2002
                                ANNUAL REPORT























                                     THE
                                   MONARCH
                                CEMENT COMPANY



<Page>



                                                        March 17, 2003



	ANNUAL REPORT TO STOCKHOLDERS

     Demand for cement and ready-mixed concrete in 2002 continued to challenge
us to maximize production in order to meet the needs of our customers.  Record
sales of $134 million exceeded last year's record sales by $8 million.
Additional sales of ready-mixed concrete and sundry building materials enabled
us to more fully utilize the equipment in this segment resulting in improved
profit margins.  Profit margins in the cement manufacturing segment were
adversely affected by the additional depreciation related to the new
construction projects completed in the last half of 2001.  We did not continue
our cement construction projects in 2002 although the equipment has been
purchased for the next phase of our expansion and modernization program.  We
are monitoring both current and long-term market conditions as we consider
timing of our future expansion plans.  We are also studying the effects of the
rising cost of natural gas on the operation of our precalciner kiln to
determine the timing of installation of the coal firing system.

     As we look ahead to 2003, demand within our market area varies by
location.  The Kansas highway program is currently on target through 2003,
although the Kansas legislature has voted to divert money from future highway
projects to other areas due to serious budget shortfalls.  Other major
projects, including schools, detention facilities and waste water treatment
plants are also scheduled for 2003.  The Portland Cement Association predicts
a 1.2% downturn in U.S. cement consumption in 2003; however, the overall five-
year forecast for cement sales continues to be strong.

     As the economy continues to struggle, we recognize and thank our
customers for their contribution to our success through promoting the use of
our products.  Their continued hard work in our market area and their
confidence in our products created the demand resulting in the record sales
reported for 2002.  We want to express our appreciation to our stockholders
for their continued confidence in our Company during these times of stock
market unrest.  Special recognition is also due our employees whose efforts
continue to contribute to our success.  Most importantly, we thank our
Heavenly Father, because without His blessings and support, we would not have
achieved the results displayed in this report and could not meet the
challenges of the years to come.

     We wish to invite you, our stockholders, to attend Monarch's annual
meeting to be held at 2:00 p.m. on April 9, 2003 in the corporate office,
Humboldt, Kansas.  Thank you for your support throughout the years and God
Bless.


                                               WALTER H. WULF, JR.
                                       President and Chairman of the Board


<Page>

<Table>
                 THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

                           SELECTED FINANCIAL DATA

                 FOR THE FIVE YEARS ENDED DECEMBER 31, 2002
             (Dollar amounts in thousands except per share data)

<Caption>
                              2002      2001      2000      1999      1998
<S>                         <C>       <C>       <C>       <C>       <C>
Net sales . . . . . . . . . $134,550  $126,352  $119,362  $111,624  $101,548
Net income. . . . . . . . . $  5,903  $  8,151  $ 10,499  $  9,654  $  9,653
Net income per share. . . .    $1.47     $2.01     $2.55     $2.32     $2.30
Total assets. . . . . . . . $133,506  $ 126,638  $96,102  $ 89,824  $ 84,868
Long-term obligations . . . $ 26,540  $  19,900  $    -   $    -    $    -
Cash dividends declared
  per share . . . . . . . .     $.80       $.80     $.78      $.74      $.68
Stockholders' investment
  per share . . . . . . . .   $19.70     $19.63   $18.36    $16.75    $15.35

</Table>


                         DESCRIPTION OF THE BUSINESS

     The Monarch Cement Company (Monarch) was organized as a corporation under
the laws of the State of Kansas in 1913 and has been principally engaged,
throughout its history, in the manufacture and sale of portland cement.

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

     The Monarch Cement Company and Subsidiaries (the Company) is also in the
ready-mixed concrete, concrete products and sundry building materials
business.  Ready-mixed concrete is manufactured by combining aggregates with
portland cement, water and chemical admixtures in batch plants.  It is then
loaded into mixer trucks and mixed in transit to the construction site where
it is placed by the contractor.


                              LINES OF BUSINESS

     The Company is engaged in the manufacture and sale of the principal types
of portland cement and ready-mixed concrete and sundry building materials.
The portland cement products are sold under the "MONARCH" brand name.

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

     The following table sets forth for the last three fiscal years of the
Company the percentage of total sales (1) by the manufacture and sale of
cement and (2) by the sale of ready-mixed concrete and sundry building
materials:

<Table>
<Caption>
                                               Total    Sales
                                                December 31,
                                         2002       2001       2000
     <S>                                <C>        <C>        <C>
     Cement Manufacturing. . . . . . .   39.8%      41.5%      41.6%
     Ready-Mixed Concrete and
       Sundry Building Materials . . .   60.2%      58.5%      58.4%
                                        100.0%     100.0%     100.0%

</Table>



                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward-Looking Statements

     Certain statements under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and elsewhere in
this Annual Report and Form 10-K report filed with the Securities and Exchange
Commission, constitute "forward-looking information".  Except for historical
information, the statements made in this report are forward-looking statements
that involve risks and uncertainties.  You can identify these statements by
forward-looking words such as "should", "expect", "anticipate", "believe",
"intend", "may", "hope", "forecast" or similar words.  In particular,
statements with respect to variations in future demand for our products in our
market area or the future activity of Kansas highway programs and other major
construction projects, the timing, scope, cost and benefits of our proposed
and recently completed capital improvements and expansion plans, including the
resulting increase in production capacity, our forecasted cement sales, the
timing and source of funds for the repayment of our line of credit, and our
anticipated increase in solid fuels and electricity required to operate our
facilities and equipment are all forward-looking statements.  You should be
aware that forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may affect the actual results,
performance or achievements expressed or implied by such forward-looking
statements.  Such factors include, among others:

*	general economic and business conditions;
*	competition;
*	raw material and other operating costs;
*	costs of capital equipment;
*	changes in business strategy or expansion plans;
*	demand for our Company's products;
*	cyclical and seasonal nature of our business;
*	the affect weather has on our business;
*	the affect of environmental and other government regulations; and
*	the affect of federal and state funding on demand for our products.


Liquidity

     We are able to meet our cash needs primarily from a combination of
operations and bank loans.  Cash increased during the year 2002 primarily due
to income from operations and bank loans.

     In December 2002, we renegotiated our unsecured credit commitment with a
bank.  This revised commitment consists of a $25,000,000 advancing term loan
maturing December 31, 2005 and a $10,000,000 line of credit maturing
December 31, 2003.  These loans bear floating interest rates based on JP
Morgan Chase prime rate less 1.25% and .75%, respectively.  The loan agreement
contains a financial covenant related to net worth which the Company was in
compliance with at year-end.  As of December 31, 2002, we had borrowed
$25,000,000 on the advancing term loan and $3,048,076 on the line of credit
leaving a balance available on the line of credit of $6,951,924.  The average
daily interest rate we paid during 2002 was 3.4%.  At year-end, the applicable
interest rate was 3.0% on the advancing term loan and 3.5% on the line of
credit. We have used these loans to help finance the expansion project at our
cement manufacturing facility.  We anticipate that the line of credit maturing
December 31, 2003 will be paid using funds from operations or replacement bank
financing.  Our board of directors has given management the authority to
borrow an additional $15,000,000 for a maximum of $50,000,000.  At this time
we do not anticipate borrowing the additional $15,000,000; although an
increase in financing may be required on a short-term basis.

