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SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
For the quarterly period ended June 30, 2000
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 incorporation or organization) |
(I.R.S. Employer Identification Number) | |||
2710 Wycliff Road, Raleigh, NC | 27607-3033 | |||
(Address of principal executive offices) | (Zip Code) | |||
Registrants telephone number, including area code | 919-781-4550 | |||
Former name: | None |
|
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 issuers classes of Common Stock, as of the latest practicable date.
Class | Outstanding as of July 31, 2000 | |||
Common Stock, $.01 par value | 46,763,803 |
Page 1 of 20
Exhibit Index is on Page 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2000
INDEX
Page | ||||||||
Part I. | Financial Information: | |||||||
Item 1. | Financial Statements | |||||||
Condensed Consolidated Balance Sheets June 30, 2000 and December 31, 1999 | 3 | |||||||
Condensed Consolidated Statements of Earnings Three-Months and Six-Months Ended June 30, 2000 and 1999 | 4 | |||||||
Condensed Consolidated Statements of Cash Flows Six-Months Ended June 30, 2000 and 1999 | 5 | |||||||
Notes to Condensed Consolidated Financial Statements | 6 | |||||||
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations | 9 | ||||||
Part II. | Other Information: | |||||||
Item 1. | Legal Proceedings | 16 | ||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 16 | ||||||
Item 5. | Other Information | 17 | ||||||
Item 6. | Exhibits and Reports on Form 8-K | 18 | ||||||
Signatures | 19 | |||||||
Exhibit Index | 20 |
Page 2 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
June 30, | December 31, | |||||||||
2000 | 1999 | |||||||||
(Dollars in Thousands) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash & cash equivalents | $ | 3,363 | $ | 3,403 | ||||||
Accounts receivable, net | 233,394 | 197,554 | ||||||||
Inventories, net | 192,787 | 172,865 | ||||||||
Other current assets | 27,717 | 29,543 | ||||||||
Total Current Assets | 457,261 | 403,365 | ||||||||
Property, plant and equipment | 1,728,253 | 1,653,208 | ||||||||
Allowances for depreciation, depletion and amortization | (850,879 | ) | (806,215 | ) | ||||||
Net property, plant and equipment | 877,374 | 846,993 | ||||||||
Cost in excess of net assets acquired | 378,970 | 375,327 | ||||||||
Other noncurrent assets | 124,513 | 116,889 | ||||||||
Total Assets | $ | 1,838,118 | $ | 1,742,574 | ||||||
LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||||
Total Current Liabilities | $ | 236,518 | $ | 182,696 | ||||||
Long-term debt and commercial paper | 601,748 | 602,011 | ||||||||
Other noncurrent liabilities | 186,899 | 183,861 | ||||||||
Total Liabilities | 1,025,165 | 968,568 | ||||||||
Shareholders equity: | ||||||||||
Common stock, par value $.01 per share | 468 | 467 | ||||||||
Additional paid-in capital | 355,693 | 354,046 | ||||||||
Retained earnings | 456,792 | 419,493 | ||||||||
Total Shareholders Equity | 812,953 | 774,006 | ||||||||
Total Liabilities and Shareholders Equity | $ | 1,838,118 | $ | 1,742,574 | ||||||
See accompanying notes to condensed consolidated financial statements.
