<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 (I.R.S. Employer Identification Number)
incorporation or organization)
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 X No
--- ---
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 October 31, 1997
- ---------------------------- ----------------------------------
Common Stock, $.01 par value 46,209,783
Page 1 of 26
Exhibit Index is on Page 23
<PAGE> 2
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
INDEX
Page
----
Part I. Financial Information:
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of
Earnings Three Months and Nine Months
Ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 11
Part II. Other Information:
Item 1. Legal Proceedings. 19
Item 4. Submission of Matters to a Vote of Security Holders. 20
Item 5. Other Information. 20
Item 6. Exhibits and Reports on Form 8-K. 21
Signatures 22
Exhibit Index 23
Page 2 of 26
<PAGE> 3
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Dollars in Thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 15,045 $ --
Accounts receivable, net 176,864 134,207
Inventories, net 128,747 113,774
Deferred income tax benefit 16,165 15,547
Other current assets 3,061 7,638
----------- ---------
Total Current Assets 339,882 271,166
----------- ---------
Property, plant and equipment 1,239,674 981,214
Allowances for depreciation, depletion and amortization (636,351) (572,394)
----------- ---------
Net property, plant and equipment 603,323 408,820
Other noncurrent assets 18,286 25,764
Cost in excess of net assets acquired 147,788 39,952
Other intangibles 36,518 23,216
----------- ---------
Total Assets $ 1,145,797 $ 768,918
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Book overdraft $ -- $ 4,260
Accounts payable 47,415 36,420
Accrued salaries, benefits and payroll taxes 22,014 17,858
Accrued insurance and other taxes 18,768 7,930
Income taxes 8,506 13,388
Current maturities of long-term debt 1,431 1,273
Other current liabilities 16,598 7,015
----------- ---------
Total Current Liabilities 114,732 88,144
Long-term debt 351,760 125,890
Pension, postretirement, and postemployment benefits 63,932 52,646
Other noncurrent liabilities 14,658 7,669
Noncurrent deferred income taxes 56,375 13,592
----------- ---------
Total Liabilities 601,457 287,941
----------- ---------
Shareholders' equity:
Common stock, par value $.01 per share 462 461
Additional paid-in capital 335,704 331,303
Retained earnings 208,174 149,213
----------- ---------
Total Shareholders' Equity 544,340 480,977
----------- ---------
Total Liabilities and Shareholders' Equity $ 1,145,797 $ 768,918
=========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 26
<PAGE> 4
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------- ----------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
(Dollars in Thousands, Except Per Share Data)
<S> <C> <C> <C> <C>
Net sales $ 271,717 $ 201,504 $ 662,070 $ 538,489
Cost of sales 191,781 142,957 486,503 400,807
------------ ------------ ------------ ------------
Gross Profit 79,936 58,547 175,567 137,682
Selling, general & administrative expense 18,874 15,030 50,486 44,763
Research and development 1,042 466 2,323 1,418
------------ ------------ ------------ ------------
Earnings from Operations 60,020 43,051 122,758 91,501
Interest expense (5,615) (2,268) (11,380) (7,964)
Other income and expenses, net 1,583 806 5,230 5,168
------------ ------------ ------------ ------------
Earnings before Taxes on Income 55,988 41,589 116,608 88,705
Taxes on income 19,714 14,099 41,058 30,071
------------ ------------ ------------ ------------
Net earnings $ 36,274 $ 27,490 $ 75,550 $ 58,634
============ ============ ============ ============
Net Earnings per share $ 0.79 $ 0.60 $ 1.64 $ 1.27
============ ============ ============ ============
Average number of shares outstanding 46,116,693 46,079,300 46,092,078 46,079,300
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4 of 26
<PAGE> 5
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1997 1996
--------- ---------
(Dollars in Thousands)
<S> <C> <C>
Operating activities:
Net earnings $ 75,550 $ 58,634
Adjustments to reconcile earnings to cash
provided by operating activities:
Depreciation, depletion and amortization 56,520 45,346
Other items, net (2,878) (1,266)
Changes in operating assets and liabilities:
Accounts receivable (46,498) (38,799)
Inventories 7,668 352
Accounts payable 4,850 (883)
Other assets and liabilities, net 26,278 8,470
--------- ---------
Net cash provided by operating activities 121,490 71,854
--------- ---------
Investing activities:
Additions to property, plant and equipment (60,312) (51,818)
Acquisitions, net (278,645) --
Transactions with Lockheed Martin Corporation 23,768 87,383
Other investing activities, net 5,792 6,509
--------- ---------
Net cash (used for) provided by investing activities (309,397) 42,074
--------- ---------
Financing activities:
Borrowings (repayments) of long-term debt, net 224,738 (103,729)
Dividends (16,589) (15,667)
Debt issue costs (937) --
Loans payable to Lockheed Martin Corporation -- 10,759
--------- ---------
Net cash provided by (used for) financing activities 207,212 (108,637)
--------- ---------
Net increase in cash and cash equivalents 19,305 5,291
Book overdraft, beginning of period (4,260) (2,927)
--------- ---------
Cash and cash equivalents, end of period $ 15,045 $ 2,364
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5 of 26
<PAGE> 6
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed 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, 1996, filed with the Securities and
Exchange Commission on March 25, 1997. 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 for the interim periods.
