<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Quarter Ended July 31, 2000
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 BOULEVARD, ANKENY, IOWA
(Address of principal executive offices)
50021
(Zip Code)
(515) 965-6100
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, No Par Value 49,466,762 shares
(Class) (Outstanding at September 1, 2000)
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CASEY'S GENERAL STORES, INC.
INDEX
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Page
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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
Consolidated condensed balance sheets -
July 31, 2000 and April 30, 2000 3
Consolidated condensed statements
of income - three months ended
July 31, 2000 and 1999 5
Consolidated condensed statements of
cash flows - three months ended
July 31, 2000 and 1999 6
Notes to consolidated condensed
financial statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations. 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 13
Item 6. Exhibits and Reports on Form 8-K. 14
SIGNATURE 16
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PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
--------------------
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(DOLLARS IN THOUSANDS)
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<CAPTION>
July 31, April 30,
2000 2000
-------- ---------
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ASSETS
Current assets:
Cash and cash equivalents $ 17,034 15,917
Short-term investments 27,104 7,925
Receivables 4,277 4,111
Inventories 49,730 41,363
Prepaid expenses 6,241 5,745
-------- -------
Total current assets 104,386 75,061
-------- -------
Long-term investments 10,812 --
Other assets 1,497 1,513
Property and equipment, net of
accumulated depreciation
July 31, 2000, $255,496
April 30, 2000, $245,858 565,112 546,991
-------- -------
$681,807 623,565
======== =======
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See notes to consolidated condensed financial statements.
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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Continued)
(DOLLARS IN THOUSANDS)
LIABILITIES AND SHAREHOLDERS' EQUITY
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July 31, April 30,
2000 2000
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Current liabilities:
Notes payable $ 400 45,950
Current maturities of
long-term debt 9,713 9,703
Accounts payable 58,543 60,959
Accrued expenses 25,084 21,948
Income taxes payable 9,905 2,091
-------- -------
Total current liabilities 103,645 140,651
-------- -------
Long-term debt, net of
current maturities 191,433 112,896
-------- -------
Deferred income taxes 59,150 57,650
-------- -------
Deferred compensation 3,757 3,606
-------- -------
Shareholders' equity
Preferred stock, no par value -- --
Common Stock, no par value 38,006 37,930
Retained earnings 285,816 270,832
-------- -------
Total shareholders' equity 323,822 308,762
-------- -------
$681,807 623,565
======== =======
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See notes to consolidated condensed financial statements.
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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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<CAPTION>
Three Months Ended
July 31,
------------------
2000 1999
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Net sales $528,891 387,194
Franchise revenue 1,145 1,514
-------- -------
530,036 388,708
-------- -------
Cost of goods sold 428,062 302,702
Operating expenses 63,892 51,580
Depreciation and
amortization 10,071 9,095
Interest, net 2,971 2,002
-------- -------
504,996 365,379
-------- -------
Income before income taxes 25,040 23,329
Federal and state
income taxes 9,315 8,678
-------- -------
Net income $ 15,725 14,651
======== =======
Earnings per common share
Basic $ .32 .28
======== =======
Diluted $ .32 .28
======== =======
</TABLE>
See notes to consolidated condensed financial statements.
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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(DOLLARS IN THOUSANDS)
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<CAPTION>
Three Months Ended
July 31,
-------------------
2000 1999
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Cash flows from operations:
Net income $ 15,725 14,651
Adjustments to reconcile
net income to net cash
provided by operations:
Depreciation and amortization 10,071 9,095
Deferred income taxes 1,500 1,750
Changes in assets and liabilities:
Receivables (166) (513)
Inventories (8,367) (4,218)
Prepaid expenses (496) (107)
Accounts payable (2,416) 11,008
Accrued expenses 3,136 (690)
Income taxes payable 7,814 6,678
Other, net (110) 500
-------- -------
Net cash provided by operations 26,691 38,154
-------- -------
Cash flows from investing:
Purchase of property and equipment (28,453) (27,151)
Purchase of investments (34,190) (2,748)
Sale of investments 4,737 1,620
-------- -------
Net cash used in investing activities (57,906) (28,279)
-------- -------
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<PAGE>
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
(DOLLARS IN THOUSANDS)
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<CAPTION>
Three Months Ended
July 31,
------------------
2000 1999
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Cash flows from financing:
Proceeds from long-term debt 80,000 --
Payment of long-term debt (1,453) (1,370)
Net activity of short-term debt (45,550) (4,500)
Proceeds from exercise of stock options 76 182
Payment of cash dividends (741) (790)
-------- ------
Net cash provided by (used in)
financing activities 32,332 (6,478)
-------- ------
Net increase in cash and cash equivalents 1,117 3,397
Cash and cash equivalents at
beginning of the period 15,917 5,935
-------- ------
Cash and cash equivalents at end of the period $ 17,034 9,332
======== ======
</TABLE>
See notes to consolidated condensed financial statements.
