Martin Marietta Materials, Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2006
OR
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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)
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| North Carolina
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56-1848578 |
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
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| 2710 Wycliff Road, Raleigh, North Carolina
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27607-3033 |
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(Zip Code) |
(919) 781-4550
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered |
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Common Stock (par value $.01 per share) (including rights attached thereto)
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Exchange Act.
Yes o No þ
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated
filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer o Non-accelerated filer 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
As of June 30, 2006, the last business day of the registrant’s most recently completed second
fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates
of the registrant was $3,335,765,324 based on the closing sale price as reported on the New York
Stock Exchange.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock on
the latest practicable date.
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Outstanding at February 16, 2007 |
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| Common Stock, $.01 par value per share
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45,054,304 shares |
DOCUMENTS INCORPORATED BY REFERENCE
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| Document |
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Parts Into Which Incorporated |
Annual Report to Shareholders for the Fiscal
Year Ended December 31, 2006 (Annual Report)
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Parts I, II, and IV |
Proxy Statement for the Annual Meeting of
Shareholders to be held May 22, 2007 (Proxy
Statement)
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Part III |
PART I
ITEM 1. BUSINESS
General
Martin Marietta Materials, Inc. (the “Company”) is the United States’ second largest producer
of aggregates for the construction industry, including infrastructure, commercial, agricultural,
and residential. The Company also has a Specialty Products segment that manufactures and markets
magnesia-based chemical products used in industrial, agricultural, and environmental applications,
dolomitic lime sold primarily to the steel industry, and structural composite products. In 2006,
the Company’s Aggregates business accounted for 92% of the Company’s total net sales, and the
Company’s Specialty Products segment accounted for 8% of the Company’s total net sales.
The Company was formed in 1993 as a North Carolina corporation to serve as successor to the
operations of the materials group of the organization that is now Lockheed Martin Corporation. An
initial public offering of a portion of the Company’s Common Stock was completed in 1994, followed
by a tax-free exchange transaction in 1996 that resulted in 100% of the Company’s Common Stock
being publicly traded.
Initially, the Company’s aggregates operations were predominantly in the Southeast, with
additional operations in the Midwest. In 1995, the Company started its geographic expansion with
the purchase of an aggregates business that included an extensive waterborne distribution system
along the East and Gulf Coasts and the Mississippi River. Smaller acquisitions that year,
including the acquisition of the Company’s granite operations on the Strait of Canso in Nova
Scotia, complemented the Company’s new coastal distribution network.
Subsequent acquisitions in 1997 and 1998 expanded the Company’s Aggregates business in the
middle of the country and added a leading producer of aggregates products in Texas, which provided
the Company with access to an extensive rail network in Texas. These two transactions positioned
the Company for numerous additional expansion acquisitions in Ohio, Indiana, and the southwestern
regions of the United States, with the Company completing 29 smaller acquisitions between 1997 and
1999, which allowed the Company to enhance and expand its presence in the aggregates marketplace.
In 1998, the Company made an initial investment in an aggregates business that would later
serve as the Company’s platform for further expansion in the southwestern and western United
States. In 2001, the Company completed the purchase of all of the remaining interests of this
business, which increased its ability to use rail as a mode of transportation.
Effective January 1, 2005, the Company formed a joint venture with Hunt Midwest Enterprises to
operate substantially all of the aggregates facilities of both companies in Kansas City and
surrounding areas. The joint venture was formed by the parties contributing a total of 15 active
quarry operations with production of approximately 7.5 million tons annually.
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Between 2001 and 2006 the Company sold a number of nonstrategic operations, including
aggregates, asphalt, ready mixed concrete, trucking, and road paving operations of its Aggregates
business and the refractories business of its Magnesia Specialties business. In some of its
divestitures, the Company concurrently entered into supply agreements to provide aggregates at
market rates to certain of these divested businesses. The Company will continue to evaluate
opportunities to divest nonstrategic assets during 2007 in an effort to redeploy capital for other
opportunities.
Business Segment Information
The Company operates in four reportable business segments: the Mideast Group, Southeast
Group, and West Group, comprising the Aggregates business, and the Specialty Products segment. The
Specialty Products segment includes the Magnesia Specialties business and the structural composites
product line. Information concerning the Company’s total revenues, net sales, earnings from
operations, assets employed, and certain additional information attributable to each reportable
business segment for each year in the three-year period ended December 31, 2006 is included in
“Note O: Business Segments” of the “Notes to Financial Statements” on pages 37-39 of the Company’s
2006 Annual Report to Shareholders (the “2006 Annual Report”), which information is incorporated
herein by reference.
Aggregates Business
The Aggregates business mines, processes and sells granite, limestone, sand, gravel, and other
aggregate products for use in all sectors of the public infrastructure, commercial and residential
construction industries as well as miscellaneous uses such as agriculture, railroad ballast and
chemical uses. The Aggregates business also includes the operation of its other construction
materials businesses. These businesses, located primarily in the West Group, were acquired through
continued selective vertical integration by the Company, and include asphalt, ready mixed concrete,
and road paving operations.
The Company is the United States’ second largest producer of aggregates. In 2006, the
Company’s Aggregates business shipped 198.5 million tons of aggregates primarily to customers in 31
states, Canada, the Bahamas, and the Caribbean Islands, generating net sales and earnings from
operations of $1.9 billion and $400.3 million, respectively.
The Aggregates business markets its products primarily to the construction industry, with
approximately 42% of its shipments made to contractors in connection with highway and other public
infrastructure projects and the balance of its shipments made primarily to contractors in
connection with commercial and residential construction projects. As a result of dependence upon
the construction industry, the profitability of aggregates producers is sensitive to national,
regional, and local economic conditions, and particularly to cyclical swings in construction
spending, which is affected by fluctuations in interest rates, demographic and population shifts,
and changes in the level of infrastructure spending funded by the public sector. The Company’s
Aggregates business covers a wide geographic area, with aggregates, asphalt products, and ready
mixed concrete sold and shipped from a network of approximately 307 quarries, underground mines,
distribution facilities, and plants in 28 states, Canada, and the Bahamas. The Company’s five
largest revenue-generating states (North Carolina, Texas, Georgia, Iowa, and South Carolina)
account for approximately 58% of total 2006 net sales for the Aggregates business by state of
destination. The Company’s business is accordingly
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affected by the economies in these regions and has been adversely affected in part by recessions
and weaknesses in these economies from time to time.
The Company’s Aggregates business is also highly seasonal, due primarily to the effect of
weather conditions on construction activity within its markets. The operations of the Aggregates
business that are concentrated in the northern United States and Canada typically experience more
severe winter weather conditions than operations in the southeastern and southwestern regions of
the United States. Excessive rainfall can also jeopardize shipments, production, and
profitability. Due to these factors, the Company’s second and third quarters are the strongest,
with the first quarter generally reflecting the weakest results. Results in any quarter are not
necessarily indicative of the Company’s annual results. Similarly, the operations of the
Aggregates business in the southeastern and Gulf Coast regions of the United States and the Bahamas
are at risk for hurricane activity and have experienced weather-related losses in recent years.
During 2005, aggregates shipments in the Company’s southeastern and Gulf Coast markets were
adversely affected by Hurricanes Katrina and Rita and several other storms during the 2005
record-setting hurricane season.
Natural aggregates sources can be found in relatively homogeneous deposits in certain areas of
the United States. As a general rule, truck shipments from an individual quarry are limited
because the cost of transporting processed aggregates to customers is high in relation to the price
of the product itself. As described below, the Company’s distribution system mainly uses trucks,
but also has access to a river barge and ocean vessel network where the per mile unit cost of
transporting aggregates is much lower. In addition, acquisitions have enabled the Company to
extend its customer base through increased access to rail transportation. Proximity of quarry
facilities to customers or to long-haul transportation corridors is an important factor in
competition for aggregates business.
A growing percentage of the Company’s aggregates shipments are being moved by rail or water
through a distribution yard network. In 1994, 93% of the Company’s aggregates shipments were moved
by truck, the rest by rail. In contrast, in 2006, the Company’s aggregates shipments moved 73% by
truck, 16% by rail, and 11% by water. The majority of the rail and water movements occur in the
Southeast Group and the West Group. The Company has an extensive network of aggregates quarries and
distribution centers along the Mississippi River system throughout the central and southern United
States and in the Bahamas and Canada, as well as distribution centers along the Gulf of Mexico and
Atlantic coasts. In recent years, the Company has brought additional capacity on line at its
Bahamas and Nova Scotia locations to transport materials via oceangoing ship. Further, in 2006,
the Company completed the second largest capital project in its history, a highly-automated plant
and barge loadout system at its Three Rivers facility in Kentucky. This new plant, which is
capable of producing more than 8 million tons per year for shipment to 14 states along the Ohio and
Mississippi River network, greatly expands the Company’s long-haul distribution network.
In addition, the Company’s acquisitions and capital projects have expanded its ability to ship
material by rail, as discussed in more detail below. The Company has added additional capacity in a
number of locations that can now accommodate larger unit train movements. These expansion projects
have enhanced the Company’s long-haul distribution network. The Company’s process improvement
program has also improved operational effectiveness through plant automation, mobile fleet
modernization, right-sizing, and other cost control improvements. Accordingly, the Company has
enhanced its reach through its ability to provide cost-effective coverage of coastal markets on the
east and gulf coasts, as well as geographic areas that can be accessed economically by the
Company’s
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expanded distribution system. This distribution network moves aggregates materials from domestic
and offshore sources, via rail and water, to markets where aggregates supply is limited.
As the Company continues to move more aggregates by rail and water, embedded freight costs
have consequently reduced gross margins. This typically occurs where the Company transports
aggregates from a production location to a distribution location by rail or water, and the customer
pays a selling price that includes a freight component. Margins are negatively affected because
the Company typically does not charge the customer a profit associated with the transportation
component of the selling price. Moreover, the Company’s expansion of its rail-based distribution
network, coupled with the extensive use of rail service in the Southeast and West Groups, increase
the Company’s dependence on and exposure to railroad performance, including track congestion, crew
availability, and power availability, and the ability to renegotiate favorable railroad shipping
contracts. The waterborne distribution network, primarily located within the Southeast Group, also
increases the Company’s exposure to certain risks, including the ability to negotiate favorable
shipping contracts, demurrage costs, fuel costs, barge or ship availability, and weather
disruptions. The Company has entered into long-term agreements with shipping companies to provide
ships to transport the Company’s aggregates to various coastal ports.
In 2005, and to a lesser extent in 2006, the Company experienced rail transportation shortages
in Texas and parts of the Southeast Group. These shortages were caused by the downsizing in
personnel and equipment by certain railroads during the economic downturn in the early part of this
decade. Further, in response to these issues, rail transportation providers focused on increasing
the number of cars per unit train under transportation contracts and are generally requiring
customers, through the freight rate structure, to accommodate larger unit train movements. A unit
train is a freight train moving large tonnages of a single bulk product between two points without
intermediate yarding and switching. In 2006, the Company brought a new plant online on a greensite
at its North Troy operation in Oklahoma, which is capable of producing 5 million tons per year and
handling multiple 90-car unit trains. Certain of the Company’s sales yards in the southwestern
region of the United States have the system capabilities to meet the unit train requirements.
During 2005 and 2006, the Company made capital improvements to a number of its sales yards in this
region in order to better accommodate unit train unloadings. Further, in 2005, the Company
addressed certain of its railcar needs for future shipments by leasing 780 railcars under two
master lease agreements.
In 2005, following Hurricanes Katrina and Rita, the Company experienced delays and shortages
relating to its transportation of barges along the Mississippi River system. As the Gulf Coast
started to recover, the Company’s barge traffic improved. However, in 2006 the Company experienced
delays in shipping materials through Lock 52 on the Ohio River, as scheduled repair and maintenance
activities were performed. These delays reduced the water traffic able to pass through Lock 52,
resulted in shipping delays for material shipped by barge through the lock during this time. While
the delays have ended and normal water traffic has resumed, another two-week planned outage is
currently scheduled for August 2007.
During 2006, the Company continued to experience shortages of barges from time to time. Barge
availability has become an issue as the rate of barges being retired is exceeding the rate at which
new barges are being constructed. Shipyards that build barges are operating at capacity, and the
lead time for new barges is approximately 18 months. In 2007, the Corporation will accept delivery
of 50 new barges.
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The Company’s management expects the multiple transportation modes that have been developed
with various rail carriers and via barges and deepwater ships should provide the Company with the
flexibility to effectively serve customers in the southeastern and southwestern regions of the
United States.
The construction aggregates industry has been in a consolidating mode. The Company’s
management expects this trend to continue but at a slower rate as the number of suitable
acquisition targets in high growth markets decline. The Company’s Board of Directors and
management continue to review and monitor the Company’s strategic long-term plans, which include
assessing business combinations and arrangements with other companies engaged in similar
businesses, increasing market share in the Company’s core businesses, and pursuing new
opportunities related to the Company’s existing markets.
The Company became more vertically integrated with an acquisition in 1998 and subsequent
acquisitions, particularly in the West Group, pursuant to which the Company acquired asphalt, ready
mixed concrete, paving construction, trucking, and other businesses, which complement the Company’s
aggregates business. These vertically integrated operations accounted for approximately 5% of
revenues of the Aggregates business in 2006. These operations have lower gross margins than
aggregates products, and are affected by volatile factors, including fuel costs, operating
efficiencies, and weather, to an even greater extent than the Company’s aggregates operations. The
road paving and trucking businesses were acquired as supplemental operations that were part of
larger acquisitions. As such, they do not represent core businesses of the Company. The results
of these operations are currently insignificant to the Company as a whole. Over the last few years
the Company has disposed of some of these operations. The Company continues to review carefully
the acquired vertically integrated operations to determine if they represent opportunities to
divest underperforming assets in an effort to redeploy capital for other opportunities.
