Tractor Supply (TSCO) 10-K risk factor changes: FY2017 vs FY2016

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

In addition, extreme weather conditions, including snow and ice storms, flood and wind damage, hurricanes, tornadoes, extreme rain and [removed: droughts, have impacted operating results.]

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

Our access to funds under our [removed: senior credit facility (as discussed in Note 5 to the Consolidated Financial Statements)] [added: debt facilities] 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 difficult for our real estate developers to obtain financing under acceptable [added: loan terms and conditions.]

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

[removed: If any such factors were to render the conduct of business in particular countries undesirable or impractical or if additional United States] [added: U.S.] quotas, duties, taxes or other charges or restrictions were imposed upon the importation of our products in the future, our financial condition and results of operations could be materially adversely affected.

The [removed: results of the November 2016 elections] [added: current political landscape] in the [removed: United States have] [added: U.S. has] introduced greater uncertainty with respect to tax and trade policies, tariffs and regulations affecting trade between the [removed: United States] [added: U.S.] and other countries.

We source a [removed: significant] portion of our merchandise from manufacturers located outside the [removed: United States,] [added: U.S.,] primarily in Asia and Central America.

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

Our business involves a risk of personal injury, workers’ compensation, product [removed: liability] [added: liability, discrimination, harassment, wrongful termination] and other claims in the ordinary course of business.

Our failure to attract and retain qualified team [removed: members] [added: members, increases in wage and labor costs and changes in laws and other labor issues] could adversely affect our financial performance.

Our ability to meet labor needs while controlling wage and related labor costs is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force, unemployment levels, prevailing wage rates, changing demographics, health and other insurance [removed: costs and] [added: costs,] changes in employment [removed: legislation.][added: legislation and the potential for changes in local labor practices or union activities.]

An internal control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that [added: the objectives of the control system are met.]

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

While we maintain substantial security measures to [added: help] protect and [removed: to] prevent unauthorized access to such information, it is possible that unauthorized parties (through [removed: cyberattacks,] [added: cybersecurity attacks,] which are rapidly evolving and becoming increasingly sophisticated, or by other means) might compromise our security measures and obtain and misuse the personal information of customers, employees and vendors that we hold or other confidential Company data.

[added: Any disruption, unanticipated expense or operational] failure related to this process could affect store operations negatively.

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, [added: or products at a desired price,] 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 [added: negatively affect our business.]

We maintain a network of distribution facilities and have plans to build new facilities [added: and expand existing facilities] to support our growth objectives.

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

Furthermore, although our Board of Directors has authorized a share repurchase program of up to $3 billion through December 2020, we may discontinue this program at any [removed: time.][added: time or significantly reduce repurchases under the program.]

We are also subject to the Foreign Corrupt Practices Act (the “FCPA”), which prohibits [removed: United States] [added: U.S.] companies and their intermediaries from making improper payments to foreign officials for the purposes of obtaining or retaining business, and the anti-bribery laws of other jurisdictions.

Failure to comply with the FCPA and similar laws could subject us to, among other things, [added: penalties and legal expenses that could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.]

droughts, have impacted operating results.

We are subject to federal, state, and local laws governing employment practices and working conditions.

These laws cover wage and hour practices, labor relations, paid and family leave, workplace safety and immigration, among others.

The laws and regulations being passed at the state and local level create unique challenges for a multi-state employer.

We must continue to monitor and adapt our employment practices to comply with these various laws and regulations.

If our costs of labor or related costs increase significantly as new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented, our financial performance could be adversely affected.

While the Company selects these third-party vendors carefully, it does not control their actions.

Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, and cyber attacks or security breaches at a vendor could adversely affect the Company’s ability to deliver products and services to its customers and otherwise conduct its business.

If any such factors were to render the conduct of business in particular countries undesirable or impractical or if additional

Additionally, we are subject to U.S. federal, state and local employment laws that expose us to potential liability if we are determined to have violated such employment laws, including but not limited to, laws pertaining to minimum wage rates, overtime pay,

discrimination, harassment, and wrongful termination.

Compliance with these laws, including the remediation of any alleged violation, may have a material adverse effect on our business or results of operations.

Our business and operations could suffer material losses in the event of system interruptions or failures.

Our information technology systems, some of which are dependent on services provided by third parties, serve an important role in the operation and administration of our business.

These systems are vulnerable to damages from any number of sources, including, but not limited to, human error, cybersecurity attacks, computer viruses, unauthorized access, fire, flood, power outages, telecommunication failures, facility or equipment damage, natural disasters, terrorism, and war.

In addition, we continually make investments in technology to implement new processes and systems as well as to maintain and update our existing processes and systems.

Implementing process and system changes increases the risk of disruption.

If our information technology systems are interrupted or fail and our redundant systems or recovery plans are not adequate to address such interruptions or failures on a timely basis, our revenues and profits could be reduced and the reputation of our brand and our business could be materially adversely affected.

Additionally, remediation of any problems with our systems could result in significant, unplanned expenses.

loan terms and conditions.

the objectives of the control system are met.

Any disruption, unanticipated expense or operational

negatively affect our business.

penalties and legal expenses that could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

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: 31, 2016] [added: 30, 2017] (our fiscal years [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014).][added: 2015).]

Founded in 1938, Tractor Supply Company is the largest operator of rural lifestyle retail stores in the United [removed: States.][added: States (“U.S.”).]

As of December [removed: 31, 2016,] [added: 30, 2017,] we operated [removed: 1,738] [added: 1,853] retail stores in 49 states under the names Tractor Supply Company, Del’s Feed & Farm Supply and Petsense.

Over the past five years, we have experienced considerable growth in stores, growing from [removed: 1,085] [added: 1,176] stores at the end of [removed: 2011] [added: 2012] to [removed: 1,738] [added: 1,853] stores [removed: (1,595] [added: (1,685] Tractor Supply and Del’s retail stores and [removed: 143] [added: 168] Petsense retail stores) at the end of fiscal [removed: 2016,] [added: 2017,] and in sales, with a compounded annual growth rate of approximately [removed: 9.9%.][added: 9.2%.]

We have developed a proven method for selecting store sites and have identified approximately [removed: 900] [added: 800] additional opportunities for new Tractor Supply stores.

In 2016, we opened 113 new Tractor Supply [removed: stores in 37 states] [added: stores, had three store relocations] and began operating 143 Petsense stores [removed: in 26 states,] as compared to 114 new Tractor Supply stores [removed: in 2015, resulting in a selling square footage increase of approximately 10.8% in fiscal 2016] and [removed: approximately 8.0%] [added: six store relocations] in fiscal 2015.

Net sales increased [removed: 8.9%] [added: 7.0%] to [removed: $6.78] [added: $7.26] billion in fiscal [removed: 2016] [added: 2017 (52 weeks)] from [removed: $6.23] [added: $6.78] billion in fiscal [removed: 2015.][added: 2016 (53 weeks).]

Comparable store sales increased [removed: 1.6%] [added: 2.7%] in fiscal [removed: 2016] [added: 2017] versus a [removed: 3.1%] [added: 1.6%] increase in fiscal [removed: 2015.][added: 2016.]

Gross profit increased [removed: 8.5%] [added: 7.2%] to [removed: $2.33] [added: $2.49] billion in fiscal [removed: 2016] [added: 2017] from [removed: $2.14] [added: $2.33] billion in fiscal [removed: 2015,] [added: 2016,] and gross margin [removed: decreased 10 basis points] [added: remained flat] to [added: prior year at] 34.3% [removed: of net sales in fiscal 2016 from 34.4%] [added: as a percentage] of net [removed: sales in fiscal 2015.][added: sales.]

Operating income decreased [removed: 20] [added: 80] basis points to [removed: 10.2%] [added: 9.4%] of net sales in fiscal [removed: 2016] [added: 2017] from [removed: 10.4%] [added: 10.2%] of net sales in fiscal [removed: 2015.][added: 2016.]

We ended the year with [removed: $53.9] [added: $109.1] million in cash and outstanding debt of [removed: $275.0] [added: $426.1] million, after returning [removed: $454.0] [added: $503.2] million to our stockholders through stock repurchases and [added: quarterly cash] dividends.

Management’s discussion and analysis of our financial position and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with [removed: United States generally accepted accounting principles.][added: U.S. GAAP.]