The results of operations for the nine months ended September 30, 1997,
are not necessarily indicative of the results to be expected for the
full year.
2. Acquisition of American Aggregates Corporation
On May 28, 1997, the Corporation purchased all of the outstanding
common stock of American Aggregates Corporation and subsidiary
("American Aggregates") along with certain other assets from American
Aggregates' former parent, CSR America, Inc. The operating results of
the acquired business have been included with those of the Corporation
since that date. This business combination is being accounted for under
the purchase method of accounting.
After preliminary working capital adjustments, the purchase price
consists of approximately $242 million in cash plus certain assumed
liabilities, including liabilities of $4 million for projected and
accumulated postretirement benefit obligations in excess of certain
benefit plans' assets, and a provision of approximately $8 million to
consummate the transaction and integrate the operations. The final
purchase price is subject to certain post-closing adjustments relating
to working capital. Any change in the purchase price resulting from
final post-closing adjustments will be reflected in the determination
of the final purchase consideration during the allocation period. As of
September 30, 1997, approximately $100 million in goodwill has been
recognized by the Corporation after recording approximately $12.5
million in other intangibles (representing the estimated fair market
value of certain assets) and other purchase adjustments necessary to
allocate the purchase price to the value of the assets acquired and
liabilities assumed. Goodwill is being amortized over a 30-year period
and other intangibles are being amortized over periods not exceeding
ten years. The portion of the cash purchase price, in the amount of $25
million -- that was deferred at the time of closing and evidenced by a
note -- was, by its terms, repaid in August 1997.
The presentation of certain pro forma financial information for the
three months ended September 30, 1997, is not required for this
business combination since the transaction is reflected in the
Corporation's balance sheet at September 30, 1997, and in its results
of operations for the three-month period then ended. However, for
comparative purposes, the following unaudited pro forma summary
financial information presents the historical results of operations of
the Corporation and the American Aggregates business for the three
months ended September 30, 1996, and nine months ended September 30,
1997 and 1996, with pro forma adjustments as if the acquisition had
been consummated as of the beginning of the earliest period presented.
The pro forma information is based upon certain estimates and
assumptions that management of the Corporation believes are reasonable
in the circumstances. The unaudited pro forma information presented on
the following page is not necessarily indicative of what results of
operations actually would have been if the acquisition had occurred on
the date indicated. Moreover, they are not necessarily indicative of
future results.
Page 6 of 26
<PAGE> 7
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Acquisition of American Aggregates Corporation (continued)
<TABLE>
<CAPTION>
Pro Forma Information (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------------
1996 1997 1996
-------- -------- --------
(Dollars in Thousands, Except Per Share Data)
<S> <C> <C> <C>
Net sales $248,379 $700,386 $633,504
======== ======== ========
Net earnings $ 29,639 $ 69,435 $ 56,026
======== ======== ========
Net earnings per share $ 0.64 $ 1.51 $ 1.22
======== ======== ========
</TABLE>
3. Inventories
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Dollars in Thousands)
<S> <C> <C>
Finished products $ 107,044 $ 85,363
Product in process and raw materials 7,814 14,682
Supplies and expendable parts 22,028 19,807
--------- ---------
136,886 119,852
Less allowances (8,139) (6,078)
--------- ---------
Total $ 128,747 $ 113,774
========= =========
</TABLE>
4. Long-Term Debt
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(Dollars in Thousands)
<S> <C> <C>
6.9% Notes, due 2007 $ 124,947 $ --
7% Debentures, due 2025 124,192 124,185
Commercial Paper, interest rates
approximating 5.7% 100,000 --
Acquisition notes, interest rates
ranging from 5% to 10% 2,423 2,254
Other notes 1,629 724
--------- ---------
353,191 127,163
Less current maturities (1,431) (1,273)
--------- ---------
Total $ 351,760 $ 125,890
========= =========
</TABLE>
Page 7 of 26
<PAGE> 8
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
During August 1997, the Corporation offered and sold the 6.9% Notes at
99.707% of their principal amount of $125,000,000. The entire amount of
these Notes was registered under the Corporation's shelf registration
statement on file with the Securities and Exchange Commission. These
Notes are carried net of original issue discount, which is being
amortized over the life of the issue. The Notes are not redeemable
prior to their maturity on August 15, 2007.
In July 1997, the Corporation entered into an interest rate swap
agreement to offset a portion of its exposure to rising interest rates
relating to the above-mentioned long-term financing. This agreement was
closed during the third quarter of 1997 in connection with the
Corporation's issuance of the 6.9% Notes in August. The Corporation
realized a gain of approximately $312.5 thousand on the closing of this
agreement, which has been deferred and is being amortized and
recognized as an adjustment to interest expense over the term of the
Notes.
