Martin Marietta Materials
MARTIN MARIETTA MATERIALS INC (Form: 10-Q, Received: 08/04/2016 14:29:46)

 

 

 

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, 2016

OR

o

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

For the transition period from                      to                     

Commission File Number 1-12744

 

MARTIN MARIETTA MATERIALS, INC.

(Exact name of registrant as specified in its charter)

 

  North Carolina

 

56-1848578

(State or other jurisdiction of

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   o

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   o

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

 

o

 

 

 

 

Non-accelerated filer

 

o   

  

Smaller reporting company

 

o

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

Yes   o     No   þ

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

 

Class

 

Outstanding as of August 2, 2016

Common Stock, $0.01 par value

 

63,437,540

 

 

 

 

 

 


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2016

 

 

Page

Part I. Financial Information:

 

 

Item 1. Financial Statements .

 

 

 

Consolidated Balance Sheets – June 30, 2016, December 31, 2015 and June 30, 2015

 

 

3

Consolidated Statements of Earnings and Comprehensive Earnings – Three and Six Months Ended June 30, 2016 and 2015

 

 

 

4

Consolidated Statements of Cash Flows – Six Months Ended June 30, 2016 and 2015

 

 

5

Consolidated Statement of Total Equity - Six Months Ended June 30, 2016

 

 

6

Notes to Consolidated Financial Statements

 

 

7

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

 

 

24

Item 3. Quantitative and Qualitative Disclosures About Market Risk .

 

 

56

Item 4. Controls and Procedures .

 

 

57

Part II. Other Information:

 

 

 

Item 1. Legal Proceedings .

 

 

58

Item 1A. Risk Factors .

 

 

58

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

 

 

58

Item 4. Mine Safety Disclosures .

 

 

58

Item 6. Exhibits .

 

 

59

Signatures

 

 

60

Exhibit Index

 

 

61

 

 

 

Page 2 of 61


 

PA RT I. FINANCIAL INFOMRATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

 

 

December 31,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2015

 

 

 

(Dollars in Thousands, Except Per Share Data)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

28,596

 

 

$

168,409

 

 

$

44,169

 

Accounts receivable, net

 

 

534,459

 

 

 

410,921

 

 

 

497,468

 

Inventories, net

 

 

504,877

 

 

 

469,141

 

 

 

479,856

 

Assets held for sale

 

 

 

 

 

 

 

 

426,495

 

Other current assets

 

 

53,997

 

 

 

33,164

 

 

 

82,134

 

Total Current Assets

 

 

1,121,929

 

 

 

1,081,635

 

 

 

1,530,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

5,896,512

 

 

 

5,613,198

 

 

 

5,421,449

 

Allowances for depreciation, depletion and amortization

 

 

(2,574,307

)

 

 

(2,457,198

)

 

 

(2,371,926

)

Net property, plant and equipment

 

 

3,322,205

 

 

 

3,156,000

 

 

 

3,049,523

 

Goodwill

 

 

2,136,783

 

 

 

2,068,235

 

 

 

2,065,882

 

Operating permits, net

 

 

442,349

 

 

 

444,725

 

 

 

447,702

 

Other intangibles, net

 

 

64,327

 

 

 

65,827

 

 

 

67,242

 

Other noncurrent assets

 

 

145,712

 

 

 

141,189

 

 

 

99,926

 

Total Assets

 

$

7,233,305

 

 

$

6,957,611

 

 

$

7,260,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Bank overdraft

 

$

7,143

 

 

$

10,235

 

 

$

 

Accounts payable

 

 

197,733

 

 

 

164,718

 

 

 

201,235

 

Accrued salaries, benefits and payroll taxes

 

 

24,864

 

 

 

30,939

 

 

 

27,590

 

Pension and postretirement benefits

 

 

9,120

 

 

 

8,168

 

 

 

8,133

 

Accrued insurance and other taxes

 

 

62,525

 

 

 

62,781

 

 

 

57,078

 

Current maturities of long-term debt and short-term facilities

 

 

238,155

 

 

 

18,713

 

 

 

15,433

 

Accrued interest

 

 

16,573

 

 

 

16,156

 

 

 

16,165

 

Other current liabilities

 

