<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 June 30, 1995 or
[_] 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
-----------------------
FASTENAL COMPANY
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(Exact name of registrant as specified in its charter)
Minnesota 41-0948415
-------------------------------- -------------------
(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
--- ---
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 July 17, 1995
---------------------------- ----------------------------
Common stock, $.01 par value 37,938,688
<PAGE>
FASTENAL COMPANY
INDEX
Page No.
--------
Part I Financial Information
Consolidated Balance Sheets - June 30, 1995 and
December 31, 1994 1
Consolidated Statements of Earnings - six months and
three months ended June 30, 1995 and 1994 2
Consolidated Statements of Cash Flows - six months ended
June 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 4 Submission of matters to a vote of security holders 6
Item 6 Exhibits and reports on Form 8-K 7
<PAGE>
PART I - FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited) *
June 30, December 31,
Assets 1995 1994
========================================================================================
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 201,000 3,133,000
Trade accounts receivable, net of allowance for doubtful
accounts of $380,000 and $300,000 as of June 30,
1995 and December 31, 1994, respectively 29,873,000 23,606,000
Inventories 40,246,000 30,911,000
Deferred income tax benefit 729,000 729,000
Other current assets 1,045,000 1,108,000
========================================================================================
Total current assets 72,094,000 59,487,000
Marketable securities 1,139,000 5,026,000
Property and equipment, less accumulated depreciation 22,571,000 16,988,000
Other assets, net 308,000 294,000
========================================================================================
Total assets $96,112,000 81,795,000
========================================================================================
Liabilities and Stockholders' Equity
========================================================================================
Current liabilities:
Payable to bank $ 2,600,000 0
Accounts payable 7,311,000 7,814,000
Accrued expenses 5,324,000 4,146,000
Income taxes payable 1,140,000 2,186,000
========================================================================================
Total current liabilities 16,375,000 14,146,000
========================================================================================
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 74,959,000 62,914,000
Translation loss (25,000) (11,000)
Unrealized holding losses on marketable securities 0 (57,000)
========================================================================================
Total stockholders' equity 79,737,000 67,649,000
========================================================================================
Total liabilities and stockholders' equity $96,112,000 81,795,000
========================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
*Derived from audited financial statements.
-1-
<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
-------------------------- ------------------------
1995 1994 1995 1994
----------------------------------------------------------- ------------------------
<S> <C> <C> <C> <C>
Net sales $106,566,000 73,370,000 55,475,000 39,388,000
Cost of sales 50,082,000 34,448,000 26,046,000 18,445,000
----------------------------------------------------------- ------------------------
Gross profit 56,484,000 38,922,000 29,429,000 20,943,000
Operating and administrative
expenses 35,380,000 25,605,000 18,188,000 13,344,000
----------------------------------------------------------- ------------------------
Operating income 21,104,000 13,317,000 11,241,000 7,599,000
Other income (expense):
Interest income 103,000 90,000 35,000 48,000
Interest expense (46,000) 0 (46,000) 0
Gain on disposal of property
and equipment 396,000 52,000 83,000 43,000
----------------------------------------------------------- ------------------------
Total other income 453,000 142,000 72,000 91,000
----------------------------------------------------------- ------------------------
Earnings before
income taxes 21,557,000 13,459,000 11,313,000 7,690,000
Income tax expense 8,753,000 5,455,000 4,593,000 3,120,000
----------------------------------------------------------- ------------------------
Net earnings $12,804,000 8,004,000 6,720,000 4,570,000
----------------------------------------------------------- ------------------------
Earnings per share $ 0.34 0.21 0.18 0.12
----------------------------------------------------------- ------------------------
Weighted average shares
outstanding 37,938,688 37,938,688 37,938,688 37,938,688
----------------------------------------------------------- ------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $12,804,000 8,004,000
Adjustments to reconcile net earnings to net cash
provided by (used for) operating activities:
Depreciation of property and equipment 2,600,000 1,545,000
Gain on disposal of property and equipment (396,000) (52,000)
Amortization of premium on marketable securities 13,000 12,000
Changes in operating assets and liabilities:
Trade accounts receivable (6,267,000) (5,132,000)
Inventories (9,335,000) (1,936,000)
Other current assets 63,000 (68,000)
Accounts payable (503,000) 1,004,000
Accrued expenses 1,178,000 1,254,000
Income taxes payable (1,046,000) 603,000
------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
operating activities (889,000) 5,234,000
------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of marketable securities 0 (384,000)
Sale of marketable securities 3,931,000 324,000
Additions of property and equipment, net (8,586,000) (3,591,000)
Proceeds from sale of property and equipment 799,000 0
Translation adjustment (14,000) 0
Decrease (increase) in other assets (14,000) 24,000
------------------------------------------------------------------------------------------------------
Net cash used in investing activities (3,884,000) (3,627,000)
------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in payable to bank 2,600,000 0
Payment of dividends (759,000) (758,000)
------------------------------------------------------------------------------------------------------
Net cash used in financing activities 1,841,000 (758,000)
------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (2,932,000) 849,000
Cash and cash equivalents at beginning of period 3,133,000 1,976,000
------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 201,000 2,825,000
------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
Cash paid during each period for:
Income taxes $ 9,798,467 4,852,000
------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
June 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.
