<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

(Mark One)
             (X)   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000
                                       OR

             ( )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File Number 0-4197

                       UNITED STATES LIME & MINERALS, INC.
                       -----------------------------------
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                     <C>
           TEXAS                                                  75-0789226
-------------------------------                     ---------------------------------------
(State or other jurisdiction of                     (I.R.S. Employer Identification Number)
 incorporation or organization)
</TABLE>

<TABLE>
<S>                                                     <C>
 13800 MONTFORT DRIVE, SUITE 330, DALLAS, TEXAS                     75240
--------------------------------------------------                ----------
    (Address of principal executive offices)                      (Zip code)
</TABLE>

       Registrant's telephone number, including area code: (972) 991-8400

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<S>                                             <C>
      Title of Each Class                         Name of Each Exchange on
                                                      Which Registered
</TABLE>

                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          Common Stock, $0.10 par value

        Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                             Yes   X            No
                                 -----             -----

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

        The aggregate market value of Common Stock held by non-affiliates as of
March 16, 2001: $2,695,842.

        Number of shares of Common Stock outstanding as of March 16, 2001:
5,799,845.

                       DOCUMENTS INCORPORATED BY REFERENCE

        Part III incorporates information by reference from the Registrant's
definitive Proxy Statement to be filed for its 2001 Annual Meeting of
Shareholders. Part IV incorporates certain exhibits by reference from the
Registrant's previous filings.


<PAGE>   2

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                      PAGE

<S>                                                                                  <C>
PART I..................................................................................1

      ITEM 1.  BUSINESS.................................................................1
               General..................................................................1
               Business and Products....................................................1
               Product Sales............................................................1
               Order Backlog............................................................1
               Seasonality..............................................................2
               Limestone Reserves.......................................................2
               Mining...................................................................2
               Plants and Facilities....................................................3
               Employees................................................................4
               Competition..............................................................4
               Environmental Matters....................................................4

      ITEM 2.  PROPERTIES...............................................................5

      ITEM 3.  LEGAL PROCEEDINGS........................................................5

      ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................5

PART II.................................................................................5

      ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS......................................................5

      ITEM 6.  SELECTED FINANCIAL DATA..................................................6

      ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................7

      ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..............13

      ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............................13

      ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE.....................................14

PART III...............................................................................14

PART IV................................................................................14

      ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
               ON FORM 8-K.............................................................14

               SIGNATURES..............................................................18
</TABLE>


<PAGE>   3

                                     PART I


ITEM 1. BUSINESS.

        GENERAL. The business of United States Lime & Minerals, Inc. (the
"Company" or the "Registrant"), which was incorporated in 1950, is the
production and sale of lime and limestone products. The Company extracts
high-quality limestone from its quarries and processes it for sale as pulverized
limestone, quicklime, and hydrated lime. These operations were conducted
throughout 2000 by three wholly-owned subsidiaries of the Company: Arkansas Lime
Company, Colorado Lime Company and Texas Lime Company.

        The Company's principal corporate office is located at 13800 Montfort
Drive, Suite 330, Dallas, Texas 75240.

        BUSINESS AND PRODUCTS. The Company extracts raw limestone and then
processes it for sale as pulverized limestone, quicklime, and hydrated lime.
Pulverized limestone (also referred to as ground calcium carbonate) is a dried
product ground to granular and finer sizes. Quicklime (calcium oxide) is
produced by heating limestone to very high temperatures in kilns in a process
called calcination. Hydrated lime (calcium hydroxide) is produced by reacting
quicklime with water in a controlled process to produce a dry, white powder.

        Pulverized limestone is used primarily in the production of construction
materials such as roofing shingles and asphalt paving, as an additive to
agriculture feeds, as a soil enhancement, and for mine safety dust in coal
mining operations. Quicklime is used primarily in the manufacturing of paper
products, in sanitation and water filtering systems, in metal processing, and in
soil stabilization for highway and building construction. Hydrated lime is used
primarily in municipal sanitation and water treatment, in soil stabilization for
highway and building construction, in the production of chemicals, and in the
production of construction materials such as stucco, plaster and mortar.

        PRODUCT SALES. In 2000, the Company sold the majority of its products in
the states of Arkansas, Colorado, Kansas, Louisiana, Mississippi, Missouri, New
Mexico, Oklahoma, Tennessee, and Texas. Sales are made primarily by the
Company's seven sales employees who call on potential customers and solicit
orders which are generally made on a purchase-order basis. The Company also
receives orders in response to bids that it prepares and submits to potential
customers.

        Principal customers for the Company's lime and limestone products are
highway, street and parking lot contractors, chemical producers, paper
manufacturers, roofing shingle manufacturers, steel producers, glass
manufacturers, municipal sanitation and water treatment facilities, poultry and
cattle feed producers, governmental agencies, and electrical utility companies.

        Approximately 900 customers accounted for the Company's sales of lime
and limestone products during the year ended December 31, 2000. No single
customer accounted for more than 10% of such sales. The Company is not subject
to significant customer risks as its customers are considerably diversified as
to geographic location and industrial concentration. However, given the nature
of the lime and limestone industry, the Company's profits are very sensitive to
changes in sales volume.

        Lime and limestone products are transported by truck and rail to
customers generally within a radius of 400 miles of each of the Company's
processing plants.

        Substantially all of the Company's sales are made within the United
States.

        ORDER BACKLOG. The Company does not believe that backlog information
accurately reflects anticipated annual revenues or profitability from year to
year.

                                      -1-
<PAGE>   4


        SEASONALITY. The Company's sales of lime and limestone products are
highest during the months of March through November. The Company's sales have
historically reflected seasonal trends, with the largest percentage of total
annual revenues being realized in the second and third quarters. Lower seasonal
demand normally results in reduced shipments and revenues in the first and
fourth quarters. Inclement weather conditions generally have a negative impact
on the demand for lime and limestone products.

        LIMESTONE RESERVES. The Company has two subsidiaries which currently
extract limestone from open-pit quarries. Texas Lime Company is located 14 miles
from Cleburne, Texas, and Arkansas Lime Company is located near Batesville,
Arkansas. A third subsidiary, Colorado Lime Company, owns limestone resources at
Monarch Pass located 15 miles west of Salida, Colorado. No mining took place on
this property in 1999 and 2000, although existing crushed stone stockpiles on
the property were used to provide feedstock to the plant in Salida acquired from
Calco, Inc. Access to all locations is provided by paved roads.

        Texas Lime Company operates upon a tract of land containing
approximately 470 acres, including the Cleburne Quarry. In January 1999, the
Company purchased approximately 400 acres of additional land and now owns
approximately 2,700 acres adjacent to the quarry. Both the quarry and the
adjacent land contain known high-quality limestone reserves in a bed averaging
28 feet in thickness, with an overburden that ranges from 0 to 50 feet. The
Company also has mineral interests in approximately 560 acres of land adjacent
to the northwest boundary of the Company's property. The calculated reserves, as
of December 31, 2000, were approximately 42,000,000 tons of proven reserves and
approximately 91,000,000 tons of probable reserves. Assuming the enhanced level
of production following the Texas modernization and expansion project is
maintained, the Company estimates that these reserves are sufficient to sustain
operations for approximately 100 years.

        Arkansas Lime Company operates the Batesville Quarry and has lime and
limestone production facilities on a second site linked to the quarry by its own
standard gauge railroad. The active quarry operations cover approximately 725
acres of land containing a known deposit of high-quality limestone. The average
thickness of the high-quality limestone deposit is approximately 70 feet, with
an average overburden thickness of 35 feet. The Company also owns approximately
325 additional acres containing additional high-quality limestone deposits
adjacent to the present quarry but separated from it by a public highway. The
average thickness of this second high-quality limestone deposit is approximately
55 feet, with an average overburden of 20 feet. The calculated reserves, as of
December 31, 2000, were approximately 22,500,000 tons of proven reserves plus an
additional 33,500,000 tons of probable reserves. Assuming the present level of
production available with Phase I of the Arkansas modernization and expansion
project completed, the Company estimates that reserves are sufficient to sustain
operations for approximately 75 years. However, this estimate is reduced to 50
years assuming that the Arkansas facility reaches projected production levels
after the planned Phase II modernization and expansion.

        Colorado Lime Company acquired the Monarch Pass Quarry in November 1995
and has not carried out any mining on the property. A review of the potential
limestone resources has been completed by independent geologists. However, the
Company does not consider the cost of a drilling program to be economically
feasible at this time and, consequently, it is not possible to identify and
categorize reserves. The Monarch Pass Quarry, which had been operated for many
years until its closure in the early nineties, contains a mixture of limestone
types, including high-quality calcium limestone and dolomite. The Company
expects to utilize remaining crushed stone stockpiles to supply its processing
plant in nearby Salida.

        MINING. The Company extracts limestone by the open-pit method at its
Arkansas and Texas quarries. Monarch Pass is also an open-pit quarry, but is not
being worked at this time. The open-pit method consists of removing any
overburden comprising soil, trees, and other substances, including inferior
limestone, and then extracting the exposed high-quality limestone. Open-pit
mining is generally less expensive than underground mining. The principal
disadvantage of the open-pit method is that operations are subject to inclement
weather. The limestone is extracted by drilling and blasting utilizing standard
mining equipment. After extraction, limestone is crushed, screened, and ground
in the case of pulverized limestone, or further processed in kilns and hydrators
in the case of quicklime and hydrated lime, before shipment. The Company has no
knowledge of any recent changes in the physical quarrying conditions on any of
its properties which have materially affected its mining operations, and no such
changes are anticipated.

                                      -2-
<PAGE>   5


        PLANTS AND FACILITIES. The Company produces lime and/or limestone
products at three plants:

        Following the completion at the end of 1998 of a modernization and
expansion project at the Texas plant, the plant now has an annual capacity of
470,000 tons of quicklime from three rotary kilns. The plant has pulverized
limestone equipment which has a capacity to produce approximately 1,000,000 tons
of pulverized limestone annually, depending on the product mix. The Texas
project included the installation of a new stone crushing and handling system,
the addition of a preheater to one of the existing kilns, additional storage,
screening, and shipping capacity, and a new support building housing a
laboratory and administrative and shop facilities. In addition to the Cleburne
plant, the Company owns a dormant plant which is located near Blum, Texas on a
tract of land covering approximately 524 acres. The Blum plant was acquired in
1989, and its kilns have not been operated since that time; however, the plant's
storage and shipment facilities are currently being utilized.

        The Arkansas lime production plant is situated at the Batesville quarry.
The limestone and hydrate facilities are situated on a tract of 290 acres
located approximately two miles from the Batesville Quarry to which it is
connected by a Company-owned standard railroad. Utilizing one rotary kiln, this
plant has an annual capacity of approximately 200,000 tons of quicklime. The
plant has two grinding systems which, depending on the product mix, have the
capacity to produce 700,000 tons of pulverized limestone annually.

