THE
                                   MONARCH
                                CEMENT COMPANY.













                               HUMBOLDT, KANSAS





                              1996 ANNUAL REPORT




<PAGE>
                                                        March 14, 1997





                  ANNUAL REPORT TO STOCKHOLDERS

     Consolidated net income for 1996 topped $10,000,000 for the first time in
Monarch's history.  Additional cement sales in 1996 as compared to 1995
increased net sales by 6% while cost of sales increased only 3%.  During 1996,
the Company capitalized on the 15% increase in clinker production capacity
realized from the $4.5 million capital improvement program completed at the
Company's Humboldt cement plant in 1995.  By reducing per-ton production
costs, the Company increased gross profit from operations as a percent of
sales from 24% in 1995 to 26% in 1996.

     Although we have not found an absolute consensus, there is some agreement
among forecasters that the 1997 United States construction markets will not
see the rate of growth that was experienced in 1996.  Total U.S. based
construction forecasts for 1997 vary from slow growth, to no growth, to a
slight downturn in cement consumption when compared to 1996.  The national
forecast is not a reflection of the Company's construction market.  The
geographic area the Company serves continues to be driven by public
construction projects which consume large volumes of cement over relatively
short periods of time.  Coupling these projects with a forecasted slight
downturn in private construction will have little effect on the total
consumption of the Company's products.  Barring weather-related construction
delays, the Company's market will most likely find cement availability in
short supply during periods of peak use.

     We wish to acknowledge our Heavenly Father for the blessings bestowed on
us in achieving these unprecedented results.  We credit our success to our
employees who continue to expend the additional effort necessary to operate at
full capacity over extended periods of time.  We express our appreciation to
our customers for their loyalty and continued patronage.  We also wish to
thank you, our stockholders, for your continued support and invite you to
attend your corporation's annual meeting to be held at 2:00 p.m. on April 9,
1997 in the corporate office, Humboldt, Kansas.

                       Respectfully yours,




 /s/  Walter H. Wulf                                      /s/ Jack R. Callahan

   WALTER H. WULF                                           JACK R. CALLAHAN
Chairman of the Board                                           President




<PAGE>
<TABLE>
                 THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

                           SELECTED FINANCIAL DATA

                 FOR THE FIVE YEARS ENDED DECEMBER 31, 1996
             (Dollar amounts in thousands except per share data)

<CAPTION>
                                 1996      1995      1994      1993      1992 
<S>                            <C>       <C>       <C>       <C>       <C> 
Net sales . . . . . . . . . .  $86,733   $81,667   $73,646   $66,118   $58,281
Net income before 
  cumulative effect of 
  accounting changes. . . . .  $10,546   $ 7,673   $ 3,998   $ 4,992   $ 3,200
Net income per share before 
  cumulative effect of
  accounting changes. . . . .    $2.50     $1.81      $.94     $1.18      $.74
Net income (loss) . . . . . .  $10,546   $ 7,673   $ 3,998   $   (88)  $ 3,200
Net income (loss) per share .    $2.50     $1.81      $.94     $(.02)     $.74
Total assets. . . . . . . . .  $68,648   $59,783   $52,522   $49,863   $42,993
Long-term obligations . . . .  $   -     $   -     $   -     $   -     $   -  
Cash dividends declared
  per share . . . . . . . . .     $.52      $.46      $.44      $.40      $.40
Stockholders' investment
  per share . . . . . . . . .   $11.73     $9.68     $8.11     $7.68     $8.05

</TABLE>


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

Liquidity

     At December 31, 1996, current assets of The Monarch Cement Company and
Subsidiaries (the Company) exceeded current liabilities by $32,734,893
resulting in a current ratio of 5.90 to 1.  The Company's cash needs in 1996
were satisfied by cash generated from operations and internal funds.  The
amount of cash and short term investments increased during 1996.  The Company
does not currently have an established line of credit with a bank; however,
the Company believes its capital resources are adequate to meet its current
capital expenditure requirements and liquidity needs.

Capital Resources

     During 1996, the Company invested $6,017,716 in property, plant and
equipment.  These capital expenditures included the installation of an impact
hammer, shell scanner and reject elevator, improvements to plant roads, a
maintenance shop addition and the purchase of two ready-mix batch plants,
ready-mix trucks, 50-ton dump trucks, a block machine, manlift, crane, loader
and bulk tanker trailers.

     The Company regularly has capital expenditures of $3,000,000 to
$4,000,000 per year in keeping its equipment and facilities in good operating
condition.  It is expected that the Company's capital expenditures will
approximate $4,000,000 during 1997 as the Company continues to upgrade
equipment.  It is anticipated that the funds for these projects will be
provided from internal sources.  

     At the regular meeting of the Board of Directors held on December 13,
1996, the Board authorized management to purchase up to a maximum of 400,000
shares of Monarch stock in addition to those shares previously acquired and
retired.  These purchases may be either Capital Stock or Class B Capital Stock
and are to be acquired on such terms and at such times as management considers
appropriate.  Funds for these purchases would be provided from internal
sources.


