Summary of MARTIN MARIETTA MATERIALS INC

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Third Quarter and Nine Months Ended September 30, 2008 Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
OVERVIEW Martin Marietta Materials, Inc. (the "Corporation"), conducts its operations through four reportable business segments: Mideast Group, Southeast Group, West Group (collectively, the "Aggregates business") and Specialty Products. The Corporation's net sales and earnings are predominately derived from its Aggregates business, which processes and sells granite, limestone, and other aggregates products from a network of 289 quarries, distribution facilities and plants to customers in 31 states, Canada, the Bahamas and the Caribbean Islands. The Aggregates business' products are used primarily by commercial customers principally in domestic construction of highways and other infrastructure projects and for commercial and residential buildings. The Specialty Products segment produces magnesia-based chemicals products used in industrial, agricultural and environmental applications; dolomitic lime sold primarily to customers in the steel industry; and structural composite products. CRITICAL ACCOUNTING POLICIES The Corporation outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on February 25, 2008. The following presents an update to the Property, Plant and Equipment critical accounting policy:
The Corporation 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. Quarry development costs are classified as land improvements.
There is diversity within the mining industry regarding the accounting treatment used to record pre-production stripping costs. At existing quarries, new pits may be developed to access additional reserves. Some companies within the industry expense pre-production stripping costs associated with new pits within a quarry. In making its determination as to the appropriateness of capitalizing or expensing pre-production stripping costs, management reviews the facts and circumstances of each situation when additional pits are developed within an existing quarry. If the additional pit 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 pits when the liability is incurred. Once a pit enters the production phase, all post-production stripping costs are expensed as incurred as periodic inventory production costs. During the nine months ended September 30, 2008, the Corporation capitalized $2.4 million of quarry development costs for a new pit being created at its Three Rivers quarry in Smithland, Kentucky.

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                              Three Months Ended             Nine Months Ended
                                 September 30,                 September 30,
                              2008          2007           2008            2007
           Gross profit     $ 151,616     $ 167,314     $   366,211     $   439,091


           Total revenues   $ 599,210     $ 615,382     $ 1,648,597     $ 1,662,309


           Gross margin          25.3 %        27.2 %          22.2 %          26.4 %

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         MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
                                   FORM 10-Q
                    For the Quarter Ended September 30, 2008
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS
             Third Quarter and Nine Months Ended September 30, 2008
                                  (Continued)
Gross Margin Excluding Freight and Delivery Revenues

                                                  Three Months Ended                  Nine Months Ended
                                                    September 30,                       September 30,
                                                2008             2007              2008               2007
Gross profit                                  $ 151,616        $ 167,314        $   366,211        $   439,091


Total revenues                                $ 599,210        $ 615,382        $ 1,648,597        $ 1,662,309
Less: Freight and delivery revenues             (73,059 )        (70,993 )         (199,732 )         (178,357 )

Net sales                                     $ 526,151        $ 544,389        $ 1,448,865        $ 1,483,952


Gross margin excluding freight and
delivery revenues                                  28.8 %           30.7 %             25.3 %             29.6 %

Operating Margin in Accordance with GAAP

                                   Three Months Ended             Nine Months Ended
                                      September 30,                 September 30,
                                   2008          2007           2008            2007
      Earnings from operations   $ 114,957     $ 136,881     $   262,687     $   331,005


      Total revenues             $ 599,210     $ 615,382     $ 1,648,597     $ 1,662,309


      Operating margin                19.2 %        22.2 %          15.9 %          19.9 %

Operating Margin Excluding Freight and Delivery Revenues

                                                  Three Months Ended                  Nine Months Ended
                                                    September 30,                       September 30,
                                                2008             2007              2008               2007
Earnings from operations                      $ 114,957        $ 136,881        $   262,687        $   331,005


Total revenues                                $ 599,210        $ 615,382        $ 1,648,597        $ 1,662,309
Less: Freight and delivery revenues             (73,059 )        (70,993 )         (199,732 )         (178,357 )

Net sales                                     $ 526,151        $ 544,389        $ 1,448,865        $ 1,483,952


Operating margin excluding freight and
delivery revenues                                  21.8 %           25.1 %             18.1 %             22.3 %

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• Cost of petroleum-based products increased $16 million, reducing earnings per diluted share by $0.23

• Heritage aggregates product line pricing up 7.5%, volume down 13.3%

• Consolidated net sales of $526.2 million, down 3% compared with the prior-year quarter

• Record Specialty Products' net sales, up 18% from the prior-year quarter

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                                                                  Three Months Ended September 30,
                                                              2008                                 2007
                                                                      % of                                 % of
                                                  Amount            Net Sales           Amount           Net Sales
                                                                      (Dollars in Thousands)
Net sales:
Mideast Group                                    $ 167,722                             $ 193,299
Southeast Group                                    119,071                               117,385
West Group                                         193,015                               194,469

