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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, 1996
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. [ ]
At the close of business on July 22, 1996, the Company had 26,225,206
shares of Common Stock, no par value, issued and outstanding. The aggregate
market value of the 21,261,664 shares of Common Stock held by non-affiliates of
the Company on that date was $380,052,244, based on a last reported sales price
of $17-7/8 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, 1996 (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 20, 1996 (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. ("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, 1996, there were
a total of 983 Casey's General Stores in operation, of which 801 were operated
by the Company ("Company Stores") and 182 stores were operated by franchisees
("Franchised Stores"). There were 65 Company Stores and 1 Franchised Stores
newly opened in fiscal 1996. 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 72% 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.
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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.
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, 1996:
COMPANY FRANCHISED
STATE STORES STORES TOTAL
----- ------- ---------- -----
Iowa . . . . . . . . . 223 89 312
Illinois . . . . . . . 204 31 235
Indiana . . . . . . . 8 0 8
Kansas . . . . . . . . 73 4 77
Minnesota. . . . . . . 41 15 56
Missouri . . . . . . . 189 33 222
Nebraska . . . . . . . 43 8 51
South Dakota . . . . 19 0 19
Wisconsin . . . . . . 1 2 3
Total . . . . 801(81%) 182(19%) 983 (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
ENDED STORES CONVERTED AT END OF
APRIL 30, OPENED STORES PERIOD
- ----------- ------ --------- ---------
1992
Company . . . . . 23 2 597 (1)
Franchised . . . . 3 (2) 202 (1)
-- ---
Total . . . . . 26 799
1993
Company . . . . . 36 10 639 (2)
Franchised . . . . 1 (10) 187 (2)
-- ---
Total . . . . . 37 826
1994
Company . . . . . 56 1 687 (3)
Franchised . . . . 4 (1) 189 (3)
-- ---
Total . . . . . 60 876
1995
Company . . . . . 60 0 741 (4)
Franchised . . . . 3 (0) 186 (4)
-- ---
Total . . . . . 63 927
1996
Company . . . . . 65 1 801
Franchised . . . . 1 (1) 182 (5)
-- ---
Total . . . . . 66 983
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(1) Seven Company Stores and one Franchised Store were closed in
1992.
(2) Four Company Stores and six Franchised Stores were closed in
1993.
(3) Nine Company Stores and one Franchised Store were closed in
1994.
(4) Six Company Stores and six Franchised Stores were closed in
1995.
(5) Six Company Stores and four Franchised Stores were closed in
1996.
Six Company Stores were opened in May and June 1996 and 38 Company
Stores were under construction at June 30, 1996. On June 30, 1996, the Company
had purchased or had the right to purchase 47 additional store sites. All but
two of the 85 stores under construction or planned for construction on such
sites will be Company Stores. Management anticipates opening approximately 70
new Company Stores during fiscal 1997.
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 1994, 1995 and
1996, the Company converted 1, 0 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
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.
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CORPORATE SUBSIDIARIES
The Marketing Company and the Services Company were organized as Iowa
corporations in March 1995, and both are wholly-owned subsidiaries of Casey's.
Certain Casey's employees became employees of the Marketing Company or the
Services 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 92%
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.
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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. The Company also has
introduced the sale of donuts prepared on store premises, available in
approximately 99% of the stores as of April 30, 1996, 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 1997,
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 902 (92%) stores as of April 30, 1996. 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 25 (3%)
stores as of April 30, 1996.