(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.
-4-
<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.
Six months 1995 vs. 1994
------------------------
Net sales for the six months ended June 30, 1995 increased 45.2% to
$106,566,000 versus the $73,370,000 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 32.6%. The remainder of the 45.2% sales
growth came from stores opened in 1994 and during the first six months of 1995.
Seventy-nine new stores were added from July, 1994 through June, 1995. Fifty-
eight of the added stores were Fastenal stores, seventeen were FastTool stores,
and four 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 six months grew from $8,004,000 in 1994 to
$12,804,000 in 1995, an increase of 60.0%. Net earnings increased at a faster
rate than net sales because gross profits increased 45.1% (commensurate with the
increase in net sales), while the operating and administrative expenses
increased only 38.2%. The Company's fixed costs increase at a rate similar to
the rate of increase in the number of stores. The 79 stores added since June 30,
1994 represent a 27% increase in the number of stores since the end of the
second quarter of 1994.
Second quarter 1995 vs. 1994
----------------------------
Net sales for the three months ended June 30, 1995 increased 40.8% to
$55,475,000 versus the $39,388,000 recorded during the comparable 1994 period.
Reasons for the increase were the same as those mentioned in the six months
comparison. The same store sales increases are due primarily to strength in the
manufacturing segment of the economy. Many of the Company's customers are in the
auto, machinery and processing sections of the manufacturing economy, all of
which are experiencing relatively high sales rates. Fourteen new Fastenal
stores, eight new FastTool stores, and two new combination stores were opened in
the quarter, bringing the opened store totals to 344 Fastenal stores, 22
FastTool stores, and 4 combination stores.
Net earnings for the first three months grew from $4,570,000 in 1994 to
$6,720,000 in 1995, an increase of 47.0%. Net earnings increased at a faster
rate than net sales because operating and administrative expenses increased
36.3%, 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
-------------------------------
The higher level of sales during the period resulted in the growth of trade
accounts receivable and inventories. Property and equipment increased because of
the construction 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, use of available cash, and
short-term bank loans. The Company expects to generate sufficient excess cash
flow in the third quarter of 1995 to pay off all short-term bank loans while
maintaining current expansion plans.
-5-
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's annual meeting of shareholders held on April 25, 1995, two
matters were put to a vote of the shareholders. Proxies were solicited from
shareholders unable to attend the meeting. Proxy votes are included in the
results that follow.
Matter 1. To elect a Board of five directors, to serve until the next regular
--------- meeting of shareholders or until their successors have been duly
elected and qualified.
The previous directors, Robert A. Kierlin, Stephen M. Slaggie, Michael M.
Gostomski, John D. Remick, and Henry K. McConnon were nominated. There were no
other nominations. The five nominees each received and had withheld the number
of votes set forth opposite their names below:
<TABLE>
<CAPTION>
Total Number of Total Number of
Name of Director Votes Cast For Votes Withheld
---------------- --------------- ---------------
<S> <C> <C>
Robert A. Kierlin 16,301,484 30,502
Stephen M. Slaggie 16,302,284 29,702
Michael M. Gostomski 16,301,509 30,477
John D. Remick 16,311,809 20,177
Henry K. McConnon 16,312,309 19,677
</TABLE>
There were no abstentions or broker non-votes.
Matter 2. To ratify the appointment of KPMG Peat Marwick as independent
--------- auditors for the fiscal year ending December 31, 1995.
Voting to ratify the appointment were 16,291,823 shares. Voting against the
ratification were 7,720 shares. There were no broker non-votes. Abstentions
totaled 32,443 shares.
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<PAGE>
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 June
30, 1995.
-7-
<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
-----------------------------------
(Robert A. Kierlin, President)
(Duly Authorized Officer)
August 8, 1995 /s/ Stephen M. Slaggie
Date _________________________ ___________________________________
(Stephen M. Slaggie, Treasurer)
(Principal Financial Officer)
<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 three months ended, June 30, 1995 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> DEC-31-1995
<PERIOD-END> APR-01-1995
<CASH> 201,000
<SECURITIES> 0<F1>
<RECEIVABLES> 30,253,000
<ALLOWANCES> 380,000
<INVENTORY> 40,246,000
<CURRENT-ASSETS> 72,094,000
<PP&E> 35,498,000
<DEPRECIATION> 12,927,000
<TOTAL-ASSETS> 96,112,000
<CURRENT-LIABILITIES> 16,375,000
<BONDS> 0
<COMMON> 379,000
0
0
<OTHER-SE> 79,358,000
<TOTAL-LIABILITY-AND-EQUITY> 96,112,000
<SALES> 55,475,000
<TOTAL-REVENUES> 55,475,000
<CGS> 26,046,000
<TOTAL-COSTS> 26,046,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 120,000
<INTEREST-EXPENSE> 46,000
<INCOME-PRETAX> 11,315,000
<INCOME-TAX> 4,593,000
<INCOME-CONTINUING> 6,720,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,720,000
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<FN>
<F1> Marketable securities in the amount of $1,139,000 have been classified as
non-current assets on the Consolidated Balance Sheet of Fastenal Company
and Subsidiary as of June 30, 1995.
</FN>
</TABLE>
