Tractor Supply (TSCO) 10-K risk factor changes: FY2018 vs FY2017

The Tractor Supply name is integral to our [removed: business] [added: business,] as well as to the implementation of our strategies for expanding our business.

We experience fluctuations in our comparable store [removed: sales,] [added: sales at our existing stores,] defined as sales in stores which have been open for at least twelve months.

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

These factors may cause [removed: our] [added: the] comparable store sales results [added: at our existing stores] to differ materially from prior periods and from expectations.

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, [removed: cotton] [added: cotton,] and other [removed: commodities] [added: commodities,] as well as diesel fuel and transportation services.

Our strategy is to reduce or mitigate the effects of purchase price volatility principally by taking advantage of vendor incentive programs, economies of scale from increased volume of purchases, adjusting retail [removed: prices] [added: prices,] and selectively buying from the most competitive vendors while maintaining product quality.

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

[removed: While extreme weather conditions can positively impact our operating results by] increasing demand in affected locations for products needed to cope with the weather condition and its effects, they can also negatively affect our business depending on the severity and length of these [removed: conditions] [added: conditions,] as a result of store closings or the inability of customers to shop at our stores due to weather conditions.

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

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

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

Such measures could include deferring capital expenditures and reducing or eliminating future share repurchases, cash [removed: dividends] [added: dividends,] or other discretionary uses of cash.

Failure to open and manage new stores in the number and manner currently contemplated could adversely affect our financial [removed: performance.]

As we execute this expansion strategy, we may also experience managerial or operational challenges which may prevent any expected increase in sales, [removed: profitability] [added: profitability,] or cash flow.

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, [added: increases in legally required minimum wage rates,] changing demographics, health and other insurance costs, changes in employment legislation and the potential for changes in local labor practices or union activities.

The success of an acquisition is based on our ability to make accurate assumptions regarding the valuation, operations, growth potential, [removed: integration] [added: integration,] and other factors relating to the target business.

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

These competitors include general merchandise retailers, home center retailers, specialty and discount retailers, [removed: independently owned] [added: independently-owned] retail farm and ranch stores, numerous privately-held regional farm store [removed: chains] [added: chains,] and farm cooperatives, as well as internet-based retailers.

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

We rely on long-term relationships with our suppliers but have no [added: significant] long-term contracts with such suppliers.

Any problems caused by these [removed: third parties,] [added: 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.

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

[added: If any such factors were to render the conduct of business in particular countries undesirable or impractical or if additional] U.S. quotas, duties, [removed: taxes] [added: 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.

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

[removed: 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 [removed: shortages] [added: 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 [removed: product] [added: products] for sale, or products at a desired price, resulting in lower sales and profitability.

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

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

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

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

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

Product liability claims from customers and product recalls for merchandise alleged to be defective or harmful could lead to the disposal or write-off of merchandise inventories, the incurrence of fines or [removed: penalties] [added: penalties,] and damage to our reputation.

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

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

Additionally, we are subject to U.S. federal, [removed: state] [added: 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, [added: discrimination, harassment, and wrongful termination.]

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

[removed: We] [added: As do most retailers, we] receive [added: and store in our information systems] certain personal and other [removed: confidential] [added: sensitive] information about our [added: business,] customers, [removed: employees] [added: employees,] and vendors.

[removed: In addition,] [added: Additionally, we also receive and process information permitting cashless payments as part of] our [added: in-store and] online operations at [removed: TractorSupply.com and Petsense.com] [added: TractorSupply.com, some of which] depend upon the secure transmission of confidential information over public [removed: networks, including information permitting cashless payments.][added: networks.]

[removed: Such an occurrence] [added: A compromise of our information security and privacy controls, or those of businesses and vendors with whom we interact, which results in confidential information being accessed, obtained, damaged, or used by unauthorized or improper parties; loss or unavailability of data; disruptions to our business activities; or any other outcome stemming from a cybersecurity incident] could materially adversely affect our reputation with our customers, [removed: employees,] [added: team members,] and vendors, as well as our operations, results of operations, financial condition and liquidity, and could result in significant legal and financial exposure beyond the scope or limits of insurance coverage.

Moreover, a security breach could require that we expend significant additional resources to respond to the [added: attack or] breach and could result in a disruption of our operations.

While extreme weather conditions can positively impact our operating results by

performance.

The unanticipated loss of current members of our senior management team and other key team members or the failure to successfully manage an executive officer transition may adversely affect our operating results.

Our success depends in large part on the continued availability and service of our executive officers, senior management, and other key team members.

Competition for senior management and key team members in our industry is strong and we may not be able to retain our key team members or attract new qualified team members.

We must continue to recruit, retain, and motivate management and other team members sufficiently, both to maintain our current business and to execute our long-term strategic growth initiatives.

The loss of any of our executive officers or other key senior management without sufficient advance notice could prevent or delay the implementation and completion of our strategic initiatives or divert management’s attention to seeking qualified replacements.

Additionally, any failure by us to manage a successful leadership transition of an executive officer and to timely identify a qualified permanent replacement could harm our business and have a material adverse effect on our results of operations.

certain liabilities and costs.

We rely on manufacturers located in foreign countries, including China, for merchandise.

Additionally, a portion of our domestically purchased merchandise is manufactured abroad.

Our business may be materially adversely affected by risks associated with international trade, including the impact of tariffs recently imposed and proposed by the U.S. with respect to certain consumer goods imported from China.

We source a portion of our merchandise from manufacturers located outside the U.S., primarily in Asia and Central America, and many of our domestic vendors have a global supply chain.

The U.S. recently imposed tariffs on certain products imported into the U.S. from China and could propose additional tariffs.

The imposition of tariffs on imported products is expected to increase our costs and could result in reduced sales and profits.

As a result, we may need to seek alternative suppliers or vendors, raise retail selling prices or make changes to our operations.

Any of these actions could have a material adverse effect on our sales and profitability, results of operations, and financial condition.

In addition, the imposition of tariffs by the U.S. has resulted in the adoption of tariffs by China on U.S. exports and could result in the adoption of tariffs by other countries as well.

A resulting trade war could have a significant adverse effect on world trade and the world economy.

Further, the imposition of tariffs or other changes in world trade could have an impact on certain U.S. industries and consumers and could negatively impact the consumer demand for products that we sell.

We continue to evaluate the potential impact of the effective and proposed tariffs on our supply chain, costs, sales, and profitability as well as our strategies to mitigate any negative impact, including negotiating with our vendors, seeking alternative sourcing options and adjusting retail selling prices.

Given the uncertainty regarding the scope and duration of the current and proposed tariffs, as well as the potential for additional trade actions by the U.S. or other countries, the impact on our business, results of operations and financial condition is uncertain but could be significant.

Thus, we can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful in whole or in part in mitigating the impact of any current or future tariffs.

To the extent that our supply chain, costs, sales, or profitability are negatively affected by the tariffs or other trade actions, our business, financial condition, and results of operations may be materially adversely affected.

Any disruption, unanticipated expense, or

We depend on information systems and technology, some of which are managed or provided by third-parties, for many activities important to our business.

The information that we receive and store makes us subject to cybersecurity attacks, cyber incidents and privacy regulations, which are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated, and are being made by groups and individuals with a wide range of expertise and motives.

We are the target of attempted cyber and other security threats and continuously monitor our information technology networks and infrastructure in an effort to prevent, detect, address and mitigate the risk of unauthorized access, misuse, computer viruses and other events that could have a security impact.

However, these security measures cannot provide absolute assurance or guarantee that we will be successful in preventing, detecting, or responding to every such breach or disruption and/or preventing the misuse of confidential information of our business, customers, employees, or vendors.

Similar risks exist with respect to the third-party vendors that we rely upon for aspects of our information technology support services and administrative functions, even if the attack or breach does not directly impact our systems or information.

We are subject to payments-related risks that could increase our operating costs, expose us to fraud, subject us to potential liability, and potentially disrupt our business.

We accept payments using a variety of methods, including credit cards, debit cards, credit accounts, our private label and co-branded credit cards, gift cards, direct debit from a customer’s bank account, consumer invoicing and physical bank checks, and we may offer different payment options over time.

These payment options subject us to many compliance requirements, including, but not limited to, compliance with payment card association operating rules, including data security rules, certification requirements, rules governing electronic funds transfers, and Payment Card Industry Data Security Standards.

