<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 March 31, 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 April 30, 1997
- ---------------------------------------- --------------------------------
Common Stock, $.01 par value 46,079,604
Page 1 of 19
Exhibit Index is on Page 17
<PAGE> 2
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
INDEX
Page
Part I. Financial Information:
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Earnings -
Three Months Ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 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. 10
Part II. Other Information:
Item 1. Legal Proceedings. 15
Item 4. Submission of Matters to a Vote of Security Holders. 15
Item 5. Other Information. 15
Item 6. Exhibits and Reports on Form 8-K. 16
Signatures 16
Exhibit Index 17
Page 2 of 19
<PAGE> 3
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ---------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,424 $ --
Accounts receivable, net 108,458 134,207
Inventories, net 118,281 113,774
Deferred income tax benefit 15,627 15,547
Other current assets 6,692 7,638
--------- ---------
Total Current Assets 257,482 271,166
--------- ---------
Property, plant and equipment 998,771 981,214
Allowances for depreciation, depletion and
amortization (585,726) (572,394)
--------- ---------
Net property, plant and equipment 413,045 408,820
Other noncurrent assets 27,871 25,764
Cost in excess of net assets acquired 40,571 39,952
Other intangibles 23,772 23,216
--------- ---------
Total Assets $ 762,741 $ 768,918
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Book overdraft $ -- $ 4,260
Accounts payable 29,678 36,420
Accrued salaries, benefits and payroll taxes 16,315 17,858
Accrued insurance and other taxes 10,064 7,930
Income taxes 8,836 13,388
Current maturities of long-term debt 1,213 1,273
Other current liabilities 8,212 7,015
--------- ---------
Total Current Liabilities 74,318 88,144
Long-term debt 125,836 125,890
Pension, postretirement, and postemployment benefits 54,585 52,646
Other noncurrent liabilities 8,258 7,669
Noncurrent deferred income taxes 15,383 13,592
--------- ---------
Total Liabilities 278,380 287,941
--------- ---------
Shareholders' equity:
Common stock, par value $.01 per share 461 461
Additional paid-in capital 331,309 331,303
Retained earnings 152,591 149,213
--------- ---------
Total Shareholders' Equity 484,361 480,977
--------- ---------
Total Liabilities and Shareholders' Equity $ 762,741 $ 768,918
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 3 of 19
<PAGE> 4
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1997 1996
------------ ------------
(Thousands of Dollars, Except Per Share Data)
<S> <C> <C>
Net sales $ 158,163 $ 136,547
Cost of sales 128,019 112,742
------------ ------------
Gross Profit 30,144 23,805
Selling, general & administrative expense 15,299 14,736
Research and development 492 475
------------ ------------
Earnings from Operations 14,353 8,594
Interest expense (2,201) (3,174)
Other income and expenses, net 1,469 1,170
------------ ------------
Earnings before Taxes on Income 13,621 6,590
Taxes on income 4,714 2,253
------------ ------------
Net Earnings $ 8,907 $ 4,337
============ ============
Net earnings per share $ 0.19 $ 0.09
============ ============
Average number of common shares outstanding 46,079,530 46,079,300
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 4 of 19
<PAGE> 5
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1997 1996
-------- ---------
(Thousands of Dollars)
<S> <C> <C>
Operating activities:
Net earnings $ 8,907 $ 4,337
Adjustments to reconcile earnings to cash
provided by operating activities:
Depreciation, depletion and amortization 16,334 14,912
Other items, net 175 174
Changes in operating assets and liabilities:
Accounts receivable 1,980 (3,026)
Inventories (3,376) (6,515)
Accounts payable (6,742) (2,210)
Other assets and liabilities, net 74 (1,408)
-------- ---------
Net cash provided by operating activities 17,352 6,264
-------- ---------
Investing activities:
Additions to property, plant and equipment (14,849) (11,264)
Acquisitions, net (9,159) --
Transactions with Lockheed Martin Corporation 23,768 87,369
Other investing activities, net 1,216 3,995
-------- ---------
Net cash provided by investing activities 976 80,100
-------- ---------
Financing activities:
Repayments of long-term debt, net (114) (101,046)
Dividends (5,530) (5,068)
Loan payable to Lockheed Martin Corporation -- 18,775
-------- ---------
Net cash used for financing activities (5,644) (87,339)
-------- ---------
Net increase (decrease) in cash and cash equivalents 12,684 (975)
Book overdraft, beginning of period (4,260) (2,927)
-------- ---------
Cash and cash equivalents (book overdraft), end of period $ 8,424 $ (3,902)
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
Page 5 of 19
<PAGE> 6
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
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 three months ended March 31, 1997,
are not necessarily indicative of the results to be expected for the
full year.
