1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 000-23314
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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)
320 Plus Park Boulevard, Nashville, Tennessee 37217
- --------------------------------------------- -----------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (615) 366-4600
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at July 28, 2001
- ---------------------------------- ------------------------------------
Common Stock, $.008 par value 8,821,466
Page 1 of 12
2
TRACTOR SUPPLY COMPANY
INDEX
Page No.
--------
Part I. Financial Information:
Item 1. Financial Statements:
Balance Sheets -
June 30, 2001 and December 30, 2000 3
Statements of Income -
For the Fiscal Three and Six Months Ended
June 30, 2001 and July 1, 2000 4
Statements of Cash Flows -
For the Fiscal Six Months Ended
June 30, 2001 and July 1, 2000 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Part II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Page 2 of 12
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRACTOR SUPPLY COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 30,
2001 2000
--------- ------------
ASSETS ......................................................................... (UNAUDITED)
Current assets:
Cash and cash equivalents .................................................... $ 9,690 $ 9,145
Accounts receivable, net ..................................................... 6,565 7,683
Inventories .................................................................. 251,507 222,535
Prepaid expenses ............................................................. 6,179 7,870
--------- ---------
Total current assets .................................................. 273,941 247,233
--------- ---------
Land ........................................................................... 6,365 6,449
Buildings and improvements ..................................................... 70,626 67,985
Machinery and equipment ........................................................ 51,376 49,304
Construction in progress ....................................................... 1,382 1,605
--------- ---------
129,749 125,343
Accumulated depreciation and amortization ...................................... (50,432) (44,855)
--------- ---------
Property and equipment, net .................................................. 79,317 80,488
--------- ---------
Deferred income taxes .......................................................... 1,112 1,112
Other assets ................................................................... 3,258 3,463
--------- ---------
Total assets .......................................................... $ 357,628 $ 332,296
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................. $ 111,961 $ 70,294
Accrued expenses ............................................................. 34,790 33,929
Current maturities of long-term debt ......................................... 3,145 3,145
Current portion of capital lease obligations ................................. 279 279
Income taxes currently payable ............................................... 8,022 1,643
Deferred income taxes ........................................................ 4,212 4,212
--------- ---------
Total current liabilities ............................................. 162,409 113,502
--------- ---------
Revolving credit loan .......................................................... 14,237 50,007
Other long-term debt ........................................................... 8,572 10,131
Capital lease obligations ...................................................... 2,672 2,812
Other long-term liabilities .................................................... 2,298 808
Stockholders' equity:
Common stock, 100,000,000 shares authorized; $.008 par value; 8,813,771 and
8,779,380 shares issued and outstanding in 2001 and 2000, respectively ..... 70 70
Additional paid-in capital ................................................... 43,190 43,009
Retained earnings ............................................................ 125,752 111,957
Accumulated other comprehensive loss ......................................... (1,572) --
--------- ---------
Total stockholders' equity ................................................. 167,440 155,036
--------- ---------
Total liabilities and stockholders' equity ............................ $ 357,628 $ 332,296
========= =========
The accompanying notes are an integral part of this statement.
Page 3 of 12
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TRACTOR SUPPLY COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE FISCAL FOR THE FISCAL
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ----------------------
JUNE 30, JULY 1, JUNE 30, JULY 1,
2001 2000 2001 2000
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
Net sales ........................................... $267,490 $232,341 $430,007 $379,823
Cost of merchandise sold ............................ 195,697 170,756 316,119 280,634
-------- -------- -------- --------
Gross margin ................................... 71,793 61,585 113,888 99,189
Selling, general and administrative expenses ........ 45,507 40,078 86,460 75,838
Depreciation and amortization ....................... 2,831 2,445 5,538 4,627
-------- -------- -------- --------
Income from operations ......................... 23,455 19,062 21,890 18,724
Interest expense, net ............................... 1,065 1,309 2,582 2,612
Unusual item: gain on proceeds from life insurance .. 2,173 -- 2,173 --
-------- -------- -------- --------
Income before income taxes ..................... 24,563 17,753 21,481 16,112
Income tax provision ................................ 8,919 7,207 7,686 6,541
-------- -------- -------- --------
Net income ..................................... $ 15,644 $ 10,546 $ 13,795 $ 9,571
======== ======== ======== ========
Net income per share - basic ................... $ 1.78 $ 1.20 $ 1.57 $ 1.09
======== ======== ======== ========
Net income per share - assuming dilution ....... $ 1.76 $ 1.20 $ 1.56 $ 1.09
======== ======== ======== ========
The accompanying notes are an integral part of this statement.
