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 March 31, 1996
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 May 10, 1996 , the Registrant had outstanding 2,186,536
shares of Capital Stock, par value $2.50 per share and 2,039,754 shares of
Class B Capital Stock, par value $2.50 per share.
<PAGE>
PART I. FINANCIAL INFORMATION
NOTES TO THE SECURITIES AND EXCHANGE COMMISSION
REPORT FORM 10-Q FOR THE QUARTER ENDED
March 31, 1996
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, 1995.
3. The net income 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 4,226,719
and 4,239,290 in the first three months of 1996 and 1995, respectively.
<PAGE>
<TABLE>
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--MARCH 31, 1996 AND DECEMBER 31, 1995
<CAPTION>
ASSETS LIABILITIES AND STOCKHOLDERS' INVESTMENT
1 9 9 6 1 9 9 5 1 9 9 6 1 9 9 5
<S> <C> <C> <S> <C> <C>
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents, at cost Accounts and notes payable $ 3,533,153 $ 3,057,538
which approximates market $ 2,761,315 $ 5,071,268 Accrued liabilities 1,887,788 3,580,727
Short term investments, at cost Total current liabilities $ 5,420,941 $ 6,638,265
which approximates market 5,605,871 7,073,446
Receivables, less allowances of
$547,000 in 1996 and $538,000 in
1995 for doubtful accounts 7,655,233 8,135,769 ACCRUED POSTRETIREMENT BENEFITS 9,695,615 9,714,799
Inventories, priced at cost which
is not in excess of market-
Cost determined by last-in,
first-out method- ACCRUED PENSION EXPENSE 418,776 452,699
Finished cement $ 3,664,734 $ 2,181,014
Work in process 1,231,482 603,886
Building products 1,109,073 1,010,644
Cost determined by first-in, MINORITY INTEREST IN CONSOLIDATED
first-out method- SUBSIDIARIES 1,985,895 1,953,237
Fuel, gypsum, paper sacks
and other 1,673,940 1,616,793
Cost determined by average method-
Operating and maintenance supplies 5,933,293 5,465,850 STOCKHOLDERS' INVESTMENT:
Total inventories $13,612,522 $10,878,187 Capital stock, par value $2.50
Refundable federal and state per share-Authorized 10,000,000
income taxes 116,971 116,971 shares, Issued 2,179,469 shares
Deferred income taxes 420,000 420,000 at 3-31-96 and 2,185,869 shares
Prepaid expenses 213,612 36,846 at 12-31-95 $ 5,448,672 $ 5,464,672
Total current assets $30,385,524 $31,732,487 Class B capital stock, par value
$2.50 per share-Authorized
PROPERTY, PLANT AND EQUIPMENT, at 10,000,000 shares, Issued
cost, less accumulated depreciation 2,046,821 shares at 3-31-96 and
and depletion of $69,011,706 in 1996 2,053,421 shares at 12-31-95 5,117,053 5,133,553
and $68,057,293 in 1995 22,965,905 22,517,810 Retained Earnings 30,171,508 29,806,550
$40,737,233 $40,404,775
DEFERRED INCOME TAXES 2,350,000 2,410,000 Plus: Unrealized holding gain 703,000 619,000
OTHER ASSETS 3,260,031 3,122,478 Total stockholders' investment $41,440,233 $41,023,775
$58,961,460 $59,782,775 $58,961,460 $59,782,775
</TABLE>
<PAGE>
<TABLE>
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
<CAPTION>
For the Three Months Ended
March 31, March 31,
1996 1995
<S> <C> <C>
NET SALES $13,644,086 $13,448,787
COST OF SALES 11,276,243 11,076,739
Gross profit from operations $ 2,367,843 $ 2,372,048
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,709,951 1,635,867
Income from operations $ 657,892 $ 736,181
OTHER INCOME (EXPENSE):
Interest income $ 130,923 $ 92,495
Other, net (31,853) (423,929)
$ 99,070 $ (331,434)
Income before provision
for taxes on income $ 756,962 $ 404,747
PROVISION FOR TAXES ON INCOME 275,000 165,000
NET INCOME (Per share-$.11 in
1996 and $.06 in 1995) $ 481,962 $ 239,747
RETAINED EARNINGS, beg. of period 29,806,550 24,081,613
Less purchase and retirement
of treasury stock 117,004 -
RETAINED EARNINGS, end of period $30,171,508 $24,321,360
</TABLE>
<PAGE>
<TABLE>
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Three Months Ended
March 31, March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 481,962 $ 239,747
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and depletion 1,029,532 881,960
