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, 1998 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 Years ended December 31, 1998 and 1997 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 Years ended December 31, 1998 and 1997 Contents Audited Financial Statements for the Plan Report of Independent Auditors..............................................1 Statements of Net Assets Available for Benefits.............................2 Statements of Changes in Net Assets Available for Benefits..................4 Notes to Financial Statements...............................................6 Audited Financial Statements for the Master Trust Report of Independent Auditors ............................................11 Statements of Net Assets...................................................13 Statements of Changes in Net Assets and Trust Balance......................15 Notes to Financial Statements..............................................17 4 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 as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years then ended. 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, 1998 and 1997, and the changes in its net assets available for benefits for the years then ended, 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. Ernst & Young LLP June 11, 1999 Raleigh, North Carolina 5 Martin Marietta Materials, Inc. Performance Sharing Plan Statement of Net Assets Available for Benefits, with Fund Information December 31, 1998 (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 Investment 500 Index Common Common Appreciation Bond America Balanced Market Fund Fund Stock Fund Stock Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------------------------------------- Assets Interest in Master Trust $27,177 $30,228 $28,217 $ - $ 8,094 $ - $ - $ - $ 4,100 Contributions receivable: Employees 87 107 81 - 32 - - - 9 Martin Marietta Materials, Inc. 50 26 27 - 9 - - - 2 -------------------------------------------------------------------------------------------------------- Net assets available for benefits $27,314 $30,361 $28,325 $ - $ 8,135 $ - $ - $ - $ 4,111 ======================================================================================================== Vanguard Vanguard International Windsor Growth Loan Fund Fund Fund Total ---------------------------------------------- Assets Interest in Master Trust $5,462 $ 2,229 $1,586 $107,093 Contributions receivable: Employees 42 16 - 374 Martin Marietta Materials, Inc. 12 4 - 130 ---------------------------------------------- Net assets available for benefits $5,516 $ 2,249 $1,586 $107,597 ============================================== 6 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. 3
Yield- Martin Enhanced Marietta Lockheed Harbor Investment Daily Short-Term S&P Materials Martin Capital Intermediate Company of American Bond Investment 500 Index Common Common Appreciation Bond America Balanced Market Fund Fund Stock Fund Stock 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 ============================================================================================================ Net assets available for benefits $18,155 $22,188 $8,911 $17,074 $ 3,544 $ 461 $1,036 $ 559 $1,814 ============================================================================================================ Vanguard Vanguard International Windsor Growth Loan Fund Fund Fund Total ------------------------------------------------- Assets Interest in Master Trust $5,224 $1,654 $1,582 $82,202 ================================================= Net assets available for benefits $5,224 $1,654 $1,582 $82,202 ================================================= 7 Martin Marietta Materials, Inc. Performance Sharing Plan Statement of Changes in Net Assets Available for Benefits, with Fund Information Year ended December 31, 1998 (In Thousands) See accompanying notes. 4
Yield- Martin Enhanced Marietta Lockheed Harbor Short Term S & P Materials Martin Capital Intermediate Investment American Investment 500 Index Common Common Appreciation Bond Company of Balanced Fund Fund Stock Fund Stock Fund Fund Fund America Fund Fund ------------------------------------------------------------------------------------------- Net assets available for benefits at beginning of period $ 18,155 $ 22,188 $ 8,911 $ 17,074 $ 3,544 $ 461 $ 1,036 $ 559 Additions to net assets: Contributions: Employees 1,033 1,315 1,032 - 405 - - - Martin Marietta Materials, Inc. 610 329 363 - 123 - - - Rollover Contributions 154 614 693 - 663 - - - ------------------------------------------------------------------------------------------- Total contributions 1,797 2,258 2,088 - 1,191 - - - Interest in net investment gain of Master Trust 1,144 6,513 10,076 1,870 1,838 1 4 1 ------------------------------------------------------------------------------------------- Total additions 2,941 8,771 12,164 1,870 3,029 1 4 1 Deductions from net assets: Distributions and withdrawals 2,076 1,118 478 869 126 - - - Administrative expenses 63 116 51 37 17 - - - ------------------------------------------------------------------------------------------- Total deductions 2,139 1,234 529 906 143 - - - Net transfers between funds 8,357 636 7,779 (18,038) 1,705 (462) (1,040) (560) ------------------------------------------------------------------------------------------- Net