1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM 11-K ----------------- [X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the fiscal year ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from to ---------- ---------- Commission file number: 1-12744 ------- MARTIN MARIETTA MATERIALS, INC. PERFORMANCE SHARING PLAN (Full title of the plan and the address of the plan, if different from that of the issuer named below) MARTIN MARIETTA MATERIALS, INC. 2710 WYCLIFF ROAD RALEIGH, NORTH CAROLINA 27607 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) - -------------------------------------------------------------------------------- 2 Audited Financial Statements Martin Marietta Materials, Inc. Performance Sharing Plan Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Year ended December 31, 1997 and period from October 18, 1996 (inception) through December 31, 1996 with Report of Independent Auditors 3 Martin Marietta Materials, Inc. Performance Sharing Plan Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Audited Financial Statements Year ended December 31, 1997 and period from October 18, 1996 (inception) through December 31, 1996 CONTENTS
Audited Financial Statements for the Plan Report of Independent Auditors.................................................................................1 Statements of Net Assets Available for Benefits, with Fund Information.........................................2 Statements of Changes in Net Assets Available for Benefits, with Fund Information..........................................................................................4 Notes to Financial Statements..................................................................................6 Audited Financial Statements for the Master Trust Report of Independent Auditors .............................................................................. 11 Statements of Net Assets Available for Benefits, with Fund Information........................................13 Statements of Changes in Net Assets Available for Benefits, with Fund Information.........................................................................................15 Notes to Financial Statements.................................................................................17 4 [ERNST & YOUNG LLP LETTERHEAD] Report of Independent Auditors Martin Marietta Materials, Inc., as Plan Administrator We have audited the accompanying statements of net assets available for benefits of the Martin Marietta Materials, Inc. Performance Sharing Plan (the "Plan") as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the year ended December 31, 1997 and for the period from October 18, 1996 (inception) to December 31, 1996. These financial statements are the responsibility of Martin Marietta Materials, Inc., as Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1997 and 1996, and the changes in the net assets available for benefits for the year ended December 31, 1997 and for the period from October 18, 1996 (inception) to December 31, 1996, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The Fund Information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The Fund Information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ ERNST & YOUNG LLP Raleigh, NC June 15, 1998 5 Martin Marietta Materials, Inc. Performance Sharing Plan Statement of Net Assets Available for Benefits, with Fund Information December 31, 1997 (In Thousands) See accompanying notes. 2
YIELD- MARTIN ENHANCED MARIETTA LOCKHEED HARBOR INVESTMENT DAILY SHORT-TERM S&P MATERIALS MARTIN CAPITAL INTERMEDIATE COMPANY OF AMERICAN BOND VANGUARD INVESTMENT 500 INDEX COMMON COMMON APPRECIATION BOND AMERICA BALANCED MARKET WINDSOR FUND FUND STOCK FUND STOCK FUND FUND FUND FUND FUND FUND FUND ----------------------------------------------------------------------------------------------------------------- ASSETS Interest in Master Trust $18,155 $22,188 $ 8,911 $17,074 $ 3,544 $ 461 $ 1,036 $ 559 $1,814 $ 5,224 ================================================================================================================= Net assets available for benefits $18,155 $22,188 $ 8,911 $17,074 $ 3,544 $ 461 $ 1,036 $ 559 $1,814 $ 5,224 ================================================================================================================= VANGUARD INTERNATIONAL GROWTH LOAN FUND FUND TOTAL -------------------------------- ASSETS Interest in Master Trust $ 1,654 $ 1,582 $82,202 ================================ Net assets available for benefits $ 1,654 $ 1,582 $82,202 ================================ 6 Martin Marietta Materials, Inc. Performance Sharing Plan Statement of Net Assets Available for Benefits, with Fund Information December 31, 1996 (In Thousands) See accompanying notes. 3
YIELD- MARTIN ENHANCED S&P MARIETTA LOCKHEED HARBOR INVESTMENT DAILY SHORT-TERM 500 MATERIALS MARTIN CAPITAL INTERMEDIATE COMPANY OF AMERICAN BOND VANGUARD INVESTMENT INDEX COMMON COMMON APPRECIATION BOND AMERICA BALANCED MARKET WINDSOR FUND FUND STOCK FUND STOCK FUND FUND FUND FUND FUND FUND FUND --------------------------------------------------------------------------------------------------------------- ASSETS Interest in Master Trust $20,221 $16,576 $ 2,020 $20,690 $ 1,471 $ 1,024 $1,190 $ 510 $ 645 $2,620 =============================================================================================================== Net assets available for benefits $20,221 $16,576 $ 2,020 $20,690 $ 1,471 $ 1,024 $1,190 $ 510 $ 645 $2,620 =============================================================================================================== VANGUARD INTERNATIONAL GROWTH LOAN FUND FUND TOTAL -------------------------------- ASSETS Interest in Master Trust $ 1,231 $ 1,241 $69,439 ================================ Net assets available for benefits $ 1,231 $ 1,241 $69,439 ================================ 7 Martin Marietta Materials, Inc. Performance Sharing Plan Statement of Changes in Net Assets Available for Benefits, with Fund Information Year ended December 31, 1997 (In Thousands) See accompanying notes. 4
