<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 1998
----------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- ------------------------
Commission file number 000-23314
---------
TRACTOR SUPPLY COMPANY
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3139732
------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
320 Plus Park Boulevard, Nashville, Tennessee 37217
- --------------------------------------------- -----------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (615) 366-4600
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at April 25, 1998
----------------------------- -----------------------------
Common Stock, $.008 par value 8,741,329
1 of 11
<PAGE> 2
TRACTOR SUPPLY COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information:
Item 1. Financial Statements:
Balance Sheets -
March 28, 1998 and December 27, 1997 3
Statements of Income -
For the Fiscal Three Months Ended
March 28, 1998 and March 29, 1997 4
Statements of Cash Flows -
For the Fiscal Three Months Ended
March 28, 1998 and March 29, 1997 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 9
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
2 of 11
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRACTOR SUPPLY COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 28, DECEMBER 27,
1998 1997
----------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 11,043 $ 8,477
Accounts receivable, net........................................................ 13,435 5,180
Inventories..................................................................... 202,830 151,749
Prepaid expenses................................................................ 4,349 4,201
----------- -----------
Total current assets..................................................... 231,657 169,607
----------- -----------
Land.............................................................................. 7,044 6,851
Buildings and improvements........................................................ 46,824 45,903
Machinery and equipment........................................................... 22,843 22,362
Construction in progress.......................................................... 1,582 843
----------- -----------
78,293 75,959
Accumulated depreciation and amortization......................................... (24,892) (23,551)
----------- -----------
Property and equipment, net..................................................... 53,401 52,408
----------- -----------
Deferred income taxes............................................................. 710 710
Other assets...................................................................... 1,335 1,355
----------- -----------
Total assets............................................................. $ 287,103 $ 224,080
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................ $ 95,995 $ 52,708
Accrued expenses................................................................ 27,344 21,188
Current maturities of long-term debt............................................ 737 737
Current portion of capital lease obligations.................................... 689 731
Income taxes currently payable.................................................. 54 2,310
Deferred income taxes........................................................... 9,064 9,064
----------- -----------
Total current liabilities................................................ 133,883 86,738
----------- -----------
Revolving credit loan............................................................. 41,068 23,419
Other long-term debt.............................................................. 5,000 5,177
Capital lease obligations......................................................... 2,383 2,538
Other long-term liabilities....................................................... 454 424
Excess of fair value of assets acquired over cost less accumulated
amortization of $2,740 and $2,695, respectively................................. 850 895
Stockholders' equity:
Common stock, 100,000,000 shares authorized; $.008 par value; 8,736,494
and 8,731,218 shares issued and outstanding in 1998 and 1997, respectively..... 70 70
Additional paid in capital...................................................... 42,004 41,926
Retained earnings............................................................... 61,391 62,893
----------- -----------
Total stockholders' equity.................................................... 103,465 104,889
----------- -----------
Total liabilities and stockholders' equity............................... $ 287,103 $ 224,080
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
3 of 11
<PAGE> 4
TRACTOR SUPPLY COMPANY
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE FISCAL THREE MONTHS ENDED
-----------------------------------
MARCH 28, MARCH 29,
1998 1997
---------- ---------
(UNAUDITED)
<S> <C> <C>
Net sales.............................................................. $ 105,587 $ 96,409
Cost of merchandise sold............................................... 79,098 72,256
---------- ---------
Gross margin...................................................... 26,489 24,153
Selling, general and administrative expenses........................... 26,924 24,089
Depreciation and amortization.......................................... 1,275 1,028
---------- ---------
Loss from operations.............................................. (1,710) (964)
Interest expense, net.................................................. 784 580
---------- ---------
Loss before income taxes.......................................... (2,494) (1,544)
Income tax benefit..................................................... (992) (618)
---------- ---------
Net loss.......................................................... $ (1,502) $ (926)
========== ---------
Net loss per share................................................ $ (.17) $ (.11)
========== =========
</TABLE>
The accompanying notes are an integral part of this statement.
4 of 11
<PAGE> 5
TRACTOR SUPPLY COMPANY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE FISCAL THREE MONTHS ENDED
-----------------------------------
MARCH 28, MARCH 29,
1998 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................. $ (1,502) $ (926)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense............................ 1,275 1,028
Loss (gain) on sale of property and equipment.................... 5 (82)
Change in assets and liabilities:
Accounts receivable............................................ (8,255) (1,939)
Inventories.................................................... (51,081) (34,450)
Prepaid expenses............................................... (148) (444)
Accounts payable............................................... 43,287 28,125
Accrued expenses............................................... 6,122 204
Income taxes currently payable................................. (2,256) (2,198)
Other.......................................................... 29 (1)
---------- ---------
Net cash used in operating activities.................................. (12,524) (10,683)
---------- ---------
Cash flows from investing activities:
Capital expenditures............................................... (2,312) (2,742)
Proceeds from sale of property and equipment....................... 49 139
---------- ---------
Net cash used in investing activities.................................. (2,263) (2,603)
---------- ---------
Cash flows from financing activities:
Net borrowings under revolving credit loan......................... 17,649 8,654
Principal payments under capital lease obligations................. (197) (243)
Repayment of long-term debt........................................ (177) (160)
Proceeds from issuance of common stock............................. 78 20
---------- ---------
Net cash provided by financing activities.............................. 17,353 8,271
---------- ---------
Net increase (decrease) in cash and cash equivalents................... 2,566 (5,015)
Cash and cash equivalents at beginning of period....................... 8,477 12,948
---------- ---------
Cash and cash equivalents at end of period............................. $ 11,043 $ 7,933
========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest............................................................. $ 903 $ 483
Income taxes......................................................... 1,157 1,580
</TABLE>
The accompanying notes are an integral part of this statement.
5 of 11
<PAGE> 6
TRACTOR SUPPLY COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
The accompanying interim financial statements have been prepared without audit,
and certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, although the Company believes that the
disclosures herein are adequate to make the information presented not
misleading. These statements should be read in conjunction with the Company's
annual report on Form 10-K for the fiscal year ended December 27, 1997. The
results of operations for the fiscal three month periods are not necessarily
indicative of results for the full fiscal year.
In the opinion of management, the accompanying interim financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
for a fair statement of the Company's financial position as of March 28, 1998
and its results of operations and its cash flows for the fiscal three month
periods ended March 28, 1998 and March 29, 1997.
Inventories
The accompanying unaudited financial statements have been prepared without full
physical inventories. The value of the Company's inventories was determined
using the lower of last-in, first-out (LIFO) cost or market. If the first-in,
first-out (FIFO) method of accounting for inventory had been used, inventories
would have been approximately $6,509,000 and $6,370,000 higher than reported at
March 28, 1998 and December 27, 1997, respectively. Since LIFO costs can only be
determined at the end of each fiscal year when inflation rates and inventory
levels are finalized, estimates of LIFO inventory costs are used for interim
financial reporting.
Net Loss Per Share
Net loss per share for the Company for the fiscal three month periods ended
March 28, 1998 and March 29, 1997 is calculated based on the weighted average
number of shares of common stock outstanding for the fiscal three month periods
of 8,735,566 and 8,719,119, respectively, after giving effect to undeclared
preferred stock dividends of $35,259 for the fiscal three month period ended
March 29, 1997. Common stock equivalents had no dilutive effect for either
period.
NOTE 2 - SEASONALITY:
The Company's business is highly seasonal, with a significant portion of its
sales and a majority of its income generated in the second fiscal quarter. The
Company typically operates at a loss in the first fiscal quarter.
NOTE 3 - REVOLVING CREDIT AGREEMENT:
In March 1998, the Company entered into an amendment (the "Second Amendment") to
its revolving credit agreement with BankBoston, N.A. (successor to First
National Bank of Boston), a national banking association, as agent, and for
itself, in its capacity as a lender thereunder, First American National Bank, a
national banking association, and SunTrust Bank Nashville, N.A., a national
banking association, (the "Credit Agreement") whereby the Company (i) increased
the maximum total commitments available under the Credit Agreement from $45
million to $60 million and (ii) extended the expiration date of the Credit
Agreement from August 31, 1999 to August 31, 2002 (the date upon which any
remaining borrowings must be repaid). There were no changes to any of the other
material terms and conditions of the Credit Agreement as a result of the Second
Amendment, provided, however, that the financial covenants must now be tested
quarterly as of the end of each fiscal quarter, based on a rolling four-quarters
basis, rather than at the end of each fiscal year.
6 of 11
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis describes certain factors affecting
Tractor Supply Company's (the "Company") results of operations for the fiscal
three months ended March 28, 1998 and March 29, 1997, and significant
developments affecting financial condition since the end of the fiscal year,
December 27, 1997, and should be read in conjunction with the Company's annual
report on Form 10-K for the fiscal year ended December 27, 1997. 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.
RESULTS OF OPERATIONS
The Fiscal Three Months (First Quarter) Ended March 28, 1998 and March 29, 1997
Net sales increased 9.5% to $105.6 million for the first quarter of fiscal 1998
from $96.4 million for the first quarter of fiscal 1997. This increase was
primarily attributable to new stores, as comparable store sales (excluding
relocations, using all stores open at least one year) increased 1.5% for the
first quarter of fiscal 1998. The Company opened four new retail farm stores
during the first quarter of fiscal 1998. The Company opened eleven new retail
farm stores during the first quarter of fiscal 1997. Comparable store sales for
the first quarter of fiscal 1998, benefiting from an aggressive inventory
in-stock position, were up 1.5% despite (i) unseasonably cool spring weather
conditions in March this year, compared to favorable spring weather conditions
in late March last year and (ii) the disruption to customer service caused by
the tremendous effort required to "remerchandise" a significant portion of over
150 stores.
The gross margin rate was 25.1% of sales in the first quarter of fiscal 1998,
the same as the first quarter of fiscal 1997.
As a percent of sales, selling, general and administrative expenses increased .5
percentage points to 25.5% of sales in the first quarter of fiscal 1998 from
25.0% of sales in the first quarter of fiscal 1997 primarily due to costs
associated with new stores as well as from the incremental store operating costs
incurred to effect the merchandising "relay" and the leverage loss attributable
to the soft comparable store sales performance. Selling, general and
administrative expenses increased 11.8% to $26.9 million in the first quarter of
fiscal 1998 from $24.1 million in the first quarter of fiscal 1997. The
increased dollar amount was primarily attributable to costs associated with new
store openings (new stores have considerably higher occupancy costs, primarily
rent, than the existing store base). Depreciation and amortization expense of
$1.3 million for the first quarter of fiscal 1998 was up 24.0% over the first
quarter of fiscal 1997, also mainly due to costs associated with new and
relocated stores. Net interest expense increased 35.2% to $.8 million in the
first quarter of fiscal 1998 from $.6 million in the first quarter of fiscal
1997
7 of 11
<PAGE> 8
primarily due to additional borrowings under the Credit Agreement to fund
the Company's growth and expansion plans, including additional inventory as
discussed below.
The Company's effective tax rate decreased to 39.8% in the first quarter of
fiscal 1998, compared with 40.0% for the first quarter of fiscal 1997.
As a result of the foregoing factors, net loss increased $.6 million to a $1.5
million net loss in the first quarter of fiscal 1998 from a net loss of $0.9
million in the first quarter of fiscal 1997. As a percent of sales, net loss
increased .4 percentage points to 1.4% of sales in the first quarter of fiscal
1998 from 1.0% of sales in the first quarter of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
In addition to normal operating expenses, the Company's primary ongoing cash
requirements are those necessary for the Company's expansion, remodeling and
relocation programs, including inventory purchases and capital expenditures. The
Company's primary ongoing sources of liquidity are funds provided from
operations, commitments available under its revolving credit agreement (the
"Credit Agreement") and short-term trade credit.
In March 1998, the Company entered into an amendment (the "Second Amendment") to
its Credit Agreement with BankBoston, N.A. (successor to First National Bank of
Boston), a national banking association, as agent, and for itself, in its
capacity as a lender thereunder, First American National Bank, a national
banking association, and SunTrust Bank Nashville, N.A., a national banking
association, whereby the Company (i) increased the maximum total commitments
available under the Credit Agreement from $45 million to $60 million and (ii)
extended the expiration date of the Credit Agreement from August 31, 1999 to
August 31, 2002 (the date upon which any remaining borrowings must be repaid).
There were no changes to any of the other material terms and conditions of the
Credit Agreement as a result of the Second Amendment, provided, however, that
the financial covenants must now be tested quarterly as of the end of each
fiscal quarter, based on a rolling four-quarters basis, rather than at the end
of each fiscal year.
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 March 28, 1998, the Company's inventories had increased
$51.1 million to $202.8 million from $151.7 million at December 27, 1997. This
increase resulted primarily from additional inventory for new stores as well as
planned inventory increases in seasonal product lines. The Company changed its
strategic plan with respect to inventory management during the first quarter of
fiscal 1998, whereby spring seasonal merchandise was brought in earlier this
year than in prior years for consistency of supply and more continuous flow of
seasonal product. In connection with this new strategic plan regarding inventory
management, the Company also intends to exit its spring seasonal merchandise
earlier this year than in prior years to minimize the amount of seasonal
markdowns and product carryover. Short-term trade credit, which represents a
source of financing for inventory, increased $43.3 million to $96.0 million at
March 28, 1998 from $52.7 million at December 27, 1997. 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 March 28, 1998, the Company had working capital of $97.8 million, which
represented a $14.9 million increase from December 27, 1997. This increase
resulted primarily from an increase in inventories without a corresponding
increase in accounts payable and an increase in trade accounts receivable
(mainly due to commitments from vendors respecting the Company's 1998 marketing
campaign) as well as from an increase in cash and cash equivalents and a
decrease in income taxes payable (mainly due to timing of payments), partially
offset by an increase in accrued expenses (mainly due to deferred vendor support
payments relating to the Company's 1998 marketing campaign and, to a lesser
extent, timing of payments).
Operations used net cash of $12.5 million and $10.7 million in the first quarter
of fiscal 1998 and 1997, respectively. The increase in net cash used in the
first quarter of fiscal 1998 resulted primarily from inventories increasing at a
faster rate than accounts payable as compared to the first quarter of fiscal
1997, as well as from an increase in trade accounts receivable during the first
quarter of fiscal 1998, partially offset by the timing of payments for accrued
expenses.
8 of 11
<PAGE> 9
Cash used in investing activities of $2.3 million for the first quarter of
fiscal 1998 represented a $0.3 million decrease over cash used in the first
quarter of fiscal 1997 of $2.6 million. The decrease in cash used in the first
quarter of fiscal 1998 resulted primarily from less capital expenditures as
compared to the first quarter of fiscal 1997 (four new stores were opened during
the first quarter of fiscal 1998 compared with eleven new store openings during
the first quarter of fiscal 1997).
Financing activities in the first quarter of fiscal 1998 provided $17.4 million
in cash which represented a $9.1 million increase in net cash provided over the
$8.3 million in net cash provided in the first quarter of fiscal 1997. This
increase in net cash provided resulted primarily from net short-term borrowings
of approximately $17.6 million during the first quarter of fiscal 1998 compared
to net borrowings of approximately $8.7 million in the first quarter of fiscal
1997.
The Company believes that its cash flow from operations, borrowings available
under its Credit Agreement and short-term trade credit will be sufficient to
fund the Company's operations and its growth and expansion plans for the next
several years.
9 of 11
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 Second Amendment to Revolving Credit Agreement, dated as of
March 23, 1998, among the Company and BankBoston, N.A.
(successor to First National Bank of Boston), a national
banking association, as agent, and for itself, in its capacity
as a lender thereunder, First American National Bank, a
national banking association, and SunTrust Bank Nashville,
N.A., a national banking association.
10.2 Revolving Credit Note, dated as of March 23, 1998, issued by
the Company to SunTrust Bank Nashville, N.A. in the aggregate
principal amount of $15 million.
27.1 Financial Data Schedule (only submitted to SEC in electronic format).
</TABLE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the
fiscal quarter ended March 28, 1998.
10 of 11
<PAGE> 11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRACTOR SUPPLY COMPANY
Date: May 1, 1998 By: /s/ Thomas O. Flood
------------------ ---------------------
Thomas O. Flood
Senior Vice President - Administration and
Finance, Treasurer and Chief Financial Officer
(Duly Authorized Officer & Principal
Financial Officer)
11 of 11
<PAGE> 1
EXHIBIT 10.1
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
This Second Amendment to Revolving Credit Agreement (the "Second
Amendment") dated as of March ___, 1998, among Tractor Supply Company, a
Delaware corporation (the "Borrower"), and BankBoston, N.A. (successor to First
National Bank of Boston), a national banking association ("BankBoston"), as
agent (the "Agent"), and for itself, in its capacity as a lender hereunder,
First American National Bank, a national banking association ("FANB"), and
SunTrust Bank Nashville, N.A., a national banking association ("SunTrust"),
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Revolving Credit Agreement (the
"Agreement"), dated as of August 31, 1994, among the Borrower, BankBoston, as
Agent, and for itself, in its capacity as a lender under the Agreement, and
FANB, the Banks agreed to loan to the Borrower amounts not to exceed
$30,000,000. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement; and,
WHEREAS, by First Amendment to Revolving Credit Agreement dated as of July
31, 1996, the Banks agreed to increase the Total Commitments from $30,000,000 to
$45,000,000, with the Commitment of BankBoston remaining at $25,000,000, and the
Commitment of FANB increasing from $5,000,000 to $20,000,000; and
WHEREAS, the Banks have agreed to increase the Total Commitments from
$45,000,000 to $60,000,000, with the Commitment of BankBoston and FANB to remain
at $25,000,000 and $20,000,000, respectively, and with SunTrust having a
Commitment for $15,000,000; and
WHEREAS, the Banks and Borrower desire to amend the Agreement to reflect
the increase in the Total Commitments, to extend the Termination Date to August
31, 2002, and to make certain other changes as set forth herein,
NOW, THEREFORE, in consideration of the foregoing premises, and other good
and valuable consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereto hereby agree to amend the Agreement as follows:
1. Definitions. The following definitions set forth in Section 1.1 of the
Agreement are hereby amended to read as follows:
"Bank" means individually, BankBoston, in its capacity as a Bank, FANB
and SunTrust, and "Banks" means collectively, BankBoston, FANB and SunTrust, and
each entity's respective successors and assigns.
1
<PAGE> 2
"Revolving Credit Notes" means, collectively, the $25,000,000 Revolving
Credit Note dated as of August 31, 1994, executed by Borrower in favor of
BankBoston, the $20,000,000 Amended and Restated Revolving Credit Note dated as
of July 31, 1996, executed by Borrower in favor of FANB, and the $15,000,000
Revolving Credit Note of even date herewith executed by Borrower in favor of
SunTrust, as amended and supplemented from time to time, and any replacement
thereof or substitution therefor.
"Termination Date" means August 31, 2002, and is the date upon which the
Revolving Credit Notes shall be due and payable without demand or the occurrence
of any Default or Event of Default.
"Total Commitments" means the aggregate of the several Commitments of the
Banks in the principal amount of up to Sixty Million and 00/100 Dollars
($60,000,000), as set forth in Section 2.1 of this Agreement, including the
aggregate of the several Commitments as they may be reduced from time to time.
2. Section 2.1. The Commitments. Section 2.1 (a) and (b) are hereby
deleted, and the following is substituted as Section 2.1 (a) and (b):
(a) Subject to the terms and conditions of and relying on the
representations, warranties and covenants contained in this Agreement, for
a period ending on the Termination Date, each Bank agrees to make
available, severally but not jointly, to the Borrower, from time to time,
as requested by the Borrower, Revolving Credit Loans up to the amount set
out below opposite their respective names, which for all of the Banks shall
be the aggregate maximum principal amount of up to Sixty Million and 00/100
Dollars ($60,000,000). The maximum Commitment of each of the Banks and its
respective percentage of the Total Commitments (the "Commitment Percentage"
of each Bank) are as follows:
<TABLE>
<CAPTION>
Commitment
Bank Commitment Percentage
---- ---------- ----------
<S> <C> <C>
First American National Bank $20,000,000 33.33%
BankBoston, N.A. $25,000,000 41.67%
SunTrust Bank Nashville, N.A. $15,000,000 25.00%
</TABLE>
(b) The Revolving Credit Loan shall be evidenced by (i) the
$20,000,000 Amended and Restated Revolving Credit Note of Borrower to FANB,
(ii) the $25,000,000 Revolving Credit Note of Borrower to BankBoston, and
(iii) the $15,000,000 Revolving Credit Note of Borrower to SunTrust, which
Revolving Credit Notes are in the form set forth as Exhibit A attached
hereto, with each Revolving Credit Note payable in accordance with its
terms. The Borrower may obtain Revolving Credit Loans, repay or prepay,
without penalty or premium (except that Eurodollar Loans may only be
prepaid at the end of the applicable Eurodollar
2
<PAGE> 3
Interest Period, unless such prepayment is made pursuant to Sections 2.8,
2.9 or 2.10 hereof), at any time or from time to time, in whole or in part,
and at the sole discretion of the Borrower), and reborrow hereunder, from
the date of this Agreement until the Termination Date, either the full
amount of the Total Commitments, or any lesser sum which is in the minimum
amount of $500,000, and in the minimum amount of an integral multiple of
$100,000 if in excess thereof. Each of the Revolving Credit Loans shall be
made by each Bank ratably in accordance with the ratio that its respective
Commitment Percentage bears to the amount of such Revolving Credit Loan.
3. Section 2.6. Interest Rate and Payments of Interest. Section 2.6(a)(4)
is hereby deleted, and the following is substituted as new Section 2.6(a)(4):
(4) The interest for Floating Rate Loans and Eurodollar Loans shall be
computed on the basis of a 360 day year, counting the actual number of days
elapsed. The interest for Floating Rate Loans shall be due and payable,
without notice, quarterly in arrears, on the first day of each calendar
quarter, commencing on April 1, 1998. Interest accruing on Eurodollar Loans
shall be due and payable, without notice, at the end of the applicable
Eurodollar Interest Period for each Eurodollar Loan, provided, however,
that with respect to a Eurodollar Loan for which the Borrower has selected
a six-month Eurodollar Interest Period, interest accruing on such
Eurodollar Loan shall be due and payable at intervals of three (3) months
after the first day of such Eurodollar Interest Period and when such
Eurodollar Loan is due (whether at maturity, by reason of acceleration or
otherwise).
4. Section 2.12. Letter of Credit Fees. As consideration for the issuance
of Letters of Credit, the Borrower agrees to pay to the Agent, for the benefit
of the Banks, Letter of Credit Fees equal to one percent (1%) per annum for
standby Letters of Credit and Agent's standard fees and interest for commercial
Letters of Credit then in effect. The fees due in connection with Letters of
Credit issued under this Agreement shall be due and payable quarterly, in
arrears, based on the face amount of Letters of Credit issued and outstanding
under the terms of this Agreement.
5. Section 8.1. Financial Ratios. Section 8.1 is hereby amended to reflect
that all of the financial covenants set forth in Section 8.1 shall be tested
quarterly as of the end of each fiscal quarter, based on a rolling four-quarters
basis, beginning March 31, 1998.
6. Section 10.1. Authorization. The first sentence of Section 10.1 is
hereby deleted, and the following is substituted as the new first sentence of
Section 10.1:
With respect to all funds advanced hereunder or under the Revolving Credit
Notes, FANB, BankBoston and SunTrust shall be obligated to advance
$20,000,000, $25,000,000, and $15,000,000, respectively, and each such Bank
shall own a corresponding undivided interest in this Agreement and a
corresponding prorata interest in all Revolving Credit Loans and all
Letters of Credit (regardless of the Bank actually issuing the Letter of
Credit) made or issued in accordance with the terms of this Agreement.
3
<PAGE> 4
7. Conditions. Notwithstanding any other provision of this Second
Amendment, this Second Amendment shall not be effective until the satisfaction
(or waiver by the Agent) of each of the following conditions:
(a) The Agent shall have received a certificate of the Chief Executive
Officer, President, Chief Financial Officer, or Controller of the Borrower
stating that, to the best of his knowledge and based on an examination
sufficient to enable him to make an informed statement:
(i) All the representations and the warranties made under this
Agreement are true and correct in all material respects as of the date of this
Second Amendment; and
(ii) No Default or Event of Default exists as of the date of this
Second Amendment.
(b) This Second Amendment and the SunTrust Revolving Credit Note, shall
have been duly executed and delivered to the Agent.
8. Notices. The address for SunTrust for notice purposes is:
SunTrust Bank Nashville
Corporate Banking
P.O. Box 305110
Nashville, TN 37230-5110
Attn: Tracy Elliott
9. Ratification. Borrower hereby restates and ratifies the covenants and
warranties contained in the Agreement, as of the date hereof, and confirms that
the terms and conditions of the Agreement, as amended hereby, remain in full
force and effect.
10. Counterparts. This Second Amendment may be executed in counterparts.
Remainder of page intentionally left blank - signature page follows
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed by their duly authorized officers as of the day and year first
written above.
TRACTOR SUPPLY COMPANY BANKBOSTON, N.A., as Agent, and in its
capacity as a lender
BY:_______________________________ BY:_______________________________
TITLE:____________________________ TITLE:____________________________
FIRST AMERICAN NATIONAL BANK
BY:_______________________________
TITLE:____________________________
SUNTRUST BANK NASHVILLE, N.A.
BY:_______________________________
TITLE:____________________________
5
<PAGE> 1
EXHIBIT 10.2
REVOLVING CREDIT NOTE
$15,000,000.00 Nashville, Tennessee
As of March _23rd, 1998
IN CONSIDERATION OF the undertaking of SunTrust Bank Nashville, N.A.
(the "Bank") to make advances to Tractor Supply Company, a Delaware corporation
(the "Borrower"), pursuant to the Credit Agreement, the Borrower hereby
unconditionally promises to pay to the order of the Bank, at the offices of the
Agent at 100 Federal Street, Boston, Massachusetts 02110, on the Termination
Date, as the same may be extended, the principal sum of Fifteen Million and
00/100 Dollars ($15,000,000.00) or, if less, the aggregate unpaid principal
amount of all advances made by the Bank to the Borrower, pursuant to the Credit
Agreement, together with interest thereon as provided for in Article 2 of the
Credit Agreement. The Borrower shall have the right at any time and from time to
time to repay or prepay any part or all of the obligations evidenced hereby
without premium or penalty, and without curtailing the Borrower's right to
further advances during the term hereof, which further advances, together with
all outstanding and unpaid advances, shall never exceed the face amount hereof,
provided, however, that Eurodollar Loans may not be prepaid except at the end of
the Eurodollar Interest Period applicable thereto, unless such prepayment is
made pursuant to Sections 2.8, 2.9 or 2.10 of the Credit Agreement.
If the Borrower shall fail to pay, when due (whether at maturity, by
reason of acceleration, or otherwise) all or any portion of the obligations due
under the terms of this Note or pursuant to the Credit Agreement, such unpaid
past due amount shall no longer bear interest in accordance with the terms of
the preceding paragraph, but, at the election of the Majority Banks, shall bear
interest for each day from the day on which it was so due until paid in full at
a rate per annum equal to the Default Rate.
The interest rate accruing on the outstanding principal amount hereof
shall be computed on the basis of a year of 360 days and the actual number of
days elapsed and may be adjusted in accordance with the provisions of Section
2.6 of the Credit Agreement. Nothing contained in this Note shall be deemed to
establish or require the payment of a rate of interest in excess of the maximum
rate permitted by Applicable Law. In the event that any rate of interest
required to be paid hereunder exceeds the maximum rate permitted by Applicable
Law, such rate shall automatically be reduced to the maximum rate permitted by
such Applicable Law and any excess amount previously collected shall be
automatically credited against the principal amount hereof effective as of the
time paid.
For purposes of this Note, "Credit Agreement" means that certain
Revolving Credit Agreement, dated as of August 31, 1994, among the Borrower, the
Agent and the Banks, as the same are defined in the Credit Agreement, as amended
from time to time. All capitalized terms used but
1
<PAGE> 2
not otherwise defined herein shall have the respective meanings ascribed to such
terms in the Credit Agreement. To the extent the provisions of this Note
conflict with the provisions of the Credit Agreement, the provisions of the
Credit Agreement shall control.
The Borrower hereby waives demand, presentment for payment, notice of
non-payment, protest, notice of protest and all other notices, in collecting the
amounts due and payable under this Note. The Borrower further agrees that it
will not be necessary for the Bank, or any holder hereof, in order to enforce
payment of this Note, to institute or exhaust its remedies against any maker or
other party liable therefor. Upon the occurrence and continuation of an Event of
Default, the Bank, at Bank's option, without notice to the Borrower, may pursue
such remedies as shall be available to Bank under this Note, the Credit
Agreement, or otherwise at law or equity. Upon the occurrence and continuation
of an Event of Default, in addition to all other Obligations owing to the Bank
under the Credit Agreement, the Borrower agrees to pay to the Bank all
reasonable costs and expenses, including reasonable attorney's or collection
fees incurred by the Bank in pursuit of its rights or remedies under this Note,
which amount shall be due and payable in full without notice or demand for
payment, and which unpaid amount shall bear interest, until paid, at the Default
Rate.
This Note is executed and delivered pursuant to the provisions of the
Credit Agreement which, among other things, contains provisions with respect to
default in payments under, the acceleration of the maturity of, and prepayments
of the principal of, this Note prior to maturity, all upon the terms and
conditions specified in the Credit Agreement.
This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
(Remainder of Page Intentionally Left Blank)
2
<PAGE> 3
IN WITNESS WHEREOF, the Borrower has authorized this Note to be
executed in its name by its duly authorized representative as of the day and
year first written above.
TRACTOR SUPPLY COMPANY
By: /s/ Michael J. Kincaid
------------------------------------
Title: Vice President
---------------------------------
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF TRACTOR SUPPLY CO. FOR THE THREE MONTHS ENDED MARCH 28,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> MAR-28-1998
<CASH> 11,043
<SECURITIES> 0
<RECEIVABLES> 13,535
<ALLOWANCES> 0
<INVENTORY> 202,830
<CURRENT-ASSETS> 231,657
<PP&E> 78,293
<DEPRECIATION> 24,892
<TOTAL-ASSETS> 287,103
<CURRENT-LIABILITIES> 133,883
<BONDS> 48,451
0
0
<COMMON> 70
<OTHER-SE> 103,395
<TOTAL-LIABILITY-AND-EQUITY> 287,103
<SALES> 105,587
<TOTAL-REVENUES> 105,587
<CGS> 79,098
<TOTAL-COSTS> 79,098
<OTHER-EXPENSES> 28,199
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 784
<INCOME-PRETAX> (2,494)
<INCOME-TAX> (992)
<INCOME-CONTINUING> (1,502)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,502)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
