Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 |
Organization | ' |
Organization |
Martin Marietta (the “Corporation”) is engaged principally in the construction aggregates business. The Corporation’s aggregates product line includes crushed stone, sand and gravel, and is used for construction of highways and other infrastructure projects, and in the nonresidential and residential construction industries. Aggregates products are also used in the railroad, agricultural, utility and environmental industries. These aggregates products, along with the Corporation’s aggregates-related downstream product lines, which include asphalt products, ready mixed concrete and road paving construction services, are sold and shipped from a network of approximately 420 quarries, distribution facilities and plants to customers in 30 states, Canada, the Bahamas and the Caribbean Islands. The aggregates and aggregates-related downstream product lines are reported collectively as the “Aggregates business”. |
Effective January 1, 2014, the Corporation made minor changes to the operations and management reporting structure of its Aggregates business, resulting in an immaterial change to its reportable segments. The Corporation currently conducts the Aggregates business through three reportable segments: the Mid-America Group, the Southeast Group and the West Group. |
AGGREGATES BUSINESS |
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Reportable Segments | | Mid-America Group | | Southeast Group | | West Group | | | | | | | | | | | | |
Operating Locations | | Indiana, Iowa, | | Alabama, Florida, | | Arkansas, | | | | | | | | | | | | |
northern Kansas, | Georgia, | Colorado, | | | | | | | | | | | | |
Kentucky, | Mississippi, | southern Kansas, | | | | | | | | | | | | |
Maryland, | Tennessee, Nova | Louisiana, | | | | | | | | | | | | |
Minnesota, | Scotia and the | western Nebraska, | | | | | | | | | | | | |
Missouri, | Bahamas | Nevada, | | | | | | | | | | | | |
eastern Nebraska, | | Oklahoma, Texas, | | | | | | | | | | | | |
North Carolina, | | Utah and | | | | | | | | | | | | |
Ohio, South Carolina, | | Wyoming | | | | | | | | | | | | |
Virginia, | | | | | | | | | | | | | | |
Washington and | | | | | | | | | | | | | | |
West Virginia | | | | | | | | | | | | | | |
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The Corporation has a Cement segment, which is comprised of cement operations acquired from Texas Industries, Inc. (“TXI”) with production facilities located in Midlothian, Texas, south of Dallas/Fort Worth; Hunter Texas, south of San Antonio; and Oro Grande, near Los Angeles, California. See Note 2 for additional information on the acquisition. The cement business produces Portland and specialty cements, such as masonry and oil well cements. Similar to the Aggregates business, cement is used in infrastructure projects, nonresidential and residential construction, and the railroad, agricultural, utility and environmental industries. The limestone reserves used as a raw material are located on owned property adjacent to each of the plants. The Corporation also operates cement terminals, a packaging facility at the Crestmore plant near Riverside, California, and its Portland cement grinding facility on an as needed basis. |
The Corporation has a Specialty Products segment with manufacturing facilities in Manistee, Michigan and Woodville, Ohio. The Specialty Products segment produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry. |
Basis of Presentation | ' |
Basis of Presentation |
The accompanying unaudited consolidated financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. Other than the adoption of a new accounting standard (see page 9), the Corporation has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three and nine months ended September 30, 2014 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013. |
Early Adoption of New Accounting Standard | ' |
Early Adoption of New Accounting Standard |
Effective January 1, 2014, the Corporation early adopted the Financial Accounting Standard Board’s (the “FASB”) final guidance on reporting discontinued operations. The guidance is to be applied prospectively and redefines discontinued operations to be either 1) a component of an entity or group of components that has been disposed of or is classified as held for sale that represents a strategic shift that has or will have a major effect on an entity’s operations and financial results or 2) a business that, upon acquisition, meets the criteria to be classified as held for sale. The adoption of the accounting standard did not have any effect on the Corporation’s financial position or results of operations. |