assets available for benefits at end of year $ 27,314 $ 30,361 $ 28,325 $ - $ 8,135 $ - $ - $ - =========================================================================================== Daily Vanguard Bond Vanguard International Market Windsor Growth Loan Fund Fund Fund Fund Total --------------------------------------------- Net assets available for benefits at beginning of period $1,814 $ 5,224 $ 1,654 $1,582 $82,202 Additions to net assets: Contributions: Employees 112 516 201 - 4,614 Martin Marietta Materials, Inc. 33 151 55 - 1,664 Rollover Contributions 103 342 119 - 2,688 --------------------------------------------- Total contributions 248 1,009 375 - 8,966 Interest in net investment gain of Master Trust 187 (8) 255 134 22,015 --------------------------------------------- Total additions 435 1,001 630 134 30,981 Deductions from net assets: Distributions and withdrawals 67 255 52 221 5,262 Administrative expenses 18 16 6 - 324 --------------------------------------------- Total deductions 85 271 58 221 5,586 Net transfers between funds 1,947 (438) 23 91 - --------------------------------------------- Net assets available for benefits at end of year $4,111 $ 5,516 $ 2,249 $1,586 $107,597 ============================================= 8 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. 5
Yield- Martin Enhanced Marietta Lockheed Harbor Short Term S&P 500 Materials Martin Capital Intermediate Investment American Investment Index Common Common Appreciation Bond Company of Balanced Fund Fund Stock Fund Stock Fund Fund Fund America 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, Inc. 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 Vanguard Bond Vanguard International Market Windsor Growth Loan Fund Fund 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, Inc. 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 ============================================= 9 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements December 31, 1998 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. Prior to January 1, 1998, the Master Trust also included the assets of the Martin Marietta Materials, Inc. Money Accumulation Plan for Hourly Employees, which was subsequently merged into the Martin Marietta Materials, Inc. Savings and Investment 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. 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. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, in particular the determination of fair values of investments for which market values are not readily available. Actual results could differ from those estimates. 2. Description of the Plan The Plan is a defined contribution plan providing eligible salaried employees of the Corporation an opportunity to participate in an individual savings and investment program providing tax deferred savings and retirement incentives. Martin Marietta Materials, Inc. is the Plan's sponsor and also serves as the Plan administrator. 6 10 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 7% of base salary (as defined in the Plan and subject to applicable Internal Revenue Code ("IRC") limitations on allowable compensation). 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 7% of base pay). 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. During 1998, the participants' investment options included the Yielded-Enhanced Short-Term Investment Fund, S&P 500 Index Fund, Martin Marietta Materials Common Stock Fund, Harbor Capital Appreciation Fund, Daily Bond Market Fund, Vanguard Windsor Fund and Vanguard International Growth Fund. Effective January 1, 1998, the Intermediate Bond Fund, Investment Company of America Fund and the American Balanced Fund investment options were eliminated. The Lockheed Martin Common Stock Fund was an investment option prior to the Corporation's split-off from Lockheed Martin Corporation, the Corporation's former parent company and the previous administrator of the Plan. In October 1998, any participant's remaining balance in the Lockheed Martin Common Stock Fund was automatically reinvested in the Yield-Enhanced Short-Term Investment Fund. 7 11 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements (continued) 2. Description of the Plan (continued) 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 - daily, but are limited to 12 changes in a calendar year, provided that the participant has one transfer in a calendar quarter, regardless of the limitation. 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 5 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 $708,000 and $936,000 was loaned to participants during 1998 and 1997, respectively. Outstanding loan balances and loan-related activities 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. 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. 8 12 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements (continued) 3. Income Tax Status The Internal Revenue Service ruled on March 18, 1998 that the Plan qualifies under Section 401(a) of the Internal Revenue Code (IRC) and therefore, the Plan is not subject to tax under present tax laws. The Plan has been amended since the date the determination letter is applicable for and as such, the plan administrator has filed for a new determination letter. The Plan is required to operate in conformity with the IRC to maintain its qualification. The plan administrator is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Master Trust The Plan's interest in the Master Trust's net assets as of December 31, 1998 and 1997, was 84.95% and 86.55%, respectively. The Plan's interest in the Master Trust did not fluctuate significantly throughout the years ended December 31, 1998 and 1997. An analysis of investments for the Master Trust is as follows: 9
