Table of Contents

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

 

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

For the quarterly period ended June 30, 2013

OR

 

[    ]

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 incorporation or organization)				(I.R.S. Employer Identification Number)
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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  þ                                         No  ¨

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

 

		Large accelerated filer  þ		Accelerated filer  ¨
		Non-accelerated filer  ¨		Smaller reporting company  ¨

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

                                     Yes  ¨             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 24, 2013
Common Stock, $0.01 par value		46,240,582

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

 

		Page
Part I. Financial Information:
Item 1. Financial Statements.
Consolidated Balance Sheets – June 30, 2013, December 31, 2012 and June 30, 2012			3
Consolidated Statements of Earnings and Comprehensive Earnings - Three and Six Months Ended June  30, 2013 and 2012			4
Consolidated Statements of Cash Flows - Six Months Ended June 30, 2013 and 2012			5
Consolidated Statement of Total Equity - Six Months Ended June 30, 2013			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			50
Item 4. Controls and Procedures.			51
Part II. Other Information:
Item 1. Legal Proceedings.			52
Item 1A. Risk Factors.			52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			52
Item 4. Mine Safety Disclosures.			52
Item 6. Exhibits.			53
Signatures			54
Exhibit Index			55

 

Page 2 of 55

---

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

		June 30, 2013				December 31, 2012				June 30, 2012
		(Unaudited)				(Audited)				(Unaudited)
		(Dollars in Thousands, Except Per Share Data)
ASSETS
Current Assets:
Cash and cash equivalents		$	43,712			$	25,394			$	41,393
Accounts receivable, net			287,521				224,050				275,416
Inventories, net			348,873				332,311				331,984
Current deferred income tax benefits			79,104				77,716				75,000
Other current assets			47,275				40,930				36,538
Total Current Assets			806,485				700,401				760,331
Property, plant and equipment			3,843,806				3,812,587				3,739,475
Allowances for depreciation, depletion and amortization			(2,126,420)				(2,059,346)				(1,985,697)
Net property, plant and equipment			1,717,386				1,753,241				1,753,778
Goodwill			616,303				616,204				618,874
Other intangibles, net			48,668				50,433				52,213
Other noncurrent assets			42,277				40,647				41,337
Total Assets		$	3,231,119			$	3,160,926			$	3,226,533
LIABILITIES AND EQUITY
Current Liabilities:
Bank overdraft		$	-			$	-			$	3,352
Accounts payable			99,960				83,537				113,308
Accrued salaries, benefits and payroll taxes			16,259				19,461				15,586
Pension and postretirement benefits			4,616				6,851				5,746
Accrued insurance and other taxes			30,679				28,682				29,616
Current maturities of long-term debt and short-term facilities			6,169				5,676				7,171
Accrued interest			7,709				7,490				7,516
Other current liabilities			27,141				21,638				16,771
Total Current Liabilities			192,533				173,335				199,066
Long-term debt			1,087,150				1,042,183				1,137,076
Pension, postretirement and postemployment benefits			184,849				183,122				153,240
Noncurrent deferred income taxes			235,505				225,592				229,972
Other noncurrent liabilities			90,415				86,395				90,375
Total Liabilities			1,790,452				1,710,627				1,809,729
Equity:
Common stock, par value $0.01 per share			461				459				457
Preferred stock, par value $0.01 per share			-				-				-
Additional paid-in capital			429,936				414,657				404,074
Accumulated other comprehensive loss			(106,257)				(106,169)				(80,640)
Retained earnings			1,077,998				1,101,598				1,054,048
Total Shareholders’ Equity			1,402,138				1,410,545				1,377,939
Noncontrolling interests			38,529				39,754				38,865
Total Equity			1,440,667				1,450,299				1,416,804
Total Liabilities and Equity		$	3,231,119			$	3,160,926			$	3,226,533

See accompanying notes to consolidated financial statements.

 

Page 3 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
		(In Thousands, Except Per Share Data)
		(Unaudited)
Net Sales		$	508,688			$	491,191			$	853,837			$	841,723
Freight and delivery revenues			53,994				54,497				93,844				97,938
Total revenues			562,682				545,688				947,681				939,661
Cost of sales			401,912				389,125				734,474				715,831
Freight and delivery costs			53,994				54,497				93,844				97,938
Total cost of revenues			455,906				443,622				828,318				813,769
Gross Profit			106,776				102,066				119,363				125,892
Selling, general & administrative expenses			37,843				35,275				75,492				68,303
Business development costs			275				9,240				582				35,140
Other operating (income) and expenses, net			(756)				(1,690)				(2,567)				(1,465)
Earnings from Operations			69,414				59,241				45,856				23,914
Interest expense			13,619				13,256				27,115				26,743
Other nonoperating (income) and expenses, net			(544)				(42)				78				(1,897)
Earnings (Loss) from continuing operations before taxes on income			56,339				46,027				18,663				(932)
Income tax expense (benefit)			15,026				8,553				6,579				(1,323)
Earnings from Continuing Operations			41,313				37,474				12,084				391
Gain (Loss) on discontinued operations, net of related tax expense (benefit) of $83, $30, $56 and ($70), respectively			254				334				154				(257)
Consolidated net earnings			41,567				37,808				12,238				134
Less: Net earnings (loss) attributable to noncontrolling interests			259				1,057				(1,230)				116
Net Earnings Attributable to Martin Marietta Materials, Inc.		$	41,308			$	36,751			$	13,468			$	18
Net Earnings Attributable to Martin Marietta Materials, Inc.
Earnings from continuing operations		$	41,054			$	36,417			$	13,314			$	275
Earnings (Loss) from discontinued operations			254				334				154				(257)
		$	41,308			$	36,751			$	13,468			$	18
Consolidated Comprehensive Earnings (See Note 1)
Earnings attributable to Martin Marietta Materials, Inc.		$	39,999			$	38,102			$	13,380			$	3,268
Earnings (Loss) attributable to noncontrolling interests			262				1,060				(1,225)				122
		$	40,261			$	39,162			$	12,155			$	3,390
Net Earnings (Loss) Attributable to Martin Marietta Materials, Inc.
Per Common Share
Basic from continuing operations attributable to common shareholders		$	0.88			$	0.79			$	0.29			$	0.01
Discontinued operations attributable to common shareholders			0.01				0.01				-				(0.01)
		$	0.89			$	0.80			$	0.29			$	-
Diluted from continuing operations attributable to common shareholders		$	0.88			$	0.79			$	0.29			$	0.01
Discontinued operations attributable to common shareholders			0.01				0.01				-				(0.01)
		$	0.89			$	0.80			$	0.29			$	-
Weighted-Average Common Shares Outstanding
Basic			46,129				45,781				46,079				45,757
Diluted			46,260				45,905				46,217				45,757
Cash Dividends Per Common Share		$	0.40			$	0.40			$	0.80			$	0.80

See accompanying notes to consolidated financial statements.

 

 

Page 4 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

		Six Months Ended June 30,
		2013				2012
		(Dollars in Thousands)
		(Unaudited)
Cash Flows from Operating Activities:
Consolidated net earnings		$	12,238			$	134
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities:
Depreciation, depletion and amortization			85,992				88,735
Stock-based compensation expense			3,981				4,577
Gains on divestitures and sales of assets			(422)				(839)
Deferred income taxes			9,282				6,777
Excess tax benefits from stock-based compensation transactions			(2,253)				-
Other items, net			204				1,322
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net			(65,165)				(71,668)
Inventories, net			(15,838)				(9,378)
Accounts payable			16,423				21,045
Other assets and liabilities, net			4,030				(13,036)
Net Cash Provided by Operating Activities			48,472				27,669
Cash Flows from Investing Activities:
Additions to property, plant and equipment			(50,002)				(66,251)
Acquisitions, net			(3,246)				(87)
Proceeds from divestitures and sales of assets			1,874				3,947
Net Cash Used for Investing Activities			(51,374)				(62,391)
Cash Flows from Financing Activities:
Borrowings of long-term debt			295,500				171,000
Repayments of long-term debt			(250,167)				(87,134)
Debt issuance costs			(510)				(300)
Change in bank overdraft			-				3,352
Dividends paid			(37,068)				(36,861)
Distributions to owners of noncontrolling interests			-				(800)
Issuances of common stock			11,212				836
Excess tax benefits from stock-based compensation transactions			2,253				-
Net Cash Provided by Financing Activities			21,220				50,093
Net Increase in Cash and Cash Equivalents			18,318				15,371
Cash and Cash Equivalents, beginning of period			25,394				26,022
Cash and Cash Equivalents, end of period		$	43,712			$	41,393
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest		$	25,868			$	26,537
Cash refunds for income taxes		$	6,103			$	4,309

See accompanying notes to consolidated financial statements.

 

Page 5 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENT OF TOTAL EQUITY

(Unaudited)

 

(in thousands)		Shares of Common Stock				Common Stock				Additional Paid-in Capital				Accumulated Other Comprehensive Loss				Retained Earnings				Total Shareholders’ Equity				Noncontrolling Interests				Total Equity
Balance at December 31, 2012			46,002			$	459			$	414,657			$	(106,169)			$	1,101,598			$	1,410,545			$	39,754			$	1,450,299
Consolidated net earnings			-				-				-				-				13,468				13,468				(1,230)				12,238
Other comprehensive (loss) earnings			-				-				-				(88)				-				(88)				5				(83)
Dividends declared			-				-				-				-				(37,068)				(37,068)				-				(37,068)
Issuances of common stock for stock award plans			230				2				11,298				-				-				11,300				-				11,300
Stock-based compensation expense			-				-				3,981				-				-				3,981				-				3,981
Balance at June 30, 2013			46,232			$	461			$	429,936			$	(106,257)			$	1,077,998			$	1,402,138			$	38,529			$	1,440,667

See accompanying notes to consolidated financial statements.

 

Page 6 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.	Significant Accounting Policies

Organization

Martin Marietta Materials, Inc., (the “Corporation”) is engaged principally in the construction aggregates business. The Corporation’s aggregates product line, which accounted for 71% of consolidated 2012 net sales, includes crushed stone, sand and gravel, and is used primarily for construction of highways and other infrastructure projects, and in the nonresidential and residential construction industries. Aggregates products are also used in the railroad, environmental, utility and agricultural industries. These aggregates products, along with the asphalt products, ready mixed concrete and road paving construction services of the Corporation’s vertically-integrated operations (which accounted for 18% of consolidated 2012 net sales), are sold and shipped from a network of 301 quarries, distribution facilities and plants to customers in 33 states, Canada, the Bahamas and the Caribbean Islands.

Effective January 1, 2013, the Corporation reorganized the operations and management reporting structure of its Aggregates business, resulting in a change to its reportable segments. The Corporation currently conducts its aggregates and vertically-integrated operations through three reportable segments as follows:

 

AGGREGATES BUSINESS
Reportable Segments		Mid-America Group		Southeast Group		West Group
Operating Locations		Indiana, Iowa, Kentucky, Maryland, Minnesota, eastern Nebraska, North Dakota, North Carolina, Ohio, South Carolina, Virginia, Washington and West Virginia		Alabama, Florida, Georgia, Mississippi, Tennessee, Nova Scotia and the Bahamas		Arkansas, Colorado, Kansas, Louisiana, Missouri, western Nebraska, Nevada, Oklahoma, Texas, Utah and Wyoming

In addition to the Aggregates business, the Corporation has a Specialty Products segment, accounting for 11% of consolidated 2012 net sales, which produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry.

 

Page 7 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.	Significant Accounting Policies (continued)

 

Basis of Presentation

The accompanying unaudited consolidated financial statements of 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 in 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, 2012, filed with the Securities and Exchange Commission on February 22, 2013. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three and six months ended June 30, 2013 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2012 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2012.

Reclassifications

Prior-year segment information for the Aggregates business presented in Note 9 has been reclassified to conform to the presentation of the Corporation’s current reportable segments.

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss

Consolidated comprehensive earnings/loss for the Corporation consist of consolidated net earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; foreign currency translation adjustments; and the amortization of the value of terminated forward starting interest rate swap agreements into interest expense.

 

Page 8 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.	Significant Accounting Policies (continued)

 

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)

Comprehensive earnings attributable to Martin Marietta Materials, Inc. are as follows:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
			(Dollars in Thousands)
Net earnings attributable to Martin Marietta Materials, Inc.		$	41,308			$	36,751			$	13,468			$	18
Other comprehensive (loss) earnings, net of tax			(1,309)				1,351				(88)				3,250
Comprehensive earnings attributable to Martin Marietta Materials, Inc.		$	39,999			$	38,102			$	13,380			$	3,268

Comprehensive earnings (loss) attributable to noncontrolling interests, consisting of net earnings or loss and adjustments for the funded status of pension and postretirement benefit plans, are as follows:

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
			(Dollars in Thousands)
Net earnings (loss) attributable to noncontrolling interests		$	259			$	1,057			$	(1,230)			$	116
Other comprehensive earnings, net of tax			3				3				5				6
Comprehensive earnings (loss) attributable to noncontrolling interests		$	262			$	1,060			$	(1,225)			$	122

 

Page 9 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.	Significant Accounting Policies (continued)

 

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)

Changes in accumulated other comprehensive earnings, net of tax, are as follows:

		(Dollars in Thousands)
		Pension and   Postretirement   Benefit Plans				Foreign Currency				Unamortized Value of Terminated Forward Starting Interest Rate Swap				Accumulated Other Comprehensive Loss
			Three Months Ended June 30, 2013
Balance at beginning of period		$	(106,296)			$	5,323			$	(3,975)			$	(104,948)
Other comprehensive loss before reclassifications, net of tax			(2,278)				(1,169)				-				(3,447)
Amounts reclassified from accumulated other comprehensive loss, net of tax			1,971				-				167				2,138
Other comprehensive earnings, net of tax			(307)				(1,169)				167				(1,309)
Balance at end of period		$	(106,603)			$	4,154			$	(3,808)			$	(106,257)

 

		Three Months Ended June 30, 2012
Balance at beginning of period		$	(82,656)			$	5,275			$	(4,610)			$	(81,991)
Other comprehensive earnings before reclassifications, net of tax			(401)				(53)				-				(454)
Amounts reclassified from accumulated other comprehensive loss, net of tax			1,650				-				155				1,805
Other comprehensive earnings, net of tax			1,249				(53)				155				1,351
Balance at end of period		$	(81,407)			$	5,222			$	(4,455)			$	(80,640)

The other comprehensive loss before reclassifications for pension and postretirement benefit plans is net of tax of $1,490,000 and $260,000 for the three months ended June 30, 2013 and 2012, respectively.

