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Table of Contents

 
 
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
For the quarterly period ended March 31, 2011
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission File Number 1-12744
MARTIN MARIETTA MATERIALS, INC.
(Exact name of registrant as specified in its charter)
     
North Carolina   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.
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o (Do not check if a smaller reporting company)   Smaller reporting company o
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 April 28, 2011
     
Common Stock, $0.01 par value   45,588,745
 
 


 

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
         
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 EX-31.01
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 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

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                         
    March 31,     December 31,     March 31,  
    2011     2010     2010  
    (Unaudited)     (Audited)     (Unaudited)  
    (Dollars in Thousands, Except Per Share Data)  
ASSETS
                       
Current Assets:
                       
Cash and cash equivalents
  $ 176,829     $ 70,323     $ 221,043  
Accounts receivable, net
    203,242       183,361       202,101  
Inventories, net
    331,679       331,894       322,027  
Current deferred income tax benefits
    88,805       83,380       72,921  
Other current assets
    39,806       27,253       36,619  
 
                 
Total Current Assets
    840,361       696,211       854,711  
 
                 
 
                       
Property, plant and equipment
    3,589,883       3,568,275       3,500,655  
Allowances for depreciation, depletion and amortization
    (1,913,562 )     (1,880,445 )     (1,805,610 )
 
                 
Net property, plant and equipment
    1,676,321       1,687,830       1,695,045  
 
                       
Goodwill
    626,527       626,527       624,224  
Other intangibles, net
    17,166       17,548       18,863  
Other noncurrent assets
    48,231       46,627       52,059  
 
                 
 
                       
Total Assets
  $ 3,208,606     $ 3,074,743     $ 3,244,902  
 
                 
 
                       
LIABILITIES AND EQUITY
                       
Current Liabilities:
                       
Bank overdraft
  $     $ 2,123     $ 2,227  
Accounts payable
    74,914       60,333       67,281  
Accrued salaries, benefits and payroll taxes
    9,239       17,506       12,217  
Pension and postretirement benefits
    4,234       6,034       18,263  
Accrued insurance and other taxes
    24,326       23,535       26,128  
Current maturities of long-term debt and short-term facilities
    7,101       248,714       219,583  
Accrued interest
    26,914       12,045       27,948  
Other current liabilities
    12,034       15,203       21,699  
 
                 
Total Current Liabilities
    158,762       385,493       395,346  
 
                       
Long-term debt
    1,161,518       782,045       1,029,606  
Pension, postretirement and postemployment benefits
    129,592       127,671       159,154  
Noncurrent deferred income taxes
    240,586       228,698       192,299  
Other noncurrent liabilities
    83,402       82,577       95,602  
 
                 
Total Liabilities
    1,773,860       1,606,484       1,872,007  
 
                 
 
                       
Equity:
                       
Common stock, par value $0.01 per share
    455       455       453  
Preferred stock, par value $0.01 per share
                 
Additional paid-in capital
    400,972       396,485       386,211  
Accumulated other comprehensive loss
    (54,564 )     (53,660 )     (70,528 )
Retained earnings
    1,046,346       1,082,160       1,016,156  
 
                 
Total Shareholders’ Equity
    1,393,209       1,425,440       1,332,292  
Noncontrolling interests
    41,537       42,819       40,603  
 
                 
Total Equity
    1,434,746       1,468,259       1,372,895  
 
                 
 
                       
Total Liabilities and Equity
  $ 3,208,606     $ 3,074,743     $ 3,244,902  
 
                 
See accompanying condensed notes to consolidated financial statements.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
                 
    Three Months Ended  
    March 31,  
    2011     2010  
    (In Thousands, Except Per Share Data)  
    (Unaudited)  
Net Sales
  $ 306,244     $ 295,561  
Freight and delivery revenues
    50,268       45,383  
 
           
Total revenues
    356,512       340,944  
 
           
 
               
Cost of sales
    285,135       275,948  
Freight and delivery costs
    50,268       45,383  
 
           
Total cost of revenues
    335,403       321,331  
 
           
 
               
Gross Profit
    21,109       19,613  
 
               
Selling, general & administrative expenses
    29,235       33,571  
Research and development
    2       13  
Other operating (income) and expenses, net
    (1,985 )     (1,107 )
 
           
Loss from Operations
    (6,143 )     (12,864 )
 
               
Interest expense
    18,165       17,616  
Other nonoperating (income) and expenses, net
    (261 )     (600 )
 
           
Loss from continuing operations before taxes on income
    (24,047 )     (29,880 )
Income tax benefit
    (6,384 )     (4,984 )
 
           
 
               
Loss from Continuing Operations
    (17,663 )     (24,896 )
(Loss) Gain on discontinued operations, net of related tax (benefit) expense of ($12) and $38, respectively
    (34 )     148  
 
           
Consolidated net loss
    (17,697 )     (24,748 )
Less: Net loss attributable to noncontrolling interests
    (283 )     (568 )
 
           
 
               
Net Loss Attributable to Martin Marietta Materials, Inc.
  $ (17,414 )   $ (24,180 )
 
           
 
               
Net (Loss) Earnings Attributable to Martin Marietta Materials, Inc.
               
Loss from continuing operations
  $ (17,380 )   $ (24,328 )
Discontinued operations
    (34 )     148  
 
           
 
  $ (17,414 )   $ (24,180 )
 
           
 
               
Net Loss Attributable to Martin Marietta Materials, Inc.
               
Per Common Share
               
Basic from continuing operations attributable to common shareholders
  $ (0.39 )   $ (0.54 )
Discontinued operations attributable to common shareholders
           
 
           
 
  $ (0.39 )   $ (0.54 )
 
           
 
               
Diluted from continuing operations attributable to common shareholders
  $ (0.39 )   $ (0.54 )
 
           
Discontinued operations attributable to common shareholders
           
 
           
 
  $ (0.39 )   $ (0.54 )
 
           
 
               
Weighted-Average Common Shares Outstanding
               
Basic
    45,584       45,400  
 
           
Diluted
    45,584       45,400  
 
           
 
               
Cash Dividends Per Common Share
  $ 0.40     $ 0.40  
 
           
 
               
See accompanying condensed notes to consolidated financial statements.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Three Months Ended  
    March 31,  
    2011     2010  
    (Dollars in Thousands)  
    (Unaudited)  
Cash Flows from Operating Activities:
               
Consolidated net loss
  $ (17,697 )   $ (24,748 )
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
               
Depreciation, depletion and amortization
    43,294       44,968  
Stock-based compensation expense
    2,777       3,894  
Gains on divestitures and sales of assets
    (3,042 )     (1,133 )
Deferred income taxes
    3,350       957  
Excess tax benefits from stock-based compensation transactions
    (268 )     (145 )
Other items, net
    625       391  
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
               
Accounts receivable, net
    (19,320 )     (39,286 )
Inventories, net
    216       10,681  
Accounts payable
    14,519       15,077  
Other assets and liabilities, net
    (3,128 )     16,465  
 
           
 
               
Net Cash Provided by Operating Activities
    21,326       27,121  
 
           
 
               
Cash Flows from Investing Activities:
               
Additions to property, plant and equipment
    (30,674 )     (25,021 )
Acquisitions, net
    (55 )     (28,026 )
Proceeds from divestitures and sales of assets
    2,188       1,588  
 
           
 
               
Net Cash Used for Investing Activities
    (28,541 )     (51,459 )
 
           
 
               
Cash Flows from Financing Activities:
               
Borrowings of long-term debt
    300,000       50,000  
Repayments of long-term debt
    (162,207 )     (50,560 )
Debt issuance costs
    (3,120 )     (80 )
Change in bank overdraft
    (2,123 )     490  
Payments on capital lease obligations
          (29 )
Dividends paid
    (18,400 )     (18,362 )
Distributions to owners of noncontrolling interests
    (1,000 )      
Issuances of common stock
    303       186  
Excess tax benefits from stock-based compensation transactions
    268       145  
 
           
 
               
Net Cash Provided by (Used for) Financing Activities
    113,721       (18,210 )
 
           
 
               
Net Increase (Decrease) in Cash and Cash Equivalents
    106,506       (42,548 )
Cash and Cash Equivalents, beginning of period
    70,323       263,591  
 
           
 
               
Cash and Cash Equivalents, end of period
  $ 176,829     $ 221,043  
 
           
 
               
Supplemental Disclosures of Cash Flow Information:
               
Cash paid for interest
  $ 2,042     $ 1,914  
Cash payments (refunds) for income taxes
  $ 385     $ (8,955 )
See accompanying condensed notes to consolidated financial statements.

