SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2018
OR
|
☐ |
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 ☑ No ☐
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 ☑ No ☐
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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
|
☑ |
|
Accelerated filer |
|
☐ |
|
|
|
|
|
|||
|
Non-accelerated filer |
|
☐ |
|
Smaller reporting company |
|
☐ |
|
|
|
|
|
|
|
|
|
Emerging growth company |
|
☐ |
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
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 May 2, 2018 |
|
Common Stock, $0.01 par value |
|
62,951,453 |
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2018
Page 2 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED BALANCE SHEETS
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|||
|
|
|
2018 |
|
|
2017 |
|
|
2017 |
|
|||
|
|
|
(Dollars in Thousands) |
|
|||||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,422,373 |
|
|
$ |
1,446,364 |
|
|
$ |
55,418 |
|
|
Accounts receivable, net |
|
|
466,465 |
|
|
|
487,240 |
|
|
|
479,215 |
|
|
Inventories, net |
|
|
606,794 |
|
|
|
600,591 |
|
|
|
537,000 |
|
|
Other current assets |
|
|
106,298 |
|
|
|
96,965 |
|
|
|
51,609 |
|
|
Total Current Assets |
|
|
2,601,930 |
|
|
|
2,631,160 |
|
|
|
1,123,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
6,523,364 |
|
|
|
6,498,067 |
|
|
|
6,211,813 |
|
|
Allowances for depreciation, depletion and amortization |
|
|
(2,940,870 |
) |
|
|
(2,905,254 |
) |
|
|
(2,744,168 |
) |
|
Net property, plant and equipment |
|
|
3,582,494 |
|
|
|
3,592,813 |
|
|
|
3,467,645 |
|
|
Goodwill |
|
|
2,160,290 |
|
|
|
2,160,290 |
|
|
|
2,159,398 |
|
|
Operating permits, net |
|
|
437,438 |
|
|
|
439,116 |
|
|
|
440,411 |
|
|
Other intangibles, net |
|
|
61,338 |
|
|
|
67,233 |
|
|
|
67,318 |
|
|
Other noncurrent assets |
|
|
104,560 |
|
|
|
101,899 |
|
|
|
135,777 |
|
|
Total Assets |
|
$ |
8,948,050 |
|
|
$ |
8,992,511 |
|
|
$ |
7,393,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
162,328 |
|
|
$ |
183,638 |
|
|
$ |
188,399 |
|
|
Accrued salaries, benefits and payroll taxes |
|
|
23,329 |
|
|
|
44,255 |
|
|
|
22,760 |
|
|
Pension and postretirement benefits |
|
|
12,812 |
|
|
|
13,652 |
|
|
|
8,136 |
|
|
Accrued insurance and other taxes |
|
|
52,413 |
|
|
|
64,958 |
|
|
|
49,535 |
|
|
Current maturities of long-term debt and short-term facilities |
|
|
300,006 |
|
|
|
299,909 |
|
|
|
290,048 |
|
|
Accrued interest |
|
|
39,720 |
|
|
|
19,825 |
|
|
|
23,649 |
|
|
Other current liabilities |
|
|
60,371 |
|
|
|
67,979 |
|
|
|
49,031 |
|
|
Total Current Liabilities |
|
|
650,979 |
|
|
|
694,216 |
|
|
|
631,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
2,728,102 |
|
|
|
2,727,294 |
|
|
|
1,556,246 |
|
|
Pension, postretirement and postemployment benefits |
|
|
248,501 |
|
|
|
244,043 |
|
|
|
252,568 |
|
|
Deferred income taxes, net |
|
|
413,570 |
|
|
|
410,723 |
|
|
|
667,160 |
|
|
Other noncurrent liabilities |
|
|
227,068 |
|
|
|
233,758 |
|
|
|
210,305 |
|
|
Total Liabilities |
|
|
4,268,220 |
|
|
|
4,310,034 |
|
|
|
3,317,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.01 per share |
|
|
628 |
|
|
|
628 |
|
|
|
626 |
|
|
Preferred stock, par value $0.01 per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
|
3,381,280 |
|
|
|
3,368,007 |
|
|
|
3,349,813 |
|
|
Accumulated other comprehensive loss |
|
|
(127,485 |
) |
|
|
(129,104 |
) |
|
|
(128,425 |
) |
|
Retained earnings |
|
|
1,422,207 |
|
|
|
1,440,069 |
|
|
|
851,354 |
|
|
Total Shareholders' Equity |
|
|
4,676,630 |
|
|
|
4,679,600 |
|
|
|
4,073,368 |
|
|
Noncontrolling interests |
|
|
3,200 |
|
|
|
2,877 |
|
|
|
2,586 |
|
|
Total Equity |
|
|
4,679,830 |
|
|
|
4,682,477 |
|
|
|
4,075,954 |
|
|
Total Liabilities and Equity |
|
$ |
8,948,050 |
|
|
$ |
8,992,511 |
|
|
$ |
7,393,791 |
|
See accompanying notes to the consolidated financial statements.
