As filed with the Securities and Exchange Commission on November 12, 2014
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Martin Marietta Materials, Inc.
(Exact Name of Registrant as Specified in Its Charter)
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North Carolina |
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1400 |
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56-1848578 |
(State or Other Jurisdiction of Incorporation or Organization) |
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(Primary Standard Industrial Classification Code Number) |
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(I.R.S. Employer Identification Number) |
2710 Wycliff Road
Raleigh, North Carolina 27607-3033
(919) 781-4550
(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
Roselyn R. Bar, Esq.
Senior
Vice President, General Counsel and Corporate Secretary
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh,
North Carolina 27607-3033
(919) 781-4550
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copy to:
William V. Fogg, Esq.
Joseph D. Zavaglia, Esq.
Worldwide Plaza
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, NY 10019
(212) 474-1000
Approximate date of commencement of the
proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective.
If the securities being
registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: ¨
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ¨
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.
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Large accelerated filer |
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x |
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Accelerated filer |
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Non-accelerated filer |
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¨ (Do not check if a
smaller reporting company) |
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Smaller reporting company |
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If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this
transaction:
Exchange Act Rule 13e-4(i) (Cross Border Issuer Tender
Offer) ¨
Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer) ¨
CALCULATION OF
REGISTRATION FEE
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Title of Each Class of
Securities to Be Registered |
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Amount
to Be
Registered |
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Proposed
Maximum
Offering Price
Per Unit(1) |
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Proposed
Maximum
Aggregate
Offering Price(1) |
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Amount of
Registration Fee(2) |
Floating Rate Senior Notes due 2017 |
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$300,000,000 |
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100% |
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$300,000,000 |
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$34,860 |
4.250% Senior Notes due 2024 |
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$400,000,000 |
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100% |
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$400,000,000 |
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$46,480 |
Total |
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$700,000,000 |
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N/A |
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$700,000,000 |
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$81,340 |
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(1) |
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933. |
(2) |
Calculated pursuant to Rule 457(f) of the Securities Act. |
The Registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell the
securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where
the offer or sale is not permitted.
Subject to
completion, dated November 12, 2014
PROSPECTUS
Martin Marietta Materials, Inc.
Offer to Exchange up to $300,000,000 Floating Rate Senior Notes due 2017 for a Like Principal Amount of Floating Rate Senior Notes due 2017 which are registered under the Securities Act of 1933 (the
Floating Rate Notes Exchange Offer); and
Offer to Exchange up to $400,000,000 4.250% Senior Notes due 2024 for a Like Principal
Amount of 4.250% Senior Notes due 2024 which are registered under the Securities Act of 1933 (the Fixed Rate Notes Exchange Offer and, together with the Floating Rate Notes Exchange Offer, the exchange offers and each an
exchange offer).
We are offering to exchange (i) $300,000,000 aggregate principal amount of our outstanding, unregistered Floating Rate Senior Notes due 2017
(the Original Floating Rate Notes) for an equivalent amount of registered Floating Rate Senior Notes due 2017 (the Exchange Floating Rate Notes) and (ii) $400,000,000 aggregate principal amount of our outstanding,
unregistered 4.250% Senior Notes due 2024 (the Original Fixed Rate Notes and, together with the Original Floating Rate Notes, the Original Notes and each an Original Note) for an equivalent amount of registered
4.250% Senior Notes due 2024 (the Exchange Fixed Rate Notes and, together with the Exchange Floating Rate Notes, the Exchange Notes and each an Exchange Note). The Original Notes and the Exchange Notes are
sometimes referred to in this prospectus together as the Notes. The terms of the Exchange Notes are identical in all material respects to the terms of the corresponding series of the Original Notes, except that the Exchange Notes are
registered under the Securities Act of 1933, as amended (the Securities Act), and the transfer restrictions, registration rights and payment of additional interest in case of non-registration applicable to the Original Notes do not apply
to the Exchange Notes. For a more detailed description of the Exchange Notes, see Description of Notes. The Original Notes may only be tendered in minimum denominations of $2,000 in principal or in integral multiples of $1,000 in excess
thereof. The exchange offers will expire at 5:00 p.m., New York City time, on , 2014, subject to our right to extend the expiration date for any exchange offer. Upon
expiration of the exchange offers, all outstanding Original Notes that are validly tendered and not withdrawn will be exchanged for a like principal amount of the applicable series of the Exchange Notes. You may withdraw tendered Original Notes at
any time prior to the expiration date.
The Exchange Notes will not be listed on any securities exchange or any automated dealer
quotation system and there is currently no market for the Exchange Notes.
Each broker-dealer that receives Exchange Notes for its own
account pursuant to an exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an underwriter within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Original Notes where such Original Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of up to 90 days after the
expiration date, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See Plan of Distribution.
Investing in the
Notes involves risks. See Risk Factors beginning on page 10 for a discussion of certain risks that you should consider in connection with the exchange offers and an investment in the Notes.
Neither the Securities and Exchange Commission (the SEC) nor any state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this
prospectus is , 2014.
In making your investment decision, you should rely only on the information contained or
incorporated by reference in this prospectus. We have not authorized anyone to provide you with any other information. If you receive any other information, you should not rely on it. The information contained or incorporated by reference in this
prospectus speaks only as of the date of the document containing such information. Our business, financial condition, liquidity, results of operations and prospects may have changed subsequent to any such date.
Except as otherwise described herein or as the context otherwise requires, each reference to Martin Marietta, we,
us, our and ours in this prospectus means Martin Marietta Materials, Inc. and its consolidated subsidiaries.
We are not making the exchange offers to, nor will we accept surrenders for exchange from, holders of outstanding Original Notes in any jurisdiction in which the applicable exchange offer would not be in
compliance with the securities or blue sky laws of such jurisdiction or where it is otherwise unlawful.
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TABLE OF CONTENTS
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Where You Can Find More Information
We file annual, quarterly and current reports, proxy statements and other information with the SEC under the Exchange Act. You may read and copy
any of this information at the SECs Public Reference Room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC also
maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers, including us, who file electronically with the SEC. The address of that website is www.sec.gov.
Our website is www.martinmarietta.com. The information contained on our website (except for the filings described below) is expressly not
incorporated by reference into this prospectus.
The SEC allows us to disclose important information to you by referring you to other
documents filed separately with the SEC. This information is considered to be a part of this prospectus, except for any information that is superseded by information included directly in this prospectus.
This prospectus incorporates by reference the documents listed below that we have previously filed with the SEC (other than information furnished
in a Current Report pursuant to Item 2.02 or Item 7.01, and any information relating thereto furnished pursuant to Item 9.01, in each case on Form 8-K). They contain important information about us, our financial condition and
other matters.
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Annual Report on Form 10-K for the fiscal year ended December 31, 2013. |
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Proxy Statement on Schedule 14A filed April 17, 2014. |
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Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 2014, June 30, 2014 and September 30, 2014 and the Quarterly Report on
Form 10-Q/A for the quarterly period ended March 31, 2014 filed on July 23, 2014. |
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Current Reports on Form 8-K, filed on January 28, 2014, January 29, 2014, January 30, 2014, February 4, 2014, March 21, 2014,
April 17, 2014, April 24, 2014 (two filings), April 25, 2014, May 28, 2014, June 11, 2014, June 20, 2014 (two filings), June 23, 2014, June 24, 2014, June 25, 2014, June 27, 2014, July 2, 2014
(two filings), August 6, 2014, August 18, 2014, August 19, 2014, October 3, 2014, October 21, 2014, October 27, 2014 and the Current Report on Form 8-K/A filed on September 16, 2014. |
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Registration Statement on Form S-4/A filed with the SEC on May 21, 2014 (only the section entitled Risk FactorsRisk Factors Relating to Martin
Marietta Following the Merger). |
In addition, we incorporate by reference any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than information furnished in a Current Report pursuant to Item 2.02 or Item 7.01, and any information relating thereto furnished pursuant to Item 9.01, in
each case on Form 8-K) between the date of this prospectus and the termination of the exchange offers. Such documents are considered to be a part of this prospectus, effective as of the date such documents are filed.
In the event of conflicting information in these documents, the information in the latest filed document supersedes the earlier.
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You can obtain any of the documents listed above from the SEC through the SECs website at the
address listed above, or from us by requesting them in writing or by telephone at the following address or telephone number:
Martin
Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, NC 27607
Attention: Corporate Secretary
Telephone: (919) 783-4540
These documents are available from us without charge, excluding any exhibits thereto that are not specifically incorporated by reference in such
documents.
This prospectus and information incorporated by reference herein contain summaries of certain agreements that we have filed
as exhibits to various SEC filings. The descriptions of these agreements contained in this prospectus and information incorporated by reference herein do not purport to be complete and are subject to, or qualified in their entirety by reference to,
the definitive agreements. Copies of the definitive agreements will be made available without charge to you by making a written or oral request to us.
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Disclosure Regarding Forward-looking Statements
Investors are cautioned that all statements in this prospectus that relate to the future involve risks and uncertainties, and are based on assumptions that we
believe in good faith are reasonable but which may be materially different from actual results. Forward-looking statements give the investor managements 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. We may use words such as anticipate, expect, should be, believe, will, and other words of similar meaning in connection with
future events or future operating or financial performance. Any or all of our forward-looking statements may turn out to be wrong. Factors that we currently believe could cause actual results to differ materially from the forward-looking statements
in this prospectus include, but are not limited to: Congress actions and timing surrounding federal highway funding and uncertainty over the funding mechanism for the Highway Trust Fund; the performance of the United States economy and the
resolution and impact of the debt ceiling and sequestration issues; widespread decline in aggregates pricing; the cyclical nature of both cement and ready mixed concrete, which are subject to significant changes in supply, demand and price; the
termination, capping and/or reduction of the federal and/or state gasoline tax(es) or other revenue related to infrastructure construction; the level and timing of federal and state transportation funding, most particularly in Texas, North Carolina,
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 we serve; a reduction in defense
spending, and the subsequent impact on construction activity on or near military bases; a decline in the commercial component of the nonresidential construction market, notably office and retail space; a slowdown in energy-related drilling activity,
particularly in Texas; a slowdown in residential construction recovery; a reduction in construction activity and related shipments due to a decline in funding under the domestic farm bill; 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 us; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost of other
consumables, namely steel, explosives, tires and conveyor belts, and with respect to the Specialty Products business, natural gas; continued increases in the cost of other repair and supply parts; unexpected equipment failures, unscheduled
maintenance, industrial accident or other prolonged and/or significant disruption to our cement production facilities; increasing governmental regulation, including environmental laws; transportation availability, notably the availability of
railcars and locomotive power to move trains to supply our 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 of trucks and licensed drivers for transport of our materials, particularly in areas with significant energy-related activity, such as Texas and Colorado; availability and cost of construction
equipment in the United States; weakening in the steel industry markets served by our dolomitic lime products; proper functioning of our information technology and automated operating systems to manage or support our operations; 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 our credit facilitys leverage ratio debt
covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would increase our tax rate; violation of our debt covenant if price and/or volumes return to previous levels of instability; downward pressure on
our common stock price and its impact on goodwill impairment evaluations; reduction of our credit rating to non-investment grade resulting from strategic acquisitions or otherwise; and other risk factors listed from time to time in our filings with
the SEC. Other factors besides those listed here may also adversely affect us, and may be material to us. We assume no obligation to update any such forward-looking statements.
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Industry and Other Information
Unless we indicate otherwise, we base the information concerning the construction industry contained or incorporated by reference in this
prospectus on our general knowledge of and expectations concerning such industry. Market positions and market shares described herein are based on Martin Marietta estimates using data from various industry sources and assumptions that we believe to
be reasonable based on our knowledge of the construction industry. We have not independently verified data from industry sources and cannot guarantee its accuracy or completeness. In addition, we believe that data regarding the construction industry
and market positions and market shares within such industry provide general guidance but are inherently imprecise. Further, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed
in our Annual Report on Form 10-K, which has been filed with the SEC and incorporated by reference herein, and those set forth in the section of this prospectus entitled Risk Factors.
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Summary
This summary highlights certain information contained elsewhere or incorporated by reference in this prospectus. Because this is only a summary,
it does not contain all the information that may be important to you. You should read the following summary together with the more detailed information appearing elsewhere in or incorporated by reference in this prospectus, including the annual and
interim financial statements incorporated by reference in this prospectus. You should also carefully consider the matters discussed under Risk Factors.
Overview
We are a leading supplier of aggregates and heavy building materials for the
construction industry, including infrastructure, nonresidential, residential, railroad ballast, agricultural and chemical grade stone used in environmental applications. Our aggregates business includes crushed stone, sand and gravel, and our
aggregates-related downstream product lines, (i.e., asphalt products, ready mixed concrete and road paving construction services). Our cement business, acquired on July 1, 2014 with the acquisition of Texas Industries, Inc.
(TXI), produces portland and specialty cements with production and distribution facilities in Texas and California. We also have a specialty products segment that manufactures and markets magnesia-based chemical products used in
industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry. Our 2013 annual consolidated net sales and operating earnings were predominately derived from our aggregates business, with
69% of our consolidated 2013 net sales derived from aggregates, 19% from vertically-integrated operations, and 12% from the magnesia specialties business. Within our aggregates business, the aggregates products line accounted for 78% of 2013 net
sales, while the vertically-integrated operations accounted for 22% of 2013 net sales.
We were formed in 1993 as a North
Carolina corporation to serve as successor to the operations of the materials group of the organization that is now Lockheed Martin Corporation. Our principal executive offices are located at 2710 Wycliff Road, Raleigh, North Carolina
27607-3033, and our telephone number is (919) 781-4550. Our website is located at http://www.martinmarietta.com. We do not incorporate the information on our website into this prospectus and you should not consider it a part of this prospectus.
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We currently conduct our aggregates business through three reportable segments: the Mid-America Group, the Southeast Group and the West Group. Our Cement Group operates as a separate segment.
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Reportable Segments
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Mid-America Group
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Southeast Group
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West Group
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Cement Group
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Operating Locations |
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Indiana, Iowa, northern Kansas, Kentucky, Maryland, Minnesota, Missouri, eastern Nebraska, North Carolina, Ohio, South Carolina, Virginia,
Washington and West Virginia |
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Alabama, Florida, Georgia, Mississippi, Tennessee, Nova Scotia and the Bahamas |
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Arkansas, Colorado, southern Kansas, Louisiana, western Nebraska, Nevada, Oklahoma, Texas, Utah and Wyoming |
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California and Texas |
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Primary Product Lines |
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Aggregates (crushed stone, sand and gravel) |
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Aggregates (crushed stone, sand and gravel) |
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Aggregates (crushed stone, sand and gravel), asphalt, ready mixed concrete and road paving
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Portland and specialty cements |
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Primary Types of Locations |
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Quarries and Distribution Facilities |
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Quarries and Distribution Facilities |
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Quarries, Plants and Distribution Facilities
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Plants and Distribution Terminals |
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Primary Modes of
Transportation for Product Line |
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Truck and Rail |
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Truck, Rail and Water |
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Truck and Rail |
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Truck and Rail |
We also have a specialty products segment, which includes our magnesia-based chemicals products used in industrial,
agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry.
Aggregates Business
The aggregates business mines, processes and sells granite, limestone, sand, gravel and other aggregate products, including asphalt,
ready mixed concrete and road paving construction services for use in all sectors of the public infrastructure, environmental industries, nonresidential and residential construction industries, as well as agriculture, railroad ballast, chemical,
utility and other uses. The aggregates business also includes the operation of other construction materials businesses. These businesses, located in the West Group, were acquired through our continued selective vertical integration, and include
asphalt, ready mixed concrete and road paving operations in Arkansas, Colorado, Louisiana, Oklahoma, Texas and Wyoming.
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We are a leading supplier of aggregates for the construction industry in the United States. In
2013, our aggregates business shipped and delivered aggregates, asphalt products and ready mixed concrete from a network of nearly 300 quarries, underground mines, distribution facilities and plants to customers in 30 states, Canada, the Bahamas,
and the Caribbean Islands, generating net sales and earnings from operations of $1.7 billion and $177.6 million, respectively.
Cement Business
Through our cement business, which we acquired with the acquisition of TXI on July 1, 2014, we produce portland cement as our
principal product. We also produce specialty cements, such as masonry and oil well cements. Our cement production facilities are located in Midlothian, Texas, south of Dallas/Fort Worth; Hunter, Texas, between Austin and San Antonio; and Oro Grande,
California, near Los Angeles. The limestone reserves used as the primary raw material are located on property we own adjacent to each of the plants. We also operate a cement terminal and packaging facility at our Crestmore plant near Riverside,
California, and we operate its portland cement grinding facility on an as needed basis. The cement facilities have annual capacity of approximately 6.6 million tons.
Specialty Products Business
We manufacture and market, through our specialty products
business, magnesia-based chemical products for industrial, agricultural and environmental applications, and dolomitic lime for use primarily in the steel industry. These chemical products have varying uses, including flame retardants, wastewater
treatment, pulp and paper production and other environmental applications. In 2013, 64% of specialty products net sales were attributable to chemical products, 35% to lime and 1% to stone sold as construction materials. Specialty
products net sales increased to record levels in 2013 reflecting the Woodville, Ohio dolomitic lime kiln expansion, marketing initiatives in the chemicals business and solid pricing gains in key product lines.
Acquisition of TXI
On July 1, 2014, we
completed our acquisition of TXI, creating a leading supplier of aggregates and heavy building materials. TXI, as a stand alone entity, was a leading supplier of heavy construction materials in the southwestern United States and a major supplier of
natural aggregates and ready-mix concrete in Texas, northern Louisiana and, to a lesser extent, in Oklahoma and Arkansas. As our wholly owned subsidiary, TXI enhances our position as an aggregates-led, low cost operator in the large and fast-growing
geographies in the United States and provides high quality assets in cement and ready mixed concrete.
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Summary of the Terms of the Exchange Offers
Background |
On July 2, 2014, we completed a private placement of the Original Floating Rate Notes and the Original Fixed Rate Notes. In connection with the private placement of the Original Notes, we entered
into a registration rights agreement in which we agreed, among other things, to complete the exchange offers. See The Exchange OffersPurpose of the Exchange Offers; Registration Rights. |
The Exchange Offers |
We are offering to exchange: |
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the unregistered Original Floating Rate Notes for an equivalent amount of the Exchange Floating Rate Notes, which are registered under the Securities Act; and
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the unregistered Original Fixed Rate Notes for an equivalent amount of the Exchange Fixed Rate Notes, which are registered under the Securities Act.
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The Original Notes may only be tendered in minimum denominations of $2,000 in principal or in integral multiples of $1,000 in excess thereof. In order to exchange an Original
Note, you must follow the required procedures, and we must accept the Original Note for exchange. We will exchange all Original Notes validly tendered and not validly withdrawn prior to the expiration date. See The Exchange Offers.
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Resale of Exchange Notes |
Based on interpretations of the SEC staff, as described in previous no-action letters issued to third parties, we believe that the Exchange Notes you receive pursuant to the exchange offers in exchange
for the Original Notes may be offered for resale, resold and otherwise transferred without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that: |
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you are acquiring the Exchange Notes in the exchange offers in the ordinary course of business; |
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you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes you will receive in the exchange offers; and |
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you are not an affiliate (as defined in Rule 405) of Martin Marietta. |
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By tendering your Original Notes as described in The Exchange OffersProcedures for Tendering, you will be making representations to this effect. If you fail to
satisfy any of these conditions, you cannot rely on the position of the SEC set forth in the no-action letters referred to above and you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with
a resale of the Exchange Notes. |
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We base our belief on interpretations by the SEC staff in no-action letters issued to other issuers in exchange offers like ours. We cannot guarantee that the SEC would make a
similar decision about our exchange offers. If our belief is wrong, you could incur liability under the Securities Act. We will not protect you against any loss incurred as a result of this liability under the Securities Act.
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Each broker-dealer that receives Exchange Notes for its own account in exchange for Original Notes, where such Original
Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the
Exchange Notes. We have agreed that, for a period of up to 90 days after the expiration date, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See Plan of Distribution.
Consequences if You Do Not Exchange Your Original Notes |
Original Notes that are not tendered in the exchange offers or are not accepted for exchange will continue to be subject to transfer restrictions. You will not be able to offer or sell such Original Notes
unless you are able to rely on an exemption from the requirements of the Securities Act, or the Original Notes are registered under the Securities Act. |
After the exchange offers are completed, we will no longer have an obligation to register the Original Notes, except under limited circumstances. To the extent that Original Notes are tendered and accepted in the
exchange offers, the market for any remaining Original Notes will be adversely affected. See Risk FactorsRisks Relating to the Exchange OffersIf you fail to exchange your Original Notes, they will continue to be restricted
securities and may become less liquid.
Expiration Date |
Each exchange offer expires at 5:00 p.m., New York City time, on , 2014 subject to our right to extend the expiration date for
either or both of the exchange offers. See The Exchange OffersExpiration Date; Extensions; Amendments. |
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Issuance of Exchange Notes |
We will issue Exchange Notes in exchange for Original Notes tendered and accepted in the exchange offers promptly following the expiration date (unless terminated as described in this prospectus). See
The Exchange OffersTerms of the Exchange Offers. |
Conditions to the Exchange Offers |
The exchange offers are subject to certain customary conditions, which we may amend or waive. The exchange offers are not conditioned upon any minimum principal amount of outstanding Original Notes being
tendered. See The Exchange OffersConditions to the Exchange Offers. |
Special Procedures for Beneficial Holders |
If you beneficially own Original Notes which are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender in the exchange offers, you should
contact the registered holder promptly and instruct such person to tender on your behalf. If you wish to tender in the exchange offers on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your
Original Notes, either arrange to have the Original Notes registered in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take a considerable amount of time. See The
Exchange OffersProcedures for Tendering. |
Withdrawal Rights |
You may withdraw your tender of Original Notes at any time before the expiration date for the applicable exchange offer. See The Exchange OffersWithdrawal of Tenders.
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Accounting Treatment |
We will not recognize any gain or loss for accounting purposes upon the completion of the exchange offers. The expenses of the exchange offers that we pay will increase our deferred financing costs in
accordance with generally accepted accounting principles (GAAP). See The Exchange OffersAccounting Treatment. |
Federal Income Tax Consequences |
The exchange of Original Notes for Exchange Notes pursuant to the exchange offers generally will not be a taxable event for U.S. federal income tax purposes. See Material United States Federal
Income Tax Considerations. |
Use of Proceeds |
We will not receive any proceeds from the issuance of Exchange Notes in connection with the exchange offers. See Use of Proceeds. |
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Exchange Agent |
Regions Bank is serving as exchange agent in connection with the exchange offers. The address and telephone number of Regions Bank are set forth under The Exchange OffersExchange Agent.
Regions Bank is also the trustee under the indenture governing the Original Notes and the Exchange Notes. |
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Summary of the Terms of the Notes
The summary below describes the principal terms of the Notes. Certain of the terms described below are subject to important limitations and
exceptions. The Description of Notes section of this prospectus contains a more detailed description of the terms of the Notes. Other than the restrictions on transfer, registration rights and special interest provisions, the Exchange
Notes will have the same terms and covenants as the Original Notes.
Issuer |
Martin Marietta Materials, Inc., a North Carolina corporation. |
Notes Offered |
$300,000,000 aggregate principal amount of Floating Rate Senior Notes due 2017. |
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$400,000,000 aggregate principal amount of 4.250% Senior Notes due 2024. |
Maturity Dates |
Exchange Floating Rate Notes: June 30, 2017. |
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Exchange Fixed Rate Notes: July 2, 2024. |
Interest |
The Exchange Floating Rate Notes will accrue interest at a per annum rate equal to three-month LIBOR for U.S. dollars plus 1.10% (or 110 basis points), reset quarterly as more fully described herein, and
will be payable in arrears on March 30, June 30, September 30 and December 30 of each year, beginning on December 30, 2014. |
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The Exchange Fixed Rate Notes will accrue interest at a per annum rate of 4.250%, payable in arrears on January 2 and July 2 of each year, beginning on January 2,
2015. |
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In the case of each series of Exchange Notes, interest will accrue from the most recent date to which interest on the corresponding series of Original Notes has been paid, or in
the case of the Exchange Fixed Rate Notes, if no interest has been paid with respect to such series, from July 2, 2014. |
Ranking |
The Notes are our senior unsecured obligations and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The Notes are effectively subordinated to
all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. The Notes are not guaranteed by any of our subsidiaries and are structurally subordinated to all of the existing and future
indebtedness and other liabilities (including trade accounts payable) and preferred equity of our subsidiaries. |
8
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As of September 30, 2014, we had consolidated outstanding indebtedness of $1,618 million, of which $30 million represented secured indebtedness of a subsidiary, and no
preferred equity. |
Optional Redemption |
We have the option to redeem some or all of the Fixed Rate Notes prior to their stated maturity date at any time and from time to time, as described under the heading Description of
NotesOptional redemption. The Floating Rate Notes are not subject to optional redemption by us prior to their stated maturity date. |
Change of Control |
If a Change of Control Repurchase Event occurs, unless in the case of the Fixed Rate Notes, we have exercised our right to redeem the Fixed Rate Notes in full, we will be required to repurchase all of the
outstanding Notes at a repurchase price equal to 101% of their principal amount, plus unpaid interest, if any, accrued thereon to, but excluding, the date of repurchase. See Description of NotesChange of Control Repurchase Event.
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Certain Covenants |
The indenture governing the Notes contains covenants that restrict our ability, with certain exceptions, to incur debt secured by liens, engage in sale and leaseback transactions and consolidate or merge
with, or transfer all or substantially all of our assets to, another entity. |
No Public Trading Market |
Each series of Exchange Notes is a new issue of securities for which there is no public trading market. We do not intend to list either series of the Exchange Notes on any securities exchange or to
arrange for either series of Exchange Notes to be quoted on any automated interdealer quotation system. Accordingly, we cannot assure you that any trading market for the Exchange Notes of either series will develop upon completion of the exchange
offers or, if such a market does develop, that such market will be maintained or as to the liquidity of any market. |
Trustee, Registrar and Transfer Agent |
Regions Bank. |
Governing Law |
The Notes and the indenture that governs the Notes are governed by the laws of the State of New York. |
Risk Factors |
Investing in the Notes involves substantial risks. You should carefully consider all the information in this prospectus prior to making a decision to participate in an exchange offer or invest in the
Notes. In particular, we urge you to carefully consider the risk factors set forth under Risk Factors in this prospectus in addition to the risks described in our filings with the SEC. |
9
Risk Factors
Investing in the Notes involves substantial risks. You should carefully consider all the information in this prospectus, including the information
incorporated by reference, prior to making a decision to participate in an exchange offer or invest in the Notes. In particular, we urge you to carefully consider the risk factors set forth in this Risk Factors section in addition to the
risks described in our filings with the SEC, including (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and (ii) our Registration Statement on Form S-4/A filed with the SEC on May 21, 2014 (under the
caption Risk FactorsRisk Factors Relating to Martin Marietta Following the Merger), each of which has been incorporated by reference into this prospectus. You should also refer to the other information included or incorporated by
reference in this prospectus, including our historical consolidated financial statements and the related notes.
Risks related to the
Exchange Offers
If you fail to exchange your Original Notes, they will continue to be restricted securities and may become less liquid.
Original Notes that you do not tender or we do not accept will, following the exchange offers, continue to be restricted securities,
and may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. We will issue Exchange Notes in exchange for the
Original Notes pursuant to the exchange offers only following the satisfaction of the procedures and conditions set forth in The Exchange OffersProcedures for Tendering. These procedures and conditions include timely receipt by the
exchange agent of such Original Notes (or a confirmation of book-entry transfer) and of a properly completed and duly executed letter of transmittal (or an agents message from The Depository Trust Company (DTC)).
Because we anticipate that most holders of Original Notes will elect to exchange their Original Notes, we expect that the liquidity of the market
for any Original Notes remaining after the completion of the exchange offers will be substantially limited. Any Original Notes tendered and exchanged in the exchange offers will reduce the aggregate principal amount of the Original Notes
outstanding. Following the exchange offers, if you do not tender your Original Notes, you generally will not have any further registration rights, and your Original Notes will continue to be subject to certain transfer restrictions. Accordingly, the
liquidity of the market for the Original Notes could be adversely affected.
If you are a broker-dealer, your ability to transfer the Exchange Notes
may be restricted.
A broker-dealer that acquired the Original Notes for its own account as a result of market-making activities or
other trading activities must comply with the prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes. Our obligation to make this prospectus available to broker-dealers is limited. Consequently, we
cannot guarantee that a proper prospectus will be available to broker-dealers wishing to resell their Exchange Notes.
If an active trading market
does not develop for the Exchange Notes, you may be unable to sell the Exchange Notes at a price you deem sufficient or at all.
Each
series of Exchange Notes is a new issue of securities for which there is currently no public trading market. We do not intend to list either series of the Exchange Notes on any securities exchange or to arrange for either series of Exchange Notes to
be quoted on any
10
automated interdealer quotation system. Accordingly, we cannot assure you that any trading market for the Exchange Notes will develop upon completion of the exchange offers or, if such a market
does develop, that such market will be maintained or as to the liquidity of any market. If an active market does not develop or is not maintained, the market price and the liquidity of the Exchange Notes may be adversely affected. In addition, the
liquidity of the trading market for the Exchange Notes, if it develops, and the market price quoted for the Exchange Notes, may be adversely affected by changes in prevailing interest rates and market conditions generally, as well as changes in our
performance and negative changes in the ratings assigned to us or our debt securities.
Risks related to the Notes
The Notes are subject to prior claims of our secured creditors and the creditors of our subsidiaries, and we may not have sufficient funds to fulfill our
obligations under the Notes.
The Notes are our unsecured general obligations, ranking equally with our other senior unsecured
indebtedness and liabilities, and are not guaranteed by any of our subsidiaries. As a result, the Notes are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such
indebtedness and are structurally subordinated to all of the existing and future indebtedness and other liabilities (including trade accounts payable) and preferred equity of our subsidiaries.
The indenture governing the Notes permits us and our subsidiaries to incur additional secured debt under specified circumstances. Our trade
receivable facility is secured by trade receivables, and we may incur additional secured debt in the future. In the event of our bankruptcy, liquidation, reorganization or other winding up, assets that secure our debt will be available to pay
obligations on the Notes only after all debt secured by those assets has been repaid in full. Holders of the Notes will participate in our remaining assets ratably with all of our unsecured and unsubordinated creditors, including the lenders under
our revolving credit facility and term loan facility and our trade creditors. This may have the effect of reducing the amount of proceeds paid to you. If there are not sufficient assets remaining to pay all of these creditors, all or a portion of
the Notes then outstanding would remain unpaid.
The Notes are not guaranteed by any of our subsidiaries and are structurally
subordinated to indebtedness and other liabilities and preferred equity of our subsidiaries. The indenture governing the Notes does not restrict the ability of our subsidiaries to incur indebtedness or other liabilities or issue preferred equity,
and any indebtedness and other liabilities (including trade accounts payable) and preferred equity of our subsidiaries will be structurally senior to the Notes. In the event of a bankruptcy, liquidation or reorganization of any of our subsidiaries,
holders of their indebtedness and their trade and other creditors and holders of their preferred equity will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets of those subsidiaries will be made
available for distribution to us.
In the future, certain of our subsidiaries may be required or otherwise designated to guarantee
certain indebtedness but not be required to guarantee the Notes pursuant to the indenture governing the Notes. In such circumstance, the Notes would be structurally subordinated with respect to the debt and other liabilities of such subsidiaries
that do not guarantee the Notes but guarantee such indebtedness.
11
Our indebtedness may impair our financial condition and liquidity and prevent us from fulfilling our obligations
under the Notes and our other debt instruments.
As of September 30, 2014, we had consolidated outstanding indebtedness of
$1,618 million, of which $30 million represented secured indebtedness of a subsidiary, and no preferred equity. Our indebtedness could have important consequences to you, including:
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making it more difficult for us to satisfy our obligations with respect to the Notes; |
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limiting our ability to borrow additional amounts to fund working capital, capital expenditures, acquisitions, debt service requirements, execution of our growth
strategy and other general corporate purposes; |
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requiring us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, which would reduce availability of our cash flow
to fund working capital, capital expenditures, acquisitions, execution of our strategy and other general corporate purposes; |
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subjecting us to cross-defaults and cross-acceleration of the maturities of our debt and, in the case of secured debt, foreclosure of collateral upon default;
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making us more vulnerable to adverse changes in general economic, industry and government regulations and in our business by limiting our flexibility in planning
for, and making it more difficult for us to react quickly to, changing conditions; and |
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placing us at a competitive disadvantage compared with those of our competitors that have less debt. Our historical financial results have been, and we
anticipate that our future financial results will be, subject to fluctuations. Our ability to generate cash flow from operations is dependent on our ability to execute our business strategy and is also subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond our control. Accordingly, we cannot assure you that our business will generate sufficient cash flow from operations or that future financing will be available to us on attractive
terms, or at all, in an amount sufficient to enable us to pay our indebtedness, including the Notes, or to fund our other business needs. |
The indenture does not limit the amount of indebtedness that we and our subsidiaries may incur.
The indenture under which the Original Notes were issued, and under which the Exchange Notes will be issued, does not limit the amount of
indebtedness that we and our subsidiaries may incur. The indenture does not contain any financial covenants or other provisions that would afford the holders of the Notes any substantial protection in the event we participate in a highly leveraged
or similar transaction. In addition, the indenture does not contain any restrictive covenants prohibiting or otherwise limiting our ability to repurchase common stock, pay dividends or make any payments on junior or other indebtedness. As a result,
we may be unable to fulfill our obligations under the Notes.
The agreements governing our indebtedness contain various covenants that limit our
discretion in the operation of our business and also require us to satisfy a financial leverage test and comply with other covenants. The failure to satisfy such test and to comply with such covenants could have a material adverse effect on us.
The agreements governing our indebtedness contain various covenants, subject to exceptions, including covenants that restrict our
ability to:
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create liens on our assets; |
12
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use assets as security in other transactions; |
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merge with or into other companies; and |
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enter into sale and leaseback transactions. |
In addition, our existing revolving credit facility requires that we satisfy a leverage ratio test, which is tested as of the last day of each fiscal quarter. During periods in which we experience declines in
shipments of aggregates products, or otherwise experience the adverse impact of cyclical market trends or other factors, we may not be able to comply with such financial covenant.
Any failure to comply with the restrictions of our existing revolving credit facility or any agreement governing our other indebtedness may result
in an event of default under those agreements. Such default may allow the creditors to accelerate the related indebtedness, which acceleration may trigger cross-acceleration or cross-default provisions in other indebtedness. For example, the
acceleration of certain indebtedness in excess of $50.0 million would constitute an event of default under our revolving credit facility. Our assets and cash flow may not be sufficient to fully repay borrowings under our outstanding indebtedness,
either upon maturity or, if accelerated, upon an event of default.
If, when required, we are unable to repay, refinance or restructure
our indebtedness under, or amend the covenants contained in, our existing revolving credit facility, or if a default otherwise occurs, the lenders under our existing revolving credit facility could elect to terminate their commitments thereunder and
cease making further loans, and lenders under our existing revolving credit facility could declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable. Any such actions could force us into
bankruptcy or liquidation, and we cannot provide any assurance that we could repay our obligations under the Notes in such an event.
Changes in our
credit ratings may adversely affect the value of the Notes.
Agency ratings are not a recommendation to buy, sell or hold any
security and may be revised or withdrawn at any time by the issuing organization. We cannot provide assurance as to the credit ratings that are currently assigned to the Notes or that any such credit ratings will remain in effect for any given
period of time or that any such ratings will not be lowered (or placed on review for a downgrade), suspended or withdrawn entirely by the rating agencies, if, in any rating agencys judgment, circumstances warrant such an action. Further, any
such ratings will be limited in scope and will not address all material risks relating to an investment in the Notes, but rather will reflect only the view of such rating agency at the time the rating is issued. An explanation of the significance of
such rating may be obtained from such rating agency. Any actual or anticipated adverse changes in our credit ratings, including any announcement that our ratings are under further review for a downgrade, could adversely affect the market price of
the Notes, increase our corporate borrowing costs and limit our access to the capital markets.
Our financial performance and other factors could
adversely impact our ability to make payments on the Notes.
Our ability to make scheduled payments with respect to our indebtedness,
including the Notes, will depend on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control. We may not be able to maintain a level of cash
flows from operating activities sufficient to permit us to pay the principal of, and premium, if any, and interest on, our indebtedness.
13
If our cash flows are insufficient to fund our debt service obligations, we could face substantial
liquidity problems and may be forced to reduce or delay capital expenditures, sell important assets, seek additional capital or seek to restructure or refinance our indebtedness, including the Notes. These alternative measures may not be successful
on attractive terms, or at all, and may not permit us to meet our scheduled debt service obligations.
Certain of our borrowings, including the
Floating Rate Notes, bear interest at floating rates that could rise significantly, increasing our cost and reducing cash flow.
A
significant part of our indebtedness, including borrowings under our revolving credit facility, trade receivable facility and the Floating Rate Notes, bears interest at per annum rates equal to LIBOR, adjusted periodically, plus a spread. These
interest rates could rise significantly in the future, thereby increasing our interest expenses associated with these obligations, reducing cash flow available for capital expenditures and hindering our ability to make payments on the Notes.
We may not be able to repurchase the Notes upon a Change of Control Repurchase Event.
If a Change of Control Repurchase Event occurs, unless in the case of the Fixed Rate Notes, we have exercised our right to redeem such Notes in
full, we will be required to make an offer to repurchase all of the outstanding Notes in cash at a price equal to 101% of the principal amount thereof plus unpaid interest, if any, accrued thereon. However, we may not be able to repurchase the Notes
upon a Change of Control Repurchase Event because we may not have sufficient funds to do so. In addition, agreements governing indebtedness incurred in the future may restrict us from purchasing the Notes in the event of a Change of Control
Repurchase Event. Any failure to repurchase properly tendered Notes would constitute an event of default under the indenture governing the Notes, which could, in turn, cause an acceleration of our other indebtedness. See Description of
NotesChange of Control Repurchase Event.
The definition of a change of control requiring us to repurchase the Notes is limited, and the
market price of the Notes may decline if we enter into a transaction that is not a change of control under the indenture governing the Notes.
The term change of control (as used in the indenture governing the Notes) is limited in terms of its scope and does not include every event that might cause the market price of the Notes to decline. In
addition, we are required to repurchase the Notes upon a change of control only if such Notes receive a reduction in rating below investment grade. Further, the definition of change of control includes a phrase relating to the transfer
of all or substantially all of our assets and those of our subsidiaries, taken as a whole. Although there is a limited body of case law interpreting the phrase substantially all, there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder with respect to either series of Notes to require us to repurchase the Notes of the applicable series as a result of a transfer of less than all of our assets and the assets of our
subsidiaries, taken as a whole, to another person or group may be uncertain. Our obligation to repurchase the Notes is limited and may not preserve the market price of the Notes in the event of a highly leveraged transaction, reorganization, merger
or similar transaction. See Description of NotesChange of Control Repurchase Event.
14
There is no public market for the Exchange Notes, and we cannot assure you that a market for the Exchange Notes
will develop.
We do not intend to list either series of Exchange Notes on any securities exchange or to arrange for the Exchange
Notes to be quoted on any automated interdealer quotation system. Each series of Exchange Notes is a new issue of securities for which there is no existing trading market, and no assurance can be given as to:
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whether an active trading market for such Exchange Notes will develop or be maintained; |
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the liquidity of any such market that may develop; |
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the ability of holders of Exchange Notes to sell their Exchange Notes; or |
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the prices at which the holders of Exchange Notes would be able to sell their Exchange Notes. |
If a trading market were to exist for the Exchange Notes of a series, such Exchange Notes could trade at prices that may be higher or lower than
their principal amounts or purchase prices, depending on many factors, including:
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the time remaining to the maturity of such Exchange Notes; |
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the outstanding principal amount of such Exchange Notes; |
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the terms related to redemption or repurchase of such Exchange Notes; |
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the market for debt securities of comparable companies; |
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the level, direction and volatility of market interest rates generally; |
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the interest of securities dealers in making a market; |
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the market price of our common stock; |
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general economic conditions; and |
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our financial condition, liquidity and results of operations and future prospects. |
15
Use of Proceeds
The exchange offers are intended to satisfy our obligations under the registration rights agreement entered into in connection with the issuance of
the Original Notes. We will not receive any proceeds from the issuance of Exchange Notes in connection with the exchange offers. In consideration for issuing the Exchange Notes, we will receive the Original Notes from you in like principal amount.
The Original Notes surrendered in exchange for the Exchange Notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes will not result in any change in our indebtedness other than to the extent that we
incur any indebtedness in connection with the payment of expenses to be incurred in connection with the exchange offers, including the fees and expenses of the exchange agent and accounting and legal fees.
16
Ratio of Earnings to Fixed Charges
The following table sets forth information regarding our ratio of earnings to fixed charges for each of the periods shown.
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Year Ended December 31, |
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Nine Months Ended September
30, |
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(Unaudited) |
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2009 |
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2010 |
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2011 |
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2012 |
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2013 |
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2014 |
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Ratio of earnings to fixed charges |
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2.23 |
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2.40 |
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2.31 |
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2.45 |
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3.41 |
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3.31 |
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We computed the ratio of earnings to fixed charges by dividing Earnings and Fixed Charges by the amount
of Total Fixed Charges. For the purposes of calculating this ratio, we have calculated Earnings and Fixed Charges by adding (i) earnings before income taxes; (ii) net loss from less than 50%-owned associated
companies; (iii) interest expense; and (iv) a portion of rents representative of an interest factor. For the purposes of calculating this ratio, we have calculated Total Fixed Charges by adding (i) interest expense;
(ii) capitalized interest; and (iii) a portion of rents representative of an interest factor.
17
Selected Historical Consolidated Financial Information
The following table sets forth our selected historical consolidated financial information for the periods presented. Our historical annual
consolidated financial information is derived from our audited consolidated financial statements as of and for each of the years in the five-year period ended December 31, 2013. Our historical consolidated financial information as of and for
the nine months ended September 30, 2014 and 2013 has been derived from our unaudited interim consolidated financial statements and, in the opinion of our management, includes all normal and recurring adjustments that are considered necessary
for the fair presentation of the results for the interim periods. The following information should be read together with our consolidated financial statements and the notes related to those financial statements incorporated herein by reference. See
Where you can find more information. Our historical consolidated financial information may not be indicative of future performance.
