SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2009

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

For the transition period from            to

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 o     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 (Do not check if a smaller reporting company)

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 July 31, 2009
Common Stock, $0.01 par value		44,538,028

 

 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

		Page
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets — June 30, 2009, December 31, 2008 and June 30, 2008			3
Consolidated Statements of Earnings — Three and Six Months Ended June 30, 2009 and 2008			4
Consolidated Statements of Cash Flows — Six Months Ended June 30, 2009 and 2008			5
Consolidated Statement of Total Equity			6
Condensed 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			45
Item 4. Controls and Procedures			46
Part II. Other Information:
Item 1. Legal Proceedings			47
Item 1A. Risk Factors			47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			47
Item 4. Submission of Matters to a Vote of Security Holders			48
Item 6. Exhibits			49
Signatures			50
Exhibit Index			51
EX-10.01
EX-31.01
EX-31.02
EX-32.01
EX-32.02

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		June 30,				December 31,				June 30,
		2009				2008				2008
		(Unaudited)				(Audited)				(Unaudited)
		(Dollars in Thousands, Except Per Share Data)
ASSETS
Current Assets:
Cash and cash equivalents		$	133,380			$	37,794			$	13,156
Accounts receivable, net			250,340				211,596				321,985
Inventories, net			333,887				318,018				297,371
Current portion of notes receivable			1,294				1,474				1,047
Current deferred income tax benefits			56,105				57,967				33,342
Other current assets			27,117				38,182				23,946
Total Current Assets			802,123				665,031				690,847
Property, plant and equipment			3,408,415				3,320,905				3,282,172
Allowances for depreciation, depletion and amortization			(1,695,691	)			(1,630,376	)			(1,577,495	)
Net property, plant and equipment			1,712,724				1,690,529				1,704,677
Goodwill			629,087				622,297				614,400
Other intangibles, net			13,304				13,890				14,821
Noncurrent notes receivable			10,813				7,610				7,609
Other noncurrent assets			39,142				33,145				39,228
Total Assets		$	3,207,193			$	3,032,502			$	3,071,582
LIABILITIES AND EQUITY
Current Liabilities:
Bank overdraft		$	1,692			$	4,677			$	12,168
Accounts payable			75,203				62,921				101,037
Accrued salaries, benefits and payroll taxes			15,795				19,232				16,528
Pension and postretirement benefits			3,935				3,728				7,769
Accrued insurance and other taxes			30,498				23,419				32,574
Income taxes			1,646				—				11,139
Current maturities of long-term debt and short-term facilities			233,229				202,530				279,697
Other current liabilities			27,066				32,132				31,606
Total Current Liabilities			389,064				348,639				492,518
Long-term debt			1,048,729				1,152,414				1,153,032
Pension, postretirement and postemployment benefits			211,229				207,830				109,660
Noncurrent deferred income taxes			173,800				174,308				163,342
Other noncurrent liabilities			82,828				82,051				91,279
Total Liabilities			1,905,650				1,965,242				2,009,831
Equity:
Common stock, par value $0.01 per share			445				414				413
Preferred stock, par value $0.01 per share			—				—				—
Additional paid-in capital			315,534				78,545				67,893
Accumulated other comprehensive loss			(96,495	)			(101,672	)			(38,932	)
Retained earnings			1,042,581				1,044,417				987,403
Total Shareholders’ Equity			1,262,065				1,021,704				1,016,777
Noncontrolling interests			39,478				45,556				44,974
Total Equity			1,301,543				1,067,260				1,061,751
Total Liabilities and Equity		$	3,207,193			$	3,032,502			$	3,071,582

