Martin Marietta Materials
MARTIN MARIETTA MATERIALS INC (Form: 10-Q, Received: 11/02/2016 15:39:53)

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2016

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       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       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

 

  

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  

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 October 28, 2016

Common Stock, $0.01 par value

 

63,466,170

 

 

 

 

 

 


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended September 30, 2016

 

 

Page

Part I. Financial Information:

 

 

Item 1. Financial Statements .

 

 

 

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

 

 

3

Consolidated Statements of Earnings and Comprehensive Earnings – Three and Nine Months Ended September 30, 2016 and 2015

 

 

 

4

Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2016 and 2015

 

 

5

Consolidated Statement of Total Equity - Nine Months Ended September 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 .

 

 

55

Item 4. Controls and Procedures .

 

 

56

Part II. Other Information:

 

 

 

Item 1. Legal Proceedings .

 

 

57

Item 1A. Risk Factors .

 

 

57

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

 

 

57

Item 4. Mine Safety Disclosures .

 

 

57

Item 6. Exhibits .

 

 

58

Signatures

 

 

59

Exhibit Index

 

 

60

 

 

 

Page 2 of 60


 

PA RT I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

 

 

 

September 30,

 

 

December 31,

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

2015

 

 

 

(Dollars in Thousands, Except Per Share Data)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

60,684

 

 

$

168,409

 

 

$

436,429

 

Accounts receivable, net

 

 

566,425

 

 

 

410,921

 

 

 

577,424

 

Inventories, net

 

 

508,199

 

 

 

469,141

 

 

 

464,525

 

Other current assets

 

 

56,217

 

 

 

33,164

 

 

 

37,427

 

Total Current Assets

 

 

1,191,525

 

 

 

1,081,635

 

 

 

1,515,805

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

6,013,084

 

 

 

5,613,198

 

 

 

5,488,744

 

Allowances for depreciation, depletion and amortization

 

 

(2,633,471

)

 

 

(2,457,198

)

 

 

(2,415,210

)

Net property, plant and equipment

 

 

3,379,613

 

 

 

3,156,000

 

 

 

3,073,534

 

Goodwill

 

 

2,160,605

 

 

 

2,068,235

 

 

 

2,065,644

 

Operating permits, net

 

 

444,123

 

 

 

444,725

 

 

 

445,855

 

Other intangibles, net

 

 

70,927

 

 

 

65,827

 

 

 

65,556

 

Other noncurrent assets

 

 

126,408

 

 

 

141,189

 

 

 

142,040

 

Total Assets

 

$

7,373,201

 

 

$

6,957,611

 

 

$

7,308,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Bank overdraft

 

$

 

 

$

10,235

 

 

$

 

Accounts payable

 

 

192,738

 

 

 

164,718

 

 

 

226,837

 

Accrued salaries, benefits and payroll taxes

 

 

33,463

 

 

 

30,939

 

 

 

30,529

 

Pension and postretirement benefits

 

 

9,658

 

 

 

8,168

 

 

 

8,359

 

Accrued insurance and other taxes

 

 

67,822

 

 

 

62,781

 

 

 

70,509

 

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

 

 

228,025

 

 

 

18,713

 

 

 

147,003

 

Accrued interest

 

 

23,060

 

 

 

16,156

 

 

 

22,414

 

Other current liabilities

 

 

50,143

 

 

 

54,948

 

 

 

69,208

 

Total Current Liabilities

 

 

604,909

 

 

 

366,658

 

 

 

574,859

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,536,810

 

 

 

1,550,061

 

 

 

1,553,768

 

Pension, postretirement and postemployment benefits

 

 

200,152

 

 

 

224,538

 

 

 

229,042

 

Deferred income taxes, net

 

 

676,144

 

 

 

583,459

 

 

 

540,079

 

Other noncurrent liabilities

 

 

196,788

 

 

 

172,718

 

 

 

158,106

 

Total Liabilities

 