Revenue Recognition Standard | ' |
Revenue Recognition Standard |
The FASB issued an accounting standard update that amends the accounting guidance on revenue recognition. The new standard intends to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The new standard is effective for interim and annual reporting periods beginning after December 15, 2016 and can be applied on a full retrospective or modified retrospective approach. The Corporation is currently evaluating the impact of the provisions of the new standard, and at this time does not expect the impact to be material to its results of operations. |
Reclassifications | ' |
Reclassifications |
Prior-year segment information for the Aggregates business presented in Note 10 has been reclassified to conform to the presentation of the Corporation’s current reportable segments. In addition, certain other reclassifications have been made to prior year amounts to conform to the current year presentation. |
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss | ' |
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss |
Consolidated comprehensive earnings/loss for the Corporation consist of consolidated net earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; foreign currency translation adjustments; and the amortization of the value of terminated forward starting interest rate swap agreements into interest expense, and are presented in the Corporation’s consolidated statements of earnings and comprehensive earnings. |
Comprehensive earnings attributable to Martin Marietta is as follows: |
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| | Three Months Ended | | | Nine Months Ended | | | |
September 30, | September 30, | | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | | | |
| | (Dollars in Thousands) | | | |
Net earnings attributable to Martin Marietta | | $ | 53,743 | | | $ | 71,836 | | | $ | 91,646 | | | $ | 85,304 | | | |
Other comprehensive (loss) earnings, net of tax | | | (1,140 | ) | | | 3,548 | | | | 833 | | | | 3,459 | | | |
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Comprehensive earnings attributable to Martin Marietta | | $ | 52,603 | | | $ | 75,384 | | | $ | 92,479 | | | $ | 88,763 | | | |
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Comprehensive earnings (loss) attributable to noncontrolling interests, consisting of net earnings or loss and adjustments for the funded status of pension and postretirement benefit plans, is as follows: |
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| | Three Months Ended | | | Nine Months Ended | | | |
September 30, | September 30, | | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | | | |
| | (Dollars in Thousands) | | | |
Net earnings (loss) attributable to noncontrolling interests | | $ | 91 | | | $ | 202 | | | $ | (1,341 | ) | | $ | (1,028 | ) | | |
Other comprehensive earnings, net of tax | | | 2 | | | | 3 | | | | 4 | | | | 8 | | | |
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Comprehensive earnings (loss) attributable to noncontrolling interests | | $ | 93 | | | $ | 205 | | | $ | (1,337 | ) | | $ | (1,020 | ) | | |
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Accumulated other comprehensive loss consists of unrealized gains and losses related to the funded status of pension and postretirement benefit plans; foreign currency translation; and the unamortized value of terminated forward starting interest rate swap agreements, and is presented on the Corporation’s consolidated balance sheets. Changes in accumulated other comprehensive loss, net of tax, are as follows: |
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| | (Dollars in Thousands) | | | |
| | Pension and | | | Foreign | | | Unamortized | | | Accumulated | | | |
Postretirement | Currency | Value of | Other | | |
Benefit Plans | | Terminated | Comprehensive | | |
| | Forward | Loss | | |
| | Starting | | | |
| | Interest Rate | | | |
| | Swap | | | |
| | Three Months Ended September 30, 2014 | | | |
Balance at beginning of period | | $ | (44,685 | ) | | $ | 5,658 | | | $ | (3,114 | ) | | $ | (42,141 | ) | | |
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Other comprehensive loss before reclassifications, net of tax | | | — | | | | (1,466 | ) | | | — | | | | (1,466 | ) | | |
Amounts reclassified from accumulated other comprehensive loss, net of tax | | | 146 | | | | — | | | | 180 | | | | 326 | | | |
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Other comprehensive earnings (loss), net of tax | | | 146 | | | | (1,466 | ) | | | 180 | | | | (1,140 | ) | | |
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Balance at end of period | | $ | (44,539 | ) | | $ | 4,192 | | | $ | (2,934 | ) | | $ | (43,281 | ) | | |
