Tractor Supply (TSCO) 10-K risk factor changes: FY2015 vs FY2014

A weakening of economic conditions affecting disposable consumer income such as lower employment levels, uncertainty or changes in business or political conditions, higher interest rates, higher tax rates, higher fuel and energy costs, higher labor and healthcare costs, the impact of natural disasters or acts of terrorism, and other matters could reduce consumer spending or cause consumers to shift their spending to [removed: other] competitors.

We are subject to market risk with respect to the pricing of certain products and services, which include, among other items, [removed: steel,] grain, [removed: petroleum,] corn, [added: steel, petroleum,] cotton and other commodities as well as transportation services.

Capital [removed: requirements] [added: required] for growth may not be available.

The construction [removed: and opening] or acquisition of new stores, store support center facilities, distribution facilities or other facilities, [removed: along with] the remodeling and renovation of existing [removed: stores,] [added: stores and investments in information technology,] require significant amounts of capital.

In the past, our growth has been funded [removed: primarily] through internally generated cash flow and bank borrowings.

Our access to funds under our Senior Credit Facility, which provides for borrowings of up to [removed: $250 million with an Increase Option for $150 million (subject to additional lender group commitments),] [added: $400 million,] is dependent on the ability of the banks that are parties to the facility to meet their funding commitments.

In addition, [removed: tighter] [added: tight] lending practices [removed: have made] [added: may make] it [removed: more] challenging for our real estate developers to obtain financing under acceptable loan terms and conditions.

Unfavorable lending [removed: trends] [added: practices] could impact the timing of our store openings and materially adversely affect our ability to open new stores in desirable locations.

Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced [added: funding] alternatives, or failures of significant financial institutions could adversely affect our access to liquidity needed for our business.

[removed: As we continue to open new stores, there may be a negative impact on our results] from a lower contribution margin of these new stores until their sales levels ramp to chain average, if at all, as well as from the impact of related pre-opening costs.

We may not be able to successfully integrate operations that we acquire, including their personnel, financial systems, distribution, operations and [added: general operating procedures.]

In [removed: past years, weather conditions, including unseasonably warm weather in winter months, and] [added: addition,] extreme weather conditions, including snow and ice storms, flood and wind damage, hurricanes, tornadoes, extreme rain and droughts, have [removed: affected our sales and] [added: impacted operating] results [removed: of operations] both [removed: positively] [added: negatively] and [removed: negatively.][added: positively, depending on the severity and length of these conditions.]

These merchandising initiatives and marketing programs may not deliver expected results, and there is no assurance that we will correctly identify and respond in a timely manner to evolving [removed: trends,] [added: trends and] consumer preferences and expectations.

[removed: As an importer, our business is subject to the risks generally associated with doing business] internationally, such as foreign governmental regulations, economic disruptions, delays in shipments, transportation capacity and costs, currency exchange rates and changes in political or economic conditions in countries from which we purchase products.

[added: If we are unable to] locate, attract or retain qualified personnel, or if costs of labor or related costs increase significantly, our financial performance could be adversely affected.

We are [removed: be] subject to personal injury, [removed: workers'] [added: workers’] compensation, product liability and other claims in the ordinary course of business.

We maintain general liability and workers compensation insurance with [added: a] self-insured retention for each policy type and a deductible for each occurrence.

In many cases, we have indemnification rights against the manufacturers of the products and their products liability [removed: insurance.][added: insurance as well as the property owners of our leased buildings.]

Our ability to recover costs and damages under such insurance or indemnification arrangements is subject to the financial viability of the [removed: insurers and] [added: insurers,] manufacturers and [added: landlords and] the specific allegations of a claim.

No assurance can be given that our insurance coverage or the manufacturers’ [added: or landlords’] indemnity will be available or sufficient in any claims brought against us.

Our costs of doing business could increase as a result of [removed: adoption of new, changes in, or increased enforcement of] federal, state, local or foreign laws and regulations.

Any failure to maintain the security of the information relating to our business, customers, employees and vendors that we hold, whether as a result of cybersecurity attacks or otherwise, could damage our reputation with customers, employees and vendors, could cause us to incur substantial additional costs and to become subject to litigation, and could adversely affect our operating [removed: results.][added: results, financial condition and liquidity.]

Such an occurrence could adversely affect our reputation with our customers, employees, and vendors, as well as our operations, results of operations, financial condition and liquidity, and could result in [removed: litigation against us or] [added: significant legal and financial exposure beyond] the [removed: imposition] [added: scope or limits] of [removed: penalties.][added: insurance coverage.]

Moreover, a security breach could require that we expend significant additional resources to [removed: upgrade further the security measures that we employ to guard such important personal information against cyberattacks and other attempts] [added: respond] to [removed: access such information] [added: the breach] and could result in a disruption of our [removed: operations, particularly our online sales] operations.

In addition, states and the federal government are increasingly enacting laws and regulations [added: relating] to [removed: protect consumers against identity theft.][added: data breaches and theft of employee and customer data.]

As customer-facing [removed: technologies] [added: technology] systems become an increasingly important part of our [removed: multi-channel] sales and marketing strategy, the failure of those systems to perform effectively and reliably could keep us from delivering positive customer experiences.

Through our continued information technology enhancements, we are able to provide an improved overall shopping environment and [removed: a multichannel] [added: an omni-channel] experience that empowers our customers to shop and interact with us from computers, tablets, smart phones and other mobile communication devices.

[added: Omni-channel] retailing is continually evolving and expanding, and we must effectively respond to changing customer expectations and new developments.

[removed: Extended delays or cost overruns] in securing, developing and otherwise implementing technology solutions to support the strategic business initiatives would delay and possibly even prevent us from realizing the projected benefits of those initiatives.

Although our Board of Directors has indicated an intention to pay future quarterly cash dividends on our common stock, any determination to pay [added: or increase] cash dividends on our common stock in the future will be based primarily upon our financial condition, results of operations, business requirements, and our Board of [removed: Directors'] [added: Directors’] continuing determination that the declaration of dividends is in the best interests of our stockholders and is in compliance with all laws and agreements applicable to the dividend.

Furthermore, although our Board of Directors has authorized a [removed: $1 billion] share repurchase program [added: of $2 billion] through [removed: April 2015,] [added: December 2017,] we may discontinue this program at any time.

In addition, we are subject to periodic audits and examinations by the Internal Revenue Service [removed: ("IRS") and other] [added: (“IRS”) as well as] state and local taxing authorities.

Our success depends [added: in part] on the value and strength of the Tractor Supply name.

Failure to comply [added: or accusation of failure to comply] with ethical, social, product, labor and environmental standards could also jeopardize our reputation and potentially lead to various adverse consumer actions.

As we continue to open new stores, there may be a negative impact on our results

Historically, weather conditions, including unseasonably warm weather in the fall and winter months and unseasonably cool weather in the spring and summer months, have affected the timing and volume of our sales and results of operations.

Our strategy is to manage product flow and adjust merchandise assortments and depth of inventory to capitalize on seasonal demand trends.

As an importer, our business is subject to the risks generally associated with doing business

Extended delays or cost overruns

Our success depends, in part, upon our ability to improve sales at our existing stores.

general operating procedures.

Our strategy is to remain flexible and to react to extreme weather conditions by adjusting our merchandise assortments and redirecting inventories to stores affected by the weather conditions.

If we are unable to

Multi-channel

The following discussion and analysis is intended to provide the reader with information that will assist in understanding the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources during the three-year period ended December [removed: 28, 2013] [added: 27, 2014] (our fiscal years [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011).][added: 2012).]

[removed: Tractor Supply] [added: The] Company is [removed: the largest operator of retail farm and ranch stores in the United States and is] focused on supplying the [removed: lifestyle] needs of recreational farmers and ranchers and others who enjoy the rural lifestyle, as well as tradesmen and small businesses.

As of December [removed: 28, 2013,] [added: 27, 2014,] we operated [removed: 1,276] [added: 1,382] retail stores in [removed: 48] [added: 49] states under the names Tractor Supply [removed: Company and] [added: Company,] Del’s Feed & Farm [removed: Supply.][added: Supply and HomeTown Pet.]

| • | Seasonal products, including [added: heating,] lawn and garden items, power equipment, gifts and toys; |

Our current and long-term growth strategy is to: (1) expand [added: domestic] geographic market presence through opening new retail stores, (2) enhance financial performance through comparable store sales growth achieved through targeted merchandising [added: and marketing] programs with an “everyday value price” philosophy [removed: and] supported by strong customer service, (3) enhance product margin through strategic product sourcing, inventory and markdown management, a strong exclusive brand offering, and optimization of product pricing and transportation costs, (4) leverage operating costs by focusing on opportunities for continuous improvement and elimination of waste in all of our processes, (5) expand market opportunities via e-commerce and internet-supported sales [removed: accomplished] by improving our website product content and enhancing [removed: our customers’] [added: the] online [removed: experience] [added: experience,] and (6) expand through selective acquisition, as such opportunities arise, to enhance penetration into new and existing markets to complement organic growth.

Over the past five years we have experienced considerable growth in stores, growing from [removed: 855] [added: 930] stores at the end of [removed: 2008] [added: 2009] to [removed: 1,276] [added: 1,382] stores at the end of fiscal [removed: 2013,] [added: 2014,] and in sales, with a compounded annual growth rate of approximately [removed: 11.4%.][added: 12.2%.]

We have developed a proven method for selecting store sites and have identified over [removed: 800] [added: 700] additional markets for new Tractor Supply stores.

We opened [removed: 102] [added: 107] new stores in [removed: 2013] [added: 2014] and [removed: 93] [added: 102] new stores in [removed: 2012,] [added: 2013,] a selling square footage increase of approximately 8.3% [added: in both fiscal 2014] and [removed: 7.9%, respectively.][added: 2013.]

During [removed: 2013,] [added: 2014,] we opened stores in [removed: 34] [added: 31] states, including our first [removed: stores] [added: store] in [removed: Arizona, Nevada and Wyoming,] [added: Utah,] and in [removed: 2014] [added: 2015] we expect to continue our expansion into [removed: these new markets.][added: the western states.]

Net sales increased [removed: 10.7%] [added: 10.6%] to [removed: $5.16] [added: $5.71] billion in fiscal [removed: 2013] [added: 2014] from [removed: $4.66] [added: $5.16] billion in fiscal [removed: 2012.][added: 2013.]

