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Significant Accounting Policies | 9 Months Ended
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Sep. 30, 2018
Accounting Policies [Abstract] |
Significant Accounting Policies |
1. | Significant Accounting Policies
Organization Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. The Company supplies aggregates (crushed stone, sand and gravel) through its network of more than 300 quarries, mines and distribution yards to its customers in 30 states, Canada, the Bahamas and the Caribbean Islands. In the western United States, Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in vertically-integrated structured markets where the Company has a leading aggregates position. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business. The Company’s Building Materials business includes three reportable segments: the Mid-America Group, the Southeast Group and the West Group.
BUILDING MATERIALS BUSINESS
Reportable Segments |  | Mid-America Group |  | Southeast Group |  | West Group
Operating Locations |  | Indiana, Iowa, northern Kansas, Kentucky, Maryland, Minnesota, Missouri, eastern Nebraska, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, Washington and West Virginia |  | Alabama, Florida, Georgia, Tennessee, Nova Scotia and the Bahamas |  | Arkansas, Colorado, southern Kansas, Louisiana, western Nebraska, Nevada, Oklahoma, Texas, Utah and Wyoming
Product Lines |  | Aggregates |  | Aggregates |  | Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving
The Company has a Magnesia Specialties business with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers in the steel and mining industries.
1. | Significant Accounting Policies (continued)
Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. Other than the required adoption of two new accounting pronouncements described below, the Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods. The consolidated results of operations for the three- and nine-months ended September 30, 2018 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2017 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. New Accounting Pronouncements Revenue from Contracts with Customers Effective January 1, 2018, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which changes the evaluation and accounting for revenue recognition under contracts with customers and enhances financial statement disclosures. The Company implemented ASU 2014-09 using the modified retrospective approach. The adoption had an immaterial impact on the Company’s financial position and results of operations but required new disclosures (see Note 2). Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments Effective January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which provides clarification or additional guidance on certain transactions and its classification on the statement of cash flows on a retrospective basis. The adoption had an immaterial impact on the Company’s statement of cash flows.
1. | Significant Accounting Policies (continued)
Pending Accounting Pronouncement Lease Standard In February 2016, the Financial Accounting Standards Board (FASB) issued a new accounting standard, Accounting Standards Codification 842 – Leases (ASC 842), intending to improve financial reporting of leases and to provide more transparency into off-balance sheet leasing obligations. The guidance requires virtually all leases, excluding mineral interest leases, to be recorded as right-to-use assets and lease liabilities on the balance sheet and provides guidance on the recognition of lease expense and income. Effective January 1, 2019, with early adoption permitted, ASC 842 requires the modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. An entity may use either 1) its effective date or 2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company will adopt the new standard effective January 1, 2019 and will use the effective date as the date of initial application. As such, financial information will not be updated and disclosures required under ASC 842 will not be provided for dates and periods prior to January 1, 2019. The new standard provides a number of practical expedients for transition and policy elections for ongoing accounting. The Company expects to elect the “package of practical expedients”, which permits the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs. The Company plans to elect the practical expedients pertaining to the use of hindsight and to land easements. The standard provides policy election options for recognition exemption for short-term leases and separation of lease and non-lease components. The Company will elect the short-term lease recognition exemption and expects to elect not to separate lease and non-lease components for all underlying asset classes with the exceptions of railcars and fleet leases. Although the Company has not determined the full impact of ASC 842, the Company expects the adoption of ASC 842 to have a material impact on its financial statements, specifically right-to-use assets and lease liabilities on the balance sheet and note disclosures pertaining to leasing activities.
