-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VKnKCSWCxAAQ/YcIv8OktAMgFNZE3TAlCPsEZKKXP5eSTOvLhGcRKTNzX3LfZNs2 Whp4J89A9DQW+apbVGotnQ== 0000950144-00-003625.txt : 20000327 0000950144-00-003625.hdr.sgml : 20000327 ACCESSION NUMBER: 0000950144-00-003625 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20000101 FILED AS OF DATE: 20000324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRACTOR SUPPLY CO /DE/ CENTRAL INDEX KEY: 0000916365 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY [5200] IRS NUMBER: 133139732 STATE OF INCORPORATION: DE FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-23314 FILM NUMBER: 577948 BUSINESS ADDRESS: STREET 1: 320 PLUS PARK BLVD CITY: NASHVILLE STATE: TN ZIP: 37217 BUSINESS PHONE: 6153664600 MAIL ADDRESS: STREET 1: 320 PLUS PARK BOULEVARD CITY: NASHVILLE STATE: TN ZIP: 37217 10-K 1 TRACTOR SUPPLY COMPANY 1 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 January 1, 2000 ------------------------------------------------------ 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 000-23314 --------- TRACTOR SUPPLY COMPANY - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware 13-3139732 - ---------------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 320 Plus Park Boulevard, Nashville, Tennessee 37217 - ---------------------------------------------- ---------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (615) 366-4600 ---------------------------- Securities Registered Pursuant to Section 12(b) of the Act: None Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $.008 par value - -------------------------------------------------------------------------------- (Title of Class) 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 [ ] 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 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, based on the closing price of the Common Stock on The Nasdaq National Market on January 31, 2000 was $49,431,078. For purposes of this response, the registrant has assumed that its directors, executive officers, and beneficial owners of 5% or more of its Common Stock are the affiliates of the registrant. Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date. Class Outstanding at January 31, 2000 - --------------------------------------- ------------------------------------- Common Stock, $.008 par value 8,774,198 1 2 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held on April 27, 2000 are incorporated by reference into Part III of this Form 10-K. Portions of the Registrant's Annual Report to Stockholders for the fiscal year ended January 1, 2000 are incorporated by reference into Parts II and IV of this Form 10-K. FORWARD-LOOKING STATEMENTS OR INFORMATION This Form 10-K includes certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements included or incorporated by reference in this Form 10-K which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy, expansion and growth of the Company's business and operations and other such matters are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions within the bounds of its knowledge of its business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by or on behalf of the Company. Many of these factors have previously been identified in filings or statements made by or on behalf of the Company. All phases of the Company's operations are subject to influences outside its control. Any one, or a combination, of which could materially affect the results of the Company's operations. These factors include general economic cycles affecting consumer spending, weather factors, operating factors affecting customer satisfaction, inflation, consumer debt levels, pricing and other competitive factors, changes in freight rates, the timing and acceptance of new products in the stores, the mix of goods sold, interest rate fluctuations and other capital market and economic conditions in general, Year 2000 issues, unemployment levels and the seasonality of the Company's business. Forward-looking statements made by or on behalf of the Company are based on a knowledge of its business and the environment in which it operates, but because of the factors listed above, actual results could differ materially from those reflected by any forward-looking statements. Consequently, all of the forward-looking statements made are qualified by these and other cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business and operations. PART I ITEM 1. BUSINESS Overview Tractor Supply Company, a Delaware corporation ("TSC" or the "Company"), is a specialty retailer which supplies the daily farming and maintenance needs of its target customers: hobby, part-time and full-time farmers and ranchers, as well as rural customers, contractors and tradesmen. The Company operates one of the largest retail farm store chains in the United States. TSC's 273 stores, located in 26 states, typically range in size from 12,000 to 14,000 square feet of inside selling space and utilize at least as many square feet of outside selling space. Stores are located in rural communities and in the outlying areas of large cities where the rural lifestyle is a significant factor in the local economy. The Company meets the daily farming and maintenance needs of its target customers with a comprehensive selection of farm maintenance products (fencing, tractor parts and accessories, agricultural spraying equipment and tillage parts); animal and pet products (specialty feeds, supplements, equine supplies, medicines, veterinary supplies and livestock feeders); general maintenance products (air compressors, welders, generators, pumps, plumbing and tools); lawn and garden products (riding mowers, tillers and fertilizers); light truck equipment; work clothing and other products. The Company does not sell large tractors, combines, bulk chemicals or bulk fertilizers. The Company's merchandising strategy combines this comprehensive product selection with strong inventory support. 2 3 The Company was founded in 1938 as a catalog mail order tractor parts supplier. In 1978, Fuqua Industries, Inc. acquired the Company, and in 1982 Fuqua, in turn, sold the Company to a group of investors, including a member of the Company's current senior management team, who is also a significant stockholder. Between the acquisition in 1982 and 1999, the Company's sales have increased from $122.5 million to $688.1 million and the Company has opened 169 stores and closed 20 stores. Seasonality and Weather The Company's business is highly seasonal. Historically, the Company's sales and profits have been the highest in the second and fourth fiscal quarters of each year due to the planting and harvesting seasons and the sale of seasonal products. The Company has typically operated at a net loss in the first fiscal quarter of each year. Unseasonable weather, excessive rain, drought, or early or late frosts may also affect the Company's sales. The Company believes, however, that the impact of adverse weather conditions is somewhat mitigated by the geographic dispersion of its stores. Business Strategy The Company believes its sales and earnings growth has resulted from the focused execution of its business strategy, which includes the following key components: Market Niche. The Company has identified a specialized market niche - supplying the daily farming and maintenance needs of hobby, part-time and full-time farmers and ranchers. By focusing its product mix on these core customers, the Company believes it has differentiated itself from general merchandise, home center and other specialty retailers. Customer Service. The Company's number one priority is customer service. It offers its customers a high level of in-store service through motivated, well-trained, technically proficient Store Associates. The Company believes the ability of its Store Associates to provide friendly, responsive, technical assistance is valued by its customers and helps to promote strong customer loyalty and repeat shopping. TSC's commitment to customer service is further enhanced by its "satisfaction guaranteed" policy and its special order program. Technology. Management strives to improve operating efficiencies and reduce costs through the use of modern technologies. The Company utilizes a fully integrated computerized merchandise and warehouse management and point-of-sale system that permits the entire store network to communicate with the Company's distribution centers and its management headquarters. The Company believes that this integrated system results in lower inventory carrying costs, improved in-stock positions and enhanced inventory control, as well as management and purchasing efficiencies. The Company believes that its ongoing commitment to utilize modern technologies creates a competitive advantage. Store Locations. The Company's strategy is to locate its stores in rural communities and outlying areas of large cities where the rural lifestyle is a significant factor in the local economy. The Company believes it has developed a sophisticated, proven methodology to select its new store sites. Product Selection. The Company offers a comprehensive selection of high quality, nationally recognized brand name and private label products, focused principally on the needs of the hobby, part-time and full-time farmer and rancher. The Company seeks to offer an extensive assortment of merchandise in specialized products. The Company's full line of product offerings is supported by a strong in-stock inventory position. An average store displays approximately 12,000 different products. Pricing. The Company utilizes an "everyday low prices" strategy to consistently offer its products at competitive prices. The Company monitors prices at competing stores and adjusts its prices as necessary. The Company believes that by avoiding a "sale" oriented marketing strategy, it is attracting customers on a regular basis rather than only in response to sales. 3 4 Vendor Partnering. The Company has established close working relationships with many of its principal vendors to manage stock levels, develop new products, plan promotions and design merchandise displays. The Company intends to continue to expand its vendor partnering strategy to include most of its other key vendors. Advertising. To generate store traffic and position TSC as a destination store, the Company promotes broad selections of merchandise with color circulars distributed by direct mail and as newspaper inserts. The Company also runs periodic special events promoted through local flyers, circulars and radio advertising. The Company enhances its print marketing and advertising programs through the expanded use of radio and national television. In connection with these programs, the Company has retained John Lyons, a renowned equine specialist, as its national equine spokesman, and George Strait, a renowned country music entertainer, as its national spokesman. Store Environment. TSC's stores are open, clean, bright and offer a pleasant atmosphere with disciplined product presentation, attractive displays, both inside and outside the store, and efficient check-out procedures. The Company endeavors to staff its stores with courteous, highly motivated, knowledgeable Store Associates in order to provide a friendly, enjoyable shopping experience. Growth Strategy The Company's growth strategy is to increase sales and profitability at existing stores through continuing improvements in product mix and operating efficiencies and through new store openings and relocations. Since the beginning of fiscal 1994, the Company has opened 124 new stores and relocated 13. Of these 137 stores, 105 have been open more than one year and have generated average net sales that are approximately 21.3% per annum greater than those of existing stores. During this period, the Company has also closed three stores (excluding relocations). Management believes that substantial opportunities exist for the opening of new stores to achieve greater penetration in existing markets and to expand into new markets. The Company continued its new store growth plan with an approximate 12% overall new store unit growth in fiscal 1999. Current plans call for the opening of 40 to 45 new stores in fiscal 2000, approximately 38 in fiscal 2001, and additional stores thereafter (the Company has presently identified over 300 potential new markets). The Company's strategy is to lease its new stores. Assuming that new stores are leased, the estimated cash required to open a new store is approximately $800,000 to $1,000,000, the majority of which is for initial inventory and capital expenditures, principally leasehold improvements, fixtures and equipment, and the balance of which is for store opening expenses. The Company plans to relocate one store in fiscal 2000 and an average of one or two additional stores each year over the next several years. Store relocations are typically undertaken to move small, older stores to full-size formats in prime retail areas. The cash required to complete a store relocation typically ranges from $250,000 to $500,000 depending on whether the Company is responsible for any renovation or remodeling costs. The Company has experienced average sales increases in excess of 11% in the year subsequent to relocation for stores relocated over the past five years. The Company plans to extensively remodel an average of one or two of its strong performing stores each year over the next several years, one of which is scheduled for fiscal 2000. The estimated cash required to complete a major remodeling typically ranges from $150,000 to $400,000. The Company also plans to perform minor remodelings of its stores on an on-going basis to ensure overall Company physical facility standards are maintained. The estimated cash required to complete a minor remodeling typically ranges from $25,000 to $75,000. Store Environment and Merchandising The Company's stores are designed and managed to create a pleasant environment, maximize sales and operating efficiencies and make shopping an enjoyable experience. The Company's stores are clean, open and bright. The average Company store has approximately 12,600 square feet of inside selling space. The Company typically utilizes at least 12,000 square feet of outside space from which it merchandises certain farm-related and lawn and 4 5 garden products. Visual displays inside and outside can be changed easily for seasonal products and promotions and space can be reallocated easily among departments. The following chart indicates the average percentages of sales represented by each of the Company's major product categories during fiscal 1999, 1998 and 1997:
Percent of Total Sales ---------------------------------------- Product Category 1999 1998 1997 ---------------- ------- ------ ------- Animal and pet products............................. 20% 19% 17% General maintenance................................. 20 18 16 Lawn and garden..................................... 16 18 19 Work clothing and other............................. 16 16 16 Farm maintenance.................................... 15 16 19 Light truck equipment............................... 13 13 13 --- --- --- 100% 100% 100% === === ===
The Company's stores carry a consistent merchandise mix, tailored to some extent to specific regional needs and store size, and stock an average of 12,000 products. The Company's stores carry a wide selection of quality, nationally recognized name brand merchandise. The Company also markets private label merchandise under the Huskee, Traveller, Harvest Supreme, Retriever and Dumor registered trademarks. Management believes that selling nationally recognized brands next to the Company's own high quality, private label merchandise offers its customers a range of products at various price points and helps build customer loyalty. The Company believes that it has also increased sales by distributing to in-store customers an easy-reference "blue book" catalog containing the descriptions and prices for thousands of its products. The Company uses a "power merchandising" selling strategy. Under this strategy, selected merchandise is given special emphasis through prominent displays, a comprehensive product line and strong inventory support. Customer Service The Company's number one priority is customer service. Store Associates are the key to quality customer service, and the Company seeks to provide them with decision-making authority and training to enable them to meet customer needs. Store Associates are authorized to special order virtually any non-stocked item a customer may need. The Company's refund policy is "hassle free" if within 30 days of date of purchase and accompanied by a receipt. However, the Company also has a "satisfaction guaranteed" policy, such that if customers are not satisfied, Store Associates are authorized, at their discretion, to offer to repair or exchange the product, or offer store credits or refunds, irrespective of when the product was purchased. The Company believes that by providing these services it improves customer satisfaction, builds customer loyalty and generates repeat business. The Company devotes considerable resources to training its Store Associates, often in cooperation with its vendors. The Company's training programs include (i) a full management training program for manager trainees which covers all aspects of the Company's operations, (ii) product knowledge video tapes produced in conjunction with over 100 of its vendors, (iii) semi-annual retail training skills classes, (iv) semi-annual store managers meetings with vendor product presentations, (v) vendor sponsored in-store training programs and (vi) ongoing product information updates from the Company's management headquarters. The Company seeks to hire and train Store Associates with farming and ranching backgrounds. The Company provides financial incentives to its district managers, store managers, manager trainees, sales managers and sales clerks through incentive compensation programs based on the achievement of sales and/or profitability goals. The Company believes that its incentive compensation programs increase the motivation and overall performance of its Store Associates and the Company's ability to attract and retain qualified personnel. 5 6 Purchasing and Distribution The Company offers an extensive selection of farm maintenance and other specialty products. The Company has established arrangements with certain of its principal vendors to develop new products, plan promotions, review marketing strategies, manage stock levels and develop merchandise displays. The Company is pursuing similar arrangements with other key vendors. The Company's business is not dependent upon any one vendor or particular group of vendors. The Company purchases its products from approximately 1,600 vendors, the five largest of which accounted for less than 25% of the Company's total purchases in fiscal 1999 and one of which (MTD Products, Inc.) accounted for more than 10% of the Company's purchases during such year. The Company has no material long-term contractual commitments with any of its vendors, has not experienced difficulty in obtaining satisfactory alternative sources of supply for its products and believes that adequate sources of supply exist at substantially similar costs for substantially all of its products. Approximately 80% of the Company's purchase orders are transmitted through an electronic data interchanges ("EDI") system, and approximately 50% of vendor invoices are transmitted through EDI. The Company is working to expand the number of vendors who transmit invoices to the Company and increase the amount of sales history transmitted from the Company, all through EDI. The Company's merchandise purchasing is centrally managed. The Company opened a new 500,000 square foot distribution center in Pendleton, Indiana in January 2000, (replacing a 300,000 square foot facility in Indianapolis, Indiana), and operates a 144,000 square foot distribution center in Omaha, Nebraska and a 105,000 square foot distribution center in Waco, Texas from which it serviced approximately 167 stores, 51 stores and 55 stores, respectively, at January 1, 2000. The Company also utilizes a 57,000 square foot, strategically located "cross-dock" facility in Rural Hall, North Carolina to support the main distribution centers and transportation system network in servicing the stores located in the Southeast region of the country. In fiscal 1999, the Company received approximately 65% of its merchandise through these distribution facilities, with the balance delivered directly to the Company's stores. The main distribution centers ship to each store at least twice a week during peak periods through a dedicated contract carrier. The Company is continuously evaluating its long-term strategic plan with respect to its distribution centers and transportation operations. Management Information and Control Systems The Company has invested considerable resources in sophisticated management information and control systems to ensure superior customer service, support the purchase and distribution of merchandise and improve operating efficiencies. The management information and control systems include a point-of-sale system, a purchase order management system, a replenishment system, a merchandise planning system and full sales, inventory and gross margin management reporting systems. These systems are fully integrated and track merchandise from order through sale. All operational data from these systems is also fully integrated with the Company's financial systems. The Company is constantly assessing and upgrading its management information and control systems to support its growth, reduce and control costs, improve internal controls and operating efficiencies and facilitate better decision-making. To that end, in February 1999, the Company completed the installation of a new merchandise and warehouse management system which positioned the Company to further improve its inventory management and control, allow for better decision making, enhance overall productivity and provide the flexibility to support the Company's growth plans while at the same time ensuring it is Year 2000 compliant. Subsequent to the installation of this new system, however, the Company experienced difficulties with the new replenishment system. These difficulties created an out-of-stock situation in certain key product categories. In an effort to correct this situation, the Company increased the ordering of goods to an extent which resulted in an overall excessive level of inventory in certain seasonal as well as basic product categories. During the third quarter of fiscal 1999, the Company corrected and refined its replenishment processes and achieved an approximate 25% reduction in the overstock position. Resolution of this situation is not expected until the end of the second quarter of fiscal 2000. The Company has since developed supplemental tools and processes that have improved most inventory management and reporting capabilities. The Company continues to further evaluate and improve the functionality of the new systems to maximize their effectiveness. Such efforts will include an ongoing evaluation of the optimal software configuration (including 6 7 system enhancements and upgrades) as well as the adequacy of the underlying hardware components. These efforts are directed toward constantly improving the overall business processes and achieving the most efficient and effective use of the system to manage the Company's operations. Competition The Company operates in a highly competitive market. While the Company believes it has successfully differentiated itself from general merchandise, home center and other specialty retailers, the Company faces select competition from these entities, as well as competition from independently owned retail farm stores, several privately-held regional farm store chains and farm cooperatives. Some of these competitors are units of large national or regional chains that have substantially greater financial and other resources than the Company. Management and Employees As of January 1, 2000, the Company employed approximately 1,800 full-time and approximately 1,700 part-time employees. The Company also employs additional part-time employees during peak periods. As of such date, approximately 35 employees of the Company's Omaha, Nebraska distribution center were covered by a collective bargaining agreement. This collective bargaining agreement expires in July 2002. Management believes its district managers, store managers and other supervisory personnel have contributed significantly to the Company's performance. Management encourages the participation of all Store Associates in decision making, regularly solicits input and suggestions from Store Associates and responds to the suggestions expressed by Company employees. Management believes it has good relationships with its employees. One of the four members of the Company's senior management, most of the Company's district managers and a significant portion of the Company's store managers were promoted to their positions from within the Company. All members of senior management have at least 15 years of experience in the retail industry and one member of senior management has over 20 years of experience with the Company. District managers and store managers have an average length of service with the Company of approximately 6.6 years and 5.0 years, respectively. Management believes internal promotions, coupled with recruitment of college graduates and hiring of individuals with previous retail experience, will provide the management structure necessary to support expected store growth. ITEM 2. PROPERTIES As of January 1, 2000, the Company leased its four distribution facilities and its management headquarters, owned 74 stores (23 of which are subject to mortgages) and leased 199 stores. The store leases typically have initial terms of between 10 and 15 years, with one to three renewal periods of five years each, exercisable at the Company's option. None of the store leases or mortgages individually is material to the Company's operations. The leases at its Pendleton, Indiana; Omaha, Nebraska; Waco, Texas and Rural Hall, North Carolina distribution facilities expire in 2015, 2002, 2002 and 2004 respectively, and the lease for its management headquarters expires in 2007. Seven of the Company's stores and its management headquarters are leased from affiliated parties. See Item 13. "Certain Relationships and Related Transactions". 7 8 As of January 1, 2000, the Company operated 273 stores in 26 states as follows:
Number Number State of Stores State of Stores ----- --------- ----- --------- Texas 52 Minnesota 6 Ohio 35 Missouri 6 Tennessee 24 Nebraska 6 Michigan 21 Pennsylvania 5 Indiana 18 South Carolina 6 North Carolina 16 South Dakota 4 Kentucky 13 Alabama 3 Illinois 10 Oklahoma 3 Iowa 9 Maryland 2 Kansas 8 Mississippi 1 North Dakota 8 Montana 1 Virginia 8 New York 1 Arkansas 6 Wisconsin 1
ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any legal proceedings, other than routine claims and lawsuits arising in the ordinary course of its business. The Company does not believe that such claims and lawsuits, individually or in the aggregate, will have a material adverse effect on the Company's business. Compliance with federal, state, local and foreign laws and regulations pertaining to the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had, and is not anticipated to have, a material effect upon the capital expenditures, earnings or competitive position of the Company. State and local regulations in the United States that are designed to protect consumers or the environment have an increasing influence on product claims, contents and packaging. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS No matter was submitted to a vote of the Company's security-holders during the fourth quarter of the Company's fiscal year ended January 1, 2000. EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G(3) of Form 10-K, the following list is included as an unnumbered item in Part I of this Report in lieu of being included in the Proxy Statement for the Annual Meeting of Stockholders to be held on April 27, 2000. The following is a list of the names and ages of all of the executive officers of the registrant indicating all positions and offices with the registrant held by each such person and each person's principal occupations and employment during at least the past five years: 8 9
Name Position Age ---- -------- --- Joseph H. Scarlett, Jr.............. Chairman of the Board, President, Chief Executive Officer and Director 57 Gerald W. Brase .................... Senior Vice President - Merchandising and Marketing 46 Michael E. Brown.................... Senior Vice President - Operations 42 Calvin B. Massmann.................. Senior Vice President-Chief Financial Officer and Treasurer 56 John W. Atkins...................... Vice President-Information Technology 37 Reynolds H. Becker.................. Vice President-Merchandise Manager for Consumer Products 41 Blake A. Fohl....................... Vice President-Marketing 40 Mark D. Gillman..................... Vice President-Operations (Region III) 39 Lawrence Goldberg................... Vice President-Logistics 57 Leo H. Haberer...................... Vice President-Real Estate 59 Stephen E. Hull..................... Vice President-Real Estate 42 Gary M. Magoni...................... Vice President-Operations (Region I) 53 Stanley L. Ruta..................... Vice President-Operations (Region II) 48 Daisy L. Vanderlinde................ Vice President-Human Resources 48
