MONARCH CEMENT CO - 10-K Annual Report

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FORM 10-K
UNITED STATES
Securities and Exchange Commission
Washington, D.C. 20549

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004, 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 of incorporation) (IRS employer identification)

P.O. Box 1000, Humboldt, Kansas 66748-0900
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: 620-473-2222
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class: Capital Stock, par value $2.50 per share
Class B Capital Stock, par value $2.50 per share

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______

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and ask prices of such
shares as of the last business day of the registrant's most recently completed
second fiscal quarter was $69,177,375.

As of March 4, 2005, the registrant had outstanding 2,408,922 shares of
Capital Stock, par value $2.50 per share, and 1,618,036 shares of Class B
Capital Stock, par value $2.50 per share.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into the
indicated parts of this report: (1) the registrant's annual report to
stockholders for the year ended December 31, 2004 - Parts I, II and IV of Form
10-K and (2) the registrant's definitive proxy statement prepared in
connection with the annual meeting of stockholders to be held on April 13,
2005 - Parts II and III of Form 10-K.

PART I

Item 1. Business

Reference is hereby made to pages 1, 2, 22 and 23 of The Monarch
Cement Company's 2004 annual report to stockholders (filed herewith as Exhibit
13) for a description of the Company's business, including information
regarding lines of business. Such information is hereby incorporated herein
by reference. In addition, we submit the following information:

The Company did not introduce any new products nor begin to do
business in a new industry segment during 2004.

The Company owns and operates quarries located near its Humboldt,
Kansas plant. Such quarries contain all essential raw materials presently
used by the Company. The Company's total reserves, including these quarries
and other property located near the plant, are estimated to be sufficient to
maintain operations at the Humboldt plant's present capacity for more than 50
years.

The Company's products are marketed under registered trademarks
using the name "MONARCH". The Company's operations are not materially
dependent on any trademarks, franchises, patents or on any licenses relating
to the use thereof.

Portland cement is the basic material used in the production of
ready-mixed concrete that is used in highway, bridge and building
construction. These construction activities are seasonal in nature. During
winter months when the ground is frozen, groundwork preparation cannot be
completed. Cold temperatures affect concrete set-time, strength and
durability, limiting its use in winter months. Dry ground conditions are also
required for construction activities to proceed. During the summer, winds and
warmer temperatures tend to dry the ground quicker creating fewer delays in
construction projects.

Variations in weather conditions from year-to-year significantly
affect the demand for our products during any particular quarter; however, our
Company's highest revenue and earnings historically occur in its second and
third fiscal quarters, April through September.

It is necessary for the Company to invest a significant portion of
its working capital in inventories. At December 31, 2004 the Company had
inventories as follows:

Cement . . . . . . . . . . . . . . . $ 2,679,506
Work in process. . . . . . . . . . . 1,456,854
Building products. . . . . . . . . . 3,391,901
Fuel, gypsum and other materials . . 2,919,528
Operating and maintenance supplies . 7,500,453
Total. . . . . . . . . . . $17,948,242

The Company is heavily dependent upon the construction industry and
is directly affected by the level of activity in that industry. However, no
customer accounted for 10% or more of the Company's consolidated net revenue
during 2004, 2003 or 2002.

Backlog of customers' orders is not a material factor in the
Company's business.

The Company has no contracts that are subject to renegotiation of
profits or termination thereof at the election of the government.

The manufacture and sale of cement and ready-mixed concrete are
extremely competitive enterprises. A number of producers, including several
nationwide manufacturers, compete for business with the Company in its market
area. The Company is not a significant factor in the nationwide portland
cement or ready-mixed concrete business but does constitute a significant
market factor for cement in its market area. Cement generally is produced to
meet standard specifications and there is little differentiation between the
products sold by the Company and its competitors. Accordingly, competition
exists primarily in the areas of price and customer service.

The Company did not spend a material amount in the last three fiscal
years on Company sponsored research and development. However, the Company is
a member of the Portland Cement Association which conducts research for the
cement industry.

The Company has, during the past several years, made substantial
capital expenditures for pollution control equipment. The Company also incurs
normal operating and maintenance expenditures in connection with its pollution
control equipment.