They also subject us to potential fraud by criminal elements seeking to discover and take advantage of security vulnerabilities that may exist in some of these payment systems.

For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability.

We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, electronic checks, gift cards and promotional financing, and it could disrupt our business if these companies become unwilling or unable to provide these services to us.

If we fail to comply with these rules or requirements, adequately encrypt payment transaction data, or if our data security systems are breached or compromised, we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees, and lose our ability to accept credit and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected.

In addition, we continually

droughts, have impacted operating results.

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

discrimination, harassment, and wrongful termination.

We also rely on business partners to provide services to us that may include important business information or data about our customers, employees and vendors.

While we maintain substantial security measures to help protect and prevent unauthorized access to such information, it is possible that unauthorized parties (through 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.

It is possible that such a compromise could go undetected by us.

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, [removed: liquidity] [added: liquidity,] and capital resources during the three-year period ended December [removed: 30, 2017] [added: 29, 2018] (our fiscal years [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015).][added: 2016).]

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

As of December [removed: 30, 2017,] [added: 29, 2018,] we operated [removed: 1,853] [added: 1,940] retail stores in 49 states under the names Tractor Supply Company, Del’s Feed & Farm [removed: Supply] [added: Supply,] and Petsense.

| • | Equine, livestock, [removed: pet] [added: pet,] and small animal products, including items necessary for their health, care, [removed: growth] [added: growth,] and containment; |

| • | Hardware, truck, [removed: towing] [added: towing,] and tool products; |

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

Tractor Supply [added: Company] 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 [removed: experiences] [added: 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, [removed: digital] [added: 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 [removed: advice] [added: 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, [removed: scale] [added: 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, [removed: optimizing] [added: optimizing,] and empowering our team members for growth by developing skills, [removed: talent] [added: talent,] and leadership across the organization, and (2) implementing operational efficiency [removed: initiatives] [added: initiatives, including leverage of technology,] to align our cost structure to support new business capabilities for margin improvement and cost reductions.

Over the past five years, we have experienced considerable growth in stores, growing from [removed: 1,176] [added: 1,276] stores at the end of [removed: 2012] [added: fiscal 2013] to [removed: 1,853] [added: 1,940] stores [removed: (1,685] [added: (1,765] Tractor Supply and Del’s retail stores and [removed: 168] [added: 175] Petsense retail stores) at the end of fiscal [removed: 2017,] [added: 2018,] and in [added: net] sales, with a compounded annual growth rate of approximately [removed: 9.2%.][added: 8.9%.]

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

In [added: fiscal] 2017, we opened 101 new Tractor Supply stores [removed: in 39 states] and 25 new Petsense [removed: stores in 11 states.][added: stores.]

In [added: fiscal] 2016, we opened 113 new Tractor Supply [removed: stores and] [added: stores,] began operating 143 Petsense [removed: stores.][added: stores (including 8 new stores after acquisition), and had three store relocations.]

This resulted in a selling square footage increase of approximately [removed: 6.3%] [added: 4.9%] in fiscal [removed: 2017] [added: 2018] and approximately [removed: 10.8%] [added: 6.3%] in fiscal [removed: 2016.][added: 2017.]

Net sales increased [removed: 7.0%] [added: 9.0%] to [removed: $7.26] [added: $7.91] billion in fiscal [removed: 2017 (52 weeks)] [added: 2018] from [removed: $6.78] [added: $7.26] billion in fiscal [removed: 2016 (53 weeks).][added: 2017.]

Comparable store sales increased [removed: 2.7%] [added: 5.1%] in fiscal [removed: 2017] [added: 2018] versus a [removed: 1.6%] [added: 2.7%] increase in fiscal [removed: 2016.][added: 2017.]

Operating income decreased [removed: 80] [added: 59] basis points to [removed: 9.4%] [added: 8.87%] of net sales in fiscal [removed: 2017] [added: 2018] from [removed: 10.2%] [added: 9.46%] of net sales in fiscal [removed: 2016.][added: 2017.]

For fiscal [removed: 2017,] [added: 2018,] net income was [removed: $422.6] [added: $532.4] million, or [removed: $3.30] [added: $4.31] per diluted share, compared to [removed: $437.1] [added: $422.6] million, or [removed: $3.27] [added: $3.30] per diluted share, in fiscal [removed: 2016.][added: 2017.]

Excluding the impact of the revaluation of the Company’s net deferred tax asset [added: in fiscal 2017] 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.

We ended the year with [removed: $109.1] [added: $86.3] million in cash and outstanding debt of [removed: $426.1] [added: $407.4] million, after returning [removed: $503.2] [added: $496.9] million to our stockholders through stock repurchases and quarterly cash dividends.

The preparation of these financial statements requires management to make informed estimates and judgments that affect the reported amounts of assets, liabilities, revenues and [removed: expenses] [added: expenses,] and related disclosure of contingent assets and liabilities.

Our significant accounting policies are disclosed in Note 1 to [removed: our] [added: the] Consolidated Financial Statements.

| 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 [removed: inventory] [added: 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 [added: inventory] impairment reserve as of December [removed: 30, 2017,] [added: 29, 2018,] would have affected net income by approximately [removed: $0.5] [added: $0.8] million in fiscal [removed: 2017.] [added: 2018.] |

| 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 [removed: 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: 30, 2017,] [added: 29, 2018,] would have affected net income by approximately [removed: $1.7] [added: $2.2] million in fiscal [removed: 2017.] [added: 2018.] |

| 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 inventory, and then recognized as a reduction of cost of merchandise as the related inventory is sold. During interim periods, the amount of vendor support 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: 2017.] [added: 2018.] If a 10% reserve had been applied against our outstanding vendor funding due as of December [removed: 30, 2017,] [added: 29, 2018,] net income would have been affected by approximately [removed: $1.4] [added: $1.7] million in fiscal [removed: 2017.] [added: 2018.] 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: 30, 2017,] [added: 29, 2018,] net income would have been affected by approximately [removed: $7.8] [added: $11.7] million in fiscal [removed: 2017.] [added: 2018.] |

| We self-insure a significant portion of our employee medical insurance, workers’ compensation [removed: insurance] [added: insurance,] and general liability (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 [removed: factors] [added: 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: 30, 2017,] [added: 29, 2018,] would have affected net income by approximately [removed: $3.6] [added: $5.1] million in fiscal [removed: 2017.] [added: 2018.] |

| 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 [removed: allocations] [added: 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 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. |

Our unaudited quarterly operating results for each fiscal quarter of [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] are shown below (in thousands, except per share amounts):

| [removed: 2016 (b)] | [removed: | (13 weeks) | | | | (13 weeks) | | | | (13] [added: (52] weeks) | | | | [removed: (14] [added: (52] weeks) | | | | (53 weeks) | | |

Acquired Petsense stores are considered comparable [removed: stores] beginning in the fourth quarter of fiscal 2017.

The following table sets forth, for the periods indicated, certain items in [removed: our] [added: the] Consolidated Statements of Income expressed as a percentage of net sales.

| | 2017 | | | [removed: 2016] | [added: 2016(a)] | | [removed: 2015] | | [added: | | |]

| Net sales | [removed: 100.0] [added: 100.00] | % | | [removed: 100.0] [added: 100.00] | % | | [removed: 100.0] [added: 100.00] | % |

| Selling, general and administrative expenses (a) | [removed: 22.6] [added: 23.05] | | | [removed: 22.0] [added: 22.60] | | | [removed: 22.0] [added: 21.95] | |

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

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

Sales from stores opened less than one year, including [removed: Petsense,] [added: acquired Petsense stores,] were $378.9 million in fiscal 2016, which represented 6.1 percentage points of the 8.9% increase over fiscal 2015 net sales.

| Tractor Supply | [removed: 2017] | | | [removed: 2016] | | [added: |]

| [removed: Store count, beginning] [added: Beginning] of period | [added: |] 1,595 | | | 1,488 | |

Gross profit increased 8.4% to $2.70 billion in fiscal 2018 from $2.49 billion in fiscal 2017, and gross margin decreased 18 basis points to 34.16% of net sales in fiscal 2018 from 34.34% of net sales in fiscal 2017.

