What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-07 compared with 2022-02-07 · 88 added, 98 removed, 571 unchanged (25% of the section changed)

4 unchanged sentences

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Fastenal Company and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2021 and the related notes and financial statement schedule listed in the table of contents at Item 15 (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of Fastenal Company and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of earnings, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2022 and the related notes and financial statement schedule II - valuation and qualifying accounts (collectively, the consolidated financial statements).

We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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• Homogeneity of the locations;

• Historical inventory locations we have visited and results of prior physical counts;

• Historical inventory locations we have visited and the results of prior physical counts;

• Inventory dollars by location;

• The Company's inventory cycle count results, including the results of monitoring and compliance with the cycle count program by in-market location.

• The Company's inventory cycle count results, including the results of monitoring and compliance with the cycle counting program.

We tested the existence and completeness of inventory by counting inventory quantities on a sample basis through in-market location visits during the year to evaluate the Company's perpetual inventory records.

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Trade accounts receivable, net of allowance for credit losses of $ 8.3 and $ 12.0 , respectively

1,013.2 900.2

Inventories 1,708.0 1,523.6

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Deferred income taxes 83.7 88.6

Other long-term liabilities 3.5 —

Commitments and contingencies (Notes 5, 8, 9, and 10)

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Net earnings 1,086.9 925.0 859.1

Dividends paid in cash ( 643.7 ) ( 803.4 ) ( 498.6 )

Cash dividends paid ( 711.3 ) ( 643.7 ) ( 803.4 )

Translation adjustment upon merger of foreign subsidiary 0.9 — —

Purchases of common stock ( 128.7 ) — —

Balance at end of year 3,218.7 2,970.9 2,689.6

13 unchanged sentences

Net earnings $ 1,086.9 925.0 859.1

Adjustments to reconcile net earnings to net cash provided by operating activities, net of acquisition:

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation of property and equipment 165.9 159.9 153.3

Gain on sale of property and equipment ( 1.1 ) ( 1.4 ) ( 1.2 )

Bad debt expense 2.5 7.5 5.5

Loss (gain) on sale of property and equipment 1.1 ( 1.1 ) ( 1.4 )

Bad debt (recoveries) expense ( 1.8 ) 2.5 7.5

Deferred income taxes ( 4.9 ) ( 13.7 ) 2.9

1 unchanged sentence

Amortization of intangible assets 10.7 10.8 9.1

Changes in operating assets and liabilities, net of acquisition:

Changes in operating assets and liabilities:

Trade accounts receivable ( 119.8 ) ( 135.2 ) ( 29.7 )

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Purchases of common stock ( 237.8 ) — ( 52.0 )

Payments of dividends ( 643.7 ) ( 803.4 ) ( 498.6 )

Cash dividends paid ( 711.3 ) ( 643.7 ) ( 803.4 )

Net cash used in financing activities ( 774.9 ) ( 627.1 ) ( 754.4 )

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Collectively, we refer to our branches and Onsite locations as in-market locations.

We have over 3,200 in-market locations located primarily in North America.

We have approximately 3,300 in-market locations located primarily in North America.

Principles of Consolidation

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All revenue is recognized when we satisfy our performance obligations under the contract.

We recognize revenue by transferring the promised products to the customer, with the majority of revenue recognized at the point in time the customer obtains control of the products.

We recognize revenue by transferring control of the promised products to the customer, with the majority of revenue recognized at the point in time the customer obtains control of the products.

We recognize revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer.

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Accounts Receivable

Credit is extended based upon an evaluation of the customers' financial condition.

Credit is extended based upon an evaluation of the customer's financial condition.

Accounts receivable are stated at their estimated net realizable value.

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Cash and Cash Equivalents

We consider all investments purchased with original maturities of three months or less to be cash equivalents.

We consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Inventories, consisting of finished goods merchandise held for resale, are stated at the lower of cost (first in, first out method) or net realizable value.

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Depreciation on property and equipment is provided for using the straight-line method over the anticipated economic useful lives of the related property.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

circumstances require a long-lived asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value.

If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying value exceeds its fair value.

Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.

There were no impairments recorded during any of the three years reported in these consolidated financial statements.

We determine if an arrangement contains a lease at inception.

