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, 2002, 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, 2003, was $54,131,868.

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 $66,833,375.

As of March 6, 2003, the registrant had outstanding 2,359,671 shares of
Capital Stock, par value $2.50 per share, and 1,667,287 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, 2002 - 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 9, 2003
- - Parts II and III of Form 10-K.

PART I

Item 1. Business

Reference is hereby made to pages 1, 2, 21 and 22 of The Monarch
Cement Company's 2002 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 2002.

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, 2002 the Company had
inventories as follows:

Cement . . . . . . . . . . . . . . . $ 1,386,348
Work in process. . . . . . . . . . . 626,130
Fuel, gypsum and other materials . . 5,284,296
Operating and maintenance supplies . 8,059,488
Total. . . . . . . . . . . $15,356,262

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 2002, 2001 or 2000.

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, 2002, the Company and its subsidiaries employed
approximately 700 employees including 325 hourly non-union employees, 235
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 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 purchase a precalciner and clinker cooler to increase production
through our second preheater kiln. We have postponed the installation of this
equipment until market projections indicate the need for this additional kiln
capacity. 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
pages 3 and 4 of the Company's 2002 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
2002.

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
2002.

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 8 of the Company's 2002 annual report to
stockholders. In addition we submit the following:

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.

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 2002 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 8 of the Company's 2002 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 $8,540,000 of equity securities as of
December 31, 2002. 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 $510,000
effect on comprehensive income.

The Company also has $28,048,076 of bank loans as of December 31,
2002. 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 1.25% and
..75%, 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 9 through 23 of the Company's 2002 annual
report to stockholders.

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

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 12 and 13 of the Company's definitive proxy
statement prepared in connection with its 2003 annual meeting of stockholders
pursuant to Regulation 14A and previously filed with the Commission.

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 2003 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 2003 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 2003 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 2003 annual meeting of stockholders pursuant
to Regulation 14A and previously filed with the Commission.

Item 14. Controls and Procedures

(a) Based on an evaluation of disclosure controls and procedures
for the period ended December 31, 2002 conducted by our President and Chief
Financial Officer, we conclude that our disclosure controls and procedures are
effective. The President and Chief Financial Officer conducted this
evaluation on February 4, 2003.

(b) In February 2003, the independent public accountants studied
and evaluated the Company's internal control structure in connection with the
audit of our annual consolidated financial statements. This was not intended
to be a complete audit of all our internal controls. There were no
significant changes in our internal control or in other factors that could
significantly affect internal controls subsequent to the date of the most
recent evaluation, nor any significant deficiencies or material weaknesses in
such internal controls requiring corrective actions. As a result, no
corrective actions were taken.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

Financial Statements
The reports of Independent Public Accountants--BKD, LLP and Arthur
Andersen LLP; the Consolidated Balance Sheets--December 31, 2002 and 2001; the
Consolidated Statements of Income for the Years Ended December 31, 2002, 2001
and 2000; the Consolidated Statements of Comprehensive Income for the Years
Ended December 31, 2002, 2001 and 2000; the Consolidated Statements of
Stockholders' Investment for the Years Ended December 31, 2002, 2001 and 2000;
the Consolidated Statements of Cash Flows for the Years Ended December 31,
2002, 2001 and 2000; and the Notes to Consolidated Financial Statements are
incorporated by reference in Item 8 to this report from the Company's 2002
annual report to stockholders on pages 9 through 23.

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.)
10.1(a) First amendment to agreement dated January 1, 2001,
between the Bank of Oklahoma N.A. and The Monarch
Cement Company.
13 2002 Annual Report to Stockholders.
16(a) Letter re change in certifying public accountant.
Filed with the Company's report on Form 8-K,
May 15, 2002 (File No. 0-2757) as Exhibit 16
and incorporated herein by reference.)
16(b) Letter re change in certifying public accountant.
Filed with the Company's report on Form 8-K,
August 12, 2002 (File No. 0-2757) as Exhibit 16
and incorporated herein by reference.)
21 Subsidiaries of the Registrant.

Form 8-K

There was one Form 8-K report filed during the last quarter of 2002
(October 1, 2002 through December 31, 2002). This report contained the
Certification of the Chief Executive Officer and the Certification of the
Chief Financial Officer which accompanied the Form 10-Q filed for the quarter
ended September 30, 2002.

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, 2003

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 14, 2003 Date: March 14, 2003

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, 2003 Date: March 14, 2003

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

Date: March 14, 2003 Date: March 14, 2003

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

Date: March 14, 2003 Date: March 14, 2003

CERTIFICATION

I, Walter H. Wulf, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of The Monarch Cement
Company;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses
in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 14, 2003
/s/ Walter H. Wulf, Jr.
Walter H. Wulf, Jr.
President and Chairman of the Board

I, Lyndell G. Mosley, certify that:

1. I have reviewed this annual report on Form 10-K of The Monarch Cement
Company;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses
in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 14, 2003
/s/ Lyndell G. Mosley
Lyndell G. Mosley
Chief Financial Officer and
Assistant Secretary-Treasurer

Report of Independent Accountants'
on Financial Statement Schedules

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 the year ended December 31, 2002, we have also
audited the following financial statement schedule. This financial statement
schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audit of the basic consolidated financial statements. This
schedule is presented for purposes of complying with the Securities and
Exchange Commission's rules and regulations and is not a required part of the
consolidated financial statements.

In our opinion, the 2002 financial statement schedule referred to above, when
considered in relation to the 2002 basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.

The financial statement schedules for the two years ended December 31, 2001,
were audited by other accountants who have ceased operations. Their report
dated February 22, 2002, expressed an unqualified opinion on such financial
statement schedules in relation to the basic consolidated financial statements
for the two years ended December 31, 2001, taken as a whole.

BKD, LLP
Kansas City, Missouri
February 14, 2003

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 report is a copy of the previously issued report.
* The predecessor auditor has not reissued the report.

THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 2002

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.)

10.1(a) First amendment to agreement dated January 1,
2001, between the Bank of Oklahoma N.A.
and The Monarch Cement Company.

13 2002 Annual Report to Stockholders.

16(a) Letter re change in certifying public
accountant. (Filed with the Company's
report on Form 8-K, May 15, 2002
(File No. 0-2757) as Exhibit 16 and
incorporated herein by reference.)

16(b) Letter re change in certifying public
accountant. (Filed with the Company's
report on Form 8-K, August 12, 2002
(File No. 0-2757) as Exhibit 16 and
incorporated herein by reference.)

21 Subsidiaries of the Registrant.