Comparable store sales increased [removed: 4.8%] [added: 3.8%] in fiscal [removed: 2013] [added: 2014] versus a [removed: 5.3%] [added: 4.8%] increase in fiscal [removed: 2012.][added: 2013.]

Gross profit increased [removed: 12.0%] [added: 11.2%] to [removed: $1.75] [added: $1.95] billion in fiscal [removed: 2013 from $1.57] [added: 2014 compared to $1.75] billion [added: in fiscal 2013.]

[added: Gross profit increased 11.2% to $1.95 billion] in fiscal [removed: 2012,] [added: 2014 from $1.75 billion in fiscal 2013,] and gross margin increased [removed: 40] [added: 10] basis points to [removed: 34.0%] [added: 34.1%] of sales in fiscal [removed: 2013] [added: 2014] from [removed: 33.6%] [added: 34.0%] of sales in fiscal [removed: 2012.][added: 2013.]

Operating profit increased [removed: 60] [added: 30] basis points to [removed: 10.0%] [added: 10.3%] of sales in fiscal [removed: 2013] [added: 2014] from [removed: 9.4%] [added: 10.0%] of sales in fiscal [removed: 2012.][added: 2013.]

In fiscal [removed: 2013,] [added: 2014,] diluted earnings per share grew [removed: 22.1%,] [added: 14.7%,] to [removed: $2.32] [added: $2.66] compared to [removed: $1.90] [added: $2.32] in fiscal [removed: 2012.][added: 2013.]

We ended the year with [removed: approximately $143] [added: $51.1] million in cash, after returning [removed: nearly $198] [added: $382.6] million to our stockholders through stock repurchases and dividends.

| We identify potentially excess and slow-moving inventory by evaluating turn rates, historical and expected future sales trends, age of merchandise, overall inventory levels, current cost of inventory and other benchmarks. [removed: The estimated] [added: We have established an] inventory valuation reserve to recognize [removed: any] [added: the estimated] impairment in value (i.e., an inability to realize the full carrying value) [removed: is] based on our aggregate assessment of these valuation indicators under prevailing market conditions and current merchandising strategies. | | We do not believe our merchandise inventories are subject to significant risk of obsolescence in the near term. However, changes in market conditions or consumer purchasing patterns could result in the need for additional reserves. Our impairment reserve contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding forecasted customer demand and the promotional environment. | | We have not made any material changes in the accounting methodology used to recognize inventory impairment reserves in the financial periods presented. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate impairment. However, if assumptions regarding consumer demand or clearance potential for certain products are inaccurate, we may be exposed to losses or gains that could be material. A 10% change in our impairment reserve at December [removed: 28, 2013,] [added: 27, 2014,] would have affected net income by approximately [removed: $0.4] [added: $0.5] million in fiscal [removed: 2013.] [added: 2014.] |

| We perform physical inventories at each store at least once a year, and we have established [removed: reserves] [added: a reserve] for estimating inventory shrinkage between physical inventory counts. The reserve is established by assessing the chain-wide average shrinkage experience rate, applied to the related [removed: periods'] [added: periods’] sales volumes. Such assessments are updated on a regular basis for the most recent individual store experiences. | | The estimated store inventory shrink rate is based on historical experience. We believe historical rates are a reasonably accurate reflection of future trends. Our shrinkage reserve contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding future shrinkage trends, the effect of loss prevention measures and new merchandising strategies. | | We have not made any material changes in the accounting methodology used to recognize shrinkage in the financial periods presented. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate our shrinkage reserve. However, if our estimates regarding inventory losses are inaccurate, we may be exposed to losses or gains that could be material. A 10% change in our shrinkage reserve at December [removed: 28, 2013,] [added: 27, 2014,] would have affected net income by approximately [removed: $1.0] [added: $1.1] million in fiscal [removed: 2013.] [added: 2014.] |

| We receive funding from substantially all of our significant merchandise vendors, in support of our business initiatives, through a variety of programs and arrangements, including guaranteed vendor support funds [removed: ("vendor support")] [added: (“vendor support”)] and volume-based rebate funds [removed: ("volume rebates").] [added: (“volume rebates”).] The amounts received are subject to terms of vendor agreements, most of which are [removed: "evergreen",] [added: “evergreen”,] reflecting the on-going relationship with our significant merchandise vendors. Certain of our agreements, primarily volume rebates, are renegotiated annually, based on expected annual purchases of the vendor’s product. Vendor funding is initially deferred as a reduction of the purchase price of inventory and then recognized as a reduction of cost of merchandise as the related inventory is sold. During interim periods, the amount of vendor support is [removed: known and is debited to vendors systematically;] [added: known;] however, volume rebates are estimated during interim periods based upon initial commitments and anticipated purchase levels with applicable vendors. | | The estimated purchase volume (and related vendor funding through volume rebates) is based on our current knowledge of inventory levels, sales trends and expected customer demand, as well as planned new store openings and relocations. Although we believe we can reasonably estimate purchase volume and related volume rebates at interim periods, it is possible that actual year-end results could [removed: differ] [added: be different] from previously estimated amounts. Our allocation methodology contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding customer demand, purchasing activity, target thresholds, vendor attrition and collectibility. | | We have not made any material changes in the accounting methodology used to establish our vendor support reserves in the financial periods presented. At the end of each fiscal year, a significant portion of the actual purchase activity is known. Thus, we do not believe there is a reasonable likelihood that there will be a material change in the amounts recorded as vendor support. We do not believe there is a significant collectibility risk related to vendor support amounts due us at the end of fiscal [removed: 2013.] [added: 2014.] If a 10% reserve had been applied against our outstanding vendor support due as of December [removed: 28, 2013,] [added: 27, 2014,] net income would have been affected by approximately $1.1 million in fiscal [removed: 2013.] [added: 2014.] Although it is unlikely that there will be any significant reduction in historical levels of vendor support, if such a reduction were to occur in future periods, the Company could experience a higher inventory balance and higher cost of sales. |

| We incur various types of transportation and delivery costs in connection with inventory purchases and distribution. Such costs are included as a component of the overall cost of inventories (on an aggregate basis) and recognized as a component of cost of merchandise sold as the related inventory is sold. | | We allocate freight as a component of total cost of sales without regard to inventory mix or unique freight burden of certain categories. This assumption has been consistently applied for all years presented. | | We have not made any material changes in the accounting methodology used to establish our capitalized freight balance or freight allocation in the financial periods presented. If a 10% increase or decrease had been applied against our current inventory capitalized freight balance as of December [removed: 28, 2013,] [added: 27, 2014,] net income would have been affected by approximately [removed: $4.9] [added: $5.7] million in fiscal [removed: 2013.] [added: 2014.] |

| We self-insure a significant portion of our employee medical insurance, [removed: workers'] [added: workers’] compensation and general liability insurance plans. We have stop-loss insurance policies to protect from individual losses over specified dollar values. [removed: When estimating] [added: Provisions for losses related to] our self-insured [removed: liabilities, we] [added: liabilities are based upon periodic independent actuarially determined estimates that] consider a number of [removed: factors,] [added: factors] including historical claims experience, demographic factors and severity factors. | | The full extent of certain claims, especially [removed: workers'] [added: workers’] compensation and general liability claims, may not become fully determined for several years. Our self-insured liabilities contain uncertainties because management is required to make assumptions and to apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not reported as of the balance sheet date based upon historical data and experience, including actuarial calculations. | | We have not made any material changes in the accounting methodology used to establish our self-insurance reserves in the financial periods presented. We do not believe there is a reasonable likelihood that there will be a material change in the assumptions we use to calculate insurance reserves. However, if we experience a significant increase in the number of claims or the cost associated with these claims, we may be exposed to losses that could be material. A 10% change in our self-insurance reserves at December [removed: 28, 2013,] [added: 27, 2014,] would have affected net income by approximately [removed: $2.6] [added: $3.0] million in fiscal [removed: 2013.] [added: 2014.] |

| A portion of our sales are to tax-exempt customers, predominantly agricultural-based. We obtain exemption information as a necessary part of each tax-exempt transaction. Many of the states in which we conduct business will perform audits to verify our compliance with applicable sales tax laws. The business activities of our customers and the intended use of the unique products sold by us create a challenging and complex compliance environment. These circumstances also create some risk that we could be challenged as to the accuracy of our sales tax compliance. [removed: While we believe we appropriately enforce sales tax compliance with] [added: When establishing] our [removed: customers and endeavor to fully comply with all applicable] sales tax [removed: regulations, there can be no assurance that we, upon final completion of such audits, would not have a significant liability for disallowed exemptions. | | We] [added: audit reserve, we] review our past audit experience and assessments with applicable states to continually determine if we have potential exposure for non-compliance. Any estimated liability is based on an initial assessment of compliance risk [removed: and] [added: as well as] our historical experience with each [added: respective] state. [added: | |] We continually reassess the exposure based on historical audit results, changes in policies, preliminary and final assessments made by state sales tax auditors, and additional documentation that may be provided to reduce the assessment. Our sales tax audit reserve contains uncertainties because management is required to make assumptions and to apply judgment regarding the complexity of agricultural-based exemptions, the ambiguity in state tax regulations, the number of ongoing audits and the length of time required to settle with the state taxing authorities. | | We have not made any material changes to our sales tax audit assessment methodology in the financial periods presented. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate the sales tax liability reserve. However, if our estimates regarding the ultimate sales tax liability are inaccurate, we may be exposed to losses or gains that could be material. A 10% change in our sales tax audit reserve at December [removed: 28, 2013,] [added: 27, 2014,] would have affected net income by approximately [removed: $0.6] [added: $0.7] million in fiscal [removed: 2013.] [added: 2014.] |

| Our income tax returns are periodically audited by U.S. federal and state tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated with our various tax filing positions, we record a liability for uncertain tax positions taken or expected to be taken in a tax return. A number of years may elapse before a particular matter, for which we have established a reserve, is audited and fully resolved or clarified. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve, the statute of limitations expires for the relevant tax authority to examine the tax position or when more information becomes available. | | Our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether or not the minimum requirements for recognition of tax benefits have been met. | | We have not made any material changes in the accounting methodology used to establish our tax contingencies in the financial periods presented. We do not believe there is a reasonable likelihood that there will be a material change in the reserves established for tax benefits not recognized. Although management believes that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material. To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of our cash and would result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction in our effective income tax rate in the period of resolution. A 10% change in our uncertain tax position reserve at December [removed: 28, 2013] [added: 27, 2014] would have affected net income by approximately $0.2 million in fiscal [removed: 2013.] [added: 2014.] |

