Table of Contents
Message to Shareholders
Management Team
2
5
Maintaining Excellent Fiscal Health 14
Corporate Finance
Board of Directors
16
17
18
New Style, Familiar Substance
6
Store Operations
Investor Information
Growing According to Plan
12
Financial Information
Store Development
Meeting the Challenge
By virtually any measure, fiscal 2009 was a difficult economic
year around the world.
In business, however, difficulty can also create opportunity.
In 2009, Casey’s General Stores, Inc., met the challenge of
a trying economy, seized opportunity, and produced
another record year.
One of the brightest silver linings
to weather the storm, it also allowed us
among the dark economic clouds was
to expand and modernize while other
the confirmation of Casey’s disciplined
companies were scaling back capital projects.
approach to business that has been a
core characteristic of our Company since
As we head into fiscal 2010, Casey’s will
its founding in 1968.
continue to make measured investments
in new and remodeled stores, technology
Not only did our prudent approach and
upgrades and employee development that
disciplined execution position Casey’s
keep us positioned to meet future challenges.
Earnings from Continuing Operations
Before Income Taxes
Financial Highlights
2009
2008
2007
$139.2
$134.0
$97.7
EPS from Continuing Operations
2009
2008
2007
$1.69
$1.68
$1.26
Total Revenue
Cash Flow from Operations
Net Earnings from Continuing Operations
EPS from Continuing Operations
EPS (Diluted)
Shareholders of Record
Employees
# of Corporate Stores
2009
$4,687,895
$169,883
$85,744
$1.69
$1.68
2,329
18,780
1,478
2008
$4,828,793
$177,030
$84,973
$1.68
$1.67
2,444
17,983
1,454
Change
-2.9%
-4.0%
0.9%
0.6%
0.6%
-4.7%
4.4%
1.7%
1
Message to Shareholders
In fiscal year 2009, the global economy presented serious
challenges to many businesses and consumers.
Despite the difficult times, Casey’s
magazine for excellence, ethics and
earnings from continuing operations
transparency in our accounting and
before income taxes rose 3.9% to $139.2
governance. Read more details of this
million, and earnings per share from those
accomplishment in the Corporate
operations increased to $1.69 from $1.68
Finance section.
in fiscal 2008.
Fiscal 2009 validated our philosophies in
Given our strong results, the word that
several areas:
comes to my mind for Casey’s fiscal 2009
is “validation.”
n Smaller Community Focus — Focusing
on locating stores in smaller Midwest
Disciplined Approach Affirmed
communities means Casey’s relies
heavily on repeat traffic from those
Fiscal 2009 — perhaps like few other
communities. That makes us less reliant
years in Casey’s 41-year history — proved
on transient traffic than some of our
the wisdom of our long-held belief that a
urban-focused competitors. During
prudent, methodical approach to business
times of higher retail gasoline prices and
builds enduring success.
lower discretionary spending, transient
traffic tends to stay home, while local,
Casey’s consistently receives praise for
small-town traffic stays loyal.
our disciplined approach to creating
and executing our business plans. Our
n Food Service Emphasis — Prepared
shareholders are very pleased with the
foods have always been a strength for
results we achieved and maintained over
Casey’s, and the category continued to
the course of fiscal 2009. In April 2009,
be a strong point in fiscal 2009. Over
Casey’s was among 100 companies
the course of the year, we found that
nationwide acknowledged by Forbes
customers are very resistant to altering
2
buying patterns for small, frequent
Our average long-term debt-to-total-
The response from customers and
purchases like their coffee and a donut
capital ratio is approximately 24% and
employees, as well as others in our industry,
in the morning. We also believe that
declining. We also own most of our
has been overwhelmingly positive.
more families turned to Casey’s for
assets, which maximizes control and
Customers are excited about our new
take-out pizza to replace more expensive
minimizes financial exposure.
design and pleased with new features
restaurant meals.
n A Strong Balance Sheet — As many
New Store Excitement
such as made-to-order sub sandwiches,
expanded cooler space and enhanced
coffee options. Overall, we are very pleased
Americans discovered last year, having
In last year’s report, we talked about
with early results from our new stores and
money in the bank and the ability to
the concept of our new store design.
will continue to evaluate performance as
take on debt are critical to withstanding
We made those plans a reality in 2009
more data becomes available.
economic turmoil and capitalizing on
by constructing 16 new stores and
opportunities that present themselves.
incorporating the new design into
another 14 replacement stores.
3
Goals for 2010
Staying the Course
As you will learn in the balance of this
To reach these goals, we will take the
report, Casey’s did very well in all our
same disciplined, data-driven, methodical
traditional categories — Gasoline,
approach that has served Casey’s well
Grocery & Other Merchandise, and
for more than four decades. With more
Prepared Foods & Fountain.
data streaming in every day, we plan to
With that in mind, Casey’s will work
store design into many of our stores
toward these goals in 2010:
company-wide through improved
incorporate key features of the new
n Expansion
practices, remodeling, new construction
and more. You will find more specifics
4% unit growth through a combination
about the 2010 outlook in each section
of building and acquisition
of this report.
n Gasoline
Finally — and most importantly — I
2% same-store gallon growth with an
want to thank you for your investment
average margin of 11 cents per gallon
in Casey’s General Stores, Inc. We take
our duties to shareholders very seriously
n Grocery & Other Merchandise
and we are always interested in your ideas
8.9% same-store sales growth
and feedback. I am very optimistic about
with an average margin of 33.9%
the coming year, and by working together
n Prepared Foods & Fountain
heritage, Casey’s will continue to meet
7.5% same-store sales growth with
the challenges of 2010 and beyond.
and staying true to our disciplined
an average margin of 62.0%
Sincerely,
Robert J. Myers
President & Chief Executive Officer
4
Management Team
First Row (left to right)
Second Row (left to right)
Third Row (left to right)
Robert J. Myers President & CEO
Darryl F. Bacon VP-Food Services
Brian J. Johnson VP-Finance
Terry W. Handley COO
Jay F. Blair VP-Transportation & Distribution
& Corporate Secretary
William J. Walljasper Senior VP & CFO
Hal D. Brown VP-Support Services
Michael R. Richardson VP-Marketing
Sam J. Billmeyer Senior VP-Logistics
Robert C. Ford VP-Store Operations
Russell D. Sukut VP-Treasurer
& Acquisitions
Julia L. Jackowski VP-Human Resources
Eli J. Wirtz VP-Corporate Counsel
5
New Style, Familiar Substance
Fiscal 2009 marked another evolution in the physical appearance
of Casey’s General Stores, Inc., with the introduction of our 10th
major store design. The first new-look store opened in Greenup, Ill.,
in September 2008.
A New Design Powered by an Old
Notion: Return On Investment (ROI)
beverage category and our prepared food
and fountain offerings. The extra 1,000
square feet in new stores is invested in
Our new store design will play a key role
more cooler space — expanding it from
in fiscal 2010 and beyond. The design
an average nine cooler-door set to a
was the product of years of analysis and
new 14 cooler-door set — and a larger
evaluation aimed at maximizing return on
kitchen area. More prepared food space
this important investment.
will allow a made-to-order sub sandwich
program and expanded fountain and coffee
The physical changes in the store are
offerings in many locations.
quite striking. At approximately 3,700
square feet, it is our largest design yet,
Data-Driven Remodeling Initiative
some 1,000 square feet larger than
our average store. Building materials
While not every community can support
and décor focus on wood grains and
the new store design, many existing
Same-Store Sales
Gasoline (Gallons)
GOAL
2010
2009
2008
-2.0%
2007
2.0%
1.0%
1.4%
Grocery & Other Merchandise
2010
2009
2008
2007
GOAL
8.9%
earth tones and create a more upscale
Casey’s locations will still benefit from
5.9%
7.3%
4.6%
ambiance. The internal signage style
this concept. Beginning in 2010, expanded
adds to the overall contemporary feel,
coolers and more extensive kitchens
and traffic flow is more efficient.
will drive a remodeling program. As we
Prepared Food & Fountain
gain more data, we will be equipped to
2010 GOAL
7.5%
The new design was created in part to
determine where remodeling makes the
9.1%
9.8%
11.0%
help us capitalize on high-margin,
most business sense.
high-turning categories: the fast-growing
2009
2008
2007
6
Off to a Good Start
Casey’s competitive advantages, prepared
food offerings. As we progress through
While results continue to come in
fiscal 2010, we will continue our tradition
from the new stores, comments from
of making changes and adjustments to
employees and customers alike have been
maximize the return on this investment
overwhelmingly positive. Customers say
over the long term.
the design is aesthetically pleasing, serves
their needs and helps emphasize one of
7
Store Operations
category. They will also be extremely
useful in assessing the new sub sandwich
From our newest store to our oldest, fiscal
and expanded coffee bar initiatives.
Sales (In Millions)
Gasoline (Gallons)
2009
2008
2007
1,242
1,215
1,194
Grocery & Other Merchandise
2009
2008
2007
$1,010
$943
$853
2009 was another banner year.
Inside Sales
FY 2009:
n Same-Store Sales — up 6.7%
n Total Inside Sales — up 8.1%
n Gross Profit — up 9.2%
We normally report inside sales broken
Grocery & Other Merchandise
FY 2009:
n Same-Store Sales — up 5.9%
n Average Margin — 33.7%
FY 2010 Goal:
n Same-Store Sales — up 8.9%
n Average Margin — 33.9%
Prepared Food & Fountain
out into two categories, Grocery &
Our fiscal 2009 goal was to increase same-
2009
2008
2007
Margin
$336
Other Merchandise and Prepared Food
store sales 7% with an average margin of
$302
& Fountain. Combined, the two posted
33.2%. For the year, same-store sales rose
$267
impressive gains in 2009. Our investment
5.9% with an average margin of 33.7%, up
in new stores and remodeling will help
60 basis points from a year ago. Grocery
us continue to emphasize these important
& Other Merchandise has consistently
Gasoline (Per Gallon)
categories. Of course, managing inside
demonstrated excellent performance over
2009
2008
2007
12.9¢
13.9¢
10.4¢
Grocery & Other Merchandise
2009
2008
2007
33.7%
33.1%
32.7%
Prepared Food & Fountain
gross profit dollars is always the
the last several years and we are optimistic
top priority for our company.
that the trend will continue.
We continue to capitalize on our
Casey’s position as a seller of small,
investments in point-of-sale systems by
inexpensive items that people are reluctant
using the data to make sound decisions
to do without helped insulate this category
that maximize store profitability. These
from the general economic downturn.
systems will help analyze everything
While we did note some “trading down”
from the challenging cigarette sales
by consumers switching to cheaper brands
61.4%
environment brought on by new taxes
and a trend toward buying packs instead
62.3%
62.0%
to the constantly changing beverage
of cartons in the cigarette category, most
of our other items remained constant. The
2009
2008
2007
8
trend toward single-pack, higher-margin
migration from carton sales to single-pack
cigarette purchases was one of the factors
sales in cigarettes, which should also help
that lifted margins above the goal for
pull margin up and help mitigate the
We also continue to use our point-of-sale
fiscal 2009.
impact of tax increases on profits.
data to refine preparation patterns to keep
Fiscal 2010 Outlook
Prepared Food & Fountain
possible, thereby protecting quality while
the product in the warmers as fresh as
A federal excise tax increase that went
into effect on April 1, 2009, did slow
cigarette unit sales and drive customers
from the category. However, we expect
the trend from more expensive carton
purchases to cheaper, but higher-margin
single-pack purchases to continue. We
also saw increases in sales of smokeless
FY 2009:
n Same-Store Sales — up 9.1%
n Average Margin — 61.4%
FY 2010 Goal:
n Same-Store Sales — up 7.5%
n Average Margin — 62.0%
minimizing waste.
Most importantly, our complete control of
our prepared foods program has helped us
create year-after-year success that has built
a brand that stands for high quality and
high value.
Sub Sandwiches on the Menu
tobacco products in 2009 and will adjust
Fiscal 2009 was a year of reaffirmation
our product mix accordingly to meet the
of Casey’s strategy of steady investment in
In conjunction with our new store
customer demand.
the Prepared Foods & Fountain category
initiative, we began rolling out a made-to-
over the past 30 years. Today, prepared
order sub sandwich program in September
We are anticipating all categories will
food generates nearly 29% of the gross
2008. Maintaining the same quality and
continue to perform well into fiscal year
profit for the entire Company.
value focus that made pizza and other
2010. The beverage category posted
good results in 2009, with beer making
exceptional gains and sales of sports
High Control, High Quality,
High Margin
drinks, bottled water and energy drinks
prepared offerings so successful has made
subs very popular with customers thus far.
We continue to review data and perform
other analysis to understand what types of
remaining strong. Beverage categories
Having our own proprietary prepared
stores and communities would support a
should benefit from the expanded
foods program allows greater control over
successful sub program.
cooler space in our new stores and
the quality of our product. Plus, we realize
incorporated in remodels where appropriate.
an increased margin above the margins
We anticipate increased sales of higher
restaurants that are often co-branded in
achieved by the typical quick-serve
margin items, primarily in the beverage
convenience stores.
category. We also expect a continued
Managing Through
Commodity Price Changes
One of the challenges of a prepared
foods operation is managing through
commodity price fluctuations. The price
9
of cheese, especially, can significantly
mix and keep the right amount of food
impact Casey’s performance given our
in the warmers at the right time of day to
substantial output of pizzas. We took
maximize sales and minimize waste.
price increases over the last two years to
offset commodity pressures in the category
On the margin side of this category, we
but still managed to increase unit sales,
will benefit in the first two quarters from
another testimony to the strength of our
our forward buy of cheese that began in
prepared foods brand.
February. This should help lift the margin
through the first half of the year.
Commodity prices were high in the first
half of the year and then fell off with the
Gasoline
economy in the third quarter. We took
advantage of those lower prices to lock
in our cheese needs through October
2009 and will continue to evaluate the
FY 2009:
n Same-Store Sales — up 1.0%
n Average Margin — 12.9 cents
market and lock in prices further out if
per gallon
opportunities present themselves.
Fiscal 2010 Outlook
Over the course of 2010, we anticipate
rolling out 200 to 300 additional iced
FY 2010 Goal:
n Same-Store Sales — up 2.0%
n Average Margin — 11.0 cents
per gallon
coffee machines to our stores as well as an
The gasoline environment of fiscal 2009
additional 200 to 300 10-head fountain
was unlike anything our Company has
machines. This, along with the continued
ever encountered. Typically, gasoline
popularity of our prepared food offerings,
margins expand during a declining price
will drive this category. While we don’t
environment and tighten up when prices
anticipate significant price increases in
are rising. In fiscal 2009, however, we
2010, we will continue to monitor the
saw nearly the opposite. Retail prices
competition and will react to competitive
responded quickly to upward movements
Gross Profit (In Millions)
Gasoline
2009
2008
2007
$159.8
$168.9
$124.2
Grocery & Other Merchandise
2009
2008
2007
$339.9
$312.0
$278.7
Prepared Food & Fountain
2009
2008
2007
10
$206.0
price fluctuations as necessary.
in wholesale cost, and our margins
$188.0
$165.8
actually widened during periods of rising
We will also continue to use our point-
prices. Conversely, as the energy markets
of-sale technology to better understand
weakened in the third quarter we saw a
customer buying patterns throughout
decline in our retail margins.
the day. That will help us adjust product
The net result was an average gasoline
of gasoline. Unfortunately, retail prices
believe lower retail prices will be a leading
margin that was 2.1 cents per gallon
responded very quickly and caused an
factor in creating positive same-store
higher than our goal. This was likely due
uncharacteristic decline in margin during that
gallon growth in 2010. Even though gas
to credit card fees and other economic
falling price environment. We saw margins
margins have been unusually favorable the
pressures on the industry. Credit card fees
return to normal once prices stabilized.
last two years, we think the current retail
are calculated based on a percentage of
price environment is going to yield a more
the retail price, and are included in our
Same-store gasoline gallons sold were
normal annual margin in 2010.
operating expenses. When gas prices were
adversely affected by the high prices during
at record highs, we believe the industry
the first half of fiscal 2009. Fortunately they
Despite the volatility and ever-changing
covered these high fees with a more
began to improve later in the year as retail
sales and margin trends, the one thing that
rational gasoline pricing strategy.
prices came off their record highs.
will not change is our competitive pricing
Our monthly average per-gallon retail
Fiscal 2010 Outlook
price ranged from $1.59 to $3.85 during
fiscal 2009. In the third quarter, we saw a
Gasoline is always the most difficult
significant decline in the wholesale cost
category of our business to forecast. We
strategy. Casey’s will not be undersold on
gasoline, and our customers will continue
to appreciate the value we deliver.
