e10vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2010 |
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
Commission file number 1-12744
MARTIN MARIETTA MATERIALS, INC.
(Exact name of registrant as specified in its charter)
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North Carolina
(State or other jurisdiction of
incorporation or organization)
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56-1848578
(I.R.S. Employer
Identification No.) |
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2710 Wycliff Road, Raleigh, North Carolina
(Address of principal executive offices)
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27607-3033
(Zip Code) |
(919) 781-4550
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class
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Name of each exchange on which registered |
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Common Stock (par value $.01 per share) (including
rights attached thereto)
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
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Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Exchange Act.
Yes o No þ
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes þ No o
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 this Form 10-K
or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
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| Large accelerated filer þ
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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As of June 30, 2010, the last business day of the registrant’s most recently completed second
fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates
of the registrant was $2,155,496,273 based on the closing sale price as reported on the New York
Stock Exchange.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock on
the latest practicable date.
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Outstanding at February 24, 2011 |
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| Common Stock, $.01 par value per share
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45,496,606 shares |
DOCUMENTS INCORPORATED BY REFERENCE
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| Document
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Parts Into Which Incorporated |
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Excerpts from Annual Report to Shareholders
for the Fiscal Year Ended December 31, 2010
(Annual Report)
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Parts I, II, and IV |
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Proxy Statement for the Annual Meeting of
Shareholders to be held May 12, 2011 (Proxy
Statement)
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Part III |
TABLE OF CONTENTS
TABLE OF CONTENTS
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3
PART I
ITEM 1. BUSINESS
General
Martin Marietta Materials, Inc. (the “Company”) is a leading producer of aggregates for the
construction industry, including infrastructure, agricultural, nonresidential, and residential.
The Company also has a Specialty Products segment that manufactures and markets magnesia-based
chemical products used in industrial, agricultural, and environmental applications and dolomitic
lime sold primarily to customers in the steel industry. In 2010, the Company’s Aggregates business
accounted for 89% of the Company’s total net sales, and the Company’s Specialty Products segment
accounted for 11% of the Company’s total net sales.
The Company was formed in 1993 as a North Carolina corporation to serve as successor to the
operations of the materials group of the organization that is now Lockheed Martin Corporation. An
initial public offering of a portion of the Company’s Common Stock was completed in 1994, followed
by a tax-free exchange transaction in 1996 that resulted in 100% of the Company’s Common Stock
being publicly traded.
Initially, the Company’s aggregates operations were predominantly in the Southeast, with
additional operations in the Midwest. In 1995, the Company started its geographic expansion with
the purchase of an aggregates business that included an extensive waterborne distribution system
along the East and Gulf Coasts and the Mississippi River. Smaller acquisitions that year,
including the acquisition of the Company’s granite operations on the Strait of Canso in Nova
Scotia, complemented the Company’s new coastal distribution network.
Subsequent acquisitions in 1997 and 1998 expanded the Company’s Aggregates business in the
middle of the country and added a leading producer of aggregates products in Texas, which provided
the Company with access to an extensive rail network in Texas. These two transactions positioned
the Company for numerous additional expansion acquisitions in Ohio, Indiana, and the southwestern
regions of the United States, with the Company completing 29 smaller acquisitions between 1997 and
1999, which allowed the Company to enhance and expand its presence in the aggregates marketplace.
In 1998, the Company made an initial investment in an aggregates business that would later
serve as the Company’s platform for further expansion in the southwestern and western United
States. In 2001, the Company completed the purchase of all of the remaining interests of this
business, which increased its ability to use rail as a mode of transportation.
Effective January 1, 2005, the Company formed a joint venture with Hunt Midwest Enterprises to
operate substantially all of the aggregates facilities of both companies in Kansas City and
surrounding areas. The parties contributed a total of 15 active quarry operations to the joint
venture.
In 2008, the Company entered into a swap transaction with Vulcan Materials Company (“Vulcan”),
pursuant to which it acquired six quarry locations in Georgia and Tennessee. The acquired
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locations significantly expanded the Company’s presence in Georgia and Tennessee, particularly
south and west of Atlanta, Georgia. The Company also acquired a land parcel previously leased from
Vulcan at the Company’s Three Rivers Quarry near Paducah, Kentucky. In addition to a cash payment,
as part of this swap, the Company divested to Vulcan its only California quarry located in
Oroville, an idle facility north of San Antonio, Texas, and land in Henderson, North Carolina,
formerly leased to Vulcan.
In 2009, the Company acquired three quarry locations plus the remaining 49% interest in an
existing joint venture from CEMEX, Inc. The quarry operations are located in Nebraska, Wyoming,
and Utah, while the 49% interest purchased relates to a quarry in Wyoming where the Company was the
operating manager. The acquired locations enhanced the Company’s existing long-haul distribution
network and provided attractive product synergies.
In 2010, the Company acquired a deep-water port facility in Port Canaveral, Florida, which
serves the greater Orlando market, the second-largest aggregates-consuming area in Florida. The
Port Canaveral acquisition, the only developed deep-water aggregates import terminal located on
Florida’s central east coast, was complemented by the Company’s organic investment in 2010 in a new
aggregates import facility at Port Manatee, Florida.
Between 2001 and 2010, the Company disposed of or permanently shut down a number of
underperforming operations, including aggregates, asphalt, ready mixed concrete, trucking, and road
paving operations of its Aggregates business and the refractories business of its Specialty
Products segment. In some of its divestitures, the Company concurrently entered into supply
agreements to provide aggregates at market rates to certain of these divested businesses. The
Company will continue to evaluate opportunities to divest underperforming assets during 2011 in an
effort to redeploy capital for other opportunities.
Business Segment Information
The Company operates in four reportable business segments: the Mideast Group, Southeast
Group, and West Group, collectively the Aggregates business, and the Specialty Products segment.
The Specialty Products segment includes the magnesia-based chemicals and dolomitic lime businesses.
Information concerning the Company’s total revenues, net sales, gross profit, earnings from
operations, assets employed, and certain additional information attributable to each reportable
business segment for each year in the three-year period ended December 31, 2010 is included in
“Note O: Business Segments” of the “Notes to Financial Statements” of the Company’s 2010
consolidated financial statements (the “2010 Financial Statements”), which are included under Item
8 of this Form 10-K, and are part of the Company’s 2010 Annual Report to Shareholders (the “2010
Annual Report”), which information is incorporated herein by reference.
Aggregates Business
The Aggregates business mines, processes and sells granite, limestone, sand, gravel, and other
aggregate products for use in all sectors of the public infrastructure, nonresidential and
residential construction industries, as well as agriculture, railroad ballast, chemical, and other
uses. The Aggregates business also includes the operation of other construction materials
businesses. These
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businesses, located primarily in the West Group, were acquired through continued
selective vertical integration by the Company, and include asphalt, ready mixed concrete, and road
paving operations.
The Company is the second largest producer of aggregates for the construction industry in the
United States. In 2010, the Company’s Aggregates business shipped 130 million tons of aggregates
primarily to customers in 30 states, Canada, the Bahamas, and the Caribbean Islands, generating net
sales and earnings from operations of $1.4 billion and $166.6 million, respectively.
The Aggregates business markets its products primarily to the construction industry, with
approximately 55% 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 nonresidential 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, demographic and population shifts,
and changes in the level of infrastructure spending funded by the public sector.
The 5.4% increase in 2010 in aggregates shipments over 2009 levels represented the Company’s
first year of volume growth since 2005. Prior to 2010, the ongoing economic recession had resulted
in unprecedented declines in aggregates shipments, as evidenced by United States aggregates
consumption declining by almost 40% from peak volumes in 2006. Aggregates shipments have also
suffered as states continue to balance their construction spending with the uncertainty related to
long-term federal highway funding and budget shortfalls caused by decreasing tax revenues..
The American Recovery and Reinvestment Act of 2009 (“ARRA”), the federal economic stimulus
plan signed into law in February 2009, provided approximately $28.6 billion of additional funding
for highways, roads, bridges and airports through 2012. However, the lack of shovel-ready projects
has delayed the impact of ARRA on the aggregates industry. The Company expects approximately 30%
of ARRA-related jobs in the Company’s critical states will be completed in 2011. Any carryover in
2012, by law, must be completed that year. Based on its market position, the Company estimates
that it has and will continue to supply approximately 6% to 8% of aggregates required for projects
funded by ARRA.
The Company’s Aggregates business covers a wide geographic area, with aggregates, asphalt
products, and ready mixed concrete sold and shipped from a network of approximately 284 quarries,
underground mines, distribution facilities, and plants to customers in 30 states, Canada, the
Bahamas, and the Caribbean Islands. The Company’s five largest revenue-generating states (Texas,
North Carolina, Georgia, Iowa, and Louisiana) account for approximately 55% of total 2010 net sales
for the Aggregates business by state of destination. The Company’s Aggregates business is
accordingly affected by the economies in these regions and has been adversely affected in part by
recessions and
weaknesses in these economies from time to time. The economic recession nationally and in these
states has negatively impacted the Company’s Aggregates business.
The Company’s Aggregates business is also highly seasonal, due primarily to the effect of
weather conditions on construction activity within its markets. The operations of the Aggregates
business that are concentrated in the northern United States and Canada typically experience more
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severe winter weather conditions than operations in the southeastern and southwestern regions of
the United States. Excessive rainfall or severe drought, however, can jeopardize shipments,
production, and profitability in all of the Company’s markets. Due to these factors, the Company’s
second and third quarters are the strongest, with the first quarter generally reflecting the
weakest results. Results in any quarter are not necessarily indicative of the Company’s annual
results. Similarly, the operations of the Aggregates business in the southeastern and Gulf Coast
regions of the United States and the Bahamas are at risk for hurricane activity and have
experienced weather-related losses in recent years.
Natural aggregates sources can be found in relatively homogeneous deposits in certain areas of
the United States. As a general rule, truck shipments from an individual quarry are limited
because the cost of transporting processed aggregates to customers is high in relation to the price
of the product itself. As described below, the Company’s distribution system mainly uses trucks,
but also has access to a river barge and ocean vessel network where the per mile unit cost of
transporting aggregates is much lower. In addition, acquisitions have enabled the Company to
extend its customer base through increased access to rail transportation. Proximity of quarry
facilities to customers or to long-haul transportation corridors is an important factor in
competition for aggregates business.
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, the rest by rail. In contrast, in 2010, the originating mode of transportation for the
Company’s aggregates shipments was 68% by truck, 21% by rail, and 11% by water. The majority of the
rail and water movements occur in the Southeast Group and the West Group. The Company has an
extensive network of aggregate quarries and distribution centers along the Mississippi River system
throughout the central and southern United States and in the Bahamas and Canada, as well as
distribution centers along the Gulf of Mexico and Atlantic coasts. In recent years the Company has
brought additional capacity on line at its Bahamas and Nova Scotia locations to transport materials
via oceangoing ships.
During the recent economic recession, the Company set a priority of preserving capital while
maintaining safe, environmentally-sound operations. As the Company returns to a more normalized
operating environment, management expects to focus a significant part of its capital growth
spending program on expanding key Southeast and Southwest operations.
In addition, the Company’s acquisitions and capital projects have expanded its ability to ship
material by rail, as discussed in more detail below. The Company has added additional capacity in a
number of locations that can now accommodate larger unit train movements. These expansion projects
have enhanced the Company’s long-haul distribution network. The Company’s process improvement
program has also improved operational effectiveness through plant automation, mobile fleet
modernization, right-sizing, and other cost control improvements. Accordingly, the Company has
enhanced its reach through its ability to provide cost-effective coverage of coastal markets on the
east and gulf coasts, as well as geographic areas that can be accessed economically by the
Company’s expanded distribution system. This distribution network moves aggregates materials from
domestic and offshore sources, via rail and water, to markets where aggregates supply is limited.
The water and rail distribution network initially resulted in the Company increasing its
market share in certain areas. However, recent consolidation in the aggregates industry has made
it more
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competitive for the Company in various parts of the country. The Company believes that as
shipment volumes recover, the Company will increase its market share in those areas.
As the Company continues to move more aggregates by rail and water, embedded freight costs
have consequently reduced gross margins. This typically occurs where the Company transports
aggregates from a production location to a distribution location by rail or water, and the customer
pays a selling price that includes a freight component. Margins are negatively affected because
the Company typically does not charge the customer a profit associated with the transportation
component of the selling price of the materials. Moreover, the Company’s expansion of its
rail-based distribution network, coupled with the extensive use of rail service in the Southeast
and West Groups, increase the Company’s dependence on and exposure to railroad performance,
including track congestion, crew availability, and power availability, and the ability to
renegotiate favorable railroad shipping contracts. The waterborne distribution network, primarily
located within the Southeast Group, also increases the Company’s exposure to certain risks,
including the ability to negotiate favorable shipping contracts, demurrage costs, fuel costs, barge
or ship availability, and weather disruptions. The Company has entered into long-term agreements
with shipping companies to provide ships to transport the Company’s aggregates to various coastal
ports.
The Company’s long-term shipping contracts are generally take-or-pay contracts with minimum
and maximum shipping requirements. If the Company fails to ship the annual minimum tonnages under
the agreement, it must still pay the shipping company the contractually-stated minimum amount for
that year. In 2010, the Company incurred a $1.4 million expense due to not shipping the minimum
tonnages. Similar charges are possible in 2011 if shipment volumes do not increase.
From time to time the Company has experienced rail transportation shortages, particularly in
the Southwest and Southeast. These shortages were caused by the downsizing in personnel and
equipment by certain railroads during economic downturns. Further, in response to these issues,
rail transportation providers focused on increasing the number of cars per unit train under
transportation contracts and are generally requiring customers, through the freight rate structure,
to accommodate larger unit train movements. A unit train is a freight train moving large tonnages
of a single bulk product between two points without intermediate yarding and switching. Certain of
the Company’s sales yards have the system capabilities to meet the unit train requirements. Over
the last few years, the Company has made capital improvements to a number of its sales yards in
order to better accommodate unit train unloadings. Rail availability is seasonal and can impact
aggregates shipments depending on competing movements.
The Company’s management expects the multiple transportation modes that have been developed
with various rail carriers and via barges and deepwater ships should provide the Company with the
flexibility to effectively serve customers in the southeastern and southwestern regions of the
United States.
