<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 September 28, 1996
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ------------------------
Commission file number 000-23314
------------
TRACTOR SUPPLY COMPANY
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3139732
- --------------------------------------------- -------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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 October 26, 1996
----------------------------- -------------------------------
Common Stock, $.008 par value 8,718,000
1 of 12
<PAGE> 2
TRACTOR SUPPLY COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information:
Item 1. Financial Statements:
Balance Sheets -
September 28, 1996 and December 30, 1995 3
Statements of Income -
For the Fiscal Three and Nine months Ended
September 28, 1996 and September 30, 1995 4
Statements of Cash Flows -
For the Fiscal Nine months Ended
September 28, 1996 and September 30, 1995 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
2 of 12
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRACTOR SUPPLY COMPANY
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 30,
1996 1995
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................................... $ 11,082 $ 5,087
Accounts receivable, net ........................................ 4,676 3,730
Inventories ..................................................... 133,971 112,700
Prepaid expenses ................................................ 3,426 5,017
-------- --------
Total current assets ............................................. 153,155 126,534
-------- --------
Land ............................................................. 8,870 10,975
Buildings and improvements ....................................... 40,142 36,481
Machinery and equipment .......................................... 15,707 13,377
-------- --------
64,719 60,833
Accumulated depreciation and amortization ........................ (18,019) (15,763)
-------- --------
Property and equipment, net ..................................... 46,700 45,070
-------- --------
Deferred income taxes ............................................ 1,526 1,526
Other assets ..................................................... 1,071 999
-------- --------
Total assets ..................................................... $202,452 $174,129
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................ $ 56,341 $ 36,525
Accrued expenses ................................................ 13,742 11,637
Current maturities of long-term debt ............................ 600 600
Current portion of capital lease obligations .................... 966 966
Income taxes currently payable .................................. 1,551 2,716
Deferred income taxes ........................................... 10,240 10,240
-------- --------
Total current liabilities ........................................ 83,440 62,684
-------- --------
Revolving credit loan ............................................ 16,500 15,093
Other long-term debt ............................................. 6,135 6,579
Capital lease obligations ........................................ 3,512 4,186
Other long-term liabilities ...................................... 991 856
Excess of fair value of assets acquired over cost less accumulated
amortization of $2,470 and $2,380, respectively ................. 1,120 1,255
Redeemable preferred stock ....................................... 1,763 3,525
Stockholders' equity:
Common stock, 9,500,000 shares authorized; $.008 par value;
8,718,000 shares issued and outstanding in 1996 and 1995 ....... 70 70
Additional paid in capital ...................................... 41,685 41,685
Retained earnings ............................................... 47,236 38,196
-------- --------
Total stockholders' equity ..................................... 88,991 79,951
-------- --------
Total liabilities and stockholders' equity ....................... $202,452 $174,129
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
3 of 12
<PAGE> 4
TRACTOR SUPPLY COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE FISCAL
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------- --------------------
SEPT. 28, SEPT. 30, SEPT. 28, SEPT. 30,
1996 1995 1996 1995
-------------------- --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales ..................................... $104,990 $88,296 $332,864 $283,414
Cost of merchandise sold ...................... 77,860 65,414 247,375 211,195
-------- ------- -------- --------
Gross margin ................................ 27,130 22,882 85,489 72,219
Selling, general and administrative expenses .. 21,791 18,059 65,801 54,400
Depreciation and amortization ................. 883 634 2,472 1,802
-------- ------- -------- --------
Income from operations ...................... 4,456 4,189 17,216 16,017
Interest expense, net ......................... 632 465 1,867 1,070
-------- ------- -------- --------
Income before income taxes .................. 3,824 3,724 15,349 14,947
Income tax provision .......................... 1,538 1,488 6,159 5,980
-------- ------- -------- --------
Net income .................................. $ 2,286 $ 2,236 $ 9,190 $ 8,967
======== ======= ======== ========
Net income per share ........................ $ .26 $ .25 $ 1.04 $ 1.00
======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