        Over the past decade, Arkansas Lime Company has lost various accounts
due to poor product quality and service from the now retired vertical lime kilns
which were installed in the 1920's. In 1999, the Company commenced a
modernization and expansion of the Arkansas facility, to be completed in two
phases, which is designed to expand production and improve quality and service,
enabling Arkansas Lime Company to compete for new accounts and for the accounts
of former customers lost due to the quality and service issues. Phase I included
the redevelopment of the quarry plant, rebuilding of the railroad to standard
United States gauge, purchase of a facility to establish an out-of-state
terminal, installation of a rotary kiln with preheater, and increased product
storage and loading capacity. There is some additional work to be completed on
Phase I, but the project recently met an important milestone in producing its
first lime on October 22, 2000. Completion of Phase I provides the Company with
modern quarry and lime manufacturing facilities, with an annual production
capacity of approximately 200,000 tons of quicklime.

        The Company has plans to refurbish the distribution terminal in
Shreveport, Louisiana, connected to the Kansas City Southern railroad, to
provide lime storage and distribution capacity to service markets in Louisiana
and East Texas. This terminal may be completed in conjunction with Phase II of
the project. Phase II , which the Company has determined to delay at this time,
would further expand lime production capacity at Arkansas to approximately
400,000 tons of quicklime by the installation of a second rotary kiln and
preheater with additional storage capacity.

        The Company maintains lime hydrating equipment and limestone drying and
pulverizing equipment at both the Texas and Arkansas plants. Storage facilities
for lime and pulverized limestone products at each plant consist primarily of
cylindrical tanks, which are considered by the Company to be adequate to protect
its lime and limestone products and to provide an available supply for
customers' needs at the existing volume of shipments. Equipment is maintained at
each plant to load trucks, and at the Arkansas and Blum plants to load railroad
cars.

        Colorado Lime Company operates a limestone drying, grinding and bagging
facility, with an annual capacity of 60,000 tons, on 7.9 acres of land in
Salida, Colorado. The property is leased from the Union Pacific Railroad for a
term of 5 years, commencing June 1999, with renewal options for a further 10
years. A rail loading spur is available, although the Company does not currently
ship any products by rail. This plant's facilities also include a small rotary
lime kiln which is permitted for operation but presently dormant. A mobile stone
crushing and screening plant is situated at the Monarch Pass Quarry, producing
agricultural grade limestone, with an annual capacity of up to 40,000 tons.

        The Company believes that its processing plants are adequately
maintained and insured. The Texas plant has recently been modernized and
expanded, and Phase I of the Arkansas modernization and expansion project has
replaced the majority of the old quarry and lime producing equipment at this
facility. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -Financial Condition."

                                      -3-
<PAGE>   6


        EMPLOYEES. The Company employed, at December 31, 2000, 212 persons, 23
of who are engaged in administrative and management activities and 7 of who are
engaged in sales activities. Of the Company's 182 production employees, 126 are
covered by two collective bargaining agreements. Both agreements were renewed
during 1999. The Arkansas facility agreement expires in January 2002, and the
Texas facility agreement expires in November 2002.

        COMPETITION. The lime industry is highly localized and competitive, with
quality, price, ability to meet customer demand and proximity to customers being
the prime competitive factors. The Company's competitors are predominantly
private companies.

        In recent years, the demand for lime has been relatively strong. In
addition, the Transportation Equity Act for the 21st Century, signed into law in
June 1998, provides federal funding for highway construction, and therefore, the
Company believes that there will be a continuing strong level of demand by the
highway construction sector for lime products used in highway construction for
the next few years.

         The lime industry is also characterized by high barriers to entry,
including: the scarcity of high-quality limestone deposits on which the required
zoning and permits for extraction can be obtained; the need for lime plants to
be located close to markets and railroad networks to enable cost-effective
production and distribution; recent clean air and anti-pollution legislation
which has made it more difficult to obtain permitting for new sources of
emissions such as lime kilns; and the high capital cost of the facilities. These
considerations reinforce the premium value of operations having permitted,
long-term, high-quality mineral reserves and good locations relative to markets.
Producers tend to be concentrated on known limestone formations where
competition takes place on a local basis. The industry as a whole has expanded
its customer base and, while the steel industry is still the largest market
sector, also counts pulp and paper producers and road builders among its major
customers. In recent years, the environmental-related uses for lime have been
expanding, including use in flue gas desulfurization and the treatment of both
waste and potable water.

        There is a continuing trend of consolidation in the lime and limestone
industry, with the three largest lime companies now accounting for more than
two-thirds of North American lime capacity. In addition to the consolidations,
and often in conjunction with them, many lime producers have undergone
modernization and expansion projects to upgrade their processing equipment in an
effort to improve operating efficiency. The Company's modernization and
expansion projects should allow it to continue to remain competitive, protect
its markets, and position itself for the future. In addition, the Company will
continue to evaluate external opportunities for expansion. However, the Company
may have to revise its strategy, or otherwise find ways to enhance the value of
the Company, including entering into strategic partnerships, mergers, or other
transactions.

        ENVIRONMENTAL MATTERS. The Company owns or controls large areas of land
upon which it operates limestone quarries and their associated processing plants
with inherent environmental responsibilities. However, there is a low level of
environmental risk posed by the production of lime and limestone.

        The Company's operations are subject to various federal, state, and
local environmental laws and regulations, including the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act, and the Comprehensive
Environmental Response, Compensation, and Liability Act, as well as the Toxic
Substances Control Act. The rate of change of such legislation has been rapid
over the last decade, and compliance can require significant expenditures. For
example, recent federal legislation required Texas Lime Company and Arkansas
Lime Company to apply for "Title V" renewable operating permits which have
significant on-going compliance monitoring costs. While the Company cannot be
certain that it will always be able to comply with changing requirements without
a material impact on its business, it is not aware of any such impending change.
In part in response to requirements of environmental regulatory agencies, the
Company incurred capital expenditures of approximately $200,000 in 2000 and
$200,000 in 1999 on environmental compliance and is planning to incur
approximately $250,000 in 2001 excluding major capital projects. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Financial Condition."

        In the judgment of management, forecastable expenditure requirements for
future environmental compliance are not of such dimension as to have a
materially adverse effect on the Company's financial condition, results of
operation, cash flows, or competitive position.

                                      -4-
<PAGE>   7


        The Company's recurring costs associated with managing and disposing of
potentially hazardous substances (such as fuels and lubricants used in
operations) and maintaining pollution control equipment amounted to
approximately $250,000 in 2000 and $165,000 in 1999. The Company has not been
named as a potentially responsible party in any superfund cleanup site.


ITEM 2. PROPERTIES.

        Reference is made to Item 1 of this Report for a description of the
properties of the Company, and such description is hereby incorporated by
reference in answer to this Item 2. As discussed in Note 2 of Notes to
Consolidated Financial Statements, the Company's plant facilities and mineral
reserves are subject to encumbrances to secure the Company's loans.


ITEM 3. LEGAL PROCEEDINGS.

        Information regarding legal proceedings is set forth in Note 6 of Notes
to Consolidated Financial Statements and is hereby incorporated by reference in
answer to this Item 3.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

        The Company did not submit any matters to a vote of security holders
during the fourth quarter 2000.


                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

        The Company's Common Stock is quoted on the Nasdaq National Market(R)
under the symbol "USLM." As of March 16, 2001, the Company had 569 stockholders
of record.

        As of March 16, 2001, the Company had 500,000 shares of $5.00 par value
preferred stock authorized; however, none had been issued.

        The high and low sales prices for the Company's Common Stock for the
periods indicated, as well as dividends declared, were:

<TABLE>
<CAPTION>
                                 2000                                  1999
                  ----------------------------------     --------------------------------
                       MARKET PRICE      DIVIDENDS          MARKET PRICE      DIVIDENDS
                  ---------------------                  -------------------
                      LOW       HIGH      DECLARED          LOW      HIGH      DECLARED
                  ----------------------------------     --------- --------- ------------
<S>                <C>       <C>          <C>             <C>        <C>         <C>
First Quarter      $6 1/4    $8 1/2       $ 0.025         $6 1/4     $8 1/32     $ 0.025
Second Quarter     $7        $8 1/2       $ 0.025         $6 1/2     $11         $ 0.025
Third Quarter      $6 1/4    $8 1/2       $ 0.025         $5 5/8     $8          $ 0.025
Fourth Quarter     $4 1/4    $6 3/4       $ 0.025         $6         $8          $ 0.025
</TABLE>

                                      -5-
<PAGE>   8


ITEM 6. SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
                                       (dollars in thousands, except per share amounts)

                                                       YEARS ENDED DECEMBER 31,
                                             ----------------------------------------------
                                              2000      1999     1998     1997      1996
                                             -------- --------- -------- --------  --------
<S>                                          <C>         <C>      <C>      <C>       <C>
Operating results
    Revenues                                 $ 32,456    31,537   28,769   32,404    40,159
                                             ======== ========= ======== ========  ========
    Net income (loss)                        $  (291)     2,533    2,929    3,096 a   2,602
                                             ======== ========= ======== ========  ========

Income (loss) per share of common stock
    Basic earnings                           $ (0.07)      0.64     0.74     0.79      0.67
                                             ======== ========= ======== ========  ========
    Diluted earnings                         $ (0.07)      0.64     0.74     0.78      0.66
                                             ======== ========= ======== ========  ========
</TABLE>


<TABLE>
<CAPTION>
                                                      AS OF DECEMBER 31,
                                         ----------------------------------------------
                                          2000      1999     1998     1997      1996
                                         -------- --------- -------- --------  --------
<S>                                     <C>        <C>      <C>      <C>       <C>
 Total assets                           $94,058    77,688   51,090   33,520    31,319
 Long-term debt,
     excluding current installments     $44,167    42,500   16,196    2,167     3,238

 Stockholders' equity per
     outstanding share                  $  7.06      7.23     6.70     6.11      5.40
 Cash dividends per share               $  0.10      0.10     0.10     0.10      0.10
 Employees at year end                      212       205      200      201       318
</TABLE>

------------------------------
        a.      Includes a loss on sale of Corson Lime Company assets of $405,
                net of related tax benefit ($506 gross), and the recognition of
                $2,300 in previously reserved deferred tax assets.



See "Management's Discussion and Analysis of Financial Condition and Results of
Operations," and Notes to Consolidated Financial Statements.

                                      -6-
<PAGE>   9


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.


RESULTS OF OPERATIONS.

        The following table sets forth selected financial information of the
Company expressed as a percentage of revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                      YEARS ENDED DECEMBER 31,
                                                 -----------------------------------
                                                   2000         1999        1998
                                                 ---------    ---------   ----------

<S>                                              <C>          <C>          <C>
Revenues                                            100%         100%         100%

Cost of revenues
    Labor and other operating expenses              (66)         (58)         (66)
    Depreciation, depletion and amortization        (15)         (14)         (10)
                                                 ---------    ---------   ----------
        GROSS PROFIT                                 19           28           24

Selling, general and administrative expenses        (12)         (11)         (12)
                                                 ---------    ---------   ----------
        OPERATING PROFIT                              7           17           12

Other (expenses) income:
    Interest expense                                (10)          (8)           -
    Other, net                                        2            2            1

Federal and state income tax (expense) benefit        -           (3)          (3)
                                                 ---------    ---------   ----------


        NET INCOME (LOSS)                            (1%)          8%          10%
                                                 =========    =========   ==========
</TABLE>


                                  2000 VS. 1999

Revenues increased to $32,456,000 in 2000 from $31,537,000 in 1999, an increase
of $919,000, or 2.9%. This increase was a result of a 1.1% increase in sales
volume and a 1.8% increase in sales price. The increased sales were
predominately the result of the strong demand in Texas, partially offset by the
reduced sales at Arkansas as a result of the delays in the completion of the
Phase I project.

