1、2008 ANNUAL REPORTGETTING THE JOB DONEFINANCIAL HIGHLIGHTSOperating Results$in millions,except share data 2006 2007 2008Net sales$2,369.6$2,703.2$3,007.9Income before income taxes$145.3$155.0$133.4Net income$91.0$96.2$81.9Net income per share(basic)$2.27$2.45$2.22Net income per share(diluted)$2.22$2
2、.40$2.19Number of stores 676 764 855NET SALES(IN BILLIONS)NET INCOME PER SHARE(DILUTED)NUMBER OF STORESABOUT TRACTOR SUPPLY COMPANYTractor Supply Company is the largest operator of retail farm and ranch stores in the United States.Our focus is on supplying the lifestyle needs of recreational farmers
3、 and ranchers.We also serve the maintenance needs of those who enjoy the rural lifestyle,as well as tradesmen and small businesses.Our stores are located in towns outlying major metropolitan markets and in rural communities.As we are serving a very specifi c niche,we offer a wide,yet very select,ass
4、ortment of products that our customers use to support their lifestyles:?Equine,pet and animal products,including items necessary for their health,care,growth and containment?Maintenance products for agricultural and rural use?Hardware and tool products?Seasonal products,including lawn and garden pow
5、er equipment?Truck and towing products?Work/recreational clothing and footwear for the entire family04050607085155956767648550405060708$1.57$2.09$2.22$2.40$2.190405060708$1.74$2.07$2.37$2.70$3.01Our business and customers proved somewhat resilient to the overall economic conditions,and our team took
6、 appropriate actions to“get the job done”in 2008 producing one of the Company s finest performances in history.GETTING THE JOB DONE IN 2008Our initial planning for 2008 assumed the year would look much like the second half of 2007.However,only six weeks into the year,our analysis of customer purchas
7、e patterns indicated a marked departure from their historic behavior.As a result,we recognized we were facing a challenging year and took action.We quickly met with all of our store managers and above,asking them to help us cut costs,reduce waste,improve efficiency,and maximize sales at every point
8、of customer contact.As the year progressed,the retail environment continued to weaken as consumers further modified their spending behavior and commodity prices increased significantly.In this dynamic year,our team expertly managed our margins and market share while concurrently reducing inventory.I
9、mportantly,we executed a number of keymerchandising initiatives that resulted in sharper store presentation,greater inventory efficiency,and enhancedstrategic sourcing and private label brand programs.While we continued to find ways to do more with less,we once again reduced store manager and team m
10、ember turnover and improved our customer loyalty scores.We also maintained our commitment to being a growth company and took a multi-pronged approach to this throughout the year.First,we focused on expanding our chain in new and existing markets,and we are proud of the performance of our new stores.
11、We also advanced our integrated multichannel strategy.As we have scaled up our e-commerce website,we find customers purchasing online as well as researching product information that leads them to buy more in our stores.Importantly,we continued to shift our merchandise mix toward higher-demand,non-di
12、scretionary categories that fit with the changes our customers were making.Our customers rely on Tractor Supply Company to support the needs of their rural lifestyle.These men,women,and children are feeding and caring for their pets,planting vegetable gardens,maintaining their outdoor power equipmen
13、t,and clearing tree branches after a storm.And they trust Tractor Supply Company to provide the products and know-how they need to“get the job done”right.In a difficult year,our actions produced excellent results.We achieved double-digit revenue growth,delivered positive same-store sales,and increas
14、ed traffic and ticket on a comparable basis.At the same time,we improved working capital and generated significant cash flow from operations.We maintained a solid capital structure with no debt and ample liquidity to fund our store growth and share repurchase program.To this end,we opened 91 new sto
15、res and returned approximately$54 million to our shareholders through our share repurchase program in 2008.TO OUR STAKEHOLDERS:POSITIONED TO WIN IN 2009 AND BEYONDTo win in the current environment and beyond,we have identified two priorities for 2009:continue differentiating Tractor Supply Company i
16、n the market and focus on executing our rural retail strategy.We are committed to serving our unique niche by providing a one-of-a-kind destination that offers customers an excellent shopping experience and the right products at compelling prices.We will continue to refine our advertising and market
17、ing efforts to ensure we are reaching our customers.Increasingly,we find direct marketing,complemented by our customer relationship management initiative,to be the most effective and efficient method of communication.The crisp execution of our retail strategy centered on store expansion,rigorous inv
18、entory management,and expense management programs will remain a key focus.We will continue to invest in the business.While taking a more conservative approach to chain expansion in the current environment,we still plan to open 70 to 80 new stores in 2009.Based on market analysis,we recently announce
19、d an increase to our long-term store count goal from 1,400 Tractor Supply Company stores nationwide to 1,800 locations.For 2009,we plan to redirect capital we typically would have spent on higher store growth and invest it in store refurbishment,information technology hardware upgrades,and other eff
20、iciency-driving system enhancements to benefit the business long-term.Our leadership team has proven it has the experience,focus,and determination to guide our success in good times and bad.We will maintain our dedicated approach to staffing and training our team members that enables us to provide t
21、he individual attention and service that have become hallmarks of Tractor Supply Company stores.I want to thank each of our team members for their hard work and loyalty in 2008 as we successfully navigated through a challenging environment.Our store support center and our field management teams are
22、aligned and well prepared for 2009 and beyond.As we look ahead,we are extremely confident we are positioned to“get the job done”and win in any environment.While the American consumer may have changed,Tractor Supply Company will remain nimble as we plan ahead to maximize our performance and react qui
23、ckly to factors outside our control.I am confident that we will continue to accomplish our goals and deliver value for all of our stakeholders.Jim WrightChairman of the Board and Chief Executive OfficerUNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON,D.C.20549 FORM 10-K(Mark One)?ANNUAL R
24、EPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 8002 ,72 r ebmeceD dedne r aey l acs i f eh t roF or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 ._ o t _ mor f do i r ep no i t i sna r t eh t roF 41332-000 r ebmun e l i f no i s
25、 s immoC TRACTOR SUPPLY COMPANY(Exact name of registrant as specified in its charter)Delaware 13-3139732 (State or other jurisdiction of (I.R.S.Employer Identification No.)incorporation or organization)200 Powell Place,Brentwood,Tennessee 37027 Address of principal executive offices Zip Code Registr
26、ants telephone number,including area code (615)440-4000 Securities Registered Pursuant to Section 12(g)of the Act:None Securities Registered Pursuant to Section 12(b)of the Act:Title of each class Name of each exchange on which registered Common Stock,$.008 par value NASDAQ Global Select Market Indi
27、cate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act YES X NO Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act YES NO X Indicate by check mark whether the registrant
28、(1)has filed all reports required to be filed by Section 13 or 15(d)of the SecuritiesExchange 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 X NO
29、Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendme
30、nt to this Form 10-K.x Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.See definitions of“large accelerated file,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act:
31、Large accelerated filer X Accelerated filer Non-accelerated filer _(Do not check if a smaller reporting company)Smaller reporting company Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act.)YES NO X The aggregate market value of the Common Stock held
32、 by non-affiliates of the registrant,based on the closing price of the Common Stock on The NASDAQ Global Select Market on June 28,2008,the last business day of the registrants most recently completed second fiscal quarter,was$885,676,775.For purposes of this response,the registrant has assumed that
33、its directors,executive officers,and beneficial owners of 5%or more of its Common Stock are the affiliates of the registrant.Indicate the number of shares outstanding of each of the registrants classes of common stock as of the latest practicable date.Class Outstanding at January 24,2009 Common Stoc
34、k,$.008 par value 35,998,470 Documents Incorporated by Reference:Portions of the Registrants definitive Proxy Statement for its 2009 Annual Meeting of Shareholders are incorporated by reference into Part III hereof.iTRACTOR SUPPLY COMPANY INDEX Form 10-K Report Item no.PageForward-Looking Statements
35、.ii PART I.1 1.Business.1 1A.Risk Factors.6 1B.Unresolved Staff Comments.9 2.Properties.9 3.Legal Proceedings.10 4.Submission of Matters to a Vote of Security Holders.11 PART II 5.Market for Registrants Common Equity,Related Stockholder Matters,and Issuer Purchases of Equity Securities.12 6.Selected
36、 Financial Data.14 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.167A.Quantitative and Qualitative Disclosures About Market Risk.31 8.Financial Statements and Supplementary Data.32 9.Changes in and Disagreements with Accountants on Accounting and Financial Di
37、sclosure.54 9A.Controls and Procedures.54 9B.Other Information.55 PART III 10.Directors,Executive Officers and Corporate Governance.56 11.Executive Compensation.56 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.56 13.Certain Relationships and Relate
38、d Transactions,and Director Independence.56 14.Principal Accountant Fees and Services.57 PART IV 15.Exhibits,Financial Statement Schedules.57 iiFORWARD-LOOKING STATEMENTS OR INFORMATION This Form 10-K and statements included or incorporated by reference in this Form 10-K include certain historical a
39、nd forward-looking information.The forward-looking statements included 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 ex
40、pect or anticipate will or may occur in the future,including such things as future capital expenditures(including their amount and nature),business strategy,expansion and growth of the business operations and other such matters are forward-looking statements.To take advantage of the safe harbor prov
41、ided 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.These factors include the impact of the current economic cycle on consumer spending,weather factors,operating factors
42、 affecting customer satisfaction,consumer debt levels,inflation,pricing and other competitive factors,the ability to attract,train and retain qualified employees,the ability to manage growth and identify suitable locations and negotiate favorable lease agreements on new and relocated stores,the timi
43、ng and acceptance of new products in the stores,the mix of goods sold,the continued availability of favorable credit sources,capital market conditions in general,the ability to increase sales at existing stores,the ability to retain vendors,reliance on foreign suppliers,management of our information
44、 systems and the seasonality of our business and those described in Item 1A.“Risk Factors.”Forward-looking statements are based on currently available information and are based on our current expectations and projections about future events.We undertake no obligation to release publicly any revision