     Contractual obligations at December 31, 2002 consisting of maturities on
long-term debt are as follows:

<Table>
                                           <S>           <C>
                                           2003          $ 3,255,476
                                           2004            3,583,949
                                           2005           18,633,981
                                           2006              197,318
                                           2007              209,284
                                           Thereafter        660,131
                                                         $26,540,139
</Table>


Financial Condition

     Total assets as of December 31, 2002 were $133,506,264, an increase of
$6,868,601 since December 31, 2001.  The increase in receivables is due to
slow payments related to long-term contracts and increased sales.  The
majority of the past due amount relates to cement sold to bonded jobs insuring
the collectability of the related receivables.  The decrease in inventories is
mainly due to a reduction in clinker inventory.  This clinker was ground into
cement to keep up with cement demand.  Other assets increased primarily as a
result of an increase in equity investments.

     Indebtedness increased $4,688,560 during the year 2002 due primarily to
capital expenditures.

     During 2002, we recorded a minimum pension liability resulting in an
increase in accrued pension expense of $2,418,375 and a decrease in
stockholders' investment of $2,259,000.

     Stockholders' investment increased .4% during 2002.  Basic earnings were
$1.47 per share and dividends declared were $.80 per share for the year 2002.


Capital Resources

     During 2002, the Company invested $11,118,444 in property, plant and
equipment.  The Company regularly has capital expenditures of $10,000,000 to
$12,000,000 per year in keeping its equipment and facilities in good operating
condition.  As of the end of 2001, we had completed the installation of a
precalciner and clinker cooler on one of our kilns.  We had also started
preliminary work on a precalciner and clinker cooler for our second preheater
kiln and the design of a new coal firing system to fuel the precalciners on
both kilns.  By the end of 2002, we had received and paid for this equipment;
however, we have postponed its installation until market projections indicate
the need for this additional kiln capacity.  We will continue to evaluate
market conditions, proposed capital expenditures and the Company's cash
resources as we finalize the timing of expansion projects and loan
requirements.

     The Company also plans to invest in other miscellaneous equipment and
facility improvements in both the cement and ready-mixed concrete segments in
2003.  It is expected that the Company's capital expenditures will approximate
$10,000,000 during 2003 and will be funded with a mixture of cash from
operations and temporary bank loans.


Results of Operations
<Table>
<Caption>
                                                    Ready-Mixed
                                                     Concrete
                                         Cement     and Sundry
                                          Manu-      Building
                                        facturing    Materials   Consolidated
<S>                                    <C>          <C>          <C>
FOR THE YEAR ENDED DECEMBER 31, 2002:
  Sales to unaffiliated customers      $53,514,889  $81,035,388  $134,550,277
  Income from operations                 8,211,792    2,089,667    10,301,459

FOR THE YEAR ENDED DECEMBER 31, 2001:
  Sales to unaffiliated customers      $52,484,654  $73,867,012  $126,351,666
  Income (loss) from operations          9,745,880     (541,712)    9,204,168

FOR THE YEAR ENDED DECEMBER 31, 2000:
  Sales to unaffiliated customers      $49,601,302  $69,760,428  $119,361,730
  Income (loss) from operations         13,019,516   (1,765,148)   11,254,368
</Table>

     General--Cement, ready-mixed concrete and sundry building materials are
used in residential, commercial and governmental construction.  Although
overall demand for our products by each of these segments remained strong
during 2002, it varies within our market area.  In some areas of our market,
residential construction is down while commercial and governmental needs are
up.  In other areas residential demand is up and commercial and governmental
use is down.  Looking back at 2002 our success can be attributed to this
variety of construction activities; our ability to capitalize on the
construction opportunities at each location; and the generally strong economic
conditions which was at least partially fueled by low interest rates.

     Looking ahead to 2003, the Portland Cement Association predicts only a
slight downturn in the total U.S. consumption of cement (1.2% decrease).
Residential construction, although not as strong as 2002, is still predicted
to remain strong due to continued projected low interest rates.  Major
commercial and governmental construction projects, including parking garages,
schools, hospitals, waste water treatment plants, and detention facilities are
currently underway in our market area and we are hopeful new projects will
follow those currently underway.  The Kansas highway program is currently on
target through 2003, although Kansas legislature has voted to divert money
from future highway projects to other areas due to serious budget shortfalls.

     For the last five years, demand for cement in the Company's market has
been excellent.  During this period, the Company sold the entire cement
production capacity of its Humboldt, Kansas plant.  Plant modifications
completed in recent years increased the production capacity of the Humboldt
plant.  These favorable market conditions and the Company's increased
production capacity are the primary factors that have led to the Company's
increased cement sales revenues in recent years.  Gross profit in the years
2002 and 2001 was adversely affected by the increased depreciation related to
facility upgrades completed in 2001.

     The Company's ready-mixed concrete operations were profitable during 2002
after experiencing operating losses during both 2001 and 2000.  Increase sales
volume in 2002 as compared to 2001 resulted in another year of improved
operating results.  Sales volume increases during 2001 resulted in reduced
operating losses.  During 2000, the segment was adversely affected by volume
declines, additional expenses incurred in the process of upgrading facilities
and weather delays creating unusual expenses in the production and
installation of concrete products.

     2002 Compared to 2001--Consolidated net sales for the year ended
December 31, 2002 were $134,550,277, an increase of $8,198,611 as compared to
the year ended December 31, 2001.  Sales of cement were higher by $1,030,235
and sales of ready-mixed concrete and sundry building materials were higher by
$7,168,376.  Increased construction activity made it possible to increase the
sales volume of both cement and ready-mixed concrete and sundry building
materials resulting in higher net sales.

     Our overall gross profit rate for the year 2002 was 16.0% compared to
15.3% for the year 2001 with the decline in gross profit in our cement segment
being more than offset by the increase in our ready-mixed concrete and sundry
building materials segment.  Additional depreciation related to facility
upgrades completed in 2001 was the primary factor contributing to the cement
segment's lower gross profit rate in 2002 as compared to 2001. Higher sales
volume of ready-mixed concrete and sundry building materials during 2002 as
compared to 2001 resulted in better utilization of manpower and equipment and
an improvement in this segment's gross profit rate.

     Selling, general and administrative expenses increased 10.6% during the
year 2002 compared to the year 2001.  These costs are normally considered
fixed costs that do not vary significantly with changes in sales volume.
However during 2002, the Company hired additional selling and administrative
personnel, primarily in the ready-mixed concrete and sundry building materials
segment.  Rising health care costs also contributed to the overall increase in
selling, general and administrative expenses.

     Interest income decreased $286,314 during 2002 as compared to the year
2001. In 2001, the Company received interest on amended state income tax
returns.  A reduction in short-term investments as the Company utilized these
funds for capital improvements also contributed to the decline in interest
income.

     Interest expense, net of amount capitalized ($-0- in 2002 and $927,262 in
2001), increased $993,421 during 2002 as compared to the year 2001 primarily
due to the increase in bank loans outstanding.  The Company utilized these
loans for capital improvements.

     "Other, net" decreased $2,730,555 for the year 2002 as compared to the
year 2001 primarily due to a reduction in the amount of gain realized on the
2001 sale of other equity investments, a reduction in subsidiary losses
allocated to minority interest and a 2002 write-off of obsolete equipment.

     The effective tax rates for years 2002 and 2001 were 32.4% and 30.0%,
respectively.  The Company's effective tax rate differs from the federal and
state statutory income tax rate primarily due to the effects of percentage
depletion and minority interest in consolidated income (loss).