Environmental and zoning regulations have made it increasingly difficult for the aggregates
industry to expand existing quarries and to develop new quarry operations. Although it cannot be
predicted what policies will be adopted in the future by federal, state, and local governmental
bodies regarding these matters, the Company anticipates that future restrictions will likely make
zoning and permitting more difficult, thereby potentially enhancing the value of the Company’s
existing mineral reserves.
Management believes the Aggregates business’ raw materials, or aggregates reserves, are
sufficient to permit production at present operational levels for the foreseeable future. The
Company does not anticipate any material difficulty in obtaining the raw materials that it uses for
current production in its Aggregates business. The Company’s aggregates reserves on the average
exceed 50 years of production, based on current levels of activity. However, certain locations may
be subject to more limited reserves and may not be able to expand. Moreover, as noted above,
environmental and zoning regulations will likely make it harder for the Company to expand its
existing quarries or develop new quarry operations.
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The Company generally sells products in its Aggregates business upon receipt of orders or
requests from customers. Accordingly, there is no significant order backlog. The Company
generally maintains inventories of aggregate products in sufficient quantities to meet the
requirements of customers.
Less than 2% of the revenues from the Aggregates business are from foreign jurisdictions,
principally Canada and the Bahamas, with revenues from customers in foreign countries totaling
$25.0 million, $16.4 million, and $15.4 million during 2006, 2005, and 2004, respectively.
Specialty Products Business
Magnesia Specialties Business. The Company manufactures and markets, through its Magnesia
Specialties business, magnesia-based chemical products for industrial, agricultural, and
environmental applications, and dolomitic lime for use primarily in the steel industry. These
chemical products have varying uses, including flame retardants, wastewater treatment, pulp and
paper production, and other environmental applications. In 2006, 65% of Magnesia Specialties’ net
sales were attributable to chemical products, 33% to lime, and 2% to stone.
Given the high fixed costs associated with operating this business, low capacity utilization
negatively affects its results of operations. A significant portion of the costs related to the
production of magnesia-based products and dolomitic lime is of a fixed or semi-fixed nature. In
addition, the production of certain magnesia chemical products and lime products requires natural
gas, coal, and petroleum coke to fuel kilns. Price fluctuations of these fuels affect the
profitability of this business.
In 2006, approximately 75% of the lime produced was sold to third-party customers, while the
remaining 25% was used internally as a raw material in making the business’ chemical products.
Dolomitic lime products sold to external customers are used primarily by the steel industry.
Accordingly, a portion of the profitability of the Magnesia Specialties business is dependent on
steel production capacity utilization and the related marketplace. Magnesia Specialties’ products
used in the steel industry accounted for approximately 43% of the net sales of the business in
2006, attributable primarily to the sale of dolomitic lime products. However, Magnesia
Specialties’ management has shifted the strategic focus of its magnesia-based business to specialty
chemicals that can be produced at volume levels that support efficient operations. Accordingly,
that business is not as dependent on the steel industry as is the dolomitic lime portion of the
Magnesia Specialties business.
The principal raw materials used in Magnesia Specialties’ products are dolomitic limestone and
alkali-rich brine. Management believes that its reserves of dolomitic limestone and brine are
sufficient to permit production at the current operational levels for the foreseeable future.
After the brine is used in the production process, the Magnesia Specialties business must
dispose of the processed brine. In the past, the business did this by reinjecting the processed
brine back into its underground brine reserve network around its facility in Manistee, Michigan.
The business has also sold a portion of this processed brine to third parties. In 2003, Magnesia
Specialties entered into a long-term processed brine supply agreement with The Dow Chemical Company
(“Dow”) pursuant to which Dow purchases processed brine from Magnesia Specialties, at market rates,
for use in Dow’s production of calcium chloride products. Magnesia Specialties also entered into a
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venture with Dow to construct, own, and operate a processed brine supply pipeline between the
Magnesia Specialties facility in Manistee, Michigan, and Dow’s facility in Ludington, Michigan.
Construction of the pipeline was completed in 2003, and Dow began purchasing processed brine from
Magnesia Specialties through the pipeline.
Magnesia Specialties generally delivers its products upon receipt of orders or requests from
customers. Accordingly, there is no significant order backlog. Inventory for Magnesia
Specialties’ products is generally maintained in sufficient quantities to meet rapid delivery
requirements of customers.
Approximately 12% of the revenues of the Magnesia Specialties business are from foreign
jurisdictions, principally Canada, Mexico, Europe, South America, and the Pacific Rim, but no
single country accounts for 10% or more of the revenues of the business. Revenues from customers
in foreign countries totaled $17.0 million, $19.6 million, and $16.1 million in 2006, 2005, and
2004, respectively. As a result of these foreign market sales, the financial results of the
Magnesia Specialties business could be affected by foreign currency exchange rates or weak economic
conditions in the foreign markets. To mitigate the short-term effects of currency exchange rates,
the Magnesia Specialties business principally uses the U.S. dollar as the functional currency in
foreign transactions.
Structural Composite Products Line. The Company, through its wholly-owned subsidiary, Martin
Marietta Composites (“MMC”), develops structural composite products. Pursuant to various
agreements, MMC has rights to commercialize certain proprietary technologies related to flat panel
applications. One of the agreements gives MMC the opportunity to pursue the use of certain
fiber-reinforced polymer composites technologies for products where corrosion resistance and high
strength-to-weight ratios are important factors, such as bridge decks, marine applications, and
other structures and applications. MMC continued its research and product development activities
during 2006 on these structural composites technologies and initiated or continued the
manufacturing and marketing of selected products.
In 2006, MMC narrowed the focus within several market sectors for its composite products:
military, transportation, and infrastructure. Military products consist of ballistic and blast
panels. Transportation products include commercial trucks and rail cars. Infrastructure products
include bridge decks. MMC is currently focusing its efforts on homeland security, military
applications and panel products. To date, MMC has completed 30 successful installations of bridge
decks in 13 states and 2 foreign countries utilizing these composite materials technologies. In
2006 MMC stopped using its license for the manufacture of composite truck trailers and wrote off
its investment in this product application of its structural composites business. MMC also
downsized the management group and the hourly workforce associated with the structural composite
product line. In 2007, the remaining components of the structural composites product line have
specific quarterly benchmarks to achieve to determine its viability. MMC will continue to
evaluate a variety of military and commercial uses for composite materials. There can be no
assurance that these technologies will become profitable.
Patents and Trademarks
As of February 16, 2007, the Company owns, has the right to use, or has pending applications
for approximately 129 patents pending or granted by the United States and various countries and
approximately 59 trademarks related to business. The Company believes that its rights under its
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existing patents, patent applications, and trademarks are of value to its operations, but no one
patent or trademark or group of patents or trademarks is material to the conduct of the Company’s
business as a whole.
Customers
No material part of the business of any segment of the Company is dependent upon a single
customer or upon a few customers, the loss of any one of which would have a material adverse effect
on the segment. The Company’s products are sold principally to commercial customers in private
industry. Although large amounts of construction materials are used in public works projects,
relatively insignificant sales are made directly to federal, state, county, or municipal
governments, or agencies thereof.
Competition
Because of the impact of transportation costs on the aggregates industry, competition in the
Aggregates business tends to be limited to producers in proximity to each of the Company’s
production facilities. Although all of the Company’s locations experience competition, the Company
believes that it is generally a leading producer in the areas it serves. Competition is based
primarily on quarry or distribution location and price, but quality of aggregates and level of
customer service are also factors.
The Company is the second largest producer of aggregates in the United States based on tons
shipped. There are over 3,900 companies in the United States that produce aggregates. The largest
five producers account for approximately 26% of the total market. The Company, in its Aggregates
business, competes with a number of other large and small producers. The Company believes that its
ability to transport materials by ocean vessels, river barges, and rail have enhanced the Company’s
ability to compete in the aggregates business. Some of the Company’s competitors in the aggregates
industry have greater financial resources than the Company.
The Magnesia Specialties business of the Company’s Specialty Products segment competes with
various companies in different geographic and product areas principally on the basis of quality,
price, and technical support for its products. The Magnesia Specialties business also competes for
sales to customers located outside the United States, with revenues from foreign jurisdictions
accounting for approximately 12% of revenues for the Magnesia Specialties business in 2006,
principally in Canada, Mexico, Europe, South America, and the Pacific Rim. Certain of the
Company’s competitors in the Magnesia Specialties business have greater financial resources than
the Company.
The structural composites product line of the Company’s Specialty Products segment competes
with various companies in different geographic and product areas principally on the basis of
technological advances, quality, price, and technical support. The structural composites product
line competes for sales to customers located outside the United States. Certain of the Company’s
competitors in the structural composites product line have greater financial resources than the
Company.
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Research and Development
The Company conducts research and development activities principally for its Magnesia
Specialties business, at its plant in Manistee, Michigan, and for its structural composites product
line, at its headquarters in Raleigh, North Carolina, and its plant in Sparta, North Carolina. In
general, the Company’s research and development efforts in 2006 were directed to applied
technological development for the use of its chemicals products and for its proprietary
technologies, including composite materials. The Company spent approximately $0.7 million in 2006,
$0.7 million in 2005, and $0.9 million in 2004 on research and development activities.
Environmental and Governmental Regulations
The Company’s operations are subject to and affected by federal, state, and local laws and
regulations relating to the environment, health and safety, and other regulatory matters. Certain
of the Company’s operations may from time to time involve the use of substances that are classified
as toxic or hazardous substances within the meaning of these laws and regulations. Environmental
operating permits are, or may be, required for certain of the Company’s operations, and such
permits are subject to modification, renewal, and revocation.
The Company records an accrual for environmental remediation liabilities in the period in
which it is probable that a liability has been incurred and the amounts can be reasonably
estimated. Such accruals are adjusted as further information develops or circumstances change.
The accruals are not discounted to their present value or offset for potential insurance or other
claims or potential gains from future alternative uses for a site.
The Company regularly monitors and reviews its operations, procedures, and policies for
compliance with existing laws and regulations, changes in interpretations of existing laws and
enforcement policies, new laws that are adopted, and new laws that the Company anticipates will be
adopted that could affect its operations. The Company has a full time staff of environmental
engineers and managers that perform these responsibilities. The direct costs of ongoing
environmental compliance were approximately $8.5 million in 2006 and approximately $3.5 million in
2005 and are related to the Company’s environmental staff and ongoing monitoring costs for various
matters (including those matters disclosed in this Annual Report on Form 10-K). Capitalized costs
related to environmental control facilities were approximately $6.4 million in 2006 and are
expected to be approximately $2 million in each of 2007 and 2008. The Company’s capital
expenditures for environmental matters were not material to its results of operations or financial
condition in 2006 and 2005. However, our expenditures for environmental matters generally have
increased over time and are likely to increase in the future. Despite our compliance efforts, risk
of environmental liability is inherent in the operation of the Company’s businesses, as it is with
other companies engaged in similar businesses, and there can be no assurance that environmental
liabilities will not have a material adverse effect on the Company in the future.
Many of the requirements of the environmental laws are satisfied by procedures that the
Company adopts as best business practices in the ordinary course of its operations. For example,
plant equipment that is used to crush aggregates products may, as an ordinary course of operations,
have an attached water spray bar that is used to clean the stone. The water spray bar also
suffices as a dust
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control mechanism that complies with applicable environmental laws. The Company does not
break out the portion of the cost, depreciation, and other financial information relating to the
water spray bar that is only attributable to environmental purposes, as it would be derived from an
arbitrary allocation methodology. The incremental portion of such operating costs that is
attributable to environmental compliance rather than best operating practices is impractical to
quantify. Accordingly, the Company expenses costs in that category when incurred as operating
expenses.
The environmental accruals recorded by the Company are based on internal studies of the
required remediation costs and estimates of potential costs that arise from time to time under
federal, state, and/or local environmental protection laws. Many of these laws and the regulations
promulgated under them are complex, and are subject to challenges and new interpretations by
regulators and the courts from time to time. In addition, new laws are adopted from time to time.
It is often difficult to accurately and fully quantify the costs to comply with new rules until it
is determined the type of operations to which they will apply and the manner in which they will be
implemented is more accurately defined. This process often takes years to finalize and changes
significantly from the time the rules are proposed to the time they are final. The Company
typically has several appropriate alternatives available to satisfy compliance requirements, which
could range from nominal costs to some alternatives that may be satisfied in conjunction with
equipment replacement or expansion that also benefits operating efficiencies or capacities and
carry significantly higher costs.
Management believes that its current accrual for environmental costs is reasonable, although
those amounts may increase or decrease depending on the impact of applicable rules as they are
finalized from time to time and changes in facts and circumstances. The Company believes that any
additional costs for ongoing environmental compliance would not have a material adverse effect on
the Company’s obligations or financial condition.
With respect to reclamation costs effective January 1, 2003, the Company adopted Statement of
Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (“FAS 143”).
See “Note N: Commitments and Contingencies” of the “Notes to Financial Statements” on pages 36 and
37 of the 2006 Annual Report. Under FAS 143, future reclamation costs are estimated using
statutory reclamation requirements and management’s experience and knowledge in the industry, and
are discounted to their present value using a credit-adjusted, risk-free rate of interest. The
future reclamation costs are not offset by potential recoveries. The Company is generally required
by state or local laws or pursuant to the terms of an applicable lease to reclaim quarry sites
after use. The Company performs activities on an ongoing basis that may reduce the ultimate
reclamation obligation. These activities are performed as an integral part of the normal quarrying
process. For example, the perimeter and interior walls of an open pit quarry are sloped and
benched as they are developed to prevent erosion and provide stabilization. This sloping and
benching meets dual objectives — safety regulations required by the Mine Safety and Health
Administration for ongoing operations and final reclamation requirements. Therefore, these types
of activities are included in normal operating costs and are not a part of the asset retirement
obligation. Historically, the Company has not incurred substantial reclamation costs in connection
with the closing of quarries. Reclaimed quarry sites owned by the Company are available for sale,
typically for commercial development or use as reservoirs.
