SEC Filing | Martin Marietta Materials

View:

Download DOC

Download PDF

Download XLS

Martin Marietta Materials, Inc.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-12744

MARTIN MARIETTA MATERIALS, INC.

(Exact name of registrant as specified in its charter)


North Carolina		56-1848578

(State or other jurisdiction of		(I.R.S. Employer Identification Number)
incorporation or organization)

2710 Wycliff Road, Raleigh, NC		27607-3033

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code		919-781-4550


Former name:		None

		Former name, former address and former fiscal year,
		if changes since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.


Class		Outstanding as of July 31, 2007

Common Stock, $0.01 par value		41,796,336

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007


	Page
Part I. Financial Information:

Item 1. Financial Statements.

Consolidated Balance Sheets – June 30, 2007, December 31, 2006 and June 30, 2006		3

Consolidated Statements of Earnings - Three and Six Months Ended June 30, 2007 and 2006		4

Consolidated Statements of Cash Flows - Six Months Ended June 30, 2007 and 2006		5

Consolidated Statement of Shareholders’ Equity		6

Condensed Notes to Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		15

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		33

Item 4. Controls and Procedures.		34

Part II. Other Information:

Item 1. Legal Proceedings.		35

Item 1A. Risk Factors.		35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		35

Item 4. Submission of Matters to a Vote of Security Holders.		36

Item 6. Exhibits.		37

Signatures		38

Exhibit Index		39
Exhibit 10.07
Exhibit 31.01
Exhibit 31.02
Exhibit 32.01
Exhibit 32.02

Page 2 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


	June 30,			December 31,			June 30,
	2007			2006			2006
	(Unaudited)			(Audited)			(Unaudited)
	(Dollars in Thousands, Except Per Share Data)
ASSETS
Current Assets:
Cash and cash equivalents	$	30,890		$	32,282		$	20,386
Accounts receivable, net		296,644			242,399			292,559
Inventories, net		297,800			256,287			243,714
Current portion of notes receivable, net		1,818			2,521			2,494
Current deferred income tax benefits		38,942			25,317			16,906
Other current assets		25,189			33,548			31,708

Total Current Assets		691,283			592,354			607,767


Property, plant and equipment		2,846,337			2,739,327			2,641,697
Allowances for depreciation, depletion and amortization		(1,498,897	)		(1,443,836	)		(1,385,697	)

Net property, plant and equipment		1,347,440			1,295,491			1,256,000

Goodwill		574,667			570,538			570,336
Other intangibles, net		10,307			10,948			16,846
Noncurrent notes receivable		8,812			10,355			10,836
Other noncurrent assets		35,218			26,735			40,231


Total Assets	$	2,667,727		$	2,506,421		$	2,502,016


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Bank overdraft	$	4,071		$	8,390		$	15,324
Accounts payable		92,351			85,237			99,526
Accrued salaries, benefits and payroll taxes		19,153			25,010			20,664
Pension and postretirement benefits		5,265			6,100			6,268
Accrued insurance and other taxes		35,285			32,297			43,442
Income taxes		36,034			—			24,088
Current maturities of long-term debt and commercial paper		127,068			125,956			13,989
Other current liabilities		34,144			32,082			27,275

Total Current Liabilities		353,371			315,072			250,576

Long-term debt		1,051,527			579,308			705,359
Pension, postretirement and postemployment benefits		109,418			106,413			97,056
Noncurrent deferred income taxes and reserves for uncertain tax positions		160,168			159,094			143,678
Other noncurrent liabilities		88,906			92,562			86,062

Total Liabilities		1,763,390			1,252,449			1,282,731


Shareholders’ Equity:
Common stock, par value $0.01 per share		417			448			453
Preferred stock, par value $0.01 per share		—			—			—
Additional paid-in capital		72,195			147,491			205,529
Accumulated other comprehensive loss		(29,574	)		(36,051	)		(15,325	)
Retained earnings		861,299			1,142,084			1,028,628

Total Shareholders’ Equity		904,337			1,253,972			1,219,285


Total Liabilities and Shareholders’ Equity	$	2,667,727		$	2,506,421		$	2,502,016

See accompanying condensed notes to consolidated financial statements.

Page 3 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
	(In Thousands, Except Per Share Data)
	(Unaudited)
Net Sales	$	534,622		$	516,759		$	948,634		$	939,595
Freight and delivery revenues		60,479			70,274			108,174			129,807

Total revenues		595,101			587,033			1,056,808			1,069,402


Cost of sales		356,600			363,619			676,980			701,825
Freight and delivery costs		60,479			70,274			108,174			129,807

Total cost of revenues		417,079			433,893			785,154			831,632


Gross Profit		178,022			153,140			271,654			237,770

Selling, general & administrative expenses		44,309			37,148			82,582			73,309
Research and development		186			140			389			304
Other operating (income) and expenses, net		(3,068	)		(3,592	)		(5,583	)		(7,230	)

Earnings from Operations		136,595			119,444			194,266			171,387

Interest expense		16,702			9,708			27,902			19,684
Other nonoperating (income) and expenses, net		(1,160	)		(306	)		(3,841	)		(2,402	)

Earnings from continuing operations before income tax expense		121,053			110,042			170,205			154,105
Income tax expense		38,436			34,155			55,044			48,096


Earnings from continuing operations		82,617			75,887			115,161			106,009
Gain (Loss) on discontinued operations, net of related tax expense of $342, $125, $557 and $550 respectively		335			(97	)		781			787

Net Earnings	$	82,952		$	75,790		$	115,942		$	106,796


Net Earnings Per Common Share:
Basic from continuing operations	$	1.94		$	1.66		$	2.65		$	2.32
Discontinued operations		0.01			—			0.02			0.02

	$	1.95		$	1.66		$	2.67		$	2.34


Diluted from continuing operations	$	1.91		$	1.63		$	2.60		$	2.27
Discontinued operations		0.01			—			0.02			0.02

	$	1.92		$	1.63		$	2.62		$	2.29


Cash Dividends Per Common Share	$	0.275		$	0.23		$	0.55		$	0.46


Reconciliation of denominators for basic and diluted earnings per share computations:
Basic weighted average number of common shares		42,458			45,663			43,498			45,706
Effect of dilutive employee and director awards		683			960			723			998

Diluted weighted average number of common shares and assumed conversions		43,141			46,623			44,221			46,704

See accompanying condensed notes to consolidated financial statements.

Page 4 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended
	June 30,
	2007			2006
	(Dollars in Thousands)
	(Unaudited)
Net earnings	$	115,942		$	106,796
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation, depletion and amortization		73,407			66,622
Stock-based compensation expense		13,013			6,065
Gains on divestitures and sales of assets		(3,258	)		(5,142	)
Deferred income taxes		2,612			(4,994	)
Excess tax benefits from stock-based compensation transactions		(17,659	)		(9,375	)
Other items, net		(1,516	)		(2,649	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net		(54,671	)		(67,547	)
Inventories, net		(42,340	)		(21,065	)
Accounts payable		7,114			6,080
Other assets and liabilities, net		47,362			39,088


Net cash provided by operating activities		140,006			113,879


Investing activities:
Additions to property, plant and equipment		(114,984	)		(157,699	)
Acquisitions, net		(12,117	)		(2,939	)
Proceeds from divestitures and sales of assets		7,151			22,613
Proceeds from sale of investments		—			25,000
Railcar construction advances		—			(32,077	)
Repayments of railcar construction advances		—			32,077


Net cash used for investing activities		(119,950	)		(113,025	)


Financing activities:
Net borrowings (repayments) of long-term debt		471,625			(415	)
Net (repayments) borrowings on commercial paper and line of credit		(537	)		13,539
Debt issuance costs		(807	)		—
Change in bank overdraft		(4,319	)		8,034
Payments on capital lease obligations		(87	)		(69	)
Dividends paid		(24,343	)		(21,251	)
Repurchases of common stock		(493,552	)		(83,180	)
Issuances of common stock		12,913			16,754
Excess tax benefits from stock-based compensation transactions		17,659			9,375


Net cash used for financing activities		(21,448	)		(57,213	)


Net decrease in cash and cash equivalents		(1,392	)		(56,359	)
Cash and cash equivalents, beginning of period		32,282			76,745


Cash and cash equivalents, end of period	$	30,890		$	20,386


Noncash investing and financing activities:
Issuance of notes payable for acquisition of land	$	3,252		$	—
Repurchases of common stock to be settled	$	1,608		$	—
Supplemental disclosures of cash flow information:
Cash paid for interest	$	25,375		$	23,596
Cash payments for income taxes	$	1,906		$	12,233

See accompanying condensed notes to consolidated financial statements.

