United States Lime & Minerals
USLM
#4024
Rank
$3.18 B
Marketcap
$111.01
Share price
-0.31%
Change (1 day)
-14.01%
Change (1 year)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-4197

United States Lime & Minerals, Inc.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Texas 75-0789226
------------- ----------------
(State of incorporation) (I.R.S. Employer Identification Number)

12221 Merit Drive, Suite 500, Dallas, Texas 75251
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

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

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

Title of Each Class Name of Each Exchange on
Which Registered
------------------- ------------------------
None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.10 par value

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [X]
The aggregate market value of Common Stock held by non-affiliates as of
March 10, 1998: $13,940,263.

Number of shares of Common Stock outstanding as of March 10, 1998: 3,951,853.

DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the Registrant's
definitive Proxy Statement to be filed for its 1998 Annual Meeting of
Shareholders. Part IV incorporates certain exhibits by reference from the
Registrant's previous filings.
TABLE OF CONTENTS


<TABLE>
<S> <C>
PART I
ITEM I. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . 1
General . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business and Products . . . . . . . . . . . . . . . . . . . 1
Product Sales . . . . . . . . . . . . . . . . . . . . . . . 1
Order Backlog . . . . . . . . . . . . . . . . . . . . . . . 2
Seasonality . . . . . . . . . . . . . . . . . . . . . . . . 2
Limestone Reserves . . . . . . . . . . . . . . . . . . . . 2
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Plant and Facilities . . . . . . . . . . . . . . . . . . . 3
Employees . . . . . . . . . . . . . . . . . . . . . . . . . 3
Competition . . . . . . . . . . . . . . . . . . . . . . . . 4
Environmental Matters . . . . . . . . . . . . . . . . . . . 4
Disposition of Assets . . . . . . . . . . . . . . . . . . . 4

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

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

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


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

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

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK . . . . . . . . . . . . . . . . . . . . 11

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . 12

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . 13


PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . 13


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>




-i-
UNITED STATES LIME & MINERALS, INC.
FORM 10-K
For the Year Ended December 31, 1997

PART I



ITEM 1. BUSINESS.
---------
General. The business of United States Lime & Minerals, Inc. (the
"Company" or the "Registrant"), which was incorporated in 1950, is the
production and sale of lime and limestone products. The Company extracts
high-quality limestone from its quarries and then processes the limestone for
sale as aggregate, pulverized limestone, quicklime and hydrated lime. In
1997, these operations were conducted through three wholly-owned subsidiaries
of the Company: Arkansas Lime Company, Corson Lime Company and Texas Lime
Company. References to the Company herein include references to its
subsidiaries. The Company sold substantially all of the assets of its
subsidiary, Corson Lime Company on June 21, 1997. See "Business - Disposition
of Assets."
The Company's principal corporate office is located at 12221 Merit Drive,
Suite 500, Dallas, Texas 75251.

Business and Products. The Company extracts raw limestone and then
processes it for sale as aggregate, pulverized limestone, quicklime and
hydrated lime. Aggregate is raw limestone that has been crushed to specified
sizes. Pulverized limestone, also referred to as ground calcium carbonate, is
a dried product ground to granular and finer sizes. Quicklime is produced
when carbon dioxide is removed from limestone in a heat process called
calcination. Hydrated lime is formed in a process called hydration in which
water is added to quicklime to produce a soft powder.
Aggregate is used by the construction industry in concrete, asphalt and
road base. Pulverized limestone is used primarily in the production of
construction materials such as asphalt paving and roofing shingles, as an
additive to agriculture feeds and as a soil enhancement. Quicklime is used
primarily in the manufacturing of paper products, in sanitation and water
filtering systems, in metal processing and in soil stabilization for highway
and building construction. Hydrated lime is used primarily in municipal
sanitation and water treatment, in soil stabilization for highway and building
construction, in the production of chemicals and in the production of
construction materials such as stucco, plaster and mortar.

Product Sales. In 1997, the Company sold its lime and limestone products
primarily in the states of Arkansas, Connecticut, Delaware, Kansas, Louisiana,
Mississippi, Missouri, New Jersey, New Mexico, New York, Oklahoma,
Pennsylvania, South Carolina, Tennessee, Texas and Virginia. Sales at
Arkansas Lime Company and Texas Lime Company are made primarily by the
Company's six sales employees. Sales personnel call on potential customers
and solicit orders which are generally made on a purchase-order basis. The
Company also receives orders in response to bids that it prepares and submits
to potential customers.
Principal customers for the Company's lime and limestone products are
highway, street and parking lot contractors, chemical producers, paper
manufacturers, roofing shingle manufacturers, glass manufacturers, municipal
sanitation and water treatment facilities, poultry and cattle feed producers,
governmental agencies, steel producers and electrical utility companies.
-1-
Excluding Corson Lime Company sales, approximately 650 customers
accounted for the Company's sales of lime and limestone products during the
year ended December 31, 1997. No single customer accounted for more than 10%
of such sales. The Company is not subject to significant customer risks as
its customers are considerably diversified as to geographic location and
industrial concentration. However, given the nature of the lime and limestone
industry, the Company's profits are very sensitive to changes in volume.
Lime and limestone products are transported by rail and truck to
customers generally within a radius of 400 miles of each of the Company's
processing plants. Sales of lime and limestone products are highest during
the months of March through November.
Substantially all of the Company's sales are made within the United
States.

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

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

Limestone Reserves. The Company currently extracts limestone from two
open-pit quarries, both of which are Company-owned. The Cleburne Quarry is
located 14 miles from Cleburne, Texas; the Batesville Quarry is located near
Batesville, Arkansas. Access to each location is provided by paved roads.
Texas Lime Company operates out of the Cleburne Quarry, which is situated
upon a tract of land containing approximately 460 acres. In addition, the
Company owns approximately 2,300 acres of land adjacent to the Cleburne tract
containing known high-quality limestone reserves in a bed averaging 28 feet in
thickness, with an overburden which ranges from 0 to 50 feet. The Company
also has mineral interests in approximately 560 acres of land adjacent to the
Northwest boundary of the Company's property. The total calculated reserves
are approximately 115,000,000 tons. Assuming the present level of production
at the quarry is maintained, the Company estimates the reserves are sufficient
to sustain operations for approximately 100 years.
Arkansas Lime Company operates out of the Batesville Quarry, which is
situated on a tract of approximately 725 acres of land that contains a known
deposit of high-quality limestone. The average thickness of the high-quality
limestone deposit is approximately 70 feet, with an average overburden of 35
feet. Total calculated reserves are approximately 25,500,000 tons on this
tract of land. In 1997, the Company purchased approximately 325 additional
acres adjacent to the present quarry containing additional high-quality
limestone. Prior to the purchase, the Company conducted a study that
determined that this tract contains high-quality limestone reserves of
approximately 31,000,000 tons with an average thickness of approximately 75
feet, with an average overburden of 20 feet. The Company estimates that,
with the purchase of the additional reserves and assuming present quarry
production levels are maintained, the total reserves are sufficient to
sustain operations for approximately 100 years.

Mining. The Company extracts limestone by the open-pit method at its two
operating quarries. The open-pit method, which consists of removing the top
layer of soil, trees and other substances and then extracting the exposed
limestone, is generally less expensive than underground mining. The principal
disadvantage of the open-pit method is that operations are subject to
inclement weather. To extract limestone, the Company utilizes standard mining
-2-
equipment which is Company-owned.  After extraction, limestone is crushed,
screened and ground in the case of aggregate and pulverized limestone, or
further processed in kilns and hydrators in the case of quicklime and hydrated
lime, before shipment. The Company has no knowledge of any recent changes in
the physical quarrying conditions on any of its properties which have
materially affected its mining operations, and no such changes are
anticipated.

