Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Organization

Organization

Martin Marietta Materials, Inc., (the “Corporation”) is engaged principally in the construction aggregates business. The Corporation’s aggregates product line accounted for 69% of consolidated 2013 net sales and includes crushed stone, sand and gravel, and is used for construction of highways and other infrastructure projects, and in the nonresidential and residential construction industries. Aggregates products are also used in the railroad, agricultural, utility and environmental industries. These aggregates products, along with the Corporation’s vertically-integrated operations, i.e., asphalt products, ready mixed concrete and road paving construction services (which accounted for 19% of consolidated 2013 net sales), are sold and shipped from a network of nearly 300 quarries, distribution facilities and plants to customers in 30 states, Canada, the Bahamas and the Caribbean Islands. The aggregates and vertically-integrated operations are reported collectively as the Corporation’s “Aggregates business”.

Effective January 1, 2014, the Corporation made minor changes to the operations and management reporting structure of its Aggregates business, resulting in an immaterial change to its reportable segments. The Corporation currently conducts its Aggregates business through three reportable segments as follows:

AGGREGATES BUSINESS
Reportable Segments	Mid-America Group	Southeast Group	West Group
Operating Locations	Indiana, Iowa, northern Kansas, Kentucky, Maryland, Minnesota, eastern Nebraska, North Carolina, North Dakota, Ohio, South Carolina, Virginia, Washington and West Virginia	Alabama, Florida, Georgia, Mississippi, Tennessee, Nova Scotia and the Bahamas	Arkansas, Colorado, southern Kansas, Louisiana, Missouri, western Nebraska, Nevada, Oklahoma, Texas, Utah and Wyoming

In addition to the Aggregates business, the Corporation has a Specialty Products segment, which accounted for 12% of consolidated 2013 net sales, that produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry.

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Corporation has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three months ended March 31, 2014 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

Early Adoption of New Accounting Standard

Early Adoption of New Accounting Standard

Effective January 1, 2014, the Corporation early adopted the Financial Accounting Standard Board’s final guidance on reporting discontinued operations. The guidance is to be applied prospectively and redefines discontinued operations to be either 1) a component of an entity or group of components that has been disposed of or is classified as held for sale that represents a strategic shift that has or will have a major effect on an entity’s operations and financial results or 2) a business that, upon acquisition, meets the criteria to be classified as held for sale. The adoption of the accounting standard did not have any effect on the Corporation’s financial position or results of operations.

Reclassifications

Reclassifications

Prior-year segment information for the Aggregates business presented in Note 9 has been reclassified to conform to the presentation of the Corporation’s current reportable segments.

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss

Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss

Consolidated comprehensive earnings/loss for the Corporation consist of consolidated net earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; foreign currency translation adjustments; and the amortization of the value of terminated forward starting interest rate swap agreements into interest expense, and are presented in the Corporation’s consolidated statements of earnings and comprehensive earnings.

Comprehensive loss attributable to Martin Marietta Materials, Inc. is as follows:

	Three Months Ended March 31,
	2014		2013
		(Dollars in Thousands)
Net loss attributable to Martin Marietta Materials, Inc.	$	(21,618)	$	(27,839)
Other comprehensive earnings, net of tax		1,370		1,221
Comprehensive loss attributable to Martin Marietta Materials, Inc.	$	(20,248)	$	(26,618)

Comprehensive loss attributable to noncontrolling interests, consisting of net earnings or loss and adjustments for the funded status of pension and postretirement benefit plans, is as follows:

	Three Months Ended March  31,
	2014		2013
		(Dollars in Thousands)
Net loss attributable to noncontrolling interests	$	(1,535)	$	(1,490)
Other comprehensive earnings, net of tax		1		2
Comprehensive loss attributable to noncontrolling interests	$	(1,534)	$	(1,488)

Accumulated other comprehensive loss consists of unrealized gains and losses related to the funded status of pension and postretirement benefit plans; foreign currency translation; and the unamortized value of terminated forward starting interest rate swap agreements, and is presented on the Corporation’s consolidated balance sheets. Changes in accumulated other comprehensive loss, net of tax, are as follows:

	(Dollars in Thousands)
	Pension and   Postretirement   Benefit Plans		Foreign Currency		Unamortized Value of Terminated Forward Starting Interest Rate Swap		Accumulated Other Comprehensive Loss
		Three Months Ended March 31, 2014
Balance at beginning of period	$	(44,549)	$	3,902	$	(3,467)	$	(44,114)
Other comprehensive earnings before reclassifications, net of tax		--		914		--		914
Amounts reclassified from accumulated other comprehensive loss, net of tax		282		--		174		456
Other comprehensive earnings, net of tax		282		914		174		1,370
Balance at end of period	$	(44,267)	$	4,816	$	(3,293)	$	(42,744)
	Three Months Ended March 31, 2013
Balance at beginning of period	$	(108,189)	$	6,157	$	(4,137)	$	(106,169)
Other comprehensive loss before reclassifications, net of tax		--		(834)		--		(834)
Amounts reclassified from accumulated other comprehensive loss, net of tax		1,893		--		162		2,055
Other comprehensive earnings, net of tax		1,893		(834)		162		1,221
Balance at end of period	$	(106,296)	$	5,323	$	(3,975)	$	(104,948)

Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive loss are as follows:

	(Dollars in Thousands)
	Pension and   Postretirement   Benefit Plans			Unamortized Value of Terminated Forward Starting Interest Rate Swap			Net Noncurrent Deferred Tax Assets
	Three Months Ended March 31, 2014
Balance at beginning of period	$	29,198		$	2,269		$	31,467
Tax effect of other comprehensive earnings		(182	)		(114	)		(296	)
Balance at end of period	$	29,016		$	2,155		$	31,171
	Three Months Ended March 31, 2013
Balance at beginning of period	$	70,881		$	2,707		$	73,588
Tax effect of other comprehensive earnings		(1,240	)		(107	)		(1,347	)
Balance at end of period	$	69,641		$	2,600		$	72,241

Reclassifications out of accumulated other comprehensive loss are as follows:

	Three Months Ended March  31,						Affected line items in the consolidated statements of earnings and comprehensive earnings
	2014			2013
		(Dollars in Thousands)
Pension and postretirement benefit plans Amortization of:
Prior service credit	$	(703	)	$	(702	)
Actuarial loss		1,167			3,835
		464			3,133		Cost of sales; Selling, general and administrative expenses
Tax benefit		(182	)		(1,240	)	Income tax benefit
	$	282		$	1,893
Unamortized value of terminated forward starting interest rate swap
Additional interest expense	$	288		$	269		Interest expense
Tax benefit		(114	)		(107	)	Income tax benefit
	$	174		$	162

Earnings per Common Share

Earnings per Common Share

The numerator for basic and diluted earnings per common share is net earnings/loss attributable to Martin Marietta Materials, Inc., reduced by dividends and undistributed earnings attributable to the Corporation’s unvested restricted stock awards and incentive stock awards. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Corporation’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three months ended March 31, 2014 and 2013, all such awards were antidilutive given the net loss attributable to Martin Marietta Materials Inc.

The following table reconciles the numerator and denominator for basic and diluted earnings per common share:

	Three Months Ended March 31,
	2014		2013
		(In Thousands)
Net loss from continuing operations attributable to Martin Marietta Materials, Inc.	$	(21,603)	$	(27,551)
Less: Distributed and undistributed earnings attributable to unvested awards		67		93
Basic and diluted net loss available to common shareholders from continuing operations attributable to Martin Marietta Materials, Inc.		(21,670)		(27,644)
Basic and diluted net loss available to common shareholders from discontinued operations		(15)		(288)
Basic and diluted net loss available to common shareholders attributable to Martin Marietta Materials, Inc.	$	(21,685)	$	(27,932)
Basic and diluted weighted-average common shares outstanding		46,315		46,028