Page 3 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
Three-Months Ended | Six-Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2000 | 1999 | 2000 | 1999 | |||||||||||||||
(Dollars in Thousands, Except Per Share Data) | ||||||||||||||||||
Net sales | $ | 362,474 | $ | 328,865 | $ | 638,605 | $ | 569,926 | ||||||||||
Cost of sales | 265,642 | 238,638 | 497,415 | 439,957 | ||||||||||||||
Gross Profit | 96,832 | 90,227 | 141,190 | 129,969 | ||||||||||||||
Selling, general and administrative expense | 24,664 | 24,919 | 48,256 | 47,665 | ||||||||||||||
Research and development | 593 | 497 | 1,213 | 1,429 | ||||||||||||||
Earnings from Operations | 71,575 | 64,811 | 91,721 | 80,875 | ||||||||||||||
Interest expense | (10,651 | ) | (9,713 | ) | (20,820 | ) | (18,959 | ) | ||||||||||
Other income and expenses, net | 3,810 | 8,654 | 5,156 | 14,032 | ||||||||||||||
Earnings before Taxes on Income | 64,734 | 63,752 | 76,057 | 75,948 | ||||||||||||||
Taxes on Income | 22,612 | 22,479 | 26,605 | 26,735 | ||||||||||||||
Net Earnings | $ | 42,122 | $ | 41,273 | $ | 49,452 | $ | 49,213 | ||||||||||
Net Earnings Per Common Share | ||||||||||||||||||
Basic | $ | 0.90 | $ | 0.88 | $ | 1.06 | $ | 1.05 | ||||||||||
Diluted | $ | 0.90 | $ | 0.88 | $ | 1.05 | $ | 1.05 | ||||||||||
Dividends Per Common Share | $ | 0.13 | $ | 0.13 | $ | 0.26 | $ | 0.26 | ||||||||||
Average Number of Common Shares Outstanding | ||||||||||||||||||
Basic | 46,751,001 | 46,684,229 | 46,738,229 | 46,659,901 | ||||||||||||||
Diluted | 47,045,402 | 47,030,911 | 46,965,231 | 46,966,449 | ||||||||||||||
See accompanying notes to condensed consolidated financial statements.
Page 4 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
Six-Months Ended | |||||||||
June 30, | |||||||||
2000 | 1999 | ||||||||
(Dollars in Thousands) | |||||||||
Net cash provided by operating activities | $ | 72,272 | $ | 57,340 | |||||
Investing activities: | |||||||||
Additions to property, plant and equipment | (73,307 | ) | (59,844 | ) | |||||
Acquisitions, net | (36,671 | ) | (2,867 | ) | |||||
Other investing activities, net | 4,175 | (7,825 | ) | ||||||
Net cash used for investing activities | (105,803 | ) | (70,536 | ) | |||||
Financing activities: | |||||||||
Net principal (repayments)/borrowings on long-term debt | (7,887 | ) | 135 | ||||||
Dividends paid | (12,153 | ) | (12,134 | ) | |||||
Loans payable | 52,295 | 9,000 | |||||||
Issuance of common stock | 1,236 | 1,407 | |||||||
Net cash provided by (used for) financing activities | 33,491 | (1,592 | ) | ||||||
Net decrease in cash and cash equivalents | (40 | ) | (14,788 | ) | |||||
Cash and cash equivalents, beginning of period | 3,403 | 14,586 | |||||||
Cash and cash equivalents (book overdraft), end of period | $ | 3,363 | $ | (202 | ) | ||||
See accompanying notes to condensed consolidated financial statements.
