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

[removed: A general reduction in the level of discretionary spending, shifts in consumer discretionary spending to our competitors or shifts in discretionary spending to less profitable products sold by] us, could result in lower net sales, slower inventory turnover, greater markdowns on inventory, and a reduction in profitability due to lower margins.

Various factors affect comparable store sales, including the general retail sales environment, our ability to efficiently source and distribute products, changes in our merchandise assortment, competition, [added: proximity of our locations to one another or to the locations of other retailers,] current economic conditions, customer satisfaction with our products, the timing of promotional events, the release of new merchandise, the success of marketing programs and weather conditions.

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

[removed: Our access to funds under our Senior Credit Facility, which provides for borrowings of up] [added: (as discussed in Note 3] to [removed: $400 million,] [added: the Consolidated Financial Statements)] is dependent on the ability of the banks that are parties to the facility to meet their funding commitments.

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

Our ability to manage our planned expansion depends on the adequacy of our existing information systems, the efficiency and expansion of our distribution systems, the adequacy of the hiring and training process for new personnel (especially store managers), the effectiveness of our controls and procedures, and the ability to identify customer demand [added: and build market awareness] in different geographic areas.

[added: 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.

Also, while we employ several different methodologies to assess potential business opportunities, the new businesses may not meet [removed: or exceed] our expectations and, therefore, adversely affect our financial performance.

We have agreements with our vendors in which the vendors agree to comply with applicable laws, including labor and environmental laws, and to indemnify us against [removed: certain liabilities and costs.]

[added: 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.

We are subject to numerous federal, state, local and foreign laws and governmental regulations [added: including those] relating to environmental protection, personal injury, intellectual property, consumer product safety, building, land use and zoning requirements, workplace regulations, wage and hour, privacy and information security and employment law matters.

If we fail to comply with existing or future laws or regulations, or if these laws or regulations are violated by importers, manufacturers or [removed: distributers,] [added: distributors,] we may be subject to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs.

In addition, our online operations at TractorSupply.com depend upon the secure transmission of confidential information over public networks, [removed: including information permitting cashless payments.]

We rely on our distribution and transportation network to provide goods to our stores in a timely and cost-effective manner through deliveries to our distribution [removed: centers] [added: facilities] from vendors and then from the distribution [removed: centers] [added: facilities] or direct ship vendors to our stores by various means of transportation, including shipments by sea, air, rail and truck.

For example, unexpected delivery delays (including delays due to weather, fuel shortages or other reasons) or increases in transportation costs (including increased fuel costs or a decrease in transportation capacity for overseas shipments) could significantly decrease our ability to provide adequate product for sale, [removed: resulting in lower sales and profitability.]

In addition, labor shortages or work stoppages in the transportation industry or long-term disruptions to the national and international transportation infrastructure that lead to delays or interruptions of deliveries could [removed: negatively affect our business.]

Also, a fire, tornado, or other disaster at one of our distribution [removed: centers] [added: facilities] could disrupt our timely receiving, processing and shipment of merchandise to our stores which could adversely affect our business.

Delays in opening distribution [removed: centers] [added: facilities] could adversely affect our future operations by slowing store growth, which may in turn reduce revenue growth.

In addition, distribution-related construction or expansion projects entail risks which could cause delays and cost overruns, such as: shortages of materials; shortages of skilled labor or work stoppages; unforeseen construction, scheduling, [removed: engineering, environmental or geological problems; weather interference; fires or other casualty losses; and unanticipated cost increases.]

These initiatives are designed to streamline our distribution process so that we can optimize the delivery of goods and services to our stores and distribution [removed: centers] [added: facilities] in a timely manner and at a reasonable cost.

We could [added: also] be [removed: materially] adversely [removed: affected if our management information systems are disrupted or] [added: impacted] if we are unable to improve, upgrade, maintain and expand [added: our management information] systems, particularly in light of the contemplated continued store growth.

[added: 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.

[removed: Because of the inherent limitations in all internal] control systems, internal control over financial reporting may not prevent or detect misstatements.

[removed: Any failure to maintain an] effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud, and could expose us to litigation or adversely affect the market price of our common stock.

A general reduction in the level of discretionary spending, shifts in consumer discretionary spending to our competitors or shifts in discretionary spending to less profitable products sold by

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Our access to funds under our credit facility

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certain liabilities and costs.

Because of the inherent limitations in all internal

Any failure to maintain an

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including information permitting cashless payments.

We could be materially adversely affected if we experienced a disruption or data loss relating to our management information systems and are unable to recover timely.

resulting in lower sales and profitability.

negatively affect our business.

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engineering, environmental or geological problems; weather interference; fires or other casualty losses; and unanticipated cost increases.

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

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

Extended delays or cost overruns

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: 27, 2014] [added: 26, 2015] (our fiscal years [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012).][added: 2013).]

The Company is focused on supplying the needs of recreational farmers and ranchers and others who enjoy the rural [removed: lifestyle,] [added: lifestyle (which we refer to] as [added: the “Out Here” lifestyle), as] well as tradesmen and small businesses.

As of December [removed: 27, 2014,] [added: 26, 2015,] we operated [removed: 1,382] [added: 1,488] retail stores in 49 states under the names Tractor Supply Company, Del’s Feed & Farm Supply and HomeTown Pet.

Our current and long-term growth strategy is to: (1) expand domestic geographic market presence through opening new retail stores, (2) enhance financial performance through comparable store sales growth achieved through targeted merchandising and marketing programs with an “everyday value price” philosophy 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 [removed: e-commerce and internet-supported sales by improving] [added: omni-channel enhancements, tying together] our website product [removed: content] [added: content, social media] and [removed: enhancing the] online [added: shopping] experience, and (6) expand through selective [removed: acquisition,] [added: acquisitions,] 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: 930] [added: 1,001] stores at the end of [removed: 2009] [added: 2010] to [removed: 1,382] [added: 1,488] stores at the end of fiscal [removed: 2014,] [added: 2015,] and in sales, with a compounded annual growth rate of approximately [removed: 12.2%.][added: 11.3%.]

We have developed a proven method for selecting store sites and have identified [removed: over 700] [added: approximately 1,000] additional [removed: markets] [added: opportunities] for new Tractor Supply stores.

We opened [removed: 107] [added: 114] new stores in [removed: 2014] [added: 2015] and [removed: 102] [added: 107] new stores in [removed: 2013,] [added: 2014,] a selling square footage increase of approximately [removed: 8.3%] [added: 8.0%] in [removed: both] fiscal [removed: 2014] [added: 2015] and [removed: 2013.][added: approximately 8.3% in fiscal 2014.]

During [removed: 2014,] [added: 2015,] we opened stores in [removed: 31 states, including our first store in Utah,] [added: 33 states] and [added: completed construction of a new distribution center] in [removed: 2015 we expect] [added: Casa Grande, Arizona] to [removed: continue] [added: support] our [added: continued] expansion into the western states.

Net sales increased [removed: 10.6%] [added: 9.0%] to [removed: $5.71] [added: $6.23] billion in fiscal [removed: 2014] [added: 2015] from [removed: $5.16] [added: $5.71] billion in fiscal [removed: 2013.][added: 2014.]

Comparable store sales increased [removed: 3.8%] [added: 3.1%] in fiscal [removed: 2014] [added: 2015] versus a [removed: 4.8%] [added: 3.8%] increase in fiscal [removed: 2013.][added: 2014.]

Gross profit increased [removed: 11.2%] [added: 9.9%] to [removed: $1.95] [added: $2.14] billion in fiscal [removed: 2014] [added: 2015] from [removed: $1.75] [added: $1.95] billion in fiscal [removed: 2013,] [added: 2014,] and gross margin increased [removed: 10] [added: 30] basis points to [removed: 34.1%] [added: 34.4%] of sales in fiscal [removed: 2014] [added: 2015] from [removed: 34.0%] [added: 34.1%] of sales in fiscal [removed: 2013.][added: 2014.]

Operating [removed: profit] [added: income] increased [removed: 30] [added: 10] basis points to [removed: 10.3%] [added: 10.4%] of [added: net] sales in fiscal [removed: 2014] [added: 2015] from [removed: 10.0%] [added: 10.3%] of [added: net] sales in fiscal [removed: 2013.][added: 2014.]

In fiscal [removed: 2014,] [added: 2015,] diluted earnings per share grew [removed: 14.7%,] [added: 12.8%,] to [removed: $2.66] [added: $3.00] compared to [removed: $2.32] [added: $2.66] in fiscal [removed: 2013.][added: 2014.]

