-----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, AKXnaeqVpMJ5jzIt1L2aoAVtiirdgGyn8LR96uqBsaRFr9Vp7r8vMuHGf+VmMbhi JL57WDzJqJGQMIKCeVVueg== 0000950131-97-004586.txt : 19970728 0000950131-97-004586.hdr.sgml : 19970728 ACCESSION NUMBER: 0000950131-97-004586 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970725 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: 97645218 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, 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 July 15, 1997 - ----------------------------- ---------------------------- Common Stock, $.01 par value 37,938,688 FASTENAL COMPANY INDEX
Page No. -------- Part I Financial Information: Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 1 Consolidated Statements of Earnings for the six months and three months ended June 30, 1997 and 1996 2 Consolidated Statements of Cash Flows for the six months ended June 30, 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 4 Submission of matters to a vote of security holders 7 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) June 30, December 31, Assets 1997 1996 - ------------------------------------------------------------------------------------------------ Current assets: Cash and cash equivalents $ 284,000 426,000 Trade accounts receivable, net of allowance for doubtful accounts of $600,000 and $540,000 as of June 30, 1997 and December 31, 1996, respectively 57,404,000 41,553,000 Inventories 60,096,000 56,526,000 Deferred income tax asset 1,219,000 1,219,000 Other current assets 5,492,000 3,731,000 - ------------------------------------------------------------------------------------------------ Total current assets 124,495,000 103,455,000 Marketable securities 515,000 515,000 Property and equipment, less accumulated depreciation 52,039,000 43,930,000 Other assets, less accumulated amortization 3,639,000 3,645,000 - ------------------------------------------------------------------------------------------------ Total assets $ 180,688,000 151,545,000 - ------------------------------------------------------------------------------------------------ Liabilities and Stockholders' Equity - ------------------------------------------------------------------------------------------------ Current liabilities: Accounts payable $ 13,301,000 10,010,000 Notes payable 12,385,000 8,622,000 Accrued expenses 7,510,000 5,611,000 Income taxes payable 2,523,000 795,000 - ------------------------------------------------------------------------------------------------ Total current liabilities 35,719,000 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 139,831,000 121,346,000 Translation loss (205,000) (182,000) - ------------------------------------------------------------------------------------------------ Total stockholders' equity 144,429,000 125,967,000 - ------------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $ 180,688,000 151,545,000 - ------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of the financial statements.
- 2 - FASTENAL COMPANY AND SUBSIDIARY Consolidated Statements of Earnings (Unaudited)
Six months ended Three months ended June 30, June 30, ------------------------- ------------------------ 1997 1996 1997 1996 - ------------------------------------------------------ ------------------------ Net sales $ 185,327,000 133,911,000 98,232,000 70,850,000 Cost of sales 88,326,000 62,450,000 47,067,000 32,814,000 - ------------------------------------------------------ ------------------------ Gross profit 97,001,000 71,461,000 51,165,000 38,036,000 Operating and administrative expenses 64,954,000 45,708,000 33,775,000 24,168,000 - ------------------------------------------------------ ------------------------ Operating income 32,047,000 25,753,000 17,390,000 13,868,000 Other income (expense): Interest income 30,000 93,000 15,000 30,000 Interest expense (500,000) (7,000) (271,000) (7,000) Gain on disposal of property and equipment 635,000 772,000 403,000 249,000 - ------------------------------------------------------ ------------------------ Total other income 165,000 858,000 147,000 272,000 - ------------------------------------------------------ ------------------------ Earnings before income taxes 32,212,000 26,611,000 17,537,000 14,140,000 Income tax expense 12,968,000 10,733,000 7,058,000 5,695,000 - ------------------------------------------------------ ------------------------ Net earnings $ 19,244,000 15,878,000 10,479,000 8,445,000 - ------------------------------------------------------ ------------------------ Earnings per share $ .51 .42 .28 .22 - ------------------------------------------------------ ------------------------ 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 (Unaudited)
Six months ended June 30, ------------------------- 1997 1996 - -------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 19,244,000 15,878,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of property and equipment 4,219,000 3,495,000 Gain on disposal of property and equipment (635,000) (772,000) Amortization of goodwill and non-compete 110,000 20,000 Amortization of premium on marketable securities 0 4,000 Changes in operating assets and liabilities: Trade accounts receivable (15,851,000) (7,980,000) Inventories (3,570,000) (8,221,000) Other current assets (1,761,000) (477,000) Accounts payable 3,291,000 3,511,000 Accrued expenses 1,899,000 1,329,000 Income taxes payable 1,728,000 (797,000) - -------------------------------------------------------------------------------- Net cash provided by operating activities 8,674,000 5,990,000 - -------------------------------------------------------------------------------- Cash flows from investing activities: Sale of marketable securities 0 89,000 Additions of property and equipment, net (14,702,000) (14,713,000) Proceeds from sale of property and equipment 3,009,000 1,750,000 Translation adjustment (23,000) (159,000) Increase in other assets (104,000) (3,493,000) - -------------------------------------------------------------------------------- Net cash used in investing activities (11,820,000) (16,526,000) - -------------------------------------------------------------------------------- Cash flows from financing activities: Net increase in notes payable 3,763,000 5,562,000 Payment of dividends (759,000) (759,000) - -------------------------------------------------------------------------------- Net cash provided by financing activities 3,004,000 4,803,000 - -------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (142,000) (5,733,000) Cash and cash equivalents at beginning of period 426,000 6,583,000 - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 284,000 850,000 - -------------------------------------------------------------------------------- Supplemental disclosure of cash flow information: Cash paid during each period for: Income taxes $ 11,240,000 11,530,000 - -------------------------------------------------------------------------------- Interest $ 500,000 7,000 - --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. - 4 - FASTENAL COMPANY AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 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 six months of 1997 vs. 1996 - --------------------------------- Net sales for the six months ended June 30, 1997 increased 38.4% to $185,327,000 versus the $133,911,000 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. Sites opened in 1995 or earlier had average sales increases of 24.2%. The remainder of the 38.4% sales growth came from store sites opened in 1996 and during the first six months of 1997. One hundred fifty-eight new store sites were added from July 1996 through June 1997. During the first six months of 1997, 92 new sites were opened consisting of 66 Fastenal(R) stores and 26 satellite stores. The total sites at the end of the second quarter were 576, which consisted of 536 Fastenal(R) stores and 40 satellite stores. During the six months ended June 30, 1997, 12.6% of net sales came from sales of the Company's FastTool(R) product line, 3.9% of net sales came from sales of the Company's SharpCut(R) product line, 2.2% of net sales came from sales of the Company's PowerFlow/TM/ product line, 2.1% 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. Net earnings for the first six months grew from $15,878,000 in 1996 to $19,244,000 in 1997, an increase of 21.2%. Net earnings increased at a slower rate than net sales primarily because operating and administrative expenses increased at a 42.1% 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 51.2% over the comparable period. The Company increased its site personnel from 1,989 on December 31, 1996 to 2,409 on June 30, 1997, an increase of 21.1%. The increase in employment costs was caused primarily by the opening of new store sites and the product line expansion at existing store sites. - 6 - ITEM 2. (continued) Second quarter of 1997 vs. 1996 - ------------------------------- Net sales for the three months ended June 30, 1997 increased 38.6% to $98,232,000 versus the $70,850,000 recorded during the comparable 1996 period. As discussed earlier, 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 23.0%. The remainder of the 38.6% sales growth came from store sites opened in 1996 and during the first six months of 1997. During the three months ended June 30, 1997, 48 new sites were opened consisting of 36 Fastenal(R) stores and 12 satellite stores. During the three months ended June 30, 1997, 12.8% of net sales came from sales of the Company's FastTool(R) product line, 4.1% of net sales came from sales of the Company's SharpCut(R) product line, 2.3% of net sales came from sales of the Company's PowerFlow/TM/ product line, 2.2% 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. Net earnings for the three months ended June 30 grew from $8,445,000 in 1996 to $10,479,000 in 1997, an increase of 24.1%. Net earnings increased at a slower rate than net sales primarily because of a decrease in the overall gross margin from 53.7% in the second quarter of 1996 to 52.1% in the second quarter of 1997 and because operating and administrative expenses increased at a 39.8% 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 49.0% over the comparable period. The Company increased its site personnel from 2,215 on March 31, 1997 to 2,409 on June 30, 1997, an increase of 8.8%. The increase in employment costs was caused primarily by the opening of new store sites and the previously discussed product line expansion at existing store sites. Liquidity and Capital Resources - ------------------------------- The higher level of sales during the six month period resulted in the growth of trade accounts receivable and inventory. 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 borrowings. As of June 30, 1997, the Company had outstanding commitments of approximately $450,000 to acquire real property in Winona, Minnesota. Management is funding this from available cash and from its borrowing capacity. - 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 22, 1997, 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 34,389,638 76,190 Stephen M. Slaggie 34,389,588 76,240 Michael M. Gostomski 34,389,338 76,490 John D. Remick 34,389,494 76,334 Henry K. McConnon 34,389,178 76,650
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, 1997. Voting to ratify the appointment were 33,804,302 shares. Voting against the ratification were 23,021 shares. There were no broker non-votes. Abstentions totaled 121,487 shares. 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, 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 July 25,1997 /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 six months ended, June 30, 1997 and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 284,000 0 58,004,000 600,000 60,096,000 124,495,000 75,783,000 23,744,000 180,688,000 35,719,000 0 379,000 0 0 144,050,000 180,688,000 185,327,000 185,327,000 88,326,000 88,326,000 0 642,000 500,000 32,212,000 12,968,000 19,244,000 0 0 0 19,244,000 .51 .51 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 June 30, 1997.
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