11
Growing According to Plan
Even with our new store design getting excellent reviews and
generating encouraging numbers so far, it would not be the
Casey’s way to leap into a massive new construction program
without thorough analysis. There will be more new stores in
2010, but certainly no deviation from our prudent approach
to development.
Store Development
Year End 2009:
1,478 corporate stores
2010 expectation:
4% unit growth,
primarily through acquisition
through acquisitions. There are several
small to mid-sized chains in the Midwest
that might be attractive as long as we can
pay a reasonable price and the acquisition
fits with our long-term strategic plans. We
believe the current economic challenges,
along with the increased complexity of
gasoline and cigarettes, will bring more
acquisition opportunities.
Like every form of real estate, convenience
New Stores on the Horizon
stores are naturally concerned with
location. In 2010, Casey’s will continue
We hope to build 20 to 25 new-design
with our philosophy of making sure great
stores in 2010. The store designs will be
locations also make sense financially
slightly adjusted, primarily in terms of
before we invest in them.
exterior look, to fit within neighborhoods
Poised for Acquisition Opportunities
Again, we will strongly resist any sort
and to meet competitive pressures.
of “if some is good, more is better”
Our strong financial position puts Casey’s
temptation. As data comes in from our
in the enviable position of being ready to
existing new-design store, we will become
52
move quickly when the right acquisition
smarter at thoroughly evaluating the
opportunities arise. We expect the majority
potential ROI for each proposed new
of our 4% unit growth in 2010 to come
store location.
# of Stores per State
37
97
94
10
418
370
63
105
284
1,478
1,454
1,448
16
Corporate Stores
2009
2008
2007
Store Growth
New Store Constructions
2009
2008
0
2007
8
Acquisitions
2009
2008
2007
16
12
12
Remodeling with Profits in Mind
In markets where replacing a store
with a new structure does not make
business sense, we will seriously consider
remodeling to incorporate some of the
profit drivers from the new design.
Remodeling can be significantly more
cost-effective than a complete replacement,
so smaller communities might present
excellent opportunities when the existing
location makes remodeling feasible.
13
Maintaining Excellent Fiscal Health
A company’s financial position is the best indication of
its overall health and its ability to capitalize on growth
opportunities when they come up. During fiscal year 2009,
Casey’s met the challenge on both fronts.
Corporate Finance
conservative, and our low leverage could
assist us in raising capital quickly should a
Building the Balance Sheet
large acquisition opportunity present itself.
It’s challenging to grow a business in a
Our long-term debt, net of current
highly competitive environment while
maturities, decreased $13.6 million to
simultaneously building ample cash
$167.9 million, and the average total debt
reserves and paying down debt.
to average total capital was approximately
24% and decreasing. Shareholders’ equity
This has been accomplished by taking the
grew 11.4% to $721 million.
long view and always making financial
considerations part of the planning and
decision-making process. This long-term
focus of maintaining a responsible balance
Benefiting from Falling Credit Card
and Transportation Costs
sheet kept us out of the credit markets in
When gasoline prices made their historic
fiscal 2009 when the financial markets
climb in fiscal 2009, they also increased
Operating Expenses Increase
6.2%
2009
2008
2007
15.6%
13.4%
Capital Structure (In Millions)
were in turmoil.
credit card fees and transportation costs
(higher fuel prices meant higher costs to
$721.0
$647.5
Over the last decade, Casey’s disciplined
transport product to our stores).
financial approach has let us increase our
dividend each year while meeting all the
However, we also benefited from shrinking
challenges the economy has thrown our
credit card fees and transportation costs
$167.9
way. Going forward, lenders will be more
as fuel prices plummeted late in the fiscal
$181.4
year. For the fiscal year overall, credit card
Equity
2009
2008
Long-Team Debt
2009
2008
14
Casey’s Named to Forbes.com 100 Most Trustworthy Companies
In a year where many instances of corporate fiscal irresponsibility contributed directly to economic calamity,
Casey’s General Stores, Inc., has been acknowledged by Forbes.com as consistently showing “transparent and
conservative accounting practices and solid corporate governance and management.”
Forbes.com went on to say the honored companies “do not play games with revenue and expense recognition,
or with asset valuation.”
Casey’s recognition came after the independent financial analytics firm Audit Integrity studied the corporate
finance practices of more than 8,000 companies traded on U.S. exchanges. The study placed Casey’s in
the top 1% of all companies tracked by Audit Integrity.
fees ended up with a 4% increase over
We expect labor costs to continue along
Our plans are to fund our store growth and
fiscal 2008, after being down 20%
moderate trends. The move to add
construction activities with existing cash
in the fourth quarter. The slowdown in
additional assistant managers initiated in
and cash flows. That allows us to preserve
fee increase is an encouraging sign for
fiscal 2008 helped improve store manager
our borrowing capacity for use if any
fiscal 2010.
retention. Labor costs will also be a key
attractive acquisition or other expansion
Regarding the rest of our operating
the new store design.
to say Casey’s is in “acquisition mode,” we
factor in analyzing the performance of
opportunities come along. While it’s fair
costs, we will remain vigilant in our
expense control, and use the current
climate to scrutinize every line item
on our income statement.
Fiscal 2010 Outlook
High on our priority list will be continuing
to measure the overall performance of the
new store design. While encouraged by
early results, we will continue to closely
analyze the execution to find opportunities
for improvement.
remain prudent in our approach, only acting
when we view the potential as favorable.
Fiscal 2010 - Capital Expenditure Budget
Acquisitions & New
Store Construction
Remodels &
Replacements
Technology
Transportation
Total
Throughout fiscal 2010, we will report
$90,000,000
in detail our progress toward our annual
$58,000,000
$8,000,000
$9,000,000
$165,000,000
goals detailed in this report, as well as our
monthly same-store sales data. We believe
transparency is important, and rest assured
that in the future we will continue our
conservative approach to business that has
enabled us to meet the challenge so far.
15
Board of Directors (*member of audit committee)
Ronald M. Lamb
Chairman of Casey’s
General Stores, Inc.
Robert J. Myers
President & CEO of
Casey’s General Stores, Inc.
Kenneth H. Haynie
Of counsel to the law firm
of Ahlers & Cooney, P.C.
William C. Kimball*
Retired Chairman & CEO
of Medicap Pharmacy, Inc.
Johnny Danos*
Director of Strategic
Development, LWBJ, LLP
Diane C. Bridgewater*
CFO & Treasurer
Life Care Services, LLC
Jeffrey M. Lamberti*
Shareholder in the law firm of
Block, Lamberti and Gocke, P.C.
Patricia Clare Sullivan* intends to retire from the Board of Directors
at the Annual Shareholder’s Meeting in September, 2009. Sullivan
joined the Board in 1996, and served on a variety of committees
during her tenure, most recently as Chair of the Nominating &
Corporate Governance Committee. She is the retired CEO and
President of Mercy Health Center in Des Moines, Iowa. We
appreciate her service to the Company and congratulate her on
an outstanding career.
16
Richard A. Wilkey* was
appointed on December 2,
2008, to fill the vacancy
created by the death of
John R. Fitzgibbon. Wilkey’s
background includes being
a management and
development consultant for
various major companies in
the Midwest. He is also a
former City Manager of the
City of Des Moines, and was
previously employed by the
Weitz Corporation as Executive
Vice President of Administration
and Finance and as President of
Life Care Services Corporation,
a major subsidiary of the
Weitz Corporation.
Investor Information
COMMON STOCK
DIVIDENDS
INVESTOR INQUIRIES
Casey’s General Stores, Inc. common
The Company began paying cash
Current or prospective Casey’s
stock trades on the Nasdaq Global
dividends during fiscal 1991. The
General Stores, Inc. investors can receive
Select Market under the symbol CASY.
dividends paid in fiscal 2009 totaled
annual reports, proxy statements,
The 50.8 million shares of common stock
$0.30 per share. At its June meeting,
Forms 10-K and 10-Q, and earnings
outstanding at April 30, 2009 had a
the Board of Directors increased the
announcements at no cost by calling
market value of $1.4 billion. As of that
quarterly dividend to $0.085 per
(515) 965-6107 or sending written
same date, there were 2,444 shareholders
share. The dividend is payable on
requests to the following address:
of record.
August 17, 2009 to shareholders
of record on August 3, 2009.
Casey’s General Stores, Inc.
COMMON STOCK MARKET PRICES
One Convenience Blvd.
Calendar 2007
High
Low
DIVIDEND REINVESTMENT AND
Ankeny, Iowa 50021
1st Quarter
$ 26.70
$ 23.49
STOCK PURCHASE PLAN
2nd Quarter
29.46
24.84
This plan, introduced in the fall of
Corporate information, including
3rd Quarter
29.88
23.02
1998, gives holders of Casey’s General
monthly same-store sales data for the
4th Quarter
31.39
27.00
Stores, Inc. common stock a convenient
Company’s three business categories, is
and economical way of purchasing
also available at www.caseys.com. Quarterly
Calendar 2008
High
Low
additional shares at market prices by
conference calls are broadcast live over
1st Quarter
$ 29.65
$ 21.69
reinvesting their dividends in full or
the Internet via the Investor Relations Web
2nd Quarter
26.30
19.97
in part. Stockholders may also take
page and made available in archived
3rd Quarter
30.48
21.80
advantage of the cash payment option
format. Broadcast times for the quarterly
4th Quarter
31.11
20.63
to purchase additional shares. Those
calls will be announced on the Web page
wishing to enroll should contact the
and in corresponding press releases.
Calendar 2009
High
Low
transfer agent and registrar:
1st Quarter
$ 28.06
$ 18.32
ANNUAL MEETING
2nd Quarter
28.22
24.31
Computershare Trust Company, N.A.
All shareholders and prospective
250 Royall Street
investors are cordially invited to attend
On July 7, 2009, the last reported
Canton, MA 02021
the annual meeting at 9:00 a.m.,
sales price of the Company’s common
Telephone 781-575-2000
September 18, 2009, at the corporate
stock was $24.86 per share. On that same
www.computershare.com
headquarters in Ankeny, Iowa.
date, the market cap was $1.3 billion.
17
FORM 10-K
TABLE OF CONTENTS
PART I
ITEM 1.
Business ...............................................................................................................................................................................3
ITEM 1A. Risk Factors .........................................................................................................................................................................8
ITEM 1B. Unresolved Staff Comments .............................................................................................................................................14
ITEM 2.
Properties ..........................................................................................................................................................................14
ITEM 3.
Legal Proceedings .............................................................................................................................................................14
ITEM 4.
Submission of Matters to a Vote of Security Holders .......................................................................................................14
PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities .......14
ITEM 6.
Selected Financial Data .....................................................................................................................................................16
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .............................................17
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk ...........................................................................................25
ITEM 8.
Financial Statements and Supplementary Data ................................................................................................................26
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...........................................49
ITEM 9A. Controls and Procedures...................................................................................................................................................50
ITEM 9B. Other Information .............................................................................................................................................................50
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance ...............................................................................................51
ITEM 11. Executive Compensation ..................................................................................................................................................51
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ........................51
ITEM 13. Certain Relationships and Related Transactions and Director Independence ..................................................................51
ITEM 14. Principal Accountant Fees and Services ...........................................................................................................................51
PART IV
ITEM 15. Exhibits and Financial Statement Schedules .....................................................................................................................52
18
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, 2009
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
42-0935283
(I.R.S. Employer
incorporation or organization)
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(b) of the Act
COMMON STOCK
(Title of Class)
COMMON SHARE PURCHASE RIGHTS
(Title of Class)
Securities Registered pursuant to Section 12(g) of the Act
NONE
1
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 has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]
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. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of October 31, 2008, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was
approximately $1,460,633,086, based on the closing sales price ($30.20 per share) as quoted on the NASDAQ Global Select Market.
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 June 19, 2009
Common Stock, no par value per share
50,858,912 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:
1. Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual Meeting of Shareholders
to be held on September 18, 2009 (Item 5 of Part II and Items 10, 11, 12, 13, and 15 of Part III).
2
PART I
ITEM 1. BUSINESS
The Company
Casey’s General Stores, Inc. and its wholly owned subsidiaries (the Company/Casey’s/we) operate convenience stores under the name
“Casey’s General Store”, “HandiMart” and “Just Diesel” in nine Midwestern 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, 2009,
there were a total of 1,478 Casey’s General Stores in operation. There were 16 stores newly constructed and 16 acquired stores opened
in fiscal 2009. There were also 8 stores closed in fiscal 2009. We operate a central warehouse, Casey’s Distribution Center, adjacent to our
corporate headquarters in Ankeny, Iowa, through which we supply grocery and general merchandise items to our stores.
Approximately 61% of all our stores are located in areas with populations of fewer than 5,000 persons, while approximately 13% of our
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 our subsidiaries, Casey’s Marketing Company (Marketing Company) and Casey’s Services Company (Services Company), also
operate from the corporate headquarters facility and were incorporated in Iowa in March 1995. A third subsidiary, Casey’s Retail Company, was
incorporated in Iowa in 2004 and a fourth subsidiary, CGS Sales Corp., was incorporated in 2008 and both also operate from these facilities.
The Company’s Internet address is www.caseys.com. Each year we make available through our website current reports on Form 8-K,
quarterly reports on Form 10-Q, our annual report on Form 10-K, and amendments to those reports free of charge as soon as reasonably
practicable after they have been electronically filed with the Securities and Exchange Commission. Additionally, you can go to our website
to read our Financial Code of Ethics and Code of Conduct; we intend to post disclosure of any waivers to the Codes to the extent such
disclosure is legally required.
General
We seek to meet the needs of residents of smaller towns by combining features of both general store and convenience store operations.
Smaller communities often are not served by national-chain convenience stores. We have succeeded at operating Casey’s General Stores in
smaller towns by offering, at competitive prices, a broader selection of products than does a typical convenience store. We have also
succeeded in meeting the needs of residents in larger communities with these offerings.
The Company derives its revenue primarily from the retail sale of gasoline and the products offered in our stores. Our sales historically have
been strongest during the first and second fiscal quarters (May through October) and relatively weaker during the third and fourth. In warmer
weather, customers tend to purchase greater quantities of gasoline and certain convenience items such as beer, soft drinks, and ice.
3
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 CGS Sales Corp. was organized as
an Iowa Corporation in 2008, and both are also wholly-owned subsidiaries of Casey’s.
