Disclosure Statement Pursuant to the Pink Basic Disclosure Guidelines

The Monarch Cement Company

A Kansas Corporation

P.O Box 1000, Humboldt, Kansas

________________________________
620-473-2222
www.monarchcement.com
[email protected]
3241 – Cement, Hydraulic
3273 – Ready-Mixed Concrete

Annual Report

For the Period Ending: December 31, 2021

As of December 31, 2021, the number of shares outstanding of our Common Stock was: 2,624,310
As of December 31, 2021, the number of shares outstanding of our Class B Common Stock was: 1,137,649
As of September 30, 2021, the number of shares outstanding of our Common Stock was: 2,624,370
As of September 30, 2021, the number of shares outstanding of our Class B Common Stock was: 1,137,849
As of December 31, 2020, the number of shares outstanding of our Common Stock was: 2,609,104
As of December 31, 2020, the number of shares outstanding of our Class B Common Stock was: 1,187,725

Indicate by check mark whether the company is a shell company (as defined in Rule 405 of the Securities Act of 1933 and
Rule 12b-2 of the Exchange Act of 1934):
Yes: No:

Indicate by check mark whether the company’s shell status has changed since the previous reporting period:
Yes: No:

Indicate by check mark whether a Change in Control of the company has occurred over this reporting period:
Yes: No:

1) Name of the issuer and its predecessors

In answering this item, please also provide any names used by predecessor entities and the dates of the name changes.
The Monarch Cement Company

The state of incorporation or registration of the issuer and of each of its predecessors (if any) during the past five years;
Please also include the issuer’s current standing in its state of incorporation (e.g. active, default, inactive):
Monarch was organized as a corporation under the laws of the State of Kansas on July 29, 1913 and is currently active.

Describe any trading suspension orders issued by the SEC concerning the issuer or its predecessors since inception:
None

List any stock split, stock dividend, recapitalization, merger, acquisition, spin-off, or reorganization either currently
anticipated or that occurred within the past 12 months:
None

The address(es) of the issuer’s principal executive office:

The Monarch Cement Company
449 1200 Street
P.O. Box 1000
Humboldt, KS 66748
 The address(es) of the issuer’s principal place of business:
Check box if principal executive office and principal place of business are the same address: ☒

Has the issuer or any of its predecessors been in bankruptcy, receivership, or any similar proceeding in the past five
years?
Yes: ☐ No: ☒

If this issuer or any of its predecessors have been the subject of such proceedings, please provide additional details in the
space below:
None

2) Security Information

Trading symbol: MCEM

Exact title and class of securities outstanding: Capital Stock
CUSIP: 609031307
Par or stated value: $2.50
Total shares authorized: 10,000,000 as of December 31, 2021
Total shares outstanding: 2,624,310 as of December 31, 2021

Trading symbol: MCEM

Exact title and class of securities outstanding: Class B Capital Stock
CUSIP: 609031406
Par or stated value: $2.50
Total shares authorized: 10,000,000 as of December 31, 2021
Total shares outstanding: 1,137,649 as of December 31, 2021

Number of shares in the Public Float: 3,261,840 as of December 31, 2021

Total number of shareholders of record: 290 as of December 31, 2021

Transfer Agent
Name: The Monarch Cement Company
Address: 449 1200 Street
P.O. Box 1000
Humboldt, KS 66748-0900
Phone: 620-473-2222
Email: [email protected]

Is the Transfer Agent registered under the Exchange Act? Yes: No:

3) Issuance History

A. Changes to the Number of Outstanding Shares

Pursuant to the provisions of Monarch's Articles of Incorporation governing the conversion of its Class B Capital Stock
into Capital Stock a total of 15,466 shares of Monarch's Capital Stock were issued in the year ended December 31,
2021 upon conversion of an equal number of shares of Monarch's Class B Capital Stock. The following shares were
converted during the past two years as indicated below:

Number of
Opening Balance:
Shares
outstanding as of Capital: 2,644,159
01/01/2019
Class B: 1,216,630
Date of Transaction Number of Class of Securities Value Were the Individual/ Reason for Restric Exemptio
Transaction type (e.g. new Shares of shares Entity share issuance ted or n or
issuance, Issued (or shares issued at a Shares were (e.g. for cash or Unrestr Registrati
cancellation, cancelled) issued discount to issued to debt conversion) icted on Type?
shares returned ($/per market (entities OR Nature of as of
to treasury) share) price at the must have Services this
at time of individual Provided (if filing?
Issuan issuance? with voting / applicable)
ce (Yes/No) investment
 control
disclosed).

6/19/19 Conversion 1,700 Class B to Capital

6/28/19 Conversion 1,000 Class B to Capital

3/30/20 Conversion 19,072 Class B to Capital

11/12/20 Conversion 3,300 Class B to Capital

12/4/20 Conversion 1,500 Class B to Capital

12/28/20 Retirement 60,587 Capital

12/28/20 Retirement 2,333 Class B

12/31/20 Retirement 1,040 Capital

1/28/21 Conversion 670 Class B to Capital

2/5/21 Conversion 600 Class B to Capital

4/1/21 Conversion 25 Class B to Capital

5/19/21 Retirement 34,610 Class B

6/15/21 Conversion 13,971 Class B to Capital

12/15/21 Conversion 200 Class B to Capital

12/21/21 Retirement 260 Capital

Shares
Ending Balance:
Outstanding on
Capital: 2,624,310
12/31/2021:
Class B: 1,137,649

The Company received no payment in connection with the issuances of such shares. No underwriters were involved
with the issuance of such shares and no commissions were paid in connection with such issuances. There was no
advertisement or general solicitation made in connection with the issuance of such shares. Except as described
above, Monarch did not issue or sell any shares of its Capital Stock or Class B Capital Stock during the year ended
December 31, 2021.

B. Debt Securities, Including Promissory and Convertible Notes

The Company has a current credit agreement with BOKF, NA dba Bank of Oklahoma which provides for a $15.0
million revolving note maturing on December 31, 2024; the previous agreement matured on December 31, 2021. As
of December 31, 2021 and December 31, 2020, there was nothing borrowed against the revolving loan.

Check this box if there are no outstanding promissory, convertible notes or debt arrangements: ☒
Date of Outstanding Principal Interest Maturity Conversion Terms (e.g. Name of Noteholder Reason for
Note Balance ($) Amount Accrued Date pricing mechanism for (entities must have Issuance (e.g.
Issuance at ($) determining conversion of individual with voting Loan, Services,
Issuance instrument to shares) / investment control etc.)
($) disclosed).
4) Financial Statements

A. The following financial statements were prepared in accordance with:

U.S. GAAP
IFRS

B. The financial statements for this reporting period were prepared by (name of individual):
Name: Tony Kasten
Title: Chief Financial Officer, Sec./Tres.
Relationship to Issuer: Officer

5) Issuer’s Business, Products and Services

A. Summarize the issuer’s business operations

The Monarch Cement Company (Monarch) manufactures and sells portland cement. The manufacture of portland
cement by Monarch involves the quarrying of clay and limestone and the crushing, drying and blending of these raw
materials into the proper chemical ratio. The raw materials are then heated in kilns to 2800º Fahrenheit at which time
chemical reactions occur forming a new compound called clinker. After the addition of a small amount of gypsum, the
clinker is ground into a very fine powder that is known as portland cement. The term "portland cement" is not a brand
name but is a term that distinguishes cement manufactured by this chemical process from natural cement, which is no
longer widely used. Portland cement is the basic material used in the production of ready-mixed concrete that is used
in highway, bridge and building construction where strength and durability are primary requirements.

Subsidiaries of Monarch (which together with Monarch are referred to herein as the "Company") are engaged in the
ready-mixed concrete, concrete products and sundry building materials business. Ready-mixed concrete is
manufactured by combining aggregates with portland cement, water and chemical admixtures in batch plants. It is
then loaded into mixer trucks and mixed in transit to the construction site where it is delivered to the contractor.
Concrete products primarily include pre-formed components produced by the Company that are ready for use in the
construction of commercial buildings and institutional facilities.

B. Describe any subsidiaries, parents, or affiliated companies.

Subsidiaries of Monarch include: Beaver Lake Concrete, Inc., Capitol Concrete Products Co., Inc., City Wide
Construction Products Co., Concrete Enterprises, Inc., Concrete Materials, Inc., Dodge City Concrete, Inc., Hays
Ready-Mix, Inc., Joplin Concrete Company, Inc., Kansas Sand and Concrete, Inc., Kay Concrete Materials Co.,
Monarch Cement of Iowa, Inc., Salina Concrete Products, Inc., Springfield Ready Mix Co. and Tulsa Dynaspan, Inc.
These subsidiaries are 100% owned by Monarch and can be contacted through Monarch.

C. Describe the issuers’ principal products or services.

The marketing area for Monarch's products, which is limited by the relatively high cost of transporting cement,
consists primarily of the State of Kansas, the State of Iowa, southeast Nebraska, western Missouri, northwest
Arkansas and northern Oklahoma. Included within this area are the metropolitan markets of Des Moines, Iowa;
Kansas City, Missouri; Springfield, Missouri; Wichita, Kansas; Omaha, Nebraska; Lincoln, Nebraska; Fayetteville,
Arkansas and Tulsa, Oklahoma. Sales of cement are made primarily to contractors, ready-mixed concrete plants,
concrete products plants, building materials dealers and governmental agencies. Monarch cement is delivered either
in bulk or in paper bags and is sold under the "MONARCH" brand name. The cement is distributed both by truck and
rail, either common or private carrier.

Subsidiaries of Monarch sell ready-mixed concrete, concrete products and sundry building materials in Monarch's
primary market.

6) Issuer’s Facilities

The Company's corporate office 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 for the cement operations are located.
Construction completed in 2006 increased our cement plant's capacity allowing us 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, although not all reserves are currently accessible under existing
 governmental permits and approvals. The Company believes that this plant and equipment are suitable and adequate
for its current level of operations and provides for increases in market demand.

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 a rock quarry located near Earlham, Iowa, approximately 30 miles west of
Des Moines, Iowa. Approximately 353 acres of this 400 acre tract have been quarried and the Company has
contracted with a third party to quarry and sell the remaining rock. This quarry operation does not have a material
effect on the Company's overall operations.

The Company owns various companies which sell ready-mixed concrete, concrete products and sundry building
materials 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. No single subsidiary's physical property is materially significant to the Company.

There are no material encumbrances on our properties.