4 of 12
<PAGE> 5
TRACTOR SUPPLY COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE FISCAL NINE MONTHS ENDED
---------------------------------
SEPT. 28, SEPT. 30,
1996 1995
-------------- ----------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................ $ 9,190 $ 8,967
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization expense ................... 2,472 1,802
Gain on sale of property and equipment .................. (378) (206)
Change in assets and liabilities:
Accounts receivable .................................... (946) (1,029)
Inventories ............................................ (21,271) (38,628)
Prepaid expenses ....................................... 1,591 (324)
Accounts payable ....................................... 19,815 25,543
Accrued expenses ....................................... 2,105 (934)
Income taxes currently payable ......................... (1,165) (1,351)
Other .................................................. (269) 418
--------- -------
Net cash provided by (used in) operating activities ....... 11,144 (5,742)
--------- --------
Cash flows from investing activities:
Capital expenditures ..................................... (5,342) (6,029)
Proceeds from sale of property and equipment ............. 1,816 1,045
--------- --------
Net cash used in investing activities ..................... (3,526) (4,984)
--------- --------
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit loan .. 1,407 10,169
Principal payments under capital lease obligations ....... (674) (600)
Repayment of long-term debt .............................. (444) (400)
Payment of preferred stock dividends ..................... (150) (247)
Repurchase of preferred stock ............................ (1,762) (2,350)
--------- --------
Net cash provided by (used in) financing activities ....... (1,623) 6,572
--------- --------
Net increase (decrease) in cash and cash equivalents ...... 5,995 (4,154)
Cash and cash equivalents at beginning of period .......... 5,087 13,999
--------- --------
Cash and cash equivalents at end of period ................ $ 11,082 $ 9,845
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ................................................. $ 1,867 $ 1,078
Income taxes ............................................. 7,337 7,262
</TABLE>
The accompanying notes are an integral part of this statement.
5 of 12
<PAGE> 6
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, 1995. The
results of operations for the fiscal three and nine 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 September 28, 1996 and its results of operations for the fiscal three and
nine month periods ended September 28, 1996 and September 30, 1995 and its cash
flows for the fiscal nine month periods ended September 28, 1996 and September
30, 1995.
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 $6,469,000 and $5,593,000 higher than
reported at September 28, 1996 and December 30, 1995, 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 for the Company for the fiscal three and nine month
periods ended September 28, 1996 and September 30, 1995 is calculated based on
the weighted average number of shares of common stock outstanding of 8,718,000
for each of the fiscal three and nine month periods, after giving effect to
preferred stock dividends of $35,259 and $161,482 for the fiscal three and nine
month periods ended September 28, 1996, respectively, and $70,500 and $286,390
for the fiscal three and nine month periods ended September 30, 1995,
respectively.
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 - PREFERRED STOCK REPURCHASE:
On May 24, 1996, the Company repurchased 1,762 shares of the Series B
Preferred Stock at a total repurchase price of approximately $1,771,000
(including accrued dividends totaling approximately $9,000).
NOTE 4 - REVOLVING CREDIT AGREEMENT:
In July 1996, the Company entered into an amendment (the "First
Amendment") to its revolving credit agreement with The First National Bank of
Boston, as agent and for itself, and First American National Bank (the "Credit
Agreement") whereby the Company (i) increased the maximum total commitments
available under the Credit Agreement from $30 million to $45 million and (ii)
extended the expiration date of the Credit Agreement from August 31, 1997 to
August 31, 1999 (the date upon which any remaining borrowings must be repaid).
There were no changes to any of the other material terms and conditions of the
Credit Agreement as a result of the First Amendment.
6 of 12
<PAGE> 7
NOTE 5 - STOCK PURCHASE PLAN:
In July 1996, the Company adopted the 1996 Associate Stock Purchase Plan
(the "ASPP") to allow eligible associates of the Company the opportunity to
purchase, through payroll deductions, shares of common stock of the Company at
a 15% discount. In August 1996, the Company filed a registration statement
with the Securities and Exchange Commission covering the shares of common stock
to be sold under the ASPP. Continuance of the ASPP is subject to its approval
by the Company's stockholders at the Company's 1997 annual meeting. In
addition, although the Company has authorized the sale of 1,000,000 shares of
common stock under the ASPP, 500,000 of such shares will be available only if
the Company's stockholders approve an appropriate increase in the number of
authorized shares of the Company's common stock.
