The Fastenal Company of Winona, MN (Nasdaq:FAST) reported the
results of the quarter and year ended December 31, 2011. Except for
per share information, or as otherwise noted below, dollar amounts
are in thousands. Share and per share information in this release
has been adjusted to give effect to the two-for-one split of our
common stock in May 2011.
Net sales, pre-tax earnings, net earnings, and net earnings per
share were as follows for the periods ended December 31:
|
Twelve-month period |
Three-month period |
|
2011 |
2010 |
Change |
2011 |
2010 |
Change |
|
|
|
|
|
|
|
Net sales |
$ 2,766,859 |
2,269,471 |
21.9% |
$ 697,804 |
573,766 |
21.6% |
Pre-tax earnings |
$ 575,081 |
430,640 |
33.5% |
$ 140,769 |
107,144 |
31.4% |
% of sales |
20.8% |
19.0% |
|
20.2% |
18.7% |
|
Net earnings |
$ 357,929 |
265,356 |
34.9% |
$ 87,472 |
65,161 |
34.2% |
Net earnings per share (basic) |
$ 1.21 |
0.90 |
34.4% |
$ 0.30 |
0.22 |
36.4% |
On December 31, 2011, we had 2,585 stores. In 2011, we
opened 122 new stores, an increase of 4.9% since December 31, 2010
(we opened 127 new stores in the same period of 2010). On December
31, 2011, we had 15,168 employees, an increase of 14.2% since
December 31, 2010.
COMMENTS REGARDING MONTHLY SALES CHANGES, SEQUENTIAL
TRENDS, AND END MARKET PERFORMANCE
Note – Daily sales are defined as the sales for the period
divided by the number of business days in the period.
This section focuses on three distinct views of our business –
monthly sales changes, sequential trends, and end market
performance. The first discussion regarding monthly sales
changes provides a good mechanical view of our business based on
the age of our stores. The second discussion provides a
framework for understanding the sequential trends (that is,
comparing a period to the immediately preceding period) in our
business. Finally, we believe the third discussion regarding
end market performance provides insight into activities with our
various types of customers.
MONTHLY SALES CHANGES:
All company sales – During each of the twelve
months in 2011, 2010, and 2009, all of our selling locations, when
combined, had daily sales growth rates of (compared to the
comparable month in the preceding year):
|
Jan. |
Feb. |
Mar. |
Apr. |
May |
June |
July |
Aug. |
Sept. |
Oct. |
Nov. |
Dec. |
2011 |
18.8% |
21.5% |
22.8% |
23.2% |
22.6% |
22.5% |
22.4% |
20.0% |
18.8% |
21.4% |
22.2% |
21.2% |
2010 |
2.4% |
4.4% |
12.1% |
18.6% |
21.1% |
21.1% |
24.4% |
22.1% |
23.5% |
22.4% |
17.9% |
20.9% |
2009 |
-8.5% |
-10.5% |
-17.4% |
-21.0% |
-20.7% |
-22.5% |
-22.9% |
-21.4% |
-20.8% |
-18.7% |
-12.0% |
-8.6% |
The growth in 2010 and 2011 generally continues the improving
trend we saw in the latter half of 2009. The negative growth
in 2009 relates to the general economic weakness in the global
marketplace. The change in currencies in foreign countries
(primarily Canada) relative to the United States dollar improved
our daily sales growth rate by 0.7% during 2011.
Stores opened greater than two years – Our
stores opened greater than two years (store sites opened as
follows: 2011 group – opened 2009 and earlier, 2010 group – opened
2008 and earlier, and 2009 group – opened 2007 and earlier)
represent a consistent 'same-store' view of our
business. During each of the twelve months in 2011, 2010, and
2009, the stores opened greater than two years had daily sales
growth rates of (compared to the comparable month in the preceding
year):
|
Jan. |
Feb. |
Mar. |
Apr. |
May |
June |
July |
Aug. |
Sept. |
Oct. |
Nov. |
Dec. |
2011 |
16.0% |
18.4% |
19.4% |
19.6% |
19.2% |
19.1% |
18.7% |
16.5% |
15.2% |
18.0% |
18.5% |
17.5% |
2010 |
0.6% |
2.3% |
9.6% |
16.3% |
18.5% |
18.3% |
21.3% |
19.2% |
19.8% |
18.8% |
14.1% |
16.8% |
2009 |
-11.2% |
-13.8% |
-20.1% |
-24.0% |
-23.7% |
-25.1% |
-25.4% |
-24.0% |
-23.1% |
-20.9% |
-13.7% |
-10.6% |
Stores opened greater than five years – The
impact of the economy, over time, is best reflected in the growth
performance of our stores opened greater than five years (store
sites opened as follows: 2011 group – opened 2006 and earlier, 2010
group – opened 2005 and earlier, and 2009 group – opened 2004 and
earlier). This group is more cyclical due to the increased
market share they enjoy in their local markets. During each of
the twelve months in 2011, 2010, and 2009, the stores opened
greater than five years had daily sales growth rates of (compared
to the comparable month in the preceding year):
|
Jan. |
Feb. |
Mar. |
Apr. |
May |
June |
July |
Aug. |
Sept. |
Oct. |
Nov. |
Dec. |
2011 |
15.3% |
17.9% |
19.2% |
19.1% |
17.9% |
18.2% |
17.3% |
15.2% |
14.5% |
17.0% |
17.4% |
16.9% |
2010 |
-2.1% |
-0.5% |
7.4% |
14.9% |
17.3% |
16.2% |
19.8% |
18.2% |
18.9% |
17.9% |
13.2% |
16.0% |
2009 |
-12.4% |
-14.3% |
-21.5% |
-25.2% |
-25.2% |
-26.3% |
-26.6% |
-24.7% |
-24.2% |
-21.7% |
-15.0% |
-12.1% |
SEQUENTIAL TRENDS:
We find it helpful to think about the monthly sequential
changes in our business using the analogy of climbing a stairway
– This stairway has several predictable landings where
there is a pause in the sequential gain (i.e. April, July, and
October to December), but generally speaking, climbs from January
to October. The October landing then establishes the benchmark
for the start of the next year.
History has identified these landings in our business
cycle. They generally relate to months with impaired business
days (certain holidays). The first landing centers on Easter,
which alternates between March and April (Easter occurred in April
in both 2011 and 2010), the second landing centers on July 4th, and
the third landing centers on the approach of winter with its
seasonal impact on primarily our construction business and with the
Christmas / New Year holidays. The holidays we noted impact
the trends because they either move from month-to-month or because
they move around during the week.
