2017 ANNUAL REPORT
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DEVELOPING OUR FUTURE
TABLE OF CONTENTS
2017
2016
2015
$269.7
$4.54
$348.7
$5.79
$282.0
$4.66
EARNINGS BEFORE
INCOME TAX (IN MILLIONS)
BASIC EARNINGS PER SHARE
{1}
Message to
our Shareholders
❱
3
Management Team
❱
5
Store Operations
❱
7
Store Growth
❱
13
Finance
❱
15
Board of Directors
❱
17
Investor Information
❱
18
FINANCIAL HIGHLIGHTS
2016
2017
% CHANGE
Total Revenue (in Thousands)
❱
$7,122,086
$7,506,587
Cash Flow from Operations (in Thousands)
❱
Net Income (in Thousands)
❱
EPS (Basic)
❱
EPS (Diluted)
❱
Employees
❱
Number of Stores
❱
$472,386
$225,982
$5.79
$5.73
34,997
1,931
$459,273
$177,485
$4.54
$4.48
35,014
1,978
5.4%
-2.8%
-21.5%
-21.6%
-21.8%
0.0%
2.4%
TERRY W. HANDLEY - PRESIDENT & CEO
{3}
Message to our Shareholders
Fiscal 2017 proved to be difficult not
center expanding our geographic
As a further commitment to creating
only for Casey’s, but for the broader
footprint, we have added more
shareholder value, the Board of
convenience, grocery, and food service
resources to the store development
Directors approved a share repurchase
industries. The weak agricultural
area in order to sustain a higher
program in fiscal 2017 under which
economy, which slowed the growth in
rate of store growth than the recent
the Company is authorized to
customer traffic to stores, combined
past. As a result of these efforts,
repurchase up to an aggregate of
with less volatility in wholesale fuel
the Company had 27 new stores
$300 million of our outstanding
costs from prior year and wage rate
under construction, 116 sites under
common stock. On top of growing
increases weighed on our fiscal 2017
agreement for new store constructions,
the business and the share repurchase
earnings. However, Casey’s continues
and five acquisition stores under
plan, Casey’s also has demonstrated
to be an industry leader in same-store
agreement to purchase at the end
a long history of consistent dividend
sales of both fuel gallons and inside
of fiscal 2017.
sales. Despite the challenging
growth with 17 straight years of
annual dividend increases. At its
environment, fiscal 2017 marked
In addition to growing the number
June meeting, the Board approved
the 16th consecutive year of positive
of Casey’s locations, we continue
yet another dividend increase.
same-store sales growth in both the
to see strong sales gains when one
grocery and other merchandise and
or more of our growth programs are
As you can see, thanks to the
prepared food and fountain categories.
implemented at a store. During fiscal
continued commitment and
2017, the Company completed 103
dedication of the more than 35,000
Rest assured, Casey’s long-term focus
major remodels and 21 store
Casey’s employees, the Company
and disciplined growth plan to create
replacements, added pizza delivery
has built significant momentum
shareholder value has not changed.
services to 161 more stores, and
heading into fiscal 2018. On the
That plan combines growing the
expanded 24-hour operations to 89
following page is the Company’s
number of Casey’s locations through
more existing stores. Furthermore,
performance guidance for fiscal 2018.
a blend of new store construction
digital engagement with our customers
and acquisitions, and getting more
continues to gain traction as the
Thank you for your investment in
out of our existing store base through
number of mobile app downloads
Casey’s General Stores, Inc. We look
offering more products and services.
has more than doubled from a year
forward to creating more shareholder
ago. Together these efforts allowed
value in fiscal 2018 and beyond.
During fiscal 2017 the Company
Casey’s to serve over 624 million
completed 48 new store constructions,
including our first store in the state of
customers in fiscal 2017. Our
long-term goal is to proudly serve
Sincerely,
Ohio, and acquired 22 stores. Returns
and satisfy 1.5 billion customers a
Terry W. Handley
on our new stores remain attractive
year by fiscal 2030. We are well on
President & Chief Executive Officer
and with the Terre Haute distribution
our way to achieving our goal.
{4}
MANAGEMENT TEAM
TERRY W. HANDLEY
President &
JULIA L. JACKOWSKI
Senior Vice President,
BRIAN J. JOHNSON
Senior Vice President,
JAY SOUPENE
Senior Vice President,
Chief Executive Officer
Corporate General Counsel
Store Development
Operations
& Secretary
DARRYL F. BACON
Vice President,
Food Service
JAY F. BLAIR
Vice President,
Transportation
& Distribution
HAL D. BROWN
Vice President,
Support Services
ROBERT C. FORD
Vice President,
Store Operations
JAMES R. PISTILLO
Vice President,
MICHAEL R. RICHARDSON
Vice President,
RICH T. SCHAPPERT
Vice President,
Accounting & Treasurer
Marketing
Information Technology
CINDI W. SUMMERS
Senior Vice President,
WILLIAM J. WALLJASPER
Senior Vice President &
Human Resources
Chief Financial Officer
DEBORAH A. GRIMES
Vice President,
KIRK HAWORTH
Vice President,
Fuel Procurement
Real Estate
BELOW IS THE COMPANY’S PERFORMANCE GUIDANCE FOR FISCAL 2018
Grocery & Other Merchandise 2.0% to 4.0% Same-Store Growth, 31.0% to 32.0% Average Margin
❱
Prepared Food & Fountain
❱
5.0% to 7.0% Same-Store Growth, 61.5% to 62.5% Average Margin
Fuel
❱
1.0% to 2.0% Same-Store Gallons Growth, 18.0 to 20.0 Cents Per Gallon Margin
Operating Expenses
❱
Expected to Increase 9.0% to 11.0%
Depreciation & Amortization Expected to Increase 13.0% to 15.0%
❱
Growth Build or Acquire 80 to 120 Stores, Replace 30 Existing Stores, Complete 75 Major Remodels
❱
{6}
STORE OPERATIONS
Inside sales is the combination of the grocery and other merchandise and the
prepared food and fountain categories. In fiscal 2017, revenue from inside sales
was $3.0 billion, with gross profit of $1.3 billion and an average margin of 41.1%.
Grocery & Other Merchandise
SAME-STORE SALES
FY 2017: 2.9%
FY 2018 Guidance: 2.0% - 4.0%
Our fiscal 2017 goal was to increase
all major product lines within the
AVERAGE MARGIN
FY 2017: 31.5%
same-store sales 6.2% with an average
category. We believe the pressure
margin of 32.0%. For the year,
was related to the challenging
same-store sales increased 2.9%
agricultural economy in our
FY 2018 Guidance: 31.0% - 32.0%
with an average margin of 31.5%.
operating area, the growing spread
in pricing between “food away from
During fiscal 2017, like many others
in the convenience store and grocery
home” and “food at home”, as well
as increased promotional activity of
industries, we experienced a slowing
other competitors. A combination
in growth of customer traffic which
of the continued pricing pressures
impacted same-store sales of most
from cigarettes and the transition to
{7}
direct store delivery of ice caused
the average margin of the entire
category to perform slightly below
our expectations.
Packaged beverages such as bottled
water, sports drinks, and energy
drinks outperformed the category as
a whole in fiscal 2017 due in part to
our larger store design and remodel
strategy. All new stores, replacement
stores, and major remodels have
expanded cooler capacity, and nearly
all of these stores also have a walk-in
beer cave. Sales growth in these
higher margin products within the
cooler doors offsets some of the
pressures from cigarettes.
OUTLOOK
We are encouraged about our
opportunities in this category as we
continue to reinvest in our stores.
Casey’s goal for fiscal 2018 is to
complete 75 major remodels and
replace 30 existing stores, further
expanding the number of stores with
greater cooler capacity. The fiscal
2018 guidance for the grocery and
other merchandise category is to
increase same-store sales 2.0% to
4.0% with an average margin of
31.0% to 32.0%.
2017
2016
2015
$2,087
$1,974
31.5%
31.9%
$657.2
$629.2
$1,795
32.1%
$575.5
SALES (IN MILLIONS)
MARGIN
GROSS PROFIT (IN MILLIONS)
{8}
STORE OPERATIONS
SAME-STORE SALES
FY 2017: 4.8%
Prepared Food & Fountain
FY 2018 Guidance: 5.0% - 7.0%
Our fiscal 2017 goal was to increase
Similar to the grocery and other
AVERAGE MARGIN
FY 2017: 62.3%
FY 2018 Guidance: 61.5% - 62.5%
same-store sales 10.2% with an
merchandise category, the previously
average margin of 62.5%. For the
mentioned challenges put downward
year, same-store sales rose 4.8%
with an average margin of 62.3%.
pressure on customer traffic, which
impacted same-store sales in the
{9}
2017
2016
2015
$953
$881
62.3%
62.5%
$594.0
$550.3
$781
59.7%
$466.1
SALES (IN MILLIONS)
MARGIN
GROSS PROFIT (IN MILLIONS)
prepared food and fountain category.
by this growth and see it as our
However, our favorable cheese and
first step towards increasing digital
coffee price agreements allowed us
engagement with our customers.
to achieve an average margin in line
Heading into fiscal 2018 we will be
with our annual goal.
very focused on increasing these
efforts in all areas of our business
The category continued to benefit
and are optimistic these numbers
from the roll out of major remodels,
will continue to grow.
pizza delivery services, and expanded
hours of operation. At the end of
fiscal 2017, a total of 464 stores have
OUTLOOK
The prepared food and fountain
been remodeled, 580 stores offer
category now accounts for over
delivery services, and nearly 1,000
35% of the Company’s total gross
stores operate 24 hours a day. The
profit. This number has expanded
sales lifts from these programs
over time and will likely continue
remain significant and we believe
to grow as we roll out growth
there are more opportunities to
programs to more stores and online
add stores to these programs in
ordering becomes more prominent.
the coming years.
These programs, combined with
our high quality, proprietary food
Digital engagement with our
offerings, have allowed the Company
customers continues to gain traction.
to be an industry leader in same-store
Mobile App downloads have
sales growth and margins. The fiscal
surpassed 850,000. In addition, 14%
2018 guidance for the prepared food
of all pizzas sold now come from
and fountain category is to increase
online orders, and the “basket size”
of an online order is approximately
same-store sales 5.0% to 7.0%
with an average margin of 61.5%
20 percent higher than that of a
to 62.5%.
telephonic order. We are encouraged
{10}
STORE OPERATIONS
SAME-STORE SALES
FY 2017: 2.1%
Fuel
FY 2018 Guidance: 1.0% - 2.0%
The fiscal 2017 goal was to increase
to perform well throughout fiscal
AVERAGE MARGIN
FY 2017: 18.4 cpg
same-store sales 2.0% with an average
2017 allowing us to achieve our
margin of 18.4 cents per gallon. For
same-store sales goal. Renewable
the year, same-store gallons increased
fuel credit values remained favorable;
FY 2018 Guidance: 18.0 - 20.0 cpg
2.1% with an average margin of 18.4
however, the fiscal 2017 fuel margin
cents per gallon.
Retail fuel prices remained low
was 1.2 cents per gallon below the
record 19.6 cents per gallon fuel margin
from fiscal 2016 primarily due to
compared to the recent past, and
less volatility in wholesale costs
the fuel saver programs continued
throughout the year.
{11}
OUTLOOK
Current forecasts from the U.S.
Energy Information Administration
suggest that the retail price of fuel
will remain low in the near future.
We are also encouraged by renewable
fuel credit values and the continued
gallon growth from the fuel saver
programs heading into fiscal 2018.
The fiscal 2018 guidance for the fuel
category is to increase same-store
gallons sold 1.0% to 2.0% with an
average margin of 18.0 to 20.0 cents
per gallon.
2017
2016
2015
2,062
1,952
1,817
18.4¢
19.6¢
19.3¢
$378.3
$381.7
$351.2
SALES (IN MILLIONS OF GALLONS)
MARGIN (IN CENTS PER GALLON)
GROSS PROFIT (IN MILLIONS)
{12}
EXPANSION
FISCAL 2017 YEAR END
1,978 Corporate Stores
Store Growth
The fiscal 2017 goal was to build or
expand into new markets. The first
FISCAL 2018 GUIDANCE
Build or Acquire 80 to 120 Stores
acquire 77 to 116 stores, replace 35
Casey’s General Store in the state of
existing stores, and complete 100
Ohio opened in March of 2017, and
Replace 30 Existing Stores
major remodels. For the year, the
the Company has numerous other
Complete 75 Major Remodels
Company built and opened 48 new
projects underway in Ohio and other
stores and acquired 22 stores. The
newer markets.
Company also replaced 21 existing
stores and remodeled 103 stores. In
addition to providing a more efficient
Throughout fiscal 2017, the Company
continued to invest in its future by
distribution channel, the second
dedicating more resources to our
distribution center in Terre Haute,
store development department in
Indiana allows us to more effectively
an effort to increase store growth.
{13}
At the end of fiscal 2017, there
We maintained our disciplined
were 116 sites under agreement for
acquisition strategy in fiscal 2017,
OUTLOOK
We are excited about our growth
new store constructions and five
acquiring a total of 22 convenience
opportunities in both existing
acquisition stores on agreement to
stores. We believe acquisitions are
markets and new territories, and
purchase. More resources in store
an integral part of our future growth
will continue our long-term growth
development, combined with the
strategy, and provide some of the
strategy in fiscal 2018. The fiscal
opening of our second distribution
highest returns on investment. But it
2018 guidance is to build or acquire
center, have created a healthy pipeline
is possible to pay too much in today’s
80 to 120 stores, replace 30 existing
for new Casey’s locations in both our
environment. We remain vigilant, yet
stores, and complete 75 major
current operating territory and in
patient, ensuring each future acquisition
remodels of existing stores.
new markets.
makes sound financial sense.
STORE COUNT
BY STATE
❱
❱
❱
❱
❱
❱
Arkansas 37
❱
Iowa 518
Illinois 440
Indiana 91
Kansas 158
Kentucky 11
Minnesota 148
❱
Missouri 326
❱
North Dakota 26
Nebraska 134
❱
Ohio 3
Oklahoma 18
❱
South Dakota 42
Tennessee 8
Wisconsin 18
❱
❱
❱
❱
2017
2016
2015
1,978
1,931
48
22
51
5
1,878
45
36
CORPORATE STORES
NEWLY CONSTRUCTED STORES
ACQUIRED STORES
{14}
BY THE NUMBERS
Finance
Cash and cash equivalents at the end
meeting, the Board of Directors
of fiscal 2017 totaled $76.7 million.
increased the quarterly dividend to
Long-term debt net of current
$0.26 per share, an 8.3% increase.
maturities was $907.4 million, and
the debt-to-capital ratio was 44%.
In fiscal 2017, the Board of Directors
Casey’s has demonstrated a long
history of consistent dividend growth
authorized an open market share
repurchase plan to acquire up to
with 17 straight years of annual
an aggregate of $300 million of the
dividend increases. At its June
Company’s outstanding common
{15}
2017
2016
2015
$1,190.6
$1,083.5
$875.2
$907.4
11.2%
$822.9
$838.2
9.7%
12.0%
EQUITY (IN MILLIONS)
LONG-TERM DEBT (IN MILLIONS)
OPERATING EXPENSE INCREASE
stock. From the inception of the
repurchase plan on March 9, 2017
through the end of fiscal 2017,
the Company repurchased 443,800
shares of its common stock under
the repurchase program for
approximately $49.4 million. As
of April 30, 2017, the Company
had a total remaining authorized
amount for share repurchases of
$250.6 million.
Our balance sheet remains one of
the strongest in the industry, which
gives us the ability to raise financing
at a very low cost. On June 13,
2017, the Company entered into a
note purchase agreement relating
to the issuance of $400 million of
aggregate principal amount of Senior
Notes consisting of (1) $150 million
aggregate principal amount of 3.51%
Senior Notes due June 13, 2025 and
(2) $250 million aggregate principal
amount of 3.77% Senior Notes due
August 22, 2028. We are excited
about the opportunities to put this
additional capital to work creating
more shareholder value in fiscal
2018 and beyond.
FISCAL 2018 - CAPITAL EXPENDITURE BUDGET
Acquisitions & New Store Construction $250 - 350 Million
❱
Replacements $81 Million
❱
Maintenance & Remodels $113 Million
❱
Transportation & Information Systems $56 Million
❱
Total $500 - 600 Million
❱
{16}
BOARD OF DIRECTORS
* Member of Audit Committee
ROBERT J. MYERS
Chairman of the Board,
TERRY W. HANDLEY
President & CEO of
WILLIAM C. KIMBALL
Lead Director, Retired
DIANE C. BRIDGEWATER*
EVP, Chief Financial
Retired CEO of Casey’s
Casey’s General Stores, Inc.
Chairman & CEO of
& Administrative Officer,
General Stores, Inc.
Medicap Pharmacy, Inc.
Life Care Companies, LLC
JOHNNY DANOS*
Director of Strategic
H. LYNN HORAK*
Past Regional Chairman
JEFFREY M. LAMBERTI
Shareholder in the Law
LARREE M. RENDA*
Retired Executive Vice
Development, LWBJ, LLP
with Wells Fargo Regional
Firm of Lamberti, Gocke
President, Safeway, Inc.
Bank - Midwest Region
& Luetje, P.C.
RICHARD A. WILKEY – The entire Casey’s family extends our deepest sympathies to the
family and friends of Richard A. Wilkey, who passed away on April 22, 2017. Richard served
on Casey’s Board of Directors since 2008 providing valuable guidance and energy that helped
Casey’s create shareholder value. His strategic focus and skill in identifying and developing
leaders made him a respected member of the Casey’s team. We will miss Richard’s dedication
and passion towards serving our Casey’s family and its shareholders.
{17}
INVESTOR INFORMATION
COMMON STOCK
Casey’s General Stores, Inc. common stock trades on the Nasdaq Global Select Market under the symbol CASY.
The approximately 38.8 million shares of common stock outstanding at April 30, 2017 had a market value of
approximately $4.3 billion. As of that same date, there were 1,715 shareholders of record.
COMMON STOCK MARKET PRICES
Calendar 2015
Calendar 2016
Calendar 2017
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
H
I
G
H
$ 94.67
98.22
114.90
129.53
LOW
$ 83.00
80.94
95.30
101.36
H
I
G
H
LOW
H
I
G
H
LOW
$ 123.75
$ 98.80
$ 120.90
$ 107.43
131.52
136.22
126.49
105.17
115.07
110.45
On June 23, 2017, the last reported sales price of the Company’s common stock was $106.59 per share.
On that same date, the market capitalization of the Company was approximately $4.1 billion.
DIVIDENDS
The Company began paying cash dividends during fiscal
1991. The dividends paid in fiscal 2017 totaled $0.96
per share. At its June 2, 2017 meeting, the Board of
Directors increased the quarterly dividend to $0.26
per share. The dividend is payable on August 15, 2017
to shareholders of record on August 1, 2017.
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
This plan, introduced in the fall of 1998, gives
holders of Casey’s General Stores, Inc. common
stock a convenient and economical way of purchasing
additional shares at market prices by reinvesting their
dividends in full or in part. Stockholders may also take
advantage of the cash payment option to purchase
additional shares. Those wishing to enroll should
contact the transfer agent and registrar:
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
Telephone 781-575-2000
www.computershare.com
INVESTOR INQUIRIES
Current or prospective Casey’s General Stores, Inc.
investors can receive annual reports, proxy statements,
Forms 10-K and 10-Q, and earnings announcements
at no cost by calling (515) 965-6100 or sending
written requests to the following address:
Investor Relations
Casey’s General Stores, Inc.
One SE Convenience Blvd.
Ankeny, Iowa 50021
Corporate information is also available at
www.caseys.com under the Press and Documents
tab. Quarterly conference calls are broadcast
live over the Internet via the Investor Relations
Web page and made available in archived format.
Broadcast times for the quarterly calls will be
announced on the Web page and in corresponding
press releases.
FORWARD-LOOKING STATEMENTS
This annual report contains statements that constitute
forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that
may cause actual results to differ materially from
future results expressed or implied by those statements.
Casey’s disclaims any intention or obligation to update
or revise forward-looking statements, whether as result
of new information, future events or otherwise.
{18}
Table of Contents
Table of Contents
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended April 30, 2017
Commission File Number 001-34700
CASEY’S GENERAL STORES, INC.
(Exact name of registrant as specified in its charter)
IOWA
(State or other jurisdiction of
incorporation or organization)
42-0935283
(I.R.S. Employer
Identification Number)
ONE CONVENIENCE BLVD., ANKENY, IOWA
(Address of principal executive offices)
50021
(Zip Code)
(515) 965-6100
(Registrant’s telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act
COMMON STOCK
(Title of Class)
NASDAQ
(Name of Exchange on which Registered)
Securities Registered pursuant to Section 12(g) of the Act
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
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, a
smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer",
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act
Accelerated filer
Smaller reporting company
☐
☐
Large accelerated filer
Non-accelerated filer
Emerging growth company
x
☐
☐
Exchange Act ☐
Act). Yes ☐ No x
Market.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
The aggregate market value of the registrant’s common stock held by non-affiliates as of October 31, 2016, was
approximately $4.4 billion based on the closing sales price ($112.99 per share) as quoted on the NASDAQ Global Select
Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.
Class
Common Stock, no par value per share
Outstanding at June 21, 2017
38,547,278 shares
DOCUMENTS INCORPORATED BY REFERENCE
The information called for by Item 5 of Part II and Items 10, 11, 12, 13 and 15 of Part III is hereby incorporated by
reference from the definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the
Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than 120 days
after April 30, 2017.
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
☐ x
No
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
x ☐
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
{1}
Table of Contents
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, a
smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer",
"smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act
Large accelerated filer
Non-accelerated filer
Emerging growth company
x
☐
☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes
☐ x
No
The aggregate market value of the registrant’s common stock held by non-affiliates as of October 31, 2016, was
approximately $4.4 billion based on the closing sales price ($112.99 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
Common Stock, no par value per share
Outstanding at June 21, 2017
38,547,278 shares
DOCUMENTS INCORPORATED BY REFERENCE
The information called for by Item 5 of Part II and Items 10, 11, 12, 13 and 15 of Part III is hereby incorporated by
reference from the definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the
Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission not later than 120 days
after April 30, 2017.