We ended the year with [removed: $51.1] [added: $63.8] million in [removed: cash,] [added: cash and outstanding debt of $150.0 million,] after returning [removed: $382.6] [added: $395.8] 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. We have established an inventory valuation reserve to recognize the estimated impairment in value (i.e., an inability to realize the full carrying value) 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 [removed: at] [added: as of] December [removed: 27, 2014,] [added: 26, 2015,] would have affected net income by approximately [removed: $0.5] [added: $0.4] million in fiscal [removed: 2014.] [added: 2015.] |

| We perform physical inventories at each store at least once a year, and we have established 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 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 [removed: at] [added: as of] December [removed: 27, 2014,] [added: 26, 2015,] would have affected net income by approximately [removed: $1.1] [added: $1.2] million in fiscal [removed: 2014.] [added: 2015.] |

| 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 [removed: guaranteed] vendor support funds (“vendor support”) and volume-based rebate funds (“volume rebates”). The amounts received are subject to terms of vendor agreements, most of which are “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; however, volume rebates are] estimated [removed: during interim periods] based upon initial commitments and anticipated purchase levels with applicable vendors. | | The estimated purchase volume (and related vendor [removed: funding through volume rebates)] [added: funding)] 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 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 [removed: collectibility.] [added: collectability.] | | 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 [removed: collectibility] [added: collectability] risk related to vendor support amounts due us at the end of fiscal [removed: 2014.] [added: 2015.] If a 10% reserve had been applied against our outstanding vendor support due as of December [removed: 27, 2014,] [added: 26, 2015,] net income would have been affected by approximately [removed: $1.1] [added: $1.7] million in fiscal [removed: 2014.] [added: 2015.] 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: 27, 2014,] [added: 26, 2015,] net income would have been affected by approximately [removed: $5.7] [added: $6.6] million in fiscal [removed: 2014.] [added: 2015.] |

| We self-insure a significant portion of our employee medical insurance, workers’ compensation and general liability insurance plans. We have stop-loss insurance policies to protect from individual losses over specified dollar values. Provisions for losses related to our self-insured liabilities are based upon periodic independent actuarially determined estimates that consider a number of factors including historical claims experience, demographic factors and severity factors. | | The full extent of certain claims, especially 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 [removed: at] [added: as of] December [removed: 27, 2014,] [added: 26, 2015,] would have affected net income by approximately [removed: $3.0] [added: $3.2] million in fiscal [removed: 2014.] [added: 2015.] |

| 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. When establishing our sales tax 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 as well as our historical experience with each respective state. | | 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 [removed: at] [added: as of] December [removed: 27, 2014,] [added: 26, 2015,] would have affected net income by approximately [removed: $0.7] [added: $0.8] million in fiscal [removed: 2014.] [added: 2015.] |

| 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 [removed: at] [added: as of] December [removed: 27, 2014] [added: 26, 2015] would have affected net income by approximately $0.2 million in fiscal [removed: 2014.] [added: 2015.] |

Our unaudited quarterly operating results for each fiscal quarter of [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] are shown below (in thousands, except per share amounts):

| Net income per share: [removed: (a)] | | | | | | | | | | | | | | | | | | | | |

| Comparable store sales increase [added: (a)] | | 2.2 | | % | | 1.9 | | % | | 5.6 | | % | | 5.3 | | % | | 3.8 | | % |

| [removed: 2013] [added: 2015] | | First Quarter | | | | Second Quarter | | | | Third Quarter | | | | Fourth Quarter | | | | Total | | |

| | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | | | [removed: 2012] [added: 2013] | |

| Cost of merchandise sold (a) | [removed: 65.9] [added: 65.6] | | | [removed: 66.0] [added: 65.9] | | | [removed: 66.4] [added: 66.0] | |

| Gross margin (a) | [removed: 34.1] [added: 34.4] | | | [removed: 34.0] [added: 34.1] | | | [removed: 33.6] [added: 34.0] | |

| Selling, general and administrative expenses(a) | [removed: 21.8] [added: 22.0] | | | [removed: 22.1] [added: 21.8] | | | [removed: 22.3] [added: 22.1] | |

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

| Income before income taxes | [removed: 10.3] [added: 10.4] | | | [removed: 10.0] [added: 10.3] | | | [removed: 9.4] [added: 10.0] | |

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

| Net income | [removed: 6.5] [added: 6.6] | % | | [removed: 6.4] [added: 6.5] | % | | [removed: 6.0] [added: 6.4] | % |

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

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

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

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, and an increase in traffic counts.

(a) Includes the Company’s two HomeTown Pet [removed: stores.][added: stores opened in fiscal 2014.]

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

| Clothing and Footwear | [removed: 9] [added: 8] | | | 9 | |

Also in 2015, we completed construction of two smaller cross-dock facilities (“mixing centers”) in Texas to improve distribution of certain high-volume bulk products.

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| Net sales | | $ | 1,331,352 | | | $ | 1,772,900 | | | $ | 1,475,645 | | | $ | 1,646,610 | | | $ | 6,226,507 | |

| Gross profit | | 444,605 | | | | 625,320 | | | | 512,248 | | | | 561,001 | | | | 2,143,174 | | |

| Operating income | | 92,847 | | | | 245,165 | | | | 139,208 | | | | 173,288 | | | | 650,508 | | |

| Net income | | 58,040 | | | | 153,331 | | | | 87,312 | | | | 111,712 | | | | 410,395 | | |

| Basic | | $ | 0.43 | | | $ | 1.13 | | | $ | 0.64 | | | $ | 0.83 | | | $ | 3.03 | |

| Diluted | | $ | 0.42 | | | $ | 1.12 | | | $ | 0.64 | | | $ | 0.82 | | | $ | 3.00 | |

| Comparable store sales increase (decrease) (a) | | 5.7 | | % | | 5.6 | | % | | 2.9 | | % | | (1.4 | | )% | | 3.1 | | % |

| Net income per share: | | | | | | | | | | | | | | | | | | | | |

(a) Comparable store metrics are calculated using sales generated from all stores open at least one year and all online sales, excluding certain adjustments to net sales.

Beginning in fiscal 2015, stores closed during the year are removed from our comparable store metrics calculations.

This change in the calculation methodology did not have a material impact on the comparable store metrics reported in prior periods presented due to the minimal number of stores closed in those periods.

Stores relocated during the periods being compared are not removed from our comparable store metrics.

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Fiscal 2015 Compared to Fiscal 2014

Net sales increased 9.0% to $6.23 billion in fiscal 2015 from $5.71 billion in fiscal 2014.

Beginning in fiscal 2015, stores closed during the year are removed from our comparable store metrics calculations.

This change in the calculation methodology did not have a material impact on the comparable store metrics reported in prior periods due to the minimal number of stores closed in those periods.

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

Hardline products such as fencing, trailers and towing also performed well throughout the year.

The full year sales performance was negatively impacted by fourth quarter weakness in the key cold weather seasonal categories of heating (stoves and fuel) and insulated outerwear along with softness in seasonal big ticket items such as snow blowers, log splitters and generators.

| | 2015 | | | 2014 | |

| Product Category: | 2015 | | | 2014 | |

Gross profit increased 9.9% to $2.14 billion in fiscal 2015 compared to $1.95 billion in fiscal 2014.

This increase in SG&A as a percent of sales was mainly related to deleverage in rent and other occupancy

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costs at the stores and incremental costs associated with our two new mixing centers and our new distribution facility in Casa Grande, Arizona.

Our effective tax rate decreased to 36.6% for fiscal 2015 compared to 36.9% in fiscal 2014 predominantly as a result of the reversal of various reserves for uncertain tax positions.

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| Inventories | 1,284.4 | | | | 1,115.5 | | | | 168.9 | | |

| Income taxes receivable | 3.7 | | | | — | | | | 3.7 | | |

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During the period of October 24, 2011 through February 19, 2016, the Company was party to a senior credit facility (the “2011 Senior Credit Facility”), which provided for borrowings up to $400 million (with a sublimit of $30 million for swingline loans) as of December 26, 2015 and December 27, 2014.

The 2011 Senior Credit Facility was unsecured and would have matured on October 24, 2016.

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| Net sales | | $ | 1,085,838 | | | $ | 1,455,767 | | | $ | 1,208,090 | | | $ | 1,415,089 | | | $ | 5,164,784 | |

| Gross profit | | 352,091 | | | | 506,140 | | | | 415,666 | | | | 479,712 | | | | 1,753,609 | | |

| Operating income | | 67,923 | | | | 197,979 | | | | 101,670 | | | | 147,078 | | | | 514,650 | | |

| Net income | | 44,006 | | | | 123,580 | | | | 64,767 | | | | 95,881 | | | | 328,234 | | |

| Basic | | $ | 0.32 | | | $ | 0.89 | | | $ | 0.46 | | | $ | 0.69 | | | $ | 2.35 | |

| Diluted | | $ | 0.31 | | | $ | 0.87 | | | $ | 0.46 | | | $ | 0.68 | | | $ | 2.32 | |

| Comparable store sales increase | | 0.5 | | % | | 7.2 | | % | | 7.5 | | % | | 3.5 | | % | | 4.8 | | % |

(a) Due to the nature of interim net income per share calculations, the sum of quarterly net income per share amounts may not equal the reported net income per share for the year.

Fiscal 2013 Compared to Fiscal 2012

Net sales increased 10.7% to $5.16 billion in fiscal 2013 from $4.66 billion in fiscal 2012.

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

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

We also estimate that comparable store sales were favorably impacted by approximately 70 basis points due to inflation, principally in pet food and livestock feed.

| | 2013 | | | 2012 | |

| Product Category: | 2013 | | | 2012 | |

Gross profit increased 12.0% to $1.75 billion in fiscal 2013 compared to $1.57 billion in fiscal 2012.

