mlm-10q_20160331.htm

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-12744

 

MARTIN MARIETTA MATERIALS, INC.

(Exact name of registrant as specified in its charter)

 

 North Carolina

 

56-1848578

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

2710 Wycliff Road, Raleigh, NC

 

27607-3033

(Address of principal executive offices)

 

(Zip Code)

Registrant’s 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  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.

 Large accelerated filer

 

þ

  

Accelerated filer

 

o

 

 

 

 

Non-accelerated filer

 

o  

  

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 issuer’s classes of Common Stock, as of the latest practicable date.

 

Class

 

Outstanding as of May 2, 2016

Common Stock, $0.01 par value

 

63,527,166

 

 

 

 

 

 


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2016

 

 

Page

Part I. Financial Information:

 

 

Item 1. Financial Statements.

 

 

 

Consolidated Balance Sheets – March 31, 2016, December 31, 2015 and March 31, 2015

 

 

3

Consolidated Statements of Earnings and Comprehensive Earnings – Three Months Ended March 31, 2016 and 2015

 

 

 

4

Consolidated Statements of Cash Flows – Three Months Ended March 31, 2016 and 2015

 

 

5

Consolidated Statement of Total Equity - Three Months Ended March 31, 2016

 

 

6

Notes to Consolidated Financial Statements

 

 

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

 

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

 

41

Item 4. Controls and Procedures.

 

 

42

Part II. Other Information:

 

 

 

Item 1. Legal Proceedings.

 

 

43

Item 1A. Risk Factors.

 

 

43

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

 

43

Item 4. Mine Safety Disclosures.

 

 

43

Item 6. Exhibits.

 

 

44

Signatures

 

 

45

Exhibit Index

 

 

46

 

 

 

Page 2 of 46


 

PART I. FINANCIAL INFOMRATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

2015

 

 

 

(Dollars in Thousands, Except Per Share Data)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,242

 

 

$

168,409

 

 

$

56,366

 

Accounts receivable, net

 

 

448,048

 

 

 

410,921

 

 

 

381,389

 

Inventories, net

 

 

485,367

 

 

 

469,141

 

 

 

505,047

 

Other current assets

 

 

37,658

 

 

 

33,164

 

 

 

103,027

 

Total Current Assets

 

 

998,315

 

 

 

1,081,635

 

 

 

1,045,829

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

5,778,368

 

 

 

5,613,198

 

 

 

5,694,546

 

Allowances for depreciation, depletion and amortization

 

 

(2,515,387

)

 

 

(2,457,198

)

 

 

(2,329,440

)

Net property, plant and equipment

 

 

3,262,981

 

 

 

3,156,000

 

 

 

3,365,106

 

Goodwill

 

 

2,135,295

 

 

 

2,068,235

 

 

 

2,071,471

 

Operating permits, net

 

 

444,148

 

 

 

444,725

 

 

 

497,841

 

Other intangibles, net

 

 

75,267

 

 

 

65,827

 

 

 

94,113

 

Other noncurrent assets

 

 

142,281

 

 

 

141,189

 

 

 

102,959

 

Total Assets

 

$

7,058,287

 

 

$

6,957,611

 

 

$

7,177,319

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Bank overdraft

 

$

 

 

$

10,235

 

 

$

 

Accounts payable

 

 

174,398

 

 

 

164,718

 

 

 

184,066

 

Accrued salaries, benefits and payroll taxes

 

 

17,052

 

 

 

30,939

 

 

 

23,590

 

Pension and postretirement benefits

 

 

9,169

 

 

 

8,168

 

 

 

6,637

 

Accrued insurance and other taxes

 

 

52,501

 

 

 

62,781

 

 

 

58,742

 

Current maturities of long-term debt and short-term facilities

 

 

177,430

 

 

 

18,713

 

 

 

13,873

 

Accrued interest

 

 

23,004

 

 

 

16,156

 

 

 

22,461

 

Other current liabilities

 

 

38,577

 

 

 

54,948

 

 

 

33,653

 

Total Current Liabilities

 

 

492,131

 

 

 

366,658

 

 

 

343,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,575,327

 

 

 

1,550,061

 

 

 

1,562,190

 

Pension, postretirement and postemployment benefits

 

 

226,924

 

 

 

224,538

 

 

 

252,923

 

Deferred income taxes, net

 

 

620,569

 

 

 

583,459

 

 

 

518,360

 

Other noncurrent liabilities

 

 

197,700

 

 

 

172,718

 

 

 

158,641

 

Total Liabilities

 

 

3,112,651

 