7) Officers, Directors, and Control Persons

Name of Affiliation with Residential Address (City / Number Share Ownership Note
Officer/Director and Company (e.g. State Only) of shares type/class Percentage of
Control Person Officer/Director/Owner owned Class
of more than 5%) Outstanding

Walter H. Wulf, Jr. Officer/Director Humboldt, KS 169,452 Capital 6.45%

193,542 Class B 17.03%

Kent A. Webber Officer/Director Chanute, KS 3,900 Capital *

Robert M. Kissick Officer/Director Leawood, KS 14,487 Capital *

39,903 Class B 3.51%

Tony D. Kasten Officer Chanute, KS 85 Capital *

Lisa J. Fontaine Officer Iola, KS 2,500 Capital *

Kenneth G. Miller Officer Humboldt, KS 786 Capital *

N. Joan Perez Officer Humboldt, KS 6,400 Capital *

Douglas W. Officer Chanute, KS 691 Capital *

Sommers

Mark A. Callaway Director Wichita, KS 100 Capital *

David L. Deffner Director Gulf Shores, AL 11,863 Class B 1.04%

Gayle C. McMillen Director Salina, KS 34,610 Class B 3.04%

Byron J. Radcliff Director Steamboat Springs, CO 4,250 Capital *

1,000 Class B *

Robert K. Radcliff Director Chicago, IL 4,250 Capital *

Steve W. Sloan Director Pittsburg, KS 2,000 Capital *

Michael R. Director Kent, WA 1,600 Capital *

Wachter
600 Class B *

Walter H. Wulf, III Director Birmingham, MI 3,800 Capital *

 4,300 Class B *

Paula D. Radcliff Owner of more Dexter, KS 199,760 Capital 7.61%

than 5%
211,960 Class B 18.65%

*Less than one percent.

8) Legal/Disciplinary History

A. Please identify whether any of the persons listed above have, in the past 10 years, been the subject of:

1. A conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding

traffic violations and other minor offenses);
None

2. The entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of
competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such
person’s involvement in any type of business, securities, commodities, or banking activities;
None

3. A finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange
Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of
federal or state securities or commodities law, which finding or judgment has not been reversed, suspended,
or vacated; or
None

4. The entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended, or
otherwise limited such person’s involvement in any type of business or securities activities.
None

B. Describe briefly any material pending legal proceedings, other than ordinary routine litigation incidental to the
business, to which the issuer or any of its subsidiaries is a party or of which any of their property is the subject.
Include the name of the court or agency in which the proceedings are pending, the date instituted, the principal parties
thereto, a description of the factual basis alleged to underlie the proceeding and the relief sought. Include similar
information as to any such proceedings known to be contemplated by governmental authorities.
None

9) Third Party Providers

Securities Counsel
Firm: Stinson LLP
Address 1: 1201 Walnut Street, Suite 2900
Address 2: Kansas City, MO 64106-2150

Accountant or Auditor
Firm: Grant Thornton, LLP
Address 1: 1201 Walnut Street, Suite 2200
Address 2: Kansas City, MO 64106
Phone: (816) 412-2400

Investor Relations Consultant

Firm: Stinson LLP
Address 1: 1201 Walnut Street, Suite 2900
Address 2: Kansas City, MO 64106-2150
10) Issuer Certification

Principal Executive Officer:

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

1. I have reviewed this Annual Report of The Monarch Cement Company;

2. Based on my knowledge, this disclosure statement 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 disclosure statement; and

3. Based on my knowledge, the financial statements, and other financial information included or incorporated by
reference in this disclosure statement, fairly present in all material respects the financial condition, results of
operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.

March 14, 2022

/s/ Walter H. Wulf, Jr.

Chairman of the Board and
Chief Executive Officer
Principal Financial Officer:

I, Tony D. Kasten certify that:

1. I have reviewed this Annual Report of The Monarch Cement Company;

2. Based on my knowledge, this disclosure statement 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 disclosure statement; and

3. Based on my knowledge, the financial statements, and other financial information included or incorporated by
reference in this disclosure statement, fairly present in all material respects the financial condition, results of
operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.

March 14, 2022

/s/ Tony D. Kasten

Chief Financial Officer
Secretary-Treasurer
TO OUR SHAREHOLDERS

March 14, 2022

To Our Valued Shareholders:

Although 2021 was a little less turbulent than 2020, it certainly brought its own unique challenges. As our
hopes for the end of the pandemic waned, our focus shifted from a temporary fix to a permanent solution. Not only
did we learn simply how to live and work with unprecedented safety constraints amidst the threat of illness at every
casual encounter, we learned how to thrive in these conditions! Our leadership team spent countless hours
developing Covid protocols and safety initiatives that allowed our workforce to continue doing what they do best:
making and delivering the highest quality cement, concrete and concrete products in the Midwest. Our employees
truly are our greatest assets. From the laborer on clean-up to the bulk loader, from the truck driver to the office staff,
they are the heart and soul of this great company, and we want to give recognition to each and every one for their
valuable contributions which enabled us to rise above the challenges.

The year 2021 also brought some unique opportunities that allowed us to ship 1,209,777 tons, a 12.4%
increase over 2020. This equates to another record year in both tons shipped and net income. Our ready-mix group
sold 625,000 cubic yards of concrete and added $3.1 million to our bottom line. We are continually exploring
opportunities to expand our subsidiary group and add value to our company.

Our investment in Property, Plant and Equipment exceeded $24 million in 2021. We purchased 27 new
ready-mix trucks, 6 new cement haul trucks, 3 loaders and 2 excavators. We also completed the addition of a
100,000 sq. ft. materials storage facility in Humboldt. This facility allows us to store most of our raw materials and
clinker out of the elements, which creates a more efficient mixing process, consuming less fuel to dry the raw
materials. Another project we are very excited about is the expansion into Spring Hill, Kansas. We broke ground on
property that will include four 5,000 ton autonomous loading cement silos, a state-of-the-art ready-mix plant and a
cement haul trucking terminal. The project is scheduled for completion in the fourth quarter of 2022.

As we look to the future, we are aligning our focus with the Portland Cement Associations’ Roadmap to
Carbon Neutrality by 2050. In 2022, we will begin to produce and ship a new product, Portland Limestone Cement
(PLC), or Type 1L. PLC is a blended cement that will reduce CO2 emissions by approximately 10% without
sacrificing any other qualities.

Finally, we want to thank you, our shareholders, for your continued support and investment in The Monarch
Cement Company. We consider it a privilege that you have entrusted us with these responsibilities. With the
blessings and support of our Heavenly Father, we remain deeply committed to the success of this great American
company.

Wൺඅඍൾඋ H. Wඎඅൿ, Jඋ.

CEO and Chairman of the Board

PROUD OF OUR HERITAGE | PASSIONATE ABOUT OUR FUTURE

 2021 FINANCIAL RESULTS

in thousands, except per share data 2021 2020 2019 2018 2017
FOR THE YEAR
Net sales $ 211,848 $ 188,825 $ 172,094 $ 173,895 $ 168,080
Net income 60,443 33,875 33,114 16,035 21,703

PER SHARE INFORMATION

Basic earnings per share $ 16.01 $ 8.78 $ 8.58 $ 4.15 $ 5.62
Cash dividends declared per share 5.60 2.00 1.85 1.75 1.40
Stockholders’ equity per share 68.71 55.98 51.16 45.60 44.53

YEAR END POSITION

Total assets $ 295,196 $ 257,770 $ 235,973 $ 206,305 $ 204,282
Long-term debt obligations - - 721 1,415 2,093

Consolidated net sales for the year ended December 31, 2021 were approximately $211.8 million, an increase of
$23.0 million as compared to the year ended December 31, 2020. Sales in our Cement Business were higher by
$15.7 million and sales in our Ready-Mixed Concrete Business were also higher by $7.3 million. Cement Business sales
increased $13.9 million due to a 13.3% increase in volume sold and increased $1.8 million due to price increases. Ready-
mixed concrete sales increased $4.9 million due to a 7.4% increase in cubic yards sold and increased $1.3 million due to
price increases. Sales for brick, block, aggregates and other sundry items increased $1.1 million.

Consolidated cost of sales for 2021 were $16.1 million higher than cost of sales for 2020. Cost of sales in our Cement
Business increased $8.5 million and cost of sales in our Ready-Mixed Concrete Business increased $7.6 million. Cement
Business cost of sales increased $7.6 million due to the 13.3% increase in volume sold and $0.9 million due to the
increases in production costs. Ready-Mixed Concrete Business cost of sales increased $4.2 million due to the 7.4%
increase in cubic yards of ready-mixed concrete sold and increased $3.1 million due to increases in material, production
and delivery costs. Cost of sales for brick, block, aggregates and other sundry items increased $0.3 million.

As a result of the above sales and cost of sales factors, our overall gross profit rate for the year ended December 31, 2021
was 31.1% compared to 31.2% for the year ended December 31, 2020. The Cement Business gross profit rate increased
from 45.3% for 2020 to 45.4% for 2021. The gross profit rate for Ready-Mixed Concrete Business decreased from 13.6%
for 2020 to 12.2% for 2021.

Selling, general and administrative expenses increased by $1.2 million for the year ended December 31, 2021 as
compared to the year ended December 31, 2020. These costs are normally considered fixed costs that do not vary
significantly with changes in sales volume.

Unrealized gain (loss) on equity investments increased $17.7 million for the year ended December 31, 2021 compared
to the year ended December 31, 2020. Other, net contains miscellaneous non-operating income (expense) items
excluding interest income, interest expense, gains (losses) on sale of equity investments (in 2021 and 2020), pension and
postretirement benefit income, unrealized gains (losses) on equity investments and dividend income.

The effective tax rates for 2021 and 2020 were 20.1% and 19.2%, respectively. The Company’s effective tax rate differs
from the federal and state statutory income tax rate primarily due to the effects of percentage depletion and state tax
credits. During 2021 and 2020, percentage depletion decreased the effective tax rate by 1.6% and 2.7%, respectively.
During 2021 and 2020, state tax credits decreased the effective tax rate by 2.3% and 2.9%, respectively.

