Martin Marietta Materials
MARTIN MARIETTA MATERIALS INC (Form: 10-Q, Received: 05/10/2017 16:26:52)

 

 

 

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 March 31, 2017

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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth 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 April 26, 2017

Common Stock, $0.01 par value

 

62,781,593

 

 

 


 

 

 

 


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

 

 

Page

Part I. Financial Information:

 

 

Item 1. Financial Statements

 

 

 

Consolidated Balance Sheets – March 31, 2017, December 31, 2016 and March 31, 2016

 

 

3

Consolidated Statements of Earnings and Comprehensive Earnings – Three Months Ended March 31, 2017 and 201 6

 

 

 

4

Consolidated Statements of Cash Flows – Three Months Ended March 31, 2017 and 2016

 

 

5

Consolidated Statement of Total Equity - Three Months Ended March 31, 2017

 

 

6

Notes to Consolidated Financial Statements

 

 

7

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

 

 

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

 

38

Item 4. Controls and Procedures

 

 

39

Part II. Other Information:

 

 

 

Item 1. Legal Proceedings

 

 

40

Item 1A. Risk Factors

 

 

40

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

 

 

40

Item 4. Mine Safety Disclosures

 

 

40

Item 6. Exhibits

 

 

41

Signatures

 

 

42

Exhibit Index

 

 

43

 

 

 

Page 2 of 43


 

PA RT I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

2016

 

 

 

(Dollars in Thousands, Except Per Share Data)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,418

 

 

$

50,038

 

 

$

27,242

 

Accounts receivable, net

 

 

479,215

 

 

 

457,910

 

 

 

448,048

 

Inventories, net

 

 

537,000

 

 

 

521,624

 

 

 

485,367

 

Other current assets

 

 

51,609

 

 

 

56,813

 

 

 

37,658

 

Total Current Assets

 

 

1,123,242

 

 

 

1,086,385

 

 

 

998,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

6,211,813

 

 

 

6,115,530

 

 

 

5,778,368

 

Allowances for depreciation, depletion and amortization

 

 

(2,744,168

)

 

 

(2,692,135

)

 

 

(2,515,387

)

Net property, plant and equipment

 

 

3,467,645

 

 

 

3,423,395

 

 

 

3,262,981

 

Goodwill

 

 

2,159,398

 

 

 

2,159,337

 

 

 

2,135,295

 

Operating permits, net

 

 

440,411

 

 

 

442,202

 

 

 

444,148

 

Other intangibles, net

 

 

67,318

 

 

 

69,110

 

 

 

75,267

 

Other noncurrent assets

 

 

135,777

 

 

 

120,476

 

 

 

142,281

 

Total Assets

 

$

7,393,791

 

 

$

7,300,905

 

 

$

7,058,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

188,399

 

 

$

178,598

 

 

$

174,398

 

Accrued salaries, benefits and payroll taxes

 

 

22,760

 

 

 

47,428

 

 

 

17,052

 

Pension and postretirement benefits

 

 

8,136

 

 

 

9,293

 

 

 

9,169

 

Accrued insurance and other taxes

 

 

49,535

 

 

 

60,093

 

 

 

52,501

 

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

 

 

290,048

 

 

 

180,036

 

 

 

177,430

 

Accrued interest

 

 

23,649

 

 

 

16,837

 

 

 

23,004

 

Other current liabilities

 

 

49,031

 

 

 

54,303

 

 

 

38,577

 

Total Current Liabilities

 

 

631,558

 

 

 

546,588

 

 

 

492,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,556,246

 

 

 

1,506,153

 

 

 

1,575,327

 

Pension, postretirement and postemployment benefits

 

 

252,568

 

 

 

248,086

 

 

 

226,924

 

Deferred income taxes, net

 

 

667,160

 

 

 

663,019

 

 

 

620,569

 

Other noncurrent liabilities

 

 

210,305

 

 

 

194,469

 

 

 

197,700

 

Total Liabilities

 

 

3,317,837

 

 

