Martin Marietta Materials, Inc.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2008
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-12744
MARTIN MARIETTA MATERIALS, INC.
(Exact name of registrant as specified in its charter)
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North Carolina
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56-1848578 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification Number) |
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2710 Wycliff Road, Raleigh, NC
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27607-3033 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code 919-781-4550
Former name: None
Former name, former address and former fiscal year,
if changes since last report.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes þ No o
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. (Check one):
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Large accelerated filer þ |
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Accelerated filer o |
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Non-accelerated filer o
(Do not check if a smaller reporting company) |
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Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of Common Stock, as of
the latest practicable date.
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Class
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Outstanding as of October 24, 2008 |
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Common Stock, $0.01 par value
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41,425,359 |
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
Page 2 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
Item 1. Financial Statements.
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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September 30, |
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December 31, |
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September 30, |
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2008 |
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2007 |
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2007 |
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(Unaudited) |
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(Audited) |
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(Unaudited) |
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(Dollars in Thousands, Except Per Share Data) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
13,896 |
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$ |
20,038 |
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$ |
26,417 |
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Accounts receivable, net |
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300,416 |
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245,838 |
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312,265 |
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Inventories, net |
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305,550 |
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286,885 |
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285,252 |
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Current portion of notes receivable, net |
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1,354 |
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2,078 |
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1,912 |
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Current deferred income tax benefits |
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29,347 |
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44,285 |
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42,118 |
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Other current assets |
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23,098 |
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26,886 |
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22,896 |
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Total Current Assets |
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673,661 |
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626,010 |
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690,860 |
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Property, plant and equipment |
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3,315,558 |
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2,978,361 |
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2,924,336 |
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Allowances for depreciation, depletion and amortization |
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(1,597,112 |
) |
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(1,544,808 |
) |
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(1,518,620 |
) |
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Net property, plant and equipment |
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1,718,446 |
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1,433,553 |
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1,405,716 |
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Goodwill |
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613,634 |
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574,667 |
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574,667 |
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Other intangibles, net |
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14,339 |
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9,426 |
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9,850 |
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Noncurrent notes receivable |
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7,594 |
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8,457 |
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8,801 |
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Other noncurrent assets |
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35,958 |
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31,692 |
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32,056 |
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Total Assets |
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$ |
3,063,632 |
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$ |
2,683,805 |
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$ |
2,721,950 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current Liabilities: |
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Bank overdraft |
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$ |
5,670 |
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$ |
6,351 |
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$ |
120 |
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Accounts payable |
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97,247 |
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86,868 |
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92,151 |
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Accrued salaries, benefits and payroll taxes |
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18,809 |
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21,262 |
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22,853 |
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Pension and postretirement benefits |
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3,135 |
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9,120 |
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9,285 |
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Accrued insurance and other taxes |
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37,005 |
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25,123 |
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38,578 |
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Income taxes |
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11,418 |
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11,247 |
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Current maturities of long-term debt and commercial
paper |
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203,517 |
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276,136 |
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78,069 |
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Accrued interest |
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32,041 |
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10,805 |
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24,168 |
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Settlement for repurchases of common stock |
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24,017 |
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Other current liabilities |
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15,714 |
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46,934 |
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40,160 |
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Total Current Liabilities |
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424,556 |
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506,616 |
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316,631 |
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Long-term debt |
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1,152,715 |
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848,186 |
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1,050,705 |
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Pension, postretirement and postemployment benefits |
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100,437 |
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103,518 |
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95,287 |
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Noncurrent deferred income taxes |
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189,237 |
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160,902 |
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155,376 |
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Other noncurrent liabilities |
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121,472 |
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118,592 |
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116,668 |
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Total Liabilities |
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1,988,417 |
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1,737,814 |
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1,734,667 |
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Shareholders Equity: |
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Common stock, par value $0.01 per share |
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414 |
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412 |
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418 |
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Preferred stock, par value $0.01 per share |
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Additional paid-in capital |
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74,809 |
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50,955 |
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53,314 |
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Accumulated other comprehensive loss |
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(36,952 |
) |
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(37,032 |
) |
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(30,071 |
) |
Retained earnings |
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1,036,944 |
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931,656 |
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963,622 |
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Total Shareholders Equity |
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1,075,215 |
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945,991 |
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987,283 |
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Total Liabilities and Shareholders Equity |
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$ |
3,063,632 |
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$ |
2,683,805 |
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$ |
2,721,950 |
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See accompanying condensed notes to consolidated financial statements.
Page 3 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2008 |
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2007 |
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2008 |
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2007 |
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(In Thousands, Except Per Share Data) |
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(Unaudited) |
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Net Sales |
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$ |
526,151 |
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$ |
544,389 |
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$ |
1,448,865 |
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$ |
1,483,952 |
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Freight and delivery revenues |
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73,059 |
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70,993 |
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199,732 |
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178,357 |
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Total revenues |
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599,210 |
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615,382 |
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1,648,597 |
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1,662,309 |
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Cost of sales |
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374,535 |
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377,075 |
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1,082,654 |
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1,044,861 |
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Freight and delivery costs |
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73,059 |
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70,993 |
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199,732 |
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178,357 |
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Total cost of revenues |
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447,594 |
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448,068 |
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1,282,386 |
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1,223,218 |
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Gross Profit |
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151,616 |
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167,314 |
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366,211 |
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439,091 |
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Selling, general & administrative expenses |
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37,734 |
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36,439 |
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117,470 |
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119,021 |
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Research and development |
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145 |
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170 |
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|
457 |
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|
559 |
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Other operating (income) and expenses, net |
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(1,220 |
) |
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(6,176 |
) |
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(14,403 |
) |
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(11,494 |
) |
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Earnings from Operations |
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114,957 |
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136,881 |
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262,687 |
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331,005 |
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Interest expense |
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19,498 |
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17,240 |
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54,636 |
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45,142 |
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Other nonoperating (income) and expenses, net |
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2,834 |
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(1,248 |
) |
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2,936 |
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(5,082 |
) |
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Earnings from continuing operations before
income tax expense |
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92,625 |
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|
120,889 |
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|
205,115 |
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|
290,945 |
|
Income tax expense |
|
|
26,113 |
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|
31,048 |
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|
59,196 |
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|
86,062 |
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Earnings from continuing operations |
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66,512 |
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|
89,841 |
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|
145,919 |
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204,883 |
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(Loss) Gain on discontinued operations, net of related
tax expense
of $1,781, $464, $5,395 and $1,051, respectively |
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(186 |
) |
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|
425 |
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|
5,076 |
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|
1,325 |
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Net Earnings |
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$ |
66,326 |
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$ |
90,266 |
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$ |
150,995 |
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$ |
206,208 |
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Net Earnings Per Common Share: |
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Basic from continuing operations |
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$ |
1.60 |
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$ |
2.15 |
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$ |
3.53 |
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$ |
4.77 |
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Discontinued operations |
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|
0.01 |
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|
0.12 |
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|
0.03 |
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$ |
1.60 |
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$ |
2.16 |
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$ |
3.65 |
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$ |
4.80 |
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Diluted from continuing operations |
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$ |
1.58 |
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$ |
2.12 |
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$ |
3.48 |
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$ |
4.70 |
|
Discontinued operations |
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|
0.01 |
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|
0.12 |
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|
0.03 |
|
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$ |
1.58 |
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$ |
2.13 |
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|
$ |
3.60 |
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|
$ |
4.73 |
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Cash Dividends Per Common Share |
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$ |
0.400 |
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$ |
0.345 |
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$ |
1.09 |
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$ |
0.895 |
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Reconciliation of denominators for basic and
diluted earnings
per share computations: |
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Basic weighted average number of common shares |
|
|
41,385 |
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|
41,817 |
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|
41,347 |
|
|
|
42,931 |
|
Effect of dilutive employee and director awards |
|
|
530 |
|
|
|
658 |
|
|
|
562 |
|
|
|
702 |
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|
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|
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|
Diluted weighted average number of common
shares and
assumed conversions |
|
|
41,915 |
|
|
|
42,475 |
|
|
|
41,909 |
|
|
|
43,633 |
|
|
|
|
|
|
|
|
|
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|
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|
See accompanying condensed notes to consolidated financial statements.
Page 4 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
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|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
|
|
(Unaudited) |
|
Net earnings |
|
$ |
150,995 |
|
|
$ |
206,208 |
|
Adjustments to reconcile net earnings to cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
125,659 |
|
|
|
111,087 |
|
Stock-based compensation expense |
|
|
17,635 |
|
|
|
16,363 |
|
Gains on divestitures and sales of assets |
|
|
(29,363 |
) |
|
|
(9,192 |
) |
Deferred income taxes |
|
|
26,045 |
|
|
|
1,691 |
|
Excess tax benefits from stock-based compensation transactions |
|
|
(3,776 |
) |
|
|
(20,153 |
) |
Other items, net |
|
|
1,051 |
|
|
|
(2,648 |
) |
Changes in operating assets and liabilities,
net of effects of acquisitions and divestitures: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(53,378 |
) |
|
|
(70,292 |
) |
Inventories, net |
|
|
(12,713 |
) |
|
|
(29,842 |
) |
Accounts payable |
|
|
10,452 |
|
|
|
6,824 |
|
Other assets and liabilities, net |
|
|
38,392 |
|
|
|
62,727 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
270,999 |
|
|
|
272,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(223,777 |
) |
|
|
(196,939 |
) |
Acquisitions, net |
|
|
(218,426 |
) |
|
|
(12,195 |
) |
Proceeds from divestitures and sales of assets |
|
|
19,341 |
|
|
|
17,026 |
|
Railcar construction advances |
|
|
(7,286 |
) |
|
|
|
|
Repayments of railcar construction advances |
|
|
7,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for investing activities |
|
|
(422,862 |
) |
|
|
(192,108 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
Borrowings of long-term debt |
|
|
297,837 |
|
|
|
471,990 |
|
Repayments of long-term debt and capital lease obligations |
|
|
(4,125 |
) |
|
|
(125,489 |
) |
Net (repayments) borrowings of commercial paper and line of credit |
|
|
(72,000 |
) |
|
|
75,463 |
|
Termination of interest rate swap agreements |
|
|
(11,139 |
) |
|
|
|
|
Debt issuance costs |
|
|
(1,105 |
) |
|
|
(807 |
) |
Change in bank overdraft |
|
|
(681 |
) |
|
|
(8,270 |
) |
Dividends paid |
|
|
(45,707 |
) |
|
|
(38,972 |
) |
Repurchases of common stock |
|
|
(24,017 |
) |
|
|
(495,160 |
) |
Issuances of common stock |
|
|
2,882 |
|
|
|
14,562 |
|
Excess tax benefits from stock-based compensation transactions |
|
|
3,776 |
|
|
|
20,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) financing activities |
|
|
145,721 |
|
|
|
(86,530 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(6,142 |
) |
|
|
(5,865 |
) |
Cash and cash equivalents, beginning of period |
|
|
20,038 |
|
|
|
32,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
13,896 |
|
|
$ |
26,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Issuance of notes payable for acquisition of land |
|
$ |
11,500 |
|
|
$ |
2,897 |
|
Notes receivable issued in connection with divestiture |
|
$ |
300 |
|
|
$ |
|
|
Revisions in estimated cash flows of asset retirement obligations |
|
$ |
|
|
|
$ |
15,000 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
36,689 |
|
|
$ |
33,677 |
|
Cash paid for income taxes |
|
$ |
18,491 |
|
|
$ |
32,086 |
|
See accompanying condensed notes to consolidated financial statements.
