UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended			~~September 26, 2020~~March 27, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from						to

Commission file number 000-23314

TRACTOR SUPPLY COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Delaware

13-3139732

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

5401 Virginia Way, Brentwood, Tennessee 37027

(Address of Principal Executive Offices and Zip Code)

(615) 440-4000

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.008 par value

TSCO

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

Yes ☐ No ☑

~~Securities registered pursuant to Section 12(b) of the Act:~~

~~Title of each class~~

~~Trading Symbol(s)~~

~~Name of each exchange on which registered~~

~~Common Stock, $0.008 par value~~

~~TSCO~~

~~NASDAQ Global Select Market~~

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.


Class						Outstanding at ~~September 26, 2020~~April 24, 2021
Common Stock, $0.008 par value						~~116,497,394~~115,255,974

TRACTOR SUPPLY COMPANY

INDEX


		Page No.

PART I.	Financial Information	3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets (unaudited) – ~~September~~March 27, 202 1 , December 26, 2020, ~~December~~and March 28, ~~2019, and September 28, 2019~~2020	3
	Condensed Consolidated Statements of Income (unaudited) – For the Fiscal Three ~~and Nine~~ Months Ended ~~September 26, 2020~~March 2 7 , 202 1 and ~~September~~March 28, ~~2019~~20 20	4
	Condensed Consolidated Statements of Comprehensive Income (unaudited) – For the Fiscal Three ~~and Nine~~ Months Ended ~~September 26, 2020~~March 2 7 , 202 1 and ~~September~~March 28, ~~2019~~20 20	5
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) – For the Fiscal Three ~~and Nine~~ Months Ended ~~September 26, 2020~~March 2 7 , 202 1 and ~~September~~March 28, ~~2019~~20 20	6
	Condensed Consolidated Statements of Cash Flows (unaudited) – For the Fiscal ~~Nine~~Three Months Ended ~~September 26, 2020~~March 2 7 , 202 1 and ~~September~~March 28, ~~2019~~20 20	87
	Notes to Unaudited Condensed Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1917
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2925
Item 4.	Controls and Procedures	3025

PART II.	Other Information	3026
Item 1.	Legal Proceedings	3026
Item 1A.	Risk Factors	3026
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3226
Item 3.	Defaults Upon Senior Securities	3226
Item 4.	Mine Safety Disclosures	3226
Item 5.	Other Information	3226
Item 6.	Exhibits	3327
Signature		3428

Page 2

Index

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(Unaudited)


		September 26, 2020		December 28, 2019		September 28, 2019			March 27, 2021		December 26, 2020		March 28, 2020
ASSETS	ASSETS							ASSETS
Current assets:	Current assets:							Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,111,986	$	84,241	$	82,640	Cash and cash equivalents	$	1,149,930	$	1,341,756	$	461,473

Inventories	Inventories	1,915,040		1,602,781		1,812,772		Inventories	2,084,677		1,783,270		1,905,913
Prepaid expenses and other current assets	Prepaid expenses and other current assets	136,098		100,865		104,486		Prepaid expenses and other current assets	146,227		133,659		112,853
Income taxes receivable		7,838		0		5,600

Total current assets	Total current assets	3,170,962		1,787,887		2,005,498		Total current assets	3,380,834		3,258,685		2,480,239

Property and equipment, net	Property and equipment, net	1,178,625		1,163,956		1,143,071		Property and equipment, net	1,287,004		1,248,960		1,143,189
Operating lease right-of-use assets	Operating lease right-of-use assets	2,354,196		2,188,802		2,133,238		Operating lease right-of-use assets	2,589,418		2,423,881		2,228,597
Goodwill and other intangible assets	Goodwill and other intangible assets	124,492		124,492		124,492		Goodwill and other intangible assets	55,520		55,520		124,492
Deferred income taxes	Deferred income taxes	3,581		0		0		Deferred income taxes	11,428		31,586		0
Other assets	Other assets	28,941		24,131		22,997		Other assets	35,475		30,484		25,888
Total assets	Total assets	$	6,860,797	$	5,289,268	$	5,429,296	Total assets	$	7,359,679	$	7,049,116	$	6,002,405

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:							Current liabilities:
Accounts payable	Accounts payable	$	1,056,911	$	643,036	$	679,791	Accounts payable	$	1,181,924	$	976,096	$	887,938
Accrued employee compensation	Accrued employee compensation	120,361		39,755		49,236		Accrued employee compensation	68,102		119,701		31,146
Other accrued expenses	Other accrued expenses	274,244		247,690		218,774		Other accrued expenses	377,777		324,813		234,460
Current portion of long-term debt	Current portion of long-term debt	380,000		30,000		30,000		Current portion of long-term debt	0		0		30,000
Current portion of finance lease liabilities	Current portion of finance lease liabilities	4,407		4,036		3,884		Current portion of finance lease liabilities	4,674		4,554		4,172
Current portion of operating lease liabilities	Current portion of operating lease liabilities	294,826		277,099		270,038		Current portion of operating lease liabilities	303,222		298,696		281,620
Income taxes payable	Income taxes payable	1,914		5,984		0		Income taxes payable	40,226		19,938		24,789

Total current liabilities	Total current liabilities	2,132,663		1,247,600		1,251,723		Total current liabilities	1,975,925		1,743,798		1,494,125

Long-term debt	Long-term debt	529,264		366,480		613,885		Long-term debt	984,838		984,324		989,074
Finance lease liabilities, less current portion	Finance lease liabilities, less current portion	32,948		30,389		29,174		Finance lease liabilities, less current portion	31,890		33,096		31,157
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	2,171,773		2,001,162		1,966,363		Operating lease liabilities, less current portion	2,399,246		2,220,904		2,051,885
Deferred income taxes	Deferred income taxes	0		153		1,888		Deferred income taxes	0		0		1,796

Other long-term liabilities	Other long-term liabilities	118,283		76,361		74,441		Other long-term liabilities	115,481		143,154		80,645
Total liabilities	Total liabilities	4,984,931		3,722,145		3,937,474		Total liabilities	5,507,380		5,125,276		4,648,682

Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:
Preferred stock	Preferred stock	0		0		0		Preferred stock	0		0		0
Common stock	Common stock	1,398		1,389		1,388		Common stock	1,409		1,401		1,391
Additional paid-in capital	Additional paid-in capital	1,059,687		966,698		950,908		Additional paid-in capital	1,154,451		1,095,500		978,837
Treasury stock	Treasury stock	(3,277,215)		(3,013,996)		(2,970,654)		Treasury stock	(3,610,362)		(3,356,953)		(3,277,215)
Accumulated other comprehensive (loss)/income		(5,867)		199		73
Accumulated other comprehensive loss								Accumulated other comprehensive loss	(1,118)		(3,243)		(5,051)
Retained earnings	Retained earnings	4,097,863		3,612,833		3,510,107		Retained earnings	4,307,919		4,187,135		3,655,761
Total stockholders’ equity	Total stockholders’ equity	1,875,866		1,567,123		1,491,822		Total stockholders’ equity	1,852,299		1,923,840		1,353,723
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	6,860,797	$	5,289,268	$	5,429,296	Total liabilities and stockholders’ equity	$	7,359,679	$	7,049,116	$	6,002,405

Preferred Stock (shares in thousands): $1.00 par value; 40 shares authorized; 0 shares were issued or outstanding during any period presented.

Common Stock (shares in thousands): $0.008 par value; 400,000 shares authorized at all periods presented. ~~174,793, 173,608,~~176,069, 175,128, and ~~173,465~~173,888 shares issued; ~~116,497, 118,165,~~115,587, 116,246, and ~~118,480~~115,592 shares outstanding at ~~September~~March 27, 2021, December 26, 2020, ~~December~~and March 28, ~~2019, and September 28, 2019,~~2020, respectively.

Treasury Stock (at cost, shares in thousands): ~~58,296, 55,443,~~60,482, 58,882, and ~~54,985~~58,296 shares at ~~September~~March 27, 2021, December 26, 2020, ~~December~~and March 28, ~~2019, and September 28, 2019,~~2020, respectively.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Page 3

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(Unaudited)


		For the Fiscal Three Months Ended						For the Fiscal Nine Months Ended							For the Fiscal Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Net sales	Net sales	$	2,606,572	$	1,984,144	$	7,742,087	$	6,160,146	Net sales	$	2,792,336	$	1,959,188
Cost of merchandise sold	Cost of merchandise sold	1,658,615		1,289,904		4,976,068		4,030,177		Cost of merchandise sold	1,808,556		1,297,939
Gross profit	Gross profit	947,957		694,240		2,766,019		2,129,969		Gross profit	983,780		661,249
Selling, general and administrative expenses	Selling, general and administrative expenses	641,129		482,604		1,794,924		1,432,603		Selling, general and administrative expenses	693,190		497,275
Depreciation and amortization	Depreciation and amortization	54,651		49,819		158,634		144,584		Depreciation and amortization	60,054		51,436
Operating income	Operating income	252,177		161,817		812,461		552,782		Operating income	230,536		112,538
Interest expense, net	Interest expense, net	7,208		4,900		20,695		15,006		Interest expense, net	7,221		5,049
Income before income taxes	Income before income taxes	244,969		156,917		791,766		537,776		Income before income taxes	223,315		107,489
Income tax expense	Income tax expense	54,359		34,784		178,701		119,601		Income tax expense	41,961		23,712
Net income	Net income	$	190,610	$	122,133	$	613,065	$	418,175	Net income	$	181,354	$	83,777

Net income per share – basic	Net income per share – basic	$	1.64	$	1.03	$	5.27	$	3.48	Net income per share – basic	$	1.56	$	0.72
Net income per share – diluted	Net income per share – diluted	$	1.62	$	1.02	$	5.23	$	3.45	Net income per share – diluted	$	1.55	$	0.71

Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	116,339		118,956		116,330		120,180		Basic	116,153		116,738
Diluted	Diluted	117,745		120,058		117,330		121,239		Diluted	117,227		117,432

Dividends declared per common share outstanding	Dividends declared per common share outstanding	$	0.40	$	0.35	$	1.10	$	1.01	Dividends declared per common share outstanding	$	0.52	$	0.35

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Page 4

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


		For the Fiscal Three Months Ended						For the Fiscal Nine Months Ended							For the Fiscal Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Net income	Net income	$	190,610	$	122,133	$	613,065	$	418,175	Net income	$	181,354	$	83,777

Other comprehensive income/(loss):	Other comprehensive income/(loss):									Other comprehensive income/(loss):
Change in fair value of interest rate swaps, net of taxes	Change in fair value of interest rate swaps, net of taxes	468		(809)		(6,066)		(4,458)		Change in fair value of interest rate swaps, net of taxes	2,125		(5,250)
Total other comprehensive income/(loss)	Total other comprehensive income/(loss)	468		(809)		(6,066)		(4,458)		Total other comprehensive income/(loss)	2,125		(5,250)
Total comprehensive income	Total comprehensive income	$	191,078	$	121,324	$	606,999	$	413,717	Total comprehensive income	$	183,479	$	78,527

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Page 5

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)


		Common Stock							Additional Paid-in Capital		Treasury Stock				Accum. Other Comp. Income/(Loss)				Retained Earnings					Total Stockholders’ Equity			Common Stock				Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. Income/(Loss)		Retained Earnings		Total Stockholders’ Equity
			Shares			Dollars																					Additional Paid-in Capital		Treasury Stock											Accum. Other Comp. Income/(Loss)	Retained Earnings	Total Stockholders’ Equity
Stockholders’ equity at December 28, 2019		118,165		$	1,389		$	966,698					$	(3,013,996)			$	199			$	3,612,833			$	1,567,123
Stockholders’ equity at December 26, 2020																					Stockholders’ equity at December 26, 2020		116,246				$	1,401	$	1,095,500	$	(3,356,953)	$	(3,243)	$	4,187,135	$	1,923,840
Common stock issuance under stock award plans & ESPP	Common stock issuance under stock award plans & ESPP	280		2			10,601												10,603		Common stock issuance under stock award plans & ESPP		941				8		58,700								58,708
Share-based compensation expense	Share-based compensation expense						6,945												6,945		Share-based compensation expense								12,318								12,318
Repurchase of shares to satisfy tax obligations	Repurchase of shares to satisfy tax obligations						(5,407)												(5,407)		Repurchase of shares to satisfy tax obligations								(12,067)								(12,067)
Repurchase of common stock	Repurchase of common stock	(2,853)							(263,219)										(263,219)		Repurchase of common stock		(1,600)								(253,409)						(253,409)
Cash dividends paid to stockholders	Cash dividends paid to stockholders														(40,849)				(40,849)		Cash dividends paid to stockholders														(60,570)		(60,570)
Change in fair value of interest rate swaps, net of taxes	Change in fair value of interest rate swaps, net of taxes										(5,250)								(5,250)		Change in fair value of interest rate swaps, net of taxes												2,125				2,125
Net income	Net income														83,777				83,777		Net income														181,354		181,354
Stockholders’ equity at March 28, 2020		115,592		$	1,391		$	978,837	$	(3,277,215)	$	(5,051)			$	3,655,761			$	1,353,723
Stockholders’ equity at March 27, 2021																					Stockholders’ equity at March 27, 2021		115,587				$	1,409	$	1,154,451	$	(3,610,362)	$	(1,118)	$	4,307,919	$	1,852,299

Common stock issuance under stock award plans & ESPP		588		5			39,732												39,737
Share-based compensation expense							7,504												7,504
Repurchase of shares to satisfy tax obligations							(1,984)												(1,984)
Repurchase of common stock		0							0										0
Cash dividends paid to stockholders															(40,644)				(40,644)
Change in fair value of interest rate swaps, net of taxes											(1,284)								(1,284)
Net income															338,678				338,678
Stockholders’ equity at June 27, 2020		116,180		$	1,396		$	1,024,089	$	(3,277,215)	$	(6,335)			$	3,953,795			$	1,695,730

Common stock issuance under stock award plans & ESPP		317		2			23,411												23,413
Share-based compensation expense							12,528												12,528
Repurchase of shares to satisfy tax obligations							(341)												(341)
Repurchase of common stock		0							0										0
Cash dividends paid to stockholders															(46,542)				(46,542)
Change in fair value of interest rate swaps, net of taxes											468								468
Net income															190,610				190,610
Stockholders’ equity at September 26, 2020		116,497		$	1,398		$	1,059,687	$	(3,277,215)	$	(5,867)			$	4,097,863			$	1,875,866