| 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 as of December [removed: 31, 2016,] [added: 30, 2017,] would have affected net income by approximately $0.5 million in fiscal [removed: 2016.] [added: 2017.] |

| We perform physical inventories at least once a year for each store that has been open more than 12 months, 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 as of December [removed: 31, 2016,] [added: 30, 2017,] would have affected net income by approximately [removed: $1.4] [added: $1.7] million in fiscal [removed: 2016.] [added: 2017.] |

| 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 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 [removed: inventory] [added: inventory,] and then recognized as a reduction of cost of merchandise as the related inventory is sold. During interim periods, the amount of [added: vendor support and] volume rebates is estimated based upon initial commitments and anticipated purchase levels with applicable vendors. | | The estimated purchase volume (and related vendor 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 collectability. | | We have not made any material changes in the accounting methodology used to establish our vendor funding 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 funding. We do not believe there is a significant collectability risk related to vendor funding amounts due to us at the end of fiscal [removed: 2016.] [added: 2017.] If a 10% reserve had been applied against our outstanding vendor funding due as of December [removed: 31, 2016,] [added: 30, 2017,] net income would have been affected by approximately [removed: $1.3] [added: $1.4] million in fiscal [removed: 2016.] [added: 2017.] Although it is unlikely that there will be any significant reduction in historical levels of vendor funding, 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: 31, 2016,] [added: 30, 2017,] net income would have been affected by approximately [removed: $6.9] [added: $7.8] million in fiscal [removed: 2016.] [added: 2017.] |

| We self-insure a significant portion of our employee medical insurance, workers’ compensation [added: insurance] and general liability [added: (including product 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 as of December [removed: 31, 2016,] [added: 30, 2017,] would have affected net income by approximately [removed: $3.5] [added: $3.6] million in fiscal [removed: 2016.] [added: 2017.] |

| 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 [added: tax] 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 [removed: auditors,] [added: 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 as of December [removed: 31, 2016,] [added: 30, 2017,] would have affected net income by approximately [removed: $0.7] [added: $0.9] million in fiscal [removed: 2016.] [added: 2017.] |

| Our income tax returns are periodically audited by [removed: United States] [added: 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. [added: The effective income tax rate is also affected by changes in tax law, the tax jurisdiction of new stores or business ventures, the level of earnings and the results of tax audits.] | | 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 as of December [removed: 31, 2016] [added: 30, 2017,] would have affected net income by approximately $0.1 million in fiscal [removed: 2016.] [added: 2017.] |

| Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset’s estimated future cash flows (undiscounted and without interest charges). The evaluation for long-lived assets is performed at the lowest level of identifiable cash flows, which is generally the individual store level. The significant assumptions used to determine estimated undiscounted cash flows include cash inflows and outflows directly resulting from the use of those assets in operations, including margin on net sales, payroll and related items, occupancy costs, insurance allocations and other costs to operate a store. If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on an estimated future cash flow model. We recognize an impairment loss if the amount of the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining estimated useful life of that asset. | | Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair [removed: values, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.] [added: values.] | | We have not made any material changes in our impairment loss 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 estimates or assumptions we use to calculate long-lived asset impairment losses. None of these estimates and assumptions are significantly sensitive, and a 10% change in any of these estimates would not have a material impact on our analysis. However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material. |

| Goodwill and other indefinite-lived intangible assets are evaluated for impairment annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In accordance with the accounting standards, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill or an indefinite-lived intangible asset is impaired. If after such assessment an entity concludes that the asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the asset using a quantitative impairment test, and if impaired, the associated assets must be written down to fair value. The quantitative [added: impairment] test for goodwill [removed: impairment is a two-step process. The first step of the goodwill impairment test, used to identify the potential for impairment,] compares the fair value of a reporting unit with the carrying value of its net assets, including goodwill. If the fair value of the reporting unit is less than the carrying value of the reporting unit, [removed: the second step of the goodwill impairment test is performed to measure the amount of impairment loss to be recorded, if any. The second step, if required, would compare the implied fair value of goodwill with the current carrying amount of goodwill. If the implied fair value of goodwill is less than the carrying value,] an impairment charge would be recorded to the Company’s [removed: operations.] [added: operations, for the amount, if any, in which the carrying amount exceeds the reporting unit’s fair value.] We determine fair values for each reporting unit using the market approach, when available and appropriate, or the income approach, or a combination of both. If multiple valuation methodologies are used, the results are weighted appropriately. The quantitative impairment test for other indefinite-lived intangible assets involves comparing the carrying amount of the asset to the sum of the discounted cash flows expected to be generated by the asset. If the implied fair value of the indefinite-lived intangible asset is less than the carrying value, an impairment charge would be recorded to the Company’s operations. | | Our impairment loss calculation contains uncertainties because they require management to make assumptions and to apply judgment to qualitative factors as well as estimate future cash flows and asset fair values, including forecasting prospective financial information and selecting the discount rate that reflects the risk inherent in future cash flows. | | [removed: We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use] [added: The valuation approaches utilized] to [removed: calculate indefinite-lived asset] [added: estimate fair value for the purposes of the] impairment [removed: losses. None] [added: tests] of [removed: these estimates] [added: goodwill] and [added: other indefinite-lived intangible assets require the use of] assumptions [removed: are significantly sensitive,] and [added: estimates, which involve] a [removed: 10% change in any] [added: degree] of [removed: these estimates would not have a material impact on our analysis. However, if] [added: uncertainty. If] actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to [added: non-cash impairment] losses that could be material. |

Our unaudited quarterly operating results for each fiscal quarter of [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] are shown below (in thousands, except per share amounts):

| 2016 [removed: (a)] [added: (b)] | | (13 weeks) | | | | (13 weeks) | | | | (13 weeks) | | | | (14 weeks) | | | | (53 weeks) | | |

| Comparable store sales increase (decrease) [removed: (b)] [added: (a)] | | 4.9 | | % | | (0.5 | | )% | | (0.6 | | )% | | 3.1 | | % | | 1.6 | | % |

| [removed: 2015] | [removed: | (13 weeks) | | | | (13 weeks) | | | | (13] [added: (52] weeks) | | | | [removed: (13] [added: (53] weeks) | | | | (52 weeks) | | |

[removed: (a)] [added: (b)] Beginning in the fourth quarter ended December 31, 2016, selected financial and operating information includes the consolidation of Petsense, unless otherwise noted.

[removed: (b)] [added: (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.

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

| | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | |

| Cost of merchandise sold (a) | 65.7 | | | [removed: 65.6] [added: 65.7] | | | [removed: 65.9] [added: 65.6] | |

| Gross margin (a) | 34.3 | | | [removed: 34.4] [added: 34.3] | | | [removed: 34.1] [added: 34.4] | |

| Selling, general and administrative [removed: expenses(a)] [added: expenses (a)] | [removed: 22.0] [added: 22.6] | | | 22.0 | | | [removed: 21.8] [added: 22.0] | |

| Depreciation and amortization | [removed: 2.1] [added: 2.3] | | | [removed: 2.0] [added: 2.1] | | | 2.0 | |

| Operating income | [removed: 10.2] [added: 9.4] | | | [removed: 10.4] [added: 10.2] | | | [removed: 10.3] [added: 10.4] | |

| Interest expense, net | [removed: 0.1] [added: 0.2] | | | [removed: —] [added: 0.1] | | | — | |

| Income before income taxes | [removed: 10.1] [added: 9.2] | | | [removed: 10.4] [added: 10.1] | | | [removed: 10.3] [added: 10.4] | |

| Income tax provision | [removed: 3.7] [added: 3.4] | | | [removed: 3.8] [added: 3.7] | | | 3.8 | |

| Net income | [removed: 6.4] [added: 5.8] | % | | [removed: 6.6] [added: 6.4] | % | | [removed: 6.5] [added: 6.6] | % |

The fourth quarter included an extra sales week as a part of the Company’s 53-week calendar in 2016, which represented [removed: 1.6%] [added: 1.6 percentage points] of the overall 8.9% sales increase over prior year.

The comparable store sales increase was driven by an increase in traffic counts and the year-round strength of consumable, [removed: usable,] [added: usable] and edible ("C.U.E.") products, [removed: principally] [added: primarily] animal- and pet-related merchandise.

Tractor Supply reports its financial results in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Tractor Supply also uses certain non-GAAP measures that fall within the meaning of Securities and Exchange Commission Regulation G and Regulation S-K Item 10(e), which may provide users of the financial information with additional meaningful comparison to prior reported results.

Non-GAAP measures do not have standardized definitions and are not defined by U.S. GAAP.

Therefore, Tractor Supply’s non-GAAP measures are unlikely to be comparable to similar measures presented by other companies.

The presentation of these non-GAAP measures should not be considered in isolation from, as a substitute for, or as superior to the financial information presented in accordance with U.S. GAAP.

Tractor Supply believes we can grow our business by being the most dependable supplier of relevant products and services for the “Out Here” lifestyle, creating customer loyalty through personalized experiences and providing convenience that our customers expect at anytime, anywhere, and in any way they choose.

Our long-term growth strategy is to: (1) drive profitable growth through new store openings and by expanding omni-channel capabilities, thus tying together our website product content, social media, digital and online shopping experience, attracting new customers and driving loyalty, (2) build customer-centric engagement by leveraging analytics to deliver legendary customer service, seasoned advice and personalized experiences, (3) offer relevant assortments and services across all channels through exclusive and national brands and continue to introduce new products through our test and learn strategy, (4) enhance our core and foundational capabilities by investing in infrastructure and process improvements which will support growth, scale and agility while improving the customer experience, and (5) expand through selective acquisitions, as such opportunities arise, to add complementary businesses and to enhance penetration into new and existing markets to supplement organic growth.

Achieving this strategy will require a foundational focus on: (1) organizing, optimizing and empowering our team members for growth by developing skills, talent and leadership across the organization, and (2) implementing operational efficiency initiatives to align our cost structure to support new business capabilities for margin improvement and cost reductions.

In 2017, we opened 101 new Tractor Supply stores in 39 states and 25 new Petsense stores in 11 states.

In 2016, we opened 113 new Tractor Supply stores and began operating 143 Petsense stores.

This resulted in a selling square footage increase of approximately 6.3% in fiscal 2017 and approximately 10.8% in fiscal 2016.

For fiscal 2017, net income was $422.6 million, or $3.30 per diluted share, compared to $437.1 million, or $3.27 per diluted share, in fiscal 2016.