In January 1997, the Corporation's revolving credit agreement with
Lockheed Martin Corporation ("Lockheed Martin") was, by its terms,
terminated. Also during January, the Corporation entered into a new
revolving credit agreement with a group of domestic and foreign banks
which provides for borrowings of up to $150 million for general
corporate purposes through January 2002. Borrowings under this
agreement are unsecured and bear interest, at the Corporation's option,
at rates based upon: (i) the Euro-Dollar rate (as defined on the basis
of a LIBOR); (ii) a bank base rate (as defined on the basis of a
published prime rate or the Federal Funds Rate plus 1/2 of 1%); or
(iii) a competitively determined rate (as defined on the basis of a
bidding process). The revolving credit agreement contains several
covenants, including specific financial covenants relating to leverage,
limitations on encumbrances, and provisions which relate to certain
changes of the Corporation's control. The Corporation is required to
pay an annual loan commitment fee to the bank group. At September 30,
1997, no borrowings were outstanding under this revolving credit
agreement. However, this long-term revolving credit agreement supports
commercial paper borrowings of $100 million outstanding at September
30, 1997, which have been classified as long-term debt in the
accompanying balance sheet based on management's ability and intention
to maintain this debt outstanding for at least one year. At November 1,
1997, $90 million remained outstanding under the Corporation's
commercial borrowing obligations.
In May 1997, the Corporation entered into an additional revolving
credit agreement with the same group of domestic and foreign banks, as
referenced above, which provides for incremental borrowings of up to
$150 million for general corporate purposes through May 26, 1998.
Borrowings under this agreement are unsecured and bear interest, at the
Corporation's option, at rates based upon: (i) the Euro-Dollar rate (as
defined on the basis of a LIBOR); (ii) a bank base rate (as defined on
the basis of a published prime rate or the Federal Funds Rate plus 1/2
of 1%); or (iii) a competitively determined rate (as defined on the
basis of a bidding process). This short-term revolving credit agreement
contains the same covenants as those contained in the above-referenced
long-term revolving credit agreement. The Corporation is required to
pay a loan commitment fee to the bank group. At September 30, 1997, no
borrowings were outstanding under this revolving credit agreement.
Page 8 of 26
<PAGE> 9
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Long-Term Debt (continued)
As of November 1, 1997, no borrowings were outstanding under either of
these revolving credit agreements.
The Corporation's interest payments were approximately $8.8 million in
1997 and $7.6 million in 1996 for the nine months ended September 30.
5. Income Taxes
The Corporation accounts for income taxes as prescribed in Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Deferred income tax assets and liabilities on the consolidated balance
sheet reflect the net of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.
The Corporation's effective income tax rate for the first nine months
was 35.2% in 1997 and 33.9% in 1996. The effective rate for three
quarters of 1997 was slightly higher than the current federal corporate
income tax rate of 35% due to the effect of several offsetting factors.
The Corporation's effective tax rate reflects the effect of state
income taxes and the impact of differences in book and tax accounting
arising from the permanent benefits associated with the depletion
allowances for mineral reserves, amortization of certain goodwill
balances, foreign operating earnings, and earnings from nonconsolidated
investments.
Through October 1996, the results of operations of the Corporation are
included in a consolidated federal income tax return with the
Corporation's former parent, Lockheed Martin. Income taxes allocable to
the operations of the Corporation through this date are calculated as
if it had filed separate federal income tax returns for each tax
reporting period.
The corporation's income tax payments were approximately $38.8 million
in 1997 and $22.9 million in 1996, for the nine months ended September
30.
6. 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.
Page 9 of 26
<PAGE> 10
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Other Matters
In February 1994, the Corporation was authorized by its shareholders
and the Board of Directors to repurchase up to 2,000,000 shares of the
Corporation's Common Stock for issuance under the Corporation's Amended
Omnibus Securities Award Plan. On May 3, 1994, the Board of Directors
authorized the repurchase of an additional 500,000 shares for general
corporate purposes. As of November 1, 1997, there have been 68,200
shares of Common Stock repurchased by the Corporation under these
authorizations.
Page 10 of 26
<PAGE> 11
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 1997 and 1996
OVERVIEW Martin Marietta Materials, Inc., (the "Corporation") operates in two
principal business segments: aggregates products and magnesia-based products.
The Corporation's sales and earnings are predominately derived from its
aggregates segment which processes and sells granite, sandstone, limestone,
shell and other aggregates products from a network of more than 250 quarries and
distribution facilities in 20 states in the southeastern, midwestern and central
regions of the United States and in the Bahama islands and Canada. The
division's products are used primarily by commercial customers principally in
domestic construction of highways and other infrastructure projects and for
commercial and residential buildings. The magnesia-based products segment
produces refractory materials and dolomitic lime used in domestic and foreign
basic steel production and produces chemicals products used in industrial,
agricultural and environmental applications. The magnesia-based products segment
derives a major portion of its sales and earnings from the products used in the
steel industry.
On September 5, 1997, the Corporation purchased the remaining 50%
interest in the outstanding common stock of an Iowa-based company for an
undisclosed purchase price consisting of cash and common stock of Martin
Marietta Materials, Inc. The Corporation acquired its initial 50% interest in
this company in 1992, and accounted for its investment under the equity method
of accounting. With the Corporation's acquisition of the remaining interest in
this company, the transaction is being accounted for under the purchase method
of accounting. Consequently, the results of the entire company's operations are
included with those of the Corporation since the effective date of the
acquisition of the company's remaining outstanding common stock by Martin
Marietta Materials. Currently, approximately $5.3 million in goodwill has been
recognized by the Corporation after recording amounts for other intangibles and
other purchase adjustments necessary to allocate the purchase price to the value
of the assets acquired and liabilities assumed. Goodwill is being amortized over
a 20-year period and other intangibles are being amortized over a ten-year
period. In connection with this transaction, the issuance of the Corporation's
common stock (the non-cash portion of the purchase price consideration) has not
been reflected in the financing and investing sections of accompanying statement
of cash flows. In addition to this transaction, the Corporation also entered
into a joint venture during the third quarter with a sand and gravel operator
that is located in the state of Mississippi. The Corporation has complete
management and operating control of the operation within this joint venture.