~~Page 6~~

~~Index~~


		Common Stock							Additional Paid-in Capital		Treasury Stock				Accum. Other Comp. Income				Retained Earnings					Total Stockholders’ Equity			Common Stock				Additional Paid-in Capital		Treasury Stock		Accum. Other Comp. Income/(Loss)		Retained Earnings		Total Stockholders’ Equity
			Shares			Dollars																					Additional Paid-in Capital		Treasury Stock											Accum. Other Comp. Income/(Loss)	Retained Earnings	Total Stockholders’ Equity
Stockholders’ equity at December 29, 2018		121,828		$	1,375		$	823,413					$	(2,480,677)			$	3,814			$	3,213,895			$	1,561,820
Stockholders’ equity at December 28, 2019																					Stockholders’ equity at December 28, 2019		118,165				$	1,389	$	966,698	$	(3,013,996)	$	199	$	3,612,833	$	1,567,123
Common stock issuance under stock award plans & ESPP	Common stock issuance under stock award plans & ESPP	570		5			34,727												34,732		Common stock issuance under stock award plans & ESPP		280				2		10,601								10,603
Share-based compensation expense	Share-based compensation expense						9,624												9,624		Share-based compensation expense								6,945								6,945

Repurchase of shares to satisfy tax obligations	Repurchase of shares to satisfy tax obligations						(3,026)												(3,026)		Repurchase of shares to satisfy tax obligations								(5,407)								(5,407)
Repurchase of common stock	Repurchase of common stock	(1,724)							(155,319)										(155,319)		Repurchase of common stock		(2,853)								(263,219)						(263,219)
Cash dividends paid to stockholders	Cash dividends paid to stockholders														(37,623)				(37,623)		Cash dividends paid to stockholders														(40,849)		(40,849)
Change in fair value of interest rate swaps, net of taxes	Change in fair value of interest rate swaps, net of taxes										(1,464)								(1,464)		Change in fair value of interest rate swaps, net of taxes												(5,250)				(5,250)
Net income	Net income														76,832				76,832		Net income														83,777		83,777
Cumulative adjustment as a result of ASU 2017-12 adoption											717				(717)				—
Stockholders’ equity at March 30, 2019		120,674		$	1,380		$	864,738	$	(2,635,996)	$	3,067			$	3,252,387			$	1,485,576
Stockholders’ equity at March 28, 2020																					Stockholders’ equity at March 28, 2020		115,592				$	1,391	$	978,837	$	(3,277,215)	$	(5,051)	$	3,655,761	$	1,353,723

Common stock issuance under stock award plans & ESPP		781		6			54,693												54,699
Share-based compensation expense							8,776												8,776
Repurchase of shares to satisfy tax obligations							(113)												(113)
Repurchase of common stock		(1,732)							(178,916)										(178,916)
Cash dividends paid to stockholders															(42,105)				(42,105)
Change in fair value of interest rate swaps, net of taxes											(2,185)								(2,185)
Net income															219,210				219,210
Stockholders’ equity at June 29, 2019		119,723		$	1,386		$	928,094	$	(2,814,912)	$	882			$	3,429,492			$	1,544,942

Common stock issuance under stock award plans & ESPP		227		2			16,110												16,112
Share-based compensation expense							7,355												7,355
Repurchase of shares to satisfy tax obligations							(651)												(651)
Repurchase of common stock		(1,470)							(155,742)										(155,742)
Cash dividends paid to stockholders															(41,518)				(41,518)
Change in fair value of interest rate swaps, net of taxes											(809)								(809)
Net income															122,133				122,133
Stockholders’ equity at September 28, 2019		118,480		$	1,388		$	950,908	$	(2,970,654)	$	73			$	3,510,107			$	1,491,822

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Page 76

Index

TRACTOR SUPPLY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		For the Fiscal Nine Months Ended							For the Fiscal Three Months Ended
		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	613,065	$	418,175	Net income	$	181,354	$	83,777
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	158,634		144,584		Depreciation and amortization	60,054		51,436
Gain on disposition of property and equipment		(774)		(262)
Loss/(gain) on disposition of property and equipment						Loss/(gain) on disposition of property and equipment	108		(315)
Share-based compensation expense	Share-based compensation expense	26,977		25,755		Share-based compensation expense	12,318		6,945
Deferred income taxes	Deferred income taxes	(3,734)		8,495		Deferred income taxes	20,158		1,643
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Inventories	Inventories	(312,259)		(223,230)		Inventories	(301,407)		(303,132)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(35,233)		9,961		Prepaid expenses and other current assets	(12,568)		(11,988)
Accounts payable	Accounts payable	413,875		59,810		Accounts payable	205,828		244,902
Accrued employee compensation	Accrued employee compensation	80,606		(4,810)		Accrued employee compensation	(51,599)		(8,609)
Other accrued expenses	Other accrued expenses	20,279		(21,622)		Other accrued expenses	55,305		(12,352)
Income taxes	Income taxes	(11,908)		(3,257)		Income taxes	20,288		18,805
Other	Other	55,447		728		Other	(12,722)		12,820
Net cash provided by operating activities	Net cash provided by operating activities	1,004,975		414,327		Net cash provided by operating activities	177,117		83,932
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(161,292)		(144,342)		Capital expenditures	(100,741)		(29,648)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	1,130		2,317		Proceeds from sale of property and equipment	222		320

Net cash used in investing activities	Net cash used in investing activities	(160,162)		(142,025)		Net cash used in investing activities	(100,519)		(29,328)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings under debt facilities	Borrowings under debt facilities	1,159,000		947,000		Borrowings under debt facilities	0		809,000
Repayments under debt facilities	Repayments under debt facilities	(646,500)		(710,750)		Repayments under debt facilities	0		(186,500)
Debt issuance costs		(1,237)		0

Principal payments under finance lease liabilities	Principal payments under finance lease liabilities	(3,098)		(2,741)		Principal payments under finance lease liabilities	(1,086)		(1,000)
Repurchase of shares to satisfy tax obligations	Repurchase of shares to satisfy tax obligations	(7,732)		(3,790)		Repurchase of shares to satisfy tax obligations	(12,067)		(5,407)
Repurchase of common stock	Repurchase of common stock	(263,219)		(489,977)		Repurchase of common stock	(253,409)		(263,219)
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	73,753		105,543		Net proceeds from issuance of common stock	58,708		10,603
Cash dividends paid to stockholders	Cash dividends paid to stockholders	(128,035)		(121,246)		Cash dividends paid to stockholders	(60,570)		(40,849)
Net cash provided by/(used in) financing activities		182,932		(275,961)
Net cash (used in)/provided by financing activities						Net cash (used in)/provided by financing activities	(268,424)		322,628
Net change in cash and cash equivalents	Net change in cash and cash equivalents	1,027,745		(3,659)		Net change in cash and cash equivalents	(191,826)		377,232
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	84,241		86,299		Cash and cash equivalents at beginning of period	1,341,756		84,241
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,111,986	$	82,640	Cash and cash equivalents at end of period	$	1,149,930	$	461,473

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	18,304	$	15,189	Interest	$	4,216	$	5,781
Income taxes	Income taxes	191,743		112,693		Income taxes	2,071		1,358

Supplemental disclosures of non-cash activities:	Supplemental disclosures of non-cash activities:					Supplemental disclosures of non-cash activities:
Non-cash accruals for construction in progress	Non-cash accruals for construction in progress	$	14,199	$	10,981	Non-cash accruals for construction in progress	$	10,301	$	7,046
Increase of operating lease assets and liabilities from new or modified leases	Increase of operating lease assets and liabilities from new or modified leases	381,486		240,969		Increase of operating lease assets and liabilities from new or modified leases	238,494		108,872
Increase of finance lease assets and liabilities from new or modified leases	Increase of finance lease assets and liabilities from new or modified leases	6,028		2,883		Increase of finance lease assets and liabilities from new or modified leases	0		1,904
Operating lease assets and liabilities recognized upon adoption of ASC 842		—		2,084,880

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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TRACTOR SUPPLY COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – General:

Nature of Business

Founded in 1938, Tractor Supply Company (the “Company” or “we” or “our” or “us”) is the largest rural lifestyle retailer in the United States (“U.S.”). The Company is focused on supplying the needs of recreational farmers, ranchers, and all those who enjoy living the rural lifestyle (which we refer to as the “Out Here” lifestyle), as well as tradesmen and small businesses. ~~Stores~~Our stores are located primarily in towns outlying major metropolitan markets and in rural communities. The Company also owns and operates Petsense, LLC (“Petsense”), a small-box pet specialty supply retailer focused on meeting the needs of pet owners, primarily in small and mid-sized communities, and offering a variety of pet products and services. At ~~September 26, 2020,~~March 27, 2021, the Company operated a total of ~~2,087~~2,121 retail stores in 49 states ~~(1,904~~(1,944 Tractor Supply and Del’s retail stores and ~~183~~177 Petsense retail stores) and also offered an expanded assortment of products through the Tractor Supply Company mobile application and online at TractorSupply.com and Petsense.com.

On February 17, 2021, the Company announced that it has entered into an agreement to acquire all of the outstanding equity interests of Orscheln Farm and Home, LLC, a farm and ranch retailer with 167 retail stores in 11 states, in an all-cash transaction for approximately $320 million. The Company intends to fund the acquisition through cash-on-hand. The acquisition is conditioned on the receipt of regulatory clearance and satisfactory completion of customary closing conditions.

Basis of Presentation

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December ~~28, 2019.~~26, 2020. The results of operations for our interim periods are not necessarily indicative of results for the full fiscal year.

The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty, and volatility which may negatively affect our business operations. As a result, if the pandemic persists or worsens, our accounting estimates and assumptions could be impacted in subsequent interim reports and upon final determination at year-end, and it is reasonably possible such changes could be significant (although the potential effects cannot be estimated at this time).

Note 2 – Fair Value of Financial Instruments:

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, short-term receivables, trade payables, debt instruments, and interest rate swaps. Due to their short-term nature, the carrying values of cash and cash equivalents, short-term receivables, and trade payables approximate current fair value at each balance sheet date. As described in further detail in Note 5 to the Condensed Consolidated Financial Statements, the Company had ~~$910.0 million, $397.5 million, and $645.0 million~~$1.00 billion in borrowings under its debt facilities at ~~September~~each of March 27, 2021 and December 26, 2020, ~~December~~and $1.02 billion in borrowings under its debt facilities at March 28, ~~2019, and September 28, 2019, respectively.~~2020. Based on market interest rates (Level 2 inputs), the carrying value of borrowings in our debt facilities approximates fair value for each period reported. The fair value of the Company’s interest rate swaps is determined based on the present value of expected future cash flows using forward rate curves (a Level 2 input). As described in further detail in Note 6 to the Condensed Consolidated Financial Statements, the fair value of the interest rate swaps, excluding accrued interest, was a net liability of ~~$7.9~~$1.5 million, $4.4 million, and $6.8 million at ~~September~~March 27, 2021, December 26, 2020, and ~~a net asset of $0.3 million and $0.1 million at December~~March 28, ~~2019 and September 28, 2019,~~2020, respectively.

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Note 3 – Share-Based Compensation:

Share-based compensation includes stock options, restricted stock units, performance-based restricted share units, and certain transactions under our Employee Stock Purchase Plan (the “ESPP”). Share-based compensation expense is recognized based on grant date fair value of all stock options, restricted stock units, and performance-based restricted share units plus a 15% discount on shares purchased by employees as a part of the ESPP. The discount under the ESPP represents the difference between the purchase date market value and the employee’s purchase price.

There were no significant modifications to the Company’s share-based compensation plans during the fiscal ~~nine~~three months ended

~~September 26, 2020.~~March 27, 2021.

For the ~~third~~first quarter of fiscal ~~2020~~2021 and ~~2019,~~2020, share-based compensation expense was ~~$12.5~~$12.3 million and ~~$7.4~~$6.9 million, ~~respectively, and $27.0 million and $25.8 million for the first nine months of fiscal 2020 and 2019,~~ respectively.

Stock Options

The following table summarizes information concerning stock option grants during the first ~~nine~~three months of fiscal ~~2020:~~2021:


	Fiscal ~~Nine~~Three Months Ended
	~~September 26, 2020~~March 27, 2021
Stock options granted	~~443,967~~235,607
Weighted average exercise price	$	~~94.62~~143.18
Weighted average grant date fair value per option	$	~~19.46~~30.13

As of ~~September 26, 2020,~~March 27, 2021, total unrecognized compensation expense related to non-vested stock options was approximately ~~$10.1~~$13.4 million with a remaining weighted average expense recognition period of ~~2.0~~2.3 years.

Restricted Stock Units and Performance-Based Restricted Share Units

The following table summarizes information concerning restricted stock unit and performance-based restricted share unit grants during the first ~~nine~~three months of fiscal ~~2020:~~2021:


	Fiscal ~~Nine~~Three Months Ended
	~~September 26, 2020~~March 27, 2021
Restricted stock units granted	~~320,053~~245,961
Performance-based restricted share units granted ^(a)	~~83,368~~56,882
Weighted average grant date fair value per share	$	~~94.39~~139.97

(a) Assumes 100% target level achievement of the relative performance targets.

In the first three months of fiscal ~~2020,~~2021, the Company granted awards that are subject to the achievement of specified performance goals. The performance metrics for the units are growth in net sales and growth in earnings per diluted ~~share.~~share and also include a relative shareholder return modifier. The number of performance-based restricted share units presented in the foregoing table represent the shares that can be achieved at the performance metric target value. The actual number of shares that will be issued under the performance share awards, which may be higher or lower than the target, will be determined by the level of achievement of the performance ~~goals.~~goals and the total shareholder return modifier. If the performance targets are achieved, the units will be issued based on the achievement level and the grant date fair value and will cliff vest in full on the third anniversary of the date of the grant.

As of ~~September 26, 2020,~~March 27, 2021, total unrecognized compensation expense related to non-vested restricted stock units and non-vested performance-based restricted share units was approximately ~~$43.8~~$72.9 million with a remaining weighted average expense recognition period of ~~2.0~~2.3 years.

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Note 4 – Net Income Per Share:

The Company presents both basic and diluted net income per share on the Condensed Consolidated Statements of Income. Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average diluted shares outstanding during the period. Dilutive shares are computed using the treasury stock method for share-based awards. Performance-based restricted share units are included in diluted shares only if the related performance conditions are considered satisfied as of the end of the reporting period. Net income per share is calculated as follows (in thousands, except per share amounts):

Fiscal Three Months Ended Fiscal Three Months Ended
September 26, 2020 September 28, 2019
Income Shares Per Share
Amount Income Shares Per Share
Amount
Basic net income per share: $ 190,610 116,339 $ 1.64 $ 122,133 118,956 $ 1.03
Dilutive effect of share-based awards 0 1,406 (0.02) 0 1,102 (0.01)
Diluted net income per share: $ 190,610 117,745 $ 1.62 $ 122,133 120,058 $ 1.02


		Fiscal Nine Months Ended								Fiscal Nine Months Ended										Fiscal Three Months Ended			Fiscal Three Months Ended
		September 26, 2020								September 28, 2019										March 27, 2021			March 28, 2020
		Income		Shares	Per Share Amount		Income		Shares	Per Share Amount			Income		Shares	Per Share Amount		Income		Shares	Per Share Amount
Basic net income per share:	Basic net income per share:	$	613,065	116,330	$	5.27	$	418,175	120,180	$	3.48	Basic net income per share:	$	181,354	116,153	$	1.56	$	83,777	116,738	$	0.72
Dilutive effect of share-based awards	Dilutive effect of share-based awards	0		1,000	(0.04)		0		1,059	(0.03)		Dilutive effect of share-based awards	0		1,074	(0.01)		0		694	(0.01)
Diluted net income per share:	Diluted net income per share:	$	613,065	117,330	$	5.23	$	418,175	121,239	$	3.45	Diluted net income per share:	$	181,354	117,227	$	1.55	$	83,777	117,432	$	0.71

Anti-dilutive stock awards excluded from the above calculations totaled ~~less than 0.1~~approximately 0.2 million and ~~approximately 0.3~~0.5 million shares for the fiscal three months ended ~~September 26,~~March 27, 2021 and March 28, 2020, ~~and September 28, 2019, respectively, and less than 0.1 million and approximately 0.4 million shares for the fiscal nine months ended September 26, 2020 and September 28, 2019,~~ respectively.