 

45,491

 

 

 

54,948

 

 

 

37,667

 

Total Current Liabilities

 

 

601,604

 

 

 

366,658

 

 

 

363,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,541,062

 

 

 

1,550,061

 

 

 

1,637,905

 

Pension, postretirement and postemployment benefits

 

 

236,562

 

 

 

224,538

 

 

 

272,461

 

Deferred income taxes, net

 

 

639,776

 

 

 

583,459

 

 

 

521,932

 

Other noncurrent liabilities

 

 

197,801

 

 

 

172,718

 

 

 

154,365

 

Total Liabilities

 

 

3,216,805

 

 

 

2,897,434

 

 

 

2,949,964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01 per share

 

 

633

 

 

 

643

 

 

 

668

 

Preferred stock, par value $0.01 per share

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

3,318,859

 

 

 

3,287,827

 

 

 

3,274,098

 

Accumulated other comprehensive loss

 

 

(106,068

)

 

 

(105,622

)

 

 

(112,814

)

Retained earnings

 

 

800,028

 

 

 

874,436

 

 

 

1,146,821

 

Total Shareholders' Equity

 

 

4,013,452

 

 

 

4,057,284

 

 

 

4,308,773

 

Noncontrolling interests

 

 

3,048

 

 

 

2,893

 

 

 

1,660

 

Total Equity

 

 

4,016,500

 

 

 

4,060,177

 

 

 

4,310,433

 

Total Liabilities and Equity

 

$

7,233,305

 

 

$

6,957,611

 

 

$

7,260,397

 

See accompanying notes to the consolidated financial statements.  

 

Page 3 of 61


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(In Thousands, Except Per Share Data)

 

 

(In Thousands, Except Per Share Data)

 

Net Sales

 

$

915,436

 

 

$

850,249

 

 

$

1,649,396

 

 

$

1,482,124

 

Freight and delivery revenues

 

 

61,862

 

 

 

71,170

 

 

 

116,636

 

 

 

130,641

 

Total revenues

 

 

977,298

 

 

 

921,419

 

 

 

1,766,032

 

 

 

1,612,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

668,735

 

 

 

650,096

 

 

 

1,258,061

 

 

 

1,207,710

 

Freight and delivery costs

 

 

61,862

 

 

 

71,170

 

 

 

116,636

 

 

 

130,641

 

Total cost of revenues

 

 

730,597

 

 

 

721,266

 

 

 

1,374,697

 

 

 

1,338,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

246,701

 

 

 

200,153

 

 

 

391,335

 

 

 

274,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

61,509

 

 

 

56,783

 

 

 

121,370

 

 

 

106,233

 

Acquisition-related expenses, net

 

 

896

 

 

 

2,092

 

 

 

1,322

 

 

 

3,696

 

Other operating (income) and expenses, net

 

 

(3,446

)

 

 

4,294

 

 

 

(2,869

)

 

 

1,930

 

Earnings from Operations

 

 

187,742

 

 

 

136,984

 

 

 

271,512

 

 

 

162,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

20,294

 

 

 

19,087

 

 

 

40,328

 

 

 

38,418

 

Other nonoperating (income) and expenses, net

 

 

(8,100

)

 

 

(3,011

)

 

 

(9,130

)

 

 

(2,118

)

Earnings before taxes on income

 

 

175,548

 

 

 

120,908

 

 

 

240,314

 

 

 

126,255

 

Taxes on income

 

 

53,435

 

 

 

38,929

 

 

 

73,145

 

 

 

38,117

 

Consolidated net earnings

 

 

122,113

 

 

 

81,979

 

 

 

167,169

 

 

 

88,138

 

Less: Net earnings attributable to noncontrolling interests

 

 

61

 

 

 

41

 

 

 

122

 

 

 

73

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

$

122,052

 

 

$

81,938

 

 

$

167,047

 

 

$

88,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Comprehensive Earnings:  (See Note 1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings attributable to Martin Marietta Materials, Inc.