At December 31, 2004, the Company and its subsidiaries employed
approximately 610 employees including 240 hourly non-union employees, 235
hourly union employees, and 135 salaried employees, which included plant
supervisory personnel, sales and executive staff. The Company has a good
working relationship with its employees and has been successful in negotiating
multiyear union contracts without work stoppages.

All of the Company's operations and sales are in one geographic area
consisting primarily of the State of Kansas, the State of Iowa, southeast
Nebraska, western Missouri, northwest Arkansas and northern Oklahoma.

Item 2. Properties

The Company's corporate offices and cement plant, including
equipment and raw materials are located at Humboldt, Kansas, approximately 110
miles southwest of Kansas City, Missouri. The Company owns approximately
5,000 acres of land on which the Humboldt plant, offices and all essential raw
materials are located. This plant has a present annual capacity of 875,000
tons of cement. The Company believes that this plant and equipment are
suitable and adequate for its current level of operations; however, due to
recent and projected market demands, the Company began updating its equipment
to improve efficiency and increase capacity. We have completed the
installation of a precalciner and clinker cooler on one of our preheater kilns
and have purchased a precalciner and clinker cooler to increase production
through our second preheater kiln. We have scheduled the installation of the
clinker cooler in early 2005 and made preliminary plans to install the
precalciner in 2006. The installation of this equipment would allow the
Company to produce in excess of one million tons of cement per year.
Producing at that level, raw material reserves are estimated to be sufficient
to maintain operations at this plant for more than 50 years. Reference is
hereby made to page 7 of the Company's 2004 annual report to stockholders
(filed herewith as Exhibit 13) for a description of the Company's capital
resources and expansion plans. Such information is hereby incorporated herein
by reference.

The Company also owns approximately 250 acres of land in Des Moines,
Iowa on which it operates a cement terminal. The Company transfers cement
produced in Humboldt, Kansas to this terminal for distribution to Iowa
customers. The Company also owns, but is not currently operating, a rock
quarry located near Earlham, Iowa, approximately 30 miles west of Des Moines,
Iowa. Approximately 300 acres of this 400 acre tract was previously quarried.

The Company owns various companies which sell ready-mixed concrete,
concrete products and sundry building materials in metropolitan areas within
the Humboldt cement plant's primary market. Various equipment and facility
improvements in this line of business ensure these plants are suitable and
adequate for their current level of operations and provide for increases in
market demand. Individual locations do not have a material affect on the
Company's overall operations.

Item 3. Legal Proceedings

The Company was not a party to any material legal proceedings during
2004.

Item 4. Submission of Matters to a Vote of Security Holders

The Company did not submit any matter to a vote of security holders,
through the solicitation of proxies or otherwise, during the fourth quarter of
2004.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities

Pursuant to General Instruction G(2) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on page 9 of the Company's 2004 annual report to
stockholders. In addition we submit the following information:

The Company does not have any compensation plans or individual
compensation arrangements under which equity securities of the registrant are
authorized for issuance to employees or non-employees.

The Company did not sell any of its equity securities during 2004
and the Company did not repurchase any of its equity securities during the
fourth quarter of 2004.

Item 6. Selected Financial Data

Pursuant to General Instruction G(2) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on page 1 of the Company's 2004 annual report to
stockholders.

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Pursuant to General Instruction G(2) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on pages 2 through 9 of the Company's 2004 annual
report to stockholders.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to various market risks, including equity
investment prices. The Company has $13,620,501 of equity securities as of
December 31, 2004. These investments are not hedged and are exposed to the
risk of changing market prices. The Company classifies these securities as
"available-for-sale" for accounting purposes and marks them to market on the
balance sheet at the end of each period. Management estimates that its
investments will generally be consistent with trends and movements of the
overall stock market excluding any unusual situations. An immediate 10%
change in the market price of our equity securities would have a $817,000
effect on comprehensive income.

The Company also has $25,981,667 of bank loans as of December 31,
2004. Interest rates on the Company's advancing term loan and line of credit
are variable and are based on the JP Morgan Chase prime rate less .75% and
1.00%, respectively.

Item 8. Financial Statements and Supplementary Data

Pursuant to General Instruction G(2) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on pages 10 through 25 of the Company's 2004 annual
report to stockholders.

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

None

Item 9A. Controls and Procedures

The Company maintains disclosure controls and procedures (as defined
in Rules 13a-5(e) and 15d-15(e) under the Exchange Act) that are designed to
ensure that information required to be disclosed in the Company's reports
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and
Exchange Commission, and that such information is accumulated and communicated
to the Company's management, including its President and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosures. Any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired
control objectives.