Note 5 – Debt:

The following table summarizes the Company’s outstanding debt as of the dates indicated (in millions):


		September 26, 2020		December 28, 2019		September 28, 2019			March 27, 2021		December 26, 2020		March 28, 2020
Senior Notes		$	150.0	$	150.0	$	150.0
1.75% Senior Notes due 2030								1.75% Senior Notes due 2030	$	650.0	$	650.0	$	0
3.70% Senior Notes due 2029								3.70% Senior Notes due 2029	150.0		150.0		150.0
Senior Credit Facility:	Senior Credit Facility:							Senior Credit Facility:
February 2016 Term Loan	February 2016 Term Loan	130.0		145.0		150.0		February 2016 Term Loan	0		0		140.0
June 2017 Term Loan	June 2017 Term Loan	80.0		87.5		90.0		June 2017 Term Loan	0		0		85.0
March 2020 Term Loan	March 2020 Term Loan	200.0		0		0		March 2020 Term Loan	0		0		200.0
April 2020 Term Loan		350.0		0		0
November 2020 Term Loan								November 2020 Term Loan	200.0		200.0		0
Revolving credit loans	Revolving credit loans	0		15.0		255.0		Revolving credit loans	0		0		445.0
Total outstanding borrowings	Total outstanding borrowings	910.0		397.5		645.0		Total outstanding borrowings	1,000.0		1,000.0		1,020.0
Less: unamortized debt issuance costs		(0.7)		(1.0)		(1.1)
Less: unamortized debt discounts and issuance costs								Less: unamortized debt discounts and issuance costs	(15.2)		(15.7)		(0.9)
Total debt	Total debt	909.3		396.5		643.9		Total debt	984.8		984.3		1,019.1
Less: current portion of long-term debt	Less: current portion of long-term debt	(380.0)		(30.0)		(30.0)		Less: current portion of long-term debt	0		0		(30.0)
Long-term debt	Long-term debt	$	529.3	$	366.5	$	613.9	Long-term debt	$	984.8	$	984.3	$	989.1

Outstanding letters of credit	Outstanding letters of credit	$	50.4	$	32.0	$	34.0	Outstanding letters of credit	$	60.3	$	48.7	$	39.0

1.75% Senior Notes due 2030

On October 30, 2020, the Company issued and sold, in a public offering, $650 million in aggregate principal amount of senior unsecured notes due November 1, 2030 bearing interest at 1.75% per annum (the “1.75% Senior Notes”). The entire principal amount of the 1.75% Senior Notes is due in full on November 1, 2030. Interest is payable semi-annually in arrears on each November 1 and May 1. The terms of the 1.750% Notes are governed by an indenture dated as of October 30, 2020 (the “Base Indenture”) between the Company and Regions Bank, as trustee, as amended and supplemented by a first supplemental indenture dated as of October 30, 2020 (the “Supplemental Indenture”) between the Company and Regions Bank, as trustee.

The 1.75% Senior Notes are senior unsecured debt obligations of the Company and will rank equally with the Company’s other senior unsecured liabilities and senior to any future subordinated indebtedness of the Company. The 1.75% Senior Notes are subject to customary covenants restricting the Company’s ability, subject to certain exceptions, to incur debt secured by liens, to

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enter into sale and leaseback transactions or to merge or consolidate with another entity or sell substantially all of its assets to another person.

At any time prior to August 1, 2030, the Company will have the right, at its option, to redeem the 1.75% Senior Notes, in whole or in part, at any time and from time to time, by paying the greater of 100% of the principal amount of the 1.75% Senior Notes to be redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest through the par call date, plus, in each case, accrued and unpaid interest to, but not including, the date of redemption. In addition, on or after August 1, 2030, the Company will have the right, at its option, to redeem the 1.75% Senior Notes, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 1.75% Senior Notes to be redeemed, plus accrued and unpaid interest to, but not including, the date of redemption.

If a Change of Control Triggering Event (as defined in the Supplemental Indenture) occurs, unless the Company has exercised its right to redeem the 1.75% Senior Notes, holders of the 1.75% Senior Notes may require the Company to repurchase all or any part of such holder’s 1.75% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, on such 1.75% Senior Notes to, but not including, the purchase date. Upon the occurrence of an event of default with respect to the 1.75% Senior Notes, which includes payment defaults, defaults in the performance of certain covenants, cross defaults, and bankruptcy and insolvency related defaults, the Company’s obligations under the 1.75% Senior Notes may be accelerated, in which case the entire principal amount of the 1.75% Senior Notes would be due and payable immediately.

Senior Note Facility (including 3.70% Senior Notes due 2029)

On August 14, 2017, the Company entered into a note purchase and private shelf agreement (the “Note Purchase Agreement”), as amended from time to time, pursuant to which the Company agreed to sell, in a private placement, $150 million aggregate principal amount of senior unsecured notes due August 14, 2029 ~~(the “2029 Notes”) in a private placement. The 2029 Notes bear~~bearing interest at 3.70% per annum ~~with interest~~(the “3.70% Senior Notes”). The entire principal amount of the 3.70% Senior Notes is due in full on August 14, 2029. Interest is payable semi-annually in arrears on each annual and semi-annual anniversary of the issuance date. The obligations under the Note Purchase Agreement are unsecured.

The Company may from time to time issue and sell additional senior unsecured notes (the “Shelf Notes”) pursuant to the Note Purchase Agreement, in an aggregate principal amount of up to $300 million minus the aggregate principal amount of all notes outstanding and issued under the Note Purchase Agreement. The Shelf Notes will have a maturity date of no more than 12 years after the date of original issuance and may be issued through November 4, 2023, unless earlier terminated in accordance with the terms of the Note Purchase Agreement.

Pursuant to the Note Purchase Agreement, the ~~2029~~3.70% Senior Notes and any Shelf Notes (collectively, the "Senior Note Facility") are redeemable by the Company, in whole at any time or in part from time to time, at 100% of the principal amount of the Senior Note Facility being redeemed, together with accrued and unpaid interest thereon and a make whole amount calculated by discounting all remaining scheduled payments on the ~~2029 Notes~~Senior Note Facility by the yield on the U.S. Treasury security with a maturity equal to the remaining average life of the ~~Notes~~Senior Note Facility plus 0.50%.

Senior Credit Facility

On February 19, 2016, the Company entered into a senior credit facility, ~~(the “2016 Senior Credit Facility”),~~ as amended from time to time, and as amended and restated on November 4, 2020 (the “Senior Credit Facility”), which provides borrowing capacity under term loan ~~agreements~~facilities as well as a revolving credit facility. ~~Proceeds from the 2016 Senior Credit Facility may be used for working capital, capital expenditures, dividends, share repurchases, and other matters.~~ There are 0no compensating balance requirements associated with the ~~2016~~ Senior Credit Facility.

The ~~2016~~ Senior Credit Facility contains a $500 million revolving credit facility (the “Revolver”) with a sublimit of $50 million for swingline ~~loans.~~loans and a sublimit of $150 million for letters of credit. This agreement is unsecured and matures on ~~February 19, 2022.~~ November 4, 2023, which, subject to satisfaction of certain terms and conditions, may be extended at the option of the Company to November 4, 2024 (as may be extended, the “Senior Credit Facility Maturity Date”).

Under the Senior Credit Facility, on November 4, 2020, a $200 million term loan (the “November 2020 Term Loan”) was extended to the Company. The November 2020 Term Loan is unsecured and the entire principal amount is due in full on the Senior Credit Facility Maturity Date.

Borrowings under both the Revolver and the November 2020 Term Loan each bear interest either at the bank’s base rate (3.250% at ~~September 26, 2020)~~March 27, 2021) plus an additional amount ranging from 0.000% to 0.375% (0.125% at March 27, 2021) or at the London Inter-Bank Offer Rate (“LIBOR”) ~~(0.146%~~(0.107% at ~~September 26, 2020)~~March 27, 2021) plus an additional amount ranging from ~~0.500%~~0.875% to ~~1.125%~~1.375% per annum ~~(0.750%~~(1.125% at ~~September 26, 2020)~~March 27, 2021), adjusted ~~quarterly~~ based on ~~our leverage ratio.~~the Company's public credit ratings. The Company is also

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required to pay, quarterly in arrears, a commitment fee ~~for~~related to unused capacity on the Revolver ranging from ~~0.075%~~0.090% to 0.200% per annum (0.125% at ~~September 26, 2020)~~March 27, 2021), adjusted ~~quarterly~~ based on the ~~Company’s leverage ratio.~~

On February 19, 2016, at the inception of the 2016 Senior Credit Facility, the Company entered into a $200 million term loan (the “February 2016 Term Loan”). This agreement is unsecured and matures on February 19, 2022. The February 2016 Term Loan of $200 million requires quarterly payments totaling $10 million per year in years one and two and $20 million per year in years three through the maturity date, with the remaining balance due in full on the maturity date of February 19, 2022. Borrowings under the February 2016 Term Loan bear interest either at the bank’s base rate (3.250% at September 26, 2020) or at LIBOR (0.146% at September 26, 2020) plus an additional amount ranging from 0.500% to 1.125% per annum (0.750% at September 26, 2020), adjusted quarterly based on our leverage ratio.

On June 15, 2017, pursuant to an accordion feature available under the 2016 Senior Credit Facility, the Company entered into an incremental term loan agreement (the “June 2017 Term Loan”) which increased the term loan capacity under the 2016 Senior Credit Facility by $100 million. This agreement is unsecured and matures on June 15, 2022. The June 2017 Term Loan of $100 million requires quarterly payments totaling $5 million per year in years one and two and $10 million per year in years three through the maturity date, with the remaining balance due in full on the maturity date of June 15, 2022. Borrowings under the June 2017 Term Loan bear interest either at the bank’s base rate (3.250% at September 26, 2020) or at LIBOR (0.146% at September 26, 2020) plus an additional 1.000% per annum.

On March 12, 2020, pursuant to an accordion feature available under the 2016 Senior Credit Facility, the Company entered into an incremental term loan agreement (the “March 2020 Term Loan”) which increased the term loan capacity under the 2016 Senior Credit Facility by $200 million. This agreement is unsecured and matures with the amount due in full on March 16, 2022. Borrowings under the March 2020 Term Loan bear interest either at the bank’s base rate (3.250% at September 26, 2020) or at LIBOR (0.146% at September 26, 2020) plus an additional 0.750% per annum.

On April 22, 2020, the Company entered into a second amendment to the 2016 Senior Credit Facility (the “Second Amendment”) to, among other things, increase the option to increase the aggregate principal amount of Revolving Loan Commitments and Incremental Term Loans (as defined in the 2016 Senior Credit Facility) up to an amount not to exceed $650 million. Simultaneously with the Second Amendment, the Company entered into an incremental term loan agreement (the “April 2020 Term Loan”) in the amount of $350 million, which is in addition to the 2016 Senior Credit Facility’s existing term loan and revolvingCompany's public credit facility. This agreement is unsecured and matures with the amount due in full on April 21, 2021. Borrowings under the April 2020 Term Loan bear interest either at the bank’s base rate (3.250% at September 26, 2020) plus an additional amount ranging from 0.250% to 1.500% per annum (0.750% at September 26, 2020) or at LIBOR (0.146% at

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~~September 26, 2020), with a floor of 0.750%, plus an additional amount ranging from 1.250% to 2.500% per annum (1.750% at September 26, 2020), adjusted quarterly based on our leverage ratio.~~ratings.

As further described in Note 6, ~~to the Condensed Consolidated Financial Statements,~~ the Company has entered into an interest rate swap ~~agreements~~agreement in order to hedge our exposure to variable rate interest payments associated with ~~each of~~ the ~~term loans under the 2016~~ Senior Credit ~~Facility other than~~Facility.

On February 19, 2016, the ~~April~~Company entered into a $200 million term loan agreement (the “February 2016 Term Loan”). This agreement was repaid in full on November 4, 2020 and is no longer in effect.

On June 15, 2017, the Company entered into a $100 million incremental term loan agreement (the “June 2017 Term Loan”). This agreement was repaid in full on November 4, 2020 and is no longer in effect.

On March 12, 2020, the Company entered into a $200 million incremental term loan agreement (the “March 2020 Term ~~Loan.~~Loan”). This agreement was repaid in full on November 4, 2020 and is no longer in effect.

On April 22, 2020, the Company entered into a $350 million incremental term loan agreement (the "April 2020 Term Loan"). This agreement was repaid in full on October 30, 2020 and is no longer in effect.

Covenants and Default Provisions of the Debt Agreements

The ~~2016~~ Senior Credit Facility and the Note Purchase Agreement (collectively, the “Debt Agreements”) require quarterly compliance with respect to two material covenants: a fixed charge coverage ratio and a leverage ratio. Both ratios are calculated on a trailing twelve-month basis at the end of each fiscal quarter. The fixed charge coverage ratio compares earnings before interest, taxes, depreciation, amortization, share-based compensation and rent expense (“consolidated EBITDAR”) to the sum of interest paid and rental expense (excluding any straight-line rent adjustments). The fixed charge coverage ratio shall be greater than or equal to 2.00 to 1.0 as of the last day of each fiscal quarter. The leverage ratio compares ~~rental expense (excluding any straight-line rent adjustments) multiplied by a factor of six plus~~ total funded debt to consolidated EBITDAR. The leverage ratio shall be less than or equal to 4.00 to 1.0 as of the last day of each fiscal quarter. The Debt Agreements also contain certain other restrictions regarding additional subsidiary indebtedness, ~~capital expenditures,~~ business operations, subsidiary guarantees, ~~investments,~~ mergers, consolidations and sales of assets, ~~prepayment of debts,~~ transactions with subsidiaries or affiliates, and liens. As of ~~September 26, 2020,~~March 27, 2021, the Company was in compliance with all debt covenants.

The Debt Agreements contain customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain ERISA events and invalidity of loan documents. Upon certain changes of control, payment under the Debt Agreements could become due and payable. In addition, under the Note Purchase Agreement, upon an event of default or change of control, the make whole payment described above may become due and payable.

