8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): April 11, 2003

FASTENAL COMPANY

(Exact name of registrant as specified in its charter)

Minnesota

(State or other jurisdiction of

incorporation)

0-16125	41-0948415
(Commission file number)	(I.R.S. Employer Identification No.)

2001 Theurer Boulevard         Winona, Minnesota	55987-1500
(Address of principal executive offices)	(Zip Code)

(507) 454-5374

(Registrant’s telephone number,

including area code)

Not Applicable

(Former name or former address, if changed since last report)

Item 7. Financial Statements and Exhibits.

(c) Exhibits

99.1 Press release of Fastenal Company dated April 11, 2003

Item 9. Regulation FD Disclosure.

The following information is being provided pursuant to Item 12 of this report:

On April 11, 2003, Fastenal Company (the “Company”) issued a press release discussing its financial performance for the fiscal quarter ended March 31, 2003. A copy of that press release is attached as an exhibit to this report and is incorporated herein by reference.

The press release contains information regarding the Company’s total and daily sales growth rates, adjusted to exclude sales of the “DIY Business”, which was acquired by the Company on August 31, 2001 and disposed of by the Company on October 3, 2002. Management believes that such adjusted growth rates are useful to investors because they provide consistent information about the financial performance of the Company’s organic branch-based business and the Company’s ongoing operations.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 11, 2003

FASTENAL COMPANY
By:	/s/    DANIEL L. FLORNESS
	Daniel L. Florness Chief Financial Officer

INDEX TO EXHIBITS

99.1 Press release of Fastenal Company dated April 11, 2003 Electronically Filed

EX-99.1

Exhibit 99.1

RELEASE DATE: April 11, 2003 Contact: Dan Florness, Treasurer and CFO 507.453.8211

FASTENAL COMPANY REPORTS FIRST QUARTER EARNINGS

The Fastenal Company of Winona, MN (NASDAQ Symbol FAST) reported the results of the quarter ended March 31, 2003. (Note – All information contained in the Press Release reflects the 2-for-1 stock split which occurred in May 2002.) Dollar amounts are in thousands.

Net sales for the three-month period ended March 31, 2003 totaled $235,843, an increase of 9.9% over net sales of $214,582 in the first quarter of 2002. The first quarter of 2002 included net sales of $5,392 from the Company’s DIY Business, which was disposed of in October 2002. Adjusting for the DIY Business sale, growth in net sales of the remaining business was 12.8% from 2002 to 2003. Net earnings increased from $17,705 in the first quarter of 2002 to $19,041 in the first quarter of 2003, an increase of 7.5%. Earnings per share increased from $.23 to $.25 for the comparable periods.

During the first quarter of 2003, Fastenal opened 36 new sites, bringing the total number of sites to 1,205. There were 4,703 site employees as of March 31, 2003, a decrease of 0.8% from December 31, 2002.

Management’s comments on 2003:

Note – Daily sales are defined as the sales for the month divided by the number of business days in the month.

The twelve months of 2001 and 2002 and the three months of 2003, excluding the DIY Business, had daily sales growth rates of (compared to the comparable month in the preceding year):

	Jan.		Feb.		Mar.		Apr.		May		June		July		Aug.		Sept.		Oct.		Nov.		Dec.
2001	20.0	%	16.2	%	11.4	%	9.0	%	9.4	%	7.6	%	7.4	%	5.9	%	4.8	%	1.0	%	-0.5	%	1.4	%
2002	2.7	%	4.8	%	6.0	%	9.3	%	9.4	%	11.0	%	8.7	%	10.4	%	12.5	%	13.3	%	17.9	%	11.6	%
2003	13.3	%	10.3	%	14.5	%

The twelve months of 2001 and 2002 and the three months of 2003, including the DIY Business, had daily sales growth rates of (compared to the comparable month in the preceding year):

