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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended April 30, 1994
Commission File Number 0-12788
CASEY'S GENERAL STORES, INC.
(Exact name of registrant as specified in its charter)
IOWA 42-0935283
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE CONVENIENCE BLVD., ANKENY, IOWA
(Address of principal executive offices)
50021
(Zip Code)
(515) 965-6100
(Registrant's telephone number, including area code)
Securities Registered Pursuant To Section 12(b) Of The Act:
NONE
Securities Registered Pursuant To Section 12(g) Of The Act:
COMMON STOCK
(Title of Class)
COMMON SHARE PURCHASE RIGHTS
(Title of Class)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
At the close of business on July 25, 1994, the Company had 25,921,020
shares of Common Stock, no par value, issued and outstanding. The aggregate
market value of the 20,229,908 shares of Common Stock stock held by
non-affiliates of the Company on that date was $237,701,419, based on a last
reported sales price of $11.75 per share on said date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents, as set forth herein, are
incorporated by reference into the listed Parts and Items of this report on
Form 10-K:
1. Annual Report for fiscal year ended April 30, 1994 (Items 5, 6, 7
and 8 of Part II and Item 14(a) of Part IV).
2. Proxy Statement dated August 15, 1994 (Item 2 of Part I and Items
10, 11, 12 and 13 of Part III).
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PART I
ITEM 1. BUSINESS
THE COMPANY
Casey's General Stores, Inc. (the "Company" or "Casey's") operates
convenience stores under the name "Casey's General Store" in eight Midwestern
states, primarily Iowa, Missouri and Illinois. The stores carry a broad
selection of food (including freshly prepared foods such as pizza, donuts and
sandwiches), beverages, tobacco products, health and beauty aids, automotive
products and other non-food items. In addition, all stores offer gasoline for
sale on a self-service basis. On April 30, 1994, there were a total of 876
Casey's General Stores in operation, of which 687 were operated by the Company
("Company Stores") and 189 stores were operated by franchisees ("Franchised
Stores"). There were 56 Company Stores and 4 Franchised Store newly opened in
fiscal 1994. The Company operates a central warehouse, the Casey's
Distribution Center, adjacent to its Corporate Headquarters facility in Ankeny,
Iowa through which it supplies grocery and general merchandise items to Company
and Franchised Stores. The Company also operates a commissary in Creston, Iowa
where it prepares sandwiches for sale through Company and Franchised Stores.
Approximately 75% of all Casey's General Stores are located in areas with
populations of fewer than 5,000 persons, while approximately 6% of all stores
are located in communities with populations exceeding 20,000 persons. The
Company competes on the basis of price, as well as on the basis of traditional
features of convenience store operations such as location, extended hours and
quality of service.
The Company, with executive offices at One Convenience Blvd., Ankeny, Iowa
50021-8045 (telephone 515/965-6100) was incorporated in Iowa in 1967.
GENERAL
Casey's General Stores seek to meet the needs of residents of small towns
by combining features of both general store and convenience store operations.
Smaller communities often are not served by national-chain convenience stores.
The Company has been successful in operating Casey's General Stores in small
towns by offering, at competitive prices, a broader selection of products than
a typical convenience store.
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In each of the past two fiscal years, the Company derived over 94% of its
gross profits from retail sales by Company Stores. It also derives income from
continuing monthly royalties based on sales by Franchised Stores, wholesale
sales to Franchised Stores, sign and facade rental fees and the provision of
certain maintenance, transportation and construction services to the Company's
franchisees. Sales at Casey's General Stores historically have been strongest
during the Company's first and second quarters and relatively weaker during its
fourth quarter. In the warmer months of the year (which comprise the Company's
first two fiscal quarters), customers tend to purchase greater quantities of
gasoline and certain convenience items such as beer, soft drinks and ice. Due
to the continuing emphasis on higher-margin, freshly prepared food items,
however, Casey's net sales and net income (with the exception of the fourth
quarter) have become somewhat less seasonal in recent years.
The following table shows the number of Company Stores and Franchised
Stores in each state on April 30, 1994:
<TABLE>
<CAPTION>
COMPANY FRANCHISED
STATE STORES STORES TOTAL
----- ------ ------- -----
<S> <C> <C> <C>
Iowa . . . . . . . . . 215 94 309
Illinois . . . . . . . 156 31 187
Kansas . . . . . . . . 69 5 74
Minnesota. . . . . . . 21 15 36
Missouri . . . . . . . 183 32 215
Nebraska . . . . . . . 24 9 33
South Dakota . . . . . 19 1 20
Wisconsin . . . . . . 0 2 2
--- --- ---
Total. . . . 687 (78%) 189 (22%) 876 (100%)
</TABLE>
The Company has operational responsibility for all Company Stores.
Franchised Stores generally follow the same operating policies as Company
Stores and are subject to Company supervision pursuant to its franchise
agreements. Franchised Stores and Company Stores offer substantially the same
products and conform to the same basic store design.
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The following table shows the number of Company and Franchised Stores
opened, Franchised Stores converted to Company Stores and total stores in
operation during each of the last five fiscal years:
<TABLE>
<CAPTION>
STORES IN
FISCAL YEAR NEW OPERATION AT
ENDED STORES CONVERTED END OF
APRIL 30, OPENED STORES PERIOD
- - ----------- ------ --------- ------------
<S> <C> <C> <C>
1990
Company . . . . . 38 17 566 (1)
Franchised. . . . 2 (17) 203 (1)
-- ---
Total. . . . 40 769
1991
Company . . . . . 14 3 579 (2)
Franchised. . . . 4 (3) 202 (2)
-- ---
Total. . . . 18 781
1992
Company . . . . . 23 2 597 (3)
Franchised. . . . 3 (2) 202 (3)
-- ---
Total. . . . 26 799
1993
Company . . . . . 36 10 639 (4)
Franchised. . . . 1 (10) 187 (4)
-- ---
Total. . . . 37 826
1994
Company . . . . . 56 1 687 (5)
Franchised. . . . 4 (1) 189 (5)
-- ---
Total. . . . 60 876
</TABLE>
(1) Two Company Stores and one Franchised Store were closed in 1990.
(2) Four Company Stores and two Franchised Stores were closed in 1991.
(3) Seven Company Stores and one Franchised Store were closed in 1992.
(4) Four Company Stores and six Franchised Stores were closed in 1993.
(5) Nine Company Stores and one Franchised Store were closed in 1994.
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Seven Company Stores were opened in May and June 1994 and 50 Company
Stores and one Franchised Store were under construction at June 30, 1994. On
June 30, 1994, Casey's had purchased or had the right to purchase 58 additional
store sites. All but one of the 109 stores under construction or planned for
construction on such sites will be Company Stores. Management anticipates
opening approximately 60 new Company Stores during fiscal 1995, substantially
all of which will be located in Iowa, Illinois and Minnesota. One such store
will be located in Sullivan, Indiana, representing the Company's first
expansion outside its eight-state market area since 1983.
The Company intends to continue to increase the number of Company
Stores, and the proportion of Company Stores relative to Franchised Stores,
because of the greater profitability of Company Stores and the Company's
greater operating control over such stores. The Company anticipates it will
increase the number of Company Stores through construction of new stores and
the acquisition of existing Franchised Stores. During fiscal 1992, 1993 and
1994, the Company converted 2, 10 and 1 stores, respectively, from Franchised
Stores to Company Stores.
Management believes that its current market area presents substantial
opportunities for continued growth, and the Company intends to concentrate its
expansion efforts in this area before pursuing expansion in other geographic
markets. In the opinion of management, the Casey's Distribution Center in
Ankeny, Iowa can adequately supply the general merchandise requirements of 800
to 1,000 stores located within a 500-mile radius of the Casey's Distribution
Center, which would include the Sullivan, Indiana store and several additional
store sites being considered in Indiana.
In its expansion, the Company intends to follow its traditional store
site selection criteria and to locate most new stores in small towns.
Management believes that satisfaction of such criteria will provide
opportunities for a better return on investment than could be realized from the
opening of stores in larger communities.
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Store Operations
Products Offered
Each Casey's General Store typically carries over 2,500 food and
non-food items. The products offered are those normally found in a
supermarket, except that the stores do not sell produce or fresh meats, and
selection is generally limited to one or two well-known brands of each item
stocked. Most staple foodstuffs carried are of nationally advertised brands.
Stores sell regional brands of dairy and bakery products, and approximately 94%
of the stores offer beer. The non-food items carried include tobacco products,
health and beauty aids, school supplies, housewares, pet supplies, photo
supplies, ammunition and automotive products.
All of the Casey's General Stores offer gasoline or gasohol for sale
on a self-service basis. Stores in Iowa, Illinois and Nebraska sell primarily
gasohol and are therefore able to avail themselves of a tax incentive for such
sales provided in those states. The gasoline and gasohol offered by the stores
generally are sold under the Casey's name, although some Franchised Stores sell
gasoline under a major oil company brand name.
It is management's policy to experiment with additions to the
Company's product line, especially products with higher gross profit margins.
As a result of this policy, the Company has added various prepared food items
to its product line over the years. In 1980, the Company initiated the
installation of "snack centers" which now are in approximately 99% of the
stores. The snack centers sell sandwiches, fountain drinks, and other items
that have gross profit margins higher than those of general staple goods.
Casey's also has introduced the sale of donuts prepared on store premises,
available in approximately 99% of the stores as of April 30, 1994, as well as
cinnamon rolls and cookies, and is installing donut-making facilities in all
newly constructed stores.
Since 1986, the Company has operated a commissary at which it prepares
sandwiches for sale in Casey's General Stores. Management expects the
commissary to produce approximately 3 million sandwiches during fiscal 1995,
for delivery to both Company and Franchised Stores through the Casey's
Distribution Center.
Casey's began marketing made-from-scratch pizza in 1984, expanding its
availability to 818 (93%) stores as of April 30, 1994. Management believes
pizza is the Company's most popular prepared food product, although the Company
continues to expand
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its prepared food product line, which now includes ham and cheese, beef, and
hot and mild sausage and tenderloin sandwiches, pizza bread, garlic bread,
breakfast croissants, quarter-pound hamburgers and cheeseburgers. In addition,
Casey's Crispy Fried Chicken was available for take-out at 87 (10%) stores as
of April 30, 1994.
The pizza and other prepared food products are made on store premises
with ingredients delivered from the Casey's Distribution Center. Pizza
generally is available in three sizes with ten different toppings and is sold
for take-out between the hours of 4:00 P.M. and 11:00 P.M. In addition, at
selected store locations a luncheon menu consisting of pizza-by-the-slice,
sandwiches, pizza bread, and garlic bread is available.
An important part of the Company's marketing strategy is to increase
sales volume by pricing competitively on price-sensitive items. On less
price-sensitive items, it is the Company's policy to maintain, or in the case
of Franchised Stores to recommend, a Company-wide pricing structure in each
store that is generally comparable to that of other convenience, gasoline or
grocery stores located in the area and competing for the same customers.
Management attributes the Company's ability to offer competitive
prices to a number of factors, including the Company's central distribution
system, its purchasing practices which avoid dependence upon jobbers and
vendors by relying on a few large wholesale companies and its success in
minimizing land, construction and equipment costs.
Management's decision to add snack center items, freshly prepared
donuts and pizza to the Company's product selection reflects its strategy to
promote high profit margin products that are compatible with convenience store
operations. Although retail sales of non-gasoline items during the last three
fiscal years have generated approximately 43% of the Company's retail sales,
such sales resulted in approximately 76% of the Company's gross profits from
retail sales. Gross profit margins for prepared foods items, which have
averaged approximately 53% during the last three fiscal years, are
significantly higher than the gross profit margin for retail sales of gasoline,
which has averaged approximately 9% during such period.
Store Design
Casey's General Stores are free-standing and, with a few exceptions to
accommodate local conditions, conform to standard construction specifications.
During the fiscal year ended April
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30, 1994, the aggregate investment in the land, building, equipment and initial
inventory for a typical Company Store averaged approximately $600,000. The
standard building designed by the Company is a pre-engineered steel frame
building mounted on a concrete slab. The current store design measures 36 feet
by 66 feet, with approximately 1,300 square feet devoted to sales area, 500
square feet to kitchen space and 575 square feet to storage. Store lots have
sufficient frontage and depth to permit adequate drive-in parking facilities on
one or more sides of each store. Each store typically includes two islands of
gasoline dispensers and storage tanks having a capacity of 20,000 to 30,000
gallons of gasoline. The merchandising display in each store follows a
standard layout designed to encourage a flow of customer traffic through all
sections of the store. All stores are air conditioned and have modern
refrigeration facilities. The store locations feature the Company's bright red
and yellow pylon sign and facade, both of which display the name and service
mark of the Company.
All Casey's General Stores remain open at least 16 hours per day,
seven days a week. Most store locations are open from 6:00 a.m. to 11:00 p.m.,
although hours of operation may be adjusted on a store-by-store basis to
accommodate customer traffic patterns. The Company requires that all stores
maintain a bright, clean store interior and provide prompt check-out service.
It is the Company's policy not to permit the installation of electronic games
or sale of adult magazines on store premises.
Store Locations
The Company traditionally has located its stores in small towns not
served by national-chain convenience stores. Approximately 75% of all stores
operate in areas with populations of fewer than 5,000 persons, while
approximately 6% of all stores are located in communities with populations
exceeding 20,000 persons. The Company believes that a Casey's General Store
provides a service not otherwise available in small towns, and that a
convenience store in an area with limited population can be profitable if it
stresses sales volume and competitive prices. The Company's store site
selection criteria emphasize the population of the immediate area and daily
highway traffic volume. Management believes that, if there is no competing
store, a Casey's General Store may operate profitably at a highway location in
a community with a population of as few as 500 persons.
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Gasoline Operations
Gasoline sales are an important part of the Company's sales and
earnings. Approximately 52% of Casey's net sales for the year ended April 30,
1994 were derived from the retail sale of gasoline. The following table
summarizes gasoline sales by Company Stores for the three fiscal years ended
April 30, 1994:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Number of
Gallons Sold 289,456,103 336,192,288 375,962,172
Total Retail
Gasoline Sales $302,201,644 $351,361,731 $377,807,750
Percentage of 49.8% 52.2% 51.7%
Net Sales
Gross Profit 8.2% 8.2% 10.1%
Percentage
Average Retail
Price per Gallon $1.04 $1.05 $1.00
Average Gross Profit
Margin per Gallon 8.60 cents 8.55 cents 10.12 cents
Average Number of
Gallons Sold per
Company Store * 492,115 540,999 570,253
</TABLE>
* Includes only those stores that had been in operation for at least one
full year before commencement of the periods indicated.
Retail prices of gasoline decreased slightly during the year ended
April 30, 1994. However, the total number of gallons sold by the Company
during this period increased, primarily as the result of the increased number
of Company Stores in operation and the Company's efforts to price its retail
gasoline competitively in the market area served by the particular store. See
"BUSINESS--Store Operations--Competition" and "LEGAL PROCEEDINGS" herein. As a
result of these conditions, total retail gasoline sales by the Company
increased during the period, while the percentage of such sales to the
Company's total net sales decreased slightly.
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Retail gasoline profit margins have a substantial impact on the
Company's net income. Profit margins on gasoline sales can be adversely
affected by factors beyond the control of the Company, including over-supply in
the retail gasoline market, uncertainty or volitility in the wholesale gasoline
market (such as that experienced during 1991 as a result of the Persian Gulf
crisis) and price competition from other gasoline marketers. Any substantial
decrease in profit margins on gasoline sales or number of gallons sold could
have a material adverse effect on the Company's earnings.
The Company purchases its gasoline from independent national and
regional petroleum distributors. Although in recent years the Company's
suppliers have not experienced any difficulties in obtaining sufficient amounts
of gasoline to meet the Company's needs, unanticipated national and
international events could result in a reduction of gasoline supplies available
for distribution to the Company. A substantial curtailment in gasoline
supplied to the Company could adversely affect the Company by reducing gasoline
sales. Further, management believes that a significant amount of the Company's
business results from the patronage of customers primarily desiring to purchase
gasoline and, accordingly, reduced gasoline supplies could adversely affect the
sale of non-gasoline items. These factors could have a material adverse impact
upon the Company's earnings and operations.
DISTRIBUTION AND WHOLESALE ARRANGEMENTS
The Company supplies all Company Stores and over 90% of the Franchised
Stores with groceries, food (including sandwiches prepared at the Company's
commissary), health and beauty aids and general merchandise from the Casey's
Distribution Center. The stores place orders for merchandise through a
telecommunications link-up to the computer at the Company's headquarters in
Ankeny, and weekly shipments are made from the Casey's Distribution Center by
36 Company-owned delivery trucks. The Company charges Franchised Stores
processing and shipping fees for each order filled by the Casey's Distribution
Center. The efficient service area of the Casey's Distribution Center is
approximately 500 miles, which encompasses all of the Company's existing and
proposed stores.
The Company's only wholesale sales are to Franchised Stores, to which
it sells groceries, prepared sandwiches, ingredients and supplies for donuts,
sandwiches and pizza, health and beauty aids, general merchandise and gasoline.
Although Casey's derives income from this activity, it makes such sales,
particularly gasoline sales, at narrow profit
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margins in order to promote the competitiveness and increase the sales to
Franchised Stores.
In fiscal 1994, the Company purchased directly from manufacturers
approximately 90% of the food and non-food items sold from the Casey's
Distribution Center. The Company has not entered into contracts with any of
the suppliers of products sold by Casey's General Stores. Management believes
that the absence of such contracts is customary in the industry for purchasers
such as the Company and enables Casey's to respond flexibly to changing market
conditions.
FRANCHISE OPERATIONS
The Company has franchised Casey's General Stores since 1970. In
addition to generating income for the Company, franchising historically enabled
Casey's to obtain desirable store locations from persons who have preferred to
become franchisees rather than to sell or lease their locations to the Company.
Franchising also enabled the Company to expand its system of stores at a faster
rate, thereby achieving operating efficiencies in its warehouse and
distribution system as well as greater identification in its market area. As
Casey's has grown and strengthened its financial resources, the advantages of
franchising have decreased in importance and the Company currently grants new
franchises only to existing franchisees on a limited basis. From April 30,
1983 to April 30, 1994, the percentage of Company Stores increased from 44% to
78%. From inception to April 30, 1994, the Company had converted 135
Franchised Stores to Company Stores by leasing or purchasing such stores.
All franchisees pay the Company a royalty fee equal to 3% of gross
receipts derived from total store sales excluding gasoline, subject to a
minimum monthly royalty of $300. The Company currently assesses a royalty fee
of $.018 per gallon on gasoline sales, although it has discretion to increase
this amount to 3% of retail gasoline sales. In addition, franchisees pay the
Company a sign and facade rental fee. The franchise agreements do not
authorize the Company to establish the prices to be charged by franchisees.