1. | Significant Accounting Policies (continued)
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss Consolidated comprehensive earnings/loss and accumulated other comprehensive loss consist of consolidated net earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; foreign currency translation adjustments; and the amortization of the value of terminated forward starting interest rate swap agreements into interest expense, and are presented in the Company’s consolidated statements of earnings and comprehensive earnings. Comprehensive earnings attributable to Martin Marietta is as follows:
|  | Three-Months Ended |  |  | Nine-Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | (Dollars in Thousands) |
Net earnings attributable to Martin Marietta Materials, Inc. |  | $ | 180,221 |  |  | $ | 151,546 |  |  | $ | 375,621 |  |  | $ | 336,159 |
Other comprehensive earnings, net of tax |  |  | 4,392 |  |  |  | 2,978 |  |  |  | 7,613 |  |  |  | 7,759 |
Comprehensive earnings attributable to Martin Marietta Materials, Inc. |  | $ | 184,613 |  |  | $ | 154,524 |  |  | $ | 383,234 |  |  | $ | 343,918 |
Comprehensive earnings attributable to noncontrolling interests, consisting of net earnings and adjustments for the funded status of pension and postretirement benefit plans, is as follows:
|  | Three-Months Ended |  |  | Nine-Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | (Dollars in Thousands) |
Net earnings (loss) attributable to noncontrolling interests |  | $ | 132 |  |  | $ | (7 | ) |  | $ | 275 |  |  | $ | (72 | )
Other comprehensive earnings, net of tax |  |  | — |  |  |  | 8 |  |  |  | 1 |  |  |  | 10 |
Comprehensive earnings (loss) attributable to noncontrolling interests |  | $ | 132 |  |  | $ | 1 |  |  | $ | 276 |  |  | $ | (62 | )
1. | Significant Accounting Policies (continued)
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued) Changes in accumulated other comprehensive earnings, net of tax, are as follows:
|  | (Dollars in Thousands) |
|  |  |  |  |  |  |  |  |  | Unamortized |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Value of |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Terminated |  |  | Accumulated |
|  | Pension and |  |  |  |  |  |  | Forward Starting |  |  | Other |
|  | Postretirement |  |  | Foreign |  |  | Interest Rate |  |  | Comprehensive |
|  | Benefit Plans |  |  | Currency |  |  | Swap |  |  | Loss |
|  | Three-Months Ended September 30, 2018 |
Balance at beginning of period |  | $ | (124,798 | ) |  | $ | (1,085 | ) |  | $ | — |  |  | $ | (125,883 | )
Other comprehensive earnings before reclassifications, net of tax |  |  | — |  |  |  | 365 |  |  |  | — |  |  |  | 365 |
Amounts reclassified from accumulated other comprehensive loss, net of tax |  |  | 4,027 |  |  |  | — |  |  |  | — |  |  |  | 4,027 |
Other comprehensive earnings, net of tax |  |  | 4,027 |  |  |  | 365 |  |  |  | — |  |  |  | 4,392 |
Balance at end of period |  | $ | (120,771 | ) |  | $ | (720 | ) |  | $ | — |  |  | $ | (121,491 | )
|  | Three-Months Ended September 30, 2017 |
Balance at beginning of period |  | $ | (124,553 | ) |  | $ | (636 | ) |  | $ | (717 | ) |  | $ | (125,906 | )
Other comprehensive earnings before reclassifications, net of tax |  |  | — |  |  |  | 838 |  |  |  | — |  |  |  | 838 |
Amounts reclassified from accumulated other comprehensive loss, net of tax |  |  | 1,918 |  |  |  | — |  |  |  | 222 |  |  |  | 2,140 |
Other comprehensive earnings, net of tax |  |  | 1,918 |  |  |  | 838 |  |  |  | 222 |  |  |  | 2,978 |
Balance at end of period |  | $ | (122,635 | ) |  | $ | 202 |  |  | $ | (495 | ) |  | $ | (122,928 | )
1. | Significant Accounting Policies (continued)
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)
|  | (Dollars in Thousands) |
|  |  |  |  |  |  |  |  |  | Unamortized |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Value of |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Terminated |  |  | Accumulated |
|  | Pension and |  |  |  |  |  |  | Forward Starting |  |  | Other |
|  | Postretirement |  |  | Foreign |  |  | Interest Rate |  |  | Comprehensive |
|  | Benefit Plans |  |  | Currency |  |  | Swap |  |  | Loss |
|  | Nine-Months Ended September 30, 2018 |
Balance at beginning of period |  | $ | (128,802 | ) |  | $ | (22 | ) |  | $ | (280 | ) |  | $ | (129,104 | )
Other comprehensive loss before reclassifications, net of tax |  |  | — |  |  |  | (698 | ) |  |  | — |  |  |  | (698 | )
Amounts reclassified from accumulated other comprehensive loss, net of tax |  |  | 8,031 |  |  |  | — |  |  |  | 280 |  |  |  | 8,311 |
Other comprehensive earnings (loss), net of tax |  |  | 8,031 |  |  |  | (698 | ) |  |  | 280 |  |  |  | 7,613 |
Balance at end of period |  | $ | (120,771 | ) |  | $ | (720 | ) |  | $ | — |  |  | $ | (121,491 | )
|  | Nine-Months Ended September 30, 2017 |
Balance at beginning of period |  | $ | (128,373 | ) |  | $ | (1,162 | ) |  | $ | (1,152 | ) |  | $ | (130,687 | )
Other comprehensive earnings before reclassifications, net of tax |  |  | — |  |  |  | 1,364 |  |  |  | — |  |  |  | 1,364 |
Amounts reclassified from accumulated other comprehensive loss, net of tax |  |  | 5,738 |  |  |  | — |  |  |  | 657 |  |  |  | 6,395 |
Other comprehensive earnings, net of tax |  |  | 5,738 |  |  |  | 1,364 |  |  |  | 657 |  |  |  | 7,759 |
Balance at end of period |  | $ | (122,635 | ) |  | $ | 202 |  |  | $ | (495 | ) |  | $ | (122,928 | )