Page 3 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
|
|
|
Three-Months Ended |
|
|||||
|
|
|
March 31, |
|
|||||
|
|
|
2018 |
|
|
2017 |
|
||
|
|
|
(In Thousands, Except Per Share Data) |
|
|||||
|
|
|
|
|
|||||
|
Products and services revenues |
|
$ |
753,305 |
|
|
$ |
792,316 |
|
|
Freight revenues |
|
|
48,699 |
|
|
|
51,543 |
|
|
Total Revenues |
|
|
802,004 |
|
|
|
843,859 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues - products and services |
|
|
641,620 |
|
|
|
644,617 |
|
|
Cost of revenues - freight |
|
|
49,992 |
|
|
|
52,175 |
|
|
Total Cost of Revenues |
|
|
691,612 |
|
|
|
696,792 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
110,392 |
|
|
|
147,067 |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses |
|
|
70,121 |
|
|
|
69,535 |
|
|
Acquisition-related expenses |
|
|
711 |
|
|
|
22 |
|
|
Other operating expense, net |
|
|
479 |
|
|
|
360 |
|
|
Earnings from Operations |
|
|
39,081 |
|
|
|
77,150 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
35,087 |
|
|
|
20,851 |
|
|
Other nonoperating income, net |
|
|
(8,503 |
) |
|
|
(536 |
) |
|
Earnings before income tax expense |
|
|
12,497 |
|
|
|
56,835 |
|
|
Income tax expense |
|
|
2,457 |
|
|
|
14,528 |
|
|
Consolidated net earnings |
|
|
10,040 |
|
|
|
42,307 |
|
|
Less: Net earnings (loss) attributable to noncontrolling interests |
|
|
17 |
|
|
|
(27 |
) |
|
Net Earnings Attributable to Martin Marietta Materials, Inc. |
|
$ |
10,023 |
|
|
$ |
42,334 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Comprehensive Earnings: (See Note 1) |
|
|
|
|
|
|
|
|
|
Earnings attributable to Martin Marietta Materials, Inc. |
|
$ |
11,642 |
|
|
$ |
44,596 |
|
|
Earnings (Loss) attributable to noncontrolling interests |
|
|
17 |
|
|
|
(26 |
) |
|
|
|
$ |
11,659 |
|
|
$ |
44,570 |
|
|
Net Earnings Attributable to Martin Marietta Materials, Inc. |
|
|
|
|
|
|
|
|
|
Per Common Share: |
|
|
|
|
|
|
|
|
|
Basic attributable to common shareholders |
|
$ |
0.16 |
|
|
$ |
0.67 |
|
|
Diluted attributable to common shareholders |
|
$ |
0.16 |
|
|
$ |
0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
62,957 |
|
|
|
63,024 |
|
|
Diluted |
|
|
63,222 |
|
|
|
63,319 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends Per Common Share |
|
$ |
0.44 |
|
|
$ |
0.42 |
|
See accompanying notes to the consolidated financial statements.