Page 5 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)


	Shares of															Total
	Common			Common			Additional			Accumulated Other			Retained			Shareholders’
(in thousands)	Stock			Stock			Paid-in-Capital			Comprehensive Loss			Earnings			Equity

Balance at December 31, 2006		44,851		$	448		$	147,491		$	(36,051	)	$	1,142,084		$	1,253,972
Increase in reserves for uncertain tax positions for FIN 48 adoption		—			—			—			—			(1,407	)		(1,407	)

Net earnings		—			—			—			—			115,942			115,942
Amortization of unrecognized actuarial losses, prior service costs and transition assets related to pension and postretirement benefits, net of tax		—			—			—			1,137			—			1,137
Foreign currency translation gain, net of tax		—			—			—			1,995			—			1,995
Change in fair value of forward starting interest rate swap agreements, net of tax		—			—			—			3,345			—			3,345

Comprehensive earnings																	122,419

Dividends declared		—			—			—			—			(24,343	)		(24,343	)
Issuances of common stock for stock award plans		526			5			35,838			—			—			35,843
Repurchases of common stock ⁽¹⁾		(3,585	)		(36	)		(124,147	)		—			(370,977	)		(495,160	)
Stock-based compensation expense		—			—			13,013			—			—			13,013

Balance at June 30, 2007		41,792		$	417		$	72,195		$	(29,574	)	$	861,299		$	904,337


⁽¹⁾		Repurchases of common stock in excess of the value of additional paid-in-capital were recorded against retained earnings. Additional paid-in-capital at June 30, 2007 represents the pool of excess tax benefits, the expensed portion of restricted stock awards and incentive stock awards, and unissued shares of common stock earned as compensation but deferred by the Corporation’s Board of Directors.

See accompanying condensed notes to consolidated financial statements.

Page 6 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of Martin Marietta Materials, Inc. (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and to Article 10 of Regulation S-X. The Corporation has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2006, filed with the Securities and Exchange Commission on February 28, 2007. 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, 2007 are not indicative of the results expected for the full year.

Retirement Plans and Postretirement Benefits

On December 31, 2006, the Corporation adopted the recognition and disclosure provisions of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an Amendment of FAS 87, 88, 106 and 132(R) (“FAS 158”) prospectively. In connection with the adoption, the Corporation increased accumulated other comprehensive loss by $20,418,000, net of tax, at December 31, 2006 for the net unrecognized actuarial losses, unrecognized prior service costs and unrecognized transition obligations remaining from the initial adoption of FAS 87 and FAS 106. During the six months ended June 30, 2007, $1,137,000, net of tax, of these unrecognized amounts was recognized as a component of net periodic benefit cost pursuant to the Corporation’s historical accounting policy for amortizing such amounts.

Uncertain Tax Positions

Effective January 1, 2007, the Corporation adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FAS 109 (“FIN 48”). FIN 48 requires the recognition of a tax benefit when it is “more-likely-than-not,” based on the technical merits, that the position would be sustained upon examination by a taxing authority. The amount to be recognized should be measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

Page 7 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

1. Significant Accounting Policies (continued)

Uncertain Tax Positions (continued)

In connection with the adoption of FIN 48, the Corporation increased its reserves for uncertain tax positions and reduced retained earnings at January 1, 2007 by $1,407,000, primarily as a result of providing interest accruals on uncertain temporary tax positions related to temporary or timing differences.

The adoption of FIN 48 affected the Corporation’s results of operations as follows:


	Three Months Ended		Six Months Ended
	June 30, 2007		June 30, 2007
Increased income tax expense and decreased net earnings by:	$	539,000	$	1,431,000
Decreased basic earnings per share by:	$	0.01	$	0.03
Decreased diluted earnings per share by:	$	0.01	$	0.03

At January 1, 2007, the total amount of gross unrecognized tax benefits, excluding interest, was $29,248,000. Unrecognized tax benefits of $10,577,000, net of federal tax benefits, related to interest accruals and permanent income tax differences would favorably affect the Corporation’s effective tax rate if recognized. There have been no significant changes to these amounts during the six months ended June 30, 2007.

The Corporation anticipates that it is reasonably possible that the total amounts of unrecognized tax benefits may significantly change within the succeeding twelve months as a result of the expiration of the federal statute of limitations for examination of the 2003 tax year and the settlement of the Internal Revenue Service audits for the 2004 and 2005 tax years. The Corporation estimates that these events could result in a reasonably possible change in unrecognized tax benefits ranging from $8,278,000 to $27,772,000.

The Corporation records interest accrued in relation to unrecognized tax benefits as income tax expense and penalties, if incurred, are recorded as operating expenses in the consolidated statement of earnings. Accrued interest of $6,081,000 was recorded as a current FIN 48 liability in the Corporation’s consolidated balance sheet at June 30, 2007.

The Corporation’s open tax years that are subject to examination are 2003 through 2006. The Internal Revenue Service is currently auditing the Corporation’s consolidated federal income tax returns for the years ended December 31, 2005 and 2004.

Page 8 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

1. Significant Accounting Policies (continued)

Comprehensive Earnings

Comprehensive earnings for the three and six months ended June 30, 2007 were $88,601,000 and $122,419,000, respectively, and consisted of net earnings, foreign currency translation adjustments, changes in the fair value of forward starting interest rate swap agreements and the amortization of unrecognized amounts related to pension and postretirement benefits. For the three and six month periods ended June 30, 2006, comprehensive earnings did not differ from net earnings.

2. Divestitures and Discontinued Operations

In 2007, the Corporation disposed of or permanently shut down certain underperforming operations in the following markets:


Reportable Segment		Markets
Mideast Group		West Virginia
West Group		Iowa, Kansas and New Mexico

These divestitures represent discontinued operations, and, therefore, the results of their operations through the dates of disposal and any gain or loss on disposals are included in discontinued operations on the consolidated statements of earnings.

The discontinued operations included the following net sales, pretax gain or loss on operations, pretax gain on disposals, income tax expense and overall net earnings or loss (dollars in thousands):


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2007		2006			2007			2006
Net sales	$	183	$	1,654		$	703		$	3,324


Pretax gain (loss) on operations	$	46	$	28		$	(253	)	$	(884	)
Pretax gain on disposals		631		—			1,591			2,221

Pretax gain		677		28			1,338			1,337
Income tax expense		342		125			557			550

Net earnings (loss)	$	335	$	(97	)	$	781		$	787

Page 9 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

3. Inventories


	June 30,			December 31,			June 30,
	2007			2006			2006
	(Dollars in Thousands)
Finished products	$	250,937		$	213,302		$	199,529
Products in process and raw materials		20,461			19,271			18,195
Supplies and expendable parts		41,541			37,935			37,845

		312,939			270,508			255,569
Less allowances		(15,139	)		(14,221	)		(11,855	)

Total	$	297,800		$	256,287		$	243,714

4. Goodwill

The following table shows changes in goodwill, all of which relate to the Aggregates business, by reportable segment and in total (dollars in thousands):


	Three Months Ended June 30, 2007
	Mideast		Southeast		West
	Group		Group		Group			Total

Balance at beginning of period	$	106,757	$	60,494	$	408,419		$	575,670
Divestitures		—		—		(1,003	)		(1,003	)

Balance at end of period	$	106,757	$	60,494	$	407,416		$	574,667


	Six Months Ended June 30, 2007
	Mideast		Southeast		West
	Group		Group		Group			Total

Balance at beginning of period	$	106,757	$	60,494	$	403,287		$	570,538
Acquisitions		—		—		5,132			5,132
Divestitures		—		—		(1,003	)		(1,003	)

Balance at end of period	$	106,757	$	60,494	$	407,416		$	574,667

Page 10 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

5. Long-Term Debt


	June 30,			December 31,			June 30,
	2007			2006			2006
	(Dollars in Thousands)
6.875% Notes, due 2011	$	249,844		$	249,829		$	249,814
5.875% Notes, due 2008		203,157			204,224			205,265
6.9% Notes, due 2007		124,999			124,995			124,992
7% Debentures, due 2025		124,321			124,312			124,304
6.25% Senior Notes, due 2037		247,782			—			—
Floating Rate Senior Notes, due 2010		224,256			—			—
Commercial paper and line of credit, interest rates ranging from 5.35% to 5.83%		—			537			13,539
Acquisition notes, interest rates ranging from 2.11% to 8.00%		684			702			769
Other notes		3,552			665			665

		1,178,595			705,264			719,348
Less current maturities		(127,068	)		(125,956	)		(13,989	)

Total	$	1,051,527		$	579,308		$	705,359

On April 25, 2007, the Corporation issued $250,000,000 of 6.25% Senior Notes due in 2037 and $225,000,000 of Floating Rate Senior Notes due in 2010 (collectively, the “Senior Notes”). The 6.25% Senior Notes may be redeemed in whole or in part prior to their maturity at a “make whole” redemption price. The Floating Rate Senior Notes bear interest at a rate equal to the three-month LIBOR (5.355% at June 30, 2007) plus 0.15% and may not be redeemed prior to maturity. Upon a change of control repurchase event, the Corporation will be required to make an offer to repurchase all outstanding Senior Notes at a price in cash equal to 101% of the principal amount of the Senior Notes, plus any accrued and unpaid interest to, but not including, the purchase date.