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Table of Contents
Table of Contents
FORM 10-K
TABLE OF CONTENTS
PART I
ITEM 1. Business
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 2. Properties
ITEM 3. Legal Proceedings
ITEM 4. Mine Safety Disclosures
PART II
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases
of Equity Securities
ITEM 6. Selected Financial Data
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk
ITEM 8. Financial Statements and Supplementary Data
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A. Controls and Procedures
ITEM 9B. Other Information
PART III ITEM 10. Directors, Executive Officers and Corporate Governance
ITEM 11. Executive Compensation
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
ITEM 13. Certain Relationships and Related Transactions and Director Independence
ITEM 14. Principal Accountant Fees and Services
PART IV ITEM 15. Exhibits and Financial Statement Schedules
Signatures
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7
15
15
15
15
16
18
18
28
29
47
47
48
49
49
49
49
49
50
52
PART I
ITEM 1. BUSINESS
The Company
Casey’s General Stores, Inc. (“Casey’s”) and its wholly owned subsidiaries (Casey’s, together with its subsidiaries, are
referred to herein as the “Company” or “we”) operate convenience stores under the names "Casey's" and “Casey’s General
Store” (hereinafter referred to as “Casey’s Store” or “Stores”) in 15 Midwestern states, primarily in Iowa, Missouri, and
Illinois. The Company also operates two stores under the name "Tobacco City", selling primarily tobacco products, and one
grocery store. The Casey's 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 but two stores offer fuel for sale on a self-service basis. Our fiscal year runs from May 1 through April 30 of each year. On
April 30, 2017 there were a total of 1,978 stores in operation. There were 48 stores newly constructed in fiscal 2017. We closed
20 stores in fiscal 2017. We also acquired 22 additional stores in fiscal 2017; 18 of those stores were opened in fiscal 2017, and
four will be opened during the 2018 fiscal year. Two distribution centers are in operation (in Ankeny, Iowa adjacent to our
corporate headquarters and in Terre Haute, Indiana) from which grocery and general merchandise items are supplied to our
stores. Casey’s, with executive offices at One Convenience Blvd., Ankeny, Iowa 50021-8045 (telephone 515-965-6100), was
incorporated in Iowa in 1967.
Approximately 57% of all our stores were opened in areas with populations of fewer than 5,000 persons, while
approximately 18% of our stores were opened 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, product offerings, and quality of service.
The Company’s internet address is www.caseys.com. Each year we make available through our website all of our SEC
filings, including 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, Corporate
Governance Guidelines, Code of Conduct, and committee charters. We intend to post disclosure of any waivers to the Code of
Conduct on our website.
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. We currently own most of our real estate, including substantially all of our stores, both distribution centers, the
Services Company facility, and the Corporate Headquarters facility.
The Company derives its revenue primarily from the retail sale of fuel and the products offered in our stores. Our sales
historically have been strongest during the first and second fiscal quarters (May through October) relative to the third and
fourth (November through April). In warmer weather, customers tend to purchase greater quantities of fuel and certain
convenience items such as beer, pop, and ice.
Corporate Subsidiaries
Casey's Marketing Company (Marketing Company) and Casey's Services Company (Services Company) were organized
as Iowa corporations in March 1995. Casey’s Retail Company was organized as an Iowa corporation in April 2004, CGS Sales
Corp. was organized as an Iowa corporation in 2008, and Tobacco City, Inc. was organized as an Iowa corporation in 2014. All
such entities are wholly-owned subsidiaries of Casey’s.
Casey’s Retail Company owns and operates stores in Illinois, Kansas, Minnesota, Nebraska, North Dakota and South
Dakota; it also holds the rights to the Casey’s trademarks, service marks, trade names, and other intellectual property. The
Marketing Company owns and operates stores in Arkansas, Indiana, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee
and Wisconsin. The Marketing Company also has responsibility for all of our wholesale operations, including both distribution
centers. The Services Company provides a variety of construction and transportation services for all stores. CGS Sales Corp.
operates one store in Iowa and one in Nebraska. Tobacco City Inc. operates two stores in North Dakota.
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Table of Contents
ITEM 1. BUSINESS
The Company
PART I
Casey’s General Stores, Inc. (“Casey’s”) and its wholly owned subsidiaries (Casey’s, together with its subsidiaries, are
referred to herein as the “Company” or “we”) operate convenience stores under the names "Casey's" and “Casey’s General
Store” (hereinafter referred to as “Casey’s Store” or “Stores”) in 15 Midwestern states, primarily in Iowa, Missouri, and
Illinois. The Company also operates two stores under the name "Tobacco City", selling primarily tobacco products, and one
grocery store. The Casey's 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 but two stores offer fuel for sale on a self-service basis. Our fiscal year runs from May 1 through April 30 of each year. On
April 30, 2017 there were a total of 1,978 stores in operation. There were 48 stores newly constructed in fiscal 2017. We closed
20 stores in fiscal 2017. We also acquired 22 additional stores in fiscal 2017; 18 of those stores were opened in fiscal 2017, and
four will be opened during the 2018 fiscal year. Two distribution centers are in operation (in Ankeny, Iowa adjacent to our
corporate headquarters and in Terre Haute, Indiana) from which grocery and general merchandise items are supplied to our
stores. Casey’s, with executive offices at One Convenience Blvd., Ankeny, Iowa 50021-8045 (telephone 515-965-6100), was
incorporated in Iowa in 1967.
Approximately 57% of all our stores were opened in areas with populations of fewer than 5,000 persons, while
approximately 18% of our stores were opened 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, product offerings, and quality of service.
The Company’s internet address is www.caseys.com. Each year we make available through our website all of our SEC
filings, including 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, Corporate
Governance Guidelines, Code of Conduct, and committee charters. We intend to post disclosure of any waivers to the Code of
Conduct on our website.
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. We currently own most of our real estate, including substantially all of our stores, both distribution centers, the
Services Company facility, and the Corporate Headquarters facility.
The Company derives its revenue primarily from the retail sale of fuel and the products offered in our stores. Our sales
historically have been strongest during the first and second fiscal quarters (May through October) relative to the third and
fourth (November through April). In warmer weather, customers tend to purchase greater quantities of fuel and certain
convenience items such as beer, pop, and ice.
Corporate Subsidiaries
Casey's Marketing Company (Marketing Company) and Casey's Services Company (Services Company) were organized
as Iowa corporations in March 1995. Casey’s Retail Company was organized as an Iowa corporation in April 2004, CGS Sales
Corp. was organized as an Iowa corporation in 2008, and Tobacco City, Inc. was organized as an Iowa corporation in 2014. All
such entities are wholly-owned subsidiaries of Casey’s.
Casey’s Retail Company owns and operates stores in Illinois, Kansas, Minnesota, Nebraska, North Dakota and South
Dakota; it also holds the rights to the Casey’s trademarks, service marks, trade names, and other intellectual property. The
Marketing Company owns and operates stores in Arkansas, Indiana, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee
and Wisconsin. The Marketing Company also has responsibility for all of our wholesale operations, including both distribution
centers. The Services Company provides a variety of construction and transportation services for all stores. CGS Sales Corp.
operates one store in Iowa and one in Nebraska. Tobacco City Inc. operates two stores in North Dakota.
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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, and we also have an assortment of Casey's proprietary branded
products. Stores sell regional brands of dairy and bakery products, and approximately 87% of the stores offer beer. Our nonfood
items include tobacco products, health and beauty aids, school supplies, housewares, pet supplies, and automotive products.
All but two Casey’s General Stores offer gasoline or diesel fuel for sale on a self-service basis. Gasoline and diesel fuel
are sold under the Casey’s name.
It is our policy to continually make additions to the Company’s product line, especially products with higher gross profit
Average retail price per gallon
$
2.14
$
2.16
$
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 the majority of 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, 2017, the Company was
selling donuts prepared on store premises in approximately 99% of our stores in addition to cookies, brownies, and other
bakery items. The Company installs donut-making equipment in all newly constructed stores.
We began marketing made-from-scratch pizza in 1984, and it was available in 1,954 stores (99%) as of April 30, 2017.
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, pizza rolls, popcorn
chicken, breakfast croissants and biscuits, breakfast pizza, hash browns, quarter-pound hamburgers and cheeseburgers, potato
cheese bites and other seasonal items. The newly constructed stores and many of the remodeled stores now offer made-to-order
sub sandwiches.
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 nonfuel items have generated
about 39% of our total revenue, but they have resulted in approximately 77% of our gross profit. Gross profit margins on
prepared food items averaged approximately 62% during the three fiscal years ended April 30, 2017—substantially higher than
the gross profit margin on retail sales of fuel, which averaged approximately 8%.
Store Design
Casey’s General Stores are primarily freestanding and, with a few exceptions to accommodate local conditions, conform
to standard construction specifications. The current larger store design measures 42 feet by 110 feet with approximately 2,200
square feet devoted to sales area, 550 square feet to kitchen space, 425 square feet to storage, and 2 large public restrooms.
There is also a smaller store design that is generally designated for smaller communities that measures 39 feet by 86 feet, with
approximately 1,500 square feet devoted to sales area with the remaining areas similar in size. 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 10 islands of fuel dispensers and storage tanks with capacity for 60,000 to 70,000 gallons of fuel. 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 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. Hours of operation may be
adjusted on a store-by-store basis to accommodate customer traffic patterns. As of April 30, 2017, we operate approximately
995 stores on a 24-hour basis. All stores maintain a bright, clean interior and provide prompt checkout service.
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. We can operate
effectively at a highway location in a community with a population of as few as 400.
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Fuel Operations
Fuel sales are an important part of our revenue and earnings. Approximately 59% of Casey’s total revenue for the year
ended April 30, 2017 was derived from the retail sale of fuel. The following table summarizes (dollars and gallons in
thousands) fuel sales for the three fiscal years ended April 30, 2017:
Number of gallons sold
Total retail fuel sales
Percentage of total revenue
Gross profit percentage (excluding credit card fees)
Average gross profit margin per gallon (excluding credit card fees)
Average number of gallons sold per store*
Year ended April 30,
2017
2016
2015
2,061,794
1,951,814
1,816,596
$ 4,414,128
$ 4,214,802
$ 5,144,385
58.8%
8.6%
18.35 ¢
1,053
59.2%
9.1%
19.55 ¢
1,015
66.2%
6.8%
2.83
19.33 ¢
968
*
Includes only those stores in operation at least one full year on April 30 of the fiscal year indicated.
Retail prices of fuel during the year were consistent, on average, with the prior year. The total number of gallons we sold
during this period increased, primarily because of the higher number of stores in operation, the slightly lower retail prices,
continued benefit from our fuel saver programs, and the growth in expanded hour stores. Gross profit percentage represents the
fuel gross profit divided by the gross fuel sales dollars, so as retail fuel prices fluctuate in a period of consistent gross margin
per gallon, the gross profit percentage will also fluctuate in an inverse relationship to fuel price. For additional information
concerning the Company’s fuel operations, see Item 7 herein.
Distribution and Wholesale Arrangements
The Marketing Company supplies all stores with groceries, food, health and beauty aids, and general merchandise from
the distribution centers. The stores place orders for merchandise electronically to our headquarters in Ankeny, and the orders
are filled with weekly shipments in Company-owned delivery trucks from one of the distribution centers, depending on
geographic proximity to the store. All of our existing and most of our proposed stores are within the two distribution centers'
optimum efficiency range—a radius of approximately 500 miles around each center.
In fiscal 2017, a majority of the food and nonfood items supplied to stores from the distribution centers were purchased
directly from manufacturers. With few exceptions, long-term supply contracts are not entered into with any of the suppliers of
products sold by Casey’s General Stores. We believe the practice enables us to respond to changing market conditions with
minimal impact on margins.
Personnel
Competition
On April 30, 2017, we had 15,911 full-time employees and 19,103 part-time employees. We have not experienced any
work stoppages. There are no collective bargaining agreements between the Company and any of its employees.
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 fuel 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 fuel 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, Kum
& Go, and other 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.
Trademarks and Service Marks
The names "Casey's" and “Casey’s General Store” and the marks consisting of the Casey’s design logos (with the words
“Casey’s General Store”) and the weathervane are registered trademarks and service marks under federal law. We believe these
marks are of material importance in promoting and advertising the Company’s business. The Company has a number of other
Fuel Operations
Fuel sales are an important part of our revenue and earnings. Approximately 59% of Casey’s total revenue for the year
ended April 30, 2017 was derived from the retail sale of fuel. The following table summarizes (dollars and gallons in
thousands) fuel sales for the three fiscal years ended April 30, 2017:
Number of gallons sold
Total retail fuel sales
Percentage of total revenue
Gross profit percentage (excluding credit card fees)
Average retail price per gallon
Average gross profit margin per gallon (excluding credit card fees)
Average number of gallons sold per store*
Year ended April 30,
2017
2,061,794
$ 4,414,128
2016
1,951,814
$ 4,214,802
2015
1,816,596
$ 5,144,385
$
58.8%
8.6%
2.14
18.35 ¢
1,053
$
59.2%
9.1%
2.16
19.55 ¢
1,015
$
66.2%
6.8%
2.83
19.33 ¢
968
*
Includes only those stores in operation at least one full year on April 30 of the fiscal year indicated.
Retail prices of fuel during the year were consistent, on average, with the prior year. The total number of gallons we sold
during this period increased, primarily because of the higher number of stores in operation, the slightly lower retail prices,
continued benefit from our fuel saver programs, and the growth in expanded hour stores. Gross profit percentage represents the
fuel gross profit divided by the gross fuel sales dollars, so as retail fuel prices fluctuate in a period of consistent gross margin
per gallon, the gross profit percentage will also fluctuate in an inverse relationship to fuel price. For additional information
concerning the Company’s fuel operations, see Item 7 herein.
Distribution and Wholesale Arrangements
The Marketing Company supplies all stores with groceries, food, health and beauty aids, and general merchandise from
the distribution centers. The stores place orders for merchandise electronically to our headquarters in Ankeny, and the orders
are filled with weekly shipments in Company-owned delivery trucks from one of the distribution centers, depending on
geographic proximity to the store. All of our existing and most of our proposed stores are within the two distribution centers'
optimum efficiency range—a radius of approximately 500 miles around each center.
In fiscal 2017, a majority of the food and nonfood items supplied to stores from the distribution centers were purchased
directly from manufacturers. With few exceptions, long-term supply contracts are not entered into with any of the suppliers of
products sold by Casey’s General Stores. We believe the practice enables us to respond to changing market conditions with
minimal impact on margins.
Personnel
On April 30, 2017, we had 15,911 full-time employees and 19,103 part-time employees. We have not experienced any
work stoppages. There are no collective bargaining agreements between the Company and any of its employees.
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 fuel 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 fuel 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, Kum
& Go, and other 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.
Trademarks and Service Marks
The names "Casey's" and “Casey’s General Store” and the marks consisting of the Casey’s design logos (with the words
“Casey’s General Store”) and the weathervane are registered trademarks and service marks under federal law. We believe these
marks are of material importance in promoting and advertising the Company’s business. The Company has a number of other
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registered and unregistered trademarks and service marks that are significant to the Company from an operational and branding
perspective (e.g. "Casey's Pizza", "Casey's Famous for Pizza", etc.).
Government Regulation (dollars in thousands)
The United States Environmental Protection Agency and several states, including Iowa, have established requirements for
owners and operators of underground fuel 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 fuel inventory record keeping. Since 1984, our new
stores have been equipped with noncorroding fiberglass USTs, including some with double-wall construction, overfill
protection, and electronic tank monitoring. We currently have 4,473 USTs, 3,587 of which are fiberglass and 886 are steel, and
we believe that 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, including the Company. For the years ended April 30, 2017 and 2016, we
spent approximately $1,323 and $1,621, respectively, for assessments and remediation. Substantially all of these expenditures
were submitted for reimbursement from state-sponsored trust fund programs. As of April 30, 2017, approximately $20,767 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. None of the
reimbursements received are currently expected to be repaid by the Company to the trust fund programs. At April 30, 2017, we
had an accrued liability of approximately $283 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.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described in this report before making a decision to invest in our securities. 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
demand for motor fuel.
The convenience store industry is highly competitive.
The convenience store and retail fuel industries in which we operate are highly competitive and characterized 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 many other convenience store chains, gasoline stations, supermarkets, drugstores, discount stores, club stores,
fast food outlets, and mass merchants, and a variety of other retail companies, including retail gasoline companies that have
more extensive retail outlets, greater brand name recognition and established fuel supply arrangements. Several non-traditional
retailers such as supermarkets, club stores, and mass merchants have affected the convenience store industry by entering the
retail fuel business. These non-traditional fuel retailers have obtained a significant share of the motor fuels market, and their
market share is expected to grow. Certain of these non-traditional retailers may use more extensive promotional pricing or
discounts, both at the fuel pump and in the store, to encourage in-store merchandise sales and gasoline sales. 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 have a greater ability to bear the economic risks inherent in our industry, and may be able to
respond better to changes in the economy and new opportunities within the industry. This intense competition could adversely
affect our revenues and profitability, and have a material adverse impact on our business and results of operations.
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. These competitive pressures
could materially and adversely affect our fuel and merchandise sales and gross profit margins, and therefore could have a
material adverse effect on our business, financial condition and results of operations.
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The volatility of wholesale petroleum costs could adversely affect our operating results.
Our net income is significantly affected by changes in the margins we receive on our retail fuel sales. Over the past three
fiscal years, on average our fuel revenues accounted for approximately 61% of total revenue and our fuel 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, threatened or actual acts of war or terrorism, and instability in oil producing regions,
particularly in the Middle East and South America, can significantly affect crude oil supplies and wholesale petroleum costs. In
addition, the supply of fuel and 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, in our case, the absence of fuel contracts that
guarantee an uninterrupted, unlimited supply of fuel. Significant increases and volatility in wholesale petroleum costs have
resulted and could in the future result in significant increases in the retail price of petroleum products and in lower average fuel
margins per gallon. Increases in the retail price of petroleum products have resulted and could in the future adversely affect
consumer demand for fuel. This volatility makes it difficult to predict the impact that future wholesale cost fluctuations will
have on our operating results and financial condition in future periods. These factors could adversely affect our fuel gallon
volume, fuel gross profit, and overall customer traffic, which in turn would affect our sales of grocery and general merchandise
and prepared food products.
In addition, wholesale petroleum prices, fuel gallons sold, fuel gross profits and merchandise sales can be subject to
seasonal fluctuations. Consumer demand for motor fuel typically increases during the summer driving season and typically
falls during the winter months. Travel, recreation and construction activities are usually higher in the summer months in the
Midwest, increasing the demand for motor fuel and merchandise that we sell. For that reason, our fuel volumes are typically
higher in the first and second quarters of our fiscal year. Any significant change in one or more of these factors could
materially affect the number of fuel gallons sold, fuel gross profits and overall customer traffic, which in turn could have a
material adverse effect on our business, financial condition and results of operations.
Changing consumer preferences for alternative motor fuel and improvements in fuel efficiency could adversely impact
our business.
A shift toward electric, hydrogen, natural gas or other alternative fuel-powered vehicles could fundamentally change the
shopping and driving habits of our customers or lead to new forms of fueling destinations or new competitive pressure.
Improvements to the fuel efficiency of automobiles, or further mandates to improve fuel efficiency, may result in decreased
demand for conventional fuel. Any of these outcomes could potentially result in fewer customer visits to our stores, decreases
both in fuel and general merchandise sales revenue or lower profit margins, which could have a material adverse effect on our
business, financial condition and results of operations.
Legal, political, scientific and technological developments related to fuel efficiency and climate change may decrease
Changes in our climate, including the effects of greenhouse gas emissions in the environment, may lessen the demand
for our largest revenue product, petroleum-based motor fuel, or lead to additional government regulation. Technological
advances to reducing fuel use and governmental mandates to improve fuel efficiency could have a material adverse effect on
our business, financial condition and results of operations. In addition, new advancements that improve fuel efficiency or other
governmental mandates to advance fuel efficiency may result in a reduction in demand for petroleum-based motor fuel, which
again could have a material adverse effect on our business.
Increased credit card expenses could increase operating expenses.
A significant percentage of our sales are made with the use of credit cards. Since the interchange fees we pay when credit
cards are used to make purchases are based on transaction amounts, higher fuel prices at the pump and higher gallon movement
result in higher credit card expenses. These additional fees increase operating expenses. Higher operating expenses that result
from higher credit card fees may decrease our overall profit and have a material adverse effect on our business, financial
condition and results of operations. Total credit card fees paid in fiscal 2017, 2016, and 2015, were approximately $110 million,
$100 million, and $100 million, respectively.
Wholesale cost and tax increases relating to tobacco products could affect our operating results.
Sales of tobacco products have averaged approximately 11% of our total revenue over the past three fiscal years, and our
tobacco gross profit accounted for approximately 10% of total gross profit for the same period. Any significant increases in
wholesale cigarette costs or tax increases on tobacco products may have a materially adverse effect on unit demand for
cigarettes. Currently, major cigarette manufacturers offer significant rebates to retailers, although there can be no assurance that
such rebate programs will continue. We include these rebates as a component of cost of goods sold, which affects our gross
margin from sales of cigarettes. In the event these rebates are no longer offered or decreased, our wholesale cigarette costs will
The volatility of wholesale petroleum costs could adversely affect our operating results.
Our net income is significantly affected by changes in the margins we receive on our retail fuel sales. Over the past three
fiscal years, on average our fuel revenues accounted for approximately 61% of total revenue and our fuel 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, threatened or actual acts of war or terrorism, and instability in oil producing regions,
particularly in the Middle East and South America, can significantly affect crude oil supplies and wholesale petroleum costs. In
addition, the supply of fuel and 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, in our case, the absence of fuel contracts that
guarantee an uninterrupted, unlimited supply of fuel. Significant increases and volatility in wholesale petroleum costs have
resulted and could in the future result in significant increases in the retail price of petroleum products and in lower average fuel
margins per gallon. Increases in the retail price of petroleum products have resulted and could in the future adversely affect
consumer demand for fuel. This volatility makes it difficult to predict the impact that future wholesale cost fluctuations will
have on our operating results and financial condition in future periods. These factors could adversely affect our fuel gallon
volume, fuel gross profit, and overall customer traffic, which in turn would affect our sales of grocery and general merchandise
and prepared food products.
In addition, wholesale petroleum prices, fuel gallons sold, fuel gross profits and merchandise sales can be subject to
seasonal fluctuations. Consumer demand for motor fuel typically increases during the summer driving season and typically
falls during the winter months. Travel, recreation and construction activities are usually higher in the summer months in the
Midwest, increasing the demand for motor fuel and merchandise that we sell. For that reason, our fuel volumes are typically
higher in the first and second quarters of our fiscal year. Any significant change in one or more of these factors could
materially affect the number of fuel gallons sold, fuel gross profits and overall customer traffic, which in turn could have a
material adverse effect on our business, financial condition and results of operations.
Changing consumer preferences for alternative motor fuel and improvements in fuel efficiency could adversely impact
our business.
A shift toward electric, hydrogen, natural gas or other alternative fuel-powered vehicles could fundamentally change the
shopping and driving habits of our customers or lead to new forms of fueling destinations or new competitive pressure.
Improvements to the fuel efficiency of automobiles, or further mandates to improve fuel efficiency, may result in decreased
demand for conventional fuel. Any of these outcomes could potentially result in fewer customer visits to our stores, decreases
both in fuel and general merchandise sales revenue or lower profit margins, which could have a material adverse effect on our
business, financial condition and results of operations.
Legal, political, scientific and technological developments related to fuel efficiency and climate change may decrease
demand for motor fuel.
Changes in our climate, including the effects of greenhouse gas emissions in the environment, may lessen the demand
for our largest revenue product, petroleum-based motor fuel, or lead to additional government regulation. Technological
advances to reducing fuel use and governmental mandates to improve fuel efficiency could have a material adverse effect on
our business, financial condition and results of operations. In addition, new advancements that improve fuel efficiency or other
governmental mandates to advance fuel efficiency may result in a reduction in demand for petroleum-based motor fuel, which
again could have a material adverse effect on our business.