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| | Three Months Ended September 30, 2013 | | | |
Balance at beginning of period | | $ | (106,603 | ) | | $ | 4,153 | | | $ | (3,808 | ) | | $ | (106,258 | ) | | |
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Other comprehensive earnings before reclassifications, net of tax | | | — | | | | 993 | | | | — | | | | 993 | | | |
Amounts reclassified from accumulated other comprehensive loss, net of tax | | | 2,387 | | | | — | | | | 168 | | | | 2,555 | | | |
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Other comprehensive earnings, net of tax | | | 2,387 | | | | 993 | | | | 168 | | | | 3,548 | | | |
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Balance at end of period | | $ | (104,216 | ) | | $ | 5,146 | | | $ | (3,640 | ) | | $ | (102,710 | ) | | |
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| | (Dollars in Thousands) | | | |
| | Pension and | | | Foreign | | | Unamortized | | | Accumulated | | | |
Postretirement | Currency | Value of | Other | | |
Benefit Plans | | Terminated | Comprehensive | | |
| | Forward | Loss | | |
| | Starting | | | |
| | Interest Rate | | | |
| | Swap | | | |
| | Nine Months Ended September 30, 2014 | | | |
Balance at beginning of period | | $ | (44,549 | ) | | $ | 3,902 | | | $ | (3,467 | ) | | $ | (44,114 | ) | | |
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Other comprehensive (loss ) earnings before reclassifications, net of tax | | | (431 | ) | | | 290 | | | | — | | | | (141 | ) | | |
Amounts reclassified from accumulated other comprehensive loss, net of tax | | | 441 | | | | — | | | | 533 | | | | 974 | | | |
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Other comprehensive earnings, net of tax | | | 10 | | | | 290 | | | | 533 | | | | 833 | | | |
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Balance at end of period | | $ | (44,539 | ) | | $ | 4,192 | | | $ | (2,934 | ) | | $ | (43,281 | ) | | |
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| | | |
| | Nine Months Ended September 30, 2013 | | | |
Balance at beginning of period | | $ | (108,189 | ) | | $ | 6,157 | | | $ | (4,137 | ) | | $ | (106,169 | ) | | |
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Other comprehensive loss before reclassifications, net of tax | | | (2,312 | ) | | | (1,011 | ) | | | — | | | | (3,323 | ) | | |
Amounts reclassified from accumulated other comprehensive loss, net of tax | | | 6,285 | | | | — | | | | 497 | | | | 6,782 | | | |
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Other comprehensive earnings (loss), net of tax | | | 3,973 | | | | (1,011 | ) | | | 497 | | | | 3,459 | | | |
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Balance at end of period | | $ | (104,216 | ) | | $ | 5,146 | | | $ | (3,640 | ) | | $ | (102,710 | ) | | |
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The other comprehensive loss before reclassifications for pension and postretirement benefit plans is net of tax of $280,000 and $1,514,000 for the nine months ended September 30, 2014 and 2013, respectively. |
Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive loss are as follows: |
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| | (Dollars in Thousands) | | | | | | | |
| | Pension and | | | Unamortized Value | | | Net Noncurrent | | | | | | | |
Postretirement | of Terminated | Deferred Tax | | | | | | |
Benefit Plans | Forward Starting | Assets | | | | | | |
| Interest Rate Swap | | | | | | | |
| | Three Months Ended September 30, 2014 | | | | | | | |
Balance at beginning of period | | $ | 29,287 | | | $ | 2,039 | | | $ | 31,326 | | | | | | | |
Tax effect of other comprehensive earnings | | | (96 | ) | | | (120 | ) | | | (216 | ) | | | | | | |
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Balance at end of period | | $ | 29,191 | | | $ | 1,919 | | | $ | 31,110 | | | | | | | |
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| | Three Months Ended September 30, 2013 | | | | | | | |
Balance at beginning of period | | $ | 69,842 | | | $ | 2,492 | | | $ | 72,334 | | | | | | | |
Tax effect of other comprehensive earnings | | | (1,566 | ) | | | (111 | ) | | | (1,677 | ) | | | | | | |
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Balance at end of period | | $ | 68,276 | | | $ | 2,381 | | | $ | 70,657 | | | | | | | |
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| | Nine Months Ended September 30, 2014 | | | | | | | |
Balance at beginning of period | | $ | 29,198 | | | $ | 2,269 | | | $ | 31,467 | | | | | | | |
Tax effect of other comprehensive earnings | | | (7 | ) | | | (350 | ) | | | (357 | ) | | | | | | |