 

Page 10 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.	Significant Accounting Policies (continued)

 

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)

 

		(Dollars in Thousands)
		Pension and   Postretirement   Benefit Plans				Foreign Currency				Unamortized Value of Terminated Forward Starting Interest Rate Swap				Accumulated Other Comprehensive Loss
			Six Months Ended June 30, 2013
Balance at beginning of period		$	(108,189)			$	6,157			$	(4,137)			$	(106,169)
Other comprehensive loss before reclassifications, net of tax			(2,312)				(2,003)				-				(4,315)
Amounts reclassified from accumulated other comprehensive loss, net of tax			3,898				-				329				4,227
Other comprehensive earnings, net of tax			1,586				(2,003)				329				(88)
Balance at end of period		$	(106,603)			$	4,154			$	(3,808)			$	(106,257)

 

		Six Months Ended June 30, 2012
Balance at beginning of period		$	(84,204)			$	5,076			$	(4,762)			$	(83,890)
Other comprehensive (loss) earnings before reclassifications, net of tax			(465)				146				-				(319)
Amounts reclassified from accumulated other comprehensive loss, net of tax			3,262				-				307				3,569
Other comprehensive earnings, net of tax			2,797				146				307				3,250
Balance at end of period		$	(81,407)			$	5,222			$	(4,455)			$	(80,640)

The other comprehensive loss before reclassifications for pension and postretirement benefit plans is net of tax of $1,512,000 and $302,000 for the six months ended June 30, 2013 and 2012, respectively.

 

Page 11 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.	Significant Accounting Policies (continued)

 

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)

Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive loss are as follows:

 

		(Dollars in Thousands)
		Pension and Postretirement Benefit Plans				Unamortized Value of Terminated Forward Starting Interest Rate Swap				Net Noncurrent Deferred Tax Assets
			Three Months Ended June 30, 2013
Balance at beginning of period		$	69,641			$	2,600			$	72,241
Tax effect of other comprehensive earnings			201				(108	)			93
Balance at end of period		$	69,842			$	2,492			$	72,334
			Three Months Ended June 30, 2012
Balance at beginning of period		$	54,148			$	3,017			$	57,165
Tax effect of other comprehensive earnings			(820	)			(102	)			(922	)
Balance at end of period		$	53,328			$	2,915			$	56,243
			Six Months Ended June 30, 2013
Balance at beginning of period		$	70,881			$	2,707			$	73,588
Tax effect of other comprehensive earnings			(1,039	)			(215	)			(1,254	)
Balance at end of period		$	69,842			$	2,492			$	72,334
			Six Months Ended June 30, 2012
Balance at beginning of period		$	55,161			$	3,116			$	58,277
Tax effect of other comprehensive earnings			(1,833	)			(201	)			(2,034	)
Balance at end of period		$	53,328			$	2,915			$	56,243

 

Page 12 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.	Significant Accounting Policies (continued)

 

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)

Reclassifications out of accumulated other comprehensive loss are as follows:

 

		Three Months Ended June  30,								Six Months Ended June  30,								Affected line items in the consolidated financial statements
		2013				2012				2013				2012
			(Dollars in Thousands)
Pension and postretirement benefit plans
Settlement charge		$	--			$	524			$	--			$	524
Amortization of:
Prior service credit			(695	)			(736	)			(1,403	)			(1,388	)
Actuarial loss			3,955				2,942				7,852				6,261
			3,260				2,730				6,449				5,397			Cost of sales; Selling, general & administrative expenses
Tax effect			(1,289	)			(1,080	)			(2,551	)			(2,135	)		Deferred income taxes
		$	1,971			$	1,650			$	3,898			$	3,262
Unamortized value of terminated forward starting interest rate swap
Additional interest expense		$	275			$	257			$	544			$	508			Interest expense
Tax effect			(108	)			(102	)			(215	)			(201	)		Deferred income taxes
		$	167			$	155			$	329			$	307

 

Page 13 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.	Significant Accounting Policies (continued)

 

Earnings (Loss) per Common Share

The numerator for basic and diluted earnings (loss) per common share is net earnings attributable to Martin Marietta Materials, Inc., reduced by dividends and undistributed earnings attributable to the Corporation’s unvested restricted stock awards and incentive stock awards. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Corporation’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three months ended June 30, 2013 and 2012 and the six months ended June 30, 2013, the diluted per-share computations reflect a change in the number of common shares outstanding to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued. For the six months ended June 30, 2012, all such awards were antidilutive given the net loss available to common shareholders attributable to Martin Marietta Materials Inc.

The following table reconciles the numerator and denominator for basic and diluted earnings (loss) per common share:

 

		Three Months Ended June  30,								Six Months Ended June 30,
		2013				2012				2013				2012
			(In Thousands)
Net earnings from continuing operations attributable to Martin Marietta Materials, Inc.		$	41,054			$	36,417			$	13,314			$	275
Less: Distributed and undistributed earnings attributable to unvested awards			197				232				182				242
Basic and diluted net earnings available to common shareholders from continuing operations attributable to Martin Marietta Materials, Inc.			40,857				36,185				13,132				33
Basic and diluted net earnings (loss) available to common shareholders from discontinued operations			254				334				154				(257)
Basic and diluted net earnings (loss) available to common shareholders attributable to Martin Marietta Materials, Inc.		$	41,111			$	36,519			$	13,286			$	(224)
Basic weighted-average common shares outstanding			46,129				45,781				46,079				45,757
Effect of dilutive employee and director awards			131				124				138				--
Diluted weighted-average common shares outstanding			46,260				45,905				46,217				45,757

 

Page 14 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

2.	Discontinued Operations

Divestitures and Permanent Closures

Operations that are disposed of or permanently shut down 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 in the consolidated statements of earnings and comprehensive earnings. The results of operations for divestitures do not include Corporate overhead that was allocated during the periods the Corporation owned these operations.

All discontinued operations relate to the Aggregates business. Discontinued operations consist of the following:

 

		Three Months Ended June  30,								Six Months Ended June  30,
		2013				2012				2013				2012
			(Dollars in Thousands)
Pretax gain on operations		$	337			$	364			$	210			$	27
Pretax loss on disposals			--				--				--				(354)
Pretax gain (loss)			337				364				210				(327)
Income tax expense (benefit)			83				30				56				(70)
Net earnings (loss)		$	254			$	334			$	154			$	(257)

 

3.	Inventories, Net

 

		June 30, 2013				December 31, 2012				June 30, 2012
			(Dollars in Thousands)
Finished products		$	366,320			$	355,881			$	355,455
Products in process and raw materials			18,701				16,442				18,714
Supplies and expendable parts			59,437				56,805				55,201
			444,458				429,128				429,370
Less allowances			(95,585)				(96,817)				(97,386)
Total		$	348,873			$	332,311			$	331,984

 

Page 15 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

4.	Long-Term Debt

 

		June 30, 2013				December 31, 2012				June 30, 2012
			(Dollars in Thousands)
6.6% Senior Notes, due 2018		$	298,783			$	298,677			$	298,575
7% Debentures, due 2025			124,457				124,443				124,430
6.25% Senior Notes, due 2037			228,130				228,114				228,097
Term Loan Facility, due 2015, interest rate of 2.20% at June 30, 2013; 2.21% at December 31, 2012; and 1.87% at June 30, 2012			240,000				245,000				245,000
Revolving Facility, interest rate of 1.89% at June 30, 2013; 1.91% at December 31, 2012; and 1.62% at June 30, 2012			50,000				50,000				145,000
Trade Receivable Facility, interest rate of 0.79% at June 30, 2013			150,000				--				--
AR Credit Facility, interest rate of 1.00% at December 31, 2012 and June 30, 2012			--				100,000				100,000
Other notes			1,949				1,625				3,145
Total debt			1,093,319				1,047,859				1,144,247
Less current maturities			(6,169)				(5,676)				(7,171)
Long-term debt		$	1,087,150			$	1,042,183			$	1,137,076

The Corporation’s $100,000,000 secured accounts receivable credit facility (the “AR Credit Facility”) expired by its own terms on April 20, 2013. On April 19, 2013, the Corporation, through a wholly-owned consolidated special purpose subsidiary, established a $150,000,000 trade receivable securitization facility with SunTrust Bank and certain other lenders that may become a party to the facility from time to time (the “Trade Receivable Facility”). Borrowings under the Trade Receivable Facility bear interest at a rate equal to the one-month LIBOR plus 0.6% and are backed by trade receivables originated by the Corporation ($274,818,000 at June 30, 2013), which the Corporation then sells to the wholly-owned consolidated special purpose subsidiary. Availability under the Trade Receivable Facility is limited to the lesser of the facility limit or 82% of “eligible” receivables, as defined. The Corporation continues to be responsible for the servicing and administration of the receivables purchased. The Corporation has the option to request an increase in the commitment amount by up to an additional $100,000,000, in increments of no less than $25,000,000, subject to receipt of lender commitments for the increased amount. The Trade Receivable Facility matures on April 19, 2014. At June 30, 2013, outstanding borrowings under the Trade Receivable Facility were classified as long-term on the consolidated balance sheet as the Corporation has the ability and intent to refinance or renew amounts outstanding. The Trade Receivable Facility contains a cross-default provision to the Corporation’s other debt agreements.

 

Page 16 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

4.	Long-Term Debt (continued)

 

The Corporation’s Credit Agreement, consisting of a $250,000,000 senior unsecured term loan (the “Term Loan Facility”) and a $350,000,000 senior unsecured revolving facility (the “Revolving Facility”), 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 month period (the “Ratio”) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Corporation may exclude from the Ratio debt incurred in connection with certain acquisitions for a period of 180 days so long as the Corporation maintains specified ratings on its long-term unsecured debt and the Ratio calculated without such exclusion does not exceed 3.75x. Additionally, if no amounts are outstanding under the Revolving Facility, consolidated debt, including debt guaranteed by the Corporation, may be reduced by the Corporation’s unrestricted cash and cash equivalents in excess of $50,000,000, such reduction not to exceed $200,000,000, for purposes of the covenant calculation.

The Corporation amended the Credit Agreement Ratio in 2012. The amendment temporarily increased the maximum Ratio to 3.75x at June 30, 2013. The Ratio returns to the pre-amendment maximum of 3.50x for the September 30, 2013 calculation date. The Corporation was in compliance with this Ratio at June 30, 2013.

Available borrowings under the Revolving Facility are reduced by any outstanding letters of credit issued by the Corporation under the Revolving Facility. At June 30, 2013, the Corporation had $2,507,000 of outstanding letters of credit issued under the Revolving Facility.

Accumulated other comprehensive loss includes the unamortized value of terminated forward starting interest rate swap agreements. For the three and six months ended June 30, 2013, the Corporation recognized $275,000 and $544,000, respectively, as additional interest expense. For the three and six months ended June 30, 2012, the Corporation recognized $257,000 and $508,000, respectively, as additional interest expense. The ongoing amortization of the terminated value of the forward starting interest rate swap agreements will increase annual interest expense by approximately $1,000,000 until the maturity of the 6.6% Senior Notes in 2018.

 

5.	Financial Instruments

The Corporation’s financial instruments include temporary cash investments, accounts receivable, notes receivable, bank overdraft, accounts payable, publicly-registered long-term notes, debentures and other long-term debt.

 

Page 17 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

5.	Financial Instruments (continued)

 

Temporary cash investments are placed primarily in money market funds, money market demand deposit accounts and Eurodollar time deposits with the following financial institutions: Bank of America, N.A., Branch Banking and Trust Company, JPMorgan Chase Bank, N.A., Regions Bank, Fifth Third Bank, and Wells Fargo Bank, N.A. The Corporation’s cash equivalents have maturities of less than three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.

Customer receivables are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions. However, customer receivables are more heavily concentrated in certain states (namely, Texas, North Carolina, Iowa, Colorado and Georgia). The estimated fair values of customer receivables approximate their carrying amounts due to the short-term nature of the receivables.

Notes receivable are primarily promissory notes with customers and are not publicly traded. Management estimates that the fair value of notes receivable approximates the carrying amount.

The bank overdraft represents the float of outstanding checks. The estimated fair value of the bank overdraft approximates its carrying value.

Accounts payable represent amounts owed to suppliers and vendors. The estimated fair value of accounts payable approximates its carrying amounts due to the short-term nature of the payables.

The carrying values and fair values of the Corporation’s long-term debt were $1,093,319,000 and $1,141,592,000, respectively, at June 30, 2013; $1,047,859,000 and $1,105,650,000, respectively, at December 31, 2012; and $1,144,247,000 and $1,204,965,000, respectively, at June 30, 2012. The estimated fair value of the Corporation’s publicly-registered long-term notes was estimated based on level 1 of the fair value hierarchy using quoted market prices. The estimated fair value of other borrowings, which primarily represents variable-rate debt, approximates its carrying amount as the interest rates reset periodically.

 

6.	Income Taxes

 

		Six Months Ended June 30,
		2013				2012
Estimated effective income tax rate:
Continuing operations			35.3%				142.0%
Discontinued operations			26.7%				21.4%
Consolidated overall			35.2%				110.6%

 

Page 18 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

6.	Income Taxes (continued)

 

The Corporation’s effective income tax rate reflects the effect of federal and state income taxes and the impact of differences in book and tax accounting arising from the net permanent benefits associated with the statutory depletion deduction for mineral reserves, the impact of foreign losses for which no tax benefit was realized and the domestic production deduction. 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 income tax rate.