 

 

2,897,434

 

 

 

2,835,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01 per share

 

 

633

 

 

 

643

 

 

 

673

 

Preferred stock, par value $0.01 per share

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

3,302,258

 

 

 

3,287,827

 

 

 

3,255,809

 

Accumulated other comprehensive loss

 

 

(103,833

)

 

 

(105,622

)

 

 

(106,723

)

Retained earnings

 

 

743,593

 

 

 

874,436

 

 

 

1,190,807

 

Total Shareholders' Equity

 

 

3,942,651

 

 

 

4,057,284

 

 

 

4,340,566

 

Noncontrolling interests

 

 

2,985

 

 

 

2,893

 

 

 

1,617

 

Total Equity

 

 

3,945,636

 

 

 

4,060,177

 

 

 

4,342,183

 

Total Liabilities and Equity

 

$

7,058,287

 

 

$

6,957,611

 

 

$

7,177,319

 

 

See accompanying notes to the consolidated financial statements.

 

Page 3 of 46


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

(In Thousands, Except Per Share Data)

 

 

 

 

 

Net Sales

 

$

733,960

 

 

$

631,876

 

Freight and delivery revenues

 

 

54,774

 

 

 

59,471

 

Total revenues

 

 

788,734

 

 

 

691,347

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

589,326

 

 

 

557,615

 

Freight and delivery costs

 

 

54,774

 

 

 

59,471

 

Total cost of revenues

 

 

644,100

 

 

 

617,086

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

144,634

 

 

 

74,261

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

59,861

 

 

 

49,450

 

Acquisition-related expenses, net

 

 

425

 

 

 

1,604

 

Other operating expenses and (income), net

 

 

579

 

 

 

(2,364

)

Earnings from Operations

 

 

83,769

 

 

 

25,571

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

20,034

 

 

 

19,331

 

Other nonoperating (income) and expenses, net

 

 

(1,030

)

 

 

893

 

Earnings before taxes on income

 

 

64,765

 

 

 

5,347

 

Taxes on income

 

 

19,710

 

 

 

(812

)

Consolidated net earnings

 

 

45,055

 

 

 

6,159

 

Less: Net earnings attributable to noncontrolling interests

 

 

61

 

 

 

33

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

$

44,994

 

 

$

6,126

 

 

 

 

 

 

 

 

 

 

Consolidated Comprehensive Earnings:  (See Note 1)

 

 

 

 

 

 

 

 

Earnings attributable to Martin Marietta Materials, Inc.

 

$

46,783

 

 

$

5,562

 

Earnings attributable to noncontrolling interests

 

 

92

 

 

 

35

 

 

 

$

46,875

 

 

$

5,597

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

 

 

 

 

 

 

 

Per Common Share:

 

 

 

 

 

 

 

 

Basic attributable to common shareholders

 

$

0.70

 

 

$

0.07

 

Diluted attributable to common shareholders

 

$

0.69

 

 

$

0.07

 

 

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

64,158

 

 

 

67,411

 

Diluted

 

 

64,350

 

 

 

67,676

 

 

 

 

 

 

 

 

 

 

Cash Dividends Per Common Share

 

$

0.40

 

 

$

0.40

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 4 of 46


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

45,055

 

 

$

6,159

 

Adjustments to reconcile consolidated net earnings to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

68,410

 

 

 

67,268

 

Stock-based compensation expense

 

 

7,228

 

 

 

2,907

 

Gain on divestitures and sales of assets

 

 

(100

)

 

 

(1,576

)

Deferred income taxes

 

 

17,988

 

 

 

27,774

 

Excess tax benefits from stock-based compensation transactions

 

 

(1,278

)

 

 

(109

)

Other items, net

 

 

(2,036

)

 

 

1,192

 

Changes in operating assets and liabilities, net of effects of acquisitions

   and divestitures:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(29,695

)

 

 

40,006

 

Inventories, net

 

 

(13,495

)

 

 

(19,071

)

Accounts payable

 

 

9,231

 

 

 

(20,328

)

Other assets and liabilities, net

 

 

(34,300

)

 

 

(69,097

)

Net Cash Provided by Operating Activities

 

 

67,008

 

 

 

35,125

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(94,228

)

 

 

(56,085

)

Acquisitions, net

 

 

(123,000

)

 

 

(10,589

)

Cash received in acquisition

 

 

3,446

 

 

 

 

Proceeds from divestitures and sales of assets

 

 

3,415

 

 

 

1,475

 

Repayments from affiliate

 

 

 

 

 

1,808

 