Increased credit card expenses could increase operating expenses.
A significant percentage of our sales are made with the use of credit cards. Since the interchange fees we pay when credit
cards are used to make purchases are based on transaction amounts, higher fuel prices at the pump and higher gallon movement
result in higher credit card expenses. These additional fees increase operating expenses. Higher operating expenses that result
from higher credit card fees may decrease our overall profit and have a material adverse effect on our business, financial
condition and results of operations. Total credit card fees paid in fiscal 2017, 2016, and 2015, were approximately $110 million,
$100 million, and $100 million, respectively.
Wholesale cost and tax increases relating to tobacco products could affect our operating results.
Sales of tobacco products have averaged approximately 11% of our total revenue over the past three fiscal years, and our
tobacco gross profit accounted for approximately 10% of total gross profit for the same period. Any significant increases in
wholesale cigarette costs or tax increases on tobacco products may have a materially adverse effect on unit demand for
cigarettes. Currently, major cigarette manufacturers offer significant rebates to retailers, although there can be no assurance that
such rebate programs will continue. We include these rebates as a component of cost of goods sold, which affects our gross
margin from sales of cigarettes. In the event these rebates are no longer offered or decreased, our wholesale cigarette costs will
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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, and in turn have a material adverse
effect on our business, financial condition and results of operations.
economic factors may affect consumer spending or buying habits, and could adversely affect the demand for products the
Company sells in its stores. Unfavorable economic conditions, especially those affecting the agricultural industry, higher fuel
prices, and unemployment levels can affect consumer confidence, spending patterns, and miles driven, causing customers to
“trade down” to lower priced products in certain categories when these conditions exist. These factors can lead to sales declines
in both fuel and general merchandise, and in turn have an adverse impact on our business, financial condition and results of
Governmental action and campaigns to discourage smoking and smoking related products may have a material adverse
effect on our revenues and gross profit.
operations.
Congress has given the Food and Drug Administration (“FDA”) broad authority to regulate tobacco products, and the
FDA has enacted numerous regulations restricting the sale of such products. These governmental actions, as well as national,
state and local campaigns to discourage smoking and other factors, have resulted in reduced industry volume and consumption
levels, and could materially affect the retail price of cigarettes, unit volume and revenues, gross profit, and overall customer
traffic, which in turn could have a material adverse effect on our business, financial condition and results of operations.
Also, increasing regulations for e-cigarettes and vapor products could offset some of the recent gains we have
experienced from selling these types of products.
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, including prepared food. 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, product 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,
industry-specific business practices or other operational matters. For example, various petroleum marketing retailers,
distributors and refiners defended 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 covered, or in some instances
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.
Our business and our reputation could be adversely affected by the failure to protect sensitive customer, employee or
vendor data, whether as a result of a cybersecurity incident or otherwise, or to comply with applicable regulations
relating to data security and privacy.
In the normal course of our business as a retailer, we obtain and have access to large amounts of personal data, including
but not limited to credit and debit card information and other personally identifiable information from our customers,
employees, and vendors. While we invest significant amounts and have engaged professional advisers in the protection of such
data and information, our IT systems, and incident response programs, and maintain what we believe are adequate security
controls, a compromise or a breach in our systems, or other data security incident that results in the loss, unauthorized release,
disclosure or acquisition of such data or information, or other sensitive data or information, could nonetheless occur and have a
material adverse effect on our reputation, operating results and financial condition.
A data security incident of any kind could expose us to risk in terms of the loss, unauthorized release, disclosure or
acquisition of sensitive customer, employee or vendor data, and could result in litigation or other regulatory action being
brought against us and damage, monetary and other claims made by or on behalf of the payment card brands, customers,
employees, shareholders, financial institutions and governmental agencies. Such claims could give rise to substantial monetary
damages and losses which are not covered, or in some instances fully covered, by our insurance policies and which could
adversely affect our reputation, results of operations, financial condition and liquidity. Moreover, a data security incident could
require that we expend significant additional resources to further upgrade the security and other measures that we employ to
guard against, and respond to, such incidents.
General economic conditions that are largely out of the Company’s control may adversely affect the Company’s
financial condition and results of operations.
condition and results of operations.
Current economic conditions, 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
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Risks Related to Our Business
The prices of certain commodities and "RINs" fluctuate widely.
The wholesale costs we pay for certain commodities such as cheese and coffee can fluctuate widely from period to
period. Any significant increase in the wholesale costs of such commodities could have a material adverse impact on our
results of operations in a particular period or periods.
In certain states, we blend bulk fuel with ethanol and bio-diesel and sell the associated “renewable identification
numbers” (“RINs”) that are generated in the process. The market prices paid to us for our RINs can fluctuate widely from
period to period and can have a significant impact on our financial results for a particular period or periods. The market price
for RINs fluctuates based on a variety of factors including, but not limited to, governmental and regulatory action, perceptions
concerning the prospect for changes in the renewable fuels standards or the future availability of RINs, and other market
dynamics. During the past three fiscal years, the average sale price has been $0.64 per RIN. Due to the inherent price volatility
of RINs, there can be no assurance that we will be able to sell our RINs in the future at any particular price. Any significant
decline in the market price of RINs could have a material adverse effect on our results of operations in a particular period or
periods.
Last year, certain oil refiners and other interested parties initiated legal challenges and filed rulemaking requests with the
U.S. Environmental Protection Agency (“EPA”), seeking reconsideration and/or changes in the RFS regulations identifying
refiners and importers of gasoline and diesel fuel as the entities responsible for complying with the annual percentage standards
adopted by EPA under the renewable fuel standards program. On November 10, 2016, EPA proposed denying the petitions for
rulemaking it has received to change the “point of obligation” from refiners and importers, but at the same time EPA opened a
60 day public comment process to allow comments on its action, which has now closed. At some point in the future, EPA will
issue a final decision on its proposed denial of the proposal to initiate rulemaking to change the point of obligation. Any
change in the existing RFS regulations, whether as a result of EPA rulemaking or other legal challenge, could materially and
adversely affect the market prices for RINs and/or our ability to sell our RINs to other parties, and there can be no assurance
that such regulatory changes will not occur in the future.
Unfavorable weather conditions can adversely affect our business.
All of our stores are located in the Midwest region of the United States, which is susceptible to tornadoes, thunderstorms,
earthquakes, 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. When weather conditions are not favorable during a particular
period, our operating results and cash flow from operations could be adversely affected.
Any failure to anticipate and respond to market trends and changes in consumer preferences could adversely affect our
financial results.
Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to
changes in consumer tastes, their attitudes toward our industry and brands, as well as to where and how consumers shop for
those products. We must continually work to develop, produce and market new products, maintain and enhance the recognition
of our brands, achieve a favorable mix of products, and refine our approach as to how and where we market and sell our
products. While we devote considerable effort and resources to shape, analyze and respond to consumer preferences, we
recognize that consumer tastes cannot be predicted with certainty and can change rapidly. The issue is compounded by the
increasing use of social and digital media by consumers and the speed by which information and opinions are shared. If we are
unable to anticipate and respond to sudden challenges that we may face in the marketplace, trends in the market for our
products and changing consumer demands and sentiment, it could have a material adverse effect on our business, financial
economic factors may affect consumer spending or buying habits, and could adversely affect the demand for products the
Company sells in its stores. Unfavorable economic conditions, especially those affecting the agricultural industry, higher fuel
prices, and unemployment levels can affect consumer confidence, spending patterns, and miles driven, causing customers to
“trade down” to lower priced products in certain categories when these conditions exist. These factors can lead to sales declines
in both fuel and general merchandise, and in turn have an adverse impact on our business, financial condition and results of
operations.
Risks Related to Our Business
The prices of certain commodities and "RINs" fluctuate widely.
The wholesale costs we pay for certain commodities such as cheese and coffee can fluctuate widely from period to
period. Any significant increase in the wholesale costs of such commodities could have a material adverse impact on our
results of operations in a particular period or periods.
In certain states, we blend bulk fuel with ethanol and bio-diesel and sell the associated “renewable identification
numbers” (“RINs”) that are generated in the process. The market prices paid to us for our RINs can fluctuate widely from
period to period and can have a significant impact on our financial results for a particular period or periods. The market price
for RINs fluctuates based on a variety of factors including, but not limited to, governmental and regulatory action, perceptions
concerning the prospect for changes in the renewable fuels standards or the future availability of RINs, and other market
dynamics. During the past three fiscal years, the average sale price has been $0.64 per RIN. Due to the inherent price volatility
of RINs, there can be no assurance that we will be able to sell our RINs in the future at any particular price. Any significant
decline in the market price of RINs could have a material adverse effect on our results of operations in a particular period or
periods.
Last year, certain oil refiners and other interested parties initiated legal challenges and filed rulemaking requests with the
U.S. Environmental Protection Agency (“EPA”), seeking reconsideration and/or changes in the RFS regulations identifying
refiners and importers of gasoline and diesel fuel as the entities responsible for complying with the annual percentage standards
adopted by EPA under the renewable fuel standards program. On November 10, 2016, EPA proposed denying the petitions for
rulemaking it has received to change the “point of obligation” from refiners and importers, but at the same time EPA opened a
60 day public comment process to allow comments on its action, which has now closed. At some point in the future, EPA will
issue a final decision on its proposed denial of the proposal to initiate rulemaking to change the point of obligation. Any
change in the existing RFS regulations, whether as a result of EPA rulemaking or other legal challenge, could materially and
adversely affect the market prices for RINs and/or our ability to sell our RINs to other parties, and there can be no assurance
that such regulatory changes will not occur in the future.
Unfavorable weather conditions can adversely affect our business.
All of our stores are located in the Midwest region of the United States, which is susceptible to tornadoes, thunderstorms,
earthquakes, 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. When weather conditions are not favorable during a particular
period, our operating results and cash flow from operations could be adversely affected.
Any failure to anticipate and respond to market trends and changes in consumer preferences could adversely affect our
financial results.
Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to
changes in consumer tastes, their attitudes toward our industry and brands, as well as to where and how consumers shop for
those products. We must continually work to develop, produce and market new products, maintain and enhance the recognition
of our brands, achieve a favorable mix of products, and refine our approach as to how and where we market and sell our
products. While we devote considerable effort and resources to shape, analyze and respond to consumer preferences, we
recognize that consumer tastes cannot be predicted with certainty and can change rapidly. The issue is compounded by the
increasing use of social and digital media by consumers and the speed by which information and opinions are shared. If we are
unable to anticipate and respond to sudden challenges that we may face in the marketplace, trends in the market for our
products and changing consumer demands and sentiment, it could have a material adverse effect on our business, financial
condition and results of operations.
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We may not be able to identify, acquire, and integrate new stores, which could adversely affect our ability to grow our
business.
to seek other remedies.
approve, revoke, suspend, or deny applications for and renewals of permits and licenses relating to the sale of these products or
An important part of our growth strategy has been to acquire other convenience stores that complement our existing
stores or broaden our geographic presence. From May 1, 2016 through April 30, 2017 we acquired 22 convenience stores and
opened 18 of those 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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The inability to identify and acquire suitable sites at advantageous prices;
Competition in targeted market areas;
Difficulties during the acquisition process in discovering some of the liabilities of the businesses that we acquire;
Difficulties associated with our existing financial controls, information systems, management resources and human
resources needed to support our future growth;
Difficulties with hiring, training and retaining skilled personnel, including store managers;
Difficulties in adapting distribution and other operational and management systems to an expanded network of stores;
Difficulties in obtaining governmental and other third-party consents, permits and licenses needed to operate
additional stores;
Difficulties in obtaining the cost savings and financial improvements we anticipate from future acquired stores;
The potential diversion of our senior management’s attention from focusing on our core business due to an increased
focus on acquisitions; and
Challenges associated with the consummation and integration of any future acquisition.
We are subject to extensive governmental regulations.
Our business is subject to extensive governmental laws and regulations that include but are not limited to those relating to
environmental protection; the preparation, sale and labeling of food; minimum wage, overtime and other employment laws and
regulations; compliance with the Patient Protection and Affordable Care Act and the Americans with Disabilities Act; legal
restrictions on the sale of alcohol, tobacco, money order and lottery products; compliance with the Payment Card Industry Data
Security Standards and similar requirements; securities laws and Nasdaq listing standards. The costs of compliance with these
laws and regulations is substantial, and 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.
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
Any appreciable increase in income, overtime pay, or the statutory minimum salary requirements, minimum wage rate, or
adoption of mandated healthcare benefits would result in an increase in our labor costs. Such cost increases 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, a significant portion of motor fuel is transported
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.
Customer preferences and store traffic could be adversely impacted by health concerns about certain prepared food
products, reports of food-borne illnesses or food safety issues, any of which could result in a decrease in demand for our
prepared food offerings.
adversely impact our sales.
Customer preferences and store traffic could be adversely impacted by health concerns or negative publicity about the
consumption of particular prepared food products such as pizza, which could cause a decline in demand for those products and
Instances or reports, whether verified or not, of food-safety issues, such as food-borne illnesses, food tampering, food
contamination or mislabeling, either during growing, manufacturing, packaging, transportation, storing or preparation, have in
the past significantly damaged the reputations of companies in the food processing, grocery and quick service and “fast casual”
restaurant sectors, and could affect us as well. Any instances of, or reports linking us to, food-borne illnesses or food
tampering, contamination, mislabeling or other food-safety issues could damage the value of the Casey’s brand and severely
hurt sales of our prepared food products and possibly lead to product liability claims, litigation (including class actions),
government agency investigations and damages.
Because we depend on our management’s and other key employees' experience and knowledge of our industry, we could
be adversely affected were we to lose any such members of our team.
We are dependent on the continued knowledge and efforts of our management team and other key employees. If, for any
reason, our executives do not continue to be active in management, or we lose such persons, or other key employees, 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, or loss of access to,
data and information, security breaches or other security incidents, and computer viruses or attacks. Any disruption could cause
our business and competitive position to suffer and cause our operating results to be reduced. Also, our business continuity plan
could fail.
Control deficiencies could prevent us from accurately and timely reporting our financial results.
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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 salary requirements, minimum wage rate, or
adoption of mandated healthcare benefits would result in an increase in our labor costs. Such cost increases 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, a significant portion of motor fuel is transported
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.
Customer preferences and store traffic could be adversely impacted by health concerns about certain prepared food
products, reports of food-borne illnesses or food safety issues, any of which could result in a decrease in demand for our
prepared food offerings.
Customer preferences and store traffic could be adversely impacted by health concerns or negative publicity about the
consumption of particular prepared food products such as pizza, which could cause a decline in demand for those products and
adversely impact our sales.
Instances or reports, whether verified or not, of food-safety issues, such as food-borne illnesses, food tampering, food
contamination or mislabeling, either during growing, manufacturing, packaging, transportation, storing or preparation, have in
the past significantly damaged the reputations of companies in the food processing, grocery and quick service and “fast casual”
restaurant sectors, and could affect us as well. Any instances of, or reports linking us to, food-borne illnesses or food
tampering, contamination, mislabeling or other food-safety issues could damage the value of the Casey’s brand and severely
hurt sales of our prepared food products and possibly lead to product liability claims, litigation (including class actions),
government agency investigations and damages.
Because we depend on our management’s and other key employees' experience and knowledge of our industry, we could
be adversely affected were we to lose any such members of our team.
We are dependent on the continued knowledge and efforts of our management team and other key employees. If, for any
reason, our executives do not continue to be active in management, or we lose such persons, or other key employees, 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, or loss of access to,
data and information, security breaches or other security incidents, and computer viruses or attacks. Any disruption could cause
our business and competitive position to suffer and cause our operating results to be reduced. Also, our business continuity plan
could fail.
Control deficiencies could prevent us from accurately and timely reporting our financial results.
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Our internal control over financial reporting constitutes a process designed to provide reasonable assurance regarding the
Iowa law and provisions in our charter documents may have the effect of preventing or hindering a change in control
reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted
accounting principles (“GAAP”). We have in the past and may in the future identify deficiencies in our internal control over
financial reporting, including significant deficiencies and material weaknesses. Failure to identify and remediate deficiencies in
our internal control over financial reporting in a timely manner could prevent us from accurately and timely reporting our
financial results, which could cause us to fail to meet our reporting obligations, lead to a loss of investor confidence and have a
negative impact on the trading price of our common stock.
Our operations present hazards and risks which may not be fully covered by insurance, if insured.
The scope and nature of our operations present a variety of operational hazards and risks that must be managed
through continual oversight and control. As protection against hazards and risks, we maintain insurance against many, but not
all, potential losses or liabilities arising from such risks. Uninsured losses and liabilities from operating risks could reduce the
funds available to us for capital and investment spending and could have a material adverse impact on the results of operations
in a particular period or periods.
Covenants in the agreements relating to our Senior Notes require us to meet financial maintenance tests. Failure to
comply with these requirements could have a material impact to us.
We are required to meet certain financial and non-financial covenants under our existing note agreements relating to
our Senior Notes. A breach of any covenant could result in a default under the note agreements, which could, if not timely
cured, permit lenders to declare all amounts outstanding to be immediately due and payable, and have an adverse effect on our
business, financial condition, and results of operation.
Compliance with and changes in tax laws could adversely affect our performance.
We are subject to extensive tax liabilities imposed by multiple jurisdictions, including income taxes, indirect taxes
(excise, sales/use, and gross receipts taxes), payroll taxes, property taxes, and tobacco taxes. Tax laws and regulations are
dynamic and subject to change as new laws are passed and new interpretations of existing laws are issued and applied. The
activity could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic
audits by the respective taxing authorities. Subsequent changes to our tax liabilities as a result of these audits may subject us to
interest and penalties.
A significant disruption to our distribution network, to the capacity of the distribution centers, or timely receipt of
inventory could adversely impact our sales or increase our transaction costs, which could have a material adverse effect
on our business.
We rely on our distribution and transportation network to provide products to our stores in a timely and cost-effective
manner. Product is moved from vendor locations to the two distribution centers. Deliveries to our stores occur from the
distribution center or directly from our vendors. Any disruption, unanticipated or unusual expense or operational failure related
to this process could affect our store operations negatively.
Shortages or interruptions in the supply of products could affect our operating results. We depend on regular
deliveries of products that meet our specifications. In addition, we have a single supplier or limited number of suppliers for
certain products. While we believe there are adequate reserve quantities and alternative suppliers, shortages or interruptions in
the receipt of products caused by unanticipated demand, problems in production or distribution, financial or other difficulties of
suppliers, inclement weather or other conditions could adversely affect the availability, quality and cost of products, and our
operating results.
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.
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 one 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.
Our articles of incorporation were amended in 2011 to stagger the terms of the Company’s board of directors, as a result
of amendments to the Iowa Business Corporation Act. Our staggered board, along with other provisions of our articles of
incorporation and bylaws and Iowa corporate law, could make it more difficult for a third party to acquire us or remove our
directors by means of a proxy contest, 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. Further,
Section 490.1108A of the Iowa Business Corporation Act permits a board of directors, in the context of a takeover proposal, to
consider not only the effect of a proposed transaction on shareholders, but also on a corporation’s employees, suppliers,
customers, creditors, and on the communities in which the corporation operates. These provisions 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.
We may, in the future, adopt other measures (such as a shareholder rights plan or “poison pill”) 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.
investment to decline.
The market price for our common stock has been and may in the future be volatile, which could cause the value of your
Securities markets worldwide experience significant price and volume fluctuations. This market volatility could
significantly affect the market price of our common stock without regard to our operating performance. In addition, the price of
our common stock could be subject to wide fluctuations in response to these and other factors:
A deviation in our results from the expectations of public market analysts and investors;
Statements by research analysts about our common stock, company, or industry;
Changes in market valuations of companies in our industry and market evaluations of our industry generally;
Additions or departures of key personnel;
Actions taken by our competitors;
Sales of common stock by the Company, senior officers, or other affiliates; and
Other general economic, political, or market conditions, many of which are beyond our control.
The market price of our common stock will also be affected by our quarterly operating results and same store sales
results, which may be expected to fluctuate. Some of the factors that may affect our quarterly results and same store sales
include 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.
{13}
13
14
Iowa law and provisions in our charter documents 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 one 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.
Our articles of incorporation were amended in 2011 to stagger the terms of the Company’s board of directors, as a result
of amendments to the Iowa Business Corporation Act. Our staggered board, along with other provisions of our articles of
incorporation and bylaws and Iowa corporate law, could make it more difficult for a third party to acquire us or remove our
directors by means of a proxy contest, 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. Further,
Section 490.1108A of the Iowa Business Corporation Act permits a board of directors, in the context of a takeover proposal, to
consider not only the effect of a proposed transaction on shareholders, but also on a corporation’s employees, suppliers,
customers, creditors, and on the communities in which the corporation operates. These provisions 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.
We may, in the future, adopt other measures (such as a shareholder rights plan or “poison pill”) 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.
The market price for our common stock has been and may in the future be volatile, which could cause the value of your
investment to decline.
Securities markets worldwide experience significant price and volume fluctuations. This market volatility could
significantly affect the market price of our common stock without regard to our operating performance. In addition, the price of
our common stock could be subject to wide fluctuations in response to these and other factors:
•
•
•
•
•
•
•
A deviation in our results from the expectations of public market analysts and investors;
Statements by research analysts about our common stock, company, or industry;
Changes in market valuations of companies in our industry and market evaluations of our industry generally;
Additions or departures of key personnel;
Actions taken by our competitors;
Sales of common stock by the Company, senior officers, or other affiliates; and
Other general economic, political, or market conditions, many of which are beyond our control.
The market price of our common stock will also be affected by our quarterly operating results and same store sales
results, which may be expected to fluctuate. Some of the factors that may affect our quarterly results and same store sales
include 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.
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14
Table of Contents
Table of Contents
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
PROPERTIES
We own our corporate headquarters (built in 1990) and both distribution centers. Located on an approximately 51-acre
site in Ankeny, Iowa, our corporate headquarters, our first distribution center, and our vehicle service and maintenance center
occupy a total of approximately 375,000 square feet. We also own a building near our corporate headquarters where our
construction and support services departments operate. In February 2016, we opened our second distribution center, located in
Terre Haute, Indiana. This second distribution center has approximately 300,000 square feet of warehouse space.
On April 30, 2017, we also owned the land at 1,957 store locations and the buildings at 1,962 locations and leased the
land at 21 locations and the buildings at 16 locations. Most of the leases provide for the payment of a fixed rent plus property
taxes, 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 10, Contingencies, to
Dividends
the Consolidated Financial Statements included in Part II, Item 8.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
Casey’s common stock trades on the Nasdaq Global Select Market under the symbol CASY. The 38,765,821 shares of
common stock outstanding at April 30, 2017 had a market value of approximately $4.3 billion. On that date there were 1,715
Common Stock
shareholders of record.