Casey’s Retail Company operates stores in Illinois, Kansas, Minnesota, Nebraska, and South Dakota; it also holds the rights to the Casey’s
trademark and trade name. The Marketing Company owns and has responsibility for the operation of stores in Iowa, Missouri, Wisconsin, and
Indiana. The Marketing Company also has responsibility for all of our wholesale operations, including the Distribution Center. The Services
Company provides a variety of construction and transportation services for all stores. CGS Sales Corp. operates a store in Onawa, Iowa.
Store Operations
Products Offered
Each Casey’s General Store typically carries over 3,000 food and nonfood items. Many of the products offered are those generally found
in a supermarket. The selection is generally limited to one or two well-known brands of each item stocked. Most of our staple foodstuffs are
nationally advertised brands. Stores sell regional brands of dairy and bakery products, and approximately 88% of the stores offer beer.
Our nonfood items include tobacco products, health and beauty aids, school supplies, housewares, pet supplies, photo supplies, and
automotive products.
All Casey’s General Stores offer gasoline or gasohol for sale on a self-service basis. The gasoline and gasohol generally are sold under
the Casey’s name.
It is our policy to experiment with additions to the Company’s product line, especially products with higher gross profit margins. As a
result, we have added various prepared food items to our product line over the years, facilitated by the installation of snack centers, which
now are in most 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, 2009, the Company was selling donuts prepared on store premises in approximately 96% of our
stores in addition to cookies, brownies, and Danish rolls. The Company installs donut-making facilities in all newly constructed stores.
We began marketing made-from-scratch pizza in 1984, and it is now available in 1,384 stores (94%) as of April 30, 2009. Although pizza
is our most popular prepared food offering, we continue to expand our prepared food product line, which now includes ham and cheese
sandwiches, pork and chicken fritters, sausage sandwiches, chicken tenders, popcorn chicken, sub sandwiches, breakfast croissants and
biscuits, breakfast pizza, hash browns, quarter-pound hamburgers and cheeseburgers, and potato cheese bites.
The growth in our proprietary prepared food program reflects management’s strategy to promote high-margin products that are
compatible with convenience store operations. In the last three fiscal years, retail sales of nongasoline items have generated about 27% of
our total revenue, but they have resulted in approximately 75% of our gross profits. Gross profit margins on prepared food items averaged
approximately 62% during the same thirty-six months—substantially higher than the gross profit margin on retail sales of gasoline, which
averaged approximately 5%.
4
Store Design
Casey’s General Stores are freestanding and, with a few exceptions to accommodate local conditions, conform to standard construction
specifications. The new store design measures 39 feet by 92 feet with approximately 2,300 square feet devoted to sales area, 500 square feet
to kitchen space, 400 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 new store typically includes 4 to 8 islands of gasoline dispensers
and storage tanks with capacity for 30,000 to 50,000 gallons of gasoline. The merchandising display follows a standard layout designed to
encourage a flow of customer traffic through all sections of every store. All stores are air-conditioned and have modern refrigeration
equipment. Nearly all the store locations feature our bright red and yellow pylon sign which displays Casey’s name and service mark.
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. We require
that all stores maintain a bright, clean interior and provide prompt checkout service. It is our policy not to install electronic games or sell adult
magazines on store premises.
Store Locations
The Company traditionally has located its stores in smaller 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. Our store-site selection criteria emphasize the population of
the immediate area and daily highway traffic volume. Where there is no competing store, we can often 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 our revenue and earnings. Approximately 71% of Casey’s total revenue for the year ended April 30,
2009 was derived from the retail sale of gasoline. The following table summarizes gasoline sales for the three fiscal years ended April 30, 2009:
Year ended April 30,
Number of gallons sold
Total retail gasoline sales
Percentage of total revenue
Gross profit percentage (excluding credit card fees)
Average retail price per gallon
$
2.68
$
Average gross profit margin per gallon (excluding credit card fees)
Average number of gallons sold per store*
12.87¢
859,114
*Includes only those stores in operation at least one full year on April 30, of the fiscal year indicated.
2009
2008
2007
1,241,502,396
1,214,932,101
1,193,936,979
$ 3,321,548,694
$
3,559,244,599
$
2,881,991,316
70.9%
4.8%
73.7%
4.7%
2.93
13.90¢
835,948
$
71.6%
4.3%
2.41
10.40¢
821,057
Retail prices of gasoline decreased during the year ended April 30, 2009. The total number of gallons we sold during this period
increased, primarily because of the higher number of stores in operation and our efforts to price our retail gasoline to compete in local market
areas. For additional information concerning the Company’s gasoline operations, see Item 7 herein.
5
Distribution and Wholesale Arrangements
The Marketing Company supplies all stores with groceries, food, health and beauty aids, and general merchandise from our distribution
center. The stores place orders for merchandise through a telecommunications link-up to the computer at our headquarters in Ankeny, and
we fill the orders with weekly shipments in Company-owned delivery trucks. All of our existing and most of our proposed stores are within
the Distribution Center’s optimum efficiency range—a radius of approximately 500 miles.
In fiscal 2009, we purchased directly from manufacturers approximately 90% of the food and nonfood items sold from our distribution
center. It is our practice, with few exceptions, not to enter into long-term supply contracts with any of the suppliers of products sold by Casey’s
General Stores. We believe the practice is customary in the industry and enables us to respond flexibly to changing market conditions.
Franchise Operations
In the early days of Casey’s existence, the Company offered private investors the opportunity to establish franchised Casey’s stores as a
way to expand the Casey’s system at a rapid pace. The franchise owner (“franchisee”) was authorized to construct a Casey’s General Store
according to the Company’s plans and specifications and to operate the store in accordance with the Company’s franchise agreement.
Although each franchise store displayed the name and trademark of Casey’s, it was independently owned and operated by the franchisee.
The largest number of stores owned by any one franchisee was thirteen. The first franchised Casey’s store opened on July 1, 1970 in Waukee,
Iowa. In the ensuing years, the increase in franchise stores almost equaled the growth of company stores. As of April 30, 1985, the Casey’s
chain of 482 stores included 232 franchise stores.
The Company discontinued active franchising in the mid-1980’s, though a few new franchise stores were built after 1990. However, the
total number of franchise stores began to decline in the late 1980’s, as some franchisees took advantage of opportunities to sell or lease their
stores to the Company. By January 1, 2000, there were 145 remaining franchise stores, compared to 1,084 company stores. The Company
then began buying existing convenience stores as a primary means of growth, and purchased many of its franchisees’ stores during the
early 2000s. A few franchise stores were sold to other owners or operated independently after their franchise agreements expired.
By November 30, 2007, only 15 franchise stores remained. The last remaining franchise store, in Prophetstown, Illinois, closed on
December 31, 2008, thus closing an important chapter in the history of Casey’s growth to 1,478 stores at April 30, 2009.
Personnel
On April 30, 2009, we had 7,740 full-time employees and 11,040 part-time employees. We have not experienced any work stoppages.
There are no collective bargaining agreements between the Company and any of its employees.
6
Competition
Our 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. We believe our stores located in
smaller 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 Quik Trip, Kwik Trip, and regional chains. Some of the Company’s competitors have greater financial and other
resources than we do. 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 our registered service marks under federal law. We believe 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 stores have been equipped with noncorroding fiberglass
USTs, including some with double-wall construction, overfill protection, and electronic tank monitoring. We currently have 3,235 USTs, 2,724
of which are fiberglass and 511 are steel, and we believe that 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 we do business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation
costs incurred by UST owners. In the years ended April 30, 2009 and 2008, we spent approximately $1,128,000 and $1,133,000, respectively,
for assessments and remediation. Substantially all of these expenditures were submitted for reimbursement from state-sponsored trust fund
programs. As of April 30, 2009, approximately $12,087,000 has been received from such programs since inception. The payments are
typically subject to statutory provisions requiring repayment of the reimbursed funds for noncompliance with upgrade provisions or other
applicable laws. No amounts are currently expected to be repaid. At April 30, 2009, we had an accrued liability of approximately $250,000
for estimated expenses related to anticipated corrective actions or remediation efforts, including relevant legal and consulting costs. We
believe we have no material joint and several environmental liability with other parties.
7
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.
Risks Related to Our Industry
The convenience store industry is highly competitive.
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 affected 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 revenues accounted for approximately 72% of total revenue and our gasoline gross profit
accounted for approximately 23% 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 a 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 affect our
sales of grocery and general merchandise and prepared food products.
8
Wholesale cost increases of tobacco products could affect our operating results.
Sales of tobacco products have averaged approximately 9% of our total revenue over the past three fiscal years, and our tobacco gross
profit accounted for approximately 13% of total gross profit for the same period. Significant increases in wholesale cigarette costs or tax
increases on tobacco products may have an adverse effect on unit demand for cigarettes domestically. Currently, major cigarette manufacturers
offer rebates to retailers. We include these rebates as a component of our gross margin from sales of cigarettes. In the event these rebates are
no longer offered or decreased, our wholesale cigarette costs will increase accordingly. 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.
Future legislation and campaigns to discourage smoking may have a material adverse effect on our revenues and gross profit.
Future legislation and national, state and local campaigns to discourage smoking could have a substantial impact on our business, as
consumers adjust their behaviors in response to such legislation and campaigns. Reduced demand for cigarettes could have a material
adverse effect on sales of, and margins for, the cigarettes we sell.
Future consumer or other litigation could adversely affect our financial condition and results of operations.
Our retail operations are characterized by a high volume of customer traffic and by transactions involving a wide array of product selections.
These operations carry a higher exposure to consumer litigation risk when compared to the operations of companies operating in many other
industries. Consequently, we may become a party to individual personal injury, bad fuel, products liability and other legal actions in the
ordinary course of our business. While these actions are generally routine in nature, incidental to the operation of our business and immaterial
in scope, if our assessment of any action or actions should prove inaccurate, our financial condition and results of operations could be
adversely affected. Additionally, we are occasionally exposed to industry-wide or class-action claims arising from the products we carry or
industry-specific business practices. For example, various petroleum marketing retailers, distributors and refiners are currently defending
class-action claims alleging that the sale of unadjusted volumes of fuel at temperatures in excess of 60 degrees Fahrenheit violates various
state consumer protection laws due to the expansion of the fuel with the increase of fuel temperatures. Certain claims asserted in these
lawsuits, if resolved against us, could give rise to substantial damages. Our defense costs and any resulting damage awards or settlement
amounts may not be fully covered by our insurance policies. Thus, an unfavorable outcome or settlement of one or more of these lawsuits
could have a material adverse effect on our financial position, liquidity and results of operations in a particular period or periods.
General economic conditions that are largely out of the Company’s control may adversely affect the Company’s financial condition and
results of operations.
Recessionary economic cycles, higher interest rates, higher fuel and other energy costs, inflation, increases in commodity prices, higher
levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors that may affect
consumer spending or buying habits could adversely affect the demand for products the Company sells in its stores. In addition, the recent
turmoil in the financial markets may have an adverse effect on the U.S. and world economy, which could negatively impact consumer spending
patterns. There can be no assurances that government responses to the disruptions in the financial markets will restore consumer confidence.
9
Risks Related to Our Business
Unfavorable weather conditions could adversely affect 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,
flooding, 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, 2008 through April 30, 2009 we acquired 16 convenience stores. We expect to continue
pursuing acquisition opportunities.
Acquisitions involve risks that could cause our actual growth or operating results to differ materially from our expectations or the
expectations of securities analysts. These risks include:
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(cid:47)(cid:133)(cid:105)(cid:202)(cid:136)(cid:152)(cid:62)(cid:76)(cid:136)(cid:143)(cid:136)(cid:204)(cid:222)(cid:202)(cid:204)(cid:156)(cid:202)(cid:136)(cid:96)(cid:105)(cid:152)(cid:204)(cid:136)(cid:118)(cid:222)(cid:202)(cid:62)(cid:152)(cid:96)(cid:202)(cid:62)(cid:86)(cid:181)(cid:213)(cid:136)(cid:192)(cid:105)(cid:202)(cid:195)(cid:213)(cid:136)(cid:204)(cid:62)(cid:76)(cid:143)(cid:105)(cid:202)(cid:195)(cid:136)(cid:204)(cid:105)(cid:195)(cid:202)(cid:62)(cid:204)(cid:202)(cid:62)(cid:96)(cid:219)(cid:62)(cid:152)(cid:204)(cid:62)(cid:125)(cid:105)(cid:156)(cid:213)(cid:195)(cid:202)(cid:171)(cid:192)(cid:136)(cid:86)(cid:105)(cid:195)(cid:198)
(cid:85)(cid:202) (cid:10)(cid:156)(cid:147)(cid:171)(cid:105)(cid:204)(cid:136)(cid:204)(cid:136)(cid:156)(cid:152)(cid:202)(cid:136)(cid:152)(cid:202)(cid:204)(cid:62)(cid:192)(cid:125)(cid:105)(cid:204)(cid:105)(cid:96)(cid:202)(cid:147)(cid:62)(cid:192)(cid:142)(cid:105)(cid:204)(cid:202)(cid:62)(cid:192)(cid:105)(cid:62)(cid:195)(cid:198)
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to support our future growth;
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(cid:85)(cid:202)
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acquisitions; and
(cid:85)(cid:202) (cid:10)(cid:133)(cid:62)(cid:143)(cid:143)(cid:105)(cid:152)(cid:125)(cid:105)(cid:195)(cid:202)(cid:62)(cid:195)(cid:195)(cid:156)(cid:86)(cid:136)(cid:62)(cid:204)(cid:105)(cid:96)(cid:202)(cid:220)(cid:136)(cid:204)(cid:133)(cid:202)(cid:204)(cid:133)(cid:105)(cid:202)(cid:86)(cid:156)(cid:152)(cid:195)(cid:213)(cid:147)(cid:147)(cid:62)(cid:204)(cid:136)(cid:156)(cid:152)(cid:202)(cid:62)(cid:152)(cid:96)(cid:202)(cid:136)(cid:152)(cid:204)(cid:105)(cid:125)(cid:192)(cid:62)(cid:204)(cid:136)(cid:156)(cid:152)(cid:202)(cid:156)(cid:118)(cid:202)(cid:62)(cid:152)(cid:222)(cid:202)(cid:118)(cid:213)(cid:204)(cid:213)(cid:192)(cid:105)(cid:202)(cid:62)(cid:86)(cid:181)(cid:213)(cid:136)(cid:195)(cid:136)(cid:204)(cid:136)(cid:156)(cid:152)(cid:176)
We are subject to federal and state environmental and other regulations.
Our business is subject to extensive governmental laws and regulations that include but are not limited to environmental and employment
laws and regulations; legal restrictions on the sale of alcohol, tobacco, and lottery products; requirements related to minimum wage, working
conditions, public accessibility, and citizenship. A violation of or change in such laws and/or regulations 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. Failure to remediate such contamination properly may make us liable to third parties and adversely
affect our ability to sell or lease such property.
10
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, ordinances, or regulations 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. State or federal lawmakers or regulators may also enact new laws
or regulations applicable to us that may have a material adverse and potentially disparate impact on our business.
The dangers inherent in the storage and transport of motor fuel could cause disruptions and could expose to us potentially significant
losses, costs or liabilities.
We store motor fuel in storage tanks at our retail locations. Additionally, we transport a significant portion of our motor fuel in our own
trucks, instead of by third-party carriers. Our operations are subject to significant hazards and risks inherent in transporting and storing motor
fuel. These hazards and risks include, but are not limited to, fires, explosions, traffic accidents, spills, discharges and other releases, any of
which could result in distribution difficulties and disruptions, environmental pollution, governmentally-imposed fines or clean-up obligations,
personal injury or wrongful death claims and other damage to our properties and the properties of others. As a result, any such event could
have a material adverse effect on our business, financial condition and results of operations.