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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, 2010
    45,579     $ 455     $ 396,485     $ (53,660 )   $ 1,082,160     $ 1,425,440     $ 42,819     $ 1,468,259  
 
                                                               
Consolidated net loss
                            (17,414 )     (17,414 )     (283 )     (17,697 )
Adjustment for funded status of pension and postretirement benefit plans, net of tax of $3,017
                      (1,442 )           (1,442 )     1       (1,441 )
Foreign currency translation gain
                      397             397             397  
Amortization of terminated value of forward starting interest rate swap agreements into interest expense, net of tax of $93
                      141             141             141  
 
                                                         
Consolidated comprehensive loss
                                            (18,318 )     (282 )     (18,600 )
 
                                                               
Dividends declared
                            (18,400 )     (18,400 )           (18,400 )
Issuances of common stock for stock award plans
    10             1,710                   1,710             1,710  
Stock-based compensation expense
                2,777                   2,777             2,777  
Distributions to owners of noncontrolling interests
                                        (1,000 )     (1,000 )
                       
Balance at March 31, 2011
    45,589     $ 455     $ 400,972     $ (54,564 )   $ 1,046,346     $ 1,393,209     $ 41,537     $ 1,434,746  
                       
See accompanying condensed notes to consolidated financial statements.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
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, 2010, filed with the Securities and Exchange Commission on February 25, 2011. 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 ended March 31, 2011 are not indicative of the results expected for other interim periods or the full year. The balance sheet at December 31, 2010 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, 2010.
 
    Earnings (Loss) per Common Share
 
    The numerator for basic and diluted earnings (loss) per common share is net earnings (loss) 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 (loss) per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) 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.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.   Significant Accounting Policies (continued)
    Earnings (Loss) per Common Share (continued)
 
    The following table reconciles the numerator and denominator for basic and diluted earnings (loss) per common share:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
    (In Thousands)  
Net loss from continuing operations attributable to Martin Marietta Materials, Inc.
  $ (17,380 )   $ (24,328 )
Less: Distributed and undistributed earnings attributable to unvested awards
    165       202  
 
           
Basic and diluted net loss available to common shareholders from continuing operations attributable to Martin Marietta Materials, Inc.
    (17,545 )     (24,530 )
Basic and diluted net (loss) earnings available to common shareholders from discontinued operations
    (34 )     148  
 
           
Basic and diluted net loss available to common shareholders attributable to Martin Marietta Materials, Inc.
  $ (17,579 )   $ (24,382 )
 
           
 
               
Basic weighted-average common shares outstanding
    45,584       45,400  
Effect of dilutive employee and director awards
           
 
           
Diluted weighted-average common shares outstanding
    45,584       45,400  
 
           
    Comprehensive Earnings/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. Consolidated comprehensive loss for the three months ended March 31, 2011 and 2010 was $18,600,000 and $20,192,000, respectively.

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\

MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
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, income tax benefit or expense and overall net earnings or loss:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
    (Dollars in Thousands)  
Net sales
  $ 17     $ 17  
 
           
 
               
Pretax (loss) gain on operations
  $ (46 )   $ 186  
Income tax (benefit) expense
    (12 )     38  
 
           
Net (loss) earnings
  $ (34 )   $ 148  
 
           
3.   Inventories, Net
                         
    March 31,     December 31,     March 31,  
    2011     2010     2010  
    (Dollars in Thousands)  
Finished products
  $ 361,956     $ 358,138     $ 342,099  
Products in process and raw materials
    12,254       13,842       15,945  
Supplies and expendable parts
    49,025       46,958       47,482  
 
                 
 
    423,235       418,938       405,526  
Less allowances
    (91,556 )     (87,044 )     (83,499 )
 
                 
Total
  $ 331,679     $ 331,894     $ 322,027  
 
                 
    In 2010, the Corporation reclassified certain of its finished products and inventory allowances and currently presents them on a gross basis. The March 31, 2010 amounts, which were previously presented on a net basis, have been recast for comparability. The reclassification had no effect on the Corporation’s financial condition, results of operations or cash flows.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.   Goodwill and Intangible Assets
    During the three months ended March 31, 2011, there were no changes in goodwill.
5.   Long-Term Debt
                         
    March 31,     December 31,     March 31,  
    2011     2010     2010  
    (Dollars in Thousands)  
6.875% Notes, due 2011
  $ 242,140     $ 242,129     $ 242,100  
6.6% Senior Notes, due 2018
    298,333       298,288       298,154  
7% Debentures, due 2025
    124,399       124,393       124,376  
6.25% Senior Notes, due 2037
    247,890       247,882       247,858  
Term Loan Facility, due 2015, interest rate of 1.932% at March 31, 2011
    250,000              
Floating Rate Senior Notes, due 2010
                217,568  
Term Loan, due 2012, interest rate of 3.29% at December 31, 2010
          111,750       111,750  
Other notes
    5,857       6,317       7,383  
 
                 
Total debt
    1,168,619       1,030,759       1,249,189  
Less current maturities
    (7,101 )     (248,714 )     (219,583 )
 
                 
Long-term debt
  $ 1,161,518     $ 782,045     $ 1,029,606  
 
                 
    On March 31, 2011, the Corporation entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, N.A., Branch Banking and Trust Company, SunTrust Bank, and Bank of America, N.A., as Co-Syndication Agents, and the lenders party thereto (the “Credit Agreement”), which provides for a $250,000,000 senior unsecured term loan (the “Term Loan Facility”) and a $350,000,000 four-year senior unsecured revolving facility (the “Revolving Facility”, and together with the Term Loan Facility, the “Senior Unsecured Credit Facilities”).

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5.   Long-Term Debt (continued)
    The Senior Unsecured Credit Facilities are syndicated with the following banks:
                 
    Revolving     Term Loan  
    Facility     Facility  
Lender   Commitment     Commitment  
    (Dollars in Thousands)  
JPMorgan Chase Bank, N.A.
  $ 46,667     $ 33,333  
Wells Fargo Bank, N.A.
    46,667       33,333  
SunTrust Bank
    46,667       33,333  
Branch Banking and Trust Company
    46,667       33,333  
Bank of America, N.A.
    46,667       33,333  
Citibank, N.A.
    29,167       20,833  
Deutsche Bank AG New York Branch
    29,167       20,833  
The Northern Trust Company
    29,167       20,833  
Comerica Bank
    14,582       10,418  
Regions Bank
    14,582       10,418  
 
           
Total
  $ 350,000     $ 250,000  
 
           
    Borrowings under the Senior Unsecured Credit Facilities bear interest, at the Corporation’s option, at rates based upon LIBOR or a base rate, plus, for each rate, a margin determined in accordance with a ratings-based pricing grid. The base rate is defined as the highest of (i) JPMorgan Chase Bank N.A.’s prime lending rate, (ii) the Federal Funds rate plus 0.5% and (iii) one-month LIBOR plus 1%.
 
    The Revolving Facility expires on March 31, 2015, with any outstanding principal amounts, together with interest accrued thereon, due in full on that date. At March 31, 2011, the Corporation had no outstanding borrowings under the Revolving Facility.
 