45、s to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.1PART IItem 1.BusinessOverviewTractor Supply Company is the largest operator of retail farm and ranch stores in the United States and is focused on supp
46、lying the lifestyle needs of recreational farmers and ranchers and those who enjoy the rural lifestyle,as well as tradesmen and small businesses.We operate retail stores under the names Tractor Supply Company and Dels Farm Supply and operate a website under the name TractorS.References to our websit
47、e do not constitute incorporation by reference of the information contained on the website.Our stores are located in towns outlying major metropolitan markets and in rural communities and offer the following comprehensive selection of merchandise:?Equine,pet and animal products,including items neces
48、sary for their health,care,growth and containment;?Maintenance products for agricultural and rural use;?Hardware and tool products;?Seasonal products,including lawn and garden power equipment;?Truck and towing products;and?Work/recreational clothing and footwear for the entire family.Our Tractor Sup
49、ply stores typically range in size from 15,500 square feet to 18,500 square feet of inside selling space and additional outside selling space.We are developing stores using several standard prototypes as well as existing building structures.Our wholly-owned subsidiary,Dels Farm Supply,LLC(“Dels”),wh
50、ich operated 28 stores as of December 27,2008 primarily in the Pacific Northwest,offers a wide selection of products(primarily in the equine,pet and animal category)tailored to those who enjoy the rural lifestyle.Dels stores currently range in size from approximately 2,000 to 6,000 square feet of in
51、side selling space plus additional outside and covered/sheltered selling space.Tractor Supply Company has one reportable industry segment farm and ranch retail sales,both at our retail locations and online.At December 27,2008,we operated 855 retail farm and ranch stores in 44 states.Seasonality and
52、Weather Our business is seasonal.Historically,our sales and profits have been the highest in the second and fourth fiscal quarters of each year due to the sale of seasonal products.Unseasonable weather,excessive precipitation,drought,and early or late frosts may also affect our sales.We believe,howe
53、ver,that the impact of adverse weather conditions is somewhat mitigated by the geographic dispersion of our stores.We experience our highest inventory and accounts payable balances during the first fiscal quarter each year for purchases of seasonal products in anticipation of the spring selling seas
54、on and again during the third fiscal quarter in anticipation of the winter selling season.Business Strategy We believe our sales and earnings growth is a result of focused execution of our business strategy,which includes the following key components:Market Niche We have identified a specialized mar
55、ket niche:supplying the lifestyle needs of recreational farmers and ranchers and those who enjoy the rural lifestyle(which we refer to as the“Out Here”lifestyle),as well as tradesmen and small businesses.By focusing our product mix on these core customers,we believe we are differentiated from genera
56、l merchandise,home center and other specialty retailers.2Customer Service We are committed to providing our customers a high level of in-store service through our motivated,well-trained store employees.We believe the ability of our store employees to provide friendly,responsive and seasoned advice h
57、elps to promote strong customer loyalty and repeat shopping.As such,we seek to provide our store employees with decision-making authority,product knowledge and training to enable them to meet our customers needs.We endeavor to staff our stores with courteous,highly motivated employees and devote con
58、siderable resources to training store employees,often in cooperation with our vendors.Our training programs include(i)a full management training program which covers all aspects of our operations,(ii)product knowledge modules produced in conjunction with key vendors,(iii)frequent management skills t
59、raining classes,(iv)semi-annual store manager meetings with vendor product presentations,(v)vendor sponsored in-store training programs and(vi)ongoing product information updates from our management headquarters,the Store Support Center.We seek to hire and train store employees with farming and ranc
60、hing backgrounds,with particular emphasis on general maintenance,equine and welding.In fiscal 2007,we established our first online shopping site,TractorS.The availability of many of our products online provides our customers the ability to purchase products and have them shipped to their homes or of
61、fices.This capability further enhances customer service and extends our market to areas where retail stores are not currently located.We offer proprietary,private label credit cards for individuals and business customers.In addition,we accept cash,checks,debit cards,Visa,MasterCard,American Express
62、and Discover credit cards and gift cards.Store Environment Our stores are designed and managed to make shopping an enjoyable experience and to maximize sales and operating efficiencies.Stores utilize several layouts,designed to provide an open environment,optimal product placement and visual display
63、 locations.In addition,these layouts allow for departmental space to be easily reallocated and visual displays to be easily changed for seasonal products and promotions.Display and product placement information is sent to stores weekly to ensure quality and uniformity among the stores.Informative si
64、gns are located throughout each store to assist customers with purchasing decisions and merchandise location by comparison of“good,better,best”qualities,clear pricing and useful information regarding product benefits and suggestions for appropriate accessories.The general uniformity of our store lay
65、outs and visual displays afford our customers a feeling of familiarity and enhances the shopping experience.To further enhance the shopping experience,all of our store employees wear highly visible red vests,aprons or smocks and nametags,and our customer service and checkout counters are convenientl
66、y located.MerchandisingWe offer a differentiated assortment of products for our customers.Our broad product assortment is tailored to meet the regional and geographic needs of our markets,as well as the physical store size.Our full line of product offerings is supported by a strong in-stock inventor
67、y position with an average of 12,500 to 15,000 unique products per store.No one product accounted for more than 10%of our sales during 2008.Our stores carry a wide selection of high quality,nationally recognized,name brand merchandise.We also market a growing list of products under our“private-label
68、 programs,”i.e.products manufactured by a number of vendors at our direction and specifically for our sole benefit.The trademarks in the private label brand names are owned by us with the exception of a very limited number of brands over which we have sole control but have not yet opted to own(“cont
69、rol brands”).Our private label brands include:?Masterhand and JobSmart(tools and tool chests)?Dumor and Producers Pride(livestock feed)3?Retriever and Paws n Claws(pet foods)?Royal Wing(bird feeding supplies)?Milepost(equine products)?Groundwork(lawn and garden supplies)?Huskee(outdoor power equipme
70、nt)?Countyline(livestock,farm and ranch equipment)?Traveller(truck/automotive products)?C.E.Schmidt(apparel and footwear)?Bit&Bridle(apparel)?Red Shed(gifts and collectibles)Our control brands include Morgan Creek(lifestyle clothing)and Farm Hand(air compressors).We believe that the availability of
71、top quality private label products at great prices provides superior value for our customers,a strategic advantage for us,and positions us as a destination store.The following chart indicates the average percentages of sales represented by each of our major product categories during fiscal 2008,2007
72、 and 2006.Percent of Sales Product Category 20082007(a)2006(a)Livestock and Pet.37%34%33%Seasonal Products.24 25 26 Hardware and Tools.14 15 15 Clothing and Footwear.10 10 9 Truck and Towing.9 9 9 Agriculture.6 7 8 100%100%100%(a)Reclassified to conform with current year presentation.Purchasing and
73、Distribution We offer a differentiated assortment of products that are sourced through domestic and international vendors for those seeking to enjoy the“Out Here”lifestyle.Our business is not dependent upon any one vendor or particular group of vendors.We purchase our products from a core group of a
74、pproximately 850 vendors,with no one vendor representing more than 10%of our purchases during fiscal 2008.Approximately 250 vendors accounted for approximately 90%of our purchases during fiscal 2008.We have not experienced any significant difficulty in obtaining satisfactory alternative sources of s
75、upply for our products and we believe that adequate sources of supply exist at substantially similar costs for substantially all of our products.We have no material long-term contractual commitments with any of our vendors.We maintain a dedicated inventory management team to focus exclusively on all
76、 replenishment and forecasting functions.This centralized direction permits our buying teams to focus more strategic attention toward vendor line reviews,assortment planning and testing of new products and programs.Through the combined efforts of these teams,we have improved our overall inventory pr
77、oductivity and in-stock position.Over 97%of our purchase orders are transmitted through an electronic data interchange(EDI)system,and approximately 93%of merchandise vendor invoices are transmitted through EDI.We are expanding the percentage of vendors who electronically transmit invoices and increa
78、sing the amount of sales history transmitted.We currently operate a distribution network for supplying our stores with merchandise and in fiscal 2008 our stores received approximately 64%of our merchandise through this network.Our six distribution centers are located in Indiana,Georgia,Maryland,Texa
79、s,Nebraska,and Washington,representing total distribution capacity of 2.9 million square feet.This capacity increased by 4approximately 347,000 square feet in 2008 due to an expansion of our Waco,Texas distribution center.In 2009,we are not planning any additional distribution center square footage
80、as we concentrate on increasing the utilization of our existing space.We manage our inbound transportation activity in-house through the use of a web-based transportation management system.We outsource the operation of our dedicated fleet to two third-party logistics providers and utilize several co
81、mmon carriers as required.The third-party logistics providers are responsible for managing drivers and tractors contracted to us.We control our transportation costs through the monitoring of transportation routes and scheduling of deliveries and backhauls while minimizing empty miles.MarketingWe uti
82、lize an everyday low prices strategy to consistently offer our products at competitive prices complemented by promotions to enhance peak selling seasons.We regularly monitor prices at competing stores and adjust our prices as appropriate.We believe that by avoiding a sale-oriented”marketing strategy
83、,we attract customers on a regular basis rather than only in response to promotional sales.To generate store traffic and position ourselves as a destination store,we promote broad selections of merchandise,primarily advertised at our regular everyday low price,with printed color circulars.We also ru
84、n periodic special events promoted through circulars and direct mail advertising.We supplement our print marketing programs and further position our brand with national cable and local television advertising in select markets.Due to the geographic dispersion of our stores,the use of national cable a
85、dvertising is generally more cost-effective and additionally serves to promote our stores prior to entering a new market.Due to the relatively small size of our stores,increased traffic in the store ensures increased exposure to our products.Our vendors are committed to helping us promote our brand
