SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

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

Commission File Number 1-12744

MARTIN MARIETTA MATERIALS, INC.

(Exact name of registrant as specified in its charter)

North Carolina		56-1848578
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
2710 Wycliff Road, Raleigh, NC		27607-3033
(Address of principal executive offices)		(Zip Code)

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

Former name:		None
		Former name, former address and former fiscal year, if changes since last report.

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

Yes 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 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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

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

Class		Outstanding as of October 28, 2010
Common Stock, $0.01 par value		45,528,566

 

 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

		Page
Part I. Financial Information:
Item 1. Financial Statements.
Consolidated Balance Sheets — September 30, 2010, December 31, 2009 and September 30, 2009			3
Consolidated Statements of Earnings — Three and Nine Months Ended September 30, 2010 and 2009			4
Consolidated Statements of Cash Flows — Nine Months Ended September 30, 2010 and 2009			5
Consolidated Statement of Total Equity			6
Condensed Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			19
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			39
Item 4. Controls and Procedures.			40
Part II. Other Information:
Item 1. Legal Proceedings.			41
Item 1A. Risk Factors.			41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			41
Item 5. Other Information.			42
Item 6. Exhibits.			45
Signatures			46
Exhibit Index			47
EX-31.01
EX-31.02
EX-32.01
EX-32.02
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		September 30,				December 31,				September 30,
		2010				2009				2009
		(Unaudited)				(Audited)				(Unaudited)
		(Dollars in Thousands, Except Per Share Data)
ASSETS
Current Assets:
Cash and cash equivalents		$	60,499			$	263,591			$	193,835
Accounts receivable, net			249,613				162,815				241,520
Inventories, net			323,820				332,569				329,781
Current deferred income tax benefits			71,593				60,303				58,272
Other current assets			26,591				37,582				21,558
Total Current Assets			732,116				856,860				844,966
Property, plant and equipment			3,541,058				3,465,978				3,436,078
Allowances for depreciation, depletion and amortization			(1,847,852	)			(1,773,073	)			(1,737,939	)
Net property, plant and equipment			1,693,206				1,692,905				1,698,139
Goodwill			624,224				624,224				624,224
Other intangibles, net			17,563				12,469				12,887
Other noncurrent assets			48,674				52,825				52,465
Total Assets		$	3,115,783			$	3,239,283			$	3,232,681
LIABILITIES AND EQUITY
Current Liabilities:
Bank overdraft		$	—			$	1,737			$	162
Accounts payable			76,993				52,107				61,741
Accrued salaries, benefits and payroll taxes			14,403				15,222				18,155
Pension and postretirement benefits			16,894				18,823				5,852
Accrued insurance and other taxes			32,409				24,274				34,307
Income taxes			—				—				2,469
Current maturities of long-term debt and short-term facilities			245,423				226,119				226,025
Accrued interest			27,231				12,751				27,680
Other current liabilities			13,482				22,520				18,394
Total Current Liabilities			426,835				373,553				394,785
Long-term debt			785,706				1,023,492				1,038,873
Pension, postretirement and postemployment benefits			144,574				160,354				193,249
Noncurrent deferred income taxes			216,844				195,946				175,255
Other noncurrent liabilities			84,596				79,527				78,543
Total Liabilities			1,658,555				1,832,872				1,880,705
Equity:
Common stock, par value $0.01 per share			454				453				446
Preferred stock, par value $0.01 per share			—				—				—
Additional paid-in capital			395,853				381,173				319,777
Accumulated other comprehensive loss			(67,249	)			(75,084	)			(89,267	)
Retained earnings			1,085,750				1,058,698				1,080,084
Total Shareholders’ Equity			1,414,808				1,365,240				1,311,040
Noncontrolling interests			42,420				41,171				40,936
Total Equity			1,457,228				1,406,411				1,351,976
Total Liabilities and Equity		$	3,115,783			$	3,239,283			$	3,232,681