The table below shows the pattern to our sequential change in
our daily sales. The line labeled 'Past' is an historical
average of our sequential daily sales change for the period 1998 to
2003. We chose this time frame because it had similar
characteristics, a weaker industrial economy in North America, and
could serve as a benchmark for a possible trend line. The
'2010' and '2011' lines represent our actual sequential daily sales
changes. The '10Delta' line is the difference between the
'Past' and '2010'; similarly, the '11Delta' is the difference
between the 'Past' and '2011'.
|
Jan.(1) |
Feb. |
Mar. |
Apr. |
May |
June |
July |
Aug. |
Sept. |
Oct. |
Past |
0.9% |
3.3% |
2.9% |
-0.3% |
3.4% |
2.8% |
-2.3% |
2.6% |
2.6% |
-0.7% |
|
|
|
|
|
|
|
|
|
|
|
2010 |
2.9% |
-0.7% |
5.9% |
0.6% |
4.8% |
1.7% |
-1.0% |
3.5% |
4.5% |
-1.5% |
10Delta |
2.0% |
-4.0% |
3.0% |
0.9% |
1.4% |
-1.1% |
1.3% |
0.9% |
1.9% |
-0.8% |
|
|
|
|
|
|
|
|
|
|
|
2011 |
-0.2% |
1.6% |
7.0% |
0.9% |
4.3% |
1.7% |
-1.0% |
1.4% |
3.4% |
0.7% |
11Delta |
-1.1% |
-1.7% |
4.1% |
1.2% |
0.9% |
-1.1% |
1.3% |
-1.2% |
0.8% |
1.4% |
|
|
|
|
|
|
|
|
|
|
|
(1) The January figures
represent the percentage change from the previous October, whereas
the remaining figures represent the percentage change from the
previous month. |
|
|
|
|
|
|
|
|
|
|
During 2010 and 2011, sales were strong - our business has
closely followed the trend line since the fall of 2009. The
months of February 2011 and 2010 were both negatively impacted by
weather.
A graph of the sequential daily sales change pattern discussed
above, starting with a base of '100' in the previous October and
ending with the next October, would be as follows:
http://media.globenewswire.com/cache/11647/file/12281.pdf
END MARKET PERFORMANCE:
Fluctuations in end market business – The
sequential trends noted above were directly linked to fluctuations
in our end markets. To place this in perspective –
approximately 50% of our business has historically been with
customers engaged in some type of manufacturing. The daily
sales to these customers grew or contracted in the first, second,
third, and fourth quarters (when compared to the same quarter in
the previous year), and for the year, as follows:
|
Q1 |
Q2 |
Q3 |
Q4 |
Annual |
|
|
|
|
|
|
2011 |
15.5% |
18.5% |
18.3% |
21.0% |
20.0% |
2010 |
15.7% |
29.8% |
30.6% |
17.7% |
22.4% |
2009 |
-16.0% |
-25.2% |
-22.8% |
-10.1% |
-18.8% |
The 2011 and 2010 growth was more pronounced in our industrial
production business (this is business where we supply products that
become part of the finished goods produced by our customers) and
less pronounced in the maintenance portion of our manufacturing
business (this is business where we supply products that maintain
the facility or the equipment of our customers engaged in
manufacturing). The 2009 contraction was more severe in our
industrial production business and less severe in the maintenance
portion of our manufacturing business. These patterns are
influenced by the movements noted in the Purchasing Manufacturers
Index ('PMI') published by the Institute for Supply Management
(http://www.ism.ws/), which is a composite index of economic
activity in the manufacturing sector. The PMI in 2011, 2010,
and 2009 was as follows:
|
Jan. |
Feb. |
Mar. |
Apr. |
May |
June |
July |
Aug. |
Sept. |
Oct. |
Nov. |
Dec. |
2011 |
60.8 |
61.4 |
61.2 |
60.4 |
53.5 |
55.3 |
50.9 |
50.6 |
51.6 |
50.8 |
52.7 |
53.9 |
2010 |
58.3 |
57.1 |
60.4 |
59.6 |
57.8 |
55.3 |
55.1 |
55.2 |
55.3 |
56.9 |
58.2 |
58.5 |
2009 |
35.7 |
36.0 |
36.6 |
39.9 |
41.9 |
44.7 |
49.0 |
51.4 |
53.2 |
55.8 |
54.7 |
56.4 |
Our non-residential construction customers have historically
represented 20% to 25% of our business. The daily sales to
these customers grew or contracted in the first, second, third, and
fourth quarters (when compared to the same quarter in the
previous year), and for the year, as follows:
|
Q1 |
Q2 |
Q3 |
Q4 |
Annual |
|
|
|
|
|
|
2011 |
17.7% |
15.8% |
15.8% |
17.4% |
17.1% |
2010 |
-14.7% |
0.5% |
6.3% |
10.3% |
-0.3% |
2009 |
-6.4% |
-19.6% |
-25.3% |
-24.8% |
-19.4% |
On a sequential basis, the sales to our manufacturing customers
stabilized in May 2009 and then started to demonstrate patterns
that resemble historical norms. This reversed the negative
trend which began in October 2008. This stabilization and
improvement was partially offset by continued deteriorization in
our non-residential construction business which weakened
dramatically in the first eight months of 2009, and then began to
also demonstrate patterns that resemble historical norms.
A graph of the sequential daily sales trends to these two end
markets in 2009, 2010, and 2011, starting with a base of '100' in
the previous October and ending with the next October, would be as
follows:
http://media.globenewswire.com/cache/11647/file/12282.pdf
PATHWAY TO PROFIT AND ITS IMPACT ON OUR
BUSINESS:
In April 2007 we disclosed our intention to alter the
growth drivers of our business – For most of the preceding
ten years, we used store openings as the primary growth driver of
our business (our historical rate was approximately 14% new stores
each year). As announced in April 2007, we began to add
outside sales personnel into existing stores at a faster rate than
historical patterns. We funded this sales force expansion with
the occupancy savings generated by opening stores at the rate of 7%
to 10% per year (see our disclosure below regarding store growth in
recent periods). Our goal was four-fold: (1) to continue
growing our business at a similar rate with the new outside sales
investment model, (2) to grow the sales of our average store to
$125 thousand per month in the five year period from 2007 to 2012,
(3) to enhance the profitability of the overall business by
capturing the natural expense leverage that has historically
occurred in our existing stores as their sales grow, resulting in a
growth of our pre-tax earnings to 23% of net sales by 2012, and (4)
to improve the performance of our business due to the more
efficient use of working capital (primarily inventory) as our
average sales volume per store increases. The economic
weakness that dramatically worsened in the fall of 2008 and
continued into 2009 caused us to alter the 'pathway to profit' in
2009. These changes centered on two aspects (1) temporarily
slowing new store openings to a range of 2% to 5% per year, and (2)
temporarily stopping headcount additions except for new store
openings and for stores that are growing. However, as our business
trends started to improve late in 2009, we began to increase our
planned openings and headcount growth. (See later discussion
on future store openings and on store count and full-time
equivalent (FTE) headcount.)
