<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 March 31, 1996 or
--------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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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
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Theurer Blvd., Winona MN 55987
- ------------------------------------------ ----------
(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 April 15, 1996
- ---------------------------- -----------------------------
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, 1996 and December 31, 1995 1
Consolidated Statements of Earnings - three months ended March 31,
1996 and 1995 2
Consolidated Statements of Cash Flows - three months ended
March 31, 1996 and 1995 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)
March 31, December 31,
Assets 1996 1995
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,187,000 6,583,000
Trade accounts receivable, net of allowance
for doubtful accounts of $480,000 and $460,000
as of March 31, 1996 and December 31, 1995,
respectively 36,287,000 31,866,000
Inventories 42,810,000 40,178,000
Deferred tax asset 947,000 947,000
Other current assets 1,563,000 1,523,000
- -------------------------------------------------------------------------------
Total current assets 89,794,000 81,097,000
Marketable securities 759,000 784,000
Property and equipment, less accumulated
depreciation 30,203,000 27,090,000
Other assets, net 364,000 349,000
- -------------------------------------------------------------------------------
Total assets $121,120,000 109,320,000
===============================================================================
Liabilities and Stockholders' Equity
- -------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 9,093,000 7,882,000
Accrued expenses 5,793,000 4,974,000
Income taxes payable 5,233,000 2,141,000
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Total current liabilities 20,119,000 14,997,000
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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 96,240,000 89,566,000
Translation loss (60,000) (52,000)
Unrealized holding gains on marketable
securities 18,000 6,000
- -------------------------------------------------------------------------------
Total stockholders' equity 101,001,000 94,323,000
- -------------------------------------------------------------------------------
Total liabilities and stockholders' equity $121,120,000 109,320,000
===============================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 1 -
<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
Consolidated Statements of Earnings
For the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Net sales $ 63,061,000 51,091,000
Cost of sales 29,636,000 24,036,000
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Gross profit 33,425,000 27,055,000
Operating and administrative
expenses 21,540,000 17,192,000
- ----------------------------------------------------------------------------
Operating income 11,885,000 9,863,000
Other income:
Interest income 63,000 68,000
Gain on disposal of property
and equipment 523,000 313,000
- ----------------------------------------------------------------------------
Total other income 586,000 381,000
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Earnings before
income taxes 12,471,000 10,244,000
Income tax expense 5,038,000 4,160,000
- ----------------------------------------------------------------------------
Net earnings $ 7,433,000 6,084,000
============================================================================
Earnings per share $ .20 .16
============================================================================
Weighted average shares
outstanding 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 three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 7,433,000 6,084,000
Adjustments to reconcile net earnings to net cash
provided by (used for) operating activities:
Depreciation of property and equipment 1,628,000 1,300,000
Gain on disposal of property and equipment (523,000) (313,000)
Amortization of premium on marketable securities 2,000 0
Changes in operating assets and liabilities:
Trade accounts receivable (4,421,000) (3,989,000)
Inventories (2,632,000) (4,663,000)
Other current assets (40,000) 94,000
Accounts payable 1,211,000 (453,000)
Accrued expenses 819,000 925,000
Income taxes payable 3,092,000 1,937,000
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Net cash provided by
operating activities 6,569,000 922,000
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Cash flows from investing activities:
Purchases of marketable securities 0 0
Sale of marketable securities 35,000 2,189,000
Additions of property and equipment, net (5,164,000) (4,864,000)
Proceeds from sale of property and equipment 946,000 496,000
Translation adjustment (8,000) (2,000)
Increase in other assets (15,000) (14,000)
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Net cash used in investing activities (4,206,000) (2,195,000)
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Cash flows from financing activities:
Increase in payable to bank 0 0
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 1,604,000 (2,032,000)
Cash and cash equivalents at beginning of period 6,583,000 3,133,000
- ---------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 8,187,000 1,101,000
=================================================================================
Supplemental disclosure of cash flow information:
Cash paid during each period for:
Income taxes $ 1,776,971 2,223,000
=================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
FASTENAL COMPANY AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 and 1995
(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, 1995. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
-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.