    On March 31, 2011, the Corporation borrowed $250,000,000 under the Term Loan Facility, a portion of which was used to prepay the $111,750,000 Term Loan due 2012. The Corporation is required to make annual principal payments of $5,000,000, with the remaining outstanding principal, together with interest accrued thereon, due in full on March 31, 2015.
 
    On March 31, 2011, the Corporation entered into the Second Amendment to Account Purchase Agreement with Wells Fargo Bank, N.A. (the “Second Amendment to Account Purchase Agreement”), which amended its $100,000,000 secured accounts receivable credit facility (the “AR Credit Facility”). As amended, purchases and settlements will be made monthly. Additionally, as amended, borrowings under the AR Credit Facility bear interest at a rate equal to the one-month LIBOR plus 1.35%. Borrowings under the AR Credit Facility are limited based on the balance of the Corporation’s accounts receivable. At March 31, 2011, December 31, 2010 and March 31, 2010, the Corporation had no outstanding borrowings under the AR Credit Facility.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5.   Long-Term Debt (continued)
    On April 1, 2011, the Corporation borrowed $100,000,000 under the AR Credit Facility, which in addition to proceeds from the Term Loan Facility, was used to repay $242,140,000 of 6.875% Notes that matured on that date. The Corporation classified its 6.875% Notes as long-term debt at March 31, 2011 as it had the ability and intent to refinance these Notes with borrowings that are due in excess of one year.
 
    The Credit Agreement and the AR Credit Facility, as amended, require the Corporation’s ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve month period (the “Ratio”) to not exceed 3.5x as of the end of any fiscal quarter, provided that the Corporation may exclude from the Ratio debt incurred in connection with certain acquisitions 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 3.75x. Additionally, if no amounts are outstanding under both the Revolving Facility and the AR Credit Facility, consolidated debt, including debt guaranteed by the Corporation, may be reduced by the Corporation’s unrestricted cash and cash equivalents in excess of $50,000,000, such reduction not to exceed $200,000,000, for purposes of the covenant calculation.
 
    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 months ended March 31, 2011 and 2010, the Corporation recognized $234,000 and $218,000, 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 $5,203,000, net of cumulative noncurrent deferred tax assets of $3,404,000, at March 31, 2011; $5,344,000, net of cumulative noncurrent deferred tax assets of $3,497,000, at December 31, 2010; and $5,755,000, net of cumulative noncurrent deferred tax assets of $3,765,000, at March 31, 2010.
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.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6.   Financial Instruments (continued)
    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, JPMorgan Chase Bank, N.A., Regions Financial Corporation 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.
 
    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 55% of the Aggregate business’ 2010 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 March 31, 2011, December 31, 2010 and March 31, 2010 was $927,859,000, $933,637,000 and $1,158,501,000, respectively, compared with a carrying amount of $912,762,000, $912,692,000 and $1,130,056,000, respectively, on the consolidated balance sheets. The fair value of this long-term debt was estimated based on quoted market prices. The estimated fair value of other borrowings was $255,857,000, $118,067,000 and $119,133,000 at March 31, 2011, December 31, 2010, and March 31, 2010, respectively, and approximates its carrying amount.
 
    The carrying values and fair values of the Corporation’s financial instruments are as follows (dollars in thousands):
                                                 
    March 31, 2011     December 31, 2010     March 31, 2010  
    Carrying             Carrying             Carrying        
    Value     Fair Value     Value     Fair Value     Value     Fair Value  
Cash and cash equivalents
  $ 176,829     $ 176,829     $ 70,323     $ 70,323     $ 221,043     $ 221,043  
Accounts receivable, net
  $ 203,242     $ 203,242     $ 183,361     $ 183,361     $ 202,101     $ 202,101  
Notes receivable, net
  $ 11,116     $ 11,116     $ 10,866     $ 10,866     $ 12,661     $ 12,661  
Bank overdraft
  $     $     $ 2,123     $ 2,123     $ 2,227     $ 2,227  
Long-term debt
  $ 1,168,619     $ 1,183,716     $ 1,030,759     $ 1,051,704     $ 1,249,189     $ 1,277,634  

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7.   Income Taxes
    Income tax benefit/expense reported in the Corporation’s consolidated statements of earnings includes income tax benefit/expense on earnings attributable to both the Corporation and its noncontrolling interests.
                 
    Three Months Ended March 31,  
    2011     2010  
Estimated effective income tax rate:
               
Continuing operations
    26.5 %     16.7 %
 
           
Discontinued operations
    26.1 %     20.4 %
 
           
Consolidated overall
    26.5 %     16.7 %
 
           
    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.
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 March 31,  
    Pension     Postretirement Benefits  
    2011     2010     2011     2010  
Service cost
  $ 2,973     $ 3,074     $ 124     $ 157  
Interest cost
    5,862       5,829       614       711  
Expected return on assets
    (6,051 )     (5,255 )            
Amortization of:
                               
Prior service cost (credit)
    133       146       (435 )     (372 )
Actuarial loss
    1,866       2,605             15  
Settlement charge
    14       99              
 
                       
Total net periodic benefit cost
  $ 4,797     $ 6,498     $ 303     $ 511  
 
                       
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.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
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. These segments are consistent with the Corporation’s current management reporting structure.
 
    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  
    March 31,  
    2011     2010  
    (Dollars in Thousands)  
Total revenues:
               
Mideast Group
  $ 91,323     $ 89,342  
Southeast Group
    82,761       83,967  
West Group
    128,829       121,808  
 
           
Total Aggregates Business
    302,913       295,117  
Specialty Products
    53,599       45,827  
 
           
Total
  $ 356,512     $ 340,944  
 
           
 
               
Net sales:
               
Mideast Group
  $ 85,455     $ 83,345  
Southeast Group
    65,958       68,120  
West Group
    105,689       102,370  
 
           
Total Aggregates Business
    257,102       253,835  
Specialty Products
    49,142       41,726  
 
           
Total
  $ 306,244     $ 295,561  
 
           
 
               
Earnings (Loss) from operations:
               
Mideast Group
  $ 5,702     $ 2,095  
Southeast Group
    (9,756 )     (9,099 )
West Group
    (12,459 )     (12,262 )
 
           
Total Aggregates Business
    (16,513 )     (19,266 )
Specialty Products
    15,129       11,212  
Corporate
    (4,759 )     (4,810 )
 
           
Total
  $ (6,143 )   $ (12,864 )
 
           

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
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  
    March 31,  
    2011     2010  
    (Dollars in Thousands)  
Aggregates
  $ 237,648     $ 237,638  
Asphalt
    10,974       8,651  
Ready Mixed Concrete
    5,314       5,625  
Road Paving
    2,222       1,659  
Other
    944       262  
 
           
Total Aggregates Business
    257,102       253,835  
 
           
Magnesia-Based Chemicals
    35,159       26,776  
Dolomitic Lime
    13,780       14,698  
Other
    203       252  
 
           
Total Specialty Products
    49,142       41,726  
 
           
Total
  $ 306,244     $ 295,561  
 
           
11.   Supplemental Cash Flow Information
    The following table presents the components of the change in other assets and liabilities, net:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
    (Dollars in Thousands)  
Other current and noncurrent assets
  $ (668 )   $ (1,912 )
Accrued salaries, benefits and payroll taxes
    (7,129 )     (2,193 )
Accrued insurance and other taxes
    790       1,853  
Accrued income taxes
    (10,610 )     3,127  
Accrued pension, postretirement and postemployment benefits
    1,686       733  
Other current and noncurrent liabilities
    12,803       14,857  
 
           
 
  $ (3,128 )   $ 16,465  
 
           

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
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 278 quarries, distribution facilities and plants to customers in 30 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 nonresidential and residential building development. Aggregates products are also used in the railroad, environmental, utility and agricultural industries. 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, 2010, filed with the Securities and Exchange Commission on February 25, 2011. There were no changes to the Corporation’s critical accounting policies during the three months ended March 31, 2011.
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 months ended March 31, 2011 and 2010 in accordance with GAAP and reconciliations of the ratios as percentages of total revenues to percentages of net sales (dollars in thousands):