We may incur costs or liabilities as a result of litigation or adverse publicity resulting from concerns over food quality, health or other
issues that could cause customers to avoid our convenience stores.
We may be the subject of complaints or litigation arising from food-related illness or injury in general which could have a negative impact
on our business. Additionally, negative publicity, regardless of whether the allegations are valid, concerning food quality, food safety or other
health concerns, employee relations or other matters related to our operations may materially adversely affect demand for our food and
could result in a decrease in customer traffic to our convenience stores.
11
It is critical to our reputation that we maintain a consistent level of high quality at our convenience stores. Health concerns, poor food
quality or operating issues stemming from one store or a limited number of stores could materially adversely affect the operating results of
some or all of our stores.
Because we depend on our senior management’s experience and knowledge of our industry, we could be adversely affected were we
to lose key members of our senior management team.
We are dependent on the continued efforts of our senior management team. If, for any reason, our senior executives do not continue to
be active in management, our business, financial condition or results of operations could be adversely affected. We also rely on our ability to
recruit qualified store managers, supervisors, district managers, regional managers and other store personnel. Failure to continue to attract
these individuals at reasonable compensation levels could have a material adverse effect on our business and results of operations.
We rely on our information technology systems to manage numerous aspects of our business, and a disruption of these systems could
adversely affect our business.
We depend on our information technology (IT) systems to manage numerous aspects of our business transactions and provide analytical
information to management. Our IT systems are an essential component of our business and growth strategies, and a serious disruption to
our IT systems could significantly limit our ability to manage and operate our business efficiently. These systems are vulnerable to, among
other things, damage and interruption from power loss or natural disasters, computer system and network failures, loss of telecommunications
services, physical and electronic loss of data, security breaches and computer viruses. Any disruption could cause our business and
competitive position to suffer and cause our operation results to be reduced. Also, our business continuity plan could fail.
Other Risks
Any issuance of shares of our common stock in the future could have a dilutive effect on your investment.
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 shareholders. 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.
12
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:
(cid:202)
(cid:202)
(cid:202)
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(cid:202)
(cid:202)
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(cid:85)(cid:202)
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(cid:85)(cid:202) (cid:10)(cid:133)(cid:62)(cid:152)(cid:125)(cid:105)(cid:195)(cid:202)(cid:136)(cid:152)(cid:202)(cid:147)(cid:62)(cid:192)(cid:142)(cid:105)(cid:204)(cid:202)(cid:219)(cid:62)(cid:143)(cid:213)(cid:62)(cid:204)(cid:136)(cid:156)(cid:152)(cid:195)(cid:202)(cid:156)(cid:118)(cid:202)(cid:86)(cid:156)(cid:147)(cid:171)(cid:62)(cid:152)(cid:136)(cid:105)(cid:195)(cid:202)(cid:136)(cid:152)(cid:202)(cid:156)(cid:213)(cid:192)(cid:202)(cid:136)(cid:152)(cid:96)(cid:213)(cid:195)(cid:204)(cid:192)(cid:222)(cid:202)(cid:62)(cid:152)(cid:96)(cid:202)(cid:147)(cid:62)(cid:192)(cid:142)(cid:105)(cid:204)(cid:202)(cid:105)(cid:219)(cid:62)(cid:143)(cid:213)(cid:62)(cid:204)(cid:136)(cid:156)(cid:152)(cid:195)(cid:202)(cid:156)(cid:118)(cid:202)(cid:156)(cid:213)(cid:192)(cid:202)(cid:136)(cid:152)(cid:96)(cid:213)(cid:195)(cid:204)(cid:192)(cid:222)(cid:202)(cid:125)(cid:105)(cid:152)(cid:105)(cid:192)(cid:62)(cid:143)(cid:143)(cid:222)(cid:198)
(cid:85)(cid:202) (cid:1)(cid:96)(cid:96)(cid:136)(cid:204)(cid:136)(cid:156)(cid:152)(cid:195)(cid:202)(cid:156)(cid:192)(cid:202)(cid:96)(cid:105)(cid:171)(cid:62)(cid:192)(cid:204)(cid:213)(cid:192)(cid:105)(cid:195)(cid:202)(cid:156)(cid:118)(cid:202)(cid:142)(cid:105)(cid:222)(cid:202)(cid:171)(cid:105)(cid:192)(cid:195)(cid:156)(cid:152)(cid:152)(cid:105)(cid:143)(cid:198)
(cid:85)(cid:202) (cid:1)(cid:86)(cid:204)(cid:136)(cid:156)(cid:152)(cid:195)(cid:202)(cid:204)(cid:62)(cid:142)(cid:105)(cid:152)(cid:202)(cid:76)(cid:222)(cid:202)(cid:156)(cid:213)(cid:192)(cid:202)(cid:86)(cid:156)(cid:147)(cid:171)(cid:105)(cid:204)(cid:136)(cid:204)(cid:156)(cid:192)(cid:195)(cid:198)
(cid:85)(cid:202)
(cid:45)(cid:62)(cid:143)(cid:105)(cid:195)(cid:202)(cid:156)(cid:118)(cid:202)(cid:86)(cid:156)(cid:147)(cid:147)(cid:156)(cid:152)(cid:202)(cid:195)(cid:204)(cid:156)(cid:86)(cid:142)(cid:202)(cid:76)(cid:222)(cid:202)(cid:204)(cid:133)(cid:105)(cid:202)(cid:10)(cid:156)(cid:147)(cid:171)(cid:62)(cid:152)(cid:222)(cid:93)(cid:202)(cid:195)(cid:105)(cid:152)(cid:136)(cid:156)(cid:192)(cid:202)(cid:156)(cid:118)(cid:119)(cid:86)(cid:105)(cid:192)(cid:195)(cid:93)(cid:202)(cid:156)(cid:192)(cid:202)(cid:156)(cid:204)(cid:133)(cid:105)(cid:192)(cid:202)(cid:62)(cid:118)(cid:119)(cid:143)(cid:136)(cid:62)(cid:204)(cid:105)(cid:195)(cid:198)(cid:202)(cid:62)(cid:152)(cid:96)
(cid:85)(cid:202) (cid:34)(cid:204)(cid:133)(cid:105)(cid:192)(cid:202)(cid:125)(cid:105)(cid:152)(cid:105)(cid:192)(cid:62)(cid:143)(cid:202)(cid:105)(cid:86)(cid:156)(cid:152)(cid:156)(cid:147)(cid:136)(cid:86)(cid:93)(cid:202)(cid:171)(cid:156)(cid:143)(cid:136)(cid:204)(cid:136)(cid:86)(cid:62)(cid:143)(cid:93)(cid:202)(cid:156)(cid:192)(cid:202)(cid:147)(cid:62)(cid:192)(cid:142)(cid:105)(cid:204)(cid:202)(cid:86)(cid:156)(cid:152)(cid:96)(cid:136)(cid:204)(cid:136)(cid:156)(cid:152)(cid:195)(cid:93)(cid:202)(cid:147)(cid:62)(cid:152)(cid:222)(cid:202)(cid:156)(cid:118)(cid:202)(cid:220)(cid:133)(cid:136)(cid:86)(cid:133)(cid:202)(cid:62)(cid:192)(cid:105)(cid:202)(cid:76)(cid:105)(cid:222)(cid:156)(cid:152)(cid:96)(cid:202)(cid:156)(cid:213)(cid:192)(cid:202)(cid:86)(cid:156)(cid:152)(cid:204)(cid:192)(cid:156)(cid:143)(cid:176)
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 retail 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 the Company’s 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 shareholder 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 shareholders. 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 shareholder for a period of three years after the date of the transaction in which the person became an interested shareholder
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 shareholders. These measures may be adopted without any further vote or action by our shareholders.
13
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We own our corporate headquarters and distribution center. Located on an approximately 45-acre site in Ankeny, Iowa, these adjacent
facilities and our vehicle service and maintenance center occupy a total of approximately 375,000 square feet. The original complex was
completed in February 1990 and placed in full service at that time. In fiscal 2007, we added 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, 2009, we also owned the land at 1,433 store locations and the buildings at 1,442 locations and leased the land at 45 locations
and the buildings at 36 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 information required to be set forth under this heading is incorporated by reference from Note 9, Contingencies, to the Consolidated
Financial Statements included in Part II, Item 8.
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 Global Select Market under the symbol CASY. The 50,842,712 shares of common stock
outstanding at April 30, 2009 had a market value of $1.4 billion, and there were 2,329 shareholders of record.
14
Common Stock Market Prices
High
$ 26.70
29.46
29.88
31.39
Calendar
Low
2008
$ 23.49
24.84
23.02
27.00
Q1
Q2
Q3
Q4
High
$ 29.65
26.30
30.48
31.11
Low
$ 21.69
19.97
21.80
20.63
Calendar
2009
Q1
High
$ 28.06
Low
$ 18.32
Calendar
2007
Q1
Q2
Q3
Q4
Dividends
We began paying cash dividends during fiscal 1991.The dividends paid in fiscal 2009 totaled $0.30 per share. The dividends paid in fiscal
2008 totaled $0.26 per share. On June 10, 2009, the Board of Directors declared a quarterly dividend of $0.085 payable August 17, 2009 to
shareholders of record on August 3, 2009. The Board expects to review the dividend every year at its June meeting.
The cash dividends declared during the calendar years 2007-09 were as follows:
Calendar
2007
Q1
Q2
Q3
Q4
Cash dividend
Calendar
Cash dividend
Calendar
Cash dividend
declared
$ 0.05
0.065
0.065
0.065
$ 0.245
2008
Q1
Q2
Q3
Q4
declared
$
0.065
0.075
0.075
0.075
$
0.29
2009
Q1
Q2
declared
$ 0.075
0.085
15
ITEM 6. SELECTED FINANCIAL DATA (In thousands, except per share amounts)
Statement of Earnings Data
Years ended April 30,
Total revenue
Cost of goods sold
Gross profit
Operating expenses
Depreciation and amortization
Interest, net
2009
2008
2007
2006
2005
$ 4,687,895
$ 4,828,793
$ 4,025,435
$ 3,493,914
$ 2,788,816
3,964,513
4,142,552
3,441,964
2,967,491
2,331,828
723,382
504,181
69,406
10,626
686,241
474,794
67,651
9,792
583,471
410,673
526,423
362,070
456,988
327,227
63,944
11,184
97,670
34,175
63,495
1,604
--------
56,947
8,896
98,510
35,330
63,180
1,629
1,083
51,734
10,739
67,288
24,875
42,413
5,660
--------
Earnings from continuing operations before income taxes
139,169
134,004
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
53,425
85,744
54
--------
49,031
84,973
82
--------
Net earnings
Basic
$
85,690
$
84,891
$
61,891
$
60,468
$
36,753
Earnings from continuing operations
$
1.69
$
1.68
$
1.26
$
1.25
$
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
$
$
--------
--------
--------
--------
.03
--------
.03
.02
1.69
$
1.68
$
1.23
$
1.20
$
1.68
$
1.67
$
1.25
$
1.24
$
--------
--------
--------
--------
.03
--------
.03
.02
Net earnings
$
1.68
$
1.67
$
1.22
$
1.19
$
.84
.11
--------
.73
.84
.11
--------
.73
Weighted average number of common
shares outstanding—basic
Weighted average number of common
shares outstanding—diluted
Dividends paid per common share
Balance Sheet Data
As of April 30,
Current assets
Total assets
Current liabilities
Long-term debt, net of current maturities
Shareholders’ equity
16
50,787
50,681
50,468
50,310
50,115
50,917
50,859
50,668
50,610
50,284
$
0.30
$
0.26
$
0.20
$
0.18
$
0.195
2009
2008
2007
2006
2005
$ 284,727
$ 313,256
$ 240,619
$ 192,766
$ 143,140
1,262,695
1,219,200
1,129,271
221,243
167,887
721,030
259,099
181,443
647,472
234,267
199,504
572,264
988,899
245,056
106,512
523,190
871,619
170,837
123,064
469,137
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands)
Please read the following discussion of the Company’s financial condition and results of operations in conjunction with the selected
historical consolidated financial data and consolidated financial statements and accompanying notes presented elsewhere in this Form 10-K.
Overview
The Company operates convenience stores under the name “Casey’s General Store”, “HandiMart” and “Just Diesel” in nine Midwestern
states, primarily Iowa, Missouri and Illinois. On April 30, 2009, there were a total of 1,478 stores in operation. All stores offer gasoline for sale
on a self-serve basis and 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 non-food items. We derive our revenue from the retail sale of
gasoline and the products offered in our stores.
Approximately 61% of all Casey’s General Stores are located in areas with populations of fewer than 5,000 persons, while approximately
13% of all stores are located in communities with populations exceeding 20,000 persons. We operate a central warehouse, the Casey’s
Distribution Center, adjacent to our Corporate Headquarters facility in Ankeny, Iowa, through which we supply grocery and general merchandise
items to our stores. At April 30, 2009, the Company owned the land at 1,433 store locations and the buildings at 1,442 locations, and leased the
land at 45 locations and the buildings at 36 locations.
During the fourth quarter of fiscal 2009, the Company earned $0.31 in earnings per share from continuing operations compared to $0.28
per share for the same quarter a year ago. Fiscal 2009 basic earnings per share was $1.69 versus $1.68 for the prior year. The Company’s
business is seasonal, and generally the Company experiences higher sales and profitability during the first and second fiscal quarters
(May-October), when customers tend to purchase greater quantities of gasoline and certain convenience items such as beer and soft drinks.
During the 2009 fiscal year, we acquired 16 convenience stores from other parties and completed 16 new store constructions.
The fourth quarter results reflected a 1.2% increase in same-store gasoline gallons sold, with an average margin of approximately
12.1 cents per gallon. For the fiscal year, same-store gallons were up 1% with an average margin of 12.9 cents per gallon. The Company’s
policy is to price to the competition, so the timing of retail price changes is driven by local competitive conditions.
Same store sales of grocery and other merchandise and prepared foods and fountain also showed gains during the fourth quarter.
Operating expenses increased in the fourth quarter due to a $9,100 pre-tax charge related to the previously disclosed settlement of two
wage and hour lawsuits.
The weakening U.S. economy and increased unemployment have generally had an adverse impact on consumer disposable income in
the Midwest. These conditions have not lowered the over-all demand for gasoline and the merchandise sold in stores, but management
expects to continue facing a challenging operating environment in the coming months. For further information concerning the Company’s
operating environment and certain of the conditions that may affect future performance, see the “Forward-looking Statements” at the end
of this Item 7.
17
Fiscal 2009 Compared with Fiscal 2008
Total revenue for fiscal 2009 decreased 2.9% to $4,687,895, primarily due to an 8.7% decrease in gas prices. That result was partially
offset by an increase in the number of gallons sold and an increase in same-store inside sales (grocery & other merchandise and prepared
food & fountain). Retail gasoline sales for the fiscal year were $3,321,549, a decrease of 6.7%, and gallons sold increased 2.2% to 1,241,502.
Inside sales increased 8.1% to $1,345,605.
Cost of goods sold as a percentage of total revenue was 84.6% for fiscal 2009 compared with 85.8% for the prior year. The gas margin
increased to 4.8% in fiscal 2009 from 4.7% in fiscal 2008. The grocery & other merchandise margin increased to 33.7% in fiscal 2009 from
33.1% in fiscal 2008 due to the continued popularity of high-margin beverages and gains in the cigarette category. The prepared food &
fountain margin decreased to 61.4% from 62.3% primarily due to the higher cost of cheese during fiscal 2009.