	Jan.		Feb.		Mar.		Apr.		May		June		July		Aug.		Sept.		Oct.		Nov.		Dec.
2001	20.0	%	16.2	%	11.4	%	9.0	%	9.4	%	7.6	%	7.4	%	5.9	%	8.7	%	4.1	%	2.5	%	5.1	%
2002	5.6	%	7.1	%	8.9	%	12.0	%	12.3	%	13.7	%	11.6	%	13.1	%	11.0	%	10.2	%	14.3	%	7.8	%
2003	10.2	%	7.9	%	11.5	%

The first table reflects growth rates of Fastenal excluding $16,974 and $8,526 of DIY Business net sales from January 1, 2002 to October 3, 2002 and from August 31, 2001 to December 31, 2001, respectively (the period of time the DIY Business was owned). Management included the first table above because we believe it provides a consistent presentation of the growth rates of the organic branch-based business before, during, and after the period in which the DIY Business was owned and operated.

The daily sales growth rates in the first table above represent several trends. The first being a downward trend in the first eleven months of 2001 which reflected the overall weakening of the industrial economy we service in North America. This trend reversed itself from December 2001 to June 2002; this was partly due to changing comparisons in the prior year and partly due to stronger month-to-month (i.e. April to May and May to June) growth rates compared to 2001. During July 2002, the daily sales growth rate decreased, began to improve again in August 2002 through November 2002, and slipped in December 2002, the final month of the year. The first quarter of 2003 continued the choppy trend in net sales growth experienced in the second half of 2002.

Fastenal’s gross margins in the first quarter of 2003 and 2002 were 49.5% and 49.7%, respectively. The change in the gross margin percent resulted from several factors. The DIY Business operated at a lower gross margin, approximately 30%, so the sale of this business caused an improvement in the overall gross margin. This improvement was offset by (1) increases in freight costs primarily due to changes in fuel prices and (2) the influence of increases in sales to certain large accounts and to certain large sales, which were made at lower margins.

Fastenal’s operating expenses grew at a rate of 9.7%, a rate that is less than the net sales growth rate of 9.9% discussed above. This was due to (1) the removal of the operating expenses associated with the DIY Business and (2) improvements in payroll and payroll related expenses. The improvement in payroll and payroll related expenses represents the continued focus on managing our headcount to the levels considered necessary to open new stores, to service growing sales, and to operate stores with the CSP format (discussed below).

The Company expects to open approximately 150 to 185 new stores in 2003 (or an increase over December 31, 2002 of approximately 12% to 16%). The Company opened 128 new store sites during 2001 (or an increase over December 31, 2000 of 14.3%) and 144 new store sites in 2002 (or an increase over December 31, 2001 of 14.0%). While the new stores continue to build the infrastructure for future growth, the first year sales are low, and the added expenses related to payroll, occupancy, and transportation costs impact the Company’s ability to leverage earnings in a weakened industrial economy. As disclosed in the past, it has been the Company’s experience that new stores take approximately ten to twelve months to achieve profitability. The planned openings can be altered in a short time span, usually less than 60 to 90 days. The Company will continue to reevaluate the level of planned openings in 2003.

In addition to the planned store expansion, we are proceeding with our ‘customer service project’ (or ‘CSP’). The goals of this project include the expansion of the products stocked at each store site as well as a more consistent display theme at each of these store sites. On March 31, 2003, 370 of Fastenal’s 1,205 stores were operating with the ‘customer service project’ layout and product selection. Our internal benchmarking information related to the store sites converted to the ‘CSP’ format in the third quarter of 2002 shows improvement in daily sales growth rates and in employee productivity when compared to a random sampling of non-converted store sites. This will be discussed in greater detail at our Annual Meeting of Shareholders on Tuesday, April 15, 2003. Copies of the information presented at the Annual Meeting will be posted on the Fastenal Company World Wide Web site at www.fastenal.com on Tuesday morning.

