Fastenal Company Reports 2012 Fourth Quarter and Annual Earnings

Fastenal Company Reports 2012 Fourth Quarter and Annual Earnings

WINONA, Minn., Jan. 17, 2013 (GLOBE NEWSWIRE) -- Fastenal Company of Winona,
MN (Nasdaq:FAST) reported the results of the quarter and year ended December
31, 2012. Except for per share information, or as otherwise noted below,
dollar amounts are stated in thousands. Share and per share information in
this document 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
                      2012         2011      Change 2012       2011    Change
Net sales              $3,133,577 2,766,859 13.3%  $757,235 697,804 8.5%
Pre-tax earnings       $674,155   575,081   17.2%  $158,151 140,769 12.3%
% of sales            21.5%        20.8%           20.9%      20.2%   
Net earnings           $420,536   357,929   17.5%  $98,716  87,472  12.9%
Net earnings per share $1.42      1.21      17.4%  $0.33    0.30    10.0%
(basic)

On a sequential basis in 2012, the first, second, third, and fourth quarters
had 64, 64, 63, and 63 business days, respectively; and our daily sales
average was $12,014, $12,576, $12,739, and $12,020, respectively.

On December31, 2012, we had 2,652 stores. During 2012, we opened 80 new
stores, an increase of 3.1% since December 2011 (we opened 122 new stores in
2011). On December31, 2012, we operated 21,095 FAST Solutions^SM (industrial
vending) machines. During 2012, we installed 13,642 new machines, an increase
of 183.0% since December 2011 (we installed 5,528 machines in 2011). On
December31, 2012, we had 15,145 employees, a decrease of 0.2% since December
2011; however, our average full-time equivalent employee number increased by
4.4% from thefourth quarter of 2011 to 2012 (as discussed later in this
document).

Similar to previous quarters, we have included comments regarding several
aspects of our business:

1.Monthly sales changes, sequential trends, and end market performance – a
    recap of our recent sales trends and some insight into the activities with
    different end markets.
2.Growth drivers of our business – a recap of how we grow our business.
3.Profit drivers of our business – a recap of how we increase our profits.
4.Statement of earnings information – a recap of the components of our
    income statement.
5.Operational working capital, balance sheet, and cash flow – a recap of the
    operational working capital utilized in our business, and the related cash
    flow.

While reading these items, it is helpful to appreciate several aspects of our
marketplace: (1) it's big, the North American marketplace for industrial
supplies is estimated to be in excess of $160 billion per year (and we have
expanded beyond North America), (2) no company has a significant portion of
this market, (3) many of the products we sell are individually inexpensive,
(4) when our customer needs something quickly or unexpectedly our local store
is a quick source, (5) the cost to manage and procure these products can be
significant, and (6) the cost to move these products, many of which are bulky,
can also be significant.

Our motto is Growth through Customer Service.This is important given the
points noted above.We believe in efficient markets – to us, this means we can
grow our market share if we provide the greatest value to the customer.We
believe our ability to grow is amplified if we can service our customer at the
closest economic point of contact.

The concept of growth is simple, find more customers every day and increase
your activity with them.However, execution is hard work. First, we recruit
service minded individuals to support our customers and their
business.Second, we operate in a decentralized fashion to help identify the
greatest value for our customers.Third, we build a great machine behind the
store to operate efficiently and to help identify new business
solutions.Fourth, we do these things every day.Finally, we strive to
generate strong profits; these profits produce the cash flow necessary to fund
the growth and to support the needs of our customers.

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 United States) 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 the months in 2012, 2011, and 2010, 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.
2012 21.3% 20.0% 19.3% 17.3% 13.1% 14.0% 12.1% 12.0% 12.9% 6.8%  8.2%  9.7%
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%

The growth in the first three and a half months of 2012 generally continued
the relative strength we saw in 2011 and in most of 2010.During 2012, there
were two distinct economic slowdowns.The first occurred in the late April/May
time frame, and then moderated until September.The second occurred in the
October/November time frame.This was exaggerated by an unusual business day
comparison in October (23 days in 2012 versus 21 days in 2011 - the
maintenance portion of our business is often linked to monthly spend patterns,
which are not as business day dependent, this can dilute the daily growth
picture given the change in business day divisor) and the impact of Hurricane
Sandy.The change in currencies in foreign countries (primarily Canada)
relative to the United States dollar lowered our daily sales growth rate by
0.1% during 2012 (this lowered our growth in the first, second, and third
quarters by 0.1%, 0.4%, 0.2%, respectively and increased our growth in the
fourth quarter by 0.2%).This was a sharp contrast to 2011 and 2010, when
changes in foreign currencies increased our growth by 0.7% and 0.6%,
respectively.