Our unaudited quarterly operating results for each fiscal quarter of [removed: 2013] [added: 2014] and [removed: 2012] [added: 2013] are shown below (in thousands, except per share amounts):

| Gross [removed: margin] [added: profit] | | 352,091 | | | | 506,140 | | | | 415,666 | | | | 479,712 | | | | 1,753,609 | | |

| [removed: 2012] [added: 2014] | | First Quarter | | | | Second Quarter | | | | Third Quarter | | | | Fourth Quarter | | | | Total | | |

| | [removed: 2013] [added: 2014] | | | [removed: 2012] [added: 2013] | | | [removed: 2011] [added: 2012] | |

| Cost of merchandise sold (a) | [removed: 66.0] [added: 65.9] | | | [removed: 66.4] [added: 66.0] | | | [removed: 66.8] [added: 66.4] | |

| Gross margin (a) | [removed: 34.0] [added: 34.1] | | | [removed: 33.6] [added: 34.0] | | | [removed: 33.2] [added: 33.6] | |

| Selling, general and administrative expenses(a) | [removed: 22.1] [added: 21.8] | | | [removed: 22.3] [added: 22.1] | | | [removed: 23.0] [added: 22.3] | |

| Depreciation and amortization | [removed: 1.9] [added: 2.0] | | | 1.9 | | | 1.9 | |

| Income before income taxes | [removed: 10.0] [added: 10.3] | | | [removed: 9.4] [added: 10.0] | | | [removed: 8.3] [added: 9.4] | |

| Income tax provision | [removed: 3.6] [added: 3.8] | | | [removed: 3.4] [added: 3.6] | | | [removed: 3.0] [added: 3.4] | |

| Net income | [removed: 6.4] [added: 6.5] | % | | [removed: 6.0] [added: 6.4] | % | | [removed: 5.3] [added: 6.0] | % |

(a) Our gross margin amounts may not be comparable to those of other retailers since some retailers include all of the costs related to their distribution network in cost of merchandise sold and others (like [removed: the] [added: our] Company) exclude a portion of these distribution network costs from gross margin and instead include them in selling, general and administrative (“SG&A”) expenses; refer to Note 1 – Significant Accounting Policies, of the Notes to Consolidated Financial Statements, included in Item 8 Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

Comparable store sales are calculated [removed: based] on [removed: the change in net] [added: an annual basis using] sales [removed: of] [added: generated from all] stores open at least one year and [added: all online sales and] exclude certain adjustments to net sales.

The comparable store sales increase was driven by continued strong results in key [removed: consumable, usable, edible (C.U.E.)] [added: C.U.E.] products, principally animal- and pet-related merchandise.

Winter seasonal merchandise, predominantly heating and insulated outerwear, also performed well during the first part of [removed: the year] [added: fiscal 2013] and the end of [removed: the year] [added: fiscal 2013] due to the colder than average weather.

In addition to comparable store sales growth in fiscal 2013, sales from [removed: new] stores [removed: and stores] opened less than one year were $281.2 million in fiscal 2013, which represented 6.0 percentage points of the 10.7% increase over fiscal 2012 net sales.

| Hardware, Tools,Truck and Towing | [removed: 23] [added: 22] | | | 23 | |

Tractor Supply Company is the largest operator of rural lifestyle retail stores in the United States.

| Net sales | | $ | 1,183,680 | | | $ | 1,583,831 | | | $ | 1,359,950 | | | $ | 1,584,254 | | | $ | 5,711,715 | |

| Gross profit | | 396,219 | | | | 550,532 | | | | 464,069 | | | | 539,595 | | | | 1,950,415 | | |

| Operating income | | 78,729 | | | | 211,029 | | | | 122,013 | | | | 177,701 | | | | 589,472 | | |

| Net income | | 48,809 | | | | 133,411 | | | | 76,603 | | | | 112,062 | | | | 370,885 | | |

| Basic | | $ | 0.35 | | | $ | 0.96 | | | $ | 0.56 | | | $ | 0.82 | | | $ | 2.69 | |

| Diluted | | $ | 0.35 | | | $ | 0.95 | | | $ | 0.55 | | | $ | 0.81 | | | $ | 2.66 | |

| Comparable store sales increase | | 2.2 | | % | | 1.9 | | % | | 5.6 | | % | | 5.3 | | % | | 3.8 | | % |

Fiscal 2014 Compared to Fiscal 2013

Net sales increased 10.6% to $5.71 billion in fiscal 2014 from $5.16 billion in fiscal 2013.

Stores closed or relocated during either of the years being compared are not removed from our comparable store sales metrics calculations.

If the effect of closed and/or relocated stores on our comparable store sales metrics calculations becomes material, we would remove closed and/or relocated stores from the calculations.

Seasonal merchandise, predominantly heating and outdoor power equipment, performed well during the year.

| | 2014 | | | 2013 | |

(a) Includes the Company’s two HomeTown Pet stores.

| Product Category: | 2014 | | | 2013 | |

This improvement in gross margin reflects improved direct product margin partially offset by higher transportation costs, primarily due to our continued western store expansion.

Total SG&A expenses, including depreciation and amortization, for fiscal 2014 increased 9.8% to $1.36 billion from $1.24 billion in fiscal 2013.

The increase in SG&A primarily reflects new store growth and variable costs associated with our comparable store sales growth.

Our effective tax rate increased to 36.9% for fiscal 2014 compared to 36.2% in fiscal 2013 as the prior year was favorably impacted by the reversal of various reserves for uncertain tax positions.

This was a result of continued investment in C.U.E inventory, expanded product assortments and improved localized product offerings.

| Inventories | 1,115.5 | | | | 979.3 | | | | 136.2 | | |

| Current portion of capital lease obligation | 0.2 | | | | — | | | | 0.2 | | |

| • | The decrease in cash is primarily attributable to incremental common stock repurchases offset in part by earnings from operations. Common stock repurchases increased $169.1 million from $129.4 million in fiscal 2013 to $298.5 million in fiscal 2014. |

| • | Accounts payable increased primarily as a result of new store growth and higher average inventory per store along with timing of payments to vendors. |

On May 16, 2014, the Company exercised the option to increase the availability under the Senior Credit Facility by $150 million, which increased the aggregate principle amount available thereunder from $250 million to $400 million.

The sublimit for swingline loans was also increased from $20 million to $30 million.

| | 2014 | | | | 2013 | | | | Variance | | |

| Net income | $ | 370.9 | | | $ | 328.2 | | | $ | 42.7 | |

| Depreciation and amortization | 114.6 | | | | 100.0 | | | | 14.6 | | |

| Stock compensation expense | 16.2 | | | | 13.9 | | | | 2.3 | | |

| Deferred income taxes | (19.8 | | ) | | (8.3 | | ) | | (11.5 | | ) |

| Accrued expenses | 6.8 | | | | 12.1 | | | | (5.3 | | ) |

| Income taxes payable | 21.9 | | | | 9.6 | | | | 12.3 | | |

| Other, net | 8.3 | | | | 2.3 | | | | 6.0 | | |

The $75.5 million increase in net cash provided by operating activities in fiscal 2014 compared with fiscal 2013 primarily reflects earnings growth, the favorable impacts related to the timing of tax benefits and income tax payments, and increased depreciation and amortization expense due to capital expenditures for store growth, distribution center capacity and corporate infrastructure.

The majority of the corporate and other category for fiscal 2014, 2013 and 2012 relates to construction of our new Store Support Center in Brentwood, Tennessee with the greatest portion of the spend in fiscal 2013.

| • | We plan to open between 110 to 115 stores in fiscal 2015. Additionally, we plan to relocate five stores as well as increase our investment in existing store renovations. |

| • | We plan to invest in our distribution center network in fiscal 2015, principally for development of a new Southwest distribution center, expansion of our existing Northeast distribution center, and development of two smaller cross-dock facilities (“mixing centers”) in our Texas region to handle certain high-volume bulk products. We estimate that our capital expenditures relating to the distribution network will range between $75 million and $85 million in fiscal 2015. |

| Operating leases | | $ | 2,076,057 | | | $ | 243,864 | | | $ | 462,347 | | | $ | 417,289 | | | $ | 952,557 | |

Fiscal years 2013 and 2012 contained 52 weeks of operating results compared to fiscal year 2011 which contained 53 weeks.

| | |

| --- | --- |

Stock Split

On August 28, 2013, our Board of Directors declared a two-for-one split of our outstanding shares of common stock to be effected in the form of a stock dividend.

On September 26, 2013, stockholders of record at the close of business on September 18, 2013, received one additional share of common stock for each share owned by such stockholder.

All share and per-share information in the Annual Report on Form 10-K has been retroactively restated to reflect the stock split.

The total number of authorized common shares and the par value of each share was not changed by the split.

We achieved strong performance in fiscal 2013, delivering diluted earnings per share growth of 22.1%, $2.32 versus $1.90 in fiscal 2012.

| Net sales | | $ | 1,020,417 | | | $ | 1,291,899 | | | $ | 1,065,638 | | | $ | 1,286,166 | | | $ | 4,664,120 | |

| Gross margin | | 332,800 | | | | 451,461 | | | | 357,171 | | | | 424,622 | | | | 1,566,054 | | |

| Operating income | | 64,393 | | | | 169,844 | | | | 77,779 | | | | 124,776 | | | | 436,792 | | |

| Net income | | 40,328 | | | | 106,621 | | | | 50,021 | | | | 79,487 | | | | 276,457 | | |

| Basic | | $ | 0.28 | | | $ | 0.74 | | | $ | 0.35 | | | $ | 0.57 | | | $ | 1.94 | |

| Diluted | | $ | 0.27 | | | $ | 0.73 | | | $ | 0.35 | | | $ | 0.55 | | | $ | 1.90 | |

| Comparable store sales increase | | 11.5 | | % | | 3.2 | | % | | 2.9 | | % | | 4.7 | | % | | 5.3 | | % |

All net income per share amounts except the third quarter and fourth quarter of fiscal 2013 have been split adjusted.