For accounting purposes, the financial position and results of operations of
this joint venture will be consolidated with those of the Corporation with
appropriate elimination of the other joint venture party's interest.
The Corporation continued in excellent overall financial condition
during the third quarter of 1997 and has adequate capital resources to operate,
compete and grow in an increasingly challenging and competitive environment. Net
earnings for the third quarter of 1997 were $36.3 million, or $0.79 per share,
an increase of 32% over 1996 third-quarter earnings of $27.5 million, or $0.60
per share.
(Continued)
Page 11 of 26
<PAGE> 12
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1997 and 1996
At September 30, 1997, total shareholders' equity reached a record
$544.3 million, and the Corporation's ratio of debt to total capitalization was
39%, compared with a debt-to-capitalization ratio of 21% at year-end 1996. Total
debt at the end of the third quarter reflected incremental borrowings --
including the sale of $125 million debt securities in August -- associated with
the financing of the acquisition of the American Aggregates business in the
second quarter of 1997. For further discussion of the Corporation's
capitalization structure following this acquisition, see the "Liquidity and
Capital Resources" section on pages 16 through 18 of this Form 10-Q.
BUSINESS COMBINATION WITH AMERICAN AGGREGATES CORPORATION On May 28, 1997, the
Corporation purchased all of the outstanding common stock of American Aggregates
Corporation ("American Aggregates") along with certain other assets from
American Aggregates' former parent, CSR America, Inc., in a transaction being
accounted for under the purchase method of accounting. Following preliminary
working capital adjustments, the purchase consideration, which remains subject
to certain further post-closing adjustments relating to working capital,
consists of approximately $242 million in cash plus certain assumed liabilities,
including a liability of $4 million for projected and accumulated postretirement
benefit obligations in excess of plan assets for various defined benefit and
retiree medical benefit plans. Any changes in the final purchase price resulting
from final post-closing adjustments will be reflected in the determination of
the final purchase consideration during the allocation period. In addition, the
Corporation recorded a provision of approximately $8 million to consummate the
transaction and integrate the operations. As of September 30, 1997,
approximately $2 million has been expended in connection with this transaction
and charged against this liability. Management expects that the balance of the
costs estimated to consummate the transaction and integrate the operations will
be incurred over the next 18- to 24-month period. Currently, approximately $100
million in goodwill has been recognized by the Corporation after recording
amounts for other intangibles (representing the estimated fair market value of
certain assets) and other purchase adjustments necessary to allocate the
purchase price to the value of assets acquired and liabilities assumed. Goodwill
is being amortized over a 30-year period and other intangibles are being
amortized over periods not exceeding ten years. See Note 2 of the Notes to
Condensed Consolidated Financial Statements for certain pro forma summary
financial information in connection with this business combination.
RESULTS OF OPERATIONS Net sales for the quarter were $271.7 million, a 35%
increase over 1996 third quarter sales of $201.5 million. Net sales for the
first nine months of 1997 were $662.1 million, an increase of 23% over net sales
for the year-earlier period of $538.5 million. Earnings from operations were up
$17.0 million, or 39%, to $60.0 million for the third quarter of 1997 over the
same period in 1996, with earnings from operations up $31.3 million, to $122.8
million for the first nine months of 1997, compared with the first nine months
of 1996. Consolidated net earnings for the quarter increased 32% to $36.3
million, or $0.79 per share, from 1996 third quarter net earnings of $27.5
million, or $0.60 per share. For the nine-month period ended September 30, 1997,
consolidated net earnings were $75.6 million, or $1.64 per share. This
represents an increase of 29% over net earnings for the first nine months of
1996 of $58.6 million, or $1.27 per share. These increases in both sales and
earnings reflect the results of operations of the American Aggregates business
that have been combined with those of the Corporation since May 28, 1997.
(Continued)
Page 12 of 26
<PAGE> 13
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1997 and 1996
Sales for the Aggregates division increased 39% to $236.3 million for
the third quarter, compared with the year-earlier period. The division's sales
increased 26% to $556.7 million for the first nine months of 1997, compared with
the first nine months of 1996. This increase in sales reflects record
year-to-date aggregates shipments (including acquisitions) of 94.2 million tons
and an increase in the division's average net selling price, when compared to
the same period in 1996. The division's third quarter operating profits were
$56.6 million, an increase of 40% over operating profits for the year-earlier
period of $40.5 million. The division's operating profits for the first nine
months of 1997 increased 35% to $112.8 million from $83.7 million for the first
nine months of 1996, which were impacted negatively by the effect of Hurricane
Fran and subsequent heavy rainfall during September 1996 in the southeast and
the effect of the adverse weather conditions that existed within most of the
markets served by the division during the first quarter of 1996. The division's
results reflect the acquisition of American Aggregates, which accounts for
slightly more than one-half of the increase in the division's shipments during
the first nine months of 1997. The Corporation's aggregates business is highly
seasonal, due primarily to the effect of weather conditions on construction
activity levels, most of which occurs typically in the spring, summer, and early
fall. Management continues to believe that the Corporation's annual production
and shipments, excluding any acquisition activities, will see some improvement
for the full year ending December 31, 1997, compared with the prior year.
