Welcome to Tractor Supply Company conference call to discuss first quarter results. (Operator instructions) I would now like to introduce your host for today’s conference, Cara O’Brien, of Financial Dynamics. Cara O’Brien - Financial Dynamics: Before we begin, let me take a moment to reference the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. This conference call may contain forward-looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of the company. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included in the company’s filings for the SEC. The information contained in the call is accurate only as of the date discussed. Investors should not assume that these statements will remain operative at a later time. Lastly, Tractor Supply Company undertakes no obligation to update any information discussed in this call. Now I’m pleased to introduce Jim Wright, Chairman, President and CEO.

I’m here today with Tony Crudele, our CFO; Stan Ruta, EVP of Store Operations; and Greg Sandfort, EVP of Merchandising. We always refer to our first quarter as our get-ready quarter as we prepare for the important spring selling season. This year we are cycling very favorable weather, as well as record sales and profits from last year’s first quarter. As we enter 2008, we expected buying patterns for this year to be similar to the second half of 2007, however, throughout the first quarter, consumers became even more cautious with their spending than we anticipated. This appears to have affected overall sales and traffic as well as initial sales of big-ticket items. Additionally, we believe the warm weather in February and the cold weather in March also impacted first quarter performance of our seasonal merchandise. With that said, during the quarter, we made progress on our key initiatives for 2008 to grow and improve the business. Let me briefly discuss a few of those highlights. First, we did grow total sales by 2.9% and improved gross margin by 70 basis points to 30.7% despite the challenge in external environment and comping against record performance in Q707. Secondly, we are pleased with the solid progress we made on our inventory management initiatives. We were deliverant with our liner review process and took a disciplined approach to improving the productivity of our inventory. To protect gross margins, we implemented a controlled mark-down cadence that allowed us to clear through remaining holiday cold weather and gift inventory much better than last year. We also experienced early benefits from our price optimization strategy. Finally, we continue to generate solid growth in our core consumable categories, including animal health and pet. Core lifestyle products have been a driver of growth and repeat business over the past few years. We believe that our position as a market leader in these categories will remain a key strength for our business in this more challenging environment as our consumers rely on Tractor Supply Company for their everyday, non-discretionary lifestyle needs. In conclusion during the quarter, we were able to make key improvements in the business and our enhanced merchandising management initiatives are already beginning to gain traction; however, we do recognize that there’s a shift in how consumers are behaving, given the economic pressures that are affecting them. That said, we’ve adjusted some of our plans and are diligently managing all current costs and initiatives to address the consumer environment while continuing to position Tractor Supply for long-term as a growth company. In doing so, we’re intensifying our efforts in key areas and beginning to make progress late in the first quarter. I’ll discuss our plans for remainder of 2008 later in the call, but first I’d like to turn the call over to Tony to review our financial performance during the quarter and our outlook for the remainder of the year.

While sales did not meet our expectations, we are pleased with several aspects of our performance, which included solid gross management and inventory management and SG&A control. For the first quarter ended March 29, 2008, sales increased 2.9% to $576.2 million compared to last year’s first quarter. The total comp sales for the period decreased 6.5% and non-comp sales were approximately $53.4 million or 9.3% of sales. Please note that we had one less selling day in the quarter due to the Easter shift. The one less day negatively impacted Q1 comp by approximately 170 basis points. Dell stores comp sales, although negative, performed better than company average. While the core consumable business continued to thrive, sales from discretionary and big-ticket items were lower due to weak consumer spending, coupled by a late spring. Such categories include short-line equipment, compressors, trailers, generators, and riders. Although comp transaction count was down 3.8%, this compares to a strong comp transaction increased 7.1% last year. So for the two-year period, we had a net positive 3.3% increase in comp transactions. This was the first decline in comp transaction count in nearly two years. Average ticket was down 2.9% and represented less than half the comp sales decline. Looking at sales patterns throughout the quarter, sales were strongest in January and comp sales were positive, very favorable selling conditions in the prior year and extremely cold February and early spring in March. Excluding the one less comp day in March 2008, as a result of the Easter shift, both months had negative comps and performed similarly. With respect to regional sales trends, comp sales were negative in all regions of the company. As expected, the Southwest was the least impacted by the year-over-year weather comparisons. The weakest performance occurred in the north and northern…

Beginning this year, we laid out three key initiatives for 2008, which are the to first grow the business, improve the business, and to continue to focus on people. As many of you know, our efforts to improve the business this year are focused on refining our CRM strategy, tightly managing our real estate and occupancy costs and executing key merchandising initiatives. In light of the shifts that we’ve seen thus far in consumer spending patterns, we’ve placed an intense focus on our near term initiatives. We believe this will help us negotiate the current consumer environment and better position our business for when we return to a more normalized consumer spending patterns. It’s also been important to note that we are prepared to react quickly should demand for seasonable big-ticket goods strengthen. We have revised our plans for remainder of 2008 and have taken prudent action that allows to better offset pressure on sales and rising costs. I’ll now provide some additional information regarding the actions we have implemented. An aggressive and proactive expense management program and focusing on reducing incremental discretionary costs, we believe this will help us offset potentially softer sales. If we achieve sales results that are aligned with our full year forecast, it will also assist us in leveraging SG&A. Most importantly, we believe we can make these changes without sacrificing customer service. The actions we’ve taken include managing store payroll aggressively to correspond with store sales variability, maintain the current personnel base and restricting non-strategic hires, stopping all nine critical projects and reducing non-essential capital expenditures. We will continue, however, to fund critical store maintenance items. Cutting costs in areas such as marketing, store support center, transportation, distribution of technology, and business travel as well as other areas has also been implemented. Additionally, we…

(Operator instructions) Our first question comes from Matt Nemer - Thomas Weisel Partners.

If you could give us some feel for what you’re seeing in the big-ticket outdoor power equipment category here in early April.

In April, we’ve seen a reversal on trend and positive comps, although I’m sure you recall, Matt that last year April started with very, very soft results. So while it is certainly an improvement from what we’ve seen thus far this year, we are cycling up for an easy April.

Any change to your ordering plans in that category right now? I think at the analyst that you mentioned that you were thinking units would be down but price average ticket would drive the dollars higher?

Yes, we are still believing that that will be as the year plays out, our new premium product is doing really quite well and at the same point in time we are being conservative of the amount of inventory we have on hand and are frankly well positioned to exit the season whether or not we hit our expectations.

I just wanted to turn to the expense management program that you mentioned. Is it possible to quantify the potential impact of that and has that factored into your commentary on the previous guidance provided?

Matt, what we have done is gone through and identified in various categories, some more into variable categories versus discretionary. We have been able to quantify that, but it does relate significantly to how we perform on the sales line. So there’s a lot of variability in the way that we will implement the program. It is reflected in our guidance. Obviously our guidance has a change relative to the overall sales compared to the original guidance and the additional expenses as we measure them throughout the period are reflected in the revised EPS guidance.

On the balance sheet, is there anything to read into the change in other accrued expenses?

No, there’s really nothing in that needs to be identified there. The focus for us is really on the accounts payable and the inventory relationship.

Your next question is from Peter Benedict – Wachovia Capital Markets.

How should we be thinking about the benefit that Q2 comps from the Easter shift? Should it be a similar 170 bps, a little more a little less?

Peter, if you look at the quarter, obviously a much larger sales volume. So therefore, as a percentage, it will be smaller, but I would guide you closer to a one and a half range versus a 1.7.

Can you talk a little bit about the trade down activity that you might be seeing in the store?

Interesting that we are seeing the premium pet and premium equine consumer is holding firm. They continue to buy and we continue to see nice sales increases there. Folks that were buying in the middle, both with quality and bag size, are trending down to more of an economy and in some cases in pet to private brand, frankly that’s margin positive for us. It’s sales negative, a margin dollar and percent positive for us. There is some trade down in bag size and generally that is also margin positive. So when we add it all up, there is some shift in behavior, but nothing that would be detrimental to the PNL.

Can you talk a little bit about the drought conditions you’re seeing?

Certainly on a macro level across all of our markets, we are wetter and greener than a year ago. We have parts of the southeast remain seriously drought involved, but on a balance, at this point in time, we are in much better shape than a year ago.

Tony, can you give us the share count that you’re assuming for the 08 EPS number? I think before you said that the guidance excluded buy back. I know you didn’t do a ton, but your model is pretty sensitive to the share count, so can you give us a sense of what the share count number is you’re assuming for the full year?

Yes, at the beginning of the year, other than some additional options that were granted, we were at $38.5 million and obviously as you stated, it does not include any additional share buy back.

We should be assuming about $38.5 for the year?

Correct.

Your next question is from Jeff Wimmer - JP Morgan. Jeff Wimmer – JP Morgan: What’s your new gross margin SG&A outlook for the year?

We give full year guidance and we update just on the EPS level and do not provide the detail. Well, we feel very good at relative to gross margin. Our earlier direction, we anticipated having increased and improved gross margins. We had given guidance that we thought would be tougher comparisons in the first quarter, but as we move forward, we expect it to show enhancement year-over-year. When it comes to SG&A, we had again stated that we expected to de-leverage during the year; however, obviously our Q2 is one of our stronger sales performing quarters and we would anticipate having improved performance over Q1 obviously, but again, overall for the remainder of the year we expect SG&A to de-lever. Jeff Wimmer – JP Morgan: You had mentioned that therefore your customer is not discretionary sales, what percentage of your business is that really?