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For the nine months ended September 30, |
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For the year ended December 31, |
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(in thousands) |
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2014 |
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2013 |
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2013 |
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2012 |
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2011 |
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2010 |
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2009 |
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Statement of Earnings Data:(1) |
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Consolidated Operating Results |
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Net sales |
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$ |
1,899,557 |
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$ |
1,451,848 |
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$ |
1,943,218 |
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$ |
1,832,957 |
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$ |
1,519,754 |
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$ |
1,475,638 |
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$ |
1,419,604 |
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Freight and delivery revenues |
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202,021 |
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158,707 |
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212,333 |
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198,944 |
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193,862 |
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177,168 |
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153,648 |
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Total revenues |
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2,101,578 |
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1,610,555 |
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2,155,551 |
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2,031,901 |
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1,713,616 |
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1,652,806 |
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1,573,252 |
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Cost of sales |
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1,542,527 |
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1,188,923 |
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1,579,261 |
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1,505,823 |
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1,217,752 |
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1,153,987 |
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1,088,091 |
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Freight and delivery costs |
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|
202,021 |
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|
158,707 |
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|
212,333 |
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|
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198,944 |
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193,862 |
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177,168 |
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153,648 |
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Total cost of revenues |
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1,744,548 |
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1,347,630 |
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1,791,594 |
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1,704,767 |
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1,411,614 |
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1,331,155 |
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1,241,739 |
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Gross Profit |
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357,030 |
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262,925 |
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363,957 |
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327,134 |
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302,002 |
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321,651 |
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331,513 |
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Selling, general and administrative expenses |
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119,239 |
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112,632 |
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150,091 |
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138,398 |
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124,138 |
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130,422 |
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135,881 |
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Acquisition-related expenses, net |
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41,178 |
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|
|
671 |
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|
671 |
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35,140 |
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18,575 |
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|
1,220 |
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|
2,199 |
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Other operating expenses (income), net |
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313 |
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(5,535 |
) |
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(4,793 |
) |
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(2,574 |
) |
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(1,720 |
) |
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(8,298 |
) |
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10,586 |
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Earnings from Operations |
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196,300 |
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155,157 |
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217,988 |
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156,170 |
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161,009 |
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198,307 |
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182,847 |
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Interest expense |
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44,954 |
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40,633 |
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53,467 |
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53,339 |
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58,586 |
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68,440 |
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73,455 |
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Other nonoperating expenses and (income), net |
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1,330 |
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|
179 |
|
|
|
295 |
|
|
|
(1,299 |
) |
|
|
1,834 |
|
|
|
198 |
|
|
|
(1,165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before taxes on income |
|
|
150,016 |
|
|
|
114,345 |
|
|
|
164,226 |
|
|
|
104,130 |
|
|
|
100,589 |
|
|
|
129,669 |
|
|
|
110,557 |
|
Taxes on income |
|
|
59,571 |
|
|
|
29,615 |
|
|
|
44,045 |
|
|
|
17,431 |
|
|
|
21,003 |
|
|
|
30,913 |
|
|
|
25,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from Continuing Operations |
|
|
90,445 |
|
|
|
84,730 |
|
|
|
120,181 |
|
|
|
86,699 |
|
|
|
79,586 |
|
|
|
98,756 |
|
|
|
84,576 |
|
Less: Net (loss) earnings attributable to noncontrolling interests |
|
|
(1,341 |
) |
|
|
(1,028 |
) |
|
|
(1,905 |
) |
|
|
1,053 |
|
|
|
1,194 |
|
|
|
1,652 |
|
|
|
2,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings from Continuing Operations Attributable to Controlling Interests |
|
$ |
91,786 |
|
|
$ |
85,758 |
|
|
$ |
122,086 |
|
|
$ |
85,646 |
|
|
$ |
78,392 |
|
|
$ |
97,104 |
|
|
$ |
81,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Amounts may not equal amounts reported in our prior Annual Reports on Form 10-K, as amounts have been recast to reflect discontinued operations. |
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|
As of December 31, |
|
(in thousands) |
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
2011 |
|
|
2010 |
|
|
2009 |
|
Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
7,338,858 |
|
|
$ |
3,259,826 |
|
|
$ |
3,160,926 |
|
|
$ |
3,147,822 |
|
|
$ |
3,074,743 |
|
|
$ |
3,239,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities other |
|
$ |
422,667 |
|
|
$ |
198,146 |
|
|
$ |
167,659 |
|
|
$ |
166,530 |
|
|
$ |
136,779 |
|
|
$ |
147,434 |
|
Current maturities of long-term debt and short-term facilities |
|
|
14,331 |
|
|
|
12,403 |
|
|
|
5,676 |
|
|
|
7,182 |
|
|
|
248,714 |
|
|
|
226,119 |
|
Long-term debt |
|
|
1,603,944 |
|
|
|
1,018,518 |
|
|
|
1,042,183 |
|
|
|
1,052,902 |
|
|
|
782,045 |
|
|
|
1,023,492 |
|
Other noncurrent liabilities |
|
|
922,303 |
|
|
|
455,840 |
|
|
|
495,109 |
|
|
|
472,344 |
|
|
|
438,946 |
|
|
|
435,827 |
|
Shareholders equity |
|
|
4,373,220 |
|
|
|
1,537,877 |
|
|
|
1,410,545 |
|
|
|
1,409,321 |
|
|
|
1,425,440 |
|
|
|
1,365,240 |
|
Noncontrolling interests |
|
|
2,393 |
|
|
|
37,042 |
|
|
|
39,754 |
|
|
|
39,543 |
|
|
|
42,819 |
|
|
|
41,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
7,338,858 |
|
|
$ |
3,259,826 |
|
|
$ |
3,160,926 |
|
|
$ |
3,147,822 |
|
|
$ |
3,074,743 |
|
|
$ |
3,239,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings
The Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings (referred to as the pro forma statement of
earnings) has been primarily derived from the historical consolidated financial statements of Martin Marietta Materials, Inc. (Martin Marietta) and Texas Industries, Inc. (TXI). The pro forma statement of earnings for
the nine months ended September 30, 2014 gives effect to the merger (as defined below) as if it was consummated on January 1, 2014.
On July 1, 2014, Martin Marietta and TXI completed a merger (referred to as the merger) whereby a wholly owned subsidiary of Martin
Marietta merged with and into TXI, following which TXI became a wholly owned subsidiary of Martin Marietta. In accordance with the related merger agreement, each outstanding share of TXI common stock was converted into 0.70 shares of Martin
Marietta common stock. TXI restricted stock units vested and were converted into shares of Martin Marietta common stock after giving effect to the 0.70 exchange ratio. TXI stock options and stock appreciation rights were converted into vested stock
options and stock appreciation rights with respect to Martin Marietta common stock, after giving effect to the 0.70 exchange ratio.
TXIs fiscal year ends May 31. The pro forma statement of earnings includes TXIs results for the six months ended May 31, 2014,
which TXI results have been derived by subtracting the line items from TXIs unaudited condensed consolidated interim statement of earnings for the six months ended November 30, 2013 from the corresponding line items from TXIs audited
consolidated statement of earnings for the fiscal year ended May 31, 2014. There were no significant transactions outside the ordinary course of business for TXI in the month ended June 30, 2014.
The historical consolidated financial information has been adjusted in the pro forma statement of earnings to give effect to pro forma events that
are: (i) directly attributable to the merger, including Martin Mariettas agreement with the U.S. Department of Justice to divest certain assets, which is described further herein; (ii) factually supportable; and (iii) expected to
have a continuing impact on the combined results of Martin Marietta and TXI.
The pro forma statement of earnings includes (i) a $10.9
million one-time increase in cost of sales for acquired inventory; (ii) integration expenses; and (iii) a nonrecurring gain on the required divestiture. The pro forma statement of earnings does not represent the full impact of cost synergies and
does not purport to represent the projected future operating results of the combined company. Transactions between Martin Marietta and TXI during the period prior to the merger have been eliminated as if Martin Marietta and TXI were consolidated
affiliates during the entire period.
Assumptions and estimates underlying the pro forma adjustments are described in the accompanying
notes, which should be read in connection with the pro forma statement of earnings.
The pro forma statement of earnings has been
presented for illustrative purposes only and is not indicative of the results of operations that would have been achieved had the acquisition taken place on January 1, 2014, or the future consolidated results of operations of the combined company.
The following information is only for the limited purpose of presenting what the results of operations of the combined businesses of Martin Marietta and TXI might have looked like had the merger taken place at an earlier date and should not be
relied on for any other purpose.
20
The following pro forma statement of earnings should be read in conjunction with:
|
|
|
the accompanying notes to the pro forma statement of earnings; |
|
|
|
the separate historical consolidated financial statements of Martin Marietta as of and for the year ended December 31, 2013, included in Martin
Mariettas Form 10-K filed with the SEC; |
|
|
|
the separate historical unaudited condensed consolidated interim financial statements of Martin Marietta as of and for the quarter and nine months ended
September 30, 2014, included in Martin Mariettas Form 10-Q filed with the SEC; |
|
|
|
the separate historical consolidated financial statements of TXI as of and for the year ended May 31, 2014, included in this prospectus;
|
|
|
|
the separate historical unaudited condensed consolidated interim financial statements of TXI as of and for the quarter and six months ended November 30,
2013, included in TXIs Form 10-Q filed with the SEC; and |
|
|
|
the Martin Marietta and TXI unaudited pro forma condensed combined consolidated statement of earnings for the year ended December 31, 2013, included in Martin
Mariettas Current Report on Form 8-K/A filed with the SEC on September 16, 2014. |
21
MARTIN MARIETTA MATERIALS, INC. AND TEXAS INDUSTRIES INC.
Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings
For the Nine Months Ended September 30, 2014
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc. Nine Months Ended September 30, 2014 |
|
|
Texas Industries, Inc. Six Months Ended May 31, 2014 |
|
|
Pro Forma Adjustments |
|
|
Note 3 |
|
Pro Forma Combined |
|
Net sales |
|
$ |
1,899,557 |
|
|
$ |
470,158 |
|
|
$ |
(60,611 |
) |
|
(b); (c); (d) |
|
$ |
2,309,104 |
|
Freight and delivery revenues |
|
|
202,021 |
|
|
|
|
|
|
|
36,258 |
|
|
(d) |
|
|
238,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
2,101,578 |
|
|
|
470,158 |
|
|
|
(24,353 |
) |
|
|
|
|
2,547,383 |
|
Cost of sales |
|
|
1,542,527 |
|
|
|
414,351 |
|
|
|
(46,930 |
) |
|
(b); (c); (d); (e); (f) |
|
|
1,909,948 |
|
Freight and delivery costs |
|
|
202,021 |
|
|
|
|
|
|
|
36,258 |
|
|
(d) |
|
|
238,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues |
|
|
1,744,548 |
|
|
|
414,351 |
|
|
|
(10,672 |
) |
|
|
|
|
2,148,227 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
357,030 |
|
|
|
55,807 |
|
|
|
(13,681 |
) |
|
|
|
|
399,156 |
|
Selling, general & administrative expenses |
|
|
119,239 |
|
|
|
36,544 |
|
|
|
|
|
|
|
|
|
155,783 |
|
Acquisition-related expenses, net |
|
|
41,178 |
|
|
|
7,690 |
|
|
|
(47,715 |
) |
|
(g) |
|
|
1,153 |
|
Other operating expenses and (income), net |
|
|
313 |
|
|
|
(6,650 |
) |
|
|
2,734 |
|
|
(e) |
|
|
(3,603 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from Operations |
|
|
196,300 |
|
|
|
18,223 |
|
|
|
31,300 |
|
|
|
|
|
245,823 |
|
Interest expense |
|
|
44,954 |
|
|
|
34,739 |
|
|
|
(6,058 |
) |
|
(h); (i) |
|
|
73,635 |
|
Other nonoperating expenses, net |
|
|
1,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations before income taxes |
|
|
150,016 |
|
|
|
(16,516 |
) |
|
|
37,358 |
|
|
|
|
|
170,858 |
|
Income tax expense (benefit) |
|
|
59,571 |
|
|
|
(1,931 |
) |
|
|
14,740 |
|
|
(j) |
|
|
72,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from continuing operations |
|
|
90,445 |
|
|
|
(14,585 |
) |
|
|
22,618 |
|
|
|
|
|
98,478 |
|
Less: Net loss attributable to noncontrolling interests |
|
|
(1,341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(1,341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations attributable to controlling interests |
|
$ |
91,786 |
|
|
$ |
(14,585 |
) |
|
$ |
22,618 |
|
|
|
|
$ |
99,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Earnings Per Common Share Attributable to Controlling Interests and Common Shares Outstanding, Using Exchange
Ratio of 0.70 |
|
|
|
|
|
|
|
Basic Earnings Per Share from Continuing Operations Attributable to Common Shareholders |
|
$ |
1.71 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share from Continuing Operations Attributable to Common Shareholders |
|
$ |
1.70 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
53,342 |
|
|
|
28,681 |
|
|
|
(14,937 |
) |
|
(k) |
|
|
67,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
53,559 |
|
|
|
28,681 |
|
|
|
(14,745 |
) |
|
(k) |
|
|
67,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
Notes to the Unaudited Pro Forma Condensed Combined
Consolidated Statement of Earnings
Note
1. Description of Transaction
On July 1, 2014, Martin Marietta and TXI completed a merger whereby a wholly
owned subsidiary of Martin Marietta merged with and into TXI, following which TXI became a wholly owned subsidiary of Martin Marietta. In accordance with the related merger agreement, each outstanding share of TXI common stock was exchanged for 0.70
shares of Martin Marietta common stock. Additionally, each TXI restricted stock unit automatically vested and was converted into a corresponding number of shares of Martin Marietta common stock after giving effect to the 0.70 exchange ratio. Each
outstanding stock option and stock appreciation right with respect to TXI common stock automatically vested and was converted into a vested option or stock appreciation right with respect to a corresponding number of shares of Martin Marietta common
stock after giving effect to the 0.70 exchange ratio.
Note 2. Basis of Pro Forma Presentation
The pro forma statement of earnings gives effect to the merger as if it was consummated on January 1, 2014, and has been primarily derived from
the historical consolidated financial statements of Martin Marietta and TXI. Assumptions and estimates underlying the pro forma adjustments are described in these notes, which should be read in conjunction with the pro forma statement of earnings.
TXIs fiscal year ends May 31. The pro forma statement of earnings includes TXIs results for the six months ended May
31, 2014, which TXI results have been derived by subtracting the line items from TXIs unaudited condensed consolidated interim statement of earnings for the six months ended November 30, 2013 from the corresponding line items from TXIs
audited consolidated statement of earnings for the fiscal year ended May 31, 2014. There were no significant transactions outside the ordinary course of business for TXI in the month ended June 30, 2014.
Prior to closing the merger, Martin Marietta entered into an agreement with the U.S. Department of Justice under which Martin Marietta agreed to
divest its North Troy aggregate quarry in Mill Creek, Oklahoma and its two rail yards located in Dallas and Frisco, Texas. The divestiture was completed in August 2014. For pro forma purposes, the divestiture is assumed to have occurred January 1,
2014. Therefore, the results of operations for this quarry and rail yards has been removed from the pro forma income statements as a pro forma adjustment. See Note 3 (c) hereto. However, the gain on the divestiture is included in the pro forma
statement of earnings.
Note 3. Adjustments to Pro Forma Statement of Earnings
The pro forma adjustments included in the pro forma statement of earnings are as follows:
(a) Martin Mariettas and TXIs historical presentation. Based on the amounts reported in the Martin Marietta consolidated
statement of earnings for the nine months ended September 30, 2014, certain financial statement line items included in TXIs historical presentation have been reclassified to conform to corresponding financial statement line items included
in Martin Mariettas historical presentation. These reclassifications had no material impact on the historical operating earnings or earnings from continuing operations reported by Martin Marietta or TXI. The accompanying pro forma statement of
earnings excludes the results of discontinued operations.
23
Notes to the Unaudited Pro Forma Condensed Combined
Consolidated Statement of Earnings(Continued)
(b) Net Sales and Cost of Sales. Reflects the elimination of $1,979,000 of transactions
between Martin Marietta and TXI that occurred in the six months ended May 31, 2014. The transactions between the entities were for the purchases/sales of aggregates products.
(c) Net Sales and Cost of Sales. Reflects the elimination of $22,374,000 and $20,896,000 of net sales and cost of sales, respectively, for the results of operations for the North Troy quarry and the two
sales yards in Dallas and Frisco, Texas. These locations were divested as required per the agreement with the U.S. Department of Justices review and approval of the merger.
(d) Net Sales, Freight and Delivery Revenues, Cost of Sales and Freight and Delivery Costs. Reflects the reclassification of $36,258,000 of
pass-through transportation costs incurred and paid by TXI to third-party carriers to deliver products and subsequently billed to customers from net sales and cost of sales to freight and delivery revenues and freight and delivery costs for the six
months ended May 31, 2014. The reclassification is to conform to Martin Mariettas accounting policy for presenting these revenues and costs.
(e) Cost of Sales and Other Operating Expenses and (Income), Net. Reflects the elimination of TXIs (1) $2,734,000 of gains on sales of property, plant, equipment and businesses for the six months
ended May 31, 2014, and (2) $301,000 of gains on settlements of asset retirement obligations for the six months ended May 31, 2014 as a result of the adjustment to record these assets and liabilities at fair value as of the assumed January 1,
2014 closing date of the merger.
(f) Cost of Sales. Reflects $11,902,000 of additional depreciation, depletion, and amortization
expense for the six months ended May 31, 2014 related to the write up of TXIs property, plant and equipment to fair value and the recognition of other acquired intangible assets as of the assumed January 1, 2014 closing date of the merger.
(g) Acquisition-Related Expenses, Net, and Other Operating Expenses and (Income), Net. Reflects the elimination of $7,690,000 of
TXIs transaction costs related to the merger for the six months ended May 31, 2014 and the elimination of $40,025,000 of Martin Mariettas transaction costs related to the merger for the nine months ended September 30, 2014. Integration
expenses incurred by Martin Marietta have not been eliminated in the pro forma statement of earnings.
(h) Interest Expense.
Reflects the $5,108,000 decrease in interest expense for the six months ended May 31, 2014 as a result of the write up of TXIs long-term debt to fair value at the assumed January 1, 2014 date of the merger. The write-up is amortized and
recorded as a reduction of interest expense over the remaining term of the debt.
(i) Interest Expense. Reflects the elimination
of $950,000 of interest expense for the six months ended May 31, 2014 related to the amortization of TXIs deferred debt issue costs which were not recognized as an acquired asset at the assumed January 1, 2014 closing date of the merger.
(j) Income Tax Expense (Benefit). Reflects the income tax effect of the pro forma adjustments using the statutory tax rates for
the applicable legal entities.
24
Notes to the Unaudited Pro Forma Condensed Combined
Consolidated Statement of Earnings(Continued)
(k) Net Earnings Per Share and Weighted Average Shares Outstanding. The pro forma basic and
diluted earnings per share are based on the historical weighted average number of shares of Martin Marietta common stock outstanding for the quarter ended September 30, 2014, which reflects the shares issued for the merger being outstanding for an
entire period. The following table presents the computation of pro forma basic and diluted weighted-average shares outstanding for the nine months ended September 30, 2014.
|
|
|
|
|
|
|
Weighted-Average Shares |
|
|
|
(Amounts in thousands) |
|
Martin Mariettas weighted-average common shares outstandingbasic for the nine months ended September 30, 2014 |
|
|
53,342 |
|
Additional weighted-average shares to reflect the assumed merger date of January 1, 2014 |
|
|
13,744 |
|
|
|
|
|
|
Pro forma weighted-average common shares outstandingbasic |
|
|
67,086 |
|
|
|
|
|
|
Martin Mariettas weighted-average common shares outstandingdiluted for the nine months ended September 30,
2014 |
|
|
53,559 |
|
Additional weighted-average shares to reflect the assumed merger date of January 1, 2014 |
|
|
13,936 |
|
|
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Pro forma weighted-average common shares outstandingdiluted |
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67,495 |
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The Exchange Offers
Purpose of the Exchange Offers; Registration Rights
In connection with the sale of the Original Floating Rate Notes and Original Fixed Rate Notes, we entered into a registration rights agreement with the initial purchasers, pursuant to which we agreed to use our
commercially reasonable efforts to prepare and file and have declared effective an exchange offer registration statement and to consummate the exchange offers for such Original Notes. The exchange offers are being made pursuant to the registration
rights agreement to satisfy our obligations under such agreement.
We are making the exchange offers in reliance on the position of the
SEC as described in previous no-action letters issued to third parties. However, we have not sought our own no-action letter. Based upon these interpretations by the SEC, we believe that a holder of Exchange Notes who exchanges Original Notes for
Exchange Notes in the exchange offers generally may offer the Exchange Notes for resale, sell the Exchange Notes and otherwise transfer the Exchange Notes without further registration under the Securities Act and without delivery of a prospectus
that satisfies the requirements of Section 10 of the Securities Act. The preceding sentence does not apply, however, to a holder who is our affiliate within the meaning of Rule 405 of the Securities Act. We also believe that a
holder may offer, sell or transfer the Exchange Notes only if the holder acknowledges that the holder is acquiring the Exchange Notes in the ordinary course of its business and is not participating, does not intend to participate and has no
arrangement or understanding with any person to participate in a distribution of the Exchange Notes.
Each broker-dealer that receives
Exchange Notes for its own account in exchange for Original Notes, where such Original Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Original Notes where
such Original Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The letter of transmittal states that by acknowledging and delivering a prospectus, a broker-dealer will not be considered
to admit that it is an underwriter within the meaning of the Securities Act. We have agreed that, starting on the expiration date and ending on the close of business 90 days after the expiration date, we will make this prospectus
available to any broker-dealer for use in connection with any such resale. See Plan of Distribution.
Except as described
above, this prospectus may not be used for an offer to resell, resale or other transfer of Exchange Notes.
We are not making the
exchange offers to, nor will we accept surrenders for exchange from, holders of outstanding Original Notes in any jurisdiction in which the applicable exchange offer would not be in compliance with the securities or blue sky laws of such
jurisdiction or where it is otherwise unlawful.
If:
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because of any change in law or in currently prevailing interpretations of the staff of the SEC, we are not permitted to effect the exchange offers; |
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the exchange offers are not consummated on or prior to July 2, 2015; or |
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(3) |
in certain circumstances, the initial purchasers or any holder of Original Notes of either series so requests, |
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we will (x) promptly deliver to the Trustee (to deliver to the applicable holder of Original Notes) written
notice thereof (the Shelf Notice) and (y) use our commercially reasonable efforts to: (i) file with the SEC, within 90 days after delivery of the Shelf Notice, a shelf registration statement to cover resales of the Original
Notes of the applicable series by the holders thereof who satisfy certain conditions; (ii) cause such shelf registration statement to become or be declared effective within 120 days after delivery of the Shelf Notice; and (iii) keep the
shelf registration statement continuously effective until the earliest of (A) the date that is one year from the effective date of the initial shelf registration statement, (B) the date on which the Original Notes of the applicable series
cease to be Registrable Securities (as such term is defined in the registration rights agreement) and (C) the date on which all Registrable Securities covered by the shelf registration statement are sold (the Effectiveness Period).
If:
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we have not consummated the exchange offers on or prior to July 2, 2015; or |
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we are required to file a shelf registration statement pursuant to the registration rights agreement and such shelf registration statement has not become or been declared
effective on or prior to the later of (x) July 2, 2015 or (y) the 120th day after delivery of the Shelf Notice; or |
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if applicable, a shelf registration statement has become or been declared effective and such shelf registration statement ceases to be effective at any time during the
Effectiveness Period (each occurrence in clauses (1) through (3), a registration default), |
then, subject to certain
exceptions, additional interest shall accrue on the principal amount of the affected series of Original Notes at a rate of 0.25% per annum for the first 90-day period immediately following the occurrence of the registration default with respect
to such series, increasing by an additional 0.25% per annum with respect to each subsequent 90-day period up to a maximum of additional interest of 1.00% per annum, from and including the date on which such registration default occurred
to, but excluding, the date on which all registration defaults with respect to such series have been cured.
This summary of
certain provisions of the registration rights agreement does not purport to be complete and is subject to, and is qualified in its entirety by, the complete provisions of the registration rights agreement, which is incorporated by reference in this
prospectus.
Terms of the Exchange Offers
We are offering to exchange the unregistered Original Floating Rate Notes for an equivalent amount of the Exchange Floating Rate Notes, which are registered under the Securities Act, and the unregistered Original
Fixed Rate Notes for an equivalent amount of the Exchange Fixed Rate Notes, which are registered under the Securities Act. As of the date of this prospectus, $300,000,000 aggregate principal amount of Original Floating Rate Notes and $400,000,000
aggregate principal amount of Original Fixed Rate Notes are outstanding.
Upon the terms and subject to the conditions of the exchange
offers set forth in this prospectus and the accompanying letter of transmittal, we will accept any and all Original Notes validly tendered prior to 5:00 p.m., New York time, on the expiration date. Promptly after the expiration date (unless extended
as described in this prospectus), we will issue Exchange Notes for a like principal amount of outstanding Original Notes of the same series tendered and accepted in connection with the exchange offers. The Exchange Notes issued in connection with
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the exchange offers will be delivered promptly after the expiration date. Holders may tender some or all of their Original Notes in connection with the exchange offers, but only in minimum
denominations of $2,000 in principal or integral multiples of $1,000 in excess thereof.
The terms of the Exchange Notes are
substantially identical to the terms of the corresponding series of the Original Notes, except that the Exchange Notes are registered under the Securities Act, and the transfer restrictions, registration rights and payment of additional interest in
case of non-registration applicable to the Original Notes do not apply to the Exchange Notes. The Exchange Notes of a given series will evidence the same debt as the Original Notes of such series and will be issued under the same indenture and be
entitled to the same benefits under the indenture as the Original Notes being exchanged.
Except as described under Description of
NotesForm, Exchange Notes will be issued in the form of one or more global notes (the Global Notes) registered in the name of DTC or its nominee and each beneficial owners interest therein will be transferable in
book-entry form through DTC. See Description of NotesForm.
Holders of Original Notes do not have any appraisal or
dissenters rights in connection with the exchange offers. We intend to conduct the exchange offers in accordance with the applicable requirements of Regulation 14E under the Exchange Act. Original Notes that are not tendered for exchange
or are tendered but not accepted in connection with the exchange offers will remain outstanding and be entitled to the benefits of the indenture under which they were issued, but certain registration and other rights under the registration rights
agreement will terminate and holders of the Original Notes will generally not be entitled to any registration rights under the registration rights agreement. See Consequences of Failure to Properly Tender Original Notes in the Exchange
Offers.
We shall be considered to have accepted validly tendered Original Notes if and when we have given oral notice (to be
followed by prompt written notice) or written notice to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the Exchange Notes from us.
If any tendered Original Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events described in this
prospectus or otherwise, we will return the Original Notes, without expense, to the tendering holder promptly after the expiration date for the exchange offers.
Holders who tender Original Notes will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes on exchange of Original Notes in connection
with the exchange offers. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offers. See Fees and Expenses.
Expiration Date; Extensions; Amendments
The expiration date for the exchange offers is 5:00 p.m., New York City time, on , 2014, unless we extend the expiration date for any exchange
offer. We may extend the expiration date for any exchange offer in our sole discretion. If we so extend the expiration date for any exchange offer, the term expiration date for such exchange offer shall mean the latest date and time to
which we extend such exchange offer.
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We reserve the right in our sole discretion:
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to, prior to the expiration date, delay accepting any Original Notes; |
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to extend any exchange offer; |
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to terminate any exchange offer if, in our reasonable judgment, any of the conditions described below under Conditions to the Exchange Offers
shall not have been satisfied or waived; or |
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to amend the terms of the exchange offers in any way we determine. |
We will give written notice of any delay, extension or termination to the exchange agent. In addition, we will give, as promptly as practicable, written notice regarding any delay in acceptance, extension or
termination of the offer to the registered holders of Original Notes. If we amend any exchange offer in a manner that we determine to constitute a material change, or if we waive a material condition, we will promptly disclose the amendment or
waiver in a manner reasonably calculated to inform the holders of Original Notes of the applicable series of the amendment or waiver, and extend the offer if required by law.
We intend to make public announcements of any delay in acceptance, extension, termination, amendment or waiver regarding the exchange offers by making a timely release through an appropriate news agency.
If we delay accepting any Original Notes or terminate any exchange offer, we promptly will return any Original Notes deposited pursuant
to such exchange offer as required by Rule 14e-1(c).
Interest on the Exchange Notes
The Exchange Floating Rate Notes will accrue interest at a per annum rate equal to three-month LIBOR for U.S. dollars plus 1.10% (or 110 basis
points), reset quarterly as more fully described herein, and will be payable in arrears on March 30, June 30, September 30 and December 30 of each year, beginning on December 30, 2014.
The Exchange Fixed Rate Notes will accrue interest at a per annum rate of 4.250%, payable in arrears on January 2 and July 2 of each
year, beginning on January 2, 2015.
In the case of each series of Exchange Notes, interest will accrue from the most recent date
to which interest on the corresponding series of Original Notes has been paid, or in the case of the Exchange Fixed Rate Notes, if no interest has been paid with respect to such series, from July 2, 2014.
Conditions to the Exchange Offers
Notwithstanding any other term of the exchange offers, we will not be required to accept for exchange, or to exchange any Exchange Notes for, any
Original Notes and may terminate any or all of the exchange offers as provided in this prospectus before the acceptance of the Original Notes, if prior to the expiration date:
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the exchange offers would violate any applicable law or any applicable interpretation of the staff of the SEC; |
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any action or proceeding is instituted or threatened in any court or by any governmental agency which might materially impair our ability to proceed with the
exchange offers; or |
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we have not obtained any governmental approval which we deem necessary for the consummation of the exchange offers. |
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The conditions listed above are for our sole benefit and may be asserted by us regardless of the
circumstances giving rise to any of these conditions. We may waive these conditions in our sole discretion in whole or in part at any time and from time to time. The failure by us at any time to exercise any of the above rights shall not constitute
a waiver of such right, and such right shall be considered an ongoing right which we may assert at any time and from time to time.
If
we determine that any of the events listed above has occurred, we may, subject to applicable law:
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refuse to accept any Original Notes and promptly return all tendered Original Notes to the tendering holders and terminate any or all of the exchange offers;
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extend any or all of the exchange offers and retain all Original Notes tendered before the expiration of the exchange offers, subject, however, to the rights of
holders to withdraw those Original Notes (see Withdrawal of Tenders); or |
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waive unsatisfied conditions relating to any or all of the exchange offers and accept all properly tendered Original Notes which have not been withdrawn. If this
waiver constitutes a material change to any or all of the exchange offers, we will promptly disclose the waiver in a manner reasonably calculated to inform the holders of Original Notes of the waiver, and extend the offer if required by law.
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Any determination by us concerning the above events will be final and binding.
Procedures for Tendering
The tender
by a holder of Original Notes, as set forth below, and our acceptance of the Original Notes will constitute a binding agreement between us and the holder in accordance with the terms and subject to the conditions set forth in this prospectus and in
the accompanying letter of transmittal.
Unless the tender is being made in book-entry form, to tender in the exchange offers, a holder
must:
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complete, sign and date the letter of transmittal, or a facsimile thereof; |
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have the signatures guaranteed if required by the letter of transmittal; and |
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mail or otherwise deliver the signed letter of transmittal or the signed facsimile, the Original Notes and any other required documents to the exchange agent
prior to 5:00 p.m., New York City time, on the expiration date. |
Any financial institution that is a participant in
DTCs system may make book-entry delivery of the Original Notes by causing DTC to transfer the Original Notes into the exchange agents DTC account in accordance with DTCs electronic Automated Tender Offer Program procedures for such
transfer. The confirmation of such book-entry transfer will include an agents message stating that DTC has received an express acknowledgment from the participant in DTC tendering the Original Notes that the participant has received and agrees
to be bound by the terms of the letter of transmittal and that we may enforce the terms of the letter of transmittal against such participant. A tender of Original Notes through a book-entry transfer into the exchange agents account will only
be effective if an agents message or the letter of transmittal with any required signature guarantees and any other required documents are transmitted to and received or confirmed by the exchange agent at the address set forth below under the
caption Exchange Agent, prior to 5:00 p.m., New York City time, on the expiration date. Delivery of documents to DTC in accordance with its procedures does not constitute delivery to the exchange agent.
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The method of delivery of Original Notes and the letter of transmittal and all other required
documents to the exchange agent is at the election and risk of the holders. Instead of delivery by mail, we recommend that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to assure delivery to
the exchange agent before the expiration date. No letter of transmittal or Original Notes should be sent to us. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect the tenders for such
holders.
Any beneficial owner whose Original Notes are registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on behalf of the beneficial owner. If the beneficial owner wishes to tender on that owners own behalf, the owner
must, prior to completing and executing the letter of transmittal and delivery of such owners Original Notes, either make appropriate arrangements to register ownership of the Original Notes in the owners name or obtain a properly
completed bond power from the registered holder. The transfer of registered ownership may take considerable time.
Signature on a letter
of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an eligible institution (as defined below) unless the Original Notes are being or were tendered:
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by a registered holder who has not completed the box entitled Special Payment Instructions or Special Delivery Instructions on the letter
of transmittal; or |
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for the account of an eligible institution (as defined below). |
In the event that signatures on a letter of transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a financial institution (including most banks, savings
and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program (each such entity, an
eligible institution).
If the letter of transmittal is signed by a person other than the registered holder(s) of any
Original Notes, such certificate(s) must be endorsed by such registered holder(s) or accompanied by separate written instruments of transfer or endorsed in blank by such registered holder(s) in form satisfactory to us and duly executed by the
registered holder, in either case signed exactly as such registered holders or holders name(s) appear(s) on the Original Notes.
If the letter of transmittal or any certificates of Original Notes or separate written instruments of transfer or exchange are signed or endorsed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or other persons acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by us, evidence satisfactory to us of their authority to so act must be
submitted with the letter of transmittal.
We will determine all questions as to the validity, form, eligibility (including time of
receipt) and acceptance and withdrawal of tendered Original Notes in our sole discretion, and our determination shall be final and binding on all parties. We reserve the absolute right to reject any and all Original Notes not properly tendered or
any Original Notes whose acceptance by us would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to any particular Original Notes either before or
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after the expiration date. Our interpretation of the terms and conditions of the exchange offers (including the instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders of Original Notes must be cured within a time period we will determine. Although we intend to request the exchange agent to notify holders of defects or irregularities
relating to tenders of Original Notes, neither we, the exchange agent nor any other person will have any duty or incur any liability for failure to give such notification. Tenders of Original Notes will not be considered to have been made until such
defects or irregularities have been cured or waived. Any Original Notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent
to the tendering holders, unless otherwise provided in the letter of transmittal, promptly following the expiration date.
In addition,
we reserve the right, as set forth above under the caption Conditions to the Exchange Offers, to terminate any or all of the exchange offers. By tendering, each holder represents and acknowledges to us, that:
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it has full power and authority to tender, exchange, sell, assign and transfer the Original Notes it is tendering and that we will acquire good, marketable and
unencumbered title to the Original Notes, free and clear of all security interests, liens, restrictions, charges and encumbrances or other obligations relating to their sale or transfer and not subject to any adverse claim when the Original Notes
are accepted by us; |
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any Exchange Notes acquired in exchange for Original Notes tendered are being acquired in the ordinary course of business of the person receiving such Exchange
Notes, whether or not such recipient is such holder itself; |
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neither such holder nor, to the actual knowledge of such holder, any other person receiving Exchange Notes from such holder has an arrangement or understanding
with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in violation of the provisions of the Securities Act; |
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neither the holder nor, to the actual knowledge of such holder, any other person receiving Exchange Notes from such holder is an affiliate (as
defined in Rule 405) of Martin Marietta or, if it is an affiliate of Martin Marietta, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; |
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if such holder is not a broker-dealer, neither such holder nor, to the actual knowledge of such holder, any other person receiving Exchange Notes from such
holder is engaging in or intends to engage in a distribution of the Exchange Notes; and |
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if such holder is a broker-dealer, such holder has acquired the Original Notes for its own account as a result of market-making or other trading activities and
that it will comply with the applicable provisions of the Securities Act (including, but not limited to, the prospectus delivery requirements thereunder). See Plan of Distribution. |
Withdrawal of Tenders
Except as
otherwise provided herein, tenders of Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of Original Notes in connection with the exchange offers, a written notice of withdrawal must be received by the exchange agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the expiration date. Any such notice of withdrawal must:
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specify the name of the person who deposited the Original Notes to be withdrawn; |
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identify the Original Notes to be withdrawn (including the certificate number(s), if any, and principal amount of such Original Notes);
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be signed by the depositor in the same manner as the original signature on the letter of transmittal by which such Original Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer sufficient to have the trustee register the transfer of such Original Notes into the name of the person withdrawing the tender; and |
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specify the name in which any such Original Notes are to be registered, if different from that of the depositor. |
If Original Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawn Original Notes or otherwise comply with DTCs procedures.
We will
determine in our sole discretion all questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices, and our determination shall be final and binding on all parties. Any Original Notes so withdrawn will be
considered not to have been validly tendered for purposes of the exchange offers, and no Exchange Notes will be issued unless the Original Notes withdrawn are validly re-tendered. Any Original Notes which have been tendered but which are not
accepted for exchange or which are withdrawn will be returned to the holder without cost to such holder promptly after withdrawal, rejection of tender or termination of the exchange offers. Properly withdrawn Original Notes may be re-tendered by
following one of the procedures described above under Procedures for Tendering at any time prior to the expiration date.
Exchange Agent
We have appointed
Regions Bank as exchange agent in connection with the exchange offers. Questions and requests for assistance, as well as requests for additional copies of this prospectus or of the letter of transmittal, should be directed to the exchange agent at
its offices at 10245 Centurion Parkway, Jacksonville, FL, 32256. The exchange agents telephone number is (904) 998-4982 and its facsimile number is (205) 261-7940.
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.
Fees and Expenses
We have not retained any dealer-manager in connection with the exchange offers and we will not make any payment to brokers, dealers or others
soliciting acceptances of the exchange offers. We will pay certain other expenses to be incurred in connection with the exchange offers, including the fees and expenses of the exchange agent and certain accountant and legal fees.
Holders who tender their Original Notes for exchange will not be obligated to pay any transfer taxes. If, however, Exchange Notes are to be
delivered to, or issued in the name of, any person other than the registered holder of the Original Notes tendered, tendered Original Notes are registered in the name of any person other than the person signing the letter of transmittal, or a
transfer tax is imposed for any reason other than the exchange of Original Notes in connection with the exchange offers, then the tendering holder must pay the amount of any transfer taxes due, whether imposed on the registered holder or any other
persons. If the
33
tendering holder does not submit satisfactory evidence of payment of these taxes or exemption therefrom with the letter of transmittal, the amount of these transfer taxes will be billed directly
to the tendering holder.
Accounting Treatment
The Exchange Notes will be recorded at the same carrying value as the Original Notes as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes upon the completion of the exchange offers. The expenses of the exchange offers that we pay will increase our deferred financing costs in accordance with GAAP.
Consequences of Failure to Properly Tender Original Notes in the Exchange Offers
Issuance of the Exchange Notes in exchange for the Original Notes under the exchange offers will be made only after timely receipt by the exchange
agent of a properly completed and duly executed letter of transmittal (or an agents message from DTC) and the certificate(s) representing such Original Notes (or confirmation of book-entry transfer), and all other required documents.
Therefore, holders of the Original Notes desiring to tender such Original Notes in exchange for Exchange Notes should allow sufficient time to ensure timely delivery. We are under no duty to give notification of defects or irregularities of tenders
of Original Notes for exchange or waive any such defects or irregularities. Original Notes that are not tendered or that are tendered but not accepted by us will, following completion of the exchange offers, continue to be subject to the existing
restrictions upon transfer thereof under the Securities Act, and, upon completion of the exchange offers, certain registration rights under the registration rights agreement will terminate.
In the event the exchange offers are completed, we generally will not be required to register the remaining Original Notes, subject to limited
exceptions. Original Notes that remain outstanding will continue to be subject to the following restrictions on transfer:
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the remaining Original Notes may be resold only if registered pursuant to the Securities Act, if any exemption from registration is available, or if such
registration is not required by law; and |
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the remaining Original Notes will bear a legend restricting transfer in the absence of registration or an exemption. |
We do not currently anticipate that we will register the remaining Original Notes under the Securities Act. To the extent that Original Notes are
tendered and accepted in connection with the exchange offers, any trading market for remaining Original Notes could be adversely affected. See Risk FactorsRisks related to the Exchange OffersIf you fail to exchange your Original
Notes, they will continue to be restricted securities and may become less liquid.
Neither we nor our board of directors make
any recommendation to holders of Original Notes as to whether to tender or refrain from tendering all or any portion of their Original Notes pursuant to the exchange offers. Moreover, no one has been authorized to make any such recommendation.
Holders of Original Notes must make their own decision whether to tender pursuant to the exchange offers and, if so, the aggregate amount of Original Notes to tender, after reading this prospectus and the letter of transmittal and consulting with
their advisors, if any, based on their own financial position and requirements.
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Description of Notes
We issued the Original Floating Rate Notes and the Original Fixed Rate Notes, and will issue the Exchange Floating Rate Notes and Exchange Fixed
Rate Notes, under an Indenture, dated as of July 2, 2014 (the Indenture), between Martin Marietta Materials, Inc. and Regions Bank, as trustee (the Trustee). We refer to the Original Floating Rate Notes and the Exchange
Floating Rate Notes together as the Floating Rate Notes and the Original Fixed Rate Notes and the Exchange Fixed Rate Notes together as the Fixed Rate Notes. The Floating Rate Notes and the Fixed Rate Notes each constitute a
separate series of debt securities under the Indenture. Any Original Notes of a series that remain outstanding after completion of the applicable exchange offer, together with the Exchange Notes of such series issued in such exchange offer, will be
treated as a single class of securities under the Indenture. As used below in this Description of Notes, unless the context otherwise requires, references to the Company, we, our, or us
refer to Martin Marietta Materials, Inc., and not to its subsidiaries or other affiliates.
The terms of the Exchange Notes are
substantially identical to the terms of the corresponding series of the Original Notes, except that the Exchange Notes are registered under the Securities Act, and the transfer restrictions, registration rights and payment of additional interest in
case of non-registration applicable to the Original Notes do not apply to the Exchange Notes. Unless the context otherwise requires, references in this Description of Notes to the Notes include the Original Notes issued to
the initial purchasers in private transactions that were not subject to the Securities Act and the Exchange Notes offered hereby which are registered under the Securities Act.
The terms of the Notes will include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the TIA).
The following description of selected provisions of the Indenture and the Notes is not complete, and is subject to, and qualified in its entirety
by reference to, the actual provisions of the Indenture and the Notes, including the definitions of certain terms contained therein and those terms made part of the Indenture by reference to the TIA. The Indenture and forms of Notes have been
incorporated by reference herein.
General
The Notes are the Companys senior unsecured obligations and rank equally in right of payment with all of its existing and future unsecured and unsubordinated indebtedness. The Notes are effectively
subordinated to all of the Companys existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. The Notes are not guaranteed by any of the Companys subsidiaries and are structurally
subordinated to all of the existing and future indebtedness and other liabilities (including trade accounts payable) and preferred equity of the Companys subsidiaries.
The Company may issue an unlimited principal amount of debt securities under the Indenture. The Floating Rate Notes are initially limited to $300 million aggregate principal amount and the Fixed Rate Notes are
initially limited to $400 million aggregate principal amount, and, in each case, will be issued in fully registered form without coupons in minimum denominations of $2,000 in principal and integral multiples of $1,000 in excess thereof.
However, the Company may issue additional debt securities with the same terms as the Notes of a particular series (other than issue date and, to the extent applicable, the first payment of interest) and such additional debt securities will be
consolidated, and constitute a single series of debt securities, with the Notes of such series for all purposes without notice to, or the
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consent of, the holders of the Notes. Unless the context requires otherwise, references to Notes for all purposes of the Indenture and this Description of Notes include
any such additional debt securities that are actually issued; provided, however, that in the event such additional debt securities are not fungible with such Notes for U.S. federal income tax purposes, such additional debt securities
will be issued with a separate CUSIP number from the Notes of such series.
Principal and interest
The Floating Rate Notes will bear interest from, and including, July 2, 2014. The Floating Rate Notes will bear interest at a per annum
floating rate, reset quarterly, equal to three-month LIBOR for U.S. dollars plus 1.10% (or 110 basis points), as described below under Provisions applicable to Floating Rate Notes only. Interest on the Floating Rate Notes will be
payable quarterly in arrears on March 30, June 30, September 30 and December 30, commencing September 30, 2014 (each, a Floating Rate Interest Payment Date). Interest payments (except defaulted
interest, which shall be paid as set forth below) on a Floating Rate Interest Payment Date will be made to the holder in whose name a Floating Rate Note is registered at the close of business on the 15th calendar day immediately preceding such
Floating Rate Interest Payment Date, whether or not such 15th calendar day is a Business Day (as defined below) (each, a Floating Rate Regular Record Date).