The construction aggregates industry has been consolidating, and the Company has actively
participated in the consolidation of the industry. When acquired, new locations sometimes do not
satisfy the Company’s internal safety, maintenance, and pit development standards, and may require
additional resources before benefits of the acquisitions are fully realized. Management expects a
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slowing in the industry consolidation trend as the number of suitable small to mid-sized
acquisition targets in high-growth markets declines. During the recent period of fewer acquisition
opportunities, the Company has focused on investing in internal expansion projects in high-growth
markets. The Company’s Board of Directors and management continue to review and monitor the
Company’s strategic long-term plans, which include assessing business combinations and arrangements
with other companies engaged in similar businesses, increasing market share in the Company’s core
businesses, investing in internal expansion projects in high-growth markets, and pursuing new
opportunities related to the Company’s existing markets.
The Company became more vertically integrated with an acquisition in 1998 and subsequent
acquisitions, particularly in the West Group, pursuant to which the Company acquired asphalt, ready
mixed concrete, paving construction, trucking, and other businesses, which complement the Company’s
aggregates business. These vertically integrated operations accounted for approximately 7% of
revenues of the Aggregates business in 2010. These operations have lower gross margins than
aggregates products, and are affected by volatile factors, including fuel costs, operating
efficiencies, and weather, to an even greater extent than the Company’s aggregates operations. The
road paving and trucking businesses were acquired as supplemental operations that were part of
larger acquisitions. As such, they do not represent core businesses of the Company. The results
of these operations are currently insignificant to the Company as a whole. Over the last few years
the Company has disposed of some of these operations. The Company continues to review carefully
the acquired vertically integrated operations to determine if they represent opportunities to
divest underperforming assets in an effort to redeploy capital for other opportunities.
Environmental and zoning regulations have made it increasingly difficult for the 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 business’ raw materials, or aggregates 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
current production in its Aggregates business. The Company’s aggregates reserves on the average
exceed 60 years of production, based on normalized levels of production. However, certain
locations may be subject to more limited reserves and may not be able to expand. Moreover, as
noted above,
environmental and zoning regulations will likely make it harder for the Company to expand its
existing quarries or develop new quarry operations. The Company generally sells products in its
Aggregates business upon receipt of orders or requests from customers. Accordingly, there is no
significant order backlog. The Company generally maintains inventories of aggregate products in
sufficient quantities to meet the requirements of customers.
Less than 2% of the revenues from the Aggregates business are from foreign jurisdictions,
principally Canada and the Bahamas, with revenues from customers in foreign countries totaling
$17.0 million, $19.8 million, and $24.8 million during 2010, 2009, and 2008, respectively.
9
Specialty Products Business
The Company manufactures and markets, through its Specialty Products business, magnesia-based
chemical products for industrial, agricultural, and environmental applications, and dolomitic lime
for use primarily in the steel industry. These chemical products have varying uses, including
flame retardants, wastewater treatment, pulp and paper production, and other environmental
applications. In 2010, 68% of Specialty Products’ net sales were attributable to chemical
products, 31% to lime, and 1% to stone. Overall net sales in the Specialty Products business
increased in 2010 reflecting growth in both magnesia chemicals sales and dolomitic lime shipments
to the steel industry.
Given the high fixed costs associated with operating this business, low capacity utilization
negatively affects its results of operations. A significant portion of the costs related to the
production of magnesia-based products and dolomitic lime is of a fixed or semi-fixed nature. In
addition, the production of certain magnesia chemical products and lime products requires natural
gas, coal, and petroleum coke to fuel kilns. Price fluctuations of these fuels affect the
profitability of this business.
In 2010, approximately 80% of the lime produced was sold to third-party customers, while the
remaining 20% was used internally as a raw material in making the business’ chemical products.
Dolomitic lime products sold to external customers are used primarily by the steel industry.
Products used in the steel industry accounted for approximately 46% of the Specialty Products’ net
sales in 2010, attributable primarily to the sale of dolomitic lime products. Accordingly, a
portion of the profitability of the Specialty Products business is dependent on steel production
capacity utilization and the related marketplace. These trends are guided by the rate of consumer
consumption, the flow of offshore imports, and other economic factors. In 2010, steelmaking rates
in the United States improved 37% over 2009, driven by inventory restocking, improved automotive
manufacturing, and a slowly improving general economy. However, production rates for steel were
approximately 70% of domestic steelmaking capacity, making 2010, along with 2009, some of the
lowest steel production rates in decades. The Company anticipates small to moderate growth in
domestic steelmaking in 2011, with the growth attributable to continued gains in consumer
confidence.
Management has shifted the strategic focus of the magnesia-based business to specialty
chemicals that can be produced at volume levels that support efficient operations. Accordingly,
that business is not as dependent on the steel industry as is the dolomitic lime portion of the
Specialty Products business.
The principal raw materials used in the Specialty Products business are dolomitic limestone
and alkali-rich brine. Management believes that its reserves of dolomitic limestone and brine are
sufficient to permit production at the current operational levels for the foreseeable future.
After the brine is used in the production process, the Specialty Products business must
dispose of the processed brine. In the past, the business did this by reinjecting the processed
brine back into its underground brine reserve network around its facility in Manistee, Michigan.
The business has also sold a portion of this processed brine to third parties. In 2003, Specialty
Products entered into a long-term processed brine supply agreement with The Dow Chemical Company
(“Dow”) pursuant to which Dow purchases processed brine from Specialty Products, at market rates,
for use in Dow’s production of calcium chloride products. Specialty Products also entered into a
venture with Dow to construct,
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own, and operate a processed brine supply pipeline between the
Specialty Products facility in Manistee, Michigan, and Dow’s facility in Ludington, Michigan.
Construction of the pipeline was completed in 2003, and Dow began purchasing processed brine from
Specialty Products through the pipeline. In 2010, Dow sold the assets of Dow’s facility in
Ludington, Michigan to Occidental Chemical Corporation (“Occidental”) and assigned to Occidental
its interests in the long-term processed brine supply agreement and the pipeline venture with
Specialty Products.
Specialty Products generally delivers its products upon receipt of orders or requests from
customers. Accordingly, there is no significant order backlog. Inventory for products is
generally maintained in sufficient quantities to meet rapid delivery requirements of customers.
Approximately 9% of the revenues of the Specialty Products business in 2010 were from foreign
jurisdictions, principally Canada, Mexico, Europe, South America, and the Pacific Rim, so no single
foreign country accounted for 10% or more of the revenues of the business. Revenues from customers
in foreign countries totaled $17.1 million, $16.2 million, and $24.3 million, in 2010, 2009, and
2008, respectively. As a result of these foreign market sales, the financial results of the
Specialty Products business could be affected by foreign currency exchange rates or weak economic
conditions in the foreign markets. To mitigate the short-term effects of currency exchange rates,
the Specialty Products business principally uses the U.S. dollar as the functional currency in
foreign transactions.
Patents and Trademarks
As of February 25, 2011, the Company owns, has the right to use, or has pending applications
for approximately 109 patents pending or granted by the United States and various countries and
approximately 107 trademarks related to 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 any 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 industry, competition in the
Aggregates business tends to be limited to producers in proximity to each of the Company’s
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 or distribution location and price, but quality of aggregates and level of customer service
are also factors.
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There are over 5,400 companies in the United States that produce construction aggregates.
These include active crushed stone companies and active sand and gravel companies. The largest ten
producers account for approximately 35% of the total market. The Company, in its Aggregates
business, competes with a number of other large and small producers. The Company believes that its
ability to transport materials by ocean vessels, river barges, and rail have enhanced the Company’s
ability to compete in the aggregates business. Some of the Company’s competitors in the aggregates
industry have greater financial resources than the Company.
The Company’s Specialty Products business competes with various companies in different
geographic and product areas principally on the basis of quality, price, technological advances,
and technical support for its products. The Specialty Products business also competes for sales to
customers located outside the United States, with revenues from foreign jurisdictions accounting
for approximately 9% of revenues for the Specialty Products business in 2010, principally in
Canada, Mexico, Europe, South America, and the Pacific Rim. Certain of the Company’s competitors
in the Specialty Products business have greater financial resources than the Company.
Research and Development
The Company conducts research and development activities principally for its magnesia-based
chemicals business, at its plant in Manistee, Michigan. In general, the Company’s research and
development efforts in 2010 were directed to applied technological development for the use of its
chemicals products. The Company spent approximately $0.2 million in 2010, $0.4 million in 2009,
and $0.6 million in 2008 on research and development activities.
Environmental and Governmental 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 records an accrual for environmental remediation liabilities in the period in
which it is probable that a liability has been incurred and the amounts can be reasonably
estimated. Such accruals are adjusted as further information develops or circumstances change.
The accruals are not discounted to their present value or offset for potential insurance or other
claims or potential gains from future alternative uses for a site.
The Company regularly monitors and reviews its operations, procedures, and policies for
compliance with existing laws and regulations, changes in interpretations of existing laws and
enforcement policies, new laws that are adopted, and new laws that the Company anticipates will be
adopted that could affect its operations. The Company has a full time staff of environmental
engineers and managers that perform these responsibilities. The direct costs of ongoing
environmental compliance were approximately $9.1 million in 2010 and approximately $8.7 million in
2009 and are related to the Company’s environmental staff, ongoing monitoring costs for various
matters (including
12
those matters disclosed in this Annual Report on Form 10-K), and asset
retirement costs. Capitalized costs related to environmental control facilities were approximately
$3.0 million in 2010 and are expected to be approximately $3 million in 2011 and 2012. The
Company’s capital expenditures for environmental matters were not material to its results of
operations or financial condition in 2010 and 2009. However, our expenditures for environmental
matters generally have increased over time and are likely to increase in the future. Despite our
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.
Many of the requirements of the environmental laws are satisfied by procedures that the
Company adopts as best business practices in the ordinary course of its operations. For example,
plant equipment that is used to crush aggregates products may, as an ordinary course of operations,
have an attached water spray bar that is used to clean the stone. The water spray bar also
suffices as a dust control mechanism that complies with applicable environmental laws. The Company
does not break out the portion of the cost, depreciation, and other financial information relating
to the water spray bar that is only attributable to environmental purposes, as it would be derived
from an arbitrary allocation methodology. The incremental portion of such operating costs that is
attributable to environmental compliance rather than best operating practices is impractical to
quantify. Accordingly, the Company expenses costs in that category when incurred as operating
expenses.
The environmental accruals recorded by the Company are based on internal studies of the
required remediation costs and estimates of potential costs that arise from time to time under
federal, state, and/or local environmental protection laws. Many of these laws and the regulations
promulgated under them are complex, and are subject to challenges and new interpretations by
regulators and the courts from time to time. In addition, new laws are adopted from time to time.
It is often difficult to accurately and fully quantify the costs to comply with new rules until it
is determined the type of operations to which they will apply and the manner in which they will be
implemented is more accurately defined. This process often takes years to finalize and changes
significantly from the time the rules are proposed to the time they are final. The Company
typically has several appropriate alternatives available to satisfy compliance requirements, which
could range from nominal costs to
some alternatives that may be satisfied in conjunction with equipment replacement or expansion
that also benefits operating efficiencies or capacities and carry significantly higher costs.
Management believes that its current accrual for environmental costs is reasonable, although
those amounts may increase or decrease depending on the impact of applicable rules as they are
finalized from time to time and changes in facts and circumstances. The Company believes that any
additional costs for ongoing environmental compliance would not have a material adverse effect on
the Company’s obligations or financial condition.
Future reclamation costs are estimated using statutory reclamation requirements and
management’s experience and knowledge in the industry, and are discounted to their present value
using a credit-adjusted, risk-free rate of interest. The future reclamation costs are not offset
by potential recoveries. For additional information regarding compliance with legal requirements,
see “Note N: Commitments and Contingencies” of the “Notes to Financial Statements” of the 2010
Financial Statements and the 2010 Annual Report. The Company is generally required by state or
13
local laws or pursuant to the terms of an applicable lease to reclaim quarry sites after use. The
Company performs activities on an ongoing basis that may reduce the ultimate reclamation
obligation. These activities are performed as an integral part of the normal quarrying process.
For example, the perimeter and interior walls of an open pit quarry are sloped and benched as they
are developed to prevent erosion and provide stabilization. This sloping and benching meets dual
objectives — safety regulations required by the Mine Safety and Health Administration for ongoing
operations and final reclamation requirements. Therefore, these types of activities are included
in normal operating costs and are not a part of the asset retirement obligation. Historically, the
Company has not incurred substantial reclamation 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.
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” under Item 3 of this Form 10-K, “Note N: Commitments and Contingencies” of the
“Notes to Financial Statements” of the 2010 Financial Statements included under Item 8 of this Form
10-K and the 2010 Annual Report, and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations — Environmental Regulation and Litigation” included under Item 7 of this
Form 10-K and the 2010 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 and mining facilities must comply with air quality, water quality, and
noise regulations, zoning and special use permitting requirements, applicable mining regulations,
and federal health and safety requirements. As new quarry and mining sites are located and
acquired, the Company works closely with local authorities during the zoning and permitting
processes to design new quarries and mines in such a way as to minimize disturbances. The Company
frequently acquires large tracts of land so that quarry, mine, and production facilities can be
situated substantial distances from surrounding property owners. Also, in certain markets the
Company’s ability to transport
material by rail and ship allows it to locate its facilities further away from residential areas.
The Company has established policies designed to minimize disturbances to surrounding property
owners from its operations.
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 also known as quartz. Excessive,
prolonged inhalation of very small-sized particles of crystalline silica has been associated with
lung diseases, including silicosis, and several scientific organizations and some states, such as
California, have reported that crystalline silica can cause lung cancer. The Mine Safety and
Health Administration and the Occupational Safety and Health Administration have established
occupational thresholds for crystalline silica exposure as respirable dust. The Company monitors
occupational exposures at its facilities and implements dust control procedures and/or makes
available appropriate respiratory protective equipment to maintain the occupational exposures at or
below the appropriate levels. The Company, through safety information sheets and other means, also
communicates what it believes to be appropriate warnings and cautions its employees and customers
about the risks associated with excessive, prolonged inhalation of mineral dust in general and
crystalline silica in particular.