Our fiscal year includes 52 or 53 weeks and ends on the last Saturday of the calendar year.

References to fiscal year mean the year in which that fiscal year ended.

The fiscal years ended December 28, 2013 and December 29, 2012 consisted of 52 weeks and the fiscal year ended December 31, 2011 consisted of 53 weeks.

_________________

Fiscal 2012 Compared to Fiscal 2011

Net sales increased 10.2% to $4.66 billion in fiscal 2012 from $4.23 billion in fiscal 2011.

Fiscal 2012 included one less sales week compared to fiscal 2011 as a part of the Company's 53-week calendar in fiscal 2011.

Adjusting for the impact of the extra sales week in fiscal 2011, our fiscal 2012 net sales increase was 11.6%.

| | 2012 | | | 2011 | |

| Product Category: | 2012 | | | 2011 | |

Gross profit increased 11.3% to $1.57 billion in fiscal 2012 compared to $1.41 billion in fiscal 2011.

These changes reflect improved direct product margin, partially offset by increased transportation costs.

Transportation costs increased primarily as a result of higher fuel costs, coupled with the continued mix shift to more freight-intensive C.U.E. products.

Total SG&A expenses for fiscal 2012 increased 7.1% to $1.13 billion from $1.05 billion in fiscal 2011.

The increase in SG&A primarily reflects new store growth as well as operating costs relating to our Franklin, Kentucky distribution center, which became operational in the fourth quarter of fiscal 2011, offset in part by the favorable impact of one less week in fiscal 2012 compared to fiscal 2011, as part of the Company's 53-week calendar in the prior year.

Our effective tax rate increased to 36.6% for fiscal 2012 compared to 36.5% in fiscal 2011.

The change in the effective tax rate was principally due to a reduction in the benefit provided by certain federal tax credits during fiscal 2012 compared to fiscal 2011.

| Restricted cash | — | | | | 8.4 | | | | (8.4 | | ) |

| Inventories | 979.3 | | | | 908.1 | | | | 71.2 | | |

| • | Income taxes payable decreased due to timing of estimated tax payments, as a result of changes in allowable deductions for depreciation expense. |

The Senior Credit Facility provides for borrowings of up to $250 million (with a sub-limit of $20 million for swing-line loans).

The Senior Credit Facility has an Increase Option for $150 million (subject to additional lender group commitments).

The timing of receipt of seasonal goods was much earlier in the fourth quarter in the current year and imports made up a larger percentage of fourth quarter receipts, requiring payment on trade credit prior to year end.

We may be exposed to changes in interest rates [added: over the near term] primarily from the Senior Credit Facility.

The Senior Credit Facility bears interest at either the bank’s base rate (3.25% at both December [removed: 28, 2013] [added: 27, 2014] and December [removed: 29, 2012)] [added: 28, 2013)] or LIBOR [removed: (0.16%] [added: (0.17%] and [removed: 0.21%] [added: 0.16%] at December [removed: 28, 2013] [added: 27, 2014] and December [removed: 29, 2012,] [added: 28, 2013,] respectively) plus an additional amount ranging from 0.40% to 1.00% per annum (0.50% at both December [removed: 28, 2013] [added: 27, 2014] and December [removed: 29, 2012),] [added: 28, 2013),] adjusted quarterly based on our leverage ratio.

We are also required to pay quarterly in arrears, a commitment fee for unused capacity ranging from 0.08% to 0.20% per annum (0.10% at both December [removed: 28, 2013] [added: 27, 2014] and December [removed: 29, 2012),] [added: 28, 2013),] adjusted quarterly based on our leverage ratio.

We are subject to market risk with respect to the pricing of certain products and services, which include, among other items, [removed: steel,] grain, [removed: petroleum,] corn, [added: steel, petroleum,] cotton and other commodities as well as transportation services.

[removed: Tractor Supply] [added: The] Company is [removed: the largest operator of retail farm and ranch stores in the United States and is] focused on supplying the [removed: lifestyle] needs of recreational farmers and ranchers and others who enjoy the rural lifestyle (which we refer to as the “Out Here” lifestyle), as well as tradesmen and small businesses.

We operate retail stores under the names Tractor Supply [removed: Company and] [added: Company,] Del’s Feed & Farm Supply and [added: HomeTown Pet and] operate a website under the name TractorSupply.com.

Tractor Supply Company has one reportable industry segment which is the retail sale of [removed: farm and ranch products.][added: products that support the rural lifestyle.]

At December [removed: 28, 2013,] [added: 27, 2014,] we operated [removed: 1,276] [added: 1,382] retail [removed: farm and ranch] stores in [removed: 48] [added: 49] states.

We use a standard [removed: 15,500 square foot] design for most new built-to-suit [removed: locations.][added: locations that includes 15,500 square feet of inside selling space.]

Our [added: target] customers are home, land, pet and livestock owners who generally have above average income and below average cost of living.

[removed: They are] [added: This customer base includes] recreational farmers and ranchers and others who enjoy the rural lifestyle, as well as tradesmen and small businesses.

Additionally, we maintain a customer solutions center [added: at our Store Support Center] located in Brentwood, Tennessee [removed: that can be reached via phone or email that supports] [added: to support] our [removed: online and] in-store [removed: customers] and [added: online customers as well as] our store team members.

Based on the third party provider’s data, we [removed: consider] [added: believe] our customer satisfaction scores to be among the best-in-class.

We [removed: critically] [added: carefully] evaluate the feedback we receive from our customers and implement improvements at the individual store level based on that feedback.

| • | a management training program which covers all aspects of our store [removed: operations;] [added: operations, delivering superior service and managing the team member experience;] |

| • | [added: on-line] product knowledge [removed: and in-store] training [removed: programs] produced in conjunction with key vendors; |

| • | [removed: semi-annual] store manager meetings with vendor product [removed: presentations; and] [added: presentations.] |

We offer an extensive assortment of products for those seeking to enjoy the Out Here [removed: lifestyle.][added: lifestyle, as well as tradesmen and small businesses.]

Our full line of product offerings [added: includes a broad selection of high quality, reputable brand name and exclusive brand products and] is supported by a strong in-stock inventory position with an average of 16,000 to 19,500 products per store.

No one product accounted for more than 10% of our sales during [removed: 2013.][added: 2014.]

| • | Seasonal products, including [added: heating,] lawn and garden items, power equipment, gifts and toys; |

The following chart indicates the percentage of sales represented by each of our major product categories during fiscal [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011:][added: 2012:]

| Product Category: | [removed: 2013] [added: 2014] | | | [removed: 2012] [added: 2013] | | | [removed: 2011] [added: 2012] | |

| Livestock and Pet | [removed: 43] [added: 44] | % | | [removed: 42] [added: 43] | % | | [removed: 40] [added: 42] | % |

| Hardware, Tools, Truck and Towing | [removed: 23] [added: 22] | | | 23 | | | 23 | |

| Seasonal, Gift and Toy Products | 20 | | | 20 | | | [removed: 21] [added: 20] | |

| Clothing and Footwear | 9 | | | 9 | | | [removed: 10] [added: 9] | |

| Agriculture | 5 | | | [removed: 6] [added: 5] | | | 6 | |

We are focused on providing key products that our customers use on a regular basis for their lifestyle and maintenance needs with emphasis on consumable, usable, edible [removed: (C.U.E.)] [added: (“C.U.E.”)] products.

Examples of C.U.E product categories include, but are not limited to, livestock feed and bedding, pet food, lubricants, and various seasonal products, such as [added: heating,] pest control and twine.

We purchase our products from a group of approximately 800 vendors, with no one vendor representing more than 10% of our purchases during fiscal [removed: 2013.][added: 2014.]

Approximately 300 core vendors accounted for 90% of our purchases during fiscal [removed: 2013.][added: 2014.]

Our exclusive brands represented approximately [removed: 31%, 25% and 23%] [added: 31%] of our total sales in fiscal [removed: 2013, 2012] [added: 2014] and [removed: 2011, respectively.][added: 2013 and 25% of our total sales in fiscal 2012.]

| [removed: • |] [added: Ÿ] Countyline® (livestock, farm and ranch equipment) | [added: Ÿ Redstone® (heating products) |]

| [removed: • |] [added: Ÿ] Groundwork® (lawn and garden supplies) | [added: Ÿ Traveller® (truck and automotive products) |]

| [removed: • | Producers Pride® and] [added: Ÿ] Dumor® (livestock and horse feed and supplies) | [added: Ÿ Retriever® (pet foods and supplies) |]

| [removed: •] [added: Ÿ C.E. Schmidt® (apparel and footwear)] | [added: Ÿ] Red Shed® [removed: (gifts] [added: (gifts, collectibles,] and [removed: collectibles)] [added: outdoor furniture)] |

| [removed: • | Retriever®,] [added: Ÿ] 4health® [removed: and Paws 'n Claws®] (pet foods and supplies) | [added: Ÿ JobSmart® (tools) |]

| [removed: •] [added: Ÿ Equistages® (horse feed)] | [added: Ÿ] Royal Wing® (bird feed and supplies) |

| [removed: •] [added: Ÿ Huskee® (outdoor power equipment)] | [added: Ÿ TSC] Tractor Supply Co® (trailers, truck tool boxes and animal [removed: bedding)] |

We believe our intellectual property, which includes the trademarks and service marks identified above, together with certain trade names, domain [removed: names, copyrights] [added: names] and [removed: patents,] [added: copyrights,] has significant value and is an important component of our merchandising and marketing strategies.

We currently operate a distribution network for supplying stores with merchandise, and in fiscal [removed: 2013] [added: 2014] our stores received approximately [removed: 71%] [added: 70%] of merchandise through this network while [removed: approximately 29% of] [added: the remaining] merchandise [removed: was] shipped directly to the stores from our vendors.

We believe this flow facilitates the prompt and efficient distribution of merchandise to our stores in order to enhance [removed: sales] [added: in-stocks, minimize freight costs] and improve [removed: our] [added: the] inventory [removed: turnover] [added: turn] rate.

Our seven distribution centers, located in Georgia, Indiana, Kentucky, Maryland, Nebraska, Texas and Washington, represent total distribution capacity of [removed: 3.9] [added: 4.2] million square feet.