Plants and Facilities. The Company produces lime and limestone products
in the following plants:

The Texas plant is located adjacent to the Cleburne Quarry on a tract of
land covering approximately 10 acres. This plant is equipped with three
rotary kilns and has a daily-rated capacity of 1,200 tons of quicklime. The
plant has pulverized limestone equipment which has a capacity to produce
550,000 tons of pulverized limestone annually, depending on the product mix.
The Company is currently undertaking a major modernization and expansion
project at the Texas facility. The Texas project includes the installation of
a new stone crushing and handling system, the addition of a preheater to one
of the existing kilns, additional storage, screening and shipping capacity and
a new support building which will house a laboratory and administrative and
shop facilities. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources." In
addition to this plant, the Company owns a plant which is located near Blum,
Texas on a tract of land covering approximately 40 acres. It is equipped with
two vertical kilns and has a daily-rated capacity of 600 tons of quicklime.
The Blum plant was acquired in 1989 and its kilns have not been operated since
that time; however, the plant's storage and shipment facilities are currently
being utilized.
The Arkansas plant, situated on a tract of approximately 290 acres, is
located roughly two miles from the Batesville Quarry and is connected to the
quarry by a Company-owned railway. Utilizing six vertical kilns, this plant
has a daily-rated capacity of 300 tons of quicklime. The plant has two
grinding systems which, depending on the product mix, have the capacity to
produce 700,000 tons of pulverized limestone annually. The Company has
completed an evaluation of, and has determined to proceed wit, a planned
major modernization and expansion project at the Arkansas facility. The
Arkansas plan includes the addition of a new 1,200 ton per day rotary kiln,a
new stone crushing, handling and transport system, a new hydrator and
additional lime and ground calcium carbonate storage and loadout facilities.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources."
The Company maintains lime hydrating equipment and limestone drying
equipment at both plants. Storage facilities for lime and pulverized limestone
products at each plant consist primarily of cylindrical tanks, which are
considered by the Company to be adequate to protect its lime and limestone
products and to provide an available supply for customers' needs at the
existing volume of shipments. Equipment is maintained at each plant to load
trucks and at the Arkansas and Blum plants to load railroad cars.
The Company believes that its processing plants are adequately maintained
and insured. Much of the equipment in the plants is aging and therefore will
require future maintenance and repair. However, the Texas and Arkansas
modernization and expansion projects will improve the overall reliability of
the plants' equipment. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources"
regarding the Company's expected capital expenditures for modernizing,
expanding and re-equipping the plants.

-3-
Employees.  The Company employed, at December 31, 1997, 201 persons, 30
of whom are engaged in sales, administrative and management activities. Of
the Company's 171 production employees, 131 are covered by collective
bargaining agreements. These agreements expire as follows:
Texas facility in November 1999
Arkansas facility in December 1999

Competition. The lime and limestone industry has certain limiting
factors, including: the availability of high-quality limestone (calcium
carbonate) reserves, the ability to secure mining and operating permits for a
facility, the cost of building processing plants to create the lime and
limestone products and the transportation costs associated with delivering the
products to customers. There is not a large number of producers in the United
States as a whole, but producers tend to concentrate on known limestone
formations where competition takes place on a local basis. The industry as a
whole has expanded its customer base and, while still selling heavily to the
steel industry, also counts paper producers and road builders among its major
customers. In recent years, the environmental-related uses for lime have been
expanding, including use in flue gas desulfurization and the treatment of both
waste and potable water.
There is a continuing trend of consolidation in the lime and limestone
industry. In addition to the consolidations, and often in conjunction with
consolidations, many lime producers have undergone modernization and expansion
projects to upgrade their processing equipment in an effort to improve their
operating efficiency. The Company's current modernization and expansion
projects should allow it to continue to be competitive in the future. In
addition, the Company will continue to evaluate external opportunities for
expansion.

Environmental Matters. The Company's operations are subject to various
federal, state and local environmental laws and regulations, including the
Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act
and the Comprehensive Environmental Response, Compensation, and Liability Act,
as well as the Toxic Substances Control Act. Management does not believe that
any lack of compliance by the Company with applicable environmental laws would
have a materially adverse effect on the Company. In part in response to
requirements of environmental regulatory agencies, the Company incurred
capital expenditures of approximately $117,000 in 1997 and $200,000 in 1996 on
environmental compliance and is planning to incur approximately $100,000 in
1998 excluding major capital projects. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources." In the judgment of management, forecastable expenditure
requirements for the future are not of such dimension as to have a materially
adverse effect on the Company's financial condition, results of operations,
liquidity or competitive position. The Company's recurring costs associated
with managing and disposing of potentially hazardous substances (such as fuels
and lubricants used in operations) and maintaining pollution control equipment
amounted to approximately $80,000 in 1997 and $100,000 in 1996. The Company
has not been named as a potentially responsible party in any superfund cleanup
site.

Disposition of Assets. Effective June 21, 1997, Corson Lime Company, a
wholly owned subsidiary of the Company, ceased operations and sold
substantially all of its aggregate and lime assets for $8,231,000 in cash,
including a $376,000 note collected in October 1997. The proceeds, net of
expenses, generated by the sale were used to partially fund the Texas plant
modernization and expansion project. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 7 of Notes
to Consolidated Financial Statements for discussions regarding the
disposition.
-4-
ITEM 2.     PROPERTIES.
-----------
Reference is made to Item 1 of this Report for a description of the
properties of the Company, and such description is hereby incorporated by
reference in answer to this Item 2. As discussed in Note 2 of Notes to
Consolidated Financial Statements, plant facilities and mineral reserves are
subject to encumbrances to secure the Company's loans.



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



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
The Company did not submit any matters to a vote of security holders
during the fourth quarter of 1997.



PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
-------------------------------------------------------------
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "USLM." As of March 10, 1998, the Company had 882 stockholders of
record.
As of December 31, 1997, 500,000 shares of $5.00 par value preferred
stock were authorized, and none was issued.
The high and low sales prices for the Company's Common Stock for the
periods indicated, as well as dividends declared, were:

<TABLE>
<CAPTION>
1997 1996
--------------------------- ---------------------------
Market Price Dividends Market Price Dividends
Low High Declared Low High Declared
------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $ 6 1/4 $ 9 $0.025 $ 8 $11 3/4 $0.025
Second Quarter $ 6 5/8 $ 9 1/8 $0.025 $11 3/8 $14 3/4 $0.025
Third Quarter $ 7 1/2 $ 9 1/4 $0.025 $ 8 3/4 $13 3/4 $0.025
Fourth Quarter $ 6 5/8 $ 9 1/2 $0.025 $ 7 3/4 $ 9 1/4 $0.025
</TABLE>




-5-
ITEM 6.     SELECTED FINANCIAL DATA.
------------------------
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Operating Results
Revenues from
continuing operations $32,404 40,159 41,419 36,865 32,359
======= ======= ======= ======= =======
Net income (loss)
From continuing operations $ 3,096 a 2,602 4,260 1,916 b (441)
From discontinued operations - - - - 480
------- ------- ------- ------- -------
$ 3,096 2,602 4,260 1,916 39
======= ======= ======= ======= =======

Income (loss) per share of common stock
Basic earnings per common share:
From continuing operations $ 0.79 0.67 1.11 0.50 (0.11)
From discontinued operations - - - - 0.12
------- ------- ------- ------- -------
$ 0.79 0.67 1.11 0.50 0.01
======= ======= ======= ======= =======

Diluted earnings per common share:
From continuing operations $ 0.78 0.66 1.11 0.50 (0.11)
From discontinued operations - - - - 0.12
------- ------- ------- ------- -------
$ 0.78 0.66 1.11 0.50 0.01
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
-------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total assets $33,520 31,319 29,793 27,397 29,937
Long-term debt, excluding
current installments $ 2,167 3,238 4,381 6,225 9,622
Stockholders' equity per
outstanding share $ 6.11 5.40 4.89 3.86 3.32
Cash dividends per share $ 0.10 0.10 0.075 - -
Employees at year-end 201 318 338 313 302
</TABLE>
___________________________________
a. Includes a loss on sale of Corson Lime Company assets of $405, net of
related tax benefit ($506 gross), and the recognition of $2,300 in
previously reserved deferred tax assets.

b. Includes a gain of $372, net of related taxes ($425 gross), due to
the expiration of certain potential post-closing obligations relating
to the sale of Virginia Lime Company assets.

See "Management's Discussion and Analysis of Financial Condition and Results
of Operations," and Notes to Consolidated Financial Statements.
-6-
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
---------------------------------------------------------------


RESULTS OF OPERATIONS.
- ----------------------
The following table sets forth selected financial information of the
Company expressed as a percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Revenues 100 % 100 % 100 %

Cost of revenues
Labor and other operating expenses (73) (71) (67)
Depreciation, depletion and amortization (10) (9) (8)
------ ------ ------
Gross profit 17 20 25

Selling, general and administrative expenses (14) (11) (12)
------ ------ ------
Operating profit 3 9 13

Other (deductions) income:
Interest expense (1) (1) (2)
Other, net 2 - 1
Federal and state income tax benefit (expense) 6 (2) (2)
------ ------ ------

Net income 10 % 6 % 10 %
====== ====== ======
</TABLE>


1997 vs 1996

Revenues decreased from $40,159,000 in 1996 to $32,404,000 in 1997, a
decrease of $7,755,000 or 19.3%. This decrease was a result of a 17.9%
decrease in sales volume, due to the sale of the Corson Lime Company assets in
the second quarter of 1997 as well as a reduction in sales at the Arkansas
plant, and a 1.4% decrease in sales prices. Excluding Corson, revenues
decreased by $825,000, or 2.9%, from 1996, resulting from a 1.9% decrease in
sales volume and 1.0% decrease in sales prices. The decreased sales volume at
Arkansas was partially due to the loss of a large pulverized limestone
customer in 1996 as well as the loss of certain quicklime customers due to
an inability to meet customer demand and increased competition in the area.
The Company's gross profit was $5,419,000 for 1997 compared to $7,883,000
for 1996, a 31.3%, or $2,464,000 decrease. The decrease was the result of a
number of factors. The lower sales volume, particularly at Arkansas, reduced
the gross profit as fixed costs, including increased depreciation expense,

-7-
were absorbed by fewer units.  The increased cost of fuel, particularly
natural gas prices, impacted all three plants. Corson's continued operating
and productivity problems up to the date of sale, as well as the $506,000 loss
on the sale of its assets, also contributed to the reduction in gross profit.
Selling, general and administrative ("SG&A") expenses increased from
$4,359,000 in 1996 to $4,520,000 in 1997, a 3.7% increase. SG&A expenses
increased as a percent of revenues to 13.9% in 1997, from 10.9% in 1996.
While SG&A expenses were reduced as a result of the sale of Corson's assets,
SG&A was negatively impacted by a one-time severance payment due to a former
employee under an employment agreement and additional professional consulting
fees in 1997.
Interest expense decreased by $195,000 in 1997 from 1996, due to lower
debt outstanding and the capitalization of $85,000 in 1997 interest costs
related to the modernization and expansion project at the Texas facility.
Other, net, increased by $243,000 in 1997 from 1996. This increase is
primarily due to increased interest income resulting from increased cash
reserves, certain royalty income on stone sales from the Blum facility and
the sale of certain surplus Texas assets.
Income tax (benefit) expense was impacted by the reduction in the
deferred tax asset valuation allowance which produced a corresponding income
tax benefit of $2,300,000 recorded in the second quarter of 1997. See Note 3
of Notes to Consolidated Financial Statements.
The Company's net income for 1997 increased $494,000, or 19.0%, from
$2,602,000 ($0.67 basic earnings per share and $0.66 diluted) in 1996, to
$3,096,000 ($0.79 basic earnings per share and $0.78 diluted). This increase
is attributable principally to the 1997 recognition of $2,300,000 ($0.59 basic
earnings per share and $0.58 diluted) in previously reserved deferred tax
assets, but was partially offset by the reduction in gross profit which
includes a $405,000, net of tax benefit ($0.10 basic and diluted earnings per
share), loss on the sale of the Corson assets.



1996 vs 1995

Revenues decreased from $41,419,000 in 1995 to $40,159,000 in 1996, a
decrease of $1,260,000, or 3.0%. This decrease was a result of a 6.9%
decrease in sales volume, which was partially offset by a 3.9% increase in
sales prices. Sales volumes were down at all plants, with the largest
percentage of reductions attributed to the Arkansas and Texas plants. The
single largest reason for Arkansas' reduced sales volume was the loss of a
large pulverized limestone customer in 1996. The increase in sales prices
was attributed principally to the Texas plant.
The Company's gross profit was $7,883,000 for 1996 compared to
$10,543,000 for 1995, a 25.2% decrease. The decrease was the result of a
number of factors. The lower sales volume reduced the gross profit as fixed
costs, including greater depreciation expense, were absorbed by fewer units.
The increased cost of fuel, particularly natural gas prices, impacted all
three plants, but particularly the Corson plant. The Corson plant's continued
operating and productivity problems accounted for approximately 50% of the
reduction in gross profit. The 9% reduction in sales volume at the Arkansas
plant also contributed to the decrease in gross profit.
SG&A expenses decreased from $4,881,000 in 1995 to $4,359,000 in 1996, a
10.7% decrease. SG&A expenses declined as a percent of revenues to 10.9% in
1996, from 11.8% in 1995. The reduction in SG&A was primarily the result of
lower bonus payments, professional fees and insurance costs.

-8-
Interest expense decreased by $160,000 in 1996 from 1995, primarily due
to lower debt outstanding.
The Company's net income for 1996 decreased $1,658,000, or 38.9%, from
$4,260,000 ($1.11 basic and diluted earnings per share) in 1995, to $2,602,000
($0.67 basic earnings per share and $0.66 diluted), principally due to the
decrease in gross profit.


FINANCIAL CONDITION.
- --------------------
Liquidity and Capital Resources. The Company's financial condition is
reflected by the following key financial measurements (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Total bank debt $ 3,238 4,381 5,524
Ratio of total bank debt
to total capitalization .12 .17 .23
Ratio of total liabilities to
stockholders' equity .39 .48 .59
Working capital $ 2,421 5,439 6,156
Current ratio 1.34 1.88 2.01
</TABLE>

In 1997, cash flow from operations was $7,264,000, an increase of
$214,000, or 3.0%, from 1996. In 1997, this cash flow, in conjunction with
the proceeds of the sale of the Corson assets, fully funded the Company's
capital expenditure program and reduced the Company's bank debt by $1,143,000.
The Company has a financing agreement with a commercial bank. The
agreement, as amended and restated in December 1997, provides for a
$15,000,000 five-year secured term loan with monthly principal repayments of
$179,000 beginning no later than July 1998 and maturing in June 2003. From
January 1998 through June 1998, interest only payments are required. This
facility is secured by substantially all of the Company's property, plant and
equipment. The agreement also provides for a $4,000,000 unsecured revolving
credit facility which matures in December 1999. Both loans bear interest at
the bank's prime rate but may, at the option of the Company, be converted into
LIBOR-based loans that bear interest at LIBOR plus 1.65% for the term loan and
LIBOR plus 1.5% for the revolving credit facility. The agreement also allows
the Company to convert all or a portion of the outstanding loans to a fixed
rate loan by establishing a fixed rate with the bank or through the use of
interest rate protection agreements with the bank. Fixed interest rates will
be quoted by the bank at the time of the request and will be based upon then-
current market conditions. The terms of the agreement contain, among other
provisions, requirements for maintaining a defined net worth and certain
financial ratios. The covenants also restrict incurrance of debt, liens and
lease obligations, mergers, and consolidations and acquisitions of assets.
As part of the same amended and restated loan agreement, the Company
negotiated a $25,000,000 secured line of credit to provide temporary financing
for capital expenditures and acquisitions until such time as permanent
financing can be arranged. Any borrowings under this facility would be at the
bank's prime rate or, at the discretion of the Company, may be converted into
a LIBOR-based loan bearing interest at LIBOR plus 2%. The capital expenditure
and acquisition line of credit is available, if not extended, through
September 1998 and is subject to approval by the bank.
Capital expenditures for 1997 totaled $11,872,000 compared to $6,121,000
in 1996. Of the 1997 expenditures, approximately $6,720,000 were related to
-9-
the modernization and expansion project at the Texas facility.  Excluding
expenditures for major modernization and expansion projects, the Company
expects to spend $2,000,000 to $3,000,000 per year over the next several
years. These expenditures are considered normal recurring maintenance and re-
equipping projects at the plant facilities to improve efficiency and reduce
costs, to effect environmental improvements and to ensure that capacity is in
place to meet market demand.
In addition to the above recurring capital expenditures, the Company is
currently undertaking a major modernization and expansion project at the Texas
facility and has approved a similar project for the Arkansas facility. The
Texas project includes the installation of a new stone crushing and handling
system, the addition of a preheater to one of the existing kilns, additional
storage, screening and shipping capacity, and a new support building which
will house a laboratory and administrative and shop facilities.
The Texas improvements should allow the Company to better serve its
customers by improving both quality and service. With the improvements, the
Company expects to be in a better position to compete for customers who
currently cannot use the Company's lime in their processes. The stone
crushing system will significantly reduce the amount of fines (undersized
pebbles and dust) generated by the existing system, thereby increasing yields
while providing a more consistently sized stone for the kiln feed system which
will increase production yield and improve fuel efficiency. The new stone
handling system will significantly reduce trucking and labor costs in the
quarry, as well as improve the reliability of the feed systems to both the
kilns and the ground calcium carbonate systems. The additional storage will
improve both kiln utilization and the plant's ability to meet peak customer
demand. The storage, screening and load-out facilities will also
substantially reduce the amount of time required for the loading of bulk
quicklime trucks. The preheater addition to a current kiln along with the
improvement in the crushing system will reduce fuel consumption and will also
increase the plant's quicklime capacity by approximately 25%. These
improvements will result in lower operating costs and in a more efficient
utilization of the work force. The cost of the Texas modernization and
expansion project is expected to be approximately $22,000,000. Although
delays or changes in the cost of the project could occur due to inclement
weather, changes in the design or cost overruns, none is anticipated at this
time. This project is being financed through a combination of internally
generated funds from operations, the proceeds from the sale of the Corson
assets and the previously discussed banking facilities.
The Texas project is being constructed in phases and significant progress
has been made. The new support building has been completed and the stone
crushing and handling system should be completed by the second quarter of
1998. The storage, screening and loadout improvements as well as the
preheater should be complete by the fourth quarter of 1998. The Company has
secured all the necessary permits for construction, with the exception of the
permit for the preheater addition which is in the final stages of the approval
process. Although delays in the final approval for the construction of the
preheater could occur, none is expected.
The Arkansas improvements will be constructed in two phases. The first
phase, scheduled for completion in 1999, includes the addition of a new
1,200-ton per day rotary kiln, a new stone crushing and handling
system, and new lime and ground calcium carbonate storage and loadout
facilities. The second phase of the project includes a new hydrator, a rock
transportation system and additional lime storage facilities. The second
phase of the project is currently scheduled for completion in 2002. However,
significant increases in product sales could result in an earlier
implementation of the second phase of the plan. Kiln system design and permit
applications are currently being finalized and bid proposals have been
requested for key components of the project. The preliminary cost estimates
for the project phases are approximately $27,000,000 and $5,000,000,
respectively. The project is contingent upon satisfactory permitting from the
various regulatory agencies. The Company expects to finance this project
through a combination of internally generated funds from operations and/or
alternative sources of financing.
The Arkansas improvements should allow the Company to better serve its
customers by improving both quality and service while increasing the
production capacity of quicklime and hydrated lime. With the improvements,
-10-
the Company expects to be in a better position to compete for customers who
currently cannot use the Company's lime in their processes due to insufficient
production capacity at the plant or quality constraints. The new rotary kiln
will have lower operating costs and a greater capacity than the six shaft
kilns currently in use. In addition to increasing capacity, this kiln will
also be able to consistently produce high-quality lime for use by certain
manufacturing customers who currently do not buy lime from the Arkansas
facility. The new stone crushing system will allow the Company to increase
quarry capacity and produce aggregate products with materials that are not
suitable for the production of lime. This system will be designed
to produce the appropriate size feed for the rotary kiln and will increase
handling and transport capacity while significantly reducing labor
requirements. The new hydrator will increase capacity and produce
hydrated lime more efficiently than the current systems. The storage,
screening and load-out facilities will also substantially reduce the amount of
time required for the loading of bulk quicklime trucks and railcars. The
planned modernization and expansion project will increase both production and
shipping capacity, will lower operating costs and will allow for a more
efficient utilization of the work force.
The Company is not contractually committed to any planned capital
expenditures until actual orders are placed for equipment. As of February 28,
1998, the Company's liability for open equipment and construction orders, all
of which were related to the Texas modernization and expansion project,
totaled approximately $2,300,000. This amount, as well as other future
billings related to the Texas modernization and expansion project, will be
recorded as work is performed and billed to the Company.
As of March 17, 1998, the Company had approximately $8,140,000 in long-
term debt outstanding under the amended and restated term loan, up from the
$3,238,000 at December 31, 1997. The additional borrowings in 1998 have been
used to fund the modernization and expansion project at the Texas facility.

Environmental Matters. The Company's operations are subject to various
environmental laws and regulations. In part in response to requirements of
environmental regulatory agencies, the Company incurred capital expenditures
of approximately $117,000 in 1997 and $200,000 in 1996. In the judgment of
management, forecastable environmental expenditure requirements for the future
are not of such dimension as to have a materially adverse effect on the
Company's financial condition, results of operations, liquidity or competitive
position. See "Business--Environmental Matters."

-11-
Year 2000 Compliance.  The Company has conducted a review of its computer
systems to identify the systems that could be affected by the year 2000 issue
and is developing an implementation plan to resolve the issue. The Company
presently believes that, with modifications to existing software in
conjunction with conversion to new year 2000 compliant software, the year 2000
problem will not pose significant operational problems for the Company's
computer systems. The Company believes that the costs associated with
ensuring year 2000 compliance will not materially affect the Company's future
operating results or financial condition.



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


NOT APPLICABLE


-12-
ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
--------------------------------------------


Index to Consolidated Financial Statements.
-------------------------------------------
<TABLE>
<S> <C>
Report of Independent Auditors F1

Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1997 and 1996 F2

Consolidated Statements of Income for the Years Ended
December 31, 1997, 1996 and 1995 F4

Consolidated Statements of Stockholders' Equity for
the Years Ended December 31, 1997, 1996 and 1995 F5

Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995 F6

Notes to Consolidated Financial Statements F7
</TABLE>


-13-
REPORT OF INDEPENDENT AUDITORS





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


We have audited the consolidated balance sheets of United States Lime &
Minerals, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of United States Lime & Minerals, Inc. and subsidiaries at December 31, 1997
and 1996, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.



ERNST & YOUNG LLP


Dallas, Texas
January 30, 1998





-F1-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES




Consolidated Balance Sheets
(dollars in thousands)

<TABLE>
<CAPTION>
December 31,
----------------------
ASSETS Notes 1997 1996
------- -------- --------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,787 1,000
Trade receivables, net 1 3,624 5,152
Inventories 1 3,001 5,054
Prepaid expenses and other assets 111 434
-------- --------
Total current assets 9,523 11,640





Property, plant and equipment, at cost: 1
Land 2,764 2,338
Building and building improvements 736 2,073
Machinery and equipment 47,631 53,816
Furniture and fixtures 556 753
Automotive equipment 615 805
-------- --------
52,302 59,785
Less accumulated depreciation (30,896) (41,045)
-------- --------
Property, plant and equipment, net 21,406 18,740


Deferred tax assets, net 3 2,537 -
Other assets, net 1, 4 54 939
-------- --------

Total assets $ 33,520 31,319
======== ========
</TABLE>




See accompanying notes to consolidated financial statements






-F2-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES




Consolidated Balance Sheets (Continued)
(dollars in thousands)
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND ----------------------
STOCKHOLDERS' EQUITY Notes 1997 1996
------- -------- --------
<S> <C> <C> <C>
Current liabilities:
Current installments of long-term debt 2 $ 1,071 1,143
Accounts payable - trade 4,437 3,117
Accrued expenses:
Salaries and wages 447 238
Insurance costs 461 228
Other expenses 686 1,475
-------- --------
Total current liabilities 7,102 6,201
Long-term debt, excluding current installments 2 2,167 3,238
Other liabilities 4 101 714
-------- --------
Total liabilities 9,370 10,153


Commitments and contingencies 6 - -


Stockholders' equity: 2, 4
Preferred stock, $5 par value;
authorized 500,000 shares; none issued - -
Common stock, $0.10 par value; authorized
15,000,000 shares; issued 5,294,065 shares 529 529
Additional paid-in capital 15,135 15,311
Retained earnings 22,729 19,888
Less treasury stock at cost; 1,342,212 shares
and 1,372,212 shares of common stock (14,243) (14,562)
-------- --------
Total stockholders' equity 24,150 21,166
-------- --------
Total liabilities and stockholders' equity $ 33,520 31,319
======== ========
</TABLE>




See accompanying notes to consolidated financial statements






-F3-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES




Consolidated Statements of Income
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
Notes 1997 1996 1995
------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 32,404 40,159 41,419
Cost of revenues:
Labor and other operating expenses 23,548 28,684 27,679
Depreciation, depletion and amortization 3,437 3,592 3,197
-------- -------- --------
26,985 32,276 30,876
-------- -------- --------
Gross profit 5,419 7,883 10,543


Selling, general and administrative expenses 4,520 4,359 4,881
-------- -------- --------
Operating profit 899 3,524 5,662


Other deductions (income):
Interest expense 2 368 563 723
Loss (gain) on sale of assets, net 14 (21) (127)
Other, net (477) (234) (216)
-------- -------- --------
(95) 308 380
-------- -------- --------
Income before taxes 994 3,216 5,282

Income tax (benefit) expense, net 3 (2,102) 614 1,022
-------- -------- --------
Net income $ 3,096 2,602 4,260
======== ======== ========


Income per share of common stock: 1, 8
Basic earnings per common share $ 0.79 0.67 1.11
======== ======== ========
Diluted earnings per common share $ 0.78 0.66 1.11
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements






-F4-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity
(dollars in thousands)


Years Ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Common Stock
---------------- Addt'l
Shares Paid-In Retained Treasury
Outstanding Amt. Capital Earnings Stock Total
----------- ---- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1995 3,836,063 $529 15,848 13,897 (15,472) 14,802

Common stock dividends - - - (286) - (286)

Adjustments to reflect minimum
pension liability (Note 4) - - - (27) - (27)

Net income - - - 4,260 - 4,260
--------- ---- ------- -------- -------- -------
Balances at December 31, 1995 3,836,063 $529 15,848 17,844 (15,472) 18,749

Stock options exercised 85,790 - (537) - 910 373

Common stock dividends - - - (389) - (389)

Adjustments to reflect minimum
pension liability (Note 4) - - - (169) - (169)

Net income - - - 2,602 - 2,602
--------- ---- ------- -------- -------- -------
Balances at December 31, 1996 3,921,853 $529 15,311 19,888 (14,562) 21,166

Stock options exercised 30,000 - (176) - 319 143

Common stock dividends - - - (394) - (394)

Adjustments to reflect minimum
pension liability (Note 4) - - - 139 - 139

Net income - - - 3,096 - 3,096
--------- ---- ------- -------- -------- -------
Balances at December 31, 1997 3,951,853 $529 15,135 22,729 (14,243) 24,150
========= ==== ======= ======== ======== =======
</TABLE>

See accompanying notes to consolidated financial statements





-F5-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
(dollars in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,096 2,602 4,260
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation, depletion and amortization 3,503 3,757 3,354
Amortization of financing costs 50 101 139
Increase in deferred income tax benefit (2,537) - -
Loss (gain) on sale of assets 14 (21) (127)
Loss on sale of Corson Lime Company assets 506 - -
Changes in assets and liabilities:
(Increase)/decrease in trade receivables 1,528 357 493
(Increase)/decrease in inventories 332 278 (562)
(Increase)/decrease in prepaid expenses (19) (200) 86
(Increase)/decrease in other assets 292 93 34
Increase/(decrease) in accounts payable
and accrued expenses 973 121 408
Increase/(decrease) in other liabilities (474) (38) (142)
-------- -------- --------
Total adjustments 4,168 4,448 3,683
-------- -------- --------
Net cash provided by operations $ 7,264 7,050 7,943

CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property, plant and equipment $(11,872) (6,121) (4,851)
Proceeds from sale of Corson Lime Company
assets, net of expenses 7,745 - -
Proceeds from sales of
property, plant and equipment 44 69 176
-------- -------- --------
Net cash used in investing activities $ (4,083) (6,052) (4,675)

CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from exercise of stock options $ 143 373 -
Payment of common stock dividends (394) (389) (286)
Proceeds from borrowings 2,900 800 2,200
Repayments of debt (4,043) (1,943) (4,044)
-------- -------- --------
Net cash used in financing activities $ (1,394) (1,159) (2,130)
-------- -------- --------
Net increase (decrease) in cash and
cash equivalents 1,787 (161) 1,138
Cash and cash equivalents at beginning of period 1,000 1,161 23
-------- -------- --------
Cash and cash equivalents at end of period $ 2,787 1,000 1,161
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements

-F6-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

Years Ended December 31, 1997, 1996 and 1995


(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Organization
The Company is a manufacturer of lime and limestone products
supplying primarily the steel, paper, agriculture, municipal
sanitation and water treatment and construction industries. The
Company is headquartered in Dallas, Texas and operates lime and
aggregate plants in Arkansas and Texas through its wholly owned
subsidiaries, Arkansas Lime Company and Texas Lime Company,
respectively. Through June 21, 1997, the Company also operated in
Pennsylvania through a wholly owned subsidiary, Corson Lime Company
(see Note 7 of Notes to Consolidated Financial Statements).

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

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

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

Supplemental cash flow information is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
Cash paid during the period for: ---- ---- ----
<S> <C> <C> <C>
Interest (net of amounts capitalized) $ 321 450 597
==== ==== ====
Income taxes $ 654 902 789
==== ==== ====
</TABLE>
(e) Trade Receivables
Trade receivables are presented net of the related allowance for
doubtful accounts, which totaled $80 and $71 at December 31, 1997 and
1996, respectively.





-F7-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)


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

A summary of inventories is as follows:
<TABLE>
<CAPTION>
December 31,
------------------
1997 1996
Lime and limestone inventories: ------- -------
<S> <C> <C>
Raw materials $ 624 860
Finished goods 844 2,190
------- -------
1,468 3,050
Service parts inventories 1,533 2,004
------- -------
$ 3,001 5,054
======= =======
</TABLE>
(g) Property, Plant and Equipment
For constructed assets, the capitalized cost includes the cash price
paid by the Company for labor and materials plus interest and project
management costs that are directly related to the constructed assets.
Total interest costs of $85 were capitalized for the year ended
December 31, 1997. No interest was capitalized in 1996 or 1995.
Depreciation of property, plant and equipment is being provided for
by the straight-line and declining-balance methods over estimated
useful lives as follows:

Buildings and building improvements 3 - 40 years
Machinery and equipment 3 - 20 years
Furniture and fixtures 3 - 10 years
Automotive equipment 3 - 8 years

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

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

-F8-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

(h) Other Assets
Other assets consist of the following:
<TABLE>
<CAPTION>
December 31,
--------------
1997 1996
---- ----
<S> <C> <C>
Assets held for sale $ - 33
Deferred stripping costs - 717
Intangible asset, pension - 138
Deferred financing costs 54 51
---- ----
$ 54 939
==== ====
</TABLE>
It is the Company's policy to make available for sale assets
considered excess and no longer necessary for operations. The
carrying values of such assets are periodically reviewed and adjusted
downward to market, when appropriate.

The deferred stripping costs, all of which were related to Corson
Lime Company ("Corson"), were amortized by the unit-of-production
method based on the estimated recoverable reserves in the underlying
area. The deferred stripping costs were written-off in 1997 in
conjunction with the sale of the Corson assets. See Note 7 of Notes
to Consolidated Financial Statements.

Deferred financing costs are expensed over the shorter of the life of
the debt or expected life of the loan using the straight-line method.

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

(j) Stock Options
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), in
accounting for its employee stock options. Under APB 25, if the
exercise price of an employee's stock options equals or exceeds the
market price of the underlying stock on the date of grant, no
compensation expense is recognized. The Company adopted Statement
of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), in 1996. SFAS 123 requires
companies that elect to continue applying the provisions of APB 25
to provide pro forma disclosures for employee stock compensation
awards as if the fair-value-based method defined in SFAS 123 had
been applied. See Note 5 of Notes to Consolidated Financial
Statements.
-F9-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

(k) Earnings Per Share of Common Stock
Effective December 31, 1997, Statement of Financial Accounting
Standards No. 128, "Earnings per Share" ("SFAS 128"), was implemented
by the Company. SFAS 128 requires the presentation of basic and
diluted earnings per share for all periods presented. As such,
earnings per share for prior years have been recalculated and are
presented in accordance with the guidelines of SFAS 128. See Note 8
of Note to Consolidated Financial Statements.

(l) Reclassifications
Certain previously reported amounts have been reclassified to conform
with the current presentation.



(2) Long-Term Debt
--------------
The Company has a financing agreement with a commercial bank. The
agreement, as amended and restated in December 1997, provides for a
$15,000 five-year secured term loan with monthly principal repayments of
$179 beginning no later than July 1998 and maturing in June 2003. From
January 1998 through June 1998, interest only payments are required.
This facility is secured by substantially all of the Company's property,
plant and equipment. The agreement also provides for a $4,000 unsecured
revolving credit facility which matures in December 1999. Both loans
bear interest at the bank's prime rate but may, at the option of the
Company, be converted into LIBOR-based loans that bear interest at LIBOR
plus 1.65% for the term loan and LIBOR plus 1.5% for the revolving credit
facility. The agreement also allows the Company to convert all or a
portion of the outstanding loans to a fixed rate loan by establishing a
fixed rate with the bank or through the use of interest rate protection
agreements with the bank. Fixed interest rates will be quoted by the
bank at the time of the request and will be based upon then-current
market conditions. The terms of the agreement contain, among other
provisions, requirements for maintaining a defined net worth and certain
financial ratios. The covenants also restrict incurrance of debt, liens
and lease obligations, mergers, and consolidations and acquisitions of
assets.

As part of the same amended and restated agreement, the Company
negotiated a $25,000 secured line of credit to provide temporary
financing for capital expenditures and acquisitions until such time as
permanent financing can be arranged. Any borrowings under this facility
would be at the bank's prime rate or, at the discretion of the Company,
may be converted into a LIBOR-based loan bearing interest at LIBOR plus
2%. The capital expenditure and acquisition line of credit is available,
if not extended, through September 1998 and is subject to approval by the
bank.




-F10-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)


A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
December 31,
-----------------
1997 1996
------- -------
<S> <C> <C>
Term loan $ 3,238 4,381
Revolving credit facility - -
------- -------
Subtotal 3,238 4,381
Less current installments 1,071 1,143
------- -------
Long-term debt, excluding current installments $ 2,167 3,238
======= =======
</TABLE>

Amounts payable on the $3,238 of long-term debt outstanding as of
December 31, 1997 to be paid in 1998 and thereafter are: 1998, $1,071;
1999, $2,143; 2000, $24. Additional amounts the Company will draw under
the amended and restated loan agreement will be paid out in accordance
with the description above and are not included in this payment schedule.

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



(3) Income Taxes
------------
Income tax (benefit) expense for the years ended December 31, 1997, 1996
and 1995 was as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Current income tax expense $ 435 614 1,022
Deferred income tax benefit (237) - -
------- ------- -------
Income tax expense 198 614 1,022
Recognition of previously reserved
deferred tax assets (2,300) - -
------- ------- -------
Income tax (benefit) expense, net $ (2,102) 614 1,022
======= ======= =======
</TABLE>


-F11-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

A reconciliation of income taxes computed at the federal statutory rate
to income tax (benefit) expense for the years ended December 31, 1997,
1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------------- -------------- ---------------
Percent Percent Percent
of pretax of pretax of pretax
Amount income Amount income Amount income
------ ------- ------ ------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Income taxes computed at
the federal statutory rate $ 338 34.0% 1,093 34.0% 1,796 34.0%
Increase (reductions) in
taxes resulting from:
Recognition of previously
reserved deferred
tax assets (2,300) (231.4) - - - -
General business credit
carryforwards - - (162) (5.0) (248) (4.6)
Statutory depletion in
excess of cost depletion (431) (43.4) (415) (12.9) (612) (11.6)
State income taxes, net of
federal income tax benefit 191 19.2 131 4.0 176 3.3
Other 100 10.1 (33) (1.0) (90) (1.7)
------ ------- ------ ------- ------ -------
Income tax (benefit)
expense, net $(2,102) (211.5)% 614 19.1% 1,022 19.4%
======= ======= ====== ======= ====== =======
</TABLE>

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

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

As a result of the sale of the Corson assets (see Note 7 of Notes to
Consolidated Financial Statements), the Company reviewed the deferred tax
assets and concluded that the uncertainties as to their realization had
been favorably resolved, in that the net operating loss carryforwards and


-F12-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

the general business credit carryforwards are expected to be fully
utilized. The Company's future taxable income, enhanced by the sale of
the Corson assets, indicates future utilization of the alternative
minimum tax credit carryforwards in the upcoming years. The post-Corson
sale assessment as to the ultimate realization of the deferred tax assets
indicates that it is more likely than not that the deferred tax assets
will be realized.

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

At December 31, 1997, the Company had deferred tax liabilities of $629
and deferred tax assets of $3,166. The principal temporary difference
related to the deferred tax liabilities was depreciation ($344). The
principal temporary differences related to the deferred tax assets were
the tax benefit of net operating loss ("NOL") carryforwards ($279) and
alternative minimum tax credit carryforwards ($2,777).

At December 31, 1996, the Company had deferred tax liabilities of $555,
deferred tax assets of $3,657 and a valuation allowance of $3,102. The
principal temporary difference related to the deferred tax liabilities
was depreciation ($555). The principal temporary differences related
to the deferred tax assets were the tax benefit of NOL carryforwards
($109) and alternative minimum tax credit carryforwards ($2,593).

Included in deferred tax assets were the tax benefit of NOL carryforwards
for tax purposes of $279, which, if unused, will expire from 2008 through
2012. Also included were general business credits of $55 that are
available to reduce the Company's federal income tax, which, if unused,
expire in 2001.


(4) Employee Retirement Plans
-------------------------
The Company has a noncontributory defined benefit pension plan covering
substantially all union employees previously employed by its wholly-owned
subsidiary, Corson. Benefits for the Corson Lime Union Pension Plan (the
"Corson Plan") are based on certain multiples of years of service. In
June 1997, the Company sold substantially all of the assets of Corson to
an unrelated third party. In connection with the sale of the assets, the
Board of Directors resolved that all active participants in the Corson
Plan as of July 31, 1997 shall be fully vested and that no employee shall
be admitted to the Corson Plan after July 31, 1997. The Board of
Directors further resolved that all benefit accruals under the Corson
Plan shall cease as of July 31, 1997. There is no material impact on the
net assets of the Corson Plan as of December 31, 1997 as a result of the
freezing of the Plan.

In conjunction with the freezing of the Corson Plan, the Company
determined that it was in its best interest to fully fund the Corson Plan
-F13-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

so as to minimize any future impact on the Company's results of
operations. The 1997 contributions were intended to provide for all
benefits earned for the participants' vested benefits under the Corson
Plan. The Company funded pension costs of $607 for 1997, $162 for 1996
and $127 for 1995.

A summary of the funding status of the Corson Plan and the amounts
recognized in the consolidated balance sheets is as follows:
<TABLE>
<CAPTION>
December 31,
----------------
1997 1996
------- -------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation:
Vested $ 1,480 1,417
Non-vested - 13
------- -------
Total $ 1,480 1,430
======= =======
Projected benefit obligation $(1,480) (1,430)
Plan assets at fair value, primarily listed
securities and short-term investments 1,488 776
------- -------
Projected benefit obligation in excess of plan assets - (654)
Plan assets in excess of projected benefit obligation 8 -
Unrecognized net loss from past experience
different from that assumed 345 426
Unrecognized net obligation at transition, being
recognized over 15 years - 8
Prior service cost not yet recognized in net
periodic pension cost - 131
Adjustments to recognize minimum liability (353) (565)
------- -------
Liability recognized in the consolidated balance sheets $ - (654)
======= =======
</TABLE>
A summary of the components of net periodic pension expense for the
Corson Plan follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 21 40 41
Interest cost on projected benefit obligations 116 108 100
Actual return on plan assets (168) 117 (32)
Liability deferred for later recognition, net 64 (186) (33)
Amortization of unrecognized net liability 11 11 10
Amortization of unrecognized prior service cost 13 25 23
------ ------ ------
Net periodic pension expense $ 57 115 109
====== ====== ======
Significant assumptions used in determination of
pension expense consist of the following:
Discount rate 8% 8% 8%
Long-term rate of return on plan assets 9% 9% 9%
</TABLE>
-F14-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

The Company also has a contributory retirement (401(k)) savings plan for
nonunion employees. The Company contributions to the plan were $46
during 1997, $61 during 1996 and $58 during 1995. The Company has a
contributory retirement (401(k)) savings plan for union employees of
Texas Lime Company. The Company contributions to this plan were $13 in
1997, $14 in 1996 and $12 in 1995.


In December 1986, the Company purchased 1,550,000 shares of its
outstanding common stock, accounted for as treasury stock in the
consolidated balance sheets, for $10.50 per share. Subsequent to that
purchase, 300,000 shares, after stock split, were sold to the Employee
Stock Ownership Plan ("ESOP") for $8.20 per share. The ESOP covers
substantially all full-time nonunion employees and is designed to invest
primarily in the Company's common stock. Contributions to the ESOP are
currently made at the option of the Company. The Company did not make a
contribution during 1997, 1996 or 1995.


(5) Stock Option Plan
-----------------
The Company has a stock option plan under which options for shares of
common stock may be granted to key employees. The options expire ten
years from the date of grant and generally become exercisable after the
expiration of one year from the grant date. As of December 31, 1997,
70,000 shares were available for future grant under this plan.

A summary of the Company's stock option activity and related information
for the years ended December 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 252,210 $6.83 355,000 $6.34 215,000 $4.77
Granted - - - - 160,000 8.25
Exercised (30,000) 4.75 (92,790) 4.80 - -
Forfeited (35,000) 8.25 (10,000) 8.25 (20,000) 4.75
------- ----- ------- ----- ------- -----
Outstanding at end of year 187,210 6.90 252,210 6.83 355,000 6.34
======= ===== ======= ===== ======= =====
Exercisable at end of year 187,210 6.90 252,210 6.83 195,000 4.78
======= ===== ======= ===== ======= =====
Weighted average fair value of
options granted during the year $ - $ - $2.15
===== ===== =====
Weighted average remaining
contractual life in years 7.12 8.13
===== =====
</TABLE>
-F15-
SFAS 123 requires the disclosure of pro forma net income and income per
share of common stock information computed as if the Company had
accounted for its employee stock options granted subsequent to December
31, 1994 under the fair-value-based method set forth in SFAS 123. The
fair value for these options was estimated at the date of grant using the
Black-Scholes option valuation model with the following weighted average
assumptions for the 1995 grant: a risk-free interest rate of 6%; a
dividend yield of 2%; and a volatility factor of 0.34. In addition, the
fair value of these options was estimated based on an expected life of
three years.

The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions, including
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options. In addition, because SFAS
123 is applicable only to options granted subsequent to December 31,
1994, the pro forma information does not reflect the pro forma effect of
all previous stock option grants of the Company, and thus the pro forma
information is not necessarily indicative of future amounts.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the expected life of the options.

The Company's pro forma information follows:

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Pro forma net income $ 3,035 2,495 4,246
Pro forma earnings per share:
Basic earnings per share $ 0.77 0.64 1.11
Diluted earnings per share $ 0.77 0.63 1.10
</TABLE>


(6) Commitments and Contingencies
-----------------------------
The Company leases some of the equipment used in its operations.
Generally, the leases are for periods varying from one to five years and
are renewable at the option of the Company. Total rent expense was $280
for 1997, $75 for 1996 and $232 for 1995. As of December 31, 1997,
future minimum payments under noncancelable operating leases are as
follows: 1998, $75; and 1999, $36.

The Company has placed purchase orders for certain pieces of constructed
equipment related to the Texas plant's modernization and expansion
project. Under the terms of the construction agreements, the Company
receives periodic billings for work performed to date. As of December
31, 1997, approximately $6,700 of billings related to the Texas project
had been received and paid by the Company. As of December 31, 1997, the
Company's liability for open equipment and construction orders, all of
which were related to the Texas modernization and expansion project,
-F16-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)

totaled approximately $2,500. This amount, as well as other future
billings related to the Texas and Arkansas modernization and expansion
project, will be recorded as work is performed and billed to the Company.

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



(7) Sale of Corson Lime Company Assets
----------------------------------
Effective June 21, 1997, Corson, a wholly owned subsidiary of the
Company, sold substantially all of its aggregate and lime assets for
$8,231 in cash, including a $376 note collected in October 1997. A
portion of the proceeds from the sale was used to pay down the
outstanding balance under the Company's revolving credit facility of
$2,900. The remainder of the proceeds was used to partially fund the
Texas plant's modernization and expansion project. The sale resulted in
a loss of $506 ($405 net of tax benefit), which is included in labor and
other operating expenses in the accompanying consolidated statements of
operations.



(8) Earnings Per Share
------------------
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1997 1996 1995
Numerator: --------- --------- ---------
<S> <C> <C> <C>
Net income for basic and diluted
earnings per common share $ 3,096 2,602 4,260
Denominator:
Denominator for basic earnings per
common share - weighted-average shares 3,929,579 3,890,646 3,836,063
Effect of dilutive securities:
Employee stock options 15,928 55,071 10,966
--------- --------- ---------
Denominator for diluted earnings per
common share - adjusted weighted-average
shares and assumed conversions 3,945,507 3,945,717 3,847,029
========= ========= =========
Basic earnings per common share $ 0.79 0.67 1.11
========= ========= =========
Diluted earnings per common share $ 0.78 0.66 1.11
========= ========= =========
</TABLE>

-F17-
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(dollars in thousands, except per share amounts)


(9) Summary of Quarterly Financial Data (unaudited)
-----------------------------------------------
<TABLE>
<CAPTION>
March 31, June 30, Sept 30, Dec 31,
1997 1997 1997 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 7,808 10,350 7,725 6,521
-------- -------- -------- --------
Gross profit 595 1,118 2,521 1,185
-------- -------- -------- --------
Net income (488) 2,176 1,321 87
======== ======== ======== ========
Net income per common share:
Basic earnings per share $ (0.12) 0.55 0.34 0.02
======== ======== ======== ========
Diluted earnings per share $ (0.12) 0.55 0.33 0.02
======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
March 31, June 30, Sept 30, Dec 31,
1996 1996 1996 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 8,523 11,583 10,452 9,601
-------- -------- -------- --------
Gross profit 1,810 3,063 1,890 1,120
-------- -------- -------- --------
Net income 503 1,471 571 57
======== ======== ======== ========
Net income per common share:
Basic earnings per share $ 0.13 0.38 0.15 0.01
======== ======== ======== ========
Diluted earnings per share $ 0.13 0.37 0.14 0.01
======== ======== ======== ========
</TABLE>


-F18-
ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
---------------------------------------------------------------

NONE



PART III

The information required in response to Items 10, 11, 12 and 13 is hereby
incorporated by reference to the information under the captions "Election of
Directors", "Executive Officers of the Company Who Are Not Also Directors",
"Executive Compensation", "Voting Securities and Principal Shareholder" and
"Shareholdings of Company Directors and Executive Officers" in the definitive
Proxy Statement for the Company's 1998 Annual Meeting of Shareholders. The
Company anticipates that it will file the definitive Proxy Statement with the
Securities and Exchange Commission on or before April 30, 1998.



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
----------------------------------------------------------------
(a) 1. The following financial statements are included in Item 8:
Report of Independent Auditors
Consolidated Financial Statements:
Consolidated Balance Sheets as of December, 31, 1997 and 1996;
Consolidated Statements of Income for the Years Ended December
31, 1997, 1996, and 1995;
Consolidated Statements of Stockholders' Equity for the Years
Ended December, 31, 1997, 1996 and 1995;
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995; and
Notes to Consolidated Financial Statements.

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


-13-
3.  The following documents are filed with or incorporated by
reference into this Report:

3(a) Articles of Amendment to the Articles of Incorporation of
Scottish Heritable, Inc. dated January 25th, 1994
(incorporated by reference to Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, File Number 0-4197).
3(b) Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, File number 0-4197).
3(c) Composite Copy of Bylaws of the Company, as currently in
effect (incorporated by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, File Number 0-4197).
10(a) United States Lime & Minerals, Inc. Employee Stock
Ownership Plan, as restated and amended effective August 1,
1989 (incorporated by reference to Exhibit 10 (b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, File Number 0-4197).
10(b) Amendment No. Two to United States Lime & Minerals, Inc.
Employee Stock Ownership Plan effective August 1, 1996
(incorporated by reference to Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, File Number 0-4197).
10(c) United States Lime & Minerals, Inc. 401(k) Profit Sharing
Plan effective August 1, 1983, as amended and restated
effective January 1, 1997 (incorporated by reference to
Exhibit 10(c) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, File Number
0-4197).
10(d) Texas Lime Company Bargaining Unit 401(k) Plan effective as
of January 1, 1992 (incorporated by reference to Exhibit
19(f) to the Company's Quarterly Report on Form 10-Q for
the quarter ended June, 30, 1992, File Number 0-4197).
10(e) Executive Retention Agreement dated as of June 10, 1992
between the Company and Timothy W. Byrne (incorporated by
reference to Exhibit 19(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1992,
File Number 0-4197).
10(f) Employment Agreement between the Company and Timothy W.
Byrne (incorporated by reference to Exhibit 19(c) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992, File Number 0-4197).
10(g) United States Lime & Minerals, Inc. 1992 Stock Option Plan
(incorporated by reference to Exhibit A to the Company's
definitive Proxy Statement for its 1992 Annual Meeting of
Shareholders held on June 9, 1992, File Number 0-4197).
10(h) Employment Agreement dated as of September 27, 1993 between
the Company and Robert F. Kizer (incorporated by reference
to Exhibit 10(a) to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1994, File
Number 0-4197).



-14-
10(i) Consulting Agreement dated April 18, 1996 between the
Company and Wallace G. Irmscher (incorporated by reference
to Exhibit 10(t) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996,
File Number 0-4197).
10(j) Amendment to the Texas Lime Company Bargaining Unit 401(k)
Plan dated January 1, 1992, effective November 9, 1997.
10(k) Asset Purchase Agreement among Corson Lime Company, United
States Lime & Minerals, Inc., and Highway Materials, Inc.,
dated as of April 22, 1997 (incorporated by reference to
Exhibit 2 to the Company's Current Report on Form 8-K dated
June 21, 1997, File Number 0-4197).
10(l) Amended and Restated Loan and Security Agreement dated
December 30, 1997 among United States Lime & Minerals,
Inc., Arkansas Lime Company and Texas Lime Company and
CoreStates Bank, N.A.
10(m) Arkansas Lime Company Bargaining Unit 401(k) Plan effective
as of January 1, 1998.
10(n) Mutual Release Agreement dated as of February 27, 1998
between the Company and Robert F. Kizer.
10(o) Employment Agreement dated as of April 17, 1997 between
the Company and Johnney G. Bowers.
21 Subsidiaries of the Company.
23 Consent of Independent Auditors
27 Financial Data Schedule.

_______________________________

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

(b) The Company did not file any Current Reports on Form 8-K during the
fourth quarter of 1997.

-15-
SIGNATURES

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

UNITED STATES LIME & MINERALS, INC.

Date: March 20, 1998 By: \s\ Timothy W. Byrne
-----------------------------------
Timothy W. Byrne, President and
Chief Executive Officer


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

Date: March 20, 1998 By: \s\ Timothy W. Byrne
-----------------------------------
Timothy W. Byrne, President, Chief
Executive Officer, Chief Financial
Officer and Director
(Principal Executive and Financial
Officer)

Date: March 20, 1998 By: \s\ Larry T. Ohms
-----------------------------------
Larry T. Ohms, Corporate Controller
and Assistant Treasurer
(Principal Accounting Officer)

Date: March 20, 1998 By: \s\ Edward A. Odishaw
-----------------------------------
Edward A. Odishaw, Director and
Chairman of the Board

Date: March 20, 1998 By: \s\ Antoine M. Doumet
-----------------------------------
Antoine M. Doumet, Director and
Vice Chairman of the Board

Date: March 20, 1998 By: \s\ John J. Brown
-----------------------------------
John J. Brown, Director


Date: March 20, 1998 By: \s\ Wallace G. Irmscher
-----------------------------------
Wallace G. Irmscher, Director




-16-
UNITED STATES LIME & MINERALS, INC.

Annual Report on Form 10-K
Index to Exhibits

Certain exhibits to this Annual Report on Form 10-K have been
incorporated by reference. For the list of these exhibits see Item 14 hereof.

The following exhibits are being filed herewith:

Exhibit No. Exhibit
---------- ---------------------------------------------------------------
10(j) Amendment to the Texas Lime Company Bargaining Unit 401(k) Plan
dated January 1, 1992, effective November 9, 1997.

10(l) Amended and Restated Loan and Security Agreement dated December
30, 1997 among United States Lime & Minerals, Inc., Arkansas
Lime Company and Texas Lime Company and CoreStates Bank, N.A.

10(m) Arkansas Lime Company Bargaining Unit 401(k) Plan effective as
of January 1, 1998.

10(n) Mutual Release Agreement dated as of February 27, 1998 between
the Company and Robert F. Kizer.

10(o) Employment Agreement dated as of April 17, 1997 between the
Company and Johnney G. Bowers.

21 Subsidiaries of the Company.

23 Consent of Independent Auditors.

27 Financial Data Schedule.