14
In the vicinity of and beneath the Specialty Products facility in Manistee, Michigan,
there is an underground plume of material originating from adjacent property which formerly was
used by Packaging Corporation of America (“PCA”) as a part of its operations. The Company believes
the plume consists of paper mill waste. On September 8, 1983, the PCA plume and property were
listed on the National Priorities List (“NPL”) under the authority of the Comprehensive
Environmental Response, Compensation and Liability Act (the “Superfund” statute). The PCA plume is
subject to a Record of Decision issued by the U.S. Environmental Protection Agency (“EPA”) on May
2, 1994, pursuant to which PCA’s successor, Pactiv Corporation (“Pactiv”), is required to conduct
annual monitoring. The EPA has not required remediation of the groundwater contamination. On
January 10, 2002, the Michigan Department of Environmental Quality (“MDEQ”) issued Notice of Demand
letters to the Company’s wholly-owned subsidiary, Martin Marietta Magnesia Specialties (“Magnesia
Specialties”), PCA and Pactiv indicating that it believes that Magnesia Specialties’ chloride
contamination is commingling with the PCA plume which originates upgradient from the Magnesia
Specialties property. The MDEQ is concerned about possible effects of these plumes, and designated
Magnesia Specialties, PCA and Pactiv as parties responsible for investigation and remediation under
Michigan state law. The MDEQ held separate meetings with Magnesia Specialties, PCA, and Pactiv to
discuss remediation and reimbursement for past investigation costs totaling approximately $700,000.
Magnesia Specialties entered into an Administrative Order with the MDEQ to pay for a portion of
MDEQ’s past investigation costs and thereby limit its liability for past costs in the amount of
$20,000. Michigan law provides that responsible parties are jointly and severally liable, and,
therefore, Magnesia Specialties is potentially liable for the full cost of funding future
investigative activities and any necessary remediation. Michigan law also provides a procedure
whereby liability may be apportioned among responsible parties if it is capable of division. The
Company believes that the liability most likely will be apportioned and that any such costs
attributed to Magnesia Specialties’ brine contamination will not have a material adverse effect on
the Company’s operations or its financial condition, but can give no assurance that the liability
will be apportioned or that the compliance costs will not have a material adverse effect on the
financial condition or results of the operations of the Specialty Products business.
The Company has been reviewing its operations with respect to climate change matters and its
sources of greenhouse gas emissions. On December 7, 2009, the USEPA made an endangerment finding
under the Clean Air Act that the current and projected concentrations of the six key greenhouse
gases (sometimes referred to as “GHG” or GHGs”) in the atmosphere threaten the public health and
welfare of current and future generations. The six GHGs are carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. As of 2010, facilities that
emitted 25,000 metric tons or more per year of GHGs are required to annually report GHG generation
to comply with the USEPA’s Mandatory Greenhouse Gas Reporting Rule. On May 13, 2010, the USEPA
issued a final rule to impose additional permitting requirements on existing GHG sources emitting
greater than 25,000 metric tons per year of GHGs. Permitting requirements will be phased in over
several years and apply to both new sources and modifications to existing facilities where GHGs
increase and exceed certain specified thresholds. The regulated facilities will have to determine
the best available control technology to control GHG emissions. In Congress, both the House and
Senate had considered climate change legislation, including the “cap-and-trade” approach. Cap and
trade is an environmental policy tool that delivers results with a mandatory cap on emissions while
providing sources flexibility in how they comply by trading credits with other sources whose
emissions are
15
below the cap. Another approach that had been proposed was a tax on emissions. However, the
Company believes that climate change legislation is not a priority item in Congress in the near
future and that the primary method that greenhouse gases will be regulated is through the USEPA
using its rule-making authority. Various states where the Company has operations are also
considering climate change initiatives, and the Company may be subject to state regulations in
addition to any federal laws and rules that are passed.
The operations of the Company’s Aggregates business are not major sources of GHG emissions.
Most of the GHG emissions from aggregate operations are tailpipe emissions from mobile sources such
as heavy construction and earth-moving equipment. The manufacturing operations of the Company’s
Specialty Products business in Woodville, Ohio releases carbon dioxide, methane and nitrous oxide
during the production of lime. The Specialty Products operation in Manistee, Michigan releases
carbon dioxide, methane, and nitrous oxides in the manufacture of magnesium oxide and hydroxide
products. Both of these operations are filing annual reports of their GHG emissions in accordance
with the USEPA’s Mandatory Greenhouse Gas Reporting Rule. If and when Congress passes legislation
on GHGs, the Woodville and Manistee operations will likely be subject to the new program. Also,
the Company believes that the USEPA may impose additional regulatory restrictions on emissions of
GHGs from its Woodville and Manistee operations. However, the Company anticipates that any
increased operating costs or taxes relating to GHG emission limitations at the Woodville operation
would be passed on to its customers. The magnesium oxide products produced at the Manistee
operation compete against other products which emit a lower level of GHGs in their production.
Therefore, the Manistee facility may have to absorb extra costs due to the regulation of GHG
emissions in order to remain competitive in pricing in that market. The Company at this time
cannot reasonably predict what the costs might be. The fastest growing part of the business is
magnesium hydroxide, however, and the Company believes its market competition will be similarly
regulated under the GHG legislation and regulations. The Manistee facility sells materials to
distributors and customers in a number of countries in Asia, Europe and South America, and to
Canada and Mexico. The Company is analyzing the obligations of our global customer base with
regards to climate change treaties and accords.
Employees
As of January 31, 2011, the Company has approximately 4,471 employees, of which 3,284 are
hourly employees and 1,187 are salaried employees. Included among these employees are 625 hourly
employees represented by labor unions (14.0% of the Company’s employees). Of such amount, 12.9% of
the Company’s Aggregates business’s hourly employees are members of a labor union, while 100% of
the Specialty Products segment’s hourly employees are represented by labor unions. The Company’s
principal union contracts cover employees of the Specialty Products business at the Manistee,
Michigan, magnesia-based chemicals plant and the Woodville, Ohio, lime plant. The Manistee
collective bargaining agreement expires in August 2011. The Woodville collective bargaining
agreement expires in June 2014. While the Company’s management does not expect significant
difficulties in renewing these labor contracts, there can be no assurance that a successor
agreement will be reached at the Manistee location this year or at the Woodville location in 2014.
16
Available Information
The
Company maintains an Internet address at www.martinmarietta.com. The Company makes
available free of charge through its Internet web site its Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, if any, filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports and any
amendments are accessed via the Company’s web site through a link with the Electronic Data
Gathering, Analysis, and Retrieval (“EDGAR”) system maintained by the Securities and Exchange
Commission (the “SEC”) at www.sec.gov. Accordingly, the Company’s referenced reports and any
amendments are made available as soon as reasonably practicable after the Company electronically
files such material with, or furnishes it to, the SEC, once EDGAR places such material in its
database.
The Company has adopted a Code of Ethics and Standards of Conduct that applies to all of its
directors, officers, and employees. The Company’s code of ethics is available on the Company’s web
site at www.martinmarietta.com. The Company intends to disclose on its Internet web site any
waivers of or amendments to its code of ethics as it applies to its directors and executive
officers.
The Company has adopted a set of Corporate Governance Guidelines to address issues of
fundamental importance relating to the corporate governance of the Company, including director
qualifications and responsibilities, responsibilities of key board committees, director
compensation, and similar issues. Each of the Audit Committee, the Management Development and
Compensation Committee, and the Nominating and Corporate Governance Committee of the Board of
Directors of the Company has adopted a written charter addressing various issues of importance
relating to each committee, including the committee’s purposes and responsibilities, an annual
performance evaluation of each committee, and similar issues. These Corporate Governance
Guidelines, and the charters of each of these committees, are available on the Company’s web site
at www.martinmarietta.com.
The Company’s Chief Executive Officer and Chief Financial Officer are required to file with
the SEC each quarter and each year certifications regarding the quality of the Company’s public
disclosure of its financial condition. The annual certifications are included as Exhibits to this
Annual Report on Form 10-K. The Company’s Chief Executive Officer is also required to certify to
the New York Stock Exchange each year that he is not aware of any violation by the Company of the
New York Stock Exchange corporate governance listing standards.
ITEM 1A. RISK FACTORS
An investment in our common stock or debt securities involves risks and uncertainties. You
should consider the following factors carefully, in addition to the other information contained in
this Form 10-K, before deciding to purchase or otherwise trade our securities.
This Form 10-K and other written reports and oral statements made from time to time by the
Company contain statements which, to the extent they are not recitations of historical fact,
constitute forward-looking statements within the meaning of federal securities law. Investors are
cautioned that all forward-looking statements involve risks and uncertainties, and are based on assumptions that
the Company believes in good faith are reasonable, but which may be materially different from
actual
17
results. Investors can identify these statements by the fact that they do not relate only
to historic or current facts. The words “may,” “will,” “could,” “should,” “anticipate,” “believe,”
“estimate,” “expect,” “forecast,” “intend,” “outlook,” “plan,” “project,” “scheduled,” and similar
expressions in connection with future events or future operating or financial performance are
intended to identify forward-looking statements. Any or all of the Company’s forward-looking
statements in this Form 10-K and in other publications may turn out to be wrong.
Statements and assumptions on future revenues, income and cash flows, performance, economic
trends, the outcome of litigation, regulatory compliance, and environmental remediation cost
estimates are examples of forward-looking statements. Numerous factors, including potentially the
risk factors described in this section, could affect our forward-looking statements and actual
performance.
Factors that the Company currently believes could cause its actual results to differ
materially from those in the forward-looking statements include, but are not limited to, those set
out below. In addition to the risk factors described below, we urge you to read our Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
Our aggregates business is cyclical and depends on activity within the construction industry.
The current market environment has hurt the economy, and we have considered the impact on our
business. The overall United States economy remains weak, with national debt at a record high.
While we were encouraged by an increase in our aggregates shipments in 2010, the first year of
volume growth since 2005, demand for our products, particularly in the nonresidential and
residential construction markets, could fall if companies and consumers are unable to get credit
for construction projects or if the economic slowdown causes delays or cancellations of capital
projects. State and federal budget issues may continue to hurt the funding available for
infrastructure spending. The lack of available credit has limited the ability of states to issue
bonds to finance construction projects. Several of our top sales states have stopped bidding
projects in their transportation departments.
We sell most of our aggregate products to the construction industry, so our results depend on
the strength of the construction industry. Since our business depends on construction spending,
which can be cyclical, our profits are sensitive to national, regional, and local economic
conditions and the aggregates intensity of the underlying spending on aggregates. The overall
economy has been hurt by mortgage security losses and the tightening credit markets. Construction
spending is affected by economic conditions, changes in interest rates, demographic and population
shifts, and changes in construction spending by federal, state, and local governments. If economic
conditions change, a recession in the construction industry may occur and affect the demand for our
aggregate products. The recent economic recession is an example, and our business has been hurt.
Construction spending can also be disrupted by terrorist activity and armed conflicts.
While our aggregate operations cover a wide geographic area, our earnings depend on the
strength of the local economies in which we operate because of the high cost to transport our
products relative to their price. If economic conditions and construction spending decline significantly in
one or more areas, particularly in our top five revenue-generating states of Texas, North Carolina,
Georgia,
18
Iowa and Louisiana, our profitability will decrease. We experienced this situation with
the recent economic recession.
The historic economic recession resulted in large declines in shipments of aggregate products
in our industry. Our 5.4% increase in aggregates shipments in 2010 was our first year of volume
growth since 2005. Prior to 2010, use of aggregate products in the United States had declined
almost 40% from the highest volume in 2006. While historical spending on public infrastructure
projects has been comparatively more stable as governmental appropriations and expenditures are
typically less interest rate-sensitive than private sector spending, the current uncertainty
created by the lack of a successor federal highway bill has negatively affected spending on public
infrastructure projects. There has been a reduction in many states’ investment in highway
maintenance.
In February 2009, President Obama signed into law an economic stimulus plan, which was
designed to stimulate the economy by providing over $29 billion in new funding for transportation
infrastructure. However, the lack of shovel-ready projects and the substitution of stimulus funds
for other projects has both delayed and limited the impact of this stimulus spending on the
aggregates industry. Stimulus spending in four of the top seven states, based on sales, of our
aggregates business, lag the national average. We expect approximately 30% of stimulus-related jobs
in our critical states will be completed in 2011, with any carryover in 2012, the last year of the
stimulus plan spending. We cannot be assured of the full impact of the stimulus plan.
Within the construction industry, we sell our aggregate products for use in both
nonresidential construction and residential construction. Nonresidential and residential
construction levels generally move with economic cycles; when the economy is strong, construction
levels rise, and when the economy is weak, construction levels fall. The overall economy has been
hurt by the changes in the financial services sector, including failures of several large financial
institutions, historical merger and acquisition activity within that industry, and the resulting
lack of credit availability.
We experienced an 8% increase in shipments to the nonresidential construction market in 2010,
with growth driven by shipments to the energy sector to support natural gas drilling and
exploration projects. However, other components of the nonresidential construction market remained
weak in 2010 and were negatively affected by continued weakness in the residential construction
market. The commercial part of nonresidential construction generally follows the residential
construction market with a 12-to-18 month lag. We expect this component of the nonresidential
construction market to experience modest volume recovery in 2011. Approximately 26% of our
aggregates shipments in 2010 were to the nonresidential construction market.
Our shipments to the residential construction market increased 5% in 2010. While the Federal
Reserve kept the federal funds rate at 0% throughout the year, overall weakness in the U.S. economy
and reduced consumer lending by banks limited the impact of this low rate. The excess supply of
developed lots also stifled new housing starts. Although we expect moderate improvement in the
residential construction market in 2011, housing starts are not expected to achieve a normalized
level, estimated at 1.5 million starts nationally, until 2013. Approximately 7% of our aggregates
shipments in 2010 were to the residential construction market.
19
Shipments of chemical rock (comprised primarily of material used for agricultural lime and
flue gas desulfurization) and ballast product sales (“ChemRock/Rail”) increased 5% in 2010,
primarily due to increased railroad industry demand. Three of our top ten customers in 2010 were
railroads. We expect our ChemRock/Rail shipments to be relatively flat in 2011 compared to 2010.
Our aggregates business is dependent on funding from a combination of federal, state and local
sources.
Our aggregates products are used in public infrastructure projects, which include the
construction, maintenance, and improvement of highways, bridges, schools, prisons, and similar
projects. So our business is dependent on the level of federal, state, and local spending on these
projects. We cannot be assured of the existence, amount, and timing of appropriations for spending
on future projects.