86、and position ourselves as a destination store.Our vendors provide assistance with product presentation and rack design,brochures,point-of-purchase materials for customers education and product education for our employees.We also receive funding through contributions and incentives on purchases to pr
87、omote new stores and earn rebates from vendors on product purchases based on volume.CompetitionWe operate in a competitive market.The principal competitive factors include location of stores,price and quality of merchandise,in-stock consistency,merchandise assortment and presentation and customer se
88、rvice.We compete with general merchandise retailers,home center retailers and other specialty and discount retailers,as well as independently owned retail farm and ranch stores,numerous privately-held regional farm store chains and farm cooperatives.Some of these competitors are units of national or
89、 regional chains and may have substantially greater resources and financial capacities than we do.However,we believe we have successfully differentiated ourselves from these entities by focusing on our specialized market niche.Management and EmployeesAs of December 27,2008,we employed approximately
90、7,200 full-time and approximately 5,600 part-time employees.We also employ additional part-time employees during peak periods.We are not party to any collective bargaining agreements.Our store operations are organized by location into eight regions.Each region is led by a regional manager and the re
91、gion is further organized into districts,which are led by a district manager.Our regional and district managers,store managers and other distribution and support personnel have contributed significantly to our performance.We have an internal advisory board comprised of store managers.This group brin
92、gs a grassroots perspective to operational initiatives and generates chain-wide endorsement of proposed“best-practice”solutions.Additionally,we are committed to a continuous improvement program called Tractor Value System(“TVS”).TVS is a commitment to provide,through team member engagement,a busines
93、s management system that emphasizes 5continuous improvement by embracing change of current practices to reduce cost,shorten lead times,and drive innovation.We have implemented numerous TVS project teams(comprised of employees from all areas of our operations)to evaluate key operations and implement
94、process changes that will both improve efficiency and strengthen controls.Our management encourages the participation of all employees in decision-making,regularly solicits input and suggestions from our employees and responds to the suggestions.All of our employees participate in one of various inc
95、entive programs,which provide the opportunity to receive additional compensation based upon team and/or Company performance.We also provide our employees the opportunity to participate in an employee stock purchase plan and a 401(k)retirement plan(we contribute to the 401(k)plan solely through a cas
96、h match).Additionally,we share in the cost of health insurance provided to our employees,and employees receive a discount on merchandise purchased at our stores.We encourage a“promote from within”environment when internal resources permit.We also provide internal leadership development programs desi
97、gned to mentor our high potential employees for continued progress and believe we have satisfactory relationships with our employees.Our district managers and store managers have an average length of service of approximately five years.Management believes internal promotions,coupled with the hiring
98、of individuals with previous retail experience,will provide the management structure necessary to support our planned store growth.Management Information and Control Systems We have invested considerable resources in our management information and control systems to ensure superior customer service,
99、manage the purchase and distribution of our merchandise and improve our operating efficiencies.Our management information and control systems include a point-of-sale system,a supply chain management and replenishment system,a radio frequency and voice picking system in the distribution centers,a ven
100、dor purchase order control system and a merchandise presentation system.These systems are integrated through an enterprise resource planning(“ERP”)system.This ERP system tracks merchandise from initial order through ultimate sale and interfaces with our financial systems.We continue to evaluate and
101、improve the functionality of our systems to maximize their effectiveness.Such efforts include ongoing hardware and software evaluations and upgrades to support optimal software configurations and application performance.We plan to upgrade our information technology and implement other efficiency-dri
102、ving system enhancements(including a new point-of-sale system)in 2009.These efforts are directed toward constantly improving the overall business processes and achieving the most efficient and effective use of the systems to manage our operations while ensuring a secure and reliable environment.Grow
103、th Strategy Our current and long-term growth strategy is to(1)expand geographic market presence through opening new retail stores,(2)enhance financial performance through same-store sales increases,achieved through targeted merchandising programs with an“everyday low prices”philosophy and supported
104、by strong customer service,(3)enhance product margin through assortment management,vendor management,sourcing and optimization of transportation and distribution costs,(4)leverage operating costs,especially advertising,distribution and corporate overhead,(5)expand market opportunities via internet s
105、ales,and(6)expand through selective acquisition,as such opportunities arise,to enhance penetration into new and existing markets as a complementary strategy to organic growth.We have experienced considerable sales growth over the last five years,with a compounded annual growth rate of approximately
106、15.4%.We project an increase in our unit count of approximately 8 to 9%for 2009.We believe this unit count increase will contribute substantially to our future growth.The acquisition of Dels enabled us to establish an initial presence in the Pacific Northwest,primarily in Washington and develop a sm
107、aller market format.We operated 855 retail farm and ranch stores in 44 states as of December 27,2008 and have plans to open 70 to 80 stores in fiscal 2009.We have developed a proven method for selecting store sites and have identified over 575 potential 6additional markets for new Tractor Supply sto
108、res(excluding Dels)in the United States.We have slowed the growth of Dels as we refine the concept,and we do not plan to open any additional Dels stores in fiscal 2009.Additional Information We file reports with the Securities and Exchange Commission(“SEC”),including Annual Reports on Form 10-K,quar
109、terly reports on Form 10-Q,current reports on Form 8-K and other reports as required.The public may read and copy any materials the Company files with the SEC at the SECs Public Reference Room at 100 F Street,NE,Washington,DC 20549.The public may obtain information on the operation of the Public Ref
110、erence Room by calling the SEC at 1-800-SEC-0330.We are an electronic filer and the SEC maintains an Internet site at sec.gov that contains the reports,proxy and information statements,and other information filed electronically.We make available free of charge through our Internet website,TractorS,o
111、ur Annual Report on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.The information provided on our website is not part of this report,a
112、nd is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this report.Our code of ethics,which is applicable to all of our employees,including our Chief Executive Officer,Chief Financial Officer and Controller,along with our Corporate Gov
113、ernance Guidelines and the charters of our Audit,Compensation,Corporate Governance and Nominating Committees of our Board of Directors,is posted on our website.Item 1A.Risk FactorsOur business faces many risks.These risks include those described below and may include additional risks and uncertainti
114、es not presently known to us or that we currently deem immaterial.If any of the events or circumstances described in the following risk factors occur,our business,financial condition or results of operations may suffer,and the trading price of our common stock could decline.These risk factors should
115、 be read in conjunction with the other information in this Form 10-K.General economic conditions may adversely affect our financial performance.Our results of operations may be sensitive to changes in overall economic conditions that impact consumer spending,including discretionary spending.Future e
116、conomic conditions affecting disposable consumer income such as employment levels,business conditions,interest rates,tax rates,fuel and energy costs,higher labor and healthcare costs,the impact of natural disasters or acts of terrorism,and other matters could reduce consumer spending or cause consum
117、ers to shift their spending to lower-priced competitors.A general reduction in the level of discretionary spending or shifts in consumer discretionary spending to our competitors could adversely affect our growth and profitability.Additionally,changes in the mix of products sold to a mix with a lowe
118、r overall gross margin or other increased cost of sales,along with slower inventory turnover and greater markdowns on inventory,could adversely affect our operations and operating results.Purchase price volatility,including inflationary and deflationary pressures may adversely affect our financial p
119、erformance.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,steel,gr
120、ain,petroleum,corn,soybean and other commodities as well as transportation services.Moreover,in the last few years,energy prices have risen dramatically,which has resulted in increased fuel costs for our business and utility costs for our stores.While the cost of certain store products and services
121、have decreased during the latter half of 2008,if the cost of these products and services resume their increase,consumer demand may fall and/or we may not be able to pass all such increases on to our customers and,as a result,sales and/or gross margins could decline.Our strategy is to reduce or mitig
122、ate the effects of inflation and deflation principally by taking advantage of vendor incentive programs,economies of scale from increased volume of purchases,increasing retail prices and selectively buying from the most competitive vendors without sacrificing quality.Due to the competitive environme
123、nt,such conditions have and may continue to adversely impact our financial performance.7There is no assurance that we will be able to continue to increase sales at our existing stores.We experience fluctuations in our same-store sales,which are defined as stores which have completed twelve months of
124、 sales.Our success depends,in part,upon our ability to improve sales at our existing stores.Various factors affect same-store sales,including the general retail sales environment,our ability to efficiently source and distribute products,changes in our merchandise mix,competition,current economic con
125、ditions,the timing of release of new merchandise and promotional events,the success of marketing programs and weather conditions.These factors may cause our same-store sales results to differ materially from prior periods and from expectations.Past same-store sales are not necessarily an indication
126、of future results,and there can be no assurance that our same-store sales will not decrease in the future.Any failure to meet the same-store sales expectations of investors and security analysts in one or more future periods could adversely affect our results of operations and result in a reduction