The Corporation’s unrecognized tax benefits, excluding interest, correlative effects and indirect benefits, are as follows:

 

		Six Months Ended June 30, 2013
			(Dollars in Thousands)
Unrecognized tax benefits at beginning of period			$        15,380
Gross increases – tax positions in prior years			4,508
Gross decreases – tax positions in prior years			(2,412)
Gross increases – tax positions in current year			777
Unrecognized tax benefits at end of period			$        18,253

The Corporation anticipates that it is reasonably possible that unrecognized tax benefits may decrease up to $10,290,000 during the twelve months ending June 30, 2014 as a result of resolution through payments to taxing authorities and the expiration of the statute of limitations for the 2009 tax year. The majority of the decrease relates to the expected settlement of the Advance Pricing Agreement (“APA”) the Corporation has with Canada that increased the sales price charged for intercompany shipments from Canada to the United States during the years 2005 through 2011. Upon final settlement with the Canadian taxing authority, the Corporation will be allowed a corresponding refund of tax in the United States for the years 2005 through 2011 pursuant to an APA with the United States, the impact of which is not included in the table of unrecognized tax benefits at June 30, 2013.

At June 30, 2013, unrecognized tax benefits of $15,035,000 related to permanent income tax differences, net of federal tax expense, would have favorably affected the Corporation’s effective income tax rate if recognized. However, the unrecognized tax benefits, if recognized, would be offset by the corresponding $8,367,000 expense in the United States related to the APA settlement.

The consolidated overall estimated effective income tax rate for the six months ended June 30, 2012 included a refund of federal tax and interest of $1,626,000 related to the 2006 tax year. This discrete event drove an increase in the consolidated overall estimated effective income tax rate for the six months ended June 30, 2012.

 

Page 19 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

7.	Pension and Postretirement Benefits

The estimated components of the recorded net periodic benefit cost (credit) for pension and postretirement benefits are as follows:

 

		Three Months Ended June 30,
		Pension								Postretirement Benefits
		2013				2012				2013				2012
			(Dollars in Thousands)
Service cost		$	4,060			$	3,174			$	56			$	59
Interest cost			5,799				5,743				251				322
Expected return on assets			(6,717	)			(5,802	)			--				--
Amortization of:
Prior service cost (credit)			113				113				(808	)			(849	)
Actuarial loss (gain)			3,949				3,016				6				(74	)
Settlement charge			--				524				--				--
Net periodic benefit cost (credit)		$	7,204			$	6,768			$	(495	)		$	(542	)

 

		Six Months Ended June 30,
		Pension								Postretirement Benefits
		2013				2012				2013				2012
			(Dollars in Thousands)
Service cost		$	8,060			$	6,740			$	113			$	114
Interest cost			11,512				12,193				506				617
Expected return on assets			(13,335	)			(12,318	)			--				--
Amortization of:
Prior service cost (credit)			224				240				(1,627	)			(1,628	)
Actuarial loss (gain)			7,840				6,403				12				(142	)
Settlement charge			--				524				--				--
Net periodic benefit cost (credit)		$	14,301			$	13,782			$	(996	)		$	(1,039	)

 

8.	Commitments and Contingencies

Legal and Administrative Proceedings

The Corporation is engaged in certain legal and administrative proceedings incidental to its normal business activities. In the opinion of management and counsel, based upon currently-available facts, it is remote that the ultimate outcome of any 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 overall results of the Corporation’s operations, its cash flows or its financial position.

 

Page 20 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

8.	Commitments and Contingencies (continued)

 

Environmental and Governmental Regulations

The United States Environmental Protection Agency (“USEPA”) includes the lime industry as a national enforcement priority under the federal Clean Air Act (“CAA”). As part of the industry wide effort, the USEPA issued Notices of Violation/Findings of Violation (“NOVs”) to the Corporation in 2010 and 2011 regarding the Corporation’s compliance with the CAA New Source Review (“NSR”) program at its Specialty Products dolomitic lime manufacturing plant in Woodville, Ohio. The Corporation has been providing information to the USEPA in response to these NOVs and has had several meetings with the USEPA. The Corporation believes it is in substantial compliance with the NSR program. Because the enforcement proceeding is in its initial stage, at this time the Corporation cannot reasonably estimate what likely penalties or upgrades to equipment might ultimately be required. The Corporation believes that any costs related to any upgrades will be spread over time and will not have a material adverse effect on the Corporation’s operations or its financial condition, but can give no assurance that the ultimate resolution of this matter will not have a material adverse effect on the financial condition or results of operations of the Specialty Products segment of the business.

Guarantee of Affiliate

The Corporation has a guaranty agreement with Bank of America, N.A., to guarantee a $6,200,000 amortizing loan due April 2015. The Corporation also had an unconditional guaranty of payment agreement with Fifth Third Bank (“Fifth Third”) to guarantee the repayment of amounts borrowed by an affiliate under a $24,000,000 revolving line of credit provided by Fifth Third. The affiliate has agreed to reimburse and indemnify the Corporation for any payments and expenses the Corporation may incur from these agreements. The Corporation holds a subordinate lien on certain of the affiliate’s assets as collateral for potential payments under the agreements.

 

Page 21 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

9.	Business Segments

The Corporation conducts its aggregates and vertically-integrated operations through three reportable business segments: Mid-America Group, Southeast Group and West Group. The Corporation also has a Specialty Products segment that includes magnesia-based chemicals products and dolomitic lime.

The following tables display selected financial data for continuing operations for the Corporation’s reportable business segments. 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 segment information has been reclassified to conform to the presentation of the Corporation’s current reportable segments.

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
			(Dollars in Thousands)
Total revenues:
Mid-America Group		$	203,532			$	201,785			$	318,127			$	326,716
Southeast Group			60,442				63,027				116,184				123,080
West Group			237,364				225,627				391,796				378,314
Total Aggregates Business			501,338				490,439				826,107				828,110
Specialty Products			61,344				55,249				121,574				111,551
Total		$	562,682			$	545,688			$	947,681			$	939,661
Net sales:
Mid-America Group		$	186,405			$	184,712			$	292,637			$	299,326
Southeast Group			55,261				58,848				106,584				114,006
West Group			210,390				197,169				342,815				326,213
Total Aggregates Business			452,056				440,729				742,036				739,545
Specialty Products			56,632				50,462				111,801				102,178
Total		$	508,688			$	491,191			$	853,837			$	841,723
Earnings (Loss) from operations:
Mid-America Group		$	46,951			$	43,827			$	35,923			$	38,603
Southeast Group			(5,176)				(5,623)				(13,563)				(11,528)
West Group			16,940				17,346				5,642				5,019
Total Aggregates Business			58,715				55,550				28,002				32,094
Specialty Products			18,726				17,451				35,804				35,672
Corporate			(8,027)				(13,760)				(17,950)				(43,852)
Total		$	69,414			$	59,241			$	45,856			$	23,914

 

Page 22 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

9.	Business Segments (continued)

 

Assets employed for the Mid-America and West Groups changed since prior year as a result of the Corporation’s reorganization of the operations of its Aggregates business (see Note 1).

 

		June 30, 2013				December 31, 2012				June 30, 2012
			(Dollars in Thousands)
Assets employed:
Mid-America Group		$	1,079,198			$	1,036,155			$	1,070,907
Southeast Group			588,098				607,705				615,742
West Group			1,184,065				1,147,879				1,182,720
Total Aggregates Business			2,851,361				2,791,739				2,869,369
Specialty Products			153,542				157,673				142,597
Corporate			226,216				211,514				214,567
Total		$	3,231,119			$	3,160,926			$	3,226,533

The Aggregates business includes the aggregates product line, along with the asphalt, ready mixed concrete and road paving product lines of its vertically-integrated operations. All vertically-integrated operations reside in the West Group. The following tables provide net sales and gross profit by product line for the Aggregates business and are reconciled to consolidated net sales and gross profit.

 

		Three Months Ended June  30,								Six Months Ended June 30,
		2013				2012				2013				2012
			(Dollars in Thousands)
Net sales:
Aggregates		$	357,240			$	356,820			$	605,031			$	614,165
Asphalt			18,811				20,235				28,444				32,774
Ready Mixed Concrete			36,662				29,246				64,030				49,501
Road Paving			39,343				34,428				44,531				43,105
Total Aggregates Business			452,056				440,729				742,036				739,545
Specialty Products			56,632				50,462				111,801				102,178
Total		$	508,688			$	491,191			$	853,837			$	841,723
Gross profit (loss):
Aggregates		$	78,942			$	76,928			$	81,003			$	88,343
Asphalt			4,903				3,441				2,448				2,706
Ready Mixed Concrete			1,649				679				1,334				(550)
Road Paving			(284)				787				(4,571)				(2,068)
Total Aggregates Business			85,210				81,835				80,214				88,431
Specialty Products			21,284				19,923				40,866				39,313
Corporate			282				308				(1,717)				(1,852)
Total		$	106,776			$	102,066			$	119,363			$	125,892

 

Page 23 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

10.	Supplemental Cash Flow Information

The components of the change in other assets and liabilities, net, are as follows:

 

		Six Months Ended June 30,
		2013				2012
		(Dollars in Thousands)
Other current and noncurrent assets		$	(4,463)			$	(9,482)
Accrued salaries, benefits and payroll taxes			(5,366)				(2,962)
Accrued insurance and other taxes			1,996				3,208
Accrued income taxes			(430)				(5,675)
Accrued pension, postretirement and postemployment benefits			2,122				(252)
Other current and noncurrent liabilities			10,171				2,127
		$	4,030			$	(13,036)

The change in other current and noncurrent liabilities is driven by unrecognized tax benefits related to the estimated settlement of the APA described in Note 6.

 

11.	Subsequent Events

On July 1, 2013, the Corporation acquired three aggregates quarries in the greater Atlanta, Georgia area for $62,000,000. The operating results of the acquired locations will be reported through the Corporation’s Southeast Group in the financial statements starting from the date of acquisition. This transaction provides over 800 million tons of aggregates reserves and enhances the Corporation’s existing long-term position in this market.

 

Page 24 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

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

OVERVIEW    Martin Marietta Materials, Inc. (the “Corporation”), is the nation’s second largest producer of construction aggregates. The Corporation’s annual net sales and earnings are predominately derived from its Aggregates business, which processes and sells granite, limestone, and other aggregates products, including asphalt, ready mixed concrete and road paving construction services, from a network of 301 quarries, distribution facilities and plants to customers in 33 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 nonresidential and residential building development. Aggregates products are also used in the railroad, environmental, utility and agricultural industries.

Effective January 1, 2013, the Corporation reorganized the groups within its Aggregates business. The Corporation currently conducts its aggregates and vertically-integrated operations through three reportable business segments: Mid-America Group, Southeast Group and West Group. The Mid-America Group continues to include operations formerly reported in the Mideast Group, along with operations in Iowa, Minnesota, eastern Nebraska, North Dakota, and Washington (which were formerly reported in the West Group). The Southeast Group remains unchanged. With the exception of operations now reported in the Mid-America Group, there were no other changes to the West Group.

 

AGGREGATES BUSINESS
Reportable Segments		Mid-America Group		Southeast Group		West Group
Operating Locations		Indiana, Iowa, Kentucky, Maryland, Minnesota, eastern Nebraska, North Dakota, North Carolina, Ohio, South Carolina, Virginia, Washington and West Virginia		Alabama, Florida, Georgia, Mississippi, Tennessee, Nova Scotia and the Bahamas		Arkansas, Colorado, Kansas, Louisiana, Missouri, western Nebraska, Nevada, Oklahoma, Texas, Utah and Wyoming
Primary Product Lines		Aggregates (stone, sand and gravel)		Aggregates (stone, sand and gravel)		Aggregates (stone, sand and gravel), asphalt, ready mixed concrete and road paving
Primary Types of Aggregates Locations		Quarries		Quarries and Distribution Yards		Quarries and Distribution Yards
Primary Modes of Transportation for Aggregates Product Line		Truck, Limited Rail and Water		Truck, Rail and Water		Truck and Rail

 

Page 25 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The Corporation also has a Specialty Products segment that produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry.

CRITICAL ACCOUNTING POLICIES    The Corporation outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission (“SEC”) on February 22, 2013. There were no changes to the Corporation’s critical accounting policies during the six months ended June 30, 2013.

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. However, 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, 2013 and 2012 in accordance with GAAP and reconciliations of the ratios as percentages of total revenues to percentages of net sales:

Gross Margin in Accordance with GAAP

 

		Three Months Ended June  30,								Six Months Ended June 30,
		2013				2012				2013				2012
		(Dollars in Thousands)
Gross profit		$	106,776			$	102,066			$	119,363			$	125,892
Total revenues		$	562,682			$	545,688			$	947,681			$	939,661
Gross margin			19.0%				18.7%				12.6%				13.4%

 

Page 26 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

Gross Margin Excluding Freight and Delivery Revenues

 

		Three Months Ended June  30,								Six Months Ended June  30,
		2013				2012				2013				2012
		(Dollars in Thousands)
Gross profit		$	106,776			$	102,066			$	119,363			$	125,892
Total revenues		$	562,682			$	545,688			$	947,681			$	939,661
Less: Freight and delivery revenues			(53,994)				(54,497)				(93,844)				(97,938)
Net sales		$	508,688			$	491,191			$	853,837			$	841,723
Gross margin excluding freight and delivery revenues			21.0%				20.8%				14.0%				15.0%

Operating Margin in Accordance with GAAP

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
		(Dollars in Thousands)
Earnings from operations		$	69,414			$	59,241			$	45,856			$	23,914
Total revenues		$	562,682			$	545,688			$	947,681			$	939,661
Operating margin			12.3%				10.9%				4.8%				2.5%

 

Page 27 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

Operating Margin Excluding Freight and Delivery Revenues

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
		(Dollars in Thousands)
Earnings from operations		$	69,414			$	59,241			$	45,856			$	23,914
Total revenues		$	562,682			$	545,688			$	947,681			$	939,661
Less: Freight and delivery revenues			(53,994)				(54,497)				(93,844)				(97,938)
Net sales		$	508,688			$	491,191			$	853,837			$	841,723
Operating margin excluding freight and delivery revenues			13.6%				12.1%				5.4%				2.8%

Quarter Ended June 30

Significant items for the quarter ended June 30, 2013 (unless noted, all comparisons are versus the prior-year quarter):

 

—

Earnings per diluted share of $0.89 compared with $0.80 (prior-year quarter includes $0.12 per diluted share charge for business development costs)

—

Consolidated net sales of $508.7 million, up 3.6%, compared with $491.2 million

—

Aggregates product line pricing up 1.7%; aggregates product line volume down 1.6%

—

Consolidated gross margin (excluding freight and delivery revenues) of $106.8 million, up $4.7 million

—

Record Specialty Products net sales of $56.6 million

—

Consolidated selling, general and administrative expenses (“SG&A”) up 20 basis points as a percentage of net sales

—

Consolidated earnings from operations of $69.4 million compared with $59.2 million (prior-year quarter includes $9.2 million of business development costs)

The following table presents net sales, gross profit, selling, general and administrative expenses and earnings from operations data for the Corporation and its reportable segments for the three months ended June 30, 2013 and 2012. 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.

