Casey's General Stores Annual Report 2006

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FY2006 Annual Report · Casey's General Stores

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annual report 2006

CASEY’S GENERAL STORES, INC.

One Convenience Blvd.
Ankeny, Iowa 50021-9437

Mark of Distinction.

Casey’s Mark of Distinction brands our 1,394 corporate stores in

• Our newly expanded warehouse adds tremendous capacity

9 states and makes our Midwest dominance visible. The number

to our vertically integrated distribution system.

of stores we own is one source of distinction, but setting ourselves

• Seizing opportunities to make wise acquisitions is the key

apart from our peers also comes from having the best people,

source of our growth.

increasing our knowledge, and being proactive.

• An exceptionally strong balance sheet and adequate debt

capacity give us financial flexibility.

There are other marks as well:

• Analysts appreciate our quarterly reports on progress toward

• Our policy of rewarding employees for increasing gross profit

measurable annual goals and the monthly same-store sales

and controlling expenses attracts and retains quality people.

data we post on our Web site.

• Our business thrives on information from our full

point-of-sale technology.

Throughout this annual report, we’ll detail how we exceeded

• We are known for having one of the best proprietary

all of last year’s operations goals and how we’ll capitalize on our

prepared food programs in the industry.

marks of distinction to meet the goals we’ll challenge ourselves

• We use our size to gain advantage in wholesale markets.

with in fiscal 2007.

2005

2006

CHANGE

Total revenue

$ 2,804,658

$ 3,515,145

Cash flow from operations

Net earnings from
continuing operations

EPS from continuing operations

129,740

42,342

0.84

147,818

62,940

1.25

25.3%

13.9%

48.6%

48.8%

table of

CONTENTS

Message to Our Shareholders . . . . . 2

Management Team. . . . . . . . . . . . . 4

Store Operations . . . . . . . . . . . . . . 6

Store Development . . . . . . . . . . . 12

Corporate Finance . . . . . . . . . . . . 14

Board of Directors . . . . . . . . . . . . 16

Investor Information . . . . . . . . . . 17

Financial Information . . . . . . . . . 18

251,3641,339 191,3941,413 361,3581,322 Total Franchise CorporateCASEY’S STORES$ 62.9$ 1.25$ 42.3$ 0.84$ 37.8$ 0.76 Net earnings from continuing operations (IN MILLIONS) EPS from continuing operationsCONTINUING OPERATIONS FINANCIAL HIGHLIGHTS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)2

message to our

SHAREHOLDERS

AT CASEY’S, WE BELIEVE OUR FREEDOM TO CHOOSE IS OUR MOST POWERFUL MARK OF DISTINCTION. THANKS TO THE INVESTMENTS WE’VE

MADE IN OUR FUTURE, WE HAVE MORE OPTIONS THAN EVER FOR BUILDING CAPACITY AND PURSUING PROFITABLE GROWTH. WE THINK WE CAN

SERVE YOU BEST BY MAKING CHOICES THAT BALANCE A DEEP RESPECT FOR OUR HISTORY WITH A BUSINESS-MINDED OPENNESS TO INNOVATION.

In the past several years, we have chosen to undertake transformational

Managing our gasoline business required steadiness in an extremely

initiatives that have benefited our customers and increased our

unstable environment. I have been with Casey’s since 1970, and I

overall impact within the convenience store industry. Selecting

cannot recall a more roller-coaster year. Our same-store gallons sold

the right people, the right strategies, and the right tools has made

were up 12.7% in August and off 1.5% in March; margins ranged from

Casey’s one of the top 10 convenience store chains in the nation.

14.1 cents per gallon in the second quarter to 9.2 cents in the third.

The choices we made during fiscal 2006 allowed us to exceed all of

When we averaged the ups and downs at fiscal year-end, annual

our operations goals and raise earnings per share from continuing

same-store gallons sold were up 4.4%—more than twice our 2%

operations to an all-time high of $1.25. We served over 325 million

goal—and the margin was above our 10.5-cent goal at 11.5 cents

customers in our 9-state region, raised sales 25.4% to $3.5 billion,

per gallon. We were opportunistic in terms of buying, refined our

and increased total gross profit 15.2% to $527 million, results that

efficient call and haul delivery system, and remained faithful to

won us increased visibility in the investment community.

our longstanding policy of pricing with the local competition.

Managing our gasoline business required

steadiness in an extremely unstable environment.

We have no reason to assume the gasoline business will be more stable in

fiscal 2007. We have good cause to think same-store sales will continue to

grow, but the gasoline margin will again be subject to market influences.

The gains we made in grocery & other merchandise are further

evidence of how well we are using our growing powers of choice.

In fiscal 2006, our lottery rollout increased store traffic as expected.

We employed our sophisticated data analysis capabilities, improved

inventory management, and enhanced distribution efficiencies to

make sure that more customers in our established stores translated

to a better bottom line for this business category. The result was a

5.7% increase in same-store sales with an average margin of 31.9%.

Our goal was a 3% increase with an average margin of 31.5%.

Prepared food & fountain again exceeded our high expectations. We

forged past our goal of increasing same-store sales 5.5% with an average

margin of 60.5% to achieve a 7.4% increase with a 63% margin. It was

our third straight year of same-store sales gains in excess of 5% and

margins above 60%.

MANAGEMENT TEAM (left to right)

Our proprietary prepared food program has earned its reputation

Ronald M. Lamb Chairman of the Board

Terry W. Handley Senior VP & COO

Julia L. Jackowski VP–Human Resources

Eli J. Wirtz VP–Corporate Counsel

Robert J. Myers President & CEO

as one of the best in the business. We made our latest gains by

refining what are now established strategies: matching menus to

customer preferences and traffic patterns, introducing profitable

new items, rotating offerings to maintain customer appeal, and

managing stales effectively. Near fiscal year-end we expanded our

fountain choices—another positive that should help keep our

Bradley G. Heyer VP–Information Systems

superior sales trend on the rise.

Darryl F. Bacon VP–Food Services

Cleo R. Kuhns VP–Real Estate-Store Development

Michael R. Richardson VP–Marketing

Sam J. Billmeyer Senior VP–Transportation & Support Operations

Hal D. Brown VP–Support Services

William J. Walljasper Senior VP & CFO

Russell D. Sukut VP–Treasurer

Robert C. Ford VP–Store Operations

John G. Harmon Senior VP & Secretary

We’ve raised the fiscal 2007 performance bar for our two inside sales

categories because recent initiatives have enhanced our control

over outcomes. Casey’s buying power is increasing our influence

with vendors, our capacity to process data and use the information

effectively in our decision-making is formidable, and our distribution

system will easily handle all the volume we can generate.

We intended to hold the percentage increase in operating expenses

to less than the percentage increase in gross profit, and we did

so. Operating expenses were up 10.6%, well below our 15.2%

improvement in gross profit. An increase in wages primarily

due to incentive compensation was a factor in the operating

expense percentage. That’s because we rightfully rewarded

those who delivered the year’s impressive results.

There will be new opportunities to increase gross profit as we

The entire management team is committed to meeting

add more stores. Our fiscal 2006 goal was to build 10 new stores

Casey’s fiscal 2007 performance goals:

and acquire 30 stores in addition to the 49 Gas ‘N Shop sites we

purchased in January. By April 30, we had built 15 stores and

• Increase same-store gasoline gallons sold 2% with an

acquired an additional 18.

average margin of 10.8 cents per gallon.

The Gas ‘N Shop acquisition was our first experience in purchasing

3.9% with an average margin of 32.2%.

and integrating a large chain into Casey’s systems. We see additional

• Increase same-store prepared food & fountain sales

acquisition possibilities to choose from in fiscal 2007. The pipeline

7.9% with an average margin of 63.4%.

is full, and our acquisition team is hard at work.

• Hold the percentage increase in operating expenses to

• Increase same-store grocery & other merchandise sales

less than the percentage increase in gross profit.

It has been my privilege to guide Casey’s senior management

• Acquire 50 stores and build 10 new stores.

through the transformation that made the past year’s achievements

possible, and, as Chairman, I will continue to be actively involved in

Making public a set of goals that requires us to outperform the

setting the strategic direction of the Company. The Chief Executive

record results of fiscal 2006 is our boldest Mark of Distinction.

Officer’s duties will be ably fulfilled by my successor Bob Myers,

who was elected to the position effective June 21, 2006.

The Board of Directors also approved four more significant

promotions: Terry Handley to Chief Operating Officer,

Ronald M. Lamb

Bill Walljasper to Senior Vice President–CFO, Sam Billmeyer

Chairman of the Board

to Senior Vice President–Transportation and Support Operations,

and Bob Ford to Vice President–Store Operations.

store

OPERATIONS

“LAST YEAR, I EMPHASIZED THE STEPS WE HAD TAKEN TO STRENGTHEN CASEY’S TECHNOLOGY, HUMAN RESOURCES, AND

INFRASTRUCTURE TO BUILD CAPACITY,” SAID NEWLY ELECTED CHIEF EXECUTIVE OFFICER BOB MYERS.“I VIEW OUR FISCAL 2006 RESULTS

AS A MARK OF DISTINCTIONBECAUSE THEY SHOW WE KNOW HOW TO USE THAT CAPACITY TO DELIVER STRONG PERFORMANCE.”

Thanks to our technology initiatives, everyone at Casey’s has

Our reward system also takes into account controlling operating

better, more timely data on which to base operational decisions.

expenses. Holding our fiscal 2006 operating expense increase to

The human capacity we’ve gained by empowering our store

only 10.6% was particularly noteworthy considering that just one

managers with more information and greater responsibility

component—credit card fees—rose nearly 39% and cost us $27.4

makes every store more efficient and more customer-focused.

million. We can’t expect credit card charges to diminish as long as the

Our infrastructure improvements let us absorb additional

retail price of gasoline remains high, so containing transaction fees

Casey’s stores without putting stress on our systems.

will be a challenge for us and for the entire industry in fiscal 2007.

“Adding stores increases our purchasing power—the capacity to

“There will be other challenges as well, but we are in an excellent

buy more for less,” said Terry Handley, Chief Operating Officer.

position to address them,” said Myers. “In the rest of this section of

“Because of our size, we can negotiate with vendors for better prices,

the report, we’ll show you how we used our considerable resources

products, and service and can contract for millions of gallons of

to exceed our fiscal 2006 goals for each of Casey’s three business

gasoline at negotiated discounts. As we grow, we are able to create

categories: gasoline, groceries & other merchandise, and prepared

new efficiencies in store delivery and gasoline transport.”

food & fountain. More important, we’ll tell you how we plan to

improve on our 2006 performance in the new fiscal year.”

Be assured these advantages are being put to work because there

are strong incentives to do so. The financial rewards for everyone

GASOLINE

at Casey’s from store managers to executive officers remain aligned

with gross profit improvement. The alignment is one reason we

Casey’s customers purchased a total of 1.1 billion gallons of gasoline

followed an 8.8% gross profit increase in fiscal 2005 with a 15.2%

in fiscal 2006. Our 4.4% increase in same-store gallons sold was one

increase in fiscal 2006.

sure indicator that gasoline remains a powerful destination item.

“High retail prices in an unstable market did not seem to

Because we price with the competition, local market conditions have

alter people’s driving habits, and we benefited from record

a significant impact on margin at the point of sale. We can and do

volume. Total gallons sold were up 8.2%,” said Handley.

influence margin results by making the best buys available to us in

the wholesale market, transporting product as efficiently as possible,

Whatever the market environment, adherence to our long-time

and making sure every store has the gasoline it needs when it needs it.

practice of pricing with local competition is always a priority.

Our average margin of 11.5 cents per gallon in fiscal 2006 reflected the

Store managers know the best way to keep Casey’s customers

markets in which we were operating and the efficiencies we achieved.

loyal is to make sure they won’t find a better price a few blocks

or a few miles away.

A recent Forbes article featured Casey’s efficiencies, highlighting

our ability to haul nearly three-quarters of the gas we sell in our

Not only do customers fill their tanks at our stores, they come

own tankers and our state-of-the-art satellite system that transmits

inside to make additional purchases. Gasoline sales matter to our

fuel-level data from every store to our corporate headquarters.

business as much for the cross-selling opportunities they present

The system allows us to integrate gasoline purchasing, dispatch,

as for the revenue they generate.

and transportation.

$ 248.7$ 125.8$ 144.3$ 220.5$ 109.4$ 123.4 $ 207.3$ 99.1$ 110.4 Gasoline Grocery & other merchandise Prepared food & fountainGROSS PROFIT (IN MILLIONS) 2.0%10.8¢4.4%11.5¢1.9%10.8¢ 3.1%10.2¢ Same-store sales increase MarginGASOLINE $ 7791098 $ 229$ 7131015$ 204 $ 664972$ 182 Gasoline (gallons) Grocery & other merchandise Prepared food & fountainSALES (IN MILLIONS) 8

We’ll continue to improve our cigarette merchandising and

to take strategic price increases when the market allows them.

“Having continuous real-time data on fuel levels at each of our

sites means we can plan efficient transport routes for providing

just-in-time delivery,” said Sam Billmeyer, Senior Vice President–

Transportation and Support Operations. “In the year just ended,

we experienced inventory outages in only about 1% of stores

served by Casey’s tankers and saved approximately $360,000 in

freight costs because of our reduction in no-fits.”

In fiscal 2006, our gasoline gross profit rose 15% to $125.8 million.

We expect to make similar gains in fiscal 2007 by monitoring the

balance between gallons sold and margin in what may again be

an unstable market. You already know our goal is to increase

same-store gasoline gallons sold 2% with an average margin

of 10.8 cents per gallon.

GROCERY & OTHER MERCHANDISE

“We set separate goals for the two business categories that

comprise Casey’s inside sales, grocery & other merchandise and

prepared food & fountain,” Handley explained, “but we manage

the two categories in tandem because doing so is the best way

to improve gross profit.” Gross profit on total inside sales grew

14.3% to $393 million in fiscal 2006.

One way to build same-store inside sales is to increase store

matching product mix and customer demand. Increasing space

traffic. That’s why we added lottery ticket sales, a rollout that was

for low-price brands attracted customers who were switching

completed nearly a year ago. Our fiscal 2006 results tell us the

from the more expensive premium brands.

lottery is having the effects we expected—more people coming

through our doors and higher same-store sales.

We’ll continue to improve our cigarette merchandising and to

take strategic price increases when the market allows them. We

We added the lottery for its drawing power, but we also earn

believe diversifying our offerings and refining our strategies will

commissions from ticket sales that contribute to the Company’s

benefit gross profit. “We have absorbed approximately $7 million

total gross profit. These commissions are accounted for separately

in retail display allowance reductions over the past three years,”

and are not included in category results.

said Mike Richardson, Vice President–Marketing, “so I’m glad to

report we aren’t anticipating further reductions in fiscal 2007.”

“Investors have asked whether the lottery’s effect will remain visible

in future year-to-year comparisons,” Handley said. “There are no

Our destination items are bringing more people inside our stores,

guarantees, of course, but fiscal 2006 same-store sales were up

and our technology initiatives are helping us turn that traffic into

significantly in our Indiana stores, which have had the lottery for

sales and profit. Though it includes gasoline as well, the inventory

two years. We’re optimistic that stores in other states will report

turn rate is an important inside-sales measure. We view the rate’s

similar second-year trends.”

improvement to 34.8 in fiscal 2006 from 30.7 in fiscal 2005 as one

indicator of the benefits we’re gaining from point-of-sale data and

Cigarettes have been a traditional destination item for all

our hand-held bar code scanning units. With implementation now

convenience stores. Though unit volume was down 2% to 4%

complete, virtually all of our stores will have both technologies

nationwide, our fiscal 2006 unit sales showed we added market

through a full seasonal cycle, a positive that will contribute to

share. During the year, we began configuring rack space according

better results in fiscal 2007.

to plans individualized for each state, another step toward

Fiscal 2006 was a good year for the products we offer under the

Our new annual goal tells you we expect a strong performance

Casey’s logo—water, sports drinks, ice cream treats, auto products,

from this business category in fiscal 2007. We intend to increase

and more. Our branded grocery products along with Casey’s

same-store sales 3.9% and earn an average margin of 32.2%. We

MasterCard and telephone calling card promote our name

are confident that matching product mix to customer demand,

and provide savings to our customers.

refining inventory efficiencies, and paying close attention to

Sales up and down our aisles rose because of customer-conscious

pricing strategies and store sets designed to make it easy for

PREPARED FOOD & FOUNTAIN

customers to find what they want and to attract them to other

pricing will get us to our targets.

items we want to sell. We’re using our knowledge of local buying

Nothing does more to set Casey’s apart from its competitors than our

patterns and product preferences to build revenue and enhance

proprietary food program, and nothing performed better for us in

customer loyalty. Total category sales were up 9.4%, and our

fiscal 2006 than prepared food & fountain. Total sales rose 12% to

same-store sales increase was well above goal at 5.7%.

reach $229 million, same-store sales were up 7.4%, and our average

margin was 63%. Gross profit increased 16.9% to $144.3 million.

“Our focus on gross profit from inside sales means we make

merchandising decisions that affect both business categories,”

How did we achieve our success in fiscal 2006? We kept getting

Handley explained. “Sometimes it pays us to sacrifice potential

better at what we do well.

sales in one category to promote sales of higher-margin

products in the other.”

We sold nearly 9 million made-from-scratch pizzas, expanded

our to-go-cup offerings, and rotated established items to meet

In the second half of fiscal 2006, for instance, we improved gross

seasonal demands and keep customer interest high. People buy

profit on inside sales overall by giving up counter space for specialty

millions of fountain drinks at Casey’s, and we’re expecting our

merchandise so we could feature some of our more profitable

recent expansion of fountain offerings to increase sales and

prepared food items. Even so, we maintained an average margin

enhance customer satisfaction in the new year.

that exceeded the 31.5% goal by 40 basis points and contributed

to a 12.8% increase in gross profit to $248.7 million.