Common Stock Market Prices
Calendar
2015
Q1
Q2
Q3
Q4
High
Low
$
$
$
$
94.67
98.22
114.90
129.53
$
$
$
$
83.00
80.94
95.30
101.36
Calendar
2016
Q1
Q2
Q3
Q4
High
Low
123.75
131.52
136.22
126.49
$
$
$
$
98.80
105.17
115.07
110.45
$
$
$
$
Calendar
2017
Q1
High
Low
$
120.90
$
107.43
We began paying cash dividends during fiscal 1991.The dividends declared in fiscal 2017 totaled $0.96 per share. The
dividends declared in fiscal 2016 totaled $0.88 per share. On June 2, 2017, the Board of Directors declared a quarterly dividend
of $0.26 per share payable August 15, 2017 to shareholders of record on August 1, 2017. The Board typically reviews the
dividend every year at its June meeting.
The cash dividends declared during the calendar years 2015-17 were as follows:
Calendar
2015
Q1
Q2
Q3
Q4
Cash
dividend
declared
$
0.200
0.220
0.220
0.220
0.860
Calendar
2016
Q1
Q2
Q3
Q4
Cash
dividend
declared
$
0.220
0.240
0.240
0.240
0.940
Calendar
2017
Q1
Q2
Cash
dividend
declared
$
0.240
0.260
Issuer Purchases of Equity Securities
During the fourth quarter of the fiscal year ended April 30, 2017, the Company began a share repurchase program,
wherein the Company is authorized to repurchase up to an aggregate of $300 million of the Company's outstanding common
stock. The share repurchase authorization is valid for a period of two years. The timing and number of repurchase transactions
under the program depends on a variety of factors including, but not limited to, market conditions, corporate considerations,
business opportunities, debt agreements, and regulatory requirements. The program can be suspended or discontinued at any
time. The following table sets forth information with respect to the Company's repurchases of common stock during the quarter
ended April 30, 2017:
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15
16
Table of Contents
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 38,765,821 shares of
common stock outstanding at April 30, 2017 had a market value of approximately $4.3 billion. On that date there were 1,715
shareholders of record.
Common Stock Market Prices
High
Low
$
$
$
$
94.67 $
98.22 $
114.90 $
129.53 $
83.00
80.94
95.30
101.36
Calendar
2016
Q1
Q2
Q3
Q4
High
123.75 $
131.52 $
136.22 $
126.49 $
Low
98.80
105.17
115.07
110.45
$
$
$
$
Calendar
2017
Q1
High
120.90 $
Low
107.43
$
Calendar
2015
Q1
Q2
Q3
Q4
Dividends
We began paying cash dividends during fiscal 1991.The dividends declared in fiscal 2017 totaled $0.96 per share. The
dividends declared in fiscal 2016 totaled $0.88 per share. On June 2, 2017, the Board of Directors declared a quarterly dividend
of $0.26 per share payable August 15, 2017 to shareholders of record on August 1, 2017. The Board typically reviews the
dividend every year at its June meeting.
The cash dividends declared during the calendar years 2015-17 were as follows:
Calendar
2015
Q1
Q2
Q3
Q4
$
Cash
dividend
declared
0.200
0.220
0.220
0.220
0.860
Calendar
2016
Q1
Q2
Q3
Q4
$
Cash
dividend
declared
0.220
0.240
0.240
0.240
0.940
Calendar
2017
Q1
Q2
Cash
dividend
declared
$
0.240
0.260
Issuer Purchases of Equity Securities
During the fourth quarter of the fiscal year ended April 30, 2017, the Company began a share repurchase program,
wherein the Company is authorized to repurchase up to an aggregate of $300 million of the Company's outstanding common
stock. The share repurchase authorization is valid for a period of two years. The timing and number of repurchase transactions
under the program depends on a variety of factors including, but not limited to, market conditions, corporate considerations,
business opportunities, debt agreements, and regulatory requirements. The program can be suspended or discontinued at any
time. The following table sets forth information with respect to the Company's repurchases of common stock during the quarter
ended April 30, 2017:
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16
Table of Contents
Period
Fourth Quarter:
March 9-31, 2017
April 1-30, 2017
215,900 $
227,900
As of April 30, 2017
443,800 $
Total Number of
Shares Purchased
Average Price Paid
Per Share
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Dollar Value of
Shares That May Yet Be
Purchased Under the Plans or
Programs
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
Statement of Income Data
110.32
112.14
111.25
215,900 $
227,900
276,182,253
250,626,279
443,800 $
250,626,279
Total revenue
Cost of goods sold
Gross profit
Operating expenses
Depreciation and amortization
Interest, net
Income before income taxes
Federal and state income taxes
Net income
Basic earnings per common share
Diluted earnings per common share
Weighted average number of common
shares outstanding—basic
Weighted average number of common
shares outstanding—diluted
Dividends declared per common share
Balance Sheet Data
2017
2016
2015
2014
2013
$
7,506,587
$
7,122,086
$
7,767,216
$
7,840,255
$
7,250,840
Years ended April 30,
6,327,431
1,439,785
6,618,239
1,222,016
6,179,771
1,071,069
5,825,426
1,681,161
1,172,328
197,629
41,536
269,668
92,183
177,485
4.54
4.48
$
$
$
5,508,465
1,613,621
1,053,805
170,937
40,173
348,706
122,724
225,982
5.79
5.73
$
$
$
960,424
156,111
41,225
282,025
101,397
180,628
4.66
4.62
$
$
$
857,297
131,160
39,915
193,644
66,824
126,820
3.30
3.26
$
$
$
39,125
39,016
38,743
38,458
38,297
39,579
39,422
39,104
38,868
0.96
$
0.88
$
0.80
$
0.72
$
760,365
111,823
35,265
163,616
59,802
103,814
2.71
2.69
38,620
0.66
$
$
$
$
Current assets
Total assets
Current liabilities
Long-term debt, net of current maturities
Shareholders’ equity
As of April 30,
2017
2016
2015
2014
2013
$
350,685
$
325,885
$
305,260
$
389,558
$
278,967
3,020,102
2,726,148
2,469,965
2,304,876
1,990,168
446,546
907,356
387,571
822,869
1,190,620
1,083,463
364,889
838,245
875,229
390,889
853,642
703,264
412,806
653,081
593,387
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollars and gallons in thousands, except per share amounts)
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 primarily operates convenience stores under the names "Casey's" and “Casey’s General Store” in 15
Midwestern states, primarily in Iowa, Missouri and Illinois. On April 30, 2017, there were a total of 1,978 stores in operation.
All but two stores offer fuel 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 fuel and the products offered in our stores.
{17}
17
18
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
Statement of Income Data
2017
2016
2015
2014
2013
Years ended April 30,
Total revenue
Cost of goods sold
Gross profit
Operating expenses
Depreciation and amortization
Interest, net
Income before income taxes
Federal and state income taxes
Net income
Basic earnings per common share
Diluted earnings per common share
Weighted average number of common
shares outstanding—basic
Weighted average number of common
shares outstanding—diluted
$ 7,506,587 $ 7,122,086 $ 7,767,216 $ 7,840,255 $ 7,250,840
6,179,771
6,327,431
5,508,465
6,618,239
5,825,426
1,439,785
1,222,016
1,071,069
1,681,161
1,172,328
197,629
41,536
269,668
1,613,621
1,053,805
170,937
40,173
348,706
960,424
156,111
41,225
282,025
857,297
131,160
39,915
193,644
92,183
177,485 $
4.54 $
4.48 $
$
$
$
122,724
225,982 $
5.79 $
5.73 $
101,397
180,628 $
4.66 $
4.62 $
66,824
126,820 $
3.30 $
3.26 $
39,125
39,016
38,743
38,458
38,297
760,365
111,823
35,265
163,616
59,802
103,814
2.71
2.69
38,620
0.66
Dividends declared per common share
$
0.96 $
0.88 $
0.80 $
0.72 $
Balance Sheet Data
39,579
39,422
39,104
38,868
Current assets
Total assets
Current liabilities
Long-term debt, net of current maturities
Shareholders’ equity
As of April 30,
2017
350,685 $
$
2016
325,885 $
2015
305,260 $
2014
389,558 $
3,020,102
446,546
907,356
1,190,620
2,726,148
387,571
822,869
1,083,463
2,469,965
364,889
838,245
875,229
2,304,876
390,889
853,642
703,264
2013
278,967
1,990,168
412,806
653,081
593,387
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollars and gallons in thousands, except per share amounts)
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 primarily operates convenience stores under the names "Casey's" and “Casey’s General Store” in 15
Midwestern states, primarily in Iowa, Missouri and Illinois. On April 30, 2017, there were a total of 1,978 stores in operation.
All but two stores offer fuel 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 fuel and the products offered in our stores.
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18
Approximately 57% of all Casey’s General Stores were opened in areas with populations of fewer than 5,000 people,
while approximately 18% of all stores were opened in communities with populations exceeding 20,000 persons. The
Marketing Company operates two distribution centers, through which grocery and general merchandise items are supplied to
our stores. One is adjacent to our Corporate Headquarters facility in Ankeny, Iowa. The other was opened in February 2016 in
Terre Haute, Indiana. At April 30, 2017, the Company owned the land at 1,957 store locations and the buildings at 1,962
locations, and leased the land at 21 locations and the buildings at 16 locations.
During the fourth quarter of fiscal 2017, the Company earned $0.76 in diluted earnings per share compared to $1.19 per
share for the same quarter a year ago. Fiscal 2017 diluted earnings per share were $4.48 versus $5.73 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 fuel and certain convenience items
such as beer, pop and ice.
During the 2017 fiscal year, we acquired 22 convenience stores from other parties and opened 18 of them, and completed
requires excess tax benefits from the settlement of share-based awards to be recognized in income tax expense in the income
48 new store constructions. In addition to this activity, the Company also completed 103 major remodels, replaced 21 stores
and closed 20 stores during the year.
statement, whereas they were previously recognized in equity.
The fourth quarter results reflected a 0.5% decrease in same-store fuel gallons sold, with an average margin of
approximately 17.2 cents per gallon (compared to a 4.6% increase in same-store fuel gallons sold and an average margin of
17.8 cents per gallon last year). The Company’s fourth quarter fuel margin was helped by our ability to sell approximately 15.5
million renewable fuel credits for $7.1 million (compared to 12.7 million credits sold last year for $9.1 million) . For the year,
we sold 67.6 million renewable fuel credits for $52.2 million. In the prior year we sold 57.1 million credits for $31.0 million.
For the fiscal year, same-store gallons increased 2.1% with an average margin of 18.4 cents per gallon. In the prior year, same-
store gallons increased 3.0% with an average margin of 19.6 cents per gallon. The Company’s policy is to price to the
competition, so the timing of retail price changes is primarily driven by local competitive conditions.
Same store sales of grocery & other merchandise increased 1.5% and prepared foods & fountain increased 3.2% during
the fourth quarter of fiscal 2017, as compared to the same period in the prior year.
The Company believes that reducing energy consumption where feasible is a sound long-term business strategy that
reduces operating expenses. While individually and in aggregate the financial impact of these initiatives may not be material,
implementing them throughout our operations is a part of our overall expense management. Below is a list of some of the
energy initiatives the Company is currently undertaking:
• All newly constructed stores use 100 percent high efficiency LED lighting. The Company is also in the process of
retrofitting all of our legacy stores with LED lighting. The project is expected to take roughly four to five years to
complete. Also, when we perform a major remodel of an existing store, the fluorescent lighting is replaced with LED
lighting. Furthermore, new canopies over the fuel pumps are installed with time systems and photo eyes to help
control the canopy lighting.
• Multiple paperless initiatives are going on throughout the Company.
• Our fleet of trucks is updated frequently, and uses electric fuel tank heaters to reduce idle time. Furthermore, timers
have been installed that automatically turn off the engine if it is idling for more than ten minutes.
For further information concerning the Company’s operating environment and certain conditions that may affect future
performance, see the “Forward-looking Statements” at the end of this Item 7.
Fiscal 2017 Compared with Fiscal 2016
Total revenue for fiscal 2017 increased 5.4% ($384,501) to $7,506,587, primarily due to an increase in the number of
fuel gallons sold (which generated an additional $235,458), and a $185,993 increase in inside sales (grocery & other
merchandise and prepared food & fountain), offset by a 1% decrease in the average retail price of a gallon of fuel (a $36,132
decrease). Retail fuel sales for the fiscal year were $4,414,128, an increase of 4.7%. Fuel gallons sold increased 5.6% to 2.1
billion gallons. Inside sales increased 6.5% to $3,040,779, primarily as a result of a $77,872 increase from stores that were built
or acquired after April 30, 2015, and a $50,593 increase from the rollout and expansion of our recent operating programs in our
stores (expanded hours at select locations, stores with pizza delivery, and major remodels).
Total gross profit margin was 22.4% for fiscal 2017 compared with 22.7% for the prior year. The fuel margin decreased
to 8.6% in fiscal 2017 from 9.1% in fiscal 2016 primarily due to less volatility in wholesale fuel prices, partially offset by gains
in renewable fuel credits. The grocery & other merchandise margin was slightly lower at 31.5% in fiscal 2017 compared to
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19
20
31.9% in fiscal 2016, due mainly to the continued pricing pressures from cigarettes, transitioning to direct store delivery of ice,
and a one time adjustment in the fourth quarter. The prepared food & fountain margin decreased to 62.3% from 62.5% during
fiscal 2017.
Operating expenses increased 11.2% ($118,523) in fiscal 2017 primarily due to the expansion of our operating programs
noted above ($36,393), and an increase from stores built or acquired after April 30, 2015 ($31,854). The majority of all
operating expenses are wages and related costs.
Depreciation and amortization expense increased 15.6% to $197,629 in fiscal 2017 from $170,937 in fiscal 2016. The
increase was due primarily to capital expenditures made in fiscal 2017.
The effective tax rate decreased 100 basis points to 34.2% in fiscal 2017 from 35.2% in fiscal 2016. The decrease in the
effective tax rate was primarily due to the adoption of ASU 2016-09 in the first quarter of fiscal year 2017. ASU 2016-09
Net income decreased to $177,485 in fiscal 2017 from $225,982 in fiscal 2016. The decrease was due to a combination of
a weaker agricultural economy, which has slowed the growth in customer traffic to stores, combined with less volatility in the
wholesale fuel costs and wage rate increases. These were partially offset by an increase in the number of fuel gallons sold, as
well as an increase in inside sales.
Fiscal 2016 Compared with Fiscal 2015
Total revenue for fiscal 2016 decreased 8.3% ($645,130) to $7,122,086, primarily due to a 24% decrease in the
average retail price of a gallon of fuel (a $1,221,577 decrease), offset by an increase in the number of fuel gallons sold (which
generated an additional $291,994), and a $279,077 increase in inside sales (grocery & other merchandise and prepared food &
fountain). Retail fuel sales for the fiscal year were $4,214,802, a decrease of 18.1%. Fuel gallons sold increased 7.4% to 2.0
billion gallons. Inside sales increased 10.8% to $2,854,786, primarily as a result of a $81,018 increase from stores that were
built or acquired after April 30, 2014, and a $54,845 increase from the rollout and expansion of our recent operating programs
in our stores (expanded hours at select locations, stores with pizza delivery, and major remodels).
Total gross profit margin was 22.7% for fiscal 2016 compared with 18.5% for the prior year. The fuel margin increased to
9.1% in fiscal 2016 from 6.8% in fiscal 2015 primarily due to a steady fall in wholesale costs midyear combined with volatility
in wholesale fuel prices, contributing to a stronger margin. The grocery & other merchandise margin was consistent at 31.9% in
fiscal 2016 compared to 32.1% in fiscal 2015. The prepared food & fountain margin increased to 62.5% from 59.7% primarily
due to the lower commodity costs during fiscal 2016.
Operating expenses increased 9.7% ($93,381) in fiscal 2016 primarily due to an increase from stores built or acquired
after April 30, 2014 ($31,137), and the expansion of our operating programs noted above ($21,256). The majority of all
operating expenses are wages and related costs.
Depreciation and amortization expense increased 9.5% to $170,937 in fiscal 2016 from $156,111 in fiscal 2015. The
increase was due to capital expenditures made in fiscal 2016.
The effective tax rate decreased 80 basis points to 35.2% in fiscal 2016 from 36.0% in fiscal 2015. The decrease in the
effective tax rate was primarily due to a decrease in state tax expense (approximately 40 basis points) and an increase in
favorable permanent differences (approximately 30 basis points).
Net income increased to $225,982 in fiscal 2016 from $180,628 in fiscal 2015. The increase was due primarily to the
increase in the number of fuel gallons sold and a slight increase in the fuel gross profit margin, as well as an increase in inside
sales, including a stronger prepared food margin. However, this was partially offset by an increase in operating expenses and
depreciation and amortization.
31.9% in fiscal 2016, due mainly to the continued pricing pressures from cigarettes, transitioning to direct store delivery of ice,
and a one time adjustment in the fourth quarter. The prepared food & fountain margin decreased to 62.3% from 62.5% during
fiscal 2017.
Operating expenses increased 11.2% ($118,523) in fiscal 2017 primarily due to the expansion of our operating programs
noted above ($36,393), and an increase from stores built or acquired after April 30, 2015 ($31,854). The majority of all
operating expenses are wages and related costs.
Depreciation and amortization expense increased 15.6% to $197,629 in fiscal 2017 from $170,937 in fiscal 2016. The
increase was due primarily to capital expenditures made in fiscal 2017.
The effective tax rate decreased 100 basis points to 34.2% in fiscal 2017 from 35.2% in fiscal 2016. The decrease in the
effective tax rate was primarily due to the adoption of ASU 2016-09 in the first quarter of fiscal year 2017. ASU 2016-09
requires excess tax benefits from the settlement of share-based awards to be recognized in income tax expense in the income
statement, whereas they were previously recognized in equity.
Net income decreased to $177,485 in fiscal 2017 from $225,982 in fiscal 2016. The decrease was due to a combination of
a weaker agricultural economy, which has slowed the growth in customer traffic to stores, combined with less volatility in the
wholesale fuel costs and wage rate increases. These were partially offset by an increase in the number of fuel gallons sold, as
well as an increase in inside sales.
Fiscal 2016 Compared with Fiscal 2015
Total revenue for fiscal 2016 decreased 8.3% ($645,130) to $7,122,086, primarily due to a 24% decrease in the
average retail price of a gallon of fuel (a $1,221,577 decrease), offset by an increase in the number of fuel gallons sold (which
generated an additional $291,994), and a $279,077 increase in inside sales (grocery & other merchandise and prepared food &
fountain). Retail fuel sales for the fiscal year were $4,214,802, a decrease of 18.1%. Fuel gallons sold increased 7.4% to 2.0
billion gallons. Inside sales increased 10.8% to $2,854,786, primarily as a result of a $81,018 increase from stores that were
built or acquired after April 30, 2014, and a $54,845 increase from the rollout and expansion of our recent operating programs
in our stores (expanded hours at select locations, stores with pizza delivery, and major remodels).
Total gross profit margin was 22.7% for fiscal 2016 compared with 18.5% for the prior year. The fuel margin increased to
9.1% in fiscal 2016 from 6.8% in fiscal 2015 primarily due to a steady fall in wholesale costs midyear combined with volatility
in wholesale fuel prices, contributing to a stronger margin. The grocery & other merchandise margin was consistent at 31.9% in
fiscal 2016 compared to 32.1% in fiscal 2015. The prepared food & fountain margin increased to 62.5% from 59.7% primarily
due to the lower commodity costs during fiscal 2016.
Operating expenses increased 9.7% ($93,381) in fiscal 2016 primarily due to an increase from stores built or acquired
after April 30, 2014 ($31,137), and the expansion of our operating programs noted above ($21,256). The majority of all
operating expenses are wages and related costs.
Depreciation and amortization expense increased 9.5% to $170,937 in fiscal 2016 from $156,111 in fiscal 2015. The
increase was due to capital expenditures made in fiscal 2016.
The effective tax rate decreased 80 basis points to 35.2% in fiscal 2016 from 36.0% in fiscal 2015. The decrease in the
effective tax rate was primarily due to a decrease in state tax expense (approximately 40 basis points) and an increase in
favorable permanent differences (approximately 30 basis points).
Net income increased to $225,982 in fiscal 2016 from $180,628 in fiscal 2015. The increase was due primarily to the
increase in the number of fuel gallons sold and a slight increase in the fuel gross profit margin, as well as an increase in inside
sales, including a stronger prepared food margin. However, this was partially offset by an increase in operating expenses and
depreciation and amortization.
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COMPANY TOTAL REVENUE AND GROSS PROFIT BY CATEGORY
SAME STORE SALES GROWTH BY CATEGORY
Total revenue by category
Fuel
Grocery & other merchandise
Prepared food & fountain
Other
Gross profit by category (1)
Fuel
Grocery & other merchandise
Prepared food & fountain
Other
INDIVIDUAL STORE COMPARISONS (2)
Average retail sales
Average retail inside sales
Average gross profit on inside items
Average retail sales of fuel
Average gross profit on fuel (3)
Average operating income (4)
Average number of gallons sold
$
$
$
$
$
Years ended April 30,
2017
2016
2015
4,414,128 $
2,087,349
953,430
51,680
7,506,587 $
4,214,802 $
1,974,073
880,713
52,498
7,122,086 $
5,144,385
1,794,822
780,887
47,122
7,767,216
378,347 $
657,190
594,024
51,600
1,681,161 $
381,659 $
629,234
550,292
52,436
1,613,621 $
351,155
575,510
466,056
47,064
1,439,785
Years ended April 30,
2017
2016
2015
3,817 $
1,561
633
2,256
194
233
1,053
3,704 $
1,505
618
2,199
202
280
1,015
4,133
1,384
554
2,748
194
256
968
(1)
(2)
(3)
(4)
Gross profits represent total revenue less cost of goods sold. Gross profit is given before charges for depreciation,
amortization, and credit card fees. Cost of goods sold includes the costs we incur to acquire fuel and merchandise,
including excise taxes, less renewable fuel credits (RINs).
Individual store comparisons include only those stores that had been in operation for at least one full year and
remained open on April 30 of the fiscal year indicated.
Retail fuel profit margins have a substantial impact on our net income. Profit margins on fuel sales can be adversely
affected by factors beyond our control, including oversupply in the retail fuel market, uncertainty or volatility in the
wholesale fuel market, and price competition from other fuel marketers. Any substantial decrease in profit margins on
retail fuel sales or the number of gallons sold could have a material adverse effect on our earnings.
Average operating income represents retail sales less cost of goods sold and operating expenses attributable to a
particular store; it excludes federal and state income taxes, and Company operating expenses not attributable to a
particular store.
Fuel gallons (1)
Grocery & other merchandise (1)
Prepared food & fountain (1) (2)
Years ended April 30,
2017
2016
2015
2.1%
2.9%
4.8%
3.0%
7.1%
8.4%
2.6%
7.8%
12.4%
(1)
The decline in all categories of same store sales for 2017 as compared to 2016 was due to a generally weaker
agricultural economy, which has slowed the growth in customer traffic to stores.
(2)
The decline in same store sales growth for 2016 as compared to 2015 was impacted by the timing of implementation
on the continued rollout of pizza delivery and major remodels in 2016, as well as cycling against strong results from
the prior year.
The same store sales comparison includes aggregated individual store results for all stores open throughout both periods
presented. When comparing quarterly data the store must be open for each entire quarter. When comparing annual data, the
store must be open for each entire fiscal year being compared.