The carrying values of the Notes due in 2008 included $3,341,000, $4,469,000 and $5,570,000 at June 30, 2007, December 31, 2006 and June 30, 2006, respectively, for the unamortized value of terminated interest rate swaps.

The Corporation entered into two forward starting interest rate swap agreements in September 2006 related to $150,000,000 of the Corporation’s anticipated refinancing of its $200,000,000 5.875% Notes due in 2008 (the “Swap Agreements”). At June 30, 2007, the fair value of the Swap Agreements was an asset of $3,583,000 and was included in other noncurrent assets in the Corporation’s consolidated balance sheet. Other comprehensive earnings/loss for the three and six months ended June 30, 2007 included a gain of $3,143,000 and $3,345,000, respectively, net of tax, for the change in fair value of the Swap Agreements. At December 31, 2006, the fair value of the Swap Agreements was a liability of $1,951,000.

Page 11 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

5. Long-Term Debt (continued)

No commercial paper borrowings were outstanding at June 30, 2007 and December 31, 2006. Borrowings of $10,000,000 were outstanding under the commercial paper program at June 30, 2006.

At December 31, 2006 and June 30, 2006, borrowings of $537,000 and $3,539,000, respectively, were outstanding under a $10,000,000 line of credit. No such borrowings were outstanding at June 30, 2007.

On April 17, 2007, the Corporation entered into an amendment of its $250,000,000 five-year revolving credit agreement, which modified the leverage ratio covenant in the agreement. As modified, the covenant requires the Corporation’s ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve months to not exceed 2.75 to 1.00 as of the end of any fiscal quarter. The covenant has certain exceptions related to qualifying acquisitions, as defined.

6. Income Taxes


	Six Months Ended June 30,
	2007			2006
Estimated effective income tax rate:
Continuing operations		32.3	%		31.2	%

Discontinued operations		41.6	%		41.1	%

Overall		32.4	%		31.3	%

The Corporation’s effective tax rate reflects the effect of state income taxes and the impact of differences in book and tax accounting arising from the net permanent benefits associated with the depletion allowances for mineral reserves, the domestic production deduction and the tax effect of nondeductibility of goodwill related to asset sales. The effective income tax rates for discontinued operations reflect the tax effects of individual operations’ transactions and are not indicative of the Corporation’s overall effective tax rate.

The increase in the Corporation’s effective tax rate for continuing operations for the six months ended June 30, 2007 as compared with the prior-year period results from the discrete tax impact of stock option exercises during the period, tax on certain foreign source income and the effect of applying FIN 48. The effective income tax rate increased 75 basis points during the first six months of 2007 as a result of the evaluation of the Corporation’s tax positions in accordance with FIN 48.

The change in the year-to-date estimated overall effective income tax rate during the second quarter of 2007, when compared with the year-to-date effective tax rate as of March 31, 2007, increased net earnings for the six months ended June 30, 2007 by $2,400,000, or $0.05 per diluted share.

Page 12 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

7. Pension and Postretirement Benefits

The following presents the estimated components of the recorded net periodic benefit cost for pension and postretirement benefits for the three months ended June 30 (dollars in thousands):


	Pension						Postretirement Benefits
	2007			2006			2007			2006
Service cost	$	3,478		$	3,072		$	124		$	134
Interest cost		5,553			4,540			544			652
Expected return on assets		(6,322	)		(4,904	)		—			—
Amortization of:
Prior service cost (credit)		191			219			(251	)		(340	)
Actuarial loss (gain)		1,258			650			(19	)		(98	)

Total net periodic benefit cost	$	4,158		$	3,577		$	398		$	348

The following presents the estimated components of the recorded net periodic benefit cost for pension and postretirement benefits for the six months ended June 30 (dollars in thousands):


	Pension						Postretirement Benefits
	2007			2006			2007			2006
Service cost	$	6,182		$	6,104		$	320		$	276
Interest cost		9,870			9,054			1,401			1,339
Expected return on assets		(11,237	)		(9,810	)		—			—
Amortization of:
Prior service cost (credit)		339			371			(647	)		(648	)
Actuarial loss (gain)		2,237			1,430			(48	)		(119	)

Total net periodic benefit cost	$	7,391		$	7,149		$	1,026		$	848

8. Contingencies

In the opinion of management and counsel, it is unlikely that the outcome of litigation and other proceedings, including those pertaining to environmental matters, relating to the Corporation and its subsidiaries, will have a material adverse effect on the results of the Corporation’s operations or its financial position.

Page 13 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

9. Business Segments

In the fourth quarter of 2006, the Corporation reorganized the operations and management of its Aggregates business, which resulted in a change to its reportable segments. Currently, the Corporation conducts its aggregates operations through three reportable business segments: Mideast Group, Southeast Group and West Group. The Corporation also has a Specialty Products segment that includes magnesia chemicals, dolomitic lime and targeted activity in structural composites.

The following tables display selected financial data for the Corporation’s reportable business segments (dollars in thousands). Corporate loss from operations primarily includes depreciation on capitalized interest, expenses for corporate administrative functions, unallocated corporate expenses and other nonrecurring and/or non-operational adjustments. Prior year information has been reclassified to conform to the presentation of the Corporation’s current reportable segments.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Total revenues:
Mideast Group	$	183,302		$	167,148		$	307,006		$	294,065
Southeast Group		162,022			170,316			311,310			319,699
West Group		206,302			209,097			352,633			369,872

Total Aggregates Business		551,626			546,561			970,949			983,636
Specialty Products		43,475			40,472			85,859			85,766

Total	$	595,101		$	587,033		$	1,056,808		$	1,069,402


Net sales:
Mideast Group	$	170,903		$	153,545		$	288,106		$	270,828
Southeast Group		143,368			144,438			276,681			270,601
West Group		180,627			182,348			305,591			320,329

Total Aggregates Business		494,898			480,331			870,378			861,758
Specialty Products		39,724			36,428			78,256			77,837

Total	$	534,622		$	516,759		$	948,634		$	939,595


Earnings (Loss) from operations:
Mideast Group	$	73,272		$	56,531		$	108,003		$	85,795
Southeast Group		33,816			27,596			60,815			43,251
West Group		31,888			34,457			30,351			40,673

Total Aggregates Business		138,976			118,584			199,169			169,719
Specialty Products		8,114			7,065			15,491			13,989
Corporate		(10,495	)		(6,205	)		(20,394	)		(12,321	)

Total	$	136,595		$	119,444		$	194,266		$	171,387

Page 14 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW Martin Marietta Materials, Inc. (the “Corporation”), conducts its operations through four reportable business segments: Mideast Group, Southeast Group, West Group (collectively, the “Aggregates business”) and Specialty Products. The Corporation’s net sales and earnings are predominately derived from its Aggregates business, which processes and sells granite, limestone, and other aggregates products from a network of 306 quarries, distribution facilities and plants to customers in 31 states, Canada, the Bahamas and the Caribbean Islands. The Aggregates business’ products are used primarily by commercial customers principally in domestic construction of highways and other infrastructure projects and for commercial and residential buildings. The Specialty Products segment produces magnesia-based chemicals products used in industrial, agricultural and environmental applications; dolomitic lime sold primarily to customers in the steel industry; and structural composite products.

CRITICAL ACCOUNTING POLICIES The Corporation outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2006, filed with the Securities and Exchange Commission on February 28, 2007.

Prior to the three months ended June 30, 2007, the Corporation valued its finished goods inventories using standards that were updated annually during the fourth quarter. During the three months ended June 30, 2007, the Corporation recorded a $9.0 million inventory valuation adjustment to reflect increasing production costs and transportation costs to distribution yards. The adjustment, which increased the carrying value of inventories and reduced cost of sales, increased quarterly net earnings by $5.5 million, or $0.13 per diluted share.

RESULTS OF OPERATIONS

Except as indicated, the following comparative analysis in the Results of Operations section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects results from continuing operations and is based on net sales and cost of sales.