Total Aggregates Business                          479,808                100.0          505,153              100.0
Specialty Products                                  46,343                100.0           39,236              100.0

Total                                            $ 526,151                100.0        $ 544,389              100.0


Gross profit:
Mideast Group                                    $  70,918                             $  79,099
Southeast Group                                     21,960                                25,323
West Group                                          49,249                                51,245

Total Aggregates Business                          142,127                 29.6          155,667               30.8
Specialty Products                                  10,923                 23.6           11,690               29.8
Corporate                                           (1,434 )                  -              (43 )                -

Total                                            $ 151,616                 28.8        $ 167,314               30.7


Selling, general & administrative expenses:
Mideast Group                                    $  11,070                             $  10,887
Southeast Group                                      6,417                                 6,347
West Group                                          11,065                                11,520

Total Aggregates Business                           28,552                  6.0           28,754                5.7
Specialty Products                                   2,501                  5.4            2,592                6.6
Corporate                                            6,681                    -            5,093                  -

Total                                            $  37,734                  7.2        $  36,439                6.7

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         MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
                                   FORM 10-Q
                    For the Quarter Ended September 30, 2008
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS
             Third Quarter and Nine Months Ended September 30, 2008
                                  (Continued)

                                                Three Months Ended September 30,
                                               2008                           2007
                                                      % of                           % of
                                     Amount         Net Sales        Amount        Net Sales
                                                    (Dollars in Thousands)
 Earnings (Loss) from operations:
 Mideast Group                      $  60,943                       $  68,594
 Southeast Group                       13,067                          19,877
 West Group                            38,391                          45,642

 Total Aggregates Business            112,401              23.4       134,113            26.5
 Specialty Products                     8,632              18.6         8,966            22.9
 Corporate                             (6,076 )               -        (6,198 )             -

 Total                              $ 114,957              21.8     $ 136,881            25.1

Third-quarter results highlight the Corporation's ability to adapt its business to successfully address the most challenging economic times in its history. Aggregates volumes declined for the tenth consecutive quarter, diesel fuel and natural gas costs escalated 47% during the quarter, and adverse weather conditions in the wake of Tropical Storm Fay and Hurricanes Gustav, Hannah and Ike had a negative impact on operations not only in the Gulf Coast region, but also in the Southeast and Central United States as the storm systems moved inland. Nevertheless, the Corporation's management team and employees again balanced the productive capacity of its operations to market demand and aggressively addressed controllable costs.
The Aggregates business continued to achieve sustainable pricing growth within all groups with heritage aggregates product line pricing up 7.5% for the quarter. With the exception of Iowa and Arkansas, the difficult economic environment caused aggregates volumes to fall in all of the business' states with the overall volume in the heritage aggregates business declining 13.3%. The strong farm economy, coupled with increased alternative energy construction in Iowa and energy expansion projects in Arkansas, East Texas and Northwest Louisiana, supported volume growth in these areas. Infrastructure and commercial construction demand remains challenging, most notably from the lack of credit availability, which has stalled overall construction activity. The West Group experienced its first quarterly volume decline of the year, reflecting the impact of the hurricanes as well as weakness in construction activity. The Corporation estimates that the third-quarter hurricane season caused the West Group to reduce shipments by 0.8 million tons and, when coupled with lost sales and increased production costs from storms in the Mideast and Southeast Groups, adverse weather lowered profitability of the Aggregates business by $5.6 million, or $0.08 per diluted share.

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         MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
                                   FORM 10-Q
                    For the Quarter Ended September 30, 2008
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS
             Third Quarter and Nine Months Ended September 30, 2008
                                  (Continued)
The following tables present volume and pricing data and shipments data for the
aggregates product line. Heritage aggregates operations exclude volume and
pricing data for acquisitions that were not included in prior-year operations
for the comparable period and divestitures.

                                                      Three Months Ended
                                                      September 30, 2008
                                                      Volume        Pricing
          Volume/Pricing Variance (1)
          Heritage Aggregates Product Line (2):
          Mideast Group                                (21.1 %)         9.9 %
          Southeast Group                              (14.6 %)         8.7 %
          West Group                                    (5.4 %)         6.7 %
          Heritage Aggregates Operations               (13.3 %)         7.5 %
          Aggregates Product Line (3)                  (12.4 %)         7.8 %



                                                      Three Months Ended
                                                        September 30,
                                                      2008           2007
                                                     (tons in thousands)
           Shipments
           Heritage Aggregates Product Line (2):
           Mideast Group                                15,185       19,254
           Southeast Group                               9,454       11,066
           West Group                                   19,773       20,902

           Heritage Aggregates Operations               44,412       51,222
           Acquisitions                                    911            -
           Divestitures (4)                                123          656

           Aggregates Product Line (3)                  45,446       51,878

(1) Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.