(Increase) decrease in long-term
notes receivable 7,397 (64,481)
(Gain) loss on disposal of assets (4,217) 17,519
Change in current assets and liabilities net
of effects from purchase of subsidiaries:
(Increase) decrease in receivables, net 480,536 (186,375)
Increase in inventories (2,734,335) (3,058,984)
Increase in prepaid expenses (176,766) (98,975)
Decrease in accounts payable, notes
payable and accrued liabilities (201,455) (99,009)
Decrease in deferred income taxes 60,000 105,000
Increase (decrease) in postretirement benefits (19,184) 41,639
Increase (decrease) in accrued pension expense (33,923) 33,000
Minority interest in earnings of subsidiaries 61,924 67,362
Net cash used for operating activities $(1,048,529) $(2,121,597)
INVESTING ACTIVITIES:
Acquisition of property, plant and equipment $(1,482,256) $(1,456,464)
Net sales (purchases) of subsidiaries' stock - 226,573
Proceeds from disposals of property, plant
and equipment 11,455 31,693
Increase in other assets (63,559) (97,133)
Decrease in short term investments 1,467,575 3,002,722
Net cash provided by (used for)
investing activities $ (66,785) $ 1,707,391
FINANCING ACTIVITIES:
Cash dividends $(1,015,869) $ (932,644)
Subsidiaries' dividends paid to minority interest (29,266) (70,742)
Purchase of treasury stock (149,504) -
Net cash used for financing activities $(1,194,639) $(1,003,386)
NET DECREASE IN CASH AND CASH EQUIVALENTS $(2,309,953) $(1,417,592)
CASH AND CASH EQUIVALENTS, beginning of year 5,071,268 3,668,782
CASH AND CASH EQUIVALENTS, end of period $ 2,761,315 $ 2,251,190
Interest paid $3,746 $39,270
Income taxes paid $485,656 $326,203
</TABLE>
<PAGE>
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 quarter of 1996 primarily due to funding increased
inventories and capital expenditures. The registrant generally produces
additional inventory during this quarter in anticipation of sales volume in
excess of production capabilities during the summer and early fall.
Results of Operations
The registrant experienced insignificant changes in sales volume and a
moderate increase in sales prices during the first quarter of 1996 as compared
to the first quarter of 1995 resulting in minor changes in net sales and cost
of sales. Demand for cement and ready-mixed concrete in the registrant's
market area was excellent during both the first quarter of 1996 and the first
quarter of 1995 and is expected to continue during the balance of 1996.
During 1995, other expense was adversely affected by the settlement of a
disputed contract requiring the purchase of a specified volume of rock for use
in the ready-mixed concrete produced by one of the registrant's subsidiaries.
This conflict was resolved during the first quarter of 1995 with the payment
of $265,000 plus $39,000 interest.
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
March 31, 1996.
(b) There were no reports required to be filed on Form 8-K during
the quarter January 1, 1996 to March 31, 1996, 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 May 14, 1996 /s/ Jack R. Callahan
Jack R. Callahan
President
Date May 14, 1996 /s/ Lyndell G. Mosley
Lyndell G. Mosley, CPA
Assistant Secretary-Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MONARCH
CEMENT COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE
QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,761,315
<SECURITIES> 5,605,871
<RECEIVABLES> 8,202,233
<ALLOWANCES> 547,000
<INVENTORY> 13,612,522
<CURRENT-ASSETS> 30,385,524
<PP&E> 91,977,611
<DEPRECIATION> 69,011,706
<TOTAL-ASSETS> 58,961,460
<CURRENT-LIABILITIES> 5,420,941
<BONDS> 0
0
0
<COMMON> 10,565,725
<OTHER-SE> 29,468,508
<TOTAL-LIABILITY-AND-EQUITY> 58,961,460
<SALES> 13,644,086
<TOTAL-REVENUES> 13,644,086
<CGS> 11,276,243
<TOTAL-COSTS> 11,276,243
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 756,962
<INCOME-TAX> 275,000
<INCOME-CONTINUING> 481,962
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 481,962
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