Page 4 of 12
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TRACTOR SUPPLY COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE FISCAL SIX MONTHS ENDED
-------------------------------
JUNE 30, JULY 1,
2001 2000
-------- --------
(UNAUDITED)
Cash flows from operating activities:
Net income .................................................. $ 13,795 $ 9,571
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization expense ................... 5,538 4,627
Gain on sale of property and equipment .................. (106) (237)
Gain on proceeds from life insurance .................... (2,173) --
Change in assets and liabilities:
Accounts receivable ................................... 1,118 (3,254)
Inventories ........................................... (28,972) (44,092)
Prepaid expenses ...................................... 1,691 (865)
Accounts payable ...................................... 41,667 38,153
Accrued expenses ...................................... 861 (5,482)
Income taxes currently payable ........................ 6,379 (777)
Other ................................................. (288) (750)
-------- --------
Net cash provided by (used in) operating activities ........... 39,510 (3,106)
-------- --------
Cash flows from investing activities:
Capital expenditures ...................................... (4,779) (10,812)
Proceeds from sale of property and equipment .............. 573 486
-------- --------
Net cash used in investing activities ......................... (4,206) (10,326)
-------- --------
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit loan ... (35,770) 20,874
Repayment of long-term debt ............................... (1,559) (1,250)
Principal payments under capital lease obligations ........ (140) (139)
Proceeds from life insurance .............................. 2,529 (442)
Proceeds from issuance of common stock .................... 181 164
-------- --------
Net cash provided by (used in) financing activities ........... (34,759) 19,207
-------- --------
Net increase in cash and cash equivalents ..................... 545 5,775
Cash and cash equivalents at beginning of period .............. 9,145 6,991
-------- --------
Cash and cash equivalents at end of period .................... $ 9,690 $ 12,766
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest .................................................... $ 2,609 $ 2,647
Income taxes ................................................ 1,273 6,805
The accompanying notes are an integral part of this statement.
Page 5 of 12
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TRACTOR SUPPLY COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
The accompanying interim financial statements have been prepared without audit,
and certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, although the Company believes that the
disclosures herein are adequate to make the information presented not
misleading. These statements should be read in conjunction with the Company's
annual report on Form 10-K for the fiscal year ended December 30, 2000. The
results of operations for the fiscal three-month and six-month periods are not
necessarily indicative of results for the full fiscal year.
In the opinion of management, the accompanying interim financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
for a fair statement of the Company's financial position as of June 30, 2001 and
its results of operations and its cash flows for the fiscal three-month and
six-month periods ended June 30, 2001 and July 1, 2000.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to December 31.
Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles inherently requires estimates and assumptions by
management that affect the reported amounts of assets and liabilities, revenues
and expenses and related disclosures. Actual results could differ from those
estimates.
Inventories
The accompanying unaudited financial statements have been prepared without full
physical inventories. The value of the Company's inventories was determined
using the lower of last-in, first-out (LIFO) cost or market. If the first-in,
first-out (FIFO) method of accounting for inventory had been used, inventories
would have been approximately $5,456,000 and $5,056,000 higher than reported at
June 30, 2001 and December 30, 2000, respectively. Since LIFO costs can only be
determined at the end of each fiscal year when inflation rates and inventory
levels are finalized, estimates of LIFO inventory costs are used for interim
financial reporting.