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
Gross Margin in Accordance with GAAP
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Gross profit
  $ 21,109     $ 19,613  
 
           
 
               
Total revenues
  $ 356,512     $ 340,944  
 
           
 
               
Gross margin
    5.9 %     5.8 %
 
           
Gross Margin Excluding Freight and Delivery Revenues
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Gross profit
  $ 21,109     $ 19,613  
 
           
 
               
Total revenues
  $ 356,512     $ 340,944  
Less: Freight and delivery revenues
    (50,268 )     (45,383 )
 
           
Net sales
  $ 306,244     $ 295,561  
 
           
 
               
Gross margin excluding freight and delivery revenues
    6.9 %     6.6 %
 
           
Operating Margin in Accordance with GAAP
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Loss from operations
  $ (6,143 )   $ (12,864 )
 
           
 
               
Total revenues
  $ 356,512     $ 340,944  
 
           
 
               
Operating margin
    (1.7 %)     (3.8 %)
 
           

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
Operating Margin Excluding Freight and Delivery Revenues
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Loss from operations
  $ (6,143 )   $ (12,864 )
 
           
 
               
Total revenues
  $ 356,512     $ 340,944  
Less: Freight and delivery revenues
    (50,268 )     (45,383 )
 
           
Net sales
  $ 306,244     $ 295,561  
 
           
 
               
Operating margin excluding freight and delivery revenues
    (2.0 %)     (4.4 %)
 
           
Quarter Ended March 31
Notable items for the quarter ended March 31, 2011 (all comparisons are versus the prior-year quarter):
    Net sales increased to $306.2 million compared with $295.6 million
 
    Consolidated operating margin (excluding freight and delivery revenues) up 240 basis points
 
    Loss per diluted share of $0.39 compared with loss per diluted share of $0.54
 
    Increased diesel costs negatively affected earnings by $0.05 per diluted share
 
    Heritage aggregates product line pricing up 0.4%
 
    Heritage aggregates product line volume down 1.2%
 
    Specialty Products record first-quarter earnings from operations of $15.1 million
 
    Selling, general and administrative expenses down 190 basis points as a percentage of net sales
The following table presents net sales, gross profit, selling, general and administrative expenses and earnings (loss) from operations data for the Corporation and its reportable segments for the three months ended March 31, 2011 and 2010. In each case, the data is stated as a percentage of net sales of the Corporation or the relevant segment, as the case may be.
Earnings from operations include research and development expense and other operating income and expenses, net. Consolidated other operating income and expenses, net, was income of $2.0 million and $1.1 million for the quarters ended March 31, 2011 and 2010, respectively.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
                                 
    Three Months Ended March 31,  
    2011     2010  
            % of             % of  
    Amount     Net Sales     Amount     Net Sales  
    (Dollars in Thousands)  
Net sales:
                               
Mideast Group
  $ 85,455             $ 83,345          
Southeast Group
    65,958               68,120          
West Group
    105,689               102,370          
 
                           
Total Aggregates Business
    257,102       100.0       253,835       100.0  
Specialty Products
    49,142       100.0       41,726       100.0  
 
                       
Total
  $ 306,244       100.0     $ 295,561       100.0  
 
                       
 
                               
Gross profit (loss):
                               
Mideast Group
  $ 13,251             $ 11,872          
Southeast Group
    (5,019 )             (2,885 )        
West Group
    (2,410 )             (2,943 )        
 
                           
Total Aggregates Business
    5,822       2.3       6,044       2.4  
Specialty Products
    17,570       35.8       14,073       33.7  
Corporate
    (2,283 )           (504 )      
 
                       
Total
  $ 21,109       6.9     $ 19,613       6.6  
 
                       
 
                               
Selling, general & administrative expenses:
                               
Mideast Group
  $ 10,408             $ 10,447          
Southeast Group
    6,123               6,414          
West Group
    10,596               10,665          
 
                           
Total Aggregates Business
    27,127       10.6       27,526       10.8  
Specialty Products
    2,467       5.0       2,931       7.0  
Corporate
    (359 )           3,114        
 
                       
Total
  $ 29,235       9.5     $ 33,571       11.4  
 
                       
 
                               
Earnings (Loss) from operations:
                               
Mideast Group
  $ 5,702             $ 2,095          
Southeast Group
    (9,756 )             (9,099 )        
West Group
    (12,459 )             (12,262 )        
 
                           
Total Aggregates Business
    (16,513 )     (6.4 )     (19,266 )     (7.6 )
Specialty Products
    15,129       30.8       11,212       26.9  
Corporate
    (4,759 )           (4,810 )      
 
                       
Total
  $ (6,143 )     (2.0 )   $ (12,864 )     (4.4 )
 
                       

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
The Corporation’s first-quarter financial results confirmed management’s expectations, reflecting a 240-basis-point improvement in consolidated operating margin (excluding freight and delivery revenues) over the prior-year quarter. Furthermore, the Corporation’s Aggregates business achieved greater levels of stability during the quarter. In particular, aggregates product line pricing, supported partly by 2010 volume growth, increased for the first time in more than a year. Management believes this pattern of stability will continue and serve as a platform as the Corporation advances toward the next phase of the construction cycle — recovery and growth.
Since heavy-construction activity slows during the winter months, the Corporation’s first-quarter results seldom reflect annual performance. That said, milder winter in some of the Corporation’s markets early in the quarter led to monthly aggregates shipment growth over the prior-year periods. In contrast to 2010, weather patterns deteriorated in the critical last two weeks of March, slowing momentum gained early in the quarter. Management believes these weather-related delays in shipments were a primary factor leading to an overall quarterly decrease of 1% in the Corporation’s heritage aggregates volume. However, despite a volume decrease for the quarter and the negative impact of rising diesel prices, the Aggregates business achieved an incremental operating margin (excluding freight and delivery revenues) in line with management’s expectations.
Infrastructure, as the Corporation’s largest end-use market, comprises approximately half of its quarterly aggregates shipments. Uncertainty stemming from the absence of a long-term federal highway bill has negatively affected the infrastructure construction market. For the quarter, infrastructure shipments declined 3% compared with the prior-year quarter.
The residential end-use market volume grew 15% compared with the prior-year quarter, reflecting increased multi-family construction activity. The Corporation’s ChemRock/Rail end-use market experienced a 2% volume increase compared with the prior-year quarter. The commercial component of the nonresidential end-use market, particularly in the Corporation’s San Antonio District, reflected increased shipments during the quarter. While management continues to expect strong volumes to the energy sector for the full year, shipments to this industry declined from the prior-year quarter which led to an overall 3% reduction in nonresidential shipments.
Compared with the prior-year quarter, changes in aggregates pricing varied by geographic region. In the first quarter of 2011, more of the Corporation’s markets reported pricing increases than in the past two years. For example, quarterly heritage aggregates pricing for the Southeast Group increased 5.8%, with positive pricing in the Florida market compensating for negative pricing in the Alabama market. Pricing in the West Group was negatively affected by product mix, particularly in the Southwest market. Other markets in the West Group, including North Texas and Iowa, had pricing increases.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
The following tables present volume and pricing data and shipments data for the aggregates product line. Heritage aggregates operations exclude volume and pricing data for acquisitions that were not included in prior-year operations for the comparable period and divestitures.
                 
    Three Months Ended  
    March 31, 2011  
Volume/Pricing Variance (1)   Volume     Pricing  
Heritage Aggregates Product Line (2):
               
Mideast Group
    0.1 %     0.8 %
Southeast Group
    (9.7 %)     5.8 %
West Group
    2.9 %     (2.4 %)
Heritage Aggregates Operations
    (1.2 %)     0.4 %
Aggregates Product Line (3)
    (0.9 %)     0.3 %
                 
    Three Months Ended  
    March 31,  
    2011     2010  
    (tons in thousands)  
Shipments
               
Heritage Aggregates Product Line (2):
               
Mideast Group
    6,913       6,905  
Southeast Group
    5,528       6,122  
West Group
    10,751       10,446  
 
           
Heritage Aggregates Operations
    23,192       23,473  
Acquisitions
    74        
Divestitures (4)
    1       3  
 
           
Aggregates Product Line (3)
    23,267       23,476  
 
           
 
(1)   Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.
 
