0000950131-95-002114.txt : 19950809 0000950131-95-002114.hdr.sgml : 19950809 ACCESSION NUMBER: 0000950131-95-002114 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FASTENAL COMPANY CENTRAL INDEX KEY: 0000815556 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY [5200] IRS NUMBER: 410948415 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16125 FILM NUMBER: 95559585 BUSINESS ADDRESS: STREET 1: 2001 THEURER BLVD CITY: WINONA STATE: MN ZIP: 55987 BUSINESS PHONE: 5074545374 10-Q 1 FORM 10-Q DATED 6-30-95 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 --------------------------------------------------------------------- (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 --------------------------------------------------------------------- (Registrant's telephone number, including area code) --------------------------------------------------------------------- (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 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 PART I - FINANCIAL STATEMENTS ITEM 1. FINANCIAL STATEMENTS FASTENAL COMPANY AND SUBSIDIARY Consolidated Balance Sheets
(Unaudited) * June 30, December 31, Assets 1995 1994 ======================================================================================== 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 ========================================================================================
The accompanying notes are an integral part of the financial statements. *Derived from audited financial statements. -1- FASTENAL COMPANY AND SUBSIDIARY Consolidated Statements of Earnings (Unaudited)
Six months ended Three months ended June 30, June 30, -------------------------- ------------------------ 1995 1994 1995 1994 ----------------------------------------------------------- ------------------------ 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 ----------------------------------------------------------- ------------------------
The accompanying notes are an integral part of the financial statements. -2- FASTENAL COMPANY AND SUBSIDIARY Consolidated Statements of Cash Flows For the six months ended June 30, 1995 and 1994 (Unaudited)
1995 1994 ------------------------------------------------------------------------------------------------------ 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 ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. -3- 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- 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- 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:
Total Number of Total Number of Name of Director Votes Cast For Votes Withheld ---------------- --------------- --------------- 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
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. -6- 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- 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) EX-27 2 ARTICLE 5 FIN DATA SCH.
5 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. 3-MOS DEC-31-1995 DEC-31-1995 APR-01-1995 201,000 0 30,253,000 380,000 40,246,000 72,094,000 35,498,000 12,927,000 96,112,000 16,375,000 0 379,000 0 0 79,358,000 96,112,000 55,475,000 55,475,000 26,046,000 26,046,000 0 120,000 46,000 11,315,000 4,593,000 6,720,000 0 0 0 6,720,000 .18 .18 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.