Welcome to Tractor Supply Company’s conference call to discuss first quarter results. At this time all participants are in a listen only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) Please be advised that reproductions of this call in whole or in part is not permitted without prior written authorization of Tractor Supply Company and as a reminder ladies and gentlemen this conference is being recorded. I would now like to introduce your host for today’s conference, Miss Cara O’Brien of Financial Dynamics. Cara O’Brien : Before we begin we would like to 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 with the Securities and Exchange Commission. The information contained in this call is accurate only as of the date discussed. Investors should not assume that the 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 am pleased to introduce Mr. Jim Wright, Chairman and CEO.

I’m joined today by Tony Crudele, our Chief Financial Officer; Greg Sandfort, our President and Chief Merchandising Officer; and Stan Ruta, our Chief Operating Officer. As you know the first quarter represents a get ready quarter for us as we prepare for the important spring selling season. Though the first quarter is always the smallest quarter for us we are pleased with our performance and believe we’re off to a good start for the year. During the quarter we made solid progress on our key priorities for 2009 which are to continue differentiating our business and executing our retail strategy to win in the current environment and beyond. Let me briefly discuss some of the highlights. First we grew the business as we increased total sales by nearly 13% to $650 million, improved gross margin by 40 basis points to 30.9%. As a result we were able to improve our bottom line on a year-over-year basis by $0.06 per diluted share to a profit of $0.01 per diluted share. Second our team did a great job of ensuring their stores remain a destination and as a result our customers continued to respond positively and have increased their visits. Although average ticket was done which Tony will discuss later we experienced a marked improvement in traffic during the quarter which we attribute primarily to the focus we’ve placed on having the right mix of everyday and advertised merchandise to keep our customers coming back. Let me go into more detail on both of these items. Starting with our merchandise as you heard us mention we believe there’s been a fundamental shift in consumer shopping habits from wants to needs and from style to value. Due to our response to these trends we’ve not seen any real deterioration in our customers’ willingness…

Although Q1 is the quarter with the lowest sales volume we are pleased with the results as Jim said. On a year-over-year basis we achieved double digit sales growth for the quarter and reduced our per store inventory levels for the sixth consecutive quarter. We believe this continues to validate the resiliency of our business model as we work through these tough economic times. For the first quarter ended March 28th, 2009 sales were $650 million and net income was $470,000 or $0.01 per diluted share. The LIFO provision was approximately $0.05 per share in the first quarter of 2009 and $0.04 in the first quarter of 2008. Total comp store sales in the period increased 4.2% and non-comp sales were approximately $49.7 million or 7.6% of sales. Comp transaction count increased 5.8% and we are pleased that we continue to drive footsteps into the store. The average comp ticket decreased 1.5% resulting from the softness in the sale of large ticket items. Although the consumer is making more frequent trips to the store for their essentials we believe they are not adding non-essential purchases to their basket. I’ll go into a little more detail on some of the other sales drives and trends. Our stores are not open on Easter and with the Easter shift to April this year we had an additional comp store day in the first quarter. We estimate that this resulted in an increase to comp store sales of approximately 160 basis points. Our core consumable, usable and edible categories including livestock and pet supplies and feed continued to be the key drivers of the business. It’s important to note that we estimate that inflation which is prevalent in these categories increased comp sales by approximately five to six percentage points. I’ll further address inflation…

As I mentioned earlier we’ll continue to differentiate our business in executing our retail strategy to win in the current environment and beyond. At the same time we believe we are well positioned to react quickly should any changes in consumer buying patterns occur. That said we’re enthusiastic about the opportunities ahead for our company. As you know our merchandise mix is the cornerstone of our business. We continue to provide our customers with basic and key items that support their lifestyle. As previously mentioned we’ve intensified the assortment and promotion of our CUE categories. We continue to see an increasing trend towards grow it yourself hobbies like gardening and patch farming and we’ve adjusted our merchandising plans accordingly. The customer is spending more time attending to their gardens for personal consumption. We expand the depth and breadth of spring seasonal goods by adding more seed packets and vegetable plants and tillers to our store assortment. Additionally we expect consumers will continue to defer big ticket items a trend that we began to see nearly three years ago. Accordingly we’ve shifted our focus to meet our customers’ growing replacement part needs as they are increasing the repair and maintenance of their existing equipment. We’ve been tightly managing inventory levels on many big ticket items by narrowing the assortment while simultaneously ensuring that we have the depth to support peak season demand. We’re also pleased with our refined marketing strategy. The marketing team has stepped up to the challenge to do more with less as we adjust our advertising dollars to focus more on or CRM program. We continue to reinforce the value proposition and our position as the authority on the rural lifestyle. Additionally we are leveraging our advertising to drive repeat business and customer loyalty efficiently. In Q1 we…

(Operator Instructions) Your first question comes from Dan Wewer – Raymond James. Dan Wewer – Raymond James: Jim or Tony when you were commenting on the April sales trends, can you determine if the weakness is due to a smaller contribution from inflation that we’re beginning to see or is it related more to traffic?

