XML 64 R8.htm IDEA: XBRL DOCUMENT
v3.19.3

Significant Accounting Policies | 9 Months Ended
--- | ---
Sep. 30, 2019
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 in 27 states, Canada and the Bahamas. 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, southwestern South Carolina, 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. 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 Accounting Standards Codification 842 – Leases (ASC 842), 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, 2018. 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, 2019 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2018 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, 2018. During the second quarter ended June 30, 2019, the Company identified a prior-period error that overstated its earnings from a nonconsolidated equity affiliate. The overstatement was not deemed material to the current period or any previously reported periods and was therefore corrected as an out-of-period expense of $15.7 million during the quarter ended June 30, 2019. The pretax noncash adjustment is recorded in other nonoperating expenses, consistent with the recurring classification of equity earnings from the nonconsolidated affiliate. New Accounting Pronouncement Leases Effective January 1, 2019, the Company adopted ASC 842, which requires virtually all leases, excluding mineral interest leases, to be recorded as right-of-use (ROU) assets and lease liabilities on the balance sheet and provides guidance on the recognition of lease expense and income. ASC 842 requires the modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. It further states that 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 used the effective date as the date of initial application. As such, financial information and disclosures required under ASC 842 will not be provided for dates and periods prior to January 1, 2019. The lease standard provides a number of practical expedients for transition and policy elections for ongoing accounting. The Company elected 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 elected the practical expedients pertaining to the use of hindsight and to land easements. Applying the hindsight practical expedient resulted in longer lease terms for many leases. The standard provides policy election options for recognition exemption for short-term leases and separation of lease and non-lease components. The Company elected the short-term lease recognition exemption and elected not to separate lease and non-lease components for all underlying asset classes, with the exceptions of railcars and fleet vehicle leases. The Company determines lease and non-lease components based on observable information, including rates provided by the lessor. The adoption of ASC 842 resulted in the recognition of ROU assets and lease liabilities of $502.5 million and $501.6 million, respectively, for operating leases and $10.9 million and $12.1 million, respectively, for finance leases. The adoption did not have a material impact on the Company’s consolidated statement of earnings or consolidated statement of cash flows. Subsequent to the date of adoption, the Company determines if a contract is or contains a lease at inception of the agreement. Operating and finance leases are recognized as ROU assets and the related obligations are recognized as current or noncurrent liabilities on the Company’s consolidated balance sheets. Leases with an initial lease term of one year or less are not recorded on the balance sheet. ROU assets, which represent the Company’s right to use an underlying asset, and lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, are recognized based on the present value of the future lease payments over the lease term at commencement date. The ROU asset also includes any lease payments made at or before commencement date and any initial direct costs incurred and excludes lease incentives. Certain of the Company’s leases contain renewal and/or termination options. The Company recognizes renewal or termination options as part of its ROU assets and lease liabilities when the Company has the unilateral right to renew or terminate and it is reasonably certain these options will be exercised. The Company determines the present value of lease payments based on the implicit rate, which may be explicitly stated in the lease if available or may be the Company’s estimated collateralized incremental borrowing rate based on the term of the lease. For operating leases, l ease expense is recognized on a straight-line basis over the lease term. Some leases require the Company pay non-lease components, which may include taxes, maintenance, insurance and certain other expenses applicable to the leased property, and are primarily considered variable costs. The Company generally accounts for lease and non-lease components as a single amount. However, for railcars and fleet vehicle leases, the Company separately accounts for the lease and non-lease components. Pending Accounting Pronouncement In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (ASU 2016-13), which is effective and will be adopted January 1, 2020. ASU 2016-13 includes a current expected credit loss (CECL) model that requires an entity to estimate credit losses expected over the life of an exposure or pool of exposures based on historical information, current information and reasonable and supportable forecasts at the time the asset is recognized and is remeasured at each reporting period. ASU 2016-13 primarily relates to the Company’s receivables, but the scope also includes retainage and contract assets related to its paving business. The Company has evaluated ASU 2016-13 and the adoption will not have a material impact on its financial position or statement of earnings and comprehensive earnings. 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, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