127、in the market price of our common stock.Our failure to effectively manage growth could impair our business.Even if we are able to implement,to a significant degree,our key business strategy of expanding our store base,we may experience managerial or operational problems,which may prevent any signifi
128、cant increase in profitability or negatively impact our cash flow.To manage our planned expansion,we must ensure the continuing adequacy of our existing systems,controls and procedures,including product distribution facilities,store management,financial controls and information systems.There can be
129、no assurance that we will be able to achieve our planned expansion,that the new stores will be effectively integrated into our existing operations or that such stores will be profitable.Capital requirements for growth may not be available.The construction and opening or acquisition of new stores and
130、 the development of new production and distribution facilities,along with the remodeling and renovation of existing stores,require significant amounts of capital.In the past,our growth has been funded primarily through bank borrowings and internally generated cash flow.Disruptions in the capital and
131、 credit markets,as have been experienced during 2008,could adversely affect the ability of the banks to meet their commitments.Our access to funds under the credit facility is dependent on the ability of the banks that are parties to the facility to meet their funding commitments.Those banks may not
132、 be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time.Longer term disruptions in the capital and credit markets as a result of uncertainty,changing or increase
133、d regulation,reduced alternatives,or failures of significant financial institutions could adversely affect our access to liquidity needed for our business.Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other f
134、unding for our business needs can be arranged.Such measures could include deferring capital expenditures,and reducing or eliminating future share repurchases or other discretionary uses of cash.Failure to open new stores in the manner currently contemplated could adversely affect our financial perfo
135、rmance.An integral part of our business strategy includes the expansion of our base of stores by opening new stores.This expansion strategy is dependent on our ability to find suitable locations,and we face competition from many retailers for such sites.If we are unable to implement this strategy,ou
136、r ability to increase our sales,profitability,and cash flow couldbe impaired significantly.To the extent that we are unable to open new stores in the manner we anticipate(due to site approval or unforeseen delays in construction),our sales growth may be impeded.New stores may negatively impact our r
137、esults.There can be no assurance that our new store openings will be successful or result in greater sales and profitability for the Company.New stores build their sales volumes and refine their merchandise selection over time and,as a result,generally have lower gross margins and higher operating e
138、xpenses as a percentage of sales than our more mature stores.As we continue to open new stores and the new stores become a larger percentage of our store base,there may be a negative impact on our results from a lower contribution margin of these new stores until their sales levels ramp to chain ave
139、rage,as well as the impact of related pre-opening costs.Competition in our industry may hinder our ability to execute our business strategy and adversely affect our operations.We operate in a very competitive market.The principal competitive factors include location of stores,price and quality of me
140、rchandise,in-stock consistency,merchandise assortment and presentation,and customer service.We believe we have successfully differentiated ourselves from general merchandise,home center retailers and other specialty and discount retailers by focusing on our specialized market niche.However,we do fac
141、e competition from these entities,as well as competition from independently-owned retail farm and ranch stores,several privately-held regional farm store 8chains and farm cooperatives.Some of our competitors are units of national or regional chains that have substantially greater financial and other
142、 resources.Weather conditions may have a significant impact on our financial results.Historically,weather conditions have had a significant impact on our operating results.Weather conditions affect the demand for,and in some cases the supply of,products,which in turn has an impact on prices.In recen
143、t years,we have experienced unusually severe weather conditions,including snow and ice storms,flood and wind damage,hurricanes,tornadoes and droughts in some states.Weather conditions also directly affect the demand for seasonal products,particularly during the winter heating season.Accordingly,the
144、weather can have a material effect on our financial condition and results of operations.There are certain risks associated with the seasonal nature of our business.Our working capital needs and borrowings generally peak in our first and third fiscal quarters because lower sales are generated while e
145、xpenses are incurred in preparation for the spring and winter selling seasons.If cash on hand and borrowings under existing credit facilities are ever insufficient to meet the seasonal needs or if cash flow generated during the spring and winter is insufficient to repay associated borrowings on a ti
146、mely basis,this seasonality could have a material adverse effect on our business.There is no assurance that our merchandising initiatives and marketing emphasis will provide expected results.We believe our past performance has been based on,and future success will depend upon,in part,the ability to
147、develop and execute merchandising initiatives with effective marketing.There is no assurance that we will be successful,or that new initiatives will be executed in a timely manner to satisfy our customers needs or expectations.Failure to execute and promote such initiatives in a timely manner could
148、harm our ability to grow the business and could have a material adverse effect on our results of operations and financial condition.Additionally,our success depends on our ability to anticipate and respond in a timely manner to changing customer demand and preferences for merchandise.If we misjudge
149、the market,we may significantly overstock unpopular products and be forced to take significant inventory markdowns.Shortages of key items could also have a materially adverse impact on operating results.We face risks associated with vendors from whom our products are sourced.The products we sell are
150、 sourced from a variety of domestic and international vendors.All of our vendors must comply with applicable laws,including labor and environmental laws,and otherwise be certified as meeting required vendor standards of conduct.We rely on foreign manufacturers for various products that we sell.In ad
151、dition,many of our domestic suppliers purchase a portion of their products from foreign sources.We rely on long-term relationships with our suppliers but have no long-term contracts with such suppliers.Our future success will depend in large measure upon our ability to maintain our existing supplier
152、 relationships or to develop new ones.This reliance increases the risk of inadequate and untimely supplies of various products due to local political,economic,social,or environmental conditions,transportation delays,restrictive actions by foreign governments,or changes in United States laws and regu
153、lations affecting imports or domestic distribution.Our vendors may be forced to reduce their production,shut down their operations or file for bankruptcy protection,which in some cases would make it difficult for us to serve the markets needs and could have a material adverse affect on our business.
154、As an importer,our business is subject to the risks generally associated with doing business abroad,such as foreign governmental regulations,economic disruptions,delays in shipments,transportation capacity and costs,currency exchange rates and changes in political or economic conditions in countries
155、 from which we purchase products.If any such factors were to render the conduct of business in particular countries undesirable or impractical or if additional United States quotas,duties,taxes or other charges or restrictions were imposed upon the importation of our products in the future,our finan
156、cial condition and results of operations could be materially adversely affected.Our failure to attract and retain qualified employees could adversely affect our financial performance.Our ability to continue expanding operations depends on our ability to attract and retain a large and growing number
157、of qualified employees.Our ability to meet labor needs while controlling wage and related labor costs is subject to numerous external factors,including the availability of a sufficient number of qualified persons in the work force,unemployment levels,prevailing wage rates,changing demographics,healt
158、h and other insurance costs and changes in employment legislation.If we are unable to locate,attract or retain qualified personnel,or if costs of labor or related costs increase significantly,our financial performance could be adversely affected.We may be subject to product liability and other claim
159、s in the ordinary course of business.Our business involves a risk of product liability and other claims in the ordinary course of business.We maintain general liability insurance with a$250,000 deductible for each occurrence and a$29,500,000 aggregate retention 9applicable to all general liability a
160、nd workers compensation claims.We also maintain umbrella limits above the primary general liability and product liability cover.In many cases,we have indemnification rights against the manufacturers of the products and their products liability insurance.Our ability to recover under such insurance or
161、 indemnification arrangements is subject to the financial viability of the insurers and manufacturers and the specific allegations of a claim.No assurance can be given that our insurance coverage or the manufacturers indemnity will be available or sufficient in any claims brought against us.Legal pr
162、oceedings could materially impact our results.From time to time,we are party to legal proceedings including matters involving personnel and employment issues,personal injury,intellectual property,and other proceedings arising in the ordinary course of business.Our results could be materially impacte
163、d by the decisions and expenses related to pending or future proceedings.If we experience difficulties with our management information systems,our financial performance may be adversely affected.We depend on management information systems for many aspects of our business.We could be materially adver
164、sely affected if our management information systems are disrupted or if we are unable to improve,upgrade,maintain and expand systems,particularly in light of the contemplated continued store growth.Effective tax rate changes and results of examinations by taxing authorities could materially impact o
165、ur results.Our future effective tax rates could be adversely affected by the earnings mix being lower than historical results in states where we have lower statutory rates and higher than historical results in states where we have higher statutory rates,by changes in the measurement of our deferred
166、tax assets and liabilities,or by changes in tax laws or interpretations thereof.In addition,we are subject to periodic audits and examinations by the Internal Revenue Service(IRS)and other state and local taxing authorities.Our results could be materially impacted by the determinations and expenses
167、related to these and other proceedings by the IRS and other state and local taxing authorities.Failure to maintain an effective system of internal control over financial reporting could materially impact our business and results.The Companys management is responsible for establishing and maintaining