Stores opened greater than two years – Our stores opened greater than two
years (store sites opened as follows: 2012 group – opened 2010 and earlier,
2011 group – opened 2009 and earlier, and 2010 group – opened 2008 and
earlier) represent a consistent 'same-store' view of our business.During the
months in 2012, 2011, and 2010, 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.
2012 18.8% 17.1% 16.8% 14.5% 10.1% 11.1% 9.1%  8.6%  9.8%  3.8%  5.1%  6.6%
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%

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: 2012 group – opened 2007 and
earlier, 2011 group – opened 2006 and earlier, and 2010 group – opened 2005
and earlier).This group is more cyclical due to the increased market share
they enjoy in their local markets.During the months in 2012, 2011, and 2010,
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.
2012 17.4% 15.8% 15.7% 13.7% 9.0%  10.2% 8.3%  7.9%  8.5%  2.6%  4.6%  5.6%
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%

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 2012, 2011, and 2010), the second landing centers on July
4^th, 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 '2012',
'2011', and '2010' lines represent our actual sequential daily sales
changes.The '12Delta', '11Delta', and '10Delta' lines indicate the difference
between the 'Past' and the actual results in the respective year.

                                                                     Cumulative
       Jan.(1) Feb.  Mar. Apr.  May   June  July  Aug.  Sept. Oct.  change
                                                                     from Jan.
                                                                     to Oct.
Past    0.9%    3.3%  2.9% -0.3% 3.4%  2.8%  -2.3% 2.6%  2.6%  -0.7% 15.9%
2012    -0.3%   0.5%  6.4% -0.8% 0.5%  2.5%  -2.7% 1.3%  4.3%  -4.8% 7.1%
12Delta -1.2%   -2.8% 3.5% -0.5% -2.9% -0.3% -0.4% -1.3% 1.7%  -4.1% -8.8%
2011    -0.2%   1.6%  7.0% 0.9%  4.3%  1.7%  -1.0% 1.4%  3.4%  0.7%  21.7%
11Delta -1.1%   -1.7% 4.1% 1.2%  0.9%  -1.1% 1.3%  -1.2% 0.8%  1.4%  5.8%
2010    2.9%    -0.7% 5.9% 0.6%  4.8%  1.7%  -1.0% 3.5%  4.5%  -1.5% 19.0%
10Delta 2.0%    -4.0% 3.0% 0.9%  1.4%  -1.1% 1.3%  0.9%  1.9%  -0.8% 3.1%

(1) The January figures represent the percentage change from the previous
October, whereas the remaining figures represent the percentage change from
the previous month.

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/17610.pdf

Several observations stand out while viewing the 2012 sequential pattern:(1)
The direction of the historical sequential pattern (increased daily sales ona
sequential basis in February, March, May, June, August, and September and
decreased daily sales on a sequential basis in April and July) has played out
each month; however, the cumulative growth in the daily sales from January to
October has fallen short of the benchmark figure and of the actual results in
2011 and 2010.(2) The magnitude of the February and May '12Delta' of
approximately -2.8% was similar.This fact, as well as the choppiness of the
year in general, caused us to approach the year with a conservative tone.(3)
The weakness in 2012 was amplified in the first three quarters of the year by
changes in foreign currencies (primarily Canada) relative to the U.S. dollar
as indicated earlier.

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 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
2012 20.3% 15.8% 14.0% 9.7%  14.9%
2011 15.5% 18.5% 18.3% 21.0% 20.0%
2010 15.7% 29.8% 30.6% 17.7% 22.4%

Our manufacturing business consists of two subsets:the industrial production
business (this is business where we supply products that become part of the
finished goods produced by our customers) and the maintenance portion (this is
business where we supply products that maintain the facility or the equipment
of our customers engaged in manufacturing).The industrial business is more
fastener centered, while the maintenance portion is represented by all product
categories.

In the second, third, and fourth quarters of 2012, the decrease in the rate of
growth was more pronounced in our industrial production business.This is in
sharp contrast to the first quarter of 2012 where the growth was more
pronounced in the industrial production business, a trend that had also
existed in 2011 and 2010.The first quarter and prior quarters were a direct
counter to the 2009 contraction, which was more severe in our industrial
production business and less severe in the maintenance portion of our
manufacturing business.

The best way to understand the change in our industrial production business is
to examine the results in our fastener product line.In the first three months
of 2012, the daily sales growth in our fastener product line was approximately
15.4%.This growth dropped to 10.5%, 6.1%, and 8.6% in April, May, and June,
respectively, and then averaged 6.0% and 2.6% in the third and fourth
quarters, respectively.By contrast, the best way to understand the change in
the maintenance portion of the manufacturing business is to examine the
results in our non-fastener product lines.In the first three months of 2012,
the daily sales growth in our non-fastener business was approximately
25.1%.This dropped to 24.4%, 19.0%, and 19.6% in April, May, and June,
respectively, and averaged 18.0% and 13.6% in the third and fourth quarters,
respectively.The non-fastener business has demonstrated relative resilience
in 2012, when compared to our fastener business and to the distribution
industry in general, due to our strong FAST Solutions^SM (industrial vending)
program; this is discussed in greater detail later in this document.

The patterns related to the industrial production business, as noted above,
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 United States
manufacturing sector.The PMI in 2012, 2011, and 2010 was as follows:

    Jan. Feb. Mar. Apr. May  June July Aug. Sept. Oct. Nov. Dec.
2012 54.1 52.4 53.4 54.8 53.5 49.7 49.8 49.6 51.5  51.7 49.5 50.7
2011 59.9 59.8 59.7 59.7 54.2 55.8 51.4 52.5 52.5  51.8 52.2 53.1
2010 56.7 55.8 59.3 59.0 58.8 56.0 55.7 57.4 56.4  57.0 58.0 57.3

For background to readers not familiar with the PMI index, it is a monthly
indicator of the economic health of the manufacturing sector.Five major
indicators that influence the PMI index are new orders, inventory levels,
productions, supplier deliveries, and the employment environment.When a PMI
of 50 or higher is reported, this indicates expansion in the manufacturing
industry compared to the previous month.If the PMI is below 50, this
represents a contraction in the manufacturing sector.