The SG&A improvement as a percent of sales was primarily attributable to the leverage of continued solid comparable store sales growth, expense control related to store operating costs and lower year-over-year incentive compensation expense, partially offset by costs related to the new and expanded Southeast distribution center and relocation of our corporate data center.

Our effective tax rate decreased to 36.2% for fiscal 2013 compared to 36.6% in fiscal 2012.

The reduction in the tax rate resulted primarily from the favorable impact of the reversal of various reserves for uncertain tax positions.

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

| • | 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. |

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.

Our primary source of liquidity is cash provided by operations.

| | 2013 | | | | 2012 | | | | Variance | | |

| Net income | $ | 328.2 | | | $ | 276.5 | | | $ | 51.7 | |

| Depreciation and amortization | 100.0 | | | | 89.0 | | | | 11.0 | | |

| Stock compensation expense | 13.9 | | | | 17.6 | | | | (3.7 | | ) |

| Deferred income taxes | (8.3 | | ) | | (26.6 | | ) | | 18.3 | | |

| Accrued expenses | 12.1 | | | | 9.0 | | | | 3.1 | | |

| Income taxes payable | 9.6 | | | | 57.3 | | | | (47.7 | | ) |

| Other, net | 2.3 | | | | 4.7 | | | | (2.4 | | ) |

The $44.6 million decrease in net cash provided by operating activities in fiscal 2013 compared with fiscal 2012 primarily related to increased inventory levels, a reduction in accounts payable and timing of estimated tax payments, partially offset by an increase in net earnings.

Inventory increased in proportion to store growth as expected, but the accounts payable balance declined year over year.

The timing of receipt of seasonal goods was much earlier in the fourth quarter in 2013 compared to 2012 and imports made up a larger percentage of fourth quarter receipts, requiring payment on trade credit prior to year end.

These factors drove the decline in accounts payable.

Income taxes payable declined due to the timing of estimated tax payments resulting from changes in allowable deductions for depreciation expense.

We are exposed to interest rate changes, primarily as a result of our credit facility (as discussed in Note 3 to the Consolidated Financial Statements) which bears interest based on variable rates.

A 1% change in interest rates on our variable rate debt would have affected interest expense by approximately $1.1 million, $0.7 million, and $0.3 million in the fiscal years ended December 26, 2015, December 27, 2014, and December 28, 2013.

On a prospective basis, a 1% change in interest rates on debt existing as of December 26, 2015, would result in interest expense fluctuating approximately $1.5 million per year.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

We may be exposed to changes in interest rates 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 27, 2014 and December 28, 2013) or LIBOR (0.17% and 0.16% at December 27, 2014 and December 28, 2013, respectively) plus an additional amount ranging from 0.40% to 1.00% per annum (0.50% at both December 27, 2014 and December 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 27, 2014 and December 28, 2013), adjusted quarterly based on our leverage ratio.

[Index](#s3A4356350C82376D7FB611D2B82C873C)

At December [removed: 27, 2014,] [added: 26, 2015,] we operated [removed: 1,382] [added: 1,488] retail stores in 49 states.

Our Tractor Supply stores typically range in size from 15,000 to [removed: 19,000] [added: 20,000] square feet of inside selling space along with additional outside selling space.

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

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

| • | [added: an annual] store manager [removed: meetings] [added: meeting] with vendor product presentations. |

These signs provide customers with a comparison of product qualities, clear [removed: pricing and] [added: pricing,] useful information regarding product [removed: benefits] [added: benefits,] and suggestions for appropriate accessories.

Our full line of product offerings 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 [removed: 19,500] [added: 20,000] products per store.

No one product accounted for more than 10% of our sales during [removed: 2014.][added: 2015.]

The following chart indicates the percentage of sales represented by each of our major product categories during fiscal [removed: 2014, 2013] [added: 2015, 2014] and [removed: 2012:][added: 2013:]

| Product Category: | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | | | [removed: 2012] [added: 2013] | |

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

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

| Clothing and Footwear | [removed: 9] [added: 8] | | | 9 | | | 9 | |

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

Our buying team [removed: constantly] [added: continuously] reviews and updates our product assortment to respond to customer needs and to offer new, relevant products.

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: 2014.][added: 2015.]

Approximately 300 core vendors accounted for 90% of our purchases during fiscal [removed: 2014.][added: 2015.]

We have no material long-term contractual commitments with any of our [added: product] vendors.

Our buying [removed: team focuses] [added: teams focus] on merchandise procurement, vendor line reviews and testing of new products and programs.

Through the combined efforts of these teams, we continue to [removed: improve] [added: focus on improving] our overall inventory productivity and in-stock position.

Our subsidiary, Tractor Supply Co. of Texas, LP (“TSCT”), owns registrations with the [removed: U.S.] [added: United States] Patent and Trademark Office (“USPTO”) for various service marks including TSC®, Tractor Supply Co.®, TSC Tractor Supply Co.® and the trapezium design for retail store services.

Our exclusive brands represented approximately 31% of our total sales in fiscal [added: 2015,] 2014 and [removed: 2013 and 25% of our total sales in fiscal 2012.][added: 2013.]

The exclusive brands identified above have been registered [added: as trademarks] with the USPTO for certain products and are the subject of applications for registration pending before the USPTO for other products.

We believe our intellectual property, which includes the trademarks and service marks identified above, together with certain trade names, domain [removed: names] [added: names, patents] and 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: 2014] [added: 2015] our stores received approximately 70% of merchandise through this network while the remaining merchandise shipped directly to the stores from our vendors.

Our [removed: seven] distribution [removed: centers,] [added: facilities,] located in [added: Arizona,] Georgia, Indiana, Kentucky, Maryland, Nebraska, [removed: Texas] [added: Texas,] and [removed: Washington,] [added: Washington] represent total distribution capacity of [removed: 4.2] [added: 5.0] million square feet.

[added: In 2015, we completed construction of a new] distribution center in Casa Grande, Arizona, with a capacity of approximately 650,000 square feet.

We continue to improve the technology in our distribution [removed: centers,] [added: facilities,] and currently [removed: four] [added: eight] of our [removed: seven] [added: ten] facilities utilize a warehouse management system that provides for improved movement of [removed: inventory through increased use of conveyors and automation.][added: inventory.]

We select the locations of our distribution [removed: centers] [added: facilities] in an effort to minimize logistics costs and optimize the distance from distribution [removed: centers] [added: facilities] to our stores.

We [added: utilize several common carriers for store deliveries and] manage our transportation costs through carrier negotiations, the monitoring of transportation routes, and the scheduling of deliveries.

To drive store traffic and position ourselves as a destination store, we promote broad selections of merchandise with newspaper circulars, customer targeted direct mail and email and [removed: internet] [added: digital] offerings.

Additionally in [removed: 2014,] [added: 2015,] we continued to invest in our omni-channel platform and expanded capabilities related to fulfillment options, product information and site research.

We also introduced [added: responsive web design that provided] an [removed: optimized] [added: enhanced] mobile and tablet experience, improved the site response time and added additional product offerings for vendor direct to customer [removed: drop] shipments.

The stores offer products for a wide variety of pets and animals, including cats, dogs, [removed: poultry, birds] [added: birds, reptiles] and [removed: horses] [added: fish,] as well as grooming and [removed: mobile] vet services.

As of December [removed: 27, 2014,] [added: 26, 2015,] we employed approximately [removed: 11,000] [added: 12,000] full-time and [removed: 10,100] [added: 11,000] part-time team members.

[removed: Our] [added: At the end of fiscal 2015, our] store operations [removed: are] [added: were] organized into [removed: seven] [added: nine] regions.

Each region is led by a [added: regional director or] vice [removed: president of operations,] [added: president,] and the region is further organized into districts, each of which is led by a district manager.

In addition to bonus incentive programs, we [removed: also] provide our eligible team members the opportunity to participate in an employee stock purchase plan and a 401(k) retirement savings plan.

We also share in the cost of health insurance provided to [removed: our] [added: eligible] team members, and team members receive a discount on merchandise purchased at our stores.

We have invested considerable resources in our management information and control systems to support superior customer service, manage the purchase and distribution of our merchandise, improve our operating efficiencies and support [removed: on-line] [added: online] operations.

We also engage with our customers through an e-commerce website (TractorSupply.com), which provides the opportunity to allow customers to shop at a time and place that fits their schedule while delivering enhanced product information, research and decision tools that support product selection and informational needs in specific subject areas.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

This facility, which began shipping merchandise to stores in December 2015, will support our western store expansion.

Also in 2015, we completed construction of two smaller cross-dock facilities (“mixing centers”) in Texas to handle certain high-volume bulk products.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

At December 26, 2015, we operated 1,488 retail stores in 49 states.

We compete with general

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

He held roles at The Sports Authority from 1989 through 1999 (serving as Chief Financial Officer from 1996 through 1999).

[Index](#s3A4356350C82376D7FB611D2B82C873C)

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

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

We utilize several common carriers for store deliveries.

| Lee J. Downing | Executive Vice President – Operations and Real Estate | 43 |

Lee J.