“Point-of-sale information is so important to our performance,”

“I said earlier that our size was making a difference,” Handley

said Daryl Bacon, Vice President–Food Services. “We receive

elaborated. “Our buying power makes it worthwhile to meet our

quick feedback on new products we introduce, we can see the

particular specifications. Some of our suppliers have actually

sales effect of any pricing changes, and we know what items are

bought the same ovens we have in our kitchens so they can

selling when and in what combination.”

test compliance.”

What POS tells us about sales is the basis for multiple management

We’re determined to be even better at running our proprietary

decisions. The information helps store managers set work schedules

food program tomorrow than we are today. We think our ongoing

to accommodate store traffic patterns. “To maintain the optimum

commitment to continuous improvement is a Mark of Distinction

balance between volume and stales, we need to know exactly how

that will drive us to achieve our 2007 performance goal: increase

to stock our kitchens,” said Bacon. “Too much of a certain product

same-store prepared food & fountain sales 7.9% with an average

leads to waste; too little means lost sales. We’ve reduced our stales

margin of 63.4%.

factor roughly 1% a year over the last three years as we’ve raised

sales an average of about 11%.”

In fiscal 2006, the amount of cheese we purchased increased from

about 8 million pounds the year before to closer to 10 million, so

what we paid for it was important. We took advantage of market

conditions to lock in an excellent price through August of 2007.

Maintaining efficiency and quality control was a priority

throughout the year. We don’t introduce new menu items that

fail to meet our taste tests or that cannot be prepared using our

existing equipment. The equipment standard helps us control

capital costs, makes training much easier, and streamlines the

introduction of new products.

Nothing does more to set Casey’s apart from

its competitors than our proprietary food program,

and nothing performed better for us in fiscal

2006 than prepared food & fountain.

3.9%32.2%5.7%31.9%4.8%30.9% 0.4%31.2% Increase in same-store sales MarginGROCERY & OTHER MERCHANDISE8663.4%7.4%63.0%8.4%60.4% 5.5%60.7% Increase in same-store sales MarginPREPARED FOOD & FOUNTAIN12

store

DEVELOPMENT

IN THE INTRODUCTION WE STATED THAT ANOTHER MARK OF DISTINCTION IS SEIZING OPPORTUNITIES TO MAKE WISE

ACQUISITIONS. CERTAINLY ACQUIRING 49 STORES FROM GAS ‘N SHOP INC. IN FISCAL 2006 WAS A SMART DECISION.

By year-end, we had closed 10 of those stores—only because they

Our goal for fiscal 2007 is to acquire 50 stores and to build 10.

were in direct competition with our stores in the same locations—and

“There are ample acquisition opportunities available as the industry

had rebranded the remaining 39 as Casey’s General Stores. We expect

continues to consolidate,” said Harmon. “We’re currently targeting

the acquired stores to be accretive within a year; their profitability

several chains in our 9-state territory and also looking at chains

will be enhanced by the construction of kitchens to support our

outside our marketing area. Any decisions will be driven by our

proprietary prepared food program.

business model of focusing on the small-town customer, potential

contribution to earnings, and estimated return on invested capital.”

Our goal for fiscal 2006 was to acquire 30 stores in addition to the

Gas ‘N Shop acquisition and to build 10 new stores. We actually

Whether we build or acquire, our critical mass and vertically

built 15 stores because there were good opportunities in areas

integrated distribution system are advantageous operationally.

where there weren’t attractive potential acquisitions. We acquired

Our vertical integration has three main aspects: We operate our

an additional 18 stores and at year-end had written agreements

own distribution center; less than 5% of the nation’s convenience

for 6 more stores.

store chains do. We run 141 grocery delivery routes every week;

our trucks arrive at the same store, on the same day, at the same

“More important than the number of stores we acquired was

time each week. We haul nearly 75% of the gasoline distributed

their quality,” said Senior Vice President John Harmon who leads

to our stores in our own tankers; our satellite communication

the acquisition team. “That’s why we were thorough in evaluating

network maximizes efficiency.

all aspects of the targeted sites. Our due diligence is rigorous,

and we’ve become increasingly proficient at multi-tasking.”

370

105

278

Total number of stores = 1,413

From our distribution center, we deliver 90% of the products we sell,

supply most of the paper and cleaning items we use, and provide

nearly all of our advertising signage. Economies of scale allow us

to lower unit costs by buying products in mass quantities. We offer

nearly 60% of our inventory in individual packages rather than by

the case. This option reduces carrying costs and outdated products

and lets store managers replenish stock with exactly what they need.

We can quantify our results. Over the last fiscal year, we saved

.3 cents per gallon when we delivered gasoline in Casey’s

transports, operated the distribution center for less than 2%

of sales, and averaged just over $3 million in sales per full-time

warehouse employee. The industry average for convenience

store suppliers was just under $1.5 million.

We added 100,000 square feet of warehouse space and 20,000

square feet of office space to our distribution center, giving us

the capacity to serve at least 1,000 more stores. The distinctive

addition is a visible mark of our commitment to continuing

growth and increasing the advantages of our vertical integration.

12295015671524 New store constructions AcquisitionsSTORE GROWTH14

corporate

FINANCE

Acquisitions & new store construction

Remodels & replacements

Technology

Transportation

Other

Total

$ 70,000,000

$ 28,000,000

5,500,000

4,500,000

$ 15,000,000

$ 123,000,000

AN EXCEPTIONALLY STRONG BALANCE SHEET AND ADEQUATE DEBT CAPACITY GIVE US FINANCIAL FLEXIBILITY, A VITAL MARK OF

DISTINCTION. AT APRIL 30, 2006, CASH AND CASH EQUIVALENTS CAME TO $75.4 MILLION, A 53.7% INCREASE FROM THE PREVIOUS

FISCAL YEAR-END. OUR LONG-TERM DEBT NET OF CURRENT MATURITIES DECREASED $16.6 MILLION TO $106.5 MILLION, AND

THE TOTAL DEBT TO TOTAL CAPITAL RATIO WAS 23.2% AT YEAR-END. SHAREHOLDERS’ EQUITY ROSE 11.5% TO $523.2 MILLION.

We increased our cash flow from operations 13.9% to $147.8 million.

What you as shareholders are most interested in is a good return

We used a little more than $100 million for capital expenditures.

on invested capital. Fiscal 2005’s ROIC was 8%—not as high

Some of that total, approximately $40 million, was spent on

as we wanted. Fiscal 2006’s ROIC was 10.6%, a healthy return

acquisitions. We built new stores for roughly $15 million. The

bolstered by improved store performance and profits from

distribution center addition cost us close to $10 million. Routine

acquisitions we made in fiscal 2005.

store maintenance, major remodels, and replacements accounted

for nearly $22 million. Infrastructure costs for transportation and

Growing profit is essential to improving the ROIC—so is

information systems came to about $15 million.

containing expenses. “You already know we met our goal of

holding the percentage increase in operating expenses to less than

The accompanying chart shows the capital expenditure budget

the percentage increase in gross profit,” Walljasper stated. “You

for fiscal 2007. “Note the amount we’ve earmarked for acquisitions,”

don’t know the specifics associated with two main components

said Chief Financial Officer Bill Walljasper. “Not only do we have the

of operating expenses: credit card fees and wages.”

ability to take advantage of acquisition opportunities, we also have

the appetite.” Included in the budget are the expenses associated

During the year, we experienced a 30% increase in credit card usage

with rebranding acquisitions, adding kitchens to the acquired

as customers charged more expensive gasoline; in turn, our fees

Gas ‘N Shop sites, and knocking down and rebuilding stores

went up 38.7%. Wages were up 8.4% for the best of reasons: bonuses

where necessary.

paid for increasing gross profit and controlling expenses.

FISCAL 2007 CAPITAL EXPENDITURE BUDGET15

In fiscal 2007, we’ll explore alternatives for containing transaction

fees. We intend to meet our goals, so operations personnel should

again earn bonuses—but the wage increase should be a favorable

comparison with the fiscal 2006 increase.

You’ll remember that in the third quarter of fiscal 2005 our operating

expenses were inflated because we identified 36 underperforming

stores as impaired assets. Later, we reclassified those stores as

discontinued operations and predicted that in fiscal 2006 we would

receive a $0.03 per share gain from eliminating the stores and some

relief operationally by not trying to change the stores’ performance.

We gained the $0.03 and benefited from the operational relief.

By December 31, 2006, we had sold 27 of the discontinued stores

and closed the remaining 9.

“Investor relations is always a priority,” Walljasper commented.

“We want people to understand our company and know our story.

Once they do, we believe they will appreciate our potential.”

In the coming year, you can count on us to publish quarterly

progress toward our annual goals and post monthly same-store

sales data for our three business categories. Throughout fiscal 2007,

we expect our reports to be Casey’s most telling Mark of Distinction.

$ 106.5$ 523.2$ 123.1$ 469.1$ 144.2$ 439.8 Long-term debt EquityCAPITAL STRUCTURE (IN MILLIONS) 15.2%10.6%8.8%7.6% 3.0%7.0% Gross profit increase Operating expense increaseOPERATING EXPENSES16

RonaldM. Lamb

Chairman

board of

DIRECTORS

(left to right)

Donald F. Lamberti Retired Chairman of Casey’s General Stores, Inc.

John G. Harmon Senior VP & Secretary

Kenneth H. Haynie Of counsel to the law firm of Ahlers & Cooney, P.C.

Johnny Danos* President of the Greater Des Moines Community Foundation

William C. Kimball* Retired Chairman and CEO of Medicap Pharmacy, Inc.

John R. Fitzgibbon* Self-employed Financial and Operational Consultant, Des Moines

Patricia Clare Sullivan* Retired CEO & President of Mercy Health Center, Central Iowa, Des Moines

Jack P. Taylor* Chairman & CEO of Taylor Construction Group, A General Contractor, Des Moines

*Member of the Audit Committee

COMMON STOCK

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

Casey’s General Stores, Inc. common stock trades on the Nasdaq

This plan, introduced in the fall of 1998, gives holders of Casey’s

National Market System under the symbol CASY. The 50.4 million

General Stores, Inc. common stock a convenient and economical

shares of common stock outstanding at April 30, 2006 had a

way of purchasing additional shares at market prices by reinvesting

market value of $1.1 billion. As of that same date, there were

their dividends in full or in part. Stockholders may also take

2,663 shareholders of record.

advantage of the cash payment option to purchase additional

shares. Those wishing to enroll should contact the transfer

COMMON STOCK MARKET PRICES

agent and registrar:

Calendar 2004

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Calendar 2005

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Calendar 2006

1st Quarter

2nd Quarter

High

$18.95

18.30

18.79

20.00

High

$19.67

20.86

23.25

26.09

High

$27.20

25.57

Low

Securities Transfer Division

$15.24

UMB Bank, n.a.

15.00

15.50

16.68

Low

$15.98

16.53

19.33

20.19

P.O. Box 410064

Kansas City, Missouri 64141

investor

INFORMATION

INVESTOR INQUIRIES

Current or prospective Casey’s General Stores, Inc. investors can

Low

receive annual reports, proxy statements, Forms 10-K and 10-Q,

$22.02

20.15

and earnings announcements at no cost by calling (515) 965-6107

or sending written requests to the following address:

On July 7, 2006 the last reported sales price of the Company's

Casey’s General Stores, Inc.

common stock was $25.00 per share. On that same date,

One Convenience Blvd.

the market cap was $1.3 billion.

Ankeny, Iowa 50021

DIVIDENDS

Corporate information, including monthly same-store sales data

for the Company’s three business categories, is also available at

The Company began paying cash dividends during fiscal 1991.

www.caseys.com. Quarterly conference calls are broadcast live over

The dividends paid in fiscal 2006 totaled $0.18 per share. At its

the Internet via the Investor Relations Web page and made available

June meeting, the Board of Directors increased the Company’s

in archived format. Broadcast times for the quarterly calls will be

quarterly dividend to $0.05 per share. The dividend is payable

announced on the Web page and in corresponding press releases.

on August 15, 2006 to shareholders of record on August 1, 2006.

ANNUAL MEETING

All shareholders and prospective investors are cordially invited to

attend the annual meeting at 9:00 a.m., September 15, 2006 at the

corporate headquarters in Ankeny, Iowa.

PART I

ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ITEM 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ITEM 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ITEM 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . 13

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder

Matters, and Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . 13

ITEM 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ITEM 7. Management’s Discussion and Analysis of

Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 16

ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . 23

ITEM 8.

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . 24

ITEM 9. Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ITEM 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ITEM 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

PART III

ITEM 10. Directors and Executive Officers of the Registrant. . . . . . . . . . . . . . . . . . . . . 43

ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ITEM 12. Security Ownership of Certain Beneficial Owners

and Management and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . 43

ITEM 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . 43

ITEM 14. Principal Accountant Fees and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

PART IV ITEM 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 44

form 10-K table of

CONTENTS

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the Fiscal Year Ended April 30, 2006

Commission File Number 0-12788

CASEY’S GENERAL STORES, INC.

(Exact name of registrant as specified in its charter)

IOWA

(State or other jurisdiction of

incorporation or organization)

42-0935283

(I.R.S. Employer

Identification Number)

ONE CONVENIENCE BLVD., ANKENY, IOWA

(Address of principal executive offices)

50021

(Zip Code)

(515) 965-6100

(Registrant’s telephone number, including area code)

Securities Registered pursuant to Section 12(g) of the Act

COMMON STOCK

(Title of Class)

COMMON SHARE PURCHASE RIGHTS

(Title of Class)

Securities Registered pursuant to Section 12(b) of the Act

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act

of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such

filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be

contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or

any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, or a non-accelerated filer. Large accelerated filer [X]

Accelerated filer [ ] Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on July 7, 2006, computed by reference to

the closing sales price ($21.57 per share) as quoted on the NASDAQ National Market System on the last business day of the registrant’s most recently

completed second fiscal quarter (October 31, 2005), was $968,282,045.

Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.

Class

Outstanding at July 6, 2006

Common Stock, no par value per share

50,402,662 shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents, as set forth herein, are incorporated by reference into the listed Parts and Items of this report on Form 10-K:

Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual Meeting of Shareholders to

be held on September 15, 2006 (Item 5 of Part II and Items 10, 11, 12, 13, and 15 of Part III).

ITEM 1. BUSINESS

The Company

PART I

Casey’s General Stores, Inc. (Casey’s) and its wholly owned subsidiaries (Casey’s, together with its subsidiaries, shall be referred to herein as the

Company) operate convenience stores under the name “Casey’s General Store” in 9 Midwest states, primarily Iowa, Missouri, and Illinois. The stores carry

a broad selection of food (including freshly prepared foods such as pizza, donuts, and sandwiches), beverages, tobacco products, health and beauty aids,

automotive products, and other nonfood items. In addition, all stores offer gasoline for sale on a self-service basis. On April 30, 2006, there were a total of

1,413 Casey’s General Stores in operation, of which 1,394 were operated by the Company (Corporate Stores) and 19 stores were operated by franchisees

(Franchise Stores). There were 15 Corporate Stores newly constructed and 55 acquired stores opened in fiscal 2006. There were no Franchise Stores newly

opened in fiscal 2006. The Company operates a central warehouse, the Casey’s Distribution Center, adjacent to its Corporate Headquarters facility in

Ankeny, Iowa, through which it supplies grocery and general merchandise items to Corporate and Franchise Stores.

Approximately 62% of all Casey’s General Stores are located in areas with populations of fewer than 5,000 persons, while approximately 12% of

all stores are located in communities with populations exceeding 20,000 persons. The Company competes on the basis of price as well as on the basis of

traditional features of convenience store operations such as location, extended hours, and quality of service.

Casey’s, with executive offices at One Convenience Blvd., Ankeny, Iowa 50021-8045 (telephone 515-965-6100) was incorporated in Iowa in 1967.

Two of the Company’s subsidiaries, Casey’s Marketing Company (Marketing Company) and Casey’s Services Company (Services Company), also operate

from the Corporate Headquarters facilities and were incorporated in Iowa in March 1995. A third subsidiary, Casey’s Retail Company, was incorporated in

Iowa in 2004, and also operates from these facilities.

The Company’s Internet address is www.caseys.com. The Company makes available through its Web site, among other items, the Company’s

Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports free of charge as soon as

reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission. Additionally,

the Company discloses its Financial Code of Ethics and Code of Conduct on its Internet Web site and intends to use its Web site to disclose any waiver to

its Financial Code of Ethics and Code of Conduct to the extent such disclosure is legally required.

General

Casey’s General Stores seek to meet the needs of residents of small towns by combining features of both general store and convenience store

operations. Smaller communities often are not served by national-chain convenience stores. The Company has been successful in operating Casey’s

General Stores in small towns by offering, at competitive prices, a broader selection of products than does a typical convenience store.

In each of the past two fiscal years, the Company derived over 99% of its gross profits from retail sales by Corporate Stores. It also derived income from continuing

monthly royalties based on sales by Franchise Stores; wholesale sales to Franchise Stores; sign and façade rental fees; and the provision of certain maintenance,

transportation, and construction services to the Company’s franchisees. Sales at Casey’s General Stores historically have been strongest during the Company’s first

and second quarters and relatively weaker during its third and fourth quarters. In the warmer months of the year (which comprise the Company’s first two fiscal

quarters), customers tend to purchase greater quantities of gasoline and certain convenience items such as beer, soft drinks, and ice.