The Company's gross profit was $6,177,000 for 2000 compared to $8,815,000 for
1999, a 29.9%, or $2,638,000 decrease. As a percentage of revenues, gross profit
margin decreased to 19.0% in 2000 from 28.0% in 1999. The delay in the
completion of the new kiln for the Arkansas plant resulted in lost production
opportunity costs, as well as lost sales for the second half of the year. In
addition, the Company's operating results were adversely affected by a number of
other factors, including rapidly increasing fuel costs, particularly natural
gas, lower sales of pulverized limestone used in roofing products, and
unprecedented flooding at the Texas Lime Company facility in June. The high cost
of natural gas negatively impacted the results of Arkansas Lime Company,
increasing operating costs because the old vertical kilns, now retired, could
only burn gas. The June flooding in Texas caused a significant loss of
production and the depletion of finished goods inventories, and led to increased
costs through purchasing lime from outside sources to fulfill customer
commitments.

Selling, general and administrative ("SGA") expenses increased by $454,000 to
$3,936,000 in 2000 from $3,482,000 in 1999, or 13.0%. As a percentage of
revenues, SGA expenses increased to 12.1% in 2000 from 11.0% in 1999. The
increase in SGA expenses was mainly caused by the increased efforts of sales
personnel at Arkansas Lime, the effect of Colorado Lime for a whole year in 2000
compared to just a half year in 1999, and increased costs related to shipping
charges.



                                       -7-
<PAGE>   10

Interest expense increased to $3,174,000 in 2000 from $2,561,000 in 1999. The
increase was a result of the Company's increased amount of debt. Interest
capitalized for the modernization and expansion project at Arkansas was
$1,600,000 in 2000 and $167,000 in 1999.


The Company's net loss for 2000 was $291,000 ($0.07 per share) compared to 1999
net income of $2,533,000 ($0.64 per share). In addition to the several factors
listed above, the one-time write off of approximately $100,000 for the old
vertical kilns at our Arkansas plant also negatively impacted the results for
2000.


                                  1999 VS. 1998

        Revenues increased to $31,537,000 in 1999 from $28,769,000 in 1998, an
increase of $2,768,000, or 9.6%. This increase was a result of a 6.9% increase
in sales volume and a 2.7% increase in sales prices. Revenues from the Colorado
Lime plant in the last six months of 1999 contributed to the increase, as did
the continued strong demand from the Texas market.

        The Company's gross profit was $8,815,000 for 1999 compared to
$7,061,000 for 1998, a 24.8%, or $1,754,000 increase. As a percentage of
revenues, gross profit margin increased to 28.0% in 1999 from 24.5% in 1998.
Improving production efficiencies at Texas Lime during the second half of 1999
contributed to the increased gross profit margin.

        SGA expenses decreased slightly to $3,482,000 in 1999 from $3,489,000 in
1998. As a percentage of revenues, SGA expenses decreased to 11.0% in 1999 from
12.1% in 1998.

        Interest expense increased to $2,561,000 in 1999 from $26,000 in 1998.
This resulted from the Company's increased amount of debt. In addition, $962,000
of interest costs associated with the modernization and expansion project at the
Texas facility were capitalized in 1998, while only $167,000 of interest costs
associated with the modernization and expansion project at the Arkansas facility
were capitalized in 1999.

        The Company's net income for 1999 decreased $396,000, or 13.5%, to
$2,533,000 ($0.64 per share) in 1999 from $2,929,000 ($0.74 per share) in 1998.
Although operating profit in 1999 increased by $1,761,000, or 49.3%, net income
was negatively impacted by the increase in interest expense in 1999 as compared
to 1998.

FINANCIAL CONDITION.

        LIQUIDITY AND CAPITAL RESOURCES. In 2000, cash flow from operations was
$9,769,000, an increase of $7,561,000, or 342.4%, from 1999. The increase was
principally related to increases in accounts payable. The large increase in
accounts payable relates substantially to amounts due contractors for the
Arkansas modernization and expansion project. As of December 31, 2000, the
Company had liabilities for open equipment and construction orders totaling
approximately $5,500,000, primarily related to the Arkansas project. This amount
is payable in the first half of 2001.

        At December 31, 2000, the Company had cash or cash equivalents totaling
$5,072,000, compared with $18,021,000 at the end of 1999. The decreased balance
is due to the monies spent on the modernization and expansion project at
Arkansas Lime Company.

        CAPITAL EXPENDITURES. The Company completed the modernization and
expansion project at the Texas facility at the end of 1998 and, in November
1999, commenced a similar project for the Arkansas facility. The Company expects
to spend approximately $3,000,000 to $4,000,000 per year over the next several
years for normal recurring capital and re-equipping projects at the plant
facilities to maintain or improve efficiency and reduce costs.

        During the fourth quarter 2000, the Company commissioned a new line for
the production of pulverized limestone at Texas Lime Company. This investment
will allow the Company to pursue new business opportunities and better serve
existing customers. The lack of capacity and reliability of a single production
line was a limiting factor on sales to several large customers requiring
"around-the-clock" availability. The new line has already resulted in new
customers for the first quarter of 2001. During the first quarter of 2001,
certain minor additions are being made to this operation to enhance its ability
to produce consistently in extreme weather conditions. The cost of the new
pulverized limestone production line was approximately $2,300,000.


                                       -8-
<PAGE>   11

        The Arkansas modernization and expansion project commenced with ground
breaking in November 1999 and is expected to be completed in two phases: Phase I
involved the redevelopment of the quarry plant, rebuilding of the railroad to
standard U.S. gauge, and installation of a rotary kiln with a preheater, along
with increased product storage and loading capacity. The kiln in Phase I
produced its first lime on October 22, 2000, which is of excellent quality and
has been well received by customers. Currently, the lime is being tested by a
number of new customers that the Company previously could not serve because of
the quality of the lime produced with the old vertical kilns which have been
retired. There is, however, some additional work to be done on Phase I to make
the plant fully operational and efficient. The Company expects this additional
work will be completed in the first quarter of 2001.

        The Company estimates that Phase I of the Arkansas project will cost
approximately $34,000,000, approximately $4,000,000 over the last estimate. The
current estimate of $34,000,000 includes approximately $1,800,000 of costs
associated with the pre-building of certain facilities for Phase II of the
Arkansas project and the purchase of, but not all of the improvements to, the
terminal in Shreveport, Louisiana. This estimate is subject to final completion
of some of the material handling infrastructure in Phase I, as well as
satisfactory resolution of various outstanding matters with vendors and
contractors.

        Phase II of the Arkansas project would further expand the plant capacity
through the installation of a second kiln with additional storage capacity and
would include the establishment of an out of state terminal in Shreveport,
Louisiana for the distribution of the Company's products. The Company had
intended to complete the terminal as part of Phase I, but determined to complete
it as part of Phase II because of Phase I cost overruns and the Company's belief
that, at this time, its current distribution channels are adequate.

        Arkansas Phase II is estimated to cost approximately $12,000,000, not
including the $1,800,000 spent as part of Phase I. The Company had planned to
commence Phase II after the second quarter of 2000 and had arranged for a
$7,000,000 term loan to fund part of the cost of Phase II. However, due to lower
than expected cash flow and operating profits generated by the Company in 2000,
as well as the increased costs of both Arkansas Phase I and the second
pulverized limestone line at Texas Lime, the Company has determined to defer the
construction of Phase II and also has determined not to finalize the $7,000,000
term loan at this time. The Company still plans to proceed with Phase II and
will continue to review the optimum time to start the project based on its
future operating results, market demand, and the Company's ability to secure
competitive construction bids and financing.

        Capital expenditures for 2000 totaled $33,730,000, compared to
$10,860,000 in 1999. Of the 2000 expenditures, which includes capitalized
interest, approximately $27,700,000 related to the modernization and expansion
project at the Arkansas facility, while $5,700,000 of the 1999 expenditures was
related to the project. The Company is not contractually committed to any
planned capital expenditures until actual orders are placed for equipment or
services.

        BANKING FACILITIES AND OTHER DEBT. On April 22, 1999, the Company
entered into a new credit agreement with a consortium of commercial banks for a
$50,000,000 Senior Secured Term Loan (the "Loan"). The interest rate on the
first $30,000,000 of the Loan is 8.875%. The subsequent installments bear
interest from the date they were funded at 3.52% above the secondary market
yield of the United States Treasury obligation maturing May 15, 2005. The
blended rate for the additional $20,000,000 is 9.65%. The Loan is repayable over
a period of approximately 8 years, maturing on March 30, 2007, and requires
monthly principal payments of $277,777.78 which began April 30, 2000, with a
final principal payment of $26,944,444.26 on March 30, 2007, which equates to a
15-year amortization.

        Upon execution of the Loan agreement, the first $30,000,000 was
advanced, of which approximately $20,000,000 was used to retire all existing
bank loans, with the balance used primarily for Phase I of the Arkansas
modernization and expansion project. Under the terms of the Loan agreement, the
remaining $20,000,000 of the Loan facility was drawn down in four equal
quarterly installments beginning June 30, 1999, and ending March 30, 2000.

        As of April 21, 2000, the Company renewed its $4,000,000 revolving
credit facility. The $4,000,000 facility matures on May 31, 2001 and bears
interest at LIBOR plus 1.40%, which rate will increase to a maximum of 3.55% in
accordance with a defined rate spread based upon the Company's then-current
ratio of total funded debt to earnings before interest, taxes, depreciation and
amortization (EBITDA). At December 31, 2000, the Company had fully drawn down
all available funds under the facility and the average interest rate was 9.42%.

                                      -9-
<PAGE>   12

        The Loan is secured by a first lien on substantially all of the
Company's assets, with the exception of accounts receivable and inventories
which secure the $4,000,000 revolving credit facility. The Loan agreement
contains covenants that restrict the incurrence of debt, guaranties and liens,
and places certain restrictions on the payment of dividends and the sale of
significant assets. The Company is also required to meet minimum debt service
coverage ratios on an on-going basis and maintain a minimum level of tangible
net worth.

         On December 27, 2000, the Company obtained a $5,000,000 bridge loan
("Bridge Loan") under normal commercial terms from Inberdon Enterprise, Ltd.
("Inberdon"), its majority shareholder. Inberdon owned approximately 51% of the
outstanding stock of the Company at the time the Bridge Loan was made. The
Bridge Loan was unsecured, carried interest at 9.75%, and matured on March 27,
2001. The Company repaid the Bridge Loan with the proceeds of its rights
offering which was completed during the second week of February, 2001. (See Note
9 of Notes to Consolidated Financial Statements).

        As of December 31, 2000, the Company had $56,325,000 in total debt
outstanding, consisting of $51,325,000 of bank debt and $5,000,000 due to
Inberdon.

         LIQUIDITY. During the fourth quarter of 2000, the Company required
additional capital because the costs to complete both the Arkansas Phase I
project and the new pulverized limestone production line at Texas were
significantly higher than originally anticipated and because the Company's cash
flow and operating profits were lower than expected. To meet its short-term
liquidity demands, the Company determined to make a pro rata rights offering to
its existing shareholders to raise $10,000,000 in additional equity capital. The
Company also obtained the $5,000,000 Bridge Loan from Inberdon.