Page 15 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

Gross margin as a percentage of net sales and operating margin as a percentage of net sales represent non-GAAP measures. The Corporation presents these ratios calculated based on net sales, as it is consistent with the basis by which management reviews the Corporation’s operating results. Further, management believes it is consistent with the basis by which investors analyze the Corporation’s operating results given that freight and delivery revenues and costs represent pass-throughs and have no profit mark-up. Gross margin and operating margin calculated as percentages of total revenues represent the most directly comparable financial measures calculated in accordance with generally accepted accounting principles (“GAAP”). The following tables present the calculations of gross margin and operating margin for the three and six months ended June 30, 2007 and 2006 in accordance with GAAP and reconciliations of the ratios as percentages of total revenues to percentages of net sales (dollars in thousands):

Gross Margin in Accordance with GAAP


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Gross profit	$	178,022		$	153,140		$	271,654		$	237,770


Total revenues	$	595,101		$	587,033		$	1,056,808		$	1,069,402


Gross margin		29.9	%		26.1	%		25.7	%		22.2	%

Gross Margin Excluding Freight and Delivery Revenues


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Gross profit	$	178,022		$	153,140		$	271,654		$	237,770


Total revenues	$	595,101		$	587,033		$	1,056,808		$	1,069,402
Less: Freight and delivery revenues		(60,479	)		(70,274	)		(108,174	)		(129,807	)

Net sales	$	534,622		$	516,759		$	948,634		$	939,595


Gross margin excluding freight and delivery revenues		33.3	%		29.6	%		28.6	%		25.3	%

Page 16 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

Operating Margin in Accordance with GAAP


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Earnings from operations	$	136,595		$	119,444		$	194,266		$	171,387


Total revenues	$	595,101		$	587,033		$	1,056,808		$	1,069,402


Operating margin		23.0	%		20.3	%		18.4	%		16.0	%

Operating Margin Excluding Freight and Delivery Revenues


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Earnings from operations	$	136,595		$	119,444		$	194,266		$	171,387


Total revenues	$	595,101		$	587,033		$	1,056,808		$	1,069,402
Less: Freight and delivery revenues		(60,479	)		(70,274	)		(108,174	)		(129,807	)

Net sales	$	534,622		$	516,759		$	948,634		$	939,595


Operating margin excluding freight and delivery revenues		25.5	%		23.1	%		20.5	%		18.2	%

Quarter Ended June 30

Notable items for the quarter ended June 30, 2007 included:

•		Earnings per diluted share of $1.92, up 18% from the prior-year quarter

•		Net sales of $534.6 million, up 3% compared with the prior-year quarter

•		Consolidated operating margin excluding freight and delivery revenues of 25.5%, up 240 basis points over prior-year quarter

•		Heritage aggregates pricing up 13%; heritage volume decreased 9%

•		Heritage aggregates product line gross margin excluding freight and delivery revenues up 450 basis points

•		Specialty Products earnings from operations up 15%

•		Repurchased 1,250,000 shares of common stock at an average price of $154.54 per share

Page 17 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

The following table presents net sales, gross profit, selling, general and administrative expenses and earnings (loss) from operations data for the Corporation and its reportable segments for the three months ended June 30, 2007 and 2006. In each case, the data is stated as a percentage of net sales of the Corporation or the relevant segment, as the case may be.

Earnings from operations include research and development expense and other operating income and expenses, net. Research and development expense for the Corporation was $0.2 million and $0.1 million for the quarters ended June 30, 2007 and 2006, respectively. Consolidated other operating income and expenses, net, was income of $3.1 million and $3.6 million for the quarters ended June 30, 2007 and 2006, respectively.


	Three Months Ended June 30,
	2007				2006
			% of				% of
	Amount		Net Sales		Amount		Net Sales
	(Dollars in Thousands)
Net sales:
Mideast Group	$	170,903			$	153,545
Southeast Group		143,368				144,438
West Group		180,627				182,348

Total Aggregates Business		494,898		100.0		480,331		100.0
Specialty Products		39,724		100.0		36,428		100.0

Total	$	534,622		100.0	$	516,759		100.0


Gross profit:
Mideast Group	$	83,125			$	64,642
Southeast Group		40,498				33,698
West Group		41,871				44,248

Total Aggregates Business		165,494		33.4		142,588		29.7
Specialty Products		10,946		27.6		9,843		27.0
Corporate		1,582		—		709		—

Total	$	178,022		33.3	$	153,140		29.6


Selling, general & administrative expenses:
Mideast Group	$	10,646			$	10,273
Southeast Group		7,694				6,958
West Group		11,528				11,182

Total Aggregates Business		29,868		6.0		28,413		5.9
Specialty Products		2,653		6.7		2,697		7.4
Corporate		11,788		—		6,038		—

Total	$	44,309		8.3	$	37,148		7.2

Page 18 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)


	Three Months Ended June 30,
	2007					2006
				% of					% of
	Amount			Net Sales		Amount			Net Sales
	(Dollars in Thousands)
Earnings (Loss) from operations:
Mideast Group	$	73,272				$	56,531
Southeast Group		33,816					27,596
West Group		31,888					34,457

Total Aggregates Business		138,976			28.1		118,584			24.7
Specialty Products		8,114			20.4		7,065			19.4
Corporate		(10,495	)		—		(6,205	)		—

Total	$	136,595			25.5	$	119,444			23.1

Net sales for the Aggregates business for the 2007 second quarter were $494.9 million, a 3.0% increase over 2006 second-quarter sales of $480.3 million. Aggregates pricing at heritage locations was up 13.3%, while volume decreased 9.0%. Inclusive of acquisitions and divestitures, aggregates pricing for the quarter increased 13.1% and aggregates product line volume decreased 9.0%. Pricing improvements continued to hold in the Aggregates business in spite of greater than expected volume declines. During the quarter, the level of residential construction spending in the United States reached its lowest point since April 2004 as reported by the U.S. Census Bureau. Although residential construction contributed only 17% of the Corporation’s aggregates product line shipments in 2006, sales into this end-use sector have diminished in virtually every market. In addition, commercial construction activity in the South Central United States’ markets, notably, Alabama, Mississippi and Tennessee, is weak.

Weather also plagued performance during the second quarter. The West Group, particularly Texas, southern Oklahoma and Kansas, experienced near historic levels of rainfall and flooding which affected both shipments and operations. Volumes declined 9.4% in these areas and negatively contributed to financial performance during the quarter. Management does not believe that any significant construction projects have been permanently delayed and expects the volume for commercial and infrastructure to return to expected levels when weather conditions normalize.

Page 19 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

The following tables present volume and pricing data and shipments data for heritage aggregates operations, acquisitions and divested operations. Heritage aggregates operations exclude acquisitions that were not included in prior-year operations for the comparable period and divestitures.


	Three Months Ended
	June 30, 2007
Volume/Pricing Variance⁽¹⁾	Volume			Pricing
Heritage Aggregates Product Line ⁽²⁾:
Mideast Group		(3.7	%)		15.7	%
Southeast Group		(14.2	%)		15.7	%
West Group		(9.4	%)		8.9	%
Heritage Aggregates Operations		(9.0	%)		13.3	%
Aggregates Business ⁽³⁾		(9.0	%)		13.1	%


	Three Months Ended
	June 30,
	2007		2006
Shipments (tons in thousands)
Heritage Aggregates Product Line⁽²⁾:
Mideast Group		17,016		17,676
Southeast Group		13,774		16,049
West Group		19,131		21,115

Heritage Aggregates Operations		49,921		54,840
Acquisitions		99		—
Divestitures⁽⁴⁾		22		162

Aggregates Business ⁽³⁾		50,042		55,002


(1)		Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.

(2)		Heritage Aggregates product line excludes acquisitions that have not been included in prior-year operations for the comparable period and divestitures.

(3)		Aggregates Business includes all acquisitions from the date of acquisition and divestitures through the date of disposal.

(4)		Divestitures include the tons related to divested operations up to the date of divestiture.

The Aggregates business is significantly affected by seasonal changes and other weather-related conditions. Aggregates production and shipment levels coincide with general construction activity levels, most of which occurs in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations concentrated in the northern United States generally experience more severe winter weather conditions than operations in the Southeast and Southwest. Furthermore, excessive rainfall can also jeopardize shipments, production and profitability. Because of the potentially significant impact of weather on the Corporation’s operations, second quarter results are not indicative of expected performance for the year.

Page 20 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

Second-quarter results for the Specialty Products segment, which includes magnesia chemicals, dolomitic lime and targeted activity in structural composites, were positive. Specialty Products’ net sales were $39.7 million for the second quarter 2007 compared with $36.4 million for the prior-year period. Earnings from operations for the quarter were $8.1 million compared with $7.1 million in the year-earlier period. Management has established specific quarterly benchmarks for 2007 to evaluate the viability of the remaining components of the structural composites product line.

Selling, general and administrative expenses for the quarter ended June 30, 2007 was $44.3 million versus $37.1 million in the 2006 period. This increase of $7.2 million was primarily related to a $5.3 million increase in performance-based incentive compensation.

Among other items, other operating income and expenses, net, includes gains and losses on the sale of assets; gains and losses related to certain accounts receivable; rental, royalty and services income; and the accretion and depreciation expenses related to Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations. For the second quarter, consolidated other operating income and expenses, net, was income of $3.1 million in 2007 compared with $3.6 million in 2006, primarily as a result of higher gains on the sales of assets in 2006.

