10-K 1 0001.txt FORM 10-K Securities and Exchange Commission Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 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 of incorporation) (IRS employer identification) P.O. Box 1000, Humboldt, Kansas 66748-1000 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: 620-473-2222 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of Class: Capital Stock, par value $2.50 per share Class B Capital Stock, par value $2.50 per share 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______ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the average bid and ask prices of such shares on March 5, 2001, was $54,720,118. As of March 5, 2001, the registrant had outstanding 2,290,837 shares of Capital Stock, par value $2.50 per share, and 1,769,459 shares of Class B Capital Stock, par value $2.50 per share. DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents are incorporated by reference into the indicated parts of this report: (1) the registrant's annual report to stockholders for the year ended December 31, 2000 - Parts I, II and IV of Form 10-K and (2) the registrant's definitive proxy statement prepared in connection with the annual meeting of stockholders to be held on April 11, 2001 - Part III of Form 10-K. PART I Item 1. Business Reference is hereby made to pages 4, 5 and 16 of registrant's 2000 annual report to stockholders (filed herewith as Exhibit 13) for a description of registrant's business, including information regarding industry segments. Such information is hereby incorporated herein by reference. In addition, registrant submits the following information: The registrant did not introduce any new products nor begin to do business in a new industry segment during 2000. The registrant owns and operates quarries located near its Humboldt, Kansas plant. Such quarries contain all essential raw materials presently used by the registrant. The registrant's total reserves, including these quarries and other property located near the plant, are estimated to be sufficient to maintain operations at the Humboldt plant's present capacity for more than 50 years. The registrant's products are marketed under registered trademarks using the name "MONARCH". The registrant's operations are not materially dependent on any trademarks, franchises, patents or on any licenses relating to the use thereof. Due to inclement construction weather in the registrant's market area during January, February and March, normally about 85% of the registrant's sales occur in April through December. It is necessary for the registrant to invest a significant portion of its working capital in inventories. At December 31, 2000 the registrant had inventories as follows: Cement . . . . . . . . . . . . . . . $ 3,675,351 Work in process. . . . . . . . . . . 4,373,014 Fuel, gypsum and other materials . . 3,518,554 Operating and maintenance supplies . 9,458,554 Total. . . . . . . . . . . $21,025,473
The registrant is heavily dependent upon the construction industry and is directly affected by the level of activity in that industry. However, no customer accounted for 10% or more of the registrant's consolidated net revenue during 2000, 1999 or 1998. Backlog of customers' orders is not a material factor in the registrant's business. The registrant has no contracts that are subject to renegotiation of profits or termination thereof at the election of the government. The manufacture and sale of cement and ready-mixed concrete are extremely competitive enterprises. A number of producers, including several nationwide manufacturers, compete for business with the registrant in its market area. The registrant is not a significant factor in the nationwide portland cement or ready-mixed concrete business but does constitute a significant market factor for cement in its market area. Cement generally is produced to meet standard specifications and there is little differentiation between the products sold by the registrant and its competitors. Accordingly, competition exists primarily in the areas of price and customer service. The registrant did not spend a material amount in the last three fiscal years on registrant sponsored research and development. However, the registrant is a member of the Portland Cement Association which conducts research for the cement industry. Registrant has, during the past several years, made substantial capital expenditures for pollution control equipment. The registrant also incurs normal operating and maintenance expenditures in connection with its pollution control equipment. At December 31, 2000, the Company and its subsidiaries employed approximately 600 hourly (production) employees and 120 salaried employees, which included plant supervisory personnel, sales and executive staff. All of the registrant's operations and sales are in one geographic area. Item 2. Properties The registrant's corporate