-----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, R7dg9/09PCaY3u0uoj0NoI4xlx5rPJ3HxR9bEHUviJugfqaXNPWrqbreZXQ53l0I F2v1djoBuV95EI7r2o61cg== 0000950131-96-005337.txt : 19961031 0000950131-96-005337.hdr.sgml : 19961031 ACCESSION NUMBER: 0000950131-96-005337 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961030 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: 96649910 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 September 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 October 15, 1996 - ----------------------------- ------------------------------- Common Stock, $.01 par value 37,938,688 FASTENAL COMPANY INDEX
Page No. -------- Part I Financial Information: Consolidated Balance Sheets as of September 30, 1996 and December 31, 1995 1 Consolidated Statements of Earnings for the nine months and three months ended September 30, 1996 and 1995 2 Consolidated Statements of Cash Flows for the nine months ended September 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 6 Exhibits and reports on Form 8-K 7
- 1 - PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FASTENAL COMPANY AND SUBSIDIARY Consolidated Balance Sheets
(Unaudited) September 30, December 31, Assets 1996 1995 - ---------------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 910,000 6,583,000 Trade accounts receivable, net of allowance for doubtful accounts of $520,000 and $460,000 as of September 30, 1996 and December 31, 1995, respectively 42,847,000 31,866,000 Inventories 51,691,000 40,178,000 Deferred tax asset 947,000 947,000 Other current assets 2,789,000 1,523,000 - ---------------------------------------------------------------------------------------------------- Total current assets 99,184,000 81,097,000 Marketable securities 681,000 784,000 Property and equipment, less accumulated depreciation 40,482,000 27,090,000 Other assets, less accumulated amortization 3,810,000 349,000 - ---------------------------------------------------------------------------------------------------- Total assets $ 144,157,000 109,320,000 ==================================================================================================== Liabilities and Stockholders' Equity - ---------------------------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 10,228,000 7,882,000 Notes payable 8,766,000 0 Accrued expenses 6,332,000 4,974,000 Income taxes payable 814,000 2,141,000 - ---------------------------------------------------------------------------------------------------- Total current liabilities 26,140,000 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 113,377,000 89,566,000 Translation loss (163,000) (52,000) Unrealized holding gains on marketable securities 0 6,000 - ---------------------------------------------------------------------------------------------------- Total stockholders' equity 118,017,000 94,323,000 - ---------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 144,157,000 109,320,000 ====================================================================================================
The accompanying notes are an integral part of the financial statements. - 2 - FASTENAL COMPANY AND SUBSIDIARY Consolidated Statements of Earnings (Unaudited)
Nine months ended Three months ended September 30, September 30, ------------------------------ ---------------------------- 1996 1995 1996 1995 - ------------------------------------------------------- ---------------------------- Net sales $ 210,123,000 164,559,000 76,212,000 57,993,000 Cost of sales 97,975,000 77,054,000 35,525,000 26,972,000 - ------------------------------------------------------- ---------------------------- Gross profit 112,148,000 87,505,000 40,687,000 31,021,000 Operating and administrative expenses 72,003,000 54,105,000 26,295,000 18,725,000 - ------------------------------------------------------- ---------------------------- Operating income 40,145,000 33,400,000 14,392,000 12,296,000 Other income (expense): Interest income 107,000 124,000 14,000 21,000 Interest expense (42,000) (68,000) (35,000) (22,000) Gain on disposal of property and equipment 923,000 553,000 151,000 157,000 - ------------------------------------------------------- ---------------------------- Total other income 988,000 609,000 130,000 156,000 - ------------------------------------------------------- ---------------------------- Earnings before income taxes 41,133,000 34,009,000 14,522,000 12,452,000 Income tax expense 16,563,000 13,819,000 5,830,000 5,066,000 - ------------------------------------------------------- ---------------------------- Net earnings $ 24,570,000 20,190,000 8,692,000 7,386,000 - ------------------------------------------------------- ---------------------------- Earnings per share $ .65 .53 .23 .19 - ------------------------------------------------------- ---------------------------- 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 nine months ended September 30, 1996 and 1995 (Unaudited)