During the quarter, the Corporation revised its finished goods inventory valuation standards to match finished goods inventory values with the significant escalation in cost, particularly related to the transportation of material to distribution yards. Historically, the Corporation has updated inventory standards once a year in the fourth quarter. However, given the magnitude of the cost change and since the Corporation’s inventory turns about once a quarter, this revaluation, which increased inventory values by $9.0 million, more closely approximates cost of sales. Management will continue to review its inventory standards on an ongoing basis.

Consolidated interest expense was $16.7 million for the second quarter 2007 as compared with $9.7 million for the prior-year quarter. The increase primarily resulted from the accrual of $4.7 million of interest for the 6.25% Senior Notes and Floating Rate Senior Notes issued in April 2007 and a lower amount of capitalized interest related to major plant expansion and efficiency projects in 2007 as compared with the prior-year quarter.

In addition to other offsetting amounts, other nonoperating income and expenses, net, are comprised generally of interest income, net equity earnings from nonconsolidated investments and eliminations of minority interests for consolidated non-wholly owned subsidiaries. Consolidated other nonoperating income and expenses, net, for the quarter ended June 30, was income of $1.2 million in 2007 compared with $0.3 million in 2006, primarily as a result of higher interest income in 2007.

Page 21 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

Six Months Ended June 30

Notable items for the six months ended June 30, 2007 included:

•		Earnings per diluted share of $2.62, up 14% from the prior-year period

•		Net sales of $948.6 million, up 1% when compared with the prior-year period

•		Consolidated operating margin excluding freight and delivery revenues of 20.5%, up 230 basis points over prior-year period

•		Heritage aggregates pricing up 14%; heritage volume decreased 11%

•		Heritage aggregates product line gross margin excluding freight and delivery revenues up 400 basis points

•		Specialty Products earnings from operations up 11%

•		Repurchased 3,585,000 shares of common stock, nearly 8% of shares outstanding at the beginning of the year, at an average price of $138.12 per share

Page 22 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

The following table presents net sales, gross profit, selling, general and administrative expenses and earnings (loss) from operations data for the Corporation and its reportable segments for the six months ended June 30, 2007 and 2006. In each case, the data is stated as a percentage of net sales of the Corporation or the relevant segment, as the case may be.

Earnings from operations include research and development expense and other operating income and expenses, net. Research and development expense for the Corporation was $0.4 million and $0.3 million for the six months ended June 30, 2007 and 2006, respectively. Consolidated other operating income and expenses, net, was income of $5.6 million and $7.2 million for the six months ended June 30, 2007 and 2006, respectively.


	Six Months Ended June 30,
	2007					2006
				% of				% of
	Amount			Net Sales		Amount		Net Sales
	(Dollars in Thousands)
Net sales:
Mideast Group	$	288,106				$	270,828
Southeast Group		276,681					270,601
West Group		305,591					320,329

Total Aggregates Business		870,378			100.0		861,758		100.0
Specialty Products		78,256			100.0		77,837		100.0

Total	$	948,634			100.0	$	939,595		100.0


Gross profit:
Mideast Group	$	127,469				$	100,853
Southeast Group		74,364					55,646
West Group		50,317					61,620

Total Aggregates Business		252,150			29.0		218,119		25.3
Specialty Products		21,133			27.0		19,427		25.0
Corporate		(1,629	)		—		224		—

Total	$	271,654			28.6	$	237,770		25.3


Selling, general & administrative expenses:
Mideast Group	$	21,088				$	20,064
Southeast Group		15,050					13,735
West Group		22,946					22,867

Total Aggregates Business		59,084			6.8		56,666		6.6
Specialty Products		5,341			6.8		5,445		7.0
Corporate		18,157			—		11,198		—

Total	$	82,582			8.7	$	73,309		7.8

Page 23 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)


	Six Months Ended June 30,
	2007					2006
				% of					% of
	Amount			Net Sales		Amount			Net Sales
	(Dollars in Thousands)
Earnings (Loss) from operations:
Mideast Group	$	108,003				$	85,795
Southeast Group		60,815					43,251
West Group		30,351					40,673

Total Aggregates Business		199,169			22.9		169,719			19.7
Specialty Products		15,491			19.8		13,989			18.0
Corporate		(20,394	)		—		(12,321	)		—

Total	$	194,266			20.5	$	171,387			18.2

Net sales for the Aggregates business for the six months ended June 30 were $870.4 million in 2007, a 1.0% increase over 2006 net sales of $861.8 million. Aggregates pricing at heritage locations was up 14.1%, while volume decreased 11.4%. Inclusive of acquisitions and divestitures, aggregates pricing for the six months ended June 30, 2007 increased 14.0% and aggregates product line volume decreased 11.5%. Shipment volumes reflect a significant decline in the residential construction market and inclement weather experienced by the West Group.

Page 24 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)


	Six Months Ended
	June 30, 2007
Volume/Pricing Variance⁽¹⁾	Volume			Pricing
Heritage Aggregates Product Line ⁽²⁾:
Mideast Group		(10.0	%)		18.3	%
Southeast Group		(12.0	%)		16.3	%
West Group		(12.1	%)		7.8	%
Heritage Aggregates Operations		(11.4	%)		14.1	%
Aggregates Business ⁽³⁾		(11.5	%)		14.0	%


	Six Months Ended
	June 30,
	2007		2006
Shipments (tons in thousands)
Heritage Aggregates Product Line⁽²⁾:
Mideast Group		27,759		30,854
Southeast Group		26,184		29,765
West Group		32,201		36,624

Heritage Aggregates Operations		86,144		97,243
Acquisitions		103		—
Divestitures⁽⁴⁾		75		348

Aggregates Business ⁽³⁾		86,322		97,591


(1)		Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.

(2)		Heritage Aggregates product line excludes acquisitions that have not been included in prior-year operations for the comparable period and divestitures.

(3)		Aggregates Business includes all acquisitions from the date of acquisition and divestitures through the date of disposal.

(4)		Divestitures include the tons related to divested operations up to the date of divestiture.

Selling, general and administrative expenses for the six months ended June 30, 2007 was $82.6 million versus $73.3 million in the 2006 period. This increase of $9.3 million was primarily related to a $6.9 million increase in performance-based incentive compensation.

For the six months ended June 30, other operating income and expenses, net, was income of $5.6 million in 2007 compared with $7.2 million in 2006, primarily as a result of income from a $2.1 million judgment in favor of the Corporation in a land condemnation and higher gains on the sales of assets in 2006. These were partially offset by a higher gain on receivables in 2007.

Page 25 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

Consolidated interest expense was $27.9 million for the six months ended June 30, 2007 compared with $19.7 million for the prior-year period. The increase resulted from the accrual of $4.7 million of interest for the 6.25% Senior Notes and Floating Rate Senior Notes issued in April 2007 and a lower amount of capitalized interest related to major plant expansion and efficiency projects in 2007 as compared with the prior-year period.

LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities during the six months ended June 30, 2007 was $140.0 million compared with $113.9 million in the comparable period of 2006. Operating cash flow is generally from net earnings, before deducting depreciation, depletion and amortization, offset by working capital requirements. Net cash provided by operating activities for the first six months of 2007 as compared with the year-earlier period reflects higher earnings, a higher accrual for income tax obligations and a lower increase in accounts receivable in 2007 resulting from better collection results, and was partially offset by a higher build up of inventories due to declining shipment volumes and increased tax benefits from stock option exercise activity.

Depreciation, depletion and amortization was as follows (amounts in millions):


	Six Months Ended
	June 30,
	2007		2006
Depreciation	$	69.8	$	62.4
Depletion		2.1		2.2
Amortization		1.5		2.0

	$	73.4	$	66.6

The increase in depreciation expense is primarily due to the completion of several large capital projects, including new plants at the Three Rivers operations in Kentucky and North Troy operations in Oklahoma.

The seasonal nature of the construction aggregates business impacts quarterly operating cash flow when compared with the year. Full year 2006 net cash provided by operating activities was $338.2 million, compared with $113.9 million for the first six months of 2006.

First six months capital expenditures, exclusive of acquisitions, were $115.0 million in 2007 and $157.7 million in 2006. Capital expenditures during the first six months of 2006 included work on several major plant expansion and efficiency projects. Comparable full-year capital expenditures were $266.0 million in 2006. Full-year capital spending is expected to approximate $235.0 million for 2007, including the Hunt Martin joint venture and exclusive of acquisitions. Additionally, in 2007, the Corporation expects to enter into a lease agreement for 50 barges with a total commitment of approximately $24.0 million.

Page 26 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

During the first six months of 2006, the Corporation received repayment of a $12.5 million note receivable related to the divestiture of its Houston asphalt operations. The Corporation continues to have a continuing financial interest in the Houston asphalt market via a supply agreement and therefore continues to include the divested locations in continuing operations.

