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MARTIN MARIETTA MATERIALS INC 10-K405

2000

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K


(Mark One)
[X]		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

For the fiscal year ended December 31, 2000

		OR

[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 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.
(Exact name of registrant as specified in its charter)


North Carolina (State or other jurisdiction of incorporation or organization)		56-1848578 (I.R.S. employer identification no.)





2710 Wycliff Road, Raleigh, North Carolina (Address of principal executive offices)		27607-3033 (Zip Code)

Registrant’s telephone number, including area code: (919) 781-4550

Securities registered pursuant to Section 12(b) of the Act:


Title of each class				Name of each exchange on which registered

Common Stock (par value $.01 per share) (including rights attached thereto)				New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. [X]

The aggregate market value of voting stock (based on the closing price on the New York Stock Exchange on March 16, 2001 as published in the Wall Street Journal) held by non-affiliates of the Company was $1,538,580,718. Shares of Common Stock held by each executive officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of each of the Registrant’s classes of common stock on March 16, 2001 as follows:

Common Stock (par value $.01 per share) 47,302,457 shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Martin Marietta Materials, Inc. 2001 Proxy Statement are incorporated by reference into Part III.

Portions of the Martin Marietta Materials, Inc. 2000 Annual Report to Shareholders are incorporated by reference into Parts I, II and IV.

TABLE OF CONTENTS

PART I

Page

Item 1

Business

Item 2

Properties

Item 3

Legal Proceedings

Item 4

Submission of Matters to a Vote of Security Holders

Forward Looking Statements – Safe Harbor Provisions

Executive Officers of the Registrant

PART II

Item 5

Market for the Registrant’s Common Equity and Related Stockholder Matters

Item 6

Selected Financial Data

Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A

Qualitative And Quantitative Disclosures About Market Risk

Item 8

Financial Statements and Supplementary Data

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

PART III

Item 10

Directors and Executive Officers of the Registrant

Item 11

Executive Compensation

Item 12

Security Ownership of Certain Beneficial Owners and Management

Item 13

Certain Relationships and Related Transactions

PART IV

Item 14

Exhibits, Financial Statements, Financial Statement Schedules and Reports on

Form 8-K

Signatures

PART I

ITEM 1. BUSINESS

General

Martin Marietta Materials, Inc. (the “Company”) is the United States’ second largest producer of aggregates for the construction industry, including highways, infrastructure, commercial and residential. The Company also manufactured and marketed in 2000 magnesia-based products, including heat-resistant refractory products for the steel industry, chemicals products for industrial, agricultural and environmental uses, and dolomitic lime. In 2000, the Company’s aggregates business accounted for 90% of the Company’s total revenues and the Company’s magnesia-based products segment accounted for 10% of the Company’s total revenues.

The Company was formed in November 1993 as a North Carolina corporation to be the successor to substantially all of the assets and liabilities of the materials group of Martin Marietta Corporation and its subsidiaries. An initial public offering of a portion of the common stock of the Company (the “Common Stock”) was completed in February 1994 whereby 8,797,500 shares of Common Stock (representing approximately 19% of the shares outstanding) were sold at an initial public offering price of $23 per share. Lockheed Martin Corporation, which was formed as the result of a business combination between Martin Marietta Corporation and Lockheed Corporation in March 1995, owned approximately 81% of the Common Stock directly and through its wholly-owned subsidiary, Martin Marietta Investments Inc., until October 1996.

In October 1996, the outstanding Common Stock of Martin Marietta Materials that was held by Lockheed Martin Corporation became available to the public market when Lockheed Martin disposed of its 81% ownership interest. This transaction was completed by means of a tax-free exchange offer pursuant to which Lockheed Martin stockholders were given the opportunity to exchange shares of Lockheed Martin common stock for shares of the Company’s Common Stock, which resulted in 100% of the outstanding shares of Common Stock being publicly traded.

On May 28, 1997, the Company purchased all of the outstanding common stock of American Aggregates Corporation (“American Aggregates”) along with certain other assets from American Aggregates’ former parent, CSR America, Inc., for an acquisition price of approximately $242 million in cash plus certain assumed liabilities (the “American Aggregates Acquisition”). The American Aggregates Acquisition included the Ohio and Indiana operations of American Aggregates with 29 production facilities and increased the Company’s annual production capacity by more than 25.0 million tons — in addition to adding over 1.0 billion tons of mineral reserves, of which approximately 700.0 million were zoned for production, and 11,000 acres of property. American Aggregates is a leading supplier of aggregates products in Indianapolis, Cincinnati, Dayton and Columbus.

On December 4, 1998, the Company acquired the common stock of Redland Stone Products Company (“Redland Stone”) from an affiliate of Lafarge SA for $272 million in cash plus normal balance sheet liabilities and approximately $8 million estimated for certain other assumed liabilities and transaction costs. The Company did not assume any long-term debt of Redland Stone. Redland Stone is a leading producer of aggregates and asphaltic concrete in the state of Texas and has mineral reserves which exceed 1.0 billion tons. Redland Stone expanded the Aggregates division’s business by

adding operating facilities in the southwest United States, expanding the Company’s presence in the asphalt production business and adding significant long-term mineral reserve capacity.

As of October 31, 1998, the Company purchased an indirect initial 14% interest in the business of Meridian Aggregates Company (“Meridian”). The transaction provided a mechanism for the Company to purchase the remaining interest in Meridian at a predetermined formula price within five years, and the Meridian investors to require the Company to purchase their interests beginning December 31, 2000, or earlier in the event of the death of an investor. The Meridian investors exercised their option in September 2000, and the Company expects to consummate the transaction whereby it will purchase all of the remaining interests in Meridian early in the second quarter 2001 for approximately $235 million, including the initial investment of $42 million, the retirement of debt, the forgiveness of related party obligations and amounts estimated for certain other assumed liabilities and transaction costs, plus the assumption of normal balance sheet liabilities. In 2000, Meridian operated 25 aggregates production facilities and seven rail-served distribution yards in 11 states in the southwestern and western United States and sold approximately 23.0 million tons of aggregates to customers in 14 states, including 6 states in which the Company has not previously conducted any business. The Meridian transaction will add more than 1.6 billion tons of aggregates reserves, expand the Company’s presence in the southwest and western states and increase its ability to use rail as a mode of transportation.

On February 23, 2001, the Company, through its wholly owned subsidiary, Martin Marietta Magnesia Specialties Inc., entered into an agreement with a subsidiary of Minerals Technologies, Inc. to sell certain assets related to its refractories business. In an accompanying manufacturing agreement, Magnesia Specialties agreed to supply the subsidiary of Minerals Technologies with certain refractories products principally from the Company’s Manistee, Michigan plant for up to two years following the sale. The sale of Magnesia Specialties’ refractories products will lessen the Magnesia Specialties division’s dependence on the steel industry. Excluding refractories products, Magnesia Specialties’ sales to the steel industry would account for 43% of the division’s 2000 net sales, as compared to 68% including refractories. The agreement contemplates closing during the second quarter 2001. The Company continues to explore additional opportunities regarding the remaining Magnesia Specialties business, including possible divestiture of all or part of the chemicals business, with a goal of creating additional value for the Company. In this regard, the Company has determined that the Woodville, Ohio operation will be transferred to the MidAmerica Division of the Aggregates division. The Woodville, Ohio operation produces and sells dolomitic lime to the steel industry and produces and sells more than 1.0 million tons per year of aggregates to construction businesses. There can be no assurance that management will pursue additional opportunities regarding the remaining Magnesia Specialties business, if any, or that they will result in additional value.

The Company announced in February 1997 that it had entered into agreements giving the Company rights to commercialize certain proprietary technologies related to the Company’s business. One of the agreements gives the Company the opportunity to pursue the use of certain composites technology for products where corrosion resistance and high strength-to-weight ratios are important factors, such as bridge decks, marine applications and other structures. The Company continued its research and development activities during 2000 in this new product area, and began manufacturing and marketing certain of the products. This technology, if fully developed by the Company, would complement and expand the Company’s business. In addition, the Company continued in 2000 to

explore the viability of certain technology related to remineralization of soil and microbial products for enhanced plant growth. The Company had limited revenue and no profits from these growth enhancement technologies in 2000. Also, in 1999 and 2000 the Company made investments in a start-up company, Industrial Microwave Systems, that has proprietary technology for use in applications related to industrial heating and drying, food processing and aseptic packaging. There can be no assurance that any of the technologies will become profitable.

Business Segment Information

The Company in 2000 operated in two reportable business segments. These segments are aggregates products and magnesia-based chemicals, refractories and dolomitic lime products. Information concerning the Company’s net sales, operating profit, assets employed and certain additional information attributable to each reportable industry segment for each year in the three-year period ended December 31, 2000 is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 33 through 35 of the Company’s 2000 Annual Report to Shareholders (the “2000 Annual Report”), which information is incorporated herein by reference.

Aggregates

The Company’s aggregates segment processes and sells granite, limestone, sand and gravel and other aggregates products for use in all sectors of the public infrastructure, commercial and residential construction industries. The Company is the United States’ second largest producer of aggregates. In 2000, the Company shipped approximately 164.9 million tons of aggregates primarily to customers in 27 southeastern, southwestern, midwestern and central states, in addition to Canada and the Bahamas, generating net sales and earnings from operations of $1.2 billion and $194.2 million, respectively.

The Aggregates division markets its products primarily to the construction industry, with approximately 46% of its shipments made to contractors in connection with highway and other public infrastructure projects and the balance of its shipments made primarily to contractors in connection with commercial and residential construction projects. As a result of dependence upon the construction industry, the profitability of aggregates producers is sensitive to national, regional and local economic conditions, and particularly to cyclical swings in construction spending, which is affected by fluctuations in interest rates, and demographic and population shifts and to changes in the level of infrastructure spending funded by the public sector. The Company’s aggregates business is concentrated principally in the southeast, southwest, midwest and central states. Aggregates products are sold and shipped from a network of approximately 300 quarries and distribution facilities in more than 20 states, as well as the Bahamas and Canada, although the Company’s five largest shipment states account for approximately 60% of total sales. The Company’s business is accordingly affected by the economies in these regions.

The Company’s aggregates business is also highly seasonal, due primarily to the effect of weather conditions on construction activity within its markets. As a result of the American Aggregates Acquisition and several other smaller acquisitions in the north central region of the United States, more of the Company’s aggregates operations have exposure to weather-related risk during the winter months. The division’s operations that are concentrated principally in the north central region of the Midwest generally experience more severe winter weather conditions than the division’s operations in the Southeast and Southwest. Due to these factors, the Company’s second and third quarters are

generally the strongest, with the first quarter generally reflecting the weakest results, which are not necessarily indicative of the Company’s annual results.

Aggregates can be found in abundant quantities throughout the United States, and there are many producers nationwide. However, as a general rule, shipments from an individual quarry are limited because the cost of transporting processed aggregates to customers is high in relation to the value of the product itself. As a result, proximity of quarry facilities to customers is the most important factor in competition for aggregates business and helps explain the highly fragmented nature of the aggregates industry. As described below, the Company’s distribution system mainly uses trucks, but also has access to a lower-cost river barge and ocean vessel network. In addition, the Redland Stone transaction, the proposed Meridian transaction and other recent acquisitions have enabled the Company to extend its reach through increased access to rail transportation.

A growing percentage of the Company’s aggregates shipments are being moved by rail or water through a distribution yard network. In 1994, 93% of the Company’s aggregates shipments were moved by truck, while the balance of 7% was moved by rail. In contrast, the Company’s aggregates shipments were moved 80% by truck, 10% by rail, and 10% by water in 2000. The Company has an extensive network of aggregates quarries and distribution centers along the Ohio and Mississippi River systems from western Pennsylvania throughout the central and southern United States and the Bahamas, as well as distribution centers along the Gulf of Mexico and Atlantic coasts. The Gulf and Atlantic coastal areas are being supplied primarily from the Bahamas location, two large quarries on the Ohio River system and a Canadian quarry on the Strait of Canso in Nova Scotia. In addition, the Company’s recent acquisitions, especially Redland Stone and the proposed acquisition of Meridian, have expanded its ability to ship by rail. Accordingly, in addition to increasing the Company’s geographic presence through acquisitions, the Company has also enhanced its reach through its ability to provide cost-effective coverage of certain coastal markets on the east coast and reaching as far as Texas, and to ship products in and to Canada, the Caribbean and parts of South America, as well as to additional geographic areas which can be accessed economically by its expanded distribution system. The Meridian operations will further expand the Company’s markets and ability to ship by rail. Meridian operates 25 aggregates production locations and seven rail-served distribution yards which serve Texas, Oklahoma, Arkansas, Mississippi, Tennessee, Louisiana, Minnesota, Kansas, Nebraska, Wyoming, Colorado, Montana, Washington, and California. The acquisition strengthens the Company’s position in the southwest and central United States and will provide entry into markets in the west.

Historically, the Company has focused on the production of aggregates and has not integrated vertically in a substantial manner into other construction materials businesses. In recent transactions, however, the Company has acquired asphaltic concrete, ready mixed concrete, paving construction and other businesses which establish vertical integration that complement its aggregates business. These products and services are not a significant component of the Company’s aggregates operations.

Environmental and zoning regulations have made it increasingly difficult for the construction aggregates industry to expand existing quarries and to develop new quarry operations. Although it cannot be predicted what policies will be adopted in the future by federal, state and local governmental bodies regarding these matters, the Company anticipates that future restrictions will likely make zoning and permitting more difficult thereby potentially enhancing the value of the Company’s existing mineral reserves.

Management believes the Aggregates division’s raw materials, or mineral reserves, are sufficient to permit production at present operational levels for the foreseeable future. The Company does not anticipate any material difficulty in obtaining the raw materials that it uses for production in its aggregates segment.

The Company generally delivers products in its aggregates segment upon receipt of orders or requests from customers. Accordingly, there is no significant backlog information. Inventory of aggregates is generally maintained in sufficient quantities to meet rapid delivery requirements of customers.

Magnesia Specialties

The Company in 2000 also manufactured and marketed dolomitic lime and magnesia-based products, including heat-resistant refractory products for the steel industry and magnesia-based chemicals products for industrial, agricultural and environmental uses, including wastewater treatment, sulfur dioxide scrubbing and acid neutralization. The Company’s Magnesia Specialties division generated net sales in 2000 of $130.4 million and earnings from operations of $8.2 million. Approximately 44% of these sales are associated with the refractories business which is proposed to be sold to a subsidiary of Minerals Technologies in the second quarter 2001. Magnesia Specialties’ refractory and dolomitic lime products are sold primarily to the steel industry. Accordingly, the division’s profitability depends on the production of steel and the related marketplace, and a significant portion of the division’s product pricing structure has historically been affected by current economic conditions within the steel industry. The proposed sale of Magnesia Specialties’ refractories business will lessen the Magnesia Specialties division’s dependence on the steel industry over time.

In 2000, the division’s refractories and dolomitic lime product areas continued to be negatively impacted by global steel industry conditions. The division’s steel-related product areas’ performance followed the steel industry’s performance. As a result, Magnesia Specialties experienced improved operating earnings during the first-six months of 2000 compared with the prior-year period. However, the slowdown experienced in the steel industry during the second half of 2000 and higher-than-expected costs for natural gas, which is used to fuel some of the division’s kilns in the manufacture of its products, negatively affected earnings from operations for the full year 2000. Competitive pricing pressures continued throughout 2000. Consolidation among manufacturers of refractory brick removed a significant periclase customer from the market during the year. The division’s chemicals products continued to diversify in chemicals used as flame retardants, in wastewater treatment and to reduce stack pollution, and is not as dependent on the steel industry as is the refractories business.

The principal raw materials used in the Company’s Magnesia Specialties division’s products are dolomitic lime, brine and imported magnesia. Management believes that its reserves of dolomitic limestone to produce dolomitic lime and its reserves of brine are sufficient to permit production at the required operational levels for the foreseeable future, which levels are expected to be lower over time than present operational levels as a result of the proposed sale of the refractories business. The supply of natural and synthetic magnesia is abundant worldwide. In 2000, the Company purchased some of its magnesia requirements from various sources located in China. While the Company does not expect an interruption in the supply of magnesia from these sources, various factors associated with economic and political uncertainty in China could result in future supply interruptions.

If such an interruption were to occur, the Company believes it could obtain alternate supplies worldwide, although there could be no assurance that the Company could do so at current prices. Alternatively, the Company believes it could adjust its mix of products and/or increase production capacity at its Manistee, Michigan plant.

The Company generally delivers its Magnesia Specialties division’s products upon receipt of orders or requests from customers. Accordingly, there is no significant backlog information. Inventory for the Magnesia Specialties division’s products is generally maintained in sufficient quantities to meet rapid delivery requirements of customers. The Company has provided extended payment terms to certain international customers.

Patents and Trademarks

As of March 16, 2001, the Company owns, has the right to use, or has pending applications for approximately 100 patents pending or granted by the United States and various countries and approximately 103 trademarks related to its Magnesia Specialties business and its developing technologies and services business. The Company expects to transfer 19 and 35 of those patents and trademarks, respectively, to a subsidiary of Minerals Technologies in connection with the proposed sale of the refractories business. The Company believes that its rights under its existing patents, patent applications and trademarks are of value to its operations, but no one patent or trademark or group of patents or trademarks is material to the conduct of the Company’s business as a whole.

Customers

No material part of the business of either segment of the Company is dependent upon a single customer or upon a few customers, the loss of any one of which would have a material adverse effect on the segment. The Company’s products are sold principally to commercial customers in private industry. Although large amounts of construction materials are used in public works projects, relatively insignificant sales are made directly to federal, state, county or municipal governments, or agencies thereof.

Competition

Because of the impact of transportation costs on the aggregates business, competition tends to be limited to producers in proximity to the Company’s individual production facilities. Although all of the Company’s locations experience competition, the Company believes that it is generally a leading producer in the areas it serves. Competition is based primarily on quarry location and price, but quality of aggregates and level of customer service are also factors.

The Company is the second largest producer of aggregates in the United States based on tons shipped. There are over 4,000 companies in the United States that produce aggregates. The largest five producers account for approximately 27% of the total market. The Company competes with a number of other large and small producers. The Company believes that its ability to transport materials by ocean vessels and river barges and its increased access to rail transportation as a result of the Redland Stone, Meridian and other transactions, has enhanced the Company’s ability to compete in

certain extended areas. Certain of the Company’s competitors in the aggregates industry have greater financial resources than the Company.

The Magnesia Specialties division of the Company competes with various companies in different geographic and product areas. The division competes principally on the basis of quality, price and technical support for its products. The Magnesia Specialties division also competes for sales to customers located outside the United States with sales to such customers accounting for approximately $20.4 million in net sales in 2000 (representing approximately 16% of net sales of the Magnesia Specialties segment) principally in Canada, Mexico, the United Kingdom, Germany and Korea. Approximately half of these sales are associated with the refractories business which is proposed to be sold to a subsidiary of Minerals Technologies in the second quarter 2001. The Magnesia Specialties division’s sales to foreign customers were $21.0 million in 1999 and $20.5 million in 1998.

Research and Development

The Company conducts research and development activities for its Magnesia Specialties segment at its laboratory located near Baltimore, Maryland and at various locations for the new proprietary technologies. The Company expects to discontinue conducting these activities at its Baltimore, Maryland laboratory after the proposed sale of the refractories business to a subsidiary of Minerals Technologies. In general, the Company’s research and development efforts in 2000 were directed to applied technological development for the use of its refractories and chemicals products and for its proprietary technologies, including composite materials, a laser-measuring device and microwave technology. The Company spent approximately $2.3 million in 2000, $2.8 million in 1999 and $3.1 million in 1998 on research and development activities.

Environmental Regulations

The Company’s operations are subject to and affected by federal, state and local laws and regulations relating to the environment, health and safety and other regulatory matters. Certain of the Company’s operations may from time to time involve the use of substances that are classified as toxic or hazardous substances within the meaning of these laws and regulations. Environmental operating permits are, or may be, required for certain of the Company’s operations and such permits are subject to modification, renewal and revocation. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. Despite these compliance efforts, risk of environmental liability is inherent in the operation of the Company’s businesses, as it is with other companies engaged in similar businesses, and there can be no assurance that environmental liabilities will not have a material adverse effect on the Company in the future. In accordance with the Company’s accounting policy for environmental costs, amounts are not accrued and included in the Company’s financial statements until it is probable that a liability has been incurred and such amounts can be estimated reasonably. The environmental accruals are estimated based on internal studies of the required remediation costs and generally not discounted to their present value or offset for potential insurance or other claims. Costs incurred by the Company in connection with environmental matters in the preceding two fiscal years were not material to the Company’s operations or financial condition.

The Company believes that its operations and facilities, both owned or leased, are in substantial compliance with applicable laws and regulations and that any noncompliance is not likely to have a material adverse effect on the Company’s operations or financial condition. See “Legal Proceedings” on pages 13-14 of this Form 10-K and “Note L: Commitments and Contingencies” of the “Notes to Financial Statements” on pages 22 and 23 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 38 of the 2000 Annual Report. However, future events, such as changes in or modified interpretations of existing laws and regulations or enforcement policies, or further investigation or evaluation of the potential health hazards of certain products or business activities, may give rise to additional compliance and other costs that could have a material adverse effect on the Company.

In general, quarry sites must comply with noise, water discharge and air quality regulations, zoning and special use permitting requirements, applicable mining regulations and federal health and safety requirements. As new quarry sites are located and acquired, the Company works closely with local authorities during the zoning and permitting processes to design new quarries in such a way as to minimize disturbances. The Company frequently acquires large tracts of land so that quarry and production facilities can be situated substantial distances from surrounding property owners. The Company maintains a centralized blasting function for its quarry operations, and has established policies designed to minimize disturbances to surrounding property owners.

The Company is generally required by state or local laws or pursuant to the terms of an applicable lease to reclaim quarry sites after use. The Company generally reclaims its quarries on an ongoing basis, reclaiming mined-out areas of the quarry while continuing operations at other areas of the site. Historically, the Company has not incurred extraordinary or substantial costs in connection with the closing of quarries. Reclaimed quarry sites owned by the Company are available for sale, typically for commercial development or use as reservoirs.

As is the case with other companies in the same industry, some of the Company’s products contain varying amounts of crystalline silica, a common mineral. Excessive, prolonged inhalation of very small-sized particles of crystalline silica has been associated with nonmalignant lung disease. The carcinogenic potential of crystalline silica was evaluated by the International Agency for Research on Cancer and later by the U.S. National Toxicology Program. In 1987, the agency found limited evidence of carcinogenicity in humans but sufficient evidence of carcinogenicity in animals. The National Toxicology Program concluded in 1991 that crystalline silica is “reasonably anticipated to be a carcinogen.” In October 1996, the International Agency for Research on Cancer issued another report stating that “inhaled crystalline silica in the form of quartz or cristobalite from occupational sources is carcinogenic to humans.” The Mine Safety and Health Administration has included the development of a crystalline silica standard as one of its long-term goals. The Company, through safety information sheets and other means, communicates what it believes to be appropriate warnings and cautions to employees and customers about the risks associated with excessive, prolonged inhalation of mineral dust in general and crystalline silica in particular.

The EPA in November 1996 proposed certain changes to the regulations relating to the standard for particulate matter in connection with air quality, which were recently placed into law as the National Ambient Air Quality Standards. The new law places an ambient air limit on the emission of fine particles (smaller than 2.5 microns) that typically result from industrial, motor vehicle and power generation fuel combustion, in addition to the coarse particles previously regulated. As adopted,

the regulations impact many industries, including the aggregates industry. The National Stone Association (“NSA”) has joined a lawsuit with many other industries challenging the standard and the lack of scientific data available supporting the limits and the ability of industry to monitor the pollutant. In May 1999, the United States Court of Appeals for the District of Columbia overturned the EPA’s PM2.5 and ozone national ambient air quality standards. The EPA appealed the Court of Appeals’ decision to the United States Supreme Court, which decided on February 27, 2001 that the EPA has the authority to issue air quality standards and remanded the case for reexamination the standards proposed by the EPA. The Company will not be able to determine the applicability of any new rules or the costs associates with any required standards until an emission standard is adopted. The Company believes that any such costs would not have a material adverse effect on the Company's operations or its financial condition.

As a result of the processing of dolomitic limestone at the Magnesia Specialties division’s Woodville, Ohio, facility, lime kiln dust (“LKD”) is produced as a by-product. The Company historically placed the LKD in the quarry as part of reclamation required under its mining permit. The Ohio Environmental Protection Agency (“OEPA”) promulgated regulations that apply to the disposal of LKD and regulate it as a solid waste. The regulations require the Company to change its disposal method and institute additional controls. In order to comply with the regulations, the Company executed an administrative order with the OEPA on November 24, 1997 requiring the Company to submit a permit application for a landfill by May 1998, which was duly submitted. The OEPA has not made a decision on the application. The Company, along with the National Lime Association and other lime producers in Ohio, has been working with the OEPA to develop a consensus approach to determine if changes to the current scope of the regulations are appropriate and whether a landfill permit is needed for the disposal. A draft bill was introduced to the State of Ohio Senate in August 2000 proposing that LKD be regulated under the mining laws and excluded as a solid waste thus eliminating the requirement for a landfill permit. Depending upon the result of the proposed legislation and whether the facility will require a landfill permit, the Company may be required to incur certain compliance costs. The Company believes that any such costs would not have a material adverse effect on the Company’s operations or its financial condition but can give no assurance that the compliance costs will not have a material adverse effect on the financial condition or results of the Magnesia Specialties segment’s operations.

The Clean Air Act Amendments of 1990 require the EPA to develop regulations for a broad spectrum of industrial sectors that emit hazardous air pollutants, including lime manufacturing. The new standards to be established would require plants to install feasible control equipment for certain hazardous air pollutants, thereby significantly reducing air emissions. The Company is actively participating with other lime manufacturers in working with the EPA to define test protocols, better define the scope of the standards, determine the existence and feasibility of various technologies, and develop realistic emission limitations and continuous emissions monitoring/reporting requirements for the lime industry. The EPA has conducted testing at lime manufacturing facilities located in Alabama, Texas and Ohio, including the Company’s Woodville facility, the results of which were discussed with the EPA in 1999 to determine whether the facilities should be subject to these regulations. The EPA received comments on its proposed technology-based standards for the industry in November 2000; the EPA has not published any final response or standards to date. The Company will not be able to determine the applicability of the new regulations or the cost associated with any required standards until the emission standards are adopted. The Company believes that any costs associated with the upgrade and/or replacement of equipment required to comply with the new regulations would not have a material adverse effect on the Company’s operations or its financial condition but can give no assurance that the compliance costs will not have a material adverse effect on the financial condition or results of the Magnesia Specialties segment’s operations.