Net Income Per Share
Net income per share is calculated as follows (in thousands, except per share
amounts):
2001
------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2001
------------------------------ --------------------------------
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------ ------ --------- ------- ------ ----------
Basic net income per share:
Net income $15,644 8,812 $ 1.78 $ 13,795 8,807 $ 1.57
========= =======
Stock options outstanding 69 51
-------- ----- ------- -----
Diluted net income per share $15,644 8,881 $ 1.76 $ 13,795 8,858 $ 1.56
======= ===== ========= ======== ===== =======
Page 6 of 12
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2000
------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 1, 2000 JULY 1, 2000
------------------------------ ---------------------------------
PER SHARE PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------ ------ --------- ------ ------ ---------
Basic net income per share:
Net income $10,546 8,778 $ 1.20 $ 9,571 8,776 $ 1.09
======= =======
Stock options outstanding 40 44
------- ------- ------- -------
Diluted net income per share $10,546 8,818 $ 1.20 $ 9,571 8,820 $ 1.09
======= ======= ======= ======= ======= =======
NOTE 2 - SEASONALITY:
The Company's business is highly seasonal, with a significant portion of its
sales and a majority of its income generated in the second fiscal quarter. The
Company typically operates at a loss in the first fiscal quarter.
NOTE 3- COMPREHENSIVE INCOME:
On December 31, 2000, the Company adopted Statement of Financial Accounting
Standards Number 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), as amended. SFAS 133 requires the Company to recognize
all derivative instruments in the balance sheet at fair value. The Company has
reduced its exposure to increases in interest rates by entering into interest
rate swap agreements. These interest rate swaps are designated as cash flow
hedges. The adoption of SFAS 133 impacts the accounting for the Company's
interest rate swap agreements.
Upon adoption of SFAS 133, the Company recorded the fair value of the interest
rate swaps on its balance sheet. The Company will continue to reflect the
current fair value of interest rate swaps in its balance sheet. The related
unrealized gains or losses on these swaps are deferred in stockholders' equity
(as a component of comprehensive loss). These deferred gains and losses are
recognized in income in the period in which the related interest rates being
hedged are recognized in interest expense. However, to the extent, if any, that
the change in value of an interest rate swap contract does not perfectly offset
the change in the value of the interest rate being hedged, that ineffective
portion is immediately recognized in the results of operations.
Comprehensive income includes changes in the fair value of the Company's
interest rate swaps which qualify for hedge accounting. Comprehensive income
totaled $15.8 million for the second quarter of fiscal 2001 compared to $10.5
million for the second quarter of fiscal 2000. The difference between net income
and comprehensive income for the second quarter of fiscal 2001 is the result of
$.2 million decrease in unrealized losses on swap contracts in the quarter
recognized in accordance with SFAS 133. Comprehensive income totaled $12.2
million for the first six months of fiscal 2001 compared to $9.6 million for the
first six months of fiscal 2000. The difference between net income and
comprehensive income for the second half of fiscal 2001 is the result of $1.6
million of unrealized losses on swap contracts in the first half recognized in
accordance with SFAS 133. As of June 30, 2001 the Company expects to reclassify
approximately $700,000 of net losses on interest rate swaps from accumulated
other comprehensive loss to earnings over the next twelve months.
NOTE 4- GAIN ON PROCEEDS FROM LIFE INSURANCE:
In April 2001, a former executive of the Company, on whom the Company carried a
life insurance policy, passed away. As a result of the related coverage, the
Company realized a $2.1 million gain on the benefit proceeds.
Page 7 of 12
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis describes certain factors affecting
Tractor Supply Company's (the "Company") results of operations for the fiscal
three and six-month periods ended June 30, 2001 and July 1, 2000, and
significant developments affecting its financial condition since the end of the
fiscal year, December 30, 2000, and should be read in conjunction with the
Company's annual report on Form 10-K for the fiscal year ended December 30,
2000. The following discussion and analysis also contains certain historical and
forward-looking information. The forward-looking statements 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 the Company expects or
anticipates will or may occur in the future, including such things as future
capital expenditures (including the amount and nature thereof), business
strategy, expansion and growth of the Company's business operations and other
such matters are forward-looking statements. To take advantage of the safe
harbor provided by the Act, the Company is identifying certain factors that
could cause actual results to differ materially from those expressed in any
forward-looking statements, whether oral or written, made by or on behalf of the
Company.
