<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 11-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number: 1-12744
MARTIN MARIETTA MATERIALS, INC.
SAVINGS and INVESTMENT PLAN for HOURLY EMPLOYEES
(Full title of the plan and the address of the plan,
if different from that of the issuer named below)
MARTIN MARIETTA MATERIALS, INC.
2710 Wycliff Road
Raleigh, North Carolina 27607
(Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office)
- --------------------------------------------------------------------------------
<PAGE> 2
Audited Financial Statements
Martin Marietta Materials, Inc.
Savings and Investment Plan
for Hourly Employees
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<PAGE> 3
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Audited Financial Statements
Years ended December 31, 1998 and 1997
Contents
Audited Financial Statements for the Plan
Report of Independent Auditors..............................................1
Statements of Net Assets....................................................2
Statements of Changes in Net Assets and Trust Balance.......................4
Notes to Financial Statements...............................................6
Audited Financial Statements for the Master Trust
Report of Independent Auditors.............................................11
Statements of Net Assets...................................................13
Statements of Changes in Net Assets and Trust Balance......................15
Notes to Financial Statements..............................................17
<PAGE> 4
Report of Independent Auditors
Martin Marietta Materials, Inc., as Plan Administrator
We have audited the accompanying statements of net assets available for benefits
of the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly
Employees as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of Martin Marietta Materials, Inc.,
as Plan Administrator. Our responsibility is to express an opinion on these
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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The Fund Information in the statements of net
assets available for benefits and the statements of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes in net assets
available for benefits of each fund. The Fund Information has been subjected to
the auditing procedures applied in our audits of the financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
Ernst & Young LLP
June 11, 1999
Raleigh, North Carolina
1
<PAGE> 5
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed Harbor Investment Daily
Short-Term S&P Materials Martin Capital Intermediate Company American Bond
Investment 500 Index Common Common Appreciation Bond of America Balanced Market
Fund Fund Stock Fund Stock Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest in Master Trust $7,536 $4,793 $4,561 $ - $ 660 $ - $ - $ - $ 131
Contributions
receivable:
Employees 111 97 94 - 16 - - - 6
Martin Marietta
Materials, Inc. 21 14 15 - 3 - - - 1
--------------------------------------------------------------------------------------------------------
Net assets available for
benefits $7,668 $4,904 $4,670 $ - $ 679 $ - $ - $ - $ 138
========================================================================================================
Vanguard
Vanguard International
Windsor Growth Loan
Fund Fund Fund Total
--------------------------------------------
Assets
Interest in Master Trust $ 488 $ 185 $ 625 $18,979
Contributions
receivable:
Employees 22 8 - 354
Martin Marietta
Materials, Inc. 4 2 - 60
--------------------------------------------
Net assets available for
benefits $ 514 $ 195 $ 625 $19,393
============================================
</TABLE>
See accompanying notes.
2
<PAGE> 6
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed
Short-Term S&P Materials Martin
Investment 500 Index Common Common
Fund Fund Stock Fund Stock Fund Total
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Interest in Master Trust $ 4,650 $ 2,287 $795 $2,692 $ 10,424
======================================================================================
Net assets available for benefits $ 4,650 $ 2,287 $795 $2,692 $ 10,424
======================================================================================
</TABLE>
See accompanying notes.
3
<PAGE> 7
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed Harbor Investment Daily
Short-Term S&P Materials Martin Capital Intermediate Company American Bond
Investment 500 Index Common Common Appreciation Bond of America Balanced Market
Fund Fund Stock Fund Stock Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets available for
benefits at beginning of
period $ 4,650 $ 2,287 $ 795 $ 2,692 $ - $ - $ - $ - $ -
Additions to net assets:
Contributions:
Employees 1,123 1,026 1,006 - 168 - - - 66
Martin Marietta
Materials, Inc. 285 187 197 - 36 - - - 13
Rollover Contributions 20 82 141 - 78 - - - 6
-----------------------------------------------------------------------------------------------------
Total contributions 1,428 1,295 1,344 - 282 - - - 85
Interest in net
investment gain
of Master Trust 349 935 1,409 279 107 3
-----------------------------------------------------------------------------------------------------
Total additions 1,777 2,230 2,753 279 389 - - - 88
Deductions from net assets:
Distributions and
withdrawals 798 154 57 141 11 - - - 3
Administrative expenses 21 17 7 7 1 - - - -
-----------------------------------------------------------------------------------------------------
Total deductions 819 171 64 148 12 - - - 3
Net transfers from other
plans 1,681 398 - - 35 5 22 28 21
Net transfers between funds 379 160 1,186 (2,823) 267 (5) (22) (28) 32
