Willard Oberton – Chief Executive Officer Daniel Florness – Chief Financial Officer

Jeffrey Germanotta – William Blair Adam Uhlman – Cleveland Research Holden Lewis – BB&T Investment Bank David Manthey – Robert W. Baird Michael Cox – Piper Jaffray John Baliotti – Ftn Midwest Securities Brent Rakers – Morgan Keegan Michael Hamilton – RBC Sam Darkatsh – Raymond James

Welcome to the Fastenal Company's 2008 annual and quarter four earnings conference call. This call will be hosted by Mr. William Oberton, Chief Executive Officer and Mr. Dan Florness, Chief Financial Officer. The call will start with a general overview by our Fastenal host Mr. Oberton and Mr. Florness. The remainder of the time will be open for questions and answers. Today's conference call of Fastenal's presentation is being recorded by Fastenal. No recording, reproduction, transmission or distribution of today's call is permitted without Fastenal's consent. This call is being audio simulcast over the internet via the Fastenal Investor Relations home page at www.investor.fastenal.com. A replay of the web cast will be available on the website until November 3 at midnight central standard time. As a reminder today's conference call includes statements regarding the company's anticipated financial and operating results as well as other forward-looking statements based on current expectations. It is important to note that the company's actual results may differ materially from those anticipated. Information on factors that could cause actual results to differ materially from these forward-looking statements are contained in the company's periodic filings with the Securities and Exchange Commission, and we encourage you to review those carefully. Forward-looking statements are made as of today's date and we will undertake no duty to update the information provided on this call. At this time, I would like to turn the conference over to Mr. Willard Oberton, Chief Executive Officer.

I'd like to thank everyone for joining us today for our 2008 year end and fourth quarter conference call. First, I'm going to touch on 2008 then I'll touch a little bit on the quarter, and then turn it over to Dan. Overall I believe 2008 was a good year for Fastenal. We were able to grow our sales 13.5%. I'll qualify that first. It was a very good year for Fastenal for the first three quarters and then it slowed down hard as you saw. We grew our sales 13.5%. We had 20.2% earnings growth, very nice number. Our operating profit, that's a number that we look at very closely. We had a goal at the beginning of the year to increase that by 100 basis point, part of our Pathway to Profit goal. I'm proud to announce that we were able to do that even in a difficult economic time, increase it 19.3%. We opened 7.5% more stores. That was a little bit below our earlier goals but that was intentional as the economy slowed at the end of the year. We said, "You know what, if we don't have leases signed, let's just back off a little bit and see what it looks like going forward." I think that was a good decision. From a head count growth, our other growth driver, we grew our overall head count at 9.2% with the store personnel growing at 12.2%. We're pretty comfortable with that number. That number came down a little bit at the end of the year as there was more uncertainty in the economy and our visibility seemed to be a little shorter. We weren't seeing as good visibility going forward. But again, overall 2008, very good year and I think the Fastenal team did a nice job. Fourth quarter as I said slowed down. October, our sales growth was 11.9%, November we came in at 6.8% and in December we had no sales growth. That's the first time in Fastenal's 42 year history that we had no growth year over year. But it is a difficult time. Some positives though for the quarter, we did have base margin improvement and driven by many areas. The biggest improvement was driven by our outside sales team calling on small and medium size customers. We say a little bit of improvement because of the inflation slowed but we still had some timing there. And the other big area for margin improvement was our transportation initiative where we did a very nice job which allowed us to have 11.3% earnings growth. The positive in that is it's the first time we were ever able to leverage earnings growth with sales below 10% probably below 15%. On our last conference call for the third quarter, the question was asked at what point could we leverage earnings growth and Dan and I felt it was around 10%. We were wrong on that. In a positive sense we were able to do it at a much lower rate. We're proud of the fact we were able to do that. Our expense control in the SG&A, we did a nice job in certain areas but in other areas we think we have room for improvement. We're working very hard on that. Dan will give a little more color on that. One of the areas I'd like to touch on for a positive in the fourth quarter of 2008 was our transportation group. We were helped by lower fuel costs but in the fourth quarter we actually made money on our overall transportation program. Those of you that have followed the company for awhile, back in 2005 we announced that we were going to overhaul our transportation, we called it our transportation initiative with a goal of having of what we called net freight internally. For the first time, in the company history we were able to do it. We actually made about $1,000 in the fourth quarter on freight overall, which means we take all the credits we get by charging freight to our customers, our vendors paying us for moving their product for them, match that against our expenses and at the end of the bottom line, it's actually a net positive for Fastenal. I bring that up because it's something our transportation group has worked very hard on and it bodes well for us going forward in a difficult time. Also on transportation, one thing that's going on externally is, UPS and FedEx are actually raising their prices to offset some of their increased costs which gives us an advantage over a lot of our competition who use UPS and FedEx as their primary carrier. So we actually have some more positives going there. Looking forward into 2009, things are very slow. It's difficult out there. Right now, looking at our January sales numbers, we see about a 4% to 6% negative sales growth in January, the first time we've ever seen that in the company. We're watching it very closely. We're trying to find out where the bottom is and we don't know that at this point. Based on that view, we're going to be very tight on head count. Between December 1 and January 15, we've lowered our overall headcount by about 4% as a company. It's all been through attrition. We haven't let anyone go. We've just had a number of people leaving the company and we're not replacing them at this time. We're also going to slow our store openings until we have better visibility. We will be opening stores. We don't have an exact number, and really what we're looking at there is, if we find a great deal on a building, we have the people, if we already have the people in place to go out and open a store, we get a good deal on a building, we are going to open some stores. It'll be a very low number. So our plan going forward is really to pay very close attention to the economy, try and understand when we get to the bottom and the economy stops slowing and starts to pick back up, and at that time we should be in a good position to start re-investing. The first thing we would start re-investing in would be additional outside sales people, and that would be followed by store growth which we believe we'll be able to do later in the year if things pick up at all. We're not retreating at all. We're just holding our cards close until we understand what's going on in the economy. With that I'd like to turn it over to Dan, and Dan will give you more color on the quarter.

