2 0 1 3 A N N U A L R E P O R T

Tractor Supply Stewardship 2013 BY THE NUMBERS

KILOWATT HOURS SAVED DUE TO OUR ENERGY MANAGEMENT SYSTEM

44 MILLION

GALLONS OF FUEL SAVED DUE TO SUPPLY CHAIN EFFICIENCIES

5.4 MILLION

KILOWATT HOURS OF RENEWABLE WIND POWER PURCHASED

26.9 MILLION

WOOD PALLETS RECYCLED

2.4 MILLION

OF PAPER AND CARDBOARD RECYCLED

16,079 TONS

112 MILLION GALLONS OF WATER

964,800 POUNDS OF AIR POLLUTION

66 MILLION KILOWATTS OF ELECTRICITY

48,240 CUBIC YARDS OF LANDFILL

273,360 TREES

This paper and cardboard, which was

recycled by the company’s stores,

distribution centers, and store support

center, saved the equivalent of:

STEWARDSHIPPROGRAM

The Origins of a

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he Stewardship Program at Tractor Supply Company is truly a grassroots effort, with team members from across the company participating

in Green Tractor teams focused on everything from recycling to packaging to energy management. So, it only seems fitting that the idea for the Stewardship Program originated at the grassroots level with a

group of team members who were participants in the 2008 Advanced Leadership Class (ALC). ALC is a company-sponsored development program for rising leaders within the company. The 2008 class was comprised of a cross-functional group of 19 team members. As part of the curriculum, the class was assigned a final group project that would

be presented to the TSC Board of Directors and Executive Committee in February 2009. The group was required to pursue a topic that no previous ALC had presented, and the project also had to have a potentially big impact on the Company. The class discussed a variety of possible topics. Ryan Mayes, who serves as the Director of the Help Desk & Customer Solutions Center, was the first to recommend a sustainability program. The Store Administration team had already implemented initiatives that were increasing efficiency and performance, while simultaneously reducing the company’s impact on the environment. Ryan referred back to the department’s success and offered this notion of sustainability as a project topic. The concept of sustainability didn’t initially click because it was still a relatively new idea at the time. It was also a very broad idea, so the group spent hours discussing what the project would look like. As more people began to see the opportunity for cost savings to the company, in addition to the positive impact on the environment, it

became much more attractive. During their conversation, the group decided to turn their focus to corporate responsibility. It was this focus on corporate responsibility and the importance of being good stewards of the land and our natural resources that led to the adoption of the

word “stewardship” to describe the program. The group’s final whitepaper, which is effectively the blueprint of the current Stewardship Program, is an in-depth document that provides case studies, research on the benefits of Stewardship from a business perspective, existing examples of Stewardship within the company and opportunities for growth. The whitepaper discusses opportunities

for real estate, store operations, transportation, and much more. Additionally, the paper discusses the importance of having a program structure and a culture of Stewardship in place. The class nominated a group to present their project, and after the official presentation

to the Board of Directors, it was unanimously decided that Stewardship would become an integral part of TSC. “We owe a big debt of gratitude to the 2008 ALC,” said Ben Parrish who heads up the Stewardship Program. For the members of the 2008 ALC, the current Tractor Supply Stewardship Program is more than they could have ever expected.

“It has become very much a part of our corporate culture and our brand, and will only continue to grow and improve,” Mark Lusby, director of recruiting, stated. Several members of the original team remain actively involved with the Stewardship Program, and all of them are able to take proud ownership of what has evolved into one of the company’s strategic initiatives.

2008 Advanced Leadership Class Members

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Several years ago, TSC recognized the need for a lighting retrofit pro-gram that would replace the older, less efficient lighting systems in TSC stores. The retrofit began in 2009 with a group of 137 stores. In 2010, an additional 181 stores received new lights, and 60 stores were retrofitted in 2013. “Stores immediately saw cost savings,” said Frank Remillard, vice president of Region 2 who led the introduction of the program. “The savings either met or exceeded what our partners promised us. So it’s great to get a return on our investment, contribute to the bot-tom line, and be good citizens and stewards all at the same time.” “It was a team effort,” Frank added. “We had major contribu-tions from our teams in Real Estate, Construction, our store managers and all of their team members, as well as our vendor partners.” For some stores, the retrofit meant

replacing outdated and inefficient HID lighting fixtures. Even after a lengthy warm-up, these lights would flicker and consumed too much energy. Other stores were using T-12 fluorescent lamps. In those cases, the fixtures could remain and the T-12 lamps were replaced with T-8s which are brighter, more efficient and longer lasting. The new lights help stores use 22 percent less electricity, resulting in lower energy expenses. The lights save enough money to pay for the retrofit in about 17 months. The lighting retrofit program is an important part of the company’s Stewardship Program. Not only does the project help the environ-ment by reducing our company’s energy consumption, it also helps the bottom line by reducing costs. The program even has the added benefit of enhancing the shopping experience for our customers by providing a brighter sales area.