Operating expenses increased 6.2% in fiscal 2009 primarily due to a $9,100 pre-tax charge related to the previously disclosed settlement
of two wage and hour lawsuits and impairment charges of $2,553 related to the five stores damaged by the significant flooding in the upper
Midwest in June 2008. Without the effect of the lawsuit settlements and flood damages, operating expenses would have increased only 3.7%.
Lower gasoline prices resulted in lower sales, which increased the operating expense ratio to 10.8% of total revenue in fiscal 2009 from 9.8% in
the prior year. Lower gasoline prices also helped reduce our transportation costs and credit card fees during the second half of the year.
Depreciation and amortization expense increased 2.6% to $69,406 in fiscal 2009 from $67,651 in fiscal 2008. The increase was due to
capital expenditures made in fiscal 2009.
The effective tax rate increased 1.8% to 38.4% in fiscal 2009 from 36.6% in fiscal 2008. The increase in the effective tax rate was primarily
due to the increase to the deferred tax liability to reflect a correction to accumulated tax over book depreciation.
Net earnings from continuing operations increased to $85,744 in fiscal 2009 from $84,973 in fiscal 2008. The slight increase was due primarily
to an increase in same-store sales from the prior year, and an increase in the average margin on grocery & other merchandise sales.
Fiscal 2009 discontinued operations resulted in a loss of $54 (net of $35 income tax benefit) compared with a loss of $82 (net of $52
income tax benefit) in fiscal 2008. Discontinued stores had total revenues of $2,630 and $14,466 and pretax operating losses of $96 and $223
for fiscal 2009 and 2008, respectively. Included were gains on disposal of $7 (net of $3 income tax expense) and $89 (net of $35 income tax
expense) for the years ended April 30, 2009 and 2008, respectively. The gains on disposal for the years ended April 30, 2009 and 2008
resulted from the sale of stores previously impaired.
Fiscal 2008 Compared with Fiscal 2007
Total revenue for fiscal 2008 increased 20% to $4,828,793, primarily due to a 21.4% increase in gas prices, an increase in the number of
gallons sold, and an increase in same-store sales. Retail gasoline sales for the fiscal year were $3,559,245, an increase of 23.5%, and gallons
sold increased 1.8% to 1,214,932. Inside sales increased 11.1% to $1,244,820.
Cost of goods sold as a percentage of total revenue was 85.8% for fiscal 2008 compared with 85.5% for the prior year. The gas margin
increased to 4.7% in fiscal 2008 from 4.3% in fiscal 2007. The grocery & other merchandise margin increased to 33.1% in fiscal 2008 from
32.7% in fiscal 2007 due to the growing popularity of high-margin beverages. In the prior year, the State of Iowa substantially increased the
excise tax on cigarettes without implementing an inventory floor tax resulting in a one-time benefit of $4,800. Without the one time benefit,
the margin would have been 32.1%. The prepared food & fountain margin increased to 62.3% from 62%.
18
Operating expenses increased 15.6% in fiscal 2008, driven by an increase in bank fees resulting from customers’ greater use of credit
cards and higher retail gasoline prices, higher wages, and additional insurance claims. Higher gasoline prices decreased the operating
expense ratio to 9.8% of total revenue in fiscal 2008 from 10.2% in the prior year.
Depreciation and amortization expense increased 5.8% to $67,651 in fiscal 2008 from $63,944 in fiscal 2007. The increase was due to
capital expenditures made in fiscal 2008.
The effective tax rate increased 1.6% to 36.6% in fiscal 2008 from 35% in fiscal 2007. The increase in the effective tax rate was primarily
due to the increase in the Financial Accounting Standards Board Interpretation No. 48 (FIN 48) tax contingencies and the stability in the
applicable rate of the total net deferred tax liabilities. This increase was partially offset by the increase in federal tax credits.
Net earnings from continuing operations increased to $84,973 in fiscal 2008 from $63,495 in fiscal 2007. The increase was due primarily
to the increase in the gross profit margin per gallon of gasoline sold, an increase in same-store sales from the prior year, and slight increases
in the average margin on grocery & other merchandise sales and prepared food & fountain sales.
Fiscal 2008 discontinued operations resulted in a loss of $82 (net of $52 income tax benefit) compared with a loss of $1,604 (net of
$1,025 income tax benefit) in fiscal 2007. Discontinued stores had total revenues of $14,466 and $21,627 and pretax operating losses of $223
and $611 for fiscal 2008 and 2007, respectively. Included was a gain on disposal of $89 (net of $35 income tax expense) for the year ended
April 30, 2008 and a loss on disposal of $2,018 (net of $787 income tax benefit) for the year ended April 30, 2007. The gain and loss on
disposal for the years ended April 30, 2008 and 2007 included write-downs of stores to net realizable value, as well as gains and losses on
sales of stores.
COMPANY TOTAL REVENUE AND GROSS PROFITS
Years ended April 30,
Total revenue
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other
Gross profits (1)
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other
INDIVIDUAL STORE COMPARISONS (2)
Years ended April 30,
Average retail sales
Average retail inside sales
Average gross profit on inside items
Average retail sales of gasoline
Average gross profit on gasoline (3)
Average operating income (4)
Average number of gallons sold
2009
2008
2007
$
3,321,549
$
3,559,245
$
2,881,991
1,010,018
335,587
20,741
943,118
301,702
24,728
853,215
267,353
22,876
$
4,687,895
$
4,828,793
$
4,025,435
$
159,787
$
168,934
$
339,933
205,954
17,708
311,959
188,002
17,346
$
723,382
$
686,241
$
2009
2008
$
3,228
$
3,305
$
928
373
2,301
108
146
859
856
340
2,449
115
136
836
124,151
278,731
165,808
14,781
583,471
2007
2,763
778
302
1,985
84
102
821
19
(1) Gross profits represent total revenue less cost of goods sold. Gross profit is given before charge for depreciation and amortization.
(2)
Individual 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.
(3) Retail gasoline profit margins have a substantial impact on our net income. Profit margins on gasoline sales can be adversely affected by
factors beyond our control, 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 our earnings.
(4) 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, Company operating expenses not attributable to
a particular store, and our payments to the Company’s benefit plan.
Critical Accounting Policies
Critical accounting policies are those accounting policies that we believe are important to the portrayal of our 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. We often receive 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.
20
Long-lived Assets
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, 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 future cash flows to be
generated and 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 us is generally on a store-by-store basis. We recorded impairment charges of $1,262 in fiscal 2009,
$450 in fiscal 2008, and $1,475 in fiscal 2007.
Self-insurance
We are 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
balance of our self-insurance reserves were $14,910 and $14,179 for the years ended April 30, 2009 and 2008, respectively.
Liquidity and Capital Resources
Due to the nature of our business, most sales are for cash; cash from operations is our primary source of liquidity. We finance our inventory
purchases primarily from normal trade credit aided by relatively rapid inventory turnover. This turnover allows us to conduct operations without
large amounts of cash and working capital. As of April 30, 2009, the Company’s ratio of current assets to current liabilities was 1.29 to 1. The
ratio at April 30, 2008 and at April 30, 2007 was 1.21 to 1 and 1.03 to 1, respectively. We believe our current $50,000 bank line of credit
together with cash flow from operations will be sufficient to satisfy the working capital needs of our business.
Net cash provided by operating activities decreased $7,147 (4%) in the year ended April 30, 2009, primarily because of a large decrease
in accounts payable. Accounts payable decreased primarily due to the low cost per gallon of gasoline. This result was partially offset by a
large decrease in inventories and increases in deferred income taxes and accrued expenses. Cash used in investing in the year ended
April 30, 2009 increased $55,445 (62.2%) primarily due to the increase in the purchase of property and equipment. Cash flows from financing
decreased $7,345 (17.6%), primarily due to reduced repayments of long-term debt.
Capital expenditures represent the single largest use of Company funds. We believe that by reinvesting in stores, we will be better able to
respond to competitive challenges and increase operating efficiencies. During fiscal 2009, we expended $144,739 for property and equipment,
primarily for the acquisition and remodeling of stores compared with $89,315 in the prior year. In fiscal 2010, we anticipate expending
approximately $165,000, primarily from existing cash and funds generated by operations, for construction, acquisition, and remodeling of stores.
As of April 30, 2009, we had long-term debt, net of current maturities, of $167,887 consisting of $100,000 in principal amount of 5.72%
senior notes, series A and B; $30,000 in principal amount of 7.38% senior notes; $17,000 in principal amount of senior notes, series A through
series F, with interest rates ranging from 6.18% to 7.23%; $11,429 in principal amount of 7.89% senior notes, series A; $1,175 of mortgage
notes payable; and $8,283 of capital lease obligations.
21
Interest on the 5.72% senior notes series A and series B is payable on the 30th day of each March and September. Principal on the senior
notes series A and series B is payable in various installments beginning September 30, 2012. We may prepay the 5.72% senior notes series
A and series B in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the
Note Agreement dated September 29, 2006 between the Company and the purchasers of the 5.72% senior notes series A and series B.
Interest on the 7.38% senior notes is payable on the 29th day of each June and December. Principal on the 7.38% senior notes is payable
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. We 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 on
the 6.18% to 7.23% senior notes series A through series F is payable in various installments beginning April 23, 2004. We 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 on 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. We 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, we have 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 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. We do not expect such capital needs to adversely affect liquidity.
The table below presents our significant contractual obligations, including interest, at April 30, 2009:
Contractual Obligations
Payments due by period
Total
Less than 1 year
$
239,390
22,985
15,632
958
178
--------
--------
39,753
1-3 years
36,210
1,218
1,238
161
--------
--------
38,827
3-5 years More than 5 years
56,765
23
1,224
89
--------
--------
58,101
123,430
--------
14,025
20
--------
--------
137,475
16,873
17,445
448
6,621
11,085
291,862
Senior notes
Mortgage notes
Capital lease obligations
Operating lease obligations
Unrecognized tax benefits
Deferred compensation
Total
$
22
Included in mortgage notes payable in less than 1 year in the table above is $8,521 relating to the purchase of the Gas ‘N Shop stores
that 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 us 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 within forty-five days of 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.
Unrecognized tax benefits relate to uncertain tax positions recorded under FIN 48, which we adopted on May 1, 2007. As we are not
able to reasonably estimate the timing of the payments or the amount by which the liability will increase or decrease over time, the related
balances have not been reflected in the “Payments Due by Period” section of the table.
At April 30, 2009, the Company had a total of $6,621 in gross unrecognized tax benefits. Of this amount, $4,967 represents the amount
of unrecognized tax benefits that, if recognized, would impact our effective tax rate. These unrecognized tax benefits relate to the state
income tax filing positions and federal tax credits claimed for the Company’s corporate subsidiaries. The total amount of accrued interest and
penalties for such unrecognized tax benefits was $650 as of April 30, 2009. Interest and penalties related to income taxes are classified as
income tax expense in our consolidated financial statements. The federal statute of limitations remains open for the years 2005 and forward.
Tax years 2003 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code
of each state.
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate
outcome or the timing of resolution for uncertain tax positions. It is reasonably probable that the amount of unrecognized tax benefits could
significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations,
examinations or other unforeseen circumstances. As of April 30, 2009, the Company did not have any ongoing federal income tax examinations.
Two states have examinations in progress. The Company did not have any outstanding litigation related to tax matters. At this time,
management does not expect the aggregate amount of unrecognized tax benefits to change significantly within the next 12 months.
Included in long-term liabilities on our consolidated balance sheet at April 30, 2009, was an $11,085 obligation for deferred compensation.
As the specific payment dates for the deferred compensation are unknown due to the unknown retirement dates of many of the participants,
the related balances have not been reflected in the “Payments Due by Period” section of the table.
At April 30, 2009, we were partially self-insured for workers’ compensation claims in all nine states of our marketing territory; we also
were 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 $10,000 and $8,800, respectively, were issued
and outstanding at April 30, 2009 and 2008, on the insurance company’s behalf. We renew 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 our 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. We caution you 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.
23
We ask you not to place undue reliance on such forward-looking statements because they speak only of our views as of the statement dates.
Although we have attempted to list the important factors that presently affect the Company’s business and operating results, we further caution
you that other factors may in the future prove to be important in affecting the Company’s results of operations. We undertake 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
Our 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 stores. Many of the food (including prepared foods) and nonfood items similar or identical to
those we sell are generally available from a variety of competitors in the communities served by stores, and we compete 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 nongasoline items (particularly prepared food items) have contributed substantially to our gross profit
on retail sales in recent years. Gasoline sales are intensely competitive. We compete for gasoline sales with both independent and national
brand gasoline stations, other convenience store chains, and several nontraditional gasoline retailers such as supermarkets in specific markets.
Some of these other gasoline retailers may have access to more favorable arrangements for gasoline supply than do we or the firms that
supply our stores. Some of our competitors have greater financial, marketing, and other resources than we have and therefore 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 our revenue and earnings, and retail gasoline profit margins have a substantial impact on our net
income. Profit margins on gasoline sales can be affected adversely by factors beyond our control, 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 our operating
results and financial conditions. These factors could materially affect gasoline gallon volume, gasoline gross profit, and overall customer
traffic levels at stores. Any substantial decrease in profit margins on gasoline sales or in the number of gallons sold by stores could have a
material adverse effect on our earnings.
The Company purchases its gasoline from a variety of independent national and regional petroleum distributors. Although in recent
years suppliers have not experienced any difficulties in obtaining sufficient amounts of gasoline to meet our needs, unanticipated national
and international events could result in a reduction of gasoline supplies available for distribution. Any substantial curtailment in our gasoline
supply would reduce gasoline sales. Further, we believe a significant amount of our 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 on our earnings and operations.
24
Tobacco Products
Sales of tobacco products represent a significant portion of our 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 stores. We attempt to pass price increases on to our customers, but competitive pressures in
specific markets may prevent us from doing so. These factors could materially affect the retail price of cigarettes, the volume of cigarettes
sold by stores, and overall customer traffic.
Environmental Compliance Costs
The United States Environmental Protection Agency and several of the states in which we do business have adopted laws and regulations
relating to underground storage tanks used for petroleum products. In the past, we have incurred substantial costs to comply with such regulations,
and additional substantial costs may be necessary in the future. Several states in which we do 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 we regularly accrue expenses for the estimated costs related to future corrective action or remediation efforts, there can be no assurance
that the accrued amounts will be sufficient to pay such costs or that we have identified all environmental liabilities at all of our current store locations.
In addition, there can be no assurance that we 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 we may acquire in the future, that we will not
be subject to any claims for reimbursement of funds disbursed to us 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 the 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 stores and may have an adverse impact on our 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 our investment portfolio and long-term debt
obligations. We place our investments with high-quality credit issuers and, by policy, limit the amount of credit exposure to any one issuer. Our
first priority is to reduce the risk of principal loss. Consequently, we seek to preserve our invested funds by limiting default risk, market risk, and
reinvestment risk. We mitigate default risk by investing in only high-quality credit securities that we believe to be low risk and by positioning our
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. We believe an immediate 100-basis-point move in
interest rates affecting our floating and fixed rate financial instruments as of April 30, 2009 would have no material effect on pretax earnings.
In the past, we have used derivative instruments such as options and futures to hedge against the volatility of gasoline cost and were at risk
for possible changes in the market value of these derivative instruments. No such derivative instruments were used during fiscal year 2009, 2008,
or 2007. However, we do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee.
