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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, 1994
Commission File Number 0-12788
CASEY'S GENERAL STORES, INC.
(Exact name of registrant as specified in its charter)
IOWA 42-0935283
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE CONVENIENCE BLVD., ANKENY, IOWA
(Address of principal executive offices)
50021
(Zip Code)
(515) 965-6100
(Registrant's telephone number, including area code)
Securities Registered Pursuant To Section 12(b) Of The Act:
NONE
Securities Registered Pursuant To Section 12(g) Of The Act:
COMMON STOCK
(Title of Class)
COMMON SHARE PURCHASE RIGHTS
(Title of Class)
2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
At the close of business on July 25, 1994, the Company had 25,921,020
shares of Common Stock, no par value, issued and outstanding. The aggregate
market value of the 20,229,908 shares of Common Stock stock held by
non-affiliates of the Company on that date was $237,701,419, based on a last
reported sales price of $11.75 per share on said date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents, as set forth herein, are
incorporated by reference into the listed Parts and Items of this report on
Form 10-K:
1. Annual Report for fiscal year ended April 30, 1994 (Items 5, 6, 7
and 8 of Part II and Item 14(a) of Part IV).
2. Proxy Statement dated August 15, 1994 (Item 2 of Part I and Items
10, 11, 12 and 13 of Part III).
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PART I
ITEM 1. BUSINESS
THE COMPANY
Casey's General Stores, Inc. (the "Company" or "Casey's") operates
convenience stores under the name "Casey's General Store" in eight Midwestern
states, primarily Iowa, Missouri and Illinois. The stores carry a broad
selection of food (including freshly prepared foods such as pizza, donuts and
sandwiches), beverages, tobacco products, health and beauty aids, automotive
products and other non-food items. In addition, all stores offer gasoline for
sale on a self-service basis. On April 30, 1994, there were a total of 876
Casey's General Stores in operation, of which 687 were operated by the Company
("Company Stores") and 189 stores were operated by franchisees ("Franchised
Stores"). There were 56 Company Stores and 4 Franchised Store newly opened in
fiscal 1994. The Company operates a central warehouse, the Casey's
Distribution Center, adjacent to its Corporate Headquarters facility in Ankeny,
Iowa through which it supplies grocery and general merchandise items to Company
and Franchised Stores. The Company also operates a commissary in Creston, Iowa
where it prepares sandwiches for sale through Company and Franchised Stores.
Approximately 75% of all Casey's General Stores are located in areas with
populations of fewer than 5,000 persons, while approximately 6% of all stores
are located in communities with populations exceeding 20,000 persons. The
Company competes on the basis of price, as well as on the basis of traditional
features of convenience store operations such as location, extended hours and
quality of service.
The Company, with executive offices at One Convenience Blvd., Ankeny, Iowa
50021-8045 (telephone 515/965-6100) was incorporated in Iowa in 1967.
GENERAL
Casey's General Stores seek to meet the needs of residents of small towns
by combining features of both general store and convenience store operations.
Smaller communities often are not served by national-chain convenience stores.
The Company has been successful in operating Casey's General Stores in small
towns by offering, at competitive prices, a broader selection of products than
a typical convenience store.
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In each of the past two fiscal years, the Company derived over 94% of its
gross profits from retail sales by Company Stores. It also derives income from
continuing monthly royalties based on sales by Franchised Stores, wholesale
sales to Franchised Stores, sign and facade rental fees and the provision of
certain maintenance, transportation and construction services to the Company's
franchisees. Sales at Casey's General Stores historically have been strongest
during the Company's first and second quarters and relatively weaker during its
fourth quarter. In the warmer months of the year (which comprise the Company's
first two fiscal quarters), customers tend to purchase greater quantities of
gasoline and certain convenience items such as beer, soft drinks and ice. Due
to the continuing emphasis on higher-margin, freshly prepared food items,
however, Casey's net sales and net income (with the exception of the fourth
quarter) have become somewhat less seasonal in recent years.
The following table shows the number of Company Stores and Franchised
Stores in each state on April 30, 1994:
COMPANY FRANCHISED
STATE STORES STORES TOTAL
----- ------ ------- -----
Iowa . . . . . . . . . 215 94 309
Illinois . . . . . . . 156 31 187
Kansas . . . . . . . . 69 5 74
Minnesota. . . . . . . 21 15 36
Missouri . . . . . . . 183 32 215
Nebraska . . . . . . . 24 9 33
South Dakota . . . . . 19 1 20
Wisconsin . . . . . . 0 2 2
--- --- ---
Total. . . . 687 (78%) 189 (22%) 876 (100%)
The Company has operational responsibility for all Company Stores.
Franchised Stores generally follow the same operating policies as Company
Stores and are subject to Company supervision pursuant to its franchise
agreements. Franchised Stores and Company Stores offer substantially the same
products and conform to the same basic store design.
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The following table shows the number of Company and Franchised Stores
opened, Franchised Stores converted to Company Stores and total stores in
operation during each of the last five fiscal years:
STORES IN
FISCAL YEAR NEW OPERATION AT
ENDED STORES CONVERTED END OF
APRIL 30, OPENED STORES PERIOD
- - ----------- ------ --------- ------------
1990
Company . . . . . 38 17 566 (1)
Franchised. . . . 2 (17) 203 (1)
-- ---
Total. . . . 40 769
1991
Company . . . . . 14 3 579 (2)
Franchised. . . . 4 (3) 202 (2)
-- ---
Total. . . . 18 781
1992
Company . . . . . 23 2 597 (3)
Franchised. . . . 3 (2) 202 (3)
-- ---
Total. . . . 26 799
1993
Company . . . . . 36 10 639 (4)
Franchised. . . . 1 (10) 187 (4)
-- ---
Total. . . . 37 826
1994
Company . . . . . 56 1 687 (5)
Franchised. . . . 4 (1) 189 (5)
-- ---
Total. . . . 60 876
(1) Two Company Stores and one Franchised Store were closed in 1990.