Downing has served as Executive Vice President – Operations and Real Estate since April 2014 and prior to that served as Senior Vice President - Operations since October 2010.

Prior to joining the Company, Mr. Downing served as Division Vice President – Operations for Dollar General Corporation from 2005.

Mr. Downing also served as Region Vice President – Northeast Operations and in various other operations roles at Family Dollar Stores from 1999 to 2005.

In the first quarter of fiscal 2011, the Environmental Enforcement Section of the Department of Justice (“DOJ”), on behalf of the EPA, informed the Company that it believed the Company had violated the Clean Air Act by importing or causing the importation of certain engines that were [removed: noncompliant, and that unless the DOJ and the Company were able to reach a settlement, the DOJ was prepared to commence a civil action.][added: noncompliant.]

The [removed: engines] [added: products at issue] were purchased by the Company pursuant to agreements with vendors under which the vendors represented that their products complied with all [added: the] applicable laws and regulations and under which the vendors agreed to indemnify the Company for any liabilities or costs relating to, among other matters, the noncompliance or alleged noncompliance of their products.

As a result of this process, the Company [removed: believes it has] [added: and its vendors] provided evidence that many of the products identified by the DOJ and EPA in early 2011 were, in fact, in compliance with the Clean Air Act and that most of the remaining issues [removed: relate] [added: related] to products purchased from one vendor.

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

[removed: The Company does not expect] [added: Accordingly,] the [removed: resolution of this matter to have a] [added: Company currently expects these matters will be resolved without] material adverse effect on its [added: consolidated] financial condition, results of operations or cash flows.

A consent decree reflecting the terms of the settlement was filed with the United States District Court in Washington, D.C. on September 30, 2015.

Under the settlement, the Company agreed to implement a formal compliance program for the small-engine products purchased by the Company for resale to its customers.

The Company also agreed to pay a civil penalty, most of which was reimbursed by the vendor who sold the small-engine products at issue to the Company.

In addition, the Company agreed to sponsor an emissions offset program that will result in the replacement of 22 older wood-burning stoves with EPA-certified wood-burning stoves.

The settlement was approved by the court on January 19, 2016.

The civil penalty did not differ materially from the amount accrued.

The cost of the settlement and the compliance and emission offset program will not have a material effect on our financial condition, results of operations or cash flows.

The Company does not believe it is reasonably possible that a loss in excess of the amount accrued will be incurred.

Accordingly, the Company currently expects these matters will be resolved without material adverse effect on its consolidated financial position, results of operations or cash flows.

10-K 1 [removed: a2014form10-k.htm] [added: a2015form10-k.htm] 10-K TRACTOR SUPPLY COMPANY

For the fiscal year ended December [removed: 27, 2014][added: 26, 2015]

[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: 27, 2014,] [added: 26, 2015,] the last business day of the registrant’s most recently completed second fiscal quarter, was approximately [removed: $6.6] [added: $9.9] billion.

| Class | | Outstanding at January [removed: 24, 2015] [added: 23, 2016] |

| Common Stock, $.008 par value | | [removed: 136,194,193] [added: 133,740,424] |

Portions of the Registrant’s definitive Proxy Statement for its [removed: 2015] [added: 2016] Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

| [Forward-Looking [removed: Statements](#sA3C40C2D5C7EACE4335D11D2B85B675F)] [added: Statements](#s0FF4FF4EAE865B98A8DEB7010F0A7B68)] | | [removed: [ii](#sA3C40C2D5C7EACE4335D11D2B85B675F)] [added: [ii](#s0FF4FF4EAE865B98A8DEB7010F0A7B68)] |

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| [removed: [1B.](#sB4CA04319C695AE0AFC211D2B8F7BF40)] [added: [1B.](#sB82A005E77CF505397D17D222D089638)] | [Unresolved Staff [removed: Comments](#sB4CA04319C695AE0AFC211D2B8F7BF40)] [added: Comments](#sB82A005E77CF505397D17D222D089638)] | [removed: [12](#sB4CA04319C695AE0AFC211D2B8F7BF40)] [added: [13](#sB82A005E77CF505397D17D222D089638)] |

| [removed: [3.](#s96B9A31C312D4AA7ABBF11D2B95420BD)] [added: [3.](#s9098435BA5B95587B08FFDA486FFE313)] | [Legal [removed: Proceedings](#s96B9A31C312D4AA7ABBF11D2B95420BD)] [added: Proceedings](#s9098435BA5B95587B08FFDA486FFE313)] | [removed: [14](#s96B9A31C312D4AA7ABBF11D2B95420BD)] [added: [14](#s9098435BA5B95587B08FFDA486FFE313)] |

| [removed: [4.](#sF1649514A3B5B37EE1E111D2B9831C13)] [added: [4.](#s6EF0A67788D15FAD9458B69C2470DCC7)] | [Mine Safety [removed: Disclosures](#sF1649514A3B5B37EE1E111D2B9831C13)] [added: Disclosures](#s6EF0A67788D15FAD9458B69C2470DCC7)] | [removed: [14](#sF1649514A3B5B37EE1E111D2B9831C13)] [added: [14](#s6EF0A67788D15FAD9458B69C2470DCC7)] |

| [removed: [5.](#s9E45CDEEA373F5B5977611D2ABDD67C0)] [added: [5.](#s599472A6CA0259BBA56E74BA9B307432)] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s9E45CDEEA373F5B5977611D2ABDD67C0)] [added: Securities](#s599472A6CA0259BBA56E74BA9B307432)] | [removed: [14](#s9E45CDEEA373F5B5977611D2ABDD67C0)] [added: [15](#s599472A6CA0259BBA56E74BA9B307432)] |

| [removed: [6.](#sCD6B71BE2FF5AB88A0A711D2ABBE9886)] [added: [6.](#s3A93A143AAD0534BAC428852252F7FBA)] | [Selected Financial [removed: Data](#sCD6B71BE2FF5AB88A0A711D2ABBE9886)] [added: Data](#s3A93A143AAD0534BAC428852252F7FBA)] | [removed: [17](#sCD6B71BE2FF5AB88A0A711D2ABBE9886)] [added: [18](#s3A93A143AAD0534BAC428852252F7FBA)] |

| [removed: [7.](#s0C373E501ADC0B28CE9D11D2BA3E0BA5)] [added: [7.](#s17FD0E6AB5915E08A42D8FD12DE70881)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s0C373E501ADC0B28CE9D11D2BA3E0BA5)] [added: Operations](#s17FD0E6AB5915E08A42D8FD12DE70881)] | [removed: [18](#s0C373E501ADC0B28CE9D11D2BA3E0BA5)] [added: [19](#s17FD0E6AB5915E08A42D8FD12DE70881)] |

| [removed: [7A.](#s3E7E0CE1905AC5B772DB11D2BB769465)] [added: [7A.](#s49153C599FDA5BEFB48201E9D4B81237)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s3E7E0CE1905AC5B772DB11D2BB769465)] [added: Risk](#s49153C599FDA5BEFB48201E9D4B81237)] | [removed: [32](#s3E7E0CE1905AC5B772DB11D2BB769465)] [added: [34](#s49153C599FDA5BEFB48201E9D4B81237)] |

| [removed: [8.](#sFF5A58ECE9CBB18F9F1F11D2BB95A131)] [added: [8.](#s5D1D5293C3B35B79B5178E32F513EB97)] | [Financial Statements and Supplementary [removed: Data](#sFF5A58ECE9CBB18F9F1F11D2BB95A131)] [added: Data](#s5D1D5293C3B35B79B5178E32F513EB97)] | [removed: [33](#sFF5A58ECE9CBB18F9F1F11D2BB95A131)] [added: [35](#s5D1D5293C3B35B79B5178E32F513EB97)] |

| [removed: [9.](#s3AEF30FFA7AB11821D6211D2BFBA424D)] [added: [9.](#s7521ADE8EA9953A9839F9D800C23878D)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s3AEF30FFA7AB11821D6211D2BFBA424D)] [added: Disclosure](#s7521ADE8EA9953A9839F9D800C23878D)] | [removed: [56](#s3AEF30FFA7AB11821D6211D2BFBA424D)] [added: [59](#s7521ADE8EA9953A9839F9D800C23878D)] |

| [removed: [9A.](#s5739DA4DD8650B47926811D2BFCAB9A0)] [added: [9A.](#s10B7B2A5C40556D7BAEF622087BC5637)] | [Controls and [removed: Procedures](#s5739DA4DD8650B47926811D2BFCAB9A0)] [added: Procedures](#s10B7B2A5C40556D7BAEF622087BC5637)] | [removed: [56](#s5739DA4DD8650B47926811D2BFCAB9A0)] [added: [59](#s10B7B2A5C40556D7BAEF622087BC5637)] |

| [removed: [9B.](#s30347C9FFDBBB454F45711D2C0089DFC)] [added: [9B.](#sA7A223299031506A86271E3D948F3949)] | [Other [removed: Information](#s30347C9FFDBBB454F45711D2C0089DFC)] [added: Information](#sA7A223299031506A86271E3D948F3949)] | [removed: [56](#s30347C9FFDBBB454F45711D2C0089DFC)] [added: [59](#sA7A223299031506A86271E3D948F3949)] |