Certain statements in this Annual Report constitute “forward-looking statements”. Except for historical information, the statements made in this report are forward-looking statements that
involve risks and uncertainties. You can identify these statements by forward-looking words such as “should”, “anticipate”, “believe”, “intend”, “may”, “forecast” or similar words. In
particular, statements with respect to the timing, scope, cost and benefits of our proposed and recently completed capital improvements and expansion plans, including potential fuel savings,
projected installation costs and other cash needs, and our forecasted cement sales are all forward-looking statements. You should be aware that 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; demand for our Company’s products; cyclical and seasonal nature of our business; the affect weather has on our business; the effect of environmental and other government
regulation; and the effect of federal and state funding on demand for our products
GRANT THORNTON LLP REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
1201 Walnut St., Suite 2200
Kansas City, MO 64106

D +1 816 412 2400

F +1 816 412 2404

Board of Directors and Stockholders

The Monarch Cement Company

Opinion
We have audited the consolidated financial statements of The Monarch Cement
Company (a Kansas corporation) and subsidiaries (the “Company”), which comprise
the consolidated balance sheet as of December 31, 2021, and the related
consolidated statements of income, comprehensive income, stockholders’ equity, and
cash flows for the year then ended, and the related notes to the financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in

all material respects, the financial position of the Company as of December 31, 2021,
and the results of its operations and its cash flows for the year then ended in
accordance with accounting principles generally accepted in the United States of
America.

Basis for opinion

We conducted our audits of the consolidated financial statements in accordance with
auditing standards generally accepted in the United States of America (US GAAS).
Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the Company and to meet our other ethical
responsibilities in accordance with the relevant ethical requirements relating to our
audits. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Responsibilities of management for the financial statements

Management is responsible for the preparation and fair presentation of the
consolidated financial statements in accordance with accounting principles generally
accepted in the United States of America, and for the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of
consolidated financial statements that are free from material misstatement, whether
due to fraud or error.

In preparing the consolidated financial statements, management is required to

evaluate whether there are conditions or events, considered in the aggregate, that
raise substantial doubt about the Company’s ability to continue as a going concern for
one year after the date the financial statements are issued.

GT.COM Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd (GTIL). GTIL and each of its member firms
are separate legal entities and are not a worldwide partnership.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not absolute assurance and therefore is
not a guarantee that an audit conducted in accordance with US GAAS will always
detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. Misstatements are considered material if there is a
substantial likelihood that, individually or in the aggregate, they would influence the
judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with US GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout

the audit.
• Identify and assess the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error, and design and perform audit
procedures responsive to those risks. Such procedures include examining, on a
test basis, evidence regarding the amounts and disclosures in the financial
statements.
• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal
control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as
well as evaluate the overall presentation of the consolidated financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in
the aggregate, that raise substantial doubt about the Company’s ability to
continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding,

among other matters, the planned scope and timing of the audit, significant audit
findings, and certain internal control–related matters that we identified during the
audit.

Kansas City, Missouri

March 14, 2022
 Independent Auditor’s Report

Board of Directors and Stockholders

The Monarch Cement Company
Humboldt, Kansas

We have audited the accompanying consolidated financial statements of The Monarch Cement Company and
subsidiaries (the Company), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and
the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each
of the years in the three-year period ended December 31, 2020, and the related notes to the consolidated financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the design,
implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 2020 in accordance with accounting
principles generally accepted in the United States of America.
Other Matter
Our audit was conducted for the purpose of forming an opinion on the basic consolidated financial statements as a
whole. The 2020 financial results are presented for purposes of additional analysis and is not a required part of the
basic consolidated financial statements. Such information has not been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, accordingly, we do not express an opinion or provide
any assurance on it.

Kansas City, Missouri

March 15, 2021
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2021 AND 2020

ASSETS 2021 2020

CURRENT ASSETS:
Cash and cash equivalents $ 53,719,765 $ 30,624,449
Receivables, less allowances of $388,000 in 2021 and
$536,000 in 2020 for doubtful accounts 22,772,751 19,488,380
Inventories, priced at cost which is not in excess of market-
Finished cement $ 4,061,816 $ 5,254,600
Work in process 4,730,686 6,849,123
Building products 3,018,382 2,586,956
Fuel, gypsum, paper sacks and other 7,116,266 6,695,701
Operating and maintenance supplies 21,029,668 19,358,550
Total inventories $ 39,956,818 $ 40,744,930
Derivative financial instruments 834,411 1,215,546
Prepaid expenses 833,015 747,053
Total current assets $ 118,116,760 $ 92,820,358
PROPERTY, PLANT AND EQUIPMENT, at cost, less
accumulated depreciation and depletion of $282,920,247
in 2021 and $270,152,181 in 2020 104,630,226 95,567,662
DEFERRED INCOME TAXES - 4,461,801
INVESTMENTS 55,490,313 49,211,744
INVESTMENTS IN AFFILIATES 11,995,580 10,755,752
OTHER ASSETS 4,962,827 4,952,591
$ 295,195,706 $ 257,769,908

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable $ 8,764,097 $ 7,220,921
Current portion of other long-term debt - 750,000
Accrued liabilities
Dividends 2,069,077 1,930,395
Compensation and benefits 3,967,036 3,207,719
Federal and state income taxes 1,002,872 1,031,227
Miscellaneous taxes 548,673 797,066
Other 856,085 785,620
Total current liabilities $ 17,207,840 $ 15,722,948
DEFERRED INCOME TAXES 3,631,053 -
ACCRUED POSTRETIREMENT BENEFITS 15,858,583 17,086,660
ACCRUED PENSION EXPENSE - 12,399,146
STOCKHOLDERS’ EQUITY
Capital stock, par value $2.50 per share, one vote per share -
Authorized 10,000,000 shares, Issued and Outstanding 2,624,310
shares at 12/31/2021 and 2,609,104 shares at 12/31/2020 $ 6,560,775 $ 6,522,760
Class B capital stock, par value $2.50 per share, supervoting
rights of ten votes per share, restricted transferability,
convertible at all times into Capital Stock on a share-for-share
basis - Authorized 10,000,000 shares, Issued and Outstanding
1,137,649 shares at 12/31/2021 and 1,187,725 shares at 12/31/2020 2,844,123 2,969,313
Additional paid-in capital 2,485,125 2,485,125
Retained earnings 262,711,013 226,760,207
Accumulated other comprehensive loss (16,102,806) (26,176,251)
TOTAL STOCKHOLDERS’ EQUITY $ 258,498,230 $ 212,561,154
$ 295,195,706 $ 257,769,908

See accompanying Notes to the Consolidated Financial Statements

5.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

2021 2020 2019

NET SALES $ 211,847,901 $ 188,825,253 $ 172,093,557
COST OF SALES 145,976,215 129,882,625 131,476,545
Gross profit from operations $ 65,871,686 $ 58,942,628 $ 40,617,012
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 20,079,595 18,852,970 18,712,781
Income from operations $ 45,792,091 $ 40,089,658 $ 21,904,231
OTHER INCOME (EXPENSE)
Interest income $ 28,636 $ 174,957 $ 377,920
Interest expense (610) (1,292) (251)
Gain on sale of equity investments 9,640,932 715,296 -
Unrealized gain (loss) on equity investments 14,180,000 (3,550,000) 15,130,000
Dividend income 2,882,599 429,219 668,691
Pension and Postretirement benefits 684,382 1,248,803 841,535
Other, net 751,892 1,191,654 762,910
$ 28,167,831 $ 208,637 $ 17,780,805
Income before income taxes $ 73,959,922 $ 40,298,295 $ 39,685,036
PROVISION FOR INCOME TAXES 14,830,000 7,720,000 7,505,000
Equity in affiliate earnings, net of tax 1,313,258 1,296,417 933,892

NET INCOME $ 60,443,180 $ 33,874,712 $ 33,113,928

Basic earnings per share $ 16.01 $ 8.78 $ 8.58

See accompanying Notes to the Consolidated Financial Statements

6.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

2021 2020 2019

NET INCOME $ 60,443,180 $ 33,874,712 $ 33,113,928
OTHER COMPREHENSIVE INCOME (LOSS), net of
deferred tax

PENSION AND POSTRETIREMENT, CURRENT YEAR

ACTUARIAL GAIN (LOSS) (Net of deferred tax expense
(benefit) of $3,309,000, $(2,340,000) and $(1,566,000),
for 2021, 2020 and 2019, respectively) 9,442,962 (6,660,520) (4,457,062)

PENSION AND POSTRETIREMENT, CURRENT YEAR

PRIOR SERVICE CREDIT (LOSS) (Net of deferred tax
(benefit) expense of $-0-, $-0- and $(3,000), for 2021,
2020 and 2019, respectively) - - (8,860)

AMORTIZATION OF PENSION AND POSTRETIREMENT

PRIOR SERVICE COST (Net of deferred tax benefit of
$(550,000), $(610,000) and $(615,000), for 2021, 2020 and
2019, respectively) (1,589,346) (1,757,113) (1,745,303)

AMORTIZATION OF PENSION AND POSTRETIREMENT

LOSS (Net of deferred tax expense of $780,000, $620,000
and $595,000, for 2021, 2020 and 2019, respectively) 2,219,829 1,794,417 1,695,621

OTHER COMPREHENSIVE INCOME (LOSS), net of

deferred tax $ 10,073,445 $ (6,623,216) $ (4,515,604)
COMPREHENSIVE INCOME $ 70,516,625 $ 27,251,496 $ 28,598,324

See accompanying Notes to the Consolidated Financial Statements

7.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

Company Stockholders
Accumulated Other
Additional Comprehensive
Class B Paid-In Retained Treasury Income (Loss),
Capital Stock Capital Stock Capital Earnings Stock Net of Tax Total
BALANCE
JANUARY 1, 2019 $ 6,610,398 $ 3,041,575 $ 2,485,125 $ 178,952,905 $ - $ (15,037,431) $ 176,052,572
Net income - - - 33,113,928 - - 33,113,928
Dividends declared ($1.85 per share) - - - (7,142,460) - - (7,142,460)
Transfer of shares 6,750 (6,750) - - - - -
Pension and Postretirement current
year actuarial loss - - - - - (4,457,062) (4,457,062)
Pension and Postretirement
current year prior service loss - - - - - (8,860) (8,860)
Amortization of Pension and
Postretirement prior service cost - - - - - (1,745,303) (1,745,303)
Amortization of Pension and
Postretirement loss - - - - - 1,695,621 1,695,621
BALANCE
DECEMBER 31, 2019 $ 6,617,148 $ 3,034,825 $ 2,485,125 $ 204,924,373 $ - $ (19,553,035) $ 197,508,436
Net income - - - 33,874,712 - - 33,874,712
Dividends declared ($2.00 per share) - - - (7,721,578) - - (7,721,578)
Transfer of shares 59,680 (59,680) - - - - -
Repurchase of capital stock - - - - (72,800) - (72,800)
Repurchase of capital stock due -
to modified Dutch tender offer - - - - (4,404,400) - (4,404,400)
Retirement of capital stock (154,068) (5,832) - (4,317,300) 4,477,200 - -
Pension and Postretirement current -
year actuarial loss - - - - - (6,660,520) (6,660,520)
Amortization of Pension and
Postretirement prior service cost - - - - - (1,757,113) (1,757,113)
Amortization of Pension and
Postretirement loss - - - - - 1,794,417 1,794,417
BALANCE
DECEMBER 31, 2020 $ 6,522,760 $ 2,969,313 $ 2,485,125 $ 226,760,207 $ - $ (26,176,251) $ 212,561,154
Net income - - - 60,443,180 - - 60,443,180
Dividends declared ($5.60 per share) - - - (21,055,339) - - (21,055,339)
Transfer of shares 38,665 (38,665) - - - - -
Retirement of capital stock (650) (86,525) - (3,437,035) - - (3,524,210)
Pension and Postretirement current
year actuarial gain - - - - - 9,442,962 9,442,962
Amortization of Pension and
Postretirement prior service cost - - - - - (1,589,346) (1,589,346)
Amortization of Pension and
Postretirement loss - - - - - 2,219,829 2,219,829
BALANCE
DECEMBER 31, 2021 $ 6,560,775 $ 2,844,123 $ 2,485,125 $ 262,711,013 $ - $ (16,102,806) $ 258,498,230