(2) Four Company Stores and two Franchised Stores were closed in 1991.
(3) Seven Company Stores and one Franchised Store were closed in 1992.
(4) Four Company Stores and six Franchised Stores were closed in 1993.
(5) Nine Company Stores and one Franchised Store were closed in 1994.
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Seven Company Stores were opened in May and June 1994 and 50 Company
Stores and one Franchised Store were under construction at June 30, 1994. On
June 30, 1994, Casey's had purchased or had the right to purchase 58 additional
store sites. All but one of the 109 stores under construction or planned for
construction on such sites will be Company Stores. Management anticipates
opening approximately 60 new Company Stores during fiscal 1995, substantially
all of which will be located in Iowa, Illinois and Minnesota. One such store
will be located in Sullivan, Indiana, representing the Company's first
expansion outside its eight-state market area since 1983.
The Company intends to continue to increase the number of Company
Stores, and the proportion of Company Stores relative to Franchised Stores,
because of the greater profitability of Company Stores and the Company's
greater operating control over such stores. The Company anticipates it will
increase the number of Company Stores through construction of new stores and
the acquisition of existing Franchised Stores. During fiscal 1992, 1993 and
1994, the Company converted 2, 10 and 1 stores, respectively, from Franchised
Stores to Company Stores.
Management believes that its current market area presents substantial
opportunities for continued growth, and the Company intends to concentrate its
expansion efforts in this area before pursuing expansion in other geographic
markets. In the opinion of management, the Casey's Distribution Center in
Ankeny, Iowa can adequately supply the general merchandise requirements of 800
to 1,000 stores located within a 500-mile radius of the Casey's Distribution
Center, which would include the Sullivan, Indiana store and several additional
store sites being considered in Indiana.
In its expansion, the Company intends to follow its traditional store
site selection criteria and to locate most new stores in small towns.
Management believes that satisfaction of such criteria will provide
opportunities for a better return on investment than could be realized from the
opening of stores in larger communities.
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Store Operations
Products Offered
Each Casey's General Store typically carries over 2,500 food and
non-food items. The products offered are those normally found in a
supermarket, except that the stores do not sell produce or fresh meats, and
selection is generally limited to one or two well-known brands of each item
stocked. Most staple foodstuffs carried are of nationally advertised brands.
Stores sell regional brands of dairy and bakery products, and approximately 94%
of the stores offer beer. The non-food items carried include tobacco products,
health and beauty aids, school supplies, housewares, pet supplies, photo
supplies, ammunition and automotive products.
All of the Casey's General Stores offer gasoline or gasohol for sale
on a self-service basis. Stores in Iowa, Illinois and Nebraska sell primarily
gasohol and are therefore able to avail themselves of a tax incentive for such
sales provided in those states. The gasoline and gasohol offered by the stores
generally are sold under the Casey's name, although some Franchised Stores sell
gasoline under a major oil company brand name.
It is management's policy to experiment with additions to the
Company's product line, especially products with higher gross profit margins.
As a result of this policy, the Company has added various prepared food items
to its product line over the years. In 1980, the Company initiated the
installation of "snack centers" which now are in approximately 99% of the
stores. The snack centers sell sandwiches, fountain drinks, and other items
that have gross profit margins higher than those of general staple goods.
Casey's also has introduced the sale of donuts prepared on store premises,
available in approximately 99% of the stores as of April 30, 1994, as well as
cinnamon rolls and cookies, and is installing donut-making facilities in all
newly constructed stores.
Since 1986, the Company has operated a commissary at which it prepares
sandwiches for sale in Casey's General Stores. Management expects the
commissary to produce approximately 3 million sandwiches during fiscal 1995,
for delivery to both Company and Franchised Stores through the Casey's
Distribution Center.
Casey's began marketing made-from-scratch pizza in 1984, expanding its
availability to 818 (93%) stores as of April 30, 1994. Management believes
pizza is the Company's most popular prepared food product, although the Company
continues to expand
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its prepared food product line, which now includes ham and cheese, beef, and
hot and mild sausage and tenderloin sandwiches, pizza bread, garlic bread,
breakfast croissants, quarter-pound hamburgers and cheeseburgers. In addition,
Casey's Crispy Fried Chicken was available for take-out at 87 (10%) stores as
of April 30, 1994.
The pizza and other prepared food products are made on store premises
with ingredients delivered from the Casey's Distribution Center. Pizza
generally is available in three sizes with ten different toppings and is sold
for take-out between the hours of 4:00 P.M. and 11:00 P.M. In addition, at
selected store locations a luncheon menu consisting of pizza-by-the-slice,
sandwiches, pizza bread, and garlic bread is available.
An important part of the Company's marketing strategy is to increase
sales volume by pricing competitively on price-sensitive items. On less
price-sensitive items, it is the Company's policy to maintain, or in the case
of Franchised Stores to recommend, a Company-wide pricing structure in each
store that is generally comparable to that of other convenience, gasoline or
grocery stores located in the area and competing for the same customers.
Management attributes the Company's ability to offer competitive
prices to a number of factors, including the Company's central distribution
system, its purchasing practices which avoid dependence upon jobbers and
vendors by relying on a few large wholesale companies and its success in
minimizing land, construction and equipment costs.
Management's decision to add snack center items, freshly prepared
donuts and pizza to the Company's product selection reflects its strategy to
promote high profit margin products that are compatible with convenience store
operations. Although retail sales of non-gasoline items during the last three
fiscal years have generated approximately 43% of the Company's retail sales,
such sales resulted in approximately 76% of the Company's gross profits from
retail sales. Gross profit margins for prepared foods items, which have
averaged approximately 53% during the last three fiscal years, are
significantly higher than the gross profit margin for retail sales of gasoline,
which has averaged approximately 9% during such period.