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Balance at end of period | | $ | 29,191 | | | $ | 1,919 | | | $ | 31,110 | | | | | | | |
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| | Nine Months Ended September 30, 2013 | | | | | | | |
Balance at beginning of period | | $ | 70,881 | | | $ | 2,707 | | | $ | 73,588 | | | | | | | |
Tax effect of other comprehensive earnings | | | (2,605 | ) | | | (326 | ) | | | (2,931 | ) | | | | | | |
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Balance at end of period | | $ | 68,276 | | | $ | 2,381 | | | $ | 70,657 | | | | | | | |
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Reclassifications out of accumulated other comprehensive loss are as follows: |
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| | Three Months Ended | | | Nine Months Ended | | | Affected line items in |
September 30, | September 30, |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | | | the consolidated |
financial statements |
| | (Dollars in Thousands) | | | |
Pension and postretirement benefit plans Settlement expense | | $ | — | | | $ | 729 | | | $ | — | | | $ | 729 | | | |
Amortization of: | | | | | | | | | | | | | | | | | | |
Prior service credit | | | (703 | ) | | | (702 | ) | | | (2,107 | ) | | | (2,104 | ) | | |
Actuarial loss | | | 945 | | | | 3,926 | | | | 2,835 | | | | 11,779 | | | |
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| | | 242 | | | | 3,953 | | | | 728 | | | | 10,404 | | | Cost of sales; |
Selling, general & administrative expenses |
Tax effect | | | (96 | ) | | | (1,566 | ) | | | (287 | ) | | | (4,119 | ) | | Deferred income taxes |
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| | $ | 146 | | | $ | 2,387 | | | $ | 441 | | | $ | 6,285 | | | |
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Unamortized value of terminated forward starting interest rate swap | | | | | | | | | | | | | | | | | | |
Additional interest expense | | $ | 300 | | | $ | 279 | | | $ | 883 | | | $ | 823 | | | Interest expense |
Tax effect | | | (120 | ) | | | (111 | ) | | | (350 | ) | | | (326 | ) | | Deferred income taxes |
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| | $ | 180 | | | $ | 168 | | | $ | 533 | | | $ | 497 | | | |
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Earnings per Common Share | ' |
Earnings per Common Share |
The numerator for basic and diluted earnings per common share is net earnings/loss attributable to Martin Marietta reduced by dividends and undistributed earnings attributable to the Corporation’s unvested restricted stock awards and incentive stock awards. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Corporation’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three and nine months ended September 30, 2014 and 2013, the diluted per-share computations reflect a change in the number of common shares outstanding to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued. |
The following table reconciles the numerator and denominator for basic and diluted earnings per common share: |
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| | Three Months Ended | | | Nine Months Ended | | | |
September 30, | September 30, | | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | | | |
| | (Dollars in Thousands) | | | |
Net earnings from continuing operations attributable to Martin Marietta | | $ | 53,812 | | | $ | 72,107 | | | $ | 91,786 | | | $ | 85,758 | | | |
Less: Distributed and undistributed earnings attributable to unvested awards | | | 213 | | | | 265 | | | | 372 | | | | 374 | | | |
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Basic and diluted net earnings available to common shareholders from continuing operations attributable to Martin Marietta | | | 53,599 | | | | 71,842 | | | | 91,414 | | | | 85,384 | | | |
Basic and diluted net loss available to common shareholders from discontinued operations | | | (69 | ) | | | (271 | ) | | | (140 | ) | | | (454 | ) | | |
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Basic and diluted net earnings available to common shareholders attributable to Martin Marietta | | $ | 53,530 | | | $ | 71,571 | | | $ | 91,274 | | | $ | 84,930 | | | |
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Basic weighted-average common shares outstanding | | | 67,086 | | | | 46,244 | | | | 53,342 | | | | 46,134 | | | |
Effect of dilutive employee and director awards | | | 409 | | | | 105 | | | | 217 | | | | 127 | | | |
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Diluted weighted-average common shares outstanding | | | 67,495 | | | | 46,349 | | | | 53,559 | | | | 46,261 | | | |
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