EX-13 2 anrpt01.txt 2001 ANNUAL REPORT THE MONARCH CEMENT COMPANY Page> March 15, 2002 ANNUAL REPORT TO STOCKHOLDERS Demand for cement and ready-mixed concrete in 2001 continued to challenge us to maximize production in order to meet the needs of our customers. Record sales of $126 million exceeded last year's record sales by almost $7 million. Although we completed a portion of our new construction in the last half of 2001, we have not yet fully realized the benefit of the added capacity and new technology provided by these additions. Increased production from this equipment in 2001 was offset by the downtime required to tie-in the existing equipment with the new processes. As anticipated, additional man-hours were needed to work with the equipment manufacturers to learn the new processes and to meet guaranteed production levels. Cost of sales was adversely affected during 2001 by the additional depreciation on this equipment, the extra expenses that occurred as equipment was shut down to tie-in the new finish mill, precalciner and clinker cooler and by additional labor expenses. As we look ahead to 2002, demand within our market area varies by location. Lower interest rates have helped to maintain the residential market. The Kansas highway program is currently on target, even though the state is facing serious budget shortfalls. As the Kansas legislature wrestles with funding for other state programs, there is some speculation that money may be diverted from the highway program to other areas. Other major projects, including schools and detention facilities are also scheduled for 2002. Overall, the five-year forecast for cement sales continues to be strong. We continue to monitor both current and long-term market conditions as we consider timing of our future expansion plans. Preliminary work has been completed on the second precalciner and clinker cooler and on designing a coal mill system to feed the precalciners and reduce our dependence on natural gas. We do not anticipate major construction to begin on these projects until late 2002 with completion in 2003. We want to express our appreciation to all our employees for their efforts during the past year. Special recognition is due our cement manufacturing employees at Humboldt, Kansas who continued to meet our customers' needs while being both involved in and inconvenienced by the expansion of our production facilities. We also recognize and thank our customers for their contribution to our success through promoting the use of our products. Their continued hard work in our market area and their confidence in our products created the demand resulting in the record sales reported for 2001. Most importantly, we thank our Heavenly Father, because without his blessings and support, we would not have achieved the results displayed in this report and could not meet the challenges of the years to come. We wish to invite you, our stockholders, to attend Monarch's annual meeting to be held at 2:00 p.m. on April 10, 2002 in the corporate office, Humboldt, Kansas. Thank you for your support throughout the years and God Bless. WALTER H. WULF, JR. President and Chairman of the Board THE MONARCH CEMENT COMPANY AND SUBSIDIARIES SELECTED FINANCIAL DATA FOR THE FIVE YEARS ENDED DECEMBER 31, 2001 (Dollar amounts in thousands except per share data)
2001 2000 1999 1998 1997 Net sales . . . . . . . . . $126,352 $119,362 $111,624 $101,548 $93,853 Net income. . . . . . . . . $ 8,151 $ 10,499 $ 9,654 $ 9,653 $10,103 Net income per share. . . . $2.01 $2.55 $2.32 $2.30 $2.40 Total assets. . . . . . . . $126,638 $ 96,102 $ 89,824 $ 84,868 $76,012 Long-term obligations . . . $ 19,900 $ - $ - $ - $ - Cash dividends declared per share . . . . . . . . $.80 $.78 $.74 $.68 $.60 Stockholders' investment per share . . . . . . . . $19.63 $18.36 $16.75 $15.35 $13.68
DESCRIPTION OF THE BUSINESS The Monarch Cement Company (Monarch) was organized as a corporation under the laws of the State of Kansas in 1913 and has been principally engaged, throughout its history, in the manufacture and sale of portland cement. The manufacture of portland cement by Monarch involves the quarrying of clay and limestone and the crushing, drying and blending of these raw materials into the proper chemical ratio. The raw materials are then heated in kilns to 2800o Fahrenheit at which time chemical reactions occur forming a new compound called clinker. After the addition of a small amount of gypsum, the clinker is ground into a very fine powder that is known as portland cement. The term "portland cement" is not a brand name but is a term that distinguishes cement manufactured by this chemical process from natural cement, which is no longer widely used. Portland cement is the basic material used in the production of ready-mixed concrete that is used in highway, bridge and building construction where strength and durability are primary requirements. The Monarch Cement Company and Subsidiaries (the Company) is also in the ready-mixed concrete, concrete products and sundry building materials business. Ready-mixed concrete is manufactured by combining aggregates with portland cement, water and chemical admixtures in batch plants. It is then loaded into mixer trucks and mixed in transit to the construction site where it is placed by the contractor. LINES OF BUSINESS The Company is engaged in the manufacture and sale of the principal types of portland cement and ready-mixed concrete and sundry building materials. The portland cement products are sold under the "MONARCH" brand name. The marketing area for Monarch's products, which is limited by the relatively high cost of transporting cement, consists primarily of the State of Kansas, the State of Iowa, southeast Nebraska, western Missouri, northwest Arkansas and northern Oklahoma. Included within this area are the metropolitan markets of Des Moines, Iowa; Kansas City, Missouri; Springfield, Missouri; Wichita, Kansas; Omaha, Nebraska; Lincoln, Nebraska and Tulsa, Oklahoma. Sales are made primarily to contractors, ready-mixed concrete plants, concrete products plants, building materials dealers and governmental agencies. Companies controlled by Monarch sell ready-mixed concrete, concrete products and sundry building materials in metropolitan areas within Monarch's primary market. Monarch cement is delivered either in bulk or in paper bags. The cement is distributed both by truck and rail, either common or private carrier. The following table sets forth for the last three fiscal years of the Company the percentage of total sales (1) by the manufacture and sale of cement and (2) by the sale of ready-mixed concrete and sundry building materials:
Total Sales December 31, 2001 2000 1999 Cement Manufacturing. . . . . . . 41.5% 41.6% 45.8% Ready-Mixed Concrete and Sundry Building Materials . . . 58.5% 58.4% 54.2% 100.0% 100.0% 100.0%