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
2012 17.1%  12.7% 8.2%  4.2%  10.3%
2011 17.7%  15.8% 15.8% 17.4% 17.1%
2010 -14.7% 0.5%  6.3%  10.3% -0.3%

We believe the weakness in the economy in the fourth quarter of 2012,
particularly in the non-residential construction market, was amplified by the
political uncertainty in the United States.

A graph of the sequential daily sales trends to these two end markets in 2012,
2011, and 2010, 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/17611.pdf

GROWTH DRIVERS OF OUR BUSINESS

We grow by continuously adding customers and by increasing the activity with
each customer.We believe this growth is enhanced by our close proximity to
our customers, which allows us to provide a range of services and product
availability that our competitors can't easily match.Historically, we
expanded our reach by opening stores at a very fast pace.These openings were
initially in the United States, but expanded beyond the United States
beginning in the mid 1990's.

In our first ten years of being public (1987 to 1997), we opened stores at a
rate approaching 30% per year. In the next ten years, we opened stores at an
annual rate of approximately 10% to 15% and, over the last five years, at a
rate of approximately 3% to 8% (we currently expect to open approximately 65
to 80 stores in 2013, or approximately 2.5% to 3.0%). As we gained proximity
to more customers, we continued to diversify our growth drivers.This was done
to provide existing store personnel with more tools to grow their business
organically, and the results of this are reflected in our earlier discussion
on sales growth at stores opened greater than five years.In the early 1990's,
we began to expand our product lines, and we added new product knowledge to
our bench.This was our first big effort to diversify our growth drivers.The
next step began in the mid to late 1990's when we began to add sales personnel
with certain specialties or focus.This began with our National Accounts group
in 1995, and, over time, has expanded to include individuals dedicated to: (1)
sales related to our internal manufacturing division, (2) government sales,
(3) internet sales, (4) specific products (most recently metal working), and
(5) FAST Solutions^SM (industrial vending). Another step occurred at our sales
locations (this includes Fastenal stores as well as strategic account stores
and in-plant locations) and at our distribution centers, and began with a
targeted merchandising and inventory placement strategy that included our
'Customer Service Project' approximately ten years ago and our 'Master
Stocking Hub' initiative approximately five years ago.This strategy allowed
us to better target where to stock certain products (local store, regional
distribution center, master stocking hub, or supplier) and allowed us to
improve our fulfillment, lower our freight costs, and improve our ability to
serve a broader range of customers.

Our FAST Solutions^SM (industrial vending) operation is a rapidly expanding
component of our business. We believe industrial vending is the next logical
chapter in the Fastenal story; we also believe it has the potential to be
transformative to industrial distribution, and that we have a 'first mover'
advantage.We are investing aggressively to maximize this advantage.At our
investor day in May 2011, we discussed our progress with industrial
vending.In addition to our discussion regarding progress, we discussed our
goals with the rollout of the industrial vending machines.One of the goals we
identified related to our rate of 'machine signings' (the first category
below) – our goal was simple, sign 2,500+ machines per quarter (or an
annualized run rate of 10,000 machines).In 2012, we hit our annual goal of
10,000 machines during July, and the momentum has continued as we finished the
year.We intend to continue our aggressive push with FAST Solutions^SM
(industrial vending) and, to this end, have established an internal goal to
sign 30,000 machines in 2013, or 2,500 per month rather than per quarter.This
is an aggressive goal, but we believe we can hit this run rate during 2013.In
addition, during 2012 we developed plans to (1) reinvigorate our fastener
growth and to (2) improve the performance (i.e. sales growth) at
under-performing locations.These plans centered on expanding our sales team
for industrial production business, improving our delivery systems for other
fastener business, and expanding the team that supports under-performing
stores and districts.

The following table includes some statistics regarding our industrial vending
business (note - we added the third category of information this quarter to
highlight the mix change in the machines deployed as our business expands
beyond the flagship FAST 5000 machine):

                               Q1       Q2        Q3       Q4       Annual
Number of vending       2012     4,568    4,669     5,334    5,591    20,162
machines in
contracts signed       2011     1,405    2,107     2,246    2,084    7,842
during the period^1
                       2010     257      420       440      792      1,909
Cumulative machines     2012     9,798    13,036    17,013   21,095   
installed^2
                       2011     2,659    3,867     5,642    7,453    
                       2010     892      1,184     1,515    1,925    
Percent of installed
machines that are a     2012     69.7%    65.9%     60.6%    58.0%    
FAST 5000
(our most common helix 2011     82.6%    77.5%     75.0%    72.5%    
vending machine)
                       2010     99.5%    97.3%     92.4%    87.8%    
Percent of total net    2012     17.8%    20.8%     23.2%    25.8%    
sales to
customers with vending 2011     8.9%     10.5%     13.1%    15.7%    
machines^3
                       2010     3.4%     4.6%      6.1%     7.5%     
Daily sales growth to   2012     33.9%    34.3%     32.9%    28.6%    
customers
with vending           2011     50.6%    43.9%     42.5%    40.7%    
machines^4
                       2010     37.4%    54.0%     56.4%    60.2%    
^ 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 dispensing product
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.

