<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) May 28, 1997
------------
MARTIN MARIETTA MATERIALS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 1-12744 56-1848578
- --------------------------------------------------------------------------------
(State or other jurisdiction of (Commission (IRS Employer Identification
incorporation) File Number) Number)
2710 Wycliff Road, Raleigh, NC 27607-3033
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code 919-781-4550
------------
Not Applicable
- --------------------------------------------------------------------------------
Former name or former address, if changes since last report.
Page 1 of 24
Exhibit Index is on Page 3
<PAGE> 2
Item 5. Other Events
The purpose of this Current Report of Form 8-K/A is to file the audited
financial statements for American Aggregates Corporation and subsidiary
("American Aggregates") as of March 31, 1997 and 1996, and for the two years
then ended, and the unaudited pro forma combined condensed financial statements
and related notes thereto, both of which are in connection with the Registrant's
acquisition in May 1997 of all the issued and outstanding shares of capital
stock of American Aggregates and certain other assets of CSR America, Inc. This
information serves to: (i) comply with the requirements of Rule 3-05 and Article
11 of Regulation S-X; and (ii) provide the required financial statements and pro
forma financial information of the business acquired amending the Current Report
on Form 8-K, dated May 28, 1997, which was filed with the Securities and
Exchange Commission on June 12, 1997.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
American Aggregates Corporation and subsidiary Financial
Statements for the Years Ended March 31, 1997 and 1996 and
Independent Auditors' Report
(b) Pro Forma Financial Information
Unaudited Pro Forma Combined Condensed Financial Statements
Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
(c) Exhibits
Exhibit 23.0 Consent of Independent Auditors
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 of the
undersigned hereunto duly authorized.
MARTIN MARIETTA MATERIALS, INC.
(Registrant)
Date: August 4, 1997 By: /s/ Janice K. Henry
-----------------------------
Janice K. Henry
Vice President, Chief Financial Officer and
Treasurer
Page 2 of 24
<PAGE> 3
MARTIN MARIETTA MATERIALS, INC.
FORM 8-K/A
CURRENT REPORT
EXHIBIT INDEX
Item/Exhibit No. Document Page
- ---------------- -------- ----
Item 7(a) Financial Statements of Business Acquired 4
Item 7(b) Pro Forma Financial Information 17
Exhibit 23.0 Consent of Independent Auditors 24
Page 3 of 24
<PAGE> 4
Item 7(a)
AMERICAN AGGREGATES CORPORATION AND SUBSIDIARY
FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 1997 AND 1996 AND
INDEPENDENT AUDITORS' REPORT
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder
American Aggregates Corporation:
We have audited the accompanying consolidated balance sheets of American
Aggregates Corporation (a wholly-owned subsidiary of CSR America, Inc., which is
a wholly-owned subsidiary of CSR Ltd, an Australian company) and subsidiary
(collectively, the "Company") as of March 31, 1997 and 1996, and the related
consolidated statements of earnings, shareholder's equity and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of American Aggregates Corporation and
subsidiary at March 31, 1997 and 1996, and the results of their operations and
their cash flows for the years then ended in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Dayton, Ohio
June 6, 1997
<PAGE> 6
AMERICAN AGGREGATES CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND 1996
- --------------------------------------------------------------------------------
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS:
Cash $ 8,717 $ 961
Accounts receivable - trade (less allowance for doubtful
accounts of $539 and $601 in 1997 and 1996, respectively) 9,825 8,369
Inventories (Note B) 17,745 18,454
Deferred tax asset (Note D) 1,285 1,107
Other current assets 373 619
-------- --------
Total Current Assets 37,945 29,510
PROPERTY, PLANT AND EQUIPMENT, NET (NOTE C) 235,926 242,710
GOODWILL AND OTHER INTANGIBLE ASSETS, NET OF
ACCUMULATED AMORTIZATION 60,429 65,071
OTHER NONCURRENT ASSETS 2,454 2,978
-------- --------
Total Assets $336,754 $340,269
======== ========
</TABLE>
See notes to consolidated financial statements.