The Note Purchase Agreement also requires that, in the event the Company amends its ~~2016~~ Senior Credit Facility, or any subsequent credit facility of $100 million or greater, such that it contains covenant or default provisions that are not provided in the Note Purchase Agreement or that are similar to those contained in the Note Purchase Agreement but which contain percentages, amounts, formulas or grace periods that are more restrictive than those set forth in the Note Purchase Agreement or are otherwise more beneficial to the lenders thereunder, the Note Purchase Agreement shall be automatically amended to include such additional or amended covenants and/or default provisions.

~~Subsequent Event - Amendment to Senior Credit Facility and Senior Notes~~

On October 16, 2020, the 2016 Senior Credit Facility and Note Purchase Agreement were amended to remove the Company’s material subsidiaries as guarantors thereof and delete the requirement that future material subsidiaries of the Company become guarantors, provided that the Note Purchase Agreement will require future subsidiary guarantees if they are likewise required under any other material credit facility. The respective agreements were also amended to permit the Company to issue senior unsecured notes on or before December 31, 2020, in an amount up to $750 million.

Note 6 – Interest Rate Swaps:

The Company entered into an interest rate swap agreement which became effective on March 31, 2016, with a maturity date of February 19, 2021. The notional amount of this swap agreement began at $197.5 million (the principal amount of the February 2016 Term Loan borrowings as of March 31, 2016) and will amortize at the same time and in the same amount as the February 2016 Term Loan borrowings, as described in Note 5 to the Condensed Consolidated Financial Statements, up to the maturity date of the interest rate swap agreement on February 19, 2021. As of September 26, 2020, the notional amount of the interest rate swap was $130.0 million.

The Company entered into a second interest rate swap agreement which became effective on June 30, 2017, with a maturity date of June 15, 2022. The notional amount of this swap agreement began at $100 million (the principal amount of the June 2017 Term Loan borrowings as of June 30, 2017) and will amortize at the same time and in the same amount as the June 2017 Term Loan borrowings, as described in Note 5 to the Condensed Consolidated Financial Statements. As of September 26, 2020, the notional amount of the interest rate swap was $80.0 million.

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~~Index~~

~~The Company entered into a third~~ interest rate swap agreement which became effective on March 18, 2020, with a maturity date of March 18, 2025. The notional amount of this swap agreement is fixed at $200 million.

The Company previously had interest rate swap agreements associated with the February 2016 Term Loan and the June 2017 Term Loan, each of which was settled in full on November 10, 2020, following the repayment and termination of the associated term loans, and is no longer in effect.

The Company’s interest rate swap agreements are executed for risk management and are not held for trading purposes. The objective of the interest rate swap agreements is to mitigate interest rate risk associated with future changes in interest rates. To accomplish this objective, the interest rate swap agreements are intended to hedge the variable cash flows associated with the variable rate term loan borrowings under the ~~2016~~ Senior Credit Facility. The interest rate swap agreements entitle the Company to receive, at specified intervals, a variable rate of interest based on LIBOR in exchange for the payment of a fixed rate of interest throughout the life of the agreement, without exchange of the underlying notional amount.

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The Company has designated its interest rate swap agreements as cash flow hedges and accounts for the underlying activity in accordance with hedge accounting. The interest rate swaps are presented within the Condensed Consolidated Balance Sheets at fair value. In accordance with hedge accounting, the gains and losses on interest rate swaps that are designated and qualify as cash flow hedges are recorded as a component of Other Comprehensive Income (“OCI”), net of related income taxes, and reclassified into earnings in the same income statement line and period during which the hedged transactions affect earnings.

As of ~~September 26, 2020,~~March 27, 2021, amounts to be reclassified from Accumulated Other Comprehensive Income (“AOCI”) into interest during the next twelve months are not expected to be material. No significant amounts were excluded from the assessment of cash flow hedge effectiveness as of ~~September 26, 2020.~~March 27, 2021.

The assets and liabilities measured at fair value related to the Company’s interest rate swaps, excluding accrued interest, were as follows (in thousands):

Derivatives Designated
as Cash Flow Hedges
Balance Sheet Location September 26,
2020 December 28,
2019 September 28,
2019
Interest rate swaps (short-term portion) Other current assets $ 0 $ 558 $ 631
Interest rate swaps (long-term portion) Other assets 0 91 105
Total derivative assets $ 0 $ 649 $ 736
Interest rate swaps (short-term portion) Other accrued expenses $ 2,831 $ 90 $ 57
Interest rate swaps (long-term portion) Other long-term liabilities 5,055 292 581
Total derivative liabilities $ 7,886 $ 382 $ 638


Derivatives Designated as Cash Flow Hedges	Balance Sheet Location	March 27, 2021		December 26, 2020		March 28, 2020




Interest rate swaps (short-term portion)	Other accrued expenses	$	1,229	$	1,227	$	2,512
Interest rate swaps (long-term portion)	Other long-term liabilities	274		3,137		4,277
Total derivative liabilities		$	1,503	$	4,364	$	6,789

The offset to the interest rate swap asset or liability is recorded as a component of equity, net of deferred taxes, in AOCI, and will be reclassified into earnings over the term of the underlying debt as interest payments are made.

The following table summarizes the changes in AOCI, net of tax, related to the Company’s interest rate swaps (in thousands):

September 26,
2020 December 28,
2019 September 28,
2019
Beginning fiscal year AOCI balance $ 199 $ 3,814 $ 3,814
Current fiscal period loss recognized in OCI (6,066) (4,332) (4,458)
Cumulative adjustment as a result of ASU 2017-12 adoption — 717 717
Other comprehensive loss, net of tax (6,066) (3,615) (3,741)
Ending fiscal period AOCI balance $ (5,867) $ 199 $ 73


	March 27, 2021		December 26, 2020		March 28, 2020
Beginning fiscal year AOCI balance	$	(3,243)	$	199	$	199
Current fiscal period gain/(loss) recognized in OCI	2,125		(5,666)		(5,250)
Amounts reclassified from AOCI	0		2,224		0
Other comprehensive gain/(loss), net of tax	2,125		(3,442)		(5,250)
Ending fiscal period AOCI balance	$	(1,118)	$	(3,243)	$	(5,051)

Cash flows related to the interest rate swaps are included in operating activities on the Condensed Consolidated Statements of Cash Flows.

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~~Index~~

The following table summarizes the impact of pre-tax gains and losses derived from the Company’s interest rate swaps (in thousands):

Fiscal Three Months Ended Fiscal Nine Months Ended
Financial Statement Location September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Amount of gains/(losses) recognized in OCI during the period Other comprehensive income/(loss) $ 629 $ (841) $ (8,153) $ (5,725)


		Fiscal Three Months Ended
	Financial Statement Location	March 27, 2021		March 28, 2020
Amount of gains/(losses) recognized in OCI during the period	Other comprehensive income/(loss)	$	2,861	$	(7,056)

The following table summarizes the impact of taxes affecting AOCI as a result of the Company’s interest rate swaps (in thousands):

Fiscal Three Months Ended Fiscal Nine Months Ended
September 26,
2020 September 28,
2019 September 26,
2020 September 28,
2019
Income tax expense/(benefit) of interest rate swaps on AOCI $ 161 $ (32) $ (2,087) $ (1,267)


	Fiscal Three Months Ended
	March 27, 2021		March 28, 2020
Income tax expense/(benefit) of interest rate swaps on AOCI	$	736	$	(1,806)

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Credit-risk-related contingent features

In accordance with the underlying interest rate swap agreements, the Company could be declared in default on its interest rate swap obligations if repayment of the underlying indebtedness (i.e., the Company’s term loans) is accelerated by the lender due to the ~~Company's~~Company’s default on such indebtedness.

If the Company had breached any of the provisions in the underlying agreements at ~~September 26, 2020,~~March 27, 2021, it could have been required to post full collateral or settle its obligations under the Company’s interest rate swap agreements. However, as of ~~September 26, 2020,~~March 27, 2021, the Company had not breached any of these provisions or posted any collateral related to the underlying interest rate swap agreements.

Note 7 – Capital Stock and Dividends:

Capital Stock

The authorized capital stock of the Company consists of common stock and preferred stock. The Company is authorized to issue 400 million shares of common stock. The Company is also authorized to issue 40 thousand shares of preferred stock, with such designations, rights and preferences as may be determined from time to time by the Company's Board of Directors.

Dividends

During the first ~~nine~~three months of fiscal ~~2020~~2021 and ~~2019,~~2020, the Company's Board of Directors declared the following cash dividends:

Date Declared

Dividend Amount
Per Share of Common Stock

Record Date

Date Paid

~~August 5, 2020~~January 27, 2021

~~0.40~~0.52

~~August 24, 2020~~February 22, 2021

~~September~~March 9, ~~2020~~2021

~~May 6, 2020~~

~~0.35~~

~~May 26, 2020~~

~~June 9, 2020~~

February 5, 2020

0.35

February 24, 2020

March 10, 2020

~~August 7, 2019~~

~~0.35~~

~~August 26, 2019~~

~~September 10, 2019~~

~~May 8, 2019~~

~~0.35~~

~~May 28, 2019~~

~~June 11, 2019~~

~~February 6, 2019~~

~~0.31~~

~~February 25, 2019~~

~~March 12, 2019~~

It is the present intention of the ~~Company's~~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 ~~Company's~~Company’s Board of Directors in its sole discretion and will depend upon the earnings, financial condition, and capital needs of the Company, along with any other factors that the ~~Company's~~Company’s Board of Directors ~~deems~~deem relevant.

~~Page 15~~

On May 5, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.52 per share of the Company’s outstanding common stock. The dividend will be paid on June 8, 2021, to stockholders of record as of the close of business on May 24, 2021.

~~Index~~

Note 8 – Treasury Stock:

The Company’s Board of Directors has authorized common stock repurchases under a share repurchase program which was announced in February 2007. The authorization amount of the program, which has been increased from time to time, is currently authorized for up to $4.5 billion, exclusive of any fees, commissions, or other expenses related to such repurchases. The share repurchase program does not have an expiration date. The repurchases may be made from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions. Repurchased shares are accounted for at cost and will be held in treasury for future issuance. The program may be limited, temporarily paused (as it was from March 12, 2020 until November 5, 2020 in order to strengthen the Company's liquidity and preserve cash while navigating the COVID-19 pandemic), or terminated at any time without prior notice. As of ~~September 26, 2020,~~March 27, 2021, the Company had remaining authorization under the share repurchase program of ~~$1.22 billion,~~$890.5 million, exclusive of any fees, commissions, or other expenses.

~~The Company has suspended the share repurchase program effective March 12, 2020, in order to strengthen its liquidity and preserve cash while navigating the COVID-19 pandemic.~~

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The following table provides the number of shares repurchased, average price paid per share, and total amount paid for share repurchases during the fiscal three ~~and nine~~ months ended ~~September 26,~~March 27, 2021 and March 28, 2020, ~~and September 28, 2019,~~ respectively (in thousands, except per share amounts):


		Fiscal Three Months Ended						Fiscal Nine Months Ended							Fiscal Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Total number of shares repurchased	Total number of shares repurchased	0		1,470		2,853		4,926		Total number of shares repurchased	1,600		2,853
Average price paid per share	Average price paid per share	$	0	$	105.97	$	92.28	$	99.46	Average price paid per share	$	158.35	$	92.28
Total cash paid for share repurchases	Total cash paid for share repurchases	$	0	$	155,742	$	263,219	$	489,977	Total cash paid for share repurchases	$	253,409	$	263,219

Note 9 – Income Taxes:

The Company’s effective income tax rate was ~~22.2%~~18.8% in the ~~third~~first quarter of ~~both~~ fiscal ~~2020 and 2019.~~2021 compared to 22.1% in the first quarter of fiscal 2020. The improvement in the effective income tax rate was 22.6% in the first nine months of fiscal 2020 compared to 22.2% in the first nine months of fiscal 2019. The primary driver for the increase in the Company’s effective income tax rate in the nine month period was attributableprimarily related to a ~~reduction in the impact of the~~discrete incremental tax benefit associated with share-based ~~compensation.~~

~~The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in~~compensation compared to the ~~U.S. on March 27, 2020. We do not anticipate that the enactment~~first quarter of ~~this legislation will significantly impact our full year effective tax rate in fiscal~~ 2020.

Note 10 – Commitments and Contingencies:

Construction and Real Estate Commitments

The Company is building a new distribution center in Navarre, Ohio which is expected to be approximately 900,000 square feet and is currently anticipated to be complete by the end of fiscal 2022. At ~~September 26, 2020, there were 0 material~~March 27, 2021, the Company had contractual commitments of approximately $75 million related to ~~real estate or~~the construction ~~projects extending greater than twelve months.~~of this new distribution center.

Letters of Credit

At ~~September 26, 2020,~~March 27, 2021, there were ~~$50.4~~$60.3 million of outstanding letters of credit under the ~~2016~~ Senior Credit Facility.

Litigation

On October 9, 2020, an alleged stockholder, the City of Pontiac Police and Fire Retirement System, filed a derivative lawsuit in the U.S. District Court for the Middle District of Tennessee, purportedly on the Company's behalf, against ~~all~~certain current and ~~two~~ former members of our Board of Directors, and the Company as a nominal defendant, seeking ~~monetary~~unspecified compensatory and punitive damages ~~interest,~~payable to the Company, disgorgement, restitution, corporate governance and hiring changes, ~~disgorgement, restitution,~~ mandated community investment, ~~punitive damages,~~ and ~~an award of~~ attorneys' ~~fees, expert~~ fees and costs. ~~Plaintiffs allege that: (a)~~Plaintiff alleges that defendants ~~misrepresented~~violated the federal securities laws governing proxy solicitations and ~~omitted material facts in the Company's proxy statements with respect to diversity; (b) defendants~~ breached their fiduciary duties by ~~permitting the Company to disseminate materially misleading and inaccurate information regarding~~misrepresenting the Company’s commitment to ~~diversity;~~ and ~~(c)~~support for diversity and inclusion. The Company disputes the allegations of the complaint. The Company and the individual defendants ~~received unjust compensation~~moved to dismiss the complaint based on plaintiff’s failure to make a demand on the Board of Directors and ~~were unjustly enriched. While~~to state a claim upon which relief may be granted. Given the indeterminate claims for monetary damages and the early stage of the proceedings where key factual and legal issues have not been resolved, the Company ~~continues~~is unable to ~~evaluate these claims, we do not believe this litigation will have~~predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a ~~material impact on our financial position or results~~range of ~~operations.~~possible losses resulting from the matter described above.

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~~Index~~

The Company is also involved in various other litigation matters arising in the ordinary course of business. The Company believes that, based upon information currently available, any estimated loss related to such matters has been adequately provided for in accrued liabilities to the extent probable and reasonably estimable. Accordingly, the Company currently expects these matters will be resolved without material adverse effect on its consolidated financial position, results of operations, or cash flows. However, litigation and other legal matters involve an element of uncertainty. Future developments in such matters, including adverse decisions or settlements or resulting required changes to the Company's business operations, could affect our consolidated operating results when resolved in future periods or could result in liability or other amounts material to the Company's Condensed Consolidated Financial Statements.

