-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GAqIhNyvTi3YE3ISqNxOAjAHVVKjI96mMVks1fMoicBuUUpO4yblm8Uxqdrg4Eyg c0NVrJFm/5zK1w1xVo+3KA== 0000067517-99-000007.txt : 19990517 0000067517-99-000007.hdr.sgml : 19990517 ACCESSION NUMBER: 0000067517-99-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONARCH CEMENT CO CENTRAL INDEX KEY: 0000067517 STANDARD INDUSTRIAL CLASSIFICATION: CONCRETE GYPSUM PLASTER PRODUCTS [3270] IRS NUMBER: 480340590 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-02757 FILM NUMBER: 99621041 BUSINESS ADDRESS: STREET 1: P O BOX 1000 CITY: HUMBOLDT STATE: KS ZIP: 66748 BUSINESS PHONE: 3164732225 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-2757 THE MONARCH CEMENT COMPANY (Exact name of registrant as specified in its charter) KANSAS 48-0340590 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 1000, HUMBOLDT, KANSAS 66748-1000 (Address of principal executive offices) (Zip Code) (316) 473-2225 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO As of May 10, 1999 , the Registrant had outstanding 2,290,895 shares of Capital Stock, par value $2.50 per share and 1,865,279 shares of Class B Capital Stock, par value $2.50 per share. PART I. FINANCIAL INFORMATION NOTES TO THE SECURITIES AND EXCHANGE COMMISSION REPORT FORM 10-Q FOR THE QUARTER ENDED March 31, 1999 1. The condensed financial statements included herein have been prepared by the registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures are adequate to make the information presented not misleading. The accompanying financial statements reflect all adjustments, which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim periods presented. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the registrant's latest annual report on Form 10-K. 2. For a summary of accounting policies, the reader should refer to Note 1 of the consolidated financial statements included in the registrant's annual report on Form 10-K for the fiscal year ended December 31, 1998. 3. Basic earnings per share of capital stock has been calculated based on the weighted average shares outstanding during each of the reporting periods. The weighted average number of shares outstanding was 4,174,479 and 4,211,158 in the first three months of 1999 and 1998, respectively. 4. The registrant groups its operations into two business segments - Industry Segment A (cement manufacturing) and Industry Segment B (ready- mixed concrete and sundry building materials). Following is condensed information for each segment for the quarters ended March 31, 1999 and 1998: 1999 1998 (In Thousands) Sales to Unaffiliated Customers- Industry: Segment A $ 6,289 $ 5,109 Segment B 11,983 9,990 Intersegment Sales- Industry: Segment A 1,477 1,307 Segment B 45 35 Operating Profit- Industry: Segment A 850 128 Segment B (21) (468) Identifiable Assets- Industry: Segment A 36,344 30,823 Segment B 21,672 16,767 5. Certain statements under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-Q, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may affect the actual results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: general economic and business conditions; competition; raw material and other operating costs; costs of capital equipment; changes in business strategy or expansion plans; and demand for the registrant's products. THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1999 AND DECEMBER 31, 1998
ASSETS 1 9 9 9 1 9 9 8 CURRENT ASSETS: Cash and cash equivalents $ 2,743,927 $ 4,254,795 Short term investments, at cost which approximates market 16,189,427 19,622,255 Receivables, less allowances of $423,000 in 1999 and $412,000 in 1998 for doubtful accounts 11,161,087 10,762,210 Inventories, priced at cost which is not in excess of market- Cost determined by last-in, first-out method- Finished cement $ 5,362,284 $ 1,634,302 Work in process 988,034 1,703,942 Building products 1,255,943 1,184,358 Cost determined by first-in, first-out method- Fuel, gypsum, paper sacks and other 2,094,209 1,899,440 Cost determined by average method- Operating and maintenance supplies 7,395,780 7,082,948 Total inventories $17,096,250 $13,504,990 Refundable federal and state income taxes 14,051 14,051 Deferred income taxes 410,000 410,000 Prepaid expenses 196,957 45,284 Total current assets $47,811,699 $48,613,585 PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and depletion of $80,336,352 in 1999 and $79,239,388 in 1998 29,561,157 29,372,287 DEFERRED INCOME TAXES 1,685,000 1,390,000 OTHER ASSETS 4,820,747 5,506,149 $83,878,603 $84,882,021 LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts and notes payable $ 5,564,967 $ 4,640,205 Accrued liabilities 2,142,407 4,063,922 Total current liabilities $ 7,707,374 $ 8,704,127 ACCRUED POSTRETIREMENT BENEFITS 9,559,684 9,620,253 ACCRUED PENSION EXPENSE 50,276 50,276 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 2,464,688 2,371,601 STOCKHOLDERS' INVESTMENT: Capital stock, par value $2.50 per share- Authorized 10,000,000 shares, Issued 2,288,520 shares at 3-31-99 and 2,290,049 shares at 12-31-98 $ 5,721,300 $ 5,725,123 Class B capital stock, par value $2.50 per share-Authorized 10,000,000 shares, Issued 1,881,376 shares at 3-31-99 and 1,887,347 shares at 12-31-98 4,703,440 4,718,367 Retained Earnings 51,941,841 51,492,274 $62,366,581 $61,935,764 Plus: Unrealized holding gain 1,730,000 2,200,000 Total stockholders' investment $64,096,581 $64,135,764 $83,878,603 $84,882,021
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS For the Three Months Ended March 31, 1999 and 1998