We go down, we take a look at the various categories, and obviously as we go through it, it’s difficult to necessarily define particular items or categories as discretionary potentially impulse. So we tend not to share that information, because there is a loss subjectivity in doing that analysis. So we try it in various different ways. We do not restrain it to just those pure 6 to 8% of the two farmers that make a living, their main income from farming. So we’ll tend to look at various items through different categories and create a basket. So we don’t provide those details in subjective calculations.

Your next question comes from David Cumberland –Robert W. Baird. David Cumberland - Robert W. Baird & Co., Inc.: A few clarifications on the reduction in incremental expenses. Did you get any benefit from that in Q1?

Yes, David, we really started to take a hard look as we moved through February. Obviously January, as we stated, we did have a positive comp and sales did perform very similar to our expectations. As we moved into February, we started to take action near the end of February. So we had some impact principally in the month of March. David Cumberland - Robert W. Baird & Co., Inc.: And then the improvement you’ve seen to date in April is that independent of the benefit you’re getting from the Easter shift?

Yes it is. Again, as we moved into April, the performance on the sales line has been very consistent with our original 2008 outlook. David Cumberland - Robert W. Baird & Co., Inc.: Then on the lower EPS guidance, does that reflect only Q1 or also, to some extent, a lower plan for the balance of the year?

Yes, it definitely includes a lower sales plan for not only Q1 but for the entire year offset by some of the expense control that we anticipate to have relative to that lower sales volume. David Cumberland - Robert W. Baird & Co., Inc.: With Q1 being by far your smallest quarter, does some of what you’ve been doing on the targeted marketing side get really dialed back and then ramped up more starting in Q2 and then as you talked about the reductions in incremental expenses, I think Jim mentioned marketing is one of those items. I’m curious about in what way you’re taking out marketing costs.

When we look at marketing, everything that our consumer would see that is linked to driving sales is pretty much from that in tax. We were down one circular in Q1 on a year-over-year basis. The rest of the year we anticipate cycling circulars with circulars. Our TV spend will be proportionate to last year. We’re taking a very diligent look at research as an example. We’re taking a look at product costs as another example. We have a certain amount of marketing costs that we allocate each year for testing and we’ve significantly reduced our scrapped marketing testing for this year. So fundamentally, Dave, we’re sticking with the basics and investing in those vehicles that our customers are most likely to see and are most likely to drive traffic. David Cumberland - Robert W. Baird & Co., Inc.: Then my initial marketing question was regarding the level that you do in Q1 versus Q2.

Well, it would be substantially noisier in Q2 than Q1 for the obvious reason it’s 20% of our business versus going to the high 20% of our business and really out-of-season versus in-season activity.

Your next question is from Peter Keith - Piper Jaffray.

I just had a question on the gross margin and, Tony, I believe on the last quarter you were anticipating maybe a negative mix shift from the spring that happened last year. That looks like the opposite. It happened actually mix shift with a benefit, because of lower mower sales. So how should we think about that based on how things are stepping back here in early April? We’re now thinking about a negative mix shift early on in the quarter.

I think that would be appropriate given that the mix shift that we experience, obviously we talked about big tickets, but big tickets also including riders. We saw that mix shift predominantly in March where it was colder, where we had less rider sales. So anticipating stronger rider sales in April should have a negative impact on the mix from a margin perspective.

Are there other items that are higher margin like fertilizer or other seasonable items that you’re now selling though that could offset that a bit?

Potentially, and it could be offset really by our markdown cadence as we move through spring goods. As we demonstrated in the first quarter, we managed through that process very well, as well as some of our price optimization initiatives or strategies being employed throughout that quarter and having that ramp up to a certain extent. So we think there are definitely ways to circumvent some of that negative impact of the mix of the hard line goods.

Just on how you’re seeing things here in April, just to make sure that we’re clear on the trend. You said that the sales here in April are pulled back to the original plan. Does that serve your original full year of guidance of one to three comp or was it your plan around Q2 that serve the internal?

It was really to our internal plan from Q2 and obviously we are cycling a very weak April, so it would be logical to assume that our planning for April is stronger than the zero to two or the one to three that we talked about for the full year.

Your next question is from Jack Murphy - William Blair.

Someone mentioned about your expectations for the last three quarters of the year. Could you give us a sense how much lower your expectation is for the comp on average for those three quarters?