Excluding the impact of the revaluation of the Company’s net deferred tax asset resulting in a one-time, non-cash charge of approximately $4.9 million, or $0.03 per diluted share, adjusted net income for fiscal 2017 was $427.5 million, or $3.33 per diluted share.

| 2017 | | (13 weeks) | | | | (13 weeks) | | | | (13 weeks) | | | | (13 weeks) | | | | (52 weeks) | | |

| Net sales | | $ | 1,564,078 | | | $ | 2,017,762 | | | $ | 1,721,704 | | | $ | 1,952,838 | | | $ | 7,256,382 | |

| Gross profit | | 518,203 | | | | 704,708 | | | | 600,456 | | | | 668,598 | | | | 2,491,965 | | |

| Operating income | | 96,362 | | | | 257,925 | | | | 148,253 | | | | 183,842 | | | | 686,382 | | |

| Net income | | 60,311 | | | | 160,649 | | | | 91,896 | | | | 109,743 | | | | 422,599 | | |

| Basic | | $ | 0.46 | | | $ | 1.25 | | | $ | 0.73 | | | $ | 0.87 | | | $ | 3.31 | |

| Diluted | | $ | 0.46 | | | $ | 1.25 | | | $ | 0.72 | | | $ | 0.87 | | | $ | 3.30 | |

| Comparable store sales (decrease) increase (a) | | (2.2 | | )% | | 2.2 | | % | | 6.6 | | % | | 4.0 | | % | | 2.7 | | % |

Acquired Petsense stores are considered comparable stores beginning in the fourth quarter of fiscal 2017.

Fiscal 2017 Compared to Fiscal 2016

Net sales increased 7.0% to $7.26 billion in fiscal 2017 from $6.78 billion in fiscal 2016.

The prior year included an extra sales week as a part of the Company’s 53-week calendar in 2016, which negatively impacted the overall sales increase by approximately 1.6 percentage points.

Acquired Petsense stores are considered comparable beginning in the fourth quarter of fiscal 2017.

Warmer than normal weather patterns early in the first quarter negatively impacted the sales of winter seasonal items and winter storms in March had an unfavorable impact on the start to the spring selling season.

Beginning in the second quarter, we experienced broad-based improvement through the remainder of the year in all geographic regions and major product categories driven by strength in sales of everyday basic items in C.U.E. and year-round products.

The third quarter experienced an additional benefit from an extended spring and summer selling season and strong sales of emergency response products related to hurricanes during the quarter while the fourth quarter experienced an additional benefit from solid sales in cold weather and other seasonal products.

| Tractor Supply | 2017 | | | 2016 | |

| New stores opened | 101 | | | 113 | |

| Beginning of period | 143 | | | — | |

| Stores acquired | — | | | 136 | |

| Stores closed | — | | | (1 | ) |

| End of period | 168 | | | 143 | |

| Consolidated end of period | 1,853 | | | 1,738 | |

| Product Category: | 2017 | | | 2016 | |

Gross profit increased 7.2% to $2.49 billion in fiscal 2017 compared to $2.33 billion in fiscal 2016.

As a percent of net sales, gross margin remained flat to prior year at 34.3%.

Gross margin percentage was negatively impacted by higher markdowns on cold weather merchandise and targeted promotional activity in the first quarter, as well as a higher freight expense throughout the year due to higher carrier costs, increased average fuel costs and a shift in product mix towards more freight intensive products.

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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 omni-channel enhancements, tying together our website product content, social media, digital and online shopping experience, and (6) expand through selective acquisitions, as such opportunities arise, to add complementary businesses and to enhance penetration into new and existing markets to supplement organic growth.

In fiscal 2016, diluted earnings per share grew 9.0% to $3.27 compared to $3.00 in fiscal 2015.

| 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) (b) | | 5.7 | | % | | 5.6 | | % | | 2.9 | | % | | (1.4 | | )% | | 3.1 | | % |

Petsense stores are not considered comparable stores until 12 months after the date of acquisition.

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.

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.

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.

As a percent of net sales, gross margin increased 30 basis points to 34.4% for fiscal 2015 compared to 34.1% for fiscal 2014.

This increase in gross margin principally reflects improved direct product margin.

Direct product margin increased as a result of strong execution on our four strategic margin initiatives which include inventory and markdown management, strategic sourcing, exclusive branding and retail price management.

This increase in SG&A expense as a percent of net sales was mainly related to deleverage in rent and other occupancy costs at the stores and incremental costs associated with our two new mixing centers and our new distribution facility in Casa Grande, Arizona.

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

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.

As a result of the foregoing factors, net income for fiscal 2015 increased 10.7% to $410.4 million, or $3.00 per diluted share, as compared to net income of $370.9 million, or $2.66 per diluted share, in fiscal 2014.

Our primary ongoing sources of liquidity are existing

| Inventories | 1,369.7 | | | | 1,284.4 | | | | 85.3 | | |

(a) Working capital for 2016 and 2015 reflects deferred tax assets as non-current as a result of the adoption of ASU 2015-17 in 2016 (which is discussed in Note 15 to the Consolidated Financial Statements).

| • | The decrease in accrued employee compensation is due to lower year-over-year incentive compensation and the timing of payroll accruals. |

| • | The increase in other accrued expenses is a result of Company growth and the timing of payments. |

| • | The current portion of long-term debt relates to the term loan which was entered into in fiscal 2016. |

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.

date of February 19, 2021.

As of December 31, 2016, the Company had outstanding total borrowings of $275.0 million under the 2016 Senior Credit Facility consisting of $190.0 million in borrowings under the term loan and $85.0 million in borrowings under the revolving credit facility.

We are exposed to interest rate changes, primarily as a result of borrowings under our [removed: senior credit facilities] [added: 2016 Senior Credit Facility] (as discussed in Note 5 to the Consolidated Financial Statements), which bear interest based on variable rates.

As discussed in Note 6 to the Consolidated Financial Statements, we entered into [removed: an] interest rate swap [removed: agreement effective March 31, 2016,] [added: agreements] which [removed: is] [added: are] intended to mitigate interest rate risk associated with future changes in interest rates for the term loan borrowings under the 2016 Senior Credit Facility.

As a result of [removed: this] [added: the] interest rate [removed: swap,] [added: swaps,] our exposure to interest rate volatility is [removed: minimized beginning in the second fiscal quarter of 2016.][added: minimized.]

The interest rate swap [removed: agreement has] [added: agreements have] been executed for risk management purposes and [removed: is] [added: are] not held for trading purposes.

[removed: A] [added: As of December 30, 2017, we have no outstanding variable rate debt other than the borrowings which are covered by interest rate swaps; therefore, on a prospective basis, a] 1% change in interest rates on our variable rate [removed: debt] [added: debt,] in excess of that amount covered by the interest rate [removed: swap] [added: swaps,] would [removed: have][added: result in no additional interest expense.]

[added: A 1% change in interest rates on our variable rate debt in excess of that amount covered by the interest rate swaps would have] affected interest expense by approximately [removed: $1.5] [added: $2.1] million, [removed: $1.1] [added: $1.5] million, and [removed: $0.7] [added: $1.1] million in the fiscal years ended December [added: 30, 2017, December] 31, 2016, [added: and] December 26, 2015, [removed: and December 27, 2014,] respectively.

On a prospective basis, a 1% change in interest rates on our variable rate debt, in excess of that amount covered by the interest rate swap, existing as of December 31, 2016, would result in interest expense fluctuating approximately $0.9 million per year.

Tractor Supply Company (the “Company” or “we”) is the largest operator of rural lifestyle retail stores in the United [removed: States.][added: States (“U.S.”).]

At December [removed: 31, 2016,] [added: 30, 2017,] we operated [removed: 1,738] [added: 1,853] retail stores in 49 states [removed: (1,595] [added: (1,685] Tractor Supply and Del’s retail stores and [removed: 143] [added: 168] Petsense retail stores).

Our Tractor Supply stores typically range in size from 15,000 to 20,000 square feet of inside selling space, along with additional outside selling [removed: space] [added: space,] and our Petsense stores have approximately 5,500 square feet of inside selling space.

We also engage with our customers through [removed: an] [added: our] 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.

We use a [removed: third party] [added: third-party] provider to measure our level of customer service.

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

| • | new store opening training that prepares [removed: new] [added: our] store managers to open [added: new] stores to Company standards; |

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

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 [removed: 16,000] [added: 15,500] to 20,000 products per store.

No one product accounted for more than 10% of our sales during [removed: 2016.][added: 2017.]

The following [removed: chart] [added: table] indicates the percentage of net sales represented by each of our major product categories during fiscal [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014:][added: 2015:]

| Product Category: | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | |

| Livestock and Pet | [removed: 46] [added: 47] | % | | [removed: 44] [added: 46] | % | | 44 | % |

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

| Seasonal, Gift and Toy Products | 19 | | | [removed: 20] [added: 19] | | | 20 | |

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

| Agriculture | [removed: 5] [added: 4] | | | 5 | | | 5 | |

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

We purchase our products from a group of approximately [removed: 850] [added: 900] vendors, with no one vendor representing more than 10% of our purchases during fiscal [removed: 2016.][added: 2017.]

Approximately [removed: 300] [added: 350] core vendors accounted for 90% of our merchandise purchases during fiscal [removed: 2016.][added: 2017.]

Our subsidiary, Tractor Supply Co. of Texas, LP (“TSCT”), owns registrations with the [removed: United States] [added: U.S.] 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 32% of our total sales in [added: both] fiscal [added: 2017 and] 2016 and [removed: approximately] 31% [removed: of our total sales] in fiscal [removed: 2015 and fiscal 2014.][added: 2015.]

In fiscal [removed: 2016,] [added: 2017,] our Tractor Supply stores received approximately [removed: 75%] [added: 74%] of merchandise through this network while the remaining merchandise shipped directly to the stores from our [removed: vendors.][added: vendors or directly to our customers.]

[added: In fiscal 2017, we began construction on a new northeast distribution] center [added: in Frankfort, New York,] as well as an expansion of our existing distribution center in Waverly, [removed: Nebraska] [added: Nebraska,] which will provide additional distribution capacity once construction is completed.