Operating leases are included in our operating lease right-of-use (ROU) assets, the current portion of operating lease liabilities, and the operating lease liabilities in our Consolidated Balance Sheets.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

The ROU assets represent our right to control the use of an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The operating lease ROU assets also include any prepaid lease payments made and exclude lease incentives.

Lease expense is recognized on a straight-line basis over the lease term.

Many of our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and nonlease components (e.g., common-area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and nonlease components for all leases.

Many of our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease components (e.g., common-area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases.

Our pick-up truck leases typically have a non-cancelable lease term of less than one year and therefore, we have elected the practical expedient to exclude these short-term leases from our ROU assets and lease liabilities.

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therefore, based on the applicable lease terms and the current economic environment, we apply a portfolio approach for determining the incremental borrowing rate.

Other Long-Lived Assets

Other assets consist of prepaid deposits, goodwill, and other definite-lived intangible assets.

Long-Lived Assets

Long-lived assets consist of net property and equipment, operating lease right-of-use assets, prepaid deposits, goodwill, and definite-lived intangible assets, and are reviewed for impairment whenever an event or change in circumstance indicates that the carrying amount of the asset may not be recoverable.

If circumstances require a long-lived asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by the asset or asset group to its carrying value.

Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as necessary.

There were no impairments recorded during any of the three years reported in these consolidated financial statements.

Goodwill represents the excess of the purchase price over the fair value of net assets acquired.

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Our warranty expense has historically been minimal.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Stock-Based Compensation

We estimate the value of stock option grants using a Black-Scholes valuation model.

Stock-based compensation expense is recognized on a straight-line basis over the vesting period.

We estimate the fair value of stock options as of the date of the grant using a Black-Scholes valuation model.

Stock-based compensation expense equal to the grant date fair value is recognized on a straight-line basis over the vesting period.

Our stock-based compensation expense is recorded in operating and administrative expenses.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

We account for income taxes under the asset and liability method.

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(1) economic characteristics, (2) products and services, (3) customers, (4) distribution channels, and (5) regulatory environments.

Considering the insignificance of our operations outside of North America, we report as a single business segment.

Impact of COVID-19

The COVID-19 pandemic has likely influenced various trends the company is currently experiencing.

These include supply chain disruptions and labor shortages, and a modest shift in our mix to include more safety products.

Evaluating 2021 is challenging given the impacts of the pandemic on the company in the year-earlier period.

However, in contrast to much of the preceding one to two years, we are currently seeing a narrower impact on our business related directly to the COVID-19 pandemic, as economic activity has recovered and customer and product mix has reverted back to close to pre-pandemic levels.

We believe current financial results are more reflective of traditional economic and marketplace dynamics than of pandemic-related issues such as facility restrictions, labor force illness, and personal protective equipment (PPE) demand.

The primary exception to this normalization trend is in the signings of our Onsite and Fastenal Managed Inventory (FMI), which have yet to recover to pre-pandemic levels.

To the extent that COVID-19 infections and/or interventions continue to meaningfully influence the marketplace, on a national, local, or business-specific basis, this can either directly impact or indirectly influence access to customer facilities and decision-makers, and lengthen the sales cycle for certain of our solutions.

However, it is possible the COVID-19 pandemic, particularly in light of variant strains of the virus, could further impact our operations and the operations of our suppliers and vendors as a result of quarantines, facility closures, illnesses, and travel and logistics restrictions.

The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the resumption of high levels of infection and hospitalization, the resulting impact on our customers, suppliers, and vendors, the remedial actions and stimulus measures adopted by federal, state, and local governments, and to what extent normal economic and operating conditions are impacted.

We cannot reasonably estimate the future impact at this time.

On April 17, 2019, the board of directors approved a two -for-one stock split of the company's outstanding common stock.

Holders of the company's common stock, par value $ 0.01 per share, at the close of business on May 2, 2019, received one

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

additional share of common stock for every share of common stock they owned.

The stock split took effect at the close of business on May 22, 2019.

All historical common stock share and per share information for all periods presented in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted to reflect the stock split.

Immaterial Revision

The prior period balances for additional paid-in capital and common stock have been updated in both the Consolidated Balance Sheets and Consolidated Statements of Stockholders' Equity to reflect the impact of an immaterial correction which reclassified $ 2.9 from additional paid-in capital to common stock in connection with the 2019 stock split.

Considering our operations outside of North America represent less than 10% of our net sales, net earnings, or assets, we report as a single business segment.