7 of 12
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following describes material changes in results of operations for the
fiscal three and nine month periods ended September 28, 1996 and September 30,
1995, and significant developments affecting the financial condition of the
Company since the end of the Company's prior fiscal year, December 30, 1995,
and should be read in conjunction with the Company's annual report on Form 10-K
for the fiscal year ended December 30, 1995.
In July 1996, the Company adopted the 1996 Associate Stock Purchase Plan
(the "ASPP") to allow eligible associates of the Company the opportunity to
purchase, through payroll deductions, shares of common stock of the Company at
a 15% discount. In August 1996, the Company filed a registration statement
with the Securities and Exchange Commission covering the shares of common stock
to be sold under the ASPP. Continuance of the ASPP is subject to its approval
by the Company's stockholders at the Company's 1997 annual meeting. In
addition, although the Company has authorized the sale of 1,000,000 shares of
common stock under the ASPP, 500,000 of such shares will be available only if
the Company's stockholders approve an appropriate increase in the number of
authorized shares of the Company's common stock.
RESULTS OF OPERATIONS
The Fiscal Three Months (Third Quarter) and Nine Months Ended September 28,
1996 and September 30, 1995
Net sales increased 18.9% to $105.0 million for the third quarter of
fiscal 1996 from $88.3 million for the third quarter of fiscal 1995. Net sales
rose 17.4% to $332.9 million for the first nine months of fiscal 1996 from
$283.4 million for the first nine months of fiscal 1995. The sales increases
resulted primarily from new and relocated stores as comparable store sales
(excluding relocations, using all stores open at least one year) increased 4.6%
for the third quarter of fiscal 1996 and 2.1% for the first nine months of
fiscal 1996 over the corresponding periods in the prior fiscal year. The
Company opened 19 new retail farm stores (none in the third quarter of fiscal
1996) and relocated three stores during the first nine months of fiscal 1996.
The Company opened 19 new retail farm stores (seven in the third quarter of
fiscal 1995) and relocated one store during the first nine months of fiscal
1995. The comparable store sales increase for the third quarter of fiscal 1996
(up 4.6%) reflected a continuing improvement over the comparable store sales
increases for the second quarter of 1996 (up 2.6%) and the first quarter of
1996 (down 1.9%). Sales for the third quarter of fiscal 1996 benefited from
(i) the new fall season merchandising and marketing programs, (ii) hurricane
Fran, and (iii) the aggressive markdown program undertaken to clear merchandise
as well as stimulate customer traffic. At September 28, 1996, the Company
operated 204 retail farm stores (in 24 states) versus 184 stores (in 22 states)
at September 30, 1995.
The gross margin rate decreased .1 percentage points to 25.8% of sales for
the third quarter of fiscal 1996 and increased .2 percentage points to 25.7% of
sales for the first nine months of fiscal 1996 over the corresponding periods
in the prior fiscal year. The gross margin rate decrease in the third quarter
resulted primarily from additional markdowns taken during the third quarter of
fiscal 1996 as discussed above. The gross margin rate increase for the first
nine months of fiscal 1996 resulted primarily from the positive mix effect of
sales of lower margin spring seasonal merchandise representing a smaller
portion of total sales than in the corresponding period a year ago.
As a percentage of sales, selling, general and administrative ("SG&A")
expenses increased .2 percentage points to 20.7% of sales for the third quarter
of fiscal 1996 and increased .6 percentage points to 19.8% of sales for the
first nine months of fiscal 1996 primarily due to costs associated with new and
relocated stores as well as from the leverage loss resulting from the soft
comparable store sales performance. On an absolute basis, SG&A expenses
increased 20.7% to $21.8 million for the third quarter of fiscal 1996 and
increased 21.0% to $65.8 million for the first nine months of fiscal 1996.