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
		(In Thousands, Except Per Share Data)
						(Unaudited)
Net Sales		$	443,709			$	428,271			$	1,182,054			$	1,168,802
Freight and delivery revenues			65,594				59,696				172,822				159,110
Total revenues			509,303				487,967				1,354,876				1,327,912
Cost of sales			329,914				310,523				930,948				890,801
Freight and delivery costs			65,594				59,696				172,822				159,110
Total cost of revenues			395,508				370,219				1,103,770				1,049,911
Gross Profit			113,795				117,748				251,106				278,001
Selling, general & administrative expenses			31,235				32,932				98,365				106,855
Research and development			114				51				150				350
Other operating (income) and expenses, net			(1,393	)			(4,448	)			(9,031	)			(2,310	)
Earnings from Operations			83,839				89,213				161,622				173,106
Interest expense			17,104				18,181				51,540				55,358
Other nonoperating (income) and expenses, net			(545	)			(1,196	)			189				(1,514	)
Earnings from continuing operations before taxes on income			67,280				72,228				109,893				119,262
Income tax expense			13,990				15,308				26,539				28,671
Earnings from Continuing Operations			53,290				56,920				83,354				90,591
(Loss) Gain on discontinued operations, net of related tax expense of $34, $37, $88 and $271, respectively			(34	)			(52	)			101				488
Consolidated net earnings			53,256				56,868				83,455				91,079
Less: Net earnings attributable to noncontrolling interests			1,266				1,354				1,246				2,467
Net Earnings Attributable to Martin Marietta Materials, Inc.		$	51,990			$	55,514			$	82,209			$	88,612
Net Earnings Attributable to Martin Marietta Materials, Inc.
Earnings from continuing operations		$	52,024			$	55,566			$	82,108			$	88,124
(Loss) Earnings from discontinued operations			(34	)			(52	)			101				488
		$	51,990			$	55,514			$	82,209			$	88,612
Net Earnings Attributable to Martin Marietta Materials, Inc.
Per Common Share
Basic from continuing operations attributable to common shareholders		$	1.13			$	1.23			$	1.79			$	1.99
Discontinued operations attributable to common shareholders			—				—				—				0.01
		$	1.13			$	1.23			$	1.79			$	2.00
Diluted from continuing operations attributable to common shareholders		$	1.13			$	1.23			$	1.78			$	1.98
Discontinued operations attributable to common shareholders			—				—				—				0.01
		$	1.13			$	1.23			$	1.78			$	1.99
Weighted-Average Common Shares Outstanding
Basic			45,526				44,622				45,463				43,690
Diluted			45,678				44,813				45,639				43,879
Cash Dividends Per Common Share		$	0.40			$	0.40			$	1.20			$	1.20

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

		Nine Months Ended
		September 30,
		2010				2009
		(Dollars in Thousands)
		(Unaudited)
Cash Flows from Operating Activities:
Consolidated net earnings		$	83,455			$	91,079
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities:
Depreciation, depletion and amortization			135,946				133,276
Stock-based compensation expense			11,684				17,084
(Gains) Losses on divestitures and sales of assets			(4,293	)			2,045
Deferred income taxes			17,131				(1,851	)
Excess tax benefits from stock-based compensation transactions			(1,643	)			(1,956	)
Other items, net			704				(2,165	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable, net			(86,798	)			(30,291	)
Inventories, net			8,888				(9,738	)
Accounts payable			24,898				(982	)
Other assets and liabilities, net			12,639				38,097
Net Cash Provided by Operating Activities			202,611				234,598
Cash Flows from Investing Activities:
Additions to property, plant and equipment			(110,024	)			(100,493	)
Acquisitions, net			(28,107	)			(49,574	)
Proceeds from divestitures and sales of assets			4,524				7,375
Railcar construction advances			(8,997	)			—
Repayments of railcar construction advances			8,997				—
Loan to affiliate			—				(4,000	)
Net Cash Used for Investing Activities			(133,607	)			(146,692	)
Cash Flows from Financing Activities:
Borrowings of long-term debt			150,000				280,000
Repayments of long-term debt			(369,229	)			(167,577	)
Repayments on short-term facilities, net			—				(200,000	)
Debt issuance costs			(80	)			(2,285	)
Change in bank overdraft			(1,737	)			(4,515	)
Payments on capital lease obligations			(308	)			(110	)
Dividends paid			(55,157	)			(52,945	)
Distributions to owners of noncontrolling interests			—				(2,561	)
Purchase of subsidiary shares from noncontrolling interest			—				(17,060	)
Issuances of common stock			2,772				233,232
Excess tax benefits from stock-based compensation transactions			1,643				1,956
Net Cash (Used for) Provided by Financing Activities			(272,096	)			68,135
Net (Decrease) Increase in Cash and Cash Equivalents			(203,092	)			156,041
Cash and Cash Equivalents, beginning of period			263,591				37,794
Cash and Cash Equivalents, end of period		$	60,499			$	193,835
Noncash Investing and Financing Activities:
Issuance of notes payable for acquisition of land		$	450			$	125
Notes receivable issued in connection with divestiture and sales of assets		$	—			$	1,675
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest		$	36,073			$	39,503
Cash payments for income taxes		$	3,732			$	8,101

