☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-3139732 | |||||||
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer Identification No.) | |||||||
5401 Virginia Way, Brentwood, Tennessee
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37027 | |||||||
(Address of Principal Executive Offices) | (Zip Code) | |||||||
Registrant’s Telephone Number, Including Area Code: |
(615) 440-4000
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, $.008 par value | TSCO | NASDAQ Global Select Market |
Large accelerated filer | ☑ | Accelerated filer | ☐ | |||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
Emerging growth company | ☐ |
Class | Outstanding at January 25, 2020 | |||||||
Common Stock, $.008 par value | 117,282,010 |
Item no.
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Form 10-K Report Page
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Percent of Net Sales | |||||||||||||||||||||||||||||
Fiscal Year | |||||||||||||||||||||||||||||
Product Category: | 2019 | 2018 | 2017 | ||||||||||||||||||||||||||
Livestock and Pet | 47 | % | 47 | % | 47 | % | |||||||||||||||||||||||
Hardware, Tools and Truck | 21 | 22 | 22 | ||||||||||||||||||||||||||
Seasonal, Gift and Toy Products | 20 | 19 | 19 | ||||||||||||||||||||||||||
Clothing and Footwear | 8 | 8 | 8 | ||||||||||||||||||||||||||
Agriculture | 4 | 4 | 4 | ||||||||||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % |
•
|
4health® (pet foods and supplies)
|
•
|
Producer’s Pride® (livestock and horse feed and supplies)
|
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•
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Bit & Bridle® (apparel and footwear)
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•
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Red Shed® (gifts, collectibles, and outdoor furniture)
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•
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Blue Mountain® (apparel)
|
•
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Redstone® (heating products)
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•
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C.E. Schmidt® (apparel and footwear)
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•
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Retriever® (pet foods and supplies)
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•
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Countyline® (livestock, farm and ranch equipment)
|
•
|
Ridgecut® (apparel)
|
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•
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Dumor® (livestock and horse feed and supplies)
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•
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Royal Wing® (bird feed and supplies)
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•
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Groundwork® (lawn and garden supplies)
|
•
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Traveller® (truck and automotive products)
|
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•
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Huskee® (outdoor power equipment)
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•
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Treeline® (hunting gear and accessories)
|
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•
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JobSmart® (tools)
|
•
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TSC Tractor Supply Co® (trailers, truck tool boxes, and animal
|
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bedding) | |||||||||||
•
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Paws & Claws® (pet foods and supplies)
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•
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Untamed® (pet foods)
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Name | Position | Age | ||||||
Harry A. Lawton, III | President and Chief Executive Officer | 45 | ||||||
Kurt D. Barton | Executive Vice President – Chief Financial Officer and Treasurer | 48 | ||||||
Benjamin F. Parrish, Jr. | Executive Vice President – General Counsel and Corporate Secretary | 63 | ||||||
Robert D. Mills | Executive Vice President – Chief Technology, Digital Commerce and Strategy Officer | 47 | ||||||
John P. Ordus | Executive Vice President – Chief Stores Officer | 44 | ||||||
Jonathan S. Estep | Executive Vice President – Chief Merchandising Officer | 40 | ||||||
Christi C. Korzekwa | Senior Vice President – Marketing | 54 | ||||||
Colin W. Yankee | Executive Vice President – Chief Supply Chain Officer | 42 |
State |
Number
of Stores |
State |
Number
of Stores |
|||||||||||||||||
Texas | 221 | Wisconsin | 24 | |||||||||||||||||
North Carolina | 100 | Massachusetts | 23 | |||||||||||||||||
Pennsylvania | 97 | Maryland | 23 | |||||||||||||||||
Tennessee | 97 | Colorado | 22 | |||||||||||||||||
Ohio | 93 | Illinois | 22 | |||||||||||||||||
Georgia | 92 | Maine | 21 | |||||||||||||||||
Michigan | 90 | New Hampshire | 21 | |||||||||||||||||
New York | 90 | New Jersey | 21 | |||||||||||||||||
Florida | 73 | Connecticut | 20 | |||||||||||||||||
Kentucky | 71 | Nebraska | 18 | |||||||||||||||||
California | 69 | Utah | 15 | |||||||||||||||||
Indiana | 63 | North Dakota | 14 | |||||||||||||||||
Virginia | 63 | Minnesota | 13 | |||||||||||||||||
Alabama | 62 | Oregon | 10 | |||||||||||||||||
Louisiana | 59 | Iowa | 9 | |||||||||||||||||
Oklahoma | 56 | South Dakota | 9 | |||||||||||||||||
South Carolina | 48 | Vermont | 8 | |||||||||||||||||
Mississippi | 41 | Wyoming | 8 | |||||||||||||||||
Arkansas | 38 | Delaware | 6 | |||||||||||||||||
Arizona | 34 | Montana | 6 | |||||||||||||||||
Missouri | 30 | Idaho | 5 | |||||||||||||||||
New Mexico | 29 | Rhode Island | 5 | |||||||||||||||||
West Virginia | 28 | Nevada | 4 | |||||||||||||||||
Kansas | 26 | Hawaii | 2 | |||||||||||||||||
Washington | 25 | |||||||||||||||||||
2,024 |
Distribution Facility Location | Approximate Square Footage | Owned/Leased Facility | ||||||||||||
Frankfort, New York | 924,000 | Owned | ||||||||||||
Franklin, Kentucky | 833,000 | Owned | ||||||||||||
Pendleton, Indiana | 764,000 | Owned | ||||||||||||
Macon, Georgia | 684,000 | Owned | ||||||||||||
Waco, Texas | 666,000 | Owned | ||||||||||||
Casa Grande, Arizona | 650,000 | Owned | ||||||||||||
Hagerstown, Maryland (a)
|
482,000 | Owned | ||||||||||||
Hagerstown, Maryland (a)
|
309,000 | Leased | ||||||||||||
Waverly, Nebraska | 592,000 | Owned | ||||||||||||
Seguin, Texas (b)
|
71,000 | Owned | ||||||||||||
Lakewood, Washington (b)
|
64,000 | Leased | ||||||||||||
Longview, Texas (b)
|
63,000 | Owned |
Price Range | |||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||
High | Low | High | Low | ||||||||||||||||||||||||||||||||||||||
First Quarter | $98.58 | $80.31 | $82.68 | $58.78 | |||||||||||||||||||||||||||||||||||||
Second Quarter | $109.67 | $96.61 | $79.04 | $58.27 | |||||||||||||||||||||||||||||||||||||
Third Quarter | $114.25 | $88.41 | $92.45 | $74.93 | |||||||||||||||||||||||||||||||||||||
Fourth Quarter | $99.37 | $89.07 | $97.65 | $78.67 |
Date Declared |
Dividend Amount
Per Share of Common Stock |
Record Date | Date Paid | |||||||||||||||||
November 6, 2019 | $0.35 | November 25, 2019 | December 10, 2019 | |||||||||||||||||
August 7, 2019 | $0.35 | August 26, 2019 | September 10, 2019 | |||||||||||||||||
May 8, 2019 | $0.35 | May 28, 2019 | June 11, 2019 | |||||||||||||||||
February 6, 2019 | $0.31 | February 25, 2019 | March 12, 2019 | |||||||||||||||||
November 7, 2018 | $0.31 | November 26, 2018 | December 11, 2018 | |||||||||||||||||
August 8, 2018 | $0.31 | August 27, 2018 | September 11, 2018 | |||||||||||||||||
May 9, 2018 | $0.31 | May 29, 2018 | June 12, 2018 | |||||||||||||||||
February 7, 2018 | $0.27 | February 26, 2018 | March 13, 2018 |
Period |
Total Number
of Shares Purchased |
Average
Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Dollar Value of Shares That May Yet Be
Purchased Under the Plans or Programs |
||||||||||||||||||||||
First Quarter (a)
|
1,758,099 | $ | 90.07 | 1,724,100 | $ | 364,717,356 | ||||||||||||||||||||
Second Quarter (a)
|
1,733,618 | 103.27 | 1,732,500 | 1,685,822,720 | ||||||||||||||||||||||
Third Quarter (a)
|
1,476,094 | 105.95 | 1,469,713 | 1,530,099,430 | ||||||||||||||||||||||
Fourth Quarter: (a)
|
||||||||||||||||||||||||||
9/29/19 - 10/26/19 | 119,000 | 93.12 | 119,000 | 1,519,019,236 | ||||||||||||||||||||||
10/27/19 - 11/23/19 | 111,288 | 96.43 | 111,000 | 1,508,316,429 | ||||||||||||||||||||||
11/24/19 - 12/28/19 | 228,000 | 94.55 | 228,000 | 1,486,763,173 | ||||||||||||||||||||||
458,288 | 94.64 | 458,000 | 1,486,763,173 | |||||||||||||||||||||||
As of December 28, 2019 | 5,426,099 | $ | 98.99 | 5,384,313 | $ | 1,486,763,173 |
12/27/2014 | 12/26/2015 | 12/31/2016 | 12/30/2017 | 12/29/2018 | 12/28/2019 | |||||||||||||||||||||||||||||||||
Tractor Supply Company | $ | 100.00 | $ | 110.89 | $ | 99.25 | $ | 99.58 | $ | 112.55 | $ | 126.57 | ||||||||||||||||||||||||||
S&P 500 | $ | 100.00 | $ | 100.77 | $ | 111.92 | $ | 136.35 | $ | 129.26 | $ | 171.88 | ||||||||||||||||||||||||||
S&P Retail Index | $ | 100.00 | $ | 126.12 | $ | 133.60 | $ | 174.21 | $ | 195.19 | $ | 252.10 |
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||||||||||||
(52 weeks) | (52 weeks) | (52 weeks) | (53 weeks) | (52 weeks) | |||||||||||||||||||||||||||||||
Operating Results: | |||||||||||||||||||||||||||||||||||
Net sales | $ | 8,351,931 | $ | 7,911,046 | $ | 7,256,382 | $ | 6,779,579 | $ | 6,226,507 | |||||||||||||||||||||||||
Gross profit | 2,871,770 | 2,702,528 | 2,491,965 | 2,325,202 | 2,143,174 | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 1,932,572 | 1,823,440 | 1,639,749 | 1,488,164 | 1,369,097 | ||||||||||||||||||||||||||||||
Depreciation and amortization | 195,978 | 177,351 | 165,834 | 142,958 | 123,569 | ||||||||||||||||||||||||||||||
Operating income | 743,220 | 701,737 | 686,382 | 694,080 | 650,508 | ||||||||||||||||||||||||||||||
Interest expense, net | 19,843 | 18,352 | 13,859 | 5,810 | 2,891 | ||||||||||||||||||||||||||||||
Income before income taxes | 723,377 | 683,385 | 672,523 | 688,270 | 647,617 | ||||||||||||||||||||||||||||||
Income tax expense | 161,023 | 151,028 | 249,924 | 251,150 | 237,222 | ||||||||||||||||||||||||||||||
Net income | $ | 562,354 | $ | 532,357 | $ | 422,599 | $ | 437,120 | $ | 410,395 | |||||||||||||||||||||||||
Net income per share – basic (c)
|
$ | 4.70 | $ | 4.34 | $ | 3.31 | $ | 3.29 | $ | 3.03 | |||||||||||||||||||||||||
Net income per share – diluted (c)
|
$ | 4.66 | $ | 4.31 | $ | 3.30 | $ | 3.27 | $ | 3.00 | |||||||||||||||||||||||||
Weighted average shares – diluted (c)
|
120,743 | 123,471 | 128,204 | 133,813 | 136,845 | ||||||||||||||||||||||||||||||
Dividends declared per common share outstanding | $ | 1.36 | $ | 1.20 | $ | 1.05 | $ | 0.92 | $ | 0.76 | |||||||||||||||||||||||||
Operating Data (percent of net sales): | |||||||||||||||||||||||||||||||||||
Gross margin | 34.4 | % | 34.2 | % | 34.3 | % | 34.3 | % | 34.4 | % | |||||||||||||||||||||||||
Selling, general and administrative expenses | 23.1 | % | 23.0 | % | 22.6 | % | 22.0 | % | 22.0 | % | |||||||||||||||||||||||||
Operating income | 8.9 | % | 8.9 | % | 9.4 | % | 10.2 | % | 10.4 | % | |||||||||||||||||||||||||
Net income | 6.7 | % | 6.7 | % | 5.8 | % | 6.4 | % | 6.6 | % | |||||||||||||||||||||||||
Store, Sales, and Other Data: | |||||||||||||||||||||||||||||||||||
Stores open at end of year | 2,024 | 1,940 | 1,853 | 1,738 | 1,488 | ||||||||||||||||||||||||||||||
Comparable store sales increase (d)
|
2.7 | % | 5.1 | % | 2.7 | % | 1.6 | % | 3.1 | % | |||||||||||||||||||||||||
New store sales (as a % of net sales) (e)
|
2.8 | % | 3.8 | % | 5.6 | % | 5.6 | % | 5.6 | % | |||||||||||||||||||||||||
Average transaction value | $ | 46.89 | $ | 45.85 | $ | 44.61 | $ | 44.42 | $ | 44.87 | |||||||||||||||||||||||||
Comparable store average transaction value increase (decrease) (c)
|
2.4 | % | 2.8 | % | 0.5 | % | (0.9) | % | (0.2) | % | |||||||||||||||||||||||||
Comparable store average transaction count increase (d)
|
0.3 | % | 2.2 | % | 2.2 | % | 2.6 | % | 3.3 | % | |||||||||||||||||||||||||
Total selling square footage (000’s) | 30,854 | 29,571 | 28,180 | 26,511 | 23,938 | ||||||||||||||||||||||||||||||
Total team members | 33,500 | 30,500 | 29,300 | 26,000 | 23,000 | ||||||||||||||||||||||||||||||
Capital expenditures (000’s) | $ | 217,450 | $ | 278,530 | $ | 250,401 | $ | 226,017 | $ | 236,496 | |||||||||||||||||||||||||
Balance Sheet Data (at end of period): | |||||||||||||||||||||||||||||||||||
Average inventory per store (f)
|
$ | 751.3 | $ | 766.8 | $ | 735.4 | $ | 741.7 | $ | 820.1 | |||||||||||||||||||||||||
Inventory turns | 3.23 | 3.27 | 3.24 | 3.19 | 3.23 | ||||||||||||||||||||||||||||||
Working capital | $ | 540,287 | $ | 856,292 | $ | 806,154 | $ | 740,615 | $ | 768,177 | |||||||||||||||||||||||||
Total assets (g)
|
$ | 5,289,268 | $ | 3,085,262 | $ | 2,868,769 | $ | 2,674,942 | $ | 2,370,826 | |||||||||||||||||||||||||
Long-term debt, less current portion (h)
|
$ | 396,869 | $ | 410,370 | $ | 433,686 | $ | 289,769 | $ | 166,992 | |||||||||||||||||||||||||
Operating lease liabilities, less current portion (g)
|
$ | 2,001,162 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||
Stockholders’ equity | $ | 1,567,123 | $ | 1,561,820 | $ | 1,418,673 | $ | 1,453,218 | $ | 1,393,294 |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||||||||||||
Inventory Valuation: | ||||||||||||||
Inventory Impairment | ||||||||||||||
We identify potentially excess and slow-moving inventory by evaluating turn rates, historical and expected future sales trends, age of merchandise, overall inventory levels, current cost of inventory, and other benchmarks. We have established an inventory valuation reserve to recognize the estimated impairment in value (i.e., an inability to realize the full carrying value) based on our aggregate assessment of these valuation indicators under prevailing market conditions and current merchandising strategies. |
We do not believe our merchandise inventories are subject to significant risk of obsolescence in the near term. However, changes in market conditions or consumer purchasing patterns could result in the need for additional reserves.
Our impairment reserve contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding forecasted customer demand and the promotional environment. |
We have not made any material changes in the accounting methodology used to recognize inventory impairment reserves in the financial periods presented. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate impairment. However, if assumptions regarding consumer demand or clearance potential for certain products are inaccurate, we may be exposed to losses or gains that could be material. A 10% change in our inventory impairment reserve as of December 28, 2019, would have affected net income by approximately $1.1 million in fiscal 2019. |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||||||||||||
Shrinkage | ||||||||||||||
We perform physical inventories at least once a year for each store that has been open more than 12 months, and we have established a reserve for estimating inventory shrinkage between physical inventory counts. The reserve is established by assessing the chain-wide average shrinkage experience rate, applied to the related periods’ sales volumes. Such assessments are updated on a regular basis for the most recent individual store experiences. |
The estimated store inventory shrink rate is based on historical experience. We believe historical rates are a reasonably accurate reflection of future trends.
Our shrinkage reserve contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding future shrinkage trends, the effect of loss prevention measures and merchandising strategies. |
We have not made any material changes in the accounting methodology used to recognize shrinkage in the financial periods presented.
We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to calculate our shrinkage reserve. However, if our estimates regarding inventory losses are inaccurate, we may be exposed to losses or gains that could be material. A 10% change in our shrinkage reserve as of December 28, 2019, would have affected net income by approximately $2.2 million in fiscal 2019. |
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Vendor Funding | ||||||||||||||
We receive funding from substantially all of our significant merchandise vendors, in support of our business initiatives, through a variety of programs and arrangements, including guaranteed vendor support funds (“vendor support”) and volume-based rebate funds (“volume rebates”). The amounts received are subject to terms of vendor agreements, most of which are “evergreen”, reflecting the on-going relationship with our significant merchandise vendors. Certain of our agreements, primarily volume rebates, are renegotiated annually, based on expected annual purchases of the vendor’s product.
Vendor funding is initially deferred as a reduction of the purchase price of inventory, and then recognized as a reduction of cost of merchandise as the related inventory is sold. During interim periods, the amount of vendor support and volume rebates are estimated based upon initial commitments and anticipated purchase levels with applicable vendors. |
The estimated purchase volume (and related vendor funding) is based on our current knowledge of inventory levels, sales trends and expected customer demand, as well as planned new store openings and relocations. Although we believe we can reasonably estimate purchase volume and related volume rebates at interim periods, it is possible that actual year-end results could be different from previously estimated amounts.
Our allocation methodology contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding customer demand, purchasing activity, target thresholds, vendor attrition and collectability. |
We have not made any material changes in the accounting methodology used to establish our vendor funding reserves in the financial periods presented.
At the end of each fiscal year, a significant portion of the actual purchase activity is known. Thus, we do not believe there is a reasonable likelihood that there will be a material change in the amounts recorded as vendor funding. We do not believe there is a significant collectability risk related to vendor funding amounts due to us at the end of fiscal 2019. If a 10% reserve had been applied against our outstanding vendor funding due as of December 28, 2019, net income would have been affected by approximately $2.2 million in fiscal 2019. Although it is unlikely that there will be any significant reduction in historical levels of vendor funding, if such a reduction were to occur in future periods, the Company could experience a higher inventory balance and higher cost of sales. |
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Freight | ||||||||||||||
We incur various types of transportation and delivery costs in connection with inventory purchases and distribution. Such costs are included as a component of the overall cost of inventories (on an aggregate basis) and recognized as a component of cost of merchandise sold as the related inventory is sold. | We allocate freight as a component of total cost of sales without regard to inventory mix or unique freight burden of certain categories. This assumption has been consistently applied for all years presented. |
We have not made any material changes in the accounting methodology used to establish our capitalized freight balance or freight allocation in the financial periods presented.
If a 10% increase or decrease had been applied against our current inventory capitalized freight balance as of December 28, 2019, net income would have been affected by approximately $10.4 million in fiscal 2019. |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||||||||||||
Self-Insurance Reserves: | ||||||||||||||
We self-insure a significant portion of our workers’ compensation insurance and general liability (including product liability) insurance plans. We have stop-loss insurance policies to protect from individual losses over specified dollar values.
Provisions for losses related to our self-insured liabilities are based upon periodic independent actuarially determined estimates that consider a number of factors including historical claims experience, loss development factors, and severity factors. |
The full extent of certain workers’ compensation and general liability claims may not become fully determined for several years.
Our self-insured liabilities contain uncertainties because management is required to make assumptions and to apply judgment to estimate the ultimate cost to settle reported claims and claims incurred but not reported as of the balance sheet date based upon historical data and experience, including actuarial calculations. |
We have not made any material changes in the accounting methodology used to establish our self-insurance reserves in the financial periods presented.
We do not believe there is a reasonable likelihood that there will be a material change in the assumptions we use to calculate insurance reserves. However, if we experience a significant increase in the number of claims or the cost associated with these claims, we may be exposed to losses that could be material. A 10% change in our self-insurance reserves as of December 28, 2019, would have affected net income by approximately $5.0 million in fiscal 2019. |
||||||||||||
Impairment of Long-Lived Assets: | ||||||||||||||
Long-lived assets, including lease assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset or asset group to its estimated undiscounted future cash flows. The evaluation for long-lived assets is performed at the lowest level of identifiable cash flows, which is generally the individual store level. The significant assumptions used to determine estimated undiscounted cash flows include cash inflows and outflows directly resulting from the use of those assets in operations, including margin on net sales, payroll and related items, occupancy costs, insurance allocations, and other costs to operate a store. If the estimated future cash flows are less than the carrying value of the related asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the related asset or asset group to its estimated fair value, which may be based on an estimated future cash flow model, market valuation, or other valuation technique, as appropriate. We recognize an impairment loss if the amount of the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated (amortized) over the remaining estimated useful life of that asset. |
Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values.
|
We have not made any material changes in our impairment loss assessment methodology in the financial periods presented, other than to include operating lease right-of-use assets in our ongoing impairment assessment upon adoption of the new lease accounting standard in fiscal 2019.
We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. None of these estimates and assumptions are significantly sensitive, and a 10% change in any of these estimates would not have a material impact on our analysis. However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material. |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||||||||||||
Impairment of Goodwill and Other Indefinite-Lived Intangible Assets: | ||||||||||||||
Goodwill and other indefinite-lived intangible assets are evaluated for impairment annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
In accordance with the accounting standards, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill or an indefinite-lived intangible asset is impaired. If after such assessment an entity concludes that the asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the asset using a quantitative impairment test, and if impaired, the associated assets must be written down to fair value.
The quantitative impairment test for goodwill compares the fair value of a reporting unit with the carrying value of its net assets, including goodwill. If the fair value of the reporting unit is less than the carrying value of the reporting unit, an impairment charge would be recorded to the Company’s operations, for the amount in which the carrying amount exceeds the reporting unit’s fair value. We determine fair values for each reporting unit using the market approach, when available and appropriate, the income approach, or a combination of both. The income approach involves forecasting projected financial information (such as revenue growth rates, profit margins, tax rates, and capital expenditures) and selecting a discount rate that reflects the risk inherent in estimated future cash flows. Under the market approach, the fair value is based on observed market data. If multiple valuation methodologies are used, the results are weighted appropriately.
The quantitative impairment test for other indefinite-lived intangible assets involves comparing the carrying amount of the asset to the sum of the discounted cash flows expected to be generated by the asset. If the implied fair value of the indefinite-lived intangible asset is less than the carrying value, an impairment charge would be recorded to the Company’s operations.
|
Our impairment loss calculation contains uncertainties because they require management to make assumptions and to apply judgment to qualitative factors as well as estimate future cash flows and asset fair values, including forecasting projected financial information and selecting the discount rate that reflects the risk inherent in future cash flows.
|
The valuation approaches utilized to estimate fair value for the purposes of the impairment tests of goodwill and other indefinite-lived intangible assets require the use of assumptions and estimates, which involve a degree of uncertainty. If actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to non-cash impairment losses that could be material.
|
First
Quarter |
Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||||||||||||||||||||||||
2019 | (13 weeks) | (13 weeks) | (13 weeks) | (13 weeks) | (52 weeks) | |||||||||||||||||||||||||||
Net sales | $ | 1,822,220 | $ | 2,353,782 | $ | 1,984,144 | $ | 2,191,785 | $ | 8,351,931 | ||||||||||||||||||||||
Gross profit | 614,984 | 820,745 | 694,240 | 741,801 | 2,871,770 | |||||||||||||||||||||||||||
Operating income | 103,408 | 287,557 | 161,817 | 190,438 | 743,220 | |||||||||||||||||||||||||||
Net income | 76,832 | 219,210 | 122,133 | 144,179 | 562,354 | |||||||||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||
Basic | $ | 0.63 | $ | 1.82 | $ | 1.03 | $ | 1.22 | $ | 4.70 | ||||||||||||||||||||||
Diluted | $ | 0.63 | $ | 1.80 | $ | 1.02 | $ | 1.21 | $ | 4.66 | ||||||||||||||||||||||
Comparable store sales increase (a)
|
5.0 | % | 3.2 | % | 2.9 | % | 0.1 | % | 2.7 | % |
First
Quarter |
Second
Quarter |
Third
Quarter |
Fourth
Quarter |
Total | ||||||||||||||||||||||||||||
2018 | (13 weeks) | (13 weeks) | (13 weeks) | (13 weeks) | (52 weeks) | |||||||||||||||||||||||||||
Net sales | $ | 1,682,901 | $ | 2,213,249 | $ | 1,881,625 | $ | 2,133,271 | $ | 7,911,046 | ||||||||||||||||||||||
Gross profit | 563,649 | 769,414 | 653,132 | 716,333 | 2,702,528 | |||||||||||||||||||||||||||
Operating income | 94,749 | 273,458 | 153,148 | 180,382 | 701,737 | |||||||||||||||||||||||||||
Net income | 71,433 | 207,289 | 116,784 | 136,851 | 532,357 | |||||||||||||||||||||||||||
Net income per share: | ||||||||||||||||||||||||||||||||
Basic | $ | 0.57 | $ | 1.70 | $ | 0.96 | $ | 1.12 | $ | 4.34 | ||||||||||||||||||||||
Diluted | $ | 0.57 | $ | 1.69 | $ | 0.95 | $ | 1.11 | $ | 4.31 | ||||||||||||||||||||||
Comparable store sales increase (a)
|
3.7 | % | 5.6 | % | 5.1 | % | 5.7 | % | 5.1 | % |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Net sales | 100.00 | % | 100.00 | % | 100.00 | % | |||||||||||||||||||||||
Cost of merchandise sold (a)
|
65.62 | 65.84 | 65.66 | ||||||||||||||||||||||||||
Gross margin (a)
|
34.38 | 34.16 | 34.34 | ||||||||||||||||||||||||||
Selling, general and administrative expenses (a)
|
23.14 | 23.05 | 22.60 | ||||||||||||||||||||||||||
Depreciation and amortization | 2.34 | 2.24 | 2.28 | ||||||||||||||||||||||||||
Operating income | 8.90 | 8.87 | 9.46 | ||||||||||||||||||||||||||
Interest expense, net | 0.24 | 0.23 | 0.19 | ||||||||||||||||||||||||||
Income before income taxes | 8.66 | 8.64 | 9.27 | ||||||||||||||||||||||||||
Income tax expense | 1.93 | 1.91 | 3.45 | ||||||||||||||||||||||||||
Net income | 6.73 | % | 6.73 | % | 5.82 | % |
Fiscal Year | ||||||||||||||||||||
Store Count Information: | 2019 | 2018 | ||||||||||||||||||
Tractor Supply | ||||||||||||||||||||
Beginning of period | 1,765 | 1,685 | ||||||||||||||||||
New stores opened | 80 | 80 | ||||||||||||||||||
Stores closed | (1) | — | ||||||||||||||||||
End of period | 1,844 | 1,765 | ||||||||||||||||||
Petsense | ||||||||||||||||||||
Beginning of period | 175 | 168 | ||||||||||||||||||
New stores opened | 8 | 18 | ||||||||||||||||||
Stores closed | (3) | (11) | ||||||||||||||||||
End of period | 180 | 175 | ||||||||||||||||||
Consolidated end of period | 2,024 | 1,940 | ||||||||||||||||||
Stores relocated | 2 | 4 |
Percent of Net Sales | ||||||||||||||||||||
Fiscal Year | ||||||||||||||||||||
Product Category: | 2019 | 2018 | ||||||||||||||||||
Livestock and Pet | 47 | % | 47 | % | ||||||||||||||||
Hardware, Tools and Truck | 21 | 22 | ||||||||||||||||||
Seasonal, Gift and Toy Products | 20 | 19 | ||||||||||||||||||
Clothing and Footwear | 8 | 8 | ||||||||||||||||||
Agriculture | 4 | 4 | ||||||||||||||||||
Total | 100 | % | 100 | % |
Fiscal Year | ||||||||||||||||||||
Store Count Information: | 2018 | 2017 | ||||||||||||||||||
Tractor Supply | ||||||||||||||||||||
Beginning of period | 1,685 | 1,595 | ||||||||||||||||||
New stores opened | 80 | 101 | ||||||||||||||||||
Stores closed | — | (11) | ||||||||||||||||||
End of period | 1,765 | 1,685 | ||||||||||||||||||
Petsense | ||||||||||||||||||||
Beginning of period | 168 | 143 | ||||||||||||||||||
New stores opened | 18 | 25 | ||||||||||||||||||
Stores closed | (11) | — | ||||||||||||||||||
End of period | 175 | 168 | ||||||||||||||||||
Consolidated end of period | 1,940 | 1,853 | ||||||||||||||||||
Stores relocated | 4 | 3 |
Percent of Net Sales | ||||||||||||||||||||
Fiscal Year | ||||||||||||||||||||
Product Category: | 2018 | 2017 | ||||||||||||||||||
Livestock and Pet | 47 | % | 47 | % | ||||||||||||||||
Hardware, Tools and Truck | 22 | 22 | ||||||||||||||||||
Seasonal, Gift and Toy Products | 19 | 19 | ||||||||||||||||||
Clothing and Footwear | 8 | 8 | ||||||||||||||||||
Agriculture | 4 | 4 | ||||||||||||||||||
Total | 100 | % | 100 | % |
December 28, 2019 | December 29, 2018 | Variance | |||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 84.2 | $ | 86.3 | $ | (2.1) | |||||||||||
Inventories | 1,602.8 | 1,589.5 | 13.3 | ||||||||||||||
Prepaid expenses and other current assets | 100.9 | 114.5 | (13.6) | ||||||||||||||
Income taxes receivable | — | 4.1 | (4.1) | ||||||||||||||
Total current assets | 1,787.9 | 1,794.4 | (6.5) | ||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable | 643.0 | 620.0 | 23.0 | ||||||||||||||
Accrued employee compensation | 39.8 | 54.0 | (14.2) | ||||||||||||||
Other accrued expenses | 247.7 | 232.4 | 15.3 | ||||||||||||||
Current portion of long-term debt | 30.0 | 26.3 | 3.7 | ||||||||||||||
Current portion of finance lease obligations | 4.0 | 3.6 | 0.4 | ||||||||||||||
Current portion of operating lease obligations | 277.1 | — | 277.1 | ||||||||||||||
Income taxes payable | 6.0 | 1.8 | 4.2 | ||||||||||||||
Total current liabilities | 1,247.6 | 938.1 | 309.5 | ||||||||||||||
Working capital | $ | 540.3 | $ | 856.3 | $ | (316.0) |
December 28,
2019 |
December 29,
2018 |
|||||||||||||||||||
Senior Notes | $ | 150.0 | $ | 150.0 | ||||||||||||||||
Senior Credit Facility: | ||||||||||||||||||||
February 2016 Term Loan | 145.0 | 165.0 | ||||||||||||||||||
June 2017 Term Loan | 87.5 | 93.8 | ||||||||||||||||||
Revolving credit loans | 15.0 | — | ||||||||||||||||||
Total outstanding borrowings | 397.5 | 408.8 | ||||||||||||||||||
Less: unamortized debt issuance costs | (1.0) | (1.4) | ||||||||||||||||||
Total debt | 396.5 | 407.4 | ||||||||||||||||||
Less: current portion of long-term debt | (30.0) | (26.3) | ||||||||||||||||||
Long-term debt | $ | 366.5 | $ | 381.1 | ||||||||||||||||
Outstanding letters of credit | $ | 32.0 | $ | 33.5 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
(52 weeks) | (52 weeks) | (52 weeks) | |||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 811.7 | $ | 694.4 | $ | 631.5 | |||||||||||||||||||||||
Net cash used in investing activities | (215.0) | (276.3) | (238.0) | ||||||||||||||||||||||||||
Net cash used in financing activities | (598.8) | (440.9) | (338.3) | ||||||||||||||||||||||||||
Net (decrease) increase in cash and cash equivalents | $ | (2.1) | $ | (22.8) | $ | 55.2 |
Fiscal Year | Variance | ||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
(52 weeks) | (52 weeks) | ||||||||||||||||||||||
Net income | $ | 562.4 | $ | 532.4 | $ | 30.0 | |||||||||||||||||
Depreciation and amortization | 196.0 | 177.4 | 18.6 | ||||||||||||||||||||
Share-based compensation expense | 31.1 | 28.9 | 2.2 | ||||||||||||||||||||
Deferred income taxes | 6.8 | 11.9 | (5.1) | ||||||||||||||||||||
Inventories and accounts payable | 9.8 | (92.9) | 102.7 | ||||||||||||||||||||
Prepaid expenses and other current assets | 13.6 | (26.2) | 39.8 | ||||||||||||||||||||
Accrued expenses | (3.9) | 58.8 | (62.7) | ||||||||||||||||||||
Income taxes | 8.3 | (8.4) | 16.7 | ||||||||||||||||||||
Other, net | (12.4) | 12.5 | (24.9) | ||||||||||||||||||||
Net cash provided by operating activities | $ | 811.7 | $ | 694.4 | $ | 117.3 |
Fiscal Year | Variance | ||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
(52 weeks) | (52 weeks) | ||||||||||||||||||||||
Net income | $ | 532.4 | $ | 422.6 | $ | 109.8 | |||||||||||||||||
Depreciation and amortization | 177.4 | 165.8 | 11.6 | ||||||||||||||||||||
Share-based compensation expense | 28.9 | 29.2 | (0.3) | ||||||||||||||||||||
Deferred income taxes | 11.9 | 26.7 | (14.8) | ||||||||||||||||||||
Inventories and accounts payable | (92.9) | (26.5) | (66.4) | ||||||||||||||||||||
Prepaid expenses and other current assets | (26.2) | 2.3 | (28.5) | ||||||||||||||||||||
Accrued expenses | 58.8 | (3.9) | 62.7 | ||||||||||||||||||||
Income taxes | (8.4) | 4.2 | (12.6) | ||||||||||||||||||||
Other, net | 12.5 | 11.1 | 1.4 | ||||||||||||||||||||
Net cash provided by operating activities | $ | 694.4 | $ | 631.5 | $ | 62.9 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
(52 weeks) | (52 weeks) | (52 weeks) | |||||||||||||||||||||||||||
Information technology | $ | 89.3 | $ | 86.7 | $ | 82.1 | |||||||||||||||||||||||
New and relocated stores and stores not yet opened | 59.3 | 68.0 | 79.3 | ||||||||||||||||||||||||||
Existing stores | 45.5 | 41.5 | 43.0 | ||||||||||||||||||||||||||
Distribution center capacity and improvements | 19.7 | 82.0 | 45.8 | ||||||||||||||||||||||||||
Corporate and other | 3.7 | 0.3 | 0.2 | ||||||||||||||||||||||||||
Total capital expenditures | $ | 217.5 | $ | 278.5 | $ | 250.4 |
Fiscal Year | |||||||||||||||||||||||
2019 | 2018 | Variance | |||||||||||||||||||||
(52 weeks) | (52 weeks) | ||||||||||||||||||||||
Net borrowings and repayments under debt facilities | $ | (11.3) | $ | (18.8) | $ | 7.5 | |||||||||||||||||
Repurchase of common stock | (533.3) | (349.8) | (183.5) | ||||||||||||||||||||
Net proceeds from issuance of common stock | 116.0 | 79.6 | 36.4 | ||||||||||||||||||||
Cash dividends paid to stockholders | (162.7) | (147.1) | (15.6) | ||||||||||||||||||||
Other, net | (7.5) | (4.8) | (2.7) | ||||||||||||||||||||
Net cash used in financing activities | $ | (598.8) | $ | (440.9) | $ | (157.9) |
Fiscal Year | |||||||||||||||||||||||
2018 | 2017 | Variance | |||||||||||||||||||||
(52 weeks) | (52 weeks) | ||||||||||||||||||||||
Net borrowings and repayments under debt facilities | $ | (18.8) | $ | 152.5 | $ | (171.3) | |||||||||||||||||
Repurchase of common stock | (349.8) | (369.4) | 19.6 | ||||||||||||||||||||
Net proceeds from issuance of common stock | 79.6 | 16.3 | 63.3 | ||||||||||||||||||||
Cash dividends paid to stockholders | (147.1) | (133.8) | (13.3) | ||||||||||||||||||||
Other, net | (4.8) | (3.9) | (0.9) | ||||||||||||||||||||
Net cash used in financing activities | $ | (440.9) | $ | (338.3) | $ | (102.6) |
Payment Due by Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 2020 | 2021-2022 | 2023-2024 | Thereafter | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating leases (a) (b)
|
$ | 2,786,223 | $ | 369,079 | $ | 677,435 | $ | 570,038 | $ | 1,169,671 | ||||||||||||||||||||||||||||||||||||||||||||||
Finance leases (b)
|
44,638 | 5,663 | 10,324 | 6,833 | 21,818 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt (c)
|
461,162 | 55,421 | 218,957 | 11,100 | 175,684 | |||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 3,292,023 | $ | 430,163 | $ | 906,716 | $ | 587,971 | $ | 1,367,173 |
Page
|
|||||
/s/ Harry A. Lawton III
|
/s/ Kurt D. Barton
|
|||||||||||||||||||
Harry A. Lawton III
President and Chief Executive Officer
|
Kurt D. Barton
Executive Vice President -
Chief Financial Officer and Treasurer
|
|||||||||||||||||||
February 20, 2020 | February 20, 2020 |
Estimate of Workers' Compensation and General Liability Self-Insurance Reserves | |||||
Description of the Matter | At December 28, 2019, the Company’s net reserves for workers’ compensation and general liability self-insurance risks were $64.6 million. As discussed in Note 1 of the consolidated financial statements, the Company retains a significant portion of risk for its workers’ compensation and general liability exposures. Accordingly, provisions are recorded based upon periodic estimates of such losses, as determined by management. The future claim costs for the workers’ compensation and general liability exposures are estimated using actuarial methods that consider assumptions for a number of factors including, but not limited to, historical claims experience, loss development factors, and severity factors. | ||||
Auditing management’s estimate of the recorded workers’ compensation and general liability self-insurance reserves was complex and judgmental due to the significant assumptions and judgments required by management in projecting the exposure on incurred claims that remain unresolved, including those which have not yet been reported to the Company. | |||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for self-insurance exposures. For example, we tested controls over the appropriateness of management’s review of the significant assumptions described above, including the completeness and accuracy of the underlying data, as well as management’s review of the actuarial calculations. | ||||
To test the Company’s estimate of the self-insurance reserves, we performed audit procedures that included, among others, assessing the actuarial valuation methodologies utilized by management, testing the significant assumptions described above, testing the related underlying data used by the Company in its evaluation for completeness and accuracy, and testing the mathematical accuracy of the calculations. Our audit procedures also included, among others, comparing the significant assumptions used by management to industry accepted actuarial assumptions and reassessing the accuracy of management’s historical estimates utilized in prior period evaluations. We involved our actuarial valuation specialists to assist in assessing the valuation methodologies and significant assumptions noted above and to develop an independent range of estimates for the insurance reserves which were then compared to management’s estimates. | |||||
Valuation of Goodwill | |||||
Description of the Matter | At December 28, 2019, the Company had $93.2 million in goodwill, which was assigned at the time of the respective acquisitions. As discussed in Note 1 and Note 3 of the consolidated financial statements, goodwill is qualitatively or quantitatively tested for impairment at the reporting unit level at least annually, during the fourth quarter, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The quantitative evaluation involves the comparison of the carrying value of the reporting unit to its fair value, as determined by management. | ||||
Auditing management’s annual goodwill impairment analysis was complex due to the significant estimation required by management in determining the fair value of a reporting unit. In particular, the fair value estimates are sensitive to significant assumptions such as projected financial information (revenue growth rates, profit margins, tax rates, and capital expenditures) and the discount rate, which are affected by expectations about future market or economic conditions. | |||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above, as well as the review of the fair value methodologies utilized. For example, we tested controls over management’s identification of reporting units and review of significant assumptions utilized within the fair value model, including the development of the projected financial information and determination of the discount rate. | ||||
To test the estimated fair value of a reporting unit, we performed audit procedures that included, among others, involvement of our valuation specialists to assess fair value methodologies, including the significant assumptions discussed above. Specifically, we compared significant assumptions used by management to current industry and economic trends and changes to the Company’s business model. As part of this assessment, we also compared the discount rate to rates for hypothetical market participants based on the capital structure of the Company and its related peer group. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of a reporting unit that would result from changes in the assumptions, as well as corroborated the estimated fair value by comparing it with peer company trading and transaction multiples. In addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. | |||||
Adoption of New Lease Accounting Standard | |||||
Description of the Matter | As discussed above and in Note 1, Note 6, and Note 14 to the consolidated financial statements, the Company adopted Topic 842 in the first quarter of fiscal 2019, which resulted in the recognition of operating lease right-of-use assets and liabilities of approximately $2.08 billion. As part of the adoption, the Company was required to make certain elections and develop assumptions in order to appropriately recognize right-of-use assets and liabilities. In particular, as most of the Company’s leases do not provide a determinable implicit rate, the Company developed certain significant assumptions to estimate the incremental borrowing rate (IBR), which was used to calculate the operating lease right-of-use assets and liabilities upon adoption. | ||||
Auditing the Company’s adoption of Topic 842 was complex as certain aspects of adopting Topic 842 required management to exercise judgment in applying the new standard to its portfolio of lease contracts. In particular, the estimate of the IBR is sensitive to significant assumptions such as determination of a synthetic credit rating and selection of associated benchmark yield curve, reflective of a collateralized obligation. | |||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for the adoption of Topic 842. For example, we tested controls over management’s review of the IBR and significant assumptions noted above. | ||||
To test the Company’s adoption of Topic 842, we performed audit procedures that included, among others, involving our valuation specialists to assess management’s significant assumptions and methodology for determining their synthetic credit rating, assessing the selection of a benchmark yield curve, and evaluating methodologies used to reflect a collateralized borrowing. We also assessed management’s development of IBR ranges based on varying lease terms at the date of adoption, including comparing the Company’s IBRs to ranges developed independently by our valuation specialists, as well as performing tests of the IBR application to remaining lease payments, with respect to the remaining term of the lease. |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
(52 weeks) | (52 weeks) | (52 weeks) | |||||||||||||||||||||||||||
Net sales | $ | 8,351,931 | $ | 7,911,046 | $ | 7,256,382 | |||||||||||||||||||||||
Cost of merchandise sold | 5,480,161 | 5,208,518 | 4,764,417 | ||||||||||||||||||||||||||
Gross profit | 2,871,770 | 2,702,528 | 2,491,965 | ||||||||||||||||||||||||||
Selling, general and administrative expenses | 1,932,572 | 1,823,440 | 1,639,749 | ||||||||||||||||||||||||||
Depreciation and amortization | 195,978 | 177,351 | 165,834 | ||||||||||||||||||||||||||
Operating income | 743,220 | 701,737 | 686,382 | ||||||||||||||||||||||||||
Interest expense, net | 19,843 | 18,352 | 13,859 | ||||||||||||||||||||||||||
Income before income taxes | 723,377 | 683,385 | 672,523 | ||||||||||||||||||||||||||
Income tax expense | 161,023 | 151,028 | 249,924 | ||||||||||||||||||||||||||
Net income | $ | 562,354 | $ | 532,357 | $ | 422,599 | |||||||||||||||||||||||
Net income per share – basic | $ | 4.70 | $ | 4.34 | $ | 3.31 | |||||||||||||||||||||||
Net income per share – diluted | $ | 4.66 | $ | 4.31 | $ | 3.30 | |||||||||||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||||||||
Basic | 119,727 | 122,651 | 127,588 | ||||||||||||||||||||||||||
Diluted | 120,743 | 123,471 | 128,204 | ||||||||||||||||||||||||||
Dividends declared per common share outstanding | $ | 1.36 | $ | 1.20 | $ | 1.05 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
(52 weeks) | (52 weeks) | (52 weeks) | |||||||||||||||||||||||||||
Net income | $ | 562,354 | $ | 532,357 | $ | 422,599 | |||||||||||||||||||||||
Other comprehensive (loss)/income: | |||||||||||||||||||||||||||||
Change in fair value of interest rate swaps, net of taxes | (4,332) | 456 | 1,371 | ||||||||||||||||||||||||||
Reclassification of stranded tax effects (ASU 2018-02) | — | — | 595 | ||||||||||||||||||||||||||
Total other comprehensive (loss)/income | (4,332) | 456 | 1,966 | ||||||||||||||||||||||||||
Total comprehensive income | $ | 558,022 | $ | 532,813 | $ | 424,565 |
December 28, 2019 | December 29, 2018 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 84,241 | $ | 86,299 | |||||||
Inventories | 1,602,781 | 1,589,542 | |||||||||
Prepaid expenses and other current assets | 100,865 | 114,447 | |||||||||
Income taxes receivable | — | 4,111 | |||||||||
Total current assets | 1,787,887 | 1,794,399 | |||||||||
Property and equipment, net | 1,163,956 | 1,134,464 | |||||||||
Operating lease right-of-use assets | 2,188,802 | — | |||||||||
Goodwill and other intangible assets | 124,492 | 124,492 | |||||||||
Deferred income taxes | — | 6,607 | |||||||||
Other assets | 24,131 | 25,300 | |||||||||
Total assets | $ | 5,289,268 | $ | 3,085,262 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 643,036 | $ | 619,981 | |||||||
Accrued employee compensation | 39,755 | 54,046 | |||||||||
Other accrued expenses | 247,690 | 232,416 | |||||||||
Current portion of long-term debt | 30,000 | 26,250 | |||||||||
Current portion of finance lease liabilities | 4,036 | 3,646 | |||||||||
Current portion of operating lease liabilities | 277,099 | — | |||||||||
Income taxes payable | 5,984 | 1,768 | |||||||||
Total current liabilities | 1,247,600 | 938,107 | |||||||||
Long-term debt | 366,480 | 381,100 | |||||||||
Finance lease liabilities, less current portion | 30,389 | 29,270 | |||||||||
Operating lease liabilities, less current portion | 2,001,162 | — | |||||||||
Deferred income taxes | 153 | — | |||||||||
Deferred rent | — | 107,038 | |||||||||
Other long-term liabilities | 76,361 | 67,927 | |||||||||
Total liabilities | 3,722,145 | 1,523,442 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock | — | — | |||||||||
Common stock
|
1,389 | 1,375 | |||||||||
Additional paid-in capital | 966,698 | 823,413 | |||||||||
Treasury stock | (3,013,996) | (2,480,677) | |||||||||
Accumulated other comprehensive income | 199 | 3,814 | |||||||||
Retained earnings | 3,612,833 | 3,213,895 | |||||||||
Total stockholders’ equity | 1,567,123 | 1,561,820 | |||||||||
Total liabilities and stockholders’ equity | $ | 5,289,268 | $ | 3,085,262 |
Common Stock |
Additional
Paid-in
Capital
|
Treasury
Stock
|
Accum. Other Comp. Income |
Retained
Earnings
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||||||||||||||||||||
Shares | Dollars | ||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity at
December 31, 2016 |
130,795 | $ | 1,360 | $ | 671,515 | $ | (1,761,498) | $ | 1,392 | $ | 2,540,449 | $ | 1,453,218 | ||||||||||||||||||||||||||||||||||
Common stock issuance under stock award plans & ESPP | 432 | 3 | 16,327 | 16,330 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | 29,202 | 29,202 | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares to satisfy tax obligations | (816) | (816) | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | (5,924) | (369,403) | (369,403) | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends paid to stockholders | (133,828) | (133,828) | |||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swaps, net of taxes | 1,371 | 1,371 | |||||||||||||||||||||||||||||||||||||||||||||
Net income | 422,599 | 422,599 | |||||||||||||||||||||||||||||||||||||||||||||
Reclassification of stranded tax effects as a result of ASU 2018-02 adoption | 595 | (595) | — | ||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity at
December 30, 2017 |
125,303 | 1,363 | 716,228 | (2,130,901) | 3,358 | 2,828,625 | 1,418,673 | ||||||||||||||||||||||||||||||||||||||||
Common stock issuance under stock award plans & ESPP | 1,512 | 12 | 79,631 | 79,643 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | 28,921 | 28,921 | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares to satisfy tax obligations | (1,367) | (1,367) | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | (4,987) | (349,776) | (349,776) | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends paid to stockholders | (147,087) | (147,087) | |||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swaps, net of taxes | 456 | 456 | |||||||||||||||||||||||||||||||||||||||||||||
Net income | 532,357 | 532,357 | |||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity at
December 29, 2018 |
121,828 | 1,375 | 823,413 | (2,480,677) | 3,814 | 3,213,895 | 1,561,820 | ||||||||||||||||||||||||||||||||||||||||
Common stock issuance under stock award plans & ESPP | 1,721 | 14 | 115,967 | 115,981 | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | 31,136 | 31,136 | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares to satisfy tax obligations | (3,818) | (3,818) | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | (5,384) | (533,319) | (533,319) | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends paid to stockholders | (162,699) | (162,699) | |||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of interest rate swaps, net of taxes | (4,332) | (4,332) | |||||||||||||||||||||||||||||||||||||||||||||
Net income | 562,354 | 562,354 | |||||||||||||||||||||||||||||||||||||||||||||
Cumulative adjustment as a result of ASU 2017-12 adoption | 717 | (717) | — | ||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity at
December 28, 2019 |
118,165 | $ | 1,389 | $ | 966,698 | $ | (3,013,996) | $ | 199 | $ | 3,612,833 | $ | 1,567,123 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
(52 weeks) | (52 weeks) | (52 weeks) | |||||||||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||||||||
Net income | $ | 562,354 | $ | 532,357 | $ | 422,599 | |||||||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||
Depreciation and amortization | 195,978 | 177,351 | 165,834 | ||||||||||||||||||||||||||
Gain on disposition of property and equipment | (297) | (567) | 460 | ||||||||||||||||||||||||||
Share-based compensation expense | 31,136 | 28,921 | 29,202 | ||||||||||||||||||||||||||
Deferred income taxes | 6,760 | 11,887 | 26,724 | ||||||||||||||||||||||||||
Change in assets and liabilities: | |||||||||||||||||||||||||||||
Inventories | (13,239) | (136,334) | (83,552) | ||||||||||||||||||||||||||
Prepaid expenses and other current assets | 13,582 | (26,195) | 2,305 | ||||||||||||||||||||||||||
Accounts payable | 23,055 | 43,413 | 57,046 | ||||||||||||||||||||||||||
Accrued employee compensation | (14,291) | 22,373 | 6,427 | ||||||||||||||||||||||||||
Other accrued expenses | 10,351 | 36,406 | (10,338) | ||||||||||||||||||||||||||
Income taxes | 8,327 | (8,355) | 4,210 | ||||||||||||||||||||||||||
Other | (12,000) | 13,137 | 10,533 | ||||||||||||||||||||||||||
Net cash provided by operating activities | 811,716 | 694,394 | 631,450 | ||||||||||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||||||||
Capital expenditures | (217,450) | (278,530) | (250,401) | ||||||||||||||||||||||||||
Proceeds from sale of property and equipment | 2,489 | 2,216 | 11,220 | ||||||||||||||||||||||||||
Acquisition of Petsense, net of cash acquired | — | — | 1,225 | ||||||||||||||||||||||||||
Net cash used in investing activities | (214,961) | (276,314) | (237,956) | ||||||||||||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||||||||
Borrowings under debt facilities | 1,002,000 | 1,193,500 | 1,180,000 | ||||||||||||||||||||||||||
Repayments under debt facilities | (1,013,250) | (1,212,250) | (1,027,500) | ||||||||||||||||||||||||||
Debt issuance costs | — | (346) | (599) | ||||||||||||||||||||||||||
Principal payments under finance lease liabilities | (3,708) | (3,246) | (2,446) | ||||||||||||||||||||||||||
Repurchase of shares to satisfy tax obligations | (3,818) | (1,367) | (816) | ||||||||||||||||||||||||||
Repurchase of common stock | (533,319) | (349,776) | (369,403) | ||||||||||||||||||||||||||
Net proceeds from issuance of common stock | 115,981 | 79,643 | 16,330 | ||||||||||||||||||||||||||
Cash dividends paid to stockholders | (162,699) | (147,087) | (133,828) | ||||||||||||||||||||||||||
Net cash used in financing activities | (598,813) | (440,929) | (338,262) | ||||||||||||||||||||||||||
Net change in cash and cash equivalents | (2,058) | (22,849) | 55,232 | ||||||||||||||||||||||||||
Cash and cash equivalents at beginning of year | 86,299 | 109,148 | 53,916 | ||||||||||||||||||||||||||
Cash and cash equivalents at end of year | $ | 84,241 | $ | 86,299 | $ | 109,148 | |||||||||||||||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||||||||||||||||
Cash paid during the year for: | |||||||||||||||||||||||||||||
Interest | $ | 19,146 | $ | 18,069 | $ | 10,481 | |||||||||||||||||||||||
Income taxes | 144,377 | 146,918 | 219,081 | ||||||||||||||||||||||||||
Supplemental disclosures of non-cash activities: | |||||||||||||||||||||||||||||
Non-cash accruals for construction in progress | $ | 7,924 | $ | 3,001 | $ | 8,647 | |||||||||||||||||||||||
Operating lease assets and liabilities recognized upon adoption of ASC 842 | 2,084,880 | — | — | ||||||||||||||||||||||||||
Increase of operating lease assets and liabilities from new or modified leases | 365,233 | — | — | ||||||||||||||||||||||||||
Increase of finance lease assets and liabilities from new or modified leases | 5,217 | — | 11,395 |
Estimated Useful Lives |
December 28,
2019 |
December 29,
2018 |
|||||||||||||||
Land | $ | 100,343 | $ | 100,767 | |||||||||||||
Buildings and improvements | 1 – 35 years | 1,242,544 | 1,110,767 | ||||||||||||||
Furniture, fixtures and equipment | 5 – 10 years | 729,272 | 645,702 | ||||||||||||||
Computer software and hardware | 2 – 7 years | 440,222 | 349,500 | ||||||||||||||
Construction in progress | 39,110 | 130,812 | |||||||||||||||
Property and equipment, gross | 2,551,491 | 2,337,548 | |||||||||||||||
Accumulated depreciation and amortization | (1,387,535) | (1,203,084) | |||||||||||||||
Property and equipment, net | $ | 1,163,956 | $ | 1,134,464 |
Bond Term |
Bond Authorized Amount
(in millions)
|
Amount Drawn
(in millions)
|
||||||||||||||||||
Franklin, Kentucky Distribution Center | 30 years | $54.0 | $51.8 | |||||||||||||||||
Macon, Georgia Distribution Center | 15 years | $58.0 | $49.9 | |||||||||||||||||
Brentwood, Tennessee Store Support Center | 10 years | $78.0 | $75.3 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Expected price volatility | 26.4 - 27.6% | 26.4 - 27.0% | 25.1 - 26.0% | ||||||||||||||||||||||||||
Risk-free interest rate | 1.6 - 2.5% | 2.5 - 3.0% | 1.7 - 1.9% | ||||||||||||||||||||||||||
Weighted average expected term (in years) | 4.5 | 4.5 | 4.4 | ||||||||||||||||||||||||||
Forfeiture rate | 7.3 | % | 7.3 | % | 7.2 | % | |||||||||||||||||||||||
Dividend yield | 1.4 | % | 1.6 | % | 1.3 | % |
Stock Option Activity | Options |
Weighted
Average Exercise
Price
|
Weighted Average Fair Value |
Weighted Average
Remaining
Contractual Term
|
Aggregate Intrinsic Value
(in thousands)
|
|||||||||||||||||||||||||||
Outstanding at December 29, 2018 | 4,053,386 | $ | 72.49 | 7.0 | $ | 46,472 | ||||||||||||||||||||||||||
Granted | 395,701 | 89.78 | $ | 20.80 | ||||||||||||||||||||||||||||
Exercised | (1,556,917) | 71.52 | ||||||||||||||||||||||||||||||
Canceled | (74,651) | 76.56 | ||||||||||||||||||||||||||||||
Outstanding at December 28, 2019 | 2,817,519 | $ | 75.34 | 6.8 | $ | 47,834 | ||||||||||||||||||||||||||
Exercisable at December 28, 2019 | 1,629,075 | $ | 74.81 | 5.9 | $ | 28,502 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Total fair value of stock options vested | $ | 16,060 | $ | 18,247 | $ | 15,996 | |||||||||||||||||||||||
Total intrinsic value of stock options exercised | $ | 45,101 | $ | 43,476 | $ | 9,237 |
Restricted Stock Unit Activity | Restricted Stock Units | Weighted Average Grant Date Fair Value | ||||||||||||
Restricted at December 29, 2018 | 438,070 | $ | 64.09 | |||||||||||
Granted | 255,500 | 88.02 | ||||||||||||
Vested | (116,118) | 71.49 | ||||||||||||
Forfeited | (34,046) | 73.28 | ||||||||||||
Restricted at December 28, 2019 | 543,406 | $ | 73.55 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Total grant date fair value of restricted stock units vested and issued | $ | 8,301 | $ | 5,325 | $ | 3,301 | |||||||||||||||||||||||
Total intrinsic value of restricted stock units vested and issued | $ | 10,623 | $ | 5,364 | $ | 3,465 |
Performance-Based Restricted Share Unit Activity | Performance-Based Restricted Share Units | Weighted Average Grant Date Fair Value | ||||||||||||
Restricted at December 29, 2018 | 41,310 | $ | 63.90 | |||||||||||
Granted (a)
|
58,115 | 85.51 | ||||||||||||
Performance adjustment | 29,001 | 63.90 | ||||||||||||
Vested | (28,792) | 70.68 | ||||||||||||
Forfeited | (6,173) | 85.04 | ||||||||||||
Restricted at December 28, 2019 | 93,461 | $ | 75.97 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Total grant date fair value of performance-based restricted share units vested and issued | $ | 2,035 | $ | — | $ | — | |||||||||||||||||||||||
Total intrinsic value of performance-based restricted share units vested and issued | $ | 2,666 | $ | — | $ | — |
December 28,
2019 |
December 29,
2018 |
|||||||||||||||||||
Senior Notes | $ | 150.0 | $ | 150.0 | ||||||||||||||||
Senior Credit Facility: | ||||||||||||||||||||
February 2016 Term Loan | 145.0 | 165.0 | ||||||||||||||||||
June 2017 Term Loan | 87.5 | 93.8 | ||||||||||||||||||
Revolving credit loans | 15.0 | — | ||||||||||||||||||
Total outstanding borrowings | 397.5 | 408.8 | ||||||||||||||||||
Less: unamortized debt issuance costs | (1.0) | (1.4) | ||||||||||||||||||
Total debt | 396.5 | 407.4 | ||||||||||||||||||
Less: current portion of long-term debt | (30.0) | (26.3) | ||||||||||||||||||
Long-term debt | $ | 366.5 | $ | 381.1 | ||||||||||||||||
Outstanding letters of credit | $ | 32.0 | $ | 33.5 |
Derivatives Designated
as Cash Flow Hedges |
Balance Sheet Location | December 28, 2019 | December 29, 2018 | |||||||||||||||||
Interest rate swaps (short-term portion) | Other current assets | $ | 558 | $ | 2,601 | |||||||||||||||
Interest rate swaps (long-term portion) | Other assets | 91 | 3,222 | |||||||||||||||||
Total derivative assets | $ | 649 | $ | 5,823 | ||||||||||||||||
Interest rate swaps (short-term portion) | Other accrued expenses | $ | 90 | $ | — | |||||||||||||||
Interest rate swaps (long-term portion) | Other long-term liabilities | 292 | — | |||||||||||||||||
Total derivative liabilities | $ | 382 | $ | — |
Fiscal Year | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Beginning fiscal year AOCI balance | $ | 3,814 | $ | 3,358 | ||||||||||||||||
Current fiscal year (loss)/gain recognized in OCI | (4,332) | 456 | ||||||||||||||||||
Cumulative adjustment as a result of ASU 2017-12 adoption | 717 | — | ||||||||||||||||||
Other comprehensive (loss)/gain, net of tax | (3,615) | 456 | ||||||||||||||||||
Ending fiscal year AOCI balance | $ | 199 | $ | 3,814 |
Fiscal Year | ||||||||||||||||||||||||||||||||||||||
Financial Statement Location | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||
Amount of (losses)/gains recognized in OCI
during the period |
Other comprehensive (loss)/income | $ | (5,556) | $ | 612 | $ | 2,240 |
Fiscal Year | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Income tax (benefit)/expense of interest rate swaps on AOCI | $ | (1,224) | $ | 156 |
Fiscal Year Ended | ||||||||||||||
Statement of Income Location | December 28, 2019 | |||||||||||||
Finance lease cost: | ||||||||||||||
Amortization of lease assets | Depreciation and amortization | $ | 4,281 | |||||||||||
Interest on lease liabilities | Interest expense, net | 1,629 | ||||||||||||
Operating lease cost | Selling, general and administrative expenses | 353,961 | ||||||||||||
Variable lease cost | Selling, general and administrative expenses | 73,768 | ||||||||||||
Net lease cost | $ | 433,639 |
Operating Leases (a)
|
Finance Leases | Total | ||||||||||||||||||
2020 | $ | 369,079 | $ | 5,663 | $ | 374,742 | ||||||||||||||
2021 | 350,527 | 5,723 | 356,250 | |||||||||||||||||
2022 | 326,908 | 4,601 | 331,509 | |||||||||||||||||
2023 | 301,783 | 3,409 | 305,192 | |||||||||||||||||
2024 | 268,255 | 3,424 | 271,679 | |||||||||||||||||
After 2024 | 1,169,671 | 21,818 | 1,191,489 | |||||||||||||||||
Total lease payments | 2,786,223 | 44,638 | 2,830,861 | |||||||||||||||||
Less: Interest | (507,962) | (10,213) | (518,175) | |||||||||||||||||
Present value of lease liabilities | $ | 2,278,261 | $ | 34,425 | $ | 2,312,686 |
December 28, 2019 | ||||||||
Weighted-average remaining lease term (years): | ||||||||
Finance leases | 10.0 | |||||||
Operating leases | 9.0 | |||||||
Weighted-average discount rate: | ||||||||
Finance leases | 5.1 | % | ||||||
Operating leases | 4.3 | % |
Capital
Leases
|
Operating
Leases
|
|||||||||||||
2019 | $ | 5,215 | $ | 344,836 | ||||||||||
2020 | 5,234 | 328,589 | ||||||||||||
2021 | 5,294 | 306,572 | ||||||||||||
2022 | 4,172 | 284,327 | ||||||||||||
2023 | 2,980 | 260,518 | ||||||||||||
Thereafter | 20,169 | 1,175,972 | ||||||||||||
Total minimum lease payments | 43,064 | $ | 2,700,814 | |||||||||||
Amount representing interest | (10,148) | |||||||||||||
Present value of minimum lease payments | 32,916 | |||||||||||||
Less: current portion | (3,646) | |||||||||||||
Long-term capital lease obligations | $ | 29,270 |
Date Declared |
Dividend Amount
Per Share of Common Stock |
Record Date | Date Paid | |||||||||||||||||
November 6, 2019 | $0.35 | November 25, 2019 | December 10, 2019 | |||||||||||||||||
August 7, 2019 | $0.35 | August 26, 2019 | September 10, 2019 | |||||||||||||||||
May 8, 2019 | $0.35 | May 28, 2019 | June 11, 2019 | |||||||||||||||||
February 6, 2019 | $0.31 | February 25, 2019 | March 12, 2019 | |||||||||||||||||
November 7, 2018 | $0.31 | November 26, 2018 | December 11, 2018 | |||||||||||||||||
August 8, 2018 | $0.31 | August 27, 2018 | September 11, 2018 | |||||||||||||||||
May 9, 2018 | $0.31 | May 29, 2018 | June 12, 2018 | |||||||||||||||||
February 7, 2018 | $0.27 | February 26, 2018 | March 13, 2018 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Total number of shares repurchased | 5,384 | 4,987 | 5,924 | ||||||||||||||||||||||||||
Average price paid per share | $ | 99.05 | $ | 70.14 | $ | 62.35 | |||||||||||||||||||||||
Total cash paid for share repurchases | $ | 533,319 | $ | 349,776 | $ | 369,403 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | |||||||||||||||||||||||||||||
Net
Income
|
Shares |
Per Share
Amount
|
|||||||||||||||||||||||||||
Basic net income per share: | $ | 562,354 | 119,727 | $ | 4.70 | ||||||||||||||||||||||||
Dilutive effect of share-based awards | — | 1,016 | (0.04) | ||||||||||||||||||||||||||
Diluted net income per share: | $ | 562,354 | 120,743 | $ | 4.66 |
Fiscal Year | |||||||||||||||||||||||||||||
2018 | |||||||||||||||||||||||||||||
Net
Income
|
Shares |
Per Share
Amount
|
|||||||||||||||||||||||||||
Basic net income per share: | $ | 532,357 | 122,651 | $ | 4.34 | ||||||||||||||||||||||||
Dilutive effect of share-based awards | — | 820 | (0.03) | ||||||||||||||||||||||||||
Diluted net income per share: | $ | 532,357 | 123,471 | $ | 4.31 |
Fiscal Year | |||||||||||||||||||||||||||||
2017 | |||||||||||||||||||||||||||||
Net
Income
|
Shares |
Per Share
Amount
|
|||||||||||||||||||||||||||
Basic net income per share: | $ | 422,599 | 127,588 | $ | 3.31 | ||||||||||||||||||||||||
Dilutive effect of share-based awards | — | 616 | (0.01) | ||||||||||||||||||||||||||
Diluted net income per share: | $ | 422,599 | 128,204 | $ | 3.30 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Current tax expense: | |||||||||||||||||||||||||||||
Federal | $ | 128,490 | $ | 123,388 | $ | 207,986 | |||||||||||||||||||||||
State | 25,091 | 15,597 | 14,516 | ||||||||||||||||||||||||||
Total current | 153,581 | 138,985 | 222,502 | ||||||||||||||||||||||||||
Deferred tax expense (benefit): | |||||||||||||||||||||||||||||
Federal | 11,770 | 9,650 | 22,469 | ||||||||||||||||||||||||||
State | (4,328) | 2,393 | 4,953 | ||||||||||||||||||||||||||
Total deferred | 7,442 | 12,043 | 27,422 | ||||||||||||||||||||||||||
Total provision | $ | 161,023 | $ | 151,028 | $ | 249,924 |
December 28, 2019 | December 29, 2018 | ||||||||||
Tax assets: | |||||||||||
Inventory valuation | $ | 16,676 | $ | 14,417 | |||||||
Accrued employee benefits costs | 12,002 | 15,333 | |||||||||
Accrued sales tax audit reserve | 4,173 | 3,419 | |||||||||
Rent expenses in excess of cash payments required | 30,975 | 25,628 | |||||||||
Deferred compensation | 14,836 | 17,598 | |||||||||
Workers’ compensation insurance | 10,154 | 9,900 | |||||||||
General liability insurance | 6,025 | 5,410 | |||||||||
Lease exit obligations | 2,087 | 2,010 | |||||||||
Income tax credits | 6,377 | 5,773 | |||||||||
Other | 5,768 | 9,160 | |||||||||
109,073 | 108,648 | ||||||||||
Tax liabilities: | |||||||||||
Inventory basis difference | (4,667) | (4,590) | |||||||||
Prepaid expenses | (2,024) | (1,912) | |||||||||
Depreciation | (93,919) | (87,417) | |||||||||
Amortization | (8,230) | (6,039) | |||||||||
Other | (386) | (2,083) | |||||||||
(109,226) | (102,041) | ||||||||||
Net deferred tax (liability)/asset | $ | (153) | $ | 6,607 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Tax provision at statutory rate | $ | 151,909 | $ | 143,511 | $ | 235,383 | |||||||||||||||||||||||
Tax effect of: | |||||||||||||||||||||||||||||
State income taxes, net of federal tax benefits | 19,722 | 18,019 | 14,320 | ||||||||||||||||||||||||||
Section 162(m) limitation | 2,572 | 2,581 | 1,223 | ||||||||||||||||||||||||||
Tax credits, net of federal tax benefits | (7,768) | (7,140) | (5,060) | ||||||||||||||||||||||||||
Share-based compensation programs | (4,484) | (4,522) | (1,040) | ||||||||||||||||||||||||||
Enactment of tax legislation | — | — | 4,856 | ||||||||||||||||||||||||||
Other | (928) | (1,421) | 242 | ||||||||||||||||||||||||||
Total income tax expense | $ | 161,023 | $ | 151,028 | $ | 249,924 |
Fiscal Year | |||||||||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Balance at beginning of year | $ | 2,451 | $ | 1,993 | $ | 1,579 | |||||||||||||||||||||||
Additions based on tax positions related to the current year | 650 | 621 | 527 | ||||||||||||||||||||||||||
Additions for tax positions of prior years | 59 | 257 | 14 | ||||||||||||||||||||||||||
Reductions for tax positions of prior years | (400) | (420) | (127) | ||||||||||||||||||||||||||
Balance at end of year | $ | 2,760 | $ | 2,451 | $ | 1,993 |
Percent of Net Sales | |||||||||||||||||||||||||||||
Fiscal Year | |||||||||||||||||||||||||||||
Product Category: | 2019 | 2018 | 2017 | ||||||||||||||||||||||||||
Livestock and Pet | 47 | % | 47 | % | 47 | % | |||||||||||||||||||||||
Hardware, Tools and Truck | 21 | 22 | 22 | ||||||||||||||||||||||||||
Seasonal, Gift and Toy Products | 20 | 19 | 19 | ||||||||||||||||||||||||||
Clothing and Footwear | 8 | 8 | 8 | ||||||||||||||||||||||||||
Agriculture | 4 | 4 | 4 | ||||||||||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % |
Plan Category |
Number of Securities to be
Issued Upon Exercise of
Outstanding Options, Warrants, and Rights
|
Weighted Average
Exercise Price of
Outstanding Options, Warrants and Rights
|
Number of Securities
Remaining Available
for Future Issuance
|
|||||||||||||||||
Equity compensation plans approved by security holders: | ||||||||||||||||||||
Stock Incentive Plans | 3,454,386 |
(a)
|
$ | 75.34 |
(b)
|
11,762,982 | ||||||||||||||
Employee Stock Purchase Plan | — | — | 11,871,696 | |||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
Total | 3,454,386 | $ | 75.34 | 23,634,678 |
TRACTOR SUPPLY COMPANY | ||||||||||||||
Date: | February 20, 2020 | By: |
/s/ Kurt D. Barton
Executive Vice President – Chief Financial Officer and Treasurer
|
Signature
|
Title | Date | |||||||||
/s/ Kurt D. Barton
Kurt D. Barton
|
Executive Vice President –
Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)
|
February 20, 2020 | |||||||||
/s/ Harry A. Lawton III
Harry A. Lawton III
|
President, Chief Executive Officer, and Director
(Principal Executive Officer) |
February 20, 2020 | |||||||||
/s/ Cynthia T. Jamison
Cynthia T. Jamison
|
Chairman of the Board
|
February 20, 2020 | |||||||||
/s/ Ricardo Cardenas
Ricardo Cardenas
|
Director | February 20, 2020 | |||||||||
/s/ Denise L. Jackson
Denise L. Jackson
|
Director | February 20, 2020 | |||||||||
/s/ Thomas A. Kingsbury
Thomas A. Kingsbury
|
Director | February 20, 2020 | |||||||||
/s/ Ramkumar Krishnan
Ramkumar Krishnan
|
Director | February 20, 2020 | |||||||||
/s/ George MacKenzie
George MacKenzie
|
Director | February 20, 2020 | |||||||||
/s/ Edna K. Morris
Edna K. Morris
|
Director | February 20, 2020 | |||||||||
/s/ Gregory A. Sandfort
Gregory A. Sandfort
|
Director
|
February 20, 2020 | |||||||||
/s/ Mark J. Weikel
Mark J. Weikel
|
Director | February 20, 2020 |
3.1 | |||||
3.2 | |||||
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 in paper form with the Commission on January 31, 1994, and incorporated herein by reference). | ||||
4.2* | |||||
10.1 | 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 in paper form with the Commission on December 17, 1993, and incorporated herein by reference). | ||||
10.2 | 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 in paper form with the Commission on December 17, 1993, and incorporated herein by reference).+ | ||||
10.3 | |||||
10.4 | |||||
10.5 | |||||
10.6 | |||||
10.7 | |||||
10.8 | |||||
10.9 | |||||
10.10 | |||||
10.11 | |||||
10.12 | |||||
10.13 | |||||
10.14 | |||||
10.15 | |||||
10.16 | |||||
10.17 | |||||
10.18 | |||||
10.19 | |||||
10.20 | |||||
10.21 | |||||
10.22 | |||||
10.23 | |||||
10.24 | |||||
10.25 | |||||
10.26 | |||||
10.27 | |||||
10.28 | |||||
10.29 | |||||
10.30 |
|
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10.31 | |||||
10.32 | |||||
10.33 | |||||
10.34 | |||||
10.35 |
|
||||
10.36 |
|
||||
10.37 |
|
||||
10.38 |
|
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10.39 | |||||
10.40 | |||||
10.41 | |||||
10.42 | |||||
10.43 | |||||
10.44 | |||||
10.45 | |||||
10.46 | |||||
10.47 | |||||
10.48* |
|
||||
10.49* |
|
||||
21* | |||||
23* | |||||
31.1* | |||||
31.2* | |||||
32* |
• | in the case of an annual meeting, no earlier than 120 days and no later than 90 days prior to the first anniversary of the date of the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the date of the current year’s annual meeting shall have been changed by more than 30 days from the anniversary date of the previous year’s annual meeting, to be timely notice by the stockholder must be received by the Company not later than the later of (i) the ninetieth day prior to such current year’s annual meeting or (ii) the tenth day following (1) the day on which the notice containing the date of the current year’s annual meeting is provided by the Company or (2) public disclosure of the current year’s annual meeting date was made, whichever first occurs; provided further, however, that any such notice which is received later than the fifth business day prior to the meeting may be disregarded; and |
• |
in the case of a nomination of a person or persons for election to the Board of Directors at a special meeting of the stockholders called for the purpose of electing directors, not earlier than the 120th day prior to such special meeting and not later than the later of (i) the ninetieth day prior to such special meeting or (ii) the tenth day following (1) the day on which the notice containing the date of the special meeting is provided by the Company or (2) public disclosure of the special meeting date was made, whichever first
occurs; provided, however, that any such notice which is received later than the fifth business day prior to the meeting may be disregarded. |
Subsidiaries | Jurisdiction of Organization | |||||||
Tractor Supply Co. of Michigan, LLC | Michigan | |||||||
Tractor Supply Co. of Texas, LP | Texas | |||||||
Tractor Supply Company of Utah, LLC | Delaware | |||||||
Dels Farm Supply, LLC | Delaware | |||||||
TSC Purchasing LLC | Delaware | |||||||
TSC Franklin DC, LLC | Delaware | |||||||
TSC SSC Bond, LLC | Delaware | |||||||
Petsense, LLC | Delaware |
Date: | February 20, 2020 | /s/ Harry A. Lawton III | ||||||
Harry A. Lawton III | ||||||||
President and Chief Executive Officer |
Date: | February 20, 2020 | /s/ Kurt D. Barton | ||||||
Kurt D. Barton | ||||||||
Executive Vice President - Chief Financial Officer and Treasurer | ||||||||