2004
                                ANNUAL REPORT























                                     THE
                                   MONARCH
                                CEMENT COMPANY



<Page>



                                                        March 14, 2005



                          ANNUAL REPORT TO STOCKHOLDERS

     As we reflect back on the year 2004, we see the beginnings of the
economic recovery in our market area.  Additional construction activity led to
moderate increases in sales volume of both cement and ready-mixed concrete and
a modest increase in cement prices during 2004 as compared to 2003. Although
net sales increased 18.9%, this is not an indication of a major economic
recovery or major increases in our primary business lines, but rather the
result of construction activities we had not undertaken in the past to the
scale attempted in 2004.  Unfortunately, these construction activities led to
a significant decline in income from operations.  Management personnel
responsible for these projects have left the Company and we are analyzing
these projects and evaluating the reasons for the losses.  We do not have
similar projects on the books for 2005, and we are reviewing our interest and
the level at which we desire to participate in design/build construction
projects.

     Although our earnings for 2004 were somewhat disappointing, we are
encouraged by the continued improvement in the stock market and other signs of
economic recovery.  Continued projections of increased demand for cement and
ready-mixed concrete prompt us to proceed with plans to expand our cement
manufacturing facilities and to invest in other capital expenditures to more
efficiently meet these demands.  In 2004, we completed the installation of a
coal firing system and began to benefit from the lower fuel costs associated
with burning coal/petroleum coke in lieu of natural gas.  For 2005, we are
adding a new clinker cooler in preparation of expanding our clinker production
capability.  Further capital improvements are anticipated for 2006 to increase
cement production capacity.

     As we complete this year, we are thankful for our many loyal customers
that continue to have confidence in the quality of our products and our
ability to service their needs.  We recognize our employees for their
contributions toward the success of our Company.  We express our appreciation
to our stockholders for their steadfast confidence in our Company.  Most
importantly, we thank our Heavenly Father for His blessings and support which
have enabled us to achieve the results displayed in this report and for His
guidance in meeting the challenges ahead.

     We wish to invite you, our stockholders, to attend Monarch's annual
meeting to be held at 2:00 p.m. on April 13, 2005 in the corporate office at
449 1200 Street, 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, 2004
             (Dollar amounts in thousands except per share data)

<Caption>
                              2004      2003      2002      2001      2000
<S>                         <C>       <C>       <C>       <C>       <C>
Net sales . . . . . . . . . $145,077  $122,028  $134,550  $126,352  $119,362
Net income. . . . . . . . . $  2,569  $  3,820  $  5,903  $  8,151  $ 10,499
Net income per share. . . .     $.64      $.95     $1.47     $2.01     $2.55
Total assets. . . . . . . . $135,200  $129,832  $133,506  $126,638  $ 96,102
Long-term obligations . . . $ 26,141  $ 23,048  $ 26,540  $ 19,900  $   -
Cash dividends declared
  per share . . . . . . . .     $.80      $.80      $.80      $.80      $.78
Stockholders' investment
  per share . . . . . . . .   $20.86    $20.66    $19.70    $19.63    $18.36
</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.  Since its inception, Monarch has
been engaged 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.

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

     As used herein, the "Cement Business" refers to our manufacture and sale
of cement and "Ready-Mixed Concrete Business" refers to our ready-mixed
concrete, concrete products and sundry building materials business.


                              LINES OF BUSINESS

     The Company is engaged in two lines of business - Cement Business and
Ready-Mixed Concrete Business.

     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 of cement are made primarily to contractors, ready-mixed
concrete plants, concrete products plants, building materials dealers and
governmental agencies.  Monarch cement is delivered either in bulk or in paper
bags and is sold under the "MONARCH" brand name. The cement is distributed
both by truck and rail, either common or private carrier.

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

     The following table sets forth for the Company's last three fiscal years
the percentage of total sales by the (1) Cement Business and (2) Ready-Mixed
Concrete Business:


<Table>
<Caption>
                                               Total    Sales
                                                December 31,
                                         2004       2003       2002
     <S>                                <C>        <C>        <C>
     Cement Business                     35.3%      39.8%      39.8%
     Ready-Mixed Concrete Business       64.7%      60.2%      60.2%
                                        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 of weather on our business;
*	the affect of environmental and other government regulations; and
*	the affect of federal and state funding on demand for our products.



Results of Operations

<Table>
<Caption>
                                                    Ready-Mixed
                                          Cement     Concrete
                                         Business    Business    Consolidated
<S>                                    <C>          <C>          <C>
FOR THE YEAR ENDED DECEMBER 31, 2004
  Sales to unaffiliated customers      $51,408,457  $93,668,097  $145,076,554
  Income (loss) from operations          6,790,090   (4,871,807)    1,918,283

FOR THE YEAR ENDED DECEMBER 31, 2003
  Sales to unaffiliated customers      $48,571,556  $73,456,755  $122,028,311
  Income (loss) from operations          5,854,070   (1,199,738)    4,654,332

FOR THE YEAR ENDED DECEMBER 31, 2002
  Sales to unaffiliated customers      $53,514,889  $81,035,388  $134,550,277
  Income from operations                 7,746,726    2,052,659     9,799,385

</Table>

     See Note 10 in the Notes to Consolidated Financial Statements for further
discussion of each of the Company's reportable operating lines of business.

     General--Our products are used in residential, commercial and
governmental construction.  In 2004 we experienced the return of increased
demand for our products.  The combination of residential, commercial and
governmental construction activities resulted in the need for increased
production to meet our customers' needs.  In response to those needs, we have
made, and continue to make, investments in our plant and equipment to increase
production and improve efficiencies.  We are confident that we will benefit
from these investments as the economy continues to improve.

     During 2004, we were encouraged with the level of construction activity
in our market area.  Although intermittent rains hampered construction
projects and reduced efficiencies in our ready-mixed concrete operations,
sales of both cement and ready-mixed concrete increased moderately compared to
2003 levels.  However, the increase in sales and the increase in operating
losses in 2004 for our Ready-Mixed Concrete Business is primarily the result
of our activities in the construction of five parking garage structures that
were substantially completed by the end of 2004.  Prior to 2004, we did not
engage in such activities to any great extent.  Costs incurred in connection
with these five projects exceeded those that were estimated when the contracts
were entered into.  Management personnel involved in these projects are no
longer with the Company, and we are undertaking a review of these projects and
the reasons for the cost overruns.  Going forward, we expect activity in
designing/building of construction projects to be reduced or eliminated.