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In Thousands, Except Per Share Data)
		(Unaudited)
Net Sales		$	411,293			$	526,417			$	741,626			$	922,698
Freight and delivery revenues			54,696				71,407				99,415				126,674
Total revenues			465,989				597,824				841,041				1,049,372
Cost of sales			299,515				386,948				581,372				708,084
Freight and delivery costs			54,696				71,407				99,415				126,674
Total cost of revenues			354,211				458,355				680,787				834,758
Gross Profit			111,778				139,469				160,254				214,614
Selling, general & administrative expenses			36,766				42,039				73,923				79,735
Research and development			163				134				299				312
Other operating (income) and expenses, net			1,843				(7,587	)			2,136				(13,174	)
Earnings from Operations			73,006				104,883				83,896				147,741
Interest expense			18,651				19,301				37,176				35,138
Other nonoperating (income) and expenses, net			(1,340	)			(354	)			(318	)			(467	)
Earnings from continuing operations before taxes on income			55,695				85,936				47,038				113,070
Income tax expense			15,554				26,322				13,363				33,231
Earnings from Continuing Operations			40,141				59,614				33,675				79,839
Gain on discontinued operations, net of related tax expense of $197, $3,756, $234 and $3,576, respectively			444				5,462				537				5,288
Consolidated net earnings			40,585				65,076				34,212				85,127
Less: Net earnings attributable to noncontrolling interests			1,723				1,272				1,114				458
Net Earnings Attributable to Martin Marietta Materials, Inc.		$	38,862			$	63,804			$	33,098			$	84,669
Net Earnings Attributable to Martin Marietta Materials, Inc.
Earnings from continuing operations		$	38,418			$	58,342			$	32,561			$	79,381
Discontinued operations			444				5,462				537				5,288
		$	38,862			$	63,804			$	33,098			$	84,669
Net Earnings Per Common Share Attributable to Martin Marietta Materials, Inc.
Basic from continuing operations available to common shareholders		$	0.85			$	1.39			$	0.74			$	1.89
Discontinued operations available to common shareholders			0.01				0.13				0.01				0.13
		$	0.86			$	1.52			$	0.75			$	2.02
Diluted from continuing operations available to common shareholders		$	0.85			$	1.38			$	0.74			$	1.88
Discontinued operations available to common shareholders			0.01				0.13				0.01				0.13
		$	0.86			$	1.51			$	0.75			$	2.01
Weighted-Average Common Shares Outstanding
Basic			44,554				41,333				43,216				41,328
Diluted			44,753				41,596				43,404				41,608
Cash Dividends Per Common Share		$	0.40			$	0.345			$	0.80			$	0.69

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

		Six Months Ended
		June 30,
		2009				2008
		(Dollars in Thousands)
		(Unaudited)
Cash Flows from Operating Activities:
Consolidated net earnings		$	34,212			$	85,127
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities:
Depreciation, depletion and amortization			87,375				81,697
Stock-based compensation expense			13,039				13,152
Losses (Gains) on divestitures and sales of assets			3,946				(22,633	)
Deferred income taxes			2,478				14,440
Excess tax benefits from stock-based compensation transactions			(1,277	)			(1,132	)
Other items, net			5				(1,939	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net			(39,111	)			(76,146	)
Inventories, net			(13,950	)			(4,446	)
Accounts payable			12,085				14,144
Other assets and liabilities, net			17,856				24,272
Net Cash Provided by Operating Activities			116,658				126,536
Cash Flows from Investing Activities:
Additions to property, plant and equipment			(74,750	)			(159,408	)
Acquisitions, net			(49,549	)			(218,389	)
Proceeds from divestitures and sales of assets			5,803				5,433
Loan to affiliate			(4,000	)			—
Railcar construction advances			—				(7,286	)
Repayments of railcar construction advances			—				7,286
Net Cash Used for Investing Activities			(122,496	)			(372,364	)
Cash Flows from Financing Activities:
Borrowings of long-term debt			230,000				297,837
Repayments of long-term debt and capital lease obligations			(103,338	)			(3,025	)
(Repayments) Borrowings on short-term facilities, net			(200,000	)			3,000
Debt issuance costs			(2,285	)			(1,101	)
Termination of interest rate swap agreements			—				(11,139	)
Change in bank overdraft			(2,985	)			5,817
Dividends paid			(34,934	)			(28,921	)
Distributions to owners of noncontrolling interests			(2,331	)			(1,482	)
Purchase of remaining 49% interest in existing joint venture			(17,060	)			—
Repurchases of common stock			—				(24,017	)
Issuances of common stock			233,080				845
Excess tax benefits from stock-based compensation transactions			1,277				1,132
Net Cash Provided by Financing Activities			101,424				238,946
Net Increase (Decrease) in Cash and Cash Equivalents			95,586				(6,882	)
Cash and Cash Equivalents, beginning of period			37,794				20,038
Cash and Cash Equivalents, end of period		$	133,380			$	13,156
Noncash Investing and Financing Activities:
Issuance of notes payable for acquisition of land		$	—			$	11,500
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest		$	37,055			$	34,530
Cash (refunds) payments for income taxes		$	(4,395	)		$	6,548