     2001 Compared to 2000--Consolidated net sales for the year ended
December 31, 2001 were $126,351,666, an increase of $6,989,936 as compared to
the year ended December 31, 2000.  Sales of cement were higher by $2,883,352
and sales of ready-mixed concrete and sundry building materials were higher by
$4,106,584.  Sales of cement and ready-mixed concrete are significantly
affected by weather conditions in our market area.  Wet weather in the latter
part of 2000 continued into the first part of 2001 slowing construction
projects and decreasing sales of both cement and ready-mixed concrete during
these periods.  Mild, dry weather during the balance of 2001, allowed
construction projects to proceed at a rapid pace through year-end.  As a
result, the Company's net sales for the last half of 2001 were 17.7% greater
than net sales for the last half of 2000 resulting in a 5.9% increase in net
sales for the year.

     The gross profit rate for the year 2001 was 15.3% compared to 16.8% for
the year 2000.  During 2001, the Company continued upgrading and expanding its
plant facilities.  As projects neared completion, it was necessary to shut
down major pieces of equipment to complete the tie-ins from one production
process to the next.  The resulting decrease in production and corresponding
increase in production costs, along with the additional depreciation relating
to this equipment, were the primary factors contributing to the decrease in
the gross profit rate.  Higher sales volume of ready-mixed concrete and sundry
building materials during 2001 as compared to 2000 resulted in better
utilization of manpower and equipment and an improvement in this segment's
gross profit rate.

     Selling, general, and administrative expenses increased 15.8% during the
year 2001 compared to the year 2000.  These costs are normally considered
fixed costs that do not vary significantly with changes in sales volume.
However during 2001, the Company hired additional selling and administrative
personnel, primarily in the ready-mixed concrete and sundry building materials
segment.  The resulting increases in payroll and health care costs contributed
to the overall increase in selling, general and administrative expenses,
although no single factor increased materially.

     Interest income decreased $229,226 during 2001 as compared to the year
2000 primarily due to the reduction in short-term investments as the Company
utilized these funds for capital improvements.

     "Other, net" decreased $1,068,440 for the year 2001 as compared to the
year 2000 primarily due to a reduction in the amount of gain realized on the
sale of other equity investments.

     The effective tax rates for years 2001 and 2000 were 30.0%.  The
Company's effective tax rate differs from the federal and state statutory
income tax rate primarily due to the effects of percentage depletion and
minority interest in consolidated income (loss).

     Accounting Policies--The critical accounting policies with respect to the
Company are those related to revenue recognition, inventories, property, plant
and equipment, and depreciation.

     The Company records revenue from the sale of cement, ready-mixed concrete
and sundry building materials when the products are delivered to the customer.
Long-term construction contract revenues are recognized on the percentage-of-
completion method based on the costs incurred relative to total estimated
costs. Full provision is made for any anticipated losses.  Billings for long-
term construction contracts are rendered monthly, including the amount of
retainage withheld by the customer until contract completion.  Retainages are
included in accounts receivable and are generally due within one year.

     Inventories of finished cement, work in process and building products are
recorded at the lower of cost or market on a last-in, first-out (LIFO) basis.
Under the average cost method of accounting (which approximates current cost),
these inventories would have been $2,340,000, $1,980,000 and $1,362,000 higher
than those reported at December 31, 2002, 2001 and 2000, respectively.  The
cost of manufactured items includes all material, labor, factory overhead and
production-related administrative overhead required in their production.
Other inventories are purchased from outside suppliers.  Fuel and other
materials are priced by the first-in, first-out (FIFO) method while operating
and maintenance supplies are priced by the average cost method.

     Property, plant and equipment are stated at cost of acquisition or
construction.  The Company capitalizes the cost of interest on borrowed funds
used to finance the construction of property, plant and equipment.  During
2002 and 2001, the company capitalized approximately $-0- and $927,000,
respectively, of interest expense related to current construction projects.
Expenditures for improvements that significantly increase the assets' useful
lives are capitalized while maintenance and repairs are charged to expense as
incurred.

     Depreciation of property, plant and equipment is provided by charges to
operations over the estimated useful lives of the assets using primarily
accelerated methods.  Depletion rates for quarry lands are designed to
amortize the cost over the estimated recoverable reserves.

     The Financial Accounting Standards Board (FASB) recently issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others,"
effective for guarantees issued or modified after December 31, 2002, Statement
of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible Assets," effective for the 2002 calendar year, and SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," effective
for the 2002 calendar year which are not expected to have a material effect on
the Company's financial position or results of operations.  The Company has
not yet assessed the impact, if any, of adopting SFAS No. 143, "Accounting for
Asset Retirement Obligations," effective for the 2003 calendar year.  In April
2002 the FASB issued SFAS No. 145, "Rescission of FASB Statement No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections" which
is not expected to have a material effect on the Company's financial position
or results of operations.  In June 2002, FASB issued SFAS No. 146, "Accounting
for Costs Associated with Exit or Disposal Activities" and in December 2002,
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure," which are not expected to have a material effect on the Company's
financial position or results of operations.

     Market Risks--Market risks relating to the Company's operations result
primarily from changes in demand for our products.  A significant increase in
interest rates could lead to a reduction in construction activities in both
the residential and commercial market.  Budget shortfalls during economic
slowdowns could cause money to be diverted away from highway projects,
schools, detention facilities and other governmental construction projects.
Reduction in construction activity lowers the demand for cement, ready-mixed
concrete and sundry building materials.  As demand decreases, competition to
retain sales volume could create downward pressure on sales prices.  The
manufacture of cement requires a significant investment in property, plant and
equipment and a trained workforce to operate and maintain this equipment.
These costs do not materially vary with the level of production.  As a result,
by operating at or near capacity, regardless of demand, companies can reduce
per unit production costs. The continual need to control production costs
encourages overproduction during periods of reduced demand.

     Interest rates on the Company's advancing term loan and line of credit
are variable and are based on the JP Morgan Chase prime rate less 1.25% and
..75%, respectively.

     Inflation--Inflation directly affects the Company's operating costs.  The
manufacture of cement requires the use of a significant amount of energy.  The
Company burns primarily solid fuels, such as coal and petroleum coke, in its
preheater kilns.  We do not anticipate a significant increase above the rate
of inflation in the cost of these solid fuels, or in the electricity required
to operate our cement manufacturing equipment.  In 2001, the Company added a
precalciner to one of its kilns to increase production capacity.  This
precalciner burns natural gas.  Increases in natural gas prices exceeding the
rate of inflation create an above average increase in manufacturing costs.
The Company has plans to add a coal firing system to its precalciner kiln to
reduce dependence on natural gas.  Prices of the specialized replacement parts
and equipment the Company must continually purchase tend to increase directly
with the rate of inflation causing manufacturing costs to increase.


                        STOCK MARKET AND DIVIDEND DATA

     On March 1, 2003, Monarch's stock was held by approximately 700 record
holders.  Monarch is the transfer agent for Monarch's stock which is traded on
the over-the-counter market.  Over-the-counter market quotations reflect
interdealer prices, without retail mark-up, mark-down or commission and may
not necessarily represent actual transactions.  Following is a schedule of the
range of high and low bid quotations as reported by Yahoo! at
http://finance.yahoo.com/, and dividends declared for each quarter of our two
latest fiscal years:

<Table>

<Caption>

                           2002                         2001
                     Price        Dividends       Price        Dividends
     Quarter      Low     High    Declared     Low     High    Declared_
      <S>       <C>      <C>        <C>      <C>      <C>        <C>
      First     $18.400  $19.500    $ -      $17.500  $17.875    $ -
      Second    $19.350  $21.500    $.20     $17.750  $19.750    $.20
      Third     $18.750  $21.800    $.20     $18.850  $20.500    $.20
      Fourth    $17.200  $18.100    $.40*    $18.300  $19.200    $.40*

      <FN>
         *Reflects declaration of two $.20 dividends payable in the first
quarter of 2003 and 2002.