Additionally, Management continues to believe that the American Aggregates
acquisition offers the opportunity to further increase the division's sales and
earnings in 1997.
The Magnesia Specialties division had third quarter 1997 sales of $35.4
million, an 11% increase over the third quarter sales of 1996, and had nine
month 1997 sales of $105.3 million, an increase of 8% in 1997 over 1996.
The division's total shipments for the first nine months of 1997 increased
when compared with the year-earlier period. However, the division's management
continues to expect price weaknesses in this business for the forseeable future
due to the fixed market limitations inherent within the steel industry, which is
the division's largest product market. Sales of periclase grain products
continued to strengthen through the first nine months of 1997.
Compared to the year-earlier period, the Magnesia Specialties
division's earnings from operations for the first nine months of 1997 increased
to $10.0 million from $7.8 million in 1997. The division's lower operating
earnings for the first nine months of 1996 reflected the negative impact of a
fire in an electrical substation at the division's Woodville, Ohio, lime plant.
(Continued)
Page 13 of 26
<PAGE> 14
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1997 and 1996
The following tables present net sales, gross profit, selling, general
and administrative expense, and earnings from operations data for the
Corporation and each of its divisions for the three and nine months ended
September 30, 1997 and 1996. In each case, the data is stated as a percentage of
net sales, of the Corporation or the relevant division, as the case may be:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------------------------------
(Dollars in Thousands)
1997 1996
---------------------- -----------------------
% of % of
Amount Net Sales Amount Net Sales
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales:
Aggregates $236,269 100.0 $169,485 100.0
Magnesia Specialties 35,448 100.0 32,019 100.0
-------- ----- -------- -----
Total $271,717 100.0 $201,504 100.0
Gross profit:
Aggregates $ 71,982 30.5 $ 51,381 30.3
Magnesia Specialties 7,954 22.4 7,166 22.4
-------- ----- -------- -----
Total $ 79,936 29.4 $ 58,547 29.1
Selling, general & administrative expense:
Aggregates $ 14,915 6.3 $ 10,859 6.4
Magnesia Specialties 3,959 11.2 4,171 13.0
-------- ----- -------- -----
Total $ 18,874 7.0 $ 15,030 7.5
Earnings from operations:
Aggregates $ 56,615 24.0 $ 40,521 23.9
Magnesia Specialties 3,405 9.6 2,530 7.9
-------- ----- -------- -----
Total $ 60,020 22.1 $ 43,051 21.4
</TABLE>
(Continued)
Page 14 of 26
<PAGE> 15
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------------------------
(Dollars in Thousands)
1997 1996
---------------------- -----------------------
% of % of
Amount Net Sales Amount Net Sales
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales:
Aggregates $556,746 100.0 $440,787 100.0
Magnesia Specialties 105,324 100.0 97,702 100.0
-------- ----- -------- -----
Total $662,070 100.0 $538,489 100.0
Gross profit:
Aggregates $151,610 27.2 $115,780 26.3
Magnesia Specialties 23,957 22.8 21,902 22.4
-------- ----- -------- -----
Total $175,567 26.5 $137,682 25.6
Selling, general & administrative expense:
Aggregates $ 38,095 6.8 $ 32,099 7.3
Magnesia Specialties 12,391 11.8 12,664 13.0
-------- ----- -------- -----
Total $ 50,486 7.6 $ 44,763 8.3
Earnings from operations:
Aggregates $112,802 20.3 $ 83,681 19.0
Magnesia Specialties 9,956 9.5 7,820 8.0
-------- ----- -------- -----
Total $122,758 18.5 $ 91,501 17.0
</TABLE>
Other income and expenses, net, for both nine month periods ended September 30,
1997 and 1996, were approximately $5.2 million in income. Including several
offsetting amounts, other income and expenses, net, is comprised generally of
interest income, gains and losses associated with the selling of certain assets,
and equity earnings and losses from nonconsolidated investments. The 1997 amount
included $0.6 million for claim recoveries for business interruption resulting
from lost production time during Hurricane Fran in late 1996.
(Continued)
Page 15 of 26
<PAGE> 16
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1997 and 1996
Interest expense was approximately $3.4 million, or 43%, higher in the
first nine months of 1997 over 1996. The increase in 1997 resulted from the
effect of the additional long-term borrowings by the Corporation associated with
its acquisition of the American Aggregates business, including the Corporation's
public offer and sale of its $125 million, 6.9% Notes in August 1997. See Note 4
of the Notes to Condensed Consolidated Financial Statements.