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF TOTAL EQUITY
(Unaudited)

		Shares of																				Total
		Common				Common				Additional				Accumulated Other				Retained				Shareholders’				Noncontrolling				Total
(in thousands)		Stock				Stock				Paid-in Capital				Comprehensive Loss				Earnings				Equity				Interests				Equity
Balance at December 31, 2008			41,462			$	414			$	78,545			$	(101,672	)		$	1,044,417			$	1,021,704			$	45,556			$	1,067,260
Consolidated net earnings			—				—				—				—				33,098				33,098				1,114				34,212
Amortization of actuarial losses, prior service costs and transition assets related to pension and postretirement benefits, net of tax benefit of $2,679			—				—				—				4,095				—				4,095				(1	)			4,094
Foreign currency translation gain			—				—				—				833				—				833				—				833
Amortization of terminated value of forward starting interest rate swap agreements into interest expense, net of tax benefit of $162			—				—				—				249				—				249				—				249
Consolidated comprehensive earnings																							38,275				1,113				39,388
Dividends declared			—				—				—				—				(34,934	)			(34,934	)			—				(34,934	)
Issuances of common stock			3,052				30				232,797				—				—				232,827				—				232,827
Issuances of common stock for stock award plans			99				1				(1,246	)			—				—				(1,245	)			—				(1,245	)
Stock-based compensation expense			—				—				13,039				—				—				13,039				—				13,039
Purchase of remaining 49% interest in existing joint venture			—				—				(7,601	)			—				—				(7,601	)			(4,526	)			(12,127	)
Distributions to owners of noncontrolling interests			—				—				—				—				—				—				(2,665	)			(2,665	)
Balance at June 30, 2009			44,613			$	445			$	315,534			$	(96,495	)		$	1,042,581			$	1,262,065			$	39,478			$	1,301,543

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

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 Corporation’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on February 17, 2009. 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 quarter and six months ended June 30, 2009 are not indicative of the results expected for other interim periods or the full year.
		Accounting Changes
		In accordance with Financial Accounting Standards Board Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157, beginning January 1, 2009, if the Corporation is required to record any nonrecurring nonfinancial assets and nonfinancial liabilities at fair value, they are measured in accordance with Statement of Financial Accounting Standards No. 157, Fair Value Measurements.
		On January 1, 2009, the Corporation adopted Statements of Financial Accounting Standards No. 141 (revised 2007), Business Combinations (“FAS 141(R)”) and No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51 (“FAS 160”). FAS 141(R) requires recognizing the full fair value of all assets acquired, liabilities assumed and noncontrolling minority interests in acquisitions of less than a 100% controlling interest; expensing all acquisition-related transaction and restructuring costs; capitalizing in-process research and development assets acquired; and recognizing contingent consideration obligations and contingent gains acquired and contingent losses assumed. FAS 160 requires the classification of noncontrolling interests as a separate component of equity and net earnings attributable to noncontrolling interests as a separate line item on the face of the income statement. FAS 141(R) and FAS 160 require prospective application for all business combinations with acquisition dates on or after the effective date. As disclosed in Note 2, on June 12, 2009, the Corporation acquired three quarry locations plus the remaining 49% interest in an existing joint venture from CEMEX, Inc.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

