TRACTOR SUPPLY CO /DE/

Note 1 -General

Nature of Business

Founded in 1938, Tractor Supply Company (the “Company,” “Tractor Supply,” “we,” “our,” or “us”) is the largest rural lifestyle retailer in the United States (“U.S.”). The Company is focused on supplying the needs of recreational farmers, ranchers, and all those who enjoy living the rural lifestyle (which we refer to as the “Out Here” lifestyle). The Company's stores are located primarily in towns outlying major metropolitan markets and in rural communities. The Company also owns and operates the following: Petsense, LLC (“Petsense by Tractor Supply”), a small-box pet specialty supply retailer focused on meeting the needs of pet owners, primarily in small and mid-sized communities, and offering a variety of pet products and services; Allivet, a leading online pet pharmacy; and VIP Petcare, the largest provider of mobile veterinary care in the U.S. At September 26, 2026, the Company operated a total of 2,621 retail stores in 49 states (2,486 Tractor Supply retail stores and 135 Petsense by Tractor Supply retail stores) and also offered an expanded assortment of products through the Tractor Supply mobile application and online at TractorSupply.com, Petsense.com, Allivet.com, and VIPPetcare.com.

Basis of Presentation

The accompanying interim unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 27, 2025 (the “2025 Form 10-K”). The results of operations for our interim periods are not necessarily indicative of results for the full fiscal year.

On May 28, 2026, the Company completed its acquisition of VIP Petcare, the veterinary services business of PetIQ. Pursuant to the agreement governing the transaction, the Company acquired 100% of the equity interest in VIP Petcare for a purchase price of $133.8 million.

New Accounting Pronouncements Not Yet Adopted

In May 2026, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” The ASU is intended to improve the financial accounting for and disclosure of environmental credits and environmental credit obligations. The ASU is required to be adopted for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The amendments should be applied on a retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption. The Company is currently evaluating the impact of adoption on its financial disclosures.

Supplier Finance Program

The Company has an agreement with a third-party financial institution that allows certain participating suppliers the ability to finance payment obligations from the Company. The third-party financial institution has separate arrangements with the Company’s suppliers and provides them with the option to request early payment for invoices confirmed by the Company. The Company does not determine the terms or conditions of the arrangement between the third-party and its suppliers and receives no compensation from the third-party financial institution. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangement. A greater number of suppliers began participating in the supplier finance program during the fiscal three and nine months ended September 26, 2026 compared to the fiscal three and nine months ended September 27, 2025, driving a larger balance in outstanding payment obligations under the program as of September 26, 2026 as compared to December 27, 2025 and September 27, 2025. The Company’s outstanding payment obligations under the supplier finance program, which are included inaccounts payable on the Company’s Consolidated Balance Sheets, were $232.7 million, $30.6 million, and $69.5 million at September 26, 2026, December 27, 2025, and September 27, 2025, respectively.

Note 2 -Fair Value of Financial Instruments

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.

The Company’s financial instruments consist of cash and cash equivalents, short-term credit card receivables, trade payables, and debt instruments. Due to their short-term nature, the carrying values of cash and cash equivalents, short-term credit card receivables, and trade payables approximate current fair value at each balance sheet date.

As described in further detail in Note 5 to the Consolidated Financial Statements, the Company had $2.25 billion, $1.78 billion and $1.76 billion in borrowings under its debt facilities at September 26, 2026, December 27, 2025 and September 27, 2025, respectively. The fair values of the Company’s $150 million 3.70% Senior Notes due 2029 (the “3.70% Senior Notes”) and the borrowings under the Company’s revolving credit facility (the “Revolving Credit Facility”) were determined based on market interest rates (Level 2 inputs). The carrying values of borrowings in the 3.70% Senior Notes and the Revolving Credit Facility approximate fair value for each period reported.

The fair values of the Company’s $750 million 5.250% Senior Notes due 2033 (the “5.25% Senior Notes”), $650 million 1.750% Senior Notes due 2030 (the “1.75% Senior Notes”) and $500 million 5.200% Senior Notes due 2032 (the “5.20% Senior Notes”) are determined based on quoted prices in active markets, which are considered Level 1 inputs. The carrying values and the fair values of the 5.25% Senior Notes, 1.75% Senior Notes, and 5.20% Senior Notes, net of discounts, were as follows (in thousands):

Note 3 -Acquisition of VIP Petcare

On May 28, 2026, the Company completed its acquisition of VIP Petcare, the veterinary services business of PetIQ. Pursuant to the agreement governing the transaction, the Company acquired 100% of the equity interest in VIP Petcare for a purchase price of $133.8 million, which excludes adjustments for working capital, acquired cash, and other acquisition related payments.

