| Document and Entity Information | ||
| 3 Months Ended
Mar. 31, 2010 | Apr. 23, 2010
| |
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | 2010-03-31 | |
| Document Fiscal Year Focus | 2,010 | |
| Document Fiscal Period Focus | Q1 | |
| Trading Symbol | FAST | |
| Entity Registrant Name | FASTENAL CO | |
| Entity Central Index Key | 0000815556 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 147,430,712 |
| Consolidated Balance Sheets (USD $) | ||
| In Thousands | Mar. 31, 2010
| Dec. 31, 2009
|
| Current assets: | ||
| Cash and cash equivalents | $178,822 | $164,852 |
| Marketable securities | 24,440 | 24,400 |
| Trade accounts receivable, net of allowance for doubtful accounts of $4,084 and $4,086, respectively | 262,463 | 214,169 |
| Inventories | 507,243 | 508,405 |
| Deferred income tax assets | 12,908 | 12,919 |
| Prepaid income taxes | 0 | 11,657 |
| Other current assets | 43,307 | 45,962 |
| Total current assets | 1,029,183 | 982,364 |
| Marketable securities | 5,210 | 6,238 |
| Property and equipment, less accumulated depreciation | 332,103 | 335,004 |
| Other assets, net | 3,779 | 3,752 |
| Total assets | 1,370,275 | 1,327,358 |
| Current liabilities: | ||
| Accounts payable | 65,778 | 53,490 |
| Accrued expenses | 74,728 | 66,019 |
| Income taxes payable | 21,803 | 0 |
| Total current liabilities | 162,309 | 119,509 |
| Deferred income tax liabilities | 17,001 | 17,006 |
| Stockholders' equity: | ||
| Preferred stock, 5,000,000 shares authorized | 0 | 0 |
| Common stock, 200,000,000 shares authorized, 147,430,712 shares issued and outstanding | 1,474 | 1,474 |
| Additional paid-in capital | 1,333 | 333 |
| Retained earnings | 1,172,703 | 1,175,641 |
| Accumulated other comprehensive income | 15,455 | 13,395 |
| Total stockholders' equity | 1,190,965 | 1,190,843 |
| Total liabilities and stockholders' equity | $1,370,275 | $1,327,358 |
| Consolidated Balance Sheets (Parenthetical) (USD $) | ||
| In Thousands, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
| Trade accounts receivable, allowance for doubtful accounts | $4,084 | $4,086 |
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
| Common stock, shares authorized | 200,000,000 | 200,000,000 |
| Common stock, shares issued | 147,430,712 | 147,430,712 |
| Common stock, shares outstanding | 147,430,712 | 147,430,712 |
| Consolidated Statements of Earnings (USD $) | ||
| In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| Net sales | $520,772 | $489,347 |
| Cost of sales | 254,859 | 230,699 |
| Gross profit | 265,913 | 258,648 |
| Operating and administrative expenses | 175,410 | 179,909 |
| Loss on sale of property and equipment | 67 | 328 |
| Operating income | 90,436 | 78,411 |
| Interest income | 233 | 256 |
| Earnings before income taxes | 90,669 | 78,667 |
| Income tax expense | 34,635 | 29,973 |
| Net earnings | $56,034 | $48,694 |
| Basic and diluted net earnings per share | 0.38 | 0.33 |
| Basic and diluted weighted average shares outstanding | 147,431 | 148,531 |
| Consolidated Statements of Cash Flows (USD $) | ||
| In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| Cash flows from operating activities: | ||
| Net earnings | $56,034 | $48,694 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
| Depreciation of property and equipment | 10,287 | 10,300 |
| Loss on sale of property and equipment | 67 | 328 |
| Bad debt expense | 1,624 | 2,567 |
| Deferred income taxes | 6 | 0 |
| Stock based compensation | 1,000 | 900 |
| Amortization of non-compete agreement | 17 | 17 |
| Changes in operating assets and liabilities: | ||
| Trade accounts receivable | (49,918) | 1,715 |
| Inventories | 1,162 | 8,964 |
| Other current assets | 2,655 | 18,600 |
| Accounts payable | 12,288 | (12,948) |
| Accrued expenses | 8,709 | (9,998) |
| Income taxes | 33,460 | 26,394 |
| Other | 1,637 | (1,999) |
| Net cash provided by operating activities | 79,028 | 93,534 |
| Cash flows from investing activities: | ||
| Purchase of property and equipment | (8,138) | (19,033) |
| Proceeds from sale of property and equipment | 685 | 1,973 |
| Net decrease (increase) in marketable securities | 988 | (19) |
| Net (increase) decrease in other assets | (44) | 63 |
| Net cash used in investing activities | (6,509) | (17,016) |
| Cash flows from financing activities: | ||
| Payment of dividends | (58,972) | (51,986) |
