-----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, EENsViu6fUkcZD98sIE6gH2PaGYCOmRI3vEXT6clZM/eT8AFAr/O3Jo7LbAwo3rl f/Rqw67pWp3v5Mj6MrrtbQ== 0000950131-97-003063.txt : 19970506 0000950131-97-003063.hdr.sgml : 19970506 ACCESSION NUMBER: 0000950131-97-003063 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970505 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: 97595087 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 March 31, 1997, 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) Not Applicable ____________________________________________________ (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, 1997 _____________________________ _____________________________ Common Stock, $.01 par value 37,938,688 FASTENAL COMPANY INDEX
Page No. -------- Part I Financial Information: Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 1 Consolidated Statements of Earnings for the three months ended March 31, 1997 and 1996 2 Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1996 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) March 31, December 31, Assets 1997 1996 - ---------------------------------------------------------------------------------------------- Current assets: Cash and cash equivalents $ 250,000 426,000 Trade accounts receivable, net of allowance for doubtful accounts of $570,000 and $540,000 as of March 31, 1997 and December 31, 1996, respectively 52,231,000 41,553,000 Inventories 60,006,000 56,526,000 Deferred income tax asset 1,219,000 1,219,000 Other current assets 4,246,000 3,731,000 - ---------------------------------------------------------------------------------------------- Total current assets 117,952,000 103,455,000 Marketable securities 515,000 515,000 Property and equipment, less accumulated depreciation 50,931,000 43,930,000 Other assets, less accumulated amortization 3,657,000 3,645,000 - ---------------------------------------------------------------------------------------------- Total assets $ 173,055,000 151,545,000 ============================================================================================== Liabilities and Stockholders' Equity - ---------------------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 12,992,000 10,010,000 Notes payable 12,986,000 8,622,000 Accrued expenses 6,827,000 5,611,000 Income taxes payable 5,765,000 795,000 - ---------------------------------------------------------------------------------------------- Total current liabilities 38,570,000 25,038,000 - ---------------------------------------------------------------------------------------------- Deferred income tax liability 540,000 540,000 - ---------------------------------------------------------------------------------------------- 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 129,352,000 121,346,000 Translation loss (210,000) (182,000) - ---------------------------------------------------------------------------------------------- Total stockholders' equity 133,945,000 125,967,000 - ---------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 173,055,000 151,545,000 ==============================================================================================
The accompanying notes are an integral part of the financial statements. - 2 - FASTENAL COMPANY AND SUBSIDIARY Consolidated Statements of Earnings (Unaudited)
Three months ended March 31, ---------------------------- 1997 1996 - ------------------------------------------------------------ Net sales $ 87,095,000 63,061,000 Cost of sales 41,259,000 29,636,000 - ------------------------------------------------------------ Gross profit 45,836,000 33,425,000 Operating and administrative expenses 31,179,000 21,540,000 - ------------------------------------------------------------ Operating income 14,657,000 11,885,000 Other income (expense): Interest income 15,000 63,000 Interest expense (229,000) 0 Gain on disposal of property and equipment 232,000 523,000 - ------------------------------------------------------------ Total other income 18,000 586,000 - ------------------------------------------------------------ Earnings before income taxes 14,675,000 12,471,000 Income tax expense 5,910,000 5,038,000 - ------------------------------------------------------------ Net earnings $ 8,765,000 7,433,000 ============================================================ Earnings per share $ .23 .20 ============================================================ Weighted average shares outstanding 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 (Unaudited)