During 2007, the Corporation continued its common stock repurchase plan through open-market purchases pursuant to authority granted by its Board of Directors. For the quarter ended June 30, 2007, the Corporation repurchased 1,250,000 shares at an aggregate cost of $193.2 million. During the six months ended June 30, the Corporation repurchased 3,585,000 shares at an aggregate cost of $495.2 million in 2007 compared with 914,400 shares at an aggregate cost of $83.2 million in 2006. At June 30, 2007, 646,000 shares of common stock were remaining under the Corporation’s repurchase authorization. The Corporation currently intends to review its share repurchase authorization.

The Corporation’s $125 million 6.9% Notes will mature in August 2007. Management currently intends to refinance the 6.9% Notes using the proceeds from the Corporation’s offering of public debt in April 2007. Those proceeds were utilized on an interim basis to repay short-term commercial paper incurred for common stock repurchases during the first quarter of 2007. Therefore, the Corporation will issue new commercial paper debt upon refinancing the 6.9% Notes.

In September 2006, the Corporation entered into two forward starting interest rate swap agreements (the “Swap Agreements”) related to $150 million of the Corporation’s anticipated refinancing of its $200 million 5.875% Notes due in 2008. The change in fair value of the Swap Agreements, net of income taxes, is recorded directly in shareholders’ equity as other comprehensive earnings/loss. At June 30, 2007, the fair value of the Swap Agreements was an asset of $3.6 million and was included in other noncurrent assets in the Corporation’s consolidated balance sheet. Other comprehensive earnings/loss for the six months ended June 30, 2007 included a gain of $3.3 million, net of tax, for the change in fair value of the Swap Agreements.

On April 17, 2007, the Corporation entered into an amendment of its $250 million five-year revolving credit agreement, which modified the leverage ratio covenant in the agreement. As modified, the covenant requires the Corporation’s ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve months to not exceed 2.75 to 1.00 as of the end of any fiscal quarter. The covenant has certain exceptions related to qualifying acquisitions, as defined. At June 30, 2007, the Corporation’s ratio of consolidated debt to consolidated EBITDA, as defined, was 2.03.

Page 27 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

On April 25, 2007, the Corporation issued $250 million of 6.25% Senior Notes due in 2037 and $225 million of Floating Rate Senior Notes due in 2010 (collectively, the “Senior Notes”). The 6.25% Senior Notes may be redeemed in whole or in part prior to their maturity at a “make whole” redemption price. The Floating Rate Senior Notes bear interest at a rate equal to the three-month LIBOR plus 0.15% and may not be redeemed prior to maturity. Upon a change of control repurchase event, the Corporation will be required to make an offer to repurchase all outstanding Senior Notes at a price in cash equal to 101% of the principal amount of the Senior Notes, plus any accrued and unpaid interest to, but not including, the purchase date.

The management team and Board of Directors have focused on establishing prudent leverage targets that provide for value creation through strong operational performance, continued investment in internal growth opportunities, financial flexibility to support opportunistic and strategic acquisitions and a return of cash to shareholders through sustainable dividends and share repurchase programs while maintaining a solid investment grade rating. Given these parameters, in the ordinary course of business, the Corporation expects to manage its leverage within a range of 2.0 to 2.5 times consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined by the underlying credit agreement.

Based on prior performance and current expectations, the Corporation’s management believes that cash flows from internally generated funds and its access to capital markets are expected to continue to be sufficient to provide the capital resources necessary to fund the operating needs of its existing businesses, cover debt service requirements, and allow for payment of dividends in 2007.

The Corporation may be required to obtain additional levels of financing in order to fund certain strategic acquisitions, if any such opportunities arise. Currently, the Corporation’s senior unsecured debt is rated “BBB+” by Standard & Poor’s and “Baa1” by Moody’s. The Corporation’s commercial paper obligations are rated “A-2” by Standard & Poor’s and “P-2” by Moody’s. While management believes its credit ratings will remain at an investment-grade level, no assurance can be given that these ratings will remain at those levels.

Contractual Obligations

Upon adoption of FIN 48 at January 1, 2007, the Corporation had gross unrecognized tax benefits, excluding interest, of $29.2 million. The Corporation anticipates settlement of $27.8 million with the taxing authorities in the upcoming twelve months and settlement of $1.4 million in one to three years.

Page 28 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

At June 30, 2007, the Corporation’s contractual obligations related to its Senior Notes issued in April 2007 are as follows (amounts in thousands). Interest on the Floating Rate Senior Notes has been calculated assuming a three-month LIBOR rate equal to the June 30, 2007 rate of 5.355%.


	Total		< 1 yr		1-3 yrs.		3-5 yrs.		> 5yrs.

Long-term debt	$	475,000	$	—	$	225,000	$	—	$	250,000
Interest (off balance sheet)		505,909		28,011		71,648		46,875		359,375

Total	$	980,909	$	28,011	$	296,648	$	46,875	$	609,375

ACCOUNTING CHANGES As discussed in Note 1 to the Consolidated Financial Statements, effective January 1, 2007, the Corporation adopted FIN 48 and reduced retained earnings by $1.4 million.

TRENDS AND RISKS The Corporation outlined the risks associated with its business in its Annual Report on Form 10-K for the year ended December 31, 2006, filed with the Securities and Exchange Commission on February 28, 2007. Management continues to evaluate its exposure to all operating risks on an ongoing basis.

In July 2007, the state of North Carolina approved the issuance of $300 million of Grant Anticipation Revenue vehicles, or GARVEE bonds, to fund various road projects statewide. The bonds will be repaid with federal money the state expects to receive for highway and interstate projects in future years. Management currently expects construction to begin on these projects in 2008.

Page 29 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

OUTLOOK 2007 Based upon the Corporation’s strong first-half 2007 performance, management continues to have a positive outlook on the remainder of the year. Aggregates product line pricing is expected to increase 11% to 12% for the year, which is higher than earlier guidance. However, aggregates shipments are more difficult to estimate for the balance of the year. Management currently expects volume to decrease 4% to 6% for the year with the degree of decline predicated on a longer-than-expected correction in the residential construction market, in addition to commercial construction weakness in the Mississippi River markets. The Specialty Products segment, which includes magnesia chemicals, dolomitic lime and focused activity in structural composites, is expected to contribute $33 million to $36 million in pretax earnings in 2007 compared with $22 million in 2006. Management expects the magnesia chemicals business to continue to grow and demand for dolomitic lime from the steel industry to be flat or down slightly.

With this backdrop, management currently expects net earnings per diluted share for the third quarter to range from $1.95 to $2.25 and the range for the year is $6.15 to $6.65. In the third quarter, the overall effective tax rate is expected to be below 30%, which will bring the higher rate of the first two quarters in line with management’s 32% expectation for the year.

OTHER MATTERS If you are interested in Martin Marietta Materials, Inc. stock, management recommends that, at a minimum, you read the Corporation’s current Annual Report and Forms 10-K, 10-Q and 8-K reports to the SEC over the past year. The Corporation’s recent proxy statement for the annual meeting of shareholders also contains important information. These and other materials that have been filed with the SEC are accessible through the Corporation’s web site at www.martinmarietta.com http://www.martinmarietta.com and are also available at the SEC’s web site at www.sec.gov. You may also write or call the Corporation’s Corporate Secretary, who will provide copies of such reports.

Page 30 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

Investors are cautioned that all statements in this Quarterly Report that relate to the future involve risks and uncertainties, and are based on assumptions that the Corporation believes in good faith are reasonable but which may be materially different from actual results. Forward-looking statements give the investor our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate only to historical or current facts. They may use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words of similar meaning in connection with future events or future operating or financial performance. Any or all of our forward-looking statements here and in other publications may turn out to be wrong.

Factors that the Corporation currently believes could cause actual results to differ materially from the forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, the level and timing of federal and state transportation funding, particularly in North Carolina, one of the Corporation’s largest and most profitable states; levels of construction spending in the markets the Corporation serves; the severity of a continued decline in the residential construction market and the unfavorable weather conditions, particularly Atlantic Ocean hurricane activity; the volatility of fuel costs; continued increases in the cost of repair and supply parts; transportation availability, notably barge availability on the Mississippi River system and the availability of railcars and locomotive power to move trains to supply the Corporation’s Texas and Gulf Coast markets; increased transportation costs, including increases from higher passed-through energy costs and higher volumes of rail and water shipments; continued strength in the steel industry markets served by the Corporation’s dolomitic lime products; successful development and implementation of the structural composite technological process, commercialization of strategic products for specific market segments, and the generation of earnings streams sufficient enough to support the recorded assets of the structural composites product line; the effect of credit concerns on the overall economy; and other risk factors listed from time to time found in the Corporation’s filings with the Securities and Exchange Commission. Other factors besides those listed here may also adversely affect the Corporation and may be material to the Corporation. The Corporation assumes no obligation to update any forward-looking statements.