 

3,158,315

 

 

 

3,112,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, par value $0.01 per share

 

 

626

 

 

 

630

 

 

 

633

 

Preferred stock, par value $0.01 per share

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

3,349,813

 

 

 

3,334,461

 

 

 

3,302,258

 

Accumulated other comprehensive loss

 

 

(128,425

)

 

 

(130,687

)

 

 

(103,833

)

Retained earnings

 

 

851,354

 

 

 

935,574

 

 

 

743,593

 

Total Shareholders' Equity

 

 

4,073,368

 

 

 

4,139,978

 

 

 

3,942,651

 

Noncontrolling interests

 

 

2,586

 

 

 

2,612

 

 

 

2,985

 

Total Equity

 

 

4,075,954

 

 

 

4,142,590

 

 

 

3,945,636

 

Total Liabilities and Equity

 

$

7,393,791

 

 

$

7,300,905

 

 

$

7,058,287

 

 

See accompanying notes to the consolidated financial statements.

 

Page 3 of 43


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

(In Thousands, Except Per Share Data)

 

 

 

 

 

Net Sales

 

$

791,684

 

 

$

733,960

 

Freight and delivery revenues

 

 

52,175

 

 

 

54,774

 

Total revenues

 

 

843,859

 

 

 

788,734

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

644,617

 

 

 

588,710

 

Freight and delivery costs

 

 

52,175

 

 

 

54,774

 

Total cost of revenues

 

 

696,792

 

 

 

643,484

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

147,067

 

 

 

145,250

 

 

 

 

 

 

 

 

 

 

Selling, general & administrative expenses

 

 

69,535

 

 

 

58,349

 

Acquisition-related expenses, net

 

 

22

 

 

 

299

 

Other operating expenses, net

 

 

360

 

 

 

579

 

Earnings from Operations

 

 

77,150

 

 

 

86,023

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

20,851

 

 

 

20,034

 

Other nonoperating (income) and expenses, net

 

 

(536

)

 

 

1,224

 

Earnings before taxes on income

 

 

56,835

 

 

 

64,765

 

Taxes on income

 

 

14,528

 

 

 

19,710

 

Consolidated net earnings

 

 

42,307

 

 

 

45,055

 

Less: Net (loss) earnings attributable to noncontrolling interests

 

 

(27

)

 

 

61

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

$

42,334

 

 

$

44,994

 

 

 

 

 

 

 

 

 

 

Consolidated Comprehensive Earnings:  (See Note 1)

 

 

 

 

 

 

 

 

Earnings attributable to Martin Marietta Materials, Inc.

 

$

44,596

 

 

$

46,783

 

(Loss) Earnings attributable to noncontrolling interests

 

 

(26

)

 

 

92

 

 

 

$

44,570

 

 

$

46,875

 

Net Earnings Attributable to Martin Marietta Materials, Inc.

 

 

 

 

 

 

 

 

Per Common Share:

 

 

 

 

 

 

 

 

Basic attributable to common shareholders

 

$

0.67

 

 

$

0.70

 

Diluted attributable to common shareholders

 

$

0.67

 

 

$

0.69

 

 

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

63,024

 

 

 

64,158

 

Diluted

 

 

63,319

 

 

 

64,350

 

 

 

 

 

 

 

 

 

 

Cash Dividends Per Common Share

 

$

0.42

 

 

$

0.40

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 4 of 43


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

(Dollars in Thousands)

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Consolidated net earnings

 

$

42,307

 

 

$

45,055

 

Adjustments to reconcile consolidated net earnings to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

70,376

 

 

 

68,410

 

Stock-based compensation expense

 

 

10,275

 

 

 

7,228

 

Loss (Gain) on divestitures and sales of assets

 

 

73

 

 

 

(100

)

Deferred income taxes

 

 

2,827

 

 

 

17,988

 

Other items, net

 

 

2

 

 

 

(2,036

)

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

   and divestitures:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(21,305

)

 

 

(29,695

)

Inventories, net

 