25
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 (the Company) as of
April 30, 2009 and 2008, and the related consolidated statements of earnings, shareholders’ equity and cash flows for each of the years in
the three-year period ended April 30, 2009. 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, 2009 and 2008 and the results of their operations and their cash flows for each of
the years in the three-year period ended April 30, 2009, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 1 to the Consolidated Financial Statements, the Company changed its method of accounting for stock based
compensation effective May 1, 2006, and changed its method of quantifying errors effective in 2007.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
Company’s internal control over financial reporting as of April 30, 2009, 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 June 29, 2009
expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Des Moines, Iowa
June 29, 2009
26
The Board of Directors and Shareholders
Casey’s General Stores, Inc.:
We have audited Casey’s General Stores, Inc. and subsidiaries (the Company) internal control over financial reporting, as of April 30,
2009, 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, appearing under Item 9A. Our responsibility is to
express an opinion on 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,
assessing the risk that a material weakness exists, and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audit also included 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, Casey’s General Stores, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial
reporting as of April 30, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
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, 2009 and 2008, and the related consolidated
statements of earnings, shareholders’ equity and cash flows for each of the years in the three-year period ended April 30, 2009, and our
report dated June 29, 2009 expressed an unqualified opinion on those consolidated financial statements.
Des Moines, Iowa
June 29, 2009
27
CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
April 30,
Assets
Current assets
Cash and cash equivalents
Receivables
Trade
Other
Inventories
Prepaid expenses
Deferred income taxes
Income taxes receivable
Total current assets
Property and equipment, at cost
Land
Buildings and leasehold improvements
Machinery and equipment
Leasehold interest in property and equipment
Less accumulated depreciation and amortization
Net property and equipment
Other assets, net of amortization
Goodwill
Total assets
Liabilities and Shareholders’ Equity
Current liabilities
Current maturities of long-term debt
Accounts payable
Accrued expenses
Wages and related taxes
Property taxes
Insurance
Other
Total current liabilities
Long-term debt, net of current maturities
Deferred income taxes
Deferred compensation
Other long-term liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, none issued
Common stock, no par value, 50,842,712 and 50,733,162 shares
issued and outstanding at April 30, 2009 and 2008, respectively
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
28
See accompanying notes to consolidated financial statements.
2009
2008
$
145,695
$
154,523
7,888
3,000
106,528
1,394
11,895
8,327
284,727
273,406
568,366
711,090
17,924
16,662
--------
124,503
1,419
8,398
7,751
313,256
249,842
523,748
655,270
15,194
1,570,786
1,444,054
652,376
918,410
8,582
50,976
595,316
848,738
8,898
48,308
$
1,262,695
$
1,219,200
$
28,442
$
115,436
23,155
14,156
19,111
20,943
221,243
167,887
125,536
11,085
15,914
541,665
34,383
163,343
13,816
13,877
18,265
15,415
259,099
181,443
105,959
10,201
15,026
571,728
--------
--------
60,804
660,226
721,030
57,690
589,782
647,472
$
1,262,695
$
1,219,200
CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share amounts)
Years ended April 30,
Total revenue
2009
2008
2007
$
4,687,895
$
4,828,793
$
4,025,435
Cost of goods sold (exclusive of depreciation, shown separately below)
3,964,513
4,142,552
3,441,964
Gross profit
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 of $35, $52 and $1,025
Net earnings
Basic
Earnings from continuing operations
Loss on discontinued operations, net of tax benefit
Net earnings per common share
Diluted
Earnings from continuing operations
Loss on discontinued operations, net of tax benefit
Net earnings per common share
See accompanying notes to consolidated financial statements.
723,382
504,181
69,406
10,626
139,169
53,425
85,744
54
686,241
474,794
67,651
9,792
134,004
49,031
84,973
82
$
$
$
$
$
85,690
$
84,891
$
1.69
$
1.68
$
-----
-----
1.69
$
1.68
$
1.68
$
1.67
$
-----
-----
1.68
$
1.67
$
583,471
410,673
63,944
11,184
97,670
34,175
63,495
1,604
61,891
1.26
.03
1.23
1.25
.03
1.22
29
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (In thousands, except share and per share amounts)
Balance at April 30, 2006
Net earnings
Payment of dividends (20 cents per share)
Proceeds from exercise of stock options (223,550 shares)
Tax benefits related to nonqualified stock options
Stock based compensation
Common
stock
Retained
earnings
Total
$
49,161
$
474,029 $
523,190
--------
--------
2,941
919
526
61,891
(10,098)
--------
--------
--------
61,891
(10,098)
2,941
919
526
Cumulative effect of adjustments resulting from the adoption of SAB No. 108
--------
(7,105)
(7,105)
Balance at April 30, 2007
Net earnings
Payment of dividends (26 cents per share)
Proceeds from exercise of stock options (156,950 shares)
Tax benefits related to nonqualified stock options
Stock based compensation
Remeasurement of income taxes upon adoption of FIN 48
Balance at April 30, 2008
Net earnings
Payment of dividends (30 cents per share)
Proceeds from exercise of stock options (93,550 shares)
Tax benefits related to nonqualified stock options
Stock based compensation
Balance at April 30, 2009
See accompanying notes to consolidated financial statements.
$
53,547
$
518,717 $
572,264
--------
--------
2,104
607
1,432
--------
84,891
(13,180)
--------
--------
--------
(646)
84,891
(13,180)
2,104
607
1,432
(646)
$
57,690
$
589,782 $
647,472
--------
--------
1,346
512
1,256
85,690
(15,246)
--------
--------
--------
85,690
(15,246)
1,346
512
1,256
$
60,804
$ 660,226
$ 721,030
30
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Years ended April 30,
Cash flows from operating activities
Net earnings
2009
2008
2007
$
85,690 $
84,891 $
61,891
Adjustments to reconcile net earnings to net cash provided by operations
Loss from discontinued operations
Depreciation and amortization
Other (accretion) amortization
Stock-based compensation
Loss on sale of property and equipment
Deferred income taxes
Excess tax benefits related to stock option exercises
Changes in assets and liabilities
Receivables
Inventories
Prepaid expenses
Accounts payable
Accrued expenses
Income taxes receivable
Other, net
Net cash provided by operating activities
Cash flows from investing activities
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 activities
Proceeds from long-term debt
Payments of long-term debt
Proceeds from exercise of stock options
Payments of cash dividends
Excess tax benefits related to stock option exercises
Net cash (used in) provided by financing activities
Cash flows from discontinued operations
Operating cash flows
Investing cash flows
Net cash flows provided by discontinued operations
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
54
69,406
(192)
1,256
4,071
16,080
(512)
5,774
17,975
25
(47,907)
15,992
1,005
1,166
82
67,651
271
1,432
2,996
235
(607)
(3,230)
(14,801)
(2,132)
28,968
9,047
1,146
1,081
1,604
63,944
482
526
3,076
(406)
(919)
(2,400)
(10,437)
(696)
(11,746)
4,681
1,233
2,607
169,883
177,030
113,440
(147,407)
(91,035)
--------
2,891
--------
1,964
(90,729)
(66,729)
2,764
(144,516)
(89,071)
(154,694)
--------
(21,100)
1,346
(15,246)
512
(34,488)
(16)
309
293
(8,828)
154,523
--------
(31,364)
2,104
(13,180)
607
(41,833)
71
1,259
1,330
47,456
107,067
100,000
(22,814)
2,941
(10,098)
919
70,948
790
1,214
2,004
31,698
75,369
$
145,695
$
154,523
$
107,067
31
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for
Interest, net of amount capitalized
Income taxes
Noncash investing and financing activities
2009
2008
$
13,142
$
15,354
$
34,229
47,710
2007
12,417
31,271
Property and equipment acquired through notes payable
1,603
120
11,744
and capitalized lease obligations
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share and per share amounts)
1. SIGNIFICANT ACCOUNTING POLICIES
Operations Casey’s General Stores, Inc. and its subsidiaries (the Company/Casey’s) operate 1,478 convenience stores in nine Midwest
states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail sales in 2009 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. We consider 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, beverages, and prepared foods, which are stated at cost) is determined by the retail inventory 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, 2009 and 2008:
Fiscal 2009
Fiscal 2008
Gasoline
Merchandise
Merchandise LIFO reserve
Total inventory
$
$
37,377
98,988
(29,837)
106,528
59,823
88,978
(24,298)
124,503
32
Goodwill Statement of Financial Accounting Standards (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. The Company
assesses goodwill in the fourth quarter using a market based approach to establish fair value. As of April 30, 2009, there was $50,976 of
goodwill, and management’s analysis of recoverability completed as of the fiscal year-end yielded no evidence of impairment. During fiscal
2009 and fiscal 2008, there were several individually immaterial business acquisitions that resulted in increases of goodwill of $2,668
and $1,720, respectively. Payments relating to these business acquisitions are included in purchase of property and equipment on the
accompanying Consolidated Statements of Cash Flows.
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 the
asset qualifies as held for sale or is disposed of and no further involvement or benefit is expected upon disposal. Operating results of discontinued
operations include related write-downs 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 gains on disposal of $7 (net of $3 income tax expense) and
$89 (net of $35 income tax expense) for the years ended April 30, 2009 and 2008, respectively. Losses on disposal of $2,018 (net of $787
income tax benefit) were recorded for the year ended April 30, 2007. Assets held for sale at April 30, 2009 and 2008 were approximately
$250 and $1,650, respectively, and are included in net property & equipment in the accompanying Consolidated Balance Sheets.
The Company 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, 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 $1,262 in fiscal 2009, $450 in fiscal 2008, and
$1,475 in fiscal 2007. 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
33
Excise taxes Excise taxes approximating $439,000, $414,000, and $423,000 collected from customers on retail gasoline sales are
included in net sales for fiscal 2009, 2008, and 2007, 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, prepared food & fountain, and
commissions on lottery, prepaid phone cards, and video rentals at the time of the sale to the customer. Sales taxes collected from customers
are recorded on a net basis in the financial statements.
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. Vendor rebates
in the form of rack display allowances are treated as a reduction in cost of sales and are recognized incrementally over the period covered by the
applicable rebate agreement. Vendor rebates in the form of billbacks are treated as a reduction in cost of sales and are recognized at the time the
product is sold. Reimbursements of an operating expense (e.g., advertising) are recorded as reductions of the related expense.
Discontinued operations Sales from discontinued operations were $2,630, $14,466, and $21,627 for the years ended April 30, 2009,
2008, and 2007, respectively. Losses from discontinued operations were $54 for the year ended April 30, 2009, including a $7 pretax gain on
disposal. Losses from discontinued operations were $82 and $1,604 for the years ended April 30, 2008 and 2007, respectively. Losses from
discontinued operations were net of tax benefits of $35, $52, and $1,025, for the years ended April 30, 2009, 2008, and 2007, respectively.
The Company’s consolidated balance sheets as of April 30, 2009 and 2008, respectively, included approximately $250 and $1,650 in net
property and equipment classified as assets held for sale; there were 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. The calculation of diluted earnings per share treats stock options outstanding as
potential common shares to the extent they are dilutive.
34
Asset retirement obligations The Company recognizes the estimated future cost to remove an underground storage tank over the
estimated useful life of the storage tank in accordance with the provisions of SFAS No. 143, Accounting for Asset Retirement Obligations.
The Company records a discounted liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying
value of the related long-lived asset at the time an underground storage tank is installed. The Company amortizes the amount added to other
assets and recognizes accretion expense in connection with the discounted liability over the remaining life of the tank. The estimates of the
anticipated future costs for removal of an underground storage tank are based on our prior experience with removal. The cost estimates are
compared to the actual removal cost experienced on an annual basis, and when the actual costs exceed our original estimates, an additional
liability for estimated future costs to remove the underground storage tanks will be recognized. Because these estimates are subjective and
are currently based on historical costs with adjustments for estimated future changes in the associated costs, we expect the dollar amount of
these obligations to change as more information is obtained. There were no material changes in our asset retirement obligation estimates
during fiscal 2009. The fair value of the recorded asset was $6,210 and $6,199 at April 30, 2009 and 2008, respectively. The discounted
liability was $8,642 and $8,823, respectively, at April 30, 2009 and 2008 and is recorded in other long-term liabilities.
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 occasionally has used derivative instruments such as options and futures to hedge against the
volatility of gasoline cost, under which the Company was at risk for possible changes in the market value for these derivative instruments.
There were no such options or futures contracts during the years ended April 30, 2009, 2008, or 2007.
Stock-based compensation Effective May 1, 2006, the Company adopted the provisions of SFAS No. 123 (revised 2004) (SFAS 123R),
Share Based Payment using the “modified prospective” transition method. SFAS 123R requires the measurement of the cost of employee
services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost of the
award is recognized in the income statement over the vesting period of the award. Under the “modified prospective” transition method,
awards that are granted, modified or settled beginning at the date of adoption are measured and accounted for in accordance with SFAS
123R. In addition, expense must be recognized in the income statement for unvested awards that were granted prior to the date of adoption.
The expense will be based on the fair value determined at the grant date. The impact on net earnings as a result of the adoption of SFAS
123R was $1,256, $1,432, and $526 for fiscal 2009, 2008, and 2007, respectively.
Recent Accounting Pronouncements In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the application of FASB
Statement No. 109 by providing guidance on the recognition and measurement of an enterprise’s tax positions taken in a tax return. FIN 48
additionally clarifies how an enterprise should account for a tax position depending on whether the position is ‘more likely than not’ to pass
a tax examination. The interpretation provides guidance on measurement, derecognition, classification, interest and penalties, accounting in
interim periods, disclosure, and transition. The Company adopted FIN 48 in the first quarter of fiscal 2008 and reduced retained earnings by
$646 due to the adoption of this interpretation.
35
In September 2006, the Securities and Exchange Commission (SEC) released Staff Accounting Bulletin No. 108 (SAB No. 108),
Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB No. 108
addresses how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current year
financial statements. SAB No. 108 requires an entity to quantify misstatements using a balance sheet and income statement approach and to
evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. The
Company adopted SAB No. 108 in the fourth quarter of fiscal 2007.
The transition provisions of SAB No. 108 permit adjustment for the cumulative effect on retained earnings of errors previously determined
to be immaterial, but pursuant to the guidance in the SAB, would be considered material under the dual method.
The following table presents a description of the individual adjustments included in the cumulative adjustment to retained earnings in
fiscal 2007. These adjustments were identified by management in the normal course of performing internal control activities:
Deferred tax liability
Net property and equipment
Amount
Years Affected
$
$
6,201
904
7,105
1980s-2004
2002-2004
The deferred tax liability was understated primarily due to book vs. tax differences in depreciation and the recording of leases that were
capitalized for book purposes and treated as operating for tax purposes.
The property and equipment was overstated primarily due to the treatment of store replacements. Prior to May 1, 2004, the fixed assets
of the stores that were replaced were left on the fixed asset schedule and continued to be depreciated over their original lives. Beginning in
fiscal 2005, the entire remaining book value of the fixed assets was recorded as depreciation expense at the time a store was replaced.
In September 2006, the FASB issued SFAS 157, Fair Value Measurements (SFAS 157), which establishes a framework for measuring fair value
and requires expanded disclosures regarding fair value measurements. In February 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB
Statement 157 (FSP 157-2), which allows for the deferral of the adoption date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company elected to defer the
adoption of SFAS 157 for the assets and liabilities within the scope of FSP 157-2. The Company will adopt FSP 157-2 on May 1, 2009. In October
2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset in a Market That Is Not Active (FSP 157-3) which clarifies
the application of SFAS 157 when the market for a financial asset is inactive. The adoption of SFAS 157 for those assets and liabilities not subject
to the deferral permitted by FSP 157-2 did not have a material impact on the Company’s consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment
of FASB Statement No. 115 (SFAS No. 159). SFAS No. 159 permits entities to choose to measure financial instruments and certain other items at
fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for
financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company adopted
SFAS No. 159 on May 1, 2008 and it did not have a material impact on the Company’s consolidated financial statements.
36
In December 2007, the FASB issued SFAS No. 141 (revised 2007) Business Combinations SFAS No. 141R “Business Combinations”
replaces SFAS No. 141, and establishes requirements for recognition and measurement of identifiable assets acquired, liabilities assumed,
noncontrolling interest of the acquiree, goodwill acquired, and gain from bargain purchase. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after December 15,
2008. The Company will adopt SFAS No. 141R on May 1, 2009.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB
No. 51. SFAS No. 160 was issued to improve the relevance, comparability, and transparency of financial information provided to investors by
requiring all entities to report noncontrolling (minority) interest in subsidiaries as equity in the consolidated financial statements. SFAS No.
160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company will
adopt SFAS No. 160 on May 1, 2009 and does not expect it to have a material impact on the Company’s consolidated financial statements.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133. SFAS No. 161 amends and expands disclosure requirements for derivative instruments in order to provide users of
financial statements with an enhanced understanding of (a) how and why an entity uses derivative instruments, (b) how derivative instruments
and related hedged items are accounted for under SFAS No. 133, and its related interpretations and (c) how derivative instruments and
related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is to be applied prospectively
for the first reporting period beginning on or after November 15, 2008. The Company adopted SFAS No. 161 on February 1, 2009.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162) which reorganizes
the generally accepted accounting principles (GAAP) hierarchy as detailed in the statement. The purpose of the new standard is to improve
financial reporting by providing a consistent framework for determining what accounting principles should be used when preparing U.S.
GAAP financial statements. SFAS No. 162 became effective on November 15, 2008. The adoption did not effect the financial position, results
of operations or cash flows of the Company.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events (SFAS 165) which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 applies
prospectively to both interim and annual financial periods ending after June 15, 2009. The Company will adopt SFAS 165 on May 1, 2009.
Reclassifications Certain amounts in the prior years’ financial statements have been reclassified to conform to the current-year
presentation, primarily related to discontinued operations.
2. 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.
37
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 $173,000 and $195,000, respectively, at April 30, 2009 and 2008. The Company has a $50,000 line of credit with
no balance owed at April 30, 2009 and 2008.
Interest expense is net of interest income of $2,107, $5,125, and $1,321for the years ended April 30, 2009, 2008, and 2007, respectively.
Interest expense in the amount of $367, $182, and $284 was capitalized during the years ended April 30, 2009, 2008, and 2007, respectively.
The next table delineates the Company’s long-term debt at carrying value.
As of April 30,
Capitalized lease obligations discounted at 4.75% to 6% due in various
monthly installments through 2048 (Note 7)
Mortgage notes payable due in various installments through 2012 with
interest at 5.5% to 6%
7.38% senior notes due in 21 semi-annual installments beginning in
December 2010
Senior notes due in various installments from 2004 through 2019 with
interest at 6.18% to 7.23%
7.89% senior notes due in 7 annual installments beginning in May 2004
5.72% senior notes due in 14 installments beginning September 30, 2012
and ending March 30, 2020
Less current maturities
2009
$
8,758
2008
9,393
16,714
19,147
30,000
30,000
18,000
22,857
100,000
196,329
28,442
$
167,887
23,000
34,286
100,000
215,826
34,383
181,443
Various debt agreements contain certain operating and financial covenants. At April 30, 2009, 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, 2009 and thereafter:
Years ended April 30,
2010
2011
2012
2013
2014
Thereafter
$
$
28,442
14,717
4,539
14,045
27,029
107,557
196,329
Included in current maturities for fiscal 2010 in the preceding tables is $8,521 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 from the original acquisition date. The seller also has 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 within forty-five days of 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.
38
3. 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 $0.30, $0.26,
and $0.20 per share for the years ended April 30, 2009, 2008, and 2007, respectively.
Common share purchase rights On June 14, 2009, the shareholder Rights Plan, providing for the distribution of one common share
purchase right for each share of common stock outstanding was allowed to expire under its own terms and was not extended.
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 5,260,000 shares of common stock. Options for 494,164 shares were available for grant at
April 30, 2009, and options for 678,000 shares (which expire between 2009 and 2018) were outstanding. All stock option shares issued are
previously unissued authorized shares. Any additional option share requirements in the future will require approval by the shareholders of the
Company. Additional information is provided in the Company’s 2009 proxy statement.
On June 6, 2003, stock options totaling 307,000 shares were granted to certain officers and key employees. These awards vested on
June 6, 2006; subsequent to adoption of FAS 123R, and compensation expense was recognized ratably over the vesting period.
On July 5, 2005, stock options totaling 234,000 shares were granted to certain officers and key employees. These awards will vest on
July 5, 2010, and compensation expense is being recognized ratably over the vesting period.
On June 25, 2007, stock options totaling 246,000 shares were granted to certain officers and key employees. These awards will vest on
June 25, 2010, and compensation expense is being recognized ratably over the vesting period.
The 2000 Stock Option Plan allows the grant of employees options with an exercise price equal to the fair market value of the Company’s
stock on the date of grant and expire ten years after the date of grant. Vesting is generally over a three to five-year service period. The
non-employee Directors’ Stock Option Plan allows the grant of directors options with an exercise price equal to the average of the last
reported sale prices of shares of common stock on the last trading day of each of the twelve months preceding the award of the option. The
term of such options is ten years from the date of grant, and each option is exercisable immediately upon grant. The aggregate number of
shares of Common Stock that may be granted pursuant to the Director Stock Plan may not exceed 200,000 shares, subject to adjustment to
reflect any future stock dividends, stock splits, or other relevant capitalization changes. On May 1, 2009, stock options totaling 16,000 shares
were granted to the members of the Board of Directors.
39
The following table shows the stock option activity during the periods indicated:
Balance at April 30, 2006
Granted
Exercised
Forfeited
Balance at April 30, 2007
Granted
Exercised
Forfeited
Balance at April 30, 2008
Granted
Exercised
Forfeited
Balance at April 30, 2009
Number of
Weighted average
shares
exercise price
961,050
$
14,000
(223,550)
(22,000)
729,500
$
260,000
(156,950)
(49,000)
783,550
$
12,000
(93,550)
(24,000)
678,000
$
15.29
22.36
13.16
14.80
16.10
26.77
13.40
23.16
19.74
26.51
14.39
23.80
20.45
At April 30, 2009, all outstanding options had an aggregate intrinsic value of $4,241 and a weighted average remaining contractual life
of 5.8 years. The vested options totaled 270,000 shares with a weighted average exercise price of $15.20 per share and a weighted average
remaining contractual life of 3.8 years. The aggregate intrinsic value for the vested options as of April 30, 2009 was $3,081. The aggregate
intrinsic value for the total of all options exercised during the year ended April 30, 2009 was $1,151, and the total fair value of shares vested
during the year ended April 30, 2009 was $100.
The fair value of the 2009 stock options granted were estimated utilizing the Black Scholes valuation model. The grant date fair value for
the May 1, 2008 options was $8.30. The significant assumptions follow:
Risk-free interest rate
Expected option life
Expected volatility
Expected dividend yield
May 1, 2008
4.3%
8.9 years
37%
1.7%
The expected option life of each award granted was based upon historical experience of employees’ exercise behavior. Expected
volatility was based upon historical volatility levels of the Company’s common stock over a similar length of time. Expected dividend yield
was based on expected dividend rate. Risk-free interest rate reflects the yield of a zero coupon U.S. Treasury over the expected option life.
Total compensation costs recorded for the years ended April 30, 2009, 2008 and 2007 were $1,256, $1,432, and $526, respectively, for
the stock option awards. As of April 30, 2009, there was $955 of total unrecognized compensation costs related to the 2000 Stock Option
Plan for stock options that are expected to be recognized ratably through 2011.
40
At April 30, 2009, the range of exercise prices was $11.20–$26.92 and the weighted average remaining contractual life of outstanding
options was 5.8 years. The number of shares and weighted average remaining contractual life of the options by range of applicable exercise
prices at April 30, 2009 were as follows:
Range of
Number of
Weighted average
Weighted average remaining
exercise prices
$ 11.20 – 13.07
14.08 – 17.64
20.68 – 26.92
shares
58,500
177,500
442,000
678,000
exercise price
contractual life (years)
$ 11.82
14.54
23.97
2.1
3.5
7.3
4. EARNINGS PER COMMON SHARE
Computations for basic and diluted earnings per common share are presented below:
Years ended April 30,
Basic
Earnings from continuing operations
Loss on discontinued operations
Net earnings
Weighted average shares outstanding—basic
Earnings per common share from continuing operations
Loss per common share on discontinued operations
Basic earnings per common share
Diluted
Earnings from continuing operations
Loss on discontinued operations
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
Diluted earnings per common share
2009
2008
2007
$
$
$
$
$
$
$
$
85,744
$
84,973
$
54
82
85,690
$
84,891
$
63,495
1,604
61,891
50,787,309
50,681,011
50,467,739
1.69
$
1.68
$
--------
--------
1.69
$
1.68
$
85,744
$
84,973
$
54
82
85,690
$
84,891
$
1.26
.03
1.23
63,495
1,604
61,891
50,787,309
50,681,011
50,467,739
130,170
177,746
200,159
50,917,479
50,858,757
50,667,898
1.68
$
1.67
$
--------
--------
1.68
$
1.67
$
1.25
.03
1.22
Options to purchase shares of common stock that were not included in the computation of diluted earnings per share, because their
inclusion would have been antidilutive, were 224,500 for fiscal 2009 and fiscal 2008. All stock options outstanding were included in the
computation of diluted earnings per share for fiscal 2007.
41
5.
INCOME TAXES
Income tax expense attributable to earnings from continuing operations consisted of the following components:
Years ended April 30,
Current tax expense
Federal
State
Deferred tax expense
Total income tax provision
2009
2008
2007
$
31,801
$
43,501
$
5,480
37,281
16,144
6,705
50,206
(1,175)
$
53,425
$
49,031
$
31,889
2,786
34,675
(500)
34,175
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities
were as follows:
As of April 30,
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
2009
2008
2007
$
11,895
$
8,398
$
4,329
2,849
19,073
--------
19,073
(129,541)
(3,173)
(132,714)
4,180
2,420
14,998
--------
14,998
7,414
3,589
982
11,985
(186)
11,799
(110,452)
(2,107)
(112,559)
(109,146)
(1,749)
(110,895)
$
(113,641)
$
(97,561)
$
(99,096)
At April 30, 2009, the Company has net operating loss carryforwards for state income tax purposes of approximately $18,652, which are
available to offset future taxable income. These net operating losses expire during the years 2016 through 2019.
There was no valuation allowance for deferred tax assets as of April 30, 2009 and 2008. There was no net change in the valuation
allowance for the year ended April 30, 2009 and there was a decrease of $186 for the year ended April 30, 2008. 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 was established for a portion of the amount of net
operating loss carryovers—state taxes as of April 30, 2007 due to the uncertainty of future recoverability.
42
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.
Years ended April 30,
Income taxes at the statutory rates
Federal tax credits
State income taxes, net of federal tax benefit
Other
2009
35.0%
(1.1)
2.9
1.6
38.4%
2008
35.0%
(1.1)
3.3
(0.6)
36.6%
2007
35.0%
(0.8)
1.5
(0.7)
35.0%
The income tax benefit from discontinued operations was $35, $52, and $1,025 for the years ended April 30, 2009, 2008, and
2007, respectively.
In July 2006, the FASB issued FIN 48. The Company adopted the provisions of FIN 48, effective May 1, 2007. This interpretation was issued
to clarify the accounting for uncertainty in income taxes recognized in the financial statements by prescribing a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
The Company recognized additional tax liabilities of $646 with a corresponding reduction to beginning retained earnings as of May 1, 2007
as a result of the adoption of FIN 48. The total amount of gross unrecognized tax benefits was $4,037 as of May 1, 2007, the date of adoption
and $5,655 at April 30, 2008. At April 30, 2009, the Company had a total of $6,621 in gross unrecognized tax benefits. Of this amount, $4,967
represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits were
a net increase of $628 during the twelve months ended April 30, 2009 due to the increase associated with state income tax filing positions
offset by a lesser decrease due to the expiration of certain statute of limitations. This had the effect of increasing the effective state tax rate
during the fiscal year ending April 30, 2009. These unrecognized tax benefits relate to risks associated with state income tax filing positions
and federal tax credits claimed for the Company’s subsidiaries.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at April 30, 200
Additions based on tax positions related to current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Reductions due to lapse of applicable statute of limitations
Settlements
Balance at April 30, 2009
$
$
5,655
1,318
324
----
(676)
----
6,621
The total net amount of accrued interest and penalties for such unrecognized tax benefits was $548 at April 30, 2008 and is included in
income taxes payable. Interest and penalties related to unrecognized tax benefits are classified as income tax expense in our consolidated
statements of earnings and was $650 for the year ended April 30, 2009. Net interest and penalties included in income tax expense for the
twelve month period ended April 30, 2009 was an additional tax expense of $103 and an additional tax expense of $418 for the year ended
April 30, 2008. At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax
benefits is a decrease of approximately $2,000 during the next twelve months mainly due to the expiration of certain statute of limitations.
The federal statute of limitations remains open for the years 2005 and forward. Tax years 2003 and forward are subject to audit by state tax
authorities depending on open statute of limitations waivers and the tax code of each state.
43
6. LEASES
The Company leases certain property and equipment used in its operations. Generally, the leases are for primary terms of from five
to twenty 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:
Asset balances at April 30,
Real estate
Equipment
Less accumulated amortization
2009
14,287
3,637
17,924
10,047
7,877
$
$
2008
$ 11,716
3,478
15,194
7,132
$ 8,062
Future minimum payments under the capital leases and noncancelable operating leases with initial or remaining terms of one year or
more consisted of the following at April 30, 2009:
Years ended April 30,
Capital leases
Operating leases
2010
2011
2012
2013
2014
$
Thereafter
Total minimum lease payments
Less amount representing interest
Present value of net minimum lease payments
$
$
958
659
579
614
610
14,025
17,445
$
8,687
8,758
178
92
69
57
32
20
448
The total rent expense under operating leases was $596 in 2009, $688 in 2008, and $634 in 2007.
44
7. BENEFIT PLANS
401(k) plan The Company provides employees with a 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 $2,819, $2,682, and $2,456 for the years ended April 30, 2009, 2008, and 2007, respectively.
On April 30, 2009, the Company had 7,740 full-time employees and 11,040 part-time employees; 3,340 were active participants in the
Plan. As of that same date, 1,669,330 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 2 of its
executive officers, 1 of whom retired April 30, 2003 and the other on April 30, 2008. 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 twenty years of
retirement, the benefits become payable to the officer’s spouse until the spouse’s death or twenty years from the date of the officer’s retirement,
whichever comes first. The Company has accrued the deferred compensation over the term of employment. The amounts accrued at
April 30, 2009 and 2008, respectively, were $6,991 and $6,503. The discount rates used were 6.3% and 8%, respectively, at April 30, 2009
and 2008. The Company expects to pay $650 per year for each of the next five years. The amounts expensed in fiscal 2009, 2008, and 2007
were $488, $573 and $763, respectively.
8. COMMITMENTS
The Company has entered into an employment agreement with its chief executive officer. The agreement provides that the officer will
receive aggregate base compensation of $600 per year exclusive of bonuses. The agreement also provides for certain payments in the case
of death or disability of the officer. 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.
9. 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 has an accrued liability at April 30, 2009 and 2008 of
approximately $250 and $259, respectively, 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.