(2)   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.
 
(3)   Aggregates Product Line includes all acquisitions from the date of acquisition and divestitures through the date of disposal.
 
(4)   Divestitures include the tons related to divested aggregates product line operations up to the date of divestiture.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
The Aggregates business is significantly affected by seasonal changes and other weather-related conditions. Aggregates production and shipment levels coincide with general construction activity levels, most of which occurs in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations concentrated in the northern United States generally experience more severe winter weather conditions than operations in the Southeast and Southwest. Excessive rainfall, and conversely excessive drought, can also jeopardize shipments, production and profitability. Because of the potentially significant impact of weather on the Corporation’s operations, first-quarter results are not indicative of expected performance for other interim periods or the full year.
The Specialty Products business benefitted from continued strong demand, primarily in the magnesia chemicals product line where volume records were achieved for several product lines. The Specialty Products business reported record quarterly net sales of $49.1 million, an 18% increase over the prior-year quarter. Record first-quarter earnings from operations of $15.1 million grew 35% compared with the prior-year quarter, reflecting increased product demand and continued focus on cost control efforts. Thus, while management expects strong performance from this business segment for the remainder of the year, prospective prior-year comparisons will be versus record 2010 quarterly performance.
The Corporation continued its commitment to cost control. Consolidated direct production costs increased 7%, primarily due to a 14% increase in noncontrollable energy costs. Higher energy prices also increased embedded freight costs for the quarter as transportation providers passed on their rising energy costs.
The Corporation’s gross margin (excluding freight and delivery revenues) for the three months ended March increased 30 basis points to 6.9% in 2011. The following presents a rollforward of the Corporation’s gross profit (dollars in thousands):
         
Consolidated gross profit, quarter ended March 31, 2010
  $ 19,613  
 
     
Aggregates Business:
       
Volume weakness
    (293 )
Pricing strength
    3,560  
Cost increases, net
    (3,489 )
 
     
Decrease in Aggregates Business gross profit
    (222 )
Specialty Products
    3,497  
Corporate
    (1,779 )
 
     
Increase in consolidated gross profit
    1,496  
 
     
Consolidated gross profit, quarter ended March 31, 2011
  $ 21,109  
 
     

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
Selling, general and administrative expenses declined $4.3 million, or 190 basis points as a percentage of net sales, for the quarter compared with the 2010 first quarter, primarily due to lower personnel and pension costs.
Among other items, other operating income and expenses, net, includes gains and losses on the sale of assets; gains and losses related to customer accounts receivable; rental, royalty and services income; and the accretion and depreciation expenses related to asset retirement obligations. For the first quarter, consolidated other operating income and expenses, net, was income of $2.0 million in 2011 compared with income of $1.1 million in 2010. First quarter 2011 other operating income and expenses, net, includes a $2.4 million land condemnation gain for the Mideast Group.
Interest expense was $18.2 million for the first quarter 2011 as compared with $17.6 million for the prior-year quarter.
In addition to other offsetting amounts, other nonoperating income and expenses, net, are comprised generally of interest income and net equity earnings from nonconsolidated investments. Consolidated other nonoperating income and expenses, net, for the quarter ended March 31, was income of $0.3 million in 2011 compared with income of $0.6 million in 2010.
The overall effective tax rate for the quarter was 27% compared with 17% for the first quarter 2010. The 2010 effective tax rate includes the effect of a charge of approximately $2.8 million resulting from the Patient Protection and Affordable Care Act (the “Act”). Management expects the overall effective tax rate for the full year to be approximately 26%.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities during the three months ended March 31, 2011 was $21.3 million compared with $27.1 million for the same period in 2010. Operating cash flow is primarily from consolidated net earnings or loss, before deducting depreciation, depletion and amortization, offset by working capital requirements. The reduction in net cash provided by operating activities for the first three months of 2011 as compared with the year-earlier period is primarily due to the timing of federal income tax refunds. Working capital management continues to be a priority and to that end, days sales outstanding was 45 days, essentially flat with 2010, and the change in net working capital improved nearly $9 million in the first quarter as compared with 2010.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
Depreciation, depletion and amortization were as follows:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
    (Dollars in Thousands)  
Depreciation
  $ 42,039     $ 43,493  
Depletion
    484       620  
Amortization
    771       855  
 
           
 
  $ 43,294     $ 44,968  
 
           
The seasonal nature of the construction aggregates business impacts quarterly operating cash flow when compared with the year. Full year 2010 net cash provided by operating activities was $269.8 million, compared with $27.1 million for the first three months of 2010.
Capital expenditures, exclusive of acquisitions, for the first three months were $30.7 million in 2011 and $25.0 million in 2010. In May 2011, the Corporation will begin the construction of a $53 million dolomitic lime kiln at its Specialty Products location in Woodville, Ohio. This project is expected to be completed by the end of 2012. Full-year capital spending for 2011 is expected to be approximately $175 million, including the Hunt Martin Materials joint venture but exclusive of acquisitions. Comparable full-year capital expenditures were $135.9 million in 2010.
On March 31, 2011, the Corporation entered into a Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, N.A., Branch Banking and Trust Company, SunTrust Bank, and Bank of America, N.A., as Co-Syndication Agents, and the lenders party thereto (the “Credit Agreement”), which provides for a $250 million senior unsecured term loan (the “Term Loan Facility”) and a $350 million four-year senior unsecured revolving facility (the “Revolving Facility”, and together with the Term Loan Facility, the “Senior Unsecured Credit Facilities”). On March 31, 2011, the Corporation borrowed $250 million under the Term Loan Facility, a portion of which was used to prepay outstanding borrowings of $111.8 million on the Term Loan due 2012.
Additionally, on March 31, 2011, the Corporation entered into the Second Amendment to Account Purchase Agreement with Wells Fargo Bank, N.A. (the “Second Amendment to Account Purchase Agreement”), which amended its $100 million secured accounts receivable credit facility (the “AR Credit Facility”). As amended, purchases and settlements will be made monthly. Additionally, as amended, borrowings under the AR Credit Facility bear interest at a rate equal to the one-month LIBOR plus 1.35%. Borrowings under the AR Credit Facility are limited based on the balance of the Corporation’s accounts receivable. At March 31, 2011, the Corporation had no outstanding borrowings under the AR Credit Facility.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
On April 1, 2011, the Corporation borrowed $100 million under the AR Credit Facility, which, in addition to proceeds from the Term Loan Facility, was used to repay $242.1 million of 6.875% Notes that matured on that date. Subsequent to this net repayment, the Corporation’s total debt outstanding at April 1, 2011 consisted of the following (dollars in thousands):
         
6.6% Senior Notes, due 2018
  $ 298,333  
7% Debentures, due 2025
    124,399  
6.25% Senior Notes, due 2037
    247,890  
Term Loan Facility, due 2015, interest rate of 1.932% at April 1, 2011
    250,000  
AR Credit Facility, interest rate of 1.6625% at April 1, 2011
    100,000  
Other notes
    5,857  
 
