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, 2001, 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]

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant computed by reference to the average bid and
ask prices of such shares on March 6, 2002, was $60,518,411.

As of March 6, 2002, the registrant had outstanding 2,323,226 shares of
Capital Stock, par value $2.50 per share, and 1,703,732 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, 2001 - 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 10,
2002 - Part III of Form 10-K.

PART I

Item 1. Business

Reference is hereby made to pages 1, 2, 18 and 19 of The Monarch
Cement Company's 2001 annual report to stockholders (filed herewith as Exhibit
13) for a description of the Company's business, including information
regarding industry segments. 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 2001.

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.

Due to inclement construction weather in the Company's market area
during January, February and March, normally about 85% of the Company's sales
occur in April through December.

It is necessary for the Company to invest a significant portion of
its working capital in inventories. At December 31, 2001 the Company had
inventories as follows:

Cement . . . . . . . . . . . . . . . $ 1,813,898
Work in process. . . . . . . . . . . 2,629,984
Fuel, gypsum and other materials . . 5,278,744
Operating and maintenance supplies . 7,867,711
Total. . . . . . . . . . . $17,590,337

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 2001, 2000 or 1999.

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.

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, 2001, the Company and its subsidiaries employed
approximately 700 employees including 360 hourly non-union employees, 200
hourly union employees, and 140 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 negotiation
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
4,800 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 has been aggressively
updating its equipment to improve efficiency and increase capacity. Upon
completion, it is projected that this expansion will 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's present capacity for more than 50 years. Reference
is hereby made to page 3 of Company's 2001 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 segment 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
2001.

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
2001.

PART II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters

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 7 of the Company's 2001 annual report to
stockholders.

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 2001 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 7 of the Company's 2001 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 $5,965,000 of equity securities as of
December 31, 2001. 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 $360,000
effect on comprehensive income.

The Company also has $19,899,655 of bank loans as of December 31,
2001. Interest rates on the Company's bank loans are variable and are based
on the Chase Manhattan Bank prime rate less 1.25%.

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 8 through 20 of the Company's 2001 annual
report to stockholders.

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

None

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 3 through 5 of the Company's definitive proxy
statement prepared in connection with its 2002 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 7 through 10 (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 2002 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 6 and 7 of the Company's definitive proxy
statement prepared in connection with its 2002 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 8 of the Company's definitive proxy statement
prepared in connection with its 2002 annual meeting of stockholders pursuant
to Regulation 14A and previously filed with the Commission.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

Financial Statements
The report of Independent Public Accountants; the Consolidated
Balance Sheets--December 31, 2001 and 2000; the Consolidated Statements of
Income for the Years Ended December 31, 2001, 2000 and 1999; the Consolidated
Statements of Comprehensive Income for the Years Ended December 31, 2001, 2000
and 1999; the Consolidated Statements of Stockholders' Investment for the
Years Ended December 31, 2001, 2000 and 1999; the Consolidated Statements of
Cash Flows for the Years Ended December 31, 2001, 2000 and 1999; and the Notes
to Consolidated Financial Statements are incorporated by reference in Item 8
to this report from the Company's 2001 annual report to stockholders on pages
8 through 20.

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 annual report
on Form 10-K for the year ended December 31, 1994
(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.)
13 2001 Annual Report to Stockholders.
21 Subsidiaries of the Registrant.

Form 8-K

There were no Form 8-K reports filed during the last quarter of
2001.

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 13, 2002

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

Date: March 13, 2002 Date: March 13, 2002

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 13, 2002 Date: March 13, 2002

By: /s/ Robert M. Kissick By: /s/ Lyndell G. Mosley
Robert M. Kissick Lyndell G. Mosley, CPA
Director Assistant Secretary-Treasurer
Chief Financial Officer

Date: March 13, 2002 Date: March 13, 2002

By: /s/ Gayle C. McMillen By: /s/ Debra P. Roe
Gayle C. McMillen Debra P. Roe, CPA
Director Principal Accounting Officer

Date: March 13, 2002 Date: March 13, 2002

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
The Monarch Cement Company

We have audited in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements included in The
Monarch Cement Company's annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 22, 2002. Our audit was made for the purpose of forming an opinion
on those statements taken as a whole. The Schedule of Valuation and
Qualifying Accounts (Schedule II) is the responsibility of the Company's
management and is presented for purposes of complying with the Securities
Exchange Commission's rules and is not part of the basic consolidated
financial statements. The schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

Arthur Andersen LLP

Kansas City, Missouri,
February 22, 2002

THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 2001

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
annual report on Form 10-K for the year
ended December 31, 1994 (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.

13 2001 Annual Report to Stockholders.

21 Subsidiaries of the Registrant.