Corporate Subsidiaries

The Marketing Company and the Services Company were organized as Iowa corporations in March 1995, and both are wholly owned subsidiaries

of Casey’s. Casey’s Retail Company was organized as an Iowa Corporation in April 2004 and is also a wholly owned subsidiary of Casey’s.

Casey’s Retail Company operates Corporate Stores in Illinois, Kansas, Minnesota, Nebraska, and South Dakota and also holds the rights to the

Casey’s trademark and trade name and serves as franchisor in connection with the operation of Franchise Stores. The Marketing Company owns and has

responsibility for the operation of Corporate Stores in Iowa, Missouri, Wisconsin, and Indiana. The Marketing Company also has responsibility for all Company

wholesale operations, including the operation of the Casey’s Distribution Center. The Services Company provides a variety of construction and transportation

services for all Corporate Stores.

First Heartland Captive Insurance Company, Inc. (First Heartland) was incorporated in April 2004 in Arizona and is a wholly owned subsidiary of

Casey’s. First Heartland operates as a single-parent deductible reimbursement captive insurance company based in Phoenix, Arizona. First Heartland provides

general liability, automobile liability, and workers compensation insurance coverages to the Retail Company, the Marketing Company, and the Services Company.

Store Operations

Products Offered

Each Casey’s General Store typically carries approximately 1,800 food and nonfood items. The products offered are those normally found in a

supermarket, except that the stores do not sell produce or fresh meats, and selection is generally limited to one or two well-known brands of each item

stocked. Most staple foodstuffs carried are of nationally advertised brands. Stores sell regional brands of dairy and bakery products, and approximately

87% of the stores offer beer. The nonfood items carried include tobacco products, health and beauty aids, school supplies, housewares, pet supplies,

photo supplies, and automotive products.

All of the Casey’s General Stores offer gasoline or gasohol for sale on a self-service basis. The gasoline and gasohol offered by the stores generally

are sold under the Casey’s name, although some Franchise Stores sell gasoline under a major oil company brand name.

It is management’s policy to experiment with additions to the Company’s product line, especially products with higher gross profit margins. As a

result of this policy, the Company has added various prepared food items to its product line over the years, including the installation of snack centers, which

now are in most Corporate Stores. The snack centers sell sandwiches, fountain drinks, and other items that have gross profit margins higher than those of

general staple goods. As of April 30, 2006, the Company was selling donuts prepared on store premises in approximately 98% of its stores in addition to

cookies, brownies, Danish rolls, cinnamon rolls, and muffins. The Company installs donut-making facilities in all newly constructed stores.

The Company began marketing made-from-scratch pizza in 1984, expanding its availability to 1,310 Corporate Stores (94%) as of April 30, 2006.

Management believes pizza is the Company’s most popular prepared food product, although the Company continues to expand its prepared food product line,

which now includes ham and cheese sandwiches, pork and chicken fritters, sausage sandwiches, chicken tenders, popcorn chicken, sub sandwiches, pizza

bites, breakfast croissants and biscuits, breakfast pizza, hash browns, quarter-pound hamburgers and cheeseburgers, hot dogs, and potato cheese bites.

Management’s decision to add snack center items and freshly prepared donuts, pizza and other prepared food items to the Company’s product

selection reflects its strategy to promote high margin products that are compatible with convenience store operations. Although retail sales of nongasoline

items during the last three fiscal years have generated approximately 33% of the Company's retail sales, such sales resulted in approximately 76% of the

Company’s gross profits from retail sales. Gross profit margins for prepared food items, which have averaged approximately 61% during the last three fiscal

years, are significantly higher than the gross profit margin for retail sales of gasoline, which has averaged approximately 6% during the same period.

Store Design

Casey’s General Stores are freestanding and, with a few exceptions to accommodate local conditions, conform to standard construction specifications.

During the fiscal year ended April 30, 2006, the aggregate investment in land, building, equipment, and initial inventory for a typical newly constructed

Corporate Store averaged approximately $1.3 million. The standard building designed by the Company is a pre-engineered steel frame building mounted

on a concrete slab. The current store design measures 40 feet by 68 feet with approximately 1,300 square feet devoted to sales area, 500 square feet to

kitchen space, and 500 square feet to storage and 2 large public restrooms. Store lots have sufficient frontage and depth to permit adequate drive-in parking

facilities on one or more sides of each store. Each store typically includes 3 or 4 islands of gasoline dispensers and storage tanks having a capacity of

24,000 to 36,000 gallons of gasoline. The merchandising display in each store follows a standard layout designed to encourage a flow of customer traffic

through all sections of the store. All stores are air-conditioned and have modern refrigeration facilities. Nearly all the store locations feature the

Company's bright red and yellow pylon sign and façade, both of which display the name and service mark of the Company.

All Casey’s General Stores remain open at least sixteen hours per day, seven days a week. Most store locations are open from 6:00 a.m. to 11:00 p.m.,

although hours of operation may be adjusted on a store-by-store basis to accommodate customer traffic patterns. The Company requires that all stores

maintain a bright, clean interior and provide prompt checkout service. It is the Company's policy not to permit the installation of electronic games or sale

of adult magazines on store premises.

Store Locations

The Company traditionally has located its stores in small towns not served by national-chain convenience stores. Management believes that a

Casey’s General Store provides a service not otherwise available in small towns and that a convenience store in an area with limited population can be

profitable if it stresses sales volume and competitive prices. The Company’s store site selection criteria emphasize the population of the immediate area

and daily highway traffic volume. Management believes that, if there is no competing store, a Casey’s General Store may operate profitably at a highway

location in a community with a population of as few as 500.

Gasoline Operations

Gasoline sales are an important part of the Company’s revenue and earnings. Approximately 71% of Casey’s net sales for the year ended April 30, 2006

were derived from the retail sale of gasoline. The following table summarizes gasoline sales by Corporate Stores for the three fiscal years ended April 30, 2006:

Number of gallons sold

1,098,273,109

1,014,685,967

Year ended April 30,

2006

2005

2004

972,194,815

Total retail gasoline sales

2,489,280,382

1,866,729,486

1,452,542,505

Percentage of net sales

Gross profit percentage

Average retail price per gallon

70.8%

5.1%

$2.27

Average gross profit margin per gallon

11.45¢

66.6%

5.9%

$1.84

10.78¢

62.5%

6.8%

$1.49

10.20¢

Average number of gallons sold per

Corporate Store*

802,451

777,002

756,069

_____________________________

*Includes only those stores in operation at least one full year before commencement of the periods indicated.

Retail prices of gasoline increased during the year ended April 30, 2006. The total number of gallons sold by the Company during this period also

increased, primarily as the result of the increased number of Corporate Stores in operation and the Company’s efforts to price its retail gasoline competitively

in the market area served by a particular store. For additional information concerning the Company’s gasoline operations, see Item 7 herein.

Distribution and Wholesale Arrangements

The Marketing Company supplies all Corporate Stores and all Franchise Stores with groceries, food, health and beauty aids, and general

merchandise from the Casey’s Distribution Center. The stores place orders for merchandise through a telecommunications link-up to the computer at

the Company’s headquarters in Ankeny, and weekly shipments are made from the Casey’s Distribution Center by Company-owned delivery trucks. The

Marketing Company charges Franchise Stores processing and shipping fees for each order filled by the Casey’s Distribution Center. The efficient service

area of the Casey’s Distribution Center is a radius of approximately 500 miles, which encompasses all of the Company's existing and proposed stores.

The Marketing Company’s only wholesale sales are to Franchise Stores, to which it sells groceries; prepared sandwiches; ingredients and supplies

for donuts, sandwiches, and pizza; health and beauty aids; general merchandise; and gasoline. Although the Company derives income from this activity,

it makes such sales, particularly gasoline sales, at narrow profit margins to promote competitiveness and increase sales to Franchise Stores.

In fiscal 2006, the Company purchased directly from manufacturers approximately 90% of the food and nonfood items sold from the Casey’s

Distribution Center. It is the Company’s practice, with few exceptions, not to enter into contracts with any of the suppliers of products sold by Casey’s

General Stores. Management believes that the absence of such contracts is customary in the industry for purchasers such as the Company and enables

the Company to respond flexibly to changing market conditions.

Franchise Operations

Casey’s has franchised Casey’s General Stores since 1970. In addition to generating income for Casey's, franchising historically enabled Casey’s

to obtain desirable store locations from persons who have preferred to become franchisees rather than to sell or lease their locations to Casey’s. Franchising

also enabled Casey’s to expand its system of stores at a faster rate, thereby achieving operating efficiencies in its warehouse and distribution system as

well as greater identification in its market area. As the Company has grown and strengthened its financial resources, the advantages of franchising have

decreased in importance. In recent years management has acquired a number of Franchise Stores by leasing or purchasing such stores from the franchisees.

As of April 30, 2006, there were a total of 14 franchisees operating 19 Franchise Stores.

All franchisees currently pay Casey’s a royalty fee equal to 3% of gross receipts derived from total store sales excluding gasoline, subject to a

minimum monthly royalty of $300. Casey’s currently assesses a royalty fee of $0.018 per gallon on gasoline sales, although it has discretion to increase this

amount to 3% of retail gasoline sales. In addition, franchisees pay Casey's a sign and façade rental fee. The franchise agreements do not authorize Casey’s

to establish the prices to be charged by franchisees. Further, except with respect to certain supplies and items provided in connection with the opening of

each store, each franchisee has unlimited authority to purchase supplies and inventory from any supplier, provided the products meet the Company’s

quality standards. Franchise agreements typically contain a noncompetition clause that restricts the franchisee's ability to operate a convenience-style

store in a specified area for a period of two or three years following termination of the agreement.

Personnel

On April 30, 2006, the Company had 6,024 full-time employees and 9,668 part-time employees. The Company has not experienced any work

stoppages. There are no collective bargaining agreements between the Company and any of its employees.

Competition

The Company’s business is highly competitive. Food, including prepared foods, and nonfood items similar or identical to those sold by the

Company are generally available from various competitors in the communities served by Casey’s General Stores. Management believes its stores located

in small towns compete principally with other local grocery and convenience stores; similar retail outlets; and, to a lesser extent, prepared food outlets,

restaurants, and expanded gasoline stations offering a more limited selection of grocery and food items for sale. Stores located in more heavily populated

communities may compete with local and national grocery and drug store chains, expanded gasoline stations, supermarkets, discount food stores, and

traditional convenience stores. Convenience store chains competing in the larger towns served by Casey’s General Stores include 7-Eleven, Quik Trip,

Kwik Trip, and regional chains. Some of the Company’s competitors have greater financial and other resources than does the Company. These competitive

factors are discussed further in Item 7 of this Form 10-K.

Service Marks

The name “Casey’s General Store” and the service mark consisting of the Casey’s design logo (with the words “Casey’s General Store”) are

registered service marks of Casey’s under federal law. Management believes these service marks are of material importance in promoting and advertising

the Company’s business.

Government Regulation

The United States Environmental Protection Agency and several states, including Iowa, have established requirements for owners and operators

of underground gasoline storage tanks (USTs) with regard to (i) maintenance of leak detection, corrosion protection, and overfill/spill protection systems;

(ii) upgrade of existing tanks; (iii) actions required in the event of a detected leak; (iv) prevention of leakage through tank closings; and (v) required gasoline

inventory recordkeeping. Since 1984, new Corporate Stores have been equipped with noncorroding fiberglass USTs, including some with double-wall construction,

overfill protection, and electronic tank monitoring. The Company currently has 2,753 USTs, 2,473 of which are fiberglass and 280 are steel. Management

currently believes substantially all capital expenditures for electronic monitoring, cathodic protection, and overfill/spill protection to comply with the

existing UST regulations have been completed. Additional regulations or amendments to the existing UST regulations could result in future expenditures.

Several states in which the Company does business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation

costs incurred by UST owners, including the Company. In each of the years ended April 30, 2006 and 2005, the Company spent approximately $1,519,000 and

$1,414,000 respectively, for assessments and remediation. Substantially all of these expenditures have been submitted for reimbursement from state-sponsored

trust fund programs. As of April 30, 2006, approximately $8,372,000 has been received from such programs since inception. Such amounts are typically subject

to statutory provisions requiring repayment of the reimbursed funds for noncompliance with upgrade provisions or other applicable laws. At April 30, 2006, the

Company had an accrued liability of approximately $200,000 for estimated expenses related to anticipated corrective actions or remediation efforts, including

relevant legal and consulting costs. Management believes the Company has no material joint and several environmental liability with other parties.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described in this report before making a decision to invest in our securities. The risks and uncertainties

described are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial could negatively

impact our results of operations or financial condition in the future. If any of such risks actually occur, our business, financial condition, and/or results of operations

could be materially adversely affected. In that case, the trading price of our securities could decline and you might lose all or part of your investment.

The convenience store industry is highly competitive.

Risks Related to Our Industry

The industry and geographic areas in which we operate are highly competitive and marked by ease of entry and constant change in the number

and type of retailers offering the products and services found in our stores. We compete with other convenience store chains, gasoline stations, supermarkets,

drugstores, discount stores, club stores, and mass merchants. In recent years, several nontraditional retailers, such as supermarkets, club stores, and

mass merchants have impacted the convenience store industry by entering the gasoline retail business. These nontraditional gasoline retailers have

obtained a significant share of the motor fuels market, and their market share is expected to grow. In some of our markets, our competitors have been in

existence longer and have greater financial, marketing, and other resources than we do. As a result, our competitors may be able to respond better to changes

in the economy and new opportunities within the industry. To remain competitive, we must constantly analyze consumer preferences and competitors’

offerings and prices to ensure we offer convenience products and services consumers demand at competitive prices. We must also maintain and upgrade our

customer service levels, facilities, and locations to remain competitive and attract customer traffic. Major competitive factors include, among others, location,

ease of access, gasoline brands, pricing, product and service selections, customer service, store appearance, cleanliness, and safety.

The volatility of wholesale petroleum costs could adversely affect our operating results.

Over the past three fiscal years, our gasoline revenue accounted for approximately 67% of total revenues and our gasoline gross profit accounted for

approximately 24% of total gross profit. Crude oil and domestic wholesale petroleum markets are marked by significant volatility. General political conditions,

acts of war or terrorism, and instability in oil producing regions, particularly in the Middle East and South America, could significantly affect crude oil supplies

and wholesale petroleum costs. In addition, the supply of gasoline and our wholesale purchase costs could be adversely affected in the event of shortage, which

could result from, among other things, lack of capacity at United States oil refineries or the absence of gasoline contracts that guarantee an uninterrupted,

unlimited supply of gasoline. Significant increases and volatility in wholesale petroleum costs could result in significant increases in the retail price of petroleum

products and in lower gasoline average margin per gallon. Increases in the retail price of petroleum products could adversely affect consumer demand for

gasoline. Volatility makes it difficult to predict the impact that future wholesale cost fluctuations will have on our operating results and financial condition.

These factors could adversely affect our gasoline gallon volume, gasoline gross profit, and overall customer traffic, which in turn would impact our sales of

grocery and general merchandise and prepared food products.

Wholesale cost increases of tobacco products could impact our operating results.

Sales of tobacco products have averaged approximately 10% of our total revenue over the past three fiscal years, and our tobacco gross profit

accounted for approximately 12.8% of total gross profit for the same period. Significant increases in wholesale cigarette costs, tax increases on tobacco products,

and national and local campaigns to discourage smoking in the United States may have an adverse effect on unit demand for cigarettes domestically. In

general, we attempt to pass price increases on to our customers. Due to competitive pressures in our markets, however, we may not always be able to do so.

These factors could adversely affect our retail price of cigarettes, cigarette unit volume and revenues, merchandise gross profit, and overall customer traffic.

Unfavorable weather conditions could adversely affect our business.

Risks Related to Our Business

All of our stores are located in the Midwest region of the United States, which is susceptible to thunderstorms, extended periods of rain, ice

storms, and heavy snow. Inclement weather conditions could damage our facilities or could have a significant impact on consumer behavior, travel, and

convenience store traffic patterns as well as our ability to operate our locations. In addition, we typically generate higher revenues and gross margins

during warmer weather months, which fall within our first and second fiscal quarters. If weather conditions are not favorable during these periods, our

operating results and cash flow from operations could be adversely affected.

We may not be able to identify, acquire, and integrate new stores, which could adversely affect our ability to grow our business.

An important part of our recent growth strategy has been to acquire other convenience stores that complement our existing stores or broaden our geographic

presence. From May 1, 2005 through April 30, 2006 we acquired 67 convenience stores. The transactions included the acquisition of 49 stores in Nebraska,

Kansas, and Iowa from Gas ‘N Shop, Inc. We closed 10 of the Gas ‘N Shop stores because they were in direct competition with existing Casey’s stores in

the same market areas. We expect to continue pursuing acquisition opportunities as an element of our growth strategy.

Acquisitions involve risks that could cause our actual growth or operating results to differ materially from our expectations or the expectations

of securities analysts:

•

We may not be able to identify suitable acquisition candidates or acquire additional convenience stores on favorable terms. We compete with

others to acquire convenience stores. We believe this competition may increase and could result in decreased availability or increased

prices for suitable acquisition candidates. It may be difficult to anticipate the timing and availability of acquisition candidates.

During the acquisition process we may fail or be unable to discover some of the liabilities of companies or businesses we acquire.

These liabilities may result from a prior owner's noncompliance with applicable federal, state, or local laws.

Acquired convenience stores may not perform as we expect or we may not be able to obtain the cost savings and financial improvements we anticipate.

We are subject to state and federal environmental and other regulations.