2. Inventories
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
Finished products $ 93,440 $ 85,363
Product in process and raw materials 11,817 14,682
Supplies and expendable parts 19,696 19,807
--------- ---------
124,953 119,852
Less allowances (6,672) (6,078)
--------- ---------
Total $ 118,281 $ 113,774
========= =========
</TABLE>
3. Long-Term Debt
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
7% Debentures, due 2025 $ 124,188 $ 124,185
Acquisition notes, interest rates
ranging from 7-1/2% to 10% 2,232 2,254
Other notes 629 724
--------- ---------
127,049 127,163
Less current maturities (1,213) (1,273)
--------- ---------
Total $ 125,836 $ 125,890
========= =========
</TABLE>
Page 6 of 19
<PAGE> 7
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. Long-Term Debt (continued)
On January 31, 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 would be 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. On May 2, 1997,
the Corporation borrowed $10.0 million under this revolving credit
agreement. See the "Liquidity and Capital Resources" discussion
contained in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on page 14 of this Form 10-Q and
Part II, Item 5 of this Form 10-Q on page 16.
During the first quarter of 1996, the Corporation's 8-1/2% Notes were
redeemed by the holders upon their maturity on March 1, 1996. During
the period these Notes were outstanding, Lockheed Martin reimbursed the
Corporation for the portion of the interest in excess of 5% per annum.
The Corporation's interest payments were approximately $0.1 million in
1997 and $2.6 million in 1996 for the three months ended March 31.
4. 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 effects 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 three months
was 34.6% in 1997 and 34.2% in 1996. The effective rate for the first
quarter of 1997 was lower than the current federal corporate income tax
rate of 35% due to the effect of several offsetting factors.
Consequently, the Corporation's effective tax rate reflects the effect
of state income taxes, which has been more than offset by the favorable
impact of differences in book and tax accounting arising from the
permanent benefits associated with the depletion allowances for mineral
reserves, foreign operating earnings, and earnings from nonconsolidated
investments.
Page 7 of 19
<PAGE> 8
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Income Taxes (continued)
Through October 1996, the results of operations of the Corporation are
included in a consolidated federal income tax return with Lockheed
Martin (see Note 5). 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 $7.6 million
in 1997 and $1.9 million in 1996, for the three months ended March 31.
5. Related Party Transactions
In October 1996, the Corporation's outstanding common stock that was
held by Lockheed Martin became available to the public market when
Lockheed Martin disposed of its 81% ownership interest. The transaction
was completed by means of a split-off, which was an exchange offer
pursuant to which Lockheed Martin stockholders were given the
opportunity to exchange shares of Lockheed Martin common stock for
shares of the Corporation's common stock. Through the consummation of
the split-off transaction in October 1996 (the "Consummation Date"),
the Corporation was charged by Lockheed Martin for certain general and
administrative services, the cost of which was allocated to the
Corporation generally using a formula that considered the Corporation's
proportionate share of sales, payroll and properties. Currently,
certain of these services are being provided still by Lockheed Martin
under the terms of a transition agreement, the costs of which are based
on current market rates. Services under the transition agreement will
be terminated completely at various dates throughout the remainder of
1997.