        The Company commenced the rights offering on December 26, 2000, and it
closed on February 8, 2001. In the rights offering, the Company raised an
additional $10,000,000 in equity capital and issued 1,818,181 shares of Common
Stock at the subscription price of $5.50 per share. The Company was able to
honor in full all over-subscription requests from its shareholders. The
Company's majority shareholder, Inberdon, subscribed for its full pro rata
amount and also purchased, at the $5.50 per share subscription price, 461,005
additional shares not purchased by other shareholders in the rights offering,
for a total investment of approximately $7,630,000. As a result of the rights
offering, Inberdon now owns approximately 59% of the Company's outstanding
Common Stock.

        The proceeds of the rights offering were used to repay the $5,000,000
Bridge Loan from Inberdon, to repay the $4,000,000 revolving credit facility,
and for working capital. Accordingly, the Company has fully utilized the
proceeds of the rights offering. As a result of repaying the $4,000,000
facility, however, the Company continues to have access to the funds available
under the facility. The Company believes that it can meet immediate liquidity
demands and pay for the necessary work on Phase I of the Arkansas project with
funds generated from operations and available under its revolving credit
facility. The revolving credit facility expires on May 31, 2001; however, the
Company plans to renew the facility prior to its expiration.

        ENVIRONMENTAL MATTERS. The Company's operations are subject to various
environmental laws and regulations. In part in response to requirements of
environmental regulatory agencies, the Company incurred capital expenditures of
approximately $200,000 in 2000 and $200,000 in 1999. In the judgment of
management, forecastable environmental expenditure requirements for the future
are not of such dimension as to have a materially adverse effect on the
Company's financial condition, results of operations, cash flows, or competitive
position. See "Business--Environmental Matters."

        FORWARD-LOOKING STATEMENTS. Any statements contained in this Report that
are not statements of historical fact are forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. Forward-looking
statements in this Report, including without limitation, statements relating to
the Company's plans, strategies, objectives, expectations, intentions, and
adequacy of resources, are identified by such words as "will," "could,"
"should," "believe," "expect," "intend," "plan," "schedule," "estimate," and
"project." The Company undertakes no obligation to publicly update or revise any
forward-looking statements. The Company cautions that forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially from expectations, including without limitation the following: (i)
the Company's plans, strategies, objectives, expectations, and intentions are
subject to change at any time in the Company's discretion; (ii) the Company's
plans and results of operations will be affected by its ability to manage its
growth and modernization; (iii) the Company's ability to meet short-term and
long-term liquidity demands; (iv) inclement weather conditions; (v) increased
fuel costs; (vi) unanticipated delays or additional cost overruns in completing
current construction projects and (vi) other risks and uncertainties set forth
below or indicated from time to time in the Company's filings with the
Securities and Exchange Commission.

                                      -10-
<PAGE>   13

ADDITIONAL FACTORS.

        SHORT-TERM LIQUIDITY DEMANDS. The Company made the rights offering to
raise funds to meet immediate liquidity demands. These funds were needed to
repay short-term indebtedness, including the $5,000,000 Bridge Loan from
Inberdon and the $4,000,000 revolving credit facility, which was fully drawn
down at the end of 2000. Funds now available under the revolving credit facility
and generated from operations should allow the Company to meet immediate
liquidity demands and to pay for the necessary work on Phase I of the Arkansas
project. However, until the Company begins to generate improved cash flow from
operations, it may have to obtain additional financing, and there is no
assurance the Company will be able to do so given the current levels of
indebtedness.

        For the first half of 2001, the Company expects that it will need
approximately $10,000,000 to fund necessary repayments of principal and interest
on its $50,000,000 Loan, payments due for open equipment and construction
orders, necessary capital expenditures for completion of the Phase I project,
normal recurring capital and re-equipping projects and normal working capital
needs. The Company expects that cash from operations and funds available under
its $4,000,000 revolving credit facility will permit the Company to meet these
short-term demands.

        The Company expects that it will begin to realize the benefits of its
capital improvement projects through increased revenues and operating profit
during the first half of 2001; however, there is no guarantee that these
benefits will be realized when and as expected. If the Company is unable to
realize the benefits of its investments, the Company expects it will need
additional sources of funding to meet liquidity demands. In that case, if the
Company is unable to obtain additional financing at acceptable terms, the
Company may be required to explore other alternatives to maximize shareholder
value. If the Company incurs additional indebtedness, its debt levels and
resulting repayment obligations will increase, which may have an adverse impact
on the Company's financial condition, results of operations, cash flows, and
competitive position.

        EFFECTS OF LEVERAGE AND RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S
INDEBTEDNESS. Following the closing of the Company's $50,000,000 Loan, the
Company is significantly more leveraged than it has been in the recent past. As
of December 31, 2000, the Company's total consolidated indebtedness and total
stockholders' equity were $56,325,000 and $28,100,000, respectively, and total
indebtedness represented 66.7% of total capitalization.

        Following the closing of the recent $10,000,000 rights offering, the
Company's debt ratio has improved. However, even with the improved debt ratio as
a result of the offering, a substantial portion of the Company's cash flow from
operations will be dedicated to the payment of principal and interest on
indebtedness. The Company's ability to service its debt and to comply with the
financial and restrictive covenants contained in the Loan is subject to
financial, economic, competitive and other factors. Many of these factors are
beyond the Company's control. In particular, the Company's ability to service
its indebtedness will depend upon its ability to generate higher levels of
revenues and cash flow as a result of the modernization and expansion of the
Texas and Arkansas plants.

        FACTORS THAT COULD AFFECT OPERATIONS. In the normal course of the
Company's business, it faces risks that could have a material adverse effect on
its financial position, results of operations, cash flows, and competitive
position. Not all risks are foreseeable or within the Company's ability to
control. These risks arise from factors including, but not limited to,
fluctuating demand for lime and limestone products, the Company's ability to
produce and store quantities of lime and limestone products sufficient to meet
customer demands, the success of the Company's modernization and expansion
strategies, including its ability to execute the strategies and complete
projects on time and within budget, the Company's access to capital, energy
costs, inclement weather and the effects of seasonal trends.

        The ability of the Company to service its debt and to comply with the
financial and restrictive covenants contained in its Loan agreement will depend
upon its future performance and business growth, including the Company's ability
to recapture the Arkansas Lime market, which, in turn, is subject to financial,
economic, competitive, and other factors, many of which are beyond the Company's
control.

        COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS. The Company's
operations are subject to various federal, state, and local environmental laws
and regulations, including the Clear Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, and the Comprehensive Environmental Response,

                                      -11-
<PAGE>   14

Compensation, and Liability Act, as well as the Toxic Substances Control Act.
The rate of change of such legislation has been rapid over the last decade, and
compliance can require significant expenditures. While the Company cannot be
certain it will always be able to comply with changing requirements without a
material impact on its business, the Company is not aware of any such impending
change with which it cannot comply.

        In September 1999, the Company received an Operating Air Permit for
Phase I of the modernization and expansion project for the Arkansas facility. In
June 2000, the Company received a second Operating Air Permit for Arkansas Phase
II. These permits cover air emissions generated at the facility and contain
stringent criteria that the new rotary lime kilns and plant must meet. Until
both kilns are fully operational and have demonstrated the ability to comply
with the permit conditions, there can be no assurance that additional capital
will not be required, or operating conditions imposed, in order to achieve
compliance.

        COMPLETION OF PHASE II OF THE ARKANSAS PROJECT. The Company still plans
to proceed with Phase II of the Arkansas project. However, due to the Company's
lower than expected cash flow and operating profits generated in 2000, as well
as the increased costs of both Arkansas Phase I and the second pulverized
limestone facility at Texas Lime, the Company has determined to defer the
construction of Arkansas Phase II at this time. The Company still intends to
proceed with the project and will continue to review the optimum start-up time
based on operating results, market demand, and the ability to secure competitive
construction bids and financing. The future construction of Arkansas Phase II
could also have a material adverse effect on the Company due to the impact of
start-up costs and the potential for under-utilization, especially in the
start-up phase. No assurance can be given that the Phase II expansion of the
Arkansas facility will be completed on time or within budget, and it may be
abandoned due to these or other issues. Further, notwithstanding current demand
for lime and limestone products, the Company cannot guarantee that it will be
able to sell its products, or reestablish accounts with those customers that
previously purchased products from Arkansas Lime, once increased production has
commenced, or that any such sales will be profitable. The Company may decide to
incur additional debt or issue additional equity securities to pay for
construction or other expansion costs, which could have a further dilutive
effect on the ownership interests of current shareholders.

        COMPETITION. The lime industry is highly regionalized and competitive.
The Company's competitors include both public and private companies. The primary
competitive factors in the lime industry are quality, price, and proximity to
the customer, personal relationships, and timeliness of deliveries, with varying
emphasis on these factors depending upon the specific product application. To
the extent that one or more of the Company's competitors becomes more successful
with respect to any key competitive factor, the Company's business could be
materially adversely affected. Although demand for lime has been relatively
strong in recent years, the Company is unable to predict future demand and
prices, and cannot provide any assurance that current levels of demand and
pricing will continue or that any future increases in price or demand can be
sustained.


                                      -12-
<PAGE>   15


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


                                      NONE


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


<TABLE>
<CAPTION>
        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS.
        -------------------------------------------

<S>                                                                          <C>
        Report of Independent Auditors                                          F-1

        Consolidated Financial Statements:

               Consolidated Balance Sheets as of December 31, 2000 and 1999     F-2

               Consolidated Statements of Operations for the Years Ended
                      December 31, 2000, 1999, and 1998                         F-3

               Consolidated Statements of Stockholders' Equity for
                      the Years Ended December 31, 2000, 1999, and 1998         F-4

               Consolidated Statements of Cash Flows for the Years
                      Ended December 31, 2000, 1999, and 1998                   F-5

               Notes to Consolidated Financial Statements                       F-6
</TABLE>

                                      -13-
<PAGE>   16


                         REPORT OF INDEPENDENT AUDITORS



The Board of Directors and Stockholders
United States Lime & Minerals, Inc.


We have audited the consolidated balance sheets of United States Lime &
Minerals, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. 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. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of United
States Lime & Minerals, Inc. and subsidiaries as of December 31, 2000 and 1999,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.



