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. The ratio of EBITDA to consolidated net sales, continuing and discontinued operations is an additional measure of financial performance. 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.

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 Corporation presents this ratio, as it is a covenant within the Corporation's $325,000,000 five-year revolving credit agreement. Under the agreement, the Corporation's ratio of Consolidated Debt-to-Consolidated EBITDA, as defined, for the trailing twelve months can not exceed 3.75 to 1.00 for the quarters ended December 31, 2009 and March 31, 2010 and 3.50 to 1.00 for the remaining quarters until maturity in June 2012. The covenant has certain exceptions related to qualifying acquisitions, as defined.

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
• For the three months ended March 31, 2008

Martin Marietta Materials calculates Free Cash Flow as net cash provided by operating activities less capital expenditures and dividends paid. 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.