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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2001, or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________________ to ______________________
Commission file number 0-16125
FASTENAL COMPANY
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(Exact name of registrant as specified in its charter)
Minnesota 41-0948415
- ------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Theurer Boulevard
Winona, Minnesota 55987-1500
- ------------------------------------------ ----------------
(Address of principal executive offices) (Zip Code)
(507) 454-5374
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant as of February 22, 2002 was $2,069,201,600. For purposes of
determining this number, all executive officers and directors of the registrant
as of February 22, 2002 are considered to be affiliates of the registrant. This
number is provided only for the purposes of this report on Form 10-K and does
not represent an admission by either the registrant or any such person as to the
status of such person.
As of February 22, 2002, the registrant had 37,938,688 shares of Common Stock
issued and outstanding.
2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 2001 are incorporated by reference in Part II. Portions of
the registrant's Proxy Statement for the annual meeting of shareholders to be
held April 16, 2002 are incorporated by reference in Part III.
FORWARD LOOKING STATEMENTS
This Form 10-K, including the sections in Part I hereof captioned "Item 1.
Business - Development of the Business", "Item 1. Business - Products", "Item 1.
Business - Manufacturing and Support Services Operations", and "Item 2.
Properties", and the sections in Part II hereof captioned "Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters" and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations", contains or incorporates by reference statements that are not
historical in nature and that are intended to be, and are hereby identified as,
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, including statements regarding new store and distribution
center openings, markets for new stores, expansion of foreign operations,
technology conversions, introduction of new product lines, growth in
manufacturing and support services, leasing of new stores, capital expenditures,
funding of expansion plans, and dividends. A discussion of certain risks and
uncertainties that could cause actual results to differ materially from those
predicted in such forward-looking statements is included in the registrant's
Annual Report to Shareholders for the fiscal year ended December 31, 2001 in the
section thereof captioned "Management's Discussion and Analysis of Financial
Condition and Results of Operations", which section has been incorporated in
this Form 10-K by reference. The registrant assumes no obligation to update
either such forward-looking statements or the discussion of such risks and
uncertainties.
PART I
ITEM 1. BUSINESS
Fastenal Company ("Fastenal Company" and, together with its wholly owned
subsidiaries, Fastenal Company Services, Fastenal Company Purchasing, Fastenal
Company Leasing, Fastenal Canada Company, Fastenal Mexico, S. de R.L. de C.V.,
Fastenal Mexico Services, S. de R.L. de C.V., and Fastenal Singapore P.T.E.
Ltd., collectively, "the Company") began as a partnership in 1967, and was
incorporated under the laws of Minnesota in 1968. As of December 31, 2001, the
Company had 1,025 store sites located in 50 states, Puerto Rico, Canada, Mexico
and Singapore and 4,263 people employed at these sites.
The Company sells industrial and construction supplies. These industrial and
construction supplies are grouped into eleven product lines described further
below.
The Company operated eleven distribution centers as of December 31, 2001 from
which the Company distributes products to its store sites, and operates a
facility in Memphis, Tennessee to receive and package goods coming from
suppliers outside of the United States. The Company also operates two
packaging/processing centers that support the business acquired in 2001
(discussed later in this section).
3
Development of the Business
Fastenal Company began in 1967 with a marketing strategy of supplying threaded
fasteners to customers in small to medium-sized cities. The Company believes its
success can be attributed to its ability to offer such customers a full line of
products at convenient locations, and to the high quality of the Company's
employees.
The Company opened its first store site in Winona, Minnesota, a city with a
population of approximately 25,000. The following table shows the number of
Company store sites during each of the last ten years and the related
consolidated net sales for each year during that period:
2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
Number of
store sites at
year end/1/ 1,025 897 807 764 642 483 375 315 253 200
Net sales/2/
(in millions) $ 818.3 755.6 618.2 511.2 404.2 292.3 226.5 164.7 112.1 82.5
/1/ During 2000, two "in-plant" sites, previously included in the store
site number, were reclassified to in-plant status. One of these
"in-plant" sites opened in 1996 and the other opened in 1997. The 1999,
1998, 1997, and 1996 store numbers above were adjusted to reflect the
reclassification.