The Company believes that its operations and facilities, both owned or leased, are in
substantial compliance with applicable laws and regulations and that any noncompliance is not
likely to have a material adverse effect on the Company’s operations or financial condition. See
“Legal Proceedings”
13
on pages
27 and 28 of this Form 10-K and “Note N: Commitments and Contingencies” of the “Notes to
Financial Statements” on pages 36 and 37 and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Environmental Regulation and Litigation” on pages 59 and 60
of the 2006 Annual Report. However, future events, such as changes in or modified interpretations
of existing laws and regulations or enforcement policies, or further investigation or evaluation of
the potential health hazards of certain products or business activities, may give rise to
additional compliance and other costs that could have a material adverse effect on the Company.
In general, quarry and mining facilities must comply with air quality, water quality, and
noise regulations, zoning and special use permitting requirements, applicable mining regulations,
and federal health and safety requirements. As new quarry and mining sites are located and
acquired, the Company works closely with local authorities during the zoning and permitting
processes to design new quarries and mines in such a way as to minimize disturbances. The Company
frequently acquires large tracts of land so that quarry, mine, and production facilities can be
situated substantial distances from surrounding property owners. Also, in certain markets the
Company’s ability to transport material by rail and ship allows it to locate its facilities further
away from residential areas. The Company has established policies designed to minimize
disturbances to surrounding property owners from its operations.
As is the case with other companies in the same industry, some of the Company’s products
contain varying amounts of crystalline silica, a common mineral also known as quartz. Excessive,
prolonged inhalation of very small-sized particles of crystalline silica has been associated with
lung diseases, including silicosis, and several scientific organizations and some states, such as
California, have reported that crystalline silica can cause lung cancer. The Mine Safety and
Health Administration and the Occupational Safety and Health Administration have established
occupational thresholds for crystalline silica exposure as respirable dust. The Company monitors
occupational exposures at its facilities and implements dust control procedures and/or makes
available appropriate respiratory protective equipment to maintain the occupational exposures at or
below the appropriate levels. The Company, through safety information sheets and other means, also
communicates what it believes to be appropriate warnings and cautions its employees and customers
about the risks associated with excessive, prolonged inhalation of mineral dust in general and
crystalline silica in particular.
The Clean Air Act Amendments of 1990 required the U.S. Environmental Protection Agency (the
“EPA”) to develop regulations for a broad spectrum of industrial sectors that emit hazardous air
pollutants, including lime manufacturing. The new standards to be established would require plants
in the targeted industries to install feasible control equipment for certain hazardous air
pollutants, thereby significantly reducing air emissions. The Company and other lime manufacturers
through the National Lime Association (“NLA”), the leading industry trade association, worked with
the EPA to define test protocols, better define the scope of the standards, determine the existence
and feasibility of various technologies, and develop realistic emission limitations and continuous
emissions monitoring/reporting requirements for the lime industry. The EPA received comments on
its proposed technology-based standards for the industry in November 2000, and a proposed rule for
the national emission standards for lime manufacturing plants was released on December 20, 2002.
The proposed rules favorably addressed many of the issues raised by NLA in the negotiation process.
NLA and the Company submitted comments on the proposed rules in February 2003. The EPA published
the final rule in the Federal Register on January 5, 2004, and facilities must be in compliance
within three years after the date of publication. The Company successfully achieved
14
compliance with the new technology-based standard by the January 5, 2007, deadline. The costs
associated to comply with the new regulations did not have a material adverse effect on the
financial condition or results of the operations of the Company or of its Magnesia Specialties
business.
In February 1998, the Georgia Department of Natural Resources (“GDNR”) determined that both
the Company and the Georgia Department of Transportation (“GDOT”) are responsible parties for
investigation and remediation at the Company’s Camak Quarry in Thomson, Georgia, due to the
discovery of trichloroethene (“TCE”) above its naturally occurring background concentration in a
drinking water well on site. The Company provided the GDNR with information indicating that the
source of the release was either from an asphalt plant and associated GDOT testing laboratory that
was on the site in the early 1970’s or from a maintenance shop that was operated on the property in
the 1940’s and 1950’s before the Company purchased the property. The Company entered into a
Consent Order with GDNR to conduct an environmental assessment of the site and file a report of the
findings. The Company and GDOT signed an agreement to share evenly the costs of the assessment
work. The assessment report was completed and filed. Based upon the results of the assessment
report, GDOT withdrew from the cost sharing agreement and has indicated it will not share in any
future remediation costs. The Company submitted a corrective action plan to GDNR for approval on
December 9, 2002. GDNR requested additional information which was duly submitted. GDNR approved
the plan on June 28, 2005, and the Company is implementing it. The Company is funding the entire
cost of future investigations and remediation which will occur over several years. Management
believes any costs incurred by the Company associated with the site will not have a material
adverse effect on the Company’s operations or its financial condition.
In December 1998, the GDNR determined that the Company, the GDOT, and two former asphalt plant
operators are responsible parties for investigation and remediation of groundwater contamination at
the Company’s Ruby Quarry in Macon, Georgia. The Company was designated by virtue of its ownership
of the property. GDOT was designated because it operated a testing laboratory at the site. The
two other parties were designated because both entities operated asphalt plants at the site. The
groundwater contamination was discovered when the Company’s tenant vacated the premises and
environmental testing was conducted. The Company and GDOT signed an agreement to share the costs
of the assessment work. The report of the assessment work was filed with the GDNR. GDOT entered
into a Consent Order with GDNR agreeing to conduct additional testing and any necessary remediation
at the site. On May 21, 2001, GDNR issued separate Administrative Orders against the Company and
other responsible parties to require all parties to participate with GDOT to undertake additional
testing and any necessary remediation. The Company and GDOT submitted a corrective action plan to
GDNR for approval on May 20, 2002. GDNR requested additional information in connection with its
consideration of the submitted plan and subsequently approved the plan on July 19, 2004. GDOT
filed an amendment to the plan, which was approved on June 28, 2005. GDOT has been proceeding with
remediation activities which will occur over a number of years. Under Georgia law, responsible
parties are jointly and severally liable, and therefore, the Company is potentially liable for the
full cost of funding any necessary remediation. Management believes any costs incurred by the
Company associated with the site will not have a material adverse effect on the Company’s
operations or its financial condition.
In the vicinity of and beneath the Magnesia Specialties facility in Manistee, Michigan,
facility, there is an underground plume of material originating from adjacent property which
formerly was used by Packaging Corporation of America (“PCA”) as a part of its operations.
Magnesia Specialties
15
believes the plume consists of paper mill waste. On September 8, 1983, the PCA plume and
property were listed on the National Priorities List (“NPL”) under the authority of the
Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund” statute).
The PCA plume is subject to a Record of Decision issued by the U.S. Environmental Protection Agency
(“EPA”) on May 2, 1994, pursuant to which PCA’s successor, Pactiv Corporation (“Pactiv”), is
required to conduct annual monitoring. The EPA has not required remediation of the groundwater
contamination. On January 10, 2002, the Michigan Department of Environmental Quality (“MDEQ”)
issued Notice of Demand letters to Magnesia Specialties, PCA and Pactiv indicating that it believes
that Magnesia Specialties’ chloride contamination is commingling with the PCA plume which
originates upgradient from the Magnesia Specialties property. The MDEQ is concerned about possible
effects of these plumes, and designated Magnesia Specialties, PCA and Pactiv as parties responsible
for investigation and remediation under Michigan state law. The MDEQ held separate meetings with
Magnesia Specialties, PCA, and Pactiv to discuss remediation and reimbursement for past
investigation costs totaling approximately $700,000. Magnesia Specialties entered into an
Administrative Order with the MDEQ to pay for a portion of MDEQ’s past investigation costs and
thereby limit its liability for past costs in the amount of $20,000. Michigan law provides that
responsible parties are jointly and severally liable, and, therefore, Magnesia Specialties is
potentially liable for the full cost of funding future investigative activities and any necessary
remediation. Michigan law also provides a procedure whereby liability may be apportioned among
responsible parties if it is capable of division. The Company believes that the liability most
likely will be apportioned and that any such costs attributed to Magnesia Specialties’ brine
contamination will not have a material adverse effect on the Company’s operations or its financial
condition, but can give no assurance that the liability will be apportioned or that the compliance
costs will not have a material adverse effect on the financial condition or results of the
operations of the Magnesia Specialties business.
Employees
As of February 16, 2007, the Company has approximately 5,500 employees, of which 4,070 are
hourly employees and 1,430 are salaried employees. Included among these employees are 762 hourly
employees represented by labor unions (13.8% of the Company’s employees). Of such amount, 13.7% of
the Company’s Aggregates business’s hourly employees are members of a labor union, while 99% of the
Specialty Products segment’s hourly employees are represented by labor unions. The Company’s
principal union contracts cover employees of the Magnesia Specialties business at the Manistee,
Michigan, magnesia-based chemicals plant and the Woodville, Ohio, lime plant. The Manistee
collective bargaining agreement expires in August 2007. The Woodville collective bargaining
agreement expires in June 2010. While management does not expect any significant issues in
renewing the Manistee labor union agreement, there can be no assurance that a successor agreement
will be reached at the Manistee location this year.
Available Information
The Company maintains an Internet address at www.martinmarietta.com. The Company makes
available free of charge through its Internet web site its annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, if any, filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports and any
amendments are accessed via the Company’s web site through a link with the Electronic Data
Gathering, Analysis, and Retrieval (“EDGAR”) system maintained by the Securities and Exchange
Commission (the
16
“SEC”) at www.sec.gov. Accordingly, the Company’s referenced reports and any amendments are made
available as soon as reasonably practicable after the Company electronically files such material
with, or furnishes it to, the SEC, once EDGAR places such material in its database.
The Company has adopted a Code of Ethics and Standards of Conduct that applies to all of its
directors, officers, and employees. The Company’s code of ethics is available on the Company’s web
site at www.martinmarietta.com. The Company intends to disclose on its Internet web site any
waivers of or amendments to its code of ethics as it applies to its directors and executive
officers.
The Company has adopted a set of Corporate Governance Guidelines to address issues of
fundamental importance relating to the corporate governance of the Company, including director
qualifications and responsibilities, responsibilities of key board committees, director
compensation, and similar issues. Each of the Audit Committee, the Management Development and
Compensation Committee, and the Nominating and Corporate Governance Committee of the Board of
Directors of the Company has adopted a written charter addressing various issues of importance
relating to each committee, including the committee’s purposes and responsibilities, an annual
performance evaluation of each committee, and similar issues. These Corporate Governance
Guidelines, and the charters of each of these committees, are available on the Company’s web site
at www.martinmarietta.com.
The Company will make paper copies of its filings with the SEC, its Code of Ethics and
Standards of Conduct, its Corporate Governance Guidelines, and the charters of its key committees,
available to its shareholders free of charge upon request by writing to: Martin Marietta
Materials, Inc., Attn: Corporate Secretary, 2710 Wycliff Road, Raleigh, North Carolina 27607-3033.
The Company’s Chief Executive Officer and Chief Financial Officer are required to file with
the SEC each quarter and each year certifications regarding the quality of the Company’s public
disclosure of its financial condition. The annual certifications are included as Exhibits to this
Annual Report on Form 10-K. The Company’s Chief Executive Officer is also required to certify to
the New York Stock Exchange each year that he is not aware of any violation by the Company of the
New York Stock Exchange corporate governance listing standards. The filing of these certifications
with the SEC and with the New York Stock Exchange is also disclosed in the Company’s 2006 Annual
Report.
ITEM 1A. RISK FACTORS AND FORWARD-LOOKING STATEMENTS
An investment in our common stock or debt securities involves risks and uncertainties. You
should consider the following factors carefully, in addition to the other information contained in
this Form 10-K, before deciding to purchase or otherwise trade our securities.
This Form 10-K and other written reports and oral statements made from time to time by the
Company contain statements which, to the extent they are not recitations of historical fact,
constitute forward-looking statements within the meaning of federal securities law. Investors are
cautioned that all forward-looking statements involve risks and uncertainties, and are based on
assumptions that the Company believes in good faith are reasonable, but which may be materially
different from actual results. Investors can identify these statements by the fact that they do
not relate only to historic or current facts. The words “may,” “wills,” “could,” “should,”
“anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “outlook,” “plan,” “project,” “scheduled,” and similar expressions
in connection with future events or future operating or financial performance are intended to
identify
17
forward-looking statements. Any or all of the Company’s forward-looking statements in
this Form 10-K and in other publications may turn out to be wrong.
Statements and assumptions on future revenues, income and cash flows, performance, economic
trends, the outcome of litigation, regulatory compliance, and environmental remediation cost
estimates are examples of forward-looking statements. Numerous factors, including potentially the
risk factors described in this section, could affect our forward-looking statements and actual
performance.
Factors that the Company currently believes could cause its actual results to differ
materially from those in the forward-looking statements include, but are not limited to, those set
out below. In addition to the risk factors described below, we urge you to read our Management’s
Discussion and Analysis of Financial Condition and Results of Operations in our 2006 Annual Report
to Shareholders.
Our aggregates business is cyclical and depends on activity within the construction industry.
We sell most of our aggregate products to the construction industry, so our results depend on
the strength of the construction industry. Since our business depends on construction spending,
which can be cyclical, our profits are sensitive to national, regional, and local economic
conditions. Construction spending is affected by economic conditions, changes in interest rates,
demographic and population shifts, and changes in construction spending by federal, state, and
local governments. If economic conditions change, a recession in the construction industry may
occur and affect the demand for our aggregate products. Construction spending can also be
disrupted by terrorist activity and armed conflicts.