offices and cement plant, including equipment and raw materials are located at Humboldt, Kansas, approximately 110 miles southwest of Kansas City, Missouri. The registrant owns approximately 4,300 acres of land on which the Humboldt plant, offices and all essential raw materials are located. Raw material reserves are estimated to be sufficient to maintain operations at this plant's present capacity for more than 50 years. This plant has a present annual capacity of 725,000 tons of cement. The registrant believes that this plant and equipment are suitable and adequate for its current level of operations; however, due to recent and projected market demands, the registrant has been aggressively updating its equipment to improve efficiency and increase capacity. Reference is hereby made to page 1 of registrant's 2000 annual report to stockholders (filed herewith as Exhibit 13) for a description of the registrant's capital resources and expansion plans. Such information is hereby incorporated herein by reference. The registrant also owns approximately 250 acres of land in Des Moines, Iowa on which it formerly operated a cement plant. Due to its age and condition and other economic factors, the registrant discontinued all production at this facility in 1994 and is dismantling the manufacturing buildings and equipment. The shipping and storage facilities, as well as the administrative offices, continue to be utilized as a cement terminal. The registrant transfers finished cement produced in Humboldt, Kansas to this terminal for distribution to Iowa customers. The registrant also owns, but is not currently operating, a rock quarry located near Earlham, Iowa, approximately 30 miles west of Des Moines, Iowa. Approximately 300 acres of this 400 acre tract was previously quarried. The registrant owns various companies which sell ready-mixed concrete, concrete products and sundry building materials in metropolitan areas within the Humboldt cement plant's primary market. Various equipment and facility improvements in this segment ensure these plants are suitable and adequate for their current level of operations and provide for increases in market demand. Individual locations do not have a material affect on the registrant's overall operations. Item 3. Legal Proceedings The registrant was not a party to any material legal proceedings during 2000. Item 4. Submission of Matters to a Vote of Security Holders The registrant did not submit any matter to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 2000. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Pursuant to General Instruction G(2) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on page 5 of the registrant's 2000 annual report to stockholders. Item 6. Selected Financial Data Pursuant to General Instruction G(2) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on page 1 of the registrant's 2000 annual report to stockholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Pursuant to General Instruction G(2) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on pages 1 through 4 of the registrant's 2000 annual report to stockholders. Item 7A. Quantitative and Qualitative Disclosures About Market Risk The registrant is exposed to various market risks, including equity investment prices. The registrant has $3,700,000 of equity securities as of December 31, 2000. These investments are not hedged and are exposed to the risk of changing market prices. The Company classifies these securities as "available-for-sale" for accounting purposes and marks them to market on the balance sheet at the end of each period. Management estimates that its investments will generally be consistent with trends and movements of the overall stock market excluding any unusual situations. An immediate 10% change in the market price of our equity securities would have a $220,000 effect on comprehensive income. Item 8. Financial Statements and Supplementary Data Pursuant to General Instruction G(2) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on pages 6 through 17 of the registrant's 2000 annual report to stockholders. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None PART III Item 10. Directors and Executive Officers of the Registrant Pursuant to General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on pages 3 through 5 of the registrant's definitive proxy statement prepared in connection with its 2001 annual meeting of stockholders pursuant to Regulation 14A and previously filed with the Commission. Item 11. Executive Compensation Pursuant to General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on pages 7 through 10 (except for the information set forth under the heading "Board of Directors' Report on Executive Compensation" which is expressly excluded from such incorporation) of the registrant's definitive proxy statement prepared in connection with its 2001 annual meeting of stockholders