-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I3cTwdE2DMwBeco/5Z5wEzeNUOZLixblTodLhAElFlSI1pxVbcnSKRhuyCDcGijr P6h//KIz2HZfXXyGBrb8+g== 0000950131-96-003546.txt : 19960801 0000950131-96-003546.hdr.sgml : 19960801 ACCESSION NUMBER: 0000950131-96-003546 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960731 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: 96601571 BUSINESS ADDRESS: STREET 1: 2001 THEURER BLVD CITY: WINONA STATE: MN ZIP: 55987 BUSINESS PHONE: 5074545374 10-Q 1 FORM 10-Q 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, 1996, 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 Boulevard Winona, Minnesota 55987 ________________________________________ __________ (Address of principal executive offices) (Zip Code) (507) 454-5374 ____________________________________________________ (Registrant's telephone number, including area code) 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 15, 1996 ____________________________ ____________________________ Common Stock, $.01 par value 37,938,688 FASTENAL COMPANY INDEX
Page No. -------- Part I Financial Information: Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995 1 Consolidated Statements of Earnings for the six months and three months ended June 30, 1996 and 1995 2 Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1995 3 Notes to Consolidated Financial Statements 4 Management's discussion and analysis of financial condition and results of operations 5-6 Part II Other Information Item 4 Submission of matters to a vote of security holders 7 Item 6 Exhibits and reports on Form 8-K 8
-1- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FASTENAL COMPANY AND SUBSIDIARY Consolidated Balance Sheets
(Unaudited) June 30, December 31, Assets 1996 1995 - -------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 850,000 6,583,000 Trade accounts receivable, net of allowance for doubtful accounts of $500,000 and $460,000 as of June 30, 1996 and December 31, 1995, respectively 39,846,000 31,866,000 Inventories 48,399,000 40,178,000 Deferred tax asset 947,000 947,000 Other current assets 2,000,000 1,523,000 - --------------------------------------------------------------------------------------------- Total current assets 92,042,000 81,097,000 Marketable securities 719,000 784,000 Property and equipment, less accumulated depreciation 37,330,000 27,090,000 Other assets, less accumulated amortization 3,822,000 349,000 - --------------------------------------------------------------------------------------------- Total assets $133,913,000 109,320,000 - --------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - --------------------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 11,393,000 7,882,000 Accrued expenses 6,303,000 4,974,000 Notes payable 5,562,000 0 Income taxes payable 1,344,000 2,141,000 - --------------------------------------------------------------------------------------------- Total current liabilities 24,602,000 14,997,000 - --------------------------------------------------------------------------------------------- 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 104,685,000 89,566,000 Translation loss (211,000) (52,000) Unrealized holding gains on marketable securities 34,000 6,000 - --------------------------------------------------------------------------------------------- Total stockholders' equity 109,311,000 94,323,000 - --------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $133,913,000 109,320,000 - ---------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. -2- FASTENAL COMPANY AND SUBSIDIARY Consolidated Statements of Earnings (Unaudited)
Six months ended Three months ended June 30, June 30, ---------------------------- ------------------------- 1996 1995 1996 1995 - ----------------------------------------------------------------- ------------------------- Net sales $133,911,000 106,566,000 70,850,000 55,475,000 Cost of sales 62,450,000 50,082,000 32,814,000 26,046,000 - ----------------------------------------------------------------- ------------------------- Gross profit 71,461,000 56,484,000 38,036,000 29,429,000 Operating and administrative expenses 45,708,000 35,380,000 24,168,000 18,188,000 - ----------------------------------------------------------------- ------------------------- Operating income 25,753,000 21,104,000 13,868,000 11,241,000 Other income (expense): Interest income 93,000 103,000 30,000 35,000 Interest expense (7,000) (46,000) (7,000) (46,000) Gain on disposal of property and equipment 772,000 396,000 249,000 83,000 - ----------------------------------------------------------------- ------------------------- Total other income 858,000 453,000 272,000 72,000 - ----------------------------------------------------------------- ------------------------- Earnings before income taxes 26,611,000 21,557,000 14,140,000 11,313,000 Income tax expense 10,733,000 8,753,000 5,695,000 4,593,000 - ----------------------------------------------------------------- ------------------------- Net earnings $ 15,878,000 12,804,000 8,445,000 6,720,000 ================================================================= ========================= Earnings per share $ .42 .34 .22 .18 ================================================================= ========================= 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. -3- FASTENAL COMPANY AND SUBSIDIARY Consolidated Statements of Cash Flows For the six months ended June 30, 1996 and 1995 (Unaudited)
1996 1995 - ---------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 15,878,000 12,804,000 Adjustments to reconcile net earnings to net cash provided by (used for) operating activities: Depreciation of plant and equipment 3,495,000 2,600,000 Gain on disposal of property and equipment (772,000) (396,000) Amortization of goodwill and non-compete 20,000 0 Amortization of premium on marketable securities 4,000 13,000 Changes in operating assets and liabilities: Trade accounts receivable (7,980,000) (6,267,000) Inventories (8,221,000) (9,335,000) Other current assets (477,000) 63,000 Accounts payable 3,511,000 (503,000) Accrued expenses 1,329,000 1,178,000 Income taxes payable (797,000) (1,046,000) - ----------------------------------------------------------------------------------------- Net cash provided by (used for) operating activities 5,990,000 (889,000) - ----------------------------------------------------------------------------------------- Cash flows from investing activities: Sale of marketable securities 89,000 3,931,000 Additions of property and equipment, net (14,713,000) (8,586,000) Proceeds from sale of property and equipment 1,750,000 799,000 Translation adjustment (159,000) (14,000) Increase in other assets (3,493,000) (14,000) - ----------------------------------------------------------------------------------------- Net cash used in investing activities (16,526,000) (3,884,000) - ----------------------------------------------------------------------------------------- Cash