Our business is subject to extensive governmental laws and regulations including but not limited to environmental regulations, employment

laws and regulations, regulations governing the sale of alcohol, tobacco, and lottery products, minimum wage requirements, working-condition require-

ments, public accessibility requirements, citizenship requirements, and other laws and regulations. A violation or change of these laws could have a

material adverse effect on our business, financial condition, and results of operations.

Under various federal, state, and local laws, regulations, and ordinances, we may, as the owner/operator of our locations, be liable for the

costs of removal or remediation of contamination at these or our former locations, whether or not we knew of, or were responsible for, the presence of such

contamination. The failure to properly remediate such contamination may subject us to liability to third parties and may adversely affect our ability to

sell or lease such property.

Compliance with existing and future environmental laws regulating underground storage tanks may require significant capital expenditures and

increased operating and maintenance costs. The remediation costs and other costs required to clean up or treat contaminated sites could be substantial.

We pay tank registration fees and other taxes to state trust funds established in our operating areas in support of future remediation obligations.

These state trust funds are expected to pay or reimburse us for remediation expenses less a deductible. To the extent third parties do not pay

for remediation as we anticipate, we will be obligated to make these payments, which could materially adversely affect our financial condition and results

of operations. Reimbursements from state trust funds will be dependent on the maintenance and continued solvency of the various funds.

In the future, we may incur substantial expenditures for remediation of contamination that has yet to be discovered at existing locations or

at locations we may acquire. We cannot assure you that we have identified all environmental liabilities at all of our current and former locations; that

material environmental conditions not known to us do not exist; that future laws, regulations, or ordinances will not impose material environmental liability

on us; or that a material environmental condition does not otherwise exist at any one or more of our locations. In addition, failure to comply with any

environmental laws, regulations, or ordinances or an increase in regulations could adversely affect our operating results and financial condition.

State laws regulate the sale of alcohol, tobacco, and lottery products. A violation or change of these laws could adversely affect our business,

financial condition, and results of operations because state and local regulatory agencies have the power to approve, revoke, suspend, or deny applications

for and renewals of permits and licenses relating to the sale of these products or to seek other remedies.

Any appreciable increase in income, overtime pay, or the statutory minimum wage rate, or adoption of mandated healthcare benefits would

result in an increase in our labor costs. Such cost increase or the penalties for failing to comply with such statutory minimum could adversely affect our

business, financial condition, and results of operations.

Any issuance of shares of our common stock in the future could have a dilutive effect on your investment.

Other Risks

We could issue additional shares for investment, acquisition, or other business purposes. Even if there is not an immediate need for capital, we may

choose to issue securities to sell in public or private equity markets if and when conditions are favorable. Raising funds by issuing securities would dilute the

ownership interests of our existing stockholders. Additionally, certain types of equity securities we may issue in the future could have rights, preferences, or

privileges senior to the rights of existing holders of our common stock.

The market price for our common stock has been and may in the future be volatile, which could cause the value of your investment to decline.

Securities markets worldwide experience significant price and volume fluctuations. This market volatility could significantly affect the market

price of our common stock without regard to our operating performance. In addition, the price of our common stock could be subject to wide fluctuations

in response to these and other factors:

•

A deviation in our results from the expectations of public market analysts and investors.

Statements by research analysts about our common stock, company, or industry.

Changes in market valuations of companies in our industry and market evaluations of our industry generally.

Additions or departures of key personnel.

Actions taken by our competitors.

Sales of common stock by the Company, senior officers, or other affiliates.

Other general economic, political, or market conditions, many of which are beyond our control.

The market price of our common stock will also be affected by our quarterly operating results and quarterly comparable store sales growth, which

may be expected to fluctuate from quarter to quarter. The following are factors that may affect our quarterly results and comparable store sales: general,

regional, and national economic conditions; competition; unexpected costs; changes in pricing, consumer trends, and the number of stores we open

and/or close during any given period; costs of compliance with corporate governance, and Sarbanes-Oxley requirements. Other factors are discussed

throughout Management's Discussion and Analysis of Financial Condition and Results of Operations. You may not be able to resell your shares of our

common stock at or above the price you pay.

Our charter documents include provisions that may have the effect of preventing or hindering a change in control and adversely affecting the market

price of our common stock.

Our articles of incorporation give our board of directors the authority to issue up to 1 million shares of preferred stock and to determine the

rights and preferences of the preferred stock without obtaining stockholder approval. The existence of this preferred stock could make it more difficult or

discourage an attempt to obtain control of the Company by means of a tender offer, merger, proxy contest, or otherwise. Furthermore, this preferred

stock could be issued with other rights, including economic rights, senior to our common stock, thereby having a potentially adverse effect on the market

price of our common stock. At present, we have no plans to issue any preferred stock.

Other provisions of our articles of incorporation and bylaws and of Iowa law could make it more difficult for a third party to acquire us or hinder

a change in management, even if doing so would be beneficial to our stockholders. For example, Section 409.1110 of the Iowa Business Corporation Act

prohibits publicly held Iowa corporations to which it applies from engaging in a “business combination” with an “interested stockholder” for a period of

three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed

manner. This provision could discourage others from bidding for our shares and could, as a result, reduce the likelihood of an increase in our stock price

that would otherwise occur if a bidder sought to buy our stock.

These governance provisions could affect the market price of our common stock. We may, in the future, adopt other measures that could have

the effect of delaying, deferring, or preventing an unsolicited takeover, even if such a change in control were at a premium price or favored by a majority

of unaffiliated stockholders. These measures may be adopted without any further vote or action by our stockholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

The Company owns its Corporate Headquarters and Distribution Center operations on a 45-acre site in Ankeny, Iowa. This facility consists of

approximately 375,000 square feet, including a central Corporate Headquarters office building, Distribution Center, and vehicle service and maintenance

center. The facility was completed in February 1990 and placed in full service at that time. The Company recently completed construction of improvements

to this facility, including the addition of 98,000 square feet to the Distribution Center, 20,000 square feet of office space, additional paving for truck parking

and necessary drainage and landscaping improvements.

On April 30, 2006, Casey’s owned the land at 1,317 locations and the buildings at 1,329 locations and leased the land at 77 locations and the

buildings at 65 locations. Most of the leases provide for the payment of a fixed rent plus property taxes and insurance and maintenance costs. Generally,

the leases are for terms of ten to twenty years with options to renew for additional periods or options to purchase the leased premises at the end of the

lease period.

ITEM 3.

LEGAL PROCEEDINGS

The Company from time to time is involved in legal and administrative proceedings or investigations arising from the conduct of its business

operations, including contractual disputes, environmental contamination or remediation issues, employment or personnel matters, personal injury and

property damage claims and claims by federal, state, and local regulatory authorities relating to the sale of products pursuant to licenses and permits

issued by those authorities. Claims for compensatory or exemplary damages in those actions may be substantial. While the outcome of such litigation,

proceedings, investigations, or claims is never certain, it is the opinion of management, after taking into consideration legal counsel’s assessment and the

availability of insurance proceeds and other collateral sources to cover potential losses, that the ultimate disposition of such matters currently pending or

threatened, individually or cumulatively, will not have a material adverse effect on the Company’s consolidated financial position and results of operation.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock

Casey’s common stock trades on the Nasdaq National Market System under the symbol CASY. The 50,368,662 shares of common stock outstanding

at April 30, 2006 had a market value of $1.1 billion, and there were 2,663 shareholders of record.

Common Stock Market Prices

Calendar

2004

High

Low

2005

High

Low

2006

High

Low

$ 18.95

$ 15.24

18.30

18.79

20.00

15.00

15.50

16.68

$ 19.67

$ 15.98

20.86

23.25

26.09

16.53

19.33

20.19

$ 27.20

$ 22.02

25.57

20.15

Dividends

The Company began paying cash dividends during fiscal 1991.The dividends paid in fiscal 2006 totaled $0.18 per share. The dividends paid in

fiscal 2005 totaled $0.195 per share, which included a dividend of $0.035 declared in the fourth quarter of fiscal 2004 and paid in fiscal 2005. Historically,

the Company recorded dividends at the time of payment, which typically followed by several weeks the date on which dividends were declared. On

May 1, 2004, the Company began recording dividends as of the date of declaration. As a result, the Company’s records show two quarterly dividends paid

in the first quarter of fiscal 2005, the first of which ($0.035) was for the fourth quarter of fiscal 2004 and the second of which ($0.04) was for the first quarter of

fiscal 2005. The Board of Directors recently declared a quarterly dividend of $0.05, payable August 15, 2006 to shareholders of record on August 1, 2006.

The Board expects to review the dividend every year at its June meeting.

The cash dividends declared by the Company during the calendar years 2004-06 have been as follows:

Calendar

Cash dividend

Calendar

Cash dividend

Calendar

Cash dividend

2004

declared

$ 0.035

0.04

$ 0.155

2005

declared

$ 0.04

0.045

$ 0.175

2006

declared

$ 0.045

0.05

ITEM 6. SELECTED FINANCIAL DATA

(In thousands, except per share amounts)

Statement of Income Data

Net sales

Franchise revenue

Cost of goods sold

Operating expenses

Depreciation and amortization

Interest, net

Earnings from continuing operations

before income taxes

Federal and state income taxes

Net earnings from continuing operations

Loss on discontinued operations,

net of tax benefit

Cumulative effect of accounting change,

net of tax benefit

Net earnings

Basic

Earnings from continuing operations

Loss on discontinued operations

Cumulative effect of accounting change,

net of tax benefit

Net earnings

Diluted

Earnings from continuing operations

Loss on discontinued operations

Cumulative effect of accounting change,

net of tax benefit

Net earnings

Weighted average number of common

shares outstanding—basic

Weighted average number of common

shares outstanding—diluted

Years ended April 30,

2006

2005

2004

$ 3,514,464

$ 2,803,593

$ 2,323,762

681

3,515,145

2,987,505

363,443

57,185

8,896

98,116

35,176

62,940

1,389

1,083

1,065

2,804,658

2,346,295

328,472

51,979

10,739

67,173

24,831

42,342

5,589

1,669

2,325,431

1,903,466

305,306

48,213

12,398

56,048

18,203

37,845

1,379

--------

60,468

36,753

36,466

1.25

.03

.02

1.20

1.24

.03

.02

1.19

50,310

50,610

.84

.11

--------

.73

.84

.11

--------

.73

50,115

50,284

.76

.03

--------

.73

.76

.03

--------

.73

49,876

50,041

Dividends paid per common share

0.18

0.195

0.13

Balance Sheet Data

Current assets

Total assets

Current liabilities

Long-term debt

Shareholders’ equity

Years ended April 30,

2006

2005

2004

191,406

142,430

146,807

987,539

243,696

106,512

523,190

870,909

170,127

123,064

469,137

834,586

145,840

144,158

439,794

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands)

The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the selected

historical consolidated financial data and consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K.

Overview

The Company derives its revenue from retail sales of food (including freshly prepared foods such as pizza, doughnuts, and sandwiches),

beverages, and nonfood products (including health and beauty aids, tobacco products, automotive products, and gasoline) by Corporate Stores and

wholesale sales of certain merchandise and gasoline to Franchise Stores. The Company generates relatively minor revenues from continuing monthly

royalties based on sales by Franchise Stores; sign and façade rental fees; and the provision of certain maintenance, transportation, and construction

services to the Company’s franchisees. A typical store generally is not profitable for its first year of operation due to start-up costs and usually will attain

representative levels of sales and profits during its third or fourth year of operation.

Casey’s measures performance using trend analysis and same-store comparisons on net sales and gross profit, with a focus on the following

three categories of products sold by Corporate Stores: gasoline, grocery & other merchandise, and prepared food & fountain. Comparisons are also made

on operating expenses. Fluctuations in operating expenses are compared with the increase or decrease in gross profit. Wages are the primary component

of operating expenses, and management believes that the Company has appropriately aligned store manager compensation with store performance.

Store growth is a priority of the Company. Casey’s evaluates the location of third-party purchases and sites for new construction based on

expected financial results and return on investment. Casey’s purchased 55 stores and built 15 in fiscal 2006.

Fiscal 2006 Compared with Fiscal 2005

Net sales for fiscal 2006 increased 25.4% to $3,514,464, primarily due to a 23.2% increase in gas prices and the net addition of 55 Corporate

Stores. Retail gasoline sales for the fiscal year were $2,489,280, an increase of 33.3%, and gallons sold increased 8.2% to 1,098,273. Inside sales (grocery

& other merchandise and prepared food & fountain) increased 9.9% to $1,008,260.

Cost of goods sold as a percentage of net sales was 85% for fiscal 2006 compared with 83.7% for the prior year. The increase was caused by a

decrease in the gas margin to 5.1% in fiscal 2006 from 5.9% in fiscal 2005 due to the higher cost of gasoline. The grocery & other merchandise margin

increased to 31.9% in fiscal 2006 from 30.9% in fiscal 2005 due to the enhancing of the point-of-sale technology. The prepared food & fountain margin

increased to 63% from 60.4%, primarily due to the relatively low cost of cheese during much of the year and the addition of profitable new products.

Operating expenses increased 10.6% in fiscal 2006, driven by an increase in bank fees resulting from customers’ greater use of credit cards

and higher retail gasoline prices and an increase in the number of Corporate Stores. Higher gasoline prices decreased the operating expense ratio to

10.3% of net sales in fiscal 2006 from 11.7% in the prior year.

Depreciation and amortization expense increased 10% to $57,185 in fiscal 2006 from $51,979 in fiscal 2005. The increase was due to capital

expenditures made in fiscal 2006.

The effective tax rate decreased 1.1% to 35.9% in fiscal 2006 from 37.0% in fiscal 2005. The decrease in the effective tax rate is primarily the

result of the valuation of deferred tax assets relating to state income tax depreciation and utilizable net operating losses, which exceeded an increase in

the tax contingency reserve.

Net earnings from continuing operations increased to $62,940 in fiscal 2006 from $42,342 in fiscal 2005. The increase was due primarily to the

increase in the average margin per gallon of gasoline sold (to 11.45¢) from the prior year (10.78¢) and the increase in average margin on both prepared

food & fountain and grocery & other merchandise sales.

Discontinued operations for fiscal 2006 resulted in a loss of $1,389 (net of $888 income tax benefit) compared with a loss of $5,589 (net of

$3,574 income tax benefit) for fiscal 2005. The stores included in discontinued operations had total revenues of $15,534 and $47,644 and pretax operating

losses of $715 and $2,333 for fiscal 2006 and 2005, respectively. Included in the loss on discontinued operations were losses on disposal of $1,562 (net of

$609 tax benefit) for the year ended April 30, 2006 and $6,830 (net of $2,664 tax benefit) for the year ended April 30, 2005. The losses on disposal for the

years ended April 30, 2006 and 2005 included write-downs of stores to net realizable value as well as gains and losses on sales of stores.

Fiscal 2005 Compared with Fiscal 2004

Net sales for fiscal 2005 increased 20.6% to $2,803,593, primarily due to a 23.1% increase in gas prices and the net addition of 17 Corporate

Stores. Retail gasoline sales for the fiscal year were $1,866,729, an increase of 28.5%, and gallons sold increased 4.4% to 1,014,686. Inside sales (grocery

& other merchandise and prepared food & fountain) increased 8.4% to $917,049.

Cost of goods sold as a percentage of net sales was 83.7% for fiscal 2005 compared with 81.9% for the prior year. The increase was caused by a

decrease in the gas margin to 5.9% in fiscal 2005 from 6.8% in fiscal 2004 due to the higher cost of gasoline. The grocery and other merchandise margin

decreased slightly to 30.9% in fiscal 2005 from 31.2% while the prepared food & fountain margin decreased to 60.4% from 60.7%, primarily due to the high

cost of cheese during much of the year.

Operating expenses increased 7.6% in fiscal 2005, driven by an increase in bank fees resulting from customers’ greater use of credit cards and

higher retail gasoline prices, and an increase in the number of Corporate Stores. Higher gasoline prices decreased the operating expense ratio to 11.7%

of net sales in fiscal 2005 from 13.1% in the prior year.

Depreciation and amortization expense increased 7.8% to $51,979 in fiscal 2005 from $48,213 in fiscal 2004. The increase was due to capital

expenditures made in fiscal 2005.

The effective tax rate increased 4.5% to 37.0% in 2005 from 32.5% in 2004. The provision for income taxes for fiscal 2004 included one-time tax

benefits of approximately $2,500. Included in the one-time benefits were approximately $200 of legislative tax changes, $1,100 in adjustment of prior estimated

federal and state credits to actual, $500 of available credits and state tax benefits previously not taken, and $700 due to the resolution of tax exposure items.

Net earnings from continuing operations increased to $42,342 in fiscal 2005 from $37,845 in fiscal 2004. The increase was due primarily to the

increase in the gross profit margin per gallon of gasoline sold (to 10.78¢) from the prior year (10.2¢).

Discontinued operations for fiscal 2005 resulted in a loss of $5,589 (net of $3,574 income tax benefit) compared to a loss of $1,379 (net of $881

income tax benefit) for fiscal 2004. The stores included in discontinued operations had total revenues of $47,644 and $45,158 and pretax operating losses

of $2,333 and $2,260 for fiscal 2005 and 2004, respectively. Included in the loss on discontinued operations were losses on disposal of $6,830 (net of

$2,664 tax benefit) for the year ended April 30, 2005. No losses were recorded on disposal for the year ended April 30, 2004. The losses on disposal for

the year ended April 30, 2005 included write-downs of stores to net realizable value as well as gains and losses on sales of stores.