 

$

119,817

 

 

$

75,847

 

 

$

166,601

 

 

$

81,410

 

Earnings attributable to noncontrolling interests

 

 

63

 

 

 

43

 

 

 

155

 

 

 

78

 

 

 

$

119,880

 

 

$

75,890

 

 

$

166,756

 

 

$

81,488

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic attributable to common shareholders

 

$

1.91

 

 

$

1.23

 

 

$

2.61

 

 

$

1.30

 

Diluted attributable to common shareholders

 

$

1.90

 

 

$

1.22

 

 

$

2.60

 

 

$

1.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,532

 

 

 

67,373

 

 

 

63,845

 

 

 

67,392

 

Diluted

 

 

63,802

 

 

 

67,633

 

 

 

64,091

 

 

 

67,654

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Dividends Per Common Share

 

$

0.40

 

 

$

0.40

 

 

$

0.80

 

 

$

0.80

 

 

 

See accompanying notes to the consolidated financial statements.  

 

Page 4 of 61


 

MARTIN MARIETTA MATERIALS, INC. AN D CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

167,169

 

 

$

88,138

 

Adjustments to reconcile consolidated net earnings to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

139,617

 

 

 

134,958

 

Stock-based compensation expense

 

 

12,801

 

 

 

7,524

 

Gain on divestitures and sales of assets

 

 

(261

)

 

 

(853

)

Deferred income taxes

 

 

34,389

 

 

 

33,906

 

Excess tax benefits from stock-based compensation transactions

 

 

(3,948

)

 

 

(55

)

Other items, net

 

 

(5,767

)

 

 

(341

)

Changes in operating assets and liabilities, net of effects of acquisitions

   and divestitures:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(117,524

)

 

 

(76,061

)

Inventories, net

 

 

(33,131

)

 

 

(27,661

)

Accounts payable

 

 

32,521

 

 

 

(3,416

)

Other assets and liabilities, net

 

 

(22,495

)

 

 

(29,070

)

Net Cash Provided by Operating Activities

 

 

203,371

 

 

 

127,069

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(210,559

)

 

 

(127,990

)

Acquisitions, net

 

 

(123,000

)

 

 

(10,713

)

Cash received in acquisition

 

 

3,446

 

 

 

 

Proceeds from divestitures and sales of assets

 

 

4,474

 

 

 

1,972

 

Repayments from affiliate

 

 

 

 

 

1,808

 

Payment of railcar construction advances

 

 

 

 

 

(25,234

)

Reimbursement of railcar construction advances

 

 

 

 

 

25,234

 

Net Cash Used for Investing Activities

 

 

(325,639

)

 

 

(134,923

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowings of debt

 

 

280,000

 

 

 

80,000

 

Repayments of debt

 

 

(70,420

)

 

 

(8,144

)

Payments on capital lease obligations

 

 

(1,563

)

 

 

(1,831

)

Change in bank overdraft

 

 

(3,092

)

 

 

(183

)

Dividends paid

 

 

(51,467

)

 

 

(54,285

)

Issuances of common stock

 

 

15,049

 

 

 

27,760

 

Repurchases of common stock

 

 

(190,000

)

 

 

(100,000

)

Excess tax benefits from stock-based compensation transactions

 

 

3,948

 

 

 

55

 

Net Cash Used for Financing Activities

 

 

(17,545

)

 

 

(56,628

)

Net Decrease in Cash and Cash Equivalents

 

 

(139,813

)

 

 

(64,482

)

Cash and Cash Equivalents, beginning of period

 

 

168,409

 

 

 

108,651

 

Cash and Cash Equivalents, end of period

 

$

28,596

 

 

$

44,169

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

36,630

 

 

$

35,447

 

Cash paid for income taxes

 

$

47,159

 

 

$

24,334

 

 

 

See accompanying notes to the consolidated financial statements.  