The increased dollar amounts were primarily attributable to costs associated
with new store openings and relocations (new and relocated stores have
considerably higher occupancy costs, primarily rent, than existing stores).
Depreciation and amortization expense increased 39.3% and 37.2% over the prior
year for the third quarter and the first nine months of fiscal 1996,
respectively, due mainly to costs associated with new and relocated stores.
Net interest expense increased 35.9% to $.6 million in the third quarter of
fiscal 1996 and increased 74.5% to $1.9 million in the first nine months of
fiscal 1996 primarily due to additional borrowings required to support the new
store growth.
8 of 12
<PAGE> 9
The Company's effective tax rate increased slightly to 40.2% for the third
quarter and 40.1% for the first nine months of fiscal 1996, compared to 40.0%
for the third quarter and first nine months of fiscal 1995.
As a result of the foregoing factors, net income for the third quarter of
fiscal 1996 increased 2.2% to $2.3 million from $2.2 million for the third
quarter of fiscal 1995. Net income for the first nine months of fiscal 1996
increased 2.5% to $9.2 million from $9.0 million for the first nine months of
fiscal 1995. As a percentage of sales, net income decreased .3 percentage
points to 2.2% of sales for the third quarter of fiscal 1996 from 2.5% of sales
for the third quarter of fiscal 1995 and decreased .5 percentage points to 2.7%
of sales for the first nine months of fiscal 1996 from 3.2% of sales for the
first nine months of fiscal 1995.
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 and short-term trade credit.
In July 1996, the Company entered into an amendment (the "First
Amendment") to its revolving credit agreement with The First National Bank of
Boston, as agent and for itself, and First American National Bank (the "Credit
Agreement") whereby the Company (i) increased the maximum total commitments
available under the Credit Agreement from $30 million to $45 million and (ii)
extended the expiration date of the Credit Agreement from August 31, 1997 to
August 31, 1999 (the date upon which any remaining borrowings must be repaid).
There were no changes to any of the other material terms and conditions of the
Credit Agreement as a result of the First Amendment.
The Company's inventory and accounts payable levels typically build in the
first and again in the third fiscal quarters in anticipation of the spring and
fall selling seasons. At September 28, 1996, the Company's inventories had
increased $21.3 million to $134.0 million from $112.7 million at December 30,
1995. This increase resulted primarily from additional inventory for new
stores. Short-term trade credit, which represents a source of financing for
inventory, increased $19.8 million to $56.3 million at September 28, 1996 from
$36.5 million at December 30, 1995. 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 September 28, 1996, the Company had working capital of $69.7 million,
which represented a $5.9 million increase from December 30, 1995. This
increase resulted primarily from an increase in cash and cash equivalents
(partially due to timing of payments) and, to a lesser extent, an increase in
inventory without a corresponding increase in accounts payable, as well as a
decrease in income taxes currently payable and an increase in accounts
receivable (mainly due to sales increases), partially offset by an increase in
accrued expenses (mainly due to timing of payments).
Operations provided net cash of $11.1 million and used net cash of $5.7
million in the first nine months of fiscal 1996 and 1995, respectively. The
increase in net cash provided in the first nine months of fiscal 1996 resulted
primarily from accounts payable increasing at nearly the same rate as
inventories in the first nine months of fiscal 1996 compared to inventories
increasing at a significantly faster rate than accounts payable in the first
nine months of fiscal 1995, as well as from the timing of certain prepaid
expenses and accrued expenses compared to the prior year.
Cash used in investing activities of $3.5 million for the first nine
months of fiscal 1996 represented a $1.5 million decrease from cash used in the
first nine months of fiscal 1995 of $5.0 million. The decrease in net cash
used in investing activities was primarily due to increased proceeds from the
sale of property and equipment, principally excess vacant properties, during
the first nine months of fiscal 1996 compared to fiscal 1995.