/2/ The net sales amounts for 2000 and prior years have been restated to
reflect the reclassification of shipping and handling costs billed to
customers and sales incentives paid to customers which were previously
included in operating and administrative expenses. This
reclassification reflects the adoption of Emerging Issues Task Force
(EITF) 00-10, Accounting for Shipping and Handling Fees and Costs, and
EITF 00-22, Accounting for "Points" and Certain Other Time-Based or
Volume-Based Incentive Offers, and Offers for Free Product.
As of December 31, 2001, the Company operated 1,025 store sites located in:
Alabama 21 Indiana 40 Nebraska 11 South Carolina 15
Alaska 1 Iowa 22 Nevada 5 South Dakota 7
Arizona 6 Kansas 21 New Hampshire 9 Tennessee 24
Arkansas 14 Kentucky 17 New Jersey 12 Texas 63
California 43 Louisiana 15 New Mexico 7 Utah 11
Colorado 14 Maine 7 New York 29 Vermont 3
Connecticut 9 Maryland 11 North Carolina 33 Virginia 22
Delaware 4 Massachusetts 14 North Dakota 7 Washington 22
Florida 28 Michigan 41 Ohio 49 West Virginia 9
Georgia 29 Minnesota 39 Oklahoma 14 Wisconsin 44
Hawaii 1 Mississippi 12 Oregon 18 Wyoming 5
Idaho 9 Missouri 22 Pennsylvania 47
Illinois 37 Montana 7 Rhode Island 3
Puerto Rico 6 Canada 63 Mexico 2 Singapore 1
The Company has closed only four store sites in its history.
4
The Company selects new locations for its stores based on their proximity to the
Company's distribution network, population statistics, and employment data for
manufacturing and construction. The Company intends to continue opening new
store sites and currently expects the rate of new store openings to be
approximately 10 to 15% per year.
The Company stocks all new stores with an inventory drawn from all of its
product lines. Subsequent to a site's opening, the site personnel customize the
inventory offering to that site's customer base. The Company has two types of
stores: (1) the stand-alone store and (2) the satellite store. The stand-alone
store is typically located in cities with a population in excess of 8,000. The
second type, the satellite store, operates as a satellite of a stand-alone
store. The satellite store is usually located within 30 miles of the stand-alone
(mother) store and is typically managed by personnel at the mother store. The
Company has satellite stores located in communities with a population as small
as 2,000. In most cases, the Company was already doing business in this
community from the mother store, but the addition of a physical presence in the
community provided sales increases from that community. The Company believes,
based on the demographics of the marketplace in the United States and Canada,
that there is sufficient potential in those two countries to support
approximately 2,000 to 2,200 total stores. Many of these stores would be in
cities in which we currently operate. The Company believes most of the future
stores will be stand-alone stores and that some of the satellite stores will
eventually become stand-alone stores. Of the 128 stores opened during 2001, none
opened as a satellite store. Of the 1,025 store sites operating at December 31,
2001, 954 stores were operating as stand-alone stores and 71 were operating as
satellite stores.
In addition to the stand-alone and satellite stores discussed above, the Company
also operates "in-plant" sites. The "in-plant" site is a selling unit located in
or near a customer's facility. These sites are not included in the store count
numbers as they represent a customer subset of the two types of stores mentioned
earlier.
The Company opened the following store sites, outside the United States, in the
last five years:
2001 2000 1999 1998 1997
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Puerto Rico 1 1 -- 3 1
Canada 4 11 5 9 20
Mexico 2 -- -- -- --
Singapore 1 -- -- -- --
The Company plans to open additional store sites in Puerto Rico, Canada, Mexico,
and Singapore in the future. The store sites located outside the United States
contributed less than 5% of the Company's consolidated net sales in 2001. In all
years presented, the Company also sold products into Mexico from its existing
stores along the border between the United States and Mexico.