The Corporation's estimated effective income tax rate for the first
nine months was 35.2% in 1997 and 33.9% in 1996. See Note 5 of the Notes to
Condensed Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES Net cash flow provided by operating activities
during the first nine months of 1997 was $121.5 million, compared with $71.9
million in the comparable period of 1996. The cash flow from operating
activities for both 1996 and 1997 was principally from earnings, before
deducting depreciation, depletion and amortization, offset by increased demand
for working capital. The increased demand on working capital during the first
nine months of 1996 and 1997 was primarily the result of increases in accounts
receivable balances (due to timing and growth in aggregates demand), which was
offset somewhat by increased trade accounts payable and other liabilities
balances in 1997 and by other liabilities balances in 1996. The seasonal nature
of the construction aggregates business impacts quarterly net cash provided by
operating activities when compared with the year. Accordingly, full year 1996
net cash provided by operating activities was $134.9 million, compared with the
$71.9 million provided by operations in the first nine months of 1996. For 1997,
capital expenditures, exclusive of acquisitions, are expected to be in excess of
prior year's expenditures, but somewhat less than the original budget amount of
$97 million. Comparable capital expenditures were approximately $80 million in
1996.
(Continued)
Page 16 of 26
<PAGE> 17
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1997 and 1996
The Corporation continues to rely upon internally generated funds and
access to capital markets, including funds obtained under its two revolving
credit agreements and cash management facility to meet its liquidity
requirements, finance its operations, and fund its capital requirements. With
respect to the Corporation's ability to access the public market, currently the
Corporation has an effective shelf registration on file with the Securities and
Exchange Commission (the "Commission") for the offering of up to $50 million of
debt securities, which may be issued from time to time. Presently, it is
Management's intent to file another shelf registration statement with the
Commission. It should be noted, however, that the Corporation has not determined
the timing when, or the amount for which, it may file such shelf registration.
Its ability to borrow or issue debt securities is dependent, among other things,
upon prevailing economic, financial and market conditions.
In connection with the July 1997 stock acquisition of the American
Aggregates Corporation, the Corporation financed the transaction by borrowing
the funds initially from its revolving credit agreements. At closing the
Corporation borrowed approximately $210 million under these agreements which,
coupled with other working capital borrowings under these same agreements,
amounted to $225 million at June 30, 1997. On July 3, 1997, the Corporation
offered and sold $200 million of commercial paper obligations, the proceeds of
which were used initially to repay certain amounts outstanding under the
revolving credit agreements. During August 1997, the Corporation sold the $125
million 6.9% Notes, the net proceeds from the sale of which were used to repay
remaining amounts outstanding under the revolving credit agreements and to
further reduce the amount of commercial paper obligations. See Note 4 of the
Notes to Condensed Consolidated Financial Statements.
Based on prior performance and current expectations, the Corporation's
management believes that cash flows from internally generated funds and its
access to capital markets are expected to continue to be sufficient to provide
the capital resources necessary to fund the operating needs of its existing
businesses, cover debt service requirements, and allow for payment of dividends
in 1997. The Corporation may be required to obtain additional levels of
financing in order to fund certain strategic acquisitions if any such
opportunities arise. Currently, the Corporation's senior unsecured debt is rated
"A" by Standard & Poor's and "A3" by Moody's. The Corporation's commercial paper
obligations are rated "A-1" by Standard & Poor's, "P-2" by Moody's and "F-1" by
Fitch Investors Service, L.P. While management believes its credit ratings will
remain at an investment-grade level, no assurance can be given that these
ratings will remain at the above-mentioned levels.
(Continued)
Page 17 of 26
<PAGE> 18
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1997 and 1996
The Corporation may repurchase up to 2.5 million shares of its common
stock under authorizations from the Corporation's Board of Directors for use in
the Amended Omnibus Securities Award Plan and for general corporate purposes. As
of November 1, 1997, there have been 68,200 shares repurchased under these
authorizations.
ACCOUNTING CHANGES In February 1997, the Financial Accounting Standards Board
(the "FASB") issued the Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("FAS 128"), which is required to be adopted on December
31, 1997. Upon adoption, the Corporation will be required to change the method
used currently to compute earnings per share and to restate all prior periods
presented. Under the new requirements for calculating basic, or primary,
earnings per share, the dilutive effect of common stock equivalents will be
excluded. Currently, shares issuable under the Corporation's employee stock
option and other stock-based plans are excluded from the weighted average number
of shares used in the Corporation's computation of primary earnings per share on
the assumption that their effect is not dilutive. Consequently, adoption of FAS
128 will have no impact on the Corporation's computation of primary earnings per
share for the three and nine months ended September 30, 1997 and 1996. The
impact of FAS 128 on the calculation of fully diluted earnings per share for
these quarters is not expected to be material.
In June 1997, the FASB issued the Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("FAS 130"), which is
required to be adopted for years beginning after December 15, 1997. Also during
June 1997, the FASB issued the Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information" ("FAS
131"). This pronouncement must also be adopted for years beginning after
December 15, 1997. The impact of both FAS 130 and FAS 131 on the Corporation's
financial reporting is not expected to be material.
