LIQUIDITY

    We are able to meet our cash needs primarily from a combination of operations and bank loans.

    Net cash provided by operating activities totaled $6.3 million and $3.2 million for the six months ended June 30, 2008 and June 30, 2007, respectively.  This was an increase in cash provided of $3.1 million for 2008 over the same period in 2007.  Net income decreased by $3.5 million from 2007 to 2008 mainly due to the decline in the gross profit margin that resulted primarily from the reduction in volume produced as discussed under "Overview" above and the $2.1 million decrease in realized gains on the sale of equity investments. Accounts receivables consumed $8.1 and $4.8 million of cash in the first half of 2008 and 2007, respectively, primarily as a result of increased sales in June as compared to December. Refundable federal and state income taxes receivable decreased  by $.7 million to provide cash while no change occurred for the same period of 2008.  Inventories used less cash in 2008 than 2007 as a result of the decision to reduce production as described under "Overview" above.  As a result of the reduction, finished cement inventory decreased $1.6 million during the first six months of 2008 and work-in-process decreased $1.8 million while finished cement and work-in-process increased $2.6 million and $.3 million, respectively, during the first six months of 2007. Less cash was used in the first six months of 2008 than 2007 as shown by the $4.2 million increase in payables and $.2 million increase in federal and state income tax liability during the first six months of 2008 as compared to a $1.7 million increase in payables and a $1.7 million increase in federal and state income tax liability for 2007.

    Net cash used for investing activities totaled $10.2 million and $2.0 million for the first six months of 2008 and 2007, respectively. The $8.2 million increase in net cash used for investing activities during the first six months of 2008 as compared to the same period in 2007 is principally due to the increase in purchases of equity investments, the acquisition of property, plant and equipment, and the acquisition of a business while there was a $3.1 million decrease in proceeds from disposals of equity investments.  Payments for purchases of equity investments totaled $3.4 million and $.9 million in 2008 and 2007, respectively. Proceeds from disposals totaled $3.1 million in 2007 while no investments were disposed of in 2008. Payments for the acquisition of property, plant and equipment totaled $4.7 million and $4.1 million in 2008 and 2007, respectively. Payments for the acquisition of a business consisted of $.2 million of inventory, $.6 million of other assets, and $1.5 million of property, plant and equipment in 2008.  There were no business acquisitions in 2007.  

    Net cash provided by financing activities totaled $3.2 million for the first six months ending June 30, 2008 while financing activities used $1.0 million during the same period in 2007.  The $4.2 million increase in cash provided in 2008 over 2007 was primarily the result of the $4.4 million increase in the revolving line of credit at the end of the second quarter of  2008 over the same period in 2007.  In both years these loans were used to cover increases in receivables, equity investments plus approximately $6.3 million and $4.1 million for cash expenditures on property, plant and equipment in 2008 and 2007, respectively.

    In December 2007, we renewed and modified our revolving line of credit with our current lender.  Our current credit facilities consist of an unsecured $25 million advancing term loan maturing December 31, 2009 and a $15 million revolving line of credit maturing December 31, 2008.  The term loan bears a floating interest rate based on JP Morgan Chase prime rate less .75% and the revolving line of credit bears a floating interest rate based on lender's national prime rate less 1.25% for 2008.  The loan agreement contains a financial covenant related to net worth which the Company was in compliance with at the end of the second quarter of 2008.  As of June 30, 2008, we had borrowed $18.4 million on the advancing term loan and $7.0 million on the revolving line of credit leaving a balance available on the revolving line of credit of $8.0 million.  The annual weighted average interest rate we paid on the advancing term loan during the second quarter of 2008 and 2007 was 4.35% and 7.50%, respectively, and for the first six months of 2008 and 2007 was 4.91% and 7.50%, respectively. The annual weighted average interest rate we paid on the revolving line of credit during the second quarter of 2008 and 2007 was 3.85% and 7.25%, respectively, and for the first six months of 2008 and 2007 was 4.41% and 7.25%, respectively. As of June 30, 2008, the applicable interest rate was 4.25% on the advancing term loan and 3.75% on the revolving line of credit. The advancing term loan was used to help finance the expansion project at our cement manufacturing facility.  The revolving line of credit was used to fund increases in receivables, capital improvements, increases in purchases of equity investments, and temporary operating expenses. Our board of directors has given management the authority to borrow an additional $10 million for a maximum of $50 million. No assurances can be given that we will be able to obtain this additional borrowing on favorable terms, if at all.