No assurance can be given that any of the expansion plans described above will
be achieved, or that new stores, once opened, will be profitable.
It has been the Company's experience that near-term profitability has been
adversely affected by the opening of new store sites, due to the related
start-up costs and the time necessary to generate a customer base. A new store
generates its sales from direct sales calls, a slow process involving repeated
contacts. As a result of this process, sales volume builds slowly and it
typically requires nine to 12 months for a new store to achieve its first
profitable month. Of the 50 stores opened in the first quarter of 2001, 18 were
profitable in the fourth quarter of 2001.
5
For 2001, annual sales volumes of store sites operating at least five years
ranged between approximately $165,000 and $5,939,000, with 75% of these store
sites having annual sales volumes within the range of approximately $477,000 to
$1,745,000. The data in the following table shows the growth in the average
sales of the Company's store sites from 2000 to 2001 based on each site's age.
The store sites opened in 2001 contributed approximately $21.6 million (or
approximately 2.6%) of the Company's consolidated net sales in 2001, with the
remainder coming from store sites opened prior to 2001 and from the 2001
acquisition.
Number of store Average
Age of store site as of Year sites in group as of sales Average Percent
December 31, 2001 Opened December 31, 2001 2000/1/ sales 2001 Change
- -----------------------------------------------------------------------------------------------------------------------
0-1 year old 2001 128 $ -- $ 169,000/2/ --%
1-2 years old 2000 90 96,000/2/ 399,000 --
2-3 years old 1999 44 378,000 486,000 28.6
3-4 years old 1998 121 561,000 627,000 11.8
4-5 years old 1997 159 621,000 678,000 9.2
5-6 years old 1996 108 751,000 768,000 2.3
6-7 years old 1995 60 835,000 778,000 (6.8)
7-8 years old 1994 62 810,000 792,000 (2.2)
8-9 years old 1993 53 954,000 950,000 (0.4)
9-10 years old 1992 42 1,215,000 1,225,000 0.8
10-11 years old 1991 32 1,213,000 1,175,000 (3.1)
11-12 years old 1990 28 1,537,000 1,312,000 (14.6)
12-15 years old 1987-1989 53 1,770,000 1,681,000 (5.0)
15+ years old 1967-1986 45 2,340,000 2,293,000 (2.0)
/1/ The average sales amounts for 2000 have been restated to reflect the
reclassification of shipping and handling costs billed to customers and
sales incentives paid to customers which were previously included in
operating and administrative expenses. This reclassification was in
accordance with Emerging Issues Task Force (EITF) 00-10, Accounting for
Shipping and Handling Fees and Costs, and EITF 00-22, Accounting for
"Points" and Certain Other Time-Based or Volume-Based Incentive Offers, and
Offers for Free Product.
/2/ The average sales include sales of store sites open for less than the
full fiscal year.
As of December 31, 2001, the Company operated distribution centers in or near
Winona, Minnesota; Indianapolis, Indiana; Dallas, Texas; Atlanta, Georgia;
Scranton, Pennsylvania; Fresno, California; Lakewood, Washington; Akron, Ohio;
Salt Lake City, Utah; Winston-Salem, North Carolina; and Kansas City, Missouri.
Distribution centers are located so as to permit twice-a-week to five
times-a-week deliveries to Company stores using Company trucks and overnight
delivery by surface common carrier. As the number of stores increases, the
Company intends to add new distribution centers. The Company also operates a
packaging facility in Memphis, Tennessee. This facility receives freight
containers from foreign suppliers and repackages the items in standard packages
using high-speed equipment.
On August 31, 2001, the Company acquired certain assets of two subsidiaries of
Textron, Inc. These assets were used in their business of selling packaged
fasteners to the retail market (Do-It-Yourself or DIY Business). The DIY
Business was purchased after a prolonged period of contraction; therefore, the
historical sales and earnings are not reflective of the DIY Business's current
operations. The four months since the acquisition produced net sales of $8.5
million at approximately a break even level and represent, for the most part,
the starting base of business. The business operates facilities in Rockford,
Illinois and Goodlettsville, Tennessee (near Nashville).