The federal highway bill provides annual highway funding for public-sector construction
projects. The most recent federal highway bill passed in 2005 provided funding of $286.4 billion
for highway, transit, and highway safety programs, but ended September 30, 2009. While a multi-year
successor federal highway bill has not been approved, Congress has extended the provisions of the
current law under continuing resolutions through March 4, 2011. Given the record level of
national debt and the resulting pressure on all government spending, we cannot be assured that
Congress will pass a multi-year successor federal highway bill or will continue to extend the
provisions of the most recent law at the same levels. Historically, states have been reluctant to
commit to long-term projects while under continuing resolutions. In fact, obligations for federal
highway funds are at a five-year low through the first half of the fiscal year ending June 30,
2011.
Federal highway bills provide spending authorizations that represent maximum amounts. Each
year, an appropriation act is passed establishing the amount that can actually be used for
particular programs. The annual funding level is generally tied to receipts of highway user taxes
placed in the Highway Trust Fund. Once the annual appropriation is passed, funds are distributed
to each state based on formulas (apportionments) or other procedures (allocations). Apportioned
and allocated funds generally must be spent on specific programs as outlined in the federal
legislation. The Highway Trust Fund has experienced shortfalls in recent years, due to high gas
prices, fewer miles driven and improved automobile fuel efficiency. These shortfalls created a
significant decline in federal highway funding levels. In response to the projected shortfalls,
money has been transferred from the General Fund into the Highway Trust Fund over the past three
years. Presently, the Congressional Budget Office projects that the highway account, one of the
two components of the Highway Trust Fund, will be unable to meet its obligations in a timely manner
sometime during 2012. We cannot be assured of the existence, timing or amount of federal highway
funding levels in the future.
At the state level, each state funds its infrastructure spending from specially allocated
amounts collected from various taxes, typically gasoline taxes and vehicle fees, along with
voter-approved bond programs. Shortages in state tax revenues can reduce the amounts spent on
state infrastructure projects, even below amounts awarded under legislative bills. Delays in state infrastructure
spending can hurt our business. Nearly all states are now experiencing state-level funding
pressures caused by lower tax revenues and an inability to finance approved projects. North
Carolina and Texas are among
20
the states experiencing these pressures, and these states
disproportionately affect our revenues and profits.
Our aggregates business is seasonal and subject to the weather.
Since the construction aggregates business is conducted outdoors, erratic weather
patterns, seasonal changes and other weather-related conditions affect our business. Adverse
weather conditions, including hurricanes and tropical storms, cold weather, snow, and heavy or
sustained rainfall, reduce construction activity, restrict the demand for our products, and impede
our ability to efficiently transport material, particularly by barge. Adverse weather conditions
also increase our costs and reduce our production output as a result of power loss, needed plant
and equipment repairs, time required to remove water from flooded operations, and similar events.
Severe drought conditions can restrict available water supplies, restrict production, and limit
movement of barge traffic. The construction aggregates business production and shipment levels
follow activity in the construction industry, which typically occur in the spring, summer and fall.
Because of the weather’s effect on the construction industry’s activity, the aggregates business
production and shipment levels vary by quarter. The second and third quarters are generally the
most profitable and the first quarter is generally the least profitable.
Our aggregates business depends on the availability of aggregate reserves or deposits and our
ability to mine them economically.
Our challenge is to find aggregate deposits that we can mine economically, with appropriate
permits, near either growing markets or long-haul transportation corridors that economically serve
growing markets. As communities have grown, they have taken up attractive quarrying locations and
have imposed restrictions on mining. We try to meet this challenge by identifying and permitting
sites prior to economic expansion, buying more land around our existing quarries to increase our
mineral reserves, developing underground mines, and developing a distribution network that
transports aggregates products by various transportation methods, including rail and water, that
allows us to transport our products longer distances than would normally be considered economical,
but we can give no assurances that we will be successful.
Our aggregates business is a capital-intensive business.
The property and machinery needed to produce our products are very expensive. Therefore, we
require large amounts of cash to operate our businesses. We believe that our cash on hand, along
with our projected internal cash flows and our available financing resources, will be enough to
give us the cash we need to support our anticipated operating and capital needs. Our ability to
generate sufficient cash flow depends on future performance, which will be subject to general
economic conditions, industry cycles and financial, business, and other factors affecting our
operations, many of which are beyond our control. If we are unable to generate sufficient cash to
operate our business, we may be required, among other things, to further reduce or delay planned
capital or operating expenditures.
21
Our businesses face many competitors.
Our businesses have many competitors, some of whom are bigger and have more resources than we
do. Some of our competitors also operate on a worldwide basis. Our results are affected by the
number of competitors in a market, the production capacity that a particular market can
accommodate, the pricing practices of other competitors, and the entry of new competitors in a
market. We also face competition for some of our products from alternative products. For example,
our magnesia specialties business may compete with other chemical products that could be used
instead of our magnesia-based products. As another example, our aggregates business may compete
with recycled asphalt and concrete products that could be used instead of new products.
Our future growth may depend in part on acquiring other businesses in our industry.
We expect to continue to grow, in part, by buying other businesses. While the pace of
acquisitions has slowed considerably over the last few years, we will continue to look for
strategic businesses to acquire. In the past, we have made acquisitions to strengthen our
existing locations, expand our operations, and enter new geographic markets. We will continue to
make selective acquisitions, joint ventures, or other business arrangements we believe will help
our company. However, the continued success of our acquisition program will depend on our ability
to find and buy other attractive businesses at a reasonable price and our ability to integrate
acquired businesses into our existing operations. We cannot assume there will continue to be
attractive acquisition opportunities for sale at reasonable prices that we can successfully
integrate into our operations.
We may decide to pay all or part of the purchase price of any future acquisition with shares
of our common stock. We may also use our stock to make strategic investments in other companies to
complement and expand our operations. If we use our common stock in this way, the ownership
interests of our shareholders will be diluted and the price of our stock could fall. We operate
our businesses with the objective of maximizing the long-term shareholder return.
We have acquired many companies since 1995. Some of these acquisitions were more easily
integrated into our existing operations and have performed as well or better than we expected,
while others have not. We have sold underperforming and other non-strategic assets, particularly
lower margin businesses like our asphalt plants in Houston, Texas, and our road paving businesses
in Shreveport, Louisiana, and Texarkana, Arkansas.
Short supplies and high costs of fuel and energy affect our businesses.
Our businesses require a continued supply of diesel fuel, natural gas, coal, petroleum coke
and other energy. The financial results of these businesses have been affected by the short supply
or high costs of these fuels and energy. While we can contract for some fuels and sources of
energy, such as fixed-price supply contracts for coal and petroleum coke, significant increases in
costs or reduced availability of these items have and may in the future reduce our financial
results. Moreover, fluctuations in the supply and costs of these fuels and energy can make
planning our businesses more difficult. For example, in 2008, increases in energy costs when
compared with 2007 prices lowered net earnings for our businesses by $0.65 per diluted share. Conversely, in 2009, decreases in
energy
22
costs compared with 2008 prices contributed $1.01 to our net earnings per diluted share.
But in 2010, increases in energy costs compared with 2009 prices again lowered net earnings for our
businesses by $0.34 per diluted share. We do not hedge our diesel fuel price risk, but instead
focus on volume-related price reductions, fuel efficiency, consumption, and the natural hedge
created by the ability to increase aggregates prices.
Changes in legal requirements and governmental policies concerning zoning, land use, the
environment, and other areas of the law, and litigation relating to these matters, affect our
businesses. Our operations expose us to the risk of material environmental liabilities.
Many federal, state, and local laws and regulations relating to zoning, land use, the
environment, health, safety, and other regulatory matters govern our operations. We take great
pride in our operations and try to remain in strict compliance at all times with all applicable
laws and regulations. Despite our extensive compliance efforts, risk of liabilities, particularly
environmental liabilities, is inherent in the operation of our businesses, as it is with our
competitors. We cannot assume that these liabilities will not negatively affect us in the future.
We are also subject to future events, including changes in existing laws or regulations or
enforcement policies, or further investigation or evaluation of the potential health hazards of
some of our products or business activities, which may result in additional compliance and other
costs. We could be forced to invest in preventive or remedial action, like pollution control
facilities, which could be substantial.
Our operations are subject to manufacturing, operating, and handling risks associated with the
products we produce and the products we use in our operations, including the related storage and
transportation of raw materials, products, hazardous substances, and wastes. We are exposed to
hazards including storage tank leaks, explosions, discharges or releases of hazardous substances,
exposure to dust, and the operation of mobile equipment and manufacturing machinery.
These risks can subject us to potentially significant liabilities relating to personal injury
or death, or property damage, and may result in civil or criminal penalties, which could hurt our
productivity or profitability. For example, from time to time we investigate and remediate
environmental contamination relating to our prior or current operations, as well as operations we
have acquired from others, and in some cases we have been or could be named as a defendant in
litigation brought by governmental agencies or private parties.
We are involved from time to time in litigation and claims arising from our operations. While
we do not believe the outcome of pending or threatened litigation will have a material adverse
effect on our operations or our financial condition, we cannot assume that an adverse outcome in a
pending or future legal action would not negatively affect us.
Labor disputes could disrupt operations of our businesses.
Labor unions represent 12.9% of the hourly employees of our aggregates business and 100% of
the hourly employees of our specialty products business. Our collective bargaining agreements for
23
employees of our magnesia specialties business at the Manistee, Michigan magnesia chemicals plant
and the Woodville, Ohio lime plant expire in August 2011 and June 2014, respectively.
Disputes with our trade unions, or the inability to renew our labor agreements, could lead to
strikes or other actions that could disrupt our businesses, raise costs, and reduce revenues and
earnings from the affected locations. We believe we have good relations with all of our employees,
including our unionized employees.
Delays or interruptions in shipping products of our businesses could affect our operations.
Transportation logistics play an important role in allowing us to supply products to our
customers, whether by truck, rail, barge, or ship. Any significant delays, disruptions, or the
non-availability of our transportation support system could negatively affect our operations. For
example, in 2005 and partially in 2006, we experienced rail transportation shortages in Texas and
parts of the southeastern region of the United States. In 2005 and 2006, following Hurricanes
Katrina and Rita, we experienced significant barge transportation problems along the Mississippi
River system.
Water levels can also affect our ability to transport our products. High water levels limit
the number of barges we can transport and can require that we use additional horsepower to tow
barges. Low water levels can reduce the amount of material we can transport in each barge.
The availability of rail cars and barges can also affect our ability to transport our
products. Rail cars and barges can be used to transport many different types of products. If
owners sell or lease rail cars and barges for use in other industries, we may not have enough rail
cars and barges to transport our products.
We have long-term agreements with shipping companies to provide ships to transport our
aggregate products from our Bahamas and Nova Scotia operations to various coastal ports. These
contracts have varying expiration dates ranging from 2011 to 2017 and generally contain renewal
options. Our inability to renew these agreements or enter into new ones with other shipping
companies could affect our ability to transport our products.
Our earnings are affected by the application of accounting standards and our critical accounting
policies, which involve subjective judgments and estimates by our management. Our estimates and
assumptions could be wrong.
The accounting standards we use in preparing our financial statements are often complex and
require that we make significant estimates and assumptions in interpreting and applying those
standards. We make critical estimates and assumptions involving accounting matters including our
goodwill impairment testing, our expenses and cash requirements for our pension plans, our
estimated income taxes, how we allocate the purchase price of our acquisitions, and how we account
for our property, plant and equipment, and inventory. These estimates and assumptions involve
matters that are inherently uncertain and require our subjective and complex judgments. If we used
different estimates and assumptions or used different ways to determine these estimates, our financial
results could differ.
24
While we believe our estimates and assumptions are appropriate, we could be wrong.
Accordingly, our financial results could be different, either higher or lower. We urge you to read
about our critical accounting policies in our Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The adoption of new accounting standards may affect our financial results.
The accounting standards we apply in preparing our financial statements are reviewed by
regulatory bodies and are changed from time to time. New or revised accounting standards could
change our financial results either positively or negatively. For example, beginning in 2006, we
were required under new accounting standards to expense the fair value of stock options we award
our management and key employees as part of their compensation. This resulted in a reduction of
our earnings and made comparisons between financial periods more difficult. Beginning in 2009, we
were required under new accounting standards to determine whether instruments granted in
stock-based payment transactions under our employee benefit plans were considered “participating
securities” and included in determining our earnings per share. This resulted in a reduction of
our previously-reported net earnings and decreased our previously-reported earnings per share
amounts. We urge you to read about our accounting policies and changes in our accounting policies
in Note A of our 2009 financial statements. The federal regulatory body overseeing our accounting
standards is now implementing a convergence project, which would confirm the accounting in the
United States for various topics to the requirements under international accounting standards.
Proposed changes are being issued one topic at a time. We have not looked at how all of these
topics might impact us. New or revised accounting standards could change our financial results
either positively or negatively.
We depend on the recruitment and retention of qualified personnel, and our failure to attract and
retain such personnel could affect our business.
Our success depends to a significant degree upon the continued services of our key personnel
and executive officers. Our prospects depend upon our ability to attract and retain qualified
personnel for our operations. Competition for personnel is intense, and we may not be successful
in attracting or retaining qualified personnel, which could negatively affect our business.
Disruptions in the credit markets could affect our business.
The current credit environment has negatively affected the economy, and we have considered how
it might affect our business. Demand for our products, particularly in the commercial and
residential construction markets, could decline if companies and consumers are unable to finance
construction projects or if the economic slowdown continues to cause delays or cancellations to
capital projects. State and federal budget issues may continue to negatively affect the funding
available for infrastructure spending without continued economic stimulus at the federal level.
A recessionary economy can also increase the likelihood we will not be able to collect on all
of our accounts receivable with our customers. We are protected in part, however, by payment bonds
posted by many of our customers or end-users. Nevertheless, we have experienced a delay in payment
from some of our customers during this economic downturn. Historically our bad debt write-offs have
25
not been significant to our operating results, and, although the amount of our bad debt write-offs
has increased, we believe our allowance for doubtful accounts is adequate.
During this economic downturn we have been forced to temporarily idle some of our facilities.
In 2010, the Company’s Aggregates business operated at a level significantly below capacity, which
restricted the Company’s ability to capitalize $52.4 million of costs that could have been
inventoried under normal operating conditions. If demand does not improve, such temporary idling
could become longer-term, impairing the value of some of the assets at those locations. The timing
of increased demand will determine when these locations will be reopened. During the idling
period, the plant and equipment will continue to be depreciated. If practicable, we will transfer
the mobile equipment and use it elsewhere. Because we continue to have long-term access to the
aggregate reserves, these sites are not considered impaired during temporary idlings.