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENT OF TOTAL EQUITY
(Unaudited)

		Shares of																				Total
		Common				Common				Additional				Accumulated Other				Retained				Shareholders’				Noncontrolling				Total
(in thousands)		Stock				Stock				Paid-in Capital				Comprehensive Loss				Earnings				Equity				Interests				Equity
Balance at December 31, 2009			45,399			$	453			$	381,173			$	(75,084	)		$	1,058,698			$	1,365,240			$	41,171			$	1,406,411
Consolidated net earnings			—				—				—				—				82,209				82,209				1,246				83,455
Unrecognized actuarial losses and prior service costs related to pension and postretirement benefits, net of tax benefit of $714			—				—				—				7,146				—				7,146				3				7,149
Foreign currency translation gain			—				—				—				286				—				286				—				286
Amortization of terminated value of forward starting interest rate swap agreements into interest expense, net of tax benefit of $264			—				—				—				403				—				403				—				403
Consolidated comprehensive earnings																							90,044				1,249				91,293
Dividends declared			—				—				—				—				(55,157	)			(55,157	)			—				(55,157	)
Issuances of common stock for stock award plans			130				1				2,996				—				—				2,997				—				2,997
Stock-based compensation expense			—				—				11,684				—				—				11,684				—				11,684
Balance at September 30, 2010			45,529			$	454			$	395,853			$	(67,249	)		$	1,085,750			$	1,414,808			$	42,420			$	1,457,228

See accompanying condensed notes to consolidated financial statements.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.

Significant Accounting Policies

		Basis of Presentation
		The accompanying unaudited consolidated financial statements of Martin Marietta Materials, Inc. (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and to Article 10 of Regulation S-X. The Corporation has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on February 26, 2010. In the opinion of management, the interim financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods. The results of operations for the quarter and nine months ended September 30, 2010 are not indicative of the results expected for other interim periods or the full year. The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. These 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, 2009.
		Earnings per Common Share
		The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta Materials, Inc., reduced by dividends and undistributed earnings attributable to the Corporation’s unvested restricted stock awards and incentive stock awards. 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. The diluted per-share computations reflect a change in the number of common shares outstanding (the denominator) to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

1.		Significant Accounting Policies (continued)
		Earnings per Common Share (continued)
		The following table reconciles the numerator and denominator for basic and diluted earnings per common share:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
		(In Thousands)
Net earnings from continuing operations attributable to Martin Marietta Materials, Inc.		$	52,024			$	55,566			$	82,108			$	88,124
Less: Distributed and undistributed earnings attributable to unvested awards			529				617				865				1,122
Basic and diluted net earnings from continuing operations attributable to common shareholders of Martin Marietta Materials, Inc.			51,495				54,949				81,243				87,002
Basic and diluted net (loss) earnings from discontinued operations attributable to common shareholders			(34	)			(52	)			101				488
Basic and diluted net earnings attributable to common shareholders of Martin Marietta Materials, Inc.		$	51,461			$	54,897			$	81,344			$	87,490
Basic weighted-average common shares outstanding			45,526				44,622				45,463				43,690
Effect of dilutive employee and director awards			152				191				176				189
Diluted weighted-average common shares outstanding			45,678				44,813				45,639				43,879