- 2 -
<PAGE> 7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY 1997 1996
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 10,513 $ 8,854
Accrued salaries, benefits and payroll taxes 4,746 3,445
Accrued taxes other than income 2,090 1,633
Accrued other 2,199 2,198
Income taxes payable (Note A and D) 7,678 6,146
--------- ---------
Total Current Liabilities 27,226 22,276
OTHER NONCURRENT LIABILITIES (NOTE E) 2,209 3,469
COMMITMENTS AND CONTINGENCIES (NOTE I)
DEFERRED INCOME TAXES (NOTE D) 71,229 73,152
SHAREHOLDER'S EQUITY (NOTE G):
Common stock, $.01 par value - authorized, issued and
outstanding 1,000 shares
Additional paid-in capital 240,298 249,231
Accumulated deficit (3,958) (7,523)
Minimum pension liability (250) (336)
--------- ---------
Total Shareholder's Equity 236,090 241,372
--------- ---------
Total Liabilities and Shareholder's Equity $ 336,754 $ 340,269
========= =========
</TABLE>
See notes to consolidated financial statements.
- 3 -
<PAGE> 8
AMERICAN AGGREGATES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED MARCH 31, 1997 AND 1996
- --------------------------------------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net sales $146,355 $127,383
Cost of sales 113,594 100,172
-------- --------
Gross profit 32,761 27,211
Selling, general and administrative expenses 24,549 23,562
-------- --------
Earnings from operations 8,212 3,649
Other income (expenses), net 891 1,768
-------- --------
Earnings before taxes on income 9,103 5,417
Taxes on income 5,538 3,984
-------- --------
Net earnings $ 3,565 $ 1,433
======== ========
</TABLE>
See notes to consolidated financial statements.
- 4 -
<PAGE> 9
AMERICAN AGGREGATES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED MARCH 31, 1997 AND 1996
- --------------------------------------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
ADDITIONAL PAID-IN ACCUMULATED MINIMUM PENSION
CAPITAL DEFICIT LIABILITY
<S> <C> <C> <C>
BALANCE AT MARCH 31, 1995 $ 271,838 $(8,956) $ (322)
Transactions with parent (22,607)
Net earnings 1,433
Minimum pension liability (14)
--------- ------- -------
BALANCE AT MARCH 31, 1996 249,231 (7,523) (336)
Transactions with parent (8,933)
Net earnings 3,565
Minimum pension liability 86
--------- ------- -------
BALANCE AT MARCH 31, 1997 $ 240,298 $(3,958) $ (250)
========= ======= =======
</TABLE>
See notes to consolidated financial statements.
- 5 -
<PAGE> 10
AMERICAN AGGREGATES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1997 AND 1996
- --------------------------------------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 3,565 $ 1,433
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation, depletion and amortization 20,087 18,436
(Gain) loss on disposal of property, plant and equipment 1,035 (1,007)
Changes in operating assets and liabilities:
Accounts receivable (1,456) 1,447
Inventories 709 5,074
Deferred income taxes (2,101) (2,758)
Other assets 770 3,345
Accounts payable 1,659 4,653
Accrued expenses 1,759 (1,044)
Income taxes payable 1,532 6,835
Other liabilities (1,260) 736
-------- --------
Net Cash Provided by Operating Activities 26,299 37,150
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (10,927) (17,100)
Proceeds from sale of property, plant and equipment 1,231 1,751
Other investing activities 86 (14)
-------- --------
Net Cash Used in Investing Activities (9,610) (15,363)
CASH FLOWS FROM FINANCING ACTIVITIES:
Transactions with parent (8,933) (22,607)
Other financing activities 1,572
-------- --------
Net Cash Used in Financing Activities (8,933) (21,035)
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 7,756 752
Cash and Cash Equivalents, beginning of year 961 209
-------- --------
Cash and Cash Equivalents, end of year $ 8,717 $ 961
======== ========
</TABLE>
See notes to consolidated financial statements.
- 6 -
<PAGE> 11
AMERICAN AGGREGATES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1997 AND 1996
- --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS - American Aggregates Corporation and subsidiary (the
"Company") is a producer of crushed stone, sand and gravel to be used in
the construction market. Production facilities are located throughout Ohio
and Indiana.