PROFIT DRIVERS OF OUR BUSINESS

We grow our profits by continuously working to grow sales and to improve our
relative profitability.We also grow our profits by allowing our inherent
profitability to shine through – we refer to this as the 'pathway to
profit'.The distinction is important.

We achieve improvements in our relative profitability by increasing our gross
margin, by structurally lowering our operating expenses, or both. We advance
on the 'pathway to profit' by increasing the average store size (measured in
terms of monthly sales), and by allowing the changing store mix to improve our
profits.This is best explained by comparing the varying profitability of our
'traditional' stores in the table below.The average store size for the group,
and the average age, number of stores, and pre-tax earnings data by store size
for the fourth quarter of 2012, 2011, and 2010, respectively, were as follows:


                              Average Number of Percentage Pre-Tax
Sales per Month               Age     Stores    of Stores  Earnings
                              (Years)                      Percentage
Three months ended December 31, 2012                       Average store sales
                                                           = $83,098
$0 to $30,000                 4.7     304       11.5%      -14.4%
$30,001 to $60,000            7.6     830       31.3%      12.2%
$60,001 to $100,000           10.0    759       28.6%      21.3%
$100,001 to $150,000          12.9    375       14.1%      26.0%
Over $150,000                 14.9    272       10.3%      28.8%
Strategic Account/Overseas           112       4.2%       
Store
Company Total                        2,652     100.0%     20.9%
                                                       
                                                          
Three months ended December 31, 2011                       Average store sales
                                                           = $78,781
$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           91        3.5%       
Store
Company Total                        2,585     100.0%     20.2%
                                                       
                                                          
Three months ended December 31, 2010                       Average store sales
                                                           = $67,643
$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           75        3.0%       
Store
Company Total                        2,490     100.0%     18.7%

Note – Amounts may not foot due to rounding difference.

When we originally announced the 'pathway to profit' strategy in 2007, our
goal was to increase our pre-tax earnings, as a percentage of sales, from 18%
to 23%.This goal was to be accomplished by slowly moving the mix from the
first three categories ($0 to $30,000, $30,001 to $60,000, and $60,001 to
$100,000, these groups represented 76.5% of our store base in the first three
months of 2007, the last quarter before we announced the 'pathway to profit')
to the last three categories ($60,001 to $100,000, $100,001 to $150,000, and
over $150,000, these groups represented 53.0% of our store base in the fourth
quarter of 2012) and by increasing the average store sales to approximately
$125,000 per month.The weak economic environment in 2009 caused our average
store size to decrease, and consequently lowered our level of profitability;
however, subsequent to 2009 we improved our gross margin and structurally
lowered our operating expenses.This improvement allowed us to amplify the
'pathway to profit' and effectively lowered the average store size required to
hit our 23% goal.Today we believe we can accomplish our 'pathway to profit'
goal with average store sales of approximately $100,000 to $110,000 per
month.In the second quarter of 2012, we achieved a pre-tax earnings
percentage of 22.2% with average store sales of $89,169 per month.

Note – Dollar amounts in this section are presented in whole dollars, not
thousands.

Store Count and Full-Time Equivalent (FTE) Headcount – The table that follows
highlights certain impacts on our business of the 'pathway to profit' since
its introduction in 2007. Under the 'pathway to profit' we increased both our
store count and our store FTE headcount during 2007 and 2008.However, 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 table
that follows, we refer to our 'store' net sales, locations, and
personnel.When we discuss 'store' net sales, locations, and personnel, we are
referring to (1) 'Fastenal' stores and (2) strategic account
stores.'Fastenal' stores are either a 'traditional' store, the typical format
in the United States or Canada, or an 'overseas' store, which is the typical
format outside the United States and Canada.This is discussed in greater
detail in our 2011 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.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 2011  Q1 2012  Q2 2012  Q3 2012 Q4 2012
Total net sales $        $        $        $        $        $       $
reported        489,157  625,037  697,804  768,875  804,890  802,577 757,235
Less: Non-store
sales           40,891   57,267   86,737   92,459   98,735   100,124 95,951
(approximate)
Store net sales $        $        $        $        $        $       $
(approximate)   448,266  567,770  611,067  676,416  706,155  702,453 661,284
% change since          26.7%    36.3%    50.9%    57.5%    56.7%   47.5%
Q1 2007
% change                17.5%    21.0%    20.2%    14.6%    10.1%   8.2%
(twelve months)
                                                              
Percentage of
sales through a 92%      91%      88%      88%      88%      88%     87%
store
                                                              
Average monthly $ 72     $ 82     $ 79     $ 86     $ 89     $ 88    $ 83
sales per store
(using ending                                                 
store count)
% change since          13.9%    9.7%     19.4%    23.6%    22.2%   15.3%
Q1 2007
% change                9.3%     16.2%    16.2%    11.3%    6.0%    5.1%
(twelve months)
                                                              
