-----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, LkENPiuoqwl1tIrcPqthoGmFZ2IRtIaDjPXtYkye8301YjaFRktbddRWVFLWL7sp BDawpsilD0AM2ZLWOjv8Ww== 0000067517-01-500005.txt : 20010816 0000067517-01-500005.hdr.sgml : 20010816 ACCESSION NUMBER: 0000067517-01-500005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010815 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: 1934 Act SEC FILE NUMBER: 000-02757 FILM NUMBER: 1714183 BUSINESS ADDRESS: STREET 1: P O BOX 1000 CITY: HUMBOLDT STATE: KS ZIP: 66748 BUSINESS PHONE: 3164732225 10-Q 1 edg201.txt 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 June 30, 2001 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) (620) 473-2222 (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 August 8, 2001 , the Registrant had outstanding 2,311,307 shares of Capital Stock, par value $2.50 per share and 1,739,121 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 June 30, 2001 l. 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 that 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, 2000. 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 4,052,830 and 4,118,749 in the second quarter of 2001 and 2000, respectively, and 4,062,151 and 4,122,746 in the first six months of 2001 and 2000, 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 three months and the six months ended June 30, 2001 and 2000 (in thousands):
Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2001 2000 2001 2000 Sales to Unaffiliated Customers- Industry: Segment A $14,934 $15,834 $21,879 $24,339 Segment B 19,588 20,186 33,628 35,473 Intersegment Sales- Industry: Segment A 2,989 2,671 4,725 4,390 Segment B 6 - 10 - Operating Profit- Industry: Segment A 2,924 5,300 4,038 6,562 Segment B 474 (19) (1,232) 294 Identifiable Assets- Industry: Segment A 75,235 47,124 75,235 47,124 Segment B 36,633 28,205 36,633 28,205 Corporate Assets- 13,375 20,903 13,375 20,903
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. Except for the historical information contained herein, the statements made in this report on Form 10-Q are forward-looking statements that involve risks and uncertainties. The words "should", "expect", "anticipate", "believe", "intend", "may", "hope", "forecast" and similar expressions may identify forward-looking statements. 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 JUNE 30, 2001 AND DECEMBER 31, 2000
ASSETS 2 0 0 1 2 0 0 0 CURRENT ASSETS: Cash and cash equivalents $ 3,027,748 $ 9,451,281 Short-term investments, at cost which approximates market 7,013 2,543,286 Receivables, less allowances of $403,000 in 2001 and $375,000 in 2000 for doubtful accounts 17,116,844 8,430,945 Inventories, priced at cost which is not in excess of market- Cost determined by last-in, first-out method- Finished cement $ 4,285,067 $ 3,675,351 Work in process 5,416,692 4,373,014 Building products 1,198,114 1,250,120 Cost determined by first-in, first-out method- Fuel, gypsum, paper sacks and other 3,634,901 2,268,434 Cost determined by average method- Operating and maintenance supplies 8,047,905 9,458,554 Total inventories $ 22,582,679 $21,025,473 Refundable federal and state income taxes 1,200,000 1,200,000 Deferred income taxes 450,000 415,000 Prepaid expenses 327,781 63,031 Total current assets $ 44,712,065 $43,129,016 PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and depletion of $86,975,918 in 2001 and $83,666,552 in 2000 71,840,385 45,809,748 DEFERRED INCOME TAXES 1,835,000 2,430,000 OTHER ASSETS 6,856,008 4,862,955 $125,243,458 $96,231,719 LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts payable $ 8,490,308 $ 5,452,004 Accrued liabilities 4,326,799 4,725,998 Total current liabilities $ 12,817,107 $10,178,002 ACCRUED POSTRETIREMENT BENEFITS 8,544,212 8,397,620 LONG-TERM DEBT 25,147,391 - MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 2,634,373 2,346,663 STOCKHOLDERS' INVESTMENT: Capital stock, par value $2.50 per share- Authorized 10,000,000 shares, Issued 2,306,281 shares at 6/30/2001 and 2,312,547 shares at 12/31/2000 $ 5,765,703 $ 5,781,368 Class B capital stock, par value $2.50 per share-Authorized 10,000,000 shares, Issued 1,744,147 shares at 6/30/2001 and 1,788,349 shares at 12/31/2000 4,360,368 4,470,872 Retained Earnings 64,659,304 64,117,194 Accumulated other comprehensive income 1,315,000 940,000 Total stockholders' investment $ 76,100,375 $75,309,434 $125,243,458 $96,231,719