9 of 12
<PAGE> 10
Financing activities in the first nine months of fiscal 1996 used $1.6
million in cash which represented a $8.2 million increase in net cash used over
the $6.6 million in net cash provided in the first nine months of fiscal 1995.
This increase in net cash used resulted primarily from net borrowings under the
Credit Agreement totaling approximately $1.4 million during the first nine
months of fiscal 1996 compared to $10.2 million in the first nine months of
fiscal 1995, partially offset by the repurchase of fewer shares of preferred
stock in the first nine months of fiscal 1996 compared to the first nine months
of fiscal 1995.
The Company believes that its cash flow from operations, borrowings
available under its Credit Agreement and short-term trade credit will be
sufficient to fund the Company's operations and its growth and expansion plans
for the next several years.
10 of 12
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1. First Amendment to Revolving Credit Agreement, dated as of
July 31, 1996, among the Company and The First National Bank of
Boston, as agent and for itself and First American National
Bank.
10.2. Amended and Restated Revolving Credit Note, dated as of
July 31, 1996, issued by the Company to First American National
Bank in the aggregate principal amount of $20 million.
10.3. 1996 Associate Stock Purchase Plan (filed as Exhibit 4.4
to Registrant's Registration Statement on Form S-8,
Registration No. 333-10699, filed with the Commission on August
23, 1996, and incorporated herein by reference).
27. Financial Data Schedule (only submitted to SEC in electronic
format).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the fiscal
quarter ended September 28, 1996.
11 of 12
<PAGE> 12
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: November 4, 1996 By: /s/ Thomas O. Flood
---------------- ----------------------------------------------
Thomas O. Flood
Senior Vice President - Administration and
Finance, Treasurer and Chief Financial Officer
(Duly Authorized Officer & Principal
Financial Officer)
12 of 12
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
This First Amendment to Revolving Credit Agreement (the "First
Amendment") dated as of July 31, 1996, among Tractor Supply Company, a Delaware
corporation (the "Borrower"), and the First National Bank of Boston, a national
banking association ("FNBB"), as agent (the "Agent"), and for itself, in its
capacity as a lender hereunder, and First American National Bank, a national
banking association ("FANB"),
WITNESSETH:
WHEREAS, pursuant to the terms of the Revolving Credit Agreement (the
"Agreement"), dated as of August 31, 1994, among the Borrower, FNBB, as Agent,
and for itself, in its capacity as a lender under the Agreement, and FANB, the
Banks agreed to loan to the Borrower amounts not to exceed $30,000,000.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to such items in the Agreement; and,
WHEREAS, the Banks have agreed to increase the Total Commitments from
$30,000,000 to $45,000,000, with the Commitment of FNBB remaining at
$25,000,000, and the Commitment of FANB increasing from $5,000,000 to
$20,000,000; and
WHEREAS, the Banks and Borrower desire to amend the Agreement to reflect
the increase in the Total Commitments and to make certain other changes as set
forth herein,
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and legal sufficiency of which is
hereby acknowledged, the parties hereto hereby agree to amend the Agreement as
follows:
1. Definitions. The following definitions set forth in Section
1.1 of the Agreement are hereby amended to read as follows:
"Revolving Credit Notes" means, collectively, the $25,000,000
Revolving Credit Note dated as of August 31, 1994, executed by Borrower in
favor of FNBB, and the $20,000,000 Amended and Restated Revolving Credit Note
of even date herewith executed by Borrower in favor of FANB, as amended and
supplemented from time to time, and any replacement thereof or substitution
therefor.
"Termination Date" means August 31, 1999 and is the date upon
which the Revolving Credit Notes shall be due and payable without demand or the
occurrence of any Default or Event of Default.
"Total Commitments" means the aggregate of the several
Commitments of the Banks in the principal amount of up to Forty-Five Million
and 00/100 Dollars ($45,000,000), as set forth in Section 2.1 of this Agreement,
including the aggregate of the several Commitments as they may be reduced from
time to time.