Page 31 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second Quarter and Six Months Ended June 30, 2007
(Continued)

INVESTOR ACCESS TO COMPANY FILINGS Shareholders may obtain, without charge, a copy of Martin Marietta Materials’ Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2006, by writing to:

Martin Marietta Materials, Inc.
Attn: Corporate Secretary
2710 Wycliff Road
Raleigh, North Carolina 27607-3033

Additionally, Martin Marietta Materials’ Annual Report, press releases and filings with the Securities and Exchange Commission, including Forms 10-K, 10-Q, 8-K and 11-K, can generally be accessed via the Corporation’s web site. Filings with the Securities and Exchange Commission accessed via the web site are available through a link with the Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system. Accordingly, access to such filings is available upon EDGAR placing the related document in its database. Investor relations contact information is as follows:

Telephone: (919) 783-4660
Email: investors@martinmarietta.com
Web site address: www.martinmarietta.com

Page 32 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Corporation’s operations are highly dependent upon the interest rate-sensitive construction and steelmaking industries. Consequently, these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs. Since June 30, 2004, the Federal Reserve Board has increased the federal funds rate from 1.00% to 5.25% at June 30, 2007. This increase has affected the residential construction market, which accounted for approximately 17% of the Corporation’s aggregates product line shipments in 2006. Aside from these inherent risks from within its operations, the Corporation’s earnings are affected also by changes in short-term interest rates, as a result of its temporary cash investments, including money market funds and overnight investments in Eurodollars; any outstanding commercial paper obligations; Floating Rate Senior Notes; defined benefit pension plans; and energy costs. Additionally, the shareholders’ equity of the Corporation is affected by changes in the fair value of forward starting interest rate swap agreements.

Commercial Paper Obligations. The Corporation has a $250 million commercial paper program in which borrowings bear interest at a variable rate based on LIBOR. At June 30, 2007, there were no commercial paper borrowings outstanding. As commercial paper borrowings bear interest at a variable rate, the Corporation has interest rate risk when such debt is outstanding.

Floating Rate Senior Notes. The Corporation has $225 million of Floating Rate Senior Notes that bear interest at a rate equal to the three-month LIBOR plus 0.15%. As the Floating Rate Senior Notes bear interest at a variable rate, the Corporation has interest rate risk. The effect of a hypothetical 100 basis point increase in interest rates on borrowings of $225 million would increase interest expense by $2.3 million on an annual basis.

Pension Expense. The Corporation’s results of operations are affected by its pension expense. Assumptions that affect this expense include the discount rate and the expected long-term rate of return on assets. Therefore, the Corporation has interest rate risk associated with these factors. The impact of hypothetical changes in these assumptions on the Corporation’s annual pension expense is discussed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2006, filed with the Securities and Exchange Commission on February 28, 2007.

Energy Costs. Energy costs, including diesel fuel, natural gas and liquid asphalt, represent significant production costs for the Corporation. Increases in these costs generally are tied to energy sector inflation. In 2006, energy costs increased significantly, with fuel price increases lowering earnings per diluted share by $0.36. A hypothetical 10% change in the Corporation’s energy prices in 2007 as compared with 2006, assuming constant volumes, would impact 2007 pretax earnings by approximately $17.8 million.

Page 33 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

Aggregate Risk for Interest Rates and Energy Sector Inflation. The pension expense for 2007 is calculated based on assumptions selected at December 31, 2006. Therefore, interest rate risk in 2007 is limited to the potential effect related to outstanding commercial paper, none of which is currently outstanding, and the Corporation’s Floating Rate Senior Notes. Assuming outstanding Floating Rate Senior Notes of $225 million, the impact of a hypothetical 100 basis point increase in interest rates would increase interest expense and decrease pretax earnings by $2.3 million. Additionally, a 10% change in energy costs would impact annual pretax earnings by $17.8 million.

Forward Starting Interest Rate Swap Agreements. In September 2006, the Corporation entered into forward starting interest rate swap agreements (the “Swap Agreements”) for the anticipated refinancing of $150.0 million of its $200.0 million 5.875% Notes due in 2008. In accordance with Statement of Financial Accounting Standards No. 133 Accounting for Derivative Instruments and Hedging Activities (“FAS 133”), the fair values of the Swap Agreements are recorded as an asset or liability in the consolidated balance sheet. The change in fair value is recorded directly in shareholders’ equity, net of taxes, as other comprehensive earnings/loss. At June 30, 2007, the fair value of the Swap Agreements was an asset of $3.6 million and was included in other noncurrent assets in the Corporation’s consolidated balance sheet.

As a result of the Swap Agreements, the Corporation’s comprehensive earnings/loss will be affected by changes in the LIBOR rate. A hypothetical change in interest rates of 100 basis points would change other comprehensive earnings/loss by approximately $9 million, which is net of taxes of $6 million.

Item 4. Controls and Procedures

As of June 30, 2007, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Corporation’s disclosure controls and procedures were effective as of June 30, 2007. There have been no significant changes in the Corporation’s internal controls or in other factors that could significantly affect the internal controls subsequent to June 30, 2007.

Page 34 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

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, 2006.

Item 1A. Risk Factors.

Reference is made to Part I. Item 1A. Risk Factors and Forward-Looking Statements of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES


					Total Number of Shares		Maximum Number of
					Purchased as Part of		Shares that May Yet be
	Total Number of		Average Price		Publicly Announced		Purchased Under the
Period	Shares Purchased		Paid per Share		Plans or Programs		Plans or Programs
April 1, 2007 -
April 30, 2007		283,000	$	137.55		283,000		1,612,998

May 1, 2007 -
May 31, 2007		236,900	$	152.37		236,900		1,376,098

June 1, 2007 -
June 30, 2007		730,100	$	161.83		730,100		645,998


Total		1,250,000	$	154.54		1,250,000		645,998

The Corporation’s initial stock repurchase program, which authorized the repurchase of 2.5 million shares of common stock, was announced in a press release dated May 6, 1994, and has been updated as appropriate. The program does not have an expiration date.

Page 35 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

PART II-OTHER INFORMATION
(Continued)

Item 4. Submission of Matters to a Vote of Security Holders.

At the Annual Meeting of Shareholders held on May 22, 2007, the shareholders of Martin Martin Marietta Materials Inc.:

(a)

Elected Marcus C. Bennett, Laree E. Perez and Dennis L. Rediker to the Board of Directors of the Corporation to terms expiring at the Annual Meeting of Shareholders in the year 2010. The following table sets forth the votes for each director.


	Votes Cast For		Withheld
Marcus C. Bennett		31,450,498		6,641,247
Laree E. Perez		31,453,099		6,638,646
Dennis L. Rediker		31,450,196		6,641,549

(b)

Ratified the selection of Ernst & Young LLP as independent auditors for the year ending December 31, 2007. The voting results for this ratification were 37,788,836 — For; 85,219 - Against; and 217,690 — Abstained.

Page 36 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

PART II-OTHER INFORMATION
(Continued)

Item 6. Exhibits.


Exhibit
No.		Document

*10.07		Martin Marietta Materials, Inc. Amended and Restated Executive Incentive Plan (which replaces the exhibit filed as Exhibit 10.07 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2006, correcting a typographical error) Commission File No. 1-12744**

31.01		Certification dated August 7, 2007 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02		Certification dated August 7, 2007 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01		Written Statement dated August 7, 2007 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.02		Written Statement dated August 7, 2007 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith

**		Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K

Page 37 of 39

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 7, 2007	By:	/s/ ANNE H. LLOYD
		Anne H. Lloyd
		Senior Vice President and Chief Financial Officer

Page 38 of 39

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended June 30, 2007

EXHIBIT INDEX


Exhibit No.		Document

* 10.07		Martin Marietta Materials, Inc. Amended and Restated Executive Incentive Plan (which replaces the exhibit filed as Exhibit 10.07 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2006, correcting a typographical error) Commission File No. 1-12744**

31.01		Certification dated August 7, 2007 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02		Certification dated August 7, 2007 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01		Written Statement dated August 7, 2007 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.02		Written Statement dated August 7, 2007 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*		Filed herewith

**		Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K

Page 39 of 39

Exhibit 10.07

EXHIBIT 10.07

MARTIN MARIETTA MATERIALS, INC.
AMENDED AND RESTATED EXECUTIVE INCENTIVE PLAN

PURPOSE

The purpose of the Martin Marietta Materials, Inc. Executive Incentive Plan (the “Plan”) is to enhance profits and overall performance by providing for its key management an additional inducement for achieving and exceeding Martin Marietta Materials, Inc. (“MMM” or the “Corporation”) performance objectives. Additionally, the Plan will allow a level of compensation that is appropriate when compared with compensation levels of other comparable organizations.

II.