BASIS OF PRESENTATION - The Company is a wholly-owned subsidiary of CSR
America, Inc. ("CSRA"), which is a wholly-owned subsidiary of CSR Ltd, an
Australian company. These consolidated financial statements include the
accounts of the Company only and all significant intercompany accounts are
eliminated. All significant intercompany accounts and transactions with
CSRA are included in additional paid-in capital. These financial
statements may not necessarily be representative of results that would
have been attained if the Company had operated as a separate consolidated
entity.
MANAGEMENT ESTIMATES - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
INVENTORIES are valued at the lower of cost (last-in, first-out) or
market. The Company defers costs directly attributable to stripping the
ground to expose the aggregate underneath. Such costs are amortized by the
units-of-production method over the estimated reserves for the area
stripped.
PROPERTY, PLANT AND EQUIPMENT is depreciated using the straight-line
method over the estimated useful life of the assets, ranging from six to
twenty years. Depletion of quarry reserves is calculated over estimated
recoverable quantities principally by the units-of-production method. The
rates used to determine depletion are based on projected quantities of
reserves available for mining and are calculated annually.
GOODWILL AND OTHER INTANGIBLE ASSETS represent costs in excess of net
assets acquired and amounts assigned to patents and trademarks. Goodwill
is amortized over a period of 20 years using the straight-line method.
Amounts assigned to patents and trademarks are amortized ratably over
periods based on related contractual terms. At March 31, 1997 and 1996,
the amounts for accumulated amortization of goodwill and other intangible
assets were approximately $24,298,000 and $19,791,000, respectively.
The carrying values of goodwill and other intangible assets are reviewed
if the facts and circumstances indicate potential impairment of their
carrying value. Any impairment in the carrying value of such intangibles
is recorded when identified.
INCOME TAXES - The results of operations of the Company are included in a
consolidated federal income tax return with CSRA. Income taxes allocable
to the operations of the Company are calculated as if it had filed
separate income tax returns. The income taxes payable amount is payable to
CSRA.
- 7 -
<PAGE> 12
B. INVENTORIES
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Finished products $12,109 $12,467
Stripping costs 5,636 5,987
------- -------
Total $17,745 $18,454
======= =======
</TABLE>
For purposes of comparison to non-LIFO companies, inventories valued at
current replacement cost would have been $2,900,000 and $1,800,000 higher
than reported at March 31, 1997 and 1996, respectively.
C. PROPERTY, PLANT AND EQUIPMENT
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Land and improvements $ 25,546 $ 27,035
Quarry reserves 174,524 174,903
Buildings 5,841 4,687
Machinery and equipment 102,464 92,722
Construction in progress 4,816 6,313
--------- ---------
313,191 305,660
Less accumulated depletion, depreciation and amortization (77,265) (62,950)
--------- ---------
Total $ 235,926 $ 242,710
========= =========
</TABLE>
D. INCOME TAXES
The significant components of income tax expense are as follows:
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Currently payable:
Federal $ 6,043 $ 5,284
State and local 1,657 1,447
------- -------
7,700 6,731
Change in deferred income taxes (2,101) (2,758)
------- -------
Total income tax 5,599 3,973
Allocation to equity (61) 11
------- -------
Net income tax expense $ 5,538 $ 3,984
======= =======
</TABLE>
- 8 -
<PAGE> 13
The Company's effective income tax rate varied from the statutory United
States income tax rate as follows:
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Federal taxes computed at statutory rate of 35% $ 3,186 $ 1,896
State and local income taxes, net of federal benefit 518 308
Percentage depletion (74) (182)
Goodwill amortization 1,808 1,808
Other items 100 154
------- -------
$ 5,538 $ 3,984
======= =======
</TABLE>
The principal deferred tax assets and liabilities are as follows:
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Deferred tax assets:
Loss provisions and other expenses not currently deductible $ 1,696 $ 1,494
Allowance for doubtful accounts 219 244
-------- --------
1,915 1,738
Deferred tax liabilities:
Difference in basis of fixed assets (67,779) (69,492)
Installment sales (135) (516)
Stripping costs (3,113) (3,094)
Other (832) (681)
-------- --------
(71,859) (73,783)
-------- --------
Net deferred tax liability $(69,944) $(72,045)
======== ========
The net deferred tax liability is classified as follows:
Current asset $ 1,285 $ 1,107
Noncurrent liability (71,229) (73,152)
-------- --------
$(69,944) $(72,045)
======== ========
</TABLE>
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<PAGE> 14
E. RETIREMENT PLANS
The Company sponsors two pension plans that cover substantially all hourly
employees. Pension benefits for hourly employees are provided by an hourly
and a non-contributory plan and are primarily based upon years of credited
service. Certain hourly employees are participants in multi-employer
pension plans negotiated in collective bargaining agreements. Benefits for
salaried employees are provided through a plan that is maintained by the
Company's parent and are based upon years of service, annual profit
sharing contribution and/or the employee's average final earnings. CSRA
allocated costs to the Company related to its share of pension expense for
salaried employees. The Company's funding policy is to contribute amounts
to the plans sufficient to meet or exceed the minimum requirements of the
Employee Retirement Income Security Act.