168、 adequate internal control over financial reporting.An internal control system,no matter how well designed and operated,can provide only reasonable,not absolute,assurance that the objectives of the control system are met.Further,the design of a control system must reflect the fact that there are res
169、ource constraints,and the benefits of controls must be considered relative to their costs.Because of the inherent limitations in all internal control systems,internal control over financial reporting may not prevent or detect misstatements.Any failure to maintain an effective system of internal cont
170、rol over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud,and could expose us to litigation or adversely affect the market price of our common stock.Item 1B.Unresolved Staff CommentsNone.Item 2.PropertiesAt December 27,2
171、008,we operated 855 stores in 44 states.We lease more than 93%of our stores,two of our six distribution centers and our management headquarters.Store leases typically have initial terms of between 10 and 15 years,with two to four renewal periods of five years each,exercisable at our option.No single
172、 lease is material to our operations.10Following is a count of our store locations by state:StateNumberof Stores StateNumberof Stores Texas 113 Kansas 11 Ohio 68 Missouri 11 Michigan 62 Iowa 10 Tennessee 55 Louisiana 9 Pennsylvania 47 Maryland 8 New York 45 Minnesota 8 Florida 36 New Jersey 7 Georgi
173、a 35 North Dakota 7 Indiana 35 New Hampshire 6 North Carolina 35 Connecticut 5 Kentucky 31 South Dakota 5 Virginia 28 Mississippi 4 Washington 21 Vermont 4 Oklahoma 20 Hawaii 3 Alabama 16 Massachusetts 3 West Virginia 16 Oregon 3 California 15 Delaware 2 South Carolina 15 Maine 2 Wisconsin 14 Idaho
174、1 Illinois 13 Montana 1 Nebraska 12 New Mexico 1 Arkansas 11 Rhode Island 1 855 Item 3.Legal ProceedingsWe are involved in various litigation matters arising in the ordinary course of business.We expect these matters will be resolved without material adverse effect on our consolidated financial posi
175、tion or results of operations.Any estimated loss related to such matters has been adequately provided in accrued liabilities to the extent probable and reasonably estimable.It is possible,however,that future results of operations for any particular quarterly or annual period could be materially affe
176、cted by changes in circumstances relating to these proceedings.11Item 4.Submission of Matters to a Vote of Security HoldersNo matter was submitted to a vote of our stockholders during the fourth quarter of our fiscal year ended December 27,2008.Executive Officers of the RegistrantPursuant to General
177、 Instruction G(3)of Form 10-K,the following list is included as an unnumbered item in Part I of this Report in lieu of being included in the Proxy Statement for the Annual Meeting of Stockholders to be held on May 7,2009.The following is a list of the names and ages of all executive officers of the
178、registrant,indicating all positions and officeswith the registrant held by each such person and each persons principal occupations and employment during at least the past five years:Name Position AgeJames F.Wright.Chairman of the Board and Chief Executive Officer 59 Anthony F.Crudele.Executive Vice
179、President-Chief Financial Officer and Treasurer 52 Gregory A.Sandfort.President and Chief Merchandising Officer 53 Stanley L.Ruta.Executive Vice President and Chief Operating Officer 57 Kimberly D.Vella.Senior Vice President-Human Resources 42 _ James F.Wright has served as Chairman of the Board and
180、 Chief Executive Officer of the Company since February 2009,and prior to that time served as Chairman of the Board,President and Chief Executive Officer from November 2007 to February 2009,and as President and Chief Executive Officer of the Company from October 2004 to November 2007.Mr.Wright previo
181、usly served as President and Chief Operating Officer of the Company from October 2000 to October 2004.Mr.Wright has served as a director of the Company since 2002.Anthony F.Crudele has served as Executive Vice President-Chief Financial Officer and Treasurer since January 2007,after having served as
182、Senior Vice President-Chief Financial Officer and Treasurer of the Company since November 2005.Mr.Crudele previously served as Chief Financial Officer at Gibson Guitar from August 2003 to September 2005,as Chief Financial Officer of Xcelerate Corp.from 2000 to January 2003,and at The Sports Authorit
183、y from 1989 through 1999(serving as Chief Financial Officer from 1996 through 1999).Gregory A.Sandfort has served as President and Chief Merchandising Officer of the Company since February 2009,and prior to that time served as Executive Vice President-Chief Merchandising Officer of the Company since
184、 November 2007.Mr.Sandfort previously served as President and Chief Operating Officer at Michaels Stores,Inc.from March 2006 to August 2007 and as Vice President General Merchandise Manager at Michaels Stores,Inc.from January 2004 to February 2006.Mr.Sandfort served as Vice Chairman and Co-Chief Exe
185、cutive Officer of Kleinerts Inc.(d/b/a Buster Brown)from 2002 to 2003 and as a Vice President,General Merchandise Manager for Sears,Roebuck and Co.from 1998 to 2002.Stanley L.Ruta has served as Executive Vice President and Chief Operating Officer of the Company since February 2009,and prior to that
186、time served as Executive Vice President-Store Operations since January 2007,after having served as Senior Vice President-Store Operations since June 2000 and as Vice President-Store Operations of the Company since 1994.Kimberly D.Vella has served as Senior Vice President-Human Resources of the Compa
187、ny since January 2007,after having served as Vice President-Human Resources of the Company since October 2001.12PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters,and Issuer Purchases of Equity SecuritiesTractor Supply Companys common stock trades on The Nasdaq Global Sel
188、ect Market under the symbol“TSCO”.The table below sets forth the high and low sales prices of our common stock as reported by The Nasdaq Global Select market for each fiscal quarter of the periods indicated:Price Range 2008 2007 High Low High LowFirst Quarter$43.25$28.01$54.16$44.87 Second Quarter$4
189、2.07$28.38$57.70$49.91 Third Quarter$47.50$26.70$53.55$44.20 Fourth Quarter$45.40$31.69$49.25$35.29 As of January 31,2009,the approximate number of record holders of our common stock was 140(excluding individual participants in nominee security position listings),and the estimated number of benefici
190、al holders of our common stock was 30,000.Issuer Purchases of Equity Securities We have a share repurchase program which provides for the repurchase of up to$400 million of our outstanding common stock through December 2011.In August 2008,our Board of Directors authorized a$200 million increase to t
191、he existing$200 million share repurchase program and extended the program term from February 2010 to December 2011.Stock repurchase activity during fiscal 2008 is set forth in the table below:PeriodTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part
192、 of Publicly Announced Plans or Programs Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs First Quarter.77,025$37.00 77,025$47,199,295 Second Quarter.738,368 33.80 738,368 22,263,381 Third Quarter.464,812 31.61 464,812 207,586,268(a)Fourth Quarter:9/28/08 10/25/08
193、.121,131 36.12 121,131 203,214,611 10/26/08 11/22/08.136,378 35.35 136,378 198,397,871 11/23/08 12/27/08.60,400 35.93 60,400 196,229,233 317,909 35.75 317,909 196,229,233 As of December 27,2008.1,598,114$33.71 1,598,114$196,229,233We expect to implement the balance of the repurchase program through
194、purchases made from time to time either in the open market or through private transactions,in accordance with regulations of the SEC.We have not declared any cash dividends during the two most recent fiscal years.Our Board of Directors authorized a share repurchase strategy,subject to a number of fa
195、ctors,including price,corporate and regulatory requirements,capital availability and other market conditions.Any future declaration of dividends or additional share repurchase programs will be subject to the discretion of our Board of Directors and subject to our results of operations,financial cond
196、ition,cash requirements and other factors deemed relevant by our Board of Directors.(a)Reflects Board approval in August 2008 to increase program by$200 million.13STOCK PERFORMANCE GRAPHThis performance graph shall not be deemed“filed”for purposes of Section 18 of the Securities Exchange Act of 1934
197、,as amended(the“Exchange Act”)or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Tractor Supply Company under the Securities Act of 1933,as amended,or the Exchange Act.The following graph compares the cumulative total
198、 stockholder return on our Common Stock from December 27,2003 to December 27,2008(the Companys fiscal year-end)with the cumulative total returns of the S&P 500 Index and the S&P Retail Index over the same period.The comparison assumes that$100 was invested on December 27,2003 in our Common Stock and
199、 in each of the foregoing indices.The historical stock price performance shown on this graph is not necessarily indicative of future performance.507090110130150200320042005200620072008Tractor SupplyCompanyS&P 500S&P Retail12/27/0312/25/0412/31/0512/30/0612/29/0712/27/08Tractor Supply Company$100.00$
200、92.25$135.92$114.79$90.78$88.63 S&P 500$100.00$110.42$113.91$129.42$134.91$79.64 S&P Retail Index$100.00$121.77$122.31$133.76$109.89$72.71 14Item 6.Selected Financial DataFIVE YEAR SELECTED FINANCIAL AND OPERATING HIGHLIGHTS The following selected financial data are derived from the consolidated fin
201、ancial statements of Tractor Supply Company.Our fiscal year includes 52 or 53 weeks and ends on the last Saturday of the calendar year.References to fiscal year mean the year in which that fiscal year ended.Fiscal year 2005 consists of 53 weeks while all other fiscal years presented below consist of
202、 52 weeks.The following table provides summary historical financial information for the periods ended and as of the dates indicated(in thousands,except per share and selected operating data):2008 2007 2006 2005 2004 Operating Results:Net sales.$3,007,949$2,703,212$2,369,612$2,067,979$1,738,843 Gross
203、 margin.912,261 852,708 746,146 636,631 522,573 Selling,general and administrative expenses.715,961 641,603 555,834 466,167 393,841 Depreciation and amortization.60,731 51,064 42,292 34,020 27,186Income from operations.135,569 160,041 148,020 136,444 101,546 Interest expense,net.2,133 5,037 2,688 1,
204、632 1,440Income before income taxes(a).133,436 155,004 145,332 134,812 100,106 Income tax provision.51,506 58,763 54,324 49,143 36,037Net income(a).$81,930$96,241$91,008$85,669$64,069Net income per share basic(b).$2.22$2.45$2.27$2.19$1.68Net income per share assuming dilution(b).$2.19$2.40$2.22$2.09
205、$1.57Adjusted weighted average shares for dilutive earnings per share.37,464 40,100 41,060 40,980 40,689Operating Data(percent of net sales):Gross margin.30.3%31.5%31.5%30.8%30.1%Selling,general and administrative expenses.23.8%23.7%23.5%22.6%22.7%Income from operations.4.5%5.9%6.2%6.6%5.8%Net incom
206、e.2.7%3.6%3.8%4.1%3.7%Number of Stores:Beginning of year.764 676 595 515 463 New stores opened.91 89 82 65 53 New stores acquired.-16 -Closed/sold stores.-(1)(1)(1)(1)End of year.855 764 676 595 515 Number of stores relocated during year.1 12 15 18 20 Number of stores remodeled(c).3 1 3 -5 Capital e
207、xpenditures(d).$91,759$83,986$90,565$78,835$92,989 Same-store sales increase(e).1.4%3.4%1.6%5.7%9.9%Average sales per store(000s)(f).$3,703$3,762$3,699$3,772$3,568 Average transaction value.$44.55$43.60$43.12$42.03$39.83 Average number of daily transactions per store.230 239 238 245 248 Total employ
208、ees.12,800 11,600 9,800 8,700 7,200 Balance Sheet Data(at end of period):Working capital.$283,460$312,068$316,104$240,732$219,326 Total assets.1,075,997 1,057,971 998,258 803,176 661,575Long-term debt,less current portion(g).1,797 57,351 2,808 10,739 34,744 Stockholders equity.610,130 565,337 598,90
