-----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, F1FdcahczTtZaP9RzjIhdHlmVgMwZVpyC7oFpaaNq8XBplTgVA5Sx+yE5utrm/hU t8LoGL49S15FX2tNpRgqxQ== 0000067517-99-000012.txt : 19991115 0000067517-99-000012.hdr.sgml : 19991115 ACCESSION NUMBER: 0000067517-99-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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: 99749349 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 September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-2757 THE MONARCH CEMENT COMPANY (Exact name of registrant as specified in its charter) KANSAS 48-0340590 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 1000, HUMBOLDT, KANSAS 66748-1000 (Address of principal executive offices) (Zip Code) (316) 473-2225 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO As of November 10, 1999 , the Registrant had outstanding 2,281,165 shares of Capital Stock, par value $2.50 per share and 1,852,099 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 September 30, 1999 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, 1998. 3. Basic earnings per share of capital stock has been calculated based on the weighted average shares outstanding during each of the reporting periods. The weighted average number of shares outstanding was 4,151,205 and 4,200,003 in the third quarter of 1999 and 1998, respectively, and 4,161,512 and 4,205,152 in the first nine months of 1999 and 1998, respectively. 4. The registrant groups its operations into two business segments - Industry Segment A (cement manufacturing) and Industry Segment B (ready- mixed concrete and sundry building materials). Following is condensed information for each segment for the six months ended September 30, 1999 and 1998: 1999 1998 (In Thousands) Sales to Unaffiliated Customers- Industry: Segment A $38,112 $32,319 Segment B 44,279 41,993 Intersegment Sales- Industry: Segment A 5,507 6,113 Segment B 323 299 Operating Profit- Industry: Segment A 8,696 8,146 Segment B 2,102 1,723 Identifiable Assets- Industry: Segment A 39,393 33,270 Segment B 25,820 21,115 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 SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
ASSETS 1 9 9 9 1 9 9 8 CURRENT ASSETS: Cash and cash equivalents $ 4,261,389 $ 4,254,795 Short term investments, at cost which approximates market 13,699,700 19,622,255 Receivables, less allowances of $407,000 in 1999 and $412,000 in 1998 for doubtful accounts 15,017,845 10,762,210 Inventories, priced at cost which is not in excess of market- Cost determined by last-in, first-out method- Finished cement $ 1,429,920 $ 1,634,302 Work in process 3,936,818 1,703,942 Building products 1,297,023 1,184,358 Cost determined by first-in, first-out method- Fuel, gypsum, paper sacks and other 2,446,998 1,899,440 Cost determined by average method- Operating and maintenance supplies 7,859,429 7,082,948 Total inventories $16,970,188 $13,504,990 Refundable federal and state income taxes 12,941 14,051 Deferred income taxes 410,000 410,000 Prepaid expenses 27,642 45,284 Total current assets $50,399,705 $48,613,585 PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and depletion of $82,982,176 in 1999 and $79,239,388 in 1998 33,197,232 29,372,287 DEFERRED INCOME TAXES 1,730,000 1,390,000 OTHER ASSETS 4,875,989 5,506,149 $90,202,926 $84,882,021 LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts payable $ 6,513,693 $ 4,640,205 Accrued liabilities 3,395,303 4,063,922 Total current liabilities $ 9,908,996 $ 8,704,127 ACCRUED POSTRETIREMENT BENEFITS 9,375,581 9,620,253 ACCRUED PENSION EXPENSE 50,276 50,276 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 2,592,969 2,371,601 STOCKHOLDERS' INVESTMENT: Capital stock, par value $2.50 per share- Authorized 10,000,000 shares, Issued 2,280,485 shares at 9-30-99 and 2,290,049 shares at 12-31-98 $ 5,701,213 $ 5,725,123 Class B capital stock, par value $2.50 per share-Authorized 10,000,000 shares, Issued 1,853,459 shares at 9-30-99 and 1,887,347 shares at 12-31-98 4,633,647 4,718,367 Retained Earnings 56,270,244 51,492,274 $66,605,104 $61,935,764 Plus: Unrealized holding gain 1,670,000 2,200,000 Total stockholders' investment $68,275,104 $64,135,764 $90,202,926 $84,882,021
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS For the Three Months and the Nine Months Ended September 30, 1999 and 1998