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity At December 31, 2001, current assets of the Company exceeded current liabilities by $18,488,416 resulting in a current ratio of 2.10 to 1. Our current ratio decreased in 2001 as compared to prior years primarily due to the utilization of cash, short-term investments and bank loans to fund expansion projects at our Humboldt, Kansas cement manufacturing facility. Cash, short-term investments and bank loans were also used for the purchase and retirement of treasury stock and the payment of dividends. Dry, mild weather during December 2001 significantly increased sales for the month as compared to December 2000. With the increase in December sales came a corresponding increase in receivables and decrease in finished cement, work in process and building products inventories. We are able to meet our cash needs primarily from a combination of operations and bank loans. In January 2001, we 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. These loans each bear floating interest rates based on Chase Manhattan Bank prime rate less 1.25%. The loan agreement contains a financial covenant related to net worth which the Company was in compliance with at year-end. As of December 31, 2001, we had borrowed $19,899,655 on the advancing term loan and $5,000,000 on the line of credit leaving a balance available on the advancing term loan of $10,100,345. The average daily interest rate we paid during 2001 was 5.3%. At year-end, the applicable interest rate was 3.5%. We have used these loans to help finance the expansion project currently underway at our cement manufacturing facility. We anticipate that the line of credit maturing December 31, 2002 will be paid using funds from operations or additional bank financing. Our board of directors has given management the authority to borrow an additional $15,000,000 for a maximum of $50,000,000. These funds would be used to continue our expansion project, increasing our production capacity to meet projected sales demand. Management anticipates negotiating for an additional $15,000,000 in bank financing this year. We will continue to evaluate market conditions, proposed capital expenditures and the Company's cash resources as we finalize the timing of expansion projects and loan requirements. Capital Resources During 2001, the Company invested $43,585,245 in property, plant and equipment. The Company regularly has capital expenditures of $10,000,000 to $12,000,000 per year in keeping its equipment and facilities in good operating condition. Due to recent and projected market demands, the Company has been aggressively updating its equipment to improve efficiency and increase capacity. As a result, the Company's 2001 expenditures exceeded the amount normally spent on capital expenditures. The Company plans to continue its modernization and expansion program during the year 2002 and future years. During the last half of 2001, the Company began operating the new finish mill, precalciner and clinker cooler. Preliminary work has been completed on the second precalciner and clinker cooler and designing a new coal firing system to fuel the precalciners. We anticipate work continuing on these projects later in 2002 with completion in 2003. Upon completion, it is projected that this expansion will allow the Company to produce in excess of one million tons of cement per year, resulting in a 35% increase in cement production capacity. The Company also expects to invest in other miscellaneous equipment and facility improvements in both the cement and ready-mixed concrete segments in 2002. It is expected that the Company's capital expenditures will approximate $25,000,000 during 2002 and will be funded with a mixture of cash from operations and bank borrowings. Results of Operations
Ready-Mixed Concrete Cement and Sundry Manu- Building facturing Materials Consolidated FOR THE YEAR ENDED DECEMBER 31, 2001: Sales to unaffiliated customers $52,484,654 $73,867,012 $126,351,666 Income (loss) from operations 9,745,880 (541,712) 9,204,168 FOR THE YEAR ENDED DECEMBER 31, 2000: Sales to unaffiliated customers $49,601,302 $69,760,428 $119,361,730 Income from operations 13,019,516 (1,765,148) 11,254,368 FOR THE YEAR ENDED DECEMBER 31, 1999: Sales to unaffiliated customers $51,143,457 $60,480,291 $111,623,748 Income from operations 11,406,669 2,954,191 14,360,860
General--Cement, ready-mixed concrete and sundry building materials are used in residential, commercial and governmental construction. Although overall demand for our products by each of these segments remains strong, it varies within our market area. In some areas of our market, residential construction is down while commercial and governmental needs are up. In other areas, residential demand is up and commercial and governmental use is down. Looking into 2002, we continue to see variations in demand within our market area. Even with the much publicized economic slowdown, the decrease in interest rates has helped to prevent sizeable drops in construction activities, particularly in the residential market. The Kansas highway program is currently on target, even though the state is facing serious budget deficits. As the Kansas legislature wrestles with funding for other state programs, there is some speculation that money may be diverted from the highway program to other areas. We are also seeing more competitiveness in pricing on highway construction projects for 2002. Other major construction projects, including schools and detention facilities are also planned for 2002 in our market area. These projects, which use sizeable amounts of cement, ready-mixed concrete and concrete products, contribute to the overall strong demand for our products. For the last five years, demand for cement in the Company's market has been excellent. During this period, the Company sold the entire cement production capacity of its Humboldt, Kansas plant. Plant modifications completed in recent years increased the production capacity of the Humboldt plant and improved its efficiency. These favorable market conditions and the Company's increased production capacity are the primary factors that have led to the Company's increased sales revenues in recent years. Profitability in the year 2001 was adversely affected by additional expenses incurred in the process of upgrading facilities and increased depreciation. The Company's ready-mixed concrete operations experienced operating losses during both 2001 and 2000 after increasing profitability during 1999. During 2001, sales volume increases led to better utilization of manpower and equipment reducing losses from operations. During 2000, the segment was adversely affected by volume declines in some market areas, additional expenses incurred in the process of upgrading facilities and weather delays creating unusual expenses in the production and installation of concrete products. The increased profitability in 1999 was primarily due to improvements in ready-mixed concrete prices. Efficiencies realized through increased sales volume also added to 1999's profitability. These factors vary from local market to local market and from year to year, and no one factor or local market accounts for a significant portion of the change in profitability during the three-year period. 