Store Design
Casey's General Stores are free-standing and, with a few exceptions to
accommodate local conditions, conform to standard construction specifications.
During the fiscal year ended April
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30, 1994, the aggregate investment in the land, building, equipment and initial
inventory for a typical Company Store averaged approximately $600,000. The
standard building designed by the Company is a pre-engineered steel frame
building mounted on a concrete slab. The current store design measures 36 feet
by 66 feet, with approximately 1,300 square feet devoted to sales area, 500
square feet to kitchen space and 575 square feet to storage. Store lots have
sufficient frontage and depth to permit adequate drive-in parking facilities on
one or more sides of each store. Each store typically includes two islands of
gasoline dispensers and storage tanks having a capacity of 20,000 to 30,000
gallons of gasoline. The merchandising display in each store follows a
standard layout designed to encourage a flow of customer traffic through all
sections of the store. All stores are air conditioned and have modern
refrigeration facilities. The store locations feature the Company's bright red
and yellow pylon sign and facade, both of which display the name and service
mark of the Company.
All Casey's General Stores remain open at least 16 hours per day,
seven days a week. Most store locations are open from 6:00 a.m. to 11:00 p.m.,
although hours of operation may be adjusted on a store-by-store basis to
accommodate customer traffic patterns. The Company requires that all stores
maintain a bright, clean store interior and provide prompt check-out service.
It is the Company's policy not to permit the installation of electronic games
or sale of adult magazines on store premises.
Store Locations
The Company traditionally has located its stores in small towns not
served by national-chain convenience stores. Approximately 75% of all stores
operate in areas with populations of fewer than 5,000 persons, while
approximately 6% of all stores are located in communities with populations
exceeding 20,000 persons. The Company believes that a Casey's General Store
provides a service not otherwise available in small towns, and that a
convenience store in an area with limited population can be profitable if it
stresses sales volume and competitive prices. The Company's store site
selection criteria emphasize the population of the immediate area and daily
highway traffic volume. Management believes that, if there is no competing
store, a Casey's General Store may operate profitably at a highway location in
a community with a population of as few as 500 persons.
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Gasoline Operations
Gasoline sales are an important part of the Company's sales and
earnings. Approximately 52% of Casey's net sales for the year ended April 30,
1994 were derived from the retail sale of gasoline. The following table
summarizes gasoline sales by Company Stores for the three fiscal years ended
April 30, 1994:
YEAR ENDED APRIL 30,
--------------------
1992 1993 1994
---- ---- ----
Number of
Gallons Sold 289,456,103 336,192,288 375,962,172
Total Retail
Gasoline Sales $302,201,644 $351,361,731 $377,807,750
Percentage of 49.8% 52.2% 51.7%
Net Sales
Gross Profit 8.2% 8.2% 10.1%
Percentage
Average Retail
Price per Gallon $1.04 $1.05 $1.00
Average Gross Profit
Margin per Gallon 8.60 cents 8.55 cents 10.12 cents
Average Number of
Gallons Sold per
Company Store * 492,115 540,999 570,253
* Includes only those stores that had been in operation for at least one
full year before commencement of the periods indicated.
Retail prices of gasoline decreased slightly during the year ended
April 30, 1994. However, the total number of gallons sold by the Company
during this period increased, primarily as the result of the increased number
of Company Stores in operation and the Company's efforts to price its retail
gasoline competitively in the market area served by the particular store. See
"BUSINESS--Store Operations--Competition" and "LEGAL PROCEEDINGS" herein. As a
result of these conditions, total retail gasoline sales by the Company
increased during the period, while the percentage of such sales to the
Company's total net sales decreased slightly.
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Retail gasoline profit margins have a substantial impact on the
Company's net income. Profit margins on gasoline sales can be adversely
affected by factors beyond the control of the Company, including over-supply in
the retail gasoline market, uncertainty or volitility in the wholesale gasoline
market (such as that experienced during 1991 as a result of the Persian Gulf
crisis) and price competition from other gasoline marketers. Any substantial
decrease in profit margins on gasoline sales or number of gallons sold could
have a material adverse effect on the Company's earnings.
The Company purchases its gasoline from independent national and
regional petroleum distributors. Although in recent years the Company's
suppliers have not experienced any difficulties in obtaining sufficient amounts
of gasoline to meet the Company's needs, unanticipated national and
international events could result in a reduction of gasoline supplies available
for distribution to the Company. A substantial curtailment in gasoline
supplied to the Company could adversely affect the Company by reducing gasoline
sales. Further, management believes that a significant amount of the Company's
business results from the patronage of customers primarily desiring to purchase
gasoline and, accordingly, reduced gasoline supplies could adversely affect the
sale of non-gasoline items. These factors could have a material adverse impact
upon the Company's earnings and operations.
DISTRIBUTION AND WHOLESALE ARRANGEMENTS
The Company supplies all Company Stores and over 90% of the Franchised
Stores with groceries, food (including sandwiches prepared at the Company's
commissary), health and beauty aids and general merchandise from the Casey's
Distribution Center. The stores place orders for merchandise through a
telecommunications link-up to the computer at the Company's headquarters in
Ankeny, and weekly shipments are made from the Casey's Distribution Center by
36 Company-owned delivery trucks. The Company charges Franchised Stores
processing and shipping fees for each order filled by the Casey's Distribution
Center. The efficient service area of the Casey's Distribution Center is
approximately 500 miles, which encompasses all of the Company's existing and
proposed stores.
The Company's only wholesale sales are to Franchised Stores, to which
it sells groceries, prepared sandwiches, ingredients and supplies for donuts,
sandwiches and pizza, health and beauty aids, general merchandise and gasoline.