1.		Significant Accounting Policies (continued)
		Accounting Changes (continued)
		FAS 160 also requires retrospective application of its disclosure and presentation requirements for all periods presented. Accordingly, noncontrolling interests at December 31, 2008 and June 30, 2008, which were previously reported as other noncurrent liabilities, have been reclassified as a separate component of equity. Furthermore, net earnings attributable to noncontrolling interests for the three and six months ended June 30, 2008 have been presented as a separate line item on the Corporation’s consolidated statement of earnings. Consolidated comprehensive earnings for the three and six months ended June 30, 2008 were also adjusted to include the comprehensive earnings attributable to noncontrolling interests.
		On January 1, 2009, the Corporation retrospectively adopted Financial Accounting Standards Board Staff Position No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). Under FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, included in computing earnings per share (EPS) pursuant to the two-class method. The two-class method determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and their respective participation rights in undistributed earnings. The Corporation pays non-forfeitable dividend equivalents during the vesting period on its restricted stock awards and incentive stock awards, which results in these being considered participating securities. The adoption of FSP EITF 03-6-1 decreased previously-reported basic EPS by $0.02 and previously-reported diluted EPS by $0.01 for the three months ended June 30, 2008. For the six months ended June 30, 2008, the adoption of FSP EITF 03-6-1 decreased previously-reported basic EPS by $0.03 and previously-reported diluted EPS by $0.01.
		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 unvested restricted stock awards and incentive stock awards. 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. The diluted per-share computations reflect a change in the number of common shares outstanding (the denominator) to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

1.		Significant Accounting Policies (continued)
		Earnings per Common Share (continued)
		The following table reconciles the numerator and denominator for basic and diluted earnings per common share:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In Thousands)
Net earnings from continuing operations attributable to Martin Marietta Materials, Inc.		$	38,418			$	58,342			$	32,561			$	79,381
Less: Distributed and undistributed earnings attributable to unvested awards			533				895				504				1,126
Basic and diluted net earnings available to common shareholders from continuing operations attributable to Martin Marietta Materials, Inc.			37,885				57,447				32,057				78,255
Basic and diluted net earnings available to common shareholders from discontinued operations			444				5,462				537				5,288
Basic and diluted net earnings available to common shareholders attributable to Martin Marietta Materials, Inc.		$	38,329			$	62,909			$	32,594			$	83,543
Basic weighted-average common shares outstanding			44,554				41,333				43,216				41,328
Effect of dilutive employee and director awards			199				263				188				280
Diluted weighted-average common shares outstanding			44,753				41,596				43,404				41,608

		Comprehensive Earnings
		Consolidated comprehensive earnings consist of consolidated net earnings or loss; amortization of actuarial losses, prior service costs and transition assets related to pension and postretirement benefits; foreign currency translation adjustments; and the amortization of the terminated value of forward starting interest rate swap agreements into interest expense. Consolidated comprehensive earnings for the three and six months ended June 30, 2009 were $43,842,000 and $39,388,000, respectively. For the three and six months ended June 30, 2008, consolidated comprehensive earnings were $66,996,000 and $83,227,000, respectively.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

1.		Significant Accounting Policies (continued)
		Subsequent Events
		The Corporation has evaluated subsequent events through August 4, 2009, which represents the date the Corporation’s Form 10-Q for the quarter ended June 30, 2009 was filed with the Securities and Exchange Commission.
		Reclassifications
		Certain 2008 amounts, in addition to those required by FAS 160, have been reclassified to conform to the 2009 presentation. The reclassifications had no impact on previously reported results of operations or financial position.
2.		Business Combinations and Discontinued Operations
		Business Combinations
		On June 12, 2009, the Corporation acquired three quarry locations plus the remaining 49% interest in an existing joint venture from CEMEX, Inc. The quarry operations are located at Fort Calhoun, Nebraska; Guernsey, Wyoming; and Milford, Utah. Guernsey and Milford are rail-connected quarries while Fort Calhoun ships material via barge on the Missouri River in addition to its local and long-haul truck market in Nebraska. The 49% interest purchased relates to the Granite Canyon, Wyoming, quarry (“Granite Canyon”) where the Corporation is the operating manager. Granite Canyon is a major supplier of railroad ballast serving both the Union Pacific Railroad and Burlington Northern Santa Fe Railway. The acquired locations enhance the Corporation’s existing long-haul distribution network and provide attractive product synergies. For the year ended December 31, 2008, the Corporation’s newly acquired locations, including the partial interest only in Granite Canyon, shipped 3.3 million tons and have aggregates reserves that exceed 250 million tons.
		The purchase price for the three quarries plus the remaining 49% interest in Granite Canyon was $65,000,000, which represents the fair value of the assets (cash) given to CEMEX, Inc. Of the total purchase price, the Corporation allocated $48,000,000 to the three quarry locations and $17,000,000 to Granite Canyon based on the locations’ relative fair values.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2.		Business Combinations and Discontinued Operations (continued)
		The three new quarry locations represent a business combination and have been accounted for in accordance with FAS 141(R), which requires the purchase price to be allocated to the fair values of the assets acquired and the liabilities assumed. The Corporation recognized goodwill in the amount of $5,277,000, all of which is deductible for income tax purposes. The preliminary fair values of the other assets acquired related to the three quarry locations were allocated as follows (dollars in thousands):