Further, except with respect to certain supplies and items provided in
connection with the opening of each store, each franchisee has unlimited
authority to purchase supplies and inventory from any supplier, provided the
products meet the Company's quality standards. Each franchise agreement
contains a non-competition clause that restricts the franchisee's ability to
operate a convenience-style store in that area for a period of two or three
years following termination of the agreement. See
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"BUSINESS - Government Regulation" herein for a discussion of recent
legislation in Iowa concerning franchise agreements.
PERSONNEL
On April 30, 1994, the Company had 2,880 full-time employees and 4,393
part-time employees. The Company has not experienced any work stoppages.
There are no collective bargaining agreements between the Company and any of
its employees.
The Company's supervisory personnel are responsible for monitoring and
assisting all stores, including Franchised Stores. Centralized control of
store operations is primarily maintained by the Chief Operating Officer of the
Company, who is assisted by the Vice President of Store Operations. Reporting
directly to the Vice President of Store Operations are four regional operations
managers. Reporting directly to the regional managers are 15 district
managers, each with responsibility over approximately equal numbers of stores.
Each district manager is generally in charge of seven supervisors. Each of the
112 supervisors in turn is responsible for the operations of approximately
eight individual stores.
The majority of store managers and store personnel live in the
community in which their Casey's store is located. Training of store managers
and store personnel is conducted through the Store Operations Training
Department overseen by the Director of Store Operations Training. The Company
operates a central training facility at its Headquarters facility in Ankeny and
provides continuing guidance and training in the areas of merchandising,
advertising and promotion, administration, record keeping, accounting,
inventory control and other general operating and management procedures.
As an incentive to the Company's employees and those of franchisees,
management stresses an internal promotion philosophy. Most district managers
and store supervisors previously worked as store managers. At the senior
management level, one of the Company's executive officers has been employed by
the Company for more than eighteen years, one has been employed for more than
twenty-two years and one has been employed for more than twenty-six years.
In addition to its four executive officers, the Company has Vice
Presidents of Store Operations, Property Management, Transportation, Food
Service and Marketing. The Company also has 30 other employees with managerial
responsibilities in the areas of store operations, gasoline marketing, real
estate development, construction, equipment maintenance, merchandising,
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advertising, Distribution Center operations, payroll, accounting and data
processing. The Company believes that such employees are capable of carrying
out their responsibilities without substantial supervision by the executive
officers.
COMPETITION
The Company's business is highly competitive. Food, including
prepared foods, and non-food items similar or identical to those sold by the
Company are generally available from various competitors in the communities
served by Casey's General Stores. Management believes that its stores located
in small towns compete principally with local convenience stores, grocery
stores and similar retail outlets and, to a lesser extent, with prepared food
outlets or restaurants and expanded gasoline stations offering a more limited
selection of grocery and food items for sale. Stores located in more heavily
populated communities may compete with local and national grocery and drug
store chains, expanded gasoline stations, supermarkets, discount food stores
and traditional convenience stores. Convenience store chains competing in the
larger towns served by Casey's General Stores include 7-Eleven, Kwik Shops, and
regional chains. Some of the Company's competitors have greater financial and
other resources than the Company.
Gasoline sales, in particular, are intensely competitive. The Company
competes with both independent and national brand gasoline stations, some of
which may have access to more favorable arrangements for gasoline supply than
do the Company or the firms that supply its stores. Management believes that
the most direct competition for gasoline sales comes from other self-service
installations in the vicinity of individual store locations, some of whom
regularly offer non-cash discounts on self-service gasoline purchases such as a
"free" car wash or "mini-service." Company Stores generally do not offer such
discounts. In addition, management believes that Company Stores compete for
gasoline customers who regularly travel outside of their relatively smaller
community for shopping or employment purposes, and who therefore are able to
purchase gasoline while in nearby larger communities where retail gasoline
prices generally are lower. For this reason, the Company attempts to offer
gasoline for sale at prices comparable to those prevailing in nearby larger
communities. See "LEGAL PROCEEDINGS" herein.
The Company believes that the competitiveness of Casey's General
Stores is based on price (particularly in the case of gasoline sales) as well
as on a combination of store location, extended hours, a wide selection of name
brand products, self-service gasoline facilities and prompt check-out service.
The Company also believes it is important to its business to
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maintain a bright, clean store and to offer quality products for sale.
SERVICE MARKS
The name "Casey's General Store" and the service mark consisting of
the Casey's design logo (with the words "Casey's General Store") are registered
service marks of the Company under federal law. The Company believes that
these service marks are of material importance in promoting and advertising the
Company's business.
GOVERNMENT REGULATION
The United States Environmental Protection Agency and several states,
including Iowa, have established requirements for owners and operators of
underground gasoline storage tanks ("USTs") with regard to (i) maintenance of
leak detection, corrosion protection and overfill/spill protection systems,
(ii) upgrade of existing tanks, (iii) actions required in the event of a
detected leak, (iv) prevention of leakage through tank closings and (v)
required gasoline inventory recordkeeping. Since 1984, new Company Stores have
been equipped with non-corroding fiberglass USTs, including some with
double-wall construction, over-fill protection and electronic tank monitoring,
and the Company has an active inspection and renovation program with respect to
its older USTs. The Company currently has 1,455 USTs of which 1,043 are
fiberglass and 412 are steel. Management believes that its existing gasoline
procedures and planned capital expenditures will continue to keep the Company
in substantial compliance with all current federal and state UST regulations.
Several of the states in which the Company does business have trust
fund programs with provisions for sharing or reimbursing corrective action or
remediation costs incurred by UST owners, including the Company. These
programs, other than the State of Iowa's, generally are in the early stages of
operation and the extent of available coverage or reimbursement under such
programs for costs incurred by the Company is not fully known at this time. In
each of the years ended April 30, 1993 and 1994, the Company spent
approximately $2,533,000 and $1,814,000, respectively, for assessments and
remediation. Substantially all of these expenditures have been submitted for
reimbursement from state-sponsored trust fund programs, and, as of June 30,
1994, approximately $3,000,000 has been received from such programs. The
Company has accrued a liability at April 30, 1994, of approximately $3,200,000
for estimated expenses related to anticipated corrective actions or remediation
efforts, including relevant legal and consulting
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costs. Management believes the Company has no material joint and several
environmental liability with other parties.
Management of the Company currently estimates that aggregate capital
expenditures for electronic monitoring, cathodic protection and overfill/spill
protection will approximate $2,000,000 in fiscal 1995 through December 23,
1998, in order to comply with the existing UST regulations. Additional
regulations, or amendments to the existing UST regulations, could result in
future revisions to such estimated expenditures.
The Federal Trade Commission and some states have adopted laws
regulating franchise operations. Existing laws generally require certain
disclosures and/or registration in connection with the sale of the franchises,
and regulate certain aspects of the relationship with franchisees, such as
rights of termination, renewal and transfer. Management believes that the
Company is duly registered in all states where its present operations require
such registration. Management does not believe that the existing state
registration and disclosure requirements, or the federal disclosure
requirements, have a material effect on the Company's operations.
During the 1992 legislative session, the Iowa General Assembly enacted
legislation relating to franchise agreements and their enforcement and
establishing certain duties and limitations on franchisors. The legislation,
which became effective July 1, 1992, applies to all new or existing franchises
that are operated in the State of Iowa, including those of the Company. The
legislation contains, among other things, provisions regarding the transfer of
franchises, the termination or nonrenewal of franchises, and the encroachment
on existing franchises. Several such provisions conflict with those contained
in existing franchise agreements entered into by the Company with respect to
stores located in the State of Iowa. As a result, several provisions of the
Company's existing franchise agreements may not be enforceable under the
legislation. Although bills have subsequently been introduced that would
modify or repeal certain provisions of the legislation, it was not amended
during the most recent session of the General Assembly.
On May 14, 1993, in an unrelated proceeding brought by other
franchisors operating in Iowa, the United States District Court for the
Southern District of Iowa ruled that certain provisions of the legislation
(those which make the legislation applicable to franchises existing before its
effective date and those provisions governing the transfer of franchises,
encroachment, termination, and non-renewal) substantially
- 14 -
<PAGE> 17
impair, in violation of the United States and Iowa Constitutions, the
franchisor-plaintiffs' contractual rights under their license agreements with
certain Iowa franchisees. The Court made no ruling on the constitutionality of
the legislation as applied to franchise agreements entered into or renewed
after the effective date of the legislation. The Company understands that the
Court's ruling was recently affirmed by the Eighth Circuit Court of Appeals.
The Company has entered into two new franchise agreements in Iowa since the
enactment of the legislation, and management does not expect the legislation to
have a material effect on the Company's business.
ITEM 2. PROPERTIES
The Company owns and has consolidated its Corporate Headquarters and
Distribution Center operations on a 36-acre site in Ankeny, Iowa. This
facility consists of approximately 255,000 square feet, including a central
Corporate Headquarters office building, expanded Distribution Center and
vehicle service/maintenance center. The facility was completed in February
1990 and placed in full service at that time.
The Company owns an approximately 10,000 square-foot building on an
eight-acre site in Creston, Iowa that it utilizes as a sandwich commissary
center for the preparation of sandwiches sold in Casey's General Stores.
On April 30, 1994, Casey's owned the land at 557 locations and the
buildings at 574 locations, and leased the land at 130 locations and the
buildings at 113 locations. Most of the leases provide for the payment of a
fixed rent, plus property taxes and insurance and maintenance costs.
Generally, the leases are for terms of 10 to 20 years, with options to renew
for additional periods or options to purchase the leased premises at the end of
the lease period.
The Company leases approximately 16,800 square feet of office and
warehouse space at 1299 N.E. Broadway Avenue, Des Moines, Iowa, which was used
as its principal offices and corporate headquarters until the new Corporate
Headquarters facility became available in February 1990. See "Other
Information Relating to Directors and Executive Officers - Certain
Transactions" in the Company's Proxy Statement dated August 15, 1994 for a
description of the terms of the Company's lease of such space.
ITEM 3. LEGAL PROCEEDINGS
The Company is the sole defendant in a class action lawsuit brought by
five Iowa retail gasoline dealers and a trade association representing
independent distributors and retailers
- 15 -
<PAGE> 18
of gasoline products within the State of Iowa, acting on behalf of a class of
such dealers. The Amended and Substituted Complaint - Class Action (the
"Bathke Complaint"), filed in the United States District Court for the Southern
District of Iowa (Gilbert Bathke, et. al. v. Casey's General Stores, Inc.,
Civil No. 4-90-CV-80658), alleges that by selling gasoline at "very low prices
which are supported by higher prices charged for the same petroleum products in
other markets," the Company violated federal anti-trust laws (specifically,
Section 2(a) of the Robinson-Patman Act and Section 2 of the Sherman Act) and
State of Iowa unfair price discrimination laws. The Bathke Complaint seeks as
relief a permanent injunction enjoining such practices, unspecified monetary
damages (to be trebled as provided by law) and attorneys' fees.
In its Answer to the Bathke Complaint, the Company denied the material
allegations included therein and raised several affirmative defenses to said
allegations. The Company initially attempted to have the case dismissed on
jurisdictional grounds, but the Company's motion to that effect was overruled
in an Order dated March 31, 1992.
The Court granted plaintiffs' request to certify the lawsuit as a
class action and the Company understands that approximately 50 potential class
members formally elected out of the litigation. A number of the remaining
class members ultimately may be excluded from the class by reason of
non-compliance with discovery requests or at their own request. As a result,
the precise number of class members cannot be ascertained at this time.
Management currently believes that the class as certified for purposes of trial
will most likely include approximately 165 members.
All formal discovery activities (including depositions of class
members) were recently completed and on July 13, 1994 the Company filed a
motion for summary judgment seeking the dismissal of all counts of the Bathke
Complaint. The Company maintains, among other arguments, that plaintiffs
cannot establish liability by "common proof", that the record shows no evidence
of the requisite predatory intent, that it has not been shown that the
Company's prices were below the appropriate measure of cost, that plaintiffs
have not borne their burden to show recoupment and that the record contains
insufficient evidence of antitrust injury and damages. The Company also filed
alternative motions to dismiss with prejudice as to certain class members who
did not respond to discovery requests and to decertify the class action. Oral
argument on the Company's motions is expected to be held on August 5, 1994.
Trial is currently set to begin on October 17, 1994.
- 16 -
<PAGE> 19
Management does not believe that the Company is liable to plaintiffs
for the conduct complained of and intends to contest the matter vigorously.
The Company from time to time is a party to other legal proceedings
arising from the conduct of its business operations, including proceedings
relating to personal injury and employment claims, disputes under franchise
agreements and claims by state and federal regulatory authorities relating to
the sale of products pursuant to state or federal licenses or permits.
Management does not believe that the potential liability of the Company with
respect to such other proceedings pending as of the date of this Form 10-K is
material in the aggregate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information required in response to this Item is incorporated
herein by reference from the section entitled "Common Stock Data" set forth on
page 24 of the Company's Annual Report for the year ended April 30, 1994.
The cash dividends declared by the Company (adjusted to give effect to
the two-for-one stock split distributed on February 15, 1994) during the
periods indicated have been as follows:
Cash Dividend
Declared
-------------
Calendar 1992
-------------
First Quarter $.015
Second Quarter .015
Third Quarter .015
Fourth Quarter .015
----
$.06
- 17 -
<PAGE> 20
Calendar 1993
-------------
First Quarter $.015
Second Quarter .01875
Third Quarter .01875
Fourth Quarter .01875
-------
$.07125
Calendar 1994
-------------
First Quarter $.01875
Second Quarter .02
ITEM 6. SELECTED FINANCIAL DATA
The information required in response to this Item is incorporated
herein by reference from the section entitled "Selected Financial Data" set
forth on page 23 of the Company's Annual Report for the year ended April 30,
1994.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required in response to this Item is incorporated
herein by reference from pages 18 through 22 of the Company's Annual Report for
the year ended April 30, 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required in response to this Item is incorporated
herein by reference from pages 8 through 17 and page 24 of the Company's Annual
Report for the year ended April 30, 1994.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required in response to this Item is incorporated by
reference from the section entitled "Election of Directors" set forth on pages
4 through 7 of the Company's Proxy Statement dated August 15, 1994.
- 18 -
<PAGE> 21
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this Item is incorporated
herein by reference from that portion of the section entitled "Executive
Compensation" set forth on pages 13 through 17 of the Company's Proxy Statement
dated August 15, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required in response to this Item is incorporated
herein by reference from the sections entitled "Shares Outstanding" and "Voting
Procedures", set forth on pages 2 and 3 of the Company's Proxy Statement dated
August 15, 1994, and from the section entitled "Beneficial Ownership of Shares
of Common Stock By Directors and Executive Officers" set forth on pages 8 and 9
thereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this Item is incorporated
herein by reference from the section entitled "Other Information Relating to
Directors and Executive Officers" set forth on pages 18 and 19 of the Company's
Proxy Statement dated August 15, 1994.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) DOCUMENTS FILED
The documents listed below are filed as a part of this Report on Form 10-K
and are incorporated herein by reference:
(1) The following financial statements, shown on pages 8 through 17
of the Company's Annual Report for the year ended April 30, 1994:
Balance Sheets, April 30, 1994 and 1993
Statements of Income, Three Years Ended April 30, 1994
Statements of Shareholders' Equity, Three Years
Ended April 30, 1994
Statements of Cash Flows,
Three Years Ended April 30, 1994
Notes to Financial Statements
Independent Auditors' Report
- 19 -
<PAGE> 22
(2) The financial statement schedules set forth in Item 14(d) of this
report.
(3) The exhibits set forth in Item 14(c) of this report. The
management contracts or compensatory plans or arrangements
required to be filed as an exhibit to this Form 10-K pursuant to
Item 14(c) consist of the following:
Exhibit Number Document
-------------- --------
10.4(a) Fifth Amended and Restated
Casey's General Stores, Inc.
Employees' Stock Ownership
Plan and Trust Agreement (g)
10.19 Casey's General Stores, Inc.
1991 Incentive Stock Option
Plan (j) and amendment
thereto (o)
10.21 Employment Agreement with
Donald F. Lamberti (l)
10.22 Employment Agreement with
Ronald M. Lamb (l)
10.23 Employment Agreement with
Douglas K. Shull (l)
10.24 Employment Agreement with
John G. Harmon
____________________
(g) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1989.
(j) Incorporated by reference from the Registration Statement on Form S-8
(33-42907) filed September 23, 1991.
(l) Incorporated by reference from the Quarterly Report on Form 10-Q for
the fiscal quarter ended January 31, 1992.
(o) Incorporated by reference from the Quarterly Report on Form 10-Q for
the fiscal quarter ended January 31, 1994.
- 20 -
<PAGE> 23
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the fiscal quarter ended April
30, 1994.
(c) EXHIBITS
Exhibit
Number Document
------ --------
3.1 Restated and Amended Articles of Incorporation (a) and
Amendments thereto (b), (d), (f)
3.2 Amended and Restated By-Laws (h)
4.2 Rights Agreement between Casey's General Stores, Inc. and
United Missouri Bank of Kansas City, N.A., as Rights Agent,
relating to Common Share Purchase Rights (e) and amendments
thereto (i), (p)
4.3 Note Agreement between Casey's General Stores, Inc. and
Principal Mutual Life Insurance Company and Nippon Life
Insurance Company of America (n)
9 Voting Trust Agreement (a) and Amendment thereto (d)
10.4(a) The Fifth Amended and Restated Casey's General Stores, Inc.
Employees' Stock Ownership Plan and Trust Agreement (g)
10.6 Lease Agreement between Casey's General Stores, Inc. and
Broadway Distributing Company (a)
10.8 Form of Franchise Agreement (a)
10.9 Form of Store Lease Agreement (a)
10.10 Form of Equipment Lease Agreement (a)
10.16 Secured Promissory Note dated November 30, 1989 given to
Principal Mutual Life Insurance Company (f)
10.18 Commercial Note with Norwest Bank Iowa, N.A.(k)
10.19 Casey's General Stores, Inc. 1991 Incentive Stock Option Plan
(j) and amendment thereto (o)
10.21 Employment Agreement with Donald F. Lamberti (l)
10.22 Employment Agreement with Ronald M. Lamb (l)
10.23 Employment Agreement with Douglas K. Shull (l)
10.24 Employment Agreement with John G. Harmon
10.25 Term Loan Agreement and Current Note with Norwest Bank Iowa,
N.A. (m)
10.26 Loan Agreement and Commercial Note with Peoples Trust and
Savings Bank (m)
- 21 -
<PAGE> 24
11 Statement regarding computation of earnings per share
13 Financial Statements from 1994 Annual Report
24.1 Report and Consent of KPMG Peat Marwick
- - -----------------------------------------------
(a) Incorporated herein by reference from the Registration Statement on
Form S-1 (2-82651) filed August 31, 1983.