Results of Operations

     1996 Compared to 1995.  Net sales of $86,732,555 for the year 1996
represents a 6% increase over 1995 net sales.  This increase is primarily a
result of an increase in the volume of cement sold and a slight increase in
the price realized from these sales.  Highway and bridge construction within
the Company's markets and an increase in residential building have continued
to create a high level of demand for cement.  

     The Company's cement segment has basically been in a sold-out position
for the last three years.  In 1994, the Company began supplementing its
production through the purchase of clinker and cement from other market areas. 
At the same time, the Company implemented plans to increase production
capacity primarily by modifying current equipment to take advantage of new
technology.  As these improvements came on line, production increased allowing
the Company to eliminate the purchase of clinker and to substantially reduce
the purchase of cement.  During 1996, the Company generated cost savings by
producing, as opposed to purchasing, clinker and cement; by improving
production efficiency with the recently modernized equipment; and by fully
utilizing this equipment.  As a result, the Company experienced  a 3% increase
in 1996 cost of sales as compared to the 6% increase in net sales and gross
profit from operations for the year 1996 improved to 26% of net sales as
compared to 24% for 1995.

     The ready-mixed concrete and sundry building materials segment
experienced insignificant changes in net sales, cost of sales and gross profit
from operations for 1996 as compared to 1995.  Although this segment accounts
for over 50% of net sales, it currently accounts for less than 20% of income
from operations.  Competition within the various market areas served by the
ready-mixed concrete and sundry building materials segment creates a continual
challenge to balance sales prices against sales volume and to look for
additional ways to control costs in order to maintain an adequate profit
margin.   

     1995 Compared to 1994.  The Company experienced a substantial increase in
gross profit from operations during 1995 as compared to 1994.  This
improvement was primarily due to changes within the cement segment of the
operation.  There were insignificant changes in the ready-mixed concrete and
sundry building materials segment of the operation during 1995 as compared to
1994.  

     While sales volume and sales prices of cement increased moderately during
1995, cost of cement sales did not increase proportionately.  By the beginning
of the third quarter of 1995, the modifications to the Company's two preheater
kilns and the installation of the vibrating grizzly were substantially
complete.  These improvements increased the plant's production capacity and
allowed the Company to substantially reduce the amount of cement and clinker
purchased from other market areas during 1995 as compared to 1994.  During
1994, the purchase of cement and clinker at prices above the Company's normal
production costs increased per unit cost of sales. By increasing production
and reducing purchases, the Company reduced its per unit cost of sales during
1995 as compared to 1994.

     The Company's gross profit margin during 1995 was 24%, as compared to 17%
in 1994.  The improved gross profit margin is attributable to operating
efficiencies achieved through higher sales volumes, reduction of costs
associated with producing versus purchasing cement and clinker, the $860,000
write-off of abandoned spare parts inventory in Des Moines in 1994 and a
moderate increase in the price of cement. 

     Inflation.  Inflation directly affects the Company's operating costs. 
The manufacture of cement requires the use of a significant amount of energy. 
The price of energy, as well as the 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. 
These inflationary increases can be partially offset by increased production. 
The manufacture of cement requires a significant investment in property, plant
and equipment and a trained work force 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.  


                         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 which 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 which is used in highway,
bridge and building construction where strength and durability are primary
requirements.

     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.

     The following table sets forth for the last three fiscal years the dollar
amount of sales to unaffiliated customers, intersegment sales, operating
profit and identifiable assets contributed by Industry Segment A (cement
manufacturing) and Industry Segment B (ready-mixed concrete and sundry
building materials):

<TABLE>
<CAPTION>
                                          1996       1995       1994  
                                                 (In Thousands)
     <S>                                 <C>        <C>        <C>  
     Sales to Unaffiliated Customers-             
        Industry:  Segment A             $36,838    $33,081    $27,334
                   Segment B              49,895     48,586     46,312

     Intersegment Sales-
        Industry:  Segment A              10,764     10,038      8,920
                   Segment B                 236        231        267

     Operating Profit-
        Industry:  Segment A              13,665      9,870      3,339
                   Segment B               1,773      2,422      2,612       

     Identifiable Assets-
        Industry:  Segment A              27,254     27,373     23,451
                   Segment B              15,656     14,196     13,589

<FN>
     All of the Company's operations and sales are in one geographic area.
</TABLE>



                              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 contributed (1) by the manufacture and
sale of portland cement and (2) by the sale of ready-mixed concrete and sundry
building materials:


<TABLE>
<CAPTION>
                                               Total    Sales       
                                                December 31,        
                                         1996       1995       1994 
     <S>                                <C>        <C>        <C>
     Portland Cement . . . . . . . . .   42.5%      40.5%      37.1%
     Ready-Mixed Concrete and
       sundry building materials . . .   57.5%      59.5%      62.9% 
                                        100.0%     100.0%     100.0%

</TABLE>



<TABLE>
                           DIRECTORS AND OFFICERS

<CAPTION>
                          Present position
        Name                with Company             Principal occupation     
<S>                     <C>                      <C>
Walter H. Wulf          Chairman of the Board    Position with Company
                        and Director

Jack R. Callahan        President                Position with Company
                        and Director

Walter H. Wulf, Jr.     Vice Chairman of         Position with Company
                        the Board, Executive
                        Vice President and
                        Director

Robert M. Kissick       Vice President           Chairman, Hydraulic Power
                        and Director             Systems, Inc. (manufacturer
                                                 of construction equipment)

Karl Callaway           Secretary                Retired Farmer
                        and Director

Byron K. Radcliff       Treasurer                Manager, Radcliff Ranch
                        and Director

Ronald E. Callaway      Director                 Transport truck driver,
                                                 Agricultural Carriers, Inc.