OTHER MATTERS Investors are cautioned that statements in this Quarterly Report
on Form 10-Q which relate to the future are, by their nature, uncertain and
dependent upon numerous contingencies - including political, economic,
regulatory, climatic, competitive, and technological - any of which could cause
actual results and events to differ materially from those indicated in such
forward-looking statements. Additional information regarding these and other
risk factors and uncertainties may be found in the Corporation's other filings
which are made from time to time with the Securities and Exchange Commission.
Page 18 of 26
<PAGE> 19
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Part II Item 1. "Legal Proceedings" of the Martin Marietta
Materials, Inc. Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1997, and to Part I, Item 1., "Business -- Environmental Regulations"
of the Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
ENVIRONMENTAL REGULATION In August 1995, the U.S. Environmental Protection
Agency (the "EPA") requested information regarding the disposal of
polychlorinated biphenyl ("PCB") waste in the 1980s at sites operated by PCB
Treatment Site, Inc., which had facilities in Kansas City, Missouri, and Kansas
City, Kansas (the "Sites"). PCB Treatment had the proper permits to operate the
Sites. According to the EPA, PCB Treatment received waste shipments of PCBs from
over 1,500 parties and received total shipments of materials in excess of 25
million pounds, of which approximately 9,465 pounds of PCB waste was shipped by
the Aggregates Division of Martin Marietta Corporation, which is the
Corporation's predecessor in interest. The Sites closed in 1986.
PCB Treatment removed the waste material from the Sites but did not complete the
remediation. The EPA has identified the Sites as requiring removal or remedial
action under the federal "Superfund" laws. A group of PRPs, each of whom
disposed of more than 200,000 pounds of waste at the Sites, have formed a
steering committee which is conducting site assessments to further evaluate the
corrective action that will be required. It is anticipated that the remaining
work that needs to be completed involves the clean-up of contamination in two
buildings (or demolition of the buildings) and clean-up of the surrounding
soils. Based on this, total clean-up costs have been estimated by the steering
committee to be $10 million to $40 million.
In a letter from the EPA dated September 16, 1997, the Corporation was
designated a "Potentially Responsible Party" (a "PRP") for the Sites. Generally,
PRPs that are ultimately determined to be "responsible parties" are strictly
liable for site clean-ups and usually agree among themselves to share, on an
allocated basis, in the costs and expenses for investigation and remediation of
the hazardous materials. Under existing environmental laws, however, responsible
parties are jointly and severally liable and, therefore, the Corporation is
potentially liable for the full cost of funding such remediation. In the event
that the Corporation were required to fund the entire cost of such remediation,
the statutory framework provides that the Corporation may pursue rights of
contribution from the other PRPs. According to the steering committee, the major
contributor of waste to the Sites is the Department of Defense. Also, there are
other solvent PRPs who will be responsible for large shares of the clean-up
costs based upon their respective shares of waste disposed at the Sites.
Furthermore, management believes that in the allocation process the
Corporation's share of the clean-up costs will be minor because the amount will
be based upon the Corporation's share of waste disposed of at the Sites (9,465
pounds) out of the total waste deposited at the Sites (25 million pounds) and
because the allocation is among over 1,500 PRPs identified thus far by EPA.
Additionally, the Corporation believes that any costs incurred by it associated
with this site would not have a material adverse effect on the Corporation's
consolidated results of operations or on its consolidated financial position.
Page 19 of 26
<PAGE> 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. (continued)
Management does not believe that adherence to presently applicable environmental
regulations at its own facilities will have material adverse affect on the
Corporation's consolidated financial position or results of its operations. For
additional information, also see Note 6 of the Notes to Condensed Consolidated
Financial Statements in this Form 10-Q, and Part I, Item 3. "Legal Proceedings"
of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
Reference is made to Part II. Item 4. "Submission of Matters to a Vote of
Security Holders" of the Martin Marietta Materials, Inc. Quarterly Report on
Form 10-K for the quarterly period ended June 30, 1997.
Item 5. Other Information.
On August 18, 1997, the Corporation announced that the Board of Directors had
elected Donald J. Easterlin, III, as a Vice President and Officer of the
Corporation.
On September 8, 1997, the Corporation announced that it had purchased the
remaining 50% of the outstanding common stock of the Kaser Corporation at an
undisclosed purchase price, comprised of cash and Martin Marietta Materials,
Inc. common stock. The Corporation made its original investment in and purchased
50% of the Kaser Corporation's outstanding common stock in 1992. The former
Kaser operations, whose headquarters were in Des Moines, Iowa, has 13 aggregates
operations in southeastern Iowa with a combined annual production capacity of
approximately 3.2 million tons.
On October 10, 1997, the Corporation announced that it had entered into a joint
venture with R & S Haulers and Distributors, a sand and gravel producer with
one plant located in Mississippi. This facility has an annual production
capacity of more than 900,000 tons and serves northeastern Mississippi and
northwestern Alabama. The terms of the transaction were not disclosed.
On November 6, 1997, the Corporation announced that the Board of Directors had
declared a regular quarterly cash dividend on the Corporation's Common Stock of
$0.12 a share, payable December 31, 1997, to shareholders of record at the close
of business on December 1, 1997.
On November 7, 1997, the Corporation announced that the Board of Directors had
elected Phillip J. Sipling as an Executive Vice President of the Corporation.
