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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, 1995
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 19, 1995, the Company had 26,075,156
shares of Common Stock, no par value, issued and outstanding. The aggregate
market value of the 20,960,695 shares of Common Stock stock held by
non-affiliates of the Company on that date was $385,152,770, based on a last
reported sales price of $18-3/8 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, 1995 (Items 5, 6, 7
and 8 of Part II and Item 14(a) of Part IV).
2. Proxy Statement to be filed with the Securities and Exchange
Commission in connection with the Annual Meeting of Shareholders to be held on
September 15, 1995 (Item 2 of Part I and Items 10, 11, 12 and 13 of Part III).
3
PART I
ITEM 1. BUSINESS
The Company
Casey's General Stores, Inc. ("Casey's") and its two wholly-owned
subsidiaries, Casey's Marketing Company (the "Marketing Company") and Casey's
Services Company (the "Services Company") (Casey's, together with the Marketing
Company and the Services Company, shall be referred to herein as the
"Company"), operate convenience stores under the name "Casey's General Store"
in nine Midwestern states, primarily Iowa, Missouri and Illinois. The stores
carry a broad selection of food (including freshly prepared foods such as
pizza, donuts and sandwiches), beverages, tobacco products, health and beauty
aids, automotive products and other non-food items. In addition, all stores
offer gasoline for sale on a self-service basis. On April 30, 1995, there were
a total of 927 Casey's General Stores in operation, of which 741 were operated
by the Company ("Company Stores") and 186 stores were operated by franchisees
("Franchised Stores"). There were 60 Company Stores and 3 Franchised Stores
newly opened in fiscal 1995. 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 74% 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.
Casey's, with executive offices at One Convenience Blvd., Ankeny, Iowa
50021-8045 (telephone 515/965-6100) was incorporated in Iowa in 1967. The
Marketing Company and the Services Company also operate from the Corporate
Headquarters facilities, and were incorporated in Iowa in March 1995.
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
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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.
In each of the past two fiscal years, the Company derived
approximately 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, 1995:
COMPANY FRANCHISED
STATE STORES STORES TOTAL
----- ------ ------ -----
Iowa . . . . . . . 219 89 308
Illinois . . . . . 176 32 208
Indiana . . . . . . 1 0 1
Kansas . . . . . . 69 5 74
Minnesota . . . . . 37 16 53
Missouri . . . . . 184 33 217
Nebraska . . . . . 36 9 45
South Dakota . . . 19 0 19
Wisconsin . . . . . 0 2 2
--- --- ---
Total . . . 741 (80%) 186 (20%) 927 (100%)
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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.
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
- ----------- ------ --------- ------------
1991
Company . . . 14 3 579 (1)
Franchised . . 4 (3) 202 (1)
-- ---
Total . . 18 781
1992
Company . . . 23 2 597 (2)
Franchised . . 3 (2) 202 (2)
-- ---
Total . . 26 799
1993
Company . . . 36 10 639 (3)
Franchised . . 1 (10) 187 (3)
-- ---
Total . . 37 826
1994
Company . . . 56 1 687 (4)
Franchised . . 4 (1) 189 (4)
-- ---
Total . . 60 876
1995
Company . . . 60 0 741 (5)
Franchised . . 3 (0) 186 (5)
-- ---
Total . . 63 927
______________
(1) Four Company Stores and two Franchised Stores were closed in 1991.
(2) Seven Company Stores and one Franchised Store were closed in 1992.
(3) Four Company Stores and six Franchised Stores were closed in 1993.
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(4) Nine Company Stores and one Franchised Store were closed in 1994.
(5) Six Company Stores and six Franchised Stores were closed in 1995.
Eleven Company Stores were opened in May and June 1995 and 39 Company
Stores and one Franchised Store were under construction at June 30, 1995. On
June 30, 1995, the Company had purchased or had the right to purchase 56
additional store sites. All but two of the 96 stores under construction or
planned for construction on such sites will be Company Stores. Management
anticipates opening approximately 65 new Company Stores during fiscal 1996,
substantially all of which will be located in Iowa, Illinois and Minnesota.
Seven such stores are expected to be located in Indiana, continuing the
Company's 1994 expansion of its market area into that state.
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 1993, 1994 and
1995, the Company converted 10, 1 and 0 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
1,000 to 1,500 stores located within a 500-mile radius of the Casey's
Distribution Center, which would include the additional store sites being
planned for 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.