		Comprehensive Earnings
		Consolidated comprehensive earnings for the Corporation consist of consolidated net earnings; amortization of actuarial losses and prior service costs related to pension and postretirement benefits; foreign currency translation adjustments; and the amortization of the value of terminated forward starting interest rate swap agreements into interest expense. Consolidated comprehensive earnings for the three and nine months ended September 30, 2010 were $55,495,000 and $91,293,000, respectively. For the three and nine months ended September 30, 2009, consolidated comprehensive earnings were $64,097,000 and $103,484,000, respectively.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

2.

Discontinued Operations

		Operations that are disposed of or permanently shut down represent discontinued operations, and, therefore, the results of their operations through the dates of disposal and any gain or loss on disposals are included in discontinued operations in the consolidated statements of earnings. All discontinued operations relate to the Aggregates business.
		Discontinued operations included the following net sales, pretax gain or loss on operations, pretax gain on disposals, income tax expense and overall net earnings or loss:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
		(Dollars in Thousands)
Net sales		$	44			$	408			$	102			$	1,619
Pretax (loss) gain on operations		$	—			$	(15	)		$	189			$	756
Pretax gain on disposals			—				—				—				3
Pretax (loss) gain			—				(15	)			189				759
Income tax expense			34				37				88				271
Net (loss) earnings		$	(34	)		$	(52	)		$	101			$	488

3.

Inventories, Net

		September 30,				December 31,				September 30,
		2010				2009				2009
		(Dollars in Thousands)
Finished products		$	350,842			$	351,393			$	345,682
Products in process and raw materials			14,310				16,296				17,432
Supplies and expendable parts			46,566				47,554				47,551
			411,718				415,243				410,665
Less allowances			(87,898	)			(82,674	)			(80,884	)
Total		$	323,820			$	332,569			$	329,781

In the quarter ended September 30, 2010, the Corporation reclassified certain of its finished products and inventory allowances and currently presents them on a gross basis. Prior-period amounts, which were previously presented on a net basis, have been recast for comparability. The reclassifications had no effect on the Corporation’s financial condition, results of operations or cash flows.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

4.

Goodwill and Intangible Assets

		During the three and nine months ended September 30, 2010, there were no changes in goodwill.
		During the nine months ended September 30, 2010, the Corporation acquired use rights of $6,600,000 related to its Aggregates business. The use rights are deemed to have an indefinite life and are not being amortized.

5.

Long-Term Debt

		September 30,				December 31,				September 30,
		2010				2009				2009
		(Dollars in Thousands)
6.875% Notes, due 2011		$	242,118			$	242,092			$	242,083
6.6% Senior Notes, due 2018			298,242				298,111				298,068
7% Debentures, due 2025			124,388				124,371				124,366
6.25% Senior Notes, due 2037			247,874				247,851				247,844
Floating Rate Senior Notes, due 2010			—				217,502				217,437
Term Loan, due 2012, interest rate of 3.3% at September 30, 2010			111,750				111,750				126,750
Other notes			6,757				7,934				8,350
Total debt			1,031,129				1,249,611				1,264,898
Less current maturities			(245,423	)			(226,119	)			(226,025	)
Long-term debt		$	785,706			$	1,023,492			$	1,038,873

		In April 2010, the Corporation repaid $217,600,000 of Floating Rate Senior Notes through the use of cash and short-term borrowings.
		At September 30, 2010, the Corporation had $245,423,000 of current maturities of long-term debt, of which $242,118,000 of 6.875% Notes become due April 2011.
		At September 30, 2010, December 31, 2009 and September 30, 2009, the Corporation had no outstanding borrowings under its $100,000,000 AR Credit Facility. Borrowings under the AR Credit Facility are limited based on the balance of the Corporation’s accounts receivable.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

5.