The Company operates a central UNIX/terminal-based computer system allowing
automatic data exchange between the stores and the distribution centers. The use
of client/server technology allows the Company's network of UNIX-based machines
to serve networked personal computers and workstations. During the last three
years, the Company converted a portion of this central processing system to a
new computer software and operating system and plans to convert additional
modules during 2002. At the store level, the Company operates a proprietary
point-of-sale system. This system operates on a Microsoft Windows NT system.
6
Trademarks
The Company conducts its business in the United States, Canada, Puerto Rico,
Mexico, and Singapore under various trademarks and service marks, including
Fastenal(R), FastTool(R), SharpCut(R), EquipRite(R), CleanChoice(R),
PowerPhase(TM), FastArc(TM), FAS-N-IT(TM), and Anchor Wire(TM). Although the
Company does not believe its operations are substantially dependent upon any of
its trademarks or service marks, the Company considers its "Fastenal" name and
other trademarks and service marks to be valuable to its business.
Products
The Company's original product offering in 1967 was fasteners and other
industrial and construction supplies, many of which are sold under the
Fastenal(R) product name. Today, this product line consists of approximately
78,000 different stock items. This product line may be divided into two broad
categories: threaded fasteners, such as bolts, nuts, screws, studs, and related
washers; and miscellaneous supplies, such as paints, various pins and machinery
keys, concrete anchors, batteries, sealants, metal framing systems, wire rope,
stainless strut, private label stud anchors, rivets, and related accessories.
Threaded fasteners are used in most manufactured products and building projects,
and in the maintenance and repair of machines and structures. Although some
aspects of the threaded fastener market are common to all cities, the Company
feels that each city's market is to some extent unique. Therefore, the Company
opens each store with minimal base stocks of inventory and then tailors the
growing inventory to the local market demand as it develops. Threaded fasteners
accounted for approximately 49%, 51%, and 51% of the Company's consolidated net
sales in 2001, 2000 and 1999, respectively.
Concrete anchors make up the largest portion of the other supply items included
in the Fastenal(R) product line. Most concrete anchors use threaded fasteners as
part of the completed anchor assembly.
During the last ten years, the Company added additional product lines. The
product lines introduced during the 1990's are sold through the same
distribution channel as the original Fastenal(R) product line. The retail
packaged product line introduced in 2001 as the result of an acquisition is sold
through both a retail distribution channel and through the Company's industrial
store site distribution channel. The additional product lines include the
following:
Approximate
Year number of stock Private label
Product line: introduced items product name
- -----------------------------------------------------------------------------------------------------------
Tools 1993 58,000 FastTool(R)
Cutting tools 1996 25,000 SharpCut(R)
Hydraulics and pneumatics 1996 24,000
Material handling 1996 9,000 EquipRite(R)
Janitorial supplies 1996 5,000 CleanChoice(R)
Electrical supplies 1997 8,000 PowerPhase(TM)
Welding supplies/1/ 1997 12,000 FastArc(TM)
Safety supplies 1999 29,000
Raw materials 2001 6,000
Retail packaged products 2001 26,000 FAS-N-IT(TM)and Anchor Wire(TM)
/1/ Excluding gas and welding machines.
The Company plans to add other product lines in the future.
7
Inventory Control
The Company controls inventory by using computer systems to determine desired
stock levels. The data used for this purpose is derived from reports showing
sales activity by stock item for the previous three years. Computers then
convert this data to typical store maximum-minimum inventory levels for each
stock item. Stores can deviate from preset inventory levels as deemed
appropriate by their district managers. Inventories in distribution centers are
established from computerized sales data for the stores served by the respective
centers.
Manufacturing and Support Services Operations
In 2001 approximately 95.7% of the Company's consolidated net sales were
attributable to products manufactured by other companies to industry standards.