Page 5 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. | The accompanying unaudited condensed consolidated financial statements of Martin Marietta Materials, Inc. (the Corporation) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and to Article 10 of Regulation S-X. The Corporation has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Corporations Annual Report on Form 10-K for the year ended December 31, 1999, filed with the Securities and Exchange Commission on March 27, 2000. 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 six-months ended June 30, 2000, are not necessarily indicative of the results to be expected for the full year. | |
2. | Inventories |
June 30, | December 31, | |||||||
2000 | 1999 | |||||||
(Dollars in Thousands) | ||||||||
Finished products | $ | 162,546 | $ | 143,776 | ||||
Product in process and raw materials | 10,370 | 9,972 | ||||||
Supplies and expendable parts | 27,356 | 25,862 | ||||||
200,272 | 179,610 | |||||||
Less allowances | (7,485 | ) | (6,745 | ) | ||||
Total | $ | 192,787 | $ | 172,865 | ||||
3. | Long-Term Debt |
June 30, | December 31, | |||||||
2000 | 1999 | |||||||
(Dollars in Thousands) | ||||||||
6.9% Notes, due 2007 | $ | 124,958 | $ | 124,956 | ||||
7% Debentures, due 2025 | 124,220 | 124,215 | ||||||
5.875% Notes, due 2008 | 199,099 | 199,059 | ||||||
Commercial paper, interest rates ranging from 5.50% to 7.16% | 225,000 | 180,000 | ||||||
Acquisition notes, interest rates ranging from 5.50% to 10.00% | 5,014 | 12,395 | ||||||
Other notes | 8,349 | 1,108 | ||||||
686,640 | 641,733 | |||||||
Less current maturities | (84,892 | ) | (39,722 | ) | ||||
Total | $ | 601,748 | $ | 602,011 | ||||
Page 6 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. | Long-Term Debt (continued) | |
No borrowings were outstanding under either of the Corporations revolving credit agreements at June 30, 2000. However, these agreements support commercial paper borrowings of $225.0 million outstanding at June 30, 2000, of which $150.0 million has been classified as long-term debt in the Corporations consolidated balance sheet based on managements ability and intention to maintain this debt outstanding for at least one year. At August 1, 2000, $205.0 million was outstanding under the Corporations commercial borrowing obligations. See the Liquidity and Capital Resources discussion contained in the Managements Discussion and Analysis of Financial Condition and Results of Operations on page 9 of this Form 10-Q. | ||
The Corporations interest payments were approximately $21.7 million in 2000 and $18.2 million in 1999 for the six months ended June 30. | ||
4. | Income Taxes | |
The Corporations effective income tax rate was 35.0% in 2000 and 35.2% in 1999. The Corporations effective tax rate reflects the effect of state income taxes and the impact of differences in book and tax accounting arising from the net permanent benefits associated with the depletion allowances for mineral reserves, amortization of certain goodwill balances, foreign operating earnings, and earnings from nonconsolidated investments. | ||
The Corporations income tax payments were approximately $15.8 million in 2000 and $11.2 million in 1999, for the six months ended June 30. | ||
5. | 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 Corporations operations or its financial position. |
Page 7 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. | Other Matters | |
In June 1998, the FASB issued the Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), which was required to be adopted in years beginning after June 15, 1999. The FASB amended FAS 133 and issued Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities Deferral of the Effective Date of FASB Statement No. 133 (FAS 137), which was issued in June 1999. FAS 137 deferred the effective date of adoption of FAS 133 until all fiscal quarters of all fiscal years beginning after June 15, 2000. In June 2000, the FASB issued the Statement of Financial Accounting Standards No. 138, Accounting for Derivative Instruments and Hedging Activities an Amendment of FASB Statement of No. 133, (FAS 138). FAS 138 is required to be adopted concurrently with FAS 133. Because of the Corporations minimal use of derivatives, if any, management does not anticipate that the adoption of FAS 133 and FAS 138 will have a significant impact on net earnings or the financial position of the Corporation. | ||
7. | Classifications | |
Certain amounts for the prior year have been reclassified to conform to the 2000 presentation with no affect on previously reported net earnings or financial position. |
Page 8 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OVERVIEW Martin Marietta Materials, Inc. (the Corporation), operates in two principal business segments: aggregates products and magnesia-based products. The Corporations sales and earnings are predominately derived from its aggregates segment, which processes and sells granite, sandstone, limestone, and other aggregates products from a network of approximately 300 quarries and distribution facilities in more than 20 states in the southeastern, southwestern, midwestern and central regions of the United States and in the Bahama Islands and Canada. The divisions products are used primarily by commercial customers principally in domestic construction of highways and other infrastructure projects and for commercial and residential buildings. The Corporation is vertically integrated in other construction materials businesses in Louisiana, Arkansas and Texas, as a result of acquisitions of asphalt production facilities, ready mixed concrete operations and road construction companies. 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.
RESULTS OF OPERATIONS Consolidated net sales for the quarter were $362.5 million, a 10% increase over 1999 second quarter sales of $328.9 million. Consolidated earnings from operations were $71.6 million in the second quarter of 2000 compared with $64.8 million in the second quarter of 1999. Consolidated net earnings for the quarter were $42.1 million, or $0.90 per diluted share, compared to 1999 second quarter net earnings of $41.3 million, or $0.88 per diluted share.