Remodeled stores that remained open or were closed for just a very brief period of time (less than a week) during the
period being compared remain in the same store sales comparison. If a store is replaced, either at the same location (razed and
rebuilt) or relocated to a new location, it is removed from the comparison until the new store has been open for each entire
period being compared. Newly constructed and acquired stores do not enter the calculation until they are open for each entire
period being compared as well.
Use of Non-GAAP Measures
We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted
EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither
EBITDA nor Adjusted EBITDA are presented in accordance with GAAP.
We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because
securities analysts and other interested parties use such calculations as a measure of financial performance and debt service
capabilities, and they are regularly used by management for internal purposes including our capital budgeting process,
evaluating acquisition targets, and assessing store performance.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for
net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations
as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under
GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to
rely on any single financial measure.
Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not
be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of
these non-GAAP financial measures with those used by other companies.
{21}
21
22
SAME STORE SALES GROWTH BY CATEGORY
Fuel gallons (1)
Grocery & other merchandise (1)
Prepared food & fountain (1) (2)
Years ended April 30,
2017
2016
2015
2.1%
2.9%
4.8%
3.0%
7.1%
8.4%
2.6%
7.8%
12.4%
(1)
(2)
The decline in all categories of same store sales for 2017 as compared to 2016 was due to a generally weaker
agricultural economy, which has slowed the growth in customer traffic to stores.
The decline in same store sales growth for 2016 as compared to 2015 was impacted by the timing of implementation
on the continued rollout of pizza delivery and major remodels in 2016, as well as cycling against strong results from
the prior year.
The same store sales comparison includes aggregated individual store results for all stores open throughout both periods
presented. When comparing quarterly data the store must be open for each entire quarter. When comparing annual data, the
store must be open for each entire fiscal year being compared.
Remodeled stores that remained open or were closed for just a very brief period of time (less than a week) during the
period being compared remain in the same store sales comparison. If a store is replaced, either at the same location (razed and
rebuilt) or relocated to a new location, it is removed from the comparison until the new store has been open for each entire
period being compared. Newly constructed and acquired stores do not enter the calculation until they are open for each entire
period being compared as well.
Use of Non-GAAP Measures
We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted
EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither
EBITDA nor Adjusted EBITDA are presented in accordance with GAAP.
We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because
securities analysts and other interested parties use such calculations as a measure of financial performance and debt service
capabilities, and they are regularly used by management for internal purposes including our capital budgeting process,
evaluating acquisition targets, and assessing store performance.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for
net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations
as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under
GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to
rely on any single financial measure.
Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not
be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of
these non-GAAP financial measures with those used by other companies.
{22}
22
The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months and
years ended April 30, 2017 and 2016, respectively:
Net income
Interest, net
Depreciation and amortization
Federal and state income taxes
EBITDA
Loss on disposal of assets and impairment charges
Adjusted EBITDA
Three months ended
Years ended
April 30,
2017
April 30,
2016
April 30,
2017
April 30,
2016
$
$
$
30,078 $
10,362
51,947
13,242
105,629 $
1,488
107,117 $
47,044 $
9,948
45,909
22,699
125,600 $
523
126,123 $
177,485 $
41,536
197,629
92,183
508,833 $
2,298
511,131 $
225,982
40,173
170,937
122,724
559,816
837
560,653
For the three months ended April 30, 2017, EBITDA and Adjusted EBITDA were down 15.9% and 15.1% respectively,
when compared to the same period a year ago. The decrease was due to slowing customer traffic due to challenges in the
broader agricultural economy, lower fuel margins, and increases in operating expenses, primarily wages. These reductions were
partially offset by operating 47 more stores than the same period a year ago, increased fuel gallons sold, and increases in inside
sales. For the year ended April 30, 2017, EBITDA and Adjusted EBITDA were down 9.1% and 8.8% respectively. The
decrease was due to slowing customer traffic due to challenges in the broader agricultural economy, lower fuel margins, and
increases in operating expenses, primarily wages. These reductions were partially offset by operating 47 more stores than the
same period a year ago, increased fuel gallons sold, and increases in inside sales.
Critical Accounting Policies
Critical accounting policies are those accounting policies that management believes 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 fuel, are stated at the lower of cost or market. For fuel, 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.
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 (RDAs) are funds that we receive from various vendors
for allocating certain shelf space to carry their specific products or to introduce new products in our stores for a particular
period of time. The RDAs are treated as a reduction in cost of goods sold and are recognized incrementally over the period
covered by the applicable rebate agreement. These funds do not represent reimbursements of specific, incremental, identifiable
costs incurred by us in selling the vendor’s products. Vendor rebates in the form of billbacks are treated as a reduction in cost of
goods sold and are recognized at the time the rebate is earned per the contract. Reimbursements of an operating expense (e.g.,
advertising) are recorded as reductions of the related expense.
The Company takes title to RINs when we purchase clear unleaded gasoline or diesel fuel, and purchase ethanol or
biodiesel separately. The ethanol or biodiesel is blended in the tanker during transit to the store and the blending is the event
that enables the RIN to be separated from the ethanol or biodiesel it identifies and allows it to be sold to third parties. The RINs
are recorded as a reduction in the cost of goods sold in the period when the Company commits to a price and agrees to sell all
of the RINs acquired during a specified period.
Long-lived Assets
The Company periodically monitors closed and 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 to the extent the carrying value of the assets exceeds their estimated fair value. 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. 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, which are considered Level 3 inputs. The estimate is derived from offers, actual sale or
disposition of assets subsequent to year-end, and other indications of fair 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 recorded impairment
charges of $705 in fiscal 2017, $1,625 in fiscal 2016, and $1,785 in fiscal 2015, a portion of which was related to replacement
store and acquisition activities. Impairment charges are a component of operating expenses.
Self-insurance
We are primarily self-insured for employee healthcare, workers’ compensation, general liability, and automobile claims.
The self-insurance claim liability for workers’ compensation, general liability, and automobile claims is determined actuarially
at each year end based on claims filed and an estimate of claims incurred but not yet reported. Actuarial projections of the
losses are employed due to the potential 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 balances of our self-insurance reserves were $37,984 and $35,535 for the years
ended April 30, 2017 and 2016, respectively.
Goodwill
Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. The Company assesses
impairment annually at year-end using a market based approach to establish fair value. All of the goodwill assigned to the
individual stores is aggregated into a single reporting unit due to the similar economic characteristics of the stores. As of
April 30, 2017, there was $132,806 of goodwill and management’s analysis of recoverability completed as of the fiscal year-
end yielded no evidence of impairment and no events have occurred since the annual test indicating a potential impairment.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-9, Revenue from Contracts with
Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of
promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP
when it becomes effective. The new standard is effective for the Company on May 1, 2018. Early application is not permitted.
To address implementation of ASU 2014-09 and evaluate its impact on our consolidated financial statements, we have
developed a project plan to evaluate our revenue streams and related internal controls. Since a majority of our revenue is
derived from point of sale transactions, we do not believe the implementation of this standard will have a material impact on
our consolidated financial statements. However, certain areas of our consolidated financial statements that will be impacted
include, but are not limited to, recognition of estimated breakage upon the sale of the Company’s gift cards and deferral of an
estimated portion of revenue expected to be redeemed in the future through Casey’s pizza box tops and punch card programs.
We expect the impact of such changes to be immaterial to the consolidated financial statements. The Company expects to adopt
the new standard using the full retrospective method beginning May 1, 2018 and will further disclose the impact to the financial
statements at that point.
In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, Interest-Imputation of Interest
(Subtopic 835-30), which provided guidance on the presentation of debt issuance costs. The new standard required that debt
issuance costs be recorded as a reduction from the face amount of the related debt, with amortization recorded as interest
expense, rather than recording as a deferred asset. The Company adopted this standard in the quarter ended July 31, 2016,
retrospectively to all prior periods. The adoption of this standard did not have a material impact on the financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among
organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing
arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within
those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-02.
In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting. The goal of the update was to simplify several aspects of the accounting for
share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities
and classification on the statement of cash flows. This update was effective for the Company beginning May 1, 2017 with early
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23
24
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. 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, which are considered Level 3 inputs. The estimate is derived from offers, actual sale or
disposition of assets subsequent to year-end, and other indications of fair 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 recorded impairment
charges of $705 in fiscal 2017, $1,625 in fiscal 2016, and $1,785 in fiscal 2015, a portion of which was related to replacement
store and acquisition activities. Impairment charges are a component of operating expenses.
Self-insurance
We are primarily self-insured for employee healthcare, workers’ compensation, general liability, and automobile claims.
The self-insurance claim liability for workers’ compensation, general liability, and automobile claims is determined actuarially
at each year end based on claims filed and an estimate of claims incurred but not yet reported. Actuarial projections of the
losses are employed due to the potential 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 balances of our self-insurance reserves were $37,984 and $35,535 for the years
ended April 30, 2017 and 2016, respectively.
Goodwill
Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. The Company assesses
impairment annually at year-end using a market based approach to establish fair value. All of the goodwill assigned to the
individual stores is aggregated into a single reporting unit due to the similar economic characteristics of the stores. As of
April 30, 2017, there was $132,806 of goodwill and management’s analysis of recoverability completed as of the fiscal year-
end yielded no evidence of impairment and no events have occurred since the annual test indicating a potential impairment.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-9, Revenue from Contracts with
Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of
promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP
when it becomes effective. The new standard is effective for the Company on May 1, 2018. Early application is not permitted.
To address implementation of ASU 2014-09 and evaluate its impact on our consolidated financial statements, we have
developed a project plan to evaluate our revenue streams and related internal controls. Since a majority of our revenue is
derived from point of sale transactions, we do not believe the implementation of this standard will have a material impact on
our consolidated financial statements. However, certain areas of our consolidated financial statements that will be impacted
include, but are not limited to, recognition of estimated breakage upon the sale of the Company’s gift cards and deferral of an
estimated portion of revenue expected to be redeemed in the future through Casey’s pizza box tops and punch card programs.
We expect the impact of such changes to be immaterial to the consolidated financial statements. The Company expects to adopt
the new standard using the full retrospective method beginning May 1, 2018 and will further disclose the impact to the financial
statements at that point.
In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, Interest-Imputation of Interest
(Subtopic 835-30), which provided guidance on the presentation of debt issuance costs. The new standard required that debt
issuance costs be recorded as a reduction from the face amount of the related debt, with amortization recorded as interest
expense, rather than recording as a deferred asset. The Company adopted this standard in the quarter ended July 31, 2016,
retrospectively to all prior periods. The adoption of this standard did not have a material impact on the financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among
organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing
arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within
those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-02.
In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting. The goal of the update was to simplify several aspects of the accounting for
share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities
and classification on the statement of cash flows. This update was effective for the Company beginning May 1, 2017 with early
{24}
24
adoption permitted. The Company elected to early adopt this standard in the quarter ended July 31, 2016. See footnote 4 to the
Consolidated Financial Statements included herein for further discussion of the impact of adoption.
$2,000 at a redemption price calculated in accordance with the Note Agreement dated May 2, 2016, between the Company and
the purchasers of the Senior notes Series C and Series D.
Liquidity and Capital Resources
Due to the nature of our business, cash provided by 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, 2017, the Company’s ratio of current
assets to current liabilities was 0.79 to 1. The ratio at April 30, 2016 and at April 30, 2015 was 0.84 to 1 and 0.84 to 1,
respectively. We believe our current $100,000 bank line of credit, together with the current cash and cash equivalents and the
future cash flow from operations will be sufficient to satisfy the working capital needs of our business.
Net cash provided by operating activities decreased $13,113 (2.8%) in the year ended April 30, 2017, primarily because
of a decrease in net income, partially offset by increases in depreciation and accounts payable. Cash used in investing activities
in the year ended April 30, 2017 increased $59,757 (15.1%) primarily due to the increased level of acquisitions and new store
construction. Cash flows used in financing activities decreased $46,578 (92.8%), primarily due to proceeds from issuance of
long-term debt in fiscal 2017.
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 2017, we expended
$458,865 for property and equipment, primarily for construction, acquisition, and remodeling of stores compared with
$400,102 in the prior year. In fiscal 2018, we anticipate expending between $500,000 and $600,000, primarily from existing
cash, funds generated by operations, and long-term debt proceeds for our construction, acquisition, and remodeling of stores.
At April 30, 2017, the Company had a bank line of credit arrangement consisting of two Promissory Notes, in the
principal amount of $50,000 each (together, the “Notes”). The Notes evidenced a revolving line of credit in the aggregate
principal amount of $100,000 and bear interest at variable rates subject to change from time to time based on changes in an
independent index referred to in the Notes as the Federal Funds Offered Rate (the “Index”). The interest rate to be applied to
the unpaid principal balance of the first Note was at a rate of 0.750% over the Index. The interest rate applicable to the second
note is 1.000% over the Index. There was a $900 balance owed on the Notes at April 30, 2017 and $0 at April 30, 2016. The
line of credit is due upon demand.
As of April 30, 2017, we had long-term debt, net of current maturities, of $907,356 consisting of $569,000 in principal
amount of 5.22% Senior notes, $30,000 in principal amount of 5.72% Senior notes, Series A and B; $150,000 in principal
amount of 3.67% Senior Notes, Series A, $50,000 in principal amount of 3.75% Senior Notes, Series B, $50,000 in principal
amount of 3.65% Senior Notes, Series C, $50,000 in principal amount of 3.72% Senior Notes, Series D, and $8,356 of capital
lease obligations.
Interest on the 5.22% Senior notes is payable on the 9th day of each February and August. Principal on the 5.22% Senior
notes is payable in full on August 9, 2020. We may prepay the 5.22% notes 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 August 9, 2010 between the
Company and the purchasers of the 5.22% Senior notes.
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 and
continuing through March 2020. 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 3.67% Senior notes Series A and 3.75% Series B is payable on the 17th day of each June and December.
Principal on the Senior notes Series A and Series B is payable in various installments beginning June 17, 2022 (Series A) and
December 17, 2022 (Series B) through December 2028. We may prepay the 3.67% and 3.75% Senior notes 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
June 17, 2013, between the Company and the purchasers of the Senior notes Series A and Series B.
Interest on the 3.65% Senior notes Series C is payable on the 2nd day of each May and November, while the interest on
the 3.72% Senior notes Series D is payable on the 28th day of each April and October. Principal on the Senior notes Series C
and Series D is payable in various installments beginning May 2, 2025 (Series C) and October 28, 2025 (Series D) through
October 2031. We may prepay the 3.65% and 3.72% Senior notes in whole or in part at any time in an amount of not less than
To date, we have funded capital expenditures primarily through funds generated from operations, the proceeds of the sale
of common stock, issuance of debt, and existing cash. 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, 2017:
Contractual obligations
Payments due by period
Senior notes
Capital lease obligations
Operating lease obligations
Unrecognized tax benefits
Deferred compensation
Total
Total
1-3 years
3-5 years
Less than
1 year
More than
5 years
$ 1,110,707
$
58,127
$
113,679
$
599,274
$
339,627
14,770
4,427
5,362
15,784
900
1,172
—
—
1,819
1,659
—
—
1,791
781
—
—
10,260
815
—
—
$ 1,151,050
$
60,199
$
117,157
$
601,846
$
350,702
Unrecognized tax benefits relate to uncertain tax positions and since 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 above “Payments due by period” table.
At April 30, 2017, the Company had a total of $5,362 in gross unrecognized tax benefits. Of this amount, $3,522
represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. The total amount of
accrued interest and penalties for such unrecognized tax benefits was $141 as of April 30, 2017. 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 tax years 2012 and forward. Tax years 2012 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 possible 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. The state of Nebraska is
examining tax years 2012 through 2014. The state of Kansas is examining tax years 2013 through 2015. Additionally, the IRS
is currently examining tax year 2012. The Company has no other ongoing federal or state income tax examinations. The
Company currently does not have any outstanding litigation related to tax matters. At this time, management believes it is
reasonably possible the aggregate amount of unrecognized tax benefits will decrease by $1,242 within the next 12 months. This
expected decrease is due to the expiration of statute of limitations related to certain federal and state income tax filing positions.
Included in long-term liabilities on our consolidated balance sheet at April 30, 2017, was a $15,784 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 above “Payments due by
period” table. However, known payments of $5,323 will be due during the next 5 years.
At April 30, 2017, we were partially self-insured for workers’ compensation claims in all 15 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
$21,126 and $20,115, respectively, were issued and outstanding at April 30, 2017 and 2016, 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
{25}
25
26
$2,000 at a redemption price calculated in accordance with the Note Agreement dated May 2, 2016, between the Company and
the purchasers of the Senior notes Series C and Series D.
To date, we have funded capital expenditures primarily through funds generated from operations, the proceeds of the sale
of common stock, issuance of debt, and existing cash. 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, 2017:
Contractual obligations
Payments due by period
Senior notes
Capital lease obligations
Operating lease obligations
Unrecognized tax benefits
Deferred compensation
Total
Total
$ 1,110,707 $
14,770
4,427
5,362
15,784
$ 1,151,050 $
Less than
1 year
1-3 years
3-5 years
More than
5 years
58,127 $
900
1,172
—
—
60,199 $
113,679 $
1,819
1,659
—
—
117,157 $
599,274 $
1,791
781
—
—
601,846 $
339,627
10,260
815
—
—
350,702
Unrecognized tax benefits relate to uncertain tax positions and since 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 above “Payments due by period” table.
At April 30, 2017, the Company had a total of $5,362 in gross unrecognized tax benefits. Of this amount, $3,522
represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. The total amount of
accrued interest and penalties for such unrecognized tax benefits was $141 as of April 30, 2017. 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 tax years 2012 and forward. Tax years 2012 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 possible 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. The state of Nebraska is
examining tax years 2012 through 2014. The state of Kansas is examining tax years 2013 through 2015. Additionally, the IRS
is currently examining tax year 2012. The Company has no other ongoing federal or state income tax examinations. The
Company currently does not have any outstanding litigation related to tax matters. At this time, management believes it is
reasonably possible the aggregate amount of unrecognized tax benefits will decrease by $1,242 within the next 12 months. This
expected decrease is due to the expiration of statute of limitations related to certain federal and state income tax filing positions.
Included in long-term liabilities on our consolidated balance sheet at April 30, 2017, was a $15,784 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 above “Payments due by
period” table. However, known payments of $5,323 will be due during the next 5 years.
At April 30, 2017, we were partially self-insured for workers’ compensation claims in all 15 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
$21,126 and $20,115, respectively, were issued and outstanding at April 30, 2017 and 2016, 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
{26}
26
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.
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
remediation of contamination or related claims that have not been discovered or asserted with respect to existing store locations
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 our
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 nonfuel items (particularly
prepared food items) have contributed substantially to our gross profit on retail sales in recent years. Fuel sales are also
intensely competitive. We compete for fuel sales with both independent and national brand gasoline stations, other convenience
store chains, and several nontraditional fuel retailers such as supermarkets in specific markets. Some of these other fuel
retailers may have access to more favorable arrangements for fuel supply than we do 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.
Fuel Operations
Fuel sales are an important part of our revenue and earnings, and retail fuel profit margins have a substantial impact on
our net income. Profit margins on fuel sales can be adversely affected by factors beyond our control, including the supply of
fuel available in the retail fuel market, uncertainty or volatility in the wholesale fuel market, increases in wholesale fuel costs
generally during a period, and price competition from other fuel marketers. The market for crude oil and domestic wholesale
petroleum products is marked by significant volatility 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 fuel 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 our fuel gallon volume, fuel gross profit, and overall customer traffic levels at stores. Any
substantial decrease in profit margins on fuel sales or in the number of gallons sold by stores could have a material adverse
effect on our earnings.
Fuel is purchased from a variety of independent national and regional petroleum distributors at current daily prices at the
rack in which the fuel is loaded onto tanker trucks. While annual purchase agreements exist with a few distributors, those
agreements primarily specify purchasing volumes that must be maintained to be eligible for certain discounts. We typically sell
the fuel before the vendor is paid as a result of our short fuel inventory turnover rate. Any substantial change in the payment
terms required by fuel vendors could impact the amount of cash and working capital we would need to conduct operations.
Although in recent years suppliers have not experienced any difficulties in obtaining sufficient amounts of fuel to meet
our needs, unanticipated national and international events could result in a reduction of fuel supplies available for distribution.
Any substantial curtailment in our fuel supply could reduce fuel sales. Further, we believe a significant amount of our business
results from the patronage of customers primarily desiring to purchase fuel; accordingly, reduced fuel supplies could adversely
affect the sale of nonfuel items. Such factors could have a material adverse effect on our earnings and operations.
Tobacco Products
{27}
27
28
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 further regulate and discourage smoking
in the United States have had and are expected to continue having an adverse effect on the demand for tobacco products sold in
our 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 impact the retail price of tobacco products, the gross profit obtained from the
tobacco category, the volume of cigarettes and other tobacco products sold by stores, and overall customer traffic, and have a
material adverse effect on the Company’s earnings and profits.
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
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.
Company sales generally are strongest during its first two fiscal quarters (May– October) relative to the third and fourth
fiscal quarters (November– April). In the warmer months, customers tend to purchase greater quantities of fuel and certain
convenience items such as beer, pop, 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
Seasonality of Sales
period.
Other Factors
Other factors and risks that may cause actual results to differ materially from those in the forward-looking statements
include the risk that our cash balances and cash generated from operations and financing activities will not be sufficient for our
future liquidity and capital resource needs, tax increases, potential liabilities and expenditures related to compliance with
environmental and other laws and regulations, the seasonality of demand patterns, and weather conditions; the increased
indebtedness that the Company has incurred to purchase shares of our common stock in our self-tender offer; and the other
risks and uncertainties included from time to time in our filings with the SEC. We further caution you that other factors we have
not identified may in the future prove to be important in affecting our business and results of operations.
Please see Item 1A of this Form 10-K, entitled “Risk Factors,” for further information on these and other factors that may
affect our business and financial results.
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, 2017, would have no material effect on pretax
earnings.
We do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee. These are not
accounted for as derivatives under the normal purchase and normal sale exclusions under the applicable guidance.
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 further regulate and discourage smoking
in the United States have had and are expected to continue having an adverse effect on the demand for tobacco products sold in
our 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 impact the retail price of tobacco products, the gross profit obtained from the
tobacco category, the volume of cigarettes and other tobacco products sold by stores, and overall customer traffic, and have a
material adverse effect on the Company’s earnings and profits.
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) relative to the third and fourth
fiscal quarters (November– April). In the warmer months, customers tend to purchase greater quantities of fuel and certain
convenience items such as beer, pop, 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.
Other Factors
Other factors and risks that may cause actual results to differ materially from those in the forward-looking statements
include the risk that our cash balances and cash generated from operations and financing activities will not be sufficient for our
future liquidity and capital resource needs, tax increases, potential liabilities and expenditures related to compliance with
environmental and other laws and regulations, the seasonality of demand patterns, and weather conditions; the increased
indebtedness that the Company has incurred to purchase shares of our common stock in our self-tender offer; and the other
risks and uncertainties included from time to time in our filings with the SEC. We further caution you that other factors we have
not identified may in the future prove to be important in affecting our business and results of operations.