| Net sales | | $ | 1,682,901 | | | $ | 2,213,249 | | | $ | 1,881,625 | | | $ | 2,133,271 | | | $ | 7,911,046 | |

| Gross profit | | 563,649 | | | | 769,414 | | | | 653,132 | | | | 716,333 | | | | 2,702,528 | | |

| Operating income | | 94,749 | | | | 273,458 | | | | 153,148 | | | | 180,382 | | | | 701,737 | | |

| Net income | | 71,433 | | | | 207,289 | | | | 116,784 | | | | 136,851 | | | | 532,357 | | |

| Basic | | $ | 0.57 | | | $ | 1.70 | | | $ | 0.96 | | | $ | 1.12 | | | $ | 4.34 | |

| Diluted | | $ | 0.57 | | | $ | 1.69 | | | $ | 0.95 | | | $ | 1.11 | | | $ | 4.31 | |

| Comparable store sales increase (a) | | 3.7 | | % | | 5.6 | | % | | 5.1 | | % | | 5.7 | | % | | 5.1 | | % |

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

| | Fiscal Year | | | | | | | |

| Cost of merchandise sold (a) | 65.84 | | | 65.66 | | | 65.70 | |

| Gross margin (a) | 34.16 | | | 34.34 | | | 34.30 | |

| Depreciation and amortization | 2.24 | | | 2.28 | | | 2.11 | |

| Operating income | 8.87 | | | 9.46 | | | 10.24 | |

| Interest expense, net | 0.23 | | | 0.19 | | | 0.09 | |

| Income before income taxes | 8.64 | | | 9.27 | | | 10.15 | |

| Income tax expense | 1.91 | | | 3.45 | | | 3.70 | |

| Net income | 6.73 | % | | 5.82 | % | | 6.45 | % |

Net sales increased 9.0% to $7.91 billion in fiscal 2018 from $7.26 billion in fiscal 2017.

The comparable store sales increase was broad-based across all merchandise categories and all geographic regions.

The growth in comparable store sales was led by strength in everyday merchandise, including consumable, usable, and edible (“C.U.E.”) products, along with strong demand for seasonal merchandise in each quarter of the year.

| | | | | | | |

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

| | | | | | | |

| | | Fiscal Year | | | | |

| | | | | | | |

| Store Count Information: | | 2018 | | | 2017 | |

| Beginning of period | | 168 | | | 143 | |

| End of period | | 175 | | | 168 | |

| | | | | | | |

| | | | | | | |

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

| | | | | | | |

| | | Fiscal Year | | | | |

| Product Category: | | 2018 | | | 2017 | |

Gross profit increased 8.4% to $2.70 billion in fiscal 2018 compared to $2.49 billion in fiscal 2017.

The decline in gross margin resulted primarily from an increase in freight expense driven by higher carrier rates and increased diesel fuel prices as well as a

negative impact from a mix shift of products sold during the fourth quarter, partially offset by strength in the Company’s price management program and strong sell through of seasonal merchandise throughout the year.

SG&A expenses increased as a percentage of net sales due principally to higher incentive compensation from the strong year-over-year growth in comparable store sales, along with planned investments in infrastructure, technology, and team member wages at both the stores and distribution centers, to support the Company’s long-term strategic growth initiatives.

These SG&A increases as a percent of net sales were partially offset by leverage in occupancy and other costs from the increase in comparable store sales.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

Gross profit increased 7.2% to $2.49 billion in fiscal 2017 from $2.33 billion in fiscal 2016, and gross margin remained flat to prior year at 34.3% as a percentage of net sales.

| | | | | |

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

| | | | | |

| Description | | Judgments and Uncertainties | | Effect if Actual Results Differ from Assumptions |

| | | | | |

| | | | | |

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

| Description | | Judgments and Uncertainties | | Effect if Actual Results Differ from Assumptions |

| Sales Tax Audit Reserve: | | | | |

| 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 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 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 30, 2017, would have affected net income by approximately $0.9 million in fiscal 2017. |

| Tax Contingencies: | | | | |

| Our income tax returns are periodically audited by U.S. federal and state tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated with our various tax filing positions, we record a liability for uncertain tax positions taken or expected to be taken in a tax return. A number of years may elapse before a particular matter, for which we have established a reserve, is audited and fully resolved or clarified. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve, the statute of limitations expires for the relevant tax authority to examine the tax position or when more information becomes available. | | Our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether or not the minimum requirements for recognition of tax benefits have been met. 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 30, 2017, would have affected net income by approximately $0.1 million in fiscal 2017. |

| Net sales | | $ | 1,467,797 | | | $ | 1,852,534 | | | $ | 1,542,706 | | | $ | 1,916,542 | | | $ | 6,779,579 | |

| Gross profit | | 494,444 | | | | 649,222 | | | | 535,274 | | | | 646,262 | | | | 2,325,202 | | |

| Operating income | | 108,195 | | | | 249,249 | | | | 142,020 | | | | 194,616 | | | | 694,080 | | |

| Net income | | 67,668 | | | | 156,425 | | | | 89,444 | | | | 123,583 | | | | 437,120 | | |

| Basic | | $ | 0.51 | | | $ | 1.17 | | | $ | 0.67 | | | $ | 0.94 | | | $ | 3.29 | |

| Diluted | | $ | 0.50 | | | $ | 1.16 | | | $ | 0.67 | | | $ | 0.94 | | | $ | 3.27 | |

| Comparable store sales increase (decrease) (a) | | 4.9 | | % | | (0.5 | | )% | | (0.6 | | )% | | 3.1 | | % | | 1.6 | | % |

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

| Cost of merchandise sold (a) | 65.7 | | | 65.7 | | | 65.6 | |

| Gross margin (a) | 34.3 | | | 34.3 | | | 34.4 | |

| Depreciation and amortization | 2.3 | | | 2.1 | | | 2.0 | |

| Operating income | 9.4 | | | 10.2 | | | 10.4 | |

| Interest expense, net | 0.2 | | | 0.1 | | | — | |

| Income before income taxes | 9.2 | | | 10.1 | | | 10.4 | |

| Income tax provision | 3.4 | | | 3.7 | | | 3.8 | |

| Net income | 5.8 | % | | 6.4 | % | | 6.6 | % |

| | | | | | |

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

| | | | | | |

| | | | | | |

| | | | | | |

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: $2.1] [added: $1.6] million, [removed: $1.5] [added: $2.1] million, and [removed: $1.1] [added: $1.5] million in [removed: the] fiscal [removed: years ended December 30,] [added: 2018,] 2017, [removed: December 31, 2016,] and [removed: December 26, 2015,] [added: 2016,] respectively.

As of December [removed: 30, 2017,] [added: 29, 2018,] 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 debt, in excess of that amount covered by the interest rate swaps, would result in no additional interest expense.

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, [removed: cotton] [added: cotton,] and other [removed: commodities] [added: commodities,] as well as transportation services.

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

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

We operate retail stores under the names Tractor Supply Company, Del’s Feed & Farm [removed: Supply] [added: Supply,] and Petsense and operate websites under the names TractorSupply.com and Petsense.com.

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

At December [removed: 30, 2017,] [added: 29, 2018,] we operated [removed: 1,853] [added: 1,940] retail stores in 49 states [removed: (1,685] [added: (1,765] Tractor Supply and Del’s retail stores and [removed: 168] [added: 175] Petsense retail stores).

We cater to the rural lifestyle and often serve a market by being a trip consolidator for many basic maintenance needs for farm, ranch and rural [removed: customers.][added: customers through convenient shopping options both in-store and online.]

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

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

[removed: We] [added: In our stores, we] believe the ability of our [removed: store] [added: motivated, well-trained] team members to provide friendly, responsive and seasoned advice helps our customers find the right products to satisfy their everyday [removed: needs] [added: needs,] as well as the specialty items needed to complete their rural lifestyle projects.

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

Additionally, we maintain a [removed: customer solutions center] [added: Customer Solutions Center] at our Store Support Center located in Brentwood, [removed: Tennessee] [added: Tennessee,] to support our in-store and online [removed: customers] [added: customers,] as well as our store team members.

We believe this commitment to customer service promotes strong customer loyalty [added: through personalized experiences] and [added: provides convenience that our customers expect, which drives] repeat [removed: shopping.][added: shopping experiences.]

