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 JanuaryJuly 31, 2001
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 49,492,76249,514,762 shares
(Class) (Outstanding at March 5,September 7, 2001)
CASEY'S GENERAL STORES, INC.
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial StatementsStatements.
Consolidated condensed balance sheets -
JanuaryJuly 31, 2001 and April 30, 20002001 3
Consolidated condensed statements
of income - three and nine months ended
JanuaryJuly 31, 2001 and 2000 5
Consolidated condensed statements of
cash flows - ninethree months ended
JanuaryJuly 31, 2001 and 2000 6
Notes to consolidated condensed
financial statements 78
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8Operations. 9
Item 3. Quantitative and Qualitative Disclosure
about Market RiskRisk. 13
PART II - OTHER INFORMATION
Item 1. Legal ProceedingsProceedings. 14
Item 6. Exhibits and Reports on Form 8-K 148-K. 15
SIGNATURE 17
-2-- 2 -
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Consolidated Financial Statements.
-----------------------------------------------------
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
January 31,
2001 April 30,
(Unaudited)
2000
--------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 5,267 15,917
Short-term investments 29,630 7,925
Receivables 4,927 4,111
Inventories 60,515 41,363
Prepaid expenses 8,146 5,745
-------- -------
Total current assets 108,485 75,061
Other assets 1,461 1,513
Property and equipment, net of
accumulated depreciation
January 31, 2001, $275,280
April 30, 2000, $245,858 580,713 546,991
-------- -------
$690,659 623,565(DOLLARS IN THOUSANDS)
July 31, April 30,
2001 2001
-------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 15,419 22,958
Short-term investments 13,666 18,225
Receivables 7,538 5,190
Inventories 64,431 51,772
Prepaid expenses 6,267 5,461
Income tax receivable --- 3,287
-------- -------
Total current assets 107,321 106,893
-------- -------
Other assets 1,279 1,297
Property and equipment, net of
accumulated depreciation
July 31, 2001, $294,738
April 30, 2001, $284,483 604,283 585,294
-------- -------
$712,883 693,484
======== =======
See notes to consolidated condensed financial statements.
-3-- 3 -
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Continued)
(Dollars in Thousands)
January 31,
2001 April 30,
(Unaudited) 2000
--------- -----------(DOLLARS IN THOUSANDS)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 14,300 45,950
Current maturities of
long-term debt 9,297 9,703
Accounts payable 51,476 60,959
Accrued expenses 24,623 21,948
Income taxes payable --- 2,091
-------- -------
Total current liabilities 99,696 140,651
-------- -------
Long-term debt, net of
current maturities 184,846 112,896
-------- -------
Deferred income taxes 62,150 57,650
-------- -------
Deferred compensation 4,059 3,606
-------- -------
Shareholders' equity
Preferred stock, no par value --- ---
Common Stock, no par value 38,260 37,930
Retained earnings 301,648 270,832
-------- -------
Total shareholders' equity 339,908 308,762
-------- -------
$690,659 623,565
July 31, April 30,
2001 2001
-------- ---------
Current liabilities:
Notes payable $ 3,300 ---
Current maturities of
long-term debt 9,454 9,482
Accounts payable 67,823 67,735
Accrued expenses 25,360 24,824
Income taxes payable 3,265 ---
-------- -------
Total current liabilities 109,202 102,041
-------- -------
Long-term debt, net of current maturities 182,015 183,107
-------- -------
Deferred income taxes 65,150 63,650
-------- -------
Deferred compensation 4,252 4,210
-------- -------
Total liabilities 360,619 353,008
-------- -------
Shareholders' equity
Preferred stock, no par value --- ---
Common Stock, no par value 38,423 38,353
Retained earnings 313,841 302,123
-------- -------
Total shareholders' equity 352,264 340,476
-------- -------
$712,883 693,484
======== =======
See notes to consolidated condensed financial statements.
-4-- 4 -
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands, except per share amounts)
Three Months Ended Nine Months Ended
January 31, January 31,
-------------------- -------------------
2001 2000 2001 2000
------ -------- ------ --------
Net sales $ 437,004 402,029 1,461,603 1,201,975
Franchise revenue 832 1,223 2,958 4,168
--------- ------- --------- ---------
437,836 403,252 1,464,561 1,206,143
--------- ------- --------- ---------
Cost of goods sold 352,903 326,806 1,177,535 957,277
Operating expenses 64,999 56,058 193,781 162,495
Depreciation and
amortization 10,473 9,724 30,865 28,225
Interest, net 3,117 2,370 8,978 6,360
--------- ------- --------- ---------
431,492 394,958 1,411,159 1,154,357
--------- ------- --------- ---------
6,344 8,294 53,402 51,786
Federal and state
income taxes 2,361 3,085 19,866 19,264
--------- ------- --------- ---------
Net income $ 3,983 5,209 33,536 32,522
=========(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended
July 31,
------------------
2001 2000
-------- --------
Net sales $578,923 528,891
Franchise revenue 876 1,145
-------- -------
579,799 530,036
-------- -------
Cost of goods sold 473,877 428,062
Operating expenses 71,776 63,892
Depreciation and
amortization 10,807 10,071
Interest, net 3,103 2,971
-------- -------
559,563 504,996
-------- -------
Income before income taxes 20,236 25,040
Federal and state
income taxes 7,528 9,315
-------- -------
Net income $ 12,708 15,725
======== =======
Earnings per share
Basic $.26 .32
======== =======
Diluted $.26 .32
======== =======
========= =========
Earnings per common share
Basic $ .08 .10 .68 .62
========= ======= ========= =========
Diluted $ .08 .10 .68 .62
========= ======= ========= =========
See notes to consolidated condensed financial statements.