Sales for the first six months of 2000 increased 12% to $638.6 million, from $569.9 million for the year-earlier period. For the six-months ended June 30, 2000, net earnings increased slightly to $49.5 million, or $1.05 per diluted share, from net earnings for the comparable prior-year period of $49.2 million, also $1.05 per diluted share. On a year-to-date basis, other income and expenses, net, was $8.8 million less than the prior year, while operating earnings increased $10.8 million or 13%.
Sales for the Aggregates division increased 11% to $328.9 million for the second quarter, compared with the year-earlier period, while the divisions earnings from operations for the quarter were $68.7 million, an increase of 7% from the year-earlier period. Operating margin for the division was 20.9%, compared with 21.6% in the prior quarterly period. The increase in sales for the division results from an almost 4% increase in aggregates shipments coupled with an approximately 3% increase in average selling prices during the quarter. However, operating margins were negatively affected by higher fuel costs, acquisitions of lower margin asphalt products operations and prolonged wet weather in certain operating areas. In fact, the sharp escalation of energy-related costs had a significant impact on earnings. Diesel fuel, which is used primarily to operate mobile equipment in quarry production, has increased in price by about 125% between January 1999 and June 2000. The combined cost of diesel fuel, liquid asphalt and natural gas used in our heritage business increased $4.9 million in the second quarter and $9.2 million year-to-date. In addition, barge freight costs have increased, primarily caused by an increase in fuel prices, by $1.6 million for the six-month period. However, in spite of an approximately 2% decline in aggregates shipments volume and other previously-mentioned factors, heritage aggregates operations, which are typically those businesses included in prior-year operations for the full year, experienced an 80 basis point improvement in operating margins. Year-to-date sales of $572.2 million and earnings from operations of $86.4 million exceeded the prior-year period by 13% and 9%, respectively.
(Continued)
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Seasonal changes and other weather-related conditions significantly affect the Aggregates divisions business. Therefore, the Aggregates divisions production and shipment levels coincide with general construction activity levels, most of which occur in the divisions markets typically during the spring, summer and fall seasons. Unusually wet weather experienced during the second quarter 2000 has continued into July and the early part of August, 2000 in some of the Corporations markets. Further, as expected, softening in residential construction and softening in commercial construction in some market areas coupled with adverse weather conditions continues to negatively impact construction activity levels. Consequently, heritage aggregates shipment levels are below managements expectations to date. As a result, management currently believes that the Corporations heritage annual aggregates shipment growth, which was flat through the six-months ended June 30, 2000, will increase moderately by 0% to 2% for the second half of 2000. Management continues to believe that average selling prices for heritage aggregates operations will increase 3% to 4%, outpacing potential increases in production costs in 2000 for comparable heritage aggregates operations. However, higher-than-expected costs for diesel fuel, liquid asphalt and natural gas, which had a significantly negative impact on the first six months of 2000, are expected to continue to affect earnings for the remainder of the year. In fact, the average cost per gallon for diesel fuel in July 2000 is 47% higher than July 1999.
The Magnesia Specialties division had second quarter 2000 sales of $33.5 million, a slight increase of approximately 2% compared with the second quarter of 1999. The divisions second quarter earnings from operations increased to $2.9 million from $0.8 million in the second quarter of 1999. The Magnesia Specialties divisions increased sales and earnings in the second quarter resulted from improving steel industry performance, continued strong chemicals sales and a better balance between production and shipments. For the first six months of 2000, sales were $65.9 million and earnings from operations were $5.3 million, an increase of $0.9 million and $4.0 million, respectively, from the prior-year period.
The Magnesia Specialties division continues to experience improvements in sales and earnings; however, this business segment is not core to the Corporation. Therefore, the Corporations management continues to evaluate its strategic alternatives with respect to the Magnesia Specialties division; and, in that regard, the Corporation has retained Banc of America Securities to act as financial advisors in connection with a possible sale of the division. However, there can be no assurance that management will complete a sale of the division.