                                                          /s/ ERNST & YOUNG LLP

                                                          ERNST & YOUNG LLP





Dallas, Texas
January 31, 2001, except for Note 9
as to which the date is February 8, 2001


                                      -F1-
<PAGE>   17


                           CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                   -------------------------
ASSETS                                                2000          1999
                                                   -----------   -----------
<S>                                            <C>              <C>
Current assets:
    Cash and cash equivalents                    $   5,072        18,021
    Trade receivables, net                           4,101         4,166
    Inventories                                      4,232         4,266
    Prepaid expenses and other assets                  263           163
                                                   -----------   -----------
        Total current assets                        13,668        26,616

Property, plant and equipment, at cost:
    Land                                             3,366         3,366
    Building and building improvements               2,042         1,940
    Machinery and equipment                        106,961        75,705
    Furniture and fixtures                           1,213           949
    Automotive equipment                               473           551
                                                   -----------   -----------
                                                   114,055        82,511
    Less accumulated depreciation                  (38,388)      (35,381)
                                                   -----------   -----------
        Property, plant and equipment, net          75,667        47,130

Deferred tax asset, net                              2,453         2,136
Other assets, net                                    2,270         1,806
                                                   -----------   -----------

        TOTAL ASSETS                              $ 94,058        77,688
                                                   ===========   ===========


Current liabilities:
    Current installments of debt                  $ 12,158         2,500
    Accounts payable - trade                         8,426         1,953
    Accrued expenses                                   929         1,580
                                                   -----------   -----------
           Total current liabilities                21,513         6,033
Debt, excluding current installments                44,167        42,500
Other liabilities                                      272           358
                                                   -----------   -----------
        TOTAL LIABILITIES                           65,952        48,891
Commitments and contingencies                            -             -
Stockholders' equity:
    Preferred stock, $5.00 par value;
        authorized 500,000 shares; none issued           -             -
    Common stock, $0.10 par value; authorized
        15,000,000 shares; issued 5,294,065
        shares                                         529           529
    Additional paid-in capital                      14,819        14,819
    Retained earnings                               26,685        27,376
    Less treasury stock at cost; 1,312,401
    shares
        shares of common stock                     (13,927)      (13,927)
                                                   -----------   -----------
           Total stockholders' equity               28,106        28,797
                                                   -----------   -----------
        TOTAL LIABILITIES AND STOCKHOLDERS'
        EQUITY                                    $ 94,058        77,688
                                                   ===========   ===========
</TABLE>

           See accompanying notes to consolidated financial statements


                                      -F2-
<PAGE>   18


                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                     YEARS ENDED DECEMBER 31,
                                               -------------------------------------
                                                  2000         1999        1998
                                               -----------  ----------- ------------

<S>                                         <C>            <C>          <C>
Revenues                                      $ 32,456       31,537       28,769

Cost of revenues:
    Labor and other operating expenses          21,408       18,295       18,920
    Depreciation, depletion and
    amortization                                 4,871        4,427        2,788
                                               -----------  ----------- ------------
                                                26,279       22,722       21,708
                                               -----------  ----------- ------------

        GROSS PROFIT                             6,177        8,815        7,061

Selling, general and administrative
expenses                                         3,936        3,482        3,489
                                               -----------  ----------- ------------

        OPERATING PROFIT                         2,241        5,333        3,572

Other expenses (income):
    Interest expense                             3,174        2,561           26
    Other, net                                    (557)        (605)        (308)
                                               -----------  ----------- ------------
                                                 2,617         1,956        (282)
                                               -----------  ----------- ------------

        INCOME (LOSS) BEFORE TAXES               (376)         3,377       3,854
Income tax expense (benefit), net                 (85)           844         925
                                               -----------  ----------- ------------

        NET INCOME (LOSS)                     $  (291)         2,533       2,929
                                               ===========  =========== ============

INCOME (LOSS) PER SHARE OF COMMON
STOCK:
    Basic earnings (loss) per common
    share                                     $ (0.07)         0.64         0.74
                                               ===========  =========== ============
    Diluted earnings (loss) per common
    share                                     $ (0.07)         0.64         0.74
                                               ===========  =========== ============
</TABLE>

           See accompanying notes to consolidated financial statements


                                      -F3-
<PAGE>   19

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (dollars in thousands)

                     YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998



<TABLE>
<CAPTION>
                                   Common Stock         Additional     Retained  Accumulated  Comprehensive   Treasury      Total
                               ----------------------    Paid-In       Earnings     Other        Income        Stock
                                 Shares       Amount     Capital                Comprehensive
                               Outstanding                                          Income
                               ----------------------- ------------ ----------- ------------- -------------- ----------- -----------

<S>                             <C>              <C>       <C>          <C>              <C>                  <C>           <C>
BALANCES AT DECEMBER 31, 1997   3,951,853         529      15,135       22,710           19                   (14,243)      24,150
  Stock options exercised          25,336          --        (269)          --           --           --          269           --
  Common stock dividends               --          --          --         (396)          --           --           --         (396)

  Adjustments to reflect
  Minimum pension liability            --          --          --           --          (19)         (19)          --          (19)
 Net income                            --          --          --        2,929           --        2,929           --        2,929
                                                                                                 -------
  Comprehensive income                 --          --          --           --           --        2,910           --           --
                                ---------------------     -------     --------    ---------      -------      -------       ------
BALANCES AT DECEMBER 31, 1998   3,977,189         529      14,866       25,243           --           --      (13,974)      26,664
 Stock options exercised            4,475          --         (47)          --           --           --           47           --
 Common stock dividends                --          --          --         (400)          --           --           --         (400)
 Net income                            --          --          --        2,533           --        2,533           --        2,533
                                                                                                 -------
  Comprehensive income                 --          --          --           --           --        2,533           --           --
                                ---------------------     -------     --------    ---------      -------      -------       ------
BALANCES AT DECEMBER 31, 1999   3,981,664         529      14,819       27,376           --           --      (13,927)      28,797

 Stock options exercised               --          --          --           --           --           --           --           --
 Common stock dividends                --          --          --         (400)          --           --           --         (400)
 Net income (loss)                     --          --          --         (291)          --         (291)          --         (291)
                                                                                                 -------
  Comprehensive income
  (loss)                               --          --          --           --           --         (291)          --           --
                                ---------------------     -------     --------    ---------      -------      -------       ------
BALANCES AT DECEMBER 31, 2000   3,981,664         529      14,819       26,685           --           --      (13,927)      28,106
                                =====================     =======     ========    =========      =======      =======       ======
</TABLE>

           See accompanying notes to consolidated financial statements


                                      -F4-
<PAGE>   20


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                   -------------------------------------
                                                      2000         1999         1998
                                                   -----------  -----------  -----------
<S>                                               <C>           <C>          <C>
OPERATING ACTIVITIES:
Net income (loss)                                 $   (291)       2,533        2,929
    Adjustments to reconcile net income (loss)
    to net cash provided by operations:
        Depreciation, depletion and amortization     5,030        4,600        2,925
        Amortization of financing costs                290          145            -
        Deferred income taxes (benefit)               (317)         329           72
        Loss (gain) on sale of assets                   76          (18)         124
        Changes in assets and liabilities:
        (Increase) / decrease in trade
        receivables                                     65         (806)         264
        (Increase) / decrease in inventories            34       (1,112)        (153)
        (Increase) / decrease in prepaid
           expenses                                   (390)         (24)         (28)
        (Increase) / decrease in other assets         (464)      (1,743)        (154)
        Increase / (decrease) in accounts
        payable and accrued expenses                 5,822       (1,801)        (697)
        Increase / (decrease) in other
           liabilities                                 (86)         105          152
                                                   -----------  -----------  -----------

        Total adjustments                           10,060         (325)       2,505
                                                   -----------  -----------  -----------
        Net cash provided by operations           $  9,769        2,208        5,434

INVESTING ACTIVITIES:
    Purchase of property, plant and equipment     $(33,730)     (10,860)     (22,790)
    Proceeds from sale of property, plant and
      equipment                                         87          224           71
                                                   -----------  -----------  -----------
        Net cash used in investing activities     $(33,643)     (10,636)     (22,719)

FINANCING ACTIVITIES:
    Payment of common stock dividends                 (400)        (400)        (396)
    Proceeds from borrowings                        13,825       47,000       16,357
    Repayments of debt                              (2,500)     (20,839)        (756)
    Repayment of pension fund liability                  -            -          (19)
                                                   -----------  -----------  -----------
        Net cash provided by  financing
          activities                              $ 10,925       25,761       15,186
                                                   -----------  -----------  -----------
        Net increase (decrease) in cash and
          cash equivalents                         (12,949)      17,333       (2,099)
    Cash and cash equivalents at beginning of
    period                                          18,021          688        2,787
                                                   -----------  -----------  -----------

    Cash and cash equivalents at end of period    $  5,072       18,021          688
                                                   ===========  ===========  ===========
</TABLE>

           See accompanying notes to consolidated financial statements

                                      -F5-
<PAGE>   21


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


                  YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998



(1)     Summary of Significant Accounting Policies

        (a)    Organization
               The Company is a manufacturer of lime and limestone products
               supplying primarily the agriculture, construction, municipal
               sanitation and water treatment, paper and steel industries. The
               Company is headquartered in Dallas, Texas and operates lime and
               limestone plants in Arkansas, Colorado and Texas through its
               wholly owned subsidiaries, Arkansas Lime Company, Colorado Lime
               Company and Texas Lime Company, respectively.

        (b)    Principles of Consolidation
               The consolidated financial statements include the accounts of the
               Company and its subsidiaries. All material intercompany balances
               and transactions have been eliminated.

        (c)    Use of Estimates
               The preparation of the financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect the amounts reported
               in the financial statements and accompanying notes. Actual
               results could differ from those estimates.

        (d)    Statements of Cash Flows
               For purposes of reporting cash flows, the Company considers all
               certificates of deposit and highly-liquid debt instruments, such
               as U.S. treasury bills and notes, with original maturities of
               three months or less to be cash equivalents. Cash equivalents are
               carried at cost plus accrued interest, which approximates fair
               market value.

               Supplemental cash flow information is presented below:

<TABLE>
<CAPTION>
                                                        2000       1999        1998
                                                      ---------- ----------  ----------
<S>                                                  <C>          <C>           <C>
          Cash paid during the period for:
              Interest (net of amounts capitalized)  $ 4,774      3,544         900
                                                      ========== ==========  ==========
              Income taxes                           $   695        470         439
                                                      ========== ==========  ==========
</TABLE>


        (e)    Trade Receivables
               Trade receivables are presented net of the related allowance for
               doubtful accounts, which totaled $104 and $93 at December 31,
               2000 and 1999, respectively.


                                      -F6-
<PAGE>   22


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


        (f)    Inventories
               Inventories are valued principally at the lower of cost,
               determined using the average cost method, or market. Costs
               include materials, labor, and production overhead.

               A summary of inventories is as follows:
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         ------------------------
                                                            2000         1999
                                                         -----------  -----------
<S>                                                     <C>            <C>
               Lime and limestone inventories:
                   Raw materials                        $  1,465        1,499
                   Finished goods                            793          955
                                                         -----------  -----------
                                                           2,258        2,454
               Service parts inventories                   1,974        1,812
                                                         -----------  -----------
                                                        $  4,232        4,266
                                                         ===========  ===========
</TABLE>

        (g)    Property, Plant and Equipment
               For major constructed assets, the capitalized cost includes the
               cash price paid by the Company for labor and materials plus
               interest and project management costs that are directly related
               to the constructed assets. Total interest costs of $1,600, $167
               and $962 were capitalized for the years ended December 31, 2000,
               1999, and 1998. Depreciation of property, plant and equipment is
               being provided for by the straight-line and declining-balance
               methods over estimated useful lives as follows:

<TABLE>
<S>                                                             <C>
                          Buildings and building improvements           3 - 40 years
                          Machinery and equipment                       3 - 20 years
                          Furniture and fixtures                        3 - 10 years
                          Automotive equipment                          3 -  8 years
</TABLE>

               Maintenance and repairs are charged to expense as incurred;
               renewals and betterments are capitalized. When units of property
               are retired or otherwise disposed of, their cost and related
               accumulated depreciation are removed from the accounts, and any
               resulting gain or loss is credited or charged to income.