LIGHTING RETROFITNEARS COMPLETION

A Bright Idea:

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ANNUAL SAVINGS IN KILOWATT HOURS PER STORE–PERCENTAGE

ANNUAL COST SAVINGS PER STORE

AMOUNT OF KILOWATT HOURS SAVED ANNUALLY PER STORE 78,794

22%

$9,890

L I G H T I N G R E T R O F I T S A V I N G S

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Reducing energy consumption is one of the most important goals of the Stewardship program. With that in mind, Tractor Supply is expanding the number of stores with energy management systems. Approximately 680 TSC stores have had EMS since 2008. A new system was selected by a cross-functional team in 2012 and approximately 300 of the new systems had been installed as of the end of 2103. These systems reduce energy usage by an average of 15%. “Energy management systems are a proven technology and one of the most effective ways to reduce energy usage in retail operations,” said Lee Downing, executive vice president, store operations. “This new system will not only save us money and help us achieve our Stewardship goals, but it will also ensure consistent, comfortable temperatures in our stores. The new energy management system remotely monitors and controls energy usage

for lighting, heating and air conditioning. The system optimizes temperature and lighting in the stores, and it also monitors critical areas such as the refrigeration unit for animal vaccines. The system even maintains optimum humidity levels for pet food and animal feed. The new system is software-based and utilizes open architecture, which means it can be upgraded easily in the future. The central component of the energy management system is the store controller, which is installed in each store and integrated with the HVAC system, lighting, refrigeration units and other devices to provide both monitoring and control. Individual store data is sent to a single site server and displayed on customized web pages. These pages present a user-friendly view of a single store or a series of stores to display energy usage, control schedules and status. The system is designed to grow and expand as new stores open and new

features are added to the system. As Tractor Supply Company installs its energy management system in stores, old thermostats, switches, time clocks and wiring are replaced. Rather than dispose of these items, they are donated to Habitat for Humanity’s ReStore program. ReStores are nonprofit home improvement and donation centers that sell new and used building materials and appliances to the public at a fraction of the retail price. Proceeds are used for Habitat builds both locally and around the world. In 2013 alone, TSC made a donation to ReStore consisting of roughly 600 thermostats, five time clocks and assorted wiring harnesses and devices from the old thermostats. As TSC continues to expand its energy management system to more stores, TSC will continue to donate the equipment that is replaced to Habitat for Humanity’s ReStore program.

EMS SHRINKS ENERGY CONSUMPTIONImplementation of

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Tractor Supply Company’s cardboard recycling program was one of its earliest stewardship initiatives and it has emerged as one of its most successful. The program began with the installation of balers in the dis-tribution centers, where they quickly became a standard piece of equipment. All DCs have at least one corrugated cardboard baler, and in addition to helping the environment, the balers also act as a means of generating income for the DCs, as they receive compensation for recycled cardboard. The balers essen-tially compact the cardboard waste and bind it, making it easier for storage and hauling. With the success of the baler program in the DCs, it was later expanded to the stores. In 2010, TSC launched its Cardboard Baler Retrofit Project that instantly bolstered the program’s success. Jon Gardner and Brad Cooper of the company’s Store Operations team led the program. The retrofit started small, with 50 stores installing balers. Another 61 were added in 2011, and 101 in 2012. In 2013, balers were installed in the remaining stores that could accommodate them, and every new TSC store is now outfitted with a baler.