Preliminary Allocation of the Purchase Price

The Company has applied the acquisition method of accounting for the VIP Petcare acquisition, in accordance with ASC 805 “Business Combinations,” with respect to the identifiable assets and liabilities of VIP Petcare which have been measured at estimated fair value as of the date of the business combination.

The aggregate purchase price was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date, primarily using Level 2 and Level 3 inputs. Level 2 and Level 3 inputs are described in further detail in Note 2 to the Consolidated Financial Statements. These fair value estimates represent management’s best estimate of future cash flows (including sales, cost of sales, income taxes, etc.), discount rates, competitive trends, market comparables, and other factors. Inputs used were generally determined from historical data supplemented by current and anticipated market conditions and growth rates.

Although the determination of the preliminary fair values is substantially complete, certain fair value estimates are based on preliminary information and are subject to change during the measurement period, which ends once the Company has determined that it has obtained all necessary information that existed as of the acquisition date or has determined that such information is unavailable and cannot extend beyond one year from the acquisition date. At September 26, 2026, the fair values that are based on preliminary information relate primarily to deferred income taxes and certain working capital adjustments. The amount of consideration transferred that exceeds the fair value of the identifiable assets, net of liabilities, is recorded as goodwill, which is indicative of the expected synergies the acquisition of VIP Petcare will bring to the Company’s portfolio offering for companion animal customers and the additional growth opportunities expected as a result of acquiring VIP Petcare. The goodwill recorded is not deductible for tax purposes.

The purchase consideration and preliminary estimated fair value of VIP Petcare’s net assets acquired are shown below (in thousands):

$9.5 million in acquisition costs related to the VIP Petcare acquisition were expensed as incurred and are included in the selling, general and administrative expenses in the Consolidated Statements of Income for the fiscal nine months ended September 26, 2026.

The results of operations of VIP Petcare have been included in the Consolidated Financial Statements since the date of the acquisition.

Note 4 –Net Income Per Share

The Company presents both basic and diluted net income per share on the Consolidated Statements of Income. Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average diluted shares outstanding during the period. Dilutive shares are computed using the treasury stock method for share-based awards. Performance-based restricted share units are included in diluted shares only if the related performance conditions are considered satisfied as of the end of the reporting period. Net income per share is calculated as follows (in thousands, except per share amounts):

Anti-dilutive stock awards excluded from the above calculations totaled approximately 4.4 million shares for the fiscal three months ended September 26, 2026 and approximately 0.6 million shares for the fiscal three months ended September 27, 2025. Anti-dilutive stock awards excluded from the above calculations totaled approximately 3.7 million shares for the fiscal nine months ended September 26, 2026 and approximately 0.8 million sharesfor the fiscal nine months ended September 27, 2025.

Note 5 –Debt

The following table summarizes the Company’s outstanding debt as of the dates indicated (in millions):

(a) Also referred to herein as the “Note Purchase Facility,” referring to the Note Purchase and Private Shelf Agreement dated as of August 14, 2017 by and among the Company, PGIM, Inc. and the noteholders party thereto, as amended through November 2, 2022, under which the notes were purchased.

On May 19, 2026, the Company entered into an Amended and Restated Credit Agreement, by and among the Company, as Borrower, certain lenders, and Wells Fargo Bank, National Association, as administrative agent (the “Amended Credit Agreement”). The credit facility provided pursuant to the Amended Credit Agreement (the “2026 Senior Credit Facility”) amends and restates the Company’s existing credit agreement. Outstanding borrowings under the existing senior credit facility were refinanced under the Amended Credit Agreement.

The 2026 Senior Credit Facility consists of the Revolving Credit Facility in the maximum principal amount of $1.30 billion (with a sublimit of $75.0 million for swingline loans and a sublimit of $150.0 million for letters of credit). In addition, the Company has an option to increase the revolving credit facility and/or establish term loans in an amount not to exceed $500.0 million in the aggregate, subject to, among other things, the receipt of commitments for the increased amount. The 2026 Senior Credit Facility is unsecured and has afive-year term withtwo options to request that the lenders extend the maturity date of the commitments held by each lender forone year.