               Q1 2007 Q3 2008 Q4 2011 Q1 2012 Q2 2012 Q3     Q4
                                                             2012    2012
Store locations
- quarter end   2,073    2,300    2,585    2,611    2,635    2,650   2,652
count
% change since          11.0%    24.7%    26.0%    27.1%    27.8%   27.9%
Q1 2007
% change                7.2%     3.8%     3.5%     3.0%     3.3%    2.6%
(twelve months)
                                                              
Store personnel
- absolute      6,849    9,123    10,328   10,486   10,637   10,604  10,347
headcount
% change since          33.2%    50.8%    53.1%    55.3%    54.8%   51.1%
Q1 2007
% change                17.9%    14.1%    12.2%    9.3%     5.4%    0.2%
(twelve months)
                                                              
Store personnel 6,383    8,280    8,684    8,900    9,126    9,244   9,035
- FTE
Non-store
selling         616      599      953      998      1,054    1,066   1,070
personnel - FTE
Sub-total of
all sales       6,999    8,879    9,637    9,898    10,180   10,310  10,105
personnel - FTE
                                                              
Distribution    1,646    1,904    1,820    1,815    1,881    1,887   1,872
personnel-FTE
Manufacturing
personnel - FTE 316      340      516      527      545      544     544
^1
Administrative  767      805      796      796      794      808     811
personnel-FTE
Sub-total of
non-sales       2,729    3,049    3,132    3,138    3,220    3,239   3,227
personnel - FTE
                                                              
Total - average 9,728    11,928   12,769   13,036   13,400   13,549  13,332
FTE headcount
                                                              
% change since Q1 2007                                                 
Store personnel         29.7%    36.0%    39.4%    43.0%    44.8%   41.5%
- FTE
Non-store
selling                 -2.8%    54.7%    62.0%    71.1%    73.1%   73.7%
personnel - FTE
Sub-total of
all sales               26.9%    37.7%    41.4%    45.4%    47.3%   44.4%
personnel - FTE
                                                              
Distribution            15.7%    10.6%    10.3%    14.3%    14.6%   13.7%
personnel-FTE
Manufacturing
personnel-FTE ^         7.6%     63.3%    66.8%    72.5%    72.2%   72.2%
1
Administrative          5.0%     3.8%     3.8%     3.5%     5.3%    5.7%
personnel-FTE
Sub-total of
non-sales               11.7%    14.8%    15.0%    18.0%    18.7%   18.2%
personnel - FTE
                                                               
Total - average FTE      22.6%    31.3%    34.0%    37.7%    39.3%   37.0%
headcount
                                                              
% change (twelve months)                                        
Store personnel         15.2%    14.1%    13.7%    10.6%    7.1%    4.0%
- FTE
Non-store
selling                 -2.4%    33.8%    28.1%    24.0%    15.9%   12.3%
personnel - FTE
Sub-total of
all sales               13.8%    15.8%    15.0%    11.8%    8.0%    4.9%
personnel - FTE
                                                              
Distribution            6.0%     14.1%    12.9%    7.1%     3.1%    2.9%
personnel-FTE
Manufacturing
personnel - FTE         1.8%     16.2%    14.3%    10.8%    6.0%    5.4%
^ 1
Administrative          7.9%     7.0%     4.7%     1.4%     -0.4%   1.9%
personnel - FTE
Sub-total of
non-sales               6.0%     12.5%    10.9%    6.2%     2.7%    3.0%
personnel - FTE
                                                              
Total - average FTE      11.7%    15.0%    14.0%    10.4%    6.7%    4.4%
headcount

^1 The distribution and manufacturing headcount was impacted by the addition
of 92 employees with the acquisition of Holo-Krome in December 2009.

STATEMENT OF EARNINGS INFORMATION (percentage of net sales) for the periods  
ended December 31:
                                                                         
                                           Twelve-month period              
                                           2012       2011       2010       
Net sales                                   100.0%     100.0%     100.0%     
Gross profit                                51.5%      51.8%      51.8%      
Operating and administrative expenses       30.0%      31.1%      32.8%      
(Gain) loss on sale of property and         0.0%       0.0%       0.0%       
equipment
Operating income                            21.5%      20.8%      19.0%      
Interest income                             0.0%       0.0%       0.0%       
Earnings before income taxes                21.5%      20.8%      19.0%      
Note – Amounts may not foot due to rounding                               
difference.

Gross profit – percentage for 2012 decreased from 2011, but stabilized in the
second, third, and fourth quarters of 2012.

The gross profit percentage in the first, second, third, and fourth quarters
was as follows:

    Q1    Q2    Q3    Q4
2012 51.3% 51.6% 51.6% 51.6%
2011 52.0% 52.2% 51.9% 51.2%
2010 51.1% 52.1% 51.8% 52.0%

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.