Page 5 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
Common |
|
|
Common |
|
|
Additional |
|
|
Accumulated Other |
|
|
Retained |
|
|
Shareholders |
|
(in thousands) |
|
Stock |
|
|
Stock |
|
|
Paid-in Capital (1) |
|
|
Comprehensive Loss |
|
|
Earnings |
|
|
Equity |
|
|
Balance at December 31, 2007 |
|
|
41,318 |
|
|
$ |
412 |
|
|
$ |
50,955 |
|
|
$ |
(37,032 |
) |
|
$ |
931,656 |
|
|
$ |
945,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,995 |
|
|
|
150,995 |
|
Amortization of unrecognized
actuarial losses, prior
service costs and settlement
expenses related to pension
and postretirement benefits,
net of tax effect of $2,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,200 |
|
|
|
|
|
|
|
3,200 |
|
Foreign currency translation loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,004 |
) |
|
|
|
|
|
|
(1,004 |
) |
Change in fair value of forward
starting interest rate
swap agreements, net of tax
benefit of $1,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,116 |
) |
|
|
|
|
|
|
(2,116 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(45,707 |
) |
|
|
(45,707 |
) |
Issuances of common stock for
stock award plans |
|
|
107 |
|
|
|
2 |
|
|
|
6,219 |
|
|
|
|
|
|
|
|
|
|
|
6,221 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
17,635 |
|
|
|
|
|
|
|
|
|
|
|
17,635 |
|
|
|
|
Balance at September 30, 2008 |
|
|
41,425 |
|
|
$ |
414 |
|
|
$ |
74,809 |
|
|
$ |
(36,952 |
) |
|
$ |
1,036,944 |
|
|
$ |
1,075,215 |
|
|
|
|
|
|
|
(1) |
|
Additional paid-in-capital September 30, 2008 represents issuances of common stock, the pool of
excess tax benefits and stock-based compensation expense. |
See accompanying condensed notes to consolidated financial statements.
Page 6 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements of Martin Marietta Materials, Inc.
(the Corporation) have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to the Quarterly Report
on Form 10-Q and to Article 10 of Regulation S-X. The Corporation has continued to follow the
accounting policies set forth in the audited consolidated financial statements and related notes
thereto included in the Corporations Annual Report on Form 10-K for the year ended December 31,
2007, filed with the Securities and Exchange Commission on February 25, 2008. In the opinion of
management, the interim financial information provided herein reflects all adjustments,
consisting of normal recurring accruals, necessary for a fair presentation of the results of
operations, financial position and cash flows for the interim periods. The results of
operations for the three and nine months ended September 30, 2008 are not indicative of the
results expected for other interim periods or the full year.
Cash and Cash Equivalents
The Corporation manages its cash and cash equivalents to ensure that short-term operating cash
needs are met and that excess funds are managed efficiently. The Corporation subsidizes
shortages in operating cash through short-term borrowings on its available line of credit. The
Corporation typically invests excess funds in Eurodollar time deposit accounts, which are
exposed to bank solvency risk and are not FDIC insured. Funds not yet available in lockboxes
generally exceed the $250,000 FDIC insurance limit. Cash and cash equivalents at September 30,
2008 were $13,896,000. Of this amount, approximately $4,300,000 was deposited in an overnight
bank time deposit account. The remaining cash and cash equivalents represent deposits in
transit to the Corporations lockbox accounts and deposits held at local banks.
Comprehensive Earnings
Comprehensive earnings consist of net earnings, amortization of unrecognized amounts related to
pension and postretirement benefits, foreign currency translation adjustments and changes in the
fair value of forward starting interest rate swap agreements. Comprehensive earnings for the
three and nine months ended September 30, 2008 were $68,306,000 and $151,075,000, respectively.
For the three and nine months ended September 30, 2007, comprehensive earnings were $89,769,000
and $212,188,000, respectively,
Page 7 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1. Significant Accounting Policies (continued)
Accounting Changes
Effective January 1, 2008, the Corporation partially adopted Statement of Financial Accounting
Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 does not require any new fair
value measurements; rather, it establishes a framework for measuring fair value in generally
accepted accounting principles, clarifies the definition of fair value within that framework and
expands disclosures about the use of fair value measurements. FAS 157 applies to all accounting
pronouncements that require fair value measurements, except for the measurement of share-based
payments. Additionally, in February 2008, the Corporation adopted Financial Accounting
Standards Board Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (FSP
157-2). FSP 157-2 delays the effective date of FAS 157 for all nonrecurring fair value
measurements of nonfinancial assets and nonfinancial liabilities until fiscal years beginning
after November 15, 2008. At September 30, 2008, the categories of assets and liabilities to
which the Corporation did not apply FAS 157 include: nonfinancial assets and liabilities
initially measured at fair value in a business combination; reporting units measured at fair
value in the first step of goodwill impairment testing; indefinite-lived intangible assets and
nonfinancial long-lived assets measured at fair value for impairment assessment and asset
retirement obligations.
Reclassifications
Certain 2007 amounts included on the consolidated balance sheets have been reclassed to conform
to the 2008 presentation. The reclassifications had no impact on previously reported financial
position.
2. Business Combinations and Divestitures
Business Combinations
On April 11, 2008, the Corporation entered into a swap transaction with Vulcan Materials Company
(Vulcan), pursuant to which it acquired six quarry locations in North Georgia and Tennessee.
The newly acquired locations significantly expand the Corporations presence in high-growth
areas of Georgia and Tennessee, particularly south and west of Atlanta. The Corporation also
acquired a land parcel previously leased from Vulcan at the Corporations Three Rivers Quarry
near Paducah, Kentucky. For the year ended December 31, 2007, the Corporations newly acquired
locations shipped nearly 4.5 million tons of aggregates and have aggregates reserves that exceed
300 million tons. The operating results of the acquired quarries have been included with those
of the Corporation since the date of acquisition and are being reported through the
Corporations Southeast Group in the financial statements.
Page 8 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Business Combinations and Divestitures (continued)
In addition to a $192,000,000 cash payment and normal closing adjustments related to working
capital, the Corporation divested to Vulcan its only California quarry located in Oroville, an
idle facility north of San Antonio, Texas, and land in Henderson, North Carolina, formerly
leased to Vulcan. Furthermore, the Corporation recognized goodwill in the amount of
$46,017,000. The preliminary fair values of the assets acquired from Vulcan were allocated as
follows (dollars in thousands):
|
|
|
|
|
Inventories |
|
$ |
6,559 |
|
Mineral reserves |
|
$ |
113,685 |
|
Land |
|
$ |
22,260 |
|
Machinery and equipment |
|
$ |
41,919 |
|
Other intangibles |
|
$ |
3,260 |
|
Discontinued Operations
During 2008, the Corporation disposed of or permanently shut down certain operations, including
its Oroville, California quarry, which was included in the West Group and divested as part of
the Vulcan swap transaction. These divestitures represent discontinued operations, and,
therefore, the results of their operations through the dates of disposal and any gain or loss on
disposals are included in discontinued operations on the consolidated statements of earnings.
The discontinued operations included the following net sales, pretax loss on operations, pretax
gain on disposals, income tax expense and overall net earnings or loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
Net sales |
|
$ |
616 |
|
|
$ |
4,619 |
|
|
$ |
3,892 |
|
|
$ |
14,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax loss on operations |
|
$ |
(166 |
) |
|
$ |
(71 |
) |
|
$ |
(142 |
) |
|
$ |
(182 |
) |
Pretax gain on disposals |
|
|
1,761 |
|
|
|
960 |
|
|
|
10,613 |
|
|
|
2,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax gain |
|
|
1,595 |
|
|
|
889 |
|
|
|
10,471 |
|
|
|
2,376 |
|
Income tax expense |
|
|
1,781 |
|
|
|
464 |
|
|
|
5,395 |
|
|
|
1,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings |
|
$ |
(186 |
) |
|
$ |
425 |
|
|
$ |
5,076 |
|
|
$ |
1,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 9 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. Inventories
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
Finished products |
|
$ |
262,189 |
|
|
$ |
244,568 |
|
|
$ |
239,879 |
|
Products in process and raw
materials |
|
|
15,638 |
|
|
|
18,642 |
|
|
|
18,559 |
|
Supplies and expendable parts |
|
|
47,875 |
|
|
|
42,811 |
|
|
|
42,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
325,702 |
|
|
|
306,021 |
|
|
|
300,788 |
|
Less allowances |
|
|
(20,152 |
) |
|
|
(19,136 |
) |
|
|
(15,536 |
) |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
305,550 |
|
|
$ |
286,885 |
|
|
$ |
285,252 |
|
|
|
|
|
|
|
|
|
|
|
4. Intangible Assets
The following table shows changes in goodwill, all of which relate to the Aggregates business,
by reportable segment and in total (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2008 |
|
|
Mideast |
|
Southeast |
|
West |
|
|
|
|
Group |
|
Group |
|
Group |
|
Total |
|
|
|
Balance at beginning of period |
|
$ |
118,257 |
|
|
$ |
97,127 |
|
|
$ |
399,016 |
|
|
$ |
614,400 |
|
Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures |
|
|
|
|
|
|
(96 |
) |
|
|
(825 |
) |
|
|
(921 |
) |
Adjustments to purchase price
allocations |
|
|
|
|
|
|
155 |
|
|
|
|
|
|
|
155 |
|
|
|
|
Balance at end of period |
|
$ |
118,257 |
|
|
$ |
97,186 |
|
|
$ |
398,191 |
|
|
$ |
613,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2008 |
|
|
Mideast |
|
Southeast |
|
West |
|
|
|
|
Group |
|
Group |
|
Group |
|
Total |
|
|
|
Balance at beginning of period |
|
$ |
115,986 |
|
|
$ |
51,265 |
|
|
$ |
407,416 |
|
|
$ |
574,667 |
|
Acquisitions |
|
|
3,780 |
|
|
|
45,862 |
|
|
|
|
|
|
|
49,642 |
|
Divestitures |
|
|
|
|
|
|
(96 |
) |
|
|
(9,225 |
) |
|
|
(9,321 |
) |
Adjustments to purchase price
allocations |
|
|
(1,509 |
) |
|
|
155 |
|
|
|
|
|
|
|
(1,354 |
) |
|
|
|
Balance at end of period |
|
$ |
118,257 |
|
|
$ |
97,186 |
|
|
$ |
398,191 |
|
|
$ |
613,634 |
|
|
|
|
Page 10 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Intangible Assets (continued)
During the nine months ended September 30, 2008, the Corporation acquired $6,350,000 of other
intangibles, consisting of the following amortizable intangible assets by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregates |
|
Specialty |
|
|
|
|
|
Weighted-average |
|
|
Business |
|
Products |
|
Total |
|
amortization period |
|
|
(Dollars in Thousands) |
|
|
|
|
Noncompetition agreements |
|
$ |
240 |
|
|
$ |
285 |
|
|
$ |
525 |
|
|
5.9 years |
Customer relationships |
|
|
3,260 |
|
|
|
|
|
|
|
3,260 |
|
|
7 years |
|
|
|
|
|
|
|
Total |
|
$ |
3,500 |
|
|
$ |
285 |
|
|
$ |
3,785 |
|
|
6.8 years |
|
|
|
|
|
|
|
The Corporation also
acquired a $2,565,000 trade name related to the ElastoMag® product during
2008. The trade name, which is recorded within the Specialty Products segment, is deemed to
have an indefinite life and is not being amortized.