All phases of the Company's operations are subject to influences outside its
control. Any one, or a combination, of these factors could materially affect the
results of the Company's operations. These factors include general economic
cycles affecting consumer spending, weather factors, operating factors affecting
customer satisfaction, consumer debt levels, pricing and other competitive
factors, the ability to attract, train and retain highly-qualified associates,
the ability to identify suitable locations and negotiate favorable lease
agreements on new and relocated stores, the timing 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, and the
seasonality of the Company's business. Forward-looking statements made by or on
behalf of the Company are based on a knowledge of its business and the
environment in which it operates, but because of the factors listed above,
actual results could differ materially from those reflected by any
forward-looking statements. Consequently, all of the forward-looking statements
made are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequences to or effects on the Company or its business and operations.
RESULTS OF OPERATIONS
The Fiscal Three Months (Second Quarter) and Six Months Ended June 30, 2001 and
July 1, 2000
Net sales increased 15.1% to $267.5 million for the second quarter of fiscal
2001 from $232.3 million for the second quarter of fiscal 2000. Net sales rose
13.2% to $430.0 million for the first six months of fiscal 2001 from $379.8
million for the first six months of fiscal 2000. The sales increase resulted
primarily from new stores as comparable store sales (excluding relocations,
using all stores open at least one year) increased 6.1% for the second quarter
of fiscal 2001 and increased 3.0% for the first six months of fiscal 2001 over
the corresponding periods in the prior fiscal year. Comparable store sales for
the second quarter of fiscal 2001 increased 6.1% primarily as a result of an
expected weather-related shift in sales from the first quarter to the second
quarter due to a later spring selling season as well as increases across
substantially all product categories except large-ticket lawn tractors. The
Company opened 11 new stores (no new stores in the second quarter of fiscal
2001) during the first six months of fiscal 2001. The Company opened 25 new
stores (15 in the second quarter of fiscal 2000) during the first six months of
fiscal 2000, and closed three stores and relocated one store during the second
quarter of fiscal 2000. The Company plans to open a total of 17 to 18 new stores
this year, with four new store openings planned for the third quarter. The
Company had originally planned to open 25 new stores in fiscal 2001, but decided
to decrease its new store openings for several reasons, including anticipated
improvements in the real estate market as well as the availability of fully
trained new store managers.
The gross margin rate for the second quarter of fiscal 2001 increased .3
percentage point to 26.8% of sales for the second quarter of fiscal 2001 and
increased .4 percentage point to 26.5% of sales for the first six months of
fiscal 2001 compared with the corresponding periods in the prior fiscal year.
The gross margin rate improvement for the second quarter of fiscal 2001 and the
first six months of fiscal 2001 was primarily due to improved product costs and
changes in the sales mix, partially offset by higher freight costs.
Page 8 of 12
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As a percent of sales, selling, general and administrative ("SG&A") expenses
decreased .3 percentage point to 17.0% of sales in the second quarter of fiscal
2001 and increased .1 percentage point to 20.1% of sales for the first six
months of fiscal 2001. On an absolute basis, SG&A expenses increased 13.5% to
$45.5 million in the second quarter of fiscal 2001 and increased 14.0% to $86.5
million for the first six months of fiscal 2001. The decrease in expenses on a
percentage-of-sales basis for the second quarter and the six-month period is
primarily a result of fewer new store openings compared to the corresponding
period in the prior year (new stores have considerably higher occupancy costs,
primarily due to pre-opening costs, than the existing store base) and the result
of greater leverage from same-store sales performance. The increase in absolute
dollars is primarily attributable to costs associated with new store openings,
as well as increased costs associated with the Company's expanded infrastructure
(primarily larger distribution facilities and store support service capacity).