</Table>

<Page>


                      Independent Accountants' Report



Board of Directors and Stockholders
The Monarch Cement Company
Humboldt, Kansas


We have audited the accompanying consolidated balance sheet of The Monarch
Cement Company as of December 31, 2002, and the related consolidated
statements of income, stockholders' investment and cash flows for the year
then ended.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audit.  The financial statements of The
Monarch Cement Company as of December 31, 2001, and for the two years then
ended were audited by other accountants who have ceased operations.  Their
report dated February 22, 2002, expressed an unqualified opinion on those
statements.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
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 that our
audit provides a reasonable basis for our opinion.

In our opinion, the 2002 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of The Monarch Cement Company as of December 31, 2002, and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.


                                                 BKD, LLP

Kansas City, Missouri
February 14, 2003


<Page>


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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

We have audited the accompanying consolidated balance sheets of The Monarch
Cement Company (a Kansas Corporation) and Subsidiaries as of December 31, 2001
and 2000, and the related consolidated statements of income, comprehensive
income, stockholders' investment and cash flows for each of the three years in
the period ended December 31, 2001.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these 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 that our audits provide
a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Monarch Cement Company
and Subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States.

ARTHUR ANDERSEN LLP


Kansas City, Missouri,
  February 22, 2002


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

<Page>


<Table>


THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001

<Caption>
ASSETS                                                 2 0 0 2       2 0 0 1
<S>                                                  <C>           <C>
CURRENT ASSETS:
  Cash and cash equivalents                          $  3,909,215  $  3,224,861
  Short-term investments, at cost which
    approximates market                                     1,493       164,073
  Receivables, less allowances of $644,000 in 2002
    and $493,000 in 2001 for doubtful accounts         15,915,121    13,262,283
  Inventories, priced at cost which is not in
    excess of market-
    Cost determined by last-in, first-out method-
      Finished cement                                $  1,386,348  $  1,813,898
      Work in process                                     626,130     2,629,984
      Building products                                 1,119,723     1,159,676
    Cost determined by first-in, first-out method-
      Fuel, gypsum, paper sacks and other               4,164,573     4,119,068
    Cost determined by average method-
      Operating and maintenance supplies                8,059,488     7,867,711
        Total inventories                            $ 15,356,262  $ 17,590,337
  Refundable federal and state income taxes               562,496       474,867
  Deferred income taxes                                   593,000       505,000
  Prepaid expenses                                         82,304        66,193
        Total current assets                         $ 36,419,891  $ 35,287,614

PROPERTY, PLANT AND EQUIPMENT, at cost, less
  accumulated depreciation and depletion of
  $96,128,254 in 2002 and $92,458,417 in 2001          82,331,077    81,441,837

DEFERRED INCOME TAXES                                   4,038,000     2,305,000

OTHER ASSETS                                           10,717,296     7,603,212

                                                     $133,506,264  $126,637,663


LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
  Accounts payable                                   $  5,845,901  $  6,636,841
  Bank loan payable                                     3,048,076     5,000,000
  Current portion of advancing term loan                3,255,476         -
  Accrued liabilities-
    Dividends                                           1,610,783     1,610,783
    Compensation and benefits                           1,909,149     2,344,263
    Miscellaneous taxes                                   634,831       671,667
    Other                                                 857,093       535,644
      Total current liabilities                      $ 17,161,309  $ 16,799,198

LONG-TERM DEBT                                         23,284,663    19,899,655

ACCRUED POSTRETIREMENT BENEFITS                         9,322,377     8,442,462

ACCRUED PENSION EXPENSE                                 2,418,375         -

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES          1,969,101     2,453,827

STOCKHOLDERS' INVESTMENT:
  Capital Stock, par value $2.50 per share, 1 vote
    per share-Authorized 10,000,000 shares, Issued


    2,344,293 shares at December 31, 2002 and
    2,303,362 shares at December 31, 2001            $  5,860,733  $  5,758,405
  Class B Capital Stock, par value $2.50 per share,
    10 votes per share-Authorized 10,000,000 shares,
    Issued 1,682,665 shares at December 31, 2002
    and 1,723,596 shares at December 31, 2001           4,206,662     4,308,990
  Retained Earnings                                    70,582,044    67,900,126
  Accumulated other comprehensive income (loss)        (1,299,000)    1,075,000
    Total stockholders' investment                   $ 79,350,439  $ 79,042,521

                                                     $133,506,264  $126,637,663
<FN>
See notes to consolidated financial statements
</Table>
<Page>

<Table>
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<Caption>
                                             2 0 0 2       2 0 0 1       2 0 0 0
<S>                                        <C>           <C>           <C>
NET SALES                                  $134,550,277  $126,351,666  $119,361,730

COST OF SALES                               113,040,462   107,009,432    99,352,725
         Gross profit from operations      $ 21,509,815  $ 19,342,234  $ 20,009,005

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                    11,208,356    10,138,066     8,754,637
         Income from operations            $ 10,301,459  $  9,204,168  $ 11,254,368

OTHER INCOME (EXPENSE):
  Interest income                          $    367,574  $    653,888  $    883,114
  Interest expense                           (1,055,304)      (61,883)      (11,373)
  Other, net                                   (875,244)    1,855,311     2,873,241
                                           $ (1,562,974) $  2,447,316  $  3,744,982
INCOME BEFORE PROVISION FOR INCOME TAXES   $  8,738,485  $ 11,651,484  $ 14,999,350

PR0VISION FOR INCOME TAXES                    2,835,000     3,500,000     4,500,000

NET INCOME                                 $  5,903,485  $  8,151,484  $ 10,499,350

Basic earnings per share                          $1.47         $2.01         $2.55
<FN>
</Table>

<Table>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<Caption>


                                             2 0 0 2       2 0 0 1       2 0 0 0
<S>                                        <C>           <C>           <C>
NET INCOME                                 $  5,903,485  $  8,151,484  $ 10,499,350

UNREALIZED APPRECIATION (DEPRECIATION)
  ON AVAILABLE FOR SALE SECURITIES (Net
  of deferred tax (benefit) expense of
  $(75,000), $90,000 and $(425,000)
  for 2002, 2001 and 2000, respectively)       (115,000)      135,000      (640,000)

MINIMUM PENSION LIABILITY (Net of
  deferred tax benefit of $(1,500,000)
  for 2002)                                  (2,259,000)        -             -

COMPREHENSIVE INCOME                       $  3,529,485  $  8,286,484  $  9,859,350
<FN>
See notes to consolidated financial statements
</Table>

<Page>
<Table>
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<Caption>
                                                                          Accum-
                                   Class B                              lated Other    Stock-
                       Capital     Capital     Retained     Treasury    Comprehen-    holders'
                        Stock       Stock      Earnings       Stock     sive Income  Investment
<S>                   <C>         <C>         <C>          <C>          <C>          <C>
Balance at 1/1/2000   $5,714,195  $4,617,090  $57,308,627  $     -      $ 1,580,000  $69,219,912
Net income                 -           -       10,499,350        -            -       10,499,350
Dividends declared
 ($.78 per share)          -           -       (3,201,569)       -            -       (3,201,569)
Transfer of shares       146,218    (146,218)       -            -            -            -
Purchase of
 treasury stock            -           -            -         (568,259)       -         (568,259)
Retirement of
 treasury stock          (79,045)      -         (489,214)     568,259        -            -
Change in unrealized
 appreciation on
 available for sale
 securities                -           -            -            -         (640,000)    (640,000)
Balance at 12/31/2000 $5,781,368  $4,470,872  $64,117,194  $     -      $   940,000  $75,309,434
Net income                 -           -        8,151,484        -            -        8,151,484
Dividends declared
 ($.80 per share)          -           -       (3,219,800)       -            -       (3,219,800)
Transfer of shares       161,882    (161,882)       -            -            -            -
Purchase of
 treasury stock            -           -            -       (1,333,597)       -       (1,333,597)
Retirement of
 treasury stock         (184,845)      -       (1,148,752)   1,333,597        -            -
Change in unrealized
 appreciation on
 available for sale
 securities                -           -            -            -          135,000      135,000
Balance at 12/31/2001 $5,758,405  $4,308,990  $67,900,126  $     -      $ 1,075,000  $79,042,521
Net income                 -           -        5,903,485        -            -        5,903,485
Dividends declared
 ($.80 per share)          -           -       (3,221,567)       -            -       (3,221,567)
Transfer of shares       102,328    (102,328)       -            -            -            -
Change in unrealized
 appreciation on
 available for sale
 securities                -           -            -            -         (115,000)    (115,000)
Adjustment to
 recognize minimum
 pension liability         -           -            -            -       (2,259,000)  (2,259,000)
Balance at 12/31/2002 $5,860,733  $4,206,662  $70,582,044  $     -      $(1,299,000) $79,350,439
<FN>
See notes to consolidated financial statements
</Table>
<Page>
<Table>
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000


<Caption>
                                                         2 0 0 2       2 0 0 1       2 0 0 0
<S>                                                    <C>           <C>           <C>
OPERATING ACTIVITIES:
Net income                                             $  5,903,485  $  8,151,484  $ 10,499,350
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation, depletion and amortization               11,259,163     9,454,167     6,754,783
  Minority interest in earnings (losses) of
   subsidiaries                                             187,056      (392,965)     (408,744)
  Deferred income taxes                                    (326,000)     (270,000)     (680,000)
  (Gain) loss on disposal of assets                         502,074      (197,548)      (63,379)
  Realized (gain) on sale of other investments               (5,132)   (1,085,776)   (2,382,261)
  Change in assets and liabilities:
    Receivables, net                                     (2,652,838)   (4,433,076)    1,419,400
    Inventories                                           2,234,075     4,475,683    (3,635,333)
    Refundable income taxes                                 (87,629)      596,154    (1,071,021)
    Prepaid expenses                                        (16,111)       42,639       (28,176)
    Other assets                                             23,675       (31,813)      422,326
    Accounts payable and accrued liabilities               (683,530)     (267,649)      373,575
    Accrued postretirement expense                          351,005       338,752       163,874
    Accrued pension expense                                (159,940)     (161,335)     (175,159)
  Net cash provided by operating activities            $ 16,529,353  $ 16,218,717  $ 11,189,235
INVESTING ACTIVITIES:
Acquisition of property, plant and equipment           $(11,118,444) $(43,585,245) $(18,627,165)
Proceeds from disposals of property,
 plant and equipment                                        375,216       442,057       302,437
Payment for purchases of equity investments              (2,900,705)   (2,356,088)   (1,039,456)
Proceeds from disposals of equity investments               145,299     1,401,137     3,263,100
Decrease in short-term investments, net                     162,580     2,387,776    13,290,758
Net purchases of subsidiaries' stock                     (2,421,057)   (1,040,400)        -
  Net cash used for investing activities               $(15,757,111) $(42,750,763) $ (2,810,326)
FINANCING ACTIVITIES:
Proceeds from bank loans                               $  3,148,421  $ 24,899,655  $      -
Cash dividends paid                                      (3,221,567)   (3,249,375)   (3,131,709)
Purchase of treasury stock                                    -        (1,333,597)       (9,828)
Subsidiaries' dividends paid to minority interest           (14,742)      (11,057)     (568,259)
  Net cash provided by (used for) financing activities $    (87,888) $ 20,305,626  $ (3,709,796)
Net increase (decrease) in cash and cash equivalents   $    684,354  $ (6,226,420) $  4,669,113
Cash and Cash Equivalents, beginning of year              3,224,861     9,451,281     4,782,168
Cash and Cash Equivalents, end of year                 $  3,909,215  $  3,224,861  $  9,451,281

Additional Cash Flow Information:
Interest paid, net of amount capitalized               $  1,101,709  $     54,657  $      7,076
Income taxes paid                                      $  3,247,546  $  3,253,490  $  5,935,016

<FN>
See notes to consolidated financial statements
</Table>


<Page>




THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000


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



    (a) Nature of Operations--The Monarch Cement Company (Monarch) is
principally engaged in the manufacture and sale of portland cement.  The
marketing area for Monarch's products consists primarily of the State of
Kansas, the State of Iowa, southeast Nebraska, western Missouri, northwest
Arkansas and northern Oklahoma.  Sales are made primarily to contractors,
ready-mixed concrete plants, concrete products plants, building materials
dealers and governmental agencies.  Companies controlled by Monarch sell
ready-mixed concrete, concrete products and sundry building materials in
metropolitan areas within Monarch's marketing area.

    (b) Principles of Consolidation--Monarch has direct control of certain
operating companies that have been deemed to be subsidiaries within the
meaning of accounting principles generally accepted in the United States of
America and the rules and regulations of the Securities and Exchange
Commission.  Accordingly, the financial statements of such companies have been
consolidated with Monarch's financial statements.  All significant
intercompany transactions have been eliminated in consolidation.  Minority
interests in net income (loss) have been recorded as reductions or increases
in other income in the accompanying statements of income.  The minority
interests in net income (loss) were $187,056, $(392,965) and $(408,744) during
2002, 2001 and 2000, respectively.

    (c) Use of Estimates--The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.  Actual
results could differ from those estimates.

    (d) Cash Equivalents--The Company considers all liquid investments with
original maturities of three months or less to be cash equivalents.  At
December 31, 2002, 2001 and 2000, cash equivalents consisted primarily of
money market investments with various banks.

    (e) Investments--Equity securities for which the Company has no immediate
plan to sell but that may be sold in the future are classified as available
for sale and carried at fair value in "Other Assets".  Unrealized gains and
losses are recorded, net of related income tax effects, in stockholders'
investment.  Realized gains and losses, based on the specifically identified
cost of the security, are included in net income.

    (f) Receivables--Accounts receivables are stated at the amount billed to
customers.  The Company provides an allowance for doubtful accounts, which is
based upon a review of outstanding receivables, historical collection
information and existing economic conditions.  Accounts receivables are
ordinarily due 30 days after the issuance of the invoice.  Accounts past due
are considered delinquent.  Delinquent receivables are written off based on
individual credit evaluation and specific circumstances of the customer.

    (g) Inventories--Inventories of finished cement, work in process and
building products are recorded at the lower of cost or market on a last-in,
first-out (LIFO) basis.  Under the average cost method of accounting (which
approximates current cost), these inventories would have been $2,340,000,
$1,980,000 and $1,362,000 higher than those reported at December 31, 2002,
2001 and 2000, respectively.  The cost of manufactured items includes all
material, labor, factory overhead and production-related administrative
overhead required in their production.

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

    (h) Property, Plant and Equipment--Property, plant and equipment are
stated at cost of acquisition or construction.  The Company capitalizes the
cost of interest on borrowed funds used to finance the construction of
property, plant and equipment.  During 2002, 2001 and 2000, the Company
capitalized approximately $-0-, $927,000 and $-0-, respectively, of interest
expense related to current construction projects.