-----------------------------------------------------------------------------------------------------
Net assets available for
benefits at end of year $ 7,668 $ 4,904 $ 4,670 $ - $ 679 $ - $ - $ - $ 138
=====================================================================================================
Vanguard
Vanguard International
Windsor Growth Loan
Fund Fund Fund Total
--------------------------------------------
Net assets available for
benefits at beginning of
period $ - $ - $ - $10,424
Additions to net assets:
Contributions:
Employees 245 84 - 3,718
Martin Marietta
Materials, Inc. 51 19 - 788
Rollover Contributions 16 21 - 364
----------------------------------------
Total contributions 312 124 - 4,870
Interest in net
investment gain
of Master Trust (3) 13 16 3,108
----------------------------------------
Total additions 309 137 16 7,978
Deductions from net assets:
Distributions and
withdrawals 12 2 44 1,222
Administrative expenses 1 - - 54
----------------------------------------
Total deductions 13 2 44 1,276
Net transfers from other
plans 55 22 - 2,267
Net transfers between funds 163 38 653 -
----------------------------------------
Net assets available for
benefits at end of year $ 514 $ 195 $ 625 $19,393
========================================
</TABLE>
4
<PAGE> 8
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed
Short-Term S&P Materials Martin
Investment 500 Index Common Common
Fund Fund Stock Fund Stock Fund Total
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets available for benefits at
beginning of year $ 4,010 $ 1,318 $ 130 $ 2,865 $ 8,323
Additions to net assets:
Contributions:
Employees 979 439 139 - 1,557
Rollover contributions - 3 2 - 5
-----------------------------------------------------------------------------------
Total contributions 979 442 141 - 1,562
Interest in net investment gain of Master
Trust 235 491 136 269 1,131
-----------------------------------------------------------------------------------
Total additions 1,214 933 277 269 2,693
Deductions from net assets:
Distributions and withdrawals 307 84 6 172 569
Administrative expenses 10 6 1 6 23
-----------------------------------------------------------------------------------
Total deductions 317 90 7 178 592
Net transfers between funds (257) 126 395 (264) -
-----------------------------------------------------------------------------------
Net assets available for benefits at end of
year $ 4,650 $ 2,287 $ 795 $ 2,692 $ 10,424
===================================================================================
</TABLE>
See accompanying notes.
5
<PAGE> 9
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Notes to Financial Statements
December 31, 1998
1. Accounting Policies
The financial statements of the Martin Marietta Materials, Inc. Savings and
Investment Plan for Hourly Employees (the "Plan") are prepared on the accrual
basis of accounting. No liability is recorded for distributions to participants
who terminated during the year but have chosen to defer payments to the
following year. The assets of the Plan are held and invested on a commingled
basis in the Martin Marietta Materials, Inc. Defined Contribution Plans Master
Trust (the "Master Trust") along with the assets of the Martin Marietta
Materials, Inc. Performance Sharing Plan. Prior to January 1, 1998, the Master
Trust also included the assets of the Martin Marietta Materials, Inc. Money
Accumulation Plan for Hourly Employees, which was subsequently merged into the
Plan. The Plan's interest in the Master Trust is stated at the fair value of the
underlying net assets in the Master Trust. The assets, realized and unrealized
gains and losses and investment income of the Master Trust are allocated among
the participating plans on a pro rata basis. All administrative expenses, a
portion of which are paid by Martin Marietta Materials, Inc. (the
"Corporation"), are otherwise paid from the Master Trust and allocated to each
of the participating plans.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates, in particular the
determination of fair values of investments for which market values are not
readily available. Actual results could differ from those estimates.
2. Description of the Plan
The Plan is a defined contribution plan providing hourly paid employees of the
Corporation and hourly employees covered under certain collectively bargained
agreements an opportunity to participate in an individual savings and investment
program providing tax deferred savings and retirement incentives. Martin
Marietta Materials, Inc. is the Plan's sponsor and also serves as the Plan
administrator.
6
<PAGE> 10
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Employees are eligible to enroll in the Plan after six months of service.
Employee participation requires employee basic contributions of 1% to 7% of base
salary (as defined in the Plan and subject to applicable Internal Revenue Code
("IRC") limitations on allowable compensation). Certain participants may also
elect to make additional supplemental contributions which are not considered for
purposes of computing the employer match. A participant's combined basic and
supplemental contributions may not exceed 17% of that participant's base pay.
Generally, a participant's before-tax contributions may not exceed 15% of base
pay.
Effective January 1, 1998, the Corporation matches the first 7% of eligible
participants' annual basic contributions. The amount of the Corporation's match
is equal to 25% of the basic contributions and is credited to participant
accounts monthly. Certain participants are not eligible for employer
contributions, as defined by the Plan. All participants are 100% vested in the
value of their accounts, including employer contributions.