We really like to try to stick to just update our full year guidance in total versus trying to break it out by quarter or the remaining three quarters of the year.

You talked about gas prices impacting the comp in the past, is that figuring in heavily into the way you’re looking at that. Have you seen some sensitivity this time around?

Obviously the first quarter, we saw our traffic count was down 2.9% of comp came from actually it was 3.8% decline in store traffic. Certainly it was related, I think overall consumer sentiments, certainly gas was a piece of that. It’s very difficult, everything is swirling around right now for us to break out any one variable and point to that as key to our consumer’s behavior.

Did I hear you correctly that you may push six to eight stores out into ’09 and if that’s the case, could you talk about a little bit more about what the thinking is there? Is it logistics or something to do with sales performance, pre-opening expenses? What’s going on there?

There is obviously a drag on December openings. November openings, there’s also a drag. On stores we opened in January the following year, there’s a pre-opening cost drag in December. We see this as; first of all, the right thing to do for this year and also it will allow us to reposition ourselves to frontload new stores more heavily in the first half as we go forward over the ensuing years.

In terms of sales productivity, there are no surprises there?

Yes, it’s in our forecast. As we talk about the overall range, we brought down the overall range forecast for the year and that is reflected in that new number.

Your next question is from Wayne Hood - BMO Capital.

Yes, Jim, back to stores a second. Why not in this environment over the next few years, why not back that store opening plan down more aggressively. You could still be considered a high-growth retailer at 9% unit growth rather than 13% and you could probably do a little bit more predictable and it’s not like anybody you’re racing to get site, I’m just thinking why not contemplate that? Another question I had is has there been any adjustments to bonus accruals in light of the revisions to sales plans here and if so, how does that impact the store managers who really are not, they look at you setting the plan and you’re already missing a plan three months into the haul and if you’re saying I’m not going to make my bonus for the year, sometimes management turnover goes up in that environment. So how you dealing with that?

Yes, we think it’s prudent this year to push a few stores into next year. We remain committed to our 12% to 13% growth. If I looked into a crystal ball and said we’re going to be in this consumer malaise for three years, I would have a different answer. My crystal ball says three to five quarters on the outside. That’s my best guess and we are a growth company. We have an entire engine from store management developments, store management training, a real estate team, a very, very long pipeline that is easy to stop and very expensive to rebuild. So if we were to stop slow growth to 9% and then in some ensuing year seek to accelerate back to 12% or 13%, we would incur a drag in earnings at that time. With the visibility we have right now, we have chosen to stay at the 12% to 13% growth. With our guide to store management turnover and the impact of the economy have on them, our store managers and district managers have a tremendous amount of authorship in the plans for their stores. Bonus payouts were not great last year either unfortunately, because we win as a team and we suffer as a team and last year our store manager turnover was flat for the prior year and Q1 of this year it is actually beneath that of last year and I’m extremely proud of our team. They’re highly energized. Also bear in mind that our store managers are compensated not only on store level four wall profit at end of year; they’re also compensated monthly on hitting their sales plan. So on individual store level, they have a tremendous amount of opportunity to drive the sales and be successful.

Where can we expect your inventory per store to be down at the end of the second quarter, particularly in some of the seasonal categories, as we look coming into the second quarter?

I would tell you that similar to what we probably experienced here from fourth quarter into first quarter, it won’t be as steep going forward, because we’ve made a lot of adjustments as we move forward so that slope will be much less, but it will continue to improve. It’s really as much as bringing inventory down by stores as it is the quality of that inventory as well. I’m sure you’re out in our stores and you’ve got to be noticing that the quality of the inventory is coming up. We’re crisper, we’re going to be cleaner, and that’s also going to add to long-term, the profitability of the company as we move through the third and fourth quarter. So it’s a balance of both.

Your next question is from Jay McCanless - FTN Midwest.

I just wanted to stick on the inventory issue for a second. Playing the role of devil’s advocate, saying that conditions actually worsen from here. What areas of the store would you look to trim back in terms of inventory? The routers and larger OP would be easy answer, but if you look at the rest of the store, where would you want to lighten up?

To be very honest with you, it is early in the game for us. Second quarter tells us a lot about how the year will perform. We made the appropriate adjustments in the plan as we saw the business developing through the latter part of fourth quarter and into early first. So I would tell you, I won’t give you anything specific as to this area or that area. You hit on that on the rider business and the OP business is definitely one that you have to watch closely. We have done the following though. We have asked a number of our vendor partners to hold some more inventory. Basically, as the business opens up, we can reach in and start to pull some merchandise forward. We’re being very cautious also with our placements overseas. We’re buying more to I think the appetite of what we see right now in the market in our consumer base. So there’s nothing specific. It’s still very early to sit there and try to forecast what we think the year is going to be.