Although Casey's derives income from this activity, it makes such sales,
particularly gasoline sales, at narrow profit
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margins in order to promote the competitiveness and increase the sales to
Franchised Stores.
In fiscal 1994, the Company purchased directly from manufacturers
approximately 90% of the food and non-food items sold from the Casey's
Distribution Center. The Company has not entered into contracts with any of
the suppliers of products sold by Casey's General Stores. Management believes
that the absence of such contracts is customary in the industry for purchasers
such as the Company and enables Casey's to respond flexibly to changing market
conditions.
FRANCHISE OPERATIONS
The Company has franchised Casey's General Stores since 1970. In
addition to generating income for the Company, franchising historically enabled
Casey's to obtain desirable store locations from persons who have preferred to
become franchisees rather than to sell or lease their locations to the Company.
Franchising also enabled the Company to expand its system of stores at a faster
rate, thereby achieving operating efficiencies in its warehouse and
distribution system as well as greater identification in its market area. As
Casey's has grown and strengthened its financial resources, the advantages of
franchising have decreased in importance and the Company currently grants new
franchises only to existing franchisees on a limited basis. From April 30,
1983 to April 30, 1994, the percentage of Company Stores increased from 44% to
78%. From inception to April 30, 1994, the Company had converted 135
Franchised Stores to Company Stores by leasing or purchasing such stores.
All franchisees pay the Company a royalty fee equal to 3% of gross
receipts derived from total store sales excluding gasoline, subject to a
minimum monthly royalty of $300. The Company currently assesses a royalty fee
of $.018 per gallon on gasoline sales, although it has discretion to increase
this amount to 3% of retail gasoline sales. In addition, franchisees pay the
Company a sign and facade rental fee. The franchise agreements do not
authorize the Company to establish the prices to be charged by franchisees.
Further, except with respect to certain supplies and items provided in
connection with the opening of each store, each franchisee has unlimited
authority to purchase supplies and inventory from any supplier, provided the
products meet the Company's quality standards. Each franchise agreement
contains a non-competition clause that restricts the franchisee's ability to
operate a convenience-style store in that area for a period of two or three
years following termination of the agreement. See
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"BUSINESS - Government Regulation" herein for a discussion of recent
legislation in Iowa concerning franchise agreements.
PERSONNEL
On April 30, 1994, the Company had 2,880 full-time employees and 4,393
part-time employees. The Company has not experienced any work stoppages.
There are no collective bargaining agreements between the Company and any of
its employees.
The Company's supervisory personnel are responsible for monitoring and
assisting all stores, including Franchised Stores. Centralized control of
store operations is primarily maintained by the Chief Operating Officer of the
Company, who is assisted by the Vice President of Store Operations. Reporting
directly to the Vice President of Store Operations are four regional operations
managers. Reporting directly to the regional managers are 15 district
managers, each with responsibility over approximately equal numbers of stores.
Each district manager is generally in charge of seven supervisors. Each of the
112 supervisors in turn is responsible for the operations of approximately
eight individual stores.
The majority of store managers and store personnel live in the
community in which their Casey's store is located. Training of store managers
and store personnel is conducted through the Store Operations Training
Department overseen by the Director of Store Operations Training. The Company
operates a central training facility at its Headquarters facility in Ankeny and
provides continuing guidance and training in the areas of merchandising,
advertising and promotion, administration, record keeping, accounting,
inventory control and other general operating and management procedures.
As an incentive to the Company's employees and those of franchisees,
management stresses an internal promotion philosophy. Most district managers
and store supervisors previously worked as store managers. At the senior
management level, one of the Company's executive officers has been employed by
the Company for more than eighteen years, one has been employed for more than
twenty-two years and one has been employed for more than twenty-six years.
In addition to its four executive officers, the Company has Vice
Presidents of Store Operations, Property Management, Transportation, Food
Service and Marketing. The Company also has 30 other employees with managerial
responsibilities in the areas of store operations, gasoline marketing, real
estate development, construction, equipment maintenance, merchandising,
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advertising, Distribution Center operations, payroll, accounting and data
processing. The Company believes that such employees are capable of carrying
out their responsibilities without substantial supervision by the executive
officers.
COMPETITION
The Company's business is highly competitive. Food, including
prepared foods, and non-food items similar or identical to those sold by the
Company are generally available from various competitors in the communities
served by Casey's General Stores. Management believes that its stores located
in small towns compete principally with local convenience stores, grocery
stores and similar retail outlets and, to a lesser extent, with prepared food
outlets or restaurants and expanded gasoline stations offering a more limited
selection of grocery and food items for sale. Stores located in more heavily
populated communities may compete with local and national grocery and drug
store chains, expanded gasoline stations, supermarkets, discount food stores
and traditional convenience stores. Convenience store chains competing in the
larger towns served by Casey's General Stores include 7-Eleven, Kwik Shops, and
regional chains. Some of the Company's competitors have greater financial and
other resources than the Company.
Gasoline sales, in particular, are intensely competitive. The Company
competes with both independent and national brand gasoline stations, some of
which may have access to more favorable arrangements for gasoline supply than
do the Company or the firms that supply its stores. Management believes that
the most direct competition for gasoline sales comes from other self-service
installations in the vicinity of individual store locations, some of whom
regularly offer non-cash discounts on self-service gasoline purchases such as a
"free" car wash or "mini-service." Company Stores generally do not offer such
discounts. In addition, management believes that Company Stores compete for
gasoline customers who regularly travel outside of their relatively smaller
community for shopping or employment purposes, and who therefore are able to
purchase gasoline while in nearby larger communities where retail gasoline
prices generally are lower. For this reason, the Company attempts to offer
gasoline for sale at prices comparable to those prevailing in nearby larger
communities. See "LEGAL PROCEEDINGS" herein.
The Company believes that the competitiveness of Casey's General
Stores is based on price (particularly in the case of gasoline sales) as well
as on a combination of store location, extended hours, a wide selection of name
brand products, self-service gasoline facilities and prompt check-out service.
