-----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, SumWm82fCbbFGL70BSrUEFjXLHotjQQD9quAbCaczBEhxM3P/3kWonqGmPmJ8fK8 AEJNkNN82oQ0tyF8auWN7w== 0000067517-98-000008.txt : 19980817 0000067517-98-000008.hdr.sgml : 19980817 ACCESSION NUMBER: 0000067517-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONARCH CEMENT CO CENTRAL INDEX KEY: 0000067517 STANDARD INDUSTRIAL CLASSIFICATION: CONCRETE GYPSUM PLASTER PRODUCTS [3270] IRS NUMBER: 480340590 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-02757 FILM NUMBER: 98689556 BUSINESS ADDRESS: STREET 1: P O BOX 1000 CITY: HUMBOLDT STATE: KS ZIP: 66748 BUSINESS PHONE: 3164732225 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-2757 THE MONARCH CEMENT COMPANY (Exact name of registrant as specified in its charter) KANSAS 48-0340590 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 1000, HUMBOLDT, KANSAS 66748-1000 (Address of principal executive offices) (Zip Code) (316) 473-2225 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO As of August 4, 1998 , the Registrant had outstanding 2,293,087 shares of Capital Stock, par value $2.50 per share and 1,910,777 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, 1998 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 which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim periods presented. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the registrant's latest annual report on Form 10-K. 2. For a summary of accounting policies, the reader should refer to Note 1 of the consolidated financial statements included in the registrant's annual report on Form 10-K for the fiscal year ended December 31, 1997. 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 4,204,332 and 4,215,714 in the second quarter of 1998 and 1997, respectively, and 4,207,726 and 4,216,006 in the first six months of 1998 and 1997, respectively. 4. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income", effective for periods beginning after December 15, 1997. SFAS 130 requires the display of comprehensive income and its components in the financial statements. The registrant has adopted SFAS 130 for the six months ending June 30, 1998. Comprehensive income for the registrant includes net income and unrealized appreciation on available for sale securities. The following table presents comprehensive income for the six months ending June 30, 1998 and 1997: 1998 1997 Net Income $3,183,105 $3,001,560 Unrealized appreciation on available for sale securities (net of deferred tax expense of $300,000 and $250,000 for 1998 and 1997, respectively) 455,000 380,000 Total Comprehensive Income $3,638,105 $3,381,560 5. Certain statements under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-Q, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may affect the actual results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: general economic and business conditions; competition; raw material and other operating costs; costs of capital equipment; changes in business strategy or expansion plans; and demand for the registrant's products. THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS--JUNE 30, 1998 AND DECEMBER 31, 1997
ASSETS LIABILITIES AND STOCKHOLDERS' INVESTMENT 1 9 9 8 1 9 9 7 1 9 9 8 1 9 9 7 CURRENT ASSETS: CURRENT LIABILITIES: Cash and cash equivalents $ 5,305,230 $ 4,093,317 Accounts and notes payable $ 4,657,987 $ 3,518,686 Short term investments, at cost Accrued liabilities 2,943,116 2,864,409 which approximates market 12,673,132 20,930,123 Total current liabilities $ 7,601,103 $ 6,383,095 Receivables, less allowances of $524,000 in 1998 and $447,000 in 1997 for doubtful accounts 12,512,127 7,972,699 Inventories, priced at cost which ACCRUED POSTRETIREMENT BENEFITS 9,835,993 9,838,905 is not in excess of market- Cost determined by last-in, first-out method- Finished cement $ 1,602,202 $ 1,168,177 ACCRUED PENSION EXPENSE 321,184 321,184 Work in process 3,321,401 316,370 Building products 1,227,760 1,127,182 Cost determined by first-in, first-out method- MINORITY INTEREST IN CONSOLIDATED Fuel, gypsum, paper sacks SUBSIDIARIES 2,233,178 2,004,424 and other 1,544,772 1,318,911 Cost determined by average method- Operating and maintenance supplies 7,043,922 7,375,598 Total inventories $14,740,057 $11,306,238 STOCKHOLDERS' INVESTMENT: Refundable federal and state Capital stock, par value $2.50 income taxes - 221,072 per share-Authorized 10,000,000 Deferred income taxes 415,000 415,000 shares, Issued 2,289,987 shares Prepaid expenses 156,879 27,921 at 6-30-98 and 2,292,891 shares Total current assets $45,802,425 $44,966,370 at 12-31-97 $ 5,724,967 $ 5,732,227 Class B capital stock, par value PROPERTY, PLANT AND EQUIPMENT, at $2.50 per share-Authorized cost, less accumulated depreciation 10,000,000 shares, Issued and depletion of $76,778,071 in 1998 1,913,877 shares at 6-30-98 and and $74,556,421 in 1997 27,951,627 25,517,772 1,922,823 shares at 12-31-97 4,784,693 4,807,058 Retained earnings 47,777,526 45,486,139 DEFERRED INCOME TAXES 1,510,000 1,810,000 $58,287,186 $56,025,424 Plus: Unrealized holding gain 2,115,000 1,660,000 OTHER ASSETS 5,129,592 3,938,890 Total stockholders' investment $60,402,186 $57,685,424 $80,393,644 $76,233,032 $80,393,644 $76,233,032