I know you said in the prepared remarks that you all bought two stores this year. Is there any thought with real estate prices moving down in certain areas to go into more owned stores versus leased stores?

We’ve addressed that question in the past and we believe that there will be some opportunities. It would not be a main strategy, but where we can use our capital to improve our store productivity and least percentage cost, we will aggressively go after that. So if opportunities do present themselves, we think we’re in a good position to be able to execute on that strategy.

Your next question is from John Lawrence - Morgan Keegan.

Could you update us a little bit, I know you talked about it on the fourth quarter call, just another update on the 50-store test on the left side of the store. I know it’s still early, but just a little update there first of all.

Yes, let me speak to that just for a moment. What we are learning is that some of the things that we have tested we now are relatively confident that we can take in and roll to the chain and there are a handful of those that are actually in play right now and will be into the stores by the end of second, early third quarter. We’re still not I would say totally convinced that that complete relay, the expense, and the time that is involved, that that’s the right thing to do for the chain at this point. They’re having some great wins. There have been some areas where they’re still, to be honest with you, we’re now getting into the peak of our season, we’ll learn more. We said that earlier. When this went into play, it was really in the down part of our sales cycle. So we needed some time, but we are taking some of the early wins right now that we can document and say – good, let’s move those forward and we’re placing those into the stores, but I will tell you that through second quarter, I think we’ll have update to then say – okay, wins, losses, and retrench. So you’ve got to give us at least another quarter.

Okay, but there are some positives you’re saying in April with some of that?

Yes, there are.

Jim, just to follow on the last question about the two pieces of land or parcels, how would you put that in context related to the golden mile versus silver mile of where those are in the real estate plan and obviously good returns to be able to buy those. How would you put that in context?

We review it very opportunistically, but the primary drivers of that decision is – one, it’s an opportunistic price. Two, we have a high confidence that the retail traffic is moving to the site over a 10 or 15 year period of time so that obviously the real estate appreciation would be accretive to the investment decision.

Your next question is from Andrew Wolf - BB&T. Andrew Wolf - BB&T Capital Markets: First on your update on the quarter to date business trend, are you able to tell us if the positive comp in both the ticket on the transaction count or is the transaction count still trending negatively?

You’re looking at comparison as you move into April. Andrew Wolf - BB&T Capital Markets: I think you’ve been saying the first three weeks have been a little better and you’re comping positively and I’m asking when you break that down between ticket and traffic, is it all ticket with still a negative traffic trend or has your traffic improved?

You see it on both sides and it’s actually slightly stronger in the transaction side than on the average ticket side, but again, let me stress that last year was very soft and it’s a very easy comparison and was extremely cold in the April timeframe. So as we move into a warmer April, you will see that there is an easier comparison and we would anticipate that transactions would be up and drive that comp store number. Andrew Wolf - BB&T Capital Markets: To your statement on managing payroll, I think you mentioned as one of the variable costs you can manage, is that going to affect hours of operation potentially or more in terms of payroll?

It’s just, Andrew, this is standard and it’s just good payroll management that we install any time a business trend shift up or down to curve the payroll accordingly to the sales rate. So as you look at a payroll percentage to total sales, we manage that and although it’s never easy to reduce hours, it’s emotional; however, we’re not reducing it any more than we would if those sales numbers were set for the stores at the beginning of the year. So it’s something we do all the time and something we will continuing doing. Andrew Wolf - BB&T Capital Markets: Lastly, in some past quarters, maybe it’s not as relevant here. You’ve spoken to Life-O, there’s so much inflation out there, at least in some of the categories, feed and so on. Did Life-O have any meaningful effect and what are you looking for for the year?

In the quarter, it was not significantly above prior year, so therefore we had no comment on it. As we look to the entire year, we believe that potentially it can be higher than what we had originally viewed it to be when we set our 2008 guidance and our 2008 plan; however, not dramatically different at this stage and obviously it’s very early as the key drivers are the price index and the growth and inventory balance at the end of the year will drive that calculation. So it’s a little bit too early to tell. We do anticipate that that number would drive a little bit higher than what we originally had forecasted.

There are no further questions.

To close, I would just like to remind everyone that we understand our customers, we understand their needs that we have and we continue to take action to reduce our costs while we continue to build customer loyalty through offering compelling value on core lifestyle products. While we certainly all agree that the near term is going to be challenging, our long-term future remains very, very bright. I look forward to speaking to you all at the end of Q2. Thank you.