Additional information regarding Fastenal Company’s first quarter statistics is available on the Fastenal Company World Wide Web site at www.fastenal.com. Beginning in November 2000, the Company began to disclose sales information on a monthly basis. This information is posted at www.fastenal.com on the third business day following the end of each month. This press release contains 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 increases in selling locations, the time it typically takes a new store to achieve profitability, the timeline for altering planned store openings, and the continuance of our ‘customer service project’. A change in the economy, from that currently being experienced, could cause the store openings to change from that expected, and disruption with the ‘customer service project’ implementation could cause expenses and inventory investments to increase, which in turn could cause the Company to reevaluate the implementation of the project. A discussion of other risks and uncertainties is included in the Company’s 2002 annual and quarterly reports under the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

FASTENAL COMPANY AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands except share information)

Assets	Unaudited March 31, 2003		December 31, 2002
Current assets:
Cash and cash equivalents	$	18,801	14,296
Marketable securities		25,753	37,062
Trade accounts receivable, net of allowance for doubtful accounts of $3,543 and $3,543, respectively		120,042	105,553
Inventories		232,682	217,262
Deferred income tax asset		5,868	5,868
Other current assets		13,873	14,607
Refundable income taxes		1,838	1,838
Total current assets		418,857	396,486
Marketable securities		12,131	15,340
Property and equipment, less accumulated depreciation		153,743	144,252
Other assets, less accumulated amortization		3,009	2,930
Total assets	$	587,740	559,008
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	23,679	25,783
Accrued expenses		24,774	21,281
Income taxes payable		10,573	—
Total current liabilities		59,026	47,064
Deferred income tax liability		12,073	12,073
Stockholders’ equity:
Preferred stock		—	—
Common stock, 100,000,000 shares authorized 75,877,376 shares issued and outstanding		759	759
Additional paid-in capital		7,472	7,472
Retained earnings		508,181	493,693
Accumulated other comprehensive loss		229	(2,053	)
Total stockholders’ equity		516,641	499,871
Total liabilities and stockholders’ equity	$	587,740	559,008

FASTENAL COMPANY AND SUBSIDIARIES

Consolidated Statements of Earnings

(Amounts in thousands except earnings and extraordinary gain per share)

	(Unaudited) Three months ended March 31,
	2003		2002
Net sales	$	235,843	214,582
Cost of sales		119,146	108,005
Gross profit		116,697	106,577
Operating and administrative expenses		85,969	78,367
Loss on sale of property and equipment		131	95
Operating income		30,597	28,115
Interest income		263	540
Earnings before income taxes		30,860	28,655
Income tax expense		11,819	10,950
Net earnings		19,041	17,705
Basic and diluted net earnings per share	$	0.25	0.23
Weighted average shares outstanding		75,877	75,877

FASTENAL COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Amounts in thousands)

	(Unaudited) Three months ended March 31,
	2003			2002
Cash flows from operating activities:
Net earnings	$	19,041		17,705
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of property and equipment		4,874		4,072
Loss on sale of property and equipment		131		95
Bad debt expense		1,404		1,340
Amortization of goodwill and non-compete agreement		17		17
Changes in operating assets and liabilities, net of ecquisition and sale of the DIY Business:
Trade accounts receivable		(15,893	)	(15,647	)
Inventories		(15,420	)	(4,226	)
Other current assets		734		2,274
Accounts payable		(2,104	)	4,207
Accrued expenses		3,493		833
Income taxes, net		10,573		10,402
Other		2,114		30
Net cash provided by operating activities		8,964		21,102
Cash flows from investing activities:
Purchase of property and equipment		(15,064	)	(4,861	)
Proceeds from sale of property and equipment		568		548
Net decrease (increase) in marketable securities		14,518		(12,485	)
Decrease (increase) in other assets		(96	)	21
Net cash used in investing activities		(74	)	(16,777	)
Cash flows from financing activities:
Payment of dividends		(4,553	)	(3,794	)
Net cash used in financing activities		(4,553	)	(3,794	)
Effect of exchange rate changes on cash		168		(4	)
Net (decrease) increase in cash and cash equivalents		4,505		527
Cash and cash equivalents at beginning of period		14,296		47,264
Cash and cash equivalents at end of period	$	18,801		47,791
Supplemental disclosure of cash flow information:
Cash paid during each period for:
Income taxes	$	1,246		548