As a result of these balers, the cardboard recycling pro-gram has been a huge success. On a combined basis, Tractor Supply stores and distribution centers recycled a record level of cardboard. The stores alone recycled more than 13,000 tons of card-board last year. This number is expected to grow in the future years as the company opens new stores. Waste has been reduced by an estimated 60 to 70 percent, and waste disposal cost has significantly declined, as well. Combined with the Company’s recycling efforts in its distribu-tion centers and store support center, more than 16,000 tons of paper and cardboard were recycled companywide. “This is one of the most successful Stewardship initiatives that the company has launched,” said Brad Cooper. “It has a sig-nificant impact on the environment and on the bottom line. Those are the types of situations we like to see. It’s definitely win-win for Tractor Supply.” As TSC continues to pursue environmental initiatives as part of its Stewardship Program, we are constantly looking to energize our efforts in the stores and DCs to create greater awareness and successful programs like this one.

MAKE AN IMPACTCardboard Balers

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Tractor Supply is committed to being a good steward, both of the environment and our communities. As a result of the foresight of its Information Technology department, TSC is able to do both by recycling its old electronic equipment. As outdated and broken electronic equipment regularly needed to be discarded, Tractor Supply began to search for ways to do it responsibly. Rather than send those items to a landfill, opportunities were researched to recycle them, and ultimately a company called Reworx was selected. Reworx is an Atlanta-based electronics recycling firm that is a division of Nobis Works, a charitable organization founded by former football star Tommy Nobis. Sixty percent of Reworx’s workforce is comprised of persons with disabilities or other barriers to employment. The company provides job training, job placement and on-the-job support for

these individuals. Reworx utilizes EPA-sanctioned responsible recycling practices to recycle everything from PCs and phones, to microwaves, printers, cameras and more. It also guarantees IT security during the recycling process. In the last year alone, Reworx processed more than 9.6 million pounds of electronics scrap. As an environmentally and socially responsible vendor, Reworx was a natural fit for Tractor Supply. “Partnering with Reworx provides a true win-win for TSC because it not only supports the goals of our Stewardship program, but also supports our community outreach efforts,” said Ben Parrish, head of the Stewardship Program and senior vice president, general counsel and corporate secretary at TSC. Tractor Supply is very proud of its partnership with Reworx, a partnership that exemplifies the Company’s mission and values.

THROUGH RECYCLED ELECTRONICS

Helping the Community

“PARTNERING WITH

REWORX PROVIDES A TRUE

WIN-WIN FOR TSC.”

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BEN PARRISH

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In late March 2012, a new and expanded recycling program was introduced at Tractor Supply’s Store Support Center in Brentwood, Tenn. In less than two years, the program collected more than 50 tons of plastic, aluminum, cardboard and paper. Under the program, TSC purchased blue plastic recycling bins for individual team members to keep in their work areas. New central collection bins were also purchased and placed in all large break rooms throughout the three buildings that comprise the SSC. Team members were asked to collect trash that could be recycled in their individual bins and periodically take their recyclables to the larger collection bins in the break rooms.

“We are really pleased with the overwhelming response of our team members to the program,” said Melissa Williamson, director of HR administration and payroll. “The volume of material collected has definitely exceeded our expectations. We are gratified that so many team members are supporting this program, which is an important part of our Stewardship Program.” The recycling program at the SSC is only one of several recycling programs at Tractor Supply. The distribution centers recycle cardboard and plastic wrap, and all TSC stores recycle cardboard and wooden pallets. Recycling is just one part of our broader effort to reduce waste, a primary goal of our Stewardship Program.

COLLECTS MORE THAN FIFTY TONS OF WASTE

Recycling Program

“WE ARE REALLY PLEASED WITH THE OVERWHELMING RESPONSE OF OUR TEAM

MEMBERS TO THE PROGRAM.” Melissa Williamson // Director of HR Administration & Payroll

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As part of its Stewardship Program, Tractor Supply is always looking for changes that not only help the environment, but also our profitability. Often, older equipment is inefficient and unreliable. The heating and cooling units in some of our stores, for example, were in need of an upgrade. In 2010, a new program for replacing units was instituted. Each year, a number of older, less efficient units are replaced. To

help select which units would be replaced, the Real Estate team began looking for the oldest, least efficient and most problematic units to systematically replace. The company’s Real Estate team developed the retrofit process and regularly work with our HVAC vendors to determine the most efficient equipment to install at a store. The ultimate goal is to have highly efficient, reliable HVAC equipment in all of our stores.

The new units are far more efficient and have very high SEER, or Seasonal Energy Efficiency Ratings. They help reduce electricity and gas consumption, while also reducing the call volume for repairs. The investment in new HVAC equipment helps our teams be more productive, improves the customer experience, and helps us be a more efficient and environmentally responsible company.