 

(15,375

)

 

 

(13,495

)

Accounts payable

 

 

8,536

 

 

 

9,231

 

Other assets and liabilities, net

 

 

(23,670

)

 

 

(34,274

)

Net Cash Provided by Operating Activities

 

 

74,046

 

 

 

68,312

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(102,095

)

 

 

(94,228

)

Acquisitions, net

 

 

 

 

 

(123,000

)

Cash received in acquisition

 

 

 

 

 

3,446

 

Proceeds from divestitures and sales of assets

 

 

539

 

 

 

3,415

 

Payment of railcar construction advances

 

 

(37,011

)

 

 

 

Reimbursement of railcar construction advances

 

 

37,011

 

 

 

 

Net Cash Used for Investing Activities

 

 

(101,556

)

 

 

(210,367

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowings of debt

 

 

205,000

 

 

 

210,000

 

Repayments of debt

 

 

(45,012

)

 

 

(26,390

)

Payments on capital lease obligations

 

 

(761

)

 

 

(780

)

Change in bank overdraft

 

 

 

 

 

(10,235

)

Dividends paid

 

 

(26,560

)

 

 

(25,847

)

Issuances of common stock

 

 

3,917

 

 

 

4,720

 

Shares withheld for employees' income tax obligations

 

 

(3,695

)

 

 

(580

)

Repurchases of common stock

 

 

(99,999

)

 

 

(150,000

)

Net Cash Provided by Financing Activities

 

 

32,890

 

 

 

888

 

Net Increase (Decrease) in Cash and Cash Equivalents

 

 

5,380

 

 

 

(141,167

)

Cash and Cash Equivalents, beginning of period

 

 

50,038

 

 

 

168,409

 

Cash and Cash Equivalents, end of period

 

$

55,418

 

 

$

27,242

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 5 of 43


 

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, 2016

 

 

63,176

 

 

$

630

 

 

$

3,334,461

 

 

$

(130,687

)

 

$

935,574

 

 

$

4,139,978

 

 

$

2,612

 

 

$

4,142,590

 

Consolidated net earnings (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,334

 

 

 

42,334

 

 

 

(27

)

 

 

42,307

 

Other comprehensive earnings,

     net of tax

 

 

 

 

 

 

 

 

 

 

 

2,262

 

 

 

 

 

 

2,262

 

 

 

1

 

 

 

2,263

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,560

)

 

 

(26,560

)

 

 

 

 

 

(26,560

)

Issuances of common stock for stock

     award plans

 

 

60

 

 

 

1

 

 

 

5,077

 

 

 

 

 

 

 

 

 

5,078

 

 

 

 

 

 

5,078

 

Repurchases of common stock

 

 

(458

)

 

 

(5

)

 

 

 

 

 

 

 

 

(99,994

)

 

 

(99,999

)

 

 

 

 

 

(99,999

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

10,275

 

 

 

 

 

 

 

 

 

10,275

 

 

 

 

 

 

10,275

 

Balance at March 31, 2017

 

 

62,778

 

 

$

626

 

 

$

3,349,813

 

 

$

(128,425

)

 

$

851,354

 

 

$

4,073,368

 

 

$

2,586

 

 

$

4,075,954

 

 

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

Page 6 of 43


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

(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 building materials business, including aggregates, cement, ready mixed concrete and asphalt and paving product lines, collectively reported as the Building Materials business. The aggregates product line is sold and shipped from a network of more than 270 quarries and distribution facilities in 26 states, Nova Scotia and the Bahamas. The cement, ready mixed concrete and asphalt and paving product lines are located in strategic, vertically integrated markets, predominately Texas and Colorado.  Building materials are used for construction of highways and other infrastructure projects, and in the nonresidential and residential construction industries. Aggregates and cement products are also used in the railroad, agricultural, utility and environmental industries.