The remaining amount of approximately 4.3% of the Company's consolidated net
sales for 2001 related to products manufactured, modified or repaired by either
the Company's Manufacturing Division or its Support Services. The manufactured
products consist primarily of non-standard sizes of threaded fasteners made to
customers' specifications. The services provided by the Support Services group
include, but are not limited to, items such as tool repair, band saw blade
welding and light manufacturing. The Company engages in these activities
primarily as a service to its customers and expects these activities in the
future to continue to contribute in the range of 4% to 10% of the Company's
consolidated net sales.
Sources of Supply
The Company uses a large number of suppliers for the approximately 280,000
standard stock items it distributes. Most items distributed by the Company can
be purchased from several sources, although preferred sourcing is used for some
stock items to facilitate quality control. No single supplier accounted for more
than 5.0% of the Company's purchases in 2001.
8
Customers and Marketing
The Company believes its success can be attributed to its ability to offer
customers in small, medium, and large-sized cities a full line of products at
convenient locations, and to the high quality of the Company's employees. Most
of the Company's customers are in the construction and manufacturing markets.
The construction market includes general, electrical, plumbing, sheet metal, and
road contractors. The manufacturing market includes both original equipment
manufacturers and maintenance and repair operations. Other users of the
Company's products include farmers, truckers, railroads, mining companies,
municipalities, schools, and certain retail trades. As of December 31, 2001, the
Company's total number of active customer accounts (defined as accounts having
purchase activity within the last 90 days) was approximately 147,000.
During each of the three years ended December 31, 2001, no one customer
accounted for a significant portion of the Company's sales. The Company believes
that the large number of its customers together with the varied markets that
they represent provide some protection to the Company from economic downturns in
a particular market.
Store personnel generate a significant portion of the Company's sales through
direct calls on customers. Because of the nature of the Company's business, the
Company does not use the more expensive forms of mass media advertising such as
television, radio, and newspapers. Forms of advertising used by the Company
include signs, catalogs, and direct mailings.
Competition
The Company's business is highly competitive. Competitors include both large
distributors located primarily in large cities and smaller distributors located
in many of the same cities in which the Company has stores. The Company believes
that the principal competitive factors affecting the markets for the Company's
products are customer service and convenience.
Some competitors use vans to sell their products in markets away from their main
warehouses, while others rely on mail order or telemarketing sales. The Company,
however, believes that the convenience provided to customers by actually
operating a number of stores in both small and large markets, each offering a
wide variety of products, is a competitive selling advantage and that the large
number of stores in a given area, taken together with the Company's ability to
provide frequent deliveries to such stores from centrally located distribution
centers, makes possible the prompt and efficient distribution of products.
Having trained personnel at each store also enhances the Company's ability to
compete (see "Employees" below).
Employees
As of December 31, 2001, the Company employed a total of 6,536 full and
part-time employees, 4,263 being store managers and store employees, and the
balance being employed in the Company's distribution centers, packaging
facilities, manufacturing operations, service operations, packaging/processing
centers, and home office.
9
The Company believes that the quality of its employees is critical to its
ability to compete successfully in the markets it currently serves and to its
ability to open new stores in new markets. The Company fosters the growth and
education of skilled employees throughout the organization by operating training
programs and by decentralizing decision-making. Wherever possible, promotions
are from within the Company. For example, most new store managers are promoted
from an assistant manager's position at another store and district managers (who
supervise a number of stores) are usually former store managers.
The Company's sales personnel participate in incentive bonus arrangements that
place emphasis on achieving increased sales on a store and regional basis, while
still attaining targeted levels of gross profit and collections. As a result, a
significant portion of the Company's total employment cost varies with sales
volume. The Company also pays incentive bonuses to other personnel for achieving
pre-determined cost containment goals.
None of the Company's employees is subject to a collective bargaining agreement
and the Company has experienced no work stoppages. The Company believes its
employee relations are excellent.