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Note 11 – Segment Reporting:

The Company has 1 reportable segment which is the retail sale of products that support the rural lifestyle. The following table indicates the percentage of net sales represented by each major product category during the fiscal three ~~and nine~~ months ended ~~September 26, 2020~~March 27, 2021 and ~~September~~March 28, ~~2019:~~2020:


		Fiscal Three Months Ended						Fiscal Nine Months Ended							Fiscal Three Months Ended
Product Category:	Product Category:	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		Product Category:	March 27, 2021		March 28, 2020
Livestock and Pet	Livestock and Pet	48	%	49	%	48	%	48	%	Livestock and Pet	51	%	54	%
Hardware, Tools and Truck	Hardware, Tools and Truck	23		23		21		21		Hardware, Tools and Truck	21		20
Seasonal, Gift and Toy Products	Seasonal, Gift and Toy Products	19		18		21		20		Seasonal, Gift and Toy Products	18		17
Clothing and Footwear	Clothing and Footwear	5		5		5		6		Clothing and Footwear	7		6
Agriculture	Agriculture	5		5		5		5		Agriculture	3		3
Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%

Note 12 – New Accounting Pronouncements:

New Accounting Pronouncements ~~Recently~~Not Yet Adopted

In ~~June 2016,~~March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses. The new guidance applies to financial assets measured at amortized cost basis, including receivables that result from revenue transactions and held-to-maturity debt securities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and early adoption was permitted for fiscal years beginning after December 15, 2018. The Company adopted this guidance in the first quarter of fiscal 2020. The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance in the first quarter of fiscal 2020. The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” This update clarifies the accounting treatment for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. This guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The amendments may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this guidance on a prospective basis in the first quarter of fiscal 2020. The adoption of this guidance did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures.

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~~Index~~

~~New Accounting Pronouncements Not Yet Adopted~~

~~In March 2020, the FASB issued ASU~~ 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope." This collective guidance is in response to accounting concerns regarding contract modifications and hedge accounting because of impending rate reform associated with structural risks of interbank offered rates (IBORs), and, particularly, the risk of cessation of LIBOR related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates. The guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not expect the adoption of this guidance to have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December ~~28, 2019~~26, 2020 (the ~~"2019~~"2020 10-K"). This Quarterly Report on Form 10-Q also contains forward-looking statements and information. The forward-looking statements included herein are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”). All statements, other than statements of historical facts, which address activities, events, or developments that we expect or anticipate will or may occur in the future, including sales and earnings growth, estimated results of operations in future periods, the declaration and payment of dividends, the timing and amount of share repurchases, future capital expenditures (including their amount and nature), business strategy, expansion and growth of our business operations, and other such matters are forward-looking statements. These forward-looking statements may be affected by certain risks and uncertainties, any one, or a combination of which, could materially affect the results of our operations. To take advantage of the safe harbor provided by the Act, we are identifying certain factors that could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written.

As with any business, many aspects of our operations are subject to influences outside our control. These factors include, without limitation, national, regional, and local economic conditions affecting consumer spending, including the effects of the COVID-19 pandemic, the efficacy and distribution of COVID-19 vaccines, the timing and acceptance of new products, 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, the ability to complete acquisitions on expected terms, failure of an acquisition to produce anticipated results, the ability to successfully manage expenses (including increased expenses as a result of operating as an essential retailer during the COVID-19 pandemic) and execute our key gross margin enhancing initiatives, the availability of favorable credit sources, capital market conditions in general, the ability to open new stores in the time, manner and number currently contemplated, particularly in light of the COVID-19 pandemic, the ability to open distribution centers in the anticipated timeframe and within budget, the impact of new stores on our business, competition, including that from online competitors, weather conditions, the seasonal nature of our business, effective merchandising initiatives and marketing emphasis, the ability to retain vendors, reliance on foreign suppliers, the ability to attract, train, and retain qualified employees, product liability and other claims, changes in federal, state, or local regulations, the effects that “shelter in place” and similar federal, state, and local regulations and protocols could have on our business, including our supply chain and employees, the effectiveness of the Company’s responses to COVID-19, including our efforts to make a vaccine available to our employees, and customer response with respect to those actions, the refusal by our employees and the public generally to be vaccinated against COVID-19, the imposition of tariffs on imported products or the disallowance of tax deductions on imported products, 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 our information systems, failure to develop and implement new technologies, the failure of customer-facing technology systems, business disruption including from the implementation of supply chain technologies, effective tax rate changes and results of examination by taxing authorities, the ability to maintain an effective system of internal control over financial reporting, and changes in accounting standards, assumptions, and estimates. We discuss in greater detail risk factors relating to our business in Part I, Item 1A of our ~~2019~~2020 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q. Forward-looking statements are based on our knowledge of our business and the environment in which we operate, but because of the factors listed above or other factors, actual results could differ materially from those reflected by any forward-looking statements. Consequently, all of the forward-looking statements made are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business and operations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Information Regarding COVID-19 Coronavirus Pandemic

The Company ~~has been and~~ continues to closely monitor the impact of the COVID-19 pandemic on all facets of our business. This includes the impact on our team members, customers, suppliers, vendors, business partners, and supply chain networks.

The health and safety of our team members and customers are the primary concerns of our management team. We have taken and continue to take numerous actions to promote health and safety, including, ~~rapidly~~encouraging vaccination efforts, providing personal protective equipment to our team members, requiring the use of masks in our facilities, ~~rolling out~~maintaining enhanced services for cleaning and sanitation, continuing to provide additional functionality to support contactless shopping experiences, adding

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services for cleaning and sanitation in our stores and distribution centers, hiring additional team members to assist in promoting social distancing and cleaning actions in our stores, and ~~implementing~~continuing to offer remote work plans at our store support center.

Additionally, we have taken significant actions to support our team members during this pandemic including COVID-19 paid medical leave, 100% coverage of COVID-19 testing and treatment under our medical plan, and the payment of incremental

~~Page 19~~

~~Index~~

appreciation bonuses for frontline team members of approximately $35 million from March 16 to June 27. Effective June 28 we have implemented permanent wage increases for all of our hourly team members in our stores and distribution centers of a minimum of $1 per hour and are now providing a new benefit package for part-time team members, including medical, vision and dental coverage, paid sick time and life insurance. Further, we have also implemented annual restricted stock unit grants to more than 2,000 frontline salaried managers in our stores and distribution centers. These actions, among others, are intended to support our team members both during and after the COVID-19 pandemic.

As further described in the results of operations, ~~for the three and nine fiscal months ended September 26, 2020,~~ our net sales have significantly increased due to unprecedented customer demand across all major product categories, channels, and geographic regions. However, the net incremental costs of doing business during this ~~crisis~~pandemic have increased as a result of the aforementioned actions we have taken, and continue to take, to support and ~~ensure~~promote the safety and well-being of our team members and customers, and we believe many of these incremental costs will continue after the pandemic is over.

On October 22, 2020 we provided financial guidance for the results of operations expected for the fourth fiscal quarter ending December 26, 2020 which reflected a continuation of the strong consumer demand for our products, albeit to a lesser extent than experienced during our second and third fiscal quarters. Additionally, we anticipate incurring incremental costs to respond to the COVID-19 pandemic, as well as costs associated with the previously announced permanent increase in compensation and benefits for our frontline team members, and incremental costs for strategic investments in our business.

~~However, there~~There are numerous uncertainties surrounding the pandemic and its impact on the economy and our business, as further described in the Risk Factors section ~~of our 2019 10-K (as updated in~~under Part ~~II,~~I Item 1A of ~~this Quarterly Report on Form 10-Q),~~our 2020 10-K, which make it difficult to predict the impact on our business, financial position, or results of operations ~~for the remainder of~~in fiscal ~~2020~~2021 and beyond. While our stores, distribution centers, and e-commerce operations are open and plan to remain open, we cannot predict the uncertainties, or the corresponding impacts on our business, at this time.

Therefore, as previously disclosed, in an effort to strengthen our liquidity and preserve cash while navigating the COVID-19 pandemic, we suspended our share repurchase program effective March 12, 2020 and increased borrowings under our debt facilities as described in Note 5 to the Condensed Consolidated Financial Statements.

Seasonality and Weather

Our business is seasonal. Historically, our sales and profits are the highest in the second and fourth fiscal quarters due to the sale of seasonal products. We usually experience our highest inventory and accounts payable balances during our first fiscal quarter for purchases of seasonal products to support the higher sales volume of the spring selling season, and again during our third fiscal quarter to support the higher sales volume of the cold-weather selling season. We believe that our business can be more accurately assessed by focusing on the performance of the halves, not the quarters, due to the fact that different weather patterns from year-to-year can shift the timing of sales and profits between quarters, particularly between the first and second fiscal quarters and the third and fourth fiscal quarters.

Historically, weather conditions, including unseasonably warm weather in the fall and winter months and unseasonably cool weather in the spring and summer months, have unfavorably affected the timing and volume of our sales and results of operations. In addition, extreme weather conditions, including snow and ice storms, flood and wind damage, hurricanes, tornadoes, extreme rain, and droughts have impacted operating results both negatively and positively, depending on the severity and length of these conditions. Our strategy is to manage product flow and adjust merchandise assortments and depth of inventory to capitalize on seasonal demand trends.

Furthermore, we are not able to predict at this time the impact that the COVID-19 pandemic may have on the seasonality of our business in the future.

Comparable Store Metrics

Comparable store metrics are a key performance indicator used in the retail industry and by the Company to measure the performance of the underlying business. Our comparable store metrics are calculated on an annual basis using sales generated from all stores open at least one year and all online sales and exclude certain adjustments to net sales. Stores closed during either of the years being compared are removed from our comparable store metrics calculations. Stores relocated during either of the years being compared are not removed from our comparable store metrics calculations. If the effect of relocated stores on our comparable store metrics calculations became material, we would remove relocated stores from the calculations.

~~Page 20~~

~~Index~~

Results of Operations

Fiscal Three Months ~~(Third~~(First Quarter) Ended ~~September 26,~~March 27, 2021 and March 28, 2020 ~~and September 28, 2019~~

Net sales for the ~~third~~first quarter of fiscal ~~2020~~2021 increased ~~31.4%~~42.5% to ~~$2.61~~$2.79 billion from ~~$1.98~~$1.96 billion for the ~~third~~first quarter of fiscal ~~2019.~~2020. Comparable store sales for the ~~third~~first quarter of fiscal ~~2020~~2021 were ~~$2.51~~$2.71 billion, a ~~26.8%~~38.6% increase as compared to the ~~third~~first quarter of fiscal ~~2019. Net~~2020. In the first quarter of fiscal 2020, net sales increased 7.5% and comparable store sales increased ~~5.4% and 2.9% in the third quarter of fiscal 2019, respectively.~~4.3%.

The comparable store sales results for the ~~third~~first quarter of fiscal ~~2020~~2021 included an increase in comparable average transaction count of ~~14.3%~~21.0% and an increase in comparable average transaction value of ~~12.5%~~17.6%, each as compared to the ~~third~~first quarter of fiscal ~~2019. The~~2020. Our sales performance continued to benefit from growth in new customer acquisition and the re-engagement of lapsed customers as well as a continuation of shifting consumer behavior trends from the COVID-19 pandemic ~~continued to have a significant impact on consumer demand in the third quarter of fiscal 2020 across all of the Company’s major product categories~~ as customers focused on the care of their homes, land, and animals. Additionally, consumer demand in the quarter benefited from favorable weather conditions across much of the country as well as ~~growth in new customer acquisition and the re-engagement of lapsed customers as a result of advertising campaigns focused on brand awareness.~~government stimulus. These factors all led to a significant increase in comparable store sales ~~which was~~across all major product categories, driven by strong demand for everyday merchandise, including

Page 18

Index

consumable, usable and edible products and robust growth for summer seasonal categories. All geographic regions of the Company had ~~robust~~positive comparable store sales ~~growth.~~growth of at least 30%. In addition, the Company’s e-commerce sales experienced triple-digit ~~sales~~ percentage growth ~~as compared to~~for the ~~third quarter of fiscal 2019.~~fourth consecutive quarter.

In addition to comparable store sales growth for the ~~third~~first quarter of fiscal 2021, sales from stores open less than one year were $82.4 million for the first quarter of fiscal 2021, which represented 4.2 percentage points of the 42.5% increase over first quarter fiscal 2020 net sales. For the first quarter of fiscal 2020, sales from stores open less than one year were ~~$93.6~~$60.2 million, ~~for the third quarter of fiscal 2020,~~ which represented ~~4.7~~3.3 percentage points of the ~~31.4%~~7.5% increase over ~~third~~first quarter fiscal 2019 net sales. For the third quarter of fiscal 2019, sales from stores open less than one year were $50.0 million, which represented 2.7 percentage points of the 5.4% increase over third quarter fiscal 2018 net sales.

The following table summarizes store growth for the fiscal three months ended ~~September 26, 2020~~March 27, 2021 and ~~September~~March 28, ~~2019:~~2020:


		Fiscal Three Months Ended				Fiscal Three Months Ended
Store Count Information:	Store Count Information:	September 26, 2020	September 28, 2019	Store Count Information:	March 27, 2021	March 28, 2020
Tractor Supply	Tractor Supply			Tractor Supply
Beginning of period	Beginning of period	1,881	1,790	Beginning of period	1,923	1,844
New stores opened	New stores opened	23	25	New stores opened	21	20
Stores closed	Stores closed	—	(1)	Stores closed	—	(1)
End of period	End of period	1,904	1,814	End of period	1,944	1,863
Petsense	Petsense			Petsense
Beginning of period	Beginning of period	180	177	Beginning of period	182	180
New stores opened	New stores opened	3	1	New stores opened	2	—
Stores closed	Stores closed	—	(2)	Stores closed	(7)	—
End of period	End of period	183	176	End of period	177	180
Consolidated, end of period	Consolidated, end of period	2,087	1,990	Consolidated, end of period	2,121	2,043
Stores relocated	Stores relocated	—	1	Stores relocated	—	1

~~Page 21~~

~~Index~~

The following table indicates the percentage of net sales represented by each of our major product categories for the fiscal three months ended ~~September 26, 2020~~March 27, 2021 and ~~September~~March 28, ~~2019:~~2020:


		Percent of Net Sales							Percent of Net Sales
		Fiscal Three Months Ended							Fiscal Three Months Ended
											Fiscal Three Months Ended
Product Category:	Product Category:	September 26, 2020		September 28, 2019		Product Category:	March 27, 2021		March 28, 2020
Livestock and Pet	Livestock and Pet	48	%	49	%	Livestock and Pet	51	%	54	%
Hardware, Tools and Truck	Hardware, Tools and Truck	23		23		Hardware, Tools and Truck	21		20
Seasonal, Gift and Toy Products	Seasonal, Gift and Toy Products	19		18		Seasonal, Gift and Toy Products	18		17
Clothing and Footwear	Clothing and Footwear	5		5		Clothing and Footwear	7		6
Agriculture	Agriculture	5		5		Agriculture	3		3
Total	Total	100	%	100	%	Total	100	%	100	%

Gross profit increased ~~36.6%~~48.8% to ~~$948.0~~$983.8 million for the ~~third~~first quarter of fiscal ~~2020~~2021 from ~~$694.2~~$661.2 million for the ~~third~~first quarter of fiscal ~~2019.~~2020. As a percent of net sales, gross margin in the ~~third~~first quarter of fiscal ~~2020~~2021 increased ~~138~~148 basis points to ~~36.37%~~35.2% from ~~34.99%~~33.8% in the ~~third~~first quarter of fiscal ~~2019.~~2020. The increase in gross margin was ~~driven by~~primarily attributable to a lower depth and frequency of sales promotions and less clearance activity and ~~lower~~favorable product mix. These factors were partially offset by higher transportation costs as a percent of net sales.