During 1998, the participants' investment options included the Yielded-Enhanced
Short-Term Investment Fund, S&P 500 Index Fund, Martin Marietta Materials Common
Stock Fund, Harbor Capital Appreciation Fund, Daily Bond Market Fund, Vanguard
Windsor Fund and Vanguard International Growth Fund.
The Lockheed Martin Common Stock Fund was an investment option prior to the
Corporation's split-off from Lockheed Martin Corporation, the Corporation's
former parent company and the previous administrator of the Plan. In October
1998, any participant's remaining balance in the Lockheed Martin Common Stock
Fund was automatically reinvested in the Yield-Enhanced Short-Term Investment
Fund.
7
<PAGE> 11
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Participants may change the overall percentage of their contributions in 1%
increments and may change investment elections for future before-tax, after-tax
and matching contributions, both up to once per month. Any changes in investment
elections must be made in 5% increments. In addition, participants may change
the investment mix of the accumulated value of prior contributions among the
investment options daily, but are limited to 12 changes in a calendar year,
provided that the participant has one transfer in a calendar quarter, regardless
of the limitation. Beginning January 1, 1998, the Plan provides for certain
participants to borrow from the money in his or her own investment account. All
loans must meet specific terms and conditions of the Plan and are subject to
applicable IRC regulations. Personal loans are available to participants in
terms of up to 5 years, and primary residence loans are available for terms of
up to 15 years. Such loans bear interest at a fixed rate, established upon loan
request, which is equal to the annual prime rate (based upon corporate borrowing
rates posted by at least 75% of the nation's 30 largest banks, as reported in
The Wall Street Journal on the first business day of the calendar month before
loan application) plus 1%. All loans are due in full immediately upon
termination of employment. Approximately $625,000 was loaned to participants
during 1998. Outstanding loan balances and loan-related activities are reflected
in the Loan Fund account in the accompanying financial statements. In addition,
the plan provides for in-service withdrawals to participants that meet specific
conditions of financial hardship, as defined in the Plan and in accordance with
current specific regulations under the IRC. Participants who are still working
at the age of 59 1/2 may qualify for special withdrawal rights and privileges as
defined in the Plan.
Upon separation from the Corporation, participants may receive the full current
value of their contributions and the matching employer contributions.
Participants who have attained age 55 may receive their distributions in the
form of a lump-sum payment or in annual installments over a period of up to 20
years. The accounts of participants who receive installment payments remain
invested in the funds indicated by the participant.
During 1998, the Plan received $2,300,000 from the Martin Marietta Materials,
Inc. Money Accumulation Plan for Hourly Employees. This amount represents the
transfer of account balances of eligible participants pursuant to the merger of
the Martin Marietta Materials, Inc. Money Accumulation Plan into the Plan
effective January 1, 1998.
State Street Bank and Trust Company is the trustee of the Master Trust and
recordkeeper of the Master Trust and Plan.
8
<PAGE> 12
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Although the Corporation expects to continue the Plan indefinitely, the Board of
Directors of the Corporation may terminate the Plan for any reason at any time.
If the Plan is terminated, each participant or former participant shall receive
a payment equal to the value of the participant's account.
3. Income Tax Status
The Internal Revenue Service ruled on April 1, 1998 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and therefore, the Plan
is not subject to tax under present tax laws. The Plan has been amended since
the date the determination letter is applicable for and as such, the plan
administrator has filed for a new determination letter. The Plan is required to
operate in conformity with the IRC to maintain its qualification. The plan
administrator is not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status.
4. Master Trust
The Plan's interest in the Master Trust's net assets as of December 31, 1998 and
1997, was 15.05% and 10.98%, respectively. The Plan's interest in the Master
Trust did not fluctuate significantly throughout the years ended December 31,
1998 and 1997. An analysis of investments for the Master Trust is as follows:
<TABLE>
<CAPTION>
1998
----------------------------------------------------------
Net Appreciation
Interest in Fair Value Fair Value at
and Dividends During Year End of Year
----------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)
Investments at fair value as determined by
quoted market price:
Cash and cash equivalents $ 1,493 $ - $ 35,527
Governmental bonds 126 - 2,465
Corporate bonds 64 - 1,763
Common stocks 1,506 21,784 83,784
Other 150 - 2,211
----------------------------------------------------------
$ 3,339 $ 21,784 $ 125,750
==========================================================
</TABLE>
9
<PAGE> 13
Martin Marietta Materials, Inc.