First quarter 1996 vs. 1995
- ---------------------------
Net sales for the three months ended March 31, 1996 increased 23.4% to
$63,061,000 versus the $51,091,000 recorded during the comparable 1995 period.
The increase came primarily from higher unit sales as prices were generally
stable over the period. Higher unit sales came from increases in sales at
existing store sites and from the addition of new store sites. Sites opened in
1994 or earlier had average sales increases of 16.5%. The remainder of the 23.4%
sales growth came from store sites opened in 1995 and during the first three
months of 1996. Sixty new store sites were added from April, 1995 through March,
1996. Forty-seven of the new sites were traditional Fastenal stores featuring
the fastener product line. The remaining thirteen new sites were combination
stores with multiple product lines in smaller communities. During the first
quarter of 1996, 4.9% of the net sales came from sales of the Company's FastTool
product line and less than 1% of the net sales came from sales of the Company's
SharpCut product line.
Net earnings for the first three months grew from $6,084,000 in 1995 to
$7,433,000 in 1996, an increase of 22.2%. Net earnings increased at a slower
rate than net sales because operating and administrative expenses increased at a
25.3% rate between the comparable periods, a rate higher than the rate of
increase in net sales. The largest increase in operating and administrative
expense came from employment costs in the store sites. The Company increased its
site personnel from 1,310 on December 31, 1995, to 1,477 on March 31, 1996.
Severe weather impacted the Company's operations in the first quarter of 1996
through lost sales at construction sites and from higher operating costs for the
Company's truck fleet.
Liquidity and Capital Resources
- -------------------------------
The higher level of sales during the period resulted in the growth of trade
accounts receivable. Property and equipment increased because of work in
progress on the Company's addition to its Winona distribution center and
corporate offices, additions to its truck fleet, additions of manufacturing
equipment, and additions of data processing equipment. Cash requirements for
these asset changes were satisfied primarily from net earnings and depreciation
on plant and equipment.
As of March 31, 1996, the Company had outstanding commitments of approximately
$1,500,000 to purchase a building for a new distribution center in Ohio, and
approximately $1,000,000 to complete the addition to the Company's corporate
offices and distribution center in Winona, Minnesota. In the first quarter of
1996 the Company was successful in recruiting enough new marketing personnel to
allow for a short-term increase in both the rate of new site openings and the
rate of product line additions to existing sites. This increased activity will
require additional inventory and marketing expenses, but the Company believes it
has sufficient liquidity to implement the increased activity. Although cash and
cash equivalents at the end of the period are believed sufficient to finance the
Company's current expansion plans and fulfill its commitments for capital
expenditures, the Company believes it will be able to secure bank loans for any
unexpected shortfall.
-5-
<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 March 31,
1996.
-6-
<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 April 29, 1996 /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 three months ended, March 31, 1996
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 8,187,000
<SECURITIES> 0<F1>
<RECEIVABLES> 36,767,000
<ALLOWANCES> 480,000
<INVENTORY> 42,810,000
<CURRENT-ASSETS> 89,794,000
<PP&E> 46,161,000
<DEPRECIATION> 15,958,000
<TOTAL-ASSETS> 121,120,000
<CURRENT-LIABILITIES> 20,119,000
<BONDS> 0
<COMMON> 379,000
0
0
<OTHER-SE> 100,622,000
<TOTAL-LIABILITY-AND-EQUITY> 121,120,000
<SALES> 63,061,000
<TOTAL-REVENUES> 63,061,000
<CGS> 29,636,000
<TOTAL-COSTS> 29,636,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 167,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,471,000
<INCOME-TAX> 5,038,000
<INCOME-CONTINUING> 7,433,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,433,000
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<FN>
<F1> Marketable securities in the amount of $759,000 have been classified as
non-current assets on the Consolidated Balance Sheet of Fastenal Company
and Subsidiary as of March 31, 1996.
</FN>
</TABLE>