See accompanying Notes to the Consolidated Financial Statements

8.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

2021 2020 2019

OPERATING ACTIVITIES:
Net income $ 60,443,180 $ 33,874,712 $ 33,113,928
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 15,035,081 15,660,518 16,767,803
Gain on derivative financial instruments (1,738,561) (378,583) -
Income from equity method investments, net of dividends (1,239,828) (1,222,989) (872,797)
Decrease in long-term notes receivable 29,913 23,640 50,518
Deferred income taxes 4,553,854 (519,595) 3,209,391
Gain on disposal of assets (287,554) (1,192,655) (177,496)
Realized gain on sale of equity investments (9,640,932) (715,296) -
Unrealized holding (gain) loss on equity investments (14,180,000) 3,550,000 (15,130,000)
Postretirement benefits and pension expense (42,305) (376,668) (606,722)
Change in assets and liabilities:
Receivables, net (3,284,371) (551,924) (599,800)
Inventories 788,112 65,819 (3,765,911)
Income taxes refundable/payable 28,354 (2,558,291) 4,855,265
Prepaid expenses (85,962) 825,353 (962,522)
Other assets (10,622) 104,621 14,524
Accounts payable and accrued liabilities 1,085,921 1,482,949 (472,378)
Net cash provided by operating activities $ 51,454,280 $ 48,071,611 $ 35,423,803

INVESTING ACTIVITIES:
Acquisition of property, plant and equipment $ (23,955,356) $ (23,540,849) $ (16,500,321)
Proceeds from disposals of property, plant and equipment 375,200 1,514,529 249,312
Payment for purchases of equity investments (3,077,395) (7,728,449) (1,589,692)
Proceeds from sale of equity investments 20,619,759 1,931,127 -
Payment for acquisition of equity method investments - - (12,160)
Payment for purchases of derivative financial instruments 2,119,695 (836,963) -
Net cash used for investing activities $ (3,918,097) $ (28,660,605) $ (17,852,861)

FINANCING ACTIVITIES:
Payments on other long-term debt $ - $ (721,154) $ (693,417)
Cash dividends paid (20,916,657) (7,722,028) (6,755,931)
Purchase of capital stock (3,524,210) (4,488,450) (67,980)
Net cash used for financing activities $ (24,440,867) $ (12,931,632) $ (7,517,328)

Net increase in cash and cash equivalents $ 23,095,316 $ 6,479,374 $ 10,053,614

Cash and Cash Equivalents, beginning of year 30,624,449 24,145,075 14,091,461
Cash and Cash Equivalents, end of year $ 53,719,765 $ 30,624,449 $ 24,145,075

Supplemental disclosures:
Interest paid, net of amount capitalized $ 610 $ (451) $ 252
Income taxes paid 10,413,162 10,826,020 1,425,000
Income tax refund 108,775 29,984 1,983,980
Capital equipment additions included in accounts
payable and accrued liabilities 482,023 252,088 275,751
Capital stock repurchases included in accrued liabilities 4,650 4,650 15,900
Dividends payable included in accrued liabilities 2,069,077 1,930,395 1,930,845

See accompanying Notes to the Consolidated Financial Statements

9.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

(1) NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Nature of Operations--The Monarch Cement Company (Monarch) is principally engaged in the

manufacture and sale of portland cement. The marketing area for Monarch’s products consists primarily of the State of
Kansas, the State of Iowa, southeast Nebraska, western Missouri, northwest Arkansas and northern Oklahoma. Sales are
made primarily to contractors, ready-mixed concrete plants, concrete products plants, building materials dealers and
governmental agencies. Subsidiaries of Monarch (which together with Monarch are referred to herein as the
“Company”) sell ready-mixed concrete, concrete products and sundry building materials within Monarch’s marketing
area.

b) Principles of Consolidation--Monarch has direct control of certain operating companies that have been
deemed to be subsidiaries within the meaning of accounting principles generally accepted in the United States of
America. Accordingly, the financial statements of such companies have been consolidated with Monarch’s financial
statements. All significant intercompany transactions have been eliminated in consolidation.

We use the equity method to account for investments in companies if the investment provides the ability to
exercise significant influence, but not control, over operating and financial policies of the companies in which we invest.
Investments accounted for under the equity method are recorded initially at cost and subsequently adjusted for our share
of the net income or loss and cash contributions and distributions to or from these entities. Our proportionate share of
the net income or loss of these companies is included in consolidated net income.

c) Use of Estimates--The preparation of financial statements in conformity with accounting principles

generally accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.

d) Cash Equivalents--The Company considers all liquid investments with original maturities of three
months or less which we do not intend to roll over beyond three months to be cash equivalents. At December 31, 2021
and 2020, cash equivalents consisted primarily of money market investments and repurchase agreements with various
banks.

The Federal Deposit Insurance Corporation’s (FDIC) standard maximum deposit insurance amount fully
guarantees all deposit accounts up to $250,000. At times, cash in banks may be in excess of the FDIC limits. At
December 31, 2021, the Company had $12.9 million in overnight investment accounts (including money market mutual
funds – Level 1) that were not covered by FDIC’s general deposit insurance in addition to $40.6 million in general
deposits that exceeded FDIC limits. The investment accounts assets are normally 80% invested in U.S. Treasury
securities and repurchase agreements for those securities. We have not experienced any losses in our accounts due to
exceeding FDIC insurance limits or lack of FDIC coverage.

e) Investments--Equity securities for which the Company has no immediate plan to sell but that may be
sold in the future are classified as available for sale. Our equity securities are carried at fair value and unrealized gains
and losses, are recorded in net income. Realized gains and losses, based on the specifically identified cost of the security,
are included in net income. Equity method investments are recorded initially at cost and subsequently adjusted for our
share of the net income or loss and cash contributions or distributions to or from these entities. Our equity method
investment involves an entity for which it is not practical to determine fair value.

f) Receivables--Accounts receivable are stated at the amount billed to customers. The Company provides
an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection
information and existing economic conditions. Accounts receivable are ordinarily due 30 days after the issuance of the
invoice. Accounts past due are considered delinquent. Delinquent receivables are written off based on individual credit
evaluation and specific circumstances of the customer.
10.
 At December 31, 2021 the Company had one customer that comprised approximately ten percent (10%) of total
outstanding accounts receivable. At December 31, 2020, the Company had no customers that comprised more than ten
percent (10%) of total outstanding accounts receivable.

g) Inventories--Inventories of finished cement and work in process are recorded at the lower of cost or
market on a last-in, first-out (LIFO) basis. Total inventories reported under LIFO amounted to $8.8 million and
$12.1 million as of December 31, 2021 and 2020, respectively. Under the average cost method of accounting (which
approximates current cost), these inventories would have been $2.6 million, $3.6 million and $2.3 million higher than
those reported at December 31, 2021, 2020 and 2019, respectively. The cost of manufactured items includes all material,
labor, factory overhead and production-related administrative overhead required in their production.

We incurred a permanent reduction in the LIFO layers of work in process resulting in liquidation gains of $0.3
million for 2019. The liquidation gains were recognized as reductions of cost of sales. We did not incur any material
liquidation gains in the LIFO layers for 2021 or 2020.

Other inventories are purchased from outside suppliers. Fuel and other materials are priced by the first-in, first-
out (FIFO) method while operating and maintenance supplies are recorded using the average cost method.

Inventories of fuel, gypsum, paper sacks and other are used in the manufacture of cement. The operating and
maintenance supplies consist primarily of spare parts for our cement manufacturing equipment.

h) Property, Plant and Equipment--Property, plant and equipment are stated at cost of acquisition or
construction. The Company capitalizes the cost of interest on borrowed funds used to finance the construction of
property, plant and equipment. The Company did not capitalize any interest in 2021, 2020 or 2019.

The Company records depreciation, depletion and amortization related to manufacturing operations in Cost of
Sales; those related to general operations are recorded in Selling, General and Administrative Expenses; and those related
to non-operational activities are in Other, net on the Consolidated Statements of Income. The approximate amounts
included in each line item as of December 31, 2021, 2020 and 2019 are as follows:
2021 2020 2019
Cost of Sales $ 13,900,000 $ 14,600,000 $ 15,300,000
Selling, General and Administrative Expenses 800,000 900,000 1,300,000
Other, net 300,000 200,000 200,000
Total $ 15,000,000 $ 15,700,000 $ 16,800,000

Depreciation of property, plant and equipment is provided by charges to operations over the estimated useful
lives of the assets using accelerated methods. The majority of the Company’s buildings, machinery and equipment are
depreciated using 200% (double) declining balance depreciation. Some of the assets used in the Cement Business
manufacturing process are depreciated using 150% declining balance depreciation. The Company switches to straight
line depreciation once it exceeds the amount computed under the declining balance method being used until the asset is
fully depreciated. The Company does not depreciate construction in process. Depletion rates for quarry lands are
designed to amortize the cost over the estimated recoverable reserves. Expenditures for improvements that significantly
increase the assets’ useful lives are capitalized while maintenance and repairs are charged to expense as incurred.