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

We seek to hire store team members with farming and ranching backgrounds, with particular emphasis on general maintenance, [removed: equine] [added: equine,] and welding.

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

In addition, these layouts allow for departmental space to be easily [removed: re-allocated] [added: reallocated] and visual displays to be changed for seasonal products and promotions.

Informative signs are located in key product categories to [added: conveniently] assist customers with purchasing decisions and merchandise location.

Our store layouts and visual displays are designed to provide our customers a feeling of familiarity and [added: convenience to] enhance the shopping experience.

Also, our store team members wear highly visible red vests, [removed: aprons] [added: aprons,] or smocks with nametags, and our customer service and checkout counters are conveniently located near the front of the store.

We offer an extensive assortment of products for [added: all] those seeking to enjoy the “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 [removed: an average of] [added: approximately] 15,500 to 20,000 products per [removed: store.][added: store as well as over 100,000 products online.]

No [removed: one] [added: single] product accounted for more than 10% of our sales during [removed: 2017.][added: fiscal 2018.]

| • | Equine, livestock, [removed: pet] [added: pet,] and small animal products, including items necessary for their health, care, [removed: growth] [added: growth,] and containment; |

| • | Hardware, truck, [removed: towing] [added: towing,] and tool products; |

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

The following table indicates the percentage of net sales represented by each of our major product categories during fiscal [added: 2018,] 2017, [removed: 2016] and [removed: 2015:][added: 2016:]

| Product Category: | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | |

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

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

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

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

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

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

Our business is not dependent upon any [removed: one] [added: single] vendor or particular group of vendors.

We purchase our products from a group of approximately 900 vendors, with no one vendor representing more than 10% of our purchases during fiscal [removed: 2017.][added: 2018.]

Approximately 350 core vendors accounted for 90% of our merchandise purchases during fiscal [removed: 2017.][added: 2018.]

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

We also employ a dedicated inventory management team that focuses exclusively on forecasting and inventory replenishment, a committed merchandise planning team that concentrates on assortment [removed: planning] [added: planning,] and a specialized pricing team that seeks to optimize market-specific pricing for our products.

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

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

Our online selling websites are positioned to offer an extended assortment of products beyond those offered in-store and drive traffic into our stores through our buy online and pickup in-store and ship to store programs.

We are committed to providing our customers reliable product availability and a convenient, customer-centric experience across shopping channels.

| | Fiscal Year | | | | | | | |

| Ÿ Blue Mountain® (apparel) | Ÿ Redstone® (heating products) |

| Ÿ C.E. Schmidt® (apparel and footwear) | Ÿ Retriever® (pet foods and supplies) |

| Ÿ Groundwork® (lawn and garden supplies) | Ÿ Treeline® (hunting gear and accessories) |

In fiscal 2018, we completed the expansion of our existing distribution center in Waverly, Nebraska.

Additionally, we substantially completed the construction of our new northeast distribution center in Frankfort, New York, which began receiving merchandise in the fourth quarter of fiscal 2018, and is expected to begin shipping merchandise to our stores in the first quarter of fiscal 2019.

Our store operations are organized into regions, each of which is led by a regional vice president.

Our key platforms include:

| | |

| --- | --- |

| • | Point-of-sale system; |

| | |

| --- | --- |

| • | In-store mobility; |

| | |

| --- | --- |

| • | E-commerce platform; |

| | |

| --- | --- |

| • | Replenishment system; |

| | |

| --- | --- |

| • | Merchandising presentation and inventory management tools; |

| | |

| --- | --- |

| • | Warehouse management system and labor management tools for stores and supply chain; |

| | |

| --- | --- |

| • | Price optimization system; |

| | |

| --- | --- |

| • | Vendor purchase order control system; |

| | |

| --- | --- |

| • | Business intelligence and analytics tools; and |

| | |

| --- | --- |

| • | Customer loyalty system. |

We are committed to providing our customers reliable product availability and a high level of in-store service through our motivated, well-trained store team members.

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

| Ÿ Equistages® (horse feed) | Ÿ Royal Wing® (bird feed and supplies) |

| Ÿ Groundwork® (lawn and garden supplies) | Ÿ Traveller® (truck and automotive products) |

In fiscal 2017, we began construction on a new northeast distribution 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.

At the end of fiscal 2017, our store operations were organized into ten regions.

We believe internal

Our key platforms include a point-of-sale system, 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 system, a merchandise presentation system, and a customer loyalty system.

The Petsense name is registered with the USPTO.

stores.

The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

The Company is [removed: also] involved in various litigation matters arising in the ordinary course of business.

Item 103 of SEC Regulation S-K requires disclosure of certain environmental legal proceedings if the proceeding reasonably involves potential monetary sanctions of $100,000 or more.

We periodically receive information requests and notices of potential noncompliance with environmental laws and regulations from governmental agencies, which are addressed on a case-by-case basis with the relevant agency.

The Company 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.

10-K 1 [removed: a2017q4form10-k.htm] [added: a2018q4form10-k.htm] 10-K TRACTOR SUPPLY COMPANY

For the fiscal year ended December [removed: 30, 2017][added: 29, 2018]

[removed: ][added: ]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

| | Non-accelerated filer | o [removed: (Do not check if a smaller reporting company)] | Smaller reporting company | o |

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: July 1, 2017,] [added: June 30, 2018,] the last business day of the registrant’s most recently completed second fiscal quarter, was approximately [removed: $6.2] [added: $8.3] billion.

| Class | | Outstanding at January [removed: 27, 2018] [added: 26, 2019] |

| Common Stock, $.008 par value | | [removed: 125,116,910] [added: 121,279,792] |

Portions of the Registrant’s definitive Proxy Statement for its [removed: 2018] [added: 2019] Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

| [Forward-Looking [removed: Statements](#sFB0A2E26466C58EA8DC9B2FE744CD294)] [added: Statements](#s4052864627845E2FB240873F6FCACC9A)] | | [removed: [ii](#sFB0A2E26466C58EA8DC9B2FE744CD294)] [added: [ii](#s4052864627845E2FB240873F6FCACC9A)] |

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| [removed: [1B.](#s883F77D469DA556886EA62F85899F7D2)] [added: [1B.](#s6DF46C3960D45F998A5E0747B7A06ABC)] | [Unresolved Staff [removed: Comments](#s883F77D469DA556886EA62F85899F7D2)] [added: Comments](#s6DF46C3960D45F998A5E0747B7A06ABC)] | [removed: [14](#s883F77D469DA556886EA62F85899F7D2)] [added: [16](#s6DF46C3960D45F998A5E0747B7A06ABC)] |

| [removed: [3.](#s2ACFBC6ECEF55CF589F95E553EB609B6)] [added: [3.](#sF3C407A09A9A5C4FBECA19DB4E6442D0)] | [Legal [removed: Proceedings](#s2ACFBC6ECEF55CF589F95E553EB609B6)] [added: Proceedings](#sF3C407A09A9A5C4FBECA19DB4E6442D0)] | [removed: [15](#s2ACFBC6ECEF55CF589F95E553EB609B6)] [added: [18](#sF3C407A09A9A5C4FBECA19DB4E6442D0)] |

| [removed: [4.](#s34559D5FFD6755A5B2BC325C85092A8A)] [added: [4.](#s17E7E211505C5653A40C996E97E66646)] | [Mine Safety [removed: Disclosures](#s34559D5FFD6755A5B2BC325C85092A8A)] [added: Disclosures](#s17E7E211505C5653A40C996E97E66646)] | [removed: [15](#s34559D5FFD6755A5B2BC325C85092A8A)] [added: [18](#s17E7E211505C5653A40C996E97E66646)] |

| [removed: [5.](#s04E1E54E84C95F608C39E32F8678B91F)] [added: [5.](#s0E1343A53B2F57C8A31A0E6CAD722457)] | [Market for Registrant’s Common Equity, Related Stockholder [removed: Matters] [added: Matters,] and Issuer Purchases of Equity [removed: Securities](#s04E1E54E84C95F608C39E32F8678B91F)] [added: Securities](#s0E1343A53B2F57C8A31A0E6CAD722457)] | [removed: [16](#s04E1E54E84C95F608C39E32F8678B91F)] [added: [19](#s0E1343A53B2F57C8A31A0E6CAD722457)] |