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

Our vendors also provide assistance with product presentation and fixture design, brochures, support for in-store [removed: events,] [added: events] and point-of-purchase materials for customer education and product knowledge for our team members.

We [removed: communicate] [added: connect] with our customers [removed: across multiple touch points including] [added: in their manner of choosing, whether that is in store, on] our [removed: stores,] e-commerce website (TractorSupply.com), e-mail, social media, direct mail [removed: and] [added: or through] our customer [removed: call] [added: solutions] center.

Our goal is to be available [removed: at any time] [added: anytime, anywhere] and in any way our customers choose to engage with our brand.

We [removed: give] [added: provide] our customers the ability to [removed: purchase products and] have [removed: them] [added: products] shipped [added: direct] to [removed: one of] our retail stores, their homes or offices.

We maintain [removed: a] [added: two] fulfillment [removed: center] [added: centers] within our [removed: Franklin, Kentucky] distribution center [added: network] to support our e-commerce activities.

We are focused on delivering an enhanced mobile and tablet experience, improving the site response time and expanding our product offerings for vendor direct to customer [removed: shipments.][added: shipments, allowing us to serve our customers at any time.]

[removed: On September 29, 2016, we acquired Petsense,] [added: Petsense is] a small-box pet specialty supply retailer focused on meeting the needs of pet owners, primarily in small and mid-sized communities, and offering a variety of pet products and services.

As of December [removed: 31, 2016,] [added: 30, 2017,] we employed approximately [removed: 13,000] [added: 14,000] full-time and [removed: 13,000] [added: 14,000] part-time [added: Tractor Supply] team members.

At the end of fiscal [removed: 2016,] [added: 2017,] our store operations were organized into [removed: eleven] [added: ten] regions.

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

Our current team of district managers and store managers have an average tenure of approximately [added: nine and] six [removed: years.][added: years, respectively.]

[removed: Management believes internal] promotions, coupled with the hiring of individuals with previous retail experience, will provide the management structure necessary to support our planned growth.

We are committed to a continuous improvement program [removed: called Tractor Value System (“TVS”), which is our catalyst] to drive change throughout our organization.

[removed: Through TVS,] [added: Using data analytics and team member engagement,] we examine business processes and identify opportunities to reduce costs, drive innovation, and improve effectiveness.

Our key [removed: management information and control systems] [added: platforms] include a point-of-sale system, [added: in-store mobility and digital technology system,] an e-commerce platform, a supply chain management and replenishment system, a transportation management system, warehouse and labor management tools, a price optimization system, a vendor purchase order control [removed: system and] [added: system,] a merchandise presentation [added: system, and a customer loyalty] system.

| • | productive workplace environment training that is intended to educate team members on company policies and procedures covering topics such as harassment, discrimination, and retaliation; |

needs with emphasis on consumable, usable, and edible (“C.U.E.”) products.

| --- | --- |

| | |

In addition, our Neighbor’s Club loyalty program enhances our ability to create engagement with our best customers.

We provide our customers the opportunity to shop in a manner that fits their lifestyle and is most convenient for them.

We offer an expansive product assortment, search capabilities and information that is relevant for their lifestyle.

In 2017, we completed the expansion of our buy online and pick up in store program which provides convenient customer pick up in our store locations.

We also began providing additional convenience through flexible payment options and simplified checkout.

Digital capabilities have further enhanced customer service and allowed us to target markets outside of our current retail store locations.

We believe internal

We have invested resources in management information and control systems to provide legendary customer service.

This includes use of digital technologies to integrate the customer experience in store, online, and through our customer solutions center, offering customers the ability to shop anytime, anywhere, and in any way they choose.

We also maintain and continue to strengthen the security of our information systems to help protect and prevent unauthorized access to personal information of our customers, employees and vendors or other confidential Company data.

At December 30, 2017, we operated a total of 168 Petsense stores in 26 states, with 400 full-time and 900 part-time team members, and an e-commerce website (Petsense.com).

Tractor Supply believes we can grow our business by being the most dependable supplier of relevant products and services for the “Out Here” lifestyle, creating customer loyalty through personalized experiences and providing convenience that our customers expect at anytime, anywhere, and in any way they choose.

Our long-term growth strategy is to: (1) drive profitable growth through new store openings and by expanding omni-channel capabilities, thus tying together our website product content, social media, digital and online shopping experience, attracting new customers and driving loyalty, (2) build customer-centric engagement by leveraging analytics to deliver legendary customer service, seasoned advice and personalized experiences, (3) offer relevant assortments and services across all channels through exclusive and national brands and continue to introduce new products through our test and learn strategy, (4) enhance our core and foundational capabilities by investing in infrastructure and process improvements which will support growth, scale and agility while improving the customer experience, and (5) expand through selective acquisitions, as such opportunities arise, to add complementary businesses and to enhance penetration into new and existing markets to supplement organic growth.

Achieving this strategy will require a foundational focus on: (1) organizing, optimizing and empowering our team members for growth by developing skills, talent and leadership across the organization, and (2) implementing operational efficiency initiatives to align our cost structure to support new business capabilities for margin improvement and cost reductions.

In fiscal 2017, we opened 101 new Tractor Supply stores and 25 new Petsense

stores.

We believe that our business can be more accurately assessed by focusing on the performance of the halves, not the quarters, due to the fact that different weather patterns from year-to-year can shift the timing of sales and profits between quarters, particularly between the first and second fiscal quarters and the third and fourth fiscal quarters.

Kurt D.

Mr. Barton served as Vice President - Controller from February 2009 after having previously served as Director, Internal Audit from July 2002 to February 2009.

Mr. Barton has served in various other leadership roles in accounting since he joined the Company in 1999.

Mr. Barton, a Certified Public Accountant, began his career in public accounting in 1993, spending six years at Ernst & Young, LLP.

In fiscal 2017, we plan to begin construction on a new northeast distribution

Connecting with consumers online provides the opportunity for 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.

In 2016, we also began offering in certain stores an option to buy online and pick up in store.

We believe our e-commerce capabilities further enhance customer service and extend our market to areas where our retail stores are not currently located.

Additionally in 2016, we continued to invest in our omni-channel platform through expanded capabilities related to fulfillment options, product information and site research.

At December 31, 2016, we operated 143 Petsense stores in 26 states.

Our two HomeTown Pet stores were converted to Petsense stores in fiscal 2017.

TVS is a business management system that emphasizes, through data analytics and team member engagement, a focus on continuous improvement.

We have invested considerable resources in our management information and control systems to support superior customer service, manage the purchase, pricing and distribution of our merchandise, improve our operating efficiencies and support online operations.

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 omni-channel enhancements, tying together our website product content, social media, digital and online shopping experience, and (6) expand through selective acquisitions, as such opportunities arise, to add complementary businesses and to enhance penetration into new and existing markets to supplement organic growth.

market niche for customers living the rural lifestyle.

Anthony F.

Mr. Crudele previously served as Chief Financial Officer at Gibson Guitar from August 2003 to September 2005 and as Chief Financial Officer of Xcelerate Corp. from January 2000 to January 2003.

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

The Company [removed: has] received a subpoena from the District Attorney of Yolo County, California, requesting records and information regarding its hazardous waste management and disposal practices in California.

The Company and the Office of the District Attorney of Yolo County engaged in settlement discussions which resulted in the settlement of the matter.

A consent decree reflecting the terms of settlement was filed with the Yolo County Superior Court on June 23, 2017.

Under the settlement, the Company agreed to a compliance plan and also agreed to pay a civil penalty and fund supplemental environmental projects furthering consumer protection and environmental enforcement in California.

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

The cost of the settlement and the compliance with the consent decree will not have a material effect on our consolidated financial position, results of operations or cash flows.

The Company is currently working with Yolo County and other district attorneys in California to resolve alleged instances of noncompliance with applicable regulations.

The matter is still ongoing and the ultimate outcome cannot be determined at this time; however, the Company does not expect the resolution of this matter to have a material adverse effect on its consolidated financial position, results of operations or cash flows.

10-K 1 [removed: a2016form10-k.htm] [added: a2017q4form10-k.htm] 10-K TRACTOR SUPPLY COMPANY

For the fiscal year ended December [removed: 31, 2016][added: 30, 2017]

[removed: ][added: ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting company” [added: and “emerging growth company”] in Rule 12b-2 of the Exchange Act:

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 [removed: June 25, 2016,] [added: July 1, 2017,] the last business day of the registrant’s most recently completed second fiscal quarter, was approximately [removed: $9.6] [added: $6.2] billion.

| Class | | Outstanding at January [removed: 28, 2017] [added: 27, 2018] |

| Common Stock, $.008 par value | | [removed: 130,725,876] [added: 125,116,910] |

Portions of the Registrant’s definitive Proxy Statement for its [removed: 2017] [added: 2018] Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

| [Forward-Looking [removed: Statements](#s206CDFEE8C3C5D009677AAD83C0EAF52)] [added: Statements](#sFB0A2E26466C58EA8DC9B2FE744CD294)] | | [removed: [ii](#s206CDFEE8C3C5D009677AAD83C0EAF52)] [added: [ii](#sFB0A2E26466C58EA8DC9B2FE744CD294)] |