COMPANY NET SALES AND GROSS PROFITS

Net sales (1)

Gasoline

Grocery & other merchandise

Prepared food & fountain

Other

Gross profits (2)

Gasoline

Grocery & other merchandise

Prepared food & fountain

Other

SAME-STORE COMPARISONS (3)

Corporate Stores

Average retail sales

Average retail inside sales

Average gross profit on inside items

Average retail sales of gasoline

Average gross profit on gasoline (4)

Average operating income (5)

Average number of gallons sold

Franchise Stores

Average franchise revenue (6)

Years ended April 30,

2006

2005

2004

$ 2,489,280

$ 1,866,729 $ 1,452,543

779,253

229,007

16,924

712,570

204,479

19,815

664,426

181,674

25,119

$ 3,514,464

$ 2,803,593

$ 2,323,762

125,797

109,351

99,144

248,726

144,312

8,124

220,521

123,410

4,016

207,329

110,353

3,470

526,959

457,298

420,296

Years ended April 30,

2006

2005

2004

2,555

2,134

1,811

738

281

1,817

105

802

702

259

1,431

778

667

248

1,144

766

(1) Net sales exclude franchise revenue and charges to franchisees for certain maintenance, transportation, and construction services

provided by the Company.

(2) Gross profits represent net sales less cost of goods sold. Gross profit is given before charge for depreciation and amortization.

(3) Same-store comparisons include only those stores that had been in operation for at least one full year on April 30 of the fiscal year indicated.

(4) Retail gasoline profit margins have a substantial impact on the Company’s net income. Profit margins on gasoline sales can be adversely

affected by factors beyond the control of the Company, including oversupply in the retail gasoline market, uncertainty or volatility in the

wholesale gasoline market, and price competition from other gasoline marketers. Any substantial decrease in profit margins on retail gasoline

sales or the number of gallons sold could have a material adverse effect on the Company’s earnings.

(5) Average operating income represents retail sales less cost of goods sold, including cost of merchandise, financing costs, and operating expenses

attributable to a particular store; it excludes federal and state income taxes, operating expenses of the Company not attributable to a particular

store, and payments by the Company to its benefit plans.

(6) Average franchise revenue includes a royalty fee equal to 3% of gross receipts derived from store sales of nongasoline items, a royalty fee of

$0.018 per gallon on gasoline sales, and sign and façade rental fees.

Critical Accounting Policies

Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company’s financial

condition and results of operations and require management’s most difficult, subjective judgments, often because of the need to estimate the effects of

inherently uncertain factors.

Inventory

Inventories, which consist of merchandise and gasoline, are stated at the lower of cost or market. For gasoline, cost is determined through the use

of the first-in, first-out (FIFO) method. For merchandise inventories, cost is determined through the use of the last-in, first-out (LIFO) method applied to

inventory values determined primarily by the FIFO method for warehouse inventories and the retail inventory method (RIM) for store inventories, except

for cigarettes, beer, pop, and prepared foods, which are valued at cost. RIM is an averaging method widely used in the retail industry because of its practicality.

Under RIM, inventory valuations are at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to sales. Inherent in the

RIM calculations are certain management judgments and estimates that could affect the ending inventory valuation at cost and the resulting gross margins.

Vendor allowances include rebates and other funds received from vendors to promote their products. The Company often receives such allowances on

the basis of quantitative contract terms that vary by product and vendor or directly on the basis of purchases made. Rebates are recognized as reductions of

inventory costs when purchases are made; reimbursements of an operating expense (e.g., advertising) are recorded as reductions of the related expense.

During fiscal 2004, the Company implemented a change in accounting principle from valuing retail gasoline inventories at the lower of cost

or market using the LIFO method to using the FIFO method.

Long-lived Assets

The Company periodically monitors under-performing stores for an indication that the carrying amount of assets may not be recoverable.

If the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, including goodwill where applicable, an

impairment loss is recognized. Impairment is based on the estimated fair value of the asset. Fair value is based on management’s estimate of the

amount that could be realized from the sale of assets in a current transaction between willing parties. The estimate is derived from offers, actual sale or

disposition of assets subsequent to year-end, and other indications of asset value. In determining whether an asset is impaired, assets are grouped at the

lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which for the Company is

generally on a store-by-store basis. The Company incurred impairment charges of $600 in fiscal 2006, $1,775 in fiscal 2005, and $400 in fiscal 2004.

Self-insurance

The Company is primarily self-insured for workers’ compensation, general liability, and automobile claims. The self-insurance claim liability

is determined actuarially based on claims filed and an estimate of claims incurred but not yet reported. Actuarial projections of the losses are employed

due to the high degree of variability in the liability estimates. Some factors affecting the uncertainty of claims include the development time frame,

settlement patterns, litigation and adjudication direction, and medical treatment and cost trends. The liability is not discounted. The Company

increased the self-insurance reserve by $1,096 in fiscal 2006 and $2,118 in fiscal 2005.

Liquidity and Capital Resources

Due to the nature of the Company’s business, most sales are for cash; cash from operations is the Company’s primary source of liquidity.

The Company finances its inventory purchases primarily from normal trade credit aided by relatively rapid inventory turnover. This turnover allows the

Company to conduct its operations without large amounts of cash and working capital. As of April 30, 2006, the Company’s ratio of current assets to

current liabilities was .79 to 1, primarily due to a large increase in accounts payable caused by higher priced gasoline. The ratio at April 30, 2005 and at

April 30, 2004 was .84 to 1 and 1.01 to 1, respectively. Management believes that the Company’s current $50,000 bank line of credit together with cash

flow from operations will be sufficient to satisfy the working capital needs of its business.

Net cash provided by operations increased $18,078 (13.9%) in the year ended April 30, 2006, primarily because of an increase in net earnings and

a large increase in accounts payable. This result was partially offset by an increase in inventories. Cash used in investing in the year ended April 30, 2006 rose

$7,539 (8.1%) due to an increase in the purchase of property and equipment and the acquisition of a business. Cash used in financing decreased $9,938

(26.9%), primarily because of a decrease in long-term debt payments.

Capital expenditures represent the single largest use of Company funds. Management believes that by reinvesting in Corporate Stores, the

Company will be better able to respond to competitive challenges and increase operating efficiencies. During fiscal 2006, the Company expended

$104,449 for property and equipment, primarily for the construction, acquisition, and remodeling of Corporate Stores, compared with $95,447 in the

prior year. In fiscal 2007, the Company anticipates expending approximately $125,000, primarily from existing cash and funds generated by operations,

for construction, acquisition, and remodeling of Corporate Stores.

As of April 30, 2006, the Company had long-term debt of $106,512 consisting of $30,000 in principal amount of 7.38% senior notes; $28,000 in

principal amount of senior notes, series A through series F, with interest rates ranging from 6.18% to 7.23%; $45,714 in principal amount of 7.89% senior

notes, series A; $1,392 of mortgage notes payable; and $1,406 of capital lease obligations.

Interest on the 7.38% senior notes is payable on the 29th day of each June and December. Principal of the 7.38% senior notes matures in 21

semi-annual installments beginning December 29, 2010 with the remaining principal payable December 29, 2020 at the rate of 7.38% per annum. The Company

may prepay the 7.38% notes in whole or in part at any time in an amount of not less than $1,000 or in integral multiples of $100 in excess thereof at a

redemption price calculated in accordance with the Note Agreement dated December 1, 1995 between the Company and the purchaser of the 7.38% notes.

Interest on the 6.18% to 7.23% senior notes series A through series F is payable on the 23rd day of each April and October. Principal of the

6.18% to 7.23% senior notes series A through series F matures in various installments beginning April 23, 2004. The Company may prepay the 6.18% to

7.23% senior notes series A through series F in whole or in part at any time in an amount of not less than $1,000 or integral multiples of $100 in excess

thereof at a redemption price calculated in accordance with the Note Agreement dated April 15, 1999 between the Company and the purchasers of the

6.18% to 7.23% senior notes series A through series F.

Interest on the 7.89% series A senior notes is payable semi-annually the 15th day of May and November in each year commencing November

15, 2000. The 7.89% senior notes mature May 15, 2010 with prepayments of principal commencing on May 15, 2004 and each May 15 thereafter to and

including May 15, 2009. The remaining principal is payable at maturity on May 15, 2010. The Company may at any time prepay the 7.89% senior notes in

whole or in part in an amount not less than $2,000 at a redemption price calculated in accordance with the Note Purchase Agreement dated May 1, 2000

between the Company and the purchasers of the 7.89% senior notes.

To date, the Company has funded capital expenditures primarily from the proceeds of the sale of common stock, issuance of 6.25% convertible

subordinated debentures (converted into shares of common stock in 1994), the previously described senior notes, a mortgage note and through funds

generated from operations. Future capital required to finance operations, improvements, and the anticipated growth in the number of Corporate Stores

is expected to come from cash generated by operations, the bank line of credit, and additional long-term debt or other securities as circumstances may

dictate. Such capital needs are not expected to adversely affect liquidity.

The table below presents significant contractual obligations, including interest, of the Company at April 30, 2006:

Senior notes

Mortgage notes

Capital lease obligations

Operating leases

Senior notes

Mortgage notes

Capital lease obligations

Operating leases

2007

2008

2009

2010

23,887

23,725

22,495

17,265

36,009

642

274

890

635

141

470

605

120

251

60,812

25,391

23,638

17,693

2011

17,723

--------

Thereafter

60,643

--------

119

Total

$ 165,738

37,489

2,133

709

17,773

60,762

$ 206,069

Included in mortgage notes for fiscal 2007 in the table above is $23,776 relating to the purchase of the Gas ‘N Shop chain, of which $22,430 may

be paid in future years. The seller has an option at any time to make an immediate sale of any or all of the stores or to lease any of the stores to the Company

for a period of five years and an option at any time during that five-year period to require the Company to purchase any leased store and pay the applicable

purchase price upon forty-five days’ notice. The annual lease payments are equal to 6% of the purchase price of the stores leased and are paid monthly

during the term of the lease. See Note 2 of Notes to Consolidated Financial Statements for additional information regarding the purchase of Gas ‘N Shop.

At April 30, 2006, the Company was partially self-insured for workers’ compensation claims in all 9 states of its marketing territory and

was also partially self-insured for general liability and auto liability under an agreement that provides for annual stop-loss limits equal to or exceeding

approximately $1,000. To facilitate this agreement, letters of credit approximating $7,500 were issued and outstanding at April 30, 2006 and 2005 on the

insurance company’s behalf. The Company renews the letters of credit on an annual basis.

Forward-looking Statements

This Form 10-K contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended and

Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements represent the Company's expectations or beliefs concerning

future events, including (i) any statements regarding future sales and gross profit percentages, (ii) any statements regarding the continuation of historical

trends, and (iii) any statements regarding the sufficiency of the Company’s cash balances and cash generated from operations and financing activities for

the Company’s future liquidity and capital resource needs. The words believe, expect, anticipate, intend, estimate, project and similar expressions are

intended to identify forward-looking statements. The Company cautions that these statements are further qualified by important factors that could cause

actual results to differ materially from those in the forward-looking statements, including without limitations the factors described in this Form 10-K.

Investors are cautioned not to place undue reliance on such forward-looking statements because they speak only of the Company’s views as

of the statement dates. Although the Company has attempted to list the important factors that presently affect the Company’s business and operating

results, the Company further cautions investors that other factors may in the future prove to be important in affecting the Company’s results of operations.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future

events, or otherwise.

In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could

cause the Company’s actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

Competition

The Company’s business is highly competitive and marked by ease of entry and constant change in terms of the numbers and type of retailers

offering the products and services found in Corporate Stores. Many of the food (including prepared foods) and nonfood items similar or identical to those

sold by the Company are generally available from a variety of competitors in the communities served by Corporate Stores, and the Company competes

with other convenience store chains, gasoline stations, supermarkets, drug stores, discount stores, club stores, mass merchants, and fast-food outlets

(with respect to the sale of prepared foods). Sales of such nongasoline items (particularly prepared food items) have contributed substantially to the

Company’s gross profit from retail sales in recent years. Gasoline sales are also intensely competitive. The Company competes for gasoline sales with both

independent and national brand gasoline stations, other convenience store chains, and several non-traditional gasoline retailers such as supermarkets in

specific markets. Some of these other gasoline retailers may have access to more favorable arrangements for gasoline supply then does the Company or

the firms that supply its stores. Some of the Company’s competitors have greater financial, marketing, and other resources than the Company, and, as a

result, may be able to respond better to changes in the economy and new opportunities within the industry.

Gasoline Operations

Gasoline sales are an important part of the Company’s revenue and earnings, and retail gasoline profit margins have a substantial impact on

the Company’s net income. Profit margins on gasoline sales can be affected adversely by factors beyond the control of the Company, including the supply

of gasoline available in the retail gasoline market, uncertainty or volatility in the wholesale gasoline market, increases in wholesale gasoline costs generally

during a period, and price competition from other gasoline marketers. The market for crude oil and domestic wholesale petroleum products is volatile

and is affected by general political conditions and instability in oil producing regions such as the Middle East and South America. The volatility of the

wholesale gasoline market makes it extremely difficult to predict the impact of future wholesale cost fluctuation on the Company’s operating results and

financial conditions. These factors could materially affect the Company’s gasoline gallon volume, gasoline gross profit, and overall customer traffic levels

at Corporate Stores. Any substantial decrease in profit margins on gasoline sales or in the number of gallons sold by Corporate Stores could have a material

adverse effect on the Company’s earnings.

The Company purchases its gasoline from a variety of independent national and regional petroleum distributors. Although in recent years

the Company’s suppliers have not experienced any difficulties in obtaining sufficient amounts of gasoline to meet the Company’s needs, unanticipated

national and international events could result in a reduction of gasoline supplies available for distribution to the Company. Any substantial curtailment

in gasoline supplied to the Company would reduce its gasoline sales. Further, management believes that a significant amount of the Company’s business

results from the patronage of customers primarily desiring to purchase gasoline; accordingly, reduced gasoline supplies could adversely affect the sale of

nongasoline items. Such factors could have a material adverse impact upon the Company’s earnings and operations.

Tobacco Products

Sales of tobacco products represent a significant portion of the Company’s revenues. Significant increases in wholesale cigarette costs and tax increases

on tobacco products as well as national and local campaigns to discourage smoking in the United States could have an adverse effect on the demand for

cigarettes sold by Corporate Stores. The Company attempts to pass price increases on to its customers, but competitive pressures in specific markets may prevent

it from doing so. These factors could materially affect the retail price of cigarettes, the volume of cigarettes sold by Corporate Stores, and overall customer traffic.

Environmental Compliance Costs

The United States Environmental Protection Agency and several of the states in which the Company does business have adopted laws and

regulations relating to underground storage tanks used for petroleum products. Substantial costs have been incurred by the Company in the past to

comply with such laws and regulations, and additional substantial costs may be necessary in the future. Several states in which the Company does

business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation costs. Any reimbursements received in

respect to such costs typically are subject to statutory provisions requiring repayment of the reimbursed funds for any future noncompliance with

upgrade provisions or other applicable laws. Although the Company regularly accrues expenses for the estimated costs related to its future corrective

action or remediation efforts, there can be no assurance that such accrued amounts will be sufficient to pay such costs or that the Company has identified

all environmental liabilities at all of its current store locations. In addition, there can be no assurance that the Company will not incur substantial

expenditures in the future for remediation of contamination or related claims that have not been discovered or asserted with respect to existing store

locations or locations that the Company may acquire in the future, that the Company will not be subject to any claims for reimbursement of funds

disbursed to the Company under the various state programs, and/or that additional regulations or amendments to existing regulations will not require

additional expenditures beyond those presently anticipated.

Seasonality of Sales

Company sales generally are strongest during its first two fiscal quarters (May–October) and weakest during its third and fourth fiscal quarters

(November–April). In the warmer months, customers tend to purchase greater quantities of gasoline and certain convenience items such as beer, soft

drinks, and ice. Difficult weather conditions (such as flooding, prolonged rain, or snowstorms) in any quarter, however, may adversely reduce sales at

affected Corporate Stores and may have an adverse impact on the Company’s earnings for that period.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s exposure to market risk for changes in interest rates relates primarily to its investment portfolio and long-term debt obligations.

The Company places its investments with high-quality credit issuers and, by policy, limits the amount of credit exposure to any one issuer. As stated in its

policy, the Company’s first priority is to reduce the risk of principal loss. Consequently, the Company seeks to preserve its invested funds by limiting

default risk, market risk, and reinvestment risk. The Company mitigates default risk by investing in only high quality credit securities that it believes to be

low risk and by positioning its portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The

portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity. The Company believes an immediate

100 basis point move in interest rates affecting the Company’s floating and fixed rate financial instruments as of April 30, 2006 would have no material

effect on pretax earnings.

The Company has used a variety of derivative instruments such as options and futures to hedge against the volatility of gasoline cost. The

Company is at risk for possible changes in the market value for these derivative instruments. It is anticipated that such risk would be mitigated by price

changes in the underlying hedged items. Market risks associated with all of the Company’s derivative contracts are reviewed regularly by management.

No derivative instruments were used during fiscal year 2006. See Note 1 to the Consolidated Financial Statements included herein for additional information

concerning the Company’s use of such derivative instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Casey’s General Stores, Inc.:

We have audited the accompanying consolidated balance sheets of Casey’s General Stores, Inc. and subsidiaries as of April 30, 2006 and

2005 and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended

April 30, 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an

opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial

statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of

Casey’s General Stores, Inc. and subsidiaries as of April 30, 2006 and 2005 and the results of their operations and their cash flows for each of the

years in the three-year period ended April 30, 2006 in conformity with U.S. generally accepted accounting principles.

We also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness

of the Company’s internal control over financial reporting as of April 30, 2006, based on criteria established in Internal Control—Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated July 7, 2006, expressed an unqualified

opinion on management’s assessment of, and effective operation of, internal control over financial reporting.