The 'pathway to profit' initiative allows us to focus on the
three drivers of our business: (1) sales force headcount, (2) store
(or unit) growth, and (3) average sales volume per store, which
ultimately drive our level of profitability. Our original goal
was to hit the $125 thousand per month store average, and grow our
pre-tax earnings to 23% of net sales, by 2012. We previously
disclosed that we believed the duration of the economic weakness
could delay the timing of when we achieve these goals by 24-30
months. However, in 2010 we modified our thought process
around the 'pathway to profit' in two regards. First, the
'pathway to profit' initiative is slowly lowering our cost
structure. With a structurally lowered cost structure and improved
gross margins, we concluded we could hit our profitability target
in the 'pathway to profit' initiative with average store sales of
$100 - $110 thousand per month by 2013 (see evidence of this in our
'Store Size and Profitability' table later in this document).
Second, we decided to hire fewer store-based employees and instead
added resources focused on specific sales opportunities, such as
national accounts personnel and dedicated sales specialists
(manufacturing, government, industry focused, and industrial
vending solutions). The decision to accelerate the addition of
non-store selling resources into the areas of national accounts and
dedicated sales specialists reinforces our belief that these areas
represent an efficient manner to accelerate sales at existing
stores.
Future store openings and increases in automated
solutions (industrial vending) – In July 2010, we
indicated our intentions to open 80 to 95 new stores during the
second half of 2010 (or an annualized rate of 6.8% to
8.0%). During the second half of 2010 we opened 82
stores. For 2011, we originally disclosed our intention to
open 150 to 200 new stores, or an annualized rate of 6.0% to
8.0%. As the PMI began to moderate in May 2011 (see table
earlier in this document), our field personnel began to slow their
store openings. As a result, we opened 122 new stores in 2011,
or approximately 4.9%. In 2012, we expect to open
approximately 4.0% to 6.0% new stores. We believe this is a
rational reaction to the current PMI and due to the good results we
are experiencing with our national accounts and dedicated sales
specialists, particularly related to our automated solutions
(industrial vending) rollout (discussed below). During 2011 and
2010, we closed 28 and seven stores, respectively. These
closures resulted from our belief we could better serve those local
markets with a different store footprint. We have closed 62
stores in our 40+ year history.
As was discussed at our investor day in May 2011, we have made
significant progress in the development of automated solutions
(industrial vending) for our customers. We believe these
solutions have the potential to be transformative to industrial
distribution. Some key statistics regarding this business
include the following:
|
|
Q1 |
Q2 |
Q3 |
Q4 |
|
|
|
|
|
|
Number of vending machines in |
2011 |
1,405 |
2,107 |
2,246 |
2,084 |
contracts signed during the period1 |
2010 |
257 |
420 |
440 |
792 |
|
2009 |
115 |
224 |
210 |
332 |
|
|
|
|
|
|
Cumulative machines installed2 |
2011 |
2,659 |
3,867 |
5,642 |
7,453 |
|
2010 |
892 |
1,184 |
1,515 |
1,925 |
|
2009 |
90 |
206 |
387 |
567 |
|
|
|
|
|
|
Percent of total net sales to |
2011 |
8.9% |
10.5% |
13.1% |
15.7% |
customers with vending machines3 |
2010 |
3.4% |
4.6% |
6.1% |
7.5% |
|
2009 |
0.5% |
1.0% |
1.6% |
2.2% |
|
|
|
|
|
|
Daily sales growth to customers |
2011 |
50.6% |
43.9% |
42.5% |
40.7% |
with vending machines4 |
2010 |
37.4% |
54.0% |
56.4% |
60.2% |
|
2009 |
Not meaningful, due to start-up
phase |
|
|
|
|
|
|
1 This represents the gross
number of machines signed during the quarter, not the number of
contracts. |
2 This represents the number of
machines installed and producing revenue on the last day of the
quarter. |
3 The percentage of total sales
(vended and traditional) to customers currently using a vending
solution. |
4 The growth in total sales
(vended and traditional) to customers currently using a vending
solution compared to the comparable period in the preceding
year. |
In addition to the increases in the number of vending machine
contracts signed and the sales results noted, we are pleased with
the ramp-up in our ability to install machines. In the third
and fourth quarter of 2011, we installed 1,775 machines (5,642
versus 3,867) and 1,811 machines (7,453 versus 5,642),
respectively, a dramatic increase over the 331 (1,515 versus 1,184)
and 410 machines (1,925 versus 1,515) installed in the third and
fourth quarter of 2010, respectively.
Store Count and Full-Time Equivalent (FTE) Headcount
– The two tables that follow highlight certain impacts of
the 'pathway to profit'. Under the 'pathway to profit' we increased
both our store count and our store FTE headcount during 2007 and
2008. However, as indicated earlier, the rate of increase in
store locations slowed and our FTE headcount for all types of
personnel was reduced when the economy weakened late in
2008. In the two tables that follow, we refer to our 'store'
sales, 'store' locations, 'store' personnel and 'store'
profitability. When we discuss 'stores' in the first table, we
are referring to (1) 'Fastenal' stores and (2) strategic account
stores. 'Fastenal' stores are either a 'traditional' store,
the typical format in North America, or an 'overseas' store, which
is the typical format outside the United States and
Canada. This is discussed in greater detail in our 2010 annual
report on Form 10-K. Strategic account stores are stores that
are focused on selling to a group of large customers in a limited
geographic market. When we discuss in the second table our
profitability as the average monthly 'store' sales grow, we are
referring to 'traditional' stores. The sales, outside of our
'store' group, relate to either (1) our in-plant locations, (2) the
portion of our internally manufactured product that is sold
directly to a customer and not through a store (including our
Holo-Krome business acquired in December 2009), or (3) our direct
import business.