For the Three Months Ended For the Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1999 1998 1999 1998 NET SALES $36,025,222 $30,733,881 $82,391,106 $74,311,503 COST OF SALES 27,813,936 23,865,433 66,196,714 59,431,845 Gross profit from operations $ 8,211,286 $ 6,868,448 $16,194,392 $14,879,658 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,859,005 1,701,540 5,395,873 5,011,153 Income from operations 6,352,281 $ 5,166,908 $10,798,519 $ 9,868,505 OTHER INCOME (EXPENSE): Interest income $ 207,436 $ 289,828 $ 601,234 $ 789,259 Other, net (123,398) (114,478) (304,323) (332,401) $ 84,038 $ 175,350 $ 296,911 $ 456,858 Income before taxes on income $ 6,436,319 $ 5,342,258 $11,095,430 $10,325,363 PROVISION FOR TAXES ON INCOME 2,375,000 1,950,000 4,075,000 3,750,000 NET INCOME $ 4,061,319 $ 3,392,258 $ 7,020,430 $ 6,575,363 RETAINED EARNINGS, beg. of period 53,344,524 47,777,526 51,492,274 45,486,139 Less cash dividends 747,539 672,618 1,495,650 1,345,236 Less purchase and retirement of treasury stock 388,060 555,271 746,810 774,371 RETAINED EARNINGS, end of period $56,270,244 $49,941,895 $56,270,244 $49,941,895 BASIC EARNINGS PER SHARE $.98 $.81 $1.69 $1.56 CASH DIVIDENDS PER SHARE $.18 $.16 $.36 $.32
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Nine Months Ended September 30, 1999 and 1998
1999 1998 NET INCOME $ 7,020,430 $ 6,575,363 UNREALIZED APPRECIATION (DEPRECIATION) ON AVAILABLE FOR SALE SECURITIES (Net of deferred tax benefit of $(340,000) and $(100,000), for 1999 and 1998, respectively) (530,000) (160,000) COMPREHENSIVE INCOME $ 6,490,430 $ 6,415,363
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1999 and 1998
1999 1998 OPERATING ACTIVITIES: Net income $ 7,020,430 $ 6,575,363 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and depletion 4,258,868 3,974,630 Gain on disposal of assets (40,657) (89,696) Change in assets and liabilities net of effects from purchase of subsidiaries: Receivables, net (4,255,635) (6,224,860) Inventories (3,465,198) (1,009,638) Refundable federal and state income taxes 1,110 221,072 Prepaid expenses 17,642 141,890 Deferred income taxes, long-term (340,000) (100,000) Long-term notes receivable - 1,250 Accounts payable, notes payable and accrued liabilities 2,708,853 2,728,529 Accrued postretirement benefits (244,672) (85,907) Minority interest in earnings of subsidiaries 361,748 449,260 Net cash provided by operating activities $ 6,022,489 $ 6,581,893 INVESTING ACTIVITIES: Acquisition of property, plant and equipment $(8,109,059) $(6,367,001) Proceeds from disposals of property, plant and equipment 65,902 160,104 (Increase) decrease in other assets 100,160 (664,666) Decrease in short term investments, net 5,922,555 3,359,051 Net cash provided by investing activities $(2,020,442) $(3,512,512) FINANCING ACTIVITIES: Cash dividends $(2,999,634) $(2,694,265) Subsidiaries' dividends paid to minority interest (140,379) (42,000) Purchase of treasury stock (855,440) (867,229) Net cash used for financing activities $(3,995,453) $(3,603,494) Net increase (decrease) in cash and cash equivalents $ 6,594 $ (534,113) CASH AND CASH EQUIVALENTS, beginning of year 4,254,795 4,093,317 CASH AND CASH EQUIVALENTS, end of period $ 4,261,389 $ 3,559,204 Interest paid $1,313 $1,517 Income taxes paid $3,352,693 $2,467,485
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 operations and the maturity of short term investments. Cash and short term investments decreased during the first nine months of 1999 primarily due to funding increased receivables and inventories, capital expenditures and dividends. RESULTS OF OPERATIONS Net sales increased 17% during the third quarter of 1999 as compared to the third quarter of 1998 and 11% during the first nine months of 1999 as compared to the first nine months of 1998. During the third quarter and the first nine months of 1999, the registrant realized increases in volume of cement and ready-mixed concrete sold as compared to similar periods in 1998. Moderate increases in sales prices of cement and ready-mixed concrete between periods also contributed to the increase in net sales. Demand for cement and ready-mixed concrete in the registrant's market area was excellent during these periods. The increase in volume sold resulted in increases in cost of sales similar to the percentage increases in net sales during the third quarter and the first nine months of 1999 as compared to the same periods in 1998. As a result, gross profit from operations increased 20% and 9% respectively. The registrant experienced insignificant changes in gross profit from operations