               The Company reviews its long-term assets for impairment in
               accordance with the guidelines of Statement of Financial
               Accounting Standards No. 121, "Accounting for the Impairment of
               Long-Lived Assets and for Long-Lived Assets to be Disposed of"
               ("SFAS 121"). SFAS 121 requires that, when changes in
               circumstances indicate that the carrying amount of an asset may
               not be recoverable, the Company should determine if impairment of
               value exists. Impairment is measured as the amount by which the
               carrying amount of the assets exceeds the expected future
               undiscounted cash flows from the use and eventual disposal of the
               assets under review. Any write-downs are treated as a permanent
               reduction in the carrying value of the assets.

                                      -F7-
<PAGE>   23


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


        (h)    Other Assets
               Other assets consist of the following:

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                     ------------------------
                                                        2000        1999
                                                     ----------- ------------
<S>                                                 <C>            <C>
                      Deferred stripping costs      $    195            -
                      Deferred financing costs         2,054        1,781
                      Goodwill                            21           25
                                                     ----------- ------------
                                                    $  2,270        1,806
                                                     =========== ============
</TABLE>


               Deferred stripping costs, all of which related to Arkansas Lime
               Company, will be amortized by the units-of-production method.
               Deferred financing costs are expensed over the shorter of the
               life of the debt or expected life of the loan using the
               straight-line method. Goodwill related to the purchase of
               Colorado Lime Company is being amortized by the straight-line
               method over 7 years.

        (i)    Environmental Expenditures
               Environmental expenditures that relate to current operations are
               expensed or capitalized as appropriate. Expenditures that relate
               to an existing condition caused by past operations, and which do
               not contribute to current or future revenue generation, are
               expensed. Liabilities are recorded when environmental assessments
               and/or remedial efforts are probable, and the costs can be
               reasonably estimated. Generally, the timing of these accruals
               will coincide with completion of a feasibility study or the
               Company's commitment to a formal plan of action.

        (j)    Stock Options
               The Company has elected to follow Accounting Principles Board
               Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
               25"), in accounting for its employee stock options. Under APB 25,
               if the exercise price of an employee's stock options equals or
               exceeds the market price of the underlying stock on the date of
               grant, no compensation expense is recognized. The Company adopted
               Statement of Financial Accounting Standards No. 123, "Accounting
               for Stock-Based Compensation" ("SFAS 123"), in 1996. SFAS 123
               requires companies that elect to continue applying the provisions
               of APB 25 to provide pro forma disclosures for employee stock
               compensation awards as if the fair-value-based method defined in
               SFAS 123 had been applied. See Note 5 of Notes to Consolidated
               Financial Statements.

        (k)    Earnings Per Share of Common Stock
               Effective December 31, 1997, Statement of Financial Accounting
               Standards No. 128, "Earnings per Share" ("SFAS 128"), was
               implemented by the Company. SFAS 128 requires the presentation of
               basic and diluted earnings per share for all periods presented.

                                      -F8-
<PAGE>   24


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


(2)     Banking Facilities and other debt

        On April 22, 1999, the Company entered into a new credit agreement with
a consortium of commercial banks for a $50,000 Senior Secured Term Loan (the
"Loan"). The Loan is repayable over a period of approximately 8 years, maturing
on March 30, 2007, and requires monthly principal payments of $278, which began
April 30, 2000, with a final principal payment of $26,944 on March 30, 2007,
which equates to a 15-year amortization. The Company paid a fee equivalent to
2-1/2% of the Loan value to the placement agent.

        Upon execution of the Loan agreement, the first $30,000 was advanced, of
which approximately $20,000 was used to retire all existing bank loans, with the
balance used primarily for the modernization and expansion of the Arkansas
operations. Under the terms of the Loan agreement, the remaining $20,000 of the
Loan facility was drawn down in four equal quarterly installments beginning June
30, 1999, and ending March 30, 2000.

        The interest rate on the first $30,000 of the Loan is 8.875%. The
subsequent installments bear interest from the date they were funded at 3.52%
above the secondary market yield of the United States Treasury obligation
maturing May 15, 2005. The blended rate for the additional $20,000 is 9.65%.

        In connection with the repayment of the prior term loan, the Company
terminated an interest rate protection agreement, which it had entered into with
its bank to modify the interest characteristics of $9,000 of its
then-outstanding term debt from a variable to a fixed rate (the "Swap
Agreement"). As a result of the termination of the Swap Agreement, the Company
was obligated to pay the bank a $102 termination payment, which was expensed in
the second quarter 1999 as an adjustment to interest expense.

        As of April 21, 2000, the Company renewed its $4,000 revolving credit
facility. The agreement matures on May 31, 2001. The revolving credit facility
bears interest at LIBOR plus 1.40%, which rate will increase to a maximum of
3.55% in accordance with a defined rate spread based upon the Company's
then-current ratio of total funded debt to earnings before interest, taxes,
depreciation and amortization (EBITDA). At December 31, 2000, the Company had
drawn down $3,825 on the revolving credit facility and the average interest rate
was 9.42%.

        The Loan is secured by a first lien on substantially all of the
Company's assets, with the exception of accounts receivable and inventories
which secure the $4,000 revolving credit facility. The Loan agreement contains
covenants that restrict the incurrence of debt, guaranties and liens, and places
certain restrictions on the payment of dividends and the sale of significant
assets. The Company is also required to meet minimum debt service coverage
ratios on an on-going basis and maintain a minimum level of tangible net worth.

        On December 27, 2000, the Company obtained a $5,000 bridge loan ("Bridge
Loan") under normal commercial terms from Inberdon Enterprise, Ltd.
("Inberdon"), evidenced by a subordinated promissory note. Inberdon owned
approximately 51% of the outstanding stock of the Company at the time. The
bridge loan was unsecured, bore interest at 9.75% and had to be repaid by March
27, 2001. The bridge loan was repaid with a portion of the proceeds of the
Company's rights offering that closed on February 8, 2001. See Note 9.

        As of December 31, 2000, the Company had approximately $56,325 in total
debt outstanding, consisting of $51,325 of bank debt and $5,000 due to Inberdon.


                                      -F9-
<PAGE>   25


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


        A summary of debt is as follows:
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                             ------------------------
                                                                2000         1999
                                                             -----------  -----------
<S>                                                         <C>           <C>
               Term loan                                    $ 47,500       45,000
               Revolving credit facility                       3,825            -
               Subordinated promissory note                    5,000            -
                                                             -----------  -----------
                   Subtotal                                   56,325       45,000

               Less current installments                      12,158        2,500
                                                             -----------  -----------

               Debt, excluding current installments         $ 44,167       42,500
                                                             ===========  ===========

</TABLE>

        Amounts payable on the long-term debt outstanding as of December 31,
        2000 to be paid in 2001 and thereafter are: 2001 = $3,333; 2002 =
        $3,333; 2003 = $3,334; 2004 = $3,333; 2005 = $3,333; 2006 = $3,334; 2007
        = $24,167.

        The carrying amount of the Company's long-term debt approximates its
        fair value.


(3)     Income Taxes

        Income tax expense (benefit), net for the years ended December 31, 2000,
        1999, and 1998 was as follows:

<TABLE>
<CAPTION>
                                                      2000        1999         1998
                                                   ----------- ------------ ------------
<S>                                                 <C>          <C>          <C>
               Current income tax expense           $  232          920          853
               Deferred income tax expense
               (benefit)                              (317)        (76)           72
                                                   ----------- ------------ ------------

               Income tax expense (benefit), net    $  (85)         844          925
                                                   =========== ============ ============
</TABLE>

        A reconciliation of income taxes computed at the federal statutory rate
        to income tax expense (benefit), net for the years ended December 31,
        2000, 1999, and 1998 is as follows:

<TABLE>
<CAPTION>
                                         2000                   1999                     1998
                                ---------------------- ----------------------- ------------------------
                                             Percent                 Percent                 Percent
                                            of pretax               of pretax               of pretax
                                 Amount      income      Amount      income      Amount      income
                                ----------  ----------  ----------  ----------  ----------  ----------
<S>                             <C>         <C>          <C>          <C>        <C>          <C>
Income taxes (benefit)
   computed at the federal
   statutory rate               $ (128)       (34.0%)       1,148        34.0%      1,310        34.0%
Increase (reductions) in
   taxes resulting from:
    Statutory depletion in
      excess of cost depletion    (203)       (54.0)         (366)      (10.8)       (439)      (11.0)
    State income taxes, net of
      federal income tax
     benefit                       255          67.8           93         2.8          39         1.0
    Other                           (9)        (2.4)         (30)        (1.0)         15           -
                                ----------  ----------  ----------  ----------  ----------  ----------

Income tax expense (benefit),
   net                          $  (85)      (22.6%)          845        25.0%         925       24.0%
                                ==========  ==========  ==========  ==========  ==========  ==========
</TABLE>


                                     -F10-
<PAGE>   26


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


        As reported in the Company's consolidated financial statements and notes
        contained in its Form 10-K for the year ended December 31, 1996, the
        Company had deferred tax assets which were previously fully reserved by
        a valuation allowance in accordance with Statement of Financial
        Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
        109"). The unrecognized deferred tax assets related primarily to net
        operating loss carryforwards, general business credit carryforwards, and
        alternative minimum tax credit carryforwards.

        Generally, the provisions of SFAS 109 require deferred tax assets to be
        reduced by a valuation allowance if, based on the weight of available
        evidence, it is "more likely" than not that some portion or all of the
        deferred tax assets will not be realized. SFAS 109 requires an
        assessment of all available evidence, both positive and negative, to
        determine the amount of any required valuation allowance. No benefit was
        given to the deferred tax assets at December 31, 1996 due to
        uncertainties related to their utilization.

        As a result of the sale of the Corson Lime Company assets in 1997, the
        Company reviewed the deferred tax assets and concluded that the
        uncertainties as to their realization had been favorably resolved, in
        that the net operating loss carryforwards and the general business
        credit carryforwards were expected to be fully utilized. The Company's
        future taxable income, enhanced by the sale of the Corson assets,
        indicated future utilization of the alternative minimum tax credit
        carryforwards in the future. The post-Corson sale assessment as to the
        ultimate realization of the deferred tax assets indicated that it was
        more likely than not that the deferred tax assets would be realized.

        As a result, the Company reduced the deferred tax assets' valuation
        allowance in the second quarter of 1997 by $2,300, recording the
        deferred tax assets and recognizing that amount in federal and state
        income tax expense (benefit), net.

        At December 31, 2000, the Company had deferred tax liabilities of $1,127
        and deferred tax assets of $3,580. The temporary differences related to
        the deferred tax liabilities are primarily comprised of depreciation of
        ($895). The principal temporary difference related to the deferred tax
        assets was the alternative minimum tax credit carryforward of $3,246.

        At December 31, 1999, the Company had deferred tax liabilities of $938
        and deferred tax assets of $3,150. The principal temporary difference
        related to the deferred tax liabilities was depreciation of ($705). The
        principal temporary differences related to the deferred tax assets was
        the alternative minimum tax credit carryforward of $2,863.


