ITEM 1. BUSINESS
Fastenal Company ("Fastenal Company" and, together with its wholly owned subsidiaries, Fastenal Company Services, Fastenal Company Purchasing, Fastenal Company Leasing and Fastenal Canada Company, collectively, "the Company") began as a partnership in 1967, and was incorporated under the laws of Minnesota in 1968. As of December 31, 1997, the Company had 644 store sites located in 48 states and Canada and 2,676 people employed at these sites. Forty-six of these sites were satellite stores of an existing site. The Company has eight product lines. The traditional Fastenal(R) product line(1) consists of approximately 51,000 different types of threaded fasteners and other industrial and construction supplies. The FastTool(R) product line(1), which was introduced in 1993, consists of approximately 21,000 different types of tools and safety supplies. The SharpCut(R), PowerFlow(TM), EquipRite(R) and CleanChoice(R) product lines(1), which were introduced in 1996, consist of approximately 14,000 different types of metal cutting tool blades, approximately 11,000 different types of fluid transfer components and accessories for hydraulic and pneumatic power, approximately 4,000 different types of material handling and storage products, and approximately 3,000 different types of janitorial and paper products, respectively. The FastArc(TM) and PowerPhase(TM) product lines, which were introduced in 1997, consist of approximately 1,000 different types of welding supplies (excluding gas and welding machines) and approximately 1,000 different types of electrical supplies, respectively. The Company operated nine distribution centers as of December 31, 1997 from which the Company distributes products to its store sites, and operates a facility in Memphis, Tennessee to receive and package goods coming from suppliers outside of the United States.
- ---------------- (1) Fastenal(R), FastTool(R), SharpCut(R), PowerFlow(TM), EquipRite(R), CleanChoice(R), FastArc(TM) and PowerPhase(TM) are trademarks and/or service marks of the Company.
DEVELOPMENT OF THE BUSINESS
Fastenal Company began in 1967 with a marketing strategy of supplying threaded fasteners to customers in small- to medium-sized cities. The Company believes its success can be attributed to its ability to offer such customers a full line of products at convenient locations, and to the high quality of the Company's employees.
The Company opened its first store site in Winona, Minnesota, a city with a population of approximately 25,000. The following table shows the growth in the number of Company store sites during the last ten years, and the related increases in the Company's consolidated net sales during that period:
As of December 31, 1997, the Company operated 644 store sites located in:
Alabama (12 sites) Nebraska (6 sites) Arizona (4 sites) Nevada (3 sites) Arkansas (11 sites) New Hampshire (6 sites) California (17 sites) New Jersey (6 sites) Colorado (8 sites) New Mexico (5 sites) Connecticut (8 sites) New York (17 sites) Delaware (2 sites) North Carolina (20 sites) Florida (17 sites) North Dakota (6 sites) Georgia (19 sites) Ohio (38 sites) Idaho (6 sites) Oklahoma (10 sites) Illinois (26 sites) Oregon (11 sites) Indiana (23 sites) Pennsylvania (25 sites) Iowa (15 sites) Rhode Island (2 sites) Kansas (9 sites) South Carolina (11 sites) Kentucky (11 sites) South Dakota (4 sites) Louisiana (9 sites) Tennessee (14 sites) Maine (4 sites) Texas (50 sites) Maryland (9 sites) Utah (7 sites) Massachusetts (10 sites) Vermont (2 sites) Michigan (28 sites) Virginia (17 sites) Minnesota (19 sites) Washington (16 sites) Mississippi (7 sites) West Virginia (8 sites) Missouri (13 sites) Wisconsin (31 sites) Montana (6 sites) Wyoming (2 sites)
Puerto Rico (1 site) Canada (33 sites)
The Company has closed only three store sites in its history.
The Company selects new locations for its stores based on their proximity to the Company's distribution network, population statistics, and employment data for manufacturing and construction. The Company currently intends to continue opening new store sites at or above the rate experienced over the last several years, subject to market and general economic conditions.