| [PART [removed: III](#s06A4327873DCB696B51D11D2C0275EDB)] [added: III](#sBBCB290E6A2B5EA6A60025ED07894294)] | | [removed: [56](#s06A4327873DCB696B51D11D2C0275EDB)] [added: [59](#sBBCB290E6A2B5EA6A60025ED07894294)] |

| [removed: [10.](#sDD0D671B4F615D3127C611D2C0568F71)] [added: [10.](#s7BA250B43FD45F31ACA47854BCF7CE15)] | [Directors, Executive Officers and Corporate [removed: Governance](#sDD0D671B4F615D3127C611D2C0568F71)] [added: Governance](#s7BA250B43FD45F31ACA47854BCF7CE15)] | [removed: [56](#sDD0D671B4F615D3127C611D2C0568F71)] [added: [59](#s7BA250B43FD45F31ACA47854BCF7CE15)] |

| [removed: [11.](#sA7F79E874E2425E526BC11D2C0752C4E)] [added: [11.](#s6320295335F55CB9A79EC51C4EB7EB92)] | [Executive [removed: Compensation](#sA7F79E874E2425E526BC11D2C0752C4E)] [added: Compensation](#s6320295335F55CB9A79EC51C4EB7EB92)] | [removed: [56](#sA7F79E874E2425E526BC11D2C0752C4E)] [added: [60](#s6320295335F55CB9A79EC51C4EB7EB92)] |

| [removed: [12.](#sA18C9D1DDC02AA4C343811D2C0B4CE37)] [added: [12.](#s40BD0704CD0A53318E7399DF5476A6F1)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sA18C9D1DDC02AA4C343811D2C0B4CE37)] [added: Matters](#s40BD0704CD0A53318E7399DF5476A6F1)] | [removed: [57](#sA18C9D1DDC02AA4C343811D2C0B4CE37)] [added: [60](#s40BD0704CD0A53318E7399DF5476A6F1)] |

| [removed: [13.](#sD74F034D3DD596DF5F8111D2C0C3D51F)] [added: [13.](#sE7BB8008F34B5BD99B8789FC197F258E)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sD74F034D3DD596DF5F8111D2C0C3D51F)] [added: Independence](#sE7BB8008F34B5BD99B8789FC197F258E)] | [removed: [57](#sD74F034D3DD596DF5F8111D2C0C3D51F)] [added: [60](#sE7BB8008F34B5BD99B8789FC197F258E)] |

| [removed: [14.](#s147234E7ABB90915FE5A11D2C102E7CA)] [added: [14.](#s62F15B0AF2EE530985E8EDE56A253261)] | [Principal Accountant Fees and [removed: Services](#s147234E7ABB90915FE5A11D2C102E7CA)] [added: Services](#s62F15B0AF2EE530985E8EDE56A253261)] | [removed: [57](#s147234E7ABB90915FE5A11D2C102E7CA)] [added: [60](#s62F15B0AF2EE530985E8EDE56A253261)] |

| [removed: [15.](#s7DB0313399B215BC2B2511D2C150238D)] [added: [15.](#s8A370122CFBB583896F31236C93E6884)] | [Exhibits and Financial Statement [removed: Schedules](#s7DB0313399B215BC2B2511D2C150238D)] [added: Schedules](#s8A370122CFBB583896F31236C93E6884)] | [removed: [58](#s7DB0313399B215BC2B2511D2C150238D)] [added: [61](#s8A370122CFBB583896F31236C93E6884)] |

| [PART I](#s0F5B3ECED2D356D3AACB6168C231EC85) | | [1](#s0F5B3ECED2D356D3AACB6168C231EC85) |

| [1.](#s8C43A41B0929575396F6F86C69A87FE4) | [Business](#s8C43A41B0929575396F6F86C69A87FE4) | [1](#s8C43A41B0929575396F6F86C69A87FE4) |

| [2.](#s259094DCB62C584A9D82E207B3F7F726) | [Properties](#s259094DCB62C584A9D82E207B3F7F726) | [13](#s259094DCB62C584A9D82E207B3F7F726) |

| [PART II](#s9B95B7B305F45E78987DB2C3866559A1) | | [15](#s9B95B7B305F45E78987DB2C3866559A1) |

| [PART IV](#sF5CCE254ACEB5AC085F72BD2975E4B5C) | | [61](#sF5CCE254ACEB5AC085F72BD2975E4B5C) |

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| | | |

| [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) |

[Index](#s3A4356350C82376D7FB611D2B82C873C)

[Index](#s3A4356350C82376D7FB611D2B82C873C)

At December [removed: 27, 2014,] [added: 26, 2015,] the Company operated [removed: 1,382] [added: 1,488] stores in 49 states.

[removed: Following] [added: The following] is a count of store locations by state:

| [removed: Texas] [added: New Hampshire] | | [removed: 145] [added: 20] | | [removed: New Hampshire] [added: Hawaii] | | [removed: 17] [added: 2] |

| Ohio | | [removed: 85] [added: 87] | | New Mexico | | 17 |

| New York | | [removed: 73] [added: 75] | | [removed: Wisconsin] [added: Massachusetts] | | 16 |

| North Carolina | | [removed: 66] [added: 67] | | [removed: Colorado] [added: Illinois] | | 14 |

| [removed: Florida] [added: Georgia] | | [removed: 51] [added: 58] | | New Jersey | | [removed: 12] [added: 13] |

| [removed: Kentucky] [added: Alabama] | | 47 | | North Dakota | | 11 |

| [removed: Oklahoma] [added: South Carolina] | | 33 | | South Dakota | | 6 |

| West Virginia | | 24 | | [removed: Hawaii] [added: Montana] | | [removed: 2] [added: 4] |

| Arkansas | | [removed: 21] [added: 23] | | Oregon | | [removed: 2] [added: 3] |

| [removed: Maine] [added: Missouri] | | [removed: 19] [added: 20] | | Rhode Island | | [removed: 2] [added: 3] |

| Maryland | | [removed: 18] [added: 19] | | [removed: Idaho] | | [removed: 1] |

| [removed: Washington] [added: Pennsylvania] | | [removed: 18] [added: 81] | | [added: Washington] | | [added: 17] |

[removed: Following] [added: The following] is a list of distribution [removed: center] locations including the approximate square footage and if the location is leased or owned:

| Distribution [removed: Center] [added: Facility] Location | | Approximate Square Footage | | Owned/Leased Facility |

| Texas | | 165 | | Colorado | | 17 |

| Michigan | | 80 | | Kansas | | 16 |

| Tennessee (a) | | 71 | | Wisconsin | | 16 |

| Florida | | 55 | | Utah | | 13 |

| Kentucky | | 53 | | Connecticut | | 12 |

| Virginia | | 51 | | Nebraska | | 12 |

| Indiana | | 46 | | Minnesota | | 10 |

| California | | 44 | | Iowa | | 7 |

| Oklahoma | | 35 | | Vermont | | 7 |

| Louisiana | | 30 | | Wyoming | | 6 |

| Arizona | | 28 | | Delaware | | 4 |

| Mississippi | | 25 | | Idaho | | 4 |

| Maine | | 19 | | Nevada | | 2 |

| | | | | | | 1,488 |

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| Casa Grande, Arizona | | 650,000 | | Owned |

| Seguin, Texas (b) | | 71,000 | | Owned |

| Longview, Texas (b) | | 63,000 | | Owned |

(b) This is a mixing center designed to process certain high-volume bulk products.

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

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

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

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

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

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

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

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

| South Carolina | | 32 | | Delaware | | 4 |

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

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

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

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

| | | | | | | 1,382 |

[Index](#s3A4356350C82376D7FB611D2B82C873C)

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.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| First Quarter | [removed: $78.17] [added: $90.49] | | [removed: $62.06] [added: $74.52] | | [removed: $52.69] [added: $78.17] | | [removed: $43.13] [added: $62.06] |

| Second Quarter | [removed: $72.99] [added: $93.99] | | [removed: $59.75] [added: $83.70] | | [removed: $59.12] [added: $72.99] | | [removed: $50.17] [added: $59.75] |

| Third Quarter | [removed: $67.84] [added: $96.28] | | [removed: $57.20] [added: $75.00] | | [removed: $67.13] [added: $67.84] | | [removed: $57.00] [added: $57.20] |

| Fourth Quarter | [removed: $79.14] [added: $94.00] | | [removed: $55.95] [added: $80.06] | | [removed: $77.00] [added: $79.14] | | [removed: $64.17] [added: $55.95] |

As of January [removed: 30, 2015,] [added: 29, 2016,] the number of record holders of our common stock was [removed: 759] [added: 700] (excluding individual participants in nominee security position listings), and the estimated number of beneficial holders of our common stock was [removed: 119,000.][added: 100,000.]

During [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] the Board of Directors declared the following cash dividends:

On February [removed: 4, 2015,] [added: 3, 2016,] our Board of Directors declared a quarterly cash dividend of [removed: $0.16] [added: $0.20] per share of the Company’s common stock.