2001 Compared to 2000--Consolidated net sales for the year ended December 31, 2001 were $126,351,666, an increase of $6,989,936 as compared to the year ended December 31, 2000. Sales of cement were higher by $2,883,352 and sales of ready-mixed concrete and sundry building materials were higher by $4,106,584. Sales of cement and ready-mixed concrete are significantly affected by weather conditions in our market area. Wet weather in the latter part of 2000 continued into the first part of 2001 slowing construction projects and decreasing sales of both cement and ready-mixed concrete during these periods. Mild, dry weather during the balance of 2001, allowed construction projects to proceed at a rapid pace through year-end. As a result, the Company's net sales for the last half of 2001 were 17.7% greater than net sales for the last half of 2000 resulting in a 5.9% increase in net sales for the year. The gross profit rate for the year 2001 was 15.3% compared to 16.8% for the year 2000. During 2001, the Company continued upgrading and expanding its plant facilities. 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, along with the additional depreciation relating to this equipment, were the primary factors contributing to the decrease in the gross profit rate. Higher sales volume of ready-mixed concrete and sundry building materials during 2001 as compared to 2000 resulted in better utilization of manpower and equipment and an improvement in this segment's gross profit rate. Selling, general, and administrative expenses increased 15.8% during the year 2001 compared to the year 2000. These costs are normally considered fixed costs that do not vary significantly with changes in sales volume. However during 2001, the Company hired additional selling and administrative personnel, primarily in the ready-mixed concrete and sundry building materials segment. The resulting increases in payroll and health care costs contributed to the overall increase in selling, general and administrative expenses, although no single factor increased materially. Interest income decreased $229,226 during 2001 as compared to the year 2000 primarily due to the reduction in short-term investments as the Company utilized these funds for capital improvements. "Other, net" decreased $1,068,440 for the year 2001 as compared to the year 2000 primarily due to a reduction in the amount of gain realized on the sale of other equity investments. 2000 Compared to 1999--The Company's 2000 net sales and cost of sales increased approximately 7% and 11%, respectively; however, gross profit from operations decreased 8%. Cement sales were excellent during both 2000 and 1999. Although this segment experienced a decrease in net sales to unaffiliated companies, increased production and lower production costs combined to substantially reduce the cement segment cost of sales and increase its income from operations by approximately 14%. During 2000, the Company once again increased its level of clinker production, exceeding the previous record set in 1999. In addition, the Company reduced its purchases of clinker from foreign markets during 2000 as compared to 1999, further reducing the segment's cost of sales and increasing its gross profit margin. Supplies and maintenance costs also decreased compared to 1999 when costs were up due to additional maintenance on equipment that had produced at maximum levels over extended periods. During these same periods, the Company's ready-mixed concrete and sundry building materials segment increased its net sales by approximately 15%. Expansion of this segment's operations to utilize its concrete products in various construction projects provided the majority of the increase in net sales. Expenses related to these construction projects also increased production costs as a percent of sales. The net sales increase generated by sales of additional concrete products was partially offset by decreases in ready-mixed concrete sales volume in several market areas. As expected, those market areas with declining sales experienced a reduction in gross profit due to fixed costs being spread over fewer units. These factors, combined with additional expenses incurred in the process of upgrading some of the Company's ready-mixed concrete facilities and weather delays creating unusual expenses in the production and installation of concrete products, resulted in a loss from operations compared to income from operations in 1999. Selling, general and administrative expenses increased 18% during 2000. Overall increases in health care costs, liability insurance, legal and professional expenses and payroll contributed to this increase. The increase in "Other, net" during 2000 as compared to 1999 was due primarily to the sale of investment securities and the allocation of net losses of subsidiaries to minority interest. Income taxes for the year 2000 decreased compared to 1999 due to an increase in depletion as a percent of consolidated taxable income and a reduction in state income taxes. Accounting Policies--The critical accounting policies with respect to the Company are those related to revenue recognition, inventories, property, plant and equipment, and depreciation. The Company records revenue from the sale of cement, ready-mixed concrete and sundry building materials when the products are delivered to the customer. Long-term construction contract revenues are recognized on the percentage-of- completion method based on the costs incurred relative to total estimated costs. Full provision is made for any anticipated losses. Billings for long- term construction contracts are rendered monthly, including the amount of retainage withheld by the customer until contract completion. Retainages are included in accounts receivable and are generally due within one year. Inventories of finished cement, work in process and building products are recorded at the lower of cost or market on a last-in, first-out (LIFO) basis. Under the average cost method of accounting (which approximates current cost), these inventories would have been $1,980,000, $1,362,000 and $2,351,000 higher than those reported at December 31, 2001, 2000 and 1999, respectively. The cost of manufactured items includes all material, labor, factory overhead and production-related administrative overhead required in their production. Other inventories are purchased from outside suppliers. Fuel and other materials are priced by the first-in, first-out (FIFO) method while operating and maintenance supplies are priced by the average cost method. Property, plant and equipment are stated at cost of acquisition or construction. The Company capitalizes the cost of interest on borrowed funds used to finance the construction of property, plant and equipment. During 2001 and 2000, the company capitalized approximately $927,000 and $-0-, respectively, of interest expense related to current construction projects. Expenditures for improvements that significantly increase the assets' useful lives are capitalized while maintenance and repairs are charged to expense as incurred. Depreciation of property, plant and equipment is provided by charges to operations over the estimated useful lives of the assets using primarily the double-declining balance method. The double-declining balance method charges depreciation expense to the income statement on an accelerated basis producing current tax savings. One-half year of depreciation is charged for the year of acquisition or disposition. Depletion rates for quarry lands are designed to amortize the cost over the estimated recoverable reserves. The Financial Accounting Standards Board (FASB) recently issued four new accounting rules. Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations," effective July 1, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets," effective for the 2002 calendar year, and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," effective for the 2002 calendar year, are not expected to have a material effect on the Company's financial position or results of operations. The Company has not yet assessed the impact, if any, of adopting SFAS No. 143, "Accounting for Asset Retirement Obligations," effective for the 2003 calendar year. Forward-Looking Statements--Certain statements under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Annual Report and Form 10-K report filed with the Securities and Exchange Commission, constitute "forward-looking information". Except for historical information, the statements made in this report are forward-looking statements that involve risks and uncertainties. You can identify these statements by forward-looking words such as "should", "expect", "anticipate", "believe", "intend", "may", "hope", "forecast" or similar words. In particular, statements with respect to variations in future demand for our products in our market area or the future activity of Kansas highway programs and other major construction projects, the timing, scope, cost and benefits of our proposed and recently completed capital improvements and expansion plans, including the resulting increase in production capacity, our forecasted cement sales, the timing and source of funds for the repayment of our line of credit, the proposed increase in our bank financing and the proposed use of loan proceeds, and our anticipated increase in solid fuels and electricity required to operate our facilities and equipment are all forward- looking statements. You should be aware that 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 our Company's products. Market Risks--Market risks relating to the Company's operations result primarily from changes in demand for our products. A significant increase in interest rates could lead to a reduction in construction activities in both the residential and commercial market. Budget shortfalls during economic slowdowns could cause money to be diverted away from highway projects, schools, detention facilities and other governmental construction projects. Reduction in construction activity lowers the demand for cement, ready-mixed concrete and sundry building materials. As demand decreases, competition to retain sales volume could create downward pressure on sales prices. The manufacture of cement requires a significant investment in property, plant and equipment and a trained workforce to operate and maintain this equipment. These costs do not materially vary with the level of production. As a result, by operating at or near capacity, regardless of demand, companies can reduce per unit production costs. The continual need to control production costs encourages overproduction during periods of reduced demand. Interest rates on the Company's bank loans are variable and are based on the Chase Manhattan Bank prime rate less 1.25%. Inflation--Inflation directly affects the Company's operating costs. The manufacture of cement requires the use of a significant amount of energy. The Company burns primarily solid fuels, such as coal and petroleum coke, in its preheater kilns. We do not anticipate a significant increase above the rate of inflation in the cost of these solid fuels, or in the electricity required to operate our cement manufacturing equipment. In 2001, the Company added a precalciner to one of its kilns to increase production capacity. This precalciner burns natural gas. Increases in natural gas prices exceeding the rate of inflation, such as occurred in late 2000 and early 2001, create an above average increase in manufacturing costs. As gas prices decreased, the Company negotiated a set purchase price for the majority of its projected natural gas needs. The Company has plans to add a coal firing system to its precalciner kiln to reduce dependence on natural gas. Prices of the specialized replacement parts and equipment the Company must continually purchase tend to increase directly with the rate of inflation causing manufacturing costs to increase. STOCK MARKET AND DIVIDEND DATA On March 1, 2002, Monarch's stock was held by approximately 700 record holders. Monarch is the transfer agent for Monarch's stock which is traded on the over-the-counter market. Over-the-counter market quotations reflect interdealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Following is a schedule of the range of high and low bid quotations of Monarch's stock as reported by Yahoo! at http://finance.yahoo.com/ for 2001 and Fahnestock & Co. Inc. for 2000, and dividends declared for each quarter of its two latest fiscal years:
2001 2000 Price Dividends Price Dividends Quarter Low High Declared Low High Declared_ First $17.500 $17.875 $ - $17.625 $20.625 $ - Second $17.750 $19.750 $.20 $16.500 $19.750 $.19 Third $18.850 $20.500 $.20 $17.125 $19.000 $.19 Fourth $18.300 $19.200 $.40* $17.500 $18.500 $.40* *Reflects declaration of two $.20 dividends payable in the first quarter of 2002 and 2001.
ANDERSEN REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of The Monarch Cement Company: We have audited the accompanying consolidated balance sheets of The Monarch Cement Company (a Kansas Corporation) and Subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, comprehensive income, stockholders' investment and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Monarch Cement Company and Subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP Kansas City, Missouri, February 22, 2002 THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2001 AND 2000