Inventories		$	1,918
Mineral reserves and interests		$	26,930
Land		$	1,220
Machinery and equipment		$	12,533
Customer relationships		$	290

		The $48,000,000 purchase price for the three acquired quarries has been classified as an investing activity in the Corporation’s consolidated statement of cash flows for the six months ended June 30, 2009. In addition, 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 Corporation’s West Group in the financial statements.
		The purchase of the remaining 49% interest in Granite Canyon represents an equity transaction in accordance with FAS 160. Accordingly, the assets and liabilities related to the noncontrolling interest continued to be valued at their basis at the transaction date; the noncontrolling interest of $4,526,000 was eliminated; additional paid-in capital was reduced by $7,601,000 for the excess of the cash paid, including transaction costs, over the noncontrolling interest at the acquisition date; and a deferred tax asset of $4,933,000 was recorded. In accordance with FAS 160, the total purchase price of $17,060,000 for Granite Canyon has been classified as a financing activity in the Corporation’s consolidated statement of cash flows for the six months ended June 30, 2009.
		Discontinued Operations
		Operations that are disposed of or permanently shut down 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. All discontinued operations relate to the Aggregates business.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2.		Business Combinations and Discontinued Operations (continued)
		Discontinued operations included the following net sales, pretax gain or loss on operations, pretax gains on disposals, income tax expense and overall net earnings:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(Dollars in Thousands)
Net sales		$	67			$	941			$	116			$	3,291
Pretax gain (loss) on operations		$	638			$	(32	)		$	768			$	13
Pretax gain on disposals			3				9,250				3				8,851
Pretax gain			641				9,218				771				8,864
Income tax expense			197				3,756				234				3,576
Net earnings		$	444			$	5,462			$	537			$	5,288

3. Inventories, Net

		June 30,				December 31,				June 30,
		2009				2008				2008
		(Dollars in Thousands)
Finished products		$	285,369			$	268,763			$	255,853
Products in process and raw materials			17,389				17,206				15,817
Supplies and expendable parts			48,888				51,068				45,399
			351,646				337,037				317,069
Less allowances			(17,759	)			(19,019	)			(19,698	)
Total		$	333,887			$	318,018			$	297,371

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

4.		Goodwill
		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 June 30, 2009
						Southeast				West
		Mideast Group				Group				Group				Total
Balance at beginning of period		$	119,749			$	105,870			$	398,191			$	623,810
Acquisitions			—				—				5,277				5,277
Balance at end of period		$	119,749			$	105,870			$	403,468			$	629,087

		Six Months Ended June 30, 2009
						Southeast				West
		Mideast Group				Group				Group				Total
Balance at beginning of period		$	118,249			$	105,857			$	398,191			$	622,297
Acquisitions			—				—				5,277				5,277
Adjustments to purchase price allocations			1,500				13				—				1,513
Balance at end of period		$	119,749			$	105,870			$	403,468			$	629,087

5.

Long-Term Debt

		June 30,				December 31,				June 30,
		2009				2008				2008
		(Dollars in Thousands)
6.875% Notes, due 2011		$	249,910			$	249,892			$	249,876
6.6% Senior Notes, due 2018			298,027				297,946				297,868
7% Debentures, due 2025			124,360				124,350				124,340
6.25% Senior Notes, due 2037			247,836				247,822				247,808
Floating Rate Senior Notes, due 2010, interest rate of 1.19% at June 30, 2009			224,781				224,650				224,519
5.875% Notes, due 2008			—				—				200,949
Term Loan, due 2012, interest rate of 3.31% at June 30, 2009			128,375				—				—
Revolving Credit Agreement, interest rate of 2.555% at December 31, 2008			—				200,000				—
Commercial paper, interest rate of 3.10% at June 30, 2008			—				—				75,000
Acquisition note, interest rate of 8.00%			617				629				651
Other notes			8,052				9,655				11,718
			1,281,958				1,354,944				1,432,729
Less current maturities			(233,229	)			(202,530	)			(279,697	)
Total		$	1,048,729			$	1,152,414			$	1,153,032