Please see Item 1A of this Form 10-K, entitled “Risk Factors,” for further information on these and other factors that may
affect our business and financial results.
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, 2017, would have no material effect on pretax
earnings.
We do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee. These are not
accounted for as derivatives under the normal purchase and normal sale exclusions under the applicable guidance.
{28}
28
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, 2017 and 2016, and the related consolidated statements of income, shareholders’ equity, and cash flows for each
of the years in the three-year period ended April 30, 2017. We also have audited the Company’s internal control over financial
reporting as of April 30, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for
these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting included in Item 9A (Controls and Procedures). Our responsibility is to express
an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting
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 audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal control over financial reporting was maintained in
all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.
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, 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, 2017 and 2016, and the results of their operations and
their cash flows for each of the years in the three-year period ended April 30, 2017, in conformity with U.S. generally accepted
accounting principles. Also, in our opinion, Casey's General Stores, Inc. maintained, in all material respects, effective internal
control over financial reporting as of April 30, 2017, based on criteria established in Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
/s/ KPMG LLP
Des Moines, Iowa
June 29, 2017
{29}
29
CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
Assets
Current assets
Cash and cash equivalents
Receivables
Inventories
Prepaid expenses
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
Notes payable to bank
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, 38,765,821 and 39,055,570 shares issued and outstanding
at April 30, 2017 and 2016, respectively
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying Notes to Consolidated Financial Statements.
30
April 30,
2017
2016
$
76,717
$
43,244
201,644
9,179
19,901
350,685
665,318
1,422,586
1,905,553
16,173
4,009,630
1,496,472
2,513,158
23,453
132,806
15,421
293,903
25,010
26,721
37,984
46,607
446,546
907,356
440,124
15,784
19,672
75,775
27,701
204,988
3,008
14,413
325,885
593,043
1,279,258
1,704,379
16,044
3,592,724
1,340,249
2,252,475
19,222
128,566
—
15,375
241,207
32,026
24,091
35,535
39,337
387,571
822,869
394,934
17,813
19,498
$
3,020,102
$
2,726,148
$
900
$
1,829,482
1,642,685
—
—
40,074
1,150,546
1,190,620
72,868
1,010,595
1,083,463
$
3,020,102
$
2,726,148
CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
Assets
Current assets
Cash and cash equivalents
Receivables
Inventories
Prepaid expenses
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
Notes payable to bank
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
April 30,
2017
2016
$
76,717 $
43,244
201,644
9,179
19,901
350,685
665,318
1,422,586
1,905,553
16,173
4,009,630
1,496,472
2,513,158
23,453
132,806
75,775
27,701
204,988
3,008
14,413
325,885
593,043
1,279,258
1,704,379
16,044
3,592,724
1,340,249
2,252,475
19,222
128,566
$
3,020,102 $
2,726,148
$
900 $
15,421
293,903
25,010
26,721
37,984
46,607
446,546
907,356
440,124
15,784
19,672
—
15,375
241,207
32,026
24,091
35,535
39,337
387,571
822,869
394,934
17,813
19,498
1,829,482
1,642,685
Preferred stock, no par value, none issued
—
—
Common stock, no par value, 38,765,821 and 39,055,570 shares issued and outstanding
at April 30, 2017 and 2016, respectively
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
40,074
1,150,546
1,190,620
3,020,102 $
72,868
1,010,595
1,083,463
2,726,148
$
See accompanying Notes to Consolidated Financial Statements.
{30}
30
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share and share amounts)
Total revenue
Cost of goods sold (exclusive of depreciation and amortization, shown
separately below)
Gross profit
Operating expenses
Depreciation and amortization
Interest, net
Income before income taxes
Federal and state income taxes
Net income
Net income per common share
Basic
Diluted
Dividends declared per share
See accompanying Notes to Consolidated Financial Statements.
Years ended April 30,
2017
2016
2015
$
7,506,587 $
7,122,086 $
7,767,216
5,825,426
1,681,161
1,172,328
197,629
41,536
269,668
5,508,465
1,613,621
1,053,805
170,937
40,173
348,706
92,183
177,485 $
122,724
225,982 $
6,327,431
1,439,785
960,424
156,111
41,225
282,025
101,397
180,628
4.54 $
4.48 $
5.79 $
5.73 $
4.66
4.62
0.96 $
0.88 $
0.80
$
$
$
$
Balance at April 30, 2014
Net income
Dividends declared (80 cents per share)
Exercise of stock options
Tax benefits related to nonqualified stock options
Stock-based compensation
Balance at April 30, 2015
Net income
Dividends declared (88 cents per share)
Exercise of stock options
Issuance of common stock
Tax benefits related to nonqualified stock options
Stock-based compensation
Balance at April 30, 2016
Net income
Dividends declared (96 cents per share)
Exercise of stock options
Issuance of common stock
Repurchase of common stock
Stock-based compensation
Shares
Outstanding
Common
stock
Retained
earnings
Shareholders'
Equity
38,507,387
$
33,878
$ 669,386
$
38,886,165
$
56,274
$ 818,955
$
310,224
68,554
—
—
—
—
—
108,100
32,717
—
28,588
—
—
69,150
28,138
—
—
11,465
3,624
7,307
—
—
3,717
2,762
2,702
7,413
—
—
2,357
3,526
(443,800)
(49,374)
56,763
10,697
180,628
(31,059)
225,982
(34,342)
— —
177,485
(37,534)
—
—
—
—
—
—
—
—
—
—
703,264
180,628
(31,059)
11,465
3,624
7,307
875,229
225,982
(34,342)
3,717
2,762
2,702
7,413
177,485
(37,534)
2,357
3,526
(49,374)
10,697
39,055,570
$
72,868
$1,010,595
$ 1,083,463
Balance at April 30, 2017
38,765,821
$
40,074
$1,150,546
$ 1,190,620
See accompanying Notes to Consolidated Financial Statements.
{31}
31
32
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share and share amounts)
Balance at April 30, 2014
Net income
Dividends declared (80 cents per share)
Exercise of stock options
Tax benefits related to nonqualified stock options
Stock-based compensation
Balance at April 30, 2015
Net income
Dividends declared (88 cents per share)
Exercise of stock options
Issuance of common stock
Tax benefits related to nonqualified stock options
Stock-based compensation
Balance at April 30, 2016
Net income
Dividends declared (96 cents per share)
Exercise of stock options
Issuance of common stock
Repurchase of common stock
Stock-based compensation
Balance at April 30, 2017
See accompanying Notes to Consolidated Financial Statements.
Shares
Outstanding
Common
stock
Retained
earnings
Shareholders'
Equity
38,507,387 $
33,878 $ 669,386 $
703,264
—
—
310,224
—
—
—
11,465
3,624
180,628
(31,059)
—
—
68,554
38,886,165 $
7,307
56,274 $ 818,955 $
—
—
—
108,100
32,717
—
—
—
3,717
2,762
2,702
225,982
(34,342)
—
—
—
180,628
(31,059)
11,465
3,624
7,307
875,229
225,982
(34,342)
3,717
2,762
2,702
28,588
39,055,570 $
—
—
69,150
7,413
—
7,413
72,868 $1,010,595 $ 1,083,463
177,485
(37,534)
2,357
177,485
(37,534)
—
—
2,357
—
28,138
(443,800)
56,763
38,765,821 $
—
3,526
3,526
(49,374)
—
(49,374)
10,697
10,697
—
40,074 $1,150,546 $ 1,190,620
{32}
32
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Stock-based compensation
Loss on disposal of assets and impairment charges
Deferred income taxes
Changes in assets and liabilities:
Receivables
Inventories
Prepaid expenses
Accounts payable
Accrued expenses
Income taxes receivable
Other, net
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property and equipment
Payments for acquisitions of businesses, net of cash acquired
Proceeds from sales of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from long-term debt
Repayments of long-term debt
Net borrowings of short-term debt
Proceeds from exercise of stock options
Payments of cash dividends
Repurchase of common stock
Tax withholdings on employee share-based awards
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for interest, net of amount capitalized
Cash paid for income taxes, net
Noncash investing and financing activities
Years ended April 30,
2017
2016
2015
$
177,485 $
225,982 $
180,628
197,629
10,697
2,298
45,190
(15,543)
4,400
(6,171)
40,332
14,780
(6,226)
(5,598)
459,273
(433,392)
(25,473)
4,140
(454,725)
100,000
(15,399)
900
2,357
(36,758)
(47,893)
(6,813)
(3,606)
942
170,937
7,413
837
55,492
(5,092)
(7,390)
(983)
3,011
14,983
7,064
132
472,386
(392,839)
(7,263)
5,134
(394,968)
—
(15,399)
—
3,717
(33,527)
—
(4,975)
(50,184)
27,234
75,775
76,717 $
48,541
75,775 $
156,111
7,307
2,370
44,711
3,232
10,365
(547)
(33,290)
(14,205)
(7,801)
(236)
348,645
(360,734)
(41,157)
2,748
(399,143)
—
(553)
—
11,465
(30,175)
—
(3,339)
(22,602)
(73,100)
121,641
48,541
41,268 $
52,961
40,401 $
60,049
41,382
64,367
$
$
Purchased property and equipment in accounts payable
Shares repurchased in accounts payable
10,883
1,481
11,619
—
9,060
—
contracted.
See accompanying Notes to Consolidated Financial Statements.
{33}
33
34
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 1,978 convenience stores in
15 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail
sales in 2017 by category are as follows: 59% fuel, 28% grocery & other merchandise, and 13% prepared food & fountain. The
Company’s products are readily available, and the Company is generally not dependent on a single supplier or only a few
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
suppliers.
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 the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Cash equivalents We consider all highly liquid investments with a maturity at purchase of three months or less to be cash
equivalents. Included in cash equivalents are money market funds and credit card, debit card and electronic benefits transfer
transactions that process within three days.
Inventories Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel, 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.
The excess of current cost over the stated LIFO value was $65,593 and $58,432 at April 30, 2017 and 2016, respectively.
There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at
April 30, 2017 and 2016:
Fuel
Merchandise
Total inventory
Fiscal 2017
Fiscal 2016
$
$
60,833
140,811
201,644
$
$
57,840
147,148
204,988
The Company often receives vendor allowances on the basis of quantitative contract terms that vary by product and
vendor or directly on the basis of purchases made. Vendor allowances include rebates and other funds received from vendors to
promote their products.Vendor rebates in the form of rack display allowances (RDAs) are funds that we receive from various
vendors for allocating certain shelf space to carry their specific products or to introduce new products in our stores for a
particular period of time. The RDAs are treated as a reduction in cost of goods sold and are recognized ratably over the period
covered by the applicable rebate agreement. These funds do not represent reimbursements of specific, incremental, identifiable
costs incurred by us in selling the vendor’s products. Vendor rebates in the form of billbacks are treated as a reduction in cost of
goods sold and are recognized at the time the rebate is earned per the contract. Reimbursements of an operating expense (e.g.,
advertising) are recorded as reductions of the related expense.
Renewable Identification Numbers (RINs) are recorded as a reduction in cost of goods sold in the period when the
Company commits to a price and agrees to sell all of the RINs earned during a specified period. The Company includes in cost
of goods sold the costs incurred to acquire fuel and merchandise, including excise taxes, less vendor allowances and rebates
and RINs. The Company does not record an asset on the balance sheet related to RINs that has not been validated and
Goodwill Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. The Company
assesses impairment annually at year-end using a market based approach to establish fair value. All of the goodwill assigned to
the individual stores is aggregated into a single reporting unit due to the similar economic characteristics of the stores. As of
April 30, 2017 and 2016, there was $132,806 and $128,566 of goodwill, respectively. Management’s analysis of recoverability
completed as of the fiscal year-end yielded no evidence of impairment for the years ended April 30, 2017, 2016, and 2015.
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 1,978 convenience stores in
15 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail
sales in 2017 by category are as follows: 59% fuel, 28% grocery & other merchandise, and 13% prepared food & fountain. The
Company’s products are readily available, and the Company is generally 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 the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
Cash equivalents We consider all highly liquid investments with a maturity at purchase of three months or less to be cash
equivalents. Included in cash equivalents are money market funds and credit card, debit card and electronic benefits transfer
transactions that process within three days.
Inventories Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel, 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.
The excess of current cost over the stated LIFO value was $65,593 and $58,432 at April 30, 2017 and 2016, respectively.
There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at
April 30, 2017 and 2016:
Fuel
Merchandise
Total inventory
Fiscal 2017
Fiscal 2016
$
$
60,833 $
140,811
201,644 $
57,840
147,148
204,988
The Company often receives vendor allowances on the basis of quantitative contract terms that vary by product and
vendor or directly on the basis of purchases made. Vendor allowances include rebates and other funds received from vendors to
promote their products.Vendor rebates in the form of rack display allowances (RDAs) are funds that we receive from various
vendors for allocating certain shelf space to carry their specific products or to introduce new products in our stores for a
particular period of time. The RDAs are treated as a reduction in cost of goods sold and are recognized ratably over the period
covered by the applicable rebate agreement. These funds do not represent reimbursements of specific, incremental, identifiable
costs incurred by us in selling the vendor’s products. Vendor rebates in the form of billbacks are treated as a reduction in cost of
goods sold and are recognized at the time the rebate is earned per the contract. Reimbursements of an operating expense (e.g.,
advertising) are recorded as reductions of the related expense.
Renewable Identification Numbers (RINs) are recorded as a reduction in cost of goods sold in the period when the
Company commits to a price and agrees to sell all of the RINs earned during a specified period. The Company includes in cost
of goods sold the costs incurred to acquire fuel and merchandise, including excise taxes, less vendor allowances and rebates
and RINs. The Company does not record an asset on the balance sheet related to RINs that has not been validated and
contracted.
Goodwill Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. The Company
assesses impairment annually at year-end using a market based approach to establish fair value. All of the goodwill assigned to
the individual stores is aggregated into a single reporting unit due to the similar economic characteristics of the stores. As of
April 30, 2017 and 2016, there was $132,806 and $128,566 of goodwill, respectively. Management’s analysis of recoverability
completed as of the fiscal year-end yielded no evidence of impairment for the years ended April 30, 2017, 2016, and 2015.
{34}
34
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
Leasehold interest in property and equipment
Leasehold improvements
25-40 years
5-30 years
Lesser of term of lease or life of asset
Lesser of term of lease or life of asset
The Company monitors stores and will accelerate depreciation if the expected life of the asset is reduced due to the
expected remaining operation of the store or the Company’s plans.
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 Company monitors closed and 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 to the extent carrying value of the assets exceeds their estimated fair value. Fair value is based on
management’s estimate of the price that would be received to sell an asset in an orderly transaction between market
participants. The estimate is derived from offers, actual sale or disposition of assets subsequent to year-end, and other
indications of fair value, which are considered Level 3 inputs. 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 $705 in
fiscal 2017, $1,625 in fiscal 2016, and $1,785 in fiscal 2015. Impairment charges are a component of operating expenses.
Excise taxes Excise taxes approximating $866,000, $818,000, and $715,000 on retail fuel sales are included in total
revenue and cost of goods sold for fiscal 2017, 2016, and 2015, respectively.
Income taxes The Company uses the asset and liability method of accounting for 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. The Company calculates its current and deferred tax provision based on estimates and
assumptions that could differ from actual results reflected in income tax returns filed in subsequent years. Adjustments based
on filed returns are recorded when identified.
Revenue recognition The Company recognizes retail sales of fuel, 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 and remitted to the government are recorded on a net basis in the consolidated financial statements.
Net income per common share Basic earnings per share have been computed by dividing net income by the weighted
average shares outstanding during each of the years. The calculation of diluted earnings per share treats stock options and
restricted stock units outstanding as potential common shares to the extent they are dilutive.
Asset retirement obligations The Company recognizes the estimated future cost to remove underground storage tanks
over the estimated useful life of the storage tank. 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. 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 2017. The recorded asset for
asset retirement obligations was $10,421 and $9,788 at April 30, 2017 and 2016, respectively, and is recorded in other assets,
net of amortization. The discounted liability was $15,899 and $14,975 at April 30, 2017 and 2016, respectively, and is recorded
in other long-term liabilities.
Self-insurance The Company is primarily self-insured for employee healthcare, workers’ compensation, general liability,
and automobile claims. The self-insurance claim liability for workers’ compensation, general liability, and automobile claims is
determined actuarially at each year end based on claims filed and an estimate of claims incurred but not yet reported. Actuarial
projections of the losses are employed due to the potential 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 $37,984 and
$35,535 for the years ended April 30, 2017 and 2016, respectively.
Environmental remediation liabilities The Company accrues for environmental remediation liabilities when it is probable
a liability has been incurred and the amount of loss can be reasonably estimated.
Derivative instruments There were no options or futures contracts as of or during the years ended April 30, 2017, 2016, or
2015. However, we do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee.
These are not accounted for as derivatives under the normal purchase and normal sale exclusions under the applicable
guidance.
Stock-based compensation Stock-based compensation is recorded based upon the fair value of the award on the grant
date. The cost of the award is recognized ratably in the statement of income over the vesting period of the award. None of the
awards contain performance conditions.
Segment reporting As of April 30, 2017, we operated 1,978 stores in 15 states. Our stores offer a broad selection of
merchandise, fuel and other products and services designed to appeal to the convenience needs of our customers. We manage
the business on the basis of one operating segment and therefore, have only one reportable segment. Our stores sell similar
products and services, use similar processes to sell those products and services, and sell their products and services to similar
classes of customers. We make specific disclosures concerning the three broad merchandise categories of fuel, grocery & other
merchandise, and prepared food & fountain because it makes it easier for us to discuss trends and operational initiatives within
our business and industry. Although we can separate gross margins within these categories (and further sub-categories), the
operating expenses associated with operating a store that sells these products are not separable by these three categories.
Recent accounting pronouncements
In May 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, which requires an entity to
recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.
The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard,
after deferral for one year, is effective for the Company on May 1, 2018. Early application is not permitted. To address
implementation of ASU 2014-09 and evaluate its impact on our consolidated financial statements, we have developed a project
plan to evaluate our revenue streams and related internal controls. Since a majority of our revenue is derived from point of sale
transactions, we do not believe the implementation of this standard will have a material impact on our consolidated financial
statements. However, certain areas of our consolidated financial statements that will be impacted include, but are not limited to,
recognition of estimated breakage upon the sale of the Company’s gift cards and deferral of an estimated portion of revenue
expected to be redeemed in the future through Casey’s pizza box tops and punch card programs. We expect the impact of such
changes to be immaterial to the consolidated financial statements. The Company expects to adopt the new standard using the
full retrospective method beginning May 1, 2018 and will further disclose the impact to the financial statements at that point.
In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, Interest-Imputation of Interest
(Subtopic 835-30), which provided guidance on the presentation of debt issuance costs. The new standard required that debt
issuance costs be recorded as a reduction from the face amount of the related debt, with amortization recorded as interest
expense, rather than recording as a deferred asset. The Company adopted this standard in the quarter ended July 31, 2016,
retrospectively to all prior periods. The adoption of this standard did not have a material impact on the financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability
among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about
leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-02.
{35}
35
36
There were no material changes in our asset retirement obligation estimates during fiscal 2017. The recorded asset for
asset retirement obligations was $10,421 and $9,788 at April 30, 2017 and 2016, respectively, and is recorded in other assets,
net of amortization. The discounted liability was $15,899 and $14,975 at April 30, 2017 and 2016, respectively, and is recorded
in other long-term liabilities.
Self-insurance The Company is primarily self-insured for employee healthcare, workers’ compensation, general liability,
and automobile claims. The self-insurance claim liability for workers’ compensation, general liability, and automobile claims is
determined actuarially at each year end based on claims filed and an estimate of claims incurred but not yet reported. Actuarial
projections of the losses are employed due to the potential 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 $37,984 and
$35,535 for the years ended April 30, 2017 and 2016, respectively.
Environmental remediation liabilities The Company accrues for environmental remediation liabilities when it is probable
a liability has been incurred and the amount of loss can be reasonably estimated.
Derivative instruments There were no options or futures contracts as of or during the years ended April 30, 2017, 2016, or
2015. However, we do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee.
These are not accounted for as derivatives under the normal purchase and normal sale exclusions under the applicable
guidance.
Stock-based compensation Stock-based compensation is recorded based upon the fair value of the award on the grant
date. The cost of the award is recognized ratably in the statement of income over the vesting period of the award. None of the
awards contain performance conditions.
Segment reporting As of April 30, 2017, we operated 1,978 stores in 15 states. Our stores offer a broad selection of
merchandise, fuel and other products and services designed to appeal to the convenience needs of our customers. We manage
the business on the basis of one operating segment and therefore, have only one reportable segment. Our stores sell similar
products and services, use similar processes to sell those products and services, and sell their products and services to similar
classes of customers. We make specific disclosures concerning the three broad merchandise categories of fuel, grocery & other
merchandise, and prepared food & fountain because it makes it easier for us to discuss trends and operational initiatives within
our business and industry. Although we can separate gross margins within these categories (and further sub-categories), the
operating expenses associated with operating a store that sells these products are not separable by these three categories.
Recent accounting pronouncements
In May 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, which requires an entity to
recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.
The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard,
after deferral for one year, is effective for the Company on May 1, 2018. Early application is not permitted. To address
implementation of ASU 2014-09 and evaluate its impact on our consolidated financial statements, we have developed a project
plan to evaluate our revenue streams and related internal controls. Since a majority of our revenue is derived from point of sale
transactions, we do not believe the implementation of this standard will have a material impact on our consolidated financial
statements. However, certain areas of our consolidated financial statements that will be impacted include, but are not limited to,
recognition of estimated breakage upon the sale of the Company’s gift cards and deferral of an estimated portion of revenue
expected to be redeemed in the future through Casey’s pizza box tops and punch card programs. We expect the impact of such
changes to be immaterial to the consolidated financial statements. The Company expects to adopt the new standard using the
full retrospective method beginning May 1, 2018 and will further disclose the impact to the financial statements at that point.
In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, Interest-Imputation of Interest
(Subtopic 835-30), which provided guidance on the presentation of debt issuance costs. The new standard required that debt
issuance costs be recorded as a reduction from the face amount of the related debt, with amortization recorded as interest
expense, rather than recording as a deferred asset. The Company adopted this standard in the quarter ended July 31, 2016,
retrospectively to all prior periods. The adoption of this standard did not have a material impact on the financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability
among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about
leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods
within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-02.
{36}
36
In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting. The goal of the update was to simplify several aspects of the accounting for
share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities
and classification on the statement of cash flows. This update was effective for the Company beginning May 1, 2017 with early
adoption permitted. The Company elected to early adopt this standard in the quarter ended July 31, 2016. See Footnote 4 for
further discussion of the impact of adoption.
2. ACQUISITIONS
During the year ended April 30, 2017, the Company acquired 22 stores through a variety of single store transactions with
several unrelated third parties. Of the 22 stores acquired, 18 were re-opened as a Casey's store during the 2017 fiscal year, and
four will be opened during the 2018 fiscal year. The acquisitions meet the criteria to be considered business combinations. The
stores were valued using a discounted cash flow model on a location by location basis. The acquisitions were recorded in the
financial statements by allocating the purchase price to the assets acquired, including intangible assets and liabilities assumed,
based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the net amounts
assigned to the fair value of the assets acquired and the liabilities assumed is recorded as goodwill. All of the goodwill
associated with these transactions will be deductible for income tax purposes over 15 years.