The Company also believes it is important to its business to
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maintain a bright, clean store and to offer quality products for sale.
SERVICE MARKS
The name "Casey's General Store" and the service mark consisting of
the Casey's design logo (with the words "Casey's General Store") are registered
service marks of the Company under federal law. The Company believes that
these service marks are of material importance in promoting and advertising the
Company's business.
GOVERNMENT REGULATION
The United States Environmental Protection Agency and several states,
including Iowa, have established requirements for owners and operators of
underground gasoline storage tanks ("USTs") with regard to (i) maintenance of
leak detection, corrosion protection and overfill/spill protection systems,
(ii) upgrade of existing tanks, (iii) actions required in the event of a
detected leak, (iv) prevention of leakage through tank closings and (v)
required gasoline inventory recordkeeping. Since 1984, new Company Stores have
been equipped with non-corroding fiberglass USTs, including some with
double-wall construction, over-fill protection and electronic tank monitoring,
and the Company has an active inspection and renovation program with respect to
its older USTs. The Company currently has 1,455 USTs of which 1,043 are
fiberglass and 412 are steel. Management believes that its existing gasoline
procedures and planned capital expenditures will continue to keep the Company
in substantial compliance with all current federal and state UST regulations.
Several of the states in which the Company does business have trust
fund programs with provisions for sharing or reimbursing corrective action or
remediation costs incurred by UST owners, including the Company. These
programs, other than the State of Iowa's, generally are in the early stages of
operation and the extent of available coverage or reimbursement under such
programs for costs incurred by the Company is not fully known at this time. In
each of the years ended April 30, 1993 and 1994, the Company spent
approximately $2,533,000 and $1,814,000, respectively, for assessments and
remediation. Substantially all of these expenditures have been submitted for
reimbursement from state-sponsored trust fund programs, and, as of June 30,
1994, approximately $3,000,000 has been received from such programs. The
Company has accrued a liability at April 30, 1994, of approximately $3,200,000
for estimated expenses related to anticipated corrective actions or remediation
efforts, including relevant legal and consulting
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costs. Management believes the Company has no material joint and several
environmental liability with other parties.
Management of the Company currently estimates that aggregate capital
expenditures for electronic monitoring, cathodic protection and overfill/spill
protection will approximate $2,000,000 in fiscal 1995 through December 23,
1998, in order to comply with the existing UST regulations. Additional
regulations, or amendments to the existing UST regulations, could result in
future revisions to such estimated expenditures.
The Federal Trade Commission and some states have adopted laws
regulating franchise operations. Existing laws generally require certain
disclosures and/or registration in connection with the sale of the franchises,
and regulate certain aspects of the relationship with franchisees, such as
rights of termination, renewal and transfer. Management believes that the
Company is duly registered in all states where its present operations require
such registration. Management does not believe that the existing state
registration and disclosure requirements, or the federal disclosure
requirements, have a material effect on the Company's operations.
During the 1992 legislative session, the Iowa General Assembly enacted
legislation relating to franchise agreements and their enforcement and
establishing certain duties and limitations on franchisors. The legislation,
which became effective July 1, 1992, applies to all new or existing franchises
that are operated in the State of Iowa, including those of the Company. The
legislation contains, among other things, provisions regarding the transfer of
franchises, the termination or nonrenewal of franchises, and the encroachment
on existing franchises. Several such provisions conflict with those contained
in existing franchise agreements entered into by the Company with respect to
stores located in the State of Iowa. As a result, several provisions of the
Company's existing franchise agreements may not be enforceable under the
legislation. Although bills have subsequently been introduced that would
modify or repeal certain provisions of the legislation, it was not amended
during the most recent session of the General Assembly.
On May 14, 1993, in an unrelated proceeding brought by other
franchisors operating in Iowa, the United States District Court for the
Southern District of Iowa ruled that certain provisions of the legislation
(those which make the legislation applicable to franchises existing before its
effective date and those provisions governing the transfer of franchises,
encroachment, termination, and non-renewal) substantially
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impair, in violation of the United States and Iowa Constitutions, the
franchisor-plaintiffs' contractual rights under their license agreements with
certain Iowa franchisees. The Court made no ruling on the constitutionality of
the legislation as applied to franchise agreements entered into or renewed
after the effective date of the legislation. The Company understands that the
Court's ruling was recently affirmed by the Eighth Circuit Court of Appeals.
The Company has entered into two new franchise agreements in Iowa since the
enactment of the legislation, and management does not expect the legislation to
have a material effect on the Company's business.
ITEM 2. PROPERTIES
The Company owns and has consolidated its Corporate Headquarters and
Distribution Center operations on a 36-acre site in Ankeny, Iowa. This
facility consists of approximately 255,000 square feet, including a central
Corporate Headquarters office building, expanded Distribution Center and
vehicle service/maintenance center. The facility was completed in February
1990 and placed in full service at that time.
The Company owns an approximately 10,000 square-foot building on an
eight-acre site in Creston, Iowa that it utilizes as a sandwich commissary
center for the preparation of sandwiches sold in Casey's General Stores.
On April 30, 1994, Casey's owned the land at 557 locations and the
buildings at 574 locations, and leased the land at 130 locations and the
buildings at 113 locations. Most of the leases provide for the payment of a
fixed rent, plus property taxes and insurance and maintenance costs.
Generally, the leases are for terms of 10 to 20 years, with options to renew
for additional periods or options to purchase the leased premises at the end of
the lease period.
The Company leases approximately 16,800 square feet of office and
warehouse space at 1299 N.E. Broadway Avenue, Des Moines, Iowa, which was used
as its principal offices and corporate headquarters until the new Corporate
Headquarters facility became available in February 1990. See "Other
Information Relating to Directors and Executive Officers - Certain
Transactions" in the Company's Proxy Statement dated August 15, 1994 for a
description of the terms of the Company's lease of such space.