(b) Incorporated herein by reference from the Annual Report on Form 10-K
for the fiscal year ended April 30, 1986 (0-12788).
(c) Reserved.
(d) Incorporated herein by reference from the Quarterly Report on Form
10-Q for the fiscal quarter ended January 31, 1988 (0-12788).
(e) Incorporated herein by reference from the Registration Statement on
Form 8-A filed June 19, 1989 (0-12788).
(f) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended October 31, 1989.
(g) Incorporated by reference from the Annual Report on Form 10-K for
the fiscal year ended April 30, 1989.
(h) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended July 31, 1989.
(i) Incorporated by reference from the Form 8 (Amendment No. 1 to the
Registration Statement on Form 8-A filed June 19, 1989) filed
September 10, 1990.
(j) Incorporated by reference from the Registration Statement on Form S-8
(33-42907) filed September 23, 1991.
(k) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1991.
(l) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended January 31, 1992.
(m) Incorporated by reference from the Annual Report on Form 10-K for the
fiscal year ended April 30, 1992.
(n) Incorporated by reference from the Current Report on Form 8-K filed
February 18, 1993.
- 22 -
<PAGE> 25
(o) Incorporated by reference from the Quarterly Report on Form 10-Q
for the fiscal quarter ended January 31, 1994.
(p) Incorporated by reference from the Form 8-A/A (Amendment No. 3 to the
Registration Statement on Form 8-A filed June 19, 1989) filed
March 30, 1994.
(D) FINANCIAL STATEMENT SCHEDULES
Schedule V - Property, Plant and Equipment
Schedule VI - Accumulated Depreciation,
Depletion and Amortization of Property,
Plant and Equipment
Schedule IX - Short-Term Borrowings
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
- 23 -
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CASEY'S GENERAL STORES, INC.
(Registrant)
Date: July 25, 1994 By /s/ Donald F. Lamberti
Donald F. Lamberti,
Chief Executive Officer
and Chairman of the Board
(Principal Executive Officer)
- 24 -
<PAGE> 27
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: July 25, 1994 By /s/ Donald F. Lamberti
---------------------------
Donald F. Lamberti
Chief Executive Officer,
Chairman of the Board
(Principal Executive Officer)
Date: July 25, 1994 By /s/ Ronald M. Lamb
---------------------------
Ronald M. Lamb
President and Chief
Operating Officer,
Director
Date: July 25, 1994 By /s/ Douglas K. Shull
---------------------------
Douglas K. Shull
Treasurer, Director
(Principal Financial Officer and
Principal Accounting Officer)
Date: July 25, 1994 By /s/ John G. Harmon
---------------------------
John G. Harmon
Secretary, Director
Date: July 26, 1994 By /s/ George A. Doerner
---------------------------
George A. Doerner
Director
Date: July 26, 1994 By /s/ Kenneth H. Haynie
---------------------------
Kenneth H. Haynie
Director
Date: July 26, 1994 By /s/ John R. Fitzgibbon
---------------------------
John R. Fitzgibbon
Director
Date: July 25, 1994 By /s/ Jack P. Taylor
---------------------------
Jack P. Taylor
Director
- 25 -
<PAGE> 28
CASEY'S GENERAL STORES, INC.
_____________________________
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- - -------- -------- -------- -------- -------- --------
Balance at Other Balance
beginning Additions changes - at end
Classification of period at cost Retirements add (deduct) of period
- - -------------- --------- --------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Year ended
April 30, 1994
Land $ 27,596,097 7,211,027 28,917 -- 34,778,207
Buildings and
leasehold
improvements 106,098,220 25,811,874 378,654 -- 131,531,440
Machinery and
equipment 148,223,940 30,789,051 2,937,280 (55,658) 176,020,053
Leasehold
interest
in property
and equipment 11,707,337 3,264,222 992,000 -- 13,979,559
----------- ---------- ---------- ----------- -----------
$293,625,594 $67,076,174 $ 4,336,851 $ (55,658) $356,309,259
----------- ---------- ---------- ----------- -----------
Year ended
April 30, 1993
Land $ 21,539,035 6,057,062 -- -- 27,596,097
Buildings and
leasehold
improvements 87,525,756 19,340,804 768,340 -- 106,098,220
Machinery and
equipment 124,948,783 25,999,010 2,668,299 (55,554) 148,223,940
Leasehold
interest
in property
and equipment 12,362,872 -- 655,535 -- 11,707,337
----------- ---------- ---------- ----------- -----------
$246,376,446 $51,396,876 $ 4,092,174 $ (55,554) $293,625,594
----------- ---------- ---------- ----------- -----------
Year ended
April 30, 1992
Land $ 17,890,067 $ 3,703,655 $ 54,687 $ -- $ 21,539,035
Buildings and
leasehold
improvements 76,479,998 11,405,077 359,319 -- 87,525,756
Machinery and
equipment 107,050,428 20,279,480 1,614,626 (766,499)(A) 124,948,783
Leasehold
interest
in property
and equipment 13,615,372 -- 1,252,500 -- 12,362,872
----------- ---------- ---------- ---------- -----------
$215,035,865 $35,388,212 $3,281,132 $ (766,499) $246,376,446
----------- ---------- --------- ----------- -----------
</TABLE>
(A) Certain equipment reclassified at depreciated cost.
<PAGE> 29
CASEY'S GENERAL STORES, INC.
____________________________________
SCHEDULE VI. ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- - -------- -------- -------- -------- -------- --------
Additions
Balance at charged to Other Balance
beginning costs and changes - at end
Description of period expenses Retirements add (deduct) of period
- - ----------- --------- --------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Year ended
April 30, 1994
Buildings and
leasehold
improvements $15,276,157 $ 3,908,621 $ 143,387 $ -- $19,041,391
Machinery and
equipment 56,151,304 13,613,035 1,849,711 (55,658) 67,858,970
Leasehold
interest
in property
and equipment 4,816,794 883,433 666,500 -- 5,033,727
---------- ---------- --------- ----------- ----------
$76,244,255 $18,405,089 $2,659,598 $ (55,658) $91,934,088
---------- ---------- --------- ----------- ----------
Year ended
April 30, 1993
Buildings and
leasehold
improvements $12,216,231 3,217,884 157,958 -- 15,276,157
Machinery and
equipment 46,041,112 11,558,251 1,392,505 (55,554) 56,151,304
Leasehold
interest
in property
and equipment 4,561,103 714,426 458,735 -- 4,816,794
---------- ---------- --------- ----------- ----------
$62,818,446 $15,490,561 $2,009,198 $ (55,554) $76,244,255
---------- ---------- --------- ----------- ----------
Year ended
April 30, 1992
Buildings and
leasehold
improvements $ 9,716,004 $ 2,649,034 $ 148,807 $ -- $12,216,231
Machinery and
equipment 37,955,535 9,816,858 964,782 (766,499)(A) 46,041,112
Leasehold
interest
in property
and equipment 4,667,051 786,091 892,039 -- 4,561,103
---------- ---------- --------- ----------- ----------
$52,338,590 $13,251,983 $2,005,628 $( 766,499) $62,818,446
---------- ---------- --------- ----------- -----------
</TABLE>
(A) Certain equipment reclassified at depreciated cost.
<PAGE> 30
CASEY'S GENERAL STORES, INC.
_____________________________
SCHEDULE IX. SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- - -------- -------- -------- -------- -------- --------
Weighted
Maximum Average average
Weighted amount amount interest
Category of Balance average outstanding outstanding rate
aggregate short- at end interest during the during the during the
term borrowings of period rate period period (A) period (B)
- - --------------- --------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
April 30, 1994
Notes Payable,
banks $18,500,000 4.48% $25,000,000 $17,425,616 4.01%
April 30, 1993
Notes Payable,
banks $12,750,000 3.83% $20,000,000 $12,653,425 4.04%
April 30, 1992
Notes Payable,
banks $7,000,000 4.77% $15,000,000 $5,313,934 5.59%
</TABLE>
_________________________
(A) The average was calculated based on the daily average outstanding balance.
(B) The weighted average was computed by dividing related interest expense by
the average short-term borrowings outstanding.
<PAGE> 31
EXHIBIT INDEX
Exhibit No. Description Page
- - ----------- ----------- ----
10.24 Employment Agreement with
John G. Harmon
11 Statement regarding computation
of earnings per share
13 Financial Statements from
1994 Annual Report
24.1 Report and Consent of
KPMG Peat Marwick
<PAGE> 1
EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of the 19th day of July, 1994, by and between Casey's General Stores, Inc.,
an Iowa corporation (the "Company"), and John G. Harmon ("Harmon").
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") recognizes that the dedication of Harmon as an officer and director
to the affairs and welfare of the Company has resulted in a long and successful
association; and
WHEREAS, the Board of Directors further recognizes that the Company
has grown and prospered as a result of its association with Harmon, and has
determined that it is in the best interest of the Company and its shareholders
to preserve this association so as to enable the Company to further benefit
from Harmon's superior knowledge and expertise in all of its present and future
business endeavors; and
WHEREAS, the Board of Directors has further determined that it is
appropriate and in the best interests of the Company and its shareholders to
enter into written contractual arrangements with respect to Harmon's employment
by the Company, with the concurrence of Harmon, in order to more accurately
reflect the obligations and responsibilities currently being undertaken by
Harmon as Secretary of the Company, as well as those reasonably expected of him
in the future in that capacity, and to provide certain incentives and
compensation arrangements as a result thereof; and
WHEREAS, the Board of Directors has further determined that it is in
the best interest of the Company and its shareholders to assure that the
Company will have the continued dedication of Harmon, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company, and to further encourage Harmon's full attention and dedication to
the Company currently and in the event of any threatened or pending Change of
Control, and to provide Harmon with compensation arrangements upon a Change of
Control which provide him with compensation for expected losses that he would
suffer in the event of a Change of Control and which are competitive with those
of other corporations, and, in order to accomplish these objectives, has
determined to cause the Company to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, the parties hereto agree as follows:
-1-
<PAGE> 2
1. Certain Definitions. For purposes of this Agreement, and in
addition to the other definitions set forth herein, the following terms shall
have the following meanings:
a) "Change of Control" shall mean:
(i) the acquisition (other than from the Company) by any
Person (as hereinafter defined), entity or "group" within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act"), (excluding for this purpose, the Company or any
employee benefit plan of the Company, which acquires beneficial
ownership of voting securities of the Company) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of twenty percent (20%) or more of either the then outstanding shares
of Common Stock, no par value, of the Company or the combined voting
power of the Company's then outstanding voting securities entitled to
vote generally in the election of directors (hereinafter referred to
as the "Common Stock"), unless such beneficial ownership was acquired
as a result of an acquisition of shares of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person,
entity or "group" to twenty percent (20%) or more of the Common Stock
of the Company then outstanding; provided, however, that if a Person,
entity or "group" shall become the beneficial owner of twenty percent
(20%) or more of the Common Stock of the Company then outstanding by
reason of share purchases by the Company and shall, after such share
purchases by the Company, become the beneficial owner of any
additional shares of Common Stock of the Company, then such Person,
entity or "group" shall be deemed to have met the conditions hereof;
or
(ii) individuals who, as of the date hereof, constitute the
Board of Directors (as of the date hereof, the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board of Directors, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes of this
Agreement considered as though such person were a member of the
Incumbent Board; or
-2-
<PAGE> 3
(iii) approval by the shareholders of the Company of a
reorganization, merger, consolidation (in each case, with
respect to which persons who were the shareholders of the Company
immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than fifty percent (50%) of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities) or a liquidation or dissolution of the
Company or of the sale of all or substantially all of the assets of the
Company.
(b) "Annual Increase" shall take effect on each January 1 for
which the benefit at issue is payable and shall mean fifty percent (50%) of the
annual increase in the National Consumer Price Index for the City of Des
Moines, Iowa, as published by the United States Bureau of Labor Statistics.
(c) "Annual Bonus" shall mean any bonus payable at the discretion
of the Board of Directors of the Company, on such terms and in such amounts as
it shall determine.
(d) "Employment Period" shall mean the term of Harmon's employment
under this Agreement, as set forth in Section 2 hereof.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Accrued Obligations" shall mean (i) Harmon's Salary through
the Date of Termination at the rate in effect on the Date of Termination, (ii)
the product of the Annual Bonus paid to Harmon for the last full fiscal year
and a fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of which is
365 and (iii) any compensation previously deferred (together with any accrued
interest thereon) and not yet paid by the Company and any accrued vacation pay
not yet paid by the Company.
(g) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) and all
"affiliates" and "associates" of such entity (as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act).
2. Employment and Term. The Company agrees to employ Harmon, and
Harmon agrees to serve the Company, as Secretary of the Company until March 1,
1997, unless his employment is otherwise terminated as provided herein;
provided, however, that in the event of a Change of Control during the
foregoing Employment Period, this Agreement shall continue in full force and
-3-
<PAGE> 4
effect for an additional period of three (3) years following the expiration of
the Employment Period (until March 1, 2000).
3. Duties of Harmon. During the period of his employment in the
capacity of Secretary, Harmon agrees to devote his professional skill and
energy to the faithful and full satisfaction of his duties as Secretary. It is
agreed and understood that Harmon will perform all duties assigned to him,
which shall be substantially the same as those performed by Harmon as Secretary
of the Company prior to the date of this Agreement (including status, offices,
titles and reporting requirements), to the full satisfaction of the Board of
Directors. The Company agrees that Harmon shall have such authority and
discretion as is necessary to fully and faithfully perform his duties in a
proper and efficient manner, subject to review by the Board of Directors.
During the period of his employment, it shall not be a violation of
this Agreement for Harmon to (i) serve on corporate, civil or charitable boards
or committees, (ii) deliver lectures or fulfill speaking engagements and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of Harmon's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by
Harmon prior to the date hereof, the continued conduct of such activities (or
the conduct of activities similar in nature and scope thereto) subsequent to
the date hereof shall not thereafter be deemed to interfere with the
performance of Harmon's responsibilities to the Company.
4. Compensation. The Company shall pay to Harmon an annual
salary of One Hundred Five Thousand Dollars ($105,000), payable in equal
monthly installments, or such other amount as shall be mutually agreed upon by
the Company and Harmon, as evidenced by a duly signed Schedule of Compensation
attached hereto and marked as Exhibit "A" (the "Salary"). In addition, Harmon
and/or Harmon's family shall be entitled to all benefits presently provided or
those which may hereafter be provided generally by the Company to its
employees, officers or directors, including health insurance and life
insurance.
5. Termination of Employment. (a) Death or Disability. Harmon's
employment under this Agreement shall terminate automatically upon Harmon's
death. If the Company determines in good faith that the Disability of Harmon
has occurred (pursuant to the definition of "Disability" set forth below), it
may give to Harmon written notice of its intention to terminate Harmon's
employment as Secretary of the Company. In such event, Harmon's employment
with the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by Harmon (the
-4-
<PAGE> 5
"Disability Effective Date"), provided that, within the thirty (30) days after
such receipt, Harmon shall not have returned to full-time performance of his
duties. For purposes of this Agreement, "Disability means disability or
incapacity of Harmon which, at least twenty-six (26) weeks after its
commencement, is determined by the Board of Directors upon competent medical
advice to be such as to prevent Harmon from performing substantially all of the
duties as Secretary of the Company.
(b) Cause. The Company may terminate Harmon's employment for "Cause."
For purposes of this Agreement, "Cause" means (i) an act or acts of personal
dishonesty taken by Harmon and intended to result in substantial personal
enrichment of Harmon at the expense of the Company, (ii) repeated violations by
Harmon of Harmon's obligations under Section 3 of this Agreement which are
demonstratively willful and deliberate on Harmon's part and which are not
remedied in a reasonable period of time after receipt of written notice from
the Company or (iii) the conviction of Harmon of a felony when such conviction
is no longer subject to direct appeal.
(c) Good Reason. Harmon's employment may be terminated by Harmon for
Good Reason. For purposes of this Agreement, "Good Reason" means:
(i) the assignment to Harmon of any duties inconsistent in any
respect with Harmon's position (including status, office, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 3 of this Agreement, or any other action by
the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof
given by Harmon;
(ii) Any failure by the Company to comply with the
provisions of Section 4 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by Harmon;
(iii) the Company's requiring Harmon to be based at any office
or location other than the Company's Corporate Headquarters facility
in Ankeny, Iowa, except for travel reasonably required in the
performance of Harmon's responsibilities;
-5-
<PAGE> 6
(iv) any purported termination by the Company of Harmon's
employment otherwise than for death, Disability or Cause as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 13(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by Harmon shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause
or by Harmon for Good Reason shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 14(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Harmon's employment
under the provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen (15) days after the
giving of such notice). The failure by Harmon to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of Harmon hereunder or preclude Harmon from
asserting such fact or circumstance in enforcing his rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that (i) if Harmon's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies Harmon of such
termination and (ii) if Harmon's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of Harmon or the
Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination of Employment. (a)
Death of Harmon. In the event of the death of Harmon during the Employment
Period, the Company shall pay to Harmon's spouse, commencing on the first day
of the month following his death and continuing for a period of twelve (12)
months thereafter, benefits equal to the monthly installments of Salary which
would have been due to Harmon pursuant to Section 4 herein. Immediately
following such one-year period, the Company shall commence the payment of
monthly benefits to Harmon's spouse equal in amount to one-half (1/2) of the
amount to which Harmon would have been entitled as retirement benefits under
Section 9 herein, which monthly benefits shall be paid for a period of
-6-
<PAGE> 7
twenty (20) years or until the death of Harmon's spouse, whichever occurs
first.
(b) Cause; Other than for Good Reason. If Harmon's employment shall
be terminated for Cause, Harmon's employment under this Agreement shall
terminate without further obligations to Harmon (other than the obligation to
pay to Harmon his Salary through the Date of Termination plus the amount of any
compensation previously deferred by Harmon, together with accrued interest
thereon). If Harmon terminates employment other than for Good Reason, this
Agreement shall terminate without further obligations to Harmon, other than
those obligations accrued or earned and vested (if applicable) by Harmon
through the Date of Termination, including for this purpose, all Accrued
Obligations. All such Accrued Obligations shall be paid to Harmon in a lump
sum in cash within thirty (30) days of the Date of Termination.