The breakdown of our sales, the average monthly sales per store,
the number of stores at quarter end, the average headcount at our
stores during a quarter, the average FTE headcount during a
quarter, and the percentage change were as follows for the first
quarter of 2007 (the last completed quarter before we began the
'pathway to profit'), for the third quarter of 2008 (our peak
quarter before the economy weakened), and for each of the last five
quarters:
|
Q1 2007 |
Q3 2008 |
Q4 2010 |
Q1 2011 |
Q2 2011 |
Q3 2011 |
Q4 2011 |
|
|
|
|
|
|
|
|
Total net sales reported |
$489,157 |
$625,037 |
$573,766 |
$640,583 |
$701,730 |
$726,742 |
$697,804 |
Less: Non-store sales (approximate) |
40,891 |
57,267 |
68,911 |
78,021 |
85,535 |
88,500 |
86,737 |
Store net sales (approximate) |
$448,266 |
$567,770 |
$504,855 |
$562,562 |
$616,195 |
$638,242 |
$611,067 |
% change since Q1 2007 |
|
26.7% |
12.6% |
25.5% |
37.5% |
42.4% |
36.3% |
% change (twelve months) |
|
17.5% |
22.3% |
25.2% |
23.6% |
21.1% |
21.0% |
|
|
|
|
|
|
|
|
Percentage of sales through a
store |
92% |
91% |
88% |
88% |
88% |
88% |
88% |
|
|
|
|
|
|
|
|
Average monthly sales per
store |
$72 |
$82 |
$68 |
$74 |
$80 |
$83 |
$79 |
(using ending store
count) |
|
|
|
|
|
|
|
% change since Q1 2007 |
|
13.9% |
-5.6% |
2.8% |
11.1% |
15.3% |
9.7% |
% change (twelve months) |
|
9.3% |
17.2% |
17.5% |
15.9% |
15.3% |
16.2% |
|
|
|
|
|
|
|
|
Store locations - quarter end count |
2,073 |
2,300 |
2,490 |
2,522 |
2,558 |
2,566 |
2,585 |
% change since Q1 2007 |
|
11.0% |
20.1% |
21.7% |
23.4% |
23.8% |
24.7% |
% change (twelve months) |
|
7.2% |
5.1% |
5.4% |
6.3% |
4.6% |
3.8% |
|
|
|
|
|
|
|
|
Store personnel - absolute headcount |
6,849 |
9,123 |
9,048 |
9,344 |
9,734 |
10,057 |
10,328 |
% change since Q1 2007 |
|
33.2% |
32.1% |
36.4% |
42.1% |
46.8% |
50.8% |
% change (twelve months) |
|
17.9% |
6.2% |
11.2% |
15.9% |
16.4% |
14.1% |
|
|
|
|
|
|
|
|
Store personnel - FTE |
6,383 |
8,280 |
7,611 |
7,825 |
8,254 |
8,629 |
8,684 |
Non-store selling personnel - FTE |
616 |
599 |
712 |
779 |
850 |
920 |
953 |
Sub-total of all sales personnel -
FTE |
6,999 |
8,879 |
8,323 |
8,604 |
9,104 |
9,549 |
9,637 |
|
|
|
|
|
|
|
|
Distribution and manufacturing personnel-FTE
1 |
1,962 |
2,244 |
2,040 |
2,069 |
2,249 |
2,343 |
2,336 |
Administrative personnel-FTE |
767 |
805 |
744 |
760 |
783 |
811 |
796 |
Sub-total of non-sales personnel -
FTE |
2,729 |
3,049 |
2,784 |
2,829 |
3,032 |
3,154 |
3,132 |
|
|
|
|
|
|
|
|
Total - average FTE headcount |
9,728 |
11,928 |
11,107 |
11,433 |
12,136 |
12,703 |
12,769 |
|
|
|
|
|
|
|
|
% change since Q1 2007 |
|
|
|
|
|
|
|
Store personnel - FTE |
|
29.7% |
19.2% |
22.6% |
29.3% |
35.2% |
36.0% |
Non-store selling personnel - FTE |
|
-2.8% |
15.6% |
26.5% |
38.0% |
49.4% |
54.7% |
Sub-total of all sales personnel -
FTE |
|
26.9% |
18.9% |
22.9% |
30.1% |
36.4% |
37.7% |
|
|
|
|
|
|
|
|
Distribution and manufacturing personnel-FTE
1 |
|
14.4% |
4.0% |
5.5% |
14.6% |
19.4% |
19.1% |
Administrative personnel-FTE |
|
5.0% |
-3.0% |
-0.9% |
2.1% |
5.7% |
3.8% |
Sub-total of non-sales personnel -
FTE |
|
11.7% |
2.0% |
3.7% |
11.1% |
15.6% |
14.8% |
|
|
|
|
|
|
|
|
Total - average FTE headcount |
|
22.6% |
14.2% |
17.5% |
24.8% |
30.6% |
31.3% |
|
|
|
|
|
|
|
|
% change (twelve months) |
|
|
|
|
|
|
|
Store personnel - FTE |
|
15.2% |
8.6% |
11.7% |
16.0% |
15.8% |
14.1% |
Non-store selling personnel - FTE |
|
-2.4% |
19.3% |
31.1% |
43.8% |
44.0% |
33.8% |
Sub-total of all sales personnel -
FTE |
|
13.8% |
9.5% |
13.2% |
18.1% |
18.0% |
15.8% |
|
|
|
|
|
|
|
|
Distribution and manufacturing personnel-FTE
1 |
|
5.4% |
15.4% |
14.9% |
19.4% |
16.7% |
14.5% |
Administrative personnel - FTE |
|
7.9% |
6.1% |
7.6% |
10.7% |
11.7% |
7.0% |
Sub-total of non-sales personnel -
FTE |
|
6.0% |
12.8% |
12.9% |
17.0% |
15.4% |
12.5% |
|
|
|
|
|
|
|
|
Total - average FTE headcount |
|
11.7% |
10.3% |
13.2% |
17.8% |
17.4% |
15.0% |
|
|
|
|
|
|
|
|
1 The distribution and
manufacturing headcount was impacted by the addition of 92
employees with the acquisition of Holo- Krome in December
2009. |
Store Size and Profitability –The average age,
number of stores, and pre-tax earnings data by store size for the
fourth quarter of 2011, 2010, and 2009, respectively, were as
follows:
|
Sales per Month |
Average Age
(Years) |
Number of
Stores |
Percentage of
Stores |
Pre-Tax Earnings
Percentage |
Three months
ended December 31, 2011 |
|
|
|
|
|
$0 to $30,000 |
3.8 |
353 |
13.7% |
-13.7% |
$30,001 to $60,000 |
7.2 |
882 |
34.1% |
11.7% |
$60,001 to $100,000 |
9.4 |
680 |
26.3% |
21.3% |
$100,001 to $150,000 |
12.0 |
352 |
13.6% |
25.9% |
Over $150,000 |
15.1 |
227 |
8.8% |
27.4% |
Strategic Account/Overseas Store |
|
91 |
3.5% |
|
Company Total |
|
2,585 |
100.0% |
20.2% |
|
|
Three months
ended December 31, 2010 |
|
|
|
|
|
$0 to $30,000 |
3.8 |
462 |
18.6% |
-13.2% |
$30,001 to $60,000 |
6.8 |
952 |
38.2% |
12.7% |
$60,001 to $100,000 |
9.7 |
573 |
23.0% |
22.0% |
$100,001 to $150,000 |
12.2 |
276 |
11.1% |
25.2% |
Over $150,000 |
15.2 |
152 |
6.1% |
27.1% |
Strategic Account/Overseas Store |
|
75 |
3.0% |
|
Company Total |
|
2,490 |
100.0% |
18.7% |
|
Three months
ended December 31, 2009 |
|
|
|
|
|
$0 to $30,000 |
3.9 |
608 |
25.7% |
-16.1% |
$30,001 to $60,000 |
6.8 |
915 |
38.6% |
10.1% |
$60,001 to $100,000 |
9.4 |
512 |
21.6% |
20.1% |
$100,001 to $150,000 |
13.1 |
175 |
7.4% |
24.4% |
Over $150,000 |
15.7 |