5. Long-Term Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
6.875% Notes, due 2011 |
|
$ |
249,884 |
|
|
$ |
249,860 |
|
|
$ |
249,852 |
|
5.875% Notes, due 2008 |
|
|
200,380 |
|
|
|
202,066 |
|
|
|
202,614 |
|
7% Debentures, due 2025 |
|
|
124,345 |
|
|
|
124,331 |
|
|
|
124,326 |
|
6.25% Senior Notes, due 2037 |
|
|
247,815 |
|
|
|
247,795 |
|
|
|
247,788 |
|
Floating Rate Senior Notes, due 2010 |
|
|
224,584 |
|
|
|
224,388 |
|
|
|
224,322 |
|
6.6% Senior Notes, due 2018 |
|
|
297,907 |
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
|
|
|
|
72,000 |
|
|
|
76,000 |
|
Acquisition notes, interest rate of 8.00% |
|
|
635 |
|
|
|
662 |
|
|
|
668 |
|
Other notes |
|
|
10,682 |
|
|
|
3,220 |
|
|
|
3,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,356,232 |
|
|
|
1,124,322 |
|
|
|
1,128,774 |
|
Less current maturities |
|
|
(203,517 |
) |
|
|
(276,136 |
) |
|
|
(78,069 |
) |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,152,715 |
|
|
$ |
848,186 |
|
|
$ |
1,050,705 |
|
|
|
|
|
|
|
|
|
|
|
On April 10, 2008, the Corporation amended its unsecured $250,000,000 Credit Agreement to add
another class of loan commitments, which had the effect of increasing the borrowing base under
the agreement by $75,000,000 (hereinafter, the Credit Agreement). Borrowings under the
Credit Agreement are unsecured and may be used for general corporate purposes, including to
support the Corporations commercial paper program if the
commercial paper market stabilizes and to the extent it is available
to the Corporation. The Credit Agreement expires on June 30,
2012.
Page 11 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Long-Term Debt (continued)
On April 21, 2008, the Corporation completed the issuance of $300,000,000 of 6.6% Senior Notes
due in 2018 (the 6.6% Senior Notes). The 6.6% Senior Notes, which are unsecured, may be
redeemed in whole or in part prior to their maturity at a make whole redemption price. Upon a
change of control repurchase event and a below investment grade credit rating, the Corporation
will be required to make an offer to repurchase all outstanding 6.6% Senior Notes at a price in
cash equal to 101% of the principal amount of the 6.6% Senior Notes, plus any accrued and unpaid
interest to, but not including, the purchase date.
In connection with the issuance of the 6.6% Senior Notes, on April 16, 2008, the Corporation
unwound its two forward starting interest rate swap agreements with a total notional amount of
$150,000,000 (the Swap Agreements). The Corporation made a cash payment of $11,139,000, which
represented the fair value of the Swap Agreements on the date of termination. The accumulated
other comprehensive loss at the date of termination will be recognized in earnings over the life
of the 6.6% Senior Notes. For the quarter and nine months ended September 30, 2008, the
Corporation recognized $196,000 and $362,000, respectively, of the accumulated other
comprehensive loss as additional interest expense. At December 31, 2007 and September 30, 2007,
the fair value of the Swap Agreements was a liability of $7,277,000 and $1,006,000,
respectively. These fair values represented the estimated amount, using Level 2 observable
market inputs for similar assets/liabilities, the Corporation would
have expected to pay to terminate the
Swap Agreements at those dates.
The carrying values of the Notes due in 2008 included $402,000, $2,187,000 and $2,766,000 at
September 30, 2008, December 31, 2007 and September 30, 2007, respectively, for the unamortized
value of terminated interest rate swaps.
No commercial paper borrowings were outstanding at September 30, 2008. Borrowings of
$72,000,000 and $76,000,000 were outstanding under the commercial paper program at December 31,
2007 and September 30, 2007, respectively.
The Corporations Credit Agreement contains a leverage ratio covenant that requires the
Corporations ratio of consolidated debt to consolidated earnings before interest, taxes,
depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve months
(the Ratio) to not exceed 2.75 to 1.00 as of the end of any fiscal quarter. Furthermore, the
covenant allows the Ratio to exclude debt incurred in connection with an acquisition for a
period of 180 days, provided that the Ratio does not exceed 3.25 to 1.00. The Corporation was
in compliance with the Ratio at September 30, 2008. The Corporation amended the leverage
covenant on October 24, 2008 (see Note 11).
Page 12 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Income Taxes
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2008 |
|
2007 |
Estimated effective income tax rate: |
|
|
|
|
|
|
|
|
Continuing operations |
|
|
28.9 |
% |
|
|
29.6 |
% |
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
51.5 |
% |
|
|
44.2 |
% |
|
|
|
|
|
|
|
|
|
Overall |
|
|
30.0 |
% |
|
|
29.7 |
% |
|
|
|
|
|
|
|
|
|
The Corporations effective income tax rate reflects the effect of state income taxes and the
impact of differences in book and tax accounting arising from the net permanent benefits
associated with the depletion allowances for mineral reserves, the domestic production deduction
and the tax effect of nondeductibility of goodwill related to asset sales. The effective income
tax rates for discontinued operations reflect the tax effects of individual operations
transactions and are not indicative of the Corporations overall effective income tax rate.
The overall estimated effective tax rate for the nine months ended September 30, 2008 includes
the following discrete items, which had an immaterial effect on net earnings: effective
settlement of agreed upon issues from the Internal Revenue Service examination that covered the
2004 and 2005 tax years and the true-up of the 2007 provision estimates to actual taxes paid as
a result of filing the related tax returns during the period.
The change in the year-to-date estimated overall effective income tax rate during the third
quarter of 2007, when compared with the year-to-date estimated overall effective income tax rate
as of June 30, 2007, is primarily due to discrete tax events. During the quarter ended
September 30, 2007, discrete tax events, primarily the reversal of 2003 tax reserves for which
the statute of limitations expired and the true-up of the 2006 provision estimates to actual as
a result of filing the related tax returns during the period, reduced income tax expense and
increased net earnings by $5,120,000, or $0.12 per diluted share.
Page 13 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Pension and Postretirement Benefits
The following presents the estimated components of the recorded net periodic benefit cost for
pension and postretirement benefits (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
Pension |
|
|
Postretirement Benefits |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Service cost |
|
$ |
2,674 |
|
|
$ |
3,085 |
|
|
$ |
145 |
|
|
$ |
160 |
|
Interest cost |
|
|
5,036 |
|
|
|
4,926 |
|
|
|
693 |
|
|
|
701 |
|
Expected return on assets |
|
|
(5,247 |
) |
|
|
(5,608 |
) |
|
|
|
|
|
|
|
|
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost (credit) |
|
|
160 |
|
|
|
169 |
|
|
|
(372 |
) |
|
|
(324 |
) |
Actuarial loss (gain) |
|
|
998 |
|
|
|
1,116 |
|
|
|
(17 |
) |
|
|
(24 |
) |
Settlement charge |
|
|
2,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net periodic benefit cost |
|
$ |
6,197 |
|
|
$ |
3,688 |
|
|
$ |
449 |
|
|
$ |
513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
Pension |
|
|
Postretirement Benefits |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Service cost |
|
$ |
8,607 |
|
|
$ |
9,266 |
|
|
$ |
436 |
|
|
$ |
479 |
|
Interest cost |
|
|
16,209 |
|
|
|
14,796 |
|
|
|
2,080 |
|
|
|
2,103 |
|
Expected return on assets |
|
|
(16,888 |
) |
|
|
(16,845 |
) |
|
|
|
|
|
|
|
|
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost (credit) |
|
|
513 |
|
|
|
509 |
|
|
|
(1,117 |
) |
|
|
(971 |
) |
Actuarial loss (gain) |
|
|
3,214 |
|
|
|
3,353 |
|
|
|
(52 |
) |
|
|
(72 |
) |
Settlement charge |
|
|
2,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net periodic benefit cost |
|
$ |
14,504 |
|
|
$ |
11,079 |
|
|
$ |
1,347 |
|
|
$ |
1,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Corporation made a $12,000,000 voluntary contribution to its pension plan in the third
quarter of 2008. The contribution was deductible for tax purposes for the 2007 tax year. No
additional contributions are expected during the remainder of the year.
8. Contingencies
In the opinion of management and counsel, it is unlikely that the outcome of litigation and
other proceedings, including those pertaining to environmental matters, relating to the
Corporation and its subsidiaries, will have a material adverse effect on the results of the
Corporations operations, financial position or cash flows.
Page 14 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Business Segments
The Corporation conducts its aggregates operations through three reportable business segments:
Mideast Group, Southeast Group and West Group. The operating results and assets of the quarries
acquired in connection with the Vulcan transaction are being reported in the Southeast Group.
The Corporation also has a Specialty Products segment that includes magnesia chemicals,
dolomitic lime and targeted activity in structural composites.