- ------------------ Joseph H. Scarlett, Jr. became Chairman of the Board, President and Chief Executive Officer of the Company in July 1998, after having served as Chairman of the Board and Chief Executive Officer of the Company since February 1993 and as President and Chief Operating Officer of the Company from 1987 to February 1993. Between 1979 and 1987, Mr. Scarlett served as Vice President-Personnel, Senior Vice President-Administration and Executive Vice President-Operations of the Company. Prior to 1979, Mr. Scarlett held operational positions, including District Supervisor and Personnel Director, with Two Guys Discount Stores in New Jersey over a 15 year period. Mr. Scarlett has served as a director of the Company since 1982. Mr. Scarlett is currently a member of the International Mass Retail Association Board. Gerald W. Brase became Senior Vice President - Merchandising and Marketing of the Company in September 1997. Mr. Brase previously served as Divisional Vice President for Builders Square, a subsidiary of Kmart Corporation from 1993 to 1997. From 1985 to 1993, Mr. Brase served as Vice President and Divisional Merchandise Manager with the Hechinger Company. From 1969 to 1985, Mr. Brase held various merchandising and operational positions with the Hechinger Company and Sears, Roebuck & Company. Michael E. Brown became Senior Vice President - Operations of the Company in January 1998. Mr. Brown previously served as Executive Vice President of Store Operations with House of Fabrics, Inc. from 1994 to 1997. From 1991 to 1994, Mr. Brown served as Vice President of Retail Sales, Regional Manager and District Manager with House of Fabrics, Inc. In November 1994, House of Fabrics, Inc. filed for bankruptcy reorganization, emerging in August 1996. From 1977 to 1991, Mr. Brown held various management and operational positions with the Rock Island County Council on Addictions, the 7 Eleven Food Stores of Iowa and the Prairie State Food Corporation. Calvin B. Massmann became Senior Vice President - Chief Financial Officer and Treasurer in January 2000. Mr. Massmann previously served as an independent business consultant during 1998 and 1999. From 1995 to 1997, Mr. Massmann served as Senior Vice President and Chief Financial Officer for Builders Square, a subsidiary of Kmart Corporation. From 1981 to 1995 Mr. Massmann held various accounting and finance positions with W.R. Grace & Company and affiliates. From 1969 to 1981, Mr. Massmann served wholesale and retail clients as an auditor with Price Waterhouse. 9 10 John W. Atkins became Vice President - Information Technology of the Company in April 1999 after having served as Vice President Farm Merchandising of the Company since December 1996 and as Division Merchandise Manager of Farm Products of the Company since July 1995 and as a Buyer for the Company since July 1992. From 1986 to 1992, Mr. Atkins held various positions, including most recently Division Manager - Field & Stream with Bass Pro Shops Outdoor World. From 1983 to 1986, Mr. Atkins held various retail management positions with Kmart Corporation. Reynolds H. Becker became Vice President - Merchandise Manager for Consumer Products in October 1999. Mr. Becker has a combined 16 years of retail experience. Most recently, Mr. Becker served as Merchandise Manager for Lowe's Companies, Inc. from 1997 to 1999. From 1992 to 1997, Mr. Becker served as Buyer and Senior Buyer with Target Stores, a division of Dayton Hudson in Minneapolis. From 1984 to 1992, Mr. Becker held various merchandising and operational positions with Roses's Stores Inc. in North Carolina. Blake A. Fohl became Vice President - Marketing of the Company in December 1996 after having served as Director of Marketing of the Company since June 1995 and as a Buyer for the Company since August 1992. Mr. Fohl previously served as Divisional Manager of Green Seed Company from 1989 to 1992, as a Dairy Specialist with Purina Mills from 1986 to 1989 and as a store manager for Southern States Cooperative from 1981 to 1986. Mark D. Gillman became Vice President - Operations of the Company in October 1999 after having served as District Manager since 1991. From 1982 to 1991 Mr. Gillman served as a store manager of the Company. Lawrence Goldberg became Vice President - Logistics of the Company in October 1993 after having served as Director of Distribution of the Company since October 1992. Mr. Goldberg previously served as the Senior Vice President of Merchandising and Marketing of Paccar Automotive Inc. from 1991 to 1992, the General Manager of Al's Auto Supply (a subsidiary of Paccar Automotive Inc.) from 1990 to 1991, the Director of Stores Division of Fuller O'Brien Paint Corporation from 1988 to 1990 and the Director of Stores of Saxon Paint & Home Care Centers from 1980 to 1988. Leo H. Haberer has served as Vice President - Real Estate of the Company since 1989. Prior to 1989, Mr. Haberer served as a Regional Vice President of the Company from 1975 to 1989 and as a store manager and zone manager from 1970 to 1975. Stephen E. Hull became Vice President - Real Estate of the Company in January 1999 after having served as Director of Real Estate of the Company since April 1998. Mr. Hull previously served as Vice President of Real Estate of Heilig-Myers Corporation from 1990 to 1998, and Development Partner for the Robinson & Wetmore Development Group from 1988 to 1990. Gary M. Magoni has served as a Vice President - Operations of the Company since 1989. Mr. Magoni previously served as a District Manager for Gold Circle Stores (a subsidiary of Federated Department Stores) from 1982 to 1988. Stanley L. Ruta has served as a Vice President - Operations of the Company since March 1994. Mr. Ruta previously served as Vice President of Store Planning and Development and Vice President of Store Operations of Central Tractor Farm and Family Center, Inc. from 1988 to 1994. From 1976 to 1988, Mr. Ruta held various other operational positions with Central Tractor Farm and Family Center, Inc., including District Manager from 1985 to 1988. Daisy L. Vanderlinde became Vice President - Human Resources of the Company in April 1996. Ms. Vanderlinde previously served as Vice President - Human Resources for Marshalls, Inc. from 1990 to 1996. From 1979 to 1990, Ms. Vanderlinde held various management and human resources positions, including most recently Divisional Vice President - Human Resources with The Broadway Stores, Inc., a division of Carter Hawley Hale Stores, Inc. 10 11 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock began trading on The Nasdaq National Market on February 18, 1994 under the symbol "TSCO". The table below sets forth the high and low sales prices of the Company's Common Stock as reported by The Nasdaq National Market for each fiscal quarter of the periods indicated:
Price Range ------------------------------------------ Fiscal 1999 Fiscal 1998 ------------------ ------------------ High Low High Low ------- -------- ------- ------- First Quarter $29 1/4 $21 $23 1/4 $13 3/4 Second Quarter $29 3/4 $25 $26 1/2 $20 5/8 Third Quarter $26 5/16 $17 3/4 $26 $18 Fourth Quarter $20 7/8 $13 13/16 $27 $18 1/2
As of January 31, 2000, the approximate number of record holders of the Company's Common Stock was 82 (excluding individual participants in nominee security position listings) and the approximate number of beneficial holders of the Company's Common Stock was 2,545. The Company has not declared any cash dividends on its Common Stock during the two most recent fiscal years. The Company currently intends to retain all earnings for future operation and expansion of its business and, therefore, does not anticipate that any dividends will be declared on the Common Stock in the foreseeable future. Any future declaration of dividends will be subject to the discretion of the Company's Board of Directors and subject to the Company's results of operations, financial condition, cash requirements and other factors deemed relevant by the Board of Directors. The Company is also restricted from paying cash dividends by the terms of the note agreement, which relates to mortgage notes on certain of its properties. ITEM 6. SELECTED FINANCIAL DATA The information set forth under the caption "Five Year Selected Financial and Operating Highlights" on page 8 of the Company's Annual Report to Stockholders for the fiscal year ended January 1, 2000 is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 9 through 15 of the Company's Annual Report to Stockholders for the fiscal year ended January 1, 2000 is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company had no holdings of derivative financial or commodity instruments at January 1, 2000. The Company is exposed to financial market risks, including changes in interest rates. All borrowings under the Company's credit agreement bear interest at a variable rate based on the prime rate or the London Interbank Offered Rate. An increase in interest rates of 100 basis points would not significantly affect the Company's net income. All of the Company's business is transacted in U.S. dollars and, accordingly, foreign exchange rate fluctuations have never had a significant impact on the Company, and they are not expected to in the foreseeable future. 11 12 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information set forth under the captions "Report of Independent Accountants", "Balance Sheets", "Statements of Income", "Statement of Changes in Stockholders' Equity", "Statements of Cash Flows", and "Notes to Financial Statements" on pages 16 through 31 of the Company's Annual Report to Stockholders for the fiscal year ended January 1, 2000 is incorporated herein by reference. The Company's unaudited operating results for each fiscal quarter within the two most recent fiscal years, as set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 10 of the Company's Annual Report to Stockholders for the fiscal year ended January 1, 2000, is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth under the captions "Election of Class III Directors and Information Regarding Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" on pages 2 through 4 and 18, respectively, of the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on April 27, 2000 is incorporated herein by reference. The information set forth under the caption "Executive Officers of the Registrant" in Part I of this Form 10-K is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information set forth under the captions "Board of Directors and Committees of the Board - Compensation of Directors", "Compensation Committee Interlocks and Insider Participation", "Executive Compensation", "Summary Compensation Table", "Option Grants in Last Fiscal Year", "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values", "Compensation Committee's Report on Executive Compensation", and "Performance Graph" on pages 4 through 16 of the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on April 27, 2000 is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" on pages 18 through 20 of the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on April 27, 2000 is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information set forth under the caption "Interests of Management in Certain Transactions" on pages 7 and 8 of the Company's Proxy Statement for its Annual Meeting of Stockholders to be held on April 27, 2000 is incorporated herein by reference. 12 13 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(a) (1) Financial Statements Page -------------------- ---- The following financial statements and related notes of the Company contained on pages 16 through 30 of the Company's Annual Report to Stockholders for the fiscal year ended January 1, 2000 are incorporated herein by reference: Report of Independent Accountants .............................................................. 16 Balance Sheets - January 1, 2000 and December 26, 1998 ......................................... 17 Statements of Income - Fiscal Years Ended January 1, 2000, December 26, 1998, and December 27, 1997 .............................................................................. 18 Statement of Changes in Stockholders' Equity - Fiscal Years Ended January 1, 2000, December 26, 1998, and December 27, 1997 ....................................................... 19 Statements of Cash Flows - Fiscal Years Ended January 1, 2000, December 26, 1998, and December 27, 1997 20 Notes to Financial Statements .................................................................. 21
(a) (2) Financial Statement Schedules None Financial statement schedules have been omitted because they are not applicable or because the required information is otherwise furnished. (a) (3) Exhibits The exhibits listed in the Index to Exhibits, which appears on pages 14 through 19 of this Form 10-K, are incorporated herein by reference or filed as part of this Form 10-K. (b) Reports on Form 8-K No reports on Form 8-K were filed by the Registrant during the last quarter of the fiscal year ended January 1, 2000. 13 14 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. TRACTOR SUPPLY COMPANY Date: March 24, 2000 By: /s/ Calvin B. Massmann --------------------------------------- Calvin B. Massmann Senior Vice President - Chief Financial Officer and Treasurer 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 in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Joseph H. Scarlett, Jr.* Chairman of the Board, President, March 24, 2000 - ------------------------------------ Chief Executive Officer and Director Joseph H. Scarlett, Jr. (Principal Executive Officer) /s/ Calvin B. Massmann Senior Vice President - Chief Financial March 24, 2000 - ------------------------------------ Officer and Treasurer Calvin B. Massmann (Principal Financial Officer) /s/ Thomas O. Flood* Director March 24, 2000 - ------------------------------------ Thomas O. Flood /s/ Joseph D. Maxwell* Director March 24, 2000 - ------------------------------------ Joseph D. Maxwell /s/ S.P. Braud* Director March 24, 2000 - ------------------------------------ S.P. Braud /s/ Joseph M. Rodgers* Director March 24, 2000 - ------------------------------------ Joseph M. Rodgers /s/Gerard E. Jones* Director March 24, 2000 - ------------------------------------ Gerald E. Jones /s/ Sam K. Reed * Director March 24, 2000 - ------------------------------------ Sam K. Reed
*By: /s/ Calvin B. Massmann -------------------------------- Calvin B. Massmann Attorney-in-fact by authority of Power of Attorney 14 15
INDEX TO EXHIBITS Page Number Exhibit by Sequential Number Description Numbering System ------- ----------- ----------------- 2.1 Plan of Reorganization and Exchange Agreement, dated as of May 1, 1991, between the Company and Thomas J. Hennesy, III (filed as Exhibit 2.1 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 3.1 Restated Certificate of Incorporation, as amended, of the Company, filed with the Delaware Secretary of State on February 14, 1994 (filed as Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on August 8, 1997, Commission File No. 000-23314, and incorporated herein by reference). 3.2 Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Company, filed with the Delaware Secretary of State on April 28, 1995 (filed as Exhibit 3.2 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on August 8, 1997, Commission File No. 000-23314, and incorporated herein by reference). 3.3 Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Company, filed with the Delaware Secretary of State on May 13, 1997 (filed as Exhibit 3.3 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on August 8, 1997, Commission File No. 000-23314, and incorporated herein by reference). 3.4 Amended and Restated By-laws of the Company as currently in effect (filed as Exhibit 3.7 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 4.1 Form of Specimen Certificate representing the Company's Common Stock, par value $.008 per share (filed as Exhibit 4.2 to Amendment No. 1 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on January 31, 1994, and incorporated herein by reference). 10.1 Revolving Credit Agreement, dated as of August 31, 1994, among the Company, The First National Bank of Boston, as agent and for itself, and First American National Bank (filed as Exhibit 1 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on November 9, 1994, Commission File No. 000-23314, and incorporated herein by reference). 10.2 Revolving Credit Note, dated as of August 31, 1994, issued by the Company to The First National Bank of Boston in the aggregate principal amount of $25 million (filed as Exhibit 2 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on November 9, 1994, Commission File No. 000-23314, and incorporated herein by reference). 10.3 Revolving Credit Note, dated as of August 31, 1994, issued by the Company to First American National Bank in the aggregate principal amount of $5 million (filed as Exhibit 3 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on November 9, 1994, Commission File No. 000-23314, and incorporated herein by reference).
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Page Number Exhibit by Sequential Number Description Numbering System ------- ----------- ---------------- 10.4 First Amendment to Revolving Credit Agreement, dated as of July 31, 1996, among the Company and The First National Bank of Boston, as agent and for itself and First American National Bank (filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q, Commission File No. 000-23314, filed with the Commission on November 6, 1996, and incorporated herein by reference). 10.5 Amended and Restated Revolving Credit Note, dated as of July 31, 1996, issued by the Company to First American National Bank in the aggregate principal amount of $20 million (filed as Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q, Commission File No. 000-23314, filed with the Commission on November 6, 1996, and incorporated herein by reference). 10.6 Second Amendment to Revolving Credit Agreement, dated as of March 23, 1998, among the Company and BankBoston, N.A. (successor to The First National Bank of Boston) as agent and for itself, First American National Bank, and SunTrust Bank Nashville, N.A. (filed as Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on May 1, 1998, Commission File No. 000-23314, and incorporated herein by reference). 10.7 Revolving Credit Note, dated as of March 23, 1998, issued by the Company to SunTrust Bank Nashville, N.A. in the aggregate principal amount of $15 million (filed as Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on May 1, 1998, Commission File No. 000-23314, and incorporated herein by reference). 10.8 Loan Agreement, dated as of June 30, 1998 between the Company and SunTrust Bank, Nashville, N.A. (filed as Exhibit 10.37 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on October 30, 1998, Commission File No. 000-23314, and incorporated herein by reference). 10.9 Term Note, dated as of June 30, 1998, issued by the Company to SunTrust Bank, Nashville, N.A. in the aggregate amount of $15 million (filed as Exhibit 10.38 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on October 30, 1998, Commission File No. 000-23314, and incorporated herein by reference). 10.10 Note Agreement (the "Note Agreement"), dated as of April 1, 1988, among the Company, The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (filed as Exhibit 10.3 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.11 First Amendment to Note Agreement, dated April 1, 1991, among the Company, The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (filed as Exhibit 10.4 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.12 Second Amendment to Note Agreement, dated as of February 1, 1992, among the Company, The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (filed as Exhibit 10.5 to Registrant's Registration
16 17
Page Number Exhibit by Sequential Number Description Numbering System ------- ----------- ---------------- Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.13 Third Amendment to Note Agreement, dated as of July 1, 1993, among the Company, The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (filed as Exhibit 10.6 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.14 Form of Adjustable Rate First Mortgage Notes due January 1, 2004 issued by the Company to The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America pursuant to the Note Agreement, as amended (filed as Exhibit 10.7 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.15 Form of Mortgage, dated as of May 10, 1988, from the Company to The Mutual Life Insurance Company of New York pursuant to the Note Agreement, as amended (filed as Exhibit 10.8 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.16 Ground Lease Agreement, dated as of July 1, 1991, between the Company and GOF Indiana Corp. (relating to Plainfield, Indiana store) (filed as Exhibit 10.10 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.17 Indenture of Lease, dated as of September 1, 1991, between the Company and GOF Indiana Corp. (relating to Plainfield, Indiana store) (filed as Exhibit 10.11 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.18 Indenture of Lease, dated as of January 1, 1986, between the Company and Joseph H., Jr. and Dorothy F. Scarlett (relating to Omaha, Nebraska store) (filed as Exhibit 10.14 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.19 Indenture of Lease, dated as of January 1, 1986, between the Company and Joseph D. and Juliann K. Maxwell (relating to Nashville, Tennessee store) (filed as Exhibit 10.18 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.20 Indenture of Lease, dated as of January 1, 1986, between the Company and Thomas O. and Vickie Flood (relating to Mandan, North Dakota store) (filed as Exhibit 10.19 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference).
17 18
Page Number Exhibit by Sequential Number Description Numbering System ------- ----------- ---------------- 10.21 Indenture of Lease, dated as of September 15, 1986, between the Company and GOF Partners (relating to Nashville, Tennessee management headquarters) (filed as Exhibit 10.20 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.22 Tractor Supply Company 1994 Stock Option Plan (filed as Exhibit 10.28 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.23 Amendment to the Tractor Supply Company 1994 Stock Option Plan (filed as Exhibit 10.25 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on August 8, 1997, Commission File No. 000-23314, and incorporated herein by reference). 10.24 TSC Industries, Inc. Employee 401(k) Retirement Plan (including the Notices of the First, Second, Third, Fourth and Fifth Amendments thereto and the Trust Agreement forming a part thereof) (filed as Exhibit 10.29 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.25 Form of Notice of the Revised Sixth Amendment to the TSC Industries, Inc. Employee 401(k) Retirement Plan (filed as Exhibit 10.30 to Amendment No. 1 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on January 31, 1994, and incorporated herein by reference). 10.26 Senior Executive Incentive Plan of the Company (filed as Exhibit 10.28 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 18, 1998, Commission File No. 000-23314, and incorporated herein by reference). 10.27 Other Executive Incentive Plan of the Company (filed as Exhibit 10.29 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 18, 1998, Commission File No. 000-23314, and incorporated herein by reference). 10.28 Form of Deferred Compensation Agreement constituting the Deferred Compensation Plan of the Company (filed as Exhibit 10.30 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 18, 1998, Commission File No. 000-23314, and incorporated herein by reference). 10.29 Certificate of Insurance relating to the Medical Expense Reimbursement Plan of the Company (filed as Exhibit 10.33 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference). 10.30 Summary plan description of the Executive Life Insurance Plan of the Company (filed as Exhibit 10.34 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference).
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Page Number Exhibit by Sequential Number Description Numbering System ------- ----------- ---------------- 10.31 Agreement, effective August 1, 1996, between the Company and General Drivers & Helpers Union, Local # 554 (filed as Exhibit 10.31 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 21, 1997, Commission File No. 000-23314, and incorporated herein by reference). 10.32 Agreement, effective April 1, 1996, between the Company and Chauffeurs, Teamsters, Warehousemen and Helpers, Local Union No. 135 (filed as Exhibit 10.32 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 21, 1997, Commission File No. 000-23314, and incorporated herein by reference). 10.33 Tractor Supply Company 1996 Associate Stock Purchase Plan (filed as Exhibit 4.4 to Registrant's Registration Statement on Form S-8, Registration No. 333-10699, filed with the Commission on August 23, 1996, and incorporated herein by reference). 10.34 Indemnification Agreement, dated January 27, 1994, between the Company and Thomas O. Flood (filed as Exhibit 10.38 to Amendment No. 1 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on January 31, 1994, and incorporated herein by reference). 10.35 Tractor Supply Company Restated 401(k) Retirement Plan (filed as Exhibit 4.1 to Registrant's Registration Statement on Form S-3, Registration No. 333-35317, filed with the Commission on September 10, 1997, and incorporated herein by reference). 10.36 Trust Agreement (filed as Exhibit 4.2 to Registrant's Registration Statement on Form S-3, Registration No. 333-35317, filed with the Commission on September 10, 1997, and incorporated herein by reference). 10.37 Noncompetition Agreement, dated as of June 30, 1996, between the Company and Joseph D. Maxwell (filed as Exhibit 10.35 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on October 31, 1997, Commission File No. 000-23314, and incorporated herein by reference). 10.38 Split-Dollar Agreement, dated January 27, 1998, between the Company and Joseph H. Scarlett, Jr., Tara Anne Scarlett and Andrew Sinclair Scarlett (filed as Exhibit 10.45 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 17, 1999, Commission File No. 000-23314, and incorporated herein by reference). 10.39 Split-Dollar Agreement, dated January 2, 1998, between the Company and Thomas O. Flood and Terry Mainiero, as Trustee of the Flood 1997 Irrevocable Trust under Agreement dated November 10, 1997 (filed as Exhibit 10.46 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 17, 1999, Commission File No. 000-23314, and incorporated herein by reference). 10.40 Term Note, dated as of September 2, 1999, issued by the Company to SunTrust Bank, Nashville, N.A., a national banking association, in the aggregate amount of $15 million (filed as Exhibit 10.47 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on October 29, 1999, Commission File No. 000-23314, and incorporated herein by reference). 10.41 Noncompetition Agreement, dated as of August 31, 1999, between the Company and Thomas O. Flood (filed as Exhibit 10.48 to Registrant's Quarterly Report on Form
19 20
Page Number Exhibit by Sequential Number Description Numbering System ------- ----------- ---------------- 10-Q, filed with the Commission on October 29, 1999, Commission File No. 000-23314, and incorporated herein by reference). 10.42 Consulting Agreement, dated as of August 31, 1999, between the Company and Thomas O. Flood (filed as Exhibit 10.49 to Registrant's Quarterly Report on Form 10-Q, filed with the Commission on October 29, 1999, Commission File No. 000-23314, and incorporated herein by reference). * 10.43 Third Amendment to Revolving Credit Agreement, dated as of November 15, 1999 among the Company and SunTrust Bank Nashville, N.A. (replaced Bank Boston, N.A. as agent), as agent and for itself, AmSouth Bank (successor to First America National Bank), an national banking association, and Bank of America, a national banking association. * 10.44 Second Amendment to the Tractor Supply Company 1994 Stock Option Plan * 10.45 Agreement, effective August 1, 1999 between the Company and General Drivers & Helpers Union, Local #554. * 13 Annual Report to Stockholders for the fiscal year ended January 1, 2000. * 23.1 Consent of PricewaterhouseCoopers LLP. * 23.2 Consent of PricewaterhouseCoopers LLP. * 24.1 Power of Attorney of Joseph H. Scarlett, Jr. * 24.2 Power of Attorney of Thomas O. Flood * 24.3 Power of Attorney of Joseph D. Maxwell * 24.4 Power of Attorney of S.P. Braud * 24.5 Power of Attorney of Joseph M. Rodgers * 24.6 Power of Attorney of Gerard E. Jones * 24.7 Power of Attorney of Sam K. Reed * 27.1 Financial Data Schedule (only submitted to SEC in electronic format).
