Business Context and Reporting Period
Company: Fastenal Company
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2001
Business Overview: Fastenal distributes industrial and construction supplies through a network of store sites. As of December 31, 2001, the Company operated 1,025 store sites across 50 U.S. states, Puerto Rico, Canada, Mexico, and Singapore, employing 6,536 people. The Company also operates 11 distribution centers and acquired a Do-It-Yourself (DIY) business from Textron, Inc. in August 2001.
Key Financial Metrics
Revenue: Consolidated net sales for 2001 were $818.3 million, an increase from $755.6 million in 2000. Note: Prior year sales figures were restated to reflect the reclassification of shipping and handling costs and sales incentives.
Profitability: The filing text does not provide specific net income or operating profit figures for 2001; these are incorporated by reference from the Annual Report to Shareholders.
Cash Flow: Specific cash flow figures are not provided in the text; they are incorporated by reference.
Margins: Gross profit margins are not explicitly stated in the text.
Debt and Liquidity: Specific debt balances and liquidity ratios are not provided in the text.
Valuation: As of February 22, 2002, the aggregate market value of Common Stock held by non-affiliates was approximately $2.07 billion. There were 37,938,688 shares of Common Stock issued and outstanding.
Material Changes vs. Prior Period
- Store Expansion: The number of store sites increased from 897 in 2000 to 1,025 in 2001, representing the opening of 128 new sites. All 128 new sites were stand-alone stores; no satellite stores were opened in 2001.
- Acquisition: On August 31, 2001, the Company acquired assets of two Textron subsidiaries (DIY Business). This acquisition contributed approximately $8.5 million in net sales for the four months following the purchase, operating at approximately a break-even level.
- Product Mix: Threaded fasteners accounted for approximately 49% of consolidated net sales in 2001, down from 51% in 2000 and 1999. The Company introduced new product lines including raw materials and retail packaged products in 2001.
- Accounting Reclassification: Net sales for 2000 and prior years were restated to include shipping and handling costs billed to customers and sales incentives, previously recorded as operating expenses, in accordance with EITF 00-10 and EITF 00-22.
Guidance, Outlook, and Risks
Outlook: The Company expects to continue opening new store sites at a rate of approximately 10% to 15% per year. Management believes there is sufficient market potential in the U.S. and Canada to support approximately 2,000 to 2,200 total stores. The Company plans to add new distribution centers as the store count increases and intends to convert additional modules of its central processing system to new software in 2002.
Risks and Contingencies:
- New Store Profitability: New stores typically require 9 to 12 months to achieve their first profitable month due to start-up costs and the time required to build a customer base. Near-term profitability is often adversely affected by new openings.
- Forward-Looking Statements: The filing contains forward-looking statements regarding expansion, technology conversions, and capital expenditures. Actual results may differ materially due to risks discussed in the Annual Report to Shareholders.
- Competition: The business is highly competitive, with competitors ranging from large distributors to smaller local entities. Competitive factors include customer service and convenience.
Investor Verification Checklist
- Verify the specific Net Income and Operating Margin figures for 2001 and 2000, as they are incorporated by reference and not explicitly detailed in this text.
- Review the Consolidated Statements of Cash Flows to assess liquidity and capital expenditure funding, as these figures are not present in the text.
- Confirm the financial impact of the Textron DIY acquisition beyond the initial $8.5 million sales figure, specifically regarding long-term profitability projections.
- Examine the "Management's Discussion and Analysis" section of the Annual Report to Shareholders for detailed risk factors and market risk disclosures.
- Verify the details of the reclassification of shipping and handling costs to ensure accurate year-over-year comparison of operating expenses.