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).Our business operated below our expected gross profit range at the
end of 2009, and expanded into the low end of this range during 2010.In the
second quarter of 2010, we moved into the middle of the 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 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 the 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.In the first quarter of 2012, our gross
margin improved nominally over the previous quarter.This was primarily caused
by the seasonal improvement of vendor volume allowances as rising fuel prices
offset our improvements in freight utilization.In the second, third, and
fourth quarters of 2012, our gross margin improved when compared to the first
quarter.Most of this improvement related to improvements in our transactional
gross margin.The improvement was partially offset by the weakening of our
selling prices in certain foreign markets due to changes in the exchange
rate.One item of note, in the fourth quarter of 2012, we experienced a drop
off in the freight component of our gross margin due to lower freight
utilization, a typical pattern due to the seasonal drop off in business; this
gross margin decline was offset by an improvement in the remaining portion of
our transactional gross margin that centers on product gross margin.

Operating and administrative expenses - improved relative to sales in both
2012 as a whole and the fourth quarter of 2012 versus 2011 as a whole and the
fourth quarter of 2011.

Historically, our two largest components of operating and administrative
expenses have consisted of employee related expenses (approximately 65% to
70%) and occupancy related expenses (approximately 15% to 20%).The remaining
expenses cover a variety of items with selling transportation typically being
the largest.

The three largest components of operating and administrative expenses grew as
follows for the periods ended December 31 (compared to the comparable periods
in the preceding year):

                            Twelve-month period
                            2012   2011   2010
Employee related expenses    10.1%  19.7%  14.6%
Occupancy related expenses   4.8%   7.4%   5.7%
Selling transportation costs 10.1%  26.5%  -0.2%

Employee related expenses include: (1) payroll (which includes cash
compensation, stock option expense, and profit sharing), (2) health care, (3)
personnel development, and (4) social taxes.The increase in 2012 was driven
by the following factors: (1) average employee headcount, measured on a
full-time equivalent basis, grew 8.7%, (2) sales commissions grew, (3) bonus
amounts related to our growth drivers grew (this includes items such as
industrial vending bonuses and manager minimum pay adjustments), and (4) our
profit sharing contribution grew.The increase in 2011 was driven by the
following factors:(1) employee headcount, measured on a full-time equivalent
basis, grew 15.0%, (2) sales commissions grew (this increase was amplified by
stronger sales growth relative to 2010, which had a meaningful impact on the
commission earned, and higher gross profit margins), (3) total bonuses earned
increased due to our profit growth, (4) hours worked per employee grew, and
(5) our profit sharing contribution grew.

Occupancy related expenses include:(1) building rent and depreciation, (2)
building utility costs, (3) equipment related to our stores and distribution
locations, and (4) FAST Solutions^SM (industrial vending) equipment (we
consider the vending equipment to be a logical extension of our store
operation and classify the expense as occupancy).The increase in 2012 was
driven by (1) a dramatic increase in the amount of FAST Solutions^SM
(industrial vending) equipment as discussed earlier in this document, (2) an
increase in the number of locations, and (3) increased investment in our
distribution infrastructure over the last several years.Almost all of our
occupancy increase in 2012 related to item (4) a dramatic increase in the
amount of FAST Solutions^SM (industrial vending) equipment, as our energy
savings offset most of the increase relating to items(1) and (3).The energy
savings were driven by our efforts to lower energy consumption, a mild winter,
and a drop in natural gas prices during the heating season.The increase in
2011 was driven by the same factors noted above with one exception; in 2011
approximately 50% of the increase was due to rising utility costs.

Our selling transportation costs consist primarily of our store fleet as most
of the distribution fleet costs are included in the cost of sales.Selling
transportation costs included in operating and administrative expenses
increased in 2012; however, they increased at a rate less than sales
growth.The increase in 2012 was primarily due to elevated fuel prices in the
first quarter, and, in the case of the first, second, and third quarters, the
impact of the 2011 expansion of our fleet related to additions to our
non-store sales personnel, particularly our industrial vending vehicles.The
increase in 2011 was primarily related to 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 our industrial vending
vehicles.Our selling and transportation costs in the fourth quarter of 2012
were comparable to those in the fourth quarter of 2011 because the per gallon
fuel costs only grew nominally and the number of our industrial vending
vehicles had normalized.Conversely, the increase in the fourth quarter of
2011 from the fourth quarter of 2010 was driven by the dramatic increase in
per gallon fuel costs and the ramp up in the number of our 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 2012,
our total vehicle fuel costs were approximately $10.6, $10.8, $10.8, and $10.3
million, respectively.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.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 as a
result of store openings and the expansion of our non-store sales force.These
fuel costs include the fuel utilized in our distribution vehicles
(semi-tractors, straight trucks, and sprinter trucks) which is recorded in
cost of sales 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:

                        Q1      Q2    Q3    Q4    Annual
Per gallon average price                           Average^1
2012 price                                     
Diesel fuel              $3.92 3.98  3.88  4.05  3.96
Gasoline                 $3.53 3.73  3.61  3.53  3.60
                                              
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
                                              
Per gallon price change  Q1      Q2    Q3    Q4    Annual^1
                                              
2012 change                                    
Diesel fuel              8.9%    -1.5% -0.5% 4.7%  2.9%
Gasoline                 9.6%    -1.3% -0.3% 4.7%  2.9%
                                              
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%

^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 37.6% and 37.8% for 2012 and 2011, 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.