The Company's management, including its President and Chairman of
the Board of Directors and Chief Financial Officer, evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures within 90 days of the filing date of this Annual Report on Form
10-K. Based on this evaluation, the Company's President and Chairman of the
Board of Directors and Chief Financial Officer have concluded that the design
and operation of these disclosure controls and procedures are effective.
There has been no change in the Company's internal control over financial
reporting during the quarter ended December 31, 2004 that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.

Item 9B. Other Information

There was no information required to be disclosed, but not reported,
in a report on Form 8-K during the fourth quarter of 2004.

PART III

Item 10. Directors and Executive Officers of the Registrant

Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on pages 4 through 6 of the Company's definitive proxy
statement prepared in connection with its 2005 annual meeting of stockholders
pursuant to Regulation 14A and previously filed with the Commission.

Item 11. Executive Compensation

Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on pages 8 through 11 (except for the information set
forth under the heading "Board of Directors' Report on Executive Compensation"
which is expressly excluded from such incorporation) of the Company's
definitive proxy statement prepared in connection with its 2005 annual meeting
of stockholders pursuant to regulation 14A and previously filed with the
Commission.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on pages 7 and 8 of the Company's definitive proxy
statement prepared in connection with its 2005 annual meeting of stockholders
pursuant to Regulation 14A and previously filed with the Commission.

Item 13. Certain Relationships and Related Transactions

Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on page 9 of the Company's definitive proxy statement
prepared in connection with its 2005 annual meeting of stockholders pursuant
to Regulation 14A and previously filed with the Commission.

Item 14. Principal Accountant Fees and Services

Pursuant to General Instruction G(3) to Form 10-K, the information
required by this Item is incorporated herein by reference to the material
responsive to this Item on page 13 of the Company's definitive proxy statement
prepared in connection with its 2005 annual meeting of stockholders pursuant
to Regulation 14A and previously filed with the Commission.

PART IV

Item 15. Exhibits and Financial Statement Schedules

Financial Statements
The report of Independent Public Accountants--BKD, LLP; the
Consolidated Balance Sheets--December 31, 2004 and 2003; the Consolidated
Statements of Income for the Years Ended December 31, 2004, 2003 and 2002; the
Consolidated Statements of Comprehensive Income for the Years Ended December
31, 2004, 2003 and 2002; the Consolidated Statements of Stockholders'
Investment for the Years Ended December 31, 2004, 2003 and 2002; the
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004,
2003 and 2002; and the Notes to Consolidated Financial Statements are
incorporated by reference in Item 8 to this report from the Company's 2004
annual report to stockholders on pages 10 through 25.

Supporting Schedules
Schedule II -- Valuation and Qualifying Accounts

Exhibits
3(i) Articles of Incorporation. (Filed with the
Company's Annual Report on Form 10-K for the
year ended December 31, 1994 (File No. 0-2757)
as Exhibit 3(i) and incorporated herein by

reference.)
3(ii) By-laws. (Filed with the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2004
(File No. 0-2757) as Exhibit 3(ii) and incorporated
herein by reference.)
10.1 Loan agreement dated January 1, 2001, between the
Bank of Oklahoma N.A. and The Monarch Cement Company.
(Filed with the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2001
(File No. 0-2757) as Exhibit 10.1 and incorporated
herein by reference.)
10.1(a) First amendment to agreement dated January 1, 2001,
between the Bank of Oklahoma N.A. and The Monarch
Cement Company. (Filed with the Company's Annual
Report on Form 10-K for the year ended December 31,
2002 (File No. 0-2757) as Exhibit 10.1(a) and
incorporated herein by reference.)
10.1(b) Second amendment to agreement dated January 1, 2001,
between the Bank of Oklahoma N.A. and The Monarch
Cement Company as amended by first amendment dated
December 31, 2002. (Filed with the Company's Annual
Report on Form 10-K for the year ended December 31,
2003 (File No. 0-2757) as Exhibit 10.1(b) and
incorporated herein by reference.)
10.1(c) Third amendment to agreement dated January 1, 2001,
between the Bank of Oklahoma N.A. and The Monarch
Cement Company as amended by first amendment dated
December 31, 2002 and second amendment dated
December 31, 2003.
13 2004 Annual Report to Stockholders.
21 Subsidiaries of the Registrant.
31.1 Certificate of the President and Chairman of the
Board pursuant to Section 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934.
31.2 Certificate of the Chief Financial Officer pursuant
to Section 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934.
32.1 18 U.S.C. Section 1350 Certificate of the President
and Chairman of the Board dated March 14, 2005.
32.2 18 U.S.C. Section 1350 Certificate of the Chief
Financial Officer dated March 14, 2005.