| [removed: [6.](#s784039894B1A54BC975AF91D770030A9)] [added: [6.](#sCA40E2A0D0535DAA8CCE1669DF6F4EC6)] | [Selected Financial [removed: Data](#s784039894B1A54BC975AF91D770030A9)] [added: Data](#sCA40E2A0D0535DAA8CCE1669DF6F4EC6)] | [removed: [19](#s784039894B1A54BC975AF91D770030A9)] [added: [22](#sCA40E2A0D0535DAA8CCE1669DF6F4EC6)] |

| [removed: [7.](#sE897515FAC145D85AE11B41A41DDD088)] [added: [7.](#s98CBDAC4594F529C872A64964E03E5BE)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sE897515FAC145D85AE11B41A41DDD088)] [added: Operations](#s98CBDAC4594F529C872A64964E03E5BE)] | [removed: [20](#sE897515FAC145D85AE11B41A41DDD088)] [added: [23](#s98CBDAC4594F529C872A64964E03E5BE)] |

| [removed: [7A.](#sF1D8775200BB58BB95D92DC96F8620A4)] [added: [7A.](#sF40590FFD25B5EAD9878199581D2D4EC)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sF1D8775200BB58BB95D92DC96F8620A4)] [added: Risk](#sF40590FFD25B5EAD9878199581D2D4EC)] | [removed: [39](#sF1D8775200BB58BB95D92DC96F8620A4)] [added: [38](#sF40590FFD25B5EAD9878199581D2D4EC)] |

| [removed: [8.](#s79D78BFFFF135639B56454CB19457B70)] [added: [8.](#s018A87F9D40E564FBE0EDF2DF7A725E5)] | [Financial Statements and Supplementary [removed: Data](#s79D78BFFFF135639B56454CB19457B70)] [added: Data](#s018A87F9D40E564FBE0EDF2DF7A725E5)] | [removed: [40](#s79D78BFFFF135639B56454CB19457B70)] [added: [39](#s018A87F9D40E564FBE0EDF2DF7A725E5)] |

| [removed: [9.](#s9B5B674DDB115F7CBAB5509911696B07)] [added: [9.](#sC6FD6D45045F5DEEA3D113E6B1E84460)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s9B5B674DDB115F7CBAB5509911696B07)] [added: Disclosure](#sC6FD6D45045F5DEEA3D113E6B1E84460)] | [removed: [71](#s9B5B674DDB115F7CBAB5509911696B07)] [added: [70](#sC6FD6D45045F5DEEA3D113E6B1E84460)] |

| [removed: [9A.](#s9DA31652C17854D6B57FB7DE89298D87)] [added: [9A.](#sDD0371EDE11A56A0A06F524A791D7116)] | [Controls and [removed: Procedures](#s9DA31652C17854D6B57FB7DE89298D87)] [added: Procedures](#sDD0371EDE11A56A0A06F524A791D7116)] | [removed: [71](#s9DA31652C17854D6B57FB7DE89298D87)] [added: [71](#sDD0371EDE11A56A0A06F524A791D7116)] |

| [removed: [9B.](#s70592877A5BA55CD8E843ABD9EBAF343)] [added: [9B.](#s1D1EA138A3E65E32A2F632A289CF2C89)] | [Other [removed: Information](#s70592877A5BA55CD8E843ABD9EBAF343)] [added: Information](#s1D1EA138A3E65E32A2F632A289CF2C89)] | [removed: [72](#s70592877A5BA55CD8E843ABD9EBAF343)] [added: [71](#s1D1EA138A3E65E32A2F632A289CF2C89)] |

| [PART [removed: III](#s37E2B4A4D9D55730A868D06C6B2C141C)] [added: III](#s4E210BFC60485940854E390F242643C2)] | | [removed: [72](#s37E2B4A4D9D55730A868D06C6B2C141C)] [added: [71](#s4E210BFC60485940854E390F242643C2)] |

| [removed: [10.](#s62AC7709CA4751239749E11C7CE1F74C)] [added: [10.](#s62677A4C515B521A9DEEF5F86E7FF86D)] | [Directors, Executive [removed: Officers] [added: Officers,] and Corporate [removed: Governance](#s62AC7709CA4751239749E11C7CE1F74C)] [added: Governance](#s62677A4C515B521A9DEEF5F86E7FF86D)] | [removed: [72](#s62AC7709CA4751239749E11C7CE1F74C)] [added: [71](#s62677A4C515B521A9DEEF5F86E7FF86D)] |

| [removed: [11.](#sD64BC0EAFDA0536C94CCAB9650284DB0)] [added: [11.](#s401E474C4D0E54B7889691E7C9C8B8C0)] | [Executive [removed: Compensation](#sD64BC0EAFDA0536C94CCAB9650284DB0)] [added: Compensation](#s401E474C4D0E54B7889691E7C9C8B8C0)] | [removed: [72](#sD64BC0EAFDA0536C94CCAB9650284DB0)] [added: [71](#s401E474C4D0E54B7889691E7C9C8B8C0)] |

| [removed: [12.](#sB70C0D0EC2195915907DEBD5B50937AF)] [added: [12.](#s51BB99B6B7AE5F069758DAB7ABF43D7D)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sB70C0D0EC2195915907DEBD5B50937AF)] [added: Matters](#s51BB99B6B7AE5F069758DAB7ABF43D7D)] | [removed: [72](#sB70C0D0EC2195915907DEBD5B50937AF)] [added: [72](#s51BB99B6B7AE5F069758DAB7ABF43D7D)] |

| [removed: [13.](#s44702D64F07F56B69E87C22FE515B55A)] [added: [13.](#s70C11CF224BD54B8BC831A05764F1705)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s44702D64F07F56B69E87C22FE515B55A)] [added: Independence](#s70C11CF224BD54B8BC831A05764F1705)] | [removed: [73](#s44702D64F07F56B69E87C22FE515B55A)] [added: [72](#s70C11CF224BD54B8BC831A05764F1705)] |

| [removed: [14.](#s73EFD129072558A6B91979B14AE6BA56)] [added: [14.](#sE28E75AA4136511487612ADFEC4D64B3)] | [Principal Accountant Fees and [removed: Services](#s73EFD129072558A6B91979B14AE6BA56)] [added: Services](#sE28E75AA4136511487612ADFEC4D64B3)] | [removed: [73](#s73EFD129072558A6B91979B14AE6BA56)] [added: [72](#sE28E75AA4136511487612ADFEC4D64B3)] |

| [removed: [15.](#s847255CC9D185B12935AC49870FDA47C)] [added: [15.](#sE1AB46658B795DD6A56E20BF6C89A3E4)] | [Exhibits and Financial Statement [removed: Schedules](#s847255CC9D185B12935AC49870FDA47C)] [added: Schedules](#sE1AB46658B795DD6A56E20BF6C89A3E4)] | [removed: [73](#s847255CC9D185B12935AC49870FDA47C)] [added: [72](#sE1AB46658B795DD6A56E20BF6C89A3E4)] |

| [removed: [16.](#s9376498667c14c51bc68fda927d7763e)] [added: [16.](#s7BF8584C3CB750D58CD4B5501EADE0E7)] | [Form 10-K [removed: Summary](#s9376498667c14c51bc68fda927d7763e)] [added: Summary](#s7BF8584C3CB750D58CD4B5501EADE0E7)] | [removed: [73](#s9376498667c14c51bc68fda927d7763e)] [added: [73](#s7BF8584C3CB750D58CD4B5501EADE0E7)] |

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, increases in [removed: fuel] [added: fuel, carrier] 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, [added: including competition from online retailers,] 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 resulting from a natural or other disaster or implementation of new technologies, including but not limited to, new supply chain technologies, effective tax rate changes, including expected effects of the Tax Cuts and Jobs Act, and results of examination by taxing authorities, the [added: imposition of tariffs on imported products or the disallowance of tax deductions on imported products, 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.

| [PART I](#s40FF4FA4C32F5E04A1B06FC4AD59A9B1) | | [1](#s40FF4FA4C32F5E04A1B06FC4AD59A9B1) |

| [1.](#s03FDFF540CFD5E18B2C41152C6BC1AFF) | [Business](#s03FDFF540CFD5E18B2C41152C6BC1AFF) | [1](#s03FDFF540CFD5E18B2C41152C6BC1AFF) |

| [2.](#s14DA1C54B289575EBC91E5FEB87001AE) | [Properties](#s14DA1C54B289575EBC91E5FEB87001AE) | [17](#s14DA1C54B289575EBC91E5FEB87001AE) |

| [PART II](#sB3D82DB68DB05C3A9CBBB505CCD30C59) | | [19](#sB3D82DB68DB05C3A9CBBB505CCD30C59) |

| [PART IV](#sB30A205F11015A73B83B15131909516B) | | [72](#sB30A205F11015A73B83B15131909516B) |

| [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) |

The Company leases approximately [removed: 93%] [added: 94%] of its stores.