 

Page 28 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

		Three Months Ended June 30,
		2013								2012
		Amount				% of Net Sales				Amount				% of Net Sales
		(Dollars in Thousands)
Net sales:
Mid-America Group		$	186,405							$	184,712
Southeast Group			55,261								58,848
West Group			210,390								197,169
Total Aggregates Business			452,056				100.0				440,729				100.0
Specialty Products			56,632				100.0				50,462				100.0
Total		$	508,688				100.0			$	491,191				100.0
Gross profit (loss):
Mid-America Group		$	59,607				32.0			$	56,255				30.5
Southeast Group			(551)				(1.0)				(896)				(1.5)
West Group			26,154				12.4				26,476				13.4
Total Aggregates Business			85,210				18.8				81,835				18.6
Specialty Products			21,284				37.6				19,923				39.5
Corporate			282				--				308				--
Total		$	106,776				21.0			$	102,066				20.8
Selling, general & administrative expenses:
Mid-America Group		$	12,705							$	13,810
Southeast Group			4,491								4,520
West Group			11,186								10,988
Total Aggregates Business			28,382				6.3				29,318				6.7
Specialty Products			2,529				4.5				2,196				4.4
Corporate			6,932				--				3,761				--
Total		$	37,843				7.4			$	35,275				7.2
Earnings (Loss) from operations:
Mid-America Group		$	46,951							$	43,827
Southeast Group			(5,176)								(5,623)
West Group			16,940								17,346
Total Aggregates Business			58,715				13.0				55,550				12.6
Specialty Products			18,726				33.1				17,451				34.6
Corporate			(8,027)				--				(13,760)				--
Total		$	69,414				13.6			$	59,241				12.1

 

Page 29 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The Corporation reported higher second-quarter net sales and gross margin (excluding freight and delivery revenues) compared with the prior-year quarter, which was particularly noteworthy in light of excessive rainfall in most of the Corporation’s key markets. Consolidated net sales increased 3.6%, driven by pricing growth in all Aggregates business product lines and a new quarterly net sales record achieved by the Specialty Products business. Net earnings increased 12.4% despite being constrained by the impact of wet weather, particularly in the midwestern and southeastern United States. For example, the state of Iowa had the wettest second quarter in over a century, and, many Georgia markets had rainfall during the quarter more than double the average levels, including Augusta which reported its wettest month in weather history in June. While difficult to isolate all of the quarter’s weather impact, the Corporation knows its effect was at least three-fold. First, with respect to potential lost sales, the Corporation estimates that precipitation reduced shipment volumes between 1.5 million and 1.7 million tons. Second, though more difficult to estimate than the sales component, throughput challenges created by wet weather significantly reduced operational productivity. Finally, lower production volumes led to an underabsorption of fixed costs. Despite these challenging conditions, the Corporation continues to see positive indicators of construction activity, including double-digit growth on a year-to-date basis in the private-sector construction market. Historically, increases in private construction have led to growth in public-sector construction. Management anticipates this trend continuing and the Corporation remains well-positioned to serve these opportunities.

During the quarter, pricing momentum in the aggregates product line continued with each of the Aggregates business’ reportable groups achieving increases. The West Group reported a 2.8% improvement, reflecting price increases implemented over the past year. The Mid-America and Southeast Groups reported average selling price increases of 1.9% and 0.4%, respectively, in the aggregates product line. Recently implemented mid-year pricing increases provide further support for continued pricing momentum. The Corporation’s vertically-integrated businesses also achieved pricing growth, with the ready mixed concrete and asphalt product lines reporting increases of 8.3% and 4.3%, respectively.

Through the first half of the year, growth in construction activity has been concentrated in the private sector which, on a year-to-date basis through May, reported a 12% increase in construction put-in-place. Consistent with this trend, the Corporation’s private-sector markets reported volume growth over the prior-year quarter. The nonresidential market, which represented approximately 30% of second-quarter aggregates shipments, increased 7%. This growth was attributable to commercial construction, namely office and retail, and was partially offset by a decline in shipments to the energy sector due to a modest slowdown in shale oil field activity. The residential construction market continues to recover; housing starts are up more than 10% over the prior year and housing completions are up over 20%. Shipments to the residential market increased 4% and accounted for 13% of second-quarter aggregates shipments, representing a more normalized and balanced percentage of overall product sales. Management expects further increases in residential volumes as the housing market continues to move toward a more sustainable equilibrium. Finally, the ChemRock/Rail end-use market, approximately 10% of second-quarter aggregates shipments, increased 2%.

 

Page 30 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The infrastructure market comprised the remaining 47% of second-quarter aggregates shipments. Lower government spending and wet weather contributed to an 8% decline in quarterly volumes to this end-use market and a 1.6% overall shipment decline for the Aggregates business. However, given the ongoing recovery of the U.S. economy, reflected by employment growth, management remains optimistic for increased future public-sector construction activity. Similar to the pattern experienced in Texas over the last few years, growth in the residential sector within the Corporation’s geographic areas is expected to stimulate growth in the nonresidential and infrastructure markets to serve an expanding economy and increased population. The Corporation sees early signs of this cycle developing in both Colorado and Georgia.

Management is also encouraged by states’ recent initiatives to address long-neglected infrastructure needs. For example, the South Carolina Department of Transportation recently increased its budget by $500 million for repairs of existing roads and the Indiana Department of Transportation approved up to an additional $415 million annually for construction of new roads and expansion of major highways. Additionally, Texas is expected to initiate work on several large highway projects in the second half of the year in connection with its increased state Department of Transportation budget. Texas is also one of the most proactive states in applications for funding under the Transportation Infrastructure Finance and Innovation Act, or TIFIA, a program with the ability to leverage up to $50 billion in financing for transportation projects of either national or regional significance. A number of TIFIA awards are currently expected to be announced later this year. Consistent with management’s previous viewpoint, given the timing of the initial awards, any meaningful impact of TIFIA is not expected prior to 2014.

Net sales by product line for the Aggregates business are as follows:

 

		Three Months Ended June 30,
		2013				2012
		(Dollars in Thousands)
Net sales1:
Aggregates		$	357,240			$	356,820
Asphalt			18,811				20,235
Ready Mixed Concrete			36,662				29,246
Road Paving			39,343				34,428
Total Aggregates Business		$	452,056			$	440,729

 

1Net	sales by product line reflect the elimination of inter-product line sales.

 

Page 31 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The following tables present volume and pricing data and shipments data for the aggregates product line.

 

		Three Months Ended June 30, 2013
Volume/Pricing Variance (1)		Volume				Pricing
Heritage Aggregates Product Line (2):
Mid-America Group			(1.2%)				1.9%
Southeast Group			(6.7%)				0.4%
West Group			(0.5%)				2.8%
Heritage Aggregates Operations(2)			(1.6%)				1.8%
Aggregates Product Line (3)			(1.6%)				1.7%

 

		Three Months Ended June 30,
		2013				2012
		(tons in thousands)
Shipments
Heritage Aggregates Product Line (2):
Mid-America Group			16,573				16,774
Southeast Group			4,273				4,579
West Group			13,703				13,767
Heritage Aggregates Operations(2)			34,549				35,120
Acquisitions			24				--
Divestitures (4)			1				10
Aggregates Product Line (3)			34,574				35,130

 

		Three Months Ended June 30,
		2013				2012
		(tons in thousands)
Shipments
Aggregates Product Line (3):
Tons to external customers			33,286				33,906
Internal tons used in other product lines			1,288				1,224
Total aggregates tons			34,574				35,130

 

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

(2)	Heritage Aggregates Product Line and Heritage Aggregates Operations exclude volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and exclude divestitures.

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

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

 

Page 32 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The per-ton average selling price for the aggregates product line was $10.48 and $10.31 for the three months ended June 30, 2013 and 2012, respectively.

The Corporation’s vertically-integrated operations include asphalt, ready mixed concrete and road paving businesses in Arkansas, Colorado and Texas. Average selling prices by product line for the Corporation’s vertically-integrated operations are as follows:

 

		Three Months Ended June 30,
		2013				2012
Asphalt		$	42.55/ton			$	40.80/ton
Ready Mixed Concrete		$	82.29/yd3			$	76.01/yd3

Unit shipments by product line for the Corporation’s vertically-integrated operations are as follows:

 

		Three Months Ended June 30,
		2013				2012
		(in thousands)
Asphalt Product Line:
Tons to external customers			382				468
Internal tons used in road paving business			461				399
Total asphalt tons			843				867
Ready Mixed Concrete – cubic yards			436				377

The Aggregates business is significantly affected by erratic weather patterns, seasonal changes and other weather-related conditions. Aggregates production and shipment levels correlate 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 and midwestern United States generally experience more severe winter weather conditions than operations in the Southeast and Southwest. Excessive rainfall, and conversely excessive drought, can also jeopardize shipments, production and profitability in all markets served by the Corporation. Because of the significant impact of weather on the Corporation’s operations, second-quarter results are not indicative of expected performance for other interim periods or the full year.

 

Page 33 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The Specialty Products business continued its strong performance and generated second-quarter net sales of $56.6 million, reflecting growth in both the dolomitic lime and chemicals product lines. Sales of dolomitic lime include the contribution from the Woodville kiln that became operational during the fourth quarter of 2012, partially offset by the impact of a 4% decrease in steel production compared with the prior-year quarter. Earnings from operations of $18.7 million were up 7% over the prior-year quarter, but were negatively affected by higher natural gas costs which reduced earnings from operations by $0.8 million.

Operations personnel continued their focus on cost control, as evidenced by a 20-basis-point expansion of consolidated gross margin (excluding freight and delivery revenues), despite weather constraints that resulted in shipment and production reductions. The Mid-America Group, led by the performance of the Mid-Atlantic Division, which includes Virginia, North Carolina, and South Carolina, achieved a 150-basis-point improvement in gross margin (excluding freight and delivery revenues). The Mid-Atlantic Division leveraged a 10% increase in aggregates product line shipments into an incremental gross margin (excluding freight and delivery revenues) exceeding the Corporation’s publicly-stated expectations.

Quarterly gross profit for the Southeast Group in 2013 was negatively impacted by $1.1 million in unplanned repairs for a shiploader/reclaimer.

The following presents a rollforward of the Corporation’s gross profit (dollars in thousands):

 

Consolidated gross profit, quarter ended June 30, 2012		$	102,066
Aggregates product line:
Pricing strength			6,305
Volume weakness			(5,885)
Cost decreases, net			1,594
Increase in aggregates product line gross profit			2,014
Vertically-integrated operations			1,361
Specialty Products			1,361
Corporate			(26)
Increase in consolidated gross profit			4,710
Consolidated gross profit, quarter ended June 30, 2013		$	106,776

 

Page 34 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

Gross profit (loss) by business is as follows:

 

		Three Months Ended June 30,
		2013				2012
		(Dollars in Thousands)
Gross profit (loss):
Aggregates		$	78,942			$	76,928
Asphalt			4,903				3,441
Ready Mixed Concrete			1,649				679
Road Paving			(284)				787
Total Aggregates Business			85,210				81,835
Specialty Products			21,284				19,923
Corporate			282				308
Total		$	106,776			$	102,066

Consolidated SG&A expenses were 7.4% of net sales, up 20 basis points compared with the prior-year quarter. On an absolute basis, SG&A increased $2.6 million, largely related to incremental costs for an information systems upgrade expected to be completed by the fall of 2013.

During the second quarter of 2012, the Corporation incurred $9.2 million of business development costs related to a proposed significant business combination that was not consummated.

Among other items, other operating income and expenses, net, includes gains and losses on the sale of assets; gains and losses related to customer accounts receivable; rental, royalty and services income; accretion expense, depreciation expense and gains and losses related to asset retirement obligations; and research and development costs. For the second quarter, consolidated other operating income and expenses, net, was income of $0.8 million in 2013 compared with income of $1.7 million in 2012, primarily as a result of higher gains on the sale of assets in 2012.

 

Page 35 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

Six Months Ended June 30

Significant items for the six months ended June 30, 2013 (unless noted, all comparisons are versus the prior-year period):

 

—

Earnings per diluted share of $0.29 compared with breakeven earnings per diluted share (prior-year period includes $0.46 per diluted share charge for business development costs)

—

Consolidated net sales of $853.8 million, up 1.4%, compared with $841.7 million

—

Aggregates product line pricing up 3.3%; aggregates product line volume down 4.6%; production cost per ton up 2.9%

—

Specialty Products net sales of $111.8 million and earnings from operations of $35.8 million

—

Consolidated SG&A up 70 basis points as a percentage of net sales

—

Consolidated earnings from operations of $45.9 million compared with $23.9 million (prior-year period includes $35.1 million of business development costs)

 

Page 36 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The following table presents net sales, gross profit, selling, general and administrative expenses and earnings from operations data for the Corporation and its reportable segments for the six months ended June 30, 2013 and 2012. 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.