ASSETS 2 0 0 1 2 0 0 0 CURRENT ASSETS: Cash and cash equivalents $ 3,224,861 $ 9,451,281 Short-term investments, at cost which approximates market 164,073 2,543,286 Receivables, less allowances of $493,000 in 2001 and $375,000 in 2000 for doubtful accounts 13,262,283 8,430,945 Inventories, priced at cost which is not in excess of market- Cost determined by last-in, first-out method- Finished cement $ 1,813,898 $ 3,675,351 Work in process 2,629,984 4,373,014 Building products 1,159,676 1,250,120 Cost determined by first-in, first-out method- Fuel, gypsum, paper sacks and other 4,119,068 2,268,434 Cost determined by average method- Operating and maintenance supplies 7,867,711 9,458,554 Total inventories $ 17,590,337 $21,025,473 Refundable federal and state income taxes 474,867 1,071,021 Deferred income taxes 505,000 415,000 Prepaid expenses 66,193 63,031 Total current assets $ 35,287,614 $43,000,037 PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and depletion of $92,458,417 in 2001 and $83,666,552 in 2000 81,441,837 45,809,748 DEFERRED INCOME TAXES 2,305,000 2,430,000 OTHER ASSETS 7,603,212 4,862,955 $126,637,663 $96,102,740 LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts payable $ 6,636,841 $ 5,452,004 Bank loan payable 5,000,000 - Accrued liabilities- Dividends 1,610,783 1,640,358 Compensation and benefits 2,344,263 2,007,394 Miscellaneous taxes 671,667 500,334 Other 535,644 448,933 Total current liabilities $ 16,799,198 $10,049,023 LONG-TERM DEBT 19,899,655 - ACCRUED POSTRETIREMENT BENEFITS 8,442,462 8,397,620 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 2,453,827 2,346,663 STOCKHOLDERS' INVESTMENT: Capital Stock, par value $2.50 per share, 1 vote per share-Authorized 10,000,000 shares, Issued 2,303,362 shares at December 31, 2001 and 2,312,547 shares at December 31, 2000 $ 5,758,405 $ 5,781,368 Class B Capital Stock, par value $2.50 per share, 10 votes per share-Authorized 10,000,000 shares, Issued 1,723,596 shares at December 31, 2001 and 1,788,349 shares at December 31, 2000 4,308,990 4,470,872 Retained Earnings 67,900,126 64,117,194 Accumulated other comprehensive income 1,075,000 940,000 Total stockholders' investment $ 79,042,521 $75,309,434 $126,637,663 $96,102,740 The accompanying notes are an integral part of these consolidated balance sheets.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2 0 0 1 2 0 0 0 1 9 9 9 NET SALES $126,351,666 $119,361,730 $111,623,748 COST OF SALES 107,009,432 99,352,725 89,834,391 Gross profit from operations $ 19,342,234 $ 20,009,005 $ 21,789,357 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 10,138,066 8,754,637 7,428,497 Income from operations $ 9,204,168 $ 11,254,368 $ 14,360,860 OTHER INCOME (EXPENSE): Interest income $ 653,888 $ 883,114 $ 1,028,727 Other, net 1,793,428 2,861,868 (435,158) $ 2,447,316 $ 3,744,982 $ 593,569 INCOME BEFORE PROVISION FOR INCOME TAXES $ 11,651,484 $ 14,999,350 $ 14,954,429 PR0VISION FOR INCOME TAXES 3,500,000 4,500,000 5,300,000 NET INCOME $ 8,151,484 $ 10,499,350 $ 9,654,429 Basic earnings per share $2.01 $2.55 $2.32 The accompanying notes are an integral part of these consolidated statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2 0 0 1 2 0 0 0 1 9 9 9 NET INCOME $ 8,151,484 $ 10,499,350 $ 9,654,429 UNREALIZED APPRECIATION (DEPRECIATION) ON AVAILABLE FOR SALE SECURITIES (Net of deferred tax (benefit) expense of $90,000, $(425,000) and $(400,000) for 2001, 2000 and 1999, respectively) 135,000 (640,000) (620,000) COMPREHENSIVE INCOME $ 8,286,484 $ 9,859,350 $ 9,034,429 The accompanying notes are an integral part of these consolidated statements.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
Accum- Class B lated Other Stock- Capital Capital Retained Treasury Comprehen- holders' Stock Stock Earnings Stock sive Income Investment Balance at 1/1/1999 $5,725,123 $4,718,367 $51,492,274 $ - $2,200,000 $64,135,764 Net income - - 9,654,429 - - 9,654,429 Dividends declared ($.74 per share) - - (3,066,148) - - (3,066,148) Transfer of shares 101,277 (101,277) - - - - Purchase of treasury stock - - - (884,133) - (884,133) Retirement of treasury stock (112,205) - (771,928) 884,133 - - Accumulated other comprehensive loss - - - - (620,000) (620,000) Balance at 12/31/1999 $5,714,195 $4,617,090 $57,308,627 $ - $1,580,000 $69,219,912 Net income - - 10,499,350 - - 10,499,350 Dividends declared ($.78 per share) - - (3,201,569) - - (3,201,569) Transfer of shares 146,218 (146,218) - - - - Purchase of treasury stock - - - (568,259) - (568,259) Retirement of treasury stock (79,045) - (489,214) 568,259 - - Accumulated other comprehensive loss - - - - (640,000) (640,000) Balance at 12/31/2000 $5,781,368 $4,470,872 $64,117,194 $ - $ 940,000 $75,309,434 Net income - - 8,151,484 - - 8,151,484 Dividends declared ($.80 per share) - - (3,219,800) - - (3,219,800) Transfer of shares 161,882 (161,882) - - - - Purchase of treasury stock - - - (1,333,597) - (1,333,597) Retirement of treasury stock (184,845) - (1,148,752) 1,333,597 - - Accumulated other comprehensive income - - - - 135,000 135,000 Balance at 12/31/2001 $5,758,405 $4,308,990 $67,900,126 $ - $1,075,000 $79,042,521 The accompanying notes are an integral part of these consolidated statements.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
2 0 0 1 2 0 0 0 1 9 9 9 OPERATING ACTIVITIES: Net income $ 8,151,484 $ 10,499,350 $ 9,654,429 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and depletion 9,454,167 6,754,783 6,025,901 Gain on disposal of assets (197,548) (63,379) (67,332) Realized gain on sale of other investments (1,085,776) (2,382,261) - Change in assets and liabilities: Receivables, net (4,433,076) 1,419,400 674,824 Inventories 4,475,683 (3,635,333) (3,885,150) Refundable federal and state income taxes 596,154 (1,071,021) - Prepaid expenses 42,639 (28,176) 10,429 Deferred income taxes (270,000) (680,000) (365,000) Other assets (31,813) 422,326 18,239 Accounts payable and accrued liabilities (267,649) 373,575 (286,002) Accrued postretirement expense 338,752 163,874 (251,507) Accrued pension expense (161,335) (175,159) (50,276) Minority interest in earnings of subsidiaries (392,965) (408,744) 534,013 Net cash provided by operating activities $ 16,218,717 $ 11,189,235 $ 12,012,568 INVESTING ACTIVITIES: Acquisition of property, plant and equipment $(43,585,245) $(18,627,165) $(10,847,723) Proceeds from disposals of property, plant and equipment 442,057 302,437 94,758 Payment for purchases of equity investments (2,356,088) (1,039,456) (733,336) Proceeds from disposals of equity investments 1,401,137 3,263,100 - Decrease in short-term investments, net 2,387,776 13,290,758 4,025,252 Net purchase of subsidiaries' stock (1,040,400) - - Net cash used for investing activities $(42,750,763) $ (2,810,326) $ (7,461,049) FINANCING ACTIVITIES: Proceeds from bank loans $ 24,899,655 $ - $ - Cash dividends paid (3,249,375) (3,131,709) (2,999,634) Purchase of treasury stock (1,333,597) (9,828) (140,379) Subsidiaries' dividends paid to minority interest (11,057) (568,259) (884,133) Net cash provided by (used for) financing activities $ 20,305,626 $ (3,709,796) $ (4,024,146) Net Increase (Decrease) in Cash and Cash Equivalents $ (6,226,420) $ 4,669,113 $ 527,373 Cash and Cash Equivalents, beginning of year 9,451,281 4,782,168 4,254,795 Cash and Cash Equivalents, end of year $ 3,224,861 $ 9,451,281 $ 4,782,168 The accompanying notes are an integral part of these consolidated statements.