Selling, general and administrative (“SG&A”) expenses, including depreciation and amortization, increased ~~30.7%~~37.3% to ~~$695.8~~$753.2 million for the ~~third~~first quarter of fiscal ~~2020~~2021 from ~~$532.4~~$548.7 million for the ~~third~~first quarter of fiscal ~~2019.~~2020. As a percent of net sales, SG&A expenses improved 14103 basis points to ~~26.69%~~27.0% for the ~~third~~first quarter of fiscal ~~2020~~2021 from ~~26.83%~~28.0% for the ~~third~~first quarter of fiscal ~~2019.~~2020. The ~~decrease~~improvement in SG&A as a percent of net sales was primarily attributable to leverage in occupancy ~~personnel~~ and other ~~operating~~ costs from the increase in comparable store sales. ~~The leverage in our personnel~~Certain first quarter costs ~~year-over-year was inclusive~~as a percent of net sales were higher than the permanent wage and benefit increases for our store and distribution center team members that went into effect in the third quarter of fiscal 2020. The leverage from these SG&A expenses was partially offsetprior year, driven by incremental costs ~~related to the~~from incentive compensation and COVID-19 ~~pandemic,~~costs of approximately $28 million including investments in ~~strategic initiatives including advertising~~pay and ~~increased incentive compensation given the record sales~~benefits and profit performance in the quarter with the majority allocated to the store teams. The incremental costs related to the COVID-19 pandemic of approximately $20 million included additional labor hours and supply costs dedicated to cleaning and sanitation to enhance theother health and safety ~~of team members and customers.~~related expenses.

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Index

Operating income for the ~~third~~first quarter of fiscal ~~2020~~2021 increased ~~55.8%~~104.9% to ~~$252.2~~$230.5 million compared to ~~$161.8~~$112.5 million in the ~~third~~first quarter of fiscal ~~2019.~~2020.

The effective income tax rate was ~~22.2% for~~18.8% in the ~~third~~first quarter of ~~both~~ fiscal ~~2020~~2021 compared to 22.1% in the first quarter of fiscal 2020. The improvement in the effective income tax rate was primarily related to a discrete incremental tax benefit associated with share-based compensation compared to the first quarter of 2020. The Company expects the full fiscal year 2021 effective tax rate to be in a range between 22.1% and ~~2019.~~22.4%.

As a result of the foregoing factors, net income for the ~~third~~first quarter of fiscal ~~2020~~2021 increased ~~56.1%~~116.5% to ~~$190.6~~$181.4 million, or ~~$1.62~~$1.55 per diluted share, as compared to net income of ~~$122.1~~$83.8 million, or ~~$1.02~~$0.71 per diluted share, for the ~~third~~first quarter of fiscal ~~2019.~~2020.

~~Fiscal Nine Months (Third Quarter) Ended September 26, 2020 and September 28, 2019~~

~~Net sales increased 25.7% to $7.74 billion for~~During the first ~~nine months~~quarter of fiscal 2020 from $6.16 billion for the first nine months of fiscal 2019. Comparable store sales for the first nine months of fiscal 2020 were $7.49 billion, a 21.5% increase over the first nine months of fiscal 2019. Net sales and comparable store sales increased 6.6% and 3.6% in the first nine months of fiscal 2019, respectively.

For the first nine months of fiscal 2020, the comparable store sales results included an increase in comparable average transaction value of 12.0% and comparable average transaction count of 9.6%. Beginning in March 2020, the COVID-19 pandemic had a significant impact on consumer demand across all2021, we repurchased approximately 1.6 million shares of the Company’s ~~major product categories and geographic regions. All geographic regions~~common stock at a total cost of the Company had robust comparable store sales growth during the first nine months of fiscal 2020. The increase in comparable store sales was driven by unprecedented demand for spring and summer seasonal categories along with exceptional growth in everyday merchandise, including consumable, usable and edible products.

~~In addition to comparable store sales growth in the first nine months of fiscal 2020, sales from stores open less than one year were $264.0~~$253.4 million in the first nine months of fiscal 2020, which represented 4.3 percentage points of the 25.7% increase over the first nine months of fiscal 2019 net sales. For the first nine months of fiscal 2019, sales from stores open less than one year

~~Page 22~~

~~Index~~

~~were $179.6 million, which represented 3.1 percentage points of the 6.6% increase over the first nine months of fiscal 2018 net sales.~~

~~The following table summarizes store growth for the fiscal nine months ended September 26, 2020 and September 28, 2019:~~

Fiscal Nine Months Ended
Store Count Information: September 26,
2020 September 28,
2019
Tractor Supply
Beginning of period 1,844 1,765
New stores opened 61 50
Stores closed (1) (1)
End of period 1,904 1,814
Petsense
Beginning of period 180 175
New stores opened 6 3
Stores closed (3) (2)
End of period 183 176
Consolidated, end of period 2,087 1,990
Stores relocated 1 2

~~The following table indicates the percentage of net sales represented by each~~as part of our ~~major product categories for the fiscal nine months ended September 26, 2020 and September 28, 2019:~~

Percent of Net Sales
Fiscal Nine Months Ended
Product Category: September 26,
2020 September 28,
2019
Livestock and Pet 48 % 48 %
Hardware, Tools and Truck 21 21
Seasonal, Gift and Toy Products 21 20
Clothing and Footwear 5 6
Agriculture 5 5
Total 100 % 100 %

Gross profit increased 29.9% to $2.77 billion from $2.13 billion in the first nine months of fiscal 2019, and gross margin increased 115 basis points to 35.73% from 34.58% in the first nine months of fiscal 2019. The increase in gross margin was driven by lower depth and frequency of sales promotions, less clearance merchandise and, to a lesser extent, favorable product mix and lower transportation costs as a percent of net sales.

Total SG&A expenses, including depreciation and amortization, increased 23.9% to $1.95 billion from $1.58 billion in the first nine months of fiscal 2019. As a percent of net sales, SG&A expenses decreased to 25.23% from 25.60% in the first nine months of fiscal 2019. The decrease in SG&A as a percent of net sales was primarily attributable to leverage in occupancy, personnel, and other operating costs from the increase in comparable store sales. The leverage in our personnel costs year-over-year was inclusive of the permanent wage and benefit increases for our store and distribution center team members that went into effect in the third quarter of fiscal 2020. These improvements in our SG&A as a percent of net sales were partially offset by incremental costs related to the COVID-19 pandemic, increased incentive compensation given the Company’s strong financial performance, and investments in strategic initiatives. The costs related to the COVID-19 pandemic were approximately $82 million during the first nine months of fiscal 2020 which includes appreciation wages for frontline team members as well as additional labor hours and supply costs dedicated to cleaning and sanitation to enhance the health and safety of team members and customers.

~~Operating income for the first nine months of fiscal 2020 increased 47.0% to $812.5 million compared to $552.8 million in the first nine months of fiscal 2019.~~

~~Page 23~~

~~Index~~

The effective income tax rate was 22.6% in the first nine months of fiscal 2020 compared to 22.2% in the first nine months of fiscal 2019. The primary driver for the increase in the Company’s effective income tax rate was attributable to a reduction in the impact of the tax benefit associated with share-based compensation. The Company expects the full fiscal year 2020 effective tax rate to be in a range between 22.5% and 22.7%. The CARES Act was enacted in the U.S. on March 27, 2020. We do not anticipate that the enactment of this legislation will significantly impact our full year effective tax rate in fiscal 2020; however, the legislation resulted in the deferral of certain tax payments.

~~As a result of the foregoing factors, net income increased 46.6% to $613.1 million from $418.2 million in the first nine months of fiscal 2019, and diluted earnings per~~ share ~~increased 51.6% to $5.23 from $3.45 in the first nine months of fiscal 2019.~~repurchase program.

Liquidity and Capital Resources

In addition to normal operating expenses, and expenses associated with COVID-19 response, our primary ongoing cash requirements are for new store expansion, existing store remodeling and ~~relocation programs,~~improvements, store relocations, distribution facility capacity and improvements, information technology, inventory purchases, repayment of existing borrowings under our debt facilities, share repurchases, cash dividends, and selective acquisitions as opportunities arise.

Our primary ongoing sources of liquidity are existing cash balances, cash provided from operations, remaining funds available under our debt facilities, ~~finance~~operating and ~~operating~~finance leases, and normal trade credit. Our inventory and accounts payable levels typically build in the first and third fiscal quarters to support the higher sales volume of the spring and cold-weather selling seasons, respectively.

The Company believes that its existing cash balances, expected cash flow from future operations, funds available under its debt facilities, ~~finance~~operating and ~~operating~~finance leases, and normal trade credit will be sufficient to fund its operations, including increased expenses associated with COVID-19, and its capital expenditure needs, including new store openings, existing store ~~acquisitions,~~remodeling and improvements, store relocations, ~~and renovations,~~ distribution facility capacity and improvements, and information technology improvements, through the end of fiscal ~~2020.~~2021.

Working Capital

At ~~September 26, 2020,~~March 27, 2021, the Company had working capital of ~~$1.04~~$1.40 billion, which ~~increased $498.0~~decreased $110.0 million from December ~~28, 2019,~~26, 2020, and increased ~~$284.5~~$418.8 million from ~~September~~March 28, ~~2019.~~2020. The shifts in working capital were attributable to changes in the following components of current assets and current liabilities (in millions):

September 26,
2020 December 28,
2019 Variance September 28,
2019 Variance
Current assets:
Cash and cash equivalents $ 1,112.0 $ 84.2 $ 1,027.8 $ 82.6 $ 1,029.4
Inventories 1,915.0 1,602.8 312.2 1,812.8 102.2
Prepaid expenses and other current assets 136.1 100.9 35.2 104.5 31.6
Income taxes receivable 7.8 — 7.8 5.6 2.2
Total current assets 3,170.9 1,787.9 1,383.0 2,005.5 1,165.4
Current liabilities:
Accounts payable 1,056.9 643.0 413.9 679.8 377.1
Accrued employee compensation 120.4 39.8 80.6 49.2 71.2
Other accrued expenses 274.2 247.7 26.5 218.8 55.4
Current portion of long-term debt 380.0 30.0 350.0 30.0 350.0
Current portion of finance lease liabilities 4.4 4.0 0.4 3.9 0.5
Current portion of operating lease liabilities 294.8 277.1 17.7 270.0 24.8
Income taxes payable 1.9 6.0 (4.1) — 1.9
Total current liabilities 2,132.6 1,247.6 885.0 1,251.7 880.9
Working capital $ 1,038.3 $ 540.3 $ 498.0 $ 753.8 $ 284.5


	March 27, 2021		December 26, 2020		Variance		March 28, 2020		Variance
Current assets:
Cash and cash equivalents	$	1,149.9	$	1,341.8	$	(191.9)	$	461.4	$	688.5
Inventories	2,084.7		1,783.3		301.4		1,905.9		178.8
Prepaid expenses and other current assets	146.2		133.6		12.6		112.9		33.3

Total current assets	3,380.8		3,258.7		122.1		2,480.2		900.6
Current liabilities:
Accounts payable	1,181.9		976.1		205.8		887.9		294.0
Accrued employee compensation	68.1		119.7		(51.6)		31.1		37.0
Other accrued expenses	377.8		324.8		53.0		234.5		143.3
Current portion of long-term debt	—		—		—		30.0		(30.0)
Current portion of finance lease liabilities	4.7		4.6		0.1		4.2		0.5
Current portion of operating lease liabilities	303.2		298.7		4.5		281.6		21.6
Income taxes payable	40.2		19.9		20.3		24.8		15.4

Total current liabilities	1,975.9		1,743.8		232.1		1,494.1		481.8
Working capital	$	1,404.9	$	1,514.9	$	(110.0)	$	986.1	$	418.8

Page 2420

Index

In comparison to December ~~28, 2019,~~26, 2020, working capital as of ~~September 26, 2020,~~March 27, 2021, was impacted most significantly by changes in cash and cash equivalents, inventories, and accounts ~~payable, current portion of long-term debt, and accrued employee compensation.~~payable.

•~~The increase in cash~~Cash and cash equivalents ~~was driven by significant net cash provided by operating activities in the first nine months of fiscal 2020 and an increase in borrowings, net of repayments, under our debt facilities as we sought~~decreased due principally to ~~strengthen liquidity and preserve cash while navigating the COVID-19 pandemic. These increases in cash and cash equivalents were partially offset by~~ share repurchases, capital expenditures to support our strategic growth, and cash dividends paid to stockholders. These decreases in cash and cash equivalents were partially offset by net cash provided by operating activities in the first three months of fiscal 2021.

•The increase in inventories resulted primarily from an increase in average inventory per store due to normal seasonal patterns as well as the purchase of additional inventory to support new store ~~growth.~~growth and the strong sales volume trends.

•The increase in accounts payable was strongly correlated to the significant increase in inventory ~~as well as strong comparable store sales~~ during the ~~third~~first quarter of fiscal 2020. The sales performance during the third quarter drove an increase in inventory purchases and produced high inventory turns, resulting in an increase in the amount of inventory purchases that remain in accounts payable at quarter end.

•The increase in the current portion of long-term debt was related to the new $350 million April 2020 Term Loan borrowing, which was executed in order to strengthen liquidity and preserve cash while navigating the COVID-19 pandemic.

•The increase in accrued employee compensation was primarily due to incentive accruals given the strong year-to-date financial performance in fiscal 2020 and, to a lesser extent, the timing of other payroll accruals and related payments.2021.

In comparison to ~~September~~March 28, ~~2019,~~2020, working capital as of ~~September 26, 2020,~~March 27, 2021, was impacted most significantly by changes in cash and cash equivalents, inventories, accounts payable, ~~current portion of long-term debt,~~ and other accrued ~~employee compensation.~~expenses.

•The increase in cash and cash equivalents was primarily driven by a significant year-over-year increase in net cash provided by operating activities as well as an increase in borrowings, net of repayments, under our debt ~~facilities~~facilities. These increases in cash and ~~a reduced amount of year-over-year~~cash equivalents were partially offset by share repurchases, ~~as we sought~~capital expenditures to ~~strengthen liquidity~~support our strategic growth, and ~~preserve~~ cash ~~while navigating the COVID-19 pandemic.~~dividends paid to stockholders.

