Mail Stop 0510
March 18, 2005
Via U.S. mail and facsimile
Walter H. Wulf, Jr., President and Chairman of the Board
The Monarch Cement Company
P.O. Box 1000
Humboldt, KS 66748-0900
RE: Form 10-K for the fiscal year ended December 31, 2004
File No. 0-2757
Dear Mr. Wulf:
We have reviewed these filings and have the following
comments. If you disagree with a comment, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004
Comment applicable to your overall filing
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your supplemental response
what the revisions will look like. These revisions should be
included in your future filings.
Item 5. Market for Registrant`s Common Equity and Related
Stockholder
Matters
2. Please expand your disclosure to include information relating
to
your dividend policy and your ability to pay such dividends,
including any restrictions on paying dividends imposed on you by
your
debtors. Refer to Item 201(c) of Regulation S-K.
Item 9A. Controls and Procedures
3. Your disclosure controls and procedures should have been
evaluated
as of the end of the period as opposed to within 90 days of the
filing being made. Please revise your disclosure accordingly.
EXHIBIT 13
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
4. Your discussion regarding your results of operations cites many
different factors that are attributable to the changes in your
income
statement line items. Please expand your disclosure to quantify
the
affects each of these components had on the changes within the
income
statement, including information on offsetting components. Some
examples include, but are not limited to the following:
* Gross profit
o fuel costs and
o pension costs
* Selling, general and administrative
o pension costs and
o corporate insurance costs
* The reason for the changes in effective tax rates
Liquidity
5. You have disclosed in Item 2 of your Form 10-K for the year
ended
December 31, 2004 that you have scheduled the installation of the
clinker cooler and made preliminary plans for installation on the
second precalciner you purchased. Please expand your disclosure
to
include the expected cost of the installations, the cost of the
equipment, and related depreciation taken on this equipment, if
any.
Please also disclose how long these installations will each take
and
how that will impact your operating results during these periods.
6. Please revise your table of contractual cash obligations to
include planned funding of pension and other postretirement
benefit
obligations and estimated interest payments on your debt. Because
the table is aimed at increasing transparency of cash flow, we
believe these payments should be included in the table. Please
also
disclose any assumptions you made to derive these amounts.
7. Please expand your disclosure to discuss your expectations
regarding the declaration and payments of future dividends.
Financial Statements
Statements of Cash Flows
8. Please present the cash inflows and outflows related to the
following on a gross basis:
* net purchases of subsidiaries` stock and
* proceeds from (retirement of) bank loans.
Otherwise, please explain to us how they meet the criteria in SFAS
95
for netting. Only cash flows stemming from investments, loans and
debt with original maturities of three months or less may be
reported
on a net basis.
9. Please disclose in a footnote the income statement line item
that
you include the (gain) loss on disposal of assets in. If you
exclude
these amounts from income from operations, please tell us how you
considered the guidance in paragraph 45 of SFAS 144 in doing so.
Notes to Financial Statements
(1) Nature of Operations and Summary of Significant Accounting
Policies
10. Please disclose the types of expenses that you include in the
cost of sales line item and the types of expenses that you include
in
the selling, general and administrative expenses line item.
Please
also disclose whether you include inbound freight charges,
purchasing
and receiving costs, inspection costs, warehousing costs, internal
transfer costs, and the other costs of your distribution network
in
the cost of sales line item. With the exception of warehousing
costs, if you currently exclude a portion of these costs from cost
of
sales, please disclose:
* in a footnote the line items that these excluded costs are
included
in and the amounts included in each line item for each period
presented, and
* in MD&A that your gross margins may not be comparable to those
of
other entities, since some entities include all of the costs
related
to their distribution network in cost of sales and others like you
exclude a portion of them from gross margin, including them
instead
in a line item, such as selling, general and administrative
expenses.
(i) Property, Plant and Equipment
11. Please revise your disclosure to clarify the types of
accelerated
methods you use to depreciate each of the asset categories you
disclose in footnote three.
(7) Pension Plans
12. Please expand your disclosure to include the accumulated
benefit
obligation relating to the plan. Refer to paragraph 5(e) of SFAS
132(R).
SCHEDULE 14A FILED ON MARCH 14, 2005
Audit Committee Report
13. You have disclosed that you do not have, nor are you required
to
have an audit committee financial expert. Please expand your
disclosure to include an explanation as to why you feel you are
not
currently required to have one. Refer to Item 401(h)(1)(iii) of
Regulation S-K.
Code of Ethics
14. You have disclosed that you have not adopted a Code of Ethics
that applies to your CEO, CFO, principal accounting officer or
controller, or persons performing similar functions. Please
expand
your disclosure to include an explanation as to why you feel are
not
required to adopt one at this time. Refer to Item 406(a) of
Regulation S-K.
* * * *
Please respond to these comments within 10 business days, or
tell us when you will provide us with a response. Please provide
us
with a supplemental response letter that keys your responses to
our
comments and provides any requested supplemental information.
Detailed letters greatly facilitate our review. Please file your
supplemental response on EDGAR as a correspondence file. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
If you have any questions regarding these comments, please
direct them to Meagan Caldwell, Staff Accountant, at (202) 824-
5578
or, in her absence, to the undersigned at (202) 942-1774.
Sincerely,
Rufus Decker
Accounting Branch Chief
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Mr. Walter H. Wulf, Jr.
March 18, 2005
Page 1 of 6
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510
DIVISION OF
CORPORATION FINANCE