(c) Good Reason; Other than for Cause or Disability. If the Company
shall terminate Harmon's employment other than for Cause, Disability, or death
or if Harmon shall terminate his employment for Good Reason at any time during
the Employment Period, except during a three-year period following any Change
of Control (in which case the provisions of Section 6(d) shall apply), then in
such event:
(i) the Company shall pay to Harmon in a lump sum in cash
within thirty (30) days after the Date of Termination the aggregate of
the following amounts:
A. to the extent not theretofore paid, Harmon's
Salary through the Date of Termination; and
B. the product of (x) the highest Annual Bonus paid
to Harmon during the three fiscal years preceding the fiscal
year in which the Date of Termination occurs (the "Recent
Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the date of
Termination and the denominator of which is 365; and
C. the product of (x) two (2.0) and (y) the sum of
(i) the Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred by
Harmon, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by the Company, and
any accrued vacation pay not yet paid by the Company; and
-7-
<PAGE> 8
E. a lump-sum amount representing the present value
of the benefits payable to Harmon under Section 9(a) or 9(c)
hereof in consideration for the services to be performed under
Sections 10 and 12 hereof; and
(ii) for a two-year period following the Date of Termination,
the Company shall continue benefits to Harmon and/or Harmon's family
at least equal to those which would have been provided to them in
accordance with the plans programs, practices and policies provided
under this Agreement if Harmon's employment had not been terminated,
including health insurance and life insurance, in accordance with the
most favorable plans, practices, programs or policies of the Company
and its subsidiaries during the 90-day period immediately preceding
the Date of Termination or, if more favorable to Harmon, as in effect
at any time thereafter with respect to other key employees and their
families.
(d) Good Reason; Other than for Cause or Disability, following a
Change of Control. If, during a three year period following any Change of
Control, the Company shall terminate Harmon's employment other than for Cause,
Disability, or death or if Harmon shall terminate his employment for Good
Reason:
(i) the Company shall pay to Harmon in a lump sum in cash on
the thirtieth (30th) day following after the Date of Termination the
aggregate of the following amounts (unless Harmon requests that such
payments be deferred or reduced as provided in Section 6(e) hereof):
A. to the extent not theretofore paid, Harmon's
Salary through the Date of Termination; and
B. the product of (x) the Recent Bonus and (y) a
fraction, the numerator of which is the number of days in the
current fiscal year through the date of Termination and the
denominator of which is 365; and
C. the product of (x) three (3.0) and (y) the sum of
(i) the Salary and (ii) the Recent Bonus; and
D. in the case of compensation previously deferred by
Harmon, all amounts previously deferred (together with any
accrued interest thereon) and not yet paid by the Company, and
any accrued vacation pay not yet paid by the Company; and
E. a lump-sum amount representing the present value
of the benefits payable to Harmon under Section
-8-
<PAGE> 9
9(a) or 9(c) hereof in consideration for the services to be
performed under Sections 10 and 12 hereof; and
(ii) for a three-year period following the Date of
Termination, the Company shall continue benefits to Harmon and/or
Harmon's family at least equal to those which would have been provided
to them in accordance with the plans programs, practices and policies
provided under this Agreement if Harmon's employment had not been
terminated, including health insurance and life insurance, in
accordance with the most favorable plans, practices, programs or
policies of the Company and its subsidiaries during the 90-day period
immediately preceding the Date of Termination or, if more favorable to
Harmon, as in effect at any time thereafter with respect to other key
employees and their families.
(e) Alternative Cap. In the event that a Change of Control shall
occur and a determination is made by the Company, pursuant to Sections 280G and
4999 of the Code, that a golden parachute excise tax is due, Harmon's benefits
under this Agreement shall be limited to the amount necessary to avoid the
excise tax only if applying such a limit results in a greater net benefit to
Harmon had the benefits not been limited and an excise tax paid.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Harmon's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the
Company and for which Harmon may qualify, nor shall anything herein limit or
otherwise affect such rights as Harmon may have under any stock option or other
agreements with the Company. Amounts which are vested benefits or which Harmon
is otherwise entitled to receive under any plan, policy, practice or program of
the Company at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Harmon or others. In no event shall Harmon be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Harmon under any of the provisions of this Agreement, but such payments
shall be reduced to the extent of Harmon's other earned income (if any) during
any remaining portion of the Employment Period. Following any Change of
Control, the Company agrees to pay, to the full extent permitted by law, all
legal fees and expenses which Harmon may reasonably incur as a result of any
contest (regardless
-9-
<PAGE> 10
of the outcome thereof) by the Company or others (including Harmon) of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof, plus in each case interest
at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.
9. Retirement of Harmon. (a) Normal Retirement. Provided that
this Agreement or an extension thereof remains in effect, it is understood that
Harmon shall retire on the last day of the calendar year during which he
reaches sixty-five (65) years of age, and the Company, in consideration for the
services performed under Sections 3 and 10 hereof, shall pay to Harmon, in such
event, an annual retirement benefit equal to one-half (1/2) of his Salary
(adjusted on an annual basis to include the Annual Increase), which benefits
shall continue to be paid until Harmon's death.
(b) Option of Board of Directors. Provided that this Agreement or
an extension thereof remains in effect, the Board of Directors of the Company,
at its sole option, may offer to extend Harmon's employment on a year-to-year
basis after the calendar year in which Harmon reaches age sixty-five (65). At
the conclusion of each year it will be presumed that Harmon will retire under
terms set out in Section 9(a) above unless the Board of Directors determines to
offer to extend Harmon's employment for an additional year.
(c) Option of Harmon. Provided that this Agreement or an
extension thereof remains in effect, Harmon, upon reaching fifty-five (55)
years of age, at his option, may retire and shall no longer be required to
perform his duties under Section 3 of this Agreement, but Harmon will be
required to perform his duties under Section 10 of this Agreement. If Harmon
elects to retire, the Company shall pay to Harmon an annual retirement benefit,
in lieu of his Salary, in an amount equal to one-fourth (1/4) of his Salary
adjusted on an annual basis to include the Annual Increase and increased each
year by five percent (5%) of the adjusted annual Salary to a maximum of
one-half (1/2) of Harmon's Salary on the date of his retirement, such benefits
to continue to be paid until Harmon's death. The obligation of the Company to
make payments pursuant to this subsection shall not become effective unless and
until Harmon shall have given the Company thirty (30) days written notice of
his intention to retire from active employment with the Company.
(d) Eligibility for Benefits. The provisions of this Section 9
shall become effective and the Company shall be required to pay the benefits
described herein only in the event that, immediately prior to the date of his
retirement, Harmon is
-10-
<PAGE> 11
employed by the Company and this Agreement or an extension hereof remains in
effect.
10. Availability of Harmon After Retirement. Harmon, upon his
retirement pursuant to Section 9(a) or 9(c) hereof, in consideration of
retirement benefits received pursuant to Section 9(a) or 9(c) hereof, shall at
reasonable times and insofar as his physical condition may permit, hold himself
available at the written request of the Board of Director's of the Company to
consult with and advise the officers, directors, and other representatives of
the Company. Such requests for Harmon's service shall, however, be structured
so that reasonable allowances are made for Harmon's needs for vacation time and
for other considerations of his physical well-being. All such services shall
be provided by Harmon at his place of residence unless otherwise agreed to by
Harmon. Harmon shall not be required to devote any prescribed hours to
consulting with and giving advice to the officers, directors, and other
representatives of the Company in order to be entitled to the retirement
benefits as set out in Section 9(a) or 9(c) hereof, but all such benefits shall
be considered as earned in return for the consulting service and advice that
Harmon may give from time to time to the Company, its officers, directors, and
other representatives.
If Harmon's physical condition shall prevent him from consulting and
advising with the officers, directors or other representatives of the Company,
the retirement benefits provided under Section 9(a) or 9(c) hereof, as the case
may be, shall nonetheless be paid as therein provided.
Harmon shall be reimbursed by the Company for all reasonable expenses
incurred as a consultant and advisor, including expenses for travel,
communication, entertainment and similar items, upon presentation of itemized
accounts of such expenditures.
11. Discretion of Board of Directors. Notwithstanding any other
term or provision of this Agreement to the contrary, nothing stated herein is
intended to, nor shall it be construed, to abrogate, limit, alter or affect the
authority, rights and privileges of the Board of Directors of the Company to
remove Harmon as Secretary of the Company, without Cause, or during the term of
this Agreement to elect as Secretary of the Company a person other than Harmon,
as provided by the laws of the State of Iowa; provided, however, it is
expressly agreed and understood that, in the event any one or any combination
of such events occurs, unless Harmon is terminated for Cause as defined in
Section 5(b) hereof, Harmon shall be entitled to terminate his employment for
Good Reason (as defined in Section 5(c) hereof) and
-11-
<PAGE> 12
receive the benefits described in either Section 6(c) or Section 6(d) of this
Agreement, as applicable.
12. Confidential Information; Restrictive Covenant.
(a) During the period of his employment, Harmon shall hold in fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall have been obtained by Harmon during Harmon's
employment by the Company or any of its subsidiaries and which shall not be or
become public knowledge (other than by acts by Harmon or his representatives in
violation of this Agreement). During a three (3) year period following
termination of Harmon's employment with the Company, Harmon shall not, without
the prior written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it.
(b) While this Agreement remains in effect and Harmon is entitled
to compensation or benefits pursuant to Sections 4 through 6 hereof (or, in the
event of termination of his employment for Good Reason, for a period of three
(3) years thereafter), Harmon shall not directly or indirectly associate with,
participate in or render service to, whether as an employee, officer, director,
consultant, independent contractor or otherwise, any organization that is
engaged in business in competition with the Company, and he shall not himself
engage in any such business on his own account.
(c) In the event of a demonstrated breach of this Section 12, the
parties agree that the Company shall be entitled to seek equitable relief in a
court of competent jurisdiction to prevent any anticipated continuing breach of
the terms and conditions of this Section 12 and to secure the enforcement
thereof. The foregoing remedy shall be exclusive and in lieu of any other
remedy otherwise available to the Company under law.
13. Successors. (a) This Agreement is personal to Harmon and without
the prior written consent of the Company shall not be assignable by Harmon
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Harmon's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company agrees and covenants to require (i) any successor or
assignee (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company through a Change of
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<PAGE> 13
Control or otherwise, and, (ii) within its lawful power to do so, any party
effecting or taking steps to accomplish a Change of Control, to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession or Change of Control had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
14. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Iowa, without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows: If the Company, to Casey's General Stores, Inc., P. O. Box 2001, One
Convenience Blvd., Ankeny, Iowa 50021, Attention: President; and if to Harmon,
to his address appearing on the books of the Company, or to his residence, or
to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Company's or Harmon's failure to insist upon strict compliance
with any provision hereof shall not be deemed to be a waiver of such provision
or any other provision thereof.
(f) This Agreement contains the entire understanding of the Company
and Harmon with respect to the subject matter hereof, and shall serve to
terminate the Employment Agreement dated as of March 2, 1992 between the
Company and Harmon.
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<PAGE> 14
(g) No change, amendment or modification of this Agreement, including
Exhibit "A" attached hereto, shall be valid unless the same be in writing and
signed by the Company and Harmon.
(h) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument with the same force and effect as
if all the parties had executed the same document.
IN WITNESS WHEREOF, the respective parties have caused this Agreement
to be executed as of the day and year first above written.
CASEY'S GENERAL STORES, INC.
By /s/ Ronald M. Lamb
----------------------------
Ronald M. Lamb, President
ATTEST:
/s/ Eli J. Wirtz
- - ---------------------------------
Eli J. Wirtz, Assistant Secretary
/s/ John G. Harmon
----------------------------
John G. Harmon
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<PAGE> 15
EXHIBIT "A"
Schedule of Compensation
for
John G. Harmon, Secretary
AMENDMENT NO. ____
As provided in Section 4 of that certain Employment Agreement by and between
Casey's General Stores, Inc. and John G. Harmon, dated as of ____________,
1994, to which this Exhibit "A" is attached, the undersigned Casey's General
Stores, Inc., by authority of its Board of Directors, and John G. Harmon hereby
agree that, effective as of the ______ day of __________________, 19__, the
annual salary of John G. Harmon shall be the sum of
_____________________________________ _________________________
($_____________) (defined in said Employment Agreement as his "Salary").
Dated this _______ day of _______________________, 19__.
CASEY'S GENERAL STORES, INC.
By ________________________________
Ronald M. Lamb, President
ATTEST:
_________________________________
Eli J. Wirtz, Assistant Secretary
___________________________________
John G. Harmon
<PAGE> 1
EXHIBIT 11
CASEY'S GENERAL STORES, INC.
____________________________
COMPUTATION OF PER SHARE EARNINGS
Primary earnings per share - The computation of primary earnings per share is
not presented since such computation can be clearly determined from the
material contained in the Financial Statements and notes thereto included in
the Company's Annual Report to Shareholders for the fiscal year ended April 30,
1994.
Fully diluted earnings per share - The following sets forth the computation of
per share earnings on a fully diluted basis:
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net income $16,564,097 $13,323,156 $11,513,744
Interest savings net of
income taxes on assumed
conversion of convertible
debentures 1,220,747 1,356,250 1,361,719
----------- ----------- -----------
Earnings applicable to
fully diluted shares $17,784,844 $14,679,406 $12,875,463
----------- ----------- -----------
----------- ----------- -----------
Average common shares
outstanding 22,571,288 22,162,124 22,057,684
Average common equivalent
shares applicable to
stock options 125,704 32,446 57,738
Average common shares
issuable on assumed
conversion of convertible
debentures 3,320,836 3,684,210 3,684,210
----------- ----------- -----------
26,017,828 25,878,780 25,799,632
----------- ----------- -----------
----------- ----------- -----------
Earnings per share-fully
diluted basis (A) $ .68 $ .57 $ . 50
----------- ----------- -----------
</TABLE>
(A) Fully diluted earnings per share cannot exceed primary earnings per share.
<PAGE> 1
EXHIBIT 13
CASEY'S GENERAL STORES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30
----------------------------------------------------
ASSETS 1994 1993
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,151,664 $ 2,121,023
Short-term investments 8,720,235 15,964,340
Receivables 2,839,900 2,147,641
Inventories (Note 1) 23,754,256 25,728,476
Prepaid expenses (Note 4) 2,903,208 551,891
----------- -----------
Total current assets 41,369,263 46,513,371
- - ------------------------------------------------------------------------------------------------------------------------------
Long-term investments 11,234,304 14,497,648
Other assets, net of amortization 1,259,138 2,384,484
Property and equipment, at cost:
Land 34,778,207 27,596,097
Buildings and leasehold improvements 131,531,440 106,098,220
Machinery and equipment 176,020,053 148,223,940
Leasehold interest in property and equipment (Note 5) 13,979,559 11,707,337
----------- -----------
356,309,259 293,625,594
Less accumulated depreciation and amortization 91,934,088 76,244,255
----------- -----------
Net property and equipment 264,375,171 217,381,339
----------- -----------
$ 318,237,876 $ 280,776,842
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks (Note 2) $ 18,500,000 $ 12,750,000
Current maturities of long-term debt (Note 2) 4,850,875 2,826,764
Accounts payable 37,414,028 25,142,803
Accrued expenses: Salaries and wages 2,130,418 2,218,769
Other (Note 8) 12,538,373 12,191,898
Income taxes payable 18,928 326,046
----------- -----------
Total current liabilities 75,452,622 55,456,280
- - ------------------------------------------------------------------------------------------------------------------------------
Long-term debt, net of current maturities (Note 2) 61,414,871 98,956,360
Deferred income taxes (Note 4) 21,983,000 17,566,000
Deferred compensation (Note 7) 977,750 822,302
Commitments and contingencies (Notes 5, 7 and 8)
Shareholders' equity (Notes 2 and 3):
Capital stock: Preferred, no par value, none issued - - - - - - - - - - - -
Common, no par value, 25,921,020 and
22,176,956 shares issued and outstanding
at April 30, 1994 and 1993, respectively 60,887,327 25,435,693
Retained earnings 97,522,306 82,540,207
----------- -----------
Total shareholders' equity 158,409,633 107,975,900
----------- -----------
$ 318,237,876 $ 280,776,842
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 2
STATEMENTS
OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30
----------------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Net sales $ 731,206,162 $ 673,696,856 $ 606,585,663
Franchise revenue 5,120,526 4,897,660 4,990,768
--------------- -------------- --------------
736,326,688 678,594,516 611,576,431
Cost of goods sold 574,143,909 533,534,357 480,357,096
Operating expenses 110,082,785 102,379,142 94,208,691
Depreciation and amortization 18,622,815 15,942,771 13,704,407
Interest, net (Note 2) 6,434,082 5,249,090 4,808,493
--------------- -------------- --------------
709,283,591 657,105,360 593,078,687
Income before income taxes 27,043,097 21,489,156 18,497,744
Provision for income taxes (Note 4) 10,479,000 8,166,000 6,984,000
--------------- -------------- --------------
Net income $ 16,564,097 $ 13,323,156 $ 11,513,744
- - -----------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------
Earnings per common and common
equivalent share (Note 3):
Primary $ .73 $ .60 $ .52
Fully diluted $ .68 $ .57 $ .50
- - -----------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENTS OF
SHAREHOLDERS' EQUITY
COMMON RETAINED
STOCK EARNINGS TOTAL
----------- ------------ -------
<S> <C> <C> <C>
Balance April 30, 1991 $ 24,512,697 $ 60,300,589 $ 84,813,286
Net income - - - - - - 11,513,744 11,513,744
Payment of dividends (6 cents per share) - - - - - - (1,267,700) (1,267,700)
Proceeds from exercise of stock options
(102,852 shares) 388,809 - - - - - - 388,809
Common Stock issued to acquire
property and equipment (50,000 shares) 406,250 - - - - - - 406,250
--------------- -------------- -------------
Balance April 30, 1992 25,307,756 70,546,633 95,854,389
Net income - - - - - - 13,323,156 13,323,156
Payment of dividends (6 cents per share) - - - - - - (1,329,582) (1,329,582)
Proceeds from exercise of stock options
(23,000 shares) 127,937 - - - - - - 127,937
--------------- -------------- -------------
Balance April 30, 1993 25,435,693 82,540,207 107,975,900
Net income - - - - - - 16,564,097 16,564,097
Payment of dividends (7 1/2 cents per share) - - - - - - (1,581,998) (1,581,998)
Conversion of Convertible Subordinated Debentures
(3,683,064 shares) 34,991,321 - - - - - - 34,991,321
Proceeds from exercise of stock options
(61,000 shares) 460,313 - - - - - - 460,313
--------------- -------------- -------------
Balance April 30, 1994 $ 60,887,327 $ 97,522,306 $ 158,409,633
- - -----------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 3
STATEMENTS OF
CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30
--------------------------------------------------------------
CASH FLOWS FROM OPERATIONS: 1994 1993 1992
-------- -------- --------
Net income $ 16,564,097 $ 13,323,156 $ 11,513,744
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 18,622,815 15,942,771 13,704,407
Deferred income taxes 2,100,000 2,650,000 2,200,000
Changes in assets and liabilities:
Receivables (692,259) (221,408) 5,459
Inventories 1,974,220 (3,830,179) (1,633,591)
Prepaid expenses (34,317) (122,438) 145,052
Accounts payable 12,271,225 (4,183,073) 5,230,125
Accrued expenses 258,124 7,050,406 2,119,815
Income taxes payable (307,118) (590,424) (560,969)
Other, net 1,972,387 305,962 852,726
------------- ------------ ------------
NET CASH PROVIDED BY OPERATIONS 52,729,174 30,324,773 33,576,768
Cash flows from investing:
Purchase of property and equipment (62,879,021) (49,362,394) (34,779,916)
Purchase of investments (7,179,357) (58,706,729) (3,602,519)
Sale of investments 17,523,129 35,838,590 2,485,877
------------- ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (52,535,249) (72,230,533) (35,896,558)
Cash flows from financing:
Proceeds from long-term debt - - - - - - 40,500,000 - - - - - -
Payments of long-term debt (3,791,599) (2,548,216) (1,813,661)
Net activity of short-term debt 5,750,000 5,750,000 3,750,000
Proceeds from exercise of stock options 460,313 127,937 388,809
Payment of cash dividends (1,581,998) (1,329,582) (1,267,700)
------------- ------------ ------------
Net cash provided by financing activities 836,716 42,500,139 1,057,448
------------- ------------ ------------
Net increase (decrease) in cash and cash equivalents 1,030,641 594,379 (1,262,342)
Cash and cash equivalents at beginning of year 2,121,023 1,526,644 2,788,986
------------- ------------ ------------
Cash and cash equivalents at end of year $ 3,151,664 $ 2,121,023 $ 1,526,644
- - -------------------------------------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SUPPLEMENTAL DISCLOSURES OF
CASH FLOWS INFORMATON
<S> <C> <C> <C>
Cash paid during the year for
Interest (net of amount capitalized) $ 7,730,310 $ 5,816,158 $ 5,175,436
Income taxes 9,034,500 6,106,424 5,494,969
Noncash investing and financing activities:
Property and equipment acquired through
the issuance of Common Stock - - - - - - - - - - - - 406,250
Property and equipment acquired through capital
lease obligations and installment purchases 3,264,221 408,076 195,039
Cancellation of capitalized lease obligation - - - - - - - - - - - - 508,989
Conversion of Convertible Subordinated Debentures 34,991,321 - - - - - - - - - - - -
- - -------------------------------------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 4
NOTES TO
FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS - Casey's General Stores, Inc. (the Company) operates 876
convenience stores in 8 midwestern states. At April 30, 1994, the Company owned
or leased 687 of these stores with 189 stores being owned or leased by
franchisees. The stores are located primarily in smaller communities, most with
populations of fewer than 5,000.