YIELD- MARTIN ENHANCED MARIETTA LOCKHEED HARBOR INVESTMENT SHORT-TERM MATERIALS MARTIN CAPITAL COMPANY OF AMERICAN INVESTMENT S&P 500 COMMON COMMON APPRECIATION INTERMEDIATE AMERICA BALANCED FUND INDEX FUND STOCK FUND STOCK FUND FUND BOND FUND FUND FUND ------------------------------------------------------------------------------------------------ Net assets available for benefits at beginning of period $ 20,221 $ 16,576 $2,020 $ 20,690 $1,471 $ 1,024 $ 1,190 $ 510 Additions to net assets: Contributions: Employees 1,232 996 377 -- 166 59 119 79 Martin Marietta Materials 652 208 119 -- 40 13 32 20 Rollover Contributions 217 65 55 -- 27 -- 12 2 ------------------------------------------------------------------------------------------------ Total contributions 2,101 1,269 551 -- 233 72 163 101 Interest in net investment gain of Master Trust 1,063 5,394 1,992 1,941 500 70 377 156 ------------------------------------------------------------------------------------------------ Total additions 3,164 6,663 2,543 1,941 733 142 540 257 Deductions from net assets: Distributions and withdrawals 3,128 776 66 660 25 71 35 15 Administrative expenses 45 68 13 42 5 6 3 1 ------------------------------------------------------------------------------------------------ Total deductions 3,173 844 79 702 30 77 38 16 Net transfers from other plans -- 21 -- 154 19 -- 36 16 Net transfers between funds (2,057) (228) 4,427 (5,009) 1,351 (628) (692) (208) ------------------------------------------------------------------------------------------------ Net assets available for benefits at end of year $ 18,155 $ 22,188 $8,911 $ 17,074 $3,544 $ 461 $ 1,036 $ 559 ================================================================================================ DAILY BOND VANGUARD VANGUARD MARKET WINDSOR INTERNATIONAL LOAN FUND FUND GROWTH FUND FUND TOTAL ---------------------------------------------------- Net assets available for benefits at beginning of period $ 645 $2,620 $1,231 $1,241 $69,439 Additions to net assets: Contributions: Employees 51 359 134 -- 3,572 Martin Marietta Materials 14 87 30 -- 1,215 Rollover Contributions -- 24 4 -- 406 --------------------------------------------------- Total contributions 65 470 168 -- 5,193 Interest in net investment gain of Master Trust 83 686 48 116 12,426 --------------------------------------------------- Total additions 148 1,156 216 116 17,619 Deductions from net assets: Distributions and withdrawals 12 47 34 91 4,960 Administrative expenses 5 8 4 -- 200 --------------------------------------------------- Total deductions 17 55 38 91 5,160 Net transfers from other plans -- 22 36 -- 304 Net transfers between funds 1,038 1,481 209 316 -- --------------------------------------------------- Net assets available for benefits at end of year $1,814 $5,224 $1,654 $1,582 $82,202 =================================================== 8 Martin Marietta Materials, Inc. Performance Sharing Plan Statement of Changes in Net Assets Available for Benefits, with Fund Information For the Period from October 18, 1996 (inception) through December 31, 1996 (In Thousands) See accompanying notes. 5
MARTIN YIELD- MARIETTA LOCKHEED ENHANCED S&P MATERIALS MARTIN HARBOR INVESTMENT SHORT-TERM 500 COMMON COMMON CAPITAL INTERMEDIATE COMPANY AMERICAN INVESTMENT INDEX STOCK STOCK APPRECIATION BOND OF AMERICA BALANCED FUND FUND FUND FUND FUND FUND FUND FUND ----------------------------------------------------------------------------------------------- Net assets available for benefits at beginning of period $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- Additions to net assets: Contributions: Employees 418 230 16 -- 26 18 22 9 Martin Marietta Materials 200 42 4 -- 6 3 5 2 Rollover contributions -- -- 1 -- 2 -- -- -- ---------------------------------------------------------------------------------------------- Total contributions 618 272 21 -- 34 21 27 11 Interest in net investment gain (loss) of Master Trust 182 887 (31) 521 42 6 52 14 ---------------------------------------------------------------------------------------------- Total additions (reductions) 800 1,159 (10) 521 76 27 79 25 Deductions from net assets: Distributions and withdrawals 629 267 19 367 -- -- -- -- Administrative expenses 7 5 1 5 1 1 1 -- ---------------------------------------------------------------------------------------------- Total deductions 636 272 20 372 1 1 1 -- Net transfers from other plans 20,193 16,160 1,898 20,838 937 928 958 441 Net transfers between funds (136) (471) 152 (297) 459 70 154 44 ---------------------------------------------------------------------------------------------- Net assets available for benefits at end of year $20,221 $16,576 $2,020 $20,690 $1,471 $1,024 $1,190 $510 ============================================================================================== DAILY VANGUARD BOND VANGUARD INTERNATIONAL MARKET WINDSOR GROWTH LOAN FUND FUND FUND FUND TOTAL ---------------------------------------------------- Net assets available for benefits at beginning of period $ -- $ -- $ -- $ -- $ -- Additions to net assets: Contributions: Employees 13 57 19 -- 828 Martin Marietta Materials 4 14 4 -- 284 Rollover contributions -- -- 2 -- 5 ---------------------------------------------------- Total contributions 17 71 25 -- 1,117 Interest in net investment gain (loss) of Master Trust 5 163 64 8 1,913 ---------------------------------------------------- Total additions (reductions) 22 234 89 8 3,030 Deductions from net assets: Distributions and withdrawals -- 1 -- 24 1,307 Administrative expenses 1 1 1 -- 24 ---------------------------------------------------- Total deductions 1 2 1 24 1,331 Net transfers from other plans 607 2,443 1,083 1,254 67,740 Net transfers between funds 17 (55) 60 3 -- ---------------------------------------------------- Net assets available for benefits at end of year $645 $2,620 $1,231 $1,241 $69,439 ==================================================== 9 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements December 31, 1997 1. ACCOUNTING POLICIES The financial statements of the Martin Marietta Materials, Inc. Performance Sharing Plan (the "Plan") are prepared on the accrual basis of accounting. No liability is recorded for distributions to participants who terminated during the year but have chosen to defer payments to the following year. The assets