| Net cash used in financing activities | (58,972) | (51,986) |
| Effect of exchange rate changes on cash | 423 | (557) |
| Net increase in cash and cash equivalents | 13,970 | 23,975 |
| Cash and cash equivalents at beginning of period | 164,852 | 85,892 |
| Cash and cash equivalents at end of period | 178,822 | 109,867 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid during each period for income taxes | $1,169 | $3,579 |
| Basis of Presentation | |
| 3 Months Ended
Mar. 31, 2010 | |
| Basis of Presentation | (1) Basis of Presentation The accompanying unaudited consolidated financial statements of Fastenal Company and subsidiaries (collectively referred to as the Company, Fastenal, or by terms such as we, our, or us) have been prepared in accordance with United States generally accepted accounting principles for interim financial information. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as described herein, there has been no material change in the information disclosed in the notes to consolidated financial statements included in our consolidated financial statements as of and for the year ended December31, 2009. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. |
| Stockholders' Equity and Stock-Based Compensation | |
| 3 Months Ended
Mar. 31, 2010 | |
| Stockholders' Equity and Stock-Based Compensation | (2) Stockholders Equity and Stock-Based Compensation During April 2009,April 2008, and April 2007, the Compensation Committee of our Board of Directors approved the grant under our employee stock option plan, effective at the close of business that day, of options to purchase approximately 395thousand shares, 275thousand shares, and 2.2million shares, respectively, of our common stock. On April20, 2010, the Compensation Committee of our Board of Directors approved the grant under our employee stock option plan, effective at the close of business that day, of options to purchase approximately 265thousand shares of our common stock at a strike price of $60.00 per share. The closing stock price on the date of grant was $54.19 per share. All of the options noted above vest and become exercisable over a period of up to eight years. Each option will terminate, to the extent not previously exercised, 13 months after the end of the relevant vesting period. As of March31, 2010, options granted in April 2007 had vested with respect to approximately 210 thousand shares. No other options were vested as of March31, 2010. Compensation expense equal to the grant date fair value will be recognized for all of these awards over the vesting period. The stock-based compensation expense for the three month periods ended March31, 2010 and 2009 was $1,000 and $900, respectively. Unrecognized compensation expense related to outstanding stock options as of March31, 2010 was $16,585 and is expected to be recognized over a weighted average period of 6.021 years. Any future changes in estimated forefeitures will impact this amount. The fair value of each share-based option outstanding as of March31, 2010, is estimated on the date of grant using a Black-Scholes valuation method that uses the assumptions noted in the following table. The expected life is the most significant assumption as it determines the period for which the risk-free interest rate, volatility, and dividend yield must be applied. The expected life is the average length of time over which the employee groups will exercise their options, which is based on historical experience with similar grants. Expected volatilities are based on the movement of the Companys stock over the most recent historical period equivalent to the expected life of the options. The risk-free interest rate is based on the U.S. Treasury rate over the expected life at the time of grant. The dividend yield is estimated over the expected life based on our current dividend payout, our historical dividends paid, and our expected future cash dividends. The following table illustrates the share price information and assumptions used to determine fair value: Options Granted April 2009 April 2008 April 2007 Strike price $ 54.00 54.00 45.00 Closing market price on date of grant $ 35.22 48.70 40.30 Weighted-average expected life of option in years 5.0 5.0 4.9 Weighted-average volatility 38.8% 30.7% 31.6% Risk free interest rate 1.9% 2.7% 4.6% Expected dividend yield 1.0% 1.0% 1.0% Weighted-average gra |