While our aggregate operations cover a wide geographic area, our earnings depend on the
strength of the local economies in which we operate because of the high cost to transport our
products relative to their price. If economic conditions and construction spending decline
significantly in one or more areas, particularly in our top five revenue-generating states of North
Carolina, Texas, Georgia, Iowa and South Carolina, our profitability will decrease.
Within the construction industry, we sell our aggregate products for use in both commercial
construction and residential construction. While the outlook for commercial construction is
positive in many markets, residential construction declined in 2006 and is expected to decline
further in 2007. Approximately 20% of our aggregates shipments in 2006 were to the residential
construction market. While we believe the downturn in residential construction will moderate
during the latter part of 2007, we cannot be sure of the existence or timing of any moderation.
Our aggregate products are used in public infrastructure projects, which include the
construction, maintenance, and improvement of highways, bridges, schools, prisons, and similar
projects. So our business is dependent on the level of federal, state, and local spending on these
projects. We cannot be assured of the existence, amount, and timing of appropriations for spending
on these projects. For example, while the current federal highway law passed in 2005 provides
funding of $286.4 billion for highway, transit, and highway safety programs through September 30,
2009, Congress must pass an appropriations bill each year to approve spending these funds. We
cannot be
assured that Congress will pass an appropriations bill each year to approve funding at the level
authorized in the federal highway law. Similarly, each state funds its infrastructure spending
from
18
specially allocated amounts collected from various taxes, typically gasoline taxes and vehicle
fees, along with voter-approved bond programs. Shortages in state tax revenues can reduce the
amounts spent on state infrastructure projects, even below amounts awarded under legislative bills.
Delays in state infrastructure spending can hurt our business. For example, we expect delays in
infrastructure spending in North Carolina and South Carolina will continue in 2007, which will
limit our business growth in those states until the level and timing of spending improves.
Our aggregates business is seasonal and subject to the weather.
Since the construction aggregates business is conducted outdoors, seasonal changes and
other weather conditions affect our business. Adverse weather conditions, including hurricanes and
tropical storms, cold weather, snow, and heavy or sustained rainfall, reduce construction activity
and the demand for our products. Adverse weather conditions also increase our costs and reduce our
production output as a result of power loss, needed plant and equipment repairs, time required to
remove water from flooded operations, and similar events. The construction aggregates business
production and shipment levels follow activity in the construction industry, which typically occur
in the spring, summer and fall. Because of the weather’s effect on the construction industry’s
activity, the aggregates business production and shipment levels vary by quarter. The second and
third quarters are generally the most profitable and the first quarter is generally the least
profitable.
Our aggregates business depends on the availability of aggregate reserves or deposits and our
ability to mine them economically.
Our challenge is to find aggregate deposits that we can mine economically, with appropriate
permits, near either growing markets or long-haul transportation corridors that economically serve
growing markets. As communities have grown, they have taken up attractive quarrying locations and
have imposed restrictions on mining. We try to meet this challenge by identifying and permitting
sites prior to economic expansion, buying more land around our existing quarries to increase our
mineral reserves, developing underground mines, and developing a distribution network that
transports aggregates products by various transportation methods, including rail and water, that
allows us to transport our products longer distances than would normally be considered economical.
Our aggregates business is a capital-intensive business.
The property and machinery needed to produce our products are very expensive. Therefore, we
must have access to large amounts of cash to operate our businesses. We believe we have adequate
cash to run our businesses. Because significant portions of our operating costs are fixed in
nature, our financial results are sensitive to production volume changes.
Our businesses face many competitors.
Our businesses have many competitors, some of whom are bigger and have more resources than we
do. Some of our competitors also operate on a worldwide basis. Our results are affected by the
number of competitors in a market, the production capacity that a particular market can
accommodate, the pricing practices of other competitors, and the entry of new competitors in a
market.
We also face competition for some of our products from alternative products. For example, our
19
magnesia specialties business may compete with other chemical products that could be used instead
of our magnesia-based products.
Our future growth may depend in part on acquiring other businesses in our industry.
We expect to continue to grow, in part, by buying other businesses. While the pace of
acquisitions has slowed considerably over the last few years, we will continue to look for
strategic businesses to acquire. In the past, we have made acquisitions to strengthen our existing
locations, expand our operations, and enter new geographic markets. We will continue to make
selective acquisitions, joint ventures, or other business arrangements we believe will help our
company. However, the continued success of our acquisition program will depend on our ability to
find and buy other attractive businesses at a reasonable price and our ability to integrate
acquired businesses into our existing operations. We cannot assume there will continue to be
attractive acquisition opportunities for sale at reasonable prices that we can successfully
integrate into our operations.
We may decide to pay all or part of the purchase price of any future acquisition with shares
of our common stock. We may also use our stock to make strategic investments in other companies to
complement and expand our operations. If we use our common stock in this way, the ownership
interests of our shareholders will be diluted and the price of our stock could fall. We operate
our businesses with the objective of maximizing the long-term shareholder return.
We acquired 62 companies from 1995 through 2002. Some of these acquisitions were more easily
integrated into our existing operations and have performed as well or better than we expected,
while others have not. We have sold underperforming and other non-strategic assets, particularly
lower margin businesses like our asphalt plants in Houston, Texas, and our road paving businesses
in Shreveport, Louisiana, and Texarkana, Arkansas.
Short supplies and high costs of fuel and energy affect our businesses.
Our businesses require a continued supply of diesel fuel, natural gas, coal, petroleum coke
and other energy. The financial results of these businesses have been affected at times by the
short supply or high costs of these fuels and energy. While we can contract for some fuels and
sources of energy, significant increases in costs or reduced availability of these items have and
may in the future reduce our financial results.
Changes in legal requirements and governmental policies concerning zoning, land use, the
environment, and other areas of the law, and litigation relating to these matters, affect our
businesses. Our operations expose us to the risk of material environmental liabilities.
Many federal, state, and local laws and regulations relating to zoning, land use, the
environment, health, safety, and other regulatory matters govern our operations. We take great
pride in our operations and try to remain in strict compliance at all times with all applicable
laws and regulations. Despite our extensive compliance efforts, risk of liabilities, particularly
environmental liabilities, is inherent in the operation of our businesses, as it is with our
competitors. We cannot assume that these liabilities will not negatively affect us in the future.
20
We are also subject to future events, including changes in existing laws or regulations or
enforcement policies, or further investigation or evaluation of the potential health hazards of
some of our products or business activities, which may result in additional compliance and other
costs. We could be forced to invest in preventive or remedial action, like pollution control
facilities, which could be substantial.
Our operations are subject to manufacturing, operating, and handling risks associated with the
products we produce and the products we use in our operations, including the related storage and
transportation of raw materials, products, hazardous substances, and wastes. We are exposed to
hazards including storage tank leaks, explosions, discharges or releases of hazardous substances,
exposure to dust, and the operation of mobile equipment and manufacturing machinery.
These risks can subject us to potentially significant liabilities relating to personal injury
or death, or property damage, and may result in civil or criminal penalties, which could hurt our
productivity or profitability. For example, from time to time we investigate and remediate
environmental contamination relating to our prior or current operations, as well as operations we
have acquired from others, and in some cases we have been or could be named as a defendant in
litigation brought by governmental agencies or private parties.
We are involved from time to time in litigation and claims arising from our operations. While
we do not believe the outcome of pending or threatened litigation will have a material adverse
effect on our operations or our financial condition, we cannot assume that an adverse outcome in a
pending or future legal action would not negatively affect us.
Labor disputes could disrupt operations of our businesses.
Labor unions represent 13.7% of the hourly employees of our aggregates business and 99% of the
hourly employees of our specialty products business. Our collective bargaining agreements for
employees of our magnesia specialties business at the Woodville, Ohio lime plant and the Manistee,
Michigan magnesia chemicals plant expire in June 2010 and August 2007, respectively. While we do
not expect any significant issues in renewing the Manistee labor union agreement, we cannot be sure
a new agreement will be reached at the Manistee location this year.
Disputes with our trade unions, or the inability to renew our labor agreements, could lead to
strikes or other actions that could disrupt our businesses, raise costs, and reduce revenues and
earnings from the affected locations. We believe we have good relations with all of our employees,
including our unionized employees.
Delays or interruptions in shipping products of our businesses could affect our operations.
Transportation logistics play an important role in allowing us to supply products to our
customers, whether by truck, rail, barge, or ship. Any significant delays, disruptions, or the
non-availability of our transportation support system could negatively affect our operations. For
example, in 2005 and partially in 2006, we experienced rail transportation shortages in Texas and
parts of the southeastern region of the United States. In 2005, following Hurricanes Katrina and
Rita, we experienced significant barge transportation problems along the Mississippi River system.
In 2006, we experienced delays in shipping our materials through Lock 52 on the Ohio River while
scheduled
21
repair and maintenance activities were performed. While the delays have ended, and normal water
traffic has resumed, another two-week planned outage is currently scheduled for August 2007.
Water levels can also affect our ability to transport our products. High water levels limit
the number of barges we can transport and can require that we use additional horsepower to tow
barges. Low water levels can reduce the amount of material we can transport in each barge.
The availability of rail cars and barges can also affect our ability to transport our
products. Rail cars and barges can be used to transport many different types of products. If
owners sell or lease rail cars and barges for use in other industries, we may not have enough rail
cars and barges to transport our products. Barges have become particularly scarce, since barges
are being retired faster than new barges are being built. Shipyards that build barges are
operating at capacity, so the lead time to buy or lease a new barge can extend many months. In
2005, we leased 780 additional rail cars. In 2006, we contracted to buy 50 new barges that will be
delivered in 2007.
We have long-term agreements with shipping companies to provide ships to transport our
aggregate products from our Bahamas and Nova Scotia operations to various coastal ports. These
contracts have varying expiration dates ranging from 2008 to 2017 and generally contain renewal
options. Our inability to renew these agreements or enter into new ones with other shipping
companies could affect our ability to transport our products.
Our earnings are affected by the application of accounting standards and our critical accounting
policies, which involve subjective judgments and estimates by our management. Our estimates and
assumptions could be wrong.
The accounting standards we use in preparing our financial statements are often complex and
require that we make significant estimates and assumptions in interpreting and applying those
standards. We make critical estimates and assumptions involving accounting matters including our
stock-based compensation, our goodwill impairment testing, our expenses and cash requirements for
our pension plans, our estimated income taxes, and how we account for our property, plant and
equipment, and inventory. These estimates and assumptions involve matters that are inherently
uncertain and require our subjective and complex judgments. If we used different estimates and
assumptions or used different ways to determine these estimates, our financial results could
differ.
While we believe our estimates and assumptions are appropriate, we could be wrong.
Accordingly, our financial results could be different, either higher or lower. We urge you to read
about our critical accounting policies in our Management’s Discussion and Analysis of Financial
Condition and Results of Operations in our 2006 Annual Report to Shareholders.
The adoption of new accounting standards may affect our financial results.
The accounting standards we apply in preparing our financial statements are reviewed by
regulatory bodies and are changed from time to time. New or revised accounting standards could
change our financial results either positively or negatively. For example, beginning in 2006, we
were required under new accounting standards to expense the fair value of stock options we award
our management and key employees as part of their compensation. This resulted in a reduction of
our earnings and made comparisons between financial periods more difficult. We urge you to read
about
22
our accounting policies and changes in our accounting policies in Note A of our 2006 financial
statements.
We depend on the recruitment and retention of qualified personnel, and our failure to attract and
retain such personnel could affect our business.
Our success depends to a significant degree upon the continued services of our key personnel
and executive officers. Our prospects depend upon our ability to attract and retain qualified
personnel for our operations. Competition for personnel is intense, and we may not be successful
in attracting or retaining qualified personnel, which could negatively affect our business.
Our magnesia specialties business depends in part on the steel industry and the supply of
reasonably priced fuels.
Our magnesia specialties business sells some of its products to companies in the steel
industry. While we have reduced this risk over the last few years, this business is still
dependent, in part, on the strength of the highly-cyclical steel industry. The magnesia
specialties business also requires significant amounts of natural gas, coal, and petroleum coke,
and financial results are negatively affected by high fuel prices or shortages.
Our structural composites product line has not generated any profits since its inception.
Our structural composites product line faces many challenges before it becomes break-even or
generates a profit. For 2007, we have set specific quarterly benchmarks for the structural
composites product line to achieve in order for us to determine its viability. We cannot ensure the
future profitability of this product line.
Market expectations for our financial performance are high.
We believe that the price of our stock reflects the recent advantageous shift in industry
pricing trends whereby there is increased demand for aggregates along with scarcity of supply in
high-growth areas, which has resulted in prices that are higher than historic levels. If we are
wrong about this change in pricing trends, then other market dynamics such as lower volumes, delays
in infrastructure spending, declines in residential construction, and higher costs could result in
lower pricing and lower earnings. If this happens, the market price of our stock could drop
sharply. The price of our stock may also reflect market expectations regarding further
consolidation of the aggregates industry.
Our articles of incorporation, bylaws, and shareholder rights plan and North Carolina law may
inhibit a change in control that you may favor.