The Company continually evaluates whether events or changes in circumstances have occurred that would
indicate that the carrying amount of long-lived assets may not be recoverable. An impairment loss would be recognized
and the asset cost would be adjusted to fair value when undiscounted estimated future cash flows expected to result from
the use of the asset and its eventual disposition is less than its carrying amount. The impairment loss would be the amount
by which the carrying amount of a long-lived asset exceeds its fair value. Various factors that the Company considers in
its review include changes in expected use of the assets, changes in technology, changes in operating performance and
changes in expected future cash flows. No asset impairment was recognized in 2021, 2020 and 2019.

11.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

i) Income Taxes--Deferred tax assets and liabilities are recognized for the tax effects of differences
between the financial statement and tax bases of assets and liabilities. A valuation allowance is established to reduce
deferred tax assets if it is more likely than not that a deferred tax asset will not be realized. The Company uses the specific
identification (or portfolio) method for reclassifying material stranded tax effects in accumulated other comprehensive
loss (AOCL) to earnings.

j) Revenue Recognition--The Company records revenue from the sale of cement, ready-mixed concrete,
concrete products and sundry building materials following delivery of the products to customers, which is the point in
time when the Company’s performance obligation with the customer is satisfied. In the event the Company receives
advance payment on orders, we defer revenue recognition until the product is delivered. See Note 12 “Lines of Business”
for the Company’s revenue disaggregated by segment for 2021, 2020 and 2019.

k) Cost of Sales--The Company considers all production and shipping costs, (gain) loss on disposal of
operating assets, inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal
transfer costs and derivative financial instruments as cost of sales.

l) Selling, General and Administrative Expenses--Selling, general and administrative expenses consist
of sales personnel salaries and expenses, promotional costs, accounting and IT personnel salaries and expenses, director
and administrative officer salaries and expenses, legal and professional expenses and other expenses related to overall
corporate costs.

m) Other, net--Other, net contains miscellaneous nonoperating income (expense) items excluding interest
income, interest expense, gains (losses) on sale of equity investments, pension and postretirement benefit income,
unrealized gains (losses) on equity investments and dividend income.

n) Earnings per Share--Basic earnings per share is based on the weighted average common shares
outstanding during each year. Diluted earnings per share are based on the weighted average common and common
equivalent shares outstanding each year. Monarch has no common stock equivalents or participating securities and
therefore does not report diluted earnings per share. The weighted average number of shares outstanding was 3,775,297
in 2021, 3,858,342 in 2020, and 3,860,789 in 2019.

o) Taxes Collected from Customers and Remitted to Governmental Authorities--Taxes collected from
customers and remitted to governmental authorities are presented in the accompanying consolidated statements of
income on a net basis.

p) Self Insurance--The Company has elected to self-insure certain costs related to employee and retiree
health and accident benefits programs. Costs resulting from self-insured losses are charged to income when
incurred. Health benefits provided to employees in the Ready-Mixed Concrete Business and health and accident benefits
provided to employees in the Cement Business are totally self-insured but are subject to an individual stop loss of
$100,000 and $200,000 for the Ready-Mixed Concrete Business and the Cement Business, respectively, with an
aggregate stop loss of 120% for both lines of business.

The Company also has established a wholly-owned captive insurance company, Lion’s Share Insurance, Inc., to
mitigate the rising costs and risks associated with property and casualty insurance. The captive holds $533,000,
representing the initial capitalization, in cash and investments at year end. No premiums were paid to the captive in 2021.

q) Disclosure about Fair Value of Financial Instruments--Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. Cash and cash equivalents, receivables, accounts payable and short and long-term debt have carrying values that
approximate fair values. Investment fair values equal quoted market prices, if available. If quoted market prices are not
available, fair value is estimated based on quoted market prices of similar securities.

12.
 r) Intangibles - Goodwill and Other--Goodwill represents the excess of cost over the fair value of net
assets of businesses acquired. Goodwill acquired in a purchase business combination is not amortized, but is tested for
impairment on an annual basis. The Company performed a qualitative assessment of its goodwill during the fourth
quarter of 2021 and determined that its goodwill is not impaired and therefore no impairment was required.

Goodwill is approximately $4.9 million at December 31, 2021 and 2020, and is included in Other Assets.

(2) FAIR VALUE

Realized gains (losses) on equity investments are computed using the specific identification method. Fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The Company applies mark-to-market accounting to derivative instruments that
are not accounted for as hedges.

Cash and cash equivalents, receivables, accounts payable and short and long-term debt have carrying values that
approximate fair values. The Company’s valuation techniques used to measure the fair value of its marketable equity
securities were derived from quoted prices in active markets for identical assets. Equity investments that do not have
readily determinable market prices were remeasured to fair value upon the occurrence of an observable price change.

The Company has no liabilities at either date requiring remeasurement to fair value on a recurring basis in the
balance sheet. The Company has no additional assets or liabilities at either date requiring remeasurement to fair value
on a non-recurring basis in the balance sheet.

(3) DERIVATIVE FINANCIAL INSTRUMENTS

The Company has entered into derivative transactions to hedge its exposures to commodity price fluctuations.
The Company does not enter into derivative transactions for trading purposes.

The Company enters into energy commodity-based derivatives in order to protect cash flows from fluctuations
caused by volatility in the commodity prices in order to protect gross margins from potentially adverse effects of market
and price volatility on diesel fuel. These hedges are not designated as effective hedges for accounting purposes. For
derivative instruments that are not accounted for as hedges, the Company applies mark-to-market accounting with the
change in fair value that is recorded through earnings in the period of change. Derivative fair market gains and losses
are included in the results of operations and are included in cost of sales.

As part of the hedging activity, the Company is required to maintain certain levels of cash (margin deposits) with
the clearing broker. The net of the margin deposits and equity value of the open positions must be a positive balance or
additional cash is required. At times, this balance will be negative, thus requiring additional cash deposits within a
specified time period. If the balance is negative as of the date of the balance sheets, this is reported as a current liability
on the balance sheets. The corresponding market value of the open positions is reported as a current asset (or liability)
on the consolidated balance sheets.

The following table provides the fair value (see Note 2) of the Company’s derivative financial instruments not
designated as hedging instruments:

Derivatives Not Designated as

Hedging Instruments Balance Sheet Classification 2021 2020
Futures Contracts (Level 2) Derivative financial instruments $ 834,411 $ 1,215,546

The net effect of derivatives not designated as hedges on the Statements of Income for the years ended December
31, 2021, 2020 and 2019:

13.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

Derivatives Not Designated as

Hedging Instruments Income Statement Classification 2021 2020 2019
Futures Contracts (Level 2) Cost of Sales $ (1,738,561) $ (378,583) $ -

(4) INVESTMENTS

Equity Investments

The following table shows the gross unrealized gains (losses) recorded in the income statement aggregated by
investment category at:
2021 2020 2019
Cement industry $ 4,660,000 $ 1,465,000 $ 6,325,000
General building materials industry 7,225,000 (1,275,000) 7,430,000
Oil & gas refining and marketing industry 1,540,000 (4,540,000) 700,000
Residential construction industry 755,000 800,000 675,000
Total $ 14,180,000 $ (3,550,000) $ 15,130,000

The Company’s equity investments are measured using quoted prices in active markets for identical assets
(Level 1). The following table shows the fair value of the Company’s investments aggregated by investment category at:

2021 2020
Cement industry $ 21,274,026 $ 19,569,886
General building materials industry 19,728,058 17,478,816
Oil & gas refining and marketing industry 9,875,417 8,967,850
Residential construction industry 4,612,812 3,195,192
Total $ 55,490,313 $ 49,211,744

Equity Method Investments

The Company owns common stock of GFI, a privately-owned company in the brick industry. The Company has
determined that it has the ability to exercise significant influence, but not control, over the operating and financial policies
of GFI. Consequently, the equity method of accounting is used for the investment.

Pertinent information about the Company’s investment in GFI is as follows:

2021 2020 2019

Carrying value $ 11,995,580 $ 10,755,752 $ 9,532,763
Ownership percentage 32.46% 32.46% 32.46%
Cash dividends received $ 73,429 $ 73,429 $ 61,095
Undistributed earnings 7,357,520 6,044,263 4,747,845
Difference between carrying amount and
the underlying equity in net assets* (240,382) (166,953) (93,524)
Equity in earnings 1,313,258 1,296,417 933,892

* The difference between carrying amount and the underlying equity in net assets is in a memo account allocated
to goodwill.

During 2021, 2020 and 2019, the Company purchased $0.9 million, $1.0 million and $0.9 million, respectively,
of brick from GFI in arm’s length transactions in the normal course of business for resale to third parties. The Company
eliminated intra-entity profits or losses for its proportionate share of GFI’s common stock for inventory still remaining
with the Company until such profits or losses were realized in transactions with third parties. Amounts due to GFI for
Company purchases were not significant at December 31, 2021 and 2020.

14.
 The Company’s equity method investment is reviewed for impairment on a periodic basis or if an event occurs
or circumstances change that indicate the carrying amount may be impaired. This assessment is based on a review of the
investment’s performance and a review of indicators of impairment to determine if there is evidence of a loss in value of
the investment. Factors the Company considers include:

 Absence of the Company’s ability to recover the carrying amount;

 Inability of the equity affiliate to sustain an earnings capacity which would justify the carrying amount of the
investment; and
 Significant litigation, bankruptcy or other events that could impact recoverability.

For an equity investment with impairment indicators, the Company measures fair value on the basis of discounted cash
flows or other appropriate valuation methods. If it is probable that the Company will not recover the carrying amount of
its investment, the impairment is recorded in earnings, and the equity investment balance is reduced to its fair value
accordingly. After review, the Company does not consider its equity method investment to be impaired at December 31,
2021 or 2020.