The Fixed Rate Notes will bear interest from, and including, July 2, 2014, at the rate of 4.250% per annum, based on
a 360-day year consisting of twelve 30-day months. Interest on the Fixed Rate Notes will be payable semiannually in arrears on January 2 and July 2 of each year, commencing January 2, 2015 (each, a Fixed Rate Interest Payment
Date). Interest payments (except defaulted interest, which shall be paid as set forth below) on a Fixed Rate Interest Payment Date will be made to the holder in whose name a Fixed Rate Note is registered at the close of business on the
15th calendar day immediately preceding such Fixed Rate Interest Payment
Date, whether or not such 15th calendar day is a Business Day (each, a
Fixed Rate Regular Record Date).
Each Floating Rate Interest Payment Date and each Fixed Rate Interest Payment Date is
referred to herein as an Interest Payment Date. Each Floating Rate Regular Record Date and each Fixed Rate Regular Record Date is referred to herein as a Regular Record Date.
The Company may, at its option, make payments of interest on an Interest Payment Date by check mailed to the address of each holder entitled to
receive such a payment or by wire transfer to an account maintained by each such holder with a bank located in the United States.
Any
interest on Notes of either series not punctually paid or duly provided for on an applicable Interest Payment Date will forthwith cease to be payable to the holders of such Notes on the related Regular Record Date and may either be paid to the
persons in whose names such Notes are registered at the close of business on a special record date (each, a Special Record Date) for the payment of the interest not punctually paid or duly provided for to be fixed by the Company, notice
of which shall be mailed to the holders of such Notes not less than 15 days prior to such Special Record Date, or may be paid at any time in any other lawful manner, as further described in the Indenture.
The Floating Rate Notes will mature on June 30, 2017, and the Fixed Rate Notes will mature on July 2, 2024, and each such date is
referred to as the Stated Maturity Date with respect to the applicable series of Notes. However, the Fixed Rate Notes will be redeemable prior to maturity as specified under Optional redemption. If a Change of Control
Repurchase Event
36
occurs, unless in the case of the Fixed Rate Notes, the Company has exercised its right to redeem such Notes in full, the Company will be required to offer to repurchase all of the outstanding
Notes at a repurchase price equal to 101% of their principal amount plus unpaid interest, if any, accrued thereon to, but excluding, the date of repurchase. See Change of Control Repurchase Event.
The Company will pay the principal of each Note on the applicable Stated Maturity Date or the principal of, and premium, if any, and interest, if
any, on, each Note on any applicable redemption date (the Redemption Date) or applicable repurchase date (the Repurchase Date), as the case may be (the Stated Maturity Date, the Redemption Date or the Repurchase Date is
referred to herein as the Maturity Date with respect to the principal of such Note of the applicable series repayable on such date), by wire transfer of immediately available funds, or in certain limited circumstances, by check.
If any Fixed Rate Interest Payment Date, the Stated Maturity Date, any Redemption Date or any Repurchase Date falls on a day that is
not a Business Day, the required payment due on such date will instead be made on the next Business Day and no additional interest will accrue on such payment as a result of payment on such next Business Day. If a Floating Rate Interest Payment Date
falls on a day that is not a Business Day, such Floating Rate Interest Payment Date will be postponed to the next succeeding Business Day, unless such next Business Day falls in the next succeeding calendar month, in which case such Floating Rate
Interest Payment Date will be the immediately preceding Business Day. A Business Day means any day other than a Saturday, Sunday or other day on which banking institutions in The City of New York are authorized or obligated by law,
regulation or executive order to close; provided that, for purposes of determining a Floating Rate Interest Payment Date, such day is also a London Business Day (as defined below).
Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any other agent of the Company or the Trustee may
treat the registered holder of each Note as the owner of such Note for the purpose of receiving payments of principal of, and premium, if any, and interest on, such Note and for all other purposes whatsoever.
Subject to certain limitations imposed on Global Notes, the Notes may be surrendered for registration of transfer or exchange thereof in accordance
with the terms of the Indenture. No service charge shall be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with such transactions.
Provisions applicable to Floating Rate Notes only
The Floating Rate Notes will bear interest for each Interest Period at a rate per annum calculated by the Trustee, as calculation agent (the
Calculation Agent), subject to the maximum interest rate permitted by New York or other applicable state law, as such law may be modified by United States law of general application. The per annum rate at which interest on the Floating
Rate Notes will accrue and be payable during a particular Interest Period will be equal to three-month LIBOR for U.S. dollars, determined on the Interest Determination Date (as defined below) for such Interest Period, plus 1.10% (or 110 basis
points).
Interest Determination Date means the second London Business Day immediately preceding the
applicable Interest Period.
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Interest Period means the period from, and including, the immediately
preceding Floating Rate Interest Payment Date to, but excluding, the next Floating Rate Interest Payment Date or the Maturity Date, as applicable.
London Business Day means a day on which commercial banks are open for general business (including dealings in U.S. dollars) in London.
three-month LIBOR, for any Interest Determination Date, will be the offered rate for deposits in the London interbank market in
U.S. dollars having an index maturity of three months, as such rate appears on the Reuters Page LIBOR01 as of approximately 11:00 a.m., London time, on such Interest Determination Date. If, on an Interest Determination Date, such rate does not
appear on Reuters Page LIBOR01 as of 11:00 a.m., London time, or if Reuters Page LIBOR01 is not available on such date, the Calculation Agent will obtain such rate from Bloomberg L.P.s page BBAM (or such other page as may
replace the BBAM page on that service (or any successor service)). With respect to an Interest Determination Date on which no rate appears on either the Reuters Page LIBOR01 or Bloomberg L.P. page BBAM as of approximately 11:00 a.m., London
time, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Company, to provide the Calculation Agent with its offered quotation for deposits in U.S.
dollars for the period of three months, commencing on the first day of the applicable Interest Period to prime banks in the London interbank market at approximately 11:00 a.m., London time, on that Interest Determination Date, and in a
principal amount that is representative for a single transaction in U.S. dollars in that market at that time. If at least two quotations are provided, then three-month LIBOR on that Interest Determination Date will be the arithmetic mean of those
quotations. If fewer than two quotations are provided, then three-month LIBOR on the Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in The City of New York, on the Interest Determination
Date by up to three major banks in The City of New York selected by the Company for loans in U.S. dollars to leading European banks having an index maturity of three months and in a principal amount that is representative for a single
transaction in U.S. dollars in that market at that time; provided that if fewer than two quotations are so provided, then three-month LIBOR on the Interest Determination Date will be equal to the three-month LIBOR in effect with respect to the
immediately preceding Interest Period.
Reuters Page LIBOR01 means the display designated on page LIBOR01 by
Reuters Group plc (or such other page as may replace the LIBOR01 page on that service (or any successor service) or such other service as may be nominated by the ICE Benchmark Administration Ltd. (or such other entity assuming the responsibility
from it for calculating London interbank offered rates for U.S. dollar deposits) for the purpose of displaying London interbank offered rates for U.S. dollar deposits).
The amount of interest for each day that the Floating Rate Notes are outstanding (the daily interest amount) will be calculated by dividing the interest rate in effect for such day by 360 and
multiplying the result by the principal amount of the Floating Rate Notes. The amount of interest to be paid on the Floating Rate Notes for any Interest Period will be calculated by adding the daily interest amounts for each day in such Interest
Period.
The interest rate and amount of interest to be paid on the Floating Rate Notes for each Interest Period will be calculated by
the Calculation Agent. All calculations made by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Company and the holders of the Floating Rate Notes. So long as three-month LIBOR is
required to be determined with respect to the Floating Rate Notes, there will at all
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times be a Calculation Agent. In the event that any then acting Calculation Agent shall be unable or unwilling to act, or that such Calculation Agent shall fail duly to establish three-month
LIBOR for any Interest Period, or that the Company proposes to remove such Calculation Agent, the Company shall appoint itself or another person which is a bank, trust company, investment banking firm or other financial institution to act as the
Calculation Agent.
All percentages resulting from any calculation of the interest rate on the Floating Rate Notes will be rounded to
the nearest one hundred-thousandth of a percentage point with five one millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting
from such calculation on the Floating Rate Notes will be rounded to the nearest cent (with one-half cent being rounded upward).
Upon request from any holder of Floating Rate Notes, the Calculation Agent will provide the interest rate in effect for the Floating Rate Notes for
the current Interest Period and, if it has been determined, the interest rate to be in effect for the next Interest Period.
Optional redemption
The Company may redeem the Fixed Rate Notes, at its option, at any time in whole or from time to time in part (minimum denominations
of $2,000 in principal or an integral multiple of $1,000 in excess thereof), for cash (1) prior to April 2, 2024 (i.e., the date that is three months prior to the Stated Maturity Date) at a price equal to the greater of
(i) 100% of the principal amount of the Fixed Rate Notes to be redeemed, and (ii) as determined by the Quotation Agent (as defined below), the sum of the present values of the principal amount of the Fixed Rate Notes to be redeemed and the
remaining scheduled payments of interest thereon after the date of optional redemption (an Optional Redemption Date) through the Stated Maturity Date for the Fixed Rate Notes (the Remaining Life) (excluding interest, if any,
accrued thereon to such Optional Redemption Date), discounted to such Optional Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 25 basis points (or 0.25%)
(collectively, the Make Whole Amount), and (2) on or after April 2, 2024 (i.e., the date that is three months prior to the Stated Maturity Date) and prior to maturity, 100% of the principal amount of the Fixed Rate Notes
to be redeemed, plus, in each case, unpaid interest, if any, accrued thereon to, but excluding, such Optional Redemption Date. Notwithstanding the foregoing, the Company will pay any interest installment due on a Fixed Rate Interest Payment Date
which occurs on or prior to such Optional Redemption Date to the holders of the Fixed Rate Notes as of the close of business on the Fixed Rate Regular Record Date immediately preceding such Fixed Rate Interest Payment Date.
The Floating Rate Notes will not be subject to optional redemption by the Company prior to their Stated Maturity Date.
Comparable Treasury Issue means the United States Treasury security selected by the Quotation Agent as having a maturity
comparable to the Remaining Life that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life.
Comparable Treasury Price means, with respect to any Optional Redemption Date, the average of two Reference Treasury
Dealer Quotations for such Optional Redemption Date.
Quotation Agent means, with respect to any Optional Redemption
Date, the Reference Treasury Dealer appointed by the Company for such purpose.
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Reference Treasury Dealer means (i) each of Deutsche Bank Securities Inc. and
J.P. Morgan Securities LLC or their respective affiliates which are primary U.S. Government securities dealers and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in The City of New York (a Primary Treasury Dealer), the Company shall substitute therefor another Primary Treasury Dealer, and (ii) at the Companys option, any other Primary Treasury
Dealers selected by the Company.
Reference Treasury Dealer Quotations means, with respect to each Reference Treasury
Dealer and any Optional Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed, in each case, as a percentage of its principal amount) quoted in writing to the Trustee by
such Reference Treasury Dealer at 5:00 pm., New York City time, on the third Business Day preceding such Optional Redemption Date.
Treasury Rate means, with respect to any Optional Redemption Date, the rate per annum equal to the semiannual yield to maturity
of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Optional Redemption Date.
Notice of any redemption will be mailed at least 15 days but not more than 30 days prior to the Optional Redemption Date to each holder
of the Fixed Rate Notes to be redeemed (with a copy to the Trustee). The notice of redemption will specify, among other items, the aggregate principal amount of Fixed Rate Notes to be redeemed, the Optional Redemption Date and the redemption price.
If the Company chooses to redeem less than all of the outstanding Fixed Rate Notes, then the Company will notify the Trustee at least
30 days before the Optional Redemption Date (or such later date acceptable to the Trustee) of the aggregate principal amount of Fixed Rate Notes to be redeemed and the Optional Redemption Date. The Trustee will select, pro rata, by lot, or such
other manner it deems fair and appropriate, the Fixed Rate Notes to be redeemed in part. For redemption of Global Notes in part, see FormDTC, Euroclear and Clearstream.
If the Company has provided a proper redemption notice to holders of the Fixed Rate Notes to be redeemed, then, unless the Company defaults in
payment of the redemption price, on and after the Optional Redemption Date interest will cease to accrue on such Fixed Rate Notes.
The
Company may at any time, and from time to time, purchase Notes at any price or prices in the open market or otherwise.
The Notes will
not be entitled to the benefit of, or be subject to, any sinking fund obligation.
Change of Control Repurchase Event
If a Change of Control Repurchase Event occurs, unless in the case of the Fixed Rate Notes, the Company has exercised its right to redeem the Fixed
Rate Notes in full, the Company will be required to make an irrevocable offer (subject to consummation of the Change of Control Repurchase Event) to each holder of Notes of each series to repurchase all or, at the election of such holder, any part
(minimum denominations of $2,000 in principal or an integral multiple of $1,000 in excess thereof) of such holders Notes for cash at a price equal to 101% of the principal amount of such Notes to be repurchased plus unpaid interest, if any,
accrued thereon to, but excluding, the Repurchase Date. Notwithstanding the foregoing, the Company will pay
40
any interest installment due on an Interest Payment Date which occurs on or prior to the Repurchase Date to the holders of the Notes of the applicable series as of the close of business on the
applicable Regular Record Date immediately preceding such Interest Payment Date.
Within 30 days following any Change of Control
Repurchase Event or, at the Companys option, prior to any Change of Control (as defined herein), but after the public announcement of the Change of Control, the Company will mail a notice to each holder of Notes of each series, with a copy to
the Trustee, describing the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase all of such Notes on the Repurchase Date specified in the notice, which date will, subject to
the following sentence, be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to repurchase
such Notes is conditioned on the Change of Control Repurchase Event occurring on or prior to the Repurchase Date specified in the notice.
The Company will comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the Exchange
Act), and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes of either series as a result of a Change of Control Repurchase Event. To the
extent that the provisions of any securities laws or regulations conflict with the Change of Control Repurchase Event provisions of the Notes, the Company will comply with the applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Change of Control Repurchase Event provisions of the Notes by virtue of such conflict.
On the
Repurchase Date, the Company will, to the extent lawful:
(1) accept for payment all Notes or portions of Notes properly
tendered by the holders thereof pursuant to the Companys offer;
(2) deposit with the Paying Agent an amount equal
to the aggregate repurchase price in respect of all Notes or portions of Notes properly tendered by the holders thereof; and
(3) deliver or cause to be delivered to the Trustee the Notes properly accepted by the Company, together with an officers certificate stating the aggregate principal amount of Notes being repurchased.
The Paying Agent will promptly mail to each holder of Notes properly tendered the repurchase price for such Notes, and the Trustee,
upon the Companys execution and delivery of the related Notes, will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new Note of the same series equal in principal amount to any unrepurchased portion
of any Notes properly tendered.
The Company will not be required to make an offer to repurchase the Notes upon a Change of Control
Repurchase Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer to be made by the Company and such third party purchases all Notes properly tendered and not withdrawn
by the holders thereof under its offer.
The definition of Change of Control includes a phrase relating to the sale, lease,
exchange or other transfer of all or substantially all of the assets of the Company and its Subsidiaries (as defined below), taken as a whole. Although there is a limited body of case law interpreting the phrase substantially all, there
is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder with respect to either series of Notes to
41
require the Company to repurchase the Notes of the applicable series as a result of a sale, lease, exchange or other transfer of less than all of the assets of the Company and its Subsidiaries,
taken as a whole, to another person or group may be uncertain.
Below Investment Grade Rating Event means the rating
on the applicable series of Notes is lowered by at least two of the three Rating Agencies (as defined below) and the applicable series of Notes is rated below an Investment Grade Rating (as defined below) by at least two of the three Rating Agencies
on any day during the period (which period shall be extended so long as the rating of the applicable series of Notes is under publicly announced consideration for a possible downgrade by any of the Rating Agencies) commencing 60 days prior to
the first public notice of the earlier of the Companys intention to effect a Change of Control and the occurrence of a Change of Control and ending 60 days following consummation of such Change of Control.
Change of Control means (1) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any person or group (as used in Section 13(d)(3) of the Exchange Act) becomes the beneficial owner, directly or indirectly, of more than 50% of the Companys Voting Stock (as defined below),
measured by voting power rather than number of shares, (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its Subsidiaries, taken
as a whole, to any person or group of related persons for the purpose of Section 13(d)(3) of the Exchange Act, together with any affiliates thereof, other than any such sale, lease, exchange or other transfer to one or more of the
Companys Subsidiaries (whether or not otherwise in compliance with the provisions of the Indenture), (3) the replacement of a majority of the Companys board of directors over a two-year period from the directors who constituted the
Companys board of directors at the beginning of such period, when such replacement shall have not been approved by a vote of a majority of the board of directors then still in office who either were members of such board of directors at the
beginning of such period or whose election as members of such board of directors was previously so approved, or (4) the adoption of a plan relating to the liquidation, dissolution or winding up of the Company.
Notwithstanding the foregoing, a transaction effected to create a holding company for the Company will not be deemed to involve a Change of Control
if (a) pursuant to such transaction the Company becomes a wholly owned subsidiary of such holding company and (b) the holders of the outstanding Voting Stock of such holding company immediately following such transaction are the same as
the holders of the Companys outstanding Voting Stock immediately prior to such transaction.
Change of Control Repurchase
Event means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.
Fitch
means Fitch Inc. and its successors.
Investment Grade Rating means a rating equal to or higher than Baa3 (or the
equivalent under any successor rating categories) by Moodys (as defined below), BBB (or the equivalent under any successor rating categories) by S&P (as defined below) and BBB (or the equivalent under any successor rating
categories) by Fitch and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company.
Moodys means Moodys Investors Service Inc. and its successors.
Rating Agency means (1) each of Moodys, S&P and Fitch; and (2) if any of Moodys, S&P or Fitch
ceases to rate the applicable series of Notes or fails to make a rating of such series publicly available for reasons outside the control of the Company, a nationally recognized
42
statistical rating organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Company (as certified by a resolution of the Companys board
of directors) to act as a replacement agency for Moodys, S&P or Fitch, or all of them, as the case may be.
S&P means Standard & Poors Ratings Services, a division of The McGraw-Hill Companies, Inc., and its
successors.
Subsidiary means an entity a majority of the Voting Stock of which is owned by the Company and/or one or
more other entities a majority of the Voting Stock of which is owned by the Company.
Voting Stock of any specified
person (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date means the capital stock or other ownership interests of such person that is at the time entitled to vote generally in the election of the board of
directors (or members of a comparable governing body) of such person.
Form
The Exchange Notes of a particular series will be represented by one or more Global Notes of the same series in permanent, fully registered form.
Each Global Note will be deposited with, or on behalf of, DTC and registered in the name of DTC or its nominee. Investors may hold their beneficial ownership interests in a Global Note directly through DTC if they are participants in such system or
indirectly through organizations which are participants in such system.
All interests in the Global Notes, including those held through
Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems.
Unless and until they are exchanged in whole or in part for the Notes in certificated form as described below under Exchange of Global
Notes for certificated Notes, a Global Note may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC.
Cross-market transfers
Any cross-market transfer will be effected in DTC on behalf of
Euroclear or Clearstream in accordance with the rules of DTC. However, such cross-market transfers will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines. Euroclear or Clearstream, as the case may be, will, if the transfer meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement
on its behalf by delivering or receiving the beneficial ownership interests in the applicable Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC participants of
Euroclear or Clearstream, as the case may be.
Because of time zone differences, the securities account of a Euroclear or Clearstream
participant purchasing a beneficial ownership interest in a Global Note from a DTC participant will be credited during the securities settlement processing day (which must be a Business Day for Euroclear or Clearstream, as applicable) immediately
following the DTC settlement date. Credit of such transfer of a beneficial ownership interest in a Global Note settled during such a processing day will be reported to the applicable Euroclear or Clearstream participant on that
43
day. Cash received in Euroclear or Clearstream as a result of a transfer of a beneficial ownership interest in a Global Note by or through a Euroclear or Clearstream participant to a DTC
participant will be received with value on the DTC settlement date but will be available in the applicable Euroclear or Clearstream cash account only as of the Business Day following settlement in DTC.
DTC, Euroclear and Clearstream
The
information set out below in connection with DTC, Euroclear and Clearstream is subject to, without notice, any change in, or reinterpretation of, the rules, regulations and procedures of the clearing systems currently in effect, and the Company
takes no responsibility for the performance of these procedures or the compliance with those rules and regulations. The information set forth below has been obtained from sources that the Company believes to be reliable, but the Company takes no
responsibility for the accuracy of such information. Furthermore, the Company will have no responsibility or liability for any aspect of the records relating to, or payments made on account of, interests in any Global Notes held through the
facilities of any clearing system or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
DTC, Euroclear and Clearstream have advised the Company as follows:
DTC. DTC is a
limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning
of the New York Uniform Commercial Code and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC. DTC also facilitates the post-trade
settlement among participants of securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between participants accounts, thereby eliminating the need for physical movement of securities
certificates. Direct participants of DTC include both U.S. and non-U.S. securities brokers and dealers (including the initial purchasers of the Original Notes), banks, trust companies, clearing corporations and certain other organizations. DTC is a
wholly owned subsidiary of The Depository Trust & Clearing Corporation (DTCC). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered
clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to DTCs system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that
clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Global Notes, unless authorized by a
direct participant in accordance with DTCs MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to a company as soon as possible after the applicable record date. The Omnibus Proxy assigns Cede & Co.s
consenting or voting rights to those direct participants to whose accounts the Global Notes are credited on the applicable record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and/or interest payments on the Global Notes will be made to Cede & Co., or such other nominee as may be
requested by an authorized representative of DTC. DTCs practice is to credit direct participants accounts, upon DTCs receipt of funds and corresponding detail information from the Company or the Trustee, on the applicable payment
date in accordance with their respective holdings shown on DTCs records. Payments by
44
participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered
in street name, and will be the responsibility of such participants and not of DTC, the Trustee or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if
any, and/or interest to DTC is the responsibility of the Company and the Trustee, disbursement of such payments to direct participants shall be the responsibility of DTC, and disbursement of such payments to the beneficial owners shall be the
responsibility of direct and indirect participants.
If applicable, redemption notices shall be sent to DTC. If fewer than all of the
Notes of a series are being redeemed, DTCs practice is to determine by lot the amount of the interest of each direct participant in such issue to be redeemed.
A beneficial owner shall give notice to elect to have its Notes repurchased or tendered, through its participant, to the Trustee and shall effect delivery of such Notes by causing the direct participant to transfer
the participants interest in such Notes, on DTCs records, to the Trustee. The requirement for physical delivery of Notes in connection with a repurchase or tender will be deemed satisfied when the ownership rights in such Notes are
transferred by direct participants on DTCs records and followed by a book-entry credit of such Notes to the Trustees DTC account.
Euroclear. Euroclear was created in 1968 to hold securities for Euroclear participants and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery
changes in accounts of such participants or other securities intermediaries. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear participants
include banks (including central banks), securities brokers and dealers and other professional intermediaries and may include the initial purchasers of the Original Notes or their affiliates. Indirect access to Euroclear is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.
Euroclear is
a Belgian bank regulated and examined by the Belgian Banking Commission.
Securities clearance accounts and cash accounts with Euroclear
are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the Euroclear terms and conditions). The Euroclear terms and
conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear and receipts of payment with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts. Euroclear acts under the Euroclear terms and conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through
Euroclear participants.
Distributions with respect to Global Notes held beneficially through Euroclear will be credited to the cash
accounts of Euroclear participants in accordance with the Euroclear terms and conditions, to the extent received by Euroclear.
Clearstream. Clearstream was incorporated as a limited liability company under the laws of Luxembourg. Clearstream is an indirect wholly
owned subsidiary of Deutsche Börse AG. Clearstream holds securities for Clearstream participants and facilitates the clearance and settlement of securities transactions between Clearstream participants through electronic book-entry changes in accounts of Clearstream participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to Clearstream participants, among
45
other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing and collateral management. Clearstream
interfaces with domestic markets in several countries through established depositary and custodial relationships. Clearstream has established an electronic bridge with Euroclear to facilitate settlement of trades between them. As a registered bank
in Luxembourg, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector. Clearstream participants are recognized financial institutions around the world, including underwriters, securities brokers
and dealers, banks, trust companies, clearing corporations and certain other organizations, and may include the initial purchasers of the Original Notes or their affiliates. Indirect access to Clearstream is also available to other institutions that
maintain a custodial relationship with a Clearstream participant. Clearstream is an indirect participant in DTC.
Distributions with
respect to the Global Notes held beneficially through Clearstream will be credited to cash accounts of Clearstream participants in accordance with its rules and procedures, to the extent received by Clearstream.
Exchange of Global Notes for certificated Notes
A Global Note will be exchangeable for Notes in certificated form of the same series if (i) DTC notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes or at any time
DTC ceases to be a clearing agency registered as such under the Exchange Act, if so required by applicable law or regulation, and the Company thereupon fails to appoint a successor to DTC within 90 days of such notification or of the Company
becoming aware of DTCs ceasing to be so registered, (ii) the Company, in its discretion, at any time determines not to have such Notes represented by one or more Global Notes or (iii) an Event of Default (as defined herein) has
occurred and is continuing. Any Global Note that is exchangeable pursuant to the preceding sentence will be exchangeable for Notes of the same series in certificated form and authorized denominations and registered in such names as DTC shall direct.
In the case of the Original Notes, such certificated Notes will be subject to the restrictions on transfer set forth therein and will bear a restrictive legend.
Trading
Except for trades involving Euroclear and Clearstream participants, beneficial
ownership interests in the Global Notes will trade in DTCs Same-Day Funds Settlement System, and secondary market trading activity in the Global Notes will therefore settle in immediately available funds, subject in all cases to the rules,
regulations and procedures of DTC. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTCs rules, regulations and procedures and will be settled in same-day funds, while transfers between participants
in Euroclear and Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures.
Amendment,
supplement and waiver
Subject to certain exceptions, the Indenture and the Notes may be amended or supplemented with the consent of
the holders of a majority in principal amount of all the then outstanding Notes issued pursuant to the Indenture (including any additional notes issued pursuant to the Indenture after the date of the issuance of the Notes offered hereby), voting as
a single class; provided that (i) if any such amendment or supplement would by its terms disproportionately and adversely affect either series of Notes under the Indenture, such amendment or supplement shall also require the consent of
the holders of a majority in
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principal amount of the then outstanding Notes of such series and (ii) if any such amendment or supplement would only affect the Notes of one series, then only the consent of the holders of
a majority in principal amount of the then outstanding Notes of such affected series (and not the consent of a majority in principal amount of all the then outstanding Notes issued under the Indenture) shall be required; and provided,
further, that the Company and the Trustee may not, without the consent of the holder of each outstanding Note of a series affected thereby:
(1) reduce the principal amount of Notes of such series whose holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of, or extend the time for payment of, interest on the Notes of such series;
(3) reduce the principal of, or extend the fixed maturity of, the Notes of such series;
(4) make the Notes of such series payable in money other than that stated in such Notes; or
(5) impair the ability of holders of the Notes of such series to institute suit to enforce the obligation of the Company to make any
principal, premium or interest payment due in respect of such Notes.
Any past default or compliance with any provisions of the
Indenture or the Notes may be waived with the consent of the holders of a majority in principal amount of all the then outstanding Notes issued pursuant to the Indenture (including any additional notes issued pursuant to the Indenture after the date
of the issuance of the Notes offered hereby), voting as a single class; provided that (i) if any such waiver would by its terms disproportionately and adversely affect either series of Notes under the Indenture, such waiver shall also
require the consent of the holders of a majority in principal amount of the then outstanding Notes of such series and (ii) if any such waiver would only affect the Notes of one series, then only the consent of the holders of a majority in
principal amount of the then outstanding Notes of such affected series (and not the consent of a majority in principal amount of all the then outstanding Notes issued under the Indenture) shall be required; and provided, further, that
no waiver shall be effective without the consent of the holder of each outstanding Note affected thereby in the case of a default in any payment of principal, premium, if any, or interest due in respect of any Note or in respect of other provisions
which under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Note affected.
Without
notice to or the consent of any holder of Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes: to cure any ambiguity, omission, defect or inconsistency; to conform the text of the Indenture or the Notes to any
provision of the Description of Notes section of the offering memorandum related to the issuance of the Original Notes to the extent that the Trustee has received an officers certificate stating that such text constitutes an
unintended conflict with the description of the corresponding provision in such Description of Notes; to provide for uncertificated Notes in addition to or in place of certificated Notes; to comply with the provisions of the Indenture
concerning mergers, consolidations and transfers of all or substantially all of the assets of the Company; to appoint a trustee other than the Trustee (or any successor thereto) as trustee in respect of the Notes of either series; to provide for the
issuance of additional Notes of a series in accordance with the terms of the Indenture; or to add, change or eliminate provisions of the Indenture as shall be necessary or desirable in accordance with any amendment to the TIA. In addition, without
notice to or the consent of any holder of a series of Notes, the Company and the Trustee may amend or supplement the Indenture and the Notes of such series to make any change that does not materially adversely affect the rights of any holder of
Notes of such series (as determined in good faith by the Company). Whenever the Company requests the Trustee to take any action
47
under the Indenture, including a request to amend or supplement the Indenture, the Company is required to furnish the Trustee with an officers certificate and an opinion of counsel to the
effect that all conditions precedent to the action have been complied with.
Covenants
The terms of the Notes of each series and the covenants contained in the Indenture do not afford holders of such Notes protection in the event of a
highly leveraged or other similar transaction involving the Company that may adversely affect holders of such Notes. The Indenture does not limit the amount of additional unsecured indebtedness that the Company or any of its Subsidiaries may incur.
Limitations on liens
Subject to the following three sentences, the Company will not, and will not permit any Restricted Subsidiary (as defined below) to, as security for
any Debt (as defined below), incur a Lien (as defined below) on any Restricted Property (as defined below), unless the Company or such Restricted Subsidiary secures or causes to be secured any outstanding Notes equally and ratably with all Debt
secured by such Lien. The Lien may equally and ratably secure such Notes and any other obligations of the Company or its Subsidiaries that are not subordinated in right of payment to any outstanding Notes. The foregoing restriction will not apply
to, among other things, Liens:
(1) existing on the date the Original Notes were issued (i.e., July 2, 2014) or
existing at the time an entity becomes a Restricted Subsidiary;
(2) existing at the time of the acquisition of the
Restricted Property or incurred to finance all or some of the purchase price or cost of construction; provided that the Lien may not extend to any other Restricted Property (other than, in the case of construction, unimproved real property)
owned by the Company or any of its Restricted Subsidiaries at the time the property is acquired or the Lien is incurred; and provided, further that the Lien may not be incurred more than one year after the later of the acquisition,
completion of construction or commencement of full operation of the property;
(3) securing Debt of the Company owed to a
Restricted Subsidiary or securing Debt of a Restricted Subsidiary owed to the Company or another Restricted Subsidiary;
(4) existing at the time an entity merges into, consolidates with, or enters into a share exchange with the Company or a Restricted
Subsidiary or a person transfers or leases all or substantially all its assets to the Company or a Restricted Subsidiary;
(5) in favor of a government or governmental entity that secures payment pursuant to a contract, subcontract, statute or regulation,
secures Debt guaranteed by the government or governmental agency, secures Debt incurred to finance all or some of the purchase price or cost of construction of goods, products or facilities produced under contract or subcontract for the government
or governmental entity, or secures Debt incurred to finance all or some of the purchase price or cost of construction of the property subject to the Lien; or
(6) extending, renewing or replacing in whole or in part a Lien (existing Lien) permitted by any of clauses (l) through (5), provided that such Lien may not extend beyond the property
subject to the existing Lien and the Debt secured by the Lien may not exceed the amount of Debt secured at the time by the existing Lien unless the existing Lien or a predecessor Lien equally and ratably secures the Notes and the Debt.
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In addition and notwithstanding the foregoing restrictions, the Company and any of its Restricted
Subsidiaries may, without securing the Notes of either series, incur a Lien that otherwise would be subject to the foregoing restrictions; provided that after giving effect to such Lien the aggregate amount of all Debt secured by Liens that
otherwise would be prohibited plus all Attributable Debt (as defined below) in respect of sale-leaseback transactions that otherwise would be prohibited by the covenant limiting sale-leaseback transactions described below would not exceed 15% of
Consolidated Net Tangible Assets (as defined below).
Limitations on sale-leaseback transactions
Subject to the following two sentences, the Company will not, and will not permit any Restricted Subsidiary to, sell or transfer a Principal
Property (as defined below) and contemporaneously lease it back, except a lease for a period of three years or less. Notwithstanding the foregoing restriction, the Company or any Restricted Subsidiary may sell or transfer a Principal Property and
contemporaneously lease it back for a longer period if:
(1) the lease is between the Company and a Restricted Subsidiary
or between Restricted Subsidiaries;
(2) the Company or such Restricted Subsidiary would be entitled, pursuant to the
provisions set forth above under the caption Limitations on liens, to create a Lien on the property to be leased securing Debt in an amount at least equal in amount to the Attributable Debt in respect of the sale-leaseback
transaction without equally and ratably securing the outstanding Notes;
(3) the Company owns or acquires other property
which will be made a Principal Property and is determined by the board of directors of the Company to have a fair value equal to or greater than the Attributable Debt incurred;
(4) within 270 days of the effective date of the lease, the Company makes Capital Expenditures (as defined below) with respect to a
Principal Property in an amount at least equal to the amount of the Attributable Debt incurred; or
(5) the Company or a
Restricted Subsidiary makes an optional prepayment in cash of its Debt or capital lease obligations at least equal in amount to the Attributable Debt for the lease, the prepayment is made within 270 days of the effective date of the lease, the Debt
prepaid is not owned by the Company or a Restricted Subsidiary, the Debt prepaid is not subordinated in right of payment to any of the Notes, and the Debt prepaid was Long-Term Debt (as defined below) at the time it was created.
In addition and notwithstanding the foregoing restrictions, the Company and any of its Restricted Subsidiaries may, without securing the Notes of
either series, enter into a sale-leaseback transaction that otherwise would be subject to the foregoing restrictions; provided that after giving effect to such sale-leaseback transaction the aggregate amount of all Debt secured by Liens that
otherwise would be prohibited by the covenant limiting Liens described above plus all Attributable Debt in respect of sale-leaseback transactions that otherwise would be prohibited above would not exceed 15% of Consolidated Net Tangible Assets.
Consolidation, merger, sale of assets
The Company shall not consolidate with or merge into, or transfer all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another entity unless:
(1) the resulting, surviving or transferee entity is organized under the laws of the United States, any state thereof or the
District of Columbia and assumes by supplemental indenture all of the obligations of the Company under the Notes of each series (if Notes of such series are then outstanding) and the Indenture;
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(2) immediately after giving effect to the transaction no Event of Default, and no
event that, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and
(3) the Company shall have delivered to the Trustee an officers certificate and an opinion of counsel each stating that the consolidation, merger or transfer and the supplemental indenture comply with the
Indenture.
If, upon any such consolidation, merger or transfer, a Restricted Property would become subject to an attaching Lien that
secures Debt, then, before the consolidation, merger or transfer occurs, the Company by supplemental indenture shall secure the Notes of each series by a direct lien on such Restricted Property. The direct Lien shall have priority over all Liens on
such Restricted Property except those already on it. The direct Lien may equally and ratably secure the Notes of each series and any other obligation of the Company or a Subsidiary. However, the Company need not comply with this provision if
(i) upon the consolidation, merger or transfer, the attaching Lien will secure the Notes of each series equally and ratably with or prior to Debt secured by the attaching Lien or (ii) the Company or a Restricted Subsidiary could create a
Lien on the Restricted Property to secure Debt at least equal in amount to that secured by the attaching Lien pursuant to the provisions described under Limitations on liens above.
When a successor entity assumes all of the obligations of the Company under the Notes of a particular series and the Indenture and the other
conditions specified above are satisfied, the Company will be released from those obligations.
Definitions
For purposes of the covenants included in the Indenture, the following terms generally shall have the meanings provided below.
Attributable Debt for a lease means the carrying value of the capitalized rental obligation determined under generally accepted
accounting principles whether or not such obligation is required to be shown on the balance sheet as a long-term liability. The carrying value may be reduced by the capitalized value of the rental obligations, calculated on the same basis, that any
sublessee has for all or part of the same property. A lease obligation shall be counted only once even if the Company and one or more of its Subsidiaries may be responsible for the obligation.
Capital Expenditures means, for any period, any expenditures of the Company or its Subsidiaries during such period that, in
conformity with generally accepted accounting principles consistently applied, are required to be included in fixed asset accounts as reflected in the consolidated balance sheet of the Company and its Subsidiaries.
Consolidated Net Tangible Assets means total assets less:
(1) total current liabilities (excluding any Debt which, at the option of the borrower, is renewable or extendible to a term
exceeding 12 months and which is included in current liabilities and further excluding any deferred income taxes which are included in current liabilities); and
(2) goodwill, patents and trademarks,
all as stated on the Companys most recent publicly available
consolidated balance sheet preceding the date of determination.
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Debt means any debt for borrowed money which would appear, in conformity with
generally accepted accounting principles, on the balance sheet as a liability or any guarantee of such a debt and includes purchase money obligations. A Debt shall be counted only once even if the Company and one or more of its Subsidiaries may be
responsible for the obligation.
Lien means any mortgage, pledge, security interest or lien.
Long-Term Debt means Debt that by its terms matures on a date more than 12 months after the date it was created or Debt that the
obligor may extend or renew without the obligees consent to a date more than 12 months after the Debt was created.
Principal Property means any mining and quarrying or manufacturing facility located in the United States and owned by the
Company or by one or more Restricted Subsidiaries on the date the Original Notes were issued (i.e., July 2, 2014) and which has, as of the date the Lien is incurred, a net book value (after deduction of depreciation and other similar charges)
greater than 3% of Consolidated Net Tangible Assets, except:
(1) any such facility or property which is financed by
obligations of any State, political subdivision of any State or the District of Columbia under terms which permit the interest payable to the holders of the obligations to be excluded from gross income as a result of the plant, facility or property
satisfying the conditions of Section 103(b)(4)(C), (D), (E), (F) or (H) or Section 103(b)(6) of the Internal Revenue Code of 1954 or Section 142(a) or Section 144(a) of the Internal Revenue Code of 1986, or of any
successors to such provisions; or
(2) any such facility or property which, in the opinion of the board of directors of
the Company, is not of material importance to the total business conducted by the Company and its Subsidiaries taken as a whole. However, the chief executive officer or chief financial officer of the Company may at any time declare any mining and
quarrying or manufacturing facility or other property to be a Principal Property by delivering a certificate to that effect to the Trustee.
Restricted Property means any Principal Property, any Debt of a Restricted Subsidiary owned by the Company or a Restricted Subsidiary on the date the Original Notes were issued (i.e.,
July 2, 2014) or thereafter if secured by a Principal Property (including any property received upon a conversion or exchange of such debt), or any shares of stock of a Restricted Subsidiary owned by the Company or a Restricted Subsidiary
(including any property or shares received upon a conversion, stock split or other distribution with respect to the ownership of such stock).
Restricted Subsidiary means a Subsidiary that has substantially all of its assets located in, or carries on substantially all of its business in, the United States and that owns a Principal
Property. Notwithstanding the preceding sentence, a Subsidiary shall not be a Restricted Subsidiary during such period of time as it has shares of capital stock registered under the Exchange Act or it files reports and other information with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act.
Default and remedies
An Event of Default under the Indenture in respect of the Notes of a series is:
(1) default for 30 days in payment of any interest on the Notes of such series;
(2) default in payment of any principal of, or premium, if any, on the Notes of such series when due;
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(3) failure by the Company for 90 days, after notice to it, to comply with any of its
other agreements in the Indenture or the Notes of such series; and
(4) certain events of bankruptcy or insolvency
applicable to the Company.
If an Event of Default in respect of the Notes of a particular series (other than as referred to in clause
(4) above) occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the then outstanding Notes of such series may declare such Notes to be due and payable immediately, but under certain conditions such
acceleration may be rescinded by the holders of a majority in principal amount of such then outstanding Notes. If an Event of Default referred to in clause (4) above occurs and is continuing, the principal of, and premium, if any, and interest
on, all of the then outstanding Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or the holders of such Notes.
No holder of Notes of either series may pursue any remedy against the Company under the Indenture (other than with respect to the right to receive any payment of principal, premium, if any, or interest due in
respect of the Notes of such series) unless such holder previously shall have given to the Trustee written notice of default and unless the holders of at least 25% in principal amount of such then outstanding Notes shall have made written request to
the Trustee to pursue the remedy and shall have offered the Trustee indemnity satisfactory to it, the Trustee shall not have complied with the request within 60 days of receipt of the request and the offer of indemnity, and the Trustee shall not
have received direction inconsistent with the request during such 60-day period from the holders of a majority in principal amount of such then outstanding Notes.
Holders of the Notes of a particular series may not enforce the Indenture or the Notes of such series except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes of such series
unless it receives indemnity satisfactory to it from the Company or, under certain circumstances, the holders of such Notes seeking to direct the Trustee to take certain actions under the Indenture against any loss, liability or expense.
Subject to certain limitations, holders of a majority in principal amount of the then outstanding Notes of a particular series may direct the
Trustee in its exercise of any trust or power under the Indenture in respect of the Notes of such series. The Indenture provides that the Trustee will give to the holders of the Notes of a particular series notice of all defaults known to it, within
90 days after the occurrence of any default with respect to the Notes of such series, unless the default shall have been cured or waived. The Trustee may withhold from holders of the Notes of a particular series notice of any continuing default
(except a default in any payment of principal, premium, if any, or interest due in respect of the Notes of such series) if it determines in good faith that withholding such notice is in the interests of such holders. The Company is required annually
to certify to the Trustee as to the compliance by the Company with certain covenants under the Indenture and the absence of a default thereunder, or as to any such default that existed.
A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the
Notes of either series or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting a Note, the holder of such Note waives and releases all such claims and liability. This waiver and
release are part of the consideration for the issue of such Note.
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Discharge, defeasance, and covenant defeasance
Satisfaction and Discharge
Upon the Companys direction, the Indenture shall cease to be of further effect with respect to the Notes of a particular series specified by
the Company, subject to the survival of specified provisions of the Indenture, when:
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(A) |
all outstanding Notes of such series have been delivered to the Trustee for cancellation, subject to certain exceptions, or |
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(B) |
all Notes of such series have become due and payable or will become due and payable at their maturity within one year or are to be called for redemption within one year, and the
Company has deposited with the Trustee, in trust, funds in U.S. dollars or U.S. government obligations (or a combination thereof) in an amount sufficient to pay the entire indebtedness on the Notes of such series, including the principal thereof
and, premium, if any, and interest, if any, thereon, to the date of such deposit, if the Notes of such series have become due and payable, or to the Stated Maturity Date of the Notes of such series, as the case may be; |
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(2) |
the Company has paid all other sums payable under the Indenture with respect to the Notes of such series (including amounts payable to the Trustee); and |
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(3) |
the Trustee has received an officers certificate and an opinion of counsel to the effect that all conditions precedent to the satisfaction and discharge of the Indenture in
respect of the Notes of such series have been satisfied. |
Defeasance and Covenant Defeasance
The Company may elect with respect to the Notes of a particular series either:
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(1) |
to defease and discharge itself from any and all obligations with respect to the Notes of such series (full defeasance), except for, among other things:
|
|
(A) |
the obligations to register the transfer or exchange of those Notes; |
|
(B) |
the obligation to replace temporary or mutilated, destroyed, lost, or stolen Notes; |
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(C) |
the obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, in respect of those Notes; and |
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(D) |
the obligation to hold moneys for payment in respect of those Notes in trust; or |
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(2) |
to be released from its obligations with respect to the Notes of such series under CovenantsLimitations on liens and
CovenantsLimitations on sale-leaseback transactions, and any failure to comply with those obligations shall not constitute a default or an Event of Default with respect to those Notes (covenant defeasance);
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in either case, upon the irrevocable deposit with the Trustee, or other qualifying Trustee, in trust for that purpose, of an amount in
U.S. dollars or U.S. government obligations (or a combination thereof) which through the payment of principal and interest in accordance with their terms will provide money, in an amount sufficient to pay the principal of, and premium, if any, and
interest on, those Notes, on the respective due dates for those payments, whether at maturity, upon redemption or repurchase or otherwise.