CASH EQUIVALENTS - Cash equivalents consist of money market funds. For purposes
of the statements of cash flows, the Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents.
INVESTMENTS - Investments consist of treasury notes and tax-exempt revenue
and municipal bonds. The investments are stated at cost plus accrued interest,
which approximates market.
The Financial Accounting Standards Board (FASB) has issued Statement 115,
"Accounting for Certain Investments in Debt and Equity Securities." Statement
115, effective for fiscal years beginning after December 15, 1993, expands the
use of fair value accounting for those securities but retains the use of the
amortized cost method for investments in debt securities that the
reporting enterprise has the positive intent and ability to hold to maturity.
The Company anticipates its short-term and long-term investments will be
classifed as "held-to-maturity" securities and the financial statement impact
will not be material to the financial statements. The Company expects to adopt
Statement 115 in the first quarter of fiscal 1995 on a prospective basis.
INVENTORIES - Inventories, which consist of merchandise and gasoline, are
stated at the lower of cost or market, which, as to merchandise in stores, is
determined by the retail method. Cost is determined using the last-in, first-out
(LIFO) method. Such inventory value is approximately $6,887,000 and $5,987,000
below replacement cost as of April 30, 1994 and 1993, respectively.
DEPRECIATION AND AMORTIZATION - Depreciation of property and equipment and
amortization of capital lease assets are computed principally by the
straight-line method over the following estimated useful lives:
Buildings 30-40 Years
Machinery and equipment 5-30 Years
Leasehold interest in property
and equipment Lesser of term of lease or life of asset
Leasehold improvements Lesser of term of lease or life of asset
INTANGIBLES - The excess of cost over the underlying value of the tangible
net assets of companies acquired is included in other assets and is being
amortized on a straight-line basis over 20 years.
DEBENTURE ISSUANCE COSTS - Costs associated with the issuance of the
Convertible Subordinated Debentures were included in other assets and amortized
over the 25-year term of the Debentures until written off upon conversion of the
Debentures in 1994.
EARNINGS PER SHARE - Primary earnings per share is determined by dividing net
income by the weighted average number of common shares and common
equivalent shares, consisting of options to purchase common shares, outstanding
during the year. Fully diluted earnings per share further assume that the
Convertible Subordinated Debentures were converted to Common Stock at the
beginning of the period and no interest expense was paid on the Debentures. The
weighted average common and common equivalent shares outstanding on a primary
basis were 22,651,334, 22,193,462 and 22,095,832 for 1994, 1993 and 1992,
respectively, and on a fully diluted basis were 26,017,828, 25,878,780 and
25,799,632 for 1994, 1993 and 1992, respectively.
EXCISE TAXES - Excise taxes approximating $121,000,000, $101,000,000 and
$86,300,000 collected from customers on retail gasoline sales are included in
net sales for 1994, 1993 and 1992, respectively.
INCOME TAXES - In February 1992, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Statement 109 requires a change from the deferred
<PAGE> 5
NOTES TO
FINANCIAL STATEMENTS (CONTINUED)
method of accounting for income taxes of APB Opinion 11 to the asset and
liability method of accounting for income taxes. Under the asset and liability
method of Statement 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
Effective May 1, 1993, the Company adopted Statement 109 and the
cumulative effect of that change was not material to the financial statements.
Pursuant to the deferred method under APB Opinion 11, which was applied in 1993
and prior years, deferred income taxes were recognized for income and expense
items that were reported in different years for financial reporting purposes and
income tax purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes were not adjusted for
subsequent changes in tax rates.
RECLASSIFICATION - Certain amounts from the prior year have been reclassified to
conform with current year presentation.
2. FAIR VALUE OF FINANCIAL INSTRUMENTS AND LONG-TERM DEBT
The fair value of the Company's financial instruments is summarized below.
CASH AND CASH EQUIVALENTS, INVESTMENTS, RECEIVABLES AND ACCOUNTS PAYABLE
- - - The carrying amount approximates fair value because of the short maturity of
these instruments or due to the recent purchase of the instruments at current
rates of interest.
NOTES PAYABLE TO BANKS - The carrying amount approximates fair value due
to variable interest rates on these notes.
LONG-TERM DEBT - The fair value of the Company's long-term debt, excluding
capital lease obligations, is estimated based on the quoted market prices for
the issue or on the current rates offered to the Company for debt of the same
or similar issues. The fair value and carrying value of the Company's long-term
debt, excluding capital lease obligations, was approximately $55,000,000 and
$96,000,000, respectively, at April 30, 1994 and 1993.
<TABLE>
<CAPTION>
APRIL 30
----------------------
1994 1993
-------- --------
<S> <C> <C>
Capitalized lease obligations, discounted at rates of
7.3% to 15.3%, due in various monthly installments
through 2008 (Note 5) $ 10,265,048 $ 8,240,374
Mortgage notes payable due in various monthly installments
through 2004 with interest at 8% to 9.5% 16,719,448 18,417,750
Unsecured notes payable to banks due in various monthly and
quarterly installments through 1997 with variable
rates of interest 9,281,250 10,125,000
7.70% Senior Notes due in 40 quarterly installments beginning in
March 1995 30,000,000 30,000,000
6.25% Convertible Subordinated Debentures due May 1, 2012,
converted March 28, 1994 - - - - - - 35,000,000
-------------- -------------
66,265,746 101,783,124
Less current maturities 4,850,875 2,826,764
-------------- -------------
$ 61,414,871 $ 98,956,360
- - -----------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 6
Various debt agreements contain certain operating and financial covenants.
Aggregate maturities of long-term debt, including capitalized lease
obligations, during the four years commencing May 1, 1995 and thereafter are:
YEAR ENDING APRIL 30
--------------------
1996 $ 7,249,861
1997 7,449,224
1998 9,330,077
1999 5,657,546
Thereafter 31,728,163
--------------
$ 61,414,871
--------------
--------------
Mortgage notes payable includes an $18,900,000 Secured Promisory Note, Mortgage
and Security Agreement with a balance of $15,826,955 and $16,650,783 at April
30, 1994 and 1993, respectively. The mortgage note has a 15-year term, bears
interest at the rate of 9.42%, is payable in monthly installments and is secured
by property with a depreciated cost of approximately $16,700,000 at April 30,
1994.
The Company's $35,000,000 of Convertible Subordinated Debentures were converted
on March 28, 1994 into 3,683,064 shares of Common Stock at the conversion price
of $9.50 per share.
Interest expense is net of interest income of $1,146,486, $709,952 and $401,796
for the years ended April 30, 1994, 1993 and 1992, respectively. Interest
expense in the amount of $418,600, $273,600 and $171,350 was capitalized during
the years ended April 30, 1994, 1993 and 1992, respectively.
At April 30, 1994 and 1993, notes payable to banks consisted of $25,000,000 and
$20,000,000 lines of credit with balances owed of $18,500,000 and $12,750,000,
respectively. Within the notes payable to banks, $10,000,000 on a $15,000,000
line of credit is due on demand and $8,500,000 on a $10,000,000 line of credit
is due December 31, 1994. The weighted average interest rate was 4.48% at April
30, 1994 and 3.83% at April 30, 1993.
3. PREFERRED AND COMMON STOCK
PREFERRED STOCK - The Company has 1,000,000 authorized shares of
preferred stock, none of which have been issued.
COMMON STOCK - The Company has 60,000,000 authorized shares of Common Stock.
Effective February 16, 1994 the Company approved a two-for-one stock split
effected in the form of a 100% stock dividend. All share and earnings per share
amounts have been restated to give effect to the stock split.
COMMON SHARE PURCHASE RIGHTS - On June 14, 1989, the Board of Directors adopted
a Shareholder Rights Plan (Rights Plan). In connection with the adoption of the
Rights Plan, the Board of Directors declared a dividend distribution of one
Common Share Purchase Right for each share of Common Stock held at the close
of business on June 14, 1989. The Rights become exercisable 10 days following a
public announcement that 20% or more of the Company's Common Stock has been
acquired or such an intent to acquire has become apparent. The Rights will
expire on the earlier of June 14, 1999 or redemption by the Company. Certain
terms of the Rights are subject to adjustment to prevent dilution. Further
description and terms of the Rights are set forth in the Rights Agreement
between the Company and United Missouri Bank, n.a. as Rights Agent.
STOCK OPTION PLAN - Under an incentive stock option plan, options can be granted
to certain officers and key employees to purchase an aggregate of 2,280,000
shares of Common Stock at option prices not less than the fair market value
(110% of fair market value as to holders of 10% or more of the Company's
stock) at the date the options are granted. Options for 946,832 shares were
available for grant at April 30, 1994 and options for 422,000 shares (which
expire in 1997, 1999, 2001 and 2003) were outstanding as follows:
13
<PAGE> 7
NOTES TO
FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
Price Range Aggregate
Shares Per Share Exercise Price
------ ------------ --------------
<S> <C> <C> <C>
Outstanding and exercisable at April 30, 1991 262,852 $ 2.34-9.00 $ 1,577,859
Granted in fiscal 1992 146,000 7.25-7.69 1,113,625
Exercised in fiscal 1992 102,852 2.34-4.81 388,809
------- -------------
Outstanding and exercisable at April 30, 1992 306,000 4.81-9.00 2,302,675
Exercised in fiscal 1993 23,000 4.81-7.69 127,937
------- -------------
Outstanding and exercisable at April 30, 1993 283,000 4.81-7.69 2,174,738
Granted in fiscal 1994 220,000 10.25 2,255,000
Exercised in fiscal 1994 61,000 4.81-7.69 460,313
Cancelled in fiscal 1994 20,000 4.81-10.25 118,925
------- -------------
Outstanding and exercisable at April 30, 1994 422,000 $ 3,850,500
------- -------------
------- -------------
</TABLE>
4. INCOME TAXES
As discussed in note 1, the Company adopted Statement 109 as of May 1, 1993.
Prior years' financial statements have not been restated to apply the provisions
of Statement 109.
Income tax expense attributable to income from operations is comprised of the
following components:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
-----------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Current tax expense: Federal $ 7,060,000 $ 4,499,000 $ 3,916,000
State 1,319,000 1,017,000 868,000
------------- ------------ ------------
8,379,000 5,516,000 4,784,000
Deferred tax expense 2,100,000 2,650,000 2,200,000
------------- ------------ ------------
Total income tax provision $ 10,479,000 $ 8,166,000 $ 6,984,000
</TABLE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
For the years ended April 30, 1993 and 1992, deferred income tax expense results
from timing differences in the recognition of revenue and expense for income
tax and financial reporting purposes. The sources of these differences and the
tax effect of each are as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
-----------------------------
1993 1992
----------- -----------
<S> <C> <C>
Excess of tax over book depreciation $ 2,988,000 $ 2,551,000
Amortization of other assets previously
allowed for tax purposes (128,000) (133,000)
Accrued vacation pay (117,000) (100,000)
Other (93,000) (118,000)
------------ ------------
$ 2,650,000 $ 2,200,000
</TABLE>
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at April 30,
1994 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Accrued liabilities $ 2,317,000
Alternative minimum tax credit carry forwards 1,500,000
Other 383,000
----------------
Total gross deferred tax assets 4,200,000
Deferred tax liabilities: ----------------
Excess of tax over book depreciation (23,771,000)
Other (95,000)
----------------
Total gross deferred liabilities (23,866,000)
----------------
Net deferred tax liability $ (19,666,000)
</TABLE>
Current deferred tax asset relates to accrued liabilities and is included
with prepaid expenses.
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
14
<PAGE> 8
The alternative minimum tax credit carryforward for income tax purposes of
approximately $1,500,000 is available to offset future regular tax in excess of
minimum tax over an indefinite period.
Total reported tax expense applicable to the Company's operations varies
from the tax that would have resulted by applying the statutory U.S. federal
income tax rates to income before income taxes for the following reasons:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1994
-------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Income taxes at the statutory rates 35.0% 34.0% 34.0%
State income taxes, net of federal tax benefit 4.4 4.5 4.4
Other (.7) (.5) (.6)
----- ----- -----
38.7% 38.0% 37.8%
----- ----- -----
----- ----- -----
</TABLE>
5. LEASES
The Company leases certain property and equipment used in its operations.
Generally, the leases are for primary terms of from 5 to 20 years with
options either to renew for additional periods or to purchase the premises and
generally call for payment of property taxes, insurance and maintenance by the
lessee.
The following is an analysis of the leased property under capital leases
by major classes:
<TABLE>
<CAPTION>
ASSET BALANCES AT APRIL 30
--------------------------
1994 1993
--------- ---------
<S> <C> <C>
Real estate $ 9,049,491 $ 9,661,990
Equipment 4,930,068 2,045,347
13,979,559 11,707,337
Less accumulated amortization 5,033,727 4,816,794
------------ -------------
$ 8,945,832 $ 6,890,543
------------ -------------
------------ -------------
</TABLE>
Future minimum payments under the capital leases and noncancellable operating
leases with initial or remaining terms of one year or more consisted of the
following at April 30, 1994:
<TABLE>
<CAPTION>
YEAR ENDING APRIL 30 CAPITAL LEASES OPERATING LEASES
- - -------------------- --------------------------------
<S> <C> <C>
1995 $ 2,051,910 $ 412,000
1996 2,028,631 397,000
1997 2,008,373 390,000
1998 1,943,909 351,000
1999 1,666,686 276,000
Thereafter 4,943,767 1,811,000
Total minimum lease payments 14,643,276 $ 3,637,000
Less amount representing interest 4,378,228 -----------
Present value of net minimum lease payments $ 10,265,048 -----------
--------------
--------------
</TABLE>
The total rent expense under operating leases was $898,000 in 1994, $760,000
in 1993 and $702,000 in 1992.
6. BENEFIT PLANS
EMPLOYEE STOCK OWNERSHIP PLAN - The Company has an Employees' Stock Ownership
Plan and Trust (Plan) which covers all employees who meet minimum age and
service requirements. Contributions to the Plan can be made by the Company
in either cash or shares of Common Stock. The discretionary contribution is
allocated to participants by a formula based on compensation. Plan expense was
$550,000, $500,000 and $450,000 for the years ended April 30, 1994, 1993 and
1992, respectively.
On April 30, 1994, the Company had 2,880 full-time employees and 4,393
part-time employees, of which approxi-
15
<PAGE> 9
NOTES TO
FINANCIAL STATEMENTS - CONTINUED
mately 2,900 were participants in the Plan. As of that same date, the Trustee
under the Plan held 2,333,520 shares of Common Stock in trust for
participants in the Plan and may distribute such shares to eligible participants
upon death, disability, retirement or termination of employment.
401(K) PLAN- The Company has a defined contribution 401(k) plan which covers all
employees who meet minimum age and service requirements. Employees may make
voluntary contributions. The Company contributions consist of matching and
discretionary amounts. The Company contributions are allocated based upon
employee contributions and compensation. Expense for the 401(k) plan was
approximately $406,000, $345,000 and $304,000 for the years ended April 30,
1994, 1993 and 1992, respectively.
7. COMMITMENTS
In March 1992 the Company entered into five-year employment agreements with each
of two officer-shareholders. The agreements provide that each officer-
shareholder will receive compensation exclusive of bonuses at the rate of
$250,000 per year or such amount as the Company and the officer mutually shall
agree. These agreements also provide for certain payments in the case of death
or disability of the officer-shareholder.
Each agreement further provides for the voluntary retirement of the officer at
age 65, or upon reaching 59 years of age and having completed 25 years of
employment with the Company, with an annual retirement benefit equal to 50
percent of his most recent salary. Certain provisions of the employment
agreements provide for the Company to pay upon termination of the officer-
shareholder's employment other than for cause, disability or death, two to three
times the sum of the annual salary and bonus, plus the present value of 50
percent of his most recent annual salary, if eligible for retirement benefits,
until death, payable in a lump sum upon termination. The Company is accruing for
the deferred compensation over the expected term of employment.