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2001, 2000 AND 1999 (1) SUMMARY OF ACCOUNTING POLICIES (a) Description of Business--The Monarch Cement Company (Monarch) is principally engaged in the manufacture and sale of portland cement. The marketing area for Monarch's products consists primarily of the State of Kansas, the State of Iowa, southeast Nebraska, western Missouri, northwest Arkansas and northern Oklahoma. Sales are made primarily to contractors, ready-mixed concrete plants, concrete products plants, building materials dealers and governmental agencies. Companies controlled by Monarch sell ready-mixed concrete, concrete products and sundry building materials in metropolitan areas within Monarch's marketing area. Monarch has direct control of certain operating companies that have been deemed to be subsidiaries within the meaning of generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission. Accordingly, the financial statements of such companies have been consolidated with Monarch's financial statements. All significant intercompany transactions have been eliminated in consolidation. Minority interests in net income (loss) have been recorded as reductions or increases in other income in the accompanying statements of income. The minority interests in net income (loss) were $(392,965), $(408,744) and $534,013 during 2001, 2000 and 1999, respectively. (b) Use of Estimates--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (c) Reclassifications--Certain reclassifications have been made to the 2000 and prior financial statements to conform with the current year presentation. (d) Inventories--Inventories of finished cement, work in process and building products are recorded at the lower of cost or market on a last-in, first-out (LIFO) basis. Under the average cost method of accounting (which approximates current cost), these inventories would have been $1,980,000, $1,362,000 and $2,351,000 higher than those reported at December 31, 2001, 2000 and 1999, respectively. The cost of manufactured items includes all material, labor, factory overhead and production-related administrative overhead required in their production. Other inventories are purchased from outside suppliers. Fuel and other materials are priced by the first-in, first-out (FIFO) method while operating and maintenance supplies are recorded at the average cost method. (e) Property, Plant and Equipment-Property, plant and equipment are stated at cost of acquisition or construction. The Company capitalizes the cost of interest on borrowed funds used to finance the construction of property, plant and equipment. During 2001 and 2000, the Company capitalized approximately $927,000 and $-0-, respectively, of interest expense related to current construction projects. Depreciation of property, plant and equipment is provided by charges to operations over the estimated useful lives of the assets using primarily the double-declining balance method. One-half year of depreciation is charged for the year of acquisition or disposition. Depletion rates for quarry lands are designed to amortize the cost over the estimated recoverable reserves. Expenditures for improvements that significantly increase the assets' useful lives are capitalized while maintenance and repairs are charged to expense as incurred. (f) Revenue Recognition--Revenue is earned and recorded when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable, and collectibility is reasonably assured. Accordingly, the Company records revenue from the sale of cement, ready-mixed concrete and sundry building materials when the products are delivered to the customer. Long-term construction contract revenues are recognized on the percentage-of-completion method based on the costs incurred relative to total estimated costs. Full provision is made for any anticipated losses. Billings for long-term construction contracts are rendered monthly, including the amount of retainage withheld by the customer until contract completion. Retainages are included in accounts receivable and are generally due within one year. (g) Earnings per Share--Basic earnings per share is based on the weighted average common shares outstanding during each year. Dilutive earnings per share is based on the weighted average common and common equivalent shares outstanding each year. Monarch has no common stock equivalents and therefore, does not report dilutive earnings per share. The weighted average number of shares outstanding was 4,049,165 in 2001, 4,113,984 in 2000 and 4,154,426 in 1999. (h) Comprehensive Income--Comprehensive income is composed of two subsets; net income and other comprehensive income. Included in other comprehensive income for the Company is unrealized appreciation (depreciation) for securities classified as available-for-sale, net of deferred income tax. (i) Statements of Cash Flows--The Company considers overnight cash investments to be cash equivalents. All other highly liquid short-term investments, generally with an original maturity of six months or less, are considered short-term investments. Interest and income taxes paid during each of the three years for the period ended December 31, are as follows:
2001 2000 1999 Interest paid, net of amount capitalized $ 54,657 $ 7,076 $ 1,313 Income taxes paid $3,253,490 $5,935,016 $6,094,546
(2) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at December 31, 2001 and 2000 consisted of:
Depreciation Lives (Years) 2001 2000 Quarry lands $ 1,220,514 $ 1,220,514 Mill site and buildings 12 - 50 21,038,888 18,922,096 Machinery and equipment 5 - 25 113,600,330 70,561,855 Transportation equipment 3 - 12 26,460,459 24,261,907 Office furniture and fixtures 5 - 20 1,117,183 925,516 Office and other buildings 10 - 30 3,315,132 2,751,097 Construction in process 7,147,748 10,833,315 $173,900,254 $129,476,300 Less--Accumulated depreciation and depletion 92,458,417 83,666,552 $ 81,441,837 $ 45,809,748
(3) Investments The Company's short-term investments consist of corporate commercial paper with maturities of six months or less and have been classified as held- to-maturity. The amortized cost, which approximates market value, is reflected in the balance sheet. Other assets includes equity securities which have been classified as available-for-sale. Realized gains are computed using the specific identification method. The equity investment results for the years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999 Fair value of investments $5,965,000 $3,700,000 $4,605,000 Cost of investments 4,175,000 2,135,000 1,975,000 Fair value in excess of cost $1,790,000 $1,565,000 $2,630,000 Unrealized gain recorded in equity $1,075,000 $ 940,000 $1,580,000 Deferred income taxes 715,000 625,000 1,050,000 $1,790,000 $1,565,000 $2,630,000 Proceeds from sale of securities $1,401,137 $3,263,100 $ - Realized gains $1,085,776 $2,382,261 $ -