It’s really weather. When we look at our business in the month of April by day and by region the ground moisture first of all with the exception of Texas is very, very good and we have a combination of a nice weather on a Friday or weekend we do see a response in the business and a response frankly in mowers. But Dan we simply have not had consistently spring like weather across most of the chain. Dan Wewer – Raymond James: That would be impacting traffic I would assume and not the ticket size?

No actually traffic, while not as robust perhaps as Q1 has been much better than the average ticket. Dan Wewer – Raymond James: I guess I’m a bit confused then. At what point during the period will the inflation benefit, the same store sales, begin to taper off?

Most of our inflation benefit last year came to us late Q2 and then through 3 and 4. Dan Wewer – Raymond James: One other question related to sales, you had noted that consumers are shifting away from style to focus on value and from wants to needs. I’m curious as to what those implications are for your apparel business which I know you’ve been expanding the last couple years.

The good news is that very few people ever state that we have any style in our apparel or very much of it. The vast majority of our business in really Q3, 4 and it’s heavyweight outerwear. Our boots are principally work boots and it’s very much a replacement business as it is an aspirational business. I see frankly very little risk in the clothing business. If consumers do trade down to our private brands, that’s fine. We maintain equal gross margin dollars per unit. It’d be obviously soft on a comp store sales side but will weigh on the margin side, Dan.

Your next question comes from Jack Murphy – William Blair & Company. Jack Murphy – William Blair & Company: I just want to go back to the inflation question for a minute. Tony, did you say that you thought you had a 500 or a 600 basis points inflation in those consumable related categories? Is that what you said earlier?

Yes, that’s correct. Jack Murphy – William Blair & Company: So help us scale this a little bit. When you’re talking about those categories in particular that are inflation impacted what percent of the mix were we talking about in the quarter? And then on a related note given the fact that you saw some deflation or the beginning of deflation in other categories, if you look at the mix as a whole, how much do you think the comp was impacted by inflation?

Let me correct the question as you stated. Overall we were looking at a 500 to 600 basis point increase not necessarily specific to those categories. Directionally we see that as far as quantifying between the categories we wouldn’t provide that level of detail because again it’s really just an estimate trying to look at the retail prices and what the increases are year-over-year and there’s obviously a lot of factors that go into that, not just inflation. Again we want to keep it more at a higher level. Directionally we feel that year-over-year we understood that based on the inflationary impact in the prices throughout 2008 we knew that we had a significant increase in the first quarter and that will continue to moderate as we move through the year when we really go up against comparable numbers that had significant inflation in it. Jack Murphy – William Blair & Company: So the 500 to 600 is versus the total company comp?

Correct. Jack Murphy – William Blair & Company: On the transaction count, obviously a pretty big number, best in about two years I guess. Given the calendar was Easter much of a factor in that and also how do you think traffic should progress as you move throughout the year given these other factors?

If you want to break down to just generally on the 160 basis point impact on Easter about 140 would be attributable to the transaction side and 20 basis points attributable to the average ticket. So that’s how it would break down. Again we would anticipate to maintain relatively firm traffic patterns and that has been consistent over the last couple quarters. It really truly is driven by the consumer and trying to satisfy their basic needs, continues to drive footsteps into the store. We’re looking forward to a continued increase in traffic.

Your next question comes from Peter Benedict – Robert W. Baird. Peter Benedict – Robert W. Baird: What was the inflation benefit last year in the first quarter? I know you said it wasn’t much but was it 1% to 2%? Is that a fair estimate?

I would say it ran in that range and probably more the 2% to 3% range last year. Peter Benedict – Robert W. Baird: Can you quantify the fuel impact benefit to gross margin in the first quarter? Was it somewhere in the neighborhood of 10 basis points or so?

Of the freight increase we attribute about 70% of it related to fuel. So you can break it down that way. We had just total 40 basis points so I’d say about 30 basis points related to the fuel increase. Peter Benedict – Robert W. Baird: On the ad spend, I think last year advertising was just under 2% of sales. It improved by about 24 basis points year over. Can we expect a similar level of improvement this year in terms of the basis point improvement given what you guys are doing on the ad front?