(5) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment and their estimated useful lives at December 31, 2021 and 2020 consisted of:
Lives (Years) 2021 2020
Quarry land $ 2,004,549 $ 2,004,549
Other land 10,602,058 9,904,633
Buildings and improvements 15 – 39 38,526,067 38,119,350
Cement manufacturing equipment 15 – 25 167,812,724 165,386,994
Ancillary equipment 5 – 10 14,467,712 14,376,557
Ready-mix and concrete production
machinery and equipment 5 – 15 42,164,418 41,645,955
Transportation and mobile equipment 3–7 64,339,403 57,824,450
Office machinery, equipment,
furniture and fixtures 3 – 10 8,815,582 8,170,772
Construction in process 38,817,960 28,286,583
$ 387,550,473 $ 365,719,843
Less: Accumulated depreciation and depletion 282,920,247 270,152,181
$ 104,630,226 $ 95,567,662

(6) REVOLVING LOAN AND LONG-TERM DEBT

On October 20, 2021, the Company entered into a new credit agreement with its current lender, BOKF, NA dba
Bank of Oklahoma (Bank of Oklahoma), which amended and restated its revolving loan. The Company’s current
agreement provides for a $15.0 million revolving loan maturing on December 31, 2024; the previous agreement matured
on December 31, 2021. Interest rates on the Company’s revolving loan are variable and based on the rate of interest
regularly published by the Wall Street Journal and designated as the U.S. Prime Rate (hereto referred to as the WSJ prime
rate) less 1.50% with a 1.50% interest rate minimum or floor. The agreement requires the Company to pledge its
investment account, receivable accounts and inventory to Bank of Oklahoma as collateral for the revolving loan. The
Company is obligated to maintain at least $12.0 million in its pledged investment account. The carrying value
of receivables, inventory and the investment account pledged as collateral was $22.8 million, $40.0 million and $33.6
million, respectively as of December 31, 2021. The agreement also contains financial covenants requiring the Company,
as of the end of any fiscal quarter, to maintain a minimum tangible net worth before accumulated other comprehensive
income (loss) of $195.0 million and a minimum tangible net worth after accumulated other comprehensive income (loss)
of $175.0 million. The Company was in compliance with these requirements at year end.

As of December 31, 2021 and 2020, there was nothing borrowed against the revolving loan.

15.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

At December 31, 2021 and 2020, other long-term debt in the table below is comprised of $0 and $0.8 million,
respectively.

2021 2020
Other $ - $ 750,000
Less current maturity of long-term debt - 750,000
Total long-term debt $ - $ -

As of December 31, 2021, there were no aggregate annual maturities of long-term debt.

(7) INCOME TAXES

The components of the provision for federal and state income taxes in the accompanying consolidated statements
of income are as follows:

2021 2020 2019

Taxes currently payable $ 10,276,000 $ 8,240,000 $ 4,296,000
Deferred income taxes 4,554,000 (520,000) 3,209,000
Provision for income taxes $ 14,830,000 $ 7,720,000 $ 7,505,000

A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is as
follows:
2021 2020 2019
Computed at statutory rate (21%) $ 15,532,000 $ 8,463,000 $ 8,334,000
Increase (decrease) resulting from:
State income taxes, net of federal
tax benefit 3,094,000 454,000 1,086,000
Percentage depletion (1,075,000) (978,000) (716,000)
Valuation allowance - - (215,000)
Current year tax credits (1,088,503) 70,000 (995,000)
Dividends received deduction (280,000) (55,000) (79,000)
Other (1,352,497) (234,000) 90,000
Provision for income taxes $ 14,830,000 $ 7,720,000 $ 7,505,000

The tax effects of significant temporary differences relating to deferred taxes, net of valuation allowances, on
the balance sheets were:

2021 2020
Allowance for doubtful accounts $ 101,000 $ 139,000
Accrued vacation 483,000 391,000
Depreciation 7,000 (50,000)
Postretirement benefits 4,265,000 4,514,000
Pension liability 138,000 3,382,000
Unrealized holding gains (10,110,000) (6,427,000)
Tax carryforwards 1,425,000 2,029,000
Settlement of lawsuit - 195,000
Impairment on investments 141,000 215,000
Other, net (81,053) 73,801
Net deferred tax assets (liabilities)* $ (3,631,053) $ 4,461,801

*Net of valuation allowance of $1,155,000 and $1,247,000 for 2021 and 2020, respectively.

Some of the Company’s subsidiaries file separate state income tax returns resulting in net operating loss
carryforwards. In addition, some subsidiaries separately filed federal income tax returns in prior years which also
resulted in net operating loss carryforwards. The provision for income taxes and income tax liabilities recorded in the
16.
financial statements include those separate calculations. The deferred taxes resulting from these and other tax
carryforwards are included in the above table net of valuation allowances. The valuation allowance has been used to
reduce the tax benefit associated with the tax carryforwards. The following table presents the expiration dates of the
Company’s carryforwards, net of valuation allowances, for tax purposes as of December 31, 2021:
Tax
Expiration Date Carryforwards
2025 109,000
2029 8,000
2035 219,000
2036 1,089,000
$ 1,425,000

The Company uses a recognition threshold of “more likely than not” that a tax position would be sustained upon
examination before any part of the benefit of that position is recognized in the Company’s financial statements.

The Company, or one of its subsidiaries, files income tax returns in the U.S. Federal jurisdiction and various
state jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal or state income tax
examinations by tax authorities for years before 2018. The Company believes it is not subject to any significant tax risk.
The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor were
any significant interest expenses recognized during the years ended December 31, 2021, 2020 and 2019.

(8) PENSION AND OTHER POSTRETIREMENT BENEFITS

Gains or losses affecting the Benefit obligation can be the result of the difference between expected and actual
return on plan assets or from changes in actuarial assumptions. The mortality projection improvement scale was updated
from MP-2020 to MP-2021 and the assumed discount rate was updated from 2.25% to 2.75%. For the Cement business
staff plan, the assumed salary increase was updated from 3.50% to 5.00%.

Postretirement Benefits

Monarch provides certain postretirement health and life insurance benefits to all retired employees in the Cement
Business who, as of their retirement date, meet the eligibility requirements. These benefits are self-insured by Monarch
and are paid out of Monarch’s general assets. Monarch expects 2022 cash expenditures for this plan to be approximately
$991,000 which is equal to the net expected benefit payments for the year.

Monarch uses a December 31 measurement date for the plans. At December 31, 2021 and 2020, the current
portion of the accrued benefit cost of approximately $991,000 and $989,000, respectively, is recorded in compensation
and benefits. Information about the plans’ funded status and postretirement cost follows:
2021 2020
Change in benefit obligation:
Beginning of year $ 18,075,660 $ 16,257,435
Service cost 344,709 301,089
Interest cost 402,223 495,198
Actuarial (gain) loss (1,123,451) 1,815,721
Benefits paid* (849,558) (793,783)
Benefit obligation at end of year $ 16,849,583 $ 18,075,660

17.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

2021 2020
Change in fair value of plan assets:
Beginning of year $ - $ -
Employer contributions 849,558 793,783
Benefits paid (849,558) (793,783)
Fair value of plan asset at end of year $ - $ -

Weighted Average Assumptions used to determine

benefit obligations:
Discount rate 2.75% 2.25%
Trend rate N/A N/A

Funded status, end of year:

Fair value of plan assets $ - $ -
Benefit obligations (16,849,583) (18,075,660)
Funded status = year-end benefit liability $ (16,849,583) $ (18,075,660)

Accrued Postretirement Benefits represents the accumulated difference between actual contributions and actual
expenses from past years. It is updated from the prior year as follows:

2021 2020
A. Accrued postretirement benefits at beginning of year $ (13,733,502) $ (15,645,754)
B. Net periodic postretirement benefit income (840,638) (1,118,469)
C. Employer contributions 849,558 793,783
D. Accrued postretirement benefits at end of year $ (12,043,306) $ (13,733,502)
(A) - (B) + (C)

Following are the components of net periodic benefit cost:

2021 2020 2019
Components of net periodic benefit cost:
Service cost $ 344,709 $ 301,089 $ 218,113
Interest cost 402,223 495,198 580,690
Amortization of prior service cost (2,171,288) (2,431,958) (2,431,958)
Recognized net actuarial loss 583,718 517,202 397,950
Net periodic benefit income $ (840,638) $ (1,118,469) $ (1,235,205)

Weighted Average Assumptions used to determine

net periodic postretirement benefit cost:
Discount rate 2.25% 3.00% 4.00%
Trend rate N/A N/A N/A

Amounts recognized in the balance sheets consist of:

2021 2020
Current liability $ (991,000) $ (989,000)
Noncurrent liability (15,858,583) (17,086,660)
Net amount recognized $ (16,849,583) $ (18,075,660)

Amounts recognized in accumulated other comprehensive income consist of:

2021 2020
Net actuarial loss $ 6,681,958 $ 8,389,127
Prior service credit (1,875,681) (4,046,969)
$ 4,806,277 $ 4,342,158

Other changes in benefit obligations recognized in other comprehensive income:

18.
 2021 2020 2019
Current year actuarial (gain)/loss $ (1,123,451) $ 1,815,721 $ 1,534,530
Amortization of actuarial loss (583,718) (517,202) (397,950)
Current year prior service credit - - -
Amortization of prior service credit 2,171,288 2,431,958 2,431,958
Total recognized in other comprehensive income $ 464,119 $ 3,730,477 $ 3,568,538

The amortization schedule for prior service costs is as follows:

12/31/2021
Date Initial Initial Outstanding Annual
Description Established Amount Period Balance Amortization
Change in Benefit Structure 12/31/2015 $ (4,952,676) 5.70 years $ - $ -
12/31/2017 (8,127,949) 5.20 years (1,875,681) (1,563,067)
$ (1,875,681) $ (1,563,067)

The accumulated postretirement benefit obligation as of December 31, 2021 is shown below:
HRA Plan Provisions $ 16,849,583

Expected benefit payments and expenses shown separately for the next five fiscal years and in the aggregate for
the subsequent five-year period are presented below:

December 31, 2022 $ 991,351

December 31, 2023 965,226
December 31, 2024 952,112
December 31, 2025 975,408
December 31, 2026 959,542
Five fiscal years ending December 31, 2031 4,743,138
Pension Plans

Monarch has noncontributory defined benefit pension plans covering substantially all employees in the Cement
Business who meet the eligibility requirements. Monarch’s funding policy is to contribute annually an amount within
the minimum/maximum range of tax deductible contributions. In 2021, there are no minimum expected contributions to
the plans. In 2019, we initiated a soft freeze in our defined benefit pension for our Cement Business staff and production
employees closing them to new entrants. The change was effective January 1, 2020. In addition to the soft freeze, all
Cement business staff and production employees hired after December 31, 2019 will have the option to participate in a
new defined contribution plan. These plans allow the Company, at its discretion, to match the employee’s contributions
based on certain formulas dictated in the respective Plan Documents.

