2004 Notes to Consolidated Financial Statements (Dollar and Share Amounts in Thousands except Per Share Information and as Otherwise Noted)  Summary of Significant Accounting Policies, continued Income Taxes Comprehensive Income  Earnings Per Share Segment Reporting 2004 ANNUAL REPORT – PAGE 26  The Company accounts for income taxes under the asset and liability method. Under this method, deferred  tax assets and liabilities are recognized for the future tax consequences attributable to differences between  the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income  in the years in which those temporary differences are expected to be recovered or settled. The effect on  deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes  the enactment date.  The Company complies with the provisions of SFAS No. 130,  Reporting Comprehensive Income , which  establishes standards for the reporting of comprehensive income and its components. The components of  comprehensive income are as follows:  2004 2003 2002 Net earnings, as reported  $ 130,989 84,120 75,542 Change in marketable securities  63 — — Translation adjustment  2,679 6,711 (193) Comprehensive income  $ 133,731 90,831 75,349 2004 2003 2002 Basic—weighted shares outstanding  75,877 75,877 75,877 Weighted shares assumed upon exercise of stock options  109 15 — Diluted—weighted shares outstanding  75,986 75,892 75,877 Basic net earnings per share is calculated using net earnings available to common stockholders divided by  the weighted average number of shares of Common Stock outstanding during the year. Diluted net earnings  per share is similar to basic net earnings per share except that the weighted average number of shares of  Common Stock outstanding plus the assumed issuance of contingent shares is increased to include the  number of additional shares of Common Stock that would have been outstanding assuming the issuance of  all potentially dilutive shares, such as Common Stock to be issued upon exercise of options. The following  table presents a reconciliation of the denominators used in the computation of basic and diluted earnings  per share related to the Fastenal Option Plan: The Company has reviewed SFAS No. 131,  Disclosures about Segments of an Enterprise and Related  Information , and determined the Company meets the aggregation criteria outlined as the various operations  of the Company have similar (1) economic characteristics, (2) products and services, (3) customers, (4)  distribution channels, and (5) regulatory environments. Therefore the Company reports as a single business  segment. 