 

Page 5 of 61


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARES

(UNAUDITED) CONSOLIDATED STATEMENT OF TOTAL EQUITY

 

(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, 2015

 

 

64,479

 

 

$

643

 

 

$

3,287,827

 

 

$

(105,622

)

 

$

874,436

 

 

$

4,057,284

 

 

$

2,893

 

 

$

4,060,177

 

Consolidated net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

167,047

 

 

 

167,047

 

 

 

122

 

 

 

167,169

 

Other comprehensive earnings,

     net of tax

 

 

 

 

 

 

 

 

 

 

 

(446

)

 

 

 

 

 

(446

)

 

 

33

 

 

 

(413

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51,467

)

 

 

(51,467

)

 

 

 

 

 

(51,467

)

Issuances of common stock for stock

     award plans

 

 

197

 

 

 

2

 

 

 

18,231

 

 

 

 

 

 

 

 

 

18,233

 

 

 

 

 

 

18,233

 

Repurchases of common stock

 

 

(1,244

)

 

 

(12

)

 

 

 

 

 

 

 

 

(189,988

)

 

 

(190,000

)

 

 

 

 

 

(190,000

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

12,801

 

 

 

 

 

 

 

 

 

12,801

 

 

 

 

 

 

12,801

 

Balance at June 30, 2016

 

 

63,432

 

 

$

633

 

 

$

3,318,859

 

 

$

(106,068

)

 

$

800,028

 

 

$

4,013,452

 

 

$

3,048

 

 

$

4,016,500

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.  

 

Page 6 of 61


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1.

Significant Accounting Policies

Organization

Martin Marietta Materials, Inc. (the “Corporation” or “Martin Marietta”) is engaged principally in the construction aggregates business. The aggregates product line accounted for 56% of consolidated net sales for the six months ended June 30, 2016 (55% of full-year 2015 consolidated net sales) and includes crushed stone, sand and gravel, and is used for construction of highways and other infrastructure projects, and in the nonresidential and residential construction industries. Aggregates products are also used in the railroad, agricultural, utility and environmental industries. These aggregates products, along with the Corporation’s aggregates-related downstream product lines, which accounted for 29% of consolidated net sales for the six months ended June 30, 2016 (27% of full-year 2015 consolidated net sales) and include asphalt products, ready mixed concrete and road paving construction services, are sold and shipped from a network of more than 400 quarries, distribution facilities and plants in 26 states, Nova Scotia and the Bahamas. The aggregates and aggregates-related downstream product lines are reported collectively as the “Aggregates business”.

The Corporation currently conducts the Aggregates business through three reportable segments: the Mid-America Group, the Southeast Group and the West Group.

 

AGGREGATES BUSINESS

Reportable Segments

  

Mid-America Group

  

Southeast Group

  

West Group

Operating Locations

  

Indiana, Iowa,

northern Kansas, Kentucky, Maryland, Minnesota, Missouri,

eastern Nebraska, North Carolina, Ohio,

South Carolina,

Virginia, Washington and

West Virginia

  

Alabama, Florida, Georgia, Tennessee,
Nova Scotia and the Bahamas

  

Arkansas, Colorado, southern Kansas,

Louisiana, western Nebraska, Nevada, Oklahoma, Texas, Utah

and Wyoming

The Corporation has a Cement segment, which accounted for 8% of consolidated net sales for the six months ended June 30, 2016 (11% of full-year 2015 consolidated net sales).  The Cement segment has production facilities located in Midlothian, Texas, south of Dallas-Fort Worth and Hunter, Texas, north of San Antonio.  The Cement business produces Portland and specialty cements. Similar to the Aggregates business, cement is used in infrastructure projects, nonresidential and residential construction, and the railroad, agricultural, utility and environmental industries. The high calcium limestone reserves, used as a raw material, are owned by the Cement business and are adjacent to each of the plants.

The Corporation has a Magnesia Specialties segment with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties segment, which accounted for 7% of consolidated net sales for the six months ended June 30, 2016 (7% of full-year 2015 consolidated net sales), 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 61


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2016

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, 2015. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the six months ended June 30, 2016 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements at that date but does not include all disclosures required by accounting principles generally accepted in the United States. 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, 2015.

Debt Issuance Costs

The Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which amends the presentation of debt issuance costs in the financial statements.  The ASU requires an entity to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts, and does not impact the recognition and measurement guidance for debt issuance costs. The Corporation adopted ASU 2015-03 on January 1, 2016 and has retrospectively adjusted the prior periods presented, resulting in a reclassification of $3,588,000 and $4,130,000 from Other noncurrent assets to Long-term debt as of December 31, 2015 and June 30, 2015, respectively, and $533,000 from Other current assets to Current maturities of long-term debt and short-term maturities as of December 31, 2015 and June 30, 2015.  