Borrowings under the Company’s Revolving Credit Facility bore interest either at the bank’s base rate (7.000% at September 26, 2026) plus an additional amount ranging from 0.000% to 0.250% (0.000% at September 26, 2026) or at adjusted Secured Overnight Financing Rate (3.898% at September 26, 2026) plus an additional amount ranging from 0.750% to 1.250% (1.000% at September 26, 2026), adjusted based on the Company’s public credit ratings. The Company was also required to pay, quarterly in arrears, a commitment fee related to unused capacity on the Revolving Credit Facility ranging from 0.075% to 0.150% per annum (0.090% at September 26, 2026), adjusted based on the Company’s public credit ratings. The Revolving Credit Facility is scheduled to mature on May 19, 2031.

5.20% Senior Notes

On August 25, 2026, the Company completed the sale of $500 million in aggregate principal amount of its 5.20% Senior Notes. The entire principal amount of the 5.20% Senior Notes is due in full on January 30, 2032. Interest is payable semi-annually in arrears on each January 30 and July 30, commencing January 30, 2027. The terms of the 5.20% Senior Notes are governed by an indenture dated as of October 30, 2020 (the “Base Indenture”) between the Company and Regions Bank, as trustee, as amended and supplemented by a third supplemental indenture dated as of August 25, 2026 (the “Third Supplemental Indenture”) between the Company and Regions Bank, as trustee.

The 5.20% Senior Notes are senior unsecured debt obligations of the Company and rank equally with the Company’s other senior unsecured liabilities and senior to any future subordinated indebtedness of the Company. The 5.20% Senior Notes are subject to customary covenants restricting the Company’s ability, subject to certain exceptions, to incur debt secured by liens, to enter into sale and leaseback transactions or to merge or consolidate with another entity or sell substantially all of its assets to another person.

At any time prior to December 30, 2031 (one month prior to the maturity date of the 5.20% Senior Notes), the Company has the right, at its option, to redeem the 5.20% Senior Notes, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of 100% of the principal amount of the 5.20% Senior Notes to be redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest through the par call date, discounted at the applicable Treasury Rate plus 15 basis points, plus, in each case, accrued and unpaid interest to, but not including, the date of redemption. On or after December 30, 2031, the Company may redeem the 5.20% Senior Notes, in whole or in part, at 100% of the principal amount to be redeemed, plus accrued and unpaid interest to, but not including, the date of redemption.

If a Change of Control Triggering Event (as defined in the Third Supplemental Indenture) occurs, unless the Company has exercised its right to redeem the 5.20% Senior Notes, holders of the 5.20% Senior Notes may require the Company to repurchase all or any part of such holder’s 5.20% Senior Notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, on such 5.20% Senior Notes to, but not including, the purchase date. Upon the occurrence of an event of default, which includes payment defaults, defaults in the performance of certain covenants, cross defaults, and bankruptcy and insolvency related defaults, the Company’s obligations under the 5.20% Senior Notes may be accelerated, in which case the entire principal amount of the 5.20% Senior Notes would be due and payable immediately.

Covenants and Default Provisions of the Debt Agreements

As of September 26, 2026, the Note Purchase Facility required quarterly compliance with respect totwo material covenants: a fixed charge coverage ratio and a leverage ratio. The 2026 Senior Credit Facility required quarterly compliance with respect to one material covenant: a leverage ratio. Both the fixed charge coverage ratio and leverage ratio are calculated on a trailing twelve-month basis at the end of each fiscal quarter. The fixed charge coverage ratio compares earnings before interest, taxes, depreciation, amortization, share-based compensation, and rent expense (“consolidated EBITDAR”) to the sum of interest paid and rental expense (excluding any straight-line rent adjustments). The fixed charge coverage ratio was required to be greater than or equal to 2.00 to 1.00 as of the last day of each fiscal quarter. The leverage ratio compares total funded debt to consolidated EBITDAR. The leverage ratio was required to be less than or equal to 4.00 to 1.00 as of the last day of each fiscal quarter. The Note Purchase Facility and the 2026 Senior Credit Facility (collectively, the “Debt Agreements”) also contain certain other restrictions regarding additional subsidiary indebtedness, business operations, subsidiary guarantees, mergers, consolidations and sales of assets, transactions with subsidiaries or affiliates, and liens. As of September 26, 2026, the Company was in compliance with all debt covenants.