Savings and Investment Plan for Hourly Employees
Notes to Financial Statements (continued)
4. Master Trust (continued)
<TABLE>
<CAPTION>
1997
----------------------------------------------------------
Net Appreciation
Interest in Fair Value Fair Value at
and Dividends During Year End of Year
----------------------------------------------------------
<S> <C> <C> <C>
(In Thousands)
Investments at fair value as determined by
quoted market price:
Cash and cash equivalents $ 1,397 $ - $ 25,197
Governmental bonds 17 104 1,564
Corporate bonds 11 70 905
Common stocks 2,022 9,998 65,319
Other - 116 1,582
----------------------------------------------------------
$ 3,447 $ 10,288 $ 94,567
==========================================================
</TABLE>
The following audited financial statements of the Master Trust contain
additional information concerning the Plan's interest in the Master Trust.
5. Year 2000 Issue (unaudited)
The Corporation has established a dedicated information technology task force to
coordinate the identification, evaluation and implementation of modifications
and replacements to the Corporation's information systems and related
applications necessary to achieve a year 2000 date conversion with no effect on
customers or disruption to its business operations. The Corporation's goal is to
be substantially year 2000 compliant on a timely basis. The major systems and
applications carrying potential business impact have been identified, evaluated,
and converted. In addition, the Corporation is communicating with suppliers,
customers, financial institutions and others with which it does business to
coordinate the year 2000 conversion process. The cost of the year 2000
initiatives is not expected to be material to the Corporation's results of
operations or financial position or to the Plan's operations.
10
<PAGE> 14
Report of Independent Auditors
Martin Marietta Materials, Inc., as Trust Administrator
We have audited the accompanying statements of net assets of the Martin Marietta
Materials, Inc. Defined Contribution Plans Master Trust as of December 31, 1998
and 1997 and the related statements of changes in net assets and trust balance
for the years then ended. These financial statements are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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, the financial statements referred to above present fairly, in
all material respects, the net assets of the Master Trust at December 31, 1998
and 1997, and the changes in its net assets and trust balance for the years then
ended, in conformity with generally accepted accounting principles.
The accompanying statements are those of the Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust, which is established under the Martin
Marietta Materials, Inc. Performance Sharing Plan and the Martin Marietta
Materials, Inc. Savings and Investment Plan for Hourly Employees (collectively,
the "Plans"). The Master Trust also included the Martin Marietta Materials, Inc.
Money Accumulation Plan for Hourly Employees for the year ended December 31,
1997. The statements do not purport to represent the net assets available for
benefits at December 31, 1998 and 1997 or the changes in net assets available
for benefits for the years then ended of the Plans. Furthermore, these
statements do not purport to satisfy the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 relating to the financial statements of employee benefit
plans.
11
<PAGE> 15
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The Fund Information in the statements of net
assets and the statements of changes in net assets and trust balance is
presented for purposes of additional analysis rather than to present the net
assets and changes in net assets and trust balance of each fund. The Fund
Information has been subjected to the auditing procedures applied in our audits
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
Ernst & Young LLP
June 11, 1999
Raleigh, North Carolina
12
<PAGE> 16
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Statement of Net Assets, with Fund Information
December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed Harbor Investment Daily
Short-Term S&P Materials Martin Capital Intermediate Company American Bond
Investment 500 Index Common Common Appreciation Bond of America Balanced Market
Fund Fund Stock Fund Stock Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments at quoted
fair value:
Cash and cash equivalents $34,302 $ - $ 1,225 $ - $ - $ - $ - $ - $ -
Governmental bonds - - - - - - - - 2,465
Corporate bonds - - - - - - - - 1,763
Common stocks - 34,875 31,864 - 8,721 - - - -
--------------------------------------------------------------------------------------------------------
Total investments at
quoted fair value 34,302 34,875 33,089 - 8,721 - 4,228
Investments at estimated
fair value:
Participant loans - - - - - - - - -
--------------------------------------------------------------------------------------------------------
Total investments at
estimated fair value - - - - - - - - -
Other assets:
Dividends and interest
receivable 149 - 4 - - - - - -
Other 262 146 111 - 33 - - - 3
--------------------------------------------------------------------------------------------------------
Total other assets 411 146 115 - 33 - - - 3
--------------------------------------------------------------------------------------------------------
Total assets 34,713 35,021 33,204 - 8,754 - - - 4,231
Liabilities
Amounts payable for
investments
purchased - - 426 - - - - - -
--------------------------------------------------------------------------------------------------------
Total liabilities - - 426 - - - - - -
--------------------------------------------------------------------------------------------------------
Net assets $34,713 $35,021 $32,778 $ - $ 8,754 $ - $ - $ - $4,231
========================================================================================================
Vanguard
Vanguard International
Windsor Growth Loan
Fund Fund Fund Total
--------------------------------------------
Assets
Investments at quoted
fair value:
Cash and cash equivalents $ - $ - $ - $ 35,527
Governmental bonds - - - 2,465
Corporate bonds - - - 1,763
Common stocks 5,921 2,403 - 83,784
-----------------------------------------------
Total investments at
quoted fair value 5,921 2,403 - 123,539
Investments at estimated
fair value:
Participant loans - - 2,211 2,211
-----------------------------------------------
Total investments at
estimated fair value - - 2,211 2,211
Other assets:
Dividends and interest
receivable - - - 153
Other 29 11 - 595
-----------------------------------------------
Total other assets 29 11 - 748
-----------------------------------------------
Total assets 5,950 2,414 2,211 126,498
Liabilities
Amounts payable for
investments
purchased - - - 426
-----------------------------------------------
Total liabilities - - - 426
-----------------------------------------------
Net assets $ 5,950 $ 2,414 $ 2,211 $126,072
===============================================
</TABLE>
See accompanying notes.