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS For the Three Months and the Six Months Ended June 30, 2001 and 2000
For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 2001 2000 2001 2000 NET SALES $34,521,865 $36,020,018 $55,506,666 $59,811,825 COST OF SALES 28,615,516 28,527,837 47,867,215 48,715,408 Gross profit from operations $ 5,906,349 $ 7,492,181 $ 7,639,451 $11,096,417 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,507,933 2,211,652 4,833,390 4,240,535 Income from operations 3,398,416 $ 5,280,529 $ 2,806,061 $ 6,855,882 OTHER INCOME (EXPENSE): Interest income $ 180,482 $ 102,223 $ 240,247 $ 351,276 Other, net (235,706) 39,407 61,235 (118,222) $ (55,224) $ 141,630 $ 301,482 $ 233,054 Income before taxes on income $ 3,343,192 $ 5,422,159 $ 3,107,543 $ 7,088,936 PROVISION FOR TAXES ON INCOME 1,080,000 1,950,000 1,000,000 2,550,000 NET INCOME $ 2,263,192 $ 3,472,159 $ 2,107,543 $ 4,538,936 RETAINED EARNINGS, beg. of period 63,316,527 58,234,038 64,117,194 57,308,627 Less cash dividends 802,466 781,227 802,466 781,227 Less purchase and retirement of treasury stock 117,949 148,206 762,967 289,572 RETAINED EARNINGS, end of period $64,659,304 $60,776,764 $64,659,304 $60,776,764 BASIC EARNINGS PER SHARE $.56 $.84 $.52 $1.10 CASH DIVIDENDS PER SHARE $.20 $.19 $.20 $.19
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Six Months Ended June 30, 2001 and 2000
For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 2001 2000 2001 2000 NET INCOME $ 2,263,192 $ 3,472,159 $ 2,107,543 $ 4,538,936 UNREALIZED APPRECIATION (DEPRECIATION) ON AVAILABLE FOR SALE SECURITIES (Net of deferred tax expense (benefit) of $155,000, $(105,000), $255,000 and $(115,000), respectively) 225,000 (160,000) 375,000 (180,000) COMPREHENSIVE INCOME $ 2,488,192 $ 3,312,159 $ 2,482,543 $ 4,358,936
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2001 and 2000
2001 2000 OPERATING ACTIVITIES: Net income $ 2,107,543 $ 4,538,936 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and depletion 3,580,372 2,996,496 Gain on disposal of assets (131,378) (20,771) Change in assets and liabilities, net of acquisitions: Receivables, net (8,287,637) (5,320,258) Inventories (516,659) (3,889,516) Refundable federal and state income taxes - 166,900 Prepaid expenses (218,949) (384,487) Deferred income taxes 255,000 (115,000) Accounts payable, notes payable and accrued liabilities 2,525,974 2,609,521 Accrued postretirement benefits 146,592 (64,545) Accrued pension expense (80,682) - Minority interest in earnings of subsidiaries (212,419) 176,793 Net cash from operating activities $ (832,243) $ 694,069 INVESTING ACTIVITIES: Acquisition of property, plant and equipment $(27,922,201) $(9,013,024) Business acquisition (1,040,400) - Proceeds from disposals of property, plant and equipment 188,276 51,783 Payment for purchases of equity investments (918,841) (519,341) (Increase) decrease in other assets (247,334) 128,558 Decrease in short-term investments, net of acquisitions 2,544,836 10,340,012 Net cash from investing activities $(27,395,664) $ 987,988 FINANCING ACTIVITIES: Proceeds from long-term debt $ 25,147,391 $ - Cash dividends (2,442,824) (2,351,725) Subsidiaries' dividends paid to minority interest (11,057) (9,828) Purchase of treasury stock (889,136) (335,414) Net cash from financing activities $ 21,804,374 $(2,696,967) Net decrease in cash and cash equivalents $ (6,423,533) $(1,014,910) CASH AND CASH EQUIVALENTS, beginning of year 9,451,281 4,782,168 CASH AND CASH EQUIVALENTS, end of period $ 3,027,748 $ 3,767,258 Cash interest paid $316,376 $992 Cash income taxes paid $(11,000) $1,040,241