- --------------- * Filed herewith. 20 EX-10.43 2 THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT 1 EXHIBIT 10.43 TRACTOR SUPPLY COMPANY AND SUNTRUST BANK, NASHVILLE, N.A. AGENT AND SUNTRUST EQUITABLE SECURITIES CORPORATION ARRANGER NOVEMBER 15, 1999 2 THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT ENTERED INTO by and among TRACTOR SUPPLY COMPANY, a Delaware corporation (the "Borrower"), SUNTRUST BANK, NASHVILLE, N.A., AGENT for itself and the Banks defined herein ("Agent"), SUNTRUST BANK, NASHVILLE, N.A. ("STB"), FIRST AMERICAN NATIONAL BANK ("FANB"), and BANK OF AMERICA ("B of A") (herein STB, FANB, and B of A shall collectively be referred to as the "Banks") as of this 15th day of November, 1999. RECITALS: 1. The Borrower entered into a Revolving Credit Agreement with First National Bank of Boston ("FNBB"), as agent and as a bank, and FANB dated as of August 31, 1994 (the "Agreement") pursuant to which FNBB and FANB extended a revolving credit facility to the Borrower in the principal amount of up to $30,000,000. 2. The Borrower, FNBB, and FANB entered into a First Amendment to Revolving Credit Agreement dated July 13, 1996 which amendment among other things increased the revolving credit facility to a principal amount of up to $45,000,000. 3. The Borrower, FNNB, FANB, and STB entered into a Second Amendment to Revolving Credit Agreement dated March 23, 1998 which amendment among other things added STB as a "Bank" to the credit facility and increased the revolving credit facility to a principal amount of up to $60,000,000. 4. FNNB has withdrawn as "Agent" and as a "Bank" under the Agreement. 5. STB has agreed to serve as "Agent" under the Agreement. 6. B of A desires to become a "Bank" under the Agreement. 7. The Banks have agreed to increase the Total Commitments from $60,000,000 to $75,000,000, with the Commitment of STB to be $30,000,000, with the Commitment of FANB to be $25,000,000, and with the Commitment of B of A to be $20,000,000. 8. The Borrower and the Banks desire to amend the Agreement for purposes set forth herein. NOW, THEREFORE, in consideration of the foregoing premises, and other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 1. Definitions. The following definitions set forth in Section 1.1 of the Agreement are hereby amended to read as follows: "Agent" means SunTrust Bank, Nashville, N.A. in its capacity as Agent for the Banks pursuant to Article 10 hereof, and not in its 3 individual capacity as a Bank, and any successor Agent appointed pursuant to Article 10. "Bank" means individually STB in its capacity as a Bank, FANB, and B of A, and "Banks" means collectively STB, FANB, and B of A, and each entity's respective successors and assigns. "Base Rate" means the rate of interest established from time to time and announced by STB as its "base rate," such rate being an interest rate used as an index for establishing interest rates on loans. The Base Rate shall be determined daily to reflect changes in the Base Rate. "Business Day" means any date other than a Saturday, Sunday, or other day on which banks in Nashville, Tennessee are authorized to close by Applicable Law or applicable governmental authority. "EBITDA" means, as measured in accordance with GAAP, for the Borrower, the sum of (i) Net Income (excluding any gains related to asset sales), plus (ii) Interest Expense, plus (iii) Income Tax Expense, plus (iv) depreciation and amortization expense. "Income Tax Expense" means the amount shown as "provision for income taxes" (or such other similar designation) on Borrower's income statement. "Interest Expense" shall mean, for any fiscal period of Borrower, total interest expense (including without limitation, interest expense attributable to Capitalized Lease Obligations in accordance with GAAP). "LIBOR Rate" means, with respect to any Eurodollar Loan, the interest rate per annum (rounded upward, if necessary, to the next higher 1/100 of 1%), as determined in good faith by the Agent, at which dollar deposits approximately equal in the principal amount to such Eurodollar Loan and with a maturity comparable to such Eurodollar Interest Period are offered to money center banks in immediately available funds in the London Interbank Market for eurodollars at approximately 12:00 Noon, Nashville, Tennessee time, on the date of commencement of such Eurodollar Interest Period. "Majority Banks" means Banks holding at least sixty percent (60%) of the then aggregate unpaid principal amounts of the Revolving Credit Notes held by the Banks, or if no such principal amounts are outstanding, Banks having at least sixty percent (60%) of the Total Commitments. "Rental and Operating Lease Expense" means all such amounts included in the income statement of the Borrower as rent, lease charges, or other payments under any lease, excluding imputed interest on Capitalized Lease Obligations. 3 4 "Revolving Credit Notes" means, collectively, the $30,000,000 Amended and Restated Revolving Credit Note dated as of November 15, 1999 executed by Borrower in favor of STB, the $25,000,000 Amended and Restated Revolving Credit Note dated as of November 15, 1999 executed by Borrower in favor of FANB, and the $20,000,000 Revolving Credit Note dated November 15, 1999 executed by Borrower in favor of B of A, as such may be amended and supplemented from time to time, and any replacement thereof or substitution therefor. "Synthetic Lease" shall mean a master agreement or synthetic lease that evidences a transaction that satisfies the requirements of the Statement of Financial Accounting Standards No. 13 (SFAS 13) promulgated by the Financial Accounting Standards Board (FASB) and the Emerging Issues Task Force of the Financial Accounting Standards Board (1990) (EITF 90-15) that is classified as a lease for financial accounting purposes and as a loan for tax purposes. "Total Commitments" means the aggregate of the several Commitments of the Banks in the principal amount of up to Seventy-Five Million and 00/100 Dollars ($75,000,000), as set forth in Section 2.1 of this Agreement, including the aggregate of the several Commitments as they may be reduced from time to time. "Total Funded Debt" means, with respect to the Borrower, without duplication, the sum of (i) all indebtedness for money borrowed; (ii) purchase money debt; (iii) Capitalized Lease Obligations; (iv) amounts evidenced by the aggregate face amount of all outstanding letters of credit; (v) outstanding amounts under asset securitization vehicles, conditional sales contracts and similar title retention debt instruments; and (vi) all indebtedness guaranteed by the Borrower. 2. Section 2.1 (a) and (b) The Commitments. Section 2.1(a) and (b) of the Agreement are hereby amended and restated in their entirety as follows: Section 2.1 The Commitments. (a) Subject to the terms and conditions of and relying on the representations, warranties, and covenants contained in this Agreement, for a period ending on the Termination Date, each Bank agrees to make available, severally, but not jointly, to the Borrower, from time to time, as requested by Borrower, Revolving Credit Loans up to the amount set out below opposite their respective names, which for all of the Banks shall be the aggregate maximum principal amount of up to Seventy-Five Million and 00/100 Dollars ($75,000,000). The maximum Commitment of each of the Banks and its respective percentage of the Total Commitments (the "Commitment Percentage" of each Bank) are as follows: 4 5
Bank Commitment Commitment ---- ---------- ----------- Percentage ----------- SunTrust Bank, Nashville, N.A. $30,000,000 40% First American National Bank $25,000,000 33% Bank of America $20,000,000 27%
(b) The Revolving Credit Loan shall be evidenced by (i) the $30,000,000 Amended and Restated Revolving Credit Note of Borrower to STB, (ii) the $25,000,000 Amended and Restated Revolving Credit Note of Borrower to FANB, and (iii) the $20,000,000 Revolving Credit Note of Borrower to B of A, which Revolving Credit Notes are in the form set forth as Exhibit A attached hereto, with each Revolving Credit Note payable in accordance with its terms. The Borrower may obtain Revolving Credit Loans, repay or prepay, without penalty or premium (except that Eurodollar Loans may only be prepaid at the end of the applicable Eurodollar Interest Period, unless such prepayment is made pursuant to Sections 2.8, 2.9 or 2.10 hereof), at any time or from time to time, in whole or in part, and at the sole discretion of the Borrower, and reborrow hereunder, from the date of this Agreement until the Termination Date, in an aggregate principal amount not less than a minimum of $500,000 or a greater integral multiple of $100,000, excluding advances made under the Revolving Credit Notes to pay the Borrower's reimbursement obligation under Section 2.13 of this Agreement. Each of the Revolving Credit Loans shall be made by each Bank ratably in accordance with the ratio that its respective Commitment Percentage bears to the amount of such Revolving Credit Loan. 3. Section 2.2 (a) Disbursement of the Revolving Credit Loans. Section 2.2(a) of the Agreement is hereby amended to add the following sentences at the end of such section: The following persons are hereby authorized to submit Borrowing Notices: Stuart L. Uselton, Joseph H. Scarlett, Jr. and Randall S. Guiler, and any other officer upon written notice from Borrower. 4. Section 2.4 The Agent's Fee. Section 2.4 of the Agreement is hereby amended and restated in its entirety as follows: Section 2.4 The Arranger's Fee and the Agent's Fee. The Borrower shall pay: (i) to SunTrust Equitable Securities Corporation an arrangement and advising fee and (ii) to Agent an agent's fee, all as set forth in letter agreement dated September 22, 1999 among Borrower, Agent, and SunTrust Equitable Securities Corporation. 5 6 5. Section 2.6 Interest Rate and Payments of Interest. The carryover paragraph appearing after subparagraph 2.6(a)(2) which begins "provided, however," is hereby deleted and replaced with the following: provided, however, that in the event that the ratio of the Borrower's Total Funded Debt to EBITDA exceeds 2 to 1 at the end of a fiscal quarter of the Borrower, as reported by the Borrower pursuant to Section 7.4, then in such event, for the next fiscal quarter of the Borrower, the interest rate payable on Floating Rate Loans shall increase to a rate per annum equal to the Base Rate plus one-half of one percent (.50%), and the interest rate payable on Eurodollar Loans shall increase to a rate per annum equal to the LIBOR Rate plus one percent (1.0%). 6. Section 2.11 Letters of Credit. Section 2.11 of the Agreement shall be amended and restated in its entirety as follows: Section 2.11 Letters of Credit. Upon the terms and subject to the conditions of this Agreement, and in reliance upon the representations and warranties made herein, the Agent shall cause STB to issue from time to time as requested by the Borrower, prior to the Termination Date, commercial and standby Letters of Credit pursuant to STB's letter of credit application forms; provided, however, that (1) the aggregate face amount of all commercial and standby Letters of Credit outstanding at any one time shall not exceed $5,000,000; (2) there shall exist no Event of Default hereunder at the time of such issuance; (3) STB may assign its obligation to issue Letters of Credit hereunder without the Borrower's consent; and (4) commercial Letters of Credit shall be used by the Borrower to facilitate the purchase of goods, inventory, equipment, machinery or fixtures to be sold or used in connection with the Borrower's business. No Letter of Credit issued under this Agreement shall have an expiration date beyond the Termination Date. The Banks shall each share in the obligations evidenced by a Letter of Credit ratably in accordance with the ratio that its respective Commitment Percentage bears to the amount of such Letter of Credit. 7. Section 2.12 Letter of Credit Fees. Section 2.12 of the Agreement shall be amended and restated in its entirety as follows: Section 2.12 Letter of Credit Charges. In connection with the issuance of Letters of Credit, the Borrower shall pay the following amounts: (a) in connection with the issuance of any standby Letter of Credit and the renewal of any existing standby Letter of Credit, the Borrower shall pay to the Agent for the benefit of the Banks an amount equal to one percent (1%) of the face amount of the standby Letter of Credit so issued or when renewed; 6 7 (b) the Borrower shall pay to the Agent for the benefit of the Banks an amount equal to twenty-five (25) basis points per annum multiplied by the face amount of all outstanding commercial (documentary) Letters of Credit, which amount shall be payable quarterly in arrears; and (c) the Borrower shall pay on demand to STB an amount equal to STB's standard fees charged from time to time in connection with letters of credit. 8. Section 7.4 (a) Officer's Certificates. Section 7.4 (a) of the Agreement is hereby amended and restated in its entirety as follows: (a) At the time the financial statements are furnished to the Agent, pursuant to Section 7.1, a certificate of its chief executive officer, president, chief financial officer or controller (i) setting forth as at the end of such fiscal quarter, the information necessary to calculate the financial covenants set forth in Section 8.1 of the Agreement, and (ii) stating, that, based on an examination sufficient to enable him to make an informed statement, no Default or Event of Default exists on the date of such certificate, or, if such is not the case, specifying such Default or Event of Default and its nature, when it occurred, whether it is continuing and the steps being taken by the Borrower with respect to such event or failure. 9. Section 8.1(b) Ratio of Total Liabilities to Net Worth. Section 8.1(b) of the Agreement shall be deleted and shall be replaced by the following provision: (b) Ratio of Total Funded Debt to EBITDA. The ratio of Total Funded Debt to EBITDA calculated as of the end of each fiscal quarter for a rolling four-quarters basis shall not exceed 2.25 to 1.00. 10. Section 8.1(c) Minimum Working Capital. Section 8.1(c) of the Agreement shall be deleted. 11. Section 8.1(d) Minimum Interest Coverage Ratio. Section 8.1(d) of the Agreement shall be deleted and shall be replaced by the following provision: (d) Fixed Charge Coverage Ratio. (i) The sum of (A) EBIT, plus (B) Rental and Operating Lease Expense, divided by (ii) the sum of (A) Interest Expense, plus (B) Rental and Operating Lease Expense, plus current maturities of Total Funded Debt shall not be less than the ratio of 1.25 to 1.0 as calculated at the end of each fiscal quarter for a rolling four-quarters basis. 12. Section 8.1(e) Minimum Current Ratio. Section 8.1(e) of the Agreement shall be deleted. 7 8 13. Section 8.2 Additional Indebtedness and Obligations Under Synthetic Leases. Section 8.2 of the Agreement shall be amended and restated in its entirety as follows: Section 8.2 Additional Indebtedness and Obligations Under Synthetic Leases. Incur, create, assume or permit to exist any Indebtedness or obligations under Synthetic Leases except (i) the Revolving Credit Loans, (ii) the Existing Indebtedness, (iii) Indebtedness of another Person assumed or paid off in connection with the acquisition of the assets or capital stock of such Person, (iv) intercompany Indebtedness, (v) Indebtedness and Guarantees not otherwise prohibited under this Agreement, (vi) Purchase Money Indebtedness incurred in the ordinary course of business, (vii) other Indebtedness which does not exceed an aggregate of $2,500,000 at any one time outstanding, and (viii) obligations under one or more Synthetic Leases which do not exceed $20,000,000 in the aggregate. 14. Section 10.1 Authorization. The first sentence of Section 10.1 is hereby deleted, and the following is substituted as the new first sentence of Section 10.1: With respect to all funds advanced hereunder or under the Revolving Credit Notes, STB, FANB, and B of A shall be obligated to advance $30,000,000, $25,000,000, and $20,000,000, respectively, and each such Bank shall own a corresponding undivided interest in this Agreement and a corresponding prorata interest in all Revolving Credit Loans and all Letters of Credit (regardless of the Bank actually issuing the Letter of Credit) made or issued in accordance with the terms of this Agreement. 15. Section 11.1(b) Address for Notices. Section 11.1(b) of the Agreement is amended and restated in its entirety as follows: (b) Addresses for Notices. Notices to the parties shall be sent to them at the following addresses, or any other address of which all the other parties are notified in writing: If to Borrower: 320 Plus Park Boulevard Nashville, Tennessee 37217 Attn: Stuart L. Uselton If to the Agent: P.O. Box 305110 201 Fourth Avenue North Nashville, Tennessee 37230-5110 Attn: Tracy Elliott If to FANB: 315 Union Street Nashville, Tennessee 37230-5110 8 9 Attn: Russell Rogers If to B of A: 414 Union Street 2nd Floor Nashville, Tennessee 37239 Attn: Bryan Hulker 16. Section 11.2(a) of the Agreement is amended and restated in its entirety as follows: (a) the preparation, execution and delivery of this Agreement, the Revolving Credit Notes, and any other documents or instruments executed and delivered in connection herewith or therewith, including taxes (if any) and the reasonable fees and disbursements of Farris, Warfield & Kanaday, PLC, counsel for the Agent and STB; 17. Boston Time. All references in the Agreement to "Boston time" shall be amended and restated to mean "Nashville, Tennessee time." 18. Exhibit A to the Agreement shall be amended and restated to mean the Collective Exhibit A attached hereto. 19. Conditions. Notwithstanding any other provision of this Third Amendment, this Third Amendment shall not be effective until the satisfaction (or waiver by the Agent) of each of the following conditions: (a) The Agent shall have received a certificate of the Chief Executive Officer, President, Chief Financial Officer, or Controller of the Borrower stating that, to the best of his knowledge and based on the examination sufficient to enable him to make an informed statement: (i) All the representations and the warranties made under this Agreement are true and correct in all material respects as of the date of this Third Amendment; and (ii) No Default or Event of Default exists as of the date of this Third Amendment. (b) This Third Amendment and the Revolving Credit Notes, shall have been duly executed and delivered to the Agent. 20. Ratification. Borrower hereby restates and ratifies the covenants and warranties contained in the Agreement, as of the date hereof, and confirms that the terms and conditions of the Agreement, as amended hereby, remain in full force and effect. 21. Counterparts. This Third Amendment may be executed in counterparts. 9 10 IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be executed by their duly authorized officers as of the day and year first written above. BORROWER: TRACTOR SUPPLY COMPANY By: /s/ Joseph H. Scarlett, Jr. -------------------------------------------- Title: Chairman of the Board, President, -------------------------------------- Treasurer and Chief Executive Officer -------------------------------------- 10 11 AGENT: SUNTRUST BANK, NASHVILLE, N.A. By: /s/ Tracy L. Elliott ------------------------------------------ Title: Assistant Vice President ------------------------------------ 11 12 BANKS: SUNTRUST BANK, NASHVILLE, N.A. By: /s/ Tracy L. Elliott ------------------------------------------ Title: Assistant Vice President ------------------------------------ 12 13 FIRST AMERICAN NATIONAL BANK By: /s/ Russell S. Rogers ------------------------------------------ Title: Senior Vice President ------------------------------------ 13 14 BANK OF AMERICA By: /s/ Bryan Hulker ------------------------------------------ Title: Vice President ------------------------------------ 14 EX-10.44 3 AMENDMENT TO 1994 STOCK OPTION PLAN 1 EXHIBIT 10.44 AMENDMENT NO. 2 TO THE TRACTOR SUPPLY COMPANY 1994 STOCK OPTION PLAN WHEREAS, Tractor Supply Company (the "Company") sponsors the Tractor Supply Company 1994 Stock Option Plan (the "Plan"); and WHEREAS, the Board of Directors of the Company has determined that it is in the best interest of the Company and its stockholders to amend the Plan in the manner contemplated below (the "Amendment") as of July 23, 1998; and NOW, THEREFORE, the Plan is hereby amended as follows: 1. Section 2.1(b) of the Plan is hereby deleted in its entirety and replaced with the following: (b) Each director of the Company who is not an employee of the Company or an Affiliate shall be granted (i) a nonqualified stock option for 3,500 shares of Common Stock upon initial election to the Board of Directors, and (ii) a nonqualified stock option for 1,500 shares of Common Stock on an annual basis. Such options shall become exercisable with respect to 33 1/3% of the shares of Common Stock subject thereto (rounded down to the next lower full share) on the first anniversary date of grant, an additional 33 1/3% of the shares of Common Stock subject thereto (rounded down to the next lower full share) on the second anniversary of the date of grant, and 100% exercisable on the third anniversary of the date of grant. Such options shall terminate and cease to be exercisable on the tenth anniversary of the date of grant. All options granted pursuant to this Section 2.1(b) shall have an option exercise price per share of 100% of the fair market value of a share of Common Stock on the date the option is granted. 2. Except as expressly amended hereby, the Plan shall remain in full force and effect. EX-10.45 4 AGREEMENT, AUGUST 1,1999 1 EXHIBIT 10.45 AGREEMENT BETWEEN TRACTOR SUPPLY COMPANY AND GENERAL DRIVERS & HELPERS UNION, LOCAL #554, AFFILIATED WITH THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS EFFECTIVE: AUGUST 1, 1999 EXPIRES: JULY 31, 2002 2
- --------------------------------------------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE - --------------------------------------------------------------------------------------------------------------------- ARTICLE 1 - RECOGNITION..............................................................................................1 ARTICLE 2 - CHECK-OFF................................................................................................1 ARTICLE 3 - DISCRIMINATION AND COERCION..............................................................................2 ARTICLE 4 - SCHEDULE OF HOURS AND OVERTIME...........................................................................3 ARTICLE 5 - VACATIONS................................................................................................5 ARTICLE 6 - HOLIDAYS.................................................................................................8 ARTICLE 7 - WAGE RATES...............................................................................................9 ARTICLE 8 - STEWARDS.................................................................................................9 ARTICLE 9 - MANAGEMENT RIGHTS.......................................................................................10 ARTICLE 10 - CONDITIONS OF EMPLOYMENT...............................................................................11 ARTICLE 11 - ARBITRATION & GRIEVANCES...............................................................................16 ARTICLE 12 - STRIKES & LOCKOUTS.....................................................................................18 ARTICLE 13 - PICKET LINE............................................................................................18 ARTICLE 14 - CONFLICT OF LAWS.......................................................................................18 ARTICLE 15 - LEAVE OF ABSENCE.......................................................................................19 ARTICLE 16 - EXTRA-CONTRACT AGREEMENTS..............................................................................19 ARTICLE 17 - REVIEW OF DISCREPANCY IN PAY...........................................................................20 ARTICLE 18 - LOSS OR DAMAGE.........................................................................................20 ARTICLE 19 - BONDS..................................................................................................20 ARTICLE 20 - PHYSICAL EXAMINATIONS..................................................................................20 ARTICLE 21 - COMPENSATION CLAIMS....................................................................................20
i 3 ARTICLE 22 - MILITARY SERVICE......................................................................................21 ARTICLE 23 - EQUIPMENT.............................................................................................21 ARTICLE 24 - PAID-FOR-TIME.........................................................................................21 ARTICLE 25 - GROUP BENEFIT PLANS...................................................................................22 ARTICLE 26 - POSTING OF NOTICES....................................................................................25 ARTICLE 27 - UNION COOPERATION.....................................................................................25 ARTICLE 28 - SEPARATION OF EMPLOYMENT..............................................................................25 ARTICLE 29 - EMERGENCY REOPENING OF AGREEMENT......................................................................25 ARTICLE 30 - AGREEMENT.............................................................................................25 ARTICLE 31 - ENTIRE AGREEMENT......................................................................................26 ARTICLE 32 - INSPECTION PRIVILEGES.................................................................................26 ARTICLE 33 - FUNERAL LEAVE.........................................................................................27 ARTICLE 34 - JURY DUTY.............................................................................................27 ARTICLE 35 - TERM OF AGREEMENT.....................................................................................28 APPENDIX "A" - WAGE RATES..........................................................................................29 APPENDIX "B" - PART-TIME PROGRAM...................................................................................32 APPENDIX "C" - OVERTIME............................................................................................33 APPENDIX "D" - DRUG AND ALCOHOL POLICY.............................................................................35
ii 4 AGREEMENT THIS AGREEMENT, entered into between TRACTOR SUPPLY COMPANY of Omaha, Nebraska, hereinafter referred to as the "Company", and GENERAL DRIVERS & HELPERS UNION, LOCAL #554, affiliated with the International Brotherhood of Teamsters, hereinafter referred to as the "Union". WITNESSETH: ARTICLE 1 - RECOGNITION The Company recognizes the Union as the sole and exclusive bargaining agent for warehousemen of the Company at Omaha, Nebraska, excluding professional associates, office clerical associates, retail salesmen, watchmen, guards, sweep-up boy and supervisors, as defined in the Labor Management Relations Act, 1947, as amended. It is expressly understood that this Agreement shall not apply to salesmen employed at any retail outlet of the Company or its subsidiaries. ARTICLE 2 - CHECK-OFF Section 1. The Company shall deduct from the first pay of each month the Union dues and uniform assessments for the current month and promptly remit same to an authorized representative of the Union, provided that the Company has received from the associate involved on whose account such deductions are made, a written assignment permitting such deduction. Initiation fees of the Union shall be deducted by the Company and remitted to the Union in the same manner as dues collections, on the basis of monthly lists of new members submitted to the Company by the Union, provided the Company shall have received from the associate on whose account such deductions 1 5 are made, a written assignment. This paragraph shall be subject to the provisions of the Labor Management Relations Act of 1947, as amended. Section 2. The Employer will recognize authorization for deductions from wages for the Union's D.R.I.V.E. Program, if in compliance with state law. Such deduction shall be made once annually and transmitted to the Union. ARTICLE 3 - DISCRIMINATION AND COERCION Section 1. There shall be no discrimination by foremen, superintendents or other supervisors of the Company against any associate in the bargaining unit because of the associate's membership in the Union. Section 2. The Union agrees that neither its officers nor its members, nor persons employed directly or indirectly by the Union, will intimidate or coerce associates, nor will it solicit members on Company time. Section 3. The Company and the Union agree to abide by applicable laws concerning no discrimination because of race, color, religion, national origin, sex, and age. Both parties further agree to abide by all applicable provisions of the National Labor Relations Act, as amended. Section 4. Due to the Americans with Disabilities Act or the regulations promulgated thereunder, the Company may be required to make a reasonable accommodation to the disability of an applicant or incumbent associate that may be in conflict with provisions of this Agreement. In such event, the Company shall be privileged to make such accommodation notwithstanding the 2 6 requirements of this Agreement. The Company shall notify the Union thereafter as soon as is practicable of such situation on a confidential basis. ARTICLE 4 - SCHEDULE OF HOURS AND OVERTIME Section 1. The regular hours of work shall be 40 hours per week divided into five days of eight hours each and/or four days of 10 hours each worked consecutively with the right of the Company to establish work shifts from Sunday 3:00 p.m. through Saturday, with the exception of utility/cleanup which would precede or follow above program. The foregoing hours of work shall not apply in cases of proven computer breakdown that would prevent the normal warehouse operation, or other causes beyond the control of the Company, Acts of God such as fire, flood, explosion or power failure. Under no condition will an associate who has reported and started work be paid for less than four hours. Section 2. Time and one-half (1-1/2) shall be paid for all work performed over 40 hours per week. A. Associates shall not be required to work an excess of 10 hours per day which may include Company directed mandatory overtime. B. The exception to Section 2A. hours of work limitation would be emergency plans enacted and/or caused by an Act of God or federal, state, or local government directives. C. See Appendix C for bid scheduling and overtime. 3 7 Section 3. Holidays shall be considered as days worked for the purpose of computing overtime. Section 4. Associates shall, except by mutual agreement, take at least one continuous period for meals of not less than 30 minutes, nor more than one hour in any one day. No associate shall be compelled to take more than one continuous hour during such period, nor be compelled to take any part of such continuous hour before he/she has been on duty three and one-half (3-1/2) hours or after he/she has been on duty six hours. Starting time for the regular or first shift will be between 5:00 a.m. and 10:00 a.m. Section 5. A. All work performed on Sunday between 12:01 a.m. and 3:00 p.m., (with the exception of utility cleanup) will be paid at two times straight-time rates. B. Associates starting after 3:00 p.m. Sunday or later, which is part of the associate's regularly scheduled work week, will be paid straight-time rates. C. All work performed on observed holidays shall be paid for at the rate of two times the regular straight time rate, plus holiday pay as provided in Article #6. D. Associates required to work on their 7th day of work (7th shift for the week) shall be paid two times their straight time rate of pay. An associate's workweek shall be a seven consecutive day period commencing on the associate's first regularly scheduled day of work. 4 8 Section 6. There shall be no pyramiding of overtime. This means that overtime shall not be paid twice for the same hours worked. Section 7. All associates covered by this Agreement shall be paid on a biweekly basis. Each associate shall be provided with a statement of gross earnings and an itemized statement of all deductions made for any purpose. Section 8. There will be two 15 minute break periods each shift, one in the first half of the shift and one in the second half of the shift, as near the middle of the work period as practical. The second break may be eliminated and reflected in a quitting time 15 minutes earlier, if the majority of the work group concurs. Section 9. Associates called in on their regular scheduled day off shall be guaranteed no less than four hours work or pay. When shift overtime of less than one hour is required, the Company may assign the associate who is to perform the work. ARTICLE 5 - VACATIONS Section 1 - Schedule of Service Vacations are provided to full-time associates for the purpose of rest and relaxation. Scheduling of vacations should be planned through your manager. The following vacation schedule is based on seniority. 