Page 183 - Martin Marietta - 2023 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

proven reserves that are recorded reflect reductions incurred through quarrying that result from leaving ramps, safety
benches, pillars (underground) and the fines (small particles) that will be generated during processing. Proven reserves
are further reduced by reserves that are under the plant and stockpile areas, as well as setbacks from neighboring
property lines. The Company typically assumes a loss factor of 25%. However, the assumed loss factor at coastal
operations is approximately 40% due to the nature of the material. The assumed loss factor for underground
operations is 35% primarily due to pillars.
Probable Reserves – These reserves are inferred utilizing fewer drill holes and/or assumptions about the economically
recoverable reserves based on local geology or drill results from adjacent properties.
The Company’s proven and probable reserves reflect reasonable economic and operating constraints as to maximum depth of
overburden and stone excavation, and also include reserves at the Company’s inactive and undeveloped sites, including some
sites where permitting and zoning applications will not be filed until warranted by expected future growth. The Company has
historically been successful in obtaining and maintaining appropriate zoning and permitting (see Environmental Regulation and
Litigation section).

Mineral reserves and mineral interests, when acquired in connection with a business combination, are valued using an excess
earnings approach for the life of the proven and probable reserves.
The Company uses proven and probable reserves as the denominator in its units‐of‐production calculation to record depletion
expense for its mineral reserves and mineral interests. For 2022, depletion expense was $59.8 million.
The Company begins capitalizing quarry development costs at a point when reserves are determined to be proven or probable,
economically mineable and when demand supports investment in the market. Capitalization of these costs ceases when
production commences. Capitalized quarry development costs are classified as land improvements.

New mining areas may be developed at existing quarries in order to access additional reserves. When this occurs, management
reviews the facts and circumstances of each situation in making a determination as to the appropriateness of capitalizing or
expensing the related pre‐production development costs. If the additional mining location operates in a separate and distinct
area of a quarry, the costs are capitalized as quarry development costs and depreciated over the life of the uncovered reserves.
Further, a separate asset retirement obligation is created for additional mining areas when the liabilityis incurred. Once a new
mining area enters the production phase, all post‐production stripping costs are expensed as incurred as periodic inventory
production costs.

Forward‐Looking Statements – Safe Harbor Provisions Under the Private Securities Litigation Reform
Act of 1995
If you are interested in Martin Marietta stock, management recommends that, at a minimum, you read the Company’s current
annual report and Forms 10‐K, 10‐Q and 8‐K reports to the Securities and Exchange Commission (SEC) over the past year. The
Company’s recent proxy statement for the annual meeting of shareholders also contains important information. These and
other materials that have been filed with the SEC are accessible through the Company’s website at www.martinmarietta.com
and are also available at the SEC’s website at www.sec.gov. You may also write or call the Company’s Corporate Secretary, who
will provide copies of such reports.
Investors are cautioned that all statements in this Annual Report that relate to the future 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. These statements, which are forward‐looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and 27A of the Securities Act of 1933, and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, provide the investor with the Company’s expectations or forecasts offuture events.
You can identify these statements by the fact that they do not relate only to historical or current facts. They may use words
such as “anticipate,” “may,” “expect,” “should,” “believe,” “project,” “intend,” “will,” and other words of similar meaning in
connection with future events or future operating or financial performance. In addition to the statements included in this
report, we mayfrom time to time make other oral or written forward‐looking statements in other filings under the Securities
Exchange Act of 1934 or in other public disclosures. Any or all of management’s forward‐looking statements here and in other
publications may turn out to be wrong.

These forward‐looking statements are subject to risks and uncertainties, and are based on assumptions that may be materially
different from actual results, and include, but are not limited to:

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