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

5.		Long-Term Debt (continued)
		On April 23, 2009, the Corporation entered into a $130,000,000 unsecured term loan with a syndicate of banks (the “Term Loan”). The Term Loan bears interest, at the Corporation’s option, at rates based upon LIBOR or a base rate, plus, for each rate, basis points related to a pricing grid. The base rate is defined as the highest of (i) the bank’s prime lending rate, (ii) the Federal Funds rate plus 0.5% and (iii) one-month LIBOR plus 1%. At June 30, 2009, the interest rate on the Term Loan was based on one-month LIBOR plus 300 basis points, or 3.31%. At June 30, 2009, the outstanding balance on the Term Loan was $128,375,000. The Term Loan requires quarterly principal payments of $1,625,000 through March 31, 2011 and $3,250,000 thereafter, with the remaining outstanding principal due in full on June 6, 2012.
		On April 21, 2009, the Corporation entered into a $100,000,000 three-year secured accounts receivable credit facility (the “AR Credit Facility”) with Wells Fargo Bank, N.A. (“Wells Fargo”). The AR Credit Facility provides for borrowings, on a revolving basis, of up to 90% of the Corporation’s eligible accounts receivable less than 90 days old and bears interest at a rate equal to the one-month LIBOR plus 2.75%. Under the AR Credit Facility, purchases and settlements will be made bi-weekly between the Corporation and Wells Fargo. Upon the terms and subject to the conditions in the AR Credit Facility, Wells Fargo may determine which receivables are eligible receivables, may determine the amount it will advance on such receivables, and may require the Corporation to repay advances made on receivables and thereby repay amounts outstanding under the AR Credit Facility. Wells Fargo also has the right to require the Corporation to repurchase receivables that remain outstanding 90 days past their invoice date. The Corporation continues to be responsible for the servicing and administration of the receivables purchased. The Corporation will carry the receivables and any outstanding borrowings on its consolidated balance sheet. During the second quarter of 2009, the Corporation borrowed $100,000,000 under the AR Credit Facility, which was subsequently repaid in full. At June 30, 2009, there were no borrowings outstanding under the Corporation’s AR Credit Facility.
		The Corporation’s $325,000,000 five-year revolving credit agreement, Term Loan and AR Credit Facility are subject to a leverage ratio covenant. The covenant requires the Corporation’s ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve months (the “Ratio”) to not exceed 3.25 to 1.00 as of the end of any fiscal quarter, provided that the Corporation may exclude from the Ratio debt incurred in connection with acquisitions for a period of 180 days so long as the Corporation maintains specified ratings on its long-term unsecured debt and the Ratio calculated without such exclusion does not exceed 3.50 to 1.00. The Corporation was in compliance with the Ratio at June 30, 2009.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

5.		Long-Term Debt (continued)
		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, net of tax, at the date of termination is being recognized in earnings over the life of the 6.6% Senior Notes. For the three and six months ended June 30, 2009, the Corporation recognized $208,000 and $411,000, respectively, net of tax, as additional interest expense. The accumulated other comprehensive loss related to the Swap Agreements at June 30, 2009 was $6,145,000, net of cumulative noncurrent deferred tax assets of $4,020,000. The ongoing amortization of the terminated value of the Swap Agreements will increase annual interest expense by approximately $1,000,000 until the maturity of the 6.6% Senior Notes in 2018.
6.		Financial Instruments
		The Corporation’s financial instruments include temporary cash investments, accounts receivable, notes receivable, bank overdraft, publicly registered long-term notes and debentures and other long-term debt.
		Temporary cash investments are placed primarily in money market funds and Eurodollar time deposits with the following financial institutions: Bank of America, N.A., Branch Banking and Trust Company, JP Morgan Chase Bank, N.A. and Wells Fargo Bank, N.A.. The Corporation’s cash equivalents have maturities of less than three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.
		Customer receivables are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions. However, customer receivables are more heavily concentrated in certain states (namely, North Carolina, Texas, Georgia, Iowa and Florida which accounted for approximately 60% of the Aggregate Business’ 2008 net sales). The estimated fair values of customer receivables approximate their carrying amounts.
		Notes receivable are primarily related to divestitures and are not publicly traded. However, using current market interest rates, but excluding adjustments for credit worthiness, if any, management estimates that the fair value of notes receivable approximates its carrying amount.
		The bank overdraft represents the float of outstanding checks. The estimated fair value of the bank overdraft approximates its carrying value.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