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| [removed: [1B.](#sA125FFA3D51652A8BC5E1EFCE351362B)] [added: [1B.](#s883F77D469DA556886EA62F85899F7D2)] | [Unresolved Staff [removed: Comments](#sA125FFA3D51652A8BC5E1EFCE351362B)] [added: Comments](#s883F77D469DA556886EA62F85899F7D2)] | [removed: [13](#sA125FFA3D51652A8BC5E1EFCE351362B)] [added: [14](#s883F77D469DA556886EA62F85899F7D2)] |

| [removed: [3.](#s00A1C24F51FA58F1A86FB1FE02180105)] [added: [3.](#s2ACFBC6ECEF55CF589F95E553EB609B6)] | [Legal [removed: Proceedings](#s00A1C24F51FA58F1A86FB1FE02180105)] [added: Proceedings](#s2ACFBC6ECEF55CF589F95E553EB609B6)] | [removed: [15](#s00A1C24F51FA58F1A86FB1FE02180105)] [added: [15](#s2ACFBC6ECEF55CF589F95E553EB609B6)] |

| [removed: [4.](#s8F494AA1BDA45208AB71A350004D3821)] [added: [4.](#s34559D5FFD6755A5B2BC325C85092A8A)] | [Mine Safety [removed: Disclosures](#s8F494AA1BDA45208AB71A350004D3821)] [added: Disclosures](#s34559D5FFD6755A5B2BC325C85092A8A)] | [removed: [15](#s8F494AA1BDA45208AB71A350004D3821)] [added: [15](#s34559D5FFD6755A5B2BC325C85092A8A)] |

| [removed: [5.](#sF2C8EFFFA6F75CA491B221991B006903)] [added: [5.](#s04E1E54E84C95F608C39E32F8678B91F)] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sF2C8EFFFA6F75CA491B221991B006903)] [added: Securities](#s04E1E54E84C95F608C39E32F8678B91F)] | [removed: [15](#sF2C8EFFFA6F75CA491B221991B006903)] [added: [16](#s04E1E54E84C95F608C39E32F8678B91F)] |

| [removed: [6.](#s98499F0C13725CB1A49FB7AAD4A1A3A2)] [added: [6.](#s784039894B1A54BC975AF91D770030A9)] | [Selected Financial [removed: Data](#s98499F0C13725CB1A49FB7AAD4A1A3A2)] [added: Data](#s784039894B1A54BC975AF91D770030A9)] | [removed: [19](#s98499F0C13725CB1A49FB7AAD4A1A3A2)] [added: [19](#s784039894B1A54BC975AF91D770030A9)] |

| [removed: [7.](#s501E3541E41C5BC89BBFA54C6A56C690)] [added: [7.](#sE897515FAC145D85AE11B41A41DDD088)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s501E3541E41C5BC89BBFA54C6A56C690)] [added: Operations](#sE897515FAC145D85AE11B41A41DDD088)] | [removed: [20](#s501E3541E41C5BC89BBFA54C6A56C690)] [added: [20](#sE897515FAC145D85AE11B41A41DDD088)] |

| [removed: [7A.](#s99ED082F8A5F531793C969B776CDE0CD)] [added: [7A.](#sF1D8775200BB58BB95D92DC96F8620A4)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s99ED082F8A5F531793C969B776CDE0CD)] [added: Risk](#sF1D8775200BB58BB95D92DC96F8620A4)] | [removed: [38](#s99ED082F8A5F531793C969B776CDE0CD)] [added: [39](#sF1D8775200BB58BB95D92DC96F8620A4)] |

| [removed: [8.](#s7F54EF6703905563AECFEC158BEFD82B)] [added: [8.](#s79D78BFFFF135639B56454CB19457B70)] | [Financial Statements and Supplementary [removed: Data](#s7F54EF6703905563AECFEC158BEFD82B)] [added: Data](#s79D78BFFFF135639B56454CB19457B70)] | [removed: [39](#s7F54EF6703905563AECFEC158BEFD82B)] [added: [40](#s79D78BFFFF135639B56454CB19457B70)] |

| [removed: [9.](#s3A98A0FE30F4591EBD3AB981F257F8CE)] [added: [9.](#s9B5B674DDB115F7CBAB5509911696B07)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s3A98A0FE30F4591EBD3AB981F257F8CE)] [added: Disclosure](#s9B5B674DDB115F7CBAB5509911696B07)] | [removed: [69](#s3A98A0FE30F4591EBD3AB981F257F8CE)] [added: [71](#s9B5B674DDB115F7CBAB5509911696B07)] |

| [removed: [9A.](#sF7D3024E96875490A131A75B5DD75452)] [added: [9A.](#s9DA31652C17854D6B57FB7DE89298D87)] | [Controls and [removed: Procedures](#sF7D3024E96875490A131A75B5DD75452)] [added: Procedures](#s9DA31652C17854D6B57FB7DE89298D87)] | [removed: [69](#sF7D3024E96875490A131A75B5DD75452)] [added: [71](#s9DA31652C17854D6B57FB7DE89298D87)] |

| [removed: [9B.](#s08281E22A76E5E228CF548934942C948)] [added: [9B.](#s70592877A5BA55CD8E843ABD9EBAF343)] | [Other [removed: Information](#s08281E22A76E5E228CF548934942C948)] [added: Information](#s70592877A5BA55CD8E843ABD9EBAF343)] | [removed: [69](#s08281E22A76E5E228CF548934942C948)] [added: [72](#s70592877A5BA55CD8E843ABD9EBAF343)] |

| [PART [removed: III](#s3B6CD126F0B9552A81FD67519F3A253F)] [added: III](#s37E2B4A4D9D55730A868D06C6B2C141C)] | | [removed: [69](#s3B6CD126F0B9552A81FD67519F3A253F)] [added: [72](#s37E2B4A4D9D55730A868D06C6B2C141C)] |

| [removed: [10.](#s227EE44A954C51539A5FA1C125975B24)] [added: [10.](#s62AC7709CA4751239749E11C7CE1F74C)] | [Directors, Executive Officers and Corporate [removed: Governance](#s227EE44A954C51539A5FA1C125975B24)] [added: Governance](#s62AC7709CA4751239749E11C7CE1F74C)] | [removed: [69](#s227EE44A954C51539A5FA1C125975B24)] [added: [72](#s62AC7709CA4751239749E11C7CE1F74C)] |

| [removed: [11.](#s5CDEF5ACD4925222A0A0E4E30F879EC3)] [added: [11.](#sD64BC0EAFDA0536C94CCAB9650284DB0)] | [Executive [removed: Compensation](#s5CDEF5ACD4925222A0A0E4E30F879EC3)] [added: Compensation](#sD64BC0EAFDA0536C94CCAB9650284DB0)] | [removed: [70](#s5CDEF5ACD4925222A0A0E4E30F879EC3)] [added: [72](#sD64BC0EAFDA0536C94CCAB9650284DB0)] |

| [removed: [12.](#s7782A24307B1515D92543C71D32E2B04)] [added: [12.](#sB70C0D0EC2195915907DEBD5B50937AF)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s7782A24307B1515D92543C71D32E2B04)] [added: Matters](#sB70C0D0EC2195915907DEBD5B50937AF)] | [removed: [70](#s7782A24307B1515D92543C71D32E2B04)] [added: [72](#sB70C0D0EC2195915907DEBD5B50937AF)] |

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| [removed: [14.](#s85D81C25C3C152E79BD665FFB70FF89A)] [added: [14.](#s73EFD129072558A6B91979B14AE6BA56)] | [Principal Accountant Fees and [removed: Services](#s85D81C25C3C152E79BD665FFB70FF89A)] [added: Services](#s73EFD129072558A6B91979B14AE6BA56)] | [removed: [70](#s85D81C25C3C152E79BD665FFB70FF89A)] [added: [73](#s73EFD129072558A6B91979B14AE6BA56)] |

| [removed: [15.](#sE03B5352934F599DA8CA37BB8B6FB213)] [added: [15.](#s847255CC9D185B12935AC49870FDA47C)] | [Exhibits and Financial Statement [removed: Schedules](#sE03B5352934F599DA8CA37BB8B6FB213)] [added: Schedules](#s847255CC9D185B12935AC49870FDA47C)] | [removed: [71](#sE03B5352934F599DA8CA37BB8B6FB213)] [added: [73](#s847255CC9D185B12935AC49870FDA47C)] |

These factors include, without limitation, national, regional and local economic conditions affecting consumer spending, weather conditions, the seasonal nature of the business, the timing and acceptance of new products in the stores, the timing and mix of goods sold, purchase price volatility (including inflationary and deflationary pressures), the ability to increase sales at existing stores, the ability to manage growth and identify suitable locations, failure of an acquisition to produce anticipated results, the ability to successfully manage expenses and execute key gross margin enhancing initiatives, [added: increases in fuel and other transportation costs, increases in wages due to competitive pressures or minimum wage laws and regulations,] the availability of favorable credit sources, capital market conditions in general, the ability to open new stores in the manner and number currently contemplated, the impact of new stores on the business, competition, effective merchandising and marketing initiatives, the ability to retain vendors, reliance on foreign suppliers, the ability to attract, train and retain qualified employees, product liability and other claims, changes in federal, state or local regulations, potential judgments, fines, legal fees and other costs, breach of information systems or theft of employee or customer data, ongoing and potential future legal or regulatory proceedings, management of the Company’s information systems, failure to develop and implement new technologies, the failure of customer-facing technology systems, business disruption [removed: including] [added: resulting] from [removed: the] [added: a natural or other disaster or] implementation of new [added: technologies, including but not limited to, new] supply chain technologies, effective tax rate [removed: changes] [added: changes, including expected effects of the Tax Cuts] and [added: Jobs Act, and] results of examination by taxing authorities, the ability to maintain an effective system of internal control over financial reporting, changes in accounting standards, assumptions and estimates, and those described in Item 1A.