as a percent of net sales during these periods. SEASONALITY The registrant's highest revenue and earnings historically occur in its second and third fiscal quarters, April through September. YEAR 2000 As has been widely publicized, there is widespread concern in the U.S. economy and elsewhere that computer systems and applications, including those imbedded in equipment and facilities, that use only two digits to identify years may create problems when the year 2000 arrives. Any of the registrant's computer systems or plant equipment systems that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculation, causing a disruption of operations. The registrant has completed its assessment of Year 2000 issues relative to information technology (IT) and non-IT computer hardware, software, and operating systems. The registrant primarily relied upon a qualified and experienced external resource to inventory, test for Year 2000 compliance, and prepare detailed recommended solutions on any non-compliant hardware or software systems. The recommended solutions have been presented to and assessed by the registrant's Year 2000 management team and it has been determined that the costs of addressing the Year 2000 compliance issues will not be material to the registrant's business, operations or financial condition. This assessment was based upon the fact that at December 31, 1998, 93% of the registrant's computer hardware was Year 2000 compliant, 86% of its operating systems were compliant and 86% of its computer software was compliant. Through a combination of equipment replacement and periodic software updates, the registrant expects to have all significant systems in compliance by the year 2000. Replacements of non-compliant hardware systems with new systems are being capitalized and amortized over the life of the new systems. The cost of annual software maintenance agreements, which include Year 2000 compliant upgrades, are being expensed as incurred. The registrant's primary accounting and management information systems were Year 2000 compliant at the end of 1998. The registrant does not anticipate any material disruptions in its operations as a result of any failure by the registrant to be in compliance. The registrant is dependent upon numerous third parties including customers, electrical power and fuel suppliers, financial institutions and other significant suppliers. Since no single customer accounts for more than 10% of the registrant's total sales, the registrant is not canvassing its customers as to their Year 2000 compliance. The registrant is inquiring of third parties (primarily financial institutions and significant suppliers) and seeking guidance as to their state of readiness. However, there can be no assurance that the registrant can avoid disruptions of supplies and services from its suppliers, or purchases by its major customers, in the event that these entities encounter unforeseen Year 2000 problems, any of which could have a material adverse effect on the registrant's business, operations or financial condition. The registrant is not aware of any material risks associated with these other entities. The registrant is in the process of developing a contingency plan that would be designed to mitigate, in part, the impact on its business of certain Year 2000 problems. This plan, however, cannot cover all eventualities, such as a power outage. The registrant expects this plan to be in place by the end of 1999. 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 September 30, 1999. (b) There were no reports required to be filed on Form 8-K during the quarter July 1, 1999 to September 30, 1999, inclusive, for which this Form 10-Q is being filed. S I G N A T U R E S Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE MONARCH CEMENT COMPANY (Registrant) Date November 12, 1999 /s/ Walter H. Wulf, Jr. Walter H. Wulf, Jr. President and Vice Chairman of the Board Date November 12, 1999 /s/ Lyndell G. Mosley Lyndell G. Mosley, CPA Chief Financial Officer and Assistant Secretary-Treasurer EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MONARCH CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1999 SEP-30-1999 4,261,389 13,699,700 15,424,845 407,000 16,970,188 50,399,705 116,179,408 82,982,176 90,202,926 9,908,996 0 0 0 10,334,860 57,940,244 90,202,926 82,391,106 82,391,106 66,196,714 66,196,714 0 0 0 11,095,430 4,075,000 7,020,430 0 0 0 7,020,430 1.69 1.69
-----END PRIVACY-ENHANCED MESSAGE-----