     
Total debt
  $ 1,026,479  
 
     
The Corporation can repurchase its common stock through open-market purchases pursuant to authority granted by its Board of Directors. The Corporation did not repurchase any shares of common stock during the three months ended March 31, 2011 and 2010. Management currently has no intent to repurchase any shares of its common stock. At March 31, 2011, 5,042,000 shares of common stock were remaining under the Corporation’s repurchase authorization.
The Credit Agreement and the AR Credit Facility, as amended, require the Corporation’s ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve month period (the “Ratio”) to not exceed 3.5x as of the end of any fiscal quarter, provided that the Corporation may exclude from the Ratio debt incurred in connection with certain acquisitions 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 3.75x. Additionally, if there are no amounts outstanding under both the Revolving Facility and the AR Credit Facility, consolidated debt, including debt guaranteed by the Corporation, will be reduced for purposes of the covenant calculation by the Corporation’s unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million (hereinafter, “net debt”).
The Ratio is calculated as net debt, including debt guaranteed by the Corporation, divided by consolidated EBITDA, as defined, for the trailing twelve months. Consolidated EBITDA is generally defined as earnings before interest expense, income tax expense, and depreciation, depletion and amortization expense for continuing operations. Additionally, stock-based compensation expense is added back and interest income is deducted in the calculation of consolidated EBITDA. Certain other nonrecurring items and noncash items, if they occur, can affect the calculation of consolidated EBITDA.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
At March 31, 2011, the Corporation’s ratio of consolidated debt to consolidated EBITDA, as defined, for the trailing twelve months EBITDA was 2.73 times and was calculated as follows (dollars in thousands):
         
    Twelve Month Period  
    April 1, 2010 to  
    March 31, 2011  
Earnings from continuing operations attributable to Martin Marietta Materials, Inc.
  $ 103,775  
Add back:
       
Interest expense
    69,004  
Income tax expense
    27,781  
Depreciation, depletion and amortization expense
    175,133  
Stock-based compensation expense
    13,558  
Deduct:
       
Interest income
    (1,019 )
 
     
Consolidated EBITDA, as defined
  $ 388,232  
 
     
Consolidated debt, including debt guaranteed by the Corporation, at March 31, 2011
  $ 1,186,001  
Deduct:
       
Unrestricted cash and cash equivalents in excess of $50,000 at March 31, 2011
    (126,655 )
 
     
Net debt, as defined, at March 31, 2011
  $ 1,059,346  
 
     
Consolidated debt to consolidated EBITDA, as defined, at March 31, 2011 for the trailing twelve months EBITDA
    2.73 X  
 
     
In the event of a default on the leverage ratio, the lenders can terminate the Credit Agreement and AR Credit Facility and declare any outstanding balances as immediately due.
Cash on hand, along with the Corporation’s projected internal cash flows and availability of financing resources, including its access to debt and equity capital markets, are expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, meet capital expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise, and allow for payment of dividends for the foreseeable future. At March 31, 2011, the Corporation had $348 million of unused borrowing capacity under its Revolving Facility and $100 million of available borrowings on its AR Credit Facility, subject to complying with the Ratio. The Credit Agreement expires on March 31, 2015 and the AR Credit Facility terminates on April 20, 2012.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
The Corporation may be required to obtain financing in order to fund certain strategic acquisitions, if any such opportunities arise, or to refinance outstanding debt. Any strategic acquisition of size would require an appropriate balance of newly-issued equity with debt in order to maintain an investment-grade credit rating. Borrowings under the AR Credit Facility would be limited based on the balance of the Corporation’s accounts receivable. Furthermore, the Corporation is exposed to the credit markets, through the interest cost related to its variable rate debt, which includes borrowings under its Revolving Facility, Term Loan Facility and AR Credit Facility, and the interest cost related to its commercial paper program, to the extent that it is available to the Corporation. The Corporation’s credit ratings are investment-grade-level and, on April 28, 2011, Standard & Poor’s reaffirmed its BBB+ corporate credit rating and revised its outlook on the Corporation’s long-term rating to stable. While management believes its credit ratings will remain at an investment-grade level, no assurance can be given that these ratings will remain at those levels.
Contractual Obligations
At March 31, 2011, the Corporation’s contractual obligations, including interest, related to its Term Loan Facility were as follows (dollars in thousands):
                                 
    Total     < 1 yr     1-3 yrs.     3-5 yrs.  
Long-term debt
  $ 250,000     $ 5,000     $ 10,000     $ 235,000  
Interest (off balance sheet)
    18,668       4,806       9,322       4,540  
Total
  $ 268,668     $ 9,806     $ 19,322     $ 239,540  
 
