Having great technology is critical to our success. Without well designed systems it is  impossible to provide our customers with the  high level of service they need and expect. Our  information systems people continued to work  on improving all of our systems in 2004, with the  main focus being the store system. They began  the process of migrating to a new version of the  windows operating system which has proven to  be faster and more reliable. They have also  developed and tested dozens of enhancements  that we felt were necessary to meet the needs of  our customers along with working on a new  warehouse management system that we expect to  begin testing in 2005. I have written about many areas of our Company  and all of the great things we are doing, but none  of this would be possible without dedicated and  well trained people. The Fastenal School of  Business (FSB) had another record year in 2004.  The FSB Team trained more than 2,400 people  in 16 different programs. The programs they  offer range in time from 2 days to 5 weeks with  most courses being one to two weeks. The  biggest program introduced in 2004 was a 3  week program for new district managers. I have  received great reviews from the people who  participated in this program. Three weeks is a big  commitment from the employee, but everyone  who I have spoken with has said it was well  worth it. We added 10 people to our FSB staff in  2004, ending the year with 28 people.  For us to continue growing, it is important that  we maintain a strong balance sheet.  The inventory buildup and the increased dividend  payment did not allow us to grow our cash  position in 2004. We believe our strong focus on  both accounts receivable and inventory will allow us to both support our dividend payments,  and be a net producer of cash in 2005.  In December 2004, we had a national product  show in Orlando, Florida. This is the fourth year  we have had this show. The first three years  were held in Clearwater, Florida. However, our  In closing, I want to thank all of our shareholders  for your continued support.  I commit to continue leading the employees of Fastenal to  achieve our common goal of “growth through  customer service” and will always keep in mind  Fastenal’s core values of ambition, innovation,  integrity, and teamwork. growth and the increases in the number of  suppliers that wanted to attend the show forced  us to move to a larger facility. We alternate each  year bringing the store managers one year and  the assistant managers the next. This year the  assistant managers attended, and over 1,700  employees made the trip. The show is designed  to give our suppliers a chance to present their  products to our people without the normal day- to-day distractions. The show gives me the opportunity to personally meet with hundreds of  employees over a three-day period, some I have  known for many years and others I have never  met before. I learn a lot about what is going on  in the Company and gather ideas on things we  could be or should be working on. It also  reinforces to me, and I think all attendees, the  power of Fastenal people and their ability to  excel in an organization that values entrepreneurship. The suppliers who attend the  show continue to tell me how professional,  energetic, and enthusiastic our people are. The  question I am always asked is, “where do you  find all of these people”? I always tell them that  it is the employees in the field who do the  recruiting, and it is much easier to recruit talent  when you believe in your Company. So I  believe if we continue to create a work environment where people can make decisions  and create opportunities for themselves, they will  continue to find the high quality people we need  to grow our business.  Thank you,  2004 ANNUAL REPORT – PAGE 4  Willard D. Oberton  CEO and President  2004 President’s Letter to Shareholders