<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1995 or
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[_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _________________ to_________________________
Commission file number 0-16125
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FASTENAL COMPANY
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(Exact name of registrant as specified in its charter)
Minnesota 41-0948415
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Theurer Blvd., Winona MN 55987
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(Address of principal executive offices) (Zip Code)
(507) 454-5374
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
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 _________
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
Class Outstanding at October 17, 1995
- ---------------------------- -------------------------------
Common stock, $.01 par value 37,938,688
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FASTENAL COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I Financial Information
Consolidated Balance Sheets - September 30, 1995 and December 31, 1994 1
Consolidated Statements of Earnings -nine months and three months
ended September 30, 1995 and 1994 2
Consolidated Statements of Cash Flows - nine months ended
September 30, 1995 and 1994 3
Notes to financial statements 4
Management's discussion and analysis of financial
condition and results of operations 5
Part II Other Information
Item 6 Exhibits and reports on Form 8-K 6
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited) *
September 30, December 31,
Assets 1995 1994
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,575,000 3,133,000
Trade accounts receivable, net of allowance
for doubtful accounts of $420,000 and $300,000
as of September 30, 1995 and December 31,
1994, respectfully 33,235,000 23,606,000
Inventories 37,049,000 30,911,000
Deferred income tax benefit 729,000 729,000
Other current assets 1,229,000 1,108,000
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Total current assets 74,817,000 59,487,000
Marketable securities 1,170,000 5,026,000
Property and equipment, less accumulated
depreciation 24,955,000 16,988,000
Other assets, net 323,000 294,000
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Total assets $101,265,000 81,795,000
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Liabilities and Stockholders' Equity
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Current liabilities:
Accounts payable $ 7,023,000 7,814,000
Accrued expenses 5,324,000 4,146,000
Income taxes payable 1,760,000 2,186,000
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Total current liabilities 14,107,000 14,146,000
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Stockholders' equity:
Preferred stock of $.01 par value per share.
Authorized 5,000,000 shares; none issued 0 0
Common stock of $.01 par value per share.
Authorized 50,000,000 shares; issued and
outstanding 37,938,688 shares 379,000 379,000
Additional paid-in capital 4,424,000 4,424,000
Retained earnings 82,345,000 62,914,000
Translation loss (25,000) (11,000)
Unrealized holding gains (losses) on marketable
securities 35,000 (57,000)
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Total stockholders' equity 87,158,000 67,649,000
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Total liabilities and stockholders' equity $101,265,000 81,795,000
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</TABLE>
The accompanying notes are an integral part of the financial statements.
*From audited financial statements.
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<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Net sales $164,559,000 116,878,000 57,993,000 43,508,000
Cost of sales 77,054,000 54,962,000 26,972,000 20,514,000
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Gross profit 87,505,000 61,916,000 31,021,000 22,994,000
Operating and administrative
expenses 54,105,000 40,095,000 18,725,000 14,490,000
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Operating income 33,400,000 21,821,000 12,296,000 8,504,000
Other income (expense):
Interest income 124,000 151,000 21,000 61,000
Interest expense (68,000) 0 (22,000) 0
Gain on disposal of
property and equipment 553,000 146,000 157,000 94,000
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Total other income 609,000 297,000 156,000 155,000
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Earnings before
income taxes 34,009,000 22,118,000 12,452,000 8,659,000
Income tax expense 13,819,000 8,960,000 5,066,000 3,505,000
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Net earnings $ 20,190,000 13,158,000 7,386,000 5,154,000
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Earnings per share $ .53 .35 .19 .14
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Weighted average shares
outstanding 37,938,688 37,938,688 37,938,688 37,938,688
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 20,190,000 13,158,000
Adjustments to reconcile net earnings to net cash provided
by (used for) operating activities:
Depreciation of property and equipment 3,900,000 2,495,000
Gain on disposal of property and equipment (553,000) (146,000)
Amortization of premium on marketable securities 15,000 25,000
Changes in operating assets and liabilities:
Trade accounts receivable (9,629,000) (8,061,000)
Inventories (6,138,000) (3,438,000)
Other current assets (121,000) (89,000)
Accounts payable (791,000) 1,155,000
Accrued expenses 1,179,000 1,665,000
Income taxes payable (427,000) 1,182,000
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Net cash provided by operating activities 7,625,000 7,946,000
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Cash flows from investing activities:
Purchases of marketable securities 0 (685,000)
Sale of marketable securities 3,933,000 324,000
Additions of property and equipment, net (12,543,000) (5,186,000)
Proceeds from sale of property and equipment 1,229,000 306,000
Translation adjustment (14,000) 0
Increase in other assets (29,000) (73,000)
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Net cash used in investing activities (7,424,000) (5,314,000)
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Cash flows from financing activities:
Increase in payable to bank 0 0
Payment of dividends (759,000) (758,000)
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Net cash used in financing activities (759,000) (758,000)
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Net increase (decrease) in cash and cash equivalents (558,000) 1,874,000
Cash and cash equivalents at beginning of period 3,133,000 1,976,000
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Cash and cash equivalents at end of period $ 2,575,000 3,850,000
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Supplemental disclosure of cash flow information:
Cash paid during each period for:
Income taxes $ 14,245,000 7,778,000
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Interest $ 68,000 0
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
September 30, 1995 and 1994
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. They do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, there has been no material change in the information
disclosed in the notes to financial statements included in the Company's
financial statements as of and for the year ended December 31, 1994. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying financial statements.
Nine months 1995 vs. 1994
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Net sales for the nine months ended September 30, 1995 increased 40.8% to
$164,559,000 versus the $116,878,000 recorded during the comparable 1994 period.
The increase came primarily from higher unit sales, although prices were about
4% higher in the 1995 period. Higher unit sales came from increases in same
store sales and from the addition of new stores. Stores opened in 1993 or
earlier had average sales increases of 27.5%. The remainder of the 40. 8% sales
growth came from stores opened in 1994 and during the first nine months of 1995.
Eighty-three new stores were added from October, 1994 through September, 1995.
Fifty-five of the added stores were Fastenal stores, twenty-three were FastTool
stores, and five were combination Fastenal/FastTool stores in smaller
communities. FastTool stores are located adjacent to existing Fastenal stores
and sell power and hand tools and safety supplies to the same customer base.
Net earnings for the first nine months grew from $13,158,000 in 1994 to
$20,190,000 in 1995, an increase of 53.4%. Net earnings increased at a faster
rate than net sales because gross profits increased 41.3% (commensurate with the
increase in net sales), while the operating and administrative expenses
increased only 34.9%. The Company's fixed costs increase at a rate similar to
the rate of increase in the number of stores. The 83 stores added since
September 30, 1994 represent a 27% increase in the number of stores since the
end of the third quarter of 1994.
Third quarter 1995 vs. 1994
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Net sales for the three months ended September 30, 1995 increased 33.3% to
$57,993,000 versus the $43,508,000 recorded during the comparable 1994 period.
Reasons for the increase were the same as those mentioned in the nine months
comparison. The same store sales increases are due primarily to strength in the
industrial construction segment of the economy, with a lesser effect from
strength in the maintenance and repair segment of the economy. Twelve new
Fastenal stores, seven new FastTool stores, and one new combination store were
opened in the quarter, bringing the opened store totals to 356 Fastenal stores,
29 FastTool stores, and 5 combination stores.
Net earnings for the third quarter grew from $5,154,000 in 1994 to $7,386,000
in 1995, an increase of 43.3%. Net earnings increased at a faster rate than net
sales because operating and administrative expenses increased 29.2%, or less
than the rate of increase for net sales. Operating and administrative expenses
increase primarily because of the opening of new stores. At the end of the 1995
period the Company had 27% more stores than at the end of the 1994 period.
Liquidity and Capital Resources
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The higher level of sales during the period resulted in the growth of trade
accounts receivable. Property and equipment increased because of the completion
of new manufacturing facilities in Winona, Minnesota, and the addition of trucks
and data processing equipment. Cash requirements for these asset changes were
satisfied from net earnings and the use of available cash. The Company expects
to generate sufficient excess cash flow in the fourth quarter of 1995 to
maintain current expansion plans.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Restated Articles of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
3.2 Restated By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to Registration Statement No. 33 - 14293).
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter ended
September 30, 1995.
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<PAGE>
SIGNATURES
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.
FASTENAL COMPANY
/s/ Robert A. Kierlin
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(Robert A. Kierlin, President)
(Duly Authorized Officer)
Date November 2, 1995 /s/ Stephen M. Slaggie
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(Stephen M. Slaggie, Treasurer)
(Principal Financial Officer)
<PAGE>
INDEX TO EXHIBITS
3.1 Restated Articles of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993).
3.2 Restated By-Laws of the Company (incorporated by reference to Exhibit
3.2 to Registration Statement No. 33-14293).
27 Financial Data Schedule........................Electronically Filed
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and Consolidated Statement of Earnings of Fastenal
Company and Subsidiary as of, and for the nine months ended, September 30, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,575,000
<SECURITIES> 0<F1>
<RECEIVABLES> 33,655,000
<ALLOWANCES> 420,000
<INVENTORY> 37,049,000
<CURRENT-ASSETS> 74,817,000
<PP&E> 38,846,000
<DEPRECIATION> 13,891,000
<TOTAL-ASSETS> 101,265,000
<CURRENT-LIABILITIES> 14,107,000
<BONDS> 0
<COMMON> 379,000
0
0
<OTHER-SE> 86,779,000
<TOTAL-LIABILITY-AND-EQUITY> 101,265,000
<SALES> 164,559,000
<TOTAL-REVENUES> 164,559,000
<CGS> 77,054,000
<TOTAL-COSTS> 77,054,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 386,000
<INTEREST-EXPENSE> 68,000
<INCOME-PRETAX> 34,009,000
<INCOME-TAX> 13,819,000
<INCOME-CONTINUING> 20,190,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,190,000
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
<FN>
<F1> Marketable securities in the amount of $1,170,000 have been classified as
non-current assets on the Consolidated Balance Sheet of Fastenal Company
and Subsidiary as of September 30, 1995.
</FN>
</TABLE>