1. | Significant Accounting Policies (continued)
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued) Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive loss are as follows:
|  | (Dollars in Thousands) |
|  | Pension and Postretirement Benefit Plans |  |  | Unamortized Value of Terminated Forward Starting Interest Rate Swap |  |  | Net Noncurrent Deferred Tax Assets |
|  | Three-Months Ended September 30, 2018 |
Balance at beginning of period |  | $ | 78,619 |  |  | $ | — |  |  | $ | 78,619 |
Tax effect of other comprehensive earnings |  |  | (1,326 | ) |  |  | — |  |  |  | (1,326 | )
Balance at end of period |  | $ | 77,293 |  |  | $ | — |  |  | $ | 77,293 |
|  | Three-Months Ended September 30, 2017 |
Balance at beginning of period |  | $ | 79,675 |  |  | $ | 464 |  |  | $ | 80,139 |
Tax effect of other comprehensive earnings |  |  | (1,193 | ) |  |  | (147 | ) |  |  | (1,340 | )
Balance at end of period |  | $ | 78,482 |  |  | $ | 317 |  |  | $ | 78,799 |
|  | Nine-Months Ended September 30, 2018 |
Balance at beginning of period |  | $ | 79,938 |  |  | $ | 178 |  |  | $ | 80,116 |
Tax effect of other comprehensive earnings |  |  | (2,645 | ) |  |  | (178 | ) |  |  | (2,823 | )
Balance at end of period |  | $ | 77,293 |  |  | $ | — |  |  | $ | 77,293 |
|  | Nine-Months Ended September 30, 2017 |
Balance at beginning of period |  | $ | 82,044 |  |  | $ | 749 |  |  | $ | 82,793 |
Tax effect of other comprehensive earnings |  |  | (3,562 | ) |  |  | (432 | ) |  |  | (3,994 | )
Balance at end of period |  | $ | 78,482 |  |  | $ | 317 |  |  | $ | 78,799 |
1. | Significant Accounting Policies (continued)
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued) Reclassifications out of accumulated other comprehensive loss are as follows:
|  | Three-Months Ended |  |  | Nine-Months Ended |  |  | Affected line items in the consolidated
|  | September 30, |  |  | September 30, |  |  | statements of earnings and
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  |  | comprehensive earnings
|  | (Dollars in Thousands) |  |  |
Pension and postretirement benefit plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Settlement expense |  | $ | 2,692 |  |  | $ | — |  |  | $ | 2,692 |  |  | $ | — |  |  |
Amortization of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service credit |  |  | (492 | ) |  |  | (402 | ) |  |  | (1,479 | ) |  |  | (1,070 | ) |  |
Actuarial loss |  |  | 3,153 |  |  |  | 3,513 |  |  |  | 9,463 |  |  |  | 10,370 |  |  |
|  |  | 5,353 |  |  |  | 3,111 |  |  |  | 10,676 |  |  |  | 9,300 |  |  | Other nonoperating income, net
Tax benefit |  |  | (1,326 | ) |  |  | (1,193 | ) |  |  | (2,645 | ) |  |  | (3,562 | ) |  | Income tax expense
|  | $ | 4,027 |  |  | $ | 1,918 |  |  | $ | 8,031 |  |  | $ | 5,738 |  |  |
Unamortized value of terminated forward starting interest rate swap |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Additional interest expense |  | $ | — |  |  | $ | 369 |  |  | $ | 458 |  |  | $ | 1,089 |  |  | Interest expense
Tax benefit |  |  | — |  |  |  | (147 | ) |  |  | (178 | ) |  |  | (432 | ) |  | Income tax expense
|  | $ | — |  |  | $ | 222 |  |  | $ | 280 |  |  | $ | 657 |  |  |
Earnings per Common Share The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta Materials, Inc. reduced by dividends and undistributed earnings attributable to certain of the Company’s stock-based compensation. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Company’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three- and nine-months ended September 30, 2018 and 2017, the diluted per-share computations reflect the number of common shares outstanding to include the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.
1. | Significant Accounting Policies (continued)
Earnings per Common Share The following table reconciles the numerator and denominator for basic and diluted earnings per common share:
|  | Three-Months Ended |  |  | Nine-Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | (In Thousands) |
Net earnings attributable to Martin Marietta Materials, Inc. |  | $ | 180,221 |  |  | $ | 151,546 |  |  | $ | 375,621 |  |  | $ | 336,159 |
Less: Distributed and undistributed earnings attributable to unvested awards |  |  | 271 |  |  |  | 399 |  |  |  | 672 |  |  |  | 1,000 |
Basic and diluted net earnings available to common shareholders attributable to Martin Marietta Materials, Inc. |  | $ | 179,950 |  |  | $ | 151,147 |  |  | $ | 374,949 |  |  | $ | 335,159 |
Basic weighted-average common shares outstanding |  |  | 62,932 |  |  |  | 62,896 |  |  |  | 62,970 |  |  |  | 62,940 |
Effect of dilutive employee and director awards |  |  | 235 |  |  |  | 262 |  |  |  | 254 |  |  |  | 278 |
Diluted weighted-average common shares outstanding |  |  | 63,167 |  |  |  | 63,158 |  |  |  | 63,224 |  |  |  | 63,218 |

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- Definition The entire disclosure for the general note to the financial statements for the reporting entity which may include, descriptions of the basis of presentation, business description, significant accounting policies, consolidations, reclassifications, new pronouncements not yet adopted and changes in accounting principles. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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