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The full defeasance or covenant defeasance described above shall only be effective if, among other
things:
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(a) |
it shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture or the applicable series of Notes)
to which the Company is a party or is bound; |
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(b) |
in the case of full defeasance, the Company shall have delivered to the Trustee an opinion of counsel reasonably acceptable to the Trustee confirming that:
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(1) |
the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or |
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(2) |
since the date of the Indenture, there has been a change in applicable U.S. federal income tax law, |
in either case, to the effect that, and based on such ruling or change the opinion of counsel shall confirm that, the holders of the Notes of the applicable series will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of the full defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the defeasance had not occurred;
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(c) |
in the case of covenant defeasance, the Company shall have delivered to the Trustee an opinion of counsel reasonably acceptable to the Trustee to the effect that the holders of
the Notes of the applicable series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if the covenant defeasance had not occurred; |
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(d) |
no Event of Default with respect to the Notes of the applicable series shall have occurred and be continuing on the date of the deposit into trust (other than an Event of Default
resulting from the incurrence of Debt to be applied to such deposit or the grant of any Lien to secure such Debt); and, solely in the case of full defeasance, no Event of Default arising from specified events of bankruptcy, insolvency, or
reorganization with respect to the Company or default which with notice or lapse of time or both would become such an Event of Default shall have occurred and be continuing during the period ending on the 91st day after the date of the deposit into
trust; and |
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(e) |
the Company shall have delivered to the Trustee an officers certificate and legal opinion to the effect that all conditions precedent to the full defeasance or covenant
defeasance, as the case may be, have been satisfied. |
Notwithstanding the foregoing, the opinion of counsel required by
clause (b) above with respect to a full defeasance need not to be delivered if all Notes not therefore delivered to the Trustee for cancellation (x) have become due and payable, or (y) will become due and payable at stated maturity
within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company.
In the event the Company effects covenant defeasance with respect to the Notes of either series and those Notes are declared due and payable
because of the occurrence of any Event of Default other than an Event of Default with respect to the covenant as to which covenant defeasance has been effected, which covenant would no longer be applicable to those Notes after covenant defeasance,
the amount of monies or U.S. government obligations deposited with the Trustee to effect covenant defeasance may not be sufficient to pay amounts due on
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those Notes at the time of any acceleration resulting from such Event of Default. However, the Company would remain liable to make payment of those amounts due at the time of acceleration.
Repayment of unclaimed funds
The Indenture provides that the Trustee and the Paying Agent shall promptly pay to the Company upon request any money held by them for the payment
of principal of, or premium, if any, or interest on, the Notes of either series that remains unclaimed for two years. In the event the Trustee or the Paying Agent returns money to the Company following such two-year period, the holders of the Notes
of such series thereafter shall be entitled to payment only from the Company, subject to all applicable escheat, abandoned property and similar laws.
Delivery of Rule 144A information
The
Indenture provides that, so long as any Notes remain outstanding, the Company, if it is not then subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, will prepare and will furnish to any holder of such Notes, any
beneficial owner of such Notes (including, without limitation, any owner of a beneficial interest in a Global Note) and any propsective purchaser or other propsective transferee of such Notes designated by a holder or a beneficial owner of such
Notes, promptly upon request and at the expense of the Company, the financial statements and other information specified in Rule 144A(d)(4) (or any successor provision thereto) under the Securities Act, in each case, whether or not such Notes are
restricted securities within the meaning of Rule 144 (or any successor provision thereto) under the Securities Act and whether or not such request is being made in connection with any transfer of such Notes.
Concerning the Trustee
Regions Bank is the
Trustee, Paying Agent, Registrar and Calculation Agent under the Indenture, and Regions Bank is acting as exchange agent in the exchange offers. Regions Bank also performs other services for the Company in the normal course of business.
The Indenture provides that there may be more than one Trustee under the Indenture, each with respect to one or more series of debt securities. If
there are different Trustees for different series of debt securities, each Trustee will be a Trustee separate and apart from any other Trustee under the Indenture. Any action permitted to be taken by a Trustee may be taken by such Trustee only with
respect to the one or more series of debt securities for which it is the Trustee under the Indenture. Any Trustee under the Indenture may resign or be removed with respect to one or more series of debt securities.
All payments of principal of, and premium, if any, and interest on, and all registration, transfer, exchange, authentication and delivery
(including authentication and delivery on original issuance of the debt securities) of the Notes of each series will be made in an office or agency maintained by the Company for that purpose in the Borough of Manhattan, The City of New York, except
as otherwise specified above under Principal and interest.
The Company shall be responsible for making all
calculations and determinations called for under the Indenture, except in the case of the Calculation Agents determination of three-month LIBOR. These calculations and determinations include, but are not limited to, accrued interest payable on
the Notes, premium, if any, and the Treasury Rate. The Company shall make all these calculations in good faith and, absent manifest error, the Companys calculations shall be
55
final and binding on holders of Notes. Upon written request, the Company shall provide a schedule of its calculations to the Trustee. The Trustee is entitled to rely conclusively upon the
accuracy of the Companys calculations without independent verification.
Governing law
The Indenture and the Original Notes are governed by, and the Exchange Notes will be governed by, and construed in accordance with, the laws of the
State of New York.
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Material United States Federal Income Tax Considerations
The following discussion is a summary of the material U.S. federal income tax consequences of the exchange offers to certain holders of Original
Notes who exchange Original Notes for Exchange Notes, but it is not a complete analysis of all potential tax effects. The summary below is based upon the Internal Revenue Code of 1986, as amended (the Code), regulations of the Treasury
Department, administrative rulings and pronouncements of the Internal Revenue Service and judicial decisions, all of which are subject to change, possibly with retroactive effect. This summary does not address all of the U.S. federal income tax
consequences that may be applicable to particular holders, including dealers in securities, financial institutions, insurance companies and tax-exempt organizations. In addition, this summary does not consider the effect of any foreign, state,
local, gift, estate or other tax laws that may be applicable to a particular holder. This summary applies only to a holder that acquired Original Notes at original issue for cash and holds such Original Notes as a capital asset within the meaning of
Section 1221 of the Code.
An exchange of Original Notes for Exchange Notes pursuant to the exchange offers will not be treated as
a taxable exchange or other taxable event for U.S. federal income tax purposes. Accordingly, there will be no U.S. federal income tax consequences to holders who exchange their Original Notes for Exchange Notes pursuant to the exchange offers, and
any such holder will have the same adjusted tax basis and holding period in the Exchange Notes as it had in the Original Notes immediately before the exchange.
The foregoing discussion of certain U.S. federal income tax considerations does not consider the facts and circumstances of any particular holders situation or status. Accordingly, each holder of Original
Notes considering the exchange offers should consult its own tax advisor regarding the tax consequences of the exchange offers to it, including those under state, foreign and other tax laws.
57
Plan of Distribution
Each broker-dealer that receives Exchange Notes for its own account pursuant to an exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Original
Notes where such Original Notes were acquired as a result of market-making activities or other trading activities. We have agreed that, starting on the expiration date and ending at the close of business on the date that is 90 days after the
expiration date, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the exchange offers may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the exchange offers and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an underwriter within the meaning of the Securities Act, and any profit of any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within
the meaning of the Securities Act.
For a period of 90 days after the expiration date, we will promptly send additional copies of this
prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents. We have agreed to pay all expenses incident to the performance of our obligations under the registration rights agreement related to the
exchange offers other than commissions and transfer taxes, and we have agreed to indemnify the holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.
58
Legal Matters
Certain legal matters related to the validity of the Exchange Notes being offered hereby relating to: (i) New York law will be passed upon for
us by Cravath, Swaine & Moore LLP, New York, New York and (ii) North Carolina law will be passed upon for us by Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina. Richard A. Vinroot, Esq., a shareholder of
Robinson, Bradshaw & Hinson, P.A., is a director of Martin Marietta. Certain members of Robinson, Bradshaw & Hinson, P.A. beneficially owned less than 1% of the outstanding shares of common stock of Martin Marietta as of the date
of this prospectus. Robinson, Bradshaw & Hinson, P.A. has provided certain legal services to Martin Marietta during 2012, 2013 and 2014. The amount of fees paid to Robinson, Bradshaw & Hinson, P.A. for such services in 2012 was
approximately $51,000 and in 2013 was approximately $87,000, representing less than 0.2% of the firms gross revenues for each of 2012 and 2013. Mr. Vinroot did not work on any of the legal matters for Martin Marietta.
Experts
Martin
Marietta
The consolidated financial statements of Martin Marietta incorporated by reference in Martin Mariettas Annual Report
on Form 10-K for the year ended December 31, 2013 (including the schedule appearing therein), and the effectiveness of Martin Mariettas internal control over financial reporting as of December 31, 2013 have been audited by Ernst & Young
LLP, independent registered public accounting firm, as set forth in their reports thereon, incorporated by reference and included therein, and incorporated herein by reference. Such consolidated financial statements and Martin Marietta
managements assessment of the effectiveness of internal control over financial reporting as of December 31, 2013 are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting
and auditing.
TXI
The
consolidated financial statements of Texas Industries, Inc. at May 31, 2014 and 2013, and for each of the three years in the period ended May 31, 2014, appearing in this prospectus and registration statement have been audited by Ernst & Young
LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
59
INDEX TO FINANCIAL STATEMENTS
|
|
|
|
|
Texas Industries, Inc. and subsidiaries |
|
|
|
|
Report of Independent Registered Public Accounting Firm |
|
|
F-2 |
|
Consolidated Balance Sheets as of May 31, 2014 and 2013 |
|
|
F-3 |
|
Consolidated Statements of Operations for the Years Ended May 31, 2014, 2013 and 2012 |
|
|
F-4 |
|
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended May 31, 2014, 2013 and
2012 |
|
|
F-5 |
|
Consolidated Statements of Cash Flows for the Years Ended May 31, 2014, 2013 and 2012 |
|
|
F-6 |
|
Consolidated Statements of Shareholders Equity for the Years Ended May 31, 2014, 2013 and
2012 |
|
|
F-7 |
|
Notes to Consolidated Financial Statements |
|
|
F-8 |
|
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Texas Industries, Inc.
We have audited the accompanying consolidated balance sheets of Texas
Industries, Inc. and subsidiaries (the Company) as of May 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and shareholders equity for each of the three years in the period
ended May 31, 2014. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Texas
Industries, Inc. and subsidiaries at May 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for each of the three years in the period ended May 31, 2014, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Dallas, Texas
July 1, 2014
F-2
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
In thousands except per share |
|
May 31, 2014 |
|
|
May 31, 2013 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
72,091 |
|
|
$ |
61,296 |
|
Receivablesnet |
|
|
158,350 |
|
|
|
126,922 |
|
Inventories |
|
|
109,494 |
|
|
|
105,054 |
|
Deferred income taxes and prepaid expenses |
|
|
20,503 |
|
|
|
27,294 |
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS |
|
|
360,438 |
|
|
|
320,566 |
|
PROPERTY, PLANT AND EQUIPMENT |
|
|
|
|
|
|
|
|
Land and land improvements |
|
|
174,828 |
|
|
|
172,780 |
|
Buildings |
|
|
51,588 |
|
|
|
50,968 |
|
Machinery and equipment |
|
|
1,661,556 |
|
|
|
1,647,460 |
|
Construction in progress |
|
|
18,302 |
|
|
|
16,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,906,274 |
|
|
|
1,887,850 |
|
Less depreciation and depletion |
|
|
724,683 |
|
|
|
661,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,181,591 |
|
|
|
1,226,396 |
|
OTHER ASSETS |
|
|
|
|
|
|
|
|
Goodwill |
|
|
40,072 |
|
|
|
40,575 |
|
Real estate and investments |
|
|
24,752 |
|
|
|
29,471 |
|
Deferred charges and other assets |
|
|
19,021 |
|
|
|
18,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
83,845 |
|
|
|
88,863 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,625,874 |
|
|
$ |
1,635,825 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
78,154 |
|
|
$ |
69,061 |
|
Accrued interest, compensation and other |
|
|
64,002 |
|
|
|
62,336 |
|
Current portion of long-term debt |
|
|
2,056 |
|
|
|
1,872 |
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
|
144,212 |
|
|
|
133,269 |
|
LONG-TERM DEBT |
|
|
656,282 |
|
|
|
657,935 |
|
OTHER CREDITS |
|
|
81,822 |
|
|
|
91,157 |
|
SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 28,856 and 28,572 shares, respectively |
|
|
28,856 |
|
|
|
28,572 |
|
Additional paid-in capital |
|
|
532,253 |
|
|
|
514,560 |
|
Retained earnings |
|
|
198,238 |
|
|
|
228,686 |
|
Accumulated other comprehensive loss |
|
|
(15,789 |
) |
|
|
(18,354 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
743,558 |
|
|
|
753,464 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,625,874 |
|
|
$ |
1,635,825 |
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
F-3
CONSOLIDATED STATEMENTS OF OPERATIONS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended May 31 |
|
In thousands except per share |
|
2014 |
|
|
2013 |
|
|
2012 |
|
NET SALES |
|
$ |
912,132 |
|
|
$ |
697,081 |
|
|
$ |
594,105 |
|
Cost of products sold |
|
|
811,502 |
|
|
|
629,803 |
|
|
|
560,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
100,630 |
|
|
|
67,278 |
|
|
|
33,532 |
|
Selling, general and administrative |
|
|
74,751 |
|
|
|
67,657 |
|
|
|
68,363 |
|
Merger charges |
|
|
7,690 |
|
|
|
|
|
|
|
|
|
Restructuring charges |
|
|
|
|
|
|
|
|
|
|
3,153 |
|
Interest |
|
|
69,533 |
|
|
|
32,807 |
|
|
|
34,835 |
|
Other income |
|
|
(17,913 |
) |
|
|
(8,926 |
) |
|
|
(73,106 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,061 |
|
|
|
91,538 |
|
|
|
33,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES FROM CONTINUING OPERATIONS |
|
|
(33,431 |
) |
|
|
(24,260 |
) |
|
|
287 |
|
Income tax benefit |
|
|
(1,636 |
) |
|
|
(13,766 |
) |
|
|
(1,641 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) FROM CONTINUING OPERATIONS |
|
$ |
(31,795 |
) |
|
$ |
(10,494 |
) |
|
$ |
1,928 |
|
NET INCOME FROM DISCONTINUED OPERATIONS |
|
|
1,347 |
|
|
|
35,044 |
|
|
|
5,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
$ |
(30,448 |
) |
|
$ |
24,550 |
|
|
$ |
7,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.11 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.07 |
|
Diluted |
|
$ |
(1.11 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
1.24 |
|
|
$ |
0.20 |
|
Diluted |
|
$ |
0.05 |
|
|
$ |
1.24 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.06 |
) |
|
$ |
0.87 |
|
|
$ |
0.27 |
|
Diluted |
|
$ |
(1.06 |
) |
|
$ |
0.87 |
|
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
28,681 |
|
|
|
28,163 |
|
|
|
27,914 |
|
Diluted |
|
|
28,681 |
|
|
|
28,163 |
|
|
|
28,016 |
|
See notes to consolidated financial statements.
F-4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended May 31, |
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
Net income (loss) |
|
$ |
(30,448 |
) |
|
$ |
24,550 |
|
|
$ |
7,476 |
|
Other comprehensive income (loss)
Unrealized actuarial gains (losses) of defined benefit plans net of tax expense (benefit) of $1,516, $3,126 and $1,568,
respectively |
|
|
2,687 |
|
|
|
5,432 |
|
|
|
(13,449 |
) |
Reclassification of actuarial losses (gains) of defined benefit plans, net of tax benefit (expense) of $(68), $409 and $(200),
respectively |
|
|
(122 |
) |
|
|
712 |
|
|
|
1,713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss) |
|
|
2,565 |
|
|
|
6,144 |
|
|
|
(11,736 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
$ |
(27,883 |
) |
|
$ |
30,694 |
|
|
$ |
(4,260 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended May 31, |
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(30,448 |
) |
|
$ |
24,550 |
|
|
$ |
7,476 |
|
Adjustments to reconcile net income (loss) to cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
77,431 |
|
|
|
59,865 |
|
|
|
60,952 |
|
Net gains on asset disposals |
|
|
(8,501 |
) |
|
|
(64,425 |
) |
|
|
(67,610 |
) |
Deferred income tax (benefit) expense |
|
|
2,832 |
|
|
|
3,423 |
|
|
|
(88 |
) |
Stock-based compensation expense |
|
|
6,667 |
|
|
|
9,513 |
|
|
|
2,387 |
|
Othernet |
|
|
(9,289 |
) |
|
|
(6,965 |
) |
|
|
1,223 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Receivablesnet |
|
|
(25,950 |
) |
|
|
(27,138 |
) |
|
|
(13,303 |
) |
Inventories |
|
|
(4,656 |
) |
|
|
21,433 |
|
|
|
10,829 |
|
Prepaid expenses |
|
|
97 |
|
|
|
(238 |
) |
|
|
1,385 |
|
Accounts payable and accrued liabilities |
|
|
17,884 |
|
|
|
13,282 |
|
|
|
6,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
26,067 |
|
|
|
33,300 |
|
|
|
10,174 |
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expendituresexpansions |
|
|
(7,125 |
) |
|
|
(67,426 |
) |
|
|
(72,906 |
) |
Capital expendituresother |
|
|
(34,078 |
) |
|
|
(25,395 |
) |
|
|
(33,430 |
) |
Proceeds from asset disposals |
|
|
11,420 |
|
|
|
18,481 |
|
|
|
66,845 |
|
Investments in life insurance contracts, net |
|
|
4,871 |
|
|
|
2,467 |
|
|
|
3,354 |
|
Othernet |
|
|
|
|
|
|
(102 |
) |
|
|
(245 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by investing activities |
|
|
(24,912 |
) |
|
|
(71,975 |
) |
|
|
(36,382 |
) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Debt payments |
|
|
(1,869 |
) |
|
|
(2,684 |
) |
|
|
(300 |
) |
Debt issuance costs |
|
|
|
|
|
|
|
|
|
|
(1,829 |
) |
Stock option exercises |
|
|
11,509 |
|
|
|
14,628 |
|
|
|
2,023 |
|
Common dividends paid |
|
|
|
|
|
|
|
|
|
|
(2,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by financing activities |
|
|
9,640 |
|
|
|
11,944 |
|
|
|
(2,197 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
10,795 |
|
|
|
(26,731 |
) |
|
|
(28,405 |
) |
Cash and cash equivalents at beginning of period |
|
|
61,296 |
|
|
|
88,027 |
|
|
|
116,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
72,091 |
|
|
$ |
61,296 |
|
|
$ |
88,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended May 31, |
|
In thousands except per share |
|
2014 |
|
|
2013 |
|
|
2012 |
|
COMMON STOCK ($1 par value) |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
|
$ |
28,572 |
|
|
$ |
27,996 |
|
|
$ |
27,887 |
|
Stock issued to employees and non-employee directors related to stock compensation plans |
|
|
284 |
|
|
|
576 |
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
|
28,856 |
|
|
|
28,572 |
|
|
|
27,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL PAID-IN CAPITAL |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
|
|
514,560 |
|
|
|
488,637 |
|
|
|
481,706 |
|
Stock-based compensation |
|
|
6,667 |
|
|
|
11,758 |
|
|
|
5,003 |
|
Excess tax benefits from stock-based compensation |
|
|
(199 |
) |
|
|
|
|
|
|
|
|
Stock issued to employees and non-employee directors related to stock compensation plans |
|
|
11,225 |
|
|
|
14,165 |
|
|
|
1,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
|
532,253 |
|
|
|
514,560 |
|
|
|
488,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RETAINED EARNINGS |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
|
|
228,686 |
|
|
|
204,136 |
|
|
|
198,751 |
|
Net income (loss) |
|
|
(30,448 |
) |
|
|
24,550 |
|
|
|
7,476 |
|
Common dividends paid$.075 per share in 2012 |
|
|
|
|
|
|
|
|
|
|
(2,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
|
198,238 |
|
|
|
228,686 |
|
|
|
204,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED OTHER COMPREHENSIVE LOSS |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
|
|
(18,354 |
) |
|
|
(24,498 |
) |
|
|
(12,762 |
) |
Postretirement benefit obligation adjustmentsnet of tax expense (benefit) of $1,448 in 2014, $3,535 in 2013 and $(1,368) in
2012 |
|
|
2,565 |
|
|
|
6,144 |
|
|
|
(11,736 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
|
(15,789 |
) |
|
|
(18,354 |
) |
|
|
(24,498 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS EQUITY |
|
$ |
743,558 |
|
|
$ |
753,464 |
|
|
$ |
696,271 |
|
See notes to consolidated financial
statements.
F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Texas Industries, Inc. and subsidiaries is a leading supplier of heavy construction materials in the southwestern United States through our three
business segments: cement, aggregates and concrete. Our principal products are gray portland cement, produced and sold through our cement segment; stone, sand and gravel, produced and sold through our aggregates segment; and ready-mix concrete,
produced and sold through our concrete segment. Our facilities are concentrated primarily in Texas, Louisiana and California. When used in these notes the terms Company, we, us or our mean Texas
Industries, Inc. and subsidiaries unless the context indicates otherwise.
We have changed the name of our consumer products
segment to concrete in the first quarter of fiscal 2014. This change impacts only the name of the segment to better reflect the business activity that occurs within the segment, and does not impact or change the financial information
that we report through this segment.
1. Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the accounts of Texas Industries, Inc. and
all subsidiaries except for a joint venture in which the Company has a 40% equity interest. The joint venture is accounted for using the equity method.
Discontinued Operations. The prior period consolidated financial statements reflect discontinued operations as discussed in Note 2.
Estimates. The preparation of financial statements and accompanying notes in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates.
Fair Value of Financial Instruments. The estimated fair value of each class of financial instrument as of May 31, 2014 and 2013 approximates its carrying value except for
long-term debt having fixed interest rates. The fair value of our long-term debt is estimated based on broker/dealer quoted market prices, which are Level 2 inputs. As of May 31, 2014, the fair value of our long-term debt, including the current
portion, was approximately $744.5 million compared to the carrying amount of $658.3 million. As of May 31, 2013, the fair value of our long-term debt, including the current portion, was approximately $723.2 million compared to the carrying
amount of $659.8 million.
Cash and Cash Equivalents. Investments with maturities of less than 90
days when purchased are classified as cash equivalents and consist primarily of money market funds and investment grade commercial paper issued by major corporations and financial institutions.
Receivables. Management evaluates the ability to collect accounts receivable based on a combination of factors. A
reserve for doubtful accounts is maintained based on the length of time receivables are past due or the status of a customers financial condition. If we are aware of a specific customers inability to make required payments, specific
amounts are added to the reserve.
Environmental Liabilities. We are subject to environmental laws
and regulations established by federal, state and local authorities, and make provision for the estimated costs related to compliance when it is probable that an estimable liability has been incurred.
F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Legal Contingencies. We are a defendant in lawsuits which arose in
the normal course of business, and make provision for the estimated loss from any claim or legal proceeding when it is probable that an estimable liability has been incurred.
Inventories. Inventories are stated at the lower of cost or market. We use the last-in, first out (LIFO)
method to value finished products, work in process and raw material inventories excluding natural aggregate inventories. We use the average cost method to value natural aggregate finished goods and raw materials, and parts and supplies, which
includes emission allowance credits. Our natural aggregate inventory includes a reserve against volumes in excess of an average twelve-month period of actual sales.
We recognize the emission allowance credits issued by the regulatory agency (CARB) at zero cost and average them with the cost of additional credits that we purchase from state approved sources.
Long-lived Assets. Management reviews long-lived assets on a facility by facility basis for impairment whenever
changes in circumstances indicate that the carrying amount of the assets may not be recoverable and would record an impairment charge if necessary. Such evaluations compare the carrying amount of an asset to future undiscounted net cash flows
expected to be generated by the asset and are significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors. Estimates of future cash flows reflect managements belief that it operates
in a cyclical industry.
Property, plant and equipment is recorded at cost. Costs incurred to construct certain long-lived assets
include capitalized interest which is amortized over the estimated useful life of the related asset. Interest is capitalized during the construction period of qualified assets based on the average amount of accumulated expenditures and the weighted
average interest rate applicable to borrowings outstanding during the period. If accumulated expenditures exceed applicable borrowings outstanding during the period, capitalized interest is allocated to projects under construction on a pro rata
basis. Provisions for depreciation are computed generally using the straight-line method. Useful lives for our primary operating facilities range from 10 to 25 years with certain cement facility structures having useful lives of 40 years. Provisions
for depletion of mineral deposits are computed on the basis of the estimated quantity of recoverable raw materials. The costs of removing overburden and waste materials to access mineral deposits are referred to as stripping costs. All production
phase stripping costs are recognized as costs of the inventory produced during the period the stripping costs are incurred. Maintenance and repairs are charged to expense as incurred.
Goodwill and Goodwill Impairment. Management tests goodwill for impairment annually by reporting unit in the fourth
quarter of our fiscal year. Management elected optional use of the qualitative assessment provided by the accounting guidance as part of its annual testing. The accounting guidance permits an entity to first perform a qualitative assessment to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If this is concluded to be the case then management would proceed with the quantitative impairment test using a two-step process.
Otherwise, the quantitative impairment test is not required.
The first step of the quantitative impairment test identifies
potential impairment by comparing the fair value of a reporting unit to its carrying value including goodwill. In applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from the reporting
F-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
unit. Similar to the review for impairment of other long-lived assets, the resulting fair value determination is significantly impacted by estimates of future prices for our products, capital
needs, economic trends and other factors. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment
test compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying value of the reporting unit goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in
an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.
Goodwill resulting primarily from the acquisitions of ready-mix operations in Texas and Louisiana and identified with our concrete operations has a carrying value of $40.1 million at May 31, 2014 and $40.6
million at May 31, 2013, all of which is amortizable for income tax purposes. Based on a qualitative assessment performed as of March 31, 2014, it was determined that it was not more likely than not that the fair value of the reporting
unit was less than its carrying value, and therefore, no impairment was indicated.
On March 22, 2013, our
subsidiaries exchanged their expanded shale and clay lightweight aggregates manufacturing business for the ready-mix concrete business of subsidiaries of Trinity Industries, Inc. in east Texas and southwest Arkansas. Pursuant to the agreements, we
transferred our expanded shale and clay manufacturing facilities in Streetman, Texas; Boulder, Colorado and Frazier Park, California; and our DiamondPro® product line in exchange for 42 ready-mix concrete plants stretching from Texarkana to Beaumont in east Texas and in southwestern Arkansas, two aggregate
distribution facilities in Beaumont and Port Arthur, Texas, and related assets. The exchange resulted in the acquisition of ready-mix property, plant and equipment of $25.3 million and $38.4 million in goodwill. These values reflect the fair
value determinations using inputs classified as Level 2 and 3. The goodwill represents the excess of the fair value of the purchase consideration over the net tangible assets acquired in the exchange, and constitutes a combination of factors
including operational synergies, increased vertical integration, and the entrance into new geographical markets. The operating results of the acquired ready-mix operations are reported in our concrete segment.
Income Taxes. Texas Industries, Inc. (the parent company) joins in filing a consolidated return with its subsidiaries
based on federal and certain state tax filing requirements. Certain subsidiaries also file separate state income tax returns. Current and deferred tax expense is allocated among the members of the group based on a stand-alone calculation of the tax
of the individual member. We recognize and classify deferred income taxes using an asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effect of temporary differences between the financial
statements and the tax basis of assets and liabilities, as measured by current enacted tax rates.
We calculate our current and
deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are generally recorded in the year the tax
returns are filed.
The amount of income tax we pay is subject to ongoing audits by federal and state authorities which may result in
proposed assessments. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. We account for these uncertain tax issues using a two-step approach to recognizing and measuring uncertain tax positions taken or expected
to be taken in a tax return. The first step determines if the weight of available evidence indicates
F-10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step measures the tax benefit as
the largest amount that is more than 50% likely to be realized upon ultimate settlement. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, judicial rulings, refinement of
estimates, or realization of earnings or deductions that differ from our estimates. To the extent that the final outcome of these matters differs from the amounts recorded, such differences generally will impact our provision for income taxes in the
period in which such a determination is made. Our provisions for income taxes include the impact of reserve provisions and changes to reserves that are considered appropriate including related interest and penalties.
Management reviews our deferred tax position and in particular our deferred tax assets whenever circumstances indicate that the assets may not be
realized in the future and recognizes a valuation allowance unless such deferred tax assets were deemed more likely than not to be recoverable. The ultimate realization of these deferred tax assets is dependent upon various factors including the
generation of taxable income during future periods. In determining the need for a valuation allowance, we consider such factors as historical earnings, the reversal of existing temporary differences, prior taxable income (if carryback is permitted
under the tax law), and prudent and feasible tax planning strategies, and future taxable income. In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the
deferred tax assets valuation allowance would be charged to earnings in the period in which we make such a determination. If we later determine that it is more likely than not that the net deferred tax assets would be realized, we would reverse the
applicable portion of the previously provided valuation allowance as an adjustment to earnings at such time. See further discussion in Note 9.
Real Estate and Investments. Surplus real estate and real estate acquired for development of high quality industrial, office or multi-use parks totaled $6.5 million at
May 31, 2014 and $7.3 million at May 31, 2013.
Investments include life insurance contracts purchased in
connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $1.1 million (net of distributions of $97.9 million plus accrued interest and fees) at May 31, 2014 and $1.1 million (net of
distributions of $99.8 million plus accrued interest and fees) at May 31, 2013. We can elect to receive distributions chargeable against the cash surrender value of the policies in the form of borrowings or withdrawals or we can elect to
surrender the policies and receive their net cash surrender value.
Investment in Joint Venture. We own a
40% equity interest in a joint venture based in Waco, Texas that operates ready-mix plants serving the central Texas market. The day to day business operations are managed by the 60% partner in the venture. We supply cement to the joint venture. The
debt of the joint venture is secured by the underlying assets of the joint venture. In addition, our partner has guaranteed 100% of the debt of the joint venture. We were released in the second quarter of fiscal year 2014 from our 50% guarantee of
the debt of the joint venture. See further discussion of joint venture debt under Guarantee of Joint Venture Debt in Note 4.
Our investment totaled $17.1 million at May 31, 2014 and $14.9 million at May 31, 2013. Our equity in income from the joint venture
was $3.8 million in 2014 and $2.7 million in 2013.
F-11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Deferred Charges and Other Assets. Deferred charges and other assets
totaled $19.0 million at May 31, 2014 and $18.8 million at May 31, 2013, of which debt issuance costs totaled $9.2 million at May 31, 2014 and $11.1 million at May 31, 2013. The costs are amortized over the
term of the related debt. Other assets include $5.6 million and $2.9 million representing various miscellaneous receivables as of May 31, 2014, and 2013, respectively.
Deferred Taxes and Other Credits. Other credits totaled $81.8 million at May 31, 2014 and $91.2 million at
May 31, 2013 and are composed primarily of liabilities related to our retirement plans, deferred compensation agreements, deferred income taxes and asset retirement obligations.
Asset Retirement Obligations. We record a liability for legal obligations associated with the retirement of our
long-lived assets in the period in which it is incurred if an estimate of fair value of the obligation can be made. The discounted fair value of the obligations incurred in each period are added to the carrying amount of the associated assets and
depreciated over the lives of the assets. The liability is accreted at the end of each period through a charge to operating expense. A gain or loss on settlement is recognized if the obligation is settled for other than the carrying amount of the
liability.
We incur legal obligations for asset retirement as part of our normal operations related to land reclamation, plant
removal and Resource Conservation and Recovery Act closures. Determining the amount of an asset retirement liability requires estimating the future cost of contracting with third parties to perform the obligation. The estimate is significantly
impacted by, among other considerations, managements assumptions regarding the scope of the work required, labor costs, inflation rates, market-risk premiums and closure dates.
Changes in asset retirement obligations are as follows:
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
Balance at beginning of period |
|
$ |
2,653 |
|
|
$ |
3,879 |
|
Additions |
|
|
83 |
|
|
|
80 |
|
Accretion expense |
|
|
246 |
|
|
|
175 |
|
Settlements |
|
|
(354 |
) |
|
|
(1,481 |
) |
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
2,628 |
|
|
$ |
2,653 |
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Loss. Amounts recognized in accumulated other
comprehensive loss represent adjustments related to a defined benefit retirement plan and a postretirement health benefit plan covering approximately 600 employees and retirees of our California cement subsidiary. The amounts totaled
$15.8 million (net of tax of $1.0 million) at May 31, 2014 and $18.4 million (net of tax of $2.5 million) at May 31, 2013. The pre-tax reclassification for the fiscal years ended May 31, 2014, 2013, and 2012 were
less than $(0.2) million, $1.1 million and $1.9 million, respectively, and affected salaries and employee benefits expense which is allocated to costs of products sold and to selling, general, and administrative in the consolidated
statement of operations.
Net Sales. Sales are recognized when title has transferred and products
are delivered. We include delivery fees in the amount we bill customers to the extent needed to recover our cost of freight and delivery. Net sales are presented as revenues and include these delivery fees.
F-12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Other Income. Other income includes gains from the sale or exchange
of operating assets, royalties, joint venture income and emission credits. Other income in total was $17.9 million in 2014, $8.9 million in 2013 and $73.1 million in 2012.
In July 2011, we entered into an asset exchange transaction with CEMEX USA in which we acquired three ready-mix concrete plants and a sand and
gravel plant that serve the Austin, Texas metropolitan market. In exchange, we transferred to CEMEX USA seven ready-mix concrete plants in the Houston, Texas market, and we designated four non-operating ready-mix plant sites in the Houston area as
surplus real estate. The exchange resulted in the acquisition of ready-mix and aggregate property, plant and equipment of $6.1 million and the recognition of a gain of $1.6 million in 2012. The gain from the transaction and the operating
results of the acquired ready-mix operations are reported in our concrete segment, and the operating results of the acquired sand and gravel operations are reported in our aggregates segment.
In November 2011, we entered into a joint venture agreement with Ratliff Ready-Mix, L.P., a ready-mix operator based in Waco, Texas. We contributed
seven of our central Texas ready-mix plants and certain related assets to the joint venture. The fair value of our 40% equity interest in the joint venture at the time of the formation was $13.0 million which resulted in the recognition of a gain of
$8.9 million in 2012. The gain from the transaction and our proportional share of the joint venture operating results are reported in our concrete segment.
In April 2012, we sold our Texas-based package products operations to Bonsal American, a unit of Oldcastle, Inc. The transaction included five production facilities that serve the Texas market from the Dallas-Fort
Worth area of north Texas to the Houston area of south Texas and extending through Austin and central Texas. The sale resulted in the recognition of a gain of $30.9 million in 2012. As a part of the agreement, we have entered into a long-term
cement supply agreement with Bonsal American and will continue to produce and sell packaged cement and masonry cements in the Texas region. The gain from the transaction is reported in our concrete segment.
In April 2012, we sold our aggregate rail distribution terminal and associated assets located in Stafford, Texas to Lex Missouri City, LP
which resulted in the recognition of a gain of $20.8 million in 2012 that is reported in our aggregates segment.
Routine sales of
surplus operating assets and real estate resulted in gains of $8.5 million in 2014, $2.8 million in 2013, and $5.4 million in 2012. We have sold emissions credits associated with our Crestmore cement plant in Riverside, California resulting in
gains of $2.5 million in 2012.
In addition, we have entered into various oil and gas lease agreements on property we own in north
Texas. The terms of the agreements include the payment of a lease bonus and royalties on any oil and gas produced on the properties. Lease bonus payments and royalties on oil and gas produced resulted in income of $1.1 million in 2014, $0.4 million
in 2013 and $1.3 million in 2012. We cannot predict what the level of future royalties, if any, will be.
Merger
Charges. Merger related expenses were $7.7 million at May 31, 2014. See Note 12.
Restructuring
Charges. We recorded restructuring charges of $3.2 million in 2012. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Financial-based Incentive Plans. All personnel employed as of
May 31 and not participating in a production-based incentive awards plan share in our pretax income for the year then ended based on predetermined formulas. The duration of most of the plans is one year. Certain executives are additionally
covered under a three-year plan. All plans are subject to annual review by the Compensation Committee of the Board of Directors. The amount of financial-based incentive compensation included in selling, general and administrative expense was $1.3
million in 2014, $1.5 million in 2013 and $5.0 million in 2012.
Stock-based Compensation. We have
provided stock-based compensation to employees and non-employee directors in the form of non-qualified and incentive stock options, restricted stock, stock appreciation rights, deferred compensation agreements and stock awards. The Company began
issuing restricted stock units subject to service-based only conditions to employees in fiscal year 2013. In addition, the Company issued restricted stock units subject to market- and service-based conditions to employees during the fiscal year
ended May 31, 2014.
We use the Black-Scholes option-pricing model to determine the fair value of stock options granted as
of the date of grant. Options with graded vesting are valued as single awards and the related compensation cost is recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for
estimated forfeitures.
We use the closing stock price on the date of grant to determine the fair value of restricted stock units
subject to service-based only conditions. The restricted stock units subject to service-based only conditions cliff vest at the end of a four year term, and we valued them as a single award with the related compensation cost recognized using a
straight-line attribution method over the vesting period adjusted for estimated forfeitures.
We use a Monte Carlo simulation to
determine the fair value of restricted stock units subject to market- and service-based conditions. The restricted stock units subject to market- and service-based conditions cliff vest at the end of a four year term subject to the achievement of
market conditions, and we valued them as a single award with the related compensation cost recognized using a straight-line attribution method over the vesting period adjusted for estimated forfeitures.
We used the closing stock price on the date of grant to determine the fair value of stock awards and restricted stock awards. Prior to our
executing the January 4, 2013 stock appreciation rights agreement and the deferred compensation agreements, we recorded a liability, which was included in other credits, for deferred compensation agreements and stock awards expected to be
settled in cash, based on their fair value at the end of each period until such awards are paid. See further discussion in Note 7.
Earnings Per Share (EPS). Income or loss allocated to common shareholders adjusts net income or loss for
the participation in earnings of unvested restricted shares outstanding.
Basic weighted-average number of common shares
outstanding during the period includes contingently issuable shares and excludes outstanding unvested restricted shares. Contingently issuable shares outstanding at May 31, 2014, 2013 and 2012 relate to deferred compensation agreements in which
directors elected to defer their fees. The deferred compensation is denominated in shares of our common stock and issued in accordance with the terms of the agreement subsequent to retirement or separation from us. The shares are considered
contingently issuable because the director has an unconditional right to the shares to be issued.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Diluted weighted-average number of common shares outstanding during the period adjusts basic
weighted-average shares for the dilutive effect of stock options, restricted shares, restricted stock units and awards.
Basic and
Diluted EPS are calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands except per share |
|
2014 |
|
|
2013 |
|
|
2012 |
|
Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations |
|
$ |
(31,795 |
) |
|
$ |
(10,494 |
) |
|
$ |
1,928 |
|
Net income from discontinued operations |
|
|
1,347 |
|
|
|
35,044 |
|
|
|
5,548 |
|
Unvested restricted share and unit participation |
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) allocated to common shareholders |
|
$ |
(30,448 |
) |
|
$ |
24,550 |
|
|
$ |
7,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
28,681 |
|
|
|
28,175 |
|
|
|
27,927 |
|
Contingently issuable shares |
|
|
5 |
|
|
|
4 |
|
|
|
2 |
|
Unvested restricted shares |
|
|
(5 |
) |
|
|
(16 |
) |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares |
|
|
28,681 |
|
|
|
28,163 |
|
|
|
27,914 |
|
Stock option, restricted share, and award dilution |
|
|
|
|
|
|
|
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average shares(1) |
|
|
28,681 |
|
|
|
28,163 |
|
|
|
28,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.11 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.07 |
|
Diluted |
|
$ |
(1.11 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
1.24 |
|
|
$ |
0.20 |
|
Diluted |
|
$ |
0.05 |
|
|
$ |
1.24 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(1.06 |
) |
|
$ |
0.87 |
|
|
$ |
0.27 |
|
Diluted |
|
$ |
(1.06 |
) |
|
$ |
0.87 |
|
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Shares excluded due to antidilutive effect of stock options, restricted shares, restricted stock units and
awards |
|
|
595 |
|
|
|
807 |
|
|
|
1,280 |
|
Recently Issued Accounting Guidance. In July 2013, the Financial Accounting Standards
Board (FASB) issued new accounting guidance on the presentation of unrecognized tax benefits. This new guidance requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax
asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting
date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity
does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The new guidance becomes
effective for us in our first quarter of fiscal 2015 with earlier adoption permitted, and should be applied prospectively with retroactive application permitted. We are currently evaluating the impact of the new guidance, and do not expect it to
have a material effect on our consolidated financial statements.
F-15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
In April 2014, the FASB issued new guidance which changes the criteria for determining which
disposals can be presented as discontinued operations and modifies related disclosure requirements. The new guidance is effective for annual and interim periods beginning after December 15, 2014. We are currently evaluating the impact of the
new guidance, and its effect on our consolidated financial statements will depend on the nature, terms and size of business disposals completed after the effective date.
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, (ASU 2014-09) which requires an entity to recognize the amount of revenue to which
it expects to be entitled for the transfer of promised goods or services to customers. This guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on June 1,
2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the impact of the new guidance.
2. Discontinued Operations
On March 22, 2013, our subsidiaries exchanged their expanded shale and clay lightweight aggregates manufacturing business for the ready-mix concrete business of subsidiaries of Trinity Industries, Inc. in east
Texas and southwest Arkansas. Pursuant to the agreements, we transferred our expanded shale and clay manufacturing facilities in Streetman, Texas; Boulder, Colorado and Frazier Park, California; and our DiamondPro® product line in exchange for 42 ready-mix concrete plants stretching from Texarkana to Beaumont in east Texas and in
southwestern Arkansas, two aggregate distribution facilities in Beaumont and Port Arthur, Texas, $8.5 million in cash, and related assets. The pre-tax gain of $41.1 million resulting from the sale of the expanded shale and clay lightweight
aggregates manufacturing business along with its operational results are reported as discontinued operations in fiscal year 2013.
The
following table summarizes the revenue, earnings before and net of income tax expense on all discontinued operations for the years ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
Revenue from discontinued operations |
|
$ |
|
|
|
$ |
47,484 |
|
|
$ |
52,898 |
|
Income from discontinued operations, before taxes (2013 includes gain on sale of discontinued operations of $41.1 million) |
|
$ |
2,072 |
|
|
$ |
52,574 |
|
|
$ |
8,187 |
|
Income from discontinued operations, net of taxes |
|
$ |
1,347 |
|
|
$ |
35,044 |
|
|
$ |
5,548 |
|
3. Working Capital
Working capital totaled $216.2 million at May 31, 2014 compared to $187.3 million at May 31, 2013. Selected components of working capital are summarized below.
Receivables consist of:
|
|
|
|
|
|
|
|
|
|
|
May 31, |
|
|
May 31, |
|
In thousands |
|
2014 |
|
|
2013 |
|
Trade notes and accounts receivable |
|
$ |
157,442 |
|
|
$ |
126,070 |
|
Other |
|
|
908 |
|
|
|
852 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
158,350 |
|
|
$ |
126,922 |
|
|
|
|
|
|
|
|
|
|
F-16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Trade notes and accounts receivable are presented net of allowances for doubtful receivables of
$2.0 million at May 31, 2014 and $2.3 million at May 31, 2013. Provisions for bad debts charged to expense were $2.0 million in 2014, $1.0 million in 2013 and $0.5 million in 2012.