Tractor Supply Company (the “Company” or “we”) is the largest operator of rural lifestyle retail stores in the United States.

| • | a thorough on-boarding process to prepare new team members for their new role; |

| • | new store opening training that prepares new store managers to open stores to Company standards; |

| • | leadership development programs that prepare leaders to expand their current contributions; and |

| Ÿ Bit & Bridle® (apparel and footwear) | Ÿ Paws & Claws® (pet foods and supplies) |

| Ÿ Blue Mountain® (apparel) | Ÿ Producer’s Pride® (livestock and horse feed and supplies) |

| | bedding) |

In late 2014, we entered into a lease agreement for a second facility in Hagerstown, Maryland, with a capacity of 309,000 square feet.

This additional space will support the future growth of stores in the northeast.

Also in 2014, we started construction on a new

distribution center in Casa Grande, Arizona, with a capacity of approximately 650,000 square feet.

This facility will support our western store expansion and is expected to begin operating in the fourth quarter of 2015.

Omni-Channel

We maintain a fulfillment center within our Franklin, Kentucky distribution center to support our e-commerce activities.

Additionally in 2014, we continued to invest in our omni-channel platform and expanded capabilities related to fulfillment options, product information and site research.

We also introduced an optimized mobile and tablet experience, improved the site response time and added additional product offerings for vendor direct to customer drop shipments.

HomeTown Pet

We opened two HomeTown Pet stores in fiscal 2014.

HomeTown Pet is a new pet supply store that provides high-quality products, knowledge and service to pet owners.

The stores offer products for a wide variety of pets and animals, including cats, dogs, poultry, birds and horses as well as grooming and mobile vet services.

We are a ‘test-and-learn’ company, and we believe these stores will help us gain better insight into the pet and animal supply category and provide valuable information that can help us better understand the unique needs of our pet customers.

Through TVS, we examine business processes and identify opportunities to reduce costs, drive innovation, and improve effectiveness.

We plan to continue to upgrade our information technology and implement other efficiency-driving system enhancements.

At December 27, 2014, we operated 1,382 retail stores in 49 states.

Historically, weather conditions, including unseasonably warm weather in the fall and winter months and unseasonably cool weather in the spring and summer months, have affected the timing and volume of our sales and results of operations.

Our strategy is to manage product flow and adjust merchandise assortments and depth of inventory to capitalize on seasonal demand trends.

We are committed to complying with all applicable environmental laws and regulations.

We are also committed to becoming a more environmentally sustainable company.

This commitment is demonstrated through our Stewardship Program, which is our environmental sustainability program.

Through this program, the Company has implemented a number of initiatives designed to reduce our impact on the environment.

These initiatives include the installation of energy management systems, high efficiency lighting and heating/air conditioning systems in our stores, and recycling programs in our stores, distribution centers and the Store Support Center.

In 2014, our new Store Support Center was awarded LEED (Leadership in Energy and Environmental Design) Silver certification for its environmentally sustainable design, construction and operation.

We also installed solar arrays at the new Store Support Center in Brentwood, Tennessee and our store in Hendersonville, Tennessee.

| Chad M. Frazell | Senior Vice President – Human Resources | 42 |

Chad M.

Frazell has served as Senior Vice President - Human Resources since August 2014.

Mr. Frazell previously served as Senior Vice President, Human Resources for Shopko Stores Operating Co., LLC from April 2011 until he joined the Company.

From 2008 to 2011, Mr. Frazell served as Vice President, Human Resources for Kohl’s Corporation, where he began as a store manager in 1999.

Prior to 1999, Mr. Frazell served as a store manager and assistant manager for Target Corporation.

He began his career with Wal-Mart Stores, Inc., where he served as an assistant manager and sales associate.

In some smaller markets we use a 12,500 square foot format with slightly less inventory and lower occupancy costs than our prototype but with a similar product assortment.

| | |

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| --- | --- |

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| --- | --- |

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| --- | --- |

| • | frequent management skills training classes; |

| | |

| --- | --- |

| | |

| --- | --- |

| • | ongoing product information updates from our management headquarters, the Store Support Center. |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| --- | --- |

| • | C.E. Schmidt®, Bit & Bridle® and Blue Mountain® (apparel and footwear) |

| • | Huskee® (outdoor power equipment) |

| • | JobSmart® (tools) |

| • | Redstone® (heating products) |

| • | Traveller® (truck and automotive products) |

In 2013, we completed construction on a new distribution center, a 684,000 square foot facility in Macon, Georgia, which includes an import center.

It replaced our 521,000 square foot leased distribution center in Braselton, Georgia and became operational in the third quarter of fiscal 2013.

We regularly monitor prices at competing stores and adjust our prices as appropriate.

Multi-Channel

Additionally, in 2013, we upgraded our e-commerce website to include the integration of order management, added extensive products offerings for vendor direct to customer drop shipments and transitioned to in-house warehouse fulfillment for products that we stock.

Utilizing TVS, we improve processes by identifying and accepting the need for change of current practices to reduce costs, shorten lead times, and drive innovation.

system, a warehouse management system, a price optimization system, a vendor purchase order control system and a merchandise presentation system.

We plan to continue to upgrade our information technology and implement other efficiency-driving system enhancements (including the continued roll-out of a new warehouse management system to distribution centers, significant feature enhancements to our e-commerce platform, an enhanced demand planning system and store and support center hardware refreshes) in 2014.

We operated 1,276 retail farm and ranch stores in 48 states as of December 28, 2013.

Our strategy is to remain flexible and react to extreme weather conditions by adjusting our merchandise assortments and redirecting inventories to stores affected by the weather conditions.

We are committed to conducting business in an environmentally responsible manner.

This commitment impacts all areas of our business, including investments in store construction and maintenance, energy usage, supply chain, product selection, responsible packaging, recycling, and delivery of product knowledge to our customers.

| Alexander L. Stanton | Senior Vice President – Supply Chain | 48 |

The Company notified these vendors of the [removed: EPA's] [added: EPA’s] position and [removed: has] worked with these vendors to provide additional information to the DOJ and EPA regarding the alleged violations.

The vendor of these products and the Company are engaged in settlement discussions with the DOJ and EPA that would call for the payment of a civil penalty [removed: by] [added: by,] and certain injunctive relief [removed: against] [added: against,] the Company.

The Company does not expect the resolution of this [removed: matters] [added: matter] to have a material adverse effect on its financial condition, results of operations or cash flows.

For the fiscal year ended December [removed: 28, 2013][added: 27, 2014]

[removed: ][added: ]

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 Global Select Market on June [removed: 28, 2013,] [added: 27, 2014,] the last business day of the registrant’s most recently completed second fiscal quarter, was [removed: $7.0] [added: approximately $6.6] billion.

| Class | | Outstanding at January [removed: 25, 2014] [added: 24, 2015] |

| Common Stock, $.008 par value | | [removed: 139,559,289] [added: 136,194,193] |

Portions of the Registrant’s definitive Proxy Statement for its [removed: 2014] [added: 2015] Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

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| [removed: [9B.](#s1C63CD581D2F83AAB5842A0398B62CC4)] [added: [9B.](#s30347C9FFDBBB454F45711D2C0089DFC)] | [Other [removed: Information](#s1C63CD581D2F83AAB5842A0398B62CC4)] [added: Information](#s30347C9FFDBBB454F45711D2C0089DFC)] | [removed: [58](#s1C63CD581D2F83AAB5842A0398B62CC4)] [added: [56](#s30347C9FFDBBB454F45711D2C0089DFC)] |

| [PART [removed: III](#sFC515C819EDCC2E9733C2A0398D82CE8)] [added: III](#s06A4327873DCB696B51D11D2C0275EDB)] | | [removed: [58](#sFC515C819EDCC2E9733C2A0398D82CE8)] [added: [56](#s06A4327873DCB696B51D11D2C0275EDB)] |

| [removed: [10.](#s2430B78852498922F4232A03990A71BA)] [added: [10.](#sDD0D671B4F615D3127C611D2C0568F71)] | [Directors, Executive Officers and Corporate [removed: Governance](#s2430B78852498922F4232A03990A71BA)] [added: Governance](#sDD0D671B4F615D3127C611D2C0568F71)] | [removed: [58](#s2430B78852498922F4232A03990A71BA)] [added: [56](#sDD0D671B4F615D3127C611D2C0568F71)] |

| [removed: [11.](#s55D6BD930A758FFD8C122A03992BCD67)] [added: [11.](#sA7F79E874E2425E526BC11D2C0752C4E)] | [Executive [removed: Compensation](#s55D6BD930A758FFD8C122A03992BCD67)] [added: Compensation](#sA7F79E874E2425E526BC11D2C0752C4E)] | [removed: [58](#s55D6BD930A758FFD8C122A03992BCD67)] [added: [56](#sA7F79E874E2425E526BC11D2C0752C4E)] |

| [removed: [12.](#s34D8F01B82088D26625B2A0388E9BA17)] [added: [12.](#sA18C9D1DDC02AA4C343811D2C0B4CE37)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s34D8F01B82088D26625B2A0388E9BA17)] [added: Matters](#sA18C9D1DDC02AA4C343811D2C0B4CE37)] | [removed: [58](#s34D8F01B82088D26625B2A0388E9BA17)] [added: [57](#sA18C9D1DDC02AA4C343811D2C0B4CE37)] |

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| [removed: [14.](#s1BF3AEE793B579DA0FC62A0399B0E212)] [added: [14.](#s147234E7ABB90915FE5A11D2C102E7CA)] | [Principal Accountant Fees and [removed: Services](#s1BF3AEE793B579DA0FC62A0399B0E212)] [added: Services](#s147234E7ABB90915FE5A11D2C102E7CA)] | [removed: [59](#s1BF3AEE793B579DA0FC62A0399B0E212)] [added: [57](#s147234E7ABB90915FE5A11D2C102E7CA)] |

| [removed: [15.](#sEF8E3917404FC508FF392A039A04366C)] [added: [15.](#s7DB0313399B215BC2B2511D2C150238D)] | [Exhibits and Financial Statement [removed: Schedules](#sEF8E3917404FC508FF392A039A04366C)] [added: Schedules](#s7DB0313399B215BC2B2511D2C150238D)] | [removed: [59](#sEF8E3917404FC508FF392A039A04366C)] [added: [58](#s7DB0313399B215BC2B2511D2C150238D)] |

These factors include, without limitation, general economic conditions affecting consumer spending, the timing and acceptance of new products in the stores, the timing and mix of goods sold, purchase price volatility (including inflationary and deflationary pressures), the ability to increase sales at existing stores, the ability to manage growth and identify suitable locations, failure of an acquisition to produce anticipated results, the ability to successfully manage expenses and execute our key gross margin enhancing initiatives, the availability of favorable credit sources, capital market conditions in general, the ability to open new stores in the manner and number currently contemplated, the impact of new stores on our business, competition, weather conditions, the seasonal nature of our business, effective merchandising initiatives and marketing emphasis, the ability to retain vendors, reliance on foreign suppliers, the ability to attract, train and retain qualified employees, product liability and other claims, changes in federal, state or local regulations, potential judgments, fines, legal fees and other costs, breach of information systems or theft of customer data, ongoing and potential future legal or regulatory proceedings, management of our information systems, failure to [removed: secure or] develop and implement new technologies, the failure of customer-facing technology systems, business disruption including from the implementation of [added: new] supply chain technologies, effective tax rate changes and results of examination by taxing authorities, the ability to maintain an effective system of internal control over financial reporting, changes in accounting standards, assumptions and estimates, and those described in Item 1A.