STANDARD OF CONDUCT AND PERFORMANCE EXPECTATION

	A.		It is expected that the business and individual goals and objectives established for this Plan will be accomplished in accordance with the Corporation’s policy on ethical conduct in business. It is a prerequisite before any award can be considered that a participant will have acted in accordance with the Martin Marietta Materials, Inc. Code of Ethics and Standards of Conduct and fostered an atmosphere to encourage all employees acting under the participant’s supervision to perform their duties in accordance with the highest ethical standards. Ethical behavior is imperative. Thus, in achieving one’s goals, the individual’s commitment and adherence to the Corporation’s ethical standards will be considered paramount in determining awards under this Plan.

	B.		Plan participants whose individual performance is determined to be less than acceptable are not eligible to receive incentive awards.

III.

EFFECTIVE DATE

The Plan will become effective each year commencing January 1.

IV.

BASIC PROGRAM ELIGIBILITY

Subject to the discretion of the Chief Executive Officer of the Corporation, an employee will be eligible to participate in the Plan for any Plan year in which the employee is classified no later than July 1 of that year as one of the following:

President
Vice President
General Manager
Director
Others recommended by a Corporate Officer

A Corporate Officer is any elected officer of the Corporation.

BASIS FOR AWARDS

Awards will be paid based on the actual base salary paid to each participant during each Plan year, and will be determined based on the following criteria:


A.	Responsibility	Target Incentive Award
	Level	(% of Annual Salary)
	Chief Operating Officer	80-100%

	Division Presidents	60%-80%

	Designated VPs of major functions	60%-80%
	reporting to the Corporation’s President
	or Chief Executive Officer
	(Corporate Unit Head)

	Vice President/General Manager	40%-50%
	reporting to a Division President or
	Corporate Unit Head

	Designated Directors/General Managers/	30%-50%
	Vice Presidents

	Other Directors/Managers	30%-35%

The award percentages noted above may be adjusted up or down subject to the discretion of the Chief Executive Officer of the Corporation.

Available Award

Total incentive awards will be based on a combination of the performance of MMM, the Operating Unit (as defined below), the Corporate Unit (as defined below) and the individual, depending on the position occupied by the participant and other factors described below. An “Operating Unit” is an operating unit(s) of the Corporation for which the individual is responsible (for example, one or more segments, divisions, regions, districts, etc.) as designated by the Chief Executive Officer. A “Corporate Unit” is a non-operating unit(s) of the Corporation for which the individual is responsible (for example, one or more of finance, legal, marketing, purchasing, etc.) as designated by the Chief Executive Officer. The portion of the total award determined by the performance of MMM, the Operating Unit, the Corporate Unit and the individual is outlined below.

Operating Units

For Division Presidents, participants reporting to Division Presidents, and participants whose work is primarily related to an Operating Unit, the award will be based on the following:


	Operating Unit			Division			MMM			Individual
	Performance			Performance			Performance			Performance
Divisions
Line Management		50	%		—			25	%		25	%
Staff		37.5	%		—			25	%		37.5	%

Areas, Districts & Regions
Line Management		50	%		12.5	%		12.5	%		25	%
Staff		37.5	%		12.5	%		12.5	%		37.5	%

Corporate Units

For individuals reporting to the Chief Executive Officer who are responsible for a Corporate Unit and are not in an Operating Unit (“Corporate Unit head”), participants reporting to a Corporate Unit head, and participants whose work is primarily related to the Corporation, the award will be based on the following:

	•		Fifty percent (50%) of the award will be based on MMM performance, as defined in Paragraph V.C.1 below.

	•		Fifty percent (50%) of the award will be based on individual performance, as defined in Paragraph V.C.2 above.

Combined Responsibilities

For individuals who have responsibilities described in both Paragraphs V.B.1 and V.B.2 above, the award will be based on the following:

	•		Sixty-five percent (65%) of the award will be based on the performance of MMM and the Operating Unit(s) which that individual is responsible, as defined in Paragraph V.C.1 below.

	•		Thirty-five percent (35%) of the award will be based on individual performance, as defined in Paragraph V.C.2 below.

Performance Criteria

MMM, Operating Units and Corporate Units

MMM, Operating Unit and Corporate Unit performance will be measured by profit contribution, cash flow, sales and production metrics and/or other appropriate financial performance, return, safety and other factors reflecting the performance of the Corporation, Operating Unit and Corporate Unit.

The Management Development and Compensation Committee of the Board of Directors will determine the percentage that was achieved by MMM and the Chief Executive Officer of the Corporation will determine the percentage that was achieved by the Operating Units and the Corporate Units, each based on an assessment of the factors listed above and on a subjective evaluation of the overall contribution to the Corporation and will apply that percentage to the portion of the total award that is available for MMM, the Operating Unit(s) and/or the Corporate Unit(s) as outlined in Paragraph V.B. above.

Individual Performance

The portion of the total award based on individual performance, if applicable, will be based on an assessment of the actual achievement of the individual relative to quantitative, measurable goals established for the Plan year, conduct in accordance with the Corporation’s Code of Ethics and Standards of Conduct and a subjective evaluation of the relative significance of one’s efforts in respect to its bearing on the overall Corporation, Operating Unit(s) and/or Corporate Unit(s).

The Chief Executive Officer will determine the percentage that was achieved by the individual based on an assessment of the factors listed above and on a subjective evaluation of the overall contribution of the individual, and will apply that percentage to the portion of the total award that is available for the individual, as outlined in Paragraph V.B. above.

Discretion of the Chief Executive Officer

Subject to approval by the Management Development and Compensation Committee of the Board of Directors, the Chief Executive Officer of the Corporation may modify the percentage of available award for any or all of the MMM, Operating Unit, Corporate Unit and/or individual awards, based on an assessment of organizational and/or individual contribution. The participant’s individual performance may impact the percent of available MMM, Operating Unit and/or Corporate Unit award. The performance of MMM, the Operating Unit and/or Corporate Unit may impact the percent of available individual award.

Payment of Awards

Awards under the Plan shall be payable in a lump sum, excluding the amounts, if any, credited on an elective or non-elective basis to stock units pursuant to the Martin Marietta Materials, Inc. Incentive Stock Plan, as soon as practicable following the close of the Plan year.

Changes in Participation

An employee must be a full-time employee of the Corporation on December 31 of the Plan Year to be eligible to participate in the Plan. It is recognized that during a Plan year, individual changes in the eligibility group may occur as participants change jobs or terminate through death, retirement or other reasons. As these circumstances occur, the Chief Executive Officer of the Corporation may, in his discretion, give consideration to recommend the grant of the award under the Plan and/or to adjust the amount of incentive award paid.

Persons in the eligibility group hired during a Plan year may be eligible for an award under the Plan in that year at the discretion and approval of the Chief Executive Officer.

Exhibit 31.01

EXHIBIT 31.01

CERTIFICATION PURSUANT TO SECURITIES AND EXCHANGE ACT OF 1934 RULE 13a-14
AS ADOPTED PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Stephen P. Zelnak, Jr., certify that:

	1.		I have reviewed this Form 10-Q of Martin Marietta Materials, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a.		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 7, 2007	By:	/s/ Stephen P. Zelnak, Jr.

		Stephen P. Zelnak, Jr. Chairman and Chief Executive Officer

Exhibit 31.02

EXHIBIT 31.02

CERTIFICATION PURSUANT TO SECURITIES AND EXCHANGE ACT OF 1934 RULE 13a-14
AS ADOPTED PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002

I, Anne H. Lloyd, certify that:

	1.		I have reviewed this Form 10-Q of Martin Marietta Materials, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a.		All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 7, 2007	By:	/s/ Anne H. Lloyd

		Anne H. Lloyd Senior Vice President and Chief Financial Officer

Exhibit 32.01

EXHIBIT 32.01

Written Statement Pursuant to 18 U.S.C. 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended June 30, 2007 (the “Report”) of Martin Marietta Materials, Inc. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Stephen P. Zelnak, Jr., the Chief Executive Officer of the Registrant certify, to the best of my knowledge, that:

	(1)		the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

	(2)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


		/s/ Stephen P. Zelnak, Jr.

		Stephen P. Zelnak, Jr. Chief Executive Officer

Dated: August 7, 2007

A signed original of this written statement required by Section 906 has been provided to Martin Marietta Materials, Inc. and will be retained by Martin Marietta Materials, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.02

EXHIBIT 32.02

Written Statement Pursuant to 18 U.S.C. 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended June 30, 2007 (the “Report”) of Martin Marietta Materials, Inc. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Anne H. Lloyd, the Chief Financial Officer of the Registrant certify, to the best of my knowledge, that:

	(1)		the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

	(2)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


		/s/ Anne H. Lloyd

		Anne H. Lloyd Senior Vice President and Chief Financial Officer

Dated: August 7, 2007

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents