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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 March 31, 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 April 18, 1995
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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 -- March 31, 1995 and December 31, 1994 1
Consolidated Statements of Earnings -- three months ended March 31,
1995 and 1994 2
Consolidated Statements of Cash Flows -- three months ended
March 31, 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
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PART I - FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited) *
March 31, December 31,
Assets 1995 1994
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,101,000 3,133,000
Trade accounts receivable, net of allowance for doubtful
accounts of $340,000 and $300,000 as of March 31,
1995 and December 31, 1994, respectively 27,595,000 23,606,000
Inventories 35,574,000 30,911,000
Deferred income tax benefit 729,000 729,000
Other current assets 1,014,000 1,108,000
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Total current assets 66,013,000 59,487,000
Marketable securities 2,837,000 5,026,000
Property and equipment, less accumulated depreciation 20,369,000 16,988,000
Other assets, net 308,000 294,000
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Total assets $89,527,000 81,795,000
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Liabilities and Stockholders' Equity
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Current liabilities:
Accounts payable $ 7,361,000 7,814,000
Accrued expenses 5,071,000 4,146,000
Income taxes payable 4,123,000 2,186,000
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Total current liabilities 16,555,000 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 68,239,000 62,914,000
Translation loss (13,000) (11,000)
Unrealized holding losses on marketable securities (57,000) (57,000)
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Total stockholders' equity 72,972,000 67,649,000
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Total liabilities and stockholders' equity $89,527,000 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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<TABLE>
<CAPTION>
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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<S> <C> <C>
Net sales $51,091,000 33,982,000
Cost of sales 24,036,000 16,003,000
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Gross profit 27,055,000 17,979,000
Operating and administrative
expenses 17,192,000 12,261,000
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Operating income 9,863,000 5,718,000
Other income:
Interest income 68,000 42,000
Gain on disposal of property
and equipment 313,000 9,000
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Total other income 381,000 51,000
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Earnings before
income taxes 10,244,000 5,769,000
Income tax expense 4,160,000 2,335,000
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Net earnings $ 6,084,000 3,434,000
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Earnings per share $ .16 .09
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Weighted average shares
outstanding 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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FASTENAL COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the three months ended March 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 6,084,000 3,434,000
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation of property and equipment 1,300,000 725,000
Gain on disposal of property and equipment (313,000) (9,000)
Changes in operating assets and liabilities:
Trade accounts receivable (3,989,000) (2,564,000)
Inventories (4,663,000) (416,000)
Other current assets 94,000 7,000
Accounts payable (453,000) (293,000)
Accrued expenses 925,000 827,000
Income taxes payable 1,937,000 1,504,000
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Net cash provided by operating activities 922,000 3,215,000
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Cash flows from investing activities:
Purchases of marketable securities - (92,000)
Sale of marketable securities 2,189,000 218,000
Additions of property and equipment, net (4,864,000) (1,305,000)
Proceeds from sale of property and equipment 496,000 36,000
Translation adjustment (2,000) -
Decrease (increase) in other assets (14,000) 35,000
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Net cash used in investing activities (2,195,000) (1,108,000)
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Cash flows from financing activities:
Payment of dividends (759,000) (759,000)
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Net cash used in financing activities (759,000) (759,000)
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Net increase (decrease) in cash and
cash equivalents (2,032,000) 1,348,000
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 $ 1,101,000 3,324,000
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Supplemental disclosure of cash flow information:
Cash paid during each period for:
Income taxes $ 2,223,000 831,000
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</TABLE>
The accompanying notes are an integral part of the financial statements.
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FASTENAL COMPANY AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
March 31, 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.
(2) Seasonal Nature of Business
The Company's product sales are generally greater in the second and third
quarters of the year due to seasonal factors affecting the construction
industry.
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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.
First quarter 1995 vs. 1994
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Net sales for the three months ended March 31, 1995 increased 50.3% to
$51,091,000 versus the $33,982,000 recorded during the comparable 1994
period. The increase came primarily from higher unit sales rather than from
price increases. Price increases caused about a 4% increase in net sales,
with the remaining increase coming from higher unit sales. 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 38.8%. The
remainder of the 50.3% sales growth came from stores opened in 1994 and
during the first three months of 1995. Seventy-two new stores were added from
April, 1994 through March, 1995. Sixty of the added stores were Fastenal
stores, ten of the added stores were FastTool stores and two of the added
stores were combined stores in communities smaller than the size considered
necessary for individual stores. The Company started its first FastTool store
in April of 1993. 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 three months grew from $3,434,000 in 1994 to
$6,084,000 in 1995, an increase of 77.2%. Net earnings increased at a faster
rate than net sales because gross profits increased 50.5% (commensurate with
the increase in net sales), while the operating and administrative expenses
increased only 40.2%. The Company's fixed costs increase at a rate similar to
the rate of increase in the number of stores. The 72 stores added since
March 31, 1994 represent a 26% increase in the number of stores since the end
of the first quarter of 1994. Except for productivity gains, the Company's
variable costs such as distribution costs and commissions increase at a rate
similar to either the rate of unit sales growth or the rate of dollar sales
growth.
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 the Company's new distribution building in Dallas, Texas, and
expenditures for additional data processing equipment, machinery and trucks.
Inventories increased to support the higher sales level. Cash requirements
for these asset changes were satisfied primarily from net earnings and
depreciation on plant and equipment. Cash and cash equivalents at the end of
the period are believed sufficient to finance the Company's current expansion
plans.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
4.1 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).
4.2 Restated By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to Registration Statement No. 33 - 14293).
(b) No reports on Form 8-K have been filed during the quarter ended
March 31, 1995.
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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
____________________________________
(Robert A. Kierlin, President)
(Duly Authorized Officer)
Date ____________________ ____________________________________
(Stephen M. Slaggie, Treasurer)
(Principal Financial Officer)