Page 4 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|||||
|
|
|
March 31, |
|
|||||
|
|
|
2018 |
|
|
2017 |
|
||
|
|
|
(Dollars in Thousands) |
|
|||||
|
|
|
|
|
|||||
|
Cash Flows from Operating Activities: |
|
|
|
|
|
|
|
|
|
Consolidated net earnings |
|
$ |
10,040 |
|
|
$ |
42,307 |
|
|
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
76,821 |
|
|
|
70,376 |
|
|
Stock-based compensation expense |
|
|
9,760 |
|
|
|
10,275 |
|
|
(Gain) Loss on divestitures and sales of assets |
|
|
(951 |
) |
|
|
73 |
|
|
Deferred income taxes |
|
|
2,029 |
|
|
|
2,827 |
|
|
Other items, net |
|
|
(2,269 |
) |
|
|
(179 |
) |
|
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: |
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
20,951 |
|
|
|
(21,305 |
) |
|
Inventories, net |
|
|
(8,873 |
) |
|
|
(15,375 |
) |
|
Accounts payable |
|
|
7,925 |
|
|
|
8,536 |
|
|
Other assets and liabilities, net |
|
|
(10,421 |
) |
|
|
(23,670 |
) |
|
Net Cash Provided by Operating Activities |
|
|
105,012 |
|
|
|
73,865 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(96,259 |
) |
|
|
(102,095 |
) |
|
Proceeds from divestitures and sales of assets |
|
|
2,528 |
|
|
|
539 |
|
|
Payment of railcar construction advances |
|
|
(8,430 |
) |
|
|
(37,011 |
) |
|
Reimbursement of railcar construction advances |
|
|
8,430 |
|
|
|
37,011 |
|
|
Investments in life insurance contracts, net |
|
|
99 |
|
|
|
181 |
|
|
Net Cash Used for Investing Activities |
|
|
(93,632 |
) |
|
|
(101,375 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
— |
|
|
|
205,000 |
|
|
Repayments of debt |
|
|
(13 |
) |
|
|
(45,012 |
) |
|
Payments on capital lease obligations |
|
|
(829 |
) |
|
|
(761 |
) |
|
Debt issuance costs |
|
|
(3,194 |
) |
|
|
— |
|
|
Contributions by owners of noncontrolling interest |
|
|
129 |
|
|
|
— |
|
|
Dividends paid |
|
|
(27,885 |
) |
|
|
(26,560 |
) |
|
Proceeds from exercise of stock options |
|
|
2,801 |
|
|
|
3,917 |
|
|
Shares withheld for employees' income tax obligations |
|
|
(6,380 |
) |
|
|
(3,695 |
) |
|
Repurchases of common stock |
|
|
— |
|
|
|
(99,999 |
) |
|
Net Cash (Used for) Provided by Financing Activities |
|
|
(35,371 |
) |
|
|
32,890 |
|
|
Net (Decrease) Increase in Cash and Cash Equivalents |
|
|
(23,991 |
) |
|
|
5,380 |
|
|
Cash and Cash Equivalents, beginning of period |
|
|
1,446,364 |
|
|
|
50,038 |
|
|
Cash and Cash Equivalents, end of period |
|
$ |
1,422,373 |
|
|
$ |
55,418 |
|
See accompanying notes to the consolidated financial statements.
Page 5 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENT OF TOTAL EQUITY
|
(in thousands) |
|
Shares of Common Stock |
|
|
Common Stock |
|
|
Additional Paid-in Capital |
|
|
Accumulated Other Comprehensive Loss |
|
|
Retained Earnings |
|
|
Total Shareholders' Equity |
|
|
Noncontrolling Interests |
|
|
Total Equity |
|
||||||||
|
Balance at December 31, 2016 |
|
|
63,176 |
|
|
$ |
630 |
|
|
$ |
3,334,461 |
|
|
$ |
(130,687 |
) |
|
$ |
935,574 |
|
|
$ |
4,139,978 |
|
|
$ |
2,612 |
|
|
$ |
4,142,590 |
|
|
Consolidated net earnings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
42,334 |
|
|
|
42,334 |
|
|
|
(27 |
) |
|
|
42,307 |
|
|
Other comprehensive earnings, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,262 |
|
|
|
— |
|
|
|
2,262 |
|
|
|
1 |
|
|
|
2,263 |
|
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(26,560 |
) |
|
|
(26,560 |
) |
|
|
— |
|
|
|
(26,560 |
) |
|
Issuances of common stock for stock award plans |
|
|
60 |
|
|
|
1 |
|
|
|
5,077 |
|
|
|
— |
|
|
|
— |
|
|
|
5,078 |
|
|
|
— |
|
|
|
5,078 |
|
|
Repurchases of common stock |
|
|
(458 |
) |
|
|
(5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(99,994 |
) |
|
|
(99,999 |
) |
|
|
— |
|
|
|
(99,999 |
) |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
10,275 |
|
|
|
— |
|
|
|
— |
|
|
|
10,275 |
|
|
|
— |
|
|
|
10,275 |
|
|
Balance at March 31, 2017 |
|
|
62,778 |
|
|
$ |
626 |
|
|
$ |
3,349,813 |
|
|
$ |
(128,425 |
) |
|
$ |
851,354 |
|
|
$ |
4,073,368 |
|
|
$ |
2,586 |
|
|
$ |
4,075,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017 |
|
|
62,873 |
|
|
$ |
628 |
|
|
$ |
3,368,007 |
|
|
$ |
(129,104 |
) |
|
$ |
1,440,069 |
|
|
$ |
4,679,600 |
|
|
$ |
2,877 |
|
|
$ |
4,682,477 |
|
|
Consolidated net earnings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,023 |
|
|
|
10,023 |
|
|
|
17 |
|
|
|
10,040 |
|
|
Other comprehensive earnings, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,619 |
|
|
|
— |
|
|
|
1,619 |
|
|
|
— |
|
|
|
1,619 |
|
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(27,885 |
) |
|
|
(27,885 |
) |
|
|
— |
|
|
|
(27,885 |
) |
|
Issuances of common stock for stock award plans |
|
|
75 |
|
|
|
— |
|
|
|
9,893 |
|
|
|
— |
|
|
|
— |
|
|
|
9,893 |
|
|
|
— |
|
|
|
9,893 |
|
|
Shares withheld for employees' income tax obligations |
|
|
— |
|
|
|
— |
|
|
|
(6,380 |
) |
|
|
— |
|
|
|
— |
|
|
|
(6,380 |
) |
|
|
— |
|
|
|
(6,380 |
) |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
9,760 |
|
|
|
— |
|
|
|
— |
|