Revenue Recognition Standard

The FASB issued an accounting standard update that amends the accounting guidance on revenue recognition. The new standard intends to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The new standard is effective January 1, 2018 and can be applied on a full retrospective or modified retrospective approach. The Corporation will not early adopt this standard.  The Corporation is currently evaluating the impact the provisions of the new standard will have on its financial statements and expects to complete its evaluation by the end of 2016.

 

Page 8 of 61


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2016

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued)  

Lease Standard

In February 2016, the FASB issued a new accounting standard, Accounting Standards Update 2016-2 – Leases, intending to improve financial reporting of leases and to provide more transparency into off-balance sheet leasing obligations.  The guidance requires virtually all leases, excluding mineral interest leases, to be recorded on the balance sheet and provides guidance on the recognition of lease expense and income.  The new standard is effective January 1, 2019 and must be applied on a modified retrospective approach.  The Corporation is currently evaluating the impact the new standard will have on its financial statements.

Share-based Payment Standard

In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which simplifies certain aspects of accounting guidance and requirements for share-based transactions.  The ASU is effective for reporting periods beginning January 1, 2017.  The Corporation is evaluating the impact of the ASU on its financial statements.  

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, and are presented in the Corporation’s consolidated statements of earnings and comprehensive earnings.

Comprehensive earnings attributable to Martin Marietta is as follows:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

Net earnings attributable to Martin Marietta

    Materials, Inc.

 

$

122,052

 

 

$

81,938

 

 

$

167,047

 

 

$

88,065

 

Other comprehensive loss, net of tax

 

 

(2,235

)

 

 

(6,091

)

 

 

(446

)

 

 

(6,655

)

Comprehensive earnings attributable to Martin Marietta

     Materials, Inc.

 

$

119,817

 

 

$

75,847

 

 

$

166,601

 

 

$

81,410

 

 

 

Page 9 of 61


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended June 30, 2016

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 noncontrolling interests, consisting of net earnings and adjustments for the funded status of pension and postretirement benefit plans, is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

Net earnings attributable to noncontrolling interests

 

$

61

 

 

$

41

 

 

$

122

 

 

$

73

 

Other comprehensive earnings, net of tax

 

 

2

 

 

 

2

 

 

 

33

 

 

 

5

 

Comprehensive earnings attributable to noncontrolling

     interests

 

$

63

 

 

$

43

 

 

$

155

 

 

$

78

 

 

Accumulated other comprehensive loss consists of unrealized gains and losses related to the funded status of pension and postretirement benefit plans; foreign currency translation; and the unamortized value of terminated forward starting interest rate swap agreements, and is presented on the Corporation’s consolidated balance sheets.

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

 

 

(Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

Unamortized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terminated

 

 

Accumulated

 

 

 

Pension and

 

 

 

 

 

 

Forward Starting

 

 

Other

 

 

 

Postretirement

 

 

Foreign

 

 

Interest Rate

 

 

Comprehensive

 

 

 

Benefit Plans

 

 

Currency

 

 

Swap

 

 

Loss

 

 

 

Three Months Ended June 30, 2016

 

Balance at beginning of period

 

$

(101,907

)

 

$

(149

)

 

$

(1,777

)

 

$

(103,833

)

Other comprehensive loss before

     reclassifications, net of tax

 

 

(3,736

)

 

 

(232

)

 

 

 

 

 

(3,968

)

Amounts reclassified from accumulated other

     comprehensive earnings, net of tax

 

 

1,529

 

 

 

 

 

 

204

 

 

 

1,733

 

Other comprehensive (loss) earnings, net of tax

 

 

(2,207

)

 

 

(232

)

 

 

204

 

 

 

(2,235

)

Balance at end of period

 

$

(104,114

)

 

$

(381

)

 

$

(1,573

)

 

$

(106,068

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2015

 

Balance at beginning of period

 

$

(105,151

)

 

$

990

 

 

$

(2,562

)

 

$

(106,723

)

Other comprehensive (loss) earnings before

     reclassifications, net of tax

 

 

(10,670

)

 

 

229

 

 

 

 

 

 

(10,441