Long-Term Debt (continued)

		The Corporation’s $325,000,000 five-year revolving credit agreement, $130,000,000 unsecured term loan (the “Term Loan”) and $100,000,000 three-year secured accounts receivable credit facility (the “AR Credit Facility”) are subject to a leverage ratio covenant. The covenant requires the Corporation’s ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve months (the “Ratio”) to not exceed 3.50 to 1.00 as of the end of any fiscal quarter. The covenant requires the inclusion of debt guaranteed by the Corporation in the Ratio calculation. Furthermore, the covenant allows the Corporation to exclude debt incurred in connection with acquisitions from the Ratio for a period of 180 days so long as the Corporation maintains specified ratings on its long-term unsecured debt and the Ratio calculated without such exclusion does not exceed the maximum Ratio plus 0.25. Certain other nonrecurring items and noncash items, if they occur, can also be excluded from the Ratio. The Corporation was in compliance with the Ratio at September 30, 2010.
		The Corporation unwound two forward starting interest rate swap agreements with a total notional amount of $150,000,000 (the “Swap Agreements”) in April 2008. The Corporation made a cash payment of $11,139,000, which represented the fair value of the Swap Agreements on the date of termination. The accumulated other comprehensive loss, net of tax, at the date of termination is being recognized in earnings over the life of the 6.6% Senior Notes. For the three and nine months ended September 30, 2010, the Corporation recognized $226,000 and $667,000, respectively, as additional interest expense. For the three and nine months ended September 30, 2009, the Corporation recognized $211,000 and $622,000, respectively, as additional interest expense. The ongoing amortization of the terminated value of the Swap Agreements will increase annual interest expense by approximately $1,000,000 until the maturity of the 6.6% Senior Notes in 2018. The accumulated other comprehensive loss related to the Swap Agreements was $5,484,000, net of cumulative noncurrent deferred tax assets of $3,588,000, at September 30, 2010; $5,887,000, net of cumulative noncurrent deferred tax assets of $3,852,000, at December 31, 2009; and $6,017,000, net of cumulative noncurrent deferred tax assets of $3,937,000, at September 30, 2009.

6.

Financial Instruments

		The Corporation’s financial instruments include temporary cash investments, accounts receivable, notes receivable, bank overdraft, publicly registered long-term notes, debentures and other long-term debt.
		Temporary cash investments are placed primarily in money market funds and Eurodollar time deposits with the following financial institutions: Bank of America, N.A., Branch Banking and Trust Company, JP Morgan Chase Bank, N.A. and Wells Fargo Bank, N.A.. The Corporation’s cash equivalents have maturities of less than three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

6.

Financial Instruments (continued)

		Customer receivables are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions. However, customer receivables are more heavily concentrated in certain states (namely, Texas, North Carolina, Georgia, Iowa and Louisiana which accounted for approximately 56% of the Aggregate business’ 2009 net sales). The estimated fair values of customer receivables approximate their carrying amounts.
		Notes receivable are primarily related to divestitures and are not publicly traded. However, using current market interest rates, but excluding adjustments for credit worthiness, if any, management estimates that the fair value of notes receivable approximates the carrying amount.
		The bank overdraft represents the float of outstanding checks. The estimated fair value of the bank overdraft approximates its carrying value.
		The estimated fair value of the Corporation’s publicly registered long-term notes and debentures at September 30, 2010 was $980,791,000, compared with a carrying amount of $912,622,000 on the consolidated balance sheet. The fair value of this long-term debt was estimated based on quoted market prices. The estimated fair value of other borrowings, including the Corporation’s Term Loan, was $118,507,000 at September 30, 2010 and approximates its carrying amount.
		The carrying values and fair values of the Corporation’s financial instruments are as follows (dollars in thousands):

		September 30, 2010								December 31, 2009								September 30, 2009
		Carrying								Carrying								Carrying
		Value				Fair Value				Value				Fair Value				Value				Fair Value
Cash and cash equivalents		$	60,499			$	60,499			$	263,591			$	263,591			$	193,835			$	193,835
Accounts receivable, net		$	249,613			$	249,613			$	162,815			$	162,815			$	241,520			$	241,520
Notes receivable, net		$	10,889			$	10,889			$	13,415			$	13,415			$	13,458			$	13,458
Bank overdraft		$	—			$	—			$	1,737			$	1,737			$	162			$	162
Long-term debt		$	1,031,129			$	1,099,298			$	1,249,611			$	1,245,068			$	1,264,898			$	1,249,621

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

7.