Inventories consist of:
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
Finished products |
|
$ |
8,245 |
|
|
$ |
5,267 |
|
Work in process |
|
|
9,094 |
|
|
|
8,630 |
|
Raw materials |
|
|
20,877 |
|
|
|
20,090 |
|
|
|
|
|
|
|
|
|
|
Total inventories at LIFO cost |
|
|
38,216 |
|
|
|
33,987 |
|
Natural Aggregates: |
|
|
|
|
|
|
|
|
Finished products |
|
|
20,780 |
|
|
|
21,836 |
|
Raw materials |
|
|
477 |
|
|
|
378 |
|
Parts and supplies, and other |
|
|
50,021 |
|
|
|
48,853 |
|
|
|
|
|
|
|
|
|
|
Total inventories at average cost |
|
|
71,278 |
|
|
|
71,067 |
|
|
|
|
|
|
|
|
|
|
Total inventories |
|
$ |
109,494 |
|
|
$ |
105,054 |
|
|
|
|
|
|
|
|
|
|
All inventories are stated at the lower of cost or market. Finished products, work in process and raw material
inventories, excluding natural aggregate inventories, are valued using the last-in, first-out (LIFO) method. Natural aggregate finished products and raw material inventories, parts and supplies inventories, and emission allowance credits
are valued using the average cost method. If the average cost method (which approximates current replacement cost) had been used for all of these inventories, inventory values would have been higher by $21.9 million as of May 31, 2014 and $20.7
million as of May 31, 2013. During each of the three years in the period ended May 31, 2014 certain inventory quantities were reduced, which resulted in liquidations of LIFO inventory layers carried at lower costs prevailing in prior
years. The effect of the liquidations was to decrease cost of products sold by approximately $0.5 million in 2014, $1.3 million in 2013, $3.9 million 2012.
Accrued interest, compensation and other consist of:
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
Interest |
|
$ |
17,707 |
|
|
$ |
17,801 |
|
Compensation and employee benefits |
|
|
18,370 |
|
|
|
15,439 |
|
Casualty insurance claims |
|
|
17,520 |
|
|
|
15,890 |
|
Income taxes |
|
|
2,091 |
|
|
|
4,666 |
|
Property taxes and other |
|
|
8,314 |
|
|
|
8,540 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
64,002 |
|
|
$ |
62,336 |
|
|
|
|
|
|
|
|
|
|
F-17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
4. Long-Term Debt
Long-term debt consists of:
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
Senior secured revolving credit facility expiring in 2016 |
|
$ |
|
|
|
$ |
|
|
9.25% Senior notes due 2020 issued August 10, 2010 at par value |
|
|
650,000 |
|
|
|
650,000 |
|
Other |
|
|
6,121 |
|
|
|
7,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
656,121 |
|
|
|
657,505 |
|
Capital lease obligations |
|
|
1,972 |
|
|
|
2,057 |
|
Other contract obligations |
|
|
245 |
|
|
|
245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
658,338 |
|
|
|
659,807 |
|
Less current portion |
|
|
2,056 |
|
|
|
1,872 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
656,282 |
|
|
$ |
657,935 |
|
|
|
|
|
|
|
|
|
|
Senior Secured Revolving Credit Facility. On August 25, 2011, we amended and
restated our credit agreement and the associated security agreement. The credit agreement continues to provide for a $200 million senior secured revolving credit facility with a $50 million sub-limit for letters of credit and a $15 million sub-limit
for swing line loans. The credit facility matures on August 25, 2016. Amounts drawn under the credit facility bear annual interest either at the LIBOR rate plus a margin of 2.00% to 2.75% or at a base rate plus a margin of 1.0% to 1.75%. The
base rate is the higher of the federal funds rate plus 0.5%, the prime rate established by Bank of America, N.A. or the one-month LIBOR rate plus 1.0%. The interest rate margins are determined based on the Companys fixed charge coverage ratio.
The commitment fee calculated on the unused portion of the credit facility ranges from 0.375% to 0.50% per year based on the Companys average daily loan balance. We may terminate the credit facility at any time.
The amount that can be borrowed under the credit facility is limited to an amount called the borrowing base. The borrowing base may be less than
the $200 million stated principal amount of the credit facility. The borrowing base is calculated based on the value of our accounts receivable, inventory and mobile equipment in which the lenders have a security interest. In addition, by mortgaging
tracts of its real property to the lenders, the Company may increase the borrowing base by an amount beginning at $20 million and declining to $10.7 million at the maturity of the credit facility.
The borrowing base under the agreement was $159.8 million as of May 31, 2014. We are not required to maintain any financial ratios or
covenants unless an event of default occurs or the unused portion of the borrowing base is less than $25 million, in which case we must maintain a fixed charge coverage ratio of at least 1.0 to 1.0. At May 31, 2014, our fixed charge coverage
ratio was 1.14 to 1.0. No borrowings were outstanding at May 31, 2014; however, $32.2 million of the borrowing base was used to support letters of credit. As a result, the maximum amount we could borrow as of May 31, 2014 was $127.6
million.
All of our consolidated subsidiaries have guaranteed our obligations under the credit facility. The credit facility is secured
by first priority security interests in all or most of our existing and future consolidated accounts, inventory, equipment, intellectual property and other personal property, and in all of our equity interests in present and future domestic
subsidiaries and 66% of the equity interest in any future foreign subsidiaries, if any.
F-18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The credit agreement contains a number of covenants restricting, among other things, prepayment or
redemption of our senior notes, distributions and dividends on and repurchases of our capital stock, acquisitions and investments, indebtedness, liens and affiliate transactions. We are permitted to pay cash dividends on our common stock as long as
the credit facility is not in default, the fixed charge coverage ratio is greater than 1.0 to 1.0 and borrowing availability under the borrowing base is more than $40 million. When our fixed charge coverage ratio is less than 1.0 to 1.0, we are
permitted to pay cash dividends on our common stock not to exceed $2.5 million in any single instance (which shall not occur more than four times in any calendar year) or $10 million in the aggregate during any calendar year as long as the
credit facility is not in default and borrowing availability is more than the greater of $60 million or 30% of the aggregate commitments of all lenders. For this purpose, borrowing availability is equal to the borrowing base less the amount of
outstanding borrowings less the amount used to support letters of credit. We were in compliance with all of our loan covenants as of May 31, 2014.
9.25% Senior Notes. On August 10, 2010, we sold $650 million aggregate principal amount of our 9.25% senior notes due 2020 at an offering price of 100%. The notes were issued
under an indenture dated as of August 10, 2010 (the Indenture). The net proceeds were used to purchase or redeem all of our outstanding 7.25% senior notes due 2013, with additional proceeds available for general corporate
purposes.
At May 31, 2014, we had $650 million aggregate principal amount of 9.25% senior notes outstanding. Under the
Indenture, at any time on or prior to August 15, 2015, we may redeem the notes at a redemption price equal to the sum of the principal amount thereof, plus accrued interest and a make-whole premium. On and after August 15, 2015, we may
redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest if redeemed during the twelve-month period beginning on August 15 of the years indicated
below:
|
|
|
|
|
Year |
|
Percentage |
|
2015 |
|
|
104.625 |
% |
2016 |
|
|
103.083 |
% |
2017 |
|
|
101.542 |
% |
2018 and thereafter |
|
|
100.000 |
% |
We may be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus
accrued interest, if we experience a change of control.
All of our consolidated subsidiaries are 100% owned and provide joint and
several, full and unconditional guarantees of the 9.25% senior notes. There are no significant restrictions on the parent companys ability to obtain funds from any of the guarantor subsidiaries in the form of a dividend or loan. Additionally,
there are no significant restrictions on the guarantor subsidiarys ability to obtain funds from the parent company or its direct or indirect subsidiaries. The Indenture governing the notes contains affirmative and negative covenants that,
among other things, limit our and our subsidiaries ability to pay dividends on or redeem or repurchase stock, make certain investments, incur additional debt or sell preferred stock, create liens, restrict dividend payments
or other payments from subsidiaries to the Company, engage in consolidations and mergers or sell or transfer assets, engage in sale and leaseback transactions, engage in transactions with affiliates, and sell stock in our
subsidiaries. We are not required to maintain any affirmative financial ratios or covenants. We were in compliance with all of our covenants as of May 31, 2014.
F-19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Other. Principal payments due on long-term debt, excluding capital
lease and other contract obligations, during each of the five years subsequent to May 31, 2014 are $2.1 million, $1.9 million, $1.7 million, $0.4 million and $0.1 million. Total amount of interest incurred was $69.5 million in 2014, $69.3
million in 2013 and $68.5 million in 2012, of which none in 2014, $36.5 million in 2013 and $33.7 million in 2012 was capitalized. The total amount of interest paid in cash was $67.7 million in 2014, $66.4 million in 2013 and $66.3 million in
2012.
Guarantee of Joint Venture Debt. We have been released from our 50% guarantee of the joint
ventures debt, which was refinanced in November, 2013. See further discussion of the joint venture under Investment in Joint Venture in Note 1.
5. Commitments
Operating Leases. We lease
certain mobile and other equipment, office space and other items which in the normal course of business may be renewed or replaced by subsequent leases. Total expense for such operating leases (other than for mineral rights) was $20.9 million in
2014, $15.6 million in 2013 and $14.5 million in 2012. Total future payments under non-cancelable operating leases with an initial or remaining term of more than one year were $72.0 million at May 31, 2014. Estimated lease payments for
each of the five succeeding years are $17.7 million, $14.0 million, $14.6 million, $10.1 million and $7.3 million.
Purchase
Obligations. We purchase coal for use in our operations under long-term supply contracts that, in certain cases, require minimum transportation charges. In addition, we purchase mining services at our north Texas cement
plant under a long-term contract that contains provisions for minimum payments. We expect to utilize these required amounts of material and services in the normal course of business operations. Total cost incurred under contracts requiring minimum
purchases or payments was $6.3 million in 2014, $6.9 million in 2013 and $16.1 million in 2012. Total future minimum payments under the contracts were $20.5 million at May 31, 2014. Estimated minimum payments for each of the five succeeding
years are $6.3 million, $6.3 million, $6.3 million, $6.3 million and $1.6 million.
We entered into a long-term contract with a
power supplier during the construction of our Oro Grande, California cement plant which included the construction of certain power facilities at the plant. We recognized a capital lease obligation of $2.4 million related to payment obligations under
the power supply contract related to these facilities. The total future commitment under the contract, including maintenance services to be provided by the power supplier, related to these facilities was $4.9 million at May 31, 2014. Payments
for each of the five succeeding years are $0.4 million per year.
6. Shareholders Equity
There are authorized 100,000 shares of Cumulative Preferred Stock, no par value, of which 20,000 shares are designated $5 Cumulative Preferred Stock
(Voting), redeemable at $105 per share and entitled to $100 per share upon dissolution. An additional 40,000 shares are designated Series B Junior Participating Preferred Stock. The Series B Preferred Stock is not redeemable and ranks, with respect
to the payment of dividends and the distribution of assets, junior to (i) all other series of the Preferred Stock unless the terms of any other series shall provide otherwise and (ii) the $5 Cumulative Preferred Stock. No shares of $5
Cumulative Preferred Stock or Series B Junior Participating Preferred Stock were outstanding as of May 31, 2014.
F-20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
7. Stock-Based Compensation Plans
The Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan (the 2004 Plan) provides that, in addition to other types of awards,
non-qualified and incentive stock options to purchase Common Stock may be granted to employees and non-employee directors at market prices at date of grant. This plan also provides for the granting of restricted stock units (RSUs).
Options become exercisable in installments beginning one year after the date of grant and expire 10 years after the date of grant. The
fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. Options with graded vesting are valued as single awards and the compensation cost recognized using a straight-line attribution method
over the shorter of the vesting period or required service period adjusted for estimated forfeitures. No options were granted during 2014 or 2013.
The following table sets forth the information about the weighted-average grant date fair value of options granted during the fiscal year ended May 31, 2012 and the weighted-average assumptions used for such
grants.
|
|
|
|
|
|
|
2012 |
|
Weighted average grant date fair value |
|
$ |
13.80 |
|
Weighted average assumptions used: |
|
|
|
|
Expected volatility |
|
|
.450 |
|
Expected option term in years |
|
|
6.7 |
|
Risk-free interest rate |
|
|
1.31 |
% |
Expected dividend yield |
|
|
.02 |
% |
Expected volatility is based on an analysis of historical volatility of our common stock. Expected option term is the period of
time that options granted are expected to be outstanding and is derived by analyzing the historical option exercise experience of our optionees. Risk-free interest rate is determined using the implied yield currently available for zero coupon U.S.
treasury issues with a remaining term equal to the expected term of the option. Expected dividend yield is based on the approved annual dividend rate in effect and the market price of our common stock at the time of grant.
A summary of option transactions for the three years ended May 31, 2014, follows:
|
|
|
|
|
|
|
|
|
|
|
Shares Under Option |
|
|
Weighted-Average Option
Price |
|
Outstanding at May 31, 2011 |
|
|
1,972,441 |
|
|
$ |
39.58 |
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
389,850 |
|
|
$ |
29.75 |
|
Exercised |
|
|
(105,269 |
) |
|
$ |
21.44 |
|
Canceled |
|
|
(111,452 |
) |
|
$ |
42.31 |
|
|
|
|
|
|
|
|
|
|
Outstanding at May 31, 2012 |
|
|
2,145,570 |
|
|
$ |
38.54 |
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(560,097 |
) |
|
$ |
32.90 |
|
Canceled |
|
|
(76,940 |
) |
|
$ |
37.72 |
|
|
|
|
|
|
|
|
|
|
Outstanding at May 31, 2013 |
|
|
1,508,533 |
|
|
$ |
40.68 |
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(269,305 |
) |
|
$ |
42.68 |
|
Canceled |
|
|
(30,348 |
) |
|
$ |
62.51 |
|
|
|
|
|
|
|
|
|
|
Outstanding at May 31, 2014 |
|
|
1,208,880 |
|
|
$ |
39.68 |
|
|
|
|
|
|
|
|
|
|
F-21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Options exercisable at May 31 were 827,620 for 2014, 878,423 for 2013, and 1,160,420 for 2012
at a weighted-average option price of $42.34, $45.95 and $42.59 respectively. The following table summarizes information about stock options outstanding as of May 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise Prices |
|
|
|
$16.04 - $29.38 |
|
|
$33.57 - $48.60 |
|
|
$50.63 - $70.18 |
|
Options outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding |
|
|
423,109 |
|
|
|
509,706 |
|
|
|
276,065 |
|
Weighted-average remaining life in years |
|
|
6.6 |
|
|
|
5.1 |
|
|
|
2.52 |
|
Weighted-average exercise price |
|
$ |
27.82 |
|
|
$ |
39.70 |
|
|
$ |
57.83 |
|
Options exercisable |
|
|
|
|
|
|
|
|
|
|
|
|
Shares exercisable |
|
|
223,249 |
|
|
|
328,306 |
|
|
|
276,065 |
|
Weighted-average remaining life in years |
|
|
5.7 |
|
|
|
4.5 |
|
|
|
2.52 |
|
Weighted-average exercise price |
|
$ |
26.43 |
|
|
$ |
40.14 |
|
|
$ |
57.83 |
|
Outstanding options expire on various dates to January 11, 2022. As of May 31, 2014, there were 2,700,239
shares available for future awards under the 2004 Plan.
As of May 31, 2014, the aggregate intrinsic value (the difference in the
closing market price of our common stock of $85.89 and the exercise price to be paid by the optionee) of stock options outstanding was $55.9 million. The aggregate intrinsic value of exercisable stock options at that date was $36.0 million. The
total intrinsic value for options exercised (the difference in the market price of our common stock on the exercise date and the price paid by the optionee to exercise the option) was $8.7 million in 2014, $15.1 million in 2013, and
$1.0 million in 2012.
We began issuing RSUs subject to service-based only conditions to employees in fiscal 2013. In fiscal year
2014, we began issuing RSUs subject to market- and service-based conditions to employees. All RSUs vest at the end of a four year term subject to achievement of market conditions for those RSUs with market conditions. We determine the fair value of
RSUs subject to service-based only conditions using the closing stock price on the date of grant, and value them as a single award with the related compensation cost recognized using a straight-line attribution method over the vesting period,
adjusted for estimated forfeitures. We determine the fair value of RSUs subject to market- and service-based conditions using a Monte Carlo simulation, and value them as a single award with the related compensation cost recognized using a
straight-line attribution method over the vesting period, adjusted for estimated forfeitures. Employees received 85,219 RSUs during the fiscal year ended May 31, 2014 with a closing stock price on the date of grant of $70.68, of which 54,512
are market- and service-based awards and the remaining are service-based awards. The total fair value for the market- and service-based RSUs granted in 2014 is $2,919,970, and the underlying valuation inputs included a risk-free interest rate of
.78% and a range of volatilities of 18% to 71%. Employees received 95,120 service-based RSUs during the fiscal year ended May 31 2013, with a closing stock price on the date of grant of $55.92.
We have provided additional stock-based compensation to employees and directors under stock appreciation rights contracts, deferred compensation
agreements, restricted stock payments and a former stock awards program which was settled during fiscal year 2012. At May 31, 2014, outstanding stock appreciation rights totaled 133,315 shares and deferred compensation agreements to be settled
in common stock totaled 5,495 shares.
F-22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Common stock totaling 3.9 million shares at May 31, 2014 and 4.2 million shares at
May 31, 2013 have been reserved for the settlement of stock-based compensation.
Total stock-based compensation included in
selling, general and administrative expense was $6.7 million in 2014, $9.5 million in 2013 and $2.4 million in 2012. Prior to effects of the January 4, 2013 stock appreciation rights agreement and the deferred compensation
agreements noted below, the impact of changes in our companys stock price on stock-based awards previously accounted for as liabilities increased stock-based compensation $4.7 million in 2013 and reduced stock-based compensation
$2.6 million in 2012.
We did not recognize any tax expense or benefit in our statements of operations for stock-based compensation
in fiscal year 2014. Total tax expense recognized in our statements of operations for stock-based compensation was $1.0 million in fiscal year 2013 and less than $0.1 million in fiscal year 2012. No cash tax benefit was realized for
stock-based compensation in fiscal years 2014, 2013 or 2012.
As of May 31, 2014, the total unrecognized stock-based compensation
expense was $11.2 million. We currently expect to recognize approximately $4.7 million of this expense in fiscal year 2015, $3.9 million in fiscal year 2016, $2.5 million in fiscal year 2017 and $0.1 million in fiscal year
2018.
Effective January 4, 2013, the outstanding stock appreciation rights agreement was extended and modified to require
settlement in shares instead of cash. Also effective December 28, 2012, deferred compensation agreements totaling 101,790 shares were settled with shares. The results of these changes were insignificant to compensation expense. In addition, as
a result of the changes, the Company no longer experiences volatility in compensation expense due to the changes in the Companys stock price.
8. Retirement Plans
Defined Benefit Plans. Approximately 600 employees and retirees of our subsidiary, Riverside Cement Company, are
covered by a defined benefit pension plan and a postretirement health benefit plan. In addition, substantially all of our executive and certain managerial employees are covered by a series of financial security plans that are non-qualified defined
benefit plans. The financial security plans require deferral of a portion of a participants salary and provide retirement, death and disability benefits to participants. We use a measurement date of May 31 for each of our pension and
postretirement benefit plans.
The Riverside defined benefit pension plan (Pension Plan) was amended during the first
quarter of fiscal year 2013. This amendment provides that all benefit accruals under the Pension Plan shall cease effective December 31, 2012 and the Pension Plan was frozen as of that date. The amendment was designed to reduce future pension
costs and provide that, effective December 31, 2012, all future benefit accruals under the Pension Plan will automatically cease for all participants, and the accrued benefits under the Pension Plan were determined and frozen as of that date.
The Riverside postretirement health benefit plan (Benefit Plan) was amended effective January 1, 2014. This amendment
discontinued medical coverage for all retirees and the subsidy for Medicare eligible retirees. The Benefit Plan continues to provide a subsidy to retirees not eligible for Medicare.
F-23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Expenses associated with our defined benefit pension plan, postretirement health benefit plan, and
financial security plans are included in the computation of total employee benefit cost, which is allocated to cost of products sold and to selling, general, and administrative in the consolidated statements of operations.
The pension and other benefit obligations recognized on our consolidated balance sheets totaled $71.7 million at May 31, 2014 and
$77.1 million at May 31, 2013, of which $3.9 million at May 31, 2014 and $3.8 million at May 31, 2013 were classified as current liabilities.
The cumulative postretirement benefit plan adjustment recognized as other comprehensive loss on our consolidated balance sheets totaled $15.8 million (net of tax of $1.0 million) at May 31, 2014 and
$18.4 million (net of tax of $2.5 million) at May 31, 2013.
The pretax changes in accumulated other comprehensive loss
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits |
|
|
Other Benefits |
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Net actuarial loss at beginning of year |
|
$ |
21,120 |
|
|
$ |
28,968 |
|
|
$ |
2,460 |
|
|
$ |
5,066 |
|
Amortization of actuarial loss |
|
|
(615 |
) |
|
|
(1,381 |
) |
|
|
(226 |
) |
|
|
(515 |
) |
Current period net actuarial loss (gain) |
|
|
120 |
|
|
|
(6,467 |
) |
|
|
(4,323 |
) |
|
|
(2,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss at the end of year |
|
$ |
20,625 |
|
|
$ |
21,120 |
|
|
$ |
(2,089 |
) |
|
$ |
2,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net prior service credit at beginning of year |
|
$ |
|
|
|
$ |
|
|
|
$ |
(2,770 |
) |
|
$ |
(3,545 |
) |
Amortization of prior service credit |
|
|
|
|
|
|
|
|
|
|
1,031 |
|
|
|
775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net prior service credit at the end of year |
|
$ |
|
|
|
$ |
|
|
|
$ |
(1,739 |
) |
|
$ |
(2,770 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The pretax amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic
postretirement benefit cost (credit) in 2015 are as follows:
|
|
|
|
|
|
|
|
|
In thousands |
|
Pension Benefits |
|
|
Other Benefits |
|
Net actuarial loss |
|
$ |
664 |
|
|
$ |
279 |
|
Prior service credit |
|
|
|
|
|
|
(1,388 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
664 |
|
|
$ |
(1,109 |
) |
|
|
|
|
|
|
|
|
|
Riverside Defined Benefit Plans. The amount of the defined benefit pension plan and
postretirement health benefit plan expense for the fiscal year ended May 31 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Pension Benefit |
|
|
Health Benefit |
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
|
2014 |
|
|
2013 |
|
|
2012 |
|
Service cost |
|
$ |
|
|
|
$ |
339 |
|
|
$ |
537 |
|
|
$ |
73 |
|
|
$ |
106 |
|
|
$ |
98 |
|
Interest cost |
|
|
2,733 |
|
|
|
2,613 |
|
|
|
3,040 |
|
|
|
196 |
|
|
|
352 |
|
|
|
415 |
|
Expected return on plan assets |
|
|
(3,404 |
) |
|
|
(3,059 |
) |
|
|
(3,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,031 |
) |
|
|
(775 |
) |
|
|
(775 |
) |
Amortization of net actuarial loss |
|
|
615 |
|
|
|
1,381 |
|
|
|
1,722 |
|
|
|
226 |
|
|
|
515 |
|
|
|
566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(56 |
) |
|
$ |
1,274 |
|
|
$ |
2,191 |
|
|
$ |
(536 |
) |
|
$ |
198 |
|
|
$ |
304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average assumptions used to determine net cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed discount rate |
|
|
4.50 |
% |
|
|
3.90 |
% |
|
|
5.35 |
% |
|
|
4.55 |
% |
|
|
4.35 |
% |
|
|
5.35 |
% |
Assumed long-term rate of return on pension plan assets |
|
|
7.30 |
% |
|
|
7.30 |
% |
|
|
7.60 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Average long-term pay progression |
|
|
N/A |
|
|
|
3.00 |
% |
|
|
3.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
F-24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Unrecognized prior service costs and credits and actuarial gains or losses for these plans are
recognized in a systematic manner over the remaining service periods of active employees expected to receive benefits under these plans.
We contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws plus such additional amounts as
are considered appropriate. We expect to make contributions of $2.7 million in 2015.
Obligation and asset data for the defined benefit
pension plan and postretirement health benefit plan at May 31 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Pension Benefit |
|
|
Health Benefit |
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Change in projected benefit obligation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year |
|
$ |
62,389 |
|
|
$ |
66,121 |
|
|
$ |
6,293 |
|
|
$ |
8,168 |
|
Service cost |
|
|
|
|
|
|
339 |
|
|
|
73 |
|
|
|
106 |
|
Interest cost |
|
|
2,733 |
|
|
|
2,613 |
|
|
|
196 |
|
|
|
352 |
|
Participant contributions |
|
|
|
|
|
|
|
|
|
|
87 |
|
|
|
168 |
|
Amendment/Curtailment |
|
|
|
|
|
|
(2,228 |
) |
|
|
(4,539 |
) |
|
|
|
|
Benefits paid |
|
|
(3,566 |
) |
|
|
(3,511 |
) |
|
|
(218 |
) |
|
|
(410 |
) |
Actuarial loss (gain) |
|
|
1,718 |
|
|
|
(945 |
) |
|
|
235 |
|
|
|
(2,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year |
|
$ |
63,274 |
|
|
$ |
62,389 |
|
|
$ |
2,127 |
|
|
$ |
6,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year |
|
$ |
47,174 |
|
|
$ |
40,028 |
|
|
$ |
|
|
|
$ |
|
|
Actual return on plan assets |
|
|
5,002 |
|
|
|
6,353 |
|
|
|
|
|
|
|
|
|
Employer contributions |
|
|
2,308 |
|
|
|
4,304 |
|
|
|
131 |
|
|
|
241 |
|
Benefits paid |
|
|
(3,566 |
) |
|
|
(3,511 |
) |
|
|
(131 |
) |
|
|
(241 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year |
|
$ |
50,918 |
|
|
$ |
47,174 |
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status at end of year |
|
$ |
(12,356 |
) |
|
$ |
(15,215 |
) |
|
$ |
(2,127 |
) |
|
$ |
(6,293 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average assumptions used to determine benefit obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed discount rate |
|
|
4.40 |
% |
|
|
4.50 |
% |
|
|
4.25 |
% |
|
|
4.55 |
% |
Accumulated benefit obligation for the defined benefit pension plan was $63.3 million at May 31, 2014 and
$62.4 million at May 31, 2013.
The estimated future benefit payments under the defined benefit pension plan for each of the
five succeeding years are $3.5 million, $3.6 million, $3.7 million, $3.8 million and $3.9 million and for the five-year period thereafter an aggregate of $20.0 million.
Authoritative accounting guidance for fair value measures provides a framework for measuring fair value. The framework establishes a three-level
value hierarchy based on the nature of the information used to measure fair value. The fair value of all the defined benefit
F-25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
pension plan assets is based on quoted prices in active markets for identical assets which are considered Level 1 inputs within the hierarchy. The total estimated fair value of the plan
assets at May 31 were as follows:
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
Cash and cash equivalents |
|
$ |
920 |
|
|
$ |
969 |
|
Mutual funds |
|
|
|
|
|
|
|
|
Equity |
|
|
31,088 |
|
|
|
28,713 |
|
Fixed income |
|
|
18,910 |
|
|
|
17,492 |
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year |
|
$ |
50,918 |
|
|
$ |
47,174 |
|
|
|
|
|
|
|
|
|
|
The plan fiduciaries set the long-term strategic investment objectives for the defined benefit pension plan assets.
The objectives include preserving the funded status of the trust and balancing risk and return. Investment performance and plan asset mix are periodically reviewed with external consultants. Plan assets are currently allocated to the fixed income
and equity categories of investments in a manner that varies in the short term, but has a long term objective of averaging approximately 60% in equity securities and 40% in fixed income securities. Within these categories, investments are allocated
to multiple asset classes. The expected long-term rate of return on plan assets of 7.30% for 2014 was determined by considering historical and expected returns for each asset class and the effect of periodic asset rebalancing and, for
underperforming assets, reallocations. The current allocation of plan assets has a long-term historical rate of return that exceeds the plan objectives. While historical returns are not guarantees of future performance, these allocations are
expected to meet the objectives of the plan.
The actual defined benefit pension plan asset allocation at May 31, 2014 and 2013,
and the target asset allocation for 2015, by asset category were as follows
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Plan Assets |
|
2014 |
|
|
2013 |
|
|
Target 2015 |
|
Equity securities |
|
|
61 |
% |
|
|
61 |
% |
|
|
60 |
% |
Fixed income securities |
|
|
39 |
% |
|
|
39 |
% |
|
|
40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
The assumed health care cost trend rate for the next year attributed to all participant age groups is 9% declining
to an ultimate trend rate of 5% in 2022. The effect of increasing or decreasing the health care cost trend rates by one percentage point would increase the health benefit obligation by approximately $48,713 or decrease the health benefit obligation
by approximately $42,036 and increase or decrease the plan expense by approximately $15,000.
The estimated future benefit payments
under the postretirement health benefit plan for each of the five succeeding years are $0.1 million, $0.1 million, $0.1 million, $0.1 million and $0.2 million and for the five-year period thereafter an aggregate of
$0.9 million.
Financial Security Defined Benefit Plans. The amount of financial security plan
benefit expense and the projected financial security plan benefit obligation are determined using assumptions as of the end of the year. The weighted-average discount rate used was 4.35% in 2014 and 4.30% in 2013. Actuarial gains or losses are
recognized when incurred, and therefore, the end of year benefit obligation is the same as the accrued benefit costs recognized in the consolidated balance sheet.
F-26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The financial security defined benefit plans were amended during the second quarter of fiscal year
2013. This amendment provides that effective December 31, 2012, the plans were frozen.
The amount of financial security plan
benefit expense for the year ended May 31 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
Service cost |
|
$ |
2,145 |
|
|
$ |
2,370 |
|
|
$ |
2,147 |
|
Interest cost |
|
|
2,435 |
|
|
|
2,364 |
|
|
|
2,517 |
|
Recognized actuarial loss (gain) |
|
|
888 |
|
|
|
(38 |
) |
|
|
4,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,468 |
|
|
$ |
4,696 |
|
|
$ |
9,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following provides a reconciliation of the financial security plan benefit obligation.
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
Change in projected benefit obligation |
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year |
|
$ |
55,603 |
|
|
$ |
54,230 |
|
Service cost |
|
|
2,145 |
|
|
|
2,370 |
|
Interest cost |
|
|
2,435 |
|
|
|
2,364 |
|
Recognized actuarial loss (gain) |
|
|
888 |
|
|
|
(38 |
) |
Benefits paid |
|
|
(3,826 |
) |
|
|
(3,323 |
) |
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year |
|
$ |
57,245 |
|
|
$ |
55,603 |
|
|
|
|
|
|
|
|
|
|
Funded status at end of year |
|
$ |
(57,245 |
) |
|
$ |
(55,603 |
) |
|
|
|
|
|
|
|
|
|
The financial security plans are unfunded and benefits are paid as they become due. The estimated future benefit
payments under the plans for each of the five succeeding years are $3.8 million, $4.4 million, $4.5 million, $4.5 million and $4.6 million and for the five-year period thereafter an aggregate of $20.8 million.
Defined Contribution Plans. Substantially all of our employees are covered by a series of defined contribution
retirement plans. The amount of expense charged to employee benefit cost for these plans was less than $0.1 million in 2014, $0.5 million in 2013 and $1.2 million in 2012.
9. Income Taxes
The income tax provision (benefit) from continuing
operations are composed of:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
Current |
|
$ |
(2,296 |
) |
|
$ |
(110 |
) |
|
$ |
964 |
|
Deferred |
|
|
660 |
|
|
|
(13,656 |
) |
|
|
(2,605 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,636 |
) |
|
$ |
(13,766 |
) |
|
$ |
(1,641 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
F-27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
A reconciliation of income taxes from continuing operations at the federal statutory rate to the
preceding benefit follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
Taxes at statutory rate |
|
$ |
(11,701 |
) |
|
$ |
(8,491 |
) |
|
$ |
100 |
|
Additional statutory depletion |
|
|
(5,060 |
) |
|
|
(2,967 |
) |
|
|
(2,485 |
) |
State income taxes |
|
|
818 |
|
|
|
(347 |
) |
|
|
519 |
|
Nontaxable insurance benefits |
|
|
(1,694 |
) |
|
|
(1,317 |
) |
|
|
(1,219 |
) |
Stock-based compensation |
|
|
(198 |
) |
|
|
(501 |
) |
|
|
823 |
|
Valuation allowance |
|
|
17,923 |
|
|
|
|
|
|
|
|
|
Othernet |
|
|
(1,724 |
) |
|
|
(143 |
) |
|
|
621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,636 |
) |
|
$ |
(13,766 |
) |
|
$ |
(1,641 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the net deferred tax asset at May 31 are summarized below.
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
Deferred tax assets |
|
|
|
|
|
|
|
|
Deferred compensation |
|
$ |
21,258 |
|
|
$ |
20,832 |
|
Inventory costs |
|
|
3,524 |
|
|
|
11,231 |
|
Accrued expenses not currently tax deductible |
|
|
10,840 |
|
|
|
8,092 |
|
Transaction costs |
|
|
2,837 |
|
|
|
|
|
Pension and other postretirement benefits |
|
|
6,046 |
|
|
|
7,493 |
|
Alternative minimum tax credit carryforward |
|
|
28,808 |
|
|
|
28,808 |
|
Net operating loss carryforward |
|
|
182,252 |
|
|
|
148,020 |
|
Other |
|
|
8,945 |
|
|
|
7,412 |
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
|
264,510 |
|
|
|
231,888 |
|
Valuation allowance |
|
|
(22,141 |
) |
|
|
(3,639 |
) |
|
|
|
|
|
|
|
|
|
Net deferred tax assets |
|
|
242,369 |
|
|
|
228,249 |
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
211,446 |
|
|
|
196,220 |
|
Goodwill |
|
|
1,077 |
|
|
|
457 |
|
Deferred real estate gains |
|
|
22,231 |
|
|
|
20,044 |
|
Other |
|
|
3,939 |
|
|
|
4,824 |
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities |
|
|
238,693 |
|
|
|
221,545 |
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset |
|
|
3,676 |
|
|
|
6,704 |
|
Less current deferred tax asset |
|
|
12,081 |
|
|
|
18,774 |
|
|
|
|
|
|
|
|
|
|
Long-term deferred tax liability |
|
$ |
(8,405 |
) |
|
$ |
(12,070 |
) |
|
|
|
|
|
|
|
|
|
We made income tax payments of $0.7 million in 2014, $0.5 million in 2013 and $0.4 million in 2012, and
received income tax refunds of $0.5 million in 2014, $0.3 million in 2013 and $0.1 million in 2012.
As of May 31,
2014, we had an alternative minimum tax credit carryforward of $28.8 million. The credit, which does not expire, is available for offset against future regular federal income tax. We had $510.6 million in federal net operating loss
carryforwards, which includes the benefit from excess stock option deductions that are not included in the net operating loss carryforward deferred tax asset. The federal net operating losses, which begin to expire in 2030, may be carried forward
twenty years and offset against future federal taxable income. We had
F-28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
$124.1 million in state net operating loss carryforwards which includes the benefit from excess stock option deductions that are not included in the net operating loss carryforward deferred
tax asset. The state net operating losses, which begin to expire in 2014, may be carried forward from five to twenty years depending on the state jurisdiction.
Under special tax rules, the Section 382 Limitation, cumulative stock ownership changes among material shareholders exceeding fifty percent during a three-year period can potentially limit a
companys future use of net operating losses, tax credits and certain built-in losses or deductions (tax attributes). The Section 382 Limitation may be increased by certain built-in gains as provided by current IRS
guidance. We had an ownership change in 2009. However, Management does not believe the Section 382 Limitation impacts the recorded value of deferred taxes or realization of our tax attributes.
Management reviews our deferred tax position and in particular our deferred tax assets whenever circumstances indicate that the assets may not be
realized in the future and records a valuation allowance unless such deferred tax assets are deemed more likely than not to be recoverable. The ultimate realization of these deferred tax assets depends upon various factors including the generation
of taxable income during future periods. The Companys deferred tax assets exceeded deferred tax liabilities as of May 31, 2014 and 2013, respectively. Management has concluded that the sources of taxable income we are permitted to
consider do not more likely than not assure the realization of the entire amount of our net deferred tax assets. Accordingly, a valuation allowance is required due to the uncertainty of realizing the deferred tax assets. We have $22.1 million in
valuation allowances recorded against our net deferred tax assets as of May 31, 2014.
The amount of income tax we pay is subject
to ongoing audits by federal and state authorities which may result in proposed assessments. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, judicial rulings, refinement
of estimates, or realization of earnings or deductions that differ from our estimates. To the extent that the final outcome of a matter differs from the amounts recorded, such difference generally will impact our provision for income taxes in the
period that includes its final resolution. Reserves for uncertain tax positions including related interest and penalties were not material at May 31, 2014 or 2013.
In addition to our federal income tax return, we file income tax returns in various state jurisdictions. We are no longer subject to income tax examinations by federal and state tax authorities for years prior to
2009. The Internal Revenue Service completed their review in fiscal 2013 of our federal income tax returns for 2007 through 2010 resulting in no adjustments.
10. Legal Proceedings and Contingent Liabilities
In February 2014,
following the announcement of the proposed merger between the Company and Martin Marietta Materials, Inc. (Martin Marietta), a purported stockholder of the Company filed a putative class action lawsuit against the Company and members of
its board, and against Martin Marietta and one of its affiliates, in the United States District Court for the Northern District of Texas, captioned Maxine Phillips, Individually and on Behalf of all Others Similarly Situated v. Texas Industries,
Inc., et al., Case 3:14-cv-00740-B. The plaintiff alleges in an amended complaint, among other things, (i) that members of the Companys board breached their fiduciary duties to stockholders by failing to fully disclose material
information regarding the proposed transaction and by adopting the merger agreement for inadequate consideration
F-29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
and pursuant to an inadequate process, (ii) that Martin Marietta and one of its affiliates aided and abetted the Companys board in their alleged breaches of fiduciary duty, and
(iii) that the registration statement filed with the Securities and Exchange Commission in connection with the merger contains certain material misstatements and omissions in violation of Sections 14(a) and 20(a) of the Securities Exchange Act
of 1934. The plaintiff seeks, among other things, injunctive relief enjoining the Company and Martin Marietta from proceeding with the merger, rescission in the event that the merger is consummated, damages and an award of attorneys fees
and other fees and costs. The Company believes that the claims are without merit.
We are subject to federal, state and local
environmental laws, regulations and permits concerning, among other matters, air emissions and wastewater discharge. We intend to comply with these laws, regulations and permits. However, from time to time we receive claims from federal and state
environmental regulatory agencies and entities asserting that we are or may be in violation of certain of these laws, regulations and permits, or from private parties alleging that our operations have injured them or their property. It is possible
that we could be held liable for future charges which might be material but are not currently known or estimable. In addition, changes in federal or state laws, regulations or requirements or discovery of currently unknown conditions could require
additional expenditures by us.
In March 2008, the South Coast Air Quality Management District, or SCAQMD, informed one of our
subsidiaries, Riverside Cement Company Riverside, that it believed that operations at the Crestmore cement plant in Riverside, California caused the level of hexavalent chromium, or chrome 6, in the air in the vicinity of the plant to be
elevated above ambient air levels. Chrome 6 has been identified by the State of California as a carcinogen. Riverside immediately began taking steps, in addition to its normal dust control procedures, to reduce dust from plant operations and
eliminate the use of open clinker stockpiles. In February 2008, the SCAQMD placed an air monitoring station at the downwind property line closest to the open clinker stockpiles. In the SCAQMDs first public report of the results of its
monitoring, over the period of February 12 to April 9, 2008, the average level of chrome 6 was 2.43 nanograms per cubic meter, or ng/m³. Since that time, the average level has decreased. The average levels of chrome 6 reported by the
SCAQMD at all of the air monitoring stations in areas around the plant, including the station at the property line, are below 1.0 ng/m³ over the entire period of time it has operated the stations. The SCAQMD compared the level of exposure at
the air monitor on our property line with the following employee exposure standards established by regulatory agencies:
|
|
|
|
|
Occupational Safety and Health Administration |
|
|
5,000 ng/m³ |
|
National Institute for Occupational Safety and Health |
|
|
1,000 ng/m³ |
|
California Environmental Protection Agency |
|
|
200 ng/m³ |
|
In public meetings conducted by the SCAQMD, it stated that the risk of long term exposure immediately adjacent to
the plant is similar to living close to a busy freeway or rail yard, and it estimated an increased risk of 250 to 500 cancers per one million people, assuming continuous exposure for 70 years. Riverside has not determined how this particular risk
number was calculated by SCAQMD. However, the Riverside Press Enterprise reported in a May 30, 2008 story that John Morgan, a public health and epidemiology professor at Loma Linda University, said he looked at cancer cases reported from
1996 to 2005 in the census tract nearest the plant and found no excess cases. That includes lung cancer, which is associated with exposure to hexavalent chromium.
F-30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
In late April 2008, a lawsuit was filed in Riverside County Superior Court of the State of
California styled Virginia Shellman, et al. v. Riverside Cement Holdings Company, et al . The lawsuit against three of our subsidiaries purports to be a class action complaint for medical monitoring for a putative class defined as individuals who
were allegedly exposed to chrome 6 emissions from our Crestmore cement plant. The complaint alleges an increased risk of future illness due to the exposure to chrome 6 and other toxic chemicals. The suit requests, among other things, establishment
and funding of a medical testing and monitoring program for the class until their exposure to chrome 6 is no longer a threat to their health, as well as punitive and exemplary damages.
Since the Shellman lawsuit was filed, five additional putative class action lawsuits have been filed in the same court. The putative class in each
of these cases is the same as or a subset of the putative class in the Shellman case, and the allegations and requests for relief are similar to those in the Shellman case. As a consequence, the court has stayed four of these lawsuits until the
Shellman lawsuit is finally determined.
Since August 2008, additional lawsuits have been filed in the same court against Texas
Industries, Inc. or one or more of our subsidiaries containing allegations of personal injury and wrongful death by approximately 3,000 individual plaintiffs who were allegedly exposed to chrome 6 and other toxic or harmful substances in the air,
water and soil caused by emissions from the Crestmore plant. The court has dismissed Texas Industries, Inc. from the suits, and our subsidiaries operating in Texas have been dismissed by agreement with the plaintiffs. Most of our subsidiaries
operating in California remain as defendants. The court has dismissed from these suits plaintiffs that failed to provide required information, leaving approximately 2,000 plaintiffs.
Since January 2009, additional lawsuits have been filed against Texas Industries, Inc. or one or more of our subsidiaries in the same court
involving similar allegations, causes of action and requests for relief, but with respect to our Oro Grande, California cement plant instead of the Crestmore plant. The suits involve approximately 300 individual plaintiffs. Texas Industries, Inc.
and our subsidiaries operating in Texas have been similarly dismissed from these suits. The court has dismissed from these suits plaintiffs that failed to provide required information, leaving approximately 250 plaintiffs. Prior to the filing of the
lawsuits, the air quality management district in whose jurisdiction the plant lies conducted air sampling from locations around the plant. None of the samples contained chrome 6 levels above 1.0 ng/m³.
The plaintiffs allege causes of action that are similar from suit to suit. Following dismissal of certain causes of action by the court and
amendments by the plaintiffs, the remaining causes of action typically include, among other things, negligence, intentional and negligent infliction of emotional distress, trespass, public and private nuisance, strict liability, willful misconduct,
fraudulent concealment, unfair business practices, wrongful death and loss of consortium. The plaintiffs generally request, among other things, general and punitive damages, medical expenses, loss of earnings, property damages and medical monitoring
costs. At the date of this report, none of the plaintiffs in these cases has alleged in their pleadings any specific amount or range of damages. Some of the suits include additional defendants, such as the owner of another cement plant located
approximately four miles from the Crestmore plant or former owners of the Crestmore and Oro Grande plants.