13
<PAGE> 17
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Statement of Net Assets, with Fund Information
December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed
Short- S&P Materials Martin Harbor Investment
Term 500 Common Common Capital Company of American
Investment Index Stock Stock Appreciation Intermediate America Balanced
Fund Fund Fund Fund Fund Bond Fund Fund Fund
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments at quoted fair value:
Cash and Cash Equivalents $24,246 $ - $ 442 $ 439 $ - $ - $ - $ 70
Governmental Bonds - - - - - 232 - 104
Corporate Bonds - - - - - 231 - 69
Common Stocks - 24,734 9,344 19,356 3,565 - 1,048 336
--------------------------------------------------------------------------------------
Total investments at quoted fair value 24,246 24,734 9,786 19,795 3,565 463 1,048 579
Investments at estimated fair value:
Participant loans - - - - - - - -
--------------------------------------------------------------------------------------
Total investments at estimated fair
value - - - - - - - -
Other assets:
Contributions receivable:
Employees 204 124 41 - 14 5 10 7
Martin Marietta Materials, Inc. 71 19 9 - 3 1 3 2
Dividends and interest receivable 116 - 2 1 - - - -
--------------------------------------------------------------------------------------
Total other assets 391 143 52 1 17 6 13 9
--------------------------------------------------------------------------------------
Total assets 24,637 24,877 9,838 19,796 3,582 469 1,061 588
Liabilities
Administrative expenses payable 44 52 11 30 3 3 3 1
Amounts payable for investments
purchased - - 121 - - - - -
--------------------------------------------------------------------------------------
Total liabilities 44 52 132 30 3 3 3 1
--------------------------------------------------------------------------------------
Net assets $24,593 $24,825 $9,706 $19,766 $3,579 $ 466 $1,058 $ 587
======================================================================================
Daily Vanguard
Bond Vanguard International
Market Windsor Growth Loan
Fund Fund Fund Fund Total
--------------------------------------------------------
Assets
Investments at quoted fair value:
Cash and Cash Equivalents $ - $ - $ - $ - $25,197
Governmental Bonds 1,228 - - - 1,564
Corporate Bonds 605 - - - 905
Common Stocks - 5,247 1,689 - 65,319
--------------------------------------------------------
Total investments at quoted fair value 1,833 5,247 1,689 - 92,985
Investments at estimated fair value:
Participant loans - - - 1,582 1,582
--------------------------------------------------------
Total investments at estimated fair
value - - - 1,582 1,582
Other assets:
Contributions receivable:
Employees 5 31 11 - 452
Martin Marietta Materials, Inc. 1 8 3 - 120
Dividends and interest receivable - - - - 119
--------------------------------------------------------
Total other assets 6 39 14 - 691
--------------------------------------------------------
Total assets 1,839 5,286 1,703 1,582 95,258
Liabilities
Administrative expenses payable 4 7 4 - 162
Amounts payable for investments
purchased - - - - 121
--------------------------------------------------------
Total liabilities 4 7 4 - 283
--------------------------------------------------------
Net assets $1,835 $5,279 $1,699 $1,582 $94,975
========================================================
</TABLE>
14
<PAGE> 18
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Statement of Changes in Net Assets and Trust Balance, with Fund Information
Year ended December 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed
Short- S&P Materials Martin Harbor Investment
Term 500 Common Common Capital Company of American
Investment Index Stock Stock Appreciation Intermediate America Balanced
Fund Fund Fund Fund Fund Bond Fund Fund Fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets at beginning
of period: $24,593 $24,825 $ 9,706 $19,766 $ 3,579 $ 466 $ 1,058 $ 587
Additions to net assets:
Contributions:
Employees 1,958 2,137 1,863 - 525 - - -
Employer 824 476 518 - 147 - - -
Rollover contributions 174 696 834 - 741 - - -
-------------------------------------------------------------------------------------
Total Contributions 2,956 3,309 3,215 - 1,413 - - -
Investment Income:
Dividends and interest 1,493 - 237 196 509 - - -
Net realized and unrealized gain (loss) - 7,448 11,248 1,953 1,436 1 4 1
-------------------------------------------------------------------------------------
Total investment income 1,493 7,448 11,485 2,149 1,945 1 4 1
-------------------------------------------------------------------------------------
Total additions 4,449 10,757 14,700 2,149 3,358 1 4 1
Deductions from net assets:
Distributions and withdrawals 2,874 1,272 535 1,010 137 - - -
Administrative expenses 84 133 58 44 18 - - -
-------------------------------------------------------------------------------------
Total deductions 2,958 1,405 593 1,054 155 - - -