10-K 1 a2014form10-k.htm 10-K TRACTOR SUPPLY COMPANY

| 5401 Virginia Way, Brentwood, Tennessee | | 37027 |

| [PART I](#s7B25532206F9569869F011D2AA47A601) | | [1](#s7B25532206F9569869F011D2AA47A601) |

| [1.](#s836EC4BA1DE44FB555DA11D2AC2BAB94) | [Business](#s836EC4BA1DE44FB555DA11D2AC2BAB94) | [1](#s836EC4BA1DE44FB555DA11D2AC2BAB94) |

| [2.](#s1C88AB3283D2307F94F411D2AD446298) | [Properties](#s1C88AB3283D2307F94F411D2AD446298) | [13](#s1C88AB3283D2307F94F411D2AD446298) |

| [PART II](#s66CCDECBF808B5F4A59411D2B9A27221) | | [14](#s66CCDECBF808B5F4A59411D2B9A27221) |

| [PART IV](#s6BF78E1CBF756BA700C711D2C121759E) | | [58](#s6BF78E1CBF756BA700C711D2C121759E) |

10-K 1 a2013form10-k.htm 10-K

| 200 Powell Place, Brentwood, Tennessee | | 37027 |

| [PART I](#s7F07E9EEBE1CBB93EB112A037FC65C71) | | [1](#s7F07E9EEBE1CBB93EB112A037FC65C71) |

| [1.](#sEF8F413865F8B47AF4CD2A0387D38952) | [Business](#sEF8F413865F8B47AF4CD2A0387D38952) | [1](#sEF8F413865F8B47AF4CD2A0387D38952) |

| [2.](#s51B3050DCDE32B4B475B2A038B1193AE) | [Properties](#s51B3050DCDE32B4B475B2A038B1193AE) | [13](#s51B3050DCDE32B4B475B2A038B1193AE) |

| [PART II](#s2EDAE746889F70F675372A0392558AB8) | | [15](#s2EDAE746889F70F675372A0392558AB8) |

| [PART IV](#sFAAEF17AF450F72CD2D32A0399D258C9) | | [59](#sFAAEF17AF450F72CD2D32A0399D258C9) |

At December [removed: 28, 2013,] [added: 27, 2014,] the Company operated [removed: 1,276] [added: 1,382] stores in [removed: 48] [added: 49] states.

The Company leases approximately 93% of its stores, [removed: one of its seven] [added: two] distribution [removed: centers] [added: sites] and [removed: three store support center locations] [added: its Merchandising Innovation Center (planogram) located] in [removed: Brentwood,] [added: Nashville,] Tennessee.

| New York | | [removed: 71] [added: 73] | | [removed: Massachusetts] [added: Wisconsin] | | [removed: 14] [added: 16] |

| [removed: Pennsylvania] [added: Ohio] | | [removed: 68] [added: 85] | | New Mexico | | [removed: 14] [added: 17] |

| North Carolina | | [removed: 61] [added: 66] | | [removed: Nebraska] [added: Colorado] | | [removed: 12] [added: 14] |

| [removed: Georgia] [added: Florida] | | 51 | | New Jersey | | [removed: 11] [added: 12] |

| Oklahoma | | [removed: 31] [added: 33] | | [removed: North] [added: South] Dakota | | [removed: 7] [added: 6] |

| South Carolina | | [removed: 29] [added: 32] | | [removed: Vermont] [added: Delaware] | | [removed: 7] [added: 4] |

| Arkansas | | [removed: 20] [added: 21] | | Oregon | | 2 |

| [removed: Missouri] [added: Maine] | | [removed: 18] [added: 19] | | Rhode Island | | [removed: 1] [added: 2] |

| Washington | | 18 | | [removed: Nevada] | | [removed: 1] |

| [removed: New Hampshire] [added: Texas] | | [removed: 17] [added: 145] | | [removed: Wyoming] [added: New Hampshire] | | [removed: 1] [added: 17] |

| Hagerstown, Maryland [added: (a)] | | 482,000 | | Owned |

| Michigan | | 77 | | Illinois | | 16 |

| Pennsylvania | | 74 | | Massachusetts | | 16 |

| Tennessee (a) | | 71 | | Kansas | | 15 |

| Georgia | | 54 | | Nebraska | | 12 |

| Virginia | | 48 | | Connecticut | | 11 |

| Kentucky | | 47 | | North Dakota | | 11 |

| Alabama | | 45 | | Minnesota | | 10 |

| Indiana | | 45 | | Iowa | | 7 |

| California | | 36 | | Vermont | | 7 |

| Louisiana | | 28 | | Montana | | 3 |

| Mississippi | | 25 | | Wyoming | | 3 |

| Arizona | | 22 | | Nevada | | 2 |

| Maryland | | 18 | | Idaho | | 1 |

| Missouri | | 18 | | Utah | | 1 |

| | | | | | | 1,382 |

(a) Includes the Company’s two HomeTown Pet stores.

| Hagerstown, Maryland (a) | | 309,000 | | Leased |

(a) The leased facility in Hagerstown is treated as an extension of the existing owned Hagerstown location and is not considered a separate distribution center.

In addition, our eighth distribution center is under construction in Casa Grande, Arizona.

This owned facility will be approximately 650,000 square feet, and it is expected to be fully operational by the fourth quarter of 2015.

The Company’s Store Support Center occupies approximately 260,000 square feet of owned building space in Brentwood, Tennessee, and the Company’s Merchandising Innovation Center occupies approximately 32,000 square feet of leased building space in Nashville, Tennessee.

| Texas | | 138 | | Illinois | | 16 |

| Ohio | | 81 | | Wisconsin | | 15 |

| Michigan | | 72 | | Kansas | | 14 |

| Tennessee | | 66 | | Maryland | | 13 |

| Florida | | 49 | | Connecticut | | 10 |

| Kentucky | | 47 | | Minnesota | | 10 |

| Virginia | | 46 | | Arizona | | 8 |

| Indiana | | 45 | | Colorado | | 8 |

| Alabama | | 43 | | Iowa | | 7 |

| California | | 25 | | South Dakota | | 6 |

| Louisiana | | 25 | | Delaware | | 4 |

| Mississippi | | 25 | | Montana | | 3 |

| Maine | | 19 | | Idaho | | 1 |

| | | | | | | 1,276 |

| | Price Range [removed: (split adjusted)] | | | | | | |

| First Quarter | [removed: $52.69] [added: $78.17] | | [removed: $43.13] [added: $62.06] | | [removed: $46.37] [added: $52.69] | | [removed: $34.25] [added: $43.13] |

| Second Quarter | [removed: $59.12] [added: $72.99] | | [removed: $50.17] [added: $59.75] | | [removed: $50.60] [added: $59.12] | | [removed: $40.30] [added: $50.17] |

| Third Quarter | [removed: $67.13] [added: $67.84] | | [removed: $57.00] [added: $57.20] | | [removed: $50.64] [added: $67.13] | | [removed: $37.73] [added: $57.00] |

| Fourth Quarter | [removed: $77.00] [added: $79.14] | | [removed: $64.17] [added: $55.95] | | [removed: $51.87] [added: $77.00] | | [removed: $41.20] [added: $64.17] |

As of January [removed: 31, 2014,] [added: 30, 2015,] the [removed: approximate] number of record holders of our common stock was [removed: 800] [added: 759] (excluding individual participants in nominee security position listings), and the estimated number of beneficial holders of our common stock was [removed: 82,000.][added: 119,000.]

During [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] the Board of Directors declared the following cash dividends:

| Date Declared | | Dividend Amount Per Share [removed: (a)] | | Stockholders of Record Date | | Date Paid |

| October [removed: 31, 2012] [added: 29, 2014] | | [removed: $0.10] [added: $0.16] | | November [removed: 19, 2012] [added: 17, 2014] | | December [removed: 4, 2012] [added: 2, 2014] |

It is the present intention of the Board of Directors to continue to pay a quarterly cash dividend; however, the declaration and payment of future dividends will be determined by the Board of Directors in its sole discretion and will depend upon the earnings, financial condition, and capital needs of the Company, [removed: and] [added: as well as] other factors which the Board of Directors deem relevant.

On February [removed: 5, 2014,] [added: 4, 2015,] our Board of Directors declared a quarterly cash dividend of [removed: $0.13] [added: $0.16] per share of the Company’s common stock.

The dividend will be paid on March [removed: 11, 2014,] [added: 10, 2015,] to stockholders of record as of the close of business on February [removed: 24, 2014.][added: 23, 2015.]

Stock purchase activity during fiscal [removed: 2013] [added: 2014] is set forth in the table below:

| Period | | Total Number of Shares Purchased [removed: (a)] | | | Average Price Paid Per Share [removed: (a)] | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | |

[removed: (b)The] [added: (a)The] total number of shares purchased and average price paid per share include [removed: 76,246] [added: 18,243] shares withheld from vested restricted stock units to satisfy employees’ minimum statutory tax withholding requirements.

[removed: (c)The] [added: (b)The] total number of shares purchased and average price paid per share include [removed: 2,697] [added: 58,949] shares withheld from vested restricted stock units to satisfy employees’ minimum statutory tax withholding requirements.