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES 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 bank loans and the maturity of short-term investments. Cash and short-term investments decreased during the first half of 2001 primarily due to increases in receivables, the purchase of equipment and the payment of dividends. In January 2001, the registrant entered into an unsecured credit commitment with a bank. This commitment consists of a $30,000,000 advancing term loan maturing December 31, 2005 and a $5,000,000 line of credit maturing December 31, 2002 with floating interest rates based on Chase Manhattan Bank prime rate less 1.25%. As of June 30, 2001, the registrant had borrowed $25,147,391 on these loans. These loans are being utilized to help finance the expansion project currently underway at the registrant's cement manufacturing facility. The registrant is negotiating with the bank for additional financing to supplement its current internal and external capital resources. Although it is too early to determine the outcome of these negotiations, this financing is intended to enable the registrant to proceed with additional capital improvements and to invest in other business opportunities. RESULTS OF OPERATIONS Net sales for the first six months of 2001 decreased 7% as compared to the first six months of 2000. Wet weather in the registrant's market area during the first half of 2001 slowed construction projects, decreasing sales of both cement and ready-mixed concrete. In contrast, during the first half of 2000, mild, dry weather allowed construction projects to proceed. While net sales decreased 7% for the first half of 2001 as compared to the first half of 2000, cost of sales decreased only 2% resulting in a 25% decrease in gross profit as a percent of sales. This decrease in gross profit as a percent of sales is primarily due to the decrease in volume sold. During the first half of 2001, the registrant continued with its upgrading and plant expansion projects. As projects neared completion, it was necessary to shut down major pieces of equipment to complete the tie-ins from one production process to the next. The resulting decrease in production and corresponding increase in production costs also contributed to the decrease in gross profit. During the second quarter of 2001, wet weather in the registrant's market area delayed construction projects. In contrast, during the second quarter of 2000, mild, dry weather allowed construction projects to proceed. As a result, net sales decreased 4% for the second quarter of 2001 as compared to the second quarter of 2000. Whereas net sales decreased, cost of sales did not change significantly resulting in an 18% decrease in gross profit as a percent of sales. This decrease in gross profit as a percent of sales is primarily due to the decrease in volume sold and the additional costs incurred during the expansion project. RECLASSIFICATIONS Certain reclassifications have been made to the 2000 financial statements to conform with the current year presentation. PENDING ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board (FASB) recently issued FASB 143, Accounting for Asset Retirements. The registrant has not evaluated the impact of FASB 143, so it is not known what, if any, impact this new rule may have on the registrant's financial statements. The registrant currently expects to adopt this new rule in January 2003. 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 4. Submission of Matters to a Vote of Security Holders At the annual meeting of the stockholders of The Monarch Cement Company held on April 11, 2001, the stockholders elected four Class III Directors, namely, Jack R. Callahan, Ronald E. Callaway, Robert M. Kissick, and Byron K. Radcliff to serve terms expiring at the annual meeting of stockholders in 2004. Class I Directors, namely, David L. Deffner, Gayle C. McMillen, and Richard N. Nixon, and Class II Directors, namely, Byron J. Radcliff, Michael R. Wachter, Walter H. Wulf, Jr, and Walter H. Wulf, III, continue to serve terms expiring at the annual meetings of stockholders in 2002 and 2003, respectively. The following is a summary of votes cast.
Withhold Abstentions/ Authority/ Broker For Against Non-votes Jack R. Callahan 17,120,713 197,839 N/A Ronald E. Callaway 17,233,318 85,234 N/A Robert M. Kissick 17,231,762 86,790 N/A Byron K. Radcliff 17,231,762 86,790 N/A
Item 6. Exhibits and Reports on Form 8-K (a) There are no exhibits required to be filed for the quarter ended June 30, 2001. (b) There were no reports required to be filed on Form 8-K during the quarter April 1, 2001 to June 30, 2001, 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 August 14, 2001 /s/ Walter H. Wulf, Jr. Walter H. Wulf, Jr. President and Chairman of the Board Date August 14, 2001 /s/ Lyndell G. Mosley Lyndell G. Mosley, CPA Chief Financial Officer and Assistant Secretary-Treasurer -----END PRIVACY-ENHANCED MESSAGE-----