of the plan are held and invested on a commingled basis in the Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust (the "Master Trust") along with the assets of the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees and the Martin Marietta Materials, Inc. Money Accumulation Plan for Hourly Employees. The Plan's interest in the Master Trust is stated at the fair value of the underlying net assets in the Master Trust. Unrealized appreciation or depreciation in the aggregate and the gain or loss on disposition of investments during the year are determined using the average cost of investments. The assets, realized and unrealized gains and losses and investment income of the Master Trust are allocated among the participating plans on a pro rata basis. All administrative expenses, a portion of which are paid by Martin Marietta Materials, Inc., (the "Corporation") are otherwise paid by the Master Trust and allocated to each of the participating plans. Prior to October 1996, the Plan was not part of the Master Trust. Rather, the Plan's assets were invested in a master trust arrangement established for various plans affiliated with Lockheed Martin Corporation, the former parent of Corporation. During October 1996, the Plan's assets were transferred directly from the master trust arrangement affiliated with Lockheed Martin Corporation into the Master Trust established for the plans sponsored by the Corporation and for certain other employees of members of the Corporation's controlled group of companies, as defined by Section 1563(a)(1) of the Internal Revenue Code ("IRC Section 1563(a)(1)"). The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, in particular the determination of fair values of investments for which market values are not readily available. Actual results could differ from those estimates. 6 10 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN In October 1996, Lockheed Martin Corporation disposed of its remaining ownership interest of the Corporation's common stock by means of a split-off, an exchange offer whereby Lockheed Martin Corporation's shareholders were given the opportunity to exchange some or all of their common stock of Lockheed Martin Corporation for shares of the Corporation's common stock. The Corporation subsequently registered its common stock for use in connection with the Plan. In connection with the divestiture of Lockheed Martin Corporation's ownership interest in the Corporation, the Plan was established effective October 18, 1996, as a defined contribution plan providing eligible salaried employees an opportunity to participate in an individual savings and investment program providing tax savings and retirement incentives. Martin Marietta Materials, Inc., is the Plan's sponsor, and also serves as the Plan administrator. Prior to October 1996, eligible employees participated in the Lockheed Martin Corporation Performance Sharing Plan, which was sponsored by Lockheed Martin Corporation. Employees of the Corporation and certain employees of members of the Lockheed Martin Corporation controlled group of companies, as defined by IRC Section 1563(a)(1), were eligible to participate in the Plan. Generally, the terms of - as well as the procedures for administering - the new Plan did not change. However, certain investment option funds available under the former plan were replaced with similar funds of the same type of risk and level of return. The risk and return investment objectives for the new funds in the Plan are similar to the investment objectives that existed in the former plan. Additionally, the underlying investment option available in the employer's company common stock fund was changed from Lockheed Martin Corporation common stock to that of Martin Marietta Materials, Inc. Following the consummation date of the split-off, Plan participants are no longer able to make any participant-directed contributions into the Lockheed Martin Common Stock Fund nor add to an existing balance in a Lockheed Martin Common Stock Fund by purchasing additional shares of the underlying common stock. For the period through October 1998, Plan participants may transfer out any balance in the Lockheed Martin Common Stock Fund and any such balance is available for withdrawals, as permitted under the Plan. At the end of this period, participation in the Lockheed Martin Common Stock Fund will be terminated and any participants' remaining balances will be liquidated and reinvested automatically in the Yield-Enhanced Short-Term Investment Fund. No other significant plan changes were made as a result of the split-off transaction. 7 11 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN (CONTINUED) Employees are eligible to enroll in the Plan after six months of service. Employee participation requires employee basic contributions of 1% to 6% of base salary (as defined in the Plan and subject to applicable Internal Revenue Code ("IRC") limitations on allowable compensation). For participants with at least three years of service on January 1 of each applicable Plan year, the maximum percentage of employee basic contributions may be increased to 7% of base salary. Participants may also elect to make additional supplemental contributions which are not considered for purposes of computing the employer match. A participant's combined basic and supplemental contributions may not exceed 17% of that participant's base pay. Generally, a participant's before-tax contributions may not exceed 15% of base pay, subject to certain restrictions for highly compensated employees, as defined. The Corporation matches the participants' annual basic contribution (the first 6% or 7% of base pay, depending upon length of service). The amount of the Corporation's match is equal to 50% of the basic contributions and is credited to participant accounts monthly. All participants are 100% vested in the value of their accounts, including employer contributions. Participants may change the overall percentage of their contributions in 1% increments and may change investment elections for future before-tax, after-tax and matching contributions, both up to once per month. Any changes in investment elections must be made in 5% increments. In addition, participants may change the investment mix of the accumulated value of prior contributions among the investment options - excluding the Lockheed Martin Common Stock Fund - daily, but are limited to 12 changes in a calendar year, however not less than one transfer in a calendar quarter. The Plan provides for participants to borrow from the money in his or her own investment account. All loans must meet specific terms and conditions of the Plan and are subject to applicable IRC regulations. Personal loans are available to participants in terms of up to 4 1/2 years, and primary residence loans are available for terms of up to 15 years. Such loans bear interest at a fixed rate, established upon loan request, which is equal to the annual prime rate (based upon corporate borrowing rates posted by at least 75% of the nation's 30 largest banks, as reported in The Wall Street Journal on the first business day of the calendar month before loan application) plus 1%. All loans are due in full immediately upon termination of employment. Approximately $936,000 was loaned to participants for the year ended December 31, 1997. Approximately $63,000 was loaned to participants for the period from October 18, 1996 (inception), through December 31, 1996. Outstanding loan balances and loan-related activities 8 12 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN (CONTINUED) are reflected in the Loan Fund account in the accompanying financial statements. In addition, the plan provides for in-service withdrawals to participants that meet specific conditions of financial hardship, as defined in the Plan and in accordance with current specific regulations under the IRC. Participants who are still working at the age of 59 1/2 may qualify for special withdrawal rights and privileges as defined in the Plan. Upon separation from the Corporation, participants may receive the full current value of their contributions and the matching employer contributions. Participants who have attained age 55 may receive their distributions in the form of a lump-sum payment or in annual installments over a period of up to 25 years. The accounts of participants who receive installment payments remain invested in the funds indicated by the participant. During 1996, the Plan received $67,740,000 from the Lockheed Martin Corporation Performance Sharing Plan. This amount represents the transfer of account balances of eligible participants pursuant to the establishment of the Plan. State Street Bank and Trust Company is the trustee of the Master Trust and recordkeeper of the Master Trust and Plan. Although the Corporation expects to continue the Plan indefinitely, the Board of Directors of the Corporation may terminate the Plan for any reason at any time. If the Plan is terminated, each participant or former participant shall receive a payment equal to the value of the participant's account. 3. INCOME TAX STATUS The Plan has received a favorable determination letter from the Internal Revenue Service (IRS). The determination letter states that the Plan meets the qualification requirements under the Internal Revenue Code (IRC) Section 401(a) for tax-exempt status under the IRC Section 501(a). Management believes that the Plan has been in operational compliance with the IRC Section 401(a) requirements. Therefore, no provision has been made in the financial statements for federal income taxes. 9 13 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements (continued) 4. MASTER TRUST The Plan's interest in the Master Trust's net assets as of December 31, 1997 and 1996, was 86.55% and 87.21%, respectively. The Plan's interest in the Master Trust did not fluctuate significantly throughout the year ended December 31, 1997 or the period from October 18, 1996 (inception) through December 31, 1996. The following audited financial statements of the Master Trust contain additional information concerning the Plan's interest in the Master Trust. 5. YEAR 2000 ISSUE (UNAUDITED) The Corporation has established a dedicated information technology task force to coordinate the identification, evaluation and implementation of modifications and replacements to the Corporation's information systems and related applications necessary to achieve a year 2000 date conversion with no effect on customers or disruption to its business operations. The Corporation's goal is to be substantially year 2000 compliant on a timely basis. The major systems and applications carrying potential business impact have been identified and are being evaluated, and initial conversion efforts are underway. In addition, the Corporation is communicating with suppliers, customers, financial institutions and others with which it does business to coordinate the year 2000 conversion process. The cost of the year 2000 initiatives is not expected to be material to the Corporation's results of operations or financial position or to the Plan's operations. 6. PLAN AMENDMENTS Effective January 1, 1998, salaried employees of the former American Aggregates Corporation, that was acquired by the Corporation during 1997, are eligible to participate in the Plan. Effective January 1, 1998, the following investment options were eliminated: Intermediate Bond Fund, Investment Company of America and American Balanced Fund. 10 14 [ERNST & YOUNG LLP LETTERHEAD] Report of Independent Auditors Martin Marietta Materials, Inc., as Plan Administrator We have audited the accompanying statements of net assets available for benefits of the Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust (the "Master Trust") as of December 31, 1997 and 1996 and the related statements of changes in net assets available for benefits for the year ended December 31, 1997 and for the period from October 18, 1996 (inception) through December 31, 1996. These financial statements are the responsibility of Martin Marietta Materials, Inc., as Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Master Trust at December 31, 1997 and 1996, and the changes in the net assets available for benefits for the year ended December 31, 1997 and for the period from October 18, 1996 (inception) through December 31, 1996, in conformity with generally accepted accounting principles. The accompanying statements are those of the Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust, which is established under the Martin Marietta Materials, Inc. Performance Sharing Plan, the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees and the Martin Marietta Materials, Inc. Money Accumulation Plan for Hourly Employees (collectively, the "Plans"); the statements do not purport to present the financial status of the Plans. The statements do not contain certain information on net assets available for benefits and other disclosures necessary for a fair presentation of the financial statements of the Plans in conformity with generally accepted accounting principles. Furthermore, these statements do not purport to satisfy the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 relating to the financial statements of employee benefit plans. 