•The increase in inventories resulted primarily from the purchase of additional inventory to support new store growth as average inventory per store did not fluctuate significantly year-over-year.

•The increase in accounts payable resulted primarily from the purchase of additional inventory to support new store growth and increased sales volumes during the ~~third~~first quarter of fiscal ~~2020.~~2021. However, the inventory balance did not increase at the same rate as accounts payable due to the significant increase in sales and inventory turns in the ~~third~~first quarter of fiscal 2021 compared to the first quarter of fiscal 2020, which resulted in a year-over-year increase in the amount of inventory purchases that remain in accounts payable at quarter end.

•The increase in other accrued expenses was driven primarily by Company growth year-over-year as well as the ~~current portion~~timing of ~~long-term debt was related to the new $350 million April 2020 Term Loan borrowing, which was executed in order to strengthen liquidity~~payments and ~~preserve cash while navigating the COVID-19 pandemic.~~

•~~The increase in accrued employee compensation was primarily due to higher year-over-year incentive accruals given the strong year-to-date financial performance in fiscal 2020.~~accruals.

~~Page 25~~

~~Index~~

Debt

The following table summarizes the Company’s outstanding debt as of the dates indicated (in millions):


		September 26, 2020		December 28, 2019		September 28, 2019			March 27, 2021		December 26, 2020		March 28, 2020
Senior Notes		$	150.0	$	150.0	$	150.0
1.75% Senior Notes due 2030								1.75% Senior Notes due 2030	$	650.0	$	650.0	$	—
3.70% Senior Notes due 2029								3.70% Senior Notes due 2029	150.0		150.0		150.0
Senior Credit Facility:	Senior Credit Facility:							Senior Credit Facility:
February 2016 Term Loan	February 2016 Term Loan	130.0		145.0		150.0		February 2016 Term Loan	—		—		140.0
June 2017 Term Loan	June 2017 Term Loan	80.0		87.5		90.0		June 2017 Term Loan	—		—		85.0
March 2020 Term Loan	March 2020 Term Loan	200.0		—		—		March 2020 Term Loan	—		—		200.0
April 2020 Term Loan		350.0		—		—
November 2020 Term Loan								November 2020 Term Loan	200.0		200.0		—
Revolving credit loans	Revolving credit loans	—		15.0		255.0		Revolving credit loans	—		—		445.0
Total outstanding borrowings	Total outstanding borrowings	910.0		397.5		645.0		Total outstanding borrowings	1,000.0		1,000.0		1,020.0
Less: unamortized debt issuance costs		(0.7)		(1.0)		(1.1)
Less: unamortized debt discounts and issuance costs								Less: unamortized debt discounts and issuance costs	(15.2)		(15.7)		(0.9)
Total debt	Total debt	909.3		396.5		643.9		Total debt	984.8		984.3		1,019.1
Less: current portion of long-term debt	Less: current portion of long-term debt	(380.0)		(30.0)		(30.0)		Less: current portion of long-term debt	—		—		(30.0)
Long-term debt	Long-term debt	$	529.3	$	366.5	$	613.9	Long-term debt	$	984.8	$	984.3	$	989.1

Outstanding letters of credit	Outstanding letters of credit	$	50.4	$	32.0	$	34.0	Outstanding letters of credit	$	60.3	$	48.7	$	39.0

For additional information about the Company’s debt and credit facilities, refer to Note 5 to the Condensed Consolidated Financial Statements. Refer to Note 6 to the Condensed Consolidated Financial Statements for information about the Company’s interest rate swap agreements.

Page 21

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Operating Activities

Operating activities provided net cash of ~~$1.0 billion~~$177.1 million and ~~$414.3~~$83.9 million in the first ~~nine~~three months of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively. The ~~$590.7~~$93.2 million increase in net cash provided by operating activities in the first ~~nine~~three months of fiscal ~~2020~~2021 compared to the first ~~nine~~three months of fiscal ~~2019~~2020 is due to changes in the following operating activities (in millions):


		Fiscal Nine Months Ended											Fiscal Three Months Ended
		September 26, 2020		September 28, 2019		Variance			March 27, 2021		March 28, 2020		Variance
Net income	Net income	$	613.1	$	418.2	$	194.9	Net income	$	181.4	$	83.8	$	97.6
Depreciation and amortization	Depreciation and amortization	158.6		144.6		14.0		Depreciation and amortization	60.1		51.4		8.7
Share-based compensation expense	Share-based compensation expense	27.0		25.8		1.2		Share-based compensation expense	12.3		6.9		5.4
Deferred income taxes	Deferred income taxes	(3.7)		8.5		(12.2)		Deferred income taxes	20.2		1.6		18.6
Inventories and accounts payable	Inventories and accounts payable	101.6		(163.4)		265.0		Inventories and accounts payable	(95.6)		(58.2)		(37.4)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(35.2)		10.0		(45.2)		Prepaid expenses and other current assets	(12.6)		(12.0)		(0.6)
Accrued expenses	Accrued expenses	100.9		(26.4)		127.3		Accrued expenses	3.7		(21.0)		24.7
Income taxes	Income taxes	(11.9)		(3.3)		(8.6)		Income taxes	20.3		18.8		1.5
Other, net	Other, net	54.6		0.3		54.3		Other, net	(12.7)		12.6		(25.3)
Net cash provided by operating activities	Net cash provided by operating activities	$	1,005.0	$	414.3	$	590.7	Net cash provided by operating activities	$	177.1	$	83.9	$	93.2

The ~~$590.7~~$93.2 million increase in net cash provided by operating activities in the first ~~nine~~three months of fiscal ~~2020~~2021 compared with the first ~~nine~~three months of fiscal ~~2019~~2020 resulted from a year-over-year increase in our net income as well as the net impact of changes in our operating assets and liabilities, principally due to Company growth year-over-year as well as the timing of ~~accruals and related~~ payments and ~~a significant increase in inventory that remains in accounts payable due to the increased sales volume and inventory turns in the third quarter of fiscal 2020.~~accruals.

~~Page 26~~

~~Index~~

Investing Activities

Investing activities used net cash of ~~$160.2~~$100.5 million and ~~$142.0~~$29.3 million in the first ~~nine~~three months of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively. The ~~$18.1~~$71.2 million increase in net cash used in investing activities primarily reflects an increase in capital expenditures in the first ~~nine~~three months of fiscal ~~2020~~2021 compared to fiscal ~~2019.~~2020.

Capital expenditures for the first ~~nine~~three months of fiscal ~~2020~~2021 and fiscal ~~2019~~2020 were as follows (in millions):


		Fiscal Nine Months Ended							Fiscal Three Months Ended
		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Existing stores						Existing stores	$	48.0	$	6.9
Information technology	Information technology	$	72.6	$	66.5	Information technology	30.9		9.0
New and relocated stores and stores not yet opened	New and relocated stores and stores not yet opened	43.8		38.6		New and relocated stores and stores not yet opened	12.0		11.9
Existing stores		30.6		23.5
Distribution center capacity and improvements	Distribution center capacity and improvements	11.6		14.3		Distribution center capacity and improvements	8.3		0.3
Corporate and other	Corporate and other	2.7		1.4		Corporate and other	1.5		1.5
Total capital expenditures	Total capital expenditures	$	161.3	$	144.3	Total capital expenditures	$	100.7	$	29.6

The increase in spending onfor existing stores in the first three months of fiscal 2021 as compared to the first three months of fiscal 2020 principally reflects our strategic initiatives related to store remodels, including space productivity and side lot improvements. Spending in the first three months of both fiscal 2021 and 2020 also includes routine refresh activity as well as security enhancements.

The increase in spending for information technology represents continued support of ~~our store growth and~~ our omni-channel initiatives, as well as improvements in security and compliance, enhancements to our customer relationship management program, an upgrade to our loyalty program, and other strategic initiatives. As we continue throughout fiscal 2020, we intend to prioritize our information technology capital expenditures to accelerate initiatives to enhance safety and convenience for customers, including initiatives such as Buy Online, Pickup In Store; Buy Online, Deliver from Store; Contactless Curbside Pickup; Contactless Payment capabilities; additional Mobile POS devices in all stores; and improvements to our in-store wireless internet.

In the first ~~nine~~three months of fiscal ~~2020,~~2021, the Company opened 6121 new Tractor Supply stores compared to 5020 new Tractor Supply stores during the first ~~nine~~three months of fiscal ~~2019.~~2020. The Company also opened ~~six~~two new Petsense stores during the first ~~nine~~three months of fiscal ~~2020 compared to three new~~2021 and no Petsense stores during the first ~~nine~~three months of fiscal ~~2019.~~2020. We expect to open approximately 80

Page 22

Index

new Tractor Supply stores and approximately 10 new Petsense stores during fiscal ~~2020,~~2021, but the timing of new store openings in some areas may be delayed as a result of the COVID-19 pandemic, including local and state orders.

~~Spending~~The increase in spending for ~~existing stores principally reflects routine refresh activity. However, the increased spend for existing stores~~distribution center capacity and improvements in the first ~~nine~~three months of fiscal ~~2020~~2021 as compared to the first ~~nine~~three months of fiscal ~~2019~~2020 is ~~driven~~related to a new distribution center in Navarre, Ohio which is expected to be approximately 900,000 square feet and is currently anticipated to be complete by ~~strategic initiatives in select stores including security enhancements, space productivity and side lot improvements.~~the end of fiscal 2022.

~~For fiscal 2020, the Company expects~~Our projected capital expenditures for fiscal 2021 are currently estimated to be in a range of approximately ~~$300~~$450 million to ~~$325 million,~~$550 million. The capital expenditures include our new store growth plans for approximately 80 new Tractor Supply stores and 10 new Petsense stores as ~~we continue~~well as the construction of our new distribution center in Navarre, Ohio. We also plan to support our strategic growth initiatives related to space productivity and side lot improvements in certain existing ~~store locations~~stores as well as ~~new~~continued improvements in technology and ~~service enhancements that are being implemented across the enterprise.~~infrastructure at our existing stores, and ongoing investments to enhance our digital and omni-channel capabilities to better serve our customers.

Financing Activities

Financing activities ~~provided~~used net cash of ~~$182.9~~$268.4 million in the first ~~nine~~three months of fiscal ~~2020~~2021 compared to ~~using~~providing net cash of ~~$276.0~~$322.6 million in the first ~~nine~~three months of fiscal ~~2019.~~2020. The ~~$458.9~~$591.0 million change in net cash ~~provided~~used by financing activities in the first ~~nine~~three months of fiscal ~~2020~~2021 compared to the first ~~nine~~three months of fiscal ~~2019~~2020 is due to changes in the following (in millions):


		Fiscal Nine Months Ended											Fiscal Three Months Ended
		September 26, 2020		September 28, 2019		Variance			March 27, 2021		March 28, 2020		Variance
Net borrowings and repayments under debt facilities	Net borrowings and repayments under debt facilities	$	512.5	$	236.3	$	276.2	Net borrowings and repayments under debt facilities	$	—	$	622.5	$	(622.5)
Repurchase of common stock	Repurchase of common stock	(263.2)		(490.0)		226.8		Repurchase of common stock	(253.4)		(263.2)		9.8
Net proceeds from issuance of common stock	Net proceeds from issuance of common stock	73.8		105.5		(31.7)		Net proceeds from issuance of common stock	58.7		10.6		48.1
Cash dividends paid to stockholders	Cash dividends paid to stockholders	(128.0)		(121.2)		(6.8)		Cash dividends paid to stockholders	(60.6)		(40.8)		(19.8)
Other, net	Other, net	(12.2)		(6.6)		(5.6)		Other, net	(13.1)		(6.5)		(6.6)
Net cash provided by/(used in) financing activities		$	182.9	$	(276.0)	$	458.9
Net cash (used in)/provided by financing activities								Net cash (used in)/provided by financing activities	$	(268.4)	$	322.6	$	(591.0)

~~Page 27~~

~~Index~~

The ~~$458.9~~$591.0 million change in net cash ~~provided~~used by financing activities in the first ~~nine~~three months of fiscal 2021 compared with the first three months of fiscal 2020 ~~compared with the first nine months of fiscal 2019~~ is due to ~~an increase~~principally to a decrease in net borrowings under debt facilities ~~which~~during the respective periods, partially offset by an increase in net proceeds from the issuance of common stock related to the exercise of stock awards. Net borrowings under debt facilities in the first three months of fiscal 2020 included the addition of the $200 million March 2020 Term Loan and the $350 million April 2020 Term Loan as described in Note 5 to the Condensed Consolidated Financial ~~Statements. Additionally, we used less cash for~~Statements, each of which was repaid in full in the ~~repurchase~~fourth quarter of ~~common stock as we have suspended our share repurchase program effective March 12, 2020. The incremental borrowings~~fiscal 2020 and ~~suspension of our share repurchase program were both intended to strengthen our liquidity and preserve cash while navigating the COVID-19 pandemic.~~is no longer in effect.

Dividends

During the first ~~nine~~three months of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, the Company's Board of Directors declared the following cash dividends:

Date Declared

Dividend Amount
Per Share of Common Stock

Record Date

Date Paid

~~August 5, 2020~~January 27, 2021

~~0.40~~0.52

~~August 24, 2020~~February 22, 2021

~~September~~March 9, ~~2020~~2021

~~May 6, 2020~~

~~0.35~~

~~May 26, 2020~~

~~June 9, 2020~~

February 5, 2020

0.35

February 24, 2020

March 10, 2020

~~August 7, 2019~~

~~0.35~~

~~August 26, 2019~~

~~September 10, 2019~~

~~May 8, 2019~~

~~0.35~~

~~May 28, 2019~~

~~June 11, 2019~~

~~February 6, 2019~~

~~0.31~~

~~February 25, 2019~~

~~March 12, 2019~~

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Share Repurchase Program

~~The Company has suspended the share repurchase program effective March 12, 2020, in order to strengthen its liquidity and preserve cash while navigating the COVID-19 pandemic.~~


		Fiscal Three Months Ended						Fiscal Nine Months Ended							Fiscal Three Months Ended
		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019			March 27, 2021		March 28, 2020
Total number of shares repurchased	Total number of shares repurchased	—		1,470		2,853		4,926		Total number of shares repurchased	1,600		2,853
Average price paid per share	Average price paid per share	$	—	$	105.97	$	92.28	$	99.46	Average price paid per share	$	158.35	$	92.28
Total cash paid for share repurchases	Total cash paid for share repurchases	$	—	$	155,742	$	263,219	$	489,977	Total cash paid for share repurchases	$	253,409	$	263,219

Pending Acquisition

Off-Balance Sheet Arrangements

There have been no material changes in the Company's off-balance sheet arrangements during the fiscal quarter ended March 27, 2021. The Company’s off-balance sheet arrangements are limited to outstanding letters of credit. Letters of credit allow the Company to purchase inventory, primarily sourced overseas, in a timely manner and support certain risk management programs.