209、4 477,698 370,584 _ 15(a)In fiscal 2006,we adopted Statement of Financial Accounting Standards(“SFAS”)123(R)which lowered income before income taxesby$12.3 million,$10.6 million and$9.7 million for 2008,2007 and 2006,respectively.Net income was lowered by$7.5 million,$6.6 million and$6.1 million for
210、 2008,2007 and 2006,respectively.(b)Basic net income per share is calculated based on the weighted average number of common shares outstanding applied to net income.Diluted net income per share is calculated using the treasury stock method for options and warrants.All share and per share data have b
211、een adjusted for stock splits.(c)Reflects remodelings costing more than$150,000.(d)Includes assets acquired through capital leases.(e)Same-store sales increases are calculated on an annual basis,excluding relocations,using all stores open at least one year.(f)Average sales per store calculated based
212、 on the weighted average number of days open in the applicable period.(g)Long-term debt includes borrowings under the Companys revolving credit agreement and amounts outstanding under its capital lease obligations,excluding the current portion.16Item 7.Managements Discussion and Analysis of Financia
213、l Condition and Results of OperationsOverviewTractor Supply Company is the largest operator of retail farm and ranch stores in the United States and is focused on supplying the lifestyle needs of recreational farmers and ranchers and of those who enjoy the rural lifestyle,as well as tradesmen and sm
214、all businesses.Our stores are located in towns outlying major metropolitan markets and in rural communities and offer the following comprehensive selection of merchandise:?Equine,pet and animal products,including items necessary for their health,care,growth and containment;?Maintenance products for
215、agricultural and rural use;?Hardware and tool products;?Seasonal products,including lawn and garden power equipment;?Truck and towing products;and?Work/recreational clothing and footwear for the entire family.Our Tractor Supply stores typically range in size from 15,500 square feet to 18,500 square
216、feet of inside selling space and additional outside selling space.We are developing stores using several standard prototypes as well as existing building structures.Our wholly-owned subsidiary,Dels,which operated 28 stores as of December 27,2008 primarily in the Pacific Northwest,offers a wide selec
217、tion of products(primarily in the equine,pet and animal category)tailored to those who enjoy the rural lifestyle.Dels stores currently range in size from approximately 2,000 to 6,000 square feet of inside selling space plus additional outside and covered/sheltered selling space.Our current and long-
218、term growth strategy is to(1)expand geographic market presence through opening new retail stores,(2)enhance financial performance through same-store sales increases,achieved through targeted merchandising programs with an“everyday low prices”philosophy and supported by strong customer service,(3)enh
219、ance product margin through assortment management,vendor management,sourcing and optimization of transportation and distribution costs,(4)leverage operating costs,especially occupancy,advertising and distribution,(5)expand market opportunities via internet sales,and(6)expand through selective acquis
220、ition,as such opportunities arise,to enhance penetration into new and existing markets as a complimentary strategy to organic growth.We have experienced considerable sales growth over the last five years,with a compounded annual growth rate of approximately 15.4%.We project an increase in our unit c
221、ount of approximately 8 to 9%for 2009.We believe this unit count increase will contribute substantially to our future growth.The acquisition of Dels enabled us to establish an initial presence in the Pacific Northwest,primarily in Washington,with three additional stores in Hawaii.We operated 855 ret
222、ail farm and ranch stores in 44 states as of December 27,2008 and have plans to open 70 to 80 stores in fiscal 2009.We have developed a proven method for selecting store sites and have identified over 575 potential additional markets for new Tractor Supply stores(excluding Dels)in the United States.
223、We have slowed the growth of Dels as we refine the concept,and we do not plan to open any additional Dels stores in fiscal 2009.The net cash investment required to open a new leased retrofit store in fiscal 2008 was between$0.9 to$2.0 million and$0.9 to$1.3 million to open a new leased prototype sto
224、re.The average net cash investment for new stores opened in 2008 was$1.2 million for retrofit stores and$1.0 million for prototype stores.A majority of the cash outlay was for initial acquisition of inventory and capital expenditures(principally leasehold improvements,fixtures and equipment),and app
225、roximately$107,000 for pre-opening costs.We have placed significant emphasis on our merchandising programs,evaluating the sales and profitability of our products through detailed line reviews,review of vendor performance measures and modification of the overall product offerings.We believe these eff
226、orts,coupled with a strong marketing program and in-depth product knowledge training of our store employees,have enhanced our sales and financial performance.17Seasonality and Weather Our business is highly seasonal.Historically,our sales and profits have been the highest in the second and fourth fi
227、scal quarters of each year due to the sale of seasonal products.Unseasonable weather,excessive precipitation,drought,and early or late frosts may also affect our sales.We believe,however,that the impact of adverse weather conditions is somewhat mitigated by the geographic dispersion of our stores.We
228、 experience our highest inventory and accounts payable levels during our first fiscal quarter each year for purchases of seasonal product in anticipation of the spring selling season and again during our third fiscal quarter in anticipation of the winter selling season.InflationAlthough we cannot de
229、termine the full effect of inflation on our operations,we believe our sales and results of operations are affected by inflation.We are subject to market risk with respect to the pricing of certain products and services,which include,among other items,steel,grain,petroleum,corn,soybean and other comm
230、odities as well as transportation services.Moreover,in the last few years,energy prices have risen dramatically,which has resulted in increased fuel costs for our business and utility costs for our stores.If the cost of these products and services continues to increase,consumer demand may fall and/o
231、r we may not be able to pass all such increases on to our customers and,as a result,sales and/or gross margins could decline.Our strategy is to reduce or mitigate the effects of inflation principallyby taking advantage of vendor incentive programs,economies of scale from increased volume of purchase
232、s,increasing retail prices and selectively buying from the most competitive vendors without sacrificing quality.Due to the competitive environment,such conditions have and may continue to adversely impact our gross margin.Significant Accounting Policies and Estimates Managements discussion and analy
233、sis of our financial position and results of operations are based upon our consolidated financial statements,which have been prepared in accordance with United States generally accepted accounting principles.The preparation of these financial statements requires management to make informed estimates
234、 and judgments that affect the reported amounts of assets,liabilities,revenues and expenses and related disclosure of contingent assets and liabilities.Our financial position and/or results of operations may be materially different when reported under different conditions or when using different ass
235、umptions 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.Our significant accounting policies are disclosed in Note 1 to our Consolidated Financial Statem
236、ents.The following discussion addresses our most critical accounting policies,which are those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates.18Description Judgments and Uncertainties Effe
237、ct if Actual Results Differ From Assumptions Revenue Recognition and Sales Returns:We recognize revenue at the time the customer takes possession of merchandise or receives services.If we receive payment before the customer has taken possession of the merchandise(as per our special order and layaway
238、 programs),the revenue is deferred until the sale is complete.Revenues from the sale of gift cards are deferred and recognized upon redemption.We estimate a liability for sales returns based on a one-year rolling average of historical return trends and we believe that our estimate for sales returns
239、is an accurate reflection of future returns associated with past sales.Our estimation methodologies have been consistently applied from year to year,however,as with any estimates,refunds activity may vary from estimated amounts.We recognize a benefit for gift cards when:(i)the gift card or merchandi
240、se return card is redeemed by the customer;(ii)the likelihood of the gift card being redeemed by the customer is remote(referred to as“breakage”);or(iii)the unredeemed merchandise returns cards expire(one year from issuance).The gift card breakage rate is based upon historical redemption patterns an
241、d a benefit is recognized for unredeemed gift cards in proportion to those historical redemption patterns.We have not made any material changes in the accounting methodology used to recognize sales returns in the financial periods presented.We do not believe there is a reasonable likelihood that the
242、re will be a material change in the future estimates or assumptions we use to calculate sales returns or gift card breakage.However,if actual consumer return or gift card redemption patterns are not consistent with our estimates or assumptions,we may be exposed to losses or gains that could be mater
243、ial.A 10%change in our sales return reserve at December 27,2008,would have affected net earnings by approximately$195,000 in fiscal 2008.A 10%change in our assumptions regarding gift card breakage would have affected net earnings by approximately$315,000 in fiscal 2008.Inventory Valuation:Impairment
244、 Risk We identify potentially excess and slow-moving inventory by evaluating turn rates,historical and expected future sales trends,age of merchandise,overall inventory levels,current cost of inventory and other benchmarks.The estimated inventory valuation reserve to recognize any impairment in valu
245、e(i.e.,an inability to realize the full carrying value)is based on our aggregate assessment of these valuation indicators under prevailing market conditions and current merchandising strategies.We do not believe our merchandise inventories are subject to significant risk of obsolescence in the near
246、term.However,changes in market conditions or consumer purchasing patterns could result in the need for additional reserves.Our impairment reserve contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding forecasted consumer demand,overall
247、aging,the promotional environment,historical results and current inventory loss trends.We have not made any material changes in the accounting methodology used to recognize impairment reserves in the financial periods presented.We do not believe there is a reasonable likelihood that there will be a
248、material change in the future estimates or assumptions we use to calculate impairment.However,if assumptions regarding consumer demand or clearance potential for certain products are inaccurate,we may be exposed to losses or gains that could be material.A 10%change in our impairment reserve at Decem
249、ber 27,2008,would have affected net earnings by approximately$465,000 in fiscal 2008.19Description Judgments and Uncertainties Effect if Actual Results Differ From Assumptions Shrinkage Our stores perform physical inventories at least once a year and we have established reserves for estimating inven
250、tory shrinkage between physical inventory counts.This is done by assessing the chain-wide average shrinkage experience rate,applied to the related periods sales volumes.Such assessments are updated on a regular basis for the most recent individual store experiences.The estimated shrink rate is based