By its terms, the Corporation's cash management agreement with Lockheed
Martin was terminated January 31, 1997. During the period that this
agreement was in effect, the Corporation's cash balances were advanced
to Lockheed Martin on an overnight basis and earned interest equal to
the federal funds rate in effect from time to time. At year-end 1996,
amounts owed to the Corporation were approximately $23.7 million, and
for financial reporting purposes, were included with other current
accounts receivable and reported in accounts receivable, net, in the
accompanying balance sheet as of December 31, 1996.
Page 8 of 19
<PAGE> 9
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Related Party Transactions (continued)
Prior to the Consummation Date, such balances were included with
amounts due from affiliates and included with affiliates receivable for
financial reporting purposes. Additionally, any cash shortfalls of up
to $2.0 million were funded on an overnight basis at the same interest
rate under this same agreement. Cash shortfalls in excess of $2.0
million were funded under a revolving credit arrangement with Lockheed
Martin that, by its terms, also was terminated on January 31, 1997 (see
Note 3). Consequently, all funds held by Lockheed Martin under the
terms of the cash management agreement were transferred to the
Corporation during the quarter ended March 31, 1997, and invested under
the terms of the Corporation's own cash management arrangement.
Accordingly, the Corporation's cash balances transferred from Lockheed
Martin are reflected in the net increase in cash and cash equivalents
in the accompanying statement of cash flows for the quarter ended March
31, 1997, and included with cash and cash equivalents in the
accompanying balance sheet as of such date.
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.
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 the date of this Quarterly Report on Form
10-Q, there have been 68,200 shares of Common Stock repurchased by the
Corporation under these authorizations.
For financial reporting purposes, certain reclassifications have been
made to 1996, to conform with the 1997 presentation. Such
reclassifications had no effect on previously reported net earnings or
retained earnings.
Page 9 of 19
<PAGE> 10
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 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 predominantly derived from its
aggregates segment which processes and sells granite, sandstone, lime-stone,
shell and other aggregates products from a network of more than 200 quarries and
distribution facilities in 19 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.
The Corporation maintained a strong overall financial condition during the first
quarter of 1997 and maintains adequate capital resources to operate, compete and
grow in an increasingly challenging and competitive environment. During the
quarter, the Corporation continued the negotiations in connection with the
proposed purchase of the common stock of American Aggregates Corporation, a
wholly owned subsidiary of CSR America, Inc. There can be no assurance that the
parties will reach resolution on all matters nor that the transaction will
close. However, subject to successful resolution of open issues in connection
with this acquisition, the transaction is expected to close during the second
quarter of this year. Additionally, the Aggregates division completed the
acquisition of four quarries located in the Midwest, along with a large
portable stone crushing plant that is expected to be used to increase
production capacity in the central United States to help meet anticipated
demand for aggregates within this region.
RESULTS OF OPERATIONS Consolidated net sales for the quarter were $158.2
million, a 16% increase over 1996 first quarter sales of $136.5 million.
Consolidated earnings from operations were $14.4 million in the first three
months of 1997 compared with $8.6 million in the first three months of 1996.
Consolidated net earnings for the quarter were $8.9 million, or $0.19 per share,
an increase of $4.6 million from 1996 first quarter net earnings of $4.3
million, or $0.09 per share.
Page 10 of 19
<PAGE> 11
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
First Quarter Ended March 31, 1997 and 1996
RESULTS OF OPERATIONS (continued) Sales for the Aggregates division increased
20% to $124.1 million for the first quarter of 1997, compared with the
year-earlier period. This increase in sales reflects an increase in shipments of
approximately 2.7 million tons, or 16%, together with a 4% increase in the
division's average net selling price, when compared to the same period in 1996.