11 15 Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The Fund Information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The Fund Information has been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ ERNST & YOUNG LLP Raleigh, NC June 15, 1998 12 16 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Net Assets Available for Benefits, with Fund Information December 31, 1997 (In Thousands) See accompanying notes. 13
YIELD- MARTIN ENHANCED MARIETTA LOCKHEED HARBOR INVESTMENT SHORT-TERM S&P 500 MATERIALS MARTIN CAPITAL COMPANY INVESTMENT INDEX COMMON COMMON APPRECIATION INTERMEDIATE OF AMERICA FUND FUND STOCK FUND STOCK FUND FUND BOND FUND FUND ----------------------------------------------------------------------------------------- ASSETS Investments at quoted fair value: Cash and cash equivalents $24,246 $ -- $ 442 $ 439 $ -- $ -- $ -- Governmental bonds -- -- -- -- -- 232 -- Corporate bonds -- -- -- -- -- 231 -- Common stocks -- 24,734 9,344 19,356 3,565 -- 1,048 ----------------------------------------------------------------------------------------- Total investments at quoted fair value 24,246 24,734 9,786 19,795 3,565 463 1,048 Investments at estimated fair value: Participant loans -- -- -- -- -- -- -- ----------------------------------------------------------------------------------------- Total investments at estimated fair value -- -- -- -- -- -- -- Other assets: Contributions receivable: Employees 204 124 41 -- 14 5 10 Martin Marietta Materials, Inc. 71 19 9 -- 3 1 3 Dividends and interest receivable 116 -- 2 1 -- -- -- ----------------------------------------------------------------------------------------- Total other assets 391 143 52 1 17 6 13 ----------------------------------------------------------------------------------------- Total assets 24,637 24,877 9,838 19,796 3,582 469 1,061 LIABILITIES Administrative expenses payable 44 52 11 30 3 3 3 Amounts payable for investments purchased -- -- 121 -- -- -- -- ----------------------------------------------------------------------------------------- Total liabilities 44 52 132 30 3 3 3 ----------------------------------------------------------------------------------------- Net assets available for benefits $24,593 $24,825 $9,706 $19,766 $3,579 $466 $1,058 ========================================================================================= DAILY VANGUARD AMERICAN BOND VANGUARD INTERNATIONAL BALANCED MARKET WINDSOR GROWTH LOAN FUND FUND FUND FUND FUND TOTAL ---------------------------------------------------------------- ASSETS Investments at quoted fair value: Cash and cash equivalents $ 70 $ -- $ -- $ -- $ -- $25,197 Governmental bonds 104 1,228 -- -- -- 1,564 Corporate bonds 69 605 -- -- -- 905 Common stocks 336 -- 5,247 1,689 -- 65,319 ---------------------------------------------------------------- Total investments at quoted fair value 579 1,833 5,247 1,689 -- 92,985 Investments at estimated fair value: Participant loans -- -- -- -- 1,582 1,582 ---------------------------------------------------------------- Total investments at estimated fair value -- -- -- -- 1,582 1,582 Other assets: Contributions receivable: Employees 7 5 31 11 -- 452 Martin Marietta Materials, Inc. 2 1 8 3 -- 120 Dividends and interest receivable -- -- -- -- -- 119 ---------------------------------------------------------------- Total other assets 9 6 39 14 -- 691 ---------------------------------------------------------------- Total assets 588 1,839 5,286 1,703 1,582 95,258 LIABILITIES Administrative expenses payable 1 4 7 4 -- 162 Amounts payable for investments purchased -- -- -- -- -- 121 ---------------------------------------------------------------- Total liabilities 1 4 7 4 -- 283 ---------------------------------------------------------------- Net assets available for benefits $587 $1,835 $5,279 $1,699 $1,582 $94,975 ================================================================ 17 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Net Assets Available for Benefits, with Fund Information December 31, 1996 (In Thousands) See accompanying notes. 14
YIELD- MARTIN ENHANCED MARIETTA LOCKHEED HARBOR INVESTMENT SHORT-TERM S&P MATERIALS MARTIN CAPITAL COMPANY OF INVESTMENT 500 INDEX COMMON COMMON APPRECIATION INTERMEDIATE AMERICA FUND FUND STOCK FUND STOCK FUND FUND BOND FUND FUND -------------------------------------------------------------------------------------- ASSETS Investments at quoted fair value: Cash and cash equivalents $25,520 $ -- $ 52 $ 1,282 $ -- $ -- $ --- Governmental bonds -- -- -- -- -- 349 -- Corporate bonds -- -- -- -- -- 669 -- Common stocks -- 17,972 2,056 22,273 1,470 -- 1,192 -------------------------------------------------------------------------------------- Total investments at quoted fair value 25,520 17,972 2,108 23,555 1,470 1,018 1,192 Investments at estimated fair value: Participant loans -- -- -- -- -- -- -- -------------------------------------------------------------------------------------- Total investments at estimated fair value -- -- -- -- -- -- -- Other assets: Contributions receivable: Employees 229 101 6 -- 7 7 7 Martin Marietta Materials, Inc. 73 15 1 -- 2 1 1 Dividends and interest receivable 117 -- -- 6 -- -- -- Receivable for investments sold -- -- 35 -- -- -- -- -------------------------------------------------------------------------------------- Total other assets 419 116 42 6 9 8 8 -------------------------------------------------------------------------------------- Total assets 25,939 18,088 2,150 23,561 1,479 1,026 1,200 LIABILITIES Administrative expenses payable 8 6 1 6 1 1 1 Amounts payable for investments purchased 117 -- -- -- -- -- -- -------------------------------------------------------------------------------------- Total liabilities 125 6 1 6 1 1 1 -------------------------------------------------------------------------------------- Net assets available for benefits $25,814 $18,082 $2,149 $23,555 $1,478 $1,025 $1,199 ====================================================================================== DAILY VANGUARD AMERICAN BOND VANGUARD INTERNATIONAL BALANCED MARKET WINDSOR GROWTH LOAN FUND FUND FUND FUND FUND TOTAL ------------------------------------------------------------- ASSETS Investments at quoted fair value: Cash and cash equivalents $ 65 $ -- $ -- $ -- $ -- $26,919 Governmental bonds 120 320 -- -- -- 789 Corporate bonds 71 321 -- -- -- 1,061 Common stocks 288 -- 2,616 1,241 -- 49,108 ------------------------------------------------------------ Total investments at quoted fair value 544 641 2,616 1,241 -- 77,877 Investments at estimated fair value: Participant loans -- -- -- -- 1,241 1,241 ------------------------------------------------------------ Total investments at estimated fair value -- -- -- -- 1,241 1,241 Other assets: Contributions receivable: Employees 3 4 19 6 -- 389 Martin Marietta Materials, Inc. 1 1 5 3 -- 103 Dividends and interest receivable -- -- -- -- -- 123 Receivable for investments sold -- -- -- -- -- 35 ------------------------------------------------------------ Total other assets 4 5 24 9 -- 650 ------------------------------------------------------------ Total assets 548 646 2,640 1,250 1,241 79,768 LIABILITIES Administrative expenses payable 1 1 1 1 -- 28 Amounts payable for investments purchased -- -- -- -- -- 117 ------------------------------------------------------------ Total liabilities 1 1 1 1 -- 145 ------------------------------------------------------------ Net assets available for benefits $547 $645 $2,639 $1,249 $1,241 $79,623 ============================================================ 18 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Changes in Net Assets Available for Benefits, with Fund Information Year ended December 31, 1997 (In Thousands) See accompanying notes. 15
YIELD- MARTIN ENHANCED MARIETTA LOCKHEED HARBOR INVESTMENT SHORT-TERM S&P MATERIALS MARTIN CAPITAL COMPANY OF INVESTMENT 500 INDEX COMMON COMMON APPRECIATION INTERMEDIATE AMERICA FUND FUND STOCK FUND STOCK FUND FUND BOND FUND FUND ------------------------------------------------------------------------------------- Net assets available for benefits At beginning of period: $25,814 $18,082 $2,149 $23,555 $1,478 $1,025 $1,199 Additions to net assets: Contributions: Employees 2,410 1,490 516 -- 169 60 124 Employer 832 228 119 -- 41 13 33 Rollover contributions 229 80 57 -- 27 -- 12 ------------------------------------------------------------------------------------- Total contributions 3,471 1,798 692 -- 237 73 169 Investment income: Dividends and interest 1,386 -- 106 371 482 -- 132 Net realized and unrealized gain (loss) -- 5,956 2,023 1,839 20 70 250 ------------------------------------------------------------------------------------- Total investment income 1,386 5,956 2,129 2,210 502 70 382 ------------------------------------------------------------------------------------- Total additions 4,857 7,754 2,821 2,210 739 143 551 Deductions from net assets: Distributions and withdrawals 3,633 866 72 832 25 71 35 Administrative expenses 59 75 14 48 4 6 3 ------------------------------------------------------------------------------------- Total deductions 3,692 941 86 880 29 77 38 Net transfers from other plans -- 21 -- 154 19 -- 36 Net transfers between funds (2,386) (91) 4,822 (5,273) 1,372 (625) (690) ------------------------------------------------------------------------------------- Net assets available for benefits at end of year $24,593 $24,825 $9,706 $19,766 $3,579 $ 466 $1,058 ===================================================================================== DAILY VANGUARD AMERICAN BOND VANGUARD INTERNATIONAL BALANCED MARKET WINDSOR GROWTH LOAN FUND FUND FUND FUND FUND TOTAL --------------------------------------------------------------- Net assets available for benefits At beginning of period: $547 $ 645 $2,639 $1,249 $1,241 $79,623 Additions to net assets: Contributions: Employees 83 53 372 138 -- 5,415 Employer 21 15 92 32 -- 1,426 Rollover contributions 2 -- 24 4 -- 435 --------------------------------------------------------------- Total contributions 106 68 488 174 -- 7,276 Investment income: Dividends and interest 92 -- 805 73 -- 3,447 Net realized and unrealized gain (loss) 71 83 (113) (27) 116 10,288 --------------------------------------------------------------- Total investment income 163 83 692 46 116 13,735 --------------------------------------------------------------- Total additions 269 151 1,180 220 116 21,011 Deductions from net assets: Distributions and withdrawals 15 12 48 35 91 5,735 Administrative expenses 1 5 9 4 -- 228 --------------------------------------------------------------- Total deductions 16 17 57 39 91 5,963 Net transfers from other plans 16 -- 22 36 -- 304 Net transfers between funds (229) 1,056 1,495 233 316 -- --------------------------------------------------------------- Net assets available for benefits at end of year $587 $1,835 $5,279 $1,699 $1,582 $94,975 =============================================================== 19 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Changes in Net Assets Available for Benefits, with Fund Information For the Period from October 18, 1996 (inception) through December 31, 1996 (In Thousands) See accompanying notes. 16