(Continued)
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Second Quarter and Six-Months Ended June 30, 2000 and 1999
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 for the second quarter and six-months ended June 30, 2000 and 1999. 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:
Three-Months Ended June 30, | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
2000 | 1999 | |||||||||||||||||
% of | % of | |||||||||||||||||
Amount | Net Sales | Amount | Net Sales | |||||||||||||||
Net sales: | ||||||||||||||||||
Aggregates | $ | 328,943 | 100.0 | $ | 295,978 | 100.0 | ||||||||||||
Magnesia Specialties | 33,531 | 100.0 | 32,887 | 100.0 | ||||||||||||||
Total | 362,474 | 100.0 | 328,865 | 100.0 | ||||||||||||||
Gross profit: | ||||||||||||||||||
Aggregates | 89,183 | 27.1 | 84,616 | 28.6 | ||||||||||||||
Magnesia Specialties | 7,649 | 22.8 | 5,611 | 17.1 | ||||||||||||||
Total | 96,832 | 26.7 | 90,227 | 27.4 | ||||||||||||||
Selling, general & administrative expense: | ||||||||||||||||||
Aggregates | 20,374 | 6.2 | 20,638 | 7.0 | ||||||||||||||
Magnesia Specialties | 4,290 | 12.8 | 4,281 | 13.0 | ||||||||||||||
Total | 24,664 | 6.8 | 24,919 | 7.6 | ||||||||||||||
Earnings from operations: | ||||||||||||||||||
Aggregates | 68,724 | 20.9 | 64,033 | 21.6 | ||||||||||||||
Magnesia Specialties | 2,851 | 8.5 | 778 | 2.4 | ||||||||||||||
Total | $ | 71,575 | 19.7 | $ | 64,811 | 19.7 |
(Continued)
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Second Quarter and Six-Months Ended June 30, 2000 and 1999
Six-Months Ended June 30, | ||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||
2000 | 1999 | |||||||||||||||||
% of | % of | |||||||||||||||||
Amount | Net Sales | Amount | Net Sales | |||||||||||||||
Net sales: | ||||||||||||||||||
Aggregates | $ | 572,670 | 100.0 | $ | 504,921 | 100.0 | ||||||||||||
Magnesia Specialties | 65,935 | 100.0 | 65,005 | 100.0 | ||||||||||||||
Total | 638,605 | 100.0 | 569,926 | 100.0 | ||||||||||||||
Gross profit: | ||||||||||||||||||
Aggregates | 126,438 | 22.1 | 118,951 | 23.6 | ||||||||||||||
Magnesia Specialties | 14,752 | 22.4 | 11,018 | 16.9 | ||||||||||||||
Total | 141,190 | 22.1 | 129,969 | 22.8 | ||||||||||||||
Selling, general & administrative expense: | ||||||||||||||||||
Aggregates | 39,812 | 7.0 | 39,057 | 7.7 | ||||||||||||||
Magnesia Specialties | 8,444 | 12.8 | 8,608 | 13.2 | ||||||||||||||
Total | 48,256 | 7.6 | 47,665 | 8.4 | ||||||||||||||
Earnings from operations: | ||||||||||||||||||
Aggregates | 86,458 | 15.1 | 79,631 | 15.8 | ||||||||||||||
Magnesia Specialties | 5,263 | 8.0 | 1,244 | 1.9 | ||||||||||||||
Total | $ | 91,721 | 14.4 | $ | 80,875 | 14.2 |
(Continued)
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Second Quarter and Six-Months Ended June 30, 2000 and 1999
Other income and expenses, net, for the quarter ended June 30, was $3.8 million in income in 2000 compared with $8.7 million in income in 1999. In addition to several offsetting amounts, other income and expenses, net, are comprised generally of interest income, gains and losses associated with the disposition of certain assets, gains and losses related to certain amounts receivable, income from non-operating services, costs associated with the commercialization of certain new technologies, and net equity earnings from non-consolidated investments. Further, in 2000, other income and expenses, net, included a nonrecurring insurance settlement related to Hurricane Floyd, while other income and expenses, net, in 1999, included a nonrecurring settlement from an antitrust claim. On a year-to-date basis, other income and expenses, net, was $5.2 million as compared to $14.0 million in the prior-year period
Interest expense was $10.7 million in the second quarter of 2000, compared to $9.7 million in the second quarter of 1999. Interest expense was $20.8 million and $19.0 million for the six-months ended June 30, 2000 and 1999, respectively.