8. CONTINGENCIES
ENVIRONMENTAL COMPLIANCE-The United States Environmental Protection Agency and
several states have adopted laws and regulations relating to underground storage
tanks used for petroleum products. Several states in which the Company does
business have trust fund programs with provisions for sharing or reimbursing
corrective action or remediation costs. Such programs, other than the state of
Iowa, generally are in the early stages of operation and the extent of the
available coverage or reimbursement under such programs for costs incurred by
the Company is not fully known at this time.
Management currently estimates that aggregate capital expenditures for
electronic monitoring, cathodic protection and overfill/spill protection will
approximate $2,000,000 in fiscal 1995 through December 23, 1998, to comply with
existing regulations. The Company has accrued a liability at April 30, 1994
and 1993, respectively, of approximately $3,200,000 and $2,900,000 for
estimated expenses related to the corrective action or remediation efforts,
including relevant legal and consulting costs. Management believes the Company
has no material joint and several environmental liability with other parties.
Additional regulations, or amendments to the existing regulations, could result
in future revisions to such estimated expenditures.
LEGAL MATTERS-The Company is a defendant in several lawsuits arising in the
normal course of business, including a class action lawsuit alleging violations
of federal anti-trust laws and unfair price discrimination. In the opinion
of management, the outcome of all such matters is not expected to have a
material effect on the financial position of the Company.
OTHER-At April 30, 1994, the Company is partially self-insured for workman's
compensation claims, in all states except Iowa, Missouri and Kansas, general
liability and auto liability all under an agreement which provides for annual
stop-loss limits equal to or exceeding approximately $2,100,000. Letters of
credit approximating $3,100,000 were issued and outstanding at April 30,
1994, on the insurance company's behalf to facilitate this agreement. The
Company is self-insured for Iowa, Missouri and Kansas workman's compensation
claims at April 30, 1994. Approximately $1,300,000 of investments are in escrow
as required by these states. Additionally, the Company is self-insured for its
portion of employee medical expenses. At April 30, 1994 and 1993, the Company
has accrued $4,200,000 and $3,800,000, respectively, for estimated claims
relating to self insurance.
16
<PAGE> 10
INDEPENDENT
AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
CASEY'S GENERAL STORES, INC.:
We have audited the accompanying balance sheets of Casey's General Stores, Inc.
as of April 30, 1994 and 1993, and the related statements of income,
shareholders' equity and cash flows for each of the years in the three-year
period ended April 30, 1994. These financial statements are the responsibility
of the Company+s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Casey's General Stores, Inc.
as of April 30, 1994 and 1993, and the results of its operations and its
cash flows for each of the years in the three-year period ended April 30, 1994
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK
DES MOINES, IOWA
JUNE 21, 1994
<PAGE> 11
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Casey's derives its revenue from retail sales of food (including freshly
prepared foods such as pizza, donuts and sandwiches), beverages and non-food
products such as health and beauty aids, tobacco products, automotive products
and gasoline by Company Stores and from wholesale sales of certain grocery
and general merchandise items and gasoline to Franchised Stores. The Company
also generates revenues from continuing monthly royalties based on sales by
Franchised Stores, sign and facade rental fees and the provision of certain
maintenance, transportation and construction services to the Company's
franchisees. A typical store is generally not profitable for its first year of
operation due to start-up costs and will usually attain representative levels
of sales and profits during its third year of operation.
The following tables set forth, for the periods indicated, the Company's net
sales and gross profits according to its major revenue categories, and average
sales and earnings information for Company and Franchised Stores:
COMPANY
NET SALES AND
GROSS PROFITS
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30
------------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
NET SALES (1):
RETAIL SALES:
Grocery and general merchandise $ 281,235,753 $ 253,896,883 $ 233,527,291
Gasoline 377,807,750 351,361,731 302,201,644
------------- ------------- -------------
659,043,503 605,258,614 535,728,935
------------- ------------- -------------
------------- ------------- -------------
WHOLESALE SALES:
Grocery and general merchandise 37,678,157 35,933,683 34,980,022
Gasoline 24,530,239 23,741,451 24,565,157
------------- ------------- -------------
62,208,396 59,675,134 59,545,179
------------- ------------- -------------
------------- ------------- -------------
GROSS PROFITS (2):
RETAIL SALES:
Grocery and general merchandise 109,812,153 103,051,219 90,810,873
Gasoline 38,045,217 28,755,619 24,902,701
------------- ------------- -------------
147,857,370 131,806,838 115,713,574
------------- ------------- -------------
------------- ------------- -------------
WHOLESALE SALES:
Grocery and general merchandise 1,282,100 1,464,205 1,311,618
Gasoline 467,224 541,510 704,762
------------- ------------- -------------
1,749,324 2,005,715 2,016,380
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
18
<PAGE> 12
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
<TABLE>
<CAPTION>
INDIVIDUAL
STORE INFORMATION (3)
YEARS ENDED APRIL 30
------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
COMPANY STORES:
Average retail sales $ 1,006,420 $ 977,310 $ 913,522
Average retail sales of grocery and
general merchandise 433,256 411,582 399,731
Average gross profit on grocery and
general merchandise 160,476 158,067 147,970
Average retail sales of gasoline 573,165 565,728 513,791
Average number of gallons sold 570,253 540,999 492,115
Average gross profit on gasoline 61,641 45,969 41,556
Average operating income (4) 73,553 61,162 54,211
Franchised Stores:
Average franchise revenue (5) 27,215 25,529 24,420
</TABLE>
(1) Net sales excludes franchise revenue and charges to franchisees for certain
maintenance, transportation and construction services provided by the Company.
(2) Gross profits represent net sales less costs of goods sold.
(3) Includes only those stores that had been in operation for at least one
full year prior to April 30 of the fiscal year indicated.
(4) Represents retail sales less cost of goods sold, including cost of
merchandise, financing costs and operating expenses attributable to a
particular store, but excluding federal and state income taxes, operating
expenses of the Company not attributable to a particular store, and payments by
the Company to its benefit plans.
(5) Includes a royalty fee equal to 3% of gross receipts derived from store
sales of non-gasoline items, a royalty fee of $.018 per gallon on
gasoline sales and sign and facade rental fees.
-19-
<PAGE> 13
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
FISCAL 1994 COMPARED TO FISCAL 1993
Net sales for fiscal 1994 increased by $57,509,000 (8.5%) over fiscal 1993.
Retail gasoline sales increased by $26,446,000 (7.5%) as the number of gallons
sold increased by 39,770,000 (11.8%). During fiscal 1994, retail sales of
grocery and general merchandise increased by $27,339,000 (10.8%) due to the net
addition of 48 new Company Stores and a greater number of stores in operation
for at least three years.
Cost of goods sold as a percentage of net sales was 78.5% for fiscal 1994
compared to 79.2% for the prior year. This result occurred because the gross
profit margin on retail gasoline sales increased.
Operating expenses as a percentage of net sales were 15.1% for fiscal 1994
compared to 15.2% for the prior year. The decrease in operating expenses
as a percentage of net sales was caused primarily by increased sales and the
increased number of Company Stores in operation.
Average operating income per Company Store increased by $12,391 (20.3%)
primarily as the result of increases in the average sales of gasoline and
grocery and general merchandise.
Net income increased by $3,241,000 (24.3%). The increase in net income was
attributable primarily to increases in retail sales and an increased number
of stores in operation at least three years.
In February 1992, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Statement 109 requires a change from the deferred method of
accounting for income taxes of APB Opinion 11 to the asset and liability method
of accounting for income taxes. Under the asset and liability method of
Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date. Effective May 1, 1993, the Company adopted Statement 109 and the
cumulative effect of that change was not material to the financial statements.
Pursuant to the deferred method under APB Opinion 11, which was applied in 1993
and prior years, deferred income taxes are recognized for income and expense
items that are reported in different years for financial reporting purposes and
income tax purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes are not adjusted for
subsequent changes in tax rates.
The FASB has issued Statement 115, "Accounting for Certain Investments
in Debt and Equity Securities." Statement 115, effective for fiscal years
beginning after December 15, 1993, expands the use of fair value accounting for
those securities but retains the use of the amortized cost method for
investments in debt securities that the reporting enterprise has the positive
intent and ability to hold to maturity. The Company anticipates its short-term
and long-term investments will be classified as "held-to-maturity" securities
and the financial statement impact will not be material to the financial
statements. The Company expects to adopt Statement 115 in the first quarter of
fiscal 1995 on a prospective basis.
FISCAL 1993 COMPARED TO FISCAL 1992
Net sales for fiscal 1993 increased by $67,111,000 (11.1%) over fiscal 1992.
Retail gasoline sales increased by $49,160,000 (16.3%) as the number of gallons
sold increased by 46,736,000 (16.1%). During fiscal 1993, retail sales of
grocery and general merchandise increased by $20,370,000 (8.7%) due to the net
addition of 42 new Company Stores and a greater number of stores in operation
for at least three years.
Cost of goods sold as a percentage of net sales was 79.2% in both fiscal 1993
and fiscal 1992.
20
<PAGE> 14
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
Operating expenses as a percentage of net sales were 15.2% for fiscal 1993
compared to 15.5% for the prior year. The decrease in operating expenses
as a percentage of net sales was caused primarily by increased sales and the
increased number of Company Stores in operation.
Average operating income per Company Store increased by $6,951 (12.8%)
primarily as the result of increases in the average sales of gasoline and
grocery and general merchandise.
Net income increased by $1,809,000 (15.7%). The increase in net income was
attributable primarily to increases in retail sales and an increased number
of stores in operation at least three years.
LIQUIDITY AND CAPITAL RESOURCES
Due to the nature of the Company's business, most sales are for cash and cash
provided by operations is the Company's primary source of liquidity. The
Company finances its inventory purchases primarily from normal trade credit
aided by the relatively rapid turnover of inventory. This turnover allows the
Company to conduct its operations without large amounts of cash and working
capital. As of April 30, 1994, the Company's ratio of current assets to current
liabilities was .55 to 1. Management believes that the Company's current
$25,000,000 bank lines of credit (aggregate amount), together with cash flow
from operations, will be sufficient to satisfy the working capital needs of its
business.
Net cash provided by operations increased $22,404,401 (73.9%) during the year
ended April 30, 1994, primarily as a result of decreased levels of inventories
and an increase in accounts payable compared to the prior year. Cash flows from
investing decreased during fiscal 1994, primarily because the increased
capital expenditure exceeded the investment activity. During fiscal 1994, the
Company expended approximately $66,000,000 for property and equipment,
primarily for the construction and remodeling of Company Stores. The Company
anticipates expending approximately $50,000,000 in fiscal 1995 for
construction, acquisition and remodeling of Company Stores, primarily from
funds generated by operations, existing cash, short-term investments and the
proceeds of the Senior Notes.
As of April 30, 1994, the Company had long-term debt of $61,415,000, consisting
of $29,250,000 of Senior Notes, $15,648,000 of mortgage notes payable,
$7,406,000 of unsecured notes payable and $9,111,000 of capital lease
obligations.
Interest on the Senior Notes is payable on the 15th day of each month at the
rate of 7.70% per annum. Principal of the Senior Notes matures in forty
quarterly installments beginning March 15, 1995. The Company may prepay the
Senior Notes in whole or in part at any time in an amount of not less than
$1,000,000 or integral multiples of $100,000 in excess thereof at a redemption
price calculated in accordance with the Note Agreement dated as of February 1,
1993 between the Company and the purchasers of the Senior Notes.
On March 28, 1994, the 6.25% Convertible Subordinated Debentures were
converted into 3,683,064 shares of Common Stock.
To date, the Company has funded capital expenditures primarily from the
proceeds of the sale of Common Stock, issuance of the Debentures and the Senior
Notes, a mortgage note and through funds generated from operations. Future
capital needs required to finance operations, improvements and the anticipated
growth in the number of Company Stores are expected to be met from cash
generated by operations, existing cash, investments and additional long-term
debt or other securities as circumstances may dictate, and are not expected to
adversely affect liquidity.
21
<PAGE> 15
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
Environmental Compliance - 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 many
with double-wall construction, over-fill protection and electronic tank
monitoring, and the Company has an active inspection and renovation program
with respect to its older USTs. The Company currently has 1,455 USTs of which
1,043 are fiberglass and 412 are steel. Management of the Company 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, 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 1993, the Company spent
approximately $1,814,000 and $2,533,000, respectively, for assessments and
remediation. Substantially all of these expenditures have been submitted for
reimbursement from state-sponsored trust fund programs and as of June 30, 1994,
approximately $3,000,000 has been received from such programs. The Company has
accrued a liability at April 30, 1994, of approximately $3,200,000 for
estimated expenses related to anticipated corrective actions or remediation
efforts, including relevant legal and consulting costs. Management believes the
Company has no material joint and several environmental liability with other
parties.
Management of the Company currently estimates that aggregate capital
expenditures for electronic monitoring, cathodic protection and overfill/spill
protection will approximate $2,000,000 in fiscal 1995 through December 23,
1998, in order to comply with the existing UST regulations. Additional
regulations, or amendments to the existing UST regulations, could result in
future revisions to such estimated expenditures.
SEASONALITY OF SALES-Sales at Casey's General Stores historically have been
strongest during the Company's first and second fiscal quarters and relatively
weaker during its third and fourth quarters. 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. As a result of management's continuing emphasis on
higher-margin prepared-food items, however, the Company's net sales and net
income have become somewhat less seasonal in recent years.
INFLATION-The Company has generally been able to pass along inflationary
increases in its costs through increased sales prices of products sold,
except in those instances where doing so would have had a material adverse
impact on the Company's ability to compete. Accordingly, management believes
that inflation has not had a material impact upon the operating results of the
Company.
22
<PAGE> 16
SELECTED
FINANCIAL DATA
<TABLE>
<CAPTION>
STATEMENT OF INCOME DATA
(amounts in thousands, except per share data) YEARS ENDED APRIL 30
------------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C>
Net sales $ 731,206 $ 673,697 $ 606,585 $ 580,305 $ 500,656
Franchise revenue 5,121 4,898 4,991 4,807 4,798
---------- ---------- ---------- --------- ---------
736,327 678,595 611,576 585,112 505,454
Cost of goods sold 574,144 533,535 480,357 463,090 394,201
Operating expenses 110,083 102,379 94,209 90,712 83,394
Depreciation and amortization 18,623 15,943 13,704 12,238 10,580
Interest, net 6,434 5,249 4,808 4,678 3,967
---------- ---------- ---------- --------- ---------
Income before income taxes 27,043 21,489 18,498 14,394 13,312
Provision for income taxes 10,479 8,166 6,984 5,362 4,959
---------- ---------- ---------- --------- ---------
Net income $ 16,564 $ 13,323 $ 11,514 $ 9,032 $ 8,353
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
*Per share - primary:
Net income $ .73 $ .60 $ .52 $ .40 $ .36
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
*Weighted average number of common
and common equivalent shares
outstanding - primary 22,651 22,193 22,096 22,374 22,893
*Dividends paid per common share $ .07125 $ .06 $ .0575 $ .0375 - - - -
*All share and per share data have been restated to
reflect a two-for-one stock split effective
February 16, 1994.
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
BALANCE SHEET DATA
(amounts in thousands) AS OF APRIL 30
------------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C>
Current assets $ 41,369 $ 46,513 $ 33,011 $ 31,646 $ 30,505
Total assets 318,238 280,777 219,476 197,741 185,447
Current liabilities 75,453 55,456 46,593 35,844 29,913
Long-term debt 61,415 98,956 61,433 63,770 64,470
Shareholders+ equity 158,410 107,976 95,854 84,813 79,469
</TABLE>
23
<PAGE> 17
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED APRIL 30, 1994 YEAR ENDED APRIL 30, 1993
------------------------------------------------- -------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR QUARTER QUARTER QUARTER QUARTER YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 193,689 $186,965 $172,621 $177,931 $731,206 $177,301 $175,875 $158,347 $162,174 $673,697
Gross profit (A) 40,169 41,110 40,018 35,765 157,062 36,671 36,969 34,227 32,295 140,162
Net income $ 4,755 $ 5,381 $ 4,047 $ 2,381 $ 16,564 $ 4,111 $ 4,428 $ 3,148 $ 1,636 $ 13,323
Earnings per
common and common
equivalent share $ .21 $ .24 $ .18 $ .10 $ .73 $ .19 $ .20 $ .14 $ .07 $ .60
Fully diluted earnings
per share $ .20 $ .22 $ .17 $ .10 $ .68 $ .17 $ .18 $ .13 $ .07 $ .57
------------------------------------------------- -------------------------------------------------
------------------------------------------------- -------------------------------------------------
</TABLE>
(A) Before charge for depreciation and amortization.
COMMON
STOCK DATA
The following table sets forth for the calendar periods indicated the high and
low sale prices per share of Common Stock as reported on the NASDAQ National
Market System through June 30, 1994.
<TABLE>
<CAPTION>
CALENDAR 1992 HIGH LOW
-------- --------
<S> <C> <C>
First Quarter $ 8 3/4 $ 6 5/16
Second Quarter 8 5/8 6 5/8
Third Quarter 8 11/16 6 11/16
Fourth Quarter 9 3/4 7 11/16
CALENDAR 1993
First Quarter 9 1/8 8 1/8
Second Quarter 9 13/16 7 3/8
Third Quarter 10 3/4 8 1/2
Fourth Quarter 12 5/16 10 1/4
CALENDAR 1994
First Quarter 13 7/8 11
Second Quarter 12 5/8 10 1/2
</TABLE>
On July 5, 1994, the last reported sales price of the Company's Common Stock
was $11 5/8 per share. On July 5, 1994, there were 2,350 holders of record of
the Common Stock.
The Company commenced paying cash dividends during fiscal 1991. On June 20,
1994, the Board of Directors declared a 2 cents per share dividend for shares
held of record on August 1, 1994. The dividend is payable on August 15,
1994. The Company currently intends to pay comparable cash dividends on a
quarterly basis in the future.
24
<PAGE> 1
EXHIBIT 24.1
REPORT AND CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Casey's General Stores, Inc.
The audits referred to in our report dated June 21, 1994 included the related
financial statement schedules as of April 30, 1994, and for each of the years
in the three-year period ended April 30, 1994, included in the Annual Report on
Form 10-K. These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statement schedules based on our audits. In our opinion, such
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We consent to incorporation by reference in the Registration Statements (No.
33-19179 and 33-42907) on Form S-8 of Casey's General Stores, Inc. of our
reports dated June 21, 1994, relating to the balance sheets of Casey's General
Stores, Inc. as of April 30, 1994 and 1993, and the related statements of
income, shareholders' equity and cash flows and related financial statement
schedules for each of the years in the three-year period ended April 30, 1994,
which reports appear in or are incorporated by reference in the April 30, 1994
Annual Report on Form 10-K of Casey's General Stores, Inc.