5 9 A. One Week Vacation: Associates hired between July 1 and December 31 are eligible for a one week vacation in the following year which must be taken between June 1 and December 31. The next year these associates will be eligible for two weeks vacation. B. Two Weeks Vacation: Associates hired between January 1 and June 30 are eligible for two weeks vacation in the following year which can be taken from a period no earlier than one year from the hire date to December 31 of that year. C. Three Weeks Vacation: Associates are eligible for three weeks vacation on the January 1 of the year in which they will complete eight years of continuous service. Associates are expected to take earned vacations during the current eligibility year. Vacation may not be accrued from one year to the next. Payment will not be made for unused vacation from prior years, nor will pay in lieu of vacation be allowed. D. Four Weeks Vacation: Associates are eligible for four weeks vacation on the January 1 of the year in which they will complete 15 years of continuous service. Section 2 - Vacation Scheduling A. Planning Vacation planning should be done as far in advance as possible. Vacation schedule forms are distributed in January to facilitate advance planning. 6 10 B. Scheduling Associate vacation requests should be solicited as far in advance as possible. Vacations will be granted according to staffing requirements with consideration given for seniority. Although efficient operation of the work unit is important, fair and equitable vacation scheduling is essential. C. Commitment Once a vacation has been scheduled it cannot be changed within two weeks of the start of the vacation, except by mutual agreement of both management and the associate. Section 3 - Vacation Payment - Full-time Associates Vacation pay is determined by the total hours worked during a normal work week. Forty hours will be paid regardless of average hours per week. Section 4 - Vacation Accrual Associates are expected to take earned vacations during the current eligibility year. Vacation may not be accrued from one year to the next. Payment will not be made for unused vacation except for separated associates as provided in Section 5. Section 5 - Vacation for Separated Associates Pay will be made to all associates for earned vacation as of the last eligible date regardless of reasons for separation. 7 11 Section 6 - Effect of a Holiday During the Vacation Time When a paid holiday falls within the vacation period, the associate shall be entitled to an additional day off with pay as mutually agreed by the supervisor and the associate within the current eligibility year. Section 7 - Effect of Leave of Absence A. Personal or Sick Leave: Leaves totalling 90 days or less shall not affect vacation. B. Military Leave: Vacation for associates with one year or more of continuous service as a full-time associate, who returns to work from military leave shall receive credit as a full-time associate according to the provisions of the Uniform Services Employment and Re-employment Rights Act. U.S. Code Chapter 43 Title 38. ARTICLE 6 - HOLIDAYS Section 1. Regular associates who are not scheduled to work on the following holidays shall be paid eight hours pay at the straight-time hourly rate for the following holidays: New Year's Day Labor Day Memorial Day Thanksgiving Day Fourth of July Christmas Day Associate's Anniversary Date Holiday pay for associates working four 10 hour days shall be as follows: 8 12 When the holiday falls on a work day, the associate receives a day off with 10 hours pay. When a holiday falls on a non-work day, it is observed on the nearest work day. Section 2. Regular associates called to work on any of the above listed holidays shall be paid at two times the regular rate, in addition to the eight hours referred to above. Section 3. In order to qualify for eight hours of straight time pay for a holiday not worked, it is provided that regular associates must work their regular scheduled work day which precedes and follows the holiday, except in cases of proven illness or unless the absence is mutually agreed to. Section 4. Associates who are serving their ninety (90) days probationary period are not entitled to holiday pay for holidays falling within the probationary period. Section 5. The parties hereto specifically acknowledge and agree that the scheduling of mandatory overtime on a holiday is one of the management prerogatives reserved to the Company under this Agreement. ARTICLE 7 - WAGE RATES Wages shall be paid as set forth in Wage Appendix "A" attached hereto and made a part of this Agreement. ARTICLE 8 - STEWARDS The Company recognizes the right of the Union to designate a job steward and/or alternate per shift to handle such Union business as may from time to time be delegated to them by the Union. 9 13 Job stewards and alternates have no authority to take strike action or any other action interrupting the Company's business in violation of this Agreement, or any action except as authorized by official action of the Union. The Company recognizes this limitation upon the authority of job stewards and their alternates. The Company, in so recognizing such limitation, shall have the authority to render proper discipline, including discharge without recourse, to such job steward or his alternate in the event the job steward or his alternate has taken an unauthorized strike action, slow-down, or work stoppage in violation of this Agreement. Job steward and alternate shall be an associate of the Company. The job steward and/or alternate has authority to receive any notice hereunder from the Company to the Union, provided the Company mails a copy of such notice to the Union. Such notice will be effective on the date of receipt by the steward or alternate. Discussion of union matters with one or more associates should be held on breaks, lunch periods, or before or after the scheduled shift. ARTICLE 9 - MANAGEMENT RIGHTS The management of the Company's business and the direction of its associates, including the right to plan, direct and control Company operations, hire, suspend or discharge, transfer, or relieve associates from duty because of lack of work or for other reasons, the right to introduce new, improved or different methods of facilities, and the right to establish and maintain rules and regulations covering the operations of its business and the conduct of its associates, are vested exclusively in the Company as long as the same does not conflict with the terms and provisions of this Agreement. The Company will discharge any associate for dishonesty, use or being under the influence of intoxicating liquors or drugs while on duty, insubordination, conduct of a criminal character, the unauthorized taking or use of Company property, violent physical threats on Company property, the possession of fire arms on Company property, fighting or other conduct that normally 10 14 calls for summary discharge. The Company will not discharge associates for other offenses without first furnishing a warning letter, a copy of which will be furnished to the Union. The Company may request an associate to take a medical test to determine whether he was under the influence of intoxicating liquor or drugs, and an associate's refusal to submit to such test may be considered as a presumption that the associate was under the influence. Such tests will be based on reasonable suspicion, or as a result of selection under the random drug and substance testing program, as set forth in Appendix D. ARTICLE 10 - CONDITIONS OF EMPLOYMENT Section 1. Seniority for the purposes of this Agreement is defined as the length of continuous service with the Company. Section 2. A.(1) In assigning associates to higher paying jobs, either inside the bargaining unit or to work as a Lead Person, the Company shall select those associates who are best qualified and desire to be so promoted. In making such selections, consideration will be given to such factors as ability, performance, skill and experience. Judgments as to qualifications shall be at the sole discretion of the Company on a non-discriminatory basis. A.(2) A Lead Person shall be assigned to a specific daily classification for overtime purposes under Appendix "C". A Lead Person, for the purpose of day off overtime, will be considered to be part of his/her last assigned classification. A.(3) If a Lead Person is filling in for supervision, he/she shall not be restricted in any way from performing his/her duties and responsibilities as a Lead Person. 11 15 B.(1) The principle of seniority will apply in case of layoffs. Layoffs will be implemented based on seniority, qualifications to perform the work, and associates being at the level of "standard performance" as per Company performance appraisal form, in order to get a bye. B.(2) The Company will notify the associate in writing at least one week before the date of layoff. B.(3) Associates with at least 90 days of service will be recalled based on seniority, qualifications to perform the work, and meeting "standard performance" objectives. Associates who have been laid off shall receive seven days written notice of recall. Section 3. Associates shall lose all seniority rights and employment shall cease for any of the following reasons: a. Resignation. b. Discharge. c. Failure to notify Company within three days after registered mail notice of recall from layoff of his/her return to work. Must report to work within seven days. d. Absence due to layoff for nine months. e. If the associate overstays a leave of absence. f. If the associate gives a false reason for a leave of absence, or engages in other employment during such leave. g. If the associate is retired. h. If the associate intentionally falsifies information on his application for employment. i. If the associate is absent from work for off-the-job illness or injury in excess of nine calendar months or for on-the-job illness or injury in excess of 15 calendar months. j. Failure to report for a period of three consecutive days without notifying the Company. 12 16 k. Failure to report for a period of two consecutive regular workdays without notifying the Company, unless the associate can prove that such notification was physically impossible. Section 4. Each new or rehired associate shall be on probation for the first 90 calendar days of employment or re-employment in the bargaining unit. Upon satisfactory completion of said probationary period, seniority will be computed from the date of hire, or most recent date of rehire, with the Company. Absence from work will extend the probationary period for a period of time equivalent to the length of such absence. At any time during the probationary period, an associate may be discharged for any reason. Such associate so discharged shall not have any recourse under this Agreement, including the right to file a grievance. Section 5. The parties agree that supervisors will not perform the work of the parties they supervise except during training, demonstration, and safety education. For the purpose of training an associate, the supervisor must perform the training in the immediate area with the associate being trained, with exception of training in Company training centers, meeting rooms, or off-site locations. It is understood that after making all reasonable efforts to use bargaining unit employees to perform bargaining unit work, the Company may use any other temporary means of covering this work. 13 17 Other associates of the Company not in the bargaining unit may work in the Distribution Center, as part of a training and development program. Participation in bargaining unit work is limited to one week per individual per year. This developmental program will not reduce Distribution Center associates' workload. Upon occasion, vendors will be allowed to construct or put together samples for use in Company training or merchandising programs. Section 6. - Bid Process Associates with seniority, if they have the ability to perform the necessary work, shall have their choice, according to their seniority, of posted jobs subject to the following conditions: A. Bid Process 1. The bids shall list job classification (description), days of work, regular starting and quitting time. There will be at least one bid position for each job classification. The number of job classifications will be determined by the Company as required by need to support the Distribution Center. 2. Associates will be notified at least two weeks in, advance of a change in their regularly scheduled starting time. 3. During the course of the work day, and day-to-day basis, if it becomes necessary to re-assign associates, it will be done on the basis of need as determined by management. a. All vacant bids and new openings created within the course of a 12 month period shall be posted for bid by associates for two working days and shall be awarded by seniority to qualified applicants at the start of following work week. These bid openings are limited to percentages stated in Article #10, Sec. 6, A6. 14 18 b. No more than two bids posted to fill open position after initial bid. 4. Jobs will be awarded to the most senior associate bidding on said job who has the ability to perform the job. 5. There shall be three bids for job preference and improvement during the contract. The bids shall be bid by August 31, 1999, and approximately 12 months thereafter. If there is an addition or reduction in staff of twenty-five percent (25%) or more within any 90 day period, it will automatically cause a bid to occur within 30 days. 6. The jobs to be bid will be determined by the Company; however, the Company agrees that at least seventy-five percent (75%) of the eligible associates in the unit will be on bid jobs. Leads will not be counted as part of 75%. Remaining associates shall be designated as floaters. 7. Each floater will be assigned on the basis of his/her preference to the most senior associates. If more than one picking job is available, choices will be by seniority. When job preference assignments have been exhausted, jobs will be assigned. Other floater job assignments, which do not fall into one of the above categories, will be offered on the basis of seniority. During the course of the work day, if it becomes necessary to reassign floaters, it will be done on a basis of need as determined by management. 15 19 ARTICLE 11 - ARBITRATION & GRIEVANCES Any complaint, disagreement or difference of opinion between the Company, the Union or the associates covered by this Agreement which concerns the interpretation or application of the terms and provisions of this Agreement will be considered a grievance. Any associate, the Union or the Company may present a grievance. Any grievance which is not presented within seven days following knowledge of the event giving rise to such grievance shall be forfeited and waived by the aggrieved party. The procedure for handling grievances shall be as follows: first, the associate (with or without the steward) and the associate's immediate supervisor shall discuss and attempt to adjust such grievance. If this attempt to settle the grievance fails, then the steward representing the Union and the Company's DC Manager or Operations Manager shall discuss and attempt to adjust such grievance. If these two are unable to settle the grievance, said grievance shall be submitted in writing by the Union Business Agent to the Company's DC Manager. Said written submission shall clearly set forth the issues of contention of the aggrieved parties. Failure to follow the above procedure will result in forfeiture of the grievance by the aggrieved party. If the Union's and the Company's designated representatives cannot reach an agreement within five days, upon request of either party, the grievance shall be submitted to an arbitrator. The Company and the Union shall select the arbitrator by mutual agreement. In the event the parties are unable to agree upon an arbitrator within five days, an arbitrator shall be selected by each party 16 20 striking two names from a list of five arbitrators to be furnished by the Federal Mediation and Conciliation Service. The arbitrator shall be impartial and possess skill and knowledge of labor-management relations. A time limit of 15 days shall be placed on the rendering of the arbitrator's decision. The arbitrator shall receive and consider such material evidence and contentions as the parties may offer and shall make such independent investigation as he/she deems essential to a full understanding and determination of the issues involved. The arbitrator shall not be vested with power to change, modify or alter any of the terms of this Agreement. All grievances submitted shall present an arbitrable issue under this Agreement, and shall not depend on or involve an issue of contention by either party which is contrary to any provision of this Agreement, or which involves the determination of a subject matter not covered by or arising during the term of this Agreement. The findings and decisions of the arbitrator on all arbitrable questions shall be binding and enforceable on all parties. If either party refuses to abide by the final decision of the arbitrator on the merits of a grievance, the other party may apply economic sanctions. It is the intention of the parties that this Article 11 shall provide a peaceful method of adjusting grievances so that there shall be no suspension or interruption of normal operations as a result of any grievances. The parties shall act in good faith in proceeding to adjust grievances in accordance with the provisions of this Article. 17 21 The expenses of the arbitrator shall be borne equally by the parties to the arbitration. It is agreed that there will be no stoppage of work or lockouts pending settlement of a dispute, in accordance with the grievance procedure herein established. ARTICLE 12 - STRIKES & LOCKOUTS The Union will not cause or officially sanction its members to cause or take part in any strike, sit-down, or stay-in or slow-down, or any other stoppage in the operations of the business of the Company; nor will the local management lock out any associate or transfer any job under dispute from local plant until all the procedures mentioned in the foregoing grievance procedure shall have been employed without success. ARTICLE 13 - PICKET LINE It shall not be a violation of this Agreement and it shall not be cause for discharge or disciplinary action in the event an associate refuses to enter upon any property involved in a lawful primary labor dispute or refuses to go through or work behind any lawful primary picket line, including the lawful primary picket line of unions party to this Agreement and including lawful primary picket lines at the Company's place or places of business. ARTICLE 14 - CONFLICT OF LAWS Nothing contained herein is intentionally in conflict with any existing federal, state or local laws or any rules or regulations made pursuant thereto. In the event that any article or portion of any article of this Agreement proves to be in conflict with any such law or rule or regulation, only the 18 22 conflicting article or portion thereof, as the case may be, shall be abrogated and all of the terms and conditions of this Agreement shall continue in full force and effect. ARTICLE 15 - LEAVE OF ABSENCE The Company agrees to grant the necessary and reasonable time off (not to exceed 30 days) without discrimination or loss of seniority rights and without pay, to any associate designated by the Union to attend a labor convention or serve in any capacity on other official Union business, provided 48 hours written notice is given to the Company by the Union, specifying the length of time off. The Union agrees that in making its request for time off for Union activities, due consideration shall be given to the number of associates affected in order that there shall be no disruption of the Company's operations due to lack of available associates. Any associate desiring a leave of absence must secure the prior written approval of both the Company and the Union. The giving of such written approval shall be within the discretion of the Company and the Union. The maximum leave of absence shall be for 30 days and may be extended for like periods. Permission for extension must be secured from both the Union and the Company. Failure to comply with this provision shall result in the complete loss of seniority of the associate involved. ARTICLE 16 - EXTRA-CONTRACT AGREEMENTS The Company agrees not to enter into any agreement or contract with associates in the bargaining unit, individually or collectively, which in any way conflicts with the terms and provisions of this Agreement. 19 23 ARTICLE 17 - REVIEW OF DISCREPANCY IN PAY Any discrepancy in pay of any associate in the bargaining unit may be taken up by the Union with the Operating Manager, who will review with the Union Representative the computation of such pay. ARTICLE 18 - LOSS OR DAMAGE Associates shall not be charged for loss or damage unless clear proof of negligence is shown, or is the result of the intentional act of the associate. ARTICLE 19 - BONDS Should the Company require any associate to give bond, cash bond shall not be compulsory, and any premium involved shall be paid by the Company, and in the event any associate cannot qualify for such bond with the bonding company selected by the Company, and in the amount required, the Company shall have the right to release and discharge said associate and said release or discharge shall not be a violation of any of the terms and conditions of this Agreement. ARTICLE 20 - PHYSICAL EXAMINATIONS Physical examinations required by the Company shall be promptly complied with by all associates, provided, however, the Company shall pay for all such examinations. ARTICLE 21 - COMPENSATION CLAIMS The Company agrees to cooperate toward the prompt disposition of associate on-the-job injury Worker's Compensation claims. The Company shall provide Worker's Compensation protection for all associates covered by this Agreement. An associate injured on the job will be paid for the 20 24 entire day if the associate is required to leave work. Following the initial day of injury, each associate may choose to use either his accumulated sick days or vacation days to continue receiving pay until worker's compensation starts. Otherwise, no pay shall be forthcoming for that period when the associate is unable to work. ARTICLE 22 - MILITARY SERVICE Associates enlisting or entering the military or naval service of the United States, pursuant to the provisions of the Uniform Services Employment and Re-employment Rights Act, U.S. Code Chapter 43 Title 38, shall be granted all rights and privileges provided by the Act. ARTICLE 23 - EQUIPMENT The Company shall not require associates to operate any vehicle or forklift truck that is not in safe operating condition or equipped with the safety appliances prescribed by law. It shall not be a violation of this Agreement where associates refuse to operate such equipment unless such refusal is unjustified. All forklift trucks used for stacking will have an overhead safety shield. The Company, upon receipt of proper documentation, shall pay fifty percent (50%) of the cost of safety shoes, provided that said payment shall not exceed fifty dollars ($50.00) in any 12 month period. ARTICLE 24 - PAID-FOR-TIME All associates covered by this Agreement shall be paid for all time spent in the service of the Company. Time shall be computed from the time the associate is directed to report to work and until he/she is released from duty, but no overtime shall be paid except when specifically directed by the Company or its authorized representative. 21 25 ARTICLE 25 - GROUP BENEFIT PLANS Section 1 - Company Plans All associates covered by this Agreement shall be subject to the provisions of and will be entitled to the benefits of the Company's group benefit program as follows: A. The Tractor Supply Co., Inc. Associate Benefit Plan; B. Sick Pay and Extended Sick Pay Plan (see Section 2 and 3 below); and C. 401 (k) Plan; as said Plans are presently constituted or as said Plans may be amended by the Company from time to time. The parties understand and agree that in the event such amendments take place during the term of this Agreement, said amendments will apply automatically to covered associates. It is further agreed that disputes under these Plans will not be subject to the Grievance Procedure, but will be governed solely by the terms of the Plan documents. Section 2 - Sick Pay A. Regular Sick Days 1. Normal Benefit: A full-time hourly associate who is absent from work due to a bona-fide personal illness or injury is entitled to one-half (1/2) day for each completed month of service. 2. Accrual of Regular Sick Days: Sick days accrue at the rate of one-half (1/2) day for each continuous month of service, not to exceed six days in any 12 month period. Accrual of benefit begins after 90 days of service. 22 26 Associates absent for a period of three or more consecutively scheduled work days will be requested by management to submit a medical doctor's certification of illness and inability to work. Unused sick days may be accrued from year to year up to a maximum accrual of 30 days. Accrued sick days are to be used only for personal illness or injury and may be used during the first seven calendar days before beginning the extended sick pay plan in Section 3. 3. Payment of Regular Sick Days: All regular sick pay time is paid through the normal payroll system. Sick time may be taken in full or half day amounts. B. Unused Sick Time - Sick days are intended to be used only for personal illness or injury. Therefore, an associate who quits or is discharged for just cause shall not be entitled to pay for an unused or accrued sick days. Section 3 - Extended Sick Pay Plan A regular full-time associate absent from work due to personal illness or injury is entitled to pay under the Company's extended sick pay plan, upon submission of a physician's written statement indicating that the associate is unable to work. Payments will begin after the associate has been continuously absent for at least seven calendar days. A. Regular Benefit for Full-Time Hourly Associates: -----------------------------------------------
Length of Service Full Pay For Half Pay For ============================================================ At least 6 months 1 week At least 3 years 2 weeks 4 weeks At least 5 years 4 weeks 6 weeks
23 27 At least 10 years 6 weeks 8 weeks At least 15 years 8 weeks 10 weeks At least 20 years 10 weeks 12 weeks
B. Payment of Extended Sick Pay: A personnel action form along with the physician's statement must be submitted to the personnel department to initiate extended sick pay benefits. C. Renewal of Extended Pay Benefits: Extended sick pay benefits are reinstated to the full amount based on Subsection A above 12 months after the first extended sick day is used, provided the associate is actively working during that 12 month period. If the associate is not actively working, extended sick pay benefits will be reinstated one year after return to work. If an associate is disabled beyond a six month period, extended sick pay would be reinstated 12 months after return to work. If a work related injury is involved, this policy becomes null and void. Section 4 - Substitution of Paid Leave for Unpaid Leave Provided Under the Family Medical Leave Act Refer to Family Medical Leave policy in the Tractor Supply Company Human Resources Manual and Handbook for application. 24 28 ARTICLE 26 - POSTING OF NOTICES Bulletin boards will be provided by the Company where notices pertaining to Union matters may be posted by an authorized agent of the Union, provided that such notices are approved by the Company. ARTICLE 27 - UNION COOPERATION The Union, as well as members thereof, agrees at all times as fully as it may be within its power, to further the interest of the Company. ARTICLE 28 - SEPARATION OF EMPLOYMENT Upon quitting, the Company shall pay all monies due to the associate on associate's normal regular pay days. ARTICLE 29 - EMERGENCY REOPENING OF AGREEMENT In the event of war, declaration of emergency, or imposition of civilian controls during the life of this Agreement, either party may reopen the same upon 60 days written notice and request re-negotiation of matters dealing with wages and hours. Upon failure of the parties to agree in such negotiations, either party shall be permitted all lawful economic recourse to support its request for revisions. If the governmental approval of revisions should become necessary, all parties will cooperate to the utmost to attain such approval. ARTICLE 30 - AGREEMENT This Agreement is the only agreement between the Company and the Union with respect to the associates covered by this Agreement. It incorporates all terms, provisions and conditions agreed 25 29 upon. No change, waiver or modification of any provision of this Agreement shall be binding unless made in writing and signed on behalf of the Company by its authorized officer, and on behalf of the Union by an authorized officer of the Union. ARTICLE 31 - ENTIRE AGREEMENT Section 1. The parties acknowledge that during the negotiations which resulted in this Agreement, each had the unlimited right and opportunity to make demands and proposals with respect to all proper subjects of collective bargaining and that all such subjects have been discussed and negotiated upon and the agreements contained in this Agreement were arrived at after the free exercise of such rights and opportunities. Therefore, the Company and the Union, for the life of this Agreement, each voluntarily and unqualifiably waive the right and each agrees the other shall not be obligated to bargain collectively with respect to any subject or matter not specifically referred to or covered in this Agreement, even though such subject or matter may not have been within the knowledge or contemplation of either or both of the parties at the time they negotiated or signed this Agreement. Section 2. The parties understand and agree that this Agreement covers all bargained for conditions of employment, and that the Company has the right, at its discretion, to change, modify or amend conditions of employment not so covered as its business judgment dictates. ARTICLE 32 - INSPECTION PRIVILEGES Authorized agents of the Union, after making their presence known to management, shall have access to the Company's establishment during working hours for the purpose of adjusting disputes, investigating working conditions, collection of dues, and ascertaining that the Agreement is 26 30 being adhered to, provided that such inspection and visitation is reasonable and does not interfere with the efficient operation of the Employer's business. Company management will notify the Union Steward or other warehouse associate to conduct subject business. ARTICLE 33 - FUNERAL LEAVE Section 1. In the event of the death of a mother, mother-in-law, father, father-in-law, sister, sister-in-law, brother, brother-in-law, child, spouse, grandparent, grandchild, grandparent-in-law, son-in-law or daughter-in-law, regular full-time associates will be paid normal pay for time absent from schedule work up to four consecutive days. Section 2. Payment will be made for Funeral Leave when the associate misses a regularly scheduled work day. Funeral Leave can be applied to the beginning or the end of a vacation period only when that time off would have been granted, regardless of the vacation. ARTICLE 34 - JURY DUTY Section 1. Regular full-time associates are entitled to a paid leave from the job for jury duty. In the event the associate is excused or the jury is not in session, the associate will be expected to work even if only for a portion of the work day. Associates are granted a maximum of 30 days per calendar year. The associate will be reimbursed the difference if jury duty pay is less than normal Company pay. 27 31 Section 2. Associates must submit proof from the appropriate authority to verify days served and the amount of compensation received in order to receive the difference between this amount and normal wages. Documents must be submitted on a timely basis. In the event that documentation cannot be obtained on a timely basis, the personnel department should be contacted to arrange for the issuance of a normal paycheck and subsequent associate reimbursement to the Company of jury duty. ARTICLE 35 - TERM OF AGREEMENT This Agreement shall be in full force and effect from August 1, 1999 to and including July 31, 2002, and shall continue in full force and effect from year to year thereafter unless written notice of desire to change or modify this Agreement is served by either party on the other 60 days prior to the date of expiration. TRACTOR SUPPLY COMPANY GENERAL DRIVERS & HELPERS UNION, LOCAL #554 affiliated with the International Brotherhood of Teamsters By: /s/ Larry Goldberg By: /s/ Jim Sheard --------------------------------- -------------------------------------------- Title: Vice President-Logistics Title: President Local #554 ------------------------------ ----------------------------------------- Date: October 18, 1999 Date: October 22, 1999 ------------------------------ ------------------------------------------
28 32 APPENDIX "A" - WAGE RATES Job classifications under this Agreement will be as follows: General Warehouse: Shall be required to perform any duties in the warehousing, order processing, receiving or shipping of any materials processed through the warehouse. These duties shall include, but not be limited to, the use of any and all "power equipment." Part-time General Warehouse: To supplement the full-time workforce, part-time general warehouse may be used. Job duties will be essentially the same as general warehouse, but part-timers may be used for such things as vacation relief, fill-ins for illness, peak workload coverage and other special needs as determined by the Company. Part-timers will work under 1000 hours per year. Section 1. Rates for Warehouse Associates A. The extent of the increases to be granted at these time intervals between the start and the maximum will be based on performance and evaluations.