        Depreciation of property, plant and equipment is provided by charges
to operations over the estimated useful lives of the assets using accelerated
methods.  Depletion rates for quarry lands are designed to amortize the cost
over the estimated recoverable reserves.  Expenditures for improvements that
significantly increase the assets' useful lives are capitalized while
maintenance and repairs are charged to expense as incurred.

    (i) Income Taxes--Deferred tax assets and liabilities are recognized for
the tax effects of differences between the financial statement and tax bases
of assets and liabilities.  A valuation allowance is established to reduce
deferred tax assets if it is more likely than not that a deferred tax asset
will not be realized.

    (j) Revenue Recognition--The Company records revenue from the sale of
cement, ready-mixed concrete and sundry building materials when the products
are delivered to the customer.  Long-term construction contract revenues are
recognized on the percentage-of-completion method based on the costs incurred
relative to total estimated costs.  Full provision is made for any anticipated
losses.  Billings for long-term construction contracts are rendered monthly,
including the amount of retainage withheld by the customer until contract
completion.  Retainages are included in accounts receivable and are generally
due within one year.

    (k) Earnings per Share--Basic earnings per share is based on the weighted
average common shares outstanding during each year.  Diluted earnings per
share is based on the weighted average common and common equivalent shares
outstanding each year.  Monarch has no common stock equivalents and therefore,
does not report diluted earnings per share.  The weighted average number of
shares outstanding was 4,026,958 in 2002, 4,049,165 in 2001 and 4,113,984 in
2000.

    (l) Self Insurance--The Company has elected to self-insure certain costs
related to employee health and accident benefit programs.  Costs resulting
from noninsured losses are charged to income when incurred.

    (m) Disclosure about Fair Value of Financial Instruments--Fair value is
the estimated amount at which financial assets or liabilities could be
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale.  Cash and cash equivalents, short-term
investments, receivables and bank loans payable have carrying values that
approximate fair values.  Investment fair values equal quoted market prices,
if available.  If quoted market prices are not available, fair value is
estimated based on quoted market prices of similar securities.

(2)  Investments

     The Company's short-term investments consist of corporate commercial
paper with maturities of six months or less and have been classified as held-
to-maturity.  The amortized cost, which approximates market value, is
reflected in the balance sheet.  Other assets includes equity securities which
have been classified as available-for-sale.  Realized gains are computed using
the specific identification method.  The equity investment results for the
years ended December 31, 2002, 2001 and 2000 are as follows:

<Table>
<Caption>
                                              2002        2001        2000
      <S>                                  <C>         <C>         <C>
      Fair value of investments            $8,540,000  $5,965,000  $3,700,000
      Cost of investments                   6,940,000   4,175,000   2,135,000
        Gross unrealized gains             $1,600,000  $1,790,000  $1,565,000
      Unrealized gain recorded in equity   $  960,000  $1,075,000  $  940,000
      Deferred income taxes                   640,000     715,000     625,000
                                           $1,600,000  $1,790,000  $1,565,000

      Proceeds from sale of securities     $  145,299  $1,401,137  $3,263,100
      Realized gains                       $    5,132  $1,085,776  $2,382,261
</Table>

(3) PROPERTY, PLANT AND EQUIPMENT

<Table>

    Property, plant and equipment at December 31, 2002 and 2001 consisted of:

<Caption>
                                    Depreciation
                                    Lives (Years)      2002          2001
     <S>                                <C>        <C>           <C>
     Quarry lands                                  $  1,470,386  $  1,220,514
     Mill site and buildings            12 - 50      21,632,713    21,038,888
     Machinery and equipment             5 - 25     110,607,203   113,600,330
     Transportation equipment            3 - 12      28,715,392    26,460,459
     Office furniture and fixtures       5 - 20       1,175,842     1,117,183
     Office and other buildings         10 - 30       4,470,866     3,315,132
     Construction in process                         10,386,929     7,147,748
                                                   $178,459,331  $173,900,254
     Less--Accumulated depreciation and depletion    96,128,254    92,458,417
                                                   $ 82,331,077  $ 81,441,837
</Table>

(4) LINE OF CREDIT AND LONG-TERM DEBT

    In December 2002, Monarch renegotiated its unsecured credit commitment
with a bank.  The revised commitment consists of a $25,000,000 advancing term
loan maturing December 31, 2005 and a $10,000,000 line of credit maturing
December 31, 2003.  At December 31, 2002 and 2001, there was $3,048,076 and
$5,000,000, respectively, borrowed against this line.  The line contains a
financial covenant related to net worth which the Company was in compliance
with at year-end.  Interest on the line of credit varies with the JP Morgan
Chase prime rate less .75% which was 3.5% on December 31, 2002 and 2001, and
is payable quarterly.

<Table>
<Caption>
                                         2002          2001
           <S>                        <C>           <C>
           Note payable, bank (a)     $25,000,000   $19,999,655
           Other                        1,540,139         -
                                      $26,540,139   $19,899,655
           Less current maturities      3,255,476         -
                                      $23,284,663   $19,899,655

<FN>
           (a) Due December 31, 2005; payable $995,000 quarterly
               including interest; interest computed based on
               JP Morgan Chase prime rate less 1.25%; subject to
               a financial covenant related to net worth which
               the Company was in compliance with at year-end.
</Table>

     Aggregate annual maturities of long-term debt as of December 31, 2002
are:

<Table>
                                      <S>           <C>
                                      2003          $ 3,255 476
                                      2004            3,583,949
                                      2005           18,633,981
                                      2006              197,318
                                      2007              209,284
                                      Thereafter        660,131
                                                    $26,540,139
</Table>

(5) INCOME TAXES

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

<Table>
<Caption>
                                         2002        2001        2000
      <S>                             <C>         <C>         <C>
      Taxes currently payable         $3,161,000  $3,860,000  $4,755,000
      Deferred income taxes             (326,000)   (360,000)   (255,000)
        Provision for income taxes    $2,835,000  $3,500,000  $4,500,000

</Table>

    The provision for federal and state income taxes in the accompanying
consolidated statements of income differs from the amount computed at the
federal statutory income tax rate as follows:

<Table>
<Caption>
                                         2002        2001        2000
     <S>                              <C>         <C>         <C>
  Provision for federal taxes
    at statutory rates                $2,971,000  $3,974,000  $5,150,000
  Increase (decrease) resulting from:
    State income taxes, net of
      federal tax benefit                183,000     153,000     137,000
    Percentage depletion                (460,000)   (505,000)   (697,000)
    Minority interest in
      consolidated income (loss)          75,000    (157,000)   (163,000)
    Other, net                            66,000      35,000      73,000
        Provision for income taxes    $2,835,000  $3,500,000  $4,500,000

</Table>

     The tax effects of significant temporary differences representing
deferred taxes shown on the balance sheets were:

<Table>
<Caption>
                                                2002             2001
     <S>                                     <C>              <C>
     Current:
       Allowance for doubtful accounts       $   255,000      $   195,000
       Accrued vacation                          310,000          280,000
       Other                                      28,000           30,000
         Net current deferred tax assets     $   593,000      $   505,000

     Noncurrent:
       Depreciation                          $  (405,000)     $  (540,000)
       Postretirement benefits                 4,090,000        3,950,000
       Minimum pension liability                 967,000         (470,000)
       Unrealized holding gains                 (640,000)        (715,000)
       Other, net                                 26,000           80,000
         Net long-term deferred tax assets   $ 4,038,000      $ 2,305,000

</Table>

(6) POSTRETIREMENT BENEFITS

    Monarch provides certain postretirement health care, accident and life
insurance benefits to all retired employees who, as of their retirement date,
have completed ten or more years of credited service under the pension plans.
These benefits are self-insured by Monarch and are paid out of Monarch's
general assets.

    Following is a reconciliation of benefit obligations and funded status as
of December 31, 2002 and 2001.  At December 31, 2002 and 2001, the current
portion of the accrued benefit cost of $900,000 and $1,428,909, respectively,
is recorded in compensation and benefits.

<Table>
<Caption>
                                                   2002           2001
<S>                                            <C>            <C>
Reconciliation of benefit obligation
  Accumulated postretirement benefit
    obligation at beginning of year            $ 13,054,462   $ 12,927,454
  Service cost                                      166,935        156,561
  Interest cost                                     916,747        942,509
  Actuarial (gain) loss                             467,046       (241,538)
  Benefits and expenses paid                       (896,483)      (730,524)
    Accumulated postretirement benefit
      obligation at end of year                $ 13,708,707   $ 13,054,462

Funded status                                  $(13,708,707)  $(13,054,462)
Unrecognized actuarial loss                       3,486,330      3,183,091
Accrued benefit cost                           $(10,222,377)  $ (9,871,371)
</Table>

    The assumed annual rate of increase in the per capita cost of covered
health care benefits was 6% for 2002 and 7% for 2001 and 2000. This trend rate
is assumed to decrease in future years, 1% per year to an ultimate annual rate
of 4%.  Following are the components of net periodic benefit cost:

<Table>
<Caption>
                                            2002         2001         2000
<S>                                      <C>          <C>          <C>
Components of net periodic benefit cost
  Service cost                           $  166,935   $  156,561   $  108,040
  Interest cost                             916,747      942,509      895,420
  Unrecognized net loss                     163,806      137,776       67,136
    Net periodic benefit cost            $1,247,488   $1,236,846   $1,070,596

Weighted-average assumptions
  as of December 31
  Discount rate as of December 31             6.75%        7.00%        7.50%
</Table>

    Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans.  A one-percentage-point change in
assumed health care cost trend rates would have the following effects:

<Table>
<Caption>
                                              1% Increase   1% Decrease
<S>                                           <C>           <C>
Effect on net periodic benefit cost           $  153,994    $  (103,150)
Effect on postretirement benefit obligation    1,787,822       (844,892)
</Table>

(7) PENSION PLANS

    Monarch has defined benefit pension plans covering substantially all
permanent employees.  Plans covering staff (salaried) employees provide
pension benefits that are based on years of service and the employee's last
sixty calendar months of earnings or the highest five consecutive calendar
years of earnings out of the last ten calendar years of service, whichever is
greater.  Plans covering production (hourly) employees provide benefits of
stated amounts for each year of service.  Generally, Monarch's funding policy
is to contribute annually the maximum amount that can be deducted for federal
income tax purposes.  Contributions are intended to provide for benefits
attributed to service to date and for those expected to be earned in the
future.  The assets of the plans are primarily equities, bonds and government
securities.

    Following is a reconciliation of benefit obligations, plan assets and
funded status as of December 31, 2002 and 2001:

<Table>
<Caption>
                                                        2002         2001
   <S>                                               <C>          <C>
   Reconciliation of projected benefit obligation
     Projected benefit obligation at
      beginning of year                              $23,465,121  $21,987,472
     Service cost                                        375,199      315,833
     Interest cost                                     1,637,380    1,621,900
     Actuarial loss                                      824,363    1,246,060
     Plan amendment                                      163,921        -
     Benefits paid and expenses                       (1,692,468)  (1,706,144)
       Projected benefit obligation at end of year   $24,773,516  $23,465,121
   Reconciliation of fair value of plan assets
     Fair value of plan assets at beginning of year  $24,918,291  $24,783,229
     Actual return on plan assets                     (2,197,416)   1,841,206
     Benefits paid and expenses                       (1,692,468)  (1,706,144)
       Fair value of plan assets at end of year      $21,028,407  $24,918,291
   Funded status                                     $(3,745,109) $ 1,453,170
   Unrecognized net actuarial loss                     4,566,718     (685,055)
   Unrecognized prior service cost                       518,668      412,570
       Prepaid benefit cost                          $ 1,340,277  $ 1,180,685
   Adjustment required to recognize
     minimum liability                                (3,758,652)       -
       (Pension liability)/prepaid benefit cost      $(2,418,375) $ 1,180,685
</Table>

    The following table presents the components of net periodic pension cost
as of December 31, 2002, 2001 and 2000:

<Table>
<Caption>
                                            2002        2001         2000
<S>                                     <C>          <C>          <C>
Service cost                            $   375,199  $   315,833  $   293,441
Interest cost                             1,637,380    1,621,900    1,617,150
Expected return on plan assets           (2,229,994)  (2,155,386)  (2,095,648)
Amortization of transitional obligation       -           14,342        9,867
Amortization of prior service cost           57,475       47,412       47,412
Recognized net actuarial gain                 -           (5,436)     (47,381)
  Net periodic pension (income)         $  (159,940) $  (161,335) $  (175,159)
</Table>

    The weighted average assumptions used to determine net pension cost and
benefit obligations as of December 31 are as follows:

<Table>
<Caption>
                                                     2002    2001    2000
    <S>                                              <C>     <C>     <C>
    Discount rate                                    6.75%   7.00%   7.50%
    Expected return on plan assets                   9.00%   9.00%   9.00%
    Rate of compensation increase (Staff plan only)  4.50%   4.50%   4.50%
</Table>

     The Company has defined contribution plans covering substantially all
permanent employees of the ready-mixed concrete and sundry building materials
segment.  These plans allow the Company, at its discretion, to match the
employee's contributions.  For the 2002,2001 and 2000 plan years, the Company
matched 25% of the first 6% of the employee's compensation up to a maximum
match of $2,500.  The Company contributed $83,985, $75,570 and $67,240 to
these plans for the years 2002,2001 and 2000, respectively.

(8) COMMITMENTS AND CONTINGENCIES

    According to various agreements with certain minority stockholders of
subsidiaries, under specified circumstances, the Company is obligated to
acquire certain minority shares, if requested to do so, at a value that
approximates the minority interest on the Balance Sheet.

(9) STOCKHOLDERS' INVESTMENT

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

(10) BUSINESS SEGMENTS

    The Company groups its operations into two business segments - cement
manufacturing and the sale of ready-mixed concrete and sundry building
materials.  The Company's business segments are separate business units that
offer different products.  The accounting policies for each segment are the
same as those described in the summary of significant accounting policies.