In February 1998, the Georgia Department of Natural Resources (“GDNR”) determined that both the Company and the Georgia Department of Transportation (“GDOT”) are responsible parties for investigation and remediation at the Company’s Camak Quarry in Thomson, Georgia, due to the discovery of trichloroethene (“TCE”) above its naturally occurring background concentration in a drinking water well on site. The Company provided the GDNR with information indicating that the source of the release was either from an asphalt plant that was on the site in the early 1970’s or from a maintenance shop that was operated on the property in the 1940’s and 1950’s before the Company purchased the property. The Company was designated a responsible party by virtue of its ownership of the property. The Company entered into a Consent Order with GDNR to conduct an environmental assessment of the site and file a report of the findings. The Company and GDOT signed an agreement to share evenly the costs of the assessment work. The assessment report was completed and filed. Based upon the results of the assessment report, GDOT withdrew from the cost sharing agreement and has indicated it will not share in any future remediation costs. Georgia law provides that responsible parties are jointly and severally liable and, therefore, the Company is potentially liable for the full cost of funding the investigation and any necessary remediation. If the Company is required to fund the entire cost of such remediation, the statutory framework provides that the Company may pursue rights of contribution from the other responsible parties. Management believes any costs incurred by the Company associated with the site will not have a material adverse effect on the Company’s operations or its financial condition.

In December 1998, the GDNR determined that the Company, the GDOT and two other parties which operated an asphalt plant are responsible parties for investigation and remediation at the Company’s Ruby Quarry in Macon, Georgia. The Company was designated by virtue of its ownership of the property. GDOT was designated because it caused a release of TCE above its naturally occurring background concentration in the groundwater at the site. The two other parties were designated because both entities operated the asphalt plant at the site. The groundwater contamination was discovered when the Company’s tenant vacated the premises and environmental testing was conducted. The Company and GDOT signed an agreement to share the costs of the assessment work. The report of the assessment work was filed with the GDNR. GDOT entered into a Consent Order with GDNR agreeing to conduct additional testing and any necessary remediation at the site. The Company has not signed a Consent Order, and GDNR may issue an Administrative Order against the Company and other responsible parties to require all parties to participate with GDOT to undertake additional testing and any necessary remediation. If the Company is required to fund the cost of remediation, the Company will pursue its right of contribution from the responsible parties. Management believes any costs incurred by the Company associated with the site will not have a material adverse effect on the Company’s operations or its financial condition.

Employees

As of March 16, 2001, the Company has approximately 6,000 employees. Approximately 4,500 are hourly employees and approximately 1,500 are salaried employees. Included among these employees are approximately 1,100 hourly employees represented by labor unions. Approximately 19% of the Company’s Aggregates division’s hourly employees are members of a labor union, while 96% of the Magnesia Specialties division’s hourly employees are represented by labor unions. The Company’s principal union contracts cover employees at the Manistee, Michigan, magnesia-based products plant and the Woodville, Ohio, lime plant. The current Manistee labor union contract was ratified in August 1999 and expires in 2003. The Woodville labor union contract was extended in June

2000 and expires in June 2001. The renewals of the Woodville labor union contract in 1996 and 2000 were renegotiated without any disruption to normal operations although there can be no assurance that a successor agreement will be reached or that a work stoppage will not occur. The Company considers its relations with its employees to be good.

ITEM 2. PROPERTIES

Aggregates

As of March 16, 2001, the Company processed or shipped aggregates from 289 quarries and distribution yards in 24 states in the southeast, southwest, midwest and central United States and in Canada and the Bahamas, of which 82 are located on land owned by the Company free of major encumbrances, 58 are on land owned in part and leased in part, 137 are on leased land, and 12 are on facilities neither owned nor leased, where raw materials are removed under an agreement. In addition, the Company processed and shipped ready mixed concrete and/or asphalt products from 25 properties in 4 states in the southern United States, of which 11 are located on land owned by the Company free of major encumbrances, 2 are on land owned in part and leased in part and 12 are on leased land.

Magnesia Specialties

The Magnesia Specialties division currently operates major manufacturing facilities in Manistee, Michigan, and Woodville, Ohio, and smaller processing plants in River Rouge, Michigan; Bridgeport, Connecticut; Baton Rouge, Louisiana; Lenoir City, Tennessee; and Pittsburgh, Pennsylvania. All of these facilities are owned, except Pittsburgh and Lenoir City, which are leased. The sale of the refractories business to a subsidiary of Minerals Technologies contemplates that the processing plants in River Rouge and Baton Rouge would be transferred to the subsidiary of Minerals Technologies. In addition, the Company has entered into several third-party toll-manufacturing agreements pursuant to which it processes various chemical and refractory products, some of which will be transferred to the subsidiary of Minerals Technologies in connection with the proposed sale of the refractories business.

Other Properties

The Company’s corporate headquarters, which it owns, is located in Raleigh, North Carolina. The Company owns and leases various administrative offices and research and development laboratories for its Aggregates division and its Magnesia Specialties division.

The Company’s principal properties, which are of varying ages and are of different construction types, are believed to be generally in good condition, are well maintained, and are generally suitable and adequate for the purposes for which they are used. The principal properties are believed to be utilized at average productive capacities of approximately 80% and are capable of supporting a higher level of market demand.

ITEM 3. LEGAL PROCEEDINGS

From time to time claims of various types are asserted against the Company arising out of its operations in the normal course of business, including claims relating to land use and permits, safety,

health and environmental matters (such as noise abatement, vibrations, air emissions and water discharges). Such matters are subject to many uncertainties and it is not possible to determine the probable outcome of, or the amount of liability, if any, from these matters. In the opinion of management of the Company (which opinion is based in part upon consideration of the opinion of counsel), it is unlikely that the outcome of these claims will have a material adverse effect on the Company’s operations or its financial condition. However, there can be no assurance that an adverse outcome in any of such litigation would not have a material adverse effect on the Company or its operating segments.

See also “Note L: Commitments and Contingencies” of the “Notes to Financial Statements” on pages 22 and 23 of the 2000 Annual Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 38 of the 2000 Annual Report.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of 2000.

FORWARD-LOOKING STATEMENTS — SAFE HARBOR PROVISIONS

This Annual Report on Form 10-K and other written reports and oral statements made from time to time by the Company contain statements which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those arising out of economic, climatic, political, regulatory, competitive and other factors, including inaccurate assumptions. Investors are also cautioned that it is not possible to predict or identify all such factors. Consequently, the reader should not consider any such list to be a complete statement of all potential risks or uncertainties. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Sections 27A and 21E. These forward-looking statements are made as of the date hereof based on management’s current expectations and the Company does not undertake an obligation to update such statements, whether as a result of new information, future events or otherwise. For a discussion identifying some important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements see the Corporation’s Securities and Exchange Commission filings, including but not limited to, the discussion of “Competition” on pages 8 and 9 of this Annual Report on Form 10-K, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 24 through 39 of the 2000 Annual Report and “Note A: Accounting Policies” and “Note L: Commitments and Contingencies” of the “Notes to Financial Statements” on pages 13 through 15 and 22 and 23, respectively, of the Audited Consolidated Financial Statements included in the 2000 Annual Report.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth certain information regarding the executive officers of Martin Marietta Materials, Inc. as of March 16, 2001:

Present Position

Year Assumed

Other Positions and Other Business

Name

Age

at March 16, 2001

Present Position

Experience Within the Last Five Years

Stephen P. Zelnak, Jr.

Chairman of the
Board of Directors;
President and Chief
Executive Officer;
President of Aggregates
Division

1997

1993

1993

Vice Chairman of the Board of Directors (1996-1997)

Philip J. Sipling

Executive Vice President;
Chairman of Magnesia
Specialties Division;
Executive Vice President of
Aggregates Division

1997
1997

1993

Senior Vice President (1993-1997);
President, Magnesia Specialties
Division (1993-1997)

Janice K. Henry

Senior Vice President;
Chief Financial Officer

1998
1994

Vice President (1994-1998)
Treasurer (1996-2000)

Donald M. Moe

Senior Vice President;
Senior Vice President of
Aggregates Division;
President-Carolina Division

2001
1999

1996

Vice President (1999 – 2001)
Vice President — General Manager,
Martin Marietta Aggregates
Eastern Carolina Region (1993 — 1996)

Jonathan T. Stewart

Senior Vice President,
Human Resources

2001

Vice President, Human Resources
(1993 – 2001)

Bruce A. Deerson

Vice President and
General Counsel

1993

Corporate Secretary (1993 – 1997)

Donald J. Easterlin, III

Vice President,
Business Development

1994

Daniel G. Shephard

Vice President and Treasurer;
President of Magnesia
Specialties Division

2000
1999

Assistant Treasurer (1996-1999)

PART II


ITEM 5.		MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There were approximately 1,400 holders of record of Martin Marietta Materials, Inc. Common Stock, $.01 par value, as of March 16, 2001. The Company’s Common Stock is traded on the New York Stock Exchange (Symbol: MLM). Information concerning stock prices and dividends paid is included under the caption “Quarterly Performance (Unaudited)” on page 40 of the 2000 Annual Report, and that information is incorporated herein by reference.


ITEM 6.		SELECTED FINANCIAL DATA

The information required in response to this Item 6 is included under the caption “Five Year Summary” on page 41 of the 2000 Annual Report, and that information is incorporated herein by reference.


ITEM 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required in response to this Item 7 is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 24 through 39 of the 2000 Annual Report, and that information is incorporated herein by reference, except that the information contained in the 18th and 19th paragraphs of “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Environment” on page 31 of the 2000 Annual Report is not incorporated herein by reference.


ITEM 7A.		QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not hold or issue derivative financial instruments for trading purposes. The Company, from time to time, uses on a limited basis derivative financial instruments to manage its exposure to fluctuations in interest rates and foreign exchange rates. In such case, the aggregate value of derivative financial instruments held or issued by the Company is not material to the Company nor is the market risk posed. The Company did not use any derivative financial instruments in 2000. For additional discussion of the Company’s market risk see “Management’s Discussion and Analysis of Financial Condition and Results of Operations, Capital Structure and Resources” on pages 36 through 38 of the 2000 Annual Report and “Note A: Accounting Policies — Accounting Changes” of the Notes to Consolidated Financial Statements on page 15 of the Audited Consolidated Financial Statements included in the 2000 Annual Report, and that information is incorporated herein by reference.


ITEM 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required in response to this Item 8 is included under the caption “Consolidated Statement of Earnings,” “Consolidated Balance Sheet,” “Consolidated Statement of Cash Flows,” “Consolidated Statement of Shareholders’ Equity,” “Notes to Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quarterly

Performance (Unaudited)” on pages 9 through 40 of the 2000 Annual Report, and that information is incorporated herein by reference.


ITEM 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III


ITEM 10.		DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information concerning directors required in response to this Item 10 is included under the captions “Election of Directors” and “Compliance With Section 16(a) of the Exchange Act” in the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the close of the Company’s fiscal year ended December 31, 2000 (the “2001 Proxy Statement”), and that information is hereby incorporated by reference in this Form 10-K. Information concerning executive officers of the Company required in response to this Item 10 is included in Part I on page 16 of this Form 10-K.


ITEM 11.		EXECUTIVE COMPENSATION

The information required in response to this Item 11 is included under the captions “Executive Compensation” and “Compensation Committee Interlocks and Insider Participation in Compensation Decisions” in the Company’s 2001 Proxy Statement, and that information, except for the information required by Items 402(k) and (l) of Regulation S-K, is hereby incorporated by reference in this Form 10-K.


ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required in response to this Item 12 is included under the captions “Voting Securities and Record Date” and “Beneficial Ownership of Shares” in the Company’s 2001 Proxy Statement, and that information is hereby incorporated by reference in this Form 10-K.


ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required in response to this Item 13 is included under the captions “Compensation Committee Interlocks and Insider Participation in Compensation Decisions,” and “Certain Related Transactions” in the Company’s 2001 Proxy Statement, and that information is hereby incorporated by reference in this Form 10-K.

PART IV


ITEM 14.		EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1) List of financial statements filed as part of this Form 10-K.


	The following consolidated financial statements of Martin Marietta Materials, Inc. and consolidated subsidiaries, included in the 2000 Annual Report, are incorporated by reference into Item 8 on page 17 of this Form 10-K. Page numbers refer to the 2000 Annual Report:


	Page

Consolidated Balance Sheet— December 31, 2000 and 1999		10




Consolidated Statement of Earnings— Years ended December 31, 2000, 1999 and 1998		9




Consolidated Statement of Shareholders’ Equity— Years ended December 31, 2000, 1999 and 1998		12




Consolidated Statement of Cash Flows— Years ended December 31, 2000, 1999 and 1998		11




Notes to Financial Statements—		13 through 23


(2)	List of financial statement schedules filed as part of this Form 10-K

	The following financial statement schedule of Martin Marietta Materials, Inc. and consolidated subsidiaries is included in Item 14(d). The page number refers to this Form 10-K.


	Schedule II — Valuation and Qualifying Accounts			25

	All other schedules have been omitted because they are not applicable, not required, or the information has been otherwise supplied in the financial statements or notes to the financial statements.

	The report of the Company’s independent auditors with respect to the above-referenced financial statements appears on page 8 of the 2000 Annual Report, and that report is hereby incorporated by reference in this Form 10-K. The report on the financial statement schedule and the consent of the Company’s independent auditors appear on page 35 of this Form 10-K.


(3)		Exhibits





		The list of Exhibits on the accompanying Index of Exhibits on pages 22 through 24 of this Form 10-K is hereby incorporated by reference. Each management contract or compensatory plan or arrangement required to be filed as an exhibit is indicated by asterisks.





(b)		Reports on Form 8-K





		None.






(c)		Index of Exhibits


Exhibit
No.

3.01		—Restated Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibits 3.1 and 3.2 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on October 25, 1996)




3.02		—Restated Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.3 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on October 25, 1996)




4.01		—Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.01 to the Martin Marietta Materials, Inc. registration statement on Form S-1 (SEC Registration No. 33-72648))




4.02		—Articles 2 and 8 of the Company’s Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 4.02 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)




4.03		—Article I of the Company’s Restated Bylaws, as amended (incorporated by reference to Exhibit 4.03 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)




4.04		—Indenture dated as of December 1, 1995 between Martin Marietta Materials, Inc. and First Union National Bank of North Carolina (incorporated by reference to Exhibit 4(a) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082))




4.05		—Form of Martin Marietta Materials, Inc. 7% Debenture due 2025 (incorporated by reference to Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082))




4.06		—Form of Martin Marietta Materials, Inc. 6.9% Notes due 2007 (incorporated by reference to Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082))




4.08		—Indenture dated as of December 7, 1998 between Martin Marietta Materials, Inc. and First Union National Bank (incorporated by reference to Exhibit 4.08 to the Martin Marietta Materials, Inc. registration statement on Form S-4 (SEC Registration No. 333-71793))




4.09		—Form of Martin Marietta Materials, Inc. 5.875% Note due December 1, 2008 (incorporated by reference to Exhibit 4.09 to the Martin Marietta Materials, Inc. registration statement on Form S-4 (SEC Registration No. 333-71793))




10.01		—Rights Agreement, dated as of October 21, 1996, between the Company and First Union National Bank of North Carolina, as Rights Agent, which includes the Form of Articles of Amendment With Respect to the Junior Participating Class A Preferred Stock of Martin Marietta Materials, Inc., as Exhibit A, the Form of Rights Certificate, as Exhibit B, and the Summary of Rights to Purchase Preferred Stock, as Exhibit C (incorporated by reference to Exhibit 1 to the Martin Marietta Materials, Inc. registration statement on Form 8-A, filed with the Securities and Exchange Commission on October 21, 1996)




10.02		—Revolving Credit Agreement dated as of January 29, 1997 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 10.06 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)


Exhibit
No.

10.03		—Amendment No. 1 to Credit Agreement dated as of October 16, 1998 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 99.4 to the Martin Marietta Materials, Inc. Current Form on 8-K filed with the Securities and Exchange Commission on December 18, 1998)




10.04		—Amendment No. 2 to Credit Agreement dated as of December 3, 1998 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 99.5 to the Martin Marietta Materials, Inc. Current Form on 8-K filed with the Securities and Exchange Commission on December 18, 1998)




10.05		— Amendment No. 3 to Credit Agreement dated as of August 9, 2000 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 10.03 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 2000)




10.06		—Martin Marietta Materials, Inc. Amended and Restated Shareholder Value Achievement Plan (incorporated by reference to Exhibit 10.07 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.07		—Form of Martin Marietta Materials, Inc. Amended and Restated Employment Protection Agreement (incorporated by reference to exhibit 10.08 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.08		—Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors (incorporated by reference to Exhibit 10.10 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)**




10.09		—Martin Marietta Materials, Inc. Executive Incentive Plan, as amended (incorporated by reference to Exhibit 10.18 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1995)**




10.10		—Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 1995)**




10.11		—Amendment No. 1 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended September 30, 1997)**




10.12		—Amendment No. 2 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.13 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.13		—Amendment No. 3 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 2000)**

*		Filed herewith




**		Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K


Exhibit
No.

*10.14		—Amendment No. 4 to the Martin Marietta Materials, Inc. Incentive Stock Plan**




*10.15		—Martin Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan**




*10.16		—Martin Marietta Materials, Inc. Amended and Restated Omnibus Securities Award Plan**




10.17		—Martin Marietta Materials, Inc. Supplemental Excess Retirement Plan (incorporated by reference to Exhibit 10.16 of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.18		—Amended and Restated Revolving Credit Agreement dated as of August 9, 2000 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 10.02 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 2000)




*12.01		—Computation of ratio of earnings to fixed charges for the year ended December 31, 2000




*13.01		—Martin Marietta Materials, Inc. 2000 Annual Report to Shareholders, portions of which are incorporated by reference in this Form 10-K. Those portions of the 2000 Annual Report to Shareholders that are not incorporated by reference shall not be deemed to be “filed” as part of this report




*21.01		—List of subsidiaries of Martin Marietta Materials, Inc.




*23.01		—Consent of Ernst & Young LLP, Independent Auditors for Martin Marietta Materials, Inc. and consolidated subsidiaries




*24.01		—Powers of Attorney (included in this Form 10-K at page 26)


Other material incorporated by reference:
	Martin Marietta Materials, Inc.’s 2001 Proxy Statement filed pursuant to Regulation 14A, portions of which are incorporated by reference in this Form 10-K. Those portions of the 2001 Proxy Statement which are not incorporated by reference shall not be deemed to be “filed” as part of this report.

*		Filed herewith




**		Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K

FINANCIAL STATEMENT SCHEDULE

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES


Col A	Col B		Col C					Col D			Col E

			Additions

					(2)
			(1)		Charged to other						Balance at
	Balance at beginning		Charged to costs		accounts--			Deductions--			end of
Description	of period		and expenses		describe			describe			period

	(Amounts in Thousands)
Year ended December 31, 2000




Allowance for doubtful accounts	$	4,707	$	432		—			—		$	5,139




Inventory valuation allowance		6,745		—		—		$	973	(a)		5,772




Amortization of intangible assets		58,354		22,612		—			5,820	(b)		75,146





Year ended December 31, 1999




Allowance for doubtful accounts	$	4,430	$	312		—		$	35	(a)	$	4,707




Inventory valuation allowance		8,449		360		—			2,064	(a)		6,745




Amortization of intangible assets		42,511		20,290		—			3,342	(b)		58,354




									673	(c)




									432	(d)





Year ended December 31, 1998




Allowance for doubtful accounts	$	4,789	$	35	$	500	(c)	$	894	(a)	$	4,430




Inventory valuation allowance		7,171		1,278		—			—			8,449




Amortization of intangible assets		29,464		12,163		1,866	(c)		338	(b)		42,511




									644	(e)

(a)		To adjust allowance for change in estimates.
(b)		Fully-amortized intangible assets written off.
(c)		Purchase accounting adjustments.
(d)		Sale of assets.
(e)		Revaluation adjustments.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


MARTIN MARIETTA MATERIALS, INC.







	By:	/s/ Bruce A. Deerson

		Bruce A. Deerson Vice President and General Counsel

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below appoints Bruce A. Deerson and Roselyn R. Bar, jointly and severally, as his true and lawful attorney-in-fact, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, jointly and severally, full power and authority to do and perform each in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, jointly and severally, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Dated: March 22, 2001

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:


Signature	Title	Date


/s/ Stephen P. Zelnak, Jr.	Chairman of the Board,	March 22, 2001
	President and Chief Executive
Stephen P. Zelnak, Jr.	Officer

/s/ Janice K. Henry	Senior Vice President and	March 22, 2001
	Chief Financial Officer
Janice K. Henry





/s/ Anne H. Lloyd	Chief Accounting Officer	March 22, 2001

Anne H. Lloyd





/s/ Richard G. Adamson	Director	March 22, 2001

Richard G. Adamson





/s/ Marcus C. Bennett	Director	March 22, 2001

Marcus C. Bennett





/s/ Bobby F. Leonard	Director	March 22, 2001

Bobby F. Leonard





/s/ William E. McDonald	Director	March 22, 2001

William E. McDonald





/s/ Frank H. Menaker, Jr.	Director	March 22, 2001

Frank H. Menaker, Jr.





/s/ James M. Reed	Director	March 22, 2001

James M. Reed





/s/ William B. Sansom	Director	March 22, 2001

William B. Sansom





/s/ Richard A. Vinroot	Director	March 22, 2001

Richard A. Vinroot

EXHIBITS


Exhibit
No.

3.01		—Restated Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibits 3.1 and 3.2 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on October 25, 1996)




3.02		—Restated Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.3 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on October 25, 1996)




4.01		—Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.01 to the Martin Marietta Materials, Inc. registration statement on Form S-1 (SEC Registration No. 33-72648))




4.02		—Articles 2 and 8 of the Company’s Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 4.02 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)




4.03		—Article I of the Company’s Restated Bylaws, as amended (incorporated by reference to Exhibit 4.03 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)




4.04		—Indenture dated as of December 1, 1995 between Martin Marietta Materials, Inc. and First Union National Bank of North Carolina (incorporated by reference to Exhibit 4(a) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082))




4.05		—Form of Martin Marietta Materials, Inc. 7% Debenture due 2025 (incorporated by reference to Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082))




4.06		—Form of Martin Marietta Materials, Inc. 6.9% Notes due 2007 (incorporated by reference to Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082))




4.08		—Indenture dated as of December 7, 1998 between Martin Marietta Materials, Inc. and First Union National Bank (incorporated by reference to Exhibit 4.08 to the Martin Marietta Materials, Inc. registration statement on Form S-4 (SEC Registration No. 333-71793))




4.09		—Form of Martin Marietta Materials, Inc. 5.875% Note due December 1, 2008 (incorporated by reference to Exhibit 4.09 to the Martin Marietta Materials, Inc. registration statement on Form S-4 (SEC Registration No. 333-71793))




10.01		—Rights Agreement, dated as of October 21, 1996, between the Company and First Union National Bank of North Carolina, as Rights Agent, which includes the Form of Articles of Amendment With Respect to the Junior Participating Class A Preferred Stock of Martin Marietta Materials, Inc., as Exhibit A, the Form of Rights Certificate, as Exhibit B, and the Summary of Rights to Purchase Preferred Stock, as Exhibit C (incorporated by reference to Exhibit 1 to the Martin Marietta Materials, Inc. registration statement on Form 8-A, filed with the Securities and Exchange Commission on October 21, 1996)




10.02		—Revolving Credit Agreement dated as of January 29, 1997 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 10.06 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)


Exhibit
No.





10.03		—Amendment No. 1 to Credit Agreement dated as of October 16, 1998 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 99.4 to the Martin Marietta Materials, Inc. Current Form on 8-K filed with the Securities and Exchange Commission on December 18, 1998)




10.04		—Amendment No. 2 to Credit Agreement dated as of December 3, 1998 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 99.5 to the Martin Marietta Materials, Inc. Current Form on 8-K filed with the Securities and Exchange Commission on December 18, 1998)




10.05		—Amendment No. 3 to Credit Agreement dated as of August 9, 2000 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 10.03 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 2000)




10.06		—Martin Marietta Materials, Inc. Amended and Restated Shareholder Value Achievement Plan (incorporated by reference to Exhibit 10.07 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.07		—Form of Martin Marietta Materials, Inc. Amended and Restated Employment Protection Agreement (incorporated by reference to exhibit 10.08 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.08		—Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors (incorporated by reference to Exhibit 10.10 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)**




10.09		—Martin Marietta Materials, Inc. Executive Incentive Plan, as amended (incorporated by reference to Exhibit 10.18 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1995)**




10.10		—Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 1995)**




10.11		—Amendment No. 1 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended September 30, 1997)**




10.12		—Amendment No. 2 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.13 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.13		—Amendment No. 3 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 2000)**

*		Filed herewith




**		Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K


Exhibit
No.

*10.14		—Amendment No. 4 to the Martin Marietta Materials, Inc. Incentive Stock Plan**




*10.15		—Martin Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan**




*10.16		—Martin Marietta Materials, Inc. Amended and Restated Omnibus Securities Award Plan**




10.17		—Martin Marietta Materials, Inc. Supplemental Excess Retirement Plan (incorporated by reference to Exhibit 10.16 of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999)**




10.18		—Amended and Restated Revolving Credit Agreement dated as of August 9, 2000 among Martin Marietta Materials, Inc. and Morgan Guaranty Trust Company of New York, as agent bank (incorporated by reference to Exhibit 10.02 to the Martin Marietta Materials, Inc. Form 10-Q for the quarter ended June 30, 2000)




*12.01		—Computation of ratio of earnings to fixed charges for the year ended December 31, 2000




*13.01		—Martin Marietta Materials, Inc. 2000 Annual Report to Shareholders, portions of which are incorporated by reference in this Form 10-K. Those portions of the 2000 Annual Report to Shareholders that are not incorporated by reference shall not be deemed to be “filed” as part of this report




*21.01		—List of subsidiaries of Martin Marietta Materials, Inc.




*23.01		—Consent of Ernst & Young LLP, Independent Auditors for Martin Marietta Materials, Inc. and consolidated subsidiaries




*24.01		—Powers of Attorney (included in this Form 10-K at page 26)


Other material incorporated by reference:
	Martin Marietta Materials, Inc.’s 2001 Proxy Statement filed pursuant to Regulation 14A, portions of which are incorporated by reference in this Form 10-K. Those portions of the 2001 Proxy Statement which are not incorporated by reference shall not be deemed to be “filed” as part of this report.

*		Filed herewith




**		Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K

1 AMENDMENT NO. 4 TO INCENTIVE STOCK PLAN This Amendment No. 4 to the Martin Marietta Materials, Inc. Incentive Stock Plan, as previously amended (the "Plan") hereby makes the following amendments, effective as of November 9, 2000. A new Section 6.08 of the Plan is added as follows: "Section 6.08 Stock Deferral. (A) A Participant may irrevocably elect, in accordance with the procedure set forth in paragraph (B) below, the following: (1) Whether to defer the distribution of Common Shares after vesting until the date his Employment terminates; and (2) If the election referred to in the preceding paragraph (1) is made, whether to receive payment of the deferred Common Shares in the form of a single lump sum payment or substantially equal annual installments for a period not to exceed ten (10) years. (B) A Participant's election pursuant to this Section 6.08 must be in writing and irrevocably filed with the Corporate Secretary at least five (5) months prior to the date the Common Shares would have been distributed. In the event a Participant fails to make an election under paragraph (A) above, he will automatically receive the distribution of Common Shares in accordance with Sections 6.01, 6.02, 6.03 and 6.04. In the event a Participant elects to defer the distribution of Common Shares under paragraph (A)(1) above but fails to make an election under paragraph (A)(2) above, he will automatically receive the distribution of Common Shares in the form of a single lump sum upon termination of employment.

2 (C) The Corporation shall continue to make cash payments equal to dividends in accordance with Section 5.02 to each Participant who chooses to defer the distribution of Common Stock pursuant to this Section 6.08. A Participant will not have any voting rights with respect to the Common Shares that are deferred until the deferral period ends and the certificates are distributed." All other terms and provisions of the Plan remain in full force and effect.

1 MARTIN MARIETTA MATERIALS, INC. AMENDED AND RESTATED STOCK-BASED AWARD PLAN ADOPTED: MAY 8, 1998 AS AMENDED MAY 1998 AND AUGUST 2000 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933

2 SECTION 1. ESTABLISHMENT AND PURPOSE The Martin Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan (the "Plan") was adopted by the shareholders of the Corporation in a manner that complies with Section 162(m) at the shareholders meeting held on May 8, 1998, and subsequently amended and restated by the Board of Directors at its meeting on May 8, 1998 and again on August 17, 2000. The purpose of this Plan is to benefit the Corporation's shareholders by encouraging high levels of performance by individuals who are key to the success of the Corporation and to enable the Corporation to attract, motivate, and retain talented and experienced individuals essential to its continued success. This is to be accomplished by providing such employees and directors an opportunity to obtain or increase their proprietary interest in the Corporation's performance and by providing such employees and directors with additional incentives to remain with the Corporation. SECTION 2. DEFINITIONS The following terms, as used herein, shall have the meaning specified: "Affiliate" of a person means any entity directly or indirectly controlling, controlled by or under direct or indirect common control with such person. "Award" means an award granted pursuant to Section 4 hereof. "Award Agreement" means an agreement described in Section 7 hereof entered into between the Corporation and a Participant, setting forth the terms and conditions applicable to the Award granted to the Participant. "Board of Directors" means the Board of Directors of the Corporation as it may be comprised from time to time. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a committee composed of members of, and designated by, the Board of Directors and consisting solely of persons who are both (i) "non-employee directors" within the meaning of Rule 16b-3, and (ii) "outside directors" within the meaning of Section 162(m), as Rule 16b-3 and Section 162(m) may be amended from time to time, which committee shall at all times comprise at least the minimum number of such persons necessary to comply with both Rule 16b-3 and Section 162. "Corporation" means Martin Marietta Materials, Inc. "Covered Employee" means a covered employee within the meaning of Section 162(m) or the Treasury Regulations promulgated thereunder. 2

3 "Eligible Director" means each director of the Corporation who is not an employee of the Corporation or any Subsidiary. "Employee" means officers and other key employees of the Corporation. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. "Fair Market Value" means the closing price of the relevant security as reported on the composite tape of New York Stock Exchange issues (or such other reporting system as shall be selected by the Committee) on the relevant date, or if no sale of the security is reported for such date, the next following day for which there is a reported sale. The Committee shall determine the Fair Market Value of any security that is not publicly traded, using such criteria as it shall determine, in its sole direction, to be appropriate for such valuation. "Incumbent Board" means a member of the board of Directors of the Corporation who is not an Acquiring Person, or an affiliate (as defined in Rule 12b-2 of the Exchange Act) or an associate (as defined in Rule 12b-2 of the Exchange Act) of an Acquiring Person, or a representative or nominee of an Acquiring Person. "Insider" means any person who is subject to Section 16 of the Exchange Act. "Participant" means an Employee or Eligible Director who has been granted and holds an unexercised or unpaid Award pursuant to this Plan. "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16 or any successor rule or regulation as amended from time to time. "Section 16" means Section 16 of the Exchange Act or any successor statute and the rules promulgated thereunder by the Securities and Exchange Commission, as they may be amended from time to time. "Section 162(m)" means Section 162(m) of the Code or any successor statute and the Treasury Regulations promulgated thereunder, as they may be amended from time to time. "Section 422" means Section 422 of the Code or any successor statute and the Treasury Regulations promulgated thereunder, as they may be amended from time to time. "Stock" means shares of Common Stock of the Corporation, par value $.01 per share. "Subsidiary" means any entity directly or indirectly controlled by the Corporation. 3

4 SECTION 3. ELIGIBILITY Awards may be granted (a) to exempt salaried Employees of the Corporation or any Subsidiary who are designated from time to time by the Committee or (b) to Eligible Directors. No individual who beneficially owns Stock possessing five percent (5%) or more of the combined voting power of all classes of stock of the Corporation shall be eligible to participate in the Plan. SECTION 4. AWARDS The Committee may grant any of the following types of Awards, either singly, in tandem or in combination with other Awards, as the Committee may in its sole discretion determine: (a) Non-Qualified Stock Options. A Non-Qualified Stock Option is a right to purchase a specified number of shares of Stock during such specified time as the Committee may determine at a price not less than 100% of the Fair Market Value of the Stock on the date the option is granted. (i) The purchase price of the Stock subject to the option may be paid in cash. At the discretion of the Committee, the purchase price may also be paid by the tender of Stock, or through a combination of Stock and cash, or through such other means as the Committee determines are consistent with the Plan's purpose and applicable law. No fractional shares of Stock will be issued or accepted. (ii) Without limiting the foregoing, to the extent permitted by law (including relevant state law), the Committee may agree to accept, as full or partial payment of the purchase price of Stock issued upon exercise of options, (A) a promissory note of the optionee evidencing the optionee's obligation to make future cash payments to the Corporation, or (B) any other form of payment deemed acceptable to the Committee. Promissory notes referred to in clause (A) above shall be payable as determined by the Committee (but in no event later than five years after the date thereof), shall be secured by a pledge of shares of Stock purchased, and shall bear interest at a rate established by the Committee. (b) Incentive Stock Options. An Incentive Stock Option is an Award in the form of an option to purchase Stock that complies with the requirements of Code Section 422 or any successor section. (i) To the extent that the aggregate Fair Market Value (determined at the time of the grant of the Award) of the shares subject to Incentive Stock Options which are exercisable by one person for the first time during a particular calendar year exceeds $100,000, such excess shall be treated as Non-Qualified Stock Options. For purposes of the preceding sentence, the term 4

5 "Incentive Stock Option" shall mean an option to purchase Stock that is granted pursuant to this Section 4(b) or pursuant to any other plan of the Corporation, which option is intended to comply with Section 422 of the Code. (ii) No Incentive Stock Option may be granted under this Plan after the tenth anniversary of the date this Plan is adopted or the date this Plan is approved by the shareholders, whichever is earlier, or be exercisable more than ten years after the date the Award is made. (iii) The exercise price of any Incentive Stock Option shall be no less than Fair Market Value of the Stock subject to the option on the date the Award is made. (iv) The Committee may provide that the option price under an Incentive Stock Option may be paid by one or more of the methods available for paying the option price of a Non-Qualified Stock Option. (c) Restricted Stock. Restricted Stock is Stock of the Corporation that is issued to a Participant and is subject to restrictions on transfer and/or such other restrictions or incidents of ownership as the Committee may determine. (d) Other Stock-Based Incentive Awards. The Committee may from time to time grant Awards under this Plan that provide the Participant with the right to purchase Stock of the Corporation or provide incentive Awards that are valued by reference to the Fair Market Value of Stock of the Corporation (including, but not limited to phantom securities or dividend equivalents). Such Awards shall be in a form determined by the Committee (and may include terms contingent upon a change of control of the Corporation), provided that such Awards shall not be inconsistent with the terms and purposes of the Plan. SECTION 5. SHARES OF STOCK AND OTHER STOCK-BASED AWARDS AVAILABLE UNDER PLAN (a) Subject to the adjustment provisions of Section 10 hereof, (i) the aggregate number of shares with respect to which Awards payable in securities may be granted under the Plan shall be no more than 5,000,000; (ii) the aggregate number of shares with respect to which Awards subject to Restricted Stock under the Plan shall be no more than 1,000,000; and (iii) the aggregate number of shares with respect to which Non-Qualified Stock Options or Incentive Stock Options may be granted to any individual Participant shall be no more than 500,000 in any one year. Awards that are canceled or repriced shall be counted against the 500,000 share per year limit to the extent required by Section 162(m) of the Code. (b) Any unexercised or undistributed portion of any terminated or forfeited Award (other than an Award terminated or forfeited by reason of the exercise of any Award granted in tandem therewith) shall be available for further Awards in addition to those available under Section 5(a) hereof. 5

6 (c) For the purposes of computing the aggregate number of shares with respect to which awards payable in securities may be granted under the Plan, the following rules shall apply: (i) except as provided in (v) of this Section, each option shall be deemed to be the equivalent of the maximum number of shares that may be issued upon exercise of the particular option; (ii) except as provided in (v) of this Section, each other stock-based Award shall be deemed to be equal to the number of shares to which it relates; (iii) except as provided in (v) of this Section, where the number of shares available under the Award is variable on the date it is granted, the number of shares shall be deemed to be the maximum number of shares that could be received under that particular Award. (iv) where one or more types of Awards (both of which are payable in Stock or another security) are granted in tandem with each other, such that the exercise of one type of Award with respect to a number of shares cancels an equal number of shares of the other, each joint Award shall be deemed to be the equivalent of the number of shares under the other; and (v) each share awarded or deemed to be awarded under the preceding subsections shall be treated as shares of Stock, even if the Award is for a security other than Stock. Additional rules for determining the aggregate number of shares with respect to which awards payable in securities may be granted under the Plan may be made by the Committee, as it deems necessary or appropriate. (d) No Stock may be issued pursuant to an Award under the Plan except to the extent that, prior to such issuance, the Corporation shall have acquired shares from its shareholders sufficient to fulfill the requirements of the Plan with respect to such issuance. SECTION 6. DIRECTORS' OPTIONS (a) Annual Options. Each Eligible Director shall be granted a Non-Qualified Stock Option to acquire 1,500 shares of Stock annually at the same meeting that options are normally granted to employees of the Corporation, or in such other amount or at such other time as may be determined by the Board of Directors. (b) Terms and Conditions. Any Award granted under this Section 6 shall be subject to the following terms and conditions: 6

7 (i) The exercise price of any Non-Qualified Stock Option granted under Section 6 shall be 100% of the Fair Market Value of the Stock on the date the Award is made. (ii) Unless otherwise provided by this Plan, a Non-Qualified Stock Option granted under Section 6 shall become exercisable as provided in the Award Agrement. SECTION 7. AWARD AGREEMENTS Each Award under this Plan shall be evidenced by an Award Agreement setting forth the number of shares of Stock, or units subject to the Award and such other terms and conditions applicable to the Award as determined by the Committee. (a) Award Agreements shall include the following terms: (i) Termination of Employment or Service as Director: A provision describing the treatment of an Award in the event of the retirement, disability, death or other termination of a Participant's employment with the Corporation or Subsidiary or service as a Director, including but not limited to terms relating to the vesting, time for exercise, forfeiture or cancellation of an Award in such circumstances. (ii) Rights as Shareholder: A provision that a Participant shall have no rights as a shareholder with respect to any securities covered by an Award until the date the Participant becomes the holder of record. Except as provided in Section 10 hereof, no adjustment shall be made for dividends or other rights, unless the Award Agreement specifically requires such adjustment, in which case, grants of dividend equivalents or similar rights shall not be considered to be a grant of any other shareholder right. (iii) Withholding: A provision requiring the withholding of applicable taxes required by law from all amounts paid in satisfaction of an Award. In the case of an Award paid in cash, the withholding obligation shall be satisfied by withholding the applicable amount and paying the net amount in cash to the Participant. In the case of Awards paid in shares of Stock or other securities of the Corporation, a Participant may satisfy the withholding obligation by paying the amount of any taxes in cash or, with the approval of the Committee, shares of Stock may be deducted from the payment to satisfy the obligation in full or in part. The number of shares to be deducted shall be determined by reference to the Fair Market Value of such shares on the date the Award is exercised. (iv) Execution: A provision stating that no Award is enforceable until the Award Agreement or a receipt has been signed by the Participant and the Chairman or the Chief Executive Officer of the Corporation (or his delegate). By executing the Award Agreement or receipt, a Participant shall be deemed to 7

8 have accepted and consented to any action taken under the Plan by the Committee, the Board of Directors or their delegates. (v) Exercise and Payment: The permitted methods of exercising and paying the exercise price with respect to the Award. (b) Award Agreements may include the following terms: (i) Replacement, Substitution and Reloading: Any provisions (A) permitting the surrender of outstanding Awards or securities held by the Participant in order to exercise or realize rights under other Awards, or in exchange for the grant of new Awards under similar or different terms (including the grant of reload options), or, (B) requiring holders of Awards to surrender outstanding Awards as a condition precedent to the grant of new Awards under the Plan. (ii) Other Terms: Such other terms as are necessary and appropriate to effect an Award to the Participant including but not limited to the term of the Award, vesting provisions, any requirements for continued employment with the Corporation or any Subsidiary, any other restrictions or conditions (including performance requirements) on the Award and the method by which restrictions or conditions lapse, the effect on the Award of a change in control, the price and the amount or value of Awards. SECTION 8. AMENDMENT AND TERMINATION The Board of Directors may at any time amend, suspend or discontinue the Plan. The Committee may at any time alter or amend any or all Award Agreements under the Plan to the extent permitted by law. However, no such action may, without approval of the shareholders of the Corporation, be effective if shareholder approval would be required to keep the Plan and the Awards made thereunder in compliance with Sections 162(m) and 422. SECTION 9. ADMINISTRATION (a) The Plan and all Awards granted pursuant thereto shall be administered by the Committee. The members of the Committee shall be designated by the Board of Directors. A majority of the members of the Committee shall constitute a quorum. The vote of a majority of a quorum shall constitute action by the Committee. (b) The Committee shall periodically determine the Participants in the Plan, except with respect to Eligible Directors, and the nature, amount, pricing, timing, and other terms of Awards to be made to such individuals. (c) The Committee shall have the power to interpret and administer the Plan. All questions of interpretation with respect to the Plan, the terms of any Award Agreements and, except with respect to Eligible Directors, the number of shares of 8

9 Stock, or units granted, shall be determined by the Committee and its determination shall be final and conclusive upon all parties in interest. In the event of any conflict between an Award Agreement and this Plan, the terms of this Plan shall govern. (d) It is the intent of the Corporation that this Plan and Awards hereunder satisfy and be interpreted in a manner, that, in the case of Participants who are or may be Insiders, satisfies the applicable requirements of Rule 16b-3, so that such persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 and will not be subjected to avoidable liability thereunder. If any provision of this Plan or of any Award would otherwise frustrate or conflict with the intent expressed in this Section 9(d), that provision to the extent possible shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, the provision shall be deemed void as applicable to Insiders to the extent permitted by law and deemed advisable by the Committee. (e) It is the intent of the Corporation that this Plan and Awards hereunder satisfy and be interpreted in a manner, that, in the case of Participants who are or may be Covered Employees, satisfies the applicable requirements of Section 162(m), so that the Corporation will be entitled, to the extent possible, to deduct compensation paid under the Plan and otherwise to such Covered Employees and will not be subjected to avoidable loss of deductions thereunder. If any provision of this Plan or of any Award would otherwise frustrate or conflict with the intent expressed in this Section 9(e), that provision to the extent possible shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, the provision shall be deemed void as applicable to Covered Employees to the extent permitted by law and deemed advisable by the Committee. (f) The Committee may delegate to the officers or employees of the Corporation the authority to execute and deliver such instruments and documents, to do all such acts and things, and to take all such other steps deemed necessary, advisable or convenient for the effective administration of the Plan in accordance with its terms and purpose, except that the Committee may not delegate any discretionary authority with respect to substantive decisions or functions regarding the Plan or Awards thereunder as these relate to Insiders or Covered Employees, including but not limited to decisions regarding the timing, eligibility, pricing, amount or other material term of such Awards. SECTION 10. ADJUSTMENT PROVISIONS (a) In the event of any change in the outstanding shares of Stock by reason of a stock dividend or split, recapitalization, merger or consolidation, reorganization, combination or exchange of shares or other similar corporate change, the number of shares of Stock (or other securities) then remaining subject to this Plan, and the maximum number of shares that may be issued to anyone pursuant to this Plan, 9

10 including those that are then covered by outstanding Awards, shall (i) in the event of an increase in the number of outstanding shares, be proportionately increased and the price for each share then covered by an outstanding Award shall be proportionately reduced, and (ii) in the event of a reduction in the number of outstanding shares, be proportionately reduced and the price for each share then covered by an outstanding Award, shall be proportionately increased. (b) The Committee shall make any further adjustments as it deems necessary to ensure equitable treatment of any holder of an Award as the result of any transaction affecting the securities subject to the Plan not described in (a), or as is required or authorized under the terms of any applicable Award Agreement. SECTION 11. CHANGE IN CONTROL (a) Subject to Sections 5, 8 and 10, in the event of a change in control of the Corporation, in addition to any action required or authorized by the terms of any Award Agreement, all time periods for purposes of vesting in, or realizing gain from, any and all outstanding Awards made pursuant to this Plan will automatically accelerate. (b) For the purposes of this Section, a "Change in Control" shall mean on or after the effective date of the Plan, (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (an "Acquiring Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (A) the fully diluted shares of Stock, as reflected on the Corporation's financial statements (the "Outstanding Corporation Common Stock"), or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition by the Corporation or any "affiliate" of the Corporation, within the meaning of 17 C.F.R.ss. 230.405 (an "Affiliate"), (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Affiliate of the Corporation, or (3) any acquisition by any entity pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this definition; or (ii) Individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business 10

11 Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Affiliate of the Corporation, or such corporation resulting from such Business Combination or any Affiliate of such corporation) beneficially owns, directly or indirectly, 40% or more of, respectively, the fully diluted shares of common stock of the corporation resulting from such Business Combination, as reflected on such corporation's financial statements, or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation. SECTION 12. UNFUNDED PLAN The Plan shall be unfunded. Neither the Corporation nor the Board of Directors shall be required to segregate any assets that may at any time be represented by Awards made pursuant to the Plan. Neither the Corporation, the Committee, nor the Board of Directors shall be deemed to be a trustee of any amounts to be paid under the Plan. SECTION 13. LIMITS OF LIABILITY (a) Any liability of the Corporation to any Participant with respect to an Award shall be based solely upon contractual obligations created by the Plan and the Award Agreement. (b) Neither the Corporation nor any member of the Board of Directors or of the Committee, nor any other person participating in any determination of any question under the Plan, or in the interpretation, administration or application of the Plan, 11

1 MARTIN MARIETTA MATERIALS, INC. AMENDED OMNIBUS SECURITIES AWARD PLAN ADOPTED: FEBRUARY 1994 AS AMENDED AND RESTATED MAY 1998 AND AMENDED AUGUST 2000

2 SECTION 1. ESTABLISHMENT AND PURPOSE The Martin Marietta Materials, Inc. Amended Omnibus Securities Award Plan (the "Plan") is an amendment and restatement of the Martin Marietta Materials, Inc. Omnibus Securities Award Plan (the "1994 Plan"), which effectiveness is subject to the adoption of the Plan by the shareholders of the Corporation in a manner that complies with Section 162(m). The purpose of this Plan is to benefit the Corporation's shareholders by encouraging high levels of performance by individuals who are key to the success of the Corporation and to enable the Corporation to attract, motivate, and retain talented and experienced individuals essential to its continued success. This is to be accomplished by providing such employees an opportunity to obtain or increase their proprietary interest in the Corporation's performance and by providing such employees with additional incentives to remain with the Corporation. SECTION 2. DEFINITIONS The following terms, as used herein, shall have the meaning specified: "Affiliate" of a person means any entity directly or indirectly controlling, controlled by or under direct or indirect common control with such person. "Award" means an award granted pursuant to Section 4 hereof. "Award Agreement" means an agreement described in Section 6 hereof entered into between the Corporation and a Participant, setting forth the terms and conditions applicable to the Award granted to the Participant. "Board of Directors" means the Board of Directors of the Corporation as it may be comprised from time to time. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means a committee composed of members of, and designated by, the Board of Directors and consisting solely of persons who are both (i) "non-employee directors" within the meaning of Rule 16b-3, and (ii) "outside directors" within the meaning of Section 162(m), as Rule 16b-3 and Section 162(m) may be amended from time to time, which committee shall at all times comprise at least the minimum number of such persons necessary to comply with both Rule 16b-3 and Section 162. "Corporation" means Martin Marietta Materials, Inc. "Covered Employee" means a covered employee within the meaning of Section 162(m) or the Treasury Regulations promulgated thereunder. 2

3 "Employee" means officers and other key employees of the Corporation but excludes directors who are not also officers or employees of the Corporation. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. "Fair Market Value" means the closing price of the relevant security as reported on the composite tape of New York Stock Exchange issues (or such other reporting system as shall be selected by the Committee) on the relevant date, or if no sale of the security is reported for such date, the next following day for which there is a reported sale. The Committee shall determine the Fair Market Value of any security that is not publicly traded, using such criteria as it shall determine, in its sole direction, to be appropriate for such valuation. "Incumbent Board" means a member of the board of Directors of the Corporation who is not an Acquiring Person, or an affiliate (as defined in Rule 12b-2 of the Exchange Act) or an associate (as defined in Rule 12b-2 of the Exchange Act) of an Acquiring Person, or a representative or nominee of an Acquiring Person. "Insider" means any person who is subject to Section 16 of the Exchange Act. "Participant" means an Employee who has been granted and holds an unexercised or unpaid Award pursuant to this Plan. "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16 or any successor rule or regulation as amended from time to time. "Section 16" means Section 16 of the Exchange Act or any successor statute and the rules promulgated thereunder by the Securities and Exchange Commission, as they may be amended from time to time. "Section 162(m)" means Section 162(m) of the Code or any successor statute and the Treasury Regulations promulgated thereunder, as they may be amended from time to time. "Stock" means shares of Common Stock of the Corporation, par value $.01 per share. "Subsidiary" means any entity directly or indirectly controlled by the Corporation. 3

4 SECTION 3. ELIGIBILITY Awards may be granted only to exempt salaried Employees of the Corporation or any Subsidiary who are designated from time to time by the Committee. No individual who beneficially owns Stock possessing five percent (5%) or more of the combined voting power of all classes of stock of the Corporation shall be eligible to participate in the Plan. SECTION 4. AWARDS The Committee may grant any of the following types of Awards, either singly, in tandem or in combination with other Awards, as the Committee may in its sole discretion determine: (a) Non-qualified Stock Options. A Non-qualified Stock Option is a right to purchase a specified number of shares of Stock during such specified time as the Committee may determine at a price not less than 100% of the Fair Market Value of the Stock on the date the option is granted. (i) The purchase price of the Stock subject to the option may be paid in cash. At the discretion of the Committee, the purchase price may also be paid by the tender of Stock, or through a combination of Stock and cash, or through such other means as the Committee determines are consistent with the Plan's purpose and applicable law. No fractional shares of Stock will be issued or accepted. (ii) Without limiting the foregoing, to the extent permitted by law (including relevant state law), the Committee may agree to accept, as full or partial payment of the purchase price of Stock issued upon exercise of options, (A) a promissory note of the optionee evidencing the optionee's obligation to make future cash payments to the Corporation, or (B) any other form of payment deemed acceptable to the Committee. Promissory notes referred to in clause (A) above shall be payable as determined by the Committee (but in no event later than five years after the date thereof), shall be secured by a pledge of shares of Stock purchased, and shall bear interest at a rate established by the Committee. (b) Incentive Stock Options. An Incentive Stock Option is an Award in the form of an option to purchase Stock that complies with the requirements of Code Section 422 or any successor section. (i) To the extent that the aggregate Fair Market Value (determined at the time of the grant of the Award) of the shares subject to Incentive Stock Options which are exercisable by one person for the first time during a particular 4

5 calendar year exceeds $100,000, such excess shall be treated as Non-qualified Stock Options. For purposes of the preceding sentence, the term "Incentive Stock Option" shall mean an option to purchase Stock that is granted pursuant to this Section 4(b) or pursuant to any other plan of the Corporation, which option is intended to comply with Section 422(b) of the Code. (ii) No Incentive Stock Option may be granted under this Plan after the tenth anniversary of the date this Plan is adopted, or the date this Plan is approved by the shareholders, whichever is earlier, or be exercisable more than ten years after the date the Award is made. (iii) The exercise price of any Incentive Stock Option shall be no less than Fair Market Value of the Stock subject to the option on the date the Award is made. (iv) The Committee may provide that the option price under an Incentive Stock Option may be paid by one or more of the methods available for paying the option price of a Non-qualified Stock Option. (c) Stock Appreciation Rights. A Stock Appreciation Right ("SAR") is a right to receive, upon exercise of the right, but without payment by the Participant, an amount payable in cash. The amount payable with respect to each right shall be equal in value to a percent of the excess, if any, of the Fair Market Value of a share of Stock on the exercise date over the Fair Market Value of a share of Stock on the date the Award was made (or, in the case of a right granted with respect to a previously granted Award, the Fair Market Value of the shares that are the subject of the previously granted Award on the date such previous Award was granted). The applicable percent shall be established by the Committee. (d) Restricted Stock. Restricted Stock is Stock of the Corporation that is issued to a Participant and is subject to restrictions on transfer and/or such other restrictions or incidents of ownership as the Committee may determine. (e) Other Stock-based Incentive Awards. The Committee may from time to time grant Awards under this Plan that provide the Participant with the right to purchase Stock of the Corporation or provide incentive Awards that are valued by reference to the Fair Market Value of Stock of the Corporation (including, but not limited to phantom securities or dividend equivalents). Such Awards shall be in a form determined by the Committee (and may include terms contingent upon a change of control of the Corporation), provided that such Awards shall not be inconsistent with the terms and purposes of the Plan. 5

6 SECTION 5. SHARES OF STOCK AND OTHER STOCK-BASED AWARDS AVAILABLE UNDER PLAN (a) Subject to the adjustment provisions of Section 9 hereof, the aggregate number of shares with respect to which Awards payable in securities may be granted under the Plan shall be no more than 2,000,000 and the aggregate number of shares with respect to which Non-qualified Stock Options, Incentive Stock Options or SARs may be granted to any individual Participant shall be no more than 200,000 in any one year. Awards that are cancelled or repriced shall be counted against the 200,000 share per year limit to the extent required by Section 162(m) of the Code. (b) Any unexercised or undistributed portion of any terminated or forfeited Award (other than an Award terminated or forfeited by reason of the exercise of any Award granted in tandem therewith) shall be available for further Awards in addition to those available under Section 5(a) hereof. (c) For the purposes of computing the aggregate number of shares with respect to which awards payable in securities may be granted under the Plan, the following rules shall apply: (i) except as provided in (v) of this Section, each option shall be deemed to be the equivalent of the maximum number of shares that may be issued upon exercise of the particular option; (ii) except as provided in (v) of this Section, each other stock-based Award shall be deemed to be equal to the number of shares to which it relates; (iii) except as provided in (v) of this Section, where the number of shares available under the Award is variable on the date it is granted, the number of shares shall be deemed to be the maximum number of shares that could be received under that particular Award. (iv) where one or more types of Awards (both of which are payable in Stock or another security) are granted in tandem with each other, such that the exercise of one type of Award with respect to a number of shares cancels an equal number of shares of the other, each joint Award shall be deemed to be the equivalent of the number of shares under the other; and (v) each share awarded or deemed to be awarded under the preceding subsections shall be treated as shares of Stock, even if the Award is for a security other than Stock. Additional rules for determining the aggregate number of shares with respect to which awards payable in securities may be granted under the Plan may be made by the Committee, as it deems necessary or appropriate. 6

7 (d) No Stock may be issued pursuant to an Award under the Plan except to the extent that, prior to such issuance, the Corporation shall have acquired shares from its shareholders sufficient to fulfill the requirements of the Plan with respect to such issuance. SECTION 6. AWARD AGREEMENTS Each Award under this Plan shall be evidenced by an Award Agreement setting forth the number of shares of Stock, SARs, or units subject to the Award and such other terms and conditions applicable to the Award as determined by the Committee. (a) Award Agreements shall include the following terms: (i) Non-assignability: A provision that no Award shall be assignable or transferable except by will or by the laws of descent and distribution and that during the lifetime of a Participant, the Award shall be exercised only by such Participant or by his or her guardian or legal representative. (ii) Termination of Employment: A provision describing the treatment of an Award in the event of the retirement, disability, death or other termination of a Participant's employment with the Corporation or Subsidiary, including but not limited to terms relating to the vesting, time for exercise, forfeiture or cancellation of an Award in such circumstances. (iii) Rights as Shareholder: A provision that a Participant shall have no rights as a shareholder with respect to any securities covered by an Award until the date the Participant becomes the holder of record. Except as provided in Section 9 hereof, no adjustment shall be made for dividends or other rights, unless the Award Agreement specifically requires such adjustment, in which case, grants of dividend equivalents or similar rights shall not be considered to be a grant of any other shareholder right. (iv) Withholding: A provision requiring the withholding of applicable taxes required by law from all amounts paid in satisfaction of an Award. In the case of an Award paid in cash, the withholding obligation shall be satisfied by withholding the applicable amount and paying the net amount in cash to the Participant. In the case of Awards paid in shares of Stock or other securities of the Corporation, a Participant may satisfy the withholding obligation by paying the amount of any taxes in cash or, with the approval of the Committee, shares of Stock or other securities may be deducted from the payment to satisfy the obligation in full or in part. The number of shares to be deducted shall be determined by reference to the Fair Market Value of such shares on the date the Award is exercised. 7

8 (v) Execution: A provision stating that no Award is enforceable until the Award Agreement or a receipt has been signed by the Participant and the Chairman or the Chief Executive Officer of the Corporation (or his delegate). By executing the Award Agreement or receipt, a Participant shall be deemed to have accepted and consented to any action taken under the Plan by the Committee, the Board of Directors or their delegates. (vi) Holding Period: In the case of an Award to an Insider, (A) of an equity security, a provision stating (or the effect of which is to require) that such security must be held for at least six months (or such longer period as the Committee in its discretion specifies) from the date of acquisition; or (B) of a derivative security with a fixed exercise price within the meaning of Section 16, a provision stating (or the effect of which is to require) that at least six months (or such longer period as the Committee in its discretion specifies) must elapse from the date of acquisition of the derivative security to the date of disposition of the derivative security (other than upon exercise or conversion) or its underlying equity security; or (C) of a derivative security without a fixed exercise price within the meaning of Section 16, a provision stating (or the effect of which is to require) that at least six months (or such longer period as the Committee in its discretion specifies) must elapse from the date upon which such price is fixed to the date of disposition of the derivative security (other than by exercise or conversion) or its underlying equity security; provided, however, that this clause (vi) shall not apply to any Award granted on or after August 15, 1996. (vii) Exercise and Payment: The permitted methods of exercising and paying the exercise price with respect to the Award. (b) Award Agreements may include the following terms: (i) Replacement, Substitution and Reloading: Any provisions (A) permitting the surrender of outstanding Awards or securities held by the Participant in order to exercise or realize rights under other Awards, or in exchange for the grant of new Awards under similar or different terms (including the grant of reload options), or, (B) requiring holders of Awards to surrender outstanding Awards as a condition precedent to the grant of new Awards under the Plan. (ii) Other Terms: Such other terms as are necessary and appropriate to effect an Award to the Participant including but not limited to the term of the Award, vesting provisions, any requirements for continued employment with the Corporation or any Subsidiary, any other restrictions or conditions (including performance requirements) on the Award and the method by which restrictions or conditions lapse, the effect on the Award of a change in control, the price and the amount or value of Awards. 8

9 SECTION 7. AMENDMENT AND TERMINATION The Board of Directors may at any time amend, suspend or discontinue the Plan. The Committee may at any time alter or amend any or all Award Agreements under the Plan to the extent permitted by law. However, no such action may, without approval of the shareholders of the Corporation, be effective if shareholder approval would be required to keep the Plan and the Awards made thereunder in compliance with Rule 16b-3 and Section 162(m). SECTION 8. ADMINISTRATION (a) The Plan and all Awards granted pursuant thereto shall be administered by the Committee. The members of the Committee shall be designated by the Board of Directors. A majority of the members of the Committee shall constitute a quorum. The vote of a majority of a quorum shall constitute action by the Committee. (b) The Committee shall periodically determine the Participants in the Plan and the nature, amount, pricing, timing, and other terms of Awards to be made to such individuals. (c) The Committee shall have the power to interpret and administer the Plan. All questions of interpretation with respect to the Plan, the number of shares of Stock, SARs, or units granted, and the terms of any Award Agreements shall be determined by the Committee and its determination shall be final and conclusive upon all parties in interest. In the event of any conflict between an Award Agreement and this Plan, the terms of this Plan shall govern. (d) It is the intent of the Corporation that this Plan and Awards hereunder satisfy and be interpreted in a manner, that, in the case of Participants who are or may be Insiders, satisfies the applicable requirements of Rule 16b-3, so that such persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 and will not be subjected to avoidable liability thereunder. If any provision of this Plan or of any Award would otherwise frustrate or conflict with the intent expressed in this Section 8(d), that provision to the extent possible shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, the provision shall be deemed void as applicable to Insiders to the extent permitted by law and deemed advisable by the Committee. (e) It is the intent of the Corporation that this Plan and Awards hereunder satisfy and be interpreted in a manner, that, in the case of Participants who are or may be Covered Employees, satisfies the applicable requirements of Section 162(m), so that the Corporation will be entitled, to the extent possible, to deduct compensation paid under the Plan and otherwise to such Covered Employees and will not be subjected to avoidable loss of deductions thereunder. If any provision of this Plan or of any Award would otherwise frustrate or conflict with the intent expressed in this Section 9

10 8(e), that provision to the extent possible shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, the provision shall be deemed void as applicable to Covered Employees to the extent permitted by law and deemed advisable by the Committee. (f) The Committee may delegate to the officers or employees of the Corporation the authority to execute and deliver such instruments and documents, to do all such acts and things, and to take all such other steps deemed necessary, advisable or convenient for the effective administration of the Plan in accordance with its terms and purpose, except that the Committee may not delegate any discretionary authority with respect to substantive decisions or functions regarding the Plan or Awards thereunder as these relate to Insiders or Covered Employees, including but not limited to decisions regarding the timing, eligibility, pricing, amount or other material term of such Awards. SECTION 9. ADJUSTMENT PROVISIONS (a) In the event of any change in the outstanding shares of Stock by reason of a stock dividend or split, recapitalization, merger or consolidation, reorganization, combination or exchange of shares or other similar corporate change, the number of shares of Stock (or other securities) then remaining subject to this Plan, and the maximum number of shares that may be issued to anyone pursuant to this Plan, including those that are then covered by outstanding Awards, shall (i) in the event of an increase in the number of outstanding shares, be proportionately increased and the price for each share then covered by an outstanding Award shall be proportionately reduced, and (ii) in the event of a reduction in the number of outstanding shares, be proportionately reduced and the price for each share then covered by an outstanding Award, shall be proportionately increased. (b) The Committee shall make any further adjustments as it deems necessary to ensure equitable treatment of any holder of an Award as the result of any transaction affecting the securities subject to the Plan not described in (a), or as is required or authorized under the terms of any applicable Award Agreement. SECTION 10. CHANGE IN CONTROL (a) Subject to Sections 5, 7 and 9, in the event of a change in control of the Corporation, in addition to any action required or authorized by the terms of any Award Agreement, all time periods for purposes of vesting in, or realizing gain from, any and all outstanding Awards made pursuant to this Plan will automatically accelerate. (b) For the purposes of this Section, a "Change in Control" shall mean on or after the effective date of the Plan, 10

11 (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (an "Acquiring Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of either (A) the fully diluted shares of Stock, as reflected on the Corporation's financial statements (the "Outstanding Corporation Common Stock"), or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition by the Corporation or any "affiliate" of the Corporation, within the meaning of 17 C.F.R.ss. 230.405 (an "Affiliate"), (2) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Affiliate of the Corporation, or (3) any acquisition by any entity pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this definition; or (ii) Individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Corporation or all or substantially all of the Corporation's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Affiliate of the Corporation, or such corporation resulting from such Business Combination or any Affiliate of such corporation) beneficially owns, directly or indirectly, 40% or more of, respectively, the fully diluted shares of common stock of the corporation resulting from such Business Combination, as reflected on such corporation's financial statements, or the combined voting power of the then outstanding 11

12 voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (iv) Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation. SECTION 11. UNFUNDED PLAN The Plan shall be unfunded. Neither the Corporation nor the Board of Directors shall be required to segregate any assets that may at any time be represented by Awards made pursuant to the Plan. Neither the Corporation, the Committee, nor the Board of Directors shall be deemed to be a trustee of any amounts to be paid under the Plan. SECTION 12. LIMITS OF LIABILITY (a) Any liability of the Corporation to any Participant with respect to an Award shall be based solely upon contractual obligations created by the Plan and the Award Agreement. (b) Neither the Corporation nor any member of the Board of Directors or of the Committee, nor any other person participating in any determination of any question under the Plan, or in the interpretation, administration or application of the Plan, shall have any liability to any party for any action taken or not taken, in good faith under the Plan. SECTION 13. RIGHTS OF EMPLOYEES (a) Status as an eligible Employee shall not be construed as a commitment that any Award will be made under this Plan to such eligible Employee or to eligible Employees generally. (b) Nothing contained in this Plan (or in any other documents related to this Plan or to any Award) shall confer upon any Employee or Participant any right to continue in the employ or other service of the Corporation or constitute any contract or limit in any way the right of the Corporation to change such person's compensation or other benefits or to terminate the employment of such person with or without cause. 12

13 SECTION 14. DURATION The Plan shall remain in effect until all Awards under the Plan have been exercised or terminated under the terms of the Plan and applicable Award Agreement, provided that Awards under the Plan may only be granted until December 31, 2003. SECTION 15. GOVERNING LAW The Plan shall be governed by the laws of the State of North Carolina. 13

1 EXHIBIT 12.01 MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES FOR THE YEAR ENDED DECEMBER 31, 2000 (AMOUNTS IN THOUSANDS) EARNINGS: Earnings before income taxes $ 168,821 Earnings of less than 50%-owned associated companies, net (419) Interest expense 41,895 Portion of rents representative of an interest factor 2,968 --------- ADJUSTED EARNINGS AND FIXED CHARGES $ 213,265 ========= FIXED CHARGES: Interest expense $ 41,895 Capitalized interest 2,107 Portion of rents representative of an interest factor 2,968 --------- TOTAL FIXED CHARGES $ 46,970 ========= RATIO OF EARNINGS TO FIXED CHARGES 4.54 ========= 31

   1
                                                                 EXHIBIT 13.1(i)


               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


BOARD OF DIRECTORS AND SHAREHOLDERS - MARTIN MARIETTA MATERIALS, INC.

We have audited the accompanying consolidated balance sheet of Martin Marietta
Materials, Inc., and subsidiaries at December 31, 2000 and 1999, and the related
consolidated statements of earnings, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material mis-statement. 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 consolidated financial position of Martin Marietta
Materials, Inc., and subsidiaries at December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.

/S/ ERNST & YOUNG LLP

Raleigh, North Carolina
January 22, 2001,
except for Note M, as to which the date is February 23, 2001



                     STATEMENT OF FINANCIAL RESPONSIBILITY


SHAREHOLDERS - MARTIN MARIETTA MATERIALS, INC.

The management of Martin Marietta Materials, Inc., is responsible for the
consolidated financial statements and all related financial information
contained in this report. The financial statements, which include amounts based
on estimates and judgments, have been prepared in accordance with accounting
principles generally accepted in the United States applied on a consistent
basis.

The Corporation maintains a system of internal accounting controls designed and
intended to provide reasonable assurance that assets are safeguarded, that
transactions are executed and recorded in accordance with management's
authorization, and that accountability for assets is maintained. An environment
that establishes an appropriate level of control-consciousness is maintained and
monitored and includes examinations by an internal audit staff and by the
independent auditors in connection with their annual audit.

The Corporation's management recognizes its responsibility to foster a strong
ethical climate. Management has issued written policy statements which document
the Corporation's business code of ethics. The importance of ethical behavior is
regularly communicated to all employees through the distribution of the Code of
Ethics and Standards of Conduct booklet and through ongoing education and review
programs designed to create a strong commitment to ethical business practices.

The Audit Committee of the Board of Directors, which consists of four outside
directors, meets periodically and when appropriate, separately with the
independent auditors, management and the internal auditors to review the
activities of each. The Audit Committee complies with standards established by
the Securities and Exchange Commission as they relate to the composition and
practices of audit committees.

The consolidated financial statements have been audited by Ernst & Young LLP,
independent auditors, whose report appears on this page.

/S/ JANICE K. HENRY

Janice K. Henry
Senior Vice President and Chief Financial Officer


Page 8             Martin Marietta Materials, Inc. and Consolidated Subsidiaries

   2


                       CONSOLIDATED STATEMENT OF EARNINGS

                           for years ended December 31



(add 000, except per share)                              2000            1999            1998
- ---------------------------------------------------------------------------------------------
                                                                          
 NET SALES                                         $1,333,000      $1,258,827      $1,057,691
 Freight and delivery revenues                        184,517         175,292         143,805
                                                    -----------------------------------------
 Total revenues                                     1,517,517       1,434,119       1,201,496
- ---------------------------------------------------------------------------------------------
 Cost of sales                                      1,029,429         948,128         776,043
 Freight and delivery costs                           184,517         175,292         143,805
                                                    -----------------------------------------
 Total cost of revenues                             1,213,946       1,123,420         919,848
- ---------------------------------------------------------------------------------------------
 GROSS PROFIT                                         303,571         310,699         281,648
 Selling, general and administrative expenses          98,768          92,621          82,041
 Research and development                               2,326           2,789           3,053
- ---------------------------------------------------------------------------------------------
 EARNINGS FROM OPERATIONS                             202,477         215,289         196,554
 Interest expense on debt                              41,895          39,411          23,759
 Other income and (expenses), net                       8,239          18,435           1,347
- ---------------------------------------------------------------------------------------------
 Earnings before taxes on income                      168,821         194,313         174,142
 Taxes on income                                       56,794          68,532          58,529
- ---------------------------------------------------------------------------------------------

 NET EARNINGS                                      $  112,027      $  125,781      $  115,613
=============================================================================================
 NET EARNINGS PER COMMON SHARE
     - Basic                                       $     2.40      $     2.70      $     2.49
     - Diluted                                     $     2.39      $     2.68      $     2.48
=============================================================================================
 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
     - Basic                                           46,753          46,668          46,454
     - Diluted                                         46,948          46,947          46,708
=============================================================================================
 CASH DIVIDENDS PER COMMON SHARE                   $     0.54      $     0.52      $     0.50
=============================================================================================



The notes on pages 13 to 23 are an integral part of these financial statements.


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 9

   3


                           CONSOLIDATED BALANCE SHEET

                                 at December 31




ASSETS (add 000)                                                        2000            1999
- --------------------------------------------------------------------------------------------
CURRENT ASSETS:
                                                                            
Cash and cash equivalents                                         $       --      $    3,403
Receivables, net                                                     180,915         197,554
Inventories                                                          207,534         172,865
Current deferred income tax benefits                                  16,750          21,899
Other current assets                                                  19,802           7,644
- --------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                 425,001         403,365
- --------------------------------------------------------------------------------------------
Property, plant and equipment, net                                   914,072         846,993
Goodwill, net                                                        374,994         375,327
Other intangibles, net                                                34,462          31,497
Other noncurrent assets                                               92,910          85,392
- --------------------------------------------------------------------------------------------
TOTAL ASSETS                                                      $1,841,439      $1,742,574
============================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY (add 000)
- --------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Book overdraft                                                    $    4,778      $       --
Accounts payable                                                      59,029          55,872
Accrued salaries, benefits and payroll taxes                          27,021          24,887
Accrued insurance and other taxes                                     23,967          26,705
Income taxes                                                           2,498           4,293
Current maturities of long-term debt and commercial paper             45,155          39,722
Other current liabilities                                             26,665          31,217
- --------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                            189,113         182,696
- --------------------------------------------------------------------------------------------
Long-term debt and commercial paper                                  601,580         602,011
Pension, postretirement and postemployment benefits                   84,950          85,839
Noncurrent deferred income taxes                                      86,563          81,857
Other noncurrent liabilities                                          15,947          16,165
- --------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                    978,153         968,568
- --------------------------------------------------------------------------------------------
Shareholders' Equity:
Common stock, $0.01 par value; 100,000,000 shares authorized             468             467
Additional paid-in capital                                           356,546         354,046
Retained earnings                                                    506,272         419,493
- --------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                                           863,286         774,006
- --------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                        $1,841,439      $1,742,574
============================================================================================


The notes on pages 13 to 23 are an integral part of these financial statements.

Page 10           Martin Marietta Materials, Inc. and Consolidated Subsidiaries

   4

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                           for years ended December 31



 (add 000)                                                                    2000            1999            1998
- ------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
                                                                                                
Net earnings                                                             $ 112,027       $ 125,781       $ 115,613

Adjustments to reconcile net earnings to cash provided by operating
activities:
  Depreciation, depletion and amortization                                 136,373         124,754          98,765
  Other items, net                                                          (2,331)         (6,257)         (4,573)
  Changes in operating assets and liabilities:
    Deferred income taxes                                                    9,457          (1,345)         (3,457)
    Net changes in receivables, inventories and payables                   (13,093)        (31,513)         (9,661)
    Other assets and liabilities, net                                      (29,553)         12,256          25,886
- ------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                  212,880         223,676         222,573

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment                                (170,805)       (137,820)       (123,926)
Acquisitions, net                                                          (39,327)        (77,080)       (347,882)
Other investing activities, net                                              8,326             339         (34,014)
- ------------------------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES                                    (201,806)       (214,561)       (505,822)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt                                                (9,369)           (618)         (1,704)
Increase in long-term debt                                                     805             280         198,994
Commercial paper and line of credit, net                                    12,518          15,000         105,000
Debt issue costs                                                                --              --          (1,745)
Dividends paid                                                             (25,248)        (24,276)        (23,233)
Issuances of common stock                                                    2,039           2,022           1,862
Repurchases of common stock                                                     --         (12,706)             --
==================================================================================================================
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES                       (19,255)        (20,298)        279,174
==================================================================================================================
NET DECREASE IN CASH AND CASH EQUIVALENTS                                   (8,181)        (11,183)         (4,075)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                 3,403          14,586          18,661
==================================================================================================================

(BOOK OVERDRAFT) CASH AND CASH EQUIVALENTS, END OF YEAR                  $  (4,778)      $   3,403       $  14,586
==================================================================================================================



The notes on pages 13 to 23 are an integral part of these financial statements.


Martin Marietta Materials, Inc. and Consolidated Subsidiaries           Page 11
   5
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY



                                                                                          TOTAL
                                           COMMON         ADDITIONAL       RETAINED    SHAREHOLDERS'
(add 000)                                  STOCK       PAID-IN CAPITAL     EARNINGS       EQUITY
- ----------------------------------------------------------------------------------------------------
                                                                           
BALANCE AT DECEMBER 31, 1997             $     462       $ 335,766       $ 225,608         $ 561,836
 Net earnings                                   --              --         115,613           115,613
 Dividends declared ($0.50 a share)             --              --         (23,233)          (23,233)
 Net stock transactions                          4          13,479              --            13,483
- ----------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998                   466         349,245         317,988           667,699
 Net earnings                                   --              --         125,781           125,781
 Dividends declared ($0.52 a share)             --              --         (24,276)          (24,276)
 Net stock transactions                          4          17,504              --            17,508
 Repurchases of common stock                    (3)        (12,703)             --           (12,706)
- ----------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999                   467         354,046         419,493           774,006
 Net earnings                                   --              --         112,027           112,027
 Dividends declared ($0.54 a share)             --              --         (25,248)          (25,248)
 Net stock transactions                          1           2,500              --             2,501
- ----------------------------------------------------------------------------------------------------

BALANCE AT DECEMBER 31, 2000             $     468       $ 356,546       $ 506,272         $ 863,286
====================================================================================================


The notes on pages 13 to 23 are an integral part of these financial statements.


Page 12            Martin Marietta Materials, Inc. and Consolidated Subsidiaries

   6

                         NOTES TO FINANCIAL STATEMENTS

NOTE A: ACCOUNTING POLICIES

ORGANIZATION.  Martin Marietta Materials, Inc. ("Martin Marietta Materials" or
the "Corporation") is engaged principally in the construction aggregates
business. Aggregates products are used primarily for construction of highways
and other infrastructure projects in the United States, and in the domestic
commercial and residential construction industries. The Corporation's aggregates
products are sold and shipped from a network of approximately 300 quarries and
distribution facilities to customers in 27 states, Canada and the Bahamas. North
Carolina, Texas, Ohio, Georgia and Iowa account for approximately 60% of total
net sales. In addition, the Corporation produces magnesia-based chemicals,
refractories and dolomitic lime products used in a wide variety of industrial,
environmental and agricultural applications with a majority of its products used
by customers in the worldwide steel industry.

BASIS OF CONSOLIDATION AND USE OF ESTIMATES.  The consolidated financial
statements include the accounts of the Corporation and its wholly owned and
majority-owned subsidiaries. Partially owned affiliates are accounted for at
cost or as equity investments depending on the level of ownership interest or
the Corporation's ability to exercise control over the affiliate's operations.
In particular, the Corporation's 14% investment in Meridian Aggregates Company
("Meridian") is recorded at cost (See Note M).

All significant intercompany balances and transactions have been eliminated in
consolidation. The preparation of the Corporation's financial statements in
conformity with generally accepted accounting principles requires management
to make certain estimates and assumptions. Such judgments affect the reported
amounts in the consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.

Certain amounts for the prior years have been reclassified to conform to the
2000 presentation. Such reclassification had no impact on previously reported
net earnings or financial position.

REVENUE RECOGNITION.  Substantially all revenues are recognized when finished
products are shipped to unaffiliated customers or services have been rendered.
Total revenues generally include sales of materials to customers, net of dis-
counts, if any, and include freight and delivery charges billed to customers
(see Note A: Accounting Policies -- Accounting Changes).

CASH AND CASH EQUIVALENTS.  Cash and cash equivalents are net of outstanding
checks that are funded daily as presented for payment. Cash equivalents are
comprised generally of highly liquid instruments with original maturities of
three months or less from the date of purchase.

At December 31, 2000, the book cash balance amounted to a net overdraft of
$4,778,000 which is attributable to the float of the Corporation's outstanding
checks.

INVENTORIES VALUATION.  Inventories are stated at the lower of cost or market.
Costs are determined principally by the first-in, first-out ("FIFO") method.

PROPERTIES AND DEPRECIATION.  Property, plant and equipment are stated at cost.
Depreciation is computed over estimated service lives, principally by the
straight-line method. The estimated service life for buildings ranges from 8 to
30 years; from 1 to 20 years for machinery and equipment; and from 5 to 15 years
for land improvements. Depletion of mineral deposits is calculated over
estimated recoverable quantities, principally by the units-of-production method.
Depreciation and depletion expense was $113,221,000, $103,928,000, and
$86,602,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

REPAIR AND MAINTENANCE COSTS.  Repair and maintenance costs that do not
substantially extend the life of the Corporation's machinery and equipment are
expensed as incurred.

INTANGIBLE ASSETS.  Goodwill represents the excess purchase price paid for
acquired businesses over the estimated fair value of identifiable assets and
liabilities. Goodwill is amortized ratably over appropriate periods ranging
from 10 to 30 years. At December 31, 2000 and 1999, the amounts for accumulated
amortization of goodwill were approximately $52,071,000 and $36,104,000,
respectively. Other intangibles represent amounts assigned principally to
noncompete agreements and are amortized ratably over periods based on related
contractual terms, generally 2 to 20 years. At December 31, 2000 and 1999, the
amounts for accumulated amortization of other intangibles were approximately
$23,075,000 and $22,250,000, respectively. Amortization expense for goodwill and
other intangibles was $22,612,000,


MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES            PAGE 13


   7
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

$20,290,000 and $12,163,000 for the years ended December 31, 2000, 1999 and
1998, respectively.

The carrying value of goodwill and other intangibles is reviewed, if the facts
and circumstances indicate potential impairment. If this review indicates that
the carrying value of goodwill and other intangibles is not recoverable, as
determined based on estimated cash flows of the business acquired over the
remaining amortization period, goodwill and other intangibles are reduced by the
estimated shortfall of discounted cash flows.

STOCK-BASED COMPENSATION. In 1996, the Corporation adopted the Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
("FAS 123"). In accordance with FAS 123, the Corporation has elected to follow
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for certain of its
employee stock-based compensation plans.

ENVIRONMENTAL MATTERS. The Corporation records an accrual for environmental
remediation liabilities in the period in which it is probable that a liability
has been incurred and the appropriate amount can be estimated reasonably. Such
accruals are adjusted as further information develops or circumstances change.
Costs of future expenditures for environmental remediation obligations are
generally not discounted to their present value.

Certain reclamation and other environmental-related costs are treated as normal
ongoing operating expenses and expensed generally in the period in which they
are incurred.

INCOME TAXES. Deferred income tax assets and liabilities on the consolidated
balance sheet reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.

RELATED PARTY TRANSACTIONS. The Corporation entered into certain agreements with
Meridian which require the Corporation to provide certain advisory and
consulting services at agreed-upon rates. In 1999, the Corporation provided
funds to finance certain Meridian expansion projects at market rates of
interest. The Corporation recorded an investment in Meridian, including
receivables and a convertible note, of $56,058,000 and $53,511,000 at December
31, 2000 and 1999, respectively, and Meridian-related income of $3,717,000
during 2000 and $3,395,000 during 1999. Further, Meridian provided 475,000 tons
of aggregates products to certain operations of the Corporation in 2000 at
market rates (see Note M).

RESEARCH AND DEVELOPMENT AND SIMILAR COSTS. Research and development and similar
costs are charged to operations as incurred. Preoperating costs and
noncapital-related start-up costs for new facilities and products are generally
charged to operations as incurred.

SEGMENT INFORMATION. Information concerning business segment data is included in
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 33 through 35.

EARNINGS PER COMMON SHARE. Basic earnings per common share are based on the
weighted-average number of common shares outstanding during the year. Diluted
earnings per common share are computed assuming that the weighted-average
number of common shares is increased by the conversion of fixed awards
(employee stock options and incentive stock awards) and nonvested stock awards
to be issued to employees and nonemployee members of the Corporation's Board of
Directors under certain stock-based compensation arrangements. The diluted
per-share computations reflect a change in the number of common shares
outstanding (the "denominator") to include the number of additional shares that
would have been outstanding if the potentially dilutive common shares had been
issued. In each year presented, the income available to common shareholders (the
"numerator") is the same for both basic and diluted per-share computations. The
following table sets forth a reconciliation of the denominators for the basic
and diluted earnings per share computations for each of the years ended
December 31:




(ADD 000)                               2000          1999          1998
- ------------------------------------------------------------------------------
                                                         
BASIC EARNINGS PER
 COMMON SHARE:
  Weighted-average
  number of shares                    46,753        46,668        46,454
- ------------------------------------------------------------------------------
EFFECT OF DILUTIVE SECURITIES:
  Employee fixed awards                  156           238           235
  Employee and Director
  nonvested stock                         39            41            19
- ------------------------------------------------------------------------------
DILUTED EARNINGS PER
 COMMON SHARE:
  Weighted-average
  number of shares and
  assumed conversions                 46,948        46,947        46,708
- ------------------------------------------------------------------------------



PAGE 14            MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
   8
 ACCOUNTING CHANGES. Effective July 1, 2000, the Corporation adopted Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("FAS 133"), as amended by Statement of Financial
Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133, and
Statement of Financial Accounting Standards No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities an Amendment of FASB
Statement No. 133 ("FAS 138"). The adoption of FAS 133 and FAS 138 did not have
an impact on net earnings or the financial position of the Corporation, because
the Corporation does not currently have any hedging activities, derivative
instruments or material contracts that are subject to these accounting
standards.

Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
("SAB 101"), was adopted for the quarter ended December 31, 2000. The
Corporation recognizes substantially all revenues, when finished products are
shipped to customers or services have been rendered. Therefore, the adoption of
SAB 101 did not have an effect on the Corporation's reported total revenues, net
earnings or financial position.

The Corporation adopted Emerging Issues Task Force Issue No. 00-10, Accounting
for Shipping and Handling Fees and Costs ("EITF 00-10"), beginning with the
fourth quarter 2000 reporting. EITF 00-10 requires that amounts billed to
customers related to shipping and handling be classified as revenue and that the
related costs be included in expenses. Generally, the Corporation's customers
accept the aggregates products that they purchase at the quarry location using
their own transportation. However, in certain circumstances, the Corporation
will arrange for transportation of the purchased aggregates products to the
customer for a delivered price. The customer is billed at the delivered price,
which includes the price of the aggregates products and the cost of freight and
delivery charges.

The Corporation previously offset the revenues related to freight and delivery
charges against the freight and delivery costs billed from the transportation
provider. Freight and delivery costs for the years ended December 31, 2000, 1999
and 1998, were $184.5 million, $175.3 million and $143.8 million, respectively.
The Corporation included freight and delivery charges in total revenues and the
related cost of freight and delivery in total cost of revenues beginning with
the reporting of the operating results for the quarter and year ended December
31, 2000. Gross profit did not change from amounts that would have been reported
prior to the adoption of EITF 00-10. Prior annual and quarterly periods were
reclassified upon adoption (see Note A: Accounting Policies -- Revenue
Recognition).

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities ("FAS 140"). FAS 140 is
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001, and should be applied
prospectively. Certain disclosures for securitized financial assets are required
for December 31, 2000, annual reporting. The adoption of FAS 140 is not expected
to have any impact on net earnings or the financial position of the Corporation.
No additional disclosures were required at December 31, 2000.



NOTE B: RECEIVABLES
DECEMBER 31
(ADD 000)                             2000              1999
- --------------------------------------------------------------------------------
                                             
Customer receivables             $ 181,326         $ 193,380
Other current receivables            4,728             8,881
- --------------------------------------------------------------------------------
                                   186,054           202,261
Less allowances                     (5,139)           (4,707)
- --------------------------------------------------------------------------------
Total                            $ 180,915         $ 197,554
================================================================================





NOTE C: INVENTORIES
DECEMBER 31
(ADD 000)                             2000              1999
- --------------------------------------------------------------------------------
                                             
Finished products                $ 177,066         $ 143,776
Products in process and
  raw materials                      9,548             9,972
Supplies and expendable parts       26,692            25,862
- --------------------------------------------------------------------------------
                                   213,306           179,610
Less allowances                     (5,772)           (6,745)
- --------------------------------------------------------------------------------
Total                            $ 207,534         $ 172,865
================================================================================





NOTE D: PROPERTY, PLANT AND EQUIPMENT, NET
DECEMBER 31
(ADD 000)                             2000              1999
- --------------------------------------------------------------------------------
                                             
Land and improvements            $  193,205        $  182,670
Mineral deposits                    161,560           156,870
Buildings                            72,687            69,273
Machinery and equipment           1,279,605         1,170,592
Construction in progress            106,544            73,803
- --------------------------------------------------------------------------------
                                  1,813,601         1,653,208
Less allowances for
  depreciation and
  depletion                        (899,529)         (806,215)
- --------------------------------------------------------------------------------
Total                            $  914,072        $  846,993
================================================================================



MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES            PAGE 15


   9
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)




NOTE E: LONG-TERM DEBT
DECEMBER 31
(ADD 000)                             2000              1999
- --------------------------------------------------------------------------------
                                             
5.875% Notes, due 2008           $ 199,141         $ 199,059
6.9% Notes, due 2007               124,961           124,956
7% Debentures, due 2025            124,226           124,215
Commercial Paper and Line
  of Credit, interest rates
  ranging from 5.50% to 7.61%      192,518           180,000
Acquisition notes, interest rates
  ranging from 5.50% to 10.0%        4,930            12,395
Other notes                            959             1,108
- --------------------------------------------------------------------------------
Total                              646,735           641,733
Less current maturities            (45,155)          (39,722)
- --------------------------------------------------------------------------------
Long-term debt                   $ 601,580         $ 602,011
================================================================================



The 5.875% Notes were offered and sold by the Corporation, through a private
placement, in December 1998, at 99.5% of their principal amount of $200,000,000.
The Corporation exchanged the Notes for publicly registered notes with
substantially identical terms. The effective interest rate on these securities
is 6.03%. The Notes are not redeemable prior to their maturity on December 1,
2008.

During August 1997, the Corporation offered and sold the 6.9% Notes at 99.7% of
their principal amount of $125,000,000. The entire amount of these long-term
fixed rate debt securities was registered under the Corporation's shelf
registration statement on file with the Securities and Exchange Commission. The
effective interest rate on these securities is 6.91%. The Notes are not
redeemable prior to their maturity on August 15, 2007.

The 7% Debentures were sold at 99.3% of their principal amount of $125,000,000
in December 1995. The entire amount of these long-term fixed rate debt
securities was registered under the Corporation's shelf registration statement
on file with the Securities and Exchange Commission. The effective interest rate
on these securities is 7.05%. The Debentures are not redeemable prior to their
maturity on December 1, 2025.

These Notes and Debentures are carried net of original issue discount, which is
being amortized by the effective interest method over the life of the issue.

The Corporation entered into revolving credit agreements, syndicated with a
group of domestic and foreign commercial banks, which provide for borrowings
of up to $150,000,000 for general corporate purposes through January 2002 and
$300,000,000 for general corporate purposes through August 2001 (collectively
the "Agreements"). Borrowings under these credit agreements are unsecured and
bear interest, at the Corporation's option, at rates based upon: (i) the
Eurodollar rate (as defined on the basis of a LIBOR) plus basis points related
to a pricing grid; (ii) a bank base rate (as defined on the basis of a published
prime rate or the Federal Funds Rate plus 1/2 of 1%); or (iii) a competitively
determined rate (as defined on the basis of a bidding process). These Agreements
contain restrictive covenants relating to leverage, requirements for
limitations on encumbrances and provisions that relate to certain changes in
control.

No borrowings were outstanding under the revolving credit agreements at December
31, 2000. However, the Agreements support a commercial paper program of
$450,000,000 of which borrowings of $190,000,000 and $180,000,000 were
outstanding at December 31, 2000 and 1999, respectively. Of these amounts,
$150,000,000 at December 31, 2000 and 1999, was classified as long-term debt on
the Corporation's consolidated balance sheet based on management's ability and
intention to maintain this debt outstanding for at least one year. The remaining
$40,000,000 at December 31, 2000, and $30,000,000 at December 31, 1999, were
classified as current liabilities.

At December 31, 2000, the Corporation had $2,518,000 outstanding under a
$10,000,000 line of credit. The effective interest rate was 7.32% on
outstanding line of credit balances at December 31, 2000.

Total interest paid was $42,661,000, $37,108,000 and $23,677,000 for the years
ended December 31, 2000, 1999 and 1998, respectively.

Excluding commercial paper and line of credit, the Corporation's long-term debt
maturities for the five years following December 31, 2000 are:



(ADD 000)
- --------------------------------------------------------------------------------
                                      
2001                                     $   2,492
2002                                           840
2003                                           219
2004                                           152
2005                                           150
Thereafter                                 450,364
- --------------------------------------------------------------------------------
Total                                    $ 454,217
================================================================================



PAGE 16            MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
   10

Amounts reflected in acquisitions, net, in the consolidated statement of cash
flows include assumed or incurred indebtedness of $950,000, $9,208,000 and
$3,373,000 for the years ended December 31, 2000, 1999 and 1998, respectively.
In addition, the amounts reflected in acquisitions, net, for 1999 and 1998
exclude the effect of the issuance of approximately 311,100 and 280,100 shares,
respectively, of the Corporation's common stock.

NOTE F: FINANCIAL INSTRUMENTS

In addition to its publicly registered long-term notes and debentures, the
Corporation's financial instruments also include temporary cash investments,
customer accounts and notes receivable, commercial paper, line of credit and
other borrowings.

Temporary investments are placed with creditworthy financial institutions,
primarily in Euro-time deposits. The Corporation's cash equivalents generally
have maturities of less than three months. Due to the short maturity of these
investments, they are carried on the consolidated balance sheet at cost, which
approximates market value.

Customer receivables are due from a large number of customers who are
dispersed across wide geographic and economic regions. However, customer
receivables are more heavily concentrated in the Corporation's five largest
states (see Note A: Accounting Policies -- Organization). At December 31, 2000
and 1999, the Corporation had no significant concentrations of credit risk. The
estimated fair values of customer receivables approximate their carrying
amounts.

The estimated fair values of the Corporation's publicly registered long-term
notes and debentures at December 31, 2000, was approximately $414,098,000
compared with a carrying amount of $448,328,000 on the consolidated balance
sheet. The fair values of this long-term debt were estimated based on quoted
market prices for those instruments publicly traded. The estimated fair value of
commercial paper, line of credit and other borrowings approximate their
carrying amounts.

NOTE G: INCOME TAXES

The components of the Corporation's tax expense (benefit)
on income are as follows:



YEARS ENDED DECEMBER 31
(ADD 000)                     2000            1999             1998
- --------------------------------------------------------------------------------
                                                  
Federal income taxes:
  Current                  $44,302        $ 61,349         $ 52,663
  Deferred                   2,656          (4,081)          (4,486)
- --------------------------------------------------------------------------------
  Total federal
   income taxes             46,958          57,268           48,177
- --------------------------------------------------------------------------------
State income taxes:
  Current                    9,409          12,128           11,360
  Deferred                     427            (864)          (1,008)
- --------------------------------------------------------------------------------
  Total state
   income taxes              9,836          11,264           10,352
- --------------------------------------------------------------------------------
Total provision            $56,794        $ 68,532         $ 58,529
================================================================================


The Corporation's effective income tax rate varied from the statutory United
States income tax rate because of the following permanent tax differences:



YEARS ENDED DECEMBER 31       2000            1999             1998
- --------------------------------------------------------------------------------
                                                      
Statutory tax rate            35.0%           35.0%            35.0%
Increase (reduction)
  resulting from:
  Effect of statutory
   depletion                  (7.7)           (6.4)            (6.6)
  State income taxes           3.8             3.8              3.9
  Goodwill amortization        2.7             2.1              1.0
  Other items                 (0.2)            0.8              0.3
- --------------------------------------------------------------------------------
Effective tax rate            33.6%           35.3%            33.6%
================================================================================


The principal components of the Corporation's deferred tax assets and
liabilities at December 31 are as follows:



                                                 DEFERRED
                                           ASSETS (LIABILITIES)
                                           --------------------
(ADD 000)                                  2000             1999
- --------------------------------------------------------------------------------
                                                  
Property, plant and
  equipment                           $(116,748)        $(89,898)
Goodwill and other intangibles            4,759            4,289
Employee benefits                        31,233           21,395
Financial reserves                       10,192            7,549
Other items, net                            751           (3,293)
- --------------------------------------------------------------------------------
Total                                 $ (69,813)        $(59,958)
================================================================================



Deferred income taxes on the consolidated balance sheet reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. The Corporation does not believe a valuation allowance is required at
December 31, 2000 or 1999.

Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 17

   11
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


The Corporation's total income tax payments were $59,915,000, $71,644,000 and
$59,466,000, respectively, during the years ended December 31, 2000, 1999 and
1998.

NOTE H: RETIREMENT PLANS, POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS

DEFINED BENEFIT PLANS.  The Corporation sponsors a number of noncontributory
defined benefit retirement plans, covering substantially all employees. The
assets of the Corporation's retirement plans are held in the Corporation's
Master Retirement Trust and are invested principally in commingled funds. The
underlying investments are invested in listed stocks and bonds and cash
equivalents. Defined benefit plans for salaried employees provide benefits based
on each employee's years of service and average compensation for a specified
period of time before retirement. Defined retirement plans for hourly employees
generally provide benefits of stated amounts for specified periods of service.

The Corporation sponsors a Supplemental Excess Retirement Plan ("SERP") that
generally provides for the payment of retirement benefits in excess of allowable
Internal Revenue Code limits. The SERP also provides for a lump sum payment of
vested benefits provided by the SERP unless the participant chooses to receive
the benefits in the same manner that benefits are paid under the Corporation's
defined benefit retirement plans.

The Corporation's defined benefit retirement plans comply with two principal
standards: the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which, in conjunction with the Internal Revenue Code, determines
legal minimum and maximum deductible funding requirements, and Statement of
Financial Accounting Standards No. 87, Employers Accounting for Pensions ("FAS
87"), and Statement of Financial Accounting Standards No. 132, Employers
Disclosures About Pensions and Other Postretirement Benefits, which establish
rules for financial accounting and reporting. When any funded plan exceeds the
full-funding limits of ERISA, no contribution is made to that plan. FAS 87
specifies that certain key actuarial assumptions be adjusted annually to reflect
current, rather than long-term, trends in the economy.

The net periodic retirement benefit cost of defined benefit plans included the
following components:



YEARS ENDED DECEMBER 31
(ADD 000)                              2000           1999           1998
- --------------------------------------------------------------------------
                                                         
Components of net periodic
   benefit cost:
Service cost                        $  6,764       $  7,578       $  5,965
Interest cost                         10,973         10,071          9,231
Expected return on assets            (14,886)       (12,946)       (11,454)
Amortization of:
   Prior service cost                    571            531            512
   Actuarial gain                     (3,005)          (485)          (464)
   Transition asset                     (357)          (357)          (331)
- --------------------------------------------------------------------------
Net periodic benefit cost           $     60       $  4,392       $  3,459
==========================================================================


Weighted-average assumptions used as of December 31 are as follows:



                                        2000           1999           1998
- ---------------------------------------------------------------------------
                                                             
Discount rate                           7.50%          8.00%          6.75%
Rate of increase in future
  compensation levels                   5.00%          5.00%          5.00%
Expected long-term rate
  of return on assets                   9.00%          9.00%          9.00%
- ---------------------------------------------------------------------------


The following tables set forth the defined benefit plans' change in benefit
obligation, change in plan assets, funded status and amounts recognized in the
Corporations' consolidated balance sheets as of:



YEARS ENDED DECEMBER 31
(ADD 000)                                   2000           1999
- ------------------------------------------------------------------
                                                   
Change in benefit obligation:
Net benefit obligation at
  beginning of year                      $ 130,669       $ 144,109
Service cost                                 6,764           7,578
Interest cost                               10,973          10,071
Actuarial loss/(gain)                       11,697         (26,718)
Plan amendments                                611              --
Acquisitions/divestitures                       --           1,216
Gross benefits paid                         (6,699)         (5,587)
- ------------------------------------------------------------------
Net benefit obligation at
  end of year                            $ 154,015       $ 130,669
==================================================================


YEARS ENDED DECEMBER 31
(ADD 000)                                   2000           1999
- ------------------------------------------------------------------
                                                   
Change in plan assets:
Fair value of plan assets
  at beginning of year                   $ 168,943       $ 147,187
Actual return on plan assets, net           (2,372)         27,291
Employer contributions                         730              52
Gross benefits paid                         (6,699)         (5,587)
- ------------------------------------------------------------------
Fair value of plan assets
  at end of year                         $ 160,602       $ 168,943
==================================================================



Page 18            Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   12



DECEMBER 31
(ADD 000)                                   2000            1999
- ------------------------------------------------------------------
                                                   
Funded status of the plan
  at end of year                         $   6,587       $  38,274
Unrecognized net
  actuarial gain                           (31,043)        (63,003)
Unrecognized prior
  service cost                               4,170           4,130
Unrecognized net
  transition asset                            (391)           (748)
- ------------------------------------------------------------------
Accrued benefit cost                     $ (20,677)      $ (21,347)
==================================================================


DECEMBER 31
(ADD 000)                                    2000            1999
- ------------------------------------------------------------------
                                                   
Amounts recognized in the
   consolidated balance
   sheet consist of:
Prepaid benefit cost                     $     134       $     118
Accrued benefit cost                       (20,811)        (21,465)
- ------------------------------------------------------------------
Net amount recognized
  at end of year                         $ (20,677)      $ (21,347)
==================================================================


The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for retirement plans with accumulated benefit obligations in
excess of plan assets were $5,272,000, $3,350,000 and $0, respectively, as of
December 31, 2000 and $3,900,000, $2,478,000 and $0, respectively, as of
December 31, 1999.

POSTRETIREMENT BENEFITS. The Corporation provides other postretirement benefits
including medical benefits for retirees and their spouses (and Medicare Part B
reimbursement for certain retirees) and retiree life insurance. The net periodic
postretirement benefit cost of postretirement plans included the following
components:



YEARS ENDED DECEMBER 31
(ADD 000)                             2000          1999         1998
- -----------------------------------------------------------------------
                                                       
Components of net periodic
  benefit cost:
Service cost                        $ 1,144       $ 2,738       $ 1,732
Interest cost                         3,886         3,782         4,034
Expected return on
  assets                                 --           (35)         (121)
Amortization of:
   Prior service cost                  (394)          (35)           25
   Actuarial gain                      (482)         (419)          (85)
- -----------------------------------------------------------------------
Net periodic benefit cost           $ 4,154       $ 6,031       $ 5,585
=======================================================================


The postretirement health care plans' change in benefit obligation, change in
plan assets, funded status and amounts recognized in the Corporation's
consolidated balance sheets are as follows:



YEARS ENDED DECEMBER 31
(ADD 000)                                  2000           1999
- ----------------------------------------------------------------
                                                  
Change in benefit obligation:
Net benefit obligation at
  beginning of year                      $ 46,435       $ 62,381
Service cost                                1,144          2,738
Interest cost                               3,886          3,782
Participants' contribution                    249             31
Plan amendments                                --         (6,410)
Actuarial loss/(gain)                       7,315        (13,208)
Gross benefit paid                         (3,750)        (2,879)
- ----------------------------------------------------------------
Net benefit obligation at
  end of year                            $ 55,279       $ 46,435
================================================================


YEARS ENDED DECEMBER 31
(ADD 000)                                  2000         1999
- --------------------------------------------------------------
                                                 
Change in plan assets:
Fair value of plan assets
  at beginning of year                   $     0       $   578
Actual return on plan assets, net             --            15
Employer contributions                     3,501            --
Participants' contributions                  249            31
Gross benefits paid                       (3,750)         (624)
- --------------------------------------------------------------
Fair value of plan assets
  at end of year                         $     0       $     0
==============================================================


DECEMBER 31
(ADD 000)                                    2000            1999
- ------------------------------------------------------------------
                                                   
Funded status of the plan
  at end of year                         $ (55,279)      $ (46,435)
Unrecognized net actuarial gain             (2,672)        (10,469)
Unrecognized prior service cost             (5,524)         (5,918)
- ------------------------------------------------------------------
Accrued benefit cost                     $ (63,475)      $ (62,822)
==================================================================


DECEMBER 31
(ADD 000)                                    2000            1999
- ------------------------------------------------------------------
                                                   
Amounts recognized in the
  consolidated balance sheet
  consist of:
Accrued benefit cost                     $ (63,475)      $ (62,822)
- ------------------------------------------------------------------
Net amount recognized
  at end of year                         $ (63,475)      $ (62,822)
==================================================================


Weighted-average assumptions used as of December 31 are as follows:



                                        2000           1999           1998
- --------------------------------------------------------------------------
                                                             
Discount rate                           7.50%          8.00%          6.75%
Expected long-term rate of
 return on assets                        N/A           9.00%          9.00%


Martin Marietta Materials, Inc. and Consolidated Subsidiaries          Page 19
   13

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


The assumed trend rate for health care inflation used in measuring the net
periodic benefit cost and benefit obligation is 8% for 2000, declining to 4.5%
in 2005 and remaining at that level thereafter. The assumed health care trend
rate has a significant impact on the amounts reported. A one-percentage point
change in the assumed health care trend rate would have the following effects at
December 31, 2000:



                                         ONE PERCENTAGE POINT
                                        -----------------------
(ADD 000)                               INCREASE     (DECREASE)
- ---------------------------------------------------------------
                                               
Total service and
  interest cost
  components                             $   553      $   (472)
Postretirement
  benefit obligation                     $ 5,608      $ (4,926)


In November 1999, the Corporation amended its postretirement medical benefits
to, among other things, realign the maximum annual medical benefits available to
retirees, modify the retiree premium schedules and limit future retiree
participation.

DEFINED CONTRIBUTION PLANS.  The Corporation maintains two defined contribution
plans, which cover substantially all employees. These plans, intended to be
qualified under Section 401(a) of the Internal Revenue Code, are retirement
savings and investment plans for the Corporation's salaried and hourly
employees. In addition, the employees of the former Redland Stone Products
Company ("Redland Stone") participate in a separate defined contribution plan
established prior to the Corporation's acquisition of Redland Stone. The
Corporation will continue to support this plan in the near-term. Under certain
provisions of these plans, the Corporation, at established rates, matches
employees' eligible contributions. The Corporation's matching obligations were
$3,695,000 in 2000, $3,144,000 in 1999 and $2,381,000 in 1998.

POSTEMPLOYMENT BENEFITS.  The Corporation provides certain benefits to former or
inactive employees after employment but before retirement, such as workers'
compensation and disability benefits. The Corporation has accrued postemployment
benefits of $1,577,000 and $1,734,000 at December 31, 2000 and 1999,
respectively.


NOTE I:  STOCK OPTIONS AND AWARD PLANS

In 1994, the shareholders of the Corporation approved the Amended Omnibus
Securities Award Plan (the "Amended Omnibus Plan") that provided authorization
for the Corporation to repurchase 2,000,000 shares of the Corporation's Common
Stock for issuance under the Amended Omnibus Plan. On May 8, 1998, the
repurchase authorization was decreased to approximately 1,007,000 shares, which
represented the aggregate number of shares that were subject to grants made
through May 8, 1998. The shareholders approved, on May 8, 1998, the Martin
Marietta Materials, Inc. Stock-Based Award Plan (the "Plan"), as amended from
time to time (collectively the "Plans," along with the "Amended Omnibus Plan").
In connection with the Plan, the Corporation was authorized to repurchase up to
5,000,000 shares of the Corporation's Common Stock for issuance under the Plan.

Under the Plans, the Corporation grants options to employees to purchase its
common stock at a price equal to the market value at the date of grant. These
options become exercisable in three equal annual installments beginning one year
after date of grant and expire ten years from such date. The Plans allow the
Corporation to provide for financing of purchases, subject to certain
conditions, by interest-bearing notes payable to the Corporation. However, the
Corporation has provided no such financing.

Additionally, an incentive stock plan has been adopted under the Plans whereby
certain participants elect to use up to 50% of their annual incentive
compensation to acquire shares of the Corporation's common stock at a 20%
discount to the market value on the date of the incentive compensation award.
Certain executive officers are required to participate in the incentive stock
plan at certain minimum levels. Stock unit awards, representing 38,222 shares
for 2000, 32,648 shares for 1999 and 22,905 shares for 1998, of the
Corporation's common stock, were awarded under the incentive stock plan. Such
awards are granted in the subsequent year. Under the awards outstanding,
participants earn the right to acquire their respective shares at the discounted
value generally at the end of a three-year period of additional employment from
the date of award or at retirement. All rights of ownership of the common stock
convey to the participants upon the issuance of their respective shares at the
end of the ownership-vesting period.


Page 20            Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   14

The Plans provide that each nonemployee director receives 1,500 non-qualified
stock options annually. The Corporation grants the nonemployee directors options
to purchase its common stock at a price equal to the market value at the date of
grant. These options are exercisable immediately and expire ten years from such
date.

A summary of the Corporation's stock-based plans' activity and related
information follows:



                                          NUMBER OF SHARES
                                     --------------------------    WEIGHTED-
                                     AVAILABLE        AWARDS        AVERAGE
                                     FOR GRANT      OUTSTANDING  EXERCISE PRICE
- -------------------------------------------------------------------------------
                                                        
December 31, 1997                    1,004,148          985,822       $25.84
Additions                            5,000,000               --           --
Authorization
 decrease                             (993,000)              --           --
Granted                               (360,779)         360,779       $46.31
Exercised                                   --         (165,612)      $21.09
Terminated                               7,166           (7,166)      $30.17
- -------------------------------------------------------------------------------
December 31, 1998                    4,657,535        1,173,823       $32.78
Granted                               (433,155)         433,155       $48.20
Exercised                                   --         (124,938)      $22.53
Terminated                               7,912           (7,912)      $37.56
- -------------------------------------------------------------------------------
December 31, 1999                    4,232,292        1,474,128       $38.15
Granted                               (507,898)         507,898       $45.50
Exercised                                   --          (74,202)      $28.04
Terminated                              17,931          (17,931)      $45.98
- -------------------------------------------------------------------------------
December 31, 2000                    3,742,325        1,889,893       $40.44
===============================================================================


Approximately 997,000, 712,000 and 519,000 outstanding awards were exercisable
at December 31, 2000, 1999 and 1998, respectively. Exercise prices for awards
outstanding as of December 31, 2000, ranged from $20.00 to $63.44. The
weighted-average remaining contractual life of those awards is 7.4 years. The
weighted-average exercise price of outstanding exercisable awards at December
31, 2000, is $35.06.

The following table summarizes information for awards outstanding and
exercisable at December 31, 2000:



                                  AWARDS OUTSTANDING
- ----------------------------------------------------------------------
                                       WEIGHTED-           WEIGHTED-
   RANGE OF        NUMBER OF            AVERAGE             AVERAGE
    PRICES           SHARES         REMAINING LIFE      EXERCISE PRICE
- ----------------------------------------------------------------------
                                               
$20.00-$24.25        385,421              4.8              $22.35
$35.50-$48.75      1,480,472              8.0              $44.88
$51.50-$63.44         24,000              8.8              $57.47




                                  AWARDS EXERCISABLE
- ----------------------------------------------------------------------
                                       WEIGHTED-           WEIGHTED-
   RANGE OF        NUMBER OF            AVERAGE             AVERAGE
    PRICES           SHARES         REMAINING LIFE      EXERCISE PRICE
- ----------------------------------------------------------------------
                                               
$20.00-$24.25        385,421              4.8              $ 22.35
$35.50-$48.75        599,839              7.4              $ 42.67
$51.50-$63.44         12,000              8.3              $ 63.44


In 1996, the Corporation adopted the Shareholder Value Achievement Plan to award
shares of the Corporation's common stock to key senior employees based on
certain common stock performance criteria over a long-term period. Under the
terms of this plan, 250,000 shares of common stock are reserved for grant. Stock
units potentially representing 50,804, 16,791 and 24,324 shares of the
Corporation's common stock were granted under this plan in 2000, 1999 and 1998,
respectively. The Corporation issued 16,023 shares of common stock to key senior
employees in January 2001 representing net stock unit awards granted for 1998.

Also, the Corporation adopted the Amended and Restated Common Stock Purchase
Plan for Directors, which provides nonemployee Directors the election to receive
all or a portion of their total fees in the form of the Corporation's common
stock. Under the terms of this plan, 50,000 shares of common stock are reserved
for issuance. Currently, Directors are required to defer at least 30% of the
retainer portion of their fees in the form of common stock. Directors elected to
defer portions of their fees representing 4,699, 3,551 and 6,328 shares of the
Corporation's common stock under this plan during 2000, 1999 and 1998,
respectively.

Pro forma information regarding net income and earnings per share is required by
FAS 123, which also requires that the information be determined as if the
Corporation had accounted for its employee stock options and other stock-based
awards and grants subsequent to December 31, 1994, under the fair value method
prescribed by FAS 123. The fair value for these stock-based plans was estimated
as of the date of grant using a Black-Scholes valuation model with the following
weighted-average assumptions as of December 31:



                                   2000           1999         1998
- ---------------------------------------------------------------------
                                                    
Risk-free interest rate             6.10%          6.20%        5.40%
Dividend yield                      1.20%          1.40%        1.80%
Volatility factor                  34.10%         27.70%       17.90%
Expected life                    7 years        7 years      7 years


The Black-Scholes valuation model was developed for use in estimating the fair
value of traded awards which have no vesting restrictions and are fully
transferable. In addition, valuation models require the input of highly
subjective assumptions, including the expected stock price volatility factor.
Because changes in the subjective input assumptions can materially affect the
fair value estimate, in manage-


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 21
   15
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

ment's opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock-based plans.

For purposes of pro forma disclosure, the estimated fair value of the
stock-based plans is amortized, hypothetically, over the vesting period of the
related grant or award. The Corporation's pro forma information for the years
ended December 31 is as follows:



(ADD 000, EXCEPT PER SHARE)                  2000         1999         1998
- ------------------------------------------------------------------------------
                                                           
Basic earnings per
  common share:
    Net earnings                          $  108,082   $  122,791   $  113,658
    Earnings per share                    $     2.31   $     2.63   $     2.45

Diluted earnings per
  common share:
    Net earnings                          $  108,082   $  122,791   $  113,343
    Earnings per share                    $     2.30   $     2.62   $     2.43
- ------------------------------------------------------------------------------



NOTE J:  LEASES

Total rent expense for all operating leases was $31,109,000, $26,761,000 and
$23,460,000 for the years ended December 31, 2000, 1999 and 1998, respectively.
The Corporation's operating leases generally contain renewal and/or purchase
options with varying terms. Total mineral royalties for all leased properties
were $22,460,000, $23,482,000 and $19,988,000 for the years ended December 31,
2000, 1999 and 1998, respectively. Future minimum rental and royalty commitments
for all noncancelable operating leases and royalty agreements as of December 31,
2000, are as follows:



(ADD 000)
- --------------------------------------------------
                                      
2001                                     $   8,952
2002                                         6,989
2003                                         5,667
2004                                         4,373
2005                                         3,579
Thereafter                                  40,855
- --------------------------------------------------
Total                                    $  70,415
- --------------------------------------------------



NOTE K:  SHAREHOLDERS' EQUITY

The authorized capital structure of Martin Marietta Materials, Inc., includes
10,000,000 shares of preferred stock with par value of $0.01 a share, none of
which is issued currently; however, 100,000 shares of Class A Preferred Stock
have been reserved in connection with the Corporation's Shareholders' Rights
Plan. In addition, the capital structure includes 100,000,000 shares of common
stock, with a par value of $0.01 a share. As of December 31, 2000 and 1999,
there were approximately 46,783,000 and 46,715,000 shares, respectively, of the
Corporation's common stock issued and outstanding. Approximately 8,307,000
common shares have been reserved for issuance under benefit and stock-based
incentive plans.

In 1999, the Corporation repurchased 322,300 shares of its common stock at
public market prices at various purchase dates. The repurchase of shares was
authorized under the Corporation's stock-based award plans' authorizations (see
Note I). There were no shares repurchased in 2000 or 1998. Further, during 1999
and 1998 the Corporation issued 311,100 and 280,100, respectively, restricted
shares of common stock for acquisitions.

Under the North Carolina Business Corporation Act, shares of common stock
reacquired by a corporation constitute unissued shares. For financial reporting
purposes, reacquired shares are recorded as reductions to issued common stock
and to additional paid-in capital.


NOTE L:  COMMITMENTS AND CONTINGENCIES

The Corporation is engaged in certain legal and administrative proceedings
incidental to its normal business activities. While it is not possible to
determine the ultimate outcome of those actions at this time, in the opinion of
management and counsel, it is unlikely that the outcome of such litigation and
other proceedings, including those pertaining to environmental matters will have
a material adverse effect on the results of the Corporation's operations or on
its financial position (see Note A: Accounting Policies -- Environmental Matters
and Management's Discussion and Analysis of Financial Condition and Results of
Operations on page 38).

ENVIRONMENTAL MATTERS.  The Corporation's operations are subject to and
affected by federal, state and local laws and regulations relating to the
environment, health and safety, and other regulatory matters. Certain of the
Corporation's operations may, from time to time, involve the use of substances
that are classified as toxic or hazardous within the meaning of these laws and
regulations. Environmental operating permits are, or may be, required for
certain of the Corporation's operations and such permits are subject to


Page 22            Martin Marietta Materials, Inc. and Consolidated Subsidiaries

   16

modification, renewal and revocation. The Corporation regularly monitors and
reviews its operations, procedures and policies for compliance with these laws
and regulations. Despite these compliance efforts, risk of environmental
liability is inherent in the operation of the Corporation's businesses, as it is
with other companies engaged in similar businesses, and there can be no
assurance that environmental liabilities will not have a material adverse effect
on the Corporation in the future.

The Corporation currently has no material provisions for estimated costs in
connection with expected remediation costs or other environmental-related
expenditures, because it is impossible to quantify the impact of all actions
regarding environmental matters, particularly the extent and cost of future
remediation and other compliance efforts. However, in the opinion of management,
it is unlikely that any additional liability the Corporation may incur for known
environmental issues or compliance with present environmental-protection laws
would have a material adverse effect on the Corporation's consolidated financial
position or on its results of operations (see Note A: Accounting Policies --
Environmental Matters and Management's Discussion and Analysis of Financial
Condition and Results of Operations on page 38).

LETTERS OF CREDIT.  The Corporation has entered into stand-by letter of credit
agreements relating to workers' compensation and auto and general liability self
insurance. At December 31, 2000, the Corporation had contingent liabilities
under these outstanding letters of credit of approximately $8.4 million.


NOTE M:  PURCHASE OF MERIDIAN AND SALE OF MAGNESIA SPECIALTIES' REFRACTORIES
BUSINESS

The Corporation expects to complete the purchase of the remaining interest of
Meridian under the purchase option terms of the original October 1998,
investment agreement, early in the second quarter 2001. The estimated purchase
consideration will consist of $235 million, including the original October 1998,
investment of $42 million, the retirement of debt, the forgiveness of related
party obligations, and amounts estimated for certain other assumed liabilities
and transaction costs; plus the assumption of normal balance sheet liabilities.
The purchase consideration is subject to adjustment based on actual results and
certain other events. This acquisition will be accounted for under the purchase
method of accounting and the operating results of Meridian will be included with
those of the Corporation from the acquisition date forward.

On February 23, 2001, Martin Marietta Magnesia Specialties Inc. entered into an
agreement with a subsidiary of Minerals Technologies Inc. to sell certain assets
related to its refractories business. In addition, the Corporation's Magnesia
Specialties division will supply the subsidiary of Minerals Technologies with
certain refractories products for up to two years after the sale. The
Corporation expects to recognize a gain on the sale of assets. However, the gain
will be largely reduced by a write-down of certain retained refractories assets,
including assets at the division's Manistee, Michigan, operating facility, as
the facility is repositioned to focus on production of chemicals products. The
agreement contemplates a closing to occur in the second quarter 2001.


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 23
   17
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

Martin Marietta Materials, Inc. ("Martin Marietta Materials" or the
"Corporation"), is the nation's second largest producer of construction
aggregates and a leading producer of magnesia-based chemicals, refractories and
dolomitic lime products, used in a wide variety of industries. The discussion
and analysis that follows reflect management's assessment of the financial
condition and results of operations of Martin Marietta Materials and should be
read in conjunction with the audited consolidated financial statements on pages
9 through 23.

BUSINESS COMBINATIONS AND SALE OF MAGNESIA SPECIALTIES' REFRACTORIES BUSINESS

The Corporation expects to complete the purchase of the remaining interest of
Meridian Aggregates Company ("Meridian") under the purchase option terms of the
original October 1998, investment agreement early in the second quarter 2001.
The estimated purchase consideration will consist of $235 million, including the
original October 1998, investment of $42 million, the retirement of debt, the
forgiveness of related party obligations, and amounts estimated for certain
other assumed liabilities and transaction costs; plus the assumption of normal
balance sheet liabilities. The estimated purchase consideration is subject to
certain other adjustments. This acquisition will be accounted for under the
purchase method of accounting and the operating results of Meridian will be
included with those of the Corporation from the acquisition date forward.
Additional information regarding this acquisition, and the related financing, is
contained in Note M to the audited consolidated financial statements on page 23,
under "Business Environment" on pages 27 through 33 and "Liquidity and Cash
Flows" and "Capital Structure and Resources" on pages 35 through 38.

While management believes that the consolidation of the aggregates and other
construction materials industries is continuing, acquisition asking prices
during 2000 escalated, at times, to what management considered to be an
unreasonable level. Therefore, the Corporation focused more on internal growth
and capacity expansion during 2000, when compared with the acquisition activity
of recent years. In 2000, the Corporation completed five acquisitions, for a
combined $39.3 million in cash and certain other consideration. The Corporation
also entered into a long-term operating agreement with Chemical Lime Company
whereby Martin Marietta Materials will process aggregates materials and provide
certain operating services. These transactions strategically expanded the
Corporation's aggregates and other businesses in Texas, North Carolina,
Tennessee and Ohio. The acquisitions in 2000 were accounted for under the
purchase method of accounting, and the operating results of the businesses
acquired were included with those of the Corporation from the acquisition dates
forward. In addition, the Corporation invested an additional $1.4 million in
Industrial Microwave Systems. The "Liquidity and Cash Flows" discussion, which
follows, includes the impact of these transactions on financing and investing
activities.

Aggregates Division Capacity
(in millions of tons)


        
1996       120.0
1997       165.8
1998       197.6
1999       208.7
2000       241.8


Note:  2000 includes 25 million tons from the Meridian acquisition.


During 2000, the Corporation finalized the purchase price allocation of the ten
transactions completed in 1999. The post-closing adjustments relating to working
capital and other fair value adjustments were finalized without a significant
impact on the preliminary purchase price allocation.

Goodwill represents the excess of the purchase price paid for acquired
businesses over the estimated fair value of identifiable assets and liabilities.
The carrying value of goodwill is reviewed if the facts and circumstances
indicate potential impairment. If this review indicates that the carrying value
of goodwill will not be recoverable, based on estimated cash flows of the
business acquired over the remaining amortization period, goodwill will be
reduced by the estimated shortfall of discounted cash flows. Goodwill is as
follows at December 31:



            Goodwill          % of Total    % of Shareholders'
          (in millions)         Assets            Equity
                                   
2000         $375.0              20.4%            43.4%
1999         $375.3              21.5%            48.5%


Page 24            Martin Marietta Materials, Inc. and Consolidated Subsidiaries


   18

On February 23, 2001, the Corporation entered into an agreement with a wholly
owned subsidiary of Minerals Technologies Inc. to sell certain assets related to
its refractories business. In an accompanying manufacturing agreement, Magnesia
Specialties agreed to supply the subsidiary of Minerals Technologies with
certain refractories products for up to two years after the sale. During 2000,
the refractories business contributed $57.3 million to net sales.

Management expects to recognize a gain on the sale, however, the gain will be
largely offset by a write-down of certain assets of the refractories business,
including assets at the Manistee, Michigan, operating facility, as the facility
is repositioned to focus on production of chemicals products. The decline in net
sales will be somewhat mitigated during the operative period of the
manufacturing agreement. Further Magnesia Specialties' earnings from operations
will decline, due to the elimination of the refractories business earnings
contribution and the division's inability to proportionately eliminate fixed
costs associated with shared production facilities and overhead costs. The
agreement contemplates a closing to occur in the second quarter 2001.

The sale of Magnesia Specialties' refractories business will lessen the Magnesia
Specialties division's dependence on the steel industry over time. In fact,
excluding the refractories business, Magnesia Specialties' sales to the steel
industry would account for 43% of the division's 2000 net sales, as compared to
68%, including refractories.

As a result of the Corporation's study of various alternatives related to
Magnesia Specialties, the Corporation has determined that the Woodville, Ohio,
operation will be transferred to the MidAmerica Division of the Aggregates
division. The Woodville, Ohio, operation produces and sells dolomitic lime to
the steel industry and produces and sells more than 1.0 million tons per year
of aggregates to construction businesses.

The Corporation continues to evaluate strategic options, including possible
divestiture of the remaining Magnesia Specialties' chemicals business, with a
goal of creating additional value for the Corporation. However, there can be
no assurance that management will pursue these opportunities, if any. Additional
information regarding this transaction is contained in Note M to the audited
consolidated financial statements on page 23 and in the "Business Environment"
discussion that follows.

RESULTS OF OPERATIONS

The Corporation's Aggregates division's business is characterized by a high
level of dependence on construction-sector spending and Magnesia Specialties'
product lines, particularly refractories and dolomitic lime products, are used
principally within the steel industry. Therefore, the Corporation's operating
results are highly dependent upon activity within the construction and
steel-related marketplaces, both of which are subject to interest rate
fluctuations and economic cycles within the public and private business sectors.
Factors, such as seasonal and other weather-related conditions, also affect the
Aggregates division's production schedules and levels of profitability.
Accordingly, the financial results for a particular year, or year-to-year
comparisons of reported results, may not be indicative of future operating
results. Further, the Corporation's sales and earnings are predominantly derived
from its Aggregates division. The following comparative analysis and
discussion should be read in that context.

As discussed in "New Accounting Standards" on pages 38 and 39, the Corporation
adopted Emerging Issues Task Force Issue No. 00-10, Accounting for Shipping and
Handling Fees and Costs, beginning with the fourth quarter 2000. As a result,
total revenues include sales of materials to customers, net of allowances,
plus freight and delivery costs billed to customers. The reconciliation of total
revenues and total cost of revenues to amounts previously reported is as
follows:



YEARS ENDED DECEMBER 31,
(IN MILLIONS)                        2000          1999          1998
- -----------------------------------------------------------------------
                                                     
Net sales                         $ 1,333.0     $ 1,258.8     $ 1,057.7
Freight and delivery
  revenues                            184.5         175.3         143.8
- -----------------------------------------------------------------------
   Total revenues                   1,517.5       1,434.1       1,201.5

Cost of sales                        1,029.4        948.1         776.1
Freight and delivery costs             184.5        175.3         143.8
- -----------------------------------------------------------------------
   Total cost of revenues            1,213.9      1,123.4         919.9
- -----------------------------------------------------------------------
   Gross profit                   $    303.6    $   310.7     $   281.6
=======================================================================


The comparative analysis in this Management's Discussion and Analysis of
Financial Condition and Results of Operations is based on net sales and cost of
sales, which exclude freight and delivery revenues and costs, and is consistent
with the basis by which management reviews the Corporation's operating results.


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 25

   19


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

The Corporation's 2000 net earnings of $112.0 million, or $2.39 per diluted
share, reflect a decrease of 11%, compared with 1999 net earnings of $125.8
million, or $2.68 per diluted share. The 1999 net earnings were 9% higher than
1998 net earnings of $115.6 million, or $2.48 per diluted share. The
Corporation's consolidated net sales of $1.333 billion in 2000 reflect an
increase of $74.2 million, or 6%, over 1999 net sales of $1.259 billion. The
1998 consolidated net sales were $1.058 billion. Consolidated earnings from
operations were $202.5 million in 2000 and $215.3 million in 1999, reflecting a
decrease of $12.8 million, or 6%, in 2000 and an increase of $18.7 million, or
10%, in 1999, both over the prior year. The Corporation's 1998 operating
earnings were $196.6 million.

In 2000, the Corporation's results reflected the impact of sharp increases in
energy-related costs, a slowdown in demand for construction-related spending and
weather-related events. The Corporation's Aggregates division's energy-related
costs include diesel fuel, liquid asphalt, natural gas and barge freight costs.
Diesel fuel is used primarily to operate mobile equipment in quarry production,
liquid asphalt and natural gas are used in the production of asphalt and the
barge freight related to waterborne transportation includes fuel escalators that
adjust barge freight rates, generally on a quarterly basis. Unanticipated
escalation in energy-related costs in the Aggregates business, based on
comparable operating levels at heritage locations, reduced the Corporation's
2000 net earnings by $24.5 million when compared to the prior year.
Historically, selling prices are increased annually and do not include
escalators for increases in specific underlying costs.

Diesel Fuel
(average price per gallon)


      
1996     $ 0.78
1997     $ 0.72
1998     $ 0.56
1999     $ 0.65
2000     $ 0.98


Source: National average price per gallon of diesel fuel for industrial
consumers from the February 2001, Petroleum Marketing Monthly issued by the
Energy Information Administration. The 2000 average price per gallon of diesel
fuel reflects the average of actual diesel fuel prices through November 2000.

Construction-related demand was affected by unexpected delays in the ramp-up of
the Transportation Equity Act for the 21st Century ("TEA-21") spending and the
increasingly slowing economy. The extended lag between the appropriation of
federal highway funds and actual highway construction, contributed to total
value of construction work on highways and bridges declining in 2000, when
compared to 1999. The decline in commercial and residential construction demand
experienced during 2000 was spurred, in part, by the high interest rate
environment, which caused a slowdown in the economy. This slowdown most
significantly affected the Corporation's operations in the midwestern and
central areas of the United States.

Unusual weather patterns continued to negatively affect the Corporation's
revenues and earnings. North Carolina, the Corporation's largest revenue and
production state, experienced a record snowfall in the first quarter 2000, and
prolonged wet weather continued to affect operations in the state throughout the
spring and parts of the summer and fall. Operations in Texas experienced
uncharacteristically wet weather during the last half of the year and, along
with operations in the mid-western, central and southeastern regions of the
United States, were negatively affected by an early, severe winter.

The combination of declining construction demand and adverse weather conditions
reduced the Corporation's aggregates shipments below the prior year's.



SHIPMENTS (THOUSANDS OF TONS)           2000       1999
- ---------------------------------------------------------
                                            
Heritage Aggregates Operations         156,386    162,995
Acquisitions                             8,529      2,214
- ---------------------------------------------------------
Aggregates Division                    164,915    165,209
=========================================================


While volume declined in 2000, average selling prices continued to increase
for both heritage aggregates operations (which exclude acquisitions that have
not been included in prior-year operations for a full year) and the Aggregates
division as a whole. Heritage aggregates operations' average selling prices
increased 3.7%, and average selling prices for the Aggregates division, which
includes all acquisitions from the date of acquisition, increased 3.6% during
2000.

The Corporation's Magnesia Specialties division contributed $8.2 million to
operating earnings, a $1.0 million increase when compared to 1999.
Higher-than-expected costs for

Page 26            Martin Marietta Materials, Inc. and Consolidated Subsidiaries

   20

natural gas, which is used to operate certain of the division's kilns,
negatively affected earnings from operations by $3.3 million in 2000, when
compared to 1999. Despite the weak economic performance of the steel industry
and higher natural gas costs, the division made a solid contribution to 2000's
operating results, primarily based upon the strength of its first-half 2000
performance.

The Corporation's operating margin of 15.2% in 2000 declined from 17.1% in 1999,
primarily as a result of energy-related costs and lower volumes at heritage
aggregates operations. Lower margin asphalt, ready mixed and paving operations
associated with certain acquisitions, also contributed to the operating margin
reduction. Improving margins at Magnesia Specialties in 2000 slightly offset the
decline.

Other income and expenses, net, for the year ended December 31, 2000, was $8.2
million in income, compared to income of $18.4 million and $1.3 million in 1999
and 1998, respectively. In addition to other offsetting amounts, other income
and expenses, net, is comprised generally of interest income, gains and losses
associated with the disposition of certain assets, gains and losses related to
certain receivables, costs associated with the commercialization of certain new
technologies and net equity earnings from non-consolidated investments. In
2000, other income includes a nonrecurring insurance settlement related to
Hurricane Floyd. Other income in 1999 included nonrecurring settlements from
antitrust claims and a higher-than-normal level of planned property sales, both
principally relating to the Aggregates division.

Interest expense for the year ended December 31, 2000, was $41.9 million. This
reflects an increase of $2.5 million, or 6%, in 2000 over 1999. Interest expense
was $39.4 million in 1999, an increase of $15.7 million, or 66%, over 1998
interest expense of $23.8 million. The increased interest expense in 2000
results primarily from the impact of increased balances of outstanding debt
throughout the year and increased interest rates on the Corporation's variable
rate commercial paper program. The interest expense increase from 1999, as
compared to 1998, resulted primarily from the full-year impact of borrowings to
finance the acquisition of Redland Stone Products Company ("Redland Stone").

The Corporation's effective income tax rate for 2000 was 33.6%, compared with
35.3% in 1999 and 33.6% in 1998. The variance in the effective income tax rates
for these years, when compared to the federal corporate tax rate of 35%, is due
to the effects of several factors. The Corporation's effective tax rates for
these years include state income taxes and reflect the effects of differences in
financial and tax accounting, arising from the net permanent benefit associated
with the depletion allowances for mineral reserves, nondeductible amortization
of certain goodwill balances, foreign operating earnings and earnings from
nonconsolidated investments.

The Corporation's debt-to-capitalization ratio decreased from 45% at December
31, 1999, to 43% at December 31, 2000, with total debt, including commercial
paper obligations, increasing from $641.7 million to $646.7 million and
shareholders' equity increasing from $774.0 million to $863.3 million. During
2000, the Corporation paid common stock dividends of $25.2 million, or $0.54 per
common share. Additional information regarding the Corporation's debt and
capital structure is contained in Note E to the audited consolidated financial
statements on pages 16 and 17 and under "Liquidity and Cash Flows" and "Capital
Structure and Resources" on pages 35 through 38.

BUSINESS ENVIRONMENT

The Corporation's principal lines of business include Martin Marietta
Aggregates, which primarily serves commercial customers in the construction
aggregates-related markets, and Martin Marietta Magnesia Specialties, which
manufactures and markets magnesia-based products and dolomitic lime, principally
for use in the steel industry. These businesses are strongly affected by
activity within the construction and steel-related marketplaces, respectively,
both of which represent industries that are cyclical in nature.

The Aggregates division markets its products primarily to the construction
industry, with 46% of its aggregates shipments made to contractors in connection
with highway and other public infrastructure projects and the balance


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 27


   21

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

of its shipments made primarily to contractors in connection with commercial and
residential construction projects. Accordingly, the Corporation's profitability
is sensitive to national, as well as regional and local, economic conditions and
particularly to cyclical swings in construction spending. The cyclical swings in
construction spending are affected by fluctuations in interest rates, changes in
the levels of infrastructure funding by the public sector, and demographic and
population shifts. Further, the Corporation's asphalt, ready mixed and road
paving operations generally follow trends in the construction industry.

2000 Aggregate Division Markets

46%  Infrastructure
30%  Commercial
18%  Residential
 6%  Chemical, Railroad Ballast & Other

While construction spending in the public and private market sectors is affected
by changes in economic cycles, there has been a tendency for the level of
spending for infrastructure projects in the public-sector portion of this market
to be more stable than spending for projects in the private sector. Governmental
appropriations and expenditures are less interest-rate sensitive than
private-sector spending, and generally improved levels of funding have enabled
highway and other infrastructure projects to register improvement over the past
few years. However, in 2000, the total value of construction work on highways
and bridges was less than 1999. The Corporation believes public-works projects
consumed more than 50% of the total annual aggregates consumption in the United
States during 2000, which has consistently been the case for each year since
1990. Additionally, since public sector-related shipments account for 46% of the
Corporation's 2000 aggregates shipments, the Aggregates division also enjoys
the benefit of the high level of public-works construction projects.
Accordingly, the Corporation's management believes the Corporation's exposure to
fluctuations in commercial and residential, or private sector, construction
spending is lessened somewhat by the division's broad mix of public
sector-related shipments.

Public-sector construction projects are funded through a combination of federal,
state and local sources, with TEA-21 providing the principal source of federal
funding. Congress passed TEA-21 legislation on June 9, 1998. TEA-21 provides
federal transportation funding authorization of $218 billion ($168 billion for
highway construction and $50 billion for other programs) over a six-year period
ending in 2003. TEA-21 increases funding by approximately 40% over the prior
federal funding level and increases funding for highway construction alone by
an average of 44%.

In a change from previous legislation, TEA-21 provides a minimum funding
guarantee firewall for the Highway Account of the Highway Trust Fund and minimum
percentage of funding guarantees for each state. TEA-21 requires that 100% of
the federal gasoline tax revenues collected be directed into the Highway Trust
Fund, as a minimum funding guarantee. Further, TEA-21 includes a highway funding
distribution formula that guarantees that each state will receive a minimum
percentage of highway funding, equal to 90.5% of the state's share of total
gasoline tax contributions. Many states in the South are expected to experience
an increase in funding in excess of the 44% national average, as a result of the
revised highway funding distribution formula. Highway construction spending is
expected to increase further as state departments of transportation match, as
required, the federal funds received under TEA-21.

The federal transportation appropriation bill for fiscal 2001 fully funded the
guaranteed highway funding level authorized under TEA-21 of $27.7 billion.
Further, the fiscal 2001 transportation appropriations bill includes an
additional $3.1 billion for guaranteed highway funding under the revenue aligned
budget authority ("RABA") provisions of TEA-21. The additional $3.1 billion of
guaranteed funding results from the adjustment of TEA-21 Federal-Aid Highways
authorizations as gasoline tax receipt projections were amended to reflect
actual receipts. The fiscal 2001 federal transportation

Page 28            Martin Marietta Materials, Inc. and Consolidated Subsidiaries


   22

appropriations bill also included $1.4 billion for demonstration projects, other
specific projects and compensation for emergency repairs to highways damaged by
natural disasters. Annual highway funds, under all TEA-21 programs, are
available to be obligated by state departments of transportation during the
year of appropriation. Once obligated, TEA-21 funds are available until
expended. Unobligated highway funds are carried over into the following year.

Federal Funding for Highways (in billions)


                  
Fiscal year 1998     $21.4
Fiscal year 1999     $26.8
Fiscal year 2000     $28.8
Fiscal year 2001     $32.2
Fiscal year 2002     $34.3
Fiscal year 2003     $28.7


Note: Fiscal year 2000, 2001 and 2002 include RABA funding of $1.5 billion, $3.1
billion and $6.0 billion, respectively. Fiscal year 2001 includes $1.4 billion
for special projects.

Source: American Road and Transportation Builders Association. This chart
depicts estimated funding under TEA-21, as originally passed in 1998, compared
to actual funding authorization through fiscal 2001. Fiscal 2002 RABA is
estimated; no RABA estimates are available for fiscal 2003.

Funding for federal transportation appropriations is subject to balanced budget
and other proposals that may affect the additional funding available for the
Highway Fund. Congress must also annually appropriate highway funding levels,
and there is no assurance that Congress will continue to follow the TEA-21
legislated minimum funding guarantee firewall or the highway funding
distribution formula.

In December 2000, the American Road and Transportation Builders Association
("ARTBA") released its 2001 highway construction forecast, including an overview
of highway construction in 2000. ARTBA's research indicated that the total value
of construction work on highways and bridges in 2000 was running behind the pace
of 1999. The research further cites a number of reasons for the decline, many of
which the Corporation has noted as contributing to the lag between the
appropriation of highway funds and the actual commencement of construction. The
reasons for the extended lag in highway construction cited in the ARTBA research
include the following: insufficient backlog of projects ready for construction
when federal highway funding unexpectedly increased; increased environmental
reviews and permitting requirements and related litigation; inadequate
staffing at some state departments of transportation, coupled with a reluctance
to outsource preliminary engineering to the private sector; a shortfall of
matching funds or a reduction of state funding for highway programs, in some
states; and a growing diversion of federal highway funds, by certain states, to
Federal Transit Administration projects under the mass transit provisions of
TEA-21.

ARTBA forecasts a 7% to 10% growth in the highway construction market in 2001,
supported by the full funding of the 2001 federal highway obligation authority
under TEA-21 and, as indicated earlier, additional funding under RABA and other
appropriations. The ARTBA research cautions that these funding increases will
not immediately translate into increased highway growth, due to the lag between
funding and construction. However, the 2001 forecast is further supported by the
fact that the pace of state obligation of federal highway funds increased 6.5%
for fiscal year 2000, when compared to 1999. ARTBA also indicates that state
spending for preliminary engineering and right-of-way acquisitions, necessary
steps before highway projects can move to construction, increased, suggesting
that states have been getting more projects ready for construction.

The Aviation Investment and Reform Act for the 21st Century ("AIR-21") provides
funding for airport improvements throughout the United States. Congress approved
$3.2 billion for the Aviation Improvement Program under AIR-21 for fiscal year
2001, which represents a 64% increase over fiscal year 2000 funding of $1.95
billion. Management does not expect that the funding increases will have an
impact on aggregates demand until 2002 or 2003, due to the lag between funding,
design and engineering, and actual construction.

The Corporation's capital expansion program is focused on taking advantage of
TEA-21; state and local spending, including a recently approved $3.1 billion
public college and university education construction bond in North Carolina;
and other infrastructure growth, through investment in both permanent and
portable quarrying operations. However, there is no guarantee that the
Corporation will fully benefit from the expected increase in public-works
construction projects.

The aggregates industry expansion and growth is subject to increasing challenges
from environmental and political advocates who want to control the pace of
future development and preserve open space. Rail and other transportation
alternatives are being supported by these groups as solutions to mitigate
traffic congestion and overcrowding.

The Clean Air Act, originally passed in 1963 and periodically updated by
amendments, is the United States' national air pollution control program that
granted the Environmental Protection Agency ("EPA") the authority to set limits
on the level of various air pollutants. Recently, environmental groups have been
successful in lawsuits against federal and certain state departments of
transportation, asserting that highway construction should be delayed until the
municipal area is in compliance with the Clean Air Act. The EPA lists several
major metropolitan areas in the Corporation's markets, including Atlanta,
Georgia, and Houston/Galveston and Dallas/Forth Worth, Texas, as non-attainment
areas with deadlines to


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 29


   23

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

reduce air pollutants or face fines or control by the EPA. Other environmental
groups have published lists of targeted municipal areas, including areas within
the Corporation's marketplace, for environmental and suburban growth control.
The effect of these initiatives on the Corporation's growth is typically
localized, and further challenges are expected as these initiatives gain
momentum across the United States.

The general economy continued its record-setting pace of expansion early in
2000, with productivity growth, high levels of technology spending and
investment in technology-related stocks. Against this backdrop, the Federal
Reserve believed that consumer demand was increasing at a rate in excess of
productivity-driven gains in supply and, when coupled with a tightening labor
supply, could trigger increases in inflation that would undermine the economy's
growth. In response, the Federal Reserve Open Market Committee increased the
federal funds rate three times through the first five months of 2000, on the
heels of three prior rate hikes, beginning in June 1999. However, as the second
half of 2000 progressed, the United States' economy began to slow, as a year of
rising interest rates softened housing activity and consumer spending declined.
Further, the mid-year reduction in the value of technology-related stocks and
rising energy prices contributed to economic slowdown. As cost pressures build,
led by energy prices, consumer demand moderates and credit conditions tighten,
some economists now predict that the 2001 economy is on track for its weakest
growth rate performance since 1991.  In recognition of the changing economic
climate, the Federal Reserve lowered the federal funds rate by 100 basis points
in January 2001, and many economists expect more rate reductions in the near
term. The current federal funds rate reduction is anticipated to have an impact
on the level of construction spending. However, as discussed previously,
public-works construction spending is principally driven by the level of
gasoline tax revenues and the appropriation guidelines under TEA-21. As such,
the volatility of public-works construction spending to interest rate changes is
somewhat mitigated.

The Aggregates division's operations are concentrated in the southeastern,
southwestern, midwestern and central regions of the nation, therefore, the
division's -- and, consequently, the Corporation's -- operating performance and
financial results depend on the strength of these specific regional economies.
In recent years, economic growth in the United States, particularly in the
Southeast and Southwest, has been generally strong. However, if federal
appropriation levels are reduced, if a reduction occurs in state and local
spending, or if the specific regional economies decline, the Aggregates division
could be adversely affected. The Aggregates division's top five
revenue-generating states, namely North Carolina, Texas, Ohio, Georgia and Iowa,
accounted for approximately 60% of 2000 net sales.

A growing percentage of the Corporation's aggregates shipments are being moved
by rail or water through a distribution yard network. In 1994, 93% of the
Corporation's aggregates shipments were moved by truck, while the balance was
moved by rail. In contrast, the Corporation's aggregates shipments moved 80% by
truck, 10% by rail and 10% by water in 2000. Further, the acquisition of
Meridian and its rail-based distribution network, coupled with the extensive use
of rail service in the Southwest Division, increases the Corporation's
dependence on and exposure to railroad performance, including track congestion,
crew availability and power failures, and the ability to renegotiate favorable
railroad shipping contracts.



2000 Transport Mode                 1994 Transport Mode
(% of 2000 shipments                (% of 1994 shipments
of 164.9 million tons)              of 71.2 million tons)
                                 
80% Truck                                    93% Truck
10% Rail                                      7% Rail
10% Water



Page 30           Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   24
Seasonal changes and other weather-related conditions can also significantly
affect the aggregates industry. Consequently, the Aggregates division's
production and shipment levels coincide with general construction activity
levels, most of which occur in the division's markets in the spring, summer and
fall. The division's operations that are concentrated principally in the north
central region of the Midwest generally experience more severe winter weather
conditions than the division's operations in the Southeast and Southwest. North
Carolina, the Corporation's largest revenue generating state at 20% of 2000 net
sales, is at risk for Atlantic Ocean hurricane activity and has experienced
hurricane-related losses in recent years.

Currently, management believes the construction industry's overall consumption
levels, and the Corporation's heritage shipments, will remain at constant levels
or increase by up to 2% in 2001. This rate of heritage growth is built on an
expected 5% to 9% growth in infrastructure-related aggregates volume, comparable
to the ARTBA forecast. However, within the construction industry, management
believes the anticipated increases in public-works construction will be offset
by decreases in the residential and commercial construction markets, as a result
of a slowing economy. The continued impact of the factors cited in the ARTBA
forecast could negatively affect anticipated infrastructure aggregates volume
growth. Due to the high level of fixed costs associated with aggregates
production, the Corporation's operating leverage can be substantial. Therefore,
a slowdown in shipments and the resultant reduction in production would impact
earnings. Currently, the Corporation's overall aggregates production and
shipments volumes are expected to grow by approximately 12% to 15%, including
heritage growth, the purchase of Meridian and several smaller acquisitions, and
capacity expansion programs that are currently in process. Coupled with
anticipated price increases of 3% to 4% in 2001, net sales are expected to
increase 15% to 19%. Based on current economic forecasts, which predict
negligible to modest growth in gross national product, and moderating energy
costs, net earnings are expected to increase at a rate of 10% to 15%, after
interest costs and goodwill amortization on new acquisitions, and excluding any
impact on operating earnings related to the sale of Magnesia Specialties'
refractories business. The Meridian acquisition is expected to be neutral to
slightly accretive to earnings, while the smaller acquisitions could have a
slightly dilutive to neutral effect on 2001 earnings. Management cannot
guarantee that the Corporation will achieve these expectations for 2001.

Over the next five years, management expects that the Aggregates division's
business and financial results will continue to grow, as a result of increased
infrastructure construction spending generated by TEA-21, coupled with moderate
growth in residential and commercial construction. Further, the Aggregates
division will generally follow national, regional and local general economic,
construction and industry trends.

The Corporation's management believes the overall long-term trend for the
construction aggregates industry continues to be one of consolidation. The
Corporation's Board of Directors and management continue to review and monitor
the Corporation's strategic long-term plans. These plans include assessing
business combinations and arrangements with other companies engaged in similar
businesses, building market share in the Corporation's core businesses and
pursuing new technological opportunities that are related to the Corporation's
existing markets.

During 2000, the Corporation expanded its market opportunities by consummating
five transactions for the acquisition of aggregates and other operations,
entering into a long-term aggregates operating agreement and either opened, or
began the process of opening, three new quarry locations.

The Corporation's aggregates reserves, including its Meridian acquisition,
exceed 50 years of production, based on current levels of activity.

Through its Magnesia Specialties division, the Corporation also manufactures and
markets magnesia-based products, including heat-resistant refractories products
for the steel industry and magnesia-based chemicals products for industrial,
agricultural and environmental uses, including wastewater treatment and acid
neutralization. Magnesia Specialties' products used within the steel industry,
particularly refractories products and dolomitic lime, accounted for
approximately 68% of the division's net sales for 2000. Accordingly, the
division's profitability is dependent on the production of steel and the related
marketplace, and a significant portion of the division's product pricing
structure is affected by current economic trends within the steel industry.
Further, due to the high level of fixed costs associated with production, the
division's operating leverage can be substantial.


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 31
   25

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


The United States' steel demand remained strong through the first six months of
2000, although the level of foreign steel imports remained high. However, as the
steel industry moved into late summer, steel demand generally slowed, matching
the demand for durable goods in the economy, and steel inventory levels grew. As
the year progressed, the dramatic increases in energy-related costs,
particularly natural gas, coupled with a slowdown in demand and continued high
levels of steel imports, led to rapidly deteriorating performance in the steel
industry. As a result, the viability of certain steel producers is questionable
and steel producer bankruptcies have increased in recent months.

The performance of the Magnesia Specialties division's steel-related products
followed the steel industry's performance in 2000. As a result, Magnesia
Specialties' improved operating earnings during the first-six months of 2000,
compared with the prior-year period, were largely offset by performance in the
second half of the year. While, for the full year, refractories and dolomitic
lime products experienced increased volumes, refractories pricing declined.
Further consolidation among manufacturers of refractory brick removed a
significant periclase customer from the market during the year. The division's
chemicals products, excluding fuel additive shipments to utilities, had solid
sales in 2000, as a result of continued diversification in chemicals used as
flame retardants, in wastewater treatment and in reducing stack pollution.
However, competitive pricing pressures continued throughout 2000. As discussed
in "Results of Operations," higher-than-expected costs for natural gas
negatively affected earnings from operations in 2000, when compared to 1999.
Overall, sales for the division declined in 2000, while operating earnings
showed improvement, in spite of the rising cost of natural gas.

Raw Steel Production for 2000
(thousands of net tons)


                                             
January           2,189.20          July              2,175.00
February          2,270.50          August            2,089.25
March             2,293.25          September         2,080.20
April             2,335.20          October           1,996.25
May               2,331.75          November          1,924.25
June              2,237.00          December          1,756.40


Source: American Iron and Steel Institute

The division's performance will continue to be directly tied to the steel
industry, and without both short- and long-term relief in natural gas costs, and
with the absence of federal restrictions on foreign steel imports, the prospects
for long-term improvement are weak. Management is minimizing production to keep
inventory levels low until natural gas pricing returns to more economically
feasible levels. The continued pressure on natural gas prices could raise
production costs above the prevailing competitive market price for certain
products. The Magnesia Specialties division has further exposure, if the
financial condition of the steel industry continues to deteriorate. Management
expects sales and earnings from operations of the Magnesia Specialties division
to decline in 2001, dependent in part on natural gas prices and conditions in
the steel industry and resulting from the anticipated sale of the refractories
business.

Approximately 16% of the Magnesia Specialties division's products are sold in
foreign jurisdictions, with no single country accounting for 10% or more of the
division's sales. While the division's products are manufactured and sold
principally in the United States, the division also markets its products in
Canada, Mexico, Europe (principally England and Germany) and the Pacific Rim
(primarily Korea). As a result of these foreign market sales, the division's
financial results could be affected by factors such as changes in foreign
currency exchange rates or weak economic conditions in the foreign markets in
which the division distributes its products. To mitigate the short-term effects
of changes in currency exchange rates on the division's operations, the division
principally uses the U.S. dollar as the functional currency in foreign
transactions.


Page 32            Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   26

The union contract for the division's employees at its Woodville, Ohio,
operating facility was extended in June 2000 and expires in June 2001.

The Corporation continued research and development activities during 2000 in
several technological product areas. Composite materials have been used for
bridge deck installation and replacement, and research is continuing on a
variety of other construction-related uses. Management believes that additional
funds for innovative technologies in roadways, from the TEA-21 program, offer
opportunities to put new bridge decks in service and to focus more attention on
the long-life and low-maintenance costs expected from the composite materials.
The Corporation also made an additional investment in a start-up company in
2000, Industrial Microwave Systems ("IMS"). IMS has proprietary technology for
use in industrial heating and drying applications, as well as food processing
and aseptic packaging.

As expected, the Corporation had limited revenue in 2000 from ECO-MIN(R)
fertilizer, a patented soil remineralization product, and SC27(TM) soil
inoculant, a microbial soil enhancer, both used to enhance plant growth.
Further, as expected, these technologies did not generate profits in 2000.

The Corporation will continue to pursue opportunities that provide proprietary
technology in high growth-rate markets that it understands, that require limited
research and development with minimal capital investment relative to revenue and
profit generation potential, and that have the potential to provide
above-average returns while minimizing risk. There can be no assurance that
these technologies can achieve profitability.

Generally, the impact of inflation on the Corporation's businesses has become
less significant with the benefit of continued moderate inflation rates.
However, energy-related inflation affects, among other things, the costs of
operating mobile equipment used in quarry operations, waterborne transportation
of aggregates materials, asphalt production and fuel for kiln operations. In
fact, as previously discussed, energy-related inflation had a significantly
negative affect on 2000 operations, when compared to 1999 operations. Wage
inflation, triggered by low unemployment and the resulting increase in labor
costs, is somewhat mitigated by increases in productivity. Generally, when the
Corporation incurs higher capital costs to replace productive facilities and
equipment, increased capacity and productivity, and various other offsetting
factors, counterbalance increased depreciation costs.

The Corporation is replacing its existing information systems with an
enterprise-wide information solution through J.D. Edwards World Solutions
Company. The capital requirements for this project are expected to be $24
million, with $16 million expected to be expended in 2001. Management expects to
complete the system design and implementation phase of several significant
processes during 2001, including the implementation of the general ledger and
financial reporting package. However, the full system implementation will take a
period of two to three years. The Corporation believes it has deployed
sufficient manpower and capital to successfully complete the project.


DISCUSSION OF BUSINESS SEGMENTS

The Corporation conducts its operations through two reportable business
segments: Aggregates and Magnesia Specialties. The Aggregates division is the
second largest producer of construction aggregates in the United States. The
Corporation's sales and earnings are predominantly derived from its aggregates
segment, which processes and sells granite, limestone, sand and gravel and other
aggregates products for use primarily by commercial customers. The division's
products are used principally in domestic construction of highways and other
infrastructure projects and for commercial and residential buildings. The
Aggregates division also includes the operations of its other construction
materials businesses. These businesses, acquired through continued selective
vertical integration by the Corporation, include primarily asphalt, ready mixed
concrete and road paving operations. The Corporation's Magnesia Specialties
division produces refractories materials and dolomitic lime used in basic steel
production and chemicals products used in industrial, agricultural and
environmental applications. The magnesia-based products segment generally
derives a major portion of its sales and earnings from the products used in the
steel industry.


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 33
   27

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


The Corporation's evaluation of performance and allocation of resources is based
primarily on earnings from operations. Earnings from operations is total
revenues less cost of revenues; selling, general and administrative expenses;
and research and development, and excludes interest expense and other income
(expense). The accounting policies of the reportable segments are the same as
those described in Note A to the audited consolidated financial statements on
pages 13 through 15. Assets employed by segment include assets directly
identified with those operations. Corporate headquarters' assets consist
primarily of cash and cash equivalents, and property, plant and equipment for
corporate operations. All debt, and the related interest expense, is held at
corporate headquarters. Property additions include property, plant and equipment
that has been purchased through acquisitions in the amount of $15,325,000 in
2000, $44,747,000 in 1999 and $154,445,000 in 1998.

The following tables display selected financial data for the Corporation's
reportable business segments for each of the three years in the period ended
December 31, 2000.

SELECTED FINANCIAL DATA BY BUSINESS SEGMENT

years ended December 31
(in thousands)



NET SALES                                2000           1999           1998
- ---------------------------------------------------------------------------
                                                        
Aggregates                         $1,202,581     $1,125,636     $  920,767
Magnesia Specialties                  130,419        133,191        136,924
- ---------------------------------------------------------------------------
Total                              $1,333,000     $1,258,827     $1,057,691
===========================================================================

GROSS PROFIT
- ---------------------------------------------------------------------------
Aggregates                         $  276,640     $  283,998     $  249,516
Magnesia Specialties                   26,931         26,701         32,132
- ---------------------------------------------------------------------------
Total                              $  303,571     $  310,699     $  281,648
===========================================================================

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
- ---------------------------------------------------------------------------
Aggregates                         $   82,088     $   75,568     $   64,106
Magnesia Specialties                   16,680         17,053         17,935
- ---------------------------------------------------------------------------
Total                              $   98,768     $   92,621     $   82,041
===========================================================================

EARNINGS FROM
OPERATIONS
- ---------------------------------------------------------------------------
Aggregates                         $  194,232     $  208,011     $  184,648
Magnesia Specialties                    8,245          7,278         11,906
- ---------------------------------------------------------------------------
Total                              $  202,477     $  215,289     $  196,554
===========================================================================


ASSETS EMPLOYED                          2000           1999           1998
- ---------------------------------------------------------------------------
                                                        
Aggregates                         $1,703,752     $1,598,948     $1,423,031
Magnesia Specialties                   99,913        105,362        117,549
Corporate headquarters                 37,774         38,264         48,009
- ---------------------------------------------------------------------------
Total                              $1,841,439     $1,742,574     $1,588,589
===========================================================================

DEPRECIATION, DEPLETION
AND AMORTIZATION
- ---------------------------------------------------------------------------
Aggregates                         $  125,697     $  114,457     $   89,487
Magnesia Specialties                    8,532          8,468          8,738
Corporate headquarters                  2,144          1,829            540
- ---------------------------------------------------------------------------
Total                              $  136,373     $  124,754     $   98,765
===========================================================================

PROPERTY ADDITIONS
- ---------------------------------------------------------------------------
Aggregates                         $  174,797     $  177,318     $  260,112
Magnesia Specialties                    6,817          3,942          6,874
Corporate headquarters                  4,516          1,307         11,385
- ---------------------------------------------------------------------------
Total                              $  186,130     $  182,567     $  278,371
===========================================================================


AGGREGATES. The Aggregates division's net sales increased 7% to $1.203 billion
for the year ended December 31, 2000, compared with the prior year's net sales.
This increase in net sales reflects a 0.3 million ton decrease in total
aggregates tons shipped during 2000 to 164.9 million tons, offset by increases
in volumes in asphalt and other construction-related operations and prices. The
decrease in total aggregates tons shipped during 2000 is discussed in "Results
of Operations." The division's heritage aggregates operations, which exclude
acquired operations that have not been included in prior-year operations for a
full year, experienced pricing improvements during 2000 of approximately 3.7% in
average net selling price, while the division's overall aggregates average net
selling price increased 3.6%, when compared with the prior year's prices. As in
1999, the pricing structure in acquired operations reflects lower overall
average net selling prices, principally because of differences in product
groups, production costs, demand and competitive conditions, when compared with
product sales from the Corporation's heritage aggregates operations.

The division's operating earnings for the full year 2000 decreased 7% to $194.2
million from the prior year's earnings from operations of $208.0 million. As
discussed previously in "Results of Operations," the division's operating
earnings for the year decreased, principally as a result of higher-than-

Page 34            Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   28
expected energy-related costs, a slowdown of construction activity and
weather-related events.

For the year ended December 31, 1999, the Aggregates division had net sales of
$1.126 billion, which were $204.9 million, or 22% higher than the 1998 net sales
of $920.8 million. This improvement reflects a 15.7 million-ton increase in
total aggregates tons shipped during 1999 to 165.2 million-tons and an increase
of approximately 3.6% in the division's aggregates average net selling price,
when compared with the prior year's. Earnings from operations in the year were
$208.0 million, an increase of 13% over the division's operating earnings for
1998. The division's increased operating profits during 1999 were principally a
result of the acquisition of Redland Stone, which was somewhat offset by the
impact of weather-related events and weakening agricultural and commercial
construction demand. Operating results in 1998 reflected record volume, 5.1%
price increases at heritage aggregates locations and growth from acquisitions.

MAGNESIA SPECIALTIES.  For the year ended December 31, 2000, the Magnesia
Specialties division had net sales of $130.4 million, a decrease of $2.8
million, or 2%, from 1999 net sales of $133.2 million. The division's earnings
from operations for 2000 of $8.2 million increased $1.0 million, or 13%, when
compared to 1999 earnings from operations. As discussed earlier, the division's
improvement during 2000 was the result of stronger performance in the steel
industry in the first half of 2000. This improvement was significantly offset by
higher-than-expected natural gas prices and deteriorating performance in the
steel industry during the second half of 2000. Balanced production and shipment
levels in 2000, along with effective cost controls, also provided a favorable
year-over-year comparison between 2000 and 1999.

Magnesia Specialties division's 1999 net sales of $133.2 million were 3% below
the prior year's. The division's operating earnings for 1999 of $7.3 million
were 39% below the 1998 operating earnings. The division's results continued to
reflect the poor performance of the steel industry through decreased demand and
the resultant adjustment in the division's production levels. The Magnesia
Specialties division's 1998 net sales of $136.9 million were 2% below the prior
year's, and operating earnings for 1998 of $11.9 million were 14% below 1997
operating earnings.


LIQUIDITY AND CASH FLOWS

A primary source of the Corporation's liquidity during the past three years has
been cash generated from its operating activities. Cash provided by its
operations was $212.9 million in 2000, as compared to $223.7 million in 1999 and
$222.6 million in 1998. These cash flows were derived, substantially, from net
earnings before deduction of certain noncash charges for depreciation, depletion
and amortization of its properties and intangible assets. Depreciation,
depletion and amortization were as follows:


YEARS ENDED DECEMBER 31
(IN THOUSANDS)                         2000         1999         1998
- ---------------------------------------------------------------------
                                                    
Depreciation                       $108,540     $ 98,559     $ 82,268
Depletion                             4,681        5,369        4,334
Amortization                         23,152       20,826       12,163
                                   --------     --------     --------
Total                              $136,373     $124,754     $ 98,765
                                   ========     ========     ========


CONSOLIDATED OPERATING CASH FLOW
(IN MILLIONS)


               
1996              $134.9
1997              $195.6
1998              $222.6
1999              $223.7
2000              $212.9


Working capital increases for 2000, included in the above-referenced cash
provided by operations, were due primarily to increases in the value of the
Aggregates division's inventories because of increases in inventory quantity,
valuation and changes in mix; offset by a reduction in receivables, primarily as
a result of reduced shipping levels in the fourth quarter. The 1999 working
capital increases were due primarily to increases in Aggregates division's
inventories, as a result of expected increases in demand in 2000, and an
increase in receivables balances, primarily associated with the increased level
of sales. The 1998 working capital increases included an increase in the
Magnesia Specialties division's inventories as a result of strong production in
1998, coupled with reduced demand in certain product areas, and a decrease in
overall trade accounts payable balances, partially offset by a decrease in
receivables resulting from accelerated cash collections. Other assets and
liabilities, net, include changes to both current and noncurrent balance sheet
accounts. In addition to other offsetting amounts, other assets and liabilities,
net, changed in 2000, principally due to a reduction in the accrual of certain
postre-


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 35
   29

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


tirement benefits and the payment of certain obligations accrued in the previous
year. In 1999, other assets and liabilities, net, changed principally due to the
decline in the rate of increase in certain self insurance reserves, as compared
to a significant increase in 1998, as a result of higher-than-average claims.

Net cash used for investing activities was $201.8 million in 2000, a decrease of
$12.8 million from $214.6 million reported in 1999. Of that amount, the
Corporation used $39.3 million for the purchase of five Aggregates division-
related acquisitions, compared with $77.1 million in 1999 for the purchase of
ten Aggregates division-related acquisitions and $347.9 million in 1998 that
financed the acquisition of Redland Stone and nine other acquisitions. Additions
to property, plant and equipment, excluding acquisitions, of $170.8 million were
24% higher in 2000, compared with 1999. Comparable full-year capital
expenditures were $137.8 million in 1999 and $123.9 million in 1998. The
Corporation's acquisition and capital expenditures reflect planned strategic
growth and capital spending activities that are consistent with management's
strategy for investment and expansion within the consolidating aggregates
industry. For the years 1999 and 2000, the Corporation's management had planned
a more significant increase in property, plant and equipment additions. However,
as anticipated net sales growth in the heritage operations was affected by
weather-related conditions and softening construction demand, management scaled
back capacity expansion to better match the timing of market expansion. Other
investing activities included, among other items, proceeds from the sale of
surplus land and equipment; in 2000, the Corporation's additional investment in
IMS; in 1999, the Corporation's initial 19% investment in IMS and loans to
Meridian; and in 1998, the Corporation's initial investment in Meridian.

Approximately $19.3 million of cash was used for financing activities during
2000, compared with $20.3 million in 1999. In 1998, $279.2 million of cash was
provided by financing activities. The Corporation incurred $4.0 million of net
indebtedness in 2000, excluding $1.0 million reflected in acquisitions, net. Net
indebtedness of $14.7 million was incurred in 1999, excluding $9.2 million
reflected in acquisitions, net. During 1998, the Corporation incurred $302.3
million of net indebtedness, principally in connection with the consummation of
the Redland Stone acquisition. In 2000, the Board of Directors approved total
cash dividends on the Corporation's common stock of $0.54 a share. Regular
quarterly dividends were authorized and paid by the Corporation at a rate of
$0.13 a share for the first and second quarters and at a rate of $0.14 a share
for the third and fourth quarters. During 2000, the Corporation issued stock
under its stock-based award plans, providing $2.0 million in cash. Comparable
cash provided by issuance of common stock was $2.0 million and $1.9 million in
1999 and 1998, respectively. Further, during 1999 and 1998, the Corporation
issued approximately 311,100 and 280,100 restricted shares of common stock,
respectively, for acquisitions. The Corporation used cash of $12.7 million
during 1999 to finance the repurchase of 322,300 shares of its common stock, at
public market prices, at various purchase dates. The repurchase of shares was
authorized under the Corporation's 6 million-share authorization from the Board
of Directors for the Stock-Based Award Plan and the Amended Omnibus Securities
Award Plan. There were no shares repurchased in 2000 or 1998.

The Corporation anticipates incurring additional indebtedness in connection with
the Meridian acquisition. The funds for the consummation of the Meridian
acquisition are expected to be initially provided through borrowings under the
Corporation's United States' commercial paper program. The Corporation expects
to subsequently repay a portion of its commercial paper borrowings with the
proceeds from the planned issuance of publicly registered debt.

CAPITAL STRUCTURE AND RESOURCES

Long-term debt, including current maturities of long-term debt and commercial
paper, increased to $646.7 million at the end of 2000, from $641.7 million at
the end of 1999. Total debt represented approximately 43% of total
capitalization at December 31, 2000, compared with 45% at December 31, 1999. The
Corporation's debt at December 31, 2000, was principally in the form of publicly
issued long-term, fixed-rate notes and debentures and United States' commercial
paper (see Note E to the audited consolidated financial statements on pages 16
and 17). Shareholders' equity grew to $863.3 million at December 31, 2000, from
$774.0 million at December 31, 1999.


Page 36           Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   30

The Corporation has $450 million in revolving credit facilities, syndicated
through a group of commercial domestic and foreign banks, which support a United
States' commercial paper program of a comparable amount. The credit facilities
consist of a five-year, unsecured revolving credit agreement in the amount of
$150 million (the "Long-Term Credit Agreement"), which expires in January 2002,
and a 364-day unsecured revolving credit agreement in the amount of $300 million
(the "Short-Term Credit Agreement"), which expires in August 2001 (see Note E to
audited consolidated financial statements on pages 16 and 17). The Corporation
amended its revolving credit agreements, in connection with extending the term
of its Short-Term Credit Agreement, to modify certain restrictive covenants
relating to leverage. The Corporation's management believes it will be able to
extend its Short-Term Credit Agreement for an additional 364-day period beyond
August 2001 and extend its Long-Term Credit Agreement for an additional
five-year term beyond January 2002.

No borrowings were outstanding under either of the revolving credit agreements
at December 31, 2000. However, the Long- and Short-Term Credit Agreements
support commercial paper borrowings of $190 million outstanding at December 31,
2000, of which $150 million has been classified as long-term debt on the
Corporation's consolidated balance sheet, based on management's ability and
intention to maintain this debt outstanding for at least one year. The remaining
outstanding commercial paper of $40 million has been classified as current on
the Corporation's consolidated balance sheet.

At December 31, 2000, the Corporation had $2.5 million outstanding under a $10
million, variable-rate line of credit. The effective interest rate on the
outstanding balance at December 31, 2000, was 7.32%.

As discussed earlier, the Corporation's operations are highly dependent upon the
interest rate-sensitive construction and steelmaking industries. Consequently,
these marketplaces could experience lower levels of economic activity in an
environment of rising interest rates or escalating costs (see "Business
Environment" on pages 27 through 33). Aside from these inherent risks, the
Corporation's earnings are affected also by changes in short-term interest
rates, as a result of its outstanding commercial paper obligations and temporary
cash investments, including overnight investments in Eurodollars. However,
management believes that the Corporation's exposure to short-term interest rate
market risk is not material.

Long-term interest rates influence assumptions used to develop the costs for
the Corporation's employee retirement and postretirement benefit plans. The
Corporation's retirement and postretirement benefit expense in 2000 was
reduced as a result of the increased discount rate for the retirement and
postretirement benefit plans, favorable 1999 investment returns on employee
retirement plan assets and certain changes to the postretirement benefit plan.
The Corporation's management anticipates an increase in retirement and
postretirement benefit expense in 2001, as a result of the decrease in the
discount rate and lower investment returns experienced in 2000, as compared to
1999. There is no assurance that retirement and postretirement benefit expense
will continue at current levels, due to the underlying volatility of interest
rates and investment returns (see Note H to the audited consolidated financial
statements on pages 18 through 20).

Certain agreements expose the Corporation to foreign currency fluctuations.
However, management believes this exposure is not material to the Corporation.

The Corporation has entered into standby letter of credit agreements relating to
workers' compensation and auto and general liability self insurance. On December
31, 2000, the Corporation had contingent liabilities under these outstanding
letters of credit of approximately $8.4 million.

The 5.875% Notes, due December 1, 2008, with an effective rate of 6.03%, were
issued in December 1998, in the aggregate principal amount of $200 million,
through private placement in connection with the acquisition of Redland Stone.
The 5.875% Notes were subsequently registered with the Securities and Exchange
Commission (the "Commission") in February 1999. The initial purchasers in the
private placement offering exchanged their outstanding notes for registered
notes with substantially identical terms.

Currently, the Board of Directors has granted management the authority to file a
universal shelf registration statement with the Commission for up to $500
million in issuance of either debt or equity securities. However, management has
not determined the timing when, or the amount for which, it may file such shelf
registration.

Martin Marietta Materials' internal cash flows and availability of financing
resources, including its access to capital markets, both debt and equity, and
its revolving credit agreements, are expected to continue to be sufficient to


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 37
   31

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


provide the capital resources necessary to support anticipated operating needs,
to cover debt service requirements, to fund capital expenditures and
discretionary investments and to allow for payment of dividends for the
foreseeable future. The Corporation's ability to borrow or issue securities is
dependent upon, among other things, prevailing economic, financial and market
conditions.

The Corporation's senior unsecured debt has been rated "A-" by Standard & Poor's
and "A3" by Moody's. The Corporation's $450 million commercial paper program is
rated "A-2" by Standard & Poor's, "P-2" by Moody's and "F-2" by Fitch IBCA, Duff
& Phelps. The Corporation's senior unsecured debt was downgraded from "A" to
"A-" by Standard and Poor's and its commercial paper program was lowered from
"A-1" to "A-2" by Standard and Poor's and from "F-1" to "F-2" by Fitch, as a
result of the additional debt required to finance the acquisition of Meridian.
While management believes its credit ratings will remain at an investment-grade
level, no assurance can be given that these ratings will remain at the
above-mentioned levels.


ENVIRONMENTAL MATTERS

The Corporation's operations are subject to and affected by federal, state and
local laws and regulations relating to the environment, health and safety, and
other regulatory matters. Certain of the Corporation's operations may, from time
to time, involve the use of substances that are classified as toxic or hazardous
within the meaning of these laws and regulations. Environmental operating
permits are, or may be, required for certain of the Corporation's operations and
such permits are subject to modification, renewal and revocation. The
Corporation regularly monitors and reviews its operations, procedures and
policies for compliance with these laws and regulations. Despite these
compliance efforts, risk of environmental liability is inherent in the operation
of the Corporation's businesses, as it is with other companies engaged in
similar businesses, and there can be no assurance that environmental liabilities
will not have a material adverse effect on the Corporation in the future.

The Corporation records appropriate financial statement accruals for
environmental matters in the period in which liability is established and the
appropriate amount can be estimated reasonably. Among the variables that
management must assess in evaluating costs associated with environmental issues
are the evolving environmental regulatory standards. The nature of these matters
makes it difficult to estimate the amount of any costs that may be necessary for
future remedial measures. The Corporation currently has no material provisions
for estimated costs in connection with expected remediation or other
environmental-related expenditures because it is impossible to quantify the
impact of all actions regarding environmental matters, particularly the extent
and cost of future remediation and other compliance efforts. However, in the
opinion of management, it is unlikely that any additional liability the
Corporation may incur for known environmental issues or compliance with present
environmental-protection laws would have a material adverse effect on the
Corporation's consolidated financial position or on its results of operations
(see Note L to the audited consolidated financial statements on pages 22 and
23).


NEW ACCOUNTING STANDARDS

Effective July 1, 2000, the Corporation adopted Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("FAS 133"), as amended by Statement of Financial Accounting
Standards No. 137, Accounting for Derivative Instruments and Hedging Activities
- - Deferral of the Effective Date of FASB Statement No. 133, and Statement of
Financial Accounting Standards No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities an Amendment of FASB Statement No.
133 ("FAS 138"). The adoption of FAS 133 and FAS 138 did not have an impact on
net earnings or the financial position of the Corporation because the
Corporation does not currently have any hedging activities, derivative
instruments or material contracts that are subject to these accounting
standards.

The Corporation adopted Staff Accounting Bulletin No. 101, Revenue Recognition
in Financial Statements ("SAB 101"), for the quarter ended December 31, 2000.
The Corporation recognizes substantially all revenues, net of discounts, if any,
when finished products are shipped to customers or services have been rendered.
Therefore, the adoption of SAB 101 had no effect on the Corporation's reported
total revenues, net earnings or financial position.


Page 38            Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   32

The Corporation adopted Emerging Issues Task Force Issue No. 00-10, Accounting
for Shipping and Handling Fees and Costs ("EITF 00-10"), beginning with the
fourth quarter 2000 reporting. EITF 00-10 requires that amounts billed to
customers related to shipping and handling be classified as revenue and that the
related costs be included in costs. Generally, the Corporation's customers
accept the aggregates products that they purchase at the quarry location using
their own transportation. However, in certain circumstances, the Corporation
arranges for transportation of the purchased aggregates products to the customer
for a delivered price. The customer is billed at the delivered price, which
includes the price of the aggregates products and the cost of freight and
delivery charges.

Freight and delivery costs for the years ended December 31, 2000, 1999 and 1998,
were $184.5 million, $175.3 million and $143.9 million respectively. The
Corporation included freight and delivery charges in total revenues and the
related cost of freight and delivery in total cost of revenues beginning with
the reporting of the operating results for the quarter and year ended December
31, 2000. Gross profit did not change from amounts reported prior to the
adoption of EITF 00-10; however, gross profit margins have decreased, as a
result of an increase in total revenues. Prior annual and quarterly periods have
been reclassified.

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities ("FAS 140"). FAS 140 is
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001, and should be applied prospectively.
Certain disclosures for securitized financial assets were required for the
December 31, 2000, annual reporting. The adoption of FAS 140 did not have any
impact on net earnings or the financial position of the Corporation.


CAUTIONARY STATEMENTS

This Annual Report contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that
all forward-looking statements involve risks and uncertainties, including those
arising out of economic, climatic, political, regulatory, competitive and other
factors, including inaccurate assumptions. Investors are also cautioned that it
is not possible to predict or identify all such factors. Consequently, the
reader should not consider any such list to be a complete statement of all
potential risks or uncertainties. The forward-looking statements in this
document are intended to be subject to the safe harbor protection provided by
Sections 27A and 21E. These forward-looking statements are made as of the date
hereof based on management's current expectations and the Corporation does not
undertake an obligation to update such statements, whether as a result of new
information, future events or otherwise. For a discussion identifying some
important factors that could cause actual results to vary materially from those
anticipated in the forward-looking statements, see the Corporation's filings
with the Securities and Exchange Commission including, but not limited to, the
discussion of "Competition" in the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000 (Form 10-K); "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 24
through 39 of this Annual Report; and "Note A: Accounting Policies" on pages 13
through 15 and "Note L: Commitments and Contingencies" on pages 22 and 23 of the
Notes to Financial Statements of the Audited Consolidated Financial Statements
included in this Annual Report, incorporated by reference into the Form 10-K.


Martin Marietta Materials, Inc. and Consolidated Subsidiaries            Page 39
   33
                             QUARTERLY PERFORMANCE
                                   UNAUDITED




                                                                                                           BASIC EARNING PER
(ADD 000, EXCEPT PER SHARE)            NET SALES(1)            GROSS PROFIT            NET EARNINGS         COMMON SHARE(2)
- -----------------------------------------------------------------------------------------------------------------------------
QUARTER                             2000          1999        2000        1999        2000        1999      2000      1999
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                             
First                           $  276,131    $  241,061    $ 44,358    $ 39,742    $  7,330    $  7,940    $0.16    $0.17
Second                             362,474       328,865      96,832      90,227      42,122      41,273     0.90     0.88
Third                              380,305       353,792      95,426      99,661      42,051      43,951     0.90     0.94
Fourth                             314,090       335,109      66,955      81,069      20,524      32,617     0.44     0.70
- -----------------------------------------------------------------------------------------------------------------------------
Totals                          $1,333,000    $1,258,827    $303,571    $310,699    $112,027    $125,781    $2.40    $2.70
=============================================================================================================================




                                                                      PER COMMON SHARE
                                                  -------------------------------------------------------
                                                                                STOCK PRICES
                             DILUTED EARNINGS PER                   -------------------------------------
                                COMMON SHARE(2)   DIVIDENDS PAID     HIGH      LOW       HIGH     LOW
- ---------------------------------------------------------------------------------------------------------
QUARTER                          2000    1999      2000     1999         2000                1999
- ---------------------------------------------------------------------------------------------------------
                                                                         
First                           $0.16    $0.17    $0.13    $0.13    $49.38    $35.50    $61      $49 3/16
Second                           0.90     0.88     0.13     0.13    $54.25    $40.45    $68 1/8  $54  7/8
Third                            0.90     0.94     0.14     0.13    $46.94    $35.24    $60 3/8  $35  1/4
Fourth                           0.44     0.70     0.14     0.13    $44.10    $32.25    $42 5/8  $35  3/8
- ---------------------------------------------------------------------------------------------------------
Totals                          $2.39    $2.68    $0.54    $0.52
=========================================================================================================


(1)  Net sales exclude freight and delivery revenues; such revenues are included
     in total revenues in accordance with EITF 00-10, Accounting for Shipping
     and Handling Fees and Costs on the Consolidated Statement of Earnings on
     page 9.

(2)  The sum of per-share earnings by quarter may not equal earnings per share
     for the year due to changes in average share calculations. This is in
     accordance with prescribed reporting requirements.


Page 40            Martin Marietta Materials, Inc. and Consolidated Subsidiaries
   34
                               FIVE YEAR SUMMARY




(ADD 000, EXCEPT PER SHARE)                              2000            1999           1998            1997             1996
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                    
CONSOLIDATED OPERATING RESULTS
Net sales                                          $1,333,000      $1,258,827      $1,057,691      $  900,863      $  721,947
Freight and delivery revenues                         184,517         175,292         143,805         128,326         102,974
                                                   --------------------------------------------------------------------------
  Total revenues                                    1,517,517       1,434,119       1,201,496       1,029,189         824,921
- -----------------------------------------------------------------------------------------------------------------------------
Cost of sales, other costs and expenses             1,130,523       1,043,538         861,137         738,093         601,271
Freight and delivery costs                            184,517         175,292         143,805         128,326         102,974
                                                   --------------------------------------------------------------------------
  Cost of operations                                1,315,040       1,218,830       1,004,942         866,419         704,245
- -----------------------------------------------------------------------------------------------------------------------------
EARNINGS FROM OPERATIONS                              202,477         215,289         196,554         162,770         120,676
Interest expense on debt                               41,895          39,411          23,759          16,899          10,121
Other income and (expenses), net                        8,239          18,435           1,347           5,341           8,398
- -----------------------------------------------------------------------------------------------------------------------------
Earnings before taxes on income                       168,821         194,313         174,142         151,212         118,953
Taxes on income                                        56,794          68,532          58,529          52,683          40,325
- -----------------------------------------------------------------------------------------------------------------------------
NET EARNINGS                                       $  112,027      $  125,781      $  115,613      $   98,529      $   78,628
=============================================================================================================================
BASIC EARNINGS PER COMMON SHARE                    $     2.40      $     2.70      $     2.49      $     2.14      $     1.71
=============================================================================================================================
DILUTED EARNINGS PER COMMON SHARE                  $     2.39      $     2.68      $     2.48      $     2.13      $     1.71
=============================================================================================================================
CASH DIVIDENDS PER COMMON SHARE                    $     0.54      $     0.52      $     0.50      $     0.48      $     0.46
=============================================================================================================================

CONDENSED CONSOLIDATED BALANCE SHEET DATA
Current deferred income tax benefits               $   16,750      $   21,899      $   18,978      $   16,873      $   15,547
Current assets - other                                408,251         381,466         350,410         305,139         255,619
Property, plant and equipment, net                    914,072         846,993         777,528         591,420         408,820
Goodwill, net                                         374,994         375,327         348,026         148,481          39,952
Other intangibles, net                                 34,462          31,497          27,952          26,415          23,216
Other noncurrent assets                                92,910          85,392          65,695          17,385          25,764
=============================================================================================================================
TOTAL                                              $1,841,439      $1,742,574      $1,588,589      $1,105,713      $  768,918
=============================================================================================================================

Current liabilities - other                        $  143,958      $  142,974      $  136,576      $  106,804      $   86,871
Current maturities of long-term debt
  and commercial paper                                 45,155          39,722          15,657           1,431           1,273
Long-term debt and commercial paper                   601,580         602,011         602,113         310,675         125,890
Pension and postretirement benefits                    84,950          85,839          76,209          63,070          52,646
Noncurrent deferred income taxes                       86,563          81,857          75,623          50,008          13,592
Other noncurrent liabilities                           15,947          16,165          14,712          11,889           7,669
Shareholders' equity                                  863,286         774,006         667,699         561,836         480,977
=============================================================================================================================
TOTAL                                              $1,841,439      $1,742,574      $1,588,589      $1,105,713      $  768,918
=============================================================================================================================



Martin Marietta Materials, Inc. and Consolidated Subsidiaries           Page 41

1 EXHIBIT 21.01 SUBSIDIARIES OF MARTIN MARIETTA MATERIALS, INC. As of March 16, 2001 NAME OF SUBSIDIARY PERCENT OWNED - ------------------ ------------- Alamo Gulf Coast Railroad Company, a Texas corporation 99.5%(1) Alamo North Texas Railroad Company, a Texas corporation 99.5%(2) American Aggregates Corporation, a Delaware corporation 100% American Stone Company, a North Carolina corporation 50%(3) B&B Materials and Hauling, Inc., a Texas corporation 100%(4) Bahama Rock Limited, a Bahamas corporation 100% Bayou Mining, Inc., a Louisiana corporation 100% Caldwell/Mellott, Inc., a North Carolina corporation 100% Central Rock Company, a North Carolina corporation 100% Eastside Development Limited Partnership, a Texas limited partnership 99%(5) Fredonia Valley Railroad, Inc., a Delaware corporation 100% Harding Street Corporation, a Delaware corporation 100% Martin Marietta Aggregates of Iowa, Inc., an Iowa corporation 100% Martin Marietta Aggregates of Southern Iowa, Inc., an Iowa corporation 100% Martin Marietta Composites, Inc., a Delaware corporation 100% Martin Marietta Exports, Inc., a Barbados corporation 100% - --------------- (1} Alamo Gulf Coast Railroad Company is owned by Martin Marietta Materials Southwest, Ltd. (99.5%) and certain individuals (0.5%). (2) Alamo North Texas Railroad Company is owned by Martin Marietta Materials Southwest, Ltd. (99.5%) and certain individuals (0.5%). (3) Central Rock Company, a wholly-owned subsidiary of the Company, owns a 50% interest in American Stone Company. (4) B&B Materials and Hauling, Inc. is a wholly-owned subsidiary of Martin Marietta Materials Southwest, Ltd. (5) Eastside Development Limited Partnership is owned by Martin Marietta Materials Southwest, Ltd. (99%) and Redland Development Company (1%), a wholly-owned subsidiary of Martin Marietta Materials Southwest, Ltd. 32

2 Martin Marietta Magnesia Specialties Inc., a Delaware corporation 100% Martin Marietta Materials Canada Limited, a Nova Scotia, Canada corporation 100% Martin Marietta Materials of Louisiana, Inc., a Delaware corporation 100% Martin Marietta Materials de Mexico, S.A. de C.V., a Mexican corporation 100%(6) Martin Marietta Materials of Missouri, Inc., a Delaware corporation 100% Martin Marietta Materials Southwest, Ltd., a Texas limited partnership 100%(7) Martin Marietta Materials of Tennessee, Inc., a Delaware corporation 100% Martin Marietta Technologies Corp., a Delaware corporation 100% Menefee Crushed Stone Company, a Tennessee corporation 100%(8) Meridian Aggregates Company, LP, a Delaware limited partnership 98%(9) Meridian Aggregates Investments, LLC, a Delaware limited liability company 28.23% Mid-State Construction & Materials, Inc., an Arkansas corporation 100%(10) Midway Holding Company, LLC, a Delaware limited liability company 14.5%(11) OK Sand & Gravel, LLC, a Delaware limited liability company 99%(12) R&S Sand & Gravel, LLC, a Delaware limited liability company 99%(13) Redland Development Company, a Texas corporation 100%(14) Redland Park Development Limited Partnership, a Texas limited partnership 100%(15) - --------------- (6) Martin Marietta Materials de Mexico, S.A. de C.V. is owned by Martin Marietta Magnesia Specialties Inc. (99%) and Martin Marietta Materials, Inc. (1%). (7) Martin Marietta Materials Southwest, Ltd. is owned 2% by Southwest I, LLC and 98% by Southwest II, LLC. (8) Menefee Crushed Stone Company is a wholly-owned subsidiary of Martin Marietta Materials of Tennessee. (9) Meridian Aggregates Company, LP is owned 98% by Meridian Aggregates Investments, LLC. The remaining 2% is owned by members of management of Meridian Aggregates Company, LP. (10) Mid-State Construction & Materials, Inc. is a wholly-owned subsidiary of Martin Marietta Materials of Arkansas, Inc. (11) Midway Holding Company, LLC is owned 14.5% directly by Martin Marietta Materials and 28.23% indirectly through Meridian Aggregates Investments, LLC. (12) Martin Marietta Materials, Inc. is the manager of and owns a 99% interest in OK Sand & Gravel, LLC. (13) Martin Marietta Materials, Inc. is the manager of and owns a 99% interest in R&S Sand & Gravel, LLC. (14) Redland Development Company is a wholly-owned subsidiary of Martin Marietta Materials Southwest, Ltd. (15) Redland Park Development Limited Partnership is owned 100% by Martin Marietta Materials Southwest, Ltd. directly and through its subsidiaries. 33

3 Redland Stone Development Company, a Texas corporation 100%(16) Southwest I, LLC, a Delaware limited liability company 100% Southwest II, LLC, a Delaware limited liability company 100% Superior Stone Company, a North Carolina corporation 100% Theodore Holding, LLC, a Delaware limited liability company 60.7%(17) - --------------- 16 Redland Stone Development Company is a wholly-owned subsidiary of Martin Marietta Materials Southwest, Ltd. 17 Superior Stone Company, a wholly-owned subsidiary of the Company, is the manager of and owns a 60.7% interest in Theodore Holding, LLC. 34

1 EXHIBIT 23.01 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Martin Marietta Materials, Inc., of our report dated January 22, 2001, except for Note M, as to which the date is February 23, 2001, included in the 2000 Annual Report to Shareholders of Martin Marietta Materials, Inc. and subsidiaries. Our audit also included the financial statement schedule of Martin Marietta Materials, Inc. and subsidiaries listed in Item 14(a). This schedule is the responsibility of the Corporation's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-83516) pertaining to the Martin Marietta Materials, Inc. 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-8 No. 333-79039) pertaining to the Martin Marietta Materials, Inc. Stock-Based Award Plan, as amended; and in the Registration Statement (Form S-8 No. 333-37886) pertaining to the Martin Marietta Materials, Inc. Southwest Division 401(k) Plan, of our report dated January 22, 2001, except Note M, as to which the date is February 23, 2001, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Martin Marietta Materials, Inc., for the year ended December 31, 2000. ERNST & YOUNG LLP Raleigh, North Carolina March 21, 2001 35