Page 20 of 26
<PAGE> 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
PART II - OTHER INFORMATION
(Continued)
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
No. Document
- ------- --------
4.01 Form of Martin Marietta Materials, Inc. 6.9% Notes, due 2007
(incorporated by reference to Exhibit 4(a)(i) to the Martin
Marietta Materials, Inc. registration statement on Form S-3
(SEC Registration No. 33-99082))
10.01 Amendment No. 1 to the Martin Marietta Materials, Inc.
Incentive Stock Plan
11.01 Martin Marietta Materials, Inc. and Consolidated
Subsidiaries Computation of Earnings Per Share for the Quarter
and Nine Months Ended September 30, 1997 and 1996
12.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries
Computation of Ratio of Earnings to Fixed Charges for the Nine
Months ended September 30, 1997
27.01 Financial Data Schedule (for Securities and Exchange
Commission use only)
(b) Reports on Form 8-K filed in the third quarter of 1997.
Current Report on Form 8-K/A, dated May 28, 1997, filed with
the Securities and Exchange Commission on August 4, 1997.
Reference is made to Part II. Item 6. "Exhibits and Reports on
Form 8-K" of the Martin Marietta Materials, Inc. Quarterly
Report on Form 10-Q for the quarterly period ended June 30,
1997
Page 21 of 26
<PAGE> 22
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
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: November 12, 1997 By: /s/ JANICE K. HENRY
-----------------------
Janice K. Henry
Vice President, Chief
Financial Officer and
Treasurer
Page 22 of 26
<PAGE> 23
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1997
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document Page
- ----------- -------- ----
<S> <C> <C>
4.01 Form of Martin Marietta Materials, Inc. 6.9 % Notes, due 2007 --
(incorporated by reference to Exhibit 4(a)(i) to the Martin Marietta
Materials, Inc. registration statement on Form S-3 (SEC Registration
No. 33-99082))
10.01 Amendment No. 1 to the Martin Marietta Materials, Inc. Incentive Stock Plan 24
11.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries 25
Computation of Earnings Per Share for the Quarter and Nine Months
Ended September 30, 1996 and 1995
12.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries 26
Computation of Ratio of Earnings to Fixed Charges for the Nine Months
ended September 30, 1996
27.01 Financial Data Schedule (for Securities and Exchange Commission
use only)
</TABLE>
Page 23 of 26
<PAGE> 1
EXHIBIT 10.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
AMENDMENT NO. 1 TO INCENTIVE STOCK PLAN
Amendment No. 1 to the Martin Marietta Materials, Inc. Incentive Stock
Plan (the "Plan") is hereby amended as follows, effective as of November 6,
1997.
Section 6.01 of the Plan is amended and restated as follows:
"6.01 Full Vesting and Distribution of Common Shares after
Three Additional Years of Employment: Stock Units credited to a
Participant for a Plan Year shall become fully vested on December 1 of
the third (3rd) succeeding Plan Year if the Participant remains
continuously Employed to that date. As soon as practicable thereafter,
such Stock Units shall be converted to unrestricted Common Shares (as
adjusted under Section 6.06) and distributed to the Participant."
All other terms and provisions of the Plan remain in full force and effect.
Page 24 of 26
<PAGE> 1
EXHIBIT 11.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
For the Quarter and Nine Months Ended September 30
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings $36,274 $27,490 $75,550 $58,634
====== ====== ====== ======
Weighted average number of
common shares outstanding 46,116,693 46,079,300 46,092,078 46,079,300
========== ========== ========== ==========
Net earnings per common share $0.79 $0.60 $1.64 $1.27
==== ==== ==== ====
</TABLE>
Page 25 of 26
<PAGE> 1
EXHIBIT 12.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Nine Months Ended September 30, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
EARNINGS:
<S> <C>
Earnings before income taxes $ 116,608
(Earnings) losses of less than 50% owned associated companies, net (919)
Interest expense 11,380
Portions of rents representative of an interest factor 685
---------
Adjusted Earnings and Fixed Charges $ 127,754
=========
FIXED CHARGES:
Interest expense $ 11,380
Capitalized interest 444
Portion of rents representative of an interest factor 685
---------
Total Fixed Charges $ 12,509
=========
Ratio of Earnings to Fixed Charges 10.21
=========
</TABLE>
Page 26 of 26
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997, AND THE RELATED
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 15,045
<SECURITIES> 0
<RECEIVABLES> 182,216
<ALLOWANCES> 5,352
<INVENTORY> 128,747
<CURRENT-ASSETS> 339,882
<PP&E> 1,239,674
<DEPRECIATION> 636,351
<TOTAL-ASSETS> 1,145,797
<CURRENT-LIABILITIES> 114,732
<BONDS> 351,760
0
0
<COMMON> 462
<OTHER-SE> 543,878
<TOTAL-LIABILITY-AND-EQUITY> 1,145,797
<SALES> 662,070
<TOTAL-REVENUES> 662,070
<CGS> 486,503
<TOTAL-COSTS> 539,312
<OTHER-EXPENSES> (5,733)
<LOSS-PROVISION> 503
<INTEREST-EXPENSE> 11,380
<INCOME-PRETAX> 116,608
<INCOME-TAX> 41,058
<INCOME-CONTINUING> 75,550
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,550
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.64
</TABLE>