     In 2003 our sales volume was affected by a combination of a slow start
for the construction industry due to cold, wet weather conditions, the effect
of the economic slowdown in our markets and because we elected to pass up
sales opportunities that required significant price concessions.  Gross
profits in 2003 were affected by higher depreciation costs associated with the
additional investment in plant and equipment in recent years, higher insurance
costs and reduced utilization of equipment due to lower sales volumes.


     2004 Compared to 2003--Consolidated net sales for the year ended December
31, 2004 were $145,076,554, an increase of $23,048,243 as compared to the year
ended December 31, 2003.  Sales in our Cement Business were higher by
$2,836,901 due to a combination of a moderate increase in both sales volume
and price attributable to the factors discussed under "General" above.  Sales
in our Ready-Mixed Concrete Business were higher by $20,211,342 in 2004 as
compared to 2003, again primarily due to higher sales volumes primarily in
construction contracts as discussed under "General" above.

     Our overall gross profit rate for the year 2004 was 9.7% compared to
13.7% for the year 2003.  Gross profit rate in the Cement Business increased
less than .5%.  In late 2004, we began to benefit from our new coal firing
system reducing our dependence on natural gas and reducing our fuel costs.  We
also benefited from a reduction in pension expense due to higher stock market
prices at the end of 2003; however, these reductions were offset by slightly
higher labor and health insurance costs.  Gross profit rate in the Ready-Mixed
Concrete Business decreased 5.4%.  This decrease in gross profit rate was
primarily due to the costs associated with the construction contracts as
discussed under "General" above.  Increases in raw material costs and fuel
also contributed to the decrease in gross profit for this line of business.

     Selling, general and administrative expenses increased .6% during the
year 2004 compared to the year 2003.  These costs are normally considered
fixed costs that do not vary significantly with changes in sales volume.

     Interest income decreased $76,767 during 2004 as compared to the year
2003 primarily due to modest decreases in investments.

     Interest expense decreased $60,737 during 2004 as compared to the year
2003 primarily due to the capitalization of interest in 2004.

     "Other, net" increased $1,300,837 for the year 2004 as compared to the
year 2003 primarily due to an increase in the amount of gain realized on the
sale of other equity investments and an increase in subsidiary losses
allocated to minority interest.

     The effective tax rates for years 2004 and 2003 were 34.4% and 28.9%,
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).


     2003 Compared to 2002--Consolidated net sales for the year ended December
31, 2003 were $122,028,311, a decrease of $12,521,966 as compared to the year
ended December 31, 2002.  Sales in our Cement Business were lower by
$4,943,333 due primarily to a reduction in volume sold attributable to the
factors discussed under "General" above.  Our average price per ton of cement
sold remained steady in 2003 as compared to 2002.  Sales in our Ready-Mixed
Concrete Business were lower by $7,578,633 in 2003 as compared to 2002, again
primarily due to lower sales volumes as discussed under "General" above.

     Our overall gross profit rate for the year 2003 was 13.7% compared to
15.6% for the year 2002.  Gross profit rate in the Cement Business decreased
less than .5%.  Higher fuel costs due to burning natural gas in our
precalciner kiln and higher pension costs due to lower stock market prices at
the end of 2002 were offset by slightly lower labor costs as a result of
reduced overtime and an increase in the gain on sale of fixed assets that
reduced cost of sales.  Gross profit rate in the Ready-Mixed Concrete Business
decreased 2.8%.  This decrease in gross profit rate was primarily due to the
reduced utilization of manpower and equipment due to lower sales volumes.
Increases in fringe benefits, primarily related to health insurance, and
depreciation expense also contributed to the reduction in gross profit rate
for this line of business.

     Selling, general and administrative expenses increased 7.9% during the
year 2003 compared to the year 2002.  These costs are normally considered
fixed costs that do not vary significantly with changes in sales volume.  The
increases are primarily due to: increases in pension expense as a result of
lower stock market prices at the end of 2002; increased corporate insurance
costs due primarily to increases in umbrella and general liability rates and
the addition of directors' and officers' insurance; rising health care costs;
and the addition of sales personnel in the Ready-Mixed Concrete Business.

     Interest income increased $88,642 during 2003 as compared to the year
2002 primarily due to modest increases in investments.

     Interest expense decreased $68,204 during 2003 as compared to the year
2002 due to the decrease in bank loans outstanding and a slight reduction in
interest rates. The Company utilized these loans for capital improvements and
temporary operating funds.

     "Other, net" increased $1,620,167 for the year 2003 as compared to the
year 2002 primarily due to an increase in the amount of gain realized on the
sale of other equity investments, an increase in miscellaneous sales, an
increase in subsidiary losses allocated to minority interest and a 2002 write-
off of obsolete equipment.

     The effective tax rates for years 2003 and 2002 were 28.9% and 32.4%,
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).


Liquidity

     We are able to meet our cash needs primarily from a combination of
operations and bank loans.  Cash decreased during the year 2004 primarily due
to utilization of cash to fund capital expenditures.

     Each segment of the cement manufacturing process requires significant
investment in major pieces of equipment.  Once installed, this equipment, if
properly maintained, functions for many years.  Generally we spend several
million dollars each year on preventive maintenance and equipment repairs;
however, capital expenditures vary considerably from year-to-year.  A piece of
equipment that cost $25 to $30 million may remain in service for fifty years.
After a period of time, this equipment may be modified to incorporate the
latest technology, increasing its efficiency and production capacity and
extending it useful life.  In the years Monarch invests in major equipment
replacements or enhancements, current operations do not generate enough cash
to pay for the improvements requiring us to use our cash on hand or bank
financing.  As projects are completed, we reduce the amount needed for major
capital expenditures allowing us to pay off any outstanding bank loans and
accumulate cash for the next major plant improvement.

     During 2004, Monarch installed a new coal firing system which required
additional bank financing and contributed to the reduction in cash and cash
equivalents.  Although we anticipate an increase in capital expenditures
during 2005 (see Capital Resources below), we do not anticipate the need for
additional bank financing during 2005, other than on a temporary basis.

     In December 2004, we renewed and modified our line of credit and term
loan with our current lender.  Our current unsecured credit commitment
consists of a $25,000,000 advancing term loan maturing December 31, 2009 and a
$10,000,000 line of credit maturing December 31, 2005.  These loans bear
floating interest rates based on JP Morgan Chase prime rate less .75% and
1.00%, 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, 2004, we had borrowed $25,000,000 on the advancing term loan and
$981,667 on the line of credit leaving a balance available on the line of
credit of $9,018,333.  The average daily interest rate we paid on the
advancing term loan during 2004 and 2003 was 3.09% and 2.87%, respectively.
The average daily interest rate we paid on the line of credit during 2004 and
2003 was 3.00% and 3.37%, respectively.  At year-end, the applicable interest
rate was 4.50% on the advancing term loan and 4.25% on the line of credit. The
advancing term loan was used to help finance the expansion project at our
cement manufacturing facility.  The line of credit was used to cover operating
expenses primarily during the first half of the year when we build inventory
due to the seasonality of our business.  We anticipate that the line of credit
maturing December 31, 2005 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.