As Will mentioned, one of the key to us having as successful fourth quarter as we could have fell into the expense control which we had to move on pretty quickly. Historically, I've talked about the components of our operating expenses and they really get down to three or four categories depending on how you want to define it. The first one being labor related costs. That would be the dollars that are paid to our employees for their day to day activities, the dollars that are paid to our employees via profit sharing contribution and then our health care costs; all those lumped together. All told those reflect somewhere between 66% and 70% of our operating expenses in any given quarter. The second piece being occupancy. Occupancy represents about 20% of our operating expenses. The third would be our store vehicle and finally all else rolled up together. When we look at those pieces in the fourth quarter and we look at those pieces going into the first quarter some things that are going on. In the past we've talked about the shock absorbers built into our business model, and that really being that a fair amount of our pay is incentive compensation. At the store level it centers on commissions. At other portions of the business it relates to some type of monthly or quarterly bonus program that typically centers on either expense management or profit growth. In the case of the fourth quarter as Will touched on was transportation. We did a great job with expense management in the fact that we were able to turn that long term cost of the business into a nominal profit for the business during the fourth quarter. As Will touched on, we've been very cautious with our payroll dollars, really since the first month of this quarter. Some turnover we have not been replacing and part time hours we did bring down from upper 20's to lower 20's as far as hours per week worked by our part time personnel in our effort to save dollars and match the energy expended to the energy needed in the store. One thing we ask of our employees and Will has been busy the last several weeks meeting with employees here in the Wynonna campus as well as other locations within Fastenal as have Nick, Lee and Steve and their respective business units, really talking to our employees about as we go into 2009 some uncertainty and the service aspect we have as an organization as well as the flexibility we all need to practice as we go into the new year to allow for us to create opportunities for our employees and provide a return for our shareholders and provide great service for our customers in that environment. On the occupancy side, again that represents about 20% of our operating expenses. For the most part, that's a fixed cost component of our operating expenses. We are attempting to turn that into, and have begun to turn that into more of a variable cost. In 2008, and I talked about this on previous calls, I think we did a nice job of lowering the rents going into new locations. We lowered the new location rent in 2008 versus the same period in 2007 by about 15% per store in the actual cost of that facility. As we look into 2009 and we really put this in motion late in 2008, about a third – typically when we open a store we sign a three or four year lease. So in any given year, we have a fair number of leases that have come up for renewal. When we look at 2009, we'll have about 700 leases that come up for renewal. The challenge we put out to all of our regional and district leadership back in the fall is, let's get those re-negotiations done early, and we laid out a target for them. 90% of your stores, we should obtain a 20% reduction in rent. That's our internal target. The logic behind that is typically when we open a store, the landlord in many cases will do a nominal build out. They might remove some walls. They might install some walls. They might redo the floor; redo lighting, so some nominal build outs for our stores. For those of you who visit our stores, you know they're not fancy, but there's still dollars involved there. Typically landlords want to recoup those dollars on their first lease term, so that really puts us in a position now on the renewal that the landlord has room to take some of that out and we want to aggressively go after it. Again to convert part of our occupancy from fixed to variable, at least in the short term. Finally as I look at the store vehicle, November, December as you can see in our numbers saw some nice benefit from the reduction in fuel costs. As we go into first quarter there's still some tailwind to that in that October really didn't see as much benefit as November and December did, so we have some sequential tailwind for both cost of good portion as related to our large truck fleet and operating