The division's operating profits were $11.8 million, an increase from the
prior-year's first quarter earnings from operations of $5.6 million that were
negatively affected by severe winter conditions. The Corporation's aggregates
business is highly seasonal, due primarily to the effect of weather conditions
on construction activity levels, most of which occur typically in the spring,
summer, and early fall. Consequently, the milder winter weather experienced
throughout much of the country this year, compared with last year, was a
positive factor that affected both production and shipment levels during the
first quarter of 1997. Management believes that the construction industry's
overall aggregates annual consumption level and the Corporation's annual
production and shipments, excluding acquisitions, will experience moderate
overall growth for the full year 1997, compared with the prior year.
The Magnesia Specialties division had three-month 1997 sales of approximately
$34.1 million, an increase of approximately 4% in the first three months of 1997
over 1996. However, the division's earnings from operations for the first
quarter of 1997 decreased $0.5 million to $2.5 million, resulting from decreased
production levels and higher costs principally related to manufacturing downtime
associated with scheduled repairs and maintenance activities during the period.
The division's chemicals product sales for the quarter were above the prior
year's first quarter sales, principally as a result of strong sales of its
industrial products. In addition, the division continued to see growth in its
international refractories markets, particularly sales to Canada, Mexico and the
United Kingdom.
Page 11 of 19
<PAGE> 12
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
First Quarter Ended March 31, 1997 and 1996
RESULTS OF OPERATIONS (continued) The following table presents net sales, gross
profit, selling, general and administrative expense, and earnings from
operations data for the Corporation and each of its divisions. 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
March 31,
------------------------------------------------
(Dollars in Thousands)
1997 1996
----------------------- ----------------------
% of % of
Amount Net Sales Amount Net Sales
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales:
Aggregates $124,083 100.0 $103,642 100.0
Magnesia Specialties 34,080 100.0 32,905 100.0
-------- ----- -------- -----
Total $158,163 100.0 $136,547 100.0
Gross profit:
Aggregates $ 23,008 18.5 $ 16,040 15.5
Magnesia Specialties 7,136 20.9 7,765 23.6
-------- ----- -------- -----
Total $ 30,144 19.1 $ 23,805 17.4
Selling, general & administrative expense:
Aggregates $ 11,195 9.0 $ 10,456 10.1
Magnesia Specialties 4,104 12.0 4,280 13.0
-------- ----- -------- -----
Total $ 15,299 9.7 $ 14,736 10.8
Earnings from operations:
Aggregates $ 11,813 9.5 $ 5,584 5.4
Magnesia Specialties 2,540 7.5 3,010 9.1
-------- ----- -------- -----
Total $ 14,353 9.1 $ 8,594 6.3
</TABLE>
Page 12 of 19
<PAGE> 13
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
First Quarter Ended March 31, 1997 and 1996
RESULTS OF OPERATIONS (continued) Other income and expenses, net, for the
quarter ended March 31, were $1.5 million in income in 1997 and $1.2 million in
income in 1996. 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.
Interest expense was approximately $1.0 million, or 31%, lower in the first
three months of 1997 compared with 1996. The higher interest expense in 1996
resulted principally from the net effect of the additional long-term borrowings
by the Corporation in December 1995, when the Corporation publicly offered and
sold its $125-million 7% Debentures, offset by the repayment of the $100-million
8-1/2% Notes on March 1, 1996.
The Corporation's estimated effective tax rate for the first three months was
34.6% in 1997 and 34.2% in 1996. See Note 4 of the Notes to Condensed
Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES Net cash flow provided by operating activities
during the first quarter of 1997 was $17.4 million compared with net cash
provided by operations of $6.3 million in the comparable period of 1996. The
cash flow for both 1997 and 1996 was principally from earnings, before deducting
depreciation, depletion and amortization, offset by working capital
requirements. Working capital increases during the first quarter of 1997 were
primarily the result of increases in inventory balances, as well as decreases in
trade accounts payable. Working capital demand increased in the first quarter of
1996 principally because of increases in inventory and accounts receivable
balances, coupled with decreases in trade accounts payable. The seasonal nature
of the construction aggregates business impacts quarterly net cash provided by
operating activities when compared with the year. Full year 1996 net cash
provided by operating activities was $134.9 million, compared with $6.3 million
provided by operations in the first quarter of 1996.