The following tables display selected financial data for the Corporations reportable business
segments. Corporate loss from operations primarily includes depreciation on capitalized
interest, expenses for corporate administrative functions, unallocated corporate expenses and
other nonrecurring and/or non-operational adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
Total revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
180,947 |
|
|
$ |
207,687 |
|
|
$ |
485,530 |
|
|
$ |
559,326 |
|
Southeast Group |
|
|
147,056 |
|
|
|
139,001 |
|
|
|
422,645 |
|
|
|
401,047 |
|
West Group |
|
|
219,178 |
|
|
|
224,006 |
|
|
|
590,404 |
|
|
|
571,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
547,181 |
|
|
|
570,694 |
|
|
|
1,498,579 |
|
|
|
1,531,763 |
|
Specialty Products |
|
|
52,029 |
|
|
|
44,688 |
|
|
|
150,018 |
|
|
|
130,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
599,210 |
|
|
$ |
615,382 |
|
|
$ |
1,648,597 |
|
|
$ |
1,662,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
167,722 |
|
|
$ |
193,299 |
|
|
$ |
455,294 |
|
|
$ |
524,665 |
|
Southeast Group |
|
|
119,071 |
|
|
|
117,385 |
|
|
|
343,880 |
|
|
|
346,810 |
|
West Group |
|
|
193,015 |
|
|
|
194,469 |
|
|
|
515,247 |
|
|
|
494,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
479,808 |
|
|
|
505,153 |
|
|
|
1,314,421 |
|
|
|
1,366,460 |
|
Specialty Products |
|
|
46,343 |
|
|
|
39,236 |
|
|
|
134,444 |
|
|
|
117,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
526,151 |
|
|
$ |
544,389 |
|
|
$ |
1,448,865 |
|
|
$ |
1,483,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from
Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
60,943 |
|
|
$ |
68,594 |
|
|
$ |
154,476 |
|
|
$ |
188,901 |
|
Southeast Group |
|
|
13,067 |
|
|
|
19,877 |
|
|
|
36,058 |
|
|
|
68,824 |
|
West Group |
|
|
38,391 |
|
|
|
45,642 |
|
|
|
72,186 |
|
|
|
75,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
112,401 |
|
|
|
134,113 |
|
|
|
262,720 |
|
|
|
333,140 |
|
Specialty Products |
|
|
8,632 |
|
|
|
8,966 |
|
|
|
27,453 |
|
|
|
24,458 |
|
Corporate |
|
|
(6,076 |
) |
|
|
(6,198 |
) |
|
|
(27,486 |
) |
|
|
(26,593 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
114,957 |
|
|
$ |
136,881 |
|
|
$ |
262,687 |
|
|
$ |
331,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 15 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9. Business Segments (continued)
Assets employed for the Southeast Group increased significantly since prior year as a result of
assets acquired in connection with the Vulcan exchange transaction (see also Note 2).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
Assets employed: |
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
869,096 |
|
|
$ |
780,074 |
|
|
$ |
798,539 |
|
Southeast Group |
|
|
819,204 |
|
|
|
519,681 |
|
|
|
524,138 |
|
West Group |
|
|
1,096,944 |
|
|
|
1,072,808 |
|
|
|
1,091,830 |
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
2,785,244 |
|
|
|
2,372,563 |
|
|
|
2,414,507 |
|
Specialty Products |
|
|
111,375 |
|
|
|
98,718 |
|
|
|
99,562 |
|
Corporate |
|
|
167,013 |
|
|
|
212,524 |
|
|
|
207,881 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
3,063,632 |
|
|
$ |
2,683,805 |
|
|
$ |
2,721,950 |
|
|
|
|
|
|
|
|
|
|
|
The asphalt, ready mixed concrete, road paving and other product lines are considered internal
customers of the core aggregates business. Net sales by product line are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
Aggregates |
|
$ |
452,613 |
|
|
$ |
475,408 |
|
|
$ |
1,237,715 |
|
|
$ |
1,285,942 |
|
Asphalt |
|
|
11,834 |
|
|
|
14,183 |
|
|
|
35,282 |
|
|
|
35,129 |
|
Ready Mixed Concrete |
|
|
9,508 |
|
|
|
10,654 |
|
|
|
28,938 |
|
|
|
30,771 |
|
Road Paving |
|
|
4,667 |
|
|
|
4,267 |
|
|
|
9,171 |
|
|
|
10,700 |
|
Other |
|
|
1,186 |
|
|
|
641 |
|
|
|
3,315 |
|
|
|
3,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
479,808 |
|
|
|
505,153 |
|
|
|
1,314,421 |
|
|
|
1,366,460 |
|
Specialty Products |
|
|
46,343 |
|
|
|
39,236 |
|
|
|
134,444 |
|
|
|
117,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
526,151 |
|
|
$ |
544,389 |
|
|
$ |
1,448,865 |
|
|
$ |
1,483,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 16 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Supplemental Cash Flow Information
The following table presents the components of the change in other assets and liabilities, net:
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
(Dollars in Thousands) |
|
Other current and noncurrent assets |
|
$ |
(3,170 |
) |
|
$ |
(3,534 |
) |
Notes receivable |
|
|
(366 |
) |
|
|
323 |
|
Accrued salaries, benefits and payroll taxes |
|
|
(2,890 |
) |
|
|
(2,157 |
) |
Accrued insurance and other taxes |
|
|
11,883 |
|
|
|
6,281 |
|
Accrued income taxes |
|
|
42,832 |
|
|
|
33,868 |
|
Accrued pension, postretirement and
postemployment benefits |
|
|
(9,067 |
) |
|
|
(7,941 |
) |
Other current and noncurrent liabilities |
|
|
(830 |
) |
|
|
35,887 |
|
|
|
|
|
|
|
|
|
|
$ |
38,392 |
|
|
$ |
62,727 |
|
|
|
|
|
|
|
|
11. Subsequent Events
On October 24, 2008, the Corporation amended its Credit Agreement to provide for an increased
leverage covenant. As amended, the Corporations ratio of consolidated debt to consolidated
EBTIDA, as defined, for the trailing twelve months may not exceed 3.25 to 1.00 as of the end of
any fiscal quarter and may exclude debt incurred in connection with an acquisition for a period
of 180 days provided that the ratio does not exceed 3.50 to 1.00. In exchange for the covenant
modification, the Corporation agreed to an increase in the drawn facility fee under a pricing
grid tied to its long-term debt rating, currently LIBOR plus 225 basis points.
Page 17 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW Martin Marietta Materials, Inc. (the Corporation), conducts its operations through four
reportable business segments: Mideast Group, Southeast Group, West Group (collectively, the
Aggregates business) and Specialty Products. The Corporations net sales and earnings are
predominately derived from its Aggregates business, which processes and sells granite, limestone,
and other aggregates products from a network of 289 quarries, distribution facilities and plants to
customers in 31 states, Canada, the Bahamas and the Caribbean Islands. The Aggregates business
products are used primarily by commercial customers principally in domestic construction of
highways and other infrastructure projects and for commercial and residential buildings. The
Specialty Products segment produces magnesia-based chemicals products used in industrial,
agricultural and environmental applications; dolomitic lime sold primarily to customers in the
steel industry; and structural composite products.
CRITICAL ACCOUNTING POLICIES The Corporation outlined its critical accounting policies in its
Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and
Exchange Commission on February 25, 2008. The following presents an update to the Property, Plant
and Equipment critical accounting policy:
The Corporation begins capitalizing quarry development costs at a point when reserves
are determined to be proven or probable, economically mineable and when demand supports
investment in the market. Capitalization of these costs ceases when production
commences. Quarry development costs are classified as land improvements.
There is diversity within the mining industry regarding the accounting treatment used to
record pre-production stripping costs. At existing quarries, new pits may be developed
to access additional reserves. Some companies within the industry expense
pre-production stripping costs associated with new pits within a quarry. In making its
determination as to the appropriateness of capitalizing or expensing pre-production
stripping costs, management reviews the facts and circumstances of each situation when
additional pits are developed within an existing quarry. If the additional pit operates
in a separate and distinct area of a quarry, the costs are capitalized as quarry
development costs and depreciated over the life of the uncovered reserves. Further, a
separate asset retirement obligation is created for additional pits when the liability
is incurred. Once a pit enters the production phase,
all post-production stripping costs are expensed as incurred as periodic inventory
production costs. During the nine months ended September 30, 2008, the Corporation
capitalized $2.4 million of quarry development costs for a new pit being created at its
Three Rivers quarry in Smithland, Kentucky.
Page 18 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
RESULTS OF OPERATIONS
Except as indicated, the following comparative analysis in the Results of Operations section of
this Managements Discussion and Analysis of Financial Condition and Results of Operations reflects
results from continuing operations and is based on net sales and cost of sales.
Gross margin as a percentage of net sales and operating margin as a percentage of net sales
represent non-GAAP measures. The Corporation presents these ratios calculated based on net sales,
as it is consistent with the basis by which management reviews the Corporations operating results.
Further, management believes it is consistent with the basis by which investors analyze the
Corporations operating results given that freight and delivery revenues and costs represent
pass-throughs and have no profit mark-up. Gross margin and operating margin calculated as
percentages of total revenues represent the most directly comparable financial measures calculated
in accordance with generally accepted accounting principles (GAAP). The following tables present
the calculations of gross margin and operating margin for the three and nine months ended September
30, 2008 and 2007 in accordance with GAAP and reconciliations of the ratios as percentages of total
revenues to percentages of net sales (dollars in thousands):
Gross Margin in Accordance with GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Gross profit |
|
$ |
151,616 |
|
|
$ |
167,314 |
|
|
$ |
366,211 |
|
|
$ |
439,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
599,210 |
|
|
$ |
615,382 |
|
|
$ |
1,648,597 |
|
|
$ |
1,662,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
25.3 |
% |
|
|
27.2 |
% |
|
|
22.2 |
% |
|
|
26.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 19 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
Gross Margin Excluding Freight and Delivery Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Gross profit |
|
$ |
151,616 |
|
|
$ |
167,314 |
|
|
$ |
366,211 |
|
|
$ |
439,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
599,210 |
|
|
$ |
615,382 |
|
|
$ |
1,648,597 |
|
|
$ |
1,662,309 |
|
Less: Freight and delivery
revenues |
|
|
(73,059 |
) |
|
|
(70,993 |
) |
|
|
(199,732 |
) |
|
|
(178,357 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
526,151 |
|
|
$ |
544,389 |
|
|
$ |
1,448,865 |
|
|
$ |
1,483,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin excluding
freight
and delivery revenues |
|
|
28.8 |
% |
|
|
30.7 |
% |
|
|
25.3 |
% |
|
|
29.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin in Accordance with GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Earnings from operations |
|
$ |
114,957 |
|
|
$ |
136,881 |
|
|
$ |
262,687 |
|
|
$ |
331,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
599,210 |
|
|
$ |
615,382 |
|
|
$ |
1,648,597 |
|
|
$ |
1,662,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
|
19.2 |
% |
|
|
22.2 |
% |
|
|
15.9 |
% |
|
|
19.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin Excluding Freight and Delivery Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Earnings from operations |
|
$ |
114,957 |
|
|
$ |
136,881 |
|
|
$ |
262,687 |
|
|
$ |
331,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
599,210 |
|
|
$ |
615,382 |
|
|
$ |
1,648,597 |
|
|
$ |
1,662,309 |
|
Less: Freight and delivery
revenues |
|
|
(73,059 |
) |
|
|
(70,993 |
) |
|
|
(199,732 |
) |
|
|
(178,357 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
526,151 |
|
|
$ |
544,389 |
|
|
$ |
1,448,865 |
|
|
$ |
1,483,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin excluding
freight and delivery
revenues |
|
|
21.8 |
% |
|
|
25.1 |
% |
|
|
18.1 |
% |
|
|
22.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 20 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
Quarter Ended September 30
Notable items for the quarter ended September 30, 2008 included:
|
|
Earnings per diluted share of $1.58 compared with $2.13 for the prior-year quarter |
|
|
Cost of petroleum-based products increased $16 million, reducing earnings per diluted share
by $0.23 |
|
|
Heritage aggregates product line pricing up 7.5%, volume down 13.3% |
|
|
Consolidated net sales of $526.2 million, down 3% compared with the prior-year quarter |
|
|
Record Specialty Products net sales, up 18% from the prior-year quarter |
Page 21 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
The following table presents net sales, gross profit, selling, general and administrative expenses
and earnings (loss) from operations data for the Corporation and its reportable segments for the
three months ended September 30, 2008 and 2007. In each case, the data is stated as a percentage
of net sales of the Corporation or the relevant segment, as the case may be.