The dividend will be paid on March [removed: 10, 2015,] [added: 8, 2016,] to stockholders of record as of the close of business on February [removed: 23, 2015.][added: 22, 2016.]

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

Stock purchase activity during fiscal [removed: 2014] [added: 2015] is set forth in the table below:

(a)The total number of shares purchased and average price paid per share include [removed: 18,243] shares withheld from vested restricted stock units to satisfy employees’ minimum statutory tax withholding [removed: requirements.][added: requirements of 12,940 during the first quarter, 206 during the second quarter, and 22,196 during the third quarter.]

The following graph compares the cumulative total stockholder return on our common stock from December [removed: 26, 2009] [added: 25, 2010] to December [removed: 27, 2014] [added: 26, 2015] (the 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: 26, 2009] [added: 25, 2010] in our common stock and in each of the foregoing indices and in each case assumes reinvestment of dividends.

[removed: ][added: ]

| | | [removed: 12/26/2009 | | | |] 12/25/2010 | | | | 12/31/2011 | | | | 12/29/2012 | | | | 12/28/2013 | | | | 12/27/2014 | | | [added: | 12/26/2015 | | |]

| | 2015 | | | | 2014 | | |

| November 2, 2015 | | $0.20 | | November 16, 2015 | | December 1, 2015 |

| August 3, 2015 | | $0.20 | | August 17, 2015 | | September 1, 2015 |

| May 4, 2015 | | $0.20 | | May 18, 2015 | | June 2, 2015 |

| February 4, 2015 | | $0.16 | | February 23, 2015 | | March 10, 2015 |

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| First Quarter (a) | | 609,140 | | | $ | 80.51 | | | 596,200 | | | $ | 815,403,974 | |

| Second Quarter (a) | | 876,106 | | | 87.45 | | | | 875,900 | | | 738,821,721 | | |

| Third Quarter (a) | | 1,400,896 | | | 86.60 | | | | 1,378,700 | | | 619,426,366 | | |

| 9/27/15 – 10/24/15 | | 354,636 | | | 85.16 | | | | 354,636 | | | 589,232,534 | | |

| 10/25/15 – 11/21/15 | | 72,777 | | | 89.95 | | | | 72,777 | | | 582,687,686 | | |

| 11/22/15 – 12/26/15 | | 137,200 | | | 87.49 | | | | 137,200 | | | 570,686,010 | | |

| | | 564,613 | | | 86.34 | | | | 564,613 | | | 570,686,010 | | |

| As of December 26, 2015 | | 3,450,755 | | | $ | 85.70 | | | 3,415,413 | | | $ | 570,686,010 | |

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| Tractor Supply Company | | $ | 100.00 | | | $ | 144.94 | | | $ | 180.72 | | | $ | 312.15 | | | $ | 321.98 | | | $ | 354.01 | |

| S&P 500 | | $ | 100.00 | | | $ | 100.07 | | | $ | 111.59 | | | $ | 146.52 | | | $ | 166.20 | | | $ | 163.99 | |

| S&P Retail Index | | $ | 100.00 | | | $ | 102.22 | | | $ | 124.95 | | | $ | 182.52 | | | $ | 200.64 | | | $ | 250.37 | |

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| | 2014 | | | | 2013 | | |

[Index](#s3A4356350C82376D7FB611D2B82C873C)

| October 30, 2013 | | $0.13 | | November 18, 2013 | | December 3, 2013 |

| July 31, 2013 | | $0.13 | | August 19, 2013 | | September 4, 2013 |

| May 1, 2013 | | $0.13 | | May 20, 2013 | | June 4, 2013 |

| February 6, 2013 | | $0.10 | | February 25, 2013 | | March 12, 2013 |

| 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 | |

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

| 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 | |

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | |

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

| Net sales | $ | [removed: 5,711,715] [added: 6,226,507] | | | $ | [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] | |

| Gross profit | [removed: 1,950,415] [added: 2,143,174] | | | | [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] | | |

| Selling, general and administrative expenses | [removed: 1,246,308] [added: 1,369,097] | | | | [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] | | |

| Depreciation and amortization | [removed: 114,635] [added: 123,569] | | | | [removed: 100,025] [added: 114,635] | | | | [removed: 88,975] [added: 100,025] | | | | [removed: 80,347] [added: 88,975] | | | | [removed: 69,797] [added: 80,347] | | |

| Operating income | [removed: 589,472] [added: 650,508] | | | | [removed: 514,650] [added: 589,472] | | | | [removed: 436,792] [added: 514,650] | | | | [removed: 352,703] [added: 436,792] | | | | [removed: 266,224] [added: 352,703] | | |

| Interest expense, net | [removed: 1,885] [added: 2,891] | | | | [removed: 557] [added: 1,885] | | | | [removed: 1,055] [added: 557] | | | | [removed: 2,087] [added: 1,055] | | | | [removed: 1,284] [added: 2,087] | | |

| Income before income taxes | [removed: 587,587] [added: 647,617] | | | | [removed: 514,093] [added: 587,587] | | | | [removed: 435,737] [added: 514,093] | | | | [removed: 350,616] [added: 435,737] | | | | [removed: 264,940] [added: 350,616] | | |

| Income tax expense | [removed: 216,702] [added: 237,222] | | | | [removed: 185,859] [added: 216,702] | | | | [removed: 159,280] [added: 185,859] | | | | [removed: 127,876] [added: 159,280] | | | | [removed: 96,968] [added: 127,876] | | |

| Net income | $ | [removed: 370,885] [added: 410,395] | | | $ | [removed: 328,234] [added: 370,885] | | | $ | [removed: 276,457] [added: 328,234] | | | $ | [removed: 222,740] [added: 276,457] | | | $ | [removed: 167,972] [added: 222,740] | |

| Net income per share – basic (b) | $ | [removed: 2.69] [added: 3.03] | | | $ | [removed: 2.35] [added: 2.69] | | | $ | [removed: 1.94] [added: 2.35] | | | $ | [removed: 1.55] [added: 1.94] | | | $ | [removed: 1.16] [added: 1.55] | |

| Net income per share – diluted (b) | $ | [removed: 2.66] [added: 3.00] | | | $ | [removed: 2.32] [added: 2.66] | | | $ | [removed: 1.90] [added: 2.32] | | | $ | [removed: 1.51] [added: 1.90] | | | $ | [removed: 1.12] [added: 1.51] | |

| Weighted average shares – diluted (b) | [removed: 139,435] [added: 136,845] | | | | [removed: 141,723] [added: 139,435] | | | | [removed: 145,514] [added: 141,723] | | | | [removed: 147,842] [added: 145,514] | | | | [removed: 149,372] [added: 147,842] | | |

| Dividends declared per common share outstanding | $ | [removed: 0.61] [added: 0.76] | | | $ | [removed: 0.49] [added: 0.61] | | | $ | [removed: 0.36] [added: 0.49] | | | $ | [removed: 0.22] [added: 0.36] | | | $ | [removed: 0.14] [added: 0.22] | |

| Gross margin | [removed: 34.1] [added: 34.4] | | % | | [removed: 34.0] [added: 34.1] | | % | | [removed: 33.6] [added: 34.0] | | % | | [removed: 33.2] [added: 33.6] | | % | | [removed: 33.1] [added: 33.2] | | % |

| Selling, general and administrative expenses | [removed: 21.8] [added: 22.0] | | % | | [removed: 22.1] [added: 21.8] | | % | | [removed: 22.3] [added: 22.1] | | % | | [removed: 23.0] [added: 22.3] | | % | | [removed: 23.9] [added: 23.0] | | % |

| Operating income | [removed: 10.3] [added: 10.4] | | % | | [removed: 10.0] [added: 10.3] | | % | | [removed: 9.4] [added: 10.0] | | % | | [removed: 8.3] [added: 9.4] | | % | | [removed: 7.3] [added: 8.3] | | % |

| Net income | [removed: 6.5] [added: 6.6] | | % | | [removed: 6.4] [added: 6.5] | | % | | [removed: 6.0] [added: 6.4] | | % | | [removed: 5.3] [added: 6.0] | | % | | [removed: 4.6] [added: 5.3] | | % |

| Stores open at end of year | [removed: 1,382] [added: 1,488] | | | | [removed: 1,276] [added: 1,382] | | | | [removed: 1,176] [added: 1,276] | | | | [removed: 1,085] [added: 1,176] | | | | [removed: 1,001] [added: 1,085] | | |

| Comparable store sales increase (c) | [removed: 3.8] [added: 3.1] | | % | | [removed: 4.8] [added: 3.8] | | % | | [removed: 5.3] [added: 4.8] | | % | | [removed: 8.2] [added: 5.3] | | % | | [removed: 7.0] [added: 8.2] | | % |