97 |
4.1% |
25.2% |
Strategic Account/Overseas Store |
|
62 |
2.6% |
|
Company Total |
|
2,369 |
100.0% |
15.0% |
|
Note -- Amounts may not foot due
to rounding difference. |
Our original intent under the 'pathway to profit' was to
increase the sales of our average store to approximately $125,000
per month (see earlier discussion) in order to meet our pre-tax
earnings profitability goal of 23%. This would have shifted
the store mix emphasis from the first three categories ($0 to
$30,000, $30,001 to $60,000, and $60,001 to $100,000) to the last
three categories ($60,001 to $100,000, $100,001 to $150,000, and
over $150,000), and we believe would have allowed us to leverage
our fixed cost and increase our overall productivity. Our goal
today is to continue (1) to grow the business and (2) to grow our
pre-tax earnings as a percent of net sales. As stated earlier,
we now believe, based on the profitability improvements noted in
the table above, we can hit our pre-tax earnings percent goal of
23% with average store sales of approximately $100,000 - $110,000
per month.
Note – Dollar amounts in this section are presented in whole
dollars, not thousands.
STATEMENT OF EARNINGS INFORMATION (percentage of net
sales) for the periods ended December
31:
|
Twelve-month period |
|
2011 |
2010 |
2009 |
|
|
|
|
Net sales |
100.0% |
100.0% |
100.0% |
Gross profit |
51.8% |
51.8% |
50.9% |
|
|
|
|
Operating and administrative expenses |
31.1% |
32.8% |
35.6% |
Loss (gain) on sale of property and
equipment |
0.0% |
0.0% |
0.0% |
Operating income |
20.8% |
19.0% |
15.3% |
|
|
|
|
Interest income |
0.0% |
0.0% |
0.1% |
Earnings before income taxes |
20.8% |
19.0% |
15.4% |
|
Note -- Amounts may not foot due
to rounding differences. |
Gross profit – relative to sales, were
consistent in 2011 and 2010 and improved from 2009.
The gross profit percentage in the first, second, third and
fourth quarters was as follows:
|
Q1 |
Q2 |
Q3 |
Q4 |
|
|
|
|
|
2011 |
52.0% |
52.2% |
51.9% |
51.2% |
2010 |
51.1% |
52.1% |
51.8% |
52.0% |
2009 |
52.9% |
51.1% |
50.0% |
49.9% |
The fluctuations in our gross profit percentages are typically
driven by changes in: (1) transactional gross profit, (2)
organizational gross profit, and (3) vendor incentive gross profit.
The transactional gross profit represents the gross profit realized
from the day-to-day fluctuations in customer pricing relative to
product and freight costs. The organizational gross profit
represents the component of gross profit we attribute to buying
scale and efficiency gains. The third component relates to vendor
volume allowances.
In the short-term, periods of inflation or deflation can
influence the first two categories, while sudden changes in
business volume can influence the third. This impact can be
magnified, as in 2009, due to the nature of our inventory turns and
the dramatic decrease in sales activity during much of the
year.
In the past, we have indicated that we believe a normal gross
profit percentage range for our business is 51% to 53%. This
is based on our current mix of products, geographies, end markets,
and end market uses (such as industrial production business versus
maintenance business). We exceeded this range late in 2008,
primarily due to inflationary trends in our business. The
impact was evenly split between the transactional and
organizational gross profit categories. This benefit carried
into the first quarter of 2009, and quickly dissipated. In the
second quarter of 2009, the trend flipped to deflation and our
gross margin began to drop. About 80% of this drop was evenly split
between the same two categories and the other 20% related to the
dramatic drop in business volumes and the related drop in vendor
incentive gross profit. In the second half of 2009, these two
factors (deflation and a drop in business volume), plus the
competitive environment of a severe recession, pushed our gross
margin to the bottom, and then just below, our expected
range. This drop was equally felt in the three categories
noted above.
Our business began to expand during 2010 and the drag on gross
margins related to deflation began to subside. This allowed
our gross margins to move back into the expected range. In the
second quarter of 2010, we moved into the middle of our expected
gross profit range as the three components of gross profit
improved, the contribution being split fairly evenly between the
three components. We remained in the middle of the expected
range until the fourth quarter of 2011. In the fourth quarter
of 2011, our gross margin felt pressure and dropped to the lower
end of our range. This drop was primarily due to changes in
our transactional margin (primarily due to changes in product and
customer mix), lower vendor incentive gross profit, and lower
freight utilization. The latter two items created half of the
gross margin drop and are more of a seasonal issue.
Operating and administrative expenses -
improved relative to sales in 2011 versus both 2010 and
2009.
Historically, 65% to 70% of our operating and administrative
expenses consist of employee related costs. The components
are: (1) payroll (which includes cash compensation, stock option
expense, and profit sharing), (2) health care, (3) personnel
development, and (4) social taxes. During 2009, these
components had reduced to a range between 60% and 65% due to the
factors noted below. During 2011 and 2010, this range moved
back to the historical level.