Summary information on the Company's hourly and non-contributory plans is
as follows:
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Financial status of plans:
Plan assets at fair value (primarily common
stocks, real estate and fixed income securities) $ 7,172 $ 6,825
Actuarial present value of accumulated
benefit obligation:
Vested (8,074) (7,816)
Non-vested (16) (226)
------- -------
Projected benefit obligation (8,090) (8,042)
------- -------
Projected benefit obligation in excess of plan assets (918) (1,217)
Reconciliation of financial status of plans to
amounts recorded in the Company's balance sheets:
Unamortized plan liabilities in excess of plan assets 300 325
at transition date
Unrecorded effect of net loss arising from differences between actuarial
assumptions used to determine periodic pension expense
and actual experience 301 570
Unamortized prior service cost 1,107 1,094
Additional minimum liability (1,708) (1,989)
------- -------
Accrued pension liability ($ 918) ($1,217)
======= =======
Benefit obligation discount rate 7.5% 7.5%
======= =======
</TABLE>
- 10 -
<PAGE> 15
The components of net pension expense for the hourly and non-contributory
plans are as follows:
(in thousands)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Service cost, benefits earned
during the year $ 148 $ 115
Interest cost on projected benefit
obligation 585 569
Actual return on plan assets (703) (910)
Net amortization and deferral 236 478
----- -----
Net pension expense $ 266 $ 252
===== =====
</TABLE>
The expected long-term rate of return on plan assets used in determining
net pension expense was 9% in 1997 and 1996.
The Company was allocated $42,000 and $288,000 of pension expense related
to the salaried plan for the years ended March 31, 1997 and 1996,
respectively. The Company recorded $341,000 and $457,000 of pension
expense related to multi-employer plans for the years ended March 31, 1997
and 1996, respectively.
- 11 -
<PAGE> 16
F. OPERATING LEASES
The Company has operating leases for manufacturing equipment, office
facilities and vehicles and royalty commitments for leased properties.
Total rent expense for all operating leases was $239,000 and $247,000 for
the years ended March 31, 1997 and 1996, respectively. Total mineral
royalties for all leased properties were $1,358,000 and $1,466,000 for the
years ended March 31, 1997 and 1996, respectively. Future minimum rental
and royalty commitments for all noncancellable operating leases and
royalty agreements as of March 31, 1997, are as follows:
(in thousands)
<TABLE>
<S> <C>
1998 $1,499
1999 738
2000 467
2001 375
2002 195
Later years 612
------
Total $3,886
======
</TABLE>
G. RELATED PARTY TRANSACTIONS
All of the Company's financing requirements are provided by CSRA. The
Company's financial statements do not include any long-term debt or
interest expense because the Company has not guaranteed the debt nor
pledged any of its assets against the debt. CSRA has allocated to the
Company costs related to pensions, data processing and other corporate
overhead of $1,641,000 and $836,000 in 1997 and 1996, respectively, which
are included in selling, general and administrative expenses.
H. CONTINGENCIES
The Company is engaged in certain legal and administrative proceedings
incidental to its normal business activities including environmental
matters. It is not possible to determine the ultimate liability, if any,
in these matters. The Company has established reserves of approximately
$1,000,000 relating to environmental liabilities which it believes are
probable and reasonably estimable. The Company believes that it is
reasonably possible that costs associated with these sites may exceed
current reserves. In the opinion of management, after consultation with
legal counsel and after considering established reserves, the resolution
of pending litigation and proceedings is not expected to have a material
effect on the financial condition, results of operations or liquidity of
the Company.