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 41% of the Company's retail sales,
such sales resulted in approximately 74% of the Company's gross profits from
retail sales. Gross profit margins for prepared foods items, which have
averaged approximately 52% during the last three fiscal years, are
significantly higher than the gross profit margin for retail sales of gasoline,
which has averaged approximately 10% 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, 1996, the aggregate investment in the
land, building, equipment and initial inventory for a typical Company Store
averaged approximately $680,000. The standard building designed by the Company
is a pre-engineered steel frame building mounted on a concrete slab. The
current store design measures 40 feet by 68 feet, with approximately 1,300
square feet devoted to sales area, 500 square feet to kitchen space, 500 square
feet to storage and two large public restrooms. Store lots have sufficient
frontage and depth to permit adequate drive-in parking facilities on one or
more sides of each store. Each store typically includes 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 72% 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
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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 56% of Casey's net sales for the year ended April 30,
1996 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, 1996:
YEAR ENDED APRIL 30,
--------------------
1994 1995 1996
---- ---- ----
Number of
Gallons Sold 375,962,172 429,629,280 492,353,905
Total Retail
Gasoline Sales $377,807,750 $455,310,780 $531,414,819
Percentage of 51.7% 53.6% 55.7%
Net Sales
Gross Profit 10.1% 9.4% 10.7%
Percentage
Average Retail
Price per Gallon $1.00 $1.06 $1.08
Average Gross Profit
Margin per Gallon 10.12 9.91 11.46
Average Number of
Gallons Sold per
Company Store * 570,253 596,684 637,904
- ----------------------
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* 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,
1996. 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" 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 volatility 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 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-
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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 1996, 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, 1996, the percentage of Company Stores
increased from 44% to 81%. From inception to April 30, 1996, the Company had
converted 136 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
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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, 1996, the Company had 3,480 full-time employees and 4,863
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 4 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
120 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 twenty years, one has been employed for more than
twenty-four years and one has been employed for more than twenty-eight years.
In addition to its four executive officers, the Company currently has
Vice Presidents of Store Operations, Property Management, Transportation, and
Marketing. The Company also has 34 other employees with managerial
responsibilities in the areas of store operations, gasoline marketing, real
estate development, construction, equipment
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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 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.
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.
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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 currently has 1,683 USTs of which 1,311 are
fiberglass and 372 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, 1995 and 1996, the Company spent
approximately $2,137,000 and $718,000, 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,
1996, approximately $3,900,000 has been received from such programs. Such
amounts are typically subject to statutory provisions requiring repayment of
the reimbursed funds for noncompliance with upgrade provisions or other
applicable laws. The Company has accrued a liability at April 30, 1996, of
approximately $2,600,000 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.
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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 1997 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,
currently set forth in Chapter 523H, Code of Iowa, 1995, as amended ("Chapter
523H"), became effective on July 1, 1992, and purports to apply to all new or
existing franchises that are operated in the State of Iowa after the effective
date, 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.
Subsequent judicial rulings in cases brought by other Iowa franchisors have
held, however, that Chapter 523H does not apply to any franchises enter into
prior to its July 1, 1992 effective date.
As of April 30, 1996, Casey's was a party to 89 franchise agreements
entered into with respect to Franchised Stores in the State of Iowa. Of that
number, only two of the franchise agreements were entered into following the
effective date of Chapter 523H (the "Covered Franchises"); the remainder were
all entered into prior to July 1, 1992. Certain provisions of the Covered
Franchises conflict with the provisions of Chapter 523H. As such, certain
contractual provisions of the Covered Franchises, including those relating to
transfer, termination or non-renewal and encroachment, may not be valid or
enforceable under Chapter 523H.
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Chapter 523H was amended during the 1995 legislative session, but
several significant ambiguities and concerns remain. As a result, Casey's
recently determined not to grant any new Iowa franchises until further amending
legislation is enacted or other favorable court rulings are rendered.
Management does not expect Chapter 523H 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, 1996, Casey's owned the land at 711 locations and the
buildings at 738 locations, and leased the land at 90 locations and the
buildings at 63 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.
ITEM 3. LEGAL PROCEEDINGS
The Company from time to time is a party to legal proceedings arising
from the conduct of its business operations, including proceedings relating to
personal injury, property damage and employment claims, environmental
remediation or contamination, 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 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.
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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, 1996.
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 1994
First Quarter $.01875
Second Quarter .02
Third Quarter .02
Fourth Quarter .02
-------
$.07875
Calendar 1995
First Quarter $.02
Second Quarter .02
Third Quarter .025
Fourth Quarter .025
-----
$.09
Calendar 1996
First Quarter $.025
Second Quarter .025
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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, 1996.
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, 1996.
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, 1996.
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, 1996 and to be used
in connection with the Company's Annual Meeting of shareholders to be held on
September 20, 1996, is hereby incorporated by reference.
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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, 1996 and to be used
in connection with the Company's Annual Meeting of shareholders to be held on
September 20, 1996, 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,
1996 and to be used in connection with the Company's Annual Meeting of
shareholders to be held on September 20, 1996, 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, 1996 and to be used in connection with the Company's
Annual Meeting of shareholders to be held on September 20, 1996, is hereby
incorporated by reference.
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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 consolidated financial statements, shown on pages 8
through 17 of the Company's Annual Report to shareholders for the
year ended April 30, 1996:
Consolidated Balance Sheets, April 30, 1996 and 1995
Consolidated Statements of Income, Three Years Ended April 30, 1996
Consolidated Statements of Shareholders' Equity, Three Years
Ended April 30, 1996
Consolidated Statements of Cash Flows,
Three Years Ended April 30, 1996
Notes to Consolidated 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 (v)
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)
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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.
(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.
(v) Incorporated by reference from the Annual Report on Form 10- K for the
fiscal year ended April 30, 1995.
(b) REPORTS ON FORM 8-K
-------------------
There were no reports on Form 8-K filed during the fiscal quarter ended
April 30, 1996.
(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)
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23
4.3 Note Agreement dated as of February 1, 1993 between Casey's
General Stores, Inc. and Principal Mutual Life Insurance Company
and Nippon Life Insurance Company of America (n) and First
Amendment thereto (u)
4.4 Note Agreement dated as of December 1, 1995 between Casey's
General Stores, Inc. and Principal Mutual Life Insurance Company
(u)
9 Voting Trust Agreement (a) and Amendment thereto (d)
10.4(b) Sixth Amended and Restated Casey's General Stores, Inc.
Employees' Stock Ownership Plan and Trust Agreement (v)
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 (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 Directors' Stock Option Plan (s)
10.28 Term Note with UMB Bank, n.a. (r)
11 Statement regarding computation of earnings per share
13 Consolidated Financial Statements from 1996 Annual Report
21 Subsidiaries of Casey's General Stores, Inc.
24.1 Consent of KPMG Peat Marwick LLP
27 Financial Data Schedule
- ----------------------
(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).
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(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.
(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.
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25
(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.
(u) Incorporated by reference from the Current Report on Form 8-K filed
January 11, 1996.
(v) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1995.
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 24, 1996 By: /s/ Donald F. Lamberti
----------------------
Donald F. Lamberti,
Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
-25-
26
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 24, 1996 By: /s/ Donald F. Lamberti
----------------------
Donald F. Lamberti
Chief Executive Officer,
Chairman of the Board
(Principal Executive Officer)
Date: July 23, 1996 By: /s/ Ronald M. Lamb
------------------
Ronald M. Lamb
President and Chief Operating
Officer, Director
Date: July 22, 1996 By: /s/ Douglas K. Shull
--------------------
Douglas K. Shull
Treasurer, Director
(Principal Financial Officer
and Principal Accounting Officer)
Date: July 22, 1996 By: /s/ John G. Harmon
------------------
John G. Harmon
Secretary, Director
Date: July 25, 1996 By: /s/ Patricia Clare Sullivan
---------------------------
Patricia Clare Sullivan
Director
-26-
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Date: July 22, 1996 By: /s/ Kenneth H. Haynie
---------------------
Kenneth H. Haynie
Director
Date: July 25, 1996 By: /s/ John R. Fitzgibbon
----------------------
John R. Fitzgibbon
Director
Date: July 25, 1996 By: /s/ Jack P. Taylor
------------------
Jack P. Taylor
Director
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28
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
11 Statement regarding computation
of earnings per share 29
13 Consolidated Financial Statements from
1996 Annual Report to shareholders 30
21 Subsidiaries of Casey's General
Stores, Inc. 47
24.1 Consent of KPMG Peat Marwick LLP 48
27 Financial Data Schedule 49
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