Monarch uses a December 31 measurement date for the plans. Information about the plans’ funded status and
pension cost follows:
2021 2020
Change in benefit obligation:
Benefit obligation at beginning of year $ 67,488,215 $ 60,784,022
Service cost 1,646,926 1,364,829
Interest cost 1,526,154 1,821,192
Actuarial (gain) loss (1,591,889) 6,253,338
Plan amendment - -
Benefits paid (2,731,775) (2,735,166)
Benefit obligation at end of year $ 66,337,631 $ 67,488,215

19.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

2021 2020
Change in plan assets:
Fair value of plan assets at beginning of year $ 55,089,069 $ 55,143,199
Actual return on plan assets 13,509,864 2,681,036
Employer contributions 500,000 -
Benefits paid (2,731,775) (2,735,166)
Fair value of plan assets at end of year $ 66,367,158 $ 55,089,069

Funded status, end of year:

Fair value of plan assets $ 66,367,158 $ 55,089,069
Benefit obligation 66,337,631 67,488,215
Funded status = pension asset (liability), end of year $ 29,527 $ (12,399,146)

The actuarial formula used to calculate the projected benefit obligation takes into account future increases in
pension contributions that would take place as the employees’ salaries increase. The accumulated benefit obligation uses
an actuarial formula to calculate the projected benefit obligation which assumes that the employees cease to work for
the Company at the time the estimation is made. The plans’ accumulated benefit obligation follows:

2021 2020
Accumulated benefit obligation, end of year $ 61,237,020 $ 63,942,396

Amounts recognized in the balance sheets consist of:

2021 2020
Noncurrent asset $ 29,527 $ -
Noncurrent liability - (12,399,146)
Net amount recognized $ 29,527 $ (12,399,146)

Amounts recognized in accumulated other comprehensive income not yet recognized as components of net
periodic benefit cost consist of:
2021 2020
Net actuarial loss $ 17,849,614 $ 31,894,236
Prior service cost 31,915 63,857
$ 17,881,529 $ 31,958,093
Less: Deferred tax 4,650,000 8,310,000
Additional pension liability, net of deferred tax $ 13,231,529 $ 23,648,093

Other changes in plan assets and benefit obligations recognized in other comprehensive income:

2021 2020 2019

Current year actuarial loss $ (11,628,511) $ 7,184,799 $ 4,488,532
Amortization of actuarial loss (2,416,111) (1,897,215) (1,892,671)
Current year prior service loss - - 11,860
Amortization of prior service cost (31,942) (64,845) (71,655)
$ (14,076,564) $ 5,222,739 $ 2,536,066
Less: Deferred tax (3,660,000) 1,360,000 660,000
Minimum pension liability, net of deferred tax $ (10,416,564) $ 3,862,739 $ 1,876,066

The amortization schedule for prior service costs is as follows:

20.
 12/31/2021 2021
Established Initial Initial Outstanding Amortization
Description Dec. 31 of: Amount Period Balance Amount
Unrecognized Prior Service Cost 2007* $ 876,119 13.41 years $ - $ -
2009 55,026 12.50 years 2,202 2,202
2015 21,393 11.14 years 9,873 1,920
2019 25,342 9.21 years 19,840 2,751
$ 31,915 $ 6,873

* The negative plan amendment impact in 2019 partially offset the existing prior service cost bases.

Cumulative employer contributions in excess of net periodic pension cost are as follows:

2021 2020
A. Cumulative balance at beginning of year $ 19,558,947 $ 21,094,531
B. Net periodic pension cost 2,147,891 1,535,584
C. Contributions 500,000 -
D. Cumulative balance at end of year $ 17,911,056 $ 19,558,947
(A) - (B) + (C)

The weighted average assumptions used to determine net pension cost and benefit obligations as of
December 31, 2021, 2020 and 2019 are as follows:
2021 2020 2019
Benefit obligation:
Discount rate 2.75% 2.25% 3.00%
Expected return on plan assets 6.25% 6.50% 6.75%
Rate of compensation increase (Staff plan only) 5.00% 3.50% 3.50%
Pension cost:
Discount rate 2.25% 3.00% 4.00%
Expected return on plan assets 6.50% 6.75% 7.00%
Rate of compensation increase (Staff plan only) 3.50% 3.50% 3.50%

The following table presents the components of net periodic pension cost as of December 31, 2021, 2020 and
2019:
2021 2020 2019
Service cost $ 1,646,926 $ 1,364,829 $ 1,098,246
Interest cost 1,526,154 1,821,192 2,131,247
Expected return on plan assets (3,473,242) (3,612,497) (3,483,790)
Amortization of prior service cost 31,942 64,845 71,655
Recognized net actuarial loss 2,416,111 1,897,215 1,892,671
Net periodic pension expense $ 2,147,891 $ 1,535,584 $ 1,710,029

The Company has estimated the long-term rate of return on plan assets based primarily on historical returns on
plan assets as well as current facts and circumstances.

Plan assets are held by a trustee bank. A fund manager has been retained to make investment decisions within
guidelines specified by Monarch. The guidelines permit investment in both equities and fixed income securities including
common stocks, corporate bonds and debentures and U.S. Government securities. An investment committee appointed
by the Board also invests a portion of the funds in equity securities. Asset allocation is primarily based on a strategy to
provide stable earnings through investing in interest-generating or fixed income investments while still permitting the
plan to recognize potentially higher returns through investments in equity securities. Focusing on balancing the risks and
rewards of each broad asset class, the percentage of allocation between fixed income and equity investments for 2021
and 2020 are as follows:
Equities 60%
Fixed Income 40%

21.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

The pension investment guidelines strive for diversification of equity securities among the various market sectors
and do not permit participation in higher risk investment strategies involving hedging activities and the use of derivative
instruments.

The plan allows a 5% fluctuation before assets are rebalanced. During periods of extreme market volatility, the
fluctuation may exceed 5% before rebalancing is complete. At December 31, 2021 and 2020, plan assets by category
were as follows:
2021 2020
Equities 54% 62%
Debt Securities 33% 35%
Other 13% 3%

Following is a description of the valuation methodologies used for pension plan assets measured at fair value on
a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of pension
plan assets pursuant to the valuation hierarchy.

Fair value prices for all securities in the pension plan portfolio are provided by our trustee bank which utilizes
an internationally recognized independent pricing service. Where quoted market prices are available in an active market,
plan assets are classified within Level 1 of the valuation hierarchy. Level 1 plan assets include equity securities which
were priced at the market close. Level 2 assets have observable inputs other than Level 1 prices. Plan assets are classified
within Level 3 of the hierarchy when relevant observable inputs for a security are not available.

We have established control procedures in which we independently assess the pricing obtained from the trustee
bank which utilizes the pricing service. These internal processes include obtaining and reviewing available reports on
controls at the trustee bank and pricing service, evaluating the prices for reasonableness given market changes,
investigating anomalies and confirming determinations through discussions with the trustee bank.

The fair value of Monarch’s pension plan assets by asset category at December 31, 2021 and 2020 are as follows:
Fair Value Measurements Using:
Quoted Prices
in Active Significant Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs
2021 Total (Level 1) (Level 2) (Level 3)
Cash and cash equivalents $ 8,874,438 $ 8,874,438 $ - $ -
Equity securities:
Consumer discretion 4,674,461 4,674,461 - -
Consumer staples 2,978,250 2,978,250 - -
Energy 5,004,655 5,004,655 - -
Equity funds 2,359,650 2,359,650 - -
Financials 2,567,522 2,567,522 - -
Healthcare 1,796,225 1,796,225 - -
Industrials 2,720,166 2,720,166 - -
Information technology 2,219,919 2,219,919 - -
International 2,337,086 2,337,086 - -
Materials 2,611,100 2,611,100 - -
Miscellaneous 687,548 687,548 - -
Real Estate 3,236,088 3,236,088 - -
Telecommunication 1,930,373 1,930,373 - -
Utilities 1,145,721 1,145,721 - -
Fixed income securities:
Corporate bonds 3,349,703 3,349,703 - -
Intermediate Duration Fund 16,634,044 16,634,044 - -
U.S. Government Obligation/Federal Agencies 1,240,209 1,240,209 - -
Total $ 66,367,158 $ 66,367,158 $ - $ -

22.
 Fair Value Measurements Using:
Quoted Prices
in Active Significant Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs
2020 Total (Level 1) (Level 2) (Level 3)
Cash and cash equivalents $ 1,781,704 $ 1,781,704 $ - $ -
Equity securities:
Consumer discretion 4,610,527 4,610,527 - -
Consumer staples 2,969,057 2,969,057 - -
Energy 3,136,606 3,136,606 - -
Financials 4,310,108 4,310,108 - -
Healthcare 1,929,291 1,929,291 - -
Industrials 3,480,302 3,480,302 - -
Information technology 2,590,177 2,590,177 - -
Materials 3,619,552 3,619,552 - -
Miscellaneous 827,314 827,314 - -
Real Estate 2,782,078 2,782,078 - -
Telecommunication 2,939,439 2,939,439 - -
Utilities 1,651,920 1,651,920 - -
Fixed income securities:
Intermediate Duration Fund 18,460,994 18,460,994 - -
Total $ 55,089,069 $ 55,089,069 $ - $ -

The plans’ expected benefit payments as of December 31, 2021, shown separately for the next five fiscal years
and in the aggregate for the subsequent five-year period, are presented below:
2022 $ 3,349,200
2023 3,349,571
2024 3,338,525
2025 3,442,185
2026 3,424,183
Five fiscal years ending
December 31, 2031 17,492,835

The Company has defined contribution plans covering substantially all permanent employees of the Ready-
Mixed Concrete Business. These plans allow the Company, at its discretion, to match the employee’s contributions. The
Company contributed $276,866, $245,593 and $177,869 to these plans for the years 2021, 2020 and 2019,
respectively. The Company expects to contribute approximately $277,000 to these plans in 2022.

The Company contributes to multiemployer defined benefit pension plans under the terms of collective
bargaining agreements that cover its union-represented employees. The risks of participating in these multiemployer
plans are different from single-employer plans in the following aspects:

a) Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees
of other participating employers.

b) If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne
by the remaining participating employers.

c) If the Company chooses to stop participating in one of its multiemployer plans, the Company may be required
to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in these plans for the annual period ended December 31, 2021, is outlined in the
table below. The Company considers only one plan it contributes to under collective bargaining agreements to be
significant. The “EIN/Pension Plan Number” column provides the plan’s Employer Identification Number (EIN) and the

23.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act (PPA) zone status
available in 2021 and 2020 is for the plan’s year-end at December 31, 2020 and 2019, respectively. The zone status is
based on information that the Company received from the plan and is certified by the plan’s actuary. Among other factors,
plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded and plans
in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which
a financial improvement plan (FIP) or rehabilitation plan (RP) is either pending or has been implemented. The last
column lists the expiration dates of the collective bargaining agreements to which the plan is subject. There have been
no significant changes that affect the comparability of 2021, 2020 and 2019 contributions.
Pension
Protection
Act Zone Expiration
Status Contributions by Company Date of
FIP/RP Status Collective
EIN/Pension Plan Pending/ Surcharge Bargaining
Pension Fund Number 2021 2020 Implemented 2021 2020 2019 Imposed Agreement
Central States,
Southeast &
Southwest Areas 3/31/2022 &
Pension Plan 36-6044243/001 Red Red Yes $354,741 $367,229 $383,281 Yes 4/30/2022 (a)
Other Funds 108,167 115,298 122,049
$ 462,908 $ 482,527 $ 505,330

(a)
The Company is party to two collective bargaining agreements that require contributions to Central States, Southeast & Southwest
Areas Pension Plan. In 2021, 30% of the Company's contributions were required by a collective bargaining agreement that expires
3/31/2022 and 70% were required by an agreement that expires 04/30/2022.

