-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cyb5UxPGGiPPGo0qALsskYQAqU83u5yVbrXQoZtePfOVqjt3hjVlE962G5EmjCHG yYhT9Qdn0p31nndo8UOiag== 0000916365-11-000013.txt : 20110223 0000916365-11-000013.hdr.sgml : 20110223 20110223160132 ACCESSION NUMBER: 0000916365-11-000013 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20110223 FILED AS OF DATE: 20110223 DATE AS OF CHANGE: 20110223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRACTOR SUPPLY CO /DE/ CENTRAL INDEX KEY: 0000916365 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY [5200] IRS NUMBER: 133139732 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23314 FILM NUMBER: 11632205 BUSINESS ADDRESS: STREET 1: 200 POWELL PLACE CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6153664600 MAIL ADDRESS: STREET 1: 200 POWELL PLACE CITY: BRENTWOOD STATE: TN ZIP: 37027 10-K 1 tractorsuppy10kfeb232011.htm TRACTOR SUPPLY COMPANY FORM 10-K 2010 tractorsuppy10kfeb232011.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(Mark One)
x         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 25, 2010
or
o         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
 
GRAPHIC
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)
   
     
200 Powell Place, Brentwood, Tennessee
 
37027
(Address of Principal Executive Offices)
 
(Zip Code)
     
Registrant's Telephone Number, Including Area Code:
 
(615) 440-4000

Securities Registered Pursuant to Section 12(b) of the Act:
 
   
Title of each class
Name of each exchange on which registered
Common Stock, $.008 par value
NASDAQ Global Select Market
Securities Registered Pursuant to Section 12(g) of the Act:  None
 
   
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES  þ    NO o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES  o    NO þ

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  þ    NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES  þ    NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
 
Large accelerated filer
þ
Accelerated filer
o
 
Non-accelerated filer
o (Do not check if a smaller reporting company)
Smaller reporting company
o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)
YES  o    NO þ
The aggregate market value of the Common Stock held by non-affiliates of the registrant, based on the closing price of the Common Stock on The NASDAQ Global Select Market on June 25, 2010, the last business day of the registrant’s most recently completed second fiscal quarter, was $2,037,338,136.  For purposes of this response, the registrant has assumed that its directors, executive officers, and beneficial owners of 5% or more of its Common Stock are the affiliates of the registrant.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.

Class
 
Outstanding at January 22, 2011
 
Common Stock, $.008 par value
    72,805,868  

Documents Incorporated by Reference:
Portions of the Registrant’s definitive Proxy Statement for its 2011 Annual Meeting of Shareholders are incorporated by reference into Part III hereof.

 
 
Item No    Form 10-K Report Page
 Forward-Looking Statements    ii
       
 PART I  
       
 1. Business    1
 1A. Risk Factors    4
 1B. Unresolved Staff Comments    7
 2. Properties    7
 3. Legal Proceedings    8
 4. [Removed and Reserved]    8
       
   9
       
 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities    9
 6. Selected Financial Data    12
 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations    14
 7A. Quantitative and Qualitative Disclosures About Market Risk    24
 8. Financial Statements and Supplementary Data    25
 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure    44
 9A. Controls and Procedures    44
 9B. Other Information    44
       
 PART III    45
       
 10. Directors, Executive Officers and Corporate Governance    45
 11. Executive Compensation    45
 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters    45
 13. Certain Relationships and Related Transactions, and Director Independence    45
 14. Principal Accountant Fees and Services    45
       
 PART IV    46
       
 15. Exhibits, Financial Statement Schedules    46
 



This Form 10-K and statements included or incorporated by reference in this Form 10-K include certain historical and forward-looking information.  The forward-looking statements included 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 we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including their amount and nature), business strategy, expansion and growth of the business operations and other such matters are forward-looking statements.  To take advantage of the safe harbor provided by the Act, we are identifying certain factors that could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written.  These factors include, without limitation, general economic conditions affecting consumer spending, the timing and acceptance of new products in the stores, the mix of goods sold,  purchase price volatility (including inflationary and deflationary pressures), the ability to increase sales at existing stores, the ability to manage growth and identify suitable locations and negotiate favorable lease agreements on new and relocated stores, the ability to manage expenses, the availability of favorable credit sources, capital market conditions in general, failure to open new stores in the manner currently contemplated, the impact of new stores on our business, competition, weather conditions, the seasonal nature of our business, effective merchandising initiatives and marketing emphasis, the ability to retain vendors, reliance on foreign suppliers, the ability to attract, train and re tain qualified employees, product liability and other claims, on-going and potential legal or regulatory proceedings, management of our information systems, effective tax rate changes and results of examination by taxing authorities, the ability to maintain an effective system of internal control over financial reporting and those described in Item 1A. “Risk Factors.”  Forward-looking statements are based on currently available information and are based on our current expectations and projections about future events.  We undertake no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.



Overview

Tractor Supply Company is the largest operator of retail farm and ranch stores in the United States and is focused on supplying the lifestyle needs of recreational farmers and ranchers and those who enjoy the rural lifestyle, as well as tradesmen and small businesses.  We operate retail stores under the names Tractor Supply Company and Del’s Farm Supply and operate a website under the name TractorSupply.com.  Our stores are located in towns outlying major metropolitan markets and in rural communities, and they offer the following comprehensive selection of merchandise:

·  
Equine, pet and small animal products, including items necessary for their health, care, growth and containment;
·  
Hardware, truck, towing and tool products;
·  
Seasonal products, including lawn and garden items, power equipment, gifts and toys;
·  
Maintenance products for agricultural and rural use; and
·  
Work/recreational clothing and footwear.

Our Tractor Supply stores typically range in size from 15,500 to 18,500 square feet of inside selling space and additional outside selling space.  We use a standard 15,500 square foot prototype for most new purpose-built locations.  For new stores located in existing buildings, one of several layout formats is utilized.

Our wholly-owned subsidiary, Del’s Farm Supply, LLC (“Del’s”), operated 26 stores as of December 25, 2010 in Washington, Oregon, Idaho and Hawaii.  Del’s stores currently range in size from approximately 2,000 to 6,000 square feet of inside selling space plus additional outside and covered/sheltered selling space.

Tractor Supply Company has one reportable industry segment – farm and ranch retail sales, both at our retail locations and online.

At December 25, 2010, we operated 1,001 retail farm and ranch stores in 44 states.

Seasonality and Weather

Our business is highly seasonal.  Historically, our sales and profits have been the highest in the second and fourth fiscal quarters due to the sale of seasonal products.  Unseasonable weather, excessive precipitation, drought, and early or late frosts may also affect our sales. We believe, however, that the impact of extreme weather conditions is somewhat mitigated by the geographic dispersion of our stores.

We experience our highest inventory and accounts payable balances during the first fiscal quarter for purchases of seasonal products in anticipation of the spring selling season and again during the third fiscal quarter in anticipation of the winter selling season.

Business Strategy

We believe our sales and earnings growth is a result of executing our business strategy, which includes the following key components:

 
Market Niche
 
We have identified a specialized market niche:  supplying the lifestyle needs of recreational farmers and ranchers and those who enjoy the rural lifestyle (which we refer to as the “Out Here” lifestyle), as well as tradesmen and small businesses.  By focusing our product mix on these core customers, we believe we are differentiated from general merchandise, home center and other specialty retailers.

Customer Service
We are committed to providing our customers a high level of in-store service through our motivated, well-trained store team members. We believe the ability of our store team members to provide friendly, responsive and seasoned advice helps to promote strong customer loyalty and repeat shopping. As such, we seek to provide our store team members with decision-making authority, product knowledge and training to enable them to meet our customers’ needs.

We endeavor to staff our stores with courteous, highly motivated team members and devote considerable resources to training store team members, often in cooperation with our vendors. Our training programs include (i) a full management training program which covers all aspects of our operations, (ii) product knowledge modules produced in conjunction with key vendors, (iii) frequent management skills training classes, (iv) semi-annual store manager meetings with vendor product presentations, (v) vendor sponsored in-store training programs and (vi) ongoing product information updates from our management headquarters, the Store Support Center.  We seek to hire and train store team members with farming and ranching backgrounds, with particular emphasis on general maintenance, equine and welding.

Our online shopping site is TractorSupply.com.  The availability of certain of our products online provides our customers the ability to purchase products and have them shipped to one of our retail stores, their homes or offices.  We believe this capability further enhances customer service and extends our market to areas where our retail stores are not currently located.

We offer proprietary, private label credit cards for individuals and business customers.  In addition, we accept cash, checks, debit cards, Visa, MasterCard, American Express and Discover credit cards and gift cards.

Store Environment
Our stores are designed and managed to make shopping an enjoyable experience and to maximize sales and operating efficiencies.  Stores utilize several layouts, designed to provide an open environment, optimal product placement and visual display locations. In addition, these layouts allow for departmental space to be easily reallocated and visual displays to be easily changed for seasonal products and promotions. Display and product placement information is sent to stores weekly to ensure quality and uniformity among the stores.  Informative signs are located throughout each store to assist customers with purchasing decisions and merchandise location.  These signs provide customers with a comparison of product qualities, clear pricing and useful information regarding product benefits and suggestions for appropriate accessories. The general uniformity of our store layouts and visual displays afford our customers a feeling of familiarity and enhances the shopping experience. To further enhance the shopping experience, all of our store team members wear highly visible red vests, aprons or smocks and nametags, and our customer service and checkout counters are conveniently located.
 
Merchandising
We offer a differentiated assortment of products for our customers.  Our broad product assortment is tailored to meet the regional and geographic needs of our markets, as well as the physical store size.  Our full line of product offerings is supported by a strong in-stock inventory position with an average of 15,500 to 19,000 unique products per store.  No one product accounted for more than 10% of our sales during 2010.

Our stores carry a wide selection of high quality, nationally recognized, name brand merchandise. We also market a growing list of products under our “private-label programs,” i.e. products manufactured for us by a number of vendors. The trademarks in the private label brand names are owned by us. Our private label brands include:

· Producers Pride and Dumor (livestock feed)
· Retriever, Paws ‘n Claws, and 4health (pet foods)
· Huskee (outdoor power equipment)
· C.E. Schmidt (apparel and footwear)
· Countyline (livestock, farm and ranch equipment)
· Royal Wing (bird feeding supplies)
· Traveller (truck/automotive products)
· Masterhand and JobSmart (tools and tool chests)
· Groundwork (lawn and garden supplies)
· Bit & Bridle (apparel)
· Red Shed (gifts and collectibles)

We believe that the availability of high quality private label products at compelling prices provides superior value for our customers, a strategic advantage for us, and positions us as a destination store.

The following chart indicates the average percentages of sales represented by each of our major product categories during fiscal 2010, 2009 and 2008.

   
Percent of Sales
 
Product Category
 
2010
   
2009 (a)
   
2008 (a)
 
Livestock and Pet
    39 %     39 %     37 %
Hardware, Tools and Truck
    23       23       24  
Seasonal, Gift and Toy Products
    22       22       23  
Clothing and Footwear
    10       10       9  
Agriculture
    6       6       7  
      100 %     100 %     100 %
(a)Reclassified to conform to current year presentation.
 
 
Purchasing
We offer a differentiated assortment of products that are sourced through domestic and international vendors for those seeking to enjoy the “Out Here” lifestyle.  Our business is not dependent upon any one vendor or particular group of vendors.  We purchase our products from a core group of approximately 700 vendors, with no one vendor representing more than 10% of our purchases during fiscal 2010.  Approximately 250 vendors accounted for approximately 90% of our purchases during fiscal 2010.  We have not experienced any significant difficulty in obtaining satisfactory alternative sources of supply for our products, and we believe that adequate sources of supply exist at substantially similar costs for nearly all of our produc ts.  We have no material long-term contractual commitments with any of our vendors.

We maintain a dedicated inventory management team to focus exclusively on all forecasting and replenishment functions.  This centralized direction permits our buying teams to focus more strategic attention toward vendor line reviews, assortment planning and testing of new products and programs.  Through the combined efforts of these teams, we have improved our overall inventory productivity and in-stock position.

Over 98% of our purchase orders are transmitted through an electronic data interchange ("EDI") system, and approximately 95% of merchandise vendor invoices are transmitted through EDI. We are expanding the percentage of vendors who electronically transmit invoices and increasing the amount of sales history transmitted.

Distribution
We currently operate a distribution network for supplying our stores with merchandise, and in fiscal 2010 our stores received approximately 67% of our merchandise through this network.  Our six distribution centers are located in Indiana, Georgia, Maryland, Texas, Nebraska, and Washington, representing total distribution capacity of 2.9 million square feet.  In 2011 we have begun construction on our seventh distribution center, a new 834,000 square foot facility in Kentucky to be operational during the fourth quarter of fiscal 2011.

We manage our inbound and outbound transportation activity in-house through the use of a web-based transportation management system.  We utilize several common carriers for store deliveries.  We manage our transportation costs through carrier negotiations, the monitoring of transportation routes, and the scheduling of deliveries.

Marketing
We utilize an "everyday value prices" strategy to consistently offer our products at competitive prices complemented by promotions primarily implemented during peak selling seasons.  We regularly monitor prices at competing stores and adjust our prices as appropriate.

To generate store traffic and position ourselves as a destination store, we promote broad selections of merchandise with newspaper circulars, customer targeted direct mail and internet offerings.  Vendors frequently support these specific programs by offering temporary cost reductions, honoring coupons and funding gift card rebate programs.

 
Due to the relatively small size of our stores, increased traffic in the store ensures increased exposure to our products. Our vendors are committed to helping us promote our brand and position ourselves as a destination store.  Our vendors provide assistance with product presentation and rack design, brochures, point-of-purchase materials for customers’ education and product education for our team members.  We also receive funding through contributions and incentives on purchases to promote new stores and earn rebates from vendors on product purchases based on volume. 
 
Competition
We operate in a competitive retail industry. The principal competitive factors include location of stores, price and quality of merchandise, in-stock consistency, merchandise assortment and presentation, and customer service. We compete with general merchandise retailers, home center retailers and other specialty and discount retailers, as well as independently owned retail farm and ranch stores, numerous privately-held regional farm store chains and farm cooperatives.  Some of these competitors are units of national or regional chains and may have substantially greater resources and financial capacities than we do.  However, we believe we have successfully differentiated ourselves from these entities by focusing on our specialized market niche for customers living the rural lifestyle.

Management and Team Members
As of December 25, 2010, we employed approximately 7,900 full-time and approximately 6,800 part-time team members. We also employ additional part-time team members during peak periods.  We are not party to any collective bargaining agreements.

Our store operations are organized into nine regions, including Del’s.  Each region is led by a regional manager and the region is further organized into districts, which are led by a district manager or area manager.  Our regional managers, district managers, area managers, store managers and other distribution and support personnel have contributed significantly to our performance.  We have internal advisory boards, one comprised of store managers and the other comprised of district managers.  These groups bring a grassroots perspective to operational initiatives and generate chain-wide endorsement of proposed “best-practice” solutions.

We are committed to a continuous improvement program called Tractor Value System (“TVS”).  TVS is a business management system that emphasizes, through team member engagement, a focus on continuous improvement.  Utilizing the TVS system, we improve processes by embracing change of current practices to reduce cost, shorten lead times, and drive innovation.  We have implemented numerous continuous improvement project teams (comprised of team members from all areas of our operations) to evaluate key operations and implement process changes that will improve efficiency, reduce costs and strengthen processes. Our management encourages the participation of all team members in decision-making, regularly solicits input and suggestions from our team members and incorporates suggestions into our improv ement activities.

All of our team members participate in one of various incentive programs, which provide the opportunity to receive additional compensation based upon team and/or Company performance. We also provide our team members the opportunity to participate in an employee stock purchase plan and a 401(k) retirement savings plan (we contribute to the 401(k) savings plan solely through a cash match). Additionally, we share in the cost of health insurance provided to our team members, and team members receive a discount on merchandise purchased at our stores.

We encourage a “promote from within” environment when internal resources permit.  We also provide internal leadership development programs designed to mentor our high potential team members for continued progress and believe we have satisfactory relationships with our team members. Our district managers, area managers, and store managers have an average length of service of approximately five years.  Management believes internal promotions, coupled with the hiring of individuals with previous retail experience, will provide the management structure necessary to support our planned store growth.

Management Information and Control Systems
We have invested considerable resources in our management information and control systems to ensure superior customer service, manage the purchase and distribution of our merchandise and improve our operating efficiencies. Our management information and control systems include a point-of-sale system, a supply chain management and replenishment system, a radio frequency and voice picking system in the distribution centers, a vendor purchase order control system and a merchandise presentation system. These systems are integrated through an enterprise resource planning (“ERP”) system.  This ERP system tracks merchandise from initial order through ultimate sale and interfaces with our financial systems.

We continue to evaluate and improve the functionality of our systems to maximize their effectiveness. Such efforts include ongoing hardware and software evaluations and upgrades to support optimal software configurations and application performance.  We plan to upgrade our information technology and implement other efficiency-driving system enhancements (including the rollout of a new warehouse management system to distribution centers, implementation of price optimization software, point-of-sale system upgrades, and store and support center hardware refreshes) in 2011.  In addition, we will continue to strengthen the security of our information systems and support the areas of store and distribution center expansion.  These efforts are directed toward constantly improving the overall business processes and achieving the most efficient and effective use of the systems to manage our operations while ensuring a secure and reliable environment.

Growth Strategy

Our current and long-term growth strategy is to: (1) expand geographic market presence through opening new retail stores, (2) enhance financial performance through same-store sales increases, achieved through targeted merchandising programs with an “everyday value prices” philosophy and supported by strong customer service, (3) enhance product margin through assortment management, vendor management, global sourcing, and optimization of transportation  and distribution costs, (4) leverage operating costs, especially advertising, distribution and corporate overhead, (5) expand market opportunities via internet sales, and (6) expand through selective acquisition, as such opportunities arise, to enhance penetration into new and existing markets as a complementary strategy to organic growth.

We have experienced considerable sales growth over the past five years, with a compounded annual growth rate of approximately 12.0%.  We project an increase of 80 to 85 new stores in 2011, an increase of approximately 8%.  We opened 74 new stores in 2010 and 76 new stores in 2009, an increase of approximately 8% and 9%, respectively.

We operated 1,001 retail farm and ranch stores in 44 states as of December 25, 2010.  We have developed a proven method for selecting store sites and have identified over 800 potential additional markets for new Tractor Supply stores in the United States.
 
 
Executive Officers of the Registrant

Pursuant to General Instruction G(3) of Form 10-K, the following list is included as an unnumbered item in Part I of this Report in lieu of being included in the Proxy Statement for the Annual Meeting of Stockholders to be held on April 28, 2011.
 
The following is a list of the names and ages of all executive officers of the registrant, indicating all positions and offices with the registrant held by each such person and each person’s principal occupations and employment during at least the past five years:

Name
Position
Age
James F. Wright
Chairman of the Board and Chief Executive Officer
61
Gregory A. Sandfort
President and Chief Merchandising Officer
55
Stanley L. Ruta
Executive Vice President and Chief Operating Officer
59
Anthony F. Crudele
Executive Vice President-Chief Financial Officer and Treasurer
54
Kimberly D. Vella
Senior Vice President and Chief People Officer
44
__________________

James F. Wright has served as Chairman of the Board and Chief Executive Officer of the Company since February 2009, and prior to that time served as Chairman of the Board, President and Chief Executive Officer from November 2007 to February 2009, and as President and Chief Executive Officer of the Company from October 2004 to November 2007.  Mr. Wright previously served as President and Chief Operating Officer of the Company from October 2000 to October 2004.  Mr. Wright has served as a director of the Company since 2002.

Gregory A. Sandfort has served as President and Chief Merchandising Officer of the Company since February 2009, and prior to that time served as Executive Vice President-Chief Merchandising Officer of the Company since November 2007.  Mr. Sandfort previously served as President and Chief Operating Officer at Michaels Stores, Inc. from March 2006 to August 2007 and as Vice President – General Merchandise Manager at Michaels Stores, Inc. from January 2004 to February 2006.  Mr. Sandfort served as Vice Chairman and Co-Chief Executive Officer of Kleinert’s Inc. (d/b/a Buster Brown) from 2002 to 2003 and as a Vice President, General Merchandise Manager for Sears, Roebuck and Co. from 1998 to 2002.

Stanley L. Ruta has served as Executive Vice President and Chief Operating Officer of the Company since February 2009, and prior to that time served as Executive Vice President-Store Operations since January 2007, after having served as Senior Vice President-Store Operations since June 2000 and as Vice President-Store Operations of the Company since 1994.

Anthony F. Crudele has served as Executive Vice President-Chief Financial Officer and Treasurer since January 2007, after having served as Senior Vice President-Chief Financial Officer and Treasurer of the Company since November 2005.  Mr. Crudele previously served as Chief Financial Officer at Gibson Guitar from August 2003 to September 2005, as Chief Financial Officer of Xcelerate Corp. from 2000 to January 2003, and at The Sports Authority from 1989 through 1999 (serving as Chief Financial Officer from 1996 through 1999).

Kimberly D. Vella has served as Senior Vice President and Chief People Officer since July 2010, and prior to that time served as Senior Vice President-Human Resources of the Company since January 2007, after having served as Vice President-Human Resources of the Company since October 2001.

Additional Information

We file reports with the Securities and Exchange Commission (“SEC”), including Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports as required. The public may read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC  20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We are an electronic filer and the SEC maintains an Internet site at sec.gov that contains the reports, proxy and information statements, and other information filed electronically.

We make available free of charge through our Internet website, TractorSupply.com, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.  The information provided on our website is not part of this report, and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this report.

Our code of ethics, which is applicable to all of our team members, including our Chief Executive Officer, Chief Financial Officer and Controller, along with our Corporate Governance Guidelines and the charters of our Audit, Compensation, Nominating and Corporate Governance Committees of our Board of Directors, is posted on our website.


Our business faces many risks. Those risks which we are currently aware and we deem to be material are described below.  If any of the events or circumstances described in the following risk factors occur, our business, financial condition or results of operations may significantly suffer, and the trading price of our common stock could decline.  These risk factors should be read in conjunction with the other information in this Form 10-K.

General economic conditions may adversely affect our financial performance.
Our results of operations may be sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending. Economic conditions affecting disposable consumer income such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs, higher labor and healthcare costs, the impact of natural disasters or acts of terrorism, and other matters could reduce consumer spending or cause consumers to shift their spending to lower-priced competitors. A general reduction in the level of discretionary spending or shifts in consumer discretionary spending to our competitors could adversely affect our growth and profitability.  Additionally, changes in the mix of products sold to a mix with a lower overall gross margin or other increased cost of sales, along with slower inventory turnover and greater markdowns on inventory, could adversely affect our operations and operating results.
 
Purchase price volatility, including inflationary and deflationary pressures, may adversely affect our financial performance.
Although we cannot determine the full effect of inflation and deflation on our operations, we believe our sales and results of operations are affected by both.  We are subject to market risk with respect to the pricing of certain products and services, which include, among other items, steel, grain, petroleum, corn, soybean and other commodities as well as transportation services.  Therefore, we may experience both inflationary and deflationary pressure on product cost, which may impact consumer demand and, as a result, sales and gross margin.  Our strategy is to reduce or mitigate the effects of purchase price volatility principally by taking advantage of vendor incentive programs, economies of scale from increased volume of purchases, adjusting retail prices and selectively buying from the most competiti ve vendors without sacrificing quality.  Due to the competitive environment, such conditions have and may continue to adversely impact our financial performance.
 
There is no assurance that we will be able to continue to increase sales at our existing stores.
We experience fluctuations in our same-store sales, which are defined as stores which have completed twelve months of sales.  Our success depends, in part, upon our ability to improve sales at our existing stores.  Various factors affect same-store sales, including the general retail sales environment, our ability to efficiently source and distribute products, changes in our merchandise mix, competition, current economic conditions, the timing of release of new merchandise and promotional events, the success of marketing programs and weather conditions.  These factors may cause our same-store sales results to differ materially from prior periods and from expectations.  Past same-store sales are not necessarily an indication of future results, and there can be no assurance that our same-store sale s will not decrease in the future.

Even if we are able to implement, to a significant degree, our key business strategy of expanding our store base, we may experience managerial or operational problems, which may prevent any expected increase in profitability or negatively impact our cash flow. To manage our planned expansion, we must ensure the continuing adequacy of our existing systems, controls and procedures, including product distribution facilities, store management, financial controls and information systems. There can be no assurance that we will be able to achieve our planned expansion, that the new stores will be effectively integrated into our existing operations or that such stores will be profitable.

Capital requirements for growth may not be available.
The construction and opening or acquisition of new stores and the development of new production and distribution facilities, along with the remodeling and renovation of existing stores, require significant amounts of capital. In the past, our growth has been funded primarily through bank borrowings and internally generated cash flow.

Disruptions in the capital and credit markets could adversely affect the ability of the banks to meet their commitments.  Our access to funds under the credit facility is dependent on the ability of the banks that are parties to the facility to meet their funding commitments.  Those banks may not be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time.  In addition, tighter lending practices have made it more challenging for our real estate developers to obtain financing under reasonable loan terms and conditions.  Unfavorable lending trends could impact the timing of our store openings and materially adversely affect our ability to open new purpose-built store s in desirable locations.

Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, or failures of significant financial institutions could adversely affect our access to liquidity needed for our business.  Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged.  Such measures could include deferring capital expenditures, and reducing or eliminating future share repurchases or other discretionary uses of cash.

Failure to open new stores in the manner currently contemplated could adversely affect our financial performance.
An integral part of our business strategy includes the expansion of our base of stores by opening new stores. This expansion strategy is dependent on our ability to find suitable locations, and we face competition from many retailers for such sites.  If we are unable to implement this strategy, our ability to increase our sales, profitability, and cash flow could be impaired significantly. To the extent that we are unable to open new stores in the manner we anticipate (due to, among other reasons, site approval or unforeseen delays in construction), our sales growth may be impeded.

New stores may negatively impact our results.
There can be no assurance that our new store openings will be successful or result in greater sales and profitability for the Company. New stores build their sales volumes and refine their merchandise selection over time and, as a result, generally have lower gross margins and higher operating expenses as a percentage of sales than our more mature stores. As we continue to open new stores, there may be a negative impact on our results from a lower contribution margin of these new stores until their sales levels ramp to chain average, if at all, as well as from the impact of related pre-opening costs.

Competition in our industry may hinder our ability to execute our business strategy and adversely affect our operations.
We operate in a very competitive market. The principal competitive factors include location of stores, price and quality of merchandise, in-stock consistency, merchandise assortment and presentation, and customer service.  We believe we have successfully differentiated ourselves from general merchandise retailers, home center retailers and other specialty and discount retailers by focusing on our specialized market niche. However, we do face competition from these entities, as well as competition from independently-owned retail farm and ranch stores, privately-held regional farm store chains and farm cooperatives.  Some of our competitors are units of national or regional chains that have substantially greater financial and other resources.

Weather conditions may have a significant impact on our financial results.
Historically, weather conditions have had a significant impact on our operating results. Weather conditions affect the demand for, and in some cases the supply of, products, which in turn has an impact on prices.  In past years, we have experienced extreme weather conditions, including snow and ice storms, flood and wind damage, hurricanes, tornadoes and droughts in some states. Weather conditions also directly affect the demand for seasonal products, particularly during the winter heating season. Accordingly, the weather can have a material effect on our financial condition and results of operations.

There are certain risks associated with the seasonal nature of our business.
Our working capital needs and borrowings (if necessary) generally peak in our first and third fiscal quarters because lower sales are generated while expenses are incurred and inventory is increased in preparation for the spring and winter selling seasons.  If cash on hand and borrowings under existing credit facilities are insufficient to meet the seasonal needs or if cash flow generated during the spring and winter is insufficient to repay associated borrowings on a timely basis, this seasonality could have a material adverse effect on our business.

 
 
There is no assurance that our merchandising initiatives and marketing emphasis will provide expected results.
We believe our past performance has been based on, and future success will depend upon, in part, the ability to develop and execute merchandising initiatives with effective marketing.  There is no assurance that we will be successful, or that new initiatives will be executed in a timely manner to satisfy our customers’ needs or expectations.  Failure to execute and promote such initiatives in a timely manner could harm our ability to grow the business and could have a material adverse effect on our results of operations and financial condition.  Additionally, our success depends on our ability to anticipate and respond in a timely manner to changing customer demand and preferences for merchandise.  If we misjudge the market, we may significantly overstock unpopular products and be forced to take significant inventory markdowns.  Shortages of key items could also have a materially adverse impact on operating results.
 
We face risks associated with vendors from whom our products are sourced.
The products we sell are sourced from a variety of domestic and international vendors.  As a general rule, we have agreements with our vendors in which the vendors agree to comply with applicable laws, including labor and environmental laws, and to indemnify us against certain liabilities and costs.  Our ability to recover liabilities and costs under these vendor agreements is dependent upon the financial condition and integrity of the vendors.

We rely on foreign manufacturers for various products that we sell.  In addition, many of our domestic suppliers purchase a portion of their products from foreign sources.  We rely on long-term relationships with our suppliers but have no long-term contracts with such suppliers.  Our future success will depend in large measure upon our ability to maintain our existing supplier relationships or to develop new ones.  This reliance increases the risk of inadequate and untimely supplies of various products due to local political, economic, social, or environmental conditions, transportation delays, restrictive actions by foreign governments, or changes in United States laws and regulations affecting imports or domestic distribution.  Our vendors may be forced to reduce their production, shu t down their operations or file for bankruptcy protection, which in some cases would make it difficult for us to serve the market’s needs and could have a material adverse effect on our business.

As an importer, our business is subject to the risks generally associated with doing business abroad, such as foreign governmental regulations, economic disruptions, delays in shipments, transportation capacity and costs, currency exchange rates and changes in political or economic conditions in countries from which we purchase products.  If any such factors were to render the conduct of business in particular countries undesirable or impractical or if additional United States quotas, duties, taxes or other charges or restrictions were imposed upon the importation of our products in the future, our financial condition and results of operations could be materially adversely affected.
 
Our failure to attract and retain qualified team members could adversely affect our financial performance.
Our ability to continue expanding operations depends on our ability to attract and retain a large and growing number of qualified team members.  Our ability to meet labor needs while controlling wage and related labor costs is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force, unemployment levels, prevailing wage rates, changing demographics, health and other insurance costs and changes in employment legislation.  If we are unable to locate, attract or retain qualified personnel, or if costs of labor or related costs increase significantly, our financial performance could be adversely affected.

We may be subject to product liability and other claims in the ordinary course of business.
Our business involves a risk of product liability and other claims in the ordinary course of business.  We maintain general liability insurance with a deductible for each occurrence and a $36,000,000 aggregate retention applicable to all general liability and workers compensation claims.  We also maintain umbrella limits above the primary general liability and product liability cover.  In many cases, we have indemnification rights against the manufacturers of the products and their products liability insurance.  Our ability to recover under such insurance or indemnification arrangements is subject to the financial viability of the insurers and manufacturers and the specific allegations of a claim.  No assurance can be given that our insurance coverage or the manufacturers’ indemni ty will be available or sufficient in any claims brought against us.

Our costs of doing business could increase as a result of changes in federal, state or local regulations.
Changes in the federal, state or local minimum wage or living wage requirements or changes in other wage or workplace regulations could increase our costs of doing business. In addition, changes in federal, state or local regulations governing the sale of some of our products or tax regulations could increase our costs of doing business.

Because we are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs.
We are subject to numerous federal, state and local laws and governmental regulations relating to environmental protection, consumer product safety, building, land use and zoning requirements, workplace regulations, wage and hour, privacy and information security and employment law matters. If we fail to comply with existing or future laws or regulations, or if these laws or regulations are violated by importers, manufacturers or distributers, we may be subject to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs. In addition, our capital expenditures could increase due to remediation measures that may be required if we are found to be noncompliant with any existing or future laws or regulations.

A privacy breach could result in negative publicity and adversely affect the Company’s business.
The protection of customer, employee and company data is critical to the Company.  The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements.  In connection with credit card sales, we transmit confidential credit card information.  Third parties may have the technology or know-how to breach the security of this customer information, and our security measures and those of our technology vendors may not effectively preclude others from obtaining improper access to this information.  Any security breach could expose us to risks of data loss, litigation and liability and could seriously disrupt our operations and any resulting negative publicity could significantly harm our reputation.

In addition, states and the federal government are increasingly enacting laws and regulations to protect consumers against identity theft.  We collect personal information from consumers in the course of doing business.  These laws will likely increase the costs of doing business and, if we fail to comply with these laws and regulations or to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these new laws, we could be subject to potential claims for damages and other remedies, which could harm our business.

Legal proceedings could materially impact our results.
From time to time, we are party to legal proceedings including matters involving personnel and employment issues, personal injury, intellectual property, and other proceedings arising in the ordinary course of business.  Our results could be materially impacted by the decisions and expenses related to pending or future proceedings.

 
If we experience difficulties with our management information systems, our financial performance may be adversely affected.
We depend on management information systems for many aspects of our business.  We could be materially adversely affected if our management information systems are disrupted or if we are unable to improve, upgrade, maintain and expand systems, particularly in light of the contemplated continued store growth.  Many of our information systems contain confidential customer, Company or employee data.  If we fail to adequately restrict access to this information, our results of operations could be adversely affected.
 
Effective tax rate changes and results of examinations by taxing authorities could materially impact our results.
Our future effective tax rates could be adversely affected by the earnings mix being lower than historical results in states where we have lower statutory rates and higher than historical results in states where we have higher statutory rates, by changes in the measurement of our deferred tax assets and liabilities, or by changes in tax laws or interpretations thereof. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service ("IRS") and other state and local taxing authorities. A portion of our sales are to tax-exempt customers. The business activities of our customers and the intended use of the unique products sold by us create a challenging and complex compliance environment.  These circumstances create risk that we could be challenged as to the propriety of our sales tax compliance. Our results could be materially impacted by the determinations and expenses related to these and other proceedings by the IRS and other state and local taxing authorities.

Failure to maintain an effective system of internal control over financial reporting could materially impact our business and results.
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. An internal control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal control systems, internal control over financial reporting may not prevent or detect misstatements. Any failure to maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent fraud, and could expose us to li tigation or adversely affect the market price of our common stock.

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, such as revenue recognition, asset impairment, inventories, lease obligations, self-insurance, tax matters and litigation, are highly complex and involve many subjective assumptions, estimates or judgments.  Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments could significantly change our reported or expected financial performance or financial condition.
 

None.


At December 25, 2010, we operated 1,001 stores in 44 states.  We lease more than 94% of our stores, two of our six distribution centers and our management headquarters.  Store leases typically have initial terms of between 10 and 15 years, with two to four renewal periods of five years each, exercisable at our option.  No single lease is material to our operations.

Following is a count of our store locations by state:

State
Number
of Stores
 
State
Number
of Stores
Texas
121
 
Wisconsin
15
Ohio
69
 
Kansas
12
Michigan
63
 
Nebraska
12
Pennsylvania
60
 
Maine
10
New York
58
 
Mississippi
10
Tennessee
57
 
New Hampshire
10
North Carolina
43
 
New Jersey
10
Georgia
40
 
Maryland
9
Indiana
38
 
Iowa
8
Kentucky
38
 
Minnesota
8
Florida
37
 
Connecticut
7
Virginia
33
 
North Dakota
7
Alabama
25
 
Massachusetts
6
Oklahoma
23
 
South Dakota
6
South Carolina
22
 
Vermont
5
Louisiana
21
 
Delaware
3
California
20
 
Hawaii
3
Washington
19
 
Oregon
3
West Virginia
18
 
Montana
2
Illinois
16
 
New Mexico
2
Arkansas
15
 
Idaho
1
Missouri
15
 
Rhode Island
1
       
1,001

 

The Company received and responded to a Request for Information from the United States Environmental Protection Agency (“EPA”) relating to certain recreational vehicles and non-road spark ignition engines sold by the Company.  In the first quarter of fiscal 2011, the Environmental Enforcement Section of the Department of Justice (“DOJ”), on behalf of the EPA, informed the Company that it believed the Company had violated the Clean Air Act by importing or causing the importation of certain engines not covered by certificates of conformity issued by the EPA, and that unless the DOJ and the Company were able to reach a settlement, the DOJ was prepared to commence a civil action. The Company is currently engaged in settlement discussions with the DOJ that would call for the payment of a civil penalty and c ertain injunctive relief.  The engines were purchased by the Company pursuant to agreements with vendors under which the vendors represented that their products complied with all applicable laws and regulations and under which the vendors agreed to indemnify the Company for any liabilities or costs relating to, among other matters, the noncompliance or alleged noncompliance of their products.  The Company has notified these vendors of the EPA’s position and expects to be reimbursed for any liabilities or costs relating to this matter.  The Company does not expect the resolution of this matter to have a material adverse effect on its financial condition or results of operations.

We are also involved in various litigation matters arising in the ordinary course of business.  We expect these matters will be resolved without material adverse effect on our consolidated financial position or results of operations.  We believe that any estimated loss related to such matters has been adequately provided in accrued liabilities to the extent probable and reasonably estimable.  It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in circumstances relating to these proceedings.

 

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Tractor Supply Company’s common stock trades on The Nasdaq Global Select Market under the symbol “TSCO”.

The table below sets forth the high and low sales prices of our common stock as reported by The Nasdaq Global Select market for each fiscal quarter of the periods indicated:

   
Price Range (split adjusted)
 
   
2010
   
2009
 
   
High
   
Low
   
High
   
Low
 
First Quarter
  $ 30.29     $ 24.56     $ 18.99     $ 14.34  
Second Quarter
  $ 35.93     $ 28.91     $ 21.86     $ 17.09  
Third Quarter
  $ 39.14     $ 29.55     $ 24.50     $ 19.84  
Fourth Quarter
  $ 48.79     $ 38.35     $ 27.25     $ 22.17  

As of January 31, 2011, the approximate number of record holders of our common stock was 120 (excluding individual participants in nominee security position listings), and the estimated number of beneficial holders of our common stock was 37,000.

Issuer Purchases of Equity Securities

We have a Board-approved share repurchase program which provides for the repurchase of up to $400 million of common stock, exclusive of any fees, commissions, or other expenses related to such repurchases, through December 2011.  Stock repurchase activity during fiscal 2010 is set forth in the table below:

Period
 
Total Number
of Shares
Purchased(a)
   
Average
Price Paid
Per Share(a)
   
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 (b)
    172,182     $ 25.90       146,200     $ 177,152,538  
Second Quarter
    298,622       33.13       298,622       167,264,053  
Third Quarter
    273,400       33.64       273,400       158,071,329  
                                 
Fourth Quarter:
                               
9/26/10 – 10/23/10
    --       --       --       158,071,329  
10/24/10 – 11/20/10 (b)
    292,999       40.52       290,000       146,324,048  
11/21/10 – 12/25/10
    83,800       42.04       83,800       142,800,349  
      376,799       40.89       373,800       142,800,349  
                                 
As of December 25, 2010
    1,121,003     $ 34.75       1,092,022     $ 142,800,349  

(a)            The number of shares purchased and the average price paid per share shown in the table above have been adjusted to reflect the effect of a two-for-one stock split for all shares purchased prior to the stock split record date.  Actual shares of 73,100, 149,311, and 230,100 were added to treasury in the first, second and third quarters of fiscal 2010, respectively, as the number of shares held in treasury was not adjusted for the two-for-one stock split as stated in Note 1 – Significant Accounting Policies in Part II Item 8 of this Form 10-K.
(b)            We withheld 25,982 (split adjusted) shares during the first quarter and 2,999 shares during the fourth quarter to satisfy employee tax obligations on the vesting of restricted stock units in the amounts of $0.7 million in the first quarter and $0.1 million in the fourth quarter at an average price of $25.30 and $42.00, respectively.  For further discussion, see Note 2 – Share-Based Compensation in Part II, Item 8 of this Form 10-K.
 
We expect to implement the balance of the repurchase program through purchases made from time to time either in the open market or through private transactions, in accordance with regulations of the SEC.  The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions.
 
Any additional share repurchase programs will be subject to the discretion of our Board of Directors and subject to our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.  The program may be limited or terminated at any time without prior notice.

 
Common Stock Dividends

During 2010, the Board of Directors declared the following dividends:

Date Declared
 
Dividend Amount Per Share
(split adjusted)
 
Stockholders of Record Date
Date Paid
March 1, 2010
  $ 0.07  
March 15, 2010
March 29, 2010
May 3, 2010
    0.07  
May 17, 2010
June 2, 2010
July 29, 2010
    0.07  
August 16, 2010
August 31, 2010
October 28, 2010
    0.07  
November 15, 2010
November 30, 2010
 
It is the present intention of the Board of Directors to continue to pay this quarterly cash dividend; however, the declaration and payment of future dividends will be determined by the Board of Directors in its sole discretion and will depend upon the earnings, financial condition, and capital needs of the Company and other factors which the Board of Directors deems relevant.  There were no dividends declared during fiscal 2009.

On February 4, 2011, we announced that our Board of Directors declared a quarterly cash dividend of $0.07 per share of the Company’s common stock.  The dividend will be paid on March 8, 2011 to stockholders of record as of the close of business on February 22, 2011.

STOCK PERFORMANCE GRAPH

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Tractor Supply Company under the Securities Act of 1933, as amended, or the Exchange Act.

 
The following graph compares the cumulative total stockholder return on our Common Stock from December 31, 2005 to December 25, 2010 (the Company's fiscal year-end) with the cumulative total returns of the S&P 500 Index and the S&P Retail Index over the same period.  The comparison assumes that $100 was invested on December 31, 2005 in our Common Stock and in each of the foregoing indices.  The historical stock price performance shown on this graph is not necessarily indicative of future performance.
 
 
chart.jpg
 
 
   
12/31/05
   
12/30/06
   
12/29/07
   
12/27/08
   
12/26/09
   
12/25/10
 
Tractor Supply Company
  $ 100.00     $ 84.45     $ 66.79     $ 65.21     $ 102.06     $ 182.85  
S&P 500
  $ 100.00     $ 113.62     $ 118.44     $ 69.92     $ 90.24     $ 100.68  
S&P Retail Index
  $ 100.00     $ 109.36     $ 89.85     $ 59.45     $ 91.47     $ 112.13  
 


 
 
Item 6.                      Selected Financial Data

FIVE YEAR SELECTED FINANCIAL AND OPERATING HIGHLIGHTS

The following selected financial data are derived from the consolidated financial statements of Tractor Supply Company.  Our fiscal year includes 52 or 53 weeks and ends on the last Saturday of the calendar year.  References to fiscal year mean the year in which that fiscal year ended.  All fiscal years presented below consist of 52 weeks.

Effective December 25, 2010, the Company elected to change its method of accounting for inventories from the lower of cost, as determined by the last-in, first-out (“LIFO”) method, or market to the lower of cost, as determined by average cost method, or market. The following table provides summary historical financial information adjusted for the change in accounting for inventory for the periods ended and as of the dates indicated (in thousands, except per share amounts and selected operating data):

   
2010
   
2009 (a)
   
2008 (a)
   
2007 (a)
   
2006 (a)
 
Operating Results:
                             
Net sales
  $ 3,638,336     $ 3,206,937     $ 3,007,949     $ 2,703,212     $ 2,369,612  
Gross margin
    1,203,665       1,041,889       955,055       857,940       752,237  
Selling, general and administrative expenses
    867,644       784,066       715,961       641,603       555,834  
Depreciation and amortization
    69,797       66,258       60,731       51,064       42,292  
                                         
Operating income
    266,224       191,565       178,363       165,273       154,111  
Interest expense, net
    1,284       1,644       2,133       5,037       2,688  
                                         
Income before income taxes
    264,940       189,921       176,230       160,236       151,423  
Income tax provision
    96,968       70,176       68,237       60,777       56,677  
                                         
Net income
  $ 167,972     $ 119,745     $ 107,993     $ 99,459     $ 94,746  
                                         
Net income per share – basic (b) (c)
  $ 2.31     $ 1.66     $ 1.47     $ 1.27     $ 1.18  
                                         
Net income per share – assuming dilution (b) (c)
  $ 2.25     $ 1.63     $ 1.44     $ 1.24     $ 1.15  
                                         
Adjusted weighted average shares for dilutive earnings per share (c)
    74,686       73,297       74,927       80,200       82,119  
                                         
Operating Data (percent of net sales):
                                       
Gross margin
    33.1 %     32.5 %     31.8 %     31.7 %     31.7 %
Selling, general and administrative expenses
    23.9 %     24.4 %     23.8 %     23.7 %     23.5 %
Operating income
    7.3 %     6.0 %     5.9 %     6.1 %     6.5 %
Net income
    4.6 %     3.7 %     3.6 %     3.7 %     4.0 %
                                         
Number of Stores:
                                       
Beginning of year
    930       855       764       676       595  
New stores opened
    74       76       91       89       82  
Closed/sold stores
    (3 )     (1 )     --       (1 )     (1 )
End of year
    1,001       930       855       764       676  
                                         
Number of stores relocated during year
    --       2       1       12       15  
Number of stores remodeled (d)
    1       6       3       1       3  
Capital expenditures (e)
  $ 96,511     $ 73,974     $ 91,759     $ 83,986     $ 90,565  
Same-store sales increase (decrease) (f)
    7.0 %     (1.1 %)     1.4 %     3.4 %     1.6 %
Average sales per store (000’s) (g)
  $ 3,781     $ 3,586     $ 3,703     $ 3,762     $ 3,699  
Average transaction value
  $ 42.07     $ 42.06     $ 44.55     $ 43.60     $ 43.12  
Average number of daily transactions per store
    249       236       230       239       238  
Total team members
    14,700       13,300       12,800       11,600       9,800  
                                         
Balance Sheet Data (at end of period):
                                       
Working capital
  $ 617,153     $ 475,847     $ 337,225     $ 340,405     $ 340,522  
Total assets
    1,463,474       1,276,580       1,143,301       1,083,185       1,010,639  
Long-term debt, less current portion (h)
    1,316       1,407       1,797       2,351       2,808  
Stockholders’ equity
    933,242       779,151       651,799       580,943       611,292  
_______________________


 
(a)
As discussed in Note 1 – Significant Accounting Policies in Part II Item 8 of this Form 10-K regarding our change in accounting for inventories from last-in, first-out (LIFO) method to the average cost method, selected financial data has been retrospectively adjusted.  Retrospective adjustments relating to fiscal 2009 and 2008 have been provided in Note 1 – Significant Accounting Policies in Part II Item 8 of this Form 10-K:
 
       
2007
   
2006
 
           
As Previously Reported
   
As Adjusted
   
As Previously Reported
   
As Adjusted
 
Operating Results:
                               
Net sales
              $ 2,703,212     $ 2,703,212     $ 2,369,612     $ 2,369,612  
Gross margin
                852,708       857,940       746,146       752,237  
Selling, general and administrative expenses
                641,603       641,603       555,834       555,834  
Depreciation and amortization
                51,064       51,064       42,292       42,292  
                                             
Operating income
                160,041       165,273       148,020       154,111  
Interest expense, net
                5,037       5,037       2,688       2,688  
                                             
Income before income taxes
                155,004       160,236       145,332       151,423  
Income tax provision
                58,763       60,777       54,324       56,677  
                                             
Net income
              $ 96,241     $ 99,459     $ 91,008     $ 94,746  
                                             
Net income per share – basic (b) (c)
              $ 1.23     $ 1.27     $ 1.14     $ 1.18  
                                             
Net income per share – assuming dilution (b) (c)
              $ 1.20     $ 1.24     $ 1.11     $ 1.15  
                                             
Adjusted weighted average shares for dilutive earnings per share (c)
                80,200       80,200       82,119       82,119  
                                             
Operating Data (percent of net sales):
                                           
Gross margin
                31.5 %     31.7 %     31.5 %     31.7 %
Selling, general and administrative expenses
                23.7 %     23.7 %     23.5 %     23.5 %
Operating income
                5.9 %     6.1 %     6.2 %     6.5 %
Net income
                3.6 %     3.7 %     3.8 %     4.0 %
                                             
 
 
 
2008
   
2007
   
2006
 
   As Previously Reported    
As Adjusted
     As Previously Reported      
As Adjusted
     As Previously Reported      
As Adjusted
 
Balance Sheet Data (at end of period):
                                           
Working capital
$ 295,518   $ 337,225     $ 324,799     $ 340,405     $ 328,134     $ 340,522  
Total assets
  1,075,997     1,143,301       1,057,971       1,083,185       998,258       1,010,639  
Long-term debt, less current portion (h)
  1,797     1,797       57,351       57,351       2,808       2,808  
Stockholders’ equity
  610,130     651,799       565,337       580,943       598,904       611,292  
 
(b) Basic net income per share is calculated based on the weighted average number of common shares outstanding applied to net income.  Diluted net income per share is calculated using the treasury stock method for stock options and restricted stock units.
(c) Adjusted to reflect two-for-one stock split that was effective September 2, 2010.
(d) Reflects remodelings costing more than $150,000.
(e) Includes assets acquired through capital leases.
(f) Same-store sales increases (decreases) are calculated on an annual basis, including relocations in 2010, 2009 and 2008 and excluding relocations in 2007 and 2006, using all stores open at least one year.
(g) Average sales per store is calculated based on total sales divided by the weighted average number of stores open in the year.
(h) Long-term debt includes borrowings under the Company's revolving credit agreement and amounts outstanding under its capital lease obligations, excluding the current portion.
 


Item 7.                      Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview
Tractor Supply Company is the largest operator of retail farm and ranch stores in the United States and is focused on supplying the lifestyle needs of recreational farmers and ranchers and of those who enjoy the rural lifestyle, as well as tradesmen and small businesses. We operate retail stores under the names Tractor Supply Company and Del’s Farm Supply and operate a website under the name TractorSupply.com. Our stores are located in towns outlying major metropolitan markets and in rural communities, and they offer the following comprehensive selection of merchandise:

·  
Equine, pet and small animal products, including items necessary for their health, care, growth and containment;
·  
Hardware, truck, towing and tool products;
·  
Seasonal products, including lawn and garden items, power equipment, gifts and toys;
·  
Maintenance products for agricultural and rural use; and
·  
Work/recreational clothing and footwear.

Our Tractor Supply stores typically range in size from 15,500 to 18,500 square feet of inside selling space and additional outside selling space. We use a standard 15,500 square foot prototype for new purpose-built locations.  For new stores located in existing buildings, one of several layout formats is utilized.

Our wholly-owned subsidiary, Del’s, operated 26 stores as of December 25, 2010 in Washington, Oregon, Idaho and Hawaii. Del’s stores currently range in size from approximately 2,000 to 6,000 square feet of inside selling space plus additional outside and covered/sheltered selling space.
 
 
Our current and long-term growth strategy is to:  (1) expand geographic market presence through opening new retail stores, (2) enhance financial performance through same-store sales increases, achieved through targeted merchandising programs with an “everyday value prices” philosophy and supported by strong customer service, (3) enhance product margin through assortment management, vendor management, sourcing and optimization of transportation  and distribution costs, (4) leverage operating costs, especially advertising, distribution and corporate overhead, (5) expand market opportunities via internet sales, and (6) expand through selective acquisition, as such opportunities arise, to enhance penetration into new and existing markets as a complimentary strategy to organic growth.

We have experienced considerable sales growth over the past five years, with a compounded annual growth rate of approximately 12.0%.  We project an increase of 80 to 85 new stores in 2011, an increase of approximately 8%.  We opened 74 new stores in 2010 and 76 new stores in 2009, an increase of approximately 8% and 9%, respectively.

We operated 1,001 retail farm and ranch stores in 44 states as of December 25, 2010.  We have developed a proven method for selecting store sites and have identified over 800 potential additional markets for new Tractor Supply stores in the United States.

The average cash investment for new leased stores opened in 2010 was $1.2 million for retrofit stores and $0.9 million for prototype stores. A majority of the cash outlay was for initial acquisition of inventory and capital expenditures (principally leasehold improvements, fixtures and equipment), and approximately $92,000 for pre-opening costs.

We have placed significant emphasis on our merchandising programs, evaluating the sales and profitability of our products through detailed line reviews, review of vendor performance measures and modification of the overall product offerings. We believe these efforts, coupled with a strong marketing program and in-depth product knowledge training of our store team members, have enhanced our sales and financial performance.

Change in Accounting Method
Effective December 25, 2010, the Company elected to change its method of accounting for inventories from the lower of cost, as determined by the last-in, first-out (“LIFO”) method, or market to the lower of cost, as determined by the average cost method, or market.  The Company believes the change is preferable as the average cost method better reflects the current value of inventory on the consolidated balance sheets, provides a better reflection of periodic income and improves comparability with our peers.

The Company has applied this change in method of inventory costing retrospectively to all prior periods presented herein in accordance with accounting principles relating to accounting changes.  All financial information in Item 8 of this 10-K has been retrospectively adjusted.  See Note 1,  Significant Accounting Policies, to the Notes to Consolidated Financial Statements, included in Item 8,  Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, for a complete discussion of our change in accounting method.

Stock Split
 
On July 29, 2010, our Board of Directors announced a two-for-one split of our outstanding shares of common stock to be effected in the form of a stock dividend. On September 2, 2010, stockholders of record at the close of business on August 19, 2010, were issued one additional share of common stock for each share owned by such stockholder.  The stock split increased the number of shares of common stock outstanding from approximately 36.3 million to approximately 72.7 million.  Share and per-share amounts (including stock options and restricted stock units) shown in this Form 10-K reflect the split. The total number of authorized common shares and the par value thereof was not changed by the split.  The number of shares held in treasury was not adjusted for the split.

Seasonality and Weather
Our business is highly seasonal.  Historically, our sales and profits have been the highest in the second and fourth fiscal quarters due to the sale of seasonal products. Unseasonable weather, excessive precipitation, drought, and early or late frosts may also affect our sales.  We believe, however, that the impact of extreme weather conditions is somewhat mitigated by the geographic dispersion of our stores.

We experience our highest inventory and accounts payable levels during our first fiscal quarter for purchases of seasonal product in anticipation of the spring selling season and again during our third fiscal quarter in anticipation of the winter selling season.

 
Purchase Price Volatility
Although we cannot determine the full effect of inflation and deflation on our operations, we believe our sales and results of operations are affected by both.  We are subject to market risk with respect to the pricing of certain products and services, which include, among other items, steel, grain, petroleum, corn, soybean and other commodities as well as transportation services.  Therefore, we may experience both inflationary and deflationary pressure on product cost, which may impact consumer demand and, as a result, sales and gross margin.  Our strategy is to reduce or mitigate the effects of purchase price volatility principally by taking advantage of vendor incentive programs, economies of scale from increased volume of purchases, adjusting retail prices and selectively buying from the most competiti ve vendors without sacrificing quality.  Due to the competitive environment, such conditions have and may continue to adversely impact our financial performance.