expense that's related to our pick up fleet at our stores. The final to all else category, we feel we can manage that through the short term. That tends to be less variable, but it's also a relatively small part of our operating expenses. When I lump all those together we believe we go into Q1 '09 with a very stable operating expense category and our intention going into the quarter would be if you're looking at Q1 '09 versus Q1 '08, we believe our operating expenses will grow somewhere between flat and up 3%. That's really our attempt to continue operating with the investments for growth that we've made in '08, allow that to allow us to continue to take market share as we go into '09, put us in a position to defend a piece of the income statement. Typically we don't give this type of visibility into our future but we feel that given the slow down we saw in the fourth quarter and the uncertainty we see in the first quarter, it's prudent to think out loud if you will about our operating expenses and where we think they'll trend in the first quarter of '09. On Page 3 of our earnings release you see our Pathway to Profits statistics. Some things to note; historically when we get into periods like this, if I go back to 2001, if we had had a similar table to this laid out, one thing that you would have seen is a certain amount of balling, that's the correct word to use, on our older stores, those stores as you've seen are highly profitable businesses for us. They leverage quite nicely on the way up. That hill was just as steep on the way down if they're not growing or they're experiencing some contraction. Most stores did experience some contraction in the fourth quarter. I'm pleased to say on a year over year basis as I look at our stores over $100,000, in the $100,000 to $150,000 category, they improved their profitability from 2008 to 2009 in a period where the leverage point for those businesses would dictate that they would contract. And we really did that with a combination of, we saw improvements in our gross margin that Will touched on earlier and we did a nice job of managing our labor costs. And, quite frankly, all the other expenses in the store, and the benefit of some fuel. All those pieces came together to allow those stores to be successful in a period where historically they would go backwards. Probably the biggest thing when I look at this chart, we did in my mind improve nicely year over year, on the [general] 30, we've taken a step backward. We need to work on that. A lot of that relates to the fact that we've put in part time employees in those stores over the last 12 months to really allow our sales people to be out selling more hours of the week. And then the final piece is as you see in that 100 to 150 category with the stores going backwards, some of them did slip into the 60 to 100 category. On the working capital side of the equation we continue to make strides on our working capital. On Page 6 of the earnings release I touched on the changes in the inventory on a year over year basis. As I look at the last two months of the year, which that period really represents the period of sales that creates our accounts receivable, we are up almost 7% in November and as Will mentioned, sales were flat in December. Year over year, our accounts receivable were up 3.6%. I consider that at least a moral victory that we've been able to manage that relative to our sales growth and will continue to strive hard to manage that as we go through this. In the areas that we talked about as Will mentioned, in support areas we just aren't adding head count and we're not replacing attrition. The only exception to that in my space is, I'm trying to find people in other areas of the finance group so we can continue to staff and maintain staffing within our call center and our accounts receivable because of the importance I placed on maintaining our management over accounts receivable in this time frame. On the inventory side, when I look at the 11.8% growth year over year, I'm disappointed that it's more than 10%. I also am very aware of the fact that product that we were buying in the August, September, October time frame, because of the lead time on inventory cycle, we would have anticipated having been sold in November and December, and the sales shortfall really led to some dollars still being on the balance sheet. Still great inventory. We'll turn that inventory in the early months of 2009. I feel we're poised well going into 2009 for working capital management in general, both accounts receivable and inventory. Finally, a little bit on cash flow. When we started Pathway to Profit back in early 2007 and I laid out some goals that I saw was a Pathway to Profit as we elevated our profitability and increased