(2) Heritage Aggregates Product Line excludes volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and divestitures.

(3) Aggregates Product Line includes all acquisitions from the date of acquisition and divestitures through the date of disposal.

(4) Divestitures include the tons related to divested aggregates product line operations up to the date of divestiture.

The Aggregates business is significantly affected by seasonal changes and other weather-related conditions. Aggregates production and shipment levels coincide with general construction activity levels, most of which occurs in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations concentrated in the northern United States generally experience more severe winter weather conditions than operations in the Southeast and Southwest. Excessive rainfall, and conversely excessive drought, can also jeopardize shipments, production and profitability. Because of the potentially significant impact of weather on the Corporation's operations, third quarter results are not indicative of expected performance for other interim periods or the full year.

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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES FORM 10-Q For the Quarter Ended September 30, 2008 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Third Quarter and Nine Months Ended September 30, 2008
(Continued)
The Specialty Products segment, which includes magnesia chemicals, dolomitic lime and targeted activity in structural composites, delivered record net sales of $46.3 million for the 2008 third quarter, an increase of 18.1% compared with the prior-year quarter. The United States' steel market has remained positive, leading to increased dolomitic lime demand. Similarly, the Corporation has experienced increased demand for magnesia-based chemicals products used in a number of environmental applications as well as for its heat resistant products. Earnings from operations of $8.6 million decreased 3.7% compared with the prior-year quarter due to rising diesel fuel and natural gas costs.
Although petroleum-based energy prices are beginning to decline, increased costs of petroleum-based products continued to have a negative impact on both costs and sales in the past quarter. Liquid asphalt, which is used in the production of asphalt paving products, increased 128% over the prior year with average prices approaching $800 per ton at their peak. The Corporation's customers, and often times end users, cannot react quickly enough to these escalating costs and, when possible, have chosen to defer work in anticipation of future potential cost reductions. The rise in the cost of petroleum-based products resulted in additional production costs of $16 million, or $0.23 per diluted share, for the quarter.
Consolidated selling, general and administrative expenses of $37.7 million for the quarter ended September 30, 2008 included a settlement charge of $2.6 million for payment to retired employees of vested benefits provided by the Corporation's SERP (Supplemental Excess Retirement Plan). Selling, general and administrative expense, excluding this charge, were $35.1 million as compared with $36.4 million in the prior-year quarter, reflecting the Corporation's continued focus on cost management.
Among other items, other operating income and expenses, net, includes gains and losses on the sale of assets; gains and losses related to certain accounts receivable; rental, royalty and services income; and the accretion and depreciation expenses related to Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations. For the third quarter, consolidated other operating income and expenses, net, was income of $1.2 million in 2008 compared with $6.2 million in 2007. Third quarter 2008 includes $3 million in nonrecurring professional fees incurred in connection with the Corporation's evaluation of a number of strategic initiatives to enhance the business and create shareholder value. Third quarter 2007 includes a $4.5 million gain on the sale of land for the West Group.
Consolidated interest expense was $19.5 million for the third quarter 2008 as compared with $17.2 million for the prior-year quarter. The increase primarily resulted from interest for the 6.6% Senior Notes issued in April 2008, as well as other short-term borrowings outstanding during the quarter.

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• Consolidated net sales of $1.449 billion, down 2% compared with the prior-year period

• Cost of petroleum-based products increased $36 million, reducing earnings by $0.53 per diluted share

• Heritage aggregates product line pricing up 6.0%, volume down 10.5%

• Specialty Products net sales and earnings from operations up 14.4% and 12.2%, respectively, from prior-year period

• Acquisition and integration of six quarry acquisitions from Vulcan Materials Company, plus two other small acquisitions

• Issuance of $300 million of Senior Notes

The following table presents net sales, gross profit, selling, general and administrative expenses and earnings (loss) from operations data for the Corporation and its reportable segments for the nine months ended September 30, 2008 and 2007. In each case, the data is stated as a percentage of net sales of the Corporation or the relevant segment, as the case may be.
Earnings from operations include research and development expense and other operating income and expenses, net. Research and development expense for the Corporation was $0.5 million and $0.6 million for the nine months ended September 30, 2008 and 2007, respectively. Consolidated other operating income and expenses, net, was income of $14.4 million and $11.5 million for the nine months ended September 30, 2008 and 2007, respectively.

. . .