Corporate Subsidiaries
The Marketing Company and the Services Company were organized as Iowa
corporations in March 1995, and both are wholly-owned subsidaries of Casey's.
Certain Casey's employees became employees of the Marketing Company or the
Services
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Company on May 1, 1995, and both of those subsidiaries assumed certain
responsibilities and functions formerly held by Casey's on that date.
Casey's now operates Company Stores in the States of Illinois, Kansas,
Minnesota, Nebraska and South Dakota. Casey's also holds the rights to the
Casey's trademark and trade name, and serves as franchisor in connection with
the operation of Franchised Stores. Effective May 1, 1995, the Marketing
Company assumed responsibility for the operation of Company Stores in the
States of Iowa, Indiana and Missouri. The Marketing Company also has
responsibility for all Company wholesale operations, including the operation of
the Casey's Distribution Center. The Services Company provides a variety of
construction and transportation services for all Company Stores. Both the
Marketing Company and Services Company personnel utilize the Corporate
Headquarters facility for their base of operations.
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 93%
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
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other items that have gross profit margins higher than those of general staple
goods. The Company also has introduced the sale of donuts prepared on store
premises, available in approximately 99% of the stores as of April 30, 1995, 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 2 million sandwiches during fiscal 1996,
for delivery to both Company and Franchised Stores through the Casey's
Distribution Center.
The Company began marketing made-from-scratch pizza in 1984, expanding
its availability to 877 (95%) stores as of April 30, 1995. Management believes
pizza is the Company's most popular prepared food product, although the Company
continues to expand its prepared food product line, which now includes ham and
cheese, 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 38 (4%)
stores as of April 30, 1995.
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.
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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 42% 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 30, 1995, the aggregate investment in the
land, building, equipment and initial inventory for a typical Company Store
averaged approximately $650,000. 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.
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Store Locations
The Company traditionally has located its stores in small towns not
served by national-chain convenience stores. Approximately 74% 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. Management believes that a Casey's General Store
provides a service not otherwise available in small towns, and that a
convenience store in an area with limited population can be profitable if it
stresses sales volume and competitive prices. The Company's store site
selection criteria emphasize the population of the immediate area and daily
highway traffic volume. Management believes that, if there is no competing
store, a Casey's General Store may operate profitably at a highway location in
a community with a population of as few as 500 persons.
Gasoline Operations
Gasoline sales are an important part of the Company's sales and
earnings. Approximately 54% of Casey's net sales for the year ended April 30,
1995 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, 1995:
YEAR ENDED APRIL 30,
--------------------
1993 1994 1995
---- ---- ----
Number of
Gallons Sold 336,192,288 375,962,172 429,629,280
Total Retail
Gasoline Sales $351,361,731 $377,807,750 $455,310,780
Percentage of 52.2% 51.7% 53.6%
Net Sales
Gross Profit 8.2% 10.1% 9.4%
Percentage
Average Retail
Price per Gallon $1.05 $1.00 $1.06
Average Gross Profit
Margin per Gallon 8.55(cents) 10.12(cents) 9.91(cents)
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Average Number of
Gallons Sold per
Company Store * 540,999 570,253 596,684
______________
* 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 increased during the year ended April 30,
1995. The total number of gallons sold by the Company during this period also
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, as did the percentage of such sales to the Company's total net sales.
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.
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Distribution and Wholesale Arrangements
The Marketing 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
40 Company-owned delivery trucks. The Marketing 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 Marketing 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 the Company derives income from this activity, it makes
such sales, particularly gasoline sales, at narrow profit margins in order to
promote the competitiveness and increase the sales to Franchised Stores.
In fiscal 1995, 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 the Company to respond flexibly to changing
market conditions.
Franchise Operations
Casey's has franchised Casey's General Stores since 1970. In addition
to generating income for Casey's, franchising historically enabled Casey's to
obtain desirable store locations from persons who have preferred to become
franchisees rather than to sell or lease their locations to Casey's.
Franchising also enabled Casey's to expand its system of stores at a faster
rate, thereby achieving operating efficiencies in its warehouse and
distribution system as well as greater identification in its market area. As
the Company has grown and strengthened its financial resources, the advantages
of franchising have decreased in importance and management currently expects to
grant new franchises only to existing franchisees operating in states other
than Iowa on a limited basis. See "BUSINESS - Government Regulation" herein.
From April 30, 1983 to April 30,
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1995, the percentage of Company Stores increased from 44% to 80%. From
inception to April 30, 1995, the Company had converted 135 Franchised Stores to
Company Stores by leasing or purchasing such stores.
All franchisees pay Casey's a royalty fee equal to 3% of gross
receipts derived from total store sales excluding gasoline, subject to a
minimum monthly royalty of $300. Casey's currently assesses a royalty fee of
$.018 per gallon on gasoline sales, although it has discretion to increase this
amount to 3% of retail gasoline sales. In addition, franchisees pay Casey's a
sign and facade rental fee. The franchise agreements do not authorize Casey's
to establish the prices to be charged by franchisees. Further, except with
respect to certain supplies and items provided in connection with the opening
of each store, each franchisee has unlimited authority to purchase supplies and
inventory from any supplier, provided the products meet the Company's quality
standards. Franchise agreements typically contain a 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 "BUSINESS - Government Regulation" herein for a discussion of
recent legislation in Iowa concerning franchise agreements.
Personnel
On April 30, 1995, the Company had 3,252 full-time employees and 4,783
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 16 district
managers, each with responsibility over approximately equal numbers of stores.
Each district manager is generally in charge of seven supervisors. Each of the
113 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
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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 nineteen years, one has been employed for more than
twenty-three years and one has been employed for more than twenty-seven years.
In addition to its four executive officers, the Company currently has
Vice Presidents of Store Operations, Property Management, Transportation, Food
Service and Marketing. The Company also has 33 other employees with managerial
responsibilities in the areas of store operations, gasoline marketing, real
estate development, construction, equipment maintenance, merchandising,
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
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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 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 Casey's under federal law. Management 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
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currently has 1,566 USTs of which 1,166 are fiberglass and 400 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, 1994 and 1995, the Company spent
approximately $1,814,000 and $2,137,000, 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,
1995, approximately $3,800,000 has been received from such programs. The
Company has accrued a liability at April 30, 1995, of approximately $3,300,000
for estimated expenses related to anticipated corrective actions or remediation
efforts, including relevant legal and consulting costs. Management believes
the Company has no material joint and several environmental liability with
other parties.
Management of the Company currently estimates that aggregate capital
expenditures for electronic monitoring, cathodic protection and overfill/spill
protection will approximate $1,000,000 in fiscal 1996 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
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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 Casey's. 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 Casey's with respect to stores located in the State of Iowa.
As a result, several provisions of Casey's existing franchise agreements may
not be enforceable under the legislation.
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 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 has been affirmed by the Eighth Circuit Court of Appeals.
Management does not expect Casey's to enter into new franchise agreements in
Iowa under the current legislation, and 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, 1995, Casey's owned the land at 611 locations and the
buildings at 629 locations, and leased the land at 130 locations and the
buildings at 112 locations. Most of the leases provide for the payment of a
fixed rent, plus property
- 15 -
18
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. Additional
information concerning the Company's lease of such space is set forth under the
caption "Other Information Relating to Directors and Executive Officers -
Certain Transactions" in the Company's definitive Proxy Statement to be filed
with the Commission pursuant to Regulation 14A within 120 days after April 30,
1995 and to be used in connection with the Company's Annual Meeting of
shareholders on September 15, 1995.
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 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), alleged 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 sought as relief a permanent injunction enjoining
such practices, unspecified monetary damages (to be trebled as provided by law)
and attorneys' fees.
Following the completion of formal discovery activities, the District
Court granted the Company's motion for summary judgment seeking the dismissal
of all counts of the Bathke Complaint in an Order entered on October 14, 1994.
The District Court dismissed the federal antitrust claims with prejudice and
dismissed the State unfair price discrimination claim without prejudice,
concluding that there was an "insuffucient basis in economic reality and
substantive federal law for the plaintiffs' theories."
Plaintiffs have appealed the dismissal of the Bathke Complaint to the
Eighth Circuit Court of Appeals in St. Louis,
- 16 -
19
Missouri. Briefs have been filed with that Court and oral argument on the
appeal was held on May 15, 1995. A decision is currently not expected until
late 1995. 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-Q 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 to shareholders for the year ended April
30, 1995.
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
Calendar 1993 Declared
------------- -------------
First Quarter $.015
Second Quarter .01875
Third Quarter .01875
Fourth Quarter .01875
-------
$.07125
- 17 -
20
Calendar 1994
-------------
First Quarter $.01875
Second Quarter .02
Third Quarter .02
Fourth Quarter .02
-------
$.07875
Calendar 1995
-------------
First Quarter $.02
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 to shareholders for the year
ended April 30, 1995.
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 to
shareholders for the year ended April 30, 1995.
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 to shareholders for the year ended April 30, 1995.
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
That portion of the Company's definitive Proxy Statement appearing
under the caption "Election of Directors", to be filed with the Commission
pursuant to Regulation 14A within 120 days after April 30, 1995 and to be used
in connection with the Company's Annual Meeting of shareholders to be held on
September 15, 1995, is hereby incorporated by reference.
- 18 -
21
ITEM 11. EXECUTIVE COMPENSATION
That portion of the Company's definitive Proxy Statement appearing
under the caption "Executive Compensation", to be filed with the Commission
pursuant to Regulation 14A within 120 days after April 30, 1995 and to be used
in connection with the Company's Annual Meeting of shareholders to be held on
September 15, 1995, is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
That portion of the Company's definitive Proxy Statement appearing
under the captions "Shares Outstanding" and "Voting Procedures", to be filed
with the Commission pursuant to Regulation 14A within 120 days after April 30,
1995 and to be used in connection with the Company's Annual Meeting of
shareholders to be held on September 15, 1995, is hereby incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
That portion of the Company's definitive Proxy Statement appearing
under the caption "Other Information Relating to Directors and Executive
Officers", to be filed with the Commission pursuant to Regulation 14A within
120 days after April 30, 1995 and to be used in connection with the Company's
Annual Meeting of shareholders to be held on September 15, 1995, is hereby
incorporated by reference.
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 to shareholders for the year
ended April 30, 1995:
- 19 -
22
Balance Sheets, April 30, 1995 and 1994
Statements of Income, Three Years Ended April 30, 1995
Statements of Shareholders' Equity, Three Years
Ended April 30, 1995
Statements of Cash Flows,
Three Years Ended April 30, 1995
Notes to Financial Statements
Independent Auditors' Report
(2) 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(b) Sixth Amended and Restated
Casey's General Stores, Inc.
Employees' Stock Ownership
Plan and Trust Agreement
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 (t)
____________________
(j) Incorporated by reference from the Registration Statement on Form S-8
(33-42907) filed September 23, 1991.
- 20 -
23
(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.
(t) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1994.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the fiscal quarter
ended April 30, 1995.
(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), (q)
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(b) The Sixth Amended and Restated Casey's General Stores, Inc. Employees' Stock Ownership Plan and Trust Agreement
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)
- 21 -
24
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 (t)
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)
10.27 Non-Employee Director Stock Option Plan (s)
10.28 Term Note with UMB Bank, n.a. (r)
11 Statement regarding computation of earnings per share
13 Financial Statements from 1995 Annual Report
21 Subsidiaries of Casey's General Stores, Inc.
23.1 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule (for SEC use only)
__________________________________
(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.
- 22 -
25
(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.
(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.
(q) Incorporated by reference from the Form 8-A12G/A (Amendment No. 2 to the
Registration Statement on Form 8-A filed June 19, 1989) filed July 29,
1994.
(r) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1995.
(s) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended July 31, 1994.
(t) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1994.
- 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 20, 1995 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 20, 1995 By /s/ Donald F. Lamberti
--------------------------------------
Donald F. Lamberti
Chief Executive Officer,
Chairman of the Board
(Principal Executive Officer)
Date: July 20, 1995 By /s/ Ronald M. Lamb
---------------------------------------
Ronald M. Lamb
President and Chief Operating Officer,
Director
Date: July 24, 1995 By /s/ Douglas K. Shull
---------------------------------------
Douglas K. Shull
Treasurer, Director
(Principal Financial Officer and
Principal Accounting Officer)
Date: July 20, 1995 By /s/ John G. Harmon
---------------------------
John G. Harmon
Secretary, Director
Date: July 21, 1995 By /s/ George A. Doerner
---------------------------
George A. Doerner
Director
Date: July 26, 1995 By /s/ Kenneth H. Haynie
---------------------------
Kenneth H. Haynie
Director
Date: July 21, 1995 By /s/ John R. Fitzgibbon
---------------------------
John R. Fitzgibbon
Director
Date: July 26, 1995 By /s/ Jack P. Taylor
---------------------------
Jack P. Taylor
Director
- 25 -
28
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
10.4(b) Sixth Amended and Restated
Casey's General Stores, Inc.
Employees' Stock Ownership Plan
and Trust Agreement
11 Statement regarding computation
of earnings per share
13 Financial Statements from
1995 Annual Report to shareholders
21 Subsidiaries of Casey's General
Stores, Inc.
23.1 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule (for SEC use only)