Depreciation and amortization expense increased 15.8% and 19.7% for the second
quarter and the first six months of fiscal 2001, respectively, due mainly to
costs associated with new stores. Net interest expense decreased 18.6% to $1.1
million in the second quarter of fiscal 2001 and decreased 1.1% to $2.6 million
in the first six months of fiscal 2000 primarily due to improved cash flows,
resulting from higher comparable store sales performance, lower average
inventory levels and reduced store openings.
In April 2001, a former executive of the Company, on whom the Company carried a
life insurance policy, passed away. As a result of the related coverage, the
Company realized a $2.1 million gain on the benefit proceeds.
Exclusive of the non-taxable $2.1 million gain on the proceeds of life
insurance, the Company's effective tax rate decreased to 39.8% in the second
quarter of fiscal 2001 and the first six months of fiscal 2001, compared with
40.6% for the second quarter of fiscal 2000 and the first six months of fiscal
2000 primarily due to a lower effective state income tax rate.
As a result of the foregoing factors, net income for the second quarter of
fiscal 2001 increased 48.3% to $15.6 million from $10.5 million for the second
quarter of fiscal 2000 and net income per share (assuming dilution) for the
second quarter of fiscal 2001 increased 46.7% to $1.76 per share from $1.20 per
share for the second quarter of fiscal 2000. Net income for the first six months
of fiscal 2001 increased 44.1% to $13.8 million from $9.6 million for the first
six months of fiscal 2000 and net income per share (assuming dilution) for the
six months of fiscal 2001 increased 43.1% to $1.56 per share from $1.09 per
share for the first six months of fiscal 2000. As a percent of sales, net income
increased 1.3 percentage points to 5.8% of sales for the second quarter of
fiscal 2001 from 4.5% of sales for the second quarter of fiscal 2000 and
increased .7 percentage point to 3.2% of sales for the first six months of
fiscal 2001 from 2.5% of sales for the first six months of fiscal 2000.
LIQUIDITY AND CAPITAL RESOURCES
In addition to normal operating expenses, the Company's primary ongoing cash
requirements are those necessary for the Company's expansion, remodeling and
relocation programs, including inventory purchases and capital expenditures. The
Company's primary ongoing sources of liquidity are funds provided from
operations, commitments available under its revolving credit agreement (the
"Credit Agreement") and short-term trade credit.
The Company's inventory and accounts payable levels typically build in the first
fiscal quarter and again in the third fiscal quarter in anticipation of the
spring and fall selling seasons. At June 30, 2001, the Company's inventories had
increased $29.0 million to $251.5 million from $222.5 million at December 30,
2000. This increase resulted primarily from additional inventory for new stores
and planned inventory increases in seasonal product lines. Short-term trade
credit, which represents a source of financing for inventory, increased $41.7
million to $112.0 million at June 30, 2001 from $70.3 million at December 30,
2000. Trade credit arises from the Company's vendors granting extended payment
terms for inventory purchases. Payment terms vary from 30 days to 180 days
depending on the inventory product.
At June 30, 2001, the Company had working capital of $111.5 million, which
represented a $22.2 million decrease from December 30, 2000. This decrease
resulted primarily from an increase in accounts payable without a corresponding
increase in inventory and an increase in income taxes payable (mainly due to
timing of payments).
Operations provided net cash of $39.5 million and used net cash of $3.1 million
in the first six months of fiscal 2001 and 2000, respectively. The increase in
net cash provided in the first six months of fiscal 2001 resulted primarily
Page 9 of 12
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from inventories decreasing at a faster rate than accounts payable in the first
six months of 2001 compared to the first six months of 2000, increases in
accrued expenses and income taxes payable in the first six months of 2001
(mainly due to timing of payments) compared to decreases in the first six months
of 2000, decreases in accounts receivable and prepaid expenses in the first six
months of 2001 compared to increases in accounts receivable and prepaid expenses
in the first six months of 2000 (mainly due to timing of collection of
commitments from vendors for marketing support and prepaid costs on new stores).