-1-
<PAGE> 2
2. Section 2.1. The Commitments. Section 2.1.(a) and (b) are
hereby deleted, and the following is substituted as Section 2.1(a) and (b):
(a) Subject to the terms and conditions of and relying on
the representations, warranties and covenants contained in this
Agreement, for a period ending on the Termination Date, each Bank
agrees to make available, severally but not jointly, to the Borrower,
from time to time, as requested by the Borrower, Revolving Credit Loans
up to the amount set out below opposite their respective names, which
for all of the Banks shall be the aggregate maximum principal amount
of up to Forty-Five Million and 00/100 Dollars ($45,000,000). The
maximum Commitment of each of the Banks and its respective percentage
of the Total Commitments (the "Commitment Percentage" of each Bank) are
as follows:
COMMITMENT
BANK COMMITMENT PERCENTAGE
---- ---------- ----------
First American National Bank $ 20,000,000 44%
The First National Bank of Boston $ 25,000,000 56%
(b) The Revolving Credit Loan shall be evidenced by (i) the
$20,000,000 Amended and Restated Revolving Credit Note of Borrower to
FANB, and (ii) the $25,000,000 Revolving Credit Note of Borrower to
FNBB, which Revolving Credit Notes are in the form set forth as EXHIBIT
A attached hereto, with each Revolving Credit Note payable in accordance
with its terms. The Borrower may obtain Revolving Credit Loans, repay
or prepay, without penalty or premium (except that Eurodollar Loans may
only be prepaid at the end of the applicable Eurodollar Interest
Period, unless such prepayment is made pursuant to Sections 2.8, 2.9 or
2.10 hereof), at any time or from time to time, in whole or in part, and
at the sole discretion of the Borrower), and reborrow hereunder, from
the date of this Agreement until the Termination Date, either the full
amount of the Total Commitments, or any lesser sum which is in the
minimum amount of $500,000, and in the minimum amount of an integral
multiple of $100,000 if in excess thereof. Each of the Revolving Credit
Loans shall be made by each Bank ratably in accordance with the ratio
that its respective Commitment Percentage bears to the amount of such
Revolving Credit Loan.
3. Section 2.6. Interest Rates and Payments of Interest. The
carryover paragraph appearing after subparagraph 2.6(a)(2) which begins
"provided, however" is hereby deleted and replaced with the following:
provided, however, that in the event that (i) the ratio of the
Borrower's Total Liabilities to Net Worth exceeds 2 to 1 at the end of
a fiscal quarter of the Borrower, as reported by the Borrower pursuant
to SECTION 7.4, and (ii) the outstanding aggregate principal balance of
the Revolving Credit Loans exceeds $15,000,000 at the end of such
fiscal quarter of the Borrower, then in such
-2-
<PAGE> 3
event, for the next fiscal quarter of the Borrower, the interest rate
payable on Floating Rate Loans shall increase to a rate per annum equal
to the Base Rate plus one-half of one percent (.50%), and the interest
rate payable on Eurodollar Loans shall increase to a rate per annum
equal to the LIBOR Rate plus one percent (1.0%).
Section 2.6(a)(4) is hereby deleted, and the following is
substituted as new Section 2.6(a)(4):
(4) The interest for Floating Rate Loans and Eurodollar Loans
shall be computed on the basis of a 360 day year, counting the actual
number of days elapsed. The interest for Floating Rate Loans shall be
due and payable, without notice, quarterly in arrears, on the first day
of each calendar quarter, commencing on October 1, 1996. Interest
accruing on Eurodollar Loans shall be due and payable, without notice,
at the end of the applicable Eurodollar Interest Period for each
Eurodollar Loan, provided, however, that with respect to a Eurodollar
Loan for which the Borrower has selected a six-month Eurodollar Interest
Period, interest accruing on such Eurodollar Loan shall be due and
payable at intervals of three (3) months after the first day of such
Eurodollar Interest Period and when such Eurodollar Loan is due (whether
at maturity, by reason of acceleration or otherwise).
4. Section 2.11 Letters of Credit. The reference to $3,000,000 in
Section 2.11 of the Agreement is hereby deleted and replaced with $4,500,000.