Earnings from operations include research and development expense and other operating income and
expenses, net. Research and development expense for the Corporation was $0.1 million and $0.2
million for the quarters ended September 30, 2008 and 2007, respectively. Consolidated other
operating income and expenses, net, was income of $1.2 million and $6.2 million for the quarters
ended September 30, 2008 and 2007, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
Amount |
|
|
Net Sales |
|
|
Amount |
|
|
Net Sales |
|
|
|
|
|
|
|
(Dollars in Thousands) |
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
167,722 |
|
|
|
|
|
|
$ |
193,299 |
|
|
|
|
|
Southeast Group |
|
|
119,071 |
|
|
|
|
|
|
|
117,385 |
|
|
|
|
|
West Group |
|
|
193,015 |
|
|
|
|
|
|
|
194,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
479,808 |
|
|
|
100.0 |
|
|
|
505,153 |
|
|
|
100.0 |
|
Specialty Products |
|
|
46,343 |
|
|
|
100.0 |
|
|
|
39,236 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
526,151 |
|
|
|
100.0 |
|
|
$ |
544,389 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
70,918 |
|
|
|
|
|
|
$ |
79,099 |
|
|
|
|
|
Southeast Group |
|
|
21,960 |
|
|
|
|
|
|
|
25,323 |
|
|
|
|
|
West Group |
|
|
49,249 |
|
|
|
|
|
|
|
51,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
142,127 |
|
|
|
29.6 |
|
|
|
155,667 |
|
|
|
30.8 |
|
Specialty Products |
|
|
10,923 |
|
|
|
23.6 |
|
|
|
11,690 |
|
|
|
29.8 |
|
Corporate |
|
|
(1,434 |
) |
|
|
|
|
|
|
(43 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
151,616 |
|
|
|
28.8 |
|
|
$ |
167,314 |
|
|
|
30.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general &
administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
11,070 |
|
|
|
|
|
|
$ |
10,887 |
|
|
|
|
|
Southeast Group |
|
|
6,417 |
|
|
|
|
|
|
|
6,347 |
|
|
|
|
|
West Group |
|
|
11,065 |
|
|
|
|
|
|
|
11,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
28,552 |
|
|
|
6.0 |
|
|
|
28,754 |
|
|
|
5.7 |
|
Specialty Products |
|
|
2,501 |
|
|
|
5.4 |
|
|
|
2,592 |
|
|
|
6.6 |
|
Corporate |
|
|
6,681 |
|
|
|
|
|
|
|
5,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
37,734 |
|
|
|
7.2 |
|
|
$ |
36,439 |
|
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 22 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
Amount |
|
|
Net Sales |
|
|
Amount |
|
|
Net Sales |
|
|
|
|
|
|
|
(Dollars in Thousands) |
|
|
|
|
|
Earnings (Loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
60,943 |
|
|
|
|
|
|
$ |
68,594 |
|
|
|
|
|
Southeast Group |
|
|
13,067 |
|
|
|
|
|
|
|
19,877 |
|
|
|
|
|
West Group |
|
|
38,391 |
|
|
|
|
|
|
|
45,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
112,401 |
|
|
|
23.4 |
|
|
|
134,113 |
|
|
|
26.5 |
|
Specialty Products |
|
|
8,632 |
|
|
|
18.6 |
|
|
|
8,966 |
|
|
|
22.9 |
|
Corporate |
|
|
(6,076 |
) |
|
|
|
|
|
|
(6,198 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
114,957 |
|
|
|
21.8 |
|
|
$ |
136,881 |
|
|
|
25.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-quarter results highlight the Corporations ability to adapt its business to successfully
address the most challenging economic times in its history. Aggregates volumes declined for the
tenth consecutive quarter, diesel fuel and natural gas costs escalated 47% during the quarter, and
adverse weather conditions in the wake of Tropical Storm Fay and Hurricanes
Gustav, Hannah and Ike had a negative impact on operations not only
in the Gulf Coast region, but also in the Southeast and
Central United States as the storm systems moved inland. Nevertheless, the Corporations
management team and employees again balanced the productive capacity of its operations to market
demand and aggressively addressed controllable costs.
The Aggregates business continued to achieve sustainable pricing growth within all groups with
heritage aggregates product line pricing up 7.5% for the quarter. With the exception of Iowa and
Arkansas, the difficult economic environment caused aggregates volumes to fall in all of the
business states with the overall volume in the heritage aggregates business declining 13.3%. The
strong farm economy, coupled with increased alternative energy construction in Iowa and energy
expansion projects in Arkansas, East Texas and Northwest Louisiana, supported volume growth in these areas.
Infrastructure and commercial construction demand remains challenging, most notably from the lack
of credit availability, which has stalled overall construction activity. The West Group experienced
its first quarterly volume decline of the year, reflecting the impact of the hurricanes as well as
weakness in construction activity. The Corporation estimates that the
third-quarter hurricane season caused
the West Group to reduce shipments by 0.8 million tons and, when coupled with lost
sales and increased production costs from storms in the Mideast and Southeast Groups, adverse
weather lowered profitability of the Aggregates business by $5.6 million, or $0.08 per diluted
share.
Page 23 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
The following tables present volume and pricing data and shipments data for the aggregates product
line. Heritage aggregates operations exclude volume and pricing data for acquisitions that were
not included in prior-year operations for the comparable period and divestitures.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
September 30, 2008 |
|
|
Volume |
|
Pricing |
Volume/Pricing Variance (1) |
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line (2): |
|
|
|
|
|
|
|
|
Mideast Group |
|
|
(21.1 |
%) |
|
|
9.9 |
% |
Southeast Group |
|
|
(14.6 |
%) |
|
|
8.7 |
% |
West Group |
|
|
(5.4 |
%) |
|
|
6.7 |
% |
Heritage Aggregates Operations |
|
|
(13.3 |
%) |
|
|
7.5 |
% |
Aggregates Product Line (3) |
|
|
(12.4 |
%) |
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
(tons in thousands) |
|
Shipments |
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line (2): |
|
|
|
|
|
|
|
|
Mideast Group |
|
|
15,185 |
|
|
|
19,254 |
|
Southeast Group |
|
|
9,454 |
|
|
|
11,066 |
|
West Group |
|
|
19,773 |
|
|
|
20,902 |
|
|
|
|
|
|
|
|
Heritage Aggregates Operations |
|
|
44,412 |
|
|
|
51,222 |
|
Acquisitions |
|
|
911 |
|
|
|
|
|
Divestitures (4) |
|
|
123 |
|
|
|
656 |
|
|
|
|
|
|
|
|
Aggregates Product Line (3) |
|
|
45,446 |
|
|
|
51,878 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Volume/pricing variances reflect the percentage increase/(decrease) from the comparable
period in the prior year. |
|
(2) |
|
Heritage Aggregates Product Line excludes volume and pricing data for acquisitions that have
not been included in prior-year operations for the comparable period and divestitures. |
|
(3) |
|
Aggregates Product Line includes all acquisitions from the date of acquisition and
divestitures through the date of disposal. |
|
(4) |
|
Divestitures include the tons related to divested aggregates product line operations up to
the date of divestiture. |
The Aggregates business is significantly affected by seasonal changes and other weather-related
conditions. Aggregates production and shipment levels coincide with general construction activity
levels, most of which occurs in the spring, summer and fall. Thus, production and shipment levels
vary by quarter. Operations concentrated in the northern United States generally experience more
severe winter weather conditions than operations in the Southeast and
Southwest. Excessive rainfall, and conversely excessive drought, can also jeopardize shipments,
production and profitability. Because of the potentially significant impact of weather on the
Corporations operations, third quarter results are not indicative of expected performance for
other interim periods or the full year.
Page 24 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
The Specialty Products segment, which includes magnesia chemicals, dolomitic lime and targeted
activity in structural composites, delivered record net sales of $46.3 million for the 2008 third
quarter, an increase of 18.1% compared with the prior-year quarter. The United States steel
market has remained positive, leading to increased dolomitic lime demand. Similarly, the
Corporation has experienced increased demand for magnesia-based chemicals products used in a number
of environmental applications as well as for its heat resistant products. Earnings from operations
of $8.6 million decreased 3.7% compared with the prior-year quarter due to rising diesel fuel and
natural gas costs.
Although petroleum-based energy prices are beginning to decline, increased costs of petroleum-based
products continued to have a negative impact on both costs and sales in the past quarter. Liquid asphalt,
which is used in the production of asphalt paving products, increased 128% over the prior year with average
prices approaching $800 per ton at their peak. The Corporations customers, and often times end
users, cannot react quickly enough to these escalating costs and, when possible, have chosen to
defer work in anticipation of future potential cost reductions. The rise in the cost of
petroleum-based products resulted in additional production costs of $16 million, or $0.23 per
diluted share, for the quarter.
Consolidated selling, general and administrative expenses of $37.7 million for the quarter ended
September 30, 2008 included a settlement charge of $2.6 million for payment to retired employees of
vested benefits provided by the Corporations SERP (Supplemental Excess Retirement Plan). Selling,
general and administrative expense, excluding this charge, were $35.1 million as compared
with $36.4 million in the prior-year quarter, reflecting the Corporations continued focus on cost
management.
Among other items, other operating income and expenses, net, includes gains and losses on the sale
of assets; gains and losses related to certain accounts receivable; rental, royalty and services
income; and the accretion and depreciation expenses related to Statement of Financial Accounting
Standards No. 143, Accounting for Asset Retirement Obligations. For the third quarter,
consolidated other operating income and expenses, net, was income of $1.2 million in 2008 compared
with $6.2 million in 2007. Third quarter 2008 includes $3 million in nonrecurring professional
fees incurred in connection with the Corporations evaluation of a number of strategic initiatives
to enhance the business and create shareholder value. Third quarter 2007 includes a $4.5 million
gain on the sale of land for the West Group.
Consolidated interest expense was $19.5 million for the third quarter 2008 as compared with $17.2
million for the prior-year quarter. The increase primarily resulted from interest for the 6.6%
Senior Notes issued in April 2008, as well as other short-term borrowings outstanding during the
quarter.
Page 25 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
In addition to other offsetting amounts, other nonoperating income and expenses, net, are comprised
generally of interest income, net equity earnings from nonconsolidated investments and eliminations
of minority interests for consolidated non-wholly owned subsidiaries. Consolidated other
nonoperating income and expenses, net, for the quarter ended September 30, was expense of $2.8
million in 2008 compared with income of $1.2 million in 2007, primarily as a result of higher
earnings from consolidated subsidiaries which increased the expense for the elimination of minority
interests in 2008. Additionally, 2008 equity earnings on nonconsolidated investments were lower as
compared with 2007.
Nine Months Ended September 30
Notable items for the nine months ended September 30, 2008 included:
|
|
Earnings per diluted share of $3.60 compared with $4.73 for the prior-year period |
|
|
Consolidated net sales of $1.449 billion, down 2% compared with the prior-year period |
|
|
Cost of petroleum-based products increased $36 million, reducing earnings by $0.53 per
diluted share |
|
|
Heritage aggregates product line pricing up 6.0%, volume down 10.5% |
|
|
Specialty Products net sales and earnings from operations up 14.4% and 12.2%, respectively,
from prior-year period |
|
|
Acquisition and integration of six quarry acquisitions from Vulcan Materials Company, plus
two other small acquisitions |
|
|
Issuance of $300 million of Senior Notes |
The following table presents net sales, gross profit, selling, general and administrative expenses
and earnings (loss) from operations data for the Corporation and its reportable segments for the
nine months ended September 30, 2008 and 2007. In each case, the data is stated as a percentage of
net sales of the Corporation or the relevant segment, as the case may be.
Earnings from operations include research and development expense and other operating income and
expenses, net. Research and development expense for the Corporation was $0.5 million and $0.6
million for the nine months ended September 30, 2008 and 2007, respectively. Consolidated other
operating income and expenses, net, was income of $14.4 million and $11.5 million for the nine
months ended September 30, 2008 and 2007, respectively.