Income Taxes

Income tax expense reported in the Corporation’s consolidated statements of earnings includes income tax expense on earnings attributable to both the Corporation and its noncontrolling interests.

		Nine Months Ended
		September 30,
		2010				2009
Estimated effective income tax rate:
Continuing operations			24.1	%			24.0	%
Discontinued operations			46.6	%			35.7	%
Consolidated Overall			24.2	%			24.1	%

		The Corporation’s effective income tax rate reflects the effect of federal and state income taxes and the impact of differences in book and tax accounting arising from the net permanent benefits associated with the depletion allowances for mineral reserves and the domestic production deduction. The effective income tax rates for discontinued operations reflect the tax effects of individual operations’ transactions and are not indicative of the Corporation’s overall effective income tax rate.
		On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law. Among other things, the PPACA reduces the tax benefits available to an employer that receives the Medicare Part D subsidy. Employers that receive the Medicare Part D subsidy recognize the deferred tax effects of the reduced deductibility of the postretirement prescription drug coverage in continuing operations in the period of enactment. The effects of changes in tax law are recognized as discrete events in the period of enactment. Accordingly, the overall estimated effective income tax rate for the nine months ended September 30, 2010 includes the effect to the Corporation of the PPACA.
		The change in the year-to-date consolidated overall estimated effective income tax rate during the third quarter of 2010, when compared with the year-to-date consolidated overall estimated effective tax rate as of June 30, 2010, increased consolidated net earnings for the nine months ended September 30, 2010 by $5,724,000, or $0.13 per diluted share. The overall estimated effective income tax rate for the nine months ended September 30, 2010 included the effective settlement of issues related to the 2004 and 2005 tax years, the effective settlement of the Internal Revenue Service audit for the 2007 tax year, the expiration of the statute of limitations for federal examination of the 2006 tax year, the provision of a valuation allowance for unused tax credits, and the true-up of the 2009 provision estimates to actual taxes paid as a result of filing the related tax returns during the period.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

7.

Income Taxes (continued)

		The change in the year-to-date consolidated overall estimated effective income tax rate during the third quarter of 2009, when compared with the year-to-date consolidated overall effective tax rate as of June 30, 2009, increased consolidated net earnings for the nine months ended September 30, 2009 by $5,161,000, or $0.12 per diluted share. The overall estimated effective income tax rate for the nine months ended September 30, 2009 included the true-up of the 2008 provision estimates to actual taxes paid as a result of filing the related tax returns during the period.
		The following table summarizes changes in the Corporation’s unrecognized tax benefits, excluding interest and correlative effects, for the nine months ended September 30, 2010 (dollars in thousands):

Unrecognized tax benefits at beginning of period		$	16,722
Gross increases — tax positions in prior years			18,545
Gross decreases — tax positions in prior years			(3,107	)
Gross increases — tax positions in current year			1,172
Settlements with taxing authorities			(684	)
Lapse of statute of limitations			(10,401	)
Unrecognized tax benefits at end of period		$	22,247

		At September 30, 2010, unrecognized tax benefits of $4,372,000, net of federal tax benefits and related to interest accruals and permanent income tax differences, would have favorably affected the Corporation’s effective tax rate if recognized.
		The Corporation anticipates that it is reasonably possible that $10,213,000 of unrecognized tax benefits may change during the twelve months ending September 30, 2011 as a result of filing a change in accounting method for the 2010 tax year.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

8.