251、 on historical experience.We believe historical rates are a reasonably accurate reflection of future trends.Our shrinkage reserve contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding historical trends,loss prevention measures and new
252、merchandising strategies.We have not made any material changes in the methodology used to recognize shrinkage in the financial periods presented.We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate our shri
253、nkage reserve.However,if our estimates regarding inventory losses are inaccurate,we may be exposed to losses or gains that could be material.A 10%change in our shrinkage reserve at December 27,2008,would have affected net earnings by approximately$878,000 in fiscal 2008.Vendor Support We receive fun
254、ding from substantially all of our significant merchandise vendors for the promotion of our brand as well as the sale of their products through a variety of programs and arrangements,including guaranteed funding and volume rebate programs.The amounts received are subject to terms of vendor agreement
255、s,which have varying expiration dates ranging in duration from several months to several years.Many agreements are negotiated annually and are based on expected annual purchases of the vendors product.Vendor funding is initially deferred as a reduction of the purchase price of inventory and then rec
256、ognized as a reduction of cost of merchandise as the related inventory is sold,which is in compliance with Emerging Issues Task Force No.02-16,Accounting by a Customer(Including a Reseller)for Certain Consideration Received from a Vendor(EITF 02-16).The amount of expected funding is estimated based
257、upon initial guaranteed commitments,as well as anticipated purchase levels with applicable vendors.The estimated purchase volume and related vendor funding is based on our current knowledge of inventory levels,sales trends and expected customer demand,as well as planned new store openings and reloca
258、tions.Although we believe we can reasonably estimate purchase volume and related vendor funding,it is possible that actual results could significantly differ from estimated amounts.Our allocation methodology contains uncertainties because the calculation requires management to make assumptions and t
259、o apply judgment regarding purchasing activity,target thresholds and vendor attrition.At the end of each fiscal year,the estimated support is reconciled to the actual amounts earned based upon actual purchase activity.We do not believe there is a significant collectibility risk related to vendor sup
260、port amounts due us at the end of fiscal 2008.Although it is unlikely that there will be any significant reduction in historical levels of vendor support,if such areduction were to occur,the Company could experience a higher inventory balance and higher cost of sales.If a 10%reserve had been applied
261、 against our outstanding vendor support due as of December 27,2008,net earnings would have been affected by approximately$1.2 million.Freight We incur various types of transportation and delivery costs in connection with inventory purchases.Such costs are included as a component of the overall cost
262、of inventories(on an aggregate basis)and recognized as a component of cost of merchandise sold as the related inventory is sold.We allocate freight as a component of total cost of sales without regard to inventory mix or unique freight burden of certain categories.This assumption has been consistent
263、ly applied for all years presented.If a 10%increase or decrease had been applied against our current inventory capitalized freight balance,net earnings would have been affected by approximately$3.1 million.20Description Judgments and Uncertainties Effect if Actual Results Differ From Assumptions Sha
264、re-Based Payments:We have a stock-based compensation plan,which includes incentive and non-qualified stock options,nonvested share awards,and an employee stock purchase plan.See Note 1,Significant Accounting Policies,and Note 2,Share-Based Compensation,to the Notes to Consolidated Financial Statemen
265、ts,included in Item 8,Financial Statements and Supplementary Data,of this Annual Report on Form 10-K,for a complete discussion of our stock-based compensation programs.We estimate the fair value of our stock option awards at the date of grant utilizing a Black-Scholes option pricing model.We estimat
266、e the fair value of our market-based nonvested share awards at the date of grant utilizing average market price of our stock on the date of the related award.Management reviews its assumptions and the valuations provided by independent third-party valuation advisors to determine the fair value of st
267、ock-based compensation awards.Option-pricing models and generally accepted valuation techniques require management to make subjective assumptions and to apply judgment to determine the fair value of our awards.These assumptions and judgments include estimating the future volatility of our stock pric
268、e,expected dividend yield,future employee turnover rates and future employee stock option exercise behaviors.In addition to the key assumptions used to estimate the fair value,the estimated forfeiture rate of the awarded options is a critical assumption,as it reduces expense ratably over the vesting
269、 period.Changes in these assumptions can materially affect the fair value estimate.While we update our assumptions annually,we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expe
270、nse.However,if actual results are not consistent with our estimates or assumptions,we may be exposed to changes in stock-based compensation expense that could be material.The reported stock-based compensation expense may not be representative of the actual economic cost of the stock-based compensati
271、on.A 10%change in our stock-based compensation expense for the year ended December 27,2008,would have affected net earnings by approximately$753,000.Self-Insurance Reserves:We self-insure a significant portion of our employee medical insurance,workers compensation and general liability insurance pla
272、ns.We have stop-loss insurance policies to protect from individual losses over specified dollar values($200,000 for employee health insurance claims,$350,000 for workers compensation and$250,000 for general liability).When estimating our self-insured liabilities,we consider a number of factors,inclu
273、ding historical claims experience,demographic factors,severity factors and valuations provided by independent third-party actuaries.Management reviews its assumptions and the valuations provided by independent third-party actuaries to determine the adequacy of our self-insured liabilities.The full e
274、xtent of certain claims,especially workers compensation and general liability claims,may not become fully determined for several years.Our self-insured liabilities contain uncertainties because management is required to make assumptions and to apply judgment to estimate the ultimate cost to settle r
275、eported claims and claims incurred but not reported as of the balance sheet date.We have not made any material changes in the accounting methodology used to establish our self-insurance reserves in the financial periods presented.We do not believe there is a reasonable likelihood that there will be
276、a material change in the assumptions we use to calculate insurance reserves.However,if we experience a significant increase in the number of claims or the cost associated with these claims,we may be exposed to losses or gains that could be material.A 10%change in our self-insurance reserves at Decem
277、ber 27,2008,would have affected net earnings by approximately$1.4 million in fiscal 2008.21Description Judgments and Uncertainties Effect if Actual Results Differ From Assumptions Sales Tax Audit Reserve:A portion of our sales are to tax-exempt customers.We obtain exemption information as a necessar
278、y part of each tax-exempt transaction.Many of the states in which we conduct business will perform audits to verify our compliance with applicable sales tax laws.The business activities of our customers and the intended use of the unique products sold by us create a challenging and complex environme
279、nt of compliance.These circumstances also create some risk that we could be challenged as to the propriety of our sales tax compliance.While we believe we reasonably enforce sales tax compliance with our customers and endeavor to fully comply with all applicable sales tax regulations,there can be no
280、 assurance that we,upon final completion of such audits,would not have a significant liability for disallowed exemptions.We review our past audit experience and assessments with applicable states to determine if we have potential exposure for non-compliance.Any estimated liability is based on an ini
281、tial assessment of compliance risk and our to-date experience with each audit.As each audit progresses,we quantify the exposure based on preliminary assessments made by the state auditors,adjusted for additional documentation that may be provided to reduce the assessment.Our sales tax audit reserve
282、contains uncertainties because management is required to make assumptions and to apply judgment regarding the regulatory support for SKU-specific agricultural-based exemptions,ambiguity in state tax regulations,and the level of exemptions support required by applicable states.We have not made any ma
283、terial changes in the methodology used to establish the sales tax audit reserve in the financial periods presented.We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate thesales tax liability reserve for cur
284、rent audits.However,if our estimates regarding the ultimate sales tax liability are inaccurate,we may be exposed to losses or gains that could be material.A 10%change in our sales tax liability reserve at December 27,2008,would have affected net earnings by approximately$144,000 in fiscal 2008.Tax C
285、ontingencies:Our income tax returns are periodically audited by U.S.federal and state tax authorities.These audits include questions regarding our tax filing positions,including the timing and amount of deductions and the allocation of income among various tax jurisdictions.At any one time,multiple
286、tax years are subject to audit by the various tax authorities.In evaluating the exposures associated with our various tax filing positions,we record reserves for probable exposures.A number of years may elapse before a particular matter,for which we have established a reserve,is audited and fully re
287、solved or clarified.We adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve,the statute of limitations expires for the relevant tax authority to examine the tax position or when m
288、ore information becomes available.Effective December 31,2006,we adopted Financial Accounting Standards Board(“FASB”)Interpretation No.48,Accounting for Uncertainty in Income Taxes,an Interpretation of FASB Statement No.109(“FIN 48”).Accordingly,we recognize a liability for certain tax benefits that
289、do not meet the minimum requirements for recognition in the financial statements.See Note 9,Our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether
290、 or not the minimum requirements for recognition of tax benefits have been met.Our effective income tax rate is also affected by changes in tax law,the tax jurisdiction of new stores or business ventures,the level of earnings and the results of tax audits.We do not believe there is a reasonable like
291、lihood that there will be a material change in the reserves established for tax benefits not recognized.Although management believes that the judgments and estimates discussed herein are reasonable,actual results could differ,and we may be exposed to losses or gains that could be material.To the ext
292、ent we prevail in matters for which reserves have been established,or are required to pay amounts in excess of our reserves,our effective income tax rate in a given financial statement period could be materially affected.An unfavorable tax settlement would require use of our cash and would result in