OPERATIONAL WORKING CAPITAL:

The year-over-year comparison and the related dollar and percentage changes
related to accounts receivable and inventories were as follows:

                                              Twelve Month Dollar Twelve Month
                Balance at December 31:      Change              Percentage
                                                                  Change
                2012         2011    2010    2012      2011      2012   2011
Accounts         $372,159   338,594 270,133 33,565    68,461    9.9%   25.3%
receivable, net
Inventories      $715,383   646,152 557,369 69,231    88,783    10.7%  15.9%
Operational
working          $1,087,542 984,746 827,502 102,796   157,244   10.4%  19.0%
capital^1
                                                                  
Sales in last    $468,696   451,069 370,582 17,627    80,487    3.9%   21.7%
two months

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.This was exaggerated by the short month in December 2012
versus 2011 (19 business days versus 21 days) and due to a drop off in payment
activity due to Christmas Day and New Year's Day falling on a Tuesday
resulting in a number of our customers being shut down for the last full week
of December.We saw a similar short month impact in September 2012.Also as
indicated above, our sales in the last two months of the year grew from 2011
to 2012 by 3.9%; however, our daily sales growth in the last two months of
2012 was 9.1% which resulted in increased year end receivables.

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 2005 to 2011), (4) expanded
direct sourcing, (5) expanded exclusive brands (private label), and (6)
expanded FAST Solutions^SM (industrial 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 both 2012 and 2011.

^1 For purposes of this discussion, we are defining operational working
capital as accounts receivable, net and inventories.

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 2012, we
generated $107,196 (or 108.6% of net earnings) of operating cash flow.During
all of 2012, we generated $396,292 (or 94.2% 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.

Our strong free cash flow (operating cash flow less net capital expenditures)
during 2012 and 2011 allowed us to increase our regular dividends, which we
began paying quarterly in 2011. Our dividends (per share basis) were as
follows in 2012 and 2011:

              2012   2011
First quarter  $0.17 0.25
Second quarter $0.17 0.13
Third quarter  $0.19 0.13
Fourth quarter $0.21 0.14
Supplemental   $0.50 0.00
Total          $1.24 0.65

We paid a supplemental dividend late in 2012 due to uncertainties surrounding
possible changes in the taxation of dividends.We had previously paid
supplemental dividends in 2010 and 2008.We expect to pay a smaller quarterly
dividend inthe initial quarters of 2013 due to the large payout in late
2012.Our board intends to reassess our dividend payments each quarter as we
progress through 2013 with the goal of returning to a quarterly dividend more
in-line with the typical quarterly dividend pattern in 2012; this decision
will be influenced by (1) the state of the economy, (2) the strength of our
free cash flow (defined as operating cash flow less capital expenditures), (3)
changes to the taxation of dividends, and (4) other factors deemed relevant by
our board of directors.

STOCK REPURCHASE:

We did not purchase any stock in 2012 or 2011.We currently have authority to
purchase up to 1,800,000 shares.

FUTURE CASH FLOW:

We remain optimistic about our ability to expand our FAST Solutions^SM
(industrial vending), and our ability to dramatically increase the use of
automation in our distribution centers.We anticipate these activities will
require considerable cash in 2013; because of this, and the large dividend
payout late in 2012, we established a $125,000,000 line of credit facility in
December 2012 to provide additional cash flow in that month and in 2013 and
2014.

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 the growth in average store sales and
profitability expected to result from that strategy (including our belief that
we can achieve targeted profitability due to an improvement in our gross
margins and a lowering of our operating expenses even if our average store
sales do not grow as originally expected), (2)the expected rate of new store
openings, (3)our belief in the transformative nature of FAST Solutions^SM
(industrial vending) and our advantage as a first mover in this area, and our
expectations regarding expansion of that business, including our goals
regarding our rate of 'machine signings', (4) our plans to reinvigorate our
fastener growth and improve sales growth at our under-performing locations,
(5) our expected gross profit range, (6) our expected future dividend
practices, and (7) our ability to dramatically increase the use of automation
at our distribution centers. 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 or sustain improvements in our gross margins and savings from lowering
our operating expenses, 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 us to alter our plans to introduce new vending machines or cause
us to fail to meet our goals regarding our rate of 'machine signings' or cause
industrial vending to be less transformative than expected, (4) our
competitors could choose, over time, to open additional locations and to
develop their own vending platform which could allow our competitors to
replicate our local storefront combined with industrial vending business model
mitigating our first mover advantage, (5) difficulties in hiring, relocating,
or training qualified sales personnel could adversely impact our ability to
reinvigorate our fastener growth and improve sales growth at our
under-performing locations, (6) changes in our current mix of products,
geographies, end markets, and end market uses could impact our expected gross
profit range, (7) changes in our financial condition or results of operations
could cause us to modify our expected future dividend practices, (8) changes
in tax law and regulations could cause us to change future dividend practices,
(9) high expenses involved in procuring the technology necessary for
automation could impact our ability to increase the use of automation at our
distribution centers, and (10) unpredictable activity by the national
government in the United States could cause unusual economic patterns and
could impact our business. 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 2011 annual report on Form10-K under the
sections captioned Certain Risks and Uncertainties and Item1A – Risk Factors.
FAST-E

FASTENAL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(Amounts in thousands except share information)
                                                                