S I G N A T U R E S

Pursuant to the requirements of Section 13 or 15(d) 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)

By: /s/ Walter H. Wulf, Jr.
Walter H. Wulf, Jr.
President

Date: March 14, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

By: /s/ Jack R. Callahan By: /s/ Gayle C. McMillen
Jack R. Callahan Gayle C. McMillen
Director Director

Date: March 14, 2005 Date: March 14, 2005

By: /s/ Ronald E. Callaway By: /s/ Byron K. Radcliff
Ronald E. Callaway Byron K. Radcliff
Director Director

Date: March 14, 2005 Date: March 14, 2005

By: /s/ David L. Deffner By: /s/ Walter H. Wulf, Jr.
David L. Deffner Walter H. Wulf, Jr.
Director President, Principal Executive
Officer and Director

Date: March 14, 2005 Date: March 14, 2005

By: /s/ Robert M. Kissick By: /s/ Debra P. Roe
Robert M. Kissick Debra P. Roe, CPA
Director Chief Financial Officer

Date: March 14, 2005 Date: March 14, 2005

Report of Independent Registered Public Accounting Firm on
Financial Statement Schedules

Audit Committee, Board of Directors and Stockholders
The Monarch Cement Company
Humboldt, Kansas

In connection with our audit of the consolidated financial statements of The
Monarch Cement Company for each of the three years in the period ended
December 31, 2004, we have also audited the following financial statement
schedules. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits of the basic financial
statements. The schedules are presented for purposes of complying with the
Securities and Exchange Commission's rules and regulations and are not a
required part of the consolidated financial statements.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly, in all material respects, the information required to
be included therein.

/s/ BKD, LLP

Kansas City, Missouri
February 11, 2005

THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 2004

EXHIBIT INDEX

Exhibit
Number Description

3(i) Articles of Incorporation. (Filed with the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994 (File No. 0-2757) as Exhibit 3(i)
and incorporated herein by reference.)

3(ii) By-laws. (Filed with the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2004
(File No. 0-2757) as Exhibit 3(ii) and incorporated
herein by reference.)

10.1 Loan agreement dated January 1, 2001, between the Bank
of Oklahoma N.A. and The Monarch Cement Company.
(Filed with the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2001 (File
No. 0-2757) as Exhibit 10.1 and incorporated herein by
reference.)

10.1(a) First amendment to agreement dated January 1, 2001,
between the Bank of Oklahoma N.A. and The Monarch
Cement Company. (Filed with the Company's Annual
Report on Form 10-K for the year ended December 31,
2002 (File No. 0-2757) as Exhibit 10.1(a) and
incorporated herein by reference.)

10.1(b) Second amendment to agreement dated January 1, 2001,
between the Bank of Oklahoma N.A and The Monarch
Cement Company, as amended by first amendment dated
December 31, 2002. (Filed with the Company's Annual
Report on Form 10-K for the year ended December 31,
2003 (File No. 0-2757) as Exhibit 10.1(b) and
incorporated herein by reference.)

10.1(c) Third amendment to agreement dated January 1, 2001,
between the Bank of Oklahoma N.A and The Monarch
Cement Company, as amended by first amendment dated
December 31, 2002 and second amendment dated
December 31, 2003.

13 2004 Annual Report to Stockholders.

21 Subsidiaries of the Registrant.

31.1 Certificate of the President and Chairman of the
Board pursuant to Section 13a-14(a)/15d-14(a) of
the Securities Exchange Act of 1934.

31.2 Certificate of the Chief Financial Officer pursuant
to Section 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934.

32.1 18 U.S.C. Section 1350 Certificate of the President
and Chairman of the Board dated March 14, 2005.

32.2 18 U.S.C. Section 1350 Certificate of the Chief
Financial Officer dated March 14, 2005.