Nevertheless, there is a risk of long-term asset impairment at sites that are temporarily idled if
the economic downturn does not improve in the near term.
The credit environment could impact the Company’s ability to borrow money in the future.
Additional financing or refinancing might not be available and, if available, may not be at
economically favorable terms. Further, an increase in leverage could lead to deterioration in our
credit ratings. A reduction in our credit ratings, regardless of the cause, could also limit our
ability to obtain additional financing and/or increase our cost of obtaining financing. In 2010,
we repaid with cash $217.6 million of our Floating Rate Senior Notes. We plan to renegotiate our
short-term and accounts credit facility with our banks. We expect to close on a new, multi-year
credit facility by the end of the first quarter of 2011. We expect the new credit facility will
have the same financial covenants as our existing credit facility and will provide us the ability
to refinance our $242 million of Notes that become due and payable in April 2011. While we
anticipate this new credit facility will be in place by the end of the first quarter 2011, there is
no guarantee we will be able to negotiate and put into place the credit facility as described.
There is no guarantee we will be able to access the capital markets at financially economical
interest rates, which could negatively affect our business.
We may be required to obtain financing in order to fund certain strategic acquisitions, if
they arise, or to refinance our outstanding debt. Any large strategic acquisition would require
that we issue both newly issued equity and debt securities in order to maintain our investment
grade credit rating. We are also exposed to risks from tightening credit markets, through the
interest payable on our outstanding debt and the interest cost on our commercial paper program, to
the extent it is available to us. While management believes our credit ratings will remain at an
investment-grade level, we cannot be assured these ratings will remain at those levels. While
management believes the Company will continue to have credit available to it adequate to meet its
needs, there can be no assurance of that.
Our specialty products business depends in part on the steel industry and the supply of reasonably
priced fuels.
Our specialty products business sells some of its products to companies in the steel industry.
While we have reduced this risk over the last few years, this business is still dependent, in
part, on the strength of the highly-cyclical steel industry. The economic downturn has caused a
significant decline in steel manufacturing. While steelmaking increased in 2010, it is still far
below levels of the past. We anticipate this weakness to continue in 2011. The specialty products
business also requires significant
26
amounts of natural gas, coal, and petroleum coke, and financial
results are negatively affected by increases in fuel prices or shortages.
Our articles of incorporation, bylaws, and shareholder rights plan and North Carolina law may
inhibit a change in control that you may favor.
Our restated articles of incorporation and restated bylaws, shareholder rights plan, and North
Carolina law contain provisions that may delay, deter or inhibit a future acquisition of us not
approved by our board of directors. This could occur even if our shareholders are offered an
attractive value for their shares or if many or even a majority of our shareholders believe the
takeover is in their best interest. These provisions are intended to encourage any person
interested in acquiring us to negotiate with and obtain the approval of our board of directors in
connection with the transaction. Provisions that could delay, deter, or inhibit a future
acquisition include the following:
| |
• |
|
a classified board of directors; |
| |
| |
• |
|
the ability of the board of directors to establish the terms of, and issue,
preferred stock without shareholder approval; |
| |
| |
• |
|
the requirement that our shareholders may only remove directors for cause; |
| |
| |
• |
|
the inability of shareholders to call special meetings of shareholders; and |
| |
| |
• |
|
super majority shareholder approval requirements for business combination
transactions with certain five percent shareholders. |
In addition, we have in place a shareholder rights plan that will trigger a dilutive issuance
of common stock upon acquisitions of our common stock by a third party above a threshold that are
not approved by the board of directors. Additionally, the occurrence of certain change of control
events could result in an event of default under certain of our existing or future debt
instruments.
Changes in our effective tax rate may harm our results of operations.
A number of factors may increase our future effective tax rate, including:
| |
• |
|
Governmental authorities increasing taxes to fund deficits; |
| |
| |
• |
|
The jurisdictions in which earnings are taxed; |
| |
| |
• |
|
The resolution of issues arising from tax audits with various tax authorities; |
| |
| |
• |
|
Changes in the valuation of our deferred tax assets and liabilities; |
| |
| |
• |
|
Adjustments to estimated taxes upon finalization of various tax returns; |
| |
| |
• |
|
Changes in available tax credits; |
27
| |
• |
|
Changes in share-based compensation; |
| |
| |
• |
|
Other changes in tax laws, and |
| |
| |
• |
|
The interpretation of tax laws and/or administrative practices. |
Any significant increase in our future effective tax rate could reduce net earnings for future
periods.
* * * * * * * * * * * * * *
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. Other factors besides those listed may also adversely affect the
Company and may be material to the Company. The Company has listed all known material risks it
considers relevant in evaluating the Company and its operations. 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 Company’s Securities
and Exchange Commission filings, including, but not limited to, the discussion under the heading
“Risk Factors and Forward-Looking Statements” under Item 1A of this Form 10-K, the discussion of
“Competition” under Item 1 on Form 10-K, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” under Item 7 of this Form 10-K and the 2010 Annual Report, and
“Note A: Accounting Policies” and “Note N: Commitments and Contingencies” of the “Notes to
Financial Statements” of the 2010 Financial Statements included under Item 8 of this Form 10-K and
the 2010 Annual Report.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Aggregates Business
As of December 31, 2010, the Company processed or shipped aggregates from 269 quarries,
underground mines, and distribution yards in 27 states and in Canada and the Bahamas, of which 99
are located on land owned by the Company free of major encumbrances, 59 are on land owned in part
and leased in part, 107 are on leased land, and 4 are on facilities neither owned nor leased, where
raw materials are removed under an agreement. The Company’s aggregates reserves on the average
exceed 50 years based on normalized levels of production, and 107 years at current production
rates.
28
However, certain locations may be subject to more limited reserves and may not be able to
expand. In addition, as of December 31, 2010, the Company processed and shipped ready mixed
concrete and/or asphalt products from 15 properties in 3 states, of which 11 are located on land
owned by the Company free of major encumbrances and 4 are on leased land.
The Company uses various drilling methods, depending on the type of aggregate, to estimate
aggregates reserves that are economically mineable. The extent of drilling varies and depends on
whether the location is a potential new site (greensite), an existing location, or a potential
acquisition. More extensive drilling is performed for potential greensites and acquisitions, and
in rare cases the Company may rely on existing geological data or results of prior drilling by
third parties. Subsequent to drilling, selected core samples are tested for soundness, abrasion
resistance, and other physical properties relevant to the aggregates industry. If the reserves
meet the Company’s standards and are economically mineable, then they are either leased or
purchased.
The Company estimates proven and probable reserves based on the results of drilling. Proven
reserves are reserves of deposits designated using closely spaced drill data, and based on that
data the reserves are believed to be relatively homogenous. Proven reserves have a certainty of
85% to 90%. Probable reserves are reserves that are inferred utilizing fewer drill holes and/or
assumptions about the economically mineable reserves based on local geology or drill results from
adjacent properties. The degree of certainty for probable reserves is 70% to 75%. In determining
the amount of reserves, the Company’s policy is to not include calculations that exceed certain
depths, so for deposits, such as granite, that typically continue to depths well below the ground,
there may be additional deposits that are not included in the reserve calculations. The Company
also deducts reserves not available due to property boundaries, set-backs, and plant
configurations, as deemed appropriate when estimating reserves. For additional information on the
Company’s assessment of reserves, see “Management’s Discussion and Analysis of Financial Condition
and Results of Operations — Other Financial Information — Critical Accounting Policies and
Estimates- Property, Plant and Equipment” under Item 7 of this Form 10-K and the 2010 Annual Report
for discussion of reserves evaluation by the Company.
Set forth in the tables below are the Company’s estimates of reserves of recoverable
aggregates of suitable quality for economic extraction, shown on a state-by-state basis, and the
Company’s total annual production for the last 3 years, along with the Company’s estimate of years
of production available, shown on a segment-by-segment basis. The number of producing quarries
shown on the table include underground mines. The Company’s reserve estimates for the last 2 years
are shown for comparison purposes on a state-by-state basis. The changes in reserve estimates at a
particular state level from year to year reflect the tonnages of reserves on locations that have
been opened or closed during the year, whether by acquisition, disposition, or otherwise; production and sales in the
normal course of business; additional reserve estimates or refinements of the Company’s existing
reserve estimates; opening of additional reserves at existing locations; the depletion of reserves
at existing locations; and other factors. The Company evaluates its reserve estimates primarily on
a Company-wide, or segment-by-segment basis, and does not believe comparisons of changes in reserve
estimates on a state-by-state basis from year to year are particularly meaningful.
29
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of aggregate |
|
aggregate |
|
|
|
| |
|
|
|
Tonnage of Reserves for |
|
|
Tonnage of Reserves for |
|
|
|
|
|
|
|
|
|
|
reserves located at an |
|
reserves on |
|
|
|
| |
|
Number of |
|
each general type of |
|
|
each general type of |
|
|
Change in Tonnage from |
|
|
existing quarry, and |
|
land that has |
|
Percent of reserves |
| |
|
Producing |
|
aggregate at 12/31/09 |
|
|
aggregate at 12/31/10 |
|
|
2009 |
|
|
reserves not located at an |
|
not been |
|
owned and percent |
| |
|
Quarries |
|
(Add 000) |
|
|
(Add 000) |
|
|
(Add 000) |
|
|
existing quarry. |
|
zoned for |
|
leased |
| State |
|
2010 |
|
Hard Rock |
|
|
S & G |
|
|
Hard Rock |
|
|
S & G |
|
|
Hard Rock |
|
|
S & G |
|
|
At Quarry |
|
Not at Quarry |
|
quarrying. |
|
Owned |
|
Leased |
Alabama |
|
5 |
|
|
82,630 |
|
|
|
10,163 |
|
|
|
104,161 |
|
|
|
12,087 |
|
|
|
21,531 |
|
|
|
1,924 |
|
|
100% |
|
0% |
|
0% |
|
23% |
|
77% |
Arkansas |
|
3 |
|
|
239,761 |
|
|
|
0 |
|
|
|
231,853 |
|
|
|
0 |
|
|
|
(7,908 |
) |
|
|
0 |
|
|
96% |
|
4% |
|
0% |
|
58% |
|
42% |
Florida |
|
2 |
|
|
119,902 |
|
|
|
0 |
|
|
|
211,627 |
|
|
|
0 |
|
|
|
91,725 |
|
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
0% |
|
100% |
Georgia |
|
13 |
|
|
1,241,080 |
|
|
|
0 |
|
|
|
1,249,337 |
|
|
|
0 |
|
|
|
8,257 |
|
|
|
0 |
|
|
92% |
|
8% |
|
0% |
|
70% |
|
30% |
Illinois |
|
2 |
|
|
750,405 |
|
|
|
0 |
|
|
|
676,733 |
|
|
|
0 |
|
|
|
(73,672 |
) |
|
|
0 |
|
|
59% |
|
41% |
|
0% |
|
58% |
|
42% |
Indiana |
|
10 |
|
|
478,497 |
|
|
|
38,010 |
|
|
|
474,514 |
|
|
|
35,650 |
|
|
|
(3,983 |
) |
|
|
(2,360 |
) |
|
100% |
|
0% |
|
15% |
|
40% |
|
60% |
Iowa |
|
23 |
|
|
656,618 |
|
|
|
54,390 |
|
|
|
621,136 |
|
|
|
53,976 |
|
|
|
(35,482 |
) |
|
|
(414 |
) |
|
99% |
|
1% |
|
1% |
|
12% |
|
88% |
Kansas |
|
6 |
|
|
120,739 |
|
|
|
0 |
|
|
|
112,162 |
|
|
|
0 |
|
|
|
(8,577 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
37% |
|
63% |
Kentucky |
|
3 |
|
|
556,310 |
|
|
|
45,533 |
|
|
|
550,460 |
|
|
|
30,970 |
|
|
|
(5,850 |
) |
|
|
(14,563 |
) |
|
100% |
|
0% |
|
0% |
|
0% |
|
100% |
Maryland |
|
2 |
|
|
95,347 |
|
|
|
0 |
|
|
|
94,630 |
|
|
|
0 |
|
|
|
(717 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
100% |
|
0% |
Minnesota |
|
2 |
|
|
447,144 |
|
|
|
0 |
|
|
|
442,524 |
|
|
|
0 |
|
|
|
(4,620 |
) |
|
|
0 |
|
|
77% |
|
23% |
|
0% |
|
69% |
|
31% |
Mississippi |
|
1 |
|
|
0 |
|
|
|
83,645 |
|
|
|
0 |
|
|
|
83,457 |
|
|
|
0 |
|
|
|
(188 |
) |
|
100% |
|
0% |
|
0% |
|
100% |
|
0% |
Missouri |
|
6 |
|
|
346,885 |
|
|
|
0 |
|
|
|
425,614 |
|
|
|
0 |
|
|
|
78,729 |
|
|
|
0 |
|
|
88% |
|
12% |
|
0% |
|
17% |
|
83% |
Montana |
|
0 |
|
|
50,000 |
|
|
|
0 |
|
|
|
50,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
100% |
|
0% |
Nebraska |
|
3 |
|
|
188,975 |
|
|
|
0 |
|
|
|
181,821 |
|
|
|
0 |
|
|
|
(7,154 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
50% |
|
50% |
Nevada |
|
1 |
|
|
156,477 |
|
|
|
0 |
|
|
|
156,038 |
|
|
|
0 |
|
|
|
(439 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
84% |
|
16% |
North Carolina |
|
38 |
|
|
3,374,396 |
|
|
|
0 |
|
|
|
3,414,099 |
|
|
|
0 |
|
|
|
39,703 |
|
|
|
0 |
|
|
82% |
|
18% |
|
3% |
|
64% |
|
36% |
Ohio |
|
15 |
|
|
181,509 |
|
|
|
194,399 |
|
|
|
180,646 |
|
|
|
191,301 |
|
|
|
(863 |
) |
|
|
(3,098 |
) |
|
100% |
|
0% |
|
3% |
|
92% |
|
8% |
Oklahoma |
|
8 |
|
|
728,065 |
|
|
|
37,688 |
|
|
|
742,625 |
|
|
|
37,169 |
|
|
|
14,560 |
|
|
|
(519 |
) |
|
100% |
|
0% |
|
0% |
|
82% |
|
18% |
South Carolina |
|
7 |
|
|
406,173 |
|
|
|
0 |
|
|
|
454,235 |
|
|
|
32,340 |
|
|
|
48,062 |
|
|
|
32,340 |
|
|
89% |
|
11% |
|
19% |
|
13% |
|
87% |
Tennessee |
|
1 |
|
|
37,273 |
|
|
|
0 |
|
|
|
36,741 |
|
|
|
0 |
|
|
|
(532 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
100% |
|
0% |
Texas |
|
10 |
|
|
1,177,978 |
|
|
|
109,782 |
|
|
|
1,164,108 |
|
|
|
107,978 |
|
|
|
(13,870 |
) |
|
|
(1,804 |
) |
|
65% |
|
35% |
|
33% |
|
10% |
|
90% |
Utah |
|
1 |
|
|
15,649 |
|
|
|
0 |
|
|
|
15,250 |
|
|
|
0 |
|
|
|
(399 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
0% |
|
100% |
Virginia |
|
4 |
|
|
383,152 |
|
|
|
0 |
|
|
|
379,557 |
|
|
|
0 |
|
|
|
(3,595 |
) |
|
|
0 |
|
|
86% |
|
14% |
|
1% |
|
76% |
|
24% |
Washington |
|
2 |
|
|
27,484 |
|
|
|
0 |
|
|
|
27,179 |
|
|
|
0 |
|
|
|
(305 |
) |
|
|
0 |
|
|
46% |
|
54% |
|
0% |
|
72% |
|
28% |
West Virginia |
|
1 |
|
|
59,161 |
|
|
|
0 |
|
|
|
58,825 |
|
|
|
0 |
|
|
|
(336 |
) |
|
|
0 |
|
|
31% |
|
69% |
|
0% |
|
90% |
|
10% |
Wyoming |
|
2 |
|
|
118,582 |
|
|
|
0 |
|
|
|
115,614 |
|
|
|
0 |
|
|
|
(2,968 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
0% |
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S. Total |
|
171 |
|
|
12,040,192 |
|
|
|
573,610 |
|
|
|
12,171,489 |
|
|
|
584,928 |
|
|
|
131,297 |
|
|
|
11,318 |
|
|
89% |
|
11% |
|
9% |
|
52% |
|
48% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
Non-U. S. |
|
2 |
|
|
845,108 |
|
|
|
0 |
|
|
|
815,111 |
|
|
|
0 |
|
|
|
(29,997 |
) |
|
|
0 |
|
|
100% |
|
0% |
|
0% |
|
99% |
|
1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grand Total |
|
173 |
|
|
12,885,300 |
|
|
|
573,610 |
|
|
|
12,986,600 |
|
|
|
584,928 |
|
|
|
101,300 |
|
|
|
11,318 |
|
|
|
|
|
|
|
|
|
|
|
30
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Annual Production (in tons) (add 000) |
|
|
Number of years of production |
|
| |
|
For year ended December 31 |
|
|
available at December 31, 2010 |
|
| Reportable Segment |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
Mideast Group |
|
|
36,596 |
|
|
|
35,310 |
|
|
|
46,578 |
|
|
|
145.7 |
|
Southeast Group |
|
|
29,295 |
|
|
|
31,095 |
|
|
|
39,574 |
|
|
|
128.7 |
|
West Group |
|
|
60,646 |
|
|
|
56,837 |
|
|
|
69,439 |
|
|
|
74.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates
Business |
|
|
126,537 |
|
|
|
123,242 |
|
|
|
155,591 |
|
|
|
107.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Products Business
The Specialty Products business currently operates major manufacturing facilities in Manistee,
Michigan, and Woodville, Ohio. Both of these facilities are owned.