In 1995 the Company opened nine experimental multi-product line `combination' stores in communities which were smaller (populations of approximately 8,000 to 25,000) than those in which traditional stores selling one product line were located. These stores, each of which started operations with two full-time employees, combined the Fastenal(R) and FastTool(R) product lines in a single store. The Company opened 71 of these combination stores in 1996, most of which were located in smaller communities.
In 1997, the Company began to stock all new stores with an inventory drawn from all of its product lines. This included sites in smaller communities as well as larger communities. Subsequent to a site's opening, the site personnel customize the inventory offering to that site's customer base. In addition, the Company began to introduce selected product from all of the Company's product lines into existing stores. Therefore, beginning in 1997 the Company ceased making a distinction between a traditional Fastenal(R) store and a `combination' store. The Company believes that approximately 1,000 markets in the United States and Canada (including those in which Fastenal stores are already located) have sufficient potential to justify this type of multi-product line store. Most of the future potential markets are located in smaller communities.
In 1996, the Company opened eight experimental stores that operated as satellites of existing stores. These satellites are located in communities as small as 2,000 population and are usually located within a 30 mile radius of the mother store. In most cases, the Company was already doing business in this community from the mother store, but the addition of a physical presence in the community provided sales increases from that community. The Company opened additional satellite stores in 1997. Although the Company cannot be sure of the success of these stores, the Company believes that their success could lead to approximately 500 satellite store sites in the United States and Canada.
In 1997 the Company sold products into Mexico from its existing Brownsville, El Paso and McAllen, Texas stores. The Company opened six store sites in Canada in 1995, seven in 1996, 20 in 1997, and plans to open additional store sites in Canada in 1998. The Company opened one store site in Puerto Rico in 1997 and plans to open additional store sites in Puerto Rico in 1998. The stores in Canada and Puerto Rico contributed less than 5% of the Company's consolidated net sales in 1997.
No assurance can be given that any of the expansion plans described above will be achieved, or that new stores, once opened, will be profitable.
It has been the Company's experience that near-term profitability has been adversely affected by the opening of new store sites, due to the related start-up costs and the time necessary to generate a customer base. A new store generates its sales from direct sales calls, a slow process involving repeated contacts. As a result of this process, sales volume builds slowly and it typically requires nine to 12 months for a new store to achieve its first profitable month. Of the 44 stores opened in the first quarter of 1997, 18 were profitable in the fourth quarter of 1997.
For 1997, annual sales volumes of store sites operating at least five years ranged between approximately $300,000 and $5,200,000, with 75% of these store sites having annual sales volumes within the range of approximately $700,000 to $1,800,000. The data in the following table shows the growth in the average sales of the Company's store sites from 1996 to 1997 based on each site's age. The store sites opened in 1997 contributed approximately $18.1 million (or approximately 4.5%) of the Company's consolidated net sales in 1997, with the remainder coming from existing store sites.
Age of store site as of Number of store December sites in group as of Average Average Percent 31, 1997 December 31, 1997 sales 1996 sales 1997 change - -------------------------------------------------------------------------------- 0-1 year old 160 $ -- $ 113,000(1) -- %
1-2 years old 109 88,000(1) 361,000 --
2-3 years old 60 299,000 472,000 57.9
3-4 years old 62 405,000 534,000 32.1
4-5 years old 53 509,000 663,000 30.3
5-6 years old 42 724,000 843,000 16.4
6-7 years old 32 821,000 951,000 15.8
7-8 years old 28 959,000 1,119,000 16.7
8-9 years old 23 947,000 1,111,000 17.3
9-10 years old 17 992,000 1,087,000 9.6
10-13 years old 30 1,244,000 1,477,000 18.7
13+ years old 28 1,734,000 2,088,000 20.4
(1) Average sales includes sales of store sites open for less than the full fiscal year.
As of December 31, 1997, the Company operated distribution centers in or near Winona, Minnesota; Indianapolis, Indiana; Dallas, Texas; Atlanta, Georgia; Scranton, Pennsylvania; Fresno, California; Lakewood, Washington; Akron, Ohio; and Salt Lake City, Utah. Distribution centers are located so as to permit twice-a-week to five times-a-week delivery to Company stores using Company trucks and overnight delivery by surface common carrier. As the number of stores increases, the Company intends to add new distribution centers. The Company opened a distribution center in Winston-Salem, North Carolina in January 1998 and plans to open two to four other distribution centers during 1998.