| | | | Emerging growth company | o |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| [PART I](#sF9A859AC49115B7C9296FAE00C34FB68) | | [1](#sF9A859AC49115B7C9296FAE00C34FB68) |

| [1.](#s01F9579DAB685B528B063D39F917F14F) | [Business](#s01F9579DAB685B528B063D39F917F14F) | [1](#s01F9579DAB685B528B063D39F917F14F) |

| [2.](#s38C2C7FAD61C52829BEB879468447723) | [Properties](#s38C2C7FAD61C52829BEB879468447723) | [14](#s38C2C7FAD61C52829BEB879468447723) |

| [PART II](#s7AE00B0B4B6D50C9AB21F1A7BA2A776B) | | [16](#s7AE00B0B4B6D50C9AB21F1A7BA2A776B) |

| [PART IV](#sAB035217ECF859679FD1113DA8A100EA) | | [73](#sAB035217ECF859679FD1113DA8A100EA) |

| [16.](#s9376498667c14c51bc68fda927d7763e) | [Form 10-K Summary](#s9376498667c14c51bc68fda927d7763e) | [73](#s9376498667c14c51bc68fda927d7763e) |

| [PART I](#s9F10FA136F81523CAE515C7CF3A17901) | | [1](#s9F10FA136F81523CAE515C7CF3A17901) |

| [1.](#s3301F1B26E9D507C886F334B1AF7E024) | [Business](#s3301F1B26E9D507C886F334B1AF7E024) | [1](#s3301F1B26E9D507C886F334B1AF7E024) |

| [2.](#sE661331CB0BD5B8EA96B725AADEB59BC) | [Properties](#sE661331CB0BD5B8EA96B725AADEB59BC) | [13](#sE661331CB0BD5B8EA96B725AADEB59BC) |

| [PART II](#s91995B31E67357CCAEB1599DDD4305FD) | | [15](#s91995B31E67357CCAEB1599DDD4305FD) |

| [PART IV](#sF4FD17E5720250A8B23B8BB01BE8D82A) | | [71](#sF4FD17E5720250A8B23B8BB01BE8D82A) |

At December [removed: 31, 2016,] [added: 30, 2017,] the Company operated [removed: 1,738] [added: 1,853] stores in 49 states.

| [removed: Pennsylvania] [added: Kansas] | | [removed: 89] [added: 22] | | [removed: Kansas] | | [removed: 20] |

| North Carolina | | [removed: 89] [added: 94] | | [removed: Maine] [added: New Hampshire] | | [removed: 19] [added: 21] |

| Tennessee | | [removed: 87] [added: 91] | | Massachusetts | | [removed: 19] [added: 20] |

| Georgia | | [removed: 79] [added: 83] | | Connecticut | | [removed: 17] [added: 19] |

| New York | | [removed: 76] [added: 77] | | Nebraska | | [removed: 15] [added: 18] |

| [removed: Virginia] [added: Florida] | | [removed: 54] [added: 63] | | New Jersey | | [removed: 13] [added: 17] |

| Indiana | | [removed: 54] [added: 57] | | North Dakota | | [removed: 13] [added: 14] |

| Alabama | | [removed: 52] [added: 56] | | Minnesota | | [removed: 10] [added: 12] |

| [removed: California] [added: Oklahoma] | | [removed: 50] [added: 53] | | South Dakota | | [removed: 7] [added: 9] |

| South Carolina | | [removed: 42] [added: 44] | | Vermont | | 7 |

| Louisiana | | [removed: 36] [added: 44] | | Wyoming | | [removed: 7] [added: 8] |

| Arizona | | [removed: 32] [added: 34] | | Idaho | | 4 |

| West Virginia | | [removed: 27] [added: 28] | | Oregon | | [removed: 4] [added: 3] |

| New Mexico | | [removed: 27] [added: 28] | | [removed: Rhode Island] [added: Nevada] | | [removed: 4] [added: 3] |

In fiscal 2017, we [removed: plan to begin] [added: began] construction on a new northeast distribution [removed: center,] [added: center in Frankfort, New York,] as well as an expansion of our existing distribution center in Waverly, Nebraska, which will provide additional distribution capacity once construction is completed.

The Company leases approximately 93% of its stores.

| Texas | | 210 | | Maryland | | 22 |

| Pennsylvania | | 93 | | Maine | | 20 |

| Ohio | | 90 | | Wisconsin | | 20 |

| Michigan | | 83 | | Washington | | 19 |

| Kentucky | | 69 | | Illinois | | 17 |

| California | | 59 | | Utah | | 15 |

| Virginia | | 55 | | Iowa | | 9 |

| Mississippi | | 39 | | Montana | | 6 |

| Arkansas | | 35 | | Delaware | | 5 |

| Missouri | | 30 | | Rhode Island | | 4 |

| Colorado | | 22 | | Hawaii | | 2 |

| | | | | | | 1,853 |

The Company also leases approximately 8,000 square feet of building space for the Petsense corporate headquarters located in Scottsdale, Arizona.

The Company leases approximately 94% of its stores, two distribution sites, its Merchandising Innovation Center (planogram) located in Nashville, Tennessee, as well as the Petsense corporate headquarters located in Scottsdale, Arizona.

| Texas | | 196 | | New Hampshire | | 21 |

| Ohio | | 87 | | Colorado | | 19 |

| Michigan | | 81 | | Wisconsin | | 17 |

| Kentucky | | 63 | | Utah | | 15 |

| Florida | | 58 | | Illinois | | 14 |

| Oklahoma | | 51 | | Iowa | | 9 |

| Arkansas | | 35 | | Montana | | 6 |

| Mississippi | | 34 | | Delaware | | 5 |

| Missouri | | 25 | | Hawaii | | 2 |

| Washington | | 24 | | Nevada | | 2 |

| Maryland | | 21 | | | | |

| | | | | | | 1,738 |

[removed: Tractor Supply] [added: The] Company’s common stock trades on [removed: The] [added: the] Nasdaq Global Select Market under the [removed: symbol “TSCO”.][added: symbol, “TSCO.”]

| First Quarter | [removed: $90.76] [added: $78.25] | | [removed: $78.05] [added: $67.70] | | [removed: $90.49] [added: $90.76] | | [removed: $74.52] [added: $78.05] |

| Second Quarter | [removed: $97.25] [added: $71.53] | | [removed: $86.44] [added: $52.09] | | [removed: $93.99] [added: $97.25] | | [removed: $83.70] [added: $86.44] |

| Third Quarter | [removed: $95.39] [added: $63.40] | | [removed: $66.77] [added: $49.87] | | [removed: $96.28] [added: $95.39] | | [removed: $75.00] [added: $66.77] |

| Fourth Quarter | [removed: $78.17] [added: $75.64] | | [removed: $61.50] [added: $54.76] | | [removed: $94.00] [added: $78.17] | | [removed: $80.06] [added: $61.50] |

As of February [removed: 3, 2017,] [added: 2, 2018,] the number of record holders of our common stock was [removed: 607] [added: 585] (excluding individual participants in nominee security position listings), and the estimated number of beneficial holders of our common stock was [removed: 115,000.][added: approximately 200,000.]

During [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] the [added: Company’s] Board of Directors declared the following cash dividends:

On February [removed: 8, 2017,] [added: 7, 2018,] our Board of Directors declared a quarterly cash dividend of [removed: $0.24] [added: $0.27] per share of the Company’s common stock.

The dividend will be paid on March [removed: 14, 2017,] [added: 13, 2018,] to stockholders of record as of the close of business on February [removed: 27, 2017.][added: 26, 2018.]

The Company’s Board of Directors has authorized common stock repurchases under a share repurchase [removed: program.][added: program of up to $3 billion, exclusive of any fees, commissions or other expenses related to such repurchases through December 31, 2020.]

Stock purchase activity during fiscal [removed: 2016] [added: 2017] is set forth in the table below:

(a) The total number of shares purchased and average price paid per share include shares withheld from vested restricted stock units to satisfy employees’ minimum statutory tax withholding requirements of [removed: 10,236] [added: 8,998] during the first [added: quarter, 2,199 during the third quarter and 558 during the fourth] quarter.

The timing and amount of any common stock repurchased under the program will depend on a variety of [removed: factors,] [added: factors] including price, corporate and regulatory requirements, capital [removed: availability,] [added: availability] and other market conditions.

The following graph compares the cumulative total stockholder return on our common stock from December [removed: 31, 2011] [added: 29, 2012] to December [removed: 31, 2016] [added: 30, 2017] (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: 31, 2011] [added: 29, 2012,] in our common stock and in each of the foregoing indices and in each case assumes reinvestment of dividends.