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CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
1. The accompanying consolidated condensed financial statements include the
accounts and transactions of the Company and its wholly-owned subsidiaries.
All material inter-company balances and transactions have been eliminated
in consolidation.
2. The accompanying consolidated condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Although
management believes that the disclosures are adequate to make the
information presented not misleading, it is suggested that these interim
consolidated condensed financial statements be read in conjunction with the
Company's most recent audited financial statements and notes thereto. In
the opinion of management, the accompanying consolidated condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as
of July 31, 2000, and the results of operations for the three months ended
July 31, 2000 and 1999, and changes in cash flows for the three months
ended July 31, 2000 and 1999.
3. The Company's financial condition and results of operations are affected by
a variety of factors and business influences, certain of which are
described in the Cautionary Statement Relating to Forward-Looking
Statements filed as Exhibit 99 to the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1997. These interim consolidated
condensed financial statements should be read in conjunction with that
Cautionary Statement.
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Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
-----------------------------------
Financial Condition and Results of Operations (Dollars in Thousands)
--------------------------------------------------------------------
Casey's derives its revenue from the retail sale 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 second or third year of operation.
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 July 31, 2000, the Company's ratio of current assets to current
liabilities was 1.01 to 1. The ratio at July 31, 1999 and April 30, 2000, was
.84 to 1 and .53 to 1, respectively. Management believes that the Company's
current bank lines of credit, together with cash flow from operations, will be
sufficient to satisfy the working capital needs of its business.
Net cash provided by operations decreased $11,463 (30%) in the three months
ended July 31, 2000 from the comparable period in the prior year, primarily as a
result of an increase in inventories and a decrease in accounts payable. Cash
flows from investing in the three months ended July 31, 2000 decreased primarily
due to the increase in the purchase of investments. Cash flows from financing
increased, primarily as a result of the proceeds from long-term debt exceeding
the reduction of short-term debt. Cash flows in the future are expected to
decrease as a result of the anticipated growth in capital expenditures.
Capital expenditures represent the single largest use of Company funds.
Management believes that by reinvesting in Company stores, the Company will be
better able to respond to competitive challenges and increase operating
efficiencies. During the first three months of fiscal 2001, the Company
expended $28,453 for property and
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equipment, primarily for the construction and remodeling of Company stores,
compared to $27,151 for the comparable period in the prior year. The Company
anticipates expending approximately $90,000 in fiscal 2001 for construction and
remodeling of Company stores, primarily from funds generated by operations,
existing cash and short-term investments and bank lines of credit.
As of July 31, 2000, the Company had long-term debt of $191,433, consisting
of $10,500 in principal amount of 7.70% Senior Notes, $30,000 in principal
amount of 7.38% Senior Notes, $10,800 in principal amount of 6.55% Senior Notes,
$50,000 in principal amount of Senior Notes, Series A through Series F, with
interest rates ranging from 6.18% to 7.23%, $80,000 in principal amount of 7.89%
Senior Notes, Series A, $6,900 of mortgage notes payable, and $3,233 of capital
lease obligations.
Interest on the 7.70% Senior Notes is payable on the 15th day of each month
at the rate of 7.70% per annum. Principal of the 7.70% Senior Notes matures in
forty quarterly installments beginning March 15, 1995. The Company may prepay
the 7.70% Senior Notes in whole or in part at any time in an amount of not less
than $1,000 or integral multiples of $100 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 7.70% Senior Notes.
Interest on the 7.38% Senior Notes is payable semi-annually on the twenty-
eighth day of June and December in each year, commencing June 28, 1996, and at
maturity, at the rate of 7.38% per annum. The 7.38% Senior Notes mature on
December 28, 2020, with prepayments of principal commencing December 28, 2010
and ending June 28, 2020, inclusive, with the remaining principal payable at
maturity on December 28, 2020. The Company may prepay the 7.38% Senior Notes in
whole or in part at any time in an amount not less than $1,000 or in integral
multiples of $100 in excess thereof at a redemption price calculated in
accordance with the Note Agreement dated as of December 1, 1995 between the
Company and the purchaser of the 7.38% Senior Notes.