Donald L. Deffner       Director                 Professor of Theology,
                                                 Concordia Seminary

Richard N. Nixon        Director                 Shareholder in law firm of
                                                 Stinson, Mag & Fizzell, P.C.,
                                                 Kansas City, Missouri

Byron J. Radcliff       Director                 Rancher

Michael R. Wachter      Director                 Civil Engineer and Director   
                                                 of Operations, Concrete
                                                 Technology Corp. (a
                                                 precast/prestressed 
                                                 concrete producer)

Lyndell G. Mosley       Assistant Secretary-     Position with Company
                        Treasurer
</TABLE>



                        STOCK MARKET AND DIVIDEND DATA

     On March 1, 1997, 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 of Monarch's stock as reported by B.C.
Christopher, a Division of Fahnestock & Co. Inc., and dividends declared for
each quarter of its two latest fiscal years:
<TABLE>
<CAPTION>
               Quarter     Stock Bid Quotation     Dividends
               Ending         Low      High        Declared 
              <S>            <C>       <C>            <C>
               3-31-95       10.00     14.25           -
               6-30-95       12.87     14.25          .11
               9-30-95       12.75     14.25          .11
              12-31-95       11.50     13.75          .24*
               3-31-96       11.25     16.25           -
               6-30-96       14.50     16.75          .12
               9-30-96       14.62     15.62          .12
              12-31-96       14.87     16.00          .28*

<FN>
*Reflects declaration of two $.12 and two $.14 dividends payable in the first
quarter of 1996 and 1997, respectively. 

</TABLE>

                      SECURITIES AND EXCHANGE FORM 10-K

     Section 13 of the Securities and Exchange Act of 1934 requires the
Company to file an Annual Report on Form 10-K with the Securities and Exchange
Commission, presenting financial information concerning the operation of the
business for its latest fiscal years in greater detail than contained herein.


     A COPY OF FORM 10-K WILL BE MAILED TO ANY STOCKHOLDER UPON RECEIPT OF
WRITTEN REQUEST ADDRESSED TO LYNDELL G. MOSLEY, ASSISTANT SECRETARY-TREASURER,
THE MONARCH CEMENT COMPANY, P.O. BOX 1000, HUMBOLDT, KANSAS 66748-1000.






<PAGE>
                           ARTHUR ANDERSEN LLP

                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, 1996
and 1995, and the related consolidated statements of income, stockholders'
investment and cash flows for each of the three years in the period ended
December 31, 1996.  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 generally accepted auditing
standards.  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, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.


                        /s/ Arthur Andersen LLP


Kansas City, Missouri,
  February 14, 1997
<PAGE>
TABLE
<PAGE>
                                          THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS--DECEMBER 31, 1996 AND 1995
<CAPTION>
                             ASSETS                                           LIABILITIES AND STOCKHOLDERS' INVESTMENT
                                           1 9 9 6      1 9 9 5                                              1 9 9 6      1 9 9 5  
<S>                                      <C>          <C>           <S>                                    <C>          <C>
CURRENT ASSETS:                                                     CURRENT LIABILITIES:
  Cash and cash equivalents              $ 3,242,245  $ 5,071,268     Accounts payable                     $ 3,454,088  $ 2,987,692
  Short term investments, at cost                                     Notes payable                              -           69,846
    which approximates market             16,103,721    7,073,446     Accrued liabilities-
  Receivables, less allowances of                                       Federal and state income taxes         565,489    1,015,351
    $616,000 in 1996 and $538,000 in                                    Dividends                            1,181,880    1,015,869
    1995 for doubtful accounts             8,560,237    8,135,769       Compensation                           693,349      660,141
  Inventories, priced at cost which                                     Miscellaneous taxes                    403,960      360,530
    is not in excess of market-                                         Other                                  383,803      528,836 
    Cost determined by last-in,                                           Total current liabilities        $ 6,682,569  $ 6,638,265
      first-out method-                                          
      Finished cement                    $ 1,274,235  $ 2,181,014   ACCRUED POSTRETIREMENT BENEFITS          9,813,569    9,714,799
      Work in process                        174,807      603,886
      Building products                    1,168,402    1,010,644   ACCRUED PENSION EXPENSE                    390,235      452,699
    Cost determined by first-in,                                 
      first-out method-                                             MINORITY INTEREST IN CONSOLIDATED
      Fuel, gypsum, paper sacks                                       SUBSIDIARIES                           2,181,297    1,953,237
        and other                          1,481,926    1,616,793
    Cost determined by average method-                              CONTINGENT LIABILITIES
      Operating and maintenance supplies   6,625,714    5,465,850
          Total inventories              $10,725,084  $10,878,187   STOCKHOLDERS' INVESTMENT:
                                                                      Capital Stock, par value $2.50
  Refundable federal and state                                          per share-Authorized 10,000,000
    income taxes                             310,733      116,971       shares, Issued 2,230,936 shares
  Deferred income taxes                      450,000      420,000       at December 31, 1996 and 2,185,869 
  Prepaid expenses                            25,442       36,846       shares at December 31, 1995        $ 5,577,340  $ 5,464,672
          Total current assets           $39,417,462  $31,732,487     Class B Capital Stock, par value
                                                                        $2.50 per share-Authorized
PROPERTY, PLANT AND EQUIPMENT, at                                       10,000,000 shares, Issued
  cost, less accumulated depreciation                                   1,995,354 shares at December 31,
  and depletion of $71,678,195 in 1996                                  1996 and 2,053,421 shares at 
  and $68,057,293 in 1995                 23,599,377   22,517,810       December 31, 1995                    4,988,385    5,133,553
                                                                      Retained Earnings                     38,039,014   29,806,550
DEFERRED INCOME TAXES                      2,350,000    2,410,000                                          $48,604,739  $40,404,775
                                                                      Plus:  Unrealized holding gain           976,000      619,000
OTHER ASSETS                               3,281,570    3,122,478       Total stockholders' investment     $49,580,739  $41,023,775 