NEW ASSOCIATES HIRED AS OF AUGUST 1, 1999: Starting Rate $ 8.50 per hour First Anniversary Date 9.25 per hour Second Anniversary Date 9.75 per hour
29 33
CURRENT ASSOCIATES NOT AT CURRENT SALARY CAP EFFECTIVE AUGUST 1, 1999: Minimum rate $8.50 per hour (1st year of service) Anniversary date $9.25 per hour (employees starting their 2nd year with more than one year but less than 2 years of service Anniversary date $9.75 per hour (employees starting their 3rd year through completion of their 6th year of service Anniversary date $10.20 beginning 7th year Anniversary date $10.72 beginning 8th year Anniversary date $11.25 beginning 9th year Anniversary date $12.00 beginning 10th year Anniversary date $12.25 beginning 11th year Anniversary date $12.50 beginning 12th year
No associate with less seniority will move to the next level of increase prior to the associate above him/her with more seniority. This will be controlled by scheduled DATE OF INCREASE and THE AMOUNT. These step increases will level out by the end of year 2000. B. Associates at the current salary cap: August 1, 1999 ..........................$12.75 per hour August 1, 2000 ...........................13.00 per hour August 1, 2001 ...........................13.25 per hour C. Shift Differentials. An associate who works between 2:00 p.m. and 10:00 p.m. will be paid a premium of thirty-five cents (35(cents)) per hour from August 1, 1999 to July 31, 2002. 30 34 An associate who works between 10:00 p.m. and 7:00 a.m. will be paid a premium of fifty cents (50(cent)) per hour. Shift premiums will be counted for the purposes of computing holiday and vacation pay. Section 2. New hire Part-time Warehouse associates - $8.00 per hour Section 3. Lead Person will be paid a premium of $1.50 per hour. The Company will have sole discretion as to designation of Lead Persons. Section 4. Learning for Pay Program. Associates will be paid a premium of fifteen cents (15(cent)) per hour for proof of successful completion of a Company approved course administered by a Company approved college or junior college. Section 5. Work in the Store Program. Subject to Company discretion, associates may participate in the "Work in the Store Program" for up to one week per year. Section 6. No Reduction in Pay. No current associate will suffer a reduction in pay as a result of the implementation of the wage program set forth in Section 1 of this Appendix "A". 31 35 APPENDIX "B" - PART-TIME PROGRAM The intent of the Part-time Program is to supplement the full-time work force and to cover vacation relief, illness or handle peak workload coverage or other special needs. Hours will be determined by management. Regular Company policy will apply, which is as follows: - Part-time associates normally work less than 30 hours a week. - Part-time associates do not receive time off benefits. - A part-time associate who is promoted to a full-time position will receive 50% credit for all past service and will begin to accrue benefits from the date of the promotion. - Health care and 401(k) eligibility will be determined by the terms of those plan documents. In addition, the following will be our understanding: - Part-timer associates will be on a separate seniority list. - Part-timer associates will be laid off before full-time associates. - Full-timers will be offered overtime opportunities before part-timers will be used. Part-time associates may be used to supplement the regular workforce on overtime when filling in for vacation relief, illness, handling peak load coverage or other special needs. - Part-time associates who are promoted to full time will be handled in the following manner: - 50% credit for past service principles will apply toward their probationary period. - They will receive a full-time seniority date beginning with the date they start full-time work. - 50% credit for past service principles will also apply to all service related benefits. 32 36 APPENDIX "C" - OVERTIME 1. Bids on daily overtime will be handled in this manner: A. Scheduled overtime will be offered to associates by shift under the bid classification and by seniority. B. If there are insufficient associates to work overtime, we will go to the top of the seniority list by shift and associates will be offered overtime based on proven ability to perform the job. C. If insufficient volunteers, overtime will be assigned by entire seniority list by shift by inverse seniority. 2. Daily call-back overtime: Associates called back will receive a minimum of one-hour pay at overtime. 3. Day-off overtime and/or emergency: The following language shall apply in all instances of day-off/emergency overtime other than Saturday overtime: A. Day-off/emergency response conditions work will be offered to associates by shift under the bid classification and by seniority. B. If there are insufficient associates to fill overtime, we will go to the top of the seniority list by shift, and associates will be offered overtime based on proven ability to perform the job. C. If there are insufficient volunteers, overtime will be assigned by entire seniority list by shift by inverse seniority. D. In the event emergency conditions beyond the control of the Company arise (fire, flood, snow storms, etc.), overtime will be assigned by entire seniority list by inverse seniority. 33 37 4. Saturday day overtime: A. Day-off work will be offered to all associates for all shifts under their bid classification, by seniority under one seniority list. B. If there are insufficient associates to work overtime, we will go to the top of the overall seniority list for all shifts, and associates will be offered overtime by seniority based on proven ability to perform the job. C. If there are insufficient volunteers, overtime will be assigned by entire seniority list by shift by inverse seniority. D. If additional workers are still needed, overtime will be assigned by the entire seniority list by inverse seniority. 34 38 APPENDIX "D" - DRUG AND ALCOHOL POLICY The purpose of the following drug and alcohol policy which has been adopted by Tractor Supply Company, Inc. (the "Company"), is to reduce the possibility of loss caused by an unsafe act or an unsafe condition created by an associate abusing alcohol or drugs. This policy will take effect August 1, 1993, 30 days from the date of posting this notice. Our drug and alcohol policy consists of the following: 1. The Company shall have the right to test all associates and applicants for employment for drug and alcohol use upon the happening of the following events: A. Application for employment. B. When probable cause exists to believe the associate is using or is under the influence of alcohol or drugs in the course of his or her employment. C. Random testing. 2. All drug and alcohol testing performed by the Company or its agent shall be done in accordance with generally accepted procedures, including but not limited to testing of the associate's blood, urine, and/or saliva specimens. The Company will bear all costs associated with testing required as a result of one of the above events or in the event retesting is necessary. 3. Refusal by an associate to submit to drug and alcohol testing as set forth above will constitute just cause for immediate discharge. An associate's refusal to execute a written consent to be tested shall constitute a refusal to be tested and cause for discharge. 35 39 4. A. The Company will provide training of each associate on the effects and consequences of the use of controlled substances on personal health, safety, and the workplace. B. The following acts or omissions by an associate will result in disciplinary actions, which may include immediate dismissal without notice at the Company's discretion: 1. The sale, purchase, transfer, use or possession of any prohibited drug on Company premises or while on Company business. 2. Reporting to or remaining on Company premises or on Company business while impaired by the use of a prohibited drug. 3. By failing or refusing to submit to a drug test as required by the Company policy. C. Each associate covered under the Company's substance abuse policy will be provided adequate training prior to the implementation of controlled substance abuse testing. D. "Impaired" means, for purposes of alcohol usage, the retention by the associate, of a blood alcohol content of .10% or more (or .04% or more if the associate's duties include driving a Company vehicle or operating Company machinery) upon testing by breathalyzer or blood test. E. Controlled substances - means, as defined in 49 CFR Part 40, marijuana, cocaine, opiates, amphetamines, and phencyclidine (PCP). F. Drug - means any substance (other than alcohol) that is a controlled substance as defined in this section and 49 CFR Part 40. 5. A. The above disciplinary procedure will not apply in the event an associate voluntarily admits or discloses a drug or alcohol use. In the event of such an admission of disclosure, the associate will be placed on a leave of absence, without pay, and the Company shall assist the associate in seeking rehabilitation. This leave of absence shall continue during the period 36 40 that an associate is enrolled within a qualified rehabilitation program. The associate will be required to produce evidence from time to time of continuing enrollment in such a program. B. Reinstatement of Associate After Positive Test - An associate who tests positive for the use of a controlled substance and/or alcohol, thereby supplying the Company with grounds for the immediate discharge of the associate, may be reinstated provided the associate agrees to comply with the following conditions: 1. The associate must immediately enroll in a qualified program of evaluation and, if necessary, treatment. The program of evaluation or treatment is to be chosen by the Company. Any cost of rehabilitation shall be borne by the associate, except to the extent covered by the Company's health care plan. 2. Upon receipt of satisfactory progress in the program of evaluation or treatment outlined in 1 above, the associate must submit to a drug and/or alcohol test in which a negative result is obtained. The satisfactory progress report must be received by the Company no later than 30 calendar days from the date that the associate was given notice of the positive test result. If more than 30 calendar days elapse, then the Company shall have grounds to discharge the associate. If a positive test for the use of a controlled substance and/or alcohol is returned after the associate enters a program of evaluation or treatment, then the associate shall be immediately discharged. 3. An associate shall be eligible for reinstatement under this Section on a one-time basis, and the reinstatement is contingent upon the associate returning directly to work for the Company. 4. Upon reinstatement, the associate shall be subject to three additional tests for drugs and/or alcohol without prior notice, with two tests to occur within six months of the reinstatement and the third test to occur within six to 12 months after reinstatement. 37 41 6. All test results shall be kept in the strictest confidence. 7. All laboratory tests shall be performed by NIDA Certified Laboratories using cutoff levels as prescribed by the Health and Human Services as may be adjusted from time to time. 8. Random test selections shall be on the basis of computer selection, selecting up to fifty percent (50%) each year. 9. Associates shall be paid for work time lost as a result of testing procedures, including travel time, if the results of the test are negative. 10. Specimen Collection - Specimen collections facilities will be established convenient to Company locations. Specimen collections will be conducted in accordance with the protocols established by the National Institute of Drug Abuse (NIDA) in order to assure the integrity of the specimen. 11. All drug testing and time spent giving a drug test shall be paid for by the Company and shall be done immediately prior to, during, or immediately after the associate's work schedule. 38 EX-13 5 ANNUAL REPORT 1 EXHIBIT 13 TRACTOR SUPPLY COMPANY [LOGO] 1999 ANNUAL REPORT [PHOTO] [PHOTO] Serving the Unique Lifestyle Needs of America's Farm, Ranch and Rural Customers [PHOTO] 2 COMPANY PROFILE Since its founding as a mail order tractor parts business in 1938, Tractor Supply Company has grown to be one of the largest operators of retail farm stores in America. The Company supplies the daily farming and maintenance needs of its target customers: hobby, part-time and full-time farmers and ranchers, as well as rural customers, contractors and tradesmen. At the close of fiscal 1999, the Company operated 273 retail farm stores in 26 states. Tractor Supply Company stores typically range in size from 12,000 to 14,000 square feet of inside space and utilize at least as many square feet of outside selling space. An average store displays a comprehensive selection of over 12,000 different products including farm maintenance products (fencing, tractor parts and accessories, agricultural spraying equipment and tillage parts); animal and pet products (specialty feeds, supplements, medicines, veterinary supplies and livestock feeders); general maintenance products (air compressors, welders, generators, pumps, plumbing and tools); lawn and garden products (riding mowers, tillers and fertilizers); light truck equipment; and work clothing. The stores are located in rural communities and in the outlying areas of large cities where the rural lifestyle is a significant factor in the local economy. The Company employs approximately 3,500 people. Tractor Supply Company has been a public company since February 1994. Its stock is traded on The Nasdaq National Market under the symbol "TSCO". NUMBER OF STORES BY STATE [GRAPH] Store Support Center - Nashville, TN Distribution Center Pendleton, IN Omaha, NE Waco, TX Rural Hall, NC 3 1 FINANCIAL HIGHLIGHTS (in thousands, except where noted)
FISCAL YEAR PERCENT - -------------------------------------------------------------------------- INCREASE 1999 1998 (DECREASE) - ----------------------------------------------------------------------------------------- OPERATING RESULTS: Net sales $688,082 $600,677 14.6% Income before income taxes 30,111 25,292 19.1 Net income 17,874 14,800 20.8 Net income per share - basic ($) 2.04 1.69 20.7 Net income per share - assuming dilution ($) 2.02 1.68 20.2 FINANCIAL POSITION: Total assets 302,630 264,649 14.4 Cash and short-term investments 6,991 18,201 (61.6) Stockholders' equity 138,305 119,976 15.3 Long-term debt to equity (%) 39.5 30.9 27.8 STATISTICS: Number of stores (#) 273 243 12.3 Square footage at year-end 3,448 3,014 14.4 Average sales per store ($) 2,520 2,472 1.9 Net sales per square foot ($) 217 206 5.3
NET SALES (in millions) 1995/1999 [GRAPH] TOTAL NUMBER of Stores (at Year-End) 1995/1999 [GRAPH] AVERAGE SALES PER SQUARE FOOT 1995/1999 [GRAPH] As with any business, all phases of the Company's operations are subject to influences outside its control. This report contains certain forward-looking statements. These statements include reference to certain factors, any one, or a combination, of which could materially affect the results of the Company's operations. These factors include general economic cycles affecting consumer spending, weather factors, pricing and other competitive factors, the timing and acceptance of new products in the stores, the mix of goods sold, capital market conditions in general and the seasonality of the Company's business. Forward-looking statements made by or on behalf of the Company are based on a knowledge of its business and the environment in which it operates, but because of the factors listed above, actual results could differ materially from those reflected by any forward-looking statements. Consequently, all of the forward-looking statements made are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business and operations. 4 2 TO OUR STOCKHOLDERS: WE BEGIN EACH YEAR WITH VERY AGGRESSIVE GOALS. AS A GROWTH COMPANY, WE WOULDN'T HAVE IT ANY OTHER WAY! OUR GOALS ARE SET BASED ON OUR CORE BUSINESS STRATEGY, WHICH RECOGNIZES THE MOST IMPORTANT BUSINESS CONCERN WE HAVE: OUR CUSTOMER! [Joe Scarlett] [Picture] Our leadership team is absolutely dedicated to our business strategy: to be the most dependable supplier of basic maintenance products to support the lifestyles of our farm, ranch and rural customers. We are clearly focused on the hobby farmer and rancher. Recent media coverage has dwelled on the plight of the American farmer. It's no secret many of America's large production farms have struggled. On the surface, this might suggest a company like ours would struggle as well. To the contrary, when a large farm stops farming, the land is often sold off in parcels, and the result is a greater number of smaller, part-time farming operations - our core customers! We are not dependent on production agriculture and our research supports that less than 10% of our customers are part of that base. It's the part-time or "hobby" farmers and ranchers that are the backbone of our growth strategy. It's what makes us unique. It's what sets us apart and makes Tractor Supply Company without equal! Our market niche is truly different from others whom you might consider our competition. We know our customers; we study our customers' needs. We differentiate ourselves through product assortments that are clearly tied to our customers' basic farm and ranch lifestyle needs. And so our strategy motivates us to drive sales through satisfying our customers. We must be: - - DEPENDABLE - we're fully committed to being in stock - the right product at the right time at everyday low prices! - - KNOWLEDGEABLE - we provide continuing education to our store managers and sales associates about the products we sell. An informed customer is a happy customer (and a repeat customer!). - - ADAPTABLE - we make regular modifications to our product assortments so we're responsive to our customers' needs. The next few pages of this annual report will expand on our business strategy - who is our customer? What are our customers' needs? And why is ours a unique niche? We have made considerable investment in our infrastructure to position ourselves to better serve our customers' needs: - - NEW SYSTEMS - a world-class enterprise resource planning system to power our merchandising capabilities, - - NEW CAPACITY - new distribution centers which increase our warehousing area by 40%, and - - NEW STORES - 31 more farm and ranch stores in 1999, all in rural towns and other locations supporting the farm and ranch lifestyle! We believe these investments will continue to pay off. Thank you for your continuing support! Sincerely, /s/ JOE SCARLETT - ------------------------- JOE SCARLETT Chairman of the Board, President and Chief Executive Officer 5 3 MISSION AND VALUES WE SET OUR GOALS BOUND AND DRIVEN BY A CLEAR STATEMENT OF MISSION AND A SOLID VALUE STRUCTURE. AT TRACTOR SUPPLY COMPANY, WE HAVE A STRONG WORK ETHIC AND A COMMITMENT TO A WORKPLACE WHERE EVERYONE IS GIVEN THE OPPORTUNITY TO SUCCEED. Our mission defines who we are, what we are, and where we are going. This mission motivates us. It is the driving force behind our success. We live this mission everyday. Our leadership team reinforces this dedication. We communicate "success stories" throughout the organization. Through demonstrated commitment to legendary service, we all win - especially our customers and, you, our stockholders! Our values are the structure beneath our strategy. These values are not mere concepts. They embody the spirit of our people. They exemplify the winning attitude, intelligence and commitment we are proud to see in our associates. Our values demonstrate our core belief in "doing the right thing" and encouraging others to do the same. Our associates are encouraged to adopt these principles and refer to them regularly. By living out these values, everyone benefits! CONTINUED GROWTH Understanding the customer is the key. We measure demographic information that enables us to more effectively locate our stores in the areas where our customers live and shop. With this information, we can more accurately predict each store's success. We've worked the store opening process down to a science. We've shaved two weeks out of the set-up and training time and we're getting to market faster than ever before. That means less start-up costs per unit and enables us to generate sales sooner. We will continue to focus on new store growth, opening an estimated 40 to 45 new stores in 2000. Large existing markets (Texas - our number one market) and a large new market (Florida - our golden opportunity) will be our primary targets. We will continue to expand, increasing our store count by approximately 12% each year. Steady, controlled growth will generate profitable success. We have a winning formula! 6 4 WE ARE FOCUSED ON OUR CUSTOMER AND EMPOWER OUR PEOPLE WITH THE AUTHORITY TO "DO WHATEVER IT TAKES." OUR TEAM HAS GREAT SPIRIT AND TREMENDOUS ENTHUSIASM. WE HAVE A "CAN DO" ATTITUDE. WE ARE POSITIVE, UPBEAT AND FOCUSED. WE ARE WINNERS! OUTLOOK FOR THE FUTURE The Company's theme for this year is "Sell!! Sell!! Sell!!" Our managers and sales associates are receiving more sales training this year than ever before. Tractor Supply Company is clearly focused on sales training and sales incentives to drive sales growth all year. Sales and morale should both get a boost this year with substantially improved "in stock" positions on basic goods now that our computer replenishment systems have smoothed out. We are working diligently to improve our inventory turn in order to generate more positive financial performance. We believe that 2000 will be an excellent year. Our systems are working well, the new distribution centers are functioning efficiently, our marketing programs are more targeted and aggressive than ever and we have a commitment to basic functional execution throughout the organization. THE FULL TIME OPPORTUNITY WITH PART TIME FARMERS/RANCHERS In 1999, Tractor Supply Company enjoyed another record year. Chain-wide sales approached $700 million and 31 new stores were opened. Looking forward, as one of the nation's leading retailers of basic maintenance products for farm, ranch and rural consumers, our prospects have never been brighter. We are perfectly positioned to address the product and service needs of key customer segments. Part time farming means different things to different people, but to Tractor Supply it just means opportunity. The "weekend" farmer probably grew up on a farm and would prefer to farm full time. With today's agricultural economy, however, that is not easy. So these folks generally work full time in a manufacturing or service industry, and farm before work, after work, and on weekends. But they are serious about farming, either because it is something they love, or because it is something they need to supplement their income. Because they are cost conscious, these customers buy a lot of repair and maintenance products. They are much more likely to fix a piece of equipment than replace it, and that is right up Tractor Supply Company's alley. The "pleasure" or "hobby" farmer may have grown up on a family farm as well, or they may have taken up farming on a small scale as a form of relaxation. In either case, these customers farm because they want to, not because they need to, and it is not uncommon for them to spend more on their "hobby" than they earn from farming. They probably have a few head of cattle and a few horses. We see these customers regularly, give them lots of advice and sell them a range of basic farm supplies, along with tons of feed and related animal care products. The "gentleman" farmer is even more upscale and is really into farming as a lifestyle more than anything else. This customer segment is composed of successful business executives, dentists, doctors, lawyers, etc. They work in the city and commute 30 minutes to an hour so they can live and raise their children in a more rustic, rural setting. While they do not really do a lot of serious farming, they are serious about the lifestyle. They often own horses or other livestock and they purchase a lot of tools and power equipment - garden tractors, tillers, etc. There is a tendency to think of part time farmers as "farmer wannabes," rather than as a significant factor in today's farm economy. At Tractor Supply Company, we know nothing could be further from the truth. According to the most recent Census of Agriculture, farms generating less than $10,000 in annual income represent half of all farms in the U.S. The "Under $10,000" segment spends more than $5.5 billion annually on farm supplies, and it is the only farm income segment that is growing. So when we see "For Sale" in front of a 1,500 acre spread, we don't see a lost customer. We see ten new customers, each with 150 acres to 7 5 fence, each with a large lawn to mow, each with livestock, horses, dogs and cats to feed, each with a need for the kinds of products we sell. We're perfectly positioned to service our core customers and meet their daily lifestyle needs. OUR EVOLVING CUSTOMERS' EVOLVING PRODUCT NEEDS [PHOTO] [PHOTO] [PHOTO] [PHOTO] Products Products Products Person As our customer mix has shifted through the years, so too has the assortment of products we carry to meet our customers' needs. While we are dedicated to continuing our heritage as the most dependable supplier of basic farm and ranch maintenance products, in recent years we have enjoyed tremendous success through expansion of certain categories with broader consumer appeal. 8 6 [PHOTO] [PHOTO] Person Products The growth of our Equine product line is a good example. In the trade areas where we locate stores there is an extremely high index of households with horses. These folks may or may not be involved in farming or ranching, but they are passionate about their horses. For years, Tractor Supply Company has offered horse feed, fencing and a few core equine oriented products. But more recently we have made a dedicated effort to position our company as America's leading chain of tack stores. Today we offer the horse lover everything from halters and bits to grooming and medical supplies. We speak directly to these customers by utilizing a range of equine magazines in our advertising program. Two years ago we began an association with John Lyons, perhaps today's foremost expert on horse training. John is a valuable spokesman for us as well as a consultant regarding equine product trends and opportunities. Most people in rural America also own pets. Again, whether they live on a farm or not, they tend to have plenty of dogs and cats. Some have rabbits as well and many are into feeding wild birds. The growth of pet superstores is testimony to the potential of this category. And while we do not attempt to carry everything found in a major pet store, we have recognized the opportunity for expanded offerings of both pet foods and high margin pet supplies. Retriever, our private-label dog food, is one of the largest selling items in our company. In addition to generating significant sales volume, the Retriever line stimulates frequent visits from a broad base of customers. We have recently seen incremental sales from the addition of national brands, and plans are to continue building this category by adding high end, nutritionally focused pet foods traditionally distributed only by veterinarians or through specialty retailers. The pet category, like the equine category, serves a dual purpose of addressing the needs of our core customer base while, at the same time, giving Tractor Supply Company relevance to an entirely new set of consumers. Another category delivering more sales and, importantly, attracting new customers, is Lawn and Garden. Many of our stores are located on the fringes of major metro areas - kind of on the 9 7 outskirts of suburbia. Five or ten years ago these trade areas were composed primarily of full and part time farmers/ranchers, so they were very solid markets for us. Today, as a few farms have sold and subdivisions have popped up, these markets have grown even stronger. They still offer a good mix of our core farmers/ranchers, but there has been a significant addition of middle income suburban homeowners. And what is the first thing every homeowner with an acre of property needs - a riding mower! Riding mowers and an array of lawn and garden materials - from seed and fertilizer to rakes and pruning shears appeals to this expanding Tractor Supply Company customer segment. In some cases, we get the business because we are more convenient and easier to shop than a "big box" home center or discount store. In other cases, it is because our unique farm store shopping experience is what this customer really wants. That, after all, is why they left the city. THE INTERNET The Internet has brought us another means of learning about and understanding our customers and potential customers. Through visits to our website, our customers inform us about their product interests and service needs. We will continue to expand our website with greater and more interactive capabilities to ensure we keep an open communication and a clear link to our customers. As you can see, our focus on our customers and maintaining an understanding of their needs is vital to our success. Knowing the customer is also the key to growth in our Company: growth in comparable store sales, growth in the number of stores and growth in profit. We are simply dedicated to exceeding our customers' expectations through proper product assortments, legendary service and everyday low prices. Total customer satisfaction - we wouldn't have it any other way! [PHOTO] [PHOTO] [PHOTO] Person Products Products 10 8 FIVE YEAR SELECTED FINANCIAL AND OPERATING HIGHLIGHTS