YIELD- MARTIN ENHANCED MARIETTA LOCKHEED HARBOR INVESTMENT SHORT-TERM S&P MATERIALS MARTIN CAPITAL COMPANY OF INVESTMENT 500 INDEX COMMON COMMON APPRECIATION INTERMEDIATE AMERICA FUND FUND STOCK FUND STOCK FUND FUND BOND FUND FUND ------------------------------------------------------------------------------------- Net assets available for benefits at beginning of period: $ -- $ -- $ -- $ -- $ -- $ -- $ -- Additions to net assets: Contributions: Employees 746 326 18 -- 26 19 22 Employer 233 47 4 -- 6 3 6 Rollover contributions -- -- 1 -- 2 -- -- ------------------------------------------------------------------------------------- Total contributions 979 373 23 -- 34 22 28 Investment income: Dividends and interest 230 -- 11 108 45 -- 52 Net realized and unrealized gain (loss) -- 961 (44) 485 (3) 6 -- ------------------------------------------------------------------------------------- Total investment income 230 961 (33) 593 42 6 52 ------------------------------------------------------------------------------------- Total additions 1,209 1,334 (10) 593 76 28 80 Deductions from net assets: Distributions and withdrawals 693 286 20 411 -- -- -- Administrative expenses 8 6 1 6 1 1 1 ------------------------------------------------------------------------------------- Total deductions 701 292 21 417 1 1 1 Net transfers from other plans 25,442 17,511 2,009 23,694 939 928 966 Net transfers between funds (136) (471) 171 (315) 464 70 154 ------------------------------------------------------------------------------------- Net assets available for benefits at end of year $25,814 $18,082 $2,149 $23,555 $1,478 $1,025 $1,199 ===================================================================================== DAILY VANGUARD AMERICAN BOND VANGUARD INTERNATIONAL BALANCED MARKET WINDSOR GROWTH LOAN FUND FUND FUND FUND FUND TOTAL -------------------------------------------------------------- Net assets available for benefits at beginning of period: $ -- $ -- $ -- $ -- $ -- $ -- Additions to net assets: Contributions: Employees 11 13 58 20 -- 1,259 Employer 2 3 15 5 -- 324 Rollover contributions -- -- -- 2 -- 5 -------------------------------------------------------------- Total contributions 13 16 73 27 -- 1,588 Investment income: Dividends and interest 31 -- 225 51 8 761 Net realized and unrealized gain (loss) (16) 5 (60) 14 -- 1,348 -------------------------------------------------------------- Total investment income 15 5 165 65 8 2,109 -------------------------------------------------------------- Total additions 28 21 238 92 8 3,697 Deductions from net assets: Distributions and withdrawals -- 1 1 -- 24 1,436 Administrative expenses 1 1 1 1 -- 28 -------------------------------------------------------------- Total deductions 1 2 2 1 24 1,464 Net transfers from other plans 476 608 2,461 1,102 1,254 77,390 Net transfers between funds 44 18 (58) 56 3 -- -------------------------------------------------------------- Net assets available for benefits at end of year $547 $645 $2,639 $1,249 $1,241 $79,623 ============================================================== 20 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Notes to Financial Statements December 31, 1997 1. ACCOUNTING POLICIES The Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust (the "Master Trust") was created on October 18, 1996, to hold the assets of the Martin Marietta Materials, Inc. Performance Sharing Plan, the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees and the Martin Marietta Money Accumulation Plan for Hourly Employees (collectively, the "Plans") on a commingled basis. All plans are defined contribution plans of Martin Marietta Materials, Inc. (the "Corporation"). State Street Bank and Trust Company ("State Street") is the trustee and record keeper for the Master Trust. Each plan owns the following share of the entire Master Trust. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, in particular the determination of fair values of investments for which market values are not readily available. Actual results could differ from those estimates. 17
INTEREST IN MASTER TRUST AS PLAN OF DECEMBER 31, NAME OF PLAN NUMBER 1997 1996 - ------------ ----------------------------------------- Martin Marietta Materials, Inc. Performance Sharing Plan EIN #56-1848578 005 86.55% 87.21% Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees EIN #56-1848578 006 10.98% 10.45% Martin Marietta Money Accumulation Plan for Hourly Employees EIN #56-1848578 007 2.47% 2.34% ----------------------------- 100.00% 100.00% ============================= 21 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Notes to Financial Statements (continued) 2. DESCRIPTION OF THE MASTER TRUST Plan assets held by the Master Trust are invested in eleven funds. The Yield-Enhanced Short-Term Investment Fund, which is managed by the trustee, is invested in high-quality money market instruments, corporate equity and debt instruments and U.S. Government secured notes and bonds. The S&P 500 Index Fund, which is managed by the trustee, invests in the same individual common stocks in identical proportions to the S&P 500 index. The Martin Marietta Materials Common Stock Fund is composed of the Corporation's common stock. The Lockheed Martin Common Stock Fund is composed of the common stock of Lockheed Martin Corporation. The Harbor Capital Appreciation Fund is designed to seek long-term growth of capital by investing in stocks of domestic and foreign companies with high equity capitalization with above average prospects for growth. The Intermediate Bond Fund, which is managed by the trustee, invests primarily in U.S. Treasury, Agency, corporate and asset backed bonds. The Investment Company of America Fund is designed to achieve long-term growth of capital and income by investing in stocks of well-established "blue-chip" companies of both the U.S. and abroad, as well as, in U.S. Government securities. The American Balanced Fund is designed to seek conservation of capital, current income and long-term growth of capital by investing in a blend of stocks, bonds and other fixed income securities. The Daily Bond Market Fund, which is managed by the trustee, invests primarily in U.S. Treasury, Agency, corporate, mortgage backed and asset backed securities. The Vanguard Windsor Fund is a capital growth and income fund that will invest primarily in a diversified portfolio of U.S. common stocks thought to be undervalued. The Vanguard International Growth Fund is designed to achieve long-term growth of capital by investing in equity securities of non-U.S. Companies. Effective January 1, 