ITEM 3. LEGAL PROCEEDINGS
The Company is the sole defendant in a class action lawsuit brought by
five Iowa retail gasoline dealers and a trade association representing
independent distributors and retailers
- 15 -
18
of gasoline products within the State of Iowa, acting on behalf of a class of
such dealers. The Amended and Substituted Complaint - Class Action (the
"Bathke Complaint"), filed in the United States District Court for the Southern
District of Iowa (Gilbert Bathke, et. al. v. Casey's General Stores, Inc.,
Civil No. 4-90-CV-80658), alleges that by selling gasoline at "very low prices
which are supported by higher prices charged for the same petroleum products in
other markets," the Company violated federal anti-trust laws (specifically,
Section 2(a) of the Robinson-Patman Act and Section 2 of the Sherman Act) and
State of Iowa unfair price discrimination laws. The Bathke Complaint seeks as
relief a permanent injunction enjoining such practices, unspecified monetary
damages (to be trebled as provided by law) and attorneys' fees.
In its Answer to the Bathke Complaint, the Company denied the material
allegations included therein and raised several affirmative defenses to said
allegations. The Company initially attempted to have the case dismissed on
jurisdictional grounds, but the Company's motion to that effect was overruled
in an Order dated March 31, 1992.
The Court granted plaintiffs' request to certify the lawsuit as a
class action and the Company understands that approximately 50 potential class
members formally elected out of the litigation. A number of the remaining
class members ultimately may be excluded from the class by reason of
non-compliance with discovery requests or at their own request. As a result,
the precise number of class members cannot be ascertained at this time.
Management currently believes that the class as certified for purposes of trial
will most likely include approximately 165 members.
All formal discovery activities (including depositions of class
members) were recently completed and on July 13, 1994 the Company filed a
motion for summary judgment seeking the dismissal of all counts of the Bathke
Complaint. The Company maintains, among other arguments, that plaintiffs
cannot establish liability by "common proof", that the record shows no evidence
of the requisite predatory intent, that it has not been shown that the
Company's prices were below the appropriate measure of cost, that plaintiffs
have not borne their burden to show recoupment and that the record contains
insufficient evidence of antitrust injury and damages. The Company also filed
alternative motions to dismiss with prejudice as to certain class members who
did not respond to discovery requests and to decertify the class action. Oral
argument on the Company's motions is expected to be held on August 5, 1994.
Trial is currently set to begin on October 17, 1994.
- 16 -
19
Management does not believe that the Company is liable to plaintiffs
for the conduct complained of and intends to contest the matter vigorously.
The Company from time to time is a party to other legal proceedings
arising from the conduct of its business operations, including proceedings
relating to personal injury and employment claims, disputes under franchise
agreements and claims by state and federal regulatory authorities relating to
the sale of products pursuant to state or federal licenses or permits.
Management does not believe that the potential liability of the Company with
respect to such other proceedings pending as of the date of this Form 10-K is
material in the aggregate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information required in response to this Item is incorporated
herein by reference from the section entitled "Common Stock Data" set forth on
page 24 of the Company's Annual Report for the year ended April 30, 1994.
The cash dividends declared by the Company (adjusted to give effect to
the two-for-one stock split distributed on February 15, 1994) during the
periods indicated have been as follows:
Cash Dividend
Declared
-------------
Calendar 1992
-------------
First Quarter $.015
Second Quarter .015
Third Quarter .015
Fourth Quarter .015
----
$.06
- 17 -
20
Calendar 1993
-------------
First Quarter $.015
Second Quarter .01875
Third Quarter .01875
Fourth Quarter .01875
-------
$.07125
Calendar 1994
-------------
First Quarter $.01875
Second Quarter .02
ITEM 6. SELECTED FINANCIAL DATA
The information required in response to this Item is incorporated
herein by reference from the section entitled "Selected Financial Data" set
forth on page 23 of the Company's Annual Report for the year ended April 30,
1994.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required in response to this Item is incorporated
herein by reference from pages 18 through 22 of the Company's Annual Report for
the year ended April 30, 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required in response to this Item is incorporated
herein by reference from pages 8 through 17 and page 24 of the Company's Annual
Report for the year ended April 30, 1994.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required in response to this Item is incorporated by
reference from the section entitled "Election of Directors" set forth on pages
4 through 7 of the Company's Proxy Statement dated August 15, 1994.
- 18 -
21
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this Item is incorporated
herein by reference from that portion of the section entitled "Executive
Compensation" set forth on pages 13 through 17 of the Company's Proxy Statement
dated August 15, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required in response to this Item is incorporated
herein by reference from the sections entitled "Shares Outstanding" and "Voting
Procedures", set forth on pages 2 and 3 of the Company's Proxy Statement dated
August 15, 1994, and from the section entitled "Beneficial Ownership of Shares
of Common Stock By Directors and Executive Officers" set forth on pages 8 and 9
thereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this Item is incorporated
herein by reference from the section entitled "Other Information Relating to
Directors and Executive Officers" set forth on pages 18 and 19 of the Company's
Proxy Statement dated August 15, 1994.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) DOCUMENTS FILED
The documents listed below are filed as a part of this Report on Form 10-K
and are incorporated herein by reference:
(1) The following financial statements, shown on pages 8 through 17
of the Company's Annual Report for the year ended April 30, 1994:
Balance Sheets, April 30, 1994 and 1993
Statements of Income, Three Years Ended April 30, 1994
Statements of Shareholders' Equity, Three Years
Ended April 30, 1994
Statements of Cash Flows,
Three Years Ended April 30, 1994
Notes to Financial Statements
Independent Auditors' Report
- 19 -
22
(2) The financial statement schedules set forth in Item 14(d) of this
report.