ITEM 2. PROPERTIES
The Company owns six facilities in Winona, Minnesota. These facilities are as
follows:
Approximate
Purpose Square Feet
- --------------------------------------------------------------------------------------------------------
Distribution center and home office 213,000
Manufacturing facility 100,000
Winona store and regional training center 13,000
Winona product support and support services 55,000
Rack and shelving storage 42,000
Multi-building complex which houses certain operations of its Manufacturing
Division and its Support Services group 30,000
The Company also owns the following facilities, excluding store locations,
outside of Winona, Minnesota:
Approximate
Purpose Location Square Feet
- --------------------------------------------------------------------------------------------------------
Distribution center Indianapolis, Indiana 414,000
Distribution center Indianapolis, Indiana 76,000
Distribution center Atlanta, Georgia 54,000
Distribution center Dallas, Texas 95,000
Distribution center Scranton, Pennsylvania 160,000
Distribution center Akron, Ohio 102,000
Distribution center Kansas City, Kansas 200,000
Packaging/processing center Nashville, Tennessee/1/ 60,000
/1/ The Nashville facility was the result of a 2001 acquisition.
10
In addition, the Company owns 41 buildings that house the Company's store
locations in various cities throughout the United States.
All other buildings occupied by the Company are leased. Leased stores range from
approximately 1,200 to 8,000 square feet, with lease terms of up to 48 months.
The Company also leases the following distribution centers, packaging facility,
and packaging/processing center:
Approximate Lease Expiration Remaining Lease
Purpose Location Square Feet Date Renewal Options
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution center Lakewood, Washington 55,000 February 2004 None
Distribution center Fresno, California 52,500 February 2003 Two one-year periods/1/
Distribution center Salt Lake City, Utah 22,000 October 2002 None
Distribution center Winston-Salem, North Carolina 58,400 October 2002 None
Packaging facility Memphis, Tennessee 115,000 December 2003 None
Packaging/ Rockford, Illinois/2/ 160,000 November 2006 None
processing center
/1/ The lease renewals can be exercised at the Company's option.
/2/ The Rockford facility was the result of a 2001 acquisition.
If economic conditions are suitable, the Company will, in the future, consider
purchasing store sites to house its older stores. It is anticipated that all
sites for new stores will continue to be leased. It is the Company's policy to
negotiate relatively short lease terms to facilitate relocation of particular
store operations if deemed desirable by management. It has been the Company's
experience that space suitable for its needs and available for leasing is more
than sufficient.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
11
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Fastenal Company are:
Name Age Position
------------------------------------------------------------------------------------------
Robert A. Kierlin 62 Chairman of the Board, Chief Executive
Officer and Director
Willard D. Oberton 43 President, Chief Operating Officer
and Director
Nicholas J. Lundquist 44 Vice President of Sales
Daniel L. Florness 38 Treasurer, Chief Financial Officer and
Chief Accounting Officer
Stephen M. Slaggie 62 Secretary and Director
Mr. Kierlin has been the Chairman of the Board and Chief Executive Officer of
Fastenal Company and has served as a director of Fastenal Company since Fastenal
Company's incorporation in 1968. From 1968 through July 2001, Mr. Kierlin also
served as President of Fastenal Company.
Mr. Oberton has been President and Chief Operating Officer of Fastenal Company
since July 2001. From June 2000 through July 2001, Mr. Oberton was Executive
Vice President and Chief Operating Officer of Fastenal Company. From March 1997
through June 2000, Mr. Oberton held the position of Vice President and Chief
Operating Officer of Fastenal Company. From June 1986 through March 1997, Mr.
Oberton held the position of General Operations Manager of Fastenal Company. Mr.
Oberton has also served as a director of Fastenal Company since June 1999.
Mr. Lundquist has been Vice President of Sales of Fastenal Company since June
2000. From April 1997 through June 2000, Mr. Lundquist held the position of
National Sales Manager of Fastenal Company. From January 1991 through March
1997, Mr. Lundquist was a Regional Manager of Fastenal Company.
Mr. Florness has been the Treasurer, Chief Financial Officer and Chief
Accounting Officer of Fastenal Company since June 1996.