The Company also operates a packaging facility in Memphis, Tennessee. This facility receives freight containers from foreign suppliers and repackages the items in standard packages using high speed equipment.
The Company operates a UNIX/terminal-based computer system allowing automatic data exchange between the stores and the distribution centers during regular business hours. The use of client/server technology allows the Company's network of UNIX-based machines to serve networked personal computers and workstations. During 1997 the Company began testing its Microsoft Windows NT, client/server, graphical user environment in a limited number of store locations (NT Point-of-sale system). The Company plans to convert to the NT Point-of-sale system during 1998.
PRODUCTS
Traditional Fastenal(R) Product Line
The Company's Fastenal(R) product line consists of approximately 51,000 different items, which may be divided into two broad categories: threaded fasteners, such as bolts, nuts, screws, studs, and related washers; and other industrial and construction supplies, such as paints, various pins and machinery keys, concrete anchors, batteries, sealants, metal framing systems, wire rope, stainless strut, private label stud anchors, rivets, and related accessories.
Threaded fasteners are used in most manufactured products and building projects, and in the maintenance and repair of machines and structures. Although some aspects of the threaded fastener market are common to all cities, the Company feels that each city's market is to some extent unique. Therefore, the Company opens each store with minimal base stocks of inventory, and then tailors the growing inventory to the local market demand as it develops. Threaded fasteners accounted for approximately 61%, 64%, and 65% of the Company's consolidated net sales in 1997, 1996 and 1995, respectively.
Concrete anchors make up the largest portion of the other supply items included in the Fastenal(R) product line. Most concrete anchors use threaded fasteners as part of the completed anchor assembly.
FastTool(R) Product Line
In 1993 the Company began selling a new FastTool(R) product line. This product line consists of power and hand tools, safety supplies and a tool repair service. The inventory of tools and safety supplies is comprised of approximately 21,000 different items. The Company uses its current distribution system for the FastTool(R) product line.
SharpCut(R) Product Line
Late in 1995 the Company developed a new SharpCut(R) product line which it began selling in 1996. This product line consists of metal cutting tool blades and a resharpening service. The inventory related to the SharpCut(R) product line is comprised of approximately 14,000 different items. The Company uses its current distribution system for the SharpCut(R) product line.
PowerFlow(TM) Product Line
In 1996 the Company began selling a new PowerFlow(TM) product line. This product line consists of fluid transfer components and accessories for hydraulic and pneumatic power and a hose crimping service. The inventory related to the PowerFlow(TM) product line is comprised of approximately 11,000 different items. The Company uses its current distribution system for the PowerFlow(TM) product line.
EquipRite(R) Product Line
In 1996 the Company began selling a new EquipRite(R) product line. This product line consists of material handling and related storage products and a storeroom layout design service. The inventory related to the EquipRite(R) product line is comprised of approximately 4,000 different items. The Company uses its current distribution system for the EquipRite(R) product line.
CleanChoice(R) Product Line
In 1996 the Company began selling a new CleanChoice(R) product line. This product line consists of janitorial and paper products. The inventory related to the CleanChoice(R) product line is comprised of approximately 3,000 different items. The Company uses its current distribution system for the CleanChoice(R) product line.
FastArc(TM) Product Line
In 1997 the Company began selling a new FastArc(TM) product line. This product line consists of welding supplies (excluding gas and welding machines). The inventory related to the FastArc(TM) product line is comprised of approximately 1,000 different items. The Company uses its current distribution system for the FastArc(TM) product line.
PowerPhase(TM) Product Line
In 1997 the Company began selling a new PowerPhase(TM) product line. This product line consists of electrical supplies. The inventory related to the PowerPhase(TM) product line is comprised of approximately 1,000 different items. The Company uses its current distribution system for the PowerPhase(TM) product line.
Additional Product Lines
The Company plans to add other industrial product lines in the future.