Other Properties
The Company’s principal corporate office, which it owns, is located in Raleigh, North
Carolina. The Company owns and leases various administrative offices for its four reportable
business segments.
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 generally well maintained,
and are generally suitable and adequate for the purposes for which they are used. During 2010, the
principal properties were believed to be utilized at average productive capacities of approximately
50% and were capable of supporting a higher level of market demand. However, due to the current
economic recession, the Company has adjusted its production schedules to meet reduced demand for
its products. For example, the Company has reduced operating hours at a number of its facilities,
closed some of its facilities, and temporarily idled some of its facilities. In 2010, the
Company’s Aggregates business operated at a level significantly below capacity, which restricted
the Company’s ability to capitalize $52.4 million of costs that could have been inventoried under
normal operating conditions. If demand does not improve over the near term, such reductions and
temporary idlings could continue. The Company expects, however, as the economy recovers, it will
be able to resume production at its normalized levels and increase production again as demand for
its products increases.
|
|
|
| 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, blasting, 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
31
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.
The Company was not required to pay any penalties in 2009 for failure to disclose certain
“reportable transactions” under Section 6707A of the Internal Revenue Code.
See also “Note N: Commitments and Contingencies” of the “Notes to Financial Statements” of
the 2010 Financial Statements included under Item 8 of this Form 10-K and the 2010 Annual Report
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations -
Environmental Regulation and Litigation” under Item 7 of this Form 10-K and the 2010 Annual
Report.
|
|
|
| ITEM 4. |
|
[REMOVED AND RESERVED] |
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding the executive officers of Martin
Marietta Materials, Inc. as of February 25, 2011:
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Year Assumed |
|
Other Positions and Other Business |
| Name |
|
Age |
|
Present Position |
|
Present Position |
|
Experience Within the Last Five Years |
C. Howard Nye |
|
48 |
|
Chief Executive Officer; |
|
2010 |
|
Chief Operating Officer (2006-2009) |
|
|
|
|
President; |
|
2006 |
|
Executive Vice President, Hanson |
|
|
|
|
President of Aggregates |
|
2010 |
|
Aggregates North America (2003-2006)* |
|
|
|
|
Business |
|
|
|
|
|
|
|
|
Chairman of Magnesia |
|
2007 |
|
|
|
|
|
|
Specialties Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
Anne H. Lloyd |
|
49 |
|
Executive Vice President; |
|
2009 |
|
Senior Vice President (2005-2009); |
|
|
|
|
Treasurer; |
|
2006 |
|
Chief Accounting Officer (1999-2006) |
|
|
|
|
Chief Financial Officer |
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
Daniel G. Shephard |
|
52 |
|
Executive Vice President; |
|
2005 |
|
|
|
|
|
|
Chief Executive Officer |
|
2005 |
|
|
|
|
|
|
of Magnesia Specialties |
|
|
|
|
|
|
|
|
Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Vaio |
|
50 |
|
President — Martin Marietta |
|
2006 |
|
President — Southwest Division (1998-2006) |
|
|
|
|
Materials West; |
|
|
|
|
|
|
|
|
Executive Vice President |
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
Roselyn R. Bar |
|
52 |
|
Senior Vice President; |
|
2005 |
|
|
|
|
|
|
General Counsel; |
|
2001 |
|
|
|
|
|
|
Corporate Secretary |
|
1997 |
|
|
|
|
|
| * |
|
Prior to his employment with the Company in 2006, Mr. Nye was Executive Vice President of Hanson
Aggregates North America, a producer of construction aggregates, since 2003. |
32
PART II
|
|
|
| ITEM 5. |
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES |
Market Information, Holders, and Dividends
The Company’s Common Stock, $.01 par value, is traded on the New York Stock Exchange (“NYSE”)
(Symbol: MLM). Information concerning stock prices and dividends paid is included under the
caption “Quarterly Performance (Unaudited)” of the 2010 Annual Report, and that information is
incorporated herein by reference. There were 760 holders of record of the Company’s Common Stock
as of February 25, 2011.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Total Number of Shares |
|
Maximum Number of |
| |
|
|
|
|
|
|
|
|
|
Purchased as Part of |
|
Shares that May Yet |
| |
|
|
|
|
|
|
|
|
|
Publicly Announced |
|
be Purchased Under |
| |
|
Total Number of Shares |
|
Average Price Paid |
|
Plans or |
|
the Plans or |
| Period |
|
Purchased |
|
per Share |
|
Programs(1) |
|
Programs |
October 1, 2010 —
October 31, 2010 |
|
|
0 |
|
|
$ |
— |
|
|
|
0 |
|
|
|
5,041,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1, 2010 —
November 30, 2010 |
|
|
0 |
|
|
$ |
— |
|
|
|
0 |
|
|
|
5,041,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 1, 2010 —
December 31,
2010 |
|
|
0 |
|
|
$ |
— |
|
|
|
0 |
|
|
|
5,041,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
0 |
|
|
$ |
— |
|
|
|
0 |
|
|
|
5,041,871 |
|
|
|
|
| (1) |
|
The Company’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. The Company
announced in a press release dated February 22, 2006 that its Board of Directors had
authorized the repurchase of an additional 5 million shares of common stock. The Company
announced in a press release dated August 15, 2007 that its Board of Directors had authorized
the repurchase of an additional 5 million shares of common stock. |
33
|
|
|
| ITEM 6. |
|
SELECTED FINANCIAL DATA |
The information required in response to this Item 6 is included under the caption “Five Year
Summary” of the 2010 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” in the 2010
Annual Report, and that information is incorporated herein by reference, except that the
information contained under the caption “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Outlook 2011” in the 2010 Annual Report is not incorporated
herein by reference.
|
|
|
| ITEM 7A. |
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The information required in response to this Item 7A is included under the caption
“Management’s Discussion and Analysis of Financial Condition and Results of Operations-Quantitative
and Qualitative Disclosures About Market Risk” of the 2010 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 Statements of Earnings,” “Consolidated Balance Sheets,” “Consolidated Statements of
Cash Flows,” “Consolidated Statements of Total Equity,” “Notes to Financial Statements,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and
“Quarterly Performance (Unaudited)” of the 2010 Annual Report, and that information is incorporated
herein by reference.
|
|
|
| ITEM 9. |
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
|
|
|
| ITEM 9A. |
|
CONTROLS AND PROCEDURES |
As of December 31, 2010, an evaluation was performed under the supervision and with the
participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures and the Company’s internal control over financial reporting.
Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the
34
Company’s disclosure controls and procedures were effective in ensuring that all material
information required to be disclosed is made known to them in a timely manner as of December 31,
2010 and further concluded that the Company’s internal control over financial reporting was
effective in providing reasonable assurance regarding the reliability of financial reporting and
the preparation of the Company’s financial statements for external purposes in accordance with
generally accepted accounting principles as of December 31, 2010. There were no changes in the
Company’s internal control over financial reporting during the most recently completed fiscal
quarter that materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
The foregoing evaluation of the Company’s disclosure controls and procedures was based on the
definition in Exchange Act Rule 13a-15(e), which requires that disclosure controls and procedures
are effectively designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits with the Securities and Exchange Commission under the Exchange Act
is recorded, processed, summarized, and reported, within the time periods specified in the
Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to the
issuer’s management, including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding required
disclosure.
The Company’s management, including the CEO and CFO, does not expect that the Company’s
control system will prevent all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of
two or more people, or by management override of the control. The design of any system of controls
also is based in part upon certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or fraud may occur and
not be detected.
The Company’s management has issued its annual report on the Company’s internal control over
financial reporting, which included management’s assessment that the Company’s internal control
over financial reporting was effective at December 31, 2010. The Company’s independent registered
public accounting firm has issued an attestation report that the Company’s internal control over
financial reporting was effective at December 31, 2010. Management’s report on the Company’s
internal controls and the attestation report of the Company’s independent registered public
accounting firm are included in the 2010 Financial Statements, included under Item 8 of this Form
10-K and the 2010 Annual Report. See also “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Internal Control and Accounting and Reporting Risk” under
Item 7 of this Form 10-K and the 2010 Annual Report.
35
Included among the Exhibits to this Form 10-K are forms of “Certifications” of the Company’s
CEO and CFO as required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the
“Section 302 Certification”). The Section 302 Certifications refer to this evaluation of the
Company’s disclosure policies and procedures and internal control over financial reporting. The
information in this section should be read in conjunction with the Section 302 Certifications for a
more complete understanding of the topics presented.
|
|
|
| ITEM 9B. |
|
OTHER INFORMATION |
On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
Dodd-Frank Act) was enacted. Section 1503 of the Dodd-Frank Act requires companies that are
“operators” (as such term is defined in the Federal Mine Safety and Health Act of 1977 (the Mine
Act)) to disclose certain mine safety information in each periodic report to the Commission. This
information is related to the enforcement of the Mine Act by the Mine Safety and Health
Administration (MSHA). The disclosures required by Section 1503 are included on Exhibit 99.01 to
this Form 10-K, which is incorporated herein in its entirety by reference.
PART III
|
|
|
| ITEM 10. |
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
The information concerning directors of the Company, the Audit Committee of the Board of
Directors, and the Audit Committee financial expert serving on the Audit Committee, all as required
in response to this Item 10, is included under the captions “Corporate Governance Matters” and
“Section 16(a) Beneficial Ownership Reporting Compliance” 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, 2010 (the “2011 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, under the heading “Executive Officers of the Registrant,” of this Form 10-K.