                                         $68,648,409  $59,782,775                                          $68,648,409  $59,782,775

<FN>
                             The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>


<PAGE>
<TABLE>
                  THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

             FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994



<CAPTION>
                                               1 9 9 6      1 9 9 5      1 9 9 4   
<S>                                          <C>          <C>          <C> 
Net Sales                                    $86,732,555  $81,666,838  $73,645,650 

Cost of Sales                                 64,095,481   62,159,712   60,994,434 
         Gross profit from operations        $22,637,074  $19,507,126  $12,651,216 

Selling, General and 
  Administrative Expenses                      7,198,992    7,215,052    6,700,034 
         Income from operations              $15,438,082  $12,292,074  $ 5,951,182 

Other Income (Expense):
  Interest income                            $   792,065  $   460,930  $   477,876 
  Other, net                                     295,511     (679,554)     (55,675)
                                             $ 1,087,576  $  (218,624) $   422,201 
Income before Provision for Income Taxes     $16,525,658  $12,073,450  $ 6,373,383 

Provision for Income Taxes                     5,980,000    4,400,000    2,375,000 

Net Income (Per share-$2.50 in 1996,
  $1.81 in 1995 and $.94 in 1994)            $10,545,658  $ 7,673,450  $ 3,998,383

<FN>
        The accompanying notes are an integral part of these consolidated statements.
</TABLE>

<PAGE>
<TABLE>
                                                  THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

                                              CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT

                                              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
                                                                                                 Unrealized   Excess     Stock-
                        Capital Stock       Class B Capital Stock   Retained     Treasury Stock   Holding    Pension    holders'
                      Shares      Amount     Shares      Amount     Earnings    Shares   Amount     Gain    Liability  Investment 
<S>                  <C>        <C>         <C>        <C>         <C>          <C>     <C>       <C>       <C>        <C> 
Balance at 1-1-94    2,119,645  $5,299,112      -      $    -      $27,247,630     -    $   -     $   -     $    -     $32,546,742
Net income               -           -          -           -        3,998,383     -        -         -          -       3,998,383 
Cash dividends
 ($.44 per share)        -           -          -           -       (1,865,287)    -        -         -          -      (1,865,287)
Stock distribution       -           -      2,119,645   5,299,113   (5,299,113)    -        -         -          -           -      
Transfer of shares      36,381      90,953    (36,381)    (90,953)       -         -        -         -          -           -      
Unrealized holding
 gain                    -           -          -           -            -         -        -      111,800       -         111,800 
Excess pension 
 liability               -           -          -           -            -         -        -         -      (393,214)    (393,214)
Balance at 12-31-94  2,156,026  $5,390,065  2,083,264  $5,208,160  $24,081,613     -    $   -     $111,800  $(393,214) $34,398,424 
Net income               -           -          -           -        7,673,450     -        -         -          -       7,673,450 
Cash dividends 
 ($.46 per share)        -           -          -           -       (1,948,513)    -        -         -          -      (1,948,513)
Transfer of shares      29,843      74,607    (29,843)    (74,607)       -         -        -         -          -           -      
Unrealized holding 
 gain                    -           -          -           -            -         -        -      507,200       -         507,200 
Excess pension
 liability               -           -          -           -            -         -        -         -       393,214      393,214 
Balance at 12-31-95  2,185,869  $5,464,672  2,053,421  $5,133,553  $29,806,550     -    $   -     $619,000  $   -      $41,023,775 
Net income               -           -          -           -       10,545,658     -        -         -         -       10,545,658 
Cash dividends 
 ($.52 per share)        -           -          -           -       (2,196,190)    -        -         -         -       (2,196,190)
Transfer of shares      58,067     145,168    (58,067)   (145,168)       -         -        -         -         -            -      
Purchase of
 treasury stock          -           -          -           -            -     (13,000) (149,504)     -         -         (149,504)
Retirement of
 treasury stock        (13,000)    (32,500)     -           -         (117,004) 13,000   149,504      -         -            -     
Unrealized holding
 gain                    -           -          -           -            -         -        -      357,000      -          357,000 
Balance at 12-31-96  2,230,936  $5,577,340  1,995,354  $4,988,385  $38,039,014     -    $   -     $976,000  $   -      $49,580,739 