The Corporations estimated effective income tax rate was 35.0% in 2000 and 35.2% in 1999. 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 six months of 2000 was $72.3 million compared with $57.3 million in the comparable period of 1999. The cash flow for both 2000 and 1999 was principally from earnings, before deducting depreciation, depletion and amortization, offset by working capital requirements. Depreciation, depletion and amortization was $67.0 million and $59.1 million for the six-months ended June 30, 2000 and 1999, respectively. Amortization of goodwill and other intangibles, included in depreciation, depletion and amortization, was $11.2 million and $9.0 million for the six-months ended June 30, 2000 and 1999, respectively. The seasonal nature of the construction aggregates business impacts quarterly net cash provided by operating activities when compared with the year. Full year 1999 net cash provided by operating activities was $223.7 million, compared with $57.3 million provided by operations in the six-months ended June 30, 1999.
Six-month capital expenditures, exclusive of acquisitions, were $73.3 million in 2000 and $59.8 million in 1999. Capital expenditures, exclusive of acquisitions, are expected to be approximately $175 million for 2000, which is $45 million less than previously anticipated. Comparable full year capital expenditures were $137.8 million in 1999. During the six-months ended June 30, 2000, the Corporation spent $36.7 million for acquisitions in continuation of its internal expansion strategy.
(Continued)
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Second Quarter and Six-Months Ended June 30, 2000 and 1999
The Corporation continues to rely upon internally generated funds and access to capital markets, including its two revolving credit agreements and a cash management facility, to meet its liquidity requirements, finance its operations, and fund its capital requirements. The Corporation has signed amendments to its revolving credit agreements which, among other things, modified certain restrictive covenants relating to leverage and extended the term of the 364-day agreement to August, 2001.
With respect to the Corporations ability to access the public market, currently, management has the authority to file a universal shelf registration statement with the Commission for up to $500 million in issuance of either debt or equity securities. It should be noted, however, that the Corporation has not determined the timing when, or the amount for which, it may file such shelf registration. The Corporations ability to borrow or issue debt securities is dependent, among other things, upon prevailing economic, financial and market conditions.
Based on prior performance and current expectations, the Corporations management believes that cash flows from internally generated funds and its access to capital markets are expected to continue to be sufficient to provide the capital resources necessary to fund the operating needs of its existing businesses, cover debt service requirements, and allow for payment of dividends in 2000. The Corporation may be required to obtain additional levels of financing in order to fund certain strategic acquisitions if any such opportunities arise. Currently, the Corporations senior unsecured debt is rated A by Standard & Poors and A3 by Moodys. The Corporations commercial paper obligations are rated A-1 by Standard & Poors, P-2 by Moodys and F-1 by Fitch IBCA, Inc. While management believes its credit ratings will remain at an investment-grade level, no assurance can be given that these ratings will remain at the above-mentioned levels.
Page 14 of 20
MARTIN MARIETTA MATERIALS, INC AND CONSOLIDATED SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
Second Quarter and Six-Months Ended June 30, 2000 and 1999
ACCOUNTING CHANGES The accounting changes that currently impact the Corporation are included in Note 6 to the Condensed Consolidated Financial Statements.