The following graph compares the cumulative total stockholder return on our [removed: Common Stock] [added: common stock] from December [removed: 27, 2008] [added: 26, 2009] to December [removed: 28, 2013] [added: 27, 2014] (the [removed: Company's] [added: Company’s] fiscal year-end) with the cumulative total returns of the S&P 500 Index and the S&P Retail Index over the same period.

The comparison assumes that $100 was invested on December [removed: 27, 2008] [added: 26, 2009] in our [removed: Common Stock] [added: common stock] and in each of the foregoing indices and in each case assumes reinvestment of dividends.

[removed: ][added: ]

| | | [removed: 12/27/2008 | | | |] 12/26/2009 | | | | 12/25/2010 | | | | 12/31/2011 | | | | 12/29/2012 | | | | 12/28/2013 | | | [added: | 12/27/2014 | | |]

| | 2014 | | | | 2013 | | |

| July 30, 2014 | | $0.16 | | August 18, 2014 | | September 3, 2014 |

| April 30, 2014 | | $0.16 | | May 19, 2014 | | June 3, 2014 |

| February 5, 2014 | | $0.13 | | February 24, 2014 | | March 11, 2014 |

On February 24, 2014, the Company’s Board of Directors authorized a $1 billion increase to the existing share repurchase program, bringing the total amount authorized to date under the program to an aggregate of $2 billion of common stock, exclusive of any fees, commissions, or other expenses related to such repurchases, through December 2017.

| First Quarter (a) | | 1,280,109 | | | $ | 66.92 | | | 1,261,866 | | | $ | 1,077,330,571 | |

| Second Quarter | | 960,899 | | | 65.09 | | | | 960,899 | | | 1,014,803,424 | | |

| Third Quarter (b) | | 1,633,109 | | | 61.81 | | | | 1,574,160 | | | 917,441,732 | | |

| 9/28/14 – 10/25/14 | | 703,900 | | | 59.39 | | | | 703,900 | | | 875,649,148 | | |

| 10/26/14 – 11/22/14 | | 100,000 | | | 73.80 | | | | 100,000 | | | 868,270,578 | | |

| 11/23/14 – 12/27/14 | | 64,000 | | | 77.06 | | | | 64,000 | | | 863,339,833 | | |

| | | 867,900 | | | 62.35 | | | | 867,900 | | | 863,339,833 | | |

| As of December 27, 2014 | | 4,742,017 | | | $ | 63.95 | | | 4,664,825 | | | $ | 863,339,833 | |

| Tractor Supply Company | | $ | 100.00 | | | $ | 179.16 | | | $ | 259.67 | | | $ | 323.78 | | | $ | 559.24 | | | $ | 576.86 | |

| S&P 500 | | $ | 100.00 | | | $ | 111.57 | | | $ | 111.64 | | | $ | 124.50 | | | $ | 163.46 | | | $ | 185.42 | |

| S&P Retail Index | | $ | 100.00 | | | $ | 122.58 | | | $ | 125.31 | | | $ | 156.19 | | | $ | 223.73 | | | $ | 245.95 | |

On August 28, 2013, our Board of Directors declared a two-for-one split of our outstanding shares of common stock to be effected in the form of a stock dividend.

On September 26, 2013, stockholders of record at the close of business on September 18, 2013, received one additional share of common stock for each share owned by such stockholder.

All share and per-share information in the Annual Report on Form 10-K has been retroactively restated to reflect the stock split.

| | 2013 | | | | 2012 | | |

| August 1, 2012 | | $0.10 | | August 20, 2012 | | September 5, 2012 |

| May 2, 2012 | | $0.10 | | May 21, 2012 | | June 5, 2012 |

| February 8, 2012 | | $0.06 | | February 27, 2012 | | March 13, 2012 |

(a) All dividend amounts except the October 30, 2013 dividend amount have been split adjusted.

The Company’s Board of Directors has authorized common stock repurchases under the share repurchase program up to $1 billion, through April 2015.

| First Quarter (b) | | 1,121,246 | | | $ | 47.99 | | | 1,045,000 | | | $ | 241,306,997 | |

| Second Quarter | | 353,650 | | | 54.97 | | | | 353,650 | | | 221,870,716 | | |

| Third Quarter | | 352,886 | | | 60.35 | | | | 352,886 | | | 200,578,283 | | |

| 9/29/13 – 10/26/13 | | — | | | — | | | | — | | | 200,578,283 | | |

| 10/27/13 – 11/23/13 (c) | | 281,221 | | | 71.86 | | | | 278,524 | | | 180,572,136 | | |

| 11/24/13 – 12/28/13 | | 256,700 | | | 73.26 | | | | 256,700 | | | 161,769,217 | | |

| | | 537,921 | | | 72.53 | | | | 535,224 | | | 161,769,217 | | |

| As of December 28, 2013 | | 2,365,703 | | | $ | 56.46 | | | 2,286,760 | | | $ | 161,769,217 | |

(a)The number of shares purchased and the average price paid per share shown in the table above have been adjusted to reflect the effect of a two-for-one stock split that was effective September 26, 2013.

| Tractor Supply Company | | $ | 100.00 | | | $ | 156.52 | | | $ | 280.42 | | | $ | 406.43 | | | $ | 506.78 | | | $ | 875.32 | |

| S&P 500 | | $ | 100.00 | | | $ | 129.07 | | | $ | 143.99 | | | $ | 144.09 | | | $ | 160.68 | | | $ | 210.98 | |

| S&P Retail Index | | $ | 100.00 | | | $ | 153.87 | | | $ | 188.62 | | | $ | 192.81 | | | $ | 240.33 | | | $ | 344.26 | |

| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009] [added: 2010] | | |

| | (52 weeks) | | | | (52 weeks) | | | | [removed: (53] [added: (52] weeks) | | | | [removed: (52] [added: (53] weeks) | | | | (52 weeks) | | |

| Net sales | $ | [removed: 5,164,784] [added: 5,711,715] | | | $ | [removed: 4,664,120] [added: 5,164,784] | | | $ | [removed: 4,232,743] [added: 4,664,120] | | | $ | [removed: 3,638,336] [added: 4,232,743] | | | $ | [removed: 3,206,937] [added: 3,638,336] | |

| Gross profit | [removed: 1,753,609] [added: 1,950,415] | | | | [removed: 1,566,054] [added: 1,753,609] | | | | [removed: 1,406,872] [added: 1,566,054] | | | | [removed: 1,203,665] [added: 1,406,872] | | | | [removed: 1,041,889] [added: 1,203,665] | | |

| Selling, general and administrative expenses | [removed: 1,138,934] [added: 1,246,308] | | | | [removed: 1,040,287] [added: 1,138,934] | | | | [removed: 973,822] [added: 1,040,287] | | | | [removed: 867,644] [added: 973,822] | | | | [removed: 784,066] [added: 867,644] | | |

| Depreciation and amortization | [removed: 100,025] [added: 114,635] | | | | [removed: 88,975] [added: 100,025] | | | | [removed: 80,347] [added: 88,975] | | | | [removed: 69,797] [added: 80,347] | | | | [removed: 66,258] [added: 69,797] | | |

| Operating income | [removed: 514,650] [added: 589,472] | | | | [removed: 436,792] [added: 514,650] | | | | [removed: 352,703] [added: 436,792] | | | | [removed: 266,224] [added: 352,703] | | | | [removed: 191,565] [added: 266,224] | | |

| Interest expense, net | [removed: 557] [added: 1,885] | | | | [removed: 1,055] [added: 557] | | | | [removed: 2,087] [added: 1,055] | | | | [removed: 1,284] [added: 2,087] | | | | [removed: 1,644] [added: 1,284] | | |

| Income before income taxes | [removed: 514,093] [added: 587,587] | | | | [removed: 435,737] [added: 514,093] | | | | [removed: 350,616] [added: 435,737] | | | | [removed: 264,940] [added: 350,616] | | | | [removed: 189,921] [added: 264,940] | | |

| Income tax expense | [removed: 185,859] [added: 216,702] | | | | [removed: 159,280] [added: 185,859] | | | | [removed: 127,876] [added: 159,280] | | | | [removed: 96,968] [added: 127,876] | | | | [removed: 70,176] [added: 96,968] | | |

| Net income | $ | [removed: 328,234] [added: 370,885] | | | $ | [removed: 276,457] [added: 328,234] | | | $ | [removed: 222,740] [added: 276,457] | | | $ | [removed: 167,972] [added: 222,740] | | | $ | [removed: 119,745] [added: 167,972] | |

| Net income per share – basic (b) [removed: (c)] | $ | [removed: 2.35] [added: 2.69] | | | $ | [removed: 1.94] [added: 2.35] | | | $ | [removed: 1.55] [added: 1.94] | | | $ | [removed: 1.16] [added: 1.55] | | | $ | [removed: 0.83] [added: 1.16] | |

| Net income per share – diluted (b) [removed: (c)] | $ | [removed: 2.32] [added: 2.66] | | | $ | [removed: 1.90] [added: 2.32] | | | $ | [removed: 1.51] [added: 1.90] | | | $ | [removed: 1.12] [added: 1.51] | | | $ | [removed: 0.82] [added: 1.12] | |

| Weighted average shares – diluted (b) [removed: (c)] | [removed: 141,723] [added: 139,435] | | | | [removed: 145,514] [added: 141,723] | | | | [removed: 147,842] [added: 145,514] | | | | [removed: 149,372] [added: 147,842] | | | | [removed: 146,594] [added: 149,372] | | |

| Dividends declared per common share outstanding [removed: (c)] | $ | [removed: 0.49] [added: 0.61] | | | $ | [removed: 0.36] [added: 0.49] | | | $ | [removed: 0.22] [added: 0.36] | | | $ | [removed: 0.14] [added: 0.22] | | | $ | [removed: 0.00] [added: 0.14] | |

| Gross margin | [removed: 34.0] [added: 34.1] | | % | | [removed: 33.6] [added: 34.0] | | % | | [removed: 33.2] [added: 33.6] | | % | | [removed: 33.1] [added: 33.2] | | % | | [removed: 32.5] [added: 33.1] | | % |