    Projects in the planning and design phases include improvements to our fuel handling system and installation of an overland conveyor system to improve efficiencies in moving raw materials.  The improvements to the fuel handling system are expected to be completed in early 2009 at a cost of approximately $4.0 million.  Installation of the overland conveyor system will take eighteen to twenty-four months to complete after the purchase order is issued, which is expected to occur later this year.  We anticipate capital expenditures for 2008 to be higher than 2007 levels, but we do not anticipate the need for additional bank financing other than that available under our existing revolving line of credit.   

 For several years the Company has paid a $.20 per share dividend in January, March, June and September.  Beginning with the April 2006 Board of Directors meeting, the Board elected to increase these dividends to $.21 per share, at the April 2007 Board of Directors meeting, the Board increased the dividend to $.22 per share, and at the April 2008 Board of Directors meeting, the Board increased the dividend to $.23 per share. Although dividends are declared at the Board's discretion, we project future earnings will support the continued payment of dividends at the current level.

FINANCIAL CONDITION

    Total assets as of June 30, 2008 were $175.6 million, an increase of $8.1 million since December 31, 2007.  Receivables increased approximately $8.1 million since December 31, 2007.  Such an increase is common during the first six months of the year due to the seasonality of our business (see Seasonality below). Deferred income tax asset increased $1.5 million primarily due to a reduction in deferred income tax liability resulting from the $2.3 million decrease in net unrealized holding gains related to equity investments.

    Accounts payable increased $4.2 million as of June 30, 2008 compared to December 31, 2007 primarily due to the expenses related to increased sales volume in June over December.

     Indebtedness increased $5.9 million during the first six months of 2008 primarily due to funding the increases in receivables just discussed plus increases in purchases of  equity investments and approximately $6.3 million for cash expenditures for property, plant and equipment. 

    Accrued liabilities decreased $1.6 million since December 31, 2007 primarily due to the $1.8 million decrease in cash dividends liability caused by the timing of when dividends are declared.

CAPITAL RESOURCES

    The Company regularly invests in miscellaneous equipment and facility improvements in both the Cement Business and Ready-Mixed Concrete Business.  Capital expenditures during the first six months of 2008 included expenditures to improve efficiencies in moving raw materials. We also invested in routine equipment purchases during the first half of 2008, primarily in the Ready-Mixed Concrete Business. During the first six months of 2008, cash expenditures for property, plant and equipment totaled approximately $6.3 million, excluding the amounts that are included in accounts payable. 

    The Company is heavily involved in the planning and design phases for two future capital expenditure projects in the Cement Business.  These projects include improvements to our fuel handling system and installation of an overland conveyor system to improve efficiencies in moving raw materials. The improvements to the fuel handling system are expected to be completed in early 2009 at a cost of approximately $4.0 million.  Installation of the overland conveyor system is anticipated to take eighteen to twenty-four months to complete after the purchase order is issued,  which is expected to occur later this year.  The Company also plans to invest in other miscellaneous equipment and facility improvements in both the Cement Business and Ready-Mixed Concrete Business in 2008.  It is expected that the Company's capital expenditures will approximate $14.0 million during 2008 and will be funded with a mixture of cash from operations and temporary bank loans. We do not anticipate the need for additional bank financing beyond the amount available through our existing revolving line of credit.

MARKET RISK   

    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.

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.  Increases 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 could adversely affect our operating profits.  We anticipate a significant increase in our fuel cost in 2009 as a result of the expiration of a five year coal contract at the end of 2008.  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.

ENVIRONMENTAL REGULATIONS

    Regulation of carbon dioxide emissions are currently being discussed by both state and federal legislative bodies and regulators.  As part of the chemical process involved in the production of portland cement, carbon dioxide is driven off of raw materials.  While management is studying practices and technology which may reduce or sequester carbon dioxide emissions, the current state of technology has yet to provide a solution.  The effect of regulation may increase taxes, penalties, and the cost of production, as well as require additional capital expenditures for equipment.

SEASONALITY

    Portland cement is the basic material used in the production of ready-mixed concrete that is used in highway, bridge and building construction.  These construction activities are seasonal in nature.  During winter months when the ground is frozen, groundwork preparation cannot be completed.  Cold temperatures affect concrete set-time, strength and durability, limiting its use in winter months.  Dry ground conditions are also required for construction activities to proceed.  During the summer, winds and warmer temperatures tend to dry the ground quicker creating fewer delays in construction projects.

    Variations in weather conditions from year-to-year significantly affect the demand for our products during any particular quarter; however, our Company's highest revenue and earnings historically occur in its second and third fiscal quarters, April through September.

Item 3.       Quantitative and Qualitative Disclosures about Market Risk

    The Company owns $13.1 million of equity securities, primarily of publicly traded entities, as of June 30, 2008.  The aggregate amount of securities carried at cost, for which the Company has not elected the fair value option, was $2.1 million as of June 30, 2008. The balance of these investments, which are stated at fair market value, are not hedged and are exposed to the risk of changing market prices.  The Company classifies all securities as "available-for-sale" for accounting purposes and marks them to market on the balance sheet at the end of each period unless they are securities for which the Company has not elected the fair value option.  Management estimates that its publicly traded investments will generally be consistent with trends and movements of the overall stock market excluding any unusual situations.  An immediate 10% change in the market price of our equity securities would have a $.7 million effect on comprehensive income.   The Company is not aware of any events or changes in circumstances that occurred during the first half of 2008 that had a significant adverse effect on the fair value of the investments carried at cost. 

    The Company also has $25.4 million of bank loans as of June 30, 2008.  Interest rates on the Company's advancing term loan and revolving line of credit are variable and are based on the JP Morgan Chase prime rate less .75% and lender's national prime rate less 1.25%, respectively.

Item 4.         Controls and Procedures

    The Company maintains disclosure controls and procedures (as defined in Rules 13a-5(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Company's reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Company's management, including its President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.  Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

    As of the end of the period covered by this report, an evaluation was carried out by the Company's management, including its President and Chairman of the Board of Directors and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-5(e) under the Securities Exchange Act of 1934).  Based upon that evaluation, the Company's President and Chairman of the Board of Directors and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report.

    There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2008 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART  II.   OTHER INFORMATION

Item 1.       Legal Proceedings

    The Company and Tulsa Dynaspan, Inc. ("TDI") a subsidiary of the Company, are defendants in a case brought by David Markle, Richard Evilsizer, and five other named plaintiffs, filed in the District Court of Tulsa County, Oklahoma, on December 29, 2004 and amended on January 19, 2005, January 6, 2006, August 18, 2006, and January 12, 2007. Prior to the August 18, 2006 amendment, Plaintiffs dismissed claims they had previously asserted for defamation and various business torts, derivative claims brought on behalf of the Company, and claims to ownership of an invention relating to parking garage construction. Markle and Evilsizer remain as Plaintiffs; the five other original Plaintiffs remain in the action only as counterclaim defendants. Plaintiffs seek an award of actual and exemplary damages from the Company, one of its directors and four of TDI's directors for alleged breach of fiduciary duties owed to TDI, based upon derivative and breach of contract claims. The Company has asserted a counterclaim based upon breach of contract against Markle and TDI has asserted counterclaims based upon breach of fiduciary duty, misappropriation, violations of the Computer Fraud and Abuse Act and the Oklahoma Trade Secrets Act, unjust enrichment, and various business torts against all of the original plaintiffs. Plaintiffs also seek an order from the Court that the Company purchase Plaintiffs' shares of TDI stock for fair value. On April 10, 2007, the Court heard arguments on various motions and subsequently entered the following orders: Monarch and the individual directors' motion for summary judgment dismissing all of Plaintiffs' claims was granted; Monarch's motion for summary judgment on its pre-termination competition claim against Markle was granted; TDI's motion for summary judgment against Plaintiffs for unjust enrichment and breach of fiduciary duty was granted; Markle's motion for partial summary judgment on the non-compete agreement executed by the parties was denied.  Additional hearings to establish TDI's and Monarch's damages will be necessary; all of Plaintiffs' claims have now been dismissed.  Because of the failure of certain plaintiffs to participate in a pretrial conference the proceedings are now bifurcated.  Markle and Evilsizer have filed bankruptcy.  Complaints to collect damages from Markle and Evilsizer have been filed in the Bankruptcy courts.  A hearing on actual and punitive damages against Parking Builders, GBS and ENCO was held on February 1, 2008.  On February 29, 2008, TDI was awarded $3,117,574 in actual damages and an additional $3,117,574 in punitive damages against GBS and ENCO; TDI was awarded $1,614,720 in actual damages and an additional $1,614,720 in punitive damages against Parking Builders.  No assurances can be given as to the collectability of these damage awards.  TDI has settled its claims against Martin and Bobbitt.

Item 4.       Submission of Matters to a Vote of Security Holders 

    At the annual meeting of the stockholders of The Monarch Cement Company held on April 9, 2008, the stockholders elected three Class I Directors, namely, David L. Deffner, Gayle C. McMillen, and Richard N. Nixon to serve terms expiring at the annual meeting of stockholders in 2011.  No other matters were voted upon at the annual meeting. Class II Directors, namely, Byron J. Radcliff, Michael R. Wachter, Walter H. Wulf, Jr., and Walter H. Wulf, III  and Class III Directors, namely, Jack R. Callahan, Ronald E. Callaway, Robert M. Kissick and Byron K. Radcliff, continue to serve terms expiring at the annual meetings of stockholders in 2009 and 2010, respectively.

           The following is a summary of votes cast in the election of Directors at the annual meeting:                  

Item 6.       Exhibits

31.1  Certificate of the President and Chairman of the Board pursuant to Section 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

31.2  Certificate of the Chief Financial Officer pursuant to Section 13a‑14(a)/15d‑14(a) of the Securities Exchange Act of 1934.

32.1  18 U.S.C. Section 1350 Certificate of the President and Chairman of the Board dated August 8, 2008.

32.2  18 U.S.C. Section 1350 Certificate of the Chief Financial Officer dated August 8, 2008.

S I G N A T U R E S

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

The Monarch Cement Company
                                                                                                (Registrant)

Date      August 8, 2008                                              /s/ Walter H. Wulf, Jr.             

Walter H. Wulf, Jr.
                                                                                President and
                                                                                Chairman of the Board

Date      August 8, 2008                                             /s/ Debra P. Roe                     

Debra P. Roe, CPA
                                                                                Chief Financial Officer and         
                                                                                Assistant Secretary‑Treasurer

EXHIBIT INDEX

 Exhibit
 Number                                                        Description                                  

31.1                             Certificate of the President and Chairman of the
                                            Board pursuant to Section 13a-14(a)/15d-14(a)
                                            of the Securities Exchange Act of 1934.

31.2                            Certificate of the Chief Financial Officer pursuant
                                            to Section 13a-14(a)/15d-14(a) of the
                                            Securities Exchange Act of 1934.

32.1                           18 U.S.C. Section 1350 Certificate of the President
                                            and Chairman of the Board dated August 8, 2008.

32.2                           18 U.S.C. Section 1350 Certificate of the
                                            Chief Financial Officer dated August 8, 2008.