Pension and Postretirement Benefits

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

		Three Months Ended September 30,
		Pension								Postretirement Benefits
		2010				2009				2010				2009
Service cost		$	2,761			$	2,788			$	137			$	139
Interest cost			5,753				5,566				688				730
Expected return on assets			(5,255	)			(4,060	)			—				—
Amortization of:
Prior service cost (credit)			146				164				(372	)			(372	)
Actuarial loss			2,554				3,596				—				—
Settlement charge			923				—				—				—
Total net periodic benefit cost		$	6,882			$	8,054			$	453			$	497

		Nine Months Ended September 30,
		Pension								Postretirement Benefits
		2010				2009				2010				2009
Service cost		$	8,282			$	8,364			$	411			$	418
Interest cost			17,259				16,699				2,063				2,189
Expected return on assets			(15,766	)			(12,181	)			—				—
Amortization of:
Prior service cost (credit)			437				491				(1,117	)			(1,116	)
Actuarial loss			7,661				10,787				—				—
Settlement charge			1,006				—				—				—
Total net periodic benefit cost		$	18,879			$	24,160			$	1,357			$	1,491

9.

Contingencies

		The Corporation is engaged in certain legal and administrative proceedings incidental to its normal business activities. In the opinion of management and counsel, it is unlikely that the outcome of any litigation and other proceedings, including those pertaining to environmental matters, relating to the Corporation and its subsidiaries, will have a material adverse effect on the results of the Corporation’s operations, its cash flows or its financial position.
		During the nine months ended September 30, 2010, the Corporation settled legal proceedings relating to its Greenwood, Missouri, operation for approximately $7,000,000. In connection with the settlement, the Corporation reversed the excess of the established legal reserve, thereby increasing net earnings by $2,751,000, or $0.06 per diluted share.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

10.

Business Segments

		The Corporation conducts its aggregates operations through three reportable business segments: Mideast Group, Southeast Group and West Group. The Corporation also has a Specialty Products segment that includes magnesia-based chemicals products and dolomitic lime.
		The following tables display selected financial data for continuing operations for the Corporation’s reportable business segments. Corporate loss from operations primarily includes depreciation on capitalized interest, expenses for corporate administrative functions, unallocated corporate expenses and other nonrecurring and/or non-operational adjustments.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
		(Dollars in Thousands)
Total revenues:
Mideast Group		$	144,688			$	139,741			$	375,726			$	358,474
Southeast Group			115,672				108,162				313,209				333,519
West Group			202,841				196,044				521,277				518,001
Total Aggregates Business			463,201				443,947				1,210,212				1,209,994
Specialty Products			46,102				44,020				144,664				117,918
Total		$	509,303			$	487,967			$	1,354,876			$	1,327,912
Net sales:
Mideast Group		$	133,607			$	131,176			$	348,524			$	337,554
Southeast Group			91,216				87,938				251,440				275,392
West Group			176,623				169,571				450,212				449,872
Total Aggregates Business			401,446				388,685				1,050,176				1,062,818
Specialty Products			42,263				39,586				131,878				105,984
Total		$	443,709			$	428,271			$	1,182,054			$	1,168,802
Earnings (Loss) from operations:
Mideast Group		$	38,741			$	40,067			$	80,296			$	79,247
Southeast Group			1,414				4,812				(144	)			22,977
West Group			33,941				36,207				54,654				65,830
Total Aggregates Business			74,096				81,086				134,806				168,054
Specialty Products			12,043				11,947				40,067				26,108
Corporate			(2,300	)			(3,820	)			(13,251	)			(21,056	)
Total		$	83,839			$	89,213			$	161,622			$	173,106

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

10.

Business Segments (continued)

The asphalt, ready mixed concrete, road paving and other product lines are considered internal customers of the core aggregates business. Product lines for the Specialty Products segment consist of magnesia-based chemicals, dolomitic lime and other. Net sales by product line are as follows:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
		(Dollars in Thousands)
Aggregates		$	376,554			$	364,774			$	986,038			$	992,088
Asphalt			9,833				12,041				29,014				34,988
Ready Mixed Concrete			7,056				6,194				19,558				21,301
Road Paving			6,575				4,349				12,602				10,550
Other			1,428				1,327				2,964				3,891
Total Aggregates Business			401,446				388,685				1,050,176				1,062,818
Magnesia-Based Chemicals			29,290				26,238				89,287				73,757
Dolomitic Lime			12,457				12,761				41,386				30,918
Other			516				587				1,205				1,309
Specialty Products			42,263				39,586				131,878				105,984
Total		$	443,709			$	428,271			$	1,182,054			$	1,168,802

11.