The Company was not listed in any of its multiemployer plans’ Forms 5500 as providing more than 5% of the
total contributions. Forms 5500 were not available for the plan year ending in 2021.

(9) RECLASSIFICATION OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the reclassifications out of accumulated other comprehensive income (loss) for the
periods indicated and the affected line item in the statements where net income is presented:
Reclassification for 2021 2020 2019
Net periodic pension and postretirement costs in:
Other, net $ 860,483 $ (47,304) $ 69,682
Tax benefit (expense) (230,000) 10,000 (20,000)
Net of tax $ 630,483 $ (37,304) $ 49,682

See Note 8, “Pension and Other Postretirement Benefits”, for discussion of pension and postretirement amounts yet to
be reclassed in accumulated other comprehensive income.

(10) SIGNIFICANT ESTIMATES AND CERTAIN CONCENTRATIONS

Thirty six percent (36%) of the Company’s employees are covered by various collective bargaining
agreements. Four of the union contracts expire in 2022. The Company believes it has a good working relationship with
its employees and has been successful in negotiating multi-year union contracts without work stoppages.

The Company has noncontributory defined benefit pension plans and defined contribution postretirement health
plans that provide certain postretirement benefits to eligible employees. The benefit obligation is the actuarial present
value of all benefits attributed to services rendered prior to the valuation date based on the Entry Age Actuarial Cost
Method and the Projected Unit Credit Actuarial Cost Method, respectively. It is reasonably possible that events could
24.
occur that would change the estimated amount of these liabilities materially in the near term. The financial statements
have been prepared using values and information currently available to the Company.

Economic and financial market conditions could adversely affect our results of operations in future periods.
Instability in the financial markets may make it difficult for certain of our customers to obtain financing, which may
significantly impact the volume of future sales and adversely impact the Company’s future operating results.

In addition, volatility of economic conditions could rapidly change the values of assets and liabilities recorded
in the financial statements, resulting in material future adjustments in investment values (including defined benefit
pension plan investments), allowances for accounts, net realizable value of inventory and realization of deferred tax
assets that could negatively impact the Company’s ability to meet debt covenants or maintain sufficient liquidity.

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. The
Current portion of other long-term debt, at December 31, 2020, in the accompanying balance sheet includes $0.8 million,
related to the settlement of a lawsuit on July 18, 2017.

The Company invests in various equity securities which are exposed to market risks. Due to the level of risk
associated with certain equity securities, it is at least reasonably possible that changes in the values of equity securities
will occur in the near term and that those changes could materially affect the amounts reported in the accompanying
balance sheet.

(11) STOCKHOLDERS’ EQUITY

Capital Stock and Class B Capital Stock have the same rights except as follows: Class B Capital Stock has voting
rights of ten votes per share and restricted transferability; Class B Capital Stock is convertible at all times into Capital
Stock on a share-for-share basis; and Capital Stock has one vote per share and is freely transferable.

(12) LINES OF BUSINESS

The Company groups its operations into two lines of business - Cement Business and Ready-Mixed Concrete
Business. The Company’s business lines are separate business units that offer different products. The accounting policies
for each line are the same as those described in the summary of significant accounting policies. Corporate assets include
cash and cash equivalents, investments, deferred income taxes and other assets for 2021, 2020 and 2019.

Following is information for each line for the years ended December 31, 2021, 2020 and 2019:

Ready-Mixed Adjustments
Cement Concrete and
Business Business Eliminations Consolidated
For the Year Ended December 31, 2021
Sales to unaffiliated customers $ 120,621,752 $ 91,226,149 $ - $ 211,847,901
Intersegment sales 18,542,002 253,839 (18,795,841) -
Total net sales $ 139,163,754 $ 91,479,988 $ (18,795,841) $ 211,847,901
Income from operations $ 43,398,414 $ 2,393,677 $ 45,792,091
Other income, net 28,167,831
Income before income taxes $ 73,959,922
Identifiable assets at December 31, 2021 $ 125,540,610 $ 42,652,200 $ 168,192,810
Corporate assets 127,002,896
Total assets at December 31, 2021 $ 295,195,706

25.
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021, 2020 AND 2019

Ready-Mixed Adjustments
Cement Concrete and
Business Business Eliminations Consolidated
For the Year Ended December 31, 2020
Sales to unaffiliated customers $ 104,880,779 $ 83,944,474 $ - $ 188,825,253
Intersegment sales 17,069,802 312,437 (17,382,239) -
Total net sales $ 121,950,581 $ 84,256,911 $ (17,382,239) $ 188,825,253
Income from operations $ 37,112,037 $ 2,977,621 $ 40,089,658
Other income, net 208,637
Income before income taxes $ 40,298,295
Identifiable assets at December 31, 2020 $ 117,397,798 $ 39,150,227 $ 156,548,025
Corporate assets 101,221,883
Total assets at December 31, 2020 $ 257,769,908

For the Year Ended December 31, 2019

Sales to unaffiliated customers $ 90,518,219 $ 81,575,338 $ - $ 172,093,557
Intersegment sales 16,759,568 464,746 (17,224,314) -
Total net sales $ 107,277,787 $ 82,040,084 $ (17,224,314) $ 172,093,557
Income (loss) from operations $ 23,007,171 $ (1,102,940) $ 21,904,231
Other income, net 17,780,805
Income before income taxes $ 39,685,036
Identifiable assets at December 31, 2019 $ 105,735,516 $ 43,616,963 $ 149,352,479
Corporate assets 86,620,022
Total assets at December 31, 2019 $ 235,972,501

Total sales by line of business before adjustments and eliminations include both sales to unaffiliated customers
(as reported in the Company’s consolidated statements of income, comprehensive income and stockholders’ equity) and
intersegment sales. Intersegment sales are accounted for by the same method as sales to unaffiliated customers.

Income from operations is total net sales less operating expenses. In computing income from operations, none
of the following items have been added or deducted: general corporate income and expenses; interest expense; and
income taxes. Depreciation and depletion for the Cement Business and Ready-Mixed Concrete Business, respectively,
was approximately: $8.4 million and $6.6 million in 2021; $8.5 million and $7.2 million in 2020; and $8.6 million and
$8.1 million in 2019. Capital expenditures for the Cement Business and Ready-Mixed Concrete Business, respectively,
were: $16.2 million and $7.9 million in 2021; $17.9 million and $5.6 million in 2020; and $8.6 million and $7.9 million
in 2019. Identifiable assets by line of business are those assets that are used in the Company’s operations in each industry.

During 2021, 2020 and 2019, there were no sales to any one customer in excess of 10% of consolidated net sales.

(13) OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in each component of accumulated other comprehensive income
(loss), net of estimated tax:
2020 Change 2021
Pension liability adjustment $ (23,648,093) $ 10,416,564 $ (13,231,529)
Postretirement liability adjustment (2,528,158) (343,119) (2,871,277)
$ (26,176,251) $ 10,073,445 $ (16,102,806)

2019 Change 2020

Pension liability adjustment $ (19,785,354) $ (3,862,739) $ (23,648,093)
Postretirement liability adjustment 232,319 (2,760,477) (2,528,158)
$ (19,553,035) $ (6,623,216) $ (26,176,251)

26.
(14) SHARE REPURCHASES

On November 16, 2020, the Company commenced a modified Dutch auction tender offer for up to $5.0 million
in shares of either our Capital or Class B shares at a price within the range of $60.00 to $70.00 per share. The tender
offer expired on December 18, 2020. Through the tender offer, we accepted 62,920 shares at a price of $70.00 per share,
for a total cost of $4.4 million. The shares purchased through the tender offer were immediately retired.

In addition to the equity tender offer described above, during the fourth quarter of 2020, we executed a
repurchase for 1,040 shares of our Capital shares totaling $72,800. These repurchased shares were immediately retired.

On May 19, 2021, the Company purchased and immediately retired 34,610 Class B shares for $101.00 per share,
for a total of $3.5 million.

27.
 CORPORATE INFORMATION

DIRECTORS OFFICERS
Mark A. Callaway Walter H. Wulf, Jr.
CEO and Chairman of the Board
David L. Deffner
Kent A. Webber
Robert M. Kissick President
Gayle C. McMillen *Robert M. Kissick
Vice Chairman of the Board and Vice President
Byron J. Radcliff
Tony D. Kasten
Robert K. Radcliff Chief Financial Officer and
Secretary-Treasurer
Steve W. Sloan
Lisa J. Fontaine
Michael R. Wachter Assistant Secretary
Kent A. Webber Kenneth G. Miller
Vice President - Cement Manufacturing
Walter H. Wulf, Jr.
N. Joan Perez
Walter H. Wulf, III
Vice President - Marketing

Douglas W. Sommers
Vice President - Sales
*Not actively involved in the daily affairs of the Company

SHAREHOLDER INFORMATION

CORPORATE OFFICE TRANSFER AGENT AND REGISTRAR

449 1200 Street The Monarch Cement Company
P.O. Box 1000 P.O. Box 1000
Humboldt, KS 66748 Humboldt, KS 66748-0900
Phone: (620) 473-2222 [email protected]
Fax: (620) 473-2447
STOCK TRADING INFORMATION
AUDITORS Trading Symbol: MCEM
Grant Thornton, LLP Over-the-Counter (OTC) Market
Kansas City, Missouri
INVESTOR RELATIONS
ANNUAL MEETING Inquiries may be directed to Tony D. Kasten,
The annual meeting of the stockholders of Chief Financial Officer and Secretary-Treasurer,
The Monarch Cement Company is held the at the corporate address shown above.
second Wednesday in April of each year at the
Company’s corporate offices. FINANCIAL INFORMATION
The Company’s financial statements are
available on the Company’s website,
http://www.monarchcement.com
and on the OTC Market’s website,
https://www.otcmarkets.com.