10-KPeriod: FY2002

FASTENAL CO Annual Report, Year Ended Dec 31, 2002

Filed February 26, 2003For Securities:FAST

Summary

This 10-K filing for Fastenal Company for the fiscal year ended December 31, 2002, highlights the company's continued expansion and its core business of distributing industrial and construction supplies. Fastenal operated 1,169 store sites across 50 states, Puerto Rico, Canada, Mexico, and Singapore, with a strategy focused on convenient locations and a wide product range. The company's growth is primarily driven by opening new stores, with an expectation of 14-16% annual growth, though it notes that new stores typically take 9-12 months to become profitable. Financially, the report details strong net sales growth over the past decade, reaching $905.4 million in 2002. The company's product mix is dominated by threaded fasteners, accounting for approximately 46% of sales in 2002, with a diversified strategy of adding new product lines over the years to supplement its core offerings. Fastenal emphasizes its decentralized decision-making and a strong employee base as key competitive advantages in a highly competitive market.

Key Highlights

  • 1Fastenal operated 1,169 store sites across 50 states, Puerto Rico, Canada, Mexico, and Singapore as of December 31, 2002.
  • 2Net sales grew to $905.4 million in 2002, reflecting a consistent upward trend over the past decade.
  • 3The company plans to continue its aggressive store expansion, targeting 14-16% new store openings annually.
  • 4Threaded fasteners represented approximately 46% of the company's consolidated net sales in 2002, with diversified product lines contributing significantly.
  • 5Fastenal acquired and subsequently divested a 'Do-It-Yourself' (DIY) business, impacting net sales in 2001 and 2002.
  • 6The company utilizes a decentralized operational model and emphasizes employee quality as a key competitive strength.
  • 7No single supplier accounted for more than 5.0% of Fastenal's purchases in 2002, indicating a diversified supply chain.

Frequently Asked Questions

Fastenal Company's primary business is the wholesale and retail distribution of industrial and construction supplies. Its revenue is generated from sales of a wide range of products, including threaded fasteners, tools, cutting tools, hydraulics, pneumatics, material handling, janitorial supplies, electrical supplies, welding supplies, and safety supplies, primarily to customers in the construction and manufacturing sectors.

Fastenal is aggressively expanding its business by opening new store sites. The company plans to open approximately 14-16% more stores each year. It also strategically acquires and integrates complementary businesses, though it also divests non-core operations, as seen with the DIY business sale in 2002.

The filing notes that new store openings can adversely affect near-term profitability due to start-up costs and the time required to build a customer base, typically 9-12 months for a new store to become profitable. The company also operates in a highly competitive market and acknowledges that expansion plans are not guaranteed to be achieved or to result in profitable operations.

Fastenal employs a robust inventory control system that uses computer data, sales activity, and vendor information to determine optimal stock levels. The company utilizes a network of eleven distribution centers to supply its stores, enabling frequent deliveries. They source products from a large number of suppliers, with no single supplier accounting for a significant portion of purchases, indicating a well-diversified supply chain.