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

| Average transaction value | $ | [removed: 44.84] [added: 44.87] | | | $ | [removed: 44.48] [added: 44.84] | | | $ | [removed: 44.40] [added: 44.48] | | | $ | [removed: 43.33] [added: 44.40] | | | $ | [removed: 42.07] [added: 43.33] | |

| Comparable store average transaction value [removed: increase] (decrease) [added: increase] (c) | [added: (0.2 | | )% | |] 0.6 | | % | | 0.0 | | % | | 2.0 | | % | | 3.1 | | % | [removed: | (0.3 | | )% |]

| Comparable store average transaction count increase (c) | [removed: 3.2] [added: 3.3] | | % | | [removed: 4.7] [added: 3.2] | | % | | [removed: 3.0] [added: 4.7] | | % | | [removed: 5.0] [added: 3.0] | | % | | [removed: 7.4] [added: 5.0] | | % |

| Total selling square footage (000’s) | [removed: 22,176] [added: 23,938] | | | | [removed: 20,470] [added: 22,176] | | | | [removed: 18,893] [added: 20,470] | | | | [removed: 17,506] [added: 18,893] | | | | [removed: 16,107] [added: 17,506] | | |

| Total team members | [removed: 21,100] [added: 23,000] | | | | [removed: 19,200] [added: 21,100] | | | | [removed: 17,300] [added: 19,200] | | | | [removed: 16,400] [added: 17,300] | | | | [removed: 14,700] [added: 16,400] | | |

| Capital expenditures (000’s) | $ | [removed: 160,613] [added: 236,496] | | | $ | [removed: 218,200] [added: 160,613] | | | $ | [removed: 152,924] [added: 218,200] | | | $ | [removed: 166,156] [added: 152,924] | | | $ | [removed: 96,511] [added: 166,156] | |

| Average inventory per store [removed: (d)] [added: (e)] | $ | [removed: 752.7] [added: 820.1] | | | $ | [removed: 723.5] [added: 752.7] | | | $ | [removed: 727.4] [added: 723.5] | | | $ | [removed: 723.4] [added: 727.4] | | | $ | [removed: 708.7] [added: 723.4] | |

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

| Working capital | $ | [removed: 670,897] [added: 814,147] | | | $ | [removed: 677,107] [added: 670,897] | | | $ | [removed: 569,547] [added: 677,107] | | | $ | [removed: 629,624] [added: 569,547] | | | $ | [removed: 617,153] [added: 629,624] | |

| Total assets | $ | [removed: 2,034,571] [added: 2,370,826] | | | $ | [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] | |

| Long-term debt, less current portion [removed: (e)] [added: (f)] | $ | [removed: 4,957] [added: 166,992] | | | $ | [removed: 1,200] [added: 4,957] | | | $ | [removed: 1,242] [added: 1,200] | | | $ | [removed: 1,284] [added: 1,242] | | | $ | [removed: 1,316] [added: 1,284] | |

| Stockholders’ equity | $ | [removed: 1,293,561] [added: 1,393,294] | | | $ | [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] | |

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

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

[added: (d)] New stores sales metrics are based on stores open for less than one year.

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

[removed: (e)] [added: (f)] Long-term debt includes amounts outstanding under the Company’s [added: 2011 Senior Credit Facility and] capital lease obligations, excluding the current [removed: portion.][added: portions.]

Beginning in fiscal 2015, stores closed during the year are removed from our comparable store metrics calculations.

This change in the calculation methodology did not have a material impact on the comparable store metrics reported in prior periods presented due to the minimal number of stores closed in those periods.

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

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#s3A4356350C82376D7FB611D2B82C873C)

| [Management's Report on Internal Control over Financial [removed: Reporting](#s80F594561975ECCD752511D2BBC4B804)] [added: Reporting](#sC7D38B4177C15FA5BE5A646FC41AEBB8)] | [removed: [34](#s80F594561975ECCD752511D2BBC4B804)] [added: [36](#sC7D38B4177C15FA5BE5A646FC41AEBB8)] |

| [Reports of Independent Registered Public Accounting [removed: Firm](#sDE753231424253780A0111D2BBE364AA)] [added: Firm](#s2446B3F4E10F51BF8C7D3DF99A50AD82)] | [removed: [35](#sDE753231424253780A0111D2BBE364AA)] [added: [37](#s2446B3F4E10F51BF8C7D3DF99A50AD82)] |

| [Consolidated Statements of Income for the fiscal years [removed: ended] [added: ended](#sC2548368945252EE9FC1CA46849B66A8)] December [added: 26, 2015, December] 27, 2014, [added: and] December 28, 2013 [removed: and December 29, 2012](#s918733D650C0BA47D84211D2AA38E3CC)] | [removed: [37](#s918733D650C0BA47D84211D2AA38E3CC)] [added: [39](#sC2548368945252EE9FC1CA46849B66A8)] |

| [Consolidated Balance Sheets as [removed: of] [added: of](#s15D21264FBC75105968576A48337CB8A)] December [removed: 27, 2014] [added: 26, 2015] and December [removed: 28, 2013](#sA01FF43F8C23B5D742F111D2A9EABE5E)] [added: 27, 2014] | [removed: [38](#sA01FF43F8C23B5D742F111D2A9EABE5E)] [added: [40](#s15D21264FBC75105968576A48337CB8A)] |

| [Consolidated Statements of Stockholders’ Equity for the fiscal years [removed: ended] [added: ended](#s7EA8DD0BBE875BBDB9F4C34685B9F8C3)] December [added: 26, 2015, December] 27, 2014, [added: and] December 28, 2013 [removed: and December 29, 2012](#sF18F6CE2348B8F3B74CE11D2A9EAAC7E)] | [removed: [39](#sF18F6CE2348B8F3B74CE11D2A9EAAC7E)] [added: [41](#s7EA8DD0BBE875BBDB9F4C34685B9F8C3)] |

| [Consolidated Statements of Cash Flows for the fiscal years [removed: ended] [added: ended](#s51FB8CA3E2595997922C5D92360F3D68)] December [added: 26, 2015, December] 27, 2014, [added: and] December 28, 2013 [removed: and December 29, 2012](#s2827ED9A7134E9D66CE311D2AA0992F8)] | [removed: [40](#s2827ED9A7134E9D66CE311D2AA0992F8)] [added: [42](#s51FB8CA3E2595997922C5D92360F3D68)] |

| [Notes to Consolidated Financial [removed: Statements](#sEF5C856F78A986E2E33B11D2BD4A2BEE)] [added: Statements](#sC85B5BEFA43F56BF9F96D34496F1265D)] | [removed: [41](#sEF5C856F78A986E2E33B11D2BD4A2BEE)] [added: [43](#sC85B5BEFA43F56BF9F96D34496F1265D)] |

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December [removed: 27, 2014.][added: 26, 2015.]

Based on this assessment, management believes that, as of December [removed: 27, 2014,] [added: 26, 2015,] the Company’s internal control over financial reporting is effective based on those criteria.

| February [removed: 18,] [added: 4,] 2015 | | [added: $0.16] | | February [removed: 18,] [added: 23,] 2015 | [added: | March 10, 2015 |]

We have audited Tractor Supply Company’s internal control over financial reporting as of December [removed: 27, 2014,] [added: 26, 2015,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Tractor Supply Company maintained, in all material respects, effective internal control over financial reporting as of December [removed: 27, 2014,] [added: 26, 2015,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Tractor Supply Company as of December [removed: 27, 2014] [added: 26, 2015] and December [removed: 28, 2013,] [added: 27, 2014,] and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended December [removed: 27, 2014,] [added: 26, 2015,] and our report dated February [removed: 18, 2015,] [added: 22, 2016,] expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheets of Tractor Supply Company as of December [removed: 27, 2014] [added: 26, 2015] and December [removed: 28, 2013,] [added: 27, 2014,] and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended December [removed: 27, 2014.][added: 26, 2015.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tractor Supply Company at December [removed: 27, 2014] [added: 26, 2015] and December [removed: 28, 2013,] [added: 27, 2014,] and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended December [removed: 27, 2014,] [added: 26, 2015,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Tractor Supply Company’s internal control over financial reporting as of December [removed: 27, 2014,] [added: 26, 2015,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February [removed: 18, 2015,] [added: 22, 2016,] expressed an unqualified opinion thereon.

| | Fiscal Year | | | | | | | | | | | [added: |]