Effective January 1, 2017, the Corporation reorganized the operations and management reporting structure of its Texas-based aggregates, cement and ready mixed concrete product lines, resulting in a change to its reportable segments.  As a result, the cement product line is reported in the West Group.   The Corporation’s Building Materials business includes three reportable segments: the Mid-America Group, the Southeast Group and the West Group.

 

BUILDING MATERIALS 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

 

 

 

 

 

 

 

 

 

Product Lines

 

Aggregates

 

Aggregates

 

Aggregates, cement, ready mixed concrete and asphalt and paving

 

 

 

 

 

 

 

Products

 

Crushed stone, sand and gravel

 

Crushed stone, sand and gravel

 

Crushed stone, sand and gravel; Portland and specialty cements; ready mixed concrete and asphalt and paving

The Corporation has a Magnesia Specialties segment with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties segment 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 43


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

(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. Other than the adoption of two new accounting standards described below, 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, 2016. 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 three months ended March 31, 2017 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2016 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, 2016.

New Accounting Pronouncements

Share-Based Payment Accounting

Effective January 1, 2017, the Corporation adopted Accounting Standards Update (ASU) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09) , which simplifies certain aspects of accounting guidance and requirements for share-based transactions.  ASU 2016-09 requires shares withheld for employees’ income tax obligations to be presented as a financing activity in the Statement of Cash Flows, with retrospective presentation.  For the quarter ended March 31, 2016, the Corporation reclassified $26,000 from operating activities to financing activities on the Statement of Cash Flows.  Additionally, excess tax benefits from stock-based compensation transactions are presented as an operating activity with retrospective presentation.  The Corporation previously presented excess tax benefits from stock-based compensation transactions as a financing activity and, for the quarter ended March 31, 2016, reclassified $1,278,000 to operating activities on the Statement of Cash Flows.  ASU 2016-09 also requires excess tax benefits and tax deficiencies to be recognized prospectively as income tax benefits or expense in the period awards vest or are exercised.  For the three months ended March 31, 2017, the Corporation recognized excess tax benefits of $2,270,000.  

 

Page 8 of 43


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued)

New Accounting Pronouncements

Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07) , which revises the accounting for periodic pension and postretirement expense.  ASU 2017-07 requires net periodic benefit cost, with the exception of service cost, to be presented retrospectively as nonoperating expense.  As permitted by ASU 2017-07, the Corporation used the pension and other postretirement benefit plan disclosures for the prior comparative periods as a practical expedient to estimate amounts for retrospective application.  Service cost will remain a component of earnings from operations and represent the only cost of pension and postretirement expense eligible for capitalization, notably in the Corporation’s inventory standards. The Corporation early adopted this standard effective January 1, 2017.  For the three months ended March 31, 2016, the Corporation reclassified $616,000, $1,512,000 and $126,000 from cost of sales; selling, general and administrative costs; and other operating income and expenses, respectively, to nonoperating expense.

Pending Accounting Pronouncements

Revenue Recognition Standard

The FASB issued an accounting standards 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 has completed its initial assessment of the provisions of the new standard and, at this time, does not expect the impact to be material to its results of operations.

Lease Standard

In February 2016, the FASB issued a new accounting standard, Accounting Codification Standard 842 – 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 assessing the impact of the updated standard on the Corporation’s financial statements. The Corporation believes the updated standard will have a material effect on its balance sheet but has not quantified the impact at this time.

Reclassifications

Prior-year information has been reclassified to conform to the presentation of the Corporation’s current reportable segments and for the adoption of the two accounting pronouncements aforementioned.

 

Page 9 of 43


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued)

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss

Consolidated comprehensive earnings/loss and accumulated other comprehensive loss 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

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

(Dollars in Thousands)

 

Net earnings attributable to Martin Marietta Materials, Inc.

 

$

42,334

 

 

$

44,994

 

Other comprehensive earnings, net of tax

 

 

2,262

 

 

 

1,789

 

Comprehensive earnings attributable to Martin Marietta Materials, Inc.