Net transfers from other plans (107) 48 - - - - - -
Net transfers between funds 8,736 796 8,965 (20,861) 1,972 (467) (1,062) (588)
-------------------------------------------------------------------------------------
Net assets at end of year $34,713 $35,021 $32,778 $ - $ 8,754 $ - $ - $ -
=====================================================================================
Daily Vanguard
Bond Vanguard International
Market Windsor Growth Loan
Fund Fund Fund Fund Total
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets at beginning
of period: $ 1,835 $ 5,279 $ 1,699 $ 1,582 $ 94,975
Additions to net assets:
Contributions:
Employees 163 697 261 - 7,604
Employer 43 186 68 - 2,262
Rollover contributions 109 358 140 - 3,052
--------------------------------------------------------
Total Contributions 315 1,241 469 - 12,918
Investment Income:
Dividends and interest 190 515 49 150 3,339
Net realized and unrealized gain (loss) - (526) 219 - 21,784
--------------------------------------------------------
Total investment income 190 (11) 268 150 25,123
--------------------------------------------------------
Total additions 505 1,230 737 150 38,041
Deductions from net assets:
Distributions and withdrawals 70 267 54 265 6,484
Administrative expenses 18 17 6 - 378
--------------------------------------------------------
Total deductions 88 284 60 265 6,862
Net transfers from other plans - - (23) - (82)
Net transfers between funds 1,979 (275) 61 744 -
--------------------------------------------------------
Net assets at end of year $ 4,231 $ 5,950 $ 2,414 $ 2,211 $126,072
========================================================
</TABLE>
15
<PAGE> 19
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Statement of Changes in Net Assets and Trust Balance, with Fund Information
Year ended December 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Yield- Martin
Enhanced Marietta Lockheed
Short- S&P Materials Martin Harbor Investment
Term 500 Common Common Capital Company of American
Investment Index Stock Stock Appreciation Intermediate America Balanced
Fund Fund Fund Fund Fund Bond Fund Fund Fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets at beginning
of period: $25,814 $18,082 $ 2,149 $23,555 $ 1,478 $ 1,025 $ 1,199 $ 547
Additions to net assets:
Contributions:
Employees 2,410 1,490 516 - 169 60 124 83
Employer 832 228 119 - 41 13 33 21
Rollover contributions 229 80 57 - 27 - 12 2
-------------------------------------------------------------------------------------
Total Contributions 3,471 1,798 692 - 237 73 169 106
Investment Income:
Dividends and interest 1,386 - 106 371 482 - 132 92
Net realized and unrealized gain (loss) - 5,956 2,023 1,839 20 70 250 71
-------------------------------------------------------------------------------------
Total investment income 1,386 5,956 2,129 2,210 502 70 382 163
-------------------------------------------------------------------------------------
Total additions 4,857 7,754 2,821 2,210 739 143 551 269
Deductions from net assets:
Distributions and withdrawals 3,633 866 72 832 25 71 35 15
Administrative expenses 59 75 14 48 4 6 3 1
-------------------------------------------------------------------------------------
Total deductions 3,692 941 86 880 29 77 38 16
Net transfers from other plans - 21 - 154 19 - 36 16
Net transfers between funds (2,386) (91) 4,822 (5,273) 1,372 (625) (690) (229)
-------------------------------------------------------------------------------------
Net assets at end of year $24,593 $24,825 $ 9,706 $19,766 $ 3,579 $ 466 $ 1,058 $ 587
=====================================================================================
Daily Vanguard
Bond Vanguard International
Market Windsor Growth Loan
Fund Fund Fund Fund Total
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets at beginning
of period: $ 645 $ 2,639 $ 1,249 $ 1,241 $79,623
Additions to net assets:
Contributions:
Employees 53 372 138 - 5,415
Employer 15 92 32 - 1,426
Rollover contributions - 24 4 - 435
--------------------------------------------------------
Total Contributions 68 488 174 - 7,276
Investment Income:
Dividends and interest - 805 73 - 3,447
Net realized and unrealized gain (loss) 83 (113) (27) 116 10,288
--------------------------------------------------------
Total investment income 83 692 46 116 13,735
--------------------------------------------------------
Total additions 151 1,180 220 116 21,011
Deductions from net assets:
Distributions and withdrawals 12 48 35 91 5,735
Administrative expenses 5 9 4 - 228
--------------------------------------------------------
Total deductions 17 57 39 91 5,963
Net transfers from other plans - 22 36 - 304
Net transfers between funds 1,056 1,495 233 316 -
--------------------------------------------------------
Net assets at end of year $ 1,835 $ 5,279 $ 1,699 $ 1,582 $94,975
========================================================
</TABLE>
See accompanying notes.