Our articles of incorporation and bylaws, shareholder rights plan, and North Carolina law contain
provisions that may delay, deter or inhibit a future acquisition of us not approved by our board of
directors. This could occur even if our shareholders are offered an attractive value for their
shares or if many or even a majority of our shareholders believe the takeover is in their best
interest. These provisions are intended to encourage any person interested in acquiring us to
negotiate with and obtain the approval of our board of directors in connection with the
transaction. Provisions that could delay, deter, or inhibit a future acquisition include the
following:
23
| |
n |
|
a classified board of directors; |
| |
| |
n |
|
the requirement that our shareholders may only remove directors for cause; |
| |
| |
n |
|
specified requirements for calling special meetings of shareholders; and |
| |
| |
n |
|
the ability of our board of directors to consider the interests of various
constituencies, including our employees, customers, and creditors and the local
community. |
In addition, we have in place a shareholder rights plan that will trigger a dilutive issuance of
common stock upon substantial purchases of our common stock by a third party that are not approved
by the board of directors.
* * * * * * * * * * * * * *
Investors are also cautioned that it is not possible to predict or identify all such factors.
Consequently, the reader should not consider any such list to be a complete statement of all
potential risks or uncertainties. Other factors besides those listed may also adversely affect the
Company and may be material to the Company. The forward-looking statements in this document are
intended to be subject to the safe harbor protection provided by Sections 27A and 21E. These
forward-looking statements are made as of the date hereof based on management’s current
expectations, and the Company does not undertake an obligation to update such statements, whether
as a result of new information, future events, or otherwise.
For a discussion identifying some important factors that could cause actual results to vary
materially from those anticipated in the forward-looking statements, see the Company’s Securities
and Exchange Commission filings, including, but not limited to, the discussion under the heading
“Risk Factors and Forward-Looking Statements” on pages 17-24 of this Form 10-K, the discussion of
“Competition” on page 11 of this Annual Report on Form 10-K, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” on pages 40-81 of the 2006 Annual Report and
“Note A: Accounting Policies” and “Note N: Commitments and Contingencies” of the “Notes to
Financial Statements” on pages 17-24 and pages 36 and 37, respectively, of the Audited Consolidated
Financial Statements included in the 2006 Annual Report.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Aggregates Business
As of December 31, 2006, the Company processed or shipped aggregates from 294 quarries,
underground mines, and distribution yards in 28 states and in Canada and the Bahamas, of which 103
are located on land owned by the Company free of major encumbrances, 59 are on land owned in part
and leased in part, 128 are on leased land, and 4 are on facilities neither owned nor leased, where
raw
materials are removed under an agreement. The Company’s aggregates reserves on the average exceed
24
50 years of production, based on current levels of activity. However, certain locations may be
subject to more limited reserves and may not be able to expand. In addition, as of December 31,
2006, the Company processed and shipped ready mixed concrete and/or asphalt products from 13
properties in 3 states, of which 11 are located on land owned by the Company free of major
encumbrances and 2 are on leased land.
The Company uses various drilling methods, depending on the type of aggregate, to estimate
aggregates reserves that are economically mineable. The extent of drilling varies and depends on
whether the location is a potential new site (greensite), an existing location, or a potential
acquisition. More extensive drilling is performed for potential greensites and acquisitions, and
in rare cases the Company may rely on existing geological data or results of prior drilling by
third parties. Subsequent to drilling, selected core samples are tested for soundness, abrasion
resistance, and other physical properties relevant to the aggregates industry. If the reserves
meet the Company’s standards and are economically mineable, then they are either leased or
purchased.
The Company estimates proven and probable reserves based on the results of drilling. Proven
reserves are reserves of deposits designated using closely spaced drill data, and based on that
data the reserves are believed to be relatively homogenous. Proven reserves have a certainty of
85% to 90%. Probable reserves are reserves that are inferred utilizing fewer drill holes and/or
assumptions about the economically mineable reserves based on local geology or drill results from
adjacent properties. The degree of certainty for probable reserves is 70% to 75%. In determining
the amount of reserves, the Company’s policy is to not include calculations that exceed certain
depths, so for deposits, such as granite, that typically continue to depths well below the ground,
there may be additional deposits that are not included in the reserve calculations. The Company
also deducts reserves not available due to property boundaries, set-backs, and plant
configurations, as deemed appropriate when estimating reserves. For additional information on the
Company’s assessment of reserves, see “Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Other Financial Information — Application of Critical Accounting
Policies — Property, Plant and Equipment” on pages 73 and 74 of the 2006 Annual Report for
discussion of reserves evaluation by the Company.
Set forth in the tables below are the Company’s estimates of reserves of recoverable
aggregates of suitable quality for economic extraction, shown on a state-by-state basis, and the
Company’s total annual production for the last 3 years, along with the Company’s estimate of years
of production available, shown on a segment-by-segment basis. The number of producing quarries
shown on the table include underground mines. The Company’s reserve estimates for the last 2 years
are shown for comparison purposes on a state-by-state basis. The changes in reserve estimates at a
particular state level from year to year reflect the tonnages of reserves on locations that have
been opened or closed during the year, whether by acquisition, disposition, or otherwise;
production and sales in the normal course of business; additional reserve estimates or refinements
of the Company’s existing reserve estimates; opening of additional reserves at existing locations;
the depletion of reserves at existing locations; and other factors. The Company evaluates its
reserve estimates primarily on a Company-wide, or segment-by-segment basis, and does not believe
comparisons of changes in reserve estimates on a state-by-state basis from year to year are
particularly meaningful.
25
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of aggregate |
|
aggregate |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
reserves located at an |
|
reserves on land |
|
|
| |
|
Number of |
|
Tonnage of Reserves for |
|
Tonnage of Reserves for |
|
|
|
|
|
|
|
|
|
existing quarry, and reserves |
|
that has not been |
|
Percent of reserves |
| |
|
Producing |
|
each general type of |
|
each general type of |
|
Change in Tonnage |
|
not located at an existing |
|
zoned for |
|
owned and percent |
| State |
|
Quarries |
|
aggregate at 12/31/05 |
|
aggregate at 12/31/06 |
|
from 2005 |
|
quarry. |
|
quarrying. |
|
leased |
| |
|
|
|
|
|
(Add 000) |
|
|
|
|
|
(Add 000) |
|
|
|
|
|
(Add 000) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
2006 |
|
Hard Rock |
|
S & G |
|
Hard Rock |
|
S & G |
|
Hard Rock |
|
S & G |
|
At Quarry |
|
Not at Quarry |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned |
|
Leased |
Alabama |
|
|
7 |
|
|
|
50,479 |
|
|
|
12,080 |
|
|
|
46,778 |
|
|
|
12,113 |
|
|
|
(3,701 |
) |
|
|
33 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
42 |
% |
|
|
58 |
% |
Arkansas |
|
|
3 |
|
|
|
307,927 |
|
|
|
0 |
|
|
|
278,548 |
|
|
|
0 |
|
|
|
(29,379 |
) |
|
|
0 |
|
|
|
73 |
% |
|
|
27 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
25 |
% |
|
|
75 |
% |
California |
|
|
1 |
|
|
|
35,755 |
|
|
|
0 |
|
|
|
23,993 |
|
|
|
0 |
|
|
|
(11,762 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
30 |
% |
|
|
70 |
% |
Florida |
|
|
2 |
|
|
|
132,062 |
|
|
|
0 |
|
|
|
122,769 |
|
|
|
0 |
|
|
|
(9,293 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
100 |
% |
Georgia |
|
|
9 |
|
|
|
724,395 |
|
|
|
0 |
|
|
|
690,960 |
|
|
|
0 |
|
|
|
(33,435 |
) |
|
|
0 |
|
|
|
84 |
% |
|
|
16 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
62 |
% |
|
|
38 |
% |
Illinois |
|
|
3 |
|
|
|
1,293,814 |
|
|
|
0 |
|
|
|
1,290,204 |
|
|
|
0 |
|
|
|
(3,610 |
) |
|
|
0 |
|
|
|
72 |
% |
|
|
28 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
9 |
% |
|
|
91 |
% |
Indiana |
|
|
11 |
|
|
|
552,463 |
|
|
|
56,030 |
|
|
|
514,724 |
|
|
|
48,566 |
|
|
|
(37,739 |
) |
|
|
(7,464 |
) |
|
|
90 |
% |
|
|
10 |
% |
|
|
|
|
|
|
15 |
% |
|
|
|
|
|
|
43 |
% |
|
|
57 |
% |
Iowa |
|
|
28 |
|
|
|
724,867 |
|
|
|
45,982 |
|
|
|
706,501 |
|
|
|
44,825 |
|
|
|
(18,366 |
) |
|
|
(1,157 |
) |
|
|
99 |
% |
|
|
1 |
% |
|
|
|
|
|
|
1 |
% |
|
|
|
|
|
|
13 |
% |
|
|
87 |
% |
Kansas |
|
|
12 |
|
|
|
211,683 |
|
|
|
0 |
|
|
|
227,023 |
|
|
|
0 |
|
|
|
15,340 |
|
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
35 |
% |
|
|
65 |
% |
Kentucky |
|
|
3 |
|
|
|
626,403 |
|
|
|
0 |
|
|
|
577,767 |
|
|
|
46,255 |
|
|
|
(48,636 |
) |
|
|
46,255 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
15 |
% |
|
|
85 |
% |
Louisiana |
|
|
1 |
|
|
|
0 |
|
|
|
2,500 |
|
|
|
0 |
|
|
|
1,536 |
|
|
|
0 |
|
|
|
(964 |
) |
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
100 |
% |
Maryland |
|
|
2 |
|
|
|
100,575 |
|
|
|
0 |
|
|
|
98,862 |
|
|
|
0 |
|
|
|
(1,713 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
100 |
% |
|
|
0 |
% |
Minnesota |
|
|
2 |
|
|
|
367,532 |
|
|
|
0 |
|
|
|
365,195 |
|
|
|
0 |
|
|
|
(2,337 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
84 |
% |
|
|
16 |
% |
Mississippi |
|
|
2 |
|
|
|
0 |
|
|
|
32,139 |
|
|
|
0 |
|
|
|
31,492 |
|
|
|
0 |
|
|
|
(647 |
) |
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
100 |
% |
|
|
0 |
% |
Missouri |
|
|
9 |
|
|
|
517,313 |
|
|
|
0 |
|
|
|
581,551 |
|
|
|
0 |
|
|
|
64,238 |
|
|
|
0 |
|
|
|
78 |
% |
|
|
12 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
40 |
% |
|
|
60 |
% |
Nebraska |
|
|
3 |
|
|
|
95,070 |
|
|
|
0 |
|
|
|
89,840 |
|
|
|
0 |
|
|
|
(5,230 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
24 |
% |
|
|
76 |
% |
Nevada |
|
|
3 |
|
|
|
17,307 |
|
|
|
0 |
|
|
|
167,624 |
|
|
|
0 |
|
|
|
150,317 |
|
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
100 |
% |
North Carolina |
|
|
40 |
|
|
|
2,445,628 |
|
|
|
2,000 |
|
|
|
2,697,214 |
|
|
|
0 |
|
|
|
251,586 |
|
|
|
(2,000 |
) |
|
|
86 |
% |
|
|
14 |
% |
|
|
|
|
|
|
3 |
% |
|
|
|
|
|
|
68 |
% |
|
|
32 |
% |
Ohio |
|
|
14 |
|
|
|
185,367 |
|
|
|
217,666 |
|
|
|
128,396 |
|
|
|
209,171 |
|
|
|
(56,971 |
) |
|
|
(8,495 |
) |
|
|
72 |
% |
|
|
28 |
% |
|
|
|
|
|
|
3 |
% |
|
|
|
|
|
|
97 |
% |
|
|
3 |
% |
Oklahoma |
|
|
9 |
|
|
|
540,841 |
|
|
|
5,685 |
|
|
|
586,939 |
|
|
|
5,067 |
|
|
|
46,098 |
|
|
|
(618 |
) |
|
|
100 |
% |
|
|
— |
|
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
45 |
% |
|
|
55 |
% |
South Carolina |
|
|
5 |
|
|
|
332,799 |
|
|
|
0 |
|
|
|
405,452 |
|
|
|
0 |
|
|
|
72,653 |
|
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
19 |
% |
|
|
|
|
|
|
76 |
% |
|
|
24 |
% |
Tennessee |
|
|
1 |
|
|
|
0 |
|
|
|
14,760 |
|
|
|
0 |
|
|
|
14,284 |
|
|
|
0 |
|
|
|
(476 |
) |
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
100 |
% |
Texas |
|
|
13 |
|
|
|
1,566,461 |
|
|
|
194,286 |
|
|
|
1,036,996 |
|
|
|
107,802 |
|
|
|
(529,465 |
) |
|
|
(86,484 |
) |
|
|
63 |
% |
|
|
37 |
% |
|
|
|
|
|
|
33 |
% |
|
|
|
|
|
|
60 |
% |
|
|
40 |
% |
Virginia |
|
|
4 |
|
|
|
365,594 |
|
|
|
0 |
|
|
|
401,910 |
|
|
|
0 |
|
|
|
36,316 |
|
|
|
0 |
|
|
|
84 |
% |
|
|
16 |
% |
|
|
|
|
|
|
1 |
% |
|
|
|
|
|
|
69 |
% |
|
|
311 |
% |
Washington |
|
|
3 |
|
|
|
34,232 |
|
|
|
0 |
|
|
|
30,588 |
|
|
|
0 |
|
|
|
(3,644 |
) |
|
|
0 |
|
|
|
85 |
% |
|
|
15 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
7 |
% |
|
|
93 |
% |
West Virginia |
|
|
2 |
|
|
|
101,139 |
|
|
|
0 |
|
|
|
97,500 |
|
|
|
0 |
|
|
|
(3,639 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
20 |
% |
|
|
80 |
% |
Wisconsin |
|
|
1 |
|
|
|
4,296 |
|
|
|
0 |
|
|
|
3,678 |
|
|
|
0 |
|
|
|
(618 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
% |
|
|
100 |
% |
Wyoming |
|
|
1 |
|
|
|
101,317 |
|
|
|
0 |
|
|
|
98,970 |
|
|
|
0 |
|
|
|
(2,347 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
100 |
% |
U. S. Total |
|
|
194 |
|
|
|
11,435,319 |
|
|
|
583,128 |
|
|
|
11,269,982 |
|
|
|
521,111 |
|
|
|
(165,337 |
) |
|
|
(62,017 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
% |
|
|
|
|
|
|
48 |
% |
|
|
52 |
% |
Non-U. S. |
|
|
2 |
|
|
|
943,947 |
|
|
|
0 |
|
|
|
933,568 |
|
|
|
0 |
|
|
|
(10,379 |
) |
|
|
0 |
|
|
|
100 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
|
|
|
|
97 |
% |
|
|
3 |
% |
Grand Total |
|
|
196 |
|
|
|
12,379,266 |
|
|
|
583,128 |
|
|
|
12,203,550 |
|
|
|
521,111 |
|
|
|
(175,716 |
) |
|
|
(62,017 |
) |
|
|
80 |
% |
|
|
20 |
% |
|
|
|
|
|
|
8 |
% |
|
|
|
|
|
|
52 |
% |
|
|
48 |
% |
26
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Annual Production (in tons) (add 000) |
|
Number of years of production |
| |
|
For year ended December 31 |
|
available at December 31, 2006 |
| Reportable Segment |
|
2006 |
|
2005 |
|
2004 |
|
|
|
|
Mideast Group |
|
|
62,005 |
|
|
|
64,792 |
|
|
|
62,297 |
|
|
|
67.7 |
|
Southeast Group |
|
|
56,663 |
|
|
|
56,612 |
|
|
|
55,931 |
|
|
|
73.6 |
|
West Group |
|
|
76,648 |
|
|
|
78,203 |
|
|
|
68,635 |
|
|
|
56.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates
Business |
|
|
195,316 |
|
|
|
199,607 |
|
|
|
186,863 |
|
|
|
65.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Products Business
The Magnesia Specialties business currently operates major manufacturing facilities in
Manistee, Michigan, and Woodville, Ohio, and a smaller processing plant in Bridgeport, Connecticut.