The Debt Agreements contain customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, certain events of bankruptcy and insolvency, material judgments, certain ERISA events, and invalidity of loan documents. Upon certain changes of control, amounts outstanding under the Debt Agreements could become due and payable. In addition, under the Note Purchase Facility, upon an event of default or change of control, the make whole payment as described in the Company’s 2025 Form 10-K may become due and payable.

The Note Purchase Facility also requires that, in the event the Company amends its 2026 Senior Credit Facility, or any subsequent credit facility of $100 million or greater, such that it contains covenant or default provisions that are not provided in the Note Purchase Facility or that are similar to those contained in the Note Purchase Facility but which contain percentages, amounts, formulas, or grace periods that are more restrictive than those set forth in the Note Purchase Facility or are otherwise more beneficial to the lenders thereunder, the Note Purchase Facility shall be automatically amended to include such additional or amended covenants and/or default provisions.

Note 6 –Capital Stock and Dividends

Capital Stock

The authorized capital stock of the Company consists of common stock and preferred stock. The Company is authorized to issue 2.00 billion shares of common stock. The Company is also authorized to issue 40 thousand shares of preferred stock, with such designations, rights and preferences as may be determined from time to time by the Company's Board of Directors.

Dividends

During the first nine months of fiscal 2026 and fiscal 2025, the Company's Board of Directors declared the following cash dividends:

On November 4, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share of the Company’s outstanding common stock. The dividend will be paid on December 8, 2026 to stockholders of record as of the close of business on November 23, 2026.

Note 7 –Treasury Stock

The Company’s Board of Directors has authorized common stock repurchases under a share repurchase program, which was most recently increased by $1.00 billion on February 12, 2025. The total amount authorized under the program, which has been increased from time to time, is currently $7.50 billion, exclusive of any fees, commissions, or other expenses related to such repurchases. The share repurchase program does not have an expiration date. 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 are accounted for at cost and will be held in treasury for future issuance. The program may be limited, temporarily paused, or terminated at any time without prior notice. As of September 26, 2026, the Company had remaining authorization under the share repurchase program of $784.9 million, exclusive of any fees, commissions, or other expenses.

The following table provides the number of shares repurchased, average price paid per share, and total cost of share repurchases during the fiscal three and nine months ended September 26, 2026 and September 27, 2025, respectively (in thousands, except per share amounts):

(a) Effective January 1, 2023, the Company’s share repurchases are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as a part of the cost basis of the shares within treasury stock. The cost of shares repurchased may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period and excise taxes incurred on share repurchases.

Note 8 –Income Taxes

The Company’s effective income tax rate was 22.1% in the third quarter of fiscal 2026 compared to 21.0% in the third quarter of fiscal 2025. The increase primarily reflects the lapping of certain tax planning initiatives in the prior year.

The Company’s effective income tax rate was 21.3% in the first nine months of fiscal 2026 compared to 22.3% in the first nine months of fiscal 2025. The decrease in the effective income tax rate in the first nine months of fiscal 2026 compared to the nine months of fiscal 2025 was driven primarily by the income tax benefit associated with the purchase of transferable federal income tax credits, partially offset by permanent differences and other discrete tax items.

Note 9 –Commitments and Contingencies

Letters of Credit

At September 26, 2026, the Company had $80.7 million in outstanding letters of credit and contractual commitments of approximately $23.8 million related to the onboarding of our newest distribution center in Nampa, Idaho.

Litigation

The Company is involved in various litigation matters arising in the ordinary course of business. The Company believes that, based upon information currently available, any estimated loss related to such matters has been adequately provided for in accrued liabilities to the extent probable and reasonably estimable. Accordingly, the Company currently expects these matters will be resolved without a material adverse effect on its consolidated financial position, results of operations, or cash flows. However, litigation and other legal matters involve an element of uncertainty. Future developments in such matters, including adverse decisions or settlements or resulting required changes to the Company's business operations, could affect our consolidated operating results when resolved in future periods or could result in liability or other amounts material to the Company's Consolidated Financial Statements.

Note 10 –Segment Reporting

The Company hasone reportable segment which is the retail sale of products that support the rural lifestyle. The following table indicates the percentage of net sales represented by each of our major product categories during the fiscal three and nine months ended September 26, 2026 and September 27, 2025:

The measure of segment assets is reported on the Company’s Consolidated Balance Sheets as total consolidated assets.