1999 1998 NET SALES $18,271,807 $15,098,857 COST OF SALES 15,694,795 13,766,503 Gross profit from operations $ 2,577,012 $ 1,332,354 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,748,161 1,671,896 Income (loss) from operations $ 828,851 $ (339,542) OTHER INCOME (EXPENSE): Interest income $ 187,082 $ 240,472 Other, net (102,460) 1,182 $ 84,622 $ 241,654 Income (loss) before taxes on income $ 913,473 $ (97,888) PROVISION FOR (BENEFIT FROM) TAXES ON INCOME 335,000 (35000) NET INCOME (LOSS) $ 578,473 $ (62,888) RETAINED EARNINGS, beginning of period 51,492,274 45,486,139 Less purchase and retirement of treasury stock 128,906 178,400 RETAINED EARNINGS, end of period $51,941,841 $45,244,851 Basic earnings (loss) per share $.14 $(.01)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Three Months Ended March 31, 1999 and 1998
1999 1998 NET INCOME (LOSS) $578,473 $(62,888) UNREALIZED APPRECIATION (DEPRECIATION) ON AVAILABLE FOR SALE SECURITIES (Net of deferred tax expense (benefit) of $(295,000) and $250,000, for 1999 and 1998, respectively) (470,000) 430,000 Comprehensive Income $108,473 $367,112
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1999 and 1998
1999 1998 OPERATING ACTIVITIES: Net income (loss) $ 578,473 $ (62,888) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and depletion 1,286,491 1,227,463 Gain on disposal of assets (6,446) (19,536) Change in assets and liabilities: Receivables, net (398,877) 412,450 Inventories (3,591,260) (2,501,586) Refundable federal and state income taxes - 11,564 Prepaid expenses (151,673) (138,684) Deferred income taxes, long-term (295,000) 280,000 Long-term notes receivable - 1,250 Accounts payable, notes payable and accrued liabilities 507,231 45,869 Accrued postretirement benefits (60,569) (5,339) Minority interest in earnings of subsidiaries 93,087 36,045 Net cash used for operating activities $(2,038,543) $ (713,392) INVESTING ACTIVITIES: Acquisition of property, plant and equipment $(1,487,240) $(1,769,469) Proceeds from disposals of property, plant and equipment 18,325 24,700 (Increase) decrease in other assets 215,402 (389,238) Decrease in short term investments, net 3,432,828 4,891,794 Net cash provided by investing activities $ 2,179,315 $ 2,757,787 FINANCING ACTIVITIES: Cash dividends $(1,503,984) $(1,349,029) Purchase of treasury stock (147,656) (203,400) Net cash used for financing activities $(1,651,640) $(1,552,429) Net increase (decrease) in cash and cash equivalents $(1,510,868) $ 491,966 CASH AND CASH EQUIVALENTS, beginning of year 4,254,795 4,093,317 CASH AND CASH EQUIVALENTS, end of period $ 2,743,927 $ 4,585,283 Interest paid $321 $510 Income taxes paid $582,135 $74,698
THE MONARCH CEMENT COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY The registrant's ability to generate cash adequate to meet its needs has been derived primarily from operations and the maturity of short term investments. Cash and short term investments decreased during the first quarter of 1999 primarily due to funding increased inventories and capital expenditures. The registrant generally produces additional inventory during this quarter in anticipation of sales volume in excess of production capabilities during the summer and early fall. RESULTS OF OPERATIONS Net sales for the first quarter of 1999 increased 21% as compared to the first quarter of 1998 as a result of increases in the volume of cement and ready-mixed concrete sold. During the first quarter of 1998, wet weather interrupted construction projects causing a delay in the need for cement and ready-mixed concrete. More favorable weather conditions during the first quarter of 1999 allowed construction projects to proceed, increasing sales of both cement and ready-mixed concrete. Demand for cement and ready-mixed concrete in the registrant's market area was excellent during both the first quarter of 1999 and the first quarter of 1998 and is expected to continue during the balance of 1999. While net sales increased 21% for the first quarter of 1999 as compared to the first quarter of 1998, cost of sales increased only 14% resulting in a 60% increase in gross profit as a percent of sales. This increase in gross profit as a percent of sales is a result of a reduction in maintenance costs during the first quarter of 1999 as compared to the first quarter of 1998 and an increase in production. Even though the registrant entered the second quarter with higher levels of inventories, to meet anticipated demand for cement during the coming peak construction season, the registrant has negotiated the purchase of additional clinker from foreign markets. Although these purchases will ikely reduce future gross profits from operations as a percent of net sales, the additional product will allow the registrant to meet the demand of its customer base in both the cement and ready-mixed concrete markets. SEASONALITY The registrant's highest revenue and earnings historically occur in its second and third fiscal quarters, April through September. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) There are no exhibits required to be filed for the quarter ended March 31, 1999. (b) There were no reports required to be filed on Form 8-K during the quarter January 1, 1999 to March 31, 1999, inclusive, for which this Form 10-Q is being filed. S I G N A T U R E S Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE MONARCH CEMENT COMPANY (Registrant) Date May 12, 1999 /s/ Walter H. Wulf, Jr. Walter H. Wulf, Jr. President and Vice Chairman of the Board Date May 12, 1999 /s/ Lyndell G. Mosley Lyndell G. Mosley, CPA Chief Financial Officer and Assistant Secretary-Treasurer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 MAR-31-1999 2,743,927 16,189,427 11,584,087 423,000 17,096,250 47,811,699 109,897,509 80,336,352 83,878,603 7,707,374 0 0 0 10,424,740 53,671,841 83,878,603 18,271,807 18,271,807 15,694,795 15,694,795 0 0 0 913,473 335,000 578,473 0 0 0 578,473 .14 .14
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