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net sales | $ | [removed: 5,711,715] [added: 6,226,507] | | | $ | [removed: 5,164,784] [added: 5,711,715] | | | $ | [removed: 4,664,120] [added: 5,164,784] | |

| Cost of merchandise sold | [removed: 3,761,300] [added: 4,083,333] | | | | [removed: 3,411,175] [added: 3,761,300] | | | | [removed: 3,098,066] [added: 3,411,175] | | |

| Gross profit | [removed: 1,950,415] [added: 2,143,174] | | | | [removed: 1,753,609] [added: 1,950,415] | | | | [removed: 1,566,054] [added: 1,753,609] | | |

| Selling, general and administrative expenses | [removed: 1,246,308] [added: 1,369,097] | | | | [removed: 1,138,934] [added: 1,246,308] | | | | [removed: 1,040,287] [added: 1,138,934] | | |

| Depreciation and amortization | [removed: 114,635] [added: 123,569] | | | | [removed: 100,025] [added: 114,635] | | | | [removed: 88,975] [added: 100,025] | | |

| Operating income | [removed: 589,472] [added: 650,508] | | | | [removed: 514,650] [added: 589,472] | | | | [removed: 436,792] [added: 514,650] | | |

| Interest expense, net | [removed: 1,885] [added: 2,891] | | | | [removed: 557] [added: 1,885] | | | | [removed: 1,055] [added: 557] | | |

| Income before income taxes | [removed: 587,587] [added: 647,617] | | | | [removed: 514,093] [added: 587,587] | | | | [removed: 435,737] [added: 514,093] | | |

| Income tax expense | [removed: 216,702] [added: 237,222] | | | | [removed: 185,859] [added: 216,702] | | | | [removed: 159,280] [added: 185,859] | | |

| Net income | $ | [removed: 370,885] [added: 410,395] | | | $ | [removed: 328,234] [added: 370,885] | | | $ | [removed: 276,457] [added: 328,234] | |

| Net income per share – basic | $ | [removed: 2.69] [added: 3.03] | | | $ | [removed: 2.35] [added: 2.69] | | | $ | [removed: 1.94] [added: 2.35] | |

| Net income per share – diluted | $ | [removed: 2.66] [added: 3.00] | | | $ | [removed: 2.32] [added: 2.66] | | | $ | [removed: 1.90] [added: 2.32] | |

| Basic | [removed: 137,769] [added: 135,582] | | | | [removed: 139,415] [added: 137,769] | | | | [removed: 142,184] [added: 139,415] | | |

| Diluted | [removed: 139,435] [added: 136,845] | | | | [removed: 141,723] [added: 139,435] | | | | [removed: 145,514] [added: 141,723] | | |

| Dividends declared per common share outstanding | $ | [removed: 0.61] [added: 0.76] | | | $ | [removed: 0.49] [added: 0.61] | | | $ | [removed: 0.36] [added: 0.49] | |

The accompanying notes are an integral part of these [added: consolidated] financial statements.

| | December [removed: 27, 2014] [added: 26, 2015] | | | | December [removed: 28, 2013] [added: 27, 2014] | | |

| Cash and cash equivalents [added: at end of year] | $ | [added: 63,813 | | | $ |] 51,134 | | | [added: |] $ | 142,743 | |

| Inventories | [removed: 1,115,450] [added: 1,284,375] | | | | [removed: 979,308] [added: 1,115,450] | | |

| Prepaid expenses and other current assets | [removed: 66,444] [added: 87,510] | | | | [removed: 57,359] [added: 66,444] | | |

| Deferred income taxes | [removed: 40,962] [added: 45,970] | | | | [removed: 29,838] [added: 40,962] | | |

| Total current assets | [removed: 1,273,990] [added: 1,485,431] | | | | [removed: 1,209,248] [added: 1,273,990] | | |

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| February 22, 2016 | | | | February 22, 2016 |

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

February 22, 2016

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

February 22, 2016

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| Cash and cash equivalents | $ | 63,813 | | | $ | 51,134 | |

| Income taxes receivable | 3,763 | | | | — | | |

| Property and equipment, gross | 1,643,916 | | | | 1,417,346 | | |

| Revolving credit loan | 150,000 | | | | — | | |

The accompanying notes are an integral part of these consolidated financial statements.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| Net income | | | | | | | | | | | | | 410,395 | | | | 410,395 | | |

| Stockholders' equity at December 26, 2015 | $ | 1,352 | | | $ | 596,131 | | | $ | (1,429,790 | ) | | $ | 2,225,601 | | | $ | 1,393,294 | |

The accompanying notes are an integral part of these consolidated financial statements.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | |

| Net income | $ | 410,395 | | | $ | 370,885 | | | | $ | 328,234 | |

| Depreciation and amortization | 123,569 | | | | 114,635 | | | | | 100,025 | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

The accompanying notes are an integral part of these consolidated financial statements.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

Based on current market interest rates (Level 2 inputs), the carrying value of our borrowings under the 2011 Senior Credit Facility approximates fair value as of December 26, 2015.

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

| Granted | 1,080,490 | | | 83.70 | | | | $ | 19.53 | | | | | | | |

| Exercised | (1,116,828 | ) | | 33.11 | | | | | | | | | | | | |

| Canceled | (185,582 | ) | | 67.28 | | | | | | | | | | | | |

| Outstanding December 26, 2015 | 3,861,506 | | | $ | 54.95 | | | | | | | 7.1 | | $ | 119,050 | |

| Exercisable at December 26, 2015 | 1,965,084 | | | $ | 37.53 | | | | | | | 5.8 | | $ | 94,598 | |

[Index](#s3A4356350C82376D7FB611D2B82C873C)

February 18, 2015

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 1,417,346 | | | | 1,268,843 | | |

| Stockholders' equity at December 31, 2011 | $ | 1,286 | | | $ | 297,783 | | | $ | (437,373 | ) | | $ | 1,146,594 | | | $ | 1,008,290 | |

| Net income | | | | | | | | | | | | | 276,457 | | | | 276,457 | | |

| Cash and cash equivalents at end of year | $ | 51,134 | | | $ | 142,743 | | | $ | 138,630 | |

| Outstanding December 31, 2011 | 7,103,750 | | | $ | 13.29 | | | | | | | 6.5 | | $ | 154,782 | |

| Granted | 1,146,504 | | | 42.79 | | | | $ | 13.13 | | | | | | | |

| Exercised | (2,132,896 | ) | | 11.04 | | | | | | | | | | | | |

| Canceled | (56,976 | ) | | 30.39 | | | | | | | | | | | | |

| Exercisable at December 27, 2014 | 2,171,934 | | | $ | 28.38 | | | | | | | 5.9 | | $ | 107,603 | |

| Restricted at December 31, 2011 | | 1,050,544 | | | $ | 12.26 | |

| Granted | | 80,034 | | | 43.55 | | |

| Exercised | | (527,184 | ) | | 10.50 | | |

| Forfeited | | — | | | — | | |

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 principal amount available thereunder from $250 million to $400 million.

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

| 2015 | $ | 537 | | | $ | 243,864 | |

| 2016 | 537 | | | | 236,943 | | |

| 2017 | 537 | | | | 225,404 | | |

| 2018 | 537 | | | | 215,190 | | |

| 2019 | 537 | | | | 202,099 | | |

| Thereafter | 5,364 | | | | 952,557 | | |

| | $ | 4,688 | | | $ | 799 | |

On May 1, 2014, the shareholders approved an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of common stock from 200 million to 400 million.

| October 30, 2013 | | $0.13 | | November 18, 2013 | | December 3, 2013 |

| July 31, 2013 | | $0.13 | | August 19, 2013 | | September 4, 2013 |

| May 1, 2013 | | $0.13 | | May 20, 2013 | | June 4, 2013 |

| February 6, 2013 | | $0.10 | | February 25, 2013 | | March 12, 2013 |

| | 2012 | | | | | | | | | |

| Net income | $ | 276,457 | | | 142,184 | | | $ | 1.94 | |

| Net income | $ | 276,457 | | | 145,514 | | | $ | 1.90 | |

| | 49,010 | | | | 47,610 | | |

| | (8,048 | | ) | | (17,772 | | ) |

| | 65,324 | | | | 55,267 | | |

| | (56,542 | | ) | | (55,175 | | ) |

In 2012, the IRS commenced an audit of the 2010 federal tax return.

In 2014, the 2010 IRS audit was finalized with minimal adjustments.

We carried out an evaluation required by the Securities Exchange Act of 1934, as amended (the “1934 Act”), under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the 1934 Act) as of December [removed: 27, 2014.][added: 26, 2015.]

Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December [removed: 27, 2014] [added: 26, 2015] our disclosure controls and procedures were effective.

The information set forth under the captions “Item 1: Election of Directors,” “Board Meetings and Committees,” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement for our Annual Meeting of Stockholders to be held on May [removed: 5, 2015] [added: 3, 2016] is incorporated herein by reference.

A copy of the Code of Ethics can also be obtained, free of charge, upon written request to the Corporate Secretary, Tractor Supply Company, 5401 Virginia Way, [removed: Brentwood, TN 37027.]

[Index](#sFE311CB6ABB9555D9B4B73BA146651C6)

Brentwood, TN 37027.

The information set forth under the captions “Corporate Governance – Compensation Committee Interlocks and Insider Participation,” “Compensation of Directors,” and “Executive Compensation” in our Proxy Statement for our Annual Meeting of Stockholders to be held on May [removed: 5, 2015] [added: 3, 2016] is incorporated herein by reference.

[Index](#s3A4356350C82376D7FB611D2B82C873C)

The information set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement for our Annual Meeting of Stockholders to be held on May [removed: 5, 2015] [added: 3, 2016] is incorporated herein by reference.

Following is a summary of our equity compensation plans as of December [removed: 27, 2014,] [added: 26, 2015,] under which equity securities are authorized for issuance, aggregated as follows:

| Employee Stock Purchase Plan | | — | | | — | | | | [removed: 12,231,977] [added: 12,163,549] | |

(a) Includes [removed: 4,083,426] [added: 3,861,506] stock options, [removed: 166,503] [added: 166,673] unvested restricted stock units and [removed: 110,844] [added: 52,944] restricted stock units which have vested but the receipt of which have been deferred by the recipient.