1998 ---------------------------------------------------------- Net Appreciation Interest in Fair Value Fair Value at and Dividends During Year End of Year ---------------------------------------------------------- (In Thousands) Investments at fair value as determined by quoted market price: Cash and cash equivalents $ 1,493 $ - $ 35,527 Governmental bonds 126 - 2,465 Corporate bonds 64 - 1,763 Common stocks 1,506 21,784 83,784 Other 150 - 2,211 ---------------------------------------------------------- $ 3,339 $ 21,784 $ 125,750 ========================================================== 13 Martin Marietta Materials, Inc. Performance Sharing Plan Notes to Financial Statements (continued) 4. Master Trust (continued) 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, evaluated, and converted. 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. 10
1997 ---------------------------------------------------------- Net Appreciation Interest in Fair Value Fair Value at and Dividends During Year End of Year ---------------------------------------------------------- (In Thousands) Investments at fair value as determined by quoted market price: Cash and cash equivalents $ 1,397 $ - $ 25,197 Governmental bonds 17 104 1,564 Corporate bonds 11 70 905 Common stocks 2,022 9,998 65,319 Other - 116 1,582 ---------------------------------------------------------- $ 3,447 $ 10,288 $ 94,567 ========================================================== 14 Report of Independent Auditors Martin Marietta Materials, Inc., as Trust Administrator We have audited the accompanying statements of net assets of the Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust as of December 31, 1998 and 1997 and the related statements of changes in net assets and trust balance for the years then ended. These financial statements are the responsibility of the Trust's management. 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 of the Master Trust at December 31, 1998 and 1997, and the changes in its net assets and trust balance for the years then ended, 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 and the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees (collectively, the "Plans"). The Master Trust also included the Martin Marietta Materials, Inc. Money Accumulation Plan for Hourly Employees for the year ended December 31, 1997. The statements do not purport to represent the net assets available for benefits at December 31, 1998 and 1997 or the changes in net assets available for benefits for the years then ended of the Plans. 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 and the statements of changes in net assets and trust balance is presented for purposes of additional analysis rather than to present the net assets and changes in net assets and trust balance 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. Ernst & Young LLP June 11, 1999 Raleigh, North Carolina 12 16 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Net Assets, with Fund Information December 31, 1998 (In Thousands) See accompanying notes. 13
Yield- Martin Enhanced Marietta Lockheed Harbor Investment Daily Short-Term S&P Materials Martin Capital Intermediate Company American Bond Investment 500 Index Common Common Appreciation Bond of America Balanced Market Fund Fund Stock Fund Stock Fund Fund Fund Fund Fund Fund -------------------------------------------------------------------------------------------------------- Assets Investments at quoted fair value: Cash and cash equivalents $34,302 $ - $ 1,225 $ - $ - $ - $ - $ - $ - Governmental bonds - - - - - - - - 2,465 Corporate bonds - - - - - - - - 1,763 Common stocks - 34,875 31,864 - 8,721 - - - - -------------------------------------------------------------------------------------------------------- Total investments at quoted fair value 34,302 34,875 33,089 - 8,721 - 4,228 Investments at estimated fair value: Participant loans - - - - - - - - - -------------------------------------------------------------------------------------------------------- Total investments at estimated fair value - - - - - - - - - Other assets: Dividends and interest receivable 149 - 4 - - - - - - Other 262 146 111 - 33 - - - 3 -------------------------------------------------------------------------------------------------------- Total other assets 411 146 115 - 33 - - - 3 -------------------------------------------------------------------------------------------------------- Total assets 34,713 35,021 33,204 - 8,754 - - - 4,231 Liabilities Amounts payable for investments purchased - - 426 - - - - - - -------------------------------------------------------------------------------------------------------- Total liabilities - - 426 - - - - - - -------------------------------------------------------------------------------------------------------- Net assets $34,713 $35,021 $32,778 $ - $ 8,754 $ - $ - $ - $4,231 ======================================================================================================== Vanguard Vanguard International Windsor Growth Loan Fund Fund Fund Total -------------------------------------------- Assets Investments at quoted fair value: Cash and cash equivalents $ - $ - $ - $ 35,527 Governmental bonds - - - 2,465 Corporate bonds - - - 1,763 Common stocks 5,921 2,403 - 83,784 ----------------------------------------------- Total investments at quoted fair value 5,921 2,403 - 123,539 Investments at estimated fair value: Participant loans - - 2,211 2,211 ----------------------------------------------- Total investments at estimated fair value - - 2,211 2,211 Other assets: Dividends and interest receivable - - - 153 Other 29 11 - 595 ----------------------------------------------- Total other assets 29 11 - 748 ----------------------------------------------- Total assets 5,950 2,414 2,211 126,498 Liabilities Amounts payable for investments purchased - - - 426 ----------------------------------------------- Total liabilities - - - 426 ----------------------------------------------- Net assets $ 5,950 $ 2,414 $ 2,211 $126,072 =============================================== 17 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Net Assets, with Fund Information December 31, 1997 (In Thousands)
Yield- Martin Enhanced Marietta Lockheed Short- S&P Materials Martin Harbor Investment Term 500 Common Common Capital Company of American Investment Index Stock Stock Appreciation Intermediate America Balanced Fund Fund Fund Fund Fund Bond Fund Fund Fund -------------------------------------------------------------------------------------- Assets Investments at quoted fair value: Cash and Cash Equivalents $24,246 $ - $ 442 $ 439 $ - $ - $ - $ 70 Governmental Bonds - - - - - 232 - 104 Corporate Bonds - - - - - 231 - 69 Common Stocks - 24,734 9,344 19,356 3,565 - 1,048 336 -------------------------------------------------------------------------------------- Total investments at quoted fair value 24,246 24,734 9,786 19,795 3,565 463 1,048 579 Investments at estimated fair value: Participant loans - - - - - - - - -------------------------------------------------------------------------------------- Total investments at estimated fair value - - - - - - - - Other assets: Contributions receivable: Employees 204 124 41 - 14 5 10 7 Martin Marietta Materials, Inc. 71 19 9 - 3 1 3 2 Dividends and interest receivable 116 - 2 1 - - - - -------------------------------------------------------------------------------------- Total other assets 391 143 52 1 17 6 13 9 -------------------------------------------------------------------------------------- Total assets 24,637 24,877 9,838 19,796 3,582 469 1,061 588 Liabilities Administrative expenses payable 44 52 11 30 3 3 3 1 Amounts payable for investments purchased - - 121 - - - - - -------------------------------------------------------------------------------------- Total liabilities 44 52 132 30 3 3 3 1 -------------------------------------------------------------------------------------- Net assets $24,593 24,825 $9,706 $19,766 $3,579 $ 466 $1,058 $ 587 ====================================================================================== 14
Daily Vanguard Bond Vanguard International Market Windsor Growth Loan Fund Fund Fund Fund Total -------------------------------------------------------- Assets Investments at quoted fair value: Cash and Cash Equivalents $ - $ - $ - $ - $25,197 Governmental Bonds 1,228 - - - 1,564 Corporate Bonds 605 - - - 905 Common Stocks - 5,247 1,689 - 65,319 -------------------------------------------------------- Total investments at quoted fair value 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 5 31 11 - 452 Martin Marietta Materials, Inc. 1 8 3 - 120 Dividends and interest receivable - - - - 119 -------------------------------------------------------- Total other assets 6 39 14 - 691 -------------------------------------------------------- Total assets 1,839 5,286 1,703 1,582 95,258 Liabilities Administrative expenses payable 4 7 4 - 162 Amounts payable for investments purchased - - - - 121 -------------------------------------------------------- Total liabilities 4 7 4 - 283 -------------------------------------------------------- Net assets $1,835 $5,279 $1,699 $1,582 $94,975 ======================================================== 18 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Changes in Net Assets and Trust Balance, with Fund Information Year ended December 31, 1998 (In Thousands) 15