I. SUBSEQUENT EVENT
On May 28, 1997, Martin Marietta Materials, Inc. purchased all of the
outstanding stock of the Company.
* * * * * *
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<PAGE> 17
Item 7(b)
UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements have been prepared by the management of Martin Marietta Materials,
Inc. (the "Corporation") from its historical consolidated financial statements
and from the historical financial statements of American Aggregates Corporation
and subsidiary ("American Aggregates") which are included in this Current Report
on Form 8-K/A. The unaudited pro forma combined condensed statements of earnings
reflect adjustments as if the transaction had occurred on January 1, 1996. The
unaudited pro forma combined condensed balance sheet reflects adjustments as if
the transaction had occurred on March 31, 1997. See "Note 1 - Basis of
Presentation." The pro forma adjustments described in the accompanying notes are
based upon preliminary estimates and certain assumptions that management of the
Corporation believes are reasonable in the circumstances.
The unaudited pro forma combined condensed financial statements are not
necessarily indicative of what the financial position or results of operations
actually would have been if the transaction had occurred on the applicable dates
indicated. Moreover, they are not intended to be indicative of future results of
operations or financial position. The unaudited pro forma combined condensed
financial statements should be read in conjunction with the historical
consolidated financial statements of the Corporation and the related notes
thereto which are included in the Corporation's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997, which was filed with the Securities and
Exchange Commission (the "Commission") on May 14, 1997, and in the Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, which
was filed with the Commission on March 25, 1997. The unaudited pro forma
combined condensed financial statements should be read in conjunction with the
historical financial statements of American Aggregates which are included in
this Current Report on Form 8-K/A.
Page 1
<PAGE> 18
UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENT OF EARNINGS
(Dollars in Thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
For The Three Months Ended
March 31, 1997
---------------------------------------------------------
Martin American Pro Forma Pro Forma
Marietta Aggregates Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $158,163 $ 17,279 $ (1,541)(2d) $173,901
Cost of sales 128,019 19,615 585 (2d) 148,405
(617)(2f)
803 (2g)
---------- --------- --------- ----------
Gross profit (loss) 30,144 (2,336) (2,312) 25,496
Selling, general & administrative expense 15,299 5,759 (3,483)(2d) 17,575
Research and development 492 -- -- 492
---------- --------- --------- ----------
Earnings (loss) from operations 14,353 (8,095) 1,171 7,429
Interest expense (2,201) -- 4,172 (2e) (6,373)
Other income and (expenses), net 1,469 192 -- (2d) 1,661
---------- --------- --------- ----------
Earnings (loss) before taxes
on income 13,621 (7,903) (3,001) 2,717
Income tax (expense) benefit (4,714) 4,836 1,200 (2h) 1,322
---------- --------- --------- ----------
Net earnings (loss) $ 8,907 $ (3,067) $ (1,801) $ 4,039
========== ========= ========= ==========
Earnings per share $ 0.19 N/A $ 0.09
========== ==========
Average number of common
shares outstanding 46,079,530 N/A 46,079,530
========== ==========
</TABLE>
See accompanying notes.