Supplemental Cash Flow Information

The following table presents the components of the change in other assets and liabilities, net:

		Nine Months Ended
		September 30,
		2010				2009
		(Dollars in Thousands)
Other current and noncurrent assets		$	3,108			$	(5,479	)
Accrued salaries, benefits and payroll taxes			(2,237	)			(4,594	)
Accrued insurance and other taxes			8,134				10,888
Accrued income taxes			11,177				22,560
Accrued pension, postretirement and postemployment benefits			(10,849	)			3,729
Other current and noncurrent liabilities			3,306				10,993
		$	12,639			$	38,097

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

12.

Transactions with Affiliates

On July 14, 2010, the Corporation entered into a reimbursement and indemnification agreement with Fifth Third Bank (“Fifth Third”), pursuant to which Fifth Third issued a letter of credit for the repayment of amounts borrowed by an affiliate under a $20,000,000 two-year revolving line of credit provided by Fifth Third and the Corporation agreed to reimburse Fifth Third for any amounts funded under the letter of credit. Additionally, on July 13, 2010, the Corporation provided Bank of America, N.A. with a guarantee of $12,400,000 of payment obligations of the Corporation’s affiliate under certain equipment lease agreements. The affiliate has agreed to reimburse and indemnify the Corporation for any payments and expenses the Corporation may incur from either the reimbursement and indemnification agreement or the guarantee agreement. The Corporation holds a subordinate lien of the affiliate’s assets as collateral for potential payments under the reimbursement and indemnification agreement.

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2010

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

OVERVIEW Martin Marietta Materials, Inc. (the “Corporation”), conducts its operations through four reportable business segments: Mideast Group, Southeast Group, West Group (collectively, the “Aggregates business”) and Specialty Products. The Corporation’s annual net sales and earnings are predominately derived from its Aggregates business, which processes and sells granite, limestone, and other aggregates products from a network of 286 quarries, distribution facilities and plants to customers in 31 states, Canada, the Bahamas and the Caribbean Islands. The Aggregates business’ products are used primarily by commercial customers principally in domestic construction of highways and other infrastructure projects and for commercial and residential building development. 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.

CRITICAL ACCOUNTING POLICIES The Corporation outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on February 26, 2010. There were no changes to the Corporation’s critical accounting policies during the nine months ended September 30, 2010.

RESULTS OF OPERATIONS

Except as indicated, the following comparative analysis in the Results of Operations section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations reflects results from continuing operations and is based on net sales and cost of sales. The Corporation’s heritage aggregates product line excludes volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and divestitures.

Gross margin as a percentage of net sales and operating margin as a percentage of net sales represent non-GAAP measures. The Corporation presents these ratios calculated based on net sales, as it is consistent with the basis by which management reviews the Corporation’s operating results. Further, management believes it is consistent with the basis by which investors analyze the Corporation’s operating results given that freight and delivery revenues and costs represent pass-throughs and have no profit mark-up. Gross margin and operating margin calculated as percentages of total revenues represent the most directly comparable financial measures calculated in accordance with generally accepted accounting principles (GAAP). The following tables present the calculations of gross margin and operating margin for the three and nine months ended September 30, 2010 and 2009 in accordance with GAAP and reconciliations of the ratios as percentages of total revenues to percentages of net sales (dollars in thousands):

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2010

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2010
(Continued)

Gross Margin in Accordance with GAAP

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Gross profit		$	113,795			$	117,748			$	251,106			$	278,001
Total revenues		$	509,303			$	487,967			$	1,354,876			$	1,327,912
Gross margin			22.3	%			24.1	%			18.5	%			20.9	%

Gross Margin Excluding Freight and Delivery Revenues

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
Gross profit		$	113,795			$	117,748			$	251,106			$	278,001
Total revenues		$	509,303			$	487,967			$	1,354,876			$	1,327,912
Less: Freight and delivery revenues			(65,594	)			(59,696	)			(172,822	)			(159,110	)
Net sales		$	443,709			$	428,271			$	1,182,054			$	1,168,802
Gross margin excluding freight and delivery revenues			25.6	%			27.5	%			21.2	%			23.8	%