     Contractual obligations at December 31, 2004, consisting of maturities on
long-term debt, are as follows:

<Table>
                                           <S>           <C>
                                           2005          $ 2,021,503
                                           2006            2,312,642
                                           2007            2,422,784
                                           2008            2,535,795
                                           2009           16,571,292
                                           Thereafter        276,602
                                                         $26,140,618
</Table>


Financial Condition

     Total assets as of December 31, 2004 were $135,200,166, an increase of
$5,367,735 since December 31, 2003.  The increase in inventories is mainly due
to an increase in cement, work in process and building products inventory
caused by adverse weather conditions in late 2004.  Weather conditions during
November and December significantly affect the level of sales of cement and
building products resulting in variations in the level of inventories from
year to year.  Operating and maintenance supplies inventory increased during
2004 as a result of the addition of repair parts related to the new coal
firing system.  Management continually evaluates the lead time to obtain
repair parts which are critical to its cement operations in determining which
parts to keep in inventory.  Property, plant and equipment increased as a
result of the purchase of new equipment.  Investments increased primarily as a
result of an increase in the fair market value of equity investments.

     Accounts payable decreased during 2004 primarily due to a reduction in
construction projects in process near the end of the year resulting in fewer
outstanding payables.

     Indebtedness increased $4,074,006 during the year 2004 due primarily to
funding the increase in inventories and capital expenditures.

     During 2004, we adjusted the minimum pension liability, resulting in an
increase in long-term accrued pension expense of $852,484 and a decrease in
stockholders' investment of $240,000.  The change in minimum pension liability
was primarily due to a lower return on plan assets during 2004 as compared to
2003.

     Stockholders' investment increased 1.0% during 2004 primarily as a result
of unrealized appreciation on available for sale securities.  Basic earnings
were $.64 per share and dividends declared were $.80 per share for the year
2004.



Capital Resources

     The Company regularly invests $10,000,000 to $12,000,000 per year on
capital expenditures to keep its equipment and facilities in good operating
condition.  Capital expenditures during 2004 included installation of a coal
firing system to fuel our precalciner kiln.  This system allows us to burn
primarily coal and petroleum coke in our precalciner in lieu of natural gas.
We also invested in routine equipment purchases in the Ready-Mixed Concrete
Business during 2004.  Property, plant and equipment expenditures for the year
2004 totaled $12,720,642.

     The Company has scheduled the installation of a new clinker cooler in
early 2005 and an addition to its corporate offices.  Preliminary plans for
2006 include the conversion of our remaining preheater kiln to a precalciner
kiln and changes to our quarrying and grinding operation to supply the raw
materials required by the increased kiln capacity.  If we elect to proceed
with these and other related projects, additional bank financing may be
required.

     The Company also plans to invest in other miscellaneous equipment and
facility improvements in both the Cement Business and Ready-Mixed Concrete
Business in 2005.  It is expected that the Company's capital expenditures,
including the new coal firing system, will approximate $14,000,000 during 2005
and will be funded with a mixture of cash from operations and temporary bank
loans.


     Accounting Policies--The critical accounting policies with respect to the
Company are those related to pension and postretirement benefits.

     Monarch has defined benefit pension plans covering substantially all
permanent employees in the Cement Business.  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.

     Monarch also provides other postretirement employee benefits including
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.  Monarch expects 2005 cash
expenditures for this plan to be approximately $1,000,000.

     We account for our pension plans in accordance with Financial Accounting
Standards Board (FASB) Statement No. 87, "Employers' Accounting for Pensions"
(FAS 87) and our postretirement benefits in accordance with FASB Statement No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"
(FAS 106).  FAS 87 and FAS 106 require us to make various estimates and
assumptions, including discount rates used to value liabilities, expected
rates of return on plan assets, salary increases, employee turnover rates,
anticipated employee mortality rates and expected future healthcare costs.
The estimates we used are based on our historical experience as well as
current facts and circumstances and are updated at least annually.  We use
third-party actuaries to assist us in properly measuring the expense and
liability associated with these benefits.

     The Financial Accounting Standards Board (FASB) has issued the following
new accounting pronouncements.

     In December 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 123 (revised 2004), Share-Based Payment.  The Statement
generally provides that the cost of Share-Based Payments be recognized over
the service period based on the fair value of the option or other instruments
at the date of grant.  The grant date fair value should be estimated using an
option-pricing model adjusted for the unique characteristics of the options or
other instruments granted.  The Company must use the Black-Scholes option
pricing model for outstanding options.  With respect to future grants, the
Company may elect to use the Black-Scholes option pricing model or may elect
to determine the grant date fair value using an alternative method.  This
Statement will be effective for the Company beginning July 1, 2005.  The
Company does not expect this pronouncement to have an affect on its financial
statements.

     In November 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter
4.  This Statement clarifies that items such as idle facility expense,
excessive spoilage, double freight, and re-handling costs should be classified
as a current-period charge.  The Statement also requires the allocation of
fixed production overhead to inventory based on the normal capacity of the
production facilities.  The statement is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005.  The Company has
not yet determined the impact that this new pronouncement will have on the
Company's consolidated financial statements.

     In December 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 153, Exchanges of Nonmonetary Assets, an amendment of APB
Opinion No. 29.  Statement No. 29 generally provides that exchanges of
nonmonetary assets should be measured based on the fair value of the assets
exchanged subject to certain exceptions to the general rule.  The Statement
amends Opinion No. 29 to eliminate the exception for exchanges involving
similar productive assets with a general exception for exchanges that do not
have commercial substance.  A nonmonetary exchange has commercial substance if
the future cash flows of the entity are expected to change significantly as a
result of the exchange.  This Statement is effective for nonmonetary asset
exchanges in periods beginning after June 15, 2005.  The Company has not yet
determined the impact that this new pronouncement will have on the Company's
consolidated financial statements.