Net Cash Used for Investing Activities

 

 

(210,367

)

 

 

(63,391

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowings of debt

 

 

210,000

 

 

 

 

Repayments of debt

 

 

(26,390

)

 

 

(4,738

)

Payments on capital lease obligations

 

 

(780

)

 

 

(795

)

Change in bank overdraft

 

 

(10,235

)

 

 

(183

)

Dividends paid

 

 

(25,847

)

 

 

(28,354

)

Issuances of common stock

 

 

4,166

 

 

 

9,942

 

Repurchases of common stock

 

 

(150,000

)

 

 

 

Excess tax benefits from stock-based compensation transactions

 

 

1,278

 

 

 

109

 

Net Cash Provided by (Used for) Financing Activities

 

 

2,192

 

 

 

(24,019

)

Net Decrease in Cash and Cash Equivalents

 

 

(141,167

)

 

 

(52,285

)

Cash and Cash Equivalents, beginning of period

 

 

168,409

 

 

 

108,651

 

Cash and Cash Equivalents, end of period

 

$

27,242

 

 

$

56,366

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

11,394

 

 

$

11,417

 

Cash paid for income taxes

 

$

10,721

 

 

$

18,678

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 5 of 46


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARES

(UNAUDITED) CONSOLIDATED STATEMENT OF TOTAL EQUITY

 

(in thousands)

 

Shares of Common Stock

 

 

Common Stock

 

 

Additional Paid-in Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Retained Earnings

 

 

Total Shareholders' Equity

 

 

Noncontrolling Interests

 

 

Total Equity

 

Balance at December 31, 2015

 

 

64,479

 

 

$

643

 

 

$

3,287,827

 

 

$

(105,622

)

 

$

874,436

 

 

$

4,057,284

 

 

$

2,893

 

 

$

4,060,177

 

Consolidated net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44,994

 

 

 

44,994

 

 

 

61

 

 

 

45,055

 

Other comprehensive (loss) earnings,

     net of tax

 

 

 

 

 

 

 

 

 

 

 

1,789

 

 

 

 

 

 

1,789

 

 

 

31

 

 

 

1,820

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,847

)

 

 

(25,847

)

 

 

 

 

 

(25,847

)

Issuances of common stock for stock

     award plans

 

 

54

 

 

 

 

 

 

7,203

 

 

 

 

 

 

 

 

 

7,203

 

 

 

 

 

 

7,203

 

Repurchases of common stock

 

 

(1,028

)

 

 

(10

)

 

 

 

 

 

 

 

 

(149,990

)

 

 

(150,000

)

 

 

 

 

 

(150,000

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

7,228

 

 

 

 

 

 

 

 

 

7,228

 

 

 

 

 

 

7,228

 

Balance at March 31, 2016

 

 

63,505

 

 

$

633

 

 

$

3,302,258

 

 

$

(103,833

)

 

$

743,593

 

 

$

3,942,651

 

 

$

2,985

 

 

$

3,945,636

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 6 of 46


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

1.

Significant Accounting Policies

Organization

Martin Marietta Materials, Inc. (the “Corporation” or “Martin Marietta”) is engaged principally in the construction aggregates business. The aggregates product line accounted for 55% of 2015 consolidated net sales and includes crushed stone, sand and gravel, and is used for construction of highways and other infrastructure projects, and in the nonresidential and residential construction industries. Aggregates products are also used in the railroad, agricultural, utility and environmental industries. These aggregates products, along with the Corporation’s aggregates-related downstream product lines, which accounted for 27% of 2015 consolidated net sales and include asphalt products, ready mixed concrete and road paving construction services, are sold and shipped from a network of more than 400 quarries, distribution facilities and plants in 26 states, Nova Scotia and the Bahamas. The aggregates and aggregates-related downstream product lines are reported collectively as the “Aggregates business”.

The Corporation currently conducts the Aggregates business through three reportable segments: the Mid-America Group, the Southeast Group and the West Group.

 

AGGREGATES BUSINESS

Reportable Segments

  

Mid-America Group

  

Southeast Group

  

West Group

Operating Locations

  

Indiana, Iowa,

northern Kansas, Kentucky, Maryland, Minnesota, Missouri,

eastern Nebraska, North Carolina, Ohio,

South Carolina,

Virginia, Washington and

West Virginia

  

Alabama, Florida, Georgia, Tennessee,
Nova Scotia and the Bahamas

  

Arkansas, Colorado, southern Kansas,

Louisiana, western Nebraska, Nevada, Oklahoma, Texas, Utah

and Wyoming

The Corporation has a Cement segment, which accounted for 11% of 2015 consolidated net sales.  The Cement segment has production facilities located in Midlothian, Texas, south of Dallas/Fort Worth and Hunter, Texas, north of San Antonio.  The Cement business produces Portland and specialty cements. Similar to the Aggregates business, cement is used in infrastructure projects, nonresidential and residential construction, and the railroad, agricultural, utility and environmental industries. The high calcium limestone reserves, used as a raw material, are owned by the Cement business and are adjacent to each of the plants.