FISCAL YEAR ENDED -------------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA) JANUARY 1, DECEMBER 26, DECEMBER 27, DECEMBER 28, DECEMBER 30, 2000 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- OPERATING RESULTS: Net Sales $ 688,082 $ 600,677 $ 509,052 $ 449,029 $ 383,903 Gross margin 181,251 154,638 131,542 116,651 98,656 Selling, general and administrative expenses 139,725 120,734 104,661 88,827 73,587 Depreciation and amortization 7,311 5,342 4,509 3,385 2,524 ----------- ---------- ----------- ---------- ---------- Income from operations 34,215 28,562 22,372 24,439 22,545 Interest expense, net 4,104 3,270 2,439 2,358 1,730 Income before income taxes 30,111 25,292 19,933 22,081 20,815 Income tax provision 12,237 10,492 8,172 8,845 8,293 ----------- ---------- ----------- ---------- ---------- Net income $ 17,874 $ 14,800 $ 11,761 $ 13,236 $ 12,522 ----------- ---------- ----------- ---------- ---------- Net income applicable to common stockholders $ 17,874 $ 14,800 $ 11,705 $ 13,039 $ 12,165 ----------- ---------- ----------- ---------- ---------- Net income per share - basic (a) $ 2.04 $ 1.69 $ 1.34 $ 1.50 $ 1.40 ----------- ---------- ----------- ---------- ---------- Weighted average common shares outstanding 8,761 8,742 8,725 8,718 8,718 OPERATING DATA: Gross margin 26.3% 25.7% 25.8% 26.0% 25.7% Selling, general and administrative expenses 20.3% 20.1% 20.5% 19.8% 19.2% Income from operations 5.0% 4.7% 4.4% 5.4% 5.9% Net income 2.6% 2.5% 2.3% 2.9% 3.3% Number of stores: Beginning of year 243 228 208 185 165 New stores 31 15 22 23 20 Closed stores (1) -- (2) -- -- ----------- ---------- ----------- ---------- ---------- End of year 273 243 228 208 185 ----------- ---------- ----------- ---------- ---------- Number of relocated stores 1 1 1 4 2 Number of remodeled stores (b) -- -- -- 1 6 Total selling square footage at period end (c) 3,448,347 3,014,196 2,806,864 2,543,575 2,237,755 Average sales per store (in thousands) $ 2,520 $ 2,472 $ 2,233 $ 2,159 $ 2,075 Net sales per square foot of selling space $ 217 $ 206 $ 191 $ 185 $ 178 Comparable store sales increase (d) 4.4% 10.9% 3.1% 2.5% 3.1% BALANCE SHEET DATA (AT END OF PERIOD): Working capital $ 117,306 $ 95,530 $ 82,869 $ 65,954 $ 63,850 Total assets 302,630 264,649 224,080 195,582 174,129 Long-term debt, less current portion (e) 54,683 37,132 31,134 21,166 25,858 Redeemable preferred stock -- -- -- 1,763 3,525 Stockholders' equity 138,305 119,976 104,889 92,966 79,951
(a) Basic net income per share is calculated based on the weighted average number of common shares outstanding applied to net income applicable to common stockholders. (b) Includes remodelings costing more than $150,000. (c) Total selling square footage includes normal selling space and excludes office, stockroom, receiving space and outside selling space. (d) Comparable store sales increases are calculated on a 52-week basis, excluding relocations, using all stores open at least one year. (e) Long-term debt includes borrowings under the Company's principal revolving credit agreements, term loan agreements and amounts outstanding under its capital lease obligations, excluding the current portions of each. 11 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis describes certain factors affecting Tractor Supply Company's (the "Company") results of operations for the three fiscal years ended January 1, 2000 and its liquidity and capital resources. This discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this Annual Report. The following discussion and analysis also contains certain historical and forward-looking information. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 ("the Act"). All statements, other than statements of historical facts, which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy, expansion and growth of the Company's business operations and other such matters are forward-looking statements. To take advantage of the safe harbor provided by the Act, the Company is identifying certain factors that could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by or on behalf of the Company. All phases of the Company's operations are subject to influences outside its control. Any one, or a combination, of these factors could materially affect the results of the Company's operations. These factors include general economic cycles affecting consumer spending, weather factors, operating factors affecting customer satisfaction, consumer debt levels, pricing and other competitive factors, the ability to identify suitable locations and negotiate favorable lease agreements on new and relocated stores, the timing and acceptance of new products in the stores, the mix of goods sold, the continued availability of favorable credit sources and other capital market conditions and the seasonality of the Company's business. Forward-looking statements made by or on behalf of the Company are based on a knowledge of its business and the environment in which it operates, but because of the factors listed above, actual results could differ materially from those reflected by any forward-looking statements. Consequently, all of the forward-looking statements made are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business and operations. The Company's fiscal year ends on the Saturday closest to December 31. Fiscal year 1999 consists of 53 weeks, while fiscal years 1998 and 1997 consist of 52 weeks. OVERVIEW Since its founding as a mail order tractor parts business in 1938, the Company has grown to be one of the largest operators of retail farm stores in America. The Company supplies the daily farming and maintenance needs of its target customers: hobby, part-time and full-time farmers and ranchers, as well as rural customers, contractors and tradesmen. The Company's stores typically range in size from 12,000 to 14,000 square feet of inside selling space and utilize at least as many square feet of outside selling space. An average store displays a comprehensive selection of over 12,000 different products including farm maintenance products (fencing, tractor parts and accessories, agricultural spraying equipment and tillage parts); animal and pet products (specialty feeds, supplements, medicines, veterinary supplies and livestock feeders); general maintenance products (air compressors, welders, generators, pumps, plumbing and tools); lawn and garden products (riding mowers, tillers and fertilizers); light truck equipment; and work clothing. The stores are located in rural communities and in the outlying areas of large cities where the rural lifestyle is a significant factor in the local economy. The Company does not sell large tractors, combines, bulk chemicals or bulk fertilizers. Over the past six fiscal years since the Company's initial public offering in February 1994 (the "Offering"), the Company has opened 124 new retail farm stores: 13 in fiscal 1994, 20 in fiscal 1995, 23 in fiscal 1996, 22 in fiscal 1997, 15 in fiscal 1998 and 31 in fiscal 1999. These new stores have increased the Company's market presence in the Southwest, primarily in Texas, and in the Southeast, primarily in Tennessee, Kentucky and North Carolina. This expansion brings the Company's total store count to 273 (in 26 states) as of January 1, 2000. The Company plans to open an additional 40 to 45 stores in fiscal 2000 (approximately 12 of which are scheduled to open in the first quarter of fiscal 2000), 38 in fiscal 2001 and additional stores thereafter. In total over the past six fiscal years since the Offering, the Company has opened, relocated or remodeled 146 stores. 12 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Between fiscal year 1994 and fiscal year 1999, net sales increased from $330.0 million to $688.1 million and net income increased from $11.3 million to $17.9 million, reflecting a five-year compound annual growth rate of 15.8% and 9.7%, respectively. The Company generated these growth rates primarily from increases in comparable store sales and through new store openings and relocations of existing stores. Comparable stores sales increased 4.4%, 10.9% and 3.1% in fiscal 1999, 1998 and 1997, respectively. Since 1994, the 105 new or relocated stores that have been open more than one year have generated average net sales that are approximately 21.3% per annum greater than those of existing stores. SEASONALITY AND WEATHER The Company's business is highly seasonal. Historically, the Company's sales and profits have been the highest in the second and fourth fiscal quarters of each year due to planting and harvesting seasons and the sale of seasonal products. The Company has typically operated at a net loss in the first fiscal quarter of each year. Unseasonable weather, excessive rain, drought, and early or late frosts may also affect the Company's sales. The Company believes, however, that the impact of adverse weather conditions is somewhat mitigated by the geographic dispersion of its stores. The Company experiences a buildup of inventory and accounts payable during its first fiscal quarter each year for purchases of seasonal product in anticipation of the April through June selling season and again during its third fiscal quarter in anticipation of the October through December selling season. The Company's unaudited quarterly operating results for each fiscal quarter of 1999 and 1998 are shown below (dollars in thousands, except per share amounts):
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER TOTAL - -------------------------------------------------------------------------------------------------------- 1999 Net sales $ 125,647 $214,124 $160,214 $188,097 $688,082 Gross margin 32,192 55,519 41,623 51,917 181,251 Income (loss) from operations (1,131) 17,811 5,624 11,911 34,215 Net income (loss) (1,140) 10,125 2,647 6,242 17,874 Net income (loss) per share - basic (.13) 1.16 .30 .71 2.04 Net income (loss) per share - assuming dilution (.13) 1.14 .30 .71 2.02 1998 Net sales $ 105,587 $196,081 $140,628 $158,381 $600,677 Gross margin 26,489 49,248 36,433 42,468 154,638 Income (loss) from operations (1,710) 16,273 4,486 9,513 28,562 Net income (loss) (1,502) 9,168 2,137 4,997 14,800 Net income (loss) per share - basic (.17) 1.05 .24 .57 1.69 Net income (loss) per share - assuming dilution (.17) 1.04 .24 .56 1.68
13 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain items in the Company's Statements of Income expressed as a percentage of net sales:
FISCAL YEAR ENDED -------------------------------------------------------------------------- JANUARY 1, DECEMBER 26, DECEMBER 27, DECEMBER 28, DECEMBER 30, 2000 1998 1997 1996 1995 -------------------------------------------------------------------------- Net sales 100.0% 100.0% 100.0% 100.0% 100.0% Cost of merchandise sold 73.7 74.3 74.2 74.0 74.3 -------------------------------------------------------------------------- Gross margin 26.3 25.7 25.8 26.0 25.7 Selling, general and administrative expenses 20.3 20.1 20.5 19.8 19.2 Depreciation and amortization 1.0 0.9 0.9 0.8 0.6 -------------------------------------------------------------------------- Income from operations 5.0 4.7 4.4 5.4 5.9 Interest expense, net .6 0.5 0.5 0.5 0.4 -------------------------------------------------------------------------- Income before income taxes 4.4 4.2 3.9 4.9 5.5 Income tax provision 1.8 1.7 1.6 2.0 2.2 -------------------------------------------------------------------------- Net income 2.6% 2.5% 2.3% 2.9% 3.3% ==========================================================================
FISCAL 1999 COMPARED TO FISCAL 1998 Net sales increased 14.6% to $688.1 million in fiscal 1999 from $600.7 million in fiscal 1998. This increase resulted primarily from new store openings and relocations, and, to a lesser extent, a comparable store sales increase of 4.4% (calculated on a 52-week basis, excluding relocations, using all stores open at least one year) and an additional week of operations (due to the Company's fiscal year-end). Comparable store sales for fiscal 1999 benefited from the "remerchandising" of the remaining approximately 60% of the inside of all stores, consisting of the entire "left-side" of the store (including tools, hardware, plumbing, electrical, paint, truck accessories, towing accessories and lubricant departments) and portions of the center aisle (mainly electrical fencing) and "agricultural sections" (including tractor parts and the equine department) as well as the new and more aggressive marketing programs. The Company opened 31 new stores, closed one store and relocated one store in fiscal 1999. The Company opened 15 new stores and relocated one store during fiscal 1998. At January 1, 2000, the Company operated 273 retail farm stores versus 243 stores at the end of the prior fiscal year. In early fiscal 2000, the Company plans to remerchandise the tool corral area (consisting primarily of compressors, welders, pressure washers, generators and hand tools), improve product assortments in fencing and core agricultural maintenance products and expand product offerings in the equine, pet and bird feeding departments. This strategy reflects the Company's continued belief, supported by the results of fiscal 1999 and 1998, that such efforts will rejuvenate the stores, create excitement with the customers and store associates and build stronger comparable store sales. The gross margin rate increased .6 percentage points to 26.3% of sales in fiscal 1999 from 25.7% in fiscal 1998. This increase is primarily due to remerchandising efforts and better product assortments, as well as lower costs from increased buying leverage through vendor consolidation. As a percent of sales, selling, general and administrative expenses increased .2 percentage points to 20.3% for fiscal 1999 from 20.1% for fiscal 1998. On an absolute basis, selling, general and administrative expenses increased 15.7% to $139.7 million for fiscal 1999 from $120.7 million in fiscal 1998. The increase in expenses on a percentage-of-sales basis is primarily as a result of costs associated with new stores, the incremental costs of certain planned infrastructure investments as well as the leverage loss attributable to the lower than anticipated comparable store sales performance. The increase in absolute dollars is primarily due to costs associated with new store openings (new stores have 14 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS considerably higher occupancy costs, primarily rent, than the existing store base), as well as an additional week of operating expenses (fiscal 1999 reflects 53 weeks of operations compared to fiscal 1998 which is comprised of 52 weeks) and a non-recurring expense of approximately $1 million relating to the Company's relocation of two of its distribution centers. During fiscal 1998, the Company began an annual major media advertising program which includes a national television campaign featuring a celebrity spokesperson, significantly expanded use of radio promotions and increased print advertising. This program is funded each year through the support of the Company's vendor partners. During fiscal 1999, the Company received marketing support funds totaling approximately $11.9 million from certain of its vendors to cover a portion of the costs of these new programs. Depreciation and amortization expense increased 36.9% over the prior year due mainly to costs associated with new and relocated stores and increased investment in infrastructure (mainly the merchandise and warehouse management system). Net interest expense increased 25.5% in fiscal 1999 from fiscal 1998. The increase in interest expense reflects additional borrowings under the Credit Agreement to fund the Company's growth and expansion plans, resulting in a higher average outstanding debt balance in fiscal 1999 compared to fiscal 1998. The Company's effective tax rate decreased 0.9 percentage points to 40.6% in fiscal 1999 from 41.5% in fiscal 1998 primarily due to a lower effective state income tax rate in fiscal 1999. As a result of the foregoing factors, net income increased 20.8% to $17.9 million in fiscal 1999 from $14.8 million in fiscal 1998. As a percent of sales, net income increased 0.1 percentage point to 2.6% of sales in fiscal 1999 from 2.5% of sales in fiscal 1998. FISCAL 1998 COMPARED TO FISCAL 1997 Net sales increased 18.0% to $600.7 million in fiscal 1998 from $509.1 million in fiscal 1997. This increase resulted primarily from a comparable store sales increase of 10.9% (calculated on a 52-week basis, excluding relocations, using all stores open at least one year) and, to a lesser extent, new store openings and relocations. Comparable store sales for fiscal 1998 benefited from the "remerchandising" of the "right side" (including expanding the equine, pet supplies, animal health and feed departments and refining the apparel and agricultural supplies departments) and portions of the "center aisle" (mainly enhancing the lawn and garden departments) of all stores early in fiscal 1998, the new and more aggressive marketing programs, an improved inventory in-stock position and favorable spring season and later winter weather conditions. The Company opened 15 new stores and relocated one store during fiscal 1998. The Company opened 22 new stores, closed two stores and relocated one store in fiscal 1997. At December 26, 1998, the Company operated 243 retail farm stores versus 228 stores at the end of the prior fiscal year. The gross margin rate decreased .1 percentage point to 25.7% of sales in fiscal 1998 from 25.8% in fiscal 1997. This decrease resulted primarily from lower gross margin rates in certain product categories (mainly due to additional seasonal markdowns and more aggressive promotional activities, principally additional discounting of select items in the Company's print advertising and additional discounting associated with the new stores' grand openings), offset, in part, by leverage improvements in both freight and shrinkage expense. As a percent of sales, selling, general and administrative expenses decreased .4 percentage points to 20.1% for fiscal 1998 from 20.5% for fiscal 1997. On an absolute basis, selling, general and administrative expenses increased 15.4% to $120.7 million for fiscal 1998 from $104.7 million in fiscal 1997. The decrease in expenses on a percentage-of-sales basis resulted primarily from the Company's on-going efforts to control increases in its operating expenses as well as from the leverage gain attributable to the strong comparable store sales performance. The increase in absolute dollars was primarily 15 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS attributable to costs associated with new store openings (new stores have considerably higher occupancy costs, primarily rent, than the existing store base), as well as higher incentive accruals. During fiscal 1998, the Company implemented new marketing and advertising programs including (i) increased print advertising (ii) significantly expended radio advertising, and (iii) for the first time, a national television advertising campaign featuring John Lyons, renowned horse trainer and national equine spokesman for the Company, and George Strait, renowned country music entertainer and national spokesman for the Company. The Company received marketing support funds totaling approximately $8.5 million from certain of its vendors to cover a portion of the costs of these new programs. Depreciation and amortization expense increased 18.5% over the prior year due mainly to costs associated with new and relocated stores. Net interest expense increased 34.1% in fiscal 1998 from fiscal 1997. The increase in interest expense reflects additional borrowings to fund the Company's growth and expansion plans, resulting in a higher average outstanding debt balance in fiscal 1998 compared to fiscal 1997. The Company's effective tax rate increased 0.5 percentage points to 41.5% in fiscal 1998 from 41.0% in fiscal 1997 primarily due to a higher effective state income tax rate in fiscal 1998. As a result of the foregoing factors, net income increased 25.8% to $14.8 million in fiscal 1998 from $11.8 million in fiscal 1997. As a percent of sales, net income increased 0.2 percentage points to 2.5% of sales in fiscal 1998 from 2.3% of sales in fiscal 1997. LIQUIDITY AND CAPITAL RESOURCES In addition to normal operating expenses, the Company's primary ongoing cash requirements are those necessary for the Company's expansion, remodeling and relocation programs, including inventory purchases and capital expenditures. The Company's primary ongoing sources of liquidity are funds provided from operations, commitments available under its credit agreement and short-term trade credit. The Company's inventory and accounts payable levels typically build in the first and again in the third fiscal quarters in anticipation of the spring and fall selling seasons. At January 1, 2000, the Company's inventories had increased $35.6 million to $207.3 million from $171.7 million at December 26, 1998. This increase was primarily attributable to additional inventory for new stores, planned inventory increases in seasonal product lines, as well as unplanned inventory increases in certain basic goods and other seasonal product lines (due to problems encountered with the Company's new replenishment system). Short-term trade credit, which represents a source of financing for inventory, decreased $1.1 million to $59.8 million at January 1, 2000 from $60.9 million at December 26, 1998. Trade credit arises from the Company's vendors granting extended payment terms for inventory purchases. Payment terms vary from 30 days to 180 days depending on the inventory product. At January 1, 2000, the Company had working capital of $117.3 million, which represented a $21.8 million increase from December 26, 1998. This increase resulted primarily from an increase in inventory (attributable mainly to the factors described above) without a corresponding increase in accounts payable, offset, in part, by an increase in accrued expenses (mainly incremental costs relating to new stores) and a decrease in cash and cash equivalents. The Company's working capital increased $12.6 million in fiscal 1998 to $95.5 million from $82.9 million in fiscal 1997. This increase resulted primarily from an increase in inventory without a corresponding increase in accounts payable, an increase in cash and cash equivalents and an increase in prepaid expenses (mainly construction-in-progress costs pertaining to planned sale/leaseback transactions respecting certain 1999 new stores) offset, in part, by an increase in accrued expenses (mainly incremental costs relating to new stores and incentives) and an increase in current debt maturities (attributable mainly to the Company's new fixed-rate term loan agreement). 16 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In March 1998, the Company entered into an amendment (the "Second Amendment") to its existing revolving credit agreement with BankBoston, N.A. (successor to First National Bank of Boston), a national banking association, as agent, and for itself, in its capacity as a lender thereunder, First American National Bank, a national banking association, and SunTrust Bank Nashville, N.A. ("SunTrust"), a national banking association Bank (the "Credit Agreement"), whereby the Company (i) increased the maximum total commitments available under the Credit Agreement from $45 million to $60 million and (ii) extended the expiration date of the Credit Agreement from August 31, 1999 to August 31, 2002 (the date upon which any remaining borrowings must be repaid). In November 1999, the Company entered into an amendment (the "Third Amendment") to its Credit Agreement with SunTrust (replaced Bank Boston, N.A. as agent), as agent, and for itself, in its capacity as a lender thereunder, AmSouth Bank (successor to First American National Bank), a national banking association, and Bank of America, a national banking association, whereby the Company (i) increased the maximum total commitments available under the Credit Agreement from $60 million to $75 million. At January 1, 2000, the Company had $38.1 million of borrowings outstanding under the Credit Agreement. The Company expects to continue borrowing amounts under the Credit Agreement from time to time to fund its growth and expansion programs and as a source of additional working capital. In June 1998, the Company entered into a new loan agreement (the "Loan Agreement") and term note (the "Term Note") with SunTrust pursuant to which the Company borrowed $15 million. The Term Note bears interest at the rate of 6.75% per annum until its maturity in June 2005. The Term Note requires monthly payments equal to $178,572, plus accrued interest, through June 2005. There are no compensating balance requirements associated with the Loan Agreement. The Loan Agreement is unsecured. The Loan Agreement contains certain restrictions regarding additional indebtedness; employee loans; business operations; guarantees; investments; mergers, consolidations and sales of assets; transactions with subsidiaries; and liens. In addition, the Company must comply with certain quarterly restrictions regarding net worth, working capital, ratios of total liabilities to net worth and interest coverage and current ratio requirements. Operations used net cash of $7.7 million in fiscal 1999, provided net cash of $15.5 million in fiscal 1998 and used net cash of $5.1 million in fiscal 1997. The cash used in fiscal 1999 resulted primarily from inventories increasing at a faster rate than accounts payable compared to the prior year, offset, in part, by an increase in net income and an increase in accrued expenses (mainly incremental costs relating to new stores). The generation of cash in fiscal 1998 resulted primarily from an increase in accrued expenses (mainly due to higher incentive accruals), an increase in net income and, to a lesser extent, an increase in income taxes currently payable compared to fiscal 1997 due to timing of payments, offset, in part, by inventories increasing at a slower rate than accounts payable compared to the prior year. Cash used in investing activities of $19.6 million, $14.3 million and $7.5 million for fiscal 1999, 1998 and 1997, respectively, resulted primarily from capital expenditures for new, relocated and remodeled stores and for new merchandise and warehouse management systems (in 1998 and, to a lesser extent, in 1999), partially offset by proceeds from the sale of certain properties (primarily land and buildings). Financing activities in fiscal 1999 provided $16.1 million in cash which represented a $7.6 million increase over the $8.5 million in cash provided in fiscal 1998. This increase resulted primarily from borrowings of $19.1 million under the Credit Agreement in fiscal 1999 compared to net repayments of approximately $4.4 million under the Credit Agreement and borrowings of $15.0 million under the Loan Agreement in fiscal 1998 offset, in part, by scheduled repayments under the Term Note, long-term debt and capital lease obligations totaling approximately $3.5 million in fiscal 1999 versus approximately $2.4 million in fiscal 1998. Financing activities in fiscal 1998 provided $8.5 million in cash which represented a $.3 million increase over the $8.2 million in cash provided in fiscal 1997. This increase resulted primarily from borrowings of $15.0 million under the Loan Agreement in fiscal 1998 compared to net borrowings of approximately $11.4 million under the Credit Agreement in fiscal 1997, offset, in part, by net repayments of approximately $4.4 million under the Credit Agreement and scheduled repayments of long-term debt and capital lease obligations totaling approximately 2.4 million in 1998 versus approximately $1.7 million in fiscal 1997. 17 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's capital additions were $20.4 million, $14.5 million and $9.1 million in fiscal 1999, 1998 and 1997, respectively. The majority of the capital additions were for store fixtures, equipment and leasehold improvements for new stores and remodeling of existing stores as well as the new merchandise and warehouse management system. The Company expects that its capital expenditures for fiscal 2000 will be approximately $25.0 million to $27.0 million, consisting primarily of leasehold improvements and, to a lesser extent, fixtures and equipment, assuming successful implementation of its growth strategy through approximately 40 to 45 planned new store openings. However, the Company cannot predict with certainty the amount of such expenditures because such new stores may be constructed, leased or acquired from others. The estimated cash required to open a new store is approximately $.8 to $1.0 million, the majority of which is for the initial acquisition of inventory and capital expenditures, principally leasehold improvements, fixtures and equipment, and the balance of which is for store opening expenses. During fiscal 1998, the Company made substantial progress in its planned installation of a new merchandise and warehouse management system. In February 1999, the Company concluded the remaining conversion effort and completed the system installation, thus achieving full Year 2000 compliance for its remaining processing systems. This installation was the one remaining significant requirement for the Company to achieve Year 2000 compliance prior to the need to execute transactions with Year 2000 implications (the processing concern created by the change in the century and the traditional two-digit year fields embedded in most data processing systems is commonly referred to as the "Year 2000" issue). The total cost for the full installation of this system was approximately $10.0 million. Since the completion of the implementation and subsequent to the end of fiscal 1999, the Company has not experienced any difficulties or observed any malfunctions in its systems relating to a Year 2000 issue. The Company believes that its cash flow from operations, borrowings available under the Credit Agreement and short-term trade credit will be sufficient to fund the Company's operations and its growth and expansion plans over the next several years. Management does not believe its operations have been materially affected by inflation. The Company has been successful, in many cases, in reducing or mitigating the effects of inflation principally by taking advantage of vendor incentive programs, economies of scale from increased volume of purchases and selective buying from the most competitive vendors without sacrificing quality. 18 16 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Tractor Supply Company In our opinion, the accompanying balance sheets and the related statements of income, of changes in stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Tractor Supply Company at January 1, 2000 and December 26, 1998, and the results of its operations and its cash flows for each of the three years in the period ended January 1, 2000, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PRICEWATERHOUSECOOPERS LLP [LOGO] Nashville, Tennessee January 24, 2000 19 17 BALANCE SHEETS (In thousands, except share amounts)
JANUARY 1, DECEMBER 26, 2000 1998 - -------------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 6,991 $ 18,201 Accounts receivable, net 6,765 5,578 Inventories 207,325 171,749 Prepaid expenses 4,845 6,301 ----------------------------- Total current assets 225,926 201,829 ----------------------------- Land 6,449 6,871 Buildings and improvements 58,135 49,437 Machinery and equipment 39,885 23,121 Construction in progress 4,514 8,818 ----------------------------- 108,983 88,247 Accumulated depreciation and amortization (35,270) (28,339) ----------------------------- Property and equipment, net 73,713 59,908 ----------------------------- Deferred income taxes 999 1,426 Other assets 1,992 1,486 ----------------------------- Total assets $ 302,630 $ 264,649 ============================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 59,764 $ 60,900 Accrued expenses 34,037 29,610 Current maturities of long-term debt 3,048 3,138 Current portion of capital lease obligations 279 553 Income taxes currently payable 4,135 4,134 Deferred income taxes 7,357 7,964 ----------------------------- Total current liabilities 108,620 106,299 ----------------------------- Revolving credit loan 38,126 19,000 Term loan 9,821 11,786 Other long-term debt 3,456 4,361 Capital lease obligations 3,280 1,985 Other long-term liabilities 487 527 Excess of fair value of assets acquired over cost less accumulated amortization of $3,055 and $2,875, respectively 535 715 Commitments (Note 5) Stockholders' equity: Common stock, 100,000,000 shares authorized; $.008 par value; 8,769,106 and 8,748,105 shares issued and outstanding in 1999 and 1998, respectively 70 70 Additional paid-in capital 42,668 42,213 Retained earnings 95,567 77,693 ----------------------------- Total stockholders' equity 138,305 119,976 ----------------------------- Total liabilities and stockholders' equity $ 302,630 $ 264,649 =============================
The accompanying notes are an integral part of this statement. 20 18 STATEMENTS OF INCOME (in thousands, except per share amounts)
FOR THE FISCAL YEAR ENDED ------------------------------------------------ JANUARY 1, DECEMBER 26, DECEMBER 27, 2000 1998 1997 ------------------------------------------------ Net sales $688,082 $600,677 $509,052 Cost of merchandise sold 506,831 446,039 377,510 -------------------------------------------- Gross margin 181,251 154,638 131,542 Selling, general and administrative expenses 139,725 120,734 104,661 Depreciation and amortization 7,311 5,342 4,509 -------------------------------------------- Income from operations 34,215 28,562 22,372 Interest expense, net 4,104 3,270 2,439 -------------------------------------------- Income before income taxes 30,111 25,292 19,933 Income tax provision 12,237 10,492 8,172 Net income $ 17,874 $ 14,800 $ 11,761 ============================================ Net income per share - basic $ 2.04 $ 1.69 $ 1.34 ============================================ Net income per share - assuming dilution $ 2.02 $ 1.68 $ 1.34 ============================================
The accompanying notes are an integral part of this statement. 21 19 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands)
ADDITIONAL TOTAL COMMON PAID-IN RETAINED STOCKHOLDERS' STOCK CAPITAL EARNINGS EQUITY ------------------------------------------------------------ Stockholders' equity at December 28, 1996 $ 70 $41,685 $ 51,211 $ 92,966 Preferred stock dividend (79) (79) Issuance of common stock under employee stock purchase plan (13,218 shares) 241 241 Net income 11,761 11,761 ----------------------------------------------------------- Stockholders' equity at December 27, 1997 70 41,926 62,893 104,889 Issuance of common stock under employee stock purchase plan (16,887 shares) 287 287 Net income 14,800 14,800 ----------------------------------------------------------- Stockholders' equity at December 26, 1998 70 42,213 77,693 119,976 Issuance of common stock under employee stock purchase plan (13,752 shares) 298 298 Exercise of stock options (7,249 shares) 157 157 Net income 17,874 17,874 ----------------------------------------------------------- Stockholders' equity at January 1, 2000 $ 70 $42,668 $ 95,567 $ 138,305 -----------------------------------------------------------
The accompanying notes are an integral part this statement. 22 20 STATEMENTS OF CASH FLOWS (in thousands)
FOR THE FISCAL YEAR ENDED ------------------------------------------------ JANUARY 1, DECEMBER 26, DECEMBER 27, 2000 1998 1997 ------------------------------------------------ Cash flows from operating activities: Net income $ 17,874 $ 14,800 $ 11,761 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 7,311 5,342 4,509 Loss (gain) on disposition of property and equipment (104) 1,353 (23) Deferred income taxes (180) (1,816) (99) Change in assets and liabilities: Accounts receivable (1,187) (398) (326) Inventory (35,576) (20,000) (27,667) Prepaid expenses 1,456 (2,100) (2,555) Accounts payable (1,136) 8,192 5,117 Accrued expenses 4,427 8,422 5,236 Income taxes currently payable 1 1,824 (551) Other (605) (131) (539) --------------------------------------------- Net cash provided by (used in) operating activities (7,719) 15,488 (5,137) --------------------------------------------- Cash flows from investing activities: Capital expenditures (20,368) (14,505) (9,120) Proceeds from sale of property and equipment 816 233 1,636 --------------------------------------------- Net cash used in investing activities (19,552) (14,272) (7,484) --------------------------------------------- Cash flows from financing activities: Net borrowings (repayment) under revolving credit loan 19,126 (4,419) 11,419 Borrowings under term loan agreement -- 15,000 -- Repayment under term loan agreement (1,965) (893) -- Principal payments under capital lease obligations (560) (731) (1,003) Repayment of long-term debt (995) (736) (665) Net proceeds from sale of common stock 455 287 241 Redemption of preferred stock -- -- (1,763) Payment of preferred stock dividend -- -- (79) --------------------------------------------- Net cash provided by financing activities 16,061 8,508 8,150 --------------------------------------------- Net increase (decrease) in cash (11,210) 9,724 (4,471) Cash and cash equivalents at beginning of year 18,201 8,477 12,948 --------------------------------------------- Cash and cash equivalents at end of year $ 6,991 $ 18,201 $ 8,477 ============================================= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (NOTE 1): Cash paid during the year for: Interest $ 4,026 $ 3,231 $ 2,583 Income taxes 12,937 10,310 8,643 Non-cash investing and financing activities: Capital lease-buildings 1,581 -- --
The accompanying notes are an integral part of this statement. 23 21 NOTES TO FINANCIAL STATEMENTS NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: Nature of Business Tractor Supply Company is a specialty retailer which supplies the daily farming and maintenance needs of its target customers: hobby, part-time and full-time farmers and ranchers, as well as rural customers, contractors and tradesmen. The Company, which was founded in 1938, operated 273 retail farm stores in 26 states as of January 1, 2000. Fiscal Year The Company's fiscal year ends on the Saturday closest to December 31. Fiscal year 1999 consists of 53 weeks, while fiscal years 1998 and 1997 consist of 52 weeks. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles inherently requires estimates and assumptions by management that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures. Actual results could differ from those estimates. Fair Value of Financial Instruments The Company has cash and cash equivalents, short-term trade receivables and payables and long-term debt instruments, including capital leases. The carrying values of cash and cash equivalents, trade receivables and trade payables equal current fair value. The terms of the Company's revolving credit agreement include variable interest rates, which approximate current market rates. The terms of the Company's term loan agreement include a fixed interest rate, which approximates current market rates. The Company's fixed rate debt has an approximate current value of $4.5 million, bearing interest at 10.32% which is above current rates available; however, the related debt agreement includes certain pre-payment penalties which make refinancing uneconomical (Notes 2, 3 and 4). Inventories Inventories, which consist primarily of farm maintenance and animal products, general maintenance products, lawn and garden products, light truck equipment and work clothing, are stated at cost, which is less than market value, with cost being determined on the last-in, first-out (LIFO) method. If the first-in, first-out (FIFO) method of accounting for inventory had been used, inventories would have been approximately $4,680,000 and $6,497,000 higher than reported at January 1, 2000 and December 26, 1998, respectively. Net Income Per Share In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 - Earnings per Share ("SFAS 128"). SFAS 128 requires companies with complex capital structures that have publicly held common stock or common stock equivalents to present both basic and diluted earning per share ("EPS") on the face of the income statement. Basic EPS is calculated as income available to common stockholders divided by the weighted average number of shares outstanding during the period. Diluted EPS (previously referred to as fully diluted EPS) is calculated using the "if converted" method for convertible securities and the treasury stock method for options and warrants as prescribed by APB 15 (Note 8). Excess of Fair Value of Assets Acquired Over Cost On December 26, 1982, the Company began operations with the acquisition of certain assets and assumption of certain obligations. The unallocated excess of fair value of assets acquired over cost was approximately $3,590,000 and is being amortized over 20 years on a straight-line basis. 24 22 NOTES TO FINANCIAL STATEMENTS Property and Equipment The Company owns the land and buildings of 74 of its stores. Property and equipment are carried at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Generally, buildings are depreciated over 31 years and machinery and equipment is depreciated over seven years. Revenue Recognition The Company recognizes revenue at the time of customer purchase. Income Taxes The Company accounts for income taxes using the liability method, whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Store Opening Costs Costs incurred in connection with opening new stores are expensed as incurred. Advertising Costs Advertising costs primarily consist of expenses incurred in connection with newspaper circulars and, to a lesser extent, radio and newspaper advertisements and other promotions. Expenses incurred are charged to operations at the time the related advertising first takes place. Advertising expense for fiscal 1999, 1998 and 1997 was approximately $8,806,000, $9,239,000, and, $8,771,000, respectively. Stock-based Compensation Plans The Company applies APB Opinion 25 and related Interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized for its fixed stock option plan and its stock purchase plan (Note 11). Cash Flows The Company considers temporary cash investments, with an original maturity of three months or less, to be cash equivalents. NOTE 2 - REVOLVING CREDIT AGREEMENT: In July 1996, the Company entered into an amendment (the "First Amendment") to its existing revolving credit agreement with The First National Bank of Boston, as agent and for itself (the "Agent") and First American National Bank (the "Credit Agreement), whereby the Company (i) increased the maximum total commitments available under the Credit Agreement from $30 million to $45 million and (ii) extended the expiration date of the Credit Agreement from August 31, 1997 to August 31, 1999 (the date upon which any remaining borrowings must be repaid). There were no changes to any of the other material terms and conditions of the Credit Agreement as a result of the First Amendment. In March 1998, the Company entered into an amendment (the "Second Amendment") to its Credit Agreement with BankBoston, N.A. (successor to The First National Bank of Boston), a national banking association, as agent, and for itself, in its capacity as a lender thereunder, First American National Bank, a national banking association, and SunTrust Bank Nashville, N.A. ("SunTrust"), a national banking association, whereby the Company (i) increased the maximum total commitments available under the Credit Agreement from $45 million to $60 million and (ii) extended the expiration date of the Credit Agreement from August 31, 1999 to August 31, 2002 (the date upon which any remaining borrowings must be repaid). There were no changes to any of the other material terms and conditions of the Credit Agreement as a result of the Second Amendment, provided, however, that the financial covenants must be tested quarterly as of the end of each fiscal quarter, based on a rolling four-quarters basis, rather than at the end of each fiscal year. 25 23 NOTES TO FINANCIAL STATEMENTS In November 1999, the Company entered into an amendment (the "Third Amendment") to its Credit Agreement with SunTrust (replaced Bank Boston, N.A. as agent), as agent, and for itself, in its capacity as a lender thereunder, AmSouth Bank (successor to First American National Bank), a national banking association, and Bank of America, a national banking association, whereby the Company (i) increased the maximum total commitments available under the Credit Agreement from $60 million to $75 million. There were no changes to any of the other material terms and conditions of the Credit Agreement as a result of the Third Amendment. All borrowings under the Credit Agreement bear interest, at the Company's option, at either the base rate of the Agent (8.50% at January 1, 2000) plus .25% per annum or the LIBOR rate (5.82% at January 1, 2000) plus .75% per annum provided, however, that upon the occurrence of certain events, the interest rate increases to the base rate of the Agent plus .50% per annum or the LIBOR rate plus 1.0% per annum. The Company is also required to pay, quarterly in arrears, a commitment fee of .25% per annum on the average daily unused portion of the credit line. There are no compensating balance requirements associated with the Credit Agreement. The Credit Agreement is unsecured. The Credit Agreement contains certain restrictions regarding additional indebtedness; employee loans; business operations; guarantees; investments; mergers, consolidations and sales of assets; transactions with subsidiaries or affiliates; and liens. In addition, the Company must comply with certain quarterly restrictions (based on a rolling fourquarters basis) regarding net worth, working capital, ratios of total liabilities to net worth and interest coverage and current ratio requirements. The Company was in compliance with all covenants at January 1, 2000. NOTE 3 - TERM LOAN AGREEMENT: In June 1998, the Company entered into a new loan agreement (the "Loan Agreement") and term note (the "Term Note") with SunTrust pursuant to which the Company borrowed $15 million. The Term Note bears interest at the rate of 6.75% per annum until its maturity in June 2005. The Term Note requires monthly payments equal to $178,572, plus accrued interest, through June 2005. There are no compensating balance requirements associated with the Loan Agreement. The Loan Agreement is unsecured. The Loan Agreement contains certain restrictions regarding additional indebtedness; employee loans; business operations; guarantees; investments; mergers, consolidations and sales of assets; transactions with subsidiaries; and liens. In addition, the Company must comply with certain quarterly restrictions regarding net worth, working capital, ratios of total liabilities to net worth and interest coverage and current ratio requirements. The Company was in compliance with all covenants at January 1, 2000. NOTE 4 - OTHER LONG-TERM DEBT: Other long-term debt consists of the following (in thousands):
JANUARY 1, DECEMBER 26, 2000 1998 - -------------------------------------------------------------- Mortgage Notes $ 4,361 $ 5,177 Less: current maturities (905) (816) -------------------------------- $ 3,456 $ 4,361 ================================