(3) The exhibits set forth in Item 14(c) of this report. The
management contracts or compensatory plans or arrangements
required to be filed as an exhibit to this Form 10-K pursuant to
Item 14(c) consist of the following:
Exhibit Number Document
-------------- --------
10.4(a) Fifth Amended and Restated
Casey's General Stores, Inc.
Employees' Stock Ownership
Plan and Trust Agreement (g)
10.19 Casey's General Stores, Inc.
1991 Incentive Stock Option
Plan (j) and amendment
thereto (o)
10.21 Employment Agreement with
Donald F. Lamberti (l)
10.22 Employment Agreement with
Ronald M. Lamb (l)
10.23 Employment Agreement with
Douglas K. Shull (l)
10.24 Employment Agreement with
John G. Harmon
____________________
(g) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1989.
(j) Incorporated by reference from the Registration Statement on Form S-8
(33-42907) filed September 23, 1991.
(l) Incorporated by reference from the Quarterly Report on Form 10-Q for
the fiscal quarter ended January 31, 1992.
(o) Incorporated by reference from the Quarterly Report on Form 10-Q for
the fiscal quarter ended January 31, 1994.
- 20 -
23
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the fiscal quarter ended April
30, 1994.
(c) EXHIBITS
Exhibit
Number Document
------ --------
3.1 Restated and Amended Articles of Incorporation (a) and
Amendments thereto (b), (d), (f)
3.2 Amended and Restated By-Laws (h)
4.2 Rights Agreement between Casey's General Stores, Inc. and
United Missouri Bank of Kansas City, N.A., as Rights Agent,
relating to Common Share Purchase Rights (e) and amendments
thereto (i), (p)
4.3 Note Agreement between Casey's General Stores, Inc. and
Principal Mutual Life Insurance Company and Nippon Life
Insurance Company of America (n)
9 Voting Trust Agreement (a) and Amendment thereto (d)
10.4(a) The Fifth Amended and Restated Casey's General Stores, Inc.
Employees' Stock Ownership Plan and Trust Agreement (g)
10.6 Lease Agreement between Casey's General Stores, Inc. and
Broadway Distributing Company (a)
10.8 Form of Franchise Agreement (a)
10.9 Form of Store Lease Agreement (a)
10.10 Form of Equipment Lease Agreement (a)
10.16 Secured Promissory Note dated November 30, 1989 given to
Principal Mutual Life Insurance Company (f)
10.18 Commercial Note with Norwest Bank Iowa, N.A.(k)
10.19 Casey's General Stores, Inc. 1991 Incentive Stock Option Plan
(j) and amendment thereto (o)
10.21 Employment Agreement with Donald F. Lamberti (l)
10.22 Employment Agreement with Ronald M. Lamb (l)
10.23 Employment Agreement with Douglas K. Shull (l)
10.24 Employment Agreement with John G. Harmon
10.25 Term Loan Agreement and Current Note with Norwest Bank Iowa,
N.A. (m)
10.26 Loan Agreement and Commercial Note with Peoples Trust and
Savings Bank (m)
- 21 -
24
11 Statement regarding computation of earnings per share
13 Financial Statements from 1994 Annual Report
24.1 Report and Consent of KPMG Peat Marwick
- - -----------------------------------------------
(a) Incorporated herein by reference from the Registration Statement on
Form S-1 (2-82651) filed August 31, 1983.
(b) Incorporated herein by reference from the Annual Report on Form 10-K
for the fiscal year ended April 30, 1986 (0-12788).
(c) Reserved.
(d) Incorporated herein by reference from the Quarterly Report on Form
10-Q for the fiscal quarter ended January 31, 1988 (0-12788).
(e) Incorporated herein by reference from the Registration Statement on
Form 8-A filed June 19, 1989 (0-12788).
(f) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended October 31, 1989.
(g) Incorporated by reference from the Annual Report on Form 10-K for
the fiscal year ended April 30, 1989.
(h) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended July 31, 1989.
(i) Incorporated by reference from the Form 8 (Amendment No. 1 to the
Registration Statement on Form 8-A filed June 19, 1989) filed
September 10, 1990.
(j) Incorporated by reference from the Registration Statement on Form S-8
(33-42907) filed September 23, 1991.
(k) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1991.
(l) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended January 31, 1992.
(m) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1992.
(n) Incorporated by reference from the Current Report on Form 8-K filed
February 18, 1993.
- 22 -
25
(o) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended January 31, 1994.
(p) Incorporated by reference from the Form 8-A/A (Amendment No. 3 to the
Registration Statement on Form 8-A filed June 19, 1989) filed
March 30, 1994.
(D) FINANCIAL STATEMENT SCHEDULES
Schedule V - Property, Plant and Equipment
Schedule VI - Accumulated Depreciation,
Depletion and Amortization of Property,
Plant and Equipment
Schedule IX - Short-Term Borrowings
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
- 23 -
26
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: July 25, 1994 By /s/ Donald F. Lamberti
Donald F. Lamberti,
Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
- 24 -
27
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: July 25, 1994 By /s/ Donald F. Lamberti
---------------------------
Donald F. Lamberti
Chief Executive Officer,
Chairman of the Board
(Principal Executive Officer)
Date: July 25, 1994 By /s/ Ronald M. Lamb
---------------------------
Ronald M. Lamb
President and Chief
Operating Officer,
Director
Date: July 25, 1994 By /s/ Douglas K. Shull
---------------------------
Douglas K. Shull
Treasurer, Director
(Principal Financial Officer and
Principal Accounting Officer)
Date: July 25, 1994 By /s/ John G. Harmon
---------------------------
John G. Harmon
Secretary, Director
Date: July 26, 1994 By /s/ George A. Doerner
---------------------------
George A. Doerner
Director
Date: July 26, 1994 By /s/ Kenneth H. Haynie
---------------------------
Kenneth H. Haynie
Director
Date: July 26, 1994 By /s/ John R. Fitzgibbon
---------------------------
John R. Fitzgibbon
Director
Date: July 25, 1994 By /s/ Jack P. Taylor
---------------------------
Jack P. Taylor
Director
- 25 -
28
CASEY'S GENERAL STORES, INC.
_____________________________
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
Column A Column B Column C Column D Column E Column F
- - -------- -------- -------- -------- -------- --------
Balance at Other Balance
beginning Additions changes - at end
Classification of period at cost Retirements add (deduct) of period
- - -------------- --------- --------- ----------- ------------ ---------
Year ended
April 30, 1994
Land $ 27,596,097 7,211,027 28,917 -- 34,778,207
Buildings and
leasehold
improvements 106,098,220 25,811,874 378,654 -- 131,531,440
Machinery and
equipment 148,223,940 30,789,051 2,937,280 (55,658) 176,020,053
Leasehold
interest
in property
and equipment 11,707,337 3,264,222 992,000 -- 13,979,559
----------- ---------- ---------- ----------- -----------
$293,625,594 $67,076,174 $ 4,336,851 $ (55,658) $356,309,259
----------- ---------- ---------- ----------- -----------
Year ended
April 30, 1993
Land $ 21,539,035 6,057,062 -- -- 27,596,097
Buildings and
leasehold
improvements 87,525,756 19,340,804 768,340 -- 106,098,220
Machinery and
equipment 124,948,783 25,999,010 2,668,299 (55,554) 148,223,940
Leasehold
interest
in property
and equipment 12,362,872 -- 655,535 -- 11,707,337
----------- ---------- ---------- ----------- -----------
$246,376,446 $51,396,876 $ 4,092,174 $ (55,554) $293,625,594
----------- ---------- ---------- ----------- -----------
Year ended
April 30, 1992
Land $ 17,890,067 $ 3,703,655 $ 54,687 $ -- $ 21,539,035
Buildings and
leasehold
improvements 76,479,998 11,405,077 359,319 -- 87,525,756
Machinery and
equipment 107,050,428 20,279,480 1,614,626 (766,499)(A) 124,948,783
Leasehold
interest
in property
and equipment 13,615,372 -- 1,252,500 -- 12,362,872
----------- ---------- ---------- ---------- -----------
$215,035,865 $35,388,212 $3,281,132 $ (766,499) $246,376,446
----------- ---------- --------- ----------- -----------
(A) Certain equipment reclassified at depreciated cost.
29
CASEY'S GENERAL STORES, INC.
____________________________________
SCHEDULE VI. ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Column A Column B Column C Column D Column E Column F
- - -------- -------- -------- -------- -------- --------
Additions
Balance at charged to Other Balance
beginning costs and changes - at end
Description of period expenses Retirements add (deduct) of period
- - ----------- --------- --------- ----------- ------------ ---------
Year ended
April 30, 1994
Buildings and
leasehold
improvements $15,276,157 $ 3,908,621 $ 143,387 $ -- $19,041,391
Machinery and
equipment 56,151,304 13,613,035 1,849,711 (55,658) 67,858,970
Leasehold
interest
in property
and equipment 4,816,794 883,433 666,500 -- 5,033,727
---------- ---------- --------- ----------- ----------
$76,244,255 $18,405,089 $2,659,598 $ (55,658) $91,934,088
---------- ---------- --------- ----------- ----------
Year ended
April 30, 1993
Buildings and
leasehold
improvements $12,216,231 3,217,884 157,958 -- 15,276,157
Machinery and
equipment 46,041,112 11,558,251 1,392,505 (55,554) 56,151,304
Leasehold
interest
in property
and equipment 4,561,103 714,426 458,735 -- 4,816,794
---------- ---------- --------- ----------- ----------
$62,818,446 $15,490,561 $2,009,198 $ (55,554) $76,244,255
---------- ---------- --------- ----------- ----------
Year ended
April 30, 1992
Buildings and
leasehold
improvements $ 9,716,004 $ 2,649,034 $ 148,807 $ -- $12,216,231
Machinery and
equipment 37,955,535 9,816,858 964,782 (766,499)(A) 46,041,112
Leasehold
interest
in property
and equipment 4,667,051 786,091 892,039 -- 4,561,103
---------- ---------- --------- ----------- ----------
$52,338,590 $13,251,983 $2,005,628 $( 766,499) $62,818,446
---------- ---------- --------- ----------- -----------
(A) Certain equipment reclassified at depreciated cost.
30
CASEY'S GENERAL STORES, INC.
_____________________________
SCHEDULE IX. SHORT-TERM BORROWINGS
Column A Column B Column C Column D Column E Column F
- - -------- -------- -------- -------- -------- --------
Weighted
Maximum Average average
Weighted amount amount interest
Category of Balance average outstanding outstanding rate
aggregate short- at end interest during the during the during the
term borrowings of period rate period period (A) period (B)
- - --------------- --------- --------- ----------- ----------- -------------
April 30, 1994
Notes Payable,
banks $18,500,000 4.48% $25,000,000 $17,425,616 4.01%
April 30, 1993
Notes Payable,
banks $12,750,000 3.83% $20,000,000 $12,653,425 4.04%
April 30, 1992
Notes Payable,
banks $7,000,000 4.77% $15,000,000 $5,313,934 5.59%
_________________________
(A) The average was calculated based on the daily average outstanding balance.
(B) The weighted average was computed by dividing related interest expense by
the average short-term borrowings outstanding.
31
EXHIBIT INDEX
Exhibit No. Description Page
- - ----------- ----------- ----
10.24 Employment Agreement with
John G. Harmon
11 Statement regarding computation
of earnings per share
13 Financial Statements from
1994 Annual Report
24.1 Report and Consent of
KPMG Peat Marwick