Allocation of the purchase price for the transactions in aggregate for the year ended April 30, 2017 is as follows (in
thousands):
Assets acquired:
Inventories
Property and equipment
Total assets
Liabilities assumed:
Accrued expenses
Total liabilities
Net tangible assets acquired
Goodwill
Total consideration paid
$
$
1,056
20,283
21,339
106
106
21,233
4,240
25,473
The following unaudited pro forma information presents a summary of our consolidated results of operations as if the
transactions referenced above occurred at the beginning of the first fiscal year of the periods presented (amounts in thousands,
except per share data):
Total revenue
Net income
Net income per common share
Basic
Diluted
Years Ended April 30,
2017
7,540,386 $
178,645 $
2016
7,156,075
227,124
4.57 $
4.51 $
5.82
5.76
$
$
$
$
Years ended April 30,
2018
2019
2020
2021
2022
Thereafter
3. FAIR VALUE OF FINANCIAL INSTRUMENTS AND LONG-TERM DEBT
A summary of the fair value of the Company’s financial instruments follows.
Cash and cash equivalents, receivables, and accounts payable The carrying amount approximates fair value due to the
short maturity of these instruments or the recent purchase of the instruments at current rates of interest.
{37}
37
38
Long-term debt The fair value of the Company’s long-term debt and 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 and
capital lease obligations was approximately $941,000 and $887,000, respectively, at April 30, 2017 and 2016.
The Company’s long-term debt at carrying amount by issuance is as follows:
Capitalized lease obligations discounted at 3.70% to 6.00% due in various monthly
installments through 2048 (Note 7)
5.72% Senior notes due in 14 installments beginning September 30, 2012 and ending
March 30, 2020
5.22% Senior notes due August 9, 2020
3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending
3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May
3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending
June 15, 2028
ending December 18, 2028
2, 2031
October 28, 2031
Less current maturities
As of April 30,
2017
2016
$
8,777
$
9,244
45,000
569,000
60,000
569,000
150,000
150,000
50,000
50,000
50,000
922,777
15,421
$
907,356
$
50,000
—
—
838,244
15,375
822,869
At April 30, 2017, the Company had a bank line of credit arrangement consisting of two Promissory Notes, in the
principal amount of $50,000 each (together, the “Notes”). The Notes evidenced a revolving line of credit in the aggregate
principal amount of $100,000 and bear interest at variable rates subject to change from time to time based on changes in an
independent index referred to in the Notes as the Federal Funds Offered Rate (the “Index”). The interest rate to be applied to
the unpaid principal balance of the first Note was at a rate of 0.750% over the Index. The interest rate applicable to the second
note is 1.000% over the Index. There was a $900 balance owed on the Notes at April 30, 2017 and $0 at April 30, 2016. The
line of credit is due upon demand.
Interest expense is net of interest income of $588, $157, and $158 for the years ended April 30, 2017, 2016, and 2015,
respectively. Interest expense is also net of interest capitalized of $1,470, $1,134, and $1,209 during the years ended April 30,
2017, 2016, and 2015, respectively.
The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2017,
the Company was in compliance with all such operating and financial covenants. Listed below are the aggregate maturities of
long-term debt, including capitalized lease obligations, for the 5 years commencing May 1, 2017 and thereafter:
Capital Leases
Senior Notes
Total
421
$
15,000
$
15,421
444
468
494
455
6,495
8,777
15,000
15,000
569,000
—
300,000
$
914,000
$
15,444
15,468
569,494
455
306,495
922,777
$
$
4. PREFERRED AND COMMON STOCK
Preferred stock The Company has 1,000,000 authorized shares of preferred stock, of which 250,000 shares have been
designated as Series A Serial Preferred Stock. No shares have been issued.
Common stock The Company currently has 120,000,000 authorized shares of common stock.
Long-term debt The fair value of the Company’s long-term debt and 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 and
capital lease obligations was approximately $941,000 and $887,000, respectively, at April 30, 2017 and 2016.
The Company’s long-term debt at carrying amount by issuance is as follows:
Capitalized lease obligations discounted at 3.70% to 6.00% due in various monthly
installments through 2048 (Note 7)
5.72% Senior notes due in 14 installments beginning September 30, 2012 and ending
March 30, 2020
5.22% Senior notes due August 9, 2020
3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending
June 15, 2028
3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and
ending December 18, 2028
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May
2, 2031
3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending
October 28, 2031
Less current maturities
As of April 30,
2017
2016
$
8,777 $
9,244
45,000
569,000
60,000
569,000
150,000
150,000
50,000
50,000
50,000
922,777
15,421
907,356 $
$
50,000
—
—
838,244
15,375
822,869
At April 30, 2017, the Company had a bank line of credit arrangement consisting of two Promissory Notes, in the
principal amount of $50,000 each (together, the “Notes”). The Notes evidenced a revolving line of credit in the aggregate
principal amount of $100,000 and bear interest at variable rates subject to change from time to time based on changes in an
independent index referred to in the Notes as the Federal Funds Offered Rate (the “Index”). The interest rate to be applied to
the unpaid principal balance of the first Note was at a rate of 0.750% over the Index. The interest rate applicable to the second
note is 1.000% over the Index. There was a $900 balance owed on the Notes at April 30, 2017 and $0 at April 30, 2016. The
line of credit is due upon demand.
Interest expense is net of interest income of $588, $157, and $158 for the years ended April 30, 2017, 2016, and 2015,
respectively. Interest expense is also net of interest capitalized of $1,470, $1,134, and $1,209 during the years ended April 30,
2017, 2016, and 2015, respectively.
The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2017,
the Company was in compliance with all such operating and financial covenants. Listed below are the aggregate maturities of
long-term debt, including capitalized lease obligations, for the 5 years commencing May 1, 2017 and thereafter:
Years ended April 30,
2018
2019
2020
2021
2022
Thereafter
Capital Leases
Senior Notes
Total
$
$
421 $
444
468
494
455
6,495
8,777 $
15,000 $
15,000
15,000
569,000
—
300,000
914,000 $
15,421
15,444
15,468
569,494
455
306,495
922,777
4. PREFERRED AND COMMON STOCK
Preferred stock The Company has 1,000,000 authorized shares of preferred stock, of which 250,000 shares have been
designated as Series A Serial Preferred Stock. No shares have been issued.
Common stock The Company currently has 120,000,000 authorized shares of common stock.
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Table of Contents
Stock option plans The 2009 Stock Incentive Plan (the “Plan”) was approved by the Board of Directors in June 2009 and
approved by the shareholders in September 2009. The Plan replaced the 2000 Option Plan and the Non-employee Director
Stock Plan (together, the “Prior Plans”). There are 3,250,062 shares available for grant at April 30, 2017 under the Plan. Awards
made under the Plan may take the form of stock options, restricted stock or restricted stock units. Each share issued pursuant to
a stock option will reduce the shares available for grant by one, and each share issued pursuant to an award of restricted stock
or restricted stock units will reduce the shares available for grant by two. Restricted stock is transferred to the employee or non-
employee immediately upon grant, whereas restricted stock units have a vesting period that must expire before the stock is
transferred. We account for stock-based compensation by estimating the fair value of stock options using the Black Scholes
model, and value restricted stock unit awards granted under the Plan using market price of a share of our common stock on the
date of grant. We recognize this fair value as an operating expense in our consolidated statements of income over the requisite
service period using the straight-line method, as adjusted for certain retirement provisions. At April 30, 2017, stock options for
222,050 shares (which expire between fiscal years 2018 through 2022) were outstanding. All stock option shares issued are
previously unissued authorized shares.
The following table summarizes the most recent compensation grants made during the three-year period ended April 30, 2017:
Outstanding at April 30, 2016
Information concerning the issuance of stock options under the Plan and Prior Plans is presented in the following table:
Date of Grant
Type of Grant
Shares Granted
Recipients
Vesting Date
Fair Value at
Grant Date
June 6, 2014
Restricted Stock
Units
91,000
Officers & Key
employees
June 6, 2017
$6,584
June 6, 2014
Restricted Stock
September 19,
2014
June 5, 2015
Restricted Stock
Restricted Stock
Units
30,538
13,955
104,200
Officers & Key
employees
Non-employee
board members
Officers & Key
employees
Immediate (Annual
performance goal)
Immediate
June 5, 2018
June 5, 2015
Restricted Stock
48,913
Officers & Key
employees
Immediate (Annual
performance goal)
September 18,
2015
Restricted Stock
Non-employee
board members
7,748
Immediate
April 12, 2016
Restricted Stock
Units
10,000 CEO
20% each May 1,
2017-2021
$2,209
$990
$9,135
$4,288
$856
$1,060
At April 30, 2017, all outstanding options had an aggregate intrinsic value of $16,335 and a weighted average remaining
contractual life of 3.49 years. All options are vested as of April 30, 2017. The aggregate intrinsic value for the total of all
options exercised during the year ended April 30, 2017 was $6,137.
At April 30, 2017, the range of exercise prices for outstanding options was $25.26 – $44.39. The number of shares and
weighted average remaining contractual life of the options by range of applicable exercise prices at April 30, 2017 were as
follows:
Range of
exercise prices
25.26-25.49
26.51-26.92
44.39
Number
of shares
Weighted average
exercise price
62,350
6,500
153,200
222,050
Weighted average
remaining
contractual life
(years)
2.2
0.6
4.2
25.28
26.73
44.39
June 3, 2016
Restricted Stock
Units
111,150
Officers & Key
employees
June 3, 2019
$13,849
Information concerning the issuance of restricted stock units under the Plan is presented in the following table:
June 3, 2016
Restricted Stock
40,996
Officers & Key
employees
Immediate (Annual
performance goal)
$5,108
Unvested at April 30, 2014
September 16,
2016
Restricted Stock
Non-employee
board members
8,941
Immediate
$1,064
Number
of option shares
Weighted
average option
exercise price
712,024
$
36.73
—
—
—
—
—
—
—
—
—
—
(310,224)
36.96
401,800
$
36.55
(108,100)
(2,500)
34.37
25.26
291,200
$
37.46
(69,150)
34.08
222,050
$
38.51
148,546
91,000
(38,198)
(7,418)
193,930
114,200
(31,480)
(3,750)
272,900
111,150
(73,000)
(7,650)
303,400
Outstanding at April 30, 2014
Outstanding at April 30, 2015
Granted
Exercised
Forfeited
Granted
Exercised
Forfeited
Granted
Exercised
Forfeited
Outstanding at April 30, 2017
Unvested at April 30, 2015
Unvested at April 30, 2016
Granted
Vested
Forfeited
Granted
Vested
Forfeited
Granted
Vested
Forfeited
Unvested at April 30, 2017
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39
40
Table of Contents
Information concerning the issuance of stock options under the Plan and Prior Plans is presented in the following table:
Outstanding at April 30, 2014
Granted
Exercised
Forfeited
Outstanding at April 30, 2015
Granted
Exercised
Forfeited
Outstanding at April 30, 2016
Granted
Exercised
Forfeited
Outstanding at April 30, 2017
Number
of option shares
Weighted
average option
exercise price
712,024 $
—
(310,224)
—
401,800 $
—
(108,100)
(2,500)
291,200 $
—
(69,150)
—
222,050 $
36.73
—
36.96
—
36.55
—
34.37
25.26
37.46
—
34.08
—
38.51
At April 30, 2017, all outstanding options had an aggregate intrinsic value of $16,335 and a weighted average remaining
contractual life of 3.49 years. All options are vested as of April 30, 2017. The aggregate intrinsic value for the total of all
options exercised during the year ended April 30, 2017 was $6,137.
At April 30, 2017, the range of exercise prices for outstanding options was $25.26 – $44.39. The number of shares and
weighted average remaining contractual life of the options by range of applicable exercise prices at April 30, 2017 were as
follows:
Range of
exercise prices
25.26-25.49
26.51-26.92
44.39
Number
of shares
Weighted average
exercise price
Weighted average
remaining
contractual life
(years)
62,350
6,500
153,200
222,050
25.28
26.73
44.39
2.2
0.6
4.2
Information concerning the issuance of restricted stock units under the Plan is presented in the following table:
Unvested at April 30, 2014
Granted
Vested
Forfeited
Unvested at April 30, 2015
Granted
Vested
Forfeited
Unvested at April 30, 2016
Granted
Vested
Forfeited
Unvested at April 30, 2017
{40}
40
148,546
91,000
(38,198)
(7,418)
193,930
114,200
(31,480)
(3,750)
272,900
111,150
(73,000)
(7,650)
303,400
Table of Contents
Total compensation costs recorded for the stock options, restricted stock, and restricted stock unit awards for the years
ended April 30, 2017, 2016 and 2015 were $10,697, $7,413, and $7,307, respectively. As of April 30, 2017, there was $12,693
of total unrecognized compensation costs related to the Plan and Prior Plans for costs related to restricted stock units which are
expected to be recognized ratably through fiscal 2020.
ASU No 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment
Accounting was issued in March 2016 and early adopted by the Company in the first quarter of fiscal 2017. ASU 2016-09
eliminates the requirement to estimate and apply a forfeiture rate to reduce stock compensation expense during the vesting
period, and instead, provides an alternative option to account for forfeitures as they occur, which is the option the Company
adopted. ASU 2016-09 requires that this change be adopted using the modified retrospective approach. The adoption of this
section had no material impact on the financial statements. Additionally, ASU 2016-09 addresses the presentation of excess tax
benefits and employee taxes paid on the statement of cash flows. The standard requires presentation of excess tax benefits as an
operating activity (combined with other income tax cash flows) on the statement of cash flows rather than as a financing
activity. We adopted this change prospectively during the first quarter of 2017. ASU 2016-09 also requires the presentation of
amounts withheld for applicable income taxes on employee share-based awards as a financing activity on the statement of cash
flows. This adoption is reflected in the cash flow statement on a retrospective basis, which resulted in an increase in net cash
used in financing activities and an increase in net cash provided by operating activities of $4,975 and $3,339 for the periods
ended April 30, 2016 and April 30, 2015, respectively.
ASU No 2016-09 also eliminates additional paid in capital ("APIC") pools and requires excess tax benefits and tax
deficiencies to be recorded in the income statement when the awards vest or are settled. This requirement is to be adopted
prospectively by the Company. The impact of this section of the standard was a benefit of $3,046 to income tax expense for the
first quarter of fiscal 2017. In addition, the ASU requires that the excess tax benefit be removed from the overall calculation of
diluted shares. The impact on diluted earnings per share of this adoption was not material.
Finally, modified retrospective adoption of ASC 2016-09 eliminates the requirement that excess tax benefits be realized
(i.e. through a reduction in income taxes payable) before they are recognized. The adoption of this portion of the standard had
no impact on the financial statements.
During the fourth quarter of the fiscal year ended April 30, 2017, the Company began a share repurchase program,
wherein the Company is authorized to repurchase up to an aggregate of $300 million of the Company's outstanding common
stock. The share repurchase authorization is valid for a period of two years. The timing and number of repurchase transactions
under the program depends on a variety of factors, including but not limited to market conditions, corporate considerations,
business opportunities, debt agreements, and regulatory requirements. The program can be suspended or discontinued at any
time. From its inception on March 9, 2017, through the end of fiscal year 2017, the company repurchased 443,800 shares of its
common stock under its open market share repurchase program, for approximately $49.4 million. As of April 30, 2017, the
Company had a total remaining authorized amount for share repurchases of $250.6 million.
5. NET INCOME PER COMMON SHARE
Computations for basic and diluted earnings per common share are presented below:
Basic
Net income
Weighted average shares outstanding-basic
Basic earnings per common share
Diluted
Net income
Weighted-average shares outstanding-basic
Plus effect of stock options and restricted stock units
Weighted-average shares outstanding-diluted
Diluted earnings per common share
Years ended April 30,
2017
2016
2015
$
$
$
$
177,485 $
225,982 $
39,124,665
39,016,299
4.54 $
5.79 $
180,628
38,743,227
4.66
177,485 $
225,982 $
39,124,665
454,333
39,578,998
39,016,299
405,900
39,422,199
4.48 $
5.73 $
180,628
38,743,227
360,606
39,103,833
4.62
There were no options considered antidilutive; therefore, all options were included in the computation of dilutive
earnings per share for fiscal 2017, 2016, and fiscal 2015, respectively.
Table of Contents
6. INCOME TAXES
Current tax expense
Federal
State
Deferred tax expense
Total income tax expense
liabilities were as follows:
Deferred tax assets
Accrued liabilities and reserves
Property and equipment depreciation
Workers compensation
Deferred compensation
Equity compensation
State net operating losses & tax credits
Other
Total gross deferred tax assets
Less valuation allowance
Total net deferred tax assets
Deferred tax liabilities
Property and equipment depreciation
Goodwill
Other
Total gross deferred tax liabilities
Net deferred tax liability
Income tax expense attributable to earnings consisted of the following components:
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax
Years ended April 30,
2017
2016
2015
$
$
41,300
$
58,273
$
5,693
46,993
45,190
8,959
67,232
55,492
49,593
7,093
56,686
44,711
92,183
$
122,724
$
101,397
As of April 30,
2017
2016
$
10,948
$
16,604
10,934
5,916
6,923
938
1,275
53,538
60
53,478
11,522
15,914
10,540
6,696
5,186
973
1,582
52,413
84
52,329
(468,470)
(25,052)
(80)
(493,602)
$
(440,124) $
(425,586)
(21,677)
—
(447,263)
(394,934)
At April 30, 2017, the Company had net operating loss carryforwards for state income tax purposes of approximately
$61,154, which are available to offset future state taxable income. These net operating loss carryforwards expire during the tax
years 2020 through 2036. In addition, the Company had state alternative minimum tax credit carryforwards of approximately
$7, which are available to reduce future state regular income taxes over an indefinite period.
There was a valuation allowance of $60 and $84 for state net operating loss deferred tax assets as of April 30, 2017 and
2016. The change in the valuation allowance was $(24) and $(144) for the years ending April 30, 2017 and 2016, respectively.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.
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.
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41
42
Table of Contents
6. INCOME TAXES
Income tax expense attributable to earnings consisted of the following components:
Current tax expense
Federal
State
Deferred tax expense
Total income tax expense
Years ended April 30,
2017
2016
2015
$
$
41,300 $
5,693
46,993
45,190
92,183 $
58,273 $
8,959
67,232
55,492
122,724 $
49,593
7,093
56,686
44,711
101,397
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax
liabilities were as follows:
Deferred tax assets
Accrued liabilities and reserves
Property and equipment depreciation
Workers compensation
Deferred compensation
Equity compensation
State net operating losses & tax credits
Other
Total gross deferred tax assets
Less valuation allowance
Total net deferred tax assets
Deferred tax liabilities
Property and equipment depreciation
Goodwill
Other
Total gross deferred tax liabilities
Net deferred tax liability
As of April 30,
2017
2016
10,948 $
16,604
10,934
5,916
6,923
938
1,275
53,538
60
53,478
11,522
15,914
10,540
6,696
5,186
973
1,582
52,413
84
52,329
(468,470)
(25,052)
(80)
(493,602)
(440,124) $
(425,586)
(21,677)
—
(447,263)
(394,934)
$
$
At April 30, 2017, the Company had net operating loss carryforwards for state income tax purposes of approximately
$61,154, which are available to offset future state taxable income. These net operating loss carryforwards expire during the tax
years 2020 through 2036. In addition, the Company had state alternative minimum tax credit carryforwards of approximately
$7, which are available to reduce future state regular income taxes over an indefinite period.
There was a valuation allowance of $60 and $84 for state net operating loss deferred tax assets as of April 30, 2017 and
2016. The change in the valuation allowance was $(24) and $(144) for the years ending April 30, 2017 and 2016, respectively.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.
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.
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42
Table of Contents
Income taxes at the statutory rates
Federal tax credits
State income taxes, net of federal tax benefit
ASU 2016-09 Benefit (share based compensation)
Other
Years ended April 30,
2017
2016
2015
35.0 %
(1.8)%
2.8 %
(1.3)%
(0.5)%
34.2 %
35.0 %
(1.7)%
2.7 %
— %
(0.8)%
35.2 %
35.0 %
(1.7)%
3.1 %
— %
(0.4)%
36.0 %
Table of Contents
Real estate
Equipment
Less accumulated amortization
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being
sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.
Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had
a total of $5,362 and $6,484 in gross unrecognized tax benefits at April 30, 2017 and 2016, respectively, which is recorded in
other long-term liabilities in the consolidated balance sheet. Of this amount, $3,522 represents the amount of unrecognized tax
benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits decreased $1,122 during the twelve
months ended April 30, 2017, due primarily to the expiration of certain statutes of limitations exceeding the increase associated
with income tax filing positions for the current year.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Beginning balance
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
Ending balance
2017
2016
6,484 $
1,705
—
—
(2,827)
—
5,362 $
8,043
1,084
26
—
(2,669)
—
6,484
$
$
The total net amount of accrued interest and penalties for such unrecognized tax benefits was $141 and $217 at April 30,
2017 and 2016, respectively, and is included in other long-term liabilities. Net interest and penalties included in income tax
expense for the twelve month period ended April 30, 2017 was a decrease in tax expense of $76 and an increase of $65 for the
year ended April 30, 2016.
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 possible 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. The State of Nebraska is
examining tax years 2012 through 2014, and the state of Kansas is examining tax years 2013 through 2015. Additionally, the
IRS is currently examining tax year 2012. The Company has no other ongoing federal or state income tax examinations. The
Company does not have any outstanding litigation related to tax matters.
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 $1,242 during the next twelve months mainly due to the expiration of certain statutes of limitations.
The federal statute of limitations remains open for the tax years 2012 and forward. Tax years 2012 and forward are subject to
audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.
7. LEASES
The Company leases certain property and equipment used in its operations. Generally, the leases are for primary terms of
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,
2017
2016
13,480
$
2,693
16,173
7,039
9,134
$
13,480
2,564
16,044
6,365
9,679
$
$
Capital
leases
900
$
Operating
leases
1,172
$
907
912
908
883
1,001
658
523
258
10,260
815
14,770
$
4,427
5,993
8,777
$
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, 2017:
Years ended April 30,
2018
2019
2020
2021
2022
Thereafter
Total minimum lease payments
Less amount representing interest
Present value of net minimum lease payments
The total rent expense under operating leases was $1,936 in 2017, $1,862 in 2016, and $1,961 in 2015.
8. BENEFIT PLANS
401(k) plan The Company provides employees with a defined contribution 401(k) plan. The 401(k) plan covers all
employees who meet minimum age and service requirements. The Company contributions consist of matching amounts in
Company stock and are allocated based on employee contributions. Contributions to the 401(k) plan were $8,181, $6,560, and
$5,852 for the years ended April 30, 2017, 2016, and 2015, respectively.
On April 30, 2017 and 2016, 1,401,764 and 1,419,841 shares of common stock, respectively, were held by the trustee of
the 401(k) plan in trust for distribution to eligible participants upon death, disability, retirement, or termination of employment.
Shares held by the 401(k) plan are treated as outstanding in the computation of net income per common share.
Supplemental executive retirement plan The Company has a nonqualified supplemental executive retirement plan (SERP)
for two of its executive officers, one of whom retired April 30, 2003 and the other on April 30, 2008. The SERP provides for
the Company to pay annual retirement benefits, 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 (at a reduced level) 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, 2017 and 2016, respectively, were $4,737 and
$5,230. The discount rates used were 4.0% and 3.8%, respectively, at April 30, 2017 and 2016. The amount expensed in fiscal
2017 was $131 and the Company expects to pay $625 per year for each of the next five years. Expense incurred in fiscal 2016
and fiscal 2015 was $230 and $326, respectively.
Other post-employment benefits The Company also has severance and/or deferred compensation agreements with three
other former employees. The amounts accrued at April 30, 2017 and 2016 were $3,825 and $4,043, respectively. The Company
expects to pay $507, $457, $432, $432 and $432 the next five years under the agreements. The expense incurred in fiscal 2017,
2016 and 2015 was $370, $238, and $219 respectively.
9. 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 not less than $900 per year exclusive of bonuses. The agreement also
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Real estate
Equipment
Less accumulated amortization
Asset balances at April 30,
2017
2016
$
$
13,480 $
2,693
16,173
7,039
9,134 $
13,480
2,564
16,044
6,365
9,679
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, 2017:
Years ended April 30,
2018
2019
2020
2021
2022
Thereafter
Total minimum lease payments
Less amount representing interest
Present value of net minimum lease payments
Capital
leases
Operating
leases
$
$
900 $
907
912
908
883
10,260
14,770 $
5,993
8,777
1,172
1,001
658
523
258
815
4,427
The total rent expense under operating leases was $1,936 in 2017, $1,862 in 2016, and $1,961 in 2015.
8. BENEFIT PLANS
401(k) plan The Company provides employees with a defined contribution 401(k) plan. The 401(k) plan covers all
employees who meet minimum age and service requirements. The Company contributions consist of matching amounts in
Company stock and are allocated based on employee contributions. Contributions to the 401(k) plan were $8,181, $6,560, and
$5,852 for the years ended April 30, 2017, 2016, and 2015, respectively.
On April 30, 2017 and 2016, 1,401,764 and 1,419,841 shares of common stock, respectively, were held by the trustee of
the 401(k) plan in trust for distribution to eligible participants upon death, disability, retirement, or termination of employment.
Shares held by the 401(k) plan are treated as outstanding in the computation of net income per common share.
Supplemental executive retirement plan The Company has a nonqualified supplemental executive retirement plan (SERP)
for two of its executive officers, one of whom retired April 30, 2003 and the other on April 30, 2008. The SERP provides for
the Company to pay annual retirement benefits, 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 (at a reduced level) 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, 2017 and 2016, respectively, were $4,737 and
$5,230. The discount rates used were 4.0% and 3.8%, respectively, at April 30, 2017 and 2016. The amount expensed in fiscal
2017 was $131 and the Company expects to pay $625 per year for each of the next five years. Expense incurred in fiscal 2016
and fiscal 2015 was $230 and $326, respectively.
Other post-employment benefits The Company also has severance and/or deferred compensation agreements with three
other former employees. The amounts accrued at April 30, 2017 and 2016 were $3,825 and $4,043, respectively. The Company
expects to pay $507, $457, $432, $432 and $432 the next five years under the agreements. The expense incurred in fiscal 2017,
2016 and 2015 was $370, $238, and $219 respectively.
9. 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 not less than $900 per year exclusive of bonuses. The agreement also
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provides for certain payments in the case of death or disability of the officer. The Company also has entered into employment
agreements with fourteen other key employees, providing for certain payments in the event of termination following a change
of control of the Company.
10. CONTINGENCIES
Environmental compliance The United States Environmental Protection Agency and several states have adopted laws and
regulations relating to underground storage tanks used for petroleum products. Several states in which the Company does
business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation costs.
Management currently believes that substantially all capital expenditures for electronic monitoring, cathodic protection,
and overfill/spill protection to comply with existing regulations have been completed. The Company has an accrued liability at
April 30, 2017 and 2016 of approximately $283 and $341, 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.
Legal matters As previously reported, the Company was named as a defendant in four lawsuits (“hot fuel” cases) brought
in the federal courts in Kansas and Missouri against a variety of fuel retailers, which were consolidated in the U.S. District
Court for the District of Kansas in Kansas City, Kansas as part of the multidistrict “Motor Fuel Temperature Sales Practices
Litigation”. On November 20, 2012, the Court preliminarily approved the previously-reported settlement involving the
Company, which when approved in final form by the Court following notice to the Class would result in the settlement and
dismissal of all claims against Casey’s in the multidistrict litigation. The approved settlement includes, but is not limited to, a
commitment on the part of the Company to “sticker” certain information on its fuel pumps and make a monetary payment
(which is not considered to be material in amount) to the plaintiff class. An order awarding fees was filed by the Court on
February 17, 2016, but is subject to resolution of any appeal to the Tenth Circuit Court of Appeals.
From time to time we may be involved in other legal and administrative proceedings or investigations arising from the
conduct of our business operations, including, but not limited to, contractual disputes; 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 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, 2017, the Company was partially self-insured for workers’ compensation claims in all but one state of
its marketing territory. In North Dakota, the Company is required to participate in an exclusive, state managed fund for all
workers compensation claims. The Company 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 $21,126 and $20,115, respectively, were issued and outstanding at April 30, 2017 and 2016, 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, 2017 and 2016, the Company had $37,984 and $35,535, respectively, in accrued
expenses for estimated claims relating to self-insurance, the majority of which has been actuarially determined.
11. SUBSEQUENT EVENTS
Events that have occurred subsequent to April 30, 2017 have been evaluated for disclosure. On June 13, 2017, the
Company issued $150 million aggregate principal amount of 3.51% Senior Notes due June 13, 2025, and expects to issue on
August 22, 2017, $250 million aggregate principal amount of 3.77% Senior Notes due August 22, 2028. Further information is
set forth in the Current Report on Form 8-K filed by the Company on June 15, 2017.
12. QUARTERLY FINANCIAL DATA (Dollars in thousands, except per share amounts) (Unaudited)
Grocery & other merchandise
Prepared food & fountain
Grocery & other merchandise
Prepared food & fountain
Income per common share
Total revenue
Fuel
Other
Gross profit*
Fuel
Other
Net income
Basic
Diluted
Total revenue
Fuel
Other
Gross profit*
Fuel
Grocery & other merchandise
Prepared food & fountain
Other
Net income
Income per common share
Basic
Diluted
Q1
Q2
Q3
Q4
Year Total
Year ended April 30, 2017
$
1,147,044
1,113,351
1,053,990
1,099,743
1,970,079
1,920,055
1,769,993
1,846,460
7,506,587
$
$
$
$
$
$
$
$
566,174
243,655
13,206
104,429
179,127
153,052
13,187
449,795
67,392
1.72
1.70
526,620
223,381
12,350
87,681
171,549
139,679
12,333
411,242
61,806
1.59
1.57
544,799
248,345
13,560
99,060
174,590
156,329
13,539
443,518
57,180
1.46
1.44
516,578
229,388
11,898
122,690
162,904
145,513
11,883
442,990
79,033
2.03
2.00
476,309
228,278
11,416
89,265
148,099
140,869
11,396
389,629
22,835
0.58
0.58
888,744
453,388
209,595
14,213
85,460
141,482
130,027
14,200
371,169
38,099
0.98
0.97
500,068
233,150
13,499
85,592
155,374
143,774
13,479
398,219
30,078
0.77
0.76
873,081
477,487
218,349
14,037
85,828
153,299
135,073
14,020
388,220
47,044
1.20
1.19
4,414,128
2,087,349
953,430
51,680
378,347
657,190
594,024
51,600
1,681,161
177,485
4.54
4.48
4,214,802
1,974,073
880,713
52,498
381,659
629,234
550,292
52,436
1,613,621
225,982
5.79
5.73
Q1
Q2
Q3
Q4
Year Total
Year ended April 30, 2016
Grocery & other merchandise
Prepared food & fountain
$
1,286,241
1,166,736
2,048,592
1,924,600
1,565,940
1,582,954
7,122,086
* Gross profit is given before charge for depreciation and amortization and credit card fees.
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12. QUARTERLY FINANCIAL DATA (Dollars in thousands, except per share amounts) (Unaudited)
Total revenue
Fuel
Grocery & other merchandise
Prepared food & fountain
Other
Gross profit*
Fuel
Grocery & other merchandise
Prepared food & fountain
Other
Net income
Income per common share
Basic
Diluted
Total revenue
Fuel
Grocery & other merchandise
Prepared food & fountain
Other
Gross profit*
Fuel
Grocery & other merchandise
Prepared food & fountain
Other
Net income
Income per common share
Basic
Diluted
Q1
Q2
Q3
Q4
Year Total
Year ended April 30, 2017
$
$
$
$
$
$
$
$
$
$
1,147,044
566,174
243,655
13,206
1,970,079
104,429
179,127
153,052
13,187
449,795
67,392
1.72
1.70
1,113,351
544,799
248,345
13,560
1,920,055
99,060
174,590
156,329
13,539
443,518
57,180
1.46
1.44
1,053,990
476,309
228,278
11,416
1,769,993
89,265
148,099
140,869
11,396
389,629
22,835
0.58
0.58
1,099,743
500,068
233,150
13,499
1,846,460
85,592
155,374
143,774
13,479
398,219
30,078
0.77
0.76
4,414,128
2,087,349
953,430
51,680
7,506,587
378,347
657,190
594,024
51,600
1,681,161
177,485
4.54
4.48
Q1
Q2
Q3
Q4
Year Total
Year ended April 30, 2016
1,286,241
526,620
223,381
12,350
2,048,592
87,681
171,549
139,679
12,333
411,242
61,806
1.59
1.57
1,166,736
516,578
229,388
11,898
1,924,600
122,690
162,904
145,513
11,883
442,990
79,033
2.03
2.00
888,744
453,388
209,595
14,213
1,565,940
85,460
141,482
130,027
14,200
371,169
38,099
0.98
0.97
873,081
477,487
218,349
14,037
1,582,954
85,828
153,299
135,073
14,020
388,220
47,044
1.20
1.19
4,214,802
1,974,073
880,713
52,498
7,122,086
381,659
629,234
550,292
52,436
1,613,621
225,982
5.79
5.73
* Gross profit is given before charge for depreciation and amortization and credit card fees.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes
in circumstances, or the degree of compliance with the policies and procedures may deteriorate.
ITEM 9B. OTHER INFORMATION
Not applicable.
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a)
Evaluation of disclosure 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 (as defined in Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the CEO and
CFO have concluded that the Company’s current disclosure controls and procedures were effective as of April 30, 2017.
For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of
an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits
under the Act (l5 U.S.C. 78a et seq.) is recorded, processed, summarized and reported within the time periods specified in the
Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is
accumulated and communicated to the issuer's management, including its principal executive and principal financial officer, or
persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
(b)
Management's Report on 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, 2017. 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 (2013). On the basis of the
prescribed criteria, management concluded that the Company's internal control over financial reporting was effective as of
April 30, 2017.
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 29.
(c)
Changes in Internal Control over Financial Reporting.
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.
(d)
Other.
The Company does not expect that our disclosure controls and procedures or our internal control over financial reporting
will prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations on all internal control systems, our internal control system can provide only
reasonable assurance of achieving its objectives and no evaluation of controls can provide absolute assurance that all control
issues and occurrences of fraud, if any, within the Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by
management override of the control. The design of any system of internal control is also based in part upon certain assumptions
about the likelihood of future events, and can provide only reasonable, not absolute, assurance that any design will succeed in
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achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes
in circumstances, or the degree of compliance with the policies and procedures may deteriorate.
ITEM 9B. OTHER INFORMATION
Not applicable.
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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” as filed with the Commission pursuant to Regulation 14A within 120 days after April 30, 2017 and used
in connection with the Company’s 2017 Annual Meeting of Shareholders 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 under the Corporate Governance link of 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” as filed with the Commission pursuant to Regulation 14A within 120 days after April 30, 2017 and used in
connection with the Company’s 2017 Annual Meeting of Shareholders 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” as filed with the
Commission pursuant to Regulation 14A within 120 days after April 30, 2017 and used in connection with the Company’s 2017
Annual Meeting of Shareholders 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 captions “Certain Relationships and
Related Transactions” and “Governance of the Company” as filed with the Commission pursuant to Regulation 14A within 120
days after April 30, 2017 and used in connection with the Company’s 2017 Annual Meeting of Shareholders 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 Registered Public
Accounting Firm Fees” as filed with the Commission within 120 days after April 30, 2017 and used in connection with the
Company’s 2017 Annual Meeting of Shareholders is hereby incorporated by reference.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
Documents filed as a part of this report on Form 10-K:
(1)
The following financial statements are included herewith:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets, April 30, 2017 and 2016
Consolidated Statements of Income, Three Years Ended April 30, 2017
Consolidated Statements of Shareholders’ Equity, Three Years Ended April 30, 2017
Consolidated Statements of Cash Flows, Three Years Ended April 30, 2017
Notes to Consolidated Financial Statements
(2) No schedules are included because the required information is inapplicable or is presented in the consolidated
financial statements or related notes thereto.
(3)
The following exhibits are filed as a part of this report:
Exhibit
Number
3.1
Description of Exhibits
Restatement of the Restated and Amended Articles of Incorporation (incorporated by reference from the Quarterly
Report on Form 10-Q for the fiscal quarter ended October 31, 1996) and Articles of Amendment thereto
(incorporated by reference from the Current Report on Form 8-K filed April 16, 2010, as amended by the Current
Report on Form 8-K/A filed April 19, 2010 and the Current Report on Form 8-K filed May 20, 2011)
3.2(a)
Second Amended and Restated By-laws (incorporated by reference from the Current Report on Form 8-K filed
June 16, 2009) and Amendments thereto (incorporated by reference from the Current Reports on Form 8-K filed
May 20, 2011, August 2, 2011 and the Current Report on Form 8-K filed June 22, 2012)
4.8
4.9
4.10
4.11
4.12
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)
Note Purchase Agreement dated as of August 9, 2010 among the Company and the purchasers of the 5.22% Senior
Notes (incorporated by reference from the Current Report on Form 8-K filed August 10, 2010)
Note Purchase Agreement dated as of June 17, 2013 among the Company and the purchasers of the 3.67% Series
A Notes and 3.75% Series B Notes (incorporated by reference from the Current Reports on Form 8-K filed June
18, 2013 and December 18, 2013)
Note Purchase Agreement dated as of May 2, 2016 among the Company and the purchasers of the 3.65% Series C
Notes and 3.72% Series D Notes (incorporated by reference from the Current Report on Form 8-K filed May 3,
2016)
Note Purchase Agreement dated as of June 13, 2017 among the Company and the purchasers of the 3.51% Series
E Notes and 3.77% Series F Notes (incorporated by reference from the Current Report on Form 8-K filed June 15,
2017)
10.21(a)* Amended and Restated Employment Agreement with Donald F. Lamberti (incorporated by reference from the
Current Report on Form 8-K filed November 10, 1997) and First Amendment thereto (incorporated by reference
from the Current Report on Form 8-K filed April 2, 1998)
10.22(a)* Amended and Restated Employment Agreement with Ronald M. Lamb (incorporated by reference from the
Current Report on Form 8-K filed November 10, 1997), 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(c) Promissory Notes delivered to UMB Bank, n.a. and related Negative Pledge Agreement dated June 9, 2016
(incorporated by reference from the Current Report on Form 8-K filed June 9, 2016)
{50}
50
Table of Contents
10.29(a)* Form of “change of control” Employment Agreement (incorporated by reference from the Current Report on
Form 8-K filed June 2, 2010)
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.38*
10.39*
10.40*
10.41*
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)
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)
Severance Agreement with Douglas K. Shull (incorporated by reference from the Current Report on Form 8-K
filed July 28, 1998)
Casey’s General Stores, Inc. 2000 Stock Option Plan (incorporated by reference from the Annual Report on
Form 10-K405 for the fiscal year ended April 30, 2001) and related form of Grant Agreement (incorporated by
reference from the Current Report on Form 8-K filed July 6, 2005)
Casey’s General Stores 401(k) Plan (incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 2003)
Trustar Directed Trust Agreement (incorporated by reference from the Annual Report on Form 10-K for the fiscal
year ended April 30, 2003)
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)
Employment Agreement with Robert J. Myers (incorporated by reference from the Current Report on Form 8-K
filed April 21, 2010) and Amendment to Employment Agreement (incorporated by reference from the Current
Report on Form 8-K filed December 19, 2012)
Severance Agreement with John G. Harmon (incorporated by reference from the Current Report on Form 8-K
filed January 17, 2008)
Casey’s General Stores, Inc. 2009 Stock Incentive Plan (incorporated by reference from the Current Report on
Form 8-K filed September 23, 2009) and related forms of Restricted Stock Units Agreement (Non-employee
Directors) (incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended April 30,
2010) and Restricted Stock Units Agreement (Officers and Other Employees), Restricted Stock Units Agreement
(Chief Executive Officer) and Stock Option Grant (incorporated by reference from the Current Report on Form 8-
K filed June 27, 2011)
10.42*
Employment Agreement with Terry W. Handley and related Restricted Stock Units Award Agreement dated April
12, 2016 (incorporated by reference from the Current Report on Form 8-K filed June 6, 2016)
21
23.1
31.1
31.2
32.1
32.2
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, 2016)
Consent of Independent Registered Public Accounting Firm
Certificate of Terry W. Handley 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 Terry W. Handley under Section 906 of Sarbanes-Oxley Act of 2002
Certificate of William J. Walljasper under Section 906 of Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
*
Indicates management contract or compensatory plan or arrangement.
{51}
51
Table of Contents
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, 2017
Date: June 29, 2017
By /s/ Terry W. Handley
Terry W. Handley, President and
Chief Executive Officer
(Principal Executive Officer and Director)
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, 2017
Date: June 29, 2017
Date: June 29, 2017
Date: June 29, 2017
Date: June 29, 2017
Date: June 29, 2017
By /s/ Robert J. Myers
Robert J. Myers
Chairman and Director
By /s/ William J. Walljasper
William J. Walljasper
Senior Vice President and Chief Financial Officer
By /s/ Terry W. Handley
Terry W. Handley, President and
Chief Executive Officer, Director
By /s/ Johnny Danos
Johnny Danos
Director
By /s/ Diane C. Bridgewater
Diane C. Bridgewater
Director
By /s/ Jeffrey M. Lamberti
Jeffrey M. Lamberti
Director
{52}
52
Table of Contents
Date: June 29, 2017
Date: June 29, 2017
By /s/ H. Lynn Horak
H. Lynn Horak
Director
By /s/ Larree M. Renda
Larree M. Renda
Director
Table of Contents
The following exhibits are filed herewith:
EXHIBIT INDEX
Exhibit No. Description
23.1
31.1
31.2
32.1
32.2
Consent of Independent Registered Public Accounting Firm
Certification of Terry W. Handley 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 Terry W. Handley under Section 906 of Sarbanes-Oxley Act of 2002
Certificate of William J. Walljasper under Section 906 of Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
{53}
53
54
Table of Contents
The following exhibits are filed herewith:
EXHIBIT INDEX
Exhibit No. Description
23.1
31.1
31.2
32.1
32.2
Consent of Independent Registered Public Accounting Firm
Certification of Terry W. Handley 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 Terry W. Handley under Section 906 of Sarbanes-Oxley Act of 2002
Certificate of William J. Walljasper under Section 906 of Sarbanes-Oxley Act of 2002
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
{54}
54
Exhibit 23.1
Exhibit 31.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Casey's General Stores, Inc.:
We consent to the incorporation by reference in the registration statements (No. 33-19179, 333-35393, 33-42907,
333-174560, 333-174561) on Form S-8 and Form S-3D of Casey’s General Stores, Inc. of our report dated June 29,
2017, with respect to the consolidated balance sheets of Casey’s General Stores, Inc. and subsidiaries as of April 30,
2017 and 2016, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the
years in the three-year period ended April 30, 2017, and the effectiveness of internal control over financial reporting as
of April 30, 2017, which report appears in the April 30, 2017 Annual Report on Form 10-K of Casey’s General Stores,
Inc.
/s/ KPMG LLP
Des Moines, Iowa
June 29, 2017
{55}
CERTIFICATION OF TERRY W. HANDLEY
UNDER SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Terry W. Handley, certify that:
1.
2.
I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
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, 2017
/s/ Terry W. Handley
Terry W. Handley, President and
Chief Executive Officer
Exhibit 31.1
CERTIFICATION OF TERRY W. HANDLEY
UNDER SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Terry W. Handley, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
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;
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;
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
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)
(b)
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
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, 2017
/s/ Terry W. Handley
Terry W. Handley, President and
Chief Executive Officer
{56}
Exhibit 31.2
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, 2017 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Terry W. Handley,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
/s/ Terry W. Handley
Terry W. Handley, President and
Chief Executive Officer
Oxley Act of 2002, that
1934.
Dated June 29, 2017
CERTIFICATION OF WILLIAM J. WALLJASPER
UNDER SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, William J. Walljasper, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Casey’s General Stores, Inc.;
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
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;
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;
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
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)
(b)
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
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, 2017
/s/ William J. Walljasper
William J. Walljasper
Senior Vice President and
Chief Financial Officer
{57}
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, 2017 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Terry W. Handley,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
Oxley Act of 2002, that
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934.
The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
/s/ Terry W. Handley
Terry W. Handley, President and
Chief Executive Officer
Dated June 29, 2017
{58}
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
A p r il 30, 2017 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-
O x le y Act of 2002, that
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934.
The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
/s/ William J. Walljasper
William J. Walljasper
Senior Vice President and Chief Financial Officer
Dated June 29, 2017
{59}
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 return of (i) the Russell 2000 Index, and (ii) a peer group index based
on the common stock of Travel Centers of America LLC, Alimentation Couch-Tard Inc., CST Brands, Inc., Core-Mark
Holding Company, Inc., Dollar General Corporation, Dollar Tree, Inc., Domino’s Pizza, Inc., Papa John’s International
Inc. and The Kroger Co. The cumulative total shareholder return computations set forth in the Performance Graph
assumes the investment of $100 in the Company’s Common Stock and each index on April 30, 2012, and reinvestment
of all dividends. The total shareholder returns shown are not intended to be indicative of future returns.
300.00
200.00
100.00
0
2012
2013
2014
2015
2016
2017
Casey’s General Stores, Inc. Russell 2000 Index Peer Group
Casey’s General Stores, Inc.
Russell 2000 Index
Peer Group
2012
100.00
100.00
100.00
2013
104.03
117.69
123.75
2014
124.63
141.82
154.07
2015
150.68
155.58
217.96
2016
207.02
146.33
236.68
2017
208.84
183.84
234.95
{60}
C
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Casey’s General Stores, Inc.
One SE Convenience Boulevard
Ankeny, IA 50021
www.caseys.com