First quarter capital expenditures, exclusive of acquisitions, were $14.9
million in 1997 and $11.3 million in 1996. Capital expenditures are expected to
be approximately $90 million for 1997, exclusive of acquisitions.
Comparable capital expenditures were $79.5 million in 1996.
Page 13 of 19
<PAGE> 14
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
First Quarter Ended March 31, 1997 and 1996
LIQUIDITY AND CAPITAL RESOURCES (continued) The Corporation continues to rely
upon internally generated funds and access to capital markets, including funds
obtained under its revolving credit and cash management facilities 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, it has an effective shelf registration on file with the Securities and
Exchange Commission for the offering of up to $175 million of debt securities,
which may be issued from time to time. Its ability to borrow or issue debt
securities is dependent, among other things, upon market conditions.
Prospectively, and particularly in connection with the proposed stock
acquisition of the American Aggregates Corporation, the Corporation may borrow
from third-party lenders or through its access to capital markets (including a
commercial paper program) and its revolving credit agreement. On May 2, 1997,
the Corporation borrowed $10.0 million under the revolving credit agreement.
The Corporation may repurchase up to 2.5 million shares of its common stock
under authorizations of the Board of Directors for use in connection with the
Corporation's Amended Omnibus Securities Award Plan and general corporate
purposes. As of the date of this Quarterly Report on Form 10-Q, there have been
68,200 shares repurchased by the Corporation under these authorizations.
Based on prior performance and current expectations, management believes that
the Corporation's internal cash flows and availability of financing sources,
including access to capital markets and its revolving credit agreement, are
expected to continue to be sufficient to provide the capital resources necessary
to support anticipated operating needs, to cover debt service requirements, to
meet capital expenditures and discretionary investment needs, and to allow for
payment of dividends for the foreseeable future.
ACCOUNTING CHANGE In February 1997, the Financial Accounting Standards Board
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
quarters ended March 31, 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.
Page 14 of 19
<PAGE> 15
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Part I. Item 3. Legal Proceedings of the Martin Marietta
Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December
31, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders held on May 1, 1997, the shareholders of
Martin Marietta Materials, Inc.:
(a) Elected William E. McDonald, Frank H. Menaker, Jr. and Richard A.
Vinroot to the Board of Directors of the Corporation to terms expiring
at the Annual Meeting of Shareholders in the year 2000. The following
table sets forth the votes for each director.
Votes Cast For Abstained
-------------- ---------
William E. McDonald 38,408,471 688,995
Frank H. Menaker, Jr. 38,572,058 525,408
Richard A. Vinroot 37,719,065 1,378,401
(b) Ratified the selection of Ernst & Young LLP, as independent auditors
for the year ending December 31, 1997. The voting results for this
ratification were: 39,037,429 -- For; 26,657 -- Against; and 33,380
--Abstained.
Item 5. Other Information.
On May 1, 1997, the Corporation's Board of Directors announced the election of
Stephen P. Zelnak, Jr., as Chairman, Board of Directors, President and Chief
Executive Officer of the Corporation, effective May 1, 1997. Mr. Zelnak succeeds
Marcus C. Bennett, Executive Vice President and Chief Financial Officer of
Lockheed Martin Corporation, who served as Chairman of Martin Marietta
Materials, Inc., since 1993. Mr. Bennett will continue to serve as an outside
member of the Corporation's Board of Directors.
On May 2, 1997, the Corporation's Board of Directors announced the election of
Roselyn R. Bar as Corporate Secretary of the Corporation. Ms. Bar succeeds Bruce
A. Deerson, Vice President and General Counsel of Martin Marietta Materials,
Inc., who served as Corporate Secretary since 1993. Mr. Deerson will continue
to serve as Vice President and General Counsel.