All of these facilities are owned.
The Company leases a 185,000 square foot facility in Sparta, North Carolina, which serves as
the assembly and manufacturing hub for the structural composites product line of Martin Marietta
Composites.
Other Properties
The Company’s principal corporate office, which it owns, is located in Raleigh, North
Carolina. The Company owns and leases various administrative offices for its four reportable
business segments.
The Company’s principal properties, which are of varying ages and are of different
construction types, are believed to be generally in good condition, are generally well maintained,
and are generally suitable and adequate for the purposes for which they are used. During 2006, the
principal properties were believed to be utilized at average productive capacities of approximately
80% and were capable of supporting a higher level of market demand.
ITEM 3. LEGAL PROCEEDINGS
From time to time claims of various types are asserted against the Company arising out of its
operations in the normal course of business, including claims relating to land use and permits,
safety, health, and environmental matters (such as noise abatement, blasting, vibrations, air
emissions, and water discharges). Such matters are subject to many uncertainties, and it is not
possible to determine the probable outcome of, or the amount of liability, if any, from, these
matters. In the opinion of management of the Company (which opinion is based in part upon
consideration of the opinion of
27
counsel), it is unlikely that the outcome of these claims will have a material adverse effect on
the Company’s operations or its financial condition. However, there can be no assurance that an
adverse outcome in any of such litigation would not have a material adverse effect on the Company
or its operating segments.
The Company was not required to pay any penalties in 2006 for failure to disclose certain
“reportable transactions” under Section 6707A of the Internal Revenue Code.
See also “Note N: Commitments and Contingencies” of the “Notes to Financial Statements” on
pages 36 and 37 of the 2006 Annual Report and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — Environmental Regulation and Litigation” on pages 59 and 60
of the 2006 Annual Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of 2006.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information regarding the executive officers of Martin
Marietta Materials, Inc. as of February 16, 2007:
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Year Assumed |
|
Other Positions and Other Business |
| Name |
|
Age |
|
Present Position |
|
Present Position |
|
Experience Within the Last Five Years |
Stephen P. Zelnak, Jr. |
|
62 |
|
Chairman of the Board of Directors; |
|
1997 |
|
President (1993-2006) |
|
|
|
|
Chief Executive Officer; |
|
1993 |
|
|
|
|
|
|
President of Aggregates Business; |
|
1993 |
|
|
|
|
|
|
Chairman of Magnesia |
|
2005 |
|
|
|
|
|
|
Specialties Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Howard Nye |
|
44 |
|
President and Chief Operating Officer |
|
2006 |
|
Executive Vice President, Hanson Aggregates North America (2003-2006); President, Hanson Aggregates East (2000-2003)* |
|
|
|
|
|
|
|
|
|
Daniel G. Shephard |
|
48 |
|
Executive Vice President; |
|
2005 |
|
Vice President-Business Development |
|
|
|
|
Chief Executive Officer |
|
2005 |
|
and Capital Planning (2002-2005); |
|
|
|
|
of Magnesia Specialties |
|
|
|
Senior Vice President (2004-2005); |
|
|
|
|
Business |
|
|
|
Regional Vice President and General |
|
|
|
|
|
|
|
|
Manager-MidAmerica Region (2003-2005); |
|
|
|
|
|
|
|
|
President of Magnesia Specialties Business |
|
|
|
|
|
|
|
|
(1999-2005); |
|
|
|
|
|
|
|
|
Vice President-Marketing (2002-2004); |
|
|
|
|
|
|
|
|
Vice President and Treasurer (2000-2002) |
|
|
|
|
|
|
|
|
|
Philip J. Sipling |
|
59 |
|
Executive Vice President; |
|
1997 |
|
Chairman of Magnesia Specialties |
|
|
|
|
Executive Vice President of |
|
1993 |
|
Business (1997-2005) |
|
|
|
|
Aggregates Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Vaio |
|
46 |
|
President – Martin Marietta |
|
2006 |
|
President – Southwest Division (1998-2006) |
|
|
|
|
Materials West; |
|
|
|
Senior Vice President (2002-2005) |
|
|
|
|
Executive Vice President |
|
2005 |
|
|
28
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Year Assumed |
|
Other Positions and Other Business |
| Name |
|
Age |
|
Present Position |
|
Present Position |
|
Experience Within the Last Five Years |
Roselyn R. Bar |
|
48 |
|
Senior Vice President; |
|
2005 |
|
Vice President (2001-2005) |
|
|
|
|
General Counsel; |
|
2001 |
|
|
|
|
|
|
Corporate Secretary |
|
1997 |
|
|
|
|
|
|
|
|
|
|
|
Anne H. Lloyd |
|
45 |
|
Treasurer; |
|
2006 |
|
Vice President and Controller (1998-2005); |
|
|
|
|
Senior Vice President and |
|
2005 |
|
Chief Accounting Officer (1999-2006) |
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald M. Moe |
|
61 |
|
Senior Vice President; |
|
2001 |
|
Vice President (1999-2001); |
|
|
|
|
Senior Vice President of |
|
1999 |
|
President-Mideast Division of |
|
|
|
|
Aggregates Business |
|
|
|
Aggregates Business (1996-2006) |
|
|
|
|
|
|
|
|
|
Jonathan T. Stewart |
|
58 |
|
Senior Vice President, |
|
2001 |
|
|
|
|
|
|
Human Resources |
|
|
|
|
|
|
|
| * |
|
Prior to his employment with the Company in 2006, Mr. Nye was Executive Vice President of Hanson
Aggregates North America, |
| producer of construction aggregates, since 2003. Prior to that, Mr.
Nye was President of Hanson Aggregates East from 2000 to 2003 with operating responsibility over
150 facilities in 12 states with annual revenues of more than $500 million. |
PART II
|
|
|
| ITEM 5. |
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES |
Market Information, Holders, and Dividends
The Company’s Common Stock, $.01 par value, is traded on the New York Stock Exchange (Symbol:
MLM). Information concerning stock prices and dividends paid is included under the caption
“Quarterly Performance (Unaudited)” on page 82 of the 2006 Annual Report, and that information is
incorporated herein by reference. There were approximately 935 holders of record of the Company’s
Common Stock as of February 16, 2007.
Recent Sales of Unregistered Securities
None.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required in response to this subsection of Item 5 is included in Part III,
under the heading “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters,” on page 32 of this Form 10-K.
29
Issuer Purchases of Equity Securities
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Maximum Number |
|
| |
|
|
|
|
|
|
|
|
|
Shares Purchased as |
|
|
of Shares that May |
|
| |
|
|
|
|
|
|
|
|
|
Part of Publicly |
|
|
Yet be Purchased |
|
| |
|
Total Number of Shares |
|
|
Average Price |
|
|
Announced Plans or |
|
|
Under the Plans or |
|
| Period |
|
Purchased |
|
|
Paid per Share |
|
|
Programs(1) |
|
|
Programs |
|
October 1, 2006 –
October 31, 2006 |
|
|
0 |
|
|
$ |
— |
|
|
|
0 |
|
|
|
4,830,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1, 2006 –
November 30, 2006 |
|
|
120,000 |
|
|
$ |
95.86 |
|
|
|
120,000 |
|
|
|
4,710,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 1, 2006 –
December 31, 2006 |
|
|
480,000 |
|
|
$ |
101.65 |
|
|
|
480,000 |
|
|
|
4,230,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
600,000 |
|
|
$ |
100.49 |
|
|
|
600,000 |
|
|
|
4,230,998 |
|
|
|
|
| (1) |
|
The Company’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. The Company
announced in a press release dated February 22, 2006 that its Board of Directors had
authorized the repurchase of an additional 5 million shares of common stock. |
ITEM 6. SELECTED FINANCIAL DATA
The information required in response to this Item 6 is included under the caption “Five Year
Summary” on page 83 of the 2006 Annual Report, and that information is incorporated herein by
reference.
|
|
|
| ITEM 7. |
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The information required in response to this Item 7 is included under the caption
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages
40-81 of the 2006 Annual Report, and that information is incorporated herein by reference, except
that the information contained under the caption “Management’s Discussion and Analysis of Financial
Condition and Results of Operations-Outlook 2007” on pages 62 and 63 of the 2006 Annual Report is
not incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required in response to this Item 7A is included under the caption
“Management’s Discussion and Analysis of Financial Condition and Results of Operations-Quantitative
and Qualitative Disclosures About Market Risk” on pages 79 and 80 of the 2006 Annual Report, and
that information is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
30
The information required in response to this Item 8 is included under the caption
“Consolidated Statements of Earnings,” “Consolidated Balance Sheets,” “Consolidated Statements of
Cash Flows,” “Consolidated Statements of Shareholders’ Equity,” “Notes to Financial Statements,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and
“Quarterly Performance (Unaudited)” on pages 13-81 of the 2006 Annual Report, and that information is
incorporated herein by reference.
|
|
|
| ITEM 9. |
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE |
None.
ITEM 9A. CONTROLS AND PROCEDURES
As of December 31, 2006, an evaluation was performed under the supervision and with the
participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s
disclosure controls and procedures and the Company’s internal control over financial reporting.
Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the
Company’s disclosure controls and procedures were effective in ensuring that all material
information required to be disclosed is made known to them in a timely manner as of December 31,
2006 and further concluded that the Company’s internal control over financial reporting was
effective in providing reasonable assurance regarding the reliability of financial reporting and
the preparation of the Company’s financial statements for external purposes in accordance with
generally accepted accounting principles as of December 31, 2006.
The Company’s management, including the CEO and CFO, does not expect that the Company’s
control system will prevent all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of
two or more people, or by management override of the control. The design of any system of controls
also is based in part upon certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or fraud may occur and
not be detected.
The Company’s management has issued its annual report on the Company’s internal control over
financial reporting, which included management’s assessment that the Company’s internal control
over financial reporting was effective at December 31, 2006. The Company’s independent registered
31
public accounting firm has issued an attestation report agreeing with management’s assessment that
the Company’s internal control over financial reporting was effective at December 31, 2006.
Management’s report on the Company’s internal controls and the related attestation report of the
Company’s independent registered public accounting firm appear on pages 10 and 11 of the 2006
Annual Report, and those reports are hereby incorporated by reference in this Form 10-K. See also
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Internal
Control and Accounting and Reporting Risk” on page 62 of the 2006 Annual Report.
Included among the Exhibits to this Annual Report on Form 10-K are forms of “Certifications”
of the Company’s CEO and CFO as required in accordance with Section 302 of the Sarbanes-Oxley Act
of 2002 (the “Section 302 Certification”). The Section 302 Certifications refer to this evaluation
of the Company’s disclosure policies and procedures and internal control over financial reporting.
The information in this section should be read in conjunction with the Section 302 Certifications
for a more complete understanding of the topics presented.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information concerning directors of the Company, the Audit Committee of the Board of
Directors, and the Audit Committee financial expert serving on the Audit Committee, all as required
in response to this Item 10, is included under the captions “Corporate Governance Matters” and
“Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s definitive proxy
statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within
120 days after the close of the Company’s fiscal year ended December 31, 2006 (the “2007 Proxy
Statement”), and that information is hereby incorporated by reference in this Form 10-K.