The two largest components of employee related costs
grew/contracted as follows:
|
2011 |
2010 |
2009 |
|
|
|
|
Payroll cost |
20.7% |
16.7% |
-18.3% |
Health care
cost |
2.3% |
-9.0% |
24.1% |
The two largest components of operating and administrative
expenses, outside of the employee related costs, grew/contracted as
follows:
|
2011 |
2010 |
2009 |
|
|
|
|
Occupancy |
7.4% |
5.7% |
2.5% |
Selling transportation |
26.5% |
-0.2% |
-18.3% |
The increase in payroll costs during 2011 and 2010 noted above
was greater than the change in full-time equivalent headcount noted
earlier in this document. This was driven by the following
factors: (1) sales commissions grew (this increase is amplified by
sales growth and, in the case of 2010 versus 2009, gross margin
expansion, both of which have a meaningful impact on the
commissions earned), (2) total bonuses earned increased due to our
profit growth, (3) hours worked per employee grew, and (4) our
profit sharing contribution grew. The payroll growth in 2011
versus 2010 was amplified because there were four quarters of
strong growth. In 2010, the first quarter was still at a
relatively lower level of pre-tax profit. This expanded for
the last three quarters of 2010.
Our health care costs in 2011 increased from 2010. Our
health care costs in the third quarter of 2010 decreased from the
unusual peak in the same period of 2009. Health care costs in
2009, and the first quarter of 2010, increased dramatically due to
the increase in the percentage of employees opting for expanded
coverage as their spouses lost their insurance coverage at other
employers, increases in COBRA costs due to changes in federal
funding within COBRA, and an increase in health care utilization
when compared to previous years. The 2011 health care costs
represented a more normal level of per employee expenses, relative
to 2010 and 2009. This resulted in a lower level of growth
relative to the industry.
The two largest components of the remaining costs within our
operating and administrative expenses include occupancy and selling
transportation. Occupancy expenses increased from 2010 to 2011
and increased from 2009 to 2010. The increase from 2010 was
driven by (1) a meaningful increase in utilities, (2) a dramatic
increase in the amount of automated solutions (industrial vending)
equipment as discussed earlier in this release (we consider the
vending equipment to be a logical extension of our store operation
and classify the expense as occupancy), (3) an increase in the
number of locations, and (4) increased investment in our
distribution infrastructure over the last several years. The
selling transportation costs consist primarily of our store fleet
as most of the distribution fleet costs are included in cost of
sales. Selling transportation costs included in operating and
administrative expenses for 2011 increased significantly from 2010,
a sharp contrast to the prior year's trend. Most of the
components of selling transportation costs increased at a rate less
than sales growth, with two exceptions, the fuel component and the
vehicle depreciation/lease payments components increased more than
sales growth in 2011. This was driven primarily by the
increase in per gallon fuel costs discussed below and the expansion
of our fleet related to additions to our non-store sales personnel,
particularly industrial vending vehicles.
The last several years have seen meaningful swings in
the cost of diesel fuel and gasoline – During the first,
second, third, and fourth quarters of 2011, our total vehicle fuel
costs were approximately $8.6, $10.5, $9.8, and $9.8 million,
respectively. During the first, second, third, and fourth
quarters of 2010, our total vehicle fuel costs were approximately
$6.4, $6.8, $6.6, and $7.1 million, respectively. The changes
resulted from variations in fuel costs, variations in the service
levels provided to our stores from our distribution centers,
changes in the number of vehicles at our store locations, and
changes in the number of other sales centered vehicles. These
fuel costs include the fuel utilized in our distribution vehicles
(semi-tractors, straight trucks, and sprinter trucks) which is
recorded in cost of goods and the fuel utilized in our store
delivery and other sales centered vehicles which is included in
operating and administrative expenses (the split in the last
several years has been approximately 50:50 between distribution and
store and other sales centered use).
The average per gallon fuel costs (in actual dollars) and the
percentage change (on a year-over-year basis) for the last three
years was as follows:
Per gallon average
price |
Q1 |
Q2 |
Q3 |
Q4 |
Annual Average1 |
|
|
|
|
|
|
2011 price |
|
|
Diesel fuel |
$3.60 |
4.04 |
3.90 |
3.87 |
3.85 |
Gasoline |
$3.22 |
3.78 |
3.62 |
3.37 |
3.50 |
|
|
|
|
|
|
2010 price |
|
|
Diesel fuel |
$2.89 |
3.06 |
2.96 |
3.14 |
3.01 |
Gasoline |
$2.68 |
2.80 |
2.71 |
2.84 |
2.76 |
|
|
|
|
|
|
2009 price |
|
|
Diesel fuel |
$2.19 |
2.29 |
2.61 |
2.70 |
2.45 |
Gasoline |
$1.86 |
2.25 |
2.55 |
2.54 |
2.30 |
|
|
|
|
|
|
Per gallon price
change |
Q1 |
Q2 |
Q3 |
Q4 |
Annual |
|
|
|
|
|
|
2011 change |
|
|
Diesel fuel |
24.6% |
32.0% |
31.8% |
23.2% |
27.9% |
Gasoline |
20.1% |
35.0% |
33.6% |
18.7% |
26.8% |
|
|
|
|
|
|
2010 change |
|
|
Diesel fuel |
32.0% |
33.6% |
13.4% |
16.3% |
22.9% |
Gasoline |
44.1% |
24.4% |
6.3% |
11.8% |
20.0% |
|
|
1 Average of the four quarterly
figures contained in the table. |
|
Income taxes – Incomes taxes,
as a percentage of earnings before income taxes, were approximately
37.8% and 38.4% for 2011 and 2010, respectively. As our
international business and profits grow over time, the lower income
tax rates in those jurisdictions, relative to the United States,
have begun to lower our effective tax rate.
WORKING CAPITAL:
The year-over-year comparison and the related dollar and
percentage changes related to accounts receivable and inventories
were as follows:
|
Balance at December
31: |
Twelve Month Dollar
Change |
Twelve Month Percentage
Change |
|
2011 |
2010 |
2009 |
2011 |
2010 |
2011 |
2010 |
Accounts receivable, net |
$ 338,594 |
270,133 |
214,169 |
68,461 |
55,964 |
25.3% |
26.1% |
Inventories |
$ 646,152 |
557,369 |
508,405 |
88,783 |
48,964 |
15.9% |
9.6% |
Operational working
capital1 |
$ 984,746 |
827,502 |
722,574 |
157,244 |
104,928 |
19.0% |
14.5% |
Sales in last two months |
$ 451,069 |
370,582 |
302,838 |
80,487 |
67,744 |
21.7% |
22.4% |
The growth in accounts receivable noted above was driven by our
sales growth in the final two months of the period. The strong
growth in recent years with our international business and with
large customer accounts has created some difficulty with managing
the growth of accounts receivable relative to the growth in
sales.
