The Corporation calculates Earnings before Interest, Income Taxes, Depreciation, Depletion and Amortization ("EBITDA") as net earnings (loss) before interest expense, income tax expense (benefit) and depreciation, depletion and amortization expense. EBITDA is also before the cumulative effect of a change in accounting principle, if applicable.

EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net earnings (loss), operating earnings (loss), cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. However, the Corporation's management believes that EBITDA may provide additional information with respect to the Corporation's performance or ability to meet its future debt service, capital expenditures and working capital requirements. Because EBITDA excludes some, but not all, items that affect net earnings and may vary among companies, the EBITDA presented by Martin Marietta Materials may not be comparable to similarly titled measures of other companies.

The ratio of Consolidated Debt-to-Consolidated EBITDA, as defined, is a covenant under the Corporation’s Revolving Facility, Term Loan Facility and Accounts Receivable Credit Facility. Under the terms of these credit agreements, the Corporation’s ratio of consolidated debt-to-consolidated EBITDA, as defined, for the trailing twelve months cannot exceed 3.5x as of the end of any fiscal quarter, with certain exceptions related to qualifying acquisitions, as defined.

If there are no amounts outstanding under both the Revolving Facility and the Accounts Receivable Credit Facility, consolidated debt, including debt guaranteed by the Corporation, may be reduced for purposes of the covenant calculation by the Corporation’s unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million (hereinafter, “net debt”).

Consolidated Debt-to-Consolidated EBITDA, as defined, is calculated as net debt, including debt guaranteed by the Corporation, divided by consolidated EBITDA, as defined, for the trailing twelve months. Consolidated EBITDA is generally defined as earnings before interest expense, income tax expense, and depreciation, depletion and amortization expense for continuing operations. Additionally, stock-based compensation expense is added back and interest income is deducted in the calculation of consolidated EBITDA. Certain other nonrecurring items and noncash items, if they occur, can affect the calculation of consolidated EBITDA.

Consolidated Debt-to-Consolidated EBITDA is calculated as total long-term debt divided by Consolidated EBITDA, as defined, for the trailing twelve months. Consolidated EBITDA is generally defined as earnings before interest expense, income tax expense, and depreciation, depletion and amortization expense for continuing operations. Additionally, stock-based compensation expense is added back and interest income is deducted in the calculation of Consolidated EBITDA. Certain other nonrecurring items and noncash items, if they occur, can affect the calculation of Consolidated EBITDA.

The following presents the calculation of proforma Consolidated Debt-to-Consolidated EBITDA, as defined, for the trailing twelve months at March 31, 2010, assuming the total amount of outstanding debt at April 30, 2010 was outstanding at March 31, 2010.

EBITDA as a percentage of net sales is a non-GAAP measure. The Corporation presents this measure as management believes it is a useful measure to assess the Corporation's operating performance. The following presents the calculation of EBITDA as a percentage of net sales for the quarters ended September 30, 2009 and 2008.

The Corporation calculates gross margin excluding freight and delivery revenues as gross profit divided by net sales and operating margin excluding freight and delivery revenues as earnings from operations divided by net sales. The Corporation presents these ratios calculated based on net sales as opposed to total revenues, as it is consistent with the basis by which management reviews the Corporation's operating results. Further, management believes it is consistent with the basis by which investors analyze the Corporation's operating results given that freight and delivery revenues represent pass-through income and have no mark-up. Gross margin and operating margin calculated as percentages of total revenues represent the most directly comparable financial measures calculated in accordance with generally accepted accounting principles.

• For the three and six months ended June 30, 2009 and 2008

The presentation of incremental operating margin (excluding freight and delivery revenues) for the Mideast Group is a non-GAAP financial measure. Management presents this measure, as it believes it demonstrates the impact of incremental sales on operating margin (excluding freight and delivery revenues) due to the significant amount of fixed production costs.

The presentation of incremental operating margin excluding freight and delivery revenues and the impact of increased energy costs on incremental operating margin for the Aggregates Business for the months of October and November 2010 are non-GAAP measures. The Corporation presents these measures as it believes it demonstrates the impact of incremental net sales on operating margin excluding freight and delivery revenues due to the significant amount of fixed production costs. Further, management believes it helps investors assess the impact of increased energy costs.

The presentation of incremental operating margin (excluding freight and delivery revenues) for the Aggregates Business for the quarter ended March 31, 2011 is a non-GAAP financial measure. Management presents this measure, as it believes it demonstrates the impact of incremental sales on operating margin (excluding freight and delivery revenues) due to the significant amount of fixed production costs.

Adjusted earnings per diluted share (“Adjusted EPS”), the earnings per diluted share impact of a nonrecurring early retirement benefit and selling, general and administrative expenses adjusted for a nonrecurring early retirement benefit (“Adjusted SG&A”) as a percentage of net sales represent non-GAAP measures. Management presents these measures as it believes Adjusted EPS and Adjusted SG&A represent the most comparable operating performance measures to analysts’ earnings expectations for the three months ended September 30, 2011. Analysts have not factored the impact of the nonrecurring early retirement benefit into their EPS or selling, general and administrative expenses estimates for the quarter.

Martin Marietta Materials calculates Free Cash Flow as net cash provided by operating activities less capital expenditures. Proceeds from divestitures of assets are then added to determine Free Cash Flow.

The reconciliation includes the following:

• Earnings per diluted share for the quarter ended December 31, 2008 to earnings per diluted share excluding one-time charges.