|  | (Dollars in Thousands) |
Net earnings attributable to Martin Marietta Materials, Inc. |  | $ | 248,573 |  |  | $ | 180,221 |  |  | $ | 480,901 |  |  | $ | 375,621 |
Other comprehensive earnings, net of tax |  |  | 2,569 |  |  |  | 4,392 |  |  |  | 8,814 |  |  |  | 7,613 |
Comprehensive earnings attributable to Martin Marietta Materials, Inc. |  | $ | 251,142 |  |  | $ | 184,613 |  |  | $ | 489,715 |  |  | $ | 383,234 |
Comprehensive earnings attributable to noncontrolling interests, consisting of net earnings and adjustments for the funded status of pension and postretirement benefit plans, are as follows:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
|  | (Dollars in Thousands) |
Net earnings attributable to noncontrolling interests |  | $ | 49 |  |  | $ | 132 |  |  | $ | 17 |  |  | $ | 275 |
Other comprehensive earnings, net of tax |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |
Comprehensive earnings attributable to noncontrolling interests |  | $ | 49 |  |  | $ | 132 |  |  | $ | 17 |  |  | $ | 276 |
Changes in accumulated other comprehensive loss, net of tax, are as follows:
|  | (Dollars in Thousands) |
|  | Pension and Postretirement Benefit Plans |  |  | Foreign Currency |  |  | Unamortized Value of Terminated Forward Starting Interest Rate Swap |  |  | Accumulated Other Comprehensive Loss |
|  | Three Months Ended September 30, 2019 |
Balance at beginning of period |  | $ | (136,021 | ) |  | $ | (1,313 | ) |  | $ | — |  |  | $ | (137,334 | )
Amounts reclassified from accumulated other comprehensive loss, net of tax |  |  | 2,726 |  |  |  | (157 | ) |  |  | — |  |  |  | 2,569 |
Balance at end of period |  | $ | (133,295 | ) |  | $ | (1,470 | ) |  | $ | — |  |  | $ | (134,765 | )
|  | 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 | )
|  | Nine Months Ended September 30, 2019 |
Balance at beginning of period |  | $ | (141,505 | ) |  | $ | (2,074 | ) |  | $ | — |  |  | $ | (143,579 | )
Amounts reclassified from accumulated other comprehensive loss, net of tax |  |  | 8,210 |  |  |  | 604 |  |  |  | — |  |  |  | 8,814 |
Balance at end of period |  | $ | (133,295 | ) |  | $ | (1,470 | ) |  | $ | — |  |  | $ | (134,765 | )
|  | 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 | )
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, 2019 |
Balance at beginning of period |  | $ | 82,417 |  |  | $ | — |  |  | $ | 82,417 |
Tax effect of other comprehensive earnings |  |  | (899 | ) |  |  | — |  |  |  | (899 | )
Balance at end of period |  | $ | 81,518 |  |  | $ | — |  |  | $ | 81,518 |
|  | 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 |
|  | Nine Months Ended September 30, 2019 |
Balance at beginning of period |  | $ | 84,207 |  |  | $ | — |  |  | $ | 84,207 |
Tax effect of other comprehensive earnings |  |  | (2,689 | ) |  |  | — |  |  |  | (2,689 | )
Balance at end of period |  | $ | 81,518 |  |  | $ | — |  |  | $ | 81,518 |
|  | 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 |
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
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |  |  | comprehensive earnings
|  | (Dollars in Thousands) |  |  |
Pension and postretirement benefit plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Settlement expense |  | $ | — |  |  | $ | 2,692 |  |  | $ | — |  |  | $ | 2,692 |  |  |
Amortization of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service credit |  |  | (188 | ) |  |  | (492 | ) |  |  | (566 | ) |  |  | (1,479 | ) |  |
Actuarial loss |  |  | 3,813 |  |  |  | 3,153 |  |  |  | 11,465 |  |  |  | 9,463 |  |  |
|  |  | 3,625 |  |  |  | 5,353 |  |  |  | 10,899 |  |  |  | 10,676 |  |  | Other nonoperating (income) and expense, net
Tax benefit |  |  | (899 | ) |  |  | (1,326 | ) |  |  | (2,689 | ) |  |  | (2,645 | ) |  | Income tax expense
|  | $ | 2,726 |  |  | $ | 4,027 |  |  | $ | 8,210 |  |  | $ | 8,031 |  |  |
Unamortized value of terminated forward starting interest rate swap |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Additional interest expense |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 458 |  |  | Interest expense
Tax benefit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (178 | ) |  | Income tax expense
|  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 280 |  |  |
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, 2019 and 2018, 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. 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, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
|  | (In Thousands) |
Net earnings attributable to Martin Marietta Materials, Inc. |  | $ | 248,573 |  |  | $ | 180,221 |  |  | $ | 480,901 |  |  | $ | 375,621 |
Less: Distributed and undistributed earnings attributable to unvested awards |  |  | 345 |  |  |  | 271 |  |  |  | 886 |  |  |  | 672 |
Basic and diluted net earnings available to common shareholders attributable to Martin Marietta Materials, Inc. |  | $ | 248,228 |  |  | $ | 179,950 |  |  | $ | 480,015 |  |  | $ | 374,949 |
Basic weighted-average common shares outstanding |  |  | 62,510 |  |  |  | 62,932 |  |  |  | 62,552 |  |  |  | 62,970 |
Effect of dilutive employee and director awards |  |  | 169 |  |  |  | 235 |  |  |  | 173 |  |  |  | 254 |
Diluted weighted-average common shares outstanding |  |  | 62,679 |  |  |  | 63,167 |  |  |  | 62,725 |  |  |  | 63,224 |

X
- References No definition available. + Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_OrganizationConsolidationBasisOfPresentationBusinessDescriptionAndAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration