<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 28, 1996
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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
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3139732
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
320 Plus Park Boulevard,
Nashville, Tennessee 37217
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (615) 366-4600
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Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.008 par value
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(Title of Class)
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
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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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the closing price of the Common Stock on The Nasdaq
National Market on January 31, 1997, was $61,323,399. For purposes of this
response, the registrant has assumed that 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 registrant's classes
of common stock as of the latest practicable date.
Class Outstanding at January 31, 1997
- - ---------------------------------- ------------------------------------
Common Stock, $.008 par value 8,718,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held on April 24, 1997 are incorporated by reference into
Part III of this Form 10-K. Portions of the Registrant's Annual Report to
Stockholders for the fiscal year ended December 28, 1996 are incorporated by
reference into Parts II and IV of this Form 10-K.
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PART I
ITEM 1. BUSINESS
Overview
Tractor Supply Company, a Delaware corporation ("TSC" or the "Company"), is a
specialty retailer which supplies the daily farming and maintenance needs of
its target customers: hobby, part-time and full-time farmers, as well as
suburban customers, contractors and tradesmen. The Company operates the
largest number of retail farm stores in the United States. TSC's 208 stores,
located in 24 states, typically range in size from 12,000 to 14,000 square feet
of inside space and utilize at least as many square feet of outside space.
Stores are located in rural communities and in the outlying areas of large
cities where farming is a significant factor in the local economy.
The Company meets the daily farming and maintenance needs of its target
customers with a comprehensive selection of farm maintenance products (fencing,
tractor parts and accessories, agricultural spraying equipment and tillage
parts); animal products (specialty feeds, supplements, medicines, veterinary
supplies and livestock feeders); general maintenance products (air compressors,
welders, generators, pumps, plumbing and tools); lawn and garden products
(riding mowers, tillers and fertilizers); light truck equipment; work clothing
and other products. The Company does not sell large tractors, combines, bulk
chemicals or bulk fertilizers. The Company's merchandising strategy combines
this comprehensive product selection with strong inventory support.
The Company was founded in 1938 as a catalog mail order tractor parts supplier.
In 1978, Fuqua Industries, Inc. acquired the Company, and in 1982 Fuqua, in
turn, sold the Company to a group of investors, including three members of the
Company's current senior management team, all three of whom are principal
stockholders. Between the acquisition in 1982 and 1996, the Company's sales
have increased from $122.5 million to $449.0 million and the Company has opened
101 stores and closed 17 stores.
Seasonality and Weather
The Company's business is highly seasonal. Historically, the Company's sales
and profits have been the highest in the second and fourth fiscal quarters of
each year due to the farming industry's planting and harvesting seasons and the
sale of seasonal products. The Company has typically operated at a net loss in
the first fiscal quarter of each year. Unseasonable weather and excessive
rain, drought, or early or late frosts may also affect the Company's sales. The
Company believes, however, that the impact of adverse weather conditions is
somewhat mitigated by the geographic dispersion of its stores.
Business Strategy
The Company believes its sales and earnings growth has resulted from the
focused execution of its business strategy, which includes the following key
components:
Market Niche. The Company has identified a specialized market niche
supplying the daily farming and maintenance needs of hobby, part-time and
full-time farmers. By focusing its product mix on these core customers, the
Company believes it has differentiated itself from general merchandise, home
center and other specialty retailers.
Customer Service. The Company's number one priority is customer service.
It offers its customers a high level of in-store service through motivated,
well trained, technically proficient Store Associates. The Company believes
the ability of its Store Associates to provide friendly, responsive,
technical assistance is valued by its customers and helps to promote strong
customer loyalty and repeat shopping. TSC's commitment to customer service
is further enhanced by its "satisfaction guaranteed" policy and its special
order program.
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Technology. Management strives to improve operating efficiencies and
reduce costs through the use of modern technologies. The Company utilizes
an integrated computerized inventory management and point-of-sale system
that permits the entire store network to communicate with the Company's
distribution centers and its management headquarters. The Company believes
that this integrated system results in lower inventory carrying costs,
improved in-stock positions and enhanced inventory control, as well as
management and purchasing efficiencies.
Store Locations. The Company's strategy is to locate its stores in rural
communities and outlying areas of large cities where farming is a
significant factor in the local economy. The Company believes it has
developed a sophisticated, proven methodology to select its new store sites.
Product Selection. The Company offers a comprehensive selection of high
quality, nationally recognized brand name and private label products,
focused principally on the needs of the hobby, part-time and full-time
farmer. The Company seeks to offer an extensive assortment of merchandise
in specialized products. The Company's full line of product offerings is
supported by a strong in-stock inventory position. An average store
displays approximately 12,000 different products.
Pricing. The Company utilizes a "low prices everyday" strategy to
consistently offer its products at competitive prices. The Company monitors
prices at competing stores and adjusts its prices as necessary. The Company
believes that by avoiding a "sale" oriented marketing strategy, it is
attracting customers on a regular basis rather than only in response to
sales.
Vendor Partnering. The Company has established close working relationships
with many of its principal vendors to manage stock levels, develop new
products, plan promotions and design merchandise displays. The Company
intends to expand its vendor partnering strategy to include most of its
other key vendors.
Advertising. To generate store traffic and position TSC as a destination
store, the Company promotes broad selections of merchandise with color
circulars distributed by direct mail and as newspaper inserts. The Company
also runs periodic special events promoted through local flyers, circulars
and radio advertising.
Store Environment. TSC's stores are open, clean, bright and offer a
pleasant atmosphere with disciplined product presentation, attractive
displays, both inside and outside the store, and efficient check-out
procedures. The Company endeavors to staff its stores with courteous,
highly motivated, knowledgeable Store Associates in order to provide a
friendly, enjoyable shopping experience.
Growth Strategy
The Company's growth strategy is to increase sales and profitability at
existing stores through continuing improvements in product mix and operating
efficiencies and through new store openings and relocations. Since the
beginning of fiscal 1992, the Company has opened 63 new stores and relocated
16. Of these 79 stores, 52 have been open more than one year and have
generated average net sales that are approximately 26.4% per annum greater than
those of existing stores. During this period, the Company has also closed six
stores (excluding relocations). Management believes that substantial
opportunities exist for the opening of new stores to achieve greater
penetration in existing markets and to expand into new markets.
The Company plans to open 25 new stores in 1997, 28 in 1998 and additional
stores thereafter. As of January 31, 1997, the Company has opened four new
stores in Seguin, Texas; Chillicothe, Ohio; Asheville, North Carolina; and
Campbellsville, Kentucky and approximately eight additional stores are
scheduled to open in the first quarter of 1997.
The Company's strategy is to lease its new stores. Assuming that new stores
are leased, the estimated cash required to open a new store is approximately
$800,000 to $1,000,000, the majority of which is for initial inventory and
capital expenditures, principally leasehold improvements, fixtures and
equipment, and the balance of which is for store opening expenses. The Company
may selectively purchase individual store locations or small chains of stores
if opportunities arise and management believes the store sites are located in
prime real estate locations.
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The Company plans to relocate approximately one store in 1997 and an average of
one or two additional stores each year over the next several years. Store
relocations are typically undertaken to move small, older stores to full-size
formats in prime retail areas. The cash required to complete a store
relocation typically ranges from $250,000 to $500,000 depending on whether the
Company is responsible for any renovation or remodeling costs. The Company has
experienced average sales increases in excess of 30% in the year subsequent to
relocation for stores relocated over the past five years.
The Company plans to extensively remodel an average of one or two of its strong
performing stores each year over the next several years, none of which are
scheduled for 1997. The estimated cash required to complete a major remodeling
typically ranges from $150,000 to $400,000. The Company also plans to perform
minor remodelings of its stores on an on-going basis to ensure overall Company
physical facility standards are maintained. The estimated cash required to
complete a minor remodeling typically ranges from $25,000 to $75,000.
Store Environment and Merchandising
The Company's stores are designed and managed to create a pleasant environment,
maximize sales and operating efficiencies and make shopping an enjoyable
experience. The Company's stores are clean, open and bright. The average
Company store has approximately 12,200 square feet of inside selling space.
The Company typically utilizes at least 12,000 square feet of outside space
from which it merchandises certain farm-related and lawn and garden products.
Visual displays inside and outside can be changed easily for seasonal products
and promotions and space can be reallocated easily among departments.
The following chart indicates the average percentages of sales represented by
each of the major product categories during fiscal 1996, 1995 and 1994:
<TABLE>
<CAPTION>
Percent of Total Sales
----------------------------
Product Category 1996 1995 1994
---------------- ------ ------ ------
<S> <C> <C> <C>
Farm maintenance ......... 19% 19% 18%
Animal care .............. 16 15 15
General maintenance ...... 17 17 16
Lawn and garden .......... 18 21 24
Light truck maintenance .. 14 13 13
Work clothing and other .. 16 15 14
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
The Company's stores carry a consistent merchandise mix, tailored to some
extent to specific regional needs and store size, and stock an average of
12,000 products. The Company's stores carry a wide selection of quality,
nationally recognized name brand merchandise. The Company also markets private
label merchandise under the Huskee, Traveller, Harvest Supreme, Retriever and
Dumor registered trademarks. Management believes that selling these nationally
recognized brands next to the Company's own high quality, private label
merchandise offers its customers a range of products at various price points
and helps build customer loyalty. The Company believes that it has also
increased sales by distributing to in-store customers an easy-reference "blue
book" catalog containing the descriptions and prices for thousands of its
products.
The Company uses a "power merchandising" selling strategy. Under this
strategy, selected merchandise is given special emphasis through prominent
displays, a comprehensive product line and strong inventory support.
Customer Service
The Company's number one priority is customer service. Store Associates are
the key to quality customer service, and the Company seeks to provide them with
decision-making authority and training to enable them to meet customer needs.
Store Associates are authorized to special order virtually any non-stocked item
a customer may need. The Company also has a "satisfaction guaranteed" policy:
if customers are not satisfied, Store Associates are authorized to offer to
repair or exchange the product, or offer store credits or refunds, irrespective
of when the product was purchased. The Company believes that by providing
these services it improves customer satisfaction, builds customer loyalty and
generates repeat business.
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The Company devotes considerable resources to training its Store Associates,
often in cooperation with its vendors. The Company's training programs include
(i) a full management training program for manager trainees which covers all
aspects of the Company's operations, (ii) product knowledge video tapes
covering over 175 products, (iii) semi-annual retail training skills classes,
(iv) semi-annual store managers meetings with vendor product presentations, (v)
vendor sponsored in-store training programs and (vi) ongoing product
information updates from its management headquarters. The Company seeks to
hire and train Store Associates with farming backgrounds.
The Company provides financial incentives to its district managers, store
managers, manager trainees, sales managers and sales clerks through incentive
compensation programs based on the achievement of sales and/or profitability
goals. The Company believes that its incentive compensation programs increase
the motivation and overall performance of its Store Associates and the
Company's ability to attract and retain qualified personnel.
Purchasing and Distribution
The Company offers an extensive selection of farm maintenance and other
specialty products. The Company has established arrangements with certain of
its principal vendors to develop new products, plan promotions, review
marketing strategies, manage stock levels and develop merchandise displays.
The Company is pursuing similar arrangements with other key vendors. The
Company's business is not dependent upon any one vendor or particular group of
vendors. The Company purchases its products from approximately 2,000 vendors,
the five largest of which accounted for less than 20% of the Company's total
purchases in fiscal 1996 and none of which accounted for more than 10% of the
Company's purchases during such year. The Company has no long-term contractual
commitments with any of its vendors, has not experienced difficulty in
obtaining satisfactory alternative sources of supply for its products and
believes that adequate sources of supply exist at substantially similar costs
for substantially all of its products. Approximately 750 vendors participate
in the Company's electronic data interchanges ("EDI") system which makes it
possible for the Company to place purchase orders electronically. The Company
is working to expand the number of vendors who transmit invoices to the Company
and increase the amount of sales history transmitted from the Company, all
through EDI. The Company's merchandise purchasing is centrally managed.
The Company operates a 339,000 square foot distribution center in Indianapolis,
Indiana and a 144,000 square foot distribution center in Omaha, Nebraska, from
which it serviced approximately 126 stores and 82 stores, respectively, at
December 28, 1996. The Company also intends to utilize smaller, strategically
located "cross-dock" facilities to support the main distribution centers and
transportation system network. The first such cross-dock facility, a 50,000
square foot distribution center located in Waco, Texas, was opened in the fall
of 1996 and supports the Company's stores located in the Southwest region of
the country. The Company's current plans call for the opening of a similar
cross-dock facility, a 28,000 square foot distribution center to be located in
Winston-Salem, North Carolina, in 1997 to support the Company's growth and
expansion plans in the Southeast region of the country. In fiscal 1996, the
Company received approximately 67% of its merchandise through these
distribution facilities, with the balance delivered directly to the Company's
stores. The main distribution centers ship to each store at least twice a week
during peak periods through a dedicated contract carrier. The Company is
continuously evaluating its long-term strategic plan with respect to its
distribution centers and transportation operations.
Management Information and Control Systems
The Company has invested considerable resources in sophisticated management
information and control systems to ensure superior customer service, support
the purchase and distribution of merchandise and improve operating
efficiencies. The management information and control systems include a
point-of-sale system, a purchase order management system, a replenishment
system, a merchandise planning system and full sales, inventory and gross
margin management reporting systems. These systems are fully integrated and
track merchandise from order through sale. All operational data from these
systems is also fully integrated with the Company's financial systems.
The Company is constantly assessing and upgrading its management information
and control systems to support its growth, reduce and control costs, improve
internal controls and operating efficiencies and facilitate better
decision-making. In 1996, the Company completed the installation of an
advanced point-of-sale store information system which has reduced customer
check-out time, improved inventory control and enhanced overall productivity.
The Company also completed the installation of several more advanced financial
systems in 1996 (and plans to complete the installation of another major
financial system by the end of the second fiscal quarter of 1997) which are
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expected to improve financial reporting and controls, enhance administrative
efficiencies and provide the flexibility to support the Company's growth plans.
The estimated cost of these new systems was approximately $7.0 million to $7.5
million for the 154 stores included in the original installation plan. The
estimated incremental cost of completing the installation of these new systems
is approximately $2.0 million, which reflects 54 additional stores and other
enhancements, such as scanning, not originally planned.
Competition
The Company operates in a highly competitive market. While the Company
believes it has successfully differentiated itself from general merchandise,
home center and other specialty retailers, the Company faces select competition
from these entities, as well as competition from independently owned retail
farm stores, several privately-held regional farm store chains and farm
cooperatives. Some of these competitors are units of large national or
regional chains that have substantially greater financial and other resources
than the Company.
Management and Employees
As of December 28, 1996, the Company employed approximately 1,300 full-time and
approximately 1,200 part-time employees. The Company also employs additional
part-time employees during peak periods. As of such date, approximately 90
employees of the Company's two main distribution centers were covered by
collective bargaining agreements. During 1996, the Company entered into new
collective bargaining agreements with the union memberships at the
Indianapolis, Indiana and Omaha, Nebraska distribution centers on terms and
conditions similar to those in the previous contracts. The new collective
bargaining agreements at the Indianapolis, Indiana and Omaha, Nebraska
distribution centers expire in April 2000 and August 1999, respectively.
Management believes its district managers, store managers and other supervisory
personnel have contributed significantly to the Company's performance.
Management encourages the participation of all Store Associates in decision
making, regularly solicits input and suggestions from Store Associates and
responds to the suggestions expressed by Company employees. Management
believes it has good relationships with its employees.
Most of the Company's senior management, district managers and store managers
were promoted to their positions from within the Company. All members of
senior management have at least 15 years of experience with the Company.
District managers and store managers have an average length of service with the
Company of approximately 7.0 years and 6.3 years, respectively. Management
believes internal promotions, coupled with recruitment of college graduates and
hiring of individuals with previous retail experience, will provide the
management structure necessary to support expected store growth.
ITEM 2. PROPERTIES
As of December 28, 1996, the Company leased its three distribution facilities
and its management headquarters, owned 74 stores (23 of which are subject to
mortgages) and leased 134 stores. The store leases typically have initial
terms of between 10 and 15 years, with one to three renewal periods of five
years each, exercisable at the Company's option. None of the store leases or
mortgages individually is material to the Company's operations. The leases at
its Indianapolis, Indiana, Omaha, Nebraska and Waco, Texas distribution
facilities expire in 2000, 1999 and 1998 respectively, and the lease for its
management headquarters expires in 2007. Eight of the Company's stores and its
management headquarters are leased from affiliated parties. See Item 13.
"Certain Relationships and Related Transactions".
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As of December 28, 1996, the Company operated 208 stores in 24 states as
follows:
<TABLE>
<CAPTION>
Number Number
State of Stores State of Stores
----- --------- ----- ---------
<S> <C> <C> <C>
Texas 29 Nebraska 6
Ohio 28 North Carolina 6
Michigan 21 Missouri 5
Indiana 17 Pennsylvania 5
Tennessee 17 South Dakota 4
Illinois 12 Virginia 4
Iowa 10 Maryland 2
Kentucky 10 Mississippi 1
North Dakota 8 Montana 1
Kansas 7 New York 1
Arkansas 6 Oklahoma 1
Minnesota 6 Wisconsin 1
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings, other than routine claims
and lawsuits arising in the ordinary course of its business. The Company does
not believe that such claims and lawsuits, individually or in the aggregate,
will have a material adverse effect on the Company's business. Compliance with
federal, state, local and foreign laws and regulations pertaining to the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had, and is not anticipated to have, a
material effect upon the capital expenditures, earnings or competitive position
of the Company. State and local regulations in the United States that are
designed to protect consumers or the environment have an increasing influence
on product claims, contents and packaging.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter was submitted to a vote of the Company's security-holders during the
fourth quarter of the Company's fiscal year ended December 28, 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General 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 April 24, 1997.
The following is a list of the names and ages of all of the executive officers
of the registrant indicating all positions and offices with the registrant held
by each such person and each person's principal occupations and employment
during at least the past five years:
<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
Joseph H. Scarlett, Jr. .. Chairman of the Board, Chief Executive Officer and Director 54
Gerald E. Newkirk ........ President, Chief Operating Officer and Director 50
Thomas O. Flood .......... Senior Vice President-Administration and Finance, 50
Treasurer, Chief Financial Officer and Director
John R. Pearson .......... Senior Vice President-Merchandising 48
John W. Atkins ........... Vice President-Farm Merchandising 34
Blake A. Fohl ............ Vice President-Marketing 37
Lawrence Goldberg ........ Vice President-Logistics 54
Leo H. Haberer ........... Vice President-Real Estate 56
Michael J. Kincaid ....... Vice President-Controller and Secretary 39
</TABLE>
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<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
Gary M. Magoni ........... Vice President-Operations (Region I) 50
James R. McMurray ........ Vice President-Information Technology and 30
Chief Information Officer
Stanley L. Ruta .......... Vice President-Operations (Region II) 45
Daisy L. Vanderlinde ..... Vice President-Human Resources 45
</TABLE>
__________________
Joseph H. Scarlett, Jr. became Chairman and Chief Executive Officer of the
Company in February 1993 after having served as President and Chief Operating
Officer of the Company since 1987. Between 1979 and 1987, Mr. Scarlett served
as Vice President-Personnel, Senior Vice President-Administration and Executive
Vice President-Operations of the Company. Prior to 1979, Mr. Scarlett held
operational positions, including District Supervisor and Personnel Director,
with Two Guys Discount Stores in New Jersey over a 15 year period. Mr.
Scarlett has served as a director of the Company since 1982. Mr. Scarlett is
currently a member of the International Mass Retail Association Board.
Gerald E. Newkirk became President and Chief Operating Officer of the Company
in February 1993 after having served as Executive Vice President of the Company
in charge of Operations and Merchandising since 1987 and as Vice President of
the Company in charge of merchandising from 1981 to 1987. From 1979 to 1981,
Mr. Newkirk was involved with store operations, first as a District Manager and
subsequently as a Regional Vice President of the Company. Prior to 1979, he
was a District Manager for Grossman's Lumber. Mr. Newkirk has served as a
director of the Company since 1985. Mr. Newkirk is currently a member of the
National FFA Foundation Sponsor Board.
Thomas O. Flood became Senior Vice President of Administration and Finance,
Treasurer and Chief Financial Officer of the Company in January 1996 after
having served as Vice President of Administration and Finance of the Company
since 1984 and as Chief Financial Officer and Treasurer since June 1993. Mr.
Flood previously served as Vice President of Finance of the Company from 1982
to 1984, as Controller from 1981 to 1982 and in various financial and
management information systems capacities between 1969 and 1981. Mr. Flood has
served as a director of the Company since 1985.
John R. Pearson became Senior Vice President of Merchandising of the Company in
January 1997 after having served as Senior Vice President of Merchandising and
Logistics of the Company since October 1993, as Vice President and General
Merchandise Manager of the Company since November 1991 and as Regional Vice
President of Operations of the Company from 1987 to 1991. Mr. Pearson has also
held various operational positions since joining the Company in 1970.
John W. Atkins became Vice President of Farm Merchandising of the Company in
December 1996 after having served as Division Merchandise Manager of Farm
Products of the Company since July 1995 and as a Buyer of the Company since
July 1992. From 1986 to 1992, Mr. Atkins held various positions, including
most recently Division Manager-Field & Stream with Bass Pro Shops Outdoor
World. From 1983 to 1986, Mr. Atkins held various retail management positions
with K-Mart Corporation.
Blake A. Fohl became Vice President of Marketing of the Company in December
1996 after having served as Director of Marketing of the Company since June
1995 and as a Buyer of the Company since August 1992. Mr. Fohl previously
served as Divisional Manager of Green Seed Company from 1989 to 1992, as a
Dairy Specialist with Purina Mills from 1986 to 1989 and as a store manager for
Southern States Cooperative from 1981 to 1986.
Lawrence Goldberg became Vice President of Logistics of the Company in 1993
after having served as Director of Distribution of the Company since October
1992. Mr. Goldberg previously served as the Senior Vice President of
Merchandising and Marketing of Paccar Automotive Inc. from 1991 to 1992, the
General Manager of Al's Auto Supply (a subsidiary of Paccar Automotive Inc.)
from 1990 to 1991, the Director of Stores Division of Fuller O'Brien Paint
Corporation from 1988 to 1990 and the Director of Stores of Saxon Paint & Home
Care Centers from 1980 to 1988.
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Leo H. Haberer has served as Vice President of Real Estate of the Company since
1989. Prior to 1989, Mr. Haberer served as a Regional Vice President of the
Company from 1975 to 1989 and as a store manager and zone manager from 1970 to
1975.
Michael J. Kincaid became Vice President-Controller and Secretary of the
Company in January 1996 after having served as the Controller of the Company
since June 1991 and as the Secretary of the Company since May 1993. From 1981
to 1991, Mr. Kincaid held various management and staff accounting positions
with Cole National Corporation, Revco D.S., Inc. and Price Waterhouse.
Gary M. Magoni has served as a Vice President of Operations of the Company
since 1989. Mr. Magoni previously served as a District Manager for Gold Circle
Stores (a subsidiary of Federated Department Stores) from 1982 to 1988.
James R. McMurray became Vice President of Information Technology and Chief
Information Officer of the Company in January 1996 after having served as Vice
President of Management Information Systems of the Company since December 1994.
Mr. McMurray previously served as Vice President of Horizon Systems from July
1993 to December 1994 and as Vice President of Retail Information Systems for
LDI Corporation from June 1991 through June 1993. From 1987 to June 1991, Mr.
McMurray served as Chairman and President of Ergonomic Systems Corporation, a
leading developer of retail information systems technology located in
Brunswick, Ohio.
Stanley L. Ruta has served as a Vice President of Operations of the Company
since March 1994. Mr. Ruta previously served as Vice President of Store
Planning and Development and Vice President of Store Operations of Central
Tractor Farm and Family Center, Inc. from 1988 to 1994. From 1976 to 1988, Mr.
Ruta held various other operation positions with Central Tractor Farm and
Family Center, Inc., including District Manager from 1985 to 1988.
Daisy L. Vanderlinde became Vice President of Human Resources in April 1996.
Ms. Vanderlinde previously served as Vice President - Human Resources for
Marshalls, Inc. from 1990 to 1996. From 1979 to 1990, Ms. Vanderlinde held
various management and human resources positions, including most recently
Divisional Vice President - Human Resources, with The Broadway Stores, Inc., a
division of Carter Hawley Hale Stores, Inc.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock began trading on The Nasdaq National Market on
February 18, 1994 under the symbol "TSCO".
The table below sets forth the high and low sales prices of the Company's
Common Stock as reported by The Nasdaq National Market for each fiscal quarter
of the periods indicated:
<TABLE>
<CAPTION>
Price Range
--------------------------------------
Fiscal 1996 Fiscal 1995
---------------- -----------------
High Low High Low
------- ------- ------- -------
<S> <C> <C> <C> <C>
First Quarter $27 1/2 $19 3/4 $24 1/4 $20 1/4
Second Quarter $27 1/4 $22 $22 1/4 $18 1/4
Third Quarter $23 1/2 $20 3/4 $24 1/2 $19
Fourth Quarter $22 3/4 $19 5/8 $20 1/2 $14 5/8
</TABLE>
As of January 31, 1997, the approximate number of record holders of the
Company's Common Stock was 61 (excluding individual participants in nominee
security position listings) and the approximate number of beneficial holders of
the Company's Common Stock was 1,500.
The Company has not declared any cash dividends on its Common Stock during the
two most recent fiscal years. The Company currently intends to retain all
earnings for future operation and expansion of its business and, therefore,
does not anticipate that any dividends will be declared on the Common Stock in
the foreseeable future. Any future declaration of dividends will be subject to
the discretion of the Company's Board of Directors and subject to the Company's
results of operations, financial condition, cash requirements and other factors
deemed relevant by the Board of Directors. In addition, the Company is
required to pay dividends on its outstanding Series B Preferred Stock before it
pays any dividends on its Common Stock. The Company is also restricted from
paying cash dividends by the terms of the note agreement which relates to
mortgage notes on certain of its properties.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Five Year Selected Financial and
Operating Highlights" on page 9 of the Company's Annual Report to Stockholders
for the fiscal year ended December 28, 1996 is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 10 through
15 of the Company's Annual Report to Stockholders for the fiscal year ended
December 28, 1996 is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth under the captions "Report of Independent
Accountants", "Balance Sheets", "Statements of Income", "Statement of Changes
in Stockholders' Equity", "Statements of Cash Flows", and "Notes to Financial
Statements" on pages 15 through 28 of the Company's Annual Report to
Stockholders for the fiscal year ended December 28, 1996 is incorporated herein
by reference.
The Company's unaudited operating results for each fiscal quarter within the
two most recent fiscal years, as set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
page 11 of the Company's Annual Report to Stockholders for the fiscal year
ended December 28, 1996, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
10
<PAGE> 11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the captions "Election of Class III Directors
and Information Regarding Directors" and "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" on pages 2 through 5 and 23, respectively, of
the Company's Proxy Statement for its Annual Meeting of Stockholders to be held
on April 24, 1997 is incorporated herein by reference.
The information set forth under the caption "Executive Officers of the
Registrant" in Part I of this Form 10-K is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the captions "Board of Directors and Committees
of the Board - Compensation of Directors", "Compensation Committee Interlocks
and Insider Participation", "Executive Compensation", "Summary Compensation
Table", "Option Grants in Last Fiscal Year", "Aggregated Option Exercises in
Last Fiscal Year and Fiscal Year-End Option Values", "Compensation Committee's
Report on Executive Compensation", and "Performance Graph" on pages 5, 6 and 15
through 20 of the Company's Proxy Statement for its Annual Meeting of
Stockholders to be held on April 24, 1997 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" on pages 23 and 24 of the Company's Proxy
Statement for its Annual Meeting of Stockholders to be held on April 24, 1997
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Interests of Management in Certain
Transactions" on pages 21 and 22 of the Company's Proxy Statement for its
Annual Meeting of Stockholders to be held on April 24, 1997 is incorporated
herein by reference.
11
<PAGE> 12
PART IV
<TABLE>
<CAPTION>
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(a) (1) Financial Statements Page
<S> <C> <C>
The following financial statements and related notes of the
Company contained on pages 15 through 28 of the Company's Annual
Report to Stockholders for the fiscal year ended December 28, 1996
are incorporated herein by reference:
Report of Independent Accountants.................................
Balance Sheets - December 28, 1996 and December 30, 1995..........
Statements of Income - Fiscal Years Ended December 28, 1996,
December 30, 1995 and December 31, 1994...........................
Statement of Changes in Stockholders' Equity - Fiscal Years Ended
December 28, 1996, December 30, 1995 and December 31, 1994........
Statements of Cash Flows - Fiscal Years Ended December 28, 1996,
December 30, 1995 and December 31, 1994...........................
Notes to Financial Statements.....................................
(a) (2) Financial Statement Schedules
None
Financial statement schedules have been omitted because they are
not applicable or because the required information is otherwise
furnished.
(a) (3) Exhibits
The exhibits listed in the Index to Exhibits, which appears on
pages 14 through 18 of this Form 10-K, are incorporated herein by
reference or filed as part of this Form 10-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
last quarter of the fiscal year ended December 28, 1996.
</TABLE>
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 21, 1997 By: /s/ Thomas O. Flood
------------------------
Thomas O. Flood
Senior Vice President -
Administration
and Finance, Treasurer and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
/s/ Joseph H. Scarlett, Jr.* Chairman of the Board, Chief March 21, 1997
- - ---------------------------- Executive Officer and Director
Joseph H. Scarlett, Jr. (Principal Executive Officer)
/s/ Gerald E. Newkirk* President, Chief Operating March 21, 1997
- - ---------------------------- Officer and Director
Gerald E. Newkirk
/s/ Thomas O. Flood Senior Vice President - Administration March 21, 1997
- - ---------------------------- and Finance, Treasurer, Chief
Thomas O. Flood Financial Officer and Director
(Principal Financial and
Accounting Officer)
/s/ Thomas J. Hennesy, III* Director March 21, 1997
- - ----------------------------
Thomas J. Hennesy, III
/s/ Joseph D. Maxwell* Director March 21, 1997
- - ----------------------------
Joseph D. Maxwell
/s/ S.P. Braud* Director March 21, 1997
- - ------------------------------
S.P. Braud
/s/ Joseph M. Rodgers* Director March 21, 1997
- - -------- --------------------
Joseph M. Rodgers
*By: /s/ Thomas O. Flood
-------------------
Thomas O. Flood
Attorney-in-fact by authority
of Power of Attorney
</TABLE>
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Page Number
Exhibit by Sequential
Number Description Numbering System
- - ------- ----------- ----------------
<S> <C> <C>
2.1 Plan of Reorganization and Exchange Agreement, dated as of May 1,
1991, between the Company and Thomas J. Hennesy, III (filed as
Exhibit 2.1 to Registrant's Registration Statement on Form S-1,
Registration No. 33-73028, filed with the Commission on December 17,
1993, and incorporated herein by reference).
3.1 Restated Certificate of Incorporation of the Company, filed with the
Delaware Secretary of State on February 14, 1994 (filed as Exhibit
3.5 to Amendment No.2 to Registrant's Registration Statement on Form
S-1, Registration No. 33-73028, filed with the Commission on February
14, 1994, and incorporated herein by reference).
3.2 Certificate of Amendment of the Restated Certificate of Incorporation
of the Company, filed with the Delaware Secretary of State on April
28, 1995 (filed as Exhibit 1 to Registrant's Quarterly Report on Form
10-Q, filed with the Commission on August 8, 1995, Commission File
No. 000-23314, and incorporated herein by reference).
3.3 Amended and Restated By-laws of the Company as currently in effect
(filed as Exhibit 3.7 to Registrant's Registration Statement on Form
S-1, Registration No. 33-73028, filed with the Commission on December
17, 1993, and incorporated herein by reference).
4.1 Form of Specimen Certificate representing the Company's Common Stock,
par value $.008 per share (filed as Exhibit 4.2 to Amendment No. 1 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on January 31, 1994, and
incorporated herein by reference).
10.1 Revolving Credit Agreement, dated as of August 31, 1994, among the
Company, The First National Bank of Boston, as agent and for itself,
and First American National Bank (filed as Exhibit 1 to Registrant's
Quarterly Report on Form 10-Q, filed with the Commission on November
9, 1994, Commission File No. 000-23314, and incorporated herein by
reference).
10.2 Revolving Credit Note, dated as of August 31, 1994, issued by the
Company to The First National Bank of Boston in the aggregate
principal amount of $25 million (filed as Exhibit 2 to Registrant's
Quarterly Report on Form 10-Q, filed with the Commission on November
9, 1994, Commission File No. 000-23314, and incorporated herein by
reference).
10.3 Revolving Credit Note, dated as of August 31, 1994, issued by the
Company to First American National Bank in the aggregate principal
amount of $5 million (filed as Exhibit 3 to Registrant's Quarterly
Report on Form 10-Q, filed with the Commission on November 9, 1994,
Commission File No. 000-23314, and incorporated herein by reference).
10.4 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 (filed as
Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q,
Commission File No. 000-23314, filed with the Commission on November
6, 1996, and incorporated herein by reference).
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Page Number
Exhibit by Sequential
Number Description Numbering System
- - ------- ----------- ----------------
<S> <C> <C>
10.5 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 (filed as Exhibit 10.2 to
Registrant's Quarterly Report on Form 10-Q, Commission File No.
000-23314, filed with the Commission on November 6, 1996, and
incorporated herein by reference).
10.6 Note Agreement (the "Note Agreement"), dated as of April 1, 1988,
among the Company, The Mutual Life Insurance Company of New York and
MONY Life Insurance Company of America (filed as Exhibit 10.3 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on December 17, 1993, and
incorporated herein by reference).
10.7 First Amendment to Note Agreement, dated April 1, 1991, among the
Company, The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America (filed as Exhibit 10.4 to Registrant's
Registration Statement on Form S-1, Registration No. 33-73028, filed
with the Commission on December 17, 1993, and incorporated herein by
reference).
10.8 Second Amendment to Note Agreement, dated as of February 1, 1992,
among the Company, The Mutual Life Insurance Company of New York and
MONY Life Insurance Company of America (filed as Exhibit 10.5 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on December 17, 1993, and
incorporated herein by reference).
10.9 Third Amendment to Note Agreement, dated as of July 1, 1993, among
the Company, The Mutual Life Insurance Company of New York and MONY
Life Insurance Company of America (filed as Exhibit 10.6 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on December 17, 1993, and
incorporated herein by reference).
10.10 Form of Adjustable Rate First Mortgage Notes due January 1, 2004
issued by the Company to The Mutual Life Insurance Company of New
York and MONY Life Insurance Company of America pursuant to the Note
Agreement, as amended (filed as Exhibit 10.7 to Registrant's
Registration Statement on Form S-1, Registration No. 33-73028, filed
with the Commission on December 17, 1993, and incorporated herein by
reference).
10.11 Form of Mortgage, dated as of May 10, 1988, from the Company to The
Mutual Life Insurance Company of New York pursuant to the Note
Agreement, as amended (filed as Exhibit 10.8 to Registrant's
Registration Statement on Form S-1, Registration No. 33-73028, filed
with the Commission on December 17, 1993, and incorporated herein by
reference).
10.12 Ground Lease Agreement, dated as of July 1, 1991, between the Company
and GOF Indiana Corp. (relating to Plainfield, Indiana store) (filed
as Exhibit 10.10 to Registrant's Registration Statement on Form S-1,
Registration No. 33-73028, filed with the Commission on December 17,
1993, and incorporated herein by reference).
10.13 Indenture of Lease, dated as of September 1, 1991, between the
Company and GOF Indiana Corp. (relating to Plainfield, Indiana store)
(filed as Exhibit 10.11 to Registrant's Registration Statement on
Form S-1, Registration No. 33-73028, filed with the Commission on
December 17, 1993, and incorporated herein by reference).
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
Page Number
Exhibit by Sequential
Number Description Numbering System
- - ------- ----------- ----------------
<S> <C> <C>
10.14 Indenture of Lease, dated as of January 1, 1986, between the Company
and Thomas J., III and Cheryl D. Hennesy (relating to Corpus Christi,
Texas store) (filed as Exhibit 10.12 to Registrant's Registration
Statement on Form S-1, Registration No. 33-73028, filed with the
Commission on December 17, 1993, and incorporated herein by
reference).
10.15 Indenture of Lease, dated as of August 1, 1994, between the Company
and Thomas J., III and Cheryl D. Hennesy (relating to Paris, Texas
store) (filed as Exhibit 10.13 to Registrant's Annual Report on Form
10-K, filed with the Commission on March 15, 1995, Commission File
No. 000-23314, and incorporated herein by reference).
10.16 Indenture of Lease, dated as of January 1, 1986, between the Company
and Joseph H., Jr. and Dorothy F. Scarlett (relating to Omaha,
Nebraska store) (filed as Exhibit 10.14 to Registrant's Registration
Statement on Form S-1, Registration No. 33-73028, filed with the
Commission on December 17, 1993, and incorporated herein by
reference).
10.17 Indenture of Lease, dated as of January 1, 1986, between the Company
and Gerald E. and Gail E. Newkirk (relating to Waterloo, Iowa store)
(filed as Exhibit 10.15 to Registrant's Registration Statement on
Form S-1, Registration No. 33-73028, filed with the Commission on
December 17, 1993, and incorporated herein by reference).
10.18 Amendment No. 1 to Lease Agreement, dated July 1, 1992, between the
Company and Gerald E. and Gail E. Newkirk (relating to Waterloo, Iowa
store) (filed as Exhibit 10.16 to Registrant's Registration Statement
on Form S-1, Registration No. 33-73028, filed with the Commission on
December 17, 1993, and incorporated herein by reference).
10.19 Indenture of Lease, dated as of January 1, 1986, between the Company
and Gerald E. and Gail E. Newkirk (relating to Sioux Falls, South
Dakota store) (filed as Exhibit 10.17 to Registrant's Registration
Statement on Form S-1, Registration No. 33-73028, filed with the
Commission on December 17, 1993, and incorporated herein by
reference).
10.20 Indenture of Lease, dated as of January 1, 1986, between the Company
and Joseph D. and Juliann K. Maxwell (relating to Nashville,
Tennessee store) (filed as Exhibit 10.18 to Registrant's Registration
Statement on Form S-1, Registration No. 33-73028, filed with the
Commission on December 17, 1993, and incorporated herein by
reference).
10.21 Indenture of Lease, dated as of January 1, 1986, between the Company
and Thomas O. and Vickie Flood (relating to Mandan, North Dakota
store) (filed as Exhibit 10.19 to Registrant's Registration Statement
on Form S-1, Registration No. 33-73028, filed with the Commission on
December 17, 1993, and incorporated herein by reference).
10.22 Indenture of Lease, dated as of September 15, 1986, between the
Company and GOF Partners (relating to Nashville, Tennessee management
headquarters) (filed as Exhibit 10.20 to Registrant's Registration
Statement on Form S-1, Registration No. 33-73028, filed with the
Commission on December 17, 1993, and incorporated herein by
reference).
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
Page Number
Exhibit by Sequential
Number Description Numbering System
------- ----------- ----------------
<S> <C> <C>
10.23 Consulting and Noncompetition Agreement, dated as of May 1, 1991,
between the Company and Thomas J. Hennesy, III (filed as Exhibit
10.21 to Registrant's Registration Statement on Form S-1,
Registration No. 33-73028, filed with the Commission on December 17,
1993, and incorporated herein by reference).
10.24 Tractor Supply Company 1994 Stock Option Plan (filed as Exhibit 10.28
to Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on December 17, 1993, and
incorporated herein by reference).
10.25 TSC Industries, Inc. Employee 401(k) Retirement Plan (including the
Notices of the First, Second, Third, Fourth and Fifth Amendments
thereto and the Trust Agreement forming a part thereof) (filed as
Exhibit 10.29 to Registrant's Registration Statement on Form S-1,
Registration No. 33-73028, filed with the Commission on December 17,
1993, and incorporated herein by reference).
10.26 Form of Notice of the Revised Sixth Amendment to the TSC Industries,
Inc. Employee 401(k) Retirement Plan (filed as Exhibit 10.30 to
Amendment No. 1 to Registrant's Registration Statement on Form S-1,
Registration No. 33-73028, filed with the Commission on January 31,
1994, and incorporated herein by reference).
10.27 Executive Incentive Plan of the Company (filed as Exhibit 10.31 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on December 17, 1993, and
incorporated herein by reference).
10.28 Form of Deferred Compensation Agreement constituting the Deferred
Compensation Plan of the Company (filed as Exhibit 10.32 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on December 17, 1993, and
incorporated herein by reference).
10.29 Certificate of Insurance relating to the Medical Expense
Reimbursement Plan of the Company (filed as Exhibit 10.33 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on December 17, 1993, and
incorporated herein by reference).
10.30 Summary plan description of the Executive Life Insurance Plan of the
Company (filed as Exhibit 10.34 to Registrant's Registration
Statement on Form S-1, Registration No. 33-73028, filed with the
Commission on December 17, 1993, and incorporated herein by
reference).
- 10.31 Agreement, effective August 1, 1996, between the Company and General
Drivers & Helpers Union, Local # 554.
- 10.32 Agreement, effective April 1, 1996, between the Company and
Chauffeurs, Teamsters, Warehousemen and Helpers, Local Union No. 135.
10.33 Tractor Supply Company 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).
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
Page Number
Exhibit by Sequential
Number Description Numbering System
------- ----------- ----------------
<S> <C> <C>
10.34 Indemnification Agreement, dated January 27, 1994, between the Company
and Thomas O. Flood (filed as Exhibit 10.38 to Amendment No. 1 to
Registrant's Registration Statement on Form S-1, Registration No.
33-73028, filed with the Commission on January 31, 1994, and
incorporated herein by reference).
- 13.1 Annual Report to Stockholders for the fiscal year ended December 28,
1996.
- 23.1 Consent of Price Waterhouse LLP.
24.1 Power of Attorney (filed as Exhibit 24.1 to Registrant's Annual Report
on Form 10-K, filed with the Commission on March 15, 1995, Commission
File No. 000-23314, and incorporated herein by reference).
24.2 Power of Attorney (filed as Exhibit 24.2 to Registrant's Annual Report
on Form 10-K, filed with the Commission on March 20, 1996, Commission
File No. 000-23314, and incorporated herein by reference).
- 27.1 Financial Data Schedule (only submitted to SEC in electronic
format).
</TABLE>
- - -------------------------
- Filed herewith.
18
<PAGE> 1
EXHIBIT 10.31
A G R E E M E N T
BETWEEN
TRACTOR SUPPLY COMPANY
AND
GENERAL DRIVERS & HELPERS UNION,
LOCAL #554, AFFILIATED WITH THE
INTERNATIONAL BROTHERHOOD OF TEAMSTERS,
CHAUFFEURS, WAREHOUSEMEN AND HELPERS
OF AMERICA
EFFECTIVE: AUGUST 1, 1996
EXPIRES: AUGUST 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
ARTICLE 1 - RECOGNITION....................................................1
ARTICLE 2 - CHECK-OFF......................................................1
ARTICLE 3 - DISCRIMINATION AND COERCION....................................2
ARTICLE 4 - SCHEDULE OF HOURS AND OVERTIME.................................3
ARTICLE 5 - VACATIONS......................................................6
ARTICLE 6 - HOLIDAYS.......................................................9
ARTICLE 7 - WAGE RATES....................................................10
ARTICLE 8 - STEWARDS......................................................11
ARTICLE 9 - MANAGEMENT RIGHTS.............................................11
ARTICLE 10 - CONDITIONS OF EMPLOYMENT......................................12
ARTICLE 11 - ARBITRATION & GRIEVANCES......................................17
ARTICLE 12 - STRIKES & LOCKOUTS............................................20
ARTICLE 13 - PICKET LINE...................................................20
ARTICLE 14 - CONFLICT OF LAWS..............................................20
ARTICLE 15 - LEAVE OF ABSENCE..............................................21
ARTICLE 16 - EXTRA-CONTRACT AGREEMENTS.....................................21
ARTICLE 17 - REVIEW OF DISCREPANCY IN PAY..................................22
ARTICLE 18 - LOSS OR DAMAGE................................................22
ARTICLE 19 - BONDS.........................................................22
ARTICLE 20 - PHYSICAL EXAMINATIONS.........................................22
ARTICLE 21 - COMPENSATION CLAIMS...........................................23
ARTICLE 22 - MILITARY SERVICE..............................................23
ARTICLE 23 - EQUIPMENT.....................................................23
ARTICLE 24 - PAID-FOR-TIME.................................................24
ARTICLE 25 - GROUP BENEFIT PLANS...........................................24
ARTICLE 26 - POSTING OF NOTICES............................................27
ARTICLE 27 - UNION COOPERATION.............................................28
ARTICLE 28 - SEPARATION OF EMPLOYMENT......................................28
ARTICLE 29 - EMERGENCY REOPENING OF AGREEMENT..............................28
ARTICLE 30 - AGREEMENT.....................................................28
ARTICLE 31 - ENTIRE AGREEMENT..............................................29
ARTICLE 32 - INSPECTION PRIVILEGES.........................................29
ARTICLE 33 - FUNERAL LEAVE.................................................30
ARTICLE 34 - JURY DUTY.....................................................30
ARTICLE 35 - TERM OF AGREEMENT.............................................31
APPENDIX "A" WAGE RATES....................................................32
APPENDIX "B" PART-TIME PROGRAM.............................................35
APPENDIX "C" OVERTIME......................................................37
APPENDIX "D" DRUG AND ALCOHOL POLICY.......................................39
</TABLE>
<PAGE> 3
A G R E E M E N T
THIS AGREEMENT, entered into between TRACTOR SUPPLY COMPANY of Omaha,
Nebraska, hereinafter referred to as the "Company", and GENERAL DRIVERS &
HELPERS UNION, LOCAL #554, affiliated with the International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America, hereinafter referred
to as the "Union".
WITNESSETH:
ARTICLE 1 - RECOGNITION
The Company recognizes the Union as the sole and exclusive bargaining
agent for warehousemen of the Company at Omaha, Nebraska, excluding professional
associates, office clerical associates, retail salesmen, watchmen, guards,
sweep-up boy and supervisors, as defined in the Labor Management Relations Act,
1947, as amended.
It is expressly understood that this Agreement shall not apply to
salesmen employed at any retail outlet of the Company or its subsidiaries.
ARTICLE 2 - CHECK-OFF
Section 1. The Company shall deduct from the first pay of each month
the Union dues and uniform assessments for the current month and promptly remit
same to an authorized representative of the Union, provided that the Company has
1
<PAGE> 4
received from the associate involved on whose account such deductions are made,
a written assignment permitting such deduction. Initiation fees of the Union
shall be deducted by the Company and remitted to the Union in the same manner as
dues collections, on the basis of monthly lists of new members submitted to the
Company by the Union, provided the Company shall have received from the
associate on whose account such deductions are made, a written assignment. This
paragraph shall be subject to the provisions of the Labor Management Relations
Act of 1947, as amended.
Section 2. The Employer will recognize authorization for deductions
from wages for the Union's D.R.I.V.E. Program, if in compliance with state law.
Such deduction shall be made once annually and transmitted to the Union.
ARTICLE 3 - DISCRIMINATION AND COERCION
Section 1. There shall be no discrimination by foremen, superintendents
or other supervisors of the Company against any associate in the bargaining unit
because of the associate's membership in the Union.
Section 2. The Union agrees that neither its officers nor its members,
nor persons employed directly or indirectly by the Union, will intimidate or
coerce associates, nor will it solicit members on Company time.
Section 3. The Company and the Union agree to abide by applicable laws
concerning no discrimination because of race, color, religion, national origin,
sex, and age. Both parties further agree to abide by all applicable provisions
of the National Labor Relations Act, as amended.
2
<PAGE> 5
Section 4. Due to the Americans with Disabilities Act or the
regulations promulgated thereunder, the Company may be required to make a
reasonable accommodation to the disability of an applicant or incumbent
associate that may be in conflict with provisions of this Agreement. In such
event, the Company shall be privileged to make such accommodation
notwithstanding the requirements of this Agreement. The Company shall notify the
Union thereafter as soon as is practicable of such situation on a confidential
basis.
ARTICLE 4 - SCHEDULE OF HOURS AND OVERTIME
Section 1. The regular hours of work shall be 40 hours per week divided
into five days of eight hours each and/or four days of 10 hours each worked
consecutively with the right of the Company to establish work shifts from Sunday
3:00 p.m. through Saturday, with the exception of utility/cleanup which would
precede or follow above program.
The foregoing hours of work shall not apply in cases of proven computer
breakdown that would prevent the normal warehouse operation, or other causes
beyond the control of the Company, Acts of God such as fire, flood, explosion or
power failure. Under no condition will an associate who has reported and started
work be paid for less than four hours.
Section 2. Time and one-half (1-1/2) shall be paid for all work
performed over 40 hours per week.
A. Associates shall not be required to work an excess of 10 hours per
day which may include Company directed mandatory overtime.
3
<PAGE> 6
B. The exception to Section 2A. hours of work limitation would be
emergency plans enacted and/or caused by an Act of God or federal, state, or
local government directives.
C. See Appendix C for bid scheduling and overtime.
Section 3. Holidays shall be considered as days worked for the purpose
of computing overtime.
Section 4. Associates shall, except by mutual agreement, take at least
one continuous period for meals of not less than 30 minutes, nor more than one
hour in any one day. No associate shall be compelled to take more than one
continuous hour during such period, nor be compelled to take any part of such
continuous hour before he/she has been on duty three and one-half (3-1/2) hours
or after he/she has been on duty six hours.
Starting time for the regular or first shift will be between 5:00 a.m.
and 10:00 a.m.
Section 5.
A. All work performed on Sunday between 12:01 a.m. and 3:00 p.m., (with
the exception of utility cleanup) will be paid at two times straight-time rates.
B. Associates starting after 3:00 p.m. Sunday or later, which is part
of the associate's regularly scheduled work week, will be paid straight-time
rates.
C. All work performed on observed holidays shall be paid for at the
rate of two times the regular straight time rate, plus holiday pay as provided
in Article #6.
4
<PAGE> 7
D. Associates required to work on their 7th day of work (7th shift for
the week) shall be paid two times their straight time rate of pay.
An associate's workweek shall be a seven consecutive day period
commencing on the associate's first regularly scheduled day of work.
Section 6. There shall be no pyramiding of overtime. This means that
overtime shall not be paid twice for the same hours worked.
Section 7. All associates covered by this Agreement shall be paid on a
bi-weekly basis. Each associate shall be provided with a statement of gross
earnings and an itemized statement of all deductions made for any purpose.
Section 8. There will be two 15 minute break periods each shift, one in
the first half of the shift and one in the second half of the shift, as near the
middle of the work period as practical. The second break may be eliminated and
reflected in a quitting time 15 minutes earlier, if the majority of the work
group concurs.
Section 9. Associates called in on their regular scheduled day off
shall be guaranteed no less than four hours work or pay. When shift overtime of
less than 30 minutes is required, the Company may assign the associate who is to
perform the work.
5
<PAGE> 8
ARTICLE 5 - VACATIONS
Section 1 - Schedule of Service
Vacations are provided to full-time associates for the purpose of rest
and relaxation. Scheduling of vacations should be planned through your manager.
The following vacation schedule is based on seniority.
A. One Week Vacation:
Associates hired between July 1 and December 31 are eligible
for a one week vacation in the following year which must be taken
between June 1 and December 31. The next year these associates will be
eligible for two weeks vacation.
B. Two Weeks Vacation:
Associates hired between January 1 and June 30 are eligible
for two weeks vacation in the following year which can be taken from a
period no earlier than one year from the hire date to December 31 of
that year.
C. Three Weeks Vacation:
Associates are eligible for three weeks vacation on the
January 1 of the year in which they will complete eight years of
continuous service. Associates are expected to take earned vacations
during the current eligibility year. Vacation may not be accrued from
one year to the next. Payment will not be made for unused vacation from
prior years, nor will pay in lieu of vacation be allowed.
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D. Four Weeks Vacation:
Associates are eligible for four weeks vacation on the January
1 of the year in which they will complete 15 years of continuous
service.
Section 2 - Vacation Scheduling
A. Planning
Vacation planning should be done as far in advance as
possible. Vacation schedule forms are distributed in January to
facilitate advance planning.
B. Scheduling
Associate vacation requests should be solicited as far in
advance as possible. Vacations will be granted according to staffing
requirements with consideration given for seniority. Although efficient
operation of the work unit is important, fair and equitable vacation
scheduling is essential.
C. Commitment
Once a vacation has been scheduled it cannot be changed within
two weeks of the start of the vacation, except by mutual agreement of
both management and the associate.
Section 3 - Vacation Payment - Full-time Associates
Vacation pay is determined by the total hours worked during a normal
work week. Forty hours will be paid regardless of average hours per week.
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Section 4 - Vacation Accrual
Associates are expected to take earned vacations during the current
eligibility year. Vacation may not be accrued from one year to the next. Payment
will not be made for unused vacation except for separated associates as provided
in Section 5.
Section 5 - Vacation for Separated Associates
Pay will be made for vacation fully earned as of the last eligibility
date for associates with two or more years of service under the two following
situations:
A. The associate voluntarily resigns providing at least 10
working days notice, or
B. The associate's position is permanently eliminated by the
Company.
Payments will not be made for unused vacation time from prior years and
under no circumstances will vacation be paid to an associate terminated for just
cause or to any associate who resigned without sufficient notice or an associate
who fails to work out a 10 day notice.
Upon retirement, associates will be paid pro-rata vacation due and
earned by the associate to date of retirement.
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Section 6 - Effect of a Holiday During the Vacation Time
When a paid holiday falls within the vacation period, the associate
shall be entitled to an additional day off with pay as mutually agreed by the
supervisor and the associate within the current eligibility year.
Section 7 - Effect of Leave of Absence
A. Personal or Sick Leave:
Leaves totalling 90 days or less shall not affect vacation.
Leaves of more than 90 calendar days shall proportionally reduce
vacation pay by one-twelfth (1/12) for each additional full month of
leave.
B. Military Leave:
Vacation for associates with one year or more of continuous
service as a full-time associate, who return to work from military
leave shall receive credit as a full-time associate according to the
provisions of military leave in Article 22.
ARTICLE 6 - HOLIDAYS
Section 1. Regular associates who are not scheduled to work on the
following holidays shall be paid eight hours pay at the straight-time hourly
rate for the following holidays:
New Year's Day Labor Day
Memorial Day Thanksgiving Day
Fourth of July Christmas Day
Associate's Anniversary Date
Holiday pay for associates working four 10 hour days shall be as
follows:
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When the holiday falls on a work day, the associate receives a day off
with 10 hours pay. When a holiday falls on a non-work day, it is observed on the
nearest work day.
Section 2. Regular associates called to work on any of the above listed
holidays shall be paid at two times the regular rate, in addition to the eight
hours referred to above.
Section 3. In order to qualify for eight hours of straight time pay for
a holiday not worked, it is provided that regular associates must work their
regular scheduled work day which precedes and follows the holiday, except in
cases of proven illness or unless the absence is mutually agreed to.
Section 4. Associates who are serving their ninety (90) days
probationary period are not entitled to holiday pay for holidays falling within
the probationary period.
Section 5. The parties hereto specifically acknowledge and agree that
the scheduling of mandatory overtime on a holiday is one of the management
prerogatives reserved to the Company under this Agreement.
ARTICLE 7 - WAGE RATES
Wages shall be paid as set forth in Wage Appendix "A" attached hereto
and made a part of this Agreement.
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ARTICLE 8 - STEWARDS
The Company recognizes the right of the Union to designate a job
steward and/or alternate per shift to handle such Union business as may from
time to time be delegated to them by the Union. Job stewards and alternates have
no authority to take strike action or any other action interrupting the
Company's business in violation of this Agreement, or any action except as
authorized by official action of the Union. The Company recognizes this
limitation upon the authority of job stewards and their alternates. The Company,
in so recognizing such limitation, shall have the authority to render proper
discipline, including discharge without recourse, to such job steward or his
alternate in the event the job steward or his alternate has taken an
unauthorized strike action, slow-down, or work stoppage in violation of this
Agreement. Job steward and alternate shall be an associate of the Company. The
job steward and/or alternate has authority to receive any notice hereunder from
the Company to the Union, provided the Company mails a copy of such notice to
the Union. Such notice will be effective on the date of receipt by the steward
or alternate.
ARTICLE 9 - MANAGEMENT RIGHTS
The management of the Company's business and the direction of its
associates, including the right to plan, direct and control Company operations,
hire, suspend or discharge, transfer, or relieve associates from duty because of
lack of work or for other reasons, the right to introduce new, improved or
different methods of facilities, and the right to establish and maintain rules
and regulations covering the operations of its business and the conduct of its
associates, are vested exclusively in the Company as long as the same does not
conflict with the terms
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and provisions of this Agreement. The Company will discharge any associate for
dishonesty, use or being under the influence of intoxicating liquors or drugs
while on duty, insubordination, conduct of a criminal character, the
unauthorized taking or use of Company property, violent physical threats on
Company property, the possession of fire arms on Company property, fighting or
other conduct that normally calls for summary discharge. The Company will not
discharge associates for other offenses without first furnishing a warning
letter, a copy of which will be furnished to the Union. The Company may request
an associate to take a medical test to determine whether he was under the
influence of intoxicating liquor or drugs, and an associate's refusal to submit
to such test may be considered as a presumption that the associate was under the
influence. Such tests will be based on reasonable suspicion, or as a result of
selection under the random drug and substance testing program, as set forth in
Appendix D.
ARTICLE 10 - CONDITIONS OF EMPLOYMENT
Section 1. Seniority for the purposes of this Agreement is defined as
the length of continuous service with the Company.
Section 2.
A.(1) In assigning associates to higher paying jobs, either inside the
bargaining unit or to work as a Lead Person, the Company shall select
those associates who are best qualified and desire to be so promoted.
In making such selections, consideration will be given to such factors
as ability, performance, skill and experience. Judgments as to
qualifications shall be at the sole discretion of the Company on a
non-discriminatory basis.
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A.(2) A Lead Person shall be assigned to a specific daily
classification for overtime purposes under Appendix "C". A Lead Person,
for the purpose of day off overtime, will be considered to be part of
his/her last assigned classification.
A.(3) If a Lead Person is filling in for supervision, he/she shall not
be restricted in any way from performing his/her duties and
responsibilities as a Lead Person.
B.(1) The principle of seniority will apply in case of layoffs. Layoffs
will be implemented based on seniority, qualifications to perform the
work, and associates being at the level of "standard performance" as
per Company performance appraisal form, in order to get a bye.
B.(2) The Company will notify the associate in writing at least one
week before the date of layoff.
B.(3) Associates with at least 90 days of service will be recalled
based on seniority, qualifications to perform the work, and meeting
"standard performance" objectives. Associates who have been laid off
shall receive seven days written notice of recall.
Section 3. Associates shall lose all seniority rights and employment
shall cease for any of the following reasons:
a. Resignation.
b. Discharge.
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c. Failure to notify Company within three days after registered
mail notice of recall from layoff of his/her return to work.
Must report to work within seven days.
d. Absence due to layoff for nine months.
e. If the associate overstays a leave of absence.
f. If the associate gives a false reason for a leave of absence,
or engages in other employment during such leave.
g. If the associate is retired.
h. If the associate intentionally falsifies information on his
application for employment.
i. If the associate is absent from work for off-the-job illness
or injury in excess of nine calendar months or for on-the-job
illness or injury in excess of 15 calendar months.
j. Failure to report for a period of three consecutive days
without notifying the Company.
k. Failure to report for a period of two consecutive regular
workdays without notifying the Company, unless the associate
can prove that such notification was physically impossible.
Section 4. Each new or rehired associate shall be on probation for the
first 90 calendar days of employment or re-employment in the bargaining unit.
Upon satisfactory completion of said probationary period, seniority will be
computed from the date of hire, or most recent date of rehire, with the Company.
Absence from work will extend the probationary period for a period of time
equivalent to the length of such absence. At any time during the probationary
period, an associate may be discharged for any reason. Such associate so
discharged shall not have any recourse under this Agreement, including the right
to file a grievance.
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Section 5 . The parties agree that supervisors will not perform the
work of the parties they supervise except during training, demonstration, and
safety education.
For the purpose of training an associate, the supervisor must perform
the training in the immediate area with the associate being trained, with
exception of training in Company training centers, meeting rooms, or off-site
locations.
It is understood that after making all reasonable efforts to use
bargaining unit employees to perform bargaining unit work, the Company may use
any other temporary means of covering this work.
Other associates of the Company not in the bargaining unit may work in
the Distribution Center, as part of a training and development program.
Participation in bargaining unit work is limited to one week per individual per
year. This developmental program will not reduce Distribution Center associates'
workload.
Upon occasion, vendors will be allowed to construct or put together
samples for use in Company training or merchandising programs.
Section 6. Bid Process
Associates with seniority, if they have the ability to perform the
necessary work, shall have their choice, according to their seniority, of posted
jobs subject to the following conditions:
A. Bid Process
1. The bids shall list job classification (description), days
of work, regular starting and quitting time. There will be at
least one bid
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position for each job classification. The number of job
classifications will be determined by the Company as required
by need to support the Distribution Center.
2. Associates will be notified at least two weeks in advance
of a change in their regularly scheduled starting time.
3. During the course of the work day, and day-to-day basis, if
it becomes necessary to re-assign associates, it will be done
on the basis of need as determined by management.
a. All vacant bids and new openings created within the
course of a 12 month period shall be posted for bid by
associates for a three working day period and shall be
awarded by seniority to qualified applicants at the start
of following work week. These bid openings are limited to
percentages stated in Article #10, Sec. 6, A6.
b. No more than two bids posted to fill open position
after initial bid.
4. Jobs will be awarded to the most senior associate bidding
on said job who has the ability to perform the job.
5. There shall be three bids for job preference and
improvement during the contract. The bids shall be bid by
August 30, 1996, and approximately 12 months thereafter. If
there is an addition or reduction in staff of twenty-five
percent (25%) or more within any 90 day period, it will
automatically cause a bid to occur within 30 days.
6. The jobs to be bid will be determined by the Company;
however, the Company agrees that at least seventy-five percent
(75%) of the eligible associates in the unit will be on bid
jobs. Leads
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will not be counted as part of 75%. Remaining associates shall
be designated as floaters.
7. Each floater will be assigned on the basis of his/her
preference to the most senior associates. If more than one
picking job is available, choices will be by seniority. When
job preference assignments have been exhausted, jobs will be
assigned.
Other floater job assignments, which do not fall into one of
the above categories, will be offered on the basis of
seniority.
During the course of the work day, if it becomes necessary to
reassign floaters, it will be done on a basis of need as
determined by management.
ARTICLE 11 - ARBITRATION & GRIEVANCES
Any complaint, disagreement or difference of opinion between the
Company, the Union or the associates covered by this Agreement which concerns
the interpretation or application of the terms and provisions of this Agreement
will be considered a grievance.
Any associate, the Union or the Company may present a grievance. Any
grievance which is not presented within seven days following knowledge of the
event giving rise to such grievance shall be forfeited and waived by the
aggrieved party.
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The procedure for handling grievances shall be as follows: first, the
associate (with or without the steward) and the associate's immediate supervisor
shall discuss and attempt to adjust such grievance. If this attempt to settle
the grievance fails, then the steward representing the Union and the Company's
supervisor shall discuss and attempt to adjust such grievance.
If these two are unable to settle the grievance, said grievance shall
be submitted in writing by the Union business agent to the Company's designated
representative. Said written submission shall clearly set forth the issues of
contention of the aggrieved parties.
If the Union's and the Company's designated representatives cannot
reach an agreement within five days, upon request of either party, the grievance
shall be submitted to an arbitrator. The Company and the Union shall select the
arbitrator by mutual agreement. In the event the parties are unable to agree
upon an arbitrator within five days, an arbitrator shall be selected by each
party striking two names from a list of five arbitrators to be furnished by the
Federal Mediation and Conciliation Service. The arbitrator shall be impartial
and possess skill and knowledge of labor-management relations. A time limit of
15 days shall be placed on the rendering of the arbitrator's decision.
The arbitrator shall receive and consider such material evidence and
contentions as the parties may offer and shall make such independent
investigation as he/she deems essential to a full understanding and
determination of the issues involved.
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The arbitrator shall not be vested with power to change, modify or
alter any of the terms of this Agreement. All grievances submitted shall present
an arbitrable issue under this Agreement, and shall not depend on or involve an
issue of contention by either party which is contrary to any provision of this
Agreement, or which involves the determination of a subject matter not covered
by or arising during the term of this Agreement.
The findings and decisions of the arbitrator on all arbitrable
questions shall be binding and enforceable on all parties. If either party
refuses to abide by the final decision of the arbitrator on the merits of a
grievance, the other party may apply economic sanctions.
It is the intention of the parties that this Article 11 shall provide a
peaceful method of adjusting grievances so that there shall be no suspension or
interruption of normal operations as a result of any grievances. The parties
shall act in good faith in proceeding to adjust grievances in accordance with
the provisions of this Article.
The expenses of the arbitrator shall be borne equally by the parties to
the arbitration.
It is agreed that there will be no stoppage of work or lockouts pending
settlement of a dispute, in accordance with the grievance procedure herein
established.
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ARTICLE 12 - STRIKES & LOCKOUTS
The Union will not cause or officially sanction its members to cause or
take part in any strike, sit-down, or stay-in or slow-down, or any other
stoppage in the operations of the business of the Company; nor will the local
management lock out any associate or transfer any job under dispute from local
plant until all the procedures mentioned in the foregoing grievance procedure
shall have been employed without success.
ARTICLE 13 - PICKET LINE
It shall not be a violation of this Agreement and it shall not be cause
for discharge or disciplinary action in the event an associate refuses to enter
upon any property involved in a lawful primary labor dispute or refuses to go
through or work behind any lawful primary picket line, including the lawful
primary picket line of unions party to this Agreement and including lawful
primary picket lines at the Company's place or places of business.
ARTICLE 14 - CONFLICT OF LAWS
Nothing contained herein is intentionally in conflict with any existing
federal, state or local laws or any rules or regulations made pursuant thereto.
In the event that any article or portion of any article of this Agreement proves
to be in conflict with any such law or rule or regulation, only the conflicting
article or portion thereof, as the case may be, shall be abrogated and all of
the terms and conditions of this Agreement shall continue in full force and
effect.
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ARTICLE 15 - LEAVE OF ABSENCE
The Company agrees to grant the necessary and reasonable time off (not
to exceed 30 days) without discrimination or loss of seniority rights and
without pay, to any associate designated by the Union to attend a labor
convention or serve in any capacity on other official Union business, provided
48 hours written notice is given to the Company by the Union, specifying the
length of time off. The Union agrees that in making its request for time off for
Union activities, due consideration shall be given to the number of associates
affected in order that there shall be no disruption of the Company's operations
due to lack of available associates.
Any associate desiring a leave of absence must secure the prior written
approval of both the Company and the Union. The giving of such written approval
shall be within the discretion of the Company and the Union. The maximum leave
of absence shall be for 30 days and may be extended for like periods. Permission
for extension must be secured from both the Union and the Company. Failure to
comply with this provision shall result in the complete loss of seniority of the
associate involved.
ARTICLE 16 - EXTRA-CONTRACT AGREEMENTS
The Company agrees not to enter into any agreement or contract with
associates in the bargaining unit, individually or collectively, which in any
way conflicts with the terms and provisions of this Agreement.
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ARTICLE 17 - REVIEW OF DISCREPANCY IN PAY
Any discrepancy in pay of any associate in the bargaining unit may be
taken up by the Union with the Operating Manager, who will review with the Union
Representative the computation of such pay.
ARTICLE 18 - LOSS OR DAMAGE
Associates shall not be charged for loss or damage unless clear proof
of negligence is shown, or is the result of the intentional act of the
associate.
ARTICLE 19 - BONDS
Should the Company require any associate to give bond, cash bond
shall not be compulsory, and any premium involved shall be paid by the Company,
and in the event any associate cannot qualify for such bond with the bonding
company selected by the Company, and in the amount required, the Company shall
have the right to release and discharge said associate and said release or
discharge shall not be a violation of any of the terms and conditions of this
Agreement.
ARTICLE 20 - PHYSICAL EXAMINATIONS
Physical examinations required by the Company shall be promptly
complied with by all associates, provided, however, the Company shall pay for
all such examinations.
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ARTICLE 21 - COMPENSATION CLAIMS
The Company agrees to cooperate toward the prompt disposition of
associate on-the-job injury Worker's Compensation claims. The Company shall
provide Worker's Compensation protection for all associates covered by this
Agreement. An associate injured on the job will be paid for the entire day if
the associate is required to leave work. Following the initial day of injury,
each associate may choose to use either his accumulated sick days or vacation
days to continue receiving pay until worker's compensation starts. Otherwise, no
pay shall be forthcoming for that period when the associate is unable to work.
ARTICLE 22 - MILITARY SERVICE
Associates enlisting or entering the military or naval service of the
United States, pursuant to the provisions of the Selective Service Act of 1948,
shall be granted all rights and privileges provided by the Act.
ARTICLE 23 - EQUIPMENT
The Company shall not require associates to operate any vehicle or
forklift truck that is not in safe operating condition or equipped with the
safety appliances prescribed by law. It shall not be a violation of this
Agreement where associates refuse to operate such equipment unless such refusal
is unjustified. All forklift trucks used for stacking will have an overhead
safety shield. The Company, upon receipt of proper documentation, shall pay
fifty percent (50%) of the cost of safety shoes, provided that said payment
shall not exceed fifty dollars ($50.00) in any 12 month period.
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ARTICLE 24 - PAID-FOR-TIME
All associates covered by this Agreement shall be paid for all time
spent in the service of the Company. Time shall be computed from the time the
associate is directed to report to work and until he/she is released from duty,
but no overtime shall be paid except when specifically directed by the Company
or its authorized representative.
ARTICLE 25 - GROUP BENEFIT PLANS
Section 1 - Company Plans
All associates covered by this Agreement shall be subject to the
provisions of and will be entitled to the benefits of the Company's group
benefit program as follows:
A. The Tractor Supply Co., Inc. Associate Benefit Plan;
B. Sick Pay and Extended Sick Pay Plan (see Section 2 and 3
below); and
C. 401(k) Plan;
as said Plans are presently constituted or as said Plans may be amended by the
Company from time to time. The parties understand and agree that in the event
such amendments take place during the term of this Agreement, said amendments
will apply automatically to covered associates. It is further agreed that
disputes under these Plans will not be subject to the Grievance Procedure, but
will be governed solely by the terms of the Plan documents.
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Section 2 - Sick Pay
A. Regular Sick Days
1. Normal Benefit: A full-time hourly associate who is
absent from work due to a bona-fide personal illness
or injury is entitled to one-half (1/2) day for each
completed month of service.
2. Accrual of Regular Sick Days: Sick days accrue at the
rate of one-half (1/2) day for each continuous month
of service, not to exceed six days in any 12 month
period.
Associates absent for a period of three or more
consecutively scheduled work days will be requested
by management to submit a medical doctor's
certification of illness and inability to work.
Unused sick days may be accrued from year to year up
to a maximum accrual of 30 days. Accrued sick days
are to be used only for personal illness or injury
and may be used during the first seven calendar days
before beginning the extended sick pay plan in
Section 3.
3. Payment of Regular Sick Days: All regular sick pay time is
paid through the normal payroll system. Sick time may be taken
in full or half day amounts.
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B. Unused Sick Time - Sick days are intended to be used only for
personal illness or injury. Therefore, an associate who quits
or is discharged for just cause shall not be entitled to pay
for an unused or accrued sick days.
Section 3 - Extended Sick Pay Plan
A regular full-time associate absent from work due to personal illness
or injury is entitled to pay under the Company's extended sick pay plan, upon
submission of a physician's written statement indicating that the associate is
unable to work. Payments will begin after the associate has been continuously
absent for at least seven calendar days.
A. Regular Benefit for Full-Time Hourly Associates:
<TABLE>
<CAPTION>
Length of Service Full Pay For Half Pay For
========================================================
<S> <C> <C>
At least 6 months 1 week
At least 3 years 2 weeks 4 weeks
At least 5 years 4 weeks 6 weeks
At least 10 years 6 weeks 8 weeks
At least 15 years 8 weeks 10 weeks
At least 20 years 10 weeks 12 weeks
</TABLE>
B. Payment of Extended Sick Pay:
A personnel action form along with the physician's statement
must be submitted to the personnel department to initiate
extended sick pay benefits.
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C. Renewal of Extended Pay Benefits:
Extended sick pay benefits are reinstated to the full amount
based on Subsection A above 12 months after the first extended
sick day is used, provided the associate is actively working
during that 12 month period. If the associate is not actively
working, extended sick pay benefits will be reinstated one
year after return to work.
If an associate is disabled beyond a six month period, extended sick
pay would be reinstated 12 months after return to work.
If a work related injury is involved, this policy becomes null and
void.
Section 4 - Substitution of Paid Leave for Unpaid Leave Provided Under
the Family Medical Leave Act
Associates will be required to substitute their paid leave to the full
extent available under the preceding Section prior to receiving unpaid leave as
provided under the Federal Family Medical Leave Act. Under no circumstances will
associates be granted more than 12 weeks of leave, total, under any combination
of paid and unpaid leave.
ARTICLE 26 - POSTING OF NOTICES
Bulletin boards will be provided by the Company where notices
pertaining to Union matters may be posted by an authorized agent of the Union,
provided that such notices are approved by the Company.
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ARTICLE 27 - UNION COOPERATION
The Union, as well as members thereof, agrees at all times as fully as
it may be within its power, to further the interest of the Company.
ARTICLE 28 - SEPARATION OF EMPLOYMENT
Upon quitting, the Company shall pay all monies due to the associate on
associate's normal regular pay days.
ARTICLE 29 - EMERGENCY REOPENING OF AGREEMENT
In the event of war, declaration of emergency, or imposition of
civilian controls during the life of this Agreement, either party may reopen the
same upon 60 days written notice and request re-negotiation of matters dealing
with wages and hours. Upon failure of the parties to agree in such negotiations,
either party shall be permitted all lawful economic recourse to support its
request for revisions. If the governmental approval of revisions should become
necessary, all parties will cooperate to the utmost to attain such approval.
ARTICLE 30 - AGREEMENT
This Agreement is the only agreement between the Company and the Union
with respect to the associates covered by this Agreement. It incorporates all
terms, provisions and conditions agreed upon. No change, waiver or modification
of any provision of this Agreement shall be binding unless made in writing and
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signed on behalf of the Company by its authorized officer, and on behalf of the
Union by an authorized officer of the Union.
ARTICLE 31 - ENTIRE AGREEMENT
Section 1. The parties acknowledge that during the negotiations which
resulted in this Agreement, each had the unlimited right and opportunity to make
demands and proposals with respect to all proper subjects of collective
bargaining and that all such subjects have been discussed and negotiated upon
and the agreements contained in this Agreement were arrived at after the free
exercise of such rights and opportunities. Therefore, the Company and the Union,
for the life of this Agreement, each voluntarily and unqualifiably waive the
right and each agrees the other shall not be obligated to bargain collectively
with respect to any subject or matter not specifically referred to or covered in
this Agreement, even though such subject or matter may not have been within the
knowledge or contemplation of either or both of the parties at the time they
negotiated or signed this Agreement.
Section 2. The parties understand and agree that this Agreement covers
all bargained for conditions of employment, and that the Company has the right,
at its discretion, to change, modify or amend conditions of employment not so
covered as its business judgment dictates.
ARTICLE 32 - INSPECTION PRIVILEGES
Authorized agents of the Union, after making their presence known to
management, shall have access to the Company's establishment during working
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hours for the purpose of adjusting disputes, investigating working conditions,
collection of dues, and ascertaining that the Agreement is being adhered to,
provided that such inspection and visitation is reasonable and does not
interfere with the efficient operation of the Employer's business.
ARTICLE 33 - FUNERAL LEAVE
Section 1. In the event of the death of a mother, mother-in-law,
father, father-in-law, sister, sister-in-law, brother, brother-in-law, child,
spouse, grandparent, grandchild, grandparent-in-law, son-in-law or
daughter-in-law, regular full-time associates will be paid normal pay for time
absent from schedule work up to four consecutive days.
Section 2. Payment will be made for Funeral Leave when the associate
misses a regularly scheduled work day. Funeral Leave can be applied to the
beginning or the end of a vacation period only when that time off would have
been granted, regardless of the vacation.
ARTICLE 34 - JURY DUTY
Section 1. Regular full-time associates are entitled to a paid leave
from the job for jury duty. In the event the associate is excused or the jury is
not in session, the associate will be expected to work even if only for a
portion of the work day. Associates are granted a maximum of 30 days per
calendar year.
The associate will be reimbursed the difference if jury duty pay is
less than normal Company pay.
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Section 2. Associates must submit proof from the appropriate authority
to verify days served and the amount of compensation received in order to
receive the difference between this amount and normal wages. Documents must be
submitted on a timely basis.
In the event that documentation cannot be obtained on a timely basis,
the personnel department should be contacted to arrange for the issuance of a
normal paycheck and subsequent associate reimbursement to the Company of jury
duty .
ARTICLE 35 - TERM OF AGREEMENT
This Agreement shall be in full force and effect from August 1, 1996 to
and including July 31, 1999, and shall continue in full force and effect from
year to year thereafter unless written notice of desire to change or modify this
Agreement is served by either party on the other 60 days prior to the date of
expiration.
TRACTOR SUPPLY COMPANY GENERAL DRIVERS & HELPERS UNION,
LOCAL #554 affiliated with the
International Brotherhood of
Teamsters, Chauffeurs, Warehousemen
and Helpers of America
By: /s/ Larry Goldberg By: /s/ Stephen Schoening
--------------------------- --------------------------------
Title: V.P. Logistics Title: President
------------------------ ----------------------------
Date: 7/31/96 Date: 8/30/96
------------------------- ------------------------------
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<PAGE> 34
APPENDIX "A"
WAGE RATES
Job classifications under this Agreement will be as follows:
General Warehouse: Shall be required to perform any duties in
the warehousing, order processing, receiving or shipping of any
materials processed through the warehouse. These duties shall include,
but not be limited to, the use of any and all "power equipment".
Part-time General Warehouse: To supplement the full-time
workforce, part-time general warehouse may be used. Job duties will be
essentially the same as general warehouse, but part-timers may be used
for such things as vacation relief, fill-ins for illness, peak workload
coverage and other special needs as determined by the Company.
Part-timers will work under 1000 hours per year.
Section 1. Rates for Warehouse Associates
A. The extent of the increases to be granted at these time
intervals between the start and the maximum will be based on
performance and evaluations.
Associates not at current salary cap -- effective August 1,
1996:
Starting Rate $ 7.50 per hour
Beginning of 2nd year 7.80 per hour
Beginning of 3rd year 8.63 per hour
Beginning of 4th year 8.79 per hour
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Beginning of 5th year 9.21 per hour
Beginning of 6th year 9.70 per hour
Beginning of 7th year 10.20 per hour
Beginning of 8th year 10.72 per hour
Beginning of 9th year 11.25 per hour
Beginning of 10th year 12.00 per hour
Beginning of 11th year 12.25 per hour
Beginning of 12th year 12.50 per hour
B. Associates at the current salary cap:
<TABLE>
<S> <C>
August 1, 1996..................... $12.00 per hour
August 1, 1997..................... 12.25 per hour
August 1, 1998..................... 12.50 per hour
</TABLE>
C. Shift Differentials. An associate who works between 2:00
p.m. and 10:00 p.m. will be paid a premium of twenty cents
(20(cent)) per hour from August 1, 1996 to February 1, 1998;
and thirty-five cents (35(cent)) per hour from February 1,
1998 to August 1, 1999.
An associate who works between 10:00 p.m. and 7:00 a.m. will
be paid a premium of fifty cents (50(cent)) per hour.
Shift premiums will be counted for the purposes of computing
holiday and vacation pay.
Section 2. New hire Part-time Warehouse associates - $7.00 per hour
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Section 3. Lead Person will be paid a premium of $1.50 per hour. The
Company will have sole discretion as to designation of Lead Persons.
Section 4. Learning for Pay Program. Associates will be paid a premium
of fifteen cents (15(cent)) per hour for proof of successful completion of a
Company approved course administered by a Company approved college or junior
college.
Section 5. Work in the Store Program. Subject to Company discretion,
associates may participate in the "Work in the Store Program" for up to one week
per year.
Section 6. No Reduction in Pay. No current associate will suffer a
reduction in pay as a result of the implementation of the wage program set forth
in Section 1 of this Appendix "A".
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<PAGE> 37
APPENDIX "B"
PART-TIME PROGRAM
The intent of the Part-time Program is to supplement the full-time work force
and to cover vacation relief, illness or handle peak workload coverage or other
special needs. Hours will be determined by management.
Regular Company policy will apply, which is as follows:
- Part-time associates normally work less than 30 hours a week.
- Part-time associates do not receive time off benefits.
- A part-time associate who is promoted to a full-time position
will receive 50% credit for all past service and will begin to
accrue benefits from the date of the promotion.
- Health care and 401(k) eligibility will be determined by the
terms of those plan documents.
In addition, the following will be our understanding:
- Part-timer associates will be on a separate seniority list.
- Part-timer associates will be laid off before full-time
associates.
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- Full-timers will be offered overtime opportunities before
part-timers will be used. Part-time associates may be used to
supplement the regular workforce on overtime when filling in
for vacation relief, illness, handling peak load coverage or
other special needs.
- Part-time associates who are promoted to full time will be
handled in the following manner:
- 50% credit for past service principles will apply
toward their probationary period.
- they will receive a full-time seniority date
beginning with the date they start full-time work.
- 50% credit for past service principles will also
apply to all service related benefits.
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<PAGE> 39
APPENDIX "C"
OVERTIME
1. Bids on daily overtime will be handled in this manner:
A. Scheduled overtime will be offered to associates by shift
under the bid classification and by seniority.
B. If there are insufficient associates to work overtime, we will
go to the top of the seniority list by shift and associates
will be offered overtime based on proven ability to perform
the job.
C. If insufficient volunteers, overtime will be assigned by
entire seniority list by shift by inverse seniority.
2. Daily call-back overtime:
Associates called back will receive a minimum of one hour pay at
overtime.
3. Day-off overtime and/or emergency:
The following language shall apply in all instances of day-off/emergency
overtime other than Saturday overtime:
A. Day-off/emergency response conditions work will be offered to
associates by shift under the bid classification and by
seniority.
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<PAGE> 40
B. If there are insufficient associates to fill overtime, we will
go to the top of the seniority list by shift, and associates
will be offered overtime based on proven ability to perform
the job.
C. If there are insufficient volunteers, overtime will be
assigned by entire seniority list by shift by inverse
seniority.
D. In the event emergency conditions beyond the control of the
Company arise (fire, flood, snow storms, etc.), overtime will
be assigned by entire seniority list by inverse seniority.
4. Saturday day overtime:
A. Day-off work will be offered to all associates for all shifts
under their bid classification, by seniority under one
seniority list.
B. If there are insufficient associates to work overtime, we will
go to the top of the overall seniority list for all shifts,
and associates will be offered overtime by seniority based on
proven ability to perform the job.
C. If there are insufficient volunteers, overtime will be
assigned by entire seniority list by shift by inverse
seniority.
D. If additional workers are still needed, overtime will be
assigned by the entire seniority list by inverse seniority.
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<PAGE> 41
APPENDIX "D"
DRUG AND ALCOHOL POLICY
The purpose of the following drug and alcohol policy which has been
adopted by Tractor Supply Company, Inc. (the "Company"), is to reduce the
possibility of loss caused by an unsafe act or an unsafe condition created by an
associate abusing alcohol or drugs. This policy will take effect August 1, 1993,
30 days from the date of posting this notice. Our drug and alcohol policy
consists of the following:
1. The Company shall have the right to test all associates and
applicants for employment for drug and alcohol use upon the happening
of the following events:
A. Application for employment.
B. When probable cause exists to believe the associate is
using or is under the influence of alcohol or drugs in the
course of his or her employment.
C. Random testing.
2. All drug and alcohol testing performed by the Company or its agent
shall be done in accordance with generally accepted procedures,
including but not limited to testing of the associate's blood, urine,
and/or saliva specimens. The Company will bear all costs associated
with testing required as a result of one of the above events or in the
event retesting is necessary.
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<PAGE> 42
3. Refusal by an associate to submit to drug and alcohol testing as set
forth above will constitute just cause for immediate discharge. An
associate's refusal to execute a written consent to be tested shall
constitute a refusal to be tested and cause for discharge.
4. A. The Company will provide training of each associate on the
effects and consequences of the use of controlled substances
on personal health, safety, and the workplace.
B. The following acts or omissions by an associate will result
in disciplinary actions, which may include immediate dismissal
without notice at the Company's discretion:
1. The sale, purchase, transfer, use or possession of
any prohibited drug on Company premises or while on
Company business.
2. Reporting to or remaining on Company premises or
on Company business while impaired by the use of a
prohibited drug.
3. By failing or refusing to submit to a drug test as
required by the Company policy.
C. Each associate covered under the Company's substance abuse
policy will be provided adequate training prior to the
implementation of controlled substance abuse testing.
D. "Impaired" means, for purposes of alcohol usage, the
retention by the associate, of a blood alcohol content of .10%
or more (or .04%
40
<PAGE> 43
or more if the associate's duties include driving a Company
vehicle or operating Company machinery) upon testing by
breathalyzer or blood test.
E. Controlled substances - means, as defined in 49 CFR Part
40, marijuana, cocaine, opiates, amphetamines, and
phencyclidine (PCP).
F. Drug - means any substance (other than alcohol) that is a
controlled substance as defined in this section and 49 CFR
Part 40.
5. A. The above disciplinary procedure will not apply in the
event an associate voluntarily admits or discloses a drug or
alcohol use. In the event of such an admission of disclosure,
the associate will be placed on a leave of absence, without
pay, and the Company shall assist the associate in seeking
rehabilitation. This leave of absence shall continue during
the period that an associate is enrolled within a qualified
rehabilitation program. The associate will be required to
produce evidence from time to time of continuing enrollment in
such a program.
B. Reinstatement of Associate After Positive Test An associate
who tests positive for the use of a controlled substance
and/or alcohol, thereby supplying the Company with grounds for
the immediate discharge of the associate, may be reinstated
provided the associate agrees to comply with the following
conditions:
1. The associate must immediately enroll in a
qualified program of evaluation and, if necessary,
treatment. The
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<PAGE> 44
program of evaluation or treatment is to be chosen by
the Company. Any cost of rehabilitation shall be
borne by the associate, except to the extent covered
by the Company's health care plan.
2. Upon receipt of satisfactory progress in the
program of evaluation or treatment outlined in 1
above, the associate must submit to a drug and/or
alcohol test in which a negative result is obtained.
The satisfactory progress report must be received by
the Company no later than 30 calendar days from the
date that the associate was given notice of the
positive test result. If more than 30 calendar days
elapse, then the Company shall have grounds to
discharge the associate. If a positive test for the
use of a controlled substance and/or alcohol is
returned after the associate enters a program of
evaluation or treatment, then the associate shall be
immediately discharged.
3. An associate shall be eligible for reinstatement
under this Section on a one-time basis, and the
reinstatement is contingent upon the associate
returning directly to work for the Company.
4. Upon reinstatement, the associate shall be subject
to three additional tests for drugs and/or alcohol
without prior notice, with two tests to occur within
six months of the reinstatement and the third test to
occur within six to 12 months after reinstatement.
6. All test results shall be kept in the strictest confidence.
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<PAGE> 45
7. All laboratory tests shall be performed by NIDA Certified
Laboratories using cutoff levels as prescribed by the Health and Human
Services as may be adjusted from time to time.
8. Random test selections shall be on the basis of computer selection,
selecting up to fifty percent (50%) each year.
9. Associates shall be paid for work time lost as a result of testing
procedures, including travel time, if the results of the test are
negative.
10. Specimen Collection
Specimen collections facilities will be established convenient
to Company locations. Specimen collections will be conducted in
accordance with the protocols established by the National Institute of
Drug Abuse (NIDA) in order to assure the integrity of the specimen.
11. All drug testing and time spent giving a drug test shall be paid
for by the Company and shall be done immediately prior to, during, or
immediately after the associate's work schedule.
43
<PAGE> 1
EXHIBIT 10.32
AGREEMENT
BETWEEN
TRACTOR SUPPLY COMPANY
And
CHAUFFEURS, TEAMSTERS, WAREHOUSEMEN AND HELPERS
LOCAL UNION NO. 135,
Affiliated With The
INTERNATIONAL BROTHERHOOD OF TEAMSTERS,
CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA
Effective: May 1, 1996
Expires: April, 30, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE NO. PAGE NO.
================================================================================
<S> <C> <C>
1 INTENT AND PURPOSES....................................................1
2 UNION RECOGNITION......................................................1
3 UNION SECURITY.........................................................2
4 ENTIRE AGREEMENT.......................................................3
5 WAGES..................................................................3
6 SEPARABILITY AND SAVINGS CLAUSE........................................4
7 SENIORITY..............................................................4
8 LEAVES OF ABSENCE......................................................7
9 HOURS OF WORK..........................................................8
10 VACATIONS AND HOLIDAYS................................................10
11 SHOP STEWARDS.........................................................12
12 GRIEVANCE AND ARBITRATION PROCEDURE...................................13
13 PROTECTION OF RIGHTS..................................................16
14 DISCHARGE OR SUSPENSION...............................................17
15 INSPECTION PRIVILEGES.................................................17
16 UNAUTHORIZED ACTIVITY.................................................18
17 GROUP BENEFIT PLANS...................................................18
18 EXAMINATIONS AND IDENTIFICATION FEES..................................20
19 PAY SCHEDULE..........................................................21
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE NO. PAGE NO.
==============================================================================
<S> <C> <C>
20 SAFETY AND HEALTH...................................................21
21 JURY DUTY...........................................................22
22 WORK ASSIGNMENTS....................................................22
23 MANAGEMENT RIGHTS...................................................22
24 DEFECTIVE EQUIPMENT AND DANGEROUS CONDITIONS OF WORK................23
25 EXAMINATION OF RECORDS..............................................23
26 COMPENSATION CLAIMS.................................................23
27 SANITARY CONDITIONS.................................................23
28 EMERGENCY PROVISION.................................................23
29 MISCELLANEOUS PROVISIONS............................................23
30 FUNERAL LEAVE.......................................................24
31 CREDIT UNION........................................................24
32 ASSOCIATES' FACILITIES..............................................25
33 CHANGE IN OPERATIONS................................................25
34 TERMINATION OF AGREEMENT............................................25
APPENDIX "A" - WAGE RATES..................................................26
</TABLE>
<PAGE> 4
A G R E E M E N T
THIS AGREEMENT has been entered into between the TRACTOR SUPPLY COMPANY, of
Indianapolis, Indiana, or its successors, hereinafter designated as the
"Employer" or the "Company," and the CHAUFFEURS, TEAMSTERS, WAREHOUSEMEN AND
HELPERS, LOCAL UNION NO. 135, of Indianapolis, Indiana, affiliated with the
INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF
AMERICA, hereinafter referred to as the "Union".
WITNESSETH:
ARTICLE 1 - INTENT AND PURPOSES
Section 1
The Employer and the Union each represent that the purpose and intent of this
Agreement is to promote cooperation and harmony, to recognize mutual interests,
to provide a channel through which information and problems may be transmitted
from one to the other, to formulate rules to govern the relationship between the
Union and the Employer, to promote efficiency and service, and to set forth
herein the basic agreements covering rates of pay, hours of work, and conditions
of employment.
Section 2
The parties understand that the Employer uses the term "associate" in its
business to refer to all individuals employed by the Employer. Where the term
"associate" is used in this Agreement, the parties agree that it will have the
same definition as the term "associate" as defined in the National Labor
Relations Act.
ARTICLE 2 - UNION RECOGNITION
The Company agrees to recognize and does hereby recognize the Union, its agents,
representatives, or successors, as the exclusive representative and collective
bargaining agency for all of the associates of the Company as hereinafter
defined:
All warehouse associates employed by the Employer at its Indianapolis,
Indiana Distribution Center, including janitors, but excluding office
clerical, professional, supervisory associates and guards as defined in
the Act.
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<PAGE> 5
ARTICLE 3 - UNION SECURITY
Section 1 - Conditions of Employment
It is understood and agreed by and between the parties hereto that as a
condition of continued employment, all persons who are hereafter employed by the
Company in the unit which is the subject of this Agreement, shall become members
of the Union not later than the 61st day following the beginning of their
employment or the execution date of this Agreement, whichever is later; that
effective from and after the 61st day following the execution date of this
Agreement, the continued employment by the Company in said unit of persons who
are already members in good standing of the Union shall be conditioned upon
those persons continuing their payment of the periodic dues of the Union; and
that the continued employment of persons who were in the employ of the Company
prior to the date of this Agreement and who are not now members of the Union
shall be conditioned upon those persons becoming members of the Union not later
than the 61st day following the execution date of this Agreement. The failure of
any person to become a member of the Union at such required times shall oblige
the Company, upon written notice from the Union to such effect and to the
further effect that Union membership was available to such person on the same
terms and conditions generally available to other members, to forthwith
discharge such person. Further, the failure of any person to maintain his Union
membership in good standing as required shall, upon written notice to the
Company by the Union to such effect, obligate the Employer to discharge such
person.
Section 2 - Union Dues
The Company agrees to deduct each month, from the pay checks of all associates,
who are covered by this Agreement, all periodic dues and initiation fees owing
to the Union by the associates, provided, however, that an associate shall have
signed and submitted a written authorization for such action on the part of the
Company; such written authorization shall conform to and be in accordance with
all applicable federal and state laws. All monies deducted by the Company shall
be forwarded to the President of the Union. It is understood and agreed that any
monies collected by the Company for the Union will be taken out of the first pay
period of each month for the following month and remitted to the Union by the
15th of the month.
Section 3
As used in this Article, the phrase "member of the Union" shall include
"financial core" membership. Fees for "financial core" members will not include
dues or other amounts which will be spent for purposes unrelated to collective
bargaining, contract administration or grievance adjustment. For the purpose of
this Article, said dues or other amounts shall be referred to as
"representational share". The "representational share" will be determined in
accord with the decision of the Supreme Court of the United States in
Communication Workers v. Beck, 128 LRRM 2729 (1988). The Union will disclose the
necessary information so as to assure that the proportionate "representational
share" may be properly calculated.
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<PAGE> 6
Section 4 - Probation Period
New associates shall work under the provisions of this Agreement but shall be
employed on a 60 day trial period, with an option to extend the probationary
period to 120 days upon mutual agreement by both the Company and the Union. The
associate's name shall be placed on the seniority list with seniority dated as
of the first day worked in the 60 day period (alphabetically, if one or more
associates are hired on the same date). During such probationary period,
associates shall have no seniority rights and may be discharged by the Company
without any recourse to the grievance procedure and/or Union.
The above paragraph notwithstanding, new associates shall not be eligible for
participation in Company benefit plans until they have worked a minimum of 90
days or the stated eligibility period in a particular benefit plan, whichever is
longer.
ARTICLE 4 - ENTIRE AGREEMENT
Section 1
The parties acknowledge that during the negotiations which resulted in this
Agreement, each had the unlimited right and opportunity to make demands and
proposals with respect to all proper subjects of collective bargaining and that
all such subjects have been discussed and negotiated upon and the Agreements
contained in this Agreement were arrived at after the free exercise of such
rights and opportunities. Therefore, the Company and the Union, for the life of
this Agreement, each voluntarily and unqualifiably waive the right and each
agrees the other shall not be obligated to bargain collectively with respect to
any subject or matter not specifically referred to or covered in this Agreement,
even though such subject or matter may not have been within the knowledge or
contemplation of either or both of the parties at the time they negotiated or
signed this Agreement.
Section 2
The parties understand and agree that this Agreement covers all bargained for
conditions of employment, and that the Company has the right, at its discretion,
to change, modify or amend conditions of employment not so covered as its
business judgment dictates.
ARTICLE 5 - WAGES
Wages shall be paid as set forth in Wage Schedule "A", attached hereto and made
a part of this Agreement.
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<PAGE> 7
ARTICLE 6 - SEPARABILITY AND SAVINGS CLAUSE
Section 1
If any Article or Section of this contract, or any Rider hereto, should be held
invalid by operation of law or by any tribunal of competent jurisdiction, or if
compliance with or enforcement of any Article or Section should be restrained by
such tribunal pending a final determination as to its validity, the remainder of
this contract and of any Rider thereto, or the application of such Article or
Section to persons or circumstances other than those as to which it has been
held invalid or as to which compliance with or enforcement of has been
restrained, shall not be affected thereby.
Section 2
In the event that any Article or Section is held invalid or enforcement of or
compliance with which has been restrained, as above set forth, the parties
affected thereby shall enter into immediate collective bargaining negotiations
upon the request of either party for the purpose of arriving at a mutually
satisfactory replacement for such Article or Section within 10 days, the matter
will be referred to the Federal Mediation and Conciliation Service for their
assistance. If the parties do not agree on a mutually satisfactory replacement,
either party shall be permitted to all legal or economic recourse in support of
its demand notwithstanding any provisions in this contract to the contrary.
ARTICLE 7 - SENIORITY
Section 1
Seniority for the purposes of this Agreement is defined as the length of
continuous service with the Company.
Section 2 - Layoff
The Company will notify the Union in writing at least one week before layoff of
the name(s) of the associate(s) to be laid off.
The principle of seniority will apply in the case of layoffs. Layoffs will be
implemented based on seniority and associates being at least at a level of
"Standard Performance", as per the Company's Performance Appraisal Form in order
to get a by.
Recall will be based on the principle of seniority.
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<PAGE> 8
Section 3 - Application of Seniority
Beginners shall obtain seniority after 60 days of continuous employment, but may
be laid off, transferred or dismissed with or without cause during such 60 day
period. In case of layoff, the Company shall lay off such beginners before
putting into effect the seniority policy as stated above.
Section 4 - Definition of Seniority
The term "length of service" as used in this Article shall be so construed that
absence from employment due to illness, accident, family deaths, or leaves of
absence as provided elsewhere in this Agreement, or layoffs by the Company shall
not cause a break in service.
Section 5 - Transfer
Any associate transferred into the bargaining unit covered by this Agreement
from another division or department of the Company shall obtain seniority dating
only from the date of such transfer, except for purposes of determining
vacations and vacation pay.
Section 6 - Military Leave
All of the provisions of this Agreement shall be subject to the provisions of
any acts of Congress or statutes, executive orders, or regulations issued
thereunder with respect to the rights of persons having served in the military
service of the United States.
Section 7 - Union Business
Any associate elected or appointed as an official of the Union or delegate to
any labor convention, necessitating a leave of absence, shall be granted a leave
of absence not to exceed one year without pay and be guaranteed re-employment at
the end of such period with the same seniority rating as when leave of absence
was granted.
Section 8
Associates shall lose all seniority rights and employment shall cease for any of
the following reasons:
a. Resignation.
b. Discharge.
c. Failure to report to work within three days after recall from
layoff.
d. Absence due to layoff for 12 months.
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<PAGE> 9
e. The associate overstays a leave of absence.
f. The associate gives a false reason for a leave of absence, or
engages in other employment during such leave.
g. Any monetary settlement is made with the associate covering
total disability.
h. The associate is retired.
i. The associate falsifies information on his application for
employment. The falsity may come to light at any time after
the associate's date of hire or acquiring seniority.
j. Failure to report for a period of two consecutive work days.
Section 9 - Bid Process
Associates with seniority shall have their choice, according to their seniority,
of posted jobs subject to the following conditions:
A. Bid Procedure
1. The jobs to be bid will be determined by the Company; however,
if the Company is arbitrary and capricious in the jobs it
elects to post, such posting may be subject to the grievance
procedure. The Company agrees that at least sixty percent
(60%) of the eligible associates in the unit will be on bid
jobs.
2. There shall be at least one bid for job preference and
improvement during each year of the contract. The bid will be
during the month of December.
3. The Company shall post on the bulletin board, for five working
days prior to the agreed to date, a listing of bid jobs.
4. Jobs will be awarded to the most senior associate bidding on
said job who has the ability to perform the job. The most
senior associate bidding on said job may be given up to 15
calendar days on that job to determine whether or not he has
the ability to do the job. However, if any time during that 15
day period, the Company determines that the associate does not
have the ability to do the job, then he shall have the right
to return to his old job.
5. If an associate has chosen a job pursuant to this Section and
he is moved therefrom in the course of a layoff and/or
reduction of operations, he shall return thereto when the job
again becomes available by notification to the foreman at the
time it becomes available.
6. If an associate is absent from work during the period of
posting because of illness, injury, sick leave or leave of
absence, then the Shop Steward will be permitted to make a
choice by proxy for the absent associate.
7. The top sixty percent (60%) of the associates will bid for
start time and position and the bottom forty percent (40%)
will bid for start time only.
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<PAGE> 10
B. Permanent Vacancy or New Position
Whenever a permanent vacancy or a new position is created, such opening
will be posted on the bulletin board for a period of two work days,
exclusive of Saturday, Sunday or holidays. Seniority associates may bid
for such positions by placing their names on the posting within the two
day posting period. Jobs will be awarded to the most senior eligible
associate bidding on said job who has the ability to perform the job.
The most senior associate bidding on said job may be given up to 15
calendar days on that job to determine whether or not he has the
ability to do the job. However, if at any time during that 15 day
period, the Company determines that the associate does not have the
ability to do the job, then he shall have the right to return to his
old job.
The name of the successful bidder will be posted and the Company will
place the bidder on the job within 10 days.
Any associate who successfully bids into another job will not be
entitled to bid on another job opening until the next bid, unless such
opening is a new position or a higher rated position, in which case
there shall be no limitation.
In no case will a single job opening result in more than two job
postings. In the event a lead person elects to give the position up or
the Company removes him, he will bump where his seniority allows.
Section 10 - Temporary Vacancies
A. Temporary vacancies will be filled by an assignment from the group of
associates not on bid jobs; a "temporary vacancy" is one caused by
vacations, leaves of absence, absenteeism, or similar reasons.
B. When there is no work, reduced work, or a job vacancy due to layoff, as
determined by the Company in a particular activity, associates will be
reassigned where needed on a seniority basis.
An associate transferred will not be replaced by another during the
time the original bidder is absent from the position.
ARTICLE 8 - LEAVES OF ABSENCE
Any associate desiring a leave of absence, not to exceed 90 days, from his
employment shall secure written permission from both the Union and the Employer.
Failure to comply with these provisions shall result in the loss of seniority
rights.
The provisions of the Family and Medical Leave Act are hereby incorporated into
this Agreement. Administration of such leave will be in accord with the
procedures set forth in Article 17, Section 4 of this Agreement and with Company
procedures regarding family and medical leave.
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<PAGE> 11
ARTICLE 9 - HOURS OF WORK
Section 1
The hours of work for each associate shall be scheduled by the Company. Starting
time for the regular or first shift will be according to the following schedule:
A. Outbound Associates Starting Time Between
January to December 4:00 a.m. - 9:00 a.m.
B. Inbound Associates Starting Time Between
January to December 4:00 a.m. - 9:00 a.m.
If the Company changes any of the start times, they will rebid.
The regular scheduled hours of work shall be 40 hours per week divided into five
days of eight hours each, with the right of the Company to establish work shifts
from Monday through Friday. Said work weeks to be initiated at the option of the
Company. However, in the event that senior associates do not bid for a
particular work shift on which the Company requires associates, the Company
shall have the right to assign the most junior associate to such work shift.
Time and one-half (1-1/2) shall be paid for all work outside the bid work week.
Double time shall be paid for all work on Sunday.
Time and one-half (1-1/2) shall be paid for all work performed over 40 hours per
week. Associates shall not be required to work in excess of 10 hours per day.
Section 2 - Overtime Guarantee
If an associate is called into work on a day off, he will be guaranteed four
hours work or pay at his appropriate rate. If he is required to work over four
hours, he will be guaranteed six hours work or pay at the appropriate rate. If
he is required to work over six hours, he will be guaranteed eight hours work or
pay at the appropriate rate.
Section 3 - Breaks and Meal Periods
There shall be one 15 minute break as near as possible to the middle of the
first half shift. There shall be one 15 minute break as near as possible to the
middle of the second half shift.
There shall be a 30 minute unpaid meal period which shall be scheduled as close
as possible to the middle of the shift.
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Section 4 - On the Job Injury
An associate injured on the job will receive pay for the entire day if required
to leave work. Following the initial day of injury, each associate may choose to
use either his accumulated sick days or vacation days to continue receiving pay
until workers' compensation starts. Otherwise, no pay shall be forthcoming for
that period when the associate is unable to work.
Section 5 - Overtime
If overtime is necessary, it shall be offered by job classification by
seniority, but not to include distributing overtime across shifts or start
times. If enough people do not elect to work the overtime, then the Company will
offer it to associates outside the classification, by seniority, if they are
qualified and may force by inverse seniority if more are needed. When weekend
overtime is necessary, the Company shall post a notice to this effect no later
than the end of the shift of the preceding Thursday, except in those cases where
such overtime is necessitated by economic circumstances in which case the
overtime will be posted expeditiously on the preceding Friday.
There shall be no extended amount of mandatory overtime worked in any operation
while there are associates on the active layoff list in the same or similar type
of operations who are qualified to perform the available work. For purpose of
this Section, "extended mandatory overtime" shall mean in excess of 48 hours per
week for four consecutive weeks.
Any part of one-quarter (1/4) hour worked by an associate, either before his
regular starting time, or after his regular quitting time at the specific
direction of the supervisor, shall constitute a full one-quarter (1/4) hour. Any
overtime in excess of two hours beyond regular quitting time shall be voluntary
on the part of the associates, except in the case of emergency. Except in case
of emergency, associates will be notified of overtime by the middle of the
shift. All mandatory overtime will be at the end of the shift, except for
weekend work or as contractually specified. When shift overtime of less than 30
minutes is required, the Company may assign the associate who is to perform the
work.
Section 6 - Night Premium
Any associate working fifty percent (50%) or more of his regularly scheduled
hours between 6:00 p.m. and 6:00 a.m. shall be paid a premium for all hours
worked on that shift:
Shift Premium: $.35 per hour
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ARTICLE 10 - VACATIONS AND HOLIDAYS
Section 1 - Schedule of Service
Vacations are provided to full-time associates for the purpose of rest and
relaxation. Vacation time must normally be taken in periods of one week or more.
Scheduling of vacations is to be planned by an associate and his supervisor. The
following vacation schedule is based on seniority.
A. One Week Vacation -- Associates hired between July 1 and December 31
are eligible for a one week vacation in the following year which must
be taken between June 1 and December 31.
B. Two Weeks Vacation -- Associates hired between January 1 and June 30
are eligible for two weeks vacation in the following year which can be
taken from a period no earlier than one year from the hire date to
December 31 of that year.
C. Three Weeks Vacation -- Associates are eligible for three weeks
vacation on January 1 of the year in which they will complete eight
years of continuous service.
D. Four Weeks Vacation -- Associates are eligible for four weeks vacation
on January 1 of the year in which they will complete 15 years of
continuous service.
Associates are expected to take earned vacation during the current eligibility
year. Vacation may not be accrued from one year to the next. Payment will not be
made for unused vacation from prior years, nor will pay in lieu of vacation be
allowed.
Section 2 - Vacation Scheduling
A. Planning -- Vacation planning should be done as far in advance as
possible. Vacation schedule forms will be distributed in January to
facilitate advance planning.
B. Scheduling -- Associate vacation requests should be solicited as far in
advance as possible. Vacations will be granted according to staffing
requirements with consideration given for seniority. Although efficient
operation of the work unit is important, fair and equitable vacation
scheduling is essential.
C. Commitment -- Once a vacation has been scheduled, it cannot be changed
within three weeks of the start of the vacation, except by mutual
agreement of both the Employer and the associate.
Section 3 - Vacation Payment/Full-Time Associates
Vacation pay is determined by the total hours worked during a normal workweek.
Forty (40) hours will be paid regardless of average hours per week.
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Section 4 - Vacation Accrual
Associates are expected to take earned vacations during the current eligibility
year. Vacation may not be accrued from one year to the next. Payment will not be
made for unused vacation except for separated associates, as provided in Section
5.
Section 5 - Vacation for Separated Associates
Pay will be made for vacation fully earned as of the last eligibility date for
associates with two or more years of service under the two following situations:
A. The associate voluntarily resigns providing at least 10 working days
notice, or
B. The associate's position is permanently eliminated by the Company.
Payments will not be made for unused vacation time from prior years and under no
circumstance will vacation be paid to an associate terminated for just cause or
to any associate who resigned without sufficient notice or an associate who
fails to work out a 10 day notice.
Section 6 - Recognized Holidays
All associates shall receive eight hours pay, at their regular hourly rate, for
the following holidays:
New Year's Day Labor Day
Memorial Day Thanksgiving Day
Independence Day Christmas Day
Associate's Anniversary Date
Any work performed on any of the above-named holidays shall be paid for at the
rate of time and one-half (1-1/2) in addition to holiday pay.
Section 7 - Anniversary Date
An associate's Anniversary Date holiday may be taken after the completion of one
year's service. Such holiday will be scheduled by mutual agreement and must be
taken within the calendar year it is earned.
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Section 8 - Holiday Payment
In order to qualify for eight hours of straight time pay for a holiday not
worked, a regular associate must work the regularly scheduled work day which
immediately precedes and follows the holiday, except in cases of proven illness
or unless the absence is mutually agreed to.
If an associate is up to 60 minutes late on either the work day before or the
work day after a holiday (but not both such days), holiday pay will be reduced
by an amount equal to the number of minutes such associate is late.
If an associate is more than 60 minutes late on either the work day before or
the work day after a holiday, or if the associate is late to work on both such
days (regardless of the number of minutes late), such associate shall not be
entitled to any holiday pay whatsoever.
Pre-holiday or post-holiday tardiness shall be treated as any other tardiness
for the purposes of the Company's attendance policy.
Section 9 - Effect of a Holiday During a Vacation
When a paid holiday falls within a vacation period, an associate must take such
holiday as the last day before or the first day after said vacation period.
Section 10 - Effect of Leave of Absence
A. Personal or Sick Leave -- Leaves totaling 90 days or less shall not
affect vacation. Leaves of more than 90 calendar days shall
proportionally reduce vacation pay by one-twelfth (1/12) for each
additional full month of leave.
B. Military Leave -- Vacation for associates with one year or more of
continuous service as a full-time associate, who returns to work from
Military Leave, shall receive credit as a full-time associate for the
time spent in military service.
ARTICLE 11 - SHOP STEWARDS
Section 1 - Designation of Duties
A. The Employer recognizes the right of the Union to designate Shop
Stewards and alternates from the Employer's seniority list.
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B. The authority of Shop Stewards and alternates so designated by the
Union shall be limited to, and shall not exceed, the following duties
and activities:
1. The reasonable investigation and presentation of grievances
with his employer or the designated company representative in
accordance with the provisions of the collective bargaining
agreement;
2. The collection of dues when authorized by appropriate Union
action;
3. The transmission of such messages and information, which shall
originate with, and are authorized by the Union or its
officers, provided such messages and information:
a) Have been reduced to writing, or
b) If not reduced to writing, are of a routine nature
and do not involve work stoppages, slow downs,
refusal to handle goods, or any other interference
with the Employer's business.
C. Shop Stewards and alternates have no authority to take strike action,
or any other action interrupting the Employer's business, except as
authorized by official action of the Union.
D. The Employer recognizes these limitations upon the authority of Shop
Stewards and their alternates, and shall not hold the Union liable for
any unauthorized acts. The employer in so recognizing such limitations
shall have the authority to impose proper discipline including
discharge, in the event the Shop Steward has taken unauthorized strike
action, slow down or work stoppage in violation of this Agreement.
E. Alternate Stewards should only act as Steward during an excused absence
of the Shop Steward from the premises.
F. Any Steward shall be permitted to leave his work to investigate and
adjust grievances of any associate within his jurisdiction, without
loss of pay, after first notifying the supervisor in charge.
ARTICLE 12 - GRIEVANCE AND ARBITRATION PROCEDURE
Section 1
A grievance, within the meaning of this Article, shall be limited to a dispute
arising between the parties hereto involving interpretation or application of
the provisions of this Agreement. Should a grievance arise, it shall be handled
in the following manner:
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Step 1. The aggrieved associate will present a grievance to the
associate's immediate supervisor within two working days of the
occurrence of the complained of event. If not presented within this
period of time, the case cannot be presented at a future date. The
Company shall render a decision within two working days of the date of
presentation.
Step 2. If not disposed of in Step 1, the associate may present the
grievance in writing to the Company. A decision at Step 1 shall be
considered to be final and the grievance shall be considered to be
withdrawn unless the grievance is taken to Step 2 within three working
days of the date of decision at Step 1. The Company shall give this
decision within three working days after the grievance is presented to
him.
Step 3. If not disposed of in Step 2, the associate and the business
representative of the Union may appeal the grievance by giving written
notice thereof to the Company. A decision at Step 2 shall be considered
as final unless the notice of appeal to Step 3 is given within five
calendar days after the decision in Step 2. The Company shall render
its decision within five calendar days from the date the written
grievance is presented at Step 3.
At any step of the grievance procedure, if the appropriate Company
representative does not act within the specified period of time, the grievance
shall be considered as having been denied as of the conclusion of the applicable
time period.
Section 2
Only those issues fulfilling both of the following requirements can be appealed
beyond Step 3.
A. The grievance must be based on an alleged violation by the Company of a
specific contract provision or must be based on the interpretation or
application of a specific provision of the contract. A Company decision
will not be subject to reversal unless it is found that the Company
misinterpreted or violated the express terms of the contract.
B. The grievance must have been processed through each step of the
grievance procedure in a timely manner unless it has been mutually
agreed in writing by both parties that a specific step is to be
bypassed or time limits waived.
Section 3
If the decision of the Company in Step 3 is unsatisfactory to the Union, and the
Union wishes to process the grievance further, the Union must make a written
request to the Company within seven calendar days following the Step 3 decision.
The written request shall include a specific statement of the violations and the
position of the Union concerning the Union's interpretation of the disputed
contract provision along with the specific remedy requested.
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Section 4 - Arbitration
Appeal of a Step 3 decision shall be subject to arbitration. Matters involving
associate grievances shall be brought to formal arbitration only after attempts
to resolve the grievance in the steps as outlined in the Grievance Procedure are
completed.
Section 5
When the Union invokes the arbitration procedure, the Union will request a panel
of arbitrators from the Federal Mediation and Conciliation Service. The FMCS
shall send the list of arbitrators to the authorized representatives of the
Union and the Company. The arbitrator will be selected from the panel by the
parties, alternately striking a name until a single arbitrator is selected. The
party to strike the first name shall be determined by the toss of a coin. Either
party reserves the right to reject only one list from the FMCS and request
another list prior to the striking of names. The arbitrator shall conduct a
hearing as expeditiously as is possible and shall render his decision promptly
and without undue delay. The decision of the arbitrator shall be final and
binding on both parties.
Section 6
In the course of hearings before the arbitrator, the Company and the Union shall
be afforded a full opportunity to present any evidence, written or oral, which
may be pertinent to the matter before the arbitrator.
Section 7
Each party shall bear their own expenses. The fees of the arbitrator shall be
borne by the losing party. The arbitrator shall only interpret the Agreement and
shall not modify, amend, add to or delete from any of its provisions in deciding
the issue(s) submitted to him by the parties as contained in the above grievance
procedure.
Section 8
Associates covered by this Agreement cannot, except through the duly constituted
officials of the Union, initiate the arbitration procedures set forth in this
Article.
Section 9
All grievance and arbitration matters shall be handled at a time other than
normal working hours, and shall not interfere with an associate's performance of
duties. Time spent by associates in handling such matters shall be without pay.
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Section 10
No associate or Union representative shall in any manner solicit or encourage
grievances and disputes. Any grievance or dispute which has been in any way
solicited or encouraged shall be null and void, will be reviewed by the Company
for such reason, and will not be subject to the grievance and arbitration
procedure.
Section 11
The decision of the arbitrator will be final and binding on all parties.
ARTICLE 13 - PROTECTION OF RIGHTS
Section 1 - Picket Lines
It shall not be a violation of this Agreement, and shall not be cause for
discharge or disciplinary action, in the event an associate refuses to enter
upon any property involved in a lawful primary labor dispute or refuses to go
through or work behind any lawful primary picket line of Unions party to this
Agreement, including the lawful primary picket lines at the Employer's place of
business. This does not apply to an extension of picket lines from another
company location.
Section 2 - Struck Goods
It shall not be a violation of this Agreement and it shall not be cause for
discharge or disciplinary action if any associate refuses to perform any service
which the Employer performs by arrangement with an employer or person whose
associates are on strike, and which service, but for such strike, would be
performed by the associates of the employer or persons on strike.
Section 3 - Grievances
Within five working days of filing of grievance claiming violation of this
Article, the parties to this Agreement shall proceed to the final step of the
Grievance Procedure without taking any intermediate steps, any other provisions
of this Agreement to the contrary notwithstanding.
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ARTICLE 14 - DISCHARGE OR SUSPENSION
Section 1
The Company shall not discharge or suspend any associate without just cause, but
in respect to discharge or suspension shall give at least one warning notice of
the complaint against such associate to the associate, in writing, and a copy of
same to the Union, except that no warning notice need be given to an associate
before he is discharged if the cause of such discharge is dishonesty,
drunkenness, use of illegal drugs, recklessness resulting in a serious accident
while on duty, or making threats of physical harm to any person(s) employed by
the Employer. The warning notice as herein provided shall not remain in effect
for a period of more than 12 months from the date of said warning notice.
Discharge must be by proper written notice to the associate and the Union. Any
associate may request an investigation as to his discharge or suspension. Should
such investigation prove that an injustice has been done an associate, that
associate shall be reinstated. The Company shall have the authority to order
full, partial or no compensation for time lost. Appeal from discharge,
suspension, or warning notices must be taken within 10 days by written notice
and a decision reached within 30 days from the date of discharge, suspension or
warning notice. If no decision has been rendered on the appeal within 30 days,
the case shall then be taken up as provided for in the Grievance Procedure.
The Company will make every effort to give written notice of discipline,
suspension or warning within 10 days of the occurrence giving rise to the
discipline or of the Company's knowledge of such occurrence. Failure to give
notice within 10 days, where the delay is excusable or reasonable under the
circumstances, will not bar the imposition of discipline.
The Company may request an associate to take a medical test to determine whether
the associate was under the influence of intoxicating liquor or drugs, and an
associate's refusal to submit to such test may be considered as a presumption
that the associate was under the influence. Such tests will be based on the
following: reasonable suspicion, or post-accident, or as a result of selection
under the Company's random drug and substance testing program.
ARTICLE 15 - INSPECTION PRIVILEGES
Section 1
Authorized agents of the Union shall have access to the Employer's establishment
during working hours for the purpose of adjusting disputes, investigating
working conditions, collection of dues and ascertaining that the Agreement is
being adhered to, provided that such inspection and visitation is reasonable and
does not interfere with the efficient operation of the Employer's business.
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ARTICLE 16 - UNAUTHORIZED ACTIVITY
Section 1 - No Strike/Lockout
The Union and the Employer agree that there shall be no strike, lockout, work
stoppage or work slow down during this present Agreement.
Section 2 - Unauthorized Action
It is understood and agreed that the Union shall have no liability for acts of
its members or agents which are unauthorized and which the Union cannot control.
It is agreed, however, that in the event of any such unauthorized action, the
Union shall, upon receiving notice thereof, urge its members to return to work,
if there should be a work stoppage, and just as soon as practical, address a
letter to the Company notifying the Company that the action of the Union members
or agents is unauthorized.
The Company shall be privileged to discipline associates responsible for such
unauthorized activities without violation of the terms of this Agreement.
Section 3 - Strike Approval
In order that the Company may be apprised of the officer of the Union empowered
to authorize strikes, work stoppages, or actions which will interfere with the
activities required of associates under this contract, it is understood and
agreed that only the President of the Union has the power or authority to
authorize any such action or give the orders or directions necessary to carry
out any such action.
ARTICLE 17 - GROUP BENEFIT PLANS
Section 1 - Company Plans
All associates covered by this Agreement shall be subject to the provisions of
and will be entitled to the benefits of the Company's group benefit program as
follows:
A. TSC Industries, Inc. Associate Benefit Plan
B. Sick Pay and Extended Sick Pay Plan (See Sections 2 and 3 below);
C. Plan.
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Associates are entitled to the benefits of the above plans as they are presently
constituted or as these plans may be amended by the Company from time to time.
The parties understand and agree that, in the event such amendments take place
during the term of this collective bargaining agreement, said amendments will
apply automatically to covered associates. It is further agreed that disputes
under these plans will not be subject to the Grievance Procedure, but will be
governed solely by the terms of the plan benefit documents.
Section 2 - Sick Pay
A. Regular Sick Days
1. Normal Benefit -- A full-time hourly associate who is absent
from work due to a bona fide personal illness or injury is
entitled to one-half (1/2) day for each completed month of
service.
2. Accrual of Regular Sick Days -- Sick days accrue at the rate
of one-half (1/2) day for each continuous month of service,
not to exceed six days in any 12 month period.
Associates absent for a period of two or more consecutively
scheduled work days will be requested by the Company to submit
a medical doctor's certification of illness and inability to
work.
Unused sick days may be accrued from year to year up to a
maximum accrual of 30 days. Accrued sick days are to be used
only for personal illness or injury and may be used during the
first seven calendar days before beginning the Extended Sick
Pay Plan in Section 3.
3. Payment of Regular Sick Days -- All regular sick pay time will
be paid through the normal payroll system. Sick time may be
taken in full or half day amounts.
B. Unused Sick Time -- Sick days are intended to be used only for personal
illness or injury. Therefore, an associate who quits or is discharged
for just cause shall not be entitled to pay for any unused or accrued
sick days.
Section 3 - Extended Sick Pay Plan
A regular full-time associate absent from work due to personal illness or injury
is entitled to pay under the Company's Extended Sick Pay Plan, upon submission
of a physician's written statement indicating that the associate is unable to
work. Payments will begin after the associate has been continuously absent for
at least seven calendar days.
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A. Regular Benefit for Full-Time Hourly Associates
<TABLE>
<CAPTION>
Full Half
Length of Service Pay For Pay For
----------------- ------- -------
<S> <C> <C>
At least six months 1 week
At least three years 2 weeks 4 weeks
At least five years 4 weeks 6 weeks
At least 10 years 6 weeks 8 weeks
At least 15 years 8 weeks 10 weeks
At least 20 years 10 weeks 12 weeks
</TABLE>
B. Payment of Extended Sick Pay -- A Personnel Action Form, along with a
physician's statement, must be submitted to the Personnel Department to
initiate extended sick pay benefits.
C. Renewal of Extended Pay Benefits -- Extended sick pay benefits are
reinstated to the full amount based on Subsection A above, 12 months
after the first extended sick day is used, provided the associate is
actively working during the 12 month period. If the associate is not
actively working, extended sick pay benefits will be reinstated one
year after return to work.
If an associate is disabled beyond a six month period, extended sick
pay would be reinstated 12 months after return to work.
If a work related injury is involved, this policy becomes null and
void.
Section 4 - Substitution of Paid Leave for Unpaid Leave Provided Under the
Family Medical Leave Act
Associates will be required to substitute their paid leave to the full extent
available under the preceding Section prior to receiving unpaid leave as
provided under the Federal Family Medical Leave Act. Under no circumstances will
associates be granted more than 12 weeks of leave, total, under any combination
of paid and unpaid leave.
ARTICLE 18 - EXAMINATIONS AND IDENTIFICATION FEES
Section 1 - Examination
Physical, mental or other examinations required by a government body or the
Employer shall be promptly complied with by all associates provided, however,
the Employer shall pay for all such examinations. The Employer shall not pay for
any time spent in the case of applicants for jobs, but shall be responsible to
other associates for all time spent at the place of examination or examinations.
The Company reserves the right to select its own medical examiner or physician,
and the Union may, if it believes an injustice has been done an associate, have
said associate re-examined at the Union's expense.
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Section 2 - Identification
Should the Employer find it necessary to require associates to carry or record
full personal identification, such requirement shall be complied with by all
associates. The cost of such personal identification shall be borne by the
Employer.
ARTICLE 19 - PAY SCHEDULE
All associates will be paid on a bi-weekly basis.
ARTICLE 20 - SAFETY AND HEALTH
The Company shall continue to make reasonable provisions for the safety and
health of its associates at the warehouse during the hours of employment. When
the Company determines that the nature of a job requires the wearing of special
protective garments or safety devices, other than safety glasses and safety
shoes, the Company will furnish the equipment without cost to the associates and
will require the wearing or use of such safety garments and equipment as a
condition of employment. As regards prescription safety glasses, the Company
will bear half the cost of the initial pair, but the cost of replacements will
be borne by the associate. As regards safety shoes, the Company will bear half
the cost of one pair of steel-toed shoes for each associate during the life of
this Agreement, if requested, up to a maximum of $50.00 if required by law or
Company regulation. The shoes and glasses become the property of the associate.
Should any associate elect not to purchase safety shoes, or prescription
glasses, the Company will make available to him a suitable substitute at no cost
to the associate.
Recognizing that safety is everyone's responsibility, the Union agrees to
cooperate with the Company in fully supporting the purposes and principles of
the Williams-Steiger Occupational Safety and Health Act of 1970. Associates
shall observe all reasonable rules made by the Company relative to health and
safety and any associate who disregards such rules and regulations will be
subject to disciplinary action as outlined in the Uniform Rules and Regulations.
To help achieve this goal, a Safety Committee shall be established which will
meet regularly to assist and make recommendations regarding safe working
conditions. Minutes of such meetings shall be prepared by the Company's safety
representative and a copy thereof shall be furnished to the Union. Two
representatives on this Committee will be members of the Union. Said
representatives shall be associates who have knowledge of the practices at the
warehouse and who have been employed by the Company a minimum of one year.
All authorized time spent, including overtime, by the Union's safety committee
persons shall be compensated for at the applicable rate.
The Company, for the duration of this Agreement, agrees to contribute $1.20 per
week to The Indiana Conference of Teamsters Safety Training and Educational
Trust Fund for each associate covered by this Agreement who performs at least 40
hours of work in any work week.
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The parties hereto specifically acknowledge and agree that the Company's only
involvement with the above mentioned Trust Fund is that of a contributor as
described herein and that the Union will defend, indemnify and save harmless the
Company against any claims, suits, grievances or other liability (including
attorneys' fees incurred by the Company) that arise out of or by reason of
actions taken by the Company with respect to said Trust Fund.
ARTICLE 21 - JURY DUTY
Section 1 - Policy
Regular full-time associates are entitled to a paid leave from the job for jury
duty. In the event the associate is excused or the jury is not in session, the
associate will be expected to work, even if only for a portion of the work day.
Associates will be granted a maximum of 30 days per calendar year.
The associate will be reimbursed the difference if jury duty pay is less than
his normal Company pay.
Section 2 - Procedure
Associates must submit proof from the appropriate authority to verify days
served and the amount of compensation received in order to receive the
difference between this amount and normal wages. Documents must be submitted on
a timely basis.
In the event that documentation cannot be obtained on a timely basis, the
Personnel Department should be contacted to arrange for the issuance of a normal
paycheck and subsequent associate reimbursement to the Company of jury duty pay.
ARTICLE 22 - WORK ASSIGNMENTS
The Employer agrees to respect the jurisdictional rules of the Union and shall
not direct or require associates, or persons other than associates in the
bargaining units here involved, to perform work which is recognized as the work
of the associates in said unit.
ARTICLE 23 - MANAGEMENT RIGHTS
The management of the Company's business and the direction of its associates
including the right to plan, direct and control its operations, hire, suspend or
discharge, transfer, or relieve associates from duty because of lack of work or
other reasons, the right to introduce new, improved or different methods or
facilities, and the right to establish and maintain rules and regulations
covering the operation of its business and the conduct of its associates, are
vested exclusively in the Employer as long as the same does not conflict with
the terms and provisions of this Agreement.
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ARTICLE 24 - DEFECTIVE EQUIPMENT AND DANGEROUS CONDITIONS OF WORK
Under no circumstances will an associate be required or assigned to engage in
any activity involving dangerous conditions of work or danger to person or
property or in violation of any applicable statute or court order, or in
violation of a government regulation relating to safety of persons or equipment.
ARTICLE 25 - EXAMINATION OF RECORDS
The Union shall have the right to examine time sheets and any other records
pertaining to the computation of compensation of any associate whose pay is in
dispute.
ARTICLE 26 - COMPENSATION CLAIMS
The Employer agrees to cooperate toward the prompt settlement of associate
on-the-job injury claims when such claims are due and owing. The Employer shall
provide Workers' Compensation protection for all associates even though not
required by state law.
ARTICLE 27 - SANITARY CONDITIONS
The Employer agrees to maintain a clean sanitary washroom having hot and cold
running water and clean toilet facilities for all departments.
ARTICLE 28 - EMERGENCY PROVISION
In the event of war, declaration of emergency, or imposition of civilian
controls during the life of this contract, either party may reopen the same upon
60 days written notice and request renegotiation of matters dealing with wages
and hours. Upon failure of the parties to agree in such negotiations, either
party shall be permitted all lawful economic resource to support their request
for revisions. If governmental approval of revisions should become necessary,
all parties will cooperate to the utmost to attain such approval. The parties
agree that the notice provided herein shall be accepted by all parties as
compliance with the notice requirements of applicable law so as to permit
economic action at the expiration thereof.
ARTICLE 29 - MISCELLANEOUS PROVISIONS
Section 1 - Bulletin Boards
The Company agrees to post within the business premises such notices of Union
meetings, etc., as may be delivered to it by the Union.
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Section 2 - No Discrimination
The Company agrees that it will not discriminate against any associate for
employment for or on account of his affiliation or activities with the Union.
The Company and Union agree not to discriminate against any individual with
respect to hiring, compensation or terms or conditions of employment because of
an individual's race, color, religion, age, sex, or national origin. Nor will
the Company limit, segregate or classify associates in any way to deprive any
individual associate of employment opportunities because of race, color,
religion, age, sex, veteran or national origin.
Section 3 - The Americans With Disabilities Act (ADA)
Due to the Americans with Disabilities Act, or the regulations promulgated
thereunder, the Company may be required to make a reasonable accommodation to
the disability of an applicant or incumbent associate that may be in conflict
with provisions of this Agreement. In such event, the Company shall be
privileged to make such accommodation notwithstanding the requirements of this
Agreement. The Company shall notify the Union thereafter as soon as is
practicable of such situation on a confidential basis.
ARTICLE 30 - FUNERAL LEAVE
Section 1 - Policy
In the event of the death of a mother, mother-in-law, father, father-in-law,
sister, sister-in-law, brother, brother-in-law, child, spouse, grandchild,
grandparent, grandparent-in-law, son-in-law or daughter-in-law, regular
full-time associates will be paid normal pay for time absent from scheduled work
up to four consecutive days.
Section 2 - Schedule
Payment will be made for Bereavement Leave when the associate misses a regularly
scheduled work day. Bereavement Leave can be applied to the beginning or the end
of a vacation period only when that time off would have been granted, regardless
of the vacation.
ARTICLE 31 - CREDIT UNION
The Company agrees to make payroll deductions for associates who have given
written authorization for payroll deductions in the amount of monies as
authorized by its associates for the associate's individual member account with
the Federally Chartered Credit Union, FINANCE CENTER FEDERAL CREDIT UNION; and
will remit said monies deducted as authorized by its associates to the FINANCE
CENTER FEDERAL CREDIT UNION, PO Box 26501, Indianapolis, IN, 46226.
-24-
<PAGE> 28
The Union agrees to save Company harmless from any action or actions growing out
of these deductions and commenced by any associate who has executed such
assignment and authorization against Company and assumes full responsibility for
the disposition of the funds so deducted once such funds have been turned over
to the Union as above provided.
ARTICLE 32 - ASSOCIATES' FACILITIES
It is agreed that the Company will provide an area to be used exclusively for
the purposes of eating and recreation, and this area shall be separated from
other areas by suitable partitions, and shall contain devices to heat and
refrigerate edibles. This area shall be kept clean, and shall be furnished with
adequate tables and chairs.
ARTICLE 33 - CHANGE IN OPERATIONS
The Company agrees to notify the Union, in writing, of any proposed change in
the location of operations, or title or interest which may affect associates
covered by this Agreement. All proposed changes will be discussed between the
Company and the Union prior to effectuating any change.
ARTICLE 34 - TERMINATION OF AGREEMENT
This Agreement shall be in full force and effect from May 1, 1996 to and
including April 30, 2000, and shall continue in full force and effect from year
to year thereafter unless written notice of desire to change or modify the
Agreement is served by either party on the other at least 60 days prior to the
date of expiration.
FOR THE COMPANY FOR THE UNION
TRACTOR SUPPLY COMPANY OF CHAUFFEURS, TEAMSTERS,
INDIANAPOLIS, INDIANA WAREHOUSEMEN AND HELPERS,
LOCAL UNION NO. 135
/s/ Larry Goldberg /s/ Danny L. Barton
- - ------------------------------------ ----------------------------------------
V.P. - Logistics Secretary - Treasurer
- - ------------------------------------ ----------------------------------------
April 15, 1996
- - ------------------------------------ ----------------------------------------
(Date) (Date)
-25-
<PAGE> 29
APPENDIX "A"
WAGE RATES
Section 1 - Rates for Warehouse Associates
A. Associates not at current salary cap.
<TABLE>
<S> <C>
Start................................................$7.50 per hour
Beginning of 2nd year.................................7.80 per hour
Beginning of 3rd year.................................8.63 per hour
Beginning of 4th year.................................8.79 per hour
Beginning of 5th year.................................9.21 per hour
Beginning of 6th year.................................9.70 per hour
Beginning of 7th year................................10.20 per hour
Beginning of 8th year................................10.72 per hour
Beginning of 9th year................................11.25 per hour
Beginning of 10th year...............................12.00 per hour
Beginning of 11th year...............................12.25 per hour
Beginning of 12th year...............................12.50 per hour
Beginning of 13th year...............................12.75 per hour
B. Associates at the current salary cap.
May 1, 1996..........................................12.00 per hour
May 1, 1997..........................................12.25 per hour
May 1, 1998..........................................12.50 per hour
May 1, 1999..........................................12.75 per hour
</TABLE>
The extent of the increases to be granted at these time intervals between the
start and the maximum will be based on performance and evaluations.
Section 2
Part-time Warehouse Associates -- $7.00 per hour
Part-time associates will be required to join the Union. Part-time associates
will not be eligible for holidays, vacations, sick pay, jury duty or funeral
leave pay. Part-time associates will be eligible for Company benefits as set
forth in Article 17 in accordance with the terms of the applicable benefit
plans. In other words, part-time associate's eligibility will be determined
solely by the provisions of each benefit plan.
Section 3 - Lead Person
Individuals in this capacity are working foreman and shall perform normal
bargaining unit work and shall have overall responsibility for coordination of
various work related activities.
Lead Persons will be paid a premium rate of $1.50 per hour.
-26-
<PAGE> 30
The Company will have sole discretion as to designation of Lead Persons.
The parties agree that Lead Persons do not meet the definition of "Supervisor"
within the meaning of the National Labor Relations Act.
Section 4 - Learning for Pay Program
Associates will be paid a premium rate of $.15 per hour for proof of successful
completion of a Company approved course administered by a Company approved
college or junior college.
Section 5 - Work in the Store Program
Subject to Company discretion, associates may participate in the "Work in the
Store Program" for up to one week per year.
Section 6 - No Reduction in Pay
No associates will suffer a reduction in pay as a result of the implementation
of the wage program set forth in Section 1 of this Appendix "A".
-27-
<PAGE> 1
[TRACTOR SUPPLY CO. LOGO]
COVER PAGE
[Pictures: Products]
[Picture: Tractor Supply Company Sign]
We are the largest retail farm store
chain in America. We doubled our
business over the past five years
and our goal is to double it again
over the next five years by:
- - - Building a strong, efficient infrastructure;
- - - Focusing the merchandise offering; and
- - - Expanding into new and existing markets.
1996 ANNUAL REPORT
<PAGE> 2
- - --------------------------------------------------------------------------------
MAP
Total Number of Stores
at Year End
(Per State)
- - --------------------------------------------------------------------------------
NUMBER OF STORES BY STATE
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Texas 29 Iowa 10 Nebraska 6 Maryland 2
Ohio 28 Kentucky 10 North Carolina 6 Mississippi 1
Michigan 21 North Dakota 8 Missouri 5 Montana 1
Indiana 17 Kansas 7 Pennsylvania 5 New York 1
Tennessee 17 Arkansas 6 South Dakota 4 Oklahoma 1
Illinois 12 Minnesota 6 Virginia 4 Wisconsin 1
</TABLE>
COMPANY PROFILE
Since its founding as a mail order tractor parts business in 1938, Tractor
Supply Company has grown to be the largest operator of retail farm stores in
America. The Company supplies the daily farming and maintenance needs of its
target customers: hobby, part-time and full-time farmers, as well as suburban
customers, contractors and tradesmen. At the close of fiscal 1996, the Company
operated 208 retail farm stores in 24 states. Tractor Supply Company stores
typically range in size from 12,000 to 14,000 square feet of inside space and
utilize at least as many square feet of outside selling space. An average
store displays a comprehensive selection of over 12,000 different products
including farm maintenance products (fencing, tractor parts and accessories,
agricultural spraying equipment and tillage parts); animal products (specialty
feeds, supplements, medicines, veterinary supplies and livestock feeders);
general maintenance products (air compressors, welders, generators, pumps,
plumbing and tools); lawn and garden products (riding mowers, tillers and
fertilizers); light truck equipment; and work clothing. The stores are located
in rural communities and in the outlying areas of large cities where farming is
a significant factor in the local economy. The Company employs approximately
2,500 people. Tractor Supply Company has been a public company since February
1994. Its stock is traded on The Nasdaq National Market under the symbol
"TSCO".
<PAGE> 3
TRACTOR SUPPLY COMPANY
FINANCIAL HIGHLIGHTS
(in thousands, except where noted)
<TABLE>
<CAPTION>
FISCAL YEAR PERCENT
------------------------ INCREASE
1996 1995 (DECREASE)
------- -------- ----------
<S> <C> <C> <C>
OPERATING RESULTS:
Net sales ............................................. $449,029 $383,903 17.0
Income before income taxes ............................ 22,081 20,815 6.1
Net income ............................................ 13,236 12,522 5.7
Net income per share ($) .............................. 1.50 1.40 7.1
FINANCIAL POSITION:
Total assets .......................................... 195,582 174,129 12.3
Cash and short-term investments ....................... 12,948 5,087 154.5
Stockholders' equity .................................. 92,966 79,951 16.3
Long-term debt to equity (%)........................... 22.8 32.3 (29.4)
STATISTICS:
Number of stores (#) .................................. 208 185 12.4
Square footage at year-end ............................ 2,544 2,238 13.7
Average sales per store ............................... 2,159 2,075 4.0
Net sales per square foot ($) ......................... 185 178 3.9
</TABLE>
GRAPHS
- - ---------------
<TABLE>
<CAPTION>
Net Sales (in millions) Income From Operations (in millions)
- - ----------------------- -------------------------------------
<S> <C> <C> <C>
1996 $449.0 1996 $24.4
1995 $383.9 1995 $22.5
1994 $330.0 1994 $20.6
1993 $279.2 1993 $15.3
1992 $251.5 1992 $12.6
<CAPTION>
Net Income (in millions) Five Year Compound Growth Rate
- - ------------------------ ------------------------------
<S> <C> <C> <C>
1996 $13.2 Net Sales 15.8%
1995 $12.5 Income from Operations 18.2%
1994 $11.3 Net Income 34.4%
1993 $ 6.9
1992 $ 4.9
</TABLE>
1
<PAGE> 4
TRACTOR SUPPLY COMPANY
LETTER TO STOCKHOLDERS
WE HAVE THE NUMBER ONE POSITION IN A VERY UNIQUE MARKET NICHE SERVING THE BASIC
MAINTENANCE NEEDS OF AMERICA'S FARMERS AND RANCHERS. LAST YEAR WE MADE
TREMENDOUS PROGRESS BY CONTINUING TO BUILD A STRONG, EFFICIENT INFRASTRUCTURE.
TRACTOR SUPPLY IS TAKING MAJOR STEPS TO REJUVENATE THE MERCHANDISE MIX TO OFFER
AN EVEN MORE FOCUSED ASSORTMENT OF PRODUCTS OF STILL GREATER VALUE. WE
CURRENTLY HAVE IDENTIFIED MORE THAN 200 NEW MARKETS FOR OUR EXPANSION. WE ARE
PROUD OF THE CONTINUED DEVELOPMENT OF OUR MANAGEMENT TEAM AT EVERY LEVEL AND
ARE CONFIDENT THAT WE HAVE THE TALENT AND THE SPIRIT TO DRIVE THIS BUSINESS
BEYOND THE EXPECTATIONS OF MOST.
Tractor Supply Company achieved record sales, record net income, and opened
more new stores than ever in 1996. Total sales for the year were $449.0
million, up 17.0% and net income was $13.2 million, up 5.7%. We added 23 new
stores and operated 208 stores in 24 states, almost twice as many as our
nearest competitor.
Industry Leader
We have the number one position in a very unique market niche serving the basic
maintenance needs of America's farmers and ranchers. We have great confidence
in the future potential of this market and will continue to expand and grow by
increasing sales at existing stores and by opening new stores in markets that
meet our demographic criteria.
Building the Foundation
Last year we made tremendous progress by continuing to build our strong growth
infrastructure. New store performance is excellent, our new store computer
system is performing above expectations, turnover of store managers is at
record low levels, logistics support is outstanding, improved inventory
controls are yielding better in stock positions and lower inventories, and we
are now on the Internet at "http://www.tractorsupplyco.com".
Last fall we rolled out state of the art Point-of-Sale systems for all stores
in less than three months. The new systems have already reduced checkout time
and streamlined administrative functions at the stores and at our support
center. The nearly completed financial systems are yielding similar
efficiencies. We are focused on making prudent long-term investments in
technology that will give us competitive advantages and operating efficiencies.
This is the second consecutive year of record low turnover of store managers
which speaks very well of the strength of the management team. Low turnover of
store managers translates to stability of the sales force which further
solidifies and strengthens the organization. We continue our emphasis on
quality recruiting, management education for our leaders and product training
for all associates.
Rejuvenating the Merchandise Mix
Tractor Supply is taking major steps to rejuvenate the merchandise mix to offer
an even more focused assortment of products at still greater value. We are
substantially accelerating the changes in our offering to better serve the
basic maintenance needs of out target customer. There are more product
innovations in place now than in several years and more are on the way. We
know that merchandising drives sales and are confident that our renewed efforts
will produce stronger sales growth in 1997 and going forward.
Dynamic Future
Last year we added 23 new stores in eight states (including two new states:
Oklahoma and Virginia) which increased the total store count to over 200 for
the first time. Most of the 25 new stores planned for 1997 will be located in
or near existing market areas and the majority will open during the first few
months of the year. Sales from new stores continue to outperform the existing
store base and become profitable during the first twelve months of operation.
We are proud of the continued development of our management team at every level
and are confident that we have the talent and the spirit to drive this business
beyond the expectations of most. We are determined to substantially improve
our sales performance this year.
Tractor Supply Company has a very unique and special niche in the retail
marketplace serving America's farmers and ranchers. We are proud of what we do,
we are winners, and this year we will prove it once again.
<TABLE>
<S> <C>
Joe Scarlett Gerry Newkirk
Chairman of the Board and President and
Chief Executive Officer Chief Operating Officer
</TABLE>
2
<PAGE> 5
TRACTOR SUPPLY COMPANY
OUR BUSINESS
Tractor Supply Company is the largest farm store chain in America operating 208
stores in 24 states at the end of 1996. Stores typically range in size from
12,000 to 14,000 square feet of inside selling space and utilize at least as
many square feet of outside selling space. Our business strategy is to provide
a comprehensive, competitively priced selection of farming and maintenance
products that meet the needs of our target customers: hobby, part-time and
full-time farmers, as well as suburban homeowners, contractors and tradesmen.
An average store displays a wide selection of over 12,000 different items
including farm maintenance products (fencing, tractor parts and accessories,
agricultural spraying and tillage parts); animal products (specialty feeds,
supplements, medicines, veterinary supplies and livestock feeders); general
maintenance products (air compressors, welders, generators, pumps, plumbing and
tools); lawn and garden products (riding mowers, tillers and fertilizers);
light truck equipment and work clothing. Our principal mission is to be the
most dependable supplier of basic maintenance needs to America's farmers and
ranchers.
[PICTURE: Bob Young]
Communication: New Store Coordinator Bob Young
Bob Young, Tractor Supply Company's New Store Coordinator, is the liaison
between each new store's management team and all other support functions within
the organization. Bob was promoted to this position in May 1994, shortly after
the Company completed its initial public offering, to direct the Company's new
store opening program. By working closely with all members of the team, Bob
has been able to successfully direct the many facets of each new store opening,
which range from ordering fixtures and merchandise, as necessary, to the
distribution of all new store materials (such as forms, manuals, and
point-of-purchase information). In many cases, Bob assisted in developing the
process itself (such as the Company's "New Store Book" that details the daily
events leading up to the opening date). Each new store is a significant event
to Bob. By making the connection between support functions and local store
management work during the store opening process, Bob contributes greatly to a
new store's success.
BUILDING THE STRONG, EFFICIENT INFRASTRUCTURE
The first key component of our growth and expansion plans is to continually
develop a strong, efficient infrastructure. Two critical elements in this
area are the ongoing development of our associates and the utilization of
technology to create competitive advantage and improve operating efficiencies.
We made significant progress on both fronts during 1996.
The most important element of building the foundation for our future is
developing our people. We are dedicated to recruiting, training and retaining
the best and most knowledgeable associates in our industry. In 1996, we
successfully recruited and/or promoted record numbers of associates throughout
the organization. We also trained record numbers of associates with programs
ranging from full management training programs for developing store managers to
product training for all associates. We have established incentive compensation
programs at all levels within our organization which we believe further enhance
our ability to attract and retain qualified associates. This ongoing
commitment to the development of our associates led to record low turnover of
store managers for the second year in a row.
3
<PAGE> 6
TRACTOR SUPPLY COMPANY
A second key element in building the foundation for our future is wisely using
technology. Several major milestones were achieved on the technology front in
1996. First, we successfully completed the roll-out of state of the art
point-of-sale systems to all stores. The new point-of-sale systems have
already reduced check-out time, streamlined administrative functions at the
store and the store support center, and improved inventory control. Benefits
of the new systems include scanning, on-line exception receiving, full price
look-up capabilities, and elimination of many manual processes, to name just a
few. We also completed the upgrade of several financial systems during 1996
and expect to complete the upgrade of another major financial system this
summer. These new financial systems are expected to improve financial
reporting and controls and further enhance administrative efficiencies.
We are proud of our management team and of our new state of the art systems and
believe that our ongoing commitment to the development of our associates and
the prudent use of technology will continue to propel us going forward.
[PICTURE: Shelly Campbell]
Customer Service: Store Manager Shelly Campbell
Shelly Campbell is a 23-year veteran with Tractor Supply Company and the
Manager of our store in Saginaw, Michigan. Over the years, Shelly has earned a
tremendous amount of respect for the way she treats customers and employees.
Shelly feels that treating people fairly and in the way she would like to be
treated if she was in their position is just common courtesy. This winning
attitude has contributed to her and her store's success. This success can also
be attributed to the friendly and supportive atmosphere fostered throughout the
store and the entire Tractor Supply organization. In an environment where
associates are empowered to succeed and to make a difference, great things can
be achieved.
FOCUSING THE MERCHANDISE OFFERING
The second key component of our growth and expansion plans is to increase sales
at our existing stores by continually focusing our merchandise offering. To
stimulate our comparable store sales, we have critically reevaluated our
business and have developed new merchandising and marketing strategies (the
focus of which will be on our core customer, the American farmer and rancher)
to accelerate the rate of change in our product offerings over the next several
years. Our goal is to aggressively pursue and introduce new and innovative
products and product lines, enhance our existing product assortments and
improve our in-stock position in key product categories. Several of these new
initiatives are already underway for 1997.
Our first major initiative for 1997 is a completely revamped equine product
assortment. This new equine program was rolled out to approximately 50 stores
earlier this year, will be rolled out to approximately 100 additional stores
beginning this summer and will be in all stores by the first quarter of next
year.
The second major initiative for 1997 is a new feed line to be rolled out
beginning this spring. The major focus of the new feed program is the
introduction, under a private label, of an economy feed line that will
compliment our already well established high-end private label feed line.
A third major initiative that we are starting in 1997 is the development of a
larger prototype store test. The Company is in the process of setting up two
larger store formats which are designed to test both new and innovative
products and product lines as well as the economics of a larger store. The
Company expects it will take several years to experiment with this new larger
prototype store, including assessing the success of the new products, product
lines, store layout and overall store performance,
4
<PAGE> 7
TRACTOR SUPPLY COMPANY
and consequently, the Company does not expect to have any meaningful results
from this test until spring of 1999. Regardless of the overall outcome of the
test of a larger store format, however, the Company expects to learn from the
experiment and hopes, at a minimum, to gain ideas for new products and/or
product lines that can be rolled out to existing stores.
And finally for 1997, the Company has also significantly enhanced one of its
key existing product assortments, power equipment, and believes that the new
and improved product offering being rolled out this spring will be our best and
most competitive power equipment offering to date.
We are confident that our efforts in this area will help rejuvenate our stores,
create excitement with our customers and store associates, and fuel our
comparable store sales.
[PICTURE: John Dansbie]
Opportunity: Store Manager John Dansbie
John Dansbie is the Manager of the Tractor Supply Company store located in
Lafayette, Indiana. John joined the Company in June 1994 as an entry level
associate at our Indianapolis, Indiana Distribution Center. In November 1994,
John was promoted to Manager Trainee and moved to the Greenwood, Indiana store
where he spent the next eleven months participating in the Company's store
management training program. Upon successful completion of the training
program, during which time he also earned his college degree, John was promoted
to Store Manager and moved to Lafayette, Indiana to manage his own store. Now,
he and his team look forward to the daily challenge of assisting customers in
finding the right products to meet their needs and making sure that store
operations in Lafayette run smoothly. John's rapid progress with Tractor
Supply is the fulfillment of one of his dreams and demonstrates the opportunity
afforded those willing to work hard and who have proven themselves.
EXPANDING INTO NEW AND EXISTING MARKETS
The third key component of the Company's growth and expansion plans is to open
additional stores in both new and existing markets. Over the past several
years, the Company has opened 56 new retail farm stores in new and existing
markets, a 37% increase in the total store count. We currently have identified
over 200 potential new markets, and our goal is to increase our total store
count by approximately 12% each year. The Company plans to open 25 additional
new stores in 1997 (approximately 12 of which are scheduled to open during the
first quarter of 1997), 28 in 1998 and additional stores thereafter. Sales from
new stores continue to outperform the existing store base and become profitable
during the first twelve months of operation.
OUTLOOK
The more we evaluate, develop and grow our business, the clearer our vision of
the business becomes. Our vision is best summarized by the basic principles we
have used to guide the Company since 1982:
<TABLE>
<S> <C>
- - - To be the most dependable supplier of basic maintenance needs to farmers
and other residents of rural areas;
- - - To provide the best customer service, guaranteed satisfaction and low
prices every day;
- - - To provide an environment where the free exchange of information is a way
of life and where personal growth is based on individual initiative and
achievement; and
- - - To continuously improve all operations so that Tractor Supply Company is
the most efficient operator.
</TABLE>
5
<PAGE> 8
TRACTOR SUPPLY COMPANY
We have a very unique and special niche in the retail marketplace, serving
America's farmers and ranchers. Our team is stronger than ever and we have an
unyielding passion to continually improve in everything we do. We believe
there continues to be tremendous opportunity for growth in this market and we
are confident that we have the talent and spirit to drive this business beyond
the expectations of most.
- - ---------------------------------
As with any business, all phases of the Company's operations are subject to
influences outside its control. This report contains certain forward-looking
statements. These statements include reference to certain factors, any one, or
a combination, of which could materially affect the results of the Company's
operations. These factors include general economic cycles affecting consumer
spending, weather factors, pricing and other competitive factors, the timing
and acceptance of new products in the stores, the mix of goods sold, 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.
6
<PAGE> 9
TRACTOR SUPPLY COMPANY
[PICTURES: Products]
7
<PAGE> 10
TRACTOR SUPPLY COMPANY
[PICTURES: Products]
8
<PAGE> 11
TRACTOR SUPPLY COMPANY
FIVE YEAR SELECTED FINANCIAL AND OPERATING HIGHLIGHTS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
DECEMBER 28, DECEMBER 30, DECEMBER 31, JANUARY 1, DECEMBER 26,
1996 1995 1994 1994 1992
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net Sales ....................................... $ 449,029 $ 383,903 $ 329,967 $ 279,213 $ 251,517
Gross margin .................................... 116,651 98,656 88,187 71,743 64,263
Selling, general and administrative expenses .... 88,827 73,587 65,790 54,788 50,142
Depreciation and amortization ................... 3,385 2,524 1,845 1,655 1,506
------------- ------------- ------------- ------------- ------------
Income from operations .......................... 24,439 22,545 20,552 15,300 12,615
Interest expense, net ........................... 2,358 1,730 1,798 3,840 4,326
------------- ------------- ------------- ------------- ------------
Income before income taxes ...................... 22,081 20,815 18,754 11,460 8,289
Income tax provision ............................ 8,845 8,293 7,496 4,531 3,421
------------- ------------- ------------- ------------- ------------
Net income ...................................... $ 13,236 $ 12,522 $ 11,258 $ 6,929 $ 4,868
============= ============= ============= ============= ============
Net income applicable to common stockholders $ 13,039 $ 12,165 $ 10,788 $ 6,459 $ 4,398
============= ============= ============= ============= ============
Net income per share (a) ......................... $ 1.50 $ 1.40 $ 1.28 $ 0.99 $ 0.67
============= ============= ============= ============= ============
Weighted average common shares outstanding (b) 8,718,000 8,718,000 8,433,934 6,518,000 6,518,000
OPERATING DATA:
Gross margin .................................... 26.0% 25.7% 26.7% 25.7% 25.5%
Selling, general and administrative expenses .... 19.8% 19.2% 19.9% 19.6% 19.9%
Income from operations .......................... 5.4% 5.9% 6.2% 5.5% 5.0%
Net income ...................................... 2.9% 3.3% 3.4% 2.5% 1.9%
Number of stores:
Beginning of year ............................. 185 165 152 150 149
New stores .................................... 23 20 13 6 1
Closed stores ................................. --- --- --- (4) ---
------------- ------------- ------------- ------------- ------------
End of year ................................... 208 185 165 152 150
============= ============= ============= ============= ============
Number of relocated stores ...................... 4 2 4 4 2
Number of remodeled stores (c) .................. 1 6 2 2 ---
Total selling square footage at period-end (d) .. 2,543,575 2,237,755 1,929,396 1,738,348 1,691,765
Average sales per store (in thousands) .......... $ 2,159 $ 2,075 $ 2,000 $ 1,837 $ 1,677
Net sales per square foot of selling space ...... $ 185 $ 178 $ 178 $ 163 $ 149
Comparable store sales increase (e) ............. 2.5% 3.1% 11.7% 7.0% 14.4%
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital ................................. $ 65,954 $ 63,850 $ 46,184 $ 27,414 $ 22,558
Total assets .................................... 195,582 174,129 146,248 116,786 107,306
Long-term debt, less current portion (f) ........ 21,166 25,858 12,266 40,006 42,733
Redeemable preferred stock ...................... 1,763 3,525 5,875 5,875 5,875
Stockholders' equity ............................ 92,966 79,951 67,817 17,279 10,392
</TABLE>
(a) Net income per share is calculated based on the weighted average number
of common shares outstanding applied to net income applicable to common
stockholders.
(b) Weighted average common shares outstanding have been adjusted to give
effect to an approximately 50 for 1 stock split consummated on February
14, 1994 in connection with the Company's initial public offering
consummated on February 25, 1994. Stock options have been excluded as
they are anti-dilutive.
(c) Includes remodelings costing more than $150,000.
(d) Total selling square footage includes normal selling space and excludes
office, stockroom, receiving space and outside selling space.
(e) Comparable store sales increases are calculated on a 52-week basis,
excluding relocations, using all stores open at least one year.
(f) Long-term debt includes borrowings under the Company's principal
revolving credit agreements and amounts outstanding under its capital
lease obligations, excluding the current portions of each.
9
<PAGE> 12
TRACTOR SUPPLY COMPANY
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 three
fiscal years ended December 28, 1996 and its liquidity and capital resources.
This discussion should be read in conjunction with the financial statements and
notes thereto included elsewhere in this Annual Report. 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 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 and other capital market conditions
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.
The Company's fiscal year ends on the Saturday closest to December 31. Fiscal
years 1996, 1995 and 1994 consisted of 52 weeks.
OVERVIEW
Since its founding as a mail order tractor parts business in 1938, the Company
has grown to be the largest operator of retail farm stores in America. The
Company supplies the daily farming and maintenance needs of its target
customers: hobby, part-time and full-time farmers, as well as suburban
customers, contractors and tradesmen. The Company's stores typically range in
size from 12,000 to 14,000 square feet of inside selling space and utilize at
least as many square feet of outside selling space. An average store displays
a comprehensive selection of over 12,000 different products including farm
maintenance products (fencing, tractor parts and accessories, agricultural
spraying equipment and tillage parts); animal products (specialty feeds,
supplements, medicines, veterinary supplies and livestock feeders); general
maintenance products (air compressors, welders, generators, pumps, plumbing and
tools); lawn and garden products (riding mowers, tillers and fertilizers);
light truck equipment; and work clothing. The stores are located in rural
communities and in the outlying areas of large cities where farming is a
significant factor in the local economy. The Company does not sell large
tractors, combines, bulk chemicals or bulk fertilizers.
On February 25, 1994, the Company consummated an initial public offering (the
"Offering") whereby the Company sold 2,200,000 shares of common stock, par
value $.008 per share, at an initial offering price to the public of $20.00 per
share. In connection with the Offering, the Company (i) received net proceeds
of approximately $39.8 million (after deducting underwriting discounts and
commissions and expenses of the Offering); (ii) repaid all of the borrowings
then outstanding under its old revolving credit agreement with The First
National Bank of Boston (the "Old Credit Agreement") (approximately $22.7
million at February 25, 1994); (iii) paid off the mortgage notes on 34 of its
existing store locations (aggregating approximately $10.1 million); and (iv)
paid off all of the amounts outstanding under subordinated promissory notes
(aggregating approximately $.2 million). Also in connection with the Offering,
the Company retired the shares of common stock held in treasury.
10
<PAGE> 13
TRACTOR SUPPLY COMPANY
Over the past three fiscal years since the Offering, the Company has
successfully achieved its new store expansion goals, opening 13 new retail farm
stores in fiscal 1994, 20 new stores in fiscal 1995 and 23 new stores in fiscal
1996. These new stores have increased the Company's market presence in the
Southwest, primarily in Texas and Arkansas, and in the Southeast, primarily in
Tennessee and North Carolina. This expansion brings the Company's total store
count to 208 (in 24 states) as of December 28, 1996. The Company plans to open
an additional 25 stores in 1997, approximately 12 of which are scheduled to
open in the first quarter of 1997, 28 in fiscal 1998 and additional stores
thereafter. Over the past three fiscal years since the Offering, the Company
has also relocated ten stores (four in fiscal 1994, two in fiscal 1995, and
four in fiscal 1996) and completed major remodelings on nine of its existing
stores. In total over the past three fiscal years since the Offering, the
Company has opened, relocated or remodeled 75 stores.
Between fiscal year 1993 and fiscal year 1996, net sales increased from $279.2
million to $449.0 million and net income increased from $6.9 million to $13.2
million, reflecting a three-year compound annual growth rate of 17.2% and
24.1%, respectively. Between fiscal year 1991 and fiscal year 1996, net sales
increased from $215.9 million to $449.0 million and net income increased from
$3.0 million to $13.2 million, reflecting a five-year compound annual growth
rate of 15.8% and 34.4%, respectively. The Company generated these growth rates
primarily from increases in comparable store sales and, more recently, through
new store openings and relocations of existing stores. Comparable stores sales
increased 2.5%, 3.1% and 11.7% in fiscal 1996, 1995 and 1994, respectively.
Since 1992, the 52 new or relocated stores that have been open more than one
year have generated average net sales that are approximately 26.4% per annum
greater than those of existing stores.
SEASONALITY AND WEATHER
The Company's business is highly seasonal. Historically, the Company's sales
and profits have been the highest in the second and fourth fiscal quarters of
each year due to the farming industry's planting and harvesting seasons and the
sale of seasonal products. The Company has typically operated at a net loss in
the first fiscal quarter of each year. Unseasonable weather and excessive
rain, drought, or early or late frosts may also affect the Company's sales.
The Company believes, however, that the impact of adverse weather conditions is
somewhat mitigated by the geographic dispersion of its stores.
The Company experiences a buildup of inventory and accounts payable during its
first fiscal quarter each year for purchases of seasonal product in
anticipation of the April through June selling season and again during its
third fiscal quarter in anticipation of the October through December selling
season.
The Company's unaudited quarterly operating results for each fiscal quarter of
1996 and 1995 are shown below (dollars in thousands, except per share amounts):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
1996
Net sales $81,157 $146,717 $104,990 $116,165 $449,029
Gross margin 20,562 37,797 27,130 31,162 116,651
Income (loss) from
operations (938) 13,698 4,456 7,223 24,439
Net income (loss) (964) 7,868 2,286 4,046 13,236
Net income (loss) per share (.12) .90 .26 .46 1.50
1995
Net sales $71,500 $123,618 $ 88,296 $100,489 $383,903
Gross margin 17,806 31,531 22,882 26,437 98,656
Income (loss) from
operations (55) 11,883 4,189 6,528 22,545
Net income (loss) (246) 6,977 2,236 3,555 12,522
Net income (loss) per share (.04) .79 .25 .40 1.40
</TABLE>
11
<PAGE> 14
TRACTOR SUPPLY COMPANY
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items in the
Company's Statements of Income expressed as a percentage of net sales:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------
December 28, December 30, December 31, January 1, December 26,
1996 1995 1994 1994 1992
------------ ------------ ----------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net sales ......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold .......... 74.0 74.3 73.3 74.3 74.5
------------ ------------ ----------------- ---------- ------------
Gross margin ...................... 26.0 25.7 26.7 25.7 25.5
Selling, general and administrative
expenses ........................ 19.8 19.2 19.9 19.6 19.9
Depreciation and amortization ..... 0.8 0.6 0.6 0.6 0.6
------------ ------------ ----------------- ---------- ------------
Income from operations ............ 5.4 5.9 6.2 5.5 5.0
Interest expense, net ............. 0.5 0.4 0.5 1.4 1.7
------------ ------------ ----------------- ---------- ------------
Income before income taxes ........ 4.9 5.5 5.7 4.1 3.3
Income tax provision .............. 2.0 2.2 2.3 1.6 1.4
------------ ------------ ----------------- ---------- ------------
Net income ........................ 2.9% 3.3% 3.4% 2.5% 1.9%
============ ============ ================= ========== ============
</TABLE>
FISCAL 1996 COMPARED TO FISCAL 1995
Net sales increased 17.0% to $449.0 million in fiscal 1996 from $383.9 million
in fiscal 1995. This increase resulted primarily from, in order of relative
importance, new store openings and relocations, and, to a lesser extent, a
comparable store sales increase of 2.5% (calculated on a 52 week basis,
excluding relocations, using all stores open at least one year). To stimulate
comparable store sales, management has critically reevaluated the business and
developed new merchandising and marketing strategies (the focus of which will
be on the Company's core customer, the American farmer and rancher) to
accelerate the rate of change in product offerings over the next several years.
Management's goal is to aggressive pursue and introduce new and innovative
products and product lines, enhance existing product assortments and improve
in-stock position in key product categories. Management believes these efforts
will rejuvenate the stores, create excitement with the customers and store
associates and build stronger comparable store sales. The Company opened 23
new stores and relocated four stores in fiscal 1996. The Company opened 20 new
stores and relocated two stores during fiscal 1995. At December 28, 1996, the
Company operated 208 retail farm stores versus 185 stores at the end of the
prior fiscal year.
The gross margin rate increased .3 percentage points to 26.0% of sales in
fiscal 1996 from 25.7% in fiscal 1995. This increase resulted primarily due to
the positive mix effect of sales of lower margin merchandise representing a
smaller portion of total sales in fiscal 1996 compared to fiscal 1995, an
improved gross margin rate in certain product categories and a reduction in the
LIFO provision, partially offset by higher freight costs.
As a percent of sales, selling, general and administrative expenses increased
.6 percentage points to 19.8% for fiscal 1996 from 19.2% for fiscal 1995. On
an absolute basis, selling, general and administrative expenses increased 20.7%
to $88.8 million for fiscal 1996 from $73.6 million in fiscal 1995. The
increase in expenses on a percentage of sales basis is a result of the leverage
loss resulting from the soft comparable store sales performance. The increase
in absolute dollars is primarily attributable to costs associated with new
store openings and relocations (new and relocated stores have considerably
higher occupancy costs, primarily rent, than the existing store base).
Depreciation and amortization expense increased 34.1% over the prior year due
mainly to costs associated with new and relocated stores.
Net interest expense increased 36.3% to $2.4 million in fiscal 1996 from $1.7
million in fiscal 1995. The increase in interest expense reflects additional
borrowings under the Credit Agreement to fund the Company's growth and
expansion plans, resulting in a higher average outstanding balance under the
revolving credit loan in fiscal 1996 compared to fiscal 1995.
The Company's effective tax rate increased 0.3 percentage points to 40.1% in
fiscal 1996 from 39.8% in fiscal 1995 primarily due to a higher effective state
income tax rate in fiscal 1996.
12
<PAGE> 15
TRACTOR SUPPLY COMPANY
As a result of the foregoing factors, net income increased 5.7% to $13.2
million in fiscal 1996 from $12.5 million in fiscal 1995. As a percent of
sales, net income decreased 0.4 percentage points to 2.9% of sales in fiscal
1996 from 3.3% of sales in fiscal 1995.
FISCAL 1995 COMPARED TO FISCAL 1994
Net sales increased 16.3% to $383.9 million in fiscal 1995 from $330.0 million
in fiscal 1994. This increase resulted primarily from, in order of relative
importance, new store openings and relocations, and, to a lesser extent, a
comparable store sales increase of 3.1% (calculated on a 52 week basis,
excluding reallocations, using all stores open at least one year). Comparable
store sales benefited from the Company's on-going efforts to improve its
in-stock position and enhance its product assortment as well as from its "low
prices everyday" pricing strategy and continuing efforts to improve customer
service. The Company opened 20 new stores and relocated two stores in fiscal
1995. The Company opened 13 new stores and relocated four stores during fiscal
1994. At December 30, 1995, the Company operated 185 retail farm stores versus
165 stores at the end of the prior year.
The gross margin rate decreased 1.0 percentage points to 25.7% of sales in
fiscal 1995 from 26.7% in fiscal 1994. This decrease resulted primarily from
higher product costs, increased competitive pricing pressures and additional
markdowns, mainly due to increased promotional activities, as well as from the
mix effect of lower margin merchandise, principally at the new stores and an
increase in the LIFO provision. The Company continues to face increasing
competitive pricing pressures which adversely impacted gross margin in fiscal
1995. During the fourth quarter of fiscal 1995, the Company undertook certain
merchandising, marketing and operational initiatives to improve the gross
margin while at the same time maintaining the "low prices everyday" competitive
pricing strategy.
As a percent of sales, selling, general and administrative expenses decreased
0.7 percentage points to 19.2% for fiscal 1995 from 19.9% for fiscal 1994. On
an absolute basis, selling, general and administrative expenses increased 11.9%
to $73.6 million for fiscal 1995 from $65.8 million in fiscal 1994. The
reduction in expenses on a percentage of sales basis is a result of the
Company's on-going efforts to control operating expenses, as well as from lower
incentive accruals compared to the prior year. The increase in absolute
dollars is primarily attributable to costs associated with new store openings
and relocations (new and relocated stores have considerably higher occupancy
costs, primarily rent, than the existing store base). Depreciation and
amortization expense increased 36.8% over the prior year due mainly to costs
associated with new, relocated and remodeled stores.
Net interest expense decreased 3.8% to $1.7 million in fiscal 1995 from $1.8
million in fiscal 1994. The reduction in interest expense reflects the
retirement of debt in early fiscal 1994 with a portion of the net proceeds of
the Offering, partially offset by a higher average outstanding balance under
the revolving credit loan in fiscal 1995 compared to fiscal 1994.
The Company's effective tax rate decreased 0.2 percentage points to 39.8% in
fiscal 1995 from 40.0% in fiscal 1994 primarily due to a lower effective state
income tax rate in fiscal 1995.
As a result of the foregoing factors, net income increased 11.2% to $12.5
million in fiscal 1995 from $11.3 million in fiscal 1994. As a percent of
sales, net income decreased 0.1 percentage points to 3.3% of sales in fiscal
1995 from 3.4% of sales in fiscal 1994.
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 credit agreement and short-term
trade credit. 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 December 28, 1996, the Company's inventories had increased $11.4 million to
$124.1 million from $112.7 million at December 30, 1995. The increase was
primarily attributable to additional inventory for new stores and, to a lesser
extent,
13
<PAGE> 16
TRACTOR SUPPLY COMPANY
development of new products and expanded product lines, but, as compared to the
larger increase in the previous year, also reflects improved control of
in-stock position in basic product lines. Short-term trade credit, which
represents a source of financing for inventory, increased $11.1 million to
$47.6 million at December 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 December 28, 1996, the Company had working capital of $66.0 million, which
represented a $2.1 million increase from December 30, 1995. This increase
resulted primarily from an increase in cash and cash equivalents and trade
receivables offset, in part, by an increase in accrued expenses (mainly
incremental costs relating to new stores) and a decrease in prepaid expenses
(mainly lower construction-in-progress costs compared to the previous year).
The Company's working capital increased $17.7 million in fiscal 1995 to $63.9
million from $46.2 million in fiscal 1994. This increase resulted primarily
from an increase in inventory (attributable mainly to the development of new
products, expansion of product lines and new stores) without a corresponding
increase in accounts payable and from an increase in prepaid expenses (mainly
construction-in-progress costs pertaining to planned sale/leaseback
transactions respecting certain 1996 new stores) offset, in part, by a decrease
in cash and cash equivalents.
In August 1994, the Company entered into a new revolving credit agreement with
The First National Bank of Boston, as agent and for itself (the "Agent") and
First American National Bank (the "New Credit Agreement") and simutaneously
terminated its Old Credit Agreement. Under the New Credit Agreement, the
Company had available total commitments aggregating at any one time up to a
maximum of $30 million.
In July 1996, the Company entered into an amendment (the "First Amendment") to
its New Credit Agreement with the Agent and First American National Bank (the
"Credit Agreement") whereby the Company (i) increased the maximum total
commitments available under the New Credit Agreement from $30 million to $45
million and (ii) extended the expiration date of the New Credit Agreement from
August 31, 1997 to August 31, 1999 (the date upon which any remaining
borrowings must be repaid). At December 28, 1996, the Company had $12.0
million of borrowings outstanding under the Credit Agreement. The Company
expects to continue borrowing amounts under the Credit Agreement from time to
time to fund its growth and expansion programs and as a source of additional
working capital.
Operations generated net cash of $21.2 million in fiscal 1996, used net cash of
$11.3 million in fiscal 1995 and generated $7.8 million in fiscal 1994. The
cash generated in fiscal 1996 resulted primarily from inventories increasing at
approximately the same rate as accounts payable (compared to inventories
increasing at a significantly faster rate than accounts payable in fiscal
1995), as well as from a decrease in prepaid expenses and an increase in
accrued expenses compared to the prior year. The use of cash in fiscal 1995
resulted primarily from inventories increasing at a faster rate than accounts
payable compared to the prior year and, to a lesser extent, from higher prepaid
expenses, increased accounts receivable and a smaller increase in accrued
expenses (mainly due to lower incentive accruals) compared to the prior year,
and a decrease in income taxes currently payable compared to fiscal 1994 due to
timing of payments.
Cash used in investing activities of $6.8 million, $8.5 million and $5.8
million for fiscal 1996, 1995 and 1994, respectively, resulted primarily from
capital expenditures for new, relocated and remodeled stores, partially offset
by proceeds from the sale of certain properties (primarily land and buildings).
Financing activities in fiscal 1996 used $6.6 million in cash which represented
a $17.6 million increase over the $11.0 million in cash provided in fiscal
1995. This increase resulted primarily from net repayments of approximately
$3.1 million under the New Credit Agreement in fiscal 1996 compared to net
borrowings of approximately $15.1 million in fiscal 1995 and, to a lesser
extent, from scheduled repayments of long-term debt and capital lease
obligations totaling approximately $1.5 million in fiscal 1996 versus
approximately $1.4 million in fiscal 1995, partially offset by a lower cash
outlay for the repurchase of 1,762 shares of Series B Preferred Stock for
approximately $1.7 million (including accrued dividends) compared to the
repurchase of 2,350 shares of Series B Preferred Stock for approximately $2.4
million (including accrued dividends) in fiscal 1995. Financing activities in
fiscal 1995 provided $11.0 million in cash, which represented a $2.4 million
increase over the $8.6 million in cash provided in fiscal 1994. This increase
resulted primarily from net borrowings of $15.1 million under the New Credit
Agreement, partially offset by the repurchase of 2,350 shares of Series B
Preferred Stock for approximately $2.4 million (including accrued dividends),
as well as scheduled repayments of long-term debt and capital lease obligations
totaling $1.4 million.
14
<PAGE> 17
TRACTOR SUPPLY COMPANY
The Company's capital additions were $9.6 million, $10.1 million and $6.7
million in fiscal 1996, 1995 and 1994, respectively. The majority of the
capital additions were for store fixtures, equipment and leasehold improvements
for new stores and remodeling of existing stores. The Company expects that its
capital expenditures for fiscal 1997 will be approximately $11.0 million to
$12.0 million, consisting primarily of leasehold improvements and, to a lesser
extent, fixtures and equipment, assuming successful implementation of its
growth strategy through 25 planned new store openings. However, the Company
cannot predict with certainty the amount of such expenditures because such new
stores may be constructed, leased or acquired from others. The estimated cash
required to open a new store is approximately $.8 to $1.0 million, the majority
of which is for the initial acquisition of inventory and capital expenditures,
principally leasehold improvements, fixtures and equipment, and the balance of
which is for store opening expenses.
In fiscal 1996, the Company completed the installation of an advanced
point-of-sale store information system which has reduced customer check-out
time, improved inventory control and enhanced overall productivity. The Company
also completed the installation of more advanced financial systems in fiscal
1996 and plans to complete the installation of another major financial system
by the end of the second fiscal quarter of 1997. These new financial systems
are expected to further improve financial reporting and controls, enhance
administrative efficiencies and provide the flexibility to support the
Company's growth and expansion plans. The estimated cost of these new systems
was approximately $7.0 million to $7.5 million for the 154 stores included in
the original installation plan. The estimated incremental cost of completing
the installation of these new systems is approximately $2.0 million, which
reflects 54 additional stores and other enhancements, such as scanning, not
originally planned.
The Company believes that its cash flow from operations, borrowings available
under the Credit Agreement and short-term trade credit will be sufficient to
fund the Company's operations and its growth and expansion plans over the next
several years.
Management does not believe its operations have been materially affected by
inflation. The Company has been successful, in many cases, in reducing or
mitigating the effects of inflation principally by taking advantage of vendor
incentive programs, economies of scale from increased volume of purchases and
selective buying from the most competitive vendors without sacrificing quality.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Tractor Supply Company
In our opinion, the accompanying balance sheets and the related statements of
income, of changes in stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of Tractor Supply Company at
December 28, 1996 and December 30, 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 28,
1996, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ PRICE WATERHOUSE
- - --------------------
Nashville, Tennessee
Janaury 22, 1997
15
<PAGE> 18
TRACTOR SUPPLY COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................................... $ 12,948 $ 5,087
Accounts receivable, net ........................................ 4,930 3,730
Inventories ..................................................... 124,082 112,700
Prepaid expenses ................................................ 1,657 5,017
--------- ---------
Total current assets ........................................ 143,617 126,534
--------- ---------
Land ............................................................. 10,178 10,975
Buildings and improvements ....................................... 40,114 36,481
Machinery and equipment .......................................... 18,117 13,377
--------- ---------
68,409 60,833
Accumulated depreciation and amortization ........................ (18,883) (15,763)
--------- ---------
Property and equipment, net ..................................... 49,526 45,070
--------- ---------
Deferred income taxes ............................................ 1,064 1,526
Other assets ..................................................... 1,375 999
--------- ---------
Total assets ................................................ $ 195,582 $ 174,129
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................ $ 47,591 $ 36,525
Accrued expenses ................................................ 15,973 11,637
Current maturities of long-term debt ............................ 665 600
Current portion of capital lease obligations .................... 1,020 966
Income taxes currently payable .................................. 2,897 2,716
Deferred income taxes ........................................... 9,517 10,240
--------- ---------
Total current liabilities ................................... 77,663 62,684
--------- ---------
Revolving credit loan ............................................ 12,000 15,093
Other long-term debt ............................................. 5,914 6,579
Capital lease obligations ........................................ 3,252 4,186
Other long-term liabilities ...................................... 949 856
Excess of fair value of assets acquired over cost less accumulated
amortization of $2,515 and $2,335, respectively ................. 1,075 1,255
Redeemable preferred stock ....................................... 1,763 3,525
Commitments (Note 5)
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 ............................................... 51,211 38,196
--------- ---------
Total stockholders' equity .................................. 92,966 79,951
--------- ---------
Total liabilities and stockholders' equity ............. $ 195,582 $ 174,129
========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
16
<PAGE> 19
TRACTOR SUPPLY COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
----------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
--------- ----------- -----------
<S> <C> <C> <C>
Net sales ..................................... $449,029 $383,903 $329,967
Cost of merchandise sold ...................... 332,378 285,247 241,780
-------- -------- --------
Gross margin ................................ 116,651 98,656 88,187
Selling, general and administrative expenses .. 88,827 73,587 65,790
Depreciation and amortization ................. 3,385 2,524 1,845
-------- -------- --------
Income from operations ...................... 24,439 22,545 20,552
Interest expense, net ......................... 2,358 1,730 1,798
-------- -------- --------
Income before income taxes .................. 22,081 20,815 18,754
Income tax provision .......................... 8,845 8,293 7,496
-------- -------- --------
Net income .................................. $ 13,236 $ 12,522 $ 11,258
======== ======== ========
Net income per share ........................ $ 1.50 $ 1.40 $ 1.28
======== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
17
<PAGE> 20
TRACTOR SUPPLY COMPANY
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
-------- --------- -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Stockholders' equity at
January 1, 1994 ...................... $ 6 $ 2,053 $22,271 $(7,051) $ 17,279
Effect of approximately
50 for 1 stock split (Note 2) ..... 48 (48) --
Net proceeds from initial public
offering of common stock (Note 2) .. 18 39,732 39,750
Cancellation of treasury stock ....... (2) (52) (6,997) 7,051 --
Preferred stock dividend ............. (470) (470)
Net income ........................... 11,258 11,258
-------- -------- -------- ------- -------
Stockholders' equity at
December 31, 1994 .................... 70 41,685 26,062 -- 67,817
Preferred stock dividend ............. (388) (388)
Net income ........................... 12,522 12,522
-------- -------- -------- ------- -------
Stockholders' equity at
December 30, 1995 .................... 70 41,685 38,196 -- 79,951
Preferred stock dividend ............. (221) (221)
Net income ........................... 13,236 13,236
-------- -------- -------- ------- -------
Stockholders' equity at
December 28, 1996 .................... $ 70 $ 41,685 $ 51,211 $ -- $92,966
======== ======== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of this statement.
18
<PAGE> 21
TRACTOR SUPPLY COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
------------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
------------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income .......................................... $ 13,236 $ 12,522 $ 11,258
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization ..................... 3,385 2,524 1,845
Gain on sale of property and equipment ............ (904) (278) (14)
Deferred income taxes ............................. (261) (275) 237
Change in assets and liabilities:
Accounts receivable .............................. (1,200) (1,566) (307)
Inventory ........................................ (11,382) (26,384)
Prepaid expenses ................................. 3,360 (3,302) 1,793
Accounts payable ................................. 11,066 4,572 7,801
Accrued expenses ................................. 4,336 704 2,436
Income taxes currently payable ................... 181 (1,017) (464)
Other ............................................ (636) 1,151 (348)
---------- ---------- ----------
Net cash provided by (used in) operating activities .. 21,181 (11,349) 7,752
---------- ---------- ----------
Cash flows from investing activities:
Capital expenditures ................................ (9,635) (10,109) (6,705)
Repayment of notes receivable from officers, net .... -- -- 474
Proceeds from sale of property and equipment ........ 2,871 1,582 399
---------- ---------- ----------
Net cash used in investing activities ................ (6,764) (8,527) (5,832)
---------- ---------- ----------
Cash flows from financing activities:
Net borrowings (repayment)
under revolving credit loan ........................ (3,093) 15,093 (17,935)
Principal payments under capital lease obligations .. (880) (849) (746)
Repayment of long-term debt ......................... (600) (542)
Net proceeds from sale of common stock .............. -- -- 39,750
Redemption of preferred stock ....................... (1,762) (2,350) --
Payment of preferred stock dividend ................. (221) (388) (470)
---------- ---------- ----------
Net cash provided by (used in) financing activities .. (6,556) 10,964 8,564
---------- ---------- ----------
Net increase (decrease) in cash ...................... 7,861 (8,912) 10,484
Cash and cash equivalents at beginning of year ....... 5,087 13,999 3,515
---------- ---------- ----------
Cash and cash equivalents at end of year ............. $ 12,948 $ 5,087 $ 13,999
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (NOTE 1):
Cash paid during the year for:
Interest $ 2,723 $ 1,732 $ 2,182
Income taxes..................................... 9,196 8,876 7,690
</TABLE>
The accompanying notes are an integral part of this statement.
19
<PAGE> 22
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business
Tractor Supply Company is a specialty retailer which supplies the daily farming
and maintenance needs of its target customers: hobby, part-time and full-time
farmers, as well as suburban customers, contractors and tradesmen. The
Company, which was founded in 1938, operated 208 retail farm stores in 24
states as of December 28, 1996.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to December 31. Fiscal
years 1996, 1995 and 1994 consist of 52 weeks.
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.
Fair Value of Financial Instruments
The Company has cash and cash equivalents, short-term trade receivables and
payables and long-term debt instruments, including capital leases. The
carrying values of cash and cash equivalents, trade receivables and trade
payables equal current fair value. The terms of the Company's revolving credit
agreement include variable interest rates which approximate current market
rates. The Company's fixed rate debt bears interest at 10.32% which is above
current rates available; however, the related debt agreement includes certain
pre-payment penalties which make refinancing uneconomical (Notes 3 and 4).
Inventories
Inventories, which consist primarily of farm maintenance and animal products,
general maintenance products, lawn and garden products, light truck equipment
and work clothing, are stated at cost, which is less than market value, with
cost being determined on the last-in, first-out (LIFO) method. If the
first-in, first-out (FIFO) method of accounting for inventory had been used,
inventories would have been approximately $6,163,000 and $5,593,000 higher than
reported at December 28, 1996 and December 30, 1995, respectively.
Net Income Per Share
Net income per share for fiscal 1996, 1995 and 1994 is calculated based on the
weighted average number of shares of common stock outstanding of 8,718,000,
8,718,000 and 8,433,934, respectively, and after giving effect to preferred
stock dividends of $197,000 in fiscal 1996, $357,000 in fiscal 1995 and
$470,000 in fiscal 1994. Stock options have been excluded as they are
anti-dilutive. The net income applicable to common stockholders for fiscal
1996, 1995 and 1994 was $13,039,000, $12,165,000 and $10,788,000, respectively.
Excess of Fair Value of Assets Acquired Over Cost
On December 26, 1982 the Company began operations with the acquisition of
certain assets and assumption of certain obligations. The unallocated excess of
fair value of assets acquired over cost was approximately $3,590,000 and is
being amortized over 20 years on a straight-line basis.
20
<PAGE> 23
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Property and Equipment
The Company owns the land and buildings of 74 of its stores. Property and
equipment are carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the respective assets.
Generally, buildings are depreciated over 31 years and machinery and equipment
is depreciated over seven years.
Revenue Recognition
The Company recognizes revenue at the time of customer purchase.
Income Taxes
The Company accounts for income taxes using the liability method, whereby
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
Store Opening Costs
Costs incurred in connection with opening new stores are expensed as incurred.
Advertising Costs
Advertising costs primarily consist of expenses incurred in connection with
newspaper circulars and, to a lesser extent, radio and newspaper advertisements
and other promotions. Expenses incurred are charged to operations at the time
the related advertising first takes place. Advertising expense for fiscal
1996, 1995 and 1994 was approximately $8,157,000, $6,837,000 and $6,015,000,
respectively.
Stock-based Compensation Plans
The Company applies APB Opinion 25 and related Interpretations in accounting
for its plans. Accordingly, no compensation cost has been recognized for its
fixed stock option plan and its stock purchase plan (Note 10).
Cash Flows
The Company considers temporary cash investments, which typically have a
maturity of three months or less, to be cash equivalents. In connection with
the Company's initial public offering in February 1994, the Company approved a
stock split of approximately 50 for 1 and canceled 2,890,151 shares of its
common stock held in treasury (Note 2).
NOTE 2--INITIAL PUBLIC OFFERING:
On February 25, 1994, the Company consummated an initial public offering of
3,283,000 shares of common stock, 2,200,000 shares of which were offered by the
Company (the "Offering"). In connection with the Offering, the Company (i)
received net proceeds of approximately $39.8 million (after deducting
underwriting discounts and commissions and expenses of the Offering); (ii)
repaid all of the borrowings outstanding under its old revolving credit
agreement with The First National Bank of Boston (the "Old Credit Agreement")
(approximately $22.7 million at February 25, 1994); (iii) paid off the mortgage
notes on 34 of its existing store locations (aggregating approximately $10.1
million); (iv) paid off all the amounts outstanding under subordinated
promissory notes (aggregating approximately $.2 million); and (v) invested the
balance of the net proceeds in short-term investment
21
<PAGE> 24
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
grade or equivalent interest bearing instruments. The Company also retired the
shares of common stock held in treasury.
Also in connection with the Offering, the Board of Directors approved a change
in the Company's capital stock to increase the authorized shares of $.008 par
value common stock to 9,500,000 shares and the authorized shares of $1.00 par
value preferred stock to 40,000 shares and a stock split of approximately 50
for 1, effective prior to the commencement of the Offering.
NOTE 3--REVOLVING CREDIT AGREEMENT:
In April 1986, the Company entered into a revolving credit agreement, as
amended and restated in February 1991 and 1993, with The First National Bank of
Boston (the "Old Credit Agreement"). Under the Old Credit Agreement the
Company could borrow up to the lesser of $30 million or 45% of the value of
eligible inventories. Borrowings were subject to interest at the base rate of
the lender plus 1.0% per annum, and the Company paid a commitment fee of .25%
per annum on the unused portion of the credit line. The Old Credit Agreement
was secured by inventory, receivables and equipment and contained a number of
restrictive covenants.
In August 1994, the Company entered into a new revolving credit agreement with
The First National Bank of Boston, as agent and for itself (the "Agent") and
First American National Bank (the "New Credit Agreement") and simultaneously
terminated its Old Credit Agreement. Under the New Credit Agreement, the
Company had available total commitments aggregating at any one time up to a
maximum of $30 million.
In connection with entering into the New Credit Agreement, the Company also
terminated its revolving credit loan agreement (the "Construction Loan") with
Third National Bank in Nashville (Note 4).
In July 1996, the Company entered into an amendment (the "First Amendment") to
its New Credit Agreement with the Agent and First American National Bank (the
"Credit Agreement") whereby the Company (i) increased the maximum total
commitments available under the New Credit Agreement from $30 million to $45
million and (ii) extended the expiration date of the New 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 New Credit Agreement as a result of the First
Amendment.
All borrowings under the Credit Agreement bear interest, at the Company's
option, at either the base rate of the Agent (8.25% at December 28, 1996) plus
.25% per annum or the LIBOR rate (5.59% at December 28, 1996) plus .75% per
annum provided, however, that upon the occurrence of certain events, the
interest rate increases to the base rate of the Agent plus .50% per annum or
the LIBOR rate plus 1.0% per annum. The Company is also required to pay,
quarterly in arrears, a commitment fee of .25% per annum on the average daily
unused portion of the credit line. There are no compensating balance
requirements associated with the Credit Agreement. The Credit Agreement is
unsecured.
The Credit Agreement contains certain restrictions regarding additional
indebtedness; employee loans; business operations; guarantees; investments;
mergers, consolidations and sales of assets; transactions with subsidiaries or
affiliates; and liens. In addition, the Company must comply with certain
annual restrictions regarding net worth, working capital, ratios of total
liabilities to net worth and interest coverage and current ratio requirements.
The Company was in compliance with all covenants at December 28, 1996.
22
<PAGE> 25
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--OTHER LONG-TERM DEBT:
Other long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 30,
1996 1995
----------- -----------
<S> <C> <C>
Mortgage Notes ............................................... $ 6,579 $7,179
Less: current maturities ..................................... (665) (600)
------- ------
$ 5,914 $6,579
======= ======
</TABLE>
In April 1988, the Company issued notes (the "Mortgage Notes") to Mutual Life
Insurance Company of New York and MONY Life Insurance Company of America
pursuant to a Note Agreement which was amended in April 1991, February 1992 and
July 1993 (the "Mortgage Loan Agreement"). The Mortgage Notes bear interest at
a minimum 10.32% rate until their maturity in January 2004. The Mortgage Notes
require monthly payments, including interest, of approximately $109,000 through
January 2004.
The Mortgage Loan Agreement is secured by first mortgages on certain of the
Company's existing properties. The Mortgage Loan Agreement contains certain
restrictions regarding sales of assets, mergers, consolidations, investments,
sales or discounting of receivables, operating leases and, unless the Company
satisfies certain net income, indebtedness and tangible net worth tests, cash
dividends on and redemptions of capital stock. In addition, the Company must
comply with certain restrictions regarding tangible net worth, working capital,
funded debt, ratios of indebtedness to capitalization, FIFO inventory to
current debt, interest coverage, fixed charge coverage, earnings coverage and
current ratio requirements. The Company was in compliance with these
restrictions at December 28, 1996.
In March 1989, the Company issued substantially similar five-year Subordinated
Promissory Notes (the "Subordinated Notes"). The Subordinated Notes bear
interest at the prime rate (6.0% at January 1, 1994) and are payable $60,000
per month, plus interest, through April 1994 with a final payment of $100,000
principal and accrued interest in May 1994. The Subordinated Notes are
subordinated to all of the Company's obligations under the Old Credit
Agreement. The Subordinated Notes contain restrictive covenants relating
primarily to the sale of assets, mergers, payment of dividends and issuance of
stock. In addition, the Subordinated Notes may, at the option of the holder,
be converted to common stock in the event of the occurrence of certain events
of default. The Subordinated Notes were paid off in connection with the
Company's initial public offering (Note 2).
In September 1993, the Company entered into a revolving credit loan agreement
(the "Construction Loan") with Third National Bank in Nashville ("Third
National Bank"). Pursuant to the Construction Loan, the Company may borrow up
to the lesser of $3.0 million or 80% of the fair market value of certain
properties pledged as collateral thereunder. Borrowings under the Construction
Loan must be used only for the acquisition of real property and/or the
development and construction of retail stores. The Construction Loan bears
interest at the base rate of Third National Bank plus 1.5% per annum; is
secured by first mortgages on certain of the Company's existing properties; and
contains certain restrictive covenants regarding the sale of assets,
investments, loans and advances, acquisitions, mergers and consolidations. The
Construction Loan was terminated in connection with the Company's entering
into the New Credit Agreement (Note 3).
23
<PAGE> 26
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The combined aggregate maturities of the above obligations for each of the next
five years are as follows (in thousands):
<TABLE>
<S> <C>
1997................................... $ 665
1998................................... 737
1999................................... 817
2000................................... 905
2001................................... 1,003
</TABLE>
NOTE 5--LEASES:
The Company leases office, warehouse/distribution and retail space,
transportation equipment, and other equipment under various noncancelable
operating leases. The leases have varying terms and expire at various dates
through June 2020. The store leases typically have initial terms of between 10
and 15 years, with one to three renewal periods of five years each, exercisable
at the Company's option. Generally, most of the leases require the Company to
pay taxes, insurance and maintenance costs.
Rent expense for all noncancelable operating leases for fiscal 1996, 1995 and
1994 was approximately $21,358,000, $16,057,000 and $11,881,000 respectively.
Future minimum payments, by year and in the aggregate, under leases with
initial or remaining terms of one year or more consist of the following (in
thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------ ---------
<S> <C> <C>
1997 ................................................. $ 1,402 $ 14,340
1998 ................................................. 1,028 13,859
1999 ................................................. 787 13,144
2000 ................................................. 464 11,894
2001 ................................................. 464 11,480
Thereafter ........................................... 1,709 59,656
-------- --------
Total minimum lease payments ......................... 5,854 $124,373
========
Amount representing interest ......................... (1,582)
--------
Present values of net minimum lease payments ......... 4,272
Less: current portion ................................ (1,020)
--------
Long-term capital lease obligations .................. $ 3,252
========
</TABLE>
NOTE 6--INCOME TAXES:
The provision for income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current tax expense:
Federal $ 7,442 $ 6,999 $ 5,827
State 1,664 1,569 1,432
-------- -------- --------
Total current 9,106 8,568 7,259
-------- -------- --------
Deferred tax expense:
Federal (229) (238) 81
State (32) (37) 156
-------- -------- --------
Total deferred (261) (275) 237
-------- -------- --------
Total provision $ 8,845 $ 8,293 $ 7,496
======== ======== ========
</TABLE>
24
<PAGE> 27
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities are as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
Current tax assets:
Inventory valuation .................................. $ 3,339 $ 3,049
Other ................................................ 1,378 1,096
-------- --------
4,717 4,145
-------- --------
Current tax liabilities:
Inventory basis difference ........................... 13,922 13,922
Other ................................................ 312 463
-------- --------
14,234 14,385
-------- --------
Net current tax liabilities ............................ $ 9,517 $ 10,240
======== ========
Non-current tax assets:
Capital lease obligation basis difference ............ $ 1,304 $ 1,670
Fixed assets basis difference ........................ 458 619
Other ................................................ 1,382 1,105
-------- --------
3,144 3,394
-------- --------
Non-current tax liabilities:
Depreciation ......................................... 1,613 1,353
Capital lease assets basis difference ................ 467 515
-------- --------
2,080 1,868
-------- --------
Net non-current tax assets ............................. $ 1,064 $ 1,526
======== ========
</TABLE>
A reconciliation of the provision for income taxes to the amounts computed at
the federal statutory rate is as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Tax provision at statutory rate ................. $ 7,729 $ 7,285 $ 6,564
Tax effect of:
State income taxes, net of federal tax benefit.. 1,082 1,020 928
Amortization of negative goodwill .............. (63) (63) (63)
Other .......................................... 97 51 67
-------- -------- --------
$ 8,845 $ 8,293 $ 7,496
======== ======== ========
</TABLE>
A substantial portion of the current deferred tax liability of the Company
relates to the tax treatment of certain inventory and other assets acquired by
the Company in connection with an acquisition in 1982. Recent cases cast some
doubt as to whether the Company's tax position with respect to such inventory
and other assets would be sustained if challenged. If the Company were
challenged on its tax position, no assurance can be given as to the outcome.
However, the Company believes, based upon its understanding of the resolution
of similar situations by others, that it has established adequate reserves and
that, accordingly, resolution of this issue would not have a material adverse
effect on its results of operations or financial position.
NOTE 7--REDEEMABLE PREFERRED STOCK:
The Company is authorized to issue 40,000 shares of Preferred Stock, with such
designations, rights and preferences as may be determined from time to time by
the Board of Directors (Note 2).
25
<PAGE> 28
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In May 1991, in accordance with a Plan of Reorganization and Exchange
Agreement, the Company reacquired 2,890,151 shares of common stock in exchange
for 5,875 shares of Series B Preferred Stock (the "Preferred Stock") and cash.
The Preferred Stock has a par value of $1 per share and a stated value and
liquidation preference of $1,000 per share. Dividends on the Preferred Stock
are cumulative and payable semi-annually on May 1st and November 1st at a rate
of 8.0% per annum on the stated value of the outstanding shares, increasing to
10% on May 1, 1999, 11% on May 1, 2000, 12% on May 1, 2001 and 13% thereafter.
On April 27, 1995, the Company's stockholders approved an amendment to the
Company's Restated Certificate of Incorporation to change the redemption
provisions of the Company's Series B Preferred Stock to permit the Company, at
its option, to repurchase all or any part of the shares of Series B Preferred
Stock then outstanding at any time and from time to time on or after May 1,
1995, (rather than on or after May 1, 1996, as previously provided in the
Restated Certificate of Incorporation). On May 26, 1995, the Company
repurchased 2,350 shares of the Series B Preferred Stock at a total repurchase
price of approximately $2,363,000 (including accrued dividends totaling
approximately $13,000). 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). If the
Company fails to make two consecutive dividend payments or to redeem all of the
outstanding shares of the Preferred Stock by April 30, 2003, holders of the
Preferred Stock would be entitled to elect a majority of the Board of Directors
of the Company until such dividends were paid or such redemption was completed.
The Company has paid all dividends on a timely basis.
NOTE 8--RELATED PARTY TRANSACTIONS:
In 1986, the Company entered into capitalized sale-leaseback transactions with
certain officers of the Company for seven of its stores. The Company sold,
leased back and provided the financing for seven of its real properties at
estimated fair values totaling $2,575,000. The related gains arising from the
sale of these properties have been deferred and are being amortized on a
straight-line basis over the terms of the related leases. Properties under
capital leases acquired through sale-leaseback transactions have been reduced
by the related deferred gains on the properties and are classified with
property and equipment. The leases have basic terms of 20 years with options
to renew for two successive five-year terms. The Company has an option to
purchase the leased properties after December 31, 1995. Rent payments under
these leases were approximately $425,000 in fiscal 1996 and $319,000 in fiscal
1995 and 1994. The Company recognized interest income (computed at 11.0%)
under the related notes receivable of approximately $30,000 in fiscal 1994. By
December 31, 1994, all the officers had repaid their outstanding obligations
under these notes to the Company. The balance of these capitalized lease
obligations, included in total capital lease obligations at December 28, 1996,
was $1,817,000.
The Company leases its management headquarters from a partnership in which
certain stockholders of the Company are general partners. The original lease
term is ten years, commencing in February 1987, with two consecutive five-year
optional renewal terms. During fiscal 1996, the Company exercised both
remaining five-year renewal options, with monthly rent set at $35,000 and
$39,000 per month, respectively. Rent payments under this lease were $384,000
in each of the fiscal years 1996, 1995 and 1994.
The Company leases one of its stores from a corporation in which certain
executive officers and directors of the Company are the sole shareholders,
directors and executive officers. The initial term of the lease is twenty
years, commencing in September 1991 and ending in August 2011, subject to
renewal at the option of the Company for two successive five-year terms.
Monthly rent ranges from $8,437 for the first five years to $9,375 for the
final five years of the initial term. The Company has the option to terminate
the lease at any time after August 31, 2001 by offering to purchase the
premises at a price that increases from $873,300 to $1,012,500, depending on
the date of the offer. If the lessor were to reject the Company's offer to
purchase, the lease would terminate 90 days after the date of the offer. The
related land is leased by the lessor from the Company pursuant to a ground
lease agreement dated July 1, 1994 providing for a fifty-year lease term,
commencing in July 1991 and ending in June 2011 and annual rental payments that
range from $15,000 to $24,300.
26
<PAGE> 29
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In October 1996, the Board approved a proposed transaction to relocate this
store to a larger facility. To effect the proposed transaction, the Company
expects it will (i) acquire the store building from the lessor for $650,000,
the purchase price provided for under the lease agreement between the Company
and the lessor effective through August 31, 1996 (the lessor waived the
increase in the purchase price effective September 1, 1996 since the
transaction on the property is not expected to close until approximately June
1997), (ii) cancel the ground lease agreement with the lessor respecting said
property, (iii) sell the store (building and land) to an unrelated real estate
developer for $750,000 (which is approximately $650,000 below the appraised
value of said property), and (iv) lease a new larger store from the same
developer (said new store to be built by the developer on a nearby site owned
by them of approximately four acres and in accordance with the Company's
specifications), pursuant to which the Company will receive a discounted rent
(approximately $6.30 per square foot initially compared to the market rate of
approximately $8.60 per square foot or approximately $750,000 over the fifteen
year initial lease) in consideration for the reduced purchase price on the
store building and land.
The Company also leases one store location from an S corporation owned by
certain officers of the Company. Rent payments under this lease were
approximately $101,000 in each of the fiscal years 1996, 1995 and 1994.
NOTE 9--RETIREMENT BENEFIT PLANS:
The Company has a defined contribution benefit plan, the TSC Industries, Inc.
Employee 401(k) Retirement Plan, which provides retirement and other benefits
for the Company's employees. Employees become eligible for participation upon
completion of 12 consecutive months of employment and 1,000 hours or more of
service. The Company contributes an amount equal to 2% of employee's
compensation plus an additional 25% of any employee voluntary contribution
(limited to 5% of the employee's total compensation).
Effective March 26, 1994, the Employee Stock Ownership Plan was merged into the
TSC Industries, Inc. Employee 401(k) Retirement Plan and the name was changed
to the Tractor Supply Company Employee 401(k) Retirement Plan. At December 28,
1996, this plan owned 978,912 shares of the Company's common stock. Expense
for the merged plan for fiscal 1996, 1995 and 1994 was approximately $565,000,
$579,000 and $373,000, respectively.
NOTE 10--STOCK-BASED COMPENSATION PLANS:
FIXED STOCK OPTION PLAN
The Company has a stock option plan for officers, directors (including
non-employee directors) and key employees which reserves 250,000 shares of
common stock for future issuance under the plan. The per share exercise price
of options granted shall not be less than the fair market value of the stock
on the date of grant and such options will expire no later than ten years from
the date of grant. In the case of a stockholder owning more than 10% of the
outstanding voting stock of the Company, the exercise price of an incentive
stock option may not be less than 110% of the fair market value of the stock
on the date of grant and such options will expire no later than five years
from the date of grant. Also, the aggregate fair market value of the stock
with respect to which incentive stock options are exercisable on a tax
deferred basis for the first time by an individual in any calendar year may
not exceed $100,000. Options granted vest one-third each year beginning on
the third anniversary date of the grant and expire after ten years.
27
<PAGE> 30
TRACTOR SUPPLY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Plan activity is summarized as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES RANGE PER SHARE
--------- ---------------
<S> <C> <C> <C>
Options granted in fiscal 1994 32,500 $21.50 - $27.00
Canceled (2,500) $ 21.50
--------
Outstanding at December 31, 1994 30,000 $21.50 - $27.00
Granted 52,750 $21.31 - $22.13
Canceled (6,750) $21.50 - $22.13
--------
Outstanding at December 30, 1995 76,000
Granted 135,500 $21.38 - $25.13
Canceled (26,500) $21.38 - $22.13
--------
Outstanding at December 28, 1996 185,000
========
</TABLE>
Had compensation cost for the Company's stock option plan been determined
based on the fair value at the grant dates for awards under the plan
consistent with the method prescribed by FASB Statement No. 123, the Company's
net income and earnings per share, for fiscal 1996 and 1995, would have been
reduced to the pro forma amounts indicated below (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Net income As reported $13,236 $12,522
Pro forma 12,919 12,397
Net income per share As reported $ 1.50 $ 1.40
Pro forma 1.46 1.39
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions using grants in fiscal 1994, 1995 and 1996, respectively: expected
volatility of 25% and risk-free interest rates of approximately 6.75% for all
years; average expected lives of 7.5 years (1994 Options), 6.5 years (1995
Options) and 6.0 years (1996 Options); and no dividend yield for any year.
EMPLOYEE STOCK PURCHASE PLAN
In July 1996, the Company adopted the 1996 Associate Stock Purchase Plan (the
"ASPP") to allow eligible employees 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. The first offering period
under the new ASPP ended on December 31, 1996 and, as such, no additional
stock had been issued by the Company under the plan as of December 28, 1996.
28
<PAGE> 31
TRACTOR SUPPLY COMPANY
<TABLE>
<S> <C> <C>
DIRECTORS, OFFICERS, AND CORPORATE INFORMATION
- - --------------------------------------------------------------------------------------------------------------------------------
DIRECTORS
JOSEPH H. SCARLETT, JR. THOMAS J. HENNESY, III JOSEPH M. RODGERS (1) (2)
Chairman of the Board Retired Vice Chairman Chairman of the Board
Tractor Supply Company of the Board The JMR Group, an investment
Tractor Supply Company firm, and former U.S.
Ambassador to France
GERALD E. NEWKIRK JOSEPH D. MAXWELL
President Retired Vice President
Tractor Supply Company Tractor Supply Company
(1) Audit Committee Member
(2) Compensation Committee Member
THOMAS O. FLOOD S.P. BRAUD (1)*(2)* (*) Committee Chairman
Senior Vice President Retired Chief Financial Officer
Tractor Supply Company Service Merchandise Company,
Inc. and President and Director
Braud Design/Build, Inc.
- - -----------------------------------------------------------------------------------------------------------------------------
OFFICERS
JOSEPH H. SCARLETT, JR. JOHN W. ATKINS GARY M. MAGONI
Chairman of the Board and Vice President-Farm Merchandising Vice President-Operations
Chief Executive Officer (Region I)
GERALD E. NEWKIRK BLAKE A. FOHL JAMES R. MCMURRAY
President and Vice President-Marketing Vice President-Information
Chief Operating Officer Technology and Chief
LAWRENCE GOLDBERG Information Officer
THOMAS O. FLOOD Vice President-Logistics
Senior Vice President- STANLEY L. RUTA
Administration and Finance, LEO H. HABERER Vice President-Operations
Treasurer and Chief Financial Officer Vice President-Real Estate (Region II)
JOHN R. PEARSON MICHAEL J. KINCAID DAISY L. VANDERLINDE
Senior Vice President- Vice President-Controller Vice President-Human Resources
Merchandising and Secretary
- - ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE INFORMATION
Store Support Center Annual Meeting written request to the Company's
Tractor Supply Company The Annual Meeting of investor relations firm:
320 Plus Park Boulevard Stockholders will be held at Corporate Communications, Inc.
Nashville, Tennessee 37217 10:00 a.m., April 24, 1997 at the 523 Third Avenue South
615/366-4600 Company's Store Support Center, Nashville, Tennessee 37210
320 Plus Park Boulevard, Nashville, 615/254-3376
Transfer Agent and Registrar Tennessee, 37217
The First National Bank of Boston Quarterly Stock Price Range
Shareholder Services Number of Stockholders
P.O. Box 644, Mail Stop 45-02-09 As of January 31, 1997 there were High Low
Boston, Massachusetts 02102 approximately 61 stockholders of --------------- -------
617/575-3400 record. This number excludes Fiscal 1996:
individual stockholders holding First Quarter $27 1/2 $19 3/4
Independent Accountants stock under nominee security Second Quarter $27 1/4 $22
Price Waterhouse LLP position listings. Third Quarter $23 1/2 $20 3/4
4400 Harding Road Fourth Quarter $22 3/4 $19 5/8
Nashville, Tennessee 37205 Form 10-K
A copy of the Company's Fiscal 1995:
Stock Exchange Listing Annual Report on Form 10-K, First Quarter $24 1/4 $20 1/4
The Nasdaq National Market as filed with the Securities Second Quarter $22 1/4 $18 1/4
Ticker Symbol: TSCO and Exchange Commission, will be Third Quarter $24 1/2 $19
sent to any stockholder upon Fourth Quarter $20 1/2 $14 5/8
World Wide Web
http://www.tractorsupplyco.com
</TABLE>
29
<PAGE> 32
TRACTOR SUPPLY COMPANY
BACK COVER
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-10699) of Tractor Supply Company of our report
dated January 22, 1997 appearing on page 15 of the Annual Report to Stockholders
which is incorporated in this Annual Report on Form 10-K.
/s/ PRICE WATERHOUSE LLP
- - ------------------------
Nashville, Tennessee
March 19, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TRACTOR SUPPLY COMPANY FOR THE YEAR FROM DECEMBER 31,
1995 TO DECEMBER 28, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> DEC-28-1996
<CASH> 12,948
<SECURITIES> 0
<RECEIVABLES> 4,980
<ALLOWANCES> 0
<INVENTORY> 124,082
<CURRENT-ASSETS> 143,617
<PP&E> 68,409
<DEPRECIATION> 18,883
<TOTAL-ASSETS> 195,582
<CURRENT-LIABILITIES> 77,663
<BONDS> 21,166
1,763
0
<COMMON> 70
<OTHER-SE> 92,896
<TOTAL-LIABILITY-AND-EQUITY> 195,582
<SALES> 449,029
<TOTAL-REVENUES> 449,029
<CGS> 332,378
<TOTAL-COSTS> 332,378
<OTHER-EXPENSES> 92,212
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,358
<INCOME-PRETAX> 22,081
<INCOME-TAX> 8,845
<INCOME-CONTINUING> 13,236
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,236
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.50
</TABLE>