| Selling, general and administrative expenses | [removed: 22.1] [added: 21.8] | | % | | [removed: 22.3] [added: 22.1] | | % | | [removed: 23.0] [added: 22.3] | | % | | [removed: 23.9] [added: 23.0] | | % | | [removed: 24.4] [added: 23.9] | | % |

| Operating income | [removed: 10.0] [added: 10.3] | | % | | [removed: 9.4] [added: 10.0] | | % | | [removed: 8.3] [added: 9.4] | | % | | [removed: 7.3] [added: 8.3] | | % | | [removed: 6.0] [added: 7.3] | | % |

| Net income | [removed: 6.4] [added: 6.5] | | % | | [removed: 6.0] [added: 6.4] | | % | | [removed: 5.3] [added: 6.0] | | % | | [removed: 4.6] [added: 5.3] | | % | | [removed: 3.7] [added: 4.6] | | % |

| Stores open at end of year | [removed: 1,276] [added: 1,382] | | | | [removed: 1,176] [added: 1,276] | | | | [removed: 1,085] [added: 1,176] | | | | [removed: 1,001] [added: 1,085] | | | | [removed: 930] [added: 1,001] | | |

| Comparable store sales increase [removed: (decrease) (d)] [added: (c)] | [removed: 4.8] [added: 3.8] | | % | | [removed: 5.3] [added: 4.8] | | % | | [removed: 8.2] [added: 5.3] | | % | | [removed: 7.0] [added: 8.2] | | % | | [removed: (1.1] [added: 7.0] | | [removed: )%] [added: %] |

| New store sales (as a % of net sales) [removed: (d)] [added: (c)] | [removed: 5.4] [added: 6.2] | | % | | [removed: 5.9] [added: 5.4] | | % | | [removed: 5.6] [added: 5.9] | | % | | 5.6 | | % | | [removed: 7.2] [added: 5.6] | | % |

| Average transaction value | $ | [removed: 44.48] [added: 44.84] | | | $ | [removed: 44.40] [added: 44.48] | | | $ | [removed: 43.33] [added: 44.40] | | | $ | [removed: 42.07] [added: 43.33] | | | $ | [removed: 42.06] [added: 42.07] | |

| Comparable store average transaction value increase (decrease) [removed: (d)] [added: (c)] | [removed: 0.0] [added: 0.6] | | % | | [removed: 2.0] [added: 0.0] | | % | | [removed: 3.1] [added: 2.0] | | % | | [removed: (0.3] [added: 3.1] | | [removed: )%] [added: %] | | [removed: (6.0] [added: (0.3] | | )% |

| Comparable store average transaction count increase [removed: (d)] [added: (c)] | [removed: 4.7] [added: 3.2] | | % | | [removed: 3.0] [added: 4.7] | | % | | [removed: 5.0] [added: 3.0] | | % | | [removed: 7.4] [added: 5.0] | | % | | [removed: 5.3] [added: 7.4] | | % |

| Total selling square footage [removed: (000's)] [added: (000’s)] | [removed: 20,470] [added: 22,176] | | | | [removed: 18,893] [added: 20,470] | | | | [removed: 17,506] [added: 18,893] | | | | [removed: 16,107] [added: 17,506] | | | | [removed: 15,023] [added: 16,107] | | |

| Total team members | [removed: 19,200] [added: 21,100] | | | | [removed: 17,300] [added: 19,200] | | | | [removed: 16,400] [added: 17,300] | | | | [removed: 14,700] [added: 16,400] | | | | [removed: 13,300] [added: 14,700] | | |

| Capital expenditures (000’s) | $ | [removed: 218,200] [added: 160,613] | | | $ | [removed: 152,924] [added: 218,200] | | | $ | [removed: 166,156] [added: 152,924] | | | $ | [removed: 96,511] [added: 166,156] | | | $ | [removed: 73,974] [added: 96,511] | |

| Average inventory per store [removed: (e)] [added: (d)] | $ | [removed: 723.5] [added: 752.7] | | | $ | [removed: 727.4] [added: 723.5] | | | $ | [removed: 723.4] [added: 727.4] | | | $ | [removed: 708.7] [added: 723.4] | | | $ | [removed: 706.5] [added: 708.7] | |

| Inventory turns | [removed: 3.29] [added: 3.32] | | | | [removed: 3.28] [added: 3.29] | | | | [removed: 3.23] [added: 3.28] | | | | [removed: 3.09] [added: 3.23] | | | | [removed: 2.88] [added: 3.09] | | |

| Working capital | $ | [removed: 677,107] [added: 670,897] | | | $ | [removed: 569,547] [added: 677,107] | | | $ | [removed: 629,624] [added: 569,547] | | | $ | [removed: 617,153] [added: 629,624] | | | $ | [removed: 475,847] [added: 617,153] | |

| Total assets | $ | [removed: 1,903,391] [added: 2,034,571] | | | $ | [removed: 1,706,808] [added: 1,903,391] | | | $ | [removed: 1,594,832] [added: 1,706,808] | | | $ | [removed: 1,463,474] [added: 1,594,832] | | | $ | [removed: 1,276,580] [added: 1,463,474] | |

| Long-term debt, less current portion [removed: (f)] [added: (e)] | $ | [removed: 1,200] [added: 4,957] | | | $ | [removed: 1,242] [added: 1,200] | | | $ | [removed: 1,284] [added: 1,242] | | | $ | [removed: 1,316] [added: 1,284] | | | $ | [removed: 1,407] [added: 1,316] | |

| Stockholders’ equity | $ | [removed: 1,246,894] [added: 1,293,561] | | | $ | [removed: 1,024,974] [added: 1,246,894] | | | $ | [removed: 1,008,290] [added: 1,024,974] | | | $ | [removed: 933,242] [added: 1,008,290] | | | $ | [removed: 779,151] [added: 933,242] | |

[removed: (d)] [added: (c)] Comparable store metrics are calculated on an annual [removed: basis, including relocations,] [added: basis] using [added: sales generated from] all stores open at least one [removed: year.][added: year and all online sales and exclude certain adjustments to net sales.]

[removed: (e)] [added: (d)] Assumes average inventory cost, excluding inventory in-transit.

[removed: (f)] [added: (e)] Long-term debt includes amounts outstanding under the [removed: Company's] [added: Company’s] capital lease obligations, excluding the current portion.

Stores closed or relocated during either of the years being compared are not removed from our comparable store sales metrics calculations.

(c) Adjusted to reflect two-for-one stock split that was effective September 26, 2013.

| [Management's Report on Internal Control over Financial [removed: Reporting](#sA9EA5CC0F5A1DC4883F12A03947B08A1)] [added: Reporting](#s80F594561975ECCD752511D2BBC4B804)] | [removed: [35](#sA9EA5CC0F5A1DC4883F12A03947B08A1)] [added: [34](#s80F594561975ECCD752511D2BBC4B804)] |

| [Reports of Independent Registered Public Accounting [removed: Firm](#sF2E2735FBD20ADC4B2B62A03949C6E2A)] [added: Firm](#sDE753231424253780A0111D2BBE364AA)] | [removed: [36](#sF2E2735FBD20ADC4B2B62A03949C6E2A)] [added: [35](#sDE753231424253780A0111D2BBE364AA)] |

| [Consolidated Statements of Income for the fiscal years ended December [removed: 28, 2013,] [added: 27, 2014,] December [removed: 29, 2012] [added: 28, 2013] and December [removed: 31, 201](#s1ED6F70828B5AC81C3542A037FC737C7)1] [added: 29, 2012](#s918733D650C0BA47D84211D2AA38E3CC)] | [removed: [38](#s1ED6F70828B5AC81C3542A037FC737C7)] [added: [37](#s918733D650C0BA47D84211D2AA38E3CC)] |

| [Consolidated Balance Sheets as of December [removed: 28, 2013] [added: 27, 2014] and December [removed: 29, 201](#sB06BC3DB982676A877752A037FD06FC3)2] [added: 28, 2013](#sA01FF43F8C23B5D742F111D2A9EABE5E)] | [removed: [39](#sB06BC3DB982676A877752A037FD06FC3)] [added: [38](#sA01FF43F8C23B5D742F111D2A9EABE5E)] |

| [Consolidated Statements of Stockholders’ Equity for the fiscal years ended December [removed: 28, 2013,] [added: 27, 2014,] December [removed: 29, 2012] [added: 28, 2013] and December [removed: 31, 2011](#sAE8D8CA97B01DC9674452A037FE40469)] [added: 29, 2012](#sF18F6CE2348B8F3B74CE11D2A9EAAC7E)] | [removed: [40](#sAE8D8CA97B01DC9674452A037FE40469)] [added: [39](#sF18F6CE2348B8F3B74CE11D2A9EAAC7E)] |

| [Consolidated Statements of Cash Flows for the fiscal years ended December [removed: 28, 2013,] [added: 27, 2014,] December [removed: 29, 2012] [added: 28, 2013] and December [removed: 31, 2011](#sDCE62B001683508D4CB62A0380026487)] [added: 29, 2012](#s2827ED9A7134E9D66CE311D2AA0992F8)] | [removed: [41](#sDCE62B001683508D4CB62A0380026487)] [added: [40](#s2827ED9A7134E9D66CE311D2AA0992F8)] |

| [removed: Notes] [added: [Notes] to [removed: [Consolidated] [added: Consolidated] Financial [removed: Statements](#sDCE62B001683508D4CB62A0380026487)] [added: Statements](#sEF5C856F78A986E2E33B11D2BD4A2BEE)] | [removed: [42](#s768CE43DD40A7FC24FAC2A039637406C)] [added: [41](#sEF5C856F78A986E2E33B11D2BD4A2BEE)] |

Management assessed the effectiveness of the [removed: Company's] [added: Company’s] internal control over financial reporting as of December [removed: 28, 2013.][added: 27, 2014.]

In making this assessment, management used the criteria [removed: set forth] [added: established in Internal Control - Integrated Framework issued] by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (COSO) in Internal Control - Integrated Framework (1992 framework).][added: (2013 framework) (the COSO criteria).]

Based on this assessment, management believes that, as of December [removed: 28, 2013,] [added: 27, 2014,] the [removed: Company's] [added: Company’s] internal control over financial reporting is effective based on those criteria.

| February [removed: 19,] [added: 5,] 2014 | | [added: $0.13] | | February [removed: 19,] [added: 24,] 2014 | [added: | March 11, 2014 |]