Recently Issued Accounting Pronouncements

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The guidance was effective upon issuance and may be applied prospectively to contract modifications made, hedging relationships entered into, and other transactions affected by reference rate reform, evaluated on or before December 31, 2022, beginning during the reporting period in which the guidance has been elected.

We do not have any receivables, hedging relationships, or lease agreements that reference LIBOR or another reference rate expected to be discontinued.

We are currently evaluating the impact of the new guidance on our consolidated financial statements;

however, we have determined that, of our current debt commitments as outlined in detail in Note 9 'Debt Commitments', only the obligations described under Unsecured Revolving Credit Facility in Note 9 would be impacted by ASU 2020-04.

Our Senior Unsecured Promissory Notes Payable described in Note 9 each have fixed interest rates.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , which extended the date to December 31, 2024.

We do not have any receivables, hedging relationships, lease agreements, or debt agreements that reference LIBOR or another reference rate expected to be discontinued.

On September 28, 2022, we amended and restated our unsecured revolving credit agreement.

At the same time, we also amended our master note agreement.

As a result of those amendments, our floating rate debt no longer references a LIBOR based benchmark rate.

Therefore, we will not be electing the optional practical expedients associated with this ASU.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Disaggregation of Revenue

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Revenues are attributed to countries based on the selling location from which the sale occurred.

During 2021, no single customer represented 5% or more of our consolidated net sales.

During 2022 and 2021, no single customer represented 5% or more of our consolidated net sales.

During 2020, we had a single customer that represented 5 % of our consolidated net sales, whereas all remaining customers fell below that threshold.

During 2019, no single customer represented 5% or more of our consolidated net sales.

Our revenues related to the following geographic areas were as follows for the periods ended December 31:

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100.0 % 100.0 % 100.0 %

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

The percentages of our sales by product line were as follows for the periods ended December 31:

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(1) The fastener product line represents fasteners and miscellaneous supplies.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Long-Lived Assets

The accounting policies of the operations in the various geographic areas are the same as those described in the summary of significant accounting policies .

Long-lived assets consist of net property and equipment, operating lease right-of-use assets, deposits, goodwill, and other net intangibles.

Long-lived assets consist of net property and equipment, operating lease right-of-use assets, prepaid deposits, goodwill, and definite-lived intangible assets.

Property and equipment at year end consisted of the following:

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Total long-lived assets $ 1,423.8 1,442.4

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Accrued Expenses

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Accrued expenses $ 241.1 298.3

(1) Includes the deferral of $ 30.0 in payroll taxes resulting from the CARES Act in 2020.

Stockholders' Equity

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We paid aggregate annual cash dividends per share of $ 1.24 and $ 1.12 in 2022 and 2021, respectively.

In 2020, we paid aggregate annual cash dividends per share of $ 1.40 , which included a special, one-time dividend of $ 0.40 per share.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Stock Options

Effective January 3, 2022, the compensation committee of our board of directors granted to our employees options to purchase a total of 660,083 shares of our common stock at an exercise strike price of $ 62.00 per share.

Effective January 3, 2023, the compensation committee of our board of directors granted to our employees options to purchase a total of 1,001,381 shares of our common stock at an exercise price of $ 48.00 per share.

On the same date, certain of our non-employee directors received options to acquire a total of 70,562 shares of our common stock at an exercise price of $ 48.00 per share.

The closing stock price on the effective date of the grants was $ 47.40 per share.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

The following tables summarize the details of options granted under our stock option plans that were still outstanding as of December 31, 2022, and the assumptions used to value those grants.

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Granted Option Exercise

(Strike) Price Closing Stock

Price Closing Stock

Price on Date

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January 2, 2018 1,087,936 $ 27.50 $ 27.270 689,133 417,667

April 19, 2016 1,690,880 $ 23.00 $ 22.870 524,119 331,739

January 3, 2017 1,529,578 $ 23.50 $ 23.475 670,372 512,248

April 19, 2016 1,690,880 $ 23.00 $ 22.870 493,803 371,455

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January 2, 2018 2.2 % 5.00 2.3 % 23.45 % $ 5.02

April 19, 2016 1.3 % 5.00 2.6 % 26.34 % $ 4.09

January 3, 2017 1.9 % 5.00 2.6 % 24.49 % $ 4.20

April 19, 2016 1.3 % 5.00 2.6 % 26.34 % $ 4.09

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All of the options in the tables above vest and become exercisable over a period of up to eight years .

Generally, each option will terminate approximat ely ten years after the grant date.

Generally, each option will terminate approximat ely 10 years after the grant date.

The fair value of each share-based option is estimated on the date of grant using a Black-Scholes valuation method that uses the assumptions listed above.

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Treasury rate over the expected life of the option at the time of grant.

The expected life is the average length of time over which we expect the employee groups will exercise their options, which is based on historical experience with similar grants.

The expected life is the average length of time over which we expect the employee groups will exercise their options, net of forfeitures, which is based on historical experience with similar grants.

The dividend yield is estimated over the expected life of the option based on our current dividend payout, historical dividends paid, and expected future cash dividends.

Expected stock volatilities are based on the movement of our stock price over the most recent historical period equivalent to the expected life of the option.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

A summary of activities under our stock option plans consisted of the following:

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Exercisable as of December 31, 2022 2,437,636 $ 27.14 4.30

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Outstanding Exercise

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Balance at end of year 570,811,674 575,464,682 574,159,575

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Earnings Per Share

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Our employees in Canada may participate in a Registered Retirement Savings Plan.

The general purpose of both of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

savings contributions.

The general purpose of both of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings contributions.

In addition to the participation of our employees, we make annual profit sharing contributions based on an established formula.

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Earnings before income taxes $ 1,440.0 1,207.8 1,132.7

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Components of income tax expense (benefit) were as follows:

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The tax effects of temporary differences that give rise to deferred income tax assets and liabilities at year end consisted of the following:

2022 2021 (1)

Deferred income tax assets (liabilities):

Inventory costing and valuation methods $ 6.7 5.2

Allowance for credit losses 3.1 3.1

Insurance reserves 8.6 7.4

Customer promotions 2.3 2.4

Stock-based compensation 3.6 2.8

Operating lease liabilities 62.6 62.6

Federal and state benefit of uncertain tax positions 0.9 0.8

Foreign net operating loss and credit carryforwards 2.6 1.4

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Prepaid royalty 0.3 5.9

Other, net 0.2 ( 0.3 )

Section 174 capitalization 3.4 —

Other, deferred tax assets 9.3 10.8

Total deferred income tax assets 95.3 94.4

1 unchanged sentence

Operating lease ROU assets ( 61.5 ) ( 61.3 )

Other, deferred tax liabilities ( 4.8 ) ( 4.3 )

Total deferred income tax liabilities ( 168.9 ) ( 175.6 )

Deferred income tax liabilities $ ( 73.6 ) ( 81.2 )

A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits was as follows:

(1) The presentation of prior year deferred income tax assets and liabilities has been updated to conform to current period presentation.

A reconciliation of the beginning and ending amount of total gross unrecognized tax benefits is as follows:

Balance at beginning of year:

Increase related to prior year tax positions 3.5 0.3

Decrease related to prior year tax positions — ( 0.1 )

Increase related to current year tax positions 0.6 0.9

Decrease related to statute of limitation lapses ( 0.9 ) ( 2.6 )

Settlements ( 0.5 ) —

Balance at end of year:

Included in the liability for gross unrecognized tax benefits is an immaterial amount for interest and penalties, both of which we classify as a component of income tax expense.

The amount of gross unrecognized tax benefits that would favorably impact the eff ective tax rate, if recognized, is not material.

We do not anticipate significant changes in total unrecognized tax benefits during the next twelve months.

The amount of unrecognized tax benefits that would favorably impact the eff ective tax rate, if recognized, is $ 8.6 as of December 31, 2022 and $ 6.5 as of December 31, 2021.

We believe it is reasonably possible that a decrease of up to $ 5.1 in unrecognized tax benefits may be recognized by the end of 2023 as a result of the lapse of the statute of limitations.

The 2022 and 2021 liability is included in deferred income taxes in the Consolidated Balance Sheets.

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We are no longer subject to income tax examinations by taxing authorities for taxable years before 2019 in the case of United States federal examinations, and with limited exception, before 2017 in the case of foreign, state, and local examinations.

During 2021, there were no material changes in unrecognized tax benefits.

In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or very minimal.

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Certain operating leases for pick-up trucks contain residual value guarantee provisions which would generally become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value.

The aggregate residual value guarantee related to these leases was appro ximately $ 83.4 .

We believe the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is remote.

The aggregate residual value guarantee related to these leases was ap proximately $ 86.0 .

We be lieve the likelihood of funding the guarantee obligation under any provision of the operating lease agreements is remote.

The cost components of our operating leases were as follows for the periods ended December 31:

2021 2020 2019

Facilities and

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Variable lease costs are excluded from ROU assets and lease liabilities and consist primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities and equipment which are paid based on actual costs incurred by the lessor as well as variable mileage costs related to our leased vehicles.

Maturities of our lease liabilities for all operating leases are as follows as of December 31, 2021:

Maturities of our lease liabilities for all operating leases were as follows as of December 31, 2022:

Facilities and

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Supplemental cash flow information related to our operating leases was as follows for the periods ended December 31:

2021 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

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Debt obligations and letters of credit outstanding at year end consisted of the following:

Average Interest Rate at December 31, 2021 Debt Outstanding

Average Interest Rate at December 31, 2022

Debt Outstanding

Date 2022 2021

Unsecured revolving credit facility 1.05 % November 30, 2023 $ 25.0 —

Senior unsecured promissory notes payable, Series A 2.00 % July 20, 2021 — 40.0

Unsecured revolving credit facility 5.35 % September 28, 2027 $ 225.0 25.0

Senior unsecured promissory notes payable, Series B 2.45 % July 20, 2022 — 35.0

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Unsecured Revolving Credit Facility

We have a $ 700.0 committed unsecured revolving credit facility (Credit Facility).

On September 28, 2022, we amended and restated our unsecured revolving Credit Agreement dated May 1, 2015.

The Credit Agreement was amended and restated to, among other things:

(1) increase the aggregate revolving credit commitment under the Credit Agreement, (2) extend the revolving credit maturity date to September 28, 2027, (3) provide a benchmark replacement for LIBOR with SOFR, and (4) make certain covenant changes.

After giving effect to the amendment and restatement described above, we have an $ 835.0 committed unsecured revolving credit facility (Credit Facility) with an uncommitted accordion option to increase the aggregate revolving commitment by an additional $ 365.0 for a total amount of $ 1,200.0 .

The Credit Facility includes a committed letter of credit subfacility of $ 55.0 .

Any borrowings outstanding under the Credit Facility for which we have the ability and intent to pay using cash within the next twelve months, will be classified as a current liability.

Any borrowings outstanding under the Credit Facility for which we have the ability and intent to pay using cash within the next 12 months will be classified as a current liability.

The Credit Facility contains certain financial and other covenants, and our right to borrow under the Credit Facility is conditioned upon, among other things, our compliance with these covenants.

We are currently in compliance with these covenants.

Borrowings under the Credit Facility generally bear interest at a rate per annum equal to LIBOR for interest periods of various lengths selected by us, plus 0.95 %.

Borrowings under the Credit Facility generally bear interest at a rate per annum equal to Daily Simple SOFR plus a 0.10 % spread adjustment plus 0.95 %.

We pay a commitment fee for the unused portion of the Credit Facility.

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Senior Unsecured Promissory Notes Payable

On September 28, 2022, we amended our Master Note Agreement dated July 20, 2016.

The Master Note Agreement was amended to, among other things:

(1) increase the aggregate principal amount of notes that may be issued under the agreement from time to time, (2) extend the issuance period to September 28, 2027, (3) replace the benchmark rate for any floating rate notes that may be issued in the future under the agreement from LIBOR to SOFR, and (4) make certain changes to covenants.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

We have issued senior unsecured promissory notes under our master note agreement (the Master Note Agreement) in the aggregate principal amount of $ 330.0 as of December 31, 2022.

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The Master Note Agreement contains certain financial and other covenants and we are in compliance with these covenants.

Fastenal Company and Subsidiaries

Notes to Consolidated Financial Statements—Continued

Principal payments required on our outstanding indebtedness, based on the maturity dates defined within our long-term debt arrangements, for the succeeding five years, are displayed in the table below, as of December 31, 2022:

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Legal Contingencies

We are involved in certain legal actions.

We are involved in certain legal actions, including those that are ordinary routine litigation incidental to our business.

The outcomes of these legal actions are not within our complete control and may not be known for prolonged periods of time.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data