HVAC UNITS MOVE INTO MORE STORESHigh Efficiency

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COLLECTS MORE THAN FIFTY TONS OF WASTE

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Solar power may seem like a recent development, but for thousands of years, farmers have relied on the sun to grow their crops. So, by installing systems to collect solar energy at the Store Support Center and in Hendersonville, Tenn., Tractor Supply is looking forward to the future while giving a nod to the Out Here lifestyle of years past. The project is being headed up by Tractor Supply’s Manager of Energy Solutions, James Masters. The Store Support Center and the Hendersonville store were both selected by the Tennessee Valley Authority as recipients of incentives

to help offset the cost of installing the two 50-kilowatt solar arrays. The solar panels collect and convert energy that is sold back to the utility to offset power costs. “We’re generating renewable energy,” said James, “and in turn, we’re reducing the volume of greenhouse gases, and shrinking our overall carbon footprint.” TSC shares that information with customers. Inside the Hendersonville store, customers see a flat panel screen showing real-time power generation from the solar array. To show the impact, that information is

displayed by comparing the energy savings to the number of cars taken off the road, or the amount of greenhouse gases eliminated. “The decisions to install solar power arrays at the new SSC and our Hendersonville store represent a major step forward for our Stewardship Program,” said Ben Parrish, senior vice president, general counsel and corporate secretary. The solar array at the Hendersonville store will produce up to 20 percent of the annual energy used by the store and the array is expected to produce clean, renewable energy for the next 25-30 years.

THE SUN’S POWERTSC Harnesses

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any of our customers and team members at Tractor Supply strive to be good stewards of the land and our natural

resources because they rely on them not just for their lifestyle, but also for their livelihood. As the supplier of choice for the farm and ranch lifestyle, it is imperative that we not only carry the products that enable our customers to live sustainably, but that we also incorporate sustainable practices into the way we do business. We cannot just be merchants of this lifestyle; we must also adhere to and practice it as a responsible corporate citizen. Tractor Supply believes that a healthy environment, properly managed resources and vibrant communities are keys to a secure and prosperous future. We have increased our recycling efforts; improved the energy efficiency of our stores, distribution centers and our store support center; and are pursuing alternative energy sources such as solar. As we continue to add new products to our assortment to support sustainable living, we will also continue in our mission to become a more sustainable company.

Tractor Supply Stewardship

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MISSION To work hard, have fun, and make money by providing legendary service and great products at everyday low prices.

OUR BUSINESSWe are committed to be the most dependable supplier of basic maintenance products to farm, ranch and rural customers.

OUR PEOPLEWe value honesty, integrity, mutual respect and teamwork above all else.

We are an open company where everyone has the information and tools to grow and excel.

We encourage risk taking, celebrate initiative and reward success.

OUR STAKEHOLDERSWe are a growth company.

We consistently grow sales and profits by continuous improvement throughout the company.

VALUES

ETHICSDo the “right thing” and always encourage others to do the right, honest, and ethical things.

RESPECTTreat others with the same personal and professional consideration we expect for ourselves.

BALANCEManage your time for both business and personal success.

WINNING ATTITUDEHave a “can-do” attitude. Be positive, upbeat, and focused. We are winners!

COMMUNICATIONShare information, ask questions, listen effectively, speak thoughtfully, and let ideas live.

DEVELOPMENTLearn from each other. Teach, coach, and listen. Create an environment where everyone can be a “star.”

TEAMWORKValue different viewpoints. Execute the agreed-upon plans. Together, everyone achieves more!

CHANGEAccept it. Embrace it. Initiate it. Do everything better faster, and cheaper.

INITIATIVESeek opportunities. Use good judgment. Take intelligent risks. Champion ideas.

ACCOUNTABILITYKnow your responsibilities. Live up to your commitments.

TSC STEWARDSHIPTractor Supply believes a healthy environment, properly managed resources and vibrant communities are keys to a secure and prosperous future.

THE LIFESTYLEWe are dedicated to ensuring that the ability to live out here on one’s own terms is available to future generations.

THE ENVIRONMENT We continuously work to improve our environmental impact by reducing resource consumption and waste, increasing efficiency and providing alternatives to customers and team members wherever appropriate.

THE BUSINESS We view sustainability to be a process of continuous improvement, offering opportunities to complement our business values

200 Powell PlaceBrentwood, TN 37027www.TractorSupply.com