I would think throughout the year, in particular in Q2 we anticipate a similar run rate. As we move forward into the second half of the year we’ll continue to assess the program and make sure that we are not trading off marketing dollars in lieu of driving sales. But generally we do expect to have a leverage of marketing but probably not to that extent as we work through the remainder of the year. Peter Benedict – Robert W. Baird: One last question, on the softer start to the spring seasonal business can you talk about our maybe break it down between the OPE business and the lower ticket lawn and garden? Is it across the board or is it more weighted in one versus the other?

Again it is mostly in big tickets and mostly in riders, walk behind mowers, really the whole category of cutting grass is the vast majority of the weakness.

Your next question comes from Mitch Kaiser – Piper Jaffray. Mitch Kaiser – Piper Jaffray: Could you talk a little bit on the food deflation or the deflation, what impact do you think that might have on transaction? Because I know transaction becomes bigger in the second quarter relative to the first. What should we be thinking about there on average transaction size in the second quarter?

With regard to feed and pet food? Mitch Kaiser – Piper Jaffray: Yes.

The closer we buy to the commodity which would be for example large animal feed, we’re much more closely linked in our purchasing agreements to commodities that across are coming down and that retail is somewhat sticky. On the pet food side it’s a bit of a mixed bag with the brands attempting to hold costs and as a result retails are staying and there’s another tier of brands where across are beginning to come down. Retails again seem to be fairly sticky and generally because private brand is pegged to the national brands, private brand retails are staying a little stickier than private brand costs. Is that correct, Greg?

Yes.

I would not to suspect to see a lot of ticket inflation on food and feed and the good news is that we continue to gain unit share in those categories.

As far as the average ticket goes, as we move into Q2 I would suspect that the sale or the softness in large ticket items would probably be more impactful than the inflation/deflation impact. Since we have obviously the riders are a large portion of the sales and they’re a large unit ticket. That will have an impact. Mitch Kaiser – Piper Jaffray: So you’re not seeing the benefits of DIY then that people are maybe foregoing lawn service care and doing it on their own? That benefit hasn’t really come through yet I guess at this point?

Relative to riding lawn mower sales, not necessarily. Obviously it has a significant impact when it comes to the repair and maintenance of those items which again tend to be a much higher gross margin category for us. Mitch Kaiser – Piper Jaffray: I know you did a recap on the lawn and garden area. Could you talk a little bit about the results that you’re seeing there?

We are very pleased with the set this year and we’ve had a tremendous amount of learnings about our customer particularly in the categories that Jim mentioned in his comments about them wanting to grow their own foods and really tend to their own property. It’s a little early right now for us to draw any conclusions on all of OPE but when we redirected the business and decided that other parts of the outdoor power equipment category could play a larger role this year, i.e., maintenance, the parts business, push more blowers and other types of categories, we’ve been very pleased with those initial results. A little disappointed as Tony mentioned and Jim mentioned on the rider category at this point. We have confidence that we’ve got it planned correctly and it’s just a matter of time. We need a little weather, that’s all we need. Mitch Kaiser – Piper Jaffray: Lastly, I know there’s some change in legislation or tax credits associated with alternative heating an I know this was a very strong category for you last year and often had some stock outs and back orders. Could you just talk about what you’re seeing or how you think you’re positioned for the alternative heating category especially in light of these tax credits that might be coming through?

Obviously the tax credits as they materialize and get communicated would be a benefit. We expect that the full year will not be too much unlike last year although the timing of that business is likely to change. Last year you recall we accelerated normal Q4 business into Q3. Then we got into Q4 and we in the industry had sporadic out of stocks on both stoves and fuel. The consumer exited last year saying boy there’s a shortage of both the whole goods and the fuel, perhaps we ought to buy earlier. Bear in mind that as the consumer went into the season last year they were looking at alternative heating being much, much cheaper than electrical, natural gas and in our case most importantly propane and fuel oil. So to a degree we are expecting some moderation demand as it is unlikely that we’ll see fuel oil and propane prices a year ago. That said we think that the fact that we’ll be in stock during actual peak season will probably offset that but we will shift from Q3 to Q4.

One follow up on that will be the essence of the pellet business, the fuel actually for the units. Because we had such increase last year in the installed base we believe there is still room for us to grow in fulfilling the needs of that customer as it comes to the fuel itself.

Your next question comes from John Lawrence – Morgan Keegan. John Lawrence – Morgan Keegan: Greg would you comment a little bit to take it one step further on lawn and garden. I know a lot of those products you just sort of reset and brought in to the category. Was some of those products that you’ve been selling for a long time still that have seen some increase because of the reset and the way that you put them together in that front left part of the store?