 

$

44,596

 

 

$

46,783

 

 

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

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

(Dollars in Thousands)

 

Net (loss) earnings attributable to noncontrolling interests

 

$

(27

)

 

$

61

 

Other comprehensive earnings, net of tax

 

 

1

 

 

 

31

 

Comprehensive (loss) earnings attributable to noncontrolling interests

 

$

(26

)

 

$

92

 

 

 

Page 10 of 43


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

(UNAUDITED) 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 (loss), 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 March 31, 2017

 

Balance at beginning of period

 

$

(128,373

)

 

$

(1,162

)

 

$

(1,152

)

 

$

(130,687

)

Other comprehensive earnings before

     reclassifications, net of tax

 

 

 

 

 

137

 

 

 

 

 

 

137

 

Amounts reclassified from accumulated other

     comprehensive earnings, net of tax

 

 

1,910

 

 

 

 

 

 

215

 

 

 

2,125

 

Other comprehensive earnings, net of tax

 

 

1,910

 

 

 

137

 

 

 

215

 

 

 

2,262

 

Balance at end of period

 

$

(126,463

)

 

$

(1,025

)

 

$

(937

)

 

$

(128,425

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2016

 

Balance at beginning of period

 

$

(103,380

)

 

$

(264

)

 

$

(1,978

)

 

$

(105,622

)

Other comprehensive earnings before

     reclassifications, net of tax

 

 

 

 

 

115

 

 

 

 

 

 

115

 

Amounts reclassified from accumulated other

     comprehensive earnings, net of tax

 

 

1,473

 

 

 

 

 

 

201

 

 

 

1,674

 

Other comprehensive earnings, net of tax

 

 

1,473

 

 

 

115

 

 

 

201

 

 

 

1,789

 

Balance at end of period

 

$

(101,907

)

 

$

(149

)

 

$

(1,777

)

 

$

(103,833

)

 

 

Page 11 of 43


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

(UNAUDITED) 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 March 31, 2017

 

Balance at beginning of period

 

$

82,044

 

 

$

749

 

 

$

82,793

 

Tax effect of other comprehensive earnings

 

 

(1,185

)

 

 

(141

)

 

 

(1,326

)

Balance at end of period

 

$

80,859

 

 

$

608

 

 

$

81,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2016

 

Balance at beginning of period

 

$

66,467

 

 

$

1,290

 

 

$

67,757

 

Tax effect of other comprehensive earnings

 

 

(944

)

 

 

(131

)

 

 

(1,075

)

Balance at end of period

 

$

65,523

 

 

$

1,159

 

 

$

66,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassifications out of accumulated other comprehensive loss are as follows:

 

 

Three Months Ended

 

 

Affected line items in the consolidated

 

 

March 31,

 

 

statements of earnings and

 

 

2017

 

 

2016

 

 

comprehensive earnings

 

 

(Dollars in Thousands)

 

Pension and postretirement

     benefit plans

 

 

 

 

 

 

 

 

 

 

Settlement charge

 

$

 

 

$

59

 

 

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

Prior service credit

 

 

(357

)

 

 

(374

)

 

 

Actuarial loss

 

 

3,452

 

 

 

2,732

 

 

 

 

 

 

3,095

 

 

 

2,417

 

 

Nonoperating expenses

Tax benefit

 

 

(1,185

)

 

 

(944

)

 

Taxes on income

 

 

$

1,910

 

 

$

1,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unamortized value of terminated

     forward starting interest

     rate swap

 

 

 

 

 

 

 

 

 

 

Additional interest expense

 

$

356

 

 

$

332

 

 

Interest expense

Tax benefit

 

 

(141

)

 

 

(131

)

 

Taxes on income

 

 

$

215

 

 

$

201

 

 

 

 

Page 12 of 43


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

FORM 10-Q

For the Quarter Ended March 31, 2017

(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

 

1.

Significant Accounting Policies (continued)

Earnings per Common Share

The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta Materials, Inc. reduced by dividends and undistributed earnings attributable to certain of the Corporation’s stock-based compensation. 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 March 31, 2017 and 2016, 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.

 

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

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016