     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, concrete products 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 .75% and
1.00%, 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, and to a
lesser extent natural gas, in its kilns.  While we do not anticipate a
significant increase above the rate of inflation in the cost of these solid
fuels, natural gas, or in the electricity required to operate our cement
manufacturing equipment, an increase in such manufacturing components could
adversely affect us.  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, 2005, 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 low and high 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>

                           2004                         2003
                     Price        Dividends       Price        Dividends
     Quarter      Low     High    Declared     Low     High    Declared_
      <S>       <C>      <C>        <C>      <C>      <C>        <C>
      First     $18.300  $20.850    $ -      $17.000  $22.000    $ -
      Second    $20.000  $22.100    $.20     $16.950  $18.000    $.20
      Third     $20.200  $22.500    $.20     $17.600  $18.000    $.20
      Fourth    $20.500  $22.560    $.40*    $17.500  $19.000    $.40*

      <FN>
       *Reflects declaration of two $.20 dividends payable in the first
quarter of 2005 and 2004.


</Table>


<Page>


          Report of Independent Registered Public Accounting Firm



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


We have audited the accompanying consolidated balance sheets of The Monarch
Cement Company as of December 31, 2004 and 2003, and the related consolidated
statements of income, stockholders' investment and cash flows for each of the
three years in the period ended December 31, 2004.  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 the standards of the Public Company
Accounting Oversight Board (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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Monarch Cement Company as of December 31, 2004 and 2003, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.


                                                 BKD, LLP

Kansas City, Missouri
February 11, 2005


<Page>

<Table>


THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003

<Caption>
ASSETS                                                 2 0 0 4       2 0 0 3
<S>                                                  <C>           <C>
CURRENT ASSETS:
  Cash and cash equivalents                          $  4,999,253  $  5,438,018
  Receivables, less allowances of $727,000 in 2004
    and $591,000 in 2003 for doubtful accounts         13,523,816    13,852,596
  Inventories, priced at cost which is not in
    excess of market-
      Finished cement                                $  2,679,506  $  2,553,258
      Work in process                                   1,456,854       919,646
      Building products                                 3,391,901     2,956,124
      Fuel, gypsum, paper sacks and other               2,919,528     2,626,194
      Operating and maintenance supplies                7,500,453     7,063,030
        Total inventories                            $ 17,948,242  $ 16,118,252
  Refundable federal and state income taxes               812,807         -
  Deferred income taxes                                   686,000       573,000
  Prepaid expenses                                        170,236       155,011

        Total current assets                         $ 38,140,354  $ 36,136,877

PROPERTY, PLANT AND EQUIPMENT, at cost, less
  accumulated depreciation and depletion of
  $113,663,839 in 2004 and $105,703,279 in 2003        79,948,242    77,884,890

DEFERRED INCOME TAXES                                   1,965,000     2,447,000

INVESTMENTS                                            13,620,501    11,502,902

OTHER ASSETS                                            1,526,069     1,860,762

                                                     $135,200,166  $129,832,431



LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
  Accounts payable                                   $  5,686,857  $  6,435,292
  Line of credit payable                                  981,667         -
  Current portion of advancing term loan                2,021,503     3,353,778
  Accrued liabilities-
    Dividends                                           1,610,783     1,610,783
    Compensation and benefits                           2,250,022     2,081,496
    Federal and state income taxes                          -           333,969
    Miscellaneous taxes                                   863,591       740,715
    Other                                                 935,041       517,511
      Total current liabilities                      $ 14,349,464  $ 15,073,544

LONG-TERM DEBT                                         24,119,115    19,694,501

ACCRUED POSTRETIREMENT BENEFITS                        10,128,039     9,554,920

ACCRUED PENSION EXPENSE                                 1,238,027       385,543

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES          1,349,566     1,915,605

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


    2,406,197 shares at December 31, 2004 and
    2,389,381 shares at December 31, 2003            $  6,015,493  $  5,973,453
  Class B Capital Stock, par value $2.50 per share,
    10 votes per share-Authorized 10,000,000 shares,
    Issued 1,620,761 shares at December 31, 2004
    and 1,637,577 shares at December 31, 2003           4,051,902     4,093,942
  Retained earnings                                    70,528,560    71,180,923
  Accumulated other comprehensive income                3,420,000     1,960,000
    Total stockholders' investment                   $ 84,015,955  $ 83,208,318

                                                     $135,200,166  $129,832,431
<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, 2004, 2003 AND 2002


<Caption>
                                             2 0 0 4       2 0 0 3       2 0 0 2
<S>                                        <C>           <C>           <C>
NET SALES                                  $145,076,554  $122,028,311  $134,550,277

COST OF SALES                               130,989,824   105,277,681   113,542,536
         Gross profit from operations      $ 14,086,730  $ 16,750,630  $ 21,007,741

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                    12,168,447    12,096,298    11,208,356
         Income from operations            $  1,918,283 $   4,654,332 $   9,799,385

OTHER INCOME (EXPENSE):
  Interest income                          $    379,449  $    456,216  $    367,574
  Interest expense                             (926,363)     (987,100)   (1,055,304)
  Other, net                                  2,547,834     1,246,997      (373,170)
                                           $  2,000,920  $    716,113   $(1,060,900)
INCOME BEFORE PROVISION FOR INCOME TAXES   $  3,919,203  $  5,370,445  $  8,738,485

PR0VISION FOR INCOME TAXES                    1,350,000     1,550,000     2,835,000

NET INCOME                                 $  2,569,203  $  3,820,445  $  5,903,485

Basic earnings per share                           $.64          $.95         $1.47
</Table>

<Table>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002


<Caption>


                                             2 0 0 4       2 0 0 3       2 0 0 2
<S>                                        <C>           <C>           <C>
NET INCOME                                 $  2,569,203  $  3,820,445  $  5,903,485

UNREALIZED APPRECIATION (DEPRECIATION)
  ON AVAILABLE FOR SALE SECURITIES (Net
  of deferred tax (benefit) expense of
  $1,615,000, $1,510,000 and $(73,000)
  for 2004, 2003 and 2002, respectively)      2,470,400     2,221,068      (111,868)

LESS:  RECLASSIFICATION ADJUSTMENT FOR
  REALIZED GAINS (LOSSES) INCLUDED IN NET
  INCOME (Net of deferred tax (benefit)
  expense of $515,000, $250,000 and $2,000
  for 2004, 2003 and 2002, respectively)       (770,400)     (381,068)       (3,132)

MINIMUM PENSION LIABILITY (Net of
  deferred tax (benefit) expense of
  $(160,000), $940,000 and $(1,500,000)
  for 2004, 2003 and 2002, respectively)       (240,000)    1,419,000    (2,259,000)

COMPREHENSIVE INCOME                       $  4,029,203  $  7,079,445  $  3,529,485
<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, 2004, 2003 AND 2002


<Caption>
                                                                        Accumu-
                                            Class B                   lated Other     Stock-
                               Capital      Capital      Retained     Comprehen-     holders'
                                Stock        Stock       Earnings     sive Income   Investment
<S>                           <C>          <C>          <C>           <C>           <C>
Balance at 1/1/2002           $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)  $79,350,439
Net income                         -            -         3,820,445         -         3,820,445
Dividends declared
 ($.80 per share)                  -            -        (3,221,566)        -        (3,221,566)
Transfer of shares               112,720     (112,720)        -             -             -
Change in unrealized
 appreciation on available
 for sale securities               -            -             -         1,840,000     1,840,000
Adjustment to recognize
 minimum pension liability         -            -             -         1,419,000     1,419,000
Balance at 12/31/2003         $5,973,453   $4,093,942   $71,180,923   $ 1,960,000   $83,208,318
Net income                         -            -         2,569,203         -         2,569,203
Dividends declared
 ($.80 per share)                  -            -        (3,221,566)        -        (3,221,566)
Transfer of shares                42,040      (42,040)        -             -             -
Change in unrealized
 appreciation on
 for sale securities               -            -             -         1,700,000     1,700,000
Adjustment to recognize
 Minimum pension liability         -            -             -          (240,000)     (240,000)
Balance at 12/31/2004         $6,015,493   $4,051,902   $70,528,560   $ 3,420,000   $84,015,955

<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, 2004, 2003 AND 2002


<Caption>
                                                         2 0 0 4       2 0 0 3       2 0 0 2
<S>                                                    <C>           <C>           <C>
OPERATING ACTIVITIES:
Net income                                             $  2,569,203  $  3,820,445  $  5,903,485
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation, depletion and amortization               10,750,447    11,198,625    11,259,163
  Minority interest in earnings (losses) of
   subsidiaries                                            (527,225)      (16,234)      187,056
  Deferred income taxes                                    (644,000)     (640,000)     (326,000)
  (Gain) loss on disposal of assets                        (264,944)     (445,079)      502,074
  Realized gain on sale of other investments             (1,285,400)     (631,068)       (5,132)
  Change in assets and liabilities:
    Receivables, net                                        328,780     2,062,525    (2,652,838)
    Inventories                                          (1,829,990)     (761,990)    2,234,075
    Refundable income taxes                                (812,807)      562,496       (87,629)
    Prepaid expenses                                        (15,225)      (71,214)      (16,111)
    Other assets                                             36,398        30,569        23,675
    Accounts payable and accrued liabilities               (623,472)      762,009      (683,530)
    Accrued postretirement benefits                         823,119       332,543       351,005
    Accrued pension expense                                 452,484       326,168      (159,940)
  Net cash provided by operating activities            $  8,957,368  $ 16,529,795  $ 16,529,353

INVESTING ACTIVITIES:
Acquisition of property, plant and equipment           $(12,720,642) $ (6,418,334) $(11,118,444)
Proceeds from disposals of property,
 plant and equipment                                        654,378       543,933       375,216
Payment for purchases of equity investments                (589,872)     (240,849)   (2,900,705)
Proceeds from disposals of equity investments             2,557,673     1,004,268       145,299
Decrease in short-term investments, net                       -             -           162,580
Net purchases of subsidiaries' stock                       (118,999)     (128,508)   (2,421,057)
  Net cash used for investing activities               $(10,217,462) $ (5,239,490) $(15,757,111)

FINANCING ACTIVITIES:
Proceeds from (retirement of) bank loans               $  4,074,006  $ (6,539,936) $  3,148,421
Cash dividends paid                                      (3,221,566)   (3,221,566)   (3,221,567)
Subsidiaries' dividends paid to minority interest           (31,111)        -           (14,742)
  Net cash provided by (used for) financing activities $    821,329  $ (9,761,502) $    (87,888)
Net increase (decrease) in cash and cash equivalents   $   (438,765) $  1,528,803 $     684,354
Cash and Cash Equivalents, beginning of year              5,438,018     3,909,215     3,224,861
Cash and Cash Equivalents, end of year                 $  4,999,253  $  5,438,018  $  3,909,215

Additional Cash Flow Information:
Interest paid, net of amount capitalized               $    930,675  $    992,209  $  1,101,709
Income taxes paid, net of refunds                      $  3,141,181  $  1,295,660  $  3,247,546

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


<Page>
THE MONARCH CEMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002


(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 $(527,225), $(16,234) and $187,056 during
2004, 2003 and 2002, 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) Reclassifications-Certain reclassifications have been made to the 2003
and prior financial statements to conform to the current year presentation.

    (e) Cash Equivalents--The Company considers all liquid investments with
original maturities of three months or less to be cash equivalents.  At
December 31, 2004 and 2003, cash equivalents consisted primarily of money
market investments and repurchase agreements with various banks.  At December
31, 2004, the Company's cash accounts exceeded federally insured limits by
approximately $2,550,000.

    (f) 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.  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.

    (g) 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.

    (h) Inventories--Inventories of finished cement and work in process are
recorded at the lower of cost or market on a last-in, first-out (LIFO) basis.
Total inventories reported under LIFO amounted to $4,136,360 and $3,472,904 as
of December 31, 2004 and 2003, respectively.  Under the average cost method of
accounting (which approximates current cost), these inventories would have
been $2,000,000, $1,994,000 and $2,340,000 higher than those reported at
December 31, 2004, 2003 and 2002, 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.

    (i) 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 2004, the Company capitalized
approximately $48,000 of interest expense related to current construction
projects.  During 2004 and 2003 the Company did not capitalize any interest
expense.

    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.

    (j) 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.

    (k) Revenue Recognition--The Company records revenue from the sale of
cement, ready-mixed concrete, concrete products and sundry building materials
when the products are delivered to customers.  Concrete products are also sold
through long-term construction contracts. Revenues for these contracts 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 receivable and are generally due
within one year.

    (l) 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 2004, 2003 and 2002.

    (m) 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.

    (n) 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, receivables, accounts
payable, bank loans payable and long-term debt have carrying values that
approximate fair values.  Investment fair values equal quoted market prices,
if available.  If quoted market prices are not available, fair value is
estimated based on quoted market prices of similar securities.

(2)  INVESTMENTS

    Investments include 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, 2004, 2003 and 2002 are as follows:

<Table>
<Caption>
                                             2004         2003         2002
      <S>                                 <C>          <C>         <C>
      Fair value of investments           $13,620,501  $11,502,902  $8,535,253
      Cost of investments                   6,120,501    6,802,902   6,935,253
        Gross unrealized gains            $ 7,500,000   $4,700,000  $1,600,000
      Unrealized gain recorded in equity  $ 4,500,000   $2,800,000  $  960,000
      Deferred income taxes                 3,000,000    1,900,000     640,000
                                          $ 7,500,000   $4,700,000  $1,600,000

      Proceeds from sale of securities    $ 2,557,673   $1,004,268  $  145,299
      Realized gains                      $ 1,285,400   $  631,068  $    5,132
</Table>

(3) PROPERTY, PLANT AND EQUIPMENT

<Table>

    Property, plant and equipment at December 31, 2004 and 2003 consisted of:

<Caption>
                                    Depreciation
                                    Lives (Years)      2003          2003
     <S>                                <C>        <C>           <C>
     Quarry lands                                  $  1,470,386  $  1,470,386
     Mill site and buildings            12 - 50      23,097,131    22,590,442
     Machinery and equipment             5 - 25     118,615,572   111,995,773
     Transportation equipment            3 - 12      31,945,457    30,041,668
     Office furniture and fixtures       5 - 20       1,698,817     1,603,316
     Office and other buildings         10 - 30       5,055,887     4,821,893
     Construction in process                         11,728,831    11,064,691
                                                   $193,612,081  $183,588,169
     Less--Accumulated depreciation and depletion   113,663,839   105,703,279
                                                   $ 79,948,242  $ 77,884,890
</Table>

(4) LINE OF CREDIT AND LONG-TERM DEBT

    In December 2004, Monarch renewed and modified its line of credit and term
loan with a bank.  Monarch's current unsecured credit commitment consists of a
$25,000,000 advancing term loan maturing December 31, 2009 and a $10,000,000
line of credit maturing December 31, 2005.  At December 31, 2004 and 2003,
there was $981,667 and $-0-, 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 1.00% for 2005 (.75% for 2004 and 2003).
The applicable interest rate was 4.25% and 3.25% on December 31, 2004 and
2003, respectively, and is payable quarterly.

<Table>
<Caption>
                                         2004          2003
           <S>                        <C>           <C>
           Note payable, bank (a)     $25,000,000   $21,741,459
           Other                        1,140,618     1,306,820
                                      $26,140,618   $23,048,279
           Less current maturities      2,021,503     3,353,778
                                      $24,119,115   $19,694,501

<FN>
           (a) Due December 31, 2009; payable $782,000 quarterly
               including interest; interest computed based on
               JP Morgan Chase prime rate less .75% (1.25% for 2004
               and prior) 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, 2004 are:

<Table>
                                      <S>           <C>
                                      2005          $ 2,021,503
                                      2006            2,312,642
                                      2007            2,422,784
                                      2008            2,535,795
                                      2009           16,571,292
                                      Thereafter        276,602
                                                    $26,140,618

</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>
                                         2004        2003        2002
      <S>                             <C>         <C>         <C>
      Taxes currently payable         $1,994,000  $2,190,000  $3,161,000
      Deferred income taxes             (644,000)   (640,000)   (326,000)
        Income tax expense            $1,350,000  $1,550,000  $2,835,000

</Table>

    A reconciliation of income tax expense at the statutory rate to the
Company's actual income tax expense is as follows:

<Table>
<Caption>
                                         2004        2003        2002
  <S>                                 <C>         <C>         <C>
  Computed at statutory rate (34%)    $1,333,000  $1,826,000  $2,971,000
  Increase (decrease) resulting from:
    State income taxes, net of
      federal tax benefit                (47,000)     52,000     183,000
    Percentage depletion                (523,000)   (385,000)   (460,000)
    Valuation allowance                  661,000        -           -
    Minority interest in
      consolidated income (loss)        (138,000)     (6,000)     75,000
    Other                                 64,000      63,000      66,000
        Provision for income taxes    $1,350,000  $1,550,000  $2,835,000

</Table>

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

<Table>
<Caption>
                                                2004             2003
     <S>                                     <C>              <C>
     Current:
       Allowance for doubtful accounts       $   291,000      $   236,000
       Accrued vacation                          351,000          303,000
       Other                                      44,000           34,000
         Net current deferred tax assets     $   686,000      $   573,000

     Noncurrent:
       Depreciation                          $  (308,000)     $  (318,000)
       Postretirement benefits                 4,551,000        4,222,000
       Minimum pension liability                 495,000          195,000
       Unrealized holding gains               (3,000,000)      (1,900,000)
       Net operating loss carryforwards          320,000          127,000
       Other, net                                (93,000)         121,000
         Net long-term deferred tax assets   $ 1,965,000      $ 2,447,000
</Table>

(6) POSTRETIREMENT BENEFITS

    Monarch provides certain postretirement health care, accident and life
insurance benefits to all retired employees in the Cement Business who, as of
their retirement date, meet the eligibility requirements. These benefits are
self-insured by Monarch and are paid out of Monarch's general assets.  Monarch
expects 2005 cash expenditures for this plan to be approximately $1,000,000.

    Monarch uses a December 31 measurement date for the plans.  At December
31, 2004 and 2003, the current portion of the accrued benefit cost of
approximately $1,000,000 in each year is recorded in compensation and
benefits.  Information about the plans' funded status and pension cost
follows:
<Table>
<Caption>
                                                   2004           2003
<S>                                            <C>            <C>
Change in benefit obligation
 Beginning of year                             $ 14,658,970   $ 13,708,841
  Service cost                                      426,079        179,380
  Interest cost                                   1,168,538        922,514
  Actuarial loss                                  2,986,526        804,415
  Benefits and expenses paid                     (1,199,632)      (956,180)
    End of year                                $ 18,040,481   $ 14,658,970

Funded status                                  $(18,040,481)  $(14,658,970)
Unrecognized net actuarial loss                   6,662,442      4,104,050
Accrued benefit cost                           $(11,378,039)  $(10,554,920)
</Table>

    The assumed annual rate of increase in the per capita cost of covered
health care benefits was 10% for 2004, 7% for 2003 and 6% for 2002. This trend
rate is assumed to decrease in future years, 1% per year to an ultimate annual
rate of 5%.  Following are the components of net periodic benefit cost:
<Table>
<Caption>
                                            2004         2003         2002
<S>                                      <C>          <C>          <C>
Components of net periodic benefit cost
  Service cost                           $  426,079   $  179,380   $  166,935
  Interest cost                           1,168,538      922,514      916,747
  Unrecognized net loss                     428,134      186,695      163,806
    Net periodic benefit cost            $2,022,751   $1,288,589   $1,247,488

Weighted-average assumptions
  as of December 31
  Discount rate                               6.00%        6.25%        6.75%
</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 interest and service cost           $  257,510    $  (211,337)
Effect on postretirement benefit obligation    2,347,034     (1,934,805)
</Table>

    On December 8, 2003, the Medicare Prescription Drug Improvement
Modernization Act of 2003 (the Act) was signed into law.  The Act introduces a
prescription drug benefit under Medicare Part D, as well as a federal subsidy
of sponsors of retiree health care benefit plans that provide benefits at
least actuarially equivalent to Medicare Part D.  The Company has been unable
to conclude whether the benefits provided by the plan are actuarially
equivalent to Medicare Part D under the Act.  Accordingly, the net periodic
post-retirement benefit costs above do not reflect any amount associated with
the subsidy.

    The following benefit payments (net of employee contributions) are
expected to be paid as of December 31, 2004:
<Table>
                                <S>         <C>
                                2005        $  936,590
                                2006           980,124
                                2007         1,035,184
                                2008         1,067 481
                                2009         1,096,591
                                2010-2014    5,922,564
</Table>

(7) PENSION PLANS

    Monarch has noncontributory defined benefit pension plans covering
substantially all employees in the Cement Business who meet the eligibility
requirements.  Generally, Monarch's funding policy is to contribute annually
the maximum amount that can be deducted for federal income tax purposes.  Due
to the 2004 investment returns, Monarch does not expect to contribute to the
plans in 2005.

    Monarch uses a December 31 measurement date for the plans.  At December
31, 2004 and 2003, the current portion of the pension liability of $-0- and
$100,000, respectively, is recorded in compensation and benefits.  Information
about the plans' funded status and pension cost follows:
<Table>
<Caption>
                                                        2004         2003
   <S>                                               <C>          <C>
   Change in benefit obligation
    Beginning of year                                $26,531,662  $24,773,516
     Service cost                                        459,956      405,229
     Interest cost                                     1,633,103    1,642,857
     Actuarial loss                                      782,516    1,313,976
     Plan amendment                                         -          40,769
     Benefits paid and expenses                       (1,677,331)  (1,644,685)
       End of year                                   $27,729,906  $26,531,662
   Change in fair value of plan assets
    Beginning of year                                $23,914,705  $21,028,407
     Actual return on plan assets                      2,131,518    4,209,877
     Employer contribution                                  -         321,106
     Benefits paid and expenses                       (1,677,331)  (1,644,685)
       End of year                                   $24,368,892  $23,914,705
   Funded status                                     $(3,361,014) $(2,616,957)
   Unrecognized net actuarial loss                     3,300,349    2,815,151
   Unrecognized prior service cost                       622,638      716,263
       Prepaid benefit cost                          $   561,973  $   914,457
   Adjustment required to recognize
     minimum liability                                (2,423,123)  (1,400,000)
       Pension liability                             $(1,861,150) $  (485,543)

   Other amounts recognized in the balance sheets:
     Accumulated other comprehensive income          $(1,080,000) $  (840,000)
</Table>

    The weighted average assumptions used to determine net pension cost and
benefit obligations as of December 31 are as follows:
<Table>
<Caption>
                                                     2004    2003    2002
    <S>                                              <C>     <C>     <C>
    Discount rate                                    6.00%   6.25%   6.75%
    Expected return on plan assets                   8.00%   8.00%   9.00%
    Rate of compensation increase (Staff plan only)  4.50%   4.50%   4.50%
</Table>

    The following table presents the components of net periodic pension cost
as of December 31, 2004, 2003 and 2002:

<Table>
<Caption>
                                            2004        2003         2002
<S>                                     <C>          <C>          <C>
Service cost                            $   459,956  $   405,229  $   375,199
Interest cost                             1,633,103    1,642,857    1,637,380
Expected return on plan assets           (1,840,183)  (1,508,629)  (2,229,994)
Amortization of transitional obligation       -            -             -
Amortization of prior service cost           75,123       73,440       57,475
Recognized net actuarial gain                24,485      134,029         -
  Net periodic pension (income) expense $   352,484  $   746,926  $  (159,940)
</Table>

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

    Plan assets are held by a trustee bank.  A fund manager has been retained
to make all investment decisions within guidelines specified by Monarch.  The
guidelines permit investment in both equities and fixed income securities
including common stocks, corporate bonds and debentures and U.S. Government
securities.  Asset allocation is primarily based on a strategy to provide
stable earnings while still permitting the plan to recognize potentially
higher returns through investment in equity securities.  The target asset
allocation percentages for 2004 and 2003 are as follows:

<Table>
                       <S>                          <C>
                       Equities                     60%
                       Fixed Income                 40%
</Table>

    The Plan allows a 5% fluctuation before assets are re-balanced.  At
December 31, 2004 and 2003, plan assets by category were as follows:

<Table>
<Caption>
                                            2004   2003
                       <S>                  <C>    <C>
                       Equities              61%    64%
                       Debt Securities       22%    26%
                       Other                 17%    10%
</Table>
The following benefit payments are expected to be paid as of
December 31, 2004:

<Table>

                       <S>                  <C>
                       2005                 $ 1,824,549
                       2006                   1,831,156
                       2007                   1,835 084
                       2008                   1,918,076
                       2009                   1,899,725
                       2010-2014              9,857,877

</Table>


    The Company has defined contribution plans covering substantially all
permanent employees of the Ready-Mixed Concrete Business.  These plans allow
the Company, at its discretion, to match the employee's contributions.  For
the 2004, 2003 and 2002 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 $76,429, $73,778 and $83,985 to these plans for the years 2004,
2003 and 2002, respectively.  The Company expects to contribute $80,000 to
these plans in 2005.

(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) LINES OF BUSINESS

    The Company groups its operations into two lines of business - Cement
Business and Ready-Mixed Concrete Business.  The Company's business lines are
separate business units that offer different products.  The accounting
policies for each line are the same as those described in the summary of
significant accounting policies.

     Following is information for each line for the years ended December 31,
2004, 2003 and 2002:


<Table>
<Caption>
                                            Ready-Mixed Adjustments
FOR THE YEAR ENDED                Cement     Concrete       and
  DECEMBER 31, 2004              Business    Business   Eliminations  Consolidated
  <S>                           <C>         <C>         <C>           <C>
  Sales to unaffiliated
    customers                   $51,408,457 $93,668,097 $      -      $145,076,554
  Intersegment sales             11,048,074        -     (11,048,074)        -
    Total net sales             $62,456,531 $93,668,097 $(11,048,074) $145,076,554
  Income (loss) from operations $ 6,790,090 $(4,871,807)              $  1,918,283
  Other income, net                                                      2,000,920
    Income before income taxes                                        $  3,919,203
  Identifiable assets at
    December 31, 2004           $76,018,017 $35,572,519               $111,590,536
  Corporate assets                                                      23,609,630
    Total assets at
      December 31, 2004                                               $135,200,166

FOR THE YEAR ENDED
  DECEMBER 31, 2003
  Sales to unaffiliated
    customers                   $48,571,556 $73,456,755 $      -      $122,028,311
  Intersegment sales             11,007,009       -      (11,007,009)        -
    Total net sales             $59,578,565 $73,456,755 $(11,007,009) $122,028,311
  Income (loss) from operations $ 5,854,070 $(1,199,738)              $  4,654,332
  Other income, net                                                        716,113
    Income before income taxes                                        $  5,370,445
  Identifiable assets at
    December 31, 2003           $70,212,426 $37,798,323               $108,010,749
  Corporate assets                                                      21,821,682
    Total assets at
      December 31, 2003                                               $129,832,431

FOR THE YEAR ENDED
  DECEMBER 31, 2002
  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        $ 7,746,726 $ 2,052,659               $  9,799,385
  Other expense, net                                                    (1,060,900)
    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

</Table>



    Total sales by line of business 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 the Cement Business and
Ready-Mixed Concrete Business, respectively, was:  $5,044,610 and $5,419,696
in 2004, $5,293,678 and $5,626,390 in 2003 and $5,964,841 and $5,243,343 in
2002. Capital expenditures for the Cement Business and Ready-Mixed Concrete
Business, respectively, were:  $7,723,336 and $4,997,306 in 2004,$1,594,784
and $4,823,550 in 2003 and $3,860,573 and $7,257,871 in 2002.  Identifiable
assets by line of business are those assets that are used in the Company's
operations in each industry.

    During 2004, 2003 and 2002, 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
2004
  Net sales                $27,649,297  $40,730,540  $44,365,950  $32,330,767
  Income (loss) from
    operations                 215,376    1,674,988    3,235,482   (3,207,563)
  Net income (loss)            268,307    1,160,623    2,265,149   (1,124,876)
  Basic earnings (loss)
    per share                     $.07         $.29         $.56        $(.28)

2003
  <S>                      <C>          <C>          <C>          <C>
  Net sales                $18,969,452  $29,593,928  $40,762,569  $32,702,362
  Income (loss) from
    operations              (1,857,128)   2,153,196    3,894,079      464,185
  Net income (loss)         (1,263,558)   1,737,764    2,592,588      753,651
  Basic earnings (loss)
    per share                    $(.31)        $.43         $.64         $.19
</Table>

    The loss from operations during the fourth quarter of 2004 is the direct
result of the construction activities in the Ready-Mixed Concrete Business.
These projects were substantially completed by the end of 2004 allowing us to
more accurately project the costs to complete.

(12) OTHER COMPREHENSIVE INCOME

    Accumulated other comprehensive income included in the balance sheet at
December 31 is as follows:
<Table>
<Caption>
                                          2003        Change	        2004
<S>                                    <C>          <C>          <C>
Unrealized appreciation on available
  for sale securities                  $ 2,800,000  $ 1,700,000  $ 4,500,000
Minimum pension liability adjustment      (840,000)    (240,000)  (1,080,000)
                                       $ 1,960,000  $ 1,460,000  $ 3,420,000

                                          2002        Change	        2003
Unrealized appreciation on available
  for sale securities                  $   960,000  $ 1,840,000  $ 2,800,000
Minimum pension liability adjustment    (2,259,000)   1,419,000     (840,000)
                                       $(1,299,000) $ 3,259,000  $ 1,960,000
</Table>

(13) FUTURE CHANGE IN ACCOUNTING PRINCIPLES



    The Financial Accounting Standards Board (FASB) has issued the following
new accounting pronouncements.

    In December 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 123 (revised 2004), Share-Based Payment.  The Statement
generally provides that the cost of Share-Based Payments be recognized over
the service period based on the fair value of the option or other instruments
at the date of grant.  The grant date fair value should be estimated using an
option-pricing model adjusted for the unique characteristics of the options or
other instruments granted.  The Company must use the Black-Scholes option
pricing model for outstanding options.  With respect to future grants, the
Company may elect to use the Black-Scholes option pricing model or may elect
to determine the grant date fair value using an alternative method.  This
Statement will be effective for the Company beginning July 1, 2005.  The
Company does not expect this pronouncement to have an affect on its financial
statements.

    In November 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter
4.  This Statement clarifies that items such as idle facility expense,
excessive spoilage, double freight, and re-handling costs should be classified
as a current-period charge.  The Statement also requires the allocation of
fixed production overhead to inventory based on the normal capacity of the
production facilities.  The statement is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005.  The Company has
not yet determined the impact that this new pronouncement will have on the
Company's consolidated financial statements.

    In December 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 153, Exchanges of Nonmonetary Assets, an amendment of APB
Opinion No. 29.  Statement No. 29 generally provides that exchanges of
nonmonetary assets should be measured based on the fair value of the assets
exchanged subject to certain exceptions to the general rule.  The Statement
amends Opinion No. 29 to eliminate the exception for exchanges involving
similar productive assets with a general exception for exchanges that do not
have commercial substance.  A nonmonetary exchange has commercial substance if
the future cash flows of the entity are expected to change significantly as a
result of the exchange.  This Statement is effective for nonmonetary asset
exchanges in periods beginning after June 15, 2005.  The Company has not yet
determined the impact that this new pronouncement will have on the Company's
consolidated financial statements.


<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                     Director of Music,
                                          Davis Community Church

ANNUAL MEETING                            Robert M. Kissick, Chairman,
The annual meeting of the                 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
                                          Partner 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

shareholder.relations@monarchcement.com   Byron K. Radcliff
                                          Owner/Manager, Radcliff Ranch

STOCK TRADING INFORMATION                 Michael R. Wachter, Civil Engineer
Trading Symbol: MCEM                      and Director of Operations,
Over-the-Counter Market                   Concrete Technology Corp.

                                          Walter H. Wulf, Jr.
INVESTOR RELATIONS                        President and Chairman of the Board
Inquiries may be directed to
Debra P. Roe, Chief Financial             Walter H. Wulf, III
Officer and Assistant Secretary-          Area Sales Manager,
Treasurer, at the corporate               General Motors Corporation
address shown above.

                                          Officers
FORM 10-K                                 Walter H. Wulf, Jr.
The Company's Annual Report on            President and Chairman of the Board
Form 10-K, as filed with the
Securities and Exchange Commission,      *Byron K. Radcliff
is available without charge upon          Vice Chairman of the Board,
written request to Debra P. Roe at        Secretary and Treasurer
the above corporate 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).
                                          Debra P. Roe
                                          Chief Financial Officer and
                                          Assistant Secretary-Treasurer

                                          Lisa J. Fontaine
                                          Assistant Secretary

                                          Roy L. Owens
                                          Vice President-Operations

                                         *Not actively involved in the daily
                                           affairs of the Company.