Our growth in inventory balances over time does not have as
direct a relationship to our monthly sales patterns as does our
growth in accounts receivable. This is impacted by other
aspects of our business. For example, the dramatic economic
slowdown in late 2008 and early 2009 caused our inventory to
spike. This occurred because the lead time for inventory
procurement is typically longer than the visibility we have into
future monthly sales patterns. Over the last decade, we
increased our relative inventory levels due to the following: (1)
new store openings, (2) expanded stocking breadth at individual
stores, (3) expanded stocking breadth at our distributions centers
(for example, our master stocking hub in Indianapolis expanded its
product breadth over six fold from 2006 to 2011), (4) expanded
direct sourcing, (5) expanded private label brands, and (6)
expanded vending solutions. Items (4), (5), and (6), plus the
impact of strong growth with national accounts and international
expansion, created most of our inventory growth in 2011 and
2010. We believe these were excellent investments for our
business. These investments have, and we believe will continue
to, leverage our sales growth.
The discussion above covers inventory from a longer perspective;
in more recent quarters, our expanding inventories are related to
(1) our expanding sales growth trends (with emphasis on our large
account business – both OEM and MRO), (2) our confidence in their
sustainability, (3) international expansion, and in recent months,
(4) some inflation. However, this expansion has been at a rate
less than sales growth which has allowed us to improve our
inventory utilization.
Our operational working capital improved relative to sales in
both 2011 and 2010.
1 For purposes of this discussion, we are defining operational
working capital as the accounts receivable, net and inventory.
BALANCE SHEET AND CASH FLOW:
Our balance sheet continues to be very strong and our operations
have good cash generating characteristics. During the fourth
quarter of 2011, we generated $74,308 (or 85.0% of net earnings) of
operating cash flow. During all of 2011, we generated
$268,489 (or 75.0% of net earnings) of operating cash
flow. Our first quarter typically has stronger cash flow
characteristics due to the timing of tax payments; this benefit
reverses itself in the second, third, and fourth quarters as income
tax payments go out in April, June, September, and
December. The remaining amounts of cash flow from operating
activities are largely linked to the pure dynamics of a
distribution business and its strong correlation to working capital
as discussed above.
The strong free cash flow (operating cash flow less net capital
expenditures) during 2010 and 2011 allowed us to increase our
dividend in 2011. We paid our regular semi-annual dividend in
the first quarter of 2011; subsequent to this, we declared and paid
our 'first' second quarter dividend. With this payment, our
board of directors indicated their desire to begin paying quarterly
dividends. Our dividends (per share basis) were as follows in
2011 and 2010:
|
2011 |
2010 |
First quarter |
$ 0.25 |
0.20 |
Second
quarter |
$ 0.13 |
0.00 |
Third quarter |
$ 0.13 |
0.21 |
Fourth quarter |
$ 0.14 |
0.21 |
Total |
$ 0.65 |
0.62 |
STOCK REPURCHASE:
We did not purchase any stock in 2010 or 2011. We currently
have authority to purchase up to 1,800,000 shares.
CONFERENCE CALL TO DISCUSS QUARTERLY
EARNINGS:
As we previously disclosed, we will host a conference call today
to review the quarterly results, as well as current
operations. This conference call will be broadcast live over
the Internet at 9:00 a.m., central time. To
access the webcast, please go to the Fastenal Company Investor
Relations Website at http://investor.fastenal.com/events.cfm.
The Fastenal Company logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6432
ADDITIONAL INFORMATION:
This press release contains statements that are not historical
in nature and that are intended to be, and are hereby identified
as, "forward looking statements" as defined in the Private
Securities Litigation Reform Act of 1995, including statements
regarding (1) the goals of our long‑term growth strategy,
'pathway to profit', including anticipated decreases in the rate of
new store openings from our historic rate prior to implementation
of the strategy, planned additions to our sales personnel, the
expected funding of such additions out of cost savings resulting
from the slowing of the rate of new store openings, the growth in
average store sales expected to result from that strategy and from
our recent decision to add resources focused on specific sales
opportunities and the expected timeline for achieving that growth,
the leverage, working capital and productivity improvements
expected to result from the strategy, and the growth in
profitability expected to result from the strategy and the expected
timeline for achieving that growth (including our belief that we
can achieve targeted profitability due to a structural lowering of
our costs even if our average store sales do not grow as expected),
(2) the expected rate of new store openings, (3) our
belief in the transformative nature of automated solutions
(industrial vending), (4) our expected gross profit range, (5) the
sales growth leverage expected to result from our inventory
investments, (6) our expectations regarding sales growth and our
confidence in the sustainability of that growth, and (7) the future
payment of quarterly dividends. The following factors are
among those that could cause our actual results to differ
materially from those predicted in such forward looking statements:
(1) a downturn or continued weakness in the economy or in the
manufacturing or commercial construction industries, changes in the
expected rate of new store openings, difficulties in successfully
attracting and retaining additional qualified sales personnel, an
inability to realize anticipated savings from lowering our cost
structure, and difficulties in changing our sales process could
adversely impact our ability to achieve the goals of our 'pathway
to profit' initiative and the expected time frame for achieving
those goals, (2) a downturn or continued weakness in the
economy or in the manufacturing or commercial construction
industries, a change from that projected in the number of North
American markets able to support stores, or an inability to recruit
and retain qualified employees could cause the rate of new store