                                                    (Unaudited) 
Assets                                               December 31, December 31,
                                                     2012         2011
Current assets:                                                  
Cash and cash equivalents                            $79,611    117,676
Marketable securities                                354          27,165
Trade accounts receivable, net of allowance for      372,159      338,594
doubtful accounts of $6,728 and $5,647, respectively
Inventories                                          715,383      646,152
Deferred income tax assets                           14,420       16,718
Other current assets                                 97,361       89,833
Prepaid income taxes                                 7,368        —
Total current assets                                 1,286,656    1,236,138
                                                                
Property and equipment, less accumulated             516,427      435,601
depreciation
Other assets, net                                    12,749       13,209
                                                                
Total assets                                         $1,815,832 1,684,948
                                                                
Liabilities and Stockholders' Equity
                                                                
Current liabilities:                                             
Accounts payable                                     $78,019    73,779
Accrued expenses                                     126,155      111,962
Income taxes payable                                 —            2,077
Total current liabilities                            204,174      187,818
                                                                
Deferred income tax liabilities                      51,298       38,154
                                                                
Stockholders' equity:                                            
Preferred stock, 5,000,000 shares authorized         —            —
Common stock, 400,000,000 shares authorized,
296,564,382and 295,258,674 sharesissued and        2,966        2,953
outstanding, respectively
Additional paid-in capital                           61,436       16,856
Retained earnings                                    1,477,601    1,424,371
Accumulated other comprehensive income               18,357       14,796
Total stockholders' equity                           1,560,360    1,458,976
                                                                
Total liabilities and stockholders' equity           $1,815,832 1,684,948


FASTENAL COMPANY AND SUBSIDIARIES
Consolidated Statements of Earnings
(Amounts in thousands except earnings per share)
                                                                  
                                    (Unaudited)          (Unaudited)
                                    Year ended             Three months ended
                                     December 31,           December 31,
                                    2012         2011      2012      2011
                                                                  
Net sales                            $3,133,577 2,766,859 757,235   697,804
                                                                  
Cost of sales                        1,519,053    1,332,687 366,414   340,626
Gross profit                         1,614,524    1,434,172 390,821   357,178
                                                                  
Operating and administrative         941,236      859,369   232,913   216,552
expenses
(Gain) loss on sale of property and  (403)        194       (136)     11
equipment
Operating income                     673,691      574,609   158,044   140,615
                                                                  
Interest income                      464          472       107       154
                                                                  
Earnings before income taxes         674,155      575,081   158,151   140,769
                                                                  
Income tax expense                   253,619      217,152   59,435    53,297
                                                                  
Net earnings                         $420,536   357,929   98,716    87,472
                                                                  
Basic net earnings per share        $1.42      1.21      0.33      0.30
                                                                  
Diluted net earnings per share      $1.42      1.21      0.33      0.30
                                                                  
Basic weighted average shares        296,089      295,054   296,457   295,231
outstanding
                                                                  
Diluted weighted average shares      297,151      295,869   297,339   296,253
outstanding


FASTENAL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in thousands)
                                                                  
                                                      (Unaudited) 
                                                      Twelve months ended
                                                       December 31,
                                                      2012         2011
                                                                  
Cash flows from operating activities:                              
Net earnings                                           $420,536   357,929
Adjustments to reconcile net earnings to net cash                  
provided by operating activities:
Depreciation of property and equipment                 53,459      44,113
(Gain) loss on sale of property and equipment          (403)       194
Bad debt expense                                       9,726       9,217
Deferred income taxes                                  15,442      15,747
Stock based compensation                               4,800       4,050
Excess tax benefits from stock based compensation      (10,149)    —
Amortization of non-compete agreements                 593         593
Changes in operating assets and liabilities:                       
Trade accounts receivable                              (43,291)    (77,678)
Inventories                                            (69,231)    (88,783)
Other current assets                                   (7,528)     (19,294)
Accounts payable                                       4,240       13,305
Accrued expenses                                       14,193      15,550
Income taxes                                           704         (3,222)
Other                                                  3,201       (3,232)
Net cash provided by operating activities              396,292     268,489
                                                                  
Cash flows from investing activities:                              
Purchase of property and equipment                    (138,406)   (120,043)
Proceeds from sale of property and equipment          4,524       3,554
Net decrease in marketable securities                 26,811      4,054
(Increase) decrease in other assets                   (133)       212
Net cash used in investing activities                 (107,204)   (112,223)
                                                                  
Cash flows from financing activities:                              
Proceeds from exercise of stock options               29,644      8,939
Excess tax benefits from stock based compensation     10,149      983
Payment of dividends                                  (367,306)   (191,741)
Net cash used in financing activities                 (327,513)   (181,819)
                                                                  
Effect of exchange rate changes on cash                360         (464)
                                                                  
Net decrease in cash and cash equivalents             (38,065)    (26,017)
                                                                  
Cash and cash equivalents at beginning of year         117,676     143,693
                                                                  
Cash and cash equivalents at end of year               $79,611    117,676
                                                                  
Supplemental disclosure of cash flow information:                  
Cash paid during each year for income taxes            $268,357   205,614

CONTACT: Sheryl Lisowski
         Controller
         507.453.8550

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