Store leases typically have initial terms of [added: between] 10 [removed: to] [added: and] 15 years, with two to four [added: optional] renewal periods of five years each, exercisable at our option.

No single lease is material to [removed: Company] [added: the Company’s] operations.

| North Carolina | | [removed: 94] [added: 99] | | [removed: New Hampshire] [added: Colorado] | | [removed: 21] [added: 22] |

| Tennessee | | [removed: 91] [added: 96] | | Massachusetts | | [removed: 20] [added: 22] |

| [removed: Michigan] [added: Washington] | | [removed: 83] [added: 23] | | [removed: Washington] | | [removed: 19] |

| New York | | [removed: 77] [added: 82] | | [removed: Nebraska] [added: New Jersey] | | [removed: 18] [added: 19] |

| Indiana | | [removed: 57] [added: 61] | | North Dakota | | 14 |

| Oklahoma | | [removed: 53] [added: 55] | | South Dakota | | 9 |

| Louisiana | | [removed: 44] [added: 53] | | Wyoming | | 8 |

| South Carolina | | [removed: 44] [added: 45] | | Vermont | | 7 |

| Mississippi | | [removed: 39] [added: 40] | | Montana | | 6 |

| [removed: Missouri] [added: New Mexico] | | [removed: 30] [added: 29] | | Rhode Island | | [removed: 4] [added: 5] |

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

| Kansas | | [removed: 22] [added: 24] | | [added: Hawaii] | | [added: 2] |

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

| Hagerstown, Maryland [removed: (a)] [added: (b)] | | 309,000 | | Leased |

| Waverly, Nebraska | | [removed: 422,000] [added: 592,000] | | Owned |

| Seguin, Texas [removed: (b)] [added: (c)] | | 71,000 | | Owned |

| Longview, Texas [removed: (b)] [added: (c)] | | 63,000 | | Owned |

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

[removed: (b)] [added: (c)] This is a mixing center designed to process certain high-volume bulk products.

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

At December 29, 2018, the Company operated 1,940 stores in 49 states (1,765 Tractor Supply and Del’s retail stores and 175 Petsense retail stores).

| Texas | | 212 | | Wisconsin | | 23 |

| Pennsylvania | | 97 | | Maryland | | 22 |

| Ohio | | 92 | | Maine | | 21 |

| Michigan | | 87 | | New Hampshire | | 21 |

| Georgia | | 86 | | Illinois | | 19 |

| Kentucky | | 70 | | Connecticut | | 18 |

| California | | 66 | | Nebraska | | 18 |

| Florida | | 65 | | Utah | | 15 |

| Virginia | | 59 | | Minnesota | | 13 |

| Alabama | | 58 | | Iowa | | 9 |

| Arkansas | | 36 | | Oregon | | 6 |

| Arizona | | 34 | | Delaware | | 5 |

| Missouri | | 30 | | Idaho | | 5 |

| | | | | | | 1,940 |

| Frankfort, New York (a) | | 924,000 | | Owned |

(a) The Frankfort, New York, distribution center began receiving merchandise in fourth quarter of fiscal 2018, and is expected to begin shipping merchandise to stores in the first quarter of fiscal 2019.

At December 30, 2017, the Company operated 1,853 stores in 49 states.

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

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

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

| Georgia | | 83 | | Connecticut | | 19 |

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

| Florida | | 63 | | New Jersey | | 17 |

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

| Alabama | | 56 | | Minnesota | | 12 |

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

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

| Arizona | | 34 | | Idaho | | 4 |

| New Mexico | | 28 | | Nevada | | 3 |

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

| | | | | | | 1,853 |

In fiscal 2017, we began construction on a new northeast distribution 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.

| First Quarter | [removed: $78.25] [added: $82.68] | | [removed: $67.70] [added: $58.78] | | [removed: $90.76] [added: $78.25] | | [removed: $78.05] [added: $67.70] |

| Second Quarter | [removed: $71.53] [added: $79.04] | | [removed: $52.09] [added: $58.27] | | [removed: $97.25] [added: $71.53] | | [removed: $86.44] [added: $52.09] |

| Third Quarter | [removed: $63.40] [added: $92.45] | | [removed: $49.87] [added: $74.93] | | [removed: $95.39] [added: $63.40] | | [removed: $66.77] [added: $49.87] |

| Fourth Quarter | [removed: $75.64] [added: $97.65] | | [removed: $54.76] [added: $78.67] | | [removed: $78.17] [added: $75.64] | | [removed: $61.50] [added: $54.76] |

As of February [removed: 2, 2018,] [added: 1, 2019,] the number of record holders of our common stock was [removed: 585] [added: 571] (excluding individual participants in nominee security position listings), and the estimated number of beneficial holders of our common stock was approximately [removed: 200,000.][added: 220,000.]

During [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the Company’s Board of Directors declared the following cash dividends:

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

On February [removed: 7, 2018, our] [added: 6, 2019, the Company’s] Board of Directors declared a quarterly cash dividend of [removed: $0.27] [added: $0.31] per share of the Company’s common stock.

The dividend will be paid on March [removed: 13, 2018,] [added: 12, 2019,] to stockholders of record as of the close of business on February [removed: 26, 2018.][added: 25, 2019.]

Additionally, the Company withholds shares from vested restricted stock units [added: and performance-based restricted share units] to satisfy employees’ minimum statutory tax withholding requirements.

Stock purchase activity during fiscal [removed: 2017] [added: 2018] is set forth in the table below:

| Fourth Quarter: [added: (a)] | | | | | | | | | | | | | | |

(a) The total number of shares purchased and average price paid per share include shares withheld from vested [removed: restricted] stock [removed: units] [added: awards] to satisfy employees’ minimum statutory tax withholding requirements of [removed: 8,998] [added: 8,228] during the first quarter, [removed: 2,199] [added: 672] during the third [removed: quarter] [added: quarter,] and [removed: 558] [added: 8,231] during the fourth quarter.

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

Any additional stock repurchase programs will be subject to the discretion of our Board of Directors and subject to our results of operations, financial condition, cash [removed: requirements] [added: requirements,] and other factors deemed relevant by our Board of Directors.

The following graph compares the cumulative total stockholder return on our common stock from December [removed: 29, 2012] [added: 28, 2013] to December [removed: 30, 2017] [added: 29, 2018] (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: 29, 2012,] [added: 28, 2013,] in our common stock and in each of the foregoing indices and in each case assumes reinvestment of dividends.