16
<PAGE> 20
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Notes to Financial Statements
December 31, 1998
1. Accounting Policies
The Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust (the
"Master Trust") was created on October 18, 1996, to hold the investments of the
Martin Marietta Materials, Inc. Performance Sharing Plan and the Martin Marietta
Materials, Inc. Savings and Investment Plan for Hourly Employees (collectively,
the "Plans") on a commingled basis. Prior to January 1, 1998, the Master Trust
also included the assets of the Martin Marietta Materials, Inc. Money
Accumulation Plan for Hourly Employees, which was subsequently merged into the
Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly
Employees. All plans are defined contribution plans of Martin Marietta
Materials, Inc. (the "Corporation"). State Street Bank and Trust Company ("State
Street") is the trustee and record keeper for the Master Trust. Each plan owns
the following share of the entire Master Trust:
<TABLE>
<CAPTION>
Interest in Master
Trust as of
December 31,
Plan
Name of Plan Number 1998 1997
- ------------ ---------------------------------------
<S> <C> <C> <C>
Martin Marietta Materials, Inc. Performance Sharing Plan
EIN #56-1848578 005 84.95% 86.55%
Martin Marietta Materials, Inc. Savings and Investment
Plan for Hourly Employees
EIN #56-1848578 006 15.05% 10.98%
Martin Marietta Money Accumulation Plan for Hourly Employees
EIN #56-1848578 007 - 2.47%
--------------------------
100 % 100%
==========================
</TABLE>
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates, in particular the
determination of fair values of investments for which market values are not
readily available. Actual results could differ from those estimates.
17
<PAGE> 21
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Notes to Financial Statements (continued)
2. Description of the Master Trust
Plan assets held by the Master Trust are invested in seven funds at December 31,
1998. The Yield-Enhanced Short-Term Investment Fund, which is managed by the
trustee, is invested in high-quality money market instruments, corporate equity
and debt instruments and U.S. Government secured notes and bonds. The S&P 500
Index Fund, which is managed by the trustee, invests in the same individual
common stocks in identical proportions to the S&P 500 index. The Martin Marietta
Materials Common Stock Fund is composed of the Corporation's common stock. The
Harbor Capital Appreciation Fund is designed to seek long-term growth of capital
by investing in stocks of domestic and foreign companies with high equity
capitalization with above average prospects for growth. The Daily Bond Market
Fund, which is managed by the trustee, invests primarily in U.S. Treasury,
Agency, corporate, mortgage backed and asset backed securities. The Vanguard
Windsor Fund is a capital growth and income fund that will invest primarily in a
diversified portfolio of U.S. common stocks thought to be undervalued. The
Vanguard International Growth Fund is designed to achieve long-term growth of
capital by investing in equity securities of non-U.S. Companies. Effective
January 1, 1998, the following investment options were eliminated: Intermediate
Bond Fund, Investment Company of America and American Balanced Fund.
Following the creation of the Master Trust, the Plans' participants were no
longer able to make any participant-directed contributions into the Lockheed
Martin Common Stock Fund nor add to an existing balance in the Lockheed Martin
Common Stock Fund by purchasing additional shares of the underlying common
stock. For the period through October 31, 1998, the Plans' participants were
permitted to transfer out any balance in the Lockheed Martin Common Stock Fund
and any such balance was available for withdrawals, as permitted under the
Plans. At the end of this period, participation in the Lockheed Martin Common
Stock Fund was terminated and any participant's remaining balances were
liquidated and reinvested automatically in the Yield-Enhanced Short-Term
Investment Fund.
18
<PAGE> 22
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Notes to Financial Statements (continued)
2. Description of the Master Trust (continued)
The Plans have loan programs whereby eligible participants may borrow up to the
lesser of 50% of their total account balance less the highest outstanding loan
balance from the past twelve months, or $50,000 with a minimum loan of $500.