 
Significant Accounting Policies and Estimates
Management’s discussion and analysis of our financial position and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.  The preparation of these financial statements requires management to make informed estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.  Our financial position and/or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies.  In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.  Our significant accounting policies are disclosed in Note 1 to our Consolidated Financial Statements.  The following discussion addresses our most critical accounting policies, which are those that are both important to the portrayal of our financial condition and results of operations and that require significant judgment or use of complex estimates.


Description
Judgments and Uncertainties
Effect if Actual Results Differ From Assumptions
     
Revenue Recognition and Sales Returns:
   
We recognize revenue at the time the customer takes possession of merchandise or receives services.  If we receive payment before the customer has taken possession of the merchandise (as per our special order and layaway programs), the revenue is deferred until the sale is complete.  Revenues from the sale of gift cards are deferred and recognized when the gift card or merchandise return card is redeemed by the customer. Income is recognized when the likelihood of the gift card or merchandise return card being redeemed by the customer is remote (referred to as “breakage”).
We estimate a liability for sales returns based on a rolling average of historical return trends, and we believe that our estimate for sales returns is an accurate reflection of future returns associated with past sales.  Our estimation methodologies have been consistently applied from year to year; however, as with any estimate, refund activity may vary from estimated amounts.
 
The gift card and merchandise return card breakage rate is based upon historical redemption patterns and a benefit is recognized for estimated unredeemed gift cards and merchandise return cards in proportion to those historical redemption patterns.
We have not made any material changes in the accounting methodology used to recognize sales returns or breakage 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 sales returns or gift card and merchandise return card breakage.  However, if actual consumer return or gift card and merchandise return card redemption patterns are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material.
 
A 50 basis point change in our sales return rate at December 25, 2010, would have affected net income by approximately $170,000 in fiscal 2010.
 
A 50 basis point change in our gift card and merchandise return card breakage rate would have affected net income by approximately $340,000 in fiscal 2010.
     
Inventory Valuation:
   
Inventory Impairment Risk
   
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.  The estimated inventory valuation reserve to recognize any impairment in value (i.e., an inability to realize the full carrying value) is 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 impairment reserve at December 25, 2010, would have affected net income by approximately $490,000 in fiscal 2010.
 
     
Description   Judgments and Uncertainties   Effect if Actual Results Differ From Assumptions
     
Shrinkage
   
We perform physical inventories at each store at least once a year, and we have established reserves 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 and the effect of loss prevention measures and new merchandising strategies.
We have not made any material changes in the 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 at December 25, 2010, would have affected net income by approximately $815,000 in fiscal 2010.
     
Vendor Support
   
We receive funding from substantially all of our significant merchandise vendors for the promotion of our brand as well as the sale of their products through a variety of programs and arrangements, including guaranteed funding and volume rebate programs.  The amounts received are subject to terms of vendor agreements, which have varying expiration dates ranging in duration from several months to a few  years.  Many agreements are negotiated annually and are 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 e xpected funding is estimated based upon initial guaranteed commitments, as well as 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 vendor funding at interim periods, it is possible that actual year-end results could significantly differ 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 collectibility.
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 support.
 
We do not believe there is a significant collectibility risk related to vendor support amounts due us at the end of fiscal 2010.
 
If a 10% reserve had been applied against our outstanding vendor support due as of December 25, 2010, net income would have been affected by approximately $1.6 million.
 
Although it is unlikely that there will be any significant reduction in historical levels of vendor support, if such a reduction were to occur in future periods, the Company could experience a higher inventory balance and higher cost of sales.
     
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.
If a 10% increase or decrease had been applied against our current inventory capitalized freight balance, net income would have been affected by approximately $3.4 million.
     
Share-Based Compensation:
   
We have share-based compensation plans, which include incentive and non-qualified stock options, restricted stock units, and an employee stock purchase plan. See Note 1,  Significant Accounting Policies, and Note 2, Share-Based Compensation, to the Notes to Consolidated Financial Statements, included in Item 8,  Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, for a complete discussion of our share-based compensation programs.
We estimate the fair value of our stock option awards at the date of grant utilizing a Black-Scholes option pricing model.   We estimate the fair value of our market-based restricted stock units at the date of grant utilizing average market price of our stock on the date of the related award.
Option-pricing models and generally accepted valuation techniques require management to make subjective assumptions and to apply judgment to determine the fair value of our awards. These assumptions and judgments include estimating the future volatility of our stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors. In addition to the key assumptions used to estimate the fair value, the estimated forfeiture rate of the awarded options is a critical assumption, as it reduces expense ratably over the vesting period.  Changes in these assumptions can materially affect the fair value estimate and the amount of share-based compensation recognized.
While we update our assumptions annually, 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 determine share-based compensation expense. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to changes in share-based compensation expense that could be material.  The reported share-based compensation expense may not be representative of the actual economic cost of the share-based compensation.
A 10% change in our share-based compensation expense for the year ended December 25, 2010, would have affected net income by approximately $750,000.
     
 
     
Description  Judgments and Uncertainties Effect if Actual Results Differ From Assumptions
     
Self-Insurance Reserves:
   
We self-insure a significant portion of our employee medical insurance, workers' compensation and general liability insurance plans.  We have stop-loss insurance policies to protect from individual losses over specified dollar values.
When estimating our self-insured liabilities, we consider a number of factors, including historical claims experience, demographic factors and severity factors.
The full extent of certain claims, especially 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.
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 at December 25, 2010, would have affected net income by approximately $1.8 million in fiscal 2010.
 
     
Sales Tax Audit Reserve:
   
A portion of our sales are to tax-exempt customers.  We obtain exemption information as a necessary part of each tax-exempt transaction.  Many of the states in which we conduct business will perform audits to verify our compliance with applicable sales tax laws.  The business activities of our customers and the intended use of the unique products sold by us create a challenging and complex compliance environment.  These circumstances also create some risk that we could be challenged as to the propriety of our sales tax compliance.
While we believe we reasonably enforce sales tax compliance with our customers and endeavor to fully comply with all applicable sales tax regulations, there can be no assurance that we, upon final completion of such audits, would not have a significant liability for disallowed exemptions.
We review our past audit experience and assessments with applicable states to determine if we have potential exposure for non-compliance.  Any estimated liability is based on an initial assessment of compliance risk and our to-date experience with each audit. As each audit progresses, we quantify the exposure based on preliminary assessments made by the state auditors, adjusted for additional documentation that may be provided to reduce the assessment.
Our sales tax audit reserve contains uncertainties because management is required to make assumptions and to apply judgment regarding the regulatory support for the complexity of agricultural-based exemptions, the ambiguity in state tax regulations, the number of ongoing audits, and the length of time required to settle with the state taxing authorities.
We have not made any material changes in the methodology used to establish the sales tax audit reserve 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 the sales tax liability reserve for current audits.  However, if our estimates regarding the ultimate sales tax liability are inaccurate, we may be exposed to losses or gains that could be material.
A 10% change in our sales tax liability reserve at December 25, 2010, would have affected net income by approximately $470,000 in fiscal 2010.
     
Tax Contingencies:
   
Our income tax returns are periodically audited by U.S. federal and state tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated with our various tax filing positions, we record reserves for probable exposures. A number of years may elapse before a particular matter, for which we have established a reserve, is audited and fully resolved or clarified. We adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve, the st atute of limitations expires for the relevant tax authority to examine the tax position or when more information becomes available.
 
We recognize a liability for certain tax benefits that do not meet the minimum requirements for recognition in the financial statements.
Our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether or not the minimum requirements for recognition of tax benefits have been met.
 
Our effective income tax rate is also affected by changes in tax law, the tax jurisdiction of new stores or business ventures, the level of earnings and the results of tax audits.
We do not believe there is a reasonable likelihood that there will be a material change in the reserves established for tax benefits not recognized.
 
Although management believes that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material.
 
To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of our cash and would result in an increase in our effective income tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction in our effective income tax rate in the period of resolution.
 
A 10% change in our unrecognized tax benefit reserve at December 25, 2010 would have affected net income by approximately $370,000 in fiscal 2010.
     
 
     
 Description  Judgments and Uncertainties  Effect if Actual Results Differ From Assumptions
     
 
Goodwill:
   
Goodwill and intangible assets with indefinite lives are not amortized.  We evaluate goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. We complete our impairment evaluation by performing internal valuation analyses, considering other publicly available market information and using an independent valuation firm, as appropriate.
At December 26, 2009 all goodwill was associated with the Del’s business and, for purposes of the fiscal 2009 impairment testing, Del’s was considered the reporting unit.  In October 2010, we reevaluated the Del’s reporting unit and concluded that since Del’s has become closely aligned in terms of management, infrastructure, philosophy and performance, we now have only one reporting unit for goodwill impairment evaluation.  All goodwill at December 25, 2010 is associated with the Company as a whole.
In the fourth quarter of fiscal 2010, we completed our annual impairment testing of goodwill, and determined there was no impairment. We determined that the fair value of the reporting unit (including goodwill) was in excess of the carrying value of the reporting unit.  In reaching this conclusion, the fair value of the reporting unit was determined based on a market approach. Under the market approach, the fair value is based on observed market prices.
We determine fair value using widely accepted valuation techniques, including discounted cash flow and market multiple analyses. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies.  Estimates include revenues, gross margins, operating costs and cash flows. We considered historical and estimated future results, economic and market conditions and the impact of planned business and operational strategies in deriving these estimates.
In developing the key judgments and assumptions used to assess impairment, we consider economic, operational and market conditions that could impact the fair value of the reporting unit.  These estimates and the judgments and assumptions upon which the estimates are based may differ in some respects from actual results.  Should a significant or prolonged deterioration in economic conditions persist, then key judgments and assumptions may be impacted. At December 25, 2010, the fair value of the reporting unit exceeded the carrying value of its net assets by a significant amount. However, if actual results are not consistent with our current estimates or assumptions, we may be exposed to an impairment charge that could be material.
     
Long-Lived Assets:
   
Long-lived assets other than goodwill and indefinite-lived intangible assets, which are separately tested for impairment, 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 to the asset’s estimated future cash flows (undiscounted and without interest charges). 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 asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on an estimated future cash flow model. 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 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, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.
We have not made any material changes in our impairment loss assessment methodology in the financial periods presented.
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.

 
Quarterly Financial Data

Our unaudited quarterly operating results for each fiscal quarter of 2010 and 2009 are shown below (in thousands, except per share amounts):

   
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter(2)
 
2010 (1)
 
As Previously Reported
   
As
Adjusted
   
As Previously Reported
   
As
Adjusted
   
As Previously Reported
   
As
Adjusted
         
As
Reported
 
Net sales
  $ 710,917     $ 710,917     $ 1,065,656     $ 1,065,656     $ 829,114     $ 829,114           $ 1,032,649  
Gross margin
    228,884       230,931       358,803       360,129       279,139       275,688             336,917  
Operating income
    14,420       16,467       122,322       123,648       50,858       47,407             78,702  
Net income
    9,308       10,582       76,487       77,318       32,017       29,863             50,209  
                                                               
Net income per share:(3)
                                                             
Basic
  $ 0.13     $ 0.15     $ 1.05     $ 1.06     $ 0.44     $ 0.41           $ 0.69  
Diluted
  $ 0.13     $ 0.14     $ 1.02     $ 1.04     $ 0.43     $ 0.40           $ 0.67  
                                                               
Same-store sales increase
    2.8 %     2.8 %     6.1 %     6.1 %     5.0 %     5.0 %           13.1 %
                                                               
   
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
 
2009 (1)
 
As Previously Reported
   
As
Adjusted
   
As Previously Reported
   
As
Adjusted
   
As Previously Reported
   
As
Adjusted
   
As Previously Reported
   
As
Adjusted
 
Net sales
  $ 650,171     $ 650,171     $ 946,504     $ 946,504     $ 747,730     $ 747,730     $ 862,532     $ 862,532  
Gross margin
    201,036       203,870       302,198       305,901       246,038       247,934       285,685       284,184  
Operating income
    1,185       4,019       88,294       91,997       35,797       37,693       59,357       57,856  
Net income
    470       2,199       54,764       57,097       21,979       23,175       38,253       37,274  
                                                                 
Net income per share:(3)
                                                               
Basic
  $ 0.01     $ 0.03     $ 0.76     $ 0.80     $ 0.30     $ 0.32     $ 0.53     $ 0.52  
Diluted
  $ 0.01     $ 0.03     $ 0.75     $ 0.78     $ 0.30     $ 0.32     $ 0.52     $ 0.51  
                                                                 
Same-store sales increase (decrease)
    4.2 %     4.2 %     (2.7 %)     (2.7 %)     (5.1 %)     (5.1 %)     0.7 %     0.7 %
                                                                 
                                                                 
 
(1)      
Amounts have been adjusted for the change in inventory accounting method from LIFO to average cost.
(2)
The fiscal fourth quarter does not require an adjustment for the change in inventory accounting method as this change occurred during this period.
(3)
Due to the nature of interim earnings per share calculations, the sum of quarterly earnings per share amounts may not equal the reported earnings per share for the year.

 

Results of Operations

Our fiscal year includes 52 or 53 weeks and ends on the last Saturday of the calendar year.  References to fiscal year mean the year in which that fiscal year ended.  The fiscal years ended December 25, 2010, December 26, 2009 and December 27, 2008 contain 52 weeks.  All amounts have been adjusted to reflect the Company’s election to change its method of accounting for inventories from the last-in, first-out (LIFO) method to the average cost method.

The following table sets forth, for the periods indicated, certain items in our Consolidated Statements of Income expressed as a percentage of net sales.

   
2010
   
2009
   
2008
 
Net sales
    100.0 %     100.0 %     100.0 %
Cost of merchandise sold (a)
    66.9       67.5       68.2  
Gross margin (a)
    33.1       32.5       31.8  
Selling, general and administrative expenses(a)
    23.9       24.4       23.8  
Depreciation and amortization
    1.9       2.1       2.0  
Operating income
    7.3       6.0       6.0  
Interest expense, net
    --       0.1       0.1  
Income before income taxes
    7.3       5.9       5.9  
Income tax provision
    2.7       2.2       2.3  
Net income
    4.6 %     3.7 %     3.6 %
                         
                         
(a)Our gross margin amounts may not be comparable to those of other retailers since some retailers include all of the costs related to their distribution network in cost of merchandise sold and others like us exclude a portion of these distribution network costs from gross margin and instead include them in selling, general and administrative (“SG&A”) expenses; refer to Note 1 – Significant Accounting Policies, of the Notes to Consolidated Financial Statements, included in Item 8 Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
 

Fiscal 2010 Compared to Fiscal 2009

Net sales increased 13.5% to $3.64 billion in fiscal 2010 from $3.21 billion in fiscal 2009. This increase resulted from the opening of new stores and a 7.0% increase in same-store sales.  The same-store average daily transaction count increased 7.4%, while same-store transaction value decreased 0.3% for fiscal 2010.

Same-store sales increased 7.0% compared with a same-store sales decrease of 1.1% in the prior year.  This same-store sales increase was broad-based and driven by strong results in core consumable categories, principally animal and pet-related products, as well as seasonal products, including heating, insulated outerwear and outdoor power equipment.

In fiscal 2010, we opened 74 new stores (compared to 76 new stores in fiscal 2009), relocated no stores (compared to two in fiscal 2009) and closed three stores (compared to one store in fiscal 2009).

Gross margin increased 15.5% to $1.20 billion compared to $1.04 billion in 2009.  As a percent of sales, gross margin increased to 33.1% for fiscal 2010 compared to 32.5% for fiscal 2009.  The improvement in gross margin is primarily due to expanded direct product margin and a decrease in shrink, partially offset by increased transportation costs. The direct product margin improvement resulted from continued progress on margin driving initiatives which include strategic sourcing, inventory management, and more effective pricing.

As a percent of sales, SG&A expenses including depreciation and amortization improved 70 basis points to 25.8% in fiscal 2010 from 26.5% in fiscal 2009.  The improvement as a percent to sales was primarily attributable to the leverage of strong same-store sales and expense management, partially offset by an increase in incentive compensation expense.

Net interest expense decreased 21.9% to $1.3 million in fiscal 2010 from $1.6 million in fiscal 2009.  This decrease is directly related to lower average borrowings and a decline in interest charges associated with sales tax audits.

Our effective tax rate decreased to 36.6% for fiscal 2010 compared to 36.9% in fiscal 2009. This reduction in the tax resulted from a greater tax benefit received on the disqualified disposition of incentive stock options during fiscal 2010 compared to fiscal 2009.

As a result of the foregoing factors, net income for fiscal 2010 increased 40.3% to $168.0 million, or $2.25 per diluted share, as compared to net income of $119.7 million, or $1.63 per diluted share, in fiscal 2009.

During 2010, we repurchased approximately 0.8 million shares of stock for $38.2 million as part of our previously announced $400 million share repurchase program.  In 2009, we repurchased approximately 0.4 million shares at a total cost of $15.3 million.  As mentioned in Note 1 – Significant Accounting Policies in Part II of this Form 10-K, the shares added to treasury were not adjusted for the stock split.

Fiscal 2009 Compared to Fiscal 2008

Net sales increased 6.6% to $3.21 billion in fiscal 2009 from $3.01 billion in fiscal 2008. This increase resulted from the opening of new stores partially offset by a 1.1% decrease in same-store sales.  The same-store average daily transaction count increased 5.3%, while same-store transaction value decreased 6.0% for fiscal 2009.

Same-store sales decreased 1.1% compared with a same-store sales increase of 1.4% in the prior year.  This same-store sales decline was primarily driven by softness in sales of seasonal big ticket (merchandise priced $350 or greater) and discretionary merchandise, partially offset by continued strong results in core consumable categories, including animal and pet-related products.

 
In fiscal 2009, we opened 76 new stores (compared to 91 new stores in fiscal 2008), relocated two stores (compared to one in fiscal 2008) and closed one store (compared to no stores in fiscal 2008).

Gross margin increased 9.1% to $1,041.9 million compared to $955.1 million in 2008.  As a percent of sales, gross margin increased to 32.5% for fiscal 2009 compared to 31.8% for fiscal 2008.  The increase in gross margin resulted primarily from lower transportation costs.

As a percent of sales, SG&A expenses increased 60 basis points to 24.4% in fiscal 2009 from 23.8% in fiscal 2008. This increase as a percent of sales was primarily attributable to the deleveraging related to the same-store sales decrease and higher incentive compensation and occupancy costs, partially offset by reduced marketing costs.  Depreciation and amortization expense increased 10 basis points as a percent of sales in fiscal 2009 over fiscal 2008 due mainly to costs associated with new stores.

Net interest expense decreased 22.9% to $1.6 million in fiscal 2009 from $2.1 million in fiscal 2008; however, net interest expense remained consistent as a percent of sales.  This decrease is directly related to lower average borrowings partially offset by higher interest charges associated with sales tax audits.

Our effective tax rate decreased to 36.9% for fiscal 2009 compared to 38.7% in fiscal 2008. This reduction in the tax resulted from the favorable impact of certain federal tax credits and a lower percentage of unfavorable permanent tax differences relative to income before taxes.

As a result of the foregoing factors, net income for fiscal 2009 increased 10.9% to $119.7 million, or $1.63 per diluted share, as compared to net income of $108.0 million, or $1.44 per diluted share, in fiscal 2008.

During 2009, we repurchased approximately 0.4 million shares of stock for $15.3 million as part of our previously announced $400 million share repurchase program.  In 2008, we repurchased approximately 1.6 million shares at a total cost of $53.9 million.  As mentioned in Note 1 – Significant Accounting Policies in Part II of this Form 10-K, the shares added to treasury were not adjusted for the stock split.

Liquidity and Capital Resources
 
In addition to normal operating expenses, our primary ongoing cash requirements are for expansion, remodeling and relocation programs, including inventory purchases and capital expenditures.  Our primary ongoing sources of liquidity are existing cash balances, funds provided from operations, commitments available under our revolving credit agreement, capital and operating leases and normal trade credit.  Our inventory and accounts payable levels typically build in the first and third fiscal quarters in anticipation of the spring and winter selling seasons, respectively.

Financial markets experienced volatility in the past few years, resulting in disruptions in credit and lending activities.  Further, disruptions in the capital and credit markets could adversely affect the ability of the banks to meet their commitments.  Our access to funds under the credit facility is dependent on the ability of the banks that are parties to the facility to meet their funding commitments.  Those banks may not be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time.  We have a diversified banking group which we believe should help mitigate any potential disruptions, if one occurs.

Working Capital

At December 25, 2010, we had working capital of $617.1 million, a $141.2 million increase from December 26, 2009.  This increase was primarily attributable to changes in the following components of current assets and current liabilities (in millions):

   
2010
   
2009
   
Variance
 
Current assets:
                 
Cash and cash equivalents
  $ 257.3     $ 172.9     $ 84.4  
Short-term investments
    15.9       --       15.9  
Inventories
    736.5       676.5       60.0  
Prepaid expenses and other current assets
    34.0       30.7       3.3  
      1,043.7       880.1       163.6  
Current liabilities:
                       
Accounts payable
  $ 247.4     $ 261.6     $ (14.2 )
Accrued employee compensation
    34.6       22.7       11.9  
Other accrued expenses
    127.4       100.7       26.7  
Current portion of capital lease obligation
    0.1       0.4       (0.3 )
Income taxes payable
    8.3       7.3       1.0  
Deferred income taxes
    8.8       11.5       (2.7 )
      426.6       404.2       22.4  
                         
Working capital
  $ 617.1     $ 475.9     $ 141.2  

In comparison to prior year end, working capital increased primarily as a result of an increase in cash and inventory. The increase in cash resulted principally from stronger earnings. The increase in inventory was primarily due to new store growth. Average inventory per store remained nearly flat at $709,000 for fiscal 2010 compared to $707,000 for fiscal 2009. This was partially offset by an increase in accrued expenses principally as a result of timing of payments and higher incentive compensation accruals over the prior year.

Accounts payable has declined as a result of an increase in cash held in our bank concentration account, which nets against accounts payable, as well as more timely payments in order to capture payment discounts offered by our vendors. Trade credit arises from our vendors granting payment terms for inventory purchases.  Payment terms generally vary from 30 days to 180 days depending on the inventory product.  Certain vendors offer payment discounts for payments made within a shorter period, typically within 10 to 15 days.

 
Borrowings and Credit Facilities

We are party to a Senior Credit Facility with Bank of America, N.A., as agent for a lender group (the “Credit Agreement”), which provides for borrowings up to $350 million (with sublimits of $75 million and $20 million for letters of credit and swingline loans, respectively).  The Credit Agreement has an Increase Option for $150 million (subject to additional lender group commitments).  The Credit Agreement is unsecured and matures in February 2012, with proceeds expected to be used for working capital, capital expenditures and share repurchases.

At December 25, 2010 and December 26, 2009, there were no outstanding borrowings under the Credit Agreement.  There were $27.4 million and $35.2 million outstanding letters of credit as of December 25, 2010 and December 26, 2009, respectively.  Borrowings bear interest at either the bank’s base rate (3.25% at December 25, 2010) or the London Inter-Bank Offer Rate (“LIBOR”) (0.26% at December 25, 2010) plus an additional amount ranging from 0.35% to 0.90% per annum, adjusted quarterly based on our performance (0.40% at December 25, 2010).  We are also required to pay, quarterly in arrears, a commitment fee ranging from 0.06% to 0.18% per annum and adjusted quarterly based on our performance, for unused capacity (0.075% at December 25, 2010).   There are no com pensating balance requirements associated with the Credit Agreement.

The Credit Agreement requires quarterly compliance with respect to two material covenants:  a fixed charge coverage ratio and a leverage ratio.  The fixed charge coverage ratio principally compares earnings before interest, taxes, depreciation, amortization, stock compensation and rent expense (“consolidated EBITDAR”) to the sum of interest paid and rental expense (excluding straight-line rent).  The leverage ratio principally compares total debt plus rental expense (excluding straight-line rent) multiplied by a factor of six to consolidated EBITDAR.  The Credit Agreement also contains certain other restrictions regarding additional indebtedness, capital expenditures, business operations, guarantees, investments, mergers, consolidations and sales of assets, transactions with subsidiar ies or affiliates, and liens.  We were in compliance with all covenants at December 25, 2010.

Sources and Uses of Cash

Our primary source of liquidity is cash provided by operations.  Principal uses of cash for investing activities are capital expenditures and financing activities are payments on debt, repurchase of the Company’s common stock, and payment of common stock dividends.  The following table presents a summary of cash flows from operating, investing and financing activities for the last three fiscal years (in millions):

   
2010
   
2009
   
2008
 
Net cash provided by operating activities
  $ 222.6     $ 215.3     $ 217.7  
Net cash used in investing activities
    (112.1 )     (73.8 )     (88.4 )
Net cash used in financing activities
    (26.0 )     (5.6 )     (105.5 )
Net increase in cash and cash equivalents
  $ 84.5     $ 135.9     $ 23.8  

Operating Activities

The $7.3 million increase in net cash provided by operations in fiscal 2010 over fiscal 2009 is primarily due to changes in the following operating activities (in millions):

   
2010
   
2009
   
Variance
 
Net income
  $ 168.0     $ 119.7     $ 48.3  
Depreciation and amortization
    69.8       66.3       3.5  
Stock compensation expense
    11.8       12.1       (0.3 )
Deferred income taxes
    2.7       (11.1 )     13.8  
Inventories and accounts payable
    (74.3 )     (29.9 )     (44.4 )
Prepaid expenses and other current assets
    (3.2 )     11.2       (14.4 )
Accrued expenses
    38.5       22.3       16.2  
Income taxes payable
    1.0       7.8       (6.8 )
Other, net
    8.3       16.9       (8.6 )
Net cash provided by operations
  $ 222.6     $ 215.3     $ 7.3  

Cash flow from operating activities continues to provide the primary source of our liquidity. The increase in net cash provided by operations in fiscal 2010 compared with fiscal 2009 was primarily due to stronger net income and an increase in accrued expenses partially offset by an increase in inventory, net of accounts payable, and an increase in prepaids and other current assets. Continued store growth has resulted in increased inventory balances.  Accounts payable levels have decreased as a result of more timely payments in order to capture payment discounts offered by vendors and also as a result of an increase in cash held in our bank concentration account.  The bank concentration account nets against the related book overdraft included in accounts payable. Accrued expenses increased as a result of timing of pa yments as well as incentive compensation earned in fiscal 2010 but not paid until fiscal 2011.

The $2.4 million decrease in net cash provided by operations in fiscal 2009 over fiscal 2008 is primarily due to changes in the following operating activities (in millions):

   
2009
   
2008
   
Variance
 
Net income
  $ 119.7     $ 108.0     $ 11.7  
Depreciation and amortization
    66.3       60.7       5.6  
Stock compensation expense
    12.1       12.3       (0.2 )
Deferred income taxes
    (11.1 )     18.5       (29.6 )
Inventories and accounts payable
    (29.9 )     18.2       (48.1 )
Prepaid expenses and other current assets
    11.2       1.0       10.2  
Accrued expenses
    22.3       (1.8 )     24.1  
Income taxes payable
    7.8       (6.3 )     14.1  
Other, net
    16.9       7.1       9.8  
Net cash provided by operations
  $ 215.3     $ 217.7     $ (2.4 )


 
The decrease in net cash provided by operations in fiscal 2009 compared with fiscal 2008 was due to changes in inventory levels and the timing of payments, partially offset by higher net income and an increase in accrued expenses.  Inventory levels remained nearly flat in 2009 compared to 2008 due to a continued focus on inventory management in 2009. Accounts payable levels have decreased substantially as a result of more timely payments to capture payment discounts offered by vendors. Accrued expenses increased as a result of timing of payments as well as incentive compensation earned in fiscal 2009 but not paid until fiscal 2010.