-5-- 5 -
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
Nine Months Ended
January 31,
-----------------
2001 2000
---- ----
Cash flows from operations:
Net income $ 33,536 32,522
Adjustments to reconcile
net income to net cash
provided by operations:
Depreciation and amortization 30,865 28,225
Deferred income taxes 4,500 5,250
Changes in assets and liabilities:
Receivables (816) (862)
Inventories (19,152) (7,133)
Prepaid expenses (2,401) (1,229)
Accounts payable (9,483) 5,866
Accrued expenses 2,675 923
Income taxes payable (2,091) (2,457)
Other, net 1,213 1,889
------- -------
Net cash provided by operations 38,846 62,994
------- -------
Cash flows from investing:
Purchase of property and equipment (65,729) (83,486)
Purchase of investments (34,190) (2,747)
Sale of investments 12,918 5,596
------- -------
Net cash used in investing activities (87,001) (80,637)
------- -------
Cash flows from financing:
Proceeds from long-term debt 80,000 --
Payments of long-term debt (8,456) (7,963)
Net activity of short-term debt (31,650) 52,600
Repurchase of Common Stock -- (12,806)
Proceeds from exercise of stock options 331 347
Payments of cash dividends (2,720) (2,373)
------- -------
Net cash provided by financing activities 37,505 29,805
------- -------
Net (decrease) increase in cash
and cash equivalents (10,650) 12,162
Cash and cash equivalents at
beginning of the year 15,917 5,935
------- -------
Cash and cash equivalents at
end of the quarter $ 5,267 18,097(DOLLARS IN THOUSANDS)
Three Months Ended
July 31,
-------------------
2001 2000
-------- -------
Cash flows from operations:
Net income $ 12,708 15,725
Adjustments to reconcile
net income to net cash
provided by operations:
Depreciation and amortization 10,807 10,071
Deferred income taxes 1,500 1,500
Changes in assets and liabilities:
Receivables (2,348) (166)
Inventories (12,659) (8,367)
Prepaid expenses (806) (496)
Accounts payable 88 (2,416)
Accrued expenses 536 3,136
Income taxes payable 6,552 7,814
Other, net 433 (110)
-------- -------
Net cash provided by operations 16,811 26,691
-------- -------
Cash flows from investing:
Purchase of property and equipment (29,721) (28,453)
Purchase of investments --- (34,190)
Sale of investments 4,476 4,737
-------- -------
Net cash used in investing activities (25,245) (57,906)
- 6 -
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
(DOLLARS IN THOUSANDS)
Three Months Ended
July 31,
-------------------
2001 2000
------- -------
Cash flows from financing:
Proceeds from long-term debt --- 80,000
Payment of long-term debt (1,485) (1,453)
Net activity of short-term debt 3,300 (45,550)
Proceeds from exercise of stock options 70 76
Payment of cash dividends (990) (741)
------- -------
Net cash provided by
financing activities 895 32,332
------- -------
Net (decease) increase in cash and cash equivalents (7,539) 1,117
Cash and cash equivalents at
beginning of the period 22,958 15,917
------- -------
Cash and cash equivalents at end of the period $15,419 17,034
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Three Months Ended
July 31,
------------------
2001 2000
------ -----
Cash paid during the year for
Interest, net of amount capitalized $4,816 2,229
Noncash investing and financing activites
Property and equipment acquired through
an installment purchase 365 ---
See notes to consolidated condensed financial statements.
-6-- 7 -
CASEY'S GENERAL STORES, INC. AND SUBSIDIARIES
NOTES TO (UNAUDITED)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 JanuaryJuly 31, 2001, and the results of operations for the three and nine
months ended
JanuaryJuly 31, 2001 and 2000, and changes in cash flows for the ninethree months
ended JanuaryJuly 31, 2001 and 2000.
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.
-7-- 8 -
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 the wholesale salesales 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 JanuaryJuly 31, 2001, the Company's ratio of current assets to current
liabilities was 1.09.98 to 1. The ratio at JanuaryJuly 31, 2000 and April 30, 20002001, was
.681.01 to 1 and .531.05 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 $24,148 (38.3%$9,880 (37%) in the ninethree months
ended JanuaryJuly 31, 2001 from the comparable period in the prior year, primarily as a
result of a larger increase in inventories and a decrease in accounts payable.net income. