SEC Filing | Martin Marietta Materials

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Martin Marietta Materials, Inc.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2004

Commission File Number 1-12744

MARTIN MARIETTA MATERIALS, INC.

(Exact name of registrant as specified in its charter)


North Carolina		56-1848578

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

2710 Wycliff Road, Raleigh, NC		27607-3033

(Address of principal executive offices)		(Zip Code)

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


Former name:		None

		Former name, former address and former fiscal year,
		if changes since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)

Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.


Class		Outstanding as of October 31, 2004

Common Stock, $0.01 par value		48,023,796

Page 1 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004


	Page
Part I. Financial Information:
Item 1. Financial Statements.
Consolidated Balance Sheets – September 30, 2004 and December 31, 2003		3
Consolidated Statements of Earnings — Three and Nine Months Ended September 30, 2004 and 2003		4
Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2004 and 2003		5
Condensed Notes to Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		12
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		24
Item 4. Controls and Procedures.		26
Part II. Other Information:
Item 1. Legal Proceedings.		27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		27
Item 4. Submission of Matters to a Vote of Security Holders.		27
Item 5. Other Information.		27
Item 6. Exhibits.		28
Signatures		29
Exhibit Index		30

Part I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30,			December 31,
	2004			2003
	(Unaudited)			(Audited)
	(Dollars in Thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	135,477		$	125,133
Accounts receivable, net		286,024			234,578
Inventories, net		208,690			213,843
Current deferred income tax benefits		28,742			21,603
Other current assets		21,047			26,362

Total Current Assets		679,980			621,519

Property, plant and equipment		2,270,304			2,205,465
Allowances for depreciation and depletion		(1,225,414	)		(1,163,033	)

Net property, plant and equipment		1,044,890			1,042,432
Goodwill		577,076			577,586
Other intangibles, net		19,703			25,142
Other noncurrent assets		66,568			63,414

Total Assets	$	2,388,217		$	2,330,093

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank Overdraft	$	5,750		$	11,264
Accounts payable		89,940			76,576
Accrued salaries, benefits and payroll taxes		29,642			29,287
Pension and postretirement benefits		4,305			36,176
Accrued insurance and other taxes		45,553			37,927
Income taxes		9,413			246
Current maturities of long-term debt		963			1,068
Other current liabilities		35,183			27,620

Total Current Liabilities		220,749			220,164

Long-term debt		714,955			717,073
Pension, postretirement and postemployment benefits		87,260			76,917
Noncurrent deferred income taxes		141,792			130,102
Other noncurrent liabilities		55,935			55,990

Total Liabilities		1,220,691			1,200,246

Shareholders’ equity:
Common stock, par value $0.01 per share		481			486
Preferred stock, par value $0.01 per share		—			—
Additional paid-in capital		407,893			435,412
Accumulated other comprehensive loss		(8,694	)		(8,694	)
Retained earnings		767,846			702,643

Total Shareholders’ Equity		1,167,526			1,129,847

Total Liabilities and Shareholders’ Equity	$	2,388,217		$	2,330,093

See accompanying notes to consolidated financial statements.

Page 3 of 29

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
	(Dollars in Thousands, Except Per Share Amounts)
	(Unaudited)
Net Sales	$	448,673		$	442,770		$	1,168,603		$	1,118,337
Freight and delivery revenues		57,508			60,841			155,331			155,573

Total revenues		506,181			503,611			1,323,934			1,273,910

Cost of sales		338,469			340,264			921,771			895,729
Freight and delivery costs		57,508			60,841			155,331			155,573

Total cost of revenues		395,977			401,105			1,077,102			1,051,302

Gross Profit		110,204			102,506			246,832			222,608
Selling, general & administrative expenses		30,957			29,969			95,607			89,826
Research and development		201			245			536			415
Other operating (income) and expenses, net		(3,047	)		(1,849	)		(4,560	)		(2,343	)

Earnings from Operations		82,093			74,141			155,249			134,710
Interest expense		10,816			10,905			31,847			31,909
Other nonoperating (income) and expenses, net		500			(1,388	)		(377	)		(256	)

Earnings from continuing operations before income tax expense and cumulative effect of change in accounting principle		70,777			64,624			123,779			103,057
Income tax expense		17,744			19,009			33,284			31,154

Earnings from continuing operations before cumulative effect of change in accounting principle		53,033			45,615			90,495			71,903
Discontinued Operations:
Earnings from (loss on) discontinued operations, net of related taxes of $1,216, $690, $1,818 and $574 respectively		970			(95	)		1,678			(751	)

Earnings before cumulative effect of change in accounting principle		54,003			45,520			92,173			71,152
Cumulative effect of change in accounting for asset retirement obligations, net of related taxes of $4,498		—			—			—			(6,874	)

Net earnings	$	54,003		$	45,520		$	92,173		$	64,278

Net Earnings Per Common Share:
Basic from continuing operations before cumulative effect of change in accounting principle	$	1.10		$	0.93		$	1.88		$	1.47
Discontinued operations		0.02			—			0.03			(0.02	)
Cumulative effect of change in accounting principle		—			—			—			(0.14	)

	$	1.12		$	0.93		$	1.91		$	1.31

Diluted from continuing operations before cumulative effect of change in accounting principle	$	1.09		$	0.93		$	1.86		$	1.47
Discontinued operations		0.02			—			0.03			(0.02	)
Cumulative effect of change in accounting principle		—			—			—			(0.14	)

	$	1.11		$	0.93		$	1.89		$	1.31

Dividends Per Share	$	0.20		$	0.18		$	0.56		$	0.51

Average Number of Common Shares Outstanding:
Basic		48,216,947			48,922,858			48,253,154			48,906,598

Diluted		48,572,510			49,189,728			48,643,512			49,119,952

See accompanying notes to consolidated financial statements.

Page 4 of 29

MARTINS MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended
	September 30,
	2004			2003
	(Dollars in Thousands)
	(Unaudited)
Net earnings	$	92,173		$	64,278
Cumulative effect of change in accounting principle		—			6,874

Earnings before cumulative effect of change in accouning principle		92,173			71,152
Adjustments to reconcile earnings to cash provided by operating activities:
Depreciation, depletion and amortization		99,896			103,814
(Gains) losses on sales of assets		(7,658	)		233
Other items, net		(261	)		(210	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Deferred income taxes		4,551			12,210
Accounts receivable, net		(51,446	)		(78,326	)
Inventories, net		1,801			21,938
Accounts payable		13,364			10,172
Other assets and liabilities, net		(3,207	)		30,424

Net cash provided by operating activities		149,213			171,407

Investing activities:
Additions to property, plant and equipment		(108,750	)		(82,434	)
Acquisitions, net		(5,567	)		(8,523	)
Proceeds from divestitures, net		36,994			14,920

Net cash used for investing activities		(77,323	)		(76,037	)

Financing activities:
Net principal repayments of long-term debt		(915	)		(23,830	)
Change in bank overdraft		(5,514	)		(3,888	)
Proceeds from termination of interest rate swaps		—			12,581
Dividends paid		(26,971	)		(24,916	)
Loans payable		—			(5,713	)
Repurchases of common stock		(30,433	)		—
Issuance of common stock		2,287			386

Net cash used in financing activities		(61,546	)		(45,380	)

Net increase in cash and cash equivalents		10,344			49,990
Cash and cash equivalents, beginning of period		125,133			14,498

Cash and cash equivalents, end of period	$	135,477		$	64,488

Supplemental disclosures of cash flow information:
Cash paid for interest	$	26,733		$	28,844
Net income tax payments (refunds)	$	10,167		$	(682	)
Noncash investing and financing activities:
Notes receivable issued in connection with divestitures	$	—		$	10,397

See accompanying notes to consolidated financial statements.

Page 5 of 29

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.		Basis of Presentation

		The accompanying unaudited consolidated financial statements of Martin Marietta Materials, Inc. (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and to Article 10 of Regulation S-X. The Corporation has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission on March 15, 2004. In the opinion of management, the interim financial information provided herein reflects all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations for the interim periods. The results of operations for the nine months ended September 30, 2004 are not indicative of the results to be expected for the full year.

		In 2004 and 2003, the Corporation divested of certain nonstrategic operations within its Aggregates operating segment. The results of all divested operations through the dates of disposal and any gain or loss on disposals are included in discontinued operations on the consolidated statements of earnings. The discontinued operations included the following net sales, pretax gain or loss on operations, pretax gain or loss on disposals and overall pretax gain or loss (in millions):


	3 Months Ended September 30,						9 Months Ended September 30,
	2004			2003			2004			2003
Net Sales	$	0.9		$	13.0		$	5.6		$	37.3

Pretax gain/(loss) on operations	$	(0.1	)	$	1.3		$	(0.4	)	$	0.6
Pretax gain/(loss) on disposals		2.3			(0.7	)		3.9			(0.8	)

Overall pretax gain/(loss)	$	2.2		$	0.6		$	3.5		$	(0.2	)

		Effective January 1, 2003, the Corporation adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (“FAS 143”). FAS 143 requires the recognition of the fair value of a legally enforceable liability representing an asset retirement obligation in the period in which it is incurred. A corresponding amount is capitalized as part of the asset’s carrying amount. The asset retirement obligation is recorded at the acquisition date of a long-lived tangible asset if the fair value can be reasonably estimated. The Corporation incurs reclamation obligations as part of its aggregates mining process. The cumulative effect of adopting FAS 143, which was recorded as of January 1, 2003, was a charge of $6.9 million, or $0.14 per diluted share, which is net of a $4.5 million income tax benefit. Subsequent to the adoption, the Corporation is incurring depreciation and accretion expenses, which are included in other operating income and expenses, net.

		Certain 2003 amounts have been reclassified to conform to the 2004 presentation. These reclassifications had no impact on previously reported net earnings or financial position.

Page 6 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Inventories


	September 30,			December 31,
	2004			2003
	(Dollars in Thousands)
Finished products	$	174,360		$	183,479
Product in process and raw materials		15,109			12,535
Supplies and expendable parts		25,254			23,819

		214,723			219,833
Less allowances		(6,033	)		(5,990	)

Total	$	208,690		$	213,843

3.		Goodwill

		The following shows changes in net goodwill (dollars in thousands):


	Quarter Ended			Nine Months Ended
	September 30, 2004			September 30, 2004
Balance at beginning of period	$	578,431		$	577,586
Acquisitions		—			4,384
Amounts allocated to divestitures		(1,355	)		(4,894	)

Balance at end of period	$	577,076		$	577,076

Long-Term Debt


	September 30,			December 31,
	2004			2003
	(Dollars in Thousands)
6.875% Notes, due 2011	$	249,767		$	249,773
5.875% Notes, due 2008		210,909			212,251
6.9% Notes, due 2007		124,981			124,976
7% Debentures, due 2025		124,276			124,265
Acquisition notes, interest rates ranging from 2.11% to 9.00%		4,834			5,916
Other notes		1,151			960

		715,918			718,141
Less current maturities		(963	)		(1,068	)

Total	$	714,955		$	717,073

The carrying values of the notes due in 2008 include $11,410,000 and $12,830,000 at September 30, 2004 and December 31, 2003, respectively, for the value of interest rate swaps.

Page 7 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

5.		Income Taxes

		The Corporation’s effective income tax rate for continuing operations for the first nine months was 26.9% in 2004 and 30.2% in 2003. The Corporation’s combined overall effective tax rate for continuing and discontinued operations was 27.6% and 30.8% for the nine months ended September 30, 2004 and 2003, respectively. The Corporation’s effective tax rate reflects the effect of state income taxes and the impact of differences in book and tax accounting arising from the net permanent benefits associated with the depletion allowances for mineral reserves and foreign operating earnings.

		The 2004 overall effective income tax rate reflects the change in estimated 2003 tax expense upon filing the 2003 tax return and an evaluation of deferred taxes. The change in the year-to-date effective income tax rate during the third quarter of 2004, when compared with the year-to-date effective tax rate as of June 30, 2004, increased net earnings for the nine months ended September 30, 2004 by $2.7 million, or $0.06 per diluted share.

		At September 30, 2004, the Corporation has recorded a valuation allowance of $4.5 million, primarily to reserve deferred tax assets related to net operating loss carryforwards for certain state income taxes.

6.		Pension and Postretirement Benefits

		The following presents the estimated components of the recorded net periodic benefit cost for pension and postretirement benefits for the quarter ended September 30 (dollars in thousands):


	Pension						Postretirement Benefits
	2004			2003			2004			2003
Service Cost	$	2,400		$	2,276		$	155		$	174
Interest Cost		3,571			3,622			834			1,029
Expected return on assets		(3,768	)		(2,672	)		—			—
Amortization of:
Prior service cost		138			152			(306	)		(182	)
Actuarial loss		301			410			76			54

Total net periodic benefit cost	$	2,642		$	3,788		$	759		$	1,075

The following presents the estimated components of the recorded net periodic benefit cost for pension and postretirement benefits for the nine months ended September 30 (dollars in thousands):


	Pension						Postretirement Benefits
	2004			2003			2004			2003
Service Cost	$	7,815		$	6,831		$	501		$	518
Interest Cost		11,627			10,870			2,694			3,067
Expected return on assets		(12,268	)		(8,017	)		—			—
Amortization of:
Prior service cost		448			456			(988	)		(543	)
Actuarial loss		979			1,230			244			160

Total net periodic benefit cost	$	8,601		$	11,370		$	2,451		$	3,202

Page 8 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

6.		Pension and Postretirement Benefits (continued)

		The Corporation made a $19 million contribution to its pension plan in the third quarter of 2004. The Corporation has made total contributions of $51 million to its pension plan in 2004, and no additional contributions are expected during the remainder of the year.

		In May 2004, the FASB issued Staff Position (FSP) No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP No. 106-2), which provides guidance on how companies should account for the impact of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) on its postretirement health care plans. To encourage employers to retain or provide postretirement drug benefits, beginning in 2006 the federal government will provide non-taxable subsidy payments to employers that sponsor prescription drug benefits to retirees that are “actuarially equivalent” to the Medicare benefit. The Corporation has determined that its postretirement health care plans’ prescription drug benefits are actuarially equivalent to Medicare Part D benefits to be provided under the Act. Effective July 1, 2004, the Corporation adopted the accounting guidance of FSP No. 106-2, which reduced its postretirement health care plans’ accumulated postretirement benefit obligation by approximately $3 million and 2004 annual expense by $0.2 million.

7.		Contingencies

		In the opinion of management and counsel, it is unlikely that the outcome of litigation and other proceedings, including those pertaining to environmental matters, relating to the Corporation and its subsidiaries, will have a material adverse effect on the results of the Corporation’s operations or its financial position.

Page 9 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

8.		Stock-Based Compensation

		The Corporation has stock-based compensation plans for employees and directors which are accounted for under the intrinsic value method prescribed by APB Opinion 25, Accounting for Stock Issued to Employees, and related Interpretations. In 2004, the Corporation changed the model used for valuing stock options for options granted in August 2004 under the Corporation’s stock-based compensation plans. The fair value of the 2004 option awards was determined using a lattice valuation model as opposed to the Black-Scholes valuation model used in prior years. The Corporation assumed that all participants would exercise their vested options once the options reach 150% of their exercise price or at termination, retirement or death, if earlier. Other key assumptions used in determining the fair value of the stock options awarded in 2004 were a dividend yield of 1.68% and a volatility factor of 26.1%. The change from the Black-Scholes valuation model to the lattice valuation model resulted in a $0.7 million reduction of fair value of the 2004 option grant.

		The following table illustrates the effect on net earnings and earnings per share if the Corporation had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
	(dollars in thousands, except per share amounts)
Net earnings, as reported	$	54,003		$	45,520		$	92,173		$	64,278
Add: Stock-based compensation expense included in reported net earnings, net of related tax effects		317			373			934			1,005
Deduct: Stock-based compensation expense determined under fair value for all awards, net of related tax effects		(1,299	)		(1,644	)		(3,900	)		(4,052	)

Pro forma net earnings	$	53,021		$	44,249		$	89,207		$	61,231

Earnings per share:
Basic-as reported	$	1.12		$	0.93		$	1.91		$	1.31

Basic-pro forma	$	1.10		$	0.90		$	1.85		$	1.25

Diluted-as reported	$	1.11		$	0.93		$	1.89		$	1.31

Diluted-pro forma	$	1.09		$	0.90		$	1.83		$	1.25

Page 10 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

9.		Accounting Changes

		In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 requires a new approach in determining if a reporting entity consolidates certain legal entities referred to as variable interest entities (“VIEs”), including joint ventures, limited liability corporations and equity investments. A VIE is an entity that has insufficient resources to finance the entity’s activities without receiving additional financial support from the other parties and in which the investor does not have a controlling interest. Under FIN 46, consolidation of a VIE is required by the investor that absorbs a majority of the entity’s expected losses or receives a majority of the entity’s residual returns, or both. FIN 46 was effective as of March 31, 2004 for the Corporation. The adoption of FIN 46 was not material to the Corporation’s financial position or results of operations.

		In March 2004, the FASB issued an Exposure Draft, Share-Based Payment, an Amendment of FASB Statements No. 123 and 95. The proposed Statement would require all forms of share-based payments to employees, including employee stock options, to be recognized as compensation expense. If adopted in the form of the proposal, the expense of the awards would generally be measured at fair value at the grant date. The Statement, in its current form, would be effective July 1, 2005 for the Corporation. The Corporation expects to adopt the provisions of the proposed statement using the modified prospective transition method, which would recognize stock option awards as compensation expense for unvested awards at July 1, 2005.

10.		Subsequent Event

		On October 29, 2004, the Corporation divested of locations comprising approximately 70% of its net sales of asphalt in the Houston, Texas area for $18 million, including cash and a note receivable. The divestiture will be included in continuing operations because of the Corporation’s continuing financial interest in the Houston asphalt market, as well as the related financing. The sale is breakeven on an after-tax basis.

Page 11 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003

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

OVERVIEW Martin Marietta Materials, Inc. (the “Corporation”), operates in two principal business segments: aggregates products and specialty products. The Corporation’s net sales and earnings are predominately derived from its aggregates segment, which processes and sells granite, limestone, and other aggregates products from a network of 347 quarries, distribution facilities and plants in 28 states in the southeastern, southwestern, midwestern and central regions of the United States and in the Bahamas and Canada. The division’s products are used primarily by commercial customers principally in domestic construction of highways and other infrastructure projects and for commercial and residential buildings. The specialty products segment produces magnesia-based chemicals products used in industrial, agricultural and environmental applications; dolomitic lime sold primarily to customers in the steel industry and structural composite products with potential uses in a wide variety of industries.

CRITICAL ACCOUNTING POLICIES The Corporation outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission on March 15, 2004.

RESULTS OF OPERATIONS

Quarter Ended September 30

Consolidated net sales for the quarter were $448.7 million compared with 2003 third quarter net sales of $442.8 million. Consolidated earnings from operations for the quarter were $82.1 million as compared with $74.1 million in the third quarter 2003. Interest expense decreased 1% to $10.8 million for the third quarter 2004. Other nonoperating income and expenses, net, was an expense of $0.5 million in 2004 compared with income of $1.4 million in the prior year. Consolidated after-tax earnings from continuing operations for the quarter were $53.0 million, or $1.09 per diluted share, compared with $45.6 million, or $0.93 per diluted share, in the third quarter 2003.

Page 12 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

In 2004 and 2003, the Corporation divested of certain nonstrategic operations within its Aggregates operating segment. The results of all divested operations through the dates of disposal and any gain or loss on disposals are included in discontinued operations on the consolidated statements of earnings. The discontinued operations included the following net sales, pretax gain or loss on operations, pretax gain or loss on disposals and overall pretax gain or loss (in millions):


	3 Months Ended September 30,
	2004			2003
Net Sales	$	0.9		$	13.0

Pretax gain/(loss) on operations	$	(0.1	)	$	1.3
Pretax gain/(loss) on disposals		2.3			(0.7	)

Overall pretax gain/(loss)	$	2.2		$	0.6

Net earnings for the quarter ended September 30 were $54.0 million, or $1.11 per diluted share, in 2004 and $45.5 million, or $0.93 per diluted share, in 2003.

Except as indicated, the following comparative analysis in the Results of Operations section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on results from continuing operations.

Page 13 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

The following tables present net sales, gross profit, selling, general and administrative expenses, other operating income and expenses, net, and earnings from operations data for the Corporation and each of its segments for the three months ended September 30, 2004 and 2003. In each case, the data is stated as a percentage of net sales, of the Corporation or the relevant segment, as the case may be.

Earnings from operations include research and development expense. This expense for the Corporation was $0.2 million for the quarters ended September 30, 2004 and 2003.


	Three Months Ended
	September 30
	2004						2003
				% of						% of
	Amount			Net Sales			Amount			Net Sales
	(Dollars in Thousands)
Net sales:
Aggregates	$	420,755			100.0		$	419,604			100.0
Specialty Products		27,918			100.0			23,166			100.0

Total	$	448,673			100.0		$	442,770			100.0

Gross profit:
Aggregates	$	104,413			24.8		$	100,917			24.1
Specialty Products		5,791			20.7			1,589			6.9

Total	$	110,204			24.6		$	102,506			23.2

Selling, general & administrative expenses:
Aggregates	$	27,897			6.6		$	27,836			6.6
Specialty Products		3,060			11.0			2,133			9.2

Total	$	30,957			6.9		$	29,969			6.8

Other operating (income) and expenses, net:
Aggregates	$	(2,918	)		(0.7	)	$	(2,119	)		(0.5	)
Specialty Products		(129	)		(0.5	)		270			1.2

Total	$	(3,047	)		(0.7	)	$	(1,849	)		(0.4	)

Earnings from operations:
Aggregates	$	79,433			18.9		$	75,187			17.9
Specialty Products		2,660			9.5			(1,046	)		(4.5	)

Total	$	82,093			18.3		$	74,141			16.7

Page 14 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

Net sales for the Aggregates division were $420.8 million for the third quarter 2004 compared with $419.6 million for the third quarter 2003. Average sales price at heritage aggregates operations increased 3.1%, offset by a 2.4% decline in heritage aggregates shipments. Aggregates shipments in the Corporation’s southeastern and Gulf Coast markets were negatively affected by four hurricanes and adverse weather conditions. While the Bahamas facility incurred limited physical damage from two direct hits from the hurricanes, power was down for five weeks after the storms, resulting in no production and limited shipments during this time. Management expects to achieve normal operating levels at the Bahamas facility during the fourth quarter of 2004. Rising energy costs also negatively affected results by $0.08 per diluted share.

The following tables present volume and pricing data and shipments data for heritage operations, acquisitions and discontinued operations:


	Three Months Ended
	September 30, 2004
	Volume			Pricing
Volume/Pricing Variance⁽¹⁾
Heritage Aggregates Operations⁽²⁾		(2.4	%)		3.1	%
Aggregates Division ⁽³⁾		(3.7	%)		3.1	%


	Three Months Ended
	September 30
	2004		2003
Shipments (tons in thousands)
Heritage Aggregates Operations ⁽²⁾		54,434		55,752
Acquisitions		—		—
Divestitures⁽⁴⁾		180		953

Aggregates Division ⁽³⁾		54,614		56,705

(1)		Volume/pricing variances reflect the percentage increase/(decrease) compared with the comparable period in the prior year.

(2)		Heritage aggregates operations exclude acquisitions that have not been included in prior-year operations for a full year and divestitures.

(3)		Aggregates division includes all acquisitions from the date of acquisition and divested operations through the dates of divestiture.

(4)		Divestitures include the tons related to divested operations up to the dates of divestiture.

Selling, general and administrative expenses remained relatively stable as compared with the prior-year quarter. Increased incentive compensation costs related to profitability improvement and regulatory compliance costs were somewhat offset by a continued focus on cost reduction.

Page 15 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

Other operating income and expenses, net, includes accretion and depreciation expenses related to asset retirement obligations, rental and royalties income, and gains and losses related to receivables, fixed assets and other operating assets. For the quarter ended September 30, other operating income and expenses, net, for the Aggregates division was income of $2.9 million as compared with $2.1 million in 2003. The improvement is due to gains on sales of assets and changes in estimated accruals, including those related to disputed charges in the Shreveport, Louisiana road paving business.

The Aggregates division’s earnings from operations were $79.4 million in the third quarter of 2004 as compared with $75.2 million in the third quarter of 2003. Operating margin increased 100 basis points to 18.9 percent as compared with the prior-year quarter.

The Aggregates division’s business is significantly affected by seasonal changes and other weather-related conditions. Consequently, the Aggregates division’s production and shipment levels coincide with general construction activity levels, most of which occur in the division’s markets typically during the spring, summer, and fall seasons. Further because of the potentially significant impact of weather on the Corporation’s operations, nine month results are not indicative of expected performance for the year.

Specialty Products’ third quarter net sales of $27.9 million increased 21% when compared with net sales of $23.2 million in the year-earlier period. The increase reflects strong lime sales to the steel industry and increased chemicals sales to a variety of end users. Earnings from operations for the third quarter were $2.7 million for 2004 as compared with a loss from operations of $1.0 million in 2003. Specialty Products’ results include a $2.7 million and $1.6 million loss from operations in the Structural Composites start-up business for the quarters ended September 30, 2004 and 2003, respectively, as the Corporation continues to build its capabilities in this new area.

In addition to other offsetting amounts, other nonoperating income and expenses, net, is comprised generally of interest income, net equity earnings from nonconsolidated investments and eliminations of minority interests for consolidated non-wholly owned subsidiaries. For the quarter ended September 30, the Corporation recognized an expense of $0.5 million in 2004 compared with income of $1.4 million in 2003, primarily as a result of an insurance settlement in 2003.

On October 29, 2004, the Corporation divested of locations comprising approximately 70% of its sales of asphalt in the Houston, Texas area for $18 million, including cash and a note receivable. The divestiture will be included in continuing operations because of the Corporation’s continuing financial interest in the Houston asphalt market, as well as the related financing. The sale is breakeven on an after-tax basis.

Page 16 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

Nine Months Ended September 30

Consolidated net sales for the first nine months of 2004 were $1.169 billion compared with $1.118 billion for the year-earlier period. On a year-to-date basis, consolidated earnings from operations were $155.2 million in 2004 compared with $134.7 million in 2003. Interest expense was $31.8 million in 2004 and $31.9 million in 2003. Other nonoperating income and expenses, net, was income of $0.4 million in 2004 and $0.3 million in 2003. Consolidated earnings from continuing operations for the nine months ended September 30 were $90.5 million, or $1.86 per diluted share, in 2004 compared with $71.9 million, or $1.47 per diluted share, in 2003.

For the nine months ended September 30, the discontinued operations included the following net sales, pretax gain or loss on operations, pretax gain or loss on disposals and overall pretax gain or loss (in millions):


	2004			2003
Net Sales	$	5.6		$	37.3

Pretax gain/(loss) on operations	$	(0.4	)	$	0.6
Pretax gain/(loss) on disposals		3.9			(0.8	)

Overall pretax gain/(loss)	$	3.5		$	(0.2	)

For the first nine months of 2003, the Corporation recorded a $6.9 million, or $0.14 per diluted share, net charge as the cumulative effect of an accounting change related to the adoption of FAS 143. Consolidated net earnings for the first nine months were $92.2 million, or $1.89 per diluted share, in 2004 as compared with $64.3 million, or $1.31 per diluted share, in 2003.

The following tables present volume and pricing data and shipments data for heritage operations, acquisitions and discontinued operations:


	Nine Months Ended
	September 30, 2004
	Volume			Pricing
Volume/Pricing Variance ⁽¹⁾
Heritage Aggregates Operations ⁽²⁾		2.0	%		2.3	%
Aggregates Division ⁽³⁾		0.6	%		2.3	%


	Nine Months Ended
	September 30
	2004		2003
Shipments (tons in thousands)
Heritage Aggregates Operations ⁽²⁾		142,479		139,702
Acquisitions		—		—
Divestitures⁽⁴⁾		887		2,846

Aggregates Division ⁽³⁾		143,366		142,548

(1)		Volume/pricing variances reflect the percentage increase/(decrease) compared with the comparable period in the prior year.

(2)		Heritage aggregates operations exclude acquisitions that have not been included in prior-year operations for a full year and divestitures.

(3)		Aggregates division includes all acquisitions from the date of acquisition and divested operations through the dates of divestiture.

(4)		Divestitures include the tons related to divested operations up to the dates of divestiture.

Page 17 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

The following tables present net sales, gross profit, selling, general and administrative expenses, other operating income and expenses, net, and earnings from operations data for the Corporation and each of its segments for the nine months ended September 30, 2004 and 2003. In each case, the data is stated as a percentage of net sales, of the Corporation or the relevant segment, as the case may be.

Earnings from operations include research and development expense. This expense for the Corporation was $0.5 million and $0.4 million for the nine months ended September 30, 2004 and 2003, respectively.


	Nine Months Ended
	September 30
	2004						2003
				% of						% of
	Amount			Net Sales			Amount			Net Sales
	(Dollars in Thousands)
Net sales:
Aggregates	$	1,085,642			100.0		$	1,053,238			100.0
Specialty Products		82,961			100.0			65,099			100.0

Total	$	1,168,603			100.0		$	1,118,337			100.0

Gross profit:
Aggregates	$	231,266			21.3		$	216,371			20.5
Specialty Products		15,566			18.8			6,237			9.6

Total	$	246,832			21.1		$	222,608			19.9

Selling, general & administrative expenses:
Aggregates	$	87,403			8.1		$	83,314			7.9
Specialty Products		8,204			9.9			6,512			10.0

Total	$	95,607			8.2		$	89,826			8.0

Other operating (income) and expenses, net:
Aggregates	$	(5,242	)		(0.5	)	$	(2,941	)		(0.3	)
Specialty Products		682			0.8			598			0.9

Total	$	(4,560	)		(0.4	)	$	(2,343	)		(0.2	)

Earnings from operations:
Aggregates	$	149,105			13.7		$	135,985			12.9
Specialty Products		6,144			7.4			(1,275	)		(2.0	)

Total	$	155,249			13.3		$	134,710			12.0

Page 18 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

During the nine months ended September 30, 2004, the Corporation recorded expenses of $1.0 million for a change in estimate primarily related to disputed charges in its Louisiana road paving business. These expenses decreased net earnings for the nine months by $0.01 per diluted share.

The Corporation incurred $2.3 million and $0.2 million of receivable losses in the first nine months of 2004 and 2003, respectively, primarily due to the Corporation expensing bad debt write offs in 2004. In 2003, the Corporation applied the majority of bad debt write offs against the allowance for doubtful accounts.

During the nine months ended September 30, 2003, the Corporation decreased its accrual for incurred but not reported claims related to its self-insurance health benefits provided to its employees. The change in estimate was based on the Corporation’s recent claims experience and increased net earnings for the nine months by $1.1 million, or $0.02 per diluted share.

The 2004 overall effective income tax rate reflects the change in estimated 2003 tax expense upon filing the 2003 tax return and an evaluation of deferred taxes. The change in the year-to-date effective income tax rate during the third quarter of 2004, when compared with the year-to-date effective tax rate as of June 30, 2004, increased net earnings for the nine months ended September 30, 2004 by $2.7 million, or $0.06 per diluted share.

At September 30, 2004, the Corporation has recorded a valuation allowance of $4.5 million, primarily to reserve deferred tax assets related to net operating loss carryforwards for certain state income taxes.

LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities during the nine months ended September 30, 2004 was $149.2 million compared with $171.4 million in the comparable period of 2003. Operating cash flow is generally from earnings, before deducting depreciation, depletion and amortization, offset by working capital requirements. In the nine months ended September 30, 2004, the Corporation made voluntary contributions of $51 million to its pension plan, compared with $21 million in the first nine months of 2003, both of which reduced operating cash flow. Additionally, during the first three quarters of 2003, the Corporation significantly reduced inventory levels. There was no comparable reduction in 2004. These factors were partially offset by a lower increase in accounts receivable in 2004 as a result of collection efforts. Depreciation, depletion and amortization was as follows (amounts in millions):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2004		2003		2004		2003
Depreciation	$	30.2	$	32.4	$	91.4	$	94.9
Depletion		1.7		1.5		4.4		4.0
Amortization		1.2		1.9		4.1		4.9

	$	33.1	$	35.8	$	99.9	$	103.8

Page 19 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

The seasonal nature of the construction aggregates business impacts quarterly operating cash flow when compared with the year. Full year 2003 net cash provided by operating activities was $277.2 million, compared with $171.4 million provided by operations in the first nine months of 2003.

First nine months capital expenditures, exclusive of acquisitions, were $108.7 million in 2004 and $82.4 million in 2003. Comparable full-year capital expenditures were $120.6 million in 2003.

During the nine months ended September 30, 2004, the Corporation repurchased 641,600 shares of its common stock at an aggregate cost of $30.4 million.

Based on prior performance and current expectations, the Corporation’s management believes that cash flows from internally generated funds will be sufficient to provide the capital resources necessary to fund the operating needs of its existing businesses, cover debt service requirements, and allow for payment of dividends in 2004.

The Corporation may be required to obtain additional levels of financing in order to fund certain strategic acquisitions, if any such opportunities arise. Currently, the Corporation’s senior unsecured debt is rated “BBB+” by Standard & Poor’s and “A3” by Moody’s. The Corporation’s commercial paper obligations are rated “A-2” by Standard & Poor’s and “P-2” by Moody’s. In May 2004, Standard and Poor’s lowered its rating on the Corporation’s senior unsecured debt from “A-” to “BBB+”. At the same time, Standard and Poor’s revised its outlook for the Corporation to stable from negative. 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.

Contractual Obligations

In 2004, the Corporation entered into new equipment operating leases with aggregate future commitments of $10.3 million. The Corporation intends to continue entering into operating leases, primarily for mobile equipment, in its ordinary course of business. The Corporation also enters into equipment rentals on a regular basis to meet shorter term, nonrecurring and intermittent needs.

ACCOUNTING CHANGES The accounting changes that currently impact the Corporation are included in Note 9 to the Consolidated Financial Statements.

TRENDS AND RISKS The Corporation outlined the trends and risks associated with its business in its Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission on March 15, 2004. Management continues to evaluate its exposure to all operating risks on an ongoing basis.

Page 20 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

The Transportation Equity Act for the 21st Century (“TEA-21”), which was the federal highway bill, expired by its own terms on September 30, 2003. The general provisions of TEA-21 have been retained under continuing resolutions, which have provided federal funding for highways at an annual level of $33.6 billion during the fiscal year ended September 30, 2004 and into fiscal year 2005. Most recently, the House and Senate approved legislation to extend the federal highway program until May 31, 2005 while deliberations for a successor bill continue. The Bush Administration and both the House and Senate have all proposed six-year bills, but the overall proposed funding level varies in each of the proposals.

OUTLOOK 2004 The outlook for the Aggregates business for the remainder of 2004 is dependent on weather conditions during the fourth quarter. Additionally, the level of highway spending will continue to be uncertain until a federal highway bill is finalized and state construction spending priorities are set. Federal highway funding has been operating under a continuing resolution since the expiration of the prior bill on September 30, 2003 and has been extended through May 31, 2005. Residential construction spending is expected to be essentially flat. Commercial construction spending, while beginning to recover in some areas in the United States, is not expected to improve significantly until 2005. Management expects aggregates shipments volume and pricing to increase 2 percent to 3 percent for the year.

Management expects net earnings per diluted share for 2004 to range from $2.42 to $2.62. Included in this range is an expected loss of $8 million to $10 million in the structural composites business. Fourth quarter 2004 earnings per diluted share are expected to be in a range of $0.53 to $0.73. The uncertainty surrounding the federal highway bill reauthorization, state construction spending priorities, the degree of commercial construction recovery, weather, the sale of underperforming assets, rail and water transportation shortages, volatility of energy prices and composites performance are the significant factors that are likely to affect performance within the earnings range.

Page 21 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

OTHER MATTERS If you are interested in Martin Marietta Materials, Inc. stock, management recommends that, at a minimum, you read the Corporation’s current annual report and 10-K, 10-Q and 8-K reports to the SEC over the past year. The Corporation’s recent proxy statement for the annual meeting of shareholders also contains important information. These and other materials that have been filed with the SEC are accessible through the Corporation’s Web site at www.martinmarietta.com and are also available at the SEC’s Web site at www.sec.gov. You may also write or call the Corporation’s Corporate Secretary, who will provide copies of such reports.

Investors are cautioned that all statements in this Quarterly Report that relate to the future involve risks and uncertainties, and are based on assumptions that the Corporation believes in good faith are reasonable but which may be materially different from actual results. Forward-looking statements give the investor our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate only to historical or current facts. They may use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words of similar meaning in connection with future events or future operating or financial performance. Any or all of our forward-looking statements here and in other publications may turn out to be wrong.

Factors that the Corporation currently believes could cause actual results to differ materially from the forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, the level and timing of federal and state transportation funding; levels of construction spending in the markets the Corporation serves; unfavorable weather conditions; fuel costs; transportation costs; successful development and implementation of the structural composite technological process and commercialization of strategic products for specific market segments; successful sale of underperforming assets; and other risk factors listed from time to time found in the Corporation’s filings with the Securities and Exchange Commission. Other factors besides those listed here may also adversely affect the Corporation, and may be material to the Corporation. The Corporation assumes no obligation to update any such forward-looking statements.

Page 22 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 2004 and 2003
(Continued)

INVESTOR ACCESS TO COMPANY FILINGS Shareholders may obtain, without charge, a copy of Martin Marietta Materials’ Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2003, by writing to:

Martin Marietta Materials, Inc.

Attn: Corporate Secretary

2710 Wycliff Road

Raleigh, North Carolina 27607-3033

Additionally, Martin Marietta Materials’ Annual Report, press releases and filings with the Securities and Exchange Commission, including Forms 10-K, 10-Q, 8-K and 11-K, can generally be accessed via the Corporation’s Web site. Filings with the Securities and Exchange Commission accessed via the Web site are available through a link with the Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system. Accordingly, access to such filings is available upon EDGAR placing the related document in its database. Investor relations contact information is as follows:

Telephone: (919) 783-4658

Email: investors@martinmarietta.com

Web site address: www.martinmarietta.com

Page 23 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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. Aside from these inherent risks from within its operations, the Corporation’s earnings are affected also by changes in short-term interest rates, as a result of its temporary cash investments, including money market funds and overnight investments in Eurodollars; interest rate swaps; any outstanding commercial paper obligations; and defined benefit pension plans.

Interest Rate Swaps. In August 2003, the Corporation entered into interest rate swap agreements (the “Swaps”) for interest related to $100 million of the $200 million Notes due in 2008 to increase the percentage of its long-term debt that bears interest at a variable rate. The Swaps are fair value hedges designed to hedge against changes in the fair value of the Notes due to changes in LIBOR, the designated benchmark interest rate. The terms of the Swaps include the Corporation receiving a fixed annual interest rate of 5.875% and paying a variable annual interest rate based on six-month LIBOR plus 1.50%.

The Corporation is required to record the fair value of the Swaps and the change in the fair value of the related Notes in its consolidated balance sheet. In accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, no gain or loss is recorded for the changes in the fair value of the Swaps or the debt. At September 30, 2004, the fair value of the Swaps is an asset of $1.6 million.

As a result of the Swaps, the Corporation has increased interest rate risk associated with changes in the LIBOR rate. The hypothetical change in interest rates of 1% would change annual interest expense by $1 million and also change the fair value of the debt covered by the Swaps by approximately $4 million.

Commercial Paper Obligations. The Corporation has a $275 million commercial paper program in which borrowings bear interest at a variable rate based on LIBOR. At September 30, 2004, there were no outstanding commercial paper borrowings. Due to commercial paper borrowings bearing interest at a variable rate, the Corporation has interest rate risk when such debt is outstanding.

Page 24 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

Pension Expense. The Corporation sponsors noncontributory defined benefit pension plans which cover substantially all employees. Therefore, the Corporation’s results of operations are affected by its pension expense. Assumptions that affect this expense include the discount rate and the expected long-term rate of return on assets. The selection of the discount rate is based on the yields on high quality, fixed income investments. The selection of the expected long-term rate of return on assets is based on general market conditions and related returns on a portfolio of investments. Therefore, the Corporation has interest rate risk associated with these factors. The impact of hypothetical changes in these assumptions on the Corporation’s annual pension expense is discussed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission on March 15, 2004.

Aggregate Interest Rate Risk. The pension expense for 2004 is calculated based on assumptions selected at December 31, 2003. Therefore, interest rate risk in 2004 is limited to the potential effect related to the interest rate swaps and outstanding commercial paper. Assuming no commercial paper is outstanding, which is consistent with the September 30, 2004 balance, the aggregate effect of a hypothetical 1% increase in interest rates would increase interest expense and decrease pretax earnings by $1 million.

Page 25 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

Item 4. CONTROLS AND PROCEDURES

As of September 30, 2004, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Corporation’s disclosure controls and procedures were effective as of September 30, 2004. There have been no significant changes in the Corporation’s internal controls or in other factors that could significantly affect the internal controls subsequent to September 30, 2004.

Page 26 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

Reference is made to Part I. Item 3. Legal Proceedings of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the year ended December 31, 2003.

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

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number of Shares

Maximum Number of

Purchased as Part of

Shares that May Yet be

Total Number of

Average Price

Publicly Announced

Purchased Under the

Period

Shares Purchased

Paid per Share

Plans or Programs

September 1, 2004–

September 30, 2004

120,000

45.11

120,000

4,643,800

The Corporation’s initial stock repurchase program, which authorized the repurchase of 2.5 million shares of common stock, was announced in a press release dated May 6, 1994, and has been updated as appropriate. The program does not have an expiration date.

Item 4. Submission of Matters to Vote of Security Holders.

No matters were submitted to a vote of security holders during the third quarter of 2004.

Item 5. Other Information.

On July 27, 2004, the Corporation announced that it will release its financial results for the second quarter ended June 30, 2004 on August 3, 2004.

On August 3, 2004, the Corporation reported financial results for the second quarter ended June 30, 2004.

On August 18, 2004, the Corporation announced that the Board of Directors declared an increase in the regular quarterly cash dividend to $0.20 per share on the Corporation’s common stock. This dividend, which represents a cash dividend of $0.80 per share on an annualized basis, was payable September 30, 2004, to shareholders of record at the close of business on September 1, 2004.

On October 20, 2004, the Corporation announced that the Board of Directors elected Laree E. Perez to serve as a director of the Corporation.

Page 27 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2004

PART II-OTHER INFORMATION
(Continued)

Item 6. Exhibits.


Exhibit
No.		Document
10.01		Amendment No. 1 to the Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors

11.01		Martin Marietta Materials, Inc. and Consolidated Subsidiaries Computation of Earnings per Share for the Three and Nine Months ended September 30, 2004 and 2003

31.01		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.02		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Page 28 of 30

SIGNATURES

Pursuant to the requirements 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.
				(Registrant)

Date: November 9, 2004				By: /s/ JANICE K. HENRY

				Janice K. Henry
				Senior Vice President and Chief Financial Officer

Page 29 of 30

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter ended September 30, 2004

EXHIBIT INDEX


Exhibit No.		Document
10.01		Amendment No. 1 to the Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors

11.01		Martin Marietta Materials, Inc. and Consolidated Subsidiaries Computation of Earnings per share for the Three and Nine Months Ended September 30, 2004 and 2003

31.01		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.02		Exhibit – Regulation FD Disclosure – Written Statement dated November 9, 2004 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Page 30 of 30

EX-10.1

EXHIBIT 10.01

AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED MARTIN MARIETTA MATERIALS, INC.
COMMON STOCK PURCHASE PLAN FOR DIRECTORS

This Amendment No. 1 to the Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors, as previously amended (the “Plan”) hereby makes the following amendment, effective as of August 17, 2004.

Section 8(a) of the Plan is amended and restated as follows:

“(a) General. At each time payment of all or a portion of a Participant’s Stock Deferral Account and/or Cash Deferral Account is due pursuant to an election made in accordance with Section 5 (or pursuant to the death of a Participant in accordance with Section 8(c)), the Company shall pay Stock and cash directly to such Participant or his Beneficiary in an amount equal to the portion of his Stock Deferral Account and/or Cash Deferral Account which is so payable. Payable amounts expressed in the form of Stock Equivalents shall be paid in Stock, and payable amounts expressed in the form of cash shall be paid in cash. The Company shall make such payment directly to the Participant from its general assets and authorized but unissued Stock; provided, however, that in the event no authorized but unissued Stock is available, payable amounts from a Participant’s Stock Deferral Account expressed in the form of Stock Equivalents may be deferred for up to six months at the discretion of the Committee pending the availability of such Stock.”

All other terms and provisions of the Plan remain in full force and effect.

EX-11.1

EXHIBIT 11.01

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

COMPUTATION OF EARNINGS PER SHARE

For the Three and Nine Months Ended September 30, 2004 and 2003
(Dollars in Thousands, Except Per Share Data)


	Three Months Ended
	September 30
	2004		2003
Earnings from continuing operations	$	53,033	$	45,615
Earnings from (loss on) discontinued operations		970		(95	)

Net earnings	$	54,003	$	45,520

Weighted average number of common shares outstanding:
Basic		48,216,947		48,922,858
Effect of dilutive securities		355,563		266,870

Diluted		48,572,510		49,189,728

Net earnings per common share:
Basic from continuing operations	$	1.10	$	0.93
Discontinued operations		0.02		—

	$	1.12	$	0.93

Diluted from continuing operations	$	1.09	$	0.93
Discontinued operations		0.02		—

	$	1.11	$	0.93

Page 1

EXHIBIT 11.01

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

COMPUTATION OF EARNINGS PER SHARE

For the Three and Nine Months Ended September 30, 2004 and 2003
(Dollars in Thousands, Except Per Share Data)


	Nine Months Ended
	September 30
	2004		2003
Earnings from continuing operations before the cumulative effect of change in accounting principle	$	90,495	$	71,903
Earnings from (loss on) discontinued operations		1,678		(751	)
Cumulative effect of change in accounting for asset retirement obligations		—		(6,874	)

Net earnings	$	92,173	$	64,278

Weighted average number of common shares outstanding:
Basic		48,253,154		48,906,598
Effect of dilutive securities		390,358		213,354

Diluted		48,643,512		49,119,952

Net earnings per common share:
Basic from continuing operations before cumulative effect of change in accounting principle	$	1.88	$	1.47
Discontinued operations		0.03		(0.02	)
Cumulative effect of change in accounting principle		—		(0.14	)

	$	1.91	$	1.31

Diluted from continuing operations before cumulative effect of change in accounting principle	$	1.86	$	1.47
Discontinued operations		0.03		(0.02	)
Cumulative effect of change in accounting principle		—		(0.14	)

	$	1.89	$	1.31

Page 2

EX-31.1

EXHIBIT 31.01

CERTIFICATION PURSUANT TO SECURITIES AND EXCHANGE ACT OF 1934
RULE 13a-14 AS ADOPTED PURSUANT TO SECTION 302 OF SARBANES-OXLEY
ACT OF 2002

I, Stephen P. Zelnak, Jr., Chief Executive Officer, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of Martin Marietta Materials, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c.		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: November 9, 2004	By:	/s/ Stephen P. Zelnak, Jr.

	Stephen P. Zelnak, Jr.
	Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.02

CERTIFICATION PURSUANT TO SECURITIES AND EXCHANGE ACT OF 1934
RULE 13a-14 AS ADOPTED PURSUANT TO SECTION 302 OF SARBANES-OXLEY
ACT OF 2002

I, Janice K. Henry, Chief Financial Officer, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of Martin Marietta Materials, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a.		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c.		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

a.		All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: November 9, 2004	By:	/s/ Janice K. Henry

	Janice K. Henry
	Chief Financial Officer

EX-32.1

EXHIBIT 32.01

Written Statement Pursuant to 18 U.S.C. 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2004 (the “Report”) of Martin Marietta Materials, Inc. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Stephen P. Zelnak, Jr., the Chief Executive Officer of the Registrant certify, to the best of my knowledge, that:

(1)		the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.



	/s/ Stephen P. Zelnak, Jr.
	Stephen P. Zelnak, Jr.
	Chief Executive Officer

Dated: November 9, 2004

A signed original of this written statement required by Section 906 has been provided to Martin Marietta Materials, Inc. and will be retained by Martin Marietta Materials, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.02

Written Statement Pursuant to 18 U.S.C. 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended September 30, 2004 (the “Report”) of Martin Marietta Materials, Inc. (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Janice K. Henry, the Chief Financial Officer of the Registrant certify, to the best of my knowledge, that:

(1)		the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.



	/s/ Janice K. Henry
	Janice K. Henry
	Chief Financial Officer

Dated: November 9, 2004