6.		Financial Instruments (continued)
		The estimated fair value of the Corporation’s publicly registered long-term notes and debentures at June 30, 2009 was $1,022,217,000, compared with a carrying amount of $1,144,914,000 on the consolidated balance sheet. The fair value of this long-term debt was estimated based on quoted market prices. The estimated fair value of other borrowings, including the Corporation’s Term Loan, was $137,044,000 at June 30, 2009 and approximates its carrying amount.
		The carrying values and fair values of the Corporation’s financial instruments at June 30, 2009 are as follows (dollars in thousands):

		Carrying Value				Fair Value
Cash and cash equivalents		$	133,380			$	133,380
Accounts receivable, net		$	250,340			$	250,340
Notes receivable		$	12,107			$	12,107
Bank overdraft		$	1,692			$	1,692
Long-term debt		$	1,281,958			$	1,159,261

7.		Income Taxes
		As required by FAS 160, income tax expense reported on the Corporation’s consolidated statements of earnings includes income taxes on earnings attributable to both controlling and noncontrolling interests.

		Six Months Ended June 30,
		2009				2008
Estimated effective income tax rate:
Continuing operations			28.4	%			29.4	%
Discontinued operations			30.4	%			40.3	%
Consolidated Overall			28.4	%			30.2	%

		The Corporation’s 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 Corporation’s overall effective income tax rate.
		The change in the year-to-date consolidated overall estimated effective income tax rate during the second quarter of 2009, when compared with the year-to-date consolidated overall effective tax rate as of March 31, 2009, decreased consolidated net earnings for the six months ended June 30, 2009 by $1,482,000, or $0.03 per diluted share.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

8.		Pension and Postretirement Benefits
		The following presents the estimated components of the recorded net periodic benefit cost for pension and postretirement benefits for the three and six months ended June 30 (dollars in thousands):

		Three Months Ended June 30,
		Pension								Postretirement Benefits
		2009				2008				2009				2008
Service cost		$	2,537			$	2,744			$	151			$	148
Interest cost			5,065				5,167				790				706
Expected return on assets			(3,694	)			(5,384	)			—				—
Amortization of:
Prior service cost (credit)			149				164				(403	)			(379	)
Actuarial loss (gain)			3,271				1,024				—				(18	)
Settlement charge			—				273				—				—
Total net periodic benefit cost		$	7,328			$	3,988			$	538			$	457

		Six Months Ended June 30,
		Pension								Postretirement Benefits
		2009				2008				2009				2008
Service cost		$	5,576			$	5,731			$	279			$	291
Interest cost			11,133				10,793				1,459				1,386
Expected return on assets			(8,121	)			(11,246	)			—				—
Amortization of:
Prior service cost (credit)			327				343				(744	)			(744	)
Actuarial loss (gain)			7,191				2,140				—				(35	)
Settlement charge			—				273				—				—
Total net periodic benefit cost		$	16,106			$	8,034			$	994			$	898

		The Corporation’s current estimate of contributions to its pension and SERP plans in 2009 ranges from $10,000,000 to $25,000,000.
9.		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 Corporation’s operations or its financial position.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