On May 2, 1997, the Corporation announced that the Board of Directors of Martin
Marietta Materials, Inc., declared a regular quarterly cash dividend on the
Corporation's Common Stock of $0.12 a share, payable June 30, 1997, to
shareholders of record at the close of business on May 30, 1997.
Page 15 of 19
<PAGE> 16
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
PART II - OTHER INFORMATION
Item 5. Other Information. (continued)
On May 7, 1997, the Corporation announced that it had purchased three
limestone quarries located in Hardin County, Illinois, from Hardin County
Materials, and an additional quarry located in western Kentucky, from Rock Dust
Products. The combined production capacity for these four locations is in
excess of 2.5 million tons per year. The terms of these transactions were not
disclosed.
Item 6. Exhibits and Reports on Form 8-K.
11.01 Martin Marietta Materials, Inc. and Consolidated
Subsidiaries Computation of Earnings Per Share for the Three
Months Ended March 31, 1996 and 1997
12.01 Martin Marietta Materials, Inc. and Consolidated
Subsidiaries Computation of Ratio of Earnings to Fixed
Charges for the Three Months Ended March 31, 1997
27.01 Financial Data Schedule (for SEC use only)
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: May 14, 1997 By: /s/ Janice K. Henry
----------------------------
Janice K. Henry
Vice President, Chief Financial Officer
and Treasurer
Page 16 of 19
<PAGE> 17
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 1997
EXHIBIT INDEX
Exhibit No. Document Page
- ----------- -------- ----
11.01 Martin Marietta Materials, Inc. and Consolidated 18
Subsidiaries Computation of Earnings Per Share
for the Three Months Ended March 31, 1996 and
1997
12.01 Martin Marietta Materials, Inc. and Consolidated 19
Subsidiaries Computation of Ratio of Earnings
to Fixed Charges for the Three Months Ended
March 31, 1997
27.01 Financial Data Schedule (for SEC use only)
Page 17 of 19
<PAGE> 1
Exhibit 11.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
For the Three Months Ended March 31
(Amounts in Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Net earnings $8,907 $4,337
===== =====
Weighted average number of common shares outstanding 46,079,530 46,079,300
========== ==========
Net earnings per common share $0.19 $0.09
==== ====
</TABLE>
Page 18 of 19
<PAGE> 1
Exhibit 12.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Three Months Ended March 31, 1997
(Dollars in Thousands)
<TABLE>
<S> <C>
EARNINGS:
Earnings before income taxes $ 13,621
Earnings of less than 50% owned associated companies, net (85)
Interest expense 2,201
Portion of rents representative of an interest factor 228
---------
Adjusted Earnings and Fixed Charges $ 15,965
=========
FIXED CHARGES:
Interest Expense $ 2,201
Capitalized interest 213
Portion of rents representative of an interest factor 228
---------
Total Fixed Charges $ 2,642
=========
Ratio of Earnings to Fixed Charges 6.04
=========
</TABLE>
Page 19 of 19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997 AND THE RELATED
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,424
<SECURITIES> 0
<RECEIVABLES> 111,450
<ALLOWANCES> 2,992
<INVENTORY> 118,281
<CURRENT-ASSETS> 257,482
<PP&E> 998,771
<DEPRECIATION> 585,726
<TOTAL-ASSETS> 762,741
<CURRENT-LIABILITIES> 74,318
<BONDS> 125,836
0
0
<COMMON> 461
<OTHER-SE> 483,900
<TOTAL-LIABILITY-AND-EQUITY> 762,741
<SALES> 158,163
<TOTAL-REVENUES> 158,163
<CGS> 128,019
<TOTAL-COSTS> 143,810
<OTHER-EXPENSES> (1,511)
<LOSS-PROVISION> 42
<INTEREST-EXPENSE> 2,201
<INCOME-PRETAX> 13,621
<INCOME-TAX> 4,714
<INCOME-CONTINUING> 8,907
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,907
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