[removed: ][added: ]

| | | [removed: 12/29/2012 | | | |] 12/28/2013 | | | | 12/27/2014 | | | | 12/26/2015 | | | | 12/31/2016 | | | | 12/30/2017 | | | [added: | 12/29/2018 | | |]

| | 2018 | | | | 2017 | | |

| November 7, 2018 | | $0.31 | | November 26, 2018 | | December 11, 2018 |

| August 8, 2018 | | $0.31 | | August 27, 2018 | | September 11, 2018 |

| May 9, 2018 | | $0.31 | | May 29, 2018 | | June 12, 2018 |

| February 7, 2018 | | $0.27 | | February 26, 2018 | | March 13, 2018 |

| First Quarter (a) | | 2,375,075 | | | $ | 66.54 | | | 2,366,847 | | | $ | 712,278,077 | |

| Second Quarter | | 1,477,200 | | | 64.37 | | | | 1,477,200 | | | 617,214,452 | | |

| Third Quarter (a) | | 452,004 | | | 81.22 | | | | 451,332 | | | 580,564,002 | | |

| 09/30/18 – 10/27/18 | | 87,256 | | | 87.75 | | | | 87,256 | | | 572,909,246 | | |

| 10/28/18 – 11/24/18 | | 123,689 | | | 91.87 | | | | 123,000 | | | 561,612,001 | | |

| 11/25/18 – 12/29/18 | | 488,631 | | | 86.56 | | | | 481,089 | | | 520,006,956 | | |

| | | 699,576 | | | 87.65 | | | | 691,345 | | | 520,006,956 | | |

| As of December 29, 2018 | | 5,003,855 | | | $ | 70.17 | | | 4,986,724 | | | $ | 520,006,956 | |

| Tractor Supply Company | | $ | 100.00 | | | $ | 104.11 | | | $ | 115.45 | | | $ | 103.33 | | | $ | 103.67 | | | $ | 117.18 | |

| S&P 500 | | $ | 100.00 | | | $ | 115.76 | | | $ | 116.64 | | | $ | 129.55 | | | $ | 157.84 | | | $ | 149.63 | |

| S&P Retail Index | | $ | 100.00 | | | $ | 111.18 | | | $ | 140.22 | | | $ | 148.53 | | | $ | 193.68 | | | $ | 217.01 | |

| | 2017 | | | | 2016 | | |

| October 31, 2016 | | $0.24 | | November 14, 2016 | | November 29, 2016 |

| August 1, 2016 | | $0.24 | | August 15, 2016 | | August 30, 2016 |

| May 2, 2016 | | $0.24 | | May 16, 2016 | | June 1, 2016 |

| February 3, 2016 | | $0.20 | | February 22, 2016 | | March 8, 2016 |

| 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 | |

| | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

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

| Net sales | $ | [removed: 7,256,382] [added: 7,911,046] | | | $ | [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] | |

| Gross profit | [removed: 2,491,965] [added: 2,702,528] | | | | [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] | | |

| Selling, general and administrative expenses | [removed: 1,639,749] [added: 1,823,440] | | | | [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] | | |

| Depreciation and amortization | [removed: 165,834] [added: 177,351] | | | | [removed: 142,958] [added: 165,834] | | | | [removed: 123,569] [added: 142,958] | | | | [removed: 114,635] [added: 123,569] | | | | [removed: 100,025] [added: 114,635] | | |

| Operating income | [removed: 686,382] [added: 701,737] | | | | [removed: 694,080] [added: 686,382] | | | | [removed: 650,508] [added: 694,080] | | | | [removed: 589,472] [added: 650,508] | | | | [removed: 514,650] [added: 589,472] | | |

| Interest expense, net | [removed: 13,859] [added: 18,352] | | | | [removed: 5,810] [added: 13,859] | | | | [removed: 2,891] [added: 5,810] | | | | [removed: 1,885] [added: 2,891] | | | | [removed: 557] [added: 1,885] | | |

| Income before income taxes | [removed: 672,523] [added: 683,385] | | | | [removed: 688,270] [added: 672,523] | | | | [removed: 647,617] [added: 688,270] | | | | [removed: 587,587] [added: 647,617] | | | | [removed: 514,093] [added: 587,587] | | |

| Income tax expense | [removed: 249,924] [added: 151,028] | | | | [removed: 251,150] [added: 249,924] | | | | [removed: 237,222] [added: 251,150] | | | | [removed: 216,702] [added: 237,222] | | | | [removed: 185,859] [added: 216,702] | | |

| Net income | $ | [removed: 422,599] [added: 532,357] | | | $ | [removed: 437,120] [added: 422,599] | | | $ | [removed: 410,395] [added: 437,120] | | | $ | [removed: 370,885] [added: 410,395] | | | $ | [removed: 328,234] [added: 370,885] | |

| Net income per share – basic (c) | $ | [removed: 3.31] [added: 4.34] | | | $ | [removed: 3.29] [added: 3.31] | | | $ | [removed: 3.03] [added: 3.29] | | | $ | [removed: 2.69] [added: 3.03] | | | $ | [removed: 2.35] [added: 2.69] | |

| Net income per share – diluted (c) | $ | [removed: 3.30] [added: 4.31] | | | $ | [removed: 3.27] [added: 3.30] | | | $ | [removed: 3.00] [added: 3.27] | | | $ | [removed: 2.66] [added: 3.00] | | | $ | [removed: 2.32] [added: 2.66] | |

| Weighted average shares – diluted (c) | [removed: 128,204] [added: 123,471] | | | | [removed: 133,813] [added: 128,204] | | | | [removed: 136,845] [added: 133,813] | | | | [removed: 139,435] [added: 136,845] | | | | [removed: 141,723] [added: 139,435] | | |

| Dividends declared per common share outstanding | $ | [removed: 1.05] [added: 1.20] | | | $ | [removed: 0.92] [added: 1.05] | | | $ | [removed: 0.76] [added: 0.92] | | | $ | [removed: 0.61] [added: 0.76] | | | $ | [removed: 0.49] [added: 0.61] | |

| Gross margin | [removed: 34.3] [added: 34.2] | | % | | 34.3 | | % | | [removed: 34.4] [added: 34.3] | | % | | [removed: 34.1] [added: 34.4] | | % | | [removed: 34.0] [added: 34.1] | | % |

| Selling, general and administrative expenses | [removed: 22.6] [added: 23.0] | | % | | [removed: 22.0] [added: 22.6] | | % | | 22.0 | | % | | [removed: 21.8] [added: 22.0] | | % | | [removed: 22.1] [added: 21.8] | | % |

| Operating income | [removed: 9.4] [added: 8.9] | | % | | [removed: 10.2] [added: 9.4] | | % | | [removed: 10.4] [added: 10.2] | | % | | [removed: 10.3] [added: 10.4] | | % | | [removed: 10.0] [added: 10.3] | | % |

| Net income | [removed: 5.8] [added: 6.7] | | % | | [removed: 6.4] [added: 5.8] | | % | | [removed: 6.6] [added: 6.4] | | % | | [removed: 6.5] [added: 6.6] | | % | | [removed: 6.4] [added: 6.5] | | % |

| Store, [removed: Sales] [added: Sales,] and Other Data: | | | | | | | | | | | | | | | | | | | |

| Stores open at end of year | [removed: 1,853] [added: 1,940] | | | | [removed: 1,738] [added: 1,853] | | | | [removed: 1,488] [added: 1,738] | | | | [removed: 1,382] [added: 1,488] | | | | [removed: 1,276] [added: 1,382] | | |

| Comparable store sales increase (d) | [removed: 2.7] [added: 5.1] | | % | | [removed: 1.6] [added: 2.7] | | % | | [removed: 3.1] [added: 1.6] | | % | | [removed: 3.8] [added: 3.1] | | % | | [removed: 4.8] [added: 3.8] | | % |

| New store sales (as a % of net sales) (e) | [removed: 5.6] [added: 3.8] | | % | | 5.6 | | % | | 5.6 | | % | | [removed: 6.2] [added: 5.6] | | % | | [removed: 5.4] [added: 6.2] | | % |

| Average transaction value | $ | [removed: 44.61] [added: 45.85] | | | $ | [removed: 44.42] [added: 44.61] | | | $ | [removed: 44.87] [added: 44.42] | | | $ | [removed: 44.84] [added: 44.87] | | | $ | [removed: 44.48] [added: 44.84] | |

| Comparable store average transaction value increase (decrease) (c) | [added: 2.8 | | % | |] 0.5 | | % | | (0.9 | | )% | | (0.2 | | )% | | 0.6 | | % | [removed: | — | | % |]