openings to change from that expected, (3) a weaker level of
industry acceptance or adoption of the vending technology from what
we are currently experiencing could cause the automated solutions
to be less transformative than expected, (4) changes in our current
mix of products, geographies, end markets, and end market uses
could impact our expected gross profit range, (5) a decision to
stock a greater amount of safety stock (extra units of inventory
carried as protection against possible stock outs) or to expand
product offerings in the various geographic areas in which we
operate could cause sales growth leverage expected to result from
our inventory investments not to occur, (6) a downturn or continued
weakness in the economy or in the manufacturing or commercial
construction industries could affect our ability to sustain our
sales growth, and (7) changes in our financial condition or results
could cause us to modify our expected dividend practices. We assume
no obligation to update any forward looking statement or any
discussion of risks and uncertainties related to such forward
looking statements. A discussion of other risks and
uncertainties which could cause our operating results to vary from
anticipated results or which could materially adversely affect our
business, financial condition, or operating results is included in
our 2010 annual report on Form 10-K under the sections
captioned Certain Risks and Uncertainties and Item 1A – Risk
Factors. FAST-E
FASTENAL COMPANY AND
SUBSIDIARIES |
|
|
|
Consolidated Balance
Sheets |
(Amounts in thousands except
share information) |
|
|
|
Assets |
(Unaudited) December 31, 2011 |
December 31, 2010 |
|
|
|
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 117,676 |
143,693 |
Marketable securities |
27,165 |
26,067 |
Trade accounts receivable, net of
allowance for doubtful accounts of $5,647 and $4,761,
respectively |
338,594 |
270,133 |
Inventories |
646,152 |
557,369 |
Deferred income tax assets |
16,718 |
17,897 |
Other current assets |
89,833 |
70,539 |
Total current assets |
1,236,138 |
1,085,698 |
|
|
|
Marketable securities |
0 |
5,152 |
Property and equipment, less accumulated
depreciation |
435,601 |
363,419 |
Other assets, net |
13,209 |
14,014 |
|
|
|
Total assets |
$ 1,684,948 |
1,468,283 |
|
|
|
|
|
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 73,779 |
60,474 |
Accrued expenses |
111,962 |
96,412 |
Income taxes payable |
2,077 |
5,299 |
Total current
liabilities |
187,818 |
162,185 |
|
|
|
Deferred income tax liabilities |
38,154 |
23,586 |
|
|
|
Stockholders' equity: |
|
|
Preferred stock, 5,000,000 shares
authorized |
0 |
0 |
Common stock, 400,000,000 shares
authorized, 295,258,674 and 294,861,424 shares issued
and outstanding, respectively |
2,953 |
2,948 |
Additional paid-in capital |
16,856 |
2,889 |
Retained earnings |
1,424,371 |
1,258,183 |
Accumulated other
comprehensive income |
14,796 |
18,492 |
Total stockholders'
equity |
1,458,976 |
1,282,512 |
|
|
|
Total liabilities and
stockholders' equity |
$ 1,684,948 |
1,468,283 |
|
|
FASTENAL COMPANY AND
SUBSIDIARIES |
|
|
|
|
|
Consolidated Statements of
Earnings |
(Amounts in thousands except
earnings per share) |
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
Year ended
December 31, |
Three months
ended December 31, |
|
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
|
|
|
|
|
Net sales |
$ 2,766,859 |
2,269,471 |
697,804 |
573,766 |
|
|
|
|
|
Cost of sales |
1,332,687 |
1,094,635 |
340,626 |
275,149 |
Gross profit |
1,434,172 |
1,174,836 |
357,178 |
298,617 |
|
|
|
|
|
|
|
|
|
|
Operating and administrative expenses |
859,369 |
745,112 |
216,552 |
191,779 |
Loss (gain) on sale of property and
equipment |
194 |
35 |
11 |
(68) |
Operating income |
574,609 |
429,689 |
140,615 |
106,906 |
|
|
|
|
|
Interest income |
472 |
951 |
154 |
238 |
|
|
|
|
|
Earnings before income taxes |
575,081 |
430,640 |
140,769 |
107,144 |
|
|
|
|
|
Income tax expense |
217,152 |
165,284 |
53,297 |
41,983 |
|
|
|
|
|
Net earnings |
$ 357,929 |
265,356 |
87,472 |
65,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings per share |
$ 1.21 |
0.90 |
0.30 |
0.22 |
|
|
|
|
|
Diluted net earnings per
share |
$ 1.21 |
0.90 |
0.30 |
0.22 |
|
|
|
|
|
Basic weighted average shares
outstanding |
295,054 |
294,861 |
295,231 |
294,861 |
|
|
|
|
|
Diluted weighted average shares
outstanding |
295,869 |
294,861 |
296,253 |
295,135 |
|
|
FASTENAL COMPANY AND
SUBSIDIARIES |
|
|
|
Consolidated Statements of Cash
Flows |
(Amounts in thousands) |
|
|
|
|
(Unaudited) |
|
|
Year ended
December 31, |
|
2011 |
2010 |
|
|
|
Cash flows from operating activities: |
|
|
Net earnings |
$ 357,929 |
265,356 |
Adjustments to reconcile net earnings to
net cash provided by operating activities: |
|
|
Depreciation of property and
equipment |
44,113 |
40,688 |
Loss on sale of property and
equipment |
194 |
35 |
Bad debt expense |
9,217 |
8,658 |
Deferred income taxes |
15,747 |
1,602 |
Stock based compensation |
4,050 |
4,030 |
Amortization of non-compete
agreements |
593 |
67 |
Changes in operating assets and
liabilities: |
|
|
Trade accounts receivable |
(77,678) |
(64,622) |
Inventories |
(88,783) |
(48,964) |
Other current assets |
(19,294) |
(24,577) |
Accounts payable |
13,305 |
6,984 |
Accrued expenses |
15,550 |
30,393 |
Income taxes |
(3,222) |
16,956 |
Other |
(3,232) |
3,882 |
Net cash provided by
operating activities |
268,489 |
240,488 |
|
|
|
Cash flows from investing activities: |
|
|
Purchase of property and equipment |
(120,043) |
(73,597) |
Proceeds from sale of property and
equipment |
3,554 |
4,459 |
Net decrease (increase) in marketable
securities |
4,054 |
(581) |
Net decrease (increase)
in other assets |
212 |
(10,329) |
Net cash used in
investing activities |
(112,223) |
(80,048) |
|
|
|
Cash flows from financing activities: |
|
|
Proceeds from exercise of stock
options |
8,934 |
0 |
Tax benefits from exercise of stock
options |
988 |
0 |
Payment of dividends |
(191,741) |
(182,814) |
Net cash used in
financing activities |
(181,819) |
(182,814) |
|
|
|
Effect of exchange
rate changes on cash |
(464) |
1,215 |
|
|
|
Net decrease in cash and cash
equivalents |
(26,017) |
(21,159) |
|
|
|
Cash and cash equivalents at beginning
of year |
143,693 |
164,852 |
Cash and cash equivalents at end of
year |
$ 117,676 |
143,693 |
|
|
|
Supplemental disclosure of cash flow
information: |
|
|
Cash paid during each
year for income taxes |
$ 205,614 |
146,726 |
CONTACT: Sheryl Lisowski
Controller
507-453-8550
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