Mr. Slaggie has been the Secretary of Fastenal Company and has served as a
director of Fastenal Company since 1970. He became a full-time employee of
Fastenal Company in December 1987, at which time he assumed the additional
duties of Shareholder Relations Director and Insurance Risk Manager.
The executive officers are elected by the Board of Directors, generally for a
term of one year, and serve until their successors are elected and qualified.
None of the above executive officers is related to any other such executive
officer or to any other director of Fastenal Company.
12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Incorporated herein by reference is Fastenal Company's Annual Report to
Shareholders for the fiscal year ended December 31, 2001, Common Stock Data on
page 9.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference is Fastenal Company's Annual Report to
Shareholders for the fiscal year ended December 31, 2001, Six-Year Selected
Financial Data on page 4.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Incorporated herein by reference is Fastenal Company's Annual Report to
Shareholders for the fiscal year ended December 31, 2001, Management's
Discussion & Analysis of Financial Condition & Results of Operations on pages
5-8.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Incorporated herein by reference is Fastenal Company's Annual Report to
Shareholders for the fiscal year ended December 31, 2001, Market Risk Management
on page 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated herein by reference is Fastenal Company's Annual Report to
Shareholders for the fiscal year ended December 31, 2001, Selected Quarterly
Financial Data (Unaudited) on page 9, and Consolidated Financial Statements,
Notes to Consolidated Financial Statements, and Report of Management &
Independent Auditors' Report on pages 10-20.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference is the information appearing under the headings
"Election of Directors--Nominees and Required Vote", pages 5 and 6, and "Section
16(a) Beneficial Ownership Reporting Compliance", page 16, in Fastenal Company's
Proxy Statement dated March 5, 2002. See also Part I hereof under the heading
"Item X. Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference is the information appearing under the headings
"Election of Directors--Compensation of Directors", page 7, "Executive
Compensation--Summary of Compensation", page 9, "Executive
Compensation--Option/SAR Grants", pages 10 and 11, and "Executive
Compensation--Compensation Committee Interlocks and Insider Participation", page
11, in Fastenal Company's Proxy Statement dated March 5, 2002.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference is the information appearing under the heading
"Security Ownership of Principal Shareholders and Management", pages 2-4, in
Fastenal Company's Proxy Statement dated March 5, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
a) 1. Financial Statements:
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Earnings for the years ended December 31,
2001, 2000, and 1999
Consolidated Statements of Stockholders' Equity and Comprehensive Income
for the years ended December 31, 2001, 2000, and 1999
Consolidated Statements of Cash Flows for the years ended December 31,
2001, 2000, and 1999
Notes to Consolidated Financial Statements
Report of Management & Independent Auditors' Report
(Incorporated by reference to pages 10-20 of Fastenal Company's Annual
Report to Shareholders for the fiscal year ended December 31, 2001)
2. Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts
3. Exhibits:
3.1 Restated Articles of Incorporation of Fastenal Company, as
amended (incorporated by reference to Exhibit 3.1 to Fastenal
Company's Form 10-Q for the quarter ended September 30, 1993)
3.2 Restated By-Laws of Fastenal Company (incorporated by reference
to Exhibit 3.2 to Registration Statement No. 33-14923)
10.1 Description of bonus arrangement for President/Chief Operating
Officer*
10.2 Description of bonus arrangement for Treasurer/Chief Financial
Officer*
10.3 Description of bonus arrangement for Vice President of Sales*
10.4 Fastenal Company Stock Appreciation Rights Plan (incorporated by
reference to Exhibit 10.4 to Fastenal Company's Form 10-K for the
year ended December 31, 2000)*
10.5 Amendment to Fastenal Company Stock Appreciation Rights Plan*
13 Annual Report to Shareholders for the fiscal year ended December
31, 2001 (only those portions specifically incorporated by
reference herein shall be deemed filed with the Commission)
21 List of Subsidiaries
23 Consent of KPMG LLP
Copies of Exhibits will be furnished upon request and payment of the
Company's reasonable expenses in furnishing the Exhibits.