<FN>
                                   The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>

<TABLE>
                                    THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
                                                               1 9 9 6       1 9 9 5       1 9 9 4   
<S>                                                          <C>           <C>           <C>
Operating Activities:
 Net income                                                  $10,545,658   $ 7,673,450   $ 3,998,383
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and depletion                                  4,702,070     4,241,360     3,697,020 
   Gain on disposal of assets                                   (309,913)     (247,088)     (260,307)
   Realized gain on sale of other investments                   (314,963)     (110,089)      (41,341)
   Change in assets and liabilities, net of
    effects from purchase of subsidiaries:
     Receivables, net                                           (424,468)     (978,667)    1,216,541 
     Inventories                                                 153,103    (2,013,408)     (252,878)
     Refundable federal and state income taxes                  (193,762)      956,887    (1,073,858)
     Deferred income taxes, current                              (30,000)      (50,000)       34,000  
     Prepaid expenses                                             11,404        (7,075)        1,144 
     Deferred income taxes, long-term                             60,000        10,000       (64,000)
     Long-term notes receivable                                   31,084       (42,290)        -     
     Accounts payable, notes payable 
      and accrued liabilities                                   (121,707)     (148,797)      302,309 
     Accrued postretirement expense                               98,770       112,560       242,239 
     Accrued pension expense                                     (62,464)      402,255       (13,453)
     Minority interest in earnings of subsidiaries               466,758       556,153       410,067 
  Net cash provided by operating activities                  $14,611,570   $10,355,251   $ 8,195,866 
Investing Activities:
 Acquisition of property, plant and equipment               $(6,017,716)  $(5,863,148)  $(7,047,228)
 Net purchases and sales of subsidiaries' stock                   -           226,573      (739,612)
 Proceeds from disposals of property, plant and equipment       554,427       349,703       289,260 
 Payment for purchases of equity investments                   (160,762)      (90,947)   (1,547,507)
 Proceeds from disposals of equity investments                  877,379       721,428       240,823 
 Increase in other assets                                      (245,265)     (513,073)      (81,024)
 (Increase) decrease in short term investments, net          (9,030,275)   (1,714,695)    4,528,008 
          Net cash used for investing activities           $(14,022,212)  $(6,884,159)  $(4,357,280)
Financing Activities:
 Subsidiaries' dividends paid to minority interest         $   (238,698)  $   (98,118)  $   (55,180)
 Cash dividends                                              (2,030,179)   (1,865,288)   (1,780,501)
 Subsidiaries' purchase of treasury stock, net                    -          (105,200)        -     
 Purchase of treasury stock                                    (149,504)        -             -     
          Net cash used for financing activities           $ (2,418,381)  $(2,068,606)  $(1,835,681)
Net Increase in Cash and Cash Equivalents                  $ (1,829,023)  $ 1,402,486   $ 2,002,905 
Cash and Cash Equivalents, beginning of year                  5,071,268     3,668,782     1,665,877 
Cash and Cash Equivalents, end of year                     $  3,242,245   $ 5,071,268   $ 3,668,782 
<FN>
          The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>

                  THE MONARCH CEMENT COMPANY AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       DECEMBER 31, 1996, 1995 AND 1994


(1) SUMMARY OF ACCOUNTING POLICIES:

    (a) Description of Business--The Monarch Cement Company (Monarch) has been
principally engaged, throughout its history, in the manufacture and sale of
portland cement.  Monarch is also in the ready-mixed concrete, concrete
products and sundry building materials business through its subsidiaries. 
Monarch has direct control of certain operating companies which have been
deemed to be subsidiaries within the meaning of 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 have been recorded as
reductions in other income in the accompanying statements of income.  The
minority interests in net income were $466,758, $556,153 and $410,067 during
1996, 1995 and 1994, respectively.

    (b) Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles 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.

    (c) Inventories--Inventories of finished cement, work in process and
building products are priced by the last-in, first-out (LIFO) method.  Under
the average cost method of accounting (which approximates current cost), these
inventories would have been $1,472,000, $1,396,000 and $1,463,000 higher than
those reported at December 31, 1996, 1995 and 1994, 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.

    (d) Property, Plant and Equipment--Depreciation of property, plant and
equipment is provided by charges to operations over the estimated useful lives
of the assets using primarily the declining balance method.  Depletion rates
for quarry lands are designed to amortize the cost over the estimated
recoverable reserves.  Expenditures for improvements which significantly
increase the assets' useful lives are capitalized while maintenance and
repairs are charged to expense as incurred.

    (e) Net Income per Capital Share--Net income per share of capital stock
has been calculated based on the weighted average shares outstanding during
each of the three years.  The weighted average number of shares after giving
retroactive effect to a stock distribution of one share of Class B Capital
Stock for each share of Capital Stock outstanding was 4,226,397 in 1996 and
4,239,290 in 1995 and 1994.

    (f) 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, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
                                                 1996         1995   
         <S>                                  <C>          <C>
         Fair value of investments            $2,876,000   $2,680,200
         Cost of investments                   1,250,000    1,651,200
           Fair value in excess of cost       $1,626,000   $1,029,000
         Unrealized gain recorded in equity   $  976,000   $  619,000
         Deferred income taxes                   650,000      410,000
                                              $1,626,000   $1,029,000

         Proceeds from sale of securities     $  877,380   $  721,428 
         Realized gains                       $  314,963   $  110,089

</TABLE>

    (g) Statements of Cash Flows--The Company considers overnight cash
investments to be cash equivalents.  All other highly liquid short term
investments, generally with an original maturity of six months or less, are
considered short term investments.  Interest and income taxes paid during each
of the three years for the period ended December 31, are as follows:

<TABLE>
<CAPTION>
                                       1996         1995         1994   
         <S>                        <C>          <C>          <C>
         Interest paid              $   13,392   $    4,115   $    2,542
         Income taxes paid          $6,833,624   $3,316,543   $4,158,015
</TABLE>

(2) INCOME TAXES:

    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>
                                         1996        1995        1994    
      <S>                             <C>         <C>         <C>
      Provision for (benefit from)
        federal taxes at statutory
        rates-
          Currently payable           $5,854,000  $4,405,000  $2,277,000 
          Deferred                      (170,000)   (300,000)   (110,000)
      State income taxes, net of 
        federal tax benefit              718,000     550,000     230,000 
      Percentage depletion              (602,000)   (487,000)   (265,000)
      Minority interest in
        consolidated income              187,000     222,000     164,000 
      Other, net                          (7,000)     10,000      79,000 
                                      $5,980,000  $4,400,000  $2,375,000 
</TABLE>

 
<TABLE>
     The tax effect of significant temporary differences representing deferred
tax assets and (liabilities) are as follows:

<CAPTION>
                                                1996             1995     
     <S>                                     <C>              <C>
     Current:
       Reserve for bad debts                 $   245,000      $   215,000 
       Vacation                                  205,000          205,000 
         Net current deferred tax assets     $   450,000      $   420,000 

     Noncurrent:
       Depreciation                          $  (953,000)     $(1,148,000)
       Postretirement benefits                 3,925,000        3,886,000 
       Pension                                    19,000           73,000 
       Unrealized holding gains                 (650,000)        (410,000)
       Other, net                                  9,000            9,000 
         Net long-term deferred tax assets   $ 2,350,000      $ 2,410,000 

</TABLE>

(3) PROPERTY, PLANT AND EQUIPMENT:

<TABLE>
    Property, plant and equipment at December 31, 1996 and 1995 consisted of:

<CAPTION>
                                     Depreciation
                                     Lives (Years)     1996         1995    
     <S>                                 <C>        <C>          <C>
     Quarry lands                                   $   710,188  $   710,188
     Mill site and buildings             12 - 50     11,448,381   11,282,945
     Machinery and equipment              5 - 25     63,239,341   60,838,275
     Transportation equipment             3 - 12     17,046,844   15,280,248
     Office furniture and fixtures        5 - 20        867,811      800,115
     Office and other buildings          10 - 30      1,644,162    1,632,722
     Construction in process                            320,845       30,610
                                                    $95,277,572  $90,575,103
     Less--Accumulated depreciation and depletion    71,678,195   68,057,293
                                                    $23,599,377  $22,517,810
</TABLE>

(4) 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.

<TABLE>

     The following tables set forth the plans' funded status and amounts
recognized in the Company's balance sheets at December 31, 1996, 1995 and
1994:

<CAPTION>
                                                         Humboldt    Des Moines 
FOR THE YEAR ENDED DECEMBER 31, 1996:         Staff     Production   Production  
<S>                                       <C>           <C>          <C>
Actuarial present value of benefit
  obligation:
  Vested benefit obligation               $ 10,219,295  $ 6,642,953  $ 2,804,797 
  Nonvested benefit obligation                 200,965      182,824       14,925 
    Accumulated benefit obligation        $ 10,420,260  $ 6,825,777  $ 2,819,722 
Projected benefit obligation              $(11,210,567) $(6,825,777) $(2,819,722)
Plan assets at fair value, primarily
  listed stocks and U.S. government
  obligations                               12,122,237    7,950,431    3,036,743 
    Plan assets in excess of projected     
      benefit obligation                  $    911,670  $ 1,124,654  $   217,021 
Unrecognized net gain from past
  experience different from that assumed
  and effects of changes in assumptions     (1,253,122)  (1,131,621)    (411,303)
Prior service cost                              73,777      368,507        -   
Unrecognized net obligation (asset) at
  December 31, 1996 due to initial 
  application of FAS Statement No. 87           67,187      (17,924)       4,535 
    (Accrued) prepaid pension expense     $   (200,488) $   343,616  $  (189,747)
Net pension cost (income) for 1996
  included the following components:
  Service cost-benefits earned during
    the period                            $    159,101  $    81,993  $    12,135 
  Interest cost on projected benefit
    obligation                                 811,393      497,588      206,023 
  Actual return on plan assets              (1,309,979)    (861,379)    (329,657)
  Net amortization and deferral                319,322      208,549       69,198 
    Net pension expense                   $    (20,163) $   (73,249) $   (42,301)

FOR THE YEAR ENDED DECEMBER 31, 1995:
Actuarial present value of benefit
  obligation:
  Vested benefit obligation               $ 10,025,749  $ 6,785,340  $ 2,821,089 
  Nonvested benefit obligation                 137,186      196,304       20,978 
    Accumulated benefit obligation        $ 10,162,935  $ 6,981,644  $ 2,842,067 
Projected benefit obligation              $(10,882,232) $(6,981,644) $(2,842,067)
Plan assets at fair value, primarily
  listed stocks and U.S. government
  obligations                               11,580,708    7,697,191    2,972,667 
    Plan assets in excess of projected     
      benefit obligation                  $    698,476  $   715,547  $   130,600 
Unrecognized net gain from past
  experience different from that assumed
  and effects of changes in assumptions       (999,752)    (819,628)    (368,090)
Prior service cost                               -          396,854        -   
Unrecognized net obligation (asset) at
  December 31, 1995 due to initial 
  application of FAS Statement No. 87           80,625      (22,406)       5,442 
    (Accrued) prepaid pension expense     $   (220,651) $   270,367  $  (232,048)
Net pension cost (income) for 1995
  included the following components:
  Service cost-benefits earned during
    the period                            $    129,060  $    73,788  $    15,613 
  Interest cost on projected benefit
    obligation                                 795,516      517,675      211,160 
  Actual return on plan assets              (2,441,742)  (1,636,137)    (633,241)
  Net amortization and deferral              1,600,739    1,087,222      412,235 
    Net pension expense                   $     83,573  $    42,548  $     5,767 
<PAGE>
<CAPTION>
                                                         Humboldt    Des Moines 
FOR THE YEAR ENDED DECEMBER 31, 1994:         Staff     Production   Production  
<S>                                        <C>          <C>          <C>
Actuarial present value of benefit
  obligation:
  Vested benefit obligation                $ 9,052,837  $ 6,596,524  $ 2,641,836 
  Nonvested benefit obligation                 154,323      161,537       33,092 
    Accumulated benefit obligation         $ 9,207,160  $ 6,758,061  $ 2,674,928 
Projected benefit obligation               $(9,808,826) $(6,758,061) $(2,674,928)
Plan assets at fair value, primarily
  listed stocks and U.S. government
  obligations                                9,839,708    6,677,762    2,589,358 
    Plan assets in excess of (less than)      
      projected benefit obligation         $    30,882  $   (80,299) $   (85,570)
Unrecognized net gain from past
  experience different from that assumed
  and effects of changes in assumptions       (262,023)      (5,099)    (147,060)
Prior service cost                               -          425,201        -   
Unrecognized net obligation (asset) at
  December 31, 1994 due to initial
  application of FAS Statement No. 87           94,063      (26,888)       6,349 
Adjustment to recognize minimum
  required liability                             -         (393,214)       -     
    Accrued pension expense                $  (137,078) $   (80,299) $  (226,281)
Net pension cost (income) for 1994
  included the following components:
  Service cost-benefits earned during
    the period                             $   232,875  $    83,708  $    27,995 
  Interest cost on projected benefit
    obligation                                 727,869      505,116      198,101 
  Actual return on plan assets                 229,762      157,599       60,957 
  Net amortization and deferral             (1,151,220)    (776,970)    (309,245)
    Net pension (income) expense           $    39,286  $   (30,547) $   (22,192)
</TABLE>

     In determining the actuarial present value of the projected benefit
obligation, the assumed discount rate was 8.0%, 7.5% and 8.0% at the end of
1996, 1995 and 1994, respectively.  The assumed rate of increase in future
compensation levels was 4.5% in 1996 and 1995 and 5% in 1994.  The expected
long-term rate of return on assets was 9% for 1996, 1995 and 1994.

(5) CONTINGENT LIABILITIES:

    According to various agreements with certain minority stockholders,  under
specified circumstances, the Company is obligated to acquire such shares, if
requested to do so, at a previously established value ($2,267,997 at December
31, 1996).  In January 1997, the Company acquired shares pursuant to one of
these agreements requiring payment of $794,410.

(6) STOCK DISTRIBUTION:

    On April 25, 1994, a stock split was effected whereby one share of Class B
Capital Stock was issued for each currently outstanding share of Capital
Stock.  The total par value of the new shares ($5,299,113) was transferred
from retained earnings to the capital stock account.  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, which is
freely transferable, on a share-for-share basis.  Capital Stock has only one
vote per share.

(7) SEGMENTS OF BUSINESS:
<TABLE>
<CAPTION>
                                            Ready-Mixed
                                             Concrete  
                                  Cement    and Sundry  Adjustments 
FOR THE YEAR ENDED                 Manu-     Building       and
  DECEMBER 31, 1996:             facturing   Materials  Eliminations  Consolidated
  <S>                           <C>         <C>         <C>           <C>
  Sales to unaffiliated
    customers                   $36,838,233 $49,894,323 $     -       $86,732,555 
  Intersegment sales             10,764,176     235,795  (10,999,971)       -     
    Total net sales             $47,602,409 $50,130,118 $(10,999,971) $86,732,555 
  Income from operations        $13,665,251 $ 1,772,831               $15,438,082 
  Other income, net                                                     1,087,576 
    Income before income taxes                                        $16,525,658 
  Identifiable assets at
    December 31, 1996           $27,253,943 $15,656,197               $42,910,140 
  Corporate assets                                                     25,738,269 
    Total assets at
      December 31, 1996                                               $68,648,409 


FOR THE YEAR ENDED
  DECEMBER 31, 1995:
  Sales to unaffiliated
    customers                   $33,080,508 $48,586,330 $     -       $81,666,838 
  Intersegment sales             10,037,591     231,041  (10,268,632)       -     
    Total net sales             $43,118,099 $48,817,371 $(10,268,632) $81,666,838 
  Income from operations        $ 9,870,468 $ 2,421,606               $12,292,074 
  Other income, net                                                      (218,624)
    Income before income taxes                                        $12,073,450 
  Identifiable assets at
    December 31, 1995           $27,372,332 $14,196,280               $41,568,612 
  Corporate assets                                                     18,214,163 
    Total assets at
      December 31, 1995                                               $59,782,775 


FOR THE YEAR ENDED
  DECEMBER 31, 1994:
  Sales to unaffiliated
    customers                   $27,333,613 $46,312,037 $     -       $73,645,650 
  Intersegment sales              8,919,667     267,523  (9,187,190)        -     
    Total net sales             $36,253,280 $46,579,560 $(9,187,190)  $73,645,650 
  Income from operations        $ 3,339,160 $ 2,612,022               $ 5,951,182 
  Other income, net                                                       422,201 
    Income before income taxes                                        $ 6,373,383 
  Identifiable assets at
    December 31, 1994           $23,450,484 $13,589,370               $37,039,854 
  Corporate assets                                                     15,482,133 
    Total assets at
      December 31, 1994                                               $52,521,987 
</TABLE>

    The Company operates principally in two industries, the manufacture of
portland cement and the sale of ready-mixed concrete and sundry building
materials.  Total sales by industry before adjustments and eliminations
includes both sales to unaffiliated customers, as reported in the Company's
consolidated statements of income and retained earnings, and intersegment
sales which are accounted for by the same method as all other sales.  Sales by
industry are made primarily to ready-mixed concrete plants and contractors for
use in highways, airports, dams, housing, commercial buildings and other
construction.  Receivables are generally collected within thirty to sixty days
of the sale, but are occasionally delayed until completion of the project. 
The Company's bad debt write-offs are generally less than .5% of net sales. 

    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.  Also, no amounts have been excluded for corporate
administrative expense because the amounts which cannot be identified by
industry are not significant.  Depreciation for cement manufacturing and
ready-mixed concrete, respectively, was $2,570,085 and $2,121,550 in 1996;
$2,081,196 and $2,149,729 in 1995 and $1,687,532 and $1,999,053 in 1994. 
Capital expenditures for cement manufacturing and ready-mixed concrete,
respectively, including capital assets of businesses acquired were $2,448,248
and $3,569,468 in 1996; $3,754,435 and $2,108,713 in 1995 and $4,152,827 and
$2,894,401 in 1994.  Identifiable assets by industry are those assets that are
used in the Company's operations in each industry. 

    During 1996, 1995 and 1994, there were no sales to any one customer in
excess of 10% of consolidated net sales. 

(8) 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. 

<TABLE>
    The following table sets forth the plans' combined funded status
reconciled with the amount shown in the Company's balance sheets as of
December 31, 1996 and 1995:

<CAPTION>
                                                    1996          1995   
<S>                                             <C>           <C>
Accumulated postretirement benefit obligation:
  Retirees                                      $ 7,837,000   $ 7,825,000 
  Other fully-eligible participants                 447,000       561,000 
  Other active participants                       2,474,000     2,126,000 
    Total benefit obligation                    $10,758,000   $10,512,000 
Unrecognized net loss from differences
  between past experience and that assumed         (944,000)     (797,000)
    Accrued postretirement liability            $ 9,814,000   $ 9,715,000 
Net periodic postretirement benefit cost
  included the following components:
  Service cost                                  $   133,000    $  126,000
  Interest cost                                     766,000       872,000
  Unrecognized net loss                               -            38,000 
    Net periodic postretirement benefit cost    $   899,000    $1,036,000 
</TABLE>

    The assumed annual rate of increase in the per capita cost of covered
health care benefits was 7%, 8% and 9% for 1996, 1995 and 1994, respectively. 
This rate is assumed to decrease 1% per year to an ultimate rate of 4%. 
Increasing the assumed health care cost trend rates by one percentage point
each year would increase the accumulated postretirement benefit obligation as
of December 31, 1996 by $998,000 and would result in an increase in net
periodic postretirement benefit cost of $103,000.

    A weighted average discount rate of 7.5% at December 31, 1996 and 1995 was
used to determine the accumulated postretirement benefit obligation.