 

		Six Months Ended June 30,
		2013								2012
		Amount				% of Net Sales				Amount				% of Net Sales
		(Dollars in Thousands)
Net sales:
Mid-America Group		$	292,637							$	299,326
Southeast Group			106,584								114,006
West Group			342,815								326,213
Total Aggregates Business			742,036				100.0				739,545				100.0
Specialty Products			111,801				100.0				102,178				100.0
Total		$	853,837				100.0			$	841,723				100.0
Gross profit (loss):
Mid-America Group		$	59,514				20.3			$	63,222				21.1
Southeast Group			(5,456)				(5.1)				(721)				(0.6)
West Group			26,156				7.6				25,930				7.9
Total Aggregates Business			80,214				10.8				88,431				12.0
Specialty Products			40,866				36.6				39,313				38.5
Corporate			(1,717)				--				(1,852)				--
Total		$	119,363				14.0			$	125,892				15.0
Selling, general & administrative expenses:
Mid-America Group		$	24,944							$	27,021
Southeast Group			8,970								9,411
West Group			22,928								22,207
Total Aggregates Business			56,842				7.7				58,639				7.9
Specialty Products			5,020				4.5				4,725				4.6
Corporate			13,630				--				4,939				--
Total		$	75,492				8.8			$	68,303				8.1
Earnings (Loss) from operations:
Mid-America Group		$	35,923							$	38,603
Southeast Group			(13,563)								(11,528)
West Group			5,642								5,019
Total Aggregates Business			28,002				3.8				32,094				4.3
Specialty Products			35,804				32.0				35,672				34.9
Corporate			(17,950)				--				(43,852)				--
Total		$	45,856				5.4			$	23,914				2.8

 

Page 37 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

For the first six months of 2013, consolidated net sales increased 1.4%, driven by pricing and volume improvements for the ready mixed concrete product line and record net sales achieved by the Specialty Products business.

Pricing momentum in the aggregates product line continued with each of our reportable groups achieving pricing growth. The West Group reported a 5.3% improvement, primarily due to price increases implemented over the past year. The Mid-America and Southeast Groups reported average selling price increases of 2.5% and 3.0%, respectively, in the aggregates product line. The Corporation’s vertically-integrated businesses also achieved pricing growth, with the ready mixed concrete and asphalt product lines reporting increases of 8.5% and 4.8%, respectively.

Excessive rainfall and lower government spending contributed to a 4.6% decline in aggregates product line shipments during the six months ended June 30, 2013.

Net sales by product line for the Aggregates business are as follows:

 

		Six Months Ended June 30,
		2013				2012
		(Dollars in Thousands)
Net sales1:
Aggregates		$	605,031			$	614,165
Asphalt			28,444				32,774
Ready Mixed Concrete			64,030				49,501
Road Paving			44,531				43,105
Total Aggregates Business		$	742,036			$	739,545

 

1	Net sales by product line reflect the elimination of inter-product line sales.

The following tables present volume and pricing data and shipments data for the aggregates product line.

 

		Six Months Ended June 30, 2013
Volume/Pricing Variance (1)		Volume				Pricing
Heritage Aggregates Product Line (2):
Mid-America Group			(4.8%)				2.5%
Southeast Group			(9.4%)				3.0%
West Group			(2.6%)				5.3%
Heritage Aggregates Operations(2)			(4.6%)				3.2%
Aggregates Product Line (3)			(4.6%)				3.3%

 

Page 38 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

		Six Months Ended June 30,
		2013				2012
		(tons in thousands)
Shipments
Heritage Aggregates Product Line (2):
Mid-America Group			25,215				26,474
Southeast Group			8,093				8,935
West Group			24,020				24,654
Heritage Aggregates Operations (2)			57,328				60,063
Acquisitions			24				--
Divestitures (4)			2				33
Aggregates Product Line (3)			57,354				60,096

 

		Six Months Ended June 30,
		2013				2012
		(tons in thousands)
Shipments
Aggregates Product Line (3):
Tons to external customers			55,407				58,125
Internal tons used in other product lines			1,947				1,971
Total aggregates tons			57,354				60,096

 

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

(2)	Heritage Aggregates Product Line and Heritage Aggregates Operations exclude volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and exclude divestitures.

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

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

The per-ton average selling price for the aggregates product line was $10.67 and $10.34 for the six months ended June 30, 2013 and 2012, respectively.

Average selling prices by product line for the Corporation’s vertically-integrated operations are as follows:

 

		Six Months Ended June 30,
		2013					2012
Asphalt			$	42.51/ton				$	40.58/ton
Ready Mixed Concrete			$	82.04/yd	3			$	75.62/yd	3

 

Page 39 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

Unit shipments by product line for the Corporation’s vertically-integrated operations are as follows:

 

		Six Months Ended June 30,
		2013				2012
		(in thousands)
Asphalt Product Line:
Tons to external customers			608				791
Internal tons used in road paving business			496				486
Total asphalt tons			1,104				1,277
Ready Mixed Concrete – cubic yards			765				644

For 2013, Specialty Products’ net sales of $111.8 million increased $9.6 million, or 9.4%, over the prior-year period. Sales growth for the dolomitic lime product line reflects shipments from the new lime kiln which became operational in November 2012, partially offset by the loss of higher-margin sales from a customer that filed for bankruptcy. Earnings from operations were $35.8 million compared with $35.7 million.

Consolidated gross margin (excluding freight and delivery revenues) was 14.0% for 2013 versus 15.0% for 2012. The reduction reflects lower aggregates product line shipments, which reduced the operating leverage of the Aggregates business. Furthermore, gross profit for the Southeast Group in 2013 was negatively impacted by $1.7 million in unplanned repairs for a shiploader/reclaimer.

The following presents a rollforward of the Corporation’s gross profit (dollars in thousands):

 

Consolidated gross profit, six months ended June 30, 2012		$	125,892
Aggregates product line:
Pricing strength			19,149
Volume weakness			(28,283)
Cost decreases, net			1,794
Decrease in aggregates product line gross profit			(7,340)
Vertically-integrated operations			(877)
Specialty Products			1,553
Corporate			135
Decrease in consolidated gross profit			(6,529)
Consolidated gross profit, six months ended June 30, 2013		$	119,363

 

Page 40 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

Gross profit (loss) by business is as follows:

 

		Six Months Ended
		June 30,
		2013				2012
		(Dollars in Thousands)
Gross profit (loss):
Aggregates		$	81,003			$	88,343
Asphalt			2,448				2,706
Ready Mixed Concrete			1,334				(550)
Road Paving			(4,571)				(2,068)
Total Aggregates Business			80,214				88,431
Specialty Products			40,866				39,313
Corporate			(1,717)				(1,852)
Total		$	119,363			$	125,892

Consolidated SG&A expenses were 8.8% of net sales, up 70 basis points compared with the prior-year period. On an absolute basis, SG&A increased $7.2 million, largely related to incremental costs for an information systems upgrade.

During the six months ended June 30, 2012, the Corporation incurred $35.1 million of business development costs related to a proposed significant business combination that was not consummated.

For the first six months, consolidated other operating income and expenses, net, was income of $2.6 million in 2013 compared with income of $1.5 million in 2012, due in part to higher gains on the sale of assets in 2013.

In addition to other offsetting amounts, other nonoperating income and expenses, net, are comprised generally of interest income and net equity earnings from nonconsolidated investments. Consolidated other nonoperating income and expenses, net, for the six months ended June 30 was an expense of $0.1 million in 2013 compared with income of $1.9 million in 2012, with the change resulting from a gain on debt repurchased at a discount in 2012 and a gain on foreign currency transactions in 2012.

 

Page 41 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities for the six months ended June 30, 2013 was $48.5 million compared with $27.7 million for the same period in 2012. The improvement is attributable to the absence of significant business development costs incurred in 2012. Operating cash flow is primarily derived from consolidated net earnings or loss, before deducting depreciation, depletion and amortization, and offset by working capital requirements. Depreciation, depletion and amortization were as follows:

 

		Six Months Ended
		June 30,
		2013				2012
		(Dollars in Thousands)
Depreciation		$	81,096			$	84,056
Depletion			2,284				1,903
Amortization			2,612				2,776
		$	85,992			$	88,735

The seasonal nature of the construction aggregates business impacts quarterly operating cash flow when compared with the full year. Full-year 2012 net cash provided by operating activities was $222.7 million compared with $27.7 million for the first six months of 2012.

During the six months ended June 30, 2013, the Corporation invested $50.0 million of capital into its business. Full-year capital spending, exclusive of acquisitions, if any, is expected to be approximately $155.0 million in 2013. Comparable full-year capital expenditures were $151.0 million in 2012.

On April 19, 2013, the Corporation, through a wholly-owned consolidated special purpose subsidiary, established a $150 million trade receivable securitization facility with SunTrust Bank and certain other lenders that may become a party to the facility from time to time (the “Trade Receivable Facility”). Borrowings under the Trade Receivable Facility are limited based on the balance of the Corporation’s accounts receivable and bear interest at a rate equal to the one-month LIBOR plus 0.6%. The Corporation has the option to request an increase in the commitment amount by up to an additional $100 million in increments of no less than $25 million, subject to receipt of lender commitments for the increased amount. The Trade Receivable Facility matures on April 19, 2014.

On July 1, 2013, the Corporation acquired three aggregates quarries in Atlanta, Georgia, for $62.0 million.

 

Page 42 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The Corporation can repurchase its common stock through open-market purchases pursuant to authority granted by its Board of Directors. The Corporation did not repurchase any shares of common stock during the six months ended June 30, 2013 and 2012. Management currently has no intent to repurchase any shares of the Corporation’s common stock. At June 30, 2013, 5,042,000 shares of common stock were remaining under the Corporation’s repurchase authorization.

The Credit Agreement (which consists of a $250 million Term Loan Facility and a $350 million Revolving Facility) 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 month period (the “Ratio”) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Corporation may exclude from the Ratio debt incurred in connection with certain acquisitions for a period of 180 days so long as the Corporation, as a consequence of such specified acquisition, does not have its ratings on long-term unsecured debt fall below BBB by Standard & Poor’s or Baa2 by Moody’s and the Ratio calculated without such exclusion does not exceed 3.75x. Additionally, if there are no amounts outstanding under the Revolving Facility, consolidated debt, including debt guaranteed by the Corporation, will be reduced for purposes of the covenant calculation by the Corporation’s unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million.

The Corporation amended the Credit Agreement Ratio in 2012. The amendment temporarily increased the maximum Ratio to 3.75x at June 30, 2013. The Ratio returns to the pre-amendment maximum of 3.50x for the September 30, 2013 calculation date.

The Ratio is calculated as debt, including debt guaranteed by the Corporation, divided by consolidated EBITDA, as defined, for the trailing twelve months. Consolidated EBITDA is generally defined as earnings before interest expense, income tax expense, and depreciation, depletion and amortization expense for continuing operations. Additionally, stock-based compensation expense is added back and interest income is deducted in the calculation of consolidated EBITDA. Certain other nonrecurring noncash items, if they occur, can affect the calculation of consolidated EBITDA.

 

Page 43 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

At June 30, 2013, the Corporation’s ratio of consolidated debt to consolidated EBITDA, as defined, for the trailing twelve months EBITDA was 3.17 times and was calculated as follows:

 

		Twelve Month Period July 1, 2012 to June 30, 2013
		(Dollars in thousands)
Earnings from continuing operations attributable to Martin Marietta Materials, Inc.		$	97,949
Add back:
Interest expense			53,711
Income tax expense			24,656
Depreciation, depletion and amortization expense			169,965
Stock-based compensation expense			7,185
Deduct:
Interest income			(294)
Consolidated EBITDA, as defined		$	353,172
Consolidated debt, including debt guaranteed by the Corporation, at June 30, 2013		$	1,117,807
Deduct:
Unrestricted cash and cash equivalents in excess of $50,000 at June 30, 2013			--
Consolidated net debt, as defined, at June 30, 2013		$	1,117,807
Consolidated debt to consolidated EBITDA, as defined, at June 30, 2013 for the trailing twelve months EBITDA			3.17X

The Trade Receivable Facility contains a cross-default provision to the Corporation’s other debt agreements. In the event of a default on the Ratio, the lenders can terminate the Credit Agreement and Trade Receivable Facility and declare any outstanding balances as immediately due.

Cash on hand, along with the Corporation’s projected internal cash flows and availability of financing resources, including its access to debt and equity capital markets, is expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, meet capital expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise and allow for payment of dividends for the foreseeable future. At June 30, 2013, the Corporation had $297 million of unused borrowing capacity under its Revolving Facility, subject to complying with the related leverage covenant. The Trade Receivable Facility expires on April 19, 2014 and the Credit Agreement expires on March 31, 2015.

 

Page 44 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The Corporation may be required to obtain financing to fund certain strategic acquisitions, if any such opportunities arise, or to refinance outstanding debt. Any strategic acquisition of size for cash would likely require an appropriate balance of newly-issued equity with debt in order to maintain a composite investment-grade credit rating. Furthermore, the Corporation is exposed to the credit markets, through the interest cost related to its variable-rate debt, which includes borrowings under its Revolving Facility, Term Loan Facility and Trade Receivable Facility at June 30, 2013. The Corporation is currently rated by three credit rating agencies; two of those agencies’ credit ratings are investment-grade level and the third agency’s credit rating is one level below investment grade. The Corporation’s composite credit rating remains at investment-grade level, which facilitates obtaining financing at lower rates than noninvestment-grade ratings. While management believes its composite credit ratings will remain at an investment-grade level, no assurance can be given that these ratings will remain at current levels, particularly if any opportunities arise to consummate strategic acquisitions.

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, 2012, filed with the Securities and Exchange Commission on February 22, 2013. Management continues to evaluate its exposure to all operating risks on an ongoing basis.