Des Moines, Iowa

July 7, 2006

The Board of Directors and Shareholders

Casey’s General Stores, Inc.:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial

Reporting appearing under Item 9A, that Casey’s General Stores, Inc. and subsidiaries (the Company) maintained effective internal control over

financial reporting as of April 30, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of

Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal

control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion

on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial

reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,

evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such

other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal

control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and

fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to

permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company

are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention

or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the

degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Casey’s General Stores, Inc. and subsidiaries maintained effective internal control over financial

reporting as of April 30, 2006 is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the

Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, the Company maintained in all material respects

effective internal control over financial reporting as of April 30, 2006, based on criteria established in Internal Control—Integrated Framework issued by

the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated

balance sheets of Casey’s General Stores, Inc. and subsidiaries as of April 30, 2006 and 2005 and the related consolidated statements of income, shareholders’

equity, and cash flows for each of the years in the three-year period ended April 30, 2006, and our report dated July 7, 2006 expressed an unqualified opinion

on those consolidated financial statements.

Des Moines, Iowa

July 7, 2006

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

Assets

Current assets

Cash and cash equivalents

Receivables

Inventories (Note 1)

Prepaid expenses (Note 6)

Income taxes receivable

Total current assets

Other assets, net of amortization (Note 1)

Goodwill

Property and equipment, at cost

Land

Buildings and leasehold improvements

Machinery and equipment

Leasehold interest in property and equipment (Note 7)

Less accumulated depreciation and amortization

Net property and equipment

Total assets

Liabilities and Shareholders’ Equity

Current liabilities

Current maturities of long-term debt (Note 3)

Accounts payable

Accrued expenses

Property taxes

Self-insurance

Other (Note 10)

Total current liabilities

Long-term debt, net of current maturities (Note 3)

Deferred income taxes (Note 6)

Deferred compensation (Note 8)

Other long-term liabilities

Total liabilities

Shareholders’ equity (Note 4)

Preferred stock, no par value, none issued

Common stock, no par value, 50,368,662 and 50,189,812 shares

issued and outstanding at April 30, 2006 and 2005, respectively

Retained earnings

Total shareholders’ equity

Total liabilities and shareholders’ equity

Commitments and contingencies (Notes 7, 9, and 10)

See accompanying Notes to Consolidated Financial Statements.

2006

75,369

9,672

96,255

7,063

3,047

191,406

6,894

14,414

211,910

457,778

575,109

20,316

1,265,113

490,288

774,825

987,539

51,628

146,121

11,418

15,635

18,894

243,696

106,512

99,929

7,236

6,976

464,349

--------

49,161

474,029

523,190

987,539

April 30,

2005

49,051

7,481

75,392

4,579

5,927

142,430

1,383

4,184

196,840

429,056

537,026

7,187

1,170,109

447,197

722,912

870,909

27,636

100,640

10,483

14,539

16,829

170,127

123,064

102,039

6,542

--------

401,772

--------

46,516

422,621

469,137

870,909

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

Net sales

Franchise revenue

Cost of goods sold

Operating expenses

Depreciation and amortization

Interest, net (Note 3)

Earnings from continuing operations before income taxes

Federal and state income taxes

Net earnings from continuing operations

Loss on discontinued operations, net of tax benefit

Years ended April 30,

2006

2005

2004

3,514,464

2,803,593

2,323,762

681

1,065

1,669

3,515,145

2,804,658

2,325,431

2,987,505

363,443

57,185

8,896

2,346,295

328,472

51,979

10,739

1,903,466

305,306

48,213

12,398

3,417,029

2,737,485

2,269,383

98,116

35,176

62,940

67,173

24,831

42,342

56,048

18,203

37,845

of $888, $3,574, and $881

1,389

5,589

1,379

Cumulative effect of accounting change, net of tax

benefit of $692

Net earnings

Basic

Earnings from continuing operations

Loss on discontinued operations, net of tax benefit

Cumulative effect of accounting change

Net earnings per common share

Diluted

Earnings from continuing operations

Loss on discontinued operations, net of tax benefit

Cumulative effect of accounting change

Net earnings per common share

See accompanying Notes to Consolidated Financial Statements.

1,083

60,468

1.25

0.03

0.02

1.20

1.24

0.03

0.02

1.19

--------

36,753

0.84

0.11

--------

0.73

0.84

0.11

--------

0.73

--------

36,466

0.76

0.03

--------

0.73

0.76

0.03

--------

0.73

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except share and per share amounts)

Balance at April 30, 2003

Net earnings

Payment of dividends

Proceeds from exercise of stock options

(346,750 shares)

Tax benefits related to nonqualified stock options

(Note 3)

Balance at April 30, 2004

Net earnings

Payment of dividends

Proceeds from exercise of stock options

(173,950 shares)

Tax benefits related to nonqualified stock options

(Note 3)

Balance at April 30, 2005

Net earnings

Payment of dividends

Proceeds from exercise of stock options

(178,850 shares)

Tax benefits related to nonqualified stock options

Common

Retained
stock earnings

Total

40,008

--------

365,652

405,660

36,466

(6,479)

36,466

(6,479)

3,643

--------

3,643

504

--------

504

44,155

--------

395,639

439,794

36,753

(9,771)

36,753

(9,771)

1,893

--------

1,893

468

--------

468

46,516

--------

422,621

469,137

60,468

(9,060)

60,468

(9,060)

2,139

--------

2,139

(Note 3)

506

--------

506

Balance at April 30, 2006

49,161

474,029

523,190

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Cash flows from continuing operations

Net earnings from continuing operations

Adjustments to reconcile net earnings to

net cash provided by continuing operations

Cumulative effect of accounting change

Depreciation and amortization

Other amortization

Loss on sale of property and equipment

Deferred income taxes

Changes in assets and liabilities

Receivables

Inventories

Prepaid expenses

Accounts payable

Accrued expenses

Income taxes receivable

Other, net

Net cash provided by continuing operations

Cash flows from investing

Purchase of property and equipment

Payments for acquisition of business

Proceeds from sales of property and equipment

Net cash used in investing activities

Cash flows from financing

Payments of long-term debt

Proceeds from exercise of stock options

Payments of cash dividends

Net cash used in financing activities

Cash flows from discontinued operations

Operating cash flows

Investing cash flows

Net cash flows from discontinued operations

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Cash paid during the year for

Interest (net of amount capitalized)

Income taxes

Noncash investing and financing activities

Property & equipment and goodwill acquired

Years ended April 30,

2006

2005

2004

62,940

42,342

37,845

(1,083)

57,185

1,871

1,757

(2,110)

(2,191)

(20,863)

(2,384)

45,481

4,096

3,386

(267)

147,818

(99,913)

(4,536)

3,915

(100,534)

(20,018)

2,139

(9,060)

(26,939)

509

5,464

5,973

26,318

49,051

75,369

10,657

32,995

--------

51,979

--------

3,041

2,880

(1,730)

2,503

1,813

17,252

7,744

5,423

(3,507)

129,740

(95,447)

--------

2,452

(92,995)

(28,999)

1,893

(9,771)

(36,877)

2,444

852

3,296

3,164

45,887

49,051

11,811

11,303

--------

48,213

--------

1,447

12,288

(9)

(12,636)

(1,802)

18,508

1,546

(8,217)

805

97,988

(72,597)

--------

3,742

(68,855)

(20,868)

3,643

(6,479)

(23,704)

(86)

--------

(86)

5,343

40,544

45,887

12,904

14,158

through installment purchases or business acquisitions

27,458

7,197

11,080

Increase in common stock and increase in

income taxes receivable due to tax benefits

related to nonqualified stock options (Note 3)

See accompanying Notes to Consolidated Financial Statements.

506

468

504

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts)

1. SIGNIFICANT ACCOUNTING POLICIES

Operations Casey’s General Stores, Inc. and its subsidiaries (the Company) operate 1,413 convenience stores in 9 Midwest states. At April 30, 2006,

the Company owned or leased 1,394 of these stores and 19 stores were owned or leased by franchisees. The stores are located primarily in smaller communities,

a majority with populations of less than 5,000. Retail sales in 2006 were distributed as follows: 71% gasoline, 22% grocery & other merchandise, and 7%

prepared food & fountain. The Company’s materials are readily available, and the Company is not dependent on a single supplier or only a few suppliers.

Principles of consolidation The consolidated financial statements include the financial statements of Casey’s General Stores, Inc. and its

wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management

to make estimates and assumptions that affect 1) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

the financial statements and 2) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash equivalents Cash equivalents consist of money market funds. The Company considers all highly liquid investments with a maturity at

purchase of three months or less to be cash equivalents.

Inventories Inventories, which consist of merchandise and gasoline, are stated at the lower of cost or market; in-store inventory (excluding

cigarettes, beer, pop, and prepared foods, which are stated at cost) is determined by the retail method (RIM). Cost is determined using the first-in, first-out

(FIFO) method for gasoline and the last-in, first-out (LIFO) method for merchandise. Below is a summary of the inventory values at April 30, 2006 and 2005:

Gasoline

Merchandise

Fiscal 2006

$ 43,932

70,813

Merchandise LIFO reserve

(18,490)

Fiscal 2005

$ 27,823

64,198

(16,629)

Total inventory

$ 96,255

$ 75,392

Goodwill SFAS No. 142 Goodwill and Other Intangible Assets requires that goodwill and intangible assets with indefinite lives no longer be

amortized to earnings but be tested for impairment at least annually. As of April 30, 2006, there was $14,414 of goodwill, and the test completed at the

fiscal year-end yielded no evidence of impairment.

Store closings and asset impairment The Company writes down property and equipment of stores it is closing to estimated net realizable value at

the time management commits to a plan to close such stores and begins active marketing of the stores. The Company bases the estimated net realizable

value of property and equipment on its experience in utilizing and/or disposing of similar assets and on estimates provided by its own and/or third-party

real estate experts. The results of operations of certain stores are presented as discontinued operations in the accompanying consolidated statements of

earnings in accordance with the provisions of SFAS No. 144, Accounting of the Impairment or Disposal of Long-Lived Assets. Any such store is presented in

discontinued operations beginning in the quarter in which management commits to a plan to close the store and actively markets the store. Operating

results of discontinued operations include related writedowns of stores to estimated net realizable value. The Company does not allocate interest expense

to discontinued operations. Included in the loss on discontinued operations were losses on disposal of $1,562 (net of $609 tax benefit) for the year ended

April 30, 2006. Losses on disposal of $6,830 (net of $2,664 tax benefit) were recorded for the year ended April 30, 2005; there were no losses on disposal for the

year ended April 30, 2004. Assets held for sale at April 30, 2006 and 2005 were $1,225 and $13,723, respectively, and are included in net property & equipment.

The Company periodically monitors underperforming stores for an indication that the carrying amount of assets may not be recoverable. If the

sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, including goodwill where applicable, an impairment

loss is recognized. Impairment is based on the estimated fair value of the asset. Fair value is based on management’s estimate of the amount that could

be realized from the sale of assets in a current transaction between willing parties. The estimate is derived from offers, actual sale or disposition of assets

subsequent to year-end, and other indications of asset value. In determining whether an asset is impaired, assets are grouped at the lowest level for which

there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which for the Company is generally on a store-by-store

basis. The Company incurred impairment charges of $600 in fiscal 2006, $1,775 in fiscal 2005, and $400 in fiscal 2004. Impairment charges are a component of

operating expenses.

Depreciation and amortization Depreciation of property and equipment and amortization of capital lease assets are computed principally by

the straight-line method over the following estimated useful lives:

Buildings

Machinery and equipment

25-40 years

5-30 years

Leasehold interest in property and equipment

Lesser of term of lease or life of asset

Leasehold improvements

Lesser of term of lease or life of asset

Excise taxes Excise taxes approximating $377,000, $365,000, and $345,000 collected from customers on retail gasoline sales are included

in net sales for fiscal 2006, 2005, and 2004, respectively.

Income taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the

financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Revenue recognition The Company recognizes retail sales of gasoline, grocery & other merchandise, and prepared food & fountain at the

time of sale to the customer. Wholesale sales to franchisees are recognized at the time of delivery to the franchise location. Franchise fees, license fees

to franchisees, and rent for franchise façades are recognized monthly when billed to the franchisees. Other maintenance services and transportation

charges are recognized at the time the service is provided.

Vendor allowances include rebates and other funds received from vendors to promote their products. The Company often receives such

allowances on the basis of quantitative contract terms that vary by product and vendor or directly on the basis of purchases made. Rebates are recognized

as reductions of inventory costs when purchases are made; reimbursements of an operating expense (e.g., advertising) are recorded as reductions of the

related expense.

Discontinued operations Sales from discontinued operations were $15,534, $47,644 and $45,158 for the years ended April 30, 2006, 2005, and

2004, respectively. Losses from discontinued operations were $1,389 for the year ended April 30, 2006, including a $1,562 pretax loss on disposal. Losses

from discontinued operations were $5,589 and $1,379 for the years ended April 30, 2005 and 2004, respectively. Losses from discontinued operations were

net of tax benefits of $888, $3,574, and $881 for the years ended April 30, 2006, 2005, and 2004, respectively.

The Company’s consolidated balance sheet as of April 30, 2006 included $1,225 in net property and equipment classified as assets held for sale;

there were no related liabilities pertaining to discontinued operations. The Company’s consolidated balance sheet as of April 30, 2005 included $13,723 in

net property and equipment and no related liabilities pertaining to discontinued operations.

Earnings per common share Basic earnings per share have been computed by dividing net income by the weighted average outstanding

common shares during each of the years. Calculation of diluted earnings per share treats stock options outstanding as potential common shares.

Environmental remediation liabilities The Company accounts for environmental remediation liabilities in accordance with the American

Institute of Certified Public Accountants’ Statement of Position (SOP) 96-1, Environmental Remediation Liabilities. SOP 96-1 requires, among other

things, environmental remediation liabilities to be accrued when the criteria of SFAS No. 5, Accounting for Contingencies, are met.

Derivative instruments The Company periodically uses a variety of derivative instruments such as options and futures to hedge against the volatility

of gasoline cost. The Company is at risk for possible changes in the market value for these derivative instruments. It is anticipated that such risk would be mitigated

by price changes in the underlying hedged items. Market risks associated with all of the Company’s derivative contracts are reviewed regularly by management.

There were no options or futures contracts during the year ended April 30, 2006. At April 30, 2005, however, the Company had accumulated net

hedging losses before income taxes of $929 on closed options and futures contracts; it had net hedging gains before income taxes of $281 for the year ended

April 30, 2004. The amounts represented the fair value of the contracts as determined using various indices and dealer quotes. These derivative contracts were

not linked to specific assets or liabilities on the balance sheet or to forecasted transactions in an accounting hedge relationship and therefore did not qualify

for hedge accounting. The contracts were carried at fair value with any changes in fair value recorded as part of cost of goods sold in the income statement.

Stock-based compensation The Company applies APB Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its incentive

stock option plan; accordingly, the financial statements recognize no compensation cost for stock options issued at fair market value on the date of grant. The

Company has elected the pro forma disclosure option of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.

Pro forma net earnings and pro forma net earnings per common share have been provided as if SFAS No. 123 were adopted for all stock-based compensation

plans. Had the Company determined compensation cost of its stock options based on the fair value at the grant date under SFAS No. 123, the Company’s

net income would have been reduced to the pro forma amounts shown in the following table:

Net income as reported

Deducted amount

Total stock-based employee compensation expense determined

by fair-value method for awards, net of related tax effects

Pro forma net income

Basic earnings per common share

As reported

Pro forma

Diluted earnings per common share

As reported

Pro forma

Years ended April 30,

2006

60,468

458

60,010

1.20

1.19

2005

36,753

302

36,451

0.73

0.72

2004

36,466

204

36,262

0.73

The weighted average fair value of the stock options granted during 2006, 2005, and 2004 was $6.06, $4.36, and $3.96 per share, respectively,

on the date of grant. Fair value was calculated using the Black Scholes option-pricing model with the following weighted average assumptions: 2006—

expected dividend yield of 0.87%, risk-free interest rate of 4.04%, estimated volatility of 24%, and an expected life of 6.2 years; 2005—expected dividend

yield of 0.95%, risk-free interest rate of 3.75%, estimated volatility of 24%, and an expected life of 5.8 years; 2004—expected dividend yield of 0.89%,

risk-free interest rate of 3.9%, estimated volatility of 24%, and an expected life of 5.8 years.

Recent Accounting Pronouncements In December 2004, the FASB issued Statement of Financial Accounting Standard (SFAS) No. 123 (Revised 2004),

Share-Based Payment. SFAS No. 123R is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board

(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123R focuses primarily on accounting

for transactions in which an entity obtains employee services through share-based payment transactions. SFAS No. 123R requires a public entity to measure

the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award at the date of grant. The cost

will be recognized over the period during which an employee is required to provide services in exchange for the award. SFAS No. 123R is effective as of the

beginning of the first annual reporting period that begins after June 15, 2005. The Company will adopt the provisions of SFAS No. 123R effective May 1, 2006

using the modified prospective method. Management believes the impact on net earnings as a result of the adoption of SFAS No. 123R will be approximately

$330 in fiscal 2007. Estimated compensation expense related to prior periods can be found in Note 1 of the Consolidated Financial Statements. The ultimate

amount of increased compensation expense will depend on the number, timing, and vesting period of option shares granted during the year.

In March 2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 47, Accounting for Conditional Asset

Retirement Obligations. This interpretation clarifies that the term “conditional asset retirement obligation” as used in FASB Statement No. 143,

Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of

settlement are conditioned on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement

activity is unconditional even though uncertainty exits about the timing and/or method of settlement, which may be conditioned on a future event.

Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can

be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation should be recognized when incurred—generally

upon acquisition, construction, or development—or through the normal operation of the asset. Uncertainty about the timing and/or method of settlement

should be factored into the measurement of the liability when sufficient information exists. Statement No. 143 acknowledges that in some cases, sufficient

information may not be available to make a reasonable estimate of fair value of an asset retirement obligation and clarifies when an entity would have

sufficient information to do so.

The Company adopted FASB Interpretation No. 47 in May 2005 and recorded an estimated liability of $3,117 for the future cost of removal

of the underground storage tanks in accordance with the provisions of SFAS No. 143 and will recognize the cost over the tank’s estimated useful life.

A corresponding increase to the carrying value of the related long-lived assets of $1,343 was recorded at that time. The Company will amortize the

amount added to other assets and recognize accretion expense for the discounted liability over the estimated remaining life of the tanks. The cumulative

effect of this accounting change resulted in a one-time pretax charge of $1,775 ($1,083 net of tax benefit). Prior to May 1, 2005, the Company had

recognized a retirement obligation for underground storage tanks that the Company knew would be removed in the future (i.e. when a store replacement or

closing had been planned). All remaining underground storage tanks were considered to have indeterminable lives when the Company adopted SFAS No. 143.

Other accounting standards have been issued or proposed by the FASB or other standard-setting bodies that do not require adoption until a

future date. These standards are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

Reclassifications Certain amounts in the prior years’ financial statements have been reclassified to conform to the current-year presentation.

The Company has separately disclosed the operating and investing portions of the cash flows attributable to its discontinued operations, which in prior

periods were reported combined with operations. The Iowa ethanol tax credit of $1,197 in fiscal 2005 and $871 in fiscal 2004 was originally recorded as an

income tax credit and is now recorded as a reduction in gasoline cost of goods sold. It is actually a refund of an excise tax that the Company receives independent

of whether the Company earns any income. The ethanol credit earned in fiscal 2006 was $1,738.

2. BUSINESS ACQUISITION

Commencing January 5, 2006, the Company purchased 51 Gas ‘N Shop (GNS) convenience stores from a single-owner, 66-store chain

headquartered in Lincoln, NE. The chain was purchased to increase substantially the Company’s presence in Nebraska. The Company issued no

Casey’s stock nor did it acquire any GNS stock as part of the transaction. The trade name Gas ‘N Shop was also acquired, but the stores not purchased

in the transaction were allowed to operate under that name for two years or until their sale to another third party, whichever is sooner. The Company

began rebranding the GNS stores to Casey’s General Stores immediately upon acquisition.

The GNS stores were valued using a discounted cash flow model that was applied on a location by location basis. The model projects future cash flows

and calculates a return on investment after capital expenditures for rebranding to Casey’s. The purchase price was determined using a targeted rate of return.

The acquisition was recorded by allocating the cost of the assets acquired, including intangible assets and liabilities assumed, based on their

estimated fair values at the acquisition date. The excess of the cost of the acquisition over the net of amounts assigned to the fair value of the assets

acquired and the liabilities assumed was recorded as goodwill. The purchase price of $29,194 was allocated as follows:

Land

Buildings

Equipment

Other assets

Goodwill

$ 4,575

13,444

2,400

101

8,674

As of April 30, 2006, $4,536 had been paid and the remaining $24,658 had been recorded in current maturities of long-term debt. The Asset Purchase

Agreement allows the seller to make an immediate sale of any or all of the stores or to lease any of the stores to the Company for a period of five years and grants

to the seller an option at any time during that five-year period to require the Company to purchase any leased store and pay the applicable purchase price upon

forty-five days’ notice. The annual lease payments are equal to 6% of the purchase price of the stores leased and are paid monthly during the term of the lease.

As of April 30, 2006, principal payments of $500 have been made on this debt, and any remaining principal balance must be paid by January 2011.

The results of operations of the GNS stores from the date of acquisition through April 30, 2006 are included in the statement of earnings and

statement of cash flows. Disclosure of pro forma financial statements were considered inconsequential for the periods under audit.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS AND LONG-TERM DEBT

A summary of the fair value of the Company’s financial instruments follows.

Cash and cash equivalents, receivables, and accounts payable The carrying amount approximates fair value due to the short maturity of these

instruments or the recent purchase of the instruments at current rates of interest.

Long-term debt The fair value of the Company’s long-term debt excluding capital lease obligations is estimated based on the current rates

offered to the Company for debt of the same or similar issues. The fair value of the Company’s long-term debt excluding capital lease obligations was

approximately $126,000 and $157,000, respectively, at April 30, 2006 and 2005.

Interest expense is net of interest income of $1,308, $649, and $437 for the years ended April 30, 2006, 2005, and 2004, respectively. Interest

expense in the amount of $398, $323, and $398 was capitalized during the years ended April 30, 2006, 2005, and 2004, respectively.

The next table delineates the Company’s long-term debt at carrying value.

April 30,

2006

2005

Capitalized lease obligations discounted at 4.75%

to 10% due in various monthly installments through 2009 (Note 7)

1,964

2,503

Mortgage notes payable due in various installments

through 2009 with interest at 6% to 7%

37,033

13,626

7.38% senior notes due in 21 semi-annual installments

beginning in December 2010

30,000

Senior notes due in various installments from 2004

through 2019 with interest at 6.18% to 7.23%

32,000

36,000

7.89% senior notes due in 7 annual installments

beginning in May 2004

57,143

158,140

68,571

150,700

Less current maturities

51,628

27,636

106,512

123,064

Various debt agreements contain certain operating and financial covenants. At April 30, 2006, the Company was in compliance with

all covenants. Listed below are the aggregate maturities of long-term debt, including capitalized lease obligations, for the 5 years commencing

May 1, 2006 and thereafter:

Years ended April 30,

2007

2008

2009

2010

2011

Thereafter

51,628

17,841

17,448

12,794

13,857

44,572

$ 158,140

Included in current maturities for fiscal 2007 in the tables above is $24,158 relating to the purchase of the Gas ‘N Shop chain, which may be

paid in future years. The seller has an option at any time to make an immediate sale of any or all of the stores or to lease any of the stores to the Company

for a period of five years and an option at any time during that five-year period to require the Company to purchase any leased store and pay the applicable

purchase price upon forty-five days’ notice. The annual lease payments are equal to 6% of the purchase price of the stores leased and are paid monthly

during the term of the lease. See Note 2 for additional information regarding the purchase of Gas ‘N Shop.

4. PREFERRED AND COMMON STOCK

Preferred stock The Company has 1,000,000 authorized shares of preferred stock, none of which has been issued.

Common stock The Company currently has 120,000,000 authorized shares of common stock. Dividends paid totaled $0.18, $0.195, and $0.13

per share for the years ended April 30, 2006, 2005, and 2004, respectively. Historically, the Company recorded dividends at the time of payment, which

typically followed by several weeks the date on which dividends were declared. On May 1, 2004, the Company began recording dividends as of the date of

declaration. As a result, the Company’s records show two quarterly dividends paid in the first quarter of fiscal 2005, the first of which ($0.035) was for the

fourth quarter of fiscal 2004 and the second of which ($0.04) was for the first quarter of fiscal 2005.

Common share purchase rights On June 14, 1989, the Board of Directors adopted the Shareholder Rights Plan, providing for the distribution

of one common share purchase right for each share of common stock outstanding. The rights generally become exercisable 10 days following a public

announcement that 15% or more of the Company’s common stock has been acquired or an intent to acquire has become apparent. The rights will expire

on the earlier of June 14, 2009 or redemption by the Company. Certain terms of the rights are subject to adjustment to prevent dilution. Further description

and terms of the rights are set forth in the amended Rights Agreement between the Company and UMB Bank, n.a., which serves as Rights Agent.

Stock option plans Under the Company’s stock option plans, options may be granted to non-employee directors, certain officers, and key

employees to purchase an aggregate of 4,560,000 shares of common stock at option prices not less than the fair market value of the stock (110% of fair

market value for holders of 10% or more of the Company’s stock) at the date the options are granted. Options for 640,664 shares were available for grant

at April 30, 2006, and options for 961,050 shares (which expire between 2007 and 2015) were outstanding.

The following table shows the stock option activity during the periods indicated:

Number of

Weighted average

1,118,850

320,000

(346,750)

(12,750)

1,079,350

14,000

(173,950)

(11,000)

908,400

248,000

(178,850)

(16,500)

961,050

exercise price

$ 11.76

14.02

6.72

13.20

$ 12.80

15.80

10.89

14.08

$ 13.20

20.51

11.96

14.46

$ 15.29

Balance at April 30, 2003

Granted

Exercised

Forfeited

Balance at April 30, 2004

Granted

Exercised

Forfeited

Balance at April 30, 2005

Granted

Exercised

Forfeited

Balance at April 30, 2006

At April 30, 2006, the range of exercise prices was $9.44–$20.68 and the weighted average remaining contractual life of outstanding

options was 6.15 years. The number of shares and weighted average remaining contractual life of the options by range of applicable exercise

prices at April 30, 2006 were as follows:

Range of
exercise prices

Number of
shares

Weighted average
exercise price

Weighted average remaining
contractual life (years)

$ 9.44

11.20 – 13.07

14.08 – 15.80

17.64 – 20.68

6,000

238,550

468,500

248,000

961,050

$ 9.44

11.73

14.42

20.51

1.00

3.94

5.75

9.16

5. EARNINGS PER COMMON SHARE

Computations for basic and diluted earnings per common share are presented below:

2006

2005

2004

Basic

Earnings from continuing operations

Loss on discontinued operations

Cumulative effect of accounting change

Net earnings

Weighted average shares outstanding—basic

Earnings per common share from continuing operations

Loss per common share on discontinued operations

Cumulative effect of accounting change

Basic earnings per common share

Diluted

Earnings from continuing operations

Loss on discontinued operations

Cumulative effect of accounting change

Net earnings

Weighted-average shares outstanding—basic

Plus effect of stock options

Weighted-average shares outstanding—diluted

Earnings per common share from continuing operations

Loss per common share on discontinued operations

Cumulative effect of accounting change

Diluted earnings per common share

62,940

1,389

1,083

60,468

50,309,929

1.25

.03

.02

1.20

62,940

1,389

1,083

60,468

50,309,929

300,335

50,610,264

1.24

.03

.02

1.19

42,342

5,589

--------

36,753

50,114,695

.84

.11

--------

.73

42,342

5,589

--------

36,753

50,114,695

169,488

50,284,183

.84

.11

--------

.73

37,845

1,379

--------

36,466

49,875,620

.76

.03

--------

.73

37,845

1,379

--------

36,466

49,875,620

165,505

50,041,125

.76

.03

--------

.73

6. INCOME TAXES

Income tax expense attributable to earnings from continuing operations consisted of the following components:

Current tax expense

Federal

State

Deferred tax expense

Total income tax provision

Years ended April 30,

2006

2005

2004

35,488

15,337

3,625

39,113

(3,937)

2,183

17,520

7,311

35,176

24,831

6,259

1,671

7,930

10,273

18,203

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

Deferred tax assets

Accrued liabilities

Deferred compensation

Other

Total gross deferred tax assets

Valuation allowance

Net deferred tax assets

Deferred tax liabilities

Excess of tax over book depreciation

Other

Total gross deferred tax liabilities

Net deferred tax liability

Years ended April 30,

2006

2005

2004

6,373

3,073

1,523

10,969

(184)

10,785

(103,094)

(1,484)

(104,578)

5,047

2,551

351

7,949

--------

7,949

(104,754)

(1,614)

(106,368)

5,465

2,027

687

8,179

--------

8,179

(100,899)

(974)

(101,873)

(93,793)

(98,419)

(93,694)

The deferred tax assets of $6,136 and $3,620 relating to accrued liabilities are current assets and are included with prepaid expenses as of April 30, 2006

and April 30, 2005, respectively. At April 30, 2006, the Company has net operating loss carryforwards for state income tax purposes of approximately $14,092, which

are available to offset future taxable income. These net operating losses expire during the years 2015 through 2018.

The valuation allowance for deferred tax assets as of April 30, 2006 and 2005 was $184 and $0, respectively. The net change in the valuation allowance for

the years ended April 30, 2006 and 2005 was an increase of $184 and $0, respectively. In assessing the realizability of deferred tax assets, management considers whether it

is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation

of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax

liabilities, projected taxable income, and tax planning strategies in making this assessment. A valuation allowance has been established for a portion of the amount

of net operating loss carryovers—state taxes as of April 30, 2006 due to the uncertainty of future recoverability. As time passes, management will be able to better

assess the amount of tax benefit it will realize from using the carryforwards.

Total reported tax expense applicable to the Company’s continuing operations varies from the tax that would have resulted from

applying the statutory U.S. federal income tax rates to income before income taxes.

Income taxes at the statutory rates

Resolution of tax exposure

Previously unrecorded tax benefits

Federal tax credits

State income taxes, net of federal tax benefit

Other

Years ended April 30,

2006

35.0%

--------

(0.7)

1.4

0.2

35.9%

2005

35.0%

--------

(0.9)

2.5

0.4

37.0%

2004

35.0%

(1.2)

(3.2)

(1.2)

2.8

0.3

32.5%

The income tax benefit from discontinued operations was $888, $3,574, and $881 for the years ended April 30, 2006, 2005, and 2004, respectively.

The income tax benefit from the cumulative effect of accounting change was $692 for the year ended April 30, 2006.

7. LEASES

The Company leases certain property and equipment used in its operations. Generally, the leases are for primary terms of from 5 to 20 years with

options either to renew for additional periods or to purchase the premises and call for payment of property taxes, insurance, and maintenance by the lessee.

The following is an analysis of the leased property under capital leases by major classes:

Real estate

Equipment

Less accumulated amortization

Asset balances at April 30,

2006

14,221

6,095

20,316

6,113

14,203

2005

4,293

2,894

7,187

6,296

891

Future minimum payments under the capital leases and noncancelable operating leases with initial or remaining terms of 1 year or more

consisted of the following at April 30, 2006:

Years ended April 30,

Capital leases

Operating leases

2007

2008

2009

2010

2011

Thereafter

Total minimum lease payments

Less amount representing interest

Present value of net minimum lease payments

642

635

605

251

----

2,133

169

1,964

The total rent expense under operating leases was $564 in 2006, $598 in 2005 and $767 in 2004.

274

141

119

709

8. BENEFIT PLANS

401(k) plan Effective April 30, 2003, the Company merged its former employee stock ownership plan with its defined contribution 401(k) plan (Plan).

The Plan covers all employees who meet minimum age and service requirements. The Company contributions consist of matching amounts and are allocated

based on employee contributions. Expense for the Plan was approximately $2,258, $2,149, and $2,038 for the years ended April 30, 2006, 2005, and 2004, respectively.

On April 30, 2006, the Company had 6,024 full-time employees and 9,668 part-time employees; approximately 4,100 were participants in the Plan.

As of that same date, 2,249,565 shares of common stock were held by the trustee of the Plan in trust for distribution to eligible participants upon death,

disability, retirement, or termination of employment. Shares held by the Plan are treated as outstanding in the computation of earnings per common share.

Supplemental executive retirement plan The Company has a nonqualified supplemental executive retirement plan (SERP) for 3 of its executive

officers, 1 of whom retired April 30, 2003. The SERP provides for the Company to pay annual retirement benefits, depending on retirement dates, up to 50%

of base compensation until death of the officer. If death occurs within 20 years of retirement, the benefits become payable to the officer’s spouse until the

spouse’s death or 20 years from the date of the officer’s retirement, whichever comes first. The Company is accruing the deferred compensation over the

expected term of employment. The amount expensed in fiscal 2006, 2005, and 2004 was $289, $570, and $746, respectively.

9. COMMITMENTS

The Company has entered into employment agreements with 2 of its executive officers. The agreements provide that the 2 officers will receive

aggregate base compensation of $1,000 per year exclusive of bonuses. These agreements also provide for certain payments in the case of death or disability

of the officers. The Company also has entered into employment agreements with 12 other key employees, providing for certain payments in the event of

termination following a change of control of the Company.

10. CONTINGENCIES

Environmental compliance The United States Environmental Protection Agency and several states have adopted laws and regulations relating

to underground storage tanks used for petroleum products. Several states in which the Company does business have trust fund programs with provisions

for sharing or reimbursing corrective action or remediation costs.

Management currently believes that substantially all capital expenditures for electronic monitoring, cathodic protection, and overfill/spill protection

to comply with existing regulations have been completed. The Company had an accrued liability at April 30, 2006 and 2005 of approximately $200 for estimated

expenses related to anticipated corrective actions or remediation efforts, including relevant legal and consulting costs. Management believes the Company

has no material joint and several environmental liability with other parties. Additional regulations or amendments to the existing regulations could result

in future revisions to such estimated expenditures.

Legal matters The Company is a defendant in several lawsuits arising in the normal course of business. In the opinion of management, the

ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position and results of operations.

Other At April 30, 2006, the Company was partially self-insured for workers’ compensation claims in all 9 states of its marketing territory and was also

partially self-insured for general liability and auto liability under an agreement that provides for annual stop-loss limits equal to or exceeding approximately $1,000.

To facilitate this agreement, letters of credit approximating $7,500 were issued and outstanding at April 30, 2006 on the insurance company’s behalf. The Company

also has investments of approximately $200 in escrow as required by one state for partial self-insurance of workers’ compensation claims. Additionally, the

Company is self-insured for its portion of employee medical expenses. At April 30, 2006 and 2005, the Company had $15,635 and $14,539, respectively, in

accrued expenses for estimated claims relating to self-insurance.