| Comprehensive Income | |
| 3 Months Ended
Mar. 31, 2010 | |
| Comprehensive Income | (3) Comprehensive Income Comprehensive income and the components of other comprehensive income were as follows: Three-month period 2010 2009 Net earnings $ 56,034 48,694 Translation adjustment 2,020 (2,555 ) Change in marketable securities 40 (2 ) Total comprehensive income $ 58,094 46,137 |
| Unrealized Investment Gains and Losses | |
| 3 Months Ended
Mar. 31, 2010 | |
| Unrealized Investment Gains and Losses | (4) Unrealized Investment Gains and Losses The following tables show the fair value of our investments and the gross unrealized gains and losses of those investments for the three month period. This information is aggregated by the investment category and maturity of the investment. March31, 2010 Current Non-current Total Fairvalue Unrealized gain (loss) Fairvalue Unrealized gain (loss) Fairvalue Unrealized gain (loss) State and municipal bonds $ 0 0 5,210 40 5,210 40 Government and agency securities 24,440 0 0 0 24,440 0 Total $ 24,440 0 5,210 40 29,650 40 March31, 2009 Current Non-current Total Fairvalue Unrealized gain (loss) Fairvalue Unrealized gain (loss) Fairvalue Unrealized gain (loss) State and municipal bonds $ 712 0 817 (2 ) 1,529 (2 ) Certificates of deposit or money market 187 0 0 0 187 0 Total $ 899 0 817 (2 ) 1,716 (2 ) As was disclosed in our 2009 Annual Report on Form 10-K, we classify these securities as available-for-sale. Available-for-sale securities are recorded at fair value based on current market value. As of March31, 2010, our financial assets that are measured at fair value on a recurring basis are debt securities. The government and agency securities have a maturity of 12 months and are valued using Level 1 inputs. The state and municipal bonds have maturities ranging from 1 to 24 years and are valued using Level 2 inputs. There have been no transfers between Level 1 and Level 2 during the three month period. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings, but are included in comprehensive income, and are reported as a separate component of stockholders equity until realized. |
| Operating Leases with Guarantees | |
| 3 Months Ended
Mar. 31, 2010 | |
| Operating Leases with Guarantees | (5) Operating Leases with Guarantees We lease certain pick-up trucks under operating leases. These leases have a non-cancellable lease term of one year, with renewal options for up to 72 months. The pick-up truck leases include an early buy out clause we generally exercise, thereby giving the leases an effective term of 28-36 months. Certain operating leases for vehicles contain residual value guarantee provisions, which could become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. The aggregate residual value at lease expiration, of the leases that contain residual value guarantees, is approximately $15,110 at March31, 2010. We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is remote, except for a $1,847 loss on disposal reserve provided at March31, 2010. |
| Income Taxes | |
| 3 Months Ended
Mar. 31, 2010 | |
| Income Taxes | (6) Income Taxes Fastenal, or one of its subsidiaries, files income tax returns in the United States Federal jurisdiction, numerous states, and various local and foreign jurisdictions. With limited exceptions, we are no longer subject to income tax examinations by taxing authorities for taxable years before 2006, in the case of United States Federal and non-United States examinations, and 2003, in the case of state and local examinations. As of March31, 2010 and 2009, the Company had $1,606 and $5,657, respectively, of liabilities recorded related to unrecognized tax benefits. Included in this liability for unrecognized tax benefits is an immaterial amount for interest and penalties, both of which we classify as a component of income tax expense. The Company does not anticipate that total unrecognized tax benefits will change significantly during the next 12 months. |
| Subsequent Events | |
| 3 Months Ended
Mar. 31, 2010 | |
| Subsequent Events | (7) Subsequent Events On April20, 2010, the Compensation Committee of our Board of Directors approved the grant, effective at the close of business that day, of options to purchase approximately 265thousand shares of our common stock. This grant is discussed in footnote (2)Stockholders Equity and Stock-Based Compensation. |