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

| Total selling square footage (000’s) | [removed: 28,180] [added: 29,571] | | | | [removed: 26,511] [added: 28,180] | | | | [removed: 23,938] [added: 26,511] | | | | [removed: 22,176] [added: 23,938] | | | | [removed: 20,470] [added: 22,176] | | |

| Total team members | [removed: 29,300] [added: 30,500] | | | | [removed: 26,000] [added: 29,300] | | | | [removed: 23,000] [added: 26,000] | | | | [removed: 21,100] [added: 23,000] | | | | [removed: 19,200] [added: 21,100] | | |

| Capital expenditures (000’s) | $ | [removed: 250,401] [added: 278,530] | | | $ | [removed: 226,017] [added: 250,401] | | | $ | [removed: 236,496] [added: 226,017] | | | $ | [removed: 160,613] [added: 236,496] | | | $ | [removed: 218,200] [added: 160,613] | |

| Average inventory per store (f) | $ | [removed: 735.4] [added: 766.8] | | | $ | [removed: 741.7] [added: 735.4] | | | $ | [removed: 820.1] [added: 741.7] | | | $ | [removed: 752.7] [added: 820.1] | | | $ | [removed: 723.5] [added: 752.7] | |

| Inventory turns | [removed: 3.24] [added: 3.27] | | | | [removed: 3.19] [added: 3.24] | | | | [removed: 3.23] [added: 3.19] | | | | [removed: 3.32] [added: 3.23] | | | | [removed: 3.29] [added: 3.32] | | |

| Working capital (g) | $ | [removed: 806,154] [added: 856,292] | | | $ | [removed: 740,615] [added: 806,154] | | | $ | [removed: 768,177] [added: 740,615] | | | $ | [removed: 670,897] [added: 768,177] | | | $ | [removed: 677,107] [added: 670,897] | |

| Total assets | $ | [removed: 2,868,769] [added: 3,085,262] | | | $ | [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] | |

| Long-term debt, less current portion (h) | $ | [removed: 433,686] [added: 410,370] | | | $ | [removed: 289,769] [added: 433,686] | | | $ | [removed: 166,992] [added: 289,769] | | | $ | [removed: 4,957] [added: 166,992] | | | $ | [removed: 1,200] [added: 4,957] | |

| Stockholders’ equity | $ | [removed: 1,418,673] [added: 1,561,820] | | | $ | [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] | |

Diluted net income per share is calculated using the treasury stock method for stock [removed: options and] [added: options,] restricted stock [added: units and performance-based restricted share] units.

(g) Working capital for [added: 2018,] 2017, 2016 and 2015 reflects deferred tax assets as non-current as a result of the adoption of ASU [removed: 2015-17 (which is discussed in Note 15 to the Consolidated Financial Statements).][added: 2015-17.]

[removed: Years prior to 2015 have] [added: Year 2014 has] not been adjusted to reflect the adoption of this guidance.

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

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

| [Management's Report on Internal Control over Financial [removed: Reporting](#sC81BD2C92F6F5DE9AD983EADE76BA69A)] [added: Reporting](#s2FC76E76F8235EFDB1D2498FE1F9B37A)] | [removed: [41](#sC81BD2C92F6F5DE9AD983EADE76BA69A)] [added: [40](#s2FC76E76F8235EFDB1D2498FE1F9B37A)] |

| [Reports of Independent Registered Public Accounting [removed: Firm](#sB14190EC41665E8F9C7AC66CA399752D)] [added: Firm](#s63A997045C0A58FEBF534A1393314BC4)] | [removed: [42](#sB14190EC41665E8F9C7AC66CA399752D)] [added: [41](#s63A997045C0A58FEBF534A1393314BC4)] |

| [Consolidated Statements of Income for the fiscal years ended December [added: 29, 2018, December] 30, 2017, [removed: December 31, 2016,] and December [removed: 26, 2015](#sB737260CAA435DB98E77DE14D641285B)] [added: 31, 2016](#s5DCD79C716265E9BA65D77CD9A5E5875)] | [removed: [44](#sB737260CAA435DB98E77DE14D641285B)] [added: [43](#s5DCD79C716265E9BA65D77CD9A5E5875)] |

| [Consolidated Statements of Comprehensive Income for the fiscal years ended December [added: 29, 2018, December] 30, 2017, [removed: December 31, 2016,] and December [removed: 26, 2015](#s39CF0F3A0F3E51DB8158D0380D08948A)] [added: 31, 2016](#s01D97562451A55AAB72AAEFBCD05A7A3)] | [removed: [45](#s39CF0F3A0F3E51DB8158D0380D08948A)] [added: [44](#s01D97562451A55AAB72AAEFBCD05A7A3)] |

| [Consolidated Balance Sheets as of December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016](#sC8E73E5F474A5D119D7C6BDE0F8F68AA)] [added: 30, 2017](#s840CC415CC2F55808621F7A07A899DA9)] | [removed: [46](#sC8E73E5F474A5D119D7C6BDE0F8F68AA)] [added: [45](#s840CC415CC2F55808621F7A07A899DA9)] |

| [Consolidated Statements of Stockholders’ Equity for the fiscal years ended December [added: 29, 2018, December] 30, 2017, [removed: December 31, 2016,] and December [removed: 26, 2015](#sFF0CBB131EFA5235B18EA2979C005B2D)] [added: 31, 2016](#s02CD7B488919519A9E7F01D2C39E8BAB)] | [removed: [47](#sFF0CBB131EFA5235B18EA2979C005B2D)] [added: [46](#s02CD7B488919519A9E7F01D2C39E8BAB)] |

| [Consolidated Statements of Cash Flows for the fiscal years ended December [added: 29, 2018, December] 30, 2017, [removed: December 31, 2016,] and December [removed: 26, 2015](#s7FA9F4986BBD5D68B1EA15D755EA6025)] [added: 31, 2016](#s5C0328D66A865B77AD723ABF8DD29A01)] | [removed: [48](#s7FA9F4986BBD5D68B1EA15D755EA6025)] [added: [47](#s5C0328D66A865B77AD723ABF8DD29A01)] |

| [Notes to Consolidated Financial [removed: Statements](#s69E3CFA547DB52EBB7946E02C66B0F5C)] [added: Statements](#s5930FCF58F135044B1C1152E7B72BF98)] | [removed: [49](#s69E3CFA547DB52EBB7946E02C66B0F5C)] [added: [48](#s5930FCF58F135044B1C1152E7B72BF98)] |

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December [removed: 30, 2017.][added: 29, 2018.]

In making this assessment, management used the 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).

Based on this assessment, management believes that, as of December [removed: 30, 2017,] [added: 29, 2018,] the Company’s internal control over financial reporting is effective based on those criteria.

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

| February [removed: 22,] [added: 7,] 2018 | | [added: $0.27] | | February [removed: 22,] [added: 26,] 2018 | [added: | March 13, 2018 |]

We have audited Tractor Supply Company’s internal control over financial reporting as of December [removed: 30, 2017,] [added: 29, 2018,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Tractor Supply [removed: Company’s] [added: Company] (the Company) maintained, in all material respects, effective internal control over financial reporting as of December [removed: 30, 2017,] [added: 29, 2018,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the [removed: consolidated balance sheets] [added: Consolidated Balance Sheets] of Tractor Supply Company as of December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016, and] [added: 30, 2017,and] the related [removed: consolidated statements] [added: Consolidated Statements] of [removed: income, comprehensive income, stockholders’ equity,] [added: Income, Comprehensive Income, Stockholders’ Equity,] and [removed: cash flows] [added: Cash Flows] for each of the three fiscal years in the period ended December [removed: 30, 2017,] [added: 29, 2018,] and the related notes and our report dated February [removed: 22, 2018,] [added: 21, 2019,] expressed an unqualified opinion thereon.

We are a public accounting firm registered with the PCAOB and are required to be independent with [removed: the] respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We have audited the accompanying [removed: consolidated balance sheets] [added: Consolidated Balance Sheets] of Tractor Supply Company (the Company) as of December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016,] [added: 30, 2017,] the related [removed: consolidated statements] [added: Consolidated Statements] of [removed: income, comprehensive income, stockholders' equity,] [added: Income, Comprehensive Income, Stockholders' Equity,] and [removed: cash flows] [added: Cash Flows] for each of the three fiscal years in the period ended December [removed: 30, 2017,] [added: 29, 2018,] and the related notes (collectively referred to as the “financial statements”).

In our opinion, the [removed: consolidated financial statements] [added: Consolidated Financial Statements] present fairly, in all material respects, the financial position of the Company at December [removed: 30, 2017] [added: 29, 2018] and December [removed: 31, 2016,] [added: 30, 2017,] and the results of its operations and its cash flows for each of the three fiscal years in the period ended December [removed: 30, 2017,] [added: 29, 2018,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December [removed: 30, 2017,] [added: 29, 2018,] 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: 22, 2018,] [added: 21, 2019,] expressed an unqualified opinion thereon.