10.		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 from CEMEX, Inc. are being reported in the West Group. The Corporation also has a Specialty Products segment that includes magnesia chemicals and dolomitic lime.
		The following tables display selected financial data for the Corporation’s 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								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(Dollars in Thousands)
Total revenues:
Mideast Group		$	132,463			$	180,001			$	219,215			$	304,582
Southeast Group			111,456				149,715				225,970				275,575
West Group			184,941				217,957				321,957				371,225
Total Aggregates Business			428,860				547,673				767,142				951,382
Specialty Products			37,129				50,151				73,899				97,990
Total		$	465,989			$	597,824			$	841,041			$	1,049,372
Net sales:
Mideast Group		$	124,820			$	168,898			$	206,859			$	287,571
Southeast Group			92,463				121,752				188,067				224,794
West Group			160,767				190,562				280,301				322,232
Total Aggregates Business			378,050				481,212				675,227				834,597
Specialty Products			33,243				45,205				66,399				88,101
Total		$	411,293			$	526,417			$	741,626			$	922,698
Earnings (Loss) from operations:
Mideast Group		$	33,959			$	61,437			$	39,113			$	93,542
Southeast Group			10,086				13,441				18,235				22,990
West Group			29,580				32,076				29,624				33,798
Total Aggregates Business			73,625				106,954				86,972				150,330
Specialty Products			7,819				9,744				14,161				18,821
Corporate			(8,438	)			(11,815	)			(17,237	)			(21,410	)
Total		$	73,006			$	104,883			$	83,896			$	147,741

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

10.		Business Segments (continued)
		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								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(Dollars in Thousands)
Aggregates		$	351,430			$	453,946			$	627,314			$	784,934
Asphalt			13,766				12,195				22,946				23,600
Ready Mixed Concrete			7,030				10,501				15,107				19,429
Road Paving			3,721				3,148				6,202				4,504
Other			2,103				1,422				3,658				2,130
Total Aggregates Business			378,050				481,212				675,227				834,597
Specialty Products			33,243				45,205				66,399				88,101
Total		$	411,293			$	526,417			$	741,626			$	922,698

11.		Supplemental Cash Flow Information
		The following table presents the components of the change in other assets and liabilities, net:

		Six Months Ended
		June 30,
		2009				2008
		(Dollars in Thousands)
Other current and noncurrent assets		$	(5,648	)		$	(5,745	)
Notes receivable			(7	)			100
Accrued salaries, benefits and payroll taxes			(6,211	)			(2,925	)
Accrued insurance and other taxes			7,079				7,451
Accrued income taxes			15,713				19,895
Accrued pension, postretirement and postemployment benefits			10,378				5,823
Other current and noncurrent liabilities			(3,448	)			(327	)
		$	17,856			$	24,272

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

12.		Accrual for Reduction in Workforce
		During the fourth quarter of 2008, the Corporation accrued severance and other termination benefits for certain employees that were terminated as part of a reduction in workforce designed to control its cost structure. During the three and six months ended June 30, 2009, the Corporation paid $889,000 and $2,061,000, respectively, in accordance with the terms of the severance arrangements. The remaining accrual of $2,144,000 at June 30, 2009 is expected to be paid within the upcoming twelve months.
13.		Sale of Equity Securities
		On March 5, 2009, the Corporation entered into a distribution agreement with J.P. Morgan Securities Inc. (“J.P. Morgan”). Under the distribution agreement, the Corporation could offer and sell up to 5,000,000 shares of its common stock having an aggregate offering price of up to $300,000,000 from time to time through J.P. Morgan, as distribution agent. From March 5, 2009 through March 31, 2009, the Corporation sold 3,051,365 shares of its common stock at an average price of $77.90 per share, resulting in gross proceeds to the Corporation of $237,701,000. The aggregate net proceeds from such sales were $232,827,000 after deducting related expenses, including $4,800,000 in gross sales commissions paid to J.P. Morgan. The Corporation did not sell any shares of its common stock pursuant to the distribution agreement during the three months ended June 30, 2009.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2009

Item 2. Management’s 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 Corporation’s 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 30 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 and dolomitic lime sold primarily to customers in the steel industry.

CRITICAL ACCOUNTING POLICIES The Corporation outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on February 17, 2009.

RESULTS OF OPERATIONS
Except as indicated, the following comparative analysis in the Results of Operations section of this Management’s 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 Corporation’s operating results. Further, management believes it is consistent with the basis by which investors analyze the Corporation’s 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 six months ended June 30, 2009 and 2008 in accordance with GAAP and reconciliations of the ratios as percentages of total revenues to percentages of net sales (dollars in thousands):

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2009

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2009
(Continued)

Gross Margin in Accordance with GAAP

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Gross profit		$	111,778			$	139,469			$	160,254			$	214,614
Total revenues		$	465,989			$	597,824			$	841,041			$	1,049,372
Gross margin			24.0	%			23.3	%			19.1	%			20.5	%