293、 an increase in our effective income tax rate in the period of resolution.A favorable tax settlement would be recognized as a reduction in our effective income tax rate in the period of resolution.A 10%change in our unrecognized tax benefit reserve at December 27,2008would have affected net earnings
294、 by approximately$187,000 in fiscal 2008.22Description Judgments and Uncertainties Effect if Actual Results Differ From Assumptions Income Taxes,to Consolidated Financial Statements,included in Item 8,Financial Statements and Supplementary Data,of this Annual Report on Form 10-K for a complete discu
295、ssion on our unrecognized tax benefit reserve.Goodwill:Goodwill and intangible assets with indefinite lives are not amortized.We evaluate goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable.We complete ou
296、r impairment evaluation by performing internal valuation analyses,considering other publicly available market information and using an independent valuation firm,as appropriate.All goodwill at December 27,2008 and December 29,2007 is associated with the Dels business and for purposes of impairment t
297、esting,Dels is considered the reporting unit.The test for goodwill impairment is a two step process.The first step of the goodwill impairment test,used to identify the potential for impairment,compares the fair value of a reporting unit with the carrying value of its net assets,including goodwill.If
298、 the fair value of the reporting unit is less than the carrying value of the reporting unit,the second step of the goodwill impairment test is performed to measure the amount of impairment loss to be recorded,if any.The second step,if required,would compare the implied fair value of goodwill with th
299、e current carrying amount of goodwill.If the implied fair value of goodwill is less than the carrying value,an impairment charge would be recorded as a charge to our operations.In the fourth quarter of fiscal 2008,we completed our annual impairment testing of goodwill using the methodology described
300、 herein,and determined there was no impairment.We performed the first step of the goodwill impairment analysis with the assistance of a third party valuation specialist and determined that the fair value of the Dels reporting unit(including goodwill)was in excess of the carrying value of the reporti
301、ng unit and as such,the second step was not necessary.In reaching this conclusion,the fair value of the Dels reporting unit was determined based on a weighting of We determine fair value using widely accepted valuation techniques,including discounted cash flow and market multiple analyses.These type
302、s of analyses contain uncertainties because they require management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies.Estimates include revenues,gross margins,operating costs and cash flows.We considered historical and
303、 estimated future results,economic and market conditions and the impact of planned business and operational strategies in deriving these estimates.We have not made any material changes in our impairment loss assessment methodology in the financial periods presented.In developing the key judgments an
304、d assumptions used to assess impairment,we consider economic,operational and market conditions that could impact the fair value of the Dels reporting unit.These estimates and the judgments and assumptions upon which the estimates are based may differ in some respects from actual results.Should a sig
305、nificant or prolonged deterioration in economic conditions persist,then key judgments and assumptions may be impacted.Thus,if actual results are not consistent with our current estimates or assumptions,we may be exposed to an impairment charge that could be material.23Description Judgments and Uncer
306、tainties Effect if Actual Results Differ From Assumptions income and market approaches.Under the income approach,the fair value of the Dels reporting unit is calculated as the present value of estimated future cash flows.Under the market approach,the fair value is based on observed market multiples
307、for comparable businesses and guideline transactions.Long-Lived Assets:Long-lived assets other than goodwill and indefinite-lived intangible assets,which are separately tested for impairment,are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may
308、 not be recoverable.When evaluating long-lived assets for potential impairment,we first compare the carrying value of the asset to the assets estimated future cash flows(undiscounted and without interest charges).If the estimated future cash flows are less than the carrying value of the asset,we cal
309、culate an impairment loss.The impairment loss calculation compares the carrying value of the asset to the assets estimated fair value,which may be based on an estimated future cash flow model.We recognize an impairment loss if the amount of the assets carrying value exceeds the assets estimated fair
310、 value.If we recognize an impairment loss,the adjusted carrying amount of the asset becomes its new cost basis.For a depreciable long-lived asset,the new cost basis will be depreciated(amortized)over the remaining useful life of that asset.Our impairment loss calculations contain uncertainties becau
311、se they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values,including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.We have not made any material changes in our
312、impairment loss assessment methodology in the financial periods presented.We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses.However,if actual results are not consistent with o
313、ur estimates and assumptions used in estimating future cash flows and asset fair values,we may be exposed to losses that could be material.24Quarterly Financial Data Our unaudited quarterly operating results for each fiscal quarter of 2008 and 2007 are shown below(dollars in thousands,except per sha
314、re amounts):2008 First Quarter Second Quarter Third Quarter Fourth Quarter Total Net sales.$576,208$898,327$733,918$799,496$3,007,949 Gross margin.175,516 273,509 218,196 245,040 912,261 Income(loss)from operations.(2,041)71,158 26,077 40,375 135,569 Net income(loss).(2,004)43,352 15,870 24,712 81,9
315、30 Net income(loss)per share:(1)Basic.$(0.05)$1.17$0.44$0.68$2.22 Diluted.$(0.05)$1.15$0.43$0.67$2.19 Same-store sales increase(decrease).(6.5)%3.4%6.2%1.3%1.4%2007 Net sales.$559,832$790,929$629,199$723,252$2,703,212 Gross margin.168,180 250,424 198,647 235,457 852,708 Income from operations.8,980
316、71,108 29,669 50,284 160,041 Net income.4,999 43,757 17,468 30,017 96,241 Net income per share:(1)Basic.$0.12$1.10$0.45$0.79$2.45 Diluted.$0.12$1.08$0.44$0.77$2.40 Same-store sales increase.8.5%1.0%1.9%3.8%3.4%(1)Due to the nature of interim earnings per share calculations,the sum of quarterly earni
317、ngs per share amounts may not equal the repoearnings per share for the year.25Results of Operations Our fiscal year includes 52 or 53 weeks and ends on the last Saturday of the calendar year.References to fiscal year mean the year in which that fiscal year ended.The fiscal years ended December 27,20
318、08,December 29,2007 and December 30,2006 contain 52 weeks.The following table sets forth,for the periods indicated,certain items in our Consolidated Statements of Income expressed as a percentage of net sales.2008 2007 2006Net sales.100.0%100.0%100.0%Cost of merchandise sold.69.7 68.5 68.5Gross marg
319、in.30.3 31.5 31.5 Selling,general and administrative expenses.23.8 23.7 23.5 Depreciation and amortization.2.0 1.9 1.8Income from operations.4.5 5.9 6.2 Interest expense,net.0.1 0.2 0.1Income before income taxes.4.4 5.7 6.1 Income tax provision.1.7 2.1 2.3Net income 2.7%3.6%3.8%Fiscal 2008 Compared
320、to Fiscal 2007 Net sales increased 11.3%to$3,007.9 million in fiscal 2008 from$2,703.2 million in fiscal 2007.This increase resulted from the opening of new stores as well as a same-store sales improvement of 1.4%.Our average transaction value increased 2.2%to$44.55 and same-store transaction value
321、increased 1.3%for fiscal 2008.The same-store average daily transaction count increased 0.1%.The average daily transaction count for the Company decreased 3.8%to 230.The decrease is a result of the new stores opened during the year which have lower transaction volumes until their sales ramp to chain
322、average.Same-store sales improvements of 1.4%compared to 3.4%in the prior year were strongest in core consumable categories including animal and pet-related products,clothing and footwear.In fiscal 2008,we opened 91 new stores(compared to 89 new stores in fiscal 2007),relocated one store(compared to
323、 12 in fiscal 2007)and closed no stores(compared to selling our only Dels store located in Canada in fiscal 2007).Gross margin increased 7.0%to$912.3 million compared to$852.7 million in 2007.As a percent of sales,gross margin decreased to 30.3%for fiscal 2008 compared to 31.5%for fiscal 2007.The de
324、crease in gross margin resulted primarily from a substantial increase in the LIFO provision.The LIFO provision increased 123 basis points from the prior year due to significant inflation(increases in costs for certain commodities,petroleum-based products and steel),a shift in the product mix towards
325、 higher turning,higher inflationary items and clearance activity.As a percent of sales,selling,general and administrative(“SG&A”)expenses increased 10 basis points to 23.8%in fiscal 2008 from 23.7%in fiscal 2007.This increase was due largely to occupancy and payroll expenses relating to new stores,w
326、hich generally have higher costs in relation to sales volume than the chain average,offset by an aggressive expense management program.Depreciation and amortization expense increased 18.9%in fiscal 2008 over fiscal 2007 due mainly to costs associated with new stores.Net interest expense decreased 10
327、 basis points as a percent of sales to$2.1 million in fiscal 2008 from$5.0 million in fiscal 2007.This decrease is directly related to a lower average debt balance primarily due to a reduction in stock repurchase activity in 2008,as compared to 2007.Our effective tax rate increased to 38.6%for fisca
328、l 2008 compared to 37.9%in fiscal 2007,resulting primarily from increases in state tax rates.As a result of the foregoing factors,net income for fiscal 2008 decreased 14.9%to$81.9 million,or$2.19 per diluted share,as compared to net income of$96.2 million,or$2.40 per diluted share,in fiscal 2007.Dur
329、ing 2008,we repurchased approximately 1.6 million shares of stock for$53.9 million as part of our previously announced$400 26million share repurchase program.In 2007,we repurchased approximately 3.2 million shares at a total cost of$150.0 million.Fiscal 2007 Compared to Fiscal 2006 Net sales increas
330、ed 14.1%to$2,703.2 million in fiscal 2007 from$2,369.6 million in fiscal 2006.This increase resulted from the opening of new stores as well as a same-store sales improvement of 3.4%.Our average transaction value increased 1.1%to$43.60 while same-store transaction value decreased 0.1%for fiscal 2007.
331、Average daily transaction count per store increased 0.6%to 239,and same-store transaction count increased 3.5%.Same-store sales improvements of 3.4%compared to 1.6%in the prior year were strongest in the livestock/pet and truck/towing categories,but were partially offset by lower than expected perfo
332、rmance in seasonal and hardware/tool products.In fiscal 2007,we opened 89 new stores(compared to 82 new stores in fiscal 2006),relocated 12 stores(compared to 15 in fiscal 2006)and sold our only Dels store located in Canada(compared to one closed store in fiscal 2006).As a percent of sales,gross mar
333、gin was unchanged at 31.5%compared with the prior year.Reductions in direct product costs were achieved through improved sourcing and mix of sales,but were offset by slightly higher transportation costs and increased shrinkage.As a percent of sales,SG&A expenses increased 20 basis points to 23.7%in fiscal 2007 from 23.5%in fiscal 2006.The increase is primarily attributable to increased occupancy a
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