In April 1988, the Company issued notes (the "Mortgage Notes") to Mutual Life Insurance Company of New York and MONY Life Insurance Company of America pursuant to a Note Agreement which was amended in April 1991, February 1992 and July 1993 (the "Mortgage Loan Agreement"). The Mortgage Notes bear interest at a minimum 10.32% rate until their maturity in January 2004. The Mortgage Notes require monthly payments, including interest, of approximately $109,000 through January 2004. 26 24 NOTES TO FINANCIAL STATEMENTS The Mortgage Loan Agreement is secured by first mortgages on certain of the Company's existing properties. The Mortgage Loan Agreement contains certain restrictions regarding sales of assets, mergers, consolidations, investments, sales or discounting of receivables, operating leases and, unless the Company satisfies certain net income, indebtedness and tangible net worth tests, cash dividends on and redemptions of capital stock. In addition, the Company must comply with certain restrictions regarding tangible net worth, working capital, funded debt, ratios of indebtedness to capitalization, FIFO inventory to current debt, interest coverage, fixed charge coverage, earnings coverage and current ratio requirements. As a result of increased capital expenditures in 1999 (primarily for software installations and Y2K remediation efforts), the Company was not in compliance with the annual fixed charge coverage ratio at January 1, 2000. The Company has received a waiver through December 29, 2000. The Company was in compliance with all other restrictions at January 1, 2000. The combined aggregate maturities of the Mortgage Notes are as follows (in thousands): 2000 $ 905 2001 1,003 2002 1,112 2003 1,232 2004 109
NOTE 5 - LEASES: The Company leases office, warehouse/distribution and retail space, transportation equipment and other equipment under various noncancelable operating leases. The leases have varying terms and expire at various dates through October 2017. The store leases typically have initial terms of between 10 and 15 years, with one to three renewal periods of five years each, exercisable at the Company's option. Generally, most of the leases require the Company to pay taxes, insurance and maintenance costs. Rent expense for all noncancelable operating leases for fiscal 1999, 1998 and 1997 was approximately $37,041,000, $32,421,000, and $27,557,000, respectively. Future minimum payments, by year and in the aggregate, under leases with initial or remaining terms of one year or more consist of the following (in thousands):
CAPITAL OPERATING LEASES LEASES - -------------------------------------------------------------------------- 2000 $ 630 $ 24,461 2001 630 23,904 2002 630 21,287 2003 628 20,241 2004 586 18,670 Thereafter 4,405 103,445 ---------------------- Total minimum lease payments 7,509 $212,008 ======== Amount representing interest (3,950) ------ Present values of net minimum lease payments 3,559 Less: current portion (279) ------ Long-term capital lease obligations $3,280 ======
27 25 NOTES TO FINANCIAL STATEMENTS NOTE 6 - INCOME TAXES: The provision for income taxes consists of the following (in thousands):
1999 1998 1997 - ---------------------------------------------------------------- Current tax expense: Federal $ 9,774 $ 10,111 $ 6,720 State 2,643 2,197 1,551 ------------------------------------- Total current 12,417 12,308 8,271 ------------------------------------- Deferred tax expense: Federal (172) (1,671) (116) State (8) (145) 17 ------------------------------------- Total deferred (180) (1,816) (99) ------------------------------------- Total provision $ 12,237 $ 10,492 $ 8,172 =====================================
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows (in thousands):
JANUARY 1, DECEMBER 26, 2000 1998 - -------------------------------------------------------------------------- Current tax assets: Inventory valuation $ 5,647 $ 4,367 Other 2,081 2,509 ---------------------- 7,728 6,876 ---------------------- Current tax liabilities: Inventory basis difference 14,230 14,186 Other 855 654 ---------------------- 15,085 14,840 ---------------------- Net current tax liabilities $ 7,357 $ 7,964 ====================== Non-current tax assets: Capital lease obligation basis difference $ 1,338 $ 807 Fixed assets basis difference 274 319 Other 1,907 1,629 ---------------------- 3,519 2,755 ---------------------- Non-current tax liabilities: Depreciation 1,569 954 Capital lease assets basis difference 951 375 ---------------------- 2,520 1,329 ---------------------- Net non-current tax assets $ 999 $ 1,426 ======================
28 26 NOTES TO FINANCIAL STATEMENTS A reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate is as follows (in thousands):
1999 1998 1997 - ------------------------------------------------------------------------------------------ Tax provision at statutory rate $ 10,539 $ 8,852 $ 6,977 Tax effect of: State income taxes, net of federal tax benefit 1,721 1,432 1,008 Amortization of negative goodwill (63) (63) (63) Other 40 271 250 ------------------------------------ $ 12,237 $ 10,492 $ 8,172 ====================================
A substantial portion of the current deferred tax liability of the Company relates to the tax treatment of certain inventory and other assets acquired by the Company in connection with an acquisition in 1982. Recent cases cast some doubt as to whether the Company's tax position with respect to such inventory and other assets would be sustained if challenged. If the Company were challenged on its tax position, no assurance can be given as to the outcome. However, the Company believes, based upon its understanding of the resolution of similar situations by others, that it has established adequate reserves and that, accordingly, resolution of this issue would not have a material adverse effect on its results of operations or financial position. NOTE 7 - CAPITAL STOCK: The authorized capital stock of the Company consists of common stock and preferred stock. In April 1997, the stockholders of the Company approved an amendment to the Company's Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of Common Stock from 9,500,000 shares to 100,000,000 shares. The Company is also authorized to issue 40,000 shares of Preferred Stock, with such designations, rights and preferences as may be determined from time to time by the Board of Directors. In May 1991, in accordance with a Plan of Reorganization and Exchange Agreement, the Company reacquired 2,890,151 shares of common stock in exchange for 5,875 shares of Series B Preferred Stock (the "Preferred Stock") and cash. The Preferred Stock has a par value of $1 per share and a stated value and liquidation preference of $1,000 per share. Dividends on the Preferred Stock are cumulative and payable semi-annually on May 1st and November 1st at a rate of 8.0% per annum on the stated value of the outstanding shares, increasing to 10% on May 1, 1999, 11% on May 1, 2000, 12% on May 1, 2001 and 13% thereafter. On May 26, 1995, the Company repurchased 2,350 shares of the Series B Preferred Stock at a total repurchase price of approximately $2,363,000 (including accrued dividends totaling approximately $13,000). On May 24, 1996, the Company repurchased 1,762 shares of the Series B Preferred Stock at a total repurchase price of approximately $1,771,000 (including accrued dividends totaling approximately $9,000). On May 23, 1997, the Company repurchased the remaining 1,763 shares of the Series B Preferred Stock at a total repurchase price of approximately $1,772,000 (including accrued dividends totaling approximately $9,000). 29 27 NOTES TO FINANCIAL STATEMENTS NOTE 8 - NET INCOME PER SHARE: Net income per share is calculated as follows (in thousands, except per share amounts):
1999 ---------------------------------- PER SHARE INCOME SHARES AMOUNT - -------------------------------------------------------------------------- Basic net income per share: Net income $17,874 8,761 $2.04 Stock options outstanding 75 ----- -------------------- Diluted net income per share $17,874 8,836 $2.02 ================================ 1998 ---------------------------------- PER SHARE INCOME SHARES AMOUNT - -------------------------------------------------------------------------- Basic net income per share: Net income $14,800 8,742 $1.69 Stock options outstanding 68 ----- -------------------- Diluted net income per share $14,800 8,810 $1.68 ================================ 1997 ---------------------------------- PER SHARE INCOME SHARES AMOUNT - -------------------------------------------------------------------------- Basic net income per share: Net income $11,761 Less: preferred stock dividends (57) ------- $11,704 8,725 $1.34 Stock options outstanding -- ----- Diluted net income per share $11,704 8,725 $1.34 ================================
NOTE 9 - RELATED PARTY TRANSACTIONS: In 1986, the Company entered into capitalized sale-leaseback transactions with certain officers of the Company for seven of its stores. The Company sold, leased back and provided the financing for seven of its real properties at estimated fair values totaling $2,575,000. The related gains arising from the sale of these properties have been deferred and are being amortized on a straight-line basis over the terms of the related leases. Properties under capital leases acquired through sale-leaseback transactions have been reduced by the related deferred gains on the properties and are classified with property and equipment. The leases have basic terms of 20 years with options to renew for two successive five-year terms. The Company has an option to purchase the leased properties after December 31, 1995. Rent payments under these leases were approximately $425,000 in fiscal 1999, 1998 and 1997. All the officers have repaid their outstanding obligations under these notes to the Company. The balance of these capitalized lease obligations, included in total capital lease obligations at January 1, 2000, was $1,396,000. The Company leases its management headquarters from a partnership in which certain stockholders of the Company are general partners. The remaining lease term is ten years, with the Company having exercised both remaining five-year renewal options in fiscal 1996, with monthly rent set at $35,000 and $39,000 per month, respectively. Rent payments under this lease were $420,000 in fiscal 1999 and $417,000 in fiscal 1998 and 1997. 30 28 NOTES TO FINANCIAL STATEMENTS The Company leased one of its stores from a corporation in which certain executive officers and directors of the Company are the sole shareholders, directors and executive officers. The initial term of the lease is twenty years, commencing in September 1991 and ending in August 2011, subject to renewal at the option of the Company for two successive five-year terms. Monthly rent ranged from $8,437 for the first five years to $9,375 for the final five years of the initial term. The related land was leased by the lessor from the Company pursuant to a ground lease agreement dated July 1, 1994 providing for a fifty-year lease term, commencing in July 1991 and ending in June 2011 and annual rental payments that range from $15,000 to $24,300. In October 1996, the Board approved a proposed transaction to relocate this store to a larger facility. In June 1997, the Company (i) acquired the store building from the lessor for $650,000, (ii) canceled the ground lease agreement with the lessor respecting said property, (iii) sold the store (building and land) to an unrelated real estate developer for $750,000 (which is approximately $650,000 below the appraised value of said property), and (iv) leased a new larger store from the same developer (said new store having been built by the developer on a nearby site owned by them of approximately four acres and in accordance with the Company's specifications), pursuant to which the Company received a discounted rent (approximately $6.30 per square foot initially compared to the market rate of approximately $8.60 per square foot or approximately $750,000 over the fifteen year initial lease) in consideration for the reduced purchase price on the store building and land. The Company also leases one store location from an S corporation owned by certain officers of the Company. Rent payments under this lease were approximately $101,000 in each of the fiscal years 1999, 1998 and 1997. NOTE 10 - RETIREMENT BENEFIT PLAN: The Company has a defined contribution benefit plan, the Tractor Supply Company Restated 401(k) Retirement Plan (the "Plan"), which provides retirement and other benefits for the Company's employees. Employees become eligible for participation upon completion of 12 consecutive months of employment and 1,000 hours or more of service. The Company matches 100% of the first 3% of employee's elective contributions plus an additional 50% of any additional elective contribution (limited to 5% of the employee's total compensation). Company contributions to the plan during fiscal 1999, 1998 and 1997 were approximately $969,000, $822,000 and $733,000, respectively. NOTE 11 - STOCK-BASED COMPENSATION PLANS: Fixed Stock Option Plan The Company has a stock option plan for officers, directors (including non-employee directors) and key employees which reserves 1,000,000 shares of common stock for future issuance under the plan. According to the terms of the Plan, the per share exercise price of options granted shall not he less than the fair market value of the stock on the date of grant and such options will expire no later than ten years from the date of grant. In the case of a stockholder owning more than 10% of the outstanding voting stock of the Company, the exercise price of an incentive stock option may not be less than 110% of the fair market value of the stock on the date of grant and such options will expire no later than five years from the date of grant. Also, the aggregate fair market value of the stock with respect to which incentive stock options are exercisable on a tax deferred basis for the first time by an individual in any calendar year may not exceed $100,000. Options granted generally vest one-third each year beginning on the third anniversary date of the grant and expire after ten years, provided, however, that options granted to non-employee directors vest one-third each year beginning on the first anniversary of the grant. 31 29 NOTES TO FINANCIAL STATEMENTS Plan activity is summarized as follows:
WEIGHTED AVERAGE NUMBER OF EXERCISE SHARES PRICE ------------------------------------------------------------ Outstanding at December 28, 1996 185,000 $21.77 Granted 350,500 $18.44 Canceled (35,500) $21.29 ------- Outstanding at December 27, 1997 500,000 $19.47 Granted 48,000 $16.67 Canceled (33,250) $19.49 ------- Outstanding at December 26, 1998 514,750 $19.21 Exercised (7,249) $21.66 Granted 218,000 $25.58 Canceled (124,001) $20.91 ------- Outstanding at January 1, 2000 601,500 $21.14 =======
The following table summarizes information concerning currently outstanding and exercisable options:
OPTIONS OUTSTANDING ---------------------- WEIGHTED AVERAGE WEIGHTED REMAINING AVERAGE RANGE OF NUMBER CONTRACTUAL EXERCISE OPTIONS YEAR EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE - ------------------------------------------------------------------------------ 1994 $21.50 - $27.00 15,000 4.18 $21.87 15,000 1995 $21.31 - $22.13 24,500 5.09 $22.08 16,669 1996 $21.38 - $25.13 66,000 6.10 $21.83 22,667 1997 $17.75 - $20.00 261,500 7.50 $18.45 6,030 1998 $14.44 - $24.31 44,000 8.07 $16.19 660 1999 $18.56 - $26.75 190,500 9.08 $25.54 0 ------- ------ 601,500 61,026 ======= ======
32 30 NOTES TO FINANCIAL STATEMENTS Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant dates for awards under the plan consistent with the method prescribed by FASB Statement No. 123, the Company's proforma net income and net income per share, for fiscal 1999, 1998 and 1997, would have been as follows (in thousands, except per share amounts):
1999 1998 1997 - ----------------------------------------------------------------------------- Net income As reported $17,874 $14,800 $11,761 Proforma $17,179 $14,271 $11,437 Net income per share - basic As reported $ 2.04 $ 1.69 $ 1.34 Proforma $ 1.96 $ 1.63 $ 1.30 Net income per share - diluted As reported $ 2.02 $ 1.68 $ 1.34 Proforma $ 1.94 $ 1.62 $ 1.30
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions.
1999 1998 1997 - ----------------------------------------------------------------------------- Expected volatility 37.8% 33.3% 30.8% Risk-free interest rate 6.5% 6.0% 6.5% Average expected life (years) 7.5 9.14 7.25 Dividend yield 0% 0% 0% Weighted average fair value $12.95 $9.26 $8.97
EMPLOYEE STOCK PURCHASE PLAN In July 1996, the Company adopted the 1996 Associate Stock Purchase Plan (the "ASPP") to allow eligible employees of the Company the opportunity to purchase, through payroll deductions, shares of common stock of the Company at a 15% discount. In August 1996, the Company filed a registration statement with the Securities and Exchange Commission covering the shares of common stock to be sold under the ASPP. The ASPP was approved by the Company's stockholders in April 1997, authorizing the sale of up to 1,000,000 shares of common stock under the ASPP. Pursuant to the terms of the ASPP, the Company issued 13,752, 16,887 and 13,218 shares of common stock in fiscal 1999, 1998 and 1997, respectively. 33 31 DIRECTORS AND OFFICERS
DIRECTORS Joseph H. Scarlett, Jr. S.P. Braud (1)*(2)*(3) Gerard E. Jones (1) (2) (3)* Chairman of the Board, Retired Chief Financial Officer Partner President and Chief Service Merchandise Company, Inc. Richards & O'Neil, LLP Executive Officer and President and Director Tractor Supply Company Braud Design/Build, Inc. Sam K. Reed (1) (2) Chief Executive Officer Thomas O. Flood Joseph M. Rodgers (1) (2) (3) Keebler Foods Company Retired Senior Vice President Chairman of the Board Tractor Supply Company The JMR Group, an investment firm, and former U.S. Joseph D. Maxwell Ambassador to France Retired Vice President Tractor Supply Company
(1) Audit Committee Member (2) Compensation Committee Member (3) Nominating Committee Member (*) Committee Chairman
OFFICERS Joseph H. Scarlett, Jr. John W. Atkins Leo H. Haberer Chairman of the Board, Vice President-Information Vice President-Real Estate President and Chief Technology Executive Officer Stephen E. Hull Reynolds H. Becker Vice President-Real Estate Gerald W. Brase Vice President- Senior Vice President- Merchandise Manager for Gary M. Magoni Merchandising and Marketing Consumer Products Vice President-Operations (Region I) Michael E. Brown Blake A. Fohl Senior Vice President- Vice President-Marketing Stanley L. Ruta Store Operations Vice President-Operations Mark D. Gillman (Region II) Calvin B. Massmann Vice President-Operations Senior Vice President- (Region III) Daisy L. Vanderlinde Chief Financial Officer Vice President-Human Resources and Treasurer Lawrence Goldberg Vice President-Logistics
34 32 CORPORATE INFORMATION STORE SUPPORT CENTER Tractor Supply Company 320 Plus Park Boulevard Nashville, Tennessee 37217 (615) 366-4600 TRANSFER AGENT AND REGISTRAR BankBoston, N.A. c/o Equiserve P.O. Box 8040 Boston, Massachusetts 02266-8040 (800) 730-6001 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 4400 Harding Road Nashville, Tennessee 37205 STOCK EXCHANGE LISTING The Nasdaq National Market Ticker Symbol: TSCO WORLD WIDE WEB www.tractorsupplyco.com ANNUAL MEETING The Annual Meeting of Stockholders will be held at 10:00 a.m., April 27, 2000 at the Company's Store Support Center, 320 Plus Park Boulevard, Nashville, Tennessee 37217 NUMBER OF STOCKHOLDERS As of January 31, 2000 there were approximately 82 stockholders of record. This number excludes individual stockholders holding stock under nominee security position listings. FORM 10-K A copy of the Company's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, will be sent to any stockholder upon written request to the Company's investor relations firm: Corporate Communications, Inc. 523 Third Avenue South Nashville, Tennessee 37210 (615) 254-3376 QUARTERLY STOCK PRICE RANGE
HIGH LOW FISCAL 1999: First Quarter $29 1/4 $21 Second Quarter $29 3/4 $25 Third Quarter $27 5/16 $17 3/4 Fourth Quarter $20 7/8 $13 13/16 FISCAL 1998: First Quarter $23 1/4 $13 3/4 Second Quarter $26 1/2 $20 5/8 Third Quarter $26 $18 Fourth Quarter $27 $18 1/2
35 ----------------------- SATISFACTION GUARANTEED ALL ASSOCIATES HAVE THE AUTHORITY TO "DO WHATEVER IT TAKES" ----------------------- 36 [TRACTOR SUPPLY CO. LOGO] Tractor Supply Company 320 Plus Park Boulevard Nashville, Tennessee (615) 366-4600 EX-23.1 6 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-10699) of Tractor Supply Company of our report dated January 24, 2000 relating to the financial statements, which appears in the Annual Report to Stockholders, which is incorporated in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP Nashville, Tennessee March 24, 2000 EX-23.2 7 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-35317) of our report dated January 24, 2000 relating to the financial statements, which appears in the 1999 Annual Report to Stockholders, which is incorporated by reference in Tractor Supply Company's Annual Report on Form 10-K for the year ended January 1, 2000. /s/ PricewaterhouseCoopers LLP Nashville, Tennessee March 24, 2000 EX-24.1 8 POWER OF ATTORNEY 1 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Calvin B. Massmann, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Securities and Exchange Commission Form 10-K, and any and all amendments thereto, and to file the same and other documents in connection therewith with the Securities and Exchange Commission and the National Association of Securities Dealers, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute, may lawfully do or cause to be done, or have done or caused to be done prior to this date, by virtue hereof. Dated: March 10, 2000 /s/ Joseph H. Scarlett, Jr. ---------------------------------- Joseph H. Scarlett, Jr. EX-24.2 9 POWER OF ATTORNEY 1 EXHIBIT 24.2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Calvin B. Massmann, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Securities and Exchange Commission Form 10-K, and any and all amendments thereto, and to file the same and other documents in connection therewith with the Securities and Exchange Commission and the National Association of Securities Dealers, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute, may lawfully do or cause to be done, or have done or caused to be done prior to this date, by virtue hereof. Dated: March 10, 2000 /s/ Thomas O. Flood ---------------------------------- Thomas O. Flood EX-24.3 10 POWER OF ATTORNEY 1 EXHIBIT 24.3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Calvin B. Massmann, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Securities and Exchange Commission Form 10-K, and any and all amendments thereto, and to file the same and other documents in connection therewith with the Securities and Exchange Commission and the National Association of Securities Dealers, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute, may lawfully do or cause to be done, or have done or caused to be done prior to this date, by virtue hereof. Dated: March 4, 2000 /s/ Joseph D. Maxwell ---------------------------------- Joseph D. Maxwell EX-24.4 11 POWER OF ATTORNEY 1 EXHIBIT 24.4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Calvin B. Massmann, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Securities and Exchange Commission Form 10-K, and any and all amendments thereto, and to file the same and other documents in connection therewith with the Securities and Exchange Commission and the National Association of Securities Dealers, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute, may lawfully do or cause to be done, or have done or caused to be done prior to this date, by virtue hereof. Dated: March 10, 2000 /s/ S.P. Braud ---------------------------------- S.P. Braud EX-24.5 12 POWER OF ATTORNEY 1 EXHIBIT 24.5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Calvin B. Massmann, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Securities and Exchange Commission Form 10-K, and any and all amendments thereto, and to file the same and other documents in connection therewith with the Securities and Exchange Commission and the National Association of Securities Dealers, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute, may lawfully do or cause to be done, or have done or caused to be done prior to this date, by virtue hereof. Dated: March 10, 2000 /s/ Joseph M. Rodgers ---------------------------------- Joseph M. Rodgers EX-24.6 13 POWER OF ATTORNEY 1 EXHIBIT 24.6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Calvin B. Massmann, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all Securities and Exchange Commission Form 10-K, and any and all amendments thereto, and to file the same and other documents in connection therewith with the Securities and Exchange Commission and the National Association of Securities Dealers, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute, may lawfully do or cause to be done, or have done or caused to be done prior to this date, by virtue hereof. Dated: March 6, 2000 /s/ Gerard E. Jones ---------------------------------- Gerard E. Jones EX-24.7 14 POWER OF ATTORNEY 1 EXHIBIT 24.7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Calvin B. Massmann, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign Tractor Supply Company's 1999 Securities and Exchange Commission Form 10-K, and any and all amendments thereto, and to file the same and other documents in connection therewith with the Securities and Exchange Commission and the National Association of Securities Dealers, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his respective substitute, may lawfully do or cause to be done, or have done or caused to be done prior to this date, by virtue hereof. Dated: March 9, 2000 /s/ Sam K. Reed ---------------------------------- Sam K. Reed EX-27.1 15 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF TRACTOR SUPPLY COMPANY FOR THE YEAR ENDED JANUARY 1, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR JAN-01-2000 DEC-27-1998 JAN-01-2000 6,991 0 6,865 0 207,325 225,926 108,983 35,270 302,630 108,620 54,683 0 0 70 138,235 302,630 688,082 688,082 506,831 506,831 147,036 0 4,104 30,111 12,237 17,874 0 0 0 17,874 2.04 2.02
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