Cash used in investing activities of $4.2 million for the first six months of
fiscal 2001 represented a $6.1 million decrease over cash used in the first six
months of fiscal 2000 of $10.3 million. The decrease in cash used in the first
six months of fiscal 2001 reflects less capital expenditures as compared to the
first six months of fiscal 2000 (mainly due to opening 11 new stores during the
first six months of 2001 compared to 25 new stores during the first six months
of 2000).
Financing activities in the first quarter of fiscal 2001 used $34.8 million in
cash, which represented a $54.0 million increase in net cash used over the $19.2
million in net cash provided in the first six months of fiscal 2000. This
increase in net cash used resulted primarily from net repayments under the
Credit Agreement of approximately $35.8 million during the first six months of
fiscal 2001 compared to net borrowings of approximately $20.9 million during the
first six months of fiscal 2000, and, to a lesser extent, by repayments of other
long-term debt of approximately $1.6 million during the first six months of
fiscal 2001 compared to approximately $1.3 million during the first six months
of fiscal 2000. These conditions were partially offset by the proceeds from life
insurance of approximately $2.5 million received in the first six months of
2001.
The Company believes that its cash flow from operations, borrowings under its
credit agreements and short-term trade credit will be sufficient to fund the
Company's operations and its current growth and expansion plans.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to financial market risks, including changes in interest
rates. To reduce such risks, the Company has entered into interest rate swap
agreements as a means of managing its interest rate exposure. The interest rate
swap agreements apply to a maximum of $30 million in outstanding borrowings
under the Company's revolving credit agreement and also the outstanding term
loan balance, approximately $8.8 million at June 30, 2001. All borrowings under
the Company's revolving credit agreement and term loan agreement bear interest
at a variable rate based on the prime rate or the London Interbank Offered Rate.
An increase in interest rates of 100 basis points would not significantly affect
the Company's net income. All of the Company's business is transacted in U.S.
dollars and, accordingly, foreign exchange rate fluctuations have never had a
significant impact on the Company, and they are not expected to in the
foreseeable future.
Page 10 of 12
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's Annual Meeting of Stockholders was held on April 26, 2001
at the Company's corporate headquarters in Nashville, Tennessee.
(b) The stockholders elected for a three-year term two Class I directors
nominated for election (Thomas O. Flood and Gerard E. Jones) as set
forth in the proxy statement dated March 23, 2001. The following table
sets forth certain information concerning each other director of the
Company whose term of office as a director continued after the meeting:
Current Term as
Name Director Expires
---- ----------------
Joseph D. Maxwell 2002
Joseph M. Rodgers 2002
Sam K. Reed 2002
Joseph H. Scarlett, Jr. 2003
S.P. Braud 2003
(c) (1) The stockholders elected two Class I directors for a three-year term
ending at the 2004 Annual Meeting of Stockholders.
Name For Withheld
---- --- --------
Thomas O. Flood 7,384,542 98,045
Gerard E. Jones 7,381,185 101,402
(c) (2) The stockholders ratified the reappointment of
PricewaterhouseCoopers LLP as independent certified public accountants
of the Company for the fiscal year ending December 29, 2001.
For Against Abstain Non-Vote
--- ------- ------- --------
7,463,690 16,313 2,584 -0-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.58 Transportation Management Services Agreement between UPS
Logistics Group, Inc. and Tractor Supply Company dated May 10,
2001.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the
fiscal quarter ended June 30, 2001.
Page 11 of 12
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRACTOR SUPPLY COMPANY
Date: August 14, 2001 By: /s/ Calvin B. Massmann
------------------- ----------------------------------------------
Calvin B. Massmann
Senior Vice President-
Chief Financial Officer and Treasurer
(Duly Authorized Officer and
Principal Financial Officer)
Page 12 of 12