the average size of the store, I felt a goal for us would be operating cash flow north of $.85 from $1.00 of earnings. I'm pleased to say that in 2007 we were at 98% operating cash flow as a percentage of net earning for the year. In 2008, we were at 93%. From a free cash flow standpoint, operating cash minus capital expenditures, our goal would be to be above that 50% to 60% range. In 2007 we were at 77%. In 2008 62%. And really the only thing that pulled that down was the tremendous increase in capital expenditures in 2008 primarily driven by our distribution expansion in Denton, Texas, and in Indianapolis, Indiana. I feel very good about our cash flow characteristics as we look out into the future. The final piece and this is just an FYI for those of you that might not have seen it. We did announce a dividend last night. Our first quarter dividend payable in late February of $0.35 per share. Two other points I wanted to make on our expense control. These are smaller examples, but they're examples nonetheless of things that we're doing to manage our expenses every day. In 2007 we talked a lot about the MC70, the handheld technology that our store personnel were using and in that technology, it's a cellular connection that we have. Our cost for each of those hand held units is about $30 per month for the cellular connection. We've recently renegotiated that and lowered it to $19. If you take that $11 per month savings times 3,000 units, and it's a nice savings. And, it's a savings that is permanent as we go through the year. And it's one example of a way we can continue to manage expenses in this environment. A second one is, we have 200,000 plus active customers a month. In the late months of 2008 we created the ability to email and e-fax our invoices to our customers. One beauty of having our call centers, we talk to our customers every day about invoices and collections and things like that. We also can talk to them about how they receive the invoices. I'm pleased to say that we have about 8,000 customers that we turned on to email and e-fax in the late months of '08. Our goal is to drive that to 50% of our customers during 2009 receiving their invoices. That cost for us between paper and postage and envelopes is about $150,000 a month. So our ability to manage expenses like that is a big deal as we look into 2009, dollars we can free up so we can still keep feet on the street selling and servicing our customers needs. One other item I touched on, and this is a little bit of visibility into our sales information. What I asked our folks internally to do was taking a look at some trends in our business and we typically don't give much trends as far as type of customer, but again, it's useful to understand some trends we're seeing in our business. What we looked at is our customers broken out between different types of entities; a broad brush of manufacturing, broad brush of construction and a broad brush of other service industries, some of which feed into manufacturing but almost carving out of that manufacturing and it's almost pure MRO business. About 50% of our sales today are broad brush manufacturing. Another 27% is a whole bunch of other pieces. Some you could define as manufacturing, some you would define as service industries. And the last piece, about 23% of our sales is construction. If I look at a base line of business, look at our customers in those groups back in the second quarter of '08 and look at their trends, typically we would see a fall off from Q3 to Q4 of somewhere in the neighborhood, and I'm using typically 2007 as our baseline, a drop off of somewhere between 3.5% to 4.5% in their business just because of seasonality. What we saw is a drop off from Q3 to Q4 in the neighborhood of 16% to 18%, and interestingly enough, when I look at the manufacturing, the service industries and the construction, there's not a noticeable dissimilarity in the fall off that occurred in the fourth quarter. Construction you would expect some fall off. And again, in '07 it was about 4% from Q3 to Q4, largely seasonal. That number was 18% this year. The pure manufacturing, again fall off last year was about 3.5%. That number fell off 16% this year. And what we saw in the case of December, you saw a lot of companies that literally shut down for a couple weeks, three weeks, their business activities or significantly reduced them to really tread water and wait until we get into the new year. And then finally, the other, the broad brush service industries, about 4.5% drop off last year, about 16% this year. Again, not noticeable dissimilarities between the groups. I hope that information is useful and not confusing. Sometimes you throw stuff like that out it might raise more questions than answers.