OTHER MATTERS Investors are cautioned that statements in this Quarterly Report on Form 10-Q that relate to the future are, by their nature, uncertain and dependent upon numerous contingencies including political, economic, regulatory, climatic, competitive, and technological any of which could cause actual results and events to differ materially from those indicated in such forward-looking statements. Additional information regarding these and other risk factors and uncertainties may be found in the Corporations other filings, which are made from time, to time with the Securities and Exchange Commission.
Page 15 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
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 year ended December 31, 1999.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) | Item 4. Submission of Matters to a Vote of Security Holders. |
At the Annual Meeting of Shareholders held on May 23, 2000, 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 2003. The following table sets forth the votes for each director. |
Votes Cast For | Withheld | |||||||
William E. McDonald | 41,076,333 | 465,813 | ||||||
Frank H. Menaker, Jr. | 41,068,415 | 473,731 | ||||||
Richard A. Vinroot | 40,537,631 | 1,004,515 |
(b) | Ratified the selection of Ernst & Young LLP, as independent auditors for the year ending December 31, 2000. The voting results for this ratification were 41,385,620 For; 57,199 Against; and 99,327 Abstained. |
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
PART II OTHER INFORMATION
Item 5. Other Information.
On May 23, 2000, the Corporation announced that the Board of Directors had declared a regular quarterly cash dividend of $0.13 per share on the Corporations common stock. This dividend, which represents a cash payout of $0.52 per share on an annualized basis, was payable June 30, 2000, to shareholders of record at the close of business on June 1, 2000.
On May 24, 2000, the Corporation announced that the Board of Directors had elected Dan Shephard as Vice President and Treasurer of the Corporation at its meeting on May 23, 2000.
On June 30, 2000, the Corporation announced the acquisition of the A.B. Long Quarries, Inc. located in Harriman, Tennessee, in the Knoxville area. The quarry mines limestone and has annual capacity in excess 750,000 tons, with mineral reserves in excess of a 20-year supply. The Corporation also announced the purchase of Texarkana Asphalt, Inc., in Texarkana, Texas. This facility operates a rail-served aggregates distribution yard in Texarkana and operates two asphalt plants located in Texarkana and Prescott, Arkansas, with annual capacity in excess of 700,000 tons, and performs construction in Northeast Texas and Southern Arkansas. In another separate transaction, the Corporation purchased a rail distribution yard near Wilmington, North Carolina, which serves the area between Wilmington and Myrtle Beach, South Carolina. All three purchases were cash for assets transactions, with the purchase price not disclosed.
On July 17, 2000, the Corporation announced that it had signed a long-term agreement with Chemical Lime Company to process aggregates materials and provide certain operating services at its New Braunfels, Texas, location.
Page 17 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No. | Document | |||
10.01 | Amendment No. 3 to the Martin Marietta Materials, Inc. Incentive Stock Plan | |||
10.02 | Amended and Restated Revolving Credit Agreement dated August 9, 2000 | |||
10.03 | Amendment No. 3 to Credit Agreement dated August 9, 2000 | |||
11.01 | Martin Marietta Materials, Inc. and Consolidated Subsidiaries Computation of Earnings per Share for the Quarter and Six-Months Ended June 30, 2000 and 1999 | |||
27.01 | Financial Data Schedule (for Securities and Exchange Commission use only) |
Page 18 of 20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
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: August 14, 2000
By: /s/ JANICE K. HENRY |
|
|
Janice K. Henry | |
Senior Vice President and Chief | |
Financial Officer |
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
EXHIBIT INDEX
Exhibit No. | Document | |||||||
10.01 | Amendment No. 3 to the Martin Marietta Materials, Inc. Incentive Stock Plan | |||||||
10.02 | Amended and Restated Revolving Credit Agreement dated as of August 9, 2000 | |||||||
10.03 | Amendment No. 3 to Credit Agreement dated August 9, 2000 | |||||||
11.01 | Martin Marietta Materials, Inc. and Consolidated Subsidiaries Computation of Earnings per Share for the Quarter Ended June 30, 2000 and 1999 | |||||||
27.01 | Financial Data Schedule (for Securities and Exchange Commission use only) |
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