11. QUARTERLY FINANCIAL DATA (Dollars in thousands) (Unaudited)

Net sales
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other

Gross profit*
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other

Net earnings from continuing operations
Loss on discontinued operations, net of tax benefit
Cumulative effect of accounting change, net of tax benefit
Net earnings
Basic
Earnings from continuing operations
Loss on discontinued operations
Cumulative effect of accounting change, net of tax benefit
Net earnings per common share
Diluted
Earnings from continuing operations
Loss on discontinued operations
Cumulative effect of accounting change, net of tax benefit
Net earnings per common share

Net sales
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other

Gross profit*
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other

Net earnings from continuing operations
Loss on discontinued operations, net of tax benefit
Net earnings
Basic
Earnings from continuing operations
Loss on discontinued operations
Net earnings per common share
Diluted
Earnings from continuing operations
Loss on discontinued operations
Net earnings per common share

*Gross profit is given before charge for depreciation and amortization.

Q1
$ 584,502
213,095
57,475
3,481
$ 858,553

$ 33,867
68,214
36,774
1,322
$ 140,177

$ 22,090
115
1,083
$ 20,892

0.44
0.00
0.02
0.42

0.43
0.00
0.02
0.41

Q1
$ 471,983
192,279
51,488
5,681
$ 721,431

30,846
60,366
30,255
832
$ 122,299

16,215
276
15,939

0.33
0.01
0.32

Year ended April 30, 2006
Q3
Q2
561,218
703,335
178,119
200,223
56,167
57,935
5,090
3,815
800,594
965,308

Q4
640,225
187,816
57,430
4,538
890,009

Year Total
2,489,280
779,253
229,007
16,924
3,514,464

125,797
248,726
144,312
8,124
526,959

62,940
1,389
1,083
60,468

1.25
0.03
0.02
1.20

1.24
0.03
0.02
1.19

Year Total
1,866,729
712,570
204,479
19,815
2,803,593

109,351
220,521
123,410
4,016
457,298

42,342
5,589
36,753

0.84
0.11
0.73

39,002
66,584
37,419
1,526
144,531

24,588
55,172
35,130
2,982
117,872

28,340
58,756
34,989
2,294
124,379

22,396
203
--------
22,193

0.44
0.00
--------
0.44

7,556
603
--------
6,953

0.15
0.01
--------
0.14

10,898
468
--------
10,430

0.22
0.01
--------
0.21

Year ended April 30, 2005

Q2
461,689
184,429
53,058
5,418
704,594

25,095
57,143
32,259
707
115,204

11,432
426
11,006

0.23
0.01
0.22

Q3
433,857
163,813
48,952
4,499
651,121

25,727
51,422
29,808
1,153
108,110

7,050
4,585
2,465

0.14
0.09
0.05

Q4
499,200
172,049
50,981
4,217
726,447

27,683
51,590
31,088
1,324
111,685

7,645
302
7,343

0.15
0.00
0.15

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the

Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures. Based on that

evaluation, the CEO and CFO have concluded that the Company’s current disclosure controls and procedures are effective to ensure that information

required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized,

and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the fourth fiscal quarter covered by this

report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The

Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the

preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective

can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2006. In making

this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal

Control—Integrated Framework. On the basis of the prescribed criteria, management believes the Company’s internal control over financial reporting was

effective as of April 30, 2006.

KPMG, LLP, as the Company’s independent registered public accounting firm, has issued a report on its assessment of the Company’s internal

control over financial reporting. This report appears on page 25.

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Those portions of the Company’s definitive Proxy Statement appearing under the captions “Election of Directors,” “Governance of the

Company,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Executive Officers and Their Compensation” to be filed with the

Commission pursuant to Regulation 14A within 120 days after April 30, 2006 and to be used in connection with the Company’s Annual Meeting of

Shareholders to be held on September 15, 2006 are hereby incorporated by reference.

The Company has adopted a Financial Code of Ethics applicable to its Chief Executive Officer and other senior financial officers. In addition,

the Company has adopted a general code of business conduct (known as the Code of Business Conduct and Ethics) for its directors, officers, and all

employees. The Financial Code of Ethics, the Code of Business Conduct and Ethics, and other Company governance materials are available on the

Company Web site at www.caseys.com. The Company intends to disclose on this Web site any amendments to or waivers from the Financial Code of

Ethics or the Code of Business Conduct and Ethics that are required to be disclosed pursuant to SEC rules. To date, there have been no waivers of the

Financial Code of Ethics or the Code of Business Conduct and Ethics. Shareholders may obtain copies of any of these corporate governance documents

free of charge by downloading from the Web site or by writing to the Corporate Secretary at the address on the cover of this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

That portion of the Company’s definitive Proxy Statement appearing under the caption “Executive Officers and Their Compensation” to be filed

with the Commission pursuant to Regulation 14A within 120 days after April 30, 2006 and to be used in connection with the Company’s Annual Meeting

of Shareholders to be held on September 15, 2006 is hereby incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Those portions of the Company’s definitive Proxy Statement appearing under the captions “Shares Outstanding,” “Voting Procedures,” and

“Beneficial Ownership of Shares of Common Stock by Directors and Executive Officers” to be filed with the Commission pursuant to Regulation 14A within

120 days after April 30, 2006 and to be used in connection with the Company’s Annual Meeting of Shareholders to be held on September 15, 2006 are

hereby incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

That portion of the Company’s definitive Proxy Statement appearing under the caption “Certain Relationships and Related Transactions” to be

filed with the Commission pursuant to Regulation 14A within 120 days after April 30, 2006 and to be used in connection with the Company’s Annual

Meeting of Shareholders to be held on September 15, 2006 is hereby incorporated by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

That portion of the Company’s definitive Proxy Statement appearing under the caption “Independent Auditor Fees” to be filed with the

Commission within 120 days after April 30, 2006 and to be used in connection with the Company’s Annual Meeting of Shareholders to be held on

September 15, 2006 is hereby incorporated by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Documents filed as a part of this report on Form 10-K

(1) The following financial statements are included herewith:

Consolidated Balance Sheets, April 30, 2006 and 2005

Consolidated Statements of Income, Three Years Ended April 30, 2006

Consolidated Statements of Shareholders’ Equity, Three Years Ended April 30, 2006

Consolidated Statements of Cash Flows, Three Years Ended April 30, 2006

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

(2) No schedules are included because the required information is inapplicable or is presented in the

consolidated financial statements or related notes thereto.

(3) The following exhibits are filed as a part of this report:

Exhibit

Number

3.1(a)

3.2(a)

Description of Exhibits

Restatement of the Restated and Amended Articles of Incorporation (incorporated by reference from the Quarterly Report on Form

10-Q for the fiscal quarter ended October 31, 1996)

Restatement of Amended and Restated By-laws (incorporated by reference from the Quarterly Report on Form 10-Q for the fiscal

quarter ended January 31, 1997) and Amendments thereto (incorporated by reference from the Quarterly Reports on Form

10-Q for the fiscal quarters ended July 31, 1997 and July 31, 2000)

4.2

Rights Agreement between Casey’s General Stores, Inc. and UMB Bank, n.a. as Rights Agent, relating to Common Share Purchase

Rights (incorporated herein by reference from the Registration Statement on Form 8-A filed June 19, 1989 (0-12788)) and

amendments thereto (incorporated by reference from the Form 8 (Amendment No. 1 to the Registration Statement on Form

8-A filed June 19, 1989) filed September 10, 1990; the Form 8-A/A (Amendment No. 3 to the Registration Statement on Form 8-A

filed June 19, 1989) filed March 30, 1994; the Form 8-A12G/A (Amendment No. 2 to the Registration Statement on Form 8-A

filed June 19, 1989) filed July 29, 1994, the Current Report on Form 8-K filed May 10, 1999; and the Current Report on Form 8-K

filed September 27, 1999)

4.4

4.6

4.7

Note Agreement dated as of December 1, 1995 between Casey’s General Stores, Inc. and Principal Mutual Life Insurance Company

(incorporated by reference from the Current Report on Form 8-K filed January 11, 1996)

Note Agreement dated as of April 15, 1999 among the Company and Principal Life Insurance Company and other purchasers of

$50,000,000 Senior Notes, Series A through Series F (incorporated by reference from the Current Report on Form 8-K filed May 10, 1999)

Note Purchase Agreement dated as of May 1, 2000 among the Company and the purchasers of $80,000,000 in principal amount of 7.89%

Senior Notes, Series 2000-A, due May 15, 2010 (incorporated by reference from the Current Report on Form 8-K filed May 23, 2000)

10.19*

Casey’s General Stores, Inc. 1991 Incentive Stock Option Plan (incorporated by reference from the Registration Statement on Form

S-8 (33-42907) filed September 23, 1991) and amendment thereto (incorporated by reference from the Quarterly Report on

Form 10-Q for the fiscal quarter ended January 31, 1994)

10.21(a)*

Amended and Restated Employment Agreement with Donald F. Lamberti (incorporated by reference from the Current Report on

Form 8-K filed November 10, 1997) and First Amendment thereto (incorporated by reference from the Current Report on Form 8-K

filed April 2, 1998)

10.22(a)*

Amended and Restated Employment Agreement with Ronald M. Lamb (incorporated by reference from the Current Report on Form 8-K

filed November 10, 1997) and First Amendment thereto (incorporated by reference from the Current Report on Form 8-K filed

April 2, 1998)

10.24(a)*

Amended and Restated Employment Agreement with John G. Harmon (incorporated by reference from the Current Report on Form

8-K filed November 10, 1997), First Amendment thereto (incorporated by reference from the Annual Report on Form 10-K405

for the fiscal year ended April 30, 2001), and Second Amendment thereto (incorporated by reference from the Quarterly Report

on Form 10-Q for the fiscal quarter ended July 31, 2004)

10.27

Non-Employee Directors’ Stock Option Plan (incorporated by reference from the Quarterly Report on Form 10-Q for the fiscal quarter ended

July 31, 1994) and related form of Grant Agreement (incorporated by reference from the Current Report on Form 8-K filed May 3, 2005)

10.28(a)

10.29

Promissory Note delivered to UMB Bank, n.a. (incorporated by reference from the Current Report on Form 8-K filed October 4, 2005)

Form of “change of control” Employment Agreement (incorporated by reference from the Quarterly Report on Form 10-Q for the

10.30*

Non-Qualified Supplemental Executive Retirement Plan (incorporated by reference from the Current Report on Form 8-K filed

fiscal quarter ended January 31, 1997)

10.31*

Non-Qualified Supplemental Executive Retirement Plan Trust Agreement with UMB Bank, n.a. (incorporated by reference from the

November 10, 1997)

10.32*

10.33*

10.34*

10.35*

10.36

23.1

31.1

31.2

32.1

32.2

Current Report on Form 8-K filed November 10, 1997)

Severance Agreement with Douglas K. Shull (incorporated by reference from the Current Report on Form 8-K filed July 28, 1998)

Casey’s General Stores, Inc. 2000 Stock Option Plan (incorporated by reference from the Annual Report on Form 10-K405 for the

fiscal year ended April 30, 2001) and related form of Grant Agreement (incorporated by reference from the Current Report on

Form 8-K filed July 6, 2005)

Casey’s General Stores 401(k) Plan (incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended April 30, 2003)

Trustar Directed Trust Agreement (incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended April 30, 2003)

Description of fiscal 2007 salary and bonus arrangements for Executive Officers (incorporated by reference from the Current Report

on Form 8-K filed June 22, 2006)

Subsidiaries of Casey’s General Stores, Inc. (incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended

April 30, 2005)

Consent of Independent Registered Public Accounting Firm

Certificate of Robert J. Myers under Section 302 of Sarbanes-Oxley Act of 2002

Certificate of William J. Walljasper under Section 302 of Sarbanes-Oxley Act of 2002

Certificate of Robert J. Myers under Section 906 of Sarbanes-Oxley Act of 2002

Certificate of William J. Walljasper under Section 906 of Sarbanes-Oxley Act of 2002

______________________________

*Indicates management contract or compensatory plan or arrangement.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be

signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

CASEY’S GENERAL STORES, INC.

(Registrant)

Date July 10, 2006

/s/ Robert J. Myers

Robert J. Myers, President and

Chief Executive Officer

(Principal Executive Officer)

Date July 10, 2006

/s/ William J. Walljasper

William J. Walljasper

Senior Vice President and Chief Financial Officer

(Authorized Officer and Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of

the registrant and in the capacities and on the dates indicated.

Date July 10, 2006

/s/ Ronald M. Lamb

Ronald M. Lamb

Chairman of the Board, Director

Date July 10, 2006

/s/ John G. Harmon

John G. Harmon

Senior Vice President–Secretary, Director

Date July 10, 2006

/s/ Donald F. Lamberti

Donald F. Lamberti

Director

Date July 12, 2006

/s/ Kenneth H. Haynie

Kenneth H. Haynie

Director

Date July 12, 2006

/s/ John R. Fitzgibbon

John R. Fitzgibbon

Director

Date July 10, 2006

/s/ Jack P. Taylor

Jack P. Taylor

Director

Date July 11, 2006

/s/ Johnny Danos

Johnny Danos

Director

The following exhibits are filed herewith:

EXHIBIT INDEX

Exhibit No.

Description

23.1

31.1

31.2

32.1

32.2

Consent of Independent Registered Public Accounting Firm

Certification of Robert J. Myers under Section 302 of the Sarbanes-Oxley Act of 2002

Certification of William J. Walljasper under Section 302 of the Sarbanes-Oxley Act of 2002

Certificate of Robert J. Myers under Section 906 of Sarbanes-Oxley Act of 2002

Certificate of William J. Walljasper under Section 906 of Sarbanes-Oxley Act of 2002

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Exhibit 23.1

The Board of Directors

Casey’s General Stores, Inc.:

We consent to incorporation by reference in the Registration Statements (No. 33-19179, 33-42907, and 33-56977) on Form S-8 of Casey’s General Stores,

Inc. of our reports dated July 7, 2006, relating to the consolidated balance sheets of Casey’s General Stores, Inc. and subsidiaries as of April 30, 2006

and 2005, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended

April 30, 2006, and management’s assessment of the effectiveness of internal control over financial reporting as of April 30, 2006 and the effectiveness of

internal control over financial reporting as of April 30, 2006, which reports appear in the April 30, 2006 Annual Report on Form 10-K of Casey’s General

Stores, Inc. Our report refers to a change in fiscal 2004 to the FIFO method of valuing gasoline inventory.

Des Moines, Iowa

July 12, 2006

KPMG LLP

CERTIFICATION OF ROBERT J. MYERS

UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

Exhibit 31.1

I, Robert J. Myers, certify that:

I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to

make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the

period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material

respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as

defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules

13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,

to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others

within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under

our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting practices;

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth

fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial

reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to

the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are

reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s

internal control over financial reporting.

Dated July 10, 2006

/s/ Robert J. Myers

Robert J. Myers, President and

Chief Executive Officer

CERTIFICATION OF WILLIAM J. WALLJASPER

UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

Exhibit 31.2

I, William J. Walljasper, certify that:

I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with

respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material

respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as

defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules

13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our

supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to

us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed

under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with generally accepted accounting practices;

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s

fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over

financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,

to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are

reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s

internal control over financial reporting.

Dated July 10, 2006

/s/ William J. Walljasper

William J. Walljasper

Senior Vice President and

Chief Financial Officer

CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

In connection with the Annual Report of Casey’s General Stores, Inc. (the Company) on Form 10-K for the fiscal year ended April 30, 2006 as filed with the

Securities and Exchange Commission on the date hereof (the Report), I, Robert J. Myers, Chief Executive Officer of the Company, certify, pursuant to 18

U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that

(1)

(2)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934.

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of

the Company.

/s/ Robert J. Myers

Robert J. Myers, President and

Chief Executive Officer

Dated July 10, 2006

CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

In connection with the Annual Report of Casey’s General Stores, Inc. (the Company) on Form 10-K for the fiscal year ended April 30, 2006 as filed with the

Securities and Exchange Commission on the date hereof (the Report), I, William J. Walljasper, Chief Financial Officer of the Company, certify, pursuant to

18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that

(1)

(2)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934.

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of

the Company.

/s/ William J. Walljasper

William J. Walljasper

Senior Vice President and Chief Financial Officer

Dated July 10, 2006

493484

Casey’s Mark of Distinction brands our 1,394 corporate stores in

• Our newly expanded warehouse adds tremendous capacity

9 states and makes our Midwest dominance visible. The number

to our vertically integrated distribution system.

of stores we own is one source of distinction, but setting ourselves

• Seizing opportunities to make wise acquisitions is the key

apart from our peers also comes from having the best people,

source of our growth.

increasing our knowledge, and being proactive.

• An exceptionally strong balance sheet and adequate debt

capacity give us financial flexibility.

There are other marks as well:

• Analysts appreciate our quarterly reports on progress toward

• Our policy of rewarding employees for increasing gross profit

measurable annual goals and the monthly same-store sales

and controlling expenses attracts and retains quality people.

data we post on our Web site.

• Our business thrives on information from our full

point-of-sale technology.

Throughout this annual report, we’ll detail how we exceeded

• We are known for having one of the best proprietary

all of last year’s operations goals and how we’ll capitalize on our

prepared food programs in the industry.

marks of distinction to meet the goals we’ll challenge ourselves

• We use our size to gain advantage in wholesale markets.

with in fiscal 2007.

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annual report 2006

CASEY’S GENERAL STORES, INC.

One Convenience Blvd.
Ankeny, Iowa 50021-9437

Mark of Distinction.