(4) INCOME TAXES The components of the provision for federal and state income taxes in the accompanying consolidated statements of income are as follows:
2001 2000 1999 Current provision for income tax: Federal $3,535,000 $4,425,000 $4,435,000 State 325,000 330,000 830,000 $3,860,000 $4,755,000 $5,265,000 Deferred provision for income tax: Federal $ (270,000) $ (135,000) $ 30,000 State (90,000) (120,000) 5,000 $ (360,000) $ (255,000) $ 35,000 Provision for income taxes $3,500,000 $4,500,000 $5,300,000
The provision for federal and state income taxes in the accompanying consolidated statements of income differs from the amount computed at the federal statutory income tax rate as follows:
2001 2000 1999 Provision for federal taxes at statutory rates $3,974,000 $5,150,000 $5,134,000 State income taxes, net of federal tax benefit 153,000 137,000 543,000 Percentage depletion (505,000) (697,000) (591,000) Minority interest in consolidated income (loss) (157,000) (163,000) 214,000 Other, net 35,000 73,000 - Provision for income taxes $3,500,000 $4,500,000 $5,300,000
The tax effect of significant temporary differences representing deferred tax assets and (liabilities) are as follows:
2001 2000 Current: Reserve for bad debts $ 195,000 $ 150,000 Vacation 280,000 265,000 Other, net 30,000 - Net current deferred tax assets $ 505,000 $ 415,000 Noncurrent: Depreciation $ (540,000) $ (450,000) Postretirement benefits 3,950,000 3,815,000 Pension (470,000) (405,000) Unrealized holding gains (715,000) (625,000) Other, net 80,000 95,000 Net long-term deferred tax assets $ 2,305,000 $ 2,430,000
(5) LONG-TERM DEBT In January 2001, Monarch 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. These loans each bear interest rates based on Chase Manhattan Bank prime rate less 1.25%. The loan agreement contains a financial covenant related to net worth which the Company was in compliance with at year-end. As of December 31, 2001, the Company had borrowed $19,899,655 on the advancing term loan and $5,000,000 on the line of credit leaving a balance available on the advancing term loan of $10,100,345. The average daily interest rate paid by the Company during 2001 was 5.3%. At year-end, the applicable interest rate was 3.5%. (6) POSTRETIREMENT BENEFITS Monarch provides certain postretirement health care, accident and life insurance benefits to all retired employees who, as of their retirement date, have completed ten or more years of credited service under the pension plans. These benefits are self-insured by Monarch and are paid out of Monarch's general assets. Following is a reconciliation of benefit obligations and funded status as of December 31, 2001 and 2000:
2001 2000 Reconciliation of benefit obligation Accumulated postretirement benefit obligation at beginning of year $ 12,927,454 $ 9,298,360 Service cost 156,561 108,040 Interest cost 942,509 895,420 Actuarial (gain) loss (241,538) 3,532,357 Benefits and expenses paid (730,524) (906,723) Accumulated postretirement benefit obligation at end of year $ 13,054,462 $ 12,927,454 Funded status $(13,054,462) $(12,927,454) Unrecognized actuarial loss 3,183,091 3,394,834 Accrued benefit cost $ (9,871,371) $ (9,532,620)
The assumed annual rate of increase in the per capita cost of covered health care benefits was 7% for 2001 and 2000 and 4% for 1999. This trend rate is assumed to decrease in future years, 1% per year to an ultimate annual rate of 4%.
2001 2000 1999 Components of net periodic benefit cost Service cost $ 156,561 $ 108,040 $ 99,410 Interest cost 942,509 895,420 697,195 Unrecognized net loss 137,776 67,136 - Net periodic benefit cost $1,236,846 $1,070,596 $ 796,605 Weighted-average assumptions as of December 31 Discount rate 7.00% 7.50% 8.00%
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
1% Increase 1% Decrease Effect on net periodic benefit cost $ 239,080 $ (107,877) Effect on postretirement benefit obligation 1,699,450 (1,184,805)
(7) PENSION PLANS Monarch has defined benefit pension plans covering substantially all permanent employees. Plans covering staff (salaried) employees provide pension benefits that are based on years of service and the employee's last sixty calendar months of earnings or the highest five consecutive calendar years of earnings out of the last ten calendar years of service, whichever is greater. Plans covering production (hourly) employees provide benefits of stated amounts for each year of service. Generally, Monarch's funding policy is to contribute annually the maximum amount that can be deducted for federal income tax purposes. Contributions are intended to provide for benefits attributed to service to date and for those expected to be earned in the future. The assets of the plans are primarily equities, bonds and government securities. Following is a reconciliation of benefit obligations, plan assets and funded status as of December 31, 2001 and 2000:
2001 2000 Reconciliation of projected benefit obligation Projected benefit obligation at beginning of year $21,987,472 $20,989,864 Service cost 315,833 293,441 Interest cost 1,621,900 1,617,150 Actuarial loss 1,246,060 734,549 Benefits paid and expenses (1,706,144) (1,647,532) Projected benefit obligation at end of year $23,465,121 $21,987,472 Reconciliation of fair value of plan assets Fair value of plan assets at beginning of year $24,783,229 $24,096,707 Actual return on plan assets 1,841,206 2,334,054 Benefits paid and expenses (1,706,144) (1,647,532) Fair value of plan assets at end of year $24,918,291 $24,783,229 Funded status $ 1,453,170 $ 2,795,757 Unrecognized net actuarial loss (685,055) (2,250,731) Unrecognized transitional obligation - 14,342 Unrecognized prior service cost 412,570 459,982 Prepaid benefit cost $ 1,180,685 $ 1,019,350
The following table presents the components of net periodic pension cost as of December 31, 2001, 2000 and 1999:
2001 2000 1999 Service cost $ 315,833 $ 293,441 $ 342,594 Interest cost 1,621,900 1,617,150 1,559,670 Expected return on plan assets (2,155,386) (2,095,648) (2,245,751) Amortization of transitional obligation 14,342 9,867 9,863 Amortization of prior service cost 47,412 47,412 45,130 Recognized net actuarial gain (5,436) (47,381) (31,967) Net periodic pension (income) $ (161,335) $ (175,159) $ (320,461)
The weighted average assumptions used to determine net pension cost and benefit obligations as of December 31 are as follows:
2001 2000 1999 Discount rate 7.00% 7.50% 8.00% Expected return on plan assets 9.00% 9.00% 9.00% Rate of compensation increase (Staff plan only) 4.50% 4.50% 4.50%
