content_image/116067.jpg content_image/116066.jpg
(Dollar Amounts in Millions except Per Share Information and as Otherwise Noted) 

Management included the net sales (excluding DIY Business) and the corresponding growth rate above because we believe it provides a consistent presentation of the growth experienced in Fastenal’s organic store-based business and ongoing operations. 

The 2004 and 2003 net sales growth rate percentages reflect the strengthening of the North American market in the period since July 2003. The increase in net sales in 2004 and 2003 came primarily from unit sales growth in existing stores more than two years old, growth in the newer product lines, and new site openings. The 2004 growth was increased by 3.0% to 4.0% due to an inflationary increase in pricing during the year, while the 2003 growth was tempered by a deflationary impact to pricing during the year. 

Stores sites opened in 2004 contributed approximately $31.5 (or 2.5%) to 2004 net sales. Store sites opened in 2003 contributed approximately $64.9 (or 5.2%) to 2004 net sales and approximately $19.5 (or 2.5%) to 2003 net sales. The rate of growth in sales of store sites generally levels off after they have been open for five years, and, as stated earlier, the sales of older store sites typically vary more with the economy than do the sales of younger store sites. 

Monthly Daily Sales Growth— Our business had daily sales growth rates of (compared to the comparable month in the preceding year): 

<img src='content_image/116067.jpg'>

Note: Daily sales are defined as the sales for a period divided by the number of business days in a period. 

Excluding sales related to the DIY Business, daily sales growth rates would have been (compared to the comparable month in the preceding year): 

<img src='content_image/116066.jpg'>

The first table reflects daily sales growth rates of the entire organization. The second table reflects daily sales growth rates of Fastenal excluding the impact of the DIY Business. As discussed earlier, the DIY Business was sold in October 2002 and represented approximately 1.9% of net sales that year. 

Management included the second table above because we believe it provides a consistent presentation of the organic store-based business and ongoing operations before, during, and after the period in which the DIY Business was owned and operated. 

The daily sales growth rates in the two tables above represent several trends. There was a downward trend in the first eleven months of 2001 which reflected the overall weakening of the industrial economy we service in North America. This trend reversed itself from December 2001 to June 2002, partly due to changing comparisons in the prior year and partly due to stronger month-to-month (i.e. April to May and May to June) growth rates compared to 2001. During July 2002, the daily sales growth rate decreased, began to improve again in August 2002 through November 2002, and slipped in December 2002, the final month of the year. The first six months of 2003 continued the choppy trend in net sales growth experienced in the second half of 2002. The July 2003 to December 2004 time frame represents 