Page 26 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
|
% of |
|
|
|
Amount |
|
|
Net Sales |
|
|
Amount |
|
|
Net Sales |
|
|
|
|
|
|
|
(Dollars in Thousands) |
|
|
|
|
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
455,294 |
|
|
|
|
|
|
$ |
524,665 |
|
|
|
|
|
Southeast Group |
|
|
343,880 |
|
|
|
|
|
|
|
346,810 |
|
|
|
|
|
West Group |
|
|
515,247 |
|
|
|
|
|
|
|
494,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
1,314,421 |
|
|
|
100.0 |
|
|
|
1,366,460 |
|
|
|
100.0 |
|
Specialty Products |
|
|
134,444 |
|
|
|
100.0 |
|
|
|
117,492 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,448,865 |
|
|
|
100.0 |
|
|
$ |
1,483,952 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
174,869 |
|
|
|
|
|
|
$ |
220,891 |
|
|
|
|
|
Southeast Group |
|
|
57,413 |
|
|
|
|
|
|
|
86,059 |
|
|
|
|
|
West Group |
|
|
102,093 |
|
|
|
|
|
|
|
100,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
334,375 |
|
|
|
25.4 |
|
|
|
407,941 |
|
|
|
29.9 |
|
Specialty Products |
|
|
35,069 |
|
|
|
26.1 |
|
|
|
32,823 |
|
|
|
27.9 |
|
Corporate |
|
|
(3,233 |
) |
|
|
|
|
|
|
(1,673 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
366,211 |
|
|
|
25.3 |
|
|
$ |
439,091 |
|
|
|
29.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
34,176 |
|
|
|
|
|
|
$ |
34,213 |
|
|
|
|
|
Southeast Group |
|
|
19,603 |
|
|
|
|
|
|
|
19,160 |
|
|
|
|
|
West Group |
|
|
33,538 |
|
|
|
|
|
|
|
34,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
87,317 |
|
|
|
6.6 |
|
|
|
87,839 |
|
|
|
6.4 |
|
Specialty Products |
|
|
7,556 |
|
|
|
5.6 |
|
|
|
7,932 |
|
|
|
6.8 |
|
Corporate |
|
|
22,597 |
|
|
|
|
|
|
|
23,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
117,470 |
|
|
|
8.1 |
|
|
$ |
119,021 |
|
|
|
8.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group |
|
$ |
154,476 |
|
|
|
|
|
|
$ |
188,901 |
|
|
|
|
|
Southeast Group |
|
|
36,058 |
|
|
|
|
|
|
|
68,824 |
|
|
|
|
|
West Group |
|
|
72,186 |
|
|
|
|
|
|
|
75,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business |
|
|
262,720 |
|
|
|
20.0 |
|
|
|
333,140 |
|
|
|
24.4 |
|
Specialty Products |
|
|
27,453 |
|
|
|
20.4 |
|
|
|
24,458 |
|
|
|
20.8 |
|
Corporate |
|
|
(27,486 |
) |
|
|
|
|
|
|
(26,593 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
262,687 |
|
|
|
18.1 |
|
|
$ |
331,005 |
|
|
|
22.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 27 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
Net sales for the Aggregates business for the nine months ended September 30 were $1.314 billion in
2008, a 3.8% decline versus 2007 net sales of $1.366 billion. Aggregates pricing at heritage
locations was up 6.0%, while volume decreased 10.5%. Inclusive of acquisitions and divestitures,
aggregates pricing for the nine months ended September 30, 2008 increased 6.2% and aggregates
product line volume decreased 10.0%.
The following tables present volume and pricing data and shipments data for the aggregates product
line. Heritage aggregates operations exclude volume and pricing data for acquisitions that were
not included in prior-year operations for the comparable period and divestitures.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
September 30, 2008 |
|
|
Volume |
|
Pricing |
Volume/Pricing Variance (1) |
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line (2): |
|
|
|
|
|
|
|
|
Mideast Group |
|
|
(22.2 |
%) |
|
|
11.4 |
% |
Southeast Group |
|
|
(11.8 |
%) |
|
|
6.5 |
% |
West Group |
|
|
1.6 |
% |
|
|
3.8 |
% |
Heritage Aggregates Operations |
|
|
(10.5 |
%) |
|
|
6.0 |
% |
Aggregates Product Line (3) |
|
|
(10.0 |
%) |
|
|
6.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
|
|
(tons in thousands) |
|
Shipments |
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line (2): |
|
|
|
|
|
|
|
|
Mideast Group |
|
|
39,919 |
|
|
|
51,279 |
|
Southeast Group |
|
|
28,568 |
|
|
|
32,382 |
|
West Group |
|
|
53,394 |
|
|
|
52,543 |
|
|
|
|
|
|
|
|
Heritage Aggregates Operations |
|
|
121,881 |
|
|
|
136,204 |
|
Acquisitions |
|
|
1,841 |
|
|
|
|
|
Divestitures (4) |
|
|
589 |
|
|
|
1,995 |
|
|
|
|
|
|
|
|
Aggregates Product Line (3) |
|
|
124,311 |
|
|
|
138,199 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Volume/pricing variances reflect the percentage increase/(decrease) from the comparable
period in the prior year. |
|
(2) |
|
Heritage Aggregates Product Line excludes volume and pricing data for acquisitions that have
not been included in prior-year operations for the comparable period and divestitures. |
|
(3) |
|
Aggregates Product Line includes all acquisitions from the date of acquisition and
divestitures through the date of disposal. |
|
(4) |
|
Divestitures include the tons related to divested aggregates product line operations up to
the date of divestiture. |
Page 28 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
Specialty Products net sales were $134.4 million for the first nine months of 2008 compared with
$117.5 million for the prior-year period. Earnings from operations for the nine months ended
September 30, 2008 were $27.5 million compared with $24.5 million in the year-earlier period.
Increased demand for magnesia-based chemicals products and dolomitic lime contributed to these
results.
Selling, general and administrative expenses for the nine months ended September 30, 2008 were
$117.5 million versus $119.0 million in the 2007 period. Selling, general and administrative
expenses decreased 1.3% as the Corporation continued its focus on cost control to all aspects of
the business.
For the nine months ended September 30, consolidated other operating income and expenses, net, was
income of $14.4 million in 2008 compared with $11.5 million in 2007. The increase results
primarily from a $7.2 million gain on the disposals of an idle facility north of San Antonio, Texas
(West Group), and land in Henderson, North Carolina (Mideast Group), in connection with the Vulcan
exchange transaction and was partially offset by increased accretion and depreciation expenses
related to asset retirement obligations.
Consolidated interest expense was $54.6 million for the nine months ended September 30, 2008 as
compared with $45.1 million for the prior-year period. The increase primarily resulted from
interest for the 6.6% Senior Notes issued in April 2008, as well as other short-term borrowings
outstanding during the year.
The overall estimated effective tax rate for the nine months ended September 30, 2008 includes the
following discrete items, which had an immaterial effect on net earnings: effective settlement of
agreed upon issues from the Internal Revenue Service examination that covered the 2004 and 2005 tax
years and the true-up of the 2007 provision estimates to actual taxes paid as a result of filing
the related tax returns during the period.
LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities during the nine months
ended September 30, 2008 was $271.0 million compared with $272.8 million in the comparable period
of 2007. Operating cash flow is generally from net earnings, before deducting depreciation,
depletion and amortization, offset by working capital requirements. Net cash provided by operating
activities for the first nine months of 2008 as compared with the year-earlier period reflects
lower net earnings before depreciation, depletion and amortization;
lower cash taxes, resulting
from lower pretax earnings and higher benefits from bonus
depreciation deductions; a lower increase
in accounts receivable as a result of lower net sales; a
decline in the rate of inventory build as the Corporation managed
production and inventory levels; and decreased tax benefits from stock option exercise activity.
Page 29 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
Depreciation, depletion and amortization was as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2008 |
|
|
2007 |
|
Depreciation |
|
$ |
120.0 |
|
|
$ |
105.5 |
|
Depletion |
|
|
3.3 |
|
|
|
3.4 |
|
Amortization |
|
|
2.4 |
|
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
$ |
125.7 |
|
|
$ |
111.1 |
|
|
|
|
|
|
|
|
The seasonal nature of the construction aggregates business impacts quarterly operating cash flow
when compared with the year. Full year 2007 net cash provided by operating activities was $395.6
million, compared with $272.8 million for the first nine months of 2007.
Full-year
capital spending is expected to approximate $255 million for 2008, including capital
spending in connection with the Hunt Martin joint venture and exclusive of acquisitions.
Comparable full-year capital expenditures were $264.9 million in 2007. First nine months capital
expenditures, exclusive of acquisitions, were $223.8 million in 2008 and $196.9 million in 2007.
Capital expenditures during the first nine months of 2008 included work on several major plant
expansion and efficiency projects, including $54.5 million for its new production and distribution
facilities in Augusta, Georgia. The new plant will begin operations in the fourth quarter of 2008
versus the prior forecast of second quarter 2009. The earlier completion of this project, which
increases aggregates capacity from 2 million tons to 6 million tons annually, is expected to
increase the Corporations market share in high-growth markets in Georgia and Florida.
During the first nine months of 2008 and 2007, the Corporation paid $218.4 million and $12.2
million, respectively, for acquisitions. On April 11, 2008, the Corporation entered into a swap
transaction with Vulcan, pursuant to which it acquired six quarry locations in North Georgia and
Tennessee. In addition to a $192.0 million cash payment plus normal closing adjustments for
working capital, the Corporation divested to Vulcan its only California quarry located in Oroville,
an idle facility north of San Antonio, Texas, and land in Henderson, North Carolina, formerly
leased to Vulcan. As part of the transaction, the Corporation also acquired a land parcel
previously leased from Vulcan at its Three Rivers Quarry near Paducah, Kentucky. During 2008, the
Corporation also acquired certain assets of the Specialty Magnesia Division of Morton
International, Inc. relating to the ElastoMag® product and a granite quarry near
Asheboro, North Carolina that contains approximately 40 million tons of reserves.
Page 30 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
The Corporation can purchase its common stock through open-market purchases pursuant to authority
granted by its Board of Directors. The Corporation did not repurchase any shares of common stock
during the nine months ended September 30, 2008. However, $24.0 million in cash was used during
January 2008 to settle common stock repurchases made as of December 31, 2007. During the nine
months ended September 30, 2007, the Corporation repurchased 3,585,000 shares at an aggregate cost
of $495.2 million. At September 30, 2008, 5,042,000 shares of common stock were remaining under
the Corporations repurchase authorization.
The Corporation manages its cash and cash equivalents to ensure that short-term operating cash
needs are met and that excess funds are managed efficiently. The Corporation subsidizes shortages
in operating cash through short-term borrowings on its available line of credit. The Corporation
typically invests excess funds in Eurodollar time deposit accounts, which are exposed to bank
solvency risk and are not FDIC insured. Funds not yet available in lockboxes generally exceed the
$250,000 FDIC insurance limit. Cash and cash equivalents at September 30, 2008 were $13.9 million.
Of this amount, approximately $4.3 million was deposited in an overnight bank time deposit
account. The remaining cash and cash equivalents represent deposits in transit to the
Corporations lockbox accounts and deposits held at local banks.
The Corporations five-year revolving credit agreement (the Credit Agreement) contains a leverage
ratio covenant that requires the Corporations ratio of consolidated debt to consolidated earnings
before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the
trailing twelve months (the Ratio) to not exceed 2.75 to 1.00 as of the end of any fiscal
quarter. Furthermore, the covenant allows the Ratio to exclude debt incurred in connection with an
acquisition for a period of 180 days, provided that the Ratio does not exceed 3.25 to 1.00. On
October 24, 2008, the Corporation amended its Credit Agreement to provide for an increased leverage
covenant. As amended, the Corporations Ratio may not exceed 3.25 to 1.00 as of the end of any
fiscal quarter and may exclude debt incurred in connection with an acquisition for a period of 180
days provided that the ratio does not exceed 3.50 to 1.00. In exchange for the covenant
modification, the Corporation agreed to an increase in the drawn facility fee under a pricing grid
tied to its long-term debt rating, currently LIBOR plus 225 basis points.