KPMG Peat Marwick
Des Moines, Iowa
July 25, 1994
<PAGE> 1
EXHIBIT 99
[CASEY'S GENERAL STORES, INC. LETTERHEAD]
August 15, 1994
TO OUR SHAREHOLDERS:
The Annual Meeting of the shareholders of Casey's General Stores, Inc.,
will be held at the Casey's General Stores, Inc. Corporate Headquarters, One
Convenience Blvd., Ankeny, Iowa, at 10:00 A.M., Iowa time, on Friday, September
16, 1994. The formal Notice of Annual Meeting and Proxy Statement, which are
contained in the following pages, outline the election of directors to be
considered by the shareholders at the meeting.
It is important that your shares be represented at the meeting whether or
not you are personally able to attend. Accordingly, we ask that you please sign,
date and return the enclosed Proxy Card promptly. If you later find that you may
be present for the meeting or for any other reason desire to revoke your proxy,
you may do so at any time before it is voted.
Your copy of the Company's Annual Report for 1994 is also enclosed. Please
read it carefully. It gives you a full report on the Company's operations for
the fiscal year ended April 30, 1994.
We look forward to seeing you at the meeting and thank you for your
continued interest in the Company.
Sincerely,
DONALD F. LAMBERTI
Chief Executive Officer
and Chairman of the Board
<PAGE> 2
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 16, 1994
TO THE SHAREHOLDERS OF CASEY'S GENERAL STORES, INC.:
The Annual Meeting of the shareholders of Casey's General Stores, Inc., an
Iowa corporation, will be held at the Casey's General Stores, Inc. Corporate
Headquarters, One Convenience Boulevard, Ankeny, Iowa, on Friday, September 16,
1994, at 10:00 A.M., Iowa time, for the following purposes:
1. To elect eight members to the Board of Directors to serve until the
next annual election or until their successors are elected and
qualified; and
2. To transact such other business as may properly come before the
meeting or at any adjournment thereof.
The Board of Directors has fixed the close of business, August 8, 1994,
as the record date for the determination of shareholders entitled to notice of
and to vote at this meeting and at any and all adjournments thereof. A list of
such holders will be open for examination by any shareholder, for any purpose
germane to the meeting, at the Company's Corporate Headquarters at the address
described above, for a period of ten days prior to the meeting.
By Order of the Board of Directors,
JOHN G. HARMON
Secretary
August 15, 1994
<PAGE> 3
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card or voting instruction
card (either, the "proxy card") are being mailed beginning on or about August
15, 1994, to each holder of record of the Common Stock, no par value (the
"Common Stock") of Casey's General Stores, Inc., One Convenience Blvd., Ankeny
Iowa 50021 (the "Company") at the close of business on August 8, 1994.
Proxies in the form enclosed are solicited by the Board of Directors of the
Company for use at the Annual Meeting of shareholders to be held at the Casey's
General Stores, Inc. Corporate Headquarters, Ankeny, Iowa, at 10:00 A.M. Iowa
time, on Friday, September 16, 1994.
If the enclosed proxy card is properly executed and returned, the shares
represented thereby will be voted at the meeting in accordance with the
shareholder's instructions. If no instructions are given, the proxy will be
voted FOR the election as directors of the nominees named herein. A person
giving a proxy may revoke it at any time before it is voted. Any shareholder
attending the meeting may, on request, vote his or her own shares even though
the shareholder has previously sent in a proxy card. Unless revoked, the shares
of Common Stock represented by proxies will be voted on all matters to be acted
upon at the meeting.
For participants in the Casey's General Stores, Inc. Employees' Stock
Ownership Plan and Trust (the "ESOP"), the proxy card will also serve as a
voting instruction card for United Missouri Bank, N.A. (the "Trustee"), the
trustee of the ESOP, with respect to the shares held in the participants'
accounts. A participant cannot direct the voting of shares allocated to the
participant's account in the ESOP unless the proxy card is signed and returned.
If proxy cards representing shares in the ESOP are not returned, those shares
will be voted by the Trustee in the same proportion as the shares for which
signed proxy cards are returned by the other participants in the ESOP.
The cost of soliciting proxies will be borne by the Company. The Company
expects to solicit proxies primarily by mail. Proxies may also be solicited
personally and by telephone by certain officers and regular employees of the
Company. The Company may reimburse brokers and their nominees for their
expenses in communicating with the persons for whom they hold shares of the
Company.
So far as the Board of Directors and the management of the Company are
aware, no matters other than those described in this Proxy Statement will be
acted upon at the meeting. If, however, any other matters properly come before
the meeting, it is the
- 1 -
<PAGE> 4
intention of the persons named in the enclosed proxy to vote the same in
accordance with their judgment on such other matters.
SHARES OUTSTANDING
All share amounts in this Proxy Statement have been adjusted to give
effect to the two-for-one stock split of the Company's Common Stock declared
for shareholders of record on February 1, 1994 and distributed on February 15,
1994.
On August 8, 1994, the record date for shareholders entitled to vote at the
meeting, there were outstanding _______ shares of Common Stock, with each such
share being entitled to one vote.
The following table contains information with respect to each person,
including any group, known to the Company to be the beneficial owner of more
than 5% of the Common Stock of the Company as of the dates indicated below.
Except as otherwise indicated, the persons listed in the table have the voting
and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
NAME AND AMOUNT
ADDRESS OF AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
OWNER OWNERSHIP OF CLASS
- - ----------- -------------- ---------
<S> <C> <C>
United Missouri Bank, N.A.
10th and Grand
Kansas City, MO 64141 2,162,968 (1) 8.34%
Donald F. Lamberti
One Convenience Blvd.
Ankeny, IA 50021 3,170,366 (2) 12.23%
College Retirement
Equities Fund
730 Third Ave.
New York, NY 10017 1,318,800 (3) 5.09%
Fiduciary Management, Inc.
225 East Mason Street
Milwaukee, WI 53202 1,330,400 (4) 5.13%
</TABLE>
- - ----------------------
(footnotes on next page)
-2-
<PAGE> 5
(1) Information is as of July 25, 1994 and consists of shares held by
United Missouri Bank, N.A. as the Trustee of the ESOP. Under the trust
agreement creating the ESOP, the shares of Common Stock held by the Trustee
are voted by the Trustee in accordance with the participants' directions
or, if no directions are received, in the same manner and proportion as the
Trustee votes shares for which the Trustee does receive timely
instructions. The trust agreement also contains provisions regarding the
allocation of shares to participants, the vesting of plan benefits and the
disposition of shares. The amount shown includes an aggregate of 853,596
shares voted by the Trustee in accordance with the instructions of Messrs.
Lamberti, Lamb, Shull and Harmon as participants in the ESOP.
(2) Information is as of July 25, 1994 and includes 545,494 shares
held under the ESOP and allocated to the account of Mr. Lamberti, over
which Mr. Lamberti exercises voting power. See footnote 1 above.
(3) Information is as of December 31, 1993 and was supplied by College
Retirement Equities Fund, an investment company.
(4) Information is as of December 31, 1993 and was supplied by
Fiduciary Management, Inc., a registered investment advisory firm. Such
information indicates that Fiduciary Management, Inc. had sole dispositive
power over 1,036,400 shares and shared dispositive power over 294,000
shares.
VOTING PROCEDURES
Under Iowa corporate law and the Company's Restated and Amended
Articles of Incorporation and By-Laws, the holders of a majority of the issued
and outstanding shares of Common Stock entitled to vote must be present or
represented by proxy in order to constitute a quorum or conduct business at the
meeting. Directors are elected by a majority of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
Shares present at the meeting that are not voted for a nominee or shares
present by proxy where the shareholder properly withheld authority to vote for
such nominee (including broker non-votes) will not be counted toward such
nominee's achievement of a majority.
-3-
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
Eight directors will be elected by the holders of Common Stock at the
Annual Meeting to serve until the next ensuing Annual Meeting of shareholders
or until their respective successors are elected and qualified. Directors are
elected by a majority of the votes cast by the shares present in person or
represented by proxy at the meeting. All of the nominees have previously been
elected as directors by the holders of the Company's Common Stock and all such
nominees are presently serving as directors of the Company.
It is intended that all proxies in the accompanying form, unless contrary
instructions are given thereon, will be voted for the election of all the
persons designated by the Board of Directors as nominees. In case any of the
nominees is unavailable for election, an event which is not anticipated, the
enclosed proxy may be voted for the election of a substitute nominee.
Additional information regarding these nominees is set forth below, and
the number of shares of Common Stock of the Company beneficially owned by each
of them as of July 15, 1994 is set forth on pages 8 and 9. Except as may be
otherwise expressly stated, all nominees for directors have been employed in
the capacities indicated for more than five years.
The Board of Directors recommends a vote FOR election of the nominees as
directors of the Company.
DONALD F. LAMBERTI, 56, Chairman of the Board and Chief Executive
Officer of the Company. Mr. Lamberti co-founded the Company in 1967 and
served as its President from 1975 to 1988, when he assumed his present
position. Mr. Lamberti, a director of the Company since 1967, also serves
as a director of Norwest Bank Iowa, N.A. and National By-Products, Inc.
and as a member of the Board of Trustees of Buena Vista College.
RONALD M. LAMB, 58, President and Chief Operating Officer of
the Company. Mr. Lamb served as a Vice President of the Company from 1976
until 1987 when he was elected Chief Operating Officer. He has served as
President of the Company since September 1988. Mr. Lamb has been a
director of the Company since 1981.
-4-
<PAGE> 7
DOUGLAS K. SHULL, 51, Treasurer and Chief Financial Officer of the
Company. Mr. Shull, a director of the Company since 1987, also serves as a
member of the Board of Directors of Iowa National Bankshares Corp. and as
President of the Board of Trustees of the Des Moines Area Community College.
JOHN G. HARMON, 40, Corporate Secretary of the Company. Mr. Harmon has
been associated with the Company since 1976 and has served as a director since
1987.
JOHN R. FITZGIBBON, 72, consultant and former Vice Chairman and Chief
Executive Officer of First Group Companies and former Chief Executive Officer
of Iowa-Des Moines National Bank (currently Norwest Bank Iowa, N.A.). Mr.
Fitzgibbon, a director of the Company since 1983, also serves as a member of
the Board of Directors of the Iowa Student Loan Liquidity Corporation and as
Chairman of the Des Moines International Airport Board.
GEORGE A. DOERNER, 76, retired Iowa Agency Manager, The Equitable Life
Assurance Society of the United States. Mr. Doerner has served as a director of
the Company since 1983.
KENNETH H. HAYNIE, 61, President of Ahlers, Cooney, Dorweiler, Haynie,
Smith & Allbee, P.C., a law firm. Mr. Haynie, a director of the Company since
1987, also serves as a member of the Board of Trustees of the Orchard Place
Foundation.
JOHN P. TAYLOR, 47, Chairman and Chief Executive Officer of Taylor Ball
(formerly known as Ringland-Johnson-Crowley), a general construction
contractor. Mr. Taylor served as President of Taylor Ball from 1983 to 1992,
when he assumed his present position. Mr. Taylor also serves as a director of
West Des Moines State Bank, Allied Group Inc., Allied Life Insurance Company
and three wholly-owned property and casualty insurance subsidiaries of Allied
Group, Inc.
MEETINGS AND COMMITTEES
The Board of Directors held seven meetings during the fiscal year ended
April 30, 1994. At intervals between formal meetings, members of the Board are
provided with various items of information regarding the Company's operations
and are frequently consulted on an informal basis with respect to pending
business. Each member of the Board of Directors attended 75% or more of the
aggregate number of Board meetings and meetings of committees on which he
served, except Mr. Doerner who attended 70% of such meetings.
- 5 -
<PAGE> 8
The Company's Second Amended and Restated Bylaws (the "Bylaws")
established four standing committees of the Board of Directors: the Executive
Committee, the Audit Committee, the Compensation Committee and the Nominating
Committee. In addition, the Bylaws authorize the Board of Directors to
establish other committees for selected purposes.
One such other committee, the Shareholder Ad Hoc Committee, was
established during the 1994 fiscal year for the purpose of reviewing the
Exercise Price of the Company's Common Share Purchase Rights and making
recommendations with respect thereto. This Committee, consisting of Messrs.
Fitzgibbon, Taylor and Doerner, met twice during the fiscal year ended April 30,
1994.
The Executive Committee, presently consisting of Messrs. Lamberti, Lamb,
Fitzgibbon and Doerner, is authorized, within certain limitations, to exercise
the power and authority of the Board of Directors between meetings of the full
Board. The Committee met twice during the fiscal year ended April 30, 1994.
The principal functions of the Audit Committee, presently consisting of
Messrs. Shull, Fitzgibbon, Doerner and Haynie, are the recommendation to the
Board of Directors of an independent public accounting firm to be the Company's
auditors, and the approval of the audit arrangements and audit results. The
Committee met twice during the fiscal year ended April 30, 1994.
The principal functions of the Compensation Committee, presently
consisting of Messrs. Fitzgibbon, Taylor, Doerner and Haynie, are to review
management's evaluation of the performance of the Company's officers and their
compensation arrangements and to make recommendations to the Board of Directors
concerning the compensation of the Company's executive officers and outside
directors. The Committee met four times and acted by unanimous consent on one
other occasion during the fiscal year ended April 30, 1994.
The Nominating Committee, presently consisting of Messrs. Lamberti, Lamb,
Shull and Harmon, generally reviews the qualifications of candidates proposed
for nomination and recommends to the Board candidates for election at the
Annual Meeting of shareholders. The Committee met once during the fiscal
year ended April 30, 1994.
Shareholders may nominate director candidates for election pursuant to
procedures set forth in the Company's By-laws. To make such nominations,
shareholders must deliver written notice thereof to the Secretary of the
Company not later than (i) with respect to an election to be held at an Annual
Meeting of shareholders, at least 30 days, but not more than 90 days, prior to
the anniversary date of the record date set for the immediately preceding
Annual Meeting of shareholder, and (ii)
-6-
<PAGE> 9
with respect to an election to be held at a special meeting of shareholders,
the close of business on the seventh day following the date on which notice of
such meeting is first given to shareholders. The notice must set forth
certain information concerning such shareholder and the shareholder's
nominee(s), including their names and addresses, a representation that the
shareholder is entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice, a description of all arrangements or understandings between the
shareholder and each nominee, such other information as would be required to
be included in a proxy statement soliciting proxies for the election of the
nominees of such shareholder and the consent of each nominee to serve as a
director of the Company if so elected. The chairman of the meeting may refuse
to acknowledge the nomination of any person not made in compliane with the
foregoing procedure.
COMPENSATION OF DIRECTORS
During the fiscal year ended April 30, 1994, each non-employee director was
paid an annual cash retainer fee of $7,500 plus a meeting fee of $500 for each
Board, committee or shareholders' meeting attended. The Company also pays the
premiums on a directors' and officers' liability insurance policy insuring all
directors.
In addition, see "Compensation Committee Interlocks and Insider
Participation" on page 18 herein for information concerning the temporary use
of Company office space during the 1994 fiscal year by Kenneth H. Haynie, a
director of the Company, and other members and staff of his law firm.
-7-
<PAGE> 10
BENEFICIAL OWNERSHIP OF SHARES OF COMMON STOCK
BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of July 25, 1994, the beneficial
ownership of shares of the Company's Common Stock, the only class of capital
stock outstanding, by the current directors of the Company and the executive
officers named in the Summary Compensation Table herein, and all directors and
executive officers as a group. Except as otherwise indicated, the shareholders
listed in the table have the voting and investment powers with respect to the
shares indicated.
<TABLE>
<CAPTION>
TOTAL AMOUNT
NAME OF SHARES AND NATURE
BENEFICIAL DIRECT SUBJECT TO ESOP OF BENEFICIAL PERCENT
OWNER OWNERSHIP OPTIONS(1) SHARES(2) OWNERSHIP (3) OF CLASS
- - ----------------- ---------- ---------- --------- ------------- --------
<S> <C> <C> <C> <C> <C>
Donald F. Lamberti 2,624,872 - 0 - 545,494 3,170,366 12.23%
Ronald M. Lamb 421,500 - 0 - 253,378 674,878 2.60%
Douglas K. Shull - 0 - 130,000 2,208 132,208 *
John G. Harmon - 0 - 20,000 52,516 72,516 *
John R. Fitzgibbon 61,860 - 0 - - 0 - 61,860 *
George A. Doerner 12,028(4) - 0 - - 0 - 12,028 *
Kenneth H. Haynie 27,631(5) - 0 - - 0 - 428,831 (6) 1.65%
John P. Taylor 8,000 - 0 - - 0 - 8,000 *
All executive officers
and directors
as a group
(8 persons) 3,126,944 150,000 853,596 4,560,687 17.59%
</TABLE>
- - -------------------
* Less than 1%
(1) Amounts shown (which are included in the totals) are subject to
acqusition through exercise of stock options granted under the
1991 Incentive Stock Option Plan (or the predecessor plan) and
cannot be presenty voted by the executive officers holding the
options. See "EXECUTIVE COMPENSATION -- Option Grants and
Exercises" on pages 14 and 15 herein.
- - -----------------------------------
(additional footnotes on next page)
- 8 -
<PAGE> 11
(2) The amounts shown (which are included in the totals) consist of
shares allocated to the named executive officers' accounts in the
ESOP as of April 30, 1994 over which the officer exercises voting
power. See Footnote 1 to the table set forth under the heading
"SHARES OUTSTANDING" on page 3 herein.
(3) Except as otherwise indicated, the amounts shown are the aggregate
numbers of shares attributable to the shareholders' direct ownership
of shares, shares subject to options and ESOP shares.
(4) The amount shown includes 1,788 shares owned by Mr. Doerner's spouse.
(5) The amount shown consists of 7,000 shares owned by Mr. Haynie's
spouse and 20,631 shares jointly owned by Mr. Haynie and his spouse.
(6) The amount shown consists of 400,000 shares held by the Lamberti
Family Trust, for which Mr. Haynie acts as co-trustee with shared
voting and dispositive power, and 1,200 shares of Common Stock owned
by one of Mr. Haynie's children, both as to which Mr. Haynie
disclaims beneficial ownership.
VOTING TRUST AGREEMENT
Messrs. Lamberti and Lamb are parties to a voting trust agreement that will
become effective upon the date of death of the first of such shareholders.
Under the voting trust agreement, the shareholders have agreed to deposit all
of the shares of Common Stock of the Company beneficially owned by them
("Voting Shares") with the survivors of Messrs. Lamberti and Lamb, and their
successors, as voting trustees. Upon the effectiveness of the voting trust, the
voting trustees generally will be entitled to vote the Voting Shares in their
discretion in accordance with the determination of a majority of the voting
trustees. However, in order to approve certain extraordinary corporate actions,
such as the merger of the Company into any other company, the voting trustees
will be required to obtain the prior affirmative vote of the holders of voting
trust certificates representing not less than two-thirds of the Voting Shares.