45
Legal matters The Company is named as a defendant in four lawsuits (“hot fuel” cases) brought in the federal courts in Kansas and
Missouri against a variety of gasoline retailers. The complaints generally allege that the Company, along with numerous other retailers, has
misrepresented gasoline volumes dispensed at its pumps by failing to compensate for expansion that occurs when fuel is sold at temperatures
above 60ºF. Fuel is measured at 60ºF in wholesale purchase transactions and computation of motor fuel taxes in Kansas and Missouri. The
complaints all seek certification as class actions on behalf of gasoline consumers within those two states, and one of the complaints also seeks
certification for a class consisting of gasoline consumers in all states. The actions generally seek recovery for alleged violations of state
consumer protection or unfair merchandising practices statutes, negligent and fraudulent misrepresentation, unjust enrichment, civil
conspiracy, and violation of the duty of good faith and fair dealing; several seek injunctive relief and punitive damages.
These actions are part of a number of similar lawsuits that have been filed since November 2006 in 28 jurisdictions, including 26 states,
Guam and the District of Columbia, against a wide range of defendants that produce, refine, distribute, and/or market gasoline products in
the United States. On June 18, 2007, the Federal Judicial Panel on Multidistrict Litigation ordered that all of the pending hot fuel cases
(officially, the “Motor Fuel Temperature Sales Practices Litigation”) be transferred to the U.S. District Court for the District of Kansas in
Kansas City, Kansas, for coordinated or consolidated pretrial proceedings, including rulings on discovery matters, various pretrial motions,
and class certification. Discovery efforts by both sides are being pursued. Management does not believe the Company is liable to the
defendants for the conduct complained of, and intends to contest the matters vigorously.
In April 2009, the Company and five individual directors or officers entered into settlement agreements with plaintiffs in two purported
collective and class actions pending in the United States District Court for the Southern District of Iowa (Kristina Jones, et al. v. Casey’s
General Stores, Inc., Robert J. Myers, Ronald M. Lamb, Terry W. Handley, Robert C. Ford, and Julia L. Jackowski, individually (“Jones action”)
and Connie Wineland, et al. v. Casey’s General Stores, Inc., Robert J. Myers, Ronald M. Lamb, Terry W. Handley, Robert C. Ford, and Julia L.
Jackowski (“Wineland action”)). The two actions are brought by plaintiffs seeking to represent approximately 7,800 current and former
assistant managers (Jones action) and approximately 76,000 current and former non-management-level store employees (Wineland action).
The plaintiffs generally sought back wages, liquidated damages, penalties, attorneys’ fees and costs, and equitable relief pursuant to various
federal and state wage and hour laws and related common law causes of action. (For more information on these proceedings, please see
Note 6 to the consolidated condensed financial statements included in Part 1, Item 1 of the Company’s Quarterly Report on Form 10-Q for
the fiscal quarter ended January 31, 2009). Under the settlement agreements, the Company has agreed to pay all putative plaintiffs and their
counsel in both actions a total of $11.7 million (inclusive of plaintiffs’ attorneys fees and costs); the Company’s directors and officers insurance
carrier has agreed to pay $3.0 million of that amount on behalf of all defendants. The Company also has agreed to pay up to $400,000 in
related settlement administration expenses. In exchange, the Company will be released from the state law claims of all putative plaintiffs who
do not opt-out of the settlement for any covered claims arising since May 7, 2005 in the Jones action and since January 10, 2006 in the
Wineland action. In addition, any plaintiffs who previously opted in to the putative collective actions will be releasing FLSA claims arising since
November 1, 2004 in the Jones action and since April 15, 2005 in the Wineland action. Pursuant to the settlement agreements, the Company
expressly denies any and all liability to the plaintiffs.
The settlement agreements have been filed with the Court as attachments to the parties’ joint motions for approval of the settlements,
and a hearing on the joint motions was held on May 18, 2009. Following the hearing, the Court entered Orders granting preliminary
approval of the settlement, approving the Notices of Class Action and Claim Forms to be distributed to class members, and setting
October 9, 2009 as the date for a hearing on final approval of the settlement.
46
From time to time we are involved in other legal and administrative proceedings or investigations arising from the conduct of our
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 our opinion, 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 our
consolidated financial position and results of operation.
Other At April 30, 2009, the Company was partially self-insured for workers’ compensation claims in all nine 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 $10,000 and $8,800 respectively, were
issued and outstanding at April 30, 2009 and 2008, on the insurance company’s behalf. The Company also has investments of approximately
$223 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, 2009 and 2008, the Company had $14,910 and $14,179, respectively, in accrued
expenses for estimated claims relating to self-insurance.
47
10. QUARTERLY FINANCIAL DATA (Dollars in thousands) (Unaudited)
Year ended April 30, 2009
Q1
Q2
Q3
Q4
Year Total
Total revenue
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other
Gross profit*
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other
$ 1,200,360
1,031,267
274,194
265,235
85,601
6,147
87,883
5,362
531,891
231,337
81,048
4,556
558,031
3,321,549
239,252
1,010,018
81,055
4,676
335,587
20,741
$ 1,566,302
1,389,747
848,832
883,014
4,687,895
$
49,600
93,325
51,824
4,353
43,495
89,839
53,211
4,462
30,573
76,147
50,077
4,320
36,119
78,824
50,842
6,371
159,787
338,135
205,954
19,506
$ 199,102
191,007
161,117
172,156
723,382
Net earnings from continuing operations
$
28,796
27,340
14,035
15,573
85,744
Loss on discontinued operations, net of tax benefit
11
11
14
18
54
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
$
28,785
27,329
14,021
15,555
85,690
$
$
$
$
0.57
-----
0.57
0.57
-----
0.57
0.54
-----
0.54
0.54
-----
0.54
0.28
-----
0.28
0.28
-----
0.28
0.31
-----
0.31
0.31
-----
0.31
1.69
-----
1.69
1.68
-----
1.68
*Gross profit is given before charge for depreciation and amortization.
48
Year ended April 30, 2008
Q1
Q2
Q3
Q4
Year Total
Total revenue
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other
Gross profit*
Gasoline
Grocery & other merchandise
Prepared food & fountain
Other
Net earnings from continuing operations
$ 938,326
259,914
75,463
6,095
854,322
250,272
79,169
6,009
860,015
214,843
73,421
6,221
906,582
3,559,245
218,089
73,649
6,403
943,118
301,702
24,728
$ 1,279,798
1,189,772
1,154,500
1,204,723
4,828,793
$
49,494
88,322
46,551
4,039
$ 188,406
$
29,946
42,580
82,756
49,899
3,947
179,182
27,685
9
40,183
68,541
46,686
4,659
36,677
72,340
44,866
4,701
160,069
158,584
168,934
311,959
188,002
17,346
686,241
84,973
82
14,455
49
14,406
84,891
0.28
-----
0.28
0.28
-----
0.28
1.68
-----
1.68
1.67
-----
1.67
12,887
(146)
13,033
0.26
-----
0.26
0.26
-----
0.26
Loss (gain) on discontinued operations, net of tax benefit (expense)
170
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
$
29,776
27,676
$
$
$
0.59
-----
0.59
$ 0.59
-----
0.59
0.55
-----
0.55
0.54
-----
0.54
*Gross profit is given before charge for depreciation and amortization.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
49
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. On the
basis of 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 period 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, 2009.
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, 2009.
KPMG, LLP, as the Company’s independent registered public accounting firm, has issued a report on its assessment of the effectiveness
of the Company’s internal control over financial reporting. This report appears on page 26.
ITEM 9B. OTHER INFORMATION
Not applicable.
50
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
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, 2009 and to be used in connection with the Company’s Annual
Meeting of Shareholders to be held on September 18, 2009 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, 2009 and to be used in connection with the
Company’s Annual Meeting of Shareholders to be held on September 18, 2009 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, 2009 and to be used in connection with the Company’s Annual Meeting of Shareholders to be
held on September 18, 2009 are hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
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, 2009 and to be used in connection with the
Company’s Annual Meeting of Shareholders to be held on September 18, 2009 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, 2009 and to be used in connection with the Company’s Annual Meeting of Shareholders to be
held on September 18, 2009 is hereby incorporated by reference.
51
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
(1)
Documents filed as a part of this report on Form 10-K
The following financial statements are included herewith:
Consolidated Balance Sheets, April 30, 2009 and 2008
Consolidated Statements of Income, Three Years Ended April 30, 2009
Consolidated Statements of Shareholders’ Equity, Three Years Ended April 30, 2009
Consolidated Statements of Cash Flows, Three Years Ended April 30, 2009
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 # Description of Exhibits
3.1(a)
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)
3.2(a)
Second Amended and Restated By-laws (incorporated by reference from the Current Report on Form 8-K filed June 16, 2009)
4.4
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)
4.6
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)
4.7
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)
4.8
Note Purchase Agreement dated as of September 29, 2006 among the Company and the purchasers of $100,000,000 in
principal amount of 5.72% Senior Notes, Series A and Series B (incorporated by reference from the Current Report on
Form 8-K filed September 29, 2006)
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)
52
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), First Amendment thereto (incorporated by reference from the Current Report on Form 8-K
filed April 2, 1998) and Second Amendment thereto (incorporated by reference from the Current Report on Form 8-K filed
July 17, 2006)
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)
Promissory Note delivered to UMB Bank, n.a. (incorporated by reference from the Current Report on Form 8-K filed
October 4, 2005)
10.29
Form of “change of control” Employment Agreement (incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended January 31, 1997)
10.30*
Non-Qualified Supplemental Executive Retirement Plan (incorporated by reference from the Current Report on Form 8-K filed
November 10, 1997) and Amendment thereto (incorporated by reference from the Current Report on Form 8-K filed July 17, 2006)
10.31*
Non-Qualified Supplemental Executive Retirement Plan Trust Agreement with UMB Bank, n.a. (incorporated by reference
from the Current Report on Form 8-K filed November 10, 1997)
10.32*
Severance Agreement with Douglas K. Shull (incorporated by reference from the Current Report on Form 8-K filed July 28, 1998)
10.33*
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)
10.34*
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)
10.35*
Trustar Directed Trust Agreement (incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended
April 30, 2003)
10.38*
Executive Nonqualified Excess Plan Document and related Adoption Agreement dated July 12, 2006 (incorporated by
reference from the Annual Report on Form 10-K for the fiscal year ended April 30, 2007)
10.39*
Employment Agreement with Robert J. Myers (incorporated by reference from the Current Report on Form 8-K filed
March 21, 2007)
10.40*
Severance Agreement with John G. Harmon (incorporated by reference from the Current Report on Form 8-K filed
January 17, 2008)
21
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, 2007)
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
23.1
31.1
31.2
32.1
32.2
______________________________
*Indicates management contract or compensatory plan or arrangement.
53
SIGNATURES
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.
CASEY’S GENERAL STORES, INC.
(Registrant)
Date: June 29, 2009
By
/s/ Robert J. Myers
Robert J. Myers, President and
Chief Executive Officer
(Principal Executive Officer and Director)
Date: June 29, 2009
By
/s/ William J. Walljasper
William J. Walljasper
Senior Vice President and Chief Financial Officer
(Authorized Officer and Principal Financial and Accounting 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: June 29, 2009
By
/s/ Robert J. Myers
Robert J. Myers
President and Chief Executive Officer, Director
Date: June 29, 2009
By
/s/ Ronald M. Lamb
Ronald M. Lamb
Chairman of the Board, Director
Date: June 29, 2009
By
/s/ Kenneth H. Haynie
Kenneth H. Haynie
Director
Date: June 29, 2009
By
/s/ Johnny Danos
Johnny Danos
Director
54
Date: June 29, 2009
By
/s/ William C. Kimball
William C. Kimball
Director
Date: June 29, 2009
By
/s/ Diane C. Bridgewater
Diane C. Bridgewater
Director
Date: June 29, 2009
By
/s/ Jeffrey M. Lamberti
Jeffrey M. Lamberti
Director
Date: June 29, 2009
By
/s/ Richard Wilkey
Richard Wilkey
Director
EXHIBIT INDEX
The following exhibits are filed herewith:
Exhibit #
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
55
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
The Board of Directors
Casey’s General Stores, Inc.:
We consent to the 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 June 29, 2009, with respect to the consolidated balance sheets of Casey’s General Stores, Inc. and
subsidiaries (the Company) as of April 30, 2009 and 2008, and the related consolidated statements of earnings, shareholders’ equity and cash
flows for each of the years in the three-year period ended April 30, 2009, and the effectiveness of internal control over financial reporting as
of April 30, 2009, which reports appear in the April 30, 2009 Annual Report on Form 10-K of Casey’s General Stores, Inc.
As discussed in Note 1 to the Consolidated Financial Statements, the Company changed its method of accounting for stock based
compensation effective May 1, 2006 and changed its method of quantifying errors effective in 2007.
Des Moines, Iowa
June 29, 2009
56
Exhibit 31.1
CERTIFICATION OF ROBERT J. MYERS
UNDER SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Robert J. Myers, certify that:
1.
I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;
2. 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;
3. 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;
4. 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
5. 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 June 29, 2009
/s/ Robert J. Myers
Robert J. Myers, President and
Chief Executive Officer
57
Exhibit 31.2
CERTIFICATION OF WILLIAM J. WALLJASPER
UNDER SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, William J. Walljasper, certify that:
1.
I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;
2. 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;
3. 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;
4. 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
5. 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 June 29, 2009
/s/ William J. Walljasper
William J. Walljasper
Senior Vice President and
Chief Financial Officer
58
Exhibit 32.1
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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, 2009 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) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934.
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of
the Company.
Dated June 29, 2009
/s/ Robert J. Myers
Robert J. Myers, President and
Chief Executive Officer
59
Exhibit 32.2
CERTIFICATE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
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, 2009 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) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934.
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of
the Company.
Dated June 29, 2009
/s/ William J. Walljasper
William J. Walljasper
Senior Vice President and Chief Financial Officer
60
COMPARATIVE STOCK PERFORMANCE
The following Performance Graph compares the cumulative total shareholder return on the Company’s Common
Stock for the last five fiscal years with the cumulative total return of (i) the Russell 2000 Index (ii) an old peer group index
based on the common stock of The Pantry, Inc. and Alimentation Couche Tard, Inc. and (iii) a new peer group index
based on the common stock of the companies in the old peer group and Susser Holdings Corporation. The cumulative
total shareholder return computations set forth in the Performance Graph assume the investment of $100 in the
Company’s Common Stock and each index on April 30, 2004, and reinvestment of all dividends. The total shareholder
returns shown are not intended to be indicative of future returns.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Casey’s General Stores, Inc., the Russell 2000 index, a New Peer Group, and an Old Peer Group.
* $100 invested on 4/30/04 in stock or index, including reinvestment of dividends. Fiscal year ending April 30.
Casey’s
Russell 2000
Old Peer Group
New Peer Group
4/04. . . . . . . . . . . . . . . . . . . . . .
4/05. . . . . . . . . . . . . . . . . . . . . .
4/06. . . . . . . . . . . . . . . . . . . . . .
4/07. . . . . . . . . . . . . . . . . . . . . .
4/08. . . . . . . . . . . . . . . . . . . . . .
4/09. . . . . . . . . . . . . . . . . . . . . .
100.00
102.89
131.45
155.82
138.56
168.55
100.00
104.71
139.76
150.70
134.19
92.94
100.00
170.13
290.76
218.78
110.94
118.91
100.00
170.13
290.76
218.78
122.39
128.27
Casey’s General Stores, Inc.
One Convenience Boulevard
Ankeny, Iowa 50021
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p