Three months ended March 31, ------------------------- 1997 1996 - ----------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 8,765,000 7,433,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of property and equipment 2,075,000 1,628,000 Gain on disposal of property and equipment (232,000) (523,000) Amortization of goodwill and non-compete 55,000 0 Amortization of premium on marketable securities 0 2,000 Changes in operating assets and liabilities: Trade accounts receivable (10,678,000) (4,421,000) Inventories (3,480,000) (2,632,000) Other current assets (515,000) (40,000) Accounts payable 2,982,000 1,211,000 Accrued expenses 1,216,000 819,000 Income taxes payable 4,970,000 3,092,000 - ----------------------------------------------------------------------------------- Net cash provided by operating activities 5,158,000 6,569,000 - ----------------------------------------------------------------------------------- Cash flows from investing activities: Sale of marketable securities 0 35,000 Additions of property and equipment, net (9,815,000) (5,164,000) Proceeds from sale of property and equipment 971,000 946,000 Translation adjustment (28,000) (8,000) Increase in other assets (67,000) (15,000) - ----------------------------------------------------------------------------------- Net cash used in investing activities (8,939,000) (4,206,000) - ----------------------------------------------------------------------------------- Cash flows from financing activities: Net increase in notes payable 4,364,000 0 Payment of dividends (759,000) (759,000) - ----------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 3,605,000 (759,000) - ----------------------------------------------------------------------------------- Net (decrease) increase in cash and cash equivalents (176,000) 1,604,000 Cash and cash equivalents at beginning of period 426,000 6,583,000 - ----------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 250,000 8,187,000 - ----------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid during each period for: Income taxes $ 940,000 1,777,000 - ----------------------------------------------------------------------------------- Interest $ 229,000 0 - -----------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. - 4 - FASTENAL COMPANY AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 1997 and 1996 (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, 1996. 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. First three months of 1997 vs. 1996 - ----------------------------------- Net sales for the three months ended March 31, 1997 increased 38.1% to $87,095,000 versus the $63,061,000 recorded during the comparable 1996 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. 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 1995 or earlier had average sales increases of 25.1%. The remainder of the 38.1% sales growth came from store sites opened in 1996 and during the first three months of 1997. One hundred thirty-six new store sites were added from April 1996 through March 1997. During the three months ended March 31, 1997, 12.4% of net sales came from sales of the Company's FastTool(R) product line, 3.7% of net sales came from sales of the Company's SharpCut(R) product line, 2.1% of net sales came from sales of the Company's PowerFlow(TM) product line, 1.9% of net sales came from sales of the Company's EquipRite(TM) product line and 1.0% of net sales came from sales of the Company's CleanChoice(TM) product line. As was indicated in the Company's Form 10-K for the fiscal year ended December 31, 1996, the Company began, in 1997, to stock all new stores with an inventory drawn from all six product lines. Due to this change, the Company no longer has a 'combination' store classification. Six of the 72 'combination' stores that existed as of December 31, 1996 are now grouped with the satellite stores, while the remaining 66 stores are grouped with the Fastenal(R) stores. During the first quarter of 1997, 44 new sites were opened consisting of 30 Fastenal(R) stores and 14 satellite stores. The total sites at the end of the quarter were 528, this consisted of 500 Fastenal(R) stores and 28 satellite stores. Net earnings for the first three months grew from $7,433,000 in 1996 to $8,765,000 in 1997, an increase of 17.9%. Net earnings increased at a slower rate than net sales because operating and administrative expenses increased at a 44.7% 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 53.6% over the comparable period. The Company increased its site personnel from 1,989 on December 31, 1996 to 2,215 on March 31, 1997, an increase of 11.4%. The increase in employment costs was caused primarily by the opening of new store sites and the previously discussed 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 purchase of pickup trucks and semi-tractors and trailers, and to a lesser extent, additions for manufacturing, warehouse and data processing equipment. Cash requirements for these asset changes were satisfied from net earnings and short-term loans. As of March 31, 1997, 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 March 31, 1997. 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 May 5, 1997 /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 three months ended, March 31, 1997 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 250,000 0 52,801,000 570,000 60,006,000 117,952,000 73,230,000 22,299,000 173,055,000 38,570,000 0 379,000 0 0 133,566,000 173,055,000 87,095,000 87,095,000 41,259,000 41,259,000 0 293,000 229,000 14,675,000 5,910,000 8,765,000 0 0 0 8,765,000 .23 .23 Marketable securities in the amount of $515,000 have been classified as non-current assets on the Consolidated Balance Sheet of Fastenal Company and Subsidiary as of March 31, 1997.
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