Information concerning executive officers of the Company required in response to this Item 10 is
included in Part I, under the heading “Executive Officers
of the Registrant,” on pages 28 and 29 of
this Form 10-K. The information concerning the Company’s code of ethics required in response to
this Item 10 is included in Part I, under the heading
“Available Information,” on pages 16 and 17
of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this Item 11 is included under the captions “Executive
Compensation,” “Compensation Discussion and Analysis,” “Corporate Governance Matters,” “Management
Development and Compensation Committee Report,” and “Compensation Committee Interlocks and Insider
Participation” in the Company’s 2006 Proxy Statement, and that information, except for the
information required by Items 402(k) and (l) of Regulation S-K, is hereby incorporated by reference
in this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
32
The information required in response to this Item 12 is included under the captions “General
Information,” “Security Ownership of Certain Beneficial Owners and Management,” and “Securities
Authorized for Issuance Under Equity Compensation Plans” in the Company’s 2007 Proxy Statement, and
that information is hereby incorporated by reference in this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required in response to this Item 13 is included under the captions
“Compensation Committee Interlocks and Insider Participation in Compensation Decisions” and
“Corporate Governance Matters” in the Company’s 2007 Proxy Statement, and that information is
hereby incorporated by reference in this Form 10-K.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required in response to this Item 14 is included under the caption
“Independent Auditors” in the Company’s 2007 Proxy Statement, and that information is hereby
incorporated by reference in this Form 10-K.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) List of financial statements filed as part of this Form 10-K.
The following consolidated financial statements of Martin Marietta Materials, Inc. and
consolidated subsidiaries, included in the 2006 Annual Report, are incorporated by reference
into Item 8 on page 30 of this Form 10-K. Page numbers refer to the 2006 Annual Report:
| |
|
|
|
|
| |
|
Page |
|
Consolidated Statements of Earnings—
for years ended December 31, 2006, 2005, and 2004 |
|
|
13 |
|
|
|
|
|
|
Consolidated Balance Sheets—
at December 31, 2006 and 2005 |
|
|
14 |
|
|
|
|
|
|
Consolidated Statements of Cash Flows—
for years ended December 31, 2006, 2005, and 2004 |
|
|
15 |
|
|
|
|
|
|
Consolidated Statements of Shareholders’ Equity—
Balance at December 31, 2006, 2005 and 2004 |
|
|
16 |
|
|
|
|
|
|
Notes to Financial Statements— |
|
|
17-39 |
|
33
(2) List of financial statement schedules filed as part of this Form 10-K
The following financial statement schedule of Martin Marietta Materials, Inc. and
consolidated subsidiaries is included in Item 15(c). The page numbers refer to this Form
10-K.
| |
|
|
|
|
Schedule II — Valuation and Qualifying Accounts |
|
|
38 |
|
All other schedules have been omitted because they are not applicable, not required, or the
information has been otherwise supplied in the financial statements or notes to the
financial statements.
The report of the Company’s independent registered public accounting firm with respect to
the above-referenced financial statements appears on page 12 of the 2006 Annual Report, and
that report is hereby incorporated by reference in this Form 10-K. The report on the
financial statement schedule and the consent of the Company’s independent registered public
accounting firm are attached as Exhibit 23.01 to this Form 10-K.
(3) Exhibits
The
list of Exhibits on the accompanying Index of Exhibits on pages 34-37 of this Form 10-K
is hereby incorporated by reference. Each management contract or compensatory plan or
arrangement required to be filed as an exhibit is indicated by asterisks.
(b) Index of Exhibits
| |
|
|
| Exhibit |
| No. |
| 3.01 |
|
—Restated Articles of Incorporation of the Company, as amended
(incorporated by reference to Exhibits 3.1 and 3.2 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on
October 25, 1996) (Commission File No. 1-12744) |
| |
|
|
| 3.02 |
|
—Articles of Amendment with Respect to the Junior Participating
Class B Preferred Stock of the Company, dated as of October 19,
2006 (incorporated by reference to Exhibit 3.1 to the Martin
Marietta Materials, Inc. Current Report on Form 8-K, filed on
October 19, 2006) (Commission File No. 1-12744) |
| |
|
|
| 3.03 |
|
—Restated Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.01 to the
Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on November 20, 2006) (Commission File No. 1-12744) |
| |
|
|
| 4.01 |
|
—Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.01 to the Martin
Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31,
2003) (Commission File No. 1-12744) |
| |
|
|
| 4.02 |
|
—Articles 2 and 8 of the Company’s Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit
4.02 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996)
(Commission File No. 1-12744) |
| |
|
|
| 4.03 |
|
—Article I of the
Company’s Restated
Bylaws, as amended
(incorporated by
reference to
Exhibit 4.03 to the
Martin Marietta
Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996) (Commission File No. 1-12744) |
| |
|
|
| 4.04 |
|
—Indenture dated as of December 1, 1995 between Martin Marietta Materials, Inc. and First
Union National Bank of North Carolina (incorporated by reference to Exhibit 4(a) to the Martin
Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082)) |
34
| |
|
|
| Exhibit |
| No. |
| 4.05 |
|
—Form of Martin Marietta Materials, Inc. 7% Debenture due 2025 (incorporated by reference to
Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC
Registration No. 33-99082)) |
| |
|
|
| 4.06 |
|
—Form of Martin Marietta Materials, Inc. 6.9% Notes due 2007 (incorporated by reference to
Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC
Registration No. 33-99082)) |
| |
|
|
| 4.08 |
|
—Indenture dated as of December 7, 1998 between Martin Marietta Materials, Inc. and First
Union National Bank (incorporated by reference to Exhibit 4.08 to the Martin Marietta
Materials, Inc. registration statement on Form S-4 (SEC Registration No. 333-71793)) |
| |
|
|
| 4.09 |
|
—Form of Martin Marietta Materials, Inc. 5.875% Note due December 1, 2008 (incorporated by
reference to Exhibit 4.09 to the Martin Marietta Materials, Inc. registration statement on
Form S-4 (SEC Registration No. 333-71793)) |
| |
|
|
| 4.10 |
|
—Form of Martin Marietta Materials, Inc. 6.875% Note due April 1, 2011 (incorporated by
reference to Exhibit 4.12 to the Martin Marietta Materials, Inc. registration statement on
Form S-4 (SEC Registration No. 333-61454)) |
| |
|
|
| 10.01 |
|
—Rights Agreement, dated as of September 27, 2006, by and between Martin Marietta
Materials, Inc. and American Stock Transfer & Trust Company, as Rights Agent, which includes
the Form of Articles of Amendment With Respect to the Junior Participating Class B Preferred
Stock of Martin Marietta Materials, Inc., as Exhibit A, and the Form of Rights Certificate, as
Exhibit B (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form
8-K, filed on September 28, 2006) |
| |
|
|
| 10.02 |
|
—$250,000,000 Five-Year Credit Agreement dated as of June 30, 2005, among Martin Marietta
Materials, Inc., the banks parties thereto, and JPMorgan Chase Bank, N.A., as Administrative
Agent (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc.
Current Report on Form 8-K, filed on June 30, 2005) (Commission File No. 1-12744) |
| |
|
|
| 10.03 |
|
—Extension Agreement to $250,000,000 Five-Year Credit Agreement dated as of June 2, 2006,
among Martin Marietta Materials, Inc., the banks parties thereto, and JPMorgan Chase Bank,
N.A., as Administrative Agent (incorporated by reference to Exhibit 10.03 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
(Commission File No. 1-12744) |
| |
|
|
| 10.04 |
|
—Form of Martin Marietta Materials, Inc. Second Amended and Restated Employment Protection
Agreement (incorporated by reference to Exhibit 10.05 to the Martin Marietta Materials, Inc.
Annual Report on Form 10-K for the fiscal year ended December 31, 2003) (Commission File No.
1-12744)** |
| |
|
|
| 10.05 |
|
—Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for
Directors (incorporated by reference to Exhibit 10.10 to the Martin Marietta Materials, Inc.
Annual Report on Form 10-K for the fiscal year ended December 31, 1996) (Commission File No.
1-12744)** |
| |
|
|
| 10.06 |
|
—Amendment No. 1 to the Amended and Restated Martin Marietta Materials, Inc. Common Stock
Purchase Plan for Directors (incorporated by reference to Exhibit 10.01 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30,
2004) (Commission File No. 1-12744)** |
| |
|
|
| *10.07 |
|
—Martin Marietta Materials, Inc. Amended and Restated Executive Incentive Plan** |
| |
|
|
| 10.08 |
|
—Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to
Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995) (Commission File No. 1-12744)** |
35
| |
|
|
| Exhibit |
| No. |
| 10.09 |
|
—Amendment No. 1 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated
by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997) (Commission File No. 1-12744)** |
| |
|
|
| 10.10 |
|
—Amendment No. 2 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated
by reference to Exhibit 10.13 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 1999) (Commission File No. 1-12744)** |
| |
|
|
| 10.11 |
|
—Amendment No. 3 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated
by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly Report on Form
10-Q for the quarter ended June 30, 2000) (Commission File No. 1-12744)** |
| |
|
|
| 10.12 |
|
—Amendment No. 4 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated
by reference to Exhibit 10.14 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2000) (Commission File No. 1-12744)** |
| |
|
|
| 10.13 |
|
—Amendment No. 5 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated
by reference to Exhibit 10.03 to the Martin Marietta Materials, Inc. Quarterly Report on Form
10-Q for the quarter ended June 30, 2001) (Commission File No. 1-12744)** |
| |
|
|
| 10.14 |
|
—Amendment No. 6 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated
by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly Report on Form
10-Q for the quarter ended September 30, 2003) (Commission File No. 1-12744)** |
| |
|
|
| 10.15 |
|
—Amendment No. 7 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated
by reference to Exhibit 10.15 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2005) (Commission File No. 1-12744)** |
| |
|
|
| 10.16 |
|
—Martin Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan dated April
3, 2006 (incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc.
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006) (Commission File No.
1-12744)** |
| |
|
|
| 10.17 |
|
—Amended and Restated Consulting Agreement dated June 26, 2006, between Janice Henry and
Martin Marietta Materials, Inc. (incorporated by reference to Exhibit 10.02 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
(Commission File No. 1-12744)** |
| |
|
|
| 10.18 |
|
—Martin Marietta Materials, Inc. Amended Omnibus Securities Award Plan (incorporated by
reference to Exhibit 10.16 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K
for the fiscal year ended December 31, 2000) (Commission File No. 1-12744)** |
| |
|
|
| 10.19 |
|
—Martin Marietta Materials, Inc. Supplemental Excess Retirement Plan (incorporated by
reference to Exhibit 10.16 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K
for the fiscal year ending December 31, 1999) (Commission File No. 1-12744)** |
| |
|
|
| 10.20 |
|
—First Amendment to Martin Marietta Materials, Inc. Supplemental Excess Retirement Plan
(incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly
Report on Form 10-Q for the quarter ended March 31, 2006) (Commission File No. 1-12744)** |
| |
|
|
| 10.21 |
|
—Form of Option Award Agreement under the Martin Marietta Materials, Inc. Amended and
Restated Stock-Based Award Plan (incorporated by reference to Exhibit 10.01 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2005)
(Commission File No. 1-12744)** |
| |
|
|
| 10.22 |
|
—Form of Restricted Stock Unit Agreement under the Martin Marietta Materials, Inc. Amended
and Restated Stock-Based Award Plan (incorporated by reference to Exhibit 10.02 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2005) (Commission File No.
1-12744)** |
| |
|
|
| *12.01 |
|
—Computation of ratio of earnings to fixed charges for the year ended December 31, 2006 |
| |
|
|
| *13.01 |
|
—Martin Marietta Materials, Inc. 2006 Annual Report to Shareholders, portions of
which are incorporated by reference in this Form 10-K. Those portions of the
2006 Annual Report to Shareholders that are not incorporated by reference shall not be deemed
to be “filed” as part of this report. |
36
| |
|
|
| Exhibit |
| No. |
| *21.01 |
|
—List of subsidiaries of Martin Marietta Materials, Inc. |
| |
|
|
| *23.01 |
|
—Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm for
Martin Marietta Materials, Inc. and consolidated subsidiaries |
| |
|
|
| *24.01 |
|
—Powers
of Attorney (included in this Form 10-K at page 39) |
| |
|
|
| *31.01 |
|
—Certification dated February 27, 2007 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 February 27, 2007 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 |
|
—Certification dated February 27, 2007 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 |
|
—Certification dated February 27, 2007 of Chief Financial Officer required by 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Other material incorporated by reference:
Martin Marietta Materials, Inc.’s 2007 Proxy Statement filed pursuant to Regulation 14A,
portions of which are incorporated by reference in this Form 10-K. Those portions of the
2007 Proxy Statement which are not incorporated by reference shall not be deemed to be
“filed” as part of this report.
|
|
|
| * |
|
Filed herewith |
| |
| ** |
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K |
37
(c) Financial Statement Schedule
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Col A |
|
Col B |
|
Col C |
|
Col D |
|
Col E |
| |
|
|
|
|
|
Additions |
|
|
|
|
|
|
| |
|
|
|
|
|
(1) |
|
(2) |
|
|
|
|
|
|
| |
|
|
|
|
|
Charged |
|
Charged to |
|
|
|
|
|
|
| |
|
Balance at |
|
to costs |
|
other |
|
|
|
|
|
Balance at |
| |
|
beginning |
|
and |
|
accounts |
|
Deductions |
|
end of |
| Description |
|
of period |
|
expenses |
|
describe |
|
describe |
|
period |
| (Amounts in Thousands) |
Year ended December 31, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
5,545 |
|
|
|
|
|
|
|
|
|
|
$ |
640 |
(a) |
|
$ |
4,905 |
|
Allowance for uncollectible
notes receivable |
|
|
795 |
|
|
$ |
58 |
|
|
|
|
|
|
|
|
|
|
|
853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory valuation allowance |
|
|
12,101 |
|
|
|
3,093 |
|
|
|
|
|
|
|
973 |
(e) |
|
|
14,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
213 |
(b) |
|
|
|
|
intangible assets |
|
|
29,399 |
|
|
|
3,858 |
|
|
|
|
|
|
|
12,374 |
(c) |
|
|
20,670 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
6,505 |
|
|
|
|
|
|
|
|
|
|
$ |
960 |
(a) |
|
$ |
5,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for uncollectible
notes receivable |
|
|
737 |
|
|
$ |
58 |
|
|
|
|
|
|
|
|
|
|
|
795 |
|
Inventory valuation allowance |
|
|
5,463 |
|
|
|
6,638 |
|
|
|
|
|
|
|
|
|
|
|
12,101 |
|
Accumulated amortization of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,328 |
(b) |
|
|
|
|
intangible assets |
|
|
29,605 |
|
|
|
3,964 |
|
|
|
|
|
|
|
2,842 |
(c) |
|
|
29,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts |
|
$ |
4,594 |
|
|
$ |
1,911 |
|
|
|
|
|
|
|
|
|
|
$ |
6,505 |
|
Allowance for uncollectible
notes receivable |
|
|
602 |
|
|
|
192 |
|
|
|
|
|
|
$ |
57 |
(a) |
|
|
737 |
|
Inventory valuation allowance |
|
|
5,990 |
|
|
|
945 |
|
|
|
|
|
|
|
1,393 |
(a) |
|
|
5,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79 |
(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,119 |
(b) |
|
|
|
|
intangible assets |
|
|
28,356 |
|
|
|
4,677 |
|
|
|
|
|
|
|
1,309 |
(c) |
|
|
29,605 |
|
|
|
|
| (a) |
|
To adjust allowance for change in estimates. |
| |
| (b) |
|
Divestitures. |
| |
| (c) |
|
Write off of fully amortized intangible assets. |
| |
| (d) |
|
Write off of uncollectible accounts against allowance. |
| |
| (e) |
|
Write off of fully reserved inventory. |
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
| |
By: |
/s/ Roselyn R. Bar
|
|
| |
|
Roselyn R. Bar |
|
| |
|
Senior Vice President, General Counsel
and Corporate Secretary |
|
| |
Dated: February 27, 2007
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below appoints
Roselyn R. Bar and M. Guy Brooks, III, jointly and severally, as his or her true and lawful
attorney-in-fact, each with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all amendments to this
Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact, jointly and severally, full power and authority to do and perform each in
connection therewith, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact, jointly and severally, or
their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
39
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the capacities and on the dates
indicated:
| |
|
|
|
|
| Signature |
|
Title |
|
Date |
/s/ Stephen P. Zelnak, Jr.
Stephen P. Zelnak, Jr.
|
|
Chairman of the Board and
Chief Executive Officer
|
|
February 27, 2007 |
|
|
|
|
|
/s/ Anne H. Lloyd
Anne H. Lloyd
|
|
Senior Vice President,
Chief Financial Officer and
Treasurer
|
|
February 27, 2007 |
|
|
|
|
|
/s/ Dana F. Guzzo
Dana F. Guzzo
|
|
Vice President, Controller and
Chief Accounting Officer
|
|
February 27, 2007 |
|
|
|
|
|
/s/ Marcus C. Bennett
Marcus C. Bennett
|
|
Director
|
|
February 27, 2007 |
|
|
|
|
|
/s/ Sue W. Cole
Sue W. Cole
|
|
Director
|
|
February 27, 2007 |
|
|
|
|
|
/s/ David G. Maffucci
David G. Maffucci
|
|
Director
|
|
February 27, 2007 |
|
|
|
|
|
/s/ William E. McDonald
William E. McDonald
|
|
Director
|
|
February 27, 2007 |
|
|
|
|
|
/s/ Frank H. Menaker, Jr.
Frank H. Menaker, Jr.
|
|
Director
|
|
February 27, 2007 |
|
|
|
|
|
/s/ Laree E. Perez
Laree E. Perez
|
|
Director
|
|
February 27, 2007 |
40
| |
|
|
|
|
| Signature |
|
Title |
|
Date |
/s/ Dennis L. Rediker
Dennis L. Rediker
|
|
Director
|
|
February 27, 2007 |
|
|
|
|
|
/s/ Richard A. Vinroot
Richard A. Vinroot
|
|
Director
|
|
February 27, 2007 |
41
EXHIBITS
| |
|
|
| Exhibit |
| No. |
| 3.01 |
|
—Restated Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibits 3.1
and 3.2 to the Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on October 25, 1996) (Commission File No. 1-12744) |
| |
|
|
| 3.02 |
|
—Articles of Amendment with Respect to the Junior Participating Class B Preferred Stock of the
Company, dated as of October 19, 2006 (incorporated by reference to Exhibit 3.1 to the
Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on October 19, 2006) (Commission File No. 1-12744) |
| |
|
|
| 3.03 |
|
—Restated Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.01 to the
Martin Marietta Materials, Inc. Current Report on Form 8-K, filed on November 20, 2006) (Commission File No. 1-12744) |
| |
|
|
| 4.01 |
|
—Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.01 to the Martin
Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31,
2003) (Commission File No. 1-12744) |
| |
|
|
| 4.02 |
|
—Articles 2 and 8 of the Company’s Restated Articles of Incorporation, as amended (incorporated
by reference to Exhibit 4.02 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996) (Commission File No. 1-12744) |
| |
|
|
| 4.03 |
|
—Article I of the Company’s Restated Bylaws, as amended (incorporated by reference to Exhibit
4.03 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996) (Commission File No. 1-12744) |
| |
|
|
| 4.04 |
|
—Indenture dated as of December 1, 1995 between Martin Marietta Materials, Inc. and First Union
National Bank of North Carolina (incorporated by reference to Exhibit 4(a) to the Martin
Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082)) |
| |
|
|
| 4.05 |
|
—Form of Martin Marietta Materials, Inc. 7% Debenture due 2025 (incorporated by reference to
Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3 (SEC Registration No. 33-99082)) |
| |
|
|
| 4.06 |
|
—Form of Martin Marietta Materials, Inc. 6.9% Notes due 2007 (incorporated by reference to
Exhibit 4(a)(i) to the Martin Marietta Materials, Inc. registration statement on Form S-3
(SEC Registration No. 33-99082)) |
| |
|
|
| 4.08 |
|
—Indenture dated as of December 7, 1998 between Martin Marietta Materials, Inc. and First Union National
Bank (incorporated by reference to Exhibit 4.08 to the Martin Marietta Materials, Inc.
registration statement on Form S-4 (SEC Registration No. 333-71793)) |
| |
|
|
| 4.09 |
|
—Form of Martin Marietta Materials, Inc. 5.875% Note due December 1, 2008 (incorporated by reference to
Exhibit 4.09 to the Martin Marietta Materials, Inc. registration statement on Form S-4 (SEC
Registration No. 333-71793)) |
| |
|
|
| 4.10 |
|
—Form of Martin Marietta Materials, Inc. 6.875% Note due April 1, 2011 (incorporated by reference to
Exhibit 4.12 to the Martin Marietta Materials, Inc. registration statement on Form S-4 (SEC
Registration No. 333-61454)) |
| |
|
|
| 10.01 |
|
—Rights Agreement, dated as of September 27, 2006, by and between Martin Marietta Materials, Inc.
and American Stock Transfer & Trust Company, as Rights Agent, which includes the Form of
Articles of Amendment With Respect to the Junior Participating Class B Preferred Stock of
Martin Marietta Materials, Inc., as Exhibit A, and the Form of Rights Certificate, as Exhibit B (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on
Form 8-K, filed on September 28, 2006) |
| |
|
|
| Exhibit |
| No. |
| 10.02 |
|
—$250,000,000 Five-Year Credit Agreement dated as of June 30, 2005, among Martin Marietta
Materials, Inc., the banks parties thereto, and JPMorgan Chase Bank, N.A., as
Administrative Agent (incorporated by reference to Exhibit 10.01 to the Martin Marietta
Materials, Inc. Current Report on Form 8-K, filed on June 30, 2005) (Commission File No.
1-12744) |
| |
|
|
| 10.03 |
|
—Extension Agreement to $250,000,000 Five-Year Credit Agreement dated as of June 2, 2006, among
Martin Marietta Materials, Inc., the banks parties thereto, and JPMorgan Chase Bank, N.A.,
as Administrative Agent (incorporated by reference to Exhibit 10.03 to the Martin Marietta
Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2006)
(Commission File No. 1-12744) |
| |
|
|
| 10.04 |
|
—Form of Martin Marietta Materials, Inc. Second Amended and Restated Employment Protection
Agreement (incorporated by reference to Exhibit 10.05 to the Martin Marietta Materials,
Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2003) (Commission
File No. 1-12744)** |
| |
|
|
| 10.05 |
|
—Amended and Restated Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors
(incorporated by reference to Exhibit 10.10 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1996) (Commission File No. 1-12744)** |
| |
|
|
| 10.06 |
|
—Amendment No. 1 to the Amended and Restated Martin Marietta Materials, Inc. Common Stock
Purchase Plan for Directors (incorporated by reference to Exhibit 10.01 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30,
2004) (Commission File No. 1-12744)** |
| |
|
|
| *10.07 |
|
—Martin Marietta Materials, Inc. Amended and Restated Executive Incentive Plan** |
| |
|
|
| 10.08 |
|
—Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by reference to Exhibit
10.01 to the Martin Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995) (Commission File No. 1-12744)** |
| |
|
|
| 10.09 |
|
—Amendment No. 1 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by
reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly Report on Form
10-Q for the quarter ended September 30, 1997) (Commission File No. 1-12744)** |
| |
|
|
| 10.10 |
|
—Amendment No. 2 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by
reference to Exhibit 10.13 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 1999) (Commission File No. 1-12744)** |
| |
|
|
| 10.11 |
|
—Amendment No. 3 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by
reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly Report on Form
10-Q for the quarter ended June 30, 2000) (Commission File No. 1-12744)** |
| |
|
|
| 10.12 |
|
—Amendment No. 4 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by
reference to Exhibit 10.14 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2000) (Commission File No. 1-12744)** |
| |
|
|
| 10.13 |
|
—Amendment No. 5 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by
reference to Exhibit 10.03 to the Martin Marietta Materials, Inc. Quarterly Report on Form
10-Q for the quarter ended June 30, 2001) (Commission File No. 1-12744)** |
| |
|
|
| 10.14 |
|
—Amendment No. 6 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by
reference to Exhibit 10.01 to the Martin Marietta Materials, Inc. Quarterly Report on Form
10-Q for the quarter ended September 30, 2003) (Commission File No. 1-12744)** |
| |
|
|
| Exhibit |
| No. |
| 10.15 |
|
—Amendment No. 7 to the Martin Marietta Materials, Inc. Incentive Stock Plan (incorporated by
reference to Exhibit 10.15 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2005) (Commission File No. 1-12744)** |
| |
|
|
| 10.16 |
|
—Martin Marietta Materials, Inc. Amended and Restated Stock-Based Award Plan dated April 3, 2006
(incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc.
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006) (Commission File No.
1-12744)** |
| |
|
|
| 10.17 |
|
—Amended and Restated Consulting Agreement dated June 26, 2006, between Janice Henry and Martin
Marietta Materials, Inc. (incorporated by reference to Exhibit 10.02 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30,
2006) (Commission File No. 1-12744)** |
| |
|
|
| 10.18 |
|
—Martin Marietta Materials, Inc. Amended Omnibus Securities Award Plan (incorporated by
reference to Exhibit 10.16 to the Martin Marietta Materials, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2000) (Commission File No. 1-12744)** |
| |
|
|
| 10.19 |
|
—Martin Marietta Materials, Inc. Supplemental Excess Retirement Plan (incorporated by reference
to Exhibit 10.16 to the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the
fiscal year ending December 31, 1999) (Commission File No. 1-12744)** |
| |
|
|
| 10.20 |
|
—First Amendment to Martin Marietta Materials, Inc. Supplemental Excess Retirement Plan
(incorporated by reference to Exhibit 10.01 to the Martin Marietta Materials, Inc.
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006) (Commission File No.
1-12744)** |
| |
|
|
| 10.21 |
|
—Form of Option Award Agreement under the Martin Marietta Materials, Inc. Amended and Restated
Stock-Based Award Plan (incorporated by reference to Exhibit 10.01 to the Martin Marietta
Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2005)
(Commission File No. 1-12744)** |
| |
|
|
| 10.22 |
|
—Form of Restricted Stock Unit Agreement under the Martin Marietta Materials, Inc. Amended and
Restated Stock-Based Award Plan (incorporated by reference to Exhibit 10.02 to the Martin
Marietta Materials, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30,
2005) (Commission File No. 1-12744)** |
| |
|
|
| *12.01 |
|
—Computation of ratio of earnings to fixed charges for the year ended December 31, 2006 |
| |
|
|
| *13.01 |
|
—Martin Marietta Materials, Inc. 2006 Annual Report to Shareholders, portions of which are
incorporated by reference in this Form 10-K. Those portions of the 2006 Annual Report to
Shareholders that are not incorporated by reference shall not be deemed to be “filed” as
part of this report. |
| |
|
|
| *21.01 |
|
—List of subsidiaries of Martin Marietta Materials, Inc. |
| |
|
|
| *23.01 |
|
—Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm for Martin Marietta
Materials, Inc. and consolidated subsidiaries |
| |
|
|
| *24.01 |
|
—Powers
of Attorney (included in this Form 10-K at page 39) |
| |
|
|
| *31.01 |
|
—Certification dated February 27, 2007 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 February 27, 2007 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 |
|
—Certification dated February 27, 2007 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 |
|
—Certification dated February 27, 2007 of Chief Financial Officer required by 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
Other material incorporated by reference:
Martin Marietta Materials, Inc.’s 2007 Proxy Statement filed pursuant to Regulation 14A,
portions of which are incorporated by reference in this Form 10-K. Those portions of the
2007 Proxy Statement which are not incorporated by reference shall not be deemed to be
“filed” as part of this report.
|
|
|
| * |
|
Filed herewith |
| |
| ** |
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K |