The Corporation has a Magnesia Specialties segment with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties segment, which accounted for 7% of 2015 consolidated net sales, produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry.

 

Page 7 of 46


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued) 

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Corporation has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three months ended March 31, 2016 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015.

Debt Issuance Costs

The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which amends the presentation of debt issuance costs in the financial statements.  The ASU requires an entity to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts, and does not impact the recognition and measurement guidance for debt issuance costs. The Corporation adopted this ASU on January 1, 2016 and has retrospectively adjusted the prior periods presented, resulting in a reclassification of $3,588,000 and $4,427,000 from Other noncurrent assets to Long-term debt as of December 31, 2015 and March 31, 2015, respectively, and $533,000 from Other current assets to Current maturities of long-term debt and short-term maturities as of December 31, 2015 and March 31, 2015.  

Revenue Recognition Standard

The FASB issued an accounting standard update that amends the accounting guidance on revenue recognition. The new standard intends to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The new standard is effective January 1, 2018 and can be applied on a full retrospective or modified retrospective approach. The Corporation is currently evaluating the impact the provisions of the new standard will have on its financial statements.

 

Page 8 of 46


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued) 

Lease Standard

In February 2016, the FASB issued a new accounting standard, Accounting Codification Standard 842 – Leases, intending to improve financial reporting of leases and to provide more transparency into off-balance sheet leasing obligations.  The guidance requires virtually all leases, excluding mineral interest leases, to be recorded on the balance sheet and provides guidance on the recognition of lease expense and income.  The new standard is effective January 1, 2019 and must be applied on a modified retrospective approach.  The Corporation is currently evaluating the impact the new standard will have on its financial statements.

Share-based Payment Standard

In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which simplifies certain aspects of accounting guidance and requirements for share-based transactions.  The ASU is effective for reporting periods beginning January 1, 2017.  The Corporation is evaluating the impact of the ASU on its financial statements.  

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss

Consolidated comprehensive earnings/loss for the Corporation consist of consolidated net earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; foreign currency translation adjustments; and the amortization of the value of terminated forward starting interest rate swap agreements into interest expense, and are presented in the Corporation’s consolidated statements of earnings and comprehensive earnings.

Comprehensive earnings attributable to Martin Marietta is as follows:

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

Net earnings attributable to Martin Marietta Materials, Inc.

 

$

44,994

 

 

$

6,126

 

Other comprehensive earnings (loss), net of tax

 

 

1,789

 

 

 

(564

)

Comprehensive earnings attributable to Martin Marietta Materials, Inc.

 

$

46,783

 

 

$

5,562

 

 

 

Page 9 of 46


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued) 

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss

Comprehensive earnings attributable to noncontrolling interests, consisting of net earnings and adjustments for the funded status of pension and postretirement benefit plans, is as follows:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

Net earnings attributable to noncontrolling interests

 

$

61

 

 

$

33

 

Other comprehensive earnings, net of tax

 

 

31

 

 

 

2

 

Comprehensive earnings attributable to noncontrolling interests

 

$

92

 

 

$

35

 

 

Accumulated other comprehensive loss consists of unrealized gains and losses related to the funded status of pension and postretirement benefit plans; foreign currency translation; and the unamortized value of terminated forward starting interest rate swap agreements, and is presented on the Corporation’s consolidated balance sheets.

Changes in accumulated other comprehensive earnings (loss), net of tax, are as follows:  

 

 

(Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

Unamortized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terminated

 

 

Accumulated

 

 

 

Pension and

 

 

 

 

 

 

Forward Starting

 

 

Other

 

 

 

Postretirement

 

 

Foreign

 

 

Interest Rate

 

 

Comprehensive

 

 

 

Benefit Plans

 

 

Currency

 

 

Swap

 

 

Loss

 

 

 

Three Months Ended March 31, 2016

 

Balance at beginning of period

 

$

(103,380

)

 

$

(264

)

 

$

(1,978

)

 

$

(105,622

)

Other comprehensive earnings before

     reclassifications, net of tax

 

 