[removed: ][added: ]

| | | [removed: 12/31/2011 | | | |] 12/29/2012 | | | | 12/28/2013 | | | | 12/27/2014 | | | | 12/26/2015 | | | | 12/31/2016 | | | [added: | 12/30/2017 | | |]

| | 2017 | | | | 2016 | | |

| November 6, 2017 | | $0.27 | | November 20, 2017 | | December 5, 2017 |

| August 7, 2017 | | $0.27 | | August 21, 2017 | | September 6, 2017 |

| May 8, 2017 | | $0.27 | | May 22, 2017 | | June 6, 2017 |

| February 8, 2017 | | $0.24 | | February 27, 2017 | | March 14, 2017 |

| First Quarter (a) | | 1,605,165 | | | $ | 71.77 | | | 1,596,167 | | | $ | 1,124,516,565 | |

| Second Quarter | | 2,209,506 | | | 60.47 | | | | 2,209,506 | | | 990,943,666 | | |

| Third Quarter (a) | | 1,427,570 | | | 55.08 | | | | 1,425,371 | | | 912,461,301 | | |

| 10/1/17 – 10/28/17 | | 315,000 | | | 58.98 | | | | 315,000 | | | 893,885,189 | | |

| 10/29/17 – 11/25/17 (a) | | 259,359 | | | 61.08 | | | | 258,801 | | | 878,077,270 | | |

| 11/26/17 – 12/30/17 | | 119,900 | | | 69.77 | | | | 119,900 | | | 869,713,394 | | |

| | | 694,259 | | | 61.63 | | | | 693,701 | | | 869,713,394 | | |

| As of December 30, 2017 | | 5,936,500 | | | $ | 62.36 | | | 5,924,745 | | | $ | 869,713,394 | |

| Tractor Supply Company | | $ | 100.00 | | | $ | 174.14 | | | $ | 181.29 | | | $ | 201.04 | | | $ | 179.94 | | | $ | 180.52 | |

| S&P 500 | | $ | 100.00 | | | $ | 134.11 | | | $ | 155.24 | | | $ | 156.43 | | | $ | 173.74 | | | $ | 211.67 | |

| S&P Retail Index | | $ | 100.00 | | | $ | 147.73 | | | $ | 164.24 | | | $ | 207.15 | | | $ | 219.43 | | | $ | 286.13 | |

| | 2016 | | | | 2015 | | |

| 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 |

On October 31, 2016, the Board of Directors authorized a $1 billion increase to the existing share repurchase program, bringing the total amount authorized to $3 billion, exclusive of any fees, commissions, or other expenses related to such repurchases and extended the program through December 31, 2020.

| First Quarter (a) | | 1,194,323 | | | $ | 83.68 | | | 1,184,087 | | | $ | 471,601,257 | |

| Second Quarter | | 86,794 | | | 89.90 | | | | 86,794 | | | 463,799,558 | | |

| Third Quarter | | 1,409,652 | | | 77.17 | | | | 1,409,652 | | | 355,034,384 | | |

| 9/25/16 – 10/22/16 | | 1,200,000 | | | 67.41 | | | | 1,200,000 | | | 274,166,426 | | |

| 10/23/16 – 11/19/16 (b) | | 377,136 | | | 64.92 | | | | 377,136 | | | 1,249,687,202 | | |

| 11/20/16 – 12/31/16 | | 140,000 | | | 76.05 | | | | 140,000 | | | 1,239,042,973 | | |

| | | 1,717,136 | | | 67.56 | | | | 1,717,136 | | | 1,239,042,973 | | |

| As of December 31, 2016 | | 4,407,905 | | | $ | 75.44 | | | 4,397,669 | | | $ | 1,239,042,973 | |

(b) The Board authorized a $1 billion increase to its existing share repurchase program, bringing the total amount authorized to date under the program to $3 billion.

The program, established in February 2007, has been extended through December 31, 2020.

| Tractor Supply Company | | $ | 100.00 | | | $ | 126.76 | | | $ | 222.22 | | | $ | 233.15 | | | $ | 260.81 | | | $ | 236.19 | |

| S&P 500 | | $ | 100.00 | | | $ | 114.07 | | | $ | 152.98 | | | $ | 177.08 | | | $ | 178.44 | | | $ | 198.18 | |

| S&P Retail Index | | $ | 100.00 | | | $ | 123.80 | | | $ | 182.90 | | | $ | 203.34 | | | $ | 256.45 | | | $ | 271.66 | |

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

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

| Net sales | $ | [removed: 6,779,579] [added: 7,256,382] | | | $ | [removed: 6,226,507] [added: 6,779,579] | | | $ | [removed: 5,711,715] [added: 6,226,507] | | | $ | [removed: 5,164,784] [added: 5,711,715] | | | $ | [removed: 4,664,120] [added: 5,164,784] | |

| Gross profit | [removed: 2,325,202] [added: 2,491,965] | | | | [removed: 2,143,174] [added: 2,325,202] | | | | [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: 1,488,164] [added: 1,639,749] | | | | [removed: 1,369,097] [added: 1,488,164] | | | | [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: 142,958] [added: 165,834] | | | | [removed: 123,569] [added: 142,958] | | | | [removed: 114,635] [added: 123,569] | | | | [removed: 100,025] [added: 114,635] | | | | [removed: 88,975] [added: 100,025] | | |

| Operating income | [removed: 694,080] [added: 686,382] | | | | [removed: 650,508] [added: 694,080] | | | | [removed: 589,472] [added: 650,508] | | | | [removed: 514,650] [added: 589,472] | | | | [removed: 436,792] [added: 514,650] | | |

| Interest expense, net | [removed: 5,810] [added: 13,859] | | | | [removed: 2,891] [added: 5,810] | | | | [removed: 1,885] [added: 2,891] | | | | [removed: 557] [added: 1,885] | | | | [removed: 1,055] [added: 557] | | |

| Income before income taxes | [removed: 688,270] [added: 672,523] | | | | [removed: 647,617] [added: 688,270] | | | | [removed: 587,587] [added: 647,617] | | | | [removed: 514,093] [added: 587,587] | | | | [removed: 435,737] [added: 514,093] | | |

| Income tax expense | [removed: 251,150] [added: 249,924] | | | | [removed: 237,222] [added: 251,150] | | | | [removed: 216,702] [added: 237,222] | | | | [removed: 185,859] [added: 216,702] | | | | [removed: 159,280] [added: 185,859] | | |

| Net income | $ | [removed: 437,120] [added: 422,599] | | | $ | [removed: 410,395] [added: 437,120] | | | $ | [removed: 370,885] [added: 410,395] | | | $ | [removed: 328,234] [added: 370,885] | | | $ | [removed: 276,457] [added: 328,234] | |

| Net income per share – basic (c) | $ | [removed: 3.29] [added: 3.31] | | | $ | [removed: 3.03] [added: 3.29] | | | $ | [removed: 2.69] [added: 3.03] | | | $ | [removed: 2.35] [added: 2.69] | | | $ | [removed: 1.94] [added: 2.35] | |

| Net income per share – diluted (c) | $ | [removed: 3.27] [added: 3.30] | | | $ | [removed: 3.00] [added: 3.27] | | | $ | [removed: 2.66] [added: 3.00] | | | $ | [removed: 2.32] [added: 2.66] | | | $ | [removed: 1.90] [added: 2.32] | |

| Weighted average shares – diluted (c) | [removed: 133,813] [added: 128,204] | | | | [removed: 136,845] [added: 133,813] | | | | [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: 0.92] [added: 1.05] | | | $ | [removed: 0.76] [added: 0.92] | | | $ | [removed: 0.61] [added: 0.76] | | | $ | [removed: 0.49] [added: 0.61] | | | $ | [removed: 0.36] [added: 0.49] | |

| Gross margin | 34.3 | | % | | [removed: 34.4] [added: 34.3] | | % | | [removed: 34.1] [added: 34.4] | | % | | [removed: 34.0] [added: 34.1] | | % | | [removed: 33.6] [added: 34.0] | | % |

| Selling, general and administrative expenses | [removed: 22.0] [added: 22.6] | | % | | 22.0 | | % | | [removed: 21.8] [added: 22.0] | | % | | [removed: 22.1] [added: 21.8] | | % | | [removed: 22.3] [added: 22.1] | | % |

| Operating income | [removed: 10.2] [added: 9.4] | | % | | [removed: 10.4] [added: 10.2] | | % | | [removed: 10.3] [added: 10.4] | | % | | [removed: 10.0] [added: 10.3] | | % | | [removed: 9.4] [added: 10.0] | | % |

| Net income | [removed: 6.4] [added: 5.8] | | % | | [removed: 6.6] [added: 6.4] | | % | | [removed: 6.5] [added: 6.6] | | % | | [removed: 6.4] [added: 6.5] | | % | | [removed: 6.0] [added: 6.4] | | % |

| Stores open at end of year | [removed: 1,738] [added: 1,853] | | | | [removed: 1,488] [added: 1,738] | | | | [removed: 1,382] [added: 1,488] | | | | [removed: 1,276] [added: 1,382] | | | | [removed: 1,176] [added: 1,276] | | |

| Comparable store sales increase (d) | [removed: 1.6] [added: 2.7] | | % | | [removed: 3.1] [added: 1.6] | | % | | [removed: 3.8] [added: 3.1] | | % | | [removed: 4.8] [added: 3.8] | | % | | [removed: 5.3] [added: 4.8] | | % |

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

| Average transaction value | $ | [removed: 44.42] [added: 44.61] | | | $ | [removed: 44.87] [added: 44.42] | | | $ | [removed: 44.84] [added: 44.87] | | | $ | [removed: 44.48] [added: 44.84] | | | $ | [removed: 44.40] [added: 44.48] | |

| Comparable store average transaction value [removed: (decrease)] increase [added: (decrease)] (c) | [added: 0.5 | | % | |] (0.9 | | )% | | (0.2 | | )% | | 0.6 | | % | | — | | % | [removed: | 2.0 | | % |]

| Comparable store average transaction count increase (d) | [removed: 2.6] [added: 2.2] | | % | | [removed: 3.3] [added: 2.6] | | % | | [removed: 3.2] [added: 3.3] | | % | | [removed: 4.7] [added: 3.2] | | % | | [removed: 3.0] [added: 4.7] | | % |

| Total selling square footage (000’s) | [removed: 26,511] [added: 28,180] | | | | [removed: 23,938] [added: 26,511] | | | | [removed: 22,176] [added: 23,938] | | | | [removed: 20,470] [added: 22,176] | | | | [removed: 18,893] [added: 20,470] | | |

| Total team members | [removed: 26,000] [added: 29,300] | | | | [removed: 23,000] [added: 26,000] | | | | [removed: 21,100] [added: 23,000] | | | | [removed: 19,200] [added: 21,100] | | | | [removed: 17,300] [added: 19,200] | | |