INVENTORY CONTROL
The Company controls inventory by using computer systems to preset desired stock levels. The data used for this purpose is derived from reports showing sales activity by item for the previous three years. Computers then convert this data to typical store maximum-minimum inventory levels for each item. Stores can deviate from preset inventory levels as deemed appropriate by their district managers. Inventories in distribution centers are established from computerized sales data for the stores served by the respective centers.
MANUFACTURING OPERATIONS
In 1997 approximately 95.5% of the Company's consolidated net sales were attributable to products manufactured by other companies to industry standards. The remaining amount of approximately 4.5% of the Company's consolidated net sales for 1997 related to products manufactured by, or modified in, the Company's machining shop or repaired in a tool repair center. These manufactured products consist primarily of non-standard sizes of threaded fasteners made to customers' specifications. The Company engages in manufacturing activity primarily as a service to its customers and does not expect any significant growth in the foreseeable future in the proportion of the Company's consolidated net sales attributable to manufacturing.
SOURCES OF SUPPLY
The Company uses a large number of suppliers for the approximately 106,000 standard items it distributes. Most items distributed by the Company can be purchased from several sources, although preferred sourcing is used for some items to facilitate quality control. No single supplier accounted for more than 5.0% of the Company's purchases in 1997.
CUSTOMERS AND MARKETING
The Company believes its success can be attributed to its ability to offer customers in small- to medium-sized cities a full line of products at convenient locations, and to the high quality of the Company's employees. Most of the Company's customers are in the construction and manufacturing markets. The construction market includes general, electrical, plumbing, sheet metal, and road contractors. The manufacturing market includes both original equipment manufacturers and maintenance and repair operations. Other users of the Company's products include farmers, truckers, railroads, mining companies, municipalities, schools, and certain retail trades. As of December 31, 1997, the Company's total number of active customer accounts (defined as accounts having purchase activity within the last 90 days) was approximately 84,000.
During each of the three years ended December 31, 1997, no one customer accounted for a significant portion of the Company's sales. The Company believes that the large number of its customers together with the varied markets that they represent provide some protection to the Company from economic downturns in a particular market.
A significant portion of the Company's sales are generated through direct calls on customers by store personnel. Because of the nature of the Company's business, the Company does not use the more expensive forms of mass media advertising such as television, radio, and newspapers. Forms of advertising used by the Company include signs and catalogs.
Late in December 1997 the Company began rolling out its new 824 page catalog. This catalog includes standard product from all of the Company's product lines.
COMPETITION
The Company's business is highly competitive. Competitors include both large distributors located primarily in large cities and smaller distributors located in many of the same cities in which the Company has stores. The Company believes that the principal competitive factors affecting the markets for the Company's products are customer service and convenience.
Some competitors use vans to sell their products in communities away from their main warehouses, while others rely on mail order or telemarketing sales. The Company, however, believes that the convenience provided to customers by actually operating a number of stores in smaller markets, each offering a full line of products, is a competitive selling advantage and that the large number of stores in a given area, taken together with the Company's ability to provide frequent deliveries to such stores from centrally located distribution centers, makes possible the prompt and efficient distribution of products. Having trained personnel at each store also enhances the Company's ability to compete (see "Employees" below).
EMPLOYEES
As of December 31, 1997, the Company employed a total of 4,075 full- and part-time employees, 2,676 being store managers and store employees, and the balance being employed in the Company's distribution centers, packaging facility, manufacturing operations, service operations and home office.
The Company believes that the quality of its employees is critical to its ability to compete successfully in the markets it currently serves and to its ability to open new stores in new markets. The Company fosters the growth and education of skilled employees throughout the organization by operating training programs and by decentralizing decision making. Wherever possible, promotions are from within the Company. For example, most new store managers are promoted from an assistant manager's position at another store and district managers (who supervise a number of stores) are usually former store managers.
The Company's sales personnel participate in incentive bonus arrangements that place emphasis on achieving increased sales on a store and regional basis, while still attaining targeted levels of gross profit. As a result, a significant portion of the Company's total employment cost varies with sales volume. The Company also pays incentive bonuses to other personnel for achieving pre-determined cost containment goals.