OUTLOOK

Management is encouraged by various positive trends in the Corporation’s business and markets – especially in private-sector employment and construction. Management anticipates volumes to the nonresidential end-use market to increase in the mid-single digits given that the Architecture Billings Index, or ABI, a leading economic indicator for nonresidential construction spending activity, remains at a strong level. Residential construction is experiencing a level of growth not seen since late 2005 with seasonally-adjusted starts ahead of any period since 2008. Management believes this trend in housing starts will continue and the residential end-use market will experience double-digit volume growth. By contrast, the weather-related slowdown in aggregates shipments experienced in the first half of the year, coupled with a delay in large infrastructure projects moving through the public letting cycle, leads management to expect aggregates shipments to the infrastructure end-use market to be down in the mid-single digits for the full year. The ChemRock/Rail end-use market is expected to be flat compared with 2012. Cumulatively, management anticipates aggregates product line shipments will increase 1% to 3%.

Management currently expects aggregates product line pricing will increase 2% to 4% for the full year. A variety of factors beyond the Corporation’s direct control may continue to exert pressure on volumes, and the forecasted pricing increase is not expected to be uniform across the company.

 

Page 45 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

Management expects the Corporation’s vertically-integrated businesses to generate between $350 million and $375 million of net sales and $20 million to $22 million of gross profit.

Aggregates product line direct production costs per ton should be flat compared with 2012. SG&A expenses, excluding costs in 2013 and 2012 related to the information systems upgrade, as a percentage of net sales are expected to decline slightly.

Net sales for the Specialty Products segment are expected to be between $220 million and $230 million, generating $81 million to $85 million of gross profit. Steel utilization and natural gas prices are two key factors for this segment.

Interest expense is expected to remain relatively flat. The Corporation’s effective tax rate is expected to approximate 26%, excluding discrete events. Capital expenditures are forecast at $155 million.

The 2013 outlook includes management’s assessment of the likelihood of certain risk factors that will affect performance. The most significant risk to 2013 performance will be the United States economy and its impact on construction activity. While both the Moving Ahead for Progress in the 21^st Century Act and TIFIA credit assistance are excluded from federal budget sequester and the U.S. debt ceiling limit, the ultimate resolution of these issues may have a significant impact on the economy and, consequently, construction activity. The Federal sequester that went into effect in March did not appear to have a significant impact on the broader economy in the first half of the year. While transportation investment is mostly exempt from spending cuts, the impact of sequester may become more apparent during the second half of the year. Other risks related to the Corporation’s future performance include, but are not limited to, both price and volume and include a recurrence of widespread decline in aggregates volume negatively affecting aggregates price; the termination, capping and/or reduction of the federal and/or state gasoline tax(es) or other revenue related to infrastructure construction; a significant change in the funding patterns for traditional federal, state and/or local infrastructure projects; a reduction in defense spending, and the subsequent impact on construction activity on or near military bases; a decline in nonresidential construction, a decline in energy-related drilling activity resulting from certain regulatory or economic factors, a slowdown in the residential construction recovery, or some combination thereof; and a reduction in ChemRock/Rail shipments resulting from declining coal traffic on the railroads. Further, increased highway construction funding pressures resulting from either federal or state issues can affect profitability. If these negatively affect transportation budgets more than in the past, construction spending could be reduced. North Carolina, a state that disproportionately affects the Corporation’s revenue and profitability, is among the states experiencing these fiscal pressures, although recent statistics indicate that transportation and tax revenues are increasing. The Specialty Products business essentially runs at capacity; therefore any unplanned changes in costs or realignment of customers introduce volatility to the earnings of this segment.

 

Page 46 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

The Corporation’s principal business serves customers in aggregates-related construction markets. This concentration could increase the risk of potential losses on customer receivables; however, payment bonds normally posted on public projects, together with lien rights on private projects, help to mitigate the risk of uncollectible receivables. The level of aggregates demand in the Corporation’s end-use markets, production levels and the management of production costs will affect the operating leverage of the Aggregates business and, therefore, profitability. Production costs in the Aggregates business are also sensitive to energy and raw materials prices, both directly and indirectly. Diesel fuel and other consumables change production costs directly through consumption or indirectly by increased energy-related input costs, such as, steel, explosives, tires and conveyor belts. Fluctuating diesel fuel pricing also affects transportation costs, primarily through fuel surcharges in the Corporation’s long-haul distribution network. The Specialty Products business is sensitive to changes in domestic steel capacity utilization and the absolute price and fluctuations in the cost of natural gas.

Transportation in the Corporation’s long-haul network, particularly rail cars and locomotive power to move trains, affects its ability to efficiently transport material into certain markets, most notably Texas, Florida and the Gulf Coast. The availability of trucks and drivers to transport the Corporation’s product, particularly in markets experiencing increased demand due to energy sector activity, is also a risk. The Aggregates business is also subject to weather-related risks that can significantly affect production schedules and profitability. The first and fourth quarters are most adversely affected by winter weather. Hurricane activity in the Atlantic Ocean and Gulf Coast generally is most active during the third and fourth quarters.

Risks to the full-year outlook include shipment declines as a result of economic events beyond the Corporation’s control. In addition to the impact on nonresidential and residential construction, the Corporation is exposed to risk in its estimated outlook from credit markets and the availability of and interest cost related to its debt.

The Corporation’s future performance is also exposed to risk from tax reform at the federal and state levels.

 

Page 47 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

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 website at www.martinmarietta.com and are also available at the SEC’s website at www.sec.gov. You may also write or call the Corporation’s Corporate Secretary, who will provide copies of such reports.

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 the Corporation’s 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 the Corporation’s 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 performance of the United States economy and the resolution and impact of the debt ceiling and sequestration issues; widespread decline in aggregates pricing; the termination, capping and/or reduction of the federal and/or state gasoline taxes or other revenue related to infrastructure construction; the level and timing of federal and state transportation funding, including federal stimulus projects and most particularly in North Carolina and Texas, two of the Corporation’s largest and most profitable states, and Iowa, Colorado and Georgia, which when coupled with North Carolina and Texas, represented 57% of 2012 net sales of the Aggregates business; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Corporation serves; a decline in defense spending, and the subsequent impact on construction activity on or near military bases; a decline in the commercial component of the nonresidential construction market, notably office and retail space; a continued slowdown in energy-related drilling activity; a slowdown in residential construction recovery; unfavorable weather conditions, particularly Atlantic Ocean hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Corporation; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost of other consumables, namely steel, explosives, tires, conveyor belts, and with respect to the Specialty Products segment, natural gas; continued increases in the cost of other repair and supply parts; transportation availability, notably the availability of railcars and locomotive power to move trains to supply the Corporation’s Texas, Florida and Gulf Coast markets; increased transportation costs, including increases from higher passed-through energy and other costs to comply with tightening regulations as well as higher volumes of rail and water shipments; availability and cost of

 

Page 48 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Second Quarter Ended June 30, 2013

(Continued)

 

construction equipment in the United States; weakening in the steel industry markets served by the Corporation’s dolomitic lime products; inflation and its effect on both production and interest costs; reduction of the Corporation’s credit rating to noninvestment-grade resulting from strategic acquisitions; ability to successfully integrate acquisitions quickly and in a cost-effective manner and achieve anticipated profitability to maintain compliance with the Corporation’s leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would increase the Corporation’s tax rate; violation of the Corporation’s debt covenant if price and/or volumes returns to previous levels of instability; downward pressure on the Corporation’s common stock price and its impact on goodwill impairment evaluations; and other risk factors listed from time to time found in the Corporation’s filings with the SEC.

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 such forward-looking statements.

INVESTOR ACCESS TO COMPANY FILINGS     Shareholders may obtain, without charge, a copy of Martin Marietta Materials, Inc.’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2012, by writing to:

Martin Marietta Materials, Inc.

Attn: Corporate Secretary

2710 Wycliff Road

Raleigh, North Carolina 27607-3033

Additionally, Martin Marietta Materials, Inc.’s 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 website. Filings with the Securities and Exchange Commission accessed via the website 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) 788-4367

Website address: www.martinmarietta.com

Information included on the Corporation’s website is not incorporated into, or otherwise create a part of, this report.

 

Page 49 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

 

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.

Management has considered the current economic environment and its potential impact to the Corporation’s business. Demand for aggregates products, particularly in the nonresidential and residential construction markets, could decline if companies and consumers are unable to obtain financing for construction projects or if economic uncertainty causes delays or cancellations to capital projects. Additionally, declining tax revenues and state budget deficits have negatively affected states’ abilities to finance infrastructure construction projects.

Demand in the residential construction market is affected by interest rates. The Federal Reserve kept the federal funds rate near zero percent during the six months ended June 30, 2013. The residential construction market accounted for approximately 14% of the Corporation’s heritage aggregates product line shipments for the six months ended June 30, 2013.

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 any temporary cash investments, including money market funds and Eurodollar time deposit accounts; any outstanding variable-rate borrowing facilities; and defined benefit pension plans. Additionally, the Corporation’s earnings are affected by energy costs. The Corporation has no material counterparty risk or foreign currency risk.

Variable-Rate Borrowing Facilities.    The Corporation has a $600 million Credit Agreement, comprised of a $350 million Revolving Facility and $250 million Term Loan Facility, and a Trade Receivable Facility. Borrowings under these facilities bear interest at a variable interest rate. A hypothetical 100-basis-point increase in interest rates on borrowings of $440.0 million, which was the collective outstanding balance at June 30, 2013, would increase interest expense by $4.4 million on an annual basis.

Pension Expense.    The Corporation’s results of operations are affected by its pension expense. Assumptions that affect pension expense include the discount rate and, for the defined benefit pension plans only, 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, 2012, filed with the Securities and Exchange Commission on February 22, 2013.

 

Page 50 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

 

Energy Costs.    Energy costs, including diesel fuel and natural gas, represent significant production costs for the Corporation. The Corporation’s Specialty Products business has fixed price agreements for the supply of coal and approximately 25% of its natural gas needs in 2013. A hypothetical 10% change in the Corporation’s energy prices in 2013 as compared with 2012, assuming constant volumes, would impact annual 2013 pretax earnings by approximately $18.8 million.

Aggregate Risk for Interest Rates and Energy Costs.    Pension expense for 2013 is calculated based on assumptions selected at December 31, 2012. Therefore, interest rate risk in 2013 is limited to the potential effect related to the Corporation’s borrowings under variable-rate facilities. The effect of a hypothetical increase in interest rates of 1% on $440.0 million of variable-rate borrowings outstanding at June 30, 2013 would increase interest expense on an annual basis by $4.4 million. Additionally, a 10% change in energy costs would impact annual pretax earnings by $18.8 million.

Item 4.  Controls and Procedures

As of June 30, 2013, 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, 2013. There were no changes in the Corporation’s internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

 

Page 51 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

 

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, 2012.

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, 2012.

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

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period		Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
April 1, 2013 – April 30, 2013			--			$	--				--			5,041,871
May 1, 2013 – May 31, 2013			--			$	--				--			5,041,871
June 1, 2013 – June 30, 2013			--			$	--				--			5,041,871
Total			--			$	--				--			5,041,871

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.

Item 4.  Mine Safety Disclosures.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

 

Page 52 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

PART II-OTHER INFORMATION

(Continued)

 

Item 6.  Exhibits.

 

Exhibit   No.		Document
31.01		Certification dated August 5, 2013 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 5, 2013 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 5, 2013 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 5, 2013 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95		Mine Safety Disclosures
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase

 

Page 53 of 55

---

Table of Contents

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 5, 2013				By:		/s/ Anne H. Lloyd
						Anne H. Lloyd
						Executive Vice President and
						Chief Financial Officer

 

Page 54 of 55

---

Table of Contents

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2013

 

EXHIBIT INDEX

 

Exhibit   No.		Document
31.01		Certification dated August 5, 2013 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 5, 2013 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 5, 2013 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 5, 2013 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95		Mine Safety Disclosures
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase

 

Page 55 of 55

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, C. Howard Nye, 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

---

5.

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 5, 2013				By:		/s/ C. Howard Nye
						C. Howard Nye
						President and Chief Executive Officer

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

---

5.

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 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 5, 2013				By:		/s/ Anne H. Lloyd
						Anne H. Lloyd
						Executive Vice President and          Chief Financial Officer

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, 2013 (the “Report”) of Martin Marietta Materials, Inc. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, C. Howard Nye, 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.

 

Dated: August 5, 2013

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

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, 2013 (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.

 

Dated: August 5, 2013

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 95

MINE SAFETY DISCLOSURES

The operation of the Corporation’s domestic aggregates quarries and mines is subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects the Corporation’s quarries and mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Whenever MSHA issues a citation or order, it also generally proposes a civil penalty, or fine, related to the alleged violation. Citations or orders may be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Corporation is required to present information regarding certain mining safety and health citations which MSHA has issued with respect to its aggregates mining operations in its periodic reports filed with the Securities and Exchange Commission (SEC). In evaluating this information, consideration should be given to factors such as: (i) the number of citations and orders will vary depending on the size of the quarry or mine and types of operations (underground or surface), (ii) the number of citations issued will vary from inspector to inspector and location to location, and (iii) citations and orders can be contested and appealed, and in that process, may be reduced in severity and amount, and are sometimes dismissed.

The Corporation has provided the information below in response to the SEC’s rules and regulations issued under the provisions of the Dodd-Frank Act. The disclosures reflect U.S. mining operations only, as the requirements of the Dodd-Frank Act and the SEC rules and regulations thereunder do not apply to the Corporation’s quarries and mines operated outside the United States.

The Corporation presents the following items regarding certain mining safety and health matters for the three months ended June 30, 2013:

 

•

Total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under section 104 of the Mine Act for which the Corporation has received a citation from MSHA (hereinafter, “Section 104 S&S Citations”). If MSHA determines that a violation of a mandatory health or safety standard is likely to result in a reasonably serious injury or illness under the unique circumstance contributed to by the violation, MSHA will classify the violation as a “significant and substantial” violation (commonly referred to as a “S&S” violation). MSHA inspectors will classify each citation or order written as a “S&S” violation or not.