What Dan's really saying is, everything slowed down. Essentially it was a broad based drop in the environment.

I will now turn it over for our Q and answer session and again, I would ask as we've asked in previous quarters to limit yourself to one question and get back in queue. If you do have a question that is related or a follow up to the answer we've just given that's okay, but limit it so everybody has an opportunity to ask a question.

(Operator instructions) Your first question comes from Jeffrey Germanotta – William Blair. Jeffrey Germanotta – William Blair: Congratulations on a great profit performance in a tough environment. My question relates to gross profit. You've been doing a lot of good things there whether it's the freight initiative, foreign sourcing, raising prices, etc., and you posted a pretty big year over year increase, over 200 basis points. How do you feel about those components and the sustainability of them as you look at softening demand and lower commodity prices in 2009?

We're pretty comfortable. We may not stay at the 53%, but we're comfortable in that 52% range as more of our normal trend in the last few quarters, and there's several reasons. One is our outside sales people are working hard at driving revenue from smaller customers where you can make a little higher margin. Second is, when the commodity prices drop, some of you'll have to give back, but some of it we don't have to give back, understanding that our average customer does $200 to $250. We take out the key accounts, the average customer only does about $200 to $250 in fasteners. So it's not a high visibility item. We can continue. If we offer high service levels we can continue to actually improve our margins as costs come down, now lose our margin. And the third is transportation. As I said, you can tell I was elated by our progress of the transportation. We've actually kind of shaken the rug on that. We found a bunch of areas we can save money and I'm very confident that we have more room to improve the gross margin with the transportation expenses are going to margin component. So we're comfortable where we are in gross margin and we believe we can maintain a level at or above where we did in 2008.

Your next question comes form Adam Uhlman – Cleveland Research. Adam Uhlman – Cleveland Research: How much did diesel prices and transportation costs boost gross margin in the fourth quarter?

You're looking at about, if you look at the fuel costs, I'll touch on that point. Our fuel cost dropped about $4 million from Q3 to Q4 and about half that number, $2 million would have benefited cost of goods. Adam Uhlman – Cleveland Research: Could you talk about active account growth in the third quarter and then in the fourth quarter what kind of growth rates are you seeing?

I don't have that right in front of me but what we saw in November, we saw active account growth in the low teens.

Our active account growth in November was actually pretty good. December fell off, but so much of that was driven by plant closing and so we really discounted the information because customers that buy from us all the time, some of them were shut down for most of the month. But through November we had I think it was about 12.5% active account growth. And that's the thing I didn't mention this morning, that's one of the big drums we're pounding with our sales people right now. Even if you can't produce top line revenue, if you continue to expand your comp base in a difficult time, eventually those customers will come back and that's where we'll get the leverage growth of expanded base and expanded activity per customer. That's a very positive message that we're sending out continually.

Your next question comes from Holden Lewis – BB&T Investment Bank. Holden Lewis – BB&T Investment Bank: Could you give a little bit more color in terms of the price and cost dynamic? Did you fully expect that you'll be able to hold the pricing that you put in through 2008 or are you expecting to have to give some away, and if you give some away are you waiting until the inventory kind of works through and you start recognizing the lower cost inventory? Give us a sense of sort of what the expectations are and sort of the timing of those expectations as we move through 2009.

We will have to give some back. We can not hold the price across the board with every customer. But the timing will be, we'll be giving it back as our inventory costs come down. If you remember our conversation, I believe it was the second quarter conference call, I described how the timing works. Our businesses, our stores act as true businesses. They're going to be very reluctant to lower their price before their cost goes down because that's going to hit them right in the pocketbook. And so it works very naturally if you're a small business. We pass price increases, then pass price decreased through to them and they pass them along to their customers. The larger customers, mostly larger customers we have contractual agreements that basically allows us to move up with the price and we have to move back down with the price. That won't create a gross margin problem. It will create a little bit of headwind on the top line revenue but it's not a tremendous amount. Right now we don't know exactly what it is because prices are still moving. But it's really with the larger customers where we have the contracts. I think with many of the small customers, we'll maintain most of the current prices. Also understand that the deflation at this point is only affecting the carbon steel fasteners. A lot of our products are still maintaining the price. In fact some of them have actually gone up in 2009 based on what they're made of and the production costs. It's not a broad based 100% deal.

Your next question comes from David Manthey – Robert W. Baird. David Manthey – Robert W. Baird: In terms of the trends that you're seeing it sounds like things turned down pretty hard late December as would be expected. Is there any color at all you can give us as it relates to the first week in January relative to that and then maybe what you saw as recently as last week? Is it getting worse, better?