Page 31 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
The Ratio is calculated as total long-term debt divided by consolidated EBITDA, as defined, for the
trailing twelve months. Consolidated EBITDA is generally defined as earnings before interest
expense, income tax expense, and depreciation, depletion and amortization expense for continuing
operations. Additionally, stock-based compensation expense is added back and interest income is
deducted in the calculation of consolidated EBITDA. Certain other nonrecurring items and noncash
items, if they occur, can affect the calculation of consolidated EBITDA. At September 30, 2008,
the Corporations ratio of consolidated debt to consolidated EBITDA, as defined, for the trailing
twelve month EBITDA was 2.49 and was calculated as follows (dollars in thousands):
|
|
|
|
|
|
|
Twelve Month Period |
|
|
|
October 1, 2007 to |
|
|
|
September 30, 2008 |
|
Earnings from continuing operations |
|
$ |
201,370 |
|
Add back: |
|
|
|
|
Interest expense |
|
|
70,387 |
|
Income tax expense |
|
|
89,207 |
|
Depreciation, depletion and amortization expense |
|
|
163,095 |
|
Stock-based compensation expense |
|
|
20,959 |
|
Deduct: |
|
|
|
|
Interest income |
|
|
(926 |
) |
|
|
|
|
Consolidated EBITDA, as defined |
|
$ |
544,092 |
|
|
|
|
|
Consolidated debt at September 30, 2008 |
|
$ |
1,356,232 |
|
|
|
|
|
Consolidated debt to consolidated EBITDA, as defined,
at September 30, 2008 for the trailing twelve month
EBITDA |
|
|
2.49 |
|
|
|
|
|
The management team and Board of Directors have focused on establishing prudent leverage targets
that provide for value creation through strong operational performance, continued investment in
internal growth opportunities, financial flexibility to support opportunistic and strategic
acquisitions and a return of cash to shareholders through sustainable dividends and share
repurchase programs while maintaining a solid investment grade rating. Given these parameters, in
the ordinary course of business and absent any future debt incurred in connection with an
acquisition, the Corporation expects to manage its leverage within a range of 2.0 to 2.5 times
consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and
amortization (EBITDA), as defined by the underlying credit agreement.
On April 10, 2008, the Corporation amended its unsecured $250 million Credit Agreement to add
another class of loan commitments, which had the effect of increasing the borrowing base under the
agreement by $75 million. Borrowings under the Credit Agreement are unsecured and may be used for
general corporate purposes, including to support the
Corporations commercial paper program if the commercial paper
market stabilizes and to the extent it is available to the Corporation. The
Credit Agreement expires on June 30, 2012.
Page 32 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
On April 21, 2008, the Corporation completed the issuance of $300 million of 6.6% Senior Notes due
in 2018 (the 6.6% Senior Notes). The 6.6% Senior Notes, which are unsecured, may be redeemed in
whole or in part prior to their maturity at a make whole redemption price. Upon a change of
control repurchase event and a below investment grade credit rating, the Corporation will be
required to make an offer to repurchase all outstanding 6.6% Senior Notes at a price in cash equal
to 101% of the principal amount of the 6.6% Senior Notes, plus any accrued and unpaid interest to,
but not including, the purchase date.
In connection with the issuance of $300 million of 6.6% Senior Notes due in 2018, on April 16,
2008, the Corporation unwound its two forward starting interest rate swap agreements with a total
notional amount of $150 million (the Swap Agreements). The Corporation made a cash payment of
$11.1 million, which represented the fair value of the Swap Agreements on the date of termination.
The accumulated other comprehensive loss at the date of termination will be recognized in earnings
over the life of the new Notes.
In August 2008, the Board of Directors approved a 16% increase in the regular quarterly cash
dividend to $0.40 per share on the Corporations common stock. This dividend represents a cash
dividend of $1.60 per share on an annualized basis.
The
Corporation may be required to obtain financing in order to fund certain
strategic acquisitions, if any such opportunities arise, or to
refinance outstanding debt. Furthermore, the
Corporation is exposed to risk from tightening credit markets, through the interest cost related to
its $225 million Floating Rate Senior Notes due in 2010 and the interest cost
related to its commercial paper program, to the extent that it is
available to the Corporation. On October 24, 2008, Moodys downgraded the
Corporations long-term rating to Baa3 from Baa1 and downgraded its commercial paper rating to P-3
from P-2 with a stable outlook. On October 29, 2008, Standard
& Poors (S&P) reaffirmed the Corporations
senior unsecured debt rating of BBB+ and downgraded the outlook to
negative. The S&P commercial paper rating of A-2 remains
unchanged. While management believes its credit ratings will remain at an
investment-grade level, no assurance can be given that these ratings will remain at those levels.
Page 33 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
While management understands that the
agencies are taking a cautious approach in gauging the effect of the current economic downturn on the Corporations ability to
generate sufficient cash flow, management is comfortable with the Corporations leverage covenant
and its liquidity available to refinance the $200 million, 5.875% Senior Notes due December 1,
2008. In addition, based on discussions with the Corporations
bank group, the Corporation expects to have continued access to the
public credit, although at a higher cost of debt when compared with its 5.9% weighted average interest rate at
September 30, 2008. However, given the dynamic, unpredictable state of the credit
markets, accessing the availability under its credit facility remains an option. Management
continues to believe the Corporation has sufficient liquidity from the cash flows generated in the
operation of the business, from its ability to reduce levels of capital expenditures, expected to be no
more than $185 million in 2009, and from its ability to execute
against an aggressive cost-reduction
plan.
Contractual Obligations
At September 30, 2008, the Corporations contractual obligations related to its 6.6% Senior Notes
issued in April 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
< 1 yr |
|
1-3 yrs. |
|
3-5 yrs. |
|
> 5 yrs. |
|
|
|
Long-term debt |
|
$ |
300,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
300,000 |
|
Interest (off balance sheet) |
|
|
197,663 |
|
|
|
28,538 |
|
|
|
39,600 |
|
|
|
39,600 |
|
|
|
89,925 |
|
|
|
|
Total |
|
$ |
497,663 |
|
|
$ |
28,538 |
|
|
$ |
39,600 |
|
|
$ |
39,600 |
|
|
$ |
389,925 |
|
|
|
|
ACCOUNTING CHANGES As discussed in Note 1 to the Consolidated Financial Statements, effective
January 1, 2008, the Corporation partially adopted FAS 157.
TRENDS AND
RISKS The Corporation outlined the risks associated with its business in its Annual
Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange
Commission on February 25, 2008. Management continues to evaluate its exposure to all operating
risks on an ongoing basis.
Page 34 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
The state of Florida recently launched the Accelerate Florida initiative aimed at advancing start
dates on $1.4 billion in road construction funding to create jobs and stimulate the states
weakening construction economy. The Florida Department of Transportation announced that these
projects will employ 39,000 people and generate $7.84 billion in economic benefits, a $5.60 return
on each state dollar invested. The Corporation is uniquely positioned to provide high-quality
granite construction aggregates into the Florida infrastructure market from its offshore quarry in
Nova Scotia and interior fall line quarries in Georgia and South Carolina. The
Corporations new plant in Augusta, Georgia, will begin operations in the fourth quarter of 2008
versus the prior forecast of second quarter 2009. The earlier completion of this project, which
increases aggregates capacity from 2 million tons to 6 million tons annually, is enabling the
Corporation to engage in marketing discussions with major Florida customers in advance of the
infrastructure acceleration.
OUTLOOK 2008 Over the past 45 to 60 days, the lack of available business credit has stalled
construction activity and further affected demand for the Corporations products. Construction
projects underway have had credit effectively pulled and new projects are subject to increasingly
tighter lending standards. The unpredictable state of the economy, energy inflation, credit market
uncertainty and lagging construction demand make forecasting increasingly difficult. That said,
pricing continues to remain positive, even in this challenging climate. Accordingly, management
reaffirms its 6% to 8% range for the rate of heritage aggregates
price increases in 2008. However,
with the pressure on volume, management now expects aggregates
shipments to be down 11% to 12% for
the year. The Specialty Products segment is expected to deliver record levels of net sales and
pretax earnings of $36 million to $38 million. Based on these factors, 2008 net
earnings per diluted share is expected to range from $4.25 to $4.65.
The Corporation is beginning to develop its preliminary views on 2009 as management completes its
regional operating plans and would characterize the upcoming year as a period of stabilization with
the first half subject to continued aggregates volume pressure. Management currently expects
modest price increases, stabilizing aggregates demand and a deflationary cost environment, as it
relates to energy costs. While management is taking a very
conservative view in its 2009 planning, it
is becoming more likely that the federal government will create a new economic stimulus package, and it
appears that both federal and state governments will look toward
making increased investment in road
construction and other infrastructure as a jobs-creation tool. Management will provide its full
guidance for 2009 when annual earnings for 2008 are released early
next year and it has more information
about government spending on infrastructure projects.
The 2008 estimated earnings range includes managements assessment of the likelihood of certain
risk factors that will affect performance within the range. The most significant risk to 2008
earnings, whether within or outside current earnings expectations, continues to be the performance
of the United States economy, the uncertainty and availability of credit markets and the effect on
construction activity.
Page 35 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
Risks to the earnings range are primarily volume-related and include a greater-than-expected drop
in demand as a result of the continued decline in residential
construction, continued decline in commercial
construction, delays in infrastructure projects, or some combination thereof. Further, increased
highway construction funding pressures as a result of either federal or state issues can affect
profitability. Currently, North Carolina, Georgia, Texas, and South Carolina are experiencing
state-level funding pressures, and these states may disproportionately affect profitability. The price of liquid asphalt is a significant cost
component in the production of hot mix asphalt products and can cause
road builders and commercial contractors to delay or defer work in
anticipation of liquid asphalt cost changes. The
level of aggregates demand in the Corporations end-use markets, production levels and the
management of production costs will affect the operating leverage of the Aggregates business and,
therefore, profitability. Production costs in the aggregates business are also sensitive to energy
prices, the costs of repair and supply parts, and the start-up expenses for large-scale plant
projects. The continued rising cost of diesel and other fuels
increases production costs, either
directly through consumption or indirectly through the higher cost of energy-related
consumables, namely steel, explosives, tires and conveyor belts. Sustained periods of diesel fuel
cost at the current level will continue to have a negative impact on profitability. The Aggregates
business is also subject to weather-related risks that can significantly affect production
schedules and profitability. Hurricane activity in the Atlantic Ocean and Gulf Coast generally is
most active during the third and fourth quarters. Opportunities to reach the upper end of the
earnings range depend on the aggregates product line demand exceeding
expectations, triggered by a significant reduction in liquid asphalt
prices and/or increased credit availability, and continued
decline in energy-related costs
Risks to earnings outside of the range include a change in volume beyond current expectations as a
result of economic events outside of the Corporations control. In addition to the impact of
residential and commercial construction, the Corporation is exposed to risk in its earnings
expectations from tightening credit markets and the availability of and interest cost related to
its short- and intermediate-term financing. The Corporations commercial paper program is rated A-2
by Standards & Poors and P-3 by Moodys. The P-3
rating by Moodys limits the Corporations
access to the commercial paper markets as a source of capital in the
current credit environment.
OTHER
MATTERS If you are interested in Martin Marietta Materials, Inc. stock, management
recommends that, at a minimum, you read the Corporations current Annual Report and Forms 10-K,
10-Q and 8-K reports to the SEC over the past year. The Corporations recent proxy statement for
the annual meeting of shareholders also contains important information. These and other materials
that have been filed with the SEC are accessible through the Corporations web site at
www.martinmarietta.com and are also available at the SECs web site at www.sec.gov. You may also
write or call the Corporations Corporate Secretary, who will provide copies of such reports.