|
|
9,760 |
|
|
|
— |
|
|
|
9,760 |
|
|
Contributions from owners of noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
306 |
|
|
|
306 |
|
|
Balance at March 31, 2018 |
|
|
62,948 |
|
|
$ |
628 |
|
|
$ |
3,381,280 |
|
|
$ |
(127,485 |
) |
|
$ |
1,422,207 |
|
|
$ |
4,676,630 |
|
|
$ |
3,200 |
|
|
$ |
4,679,830 |
|
See accompanying notes to the consolidated financial statements.
Page 6 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2018
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
1. |
Significant Accounting Policies |
Organization
Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. The Company supplies aggregates (crushed stone, sand and gravel) through its network of 282 quarries, mines and distribution yards to its customers in 30 states, Canada, the Bahamas and the Caribbean Islands. In the western United States, Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in vertically-integrated structured markets where the Company has a leading aggregates position. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business.
The Company’s Building Materials business includes three reportable segments: the Mid-America Group, the Southeast Group and the West Group.
|
BUILDING MATERIALS BUSINESS |
||||||
|
Reportable Segments |
|
Mid-America Group |
|
Southeast Group |
|
West Group |
|
Operating Locations |
|
Indiana, Iowa, northern Kansas, Kentucky, Maryland, Minnesota, Missouri, eastern Nebraska, North Carolina, Ohio, South Carolina, Virginia, Washington and West Virginia |
|
Alabama, Florida, Georgia, Tennessee, |
|
Arkansas, Colorado, southern Kansas, Louisiana, western Nebraska, Nevada, Oklahoma, Texas, Utah and Wyoming
|
|
|
|
|
|
|
|
|
|
Product Lines |
|
Aggregates |
|
Aggregates |
|
Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving |
The Company has a Magnesia Specialties business with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers in the steel and mining industries.
Page 7 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2018
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. Other than the required adoption of two new accounting pronouncements described below, the Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement 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, 2018 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2017 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
New Accounting Pronouncements
Revenue from Contracts with Customers
Effective January 1, 2018, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which changes the evaluation and accounting for revenue recognition under contracts with customers and enhances financial statement disclosures. The Company implemented ASU 2014-09 using the modified retrospective approach. The adoption resulted in insignificant changes to the Company’s policies in reporting revenues and had an immaterial impact on the Company’s financial position and results of operations but required new disclosures (see Note 2).
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
Effective January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which provides clarification or additional guidance on certain transactions and its classification on the statement of cash flows on a retrospective basis. Notably, ASU 2016-15 states settlement proceeds from corporate-owned life insurance policies should be classified as investing activities and premiums paid may be presented as either investing or operating activities or a combination of both. At March 31, 2017, the Company reclassified $181,000 from operating activities to investing activities.
Page 8 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2018
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Pending Accounting Pronouncement
Lease Standard
In February 2016, the Financial Accounting Standards Board (FASB) issued a new accounting standard, Accounting Codification Standard 842 – Leases, intending to improve financial reporting of leases and to provide more transparency into off-balance sheet leasing obligations. The guidance requires virtually all leases, excluding mineral interest leases, to be recorded on the balance sheet and provides guidance on the recognition of lease expense and income. The new standard is effective January 1, 2019. The FASB recently proposed to eliminate the need for retrospective presentation of comparative financial statements and to allow the use of certain practical expedients in the adoption of the new standard. The Company is currently assessing the impact of the new standard on the Company’s financial statements. The Company believes the new standard will have a material effect on its balance sheet but has not quantified the impact at this time.
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss
Consolidated comprehensive earnings/loss and accumulated other comprehensive loss 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 Company’s consolidated statements of earnings and comprehensive earnings.