 

 

 

115

 

 

 

 

 

 

115

 

Amounts reclassified from accumulated other

     comprehensive earnings, net of tax

 

 

1,473

 

 

 

 

 

 

201

 

 

 

1,674

 

Other comprehensive earnings, net of tax

 

 

1,473

 

 

 

115

 

 

 

201

 

 

 

1,789

 

Balance at end of period

 

$

(101,907

)

 

$

(149

)

 

$

(1,777

)

 

$

(103,833

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

Balance at beginning of period

 

$

(106,688

)

 

$

3,278

 

 

$

(2,749

)

 

$

(106,159

)

Other comprehensive loss before reclassifications,

     net of tax

 

 

 

 

 

(2,288

)

 

 

 

 

 

(2,288

)

Amounts reclassified from accumulated other

     comprehensive earnings, net of tax

 

 

1,537

 

 

 

 

 

 

187

 

 

 

1,724

 

Other comprehensive earnings (loss), net of tax

 

 

1,537

 

 

 

(2,288

)

 

 

187

 

 

 

(564

)

Balance at end of period

 

$

(105,151

)

 

$

990

 

 

$

(2,562

)

 

$

(106,723

)

 

 

Page 10 of 46


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued) 

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)

Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive loss are as follows:

 

 

(Dollars in Thousands)

 

 

 

Pension and Postretirement

Benefit Plans

 

 

Unamortized Value of Terminated Forward Starting Interest Rate Swap

 

 

Net Noncurrent Deferred Tax Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2016

 

Balance at beginning of period

 

$

66,467

 

 

$

1,290

 

 

$

67,757

 

Tax effect of other comprehensive earnings

 

 

(944

)

 

 

(131

)

 

 

(1,075

)

Balance at end of period

 

$

65,523

 

 

$

1,159

 

 

$

66,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2015

 

Balance at beginning of period

 

$

68,568

 

 

$

1,799

 

 

$

70,367

 

Tax effect of other comprehensive earnings

 

 

(1,016

)

 

 

(120

)

 

 

(1,136

)

Balance at end of period

 

$

67,552

 

 

$

1,679

 

 

$

69,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassifications out of accumulated other comprehensive loss are as follows:

 

 

Three Months Ended

 

 

Affected line items in the consolidated

 

 

March 31,

 

 

statements of earnings and

 

 

2016

 

 

2015

 

 

comprehensive earnings

 

 

(Dollars in Thousands)

 

Pension and postretirement

     benefit plans

 

 

 

 

 

 

 

 

 

 

Settlement charge

 

$

59

 

 

$

 

 

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

Prior service credit

 

 

(374

)

 

 

(471

)

 

 

Actuarial loss

 

 

2,732

 

 

 

3,024

 

 

 

 

 

 

2,417

 

 

 

2,553

 

 

Cost of sales; Selling, general

     and administrative expenses

Tax benefit

 

 

(944

)

 

 

(1,016

)

 

Taxes on income

 

 

$

1,473

 

 

$

1,537

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortized value of terminated

     forward starting interest

     rate swap

 

 

 

 

 

 

 

 

 

 

Additional interest expense

 

$

332

 

 

$

307

 

 

Interest expense

Tax benefit

 

 

(131

)

 

 

(120

)

 

Taxes on income

 

 

$

201

 

 

$

187

 

 

 

 

 

Page 11 of 46


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued) 

Earnings per Common Share

The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta Materials, Inc. reduced by dividends and undistributed earnings attributable to the Corporation’s certain stock-based compensation. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Corporation’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three months ended March 31, 2016 and 2015, the diluted per-share computations reflect a change in the number of common shares outstanding to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.

 

The following table reconciles the numerator and denominator for basic and diluted earnings per common share:

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2016

 

 

2015

 

 

 

(In Thousands)

 

Net earnings from continuing operations attributable to

      Martin Marietta Materials, Inc.

 

$

44,994

 

 

$

6,126

 

Less: Distributed and undistributed earnings attributable to

     unvested awards

 

 

298

 

 

 

1,369

 

Basic and diluted net earnings available to common

     shareholders attributable to Martin Marietta Materials, Inc.

 

$

44,696

 

 

$

4,757

 

 

 

 

 

 

 

 

 

 

Basic weighted-average common shares outstanding

 

 

64,158

 

 

 

67,411

 

Effect of dilutive employee and director awards

 

 

192

 

 

 

265

 

Diluted weighted-average common shares outstanding

 

 

64,350

 

 

 

67,676

 

 

2.

Inventories, Net

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2016