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Three Months Ended For the Six Months Ended June 30, June 30, June 30, June 30, 1998 1997 1998 1997 NET SALES $28,478,765 $25,524,530 $43,577,622 $41,414,537 COST OF SALES 21,799,909 18,608,238 35,566,412 33,559,520 Gross profit from operations $ 6,678,856 $ 6,916,292 $ 8,011,210 $ 7,855,017 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,637,717 1,755,957 3,309,613 3,454,198 Income from operations 5,041,139 $ 5,160,335 $ 4,701,597 $ 4,400,819 OTHER INCOME (EXPENSE): Interest income $ 258,959 $ 184,887 $ 499,431 $ 369,205 Other, net (219,105) (21,851) (217,923) (68,464) $ 39,854 $ 163,036 $ 281,508 $ 300,741 Income before provision for taxes on income $ 5,080,993 $ 5,323,371 $ 4,983,105 $ 4,701,560 PROVISION FOR TAXES ON INCOME 1,835,000 1,925,000 1,800,000 1,700,000 NET INCOME $ 3,245,993 $ 3,398,371 $ 3,183,105 $ 3,001,560 RETAINED EARNINGS, beg. of period 45,244,851 37,515,291 45,486,139 38,039,014 Less cash dividends 672,618 590,200 672,618 590,200 Less purchase and retirement of treasury stock 40,700 - 219,100 126,912 RETAINED EARNINGS, end of period $47,777,526 $40,323,462 $47,777,526 $40,323,462 BASIC EARNINGS PER SHARE $.77 $.81 $.76 $.71 CASH DIVIDENDS PER SHARE $.16 $.14 $.16 $.14
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, June 30, 1998 1997 OPERATING ACTIVITIES: Net income $ 3,183,105 $ 3,001,560 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and depletion 2,550,519 2,252,351 Gain on disposal of assets (34,603) (581,893) Change in assets and liabilities net of effects from purchase of subsidiaries: Receivables, net (4,539,428) (3,516,491) Inventories (3,433,819) (1,469,617) Refundable federal and state income taxes 221,072 310,733 Prepaid expenses (128,958) (126,708) Deferred income taxes, long-term 300,000 485,000 Long-term notes receivable 1,250 7,456 Accounts payable, notes payable and accrued liabilities 2,567,037 2,111,824 Accrued postretirement benefits (2,912) (27,249) Accrued pension expense - (67,301) Minority interest in earnings of subsidiaries 270,754 339,014 Net cash provided by operating activities $ 954,017 $ 2,718,679 INVESTING ACTIVITIES: Acquisition of property, plant and equipment $(5,029,397) $(3,635,904) Net purchases and sales of subsidiaries' stock - (1,029,410) Proceeds from disposals of property, plant and equipment 79,626 692,932 Increase in other assets (736,952) (250,000) Decrease in short term investments, net 8,256,991 2,961,644 Net cash provided by (used for) investing activities $ 2,570,268 $(1,260,738) FINANCING ACTIVITIES: Cash dividends $(2,021,647) $(1,772,080) Subsidiaries' dividends paid to minority interest (42,000) (173,746) Subsidiaries' purchase of treasury stock, net - (9,419) Purchase of treasury stock (248,725) (153,352) Net cash used for financing activities $(2,312,372) $(2,108,597) Net increase (decrease) in cash and cash equivalents $ 1,211,913 $ (650,656) CASH AND CASH EQUIVALENTS, beginning of year 4,093,317 3,242,245 CASH AND CASH EQUIVALENTS, end of period $ 5,305,230 $ 2,591,589 Interest paid $1,517 $4,556 Income taxes paid $170,670 $396,582
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity The registrant's ability to generate cash adequate to meet its needs has been derived primarily from operations. Cash and short term investments decreased during the first half of 1998 primarily due to funding increased receivables and inventories, maintenance, capital expenditures and dividends. The registrant generally produces additional inventory during the early part of the year in anticipation of sales volume in excess of production capabilities during the summer and early fall. Results of Operations Net sales increased 11% during the second quarter of 1998 as compared to the second quarter of 1997 resulting in a 5% increase in net sales and a 6% increase in cost of sales for the first half of 1998 as compared to the first half of 1997. During the second quarter and the first six months of 1998, the registrant realized increases in both volume of cement sold and sales prices of cement and ready-mixed concrete as compared to similar periods in 1997. Demand for cement and ready-mixed concrete in the registrant's market area was excellent during these periods and is expected to continue at high levels for the balance of 1998. During the second quarter of 1998, the registrant continued its capital expenditure program by further modernizing and increasing the capacity of one of its kilns. The registrant also utilized this downtime to perform major maintenance on related equipment. As a result, clinker production decreased 22% during the second quarter of 1998 as compared to the second quarter of 1997. This reduction in clinker production, along with the cost of the additional maintenance, resulted in a 17% increase in cost of sales during the second quarter of 1998 as compared to the second quarter of 1997. To help offset the reduction in clinker produced and to meet the anticipated demand for cement during the coming peak construction season, the registrant purchased additional clinker from foreign markets during the second quarter of 1998. Although this will increase the cement segment's cost of sales, it will allow the registrant to maintain its customer base in both the cement and ready-mixed concrete markets. Seasonality The registrant's highest revenue and earnings historically occur in its second and third fiscal quarters, April through September. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) There are no exhibits required to be filed for the quarter ended June 30, 1998. (b) There were no reports required to be filed on Form 8-K during the quarter April 1, 1998 to June 30, 1998, 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 13, 1998 /s/ Walter H. Wulf, Jr. Walter H. Wulf, Jr. President and Vice Chairman of the Board Date August 13, 1998 /s/ Lyndell G. Mosley Lyndell G. Mosley, CPA Chief Financial Officer and Assistant Secretary-Treasurer EX-27 2
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1998 JUN-30-1998 5305230 12673132 13036127 524000 14740057 45802425 104729698 76778071 80393644 7601103 0 0 0 10509660 49892526 80393644 43577622 43577622 35566412 35566412 0 0 0 4983105 1800000 3183105 0 0 0 3183105 .76 .76
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