Interest on the 6.55% Senior Notes is payable quarterly on the 18th day of
March, June, September and December of each year, commencing March 18, 1998, and
at maturity, at the rate of 6.55% per annum. Principal of the 6.55% Senior
Notes matures in five annual installments commencing December 18, 1999. The
Company may prepay the 6.55% Senior Notes in whole or in part at any time in an
amount of not less than $1,000 or integral multiples of $100 in excess thereof
at a redemption price calculated in accordance with the Note Agreement dated as
of December 1, 1997 between the Company and the purchasers of the 6.55% Senior
Notes.
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Interest on the 6.18% to 7.23% Senior Notes, Series A through Series F, is
payable on the 23rd day of each April and October. Principal of the 6.18% to
7.23% Senior Notes, Series A through Series F, matures in various installments
beginning April 23, 2004. The Company may prepay the 6.18% to 7.23% Senior
Notes, Series A through Series F, in whole or in part at any time in an amount
of not less than $1,000 or integral multiples of $100 in excess thereof at a
redemption price calculated in accordance with the Note Agreement dated as of
April 15, 1999 between the Company and the purchasers of the 6.18% to 7.23%
Senior Notes, Series A through Series F.
Interest on the 7.89% Senior Notes, Series A, is payable semi-annually on
the 15th day of May and November in each year, commencing November 15, 2000, and
at maturity, at the rate of 7.89% per annum. The 7.89% Senior Notes mature on
May 15, 2010, with prepayments of principal commencing on May 15, 2004 and on
each May 15 thereafter to and including May 15, 2009, with the remaining
principal payable at maturity on May 15, 2010. The Company may prepay the 7.89%
Senior Notes in whole or in part at any time in an amount not less than $2,000
in the case of a partial prepayment at a redemption price calculated in
accordance with the Note Purchase Agreement dated as of May 1, 2000 between the
Company and the purchasers of the 7.89% Senior Notes.
To date, the Company has funded capital expenditures primarily from the
proceeds of the sale of Common Stock, issuance of the 6-1/4% Convertible
Subordinated Debentures (which were converted into shares of Common Stock in
1994), the above-described 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.
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 2,369 USTs, of which 2,039 are fiberglass
and 330 are steel.
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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. In each of the
years ended April 30, 2000 and 1999, the Company spent approximately $447 and
$516, respectively, for assessments and remediation. During the three months
ended July 31, 2000, the Company expended approximately $178 for such purposes.
Substantially all of these expenditures have been submitted for reimbursement
from state-sponsored trust fund programs and as of July 31, 2000, a total of
approximately $4,800 has been received from such programs since their inception.
Such amounts are typically subject to statutory provisions requiring repayment
of the reimbursed funds for noncompliance with upgrade provisions or other
applicable laws. The Company has accrued a liability at July 31, 2000, of
approximately $200 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.
Three Months Ended July 31, 2000 Compared to Three Months Ended
---------------------------------------------------------------
July 31, 1999 (Dollars in Thousands)
-------------
Net sales for the first quarter of fiscal 2001 increased by $141,697
(36.6%) over the comparable period in fiscal 2000. Retail gasoline sales
increased by $116,280 (56.3%) as the number of gallons sold increased by 16,213
(8.3%) while the average retail price per gallon increased 44.3%. During this
same period, retail sales of grocery and general merchandise increased by
$24,391 (15.6%) due to the addition of 104 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 80.9% for the first
quarter of fiscal 2001, compared to 78.2% for the comparable period in the prior
year. The gross profit margins on retail gasoline sales decreased (to 8.6%)
during the first quarter of fiscal 2001 from the first quarter of the prior year
(9.3%). However, the gross profit margin per gallon increased (to $.1308) in
the first quarter of fiscal 2001 from the comparable period in the prior year
($.0986). The gross profits on retail sales of grocery and general merchandise
also decreased (to 38.4%) from the comparable period in the prior year (39.1%).
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Operating expenses as a percentage of net sales were 12.1% for the first
quarter of fiscal 2001 compared to 13.3% for the comparable period in the prior
year. The decrease in operating expenses as a percentage of net sales was
caused primarily by an increase in the average retail price per gallon of
gasoline sold.