 

3,214,803

 

 

 

2,897,434

 

 

 

3,055,854

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01 per share

 

 

633

 

 

 

643

 

 

 

660

 

Preferred stock, par value $0.01 per share

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

3,326,531

 

 

 

3,287,827

 

 

 

3,283,200

 

Accumulated other comprehensive loss

 

 

(104,511

)

 

 

(105,622

)

 

 

(112,742

)

Retained earnings

 

 

932,679

 

 

 

874,436

 

 

 

1,079,764

 

Total Shareholders' Equity

 

 

4,155,332

 

 

 

4,057,284

 

 

 

4,250,882

 

Noncontrolling interests

 

 

3,066

 

 

 

2,893

 

 

 

1,698

 

Total Equity

 

 

4,158,398

 

 

 

4,060,177

 

 

 

4,252,580

 

Total Liabilities and Equity

 

$

7,373,201

 

 

$

6,957,611

 

 

$

7,308,434

 

See accompanying notes to the consolidated financial statements (unaudited).

 

Page 3 of 60


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(In Thousands, Except Per Share Data)

 

 

(In Thousands, Except Per Share Data)

 

Net Sales

 

$

1,038,344

 

 

$

1,005,218

 

 

$

2,687,740

 

 

$

2,487,342

 

Freight and delivery revenues

 

 

65,557

 

 

 

77,031

 

 

 

182,194

 

 

 

207,672

 

Total revenues

 

 

1,103,901

 

 

 

1,082,249

 

 

 

2,869,934

 

 

 

2,695,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

745,776

 

 

 

742,713

 

 

 

2,003,837

 

 

 

1,950,424

 

Freight and delivery costs

 

 

65,557

 

 

 

77,031

 

 

 

182,194

 

 

 

207,672

 

Total cost of revenues

 

 

811,333

 

 

 

819,744

 

 

 

2,186,031

 

 

 

2,158,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

292,568

 

 

 

262,505

 

 

 

683,903

 

 

 

536,918

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

56,348

 

 

 

54,887

 

 

 

177,718

 

 

 

161,120

 

Acquisition-related expenses, net

 

 

306

 

 

 

2,087

 

 

 

1,627

 

 

 

5,783

 

Other operating (income) and expenses, net

 

 

(4,441

)

 

 

26,033

 

 

 

(7,309

)

 

 

27,963

 

Earnings from Operations

 

 

240,355

 

 

 

179,498

 

 

 

511,867

 

 

 

342,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

20,568

 

 

 

18,926

 

 

 

60,896

 

 

 

57,344

 

Other nonoperating income, net

 

 

(10,560

)

 

 

(4,489

)

 

 

(19,690

)

 

 

(6,607

)

Earnings before taxes on income

 

 

230,347

 

 

 

165,061

 

 

 

470,661

 

 

 

291,315

 

Taxes on income

 

 

70,869

 

 

 

47,483

 

 

 

144,014

 

 

 

85,600

 

Consolidated net earnings

 

 

159,478

 

 

 

117,578

 

 

 

326,647

 

 

 

205,715

 

Less: Net (loss) earnings attributable to noncontrolling interests

 

 

(1

)

 

 

34

 

 

 

121

 

 

 

108

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

$

159,479

 

 

$

117,544

 

 

$

326,526

 

 

$

205,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Comprehensive Earnings:  (See Note 1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings attributable to Martin Marietta Materials, Inc.

 

$

161,036

 

 

$

117,616

 

 

$

327,637

 

 

$

199,024

 

Earnings attributable to noncontrolling interests

 

 

19

 

 

 

37

 

 

 

173

 

 

 

116

 

 

 

$

161,055

 

 

$

117,653

 

 

$

327,810

 

 

$

199,140

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic attributable to common shareholders

 

$

2.50

 

 

$

1.75

 

 

$

5.10

 

 

$

3.05

 

Diluted attributable to common shareholders

 

$

2.49

 

 

$

1.74

 

 

$

5.08

 

 

$

3.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

63,452

 

 

 

66,830

 

 

 

63,713

 

 

 

67,203

 

Diluted

 

 

63,723

 

 

 

67,108

 

 

 

63,967

 

 

 

67,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Dividends Per Common Share

 

$

0.42

 

 

$

0.40

 

 

$

1.22

 

 

$

1.20

 

 

See accompanying notes to the consolidated financial statements (unaudited).