Through the first ten days of January we're seeing our sales down about 4% to 6% year over year on a daily basis. That's a similar trend to what we saw, actually that's slower than we saw in late December, but December was such a hard month to judge because of the way the holidays came. It looks like January came out slightly below where December was, or so far through 10 days of January. David Manthey – Robert W. Baird: You're comparing the first three weeks here of January to the last couple weeks of December. Is that what you're saying?

No. We're comparing the first three weeks of January to the first three weeks of January in 2008. In the year over year comparison, our trend is below where it was one year ago at 4% to 6% and that's all the visibility we have and we have daily visibility. I spent a lot of time traveling last week. I was out in front of probably 300 managers and groups and the mood is very good. I was trying to explain that to my Board yesterday. They're going, "How can the mood be good when our sales are down?" But you have to understand they're running small businesses so if I'm running an $80,000 business last year I did $80,000, this year I'm on track to do $77,000, or something like that, I'm still busy. I still have customer activity. And that's positive that they're optimistic about it because they're still out knocking on doors. The last thing we want is them to be sticking their head in the sand and saying uncle. So the people are out working hard and what we seeing, we don't have the account activity yet for January, but what I'm hearing from our stores anecdotally is that most of the customers are buying. I believe we'll have okay account growth in January. The average customer will just buy less product and that's what's driving, putting the pressure on our top line revenue growth.

Your next question comes from Michael Cox – Piper Jaffray. Michael Cox – Piper Jaffray: I was hoping you could comment on the discrepancy or maybe there wasn't one between strategic accounts and smaller customers as you look at the fall off in sales activity. And then just one follow up on your prepared comments, you mentioned that you'd seen some attrition in head count reduction for this month, if you could just comment on sales rep hiring plans in 2009. Do you still expect that to grow at a double digit rate?

As far as large versus small difference noted, no question about it when I look at 2008, especially the late months of 2008, our large account business has been hurt more by the economy than our small account business. With that same notion, both are hurt. It's it degree to which they're hurt in the late months of the year. So large account business slipping, but the small account business is soft as well.

A little more on that, that's also what's helped our gross margin, is that the small accounts do run at a much higher gross margin so the mix changes and the margin moves up. As far as hiring of outside sales people, right now we're not going to put out numbers on that. What we want to do first is we want to see where the bottom is. Our plan is to continue hiring outside sales people in 2009, but we're reluctant to do it until we see where the economy is. As a company we're very committed to not put ourselves in a position where we have to start letting people go. We have to start laying off and doing things like that. We're committed to our team, so we believe it's prudent to just let the attrition go. What we're not going to allow to happen is stores are not going to be running with one person or understaffed. If the store volume warrants it and we need three people or four people in a store, we will replace the people and keep the customer service level high. But if someone leaves, business drops off and someone leaves, if a $300,000 stores goes to $250,000 and someone quits, we will probably not replace that person at this time. That's what we're monitoring. We're letting our people, our district managers and our regional managers in the field make those decisions. Dan and I are not making them. We're just monitoring the results. Based on that strategy, our head count is down by about 4% over the last six weeks just through normal attrition.

Your next question comes from John Baliotti – Ftn Midwest Securities. John Baliotti – Ftn Midwest Securities: In your prepared remarks you mentioned cost. I wasn't sure if it was for the first quarter or for the year. I think you mentioned you expect it to be flat to up 3%. Is that right?

I mentioned that. That was looking at our operating expenses, looking at the trends that are going in payroll, in occupancy as well as the remaining expenses in operating expenses. It was about the first quarter. When I look at the first quarter of '09 versus first quarter of '08, hopefully we'll have SG&A that's flat year over year, but zero to three would be the range we're looking at right now based on trends. As far as the second, third and fourth quarter, at this point I'd be making a lot of speculation because a lot of it will depend on when we feel we've seen the bottom and when we feel we're at a stable floor that we can build from again and revisit what we're doing with head count and store openings at that juncture. That could be a month away. It could be three months away. John Baliotti – Ftn Midwest Securities: So overall, you're saying, you might have mentioned it, you still think at the 52% to 53% gross margin is still a good range to think about for '09?

Yes we believe it is.

I was going to say before, understand we do not see us being conservative in store openings and hiring's as retreating. We just believe we're just waiting to see what goes on and preparing. When we see a bottom, we believe it's staring to pick up, we plan to be aggressive growing our business, but until we know where it is – I just want to make that point clear because some people are going, "You guys never back up." We're not backing up. We're just taking a wait and see attitude for a short period of time. We do not believe two or three years from now it will have a material affect on where we are.