Net income increased by $1,074 (7.3%). The increase in net income was
attributable primarily to the increase in retail sales of grocery and general
merchandise, an increase in the number of gallons of gasoline sold, an increase
in the gross profit margin per gallon of gasoline sold, and an increased number
of stores in operation for at least three years.
Cautionary Statement
--------------------
The foregoing Management's Discussion and Analysis of Financial Condition
and Results of Operations contains various "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements represent the Company's expectations or beliefs concerning future
events, including (i) any statements regarding future sales and gross profit
percentages, (ii) any statements regarding the continuation of historical trends
and (iii) any statements regarding the sufficiency of the Company's cash
balances and cash generated from operations and financing activities for the
Company's future liquidity and capital resource needs. The Company cautions
that these statements are further qualified by important factors that could
cause actual results to differ materially from those in the forward-looking
statements, including, without limitations, the factors described in the
Cautionary Statement Relating to Forward-Looking Statements included as Exhibit
99 to the Form 10-Q for the fiscal quarter ended January 31, 1997.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
The Company from time to time is a party to legal proceedings arising from
the conduct of its business operations, including proceedings relating to
personal injury and employment claims, environmental remediation or
contamination, disputes under franchise agreements and claims by state and
federal regulatory authorities relating to the sale of products pursuant to
state or federal licenses or permits. Management does not believe that the
potential liability of the Company with respect to such other proceedings
pending as of the date of this Form 10-Q is material in the aggregate.
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Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) The following exhibits are filed with this Report or, if so indicated,
incorporated by reference.
Exhibit
No. Description
------- -----------
3.2(a) Restatement of Amended and Restated Bylaws (h) and amendments
thereof (l)
4.2 Rights Agreement between Casey's General Stores, Inc. and United
Missouri Bank of Kansas City, N.A., as Rights Agent (a), and
amendments thereto (b), (c), (d), (i), (j)
4.3 Note Agreement dated as of February 1, 1993 between Casey's
General Stores, Inc. and Principal Mutual Life Insurance Company
and Nippon Life Insurance Company of America (e) and First
Amendment thereto (f)
4.4 Note Agreement dated as of December 1, 1995 between Casey's
General Stores, Inc. and Principal Mutual Life Insurance Company
(f)
4.5 Note Agreement dated as of December 1, 1997 among the Company and
Principal Mutual Life Insurance Company, Nippon Life Insurance
Company of America and TMG Life Insurance Company (g)
4.6 Note Agreement dated as of April 15, 1999 among the Company and
Principal Life Insurance Company and other purchasers of the
6.18% to 7.23% Senior Notes, Series A through Series F (i)
4.7 Note Purchase Agreement dated as of May 1, 2000 among the Company
and the purchasers of the 7.89% Senior Notes, Series 2000-A (k)
11 Statement regarding computation of per share earnings
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27 Financial Data Schedule
99 Cautionary Statement Relating to Forward-Looking Statements (h)
-------------------
(a) Incorporated by reference from the Registration Statement on Form 8-A
(0-12788) filed June 19, 1989 relating to Common Share Purchase Rights.
(b) 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.
(c) 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) Incorporated by reference from the Form 8-A12G/A (Amendment No. 2 to the
Registration Statement on Form 8-A filed June 19, 1989) filed July 29,
1994.
(e) Incorporated by reference from the Current Report on Form 8-K filed
February 18, 1993.
(f) Incorporated by reference from the Current Report on Form 8-K filed January
11, 1996.
(g) Incorporated by reference from the Current Report on Form 8-K filed January
7, 1998.
(h) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 1997.
(i) Incorporated by reference from the Current Report on Form 8-K filed May 10,
1999.
(j) Incorporated by reference from the Current Report on Form 8-K filed
September 27, 1999.
(k) Incorporated by reference from the Current Report on Form 8-K filed May 23,
2000.
(l) Incorporated by reference from the Quarterly Report on Form 10-Q for the
fiscal quarter ended July 31, 1997.
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SIGNATURE
Pursuant to the requirements 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.
Date: September 5, 2000 By: /s/ John G. Harmon
------------------
John G. Harmon
Secretary/Treasurer
(Authorized Officer and Principal
Financial Officer)
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EXHIBIT INDEX
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Exhibit No. Description Page
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3.2(a) Amendment to Amended and 18
Restated Bylaws
11 Statement regarding 20
computation of
per share earnings
27 Financial Data Schedule 21
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