The Company has defined contribution plans covering substantially all permanent employees of the ready-mixed concrete and sundry building materials segment. These plans allow the Company, at its discretion, to match the employee's contributions. For the 2001 and 2000 plan years, the Company matched 25% of the first 6% of the employee's compensation up to a maximum match of $2,500. The Company contributed $75,570 and $67,240 to these plans for the years 2001 and 2000, respectively. (8) COMMITMENTS AND CONTINGENCIES According to various agreements with certain minority stockholders of subsidiaries, under specified circumstances, the Company is obligated to acquire certain minority shares, if requested to do so, at a value that approximates the minority interest on the Balance Sheet. (9) STOCKHOLDERS' INVESTMENT Capital Stock and Class B Capital Stock have the same rights except as follows: Class B Capital Stock has supervoting rights of ten votes per share and restricted transferability; Class B Capital Stock is convertible at all times into Capital Stock on a share-for-share basis; and Capital Stock has only one vote per share and is freely transferable. (10) BUSINESS SEGMENTS The Company groups its operations into two business segments - cement manufacturing and the sale of ready-mixed concrete and sundry building materials. The Company's business segments are separate business units that offer different products. The accounting policies for each segment are the same as those described in the summary of significant accounting policies. Following is information for each segment for the years ended December 31, 2001, 2000 and 1999:
Ready-Mixed Concrete Cement and Sundry Adjustments FOR THE YEAR ENDED Manu- Building and DECEMBER 31, 2001: facturing Materials Eliminations Consolidated Sales to unaffiliated customers $52,484,654 $73,867,012 $ - $126,351,666 Intersegment sales 9,701,435 66,201 (9,767,636) - Total net sales $62,186,089 $73,933,213 $ (9,767,636) $126,351,666 Income (loss) from operations $ 9,745,880 $ (541,712) $ 9,204,168 Other income, net 2,447,316 Income before income taxes $ 11,651,484 Identifiable assets at December 31, 2001 $79,454,009 $32,905,909 $112,359,918 Corporate assets 14,277,745 Total assets at December 31, 2001 $126,637,663 FOR THE YEAR ENDED DECEMBER 31, 2000: Sales to unaffiliated customers $49,601,302 $69,760,428 $ - $119,361,730 Intersegment sales 9,265,934 5,192 (9,271,126) - Total net sales $58,867,236 $69,765,620 $ (9,271,126) $119,361,730 Income (loss) from operations $13,019,516 $(1,765,148) $ 11,254,368 Other income, net 3,744,982 Income before income taxes $ 14,999,350 Identifiable assets at December 31, 2000 $47,123,981 $28,205,216 $ 75,329,197 Corporate assets 20,773,543 Total assets at December 31, 2000 $ 96,102,740 FOR THE YEAR ENDED DECEMBER 31, 1999: Sales to unaffiliated customers $51,143,457 $60,480,291 $ - $111,623,748 Intersegment sales 7,690,066 697,177 (8,387,243) - Total net sales $58,833,523 $61,177,468 $ (8,387,243) $111,623,748 Income from operations $11,406,669 $ 2,954,191 $ 14,360,860 Other income, net 593,569 Income before income taxes $ 14,954,429 Identifiable assets at December 31, 1999 $36,252,363 $25,189,660 $ 61,442,023 Corporate assets 28,549,358 Total assets at December 31, 1999 $ 89,991,381
Total sales by segment before adjustments and eliminations includes both sales to unaffiliated customers (as reported in the Company's consolidated statements of income, comprehensive income and stockholders' investment) and intersegment sales. Intersegment sales are accounted for by the same method as sales to unaffiliated customers. Income from operations is total net sales less operating expenses. In computing income from operations, none of the following items have been added or deducted: general corporate income and expenses, interest expense and income taxes. Depreciation and depletion for cement manufacturing and ready-mixed concrete, respectively, was: $4,325,197 and $5,128,970 in 2001; $2,571,183 and $4,183,600 in 2000; and $2,951,294 and $3,074,607 in 1999. Capital expenditures for cement manufacturing and ready-mixed concrete, respectively, including capital assets of businesses acquired were: $39,174,379 and $4,410,866 in 2001; $11,051,905 and $7,575,260 in 2000; and $2,749,880 and $8,097,843 in 1999. Identifiable assets by segment are those assets that are used in the Company's operations in each industry. During 2001, 2000 and 1999, there were no sales to any one customer in excess of 10% of consolidated net sales. (11) Quarterly Financial Information (Unaudited)
First Second Third Fourth Quarter Quarter Quarter Quarter 2001 Net sales $20,335,027 $33,746,878 $39,618,762 $32,650,999 Income (loss) from operations (592,355) 3,398,416 4,492,050 1,906,057 Net income (loss) (155,649) 2,263,192 3,354,934 2,689,007 Basic earnings (loss) per share $(.04) $.56 $.83 $.66 2000 Net sales $22,862,034 $35,105,445 $38,413,341 $22,980,910 Income (loss) from operations 1,575,353 5,280,529 5,545,759 (1,147,273) Net income 1,066,777 3,472,159 3,739,286 2,221,128 Basic earnings per share $.26 $.84 $.91 $.54
CORPORATE INFORMATION CORPORATE OFFICE DIRECTORS 449 1200 Street Jack R. Callahan P.O. Box 1000 Retired President, The Monarch Humboldt, KS 66748 Cement Company Phone: (620) 473-2222 Fax: (620) 473-2447 Ronald E. Callaway Retired transport truck driver Agricultural Carriers, Inc. AUDITORS Arthur Andersen LLP David L. Deffner Kansas City, Missouri Professor of Music, American River College ANNUAL MEETING Robert M. Kissick The annual meeting of the Chairman, Hydraulic Power Systems, Inc. stockholders of The Monarch Cement Company is held the Gayle C. McMillen second Wednesday in April of Music Instructor, Salina School each year at the Company's District corporate offices. Richard N. Nixon Shareholder in law firm of Stinson, TRANSFER AGENT AND REGISTRAR Mag & Fizzell, P.C. The Monarch Cement Company P.O. Box 1000 Byron J. Radcliff Humboldt, KS 66748-0900 Rancher Byron K. Radcliff STOCK TRADING INFORMATION Owner/Manager, Radcliff Ranch Trading Symbol: MCEM Over-the-Counter Market Michael R. Wachter Civil Engineer and Director of Operations, Concrete Technology Corp. INVESTOR RELATIONS Inquiries may be directed to Walter H. Wulf, Jr. Lyndell G. Mosley, Chief Financial President and Chairman of the Board Officer and Assistant Secretary- Treasurer, at the corporate Walter H. Wulf, III address shown above. Area Service Manager, General Motors Corporation FORM 10-K Officers The Company's Annual Report on Walter H. Wulf, Jr. Form 10-K, as filed with the President and Chairman of the Board Securities and Exchange Commission, is available without charge upon *Byron K. Radcliff written request to Lyndell G. Vice Chairman of the Board, Mosley at the above corporate Secretary and Treasurer office address. *Robert M. Kissick The Company's financial Vice President information is also available from the SEC at their EDGAR Rick E. Rush internet address Vice President (http://www.sec.gov). Lyndell G. Mosley Chief Financial Officer and Assistant Secretary-Treasurer Debra P. Roe Principal Accounting Officer and Assistant Secretary-Treasurer Lisa J. Fontaine Assistant Secretary *Not active in the daily affairs of the Company.