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K pursuant to Item 14(c).
b) Reports on Form 8-K
Fastenal Company filed no reports on Form 8-K during the fourth quarter of
the fiscal year ended December 31, 2001.
15
Independent Auditors' Report on Schedule
The Board of Directors and Stockholders
Fastenal Company:
Under date of January 18, 2002 we reported on the consolidated balance sheets of
Fastenal Company and subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of earnings, stockholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 2001, as contained in the 2001 annual report to
shareholders. These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year 2001.
In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related financial statement schedule as listed
in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
January 18, 2002
16
FASTENAL COMPANY
Schedule II--Valuation and Qualifying Accounts
Years ended December 31, 2001, 2000, and 1999
"Additions"
Balance at charged to Balance
beginning costs and "Other" "Less" at end
Description of year expenses additions deductions of year
- --------------------------------------------------------------------------------------------------------------------
Year ended December 31,
2001 allowance for
doubtful accounts $ 2,238,000 $ 5,453,000 $ 294,000/1/ $ 4,511,000 $ 3,474,000
Year ended December 31,
2000 allowance for
doubtful accounts $ 1,400,000 $ 4,496,000 $ -- $ 3,658,000 $ 2,238,000
Year ended December 31,
1999 allowance for
doubtful accounts $ 740,000 $ 3,566,000 $ -- $ 2,906,000 $ 1,400,000
/1/ Represents opening allowance for doubtful accounts from 2001 acquisition.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 5, 2002
FASTENAL COMPANY
By /s/ Robert A. Kierlin
-------------------------------------------
Robert A. Kierlin, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
Date: March 5, 2002
By /s/ Robert A. Kierlin
-------------------------------------------
Robert A. Kierlin, Chief Executive Officer
(Principal Executive Officer) and
Director
By /s/ Stephen M. Slaggie
-------------------------------------------
Stephen M. Slaggie, Director
By /s/ Henry K. McConnon
-------------------------------------------
Henry K. McConnon, Director
By /s/ Robert A. Hansen
-------------------------------------------
Robert A. Hansen, Director
By /s/ Reyne K. Wisecup
-------------------------------------------
Reyne K. Wisecup, Director
By /s/ Daniel L. Florness
-------------------------------------------
Daniel L. Florness, Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
By /s/ Michael M. Gostomski
-------------------------------------------
Michael M. Gostomski, Director
By /s/ John D. Remick
-------------------------------------------
John D. Remick, Director
By /s/ Willard D. Oberton
-------------------------------------------
Willard D. Oberton, Director
By /s/ Michael J. Dolan
-------------------------------------------
Michael J. Dolan, Director
INDEX TO EXHIBITS
3.1 Restated Articles of Incorporation of Fastenal Company, as amended
(incorporated by reference to Exhibit 3.1 to Fastenal Company's Form
10-Q for the quarter ended September 30, 1993).
3.2 Restated By-Laws of Fastenal Company (incorporated by reference to
Exhibit 3.2 to Registration Statement No. 33-14923).
10.1 Description of bonus arrangement for President/Chief Operating Officer......... Electronically Filed
10.2 Description of bonus arrangement for Treasurer/Chief Financial Officer......... Electronically Filed
10.3 Description of bonus arrangement for Vice President of Sales.................. Electronically Filed
10.4 Fastenal Company Stock Appreciation Rights Plan (incorporated by
reference to Exhibit 10.4 to Fastenal Company's Form 10-K for the year
ended December 31, 2000)
10.5 Amendment to Fastenal Company Stock Appreciation Rights Plan................... Electronically Filed
13 Annual Report to Shareholders for the fiscal year ended December 31, 2001
(only those portions specifically incorporated by reference herein shall
be deemed filed with the Commission)........................................... Electronically Filed
21 List of Subsidiaries........................................................... Electronically Filed
23 Consent of KPMG LLP............................................................ Electronically Filed