On thing that's worth noting is that our business has one tremendous advantage, and that is our ability to move quickly. The ability to add OSP and open stores is a very short window time.

One of the things that has made our ability to add sales people much shorter is we've increased our part time head count by about 50% at the store over the last 12 months. Many of those people are looking for full time opportunities and we can hold them at bay for a short period of time until we have the opportunities. Then we can turn on very quickly.

Your next question comes from Brent Rakers – Morgan Keegan. Brent Rakers – Morgan Keegan: I wanted to follow up on some earlier comments you made about the transition from December month factory activity to January month factory activity, and I guess more specifically you talked a little bit about the factory shut downs during the second half of December, I guess point one would be have those factories come back on line in general? Is it weakness in other factories that's impacting the January comps?

We don't have good information specifically of what factories are online and which factories are not. We don't look at our account activity until the end of the month. At the end of the month we start matching it up. We've just never done it in the middle of the month. What we're hearing from the field, anecdotally from our store managers and suppliers over the last two weeks is that, "You know what? There's a lot of activity out there but people are just buying less. They're very, very conservative on anything that they don't have need for absolutely today, they're just not buying it." And we're doing the same thing with our suppliers. If we don't need it, we're not going to buy it, and there's a very, very conservative posturing out there with all the companies trying to conserve cash. The difficult thing for us is trying to understand is the demand this low? Is it an inventory correction? It's probably a combination of both. It's fear of the future, I guess uncertainty, lower demand and sell everything we have before we buy anything new. It's combined to really drive weakness.

What I'd add to that, is if you look at our daily active number in December, that was down about 11% from January and right now at least what we're comfortable talking about is we're seeing trends of activity January to January being down about 4% to 6%.

But I think our activity will not be down. My prediction from what I've seen is the activity will not be down that much. Brent Rakers – Morgan Keegan: I'm sorry. I'm confused by that last comment. You're down 4% to 6% but you're activity won't.

That's sales. Sales top line revenue growth appears to be down for the month it looks like we'll be down 4% to 6%. From what I am hearing, our customer activity, number of actives will not be down that much. Right now I'm still predicting that we'll have slight growth on our actives. We're selling to more customers. They're just buying less product.

Your next question comes from Michael Hamilton – RBC. Michael Hamilton – RBC: I was wondering if you could talk a little bit about what you're seeing in trends in Canada.

We actually are, when you take out the currency issue, our trends in Canada are very good. We've had high single digit growth in the fourth quarter, 8% to 10% growth in Canadian dollars. You convert that and we're down 10%. But the Canadian economy has not been hit as hard at least for us. What surprised us is even in the car belt, the auto belt between Windsor and Toronto we've still seen some decent growth. Michael Hamilton – RBC: When you look at planned activity on the rental side, the real estate leasing, you've had a very collegial business model where a fair number of your leases are in fact with customers. How do you walk that line as you prepare for those negotiations?

It's actually a relatively small number that would be with customers.

I would guess it's below 5%, well below 5% with customers.

I know of a few, but it's pretty slim. And my guess is they'll be calling us for price decreases.

Your next question comes from Sam Darkatsh – Raymond James. Sam Darkatsh – Raymond James: Historically how soon do the changes in the broad steel market place inflation or deflation affect the fasteners that you are purchasing from the vendors? My secondary question would be what was average ticket or average PO, however you define it on a year on year basis in the quarter?

As far as the lag, Dan's going to look up the average invoice. There's usually a three to six month lag and it really depends on what products you're talking about. The products that are narrow skew count, high volume, things like threaded rod, it's a shorter cycle because we turn the inventory faster. Items that are more semi standard, the cycle actually goes six to nine months because they product them with less frequency. We buy them in larger quantities relative to what we sell. But overall if steel pricing, if steel prices start going down in the August time frame, that product will be hitting our shelves about this time, January, about five to six months later. It'll be passing through to our customers in the April/May time frame because we turn that product about two to two and a half times a year. So it's really steel to the supplier. They produce it, ship it to us. We sell to our inventory, ship it to our customers. That entire cycle is about nine months.

On the question about average invoice size, I'll give you three data points. In January of '09 our average invoice was just over $200.00. It was $202.00. In the September/October time frame that number had grown to about $209.00 and in the month of December that number contracted to $196.00.