Within the reportable segment, there are significant expense categories regularly provided to the Chief Operating Decision Maker and included in the measure of the segment’s net income as shown below:

(a) Personnel expenses include wages, salaries, and other forms of personnel compensation.

(b) Other segment expenses include occupancy expenses, advertising expenses, and other operating expenses within Selling, General and Administrative expenses as described in Note 1 of the Company’s 2025 Form 10-K.

Note 11 -Impairment and Restructuring

During the second quarter of fiscal 2026, the Company completed a strategic reassessment of the Petsense business including an evaluation of the current operations and future growth outlook for that business. As a result of this review, management approved a plan to restructure the business, including the closure of 74 stores. These planned store closures and the corresponding decrease in expected future cash flow due to the closures resulted in a downward adjustment of the future financial forecast for the Petsense business. This also signaled that potential impairment indicators existed for both the goodwill asset and tradename intangible asset that are related to the Petsense reporting unit. The Company performed assessments of the fair value of inventories and tangible long-lived assets and concluded that impairment charges were necessary. Finally, the Company evaluated other restructuring charges as a result of these planned closures. During the third quarter of fiscal 2026, the Company completed the closure of the 74 Petsense stores included in this plan.

As a result of these assessments, the Company recognized pre-tax charges totaling $71.7 million during the fiscal nine months ended September 26, 2026. These charges are as follows (in thousands):

Goodwill

Goodwill is allocated to each identified reporting unit, which is defined as an operating segment or one level below the operating segment. Goodwill is not amortized, but is evaluated for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The aforementioned planned closure of 74 Petsense stores and the corresponding decrease in expected cash flow due to the closures resulted in a downward adjustment of the future financial forecast for the Petsense business. This indicated that it was more likely than not that the carrying value of the Petsense reporting unit exceeded its fair value. As a result, the Company performed an interim impairment assessment as of the date of the approved closure plan.

The Company conducted a quantitative impairment analysis of the Petsense reporting unit using the income approach. The determination of fair value under the income approach requires management to make subjective judgments involving, among other items, forecasts of projected financial information (such as revenue growth rates, profit margins, tax rates, and capital expenditures) and selection of a discount rate that reflects the risk inherent in estimated future cash flows. These are unobservable inputs classified as Level 3 inputs under the fair value hierarchy.

As a result of the quantitative impairment analysis of the Petsense reporting unit, it was determined that the carrying value exceeded the fair value, resulting in a pre-tax impairment loss of approximately $22.2 million in the fiscal nine months ended September 26, 2026.

The changes in the carrying amount of goodwill by reporting unit for the fiscal three and nine months ended September 26, 2026 and September 27, 2025 are as follows (in thousands):

Other Intangible Assets

The Company had approximately $78.9 million and $52.6 million of intangible assets other than goodwill at September 26, 2026 and September 27, 2025, respectively. These identifiable intangible assets included the Petsense tradename intangible asset, which previously had a carrying value of $23.1 million at September 27, 2025. The intangible asset balance represents the carrying value of certain indefinite-lived assets, which are not subject to amortization as they have an indefinite useful life on the basis that they are expected to contribute cash flows beyond the foreseeable horizon, and certain definite-lived assets. These assets are evaluated for impairment annually and whenever events or changes in circumstances indicate the carrying value of the asset may not be recoverable.

The aforementioned planned closure of 74 Petsense stores and the corresponding decrease in expected future cash flow due to the closures resulted in a downward adjustment of the future financial forecast for the Petsense business. This indicated that it was more likely than not that the carrying value of the Petsense tradename asset exceeded its fair value. We conducted a quantitative impairment analysis in the second quarter of fiscal 2026 using the relief-from-royalty method to measure the estimated fair value of the tradename intangible asset at the measurement date. The determination of fair value requires management to make subjective judgments involving forecasts of projected revenue growth rates, royalty rates, and tax rates, as well as the selection of a discount rate that reflects the risk inherent in estimated future cash flows. These are unobservable inputs classified as Level 3 inputs under the fair value hierarchy. 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 additional impairment losses in a future period. As a result of the quantitative impairment analysis, it was determined that the carrying value of the Petsense tradename was in excess of the fair value, resulting in a pre-tax impairment loss of approximately $11.0 million, included in the impairment expense income statement caption, in the fiscal nine months ended September 26, 2026.