Unless earlier terminated by the vote of all of the voting trustees or of
holders of voting trust certificates representing at least three-quarters of
the Voting Shares, the agreement will terminate upon the expiration of three
years after the effective date of the voting trust.
- 9 -
<PAGE> 12
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee"),
composed of three outside directors, is responsible for evaluating the
performance of management and determining the annual compensation to be paid to
the Company's chief executive officer and the executive officers named in the
Summary Compensation Table. The Committee also administers the 1991 Incentive
Stock Option Plan (the "1991 Option Plan").
OBJECTIVES
The Committee's executive compensation policies are designed to attract,
motivate and retain executives who will contribute to the long-term success of
the Company, and to reward executives for achieving both short-term and
long-term strategic goals of the Company. The Company is committed to
providing a fair and competitive pay package to all employees. Compensation
for executive officers is linked directly to the Company's financial
performance as well as the attainment of each executive officer's individual
performance goals. As a result, a substantial portion of each executive
officer's total compensation is intended to be variable and to relate to and be
contingent upon the financial performance of the Company, as well as each
executive officer's job performance.
Each year, typically in August, the Committee reviews the Company's
executive compensation program and approves individual salary levels and
performance goals for all executive officers and other senior Company
personnel. The Committee also makes any determinations with respect to the
award of stock options under the 1991 Option Plan at that time. In 1992, this
review included a report from an independent compensation consultant concerning
the terms of the Company's employment agreements with its executive officers
and the level of salaries and benefits provided therein.
EXECUTIVE OFFICER COMPENSATION
As has been the practice in recent years, the three principal components
of the Company's executive compensation program during the 1994 fiscal year
were base salary, annual incentive payments and stock options.
BASE SALARY. Base salaries for executive officers of the Company are
determined primarily on the basis of each executive officer's job description
and corresponding responsibilities, rather than on the basis of job titles or
comparisons with executive officers at comparably sized companies. The
Company
-10-
<PAGE> 13
has established only four executive officer positions and, as a result, the
Committee believes that the Company's executive officers generally assume more
extensive responsibilities than those found in similar positions with
comparably sized companies. The base salary of each executive officer is set
forth in the officer's employment agreement with the Company and may be
adjusted during the terms thereof with the consent of the officer.
ANNUAL INCENTIVE PAYMENTS. The Company's executive officers (as well
as its Vice Presidents) annually participate in an incentive compensation bonus
pool. Bonus awards are made only if the Company achieves specific performance
targets in earnings per share established each year by the Committee, with the
amount of the bonus increasing as earnings per share increase above the
levels specified by the Committee. The purpose of the bonus awarded is to
reward superior performance by the Company's executive officers that has
resulted in the Company achieving certain financial performance levels. During
the 1994 fiscal year, each of the Company's executive officers received the
maximum bonus award for which he was eligible under the levels established by
the Committee.
STOCK OPTIONS. Stock options may be granted to executive officers and
other key employees of the Company under the terms of the 1991 Option Plan.
The size of stock option awards is based primarily on individual performance
and the individual's responsibilities and position with the Company. The 1991
Option Plan is designed to assist the Company in attracting, retaining and
motivating executive officers and other key employees. The stock options are
also designed to align the interests of the executive officers and other key
employees with those of the Company's shareholders. The stock options are
granted with an exercise price equal to the fair market value of the Company's
Common Stock on the date of grant. This approach encourages the creation of
shareholder value over the long-term, in that no benefit is realized from the
stock option grants unless the price of the Company's Common Stock rises over a
number of years. During the 1994 fiscal year, the Committee granted options to
purchase an aggregate of 220,000 shares to a total of 71 employees, including
two of the executive officers and each of the Company's five Vice Presidents.
ADDITIONAL COMPENSATION AND BENEFITS. The Company's compensation of
executive officers includes certain other benefits. Each executive officer is
entitled to receive additional compensation in the form of payments,
allocations, or accruals under various benefit plans, consisting primarily of
contributions to the Company's 401(k) plan and employee stock ownership plan.
The Committee believes that these plans are an integral part of the overall
compensation program of the Company.
-11-
<PAGE> 14
CHIEF EXECUTIVE OFFICER. Mr. Lamberti's compensation for the fiscal
year ended April 30, 1994 was determined in accordance with the above policies
and in light of his employment agreement with the Company. No adjustment was
made to Mr. Lamberti's base salary during 1994. Mr. Lamberti earned $200,000 in
annual bonus for performance in the 1994 fiscal year based upon the Company's
ability to achieve specified financial performance targets in earnings per
share established by the Committee at the beginning of the fiscal year.
OTHER. The Committee is aware of the limitations placed recently on
the deductibility of compensation in excess of $1 million which is earned by
an executive officer in any year. None of the executive officers earned
compensation that would be subject to such limitations, but the Committee will
continue to monitor developments in this area.
COMPENSATION COMMITTEE
John R. Fitzgibbon, Chairman
George A. Doerner
Kenneth H. Haynie
John P. Taylor
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation earned or
awarded for the last three fiscal years to the chief executive officer and the
three other most highly compensated executive officers of the Company whose
compensation (based on the total of the amounts required to be shown in the
salary and bonus columns of such table) exceeded $100,000.
- 12 -
<PAGE> 15
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- ------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL COMPENSATION COMPENSATION
POSITION(1) YEAR SALARY($) BONUS($) ($) OPTIONS(#) ($) (2)
- - ----------- ---- --------- -------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald F. Lamberti
Chairman 1994 $250,000 $200,000 $2,444 0 $3,681
and 1993 250,000 200,000 2,444 0 3,293
Chief 1992 250,000 200,000 2,444 0 3,378
Executive
Officer
Ronald M. Lamb
President 1994 $250,000 $200,000 $ 836 0 $3,681
and Chief 1993 250,000 200,000 965 0 $3,293
Operating 1992 250,000 200,000 1,352 0 $3,378
Officer
Douglas K. Shull
Treasurer 1994 $119,000 $ 80,000 $2,248 10,000 $5,521
and Chief 1993 117,000 80,000 2,248 0 $5,207
Financial 1992 117,000 80,000 2,248 10,000 $5,369
Officer
John G. Harmon
Secretary 1994 $ 98,334 $ 80,000 $1,789 10,000 $4,778
1993 95,000 $ 80,000 $1,789 0 $4,444
1992 95,000 $ 80,000 $1,789 10,000 $4,587
</TABLE>
- - ----------
(1) The Company has only four executive officers for whom individualized pay
disclosure is required under the rules of the Securities and Exchange
Commission.
(2) The amount shown for each named executive officer is the total of the
Company's contributions to the Company's 401(k) plan, in which all
employees are eligible to participate, and contributions to the ESOP. For
the year ended April 30, 1994, the Company contributed $2,380 and $1,967 to
the 401(k) plan on behalf of Messrs. Shull and Harmon, respectively
(neither Mr. Lamberti nor Mr. Lamb participate in such plan). The Company's
contributions to the ESOP for the named executive officers were as
follows: Mr. Lamberti, $3,681; Mr. Lamb, $3,681; Mr. Shull, $3,141; and
Mr. Harmon, $2,811.
- 13 -
<PAGE> 16
OPTION GRANTS AND EXERCISES
The following tables summarize, for the fiscal year ended April 30, 1994,
option grants to and option exercises by the executive officers named in the
Summary Compensation Table under the Company's 1991 Incentive Stock Option
Plan, and the value of the options held by such persons at April 30, 1994:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
- - ----------------------------------------------------------------------------------------------------------- ----------------------
PERCENT
OF TOTAL
OPTIONS
OPTIONS GRANTED EXERCISE
GRANTED TO EMPLOYEES PRICE EXPIRATION 5% 10%
NAME (#)(1) IN FISCAL YEAR ($/SH) DATE ($) ($)
- - ---- -------- -------------- --------- ---------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Donald F. Lamberti -0- -- -- -- -- --
Ronald M. Lamb -0- -- -- -- -- --
Douglas K. Shull 10,000 4.5% $10.25 9-1-2003 $64,460 $163,360
John G. Harmon 10,000 4.5% $10.25 9-1-2003 $64,460 $163,360
</TABLE>
- - -------------
(1) Stock options have no value on the date of grant because the exercise
price per share is equal to the market price per share of the Company's
Common Stock on the date the option is granted. A stock option has value
to the optionee in the future only if the market price of the Company's
Common Stock at the time the option is exercised exceeds the exercise
price.
(2) The dollar amounts under the 5% and 10% Columns are the result of
calculations required by the Securities and Exchange Commission and should
not be viewed as, and are not intended to be, a forecast of possible
future appreciation in the Company's stock price.
-14-
<PAGE> 17
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
---------------------------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
YEAR-END YEAR-END
------------- --------------
SHARES VALUE EXERCISABLE/ EXERCISABLE/
ACQUIRED ON REALIZED UNEXERCISABLE UNEXERCISABLE
NAME EXERCISE (#) ($) (#) (IN SHARES) (IN DOLLARS)
- - ------------------------- ------------ -------- --------------- ---------------
<S> <C> <C> <C> <C>
Donald F. Lamberti 0 0 0/0 0/0
Ronald M. Lamb 0 0 0/0 0/0
Douglas K. Shull 0 0 130,000/0 $453,125/0
John G. Harmon 0 0 20,000/0 $ 67,500/0
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
Effective as of March 2, 1992, the Company entered into employment
agreements with each of Messrs. Lamberti, Lamb, Shull and Harmon. The
agreements with Messrs. Lamberti, Lamb and Shull are for terms of five years
(with automatic renewal terms of three years in the case of Messrs. Lamberti
and Lamb) and the agreement with Mr. Harmon was for a term of three years. On
June 20, 1994, the Board of Directors approved of an extension of the Company's
contract with Mr. Harmon, on essentially the same terms as those approved in
1992, for a period expiring on March 1, 1997. The term of employment for
Messrs. Shull and Harmon would be extended for a three year period in the event
of a "change of control" (as defined in the agreements) of the Company.
Each of the agreements with the executive officers continues their levels
of responsibility on an equivalent basis to the duties performed by each of them
prior to the effective date of the agreement. The agreements with Messrs.
Lamberti and Lamb provide that each such executive officer will receive
compensation exclusive of bonuses at the rate of $250,000 per year or such other
amount as the Company and the officer mutually shall agree. In the case of
Messrs. Shull and Harmon, the agreements provide for compensation exclusive of
bonuses at the rates of $120,000 and $100,000, respectively, or such other
amounts as the Company and the officers shall agree upon.
-15-
<PAGE> 18
In each case, the officer's employment may be terminated as a result of
death, disability, cause or "good reason", both before or following any change
in control of the Company. For this purpose, good reason is generally defined
as a diminution in compensation or level of responsibility, forced relocation
to another area, or the failure to continue employment upon the stated terms
and conditions.
Under the agreements, the death of either Messrs. Lamberti or Lamb
would obligate the Company to pay their surviving spouse the officer's salary
for a period of 24 months, after which the spouse would receive monthly
benefits equal to one-half of the officer's retirement benefits for period of
20 years or until the spouse's death, whichever occurs first. A similar
obligation would arise in the event of the death of either Messrs. Shull or
Harmon, except at the period during which full salary would be paid would be 12
rather than 24 months. In the event either Messr. Lamberti or Lamb become
disabled, the officer would be entitled to disability benefits equal to
one-half of their annual salary until they reach age 65 or are no longer
disabled or until their death, whichever occurs first. In the event they
recover from their disability, retirement benefits would be paid thereafter
until death. Neither Messrs. Shull nor Harmon are entitled to receive any
disability payments under their agreements with the Company. In the event of
termination for cause (or other than for good reason), each of the four
officers is entitled to receive their salary to the date of termination. In
the event an officer terminates employment for good reason, the Company would
be obligated to pay such officer (i) his salary through the date of
termination, (ii) a portion of the highest annual bonus received during the
three previous fiscal years, if any, (iii) a payment equal to 2.0 times the sum
of the officer's salary and bonus allocation, (iv) all compensation previously
deferred and (v) the present value of their retirement benefits, if any.
Certain employee benefits also would be continued for a two-year period
following the date of termination. If an officer terminates employment for
good reason within three years following a change of control, the Company would
be obligated to pay such officer as it would for a "good reason" termination
described above, except that the multiple would be 3.0 times the sum of the
officer's salary and bonus allocation rather than 2.0 times. Similarly,
certain employee benefits also would be continued for a three-year period
following the date of termination. In the event of such a termination, the
Company would be obligated to take into account the golden parachute tax
provisions of the Internal Revenue Code of 1986 and may be required to adjust
the payment amount to avoid an adverse tax result to the officer as a result of
receiving the foregoing amounts.
- 16 -
<PAGE> 19
Each agreement further provides for the voluntary retirement of the
officer at age 65, or upon reaching 59 years of age and having completed 25
years of employment with the Company, following which an officer would be
entitled to receive an annual retirement benefit equal to one-half of his most
recent salary payable until his death. The Board of Directors may extend an
officer's employment on a year-to-year basis following age 65, and each officer
is expected to hold themselves available at the written request of the Board of
Directors to consult and advise with the officers and directors of the Company.
COMPARATIVE STOCK PERFORMANCE
The Performance Graph set forth below compares the cumulative total
shareholder return on the Company's Common Stock for the last five fiscal years
with the cumulative total return on the Russell 2000 Index and a peer group
index based on the common stock of the following three companies: Dairy Mart
Convenience Stores, Uni-Marts Incorporated and Sunshine Jr. Stores
Incorporated. The cumulative total shareholder return computations set
forth in the Performance Graph assume the investment of $100 in the Company's
Common Stock and each index on April 30, 1989, and reinvestment of all
dividends. The total shareholder returns shown are not necessarily indicative
of future returns.
-17-
<PAGE> 20
<TABLE>
<CAPTION>
April 30
---------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CASEY'S GENERAL STORES, INC. $100 $78 $ 82 $143 $146 $216
PEER GROUP $100 $70 $ 62 $ 70 $ 49 $ 83
RUSSELL 2000 $100 $98 $107 $126 $145 $168
</TABLE>
- - -------------
* The peer group index reflected on the above Performance Graph does not
include Circle K Corp., a company that was included in the peer group
index set forth in the Proxy Statement for the 1993 Annual Meeting of
the Company's shareholders. The Company understands that Circle K Corp.
ceased active trading and public reporting in November 1993 and is now a
privately held concern, and that the information necessary to include
the same in the peer group index is no longer publicly available.
<PAGE> 21
OTHER INFORMATION RELATING TO
DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors determines
annually the compensation to be paid to the Company's Chief Executive Officer
and other executive officers, including the executive officers named in the
Summary Compensation Table. The Compensation Committee members are John R.
Fitzgibbon (Chairman), John P. Taylor, George A. Doerner and Kenneth H. Haynie.
Mr. Haynie is a shareholder and President of Ahlers, Cooney, Dorweiler, Haynie,
Smith & Allbee, P.C., a law firm in Des Moines, Iowa. The Company retained
this law firm during fiscal 1994 for legal services and expects to retain such
firm in the current fiscal year.
During the flooding that struck Des Moines in July 1993, the Company
permitted Mr. Haynie and several lawyers and staff members with his law firm to
utilize office and working space in the Company's Corporate Headquarters as
their temporary office facilities while the law firm's offices were
inaccessible. Such usage extended for a period of approximately six weeks. No
specific rental arrangements for such use were ever formalized, and no
independent determination was made of the fair market value thereof. In
September 1993 the law firm paid the Company $1,500 as a rental fee and
reimbursed the Company $642 for postage and facsimile charges incurred during
the period.
CERTAIN TRANSACTIONS
At one store location, the Company is currently a sublessee of a trust
created by Mr. Lamberti for the benefit of his heirs. The trust is irrevocable
for federal income tax purposes, and Mr. Lamberti exercises no incidents of
ownership over it. Following the December 1, 1984, dissolution of a
corporation beneficially owned by Mr. Lamberti, the trust succeeded to the
interest in the lease with the Company. The trust currently owns the building
at that location and itself leases the real estate at that location from
another trust. The Company's sublease originally commenced on October 1, 1977,
for a term of 10 years, and provided for a fixed monthly rental payment of
$1,300 and payment of an amount equal to 1% of sales by the leased store. In
December 1984, the Company's sublease was extended until September 30, 1997 for
the same rental. The amounts received by the trust under the lease during the
past three fiscal years were $20,639 in fiscal 1992, $24,565 in fiscal 1993 and
$34,903 in fiscal 1994. The Company does not intend to lease additional store
sites or buildings from affiliated persons.
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During the fiscal 1994, the Company leased its former headquarters site
and building, primarily for storage purposes, from a general partnership
(Broadway Distributing Co.) composed of the Company (50%), Mr. Lamberti (25%)
and Walter J. Carlson (25%), a former director and officer of the Company. The
property was leased under the terms of a 15-year lease that commenced on
January 1, 1978 and terminated on December 31, 1992, and provided for an annual
rental of $54,000 plus the payment by the Company of all property taxes. The
Company has continued to occupy the property following termination of the lease
as a tenant at will and has subleased a portion of the same to a local
government agency. The Company has paid $64,800 in rentals under the lease
during each of the past three fiscal years.
AUDITORS
KPMG Peat Marwick was engaged by the Company to serve as its auditors
for fiscal 1994. Representatives of KPMG Peat Marwick will be in attendance at
the Annual Meeting to be held on September 16, 1994, and will be available to
respond to appropriate questions and may make a statement if they so desire.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal which a shareholder intends to present at the Annual
Meeting of shareholders in 1995 must be received by the Company by April 14,
1995 in order to be eligible for inclusion in the proxy statement and proxy
card relating to such meeting.
ANNUAL REPORT
The Company's 1994 Annual Report is being mailed to shareholders with
this Proxy Statement. The Company will provide without charge to each
shareholder, on written request, a copy of the Company's Annual Report on Form
10-K for the year 1994, including the financial statements and schedules
thereto, filed with the Securities and Exchange Commission. If a shareholder
requests copies of any exhibits to such Form 10-K, the Company will require the
payment of a fee covering its reasonable expenses. A written request should be
addressed to the Corporate Secretary, Casey's General Stores, Inc., One
Convenience Blvd., Ankeny, Iowa 50021-0845.
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<PAGE> 23
By Order of the Board of Directors,
John G. Harmon
Secretary
August 15, 1994
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT
PROMPTLY IN THE ACCOMPANYING POSTPAID ENVELOPE.
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