1996 1995 - ---------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 24,570,000 20,190,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of property and equipment 5,705,000 3,900,000 Gain on disposal of property and equipment (923,000) (553,000) Amortization of goodwill and non-compete 78,000 0 Amortization of premium on marketable securities 5,000 15,000 Changes in operating assets and liabilities: Trade accounts receivable (10,981,000) (9,629,000) Inventories (11,513,000) (6,138,000) Other current assets (1,266,000) (121,000) Accounts payable 2,346,000 (791,000) Accrued expenses 1,358,000 1,179,000 Income taxes payable (1,327,000) (427,000) - ---------------------------------------------------------------------------------------------------- Net cash provided by operating activities 8,052,000 7,625,000 - ---------------------------------------------------------------------------------------------------- Cash flows from investing activities: Sale of marketable securities 92,000 3,933,000 Additions of property and equipment, net (20,654,000) (12,543,000) Proceeds from sale of property and equipment 2,480,000 1,229,000 Translation adjustment (111,000) (14,000) Increase in other assets (3,539,000) (29,000) - ---------------------------------------------------------------------------------------------------- Net cash used in investing activities (21,732,000) (7,424,000) - ---------------------------------------------------------------------------------------------------- Cash flows from financing activities: Increase in notes payable 8,766,000 0 Payment of dividends (759,000) (759,000) - ---------------------------------------------------------------------------------------------------- Net cash provided by (used for) financing activities 8,007,000 (759,000) - ---------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (5,673,000) (558,000) Cash and cash equivalents at beginning of period 6,583,000 3,133,000 - ---------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 910,000 2,575,000 - ---------------------------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid during each period for: Income taxes $ 17,890,000 14,245,000 - ---------------------------------------------------------------------------------------------------- Interest $ 42,000 68,000 - ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. - 4 - FASTENAL COMPANY AND SUBSIDIARY NOTES TO CONSOIDATED FINANCIAL STATEMENTS September 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. Nine months of 1996 vs. 1995 - ---------------------------- Net sales for the nine months ended September 30, 1996 increased 27.7% to $210,123,000 versus the $164,559,000 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 19.5%. The remainder of the 27.7% sales growth came from store sites opened in 1995 and during the first nine months of 1996. Ninety-one new store sites were added from October 1995 through September 1996. Forty of the new sites were traditional stores featuring the fastener product line. The remaining 51 new sites were combination stores with multiple product lines in smaller communities. During the first nine months of 1996, 5.9% of net sales came from sales of the Company's FastTool(R) product line and less than 1% of the net sales came from each of the remaining non- fastener product lines. Net earnings for the first nine months grew from $20,190,000 in 1995 to $24,570,000 in 1996, an increase of 21.7%. Net earnings increased at a slower rate than net sales because operating and administrative expenses increased at a 33.1% 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 which increased by 38.6%. The Company increased its site personnel from 1,310 on December 31, 1995 to 1,830 on September 30, 1996, an increase of 39.7%. Third quarter 1996 vs. 1995 - --------------------------- Net sales for the three months ended September 30, 1996 increased 31.4% to $76,212,000 versus the $57,993,000 recorded during the comparable 1995 period. Reasons for the increase were the same as those mentioned in the nine month comparison. The increases in sales at existing store sites are due primarily to strength in the manufacturing segment of the economy and, to a lesser extent, 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. Sites opened in 1994 or earlier had average sales increases of 21.7%. The remainder of the 31.4% sales growth came from store sites opened in 1995 and during the first nine months of 1996. Thirty-four new store sites were added during the quarter. Twelve of the new sites were traditional stores featuring the fastener product line. The remaining 22 new sites were combination stores with multiple product lines in smaller communities. The total sites at the end of the quarter were 396 traditional Fastenal stores and 56 combination stores. - 6 - ITEM 2. (continued) Net earnings for the three months grew from $7,386,000 in 1995 to $8,692,000 in 1996, an increase of 17.7%. Net earnings increased at a slower rate than net sales because operating and administrative expenses increased at a 40.4% 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 which increased by 44.7%. The increase in employment costs was caused primarily by the opening of new store sites and the addition of new product lines at existing store sites. 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 fourth quarter of 1996 to significantly reduce all short-term loans while maintaining current expansion plans. As of September 30, 1996, there were no material commitments outstanding for capital expenditures. - 7 - PART II - OTHER INFORMATION 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 September 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 October 30, 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 nine months ended, September 30, 1996 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 910,000 0 43,367,000 520,000 51,691,000 99,184,000 59,767,000 19,285,000 144,157,000 26,140,000 0 379,000 0 0 117,638,000 144,157,000 210,123,000 210,123,000 97,975,000 97,975,000 0 702,000 42,000 41,133,000 16,563,000 24,570,000 0 0 0 24,570,000 .65 .65 Marketable securities in the amount of $681,000 have been classified as non-current assets on the Consolidated Balance Sheet of Fastenal Company and Subsidiary as of September 30, 1996.
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