 

Page 4 of 60


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

326,647

 

 

$

205,715

 

Adjustments to reconcile consolidated net earnings to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

211,997

 

 

 

199,935

 

Stock-based compensation expense

 

 

17,167

 

 

 

10,722

 

Loss on divestitures and sales of assets

 

 

158

 

 

 

27,568

 

Deferred income taxes

 

 

59,834

 

 

 

43,286

 

Excess tax benefits from stock-based compensation transactions

 

 

(5,010

)

 

 

 

Other items, net

 

 

(17,797

)

 

 

(6,554

)

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

   and divestitures:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(133,848

)

 

 

(155,054

)

Inventories, net

 

 

(33,956

)

 

 

(17,650

)

Accounts payable

 

 

12,422

 

 

 

22,186

 

Other assets and liabilities, net

 

 

(23,546

)

 

 

(10,575

)

Net Cash Provided by Operating Activities

 

 

414,068

 

 

 

319,579

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(285,481

)

 

 

(212,447

)

Acquisitions, net

 

 

(178,689

)

 

 

(10,748

)

Cash received in acquisition

 

 

4,246

 

 

 

 

Proceeds from divestitures and sales of assets

 

 

5,216

 

 

 

422,045

 

Repayments from affiliate

 

 

 

 

 

1,808

 

Payment of railcar construction advances

 

 

(37,370

)

 

 

(25,341

)

Reimbursement of railcar construction advances

 

 

37,370

 

 

 

25,234

 

Net Cash (Used for) Provided by Investing Activities

 

 

(454,708

)

 

 

200,551

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowings of debt

 

 

360,000

 

 

 

230,000

 

Repayments of debt

 

 

(168,267

)

 

 

(111,384

)

Payments on capital lease obligations

 

 

(2,463

)

 

 

(5,784

)

Debt issuance costs

 

 

(213

)

 

 

 

Change in bank overdraft

 

 

(10,235

)

 

 

(183

)

Dividends paid

 

 

(78,295

)

 

 

(81,219

)

Issuances of common stock

 

 

17,378

 

 

 

33,892

 

Repurchases of common stock

 

 

(190,000

)

 

 

(257,674

)

Excess tax benefits from stock-based compensation transactions

 

 

5,010

 

 

 

 

Net Cash Used for Financing Activities

 

 

(67,085

)

 

 

(192,352

)

Net (Decrease) Increase in Cash and Cash Equivalents

 

 

(107,725

)

 

 

327,778

 

Cash and Cash Equivalents, beginning of period

 

 

168,409

 

 

 

108,651

 

Cash and Cash Equivalents, end of period

 

$

60,684

 

 

$

436,429

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

48,813

 

 

$

47,069

 

Cash paid for income taxes

 

$

81,589

 

 

$

30,896

 

 

 

 

See accompanying notes to the consolidated financial statements (unaudited).