Investing Activities

Investing activities used $112.1 million, $73.8 million and $88.4 million in fiscal 2010, 2009 and 2008, respectively. The majority of this cash requirement relates to our capital expenditures.  Our significant store expansion, coupled with required investment in infrastructure, resulted in the following capital expenditures, including capital leases (in millions):

   
2010
   
2009
   
2008
 
New and relocated stores and stores not yet opened
  $ 28.6     $ 31.7     $ 39.8  
Distribution center capacity and improvements
    18.1       4.3       16.2  
Existing stores
    17.6       18.4       10.0  
Information technology
    14.9       17.6       17.2  
Purchase of previously leased stores
    11.6       --       8.5  
Corporate and other
    5.7       2.0       0.1  
    $ 96.5     $ 74.0     $ 91.8  

Our long-term growth strategy anticipates continued geographic market expansion and further concentration within existing markets.  This growth will also require continuing investment in information technology.  The costs reflected above are typically building improvements, as we lease the majority of our facilities.  We currently estimate that capital expenditures will range between $150 million and $160 million in fiscal 2011.  While we plan to open only a few more stores in 2011 compared to 2010, we expect to have additional capital expenditures next year as we construct a new distribution center and implement a comprehensive warehouse management system designed to improve throughput and efficiencies in the distribution center network, along with other efficiency-driving system enhancements in 2011.

Financing Activities

Financing activities used $26.0 million, $5.6 million, and $105.5 million in fiscal 2010, 2009 and 2008, respectively.  The cash used by financing activities in fiscal 2010 is mainly the result of quarterly cash dividends paid to stockholders and repurchases of common stock, partially offset by increased net proceeds from issuance of common stock related to share-based compensation.

We have a Board-approved share repurchase program which provides for repurchase of up to $400 million of common stock, exclusive of any fees, commissions, or other expenses related to such repurchases, through December 2011.  The repurchases may be made from time to time on the open market or in privately negotiated transactions.  The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions.  Repurchased shares will be held in treasury.  The program may be limited or terminated at any time without prior notice.

We repurchased approximately 0.8 million, 0.4 million and 1.6 million shares under the share repurchase program for a total cost of $38.2 million, $15.3 million and $53.9 million in fiscal 2010, 2009 and 2008, respectively.  As mentioned in Note 1 – Significant Accounting Policies in Part II of this Form 10-K, the shares added to treasury were not adjusted for the stock split.  Repurchased shares are accounted for at cost and will be held in treasury for future issuance.  As of December 25, 2010, we had remaining authorization under the share repurchase program of $142.8 million exclusive of any fees, commissions, or other expenses.

We believe that our existing cash balances, expected cash flow from future operations, borrowings available under the Credit Agreement, and normal trade credit will be sufficient to fund our operations and our capital expenditure needs, including store openings, relocations and renovations, over the next several years.

Significant Contractual Obligations and Commercial Commitments

The following table reflects our future obligations and commitments as of December 25, 2010 (in thousands):
 
    Payment Due by Period  
   
Total
Contractual
Obligations
   
Less than
1 year
   
1-3 years
   
4-5 years
   
More than
5 years
 
 Operating leases   $ 1,545,028     $ 174,846     $ 335,140     $ 297,282     $ 737,760  
 Capital leases (1)     2,716       206       292       292       1,926  
 Purchase obligations (2)     32,242       32,242       --       --       --  
    $ 1,579,986     $ 207,294     $ 335,432     $ 297,574     $ 739,686  
                                         
 
   (1) Capital lease obligations include related interest.
   (2)   The amounts for purchase obligations include commitments for construction of stores and a distribution center expected to be opened in fiscal 2011.
     
 
The Company had outstanding letters of credit of $27.4 million as of December 25, 2010.

 
Off-Balance Sheet Arrangements

Our off-balance sheet arrangements consist of operating leases and outstanding letters of credit.  The balances for these arrangements are discussed above. We typically lease buildings for retail stores and offices rather than acquiring these assets which allows us to utilize financial capital to operate the business rather than invest in fixed assets.  Letters of credit allow us to purchase inventory, primarily sourced overseas, and support certain risk management programs in a timely manner.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Topic 810 (originally issued as Statement of Financial Accounting Standards No. 167, “Amendments to FASB Interpretation No. (“FIN”) 46(R)”).  Among other items, ASC 810 responds to concerns about an enterprise’s application of certain key provisions of FIN 46(R), including those regarding the transparency of the enterprise’s involvement with variable interest entities.  ASC 810 is effective for the first annual period that begins after November 15, 2009, and for interim periods within that first annual reporting period.  The Company adopted the standard for the interim period ended March 27, 2010.  There was no impact on the C ompany’s financial position, results of operations, cash flows, or disclosures.

In February 2010, the FASB issued Accounting Standards Update No. 2010-09 (ASU No. 2010-09), “Subsequent Events (Topic 855):  Amendments to Certain Recognition and Disclosure Requirements.”  The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements, through which subsequent events have been reviewed.  Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP.  ASU No. 2010-09 was effective upon issuance.  The adoption of this guidance did not have an impact on our financial condition, results of operations or cash flows.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We may be exposed to changes in interest rates primarily from the Credit Agreement. The Credit Agreement bears interest at either the bank’s base rate (3.25% at both December 25, 2010 and December 26, 2009) or LIBOR (0.26% and 0.23% at December 25, 2010 and December 26, 2009, respectively) plus an additional amount ranging from 0.35% to 0.90% per annum, adjusted quarterly, based on our performance (0.40% and 0.50% at December 25, 2010 and December 26, 2009, respectively).  We are also required to pay (quarterly in arrears) a commitment fee ranging from 0.06% to 0.18% based on the daily average unused portion of the credit line (0.075% at December 25, 2010 and 0.10% December 26, 2009).

Item 8.                      Financial Statements and Supplementary Data

INDEX
TRACTOR SUPPLY COMPANY
 
 
 
 



The Board of Directors and Stockholders of
Tractor Supply Company

We have audited Tractor Supply Company’s internal control over financial reporting as of December 25, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Tractor Supply Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations o f management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Tractor Supply Company maintained, in all material respects, effective internal control over financial reporting as of December 25, 2010, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Tractor Supply Company as of December 25, 2010 and December 26, 2009 and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended December 25, 2010 and our report dated February 23, 2011 expressed an unqualified opinion thereon.
 
 
 
 
/s/ Ernst & Young LLP

 
Nashville, Tennessee
February 23, 2011


Report of Independent Registered Public Accounting Firm


The Board of Directors and Stockholders of
Tractor Supply Company

We have audited the accompanying consolidated balance sheets of Tractor Supply Company as of December 25, 2010 and December 26, 2009, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 25, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tractor Supply Company at December 25, 2010 and December 26, 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 25, 2010, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company has elected to change its method of accounting for inventory from the lower of cost, as determined by the last-in first-out (LIFO) method, or market, to the lower of cost, as determined by the average cost method, or market, effective December 25, 2010.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Tractor Supply Company's internal control over financial reporting as of December 25, 2010, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2011 expressed an unqualified opinion thereon.
 
 
 

/s/ Ernst & Young LLP
 

Nashville, Tennessee
February 23, 2011

(in thousands, except per share amounts)


   
Fiscal Year
 
   
2010
   
2009
   
2008
 
                   
Net sales
  $ 3,638,336     $ 3,206,937     $ 3,007,949  
                         
Cost of merchandise sold
    2,434,671       2,165,048       2,052,894  
                         
Gross margin
    1,203,665       1,041,889       955,055  
                         
Selling, general and administrative expenses
    867,644       784,066       715,961  
Depreciation and amortization
    69,797       66,258       60,731  
                         
Operating income
    266,224       191,565       178,363  
                         
Interest expense, net
    1,284       1,644       2,133  
                         
Income before income taxes
    264,940       189,921       176,230  
                         
Income tax expense
    96,968       70,176       68,237  
                         
Net income
  $ 167,972     $ 119,745     $ 107,993  
                         
Net income per share – basic(a)
  $ 2.31     $ 1.66     $ 1.47  
                         
Net income per share – assuming dilution(a)
  $ 2.25     $ 1.63     $ 1.44  
                         
Weighted average shares outstanding:(a)
                       
Basic
    72,597       71,981       73,661  
Diluted
    74,686       73,297       74,927  
                         
Dividends declared per common share outstanding (a)
  $ 0.28     $ --     $ --  
 
(a)
 All share and per share information has been adjusted to reflect the two-for-one stock split as discussed in Note 1.


(in thousands, except share amounts)

   
December 25,
2010
   
December 26,
2009
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 257,339     $ 172,851  
Short-term investments
    15,913       --  
Inventories
    736,520       676,466  
Prepaid expenses and other current assets
    33,945       30,747  
Total current assets
    1,043,717       880,064  
                 
Property and Equipment:
               
Land
    30,350       27,646  
Buildings and improvements
    380,228       350,505  
Furniture, fixtures and equipment
    256,369       226,967  
Computer software and hardware
    94,878       88,700  
Construction in progress
    20,961       11,562  
      782,786       705,380  
Accumulated depreciation and amortization
    (386,997 )     (335,135 )
Property and equipment, net
    395,789       370,245  
                 
Goodwill                                                                                                
    10,258       10,258  
Deferred income taxes
    5,750       11,091  
Other assets
    7,960       4,922  
                 
Total assets
  $ 1,463,474     $ 1,276,580  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 247,388     $ 261,635  
Accrued employee compensation
    34,576       22,725  
Other accrued expenses
    127,386       100,695  
Current portion of capital lease obligations
    91       392  
Income taxes payable
    8,269       7,265  
Deferred income taxes
    8,854       11,505  
Total current liabilities
    426,564       404,217  
                 
Revolving credit loan
    --       --  
Capital lease obligations, less current maturities
    1,316       1,407  
Deferred rent
    70,697       63,470  
Other long-term liabilities
    31,655       28,335  
Total liabilities
    530,232       497,429  
                 
Stockholders’ equity:
               
Preferred Stock, 40,000 shares authorized; $1.00 par value; no shares issued
    --       --  
Common Stock, 100,000,000 shares authorized, $.008 par value; 78,835,508 shares issued and 72,775,862 shares outstanding at December 25, 2010 and 77,386,151  shares issued and 72,152,816 shares outstanding at December 26, 2009
    631       619  
Additional paid-in capital
    235,283       190,649  
Treasury stock, at cost, 6,059,646 shares at December 25, 2010 and 5,233,335 shares at December 26, 2009
    (257,376 )     (219,204 )
Retained earnings
    954,704       807,087  
Total stockholders’ equity
    933,242       779,151  
                 
Total liabilities and stockholders’ equity
  $ 1,463,474     $ 1,276,580  



(in thousands, except share amounts)


   
Common
Stock (a)
   
Additional
Paid-in
Capital (a)
   
Treasury
Stock
   
Retained
Earnings
   
Total
Stockholders’
Equity
 
                               
Stockholders’ equity at December 29, 2007
  $ 625     $ 151,018     $ (150,049 )   $ 563,743     $ 565,337  
                                         
Cumulative effect of change in accounting method in prior years(b)
                            15,606       15,606  
                                         
Stockholders’ equity at December 29, 2007
    625       151,018       (150,049 )     579,349       580,943  
                                         
Issuance of common stock under employee stock purchase plan (122,696 shares)(a)
    1       1,679                       1,680  
Exercise of stock options (226,638 shares) and restricted stock units (2,020 shares)(a)
    2       1,468                       1,470  
Stock compensation
            12,257                       12,257  
Tax benefit of stock options exercised
            1,322                       1,322  
Repurchase of common stock  (1,598,114 shares)(a)
    (13 )     13       (53,866 )             (53,866 )
Net income, as adjusted(b)
                            107,993       107,993  
                                         
Stockholders’ equity at December 27, 2008
    615       167,757       (203,915 )     687,342       651,799  
                                         
Issuance of common stock under employee stock purchase plan (101,470 shares)(a)
    1       1,630                       1,631  
Exercise of stock options (755,348 shares) and restricted stock units (10,896 shares)(a)
    6       4,342                       4,348  
Stock compensation
            12,130                       12,130  
Tax benefit of stock options exercised
            4,787                       4,787  
Repurchase of common stock  (419,034 shares)(a)
    (3 )     3       (15,289 )             (15,289 )
Net income, as adjusted(b)
                            119,745       119,745  
                                         
Stockholders’ equity at December 26, 2009
    619       190,649       (219,204 )     807,087       779,151  
                                         
Issuance of common stock under employee stock purchase plan (74,788 shares)(a)
    1       1,739                       1,740  
Exercise of stock options (1,550,077 shares) and restricted stock units (90,203 shares)(a)
    13       22,125                       22,138  
Stock compensation
            11,771                       11,771  
Tax benefit of stock options exercised
            9,780                       9,780  
Restricted stock units withheld for taxes
            (783 )                     (783 )
Repurchase of common stock  (826,311 shares)(a)
    (2 )     2       (38,172 )             (38,172 )
Dividends paid
                            (20,355 )     (20,355 )
Net income
                            167,972       167,972  
                                         
Stockholders’ equity at December 25, 2010
  $ 631     $ 235,283     $ (257,376 )   $ 954,704     $ 933,242  
                                         
                                         
 
 (a)
All share and per share information has been adjusted to reflect the two-for-one stock split, except for repurchase of common stock as the number of shares held in treasury was not adjusted for the split. See Note 1 for more information.
 
 (b)
Net income and retained earnings for all periods prior to 2010 have been adjusted to reflect the change in accounting for inventory. See Note 1 for more information.
 



(in thousands)

   
Fiscal Year
 
   
2010
   
2009
   
2008
 
Cash flows from operating activities:
                 
Net income
  $ 167,972     $ 119,745     $ 107,993  
Adjustments to reconcile net income to net cash provided by operating activities:
                       
Depreciation and amortization
    69,797       66,258       60,731  
Net loss (gain) on disposition of property and equipment
    1,062       213       (425 )
Stock compensation expense
    11,771       12,130       12,257  
Deferred income taxes
    2,690       (11,139 )     18,531  
Change in assets and liabilities:
                       
Inventories
    (60,054 )     (4,745 )     (10,241 )
Prepaid expenses and other current assets
    (3,201 )     11,164       1,007  
Accounts payable
    (14,247 )     (25,193 )     28,482  
Accrued employee compensation
    11,851       12,476       (590 )
Other accrued expenses
    26,691       9,838       (1,174 )
Income taxes payable
    1,004       7,801       (6,359 )
Other
    7,272       16,769       7,514  
                         
Net cash provided by operating activities
    222,608       215,317       217,726  
                         
Cash flows from investing activities:
                       
Capital expenditures
    (96,511 )     (73,974 )     (91,759 )
    Proceeds from sale of property and equipment
    313       97       3,324  
Purchases of short-term investments
    (15,913 )     --       --  
                         
Net cash used in investing activities
    (112,111 )     (73,877 )     (88,435 )
                         
Cash flows from financing activities:
                       
Borrowings under revolving credit agreement
    --       274,033       853,903  
Repayments under revolving credit agreement
    --       (274,033 )     (908,903 )
Excess tax benefit of stock options exercised
    9,815       4,280       1,085  
Principal payments under capital lease obligations
    (392 )     (548 )     (851 )
Restricted stock units withheld to satisfy tax obligations
    (783 )     --       --  
Repurchase of common stock
    (38,172 )     (15,289 )     (53,866 )
Net proceeds from issuance of common stock
    23,878       5,979       3,150  
Cash dividends paid to stockholders
    (20,355 )     --       --  
                         
Net cash used in financing activities
    (26,009 )     (5,578 )     (105,482 )
                         
Net increase in cash
    84,488       135,862       23,809  
                         
Cash and cash equivalents at beginning of year
    172,851       36,989       13,180  
                         
Cash and cash equivalents at end of year
  $ 257,339     $ 172,851     $ 36,989  
                         
Supplemental disclosures of cash flow information:
                       
Cash paid during the year for:
                       
Interest                                                                        
  $ 305     $ 838     $ 3,890  
Income taxes
    82,821       66,888       55,476  


Nature of Business

Tractor Supply Company (the “Company”, “we”, “us” and/or “our”) is the largest operator of retail farm and ranch stores in the United States.  We are focused on supplying the lifestyle needs of recreational farmers and ranchers and those who enjoy the rural lifestyle, as well as tradesmen and small businesses.  Stores are located in towns outlying major metropolitan markets and in rural communities.  Our wholly-owned subsidiary, Del’s Farm Supply, LLC (“Del’s”) operated 26 stores as of December 25, 2010.  At December 25, 2010, we operated a total of 1,001 retail farm and ranch stores in 44 states and also offered a number of products online at TractorSupply.com.

Fiscal Year

Our fiscal year ends on the last Saturday of the calendar year and includes 52 or 53 weeks.  The fiscal years ended December 25, 2010, December 26, 2009 and December 27, 2008 consist of 52 weeks.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries.  All material intercompany accounts and transactions have been eliminated.

Change in Accounting Method

Effective December 25, 2010, the Company elected to change its method of accounting for inventories from lower of cost, as determined by the LIFO method, or market, to lower of cost, as determined by the average cost method, or market.  The Company believes the change is preferable as the average cost method better reflects the current value of inventory on the consolidated balance sheets, provides a better reflection of periodic income and improves comparability with our peers.

The Company has applied this change in method of inventory costing retrospectively to all prior periods presented herein in accordance with accounting principles relating to accounting changes.  As a result of the retrospective change in accounting principle, opening retained earnings as of December 29, 2007 increased by $15.6 million.  The effect of the change in method on previously reported consolidated operating results for fiscal 2009 and 2008 was to increase net income by $4.3 million ($0.05  per dilutive share), and $26.1 million ($0.35 per dilutive share), respectively.  The effect on the consolidated balance sheet at December 26, 2009 was to increase inventory, tax liabilities and retained earnings by $75.2 million, $29.3 million and $45.9 million, respectively.

Certain components of the Company’s financial statements affected by the change in costing methodology as originally reported under the LIFO method and as adjusted for the change to the average cost method are as follows (in thousands, except per share data):

   
Fiscal 2009
   
Fiscal 2008
 
   
As Previously
   
Effect of
   
As
   
As Previously
   
Effect of
   
As
 
   
Reported
   
Change
   
Adjusted
   
Reported
   
Change
   
Adjusted
 
Consolidated Statements of Income
                                   
Cost of merchandise sold
  $ 2,171,980     $ (6,932 )   $ 2,165,048     $ 2,095,688     $ (42,794 )   $ 2,052,894  
Gross margin
    1,034,957       6,932       1,041,889       912,261       42,794       955,055  
Operating income
    184,633       6,932       191,565       135,569       42,794       178,363  
Income before income taxes
    182,989       6,932       189,921       133,436       42,794       176,230  
Income tax expense
    67,523       2,653       70,176       51,506       16,731       68,237  
Net income
  $ 115,466     $ 4,279     $ 119,745     $ 81,930     $ 26,063     $ 107,993  
Net income per share – basic
  $ 1.60     $ 0.06     $ 1.66     $ 1.11     $ 0.36     $ 1.47  
Net income per share – assuming dilution
  $ 1.58     $ 0.05     $ 1.63     $ 1.09     $ 0.35     $ 1.44  

   
Fiscal 2009
 
   
As Previously
   
Effect of
   
As
 
   
Reported *
   
Change
   
Adjusted
 
Consolidated Balance Sheets
                 
Inventories
  $ 601,249     $ 75,217     $ 676,466  
Deferred income taxes (current asset)
    17,909       (17,909 )     --  
Total current assets
    822,756       57,308       880,064  
Deferred income taxes
    11,091       --       11,091  
Total assets
    1,219,272       57,308       1,276,580  
Income taxes payable
    7,605       (340 )     7,265  
Deferred income taxes (current liability)
    --       11,505       11,505  
Total current liabilities
    393,052       11,165       404,217  
Other long-term liabilities
    28,140       195       28,335  
Total liabilities
    486,069       11,360       497,429  
Retained earnings
    761,139       45,948       807,087  
Total stockholders’ equity
    733,203       45,948       779,151  
Total  liabilities and  stockholders’ equity
    1,219,272       57,308       1,276,580  
                         
 
 
*     As described below, certain other amounts in the previously issued balance sheet have been reclassified to conform to the fiscal 2010 presentation.
 

 
 
 
Fiscal 2009
   
Fiscal 2008
 
   
As Previously
   
Effect of
   
As
   
As Previously
   
Effect of
   
As
 
   
Reported
   
Change
   
Adjusted
   
Reported
   
Change
   
Adjusted
 
Consolidated Statements of Cash Flows
                                   
Net income
  $ 115,466     $ 4,279     $ 119,745     $ 81,930     $ 26,063     $ 107,993  
Adjustments to reconcile net income to net cash provided by operating activities:
                                               
Deferred income taxes
    (13,597 )     2,458       (11,139 )     1,566       16,965       18,531  
Inventories
    2,186       (6,931 )     (4,745 )     32,553       (42,794 )     (10,241 )
Income taxes payable
    7,605       196       7,801       (5,928 )     (431 )     (6,359 )
Other
    16,771       (2 )     16,769       7,317       197       7,514  
Net cash provided by operating activities
  $ 215,317     $ --     $ 215,317     $ 217,726     $ --     $ 217,726  

Stock Split

 
On July 29, 2010, our Board of Directors announced a two-for-one split of our outstanding shares of common stock to be effected in the form of a stock dividend. On September 2, 2010, stockholders of record at the close of business on August 19, 2010, were issued one additional share of common stock for each share owned by such stockholder.  The stock split increased the number of shares of common stock outstanding from approximately 36.3 million to approximately 72.7 million.  Share and per-share amounts (including stock options and restricted stock units) shown in the consolidated financial statements and related notes reflect the split. The total number of authorized common shares and the par value thereof was not changed by the split.  The number of shares held in treasury was not adjusted for the split .

Reclassifications

Certain amounts in previously issued financial statements have been reclassified to conform to the fiscal 2010 presentation.  Marketing support fund receivables due from vendors previously classified in prepaid expenses and other current assets have been reclassified to reduce vendor accounts payable ($11.6 million at December 26, 2009).  Amounts related to accrued employee compensation ($22.7 million at December 26, 2009) have been reclassified from other accrued expenses to accrued employee compensation.  A portion of the liabilities related to self-insured workers’ compensation and general liability claims ($14.0 million at December 26, 2009) previously classified in other accrued expenses have been reclassified to other long-term liabilities to reflect their long-term status.  Also amou nts related to tenant improvement allowances ($18.0 million at December 26, 2009) previously classified in other long-term liabilities and amounts related to straight-line rent ($45.5 million at December 26, 2009) previously classified as straight-line rent liability have been reclassified as deferred rent to conform to the December 25, 2010 presentation.

These changes have affected our December 26, 2009 Consolidated Balance Sheet and the Consolidated Statements of Cash Flows for the fiscal years ended December 26, 2009 and December 27, 2008.

Segment Information

Tractor Supply Company has one reportable industry segment which is the operation of farm and ranch retail stores.  We also offer a number of products online at TractorSupply.com

Management Estimates

Our preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States inherently requires estimates and assumptions by us that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures.  Actual results could differ from those estimates.

Significant estimates and assumptions by management primarily impact the following key financial statement areas:

Revenue Recognition and Sales Returns
We recognize revenue at the time the customer takes possession of merchandise.  If we receive payment before the customer has taken possession of the merchandise (as per our special order and layaway programs), the revenue is deferred until the sale is complete.
 
We are required to collect certain taxes and fees from customers on behalf of government agencies and remit such collections to the applicable governmental entity on a periodic basis.  These taxes are collected from customers at the time of purchase, but are not included in net sales.  We record a liability upon collection from the customer and relieve the liability when payments are remitted to the applicable governmental agency.

We estimate a liability for sales returns based on a rolling average of historical return trends, and we believe that our estimate for sales returns is an accurate reflection of future returns associated with past sales.  Our estimation methodologies have been consistently applied from year to year; however, as with any estimate, refund activity may vary from estimated amounts.  At December 25, 2010 we had a liability of $3.0 million reserved for sales returns, compared to $3.1 million at December 26, 2009.

We recognize revenue when a gift card or merchandise return card is redeemed by the customer and recognize income when the likelihood of the gift card or merchandise return card being redeemed by the customer is remote (referred to as “breakage”).  The gift card and merchandise return card breakage rate is based upon historical redemption patterns and income is recognized for unredeemed gift card and merchandise return cards in proportion to those historical redemption patterns.  We recognized income of $1.6 million, $1.1 million and $1.4 million in fiscal 2010, 2009 and 2008, respectively.

 
Inventory Valuation

Inventory Impairment Risk
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.  The estimated inventory valuation reserve to recognize any impairment in value (i.e. an inability to realize the full carrying value) is 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.

Shrinkage
We perform physical inventories at each store at least once a year, and we have established reserves 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.

Vendor Support
We receive funding from substantially all of our significant merchandise vendors for the promotion of our brand as well as the sale of their products through a variety of programs and arrangements, including guaranteed funding and volume rebate programs.  The amounts received are subject to terms of vendor agreements, which have varying expiration dates ranging in duration from several months to a few years.  Many agreements are negotiated annually and are 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 the interim periods, the amount of expected funding is estimated based upon initial guaranteed commitments, as well as 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 vendor funding at interim periods, it is possible that actual year-end results could differ significantly from the previously estimated amounts.

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.

 
Share-Based Compensation
We have share-based compensation plans, which include incentive and non-qualified stock options, restricted stock units, and an employee stock purchase plan, covering certain members of management and non-employee directors.

We estimate the fair value of our stock option awards at the date of grant utilizing a Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of short-term traded options that have no vesting restrictions and are fully transferable. However, key assumptions used in the Black-Scholes model are adjusted to incorporate the unique characteristics of our stock option awards. Option pricing models and generally accepted valuation techniques require management to make subjective assumptions including expected stock price volatility, expected dividend yield, risk-free interest rate and expected life. We rely on historical volatility trends to estimate future volatility assumptions.  The risk-free interest rates used were actual U.S. Treasury Constant Maturity rates for bonds matching the expected term of the option on the date of grant. The expected life of the option on the date of grant was estimated based on our historical experience for similar options.

In addition to the key assumptions used in the Black-Scholes model, the estimated forfeiture rate at the time of valuation (which is based on historical experience for similar options) is a critical assumption, as it reduces expense ratably over the vesting period. We adjust this estimate periodically, based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

We believe our estimates are reasonable in the context of historical experience.  Future results will depend on, among other matters, levels of share-based compensation granted in the future, actual forfeiture rates and the timing of option exercises.

Self-Insurance Reserves
We self-insure a significant portion of our employee medical insurance, workers’ compensation and general liability insurance plans.  We have stop-loss insurance policies to protect from individual losses over specified dollar values. The full extent of certain claims, especially workers’ compensation and general liability claims, may not become fully determined for several years. Therefore, we estimate potential obligations for liabilities that have been incurred but not yet reported based upon historical data and experience. Although we believe the reserves established for these obligations are reasonably estimated, any significant increase in the number of claims or costs associated with claims made under these plans could have a material adverse effect on our financial results.  At December 25, 2010 , we had recorded net insurance reserves of $29.0 million compared to $23.7 million at December 26, 2009. 

Sales Tax Audit Reserve
A portion of our sales are to tax-exempt customers.  We obtain exemption information as a necessary part of each tax-exempt transaction.  Many of the states in which we conduct business will perform audits to verify our compliance with applicable sales tax laws.  The business activities of our customers and the intended use of the unique products sold by us create a challenging and complex compliance environment.  These circumstances also create some risk that we could be challenged as to the propriety of our sales tax compliance.  While we believe we reasonably enforce sales tax compliance with our customers and endeavor to fully comply with all applicable sales tax regulations, there can be no assurance that we, upon final completion of such audits, will not have a significant liabil ity for disallowed exemptions.

We review our past audit experience and assessments with applicable states to determine if we have potential exposure for non-compliance.  Any estimated liability is based on an initial assessment of compliance risk and our to-date experience with each audit. As each audit progresses, we quantify the exposure based on preliminary assessments made by the state auditors, adjusted for additional documentation that may be provided to reduce the assessment.   The reserve for these tax audits can fluctuate depending on numerous factors, including the complexity of agricultural-based exemptions, ambiguity in state tax regulations, the number of ongoing audits and the length of time required to settle with the state taxing authorities.

 
Tax Contingencies
Our income tax returns are periodically audited by U.S. federal and state tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated with our various tax filing positions, we record reserves for probable exposures. A number of years may elapse before a particular matter, for which we have established a reserve, is audited and fully resolved or clarified. We adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve, the statute of limitations expires for the relevant ta x authority to examine the tax position or when more information becomes available.

We recognize a liability for certain tax benefits that do not meet the minimum requirements for recognition in the financial statements.

Our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether or not the minimum requirements for recognition of tax benefits have been met.

Our effective income tax rate is also affected by changes in tax law, the tax jurisdiction of new stores or business ventures, the level of earnings and the results of tax audits.

Credit Cards/Accounts Receivable

Sales generated through our private label credit cards are not reflected as accounts receivable.  Under an agreement with Citi Cards, a division of Citigroup (“Citigroup”), consumer and business credit is extended directly to customers by Citigroup.  All credit program and related services are performed and controlled directly by Citigroup.

Pre-opening Costs

Non-capital expenditures incurred in connection with opening new store and distribution centers, primarily payroll and rent, are expensed as incurred.  Preopening costs were approximately $7.1 million, $7.5 million and $8.7 million in 2010, 2009 and 2008, respectively.

Store Closing Costs

We regularly evaluate the performance of our stores and periodically close those that are under-performing.  We record a liability for a cost associated with an exit or disposal activity when the liability is incurred, usually in the period the store closes.  Store closing costs were not significant to results of operations for any of the fiscal years presented.

Cash and Cash Equivalents

Temporary cash investments, with a maturity of three months or less when purchased, are considered to be cash equivalents.  The majority of payments due from banks for customer credit card transactions process within 24-48 hours and are accordingly classified as cash and cash equivalents.

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Financial Instruments Not Carried at Fair Value

Our financial instruments consist of cash and cash equivalents, short-term investments, short-term receivables, trade payables and long-term debt instruments.  The carrying values of cash and cash equivalents, short-term receivables and trade payables approximate current fair value.  We had no borrowings under the revolving credit facility at December 25, 2010 and December 26, 2009.
 
Our short-term investment in a U.S. Treasury note is classified as Level 1 as these types of investments trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.  The U.S. Treasury note is held as collateral for a standby letter of credit and is expected to be held to maturity.  The fair value of short-term investments at December 25, 2010 was $15.9 million.  We had no short-term investments at December 26, 2009.

Inventories

Inventories are stated at the lower of cost, as determined by the average cost method, or market.  Inventory cost consists of the direct cost of merchandise including freight.  Inventories are net of shrinkage, obsolescence, other valuations and vendor allowances.

Vendor Concentration

Approximately 250 vendors accounted for 90% of our purchases for fiscal 2010, with no one vendor representing more than 10% of purchases during the year.

Cost of Merchandise Sold

Cost of merchandise sold includes the total cost of products sold; freight expenses associated with moving merchandise inventories from our vendors to our distribution centers; from our distribution centers to our retail stores; and from one distribution center to another; vendor support; damaged, junked or defective product; cash discounts from payments to merchandise vendors; and adjustments for shrinkage (physical inventory losses), lower of cost or market valuation, slow moving product and excess inventory quantities.

 
Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) include payroll and benefit costs for retail, distribution center and corporate employees; occupancy costs of retail, distribution center and corporate facilities; advertising; tender costs, including bank charges and costs associated with credit and debit card interchange fees; outside service fees; and other administrative costs, such as computer maintenance, supplies, travel and lodging.

Warehousing and Distribution Costs

Costs incurred at our distribution centers for receiving, warehousing and preparing product for delivery are expensed as incurred and are included in SG&A expenses in the Consolidated Statements of Income.  Because the Company does not include these costs in cost of sales, the Company’s gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin.  Distribution center costs for fiscal 2010, 2009 and 2008 were approximately $64.4 million, $59.0 million and $52.8 million, respectively.

Property and Equipment

Property and equipment are carried at cost.  Depreciation is recorded using the straight-line method over the estimated useful lives of the assets.  Improvements to leased premises are amortized using the straight-line method over the initial term of the lease or the useful life of the improvement, whichever is less.  Leasehold improvements added late in the lease term are amortized over the term of the lease (including the first renewal option, if the renewal is reasonably assured) or the useful life of the improvement, whichever is less.  The following estimated useful lives are generally applied:
 
 
Life
Buildings
30 – 35 years
Leasehold and building improvements
5 – 35 years
Furniture, fixtures and equipment
5 – 10 years
Computer software and hardware
3 –   5 years
 
Depreciation and Amortization

Depreciation includes expenses related to all retail, distribution center and corporate assets.  Amortization includes expenses related to definite-lived intangible assets.

Capitalized Software Costs

The Company capitalizes certain costs related to the acquisition and development of software and amortizes these costs using the straight-line method over the estimated useful life of the software, which is three to five years.  These costs are included in computer software and hardware in the accompanying Consolidated Balance Sheets.  Certain software costs not meeting the criteria for capitalization are expensed as incurred.

Leases

Assets under capital leases are amortized in accordance with our normal depreciation policy for owned assets or over the lease term, if shorter, and the related charge to operations is included in depreciation expense in the Consolidated Statements of Income.

Certain leases include rent increases during the initial lease term.  For these leases, we recognize the related rental expense on a straight-line basis over the term of the lease (which includes the pre-opening period of construction, renovation, fixturing and merchandise placement) and record the difference between the expense charged to operations and amounts paid as a deferred rent liability.

We occasionally receive reimbursements from landlords to be used towards improving the related store to be leased.  Reimbursements are primarily for the purpose of performing work required to divide a much larger location into smaller segments, one of which we will use for our store.  This work could include the addition of demising walls, separation of plumbing, utilities, electric work, entrances (front and back) and other work as required.  Leasehold improvements are recorded at their gross costs including items reimbursed by landlords.  Related reimbursements are amortized on a straight-line basis as a reduction of rent expense over the initial lease term.
 
Impairment of Long-Lived Assets

Long-lived assets other than goodwill and indefinite-lived intangible assets, which are separately tested for impairment, 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 to the asset’s 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 asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the ass et’s estimated fair value, which may be based on an estimated future cash flow model. 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 useful life of that asset.

 
In fiscal 2010, the company recognized impairment charges of $1.1 million related to the write-off of certain capitalized software development costs.  These assets were not expected to provide any future benefit to the Company and were determined to have no significant fair value.  During fiscal year 2009 impairment charges of $0.8 million were recorded representing the amount required to write-down the carrying value of certain leasehold improvements to the assets’ estimated fair value. Impairment charges are included in SG&A expenses in the Consolidated Statement of Income. No significant impairment charges were recognized in fiscal 2008.

Goodwill

Goodwill and intangible assets with indefinite lives are not amortized.  We evaluate goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. We complete our impairment evaluation by performing internal valuation analyses, considering other publicly available market information and using an independent valuation firm, as appropriate.  All goodwill at December 25, 2010 is associated with the Company as a whole.  At December 26, 2009 all goodwill was associated with the Del’s business and, for purposes of the fiscal 2009 impairment testing, Del’s was considered the reporting unit.  In October 2010, we reevaluated the Del’s reporting unit and concluded that since Del’s has be come closely aligned in terms of management, infrastructure, philosophy and performance, we now have only one reporting unit for goodwill impairment evaluation.

The test for goodwill impairment is a two step process.  The first step of the goodwill impairment test, used to identify the potential for impairment, 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, the second step of the goodwill impairment test is performed to measure the amount of impairment loss to be recorded, if any.  The second step, if required, would compare the implied fair value of goodwill with the current carrying amount of goodwill.  If the implied fair value of goodwill is less than the carrying value, an impairment charge would be recorded as a charge to our operations.

In the fourth quarter of fiscal 2010, we completed our annual impairment testing of goodwill and determined there was no impairment. We determined that the fair value of the reporting unit (including goodwill) was in excess of the carrying value of the reporting unit and as such, the second step was not necessary.  In reaching this conclusion, the fair value of the reporting unit was determined based on a market approach.  Under the market approach, the fair value is based on observed market prices.

Advertising Costs

Advertising costs consist of expenses incurred in connection with newspaper circulars, television and radio, as well as direct mail, newspaper advertisements and other promotions.  Costs are expensed when incurred with the exception of television advertising and circular and direct mail promotions, which are expensed upon first showing.  Advertising expenses for fiscal 2010, 2009 and 2008 were approximately $48.6 million, $45.7 million and $58.0 million, respectively. Prepaid advertising costs were approximately $0.1 million and $0.2 million at December 25, 2010 and December 26, 2009, respectively.

Income Taxes

We account for income taxes using the liability method, whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be recovered or settled.

Net Income Per Share

Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period.  Diluted EPS is calculated by dividing net income by the weighted average diluted shares outstanding.  Diluted shares are computed using the treasury stock method for options and restricted stock units.

Note 2 - Share-Based Compensation:

Share-based compensation includes stock option and restricted stock unit awards and certain transactions under our Employee Stock Purchase Plan (the “ESPP”).   Share-based compensation expense is recognized based on grant date fair value of all options and restricted stock unit awards plus a discount on shares purchased by employees as a part of the ESPP.  The discount under the ESPP represents the difference between the grant date market value and the employee’s purchase price.

Share-based compensation expense including reductions in expense for modifications of awards was $11.8 million, $12.1 million and $12.3 million for fiscal 2010, 2009 and 2008, respectively.

Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

Effective May 7, 2009, the Company adopted the 2009 Stock Incentive Plan replacing the 2006 Stock Incentive Plan.  Following the adoption of the 2009 Stock Incentive Plan, no further grants may be made under the 2006 Stock Incentive Plan.

Under our 2009 Stock Incentive Plan, options may be granted to officers, non-employee directors and other employees.  The per share exercise price of options granted shall not be less than the fair market value of the stock on the date of grant and such options will expire no later than ten years from the date of grant.  Also, the aggregate fair market value of the stock with respect to which incentive stock options are exercisable on a tax deferred basis for the first time by an individual in any calendar year may not exceed $100,000.  Vesting of options commences at various anniversary dates following the dates of grant.

Under the terms of the 2009 Stock Incentive Plan, a maximum of 6,200,000 shares are available for grant as stock options or other awards.  At December 25, 2010, we had 5,146,530 shares available for future equity awards under the Company’s 2009 Stock Incentive Plan.

 
The fair value of each option grant is separately estimated for each vesting date.  The fair value of each option is recognized as compensation expense ratably over the vesting period.  We have estimated the fair value of all stock option awards as of the date of the grant by applying a Black-Scholes pricing valuation model.  The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense.  The weighted averages for key assumptions used in determining the fair value of options granted during fiscal 2010, 2009 and 2008, as well as a summary of the methodology applied to develop each assumption, are as follows:


   
Fiscal Year
 
   
2010
   
2009
   
2008
 
Expected price volatility
    38.5 – 38.9 %     39.3 – 54.0 %     37.6 – 39.7 %
Risk-free interest rate
    1.0 – 2.7 %     0.6 – 2.5 %     1.6 – 3.5 %
Weighted average expected lives (in years)
    4.8 – 5.8       4.7 – 5.6       4.4 – 5.5  
Forfeiture rate
    5.4 – 7.7 %     1.4 – 8.0 %     1.4 – 7.1 %
Dividend yield
    0.0 – 1.0 %     0.0 %     0.0 %
 
 
Expected Price Volatility This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. We use actual historical changes in the market value of the stock to calculate expected price volatility because we believe that this is the best indicator of future volatility.  We calculate daily market value changes from the date of grant over a past period generally representative of the expected life of the options to determine volatility.  An increase in the expected volatility will increase compensation expense.
 
 
Risk-Free Interest Rate — This is the U.S. Treasury Constant Maturity rate over a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.
 
 
Weighted Average Expected Lives — This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Options granted generally have a maximum term of ten years. An increase in the expected life will increase compensation expense.

 
Forfeiture Rate — This is the estimated percentage of options granted that are expected to be forfeited or cancelled before becoming fully vested. This estimate is based on historical experience. An increase in the forfeiture rate will decrease compensation expense.

 
Dividend Yield —This is the estimated dividend yield for the weighted average expected life of the option granted. An increase in the dividend yield will decrease compensation expense.

Stock Options

We issue new shares for options when exercised. A summary of stock option activity is as follows:

   
Options
   
Weighted
Average Exercise
Price
   
Weighted Average Fair Value
   
Weighted Average
Remaining
Contractual Term
   
Aggregate Intrinsic Value
(in thousands)
 
Outstanding December 29, 2007
    4,576,652     $ 16.66             6.4     $ 22,485  
Granted
    1,306,700       19.17     $ 7.27                  
Exercised
    (226,638 )     6.49                          
Canceled
    (548,700 )     23.00                          
                                         
Outstanding December 27, 2008
    5,108,014     $ 17.07               6.2     $ 19,296  
Granted
    1,126,132       17.28     $ 6.48                  
Exercised
    (755,348 )     5.83                          
Canceled
    (177,954 )     23.01                          
                                         
Outstanding December 26, 2009
    5,300,844     $ 18.53               6.4     $ 47,413  
Granted
    908,728       26.70     $ 10.32                  
Exercised
    (1,550,077 )     14.28                          
Canceled
    (144,638 )     21.82                          
                                         
Outstanding December 25, 2010
    4,514,857     $ 21.52               6.7     $ 121,350  
                                         
Exercisable at December 25, 2010
    2,631,276     $ 21.18               5.5     $ 71,618  


The aggregate intrinsic values in the table above represents the total difference between our closing stock price at each year-end and the option exercise price, multiplied by the number of in-the-money options at each year-end. As of December 25, 2010, total unrecognized compensation expense related to non-vested stock options is $9,156,000 with a weighted average expense recognition period of 1.4 years.

There were no material modifications to options in 2010, 2009 or 2008.

Other information relative to option activity during fiscal 2010, 2009 and 2008 is as follows (in thousands):

   
2010
   
2009
   
2008
 
Total fair value of stock options vested
  $ 8,417     $ 10,225     $ 9,192  
Total intrinsic value of stock options exercised
  $ 31,388     $ 12,742     $ 2,561  

 
Restricted Stock Units

We issue shares for restricted stock unit awards once vesting occurs and related restrictions lapse.  The units vest over a one to three-year term.  The status of restricted stock units is presented below:

Restricted Stock Units
 
Shares
   
Weighted Average Grant Date Fair Value
 
Restricted at December 29, 2007
    127,738     $ 23.36  
Granted
    179,916       19.17  
Exercised
    (2,020 )     29.69  
Forfeited
    (28,228 )     21.00  
                 
Restricted at December 27, 2008
    277,406     $ 20.83  
Granted
    308,102       17.50  
Exercised
    (10,896 )     19.03  
Forfeited
    (15,828 )     20.37  
                 
Restricted at December 26, 2009
    558,784     $ 19.04  
Granted
    148,862       27.37  
Exercised
    (119,184 )     22.10  
Forfeited
    (38,284 )     19.28  
                 
Restricted at December 25, 2010
    550,178     $ 20.61  

Other information relative to restricted unit activity during fiscal 2010, 2009 and 2008 is as follows (in thousands):
 
 
   
2010
   
2009
   
2008
 
Total grant date fair value of restricted units vested and exercised
  $ 2,634     $ 207     $ 60  
Total intrinsic value of restricted units vested and exercised
  $ 3,329     $ 180     $ 40  
                         

For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of the minimum statutory tax withholding requirements that we pay on behalf of our employees.  We issued 90,203, 10,896, and 2,020 shares as a result of vested restricted stock units during fiscal 2010, 2009 and 2008, respectively.  The 2010 amount is net of 28,981 shares, withheld to satisfy $0.8 million of employees’ tax obligations.  Although shares withheld are not issued, they are treated similar to common stock repurchases as they reduce the number of shares that would have been issued upon vesting.

There were no material modifications to restricted stock units in 2010, 2009, or 2008.

As of December 25, 2010, total unrecognized compensation expense related to non-vested restricted stock units is $4,705,000 with a weighted average expense recognition period of 1.7 years.

Employee Stock Purchase Plan

The ESPP provides our employees the opportunity to purchase, through payroll deductions, shares of common stock at a 15% discount.  Pursuant to the terms of the ESPP, we issued 74,788, 101,470 and 122,696 shares of common stock during fiscal 2010, 2009 and 2008, respectively.  The total cost related to the ESPP, including the compensation expense calculations, was approximately $439,000, $449,000 and $485,000 in fiscal 2010, 2009 and 2008, respectively.  In connection with the stock split, the number of shares of our common stock that are reserved under the ESPP increased from 4,000,000 shares to 8,000,000 shares.  At December 25, 2010, there were 6,299,852 shares of common stock reserved for future issuance under the ESPP.
 
There were no significant modifications to the Company's share-based compensation plans during fiscal 2010.

Note 3 - Credit Agreement:

We are party to a Senior Credit Facility with Bank of America, N.A., as agent for a lender group (the “Credit Agreement”), which provides for borrowings up to $350 million (with sublimits of $75 million and $20 million for letters of credit and swingline loans, respectively).  The Credit Agreement has an Increase Option for $150 million (subject to additional lender group commitments).  The Credit Agreement is unsecured and matures in February 2012, with proceeds expected to be used for working capital, capital expenditures and share repurchases.

At December 25, 2010 and December 26, 2009, there were no outstanding borrowings under the Credit Agreement.  There were $27.4 million and $35.2 million outstanding letters of credit as of December 25, 2010 and December 26, 2009, respectively.  Borrowings bear interest at either the bank’s base rate (3.25% at December 25, 2010) or the London Inter-Bank Offer Rate (0.26% at December 25, 2010) plus an additional amount ranging from 0.35% to 0.90% per annum, adjusted quarterly based on our performance (0.40% at December 25, 2010).  We are also required to pay, quarterly in arrears, a commitment fee ranging from 0.06% to 0.18% per annum and adjusted quarterly based on our performance, for unused capacity (0.075% at December 25, 2010).   There are no compensating balance requirements associated with the Credit Agreement.

The Credit Agreement requires quarterly compliance with respect to two material covenants:  a fixed charge coverage ratio and a leverage ratio.  The fixed charge coverage ratio principally compares consolidated EBITDAR to the sum of interest paid and rental expense (excluding straight-line rent).  The leverage ratio principally compares total debt plus rental expense (excluding straight-line rent) multiplied by a factor of six to consolidated EBITDAR.  The Credit Agreement also contains certain other restrictions regarding additional indebtedness, capital expenditures, business operations, guarantees, investments, mergers, consolidations and sales of assets, transactions with subsidiaries or affiliates, and liens.  We were in compliance with all covenants at December 25, 2010.

 
Note 4 - Leases:

We lease the majority of our office space and retail store locations, certain distribution centers, transportation equipment and other equipment under various noncancellable operating leases.  The leases have varying terms and expire at various dates through 2029 and 2025 for capital leases and operating leases, respectively.  Store leases typically have initial terms of between 10 and 15 years, with two to four optional renewal periods of five years each.  Some leases require the payment of contingent rent that is based upon store sales above agreed-upon sales levels for the year.  The sales levels vary for each store and are established in the lease agreements.  Generally, most of the leases also require that we pay associated taxes, insurance and maintenance costs.

Total rent expense for fiscal 2010, 2009 and 2008 was approximately $169.4 million, $162.2 million and $144.4 million, respectively.  Total contingent rent expense for fiscal 2010, 2009 and 2008 was insignificant.

Future minimum payments, by year and in the aggregate, under leases with initial or remaining terms of one year or more consist of the following (in thousands):

   
Capital
Leases
   
Operating
Leases
 
             
2011
  $ 206     $ 174,846  
2012
    146       170,642  
2013
    146       164,498  
2014
    146       153,812  
2015
    146       143,470  
Thereafter
    1,926       737,760  
Total minimum lease payments
    2,716     $ 1,545,028  
Amount representing interest
    (1,309 )        
Present value of minimum lease payments
    1,407          
Less:  current portion
    (91 )        
Long-term capital lease obligations
  $ 1,316          

Assets under capital leases were as follows (in thousands):

   
2010
   
2009
 
             
Building and improvements
  $ 1,581     $ 1,581  
Computer software and hardware
    2,363       3,022  
Less:  accumulated depreciation and amortization
    (2,915 )     (3,198 )
    $ 1,029     $ 1,405  

Note 5 - Capital Stock:

The authorized capital stock of the Company consists of common stock and preferred stock.  The Company is authorized to issue 100,000,000 shares of common stock.  The Company is also authorized to issue 40,000 shares of Preferred Stock, with such designations, rights and preferences as may be determined from time to time by the Board of Directors.

Note 6 - Treasury Stock:

We have a Board-approved share repurchase program which provides for repurchase of up to $400 million of common stock, exclusive of any fees, commissions, or other expenses related to such repurchases, through December 2011. The repurchases may be made from time to time on the open market or in privately negotiated transactions.  The timing and amount of any shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, capital availability, and other market conditions.  Repurchased shares will be held in treasury.  The program may be limited or terminated at any time without prior notice.

We repurchased 0.8 million, 0.4 million and 1.6 million shares under the share repurchase program for a total cost of $38.2 million, $15.3 million and $53.9 million in fiscal 2010, 2009 and 2008, respectively.  As mentioned in Note 1, the shares added to treasury were not adjusted for the stock split.  As of December 25, 2010, we had remaining authorization under the share repurchase program of $142.8 million exclusive of any fees, commissions, or other expenses.

 
Note 7 - Net Income Per Share:

Net income per share is calculated as follows (in thousands, except per share amounts):

   
2010
 
   
Net
Income
   
Shares
   
Per Share
Amount
 
Basic net income per share:
                 
Net income
  $ 167,972       72,597     $ 2.31  
Dilutive stock options and restricted stock units outstanding
    --       2,089       (0.06 )
Diluted net income per share
  $ 167,972       74,686     $ 2.25  
       
      2009  
   
Net
Income
   
Shares
   
Per Share
Amount
 
Basic net income per share:
                       
Net income
  $ 119,745       71,981     $ 1.66  
Dilutive stock options and restricted stock units outstanding
    --       1,316       (0.03 )
Diluted net income per share
  $ 119,745       73,297     $ 1.63  
       
      2008  
   
Net
Income
   
Shares
   
Per Share
Amount
 
Basic net income per share:
                       
Net income
  $ 107,993       73,661     $ 1.47  
Dilutive stock options and restricted stock units outstanding
    --       1,266       (0.03 )
Diluted net income per share
  $ 107,993       74,927     $ 1.44  

Anti-dilutive stock options excluded from the above calculations totaled 521,941, 3,305,874 and 3,274,572 in 2010, 2009 and 2008, respectively.

Note 8 – Income Taxes:

All amounts in this footnote reflect the change in method of accounting for inventory as discussed in Note 1.

The provision for income taxes consists of the following (in thousands):

   
2010
   
2009
   
2008
 
Current tax expense:
                 
Federal
  $ 85,854     $ 72,398     $ 46,664  
State
    7,444       9,427       3,495  
Total current
    93,298       81,825       50,159  
                         
Deferred tax expense (benefit):
                       
Federal
    2,116       (9,425 )     14,955  
State
    1,554       (2,224 )     3,123  
Total deferred
    3,670       (11,649 )     18,078  
Total provision
  $ 96,968     $ 70,176     $ 68,237  

 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the deferred tax assets and liabilities are as follows (in thousands):

   
2010
   
2009
 
Current tax assets:
           
Inventory valuation
  $ 8,738     $ 8,463  
Accrued employee benefit costs
    21,209       14,956  
Accrued sales taxes
    2,687       1,810  
Other
    5,972       6,122  
      38,606       31,351  
Current tax liabilities:
               
Inventory basis difference
    (45,952 )     (41,412 )
Other
    (1,508 )     (1,444 )
      (47,460 )     (42,856 )
Net current tax liability
  $ (8,854 )   $ (11,505 )
                 
Non-current tax assets:
               
Capital lease obligation basis difference
  $ 1,018     $ 1,017  
Rent expenses in excess of cash payments required
    21,066       18,677  
Deferred compensation
    13,870       11,113  
Other
    1,933       2,981  
      37,887       33,788  
Non-current tax liabilities:
               
Depreciation
    (30,696 )     (21,825 )
Capital lease assets basis difference
    (551 )     (571 )
Other
    (890 )     (301 )
      (32,137 )     (22,697 )
Net non-current tax asset
  $ 5,750     $ 11,091  
                 
Net deferred tax liabilities
  $ (3,104 )   $ (414 )
 
We have evaluated the need for a valuation allowance for all or a portion of the deferred tax assets and we believe that all of the deferred tax assets will more likely than not be realized through future earnings.

A reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate is as follows (in thousands):

   
2010
   
2009
   
2008
 
                   
Tax provision at statutory rate
  $ 92,729     $ 66,473     $ 61,680  
Tax effect of:
                       
State income taxes, net of federal tax benefits
    5,848       4,682       4,302  
Permanent differences
    (1,609 )     (979 )     2,255  
    $ 96,968     $ 70,176     $ 68,237  

The Company and its affiliates file income tax returns in the U.S. and various state and local jurisdictions.  With few exceptions, we are no longer subject to federal, state and local income tax examinations by tax authorities for years before 2005.  Various states have completed an examination of our income tax returns for 2001 through 2008.

The total amount of unrecognized tax benefits that, if recognized, would decrease the effective tax rate, is $3.7 million at December 25, 2010. In addition, we recognize current interest and penalties accrued related to these uncertain tax positions as interest expense, and the amount is not material to the Consolidated Statements of Income.  A reconciliation of the beginning and ending gross amount of unrecognized tax benefits (exclusive of interest and penalties) is as follows (in thousands):

   
2010
   
2009
   
2008
 
Balance at beginning of year
  $ 4,084     $ 3,249     $ 4,236  
Additions based on tax positions related to the current year
    1,453       1,293       959  
Additions for tax positions of prior years
    --       437       --  
Reductions for tax positions of prior years
    (736 )     (688 )     (520 )
Reductions due to audit results
    --       (207 )     (1,426 )
Balance at end of year
  $ 4,801     $ 4,084     $ 3,249  

 
 
Note 9 - Retirement Benefit Plans:

We have a defined contribution benefit plan, the Tractor Supply Company 401(k) Retirement Savings Plan (the “Plan”), which provides retirement benefits for our employees.  Employees become eligible on the first month following their fulfillment of the eligibility requirements.  To be eligible, an employee must be at least 21 years of age, have completed 12 months of employment, and performed 1,000 hours of service in a year of service as defined by the Plan.  We match (in cash) 100% of the employee’s elective contributions up to 3% of the employee’s eligible compensation plus 50% of the employee’s elective contributions from 3% to 6% of the employee’s eligible compensation.  In no event shall the total Company match made on behalf of the employee exceed 4.5% of the employee’s eligible compensation.  All current contributions are immediately 100% vested.  Company contributions to the Plan during fiscal 2010, 2009 and 2008, were approximately $3.7 million, $3.2 million and $2.8 million, respectively.

We offer, through a deferred compensation program, the opportunity for certain qualifying employees to elect a deferral of up to 40% of their annual base salary and up to 100% of their annual incentive bonus under their respective incentive bonus programs.  To be eligible for the salary deferral, each participant must contribute the maximum amount of salary to the Plan subject to the Company’s match.  Under the deferred compensation program, the participants’ salary deferral is matched by the Company, 100% on the first $3,000 of base salary contributed and 50% on the next $3,000 of base salary contributed limited to a maximum annual matching contribution of $4,500.  Each participant’s account earns simple annual interest at the prime rate as in effect on January 1 each year.  Ea ch participant is fully vested in all amounts credited to their deferred compensation account.  Payments under the program, which are made in cash and paid in ten annual installments or in a single lump sum payment at the election of the participant, are made within 30 days following the earlier of the participant’s (i) death, (ii) retirement, plus six months if the participant is a key employee, (iii) total and permanent disability, (iv) separation from service, plus six months if the participant is a key employee, or (v) some other date designated by the participant at the time of the initial deferral. The Company’s contributions, including accrued interest, were $0.3 million in each of the fiscal years 2010, 2009 and 2008.

Note 10 – Commitments and Contingencies:

Construction and Real Estate Commitments

At December 25, 2010, we had commitments related to construction projects for new stores and a distribution center totaling approximately $32.2 million.

Litigation

The Company received and responded to a Request for Information from the United States Environmental Protection Agency (“EPA”) relating to certain recreational vehicles and non-road spark ignition engines sold by the Company.  In the first quarter of fiscal 2011, the Environmental Enforcement Section of the Department of Justice (“DOJ”), on behalf of the EPA, informed the Company that it believed the Company had violated the Clean Air Act by importing or causing the importation of certain engines not covered by certificates of conformity issued by the EPA, and that unless the DOJ and the Company were able to reach a settlement, the DOJ was prepared to commence a civil action. The Company is currently engaged in settlement discussions with the DOJ that would call for the payment of a civil penalty and c ertain injunctive relief.  The engines were purchased by the Company pursuant to agreements with vendors under which the vendors represented that their products complied with all applicable laws and regulations and under which the vendors agreed to indemnify the Company for any liabilities or costs relating to, among other matters, the noncompliance or alleged noncompliance of their products.  The Company has notified these vendors of the EPA’s position and expects to be reimbursed for any liabilities or costs relating to this matter.   The Company does not expect the resolution of this matter to have a material adverse effect on its financial condition or results of operations.

We are also involved in various litigation matters arising in the ordinary course of business.  Management expects these matters will be resolved without material adverse effect on our consolidated financial position or results of operations.  We believe that any estimated loss related to such matters has been adequately provided in accrued liabilities to the extent probable and reasonably estimable.  It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in circumstances relating to these proceedings.

Note 11 - Impact of Recently Issued Accounting Standards:

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Topic 810 (originally issued as Statement of Financial Accounting Standards No. 167, “Amendments to FASB Interpretation No. (“FIN”) 46(R)”).  Among other items, ASC 810 responds to concerns about an enterprise’s application of certain key provisions of FIN 46(R), including those regarding the transparency of the enterprise’s involvement with variable interest entities.  ASC 810 is effective for the first annual period that begins after November 15, 2009, and for interim periods within that first annual reporting period.  The Company adopted the standard for the interim period ended March 27, 2010.  There was no impact on the C ompany’s financial position, results of operations, cash flows, or disclosures.

In February 2010, the FASB issued Accounting Standards Update No. 2010-09 (ASU No. 2010-09), “Subsequent Events (Topic 855):  Amendments to Certain Recognition and Disclosure Requirements.”  The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements, through which subsequent events have been reviewed.  Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP.  ASU No. 2010-09 was effective upon issuance.  The adoption of this guidance did not have an impact on our financial condition, results of operations or cash flows.

Note 12 – Subsequent Events:

On February 4, 2011, we announced that our board of directors declared a quarterly cash dividend of $0.07 per share of the Company’s common stock.  The dividend will be paid on March 8, 2011 to stockholders of record as of the close of business on February 22, 2011.


Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by the Securities Exchange Act of 1934, as amended (the “1934 Act”), under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the 1934 Act) as of December 25, 2010.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the 1934 Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of December 25, 2010, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the 1934 Act.  The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 25, 2010.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework.  Based on this assessment, management believes that, as of December 25, 2010, the Company’s internal control over financial reporting is effective based on those criteria.

Ernst & Young LLP, the independent registered public accounting firm which also audited the Company’s consolidated financial statements, has issued a report on the Company’s internal control over financial reporting, which is included herein.

Change in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Item 9B.   Other Information

None.



Item 10.   Directors, Executive Officers and Corporate Governance

The information set forth under the caption "Executive Officers of the Registrant" in Part I of this Form 10-K is incorporated herein by reference.

The information set forth under the captions “Corporate Governance – Code of Ethics,” “Item 1: Election of Directors,” “Board Meetings and Committees,” and "Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement for our Annual Meeting of Stockholders to be held on April 28, 2011 is incorporated herein by reference.

Item 11.   Executive Compensation

The information set forth under the captions “Corporate Governance – Compensation Committee Interlocks and Insider Participation,” “Compensation of Directors”, “Executive Compensation”, “Compensation Committee Report”, “Compensation Discussion and Analysis”, “2010 Summary Compensation Table”, “2010 Non-Qualified Deferred Compensation”, “2010 Grants of Plan-Based Awards”, “Outstanding Equity Awards At Fiscal 2010 Year-End”, “2010 Option Exercises and Stock Vested”, and “Potential Payments Upon Termination or Change in Control” in our Proxy Statement for our Annual Meeting of Stockholders to be held on April 28, 2011 is incorporated herein by reference.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in our Proxy Statement for our Annual Meeting of Stockholders to be held on April 28, 2011 is incorporated herein by reference.

Following is a summary of our equity compensation plans as of December 25, 2010, under which equity securities are authorized for issuance, aggregated as follows:

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:
                 
                   
2009 Stock Incentive Plan
    1,052,404     $ 22.72       5,146,530  
2006 Stock Incentive Plan (1)
    2,720,413       16.49       --  
2000 Stock Incentive Plan (1)
    1,133,784       22.72       --  
1994 Stock Option Plan (1)
    158,434       16.67       --  
Employee Stock Purchase Plan (2)
    --       --       6,299,852  
Equity compensation plans not approved by security holders:
    --       --       --  
                         
Total
    5,065,035     $ 19.18       11,446,382  
 
  (1) The 2006 Stock Incentive Plan was superseded in May 2009. The 2000 Stock Incentive Plan was superseded in May 2006. The 1994 Stock Option Plan expired in February 2004.
   Represents shares available as of December 25, 2010.
 
The information set forth in Note 2 to the “Notes to Consolidated Financial Statements” contained in this Form 10-K provides further information with respect to the material features of each plan.

Item 13.   Certain Relationships and Related Transactions, and Director Independence

The information set forth under the captions “Item 1 – Election of Directors”, “Corporate Governance” and “Related-Party Transactions” in our Proxy Statement for our Annual Meeting of Stockholders to be held on April 28, 2011 is incorporated herein by reference.

Item 14.   Principal Accountant Fees and Services

The information set forth under the caption “Item 2 – Ratification of Reappointment of Independent Registered Public Accounting Firm” in our Proxy Statement for our Annual Meeting of Stockholders to be held on April 28, 2011, is incorporated herein by reference.

 

Item 15.   Exhibits, Financial Statement Schedules

(a) (1)
Financial Statements

See Consolidated Financial Statements under Item 8 on pages 36 through 55 of this Form 10-K.

(a) (2)
Financial Statement Schedules
 
None

Financial statement schedules have been omitted because they are not applicable.
 
(a) (3)
Exhibits
 
The exhibits listed in the Index to Exhibits, which appears on pages 60 through 63 of this Form 10-K, are incorporated herein by reference or filed as part of this Form 10-K.


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
TRACTOR SUPPLY COMPANY
 
Date:  February 23, 2011
By:
/s/ Anthony F. Crudele
Executive Vice President – Chief Financial Officer and Treasurer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Signature
Title
Date
/s/ Anthony F. Crudele
Anthony F. Crudele
Executive Vice President – Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
 
February 23, 2011
/s/ James F. Wright
James F. Wright
Chairman of the Board, Chief Executive Officer and Director
(Principal Executive Officer)
 
February 23, 2011
/s/ Johnston C. Adams
Johnston C. Adams
 
Director
February 23, 2011
/s/ William Bass
William Bass
 
Director
February 23, 2011
/s/ Jack C. Bingleman
Jack C. Bingleman
 
Director
February 23, 2011
/s/ Richard W. Frost
Richard W. Frost
 
Director
February 23, 2011
/s/ Cynthia T. Jamison
Cynthia T. Jamison
 
Director
February 23, 2011
/s/ Gerard E. Jones
Gerard E. Jones
 
Director
February 23, 2011
/s/ George MacKenzie
George MacKenzie
 
Director
February 23, 2011
/s/ Edna K. Morris
Edna K. Morris
 
Director
February 23, 2011



EXHIBIT INDEX

 
3.1
Restated Certificate of Incorporation, as amended, of the Company, filed with the Delaware Secretary of State on February 14, 1994 (filed as Exhibit 4.1 to Registrant's Registration Statement on Form S-8, Registration No. 333-102768, filed with the Commission on January 28, 2003. and incorporated herein by reference).

 
3.2
Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Company, filed with the Delaware Secretary of State on April 28, 1995 (filed as Exhibit 4.2 to Registrant's Registration Statement on Form S-8, Registration No. 333-102768, filed with the Commission on January 28, 2003, and incorporated herein by reference).

 
3.3
Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Company, filed with the Delaware Secretary of State on May 13, 1994 (filed as Exhibit 4.3 to Registrant's Registration Statement on Form S-8, Registration No. 333-102768, filed with the Commission on January 28, 2003, and incorporated herein by reference).

 
3.4
Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Company (filed as Exhibit 3.1 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on May 3, 2005, Commission File No. 000-23314, and incorporated herein by reference).

 
3.5
Second Amended and Restated By-laws (filed as Exhibit 3(ii) to Registrant’s Current Report on Form 8-K, filed with the Commission on February 11, 2009, Commission File No. 000-23314, and incorporated herein by reference).

 
4.1
Form of Specimen Certificate representing the Company's Common Stock, par value $.008 per share (filed as Exhibit 4.2 to Amendment No. 1 to Registrant's Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on January 31, 1994, and incorporated herein by reference).

 
10.1
Tractor Supply Company 1994 Stock Option Plan (filed as Exhibit 10.28 to Registrant’s Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference).+

 
10.2
Amendment to the Tractor Supply Company 1994 Stock Option Plan (filed as Exhibit 4.6 to Registrant’s Registration Statement on Form S-8, Registration No. 333-10699, filed with the Commission on June 14, 1999, and incorporated herein by reference).+

 
10.3
Second Amendment to the Tractor Supply Company 1994 Stock Option Plan (filed as Exhibit 10.44 to Registrant’s Annual Report on Form 10-K, filed with the Commission on March 24, 2000, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.4
Third Amendment to the Tractor Supply Company 1994 Stock Option Plan, effective February 8, 2007 (filed as Exhibit 10.36 to Registrant’s Annual Report on Form 10-K, filed with the Commission on February 28, 2007, Commission File No. 000-23314, and incorporated herein by reference.)+

 
10.5
Certificate of Insurance relating to the Medical Expense Reimbursement Plan of the Company (filed as Exhibit 10.33 to Registrant’s Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference).

 
10.6
Summary Plan Description of the Executive Life Insurance Plan of the Company (filed as Exhibit 10.34 to Registrant’s Registration Statement on Form S-1, Registration No. 33-73028, filed with the Commission on December 17, 1993, and incorporated herein by reference).+

 
10.7
Tractor Supply Company 1996 Associate Stock Purchase Plan (filed as Exhibit 4.4 to Registrant’s Registration Statement on Form S-8, Registration No. 333-10699, filed with the Commission on August 23, 1996, and incorporated herein by reference).+

 
10.8
Tractor Supply Company Restated 401(k) Retirement Plan (filed as Exhibit 4.1 to Registrant’s Registration Statement on Form S-3, Registration No. 333-35317, filed with the Commission on September 10, 1997, and incorporated herein by reference).+

 
10.9
First Amendment, dated December 22, 2003 to the Tractor Supply Company 401(k) Retirement Savings Plan (filed as Exhibit 10.53 to Registrant’s Annual Report on Form 10-K, filed with the Commission on March 8, 2004, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.10
Second Amendment to Tractor Supply Company Restated 401(k) Retirement Plan (filed as Exhibit 10.57 to Registrant’s Annual Report on Form 10-K, filed with the Commission on March 23, 2001, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.11
Trust Agreement (filed as Exhibit 4.2 to Registrant’s Registration Statement on Form S-3, Registration No. 333-35317, filed with the Commission on September 10, 1997, and incorporated herein by reference).

 
10.12
Split-Dollar Agreement, dated January 27, 1998, between the Company and Joseph H. Scarlett, Jr., Tara Anne Scarlett and Andrew Sinclair Scarlett (filed as Exhibit 10.45 to Registrant's Annual Report on Form 10-K, filed with the Commission on March 17, 1999, Commission File No. 000-23314, and incorporated herein by reference).

 
10.13
Tractor Supply Company 2000 Stock Incentive Plan (filed as Exhibit 4.5 to Registrant's Registration Statement on Form S-8, Registration No. 333-102768, filed with the Commission on January 28, 2003 and incorporated herein by reference).+

 
10.14
First Amendment to the Tractor Supply Company 2000 Stock Incentive Plan, effective February 8, 2007 (filed as Exhibit 10.37 to Registrant’s Annual Report on Form 10-K, filed with the Commission on February 28, 2007, Commission File No. 000-23314, and incorporated herein by reference.) +

 
 
10.15
First Amendment to Lease Agreement, dated as of December 18, 2000, between Tractor Supply Company and GOF Partners (filed as Exhibit 10.56 to Registrant’s Annual Report on Form 10-K, filed with the Commission on March 23, 2001, Commission File No. 000-23314, and incorporated herein by reference).

 
10.16
Transportation Management Services Agreement between UPS Logistics Group, Inc. and Tractor Supply Company dated May 10, 2001 (filed as Exhibit 10.58 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on August 14, 2001 Commission File No. 000-23314, and incorporated herein by reference).

 
10.17
Tractor Supply Company Executive Deferred Compensation Plan, dated November 11, 2001 (filed as Exhibit 10.58 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on May 13, 2002, Commission File No. 000-23314, and incorporated herein by reference).

 
10.18
Transition and Separation Agreement dated February 17, 2006 between Tractor Supply Company and Calvin B. Massmann (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K, Registration No. 000-23314 filed with the Commission on February 21, 2006, and incorporated herein by reference).+

 
10.19
Lease Agreement dated January 22, 2004 between Tractor Supply Company and The Prudential Insurance Company of America (filed as Exhibit 10.54 to Registrant’s Annual Report on Form 10-K, filed with the Commission on March 8, 2004, Commission File No. 000-23314, and incorporated herein by reference).

 
10.20
Tractor Supply Co. 2004 Cash Incentive Plan, effective April 15, 2004 (filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on August 4, 2004, Commission File No. 000-23314, and incorporated herein by reference).

 
10.21
Amended and Restated Employment Agreement between Tractor Supply Company and James F. Wright dated December 21, 2010 (filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K, filed with the Commission on December 22, 2010, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.22
Chairman of the Board Bonus Plan (filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K, filed with the Commission on April 27, 2005, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.23
Form of Incentive Stock Option Agreement under the 2000 Stock Incentive Plan (filed as Exhibit 10.46 to Registrant’s Annual Report on Form 10-K, filed with the Commission on March 10, 2005, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.24
Form of Incentive Stock Option Agreement under the 2000 Stock Incentive Plan (filed as Exhibit 10.44 to Registrant’s Annual Report on Form 10-K, filed with the Commission on March 16, 2006, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.25
Form of Incentive Stock Option Agreement under the 2006 Stock Incentive Plan (filed as Exhibit 10.39 to Registrant’s Annual Report on Form 10-K, filed with the Commission on February 28, 2007, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.26
Form of Incentive Stock Option Agreement under the 2006 Stock Incentive Plan (filed as Exhibit 10.45 to Registrant’s Annual Report on Form 10-K, filed with the Commission on February 27, 2008, Commission File No. 000-23314, incorporated herein by reference).+

 
10.27
Tractor Supply Company 2006 Stock Incentive Plan (filed as Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 27, 2006, and incorporated herein by reference).+

 
10.28
First Amendment, dated April 27, 2006 to the 2006 Stock Incentive Plan (filed as Exhibit 99.1 to Registrant’s Current Report on Form 8-K, filed with the Commission on April 27, 2006, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.29
Second Amendment to the Tractor Supply Company 2006 Stock Incentive Plan, effective February 8, 2007 (filed as Exhibit 10.38 to Registrant’s Annual Report on Form 10-K, filed with the Commission on February 28, 2007, Commission File No. 000-23314, and incorporated herein by reference.)+

 
10.30
Form of Incentive Stock Option Agreement under the 2006 Stock Incentive Plan (filed as Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K, filed with the Commission on February 25, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.31
Form of Change in Control Agreement for each of Anthony F. Crudele; Stanley L. Ruta; Gregory A. Sandfort; and Kimberly D. Vella (filed as Exhibit 10.42 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on August 4, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.32
Amended and Restated Change in Control Agreement for James F. Wright (filed as Exhibit 10.41 to Current Report on Form 8-K, filed with the Commission on December 22, 2010, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.33
Form of Incentive Stock Option Agreement under the Tractor Supply Company 2009 Stock Incentive Plan (filed as Exhibit 10.44 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on August 4, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.34
Form of Restricted Share Unit Agreement under the Tractor Supply Company 2009 Stock Incentive Plan (filed as Exhibit 10.45 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on August 4, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
 
10.35
Form of Nonqualified Stock Option Agreement under the Tractor Supply Company 2009 Stock Incentive Plan (filed as Exhibit 10.46 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on August 4, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.36
Revolving Credit Agreement, dated as of February 22, 2007 by and among Tractor Supply Company, the banks party thereto, and Bank of America, N.A., as Administrative Agent, (filed as Exhibit 10.47 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on November 2, 2009, Commission File No. 000-23314, and incorporated herein by reference).
 
 
10.37
First Amendment to Revolving Credit Agreement, dated as of February 25, 2008 by and among Tractor Supply Company, the banks party thereto, and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.46 to Registrant’s Annual Report on Form 10-K, filed with the Commission on February 27, 2008, Commission File No. 000-23314, and incorporated herein by reference).

 
10.38
Form of Director Restricted Stock Unit Award Agreement (filed as Exhibit 10.48 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on November 2, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.39
Form of Restricted Share Unit Agreement for Officers (filed as Exhibit 10.49 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on November 2, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.40
Form of Deferred Stock Unit Award Agreement for Directors (filed as Exhibit 10.50 to Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on November 2, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
10.41
Tractor Supply Company 2009 Stock Incentive Plan (filed as Exhibit 99.1 to Registrant’s Current Report on Form 8-K, filed with the Commission on April 14, 2009, Commission File No. 000-23314, and incorporated herein by reference).+

 
18*
Letter re:  Change in accounting principles.

 
21*
List of subsidiaries.

 
23*
Consent of Ernst & Young LLP.

 
31.1*
Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

 
31.2*
Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

 
32*
Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

 
101
The following financial information from our Annual Report on Form 10-K for the fiscal 2010, filed with the SEC on February 23, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the consolidated balance sheets at December 25, 2010 and December 26, 2009, (ii) the consolidated statements of income for years ended December 25, 2010, December 26, 2009, and December 27, 2008 (iii) the consolidated statements of cash flows for years ended December 25, 2010 December 26, 2009, and December 27, 2008, (iv) the consolidated statements of stockholders' equity for the years ended December 25, 2010 December 26, 2009, and December 27, 2008, and (v) the Notes to Consolidated Financial Statements.(1)
 
*           Filed herewith
+           Management contract or compensatory plan or arrangement

 
(1)
The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
 
 


 
EX-18 2 exhibit18.htm EXHIBIT 18 LETTER: CHANGE IN ACCOUNTING PRINCIPLES exhibit18.htm


Exhibit 18

February 23, 2011
 
 
Board of Directors
Tractor Supply Company
200 Powell Avenue
Brentwood, Tennessee 37027
 
 
Ladies and Gentlemen:


Note 1 of Notes to the consolidated financial statements of Tractor Supply Company included in its Form 10-K for the year ended December 25, 2010 describes a change in the method of accounting for inventory from the lower of cost, as determined by the last-in, first-out (LIFO) method, or market, to the lower of cost, as determined by an average cost method, or market. There are no authoritative criteria for determining a ‘preferable’ inventory accounting method based on the particular circumstances; however, we conclude that such change in the method of accounting is to an acceptable alternative method which, based on your business judgment to make this change and for the stated reasons, is preferable in your circumstances.

Very truly yours,
 
 
 
 
/s/ Ernst & Young LLP

 


EX-21 3 exhibit21.htm EXHIBIT 21 LIST OF SUBSIDIARIES exhibit21.htm


Exhibit 21
 
 Subsidiaries    Jurisdiction of Organization
     
Tractor Supply Co. of Michigan, LLC
   Michigan
Tractor Supply Co. of Texas, LP
   Texas
Dels Farm Supply, LLC
   Delaware
TSC Purchasing LLC
   Delaware

 
 


EX-31.1 4 exhibit31_1.htm EXHIBIT 31.1 CERTIFICATION exhibit31_1.htm


Exhibit 31.1
 
CERTIFICATIONS


I, James F. Wright, certify that:

1.  
I have reviewed this annual report on Form 10-K of Tractor Supply Company;

2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


 
 
       
 Date:        February 23, 2011    /s/ James F. Wright  
    James F. Wright  
    Chairman of the Board and Chief Executive Officer
 
 


EX-31.2 5 exhibit31_2.htm EXHIBIT 31.2 CERTIFICATION exhibit31_2.htm


Exhibit 31.2
 
CERTIFICATIONS


I, Anthony F. Crudele, certify that:

1.           I have reviewed this annual report on Form 10-K of Tractor Supply Company;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 
 
 
       
 Date:        February 23, 2011   /s/ Anthony F. Crudele  
    Anthony F. Crudele  
    Executive Vice President - Chief Financial Officer and Treasurer  
 


EX-32 6 exhibit32.htm EXHIBIT 32 CERTIFICATION exhibit32.htm


Exhibit 32

CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)




In connection with the Annual Report (“Report”) of Tractor Supply Company (the “Company”) on Form 10-K for the fiscal year ended December 25, 2010, as filed with the Securities and Exchange Commission on the date hereof, we, James F. Wright, Chief Executive Officer, and Anthony F. Crudele, Chief Financial Officer, of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350), that to the best of our knowledge:

(1)  
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(2)  
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Dated:  February 23, 2011

   
 /s/ James F. Wright  
James F. Wright  
Chairman of the Board and Chief Executive Officer
 


   
 /s/ Anthony F. Crudele  
Anthony F. Crudele  
Executive Vice President - Chief Financial Officer and Treasurer  

 


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sales volumes.&#160;&#160;Such assessments are updated on a regular basis for the most recent individual store experiences.& amp;#160;&#160;&#160;The estimated store inventory shrink rate is based on historical experience.&#160;&#160;We believe historical rates are a reasonably accurate reflection of future trends.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Vendor Support</font></font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We receive funding from substantially all of our significant merchandise vendors for the promotion of our brand as well as the sale of their products through a variety of programs and arrangements, including guaranteed fund ing and volume rebate programs.&#160;&#160;The amounts received are subject to terms of vendor agreements, which have varying expiration dates ranging in duration from several months to a few years.&#160;&#160;Many agreements are negotiated annually and are based on expected annual purchases of the vendor&#8217;s product.&#160;&#160;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.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">During the interim periods, the amount of expected funding is estimated based upon initial guaranteed commitments, as well as anticipated purchase levels with applicable vendors.&#160;&am p;#160;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.&#160;&#160;Although we believe we can reasonably estimate purchase volume and related vendor funding at interim periods, it is possible that actual year-end results could differ significantly from the previously estimated amounts.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Freight</font></font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FO NT-SIZE: 10pt">We incur various types of transportation and delivery costs in connection with inventory purchases and distribution.&#160;&#160;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.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div><table style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"><tr valign="top"><td style="WIDTH: 18pt"><div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></div></td><td><div align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Share-Based Compensation</font></div></td></tr></table></div> ;<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We have share-based compensation plans, which include incentive and non-qualified stock options, restricted stock units, and an employee stock purchase plan, covering certain members of management and non-employee directors.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We estimate the fair value of our stock option awards at the date of grant utilizing a <font style="FONT-STYLE: italic; DISPLAY: inline">Black-Scholes</font> option pricing model. The <font style="FONT-STYLE: italic; DISPLAY: inline">Black-Scholes</font> option valuation model was developed for use in estimating the fair value of short-term traded options that have no vesting restrictions and are fully transferable. However, key assumptions used in the <font style="FONT-STYLE: italic; DISPLAY: inline">Black-Scholes</font> model are adjusted to incorporate the unique characteristics of our stock option awards. Option pricing models and generally accepted valuation techniques require management to make subjective assumptions including expected stock price volatility, expected dividend yield, risk-free interest rate and expected life. We rely on historical volatility trends to estimate future volatility assumptions.&#160;&#160;The risk-free interest rates used were actual U.S.&#160;Treasury Constant Maturity rates for bonds matching the expected term of the option on the date of grant. The expected life of the option on the date of grant was estimated based on our historical experience for similar options.</font></div></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In addition to the key assumptions used in the <font style="FONT-STYLE: italic; DISPLAY: inline">Black-Scholes</font> model, the estimated forfeiture rate at the time of valuation (which is based on historical experience for similar options) is a critical assumption, as it reduces expense ratably over the vesting period. We adjust this estimate periodically, based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT- INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We believe our estimates are reasonable in the context of historical experience.&#160;&#160;Future results will depend on, among other matters, levels of share-based compensation granted in the future, actual forfeiture rates and the timing of option exercises.</font></div></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Self-Insurance Reserves</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPL AY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We self-insure a significant portion of our employee medical insurance, workers&#8217; compensation and general liability insurance plans.&#160; We have stop-loss insurance policies to protect from individual losses over specified dollar values. The full extent of certain claims, especially workers&#8217; compensation and general liability claims, may not become fully determined for several years. Therefore, we estimate potential obligations for liabilities that have been incurred but not yet reported based upon historical data and experience. Although we believe the reserves established for these obligations are reasonably estimated, any significant increase in the number of claims or costs associated with claims made under these plans could have a material adverse effect on our financial results.&#160;&#160;At December&#160;25, 2010, we had recorded net insurance reserves of $29.0 million compared to $23.7 million at Dece mber&#160;26, 2009.&#160;</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Sales Tax Audit Reserve</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">A portion of our sales are to tax-exempt customers.&#160;&#160;We obtain exemption information as a necessary part of each tax-exempt transaction.&#160;&#160;Many of the states in which we conduct business will perform audits to verify our compliance with applicable sales tax laws.&#160;&#160;The business activities of our customers and the intended use of the unique products sold by us create a challenging and comp lex compliance environment.&#160;&#160;These circumstances also create some risk that we could be challenged as to the propriety of our sales tax compliance.&#160;&#160;While we believe we reasonably enforce sales tax compliance with our customers and endeavor to fully comply with all applicable sales tax regulations, there can be no assurance that we, upon final completion of such audits, will not have a significant liability for disallowed exemptions.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We review our past audit experience and assessments with applicable states to determine if we have potential exposure for non-compliance.&#160;&#160;Any estimated liability is based on an initial assessment of compliance risk and our to-date experience with each audit. As each audit progresses, we quantify the exposure based on preliminary assessments made by the state auditors, adjusted for additional documentation that may be provided to reduce the assessment.&#160;&#160;&#160;The reserve for these tax audits can fluctuate depending on numerous factors, including the complexity of agricultural-based exemptions, ambiguity in state tax regulations, the number of ongoing audits and the length of time required to settle with the state taxing authorities.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Tax Contingencies</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMIL Y: Times New Roman; FONT-SIZE: 10pt">Our income tax returns are periodically audited by U.S. federal and state tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated with our various tax filing positions, we record reserves for probable exposures. A number of years may elapse before a particular matter, for which we have established a reserve, is audited and fully resolved or clarified. We adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve, the statute of limitations expires for the relevant tax authority to examine the tax position or when more information becomes available.</font></div><div style="TEXT-INDENT: 0 pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We recognize a liability for certain tax benefits that do not meet the minimum requirements for recognition in the financial statements.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether or not the minimum requirements for recognition of tax benefits have been met.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"& gt;<br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our effective income tax rate is also affected by changes in tax law, the tax jurisdiction of new stores or business ventures, the level of earnings and the results of tax audits.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Credit Cards/Accounts Receivable</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Sales generated through our private label credit cards are not reflected as accounts receivable.&#160;&#160;Under an agreement with Citi Cards, a division of Citigroup (&#8220;Citigroup&#8221;), consumer and business credit is extended directly to customers by Citigroup.&#160;&#160;All credit program and related services are performed and controlled directly by Citigroup.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Pre-opening Costs</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times N ew Roman; FONT-SIZE: 10pt">Non-capital expenditures incurred in connection with opening new store and distribution centers, primarily payroll and rent, are expensed as incurred.&#160;&#160;Preopening costs were approximately $7.1 million, $7.5 million and $8.7 million in 2010, 2009 and 2008, respectively.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Store Closing Costs</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We regularly evaluate the performance of our stores and periodically c lose those that are under-performing.&#160;&#160;We record a liability for a cost associated with an exit or disposal activity when the liability is incurred, usually in the period the store closes.&#160;&#160;Store closing costs were not significant to results of operations for any of the fiscal years presented.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Cash and Cash Equivalents</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Temporary cash investments, with a maturity of thre e months or less when purchased, are considered to be cash equivalents.&#160;&#160;The majority of payments due from banks for customer credit card transactions process within 24-48 hours and are accordingly classified as cash and cash equivalents.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Fair Value</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly tra nsaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.&#160;&#160;These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Financial Instruments Not Carried at Fair Value</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> ;</div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our financial instruments consist of cash and cash equivalents, short-term investments, short-term receivables, trade payables and long-term debt instruments.&#160;&#160;The carrying values of cash and cash equivalents, short-term receivables and trade payables approximate current fair value.&#160;&#160;We had no borrowings under the revolving credit facility at December&#160;25, 2010 and December&#160;26, 2009.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"></font>&#160;</div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inlin e; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our short-term investment in a U.S. Treasury note is classified as Level 1 as these types of investments trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.&#160;&#160;The U.S. Treasury note is held as collateral for a standby letter of credit and is expected to be held to maturity.&#160;&#160;The fair value of short-term investments at December 25, 2010 was $15.9 million.&#160;&#160;We had no short-term investments at December 26, 2009.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Inventories</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div st yle="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Inventories are stated at the lower of cost, as determined by the average cost method, or market.&#160;&#160;Inventory cost consists of the direct cost of merchandise including freight.&#160;&#160;Inventories are net of shrinkage, obsolescence, other valuations and vendor allowances.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Vendor Concentration</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="jus tify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Approximately 250 vendors accounted for 90% of our purchases for fiscal 2010, with no one vendor representing more than 10% of purchases during the year.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Cost of Merchandise Sold</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Cost of merchandise sold includes the total cost of products sold; freight expenses associated with moving merchandise inventories from o ur vendors to our distribution centers; from our distribution centers to our retail stores; and from one distribution center to another; vendor support; damaged, junked or defective product; cash discounts from payments to merchandise vendors; and adjustments for shrinkage (physical inventory losses), lower of cost or market valuation, slow moving product and excess inventory quantities.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Selling, General and Administrative Expenses</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Selling, general and administrative expenses (&#8220;SG&amp;A&#8221;) include payroll and benefit costs for retail, distribution center and corporate employees; occupancy costs of retail, distribution center and corporate facilities; advertising; tender costs, including bank charges and costs associated with credit and debit card interchange fees; outside service fees; and other administrative costs, such as computer maintenance, supplies, travel and lodging.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Warehousing and Distribution Costs</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-L EFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Costs incurred at our distribution centers for receiving, warehousing and preparing product for delivery are expensed as incurred and are included in SG&amp;A expenses in the Consolidated Statements of Income.&#160;&#160;Because the Company does not include these costs in cost of sales, the Company&#8217;s gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin.&#160;&#160;Distribution center costs for fiscal 2010, 2009 and 2008 were approximately $64.4 million, $59.0 million and $52.8 million, respectively.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZ E: 10pt; FONT-WEIGHT: bold">Property and Equipment</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Property and equipment are carried at cost.&#160;&#160;Depreciation is recorded using the straight-line method over the estimated useful lives of the assets.&#160;&#160;Improvements to leased premises are amortized using the straight-line method over the initial term of the lease or the useful life of the improvement, whichever is less.&#160;&#160;Leasehold improvements added late in the lease term are amortized over the term of the lease (including the first renewal option, if the renewal is reasonably assured) or the useful life of the improvement, whichever is less.&#160;&#160;The following estimated useful lives are generally applied:< ;/font></div><div><table style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt" cellspacing="0" cellpadding="0" width="100%"><tr><td valign="bottom" width="30%"><font style="DISPLAY: inline; 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DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Leasehold and building improvements</font></div></td><td valign="top" width="16%"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5 &#8211; 35 years</font></div></td></tr>< ;tr><td valign="bottom" width="30%"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Furniture, fixtures and equipment</font></div></td><td valign="top" width="16%"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5 &#8211; 10 years</font></div></td></tr><tr><td valign="bottom" width="30%"><div style="TEXT-INDENT: 0pt; 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FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset&#8217;s estimated undiscounted future cash flows. 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If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. 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Repurchase of common stock Treasury Stock Value Acquired Cost Method Dividends paid Issuance of common stock under employee stock purchase plan, (in shares) Exercise of stock options, (in shares) Repurchase of common stock, (in shares) Repurchase of common stock, retired (in shares) Supplemental disclosure of non-cash activities: Supplemental disclosures of cash flow information: Equipment acquired through capital leases Leases Capital Stock Retirement Benefit Plans Significant Accounting Policies Impact of Recently Issued Accounting Standards Deferred TaxLiabilities Current Deferred income taxes Restricted stock units, (in shares) Cumulative effect of change in accounting method in prior years Adjusted Stockholders Equity Balance Total of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent adjusted for the cumulative effect of change in accounting method in prior years. 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The Company&#8217;s contributions, including accrued interest, were $0.3 million in each of the fiscal years 2010, 2009 and 2008.</font></div>Note 9 - Retirement Benefit Plans:We have a defined contribution benefit plan, the Tractor Supply Company 401(k) Retirement Savings Plan (thefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescription containing the entire pension and other postretirement benefits disclosure as a single block of text.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FAS106-2 -Paragraph 20, 21, 22 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5, 6, 7, 8 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 87 -Paragraph 264 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Implementation Guide (Q and A) -Number FAS88 -Paragraph 63 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 158 -Paragraph 7, 21, 22 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph b Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 30 -Paragraph 26 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 106 -Paragraph 518 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 03-2 -Paragraph 8 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 8 -Subparagraph m Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph h Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph a Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph q falsefalse12Retirement Benefit PlansUnKnownUnKnownUnKnownUnKnownfalsetrue ZIP 24 0000916365-11-000013-xbrl.zip IDEA: XBRL DOCUMENT begin 644 0000916365-11-000013-xbrl.zip M4$L#!!0````(`$&`5SZF?W+'QJP``#C."@`1`!P`='-C;RTR,#$P,3(R-2YX M;6Q55`D``\EU94W)=65-=7@+``$$)0X```0Y`0``[#UI=]LXDM_WO?T/&&^F M7_)6!TG=MI-YCH^,=AS;SW:VN_<;1$(6.A2I)DC;FE^_50#!0Z*LPXZDJ-4? 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This element can be used, generally, for the adjustment to retained earnings of a new accounting principle.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 154 -Paragraph 17, 18 falsefalse3false0tsco_AdjustedStockholdersEquityBalancetscofalsecreditdurationTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the...falsefalsefalsefalsefalsefalsefalsefalsefalsefalse terselabel1truefalsefalse625000625[1]falsefalsefalsetruefalse2truefalsefalse151018000151018[1]falsefalsefalsetruefalse3truefalsefalse-150049000-150049falsefalsefalsetruefalse4truefalsefalse579349000579349falsefalse falsetruefalse5truefalsefalse580943000580943falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent adjusted for the cumulative effect of change in accounting method in prior years.No authoritative reference available.falsefalse4false0us-gaap_StockIssuedDuringPeriodValueEmployeeStockPurchasePlanus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse10001[1]falsefalsefalsetruefalse2truefalsefalse16790001679[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse16800001680[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAggregate change in value for stock issued during the period as a result of employee stock purchase plan.Reference 1: http://www.xbrl.org/2003/role/presentation Ref -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse5false0us-gaap_StockIssuedDuringPeriodValueStockOptionsExercisedus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse20002[1]falsefalsefalsetruefalse2truefalsefalse14680001468[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse14700001470[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue stock issued during the period as a result of the exercise of stock options.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse6false0us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValueus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse1225700012257[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse 5truefalsefalse1225700012257falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents the amount of recognized share-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 39 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64 -Subparagraph b Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph A91 falsefalse7false0us-gaap_AdjustmentsToAdditionalPaidInCapitalTaxEffectFromShareBasedCompensationus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefals efalse00falsefalsefalsetruefalse2truefalsefalse13220001322[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5true< IsRatio>falsefalse13220001322falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTax benefit associated with any share-based compensation plan other than an employee stock ownership plan (ESOP). The tax benefit results from the deduction by the entity on its tax return for an award of stock that exceeds the cumulative compensation cost for common stock or preferred stock recognized for financial reporting. Includes any resulting tax benefit that ex ceeds the previously recognized deferred tax asset (excess tax benefits).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 62 falsefalse8false0us-gaap_TreasuryStockValueAcquiredCostMethodus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1true< IsRatio>falsefalse-13000-13[1]falsefalsefalsetruefalse2truefalsefalse1300013[1]falsefalsefalsetruefalse3truefalsefalse-53866000-53866[1]falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse< /hasScenarios>5truefalsefalse-53866000-53866[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCost of common and preferred stock that were repurchased during the period. Recorded using the cost method.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 1 -Section B -Paragraph 7 -Subparagraph b falsefalse9false0us-gaap_NetIncomeLossus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1falsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4truefalsefalse107993000107993[2]falsefalsefalsetruefalse5truefalsefalse107993000107993[2]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe portion of consolidated profit or loss for the period, net of income taxes, which is attributable to the parent. If the entity does not present consolidated financial statements, the amount of profit or loss for the period, net of income taxes.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 19 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 38 -Subparagraph d Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph A7 -Appendix A Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 38 -Subparagraph a Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph 20 -Article 9 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 130 -Paragraph 10, 15 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 87-21 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28, 29, 30 falsefalse10false0us-gaap_StockholdersEquityus-gaaptruecreditinstantNo definition available.falsefalsefalsetruefalsefalsefalsefalsetruefalseperiodendlabelinstant2008-12-27T00:00:000001 - -01-01T00:00:001truefalsefalse615000615[1]falsefalsefalsetruefalse2truefalsefalse167757000167757[1]falsefalsefalsetruefalse3truefalsefalse-203915000-203915falsefalsefalsetruefalse4truefalsefalse687342000687342falsefalsefalsetruefalse5truefalsefalse651799000651799falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the ec onomic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph A3 -Appendix A Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse11false0us-gaap_StockIssuedDuringPeriodValueEmployeeStockPurchasePlanus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefal sefalse10001[1]falsefalsefalsetruefalse2truefalsefalse16300001630[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse16310001631[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAggregate change in value for stock issued during the period as a result of employee stock purchase plan.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse12false0us-gaap_StockIssuedDuringPeriodValueStockOptionsExercisedus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse60006[1]falsefalsefalsetruefalse2truefalsefalse43420004342[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse43480004348[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue stock issued during the period as a result of the exercise of stock options.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse13false0us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValueus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse1213000012130[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse1213000012130falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents the amount of recognized share-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 39 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64 -Subparagraph b Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph A91 falsefalse14false0us-gaap_AdjustmentsToAdditionalPaidInCapitalTaxEffectFromShareBasedCompensationus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefal sefalse00falsefalsefalsetruefalse2truefalsefalse47870004787[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5true falsefalse47870004787falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTax benefit associated with any share-based compensation plan other than an employee stock ownership plan (ESOP). The tax benefit results from the deduction by the entity on its tax return for an award of stock that exceeds the cumulative compensation cost for common stock or preferred stock recognized for financial reporting. Includes any resulting tax benefit that e xceeds the previously recognized deferred tax asset (excess tax benefits).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 62 falsefalse15false0us-gaap_TreasuryStockValueAcquiredCostMethodus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1true falsefalse-3000-3[1]falsefalsefalsetruefalse2truefalsefalse30003[1]falsefalsefalsetruefalse 3truefalsefalse-15289000-15289[1]falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse-15289000-15289[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCost of common and preferred stock that were repurchased during the period. Recorded using the cost method.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 1 -Section B -Paragraph 7 -Subparagraph b falsefalse16false0us-gaap_NetIncomeLossus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1falsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4truefalsefalse119745000119745[2]falsefalsefalsetruefalse5truefalsefalse119745000119745[2]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe portion of consolidated profit or loss for the period, net of income taxes, which is attributable to the parent. If the entity does not present consolidated financial statements, the amount of profit or loss for the period, net of income taxes.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 19 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 38 -Subparagraph d Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph A7 -Appendix A Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 38 -Subparagraph a Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph 20 -Article 9 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 130 -Paragraph 10, 15 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 87-21 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28, 29, 30 falsefalse17false0us-gaap_StockholdersEquityus-gaaptruecreditinstantNo definition available.falsefalsefalsetruefalsefalsefalsefalsetruefalseperiodendlabelinstant2009-12-26T00:00:000001 - -01-01T00:00:001truefalsefalse619000619[1]falsefalsefalsetruefalse2truefalsefalse190649000190649[1]falsefalsefalsetruefalse3truefalsefalse-219204000-219204falsefalsefalsetruefalse4truefalsefalse807087000807087falsefalsefalsetruefalse5truefalsefalse779151000779151falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the ec onomic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph A3 -Appendix A Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 4 -Section E Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse18false0us-gaap_StockIssuedDuringPeriodValueEmployeeStockPurchasePlanus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefal sefalse10001[1]falsefalsefalsetruefalse2truefalsefalse17390001739[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse17400001740[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAggregate change in value for stock issued during the period as a result of employee stock purchase plan.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse19false0us-gaap_StockIssuedDuringPeriodValueStockOptionsExercisedus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse1300013[1]falsefalsefalsetruefalse2truefalsefalse2212500022125[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse2213800022138[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue stock issued during the period as a result of the exercise of stock options.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 falsefalse20false0us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValueus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse1177100011771[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse1177100011771falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis element represents the amount of recognized share-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 39 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64 -Subparagraph b Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph A91 falsefalse21false0us-gaap_AdjustmentsToAdditionalPaidInCapitalTaxEffectFromShareBasedCompensationus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefal sefalse00falsefalsefalsetruefalse2truefalsefalse97800009780[1]falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5true falsefalse97800009780falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTax benefit associated with any share-based compensation plan other than an employee stock ownership plan (ESOP). 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Includes any resulting tax benefit that e xceeds the previously recognized deferred tax asset (excess tax benefits).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 62 falsefalse22false0tsco_RestrictedStockUnitsWithheldForTaxestscofalsedebitdurationRestricted stock units repurchased for payment of taxes.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1 falsefalsefalse00falsefalsefalsetruefalse2truefalsefalse-783000-783falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse-783000-783falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryRestricted stock units repurchased for payment of taxes.No authoritative reference available.falsefalse23false0us-gaap_TreasuryStockValueAcquiredCostMethodus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse-2000-2[1] falsefalsefalsetruefalse2truefalsefalse20002[1]falsefalsefalsetruefalse3truefalsefalse-38172000-38172[1]falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5truefalsefalse-38172000-38172[1]falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCost of common and preferred stock that were repurchased during the period. Recorded using the cost method.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 10 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Chapter 1 -Section B -Paragraph 7 -Subparagraph b falsefalse24false0us-gaap_DividendsCommonStockCashus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4truefalsefalse-20355000-20355falsefalsefalsetruefalse5truefalsefalse-20355000-20355falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCommon stock cash dividend declared by an entity during the period. This element includes paid and unpaid dividends declared during the period.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Article 3 falsefalse25false0us-gaap_NetIncomeLossus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1falsefalsefa lse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4truefalsefalse167972000167972falsefalsefalsetruefalse5truefalsefalse 167972000167972falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe portion of consolidated profit or loss for the period, net of income taxes, which is attributable to the parent. 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See Note 1 for more information.2Net income and retained earnings for all periods prior to 2010 have been adjusted to reflect the change in accounting for inventory, see Note 1 for more information.526CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)ThousandsUnKnownUnKnownUnKnownfalsetrue XML 27 R16.xml IDEA: Commitments and Contingencies 2.2.0.25falsefalse006100 - Disclosure - Commitments and Contingenciestruefalsefalse1falsefalseUSDfalsefalse12/27/2009 - 12/25/2010 USD ($) USD ($) / shares $c00001http://www.sec.gov/CIK0000916365duration2009-12-27T00:00:002010-12-25T00:00:00u000Standardhttp://www.xbrl.org/2003/iso4217USDiso42170u002Dividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli 0u001Standardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0tsco_NotesToFinancialStatementsAbstracttscofalsenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_CommitmentsAndContingenciesDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1 falsefalsefalse00<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Note 10 &#8211; Commitments and Contingencies:</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Construction and Real Estate Commitments</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style= "DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At December 25, 2010, we had commitments related to construction projects for new stores and a distribution center totaling approximately $32.2 million.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Litigation</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company received and responded to a Request for Information from the United States Environmental Protection Agency (&#8220;EPA&#8221;) relating to certain recreational vehicles and no n-road spark ignition engines sold by the Company.&#160;&#160;In the first quarter of fiscal 2011, the Environmental Enforcement Section of the Department of Justice (&#8220;DOJ&#8221;), on behalf of the EPA, informed the Company that it believed the Company had violated the Clean Air Act by importing or causing the importation of certain engines not covered by certificates of conformity issued by the EPA, and that unless the DOJ and the Company were able to reach a settlement, the DOJ was prepared to commence a civil action. The Company is currently engaged in settlement discussions with the DOJ that would call for the payment of a civil penalty and certain injunctive relief.&#160;&#160;The engines were purchased by the Company pursuant to agreements with vendors under which the vendors represented that their products complied with all applicable laws and regulations and under which the vendors agreed to indemnify the Company for any liabilities or costs relating to, among other matt ers, the noncompliance or alleged noncompliance of their products.&#160;&#160;The Company has notified these vendors of the EPA&#8217;s position and expects to be reimbursed for any liabilities or costs relating to this matter.&#160;&#160;&#160;The Company does not expect the resolution of this matter to have a material adverse effect on its financial condition or results of operations.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are also involved in various litigation matters arising in the ordinary course of business.&#160;&#160;Management expects these matters will be resolved without material adverse effect on our consolidated financial position or results of operations.&#160;&#160;We believe that any estimated loss relate d to such matters has been adequately provided in accrued liabilities to the extent probable and reasonably estimable.&#160;&#160;It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in circumstances relating to these proceedings.</font></div>Note 10 &#8211; Commitments and Contingencies:Construction and Real Estate CommitmentsAt December 25, 2010, we had commitments related to construction projectsfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringIncludes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 falsefalse12Commitments and ContingenciesUnKnownUnKnownUnKnownUnKnownfalsetrue XML 28 R9.xml IDEA: Credit Agreement 2.2.0.25falsefalse006030 - Disclosure - Credit Agreementtruefalsefalse1falsefalseUSDfalsefalse12/27/2009 - 12/25/2010 USD ($) USD ($) / shares $c00001http://www.sec.gov/CIK0000916365duration2009-12-27T00:00:002010-12-25T00:00:00u000Standardhttp://www.xbrl.org/2003/iso4217USDiso42170u002Dividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli 0u001Standardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0tsco_NotesToFinancialStatementsAbstracttscofalsenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_ScheduleOfLineOfCreditFacilitiesTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1 falsefalsefalse00<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Note 3 - Credit Agreement:</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are party to a Senior Credit Facility with Bank of America, N.A., as agent for a lender group (the &#8220;Credit Agreement&#8221;), which provides for borrowings up to $350 million (with sublimits of $75 million and $20 million for letters of credit and swingline loans, respectively).&#160;& ;#160;The Credit Agreement has an Increase Option for $150 million (subject to additional lender group commitments).&#160;&#160;The Credit Agreement is unsecured and matures in February 2012, with proceeds expected to be used for working capital, capital expenditures and share repurchases.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At December&#160;25, 2010 and December&#160;26, 2009, there were no outstanding borrowings under the Credit Agreement.&#160;&#160;There were $27.4 million and $35.2 million outstanding letters of credit as of December&#160;25, 2010 and December&#160;26, 2009, respectively.&#160;&#160;Borrowings bear interest at either the bank&#8217;s base rate (3.25% at December&#160;25, 2010) or the London I nter-Bank Offer Rate (0.26% at December&#160;25, 2010) plus an additional amount ranging from 0.35% to 0.90% per annum, adjusted quarterly based on our performance (0.40% at December&#160;25, 2010).&#160;&#160;We are also required to pay, quarterly in arrears, a commitment fee ranging from 0.06% to 0.18% per annum and adjusted quarterly based on our performance, for unused capacity (0.075% at December&#160;25, 2010).&#160;&#160;&#160;There are no compensating balance requirements associated with the Credit Agreement.</font></div><div style="DISPLAY: block; 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If the entity does not present consolidated financial statements, the amount of profit or loss for the period, net of income taxes.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 19 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 38 -Subparagraph d Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph A7 -Appendix A Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 51 -Paragraph 38 -Subparagraph a Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph 20 -Article 9 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 130 -Paragraph 10, 15 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 87-21 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28, 29, 30 falsefalse5true0us-gaap_AdjustmentsNoncashItemsToReconcileNetIncomeLossToCashProvidedByUsedInOperatingActivitiesAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1false< IsRatio>falsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse6false0us-gaap_DepreciationAndAmortizationus-gaap truedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse6979700069797falsefalsefalsefalsefalse2truefalsefalse6625800066258falsefalsefalsefalsefalse3truefalsefalse6073100060731falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe current period expense charged against earnings on long-lived, physical assets not used in production, and which are not intended for resale, to allocate or recognize the cost of such assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset; or to reflect consumption during the period of an asset that is not used in production.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 12 -Paragraph 5 falsefalse7false0us-gaap_GainLossOnSaleOfPropertyPlantEquipmentus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalselabel1truefal sefalse10620001062falsefalsefalsefalsefalse2truefalsefalse213000213falsefalsefalsefalsefalse3truefalsefalse-425000-425falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe difference between the sale price or salvage price and the book value of a property, plant, and equipment asset that was sold or retired during the reporting period. This element refers to the gain (loss).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse8false0us-gaap_ShareBasedCompensationus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse1177100011771falsefalsefalsefalsefalse2truefalsefalse1213000012130falsefalsefalsefalsefalse3truefa lsefalse1225700012257falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock options, amortization of restricted stock, and adjustment for officers compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method.Reference 1: http://www. xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse9false0us-gaap_DeferredIncomeTaxExpenseBenefitus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse26900002690falsefalsefalsefalsefalse2truefalsefalse-11139000-11139falsefalsefalsefalsefalse3truefalsefalse1853100018531falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 6 -Section I -Subsection 7 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 45 -Subparagraph b Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 289 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 falsefalse10true0us-gaap_IncreaseDecreaseInOperatingCapitalAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalse false00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse 00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse11false0us-gaap_IncreaseDecreaseInInventoriesus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse-60054000-60054falsefalsefalsefal sefalse2truefalsefalse-4745000-4745falsefalsefalsefalsefalse3truefalsefalse-10241000-10241falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net change during the reporting period in the aggregate value of all inventory held by the reporting entity, associated with underlying transactions that are classified as operating activities.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse12false0us-gaap_IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssetsus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse-3201000-3201falsefalsefalsefalsefalse2truefalsefalse1116400011164falsefalsefalsefalsefalse3truefalsefalse10070001007falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net change during the reporting period in the value of this group of assets within the working capital section.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse13false0us-gaap_IncreaseDecreaseInAccountsPayableus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse-14247000-14247falsefalsefalsefalsefalse2truefalsefalse-25193000-25193falsefalsefalsefalsefalse3truef alsefalse2848200028482falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net change during the reporting period in the aggregate amount of obligations due within one year (or one business cycle). This may include trade payables, amounts due to related parties, royalties payable, and other obligations.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse14false0us-gaap_IncreaseDecreaseInAccruedSalariesus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1truefalsefalse1185100011851falsefalsefalsefalsefalse2truefalsefalse1247600012476falsefalsefalsefalsefalse3truefalse false-590000-590falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryNet change during the period in the amount of salaries accrued at the period end.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse15false0us-gaap_IncreaseDecreaseInAccruedLiabilitiesus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1true falsefalse2669100026691falsefalsefalsefalsefalse2truefalsefalse98380009838falsefalsefalsefalsefalse3truefalsefalse-1174000-1174falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net change during the reporting period in the aggregate amount of expenses incurred but not yet paid.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse16false0us-gaap_IncreaseDecreaseInAccruedIncomeTaxesPayableus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse10040001004falsefalsefalsefalsefalse2truefalsefalse78010007801falsefalsefalsefalsefalse3truefalsefalse-6359000-6359falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net change during the period in the amount of cash payments due to taxing authorities for taxes that are based on the reporting entity's earnings.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse17false0us-gaap_IncreaseDecreaseInOtherOperatingLiabilitiesus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse72720007272falsefalsefalsefalsefalse2truefalsefalse1676900016769falsefalsefalsefalsefalse3truefalsefalse75140007514falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net change during the reporting period in other operating obligations not otherwise defined in the taxonomy.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 falsefalse18false0us-gaap_NetCashProvidedByUsedInOperatingActivitiesus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1truefalsefalse222608000222608falsefalsefalsefalsefalse2truefalsefalse215317000215317falsefalsefalsefalsefalse3truefa lsefalse217726000217726falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net cash from (used in) all of the entity's operating activities, including those of discontinued operations, of the reporting entity. Operating activities generally involve producing and delivering goods and providing services. Operating activity cash flows include transactions, adjustments, and changes in value that are not defined as investing or financing activities. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 28 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 26 truefalse19true0us-gaap_NetCashProvidedByUsedInInvestingActivitiesAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse20false0us-gaap_PaymentsToAcquirePropertyPlantAndEquipmentus-gaaptruecredit durationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1truefalsefalse-96511000-96511falsefalsefalse falsefalse2truefalsefalse-73974000-73974falsefalsefalsefalsefalse3truefalsefalse-91759000-91759falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale; includes cash outflows to pay for construction of self-constructed assets.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 15 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 17 -Subparagraph c falsefalse21false0us-gaap_ProceedsFromSaleOfPropertyPlantAndEquipmentus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse313000313falsefalsefalsefalsefalse2truefalsefalse9700097falsefalsefalsefalsefalse3truefalsefalse33240003324falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash inflow from the sale of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 15 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 16 -Subparagraph c falsefalse22false0us-gaap_PaymentsToAcquireHeldToMaturitySecuritiesus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1truefalsefalse-15913000-15913falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3tr uefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash outflow to acquire a debt financial instrument for which the entity has the ability and intent to hold until maturity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 115 -Paragraph 18 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 15 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 17 -Subparagraph a falsefalse23false0us-gaap_NetCashProvidedByUsedInInvestingActivitiesus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1truefalsefalse-112111000-112111falsefalsefalsefalsefalse2truefalsefalse-73877000-73877falsefalsefalsefalsefalse3truefalsefalse-88435000-88435falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net cash inflow (outflow) from investing activity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 26 truefalse24true0us-gaap_NetCashProvidedByUsedInFinancingActivitiesAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalse< DisplayZeroAsNone>false00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse25false0us-gaap_ProceedsFromLinesOfCreditus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse274033000274033falsefalsefalsefalsefalse3truefalsefalse853903000853903falsefalsefalsefals efalseMonetaryxbrli:monetaryItemTypemonetaryThe cash inflow from a contractual arrangement with the lender, including letter of credit, standby letter of credit and revolving credit arrangements, under which borrowings can be made up to a specific amount at any point in time with either short term or long term maturity that is collateralized (backed by pledge, mortgage or other lien in the entity's assets).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 18 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 19 -Subparagraph b falsefalse26false0us-gaap_RepaymentsOfLinesOfCreditus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1true falsefalse00falsefalsefalsefalsefalse2truefalsefalse-274033000-274033falsefalsefalsefalsefalse3true< IsRatio>falsefalse-908903000-908903falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash outflow to pay off an obligation from a contractual arrangement with the lender, including letter of credit, standby letter of credit and revolving credit arrangements, under which borrowings can be made up to a specific amount at any point in time with either short term or long term maturity.Reference 1: http://www .xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 18 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 20 -Subparagraph b falsefalse27false0us-gaap_ExcessTaxBenefitFromShareBasedCompensationFinancingActivitiesus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalselabel1truefalsefalse98150009815falsefalsefalsefalsefalse2truefalsefalse42800004280falsefalsefalsefalsefalse< Id>3truefalsefalse10850001085falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryReductions in the entity's income taxes that arise when compensation cost (from non-qualified share-based compensation) recognized on the entity's tax return exceeds compensation cost from share-based compensation recognized in financial statements. This element represents the cash inflow reported in the enterprise's financing activ ities.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph A240 -Subparagraph i Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 00-15 -Paragraph 3 falsefalse28false0us-gaap_RepaymentsOfLongTermCapitalLeaseObligationsus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1true< /IsNumeric>falsefalse-392000-392falsefalsefalsefalsefalse2truefalsefalse-548000-548falsefalsefalsefalsefalse3truefalsefalse-851000-851falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash outflow for the obligation for lease meeting the criteria for capitalization (with maturities exceeding one year or beyond the operating cycle of the entity, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 26, 31 falsefalse29false0tsco_RestrictedStockUnitsRepurchasedForPaymentOfTaxestscofalsecreditdurationRestricted stock units repurchased for payment of taxesfalsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1truefalsefalse-783000-783falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse< /Cell>3truefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryRestricted stock units repurchased for payment of taxesNo authoritative reference available.falsefalse30false0us-gaap_PaymentsForRepurchaseOfCommonStockus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1truefalsefalse-38172000-38172falsefalsefalsefalsefalse2truefalsefalse-15289000-15289falsefalsefalsefalsefalse3truefalsefalse-53866000-53866falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash outflow to reacquire common stock during the period.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 18 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 20 -Subparagraph a falsefalse31false0us-gaap_ProceedsFromIssuanceOfSharesUnderIncentiveAndShareBasedCompensationPlansIncludingStockOptionsus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1 truefalsefalse2387800023878falsefalsefalsefalsefalse2truefalsefalse59790005979falsefalsefalsefalsefalse3truefalsefalse31500003150falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe total cash inflow associated with the amount received from holders to acquire the entity's shares under incentive and share awards, including stock option exercises.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 18 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph A240 -Subparagraph i Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 19 -Subparagraph a falsefalse32false0us-gaap_PaymentsOfDividendsus-gaaptruecreditdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsetruenegated1truefalsefalse-20355000-20355falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3truef alsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash outflow from the entity's earnings to the shareholders.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 18 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 20 -Subparagraph a falsefalse33false0us-gaap_NetCashProvidedByUsedInFinancingActivitiesus-gaaptruedebitdurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1truefalsefalse-26009000-26009falsefalsefalsefalsefalse2truefalsefalse-5578000-5578falsefalsefalsefalsefalse3truefalsefalse-105482000-105482falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net cash inflow (outflow) from financing activity for the period.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 26 truefalse34false0us-gaap_CashAndCashEquivalentsPeriodIncreaseDecreaseus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1truefalsefalse8448800084488falsefalsefalsefalsefalse2truefalsefalse135862000135862falsefalsefalsefalsefalse3truefalsefalse2380900023809falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe net change between the beginning and ending balance of cash and cash equivalents.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 95 -Paragraph 26 truefalse35false0us-gaap_CashAndCashEquivalentsAtCarryingValueus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsetruefalsefalseperiodstartlabel1truefalse false172851000172851falsefalsefalsefalsefalse2truefalsefalse3698900036989falsefalsefalsefalsefalse3truefalsefalse1318000013180falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryIncludes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding ite ms classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. 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No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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Gross carrying amount before accumulated amortization as of the balance sheet date of capitalized costs to ready software for sale or licensing, or for long-term internal use and long lived, depreciable assets that are used in the creation, maintenance and utilization of information systems. No authoritative reference available. Sum of the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year or the normal operating cycle, if longer. This element also represents the aggregate carrying amount, as of the balance sheet date, of current assets not separately presented elsewhere in the balance sheet. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer). No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. The cumulative difference between the rental income or payments required by a lease agreement and the rental income or expense recognized on a straight-line basis plus deferred credit for incentives or inducements received by a lessee from a lessor, in order to motivate the lessee to enter the lease agreement, which incentive or inducements is to be recognized as a reduction of rental expense over the lease term. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Total of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent adjusted for the cumulative effect of change in accounting method in prior years. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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Restricted stock units repurchased for payment of taxes. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. Restricted stock units repurchased for payment of taxes No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. No authoritative reference available. 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0u001Standardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0tsco_NotesToFinancialStatementsAbstracttscofalsenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_SignificantAccountingPoliciesTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Note 1 &#8211; Significant Accounting Policies:</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Nature of Business</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inl ine; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Tractor Supply Company (the &#8220;Company&#8221;, &#8220;we&#8221;, &#8220;us&#8221; and/or &#8220;our&#8221;) is the largest operator of retail farm and ranch stores in the United States.&#160;&#160;We are focused on supplying the lifestyle needs of recreational farmers and ranchers and those who enjoy the rural lifestyle, as well as tradesmen and small businesses.&#160;&#160;Stores are located in towns outlying major metropolitan markets and in rural communities.&#160;&#160;Our wholly-owned subsidiary, Del&#8217;s Farm Supply, LLC (&#8220;Del&#8217;s&#8221;) operated 26 stores as of December&#160;25, 2010.&#160;&#160;At December&#160;25, 2010, we operated a total of 1,001 retail farm and ranch stores in 44 states 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however, as with any estimate, refund activity may vary from estimated amounts.&a mp;#160;&#160;At December&#160;25, 2010 we had a liability of $3.0 million reserved for sales returns, compared to $3.1 million at December&#160;26, 2009.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"></font><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We recognize revenue when&#160;a gift card or merchandise return card is redeemed by the customer and recognize income when the likelihood of the gift card or merchandise return card bein g redeemed by the customer is remote (referred to as &#8220;breakage&#8221;).&#160;&#160;The gift card and merchandise return card breakage rate is based upon historical redemption patterns and income is recognized for unredeemed gift card and merchandise return cards in proportion to those historical redemption patterns.&#160;&#160;We recognized income of $1.6 million, $1.1 million and $1.4&#160;million in fiscal 2010, 2009 and 2008, respectively.</font></font><br /></div></div><div style="TEXT-INDENT: 18pt; 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We do not believe our merchandise inventories are subject to significant risk of obsolescence in the near term.&#160;&#160;However, changes in mar ket conditions or consumer purchasing patterns could result in the need for additional reserves.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Shrinkage</font></font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We perform physical inventories at each store at least once a year, and we have established reserves for estimating inventory shrinkage between physical inventory counts.&#160;&#160;The reserve is established by assessing the chain-wide average shrinkage experience rate, applied to the related periods&#8217; sales volumes. &#160;&#160;Such assessments are updated on a regular basis for the most recent individual store experiences.&#160;&#160;&#160;The estimated store inventory shrink rate is based on historical experience.&#160;&#160;We believe historical rates are a reasonably accurate reflection of future trends.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Vendor Support</font></font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We receive funding from substantially all of our significant merchandise vendors for the promotion of our brand as well as the sale of their products through a variety of programs and arrangements, including guaranteed funding and volume rebate programs.&#160;&#160;The amounts received are subject to terms of vendor agreements, which have varying expiration dates ranging in duration from several months to a few years.&#160;&#160;Many agreements are negotiated annually and are based on expected annual purchases of the vendor&#8217;s product.&#160;&#160;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.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">During the interim periods, the amount of expected funding is estimated b ased upon initial guaranteed commitments, as well as anticipated purchase levels with applicable vendors.&#160;&#160;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.&#160;&#160;Although we believe we can reasonably estimate purchase volume and related vendor funding at interim periods, it is possible that actual year-end results could differ significantly from the previously estimated amounts.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Freight</font></font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGI N-LEFT: 18pt; MARGIN-RIGHT: 18pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We incur various types of transportation and delivery costs in connection with inventory purchases and distribution.&#160;&#160;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.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div><table style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"><tr valign="top"><td style="WIDTH: 18pt"><div><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160; </font></div></td><td><div align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman ; FONT-SIZE: 10pt">Share-Based Compensation</font></div></td></tr></table></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We have share-based compensation plans, which include incentive and non-qualified stock options, restricted stock units, and an employee stock purchase plan, covering certain members of management and non-employee directors.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We estimate the fair value of our stock option awards at the date of grant utilizing a <font style="FONT-STYLE : italic; DISPLAY: inline">Black-Scholes</font> option pricing model. The <font style="FONT-STYLE: italic; DISPLAY: inline">Black-Scholes</font> option valuation model was developed for use in estimating the fair value of short-term traded options that have no vesting restrictions and are fully transferable. However, key assumptions used in the <font style="FONT-STYLE: italic; DISPLAY: inline">Black-Scholes</font> model are adjusted to incorporate the unique characteristics of our stock option awards. Option pricing models and generally accepted valuation techniques require management to make subjective assumptions including expected stock price volatility, expected dividend yield, risk-free interest rate and expected life. We rely on historical volatility trends to estimate future volatility assumptions.&#160;&#160;The risk-free interest rates used were actual U.S.&#160;Treasury Constant Maturity rates for bonds matching the expected term of the option on the dat e of grant. The expected life of the option on the date of grant was estimated based on our historical experience for similar options.</font></div></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In addition to the key assumptions used in the <font style="FONT-STYLE: italic; DISPLAY: inline">Black-Scholes</font> model, the estimated forfeiture rate at the time of valuation (which is based on historical experience for similar options) is a critical assumption, as it reduces expense ratably over the vesting period. We adjust this estimate periodically, based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.< ;/font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We believe our estimates are reasonable in the context of historical experience.&#160;&#160;Future results will depend on, among other matters, levels of share-based compensation granted in the future, actual forfeiture rates and the timing of option exercises.</font></div></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Self-Insurance Reserves</font></div><div s tyle="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We self-insure a significant portion of our employee medical insurance, workers&#8217; compensation and general liability insurance plans.&#160; We have stop-loss insurance policies to protect from individual losses over specified dollar values. The full extent of certain claims, especially workers&#8217; compensation and general liability claims, may not become fully determined for several years. Therefore, we estimate potential obligations for liabilities that have been incurred but not yet reported based upon historical data and experience. Although we believe the reserves established for these obligations are reasonably estimated, any significant increase in the number of claims or costs associated with claims made under these plans could have a material adverse effect on our financial results.&#160;&#160;At December&#160;25, 2010, we had recorded net insurance reserves of $29.0 million compared to $23.7 million at December&#160;26, 2009.&#160;</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Sales Tax Audit Reserve</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">A portion of our sales are to tax-exempt customers.&#160;&#160;We obtain exemption information as a necessary part of each tax-exempt transaction.&#160;&#160;Many of the states in which we conduct business will perform audits to verify our compliance with applicable sales tax laws.&#160;&#160;The bus iness activities of our customers and the intended use of the unique products sold by us create a challenging and complex compliance environment.&#160;&#160;These circumstances also create some risk that we could be challenged as to the propriety of our sales tax compliance.&#160;&#160;While we believe we reasonably enforce sales tax compliance with our customers and endeavor to fully comply with all applicable sales tax regulations, there can be no assurance that we, upon final completion of such audits, will not have a significant liability for disallowed exemptions.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We review our past audit experience and assessments with applicable states to determine if we have potential exposure for non-compliance.& #160;&#160;Any estimated liability is based on an initial assessment of compliance risk and our to-date experience with each audit. As each audit progresses, we quantify the exposure based on preliminary assessments made by the state auditors, adjusted for additional documentation that may be provided to reduce the assessment.&#160;&#160;&#160;The reserve for these tax audits can fluctuate depending on numerous factors, including the complexity of agricultural-based exemptions, ambiguity in state tax regulations, the number of ongoing audits and the length of time required to settle with the state taxing authorities.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Tax Contingencies</font></div><div style="TEXT-INDENT: 0pt ; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our income tax returns are periodically audited by U.S. federal and state tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated with our various tax filing positions, we record reserves for probable exposures. A number of years may elapse before a particular matter, for which we have established a reserve, is audited and fully resolved or clarified. We adjust our tax contingencies reserve and income tax provision in the period in which actual results of a settlement with tax authorities differs from our established reserve, the statute of limitations expires for the relevant tax authority to exam ine the tax position or when more information becomes available.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We recognize a liability for certain tax benefits that do not meet the minimum requirements for recognition in the financial statements.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our tax contingencies reserve contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions and whether or not the minimum requirements fo r recognition of tax benefits have been met.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our effective income tax rate is also affected by changes in tax law, the tax jurisdiction of new stores or business ventures, the level of earnings and the results of tax audits.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Credit Cards/Accounts Receivable</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Sales generated through our private label credit cards are not reflected as accounts receivable.&#160;&#160;Under an agreement with Citi Cards, a division of Citigroup (&#8220;Citigroup&#8221;), consumer and business credit is extended directly to customers by Citigroup.&#160;&#160;All credit program and related services are performed and controlled directly by Citigroup.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Pre-opening Costs</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY : block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Non-capital expenditures incurred in connection with opening new store and distribution centers, primarily payroll and rent, are expensed as incurred.&#160;&#160;Preopening costs were approximately $7.1 million, $7.5 million and $8.7 million in 2010, 2009 and 2008, respectively.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Store Closing Costs</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FO NT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We regularly evaluate the performance of our stores and periodically close those that are under-performing.&#160;&#160;We record a liability for a cost associated with an exit or disposal activity when the liability is incurred, usually in the period the store closes.&#160;&#160;Store closing costs were not significant to results of operations for any of the fiscal years presented.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Cash and Cash Equivalents</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style=" DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Temporary cash investments, with a maturity of three months or less when purchased, are considered to be cash equivalents.&#160;&#160;The majority of payments due from banks for customer credit card transactions process within 24-48 hours and are accordingly classified as cash and cash equivalents.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Fair Value</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.&#160;&#160;These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Financial Instrum ents Not Carried at Fair Value</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our financial instruments consist of cash and cash equivalents, short-term investments, short-term receivables, trade payables and long-term debt instruments.&#160;&#160;The carrying values of cash and cash equivalents, short-term receivables and trade payables approximate current fair value.&#160;&#160;We had no borrowings under the revolving credit facility at December&#160;25, 2010 and December&#160;26, 2009.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"></font>&#160;</div><div style="TE XT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our short-term investment in a U.S. Treasury note is classified as Level 1 as these types of investments trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.&#160;&#160;The U.S. Treasury note is held as collateral for a standby letter of credit and is expected to be held to maturity.&#160;&#160;The fair value of short-term investments at December 25, 2010 was $15.9 million.&#160;&#160;We had no short-term investments at December 26, 2009.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Inve ntories</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Inventories are stated at the lower of cost, as determined by the average cost method, or market.&#160;&#160;Inventory cost consists of the direct cost of merchandise including freight.&#160;&#160;Inventories are net of shrinkage, obsolescence, other valuations and vendor allowances.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Vendor Concentration</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block">&l t;br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Approximately 250 vendors accounted for 90% of our purchases for fiscal 2010, with no one vendor representing more than 10% of purchases during the year.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Cost of Merchandise Sold</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Cost of merchandise sold includes the total cost of products sold; freight expenses associated with moving merchandise inventories from our vendors to our distribution centers; from our distribution centers to our retail stores; and from one distribution center to another; vendor support; damaged, junked or defective product; cash discounts from payments to merchandise vendors; and adjustments for shrinkage (physical inventory losses), lower of cost or market valuation, slow moving product and excess inventory quantities.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Selling, General and Administrative Expenses</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Selling, general and administrative expenses (&#8220;SG&amp;A&#8221;) include payroll and benefit costs for retail, distribution center and corporate employees; occupancy costs of retail, distribution center and corporate facilities; advertising; tender costs, including bank charges and costs associated with credit and debit card interchange fees; outside service fees; and other administrative costs, such as computer maintenance, supplies, travel and lodging.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Warehousing and Distribution Costs</font></div><div style=" TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Costs incurred at our distribution centers for receiving, warehousing and preparing product for delivery are expensed as incurred and are included in SG&amp;A expenses in the Consolidated Statements of Income.&#160;&#160;Because the Company does not include these costs in cost of sales, the Company&#8217;s gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin.&#160;&#160;Distribution center costs for fiscal 2010, 2009 and 2008 were approximately $64.4 million, $59.0 million and $52.8 million, respectively.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGH T: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Property and Equipment</font></div><div style="TEXT-INDENT: 0pt; 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DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Computer software and hardware</font></div></td><td va lign="top" width="16%"><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">3 &#8211;&#160;&#160;&#160;5 years</font></div></td></tr></table></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"></font><br />&#160;</div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Depreciation and Amortization</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="just ify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Depreciation includes expenses related to all retail, distribution center and corporate assets.&#160;&#160;Amortization includes expenses related to definite-lived intangible assets.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Capitalized Software Costs</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company capitalizes certain costs related to the acquisition and development of software and am ortizes these costs using the straight-line method over the estimated useful life of the software, which is three to five years.&#160;&#160;These costs are included in computer software and hardware in the accompanying Consolidated Balance Sheets.&#160;&#160;Certain software costs not meeting the criteria for capitalization are expensed as incurred.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Leases</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Assets under capital leases are a mortized in accordance with our normal depreciation policy for owned assets or over the lease term, if shorter, and the related charge to operations is included in depreciation expense in the Consolidated Statements of Income.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Certain leases include rent increases during the initial lease term.&#160;&#160;For these leases, we recognize the related rental expense on a straight-line basis over the term of the lease (which includes the pre-opening period of construction, renovation, fixturing and merchandise placement) and record the difference between the expense charged to operations and amounts paid as a deferred rent liability.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br />&l t;/div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We occasionally receive reimbursements from landlords to be used towards improving the related store to be leased.&#160;&#160;Reimbursements are primarily for the purpose of performing work required to divide a much larger location into smaller segments, one of which we will use for our store.&#160;&#160;This work could include the addition of demising walls, separation of plumbing, utilities, electric work, entrances (front and back) and other work as required.&#160;&#160;Leasehold improvements are recorded at their gross costs including items reimbursed by landlords.&#160;&#160;Related reimbursements are amortized on a straight-line basis as a reduction of rent expense over the initial lease term.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT : 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"></font><br />&#160;</div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Impairment of Long-Lived Assets</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Long-lived assets other than goodwill and indefinite-lived intangible assets, which are separately tested for impairment, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.</font></div><div style="TEXT-INDEN T: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset&#8217;s 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.&#160;&#160;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.&#160;&#160;If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset&#8217;s estimated fair value, which may be based on an estimated future cash flow model. We recognize an impairment loss if the amount of the asset&#8217;s carrying value exceeds the asset&#8217;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 useful life of that asset.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In fiscal 2010, the company recognized impairment charges of $1.1 million related to the write-off of certain capitalized software development costs.&#160;&#160;These asse ts were not expected to provide any future benefit to the Company and were determined to have no significant fair value.&#160;&#160;During fiscal year 2009 impairment charges of $0.8 million were recorded representing the amount required to write-down the carrying value of certain leasehold improvements to the assets&#8217; estimated fair value. Impairment charges are included in SG&amp;A expenses in the Consolidated Statement of Income. No significant impairment charges were recognized in fiscal 2008.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Goodwill</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0 pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Goodwill and intangible assets with indefinite lives are not amortized.&#160;&#160;We evaluate goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. We complete our impairment evaluation by performing internal valuation analyses, considering other publicly available market information and using an independent valuation firm, as appropriate.&#160;&#160;All goodwill at December&#160;25, 2010 is associated with the Company as a whole.&#160;&#160;At December&#160;26, 2009 all goodwill was associated with the Del&#8217;s business and, for purposes of the fiscal 2009 impairment testing, Del&#8217;s was considered the reporting unit.&#160;&#160;In October 2010, we reevaluated the Del&#8217;s reporting unit and concluded that since Del&#8217;s h as become closely aligned in terms of management, infrastructure, philosophy and performance, we now have only one reporting unit for goodwill impairment evaluation.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The test for goodwill impairment is a two step process.&#160;&#160;The first step of the goodwill impairment test, used to identify the potential for impairment, compares the fair value of a reporting unit with the carrying value of its net assets, including goodwill.&#160;&#160;If the fair value of the reporting unit is less than the carrying value of the reporting unit, the second step of the goodwill impairment test is performed to measure the amount of impairment loss to be recorded, if any.&#160;&#160;The second step, if required, wou ld compare the implied fair value of goodwill with the current carrying amount of goodwill.&#160;&#160;If the implied fair value of goodwill is less than the carrying value, an impairment charge would be recorded as a charge to our operations.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">In the fourth quarter of fiscal 2010, we completed our annual impairment testing of goodwill and determined there was no impairment. We determined that the fair value of the reporting unit (including goodwill) was in excess of the carrying value of the reporting unit and as such, the second step was not necessary.&#160;&#160;In reaching this conclusion, the fair value of the reporting unit was determined based on a market approach.&#160;&#160;Under the market app roach, the fair value is based on observed market prices.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Advertising Costs</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Advertising costs consist of expenses incurred in connection with newspaper circulars, television and radio, as well as direct mail, newspaper advertisements and other promotions.&#160;&#160;Costs are expensed when incurred with the exception of television advertising and circular and direct mail promotions, which are expe nsed upon first showing.&#160;&#160;Advertising expenses for fiscal 2010, 2009 and 2008 were approximately $48.6&#160;million, $45.7 million and $58.0 million, respectively.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>Prepaid advertising costs were approximately $0.1 million and $0.2 million at December&#160;25, 2010 and December&#160;26, 2009, respectively.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Income Taxes</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; F ONT-SIZE: 10pt">We account for income taxes using the liability method, whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be recovered or settled.</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Net Income Per Share</font></div><div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /></div><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period.&#160;&#160;Diluted EPS is calculated by dividing net income by the weighted average diluted shares outstanding.&#160;&#160;Diluted shares are computed using the treasury stock method for options and restricted stock units.</font></div>Note 1 &#8211; Significant Accounting Policies:Nature of BusinessTractor Supply Company (the &#8220;Company&#8221;, &#8220;we&#8221;, &#8220;us&#8221; and/orfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis element may be used to describe all significant accounting policies of the reporting entity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 22 -Paragraph 8 falsefalse12Significant Accounting PoliciesUnKnownUnKnownUnKnownUnKnownfalsetrue XML 38 R17.xml IDEA: Impact of Recently Issued Accounting Standards 2.2.0.25falsefalse006110 - Disclosure - Impact of Recently Issued Accounting Standardstruefalsefalse1falsefalseUSDfalsefalse12/27/2009 - 12/25/2010 USD ($) USD ($) / shares $c00001http://www.sec.gov/CIK0000916365duration2009-12-27T00:00:002010-12-25T00:00:00u000Standardhttp://www.xbrl.org/2003/iso4217USDiso42170u002Dividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli 0u001Standardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0tsco_NotesToFinancialStatementsAbstracttscofalsenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse3false0us-gaap_ScheduleOfNewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Note 11 - Impact of Recently Issued Accounting Standards:</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In June 2009, the Financial Accounting Standards Board (&#8220;FASB&#8221;) issued Accounting Standards Codification (&#8220;ASC&#8221;) Topic 810 (originally issued as Statement of Financial Accounting Standards No. 167, & ;#8220;Amendments to FASB Interpretation No. (&#8220;FIN&#8221;) 46(R)&#8221;).&#160;&#160;Among other items, ASC 810 responds to concerns about an enterprise&#8217;s application of certain key provisions of FIN 46(R), including those regarding the transparency of the enterprise&#8217;s involvement with variable interest entities.&#160;&#160;ASC 810 is effective for the first annual period that begins after November 15, 2009, and for interim periods within that first annual reporting period.&#160;&#160;The Company adopted the standard for the interim period ended March 27, 2010.&#160;&#160;There was no impact on the Company&#8217;s financial position, results of operations, cash flows, or disclosures.</font></div><div style="DISPLAY: block; TEXT-INDENT: 0pt"><br /></div><div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; F ONT-FAMILY: Times New Roman">In February 2010, the FASB issued Accounting Standards Update No. 2010-09 (ASU No. 2010-09), &#8220;Subsequent Events (Topic 855):&#160;&#160;Amendments to Certain Recognition and Disclosure Requirements.&#8221;&#160;&#160;The amendments remove the requirements for an SEC filer to disclose a date, in both issued and revised financial statements, through which subsequent events have been reviewed.&#160;&#160;Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP.&#160;&#160;ASU No. 2010-09 was effective upon issuance.&#160;&#160;The adoption of this guidance did not have an impact on our financial condition, results of operations or cash flows.</font></div>Note 11 - Impact of Recently Issued Accounting Standards:In June 2009, the Financial Accounting Standards Board (&#8220;FASB& amp;#8221;) issued AccountingfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringRepresents disclosure of any changes in an accounting principle, including a change from one generally accepted accounting principle to another generally accepted accounting principle when there are two or more generally accepted accounting principles that apply or when the accounting principle formerly used is no longer generally accepted. 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