5. Section 10.1 Authorization. The reference to $5,000,000 in
Section 10.1 of the Agreement is hereby deleted and replaced with $20,000,000.
6. Conditions. Notwithstanding any other provision of this First
Amendment, this First Amendment shall not be effective until the satisfaction
(or waiver by the Agent) of each of the following conditions:
(a) The Agent shall have received a certificate of the President,
Chief Financial Officer, or Controller of the Borrower stating that, to the best
of his knowledge and based on an examination sufficient to enable him to make an
informed statement:
(i) All the representations and the warranties made under this
Agreement are true and correct in all material respects as of the date
of this First Amendment; and
(ii) No Default or Event of Default exists as of the date of
this First Amendment.
(b) This First Amendment and the Amended First American Revolving
Credit Note, shall have been duly executed and delivered to the Agent.
7. Fees. In Consideration for the Agreement of the Banks to
increase the Total Commitments from $30,000,000 to $45,000,000, as set forth in
this First Amendment, the Borrower
-3-
<PAGE> 4
shall pay to the Agent, for the benefit of the Banks, a fee in the amount of
$56,250.00. Such fee shall be deemed earned and shall be due and payable at
the time this First Amendment is executed. The Agent shall distribute fifty
percent (50%) of the total fee to each of the Banks.
8. Ratification. Borrower hereby restates and ratifies the covenants
and warranties contained in the Agreement, as of the date hereof, and confirms
that the terms and conditions of the Agreement, as amended hereby, remain in
full force and effect.
9. Return of Note. Following execution of this First Amendment by all
parties and delivery of the executed $20,000,000 Amended and Restated Revolving
Credit Note to the Agent, the Agent shall cause FANB to promptly deliver the
original $5,000,000 Revolving Credit Note marked "CANCELLED" to the Borrower.
10. Counterparts. This First Amendment may be executed in counterparts.
Remainder of page intentionally left blank - signature page follows
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their duly authorized officers as of the day and year first
written above.
TRACTOR SUPPLY COMPANY THE FIRST NATIONAL BANK OF
BOSTON, as Agent, and in its capacity
as a lender
BY: /s/ Michael J. Kincaid BY: /s/ William C. Purinton
------------------------------ ----------------------------------
TITLE: VICE PRESIDENT TITLE: VICE PRESIDENT
--------------------------- -------------------------------
FIRST AMERICAN NATIONAL BANK
BY: /s/ Kathryn A. Brothers
----------------------------------
TITLE: Kathryn A. Brothers
-------------------------------
Vice President
-5-
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$20,000,000.00 Nashville, Tennessee
As of July 31, 1996
IN CONSIDERATION OF the undertaking of First American National Bank
(the "Bank") to make advances to Tractor Supply Company, a Delaware corporation
(the "Borrower"), pursuant to the Credit Agreement, the Borrower hereby
unconditionally promises to pay to the order of the Bank, at the offices of the
Agent at 100 Federal Street, Boston, Massachusetts 02110, on the Termination
Date, as the same may be extended, the principal sum of Twenty Million and
00/100 Dollars ($20,000,000.00) or, if less, the aggregate unpaid principal
amount of all advances made by the Bank to the Borrower pursuant to the Credit
Agreement, together with interest thereon as provided for in Article 2 of the
Credit Agreement. The Borrower shall have the right at any time and from time
to time to repay or prepay any part or all of the obligations evidenced hereby
withour premium or penalty, and without curtailing the Borrower's right to
further advances during the term hereof, which further advances, together with
all outstanding and unpaid advances, shall never exceed the face amount hereof,
provided, however, that Eurodollar Loans may not be prepaid except at the end
of the Eurodollar Interest Period applicable thereto, unless such prepayment is
made pursuant to Sections 2.8, 2.9 or 2.10 of the Credit Agreement.
If the Borrower shall fail to pay, when due (whether at maturity, by
reason of acceleration, or otherwise) all or any portion of the obligations due
under the terms of this Note or pursuant to the Credit Agreement, such unpaid
past due amount shall no longer bear interest in accordance with the terms of
the preceding paragraph, but, at the election of the Majority Banks, shall bear
interest for each day from the day on which it was so due until paid in full at
a rate per annum equal to the Default Rate.