Comprehensive earnings attributable to Martin Marietta is as follows:
|
|
|
Three-Months Ended |
|
|||||
|
|
|
March 31, |
|
|||||
|
|
|
2018 |
|
|
2017 |
|
||
|
|
|
(Dollars in Thousands) |
|
|||||
|
Net earnings attributable to Martin Marietta Materials, Inc. |
|
$ |
10,023 |
|
|
$ |
42,334 |
|
|
Other comprehensive earnings, net of tax |
|
|
1,619 |
|
|
|
2,262 |
|
|
Comprehensive earnings attributable to Martin Marietta Materials, Inc. |
|
$ |
11,642 |
|
|
$ |
44,596 |
|
Comprehensive earnings attributable to noncontrolling interests, consisting of net earnings and adjustments for the funded status of pension and postretirement benefit plans, is as follows:
|
|
|
Three-Months Ended |
|
|||||
|
|
|
March 31, |
|
|||||
|
|
|
2018 |
|
|
2017 |
|
||
|
|
|
(Dollars in Thousands) |
|
|||||
|
Net earnings (loss) attributable to noncontrolling interests |
|
$ |
17 |
|
|
$ |
(27 |
) |
|
Other comprehensive earnings, net of tax |
|
|
— |
|
|
|
1 |
|
|
Comprehensive earnings (loss) attributable to noncontrolling interests |
|
$ |
17 |
|
|
$ |
(26 |
) |
Page 9 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2018
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)
Changes in accumulated other comprehensive earnings (loss), net of tax, are as follows:
|
|
|
(Dollars in Thousands) |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Unamortized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminated |
|
|
Accumulated |
|
||
|
|
|
Pension and |
|
|
|
|
|
|
Forward Starting |
|
|
Other |
|
|||
|
|
|
Postretirement |
|
|
Foreign |
|
|
Interest Rate |
|
|
Comprehensive |
|
||||
|
|
|
Benefit Plans |
|
|
Currency |
|
|
Swap |
|
|
Loss |
|
||||
|
|
|
Three-Months Ended March 31, 2018 |
|
|||||||||||||
|
Balance at beginning of period |
|
$ |
(128,802 |
) |
|
$ |
(22 |
) |
|
$ |
(280 |
) |
|
$ |
(129,104 |
) |
|
Other comprehensive loss before reclassifications, net of tax |
|
|
— |
|
|
|
(587 |
) |
|
|
— |
|
|
|
(587 |
) |
|
Amounts reclassified from accumulated other comprehensive earnings, net of tax |
|
|
1,996 |
|
|
|
— |
|
|
|
210 |
|
|
|
2,206 |
|
|
Other comprehensive earnings (loss), net of tax |
|
|
1,996 |
|
|
|
(587 |
) |
|
|
210 |
|
|
|
1,619 |
|
|
Balance at end of period |
|
$ |
(126,806 |
) |
|
$ |
(609 |
) |
|
$ |
(70 |
) |
|
$ |
(127,485 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended March 31, 2017 |
|
|||||||||||||
|
Balance at beginning of period |
|
$ |
(128,373 |
) |
|
$ |
(1,162 |
) |
|
$ |
(1,152 |
) |
|
$ |
(130,687 |
) |
|
Other comprehensive earnings before reclassifications, net of tax |
|
|
— |
|
|
|
137 |
|
|
|
— |
|
|
|
137 |
|
|
Amounts reclassified from accumulated other comprehensive earnings, net of tax |
|
|
1,910 |
|
|
|
— |
|
|
|
215 |
|
|
|
2,125 |
|
|
Other comprehensive earnings, net of tax |
|
|
1,910 |
|
|
|
137 |
|
|
|
215 |
|
|
|
2,262 |
|
|
Balance at end of period |
|
$ |
(126,463 |
) |
|
$ |
(1,025 |
) |
|
$ |
(937 |
) |
|
$ |
(128,425 |
) |
Page 10 of 42
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2018
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)
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, 2018 |
|
|||||||||
|
Balance at beginning of period |
|
$ |
79,938 |
|
|
$ |
178 |
|
|
$ |
80,116 |
|
|
Tax effect of other comprehensive earnings |
|
|
(658 |
) |
|
|
(137 |
) |
|
|
(795 |
) |
|
Balance at end of period |
|
$ |
79,280 |
|
|
$ |
41 |
|
|
$ |
79,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended March 31, 2017 |
|
|||||||||
|
Balance at beginning of period |
|
$ |
82,044 |
|
|
$ |
749 |
|
|
$ |
82,793 |
|
|
Tax effect of other comprehensive earnings |
|
|
(1,185 |
|||||||||