F-31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Discovery is proceeding in all of the suits, and the trial for the claims of 14 of the individual
plaintiffs is currently scheduled to begin in January, 2015. No trial date has been set in the class action suits or for other individual plantiffs. We are vigorously defending all of these suits but we cannot predict what liability, if any, could
arise from them. We also cannot predict whether any other suits may be filed against us alleging damages due to injuries to persons or property caused by claimed exposure to chrome 6.
We are defendants in other lawsuits that arose in the ordinary course of business. In our judgment the ultimate liability, if any, from such legal
proceedings will not have a material effect on our consolidated financial position or results of operations.
11. Business
Segments
We have three business segments: cement, aggregates and concrete. Our business segments are managed separately along
product lines. Through the cement segment we produce and sell gray portland cement as our principal product, as well as specialty cements. Through the aggregates segment we produce and sell stone, sand and gravel as our principal products.
Previously, the aggregates segment included our expanded shale and clay lightweight aggregates which has been classified as discontinued operations in the current period and all prior periods. Therefore, amounts for these operations are not included
in the information presented below. Through the concrete segment we produce and sell ready-mix concrete as our principal product. We account for intersegment sales at market prices. Segment operating profit consists of net sales less operating costs
and expenses. Corporate includes those administrative, financial, legal, human resources, environmental and real estate activities which are not allocated to operations and are excluded from segment operating profit. Identifiable assets by segment
are those assets that are used in each segments operation. Corporate assets consist primarily of cash and cash equivalents, real estate and other financial assets not identified with a business segment.
F-32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following is a summary of operating results and certain other financial data for our business
segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands |
|
2014 |
|
|
2013 |
|
|
2012 |
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
Cement |
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external customers |
|
$ |
373,808 |
|
|
$ |
336,614 |
|
|
$ |
268,886 |
|
Intersegment sales |
|
|
74,313 |
|
|
|
44,890 |
|
|
|
46,407 |
|
Aggregates |
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external customers |
|
|
140,526 |
|
|
|
128,901 |
|
|
|
96,212 |
|
Intersegment sales |
|
|
49,145 |
|
|
|
26,705 |
|
|
|
21,145 |
|
Concrete |
|
|
|
|
|
|
|
|
|
|
|
|
Sales to external customers |
|
|
397,798 |
|
|
|
231,566 |
|
|
|
229,007 |
|
Intersegment sales |
|
|
118 |
|
|
|
162 |
|
|
|
2,721 |
|
Eliminations |
|
|
(123,576 |
) |
|
|
(71,757 |
) |
|
|
(70,273 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
912,132 |
|
|
$ |
697,081 |
|
|
$ |
594,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit |
|
|
|
|
|
|
|
|
|
|
|
|
Cement |
|
$ |
40,448 |
|
|
$ |
44,062 |
|
|
$ |
20,488 |
|
Aggregates |
|
|
25,701 |
|
|
|
14,443 |
|
|
|
25,370 |
|
Concrete |
|
|
12,882 |
|
|
|
(10,132 |
) |
|
|
25,035 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment operating profit |
|
|
79,031 |
|
|
|
48,373 |
|
|
|
70,893 |
|
Corporate |
|
|
(35,239 |
) |
|
|
(39,826 |
) |
|
|
(35,771 |
) |
Merger charges |
|
|
(7,690 |
) |
|
|
|
|
|
|
|
|
Interest |
|
|
(69,533 |
) |
|
|
(32,807 |
) |
|
|
(34,835 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes |
|
$ |
(33,431 |
) |
|
$ |
(24,260 |
) |
|
$ |
287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identifiable assets |
|
|
|
|
|
|
|
|
|
|
|
|
Cement |
|
$ |
1,157,369 |
|
|
$ |
1,174,879 |
|
|
$ |
1,135,336 |
|
Aggregates |
|
|
156,021 |
|
|
|
168,255 |
|
|
|
219,074 |
|
Concrete |
|
|
196,565 |
|
|
|
182,839 |
|
|
|
90,717 |
|
Corporate |
|
|
115,919 |
|
|
|
109,852 |
|
|
|
131,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,625,874 |
|
|
$ |
1,635,825 |
|
|
$ |
1,576,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Cement |
|
$ |
52,204 |
|
|
$ |
35,219 |
|
|
$ |
35,078 |
|
Aggregates |
|
|
11,054 |
|
|
|
13,053 |
|
|
|
14,231 |
|
Concrete |
|
|
13,087 |
|
|
|
9,353 |
|
|
|
8,981 |
|
Corporate |
|
|
1,086 |
|
|
|
988 |
|
|
|
1,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation, depletion and amortization |
|
$ |
77,431 |
|
|
$ |
58,613 |
|
|
$ |
59,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Cement |
|
$ |
19,508 |
|
|
$ |
77,793 |
|
|
$ |
78,618 |
|
Aggregates |
|
|
6,052 |
|
|
|
4,298 |
|
|
|
20,979 |
|
Concrete |
|
|
4,086 |
|
|
|
8,820 |
|
|
|
4,569 |
|
Corporate |
|
|
4,432 |
|
|
|
1,607 |
|
|
|
1,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures |
|
$ |
34,078 |
|
|
$ |
92,518 |
|
|
$ |
105,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by product |
|
|
|
|
|
|
|
|
|
|
|
|
Cement |
|
$ |
338,472 |
|
|
$ |
301,106 |
|
|
$ |
232,007 |
|
Stone, sand and gravel |
|
|
92,241 |
|
|
|
83,333 |
|
|
|
64,393 |
|
Ready-mix concrete |
|
|
397,332 |
|
|
|
231,195 |
|
|
|
182,418 |
|
Other products |
|
|
11,541 |
|
|
|
10,758 |
|
|
|
50,409 |
|
Delivery fees |
|
|
72,546 |
|
|
|
70,689 |
|
|
|
64,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
912,132 |
|
|
$ |
697,081 |
|
|
$ |
594,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
All sales were made in the United States during the periods presented with no single customer
representing more than ten percent of sales.
Cement segment operating profit includes a gain from the sales of emission credits
associated with our Crestmore cement plant in Riverside, California of $2.5 million in 2012.
Concrete operating profit includes a gain
of $2.2 million in 2014 and $1.6 million in 2012 from the exchange of certain ready-mix operations in Houston, Texas for ready-mix and aggregates operations that serve the Austin, Texas metropolitan market.
Corporate operating profit includes a gain of $6.0 million from the sale of real estate land.
Operating profit includes $2.0 million in restructuring charges in 2012, including $1.1 million associated with our cement operations,
$0.4 million associated with our aggregate operations, $0.5 million associated with our ready-mix concrete operations. An additional $1.2 million in restructuring charges in 2012 is associated with our corporate activities.
Capital expenditures in connection with the expansion of our Hunter, Texas cement plant for the year ended May 31, 2014 were
$7.1 million consisting solely of interest paid that was capitalized in the prior year period ended May 31, 2013. Capital expenditures incurred in connection with the expansion of our Hunter, Texas cement plant was $75.3 million in 2013
and $72.9 million in 2012 of which $38.5 million in 2013 and $32.3 million in 2012 was capitalized interest paid.
Capital expenditures for normal replacement and upgrades of existing equipment and acquisitions to sustain existing operations were $34.1 million
in 2014, $25.4 million in 2013 and $33.4 million in 2012, of which $18.0 million was incurred to acquire aggregate reserves in 2012.
All of our identifiable assets are located in the United States.
12. Merger Agreement
On January 27, 2014, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Martin
Marietta and Project Holdings, Inc. (Merger Sub), a wholly owned subsidiary of Martin Marietta. Subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company with the Company
surviving the merger as a wholly owned subsidiary of Martin Marietta. At the effective time of the merger, each outstanding share of Company common stock will be exchanged for 0.70 of a share of Martin Marietta common stock. The Merger Agreement was
unanimously approved by the Boards of Directors of the Company and Martin Marietta.
The Merger Agreement was approved on June 26,
2014 by the U.S. Department of Justice resulting in the termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. As a result of the approval, Martin Marietta will divest two rail yards
in Texas, and an aggregate quarry in Oklahoma. The Company does not believe this divestment to have a material effect on the Merger.
On
June 30, 2014, the shareholders of the Company voted unanimously to approve the Merger Agreement. Also, on June 30, 2014, the shareholders of Martin Marietta voted unanimously to approve the issuance of Martin Marietta common stock to the
Company shareholders in accordance with the Merger Agreement.
F-34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The Company and Martin Marietta have now received all the necessary approvals and expect the
merger to close promptly.
13. Subsequent Events
The Company evaluated subsequent events through July 1, 2014, the date the accompanying consolidated financial statements were issued.
Following the announcement of the proposed merger between Martin Marietta and TXI, a purported stockholder of Martin Marietta filed a putative
class action lawsuit against Martin Marietta and members of the Martin Marietta board, and against TXI, collectively the Defendants, in the Supreme Court of the State of New York, County of New, captioned City Trading Fund, on Behalf of Itself
and All Others Similarly Situated v. C. Howard Nye, et at., Index No. 651668/2014. The plaintiff alleges that Martin Marietta and its board members breached their fiduciary duties by failing to disclose material information in the joint
proxy statement/prospectus filed by Martin Marietta and TXI for the merger between them, and that TXI aided and abetted such breach. The plaintiff seeks, among other things, injunctive relief enjoining TXI and Martin Marietta from proceeding with
the merger absent additional disclosures, damages and an award of attorneys and other fees and costs.
In June 2014, counsel for
the Defendants pertaining to two separate lawsuits (filed February 2014 and June 2014) related to the merger, entered into the memorandums of understanding (the MOU) with the plaintiffs pursuant to which Martin Marietta and TXI have
agreed to make certain disclosures concerning the merger. In addition, the MOUs provide that, subject to approval by the Court after notice to the members of each plaintiff class (the Class Members), the lawsuits will be dismissed with
prejudice and all claims, including derivative claims, that the Class Members may possess with regard to the merger will be released. In connection with the settlements, the plaintiffs counsel have expressed their intention to seek an award by
the court of attorneys fees and expenses. The amount for attorneys fees and expenses is unknown at this time but the Companys belief is it will not have a material adverse effect on its financial condition.
Martin Marietta intends to refinance the Companys 9.25% senior notes prior to August 14, 2015, resulting in a make whole premium in
accordance with the terms of the Indenture.
The Company will be liable for certain contingent fees due to its investment bankers of an
additional $14.4 million and to its attorneys an additional $2.5 million upon the closing of the merger with Martin Marietta, which have not been accrued in the Companys consolidated balance sheet as of May 31, 2014.
F-35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
QUARTERLY FINANCIAL INFORMATION (Unaudited)
The following is a summary of quarterly financial information (in thousands except per share).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
Aug. |
|
|
Nov. |
|
|
Feb. |
|
|
May |
|
Net sales |
|
$ |
233,082 |
|
|
$ |
208,892 |
|
|
$ |
207,828 |
|
|
$ |
262,330 |
|
Gross profit |
|
|
30,666 |
|
|
|
14,157 |
|
|
|
11,993 |
|
|
|
43,814 |
|
Net income (loss) from continuing operations |
|
|
429 |
|
|
|
(17,640 |
) |
|
|
(21,769 |
) |
|
|
7,185 |
|
Net income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,347 |
|
Net income (loss) |
|
|
429 |
|
|
|
(17,640 |
) |
|
|
(21,769 |
) |
|
|
8,532 |
|
Net income (loss) per share from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
0.02 |
|
|
$ |
(0.62 |
) |
|
$ |
(0.76 |
) |
|
$ |
0.25 |
|
Diluted earnings (loss) per share |
|
$ |
0.01 |
|
|
$ |
(0.62 |
) |
|
$ |
(0.76 |
) |
|
$ |
0.24 |
|
Net income from discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
0.05 |
|
Diluted earnings per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
0.05 |
|
Net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
0.02 |
|
|
$ |
(0.62 |
) |
|
$ |
(0.76 |
) |
|
$ |
0.30 |
|
Diluted earnings (loss) per share |
|
$ |
0.01 |
|
|
$ |
(0.62 |
) |
|
$ |
(0.76 |
) |
|
$ |
0.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
|
Aug. |
|
|
Nov. |
|
|
Feb. |
|
|
May |
|
Net sales |
|
$ |
174,523 |
|
|
$ |
167,693 |
|
|
$ |
141,359 |
|
|
$ |
213,506 |
|
Gross profit |
|
|
15,200 |
|
|
|
11,754 |
|
|
|
12,324 |
|
|
|
28,000 |
|
Net income (loss) from continuing operations |
|
|
(7,396 |
) |
|
|
(10,189 |
) |
|
|
(8,513 |
) |
|
|
15,604 |
|
Net income from discontinued operations |
|
|
4,738 |
|
|
|
(933 |
) |
|
|
2,699 |
|
|
|
28,540 |
|
Net income
(loss)(1) |
|
|
(2,658 |
) |
|
|
(11,122 |
) |
|
|
(5,814 |
) |
|
|
44,144 |
|
Net income (loss) per share from continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
(0.26 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.30 |
) |
|
$ |
0.55 |
|
Diluted earnings (loss) per share |
|
$ |
(0.26 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.30 |
) |
|
$ |
0.55 |
|
Net income (loss) from discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
0.18 |
|
|
$ |
(0.04 |
) |
|
$ |
0.10 |
|
|
$ |
1.00 |
|
Diluted earnings (loss) per share |
|
$ |
0.18 |
|
|
$ |
(0.04 |
) |
|
$ |
0.10 |
|
|
$ |
0.99 |
|
Net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
(0.08 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.20 |
) |
|
$ |
1.55 |
|
Diluted earnings (loss) per share |
|
$ |
(0.08 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.20 |
) |
|
$ |
1.54 |
|
(1) |
During the May 2013 quarter, we entered into an asset exchange transaction that resulted in the recognition of a gain of $41.1 million reported in our aggregate segment.
|
F-36
Martin Marietta
Materials, Inc.
Offer to Exchange up to $300,000,000 Floating Rate
Senior Notes due 2017 for a Like Principal Amount of Floating Rate Senior Notes due 2017 which are registered under
the Securities Act of 1933
Offer to Exchange up to $400,000,000 4.250%
Senior Notes due 2024 for a Like Principal Amount of 4.250%
Senior Notes due 2024 which are
registered under
the Securities Act of 1933
PROSPECTUS
Subject to completion,
dated , 2014
Part II
Information Not Required in Prospectus
Item 20. Indemnification of Directors and Officers
Martin Marietta is a North Carolina corporation. Martin Mariettas Restated Articles of Incorporation (the Charter)
eliminates, to the fullest extent permitted by the North Carolina Business Corporation Act (the NCBCA), the personal liability of each director of Martin Marietta to the corporation and its shareholders for monetary damages for breach of
duty as a director. This provision in Martin Mariettas Charter, does not change a directors duty of care, but it eliminates monetary liability for certain violations of that duty, including violations based on grossly negligent business
decisions that may include decisions relating to attempts to change control of Martin Marietta. The provision does not affect the availability of equitable remedies for a breach of the duty of care, such as an action to enjoin or rescind a
transaction involving a breach of fiduciary duty; in certain circumstances, however, equitable remedies may not be available as a practical matter. Under the NCBCA, the limitation of liability provision is ineffective against liabilities for
(i) acts or omissions that the director knew or believed at the time of the breach to be clearly in conflict with the best interests of the corporation, (ii) unlawful distributions described in NCBCA Section 55-8-33, (iii) any
transaction from which the director derived an improper personal benefit, or (iv) acts or omissions occurring prior to the date the provision became effective. The provision also in no way affects a directors liability under the federal
securities laws.
Under the NCBCA, Martin Marietta must indemnify its directors and officers who were wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he or she was a party because he or she is or was a director or officer of the corporation against any reasonable expenses incurred by him or her in connection with such proceeding. The NCBCA
also provides that a corporation may in its articles of incorporation or bylaws or by contract or resolution indemnify or agree to indemnify any one or more of its directors, officers, employees and agents against liabilities and expenses incurred
in a proceeding (including a proceeding brought by or on behalf of the corporation) arising out of a persons status as such or their activities in such capacity, except that a corporation may not indemnify a person against liabilities or
expenses he or she may incur on account of his or her activities which were at the time taken known or believed by the person to be clearly in conflict with the best interests of the corporation. Under this provision of the NCBCA, a corporation may
likewise and to the same extent indemnify or agree to indemnify any person who, at the request of the corporation, is or was serving as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise or as a trustee or administrator under an employee benefit plan. Martin Mariettas Restated Bylaws provide that Martin Marietta will indemnify any person (1) who at any time serves or has served as an officer,
employee or a director of Martin Marietta, or (2) who, while serving as an officer, employee or a director of Martin Marietta, serves or has served at the request of Martin Marietta as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or as a trustee, other fiduciary or administrator under an employee benefit plan, against any and all liability and litigation expense, including reasonable attorneys
fees, to the fullest extent permitted by North Carolina law, provided that any employee shall have a right to indemnification when acting in his or her capacity as an employee only upon satisfaction of the standards of conduct of officers and
directors set forth in the NCBCA.
Martin Marietta also maintains a directors and officers insurance policy pursuant to which its
directors and officers are insured against liability for actions in their capacity as directors and officers.
II-1
Item 21. Exhibits
The following Exhibits are filed as part of, or are incorporated by reference in, this Registration Statement:
|
|
|
|
|
2.1* |
|
Agreement and Plan of Merger, dated as of January 27, 2014, by and among Martin Marietta Materials, Inc., Texas Industries, Inc. and Project Holdings, Inc. (incorporated by reference
to Exhibit 2.1 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on January 30, 2014) |
|
|
4.1 |
|
Indenture, dated as of July 2, 2014, between Martin Marietta Materials, Inc. and Regions Bank, as trustee (incorporated by reference to Exhibit 4.1 to the Martin Marietta Materials, Inc.
Current Report on Form 8-K, filed on July 2, 2014 (second filing)) |
|
|
4.2 |
|
Form of Floating Rate Senior Notes due 2017 (included in Exhibit 4.1) |
|
|
4.3 |
|
Form of 4.250% Senior Notes due 2024 (included in Exhibit 4.1) |
|
|
4.4 |
|
Registration Rights Agreement, dated as of July 2, 2014, among Martin Marietta Materials, Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as representatives of the
Initial Purchasers (incorporated by reference to Exhibit 4.4 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on July 2, 2014 (second filing)) |
|
|
4(a) |
|
Upon the request of the SEC, the Registrant will furnish a copy of all other instruments defining the rights of holders of long-term debt of the Registrant |
|
|
5.1 |
|
Opinion of Robinson, Bradshaw & Hinson, P.A. |
|
|
5.2 |
|
Opinion of Cravath, Swaine & Moore LLP |
|
|
12.1 |
|
Statement Regarding Computation of Ratio of Earnings to Fixed Charges |
|
|
23.1 |
|
Consent of Robinson, Bradshaw & Hinson, P.A. (included as part of its opinion filed as Exhibit 5.1 hereto and incorporated herein by reference) |
|
|
23.2 |
|
Consent of Cravath, Swaine & Moore LLP (included as part of its opinion filed as Exhibit 5.2 hereto and incorporated herein by reference) |
|
|
23.3 |
|
Consent of Ernst & Young LLP, independent registered public accounting firm |
|
|
23.4 |
|
Consent of Ernst & Young LLP, independent registered public accounting firm |
|
|
24.1 |
|
Power of Attorney (included on signature page to this registration statement) |
|
|
25.1 |
|
Statement of Eligibility under the Trust Indenture Act of 1939 by Regions Bank (Form T-1) |
|
|
99.1 |
|
Form of Letter of Transmittal |
|
|
99.2 |
|
Form of Letter to Clients |
|
|
99.3 |
|
Form of Letter to Brokers |
* |
Pursuant to Item 601(b)(2) of Regulation S-K, the disclosure letters of both Martin Marietta and TXI have been omitted. The registrant hereby agrees to furnish
supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request. |
II-2
Item 22. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the Securities Act); (ii) to
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement (notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement); and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove
from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the Securities Act, each filing of the registrants annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (and, where applicable, each filing of an employee benefit plans annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(5) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness (provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use).
(6) That for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned
registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will be considered to offer or
II-3
sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating the
offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(7) To respond to requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
(8) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration
statement when it became effective.
(9) Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of
Raleigh, State of North Carolina, on November 12, 2014.
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
|
|
By: |
|
/s/ C. Howard Nye |
|
|
C. Howard Nye |
|
|
President and Chief Executive Officer |
Power of Attorney
Each person whose signature appears below hereby constitutes and appoints Roselyn R. Bar, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her
and in his/her name, place and stead, in any and all capacities, to sign any or all amendments or supplements to this registration statement, whether pre-effective or post-effective, including any subsequent registration statement for the same
offering which may be filed under Rule 462(b) under the Securities Act of 1933, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and every act and thing necessary or appropriate to be done with respect to this registration statement or any amendments or supplements hereto in the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities
indicated on November 12, 2014.
|
|
|
|
|
Signature |
|
|
|
Title |
|
|
|
/s/ C. Howard Nye |
|
|
|
President, Chief Executive Officer and Chairman of the Board |
C. Howard Nye |
|
|
|
|
|
|
/s/ Anne H. Lloyd |
|
|
|
Executive Vice President and Chief Financial Officer |
Anne H. Lloyd |
|
|
|
|
|
|
/s/ Dana F. Guzzo
|
|
|
|
Senior Vice President, Controller, Chief Accounting Officer and Chief Information Officer |
Dana F. Guzzo |
|
|
|
|
|
|
/s/ Sue W. Cole
|
|
|
|
Director |
Sue W. Cole |
|
|
|
|
|
|
/s/ David G. Maffucci
|
|
|
|
Director |
David G. Maffucci |
|
|
|
|
|
|
/s/ William E. McDonald
|
|
|
|
Director |
William E. McDonald |
|
|
|
|
|
|
/s/ Frank H. Menaker, Jr.
|
|
|
|
Director |
Frank H. Menaker, Jr. |
|
|
|
II-5
|
|
|
|
|
|
|
|
/s/ Laree E. Perez
|
|
|
|
Director |
Laree E. Perez |
|
|
|
|
|
|
/s/ Michael J. Quillen
|
|
|
|
Director |
Michael J. Quillen |
|
|
|
|
|
|
/s/ Dennis L. Rediker
|
|
|
|
Director |
Dennis L. Rediker |
|
|
|
|
|
|
/s/ Richard A. Vinroot
|
|
|
|
Director |
Richard A. Vinroot |
|
|
|
|
|
|
/s/ Stephan P. Zelnak, Jr.
|
|
|
|
Director |
Stephan P. Zelnak, Jr. |
|
|
|
II-6
EXHIBIT INDEX
|
|
|
|
|
2.1* |
|
Agreement and Plan of Merger, dated as of January 27, 2014, by and among Martin Marietta Materials, Inc., Texas Industries, Inc. and Project Holdings, Inc. (incorporated by reference
to Exhibit 2.1 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on January 30, 2014) |
|
|
4.1 |
|
Indenture, dated as of July 2, 2014, between Martin Marietta Materials, Inc. and Regions Bank, as trustee (incorporated by reference to Exhibit 4.1 to the Martin Marietta Materials, Inc.
Current Report on Form 8-K, filed on July 2, 2014 (second filing)) |
|
|
4.2 |
|
Form of Floating Rate Senior Notes due 2017 (included in Exhibit 4.1) |
|
|
4.3 |
|
Form of 4.250% Senior Notes due 2024 (included in Exhibit 4.1) |
|
|
4.4 |
|
Registration Rights Agreement, dated as of July 2, 2014, among Martin Marietta Materials, Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as representatives of the
Initial Purchasers (incorporated by reference to Exhibit 4.4 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on July 2, 2014 (second filing)) |
|
|
4(a) |
|
Upon the request of the SEC, the Registrant will furnish a copy of all other instruments defining the rights of holders of long-term debt of the Registrant |
|
|
5.1 |
|
Opinion of Robinson, Bradshaw & Hinson, P.A. |
|
|
5.2 |
|
Opinion of Cravath, Swaine & Moore LLP |
|
|
12.1 |
|
Statement Regarding Computation of Ratio of Earnings to Fixed Charges |
|
|
23.1 |
|
Consent of Robinson, Bradshaw & Hinson, P.A. (included as part of its opinion filed as Exhibit 5.1 hereto and incorporated herein by reference) |
|
|
23.2 |
|
Consent of Cravath, Swaine & Moore LLP (included as part of its opinion filed as Exhibit 5.2 hereto and incorporated herein by reference) |
|
|
23.3 |
|
Consent of Ernst & Young LLP, independent registered public accounting firm |
|
|
23.4 |
|
Consent of Ernst & Young LLP, independent registered public accounting firm |
|
|
24.1 |
|
Power of Attorney (included on signature page to this registration statement) |
|
|
25.1 |
|
Statement of Eligibility under the Trust Indenture Act of 1939 by Regions Bank (Form T-1) |
|
|
99.1 |
|
Form of Letter of Transmittal |
|
|
99.2 |
|
Form of Letter to Clients |
|
|
99.3 |
|
Form of Letter to Brokers |
* |
Pursuant to Item 601(b)(2) of Regulation S-K, the disclosure letters of both Martin Marietta and TXI have been omitted. The registrant hereby agrees to furnish
supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request. |
EXHIBIT 5.1
November 12, 2014
Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: C. Howard Nye,
President and
Chief Executive Officer
Ladies and Gentlemen:
We have served as North
Carolina counsel to Martin Marietta Materials, Inc., a North Carolina corporation (the Company), in connection with certain matters relating to the registration statement on Form S-4
(the Registration Statement) of the Company with respect to its offers to exchange (the Exchange Offers) up to $300,000,000 aggregate principal amount of its outstanding, unregistered Floating Rate Senior Notes
due 2017 (the Original Floating Rate Notes) for an equivalent amount of registered Floating Rate Senior Notes due 2017 (the Exchange Floating Rate Notes) and up to $400,000,000 aggregate principal amount of its
outstanding, unregistered 4.250% Senior Notes due 2024 (together with the Original Floating Rate Notes, the Original Notes) for an equivalent amount of registered 4.250% Senior Notes due 2024 (together with the Exchange Floating
Rate Notes, the Exchange Notes).
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the Securities Act).
In rendering the opinions expressed herein, we have reviewed such matters of law and examined original, or copies certified or otherwise
identified, of the Amended and Restated Articles of Incorporation of the Company, as amended, the Restated Bylaws of the Company, resolutions of the Board of Directors of the Company, the Finance Committee of the Board of Directors of the Company,
and the Chairman of the Finance Committee of the Company, the Registration Statement, an executed copy of the Indenture dated as of July 2, 2014 (the Indenture) between the Company and Regions Bank, as Trustee, and the forms
of note included therein, the Registration Rights Agreement dated as of July 2, 2014 (the Registration Rights Agreement), and such other documents, records, agreements and certificates as we have deemed necessary as a basis
for the opinions expressed herein. In such review, we have assumed the genuineness of all signatures, the capacity of all natural persons, the authenticity of all documents and certificates submitted to us as originals or duplicate originals, the
conformity to original documents and certificates of the documents and certificates submitted to us as certified, photostatic, conformed, electronic or facsimile copies, the authenticity of the originals of such latter documents and certificates,
the accuracy and completeness of all statements contained in all such documents and certificates, and the integrity and completeness of the minute books and records of the Company to the date hereof. As to all questions of fact material to the
opinions
Robinson
Bradshaw & Hinson, P.A. 101 North Tryon Street, Suite 1900 n Charlotte, NC 28246 n 704.377.2536
Martin Marietta Materials, Inc.
November 12, 2014
Page 2
expressed herein that have not been independently established, we have relied, without investigation or analysis of any underlying data, upon certificates and statements of public officials and
representatives of the Company. In expressing the opinions set forth herein, we have assumed, with your consent, that each of the Exchange Notes conform to the respective forms of note examined by us.
In rendering the opinions set forth below, we have also assumed that prior to the issuance of any of the Exchange Notes pursuant to the
Exchange Offers the Registration Statement, as may then be amended, will have become effective under the Securities Act and such effectiveness shall not have been terminated or rescinded and the Indenture shall have been qualified pursuant to the
Trust Indenture Act of 1939, as amended.
Upon the basis of such examination, and subject to the limitations and qualifications expressed
herein, we are of the opinion that:
(1) The Company is a corporation duly incorporated and validly existing under the laws of the State
of North Carolina.
(2) The Company has the corporate power to enter into and perform its obligations under the Indenture and the Exchange
Notes.
(3) The Indenture has been duly authorized, executed and delivered by the Company.
(4) The Exchange Notes have been duly authorized and when executed and delivered by the Company and, assuming due authentication as provided
in the Indenture and delivery of the respective Original Notes in exchange therefor in accordance with the terms of the respective Exchange Offer, will be duly and validly issued and outstanding.
The foregoing opinions are limited to the laws of the State of North Carolina, and we are expressing no opinion as to the effect of the laws
of other jurisdictions. This opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. This opinion is given as of the date hereof, and we assume no obligation to advise
you after the date hereof of facts or circumstances that come to our attention or changes in law that occur, which could affect the opinions contained herein.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption
Legal Matters in the prospectus that is included in the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.
|
Very truly yours, |
|
ROBINSON, BRADSHAW & HINSON, P.A. |
|
/s/ Robinson, Bradshaw & Hinson |
EXHIBIT 5.2
[Letterhead of]
CRAVATH,
SWAINE & MOORE LLP
[New York Office]
November 12, 2014
Martin
Marietta Materials, Inc.
$300,000,000 Floating Rate Senior Notes due 2017
$400,000,000 4.250% Senior Notes due 2024
Form S-4 Registration Statement
Ladies
and Gentlemen:
We have acted as counsel for Martin Marietta Materials, Inc., a North Carolina corporation (the Company), in
connection with the filing by the Company with the Securities and Exchange Commission (the Commission) of a registration statement on Form S-4 (the Registration Statement) under the Securities Act of 1933, as
amended (the Act), relating to the proposed issuance and offer to exchange up to $300,000,000 aggregate principal amount of new Floating Rate Senior Notes due 2017 (the Exchange 2017 Notes) for a like aggregate principal
amount of outstanding Floating Rate Senior Notes due 2017, which have certain transfer restrictions (the Original 2017 Notes) and up to $400,000,000 aggregate principal amount of new 4.250% Senior Notes due 2024 (the Exchange 2024
Notes and, together with the Exchange 2017 Notes, the Exchange Notes) for a like aggregate principal amount of outstanding 4.250% Senior Notes due 2024, which have certain transfer restrictions (the Original 2024
Notes). The Exchange Notes are to be issued pursuant to the indenture dated as of July 2, 2014, (the Indenture) between the Company and Regions Bank, as trustee (the Trustee).
In that connection, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate
records and other instruments as we have deemed necessary or appropriate for the purposes of this opinion, including the Indenture and the forms of Exchange Notes included therein.
In rendering this opinion, we have assumed, with your consent and without independent investigation or verification, the genuineness of all
signatures, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as duplicates or copies. We also
have assumed, with your consent, that the Indenture has been duly authorized, executed and delivered by the Company and the Trustee and that the form of the Exchange Notes will conform to that included in the Indenture.
Based on the foregoing and subject to the qualifications set forth herein, we are of opinion as
follows:
1. Assuming that the Exchange Notes have been duly authorized by the Company, the Exchange Notes, when executed and authenticated
in accordance with the provisions of the Indenture and issued and delivered in exchange for the applicable Original Notes, will constitute legal, valid and binding obligations of the Company (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law).
We are admitted to
practice in the State of New York, and we express no opinion as to matters governed by any laws other than the laws of the State of New York. In particular, we do not purport to pass on any matter governed by the laws of North Carolina.
We hereby consent to the filing of this opinion with the Commission as Exhibit 5.2 to the Registration Statement. We also consent to the
reference to our firm under the caption Legal Matters in the prospectus constituting a part of the Registration Statement. In giving such consent, we do not thereby admit that we are included in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the Commission.
Very truly yours,
/s/ Cravath, Swaine & Moore LLP
Martin Marietta
Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607-3033
2
EXHIBIT 12.1
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Nine Months Ended September 30, 2014
(add 000, except ratio)
|
|
|
|
|
EARNINGS: |
|
|
|
|
Earnings before income taxes* |
|
$ |
151,357 |
|
Loss from less than 50%-owned associated companies, net |
|
|
1,275 |
|
Interest expense |
|
|
44,954 |
|
Portion of rents representative of an interest factor |
|
|
10,711 |
|
|
|
|
|
|
Adjusted Earnings and Fixed Charges |
|
$ |
208,297 |
|
FIXED CHARGES: |
|
|
|
|
Interest expense |
|
$ |
44,954 |
|
Capitalized interest |
|
|
7,324 |
|
Portion of rents representative of an interest factor |
|
|
10,711 |
|
|
|
|
|
|
Total Fixed Charges |
|
$ |
62,989 |
|
Ratio of Earnings to Fixed Charges |
|
|
3.31 |
|
* |
Represents earnings from continuing operations less net earnings (loss) attributable to noncontrolling interests. |
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Year Ended December 31, 2013
(add 000, except ratio)
|
|
|
|
|
EARNINGS: |
|
|
|
|
Earnings before income taxes* |
|
$ |
166,131 |
|
Loss from less than 50%-owned associated companies, net |
|
|
241 |
|
Interest expense** |
|
|
53,467 |
|
Portion of rents representative of an interest factor |
|
|
12,944 |
|
|
|
|
|
|
Adjusted Earnings and Fixed Charges |
|
$ |
232,783 |
|
FIXED CHARGES: |
|
|
|
|
Interest expense** |
|
$ |
53,467 |
|
Capitalized interest |
|
|
1,792 |
|
Portion of rents representative of an interest factor |
|
|
12,944 |
|
|
|
|
|
|
Total Fixed Charges |
|
$ |
68,203 |
|
Ratio of Earnings to Fixed Charges |
|
|
3.41 |
|
* |
Represents earnings from continuing operations less net earnings attributable to noncontrolling interests. |
** |
Interest expense excluded $1,446 accrued for the interest expense component associated with uncertain tax provisions. |
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Year Ended December 31, 2012
(add 000, except ratio)
|
|
|
|
|
EARNINGS: |
|
|
|
|
Earnings before income taxes |
|
$ |
101,860 |
** |
Loss from less than 50%-owned associated companies, net |
|
|
1,393 |
|
Interest expense* |
|
|
53,339 |
* |
Portion of rents representative of an interest factor |
|
|
13,647 |
|
|
|
|
|
|
Adjusted Earnings and Fixed Charges |
|
$ |
170,239 |
|
FIXED CHARGES: |
|
|
|
|
Interest expense* |
|
$ |
53,339 |
|
Capitalized interest |
|
|
2,537 |
|
Portion of rents representative of an interest factor |
|
|
13,647 |
|
|
|
|
|
|
Total Fixed Charges |
|
$ |
69,523 |
|
Ratio of Earnings to Fixed Charges |
|
|
2.45 |
|
* |
Interest expense excluded $119 accrued for the interest benefit component associated with uncertain tax provisions. |
** |
Represents earnings from continuing operations less net earnings attributable to noncontrolling interests. |
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Year Ended December 31, 2011
(add 000, except ratio)
|
|
|
|
|
EARNINGS: |
|
|
|
|
Earnings before income taxes |
|
$ |
99,408 |
** |
Loss from less than 50%-owned associated companies, net |
|
|
1,666 |
|
Interest expense* |
|
|
58,586 |
* |
Portion of rents representative of an interest factor |
|
|
15,419 |
|
|
|
|
|
|
Adjusted Earnings and Fixed Charges |
|
$ |
175,079 |
|
FIXED CHARGES: |
|
|
|
|
Interest expense* |
|
$ |
58,586 |
|
Capitalized interest |
|
|
1,816 |
|
Portion of rents representative of an interest factor |
|
|
15,419 |
|
|
|
|
|
|
Total Fixed Charges |
|
$ |
75,821 |
|
Ratio of Earnings to Fixed Charges |
|
|
2.31 |
|
* |
Interest expense excluded $81 accrued for the interest component associated with uncertain tax provisions. |
** |
Represents earnings from continuing operations less net earnings attributable to noncontrolling interests. |
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Year Ended December 31, 2010
(add 000, except ratio)
|
|
|
|
|
EARNINGS: |
|
|
|
|
Earnings before income taxes |
|
$ |
126,044 |
** |
Loss from less than 50%-owned associated companies, net |
|
|
2,173 |
|
Interest Expense* |
|
|
68,456 |
|
Portion of rents representative of an interest factor |
|
|
19,218 |
|
|
|
|
|
|
Adjusted Earnings and Fixed Charges |
|
$ |
215,891 |
|
FIXED CHARGES: |
|
|
|
|
Interest Expense* |
|
$ |
68,456 |
|
Capitalized Interest |
|
|
2,129 |
|
Portion of rents representative of an interest factor |
|
|
19,218 |
|
|
|
|
|
|
Total Fixed Charges |
|
$ |
89,803 |
|
Ratio of Earnings to Fixed Charges |
|
|
2.40 |
|
* |
Interest Expense excluded $1,327 accrued for the interest component associated with uncertain tax positions. |
** |
Note: Use Earnings from Continuing Operations less net earnings attributable to noncontrolling interests. |
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Year Ended December 31, 2009
(add 000, except ratio)
|
|
|
|
|
EARNINGS: |
|
|
|
|
Earnings before income taxes |
|
$ |
112,557 |
** |
Loss from less than 50%-owned associated companies, net |
|
|
1,313 |
|
Interest Expense* |
|
|
73,460 |
|
Portion of rents representative of an interest factor |
|
|
17,301 |
|
|
|
|
|
|
Adjusted Earnings and Fixed Charges |
|
$ |
204,631 |
|
FIXED CHARGES: |
|
|
|
|
Interest Expense* |
|
$ |
73,460 |
|
Capitalized Interest |
|
|
1,010 |
|
Portion of rents representative of an interest factor |
|
|
17,301 |
|
|
|
|
|
|
Total Fixed Charges |
|
$ |
91,771 |
|
Ratio of Earnings to Fixed Charges |
|
|
2.23 |
|
* |
Interest Expense excluded interest income of $343 related to the reversal of interest accruals for uncertain tax positions. |
** |
Note: Use Earnings from Continuing Operations less net earnings attributable to noncontrolling interests. |
Exhibit 23.3
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption Experts in the Registration Statement (Form S-4) and related Prospectus of Martin
Marietta Materials, Inc. for the registration of $300,000,000 of Floating Rate Senior Notes due 2017 and $400,000,000 4.250% Senior Notes due 2024 and to the incorporation by reference therein of our reports dated February 24, 2014, with
respect to the consolidated financial statements of Martin Marietta Materials, Inc. and the effectiveness of internal control over financial reporting of Martin Marietta Materials, Inc., incorporated by reference in its Annual Report (Form 10-K) for
the year ended December 31, 2013 and the financial statement schedule of Martin Marietta Materials, Inc. included therein, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Raleigh, North Carolina
November 10, 2014
EXHIBIT 23.4
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption Experts and to the use of our report dated July 1, 2014, in the Registration
Statement (Form S-4) and related Prospectus of Martin Marietta Materials, Inc. for the registration of $300,000,000 of Floating Rate Senior Notes due 2017 and $400,000,000 of 4.250% Senior Notes due 2024.
/s/ Ernst & Young LLP
Dallas, Texas
November 10, 2014
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
¨ |
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b) (2) |
REGIONS BANK
(Exact name of trustee as specified in its charter)
|
|
|
Alabama |
|
63-0371391 |
(Jurisdiction of incorporation or |
|
(I.R.S. Employer |
organization if not a U.S. national bank) |
|
Identification No.) |
|
|
1900 Fifth Avenue North |
|
|
Birmingham, AL |
|
35203 |
(Address of principal executive offices) |
|
(Zip code) |
Regions Bank
10245 Centurion Parkway
Jacksonville, FL 32256
(904) 998-4982
(Name,
address and telephone number of agent for service)
MARTIN
MARIETTA MATERIALS, INC.
(Exact name of obligor as specified in its charter)
|
|
|
North Carolina |
|
56-1848578 |
(State or other jurisdiction of |
|
(I.R.S. Employer |
incorporation or organization) |
|
Identification No.) |
|
|
2710 Wycliff Road |
|
|
Raleigh, NC |
|
27607 |
(Address of principal executive offices) |
|
(Zip code) |
Floating Rate Senior Notes due 2017
4.250% Senior Notes due 2024
(Titles of the indenture securities)
Item 1. General Information. Furnish the following information as to the trustee:
|
(a) |
Name and address of each examining or supervising authority to which it is subject. |
State of
Alabama State Banking Department
PO Box 4600
Montgomery, AL 36103-4600
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve
Bank of Atlanta
Atlanta, Georgia 30309
|
(b) |
Whether it is authorized to exercise corporate trust powers. |
Yes.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation.
None with respect to the trustee.
Items 3-15. No responses are included for Items 3 through 12. Responses to those Items are not required because, as provided in General Instruction B the
obligor is not in default on any securities issued under indentures under which Regions Bank is a trustee.
Item 16. List of Exhibits. List
below all exhibits filed as a part of this Statement of Eligibility.
|
|
|
|
|
Exhibit 1. |
|
A copy of the Articles of Incorporation of the trustee now in effect. |
|
|
Exhibit 2. |
|
The authority of Regions Bank to commence business was granted under the Articles of Incorporation for Regions Bank, incorporated herein by reference to Exhibit 1 of Form T-1. |
|
|
Exhibit 3. |
|
The authorization to exercise corporate trust powers was granted under the Articles of Incorporation for Regions Bank, incorporated herein by reference to Exhibit 1 of Form T-1. |
|
|
Exhibit 4. |
|
A copy of the bylaws of the trustee as now in effect. |
|
|
Exhibit 5. |
|
Not applicable. |
|
|
Exhibit 6. |
|
The consent of the trustee required by Section 321(b) of the Act. |
|
|
Exhibit 7. |
|
A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. |
|
|
Exhibit 8. |
|
Not applicable. |
|
|
Exhibit 9. |
|
Not applicable. |
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Regions Bank, a state chartered bank under the laws of Alabama, has
duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Jacksonville and State of Florida on November 12, 2014.
|
REGIONS BANK |
|
/s/ Janet Ricardo |
Janet Ricardo |
Vice President |
EXHIBIT 1
RESTATED ARTICLES OF INCORPORATION
OF
REGIONS BANK
The name of this corporation shall be Regions Bank.
The principal place of business shall be 1900 Fifth Avenue North, Birmingham, Alabama. The general business of Regions Bank (the
Bank) shall be conducted at its main office and its branches and other facilities.
The Bank shall have the following objects,
purposes and powers:
To sue and be sued, complain and defend, in its corporate name.
To have a corporate seal which may be altered at pleasure, and to use the same by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced.
To purchase, take, receive, lease, or otherwise acquire, own,
hold, improve, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated.
To sell, convey, mortgage, pledge, lease, exchange, transfer and otherwise dispose of all or any part of its property and
assets, subject to the limitations hereinafter prescribed.
To lend money and use its credit to assist its employees.
To purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or
otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign corporations, associations, partnerships or individuals, or direct or indirect obligations of the United States
or of any other government, state, territory, governmental district, or municipality or of any instrumentality thereof as may be permitted by law or appropriate regulations.
To make contracts, guarantees, and indemnity agreements and incur liabilities, borrow money at such rates of interest as the
corporation may determine, issue its notes, bonds, and other obligations, and secure any of its obligations by mortgage, pledge of, or creation of security interests in, all or any of its property, franchises, or income, or any interest therein, not
inconsistent with the provisions of the Constitution of Alabama as the same may be amended from time to time.
To lend money for its corporate purposes, invest and reinvest its funds, and take
and hold real and personal property as security for the payment of funds so loaned or invested.
To conduct its business,
carry on its operations and have offices and exercise the powers granted by this Article, within or without the State of Alabama.
To elect or appoint and remove officers and agents of the Bank, and define their duties and fix their compensation.
To make and alter by its board of directors bylaws not inconsistent with its articles of incorporation or with the laws of this
state for the administration and regulation of the affairs of the Bank.
To make donations for the public welfare or for
charitable, scientific, or educational purposes.
To transact any lawful business which the board of directors shall find
will be in aid of governmental policy.
To pay pensions and establish pension plans, pension trusts, profit sharing plans,
stock bonus plans, stock option plans and other incentive plans for any or all of its directors, officers and employees.
To be a promoter, incorporator, partner, member, trustee, associate, or manager of any domestic or foreign corporation,
partnership, joint venture, trust, or other enterprise.
To consolidate or merge, before or after the completion of its
works or plants, in the manner herein provided, with any other foreign or domestic corporation or corporations engaged in the business of banking or trust companies doing a banking business subject to the limitations hereinafter prescribed.
To have and exercise all powers permitted by the laws of Alabama necessary or convenient to effect its purposes.
To discount bills, notes or other evidences of debt.
To receive and pay out deposits, with or without interest, pay checks, and impose charges for any services.
To receive on special deposit money, bullion or foreign coins or bonds or other securities.
To buy and sell foreign and domestic exchanges, gold and silver bullion or foreign coins, bonds, bills of exchange, notes and
other negotiable paper.
To lend money on personal security or upon pledges of bonds, stocks or other negotiable
securities.
To take and receive security by mortgage, security or otherwise on property, real
and personal.
To become trustee for any purpose and be appointed and act as executor, administrator, guardian, receiver,
or fiduciary.
To lease real and personal property upon specific request of a customer, provided it complies with any
applicable Alabama laws regulating leasing real property or improvements thereon to others.
To perform computer,
management and travel agency services for others.
To subscribe to the capital stock and become a member of the federal
reserve system and comply with rules and regulations thereof.
To do any business and exercise directly or through
operating subsidiaries any powers incident to the business of banks.
The duration of the corporation shall be perpetual.
The Board of Directors is expressly authorized from time to time to fix the number of Directors which shall constitute the entire Board,
subject to the following:
The number of Directors constituting the entire Board shall be fixed from time to time by vote
of a majority of the entire Board, provided, however, that the number of Directors shall not be reduced so as to shorten the term of any Director at the time in office, and provided further, shall not be less than three nor more than twenty-five
(25). Each Director shall be the record owner of the requisite number of shares of common stock of the Banks parent bank holding company fixed by the appropriate regulatory authorities.
Notwithstanding any other provisions of the Articles of Incorporation or the bylaws of the Bank (and notwithstanding the fact
that some lesser percentage may be specified by law, these Restated Articles of Incorporation or the bylaws of the Bank), any Director or the entire Board of Directors of the Bank may be removed at any time, with or without cause by the affirmative
vote of the holders of ninety percent (90%) or more of the outstanding shares of capital stock of the Bank entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders
called for that purpose.
The aggregate number of shares of capital stock which the Bank shall have authority to issue is thirty thousand
five hundred forty six (30,546) shares, which shall be common stock, par value five dollars ($5.00) per share (the Common Stock). The Bank shall not issue fractional shares of stock, but shall pay in cash the fair value of fractions
of a share as of the time when those otherwise entitled to receive such fractions are determined.
Shareholders shall not
have pre-emptive rights to purchase shares of any class of capital stock of the Bank. The Bank, at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders.
Authority is hereby expressly granted to the Board of Directors from time to time
to issue any authorized but unissued shares of Common Stock for such consideration and on such terms as it may determine. Every share of Common Stock of the Bank shall have one vote at any meeting of the shareholders and may be voted by the
shareholders of record either in person or by proxy.
In the event of any liquidation, dissolution, or winding up of the
Bank or upon the distribution of the assets of the Bank, the assets of the Bank remaining after satisfaction of all obligations and liabilities shall be divided and distributed among the holders of the Common Stock ratably. Neither the merger or
consolidation of the Bank with another corporation nor the sale or lease of all or substantially all of the assets of the Bank shall be deemed to be a liquidation, dissolution, or winding up of the Bank or a distribution of its assets.
The holders of Common Stock shall have the exclusive power to vote and shall have one vote in respect of each share of such
stock held by them.
The Chief Executive Officer, Secretary, Board of Directors, or holder(s) of at least 90% of the issued and
outstanding voting stock of the Bank may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of Alabama, notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be
given by first-class mail, postage prepaid, mailed at least ten days prior to the date of such meeting to each shareholder of record at his address as shown upon the stock transfer book of this Bank.
The Bank reserves the right to amend, alter, change or repeal any provision contained in these Restated Articles of Incorporation, in the
manner now or hereafter provided by law, at any regular or special meeting of the shareholders, and all rights conferred upon officers, directors and shareholders of the Bank hereby are granted subject to this reservation.
The Bank shall indemnify its officers, directors, employees, and agents to the fullest extent permitted by the Constitution and laws of the
State of Alabama.
This amendment to and restatement of the Articles of Incorporation was duly adopted by vote of
the directors of the Bank pursuant to Section 10A-2-10.03 of the Alabama Business Corporation Law and was approved by the sole shareholder in accordance with Section 10A-2-10.03, by unanimous consent of the holder of 21,546 shares of
common stock, constituting all of the shares of capital stock of the Bank outstanding, indisputably represented, and entitled to vote on the amendment. The date of adoption of the Restated Articles of Incorporation was July 17, 2014.
IN WITNESS WHEREOF, said Regions Bank has caused this certificate to be signed by Fournier J. Gale, III, its Senior Executive Vice President,
General Counsel and Corporate Secretary, this 17th day of July, 2014.
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REGIONS BANK |
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By: |
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/s/ Fournier J. Gale, III |
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Fournier J. Gale, III |
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Senior Executive Vice President, General |
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Counsel and Corporate Secretary |
STATE OF ALABAMA
MONTGOMERY COUNTY
I, John D. Harrison, as
Superintendent of Banks for the State of Alabama, do hereby certify that I have fully and duly examined the foregoing Articles of Amendment whereby the shareholder of Regions Bank, a banking corporation located at Birmingham, Alabama, proposes to
Restate the Articles of Incorporation.
See attached Articles of Amendment which Restate the Articles of Incorporation of Regions Bank.
I do hereby certify that said Amendment of the Articles of Incorporation appear to be in substantial conformity with the requirements of
law and they are hereby approved. Upon the filing of the same, together with this Certificate of Approval, with the proper agency as required by law, the Restated Articles of Incorporation of said bank shall be effective.
Given under my hand and seal of office this the 30th day of July, 2014.
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/s/ John D. Harrison |
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John D. Harrison |
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Superintendent of Banks |
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Jefferson County |
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I, the Undersigned, as Judge of Probate in and for said County, in said State, hereby certify that the foregoing is a full, true and correct copy of the
instrument with the filing of same as appears of record in this office in vol. 201415 page 9638. Given under my hand and official seal, this the 31st day of July,
2014. |
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/s/ Alan L. King |
Judge of Probate |
EXHIBIT 4
BY-LAWS OF
REGIONS BANK
(As amended July 18, 2013)
ARTICLE I. OFFICES
Section 1.
Registered Office
The registered office shall be established and maintained at the office of the CSC Lawyers Incorporating
Service, Inc., in the City of Montgomery, in the County of Montgomery, in the State of Alabama, and said corporation shall be the registered agent of this Bank in charge thereof.
Section 2. Other Offices
The Bank
may have other offices, either within or without the State of Alabama, at such place or places as the Board of Directors may from time to time appoint or the business of the Bank may require.
Section 3. Principal Place of Business
The principal place of business of the Bank shall be in Birmingham, Alabama.
ARTICLE II. MEETINGS OF STOCKHOLDERS
Section 1. Annual Meeting
Annual
meetings of stockholders for the election of Directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Alabama, and at such time and date as the Board of
Directors, by resolution, shall determine and as set forth in the notice of the meeting.
At each annual meeting, the stockholders
entitled to vote shall elect Directors, and they may transact such other corporate business as may properly come before the meeting.
Section 2.
Special Meeting
Special meetings of the stockholders for any purpose or purposes, other than the election of Directors, may be
called at any time by the Chairman of the Board, the Chief Executive Officer, the President, the Secretary, or by resolution of the Directors. Special meetings of stockholders may be held at such time and place, within or without the State of
Alabama, as shall be stated in the notice of the meeting.
Section 3. Voting
The vote of a majority of the votes cast by the shares entitled to vote on any matter at a meeting of stockholders at which a quorum is present
shall be the act of the stockholders on that matter, except as otherwise required by law or by the articles of incorporation of the Bank.
Section 4.
Quorum
A majority of the outstanding shares of the Bank entitled to vote, represented in person or by proxy, shall constitute a
quorum at meetings of stockholders. If less than a majority of the outstanding shares are represented, a majority of the shares so represented may adjourn the meeting from time to time without further notice, but until a quorum is secured no other
business may be transacted. The stockholders present at a duly organized meeting may continue to transact business until an adjournment notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
ARTICLE III. DIRECTORS
Section 1.
Number of Term
The number of Directors which shall constitute the whole Board of Directors shall be fixed, from time to time,
by resolutions adopted by the Board of Directors, but shall not be less than three persons. The number of Directors shall not be reduced so as to shorten the term of any Director at the time in office.
At each annual meeting of stockholders, all Directors shall be elected for terms of one year, and except as hereinafter provided, each
Director shall hold office until the next annual meeting or until his or her successor shall have been elected and qualified, or until his or her earlier retirement, death, resignation or removal. Directors need not be residents of Alabama.
Section 2. Chairman of the Board and Vice Chairman of the Board
The Board of Directors shall by majority vote designate from time to time from among its members a Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the stockholders and of the Board of Directors of the Bank. He or she shall have and perform such duties as prescribed by the By-Laws and by the Board of Directors. The position of Chairman of the Board is a
Board position, provided however, the position of Chairman of the Board may be held by a person who is also an officer of the Bank.
The
Board of Directors may by majority vote designate from time to time from among its members one or more Vice Chairmen of the Board. A Vice Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors of the
Bank which the Chairman of the Board shall be unable to attend. He or she shall assist the Chairman of the Board in the exercise of his or her duties and shall have and perform such duties as are prescribed from time to time by the Board of
Directors. In the event of the death or incapacity of the Chairman of the Board, he or she shall perform all the duties of the Chairman of the Board until the next annual meeting of the stockholders or until the Board shall have sooner elected a
successor Chairman of the Board. The position of Vice Chairman of the Board is a Board position, provided however, that the position of Vice Chairman of the Board may be held by a person who is also an officer of the Bank.
In the absence of the Chairman of the Board and Vice Chairman of the Board or in case of their inability to act, the Independent Lead
Director, if at the time a Director of the Bank has been designated by the Board of Directors as such, shall have and exercise all the powers and duties of such office and shall preside at all meetings of the Board of Directors. If at any Board of
Directors meeting none of such persons is present or able to act, the Board of Directors shall select one of its members as acting chair of the meeting or portion thereof.
Section 3. Resignations
Any Director may resign at any time. Such resignation shall be made in writing, and shall take effect at the time of its receipt by the
Chairman of the Board, Chief Executive Officer, the President, or the Secretary or at such other time as may be specified therein. The acceptance of a resignation shall not be necessary to make it effective.
Section 4. Vacancies
If the
office of any Director becomes vacant, the remaining Directors in office, though less than a quorum, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor
shall be duly chosen.
Section 5. Removal
Any Director may be removed at any time, with or without cause, by the affirmative vote of the holders of a majority of the outstanding shares
of capital stock of the Bank entitled to vote generally in the election of Directors considered for this purpose as one class cast at a meeting of the stockholders called for that purpose.
Section 6. Powers
The Board of
Directors shall exercise all the powers of the Bank except such as are by law, by the Articles of Incorporation of the Bank or pursuant to the Banks bylaws conferred upon or reserved to the stockholders.
Section 7. Meetings
A regular
meeting of the Board of Directors shall be held immediately before or after the annual meeting of stockholders. Additional regular meetings of the Directors may be held without notice at such places and times as shall be determined from time to time
by resolution of the Directors.
Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief
Executive Officer, the President, or by the Secretary on the written request of a majority of the Board of Directors on at least two days notice to each Director and shall be held at such place or places as may be determined by the Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Articles of Incorporation or these By-Laws, members
of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
Section 8. Quorum
A majority of
the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is
obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. Notwithstanding the withdrawal of enough Directors to leave less than a quorum, the Directors present at a duly organized
meeting may continue to transact business until adjournment.
Section 9. Compensation
Directors shall not receive any stated salary for their services as Directors or as members of committees, except that by resolution of the
Board of Directors, retainer fees, meeting fees, and expenses of attendance at meetings may be authorized. Nothing herein contained shall be construed to preclude any Director from serving the Bank in any other capacity as an officer, agent or
otherwise, and receiving compensation therefore.
Section 10. Action Without Meeting
Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof, may be taken without a
meeting, if prior to such action a written consent thereto is signed by all members of the Board of Directors, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or
committee.
Section 11. Committees
A majority of the whole Board of Directors shall have the authority to designate one or more committees, each committee to consist of one or
more of the Directors of the Bank. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in
the resolution of the Board or in these By-Laws, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Bank, and may authorize the seal of the Bank to be affixed to all papers which may
require it; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not the member or members
constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Section 12. Eligibility
No person
shall be eligible to serve as Director of the Bank unless such person shall be the owner of shares of stock of the parent holding company of the number and held in the manner sufficient to meet the requirements of any applicable law or regulation in
effect requiring the ownership of Directors qualifying shares.
Section 13. Directors Protected
Each Director shall in the performance of his or her duties be fully protected in relying in good faith upon reports made to the Directors by
the officers of the Bank or by state or federal bank examiners or by any independent accountant or by any appraiser selected with reasonable care, or by counsel, or by a committee of the Board, or in relying in good faith upon other records or books
of account of the Bank.
ARTICLE IV. OFFICERS
Section 1. Officers, Elections, Terms
The officers of the Bank shall be a Chief Executive Officer; a President; one or more Regional or Local Presidents if the Board so determines;
one or more Vice Presidents, who may be designated Senior Executive Vice Presidents, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, and Assistant Vice Presidents; a Secretary; one or more Assistant Secretaries; a Chief Financial
Officer; a Controller; an Auditor; and such other officers as may be deemed appropriate. All of such officers shall be appointed annually by the Board of Directors to serve for a term of one year and until their respective successors are appointed
and qualified or until such officers earlier death, resignation, retirement, or removal, except that the Board of Directors may delegate the authority to appoint officers holding the position of Senior Executive Vice President and below in
accordance with procedures established or modified by the Board from time to time. Those Officers who serve in the Trust Department shall be so designated by the word Trust in their title. None of the officers of the Bank need be
Directors. More than one office may be held by the same person.
Section 2. Chief Executive Officer
The Board of Directors shall appoint a Chief Executive Officer of the Bank. The Chief Executive Officer is the most senior executive officer of
the Bank, and shall be vested with authority to act for the Bank in all matters and shall have general supervision of the Bank and of its business affairs, including authority over the detailed operations of the Bank and over its personnel, with
full power and authority during intervals between sessions of the Board to do and perform in the name of the Bank all acts and deeds necessary or proper, in his or her opinion, to be done and performed and to execute for and in the name of the Bank
all instruments, agreements, and deeds which may be authorized to be executed in behalf of the Bank or which may be required by law. The Chief Executive Officer may, but need not, also hold the office of President.
Section 3. President
The
President shall, subject to the control of the Board of Directors and of any committee of the Board having authority in the premises, have, and may exercise the authority to act for the Bank in all ordinary matters and perform other such duties as
directed by the By-Laws, the Board of Directors, or the Chief Executive Officer. Among the officers of the Bank, the President is subordinate to only the Chief Executive Officer and is senior to the other officers of the Bank. The authority of the
President shall include authority over the detailed operations of the Bank and over its personnel with full power and authority during intervals between sessions of the Board to do and perform in the name of the Bank all acts and deeds necessary or
proper, in his or her opinion, to be done and performed and to execute for and in the name of the Bank all instruments, agreements, and deeds which may be authorized to be executed in behalf of the Bank or which may be required by law.
Section 4. Vice Presidents
The
Vice Presidents shall, subject to the control of the Board of Directors, the Chief Executive Officer or the President, have and may exercise the authority vested in them in all proper matters, including authority over the detailed operations of the
Bank and over its personnel.
Section 5. Chief Financial Officer
The Chief Financial Officer or his designee shall have custody of all funds of the Bank. He or his designee shall have and perform such duties
as are incident to the office of Chief Financial Officer and such other duties as may from time to time be assigned to him by the Board of Directors, the Chief Executive Officer, or the President.
Section 6. Secretary
The Secretary shall keep minutes of all meetings of the stockholders and the Board of Directors unless otherwise directed by those bodies. The
Secretary, or in his absence, any Assistant Secretary, shall attend to the giving and serving of all notices of the Bank. He shall perform all the duties incident to the office of Secretary, subject to the control of the Board of Directors, and
shall do and perform such other duties as may from time to time be assigned by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, or the President.
Section 7. Controller
The
Controller shall, under the direction of the Chief Executive Officer, the President, the Chief Financial Officer, or a more senior officer, have general supervision and authority over all reports required of the Bank by law or by any public body or
officer or regulatory authority pertaining to the condition of the Bank and its assets and liabilities. The Controller shall have general supervision of the books and accounts of the Bank and its methods and systems of recording and keeping accounts
of its business transactions and of its assets and liabilities. The Controller shall be responsible for preparing statements showing the financial condition of the Bank and shall furnish such reports and financial records as may be required of him
or her by the Board of Directors or by the Chief Executive Officer, the President, the Chief Financial Officer, or other more senior officer.
Section
8. Auditor
The Auditors office may be filled by an employee of the Bank or his or her duties may be performed by an
employee or committee of the parent company of the Bank. The Auditor shall have general supervision of the auditing of the books and accounts of the Bank, and shall continuously and from time to time check and verify the Banks transactions,
its assets and liabilities, and the accounts and doings of the officers, agents and employees of the Bank with respect thereto. The Auditor whether an employee of the Bank or of its parent shall be directly accountable to and under the jurisdiction
of the Board of Directors and, if applicable, its designated committee, acting independently of all officers, agents and employees of the bank. The Auditor shall render reports covering matters in his or her charge regularly and upon request to the
Board and, if applicable, its designated committee.
Section 9. Other Officers and Agents
The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors. The functions of a cashier of the Bank may be performed by the Controller or any other officer of the Bank whose area of responsibility includes the function to be performed.
Section 10. Officer in Charge of Wealth Management
The officer in charge of Wealth Management shall be designated as such by the Board of Directors and shall exercise general supervision and
management over the affairs of Private Wealth Management, Institutional Services, and Wealth Management Operations and Support, which groups are responsible for exercise of the Banks trust powers. That officer is hereby empowered to appoint
all necessary agents or attorneys; also to make, execute and acknowledge all checks, bonds, certificates, deeds, mortgages, notes, releases, leases, agreements, contracts, bills of sale, assignments, transfers, powers of attorney or of substitution,
proxies to vote stock, or any other instrument in writing that may be necessary in the purchase, sale, mortgage, lease, assignment, transfer, management or handling, in any way of any property of any description held or controlled by the Bank in any
fiduciary capacity. Said officer shall have such other duties and powers as shall be designated by the Board of Directors.
Section 11. Other
Officers in Private Wealth Management, Institutional Services, and Wealth Management Operations and Support
The officer in charge
of Wealth Management shall appoint officers responsible for the activities of Private Wealth Management, Institutional Services, and Wealth Management Operations and Support. Various other officers as designated by the officers responsible for the
activities of Private Wealth Management, Institutional Services, and Wealth Management Operations and Support are empowered and authorized to make, execute, and acknowledge all checks, bonds, certificates, deeds, mortgages, notes, releases, leases,
agreements, contracts, bills of sale, assignments, transfers, powers of attorney or substitution, proxies to vote stock or any other instrument in writing that may be necessary to the purchase, sale, mortgage, lease, assignments, transfer,
management or handling in any way, of any property of any description held or controlled by the Bank in any fiduciary capacity.
Section 12. Removal
and Retirement of Officers
At its pleasure, the Board of Directors may remove any officer from office at any time by a majority
vote of the Board, provided however that the terms of any employment or compensation contract shall be honored according to its terms. An individuals status as an officer will terminate without the necessity of any other action or ratification
immediately upon termination for any reason of the individuals employment by the Bank.
ARTICLE V. MISCELLANEOUS
Section 1. Certificates of Stock
Certificates of stock of the Bank shall be signed by the President and the Secretary of the Bank, which signatures may be represented by a
facsimile signature. The certificate may be sealed with the seal of the Bank or an engraved or printed facsimile thereof. The certificate represents the number of shares of stock registered in certificate form owned by such holder.
Section 2. Lost Certificates
In
case of the loss or destruction of any certificate of stock, the holder or owner of same shall give notice thereof to the Chief Executive Officer, the President, any Vice President, or the Secretary of the Bank and, if such holder or owner shall
desire the issue of a new certificate in the place of the one lost or destroyed, he or she shall make affidavit of such loss or destruction and deliver the same to any one of said officers and accompany the same with a bond with surety satisfactory
to the Bank to indemnify the Bank and save it harmless against any loss, cost or damage in case such certificate should thereafter be presented to the Bank, which affidavit and bond shall be, at the discretion of the deciding party listed in this
Section 2, unless so ordered by a court having jurisdiction over the matter, approved or rejected by the Board of Directors or by the Chief Executive Officer or by the President or an Executive or Senior Vice President before the issue of any
new certificate.
Section 3. Transfer of Shares
Title to a certificate and to the shares represented thereby can be transferred only by delivery of the certificate endorsed either in blank or
to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby, or by delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney
to sell, assign, or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a
specified person.
Section 4. Fractional Shares
No fractional part of a share of stock shall ever be issued by this Bank.
Section 5. Stockholders Record Date
In order that the Bank may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 6. Dividends
Subject to the provisions of the Articles of Incorporation, the Board of Directors may, out of funds legally available therefore at any regular
or special meeting, declare dividends upon the capital stock of the Bank as and when they deem expedient. Before declaring any dividend there may be set apart out of any fund of the Bank available for dividends, such sum or sums as the Directors
from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the Directors shall deem conducive to the interests of the Bank. No dividends
shall be declared which exceed the amounts authorized by applicable laws and regulations or are otherwise contrary to law.
Section 7. Seal
The corporate seal of the Bank shall be circular in shape and shall include the words Regions Bank around the outer edge
of the circle and the word Seal in the center of the circle. The seal may also include appropriate descriptors, such as the words: An Alabama Banking Corporation. The Secretary of the Bank shall have custody of the seal and
is authorized to affix the same to instruments, documents, and papers as required by law or as customary or appropriate in the Secretarys judgment and discretion. Without limiting the general authority of the Board of Directors of the Bank to
name, appoint, remove, and define the duties of officers of the Bank, the Secretary is further authorized to cause reproductions of the seal to be made, distributed to, and used by officers and employees of the Bank whose duties and responsibilities
involve the execution and delivery of instruments, documents, and papers bearing the seal of the Bank. In this regard, the Secretary is further authorized to establish, implement, interpret, and enforce policies and procedures governing the use of
the seal and the authorization by the Secretary of officers and employees of the Bank to have custody of and to use the
seal. Such policies and procedures may include (i) the right of the Secretary to appoint any Bank employee as an Assistant Secretary of the Bank, if such appointment would, in the
Secretarys judgment, be convenient with respect to such employees custody and use of a seal and/or (ii) the right of the Secretary to authorize Bank employees to have and use seals as delegates of the Secretary without appointing
such employees as Assistant Secretaries of the Bank.
Section 8. Fiscal Year
The fiscal year of the Bank shall be the calendar year.
Section 9. Checks, Drafts, Transfers, etc
The Chief Executive Officer, the President, any Regional or Local President, any Vice President or Assistant Vice President, any Branch Manager
or any other employee designated by the Board of Directors, is authorized and empowered on behalf of the Bank and in its name to sign and endorse checks and warrants, to draw drafts, to issue and sign cashiers checks, to guarantee signatures,
to give receipts for money due and payable to the Bank, to sell, assign and transfer shares of capital stock, bonds, or other personal property or securities standing in the name of or held by the Bank, whether in its own right or in any fiduciary
capacity, and to make or join in such consents, requests or commitments with respect to the same as may be appropriate or authorized as to the holder thereof, and to sign such other papers and do such other acts as are necessary in the performance
of his or her duties. The authority conveyed to any employee designated by the Board may be limited by general or specific resolution of the Board.
Section 10. Notice and Waiver of Notice
Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so
required shall be deemed to be sufficient if given by depositing the same in the United States, mail, postage, prepaid, or by telegram, teletype, facsimile transmission or other form of wire, wireless, or other electronic communication or by private
carrier addressed to the person entitled thereto at his address as it appears on the records of the Bank, and such notice shall be deemed to have been given on the date of such mailing. Stockholders not entitled to vote shall not be entitled to
receive notice of meetings except as otherwise provided by statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Articles of Incorporation of the Bank or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
Section 11. Right of Indemnity
To the full extent allowed by Section 10-2B-8.5 et seq. of the Code of Alabama (1975), or any statute amendatory or supplemental thereof,
the Bank shall indemnify and hold harmless each director or officer now or hereafter serving the Bank against any loss and reasonable expenses actually and necessarily incurred by him or her in connection with the defense of any claim, or any
action, suit or proceeding against him or her or in which he or she is made a party, by reason of his or her being or having been a Director or officer of the Bank, or who, while a Director or officer of the Bank, is or was serving as at the
Banks request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. Such right of indemnity shall not be deemed
exclusive of any other rights to which such Director or officer may be entitled under any statute, article of incorporation, rule of law, other bylaw, agreement, vote of stockholders or directors, or otherwise. Nor shall anything herein contained
restrict the right of the Bank to indemnify or reimburse any officer or Director in any proper case even though not specifically provided for herein. The Bank may purchase and maintain insurance in such amounts as the Board of Directors deems
appropriate on behalf of said Directors or officers so as to offset any potential liability asserted against said Directors or officers acting in such capacity as described in these By-Laws.
Section 12. Execution of Instruments and Documents
The Chief Executive Officer, or the President, or any Regional or Local President or any Vice President is authorized, in his or her
discretion, to do and perform any and all corporate and official acts in carrying on the business of the Bank, including, but not limited to, the authority to make, execute, acknowledge, accept and deliver any and all deeds, mortgages, releases,
bills of sale, assignments, transfers, leases (as lessor or lessee), powers of attorney or of substitution, servicing or sub-servicing agreements, vendor agreements, proxies to vote stock or any other instrument in writing that may be necessary in
the purchase, sale, lease, assignment, transfer, discount, management or handling in any way of any property of any description held, controlled or used by Bank or to be held, controlled or used by Bank, either in its own or in its fiduciary
capacity and including the authority from time to time to open bank accounts with the Bank or any other institution, to borrow money in such amounts for such lengths of time, at such rates of interest and upon such terms and conditions as any said
officer may deem proper and to evidence the indebtedness thereby created by executing and delivering in the name of the Bank promissory notes or other appropriate evidences of indebtedness, and to guarantee the obligations of any subsidiary or
affiliate of the Bank. The enumeration herein of particular powers shall not restrict in any way the general powers and authority of said officers.
By way of example and not limitation, such officers of the Bank are authorized to execute, accept, deliver and issue, on behalf of the Bank
and as binding obligations of Bank, such agreements and instruments as may be within the officers area of responsibility, including, as applicable, agreements and related documents (such as schedules, confirmations, transfers, assignments,
acknowledgments, and other documents) relating to derivative transactions, loan or letter of credit transactions, syndications, participations, trades, purchase and sale or discount transactions, transfers and assignments, servicing and
sub-servicing agreements, vendor agreements, securitizations, and transactions of whatever kind or description arising in the conduct of the Banks business.
The authority to execute and deliver documents, instruments, and agreements may be limited by resolution of the Board of Directors, by a
committee of the Board of Directors, by the Chief Executive Officer, or by the President, by reference to subject matter, category, amount, geographical location, or any other criteria, and may be made subject to such policies, procedures, and
levels of approval as may be adopted or amended from time to time.
Section 13. Voting Banks Securities
Unless otherwise ordered by the Board of Directors, the Chief Executive Officer, the President, any Executive Vice President or above, the
Controller, the Banks General Counsel, and any other officer as may be designated by the Board of Directors shall have full power and authority on behalf of the Bank to attend, and to act and to vote, and to execute a proxy or proxies
empowering others to attend, and to act and to vote, at any meetings of security holders of any of the corporations in which the Bank may hold securities and, at such meetings, such officer shall possess and may exercise any and all rights and
powers incident to the ownership of such securities which, as the owner thereof, the Bank might have possessed and exercised, if present.
Section 14.
Bonds of Officers and Employees
The Board of Directors shall from time to time designate the officers and employees who shall
be required to give bond and fix the amounts thereof.
Section 15. Satisfaction of Loans
On payment of sums lent, for which security shall have been taken either by way of mortgage or other lien on real or personal property or by
the pledge of collateral, whether said loans have been made from funds of the Bank or from funds held in fiduciary capacity, any officer of the Bank shall have the power and authority to enter the fact of payment or satisfaction on the margin of the
record of any such security or in any other legal manner to cancel such indebtedness and to release said security, and the Chief Executive Officer or the President or any Regional or Local President or any Vice President of the Bank shall have power
and authority to execute a power of attorney authorizing the cancellation, release or satisfaction of any mortgage or other security given to the Bank in its corporate or fiduciary capacity, by such person as he or she may in his or her discretion
appoint.
Section 16. Emergencies
In the event of an emergency declared by the President of the United States or the person performing his or her functions, the officers and
employees of this Bank will continue to conduct the affairs of the Bank under such guidance from the Directors as may be available except as to matters which by statute require specific approval of the Board of Directors and subject to conformance
with any governmental directives or directives of the Federal Deposit Insurance Corporation during the emergency.
ARTICLE VI.
AMENDMENTS
Except as otherwise provided herein or in the articles of incorporation of the Bank, these By-Laws may be amended or
repealed by the affirmative vote of a majority of the Directors then holding office at any regular or special meeting of the Board of Directors, and the Stockholders may make, alter or repeal any By-Laws, whether or not adopted by them.
EXHIBIT 6
November 12, 2014
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.
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Very truly yours, |
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REGIONS BANK |
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/s/ Janet Ricardo |
Janet Ricardo Vice President |
EXHIBIT 7
Consolidated Report of Condition for Insured Banks
and Savings Associations
REGIONS BANK
As of the
close of business on September 30 2014:
|
|
|
|
|
ASSETS |
|
Thousands of Dollars |
|
Cash and balances due from depository institutions: |
|
|
4,768,368 |
|
Securities: |
|
|
24,044,181 |
|
Federal funds sold and securities purchased under agreement to resell: |
|
|
20,000 |
|
Loans and leases held for sale: |
|
|
503,795 |
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Loans and leases net of unearned income and allowance: |
|
|
75,428,684 |
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Trading Assets: |
|
|
397,294 |
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Premises and fixed assets: |
|
|
2,179,351 |
|
Other real estate owned: |
|
|
117,639 |
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Investments in unconsolidated subsidiaries and associated companies: |
|
|
0 |
|
Direct and indirect investments in real estate ventures: |
|
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0 |
|
Intangible assets: |
|
|
4,299,394 |
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Other assets: |
|
|
6,041,043 |
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Total Assets: |
|
|
118,289,749 |
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|
|
|
|
|
LIABILITIES |
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Thousands of Dollars |
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Deposits |
|
|
96,378,892 |
|
Federal funds purchased and securities sold under agreements to repurchase |
|
|
1,893,335 |
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Trading liabilities: |
|
|
0 |
|
Other borrowed money: |
|
|
161,850 |
|
Subordinated notes and debentures: |
|
|
1,599,307 |
|
Other Liabilities: |
|
|
1,812,016 |
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Total Liabilities |
|
|
102,088,805 |
|
|
|
|
|
|
EQUITY CAPITAL |
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Thousands of Dollars |
|
Common Stock |
|
|
103 |
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Surplus |
|
|
17,156,072 |
|
Retained Earnings |
|
|
(781,371 |
) |
Accumulated other comprehensive income |
|
|
(173,860 |
) |
Total Equity Capital |
|
|
16,200,944 |
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Total Liabilities and Equity Capital |
|
|
118,289,749 |
|
EXHIBIT 99.1
FORM OF LETTER OF TRANSMITTAL
Martin Marietta Materials, Inc.
Offer to Exchange up to $300,000,000 Floating Rate Senior Notes due 2017 for a Like Principal Amount of Floating Rate
Senior Notes due 2017 which have been registered under the Securities Act of 1933 (the 2017 Notes Exchange Offer);
Offer to Exchange up to $400,000,000 4.250% Senior Notes due 2024 for a Like Principal Amount of 4.250% Senior Notes due 2024 which have been registered under the Securities Act of 1933 (the 2024
Notes Exchange Offer and, together with the 2017 Notes Exchange Offer, the exchange offers and each an exchange offer).
Pursuant to the Prospectus, dated , 2014
THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
, 2014, SUBJECT TO THE COMPANYS RIGHT TO EXTEND THE EXPIRATION DATE FOR ANY EXCHANGE OFFER (SUCH DATE AND TIME, AS IT MAY BE EXTENDED, THE EXPIRATION DATE).
TENDERS MAY BE WITHDRAWN PRIOR TO THE EXPIRATION DATE.
DELIVERY TO:
Regions Bank (the Exchange Agent)
For Delivery by Hand, Overnight Delivery, Registered or Certified Mail:
10245 Centurion Parkway
Jacksonville, FL 32256
Attn: Janet Ricardo
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By Facsimile: |
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To Confirm by Telephone: |
(205) 261-7940 |
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(904) 998-4982 |
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For Information, Call: |
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(904) 998-4982 |
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Delivery of this Letter of Transmittal (this Letter) to an address other than as set
forth above, or transmission of this Letter via facsimile other than as set forth above, will not constitute a valid delivery.
The undersigned acknowledges that he or she has received the prospectus, dated , 2014 (the Prospectus), of Martin
Marietta Materials Inc., a North Carolina corporation (the Company), and this Letter, which together constitute the Companys offer to exchange up to $300,000,000 aggregate principal amount of its outstanding, unregistered Floating
Rate Senior Notes due 2017 (the Original 2017 Notes) for an equivalent amount of registered Floating Rate Senior Notes due 2017 (the Exchange 2017 Notes) and up to $400,000,000 aggregate principal amount of its outstanding,
unregistered 4.250% Senior Notes due 2024 (the Original 2024 Notes and, together with the Original 2017 Notes, the Original Notes and each an Original Note) for an equivalent amount of registered 4.250% Senior
Notes due 2024 (the Exchange 2024 Notes and, together with the Exchange 2017 Notes, the Exchange Notes and each an Exchange Note), each upon the terms and subject to the conditions set forth in the Prospectus and
this Letter. The Original Notes and the Exchange Notes are sometimes referred to in this Letter together as the Notes. Capitalized terms used but not defined herein shall have the same meaning given to them in the Prospectus.
For each Original Note accepted for exchange, the holder of such Original Note will receive
an Exchange Note of the same series having a principal amount equal to that of the surrendered Original Note. Interest on the Exchange 2017 Notes will accrue at a per annum floating rate, reset quarterly, equal to three-month LIBOR for U.S. dollars
plus 1.10% (or 110 basis points) and will be payable quarterly in cash in arrears on March 30, June 30, September 30 and December 30, commencing on December 30, 2014. Interest on the Exchange 2024 Notes will accrue at a rate
of 4.250% per annum, payable semi-annually in cash in arrears on January 2 and July 2 of each year, commencing January 2, 2015. In each case, interest will accrue from the most recent date to which interest on the corresponding
series of Original Notes has been paid, or, if no interest has been paid with respect to such series, from July 2, 2014.
The Exchange 2017 Notes will mature on June 30, 2017 and the Exchange 2024 Notes will mature on July 2, 2024. The terms of the
Exchange Notes are substantially identical to the terms of the corresponding series of the Original Notes, except that the Exchange Notes are registered under the Securities Act of 1933 (the Securities Act) and the transfer restrictions,
registration rights and payment of additional interest in case of non-registration applicable to the Original Notes do not apply to the Exchange Notes. The Exchange Notes of a given series will evidence the same debt as the Original Notes of such
series and will be issued under the same indenture and, except as described in the immediately preceding sentence, will be entitled to the same benefits under the indenture as the Original Notes being exchanged.
In the event that (1) any changes in law or the applicable interpretations of the staff of the SEC do not permit the Company to
effect the exchange offers, (2) any action or proceeding is instituted or threatened in any court or by any governmental agency which might materially impair the Companys ability to proceed with the exchange offers, or (3) the
Company has not obtained any governmental approval which it deems necessary for the consummation of the exchange offers, the Company will not be required to accept for exchange, or to exchange any Exchange Notes for, any Original Notes and may
terminate any or all of the exchange offers. These conditions are for the Companys sole benefit and may be asserted by the Company regardless of the circumstances giving rise to any of these conditions. The Company may waive these conditions
in its sole discretion in whole or in part at any time and from time to time. The failure by the Company at any time to exercise any of the above rights shall not constitute a waiver of such right, and such right shall be considered an ongoing right
which the Company may assert at any time and from time to time.
If the Company determines that any of the events listed above
has occurred, it may, subject to applicable law (1) refuse to accept any Original Notes and promptly return all tendered Original Notes to the tendering holders and terminate any or all of the exchange offers, (2) extend any or all of the
exchange offers and retain all Original Notes tendered before the expiration of the exchange offers, subject, however, to the rights of holders to withdraw those Original Notes, or (3) waive unsatisfied conditions relating to any or all of the
exchange offers and accept all properly tendered Original Notes which have not been withdrawn. If this waiver constitutes a material change to any or all of the exchange offers, the Company will promptly disclose the waiver in a manner reasonably
calculated to inform the holders of Original Notes of the waiver, and extend the offer if required by law.
The Prospectus, as
it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Original Notes where such Original Notes were acquired as a result of market-making activities
or other trading activities. Subject to certain exceptions described in the registration rights agreement dated July 2, 2014, the Company has agreed to use its commercially reasonable efforts to keep the registration statement of which this
Prospectus forms a part continuously effective, supplemented and amended as required by the registration rights agreement to the extent necessary to ensure that it is available for resales of Exchange Notes, and to ensure that it conforms in all
material respects with the requirements of the registration rights agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, provided, however, that such period shall not be
required to exceed 90 days or such longer period if extended pursuant to the terms of the registration rights agreement. During this period, the Company will promptly send additional copies of the Prospectus and any amendment or supplement to the
Prospectus to any broker-dealer that requests such documents.
2
The Company reserves the right, at any time or from time to time, to extend any exchange
offer at its sole discretion, in which event the term Expiration Date for such exchange offer shall mean the latest time and date to which such exchange offer is extended. The Company intends to publicly announce any extension by making
a timely release through an appropriate news agency.
This Letter is to be completed by a holder of Original Notes either if
certificates for such Original Notes are forwarded herewith or if a tender is to be made by book-entry transfer to the Exchange Agents account at The Depository Trust Company (DTC or the Book-Entry Transfer Facility) in
accordance with the procedures set forth in the Prospectus under the caption The Exchange OffersProcedures For Tendering and an Agents Message (as defined below) is not delivered. Tenders by book-entry transfer may also be
made by delivering an Agents Message in lieu of this Letter. The term Agents Message means a message, transmitted by the Book- Entry Transfer Facility to and received by the Exchange Agent and forming a part of a Book-Entry
Confirmation (as defined below), which states that the Book-Entry Transfer Facility has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by this
Letter and that the Company may enforce this Letter against such participant. The term Book- Entry Confirmation means confirmation of the book-entry tender of Original Notes into the Exchange Agents account at the Book-Entry
Transfer Facility.
Delivery of documents to the Book-Entry Transfer Facility in accordance with its procedures does not
constitute delivery to the Exchange Agent.
The method of delivery of Original Notes and this Letter and all other
required documents to the Exchange Agent is at the election and risk of the holders. Instead of delivery by mail, the Company recommends that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to
assure delivery to the Exchange Agent before the Expiration Date. No Letter or Original Notes should be sent to the Company.
3
The undersigned has completed the appropriate boxes below and signed this Letter to indicate
the action the undersigned desires to take with respect to the exchange offers.
List below the Original Notes to which this
Letter relates. If the space provided below is inadequate, the certificate numbers and principal amount at maturity of Original Notes should be listed on a separate signed schedule affixed hereto.
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DESCRIPTION OF ORIGINAL 2017 NOTES |
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1 |
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2 |
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3 |
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank) |
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Certificate Number(s)* |
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Aggregate Principal Amount Represented |
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Principal Amount Tendered** |
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Total |
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* Need not be completed if Original 2017 Notes are being tendered by
book-entry transfer. ** Unless otherwise indicated in this column, a
holder will be deemed to have tendered ALL of the Original 2017 Notes represented by the Original 2017 Notes indicated in column 2. See Instruction 2. Original 2017 Notes tendered must be in minimum denominations of $2,000 in principal and integral
multiples of $1,000 in excess thereof. See Instruction 1. |
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DESCRIPTION OF ORIGINAL 2024 NOTES |
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1 |
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2 |
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3 |
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank) |
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Certificate Number(s)* |
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Aggregate Principal Amount Represented |
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Principal Amount Tendered** |
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Total |
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* Need not be completed if Original 2024 Notes are being tendered by
book-entry transfer. ** Unless otherwise indicated in this column, a
holder will be deemed to have tendered ALL of the Original 2024 Notes represented by the Original 2024 Notes indicated in column 2. See Instruction 2. Original 2024 Notes tendered must be in minimum denominations of $2,000 in principal and integral
multiples of $1,000 in excess thereof. See Instruction 1. |
4
¨ |
CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING: |
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Name of Tendering Institution |
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Account Number |
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Transaction Code Number |
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By crediting the Original Notes to the Exchange Agents account at the Book-Entry Transfer
Facilitys Automated Tender Offer Program (ATOP) and by complying with applicable ATOP procedures with respect to the exchange offers, including transmitting to the Exchange Agent an Agents Message in which the holder of the
Original Notes acknowledges and agrees to be bound by the terms of, and makes the representations and warranties contained in, this Letter, the participant in the Book-Entry Transfer Facility confirms on behalf of itself and the beneficial owners of
such Original Notes all provisions of this Letter (including all representations and warranties) applicable to it and such beneficial owner as fully as if it had completed the information required herein and executed and transmitted this Letter to
the Exchange Agent.
¨ |
CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH. |
¨ |
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
|
5
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon
the terms and subject to the conditions of the exchange offers, the undersigned hereby tenders to the Company the aggregate principal amount of the Original Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the
Original Notes tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Original Notes as are being tendered hereby. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as the undersigneds true and lawful agent and attorney-in-fact with respect to such tendered Original Notes, with full power of substitution, among other things, to cause the Original Notes to be
assigned, transferred and exchanged.
The undersigned hereby represents and warrants that (i) the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the Original Notes tendered hereby and that the Company will acquire good, marketable and unencumbered title to the Original Notes, free and clear of all security interests, liens,
restrictions, charges and encumbrances or other obligations relating to their sale or transfer and not subject to any adverse claim when the Original Notes are accepted by the Company; (ii) the undersigned is not an affiliate, as
defined in Rule 405 under the Securities Act, of the Company or its subsidiaries; (iii) any Exchange Notes to be received by the undersigned will be acquired in the ordinary course of the undersigneds business; and (iv) at the time
of commencement of the exchange offers it has not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to participate in the distribution, as defined in the Securities Act, of the Exchange Notes it will
receive in the exchange offers.