Yield- Martin Enhanced Marietta Lockheed Short- S&P Materials Martin Harbor Investment Term 500 Common Common Capital Company of American Investment Index Stock Stock Appreciation Intermediate America Balanced Fund Fund Fund Fund Fund Bond Fund Fund Fund ------------------------------------------------------------------------------------- Net assets at beginning of period: $24,593 $24,825 $ 9,706 $19,766 $ 3,579 $ 466 $ 1,058 $ 587 Additions to net assets: Contributions: Employees 1,958 2,137 1,863 - 525 - - - Employer 824 476 518 - 147 - - - Rollover contributions 174 696 834 - 741 - - - ------------------------------------------------------------------------------------- Total Contributions 2,956 3,309 3,215 - 1,413 - - - Investment Income: Dividends and interest 1,493 - 237 196 509 - - - Net realized and unrealized gain (loss) - 7,448 11,248 1,953 1,436 1 4 1 ------------------------------------------------------------------------------------- Total investment income 1,493 7,448 11,485 2,149 1,945 1 4 1 ------------------------------------------------------------------------------------- Total additions 4,449 10,757 14,700 2,149 3,358 1 4 1 Deductions from net assets: Distributions and withdrawals 2,874 1,272 535 1,010 137 - - - Administrative expenses 84 133 58 44 18 - - - ------------------------------------------------------------------------------------- Total deductions 2,958 1,405 593 1,054 155 - - - Net transfers from other plans (107) 48 - - - - - - Net transfers between funds 8,736 796 8,965 (20,861) 1,972 (467) (1,062) (588) ------------------------------------------------------------------------------------- Net assets at end of year $34,713 $35,021 $32,778 $ - $ 8,754 $ - $ - $ - ===================================================================================== Daily Vanguard Bond Vanguard International Market Windsor Growth Loan Fund Fund Fund Fund Total -------------------------------------------------------- Net assets at beginning of period: $ 1,835 $ 5,279 $ 1,699 $ 1,582 $ 94,975 Additions to net assets: Contributions: Employees 163 697 261 - 7,604 Employer 43 186 68 - 2,262 Rollover contributions 109 358 140 - 3,052 -------------------------------------------------------- Total Contributions 315 1,241 469 - 12,918 Investment Income: Dividends and interest 190 515 49 150 3,339 Net realized and unrealized gain (loss) - (526) 219 - 21,784 -------------------------------------------------------- Total investment income 190 (11) 268 150 25,123 -------------------------------------------------------- Total additions 505 1,230 737 150 38,041 Deductions from net assets: Distributions and withdrawals 70 267 54 265 6,484 Administrative expenses 18 17 6 - 378 -------------------------------------------------------- Total deductions 88 284 60 265 6,862 Net transfers from other plans - - (23) - (82) Net transfers between funds 1,979 (275) 61 744 - -------------------------------------------------------- Net assets at end of year $ 4,231 $ 5,950 $ 2,414 $ 2,211 $126,072 ======================================================== 19 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Statement of Changes in Net Assets and Trust Balance, with Fund Information Year ended December 31, 1997 (In Thousands) See accompanying notes. 16
Yield- Martin Enhanced Marietta Lockheed Short- S&P Materials Martin Harbor Investment Term 500 Common Common Capital Company of American Investment Index Stock Stock Appreciation Intermediate America Balanced Fund Fund Fund Fund Fund Bond Fund Fund Fund ------------------------------------------------------------------------------------- Net assets at beginning of period: $25,814 $18,082 $ 2,149 $23,555 $ 1,478 $ 1,025 $ 1,199 $ 547 Additions to net assets: Contributions: Employees 2,410 1,490 516 - 169 60 124 83 Employer 832 228 119 - 41 13 33 21 Rollover contributions 229 80 57 - 27 - 12 2 ------------------------------------------------------------------------------------- Total Contributions 3,471 1,798 692 - 237 73 169 106 Investment Income: Dividends and interest 1,386 - 106 371 482 - 132 92 Net realized and unrealized gain (loss) - 5,956 2,023 1,839 20 70 250 71 ------------------------------------------------------------------------------------- Total investment income 1,386 5,956 2,129 2,210 502 70 382 163 ------------------------------------------------------------------------------------- Total additions 4,857 7,754 2,821 2,210 739 143 551 269 Deductions from net assets: Distributions and withdrawals 3,633 866 72 832 25 71 35 15 Administrative expenses 59 75 14 48 4 6 3 1 ------------------------------------------------------------------------------------- Total deductions 3,692 941 86 880 29 77 38 16 Net transfers from other plans - 21 - 154 19 - 36 16 Net transfers between funds (2,386) (91) 4,822 (5,273) 1,372 (625) (690) (229) ------------------------------------------------------------------------------------- Net assets at end of year $24,593 $24,825 $ 9,706 $19,766 $ 3,579 $ 466 $ 1,058 $ 587 ===================================================================================== Daily Vanguard Bond Vanguard International Market Windsor Growth Loan Fund Fund Fund Fund Total -------------------------------------------------------- Net assets at beginning of period: $ 645 $ 2,639 $ 1,249 $ 1,241 $79,623 Additions to net assets: Contributions: Employees 53 372 138 - 5,415 Employer 15 92 32 - 1,426 Rollover contributions - 24 4 - 435 -------------------------------------------------------- Total Contributions 68 488 174 - 7,276 Investment Income: Dividends and interest - 805 73 - 3,447 Net realized and unrealized gain (loss) 83 (113) (27) 116 10,288 -------------------------------------------------------- Total investment income 83 692 46 116 13,735 -------------------------------------------------------- Total additions 151 1,180 220 116 21,011 Deductions from net assets: Distributions and withdrawals 12 48 35 91 5,735 Administrative expenses 5 9 4 - 228 -------------------------------------------------------- Total deductions 17 57 39 91 5,963 Net transfers from other plans - 22 36 - 304 Net transfers between funds 1,056 1,495 233 316 - -------------------------------------------------------- Net assets at end of year $ 1,835 $ 5,279 $ 1,699 $ 1,582 $94,975 ======================================================== 20 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Notes to Financial Statements December 31, 1998 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 investments of the Martin Marietta Materials, Inc. Performance Sharing Plan and the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees (collectively, the "Plans") on a commingled basis. Prior to January 1, 1998, the Master Trust also included the assets of the Martin Marietta Materials, Inc. Money Accumulation Plan for Hourly Employees, which was subsequently merged into the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees. 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, 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 of December 31, Plan Name of Plan Number 1998 1997 - ------------ --------------------------------------- Martin Marietta Materials, Inc. Performance Sharing Plan EIN #56-1848578 005 84.95% 86.55% Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees EIN #56-1848578 006 15.05% 10.98% Martin Marietta Money Accumulation Plan for Hourly Employees EIN #56-1848578 007 - 2.47% -------------------------- 100 % 100% ========================== 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 seven funds at December 31, 1998. 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 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 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. Following the creation of the Master Trust, the Plans' participants were no longer able to make any participant-directed contributions into the Lockheed Martin Common Stock Fund nor add to an existing balance in the Lockheed Martin Common Stock Fund by purchasing additional shares of the underlying common stock. For the period through October 31, 1998, the Plans' participants were permitted to transfer out any balance in the Lockheed Martin Common Stock Fund and any such balance was available for withdrawals, as permitted under the Plans. At the end of this period, participation in the Lockheed Martin Common Stock Fund was terminated and any participant's remaining balances were liquidated and reinvested automatically in the Yield-Enhanced Short-Term Investment Fund. 18 22 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Notes to Financial Statements (continued) 2. Description of the Master Trust (continued) The Plans have loan programs 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 5 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 $2,211,000 and $1,582,000 was loaned to participants at December 31, 1998 and December 31, 1997, respectively. Participant loan activity and the net outstanding loan balances are reflected in the Loan Fund in the accompanying financial statements. Fair values of the underlying securities in the Yield-Enhanced Short-Term Investment Fund, the S&P 500 Index 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 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 Vanguard Windsor Fund, and the Vanguard International Growth Fund are determined by the closing prices on the last business day of the year. 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. 19 23 Martin Marietta Materials, Inc. Defined Contribution Plans Master Trust Notes to Financial Statements (continued) 3. Investments The fair values of individual investments that represent 5% or more of the Master Trust's net assets at December 31, 1998, are as follows: (In Thousands) Yield-Enhanced Short-Term Investment Fund $ 34,302 S&P 500 Index Fund 34,875 Martin Marietta Materials Common Stock Fund 33,089 Harbor Capital Appreciation Fund 8,721 4. Income Taxes The Master Trust was created and is used as a funding vehicle to provide benefits under the various defined contribution plans of the Corporation which are listed as participating plans in the Master Trust agreement. Only plans which are qualified under Section 401(a) of the Internal Revenue Code ("IRC") may be funded through the Master Trust. The plans currently participating in the Master Trust have applied for determination letters from the Internal Revenue Service to verify that they are qualified under Section 401(a) of the IRC. As 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, evaluated, and converted. 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 30, 1999 25 EXHIBIT INDEX Exhibit No. Document ----------- -------- 23 Consent of Ernst & Young LLP
1 EXHIBIT 23 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, as amended; in the Registration Statement (Form S-8 No. 333-15429) pertaining to the Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors, Martin Marietta Materials, Inc. Performance Sharing Plan and the Martin Marietta Materials, Inc. Savings and Investment Plan for Hourly Employees; in the Registration Statement (Form S-3 No. 33-99082) pertaining to the Martin Marietta Materials, Inc. shelf registration; and in the Registration Statement (Form S-8 No. 333-79039) pertaining to the Martin Marietta Materials, Inc. Stock-Based Award Plan of our report dated June 11, 1999, 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, 1998. Ernst & Young LLP June 25, 1999