~~Page 28~~

~~Index~~

Significant Contractual Obligations and Commercial Commitments

The Company is building a new distribution center in Navarre, Ohio which is expected to be approximately 900,000 square feet and is currently anticipated to be complete by the end of fiscal 2022. At ~~September 26, 2020, there were no material~~March 27, 2021, the Company had contractual commitments of approximately $75 million related to ~~real estate or~~the construction ~~projects extending greater than twelve months.~~of this new distribution center.

At ~~September 26, 2020,~~March 27, 2021, there were ~~$50.4~~$60.3 million of outstanding letters of credit under the ~~2016~~ Senior Credit Facility.

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Significant Accounting Policies and Estimates

Management’s discussion and analysis of the Company’s financial position and results of operations are based upon its Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make informed estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company’s significant accounting policies, including areas of critical management judgments and estimates, have primary impact on the following financial statement areas:


-	Inventory valuation	-	Impairment of long-lived assets
-	Self-insurance reserves	-	Impairment of goodwill and other indefinite-lived intangible assets

See the Notes to the Consolidated Financial Statements in our ~~Annual Report on Form~~2020 10-K, ~~for the fiscal year ended December 28, 2019,~~ for a discussion of the Company’s critical accounting policies. The Company’s financial position and/or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.

New Accounting Pronouncements

Refer to Note 12 to the Condensed Consolidated Financial Statements for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of ~~September 26, 2020.~~March 27, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Interest Rate Risk~~For a description of the Company’s quantitative and qualitative disclosures about market risks, see Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" included in our Annual Report on Form 10-K for the fiscal year ended December 26, 2020. As of March 27, 2021, there has been no material change in this information.

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

As discussed in Note 6 to the Condensed Consolidated Financial Statements, we entered into interest rate swap agreements which are intended to mitigate interest rate risk associated with future changes in interest rates for the term loan borrowings under the 2016 Senior Credit Facility. As a result of these interest rate swaps, our exposure to interest rate volatility is minimized. The interest rate swap agreements have been executed for risk management purposes and are not held for trading purposes.

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 $0.4 million and $0.4 million for the three months ended September 26, 2020 and September 28, 2019, respectively, and $2.1 million and $1.3 million for the nine months ended September 26, 2020 and September 28, 2019, respectively.

~~Purchase Price Volatility~~

Although we cannot determine the full effect of inflation and deflation on our operations, we believe our sales and results of operations are affected by both. We are subject to market risk with respect to the pricing of certain products and services, which include, among other items, grain, corn, steel, petroleum, cotton, and other commodities, as well as transportation services. Therefore, we may experience both inflationary and deflationary pressure on product cost, which may impact consumer demand and, as a result, sales and gross margin. Our strategy is to reduce or mitigate the effects of purchase price volatility principally by taking advantage of vendor incentive programs, growing economies of scale from increased volume of purchases, adjusting retail prices and selectively buying from the most competitive vendors without sacrificing quality.

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~~Index~~

Item 4. Controls and Procedures

Disclosure Controls and Procedures

WeOur management carried out an evaluation required by the Securities Exchange Act of 1934, as amended (the “1934 Act”), under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of ~~the design and operation of~~ our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) as of ~~September 26, 2020.~~March 27, 2021. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of ~~September 26, 2020,~~March 27, 2021, our disclosure controls and procedures were effective.

Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~On October 9, 2020, an alleged stockholder filed~~For a ~~derivative lawsuit in the U.S. District Court for the Middle District~~description of ~~Tennessee, purportedly on~~ the Company's behalf, against all current and two former members of our Board of Directors, and the Company as a nominal defendant, seeking monetary damages, interest, corporate governance changes, disgorgement, restitution, mandated community investment, punitive damages, and an award of attorneys' fees, expert fees, and costs. Plaintiffs allege that: (a) defendants misrepresented and omitted material facts in the Company's proxy statements with respectlegal proceedings, refer to diversity; (b) defendants breached their fiduciary duties by permitting the Company to disseminate materially misleading and inaccurate information regarding the Company’s commitment to diversity; and (c) defendants received unjust compensation and were unjustly enriched. While the Company continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations.

The Company is also involved in various other litigation matters arising in the ordinary course of business. The Company believes that, based upon information currently available, any estimated loss related to such matters has been adequately provided for in accrued liabilitiesNote 10 to the extent probable and reasonably estimable. Accordingly, the Company currently expects these matters will be resolved without material adverse effect on its consolidated financial position, results of operations, or cash flows. However, litigation and other legal matters involve an element of uncertainty. Future developments in such matters, including adverse decisions or settlements or resulting required changes to the Company's business operations, could affect our consolidated operating results when resolved in future periods or could result in liability or other amounts material to the Company's Condensed Consolidated Financial ~~Statements.~~Statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

The risk factors described in Part I, Item ~~1A.~~1A “Risk Factors” in our ~~2019~~2020 10-K should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes to our risk factors as previously disclosed in our 2020 10-K. Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us. The risk factors described below update the risk factors disclosed in Part I, Item 1A. “Risk Factors” in our 2019 10-K, to include additional information, and should be read in conjunction with the risk factors in our 2019 10-K.

~~The COVID-19 coronavirus pandemic could have a material negative effect on our results of operations, cash flows, financial position, and business operations.~~

~~The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty, and volatility which may negatively affect our business operations.~~

We are unable to predict the impact that COVID-19 will have on our results of operations, cash flows, financial position, and business operations due to numerous uncertainties. These uncertainties include, but are not limited to: the severity of the virus; the duration of the pandemic; governmental actions which include restrictions on our operations up to and including potential closure of our stores and distribution centers; the duration and degree of quarantine or shelter-in-place measures, including additional measures that may still occur; impacts on our supply chain which include suppliers of our products and our

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~~Index~~

transportation vendors; the health of our workforce and our ability to maintain staffing needs to operate our business; how macroeconomic factors evolve including unemployment rates and recessionary pressures; the impact of the crisis on consumer shopping patterns, both during and after the crisis; volatility in the economy as well as the credit and financial markets during and after the pandemic; the incremental costs of doing business during the crisis as well as on a long-term basis; potential increases in insurance premiums, medical claims costs, and workers' compensation claim costs; unknown consequences on our business performance and initiatives stemming from the substantial investment of time and other resources to the pandemic response; potential delays in growth initiatives including the timing of new store openings; potential adverse effects on our internal control environment and information security as a result of changes to a remote work environment; and the long-term impact of the crisis on our business.

In addition, we cannot predict the impact that the pandemic will have on our manufacturers and suppliers of our products and other business partners such as service vendors; however, any material effect on these parties could adversely impact our results of operations and our ability to operate our business effectively.

~~The COVID-19 coronavirus pandemic could have a material negative effect on our supply chain.~~

~~Circumstances surrounding and related to the COVID-19 pandemic have created unprecedented impacts on the global supply chain.Our business relies on an efficient and effective supply chain, including the manufacture and transportation of our products as well as the effective functioning of our distribution centers.~~Impacts related to the COVID-19 pandemic are placing strain on the domestic and international supply chain that could negatively affect the flow or availability of our products and result in higher out-of-stock inventory positions due to difficulties in timely obtaining product from the manufacturers and suppliers of our products as well as transportation of those products to our distribution centers and stores.Further, we may have to source products from different manufacturers or geographic locations which could result in, among other things, higher product costs, increased transportation costs, delays in receiving products or lower quality of the products.

~~Additionally, the operation of our distribution centers is crucial to our business operations.~~If our distribution centers experience closures or worker shortages, whether temporary or sustained, we could sustain significant adverse impacts related to the flow or availability of products to our stores and customers.

Any of these circumstances could adversely affect our ability to deliver inventory in a timely manner, which could impair our ability to meet customer demand for products and result in lost sales, increased supply chain costs, or damage to our reputation.

Economic impacts stemming from the COVID-19 coronavirus pandemic could significantly impact our financial position, including liquidity, capital allocation, and access to capital markets for additional funds to operate our business.

In an effort to strengthen our liquidity and preserve cash while navigating the COVID-19 pandemic, we have taken preemptive actions, including incremental borrowings under our debt facilities and suspension of our share repurchase program.

The increased debt levels have increased our interest expense costs and could place us at higher risk of default or limit our future financial flexibility. Further, the financial and credit markets have and may continue to experience significant volatility and turmoil.Whether due to our increased debt levels or to ongoing changes in the financial and credit markets, our ability to access capital on favorable terms and continue to meet our liquidity needs could be adversely affected.

~~Additionally, changes in our capital allocation strategy could have significant adverse impacts, both short- and long-term, on our business, results of operations, and financial position.Suspension of our share repurchase program, depending on duration, will negatively impact our earnings per share which in turn could adversely impact our common stock price.While not contemplated at this time, any potential suspension or reduction in our dividend declaration could have an adverse impact on investor perception and our common stock price.~~

Actions taken to protect the health and safety of our team members and customers during the COVID-19 coronavirus pandemic have increased our operating costs and may not be sufficient to protect against operational or reputational harm to our business.

~~In response to the COVID-19 pandemic, we have taken a number of actions across our business to help protect our team members, customers, and others in the communities we serve.~~ These measures include personal protective equipment for our team members, a requirement to wear masks in our facilities, increased staffing in order to provide contact-free curbside pickup from stores, expansion of our capabilities to support delivery to customer homes, increased cleaning and sanitizing measures, and monitoring for “social distancing” directives, as well as additional cleaning materials in our facilities. Additionally, we have provided appreciation bonuses as well as permanent increases in compensation and benefits for our team members in our

~~Page 31~~

~~Index~~

stores and distribution centers to further support them during and after the COVID-19 pandemic. Actions such as these have resulted in significant incremental costs and we expect that we will continue to incur these costs for the foreseeable future, which in turn will have an adverse impact on our results of operations.

~~The health and safety of our team members and customers are of primary concern to our management team.However, due to the unpredictable nature of this virus and the consequences of our actions, we may see unexpected outcomes notwithstanding our added safety measures.~~ For instance, if we do not respond appropriately to the pandemic, or if our customers do not participate in “social distancing” and other safety measures, the well-being of our team members and customers could be jeopardized. Furthermore, any failure to appropriately respond, or the perception of an inadequate response, could cause reputational harm to our brand and subject us to claims and litigation from team members, customers and service providers.

Additionally, an outbreak of confirmed cases of COVID-19 in our stores or distribution centers could result in temporary or sustained workforce shortages or facility closures which would negatively impact our underlying business and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Share repurchases were made pursuant to the share repurchase program which is described under Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q. Additionally, the Company withholds shares from vested restricted stock units and performance-based restricted share units to satisfy employees’ minimum statutory tax withholding requirements. Stock repurchase activity during the ~~third~~first quarter of fiscal ~~2020~~2021 was as follows:

Period Total Number of Shares Purchased
Average
Price Paid
Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Dollar
Value of Shares That May Yet Be Purchased Under the Plans or Programs
June 28, 2020 - July 25, 2020 — $ — — $ 1,223,586,890
July 26, 2020 - August 22, 2020
^(a)
2,305 147.94 — 1,223,586,890
August 23, 2020 - September 26, 2020 — — — 1,223,586,890
Total 2,305 $ 147.94 — $ 1,223,586,890


Period		Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
December 27, 2020 - January 23, 2021		172,500	$	145.93	172,500	$	1,118,686,709
January 24, 2021 - February 20, 2021	(a)	542,496	150.40		461,502	1,049,167,055
February 21, 2021 - March 27, 2021		966,352	164.24		966,352	890,467,715
Total		1,681,348	$	158.35	1,600,354	$	890,467,715

(a) The number of shares purchased and average price paid per share includes ~~2,305~~80,994 shares withheld from vested stock awards to satisfy employees’ minimum statutory tax withholding requirements for the period of ~~July 26, 2020~~January 24, 2021 - ~~August 22, 2020.~~February 20, 2021.

~~Share repurchases were made pursuant to the share repurchase program described under Part I Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations.~~ We expect to implement the balance of the share repurchase program through purchases made from time to time either in the open market or through private transactions, in accordance with regulations of the SEC and other applicable legal requirements. 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 availability, and other market conditions.

Any additional share repurchase programs will be subject to the discretion of our Board of Directors and will depend upon earnings, financial condition, and capital needs of the Company, along with any other factors which the Board of Directors deem relevant. The program may be limited, temporarily paused, or terminated at any time, without prior notice.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit

3.1* ~~Restated Certificate of Incorporation, as amended, of the Company (restated for SEC filing purposes only).~~

~~3.2~~ Fifth Amended and Restated By-laws, as amended (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on May 7, 2020, Commission File No. 000-23314, and incorporated herein by reference).

4.1* ~~Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended: our common stock.~~

10.1 ~~Form of~~ Change in Control Agreement, dated as of March 8, 2021, by and between Tractor Supply Company and ~~Melissa Kersey~~Harry A. Lawton III (filed as ~~exhibit~~Exhibit 10.1 to Current Report on Form 8-K, filed with the Commission on March ~~1, 2019,~~10, 2021, Commission ~~File~~file No. 000-23314, and incorporated herein by reference).+

10.2 ~~Transition~~Form of Change in Control Agreement, dated ~~October 14, 2020,~~as of March 8, 2021, by and between Tractor Supply Company and ~~Benjamin F. Parrish~~each of Kurt D. Barton, Robert D. Mills, John P. Ordus, Jonathan S. Estep, Melissa D. Kersey, Colin W. Yankee, Noni L. Ellison, Christi C. Korzekwa, and Matthew L. Rubin (filed as ~~exhibit 10.1~~Exhibit 10.2 to Current Report on Form 8-K, filed with the Commission on ~~October 16, 2020,~~March 10, 2021, Commission ~~File~~file No. 000-23314, and incorporated herein by reference).+

10.3* ~~Third Amendment to Credit Agreement~~O ffer Le tter between Mel issa D. Kersey and ~~Release of Guarantors, dated October 16, 2020, by and among~~ Tractor Supply ~~Company, as Borrower, certain subsidiaries of Tractor Supply Company, certain lenders, and Wells Fargo Bank, National Association, as Administrative Agent and Lender.~~C

10.4* First Amendment to Note Purchase and Private Shelf Agreement, dated October 16, 2020, by and among Tractor Supply Company, certain subsidiaries of Tractor Supply Company, PGIM, Inc. and certain affiliates of PGIM, Inc.ompany.+

31.1* Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1** Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

101* The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 26, 2020,~~March 27, 2021, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

104* The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 26, 2020,~~March 27, 2021, formatted in Inline XBRL (included in Exhibit 101).

* Filed herewith

** Furnished herewith

+ Management contract or compensatory plan or arrangement

Page 3327

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			TRACTOR SUPPLY COMPANY

Date:	~~October 22, 2020~~May 6, 2021	By:	/s/ Kurt D. Barton
			Kurt D. Barton
			Executive Vice President - Chief Financial Officer and Treasurer
			(Duly Authorized Officer and Principal Financial Officer)

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