                       
Management currently intends to maintain $100 million of outstanding borrowings on its AR Credit Facility until its expiration on April 30, 2012.
TRENDS AND RISKS            The Corporation outlined the risks associated with its business in its Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on February 25, 2011. Management continues to evaluate its exposure to all operating risks on an ongoing basis.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
OUTLOOK A variety of factors make it difficult to form a complete perspective for 2011. A noteworthy consideration will be the rate at which states spend available Stimulus funds for infrastructure projects. The Corporation is operating under a Congressional continuing resolution that extends the Safe, Accountable, Flexible and Efficient Transportation Equity Act — A Legacy for Users (SAFETEA-LU) through September 30, 2011. Although there is bipartisan Congressional agreement that infrastructure is a key and essential governmental priority, there is heightened sensitivity with respect to all government spending due to the national deficit. Without interim clarity, a definitive outlook is uncertain. Management believes there are several options for federal infrastructure funding, including: additional continuing resolutions that maintain current funding through the next presidential election, or a new federal highway bill (with flat or reduced funding and which may be shorter than the typical six-year term). While operating under a continuing resolution is more likely for 2011, management believes that Congress understands that fully-funded, reauthorized infrastructure legislation at the federal level serves as an efficient means of jobs creation and investment in America’s economic growth.
Given this uncertainty, the Corporation’s 2011 outlook assumes there will be additional continuing resolutions that maintain current federal funding levels. Management also expects that state spending on infrastructure should remain relatively constant and 30% of ARRA infrastructure funds will be spent this year. Management expects the infrastructure end-use market to be flat to slightly down; management also anticipates a modest volume recovery in the commercial component of the Corporation’s nonresidential end-use market. Considering the notable aggregates shipments to the energy sector in 2010, management expects the rate of growth in the heavy industrial component of the Corporation’s nonresidential end-use market to moderate in 2011. Natural gas prices and the timing of lease commitments for oil and natural gas companies will be significant factors for energy-sector activity. Additionally, given current oil prices, there is a possibility of increased wind farm construction activity. Overall, management expects nonresidential end-use shipments in 2011 to increase in the mid-single digit range. The Corporation has noticed early signs of potential recovery in the multi-family component of the residential construction market and expects the rate of improvement in this end-use market to increase over 2010. Finally, the Corporation’s ChemRock/Rail shipments should be stable compared with 2010 shipments. Cumulatively, management expects flat to a 3% improvement in overall aggregates volume in 2011.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
Stability in the Corporation’s aggregates shipments will likely lead to sustainable price increases. However, such increases may not be uniform throughout the Corporation’s enterprise. Overall, management expects full-year 2011 aggregates pricing will range from flat to a 2% increase. Additionally, rising energy costs may provide an impetus for certain mid-year price increases.
Aggregates production cost per ton in 2011 is expected to range from flat to a slight decrease compared with 2010, despite rising energy costs. The Specialty Products segment should contribute $50 million to $52 million in pretax earnings for 2011, as economic recovery drives industrial demand for magnesia-based chemicals products and continued demand for environmental applications is driven by the United States’ focus on green technology and innovation.
Selling, general and administrative expenses should be lower in 2011, primarily due to lower pension expense. Interest expense should be approximately $60 million in 2011, or $8 million less than 2010, resulting from the refinancing of $242 million of 6.875% Senior Notes with variable-rate borrowings under the Corporation’s outstanding credit facilities. The Corporation’s effective tax rate is expected to be 26%. Capital expenditures are forecast at $175 million for 2011, including the first $25 million of the $50 million project in Specialty Products and nearly $50 million for selective high-quality growth projects.
The 2011 estimated outlook includes management’s assessment of the likelihood of certain risk factors that will affect performance. The most significant risk to 2011 performance will be, as previously noted, the United States economy and its impact on construction activity.
Other risks related to the Corporation’s future performance include, but are not limited to: both price and volume and include a recurrence of widespread decline in aggregates pricing; a greater-than-expected decline in infrastructure construction as a result of continued delays in traditional federal, ARRA, state and/or local infrastructure projects and continued lack of clarity regarding the timing and amount of the federal highway bill; a decline in nonresidential construction; a slowdown in the residential construction recovery; or some combination thereof. Further, increased highway construction funding pressures resulting from either federal or state issues can affect profitability. Currently, nearly all states are experiencing some funding-level pressures driven by lower tax revenues. If these pressures reduce transportation budgets more than in the past, construction spending could be negatively affected. North Carolina and Texas are among the states experiencing these general pressures, although recent statistics indicate that tax revenues are increasing; these states disproportionately affect the Corporation’s revenue and profitability.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
The Corporation’s principal business serves customers in construction aggregates-related markets. This concentration could increase the risk of potential losses on customer receivables; however, payment bonds normally posted on public projects, together with lien rights on private projects, help to mitigate the risk of uncollectible receivables. The level of aggregates demand in the Corporation’s end-use markets, production levels and the management of production costs will affect the operating leverage of the Aggregates business and, therefore, profitability. Production costs in the Aggregates business are also sensitive to energy prices, both directly and indirectly. Diesel and other fuels change production costs directly through consumption or indirectly in the increased cost of energy-related consumables, such as, steel, explosives, tires and conveyor belts. Fluctuating diesel pricing also affects transportation costs, primarily through fuel surcharges in the Corporation’s long-haul distribution network.
Transportation in the Corporation’s long-haul network, particularly barge availability on the Mississippi River system, as well as rail cars and locomotive power to move trains, affects the Corporation’s ability to efficiently transport material into certain markets, most notably Texas, Florida and the Gulf Coast. The Aggregates business is also subject to weather-related risks that can significantly affect production schedules and profitability. The first and fourth quarters are most adversely affected by winter weather.
Risks to the 2011 outlook include shipment declines as a result of economic events beyond the Corporation’s control. In addition to the impact on nonresidential and residential construction, the Corporation is exposed to risk in its estimated outlook from credit markets and the availability of and interest cost related to its debt.
OTHER MATTERS If you are interested in Martin Marietta Materials, Inc. stock, management recommends that, at a minimum, you read the Corporation’s current Annual Report and Forms 10-K, 10-Q and 8-K reports to the SEC over the past year. The Corporation’s recent proxy statement for the annual meeting of shareholders also contains important information. These and other materials that have been filed with the SEC are accessible through the Corporation’s website at www.martinmarietta.com and are also available at the SEC’s website at www.sec.gov. You may also write or call the Corporation’s Corporate Secretary, who will provide copies of such reports.
Investors are cautioned that all statements in this Quarterly Report that relate to the future involve risks and uncertainties, and are based on assumptions that the Corporation believes in good faith are reasonable but which may be materially different from actual results. Forward-looking statements give the investor the Corporation’s expectations or forecasts of future events. You can identify these statements by the fact that they do not relate only to historical or current facts. They may use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words of similar meaning in connection with future events or future operating or financial performance. Any or all of the Corporation’s forward-looking statements here and in other publications may turn out to be wrong.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
Factors that the Corporation currently believes could cause actual results to differ materially from the forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, the performance of the United States economy; widespread decline in aggregates pricing; the level and timing of federal and state transportation funding, including federal stimulus projects and most particularly in North Carolina, one of the Corporation’s largest and most profitable states, and Texas, Georgia, Iowa and Louisiana, which when coupled with North Carolina, represented 55% of 2010 net sales of the Aggregates business; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Corporation serves; the severity of a continued decline in the commercial construction market, notably office and retail space; a slowdown in residential construction recovery; unfavorable weather conditions, particularly Atlantic Ocean hurricane activity, the late start to spring or the early onset of winter and the impact of a drought in the markets served by the Corporation; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost of other consumables, namely steel, explosives, tires and conveyor belts; continued increases in the cost of other repair and supply parts; transportation availability, notably barge availability on the Mississippi River system and the availability of railcars and locomotive power to move trains to supply the Corporation’s Texas, Florida and Gulf Coast markets; increased transportation costs, including increases from higher passed-through energy costs and higher volumes of rail and water shipments; availability and cost of construction equipment in the United States; weakening in the steel industry markets served by the Corporation’s dolomitic lime products; inflation and its effect on both production and interest costs; ability to successfully integrate acquisitions quickly and in a cost-effective manner and achieve anticipated profitability to maintain compliance with the Corporation’s leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would increase the Corporation’s tax rate; violation of the debt covenant if price and volume return to previous levels of instability; downward pressure on the Corporation’s common stock price and its impact on goodwill impairment evaluations; and other risk factors listed from time to time found in the Corporation’s filings with the Securities and Exchange Commission. Other factors besides those listed here may also adversely affect the Corporation, and may be material to the Corporation. The Corporation assumes no obligation to update any such forward-looking statements.
INVESTOR ACCESS TO COMPANY FILINGS Shareholders may obtain, without charge, a copy of Martin Marietta Materials, Inc.’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2010, by writing to:
      
Martin Marietta Materials, Inc.
Attn: Corporate Secretary
2710 Wycliff Road
Raleigh, North Carolina 27607-3033

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Quarter Ended March 31, 2011
(Continued)
Additionally, Martin Marietta Materials, Inc.’s Annual Report, press releases and filings with the Securities and Exchange Commission, including Forms 10-K, 10-Q, 8-K and 11-K, can generally be accessed via the Corporation’s website. Filings with the Securities and Exchange Commission accessed via the website are available through a link with the Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system. Accordingly, access to such filings is available upon EDGAR placing the related document in its database. Investor relations contact information is as follows:
      
Telephone: (919) 783-4540
Website address: www.martinmarietta.com
Information included on the Corporation’s website is not incorporated into, or otherwise create a part of, this report.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Corporation’s operations are highly dependent upon the interest rate-sensitive construction and steelmaking industries. Consequently, these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs.
Management has considered the current economic environment and its potential impact to the Corporation’s business. Demand for aggregates products, particularly in the nonresidential and residential construction markets, could decline if companies and consumers are unable to obtain financing for construction projects or if the economic recession causes delays or cancellations to capital projects. Additionally, uncertainty regarding federal highway funding, declining tax revenues and state budget deficits have negatively affected states’ abilities to finance infrastructure construction projects.
Demand in the residential construction market is affected by interest rates. The Federal Reserve kept the federal funds rate at zero percent during the quarter ended March 31, 2011. The residential construction market accounted for approximately 7% of the Corporation’s aggregates product line shipments in 2010.
Aside from these inherent risks from within its operations, the Corporation’s earnings are affected also by changes in short-term interest rates as a result of any temporary cash investments, including money market funds and Eurodollar time deposit accounts; any outstanding variable-rate borrowing facilities; and defined benefit pension plans. Additionally, the Corporation’s earnings are affected by energy costs. The Corporation has no counterparty risk.
Variable-Rate Borrowing Facilities. The Corporation has a $600 million Credit Agreement which supports its commercial paper program and a $100 million AR Credit Facility. Borrowings under these facilities and the commercial paper program bear interest at a variable interest rate. A hypothetical 100-basis-point increase in interest rates on outstanding borrowings of $250 million, which is the outstanding balance at March 31, 2011, would increase interest expense by $2.5 million on an annual basis.
Pension Expense. The Corporation’s results of operations are affected by its pension expense. Assumptions that affect this expense include the discount rate and, for the defined benefit pension plans only, the expected long-term rate of return on assets. Therefore, the Corporation has interest rate risk associated with these factors. The impact of hypothetical changes in these assumptions on the Corporation’s annual pension expense is discussed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on February 25, 2011.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
Energy Costs. Energy costs, including diesel fuel, natural gas and liquid asphalt, represent significant production costs for the Corporation. A hypothetical 10% change in the Corporation’s energy costs in 2011 as compared with 2010, assuming constant volumes, would impact annual 2011 pretax earnings by approximately $15.6 million.
Aggregate Risk for Interest Rates and Energy Costs. Pension expense for 2011 was calculated based on assumptions selected at December 31, 2010. Therefore, interest rate risk in 2011 is limited to the potential effect related to the Corporation’s borrowings under variable-rate facilities. The effect of a hypothetical increase in interest rates of 1% on the $250 million of variable-rate borrowings outstanding at March 31, 2011 would be an increase of $2.5 million in interest expense in 2011. Additionally, a 10% change in energy costs compared with 2010 would impact annual pretax earnings by $15.6 million.
Item 4. Controls and Procedures
As of March 31, 2011, an evaluation was performed under the supervision and with the participation of the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of the Corporation’s disclosure controls and procedures. Based on that evaluation, the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Corporation’s disclosure controls and procedures were effective as of March 31, 2011. There were no changes in the Corporation’s internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Part I. Item 3. Legal Proceedings of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the year ended December 31, 2010.
Item 1A. Risk Factors.
Reference is made to Part I. Item 1A. Risk Factors and Forward-Looking Statements of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the year ended December 31, 2010.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
                                 