The interest rate accruing on the outstanding principal amount hereof
shall be computed on the basis of a year of 360 days and the actual number of
days elapsed and may be adjusted in accordance with the provisions of Section
2.6 of the Credit Agreement. Nothing contained in this Note shall be deemed to
establish or require the payment of a rate of interest in excess of the maximum
rate permitted by Applicable Law. In the event that any rate of interest
required to be paid hereunder exceeds the maximum rate permitted by Applicable
Law, such rate shall automatically be reduced to the maximum rate permitted by
such Applicable Law and any excess amount previously collected shall be
automatically credited against the principal amount hereof effective as of the
time paid.
For purposes of this Note, "Credit Agreement" means that certain
Revolving Credit Agreement, dated as of August 31, 1994, among the Borrower, the
Agent and the Banks, as the same are defined in the Credit Agreement, as amended
from time to time. All capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Credit
Agreement. To the extent the provisions of this Note conflict with the
provisions of the Credit Agreement, the provisions of the Credit Agreement shall
control.
The Borrower hereby waives demand, presentment for payment, notice of
non-payment, protest, notice of protest and all other notices, in collecting the
amounts due and payable under this Note. The Borrower further agrees that it
will not be necessary for the Bank, or any
-1-
<PAGE> 2
holder hereof, in order to enforce payment of this Note, to institute or exhaust
its remedies against any maker or other party liable therefor. Upon the
occurrence and continuation of an Event of Default, the Bank, at Bank's option,
without notice to the Borrower, may pursue such remedies as shall be available
to Bank under this Note, the Credit Agreement, or otherwise at law or equity.
Upon the occurrence and continuation of an Event of Default, in addition to all
other Obligations owing to the Bank under the Credit Agreement, the Borrower
agrees to pay to the Bank all reasonable costs and expenses, including
reasonable attorney's or collection fees incurred by the Bank in pursuit of its
rights or remedies under this Note, which amount shall be due and payable in
full without notice or demand for payment, and which unpaid amount shall bear
interest, until paid, at the Default Rate.
This Note represents an amendment and restatement of the $5,000,000
Revolving Credit Note dated as of August 31, 1994 executed by the Borrower in
favor of Bank, and is executed and delivered pursuant to the provisions of the
Credit Agreement which, among other things, contains provisions with respect to
default in payments under, the acceleration of the maturity of, and prepayments
of the principal of, this Note prior to maturity, all upon the terms and
conditions specified in the Credit Agreement.
This Note shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Borrower has authorized this Note to be executed
in its name by its duly authorized representative as of the day and year first
written above.
TRACTOR SUPPLY COMPANY
By: /s/ Michael J. Kincaid
------------------------------
Title: Vice President
----------------------------
-2-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TRACTOR SUPPLY COMPANY FOR THE NINE MONTHS ENDED
SEPTEMBER 28, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-28-1996
<CASH> 11,082
<SECURITIES> 0
<RECEIVABLES> 4,726
<ALLOWANCES> 0
<INVENTORY> 133,971
<CURRENT-ASSETS> 153,155
<PP&E> 64,719
<DEPRECIATION> 18,019
<TOTAL-ASSETS> 202,452
<CURRENT-LIABILITIES> 83,440
<BONDS> 26,147
1,763
0
<COMMON> 70
<OTHER-SE> 88,921
<TOTAL-LIABILITY-AND-EQUITY> 202,452
<SALES> 332,864
<TOTAL-REVENUES> 332,864
<CGS> 247,375
<TOTAL-COSTS> 247,375
<OTHER-EXPENSES> 68,273
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,867
<INCOME-PRETAX> 15,349
<INCOME-TAX> 6,159
<INCOME-CONTINUING> 9,190
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,190
<EPS-PRIMARY> 1.04
<EPS-DILUTED> 1.04
</TABLE>