Loans are repaid monthly over a term of up to 5 years for personal loans and up
to 15 years for a residential loan at an interest rate of one percent over the
prime rate reported by at least 75% of the nation's 30 largest banks as reported
in The Wall Street Journal on the first business day of the month before loan
application. All loans are due in full immediately upon termination of
employment. Approximately $2,211,000 and $1,582,000 was loaned to participants
at December 31, 1998 and December 31, 1997, respectively. Participant loan
activity and the net outstanding loan balances are reflected in the Loan Fund in
the accompanying financial statements.
Fair values of the underlying securities in the Yield-Enhanced Short-Term
Investment Fund, the S&P 500 Index Fund and the Daily Bond Market Fund are
determined by closing prices on the last business day of the year for those
securities traded on national exchanges, at the most recent sales prices for
those securities traded in over-the-counter markets and at fair value as
determined by the Trustee for securities for which there is not an established
market. The fair value of Martin Marietta Materials common stock is determined
by the closing price per share on the last business day of the year as reported
for New York Stock Exchange Composite Transactions. Fair values of the Harbor
Capital Appreciation Fund, the Vanguard Windsor Fund, and the Vanguard
International Growth Fund are determined by the closing prices on the last
business day of the year.
Administrative expenses, a portion of which are paid by the Corporation, are
otherwise paid from the Trust and allocated to the Plans on a pro rata basis.
19
<PAGE> 23
Martin Marietta Materials, Inc.
Defined Contribution Plans Master Trust
Notes to Financial Statements (continued)
3. Investments
The fair values of individual investments that represent 5% or more of the
Master Trust's net assets at December 31, 1998, are as follows:
(In Thousands)
Yield-Enhanced Short-Term Investment Fund $ 34,302
S&P 500 Index Fund 34,875
Martin Marietta Materials Common Stock Fund 33,089
Harbor Capital Appreciation Fund 8,721
4. Income Taxes
The Master Trust was created and is used as a funding vehicle to provide
benefits under the various defined contribution plans of the Corporation which
are listed as participating plans in the Master Trust agreement. Only plans
which are qualified under Section 401(a) of the Internal Revenue Code ("IRC")
may be funded through the Master Trust. The plans currently participating in the
Master Trust have applied for determination letters from the Internal Revenue
Service to verify that they are qualified under Section 401(a) of the IRC. As
management believes the plans to be operating in compliance with all applicable
requirements, there has been no provision for federal income taxes in the
financial statements.
5. Year 2000 Issue (unaudited)
The Corporation has established a dedicated information technology task force to
coordinate the identification, evaluation, and implementation of modifications
and replacements to the Corporation's information systems and related
applications necessary to achieve a year 2000 date conversion with no effect on
customers or disruption to its business operations. The Corporation's goal is to
be substantially year 2000 compliant on a timely basis. The major systems and
applications carrying potential business impact have been identified, evaluated,
and converted. In addition, the Corporation is communicating with suppliers,
customers, financial institutions, and others with which it does business to
coordinate the year 2000 conversion process. The cost of the year 2000
initiatives is not expected to be material to the Corporation's results of
operations or financial position or to the Plans' operations.
20
<PAGE> 24
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustee of the below named plan has duly caused this annual report
to be signed on its behalf by the undersigned hereunto duly authorized.
MARTIN MARIETTA MATERIALS, INC.
SAVINGS and INVESTMENT PLAN for
HOURLY EMPLOYEES
By: Martin Marietta Materials, Inc.
Plan Administrator
By: Benefit Plan Committee
By: /s/ Janice K. Henry
----------------------------
Janice K. Henry
Date: June 30, 1999
<PAGE> 25
EXHIBIT INDEX
Exhibit No. Document
----------- --------
23 Consent of Ernst & Young LLP
<PAGE> 1
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-83516) pertaining to the Martin Marietta Materials, Inc.
Amended Omnibus Securities Award Plan, as amended; in the Registration
Statement (Form S-8 No. 333-15429) pertaining to the Martin Marietta Materials,
Inc. Common Stock Purchase Plan for Directors, Martin Marietta Materials, Inc.
Performance Sharing Plan and the Martin Marietta Materials, Inc. Savings and
Investment Plan for Hourly Employees; in the Registration Statement (Form S-3
No. 33-99082) pertaining to the Martin Marietta Materials, Inc. shelf
registration; and in the Registration Statement (Form S-8 No. 333-79039)
pertaining to the Martin Marietta Materials, Inc. Stock-Based Award Plan of our
report dated June 11, 1999, with respect to the financial statements of the
Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly
Employees and Martin Marietta Materials, Inc. Defined Contribution Plans Master
Trust included in this Annual Report (Form 11-K) for the year ended December
31, 1998.
Ernst & Young LLP
June 25, 1999