None of the Company's employees is subject to a collective bargaining agreement and the Company has experienced no work stoppages. The Company believes its employee relations are excellent.
ITEM 2.
ITEM 2. PROPERTIES
The Company owns five facilities in Winona, Minnesota: a 173,000 square foot distribution center and home office building, a 50,000 square foot manufacturing facility, a 13,000 square foot building that houses the Company's Winona store and regional training center, a 42,000 square foot building that houses rack and shelving storage and a multi-building complex purchased in 1997 with approximately 30,000 total square feet which houses several support services including, among others, the SharpCut(R) regrind department and the fabrication department. The Company also owns a 60,000 square foot distribution center in Indianapolis, Indiana, a 54,000 square foot distribution center in Atlanta, Georgia, a 50,000 square foot distribution center in Dallas, Texas, a 50,000 square foot distribution center near Scranton, Pennsylvania and a 102,000 square foot distribution center in Akron, Ohio. The buildings that house the Company's stores in Waterloo and Mason City, Iowa; St. Joseph, Missouri; Wichita Falls and Texarkana, Texas; Topeka, Kansas; and Kokomo, Indiana are also owned by the Company.
All other buildings occupied by the Company are leased. Leased stores range from approximately 1,200 to 8,000 square feet, with lease terms of up to 48 months. The Company's leases certain distribution centers as well as its packaging facility in Tennessee. These leases are as follows:
* The lease renewals can be exercised at the Company's option. ** As of December 31, 1997, the Memphis packaging center was housed in a 37,500 square foot facility. The Company expects to move into a 115,000 square foot facility in February 1998.
If economic conditions are suitable, the Company will, in the future, consider purchasing store sites to house its older stores. All sites for new stores will continue to be leased. It is the Company's policy to negotiate relatively short lease terms to facilitate relocation of particular store operations if deemed desirable by management. It has been the Company's experience that space suitable for its needs and available for leasing is more than sufficient.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Fastenal Company are:
Name Age Position - ----------------------------------------------------------------------------
Robert A. Kierlin 58 Chairman of the Board, President, Chief Executive Officer and Director
Willard D. Oberton 39 Vice President and Chief Operating Officer
Stephen M. Slaggie 58 Secretary and Director
Daniel L. Florness 34 Treasurer, Chief Financial Officer and Chief Accounting Officer
Mr. Kierlin has been the Chairman of the Board, President and Chief Executive Officer of Fastenal Company and has served as a director since Fastenal Company's incorporation in 1968.
Mr. Oberton has been the Vice President and Chief Operating Officer of Fastenal Company since March 1997. From June 1986 through March 1997, Mr. Oberton held the position of general operations manager of Fastenal Company.
Mr. Slaggie has been the Secretary of Fastenal Company and has served as a director since 1970. He became a full-time employee of Fastenal Company in December 1987, at which time he assumed the additional duties of Shareholder Relations Director and Insurance Risk Manager. From 1970 through June 1996, Mr. Slaggie also served as the Treasurer of Fastenal Company.
Mr. Florness has been the Treasurer, Chief Financial Officer and Chief Accounting Officer of Fastenal Company since June 1996. From January 1987 through May 1996, Mr. Florness was employed by KPMG Peat Marwick LLP, a public accounting firm. Mr. Florness served in the capacity of manager or senior manager from July 1992 through May 1996 with that firm.
None of the above executive officers is related to any other such executive officer or to any other director of Fastenal Company.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Incorporated herein by reference is Fastenal Company's Annual Report to Shareholders for the fiscal year ended December 31, 1997, Common Stock Data on page 9.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference is Fastenal Company's Annual Report to Shareholders for the fiscal year ended December 31, 1997, page 2.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Incorporated herein by reference is Fastenal Company's Annual Report to Shareholders for the fiscal year ended December 31, 1997, pages 5-8.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not Applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated herein by reference is Fastenal Company's Annual Report to Shareholders for the fiscal year ended December 31, 1997, Selected Quarterly Financial Data (Unaudited) on page 9, and Consolidated Financial Statements, Notes to Consolidated Financial Statements, and Independent Auditors' Report on pages 10-20.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference is the information appearing under the headings "Election of Directors--Nominees and Required Vote", pages 4-5, and "Section 16(a) Beneficial Ownership Reporting Requirements", page 10, in Fastenal Company's Proxy Statement dated March 17, 1998. See also Part I hereof under the heading "Item X. Executive Officers of the Registrant".