 

Page 5 of 60


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

326,526

 

 

 

326,526

 

 

 

121

 

 

 

326,647

 

Other comprehensive earnings,

     net of tax

 

 

 

 

 

 

 

 

 

 

 

1,111

 

 

 

 

 

 

1,111

 

 

 

52

 

 

 

1,163

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(78,295

)

 

 

(78,295

)

 

 

 

 

 

(78,295

)

Issuances of common stock for stock

     award plans

 

 

231

 

 

 

2

 

 

 

21,537

 

 

 

 

 

 

 

 

 

21,539

 

 

 

 

 

 

21,539

 

Repurchases of common stock

 

 

(1,244

)

 

 

(12

)

 

 

 

 

 

 

 

 

(189,988

)

 

 

(190,000

)

 

 

 

 

 

(190,000

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

17,167

 

 

 

 

 

 

 

 

 

17,167

 

 

 

 

 

 

17,167

 

Balance at September 30, 2016

 

 

63,466

 

 

$

633

 

 

$

3,326,531

 

 

$

(104,511

)

 

$

932,679

 

 

$

4,155,332

 

 

$

3,066

 

 

$

4,158,398

 

 

 

 

See accompanying notes to the consolidated financial statements (unaudited).

 

Page 6 of 60


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended September 30, 2016

(UNAUDITED) 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 54% of consolidated net sales for the nine months ended September 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. The Corporation’s aggregates-related downstream product lines, which accounted for 32% of consolidated net sales for the nine months ended September 30, 2016 (27% of full-year 2015 consolidated net sales) include asphalt products, ready mixed concrete and road paving construction services.  Aggregates and aggregates-related downstream product lines 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 7% of consolidated net sales for the nine months ended September 30, 2016 (11% of full-year 2015 consolidated net sales which included the operations of a California-based cement plant sold in September 2015).  The Cement segment has production facilities located in Midlothian, Texas, south of Dallas-Fort Worth and Hunter, Texas, north of San Antonio, which produce 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 nine months ended September 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 60


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended September 30, 2016

(UNAUDITED) 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 nine months ended September 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 $3,567,000 and $3,848,000 from Other noncurrent assets to Long-term debt as of December 31, 2015 and September 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 September 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 60


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended September 30, 2016

(UNAUDITED) 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

Net earnings attributable to Martin Marietta

    Materials, Inc.

 

$

159,479

 

 

$

117,544

 

 

$

326,526

 

 

$

205,607

 

Other comprehensive earnings (loss), net of tax

 

 

1,557

 

 

 

72

 

 

 

1,111

 

 

 

(6,583

)

Comprehensive earnings attributable to Martin Marietta

     Materials, Inc.

 

$

161,036

 

 

$

117,616

 

 

$

327,637

 

 

$

199,024

 

 

 

Page 9 of 60


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended September 30, 2016

(UNAUDITED) 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(Dollars in Thousands)

 

Net (loss) earnings attributable to noncontrolling

     interests

 

$

(1

)

 

$

34

 

 

$

121

 

 

$

108

 

Other comprehensive earnings, net of tax

 

 

20

 

 

 

3

 

 

 

52

 

 

 

8

 

Comprehensive earnings attributable to noncontrolling

     interests

 

$

19

 

 

$

37

 

 

$

173

 

 

$

116

 

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 September 30, 2016

 

Balance at beginning of period

 

$

(104,114

)

 

$

(381

)

 

$

(1,573

)

 

$

(106,068

)

Other comprehensive earnings (loss) before

     reclassifications, net of tax

 

 

 

 

 

(198

)

 

 

 

 

 

(198

)

Amounts reclassified from accumulated other

     comprehensive earnings, net of tax

 

 

1,547

 

 

 

 

 

 

208

 

 

 

1,755

 

Other comprehensive earnings (loss), net of tax

 

 

1,547

 

 

 

(198

)

 

 

208

 

 

 

1,557

 

Balance at end of period

 

$

(102,567

)

 

$

(579

)

 

$

(1,365

)

 

$

(104,511

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2015

 

Balance at beginning of period

 

$

(111,663

)

 

$

1,219

 

 

$

(2,370

)

 

$

(112,814

)

Other comprehensive loss before reclassifications,

     net of tax

 

 

 

 

 

(1,757

)

 

 

 

 

 

(1,757

)

Amounts reclassified from accumulated other

     comprehensive earnings, net of tax

 

 

1,636

 

 

 

 

 

 

193