Page 2
<PAGE> 19
UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENT OF EARNINGS
(Dollars in Thousands, except Per Share Amounts)
<TABLE>
For The Year Ended
December 31, 1996
---------------------------------------------------------
Martin American Pro Forma Pro Forma
Marietta Aggregates Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $ 721,947 $ 146,355 $(11,098)(2d) $ 857,204
Cost of sales 539,437 113,594 (2,451)(2d) 651,324
(2,467)(2f)
3,211 (2g)
---------- --------- -------- ----------
Gross Profit 182,510 32,761 (9,391) 205,880
Selling, general & administrative expense 59,937 24,549 (13,982)(2d) 70,504
Research and development 1,897 -- -- 1,897
---------- --------- -------- ----------
Earnings from operations 120,676 8,212 4,591 133,479
Interest expense (10,121) -- 16,921 (2e) (27,042)
Other income and (expenses), net 8,398 891 -- (2d) 9,289
---------- --------- -------- ----------
Earnings before taxes on income 118,953 9,103 (12,330) 115,726
Income tax expense 40,325 5,538 (4,932)(2h) 40,931
---------- --------- -------- ----------
Net earnings $ 78,628 $ 3,565 $ (7,398) $ 74,795
========== ========= ======== ==========
Earnings per share $1.71 N/A $ 1.62
========== ==========
Average number of common
shares outstanding 46,079,300 N/A 46,079,300
========== ==========
</TABLE>
Page 3
<PAGE> 20
UNAUDITED PRO FORMA COMBINED
CONDENSED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, 1997
---------------------------------------------------------
Martin American Pro Forma Pro Forma
Marietta Aggregates Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 8,424 $ 8,717 $ (8,717)(2a) $ 8,424
Accounts receivable, net 108,458 9,825 -- 118,283
Inventories, net 118,281 17,745 4,664 (2c) 140,690
Deferred income tax benefit 15,627 1,285 (1,285)(2a) 15,627
Other current assets 6,692 373 (335)(2a) 6,730
--------- ---------- --------- ----------
Total Current Assets 257,482 37,945 (5,673) 289,754
Property, plant and equipment, net 413,045 235,926 (70,867)(2c) 578,104
Other noncurrent assets 27,871 2,406 (2,016)(2c) 28,261
Cost in excess of net assets acquired 40,571 60,429 (60,429)(2a) 136,926
96,355 (2c)
Intangible assets, net 23,772 48 (48)(2a) 36,272
12,500 (2c)
--------- ---------- --------- ----------
Total Assets $ 762,741 $ 336,754 $ (30,178) $1,069,317
========= ========== ========= ==========
</TABLE>
See accompanying notes.
Page 4
<PAGE> 21
UNAUDITED PRO FORMA COMBINED
CONDENSED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, 1997
---------------------------------------------------------
Martin American Pro Forma Pro Forma
Marietta Aggregates Adjustments Combined
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,678 $ 10,513 $ (4,758)(2c) $ 35,433
Accrued salaries, benefits and payroll taxes 16,315 4,746 (2,106)(2c) 18,955
Accrued insurance and other taxes 10,064 2,090 (936)(2c) 11,218
Income taxes 8,836 7,678 (7,678)(2a) 8,836
Current maturities on long-term debt 1,213 -- -- 1,213
Other current liabilities 8,212 2,199 3,000 (2c) 13,411
-------- -------- -------- ------------
Total Current Liabilities 74,318 27,226 (12,478) 89,066
Long-term debt, less current maturities 125,836 -- 241,678 (2b) 367,514
Pension, postretirement and
postemployment benefits 54,585 -- 6,650 (2c) 61,235
Other noncurrent liabilities 8,258 2,209 (2,209)(2a) 13,258
5,000 (2c)
Noncurrent deferred income taxes 15,383 71,229 (71,229)(2a) 53,883
38,500 (2c)
-------- -------- -------- ------------
Total Liabilities 278,380 100,664 205,912 584,956
Total Shareholders' Equity 484,361 236,090 10,302 (2a) 484,361
(246,392)(2c)
-------- -------- -------- ------------
Total Liabilities and
Shareholders' Equity $762,741 $336,754 $(30,178) $ 1,069,317
======== ======== ======== ============
</TABLE>
See accompanying notes.
Page 5
<PAGE> 22
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited pro forma combined condensed
statements of earnings present the historical results of operations of
the Corporation and American Aggregates for the three months ended
March 31, 1997, and for the year ended December 31, 1996, with pro
forma adjustments as if the transaction had taken place on January 1,
1996. The unaudited pro forma combined condensed statement of earnings
for the year ended December 31, 1996, is presented using the combined
historical results of the Corporation for the year ended December 31,
1996, and those of American Aggregates for its most recent fiscal year
ended March 31, 1997. The unaudited pro forma combined condensed
statement of earnings for the three month period ended March 31, 1997,
is presented using the combined historical results of the Corporation
and those of American Aggregates for three months ended March 31, 1997.