You are correct. By putting that together in one area to create a destination in the store and it has paid off very, very well for us. John Lawrence – Morgan Keegan: If you take that obviously as you look at things down the road, other categories, other parts of the stores do you think maybe you can play that again?

I would tell you that we have plans to do things similarly as we move forward yes, John you are absolutely correct. John Lawrence – Morgan Keegan: The last question, any comments Jim on the labor profile in the store? Economic environment, turnover down, attracting better talent, anything going on there?

Store turnover is actually modestly up but that is the fact that we are upgrading the team and we have a wonderful opportunity to higher some very strong talent so we’re really in very, very good shape right now.

Your next question comes from Matt Nemer – Thomas Weisel Partners. Matt Nemer – Thomas Weisel Partners: My first question is not to harp on the softness in April in some large ticket items but you sound very comfortable that this more of a weather impact than an economic impact and I’m wondering if you’ve seen any consumer studies that confirm that or is there any chance that it is potentially the other way around?

I certainly couldn’t rule that out but the greatest data we have is the response we see when we get a bright sunny warm day. Matt, it is very, very significant. We can see our business move several, several points of comp just due to the fact that we have a combination – it’s very wet, everyplace but Texas and as soon as we get a sunny day when people are out in their yards and they’re out shopping we see an immediate pickup. So, while we realize that there is certainly a persistent big ticket problems for all the reasons that we all understand, we think that because that has been the case for a while now and certainly recycling that, that at this point in time we believe it is predominately the weather. Matt Nemer – Thomas Weisel Partners: Then secondly, in terms of the OPE category, what are you forecasting this year in terms of year-over-year I guess it would probably be a decline, maybe slight growth, just what is the industry saying this year?

That’s a real interesting question and Matt I don’t think there is any one real answer. The industry OPEI has said that shipments, and I’ll refer to that are going to be down double digit. So, taking that in light I am sure that many retailers have planned their business accordingly. We went through a real rationalization of skews, we looked at our store base, we looked at the mix of our skews and we feel still very comfortable that we have a very compelling offer. We’ve assorted it by store and it’s really, I agree with Jim, this is a matter of when the weather breaks and we believe it will be shortly and I think we’re well positioned. So, OPEI data would tell you that it’s going to be tough. I guess we’re betting against the odds a little bit. Matt Nemer – Thomas Weisel Partners: I guess just digging a little deeper that does that mean you’re going to have your inventory in that category will still be down year-over-year but not down as much as double digits?

We have planned the inventory down to last year. I can’t go any further than that to tell you but its appropriate to our sales potential that we believe is out there for us.

Also, we’ve narrowed the line so we have fewer choices of riders that allows us to have more depth so we can be in stock at the price points that have proven to be most important. Again, this is where we’re sorted this year not just by region but by store based upon their two year history by future benefit price point. The other thing to recall is that riders have over the last really four years now have become a less significant portion of our business and the plan that we shared, the data that we used in our planning which we have shared with you all is that a good rider year would be beneficial to our results but we don’t need one to achieve our objectives. Matt Nemer – Thomas Weisel Partners: Part of the narrowed line, it sounds like from something you said earlier that there will be more push mowers, more sort of accessories and parts and perhaps that takes your ticket down in the category this year versus last year?

Within the category yes but, bear in mind we have a $45 ticket average so every string trimmer on average is double that. So, as we can gain share in walks, in string trimmers, blowers, we’ve already had a very good tiller season, I expect more of that up North year, we have the opportunity to offset many of the sales dollars but most significantly the margin dollars. Matt Nemer – Thomas Weisel Partners: Then lastly, in terms of the price moderation that you’ve talked about, can you get more specific on which categories are starting to moderate? It sounds like it’s potentially not the feed and the pet food categories from what you said earlier?

When we look at the three main categories, when you look at the grain prices, we look at oil and we look at steel, we’ve already experienced a significant decrease in those raw material prices. So, it’s a matter relative to each one of those categories and how they impact our merchandise categories as we work with the vendors for us to realize those savings as well. So, we believe that we have worked through a lot of the price decreases and again, as we relate back to some of our comments that we feel that the retail price has been sticky in many of the categories to the extent that as we receive those cost reductions which we believe has already been experienced by many of the vendors and manufacturers in the raw materials, as we receive those prices decreases and they work through our average costs, we’ll be able to maintain reasonable margins during that time period. So, we think obviously it’s our responsibility to work through that. It’s part of our business to manage the margins and we think that we’ve been successful and that we have seen a stabilization of the prices over the last couple of months. Matt Nemer – Thomas Weisel Partners: Of those three in response to another question that was asked earlier it sounds like on the pet food side specifically maybe you haven’t seen as much of a decrease as you’d like?