                    Total Number of Shares     Maximum Number of  
                    Purchased as Part of     Shares that May Yet  
    Total Number of     Average Price     Publicly Announced     be Purchased Under  
Period   Shares Purchased     Paid per Share     Plans or Programs     the Plans or Programs  
 
January 1, 2011 — January 31, 2011
        $             5,041,871  
 
                               
February 1, 2011 — February 28, 2011
        $             5,041,871  
 
                               
March 1, 2011 — March 31, 2011
        $             5,041,871  
 
                           
 
                               
Total
        $             5,041,871  
The Corporation’s initial stock repurchase program, which authorized the repurchase of 2.5 million shares of common stock, was announced in a press release dated May 6, 1994, and has been updated as appropriate. The program does not have an expiration date.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
PART II-OTHER INFORMATION
(Continued)
Item 5. Other Information.
The operation of the Corporation’s aggregates quarries and mines is subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects the Corporation’s quarries and mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Corporation is required to present information regarding certain mining safety and health citations which MSHA has issued with respect to its aggregates mining operations in its periodic reports filed with the Securities and Exchange Commission. In evaluating this information, consideration should be given to factors such as: (i) the number of citations and orders will vary depending on the size of the quarry or mine, (ii) the number of citations issued will vary from inspector to inspector and location to location, and (iii) citations and orders can be contested and appealed, and in that process, may be reduced in severity and amount, and are sometimes dismissed.
The Corporation presents the following items regarding certain mining safety and health matters for the three months ended March 31, 2011:
  Total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under section 104 of the Mine Act for which the Corporation has received a citation from MSHA (hereinafter, “Mine Act Section 104 Significant and Substantial Citations”);
  Total number of orders issued under section 104(b) of the Mine Act (hereinafter, “Mine Act Section 104(b) Orders”);
  Total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under Section 104(d) of the Mine Act (hereinafter, “Mine Act Section 104(d) Unwarrantable Failure Citations/Orders”);
  Total number of imminent danger orders issued under section 107(a) of the Mine Act (hereinafter, Mine Act Section 107(a) Imminent Danger Orders”); and
  Total dollar value of proposed assessments from MSHA under the Mine Act.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
PART II-OTHER INFORMATION
(Continued)
                                         
                            Mine Act        
    Mine Act             Mine Act Section     Section     Total Dollar  
    Section 104             104(d)     107(a)     Value of  
    Significant and     Mine Act     Unwarrantable     Imminent     Proposed  
    Substantial     Section 104(b)     Failure     Danger     MSHA  
Location *   Citations     Orders     Citations/Orders     Orders     Assessments  
 
Alden
    1                   1     $  
Ames
    5             1             21,837  
Apple Grove
    1                          
Augusta, KS
    1                          
Bakers
    1                         276  
Beaver Lake
                            208  
Bessemer City
    2                          
Broken Bow
                            238  
Charlotte
                            100  
Chattanooga
                            100  
Des Moines
    1                         645  
Doswell
                            784  
Durham
    3                         4,943  
Earlham
                            427  
Fairborn Gravel
                            100  
Fairfield
                             
Fort Calhoun
    1                         7,511  
Fort Dodge
    1                          
Georgetown ll
    1                          
Granite Canyon
    3                         650  
Guernsey
                            100  
Kentucky Ave
    1                         263  
Lemon Springs
    4                   2        
Malcom
    1                          
Maylene
                            554  
Milford
    1                          
Mill Creek
    1                          
New Braunfels
    2             1              
North Indianapolis
    3                          
Ottawa
                            807  
Pacific
                            873  
Parkville
    1                         227  
Paulding
                            217  
Pederson
    3                          
Phillipsburg
                            100  

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
PART II-OTHER INFORMATION
(Continued)
                                         
                            Mine Act        
    Mine Act             Mine Act Section     Section     Total Dollar  
    Section 104             104(d)     107(a)     Value of  
    Significant and     Mine Act     Unwarrantable     Imminent     Proposed  
    Substantial     Section 104(b)     Failure     Danger     MSHA  
Location *   Citations     Orders     Citations/Orders     Orders     Assessments  
 
Portable Crushing
    1                         685  
Poteet Sand
                            100  
Randolph Deep
    1                         307  
Stamper
    1                         416  
Sully
    1                          
Three Rivers
    2                         3,186  
Warrenton
                            138  
Weeping Water
    7       1                   17,586  
Wilson
    1                         499  
 
Total
    52       1       2       3     $ 63,877  
 
 
*   Only locations that have received violations, citations, orders and/or proposed assessments issued under the Mine Act have been included in this table.
For the three months ended March 31, 2011, none of the Corporation’s aggregates quarries or mines received written notice from MSHA of (i) a flagrant violation under section 110(b)(2) of the Mine Act; (ii) a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of other mine health or safety hazards under section 104(e) of the Mine Act; or (iii) the potential to have such a pattern. During the three months ended March 31, 2011, the Corporation experienced no fatalities at any of its aggregates quarries or mines.
As of March 31, 2011, the Corporation has a total of 55 matters pending before the Federal Mine Safety and Health Review Commission. This includes legal actions that were initiated prior to the three months ended March 31, 2011 and which do not necessarily relate to the citations, orders or proposed assessments issued by MSHA during such three-month period.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
PART II-OTHER INFORMATION
(Continued)
Item 6. Exhibits.
     
Exhibit    
No.   Document
31.01
  Certification dated May 3, 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 May 3, 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
  Written Statement dated May 3, 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
  Written Statement dated May 3, 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
 
   
101.INS
  XBRL Instance Document
 
   
101.SCH
  XBRL Taxonomy Extension Schema Document
 
   
101.CAL
  XBRL Taxonomy Extension Calculation Linkbase Document
 
   
101.LAB
  XBRL Taxonomy Extension Label Linkbase Document
 
   
101.PRE
  XBRL Taxonomy Extension Presentation Linkbase Document
 
   
101.DEF
  XBRL Taxonomy Extension Definition Linkbase

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  MARTIN MARIETTA MATERIALS, INC.
                          (Registrant)
 
 
Date: May 3, 2011  By:   /s/ Anne H. Lloyd    
    Anne H. Lloyd   
    Executive Vice President and
Chief Financial Officer 
 

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2011
EXHIBIT INDEX
     
Exhibit No.   Document
31.01
  Certification dated May 3, 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 May 3, 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
  Written Statement dated May 3, 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
  Written Statement dated May 3, 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
 
   
101.INS
  XBRL Instance Document
 
   
101.SCH
  XBRL Taxonomy Extension Schema Document
 
   
101.CAL
  XBRL Taxonomy Extension Calculation Linkbase Document
 
   
101.LAB
  XBRL Taxonomy Extension Label Linkbase Document
 
   
101.PRE
  XBRL Taxonomy Extension Presentation Linkbase Document
 
   
101.DEF
  XBRL Taxonomy Extension Definition Linkbase

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