| Capital expenditures (000’s) | $ | [removed: 226,017] [added: 250,401] | | | $ | [removed: 236,496] [added: 226,017] | | | $ | [removed: 160,613] [added: 236,496] | | | $ | [removed: 218,200] [added: 160,613] | | | $ | [removed: 152,924] [added: 218,200] | |

| Average inventory per store (f) | $ | [removed: 741.7] [added: 735.4] | | | $ | [removed: 820.1] [added: 741.7] | | | $ | [removed: 752.7] [added: 820.1] | | | $ | [removed: 723.5] [added: 752.7] | | | $ | [removed: 727.4] [added: 723.5] | |

| Inventory turns | [removed: 3.19] [added: 3.24] | | | | [removed: 3.23] [added: 3.19] | | | | [removed: 3.32] [added: 3.23] | | | | [removed: 3.29] [added: 3.32] | | | | [removed: 3.28] [added: 3.29] | | |

| Working capital (g) | $ | [removed: 740,615] [added: 806,154] | | | $ | [removed: 768,177] [added: 740,615] | | | $ | [removed: 670,897] [added: 768,177] | | | $ | [removed: 677,107] [added: 670,897] | | | $ | [removed: 569,547] [added: 677,107] | |

| Total assets | $ | [removed: 2,674,942] [added: 2,868,769] | | | $ | [removed: 2,370,826] [added: 2,674,942] | | | $ | [removed: 2,034,571] [added: 2,370,826] | | | $ | [removed: 1,903,391] [added: 2,034,571] | | | $ | [removed: 1,706,808] [added: 1,903,391] | |

| Long-term debt, less current portion (h) | $ | [removed: 289,769] [added: 433,686] | | | $ | [removed: 166,992] [added: 289,769] | | | $ | [removed: 4,957] [added: 166,992] | | | $ | [removed: 1,200] [added: 4,957] | | | $ | [removed: 1,242] [added: 1,200] | |

| Stockholders’ equity | $ | [removed: 1,453,218] [added: 1,418,673] | | | $ | [removed: 1,393,294] [added: 1,453,218] | | | $ | [removed: 1,293,561] [added: 1,393,294] | | | $ | [removed: 1,246,894] [added: 1,293,561] | | | $ | [removed: 1,024,974] [added: 1,246,894] | |

Fiscal year 2016 consisted of 53 weeks while all other fiscal years [added: presented] consisted of 52 weeks.

(g) Working capital for [added: 2017,] 2016 and 2015 reflects deferred tax assets as non-current as a result of the adoption of ASU 2015-17 (which is discussed in Note 15 to the Consolidated Financial Statements).

(h) Long-term debt includes amounts outstanding under the Company’s [removed: senior credit facility] [added: debt facilities] and capital lease obligations, excluding the current portions.

Acquired Petsense stores are considered comparable stores beginning in the fourth quarter of fiscal 2017.

Petsense stores are not considered comparable stores until 12 months after the date of acquisition.

| [Management's Report on Internal Control over Financial [removed: Reporting](#s1CB1138F059C50E4A68B5D8A9A894297)] [added: Reporting](#sC81BD2C92F6F5DE9AD983EADE76BA69A)] | [removed: [40](#s1CB1138F059C50E4A68B5D8A9A894297)] [added: [41](#sC81BD2C92F6F5DE9AD983EADE76BA69A)] |

| [Reports of Independent Registered Public Accounting [removed: Firm](#s0E2A7D61B1ED5649B37E7ECFC4700F1A)] [added: Firm](#sB14190EC41665E8F9C7AC66CA399752D)] | [removed: [41](#s0E2A7D61B1ED5649B37E7ECFC4700F1A)] [added: [42](#sB14190EC41665E8F9C7AC66CA399752D)] |

| [Consolidated Statements of Income for the fiscal years [removed: ended](#sFAB5EA2EB1A25F199F24ED5B67943D7D)] [added: ended] December [added: 30, 2017, December] 31, 2016, [removed: December 26, 2015,] and December [removed: 27, 2014] [added: 26, 2015](#sB737260CAA435DB98E77DE14D641285B)] | [removed: [43](#sFAB5EA2EB1A25F199F24ED5B67943D7D)] [added: [44](#sB737260CAA435DB98E77DE14D641285B)] |

| [Consolidated Statements of Comprehensive Income for the fiscal years ended December [added: 30, 2017, December] 31, 2016, [removed: December 26, 2015,] and December [removed: 27, 2014](#s73de253e1b2249208fdba60ac776477f)] [added: 26, 2015](#s39CF0F3A0F3E51DB8158D0380D08948A)] | [removed: [44](#s73de253e1b2249208fdba60ac776477f)] [added: [45](#s39CF0F3A0F3E51DB8158D0380D08948A)] |

| [Consolidated Balance Sheets as [removed: of](#sC3D9FF1CA7E25B89BAA74D7C60E0BD89)] [added: of] December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015] [added: 31, 2016](#sC8E73E5F474A5D119D7C6BDE0F8F68AA)] | [removed: [45](#sC3D9FF1CA7E25B89BAA74D7C60E0BD89)] [added: [46](#sC8E73E5F474A5D119D7C6BDE0F8F68AA)] |

| [Consolidated Statements of Stockholders’ Equity for the fiscal years [removed: ended](#sCD58A4F7C9F6578CAB2327CFE33CAAF8)] [added: ended] December [added: 30, 2017, December] 31, 2016, [removed: December 26, 2015,] and December [removed: 27, 2014] [added: 26, 2015](#sFF0CBB131EFA5235B18EA2979C005B2D)] | [removed: [46](#sCD58A4F7C9F6578CAB2327CFE33CAAF8)] [added: [47](#sFF0CBB131EFA5235B18EA2979C005B2D)] |

| [Consolidated Statements of Cash Flows for the fiscal years [removed: ended](#s5C63043E71615ECABD30C7F18CA84D2C)] [added: ended] December [added: 30, 2017, December] 31, 2016, [removed: December 26, 2015,] and December [removed: 27, 2014] [added: 26, 2015](#s7FA9F4986BBD5D68B1EA15D755EA6025)] | [removed: [47](#s5C63043E71615ECABD30C7F18CA84D2C)] [added: [48](#s7FA9F4986BBD5D68B1EA15D755EA6025)] |

| [Notes to Consolidated Financial [removed: Statements](#sDB62A17B50D650F2B0C44790EDD09128)] [added: Statements](#s69E3CFA547DB52EBB7946E02C66B0F5C)] | [removed: [48](#sDB62A17B50D650F2B0C44790EDD09128)] [added: [49](#s69E3CFA547DB52EBB7946E02C66B0F5C)] |

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December [removed: 31, 2016.][added: 30, 2017.]

Based on this assessment, management believes that, as of December [removed: 31, 2016,] [added: 30, 2017,] the Company’s internal control over financial reporting is effective based on those criteria.

| Gregory A. Sandfort Chief Executive Officer | | | | [removed: Anthony F. Crudele Executive] [added: Kurt D. Barton Senior] Vice President - Chief Financial Officer and Treasurer |

| February [removed: 23,] [added: 8,] 2017 | | [added: $0.24] | | February [removed: 23,] [added: 27,] 2017 | [added: | March 14, 2017 |]

[removed: The] [added: To the Shareholders and the] Board of Directors [removed: and Stockholders] of [added: Tractor Supply Company]

We have audited Tractor Supply Company’s internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] based on criteria established in Internal [removed: Control—Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

[removed: Tractor Supply] [added: The] Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

In our opinion, Tractor Supply [removed: Company] [added: Company’s (the Company)] maintained, in all material respects, effective internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (PCAOB),] the consolidated balance sheets of Tractor Supply Company as of December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015,] [added: 31, 2016,] and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three fiscal years in the period ended December [removed: 31, 2016,] [added: 30, 2017,] and [added: the related notes and] our report dated February [removed: 23, 2017,] [added: 22, 2018,] expressed an unqualified opinion thereon.

[removed: The] [added: To the Shareholders and the] Board of Directors [removed: and Stockholders] of [added: Tractor Supply Company]

We have audited the accompanying consolidated balance sheets of Tractor Supply Company [added: (the Company)] as of December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015, and] [added: 31, 2016,] the related consolidated statements of income, comprehensive income, [removed: stockholders’] [added: stockholders'] equity, and cash flows for each of the three fiscal years in the period ended December [removed: 31, 2016.][added: 30, 2017, and the related notes (collectively referred to as the “financial statements”).]

Our responsibility is to express an opinion on [removed: these] [added: the Company’s] financial statements based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures include] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, the [added: consolidated] financial statements [removed: referred to above] present fairly, in all material respects, the [removed: consolidated] financial position of [removed: Tractor Supply] [added: the] Company at December [removed: 31, 2016] [added: 30, 2017] and December [removed: 26, 2015,] [added: 31, 2016,] and the [removed: consolidated] results of its operations and its cash flows for each of the three fiscal years in the period ended December [removed: 31, 2016,] [added: 30, 2017,] 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 [removed: States), Tractor Supply Company’s] [added: States) (PCAOB), the Company's] internal control over financial reporting as of December [removed: 31, 2016,] [added: 30, 2017,] 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: 23, 2017,] [added: 22, 2018,] expressed an unqualified opinion thereon.

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

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

| Net sales | $ | [removed: 6,779,579] [added: 7,256,382] | | | $ | [removed: 6,226,507] [added: 6,779,579] | | | $ | [removed: 5,711,715] [added: 6,226,507] | |

| Cost of merchandise sold | [removed: 4,454,377] [added: 4,764,417] | | | | [removed: 4,083,333] [added: 4,454,377] | | | | [removed: 3,761,300] [added: 4,083,333] | | |