                                     -F11-
<PAGE>   27


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


        (4)    Employee Retirement Plans


        The Company has a contributory retirement (401(k)) savings plan for
        nonunion employees. The Company contributions to the plan were $57
        during 2000, $51 during 1999, and $50 during 1998. The Company also has
        contributory retirement (401(k)) savings plans for union employees of
        Arkansas Lime Company and Texas Lime Company. The Company contributions
        to these plans were $28 in 2000, $21 in 1999, and $20 in 1998.

        In December 1986, the Company purchased 1,550,000 shares of its
        outstanding common stock, accounted for as treasury stock in the
        consolidated balance sheets, for $10.50 per share. Subsequent to that
        purchase, 300,000 shares, after stock split, were sold to the Employee
        Stock Ownership Plan ("ESOP") for $8.20 per share. The ESOP covered
        substantially all full-time nonunion employees and was designed to
        invest primarily in the Company's common stock. Effective July 31, 1999,
        the Company merged the ESOP into the 401(k) savings plan for nonunion
        employees. Contributions to the ESOP had been at the option of the
        Company, which did not make contributions during 2000, 1999, or 1998.


                                     -F12-
<PAGE>   28


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


(5)     Stock Option Plan
        The Company has a stock option plan under which options for shares of
        common stock may be granted to key employees. The options expire ten
        years from the date of grant and generally become exercisable after the
        expiration of one year from the grant date. On April 30, 1999,
        shareholders approved an increase of 100,000 in the maximum number of
        shares available under the plan. As of December 31, 2000, the number of
        shares remaining available for future grant under the plan was 31,000.

        A summary of the Company's stock option activity and related information
        for the years ended December 31, 2000, 1999, and 1998 is as follows:

<TABLE>
<CAPTION>
                                                 2000                 1999                   1998
                                           ------------------ ----------------------   --------------------
                                                     Weighted              Weighted               Weighted
                                                     Average               Average                Average
                                                     Exercise              Exercise               Exercise
                                            Options   Price    Options      Price       Options    Price
                                           --------- -------- ---------    ---------   --------- ----------
<S>                                         <C>       <C>      <C>          <C>         <C>         <C>
     Outstanding at beginning of year       189,000   $7.47    154,000      $  7.32     187,210     $  6.90
       Granted                                5,000    6.75     75,000         7.95      62,500        7.00
       Exercised                                  -       -    (40,000)(a)     7.78     (92,210)(a)    6.27
       Forfeited                                  -       -          -            -      (3,500)       7.00
                                           --------- -------- ---------    ---------   --------- ----------

     Outstanding at end of year             194,000    7.45    189,000         7.47     154,000        7.32
                                           ========= ======== =========    =========   ========= ==========

     Exercisable at end of year             189,000    7.61    114,000         7.15      95,000        6.90
                                           ========= ======== =========    =========   ========= ==========

     Weighted average fair value of
       options granted during the year                $1.69                 $  2.09                 $  1.84
                                                    ========               =========              ==========
     Weighted average remaining
       contractual life in years                       6.83                    7.83                    7.00
                                                    ========               =========              ==========
</TABLE>

------------------------------
        (a)     In connection with the exercise of stock options in 1999 and
                1998, certain option holders exchanged shares, and treasury
                stock was used in part or total to satisfy the exercise of such
                options.





        The following table summarizes information about options outstanding at
        December 31, 2000:

<TABLE>
<CAPTION>

        Exercise                 Weighted Average Remaining
          Price                   Contractual Life (Years)               Number of Shares
      --------------          ---------------------------------         -------------------
<S>      <C>                              <C>                               <C>
         $   4.75                           2.92                              20,000
         $   8.25                           4.88                              50,000
         $   7.00                           7.14                              44,000
         $   7.625                          8.64                              10,000
         $   8.00                           8.88                              65,000
         $   6.75                           9.13                               5,000
                              ---------------------------------         -------------------
                     Total:                 6.83                             194,000
</TABLE>


                                     -F13-
<PAGE>   29


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)

        SFAS 123 requires the disclosure of pro forma net income and income per
        share of common stock information computed as if the Company had
        accounted for its employee stock options granted subsequent to December
        31, 1994 under the fair-value-based method set forth in SFAS 123. The
        fair value for these options was estimated at the date of grant using
        the Black-Scholes option valuation model, with the following weighted
        average assumptions for the 2000, 1999, and 1998 grants: a risk-free
        interest rate of 6.63% in 2000 and 6% in 1999 and 1998; a dividend yield
        of 2%; and a volatility factor of 0.31 in 2000 and 0.34 in 1999 and
        1998. In addition, the fair value of these options was estimated based
        on an expected life of three years.

        The Black-Scholes options valuation model was developed for use in
        estimating the fair value of traded options which have no vesting
        restrictions and are fully transferable. In addition, option valuation
        models require the input of highly subjective assumptions, including
        expected stock price volatility.

        Because the Company's employee stock options have characteristics
        significantly different from those of traded options, and because
        changes in the subjective assumptions can materially affect the fair
        value estimate, in management's opinion the existing models do not
        necessarily provide a reliable single measure of the fair value of the
        Company's employee stock options. In addition, because SFAS 123 is
        applicable only to options granted subsequent to December 31, 1994, the
        pro forma information does not reflect the pro forma effect of all
        previous stock option grants of the Company, and thus the pro forma
        information is not necessarily indicative of future amounts.


        For purposes of pro forma disclosures, the estimated fair value
        of the options is amortized to expense over the expected life of the
        options. The Company's pro forma information follows:

<TABLE>
<CAPTION>
                                                          2000        1999        1998
                                                       ----------- ----------- -----------
<S>                                                    <C>            <C>         <C>
               Pro forma net income (loss)             $  (468)       2,472       2,811

               Pro forma earnings (loss) per share:
                   Basic earnings (loss) per share     $ (0.12)        0.62        0.71
                   Diluted earnings (loss) per share   $ (0.12)        0.62        0.71
</TABLE>

(6)     Commitments and Contingencies

        The Company leases some of the equipment used in its operations.
        Generally, the leases are for periods varying from one to five years and
        are renewable at the option of the Company. Total rent expense was $231
        for 2000, $78 for 1998, and $185 for 1998. As of December 31, 2000,
        future minimum payments under noncancelable operating leases were $87
        per year through 2008, and $44 for 2009.

        The Company is party to lawsuits and claims arising in the normal course
        of business, none of which, in the opinion of management, is expected to
        have a material adverse effect on the Company's financial condition,
        results of operation, or cash flows.

        The Company is not contractually committed to any planned capital
        expenditures until actual orders are placed for equipment or services.
        As of December 31, 2000, the Company had liabilities for open equipment
        and construction orders totaling approximately $5,500 related to the
        Arkansas modernization and expansion project.


                                     -F14-
<PAGE>   30


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)


(7)     Earnings (Loss) Per Share

        The following table sets forth the computation of basic and diluted
earnings (loss) per share:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                       ---------------------------------------
                                                           2000         1999         1998
                                                       ----------- ------------- -------------
<S>                                                   <C>            <C>          <C>
Numerator:
   Net income (loss) for basic and diluted
    earnings per common share                         $     (291)        2,533        2,929
                                                       =========== ============= =============

Denominator:
   Denominator for basic earnings (loss) per
    common share - weighted-average shares              3,981,664    3,979,988    3,967,247

   Effect of dilutive securities on earnings (loss):
    Employee stock options                                      -        1,187        3,755
                                                       ----------- ------------- -------------

   Denominator for diluted earnings (loss)
   per common share - adjusted weighted-average shares
    and assumed exercises                               3,981,664    3,981,175    3,971,002
                                                       =========== ============= =============

Basic earnings (loss) per common share                $    (0.07)         0.64         0.74
                                                       =========== ============= =============

Diluted earnings (loss) per common share              $    (0.07)         0.64         0.74
                                                       =========== ============= =============
</TABLE>


(8)     Summary of Quarterly Financial Data (unaudited)

<TABLE>
<CAPTION>
                                                       2000
                             --------------------------------------------------------
                                MARCH 31,     JUNE 30,   SEPTEMBER 30,   DECEMBER 31,
                               ----------- ------------- -------------- -------------
<S>                           <C>            <C>          <C>           <C>
Revenues                      $  7,686         8,450        9,344         6,976
                               ----------- ------------- -------------- -------------
Gross profit                     1,969         1,669        2,005           534
                               ----------- ------------- -------------- -------------

Net income  (loss)                 262           157          285         (995)
                               =========== ============= ============== =============
    Basic earnings (loss)
    per share                 $   0.07          0.04         0.07        (0.25)
                               =========== ============= ============== =============
    Diluted earnings (loss)
    per share                 $   0.07          0.04         0.07        (0.25)
                               =========== ============= ============== =============


<CAPTION>
                                                       1999
                              -------------------------------------------------------
                                MARCH 31,     JUNE 30,   SEPTEMBER 30,   DECEMBER 31,
                               ----------- -------------- ------------- -------------
<S>                           <C>              <C>        <C>           <C>
Revenues                      $  6,931         7,613        9,268         7,725
                               ----------- -------------- ------------- -------------
Gross profit                     1,877         2,032        2,896         2,010
                               ----------- -------------- ------------- -------------

Net income                         458           444        1,113           518
                               =========== ============== ============= =============
    Basic earnings per share  $   0.12          0.11         0.28          0.13
                               =========== ============== ============= =============
    Diluted earnings per
    share                     $   0.12          0.11         0.28          0.13
                               =========== ============== ============= =============
</TABLE>


                                     -F15-
<PAGE>   31
                   Notes to Consolidated Financial Statements
                (dollars in thousands, except per share amounts)

        (9)    Subsequent Events - Rights Offering


        On December 26, 2000, the Company initiated a rights offering for
        $10,000. The rights offering allowed each shareholder to receive 0.4566
        non-transferable subscription rights for each share of the Company's
        common stock owned on December 26, 2000. The purchase price for the
        subscription was $5.50 per share, and the rights offering expired on
        February 5, 2001.


        The Company received $10,000 and issued an additional 1,818,181 shares
        effective February 8, 2001. In the rights offering, the Company honored
        the over subscription request of its shareholders in full. The Company's
        majority shareholder, Inberdon, subscripted to its full pro-rata amount,
        and in addition purchased 461,005 shares not purchased by other
        shareholders in the rights offering. As a result of the rights offering,
        Inberdon owns approximately 59% of the Company's common stock.

                                     -F16-
<PAGE>   32

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.
                                      NONE




                                    PART III

        The information required in response to Items 10, 11, 12 and 13 is
hereby incorporated by reference to the information under the captions "Election
of Directors," "Nominees for Director, " "Executive Officers of the Company Who
Are Not Also Directors," "Executive Compensation," "Voting Securities and
Principal Shareholders" and "Shareholdings of Company Directors and Executive
Officers," and "Executive Compensation" in the definitive Proxy Statement for
the Company's 2001 Annual Meeting of Shareholders. The Company anticipates that
it will file the definitive Proxy Statement with the Securities and Exchange
Commission on or before April 30, 2001.



                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.