We have not seen as much of a decrease as we would expect, that would be correct.

Your next question comes from David Magee – SunTrust Robinson Humphery. David Magee – SunTrust Robinson Humphery: Just a question going back to the inflation impact on the comp, you had said it was 500 or 600 bips, I guess does that mean then that I guess ex that then the average transaction size was really down about 8% coming on a FIFO basis year-to-year?

When you say the average? David Magee – SunTrust Robinson Humphery: You said the average basket size was down a couple of points earlier. If you ex’d out the impact of inflation as a positive influence there in terms of just taking price out of the equation mean that the basket size would be much less?

Right. You would allocate inflation more to the average ticket. It would have less of an impact on the transaction size, correct. David Magee – SunTrust Robinson Humphery: So I guess what I’m getting to is as inflation, the positive impact there begins to lesson as the quarter goes on, the second quarter and your traffic probably moderates certainly from the strong first quarter performance. I guess the second quarter comp, although you didn’t give the guidance, would be it looks like to me is going to be roughly offsetting what you did in the first quarter. Is my logic I guess correct in that regard?

Not necessarily and obviously we don’t give specific guidance to the second quarter. We do agree that generally we will not have the tailwind that we’ve had in the past in 2008. However, as we look at it and we become focused on the margin rate and the margin per unit, as much as it may have an impact on the comp sales, we think what’s critical is to drive the [inaudible] and that’s where we feel that we’ve been successful as we analyze categories that have already experienced that type of deflation.

Two things to remember, one in Q2 we’re going to have a 100 basis point negative comp because Easter is in the quarter versus not being in the quarter last year and secondly, for the next three quarters with us reaffirming our revenue guidance, our projections are comps of -29 to a positive 80 basis points. That’s the range we are planning and yet we fully anticipate landing the EPS of $2.50 to $2.74 with that range of comp sales performance. David Magee – SunTrust Robinson Humphery: Also could you talk a little bit about what the competition might be doing this spring in the mower business? Is that having an impact different than expectations of any sort?

Frankly, thus far we have not seen any new tricks or any real strengthening by any of our competitors. Obviously, the next six weeks will be the flurry of activity but we’ve seen nothing out there that we think something else will win at our cost.

Your next question comes from [Peter Benedict – Robert W. Baird & Co.] [Peter Benedict – Robert W. Baird & Co.]: If I could was the inflation impact in the first quarter the highest you’ve seen in the cycle so far? I think it was, it was higher than what you saw in the fourth quarter, correct?

That’s correct. Generally for the year last year we were in the slightly above four range for the whole year and the fourth quarter was the highest quarter in 2008 that was sort of in the 4.5 to 5 range. So yes. [Peter Benedict – Robert W. Baird & Co.]: Tony, what type of impact are you guys assuming in the full year comp plan in terms of inflation for that down 1.5 to plus 1.5?

We really don’t break out the inflation component when it comes to the comp sales. Obviously we do sensitivities around that number and try to understand what the potential impact is and again, that’s how we come up with the ranges but we have not disclosed any specific inflation guidance. [Peter Benedict – Robert W. Baird & Co.]: Is it fair to say it’s not a negative number? The impact for the full year?

Not necessarily but it’s generally closer to the mid range of the comp. [Peter Benedict – Robert W. Baird & Co.]: Then on the expectations for your SG&A leverage plan over the balance of the year, what type of comp do you think you guys need to get leverage on SG&A over the balance of the year?

Generally as we stated in the past we’re still look at the 2 to 2.25 range. I’d like to sort of stay in the 2.5 but I think 2 to 2.25 potentially. I think given the marketing spend we anticipate I think we have a good opportunity to leverage at that comp range.

There are no further questions. Please continue with any closing comments.

Thank you all very much. I’m glad you’re on this journey with us. We are glad that we have confirmed the opportunity to open 1,800 stores. Those of you who have known us for a long time recognize that we run the business against the long term opportunity. We are diligent by the day, week and certainly by the quarter but we run the business to deliver value and continue to build the brand and relationship with our customers in this sort of aspirational lifestyle that we call this wonderful place out here. We look forward to speaking to you next quarter.

Ladies and gentlemen that does conclude our conference call for today. You may all disconnect and thank you for participating.