You have a follow up question from Holden Lewis – BB&T Investment Bank. Holden Lewis – BB&T Investment Bank: I remember in the last downturn you also had reduced your store opening rates, head counts, that sort of thing. I think in the wake of that and given your strong financial condition your comments have sort of been around we kind of regret having done that. I wish we'd been more aggressive growing through that downturn in terms of our investment spending. And now it seems like, like then you're still doing some investment spending but it seems like you're tapping the brakes fairly substantially in light of the downturn. Is there any risk that we're going to look down the road a few years and say we regret having done this, or are the conditions different? Or am I recollecting incorrectly? Can you just give a little historical perspective to this?

You're a smart guy. There's risk in everything we do. We don't plan to keep our feet on the brakes very long. We believe there's as much risk plowing headlong into it because this is very different. It appears it could be quite different from the last one, and we're position as Dan said that we can pick up our store pace very quickly and we can add sales people at a rate we've never been able to because of the position we have with both our outside sales initiative, but our part time sales initiative to support that. Maybe we are being a little conservative but I'm comfortable with that position right now and for the next month or two or three depending on where it goes. Shortly into the year we're going to have to make some decisions.

I'm going to throw a couple of things out. If I go back to the '98 time frame when the Asian flu came through and put quite a shutter on the global economy, we stopped opening stores in the fourth quarter of that year. Our biggest regret when we look back at it is we underestimated the inertia to turn off and turn back on store openings, and we were disappointed not in the fact that we shut it off. We were disappointed in the fact that in '99 we couldn't get it going again. I think we opened 49, 50 stores in '99. And that was a frustration point. In the 2001 time frame we kept opening stores for the most part through that cycle. I think the biggest difference when I look back to that time frame is we've gone from really 100% of our long term growth drivers centered on store openings to today about 60% center on store openings and about 40% center on the OSP program as I think about the 40% pull back we did in store openings we did in 2007. As Will mentioned, the OSP initiative with the dramatic increase we've done with our part time sales force, or part time work force at the store over the last year and a half, really have put us in a position where we can relight that match pretty quickly in our store openings. Our ability to open stores and turn that on and off is night and day different today in a post OSP environment than it was in the late 1990's.

There's one other piece to it and it's internal, is I felt that the only way we were going to get all the other expenses pulled back quickly was throw the brakes on everything. Once we feel comfortable about our distribution costs, our transportation, all the other things that we're working on that we're really frozen up to the point we need to, then we can start opening up a little more investment into outside sales people and stores. But if you let some run wide open, you're not going to pull the rest back, so sometimes we have found, you pull it back tight and we're there right now. We believe we've done a nice job of that. I think our numbers show that. Now we can say, "Where is the best place to invest money?" It's with our best district managers and our best managers. We know that. History showed us that.

There are no further questions. I would like to turn the conference back over to Mr. Willard Oberton and Mr. Dan Florness for any closing remarks.

I'd just like to thank everybody for listening on our call and as I think we've shown historically and I think we've talked about today, our optimism for the future is completely unchanged and our optimism on the market that's out there and our ability to market is completely unchanged. Right now we're searching for the bottom. So again, we have a solid footing to keep building the business on. And finally, one item I'd just like to mention, I'm not going to throw a name out, but over the years I've been with Fastenal for over 12 years, and over the years I've had the great benefit with being associated with a wonderful organization and a great group of people. Last week I was reading an article about one of our employees in North Carolina and it talked about this employee who had gone to work that day and figured he'd be selling fasteners and other industrial supplies, and there was a tanker truck that tipped over in front of our store. It had about 7,000 gallons of gasoline in it. The truck tipped over. The engine was running. Our employee along with another gentleman basically disregarded the fact that there was gasoline leaking from the vehicle and were able with the help of a pocket knife, cut this person loose from the vehicle. Their foot was trapped and they had to cut the persons' boot off and pull them away from the vehicle. After they got across the street the vehicle burst into flame. I throw that out not from a boastful standpoint, I throw it out, I'm proud of that individual. I'm proud to say that I work for the same organization as that individual. But I think that's true for a lot of the folks in our organization. I think we have a wonderful collection of people with servant's hearts and really care about the success of their customers at the end of the day. I'll get off my soapbox and everybody have a good week.