Consequently, for purposes of the accompanying pro forma information,
American Aggregates' unadjusted net sales of $17.3 million and its
unadjusted net loss of $3.2 million for the three month period ended
March 31, 1997, are included in both accompanying unaudited pro forma
combined condensed statements of earnings. The unaudited pro forma
combined condensed balance sheet presents the historical balance sheets
of the Corporation and American Aggregates as of March 31, 1997, with
pro forma adjustments as if the transaction had been consummated as of
March 31, 1997 in a transaction accounted for as a purchase in
accordance with generally accepted accounting principles.
Certain reclassifications have been made to the historical
financial statements of the Corporation and American Aggregates to
conform to the pro forma combined condensed financial statement
presentation.
2. PRO FORMA ADJUSTMENTS
The following adjustments give pro forma effect to the transaction
(Dollars in Thousands):
<TABLE>
<S> <C>
(a) To reflect excluded assets and liabilities at closing
(b) To record the cash purchase price consideration:
Payment of cash at closing financed by short- and
long-term borrowings (Assumed: 6-1/2% short-term
borrowings, 5-3/4% commercial paper, and 7% Notes due
2007) $204,678
Recognition of liability for a deferred cash payment
to be financed by borrowings (Assumed: 5-3/4%
commercial paper and 7% Notes due 2007) 37,000
---------
$241,678
========
</TABLE>
(Continued)
Page 6
<PAGE> 23
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
2. PRO FORMA ADJUSTMENTS (continued)
(c) To adjust the acquired assets and assumed liabilities
to their estimated fair values, including the
recording of the cost in excess of net assets
acquired of approximately $96.4 million. Included in
this adjustment is a provision for estimated costs to
integrate the operations of approximately $8 million.
This provision will include estimates of: (i)
transaction-related costs; and (ii) relocation,
severance and termination benefit expenses for
certain employees. Such employee-related costs will
be accrued after management's specific plan has been
approved and properly communicated. It is expected
that a significant portion of these costs will be
incurred during the next 18 months. Also included is
a liability of approximately $6.7 million for the
projected and accumulated postretirement benefit
obligations in excess of plan assets for various
defined benefit and retiree medical benefit plans,
the participation in which will be extended to the
employees of the former American Aggregates business.
(d) To reflect adjustments for various items which would
not have been incurred or earned if the transaction
had occurred on January 1, 1996. These items include
amortization of intangible assets, adjustments to
allocated overhead charges, net sales and cost of
sales reclassifications, and employee
benefits-related expense adjustments.
(e) To record adjustments which represent additional
estimated interest expense resulting from the use of
borrowings to finance the transaction.
(f) To record adjustments for depreciation expense for
certain fixed assets to fair value over an estimated
composite life of approximately seven and one-half
years and depletion expense (unit-of-production
method) on the net step-down of mineral reserves to
fair value. Additionally, to record adjustment for
the amortization expense for certain intangible
assets recorded at fair value over estimated lives
of five to ten years. Such depreciation, depletion
and amortization expenses are subject to possible
adjustment resulting from completion of the
valuation analyses.
(g) To record amortization of the cost in excess of
acquired net assets over an estimate life of 30
years. Such amortization expense is subject to
possible adjustment resulting from completion of
valuation analyses and final post-closing
adjustments.
(h) To reflect the tax effect, using a 40% statutory
rate, on the net pro forma adjustments.
The pro forma combined condensed statements of earnings do not
reflect the total cost savings or economies of scale that the
Corporation's management believes would have been achieved had
the transaction occurred on January 1, 1996.
Page 7
<PAGE> 1
Exhibit 23.0
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
33-83516 of Martin Marietta Materials, Inc. on Form S-8 pertaining to the Martin
Marietta Materials, Inc. Omnibus Securities Award Plan and in the Registration
Statement No. 33-99082 of Martin Marietta Materials, Inc. on Form S-3 pertaining
to the Martin Marietta Materials, Inc. shelf registration, of our report dated
June 6, 1997, with respect to the consolidated financial statements of American
Aggregates Corporation and subsidiary for the years ended March 31, 1997 and
1996, appearing in this Current Report on Form 8-K/A of Martin Marietta
Materials, Inc. dated May 28, 1997, to be filed with the Securities and
Exchange Commission on August 4, 1997.
DELOITTE & TOUCHE LLP
Dayton, Ohio
July 31, 1997
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