---

•

Total number of orders issued under section 104(b) of the Mine Act (hereinafter, “Section 104(b) Orders”). These orders are issued for situations in which MSHA determines a previous violation covered by a Section 104(a) citation has not been totally abated within the prescribed time period, so a further order is needed to require the mine operator to immediately withdraw all persons (except authorized persons) from the affected area of a quarry or mine.

 

•

Total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under Section 104(d) of the Mine Act (hereinafter, “Section 104(d) Citations and Orders”). These violations are similar to those described above, but the standard is that the violation could significantly and substantially contribute to the cause and effect of a safety or health hazard, but the conditions do not cause imminent danger, and the MSHA inspector finds that the violation is caused by an unwarranted failure of the operator to comply with the health and safety standards.

 

•

Total number of flagrant violations under section 110(b)(2) of the Mine Act (hereinafter, “Section 110(b)(2) Violations”). These violations are penalty violations issued if MSHA determines that violations are “flagrant”, for which civil penalties may be assessed. A “flagrant” violation means a reckless or repeated failure to make reasonable efforts to eliminate a known violation of a mandatory health or safety standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury.

 

•

Total number of imminent danger orders issued under section 107(a) of the Mine Act (hereinafter, “Section 107(a) Orders”). These orders are issued for situations in which MSHA determines an imminent danger exists in the quarry or mine and results in orders of immediate withdrawal of all persons (except certain authorized persons) from the area of the quarry or mine affected by its condition until the imminent danger and the underlying conditions causing the imminent danger no longer exist.

 

•

Total dollar value of proposed assessments from MSHA under the Mine Act. These are the amounts of proposed assessments issued by MSHA with each citation or order for the time period covered by the reports. Penalties are assessed by MSHA according to a formula that considers a number of factors, including the mine operator’s history, size, negligence, gravity of the violation, good faith in trying to correct the violation promptly, and the effect of the penalty on the operator’s ability to continue in business.

 

•

Total number of mining-related fatalities. Mines subject to the Mine Act are required to report all fatalities occurring at their facilities unless the fatality is determined to be “non-chargeable” to the mining industry. The final rules of the SEC require disclosure of mining-related fatalities at mines subject to the Mine Act. Only fatalities determined by MSHA not to be mining-related may be excluded.

---

•

Receipt of written notice from MSHA of a pattern (or a potential to have such a pattern) of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of other mine health or safety hazards under Section 104(e) of the Mine Act. If MSHA determines that a mine has a “pattern” of these types of violations, or the potential to have such a pattern, MSHA is required to notify the mine operator of the existence of such a thing.

 

•

Legal actions before the Federal Mine Safety and Health Review Commissions pending as of the last day of period.

 

•

Legal actions before the Federal Mine Safety and Health Review Commissions initiated during period.

 

•

Legal actions before the Federal Mine Safety and Health Review Commissions resolved during period.

The Federal Mine Safety and Health Review Commission (the “Commission”) is an independent adjudicative agency that provides administrative trial and appellate review of legal disputes arising under the Mine Act. The cases may involve, among other questions, challenges by operators to citations, orders and penalties they have received from MSHA, or complaints of discrimination by miners under Section 105 of the Mine Act. Appendix 1 shows, for each of the Corporation’s quarries and mines identified, as of June 30, 2013, the number of legal actions pending before the Commission, along with the number of legal actions initiated before the Commission during the quarter as well as resolved during the quarter. In addition, Appendix 1 includes a footnote to the column for legal actions before the Commission pending as of the last day of the period, which footnote breaks down that total number of legal actions pending by categories according to the type of proceeding in accordance with various categories established by the Procedural Rules of the Commission.

Appendix 1 attached.

---

Appendix 1

 

Location		MSHA ID		Section 104 S&S Citations (#)		Section 104(b) Orders (#)		Section 104(d) Citations and Orders (#)		Section 110(b)(2) Violations (#)		Section 107(a) Orders (#)		Total Dollar Value of MSHA Assessment/$ Proposed				Total Number of Mining Related Fatalities (#)		Received Notice of Pattern of Violation Under Section 104(e) (yes/no)		Received Notice of Potential to have Pattern under Section 104(e) (yes/no)		Legal Actions Pending as of Last Day of Period (#)*		Legal Actions Instituted During Period (#)		Legal Actions Resolved During Period (#)
American Stone Quarry		3100189		0		0		0		0		0			$0			0		no		no		0		0		0
Anderson Creek		4402963		2		0		0		0		0			$0			0		no		no		0		0		0
Arrowood		3100059		0		0		0		0		0			$0			0		no		no		0		0		0
Asheboro Quarry		3100066		0		0		0		0		0			$0			0		no		no		0		0		0
Bakers		3100071		0		0		0		0		0			$0			0		no		no		0		0		0
Belgrade Quarry		3100064		0		0		0		0		0			$0			0		no		no		0		0		0
Benson Quarry		3101979		0		0		0		0		0			$0			0		no		no		0		0		0
Berkeley Quarry		3800072		0		0		0		0		0			$0			0		no		no		0		0		0
Bessemer City		3101105		0		0		0		0		0			$0			0		no		no		0		0		0
Black Ankle Quarry		3102220		0		0		0		0		0			$0			0		no		no		0		0		0
Bonds		3101963		0		0		0		0		0			$0			0		no		no		0		0		0
Boonsboro		1800024		0		0		0		0		0			$0			0		no		no		1		0		0
Burlington Quarry		3100042		0		0		0		0		0			$0			0		no		no		0		0		0
Caldwell Quarry		3101869		1		0		0		0		0			$0			0		no		no		1		0		0
Carmel Church Quarry		4405633		0		0		0		0		0			$0			0		no		no		0		0		0
Castle Hayne Quarry		3100063		1		0		0		0		0			$2,748			0		no		no		0		0		0
Cayce Quarry		3800016		0		0		0		0		0			$0			0		no		no		1		0		0
Central Rock Quarry		3100050		0		0		0		0		0			$0			0		no		no		0		0		0
Charlotte		3100057		0		0		0		0		0			$0			0		no		no		0		0		0
Chesterfield Quarry		3800682		0		0		0		0		0			$0			0		no		no		0		0		0
Clarks Quarry		3102009		0		0		0		0		0			$0			0		no		no		0		0		0
Cumberland Quarry		3102237		0		0		0		0		0			$0			0		no		no		0		0		0
Denver		3101971		0		0		0		0		0			$0			0		no		no		0		0		0
Doswell		4400045		1		0		0		0		0			$0			0		no		no		1		0		0
East Alamance		3102021		2		0		0		0		0			$3,806			0		no		no		0		0		0
Fountain Quarry		3100065		0		0		0		0		0			$0			0		no		no		0		0		0
Franklin Quarry		3102130		0		0		0		0		0			$0			0		no		no		0		0		0
Fuquay Quarry		3102055		0		0		0		0		0			$234			0		no		no		0		0		0
Garner Quarry		3100072		0		0		0		0		0			$0			0		no		no		6		1		0
Georgetown ll		3800525		0		0		0		0		0			$0			0		no		no		0		0		0
Hickory Quarry		3100043		0		0		0		0		0			$0			0		no		no		0		0		0
Hicone Quarry		3102088		0		0		0		0		0			$0			0		no		no		0		0		0
Jamestown Quarry		3100051		0		0		0		0		0			$0			0		no		no		0		0		0
Kannapolis		3100070		0		0		0		0		0			$0			0		no		no		0		0		0
Kings Mountain		3100047		0		0		0		0		0			$0			0		no		no		0		0		0
Lemon Springs Quarry		3101104		0		0		0		0		0			$0			0		no		no		0		0		0
Loamy Sand & Gravel		3800721		1		0		0		0		0			$0			0		no		no		0		0		0
Maiden Quarry		3102125		0		0		0		0		0			$0			0		no		no		0		0		0
Mallard Creek		3102006		0		0		0		0		0			$0			0		no		no		0		0		0
Matthews		3102084		0		0		0		0		0			$0			0		no		no		0		0		0
Midlothian		4403767		0		0		0		0		0			$138			0		no		no		0		0		0
North Columbia Quarry		3800146		0		0		0		0		0			$0			0		no		no		0		0		0
Onslow Quarry		3102120		1		0		0		0		0			$308			0		no		no		0		0		0
Pinesburg		1800021		0		0		0		0		0			$0			0		no		no		1		0		0
Pomona Quarry		3100052		0		0		0		0		0			$0			0		no		no		0		0		0
Raleigh Durham Quarry		3101941		0		0		0		0		0			$0			0		no		no		1		0		0
Red Hill		4400072		0		0		0		0		0			$0			0		no		no		0		0		0
Reidsville Quarry		3100068		0		0		0		0		0			$216			0		no		no		0		0		0
Rock Hill		3800026		0		0		0		0		0			$0			0		no		no		0		0		0
Rocky Point Quarry		3101956		0		0		0		0		0			$0			0		no		no		0		0		0
Rocky River		3102033		0		0		0		0		0			$0			0		no		no		0		0		0

---

Appendix 1

 

Location		MSHA ID		Section 104 S&S Citations (#)		Section 104(b) Orders (#)		Section 104(d) Citations and Orders (#)		Section 110(b)(2) Violations (#)		Section 107(a) Orders (#)		Total Dollar Value of MSHA Assessment/$ Proposed				Total Number of Mining Related Fatalities (#)		Received Notice of Pattern of Violation Under Section 104(e) (yes/no)		Received Notice of Potential to have Pattern under Section 104(e) (yes/no)		Legal Actions Pending as of Last Day of Period (#)*		Legal Actions Instituted During Period (#)		Legal Actions Resolved During Period (#)
Salem Stone Company		3102038		0		0		0		0		0			$100			0		no		no		0		0		0
Siler City Quarry		3100044		0		0		0		0		0			$0			0		no		no		0		0		0
Statesville Quarry		3100055		0		0		0		0		0			$0			0		no		no		0		0		0
Thomasville Quarry		3101475		0		0		0		0		0			$0			0		no		no		0		0		0
Wilson Quarry		3102230		0		0		0		0		0			$0			0		no		no		0		0		0
Woodleaf Quarry		3100069		0		0		0		0		0			$0			0		no		no		0		0		0
(45) North Indianapolis SURFACE		1200002		0		0		0		0		0			$0			0		no		no		0		0		0
Apple Grove		3301676		0		0		0		0		0			$0			0		no		no		0		0		0
Belmont Sand		1201911		0		0		0		0		0			$0			0		no		no		0		0		0
Blue Rock		3300016		0		0		0		0		0			$0			0		no		no		0		0		0
Burning Springs		4608862		2		0		0		0		0			$0			0		no		no		7		0		0
Carmel SandG		1202124		0		0		0		0		0			$0			0		no		no		0		0		0
Cedarville		3304072		0		0		0		0		0			$0			0		no		no		0		0		0
Clinton County		3304546		0		0		0		0		0			$0			0		no		no		0		0		0
Cloverdale		1201744		0		0		0		0		0			$100			0		no		no		0		0		0
Cook Road		3304534		0		0		0		0		0			$0			0		no		no		0		0		0
Dredge Lucas		4603800		0		0		0		0		0			$0			0		no		no		0		0		0
E-Town SandG		3304279		0		0		0		0		0			$0			0		no		no		0		0		0
Fairborn Gravel		3301388		0		0		0		0		0			$0			0		no		no		0		0		0
Fairfield		3301396		0		0		0		0		0			$0			0		no		no		0		0		0
Franklin Gravel		3302940		0		0		0		0		0			$0			0		no		no		0		0		0
Hamilton Gravel		3301394		0		0		0		0		0			$0			0		no		no		0		0		0
Harrison		3301395		0		0		0		0		0			$0			0		no		no		0		0		0
Kentucky Ave Mine		1201762		0		0		0		0		0			$0			0		no		no		0		0		0
Kokomo Mine		1202105		0		0		0		0		0			$0			0		no		no		0		0		0
Kokomo Sand		1202203		0		0		0		0		0			$0			0		no		no		0		0		0
Kokomo Stone		1200142		0		0		0		0		0			$0			0		no		no		0		0		0
Lynchburg Quarry		3304281		0		0		0		0		0			$0			0		no		no		0		0		0
Noblesville SandG		1201994		0		0		0		0		0			$0			0		no		no		0		0		0
Noblesville Stone		1202176		0		0		0		0		0			$0			0		no		no		0		0		0
North Indianapolis		1201993		0		0		0		0		0			$0			0		no		no		0		0		0
Ohio Recycle		3304394		0		0		0		0		0			$0			0		no		no		0		0		0
Ohio Stripping		N354		0		0		0		0		0			$0			0		no		no		0		0		0
Petersburg		1516895		0		0		0		0		0			$0			0		no		no		0		0		1
Phillipsburg		3300006		0		0		0		0		0			$0			0		no		no		0		0		0
Recycling 801		1202198		0		0		0		0		0			$0			0		no		no		0		0		0
Recycling 802		1202199		0		0		0		0		0			$0			0		no		no		0		0		0
Ross Gravel		3301587		0		0		0		0		0			$0			0		no		no		0		0		0
Troy Gravel		3301678		0		0		0		0		0			$0			0		no		no		0		0		0
Waverly Sand		1202038		0		0		0		0		0			$0			0		no		no		0		0		0
Xenia		3301393		0		0		0		0		0			$0			0		no		no		0		0		0
Alabaster Quarry		0103068		0		0		0		0		0			$0			0		no		no		0		0		0
Appling Quarry		0901083		0		0		0		0		0			$0			0		no		no		0		0		0
Auburn, Al Quarry		0100006		0		0		0		0		0			$0			0		no		no		3		0		0
Auburn, GA Quarry		0900436		0		0		0		0		0			$0			0		no		no		0		0		0
Augusta Quarry-GA		0900065		0		0		0		0		0			$0			0		no		no		1		0		0
Birmingham Shop		0102096		0		0		0		0		0			$0			0		no		no		0		0		0
Cabbage Grove Quarry		0800008		0		0		0		0		0			$0			0		no		no		0		0		0
Camak Quarry		0900075		0		0		0		0		0			$0			0		no		no		0		0		0
Chattanooga Quarry		4003159		1		0		0		0		0			$0			0		no		no		0		0		0
Forsyth Quarry		0901035		0		0		0		0		0			$0			0		no		no		0		0		0