In addition, if the undersigned is a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of the Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Original Notes, it represents that the Original Notes to
be exchanged for Exchange Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an underwriter within the meaning of the Securities Act.
The undersigned also acknowledges that the exchange offers are being made by the Company based upon the Companys understanding of interpretations by the staff of the SEC as set forth in no-action
letters issued to third parties, that the Exchange Notes issued in exchange for the Original Notes pursuant to the exchange offers may be offered for resale, resold and otherwise transferred by holders thereof, without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided that: (i) such holder is not an affiliate, as defined in Rule 405 under the Securities Act, of the Company or its subsidiaries; (ii) such Exchange
Notes received by the undersigned are acquired in the ordinary course of the undersigneds business; and (iii) such holder is not engaged in, does not intend to engage in, and has no arrangement or understanding with any person to
participate in the distribution, as defined in the Securities Act, of the Exchange Notes.
However, the Company has not sought
its own no-action letter and therefore the staff of the SEC has not considered the exchange offers in the context of a no-action letter. There can be no assurance that the staff of the SEC would make a similar determination with respect to the
exchange offers as in other circumstances. The Company will not protect any holder against any loss incurred as a result of liability that holders may incur under the Securities Act should the SEC hold otherwise. If a holder of Original Notes is an
affiliate of the Company or its subsidiaries, acquires the Exchange Notes other than in the ordinary course of such holders business or is engaged in or intends to engage in a distribution of the Exchange Notes or has any arrangement or
understanding with respect to the distribution of the Exchange Notes to be acquired pursuant to the exchange offers, such holder could not rely on the applicable interpretations of the staff of the SEC and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction.
6
The undersigned will, upon request, execute and deliver any additional documents deemed by
the Company or the Exchange Agent to be necessary or desirable to complete the sale, assignment and transfer of the Original Notes tendered hereby. All authority conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of
the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in The Exchange OffersWithdrawal of Tenders section of the Prospectus.
Unless otherwise indicated in the box entitled Special Issuance Instructions below, please deliver the Exchange Notes in the
name of the undersigned or, in the case of a book-entry delivery of the Original Notes, please credit the account indicated above maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under the box entitled
Special Delivery Instructions below, please send the Exchange Notes to the undersigned at the address shown above in the applicable box above.
7
THE UNDERSIGNED, BY COMPLETING THE APPLICABLE BOX OR BOXES ABOVE AND SIGNING THIS LETTER,
WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AS SET FORTH IN SUCH BOX ABOVE.
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Original Notes not exchanged and/or Exchange Notes are to be
issued in the name of and sent to someone other than the person(s) whose signature (s) appear(s) on this Letter, or if Original Notes delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account indicated above.
Issue Exchange Notes
and/or Original Notes to:
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Name(s): |
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(Please Type or Print) |
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(Please Type or Print) |
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Address: |
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(Including Zip Code) |
(Complete accompanying IRS Form W-9) |
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¨ |
Credit unexchanged Original Notes delivered by book-entry transfer to the Book-Entry Transfer Facility account set forth below. |
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(Book-Entry Transfer Facility
Account Number, if applicable) |
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Original Notes not exchanged and/or Exchange Notes are to be
sent to someone other than the person(s) whose signature(s) appear(s) on this Letter or to such person(s) at an address other than shown in the box entitled, Description of Original 2017 Notes, and/ or Description of Original 2024
Notes on this Letter above.
Mail Exchange Notes and/or Original Notes to:
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Name(s): |
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(Please Type or Print) |
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(Please Type or Print) |
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Address: |
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(Including Zip Code) |
IMPORTANT: THIS LETTER OR A
FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES FOR ORIGINAL NOTES) OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
8
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying IRS Form W-9 below)
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X: |
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X: |
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(Signature(s) of Registered Owner(s)) |
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(Date) |
Area Code and Telephone Number:
If a holder is tendering any Original Notes, this Letter must be signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Original Notes or on a security position listing or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 3.
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Name(s): |
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Title: |
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(Please Type or Print) |
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Capacity: |
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Address: |
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(Including Zip Code) |
SIGNATURE GUARANTEE
(if Required by Instruction 3)
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Signature Guaranteed by an Eligible Institution: |
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(Authorized Signature) |
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(Title) |
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(Name and Firm) |
Date:
9
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Offer to Exchange up
to $300,000,000 Floating Rate Senior Notes due 2017 for a Like Principal Amount of Floating Rate Senior Notes due 2017 which have been registered under the Securities Act of 1933 (the 2017 Notes Exchange Offer); and
Offer to Exchange up to $400,000,000 4.250% Senior Notes due 2024 for a Like Principal Amount of 4.250% Senior Notes due 2024 which
have been registered under the Securities Act of 1933 (the 2024 Notes Exchange Offer and, together with the 2017 Notes Exchange Offer, the exchange offers and each an exchange offer).
Pursuant to the Prospectus, dated , 2014
1. |
Delivery of this Letter and the Original Notes. |
This Letter or, in lieu thereof, an Agents Message stating that the holder has expressly acknowledged receipt of, and agrees to be bound by and held accountable by, this Letter, is to be completed
by or received with respect to holders of Original Notes either if certificates are to be forwarded herewith or if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in The Exchange
OffersProcedures for Tendering section of the Prospectus. Certificates for all physically tendered Original Notes (or Book-Entry Confirmation), as well as a properly completed and duly executed Letter (or facsimile thereof) and any other
documents required by this Letter (or, in lieu thereof, an Agents Message), must be received by the Exchange Agent at the address set forth herein on or prior to the Expiration Date. Original Notes tendered hereby must be in minimum
denominations of $2,000 in principal and any integral multiple of $1,000 in excess thereof.
The method of delivery of this
Letter, the Original Notes and all other required documents is at the election and risk of the tendering holders. Instead of delivery by mail, it is recommended that holders use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure delivery to the Exchange Agent before the Expiration Date. No Letter or Original Notes should be sent to the Company. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to
effect the tenders for such holders.
See The Exchange Offers section of the Prospectus.
2. |
Partial Tenders (not applicable to holders of Original Notes who tender by book-entry transfer); Withdrawals. |
If less than all of the Original Notes evidenced by a submitted certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Original Notes to be tendered in the box(es) above entitled Description of Original 2017 NotesPrincipal Amount Tendered and/or Description of Original 2024 NotesPrincipal Amount
Tendered. A newly reissued certificate for the Original Notes submitted but not tendered will be sent to such holder as soon as practicable after the Expiration Date. All of the Original Notes delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise clearly indicated.
A tender pursuant to the exchange offers may be withdrawn at any time
prior to the Expiration Date. To be effective, a written or facsimile transmission notice of withdrawal must: (i) be received by the Exchange Agent prior to the Expiration Date; (ii) specify the name of the person who deposited the
Original Notes to be withdrawn; (iii) identify the Original Notes to be withdrawn (including the certificate number(s), if any, and principal amount of such Original Notes); (iv) be signed by the depositor in the same manner as the
original signature on this Letter by which such Original Notes were tendered (including any required signature
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guarantees) or be accompanied by documents of transfer sufficient to have the trustee register the transfer of such Original Notes into the name of the person withdrawing the tender; and
(v) specify the name in which any such Original Notes are to be registered, if different from that of the depositor. The Exchange Agent will return the properly withdrawn Original Notes promptly following receipt of notice of withdrawal. If
Original Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Original Notes or
otherwise comply with the Book-Entry Transfer Facilitys procedures. All questions as to the validity of notices of withdrawal, including time of receipt, will be determined by the Company, in its sole discretion, and such determination will be
final and binding on all parties.
3. |
Signatures on this Letter, Bond Powers and Endorsements; Guarantee of Signatures. |
If this Letter is signed by the registered holder(s) of the Original Notes tendered hereby, the signature must correspond exactly with the
name as written on the face of the certificates or on DTCs security position listing without alteration, enlargement or any change whatsoever.
If any tendered Original Notes are owned of record by two or more joint owners, all such owners must sign this Letter.
If any tendered Original Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter as there are different
registrations of certificates.
When this Letter is signed by the registered holder(s) (which term, for the purposes described
herein, shall include the Book-Entry Transfer Facility whose name appears on a security listing as the owner of the Original Notes) of the Original Notes specified herein and tendered hereby, no endorsements of certificates or separate bond powers
are required. If, however, the Exchange Notes are to be issued to a person other than the registered holder(s), then endorsements of any certificates transmitted hereby or separate bond powers are required. Signatures on such certificates must be
guaranteed by an Eligible Institution (as defined below).
If this Letter is signed by a person other than the registered
holder(s) of any Original Notes specified therein, such certificate(s) must be endorsed by such registered holder(s) or accompanied by separate written instruments of transfer or endorsed in blank by such registered holder(s) in form satisfactory to
the Company and duly executed by the registered holder, in either case signed exactly as such registered holders or holders name(s) appear(s) on the Original Notes.
If this Letter or any certificates of Original Notes or separate written instruments of transfer or exchange are signed or endorsed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or other persons acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Company, evidence
satisfactory to the Company of their authority to so act must be submitted with this Letter.
Signature on a Letter or a
notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution unless the Original Notes are being or were tendered (i) by a registered holder who has not completed the box entitled Special Payment
Instructions or Special Delivery Instructions on the Letter or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantee must be by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program (each such entity an Eligible Institution).
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4. |
Special Issuance and Delivery Instructions. |
Tendering holders of Original Notes should indicate in the applicable box the name and address to which Exchange Notes issued pursuant to the exchange offers are to be issued or sent, if different from
the name or address of the person signing this Letter. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. Holders tendering Original Notes by book- entry
transfer may request that Original Notes not exchanged be credited to such account maintained at the Book- Entry Transfer Facility as such holder may designate hereon. If no such instructions are given, such Original Notes not exchanged will be
returned to the name or address of the person signing this Letter.
5. |
Tax Identification Number and Backup Withholding. |
An exchange of Original Notes for Exchange Notes pursuant to the exchange offers will not be treated as a taxable exchange or other taxable event for U.S. federal income tax purposes. In particular, no
backup withholding or information reporting is required in connection with such an exchange. However, U.S. federal income tax law generally requires that payments of principal and interest on a Note to a holder be subject to backup withholding
unless such holder provides the payor with such holders correct Taxpayer Identification Number (TIN) on Internal Revenue Service (IRS) Form W-9 below or otherwise establishes a basis for exemption. If such holder is an
individual, the TIN is his or her social security number (where applicable). If the payor is not provided with the current TIN or an adequate basis for an exemption, such tendering holder may be subject to a $50 penalty imposed by the IRS. In
addition, such holder may be subject to backup withholding in an amount equal to 28% of all reportable payments of principal and interest.
Certain holders (including, among others, certain foreign individuals and corporations) are not subject to these backup withholding and reporting requirements. Such holders should nevertheless
complete the attached IRS Form W-9 to avoid possible erroneous backup withholding. If the tendering holder of Original Notes is a nonresident alien or foreign entity not subject to backup withholding, such holder must give the Company a completed
IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate IRS Form W-8. These forms may be obtained from the Exchange Agent or from the IRS website, www.irs.gov. See the enclosed IRS Form W-9 for additional instructions.
To prevent backup withholding on reportable payments of principal and interest, each tendering holder of Original Notes must provide its
correct TIN by completing the IRS Form W-9 set forth below, certifying that the TIN provided is correct (or that such holder is awaiting a TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder has not been
notified by the IRS that such holder is subject to backup withholding as a result of a failure to report all interest or dividends or (iii) the IRS has notified the holder that such holder is no longer subject to backup withholding. If the
Original Notes are in more than one name or are not in the name of the actual owner, such holder should consult IRS Form W-9 for information on which TIN to report. If such holder does not have a TIN, such holder should consult IRS Form W-9 for
instructions on applying for a TIN and write applied for in lieu of its TIN. Note: writing applied for on the form means that such holder has already applied for a TIN or that such holder intends to apply for one in the near
future. If a holder writes applied for in lieu of its TIN, backup withholding at a rate of 28% will nevertheless apply to certain reportable payments made by such holder. See the enclosed IRS Form W-9 instructions for additional details.
If backup withholding applies, the payor will withhold the applicable backup withholding amounts from payments to the payee.
Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in overpayment of taxes, a refund or credit may
be obtained from the IRS, provided the relevant information is timely furnished to the IRS.
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Except
as provided immediately below, holders who tender their Original Notes for exchange will not be obligated to pay any transfer taxes in connection therewith. If Exchange Notes are to be delivered to, or are to be issued in the name of, any person
other than the registered holder of the Original Notes tendered hereby; if tendered Original Notes are registered in the name of any person other than the person signing this Letter; or if a transfer tax is imposed for any reason other than the
exchange of Original Notes in connection with the exchange offers, then in each case the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Original Notes specified in this Letter.
The Company reserves the right, in its sole discretion, to waive satisfaction of any or all conditions enumerated in the Prospectus at any
time and from time to time prior to the Expiration Date.
8. |
No Conditional Tenders. |
No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Original Notes, by execution of
this Letter or, in lieu thereof, an Agents Message, shall waive any right to receive notice of the acceptance of their Original Notes for exchange.
None of the Company, the Exchange Agent or any other person is obligated to give notice of any defect or irregularity with respect to any tender of Original Notes nor shall any of them incur any liability
for failure to give any such notice.
9. |
Mutilated, Lost, Stolen or Destroyed Original Notes. |
Any holder whose Original Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions.
10. |
Requests for Assistance or Additional Copies. |
Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter, may be directed to the Exchange Agent, at the address and telephone number
indicated above.
13
Print or type
See Specific Instructions on page 2.
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Form W-9 (Rev. August 2013) Department of the Treasury
Internal Revenue Service |
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Request for Taxpayer
Identification Number and Certification |
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Give Form to the requester. Do not send to the IRS. |
Name (as shown on your income tax return)
Business
name/disregarded entity name, if different from above
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Check appropriate box for federal tax classification : |
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Individual/ sole proprietor |
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C Corporation
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S Corporation
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Partnership
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Trust/estate
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Exemptions (see instructions): |
¨ Limited liability company. Enter the tax classification (C-C
corporation, S-S corporation, P-partnership) |
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Exempt payee code (if any) |
¨ Other (see instructions)
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Exemption from FATCA reporting code (if any) |
Address (number,
street, and apt. or suite no.)
Requesters name and address (optional)
City,
state, and ZIP code
List account number(s) here (optional)
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Part I |
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Taxpayer Identification Number (TIN) |
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Enter your TIN in the appropriate box. The TIN provided
must match the name given on the Name line to avoid backup withholding. For individuals, this is your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the Part I instructions on
page 3. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN on page 3.
Note. If the account is in more than one name, see the chart on page 4 for guidelines on whose number to enter. |
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Social security number |
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Employer identification number |
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Under penalties of perjury, I certify that:
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The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and |
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I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am
subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and |
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I am a U.S. citizen or other U.S. person (defined below), and |
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The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct. |
Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions on page 3.
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Sign Here |
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Signature of U.S.
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General Instructions
Section references are to the Internal Revenue Code unless otherwise noted.
Future developments. The IRS has created a page on IRS.gov for information about Form W-9, at www.irs.gov/w9. Information about any future developments affecting Form W-9 (such as
legislation enacted after we release it) will be posted on that page.
Purpose of Form
A person who is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) to report, for example,
income paid to you, payments made to you in settlement of payment card and third party network transactions, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions
you made to an IRA.
Use Form W-9 only if you are a U.S. person (including a resident alien), to provide your correct TIN to
the person requesting it (the requester) and, when applicable, to:
1. Certify that the TIN you are giving is correct (or you
are waiting for a number to be issued),
2. Certify that you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are a U.S. exempt payee. If applicable, you are also certifying that as a U.S. person,
your allocable share of any partnership income from a U.S. trade or business is
not subject to the withholding tax on foreign partners share of effectively connected income, and
4. Certify that FATCA code(s) entered on this form (if any) indicating that you are exempt from the FATCA reporting, is correct.
Note. If you are a U.S. person and a requester gives you a form other than Form W-9 to request your TIN, you must use the requesters form if it is substantially similar to this Form W-9.
Definition of a U.S. person. For federal tax purposes, you are considered a U.S. person if you are:
An individual who is a U.S. citizen or U.S. resident alien,
A partnership, corporation, company, or association created or organized in the United States or
under the laws of the United States,
An estate (other than a foreign estate), or
A domestic trust (as defined in Regulations section 301.7701 -7).
Special rules for partnerships. Partnerships that conduct a trade or business in the United States are generally required to pay a withholding tax
under section 1446 on any foreign partners share of effectively connected taxable income from such business. Further, in certain cases where a Form W-9 has not been received, the rules under section 1446 require a partnership to presume that a
partner is a foreign person, and pay the section 1446 withholding tax. Therefore, if you are a U.S. person that is a partner in a partnership conducting a trade or business in the United States, provide Form W-9 to the partnership to establish your
U.S. status and avoid section 1446 withholding on your share of partnership income.
Cat. No. 10231X |
Form W-9 (Rev. 8-2013) |
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In the cases below, the following person must give Form W-9 to the partnership for purposes
of establishing its U.S. status and avoiding withholding on its allocable share of net income from the partnership conducting a trade or business in the United States:
In the case of a disregarded entity with a U.S. owner, the U.S. owner of the disregarded entity and not the entity.
In the case of a grantor trust with a U.S. grantor or other U.S. owner, generally,
the U.S. grantor or other U.S. owner of the grantor trust and not the trust, and
In the case of a U.S. trust (other than a grantor trust), the U.S. trust (other than
a grantor trust) and not the beneficiaries of the trust.
Foreign person. If you are a foreign person or the U.S. branch
of a foreign bank that has elected to be treated as a U.S. person, do not use Form W-9. Instead, use the appropriate Form W-8 or Form 8233 (see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).
Nonresident alien who becomes a resident alien. Generally, only a nonresident alien individual may use the terms of a tax treaty to
reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a saving clause. Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of
income even after the payee has otherwise become a U.S. resident alien for tax purposes.
If you are a U.S. resident alien who
is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Form W-9 that specifies the following five items:
1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien.
2. The treaty article addressing the income.
3. The article number (or location) in the tax treaty that contains the saving clause and its exceptions.
4. The type and amount of income that qualifies for the exemption from tax.
5.
Sufficient facts to justify the exemption from tax under the terms of the treaty article.
Example. Article 20 of
the U.S.-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her
stay in the United States exceeds 5 calendar years. However, paragraph 2 of the first Protocol to the U.S.-China treaty (dated April 30, 1984) allows the provisions of Article 20 to continue to apply even after the Chinese student becomes a resident
alien of the United States. A Chinese student who qualifies for this exception (under paragraph 2 of the first protocol) and is relying on this exception to claim an exemption from tax on his or her scholarship or fellowship income would attach to
Form W-9 a statement that includes the information described above to support that exemption.
If you are a nonresident alien
or a foreign entity, give the requester the appropriate completed Form W-8 or Form 8233.
What is backup withholding?
Persons making certain payments to you must under certain conditions withhold and pay to the IRS a percentage of such payments. This is called backup withholding. Payments that may be subject to backup withholding include interest,
tax-exempt interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, payments made in settlement of payment card and third party network transactions, and certain payments from fishing boat operators. Real
estate transactions are not subject to backup withholding.
You will not be subject to backup withholding on payments you
receive if you give the requester your correct TIN, make the proper certifications. and report all your taxable interest and dividends on your tax return.
Payments you receive will be subject to backup withholding if:
1. You do
not furnish your TIN to the requester.
2. You do not certify your TIN when required (see the Part II instructions on page 3
for details),
3. The IRS tells the requester that you furnished an incorrect TIN,
4. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
5. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend
accounts opened after 1983 only).
Certain payees and payments are exempt from backup withholding. See Exempt payee code
on page 3 and the separate Instructions for the Requester of Form W-9 for more information.
Also see Special rules for
partnerships on page 1.
What is FATCA reporting? The Foreign Account Tax Compliance Act (FATCA) requires a
participating foreign financial institution to report all United States account holders that are specified United States persons. Certain payees are exempt from FATCA reporting. See Exemption from FATCA reporting code on page 3 and the
Instructions for the Requester of Form W-9 for more information.
Updating Your Information
You must provide updated information to any person to whom you claimed to be an exempt payee if you are no longer an exempt payee and anticipate receiving
reportable payments in the future from this person. For example, you may need to provide updated information if you are a C corporation that elects to be an S corporation, or if you no longer are tax exempt In addition, you must furnish a new Form
W-9 if the name or TIN changes for the account, for example, if the grantor of a grantor trust dies.
Penalties
Failure to furnish TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil penalty for false information with respect to withholding. If
you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.
Criminal
penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.
Misuse of TINs. If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties.
Specific Instructions
Name
If you are an individual, you must generally enter the name shown on your income tax return. However, if you have changed your last name,
for instance, due to marriage without informing the Social Security Administration of the name change, enter your first name, the last name shown on your social security card, and your new last name.
If the account is in joint names, list first, and then circle, the name of the person or entity whose number you entered in Part I of the
form.
Sole proprietor. Enter your individual name as shown on your income tax return on the Name line. You may enter your
business, trade, or doing business as (DBA) name on the Business name/disregarded entity name line.
Partnership, C
Corporation, or S Corporation. Enter the entitys name on the Name line and any business, trade, or doing business as (DBA) name on the Business name/disregarded entity name line.
Disregarded entity. For U.S. federal tax purposes, an entity that is disregarded as an entity separate from its owner is treated as a
disregarded entity. See Regulation section 301.7701-2(c)(2)(iii). Enter the owners name on the Name line. The name of the entity entered on the Name line should never be a disregarded entity. The name on the
Name line must be the name shown on the income tax return on which the income should be reported. For example, if a foreign LLC that is treated as a disregarded entity for U.S. federal tax purposes has a single owner that is a U.S.
person, the U.S. owners name is required to be provided on the Name line. If the direct owner of the entity is also a disregarded entity, enter the first owner that is not disregarded for federal tax purposes. Enter the disregarded
entitys name on the Business name/disregarded entity name line. If the owner of the disregarded entity is a foreign person, the owner must complete an appropriate Form W-8 instead of a Form W-9. This is the case even if the foreign
person has a U.S. TIN.
Note. Check the appropriate box for the U.S. federal tax classification of the person whose name is entered on
the Name line (Individual/sole proprietor, Partnership, C Corporation, S Corporation, Trust/estate).
Limited Liability Company
(LLC). If the person identified on the Name line is an LLC, check the Limited liability company box only and enter the appropriate code for the U.S. federal tax classification in the space provided. If you are an LLC that
is treated as a partnership for U.S. federal tax purposes, enter P for partnership. If you are an LLC that has filed a Form 8832 or a Form 2553 to be taxed as a corporation, enter C for C corporation or S for S
corporation, as appropriate. If you are an LLC that is disregarded as an entity separate from its owner under Regulation section 301.7701-3 (except for employment and excise tax), do not check the LLC box unless the owner of the LLC (required to be
identified on the Name line) is another LLC that is not disregarded for U.S. federal tax purposes. If the LLC is disregarded as an entity separate from its owner, enter the appropriate tax classification of the owner identified on the
Name line.
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Other entities. Enter your business name as shown on required U.S. federal tax documents on the
Name line. This name should match the name shown on the chanter or other legal document creating the entity. You may enter any business, trade, or DBA name on the Business name/disregarded entity name line.
Exemptions
If you are exempt from backup
withholding and/or FATCA reporting, enter in the Exemptions box, any code(s) that may apply to you. See Exempt payee code and Exemption from FATCA reporting code on page 3.
Exempt payee code, Generally. individuals (including sole proprietors) are not exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as interest and dividends. Corporations are not exempt from backup withholding for payments made in settlement of payment card or third party network transactions.
Note. If you are exempt from backup withholding, you should still complete this form to avoid possible
erroneous backup withholding.
The following codes identify payees that are exempt from backup withholding:
1An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account
satisfies the requirements of section 401(f)(2)
2The United States or any of its agencies or instrumentalities
3A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or
instrumentalities
4A foreign government or any of its political subdivisions, agencies, or instrumentalities
5A corporation
6A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States
7A futures commission merchant registered with the Commodity Futures Trading Commission
8A real estate investment trust
9An entity registered at all limes during the tax year under the Investment Company Act of 1940
10A common trust fund operated by a bank under section 584(a)
11A
financial institution
12A middleman known in the investment community as a nominee or custodian
13A trust exempt from tax under section 664 or described in section 4947
The following chart shows types of payments that may be exempt from backup withholding. The chart applies to the exempt payees listed
above, 1 through 13.
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IF the payment is for. . . |
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THEN the payment is exempt for... |
Interest and dividend payments |
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All exempt payees except for 7 |
Broker transactions |
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Exempt payees 1 through 4 and 6 through 11 and all C corporations. S corporations must not enter an exempt payee code because they are exempt
only for sales of noncovered securities acquired prior to 2012. |
Barter exchange transactions and patronage dividends |
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Exempt payees 1 through 4 |
Payments over $600 required to be reported and direct sales over $5,0001 |
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Generally, exempt payees 1 through 52 |
Payments made in settlement of payment card or third party network transactions |
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Exempt payees 1 through 4 |
1 |
See Form 1099-MISC, Miscellaneous Income, and its instructions. |
2 |
However, the following payments made to a corporation and reportable on Form 1099-MISC are not exempt from backup withholding: medical and health care
payments, attorneys fees, gross proceeds paid to an attorney, and payments for services paid by a federal executive agency. |
Exemption from FATCA reporting code. The following codes identify payees that are exempt from reporting under FATCA. These codes apply to persons submitting this form for accounts
maintained outside of the United States by certain foreign financial institutions. Therefore, if you are only submitting this form for an account you hold in the United States, you may leave this field blank. Consult with the person requesting this
form if you are uncertain if the financial institution is subject to these requirements.
AAn organization exempt from
tax under section 501(a) or any individual retirement plan as defined in section 7701(a)(37)
BThe United States or any of its agencies or instrumentalities
CA state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities
DA corporation the stock of which is regularly traded on one or more established securities markets, as described in
Reg. section 1.1472-1(c)(1)(i)
EA corporation that is a member of the same expanded affiliated group as a corporation
described in Reg. section 1.1472-1(c)(1)(i)
FA dealer in securities, commodities, or derivative financial instruments
(including notional principal contracts, futures, forwards, and options) that is registered as such under the laws of the United States or any state
GA real estate investment trust
HA regulated investment company as
defined in section 851 or an entity registered at all times during the tax year under the Investment Company Act of 1940
IA common trust fund as defined in section 534(a)
JA bank as defined in section 581
KA broker
LA trust exempt from tax under section 664 or described in section 4947(a)(1)
MA tax exempt trust under a section 403(b) plan or section 457(g) plan
Part I. Taxpayer Identification Number (TIN)
Enter your
TIN in the appropriate box. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an
ITIN, see How to get a TIN below.
If you are a sole proprietor and you have an EIN, you may enter either your SSN or EIN.
However, the IRS prefers that you use your SSN.
If you are a single-member LLC that is disregarded as an entity separate from
its owner (see Limited Liability Company (LLC) on page 2), enter the owners SSN (or EIN, if the owner has one). Do not enter the disregarded entitys EIN. If the LLC is classified as a corporation or partnership, enter the
entitys EIN.
Note. See the chart on page 4 for further clarification of name and TIN combinations.
How to get a TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get Form SS-5,
Application for a Social Security Card, from your local Social Security Administration office or get this form online at www.ssa.gov. You may also get this form by calling 1-800-772-1213. Use Form W-7, Application for IRS Individual Taxpayer
Identification Number, to apply for an ITIN, or Form SS-4, Application for Employer Identification Number, to apply for an EIN. You can apply for an EIN online by accessing the IRS website at www.irs.gov/businesses and clicking on Employer
Identification Number (EIN) under Starting a Business. You can get Forms W-7 and SS-4 from the IRS by visiting IRS.gov or by calling
1-800-TAX-FORM
(1-800-829-3676).
If you are asked to complete Form W-9 but do not have a TIN, apply for a TIN and write Applied For in the space for the TIN, sign and date the form, and give it to the requester. For interest
and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does
not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester.
Note. Entering Applied For means that you have already applied for a TIN or that you intend to apply for one soon.
Caution: A disregarded U.S. entity that has a foreign owner must use the appropriate Form W-8.
Part II. Certification
To establish to the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if items 1, 4, or 5 below
indicate otherwise.
For a joint account, only the person whose TIN is shown in Part I should sign (when required). In the case
of a disregarded entity, the person identified on the Name line must sign. Exempt payees, see Exempt payee code earlier.
Signature requirements. Complete the certification as indicated in items 1 through 5 below.
1. Interest, dividend, and barter exchange accounts opened before 1984 and broker accounts considered active during 1983. You must give your correct TIN, but you do not have to sign the
certification.
16
Form W-9 (Rev. 8-2013) |
Page 4
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2. Interest, dividend, broker, and barter exchange accounts opened after 1983 and broker
accounts considered inactive during 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2
in the certification before signing the form.
3. Real estate transactions. You must sign the certification. You may
cross out item 2 of the certification.
4. Other payments. You must give your correct TIN, but you do not have to sign
the certification unless you have been notified that you have previously given an incorrect TIN. Other payments include payments made in the course of the requesters trade or business for rents, royalties, goods (other than bills
for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments made in settlement of payment card and third party network transactions, payments to certain fishing boat crew
members and fishermen, and gross proceeds paid to attorneys (including payments to corporations).
5. Mortgage interest paid
by you, acquisition or abandonment of secured property, cancellation of debt, qualified tuition program payments (under section 529), IRA, Coverdell ESA, Archer MSA or HSA contributions or distributions, and pension distributions. You must give
your correct TIN, but you do not have to sign the certification.
What Name and Number To Give the Requester
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For this type of account: |
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Give name and SSN of: |
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1. |
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Individual |
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The individual |
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2. |
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Two or more individuals (joint account) |
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The actual owner of the account or, if combined funds, the first individual on the
account 1 |
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3. |
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Custodian account of a minor (Uniform Gift to Minors Act) |
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The minor 2 |
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4. |
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a. The usual revocable savings trust (grantor is also trustee) |
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The grantor-trustee 1 |
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b. So-called trust account that is not a legal or valid trust under state law |
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The actual owner 1 |
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5. |
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Sole proprietorship or disregarded entity owned by an individual |
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The owner 3 |
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6. |
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Grantor trust filing under Optional Form 1099 Filing Method 1 (see Regulation section 1.671-4(b)(2)(i)(A)) |
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The grantor* |
For this type of account: |
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Give name and EIN of: |
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7. |
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Disregarded entity not owned by an individual |
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The owner |
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8. |
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A valid trust, estate, or pension trust |
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Legal entity 4 |
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9. |
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Corporation or LLC electing corporate status on Form 8832 or Form 2553 |
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The corporation |
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10. |
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Association, club, religious, charitable, educational, or other tax-exempt organization |
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The organization |
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11. |
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Partnership or multi-member LLC |
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The partnership |
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12. |
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A broker or registered nominee |
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The broker or nominee |
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13. |
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Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program
payments |
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The public entity |
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14. |
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Grantor trust filing under the Form 1041 Filing Method or the Optional Form 1099 Filing Method 2 (see Regulation section
1.671-4(b)(2)(i)(B)) |
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The trust |
1 |
List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN. that persons number must
be furnished. |
2 |
Circle the minors name and furnish the minors SSN. |
3 |
You must show your individual name and you may also enter your business or DBA name on the Business name/disregarded entity
name line. You may use either your SSN or EIN (if you have one), but the IRS encourages you to use your SSN. |
4 |
List first and circle the name of the trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.) Also see Special rules for partnerships on page 1. |
*Note. Grantor also must provide a Form W-9 to trustee of trust.
Note. If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed.
Secure Your Tax Records from Identity Theft
Identity theft
occurs when someone uses your personal information such as your name, social security number (SSN), or other identifying information, without your permission, to commit fraud or other crimes. An identity thief may use your SSN to get a job or may
file a tax return using your SSN to receive a refund.
To reduce your risk:
Protect your SSN,
Ensure your employer is protecting your SSN, and
Be careful when choosing a tax preparer.
If your tax records are affected by identity theft and you receive a notice from the IRS, respond right away to the name and phone number
printed on the IRS notice or letter.
If your tax records are not currently affected by identity theft but you think you are at
risk due to a lost or stolen purse or wallet, questionable credit card activity or credit report, contact the IRS Identity Theft Hotline at 1-800-908-4490 or submit Form 14039.
For more information, see Publication 4535, Identity Theft Prevention and Victim Assistance.
Victims of identity theft who are experiencing economic harm or a system problem, or are seeking help in resolving tax problems that have not been resolved through normal channels, may be eligible for
Taxpayer Advocate Service (TAS) assistance. You can reach TAS by calling the TAS toll-free case intake line at 1-877-777-4778 or TTY/TDD 1-800-829-4059.
Protect yourself from suspicious emails or phishing schemes. Phishing is the creation and use of email and websites designed to mimic legitimate business emails and websites. The most common act is
sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.
The IRS does not initiate contacts with taxpayers via emails. Also, the IRS does not request personal detailed information through email
or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.
If you receive an unsolicited email claiming to be from the IRS, forward this message to phishing@irs.gov. You may also report misuse of the IRS name, logo, or other IRS property to the Treasury
Inspector General for Tax Administration at 1-800-366-4484. You can forward suspicious emails to the Federal Trade Commission at: spam@uce.gov or contact them at www.ftc.gov/idtheft or 1-877-IDTHEFT (1-877-438-4338).
Visit IRS.gov to lean more about identity theft and how to reduce your risk.
Privacy Act Notice
Section 6109 of the
Internal Revenue Code requires you to provide your correct TIN to persons (including federal agencies) who are required to file information returns with the IRS to report interest, dividends, or certain other income paid to you; mortgage interest
you paid; the acquisition or abandonment of secured property; the cancellation of debt; or contributions you made to an IRA, Archer MSA, or HSA. The person collecting this form uses the information on the form to file information returns with the
IRS, reporting the above information. Routine uses of this information include giving it to the Department of Justice for civil and criminal litigation and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use
in administering their laws. The information also may be disclosed to other countries under a treaty, to federal and state agencies to enforce civil and criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. You
must provide your TIN whether or not you are required to file a tax return. Under section 3406. payers must generally withhold a percentage of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to the payer.
Certain penalties may also apply for providing false or fraudulent information.
17
EXHIBIT 99.2
Martin Marietta Materials, Inc.
Offer to Exchange up to $300,000,000 Floating Rate Senior Notes due 2017 for a Like Principal Amount of Floating Rate Senior Notes due 2017
which have been registered under the Securities Act of 1933 (the 2017 Notes Exchange Offer);
Offer to Exchange up to
$400,000,000 4.250% Senior Notes due 2024 for a Like Principal Amount of 4.250% Senior Notes due 2024 which have been registered under the Securities Act of 1933 (the 2024 Notes Exchange Offer and, together with the 2017 Notes Exchange
Offer, the exchange offers and each an exchange offer).
Pursuant to the Prospectus, dated
, 2014
To Our Clients:
Enclosed for your consideration is a prospectus, dated , 2014 (the
Prospectus) and the related letter of transmittal (the Letter of Transmittal), relating to the offer of Martin Marietta Materials Inc., a North Carolina corporation (the Company), to exchange up to $300,000,000
aggregate principal amount of its outstanding, unregistered Floating Rate Senior Notes due 2017 (the Original 2017 Notes) for an equivalent amount of registered Floating Rate Senior Notes due 2017 (the Exchange 2017 Notes)
and up to $400,000,000 aggregate principal amount of its outstanding, unregistered 4.250% Senior Notes due 2024 (the Original 2024 Notes and, together with the Original 2017 Notes, the Original Notes and each an
Original Note) for an equivalent amount of registered 4.250% Senior Notes due 2024 (the Exchange 2024 Notes and, together with the Exchange 2017 Notes, the Exchange Notes and each an Exchange Note),
each upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal. The Original Notes and the Exchange Notes are sometimes referred to in this letter together as the Notes. Capitalized terms not
defined herein shall have the meaning ascribed to them in the Prospectus.
The exchange offers are intended to satisfy certain obligations
of the Company contained in the Registration Rights Agreement, dated as of July 2, 2014, among Martin Marietta Materials, Inc. and Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as representatives of the several Initial
Purchasers, relating to the Original 2017 Notes and the Original 2024 Notes. As set forth in the Prospectus, the terms of the Exchange Notes are substantially identical to the terms of the corresponding series of the Original Notes, except that the
Exchange Notes are registered under the Securities Act of 1933 and the transfer restrictions, registration rights and payment of additional interest in case of non-registration applicable to the Original Notes do not apply to the Exchange Notes.
This material is being forwarded to you as the beneficial owner of the Original Notes carried by us for your account but not
registered in your name. A tender of such Original Notes may only be made by us as the holder of record and pursuant to your instructions, unless you obtain a properly completed bond power from us or arrange to have the Original Notes registered
in your name.
Accordingly, we request instructions as to whether you wish us to tender on your behalf the Original Notes held
by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal.
Please
forward your instructions to us as promptly as possible in order to permit us to tender the Original Notes on your behalf in accordance with the provisions of the exchange offers. The exchange offers will expire at 5:00 p.m., New York City
time, on , 2014, subject to the Companys right to extend the expiration date for any exchange offer (such date and time, the Expiration Date). Any Original
Notes tendered pursuant to the exchange offers may be withdrawn any time prior to the Expiration Date.
1
Your attention is directed to the following:
1. |
The exchange offers are for any and all Original Notes. |
2. |
The exchange offers are subject to certain conditions set forth in the Prospectus in the section captioned The Exchange OffersConditions to the Exchange Offers. |
3. |
The exchange offers expire at 5:00 p.m., New York City time, on the Expiration Date, unless extended by the Company. |
If you wish to have us tender your Original Notes, please instruct us to do so by completing, executing and returning to us the instruction
form on the back of this letter.
The Letter of Transmittal is furnished to you for information only and may not be used directly by
you to tender Original Notes, unless you obtain a properly completed bond power from us or arrange to have the Original Notes registered in your name.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFERS
The undersigned acknowledge(s) receipt of this letter and the enclosed materials referred to herein relating to the exchange offers made by
the Company with respect to the Original Notes.
This material will instruct you to tender the Original Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the related Letter of Transmittal.
Please tender the Original 2017 Notes held by you for the account of the
undersigned as indicated below:
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¨ Please tender the Original
2017 Notes held by you for the account of the undersigned as indicated below: |
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Aggregate Principal Amount of Original 2017 Notes |
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Floating Rate Senior Notes due 2017 |
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$
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(must be in minimum denominations of $2,000 in principal or in integral multiples of $1,000 in excess thereof) |
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¨ Please do not tender any
Original 2017 Notes held by you for the account of the undersigned. |
Please tender the Original 2024 Notes held by you for the account of the undersigned as
indicated below:
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¨ Please tender the Original
2024 Notes held by you for the account of the undersigned as indicated below: |
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Aggregate Principal Amount of Original 2024 Notes |
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4.250% Senior Notes due 2024 |
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$
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(must be in minimum denominations of $2,000 in principal or in integral multiples of $1,000 in excess thereof) |
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¨ Please do not tender any
Original 2024 Notes held by you for the account of the undersigned. |
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PLEASE SIGN HERE
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X:
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__________________________________________ |
(Signature) |
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(Date) |
(Type or Print Name)
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(Address)
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(Area Code and Telephone Number)
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(Tax Identification or Social Security Number)
|
None of the Original Notes held by us for your account will be tendered unless we receive written
instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature(s) hereon shall constitute an instruction to us to tender all the Original Notes held by us for your account.
EXHIBIT 99.3
Martin Marietta Materials, Inc.
Offer to Exchange up to $300,000,000 Floating Rate Senior Notes due 2017 for a Like Principal Amount of Floating Rate Senior Notes due 2017
which have been registered under the Securities Act of 1933 (the 2017 Notes Exchange Offer);
Offer to Exchange up to
$400,000,000 4.250% Senior Notes due 2024 for a Like Principal Amount of 4.250% Senior Notes due 2024 which have been registered under the Securities Act of 1933 (the 2024 Notes Exchange Offer and, together with the 2017 Notes Exchange
Offer, the exchange offers and each an exchange offer).
Pursuant to the Prospectus, dated
, 2014
To: Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees:
Martin Marietta Materials, Inc., a North Carolina corporation (the Company), hereby offers to exchange, upon and
subject to the terms and conditions set forth in the prospectus dated , 2014 (the Prospectus) and the related letter of transmittal (the Letter of
Transmittal), up to $300,000,000 aggregate principal amount of its outstanding, unregistered Floating Rate Senior Notes due 2017 (the Original 2017 Notes) for an equivalent amount of registered Floating Rate Senior Notes due 2017
(the Exchange 2017 Notes) and up to $400,000,000 aggregate principal amount of its outstanding, unregistered 4.250% Senior Notes due 2024 (the Original 2024 Notes and, together with the Original 2017 Notes, the Original
Notes and each an Original Note) for an equivalent amount of registered 4.250% Senior Notes due 2024 (the Exchange 2024 Notes and, together with the Exchange 2017 Notes, the Exchange Notes and each an
Exchange Note). The Original Notes and the Exchange Notes are sometimes referred to in this letter together as the Notes. Capitalized terms not defined herein shall have the meaning ascribed to them in the Prospectus.
The exchange offers are intended to satisfy certain obligations of the Company contained in the Registration Rights Agreement, dated as of
July 2, 2014, among Martin Marietta Materials, Inc. and Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as representatives of the several Initial Purchasers, relating to the Original 2017 Notes and the Original 2024 Notes. As set
forth in the Prospectus, the terms of the Exchange Notes are substantially identical to the terms of the corresponding series of the Original Notes, except that the Exchange Notes are registered under the Securities Act of 1933 and the transfer
restrictions, registration rights and payment of additional interest in case of non-registration applicable to the Original Notes do not apply to the Exchange Notes.
Please contact your clients for whom you hold Original Notes regarding the exchange offers. For your information and for forwarding to your
clients for whom you hold Original Notes registered in your name or in the name of your nominee, or who hold Original Notes registered in their own names, the following documents are enclosed:
|
1. |
Prospectus dated , 2014; |
|
2. |
The Letter of Transmittal for your use and for the information of your clients; |
|
3. |
A form of letter which may be sent to your clients for whose account you hold Original Notes registered in your name or the name of your nominee, with space provided for obtaining such clients instructions with
regard to the exchange offers; and |
|
4. |
Substitute Form W-9 and Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (included with the Letter of Transmittal). |
1
Your prompt action is requested. The exchange offers will expire at 5:00 p.m., New York City
time, on , 2014, subject to the Companys right to extend the expiration date for any exchange offer (such date and time, the Expiration Date). Any
Original Notes tendered pursuant to the exchange offers may be withdrawn at any time prior to the Expiration Date.
The Company will,
upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and related documents to the beneficial owners of the Original Notes held by
them as nominee or in a fiduciary capacity. The Company has not retained any dealer-manager in connection with the exchange offers and will not make any payment to brokers, dealers or others soliciting acceptances of the exchange offers.
To participate in the exchange offers, a duly executed and properly completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, and any other documents required by the Letter of Transmittal or an Agents Message (as defined in the Letter of Transmittal) stating that the tendering holder has expressly acknowledged receipt of, and agrees to be bound
by and held accountable under, the Letter of Transmittal, must be sent to the Exchange Agent and certificates representing the Original Notes (or confirmation of book-entry transfer of such Original Notes into the Exchange Agents account at
The Depository Trust Company) must be delivered to the Exchange Agent, all in accordance with the instructions set forth in the Letter of Transmittal and the Prospectus.
Any inquiries you may have with respect to the exchange offers or requests for additional copies of the enclosed materials should be directed
to the Exchange Agent at its address and telephone number set forth on the front of the Letter of Transmittal.
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Very truly yours, |
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Martin Marietta Materials, Inc. |
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE
COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFERS, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF
TRANSMITTAL.
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