     Following is information for each segment for the years ended December 31,
2002, 2001 and 2000:


<Table>
<Caption>
                                            Ready-Mixed
                                             Concrete
                                  Cement    and Sundry  Adjustments
FOR THE YEAR ENDED                 Manu-     Building       and
  DECEMBER 31, 2002:             facturing   Materials  Eliminations  Consolidated
  <S>                           <C>         <C>         <C>           <C>
  Sales to unaffiliated
    customers                   $53,514,889 $81,035,388 $     -       $134,550,277
  Intersegment sales             10,817,807      85,364  (10,903,171)        -
    Total net sales             $64,332,696 $81,120,752 $(10,903,171) $134,550,277
  Income from operations        $ 8,211,792 $ 2,089,667               $ 10,301,459
  Other expense, net                                                    (1,562,974)
    Income before income taxes                                        $  8,738,485
  Identifiable assets at
    December 31, 2002           $76,368,540 $37,316,224               $113,684,764
  Corporate assets                                                      19,821,500
    Total assets at
      December 31, 2002                                               $133,506,264

FOR THE YEAR ENDED
  DECEMBER 31, 2001:
  Sales to unaffiliated
    customers                   $52,484,654 $73,867,012 $     -       $126,351,666
  Intersegment sales              9,701,435      66,201   (9,767,636)        -
    Total net sales             $62,186,089 $73,933,213 $ (9,767,636) $126,351,666
  Income (loss) from operations $ 9,745,880 $  (541,712)              $  9,204,168
  Other income, net                                                      2,447,316
    Income before income taxes                                        $ 11,651,484
  Identifiable assets at
    December 31, 2001           $79,454,009 $32,905,909               $112,359,918
  Corporate assets                                                      14,277,745
    Total assets at
      December 31, 2001                                               $126,637,663

FOR THE YEAR ENDED
  DECEMBER 31, 2000:
  Sales to unaffiliated
    customers                   $49,601,302 $69,760,428 $     -       $119,361,730
  Intersegment sales              9,265,934       5,192   (9,271,126)        -
    Total net sales             $58,867,236 $69,765,620 $ (9,271,126) $119,361,730
  Income (loss) from operations $13,019,516 $(1,765,148)              $ 11,254,368
  Other income, net                                                      3,744,982
    Income before income taxes                                        $ 14,999,350
  Identifiable assets at
    December 31, 2000           $47,123,981 $28,205,216               $ 75,329,197
  Corporate assets                                                      20,773,543
    Total assets at
      December 31, 2000                                               $ 96,102,740
</Table>

    Total sales by segment before adjustments and eliminations includes both
sales to unaffiliated customers (as reported in the Company's consolidated
statements of income, comprehensive income and stockholders' investment) and
intersegment sales.  Intersegment sales are accounted for by the same method
as sales to unaffiliated customers.

    Income from operations is total net sales less operating expenses.  In
computing income from operations, none of the following items have been added
or deducted:  general corporate income and expenses; interest expense; and
income taxes.  Depreciation and depletion for cement manufacturing and
ready-mixed concrete, respectively, was:  $5,964,841 and $5,243,343 in 2002;
$4,325,197 and $5,128,970 in 2001; and $2,571,183 and $4,183,600 in 2000.
Capital expenditures for cement manufacturing and ready-mixed concrete,
respectively, were:  $3,860,573 and $7,257,871 in 2002; $39,174,379 and
$4,410,866 in 2001; and $11,051,905 and $7,575,260 in 2000.  Identifiable
assets by segment are those assets that are used in the Company's operations
in each industry.

    During 2002, 2001 and 2000, there were no sales to any one customer in
excess of 10% of consolidated net sales.

(11) Quarterly Financial Information (Unaudited)

<Table>
<Caption>
                              First       Second        Third       Fourth
                             Quarter      Quarter      Quarter      Quarter
2002
  <S>                      <C>          <C>          <C>          <C>
  Net sales                $22,871,653  $35,409,167  $41,728,112  $34,541,345
  Income (loss) from
    operations                (915,339)   3,288,097    6,114,679    1,814,022
  Net income (loss)           (800,608)   2,153,077    4,114,094      436,922
  Basic earnings (loss)
    per share                    $(.20)        $.53        $1.02         $.12

2001
  Net sales                $20,335,027  $33,746,878  $39,618,762  $32,650,999
  Income (loss) from
    operations                (592,355)   3,398,416    4,492,050    1,906,057
  Net income (loss)           (155,649)   2,263,192    3,354,934    2,689,007
  Basic earnings (loss)
    per share                    $(.04)        $.56         $.83         $.66
</Table>



(12) Other Comprehensive Income

    Accumulated other comprehensive income included in the balance sheet at
December 31 is as follows:

                                          2001       Change	         2002
Unrealized appreciation on available
  for sale securities                  $1,075,000  $  (115,000)  $   960,000
Minimum pension liability adjustment        -       (2,259,000)   (2,259,000)
                                       $1,075,000  $(2,374,000)  $(1,299,000)

                                          2000        Change 	       2001
Unrealized appreciation on available
   for sale securities                 $  940,000   $   135,000  $ 1,075,000


(13)	Future Change in Accounting Principles

    The Financial Accounting Standards Board (FASB) recently issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others,"
effective for guarantees issued or modified after December 31, 2002, Statement
of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other
Intangible Assets," effective for the 2002 calendar year, and SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," effective
for the 2002 calendar year which are not expected to have a material effect on
the Company's financial position or results of operations.  The Company has
not yet assessed the impact, if any, of adopting SFAS No. 143, "Accounting for
Asset Retirement Obligations," effective for the 2003 calendar year.  In April
2002 the FASB issued SFAS No. 145, "Rescission of FASB Statement No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections" which
is not expected to have a material effect on the Company's financial position
or results of operations.  In June 2002, FASB issued SFAS No. 146, "Accounting
for Costs Associated with Exit or Disposal Activities" and in December 2002,
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure," which are not expected to have a material effect on the Company's
financial position or results of operations.






<Page>
CORPORATE  INFORMATION




CORPORATE OFFICE                       DIRECTORS
449 1200 Street                        Jack R. Callahan
P.O. Box 1000                          Retired President, The Monarch
Humboldt, KS 66748                     Cement Company
Phone:  (620) 473-2222
Fax:  (620) 473-2447                   Ronald E. Callaway
                                       Retired transport truck driver
                                       Agricultural Carriers, Inc.
AUDITORS
BKD LLP                                David L. Deffner
Kansas City, Missouri                  Professor of Music, American
                                       River College

ANNUAL MEETING                         Robert M. Kissick
The annual meeting of the              Chairman, Hydraulic Power Systems, Inc.
stockholders of The Monarch
Cement Company is held the             Gayle C. McMillen
second Wednesday in April of           Music Instructor, Salina School
each year at the Company's             District
corporate offices.
                                       Richard N. Nixon
                                       Shareholder in law firm of Stinson
TRANSFER AGENT AND REGISTRAR           Morrison Hecker, LLP
The Monarch Cement Company
P.O. Box 1000                          Byron J. Radcliff
Humboldt, KS 66748-0900                Rancher

                                       Byron K. Radcliff
STOCK TRADING INFORMATION              Owner/Manager, Radcliff Ranch
Trading Symbol: MCEM
Over-the-Counter Market                Michael R. Wachter
                                       Civil Engineer and Director of
                                       Operations, Concrete Technology Corp.
INVESTOR RELATIONS
Inquiries may be directed to           Walter H. Wulf, Jr.
Lyndell G. Mosley, Chief Financial     President and Chairman of the Board
Officer and Assistant Secretary-
Treasurer, at the corporate            Walter H. Wulf, III
address shown above.                   Area Service Manager,
                                       General Motors Corporation

FORM 10-K                              Officers
The Company's Annual Report on         Walter H. Wulf, Jr.
Form 10-K, as filed with the           President and Chairman of the Board
Securities and Exchange Commission,
is available without charge upon      *Byron K. Radcliff
written request to Lyndell G.          Vice Chairman of the Board,
Mosley at the above corporate          Secretary and Treasurer
office address.
                                      *Robert M. Kissick
The Company's financial                Vice President
information is also available
from the SEC at their EDGAR            Rick E. Rush
internet address                       Vice President
(http://www.sec.gov).
                                       Lyndell G. Mosley
                                       Chief Financial Officer and
                                       Assistant Secretary-Treasurer

                                       Debra P. Roe
                                       Principal Accounting Officer and
                                       Assistant Secretary-Treasurer

                                       Lisa J. Fontaine
                                       Assistant Secretary

                                      *Not active in the daily affairs
                                        of the Company.