flows from financing activities: Increase in notes payable 5,562,000 2,600,000 Payment of dividends (759,000) (759,000) - ----------------------------------------------------------------------------------------- Net cash provided by financing activities 4,803,000 1,841,000 - ----------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (5,733,000) (2,932,000) Cash and cash equivalents at beginning of period 6,583,000 3,133,000 - ----------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 850,000 201,000 - ----------------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid during each period for: Income taxes $ 11,530,000 9,799,000 - ----------------------------------------------------------------------------------------- Interest $ 7,000 46,000 - -----------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. - 4 - FASTENAL COMPANY AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 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 consolidated financial statements of Fastenal Company and its wholly-owned subsidiary, Fastenal Canada Company, (collectively referred to as the Company) included in the Company's consolidated 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. - 5 - 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 consolidated financial statements. Six months of 1996 vs. 1995 - --------------------------- Net sales for the six months ended June 30, 1996 increased 25.7% to $133,911,000 versus the $106,566,000 recorded during the comparable 1995 period. The increase came primarily from higher unit sales as prices were relatively 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 20.0%. The remainder of the 25.7% sales growth came from store sites opened in 1995 and during the first six months of 1996. Seventy new store sites were added from July 1995 through June 1996. Forty of the new sites were traditional stores featuring the fastener product line. The remaining 30 new sites were combination stores with multiple product lines in smaller communities. During the first six months of 1996, 5.5% of net sales came from sales of the Company's FastTool(R) product line and less than 1% of the net sales came from the sales of the Company's Sharpcut(TM) product line. Net earnings for the first six months grew from $12,804,000 in 1995 to $15,878,000 in 1996, an increase of 24.0%. Net earnings increased at a slower rate than net sales because operating and administrative expenses increased at a 29.2% 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 1,659 on June 30, 1996. Second quarter 1996 vs. 1995 - ---------------------------- Net sales for the three months ended June 30, 1996 increased 27.7% to $70,850,000 versus the $55,475,000 recorded during the comparable 1995 period. Reasons for the increase were the same as those mentioned in the six month comparison. The increases in sales at existing store sites are due primarily to strength in the manufacturing segment of the economy and the introduction of new product lines at the existing sites. 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. Twenty-six new store sites were added during the quarter. Seven of the new sites were traditional stores featuring the fastener product line. The remaining 19 new sites were combination stores with multiple product lines in smaller communities. The total sites at the end of the quarter were 384 traditional Fastenal stores and 34 combination stores. Net earnings for the first three months grew from $6,720,000 in 1995 to 8,445,000 in 1996, an increase of 25.7%. Net earnings increased at a slower rate than net sales because operating and administrative expenses increased at a 32.9% 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. This was caused by the opening of new stores and the addition of new product lines at existing store sites. - 6 - ITEM 2. (continued) 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 expansion of the Winona warehouse and corporate offices, the purchase of the Ohio warehouse, the acquisition of a janitorial supply business, 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 loans. The Company expects to generate sufficient excess cash flow in the third and fourth quarters of 1996 to pay off all short-term loans while maintaining current expansion plans and fulfilling its commitments for capital expenditures. As of June 30, 1996, the Company had outstanding commitments of approximately $300,000 to complete the addition to the Company's corporate offices and distribution center in Winona, Minnesota. - 7 - 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 23, 1996, 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 33,814,779 134,134 Stephen M. Slaggie 33,813,311 135,622 Michael M. Gostomski 33,812,019 136,914 John D. Remick 33,812,414 136,519 Henry K. McConnon 33,812,799 136,134
There were no abstentions or broker non-votes. Matter 2. To ratify the appointment of KPMG Peat Marwick LLP as independent - -------- auditors for the fiscal year ending December 31, 1996. Voting to ratify the appointment were 33,388,842 shares. Voting against the ratification were 19,150 shares. There were no broker non-votes. Abstentions totaled 101,151 shares. - 8 - ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 3.1 Restated Articles of Incorporation of Fastenal Company, as amended (incorporated by reference to Exhibit 3.1 to Fastenal Company's Form 10-Q for the quarter ended September 30, 1993) 3.2 Restated By-Laws of Fastenal Company (incorporated by reference to Exhibit 3.2 to Registration Statement No. 33-14923) 27 Financial Data Schedule (b) Reports on Form 8-K: No report on Form 8-K was filed by Fastenal Company during the quarter ended June 30, 1996. 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) Date July 31, 1996 /s/ Daniel L. Florness ------------- ------------------------------- (Daniel L. Florness, Treasurer) (Principal Financial Officer) INDEX TO EXHIBITS 3.1 Restated Articles of Incorporation of Fastenal Company, as amended (incorporated by reference to Exhibit 3.1 to Fastenal Company's Form 10-Q for the quarter ended September 30, 1993). 3.2 Restated By-Laws of Fastenal Company (incorporated by reference to Exhibit 3.2 to Registration Statement No. 33-14923). 27 Financial Data Schedule...............................Electronically Filed EX-27 2 FINANCIAL DATA SCHEDULE
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 six months ended, June 30, 1996 and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 850,000 0 40,346,000 500,000 48,399,000 92,042,000 54,714,000 17,384,000 133,913,000 24,602,000 0 379,000 0 0 108,932,000 133,913,000 133,911,000 133,911,000 62,450,000 62,450,000 0 406,000 7,000 26,611,000 10,733,000 15,878,000 0 0 0 15,878,000 .42 .42 Marketable securities in the amount of $719,000 have been classified as non-current assets on the Consolidated Balance Sheet of Fastenal Company and Subsidiary as of June 30, 1996.
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