1998, the following investment options were eliminated: Intermediate Bond Fund, Investment Company of America and American Balanced Fund. The Martin Marietta Materials, Inc. Performance Sharing Plan has a loan program whereby eligible participants may borrow up to the lesser of 50% of their total account balance less the highest outstanding loan balance from the past twelve months, or $50,000 with a minimum loan of $500. Loans are repaid monthly over a term of up to 4 1/2 years for personal loans and up to 15 years for a residential loan at an interest rate of one percent over the prime rate reported by at least 75% of the nation's 30 largest banks as reported in The Wall Street Journal on the first business day of the month before loan application. All loans are due in full immediately upon termination of employment. Approximately $1,582,000 and $1,241,000 was loaned to participants at December 31, 1997 and 1996, respectively. Participant loan activity and the net outstanding loan balances are reflected in the Loan Fund in the accompanying financial statements. 18 22 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Notes to Financial Statements (continued) 2. DESCRIPTION OF THE MASTER TRUST (CONTINUED) Fair values of the underlying securities in the Yield-Enhanced Short-Term Investment Fund, the S&P 500 Index Fund, the Intermediate Bond Fund, and the Daily Bond Market Fund are determined by closing prices on the last business day of the year for those securities traded on national exchanges, at the most recent sales prices for those securities traded in over-the-counter markets and at fair value as determined by the Trustee for securities for which there is not an established market. The fair value of Martin Marietta Materials common stock and Lockheed Martin Corporation common stock is determined by the closing price per share on the last business day of the year as reported for New York Stock Exchange Composite Transactions. Fair values of the Harbor Capital Appreciation Fund, the Investment Company of America Fund, the American Balanced Fund, the Vanguard Windsor Fund, and the Vanguard International Growth Fund are determined by the closing prices on the last business day of the year. Following the creation of the Master Trust, the Plans' participants are no longer able to make any participant-directed contributions into the Lockheed Martin Common Stock Fund nor add to an existing balance in a Lockheed Martin Common Stock Fund by purchasing additional shares of the underlying common stock. For the period through October 1998, the Plans' participants may transfer out any balance in the Lockheed Martin Common Stock Fund and any such balance is available for withdrawals, as permitted under the Plans. At the end of this period, participation in the Lockheed Martin Common Stock Fund will be terminated and any participants' remaining balances will be liquidated and reinvested automatically in the Yield-Enhanced Short-Term Investment Fund. Administrative expenses, a portion of which are paid by the Corporation, are otherwise paid from the Trust and allocated to the Plans on a pro rata basis. 3. INVESTMENTS The fair values of individual investments that represent 5% or more of the Master Trust's net assets at December 31, 1997 are as follows (in thousands): 19
Yield-Enhanced Short-Term Investment Fund $24,246 S&P 500 Index Fund $24,734 Martin Marietta Materials Stock Fund $ 9,786 Lockheed Martin Common Stock Fund $19,795 Vanguard Windsor Fund $ 5,247 23 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Notes to Financial Statements (continued) 4. INCOME TAXES The Master Trust was created to hold the assets of the various defined contribution plans of the Corporation which are listed as participating plans in the Master Trust Agreement. As Plans participating in the Master Trust have received favorable determination letters from the Internal Revenue Service that they are qualified under Section 401(a) of the Internal Revenue Code, and management believes the Plans to be operating in compliance with all applicable requirements, there has been no provision for federal income taxes in the financial statements. 5. YEAR 2000 ISSUE (UNAUDITED) The Corporation has established a dedicated information technology task force to coordinate the identification, evaluation and implementation of modifications and replacements to the Corporation's information systems and related applications necessary to achieve a year 2000 date conversion with no effect on customers or disruption to its business operations. The Corporation's goal is to be substantially year 2000 compliant on a timely basis. The major systems and applications carrying potential business impact have been identified and are being evaluated, and initial conversion efforts are underway. In addition, the Corporation is communicating with suppliers, customers, financial institutions and others with which it does business to coordinate the year 2000 conversion process. The cost of the year 2000 initiatives is not expected to be material to the Corporation's results of operations or financial position or to the Plans' operations. 20 24 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee of the below named plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. MARTIN MARIETTA MATERIALS, INC. PERFORMANCE SHARING PLAN By: Martin Marietta Materials, Inc. Plan Administrator By: Benefit Plan Committee By: /s/ Janice K. Henry ------------------------------- Janice K. Henry Date: June 29, 1998 25 EXHIBIT INDEX
Exhibit No. Document ----------- ------------------------------ 23 Consent of Ernst & Young LLP
1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-83516) pertaining to the Martin Marietta Materials, Inc. Amended Omnibus Securities Award Plan and in the Registration Statement (Form S-3 No. 33-99082) pertaining to the Martin Marietta Materials, Inc. shelf registration of our report dated June 15, 1998, with respect to the financial statements of the Martin Marietta Materials, Inc. Performance Sharing Plan and Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust included in this Annual Report (Form 11-K) for the year ended December 31, 1997. /s/ ERNST & YOUNG LLP Raleigh, NC June 25, 1998