The information concerning the Company’s code of ethics required in response to this Item 10 is included in Part I, under the
heading “Available Information,” 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,” “Compensation Discussion and Analysis,” “Corporate Governance Matters,” “Management
Development and Compensation Committee Report,” and “Compensation Committee Interlocks and Insider
Participation” in the Company’s 2011 Proxy Statement, and that information is hereby incorporated
by reference in this Form 10-K.
|
|
|
| ITEM 12. |
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS |
36
The information required in response to this Item 12 is included under the captions “General
Information,” “Security Ownership of Certain Beneficial Owners and Management,” and “Securities
Authorized for Issuance Under Equity Compensation Plans” in the Company’s 2011 Proxy Statement, and
that information is hereby incorporated by reference in this Form 10-K.
|
|
|
| ITEM 13. |
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
The information required in response to this Item 13 is included under the captions
“Compensation Committee Interlocks and Insider Participation in Compensation Decisions” and
“Corporate Governance Matters” in the Company’s 2011 Proxy Statement, and that information is
hereby incorporated by reference in this Form 10-K.
|
|
|
| ITEM 14. |
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The information required in response to this Item 14 is included under the caption
“Independent Auditors” in the Company’s 2011 Proxy Statement, and that information is hereby
incorporated by reference in this Form 10-K.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(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 2010 Annual Report and incorporated by reference
under Item 8 of this Form 10-K: |
Consolidated Statements of Earnings—
for years ended December 31, 2010, 2009, and 2008
Consolidated Balance Sheets—
at December 31, 2010 and 2009
Consolidated Statements of Cash Flows—
for years ended December 31, 2010, 2009, and 2008
Consolidated Statements of Total Equity—
Balance at December 31, 2010, 2009, and 2008
Notes to Financial Statements
(2) List of financial statement schedules filed as part of this Form 10-K
37
| |
| |
|
The following financial statement schedule of Martin Marietta Materials, Inc. and
consolidated subsidiaries is included in Item 15(c) of this Form 10-K. |
| |
| |
|
Schedule II — Valuation and Qualifying Accounts |
| |
| |
|
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 registered public accounting firm with respect to
the above-referenced financial statements is included in the 2010 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 registered public accounting
firm are attached as Exhibit 23.01 to this Form 10-K. |
| |
| (3) |
|
Exhibits |
| |
| |
|
The list of Exhibits on the accompanying Index of Exhibits included in Item 15(b) 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) |
|
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) (Commission File No. 1-12744) |
| |
|
|
|
|
| |
3.02 |
|
|
—Articles of Amendment with Respect to the Junior Participating
Class B Preferred Stock of the Company, dated as of October 19,
2006 (incorporated by reference to Exhibit 3.1 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on
October 19, 2006) (Commission File No. 1-12744) |
| |
|
|
|
|
| |
3.03 |
|
|
—Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.01 to the Martin Marietta Materials, Inc. Current
Report on Form 8-K, filed on November 8, 2007) (Commission File
No. 1-12744) |
| |
|
|
|
|
| |
4.01 |
|
|
—Specimen Common Stock Certificate (incorporated by reference
to Exhibit 4.01 to the Martin Marietta Materials, Inc. Annual
Report on Form 10-K for the fiscal year ended December 31,
2003) (Commission File No. 1-12744) |
| |
|
|
|
|
| |
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)
(Commission File No. 1-12744) |
| |
|
|
|
|
| |
4.03 |
|
|
—Article I of the Company’s Restated Bylaws (incorporated by
reference to Exhibit 3.01 to the Martin Marietta Materials,
Inc. Current Report on Form 8-K, filed on November 8, 2007)
(Commission File No. 1-12744) |
| |
|
|
|
|
| |
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)) |
38
| |
|
|
|
|
| Exhibit |
| No. |
| |
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 |
|
|
—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)) |
| |
|
|
|
|
| |
4.07 |
|
|
—Form of Martin Marietta Materials, Inc. 6.875% Note due April
1, 2011 (incorporated by reference to Exhibit 4.12 to the
Martin Marietta Materials, Inc. registration statement on Form
S-4 (SEC Registration No. 333-61454)) |
| |
|
|
|
|
| |
4.08 |
|
|
—Indenture dated as of April 30, 2007 between Martin Marietta
Materials, Inc. and Branch Banking and Trust Company, Inc., as
trustee (incorporated by reference to Exhibit 4.1 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on
April 30, 2007 (Commission File No. 1-12744) |
| |
|
|
|
|
| |
4.09 |
|
|
—Second Supplemental Indenture, dated as of April 30, 2007,
between Martin Marietta Materials, Inc. and Branch Banking and
Trust Company, Inc., as trustee, to that certain Indenture
dated as of April 30, 2007 between Martin Marietta Materials,
Inc. and Branch Banking and Trust Company, Inc., as trustee,
pursuant to which were issued $250,000,000 aggregate principal
amount of 6 1/4% Senior Notes due 2037 of Martin Marietta
Materials, Inc. (incorporated by reference to Exhibit 4.3 to
the Martin Marietta Materials, Inc. Current Report on Form 8-K,
filed on April 30, 2007 (Commission File No. 1-12744) |
| |
|
|
|
|
| |
4.10 |
|
|
—Third Supplemental Indenture, dated as of April 21, 2008,
between Martin Marietta Materials, Inc. and Branch Banking and
Trust Company, Inc., as trustee, to that certain Indenture
dated as of April 30, 2007 between Martin Marietta Materials,
Inc. and Branch Banking and Trust Company, Inc., as trustee,
pursuant to which were issued $300,000,000 aggregate principal
amount of 6.60% Senior Notes due 2018 of Martin Marietta
Materials, Inc. (incorporated by reference to Exhibit 4.1 to
the Martin Marietta Materials, Inc. Current Report on Form 8-K,
filed on April 21, 2008 (Commission File No. 1-12744) |
| |
|
|
|
|
| |
4.11 |
|
|
—Rights Agreement, dated as of September 27, 2006, by and
between Martin Marietta Materials, Inc. and American Stock
Transfer & Trust Company, as Rights Agent, which includes the
Form of Articles of Amendment With Respect to the Junior
Participating Class B Preferred Stock of Martin Marietta
Materials, Inc., as Exhibit A, and the Form of Rights
Certificate, as Exhibit B (incorporated by reference to Exhibit
4.1 of the Company’s Current Report on Form 8-K, filed on
September 28, 2006) (Commission File No. 1-12744) |
| |
|
|
|
|
| |
4.12 |
|
|
—Form of Indenture for Senior Debt Securities (incorporated by
reference to Exhibit 4.5 to the Martin Marietta Materials, Inc.
registration statement on Form S-3) (SEC Registration No.
333-157731) |
| |
|
|
|
|
| |
4.13 |
|
|
—Form of Indenture for Subordinated Debt Securities
(incorporated by reference to Exhibit 4.6 to the Martin
Marietta Materials, Inc. registration statement on Form S-3)
(SEC Registration No. 333-157731) |
| |
|
|
|
|
| |
4.14 |
|
|
—Form of Senior Note (included in Exhibit 4.13) (incorporated
by reference to Exhibit 4.5 to the Martin Marietta Materials,
Inc. registration statement on Form S-3) (SEC Registration No.
333-157731) |
| |
|
|
|
|
| |
4.15 |
|
|
—Form of Subordinated Note (included in Exhibit 4.14)
(incorporated by reference to Exhibit 4.6 to the Martin
Marietta Materials, Inc. registration statement on Form S-3)
(SEC Registration No. 333-157731) |
| |
|
|
|
|
| |
10.01 |
|
|
—$325,000,000 Second Amended and Restated Credit Agreement
dated as of October 24, 2008, among Martin Marietta Materials,
Inc., the banks parties thereto, and JP Morgan Chase Bank,
N.A., as Administrative Agent (incorporated by reference to
Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly
Report on Form 10-Q for the quarter ended September 30, 2008)
(Commission File No. 1-12744) |
39
| |
|
|
|
|
| Exhibit |
| No. |
| |
10.02 |
|
|
—Amendment No. 1 dated as of December 23, 2009 to $325,000,000
Second Amended and Restated Credit Agreement dated as of
October 24, 2008 among Martin Marietta Materials, Inc., the
banks party thereto, and J.P. Morgan Chase Bank, N.A., as
Administrative Agent (incorporated by reference to Exhibit
10.01 to the Martin Marietta Materials, Inc. Current Report on
Form 8-K, filed on December 23, 2009) (Commission File No.
1-12744) |
| |
|
|
|
|
| |
10.03 |
|
|
—$130,000,000 Term Loan Agreement dated as of April 23, 2009
among Martin Marietta Materials, Inc., SunTrust Bank, as
Administrative Agent and a syndicate of banks (incorporated by
reference to Exhibit 10.02 to the Martin Marietta Materials,
Inc., Current Report on Form 8-K filed on April 27, 2009)
(Commission File No. 1-12744) |
| |
|
|
|
|
| |
10.04 |
|
|
—First Amendment dated as of December 23, 2009 to $130,000,000
Term Loan Agreement dated as of April 23, 2009 among Martin
Marietta Materials, Inc., SunTrust Bank, as Administrative
Agent and syndicate of banks (incorporated by reference to
Exhibit 10.02 to the Martin Marietta Materials, Inc. Current
Report on Form 8-K, filed on December 23, 2009) (Commission
File No. 1-12744) |
| |
|
|
|
|
| |
10.05 |
|
|
—$100,000,000 Account Purchase Agreement dated as of April 21,
2009 between Martin Marietta Materials, Inc. and Wells Fargo
Bank, N.A. (incorporated by reference to Exhibit 10.01 to the
Martin Marietta Materials, Inc., Current Report on Form 8-K
filed on April 27, 2009) (Commission File No. 1-12744) |
| |
|
|
|
|
| |
10.06 |
|
|
—First Amendment dated as of December 23, 2009 to $100,000,000
Account Purchase Agreement dated as of April 21, 2009 between
Martin Marietta Materials, Inc. and Wells Fargo Bank, N.A.
(incorporated by reference to Exhibit 10.03 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on
December 23, 2009) (Commission File No. 1-12744) |
| |
|
|
|
|
| |
10.07 |
|
|
—Distribution Agreement dated March 5, 2009 between Martin
Marietta Materials, Inc. and J.P. Morgan Securities Inc.
(incorporated by reference to Exhibit 99.1 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on
March 6, 2009) (Commission File No. 1-12744) |
| |
|
|
|
|
| |
10.08 |
|
|
—Distribution Agreement dated November 18, 2009 between Martin
Marietta Materials, Inc. and Wells Fargo Securities, LLC
(incorporated by reference to Exhibit 99.1 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on
November 18, 2009) (Commission File No. 1-12744)10.09 —Form of
Martin Marietta Materials, Inc. Third Amended and Restated
Employment Protection Agreement (incorporated by reference to
Exhibit 10.01 to the Martin Marietta Materials, Inc. Current
Report on Form 8-K, filed on August 19, 2008) (Commission File
No. 1-12744)** |
| |
|
|
|
|
| |
10.10 |
|
|
—Amended and Restated Martin Marietta Materials, Inc. Common
Stock Purchase Plan for Directors (incorporated by reference to
Exhibit 10.04 to the Martin Marietta Materials, Inc. Annual
Report on Form 10-K for the fiscal year ended December 31,
2008) (Commission File No. 1-12744)** |
| |
|
|
|
|
| |
10.11 |
|
|
—Martin Marietta Materials, Inc. Amended and Restated
Executive Incentive Plan (incorporated by reference to Exhibit
10.05 to the Martin Marietta Materials, Inc. Annual Report on
Form 10-K for the fiscal year ended December 31, 2008)
(Commission File No. 1-12744)** |
| |
|
|
|
|
| |
10.12 |
|
|
—Martin Marietta Materials, Inc. Incentive Stock Plan, as
Amended (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, 2008) (Commission File No.
1-12744)** |
| |
|
|
|
|
| |
10.13 |
|
|
—Martin Marietta Materials, Inc. Amended and Restated
Stock-Based Award Plan dated April 3, 2006 (incorporated by
reference to Exhibit 10.01 to the Martin Marietta Materials,
Inc. Quarterly Report on Form 10-Q for the quarter ended June
30, 2006) (Commission File No. 1-12744)** |
| |
|
|
|
|
| |
10.14 |
|
|
—Martin Marietta Materials, Inc. Amended Omnibus Securities
Award Plan (incorporated by reference to Exhibit 10.16 to the
Martin Marietta Materials, Inc. Annual Report on Form 10-K for
the fiscal year ended December 31, 2000) (Commission File No.
1-12744)** |
40
| |
|
|
|
10.15
|
|
—Martin Marietta Materials, Inc. Amended and Restated Supplemental Excess Retirement
Plan (incorporated by reference to Exhibit 10.2 to the Martin Marietta Materials, Inc.
Current Report on Form 8-K, filed on August 19, 2008 ) (Commission File No. 1-12744)** |
| |
|
|
|
|
10.16
|
|
—Form of Option Award Agreement under the Martin Marietta Materials, Inc. Amended and
Restated Stock-Based Award Plan (incorporated by reference to Exhibit 10.11 to the Martin
Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31,
2008) (Commission File No. 1-12744)** |
| |
|
|
|
|
10.17
|
|
—Form of Restricted Stock Unit Agreement under the Martin Marietta Materials, Inc. Amended
and Restated Stock-Based Award Plan (incorporated by reference to Exhibit 10.01 to the
Martin Marietta Materials, Inc. Quarter Report on Form 10-Q for the quarter ended June 30,
2009) (Commission File No. 1-12744)** |
| |
|
|
|
|
10.18
|
|
—Form of Amendment to the Stock Unit Agreement under the Martin Marietta Materials, Inc.
Amended and Restated Stock-Based Award 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, 2008) (Commission File No. 1-12744)** |
| |
|
|
|
|
*12.01
|
|
—Computation of ratio of earnings to fixed charges for the year ended December 31, 2010 |
| |
|
|
|
|
*13.01
|
|
—Excerpts from Martin Marietta Materials, Inc. 2010 Annual Report to Shareholders, portions of which are incorporated
by reference in this Form 10-K. Those portions of the 2010 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 Registered Public Accounting Firm for Martin Marietta Materials, Inc. and
consolidated subsidiaries |
| |
|
|
|
|
*24.01
|
|
—Powers of Attorney (included in this Form 10-K immediately following Signatures) |
| |
|
|
|
|
*31.01
|
|
—Certification dated February 25, 2011 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
|
|
—Certification dated February 25, 2011 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
|
|
—Certification dated February 25, 2011 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
|
|
—Certification dated February 25, 2011 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
|
|
*99.01
|
|
—Mine Safety Disclosure |
Other material incorporated by reference:
| |
|
|
Martin Marietta Materials, Inc.’s 2011 Proxy Statement filed pursuant to Regulation 14A, portions of
which are incorporated by reference in this Form 10-K. Those portions of the 2011 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 |
41
(c) Financial Statement Schedule
SCHEDULE
VALUATION AND QUALIFYING ACCOUNTS
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Col A |
|
Col B |
|
|
Col C |
|
|
Col D |
|
|
Col E |
|
| |
|
|
|
|
|
Additions |
|
|
|
|
|
|
|
| |
|
|
|
|
|
(1) |
|
|
(2) |
|
|
|
|
|
|
|
|
|
| |
|
Balance at |
|
|
Charged to |
|
|
Charged to other |
|
|
|
|
|
|
Balance at |
|
| |
|
beginning |
|
|
costs and |
|
|
accounts |
|
|
Deductions |
|
|
end of |
|
| Description |
|
of period |
|
|
expenses |
|
|
describe |
|
|
describe |
|
|
period |
|
| |
|
|
|
|
|
(Amounts in Thousands) |
|
|
|
|
|
|
|
|
|
Year ended December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
4,622 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,044 |
(a) |
|
$ |
3,578 |
|
Allowance for uncollectible
notes receivable |
|
|
151 |
|
|
|
28 |
|
|
|
— |
|
|
|
— |
|
|
|
179 |
|
Inventory valuation allowance |
|
|
82,674 |
|
|
|
4,370 |
|
|
|
— |
|
|
|
|
|
|
|
87,044 |
|
Accumulated amortization of
intangible assets |
|
|
13,155 |
|
|
|
1,453 |
|
|
|
— |
|
|
|
285 |
(b) |
|
|
14,323 |
|
Year ended December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
4,696 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
74 |
(a) |
|
$ |
4,622 |
|
Allowance for uncollectible
notes receivable |
|
|
— |
|
|
|
151 |
|
|
|
— |
|
|
|
— |
|
|
|
151 |
|
Inventory valuation allowance |
|
|
80,854 |
(c) |
|
|
1,820 |
|
|
|
|
|
|
|
— |
|
|
|
82,674 |
(c) |
Accumulated amortization of
intangible assets |
|
|
12,644 |
|
|
|
1,711 |
|
|
|
— |
|
|
|
1,200 |
(b) |
|
|
13,155 |
|
Year ended December 31, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
3,661 |
|
|
$ |
1,035 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,696 |
|
Allowance for uncollectible
notes receivable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Inventory valuation allowance |
|
|
78,264 |
(c) |
|
|
2,590 |
|
|
|
— |
|
|
|
— |
|
|
|
80,854 |
(c) |
Accumulated amortization of
intangible assets |
|
|
18,816 |
|
|
|
1,886 |
|
|
|
— |
|
|
|
8,058 |
(b) |
|
|
12,644 |
|
|
|
|
| (a) |
|
To adjust allowance for change in estimates. |
| |
| (b) |
|
Write off of fully amortized intangible assets. |
| |
| (c) |
|
Reflects the gross up of certain finished products and the related inventory allowances. |
42
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/ Roselyn R. Bar
|
|
| |
|
Roselyn R. Bar |
|
| |
|
Senior Vice President, General Counsel
and Corporate Secretary |
|
| |
Dated: February 25, 2011
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below appoints
Roselyn R. Bar and M. Guy Brooks, III, jointly and severally, as his or her true and lawful
attorney-in-fact, each with full power of substitution and resubstitution, for him or her and in
his or her 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 or she 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.