---

Appendix 1

 

Location		MSHA ID		Section 104 S&S Citations (#)		Section 104(b) Orders (#)		Section 104(d) Citations and Orders (#)		Section 110(b)(2) Violations (#)		Section 107(a) Orders (#)		Total Dollar Value of MSHA Assessment/$ Proposed				Total Number of Mining Related Fatalities (#)		Received Notice of Pattern of Violation Under Section 104(e) (yes/no)		Received Notice of Potential to have Pattern under Section 104(e) (yes/no)		Legal Actions Pending as of Last Day of Period (#)*		Legal Actions Instituted During Period (#)		Legal Actions Resolved During Period (#)
Jefferson Quarry		0901106		0		0		0		0		0			$0			0		no		no		0		0		0
Junction City Quarry		0901029		0		0		0		0		0			$0			0		no		no		0		0		0
Maylene Quarry		0100634		0		0		0		0		0			$227			0		no		no		0		0		0
ONeal		0103076		0		0		0		0		0			$100			0		no		no		0		0		0
Paulding Quarry		0901107		2		0		0		0		0			$352			0		no		no		0		0		0
Perry Quarry		0801083		0		0		0		0		0			$0			0		no		no		0		0		0
Red Oak Quarry		0900069		0		0		0		0		0			$0			0		no		no		0		0		0
R-S Sand and Gravel		2200381		0		0		0		0		0			$0			0		no		no		0		0		0
Ruby Quarry		0900074		0		0		0		0		0			$0			0		no		no		0		0		0
Shorter Sand and Gravel		0102852		0		0		0		0		0			$0			0		no		no		0		0		0
Six Mile Quarry		0901144		0		0		0		0		0			$0			0		no		no		0		0		0
Tyrone Quarry		0900306		0		0		0		0		0			$0			0		no		no		0		0		0
Vance Quarry		0103022		0		0		0		0		0			$0			0		no		no		1		0		0
Warrenton Quarry		0900580		0		0		0		0		0			$0			0		no		no		0		0		0
Alden Portable Sand		1302037		0		0		0		0		0			$0			0		no		no		0		0		0
Alden Portable Plant 1		1302031		0		0		0		0		0			$0			0		no		no		0		0		0
Alden Portable Plant 2		1302033		1		0		0		0		0			$0			0		no		no		0		0		0
Alden Portable Wash		1302122		0		0		0		0		0			$0			0		no		no		0		0		0
Alden Quarry		1300228		0		0		0		0		0			$0			0		no		no		0		0		0
Alden Shop		1302320		1		0		0		0		0			$0			0		no		no		0		0		0
Ames Mine		1300014		1		0		0		0		0			$685			0		no		no		0		0		0
Beaver Lake Quarry		4503347		0		0		0		0		0			$0			0		no		no		0		0		0
Cedar Rapids Quarry		1300122		0		0		0		0		0			$0			0		no		no		0		0		0
Colfax Sand and Gravel		1300814		0		0		0		0		0			$0			0		no		no		0		0		0
Des Moines Portable		1300150		0		0		0		0		0			$0			0		no		no		0		0		0
Dubois Quarry		2501046		0		0		0		0		0			$0			0		no		no		0		0		0
Durham Mine		1301225		0		0		0		0		0			$0			0		no		no		0		0		0
Earlham Quarry		1302123		0		0		0		0		0			$0			0		no		no		0		0		0
Ferguson Quarry		1300124		0		0		0		0		0			$0			0		no		no		0		0		0
Fort Calhoun		2500006		0		0		0		0		0			$0			0		no		no		0		0		0
Fort Dodge Mine		1300032		0		0		0		0		0			$0			0		no		no		2		0		2
Iowa Grading		1302316		0		0		0		0		0			$0			0		no		no		0		0		0
Iowa Grading 26810		1302126		0		0		0		0		0			$0			0		no		no		0		0		0
LeGrand Portable		1302317		0		0		0		0		0			$0			0		no		no		0		0		0
Linn County Sand		1302208		1		0		0		0		0			$0			0		no		no		0		0		0
Malcom Mine		1300112		0		0		0		0		0			$324			0		no		no		0		0		0
Marshalltown Sand		1300718		0		0		0		0		0			$0			0		no		no		0		0		0
Moore Quarry		1302188		0		0		0		0		0			$0			0		no		no		0		0		0
New Harvey Sand		1301778		0		0		0		0		0			$0			0		no		no		0		0		0
Northwest Division OH		A2354		0		0		0		0		0			$0			0		no		no		0		0		0
Pacific Quarry		4500844		0		0		0		0		0			$0			0		no		no		0		0		0
Pederson Quarry		1302192		0		0		0		0		0			$0			0		no		no		0		0		0
Raccoon River Sand		1302315		0		0		0		0		0			$0			0		no		no		0		0		0
Rock Springs Quarry		4700053		0		0		0		0		0			$0			0		no		no		0		0		0
Saylorville Sand		1302290		0		0		0		0		0			$0			0		no		no		0		0		0
Springfield Quarry		2501103		0		0		0		0		0			$0			0		no		no		0		0		0
St Cloud Quarry		2100081		0		0		0		0		0			$0			0		no		no		0		0		0
Sully Mine		1300063		0		0		0		0		0			$0			0		no		no		0		0		0
W. Des Moines S		1300932		0		0		0		0		0			$0			0		no		no		0		0		0
Weeping Water Mine		2500998		1		0		0		0		0			$0			0		no		no		13		2		0
Yellow Medicine Quarry		2100033		0		0		0		0		0			$0			0		no		no		0		0		0

---

Appendix 1

 

Location		MSHA ID		Section 104 S&S Citations (#)		Section 104(b) Orders (#)		Section 104(d) Citations and Orders (#)		Section 110(b)(2) Violations (#)		Section 107(a) Orders (#)		Total Dollar Value of MSHA Assessment/$ Proposed				Total Number of Mining Related Fatalities (#)		Received Notice of Pattern of Violation Under Section 104(e) (yes/no)		Received Notice of Potential to have Pattern under Section 104(e) (yes/no)		Legal Actions Pending as of Last Day of Period (#)*		Legal Actions Instituted During Period (#)		Legal Actions Resolved During Period (#)
211 Quarry		4103829		0		0		0		0		0			$0			0		no		no		1		1		0
Beckman Quarry		4101335		0		0		0		0		0			$0			0		no		no		0		0		0
Bedrock Plant		4103283		0		0		0		0		0			$0			0		no		no		0		0		0
Black Spur Quarry		4104159		0		0		0		0		0			$0			0		no		no		1		1		0
Chico		4103360		1		0		0		0		0			$0			0		no		no		0		2		2
Cobey		4104140		0		0		0		0		0			$0			0		no		no		0		0		0
Davis		3401299		0		0		0		0		0			$0			0		no		no		0		0		0
Garwood		4102886		0		0		0		0		0			$0			0		no		no		0		0		0
Helotes		4103137		0		0		0		0		0			$0			0		no		no		0		0		0
Hondo		4104708		0		0		0		0		0			$0			0		no		no		0		0		0
Hondo-1		4104090		0		0		0		0		0			$0			0		no		no		0		0		0
Medinia R-R Portable				0		0		0		0		0			$0			0		no		no		0		0		0
Mill Creek		3401285		0		0		0		0		0			$0			0		no		no		0		0		0
New Braunfels Quarry		4104264		0		0		0		0		0			$0			0		no		no		0		0		0
North Troy		3401905		0		0		0		0		0			$0			0		no		no		0		0		0
North Troy Portable		3401949		0		0		0		0		0			$0			0		no		no		0		0		0
Portable Crushing		4104204		1		0		0		0		0			$0			0		no		no		2		1		0
Poteet (Sand Plant)		4101342		0		0		0		0		0			$0			0		no		no		0		0		0
Rio Medina		4103594		0		0		0		0		0			$0			0		no		no		2		0		0
S.T. Porter Pit		4102673		0		0		0		0		0			$0			0		no		no		0		0		0
San Pedro Quarry		4101337		0		0		0		0		0			$0			0		no		no		0		0		0
Snyder		3401651		0		0		0		0		0			$0			0		no		no		0		0		0
Augusta Quarry-KS		1400126		0		0		0		0		0			$0			0		no		no		0		0		0
Big Springs		1400184		0		0		0		0		0			$0			0		no		no		0		0		0
Black Rock Quarry		0300011		0		0		0		0		0			$200			0		no		no		1		1		0
Blake Quarry		1401584		0		0		0		0		0			$0			0		no		no		0		0		0
Broken Bow SandG		3400460		1		0		0		0		0			$307			0		no		no		1		0		0
Greenwood		2300141		2		0		0		0		0			$2,177			0		no		no		2		2		0
Hatton Quarry		0301614		0		0		0		0		0			$0			0		no		no		0		0		0
Hugo		3400061		0		0		0		0		0			$0			0		no		no		0		0		0
Hwy 10 Quarry		2300925		0		0		0		0		0			$0			0		no		no		0		0		0
Idabel		3400507		0		0		0		0		0			$0			0		no		no		0		0		0
Jones Mill Quarry		0301586		0		0		0		0		0			$0			0		no		no		0		0		0
Kansas Portable		1401659		0		0		0		0		0			$0			0		no		no		0		0		0
North Marion Quarry		1401506		0		0		0		0		0			$0			0		no		no		0		0		0
Ottawa Quarry		1401590		0		0		0		0		0			$0			0		no		no		0		0		0
Parkville Mine		2301883		0		0		0		0		0			$300			0		no		no		1		1		1
Peculiar Mine		2300765		0		0		0		0		0			$0			0		no		no		0		0		0
Randolph Deep Mine		2302308		0		0		0		0		0			$200			0		no		no		0		0		0
Sawyer		3401634		0		0		0		0		0			$100			0		no		no		0		0		0
Stamper Mine		2302232		1		0		0		0		0			$100			0		no		no		0		0		0
Sunflower		1401556		0		0		0		0		0			$0			0		no		no		0		0		0
Cottonwood Sand and Gravel		0504418		1		0		0		0		0			$0			0		no		no		0		0		0
Fountain Sand and Gravel		0503821		0		0		0		0		0			$0			0		no		no		0		0		0
Granite Canyon Quarry		4800018		0		0		0		0		0			$0			0		no		no		0		0		0
Greeley 35th Ready Mix		0503215		0		0		0		0		0			$0			0		no		no		0		0		0
Greeley 35th Sand and Gravel		0504613		0		0		0		0		0			$0			0		no		no		0		0		0
Guernsey		4800004		0		0		0		0		0			$0			0		no		no		0		0		0
Gypsum Portable		0504320		0		0		0		0		0			$100			0		no		no		0		0		0
Mamm Creek Portable		0504647		0		0		0		0		0			$0			0		no		no		0		0		0
Milford		4202177		2		0		0		0		0			$1,750			0		no		no		0		0		0

---

Appendix 1

 

Location		MSHA ID		Section 104 S&S Citations (#)		Section 104(b) Orders (#)		Section 104(d) Citations and Orders (#)		Section 110(b)(2) Violations (#)		Section 107(a) Orders (#)		Total Dollar Value of MSHA Assessment/$ Proposed				Total Number of Mining Related Fatalities (#)		Received Notice of Pattern of Violation Under Section 104(e) (yes/no)		Received Notice of Potential to have Pattern under Section 104(e) (yes/no)		Legal Actions Pending as of Last Day of Period (#)*		Legal Actions Instituted During Period (#)		Legal Actions Resolved During Period (#)
Mustang Quarry		2602484		0		0		0		0		0			$0			0		no		no		0		0		0
Portable Crushing		0503984		0		0		0		0		0			$0			0		no		no		0		0		0
Portable Recycle 18		0501057		0		0		0		0		0			$0			0		no		no		0		0		0
POrtable Recycle 2		0504360		0		0		0		0		0			$0			0		no		no		0		0		0
Portable Recycle 21		0504520		0		0		0		0		0			$0			0		no		no		0		0		0
Powers Portable		0504531		0		0		0		0		0			$0			0		no		no		0		0		0
Riverbend Sand and Gravel		0504841		0		0		0		0		0			$0			0		no		no		0		0		0
Spanish Springs Quarry		2600803		0		0		0		0		0			$0			0		no		no		0		0		0
Spec Agg Sand and Gravel		0500860		0		0		0		0		0			$0			0		no		no		0		0		0
Table Mountain Quarry		0404847		0		0		0		0		0			$0			0		no		no		0		0		0
Taft Sand and Gravel		0504526		0		0		0		0		0			$0			0		no		no		0		0		0
Taft Shop		0504735		0		0		0		0		0			$0			0		no		no		0		0		0
Salisbury Shop		3101235		0		0		0		0		0			$276			0		no		no		0		0		0
Woodville		3300156		0		0		0		0		0			$0			0		no		no		0		0		0
TOTALS				28		0		0		0		0			$14,848			0		0		0		50		12		6

* Of the 50 legal actions pending on June 30, 2013, 18 were contests of citations or orders referenced in Subpart B of CFR Part 2700, which includes contests of citations and orders issued under Section 104 of the Mine Act and contests of imminent danger orders under Section 107 of the Mine Act, 31 were contests of proposed penalties referenced in Subpart C of 29 CFR Part 2700, which are administrative proceedings before the Commission challenging a civil penalty that MSHA has proposed for the violation contained in a citation or order, and one was a complaint of discharge, discrimination or interference referenced in Subpart E of 29 CFR Part 2700, which is a complaint under Section 105 of the Mine Act by a worker involving discrimination proceedings and relating proceedings.