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference is the information appearing under the headings "Election of Directors--Board and Committee Meetings", page 5, "Executive Compensation--Summary of Compensation", page 6, and "Executive Compensation--Compensation Committee Interlocks and Insider Participation", page 6, in Fastenal Company's Proxy Statement dated March 17, 1998.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference is the information appearing under the heading "Security Ownership of Principal Shareholders and Management", pages 2-4, in Fastenal Company's Proxy Statement dated March 17, 1998.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference is the information appearing under the heading "Interests of Management in Certain Transactions", page 10, in Fastenal Company's Proxy Statement dated March 17, 1998.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) 1. Financial Statements:
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Earnings for the years ended December 31, 1997, 1996, and 1995
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996, and 1995
Notes to Consolidated Financial Statements
Independent Auditors' Report
(Incorporated by reference to pages 10-20 of Fastenal Company's Annual Report to Shareholders for the fiscal year ended December 31, 1997)
2. Financial Statement Schedules:
Schedule VIII--Valuation and Qualifying Accounts
3. 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)
10 Description of bonus arrangement for Vice President
13 Annual Report to Shareholders for the fiscal year ended December 31, 1997 (only those portions specifically incorporated by reference herein shall be deemed filed with the Commission)
21 List of Subsidiaries
27 Financial Data Schedule
Copies of Exhibits will be furnished upon request and payment of the Company's reasonable expenses in furnishing the Exhibits.
b) Reports on Form 8-K
No report on Form 8-K was filed by Fastenal Company during the fourth quarter of the fiscal year ended December 31, 1997.
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
The Board of Directors and Stockholders Fastenal Company:
Under date of January 23, 1998, we reported on the consolidated balance sheets of Fastenal Company and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1997, as contained in the 1997 annual report to shareholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1997. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota January 23, 1998
FASTENAL COMPANY
Schedule VIII--Valuation and Qualifying Accounts
Years ended December 31, 1997, 1996, and 1995
"Additions" "Additions" Balance at charged to charged Balance beginning costs and to other "Less" at end Description of year expenses accounts deductions of year - --------------------------------------------------------------------------------
Year ended December 31, 1997 allowance for doubtful accounts $540,000 $1,614,000 $0 $1,494,000 $660,000
Year ended December 31, 1996 allowance for doubtful accounts 460,000 917,000 0 837,000 540,000
Year ended December 31, 1995 allowance for doubtful accounts 300,000 519,513 0 359,513 460,000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 16, 1998
FASTENAL COMPANY
By /s/ Robert A. Kierlin --------------------------------- Robert A. Kierlin, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: March 16, 1998 By /s/ Robert A. Kierlin ------------------------------------- Robert A. Kierlin, President (Principal Executive Officer) and Director
Date: March 16, 1998 By /s/ Daniel L. Florness ------------------------------------- Daniel L. Florness, Treasurer (Principal Financial Officer and Principal Accounting Officer)
Date: March 16, 1998 By /s/ Stephen M. Slaggie ------------------------------------- Stephen M. Slaggie, Director
Date: March 16, 1998 By /s/ Michael M. Gostomski ------------------------------------- Michael M. Gostomski, Director
Date: March 16, 1998 By /s/ Henry K. McConnon ------------------------------------- Henry K. McConnon, Director
Date: March 16, 1998 By /s/ John D. Remick ------------------------------------- John D. Remick, Director
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).
10 Description of bonus arrangement for Vice President .................................Electronically Filed
13 Annual Report to Shareholders for the fiscal year ended December 31, 1997 (only those portions specifically incorporated by reference herein shall be deemed filed with the Commission)................Electronically Filed
21 List of Subsidiaries ...............................Electronically Filed
27 Financial Data Schedule.............................Electronically Filed