        (a)  1. The following financial statements are included in Item 8:

                Report of Independent Auditors

                Consolidated Financial Statements:

                        Consolidated Balance Sheets as of December, 31, 2000 and
                        1999;

                        Consolidated Statements of Operations for the Years
                        Ended December 31, 2000, 1999, and 1998;

                        Consolidated Statements of Stockholders' Equity for the
                        Years Ended December, 31, 2000, 1999, and 1998;

                        Consolidated Statements of Cash Flows for the Years
                        Ended December 31, 2000, 1999, and 1998; and Notes to

                        Consolidated Financial Statements.

             2. All financial statement schedules are omitted because they are
                not applicable, or are immaterial, or the required information
                is presented in the consolidated financial statements or the
                related notes.


                                      -14-
<PAGE>   33

             3. The following documents are filed with or incorporated by
                reference into this Report:

                3(a)    Articles of Amendment to the Articles of Incorporation
                        of Scottish Heritable, Inc. dated as of January 25, 1994
                        (incorporated by reference to Exhibit 3(a) to the
                        Company's Annual Report on Form 10-K for the fiscal year
                        ended December 31, 1993, File Number 0-4197).

                3(b)    Restated Articles of Incorporation of the Company dated
                        as of May 14, 1990 (incorporated by reference to Exhibit
                        3(b) to the Company's Annual Report on Form 10-K for the
                        fiscal year ended December 31, 1993, File Number
                        0-4197).

                3(c)    Composite Copy of Bylaws of the Company, dated as of
                        December 31, 1991 (incorporated by reference to Exhibit
                        3(b) to the Company's Annual Report on Form 10-K for the
                        fiscal year ended December 31, 1991, File Number
                        0-4197).

                10(a)   Third Amendment to the United States Lime & Minerals,
                        Inc. Employee Stock Ownership Plan, effective July 31,
                        1999 (incorporated by reference to Exhibit 10(a) to the
                        Company's Annual Report on Form 10-K for the fiscal year
                        ended December 31, 1999, File Number 0-4197).

                10(b)   United States Lime & Minerals, Inc. 401(k) Profit
                        Sharing Plan effective August 1, 1983, as amended and
                        restated effective January 1, 1997 (incorporated by
                        reference to Exhibit 10(c) to the Company's Annual
                        Report on Form 10-K for the fiscal year ended December
                        31, 1996, File Number 0-4197).

                10(c)   Arkansas Lime Company Bargaining Unit 401(k) Plan
                        effective as of January 1, 1998 (incorporated by
                        reference to Exhibit 10(m) to the Company's Annual
                        Report on Form 10-K for the fiscal year ended December
                        31, 1997, File Number 0-4197).

                10(d)   Texas Lime Company Bargaining Unit 401(k) Plan,
                        effective as of January 1, 1992 (incorporated by
                        reference to Exhibit 19(f) to the Company's Quarterly
                        Report on Form 10-Q for the quarter ended June, 30,
                        1992, File Number 0-4197).

                10(e)   Executive Retention Agreement dated as of June 10, 1992
                        between the Company and Timothy W. Byrne (incorporated
                        by reference to Exhibit 19(b) to the Company's Quarterly
                        Report on Form 10-Q for the quarter ended June 30, 1992,
                        File Number 0-4197).

                10(f)   Employment Agreement between the Company and Timothy W.
                        Byrne (incorporated by reference to Exhibit 19(c) to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 30, 1992, File Number 0-4197).

                10(g)   United States Lime & Minerals, Inc. 1992 Stock Option
                        Plan, as Amended and Restated (incorporated by reference
                        to Exhibit 10(c) to the Company's Quarterly Report on
                        Form 10-Q for the quarter ended June 30, 1999, File
                        Number 0-4197).

                10(h)   Employment Agreement dated as of September 27, 1993
                        between the Company and Robert F. Kizer (incorporated by
                        reference to Exhibit 10(a) to the Company's Quarterly
                        Report on Form 10-Q for the quarter ended March 31,
                        1994, File Number 0-4197).

                10(i)   Consulting Agreement dated April 18, 1996 between the
                        Company and Wallace G. Irmscher (incorporated by
                        reference to Exhibit 10(t) to the Company's Annual
                        Report on Form 10-K for the fiscal year ended December
                        31, 1996, File Number 0-4197).

                10(j)   Amendment No. [One] to the Texas Lime Company Bargaining
                        Unit 401(k) Plan dated January 1, 1992, effective
                        November 9, 1997 (incorporated by reference to Exhibit
                        10(j) to the Company's Annual Report on Form 10-K for
                        the fiscal year ended December 31, 1997, File Number
                        0-4197).


                                      -15-
<PAGE>   34
                10(k)   Asset Purchase Agreement among Corson Lime Company,
                        United States Lime & Minerals, Inc., and Highway
                        Materials, Inc., dated as of April 22, 1997
                        (incorporated by reference to Exhibit 2 to the Company's
                        Current Report on Form 8-K dated June 21, 1997, File
                        Number 0-4197).

                10(l)   Loan and Security Agreement dated December 30, 1997
                        among United States Lime & Minerals, Inc., Arkansas Lime
                        Company and Texas Lime Company and CoreStates Bank, N.A.
                        (incorporated by reference to Exhibit 10(l) to the
                        Company's Annual Report on Form 10-K for the fiscal year
                        ended December 31, 1997, File Number 0-4197).

                10(m)   First Amendment to Amended and Restated Loan and
                        Security Agreement dated August 31, 1998 among United
                        States Lime & Minerals, Inc., Arkansas Lime Company and
                        Texas Lime Company and First Union National Bank
                        (incorporated by reference to Exhibit 10(a) to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended September, 30, 1998, File Number 0-4197).

                10(n)   International Swap Dealers Association Master Agreement
                        dated as of April 3, 1998 among CoreStates Bank, N.A.
                        and the Company (incorporated by reference to Exhibit 10
                        to the Company's Quarterly Report on Form 10-Q for the
                        quarter ended March 31, 1998, File Number 0-4197).

                10(o)   Employment Agreement dated as of October 11, 1989
                        between the Company and Billy R. Hughes (incorporated by
                        reference to Exhibit 10(a) to the Company's Quarterly
                        Report on Form 10-Q for the quarter ended March 31,
                        1999, File Number 0-4197).

                10(p)   Mutual Release Agreement dated as of February 27, 1998
                        between the Company and Robert F. Kizer (incorporated by
                        reference to Exhibit 10(n) to the Company's Annual
                        Report on Form 10-K for the fiscal year ended December
                        31, 1997, File Number 0-4197).

                10(q)   Employment Agreement dated as of April 17, 1997 between
                        the Company and Johnney G. Bowers (incorporated by
                        reference to Exhibit 10(o) to the Company's Annual
                        Report on Form 10-K for the fiscal year ended December
                        31, 1997, File Number 0-4197).

                10(r)   Employment Agreement dated as of December 1, 1998
                        between the Company and Herbert G.A. Wilson
                        (incorporated by reference to Exhibit 10(r) to the
                        Company's Annual Report on Form 10-K for the fiscal year
                        ended December 31, 1998, File Number 0-4197).

                10(s)   Employment Agreement dated as December 8, 2000 between
                        the Company and Timothy W. Byrne.

                10(t)   Credit Agreement dated April 22, 1999 among United
                        States Lime & Minerals, Inc., Arkansas Lime Company,
                        Texas Lime Company, the Lenders who are, or may become,
                        a party to this Agreement, and First Union National Bank
                        (incorporated by reference to Exhibit 10(a) to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 30, 1999, File Number 0-4197).

                10(u)   Second Amendment to Amended and Restated Loan and
                        Security Agreement dated as of April 22, 1999 among
                        United States Lime & Minerals, Inc., Arkansas Lime
                        Company, Texas Lime Company, and First Union National
                        Bank (incorporated by reference to Exhibit 10(b) to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 30, 1999, File Number 0-4197).

                10(v)   Third Amendment to Amended and Restated Loan and
                        Security Agreement dated as of May 31, 2000 among United
                        States Lime & Minerals, Inc., Arkansas Lime Company,
                        Texas Lime Company and First Union National Bank
                        (incorporated by reference to Exhibit 10 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 30, 2000, File Number 0-4197).


                                      -16-
<PAGE>   35

                UNITED STATES LIME & MINERALS, INC. - FORM 10-K

                10(w)   First Amendment to Credit Agreement dated as of December
                        27, 2000 among United States Lime & Minerals, Inc.,
                        Arkansas Lime Company, Texas Lime Company, the Lenders
                        who are, or may become, a party to this Agreement, and
                        First Union National Bank (incorporated by reference to
                        the Company's Current Report on Form 8-K dated January
                        18, 2001, File Number 0-4197).

                10(x)   Subordinated Promissory Note dated as of December 27,
                        2000 among United States Lime & Minerals, Inc., Texas
                        Lime Company, Arkansas Lime Company, and Inberdon
                        Enterprises Ltd. (incorporated by reference to the
                        Company's Current Report on Form 8-K dated January 18,
                        2001, File Number 0-4197).

                21      Subsidiaries of the Company.

                23      Consent of Independent Auditors.

------------------------------

        Exhibits 10(a) through 10(j), and 10(o) through 10(s) are management
        contracts or compensatory plans or arrangements required to be filed as
        exhibits.

        (b)     On December 26, 2000, the Company filed a current report on Form
                8-K reporting, under Items 5 and 7, the Bridge Loan between the
                Company and Inberdon, the First Amendment to Credit Agreement,
                and the news release dated December 26, 2000.

                                      -17-
<PAGE>   36


                UNITED STATES LIME & MINERALS, INC. - FORM 10-K


                                   SIGNATURES


        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                               UNITED STATES LIME & MINERALS, INC.


Date:  March 23, 2001          By:   \s\ Timothy W. Byrne
                                   --------------------------
                                   Timothy W. Byrne, President and
                                   Chief Executive Officer

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


Date: March 23, 2001           By:   \s\ Timothy W. Byrne
                                   --------------------------
                                   Timothy W. Byrne, President,
                                   Chief Executive Officer, and Director
                                   (Principal Executive Officer)

Date: March 23, 2001           By:   \s\ Larry T. Ohms
                                   ---------------------------------
                                   Larry T. Ohms, Vice President of Finance,
                                   Company Secretary and Corporate Controller
                                   (Principal Financial and Accounting Officer)

Date: March 23, 2001           By:   \s\ Edward A. Odishaw
                                   ---------------------------------
                                   Edward A., Director and
                                   Chairman of the Board

Date: March 23, 2001           By:   \s\ Antoine M. Doumet
                                   ---------------------------------
                                   Antoine M. Doumet, Director and
                                   Vice Chairman of the Board

Date: March 23, 2001           By:   \s\ John J. Brown
                                   ---------------------------------
                                   John J. Brown, Director


Date: March 23, 2001           By:   \s\ Wallace G. Irmscher
                                   ---------------------------------
                                   Wallace G. Irmscher, Director


Date: March 23, 2001           By:   \s\ Richard W. Cardin
                                   ---------------------------------
                                   Richard W. Cardin, Director


                                      -18-
<PAGE>   37

                UNITED STATES LIME & MINERALS, INC. - FORM 10-K

                                  EXHIBIT INDEX

                10(s)   Employment Agreement dated as December 8, 2000 between
                        the Company and Timothy W. Byrne.

                21      Subsidiaries of the Company.

                23      Consent of Independent Auditors.