43
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.
Stephen P. Zelnak, Jr.
|
|
Chairman of the Board
|
|
February 25, 2011 |
|
|
|
|
|
/s/ C. Howard Nye
C. Howard Nye
|
|
President and
Chief Executive Officer
|
|
February 25, 2011 |
|
|
|
|
|
/s/ Anne H. Lloyd
Anne H. Lloyd
|
|
Executive Vice President,
Chief Financial Officer and
Treasurer
|
|
February 25, 2011 |
|
|
|
|
|
/s/ Dana F. Guzzo
Dana F. Guzzo
|
|
Vice President, Controller and
Chief Accounting Officer
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February 25, 2011 |
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/s/ Sue W. Cole
Sue W. Cole
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Director
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February 25, 2011 |
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/s/ David G. Maffucci
David G. Maffucci
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Director
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February 25, 2011 |
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/s/ William E. McDonald
William E. McDonald
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Director
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February 25, 2011 |
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/s/ Frank H. Menaker, Jr.
Frank H. Menaker, Jr.
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Director
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February 25, 2011 |
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/s/ Laree E. Perez
Laree E. Perez
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Director
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February 25, 2011 |
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/s/ Michael J. Quillen
Michael J. Quillen
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Director
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February 25, 2011 |
44
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Signature
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Title
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Date |
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/s/ Dennis L. Rediker
Dennis L. Rediker
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Director
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February 25, 2011 |
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/s/ Richard A. Vinroot
Richard A. Vinroot
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Director
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February 25, 2011 |
45
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)(Commission File No.1-12744) |
| |
3.02
|
|
—Articles of Amendment with Respect to the Junior Participating Class B Preferred Stock of the Company, dated as of October 19, 2006
(incorporated by reference to Exhibit 3.1 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on October 19, 2006)
(Commission File No. 1-12744) |
| |
3.03
|
|
—Restated Bylaws of the Company (incorporated by reference to Exhibit 3.01 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on November 8, 2007)
(Commission File No. 1-12744) |
| |
4.01
|
|
—Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.01 to the Martin
Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended
December 31, 2003) (Commission File No. 1-12744) |
| |
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) (Commission File No. 1-12744) |
| |
4.03
|
|
—Article I of the Company’s Restated Bylaws (incorporated by reference to Exhibit 3.01 to the
Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on November 8, 2007)
(Commission File No. 1-12744) |
| |
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
|
|
—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)) |
| |
4.07
|
|
—Form of Martin Marietta Materials, Inc. 6.875% Note due April 1, 2011 (incorporated by
reference to Exhibit 4.12 to the Martin Marietta Materials, Inc. registration statement on
Form S-4 (SEC Registration No. 333-61454)) |
| |
4.08
|
|
—Indenture dated as of April 30, 2007 between Martin Marietta Materials, Inc. and Branch
Banking and Trust Company, Inc., as trustee (incorporated by reference to Exhibit 4.1 to the
Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on April 30, 2007
(Commission File No. 1-12744) |
| |
4.09
|
|
—Second Supplemental Indenture, dated as of April 30, 2007, between Martin Marietta
Materials, Inc. and Branch Banking and Trust Company, Inc., as trustee, to that certain
Indenture dated as of April 30, 2007 between Martin Marietta Materials, Inc. and Branch
Banking and Trust Company, Inc., as trustee, pursuant to which were issued $250,000,000
aggregate principal amount of 6 1/4% Senior Notes due 2037 of Martin Marietta Materials, Inc.
(incorporated by |
46
| |
|
|
|
|
reference to Exhibit 4.3 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed
on April 30, 2007 (Commission File No. 1-12744) |
| |
4.10
|
|
—Third Supplemental Indenture, dated as of April 21, 2008, between Martin Marietta
Materials, Inc. and Branch Banking and Trust Company, Inc., as trustee, to that certain
Indenture dated as of April 30, 2007 between Martin Marietta Materials, Inc. and Branch
Banking and Trust Company, Inc., as trustee, pursuant to which were issued $300,000,000
aggregate principal amount of 6.60% Senior Notes due 2018 of Martin Marietta Materials, Inc.
(incorporated by reference to Exhibit 4.1 to the Martin Marietta Materials, Inc. Current
Report on Form 8-K, filed on April 21, 2008 (Commission File No. 1-12744) |
| |
4.11
|
|
—Rights Agreement, dated as of September 27, 2006, by and between Martin Marietta Materials,
Inc. and American Stock Transfer & Trust Company, as Rights Agent, which includes the Form of
Articles of Amendment With Respect to the Junior Participating Class B Preferred Stock of
Martin Marietta Materials, Inc., as Exhibit A, and the Form of Rights Certificate, as Exhibit
B (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed
on September 28, 2006) (Commission File No. 1-12744) |
| |
4.12
|
|
—Form of Indenture for Senior Debt Securities (incorporated by reference to Exhibit 4.5 to
the Martin Marietta Materials, Inc. registration statement on Form S-3) (SEC Registration No.
333-157731) |
| |
4.13
|
|
—Form of Indenture for Subordinated Debt Securities (incorporated by reference to Exhibit
4.6 to the Martin Marietta Materials, Inc. registration statement on Form S-3) (SEC
Registration No. 333-157731) |
| |
4.14
|
|
—Form of Senior Note (included in Exhibit 4.13) (incorporated by reference to Exhibit 4.5 to
the Martin Marietta Materials, Inc. registration statement on Form S-3) (SEC Registration No.
333-157731) |
| |
4.15
|
|
—Form of Subordinated Note (included in Exhibit 4.14) (incorporated by reference to Exhibit
4.6 to the Martin Marietta Materials, Inc. registration statement on Form S-3) (SEC
Registration No. 333-157731) |
| |
10.01
|
|
—$325,000,000 Second Amended and Restated Credit Agreement dated as of October 24, 2008,
among Martin Marietta Materials, Inc., the banks parties thereto, and JP Morgan Chase Bank,
N.A., as Administrative Agent (incorporated by reference to Exhibit 10.01 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30,
2008) (Commission File No. 1-12744) |
| |
10.02
|
|
—Amendment No. 1 dated as of December 23, 2009 to $325,000,000 Second Amended and Restated
Credit Agreement dated as of October 24, 2008 among Martin Marietta Materials, Inc., the banks
party thereto, and J.P. Morgan Chase Bank, N.A., as Administrative Agent (incorporated by
reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Current Report on Form 8-K,
filed on December 23, 2009) (Commission File No. 1-12744) |
| |
10.03
|
|
—$130,000,000 Term Loan Agreement dated as of April 23, 2009 among Martin Marietta
Materials, Inc., SunTrust Bank, as Administrative Agent and a syndicate of banks (incorporated
by reference to Exhibit 10.02 to the Martin Marietta Materials, Inc., Current Report on Form
8-K filed on April 27, 2009) (Commission File No. 1-12744) |
| |
10.04
|
|
—First Amendment dated as of December 23, 2009 to $130,000,000 Term Loan Agreement dated as
of April 23, 2009 among Martin Marietta Materials, Inc., SunTrust Bank, as Administrative
Agent and syndicate of banks (incorporated by reference to Exhibit 10.02 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on December 23, 2009) (Commission
File No. 1-12744) |
| |
10.05
|
|
—$100,000,000 Account Purchase Agreement dated as of April 21, 2009 between Martin Marietta
Materials, Inc. and Wells Fargo Bank, N.A. (incorporated by reference to Exhibit
10.01 to |
47
| |
|
|
|
|
the Martin Marietta Materials, Inc., Current Report on Form 8-K filed on April
27, 2009) (Commission File No. 1-12744) |
| |
10.06
|
|
—First Amendment dated as of December 23, 2009 to $100,000,000 Account Purchase Agreement
dated as of April 21, 2009 between Martin Marietta Materials, Inc. and Wells Fargo Bank, N.A.
(incorporated by reference to Exhibit 10.03 to the Martin Marietta Materials, Inc. Current
Report on Form 8-K, filed on December 23, 2009) (Commission File No. 1-12744) |
| |
10.07
|
|
—Distribution Agreement dated March 5, 2009 between Martin Marietta Materials, Inc. and
J.P. Morgan Securities Inc. (incorporated by reference to Exhibit 99.1 to the Martin Marietta
Materials, Inc. Current Report on Form 8-K, filed on March 6, 2009) (Commission File No.
1-12744) |
| |
10.08
|
|
—Distribution Agreement dated November 18, 2009 between Martin Marietta Materials, Inc. and
Wells Fargo Securities, LLC (incorporated by reference to Exhibit 99.1 to the Martin Marietta
Materials, Inc. Current Report on Form 8-K, filed on November 18, 2009) (Commission File No.
1-12744) |
| |
10.09
|
|
—Form of Martin Marietta Materials, Inc. Third Amended and Restated Employment Protection
Agreement (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc.
Current Report on Form 8-K, filed on August 19, 2008) (Commission File No. 1-12744)** |
| |
10.10
|
|
—Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for
Directors (incorporated by reference to Exhibit 10.04 to the Martin Marietta Materials, Inc.
Annual Report on Form 10-K for the fiscal year ended December 31, 2008) (Commission File No.
1-12744)** |
| |
10.11
|
|
—Martin Marietta Materials, Inc. Amended and Restated Executive Incentive Plan
(incorporated by reference to Exhibit 10.05 to the Martin Marietta Materials, Inc. Annual
Report on Form 10-K for the fiscal year ended December 31, 2008) (Commission File No.
1-12744)** |
| |
10.12
|
|
—Martin Marietta Materials, Inc. Incentive Stock Plan, as Amended (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, 2008) (Commission File No. 1-12744)** |
| |
10.13
|
|
—Martin Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan dated April
3, 2006 (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc.
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006) (Commission File No.
1-12744)** |
| |
10.14
|
|
—Martin Marietta Materials, Inc. Amended Omnibus Securities Award Plan (incorporated by
reference to Exhibit 10.16 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K
for the fiscal year ended December 31, 2000) (Commission File No. 1-12744)** |
| |
10.15
|
|
—Martin Marietta Materials, Inc. Amended and Restated Supplemental Excess Retirement Plan
(incorporated by reference to Exhibit 10.2 to the Martin Marietta Materials, Inc. Current
Report on Form 8-K, filed on August 19, 2008) (Commission File No. 1-12744)** |
| |
10.16
|
|
—Form of Option Award Agreement under the Martin Marietta Materials, Inc. Amended and
Restated Stock-Based Award Plan (incorporated by reference to Exhibit 10.11 to the Martin
Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31,
2008) (Commission File No. 1-12744)** |
| |
10.17
|
|
—Form of Restricted Stock Unit Agreement under the Martin Marietta Materials, Inc. Amended
and Restated Stock-Based Award Plan (incorporated by reference to Exhibit 10.01 to the
Martin Marietta Materials, Inc. Quarter Report on Form 10-Q for the quarter ended June 30,
2009) (Commission File No. 1-12744)** |
| |
10.18
|
|
—Form of Amendment to the Stock Unit Agreement under the Martin Marietta Materials, Inc.
Amended and Restated Stock-Based Award Plan (incorporated by reference to Exhibit |
48
| |
|
|
|
|
10.13 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2008) (Commission File No.
1-12744)** |
| |
*12.01
|
|
—Computation of ratio of earnings to fixed charges for the year ended December 31, 2010 |
| |
*13.01
|
|
—Excerpts from Martin Marietta Materials, Inc. 2010 Annual Report to Shareholders, portions of which are incorporated
by reference in this Form 10-K. Those portions of the 2010 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 Registered Public Accounting Firm for Martin Marietta Materials, Inc. and
consolidated subsidiaries
|
| |
*24.01
|
|
—Powers of Attorney (included in this Form 10-K immediately following Signatures) |
| |
*31.01
|
|
—Certification dated February 25, 2011 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
|
|
—Certification dated February 25, 2011 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
|
|
—Certification dated February 25, 2011 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
|
|
—Certification dated February 25, 2011 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
*99.01
|
|
—Mine Safety Disclosure |
| |
|
Other material incorporated by reference: |
| |
|
|
Martin Marietta Materials, Inc.’s 2011 Proxy Statement filed pursuant to Regulation 14A,
portions of which are incorporated by reference in this Form 10-K. Those portions of the
2011 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 |
49