Page 36 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
Investors are cautioned that all statements in this Quarterly Report that relate to the future
involve risks and uncertainties, and are based on assumptions that the Corporation believes in good
faith are reasonable but which may be materially different from actual results. Forward-looking
statements give the investor our expectations or forecasts of future events. You can identify
these statements by the fact that they do not relate only to historical or current facts. They may
use words such as anticipate, estimate, expect, project, intend, plan, believe, and
other words of similar meaning in connection with future events or future operating or financial
performance. Any or all of our forward-looking statements here and in other publications may turn
out to be wrong.
Factors that the Corporation currently believes could cause actual results to differ materially
from the forward-looking statements in this Quarterly Report on Form 10-Q include, but are not
limited to, the level and timing of federal and state transportation funding, particularly in North
Carolina, Texas and Georgia, three of the Corporations largest and most profitable states, and in South
Carolina, the Corporations fifth largest state as measured by 2007 Aggregates business net sales;
levels of construction spending in the markets the Corporation serves; the severity and duration of
a continued decline in the residential construction market; the
impact of limited credit availability on commercial
construction; unfavorable weather conditions, including hurricane activity; the ability to
recognize quantifiable savings from internal expansion projects; the ability to successfully
integrate acquisitions quickly and in a cost-effective manner; the volatility of fuel costs, most
notably diesel fuel, liquid asphalt and natural gas; continued increases in the cost of repair and
supply parts; logistical issues and costs, notably barge availability on the Mississippi River
system and the availability of railcars and locomotive power to move trains to supply the
Corporations Texas and Gulf Coast markets; continued strength in the steel industry markets served
by the Corporations dolomitic lime products; availability of
funds for financing and increases in interest costs; the impact of
the Corporations credit ratings on capital structure and
financing availability and costs; and other risk factors listed from time to time found
in the Corporations filings with the Securities and Exchange Commission. Other factors besides
those listed here may also adversely affect the Corporation and may be material to the Corporation.
The Corporation assumes no obligation to update any forward-looking statements.
Page 37 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2008
(Continued)
INVESTOR ACCESS TO COMPANY FILINGS Shareholders may obtain, without charge, a copy of Martin
Marietta Materials Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 2007, by writing to:
Martin Marietta Materials, Inc.
Attn: Corporate Secretary
2710 Wycliff Road
Raleigh, North Carolina 27607-3033
Additionally, Martin Marietta Materials Annual Report, press releases and filings with the
Securities and Exchange Commission, including Forms 10-K, 10-Q, 8-K and 11-K, can generally be
accessed via the Corporations web site. Filings with the Securities and Exchange Commission
accessed via the web site are available through a link with the Electronic Data Gathering,
Analysis, and Retrieval (EDGAR) system. Accordingly, access to such filings is available upon
EDGAR placing the related document in its database. Investor relations contact information is as
follows:
Telephone: (919) 783-4540
Web site address: www.martinmarietta.com
Page 38 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Corporations operations are highly dependent upon the interest rate-sensitive construction and
steelmaking industries. Consequently, these marketplaces could experience lower levels of economic
activity in an environment of rising interest rates or escalating costs.
The current credit environment has negatively affected the economy and management has considered
the potential impact to the Corporations business. Demand for aggregates products, particularly
in the commercial and residential construction markets, could continue to decline if companies and
consumers are unable to obtain financing for construction projects or if the economic slowdown
causes delays or cancellations to capital projects.
On October 24, 2008, Moodys
downgraded the Corporations commercial paper rating to P-3.
The P-3 rating by Moodys limits the Corporations access
to the commercial paper markets as a source of capital in the current
credit environment. On October 29, 2008, Standard &
Poors reaffirmed the Corporations commercial paper rating
of A-2 and downgraded the outlook to negative. The negative outlook and downgrade
in credit ratings will increase the cost of debt.
Demand in the residential construction market is affected by interest rates. Since December 31,
2007, in response to the current overall economic crisis, including a deepening of the housing
contraction, the Federal Reserve Board cut the federal funds rate by 275 basis points to 1.5% in
October, 2008. The residential construction market accounted for approximately 12% of the
Corporations aggregates product line shipments in 2007.
Aside from these inherent risks from within its operations, the Corporations earnings are affected
also by changes in short-term interest rates, as a result of any temporary cash investments,
including money market funds and overnight investments in
Eurodollars; any outstanding credit facility borrowings; Floating Rate Senior Notes; defined benefit pension plans; and petroleum-based
product costs. The Corporation has no counterparty risk.
Credit
Facility. The Corporation has a $325 million credit facility
in which borrowings bear interest at a variable rate. At
September 30, 2008, there were no borrowings outstanding. As
borrowings bear interest at a variable rate, the Corporation has
interest rate risk when such borrowings are outstanding.
Floating Rate Senior Notes. The Corporation has $225 million of Floating Rate Senior Notes that
bear interest at a rate equal to the three-month LIBOR plus 0.15%. As the Floating Rate
Senior Notes bear interest at a variable rate, the Corporation has interest rate risk. The effect
of a hypothetical 100 basis point increase in interest rates on borrowings of $225 million would
increase interest expense by $2.3 million on an annual basis.
Page 39 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
Pension Expense. The Corporations results of operations are affected by its pension expense.
Assumptions that affect this expense include the discount rate and the expected long-term rate of
return on assets. Therefore, the Corporation has interest rate risk associated with these factors.
The impact of hypothetical changes in these assumptions on the Corporations annual pension
expense is discussed in the Corporations Annual Report on Form 10-K for the year ended December
31, 2007, filed with the Securities and Exchange Commission on February 25, 2008.
The Corporations pension expense and funding requirements are affected by the fair value of its
pension plan assets, which consist of listed stocks, bonds and cash equivalents. Declines in
pension assets can reduce the funded status of the pension plan and may result in required
contributions to the plan beginning as early as 2009. Declines in the fair value of these assets
can also increase the succeeding years annual pension expense. The measurement of the
Corporations pension liability is affected by yields on highly-rated, long corporate bonds, which
serve as the basis for setting the discount rate used to present value the pension obligation.
Increases in the yields on highly-rated, long corporate bonds generally increase the discount rate
and therefore, decrease the pension obligation.
Petroleum-Based Product Costs. Petroleum-based product costs, including diesel fuel, natural gas
and liquid asphalt, represent significant production costs for the Corporation. Increases in these
costs generally are tied to energy sector inflation. For the nine months ended September 30, 2008,
increases in these costs lowered net earnings by $0.53 per diluted share when compared with 2007.
Aggregate Risk for Interest Rates and Petroleum-Based Product Sector Inflation. The pension
expense for 2008 is calculated based on assumptions selected at December 31, 2007. Therefore,
interest rate risk in 2008 is limited to the potential effect related
to borrowings under the Corporations credit facility, none of
which is currently outstanding, and the Corporations Floating Rate Senior Notes.
Assuming outstanding Floating Rate Senior Notes of $225 million, the impact of a hypothetical 100
basis point increase in interest rates would increase interest expense and decrease pretax earnings
by $2.3 million. Additionally, increases in petroleum-based product costs have already had a
significant impact on year-to-date 2008 pretax earnings.
Item 4. Controls and Procedures
As of September 30, 2008, an evaluation was performed under the supervision and with the
participation of the Corporations management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and the operation of the Corporations
disclosure controls and procedures. Based on that evaluation, the Corporations management,
including the Chief Executive Officer and Chief Financial Officer, concluded that the Corporations
disclosure controls and procedures were effective as of September 30, 2008. There have been no
significant changes in the Corporations internal controls or in other factors that could
significantly affect the internal controls subsequent to September 30, 2008.
Page 40 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Part I. Item 3. Legal Proceedings of the Martin Marietta Materials, Inc.
Annual Report on Form 10-K for the year ended December 31, 2007.
Item 1A. Risk Factors.
Reference is made to Part I. Item 1A. Risk Factors and Forward-Looking Statements of the Martin
Marietta Materials, Inc. Annual Report on Form 10-K for the year ended December 31, 2007.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Shares |
|
Maximum Number of |
|
|
|
|
|
|
|
|
|
|
Purchased as Part of |
|
Shares that May Yet be |
|
|
Total Number of |
|
Average Price |
|
Publicly Announced |
|
Purchased Under the |
Period |
|
Shares Purchased |
|
Paid per Share |
|
Plans or Programs |
|
Plans or Programs |
July 1, 2008
July 31, 2008 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
5,041,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 1, 2008
August 31, 2008 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
5,041,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 1, 2008
September 30, 2008 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
5,041,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
5,041,871 |
|
The Corporations initial stock repurchase program, which authorized the repurchase of 2.5 million
shares of common stock, was announced in a press release dated May 6, 1994, and has been updated as
appropriate. The program does not have an expiration date.
Item 5.
Other Information.
On October
24, 2008, the Corporation amended its $325,000,000 credit agreement
(the Credit Agreement) with the bank parties thereto,
syndicated with JP Morgan Chase Bank, N.A., as Administrative
Agent, to provide for an increased leverage covenant. As amended, the
Corporations ratio of consolidated debt to consolidated EBITDA,
as defined, for the trailing twelve months may not exceed 3.25 to
1.00 as of the end of any fiscal quarter and may exclude debt
incurred in connection with an acquisition for a period of 180 days
provided that the ratio does not exceed 3.50 to 1.00. In exchange for
the covenant modification, the Corporation agreed to an increase in
the drawn facility fee under a pricing grid tied to its long-term debt
rating, currently LIBOR plus 225 basis points. The Credit Agreement
expires in June 2012.
The
amended Credit Agreement is filed as Exhibit 10.01.
Page 41 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
PART II-OTHER INFORMATION
(Continued)
Item 6. Exhibits.
|
|
|
Exhibit |
|
|
No. |
|
Document |
|
|
|
10.01
|
|
$325,000,000 Second Amended and
Restated Credit Agreement, dated as of October 24, 2008 among
Martin Marietta Materials, Inc., the bank parties thereto and
JP Morgan Chase Bank, N.A., as Administrative Agent |
|
|
|
31.01
|
|
Certification dated October 29, 2008 of Chief Executive Officer pursuant to Securities and
Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
|
|
|
31.02
|
|
Certification dated October 29, 2008 of Chief Financial Officer pursuant to Securities and
Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
|
|
|
32.01
|
|
Written Statement dated
October 29, 2008 of Chief Executive Officer required by 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.02
|
|
Written Statement dated
October 29, 2008 of Chief Financial Officer required by 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Page 42 of 44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
|
|
|
|
|
|
(Registrant) |
|
|
|
Date: October 29, 2008
|
|
By:
|
|
/s/ Anne H. Lloyd
Anne H. Lloyd
|
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer |
|
|
Page 43 of 44
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2008
EXHIBIT INDEX
|
|
|
Exhibit No. |
|
Document |
|
|
|
10.01
|
|
$325,000,000 Second Amended and
Restated Credit Agreement, dated as of October 24, 2008 among
Martin Marietta Materials, Inc., the bank parties thereto and
JP Morgan Chase Bank, N.A., as Administrative Agent |
|
|
|
31.01
|
|
Certification dated October 29, 2008 of Chief Executive
Officer pursuant to Securities and Exchange Act of 1934 rule
13a-14 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
31.02
|
|
Certification dated October 29, 2008 of Chief Financial
Officer pursuant to Securities and Exchange Act of 1934 rule
13a-14 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
32.01
|
|
Written Statement dated
October 29, 2008 of Chief Executive
Officer required by 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.02
|
|
Written Statement dated
October 29, 2008 of Chief Financial
Officer required by 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
Page 44 of 44