pursuant to regulation 14A and previously filed with the Commission. Item 12. Security Ownership of Certain Beneficial Owners and Management Pursuant to General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on pages 6 and 7 of the registrant's definitive proxy statement prepared in connection with its 2001 annual meeting of stockholders pursuant to Regulation 14A and previously filed with the Commission. Item 13. Certain Relationships and Related Transactions Pursuant to General Instruction G(3) to Form 10-K, the information required by this Item is incorporated herein by reference to the material responsive to this Item on page 8 of the registrant's definitive proxy statement prepared in connection with its 2001 annual meeting of stockholders pursuant to Regulation 14A and previously filed with the Commission. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Financial Statements The report of Independent Public Accountants; the Consolidated Balance Sheets--December 31, 2000 and 1999; the Consolidated Statements of Income for the Years Ended December 31, 2000, 1999 and 1998; the Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2000, 1999 and 1998; the Consolidated Statements of Stockholders' Investment for the Years Ended December 31, 2000, 1999 and 1998; the Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998; and the Notes to Consolidated Financial Statements are incorporated by reference in Item 8 to this report from the registrant's 2000 annual report to stockholders on pages 6 through 17. Supporting Schedules Schedule II -- Valuation and Qualifying Accounts Exhibits 3(i) Articles of Incorporation. (Filed with the registrant's annual report on Form 10-K for the year ended December 31, 1994 (File No. 0-2757) as Exhibit 3(i) and incorporated herein by reference.) 3(ii) By-laws. (Filed with the registrant's annual report on Form 10-K for the year ended December 31, 1994 (File No. 0-2757) as Exhibit 3(ii) and incorporated herein by reference.) 13 2000 Annual Report to Stockholders. 21 Subsidiaries of the Registrant. Form 8-K There were no Form 8-K reports required to be filed during the last quarter of 2000. S I G N A T U R E S Pursuant to the requirements of Section 13 or 15(d) 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) By: /s/ Walter H. Wulf, Jr. Walter H. Wulf, Jr. President Date: March 12, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Jack R. Callahan By: /s/ Byron K. Radcliff Jack R. Callahan Byron K. Radcliff Director Director Date: March 12, 2001 Date: March 12, 2001 By: /s/ Robert M. Kissick By: /s/ Walter H. Wulf, Jr. Robert M. Kissick Walter H. Wulf, Jr. Director President, Principal Executive Officer and Director Date: March 12, 2001 Date: March 12, 2001 By: /s/ Richard N. Nixon By: /s/ Lyndell G. Mosley Richard N. Nixon Lyndell G. Mosley, CPA Director Assistant Secretary-Treasurer Chief Financial Officer Date: March 12, 2001 Date: March 12, 2001 By: /s/ Byron J. Radcliff By: /s/ Debra P. Roe Byron J. Radcliff Debra P. Roe, CPA Director Principal Accounting Officer Date: March 12, 2001 Date: March 12, 2001 ARTHUR ANDERSEN REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of The Monarch Cement Company We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements included in The Monarch Cement Company's annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 16, 2001. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The Schedule II is the responsibility of the Company's management and is presented for purposes of complying with the Securities Exchange Commission's rules and is not part of the basic financial statements. The schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Arthur Andersen LLP Kansas City, Missouri, February 16, 2001 THE MONARCH CEMENT COMPANY AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS FOR THE THREE YEARS ENDED DECEMBER 31, 2000
Additions Balance at Charged to Deduction Balance Beginning Costs and from at End Description of Period Expenses Reserves of Period (1) For the Year Ended December 31, 2000: Reserve for doubtful accounts $409,000 $ 78,000 $112,000 $375,000 For the Year Ended December 31, 1999: Reserve for doubtful accounts $412,000 $104,000 $107,000 $409,000 For the Year Ended December 31, 1998: Reserve for doubtful accounts $477,000 $ 82,000 $147,000 $412,000 (1) Writeoff of uncollectible accounts, net of collections on accounts previously written off.
EXHIBIT INDEX Exhibit Number Description 3(i) Articles of Incorporation. (Filed with the registrant's annual report on Form 10-K for the year ended December 31, 1994 (File No. 0-2757) as Exhibit 3(i) and incorporated herein by reference.) 3(ii) By-laws. (Filed with the registrant's annual report on Form 10-K for the year ended December 31, 1994 (File No. 0-2757) as Exhibit 3(ii) and incorporated herein by reference.) 13 2000 Annual Report to Stockholders. 21 Subsidiaries of the Registrant.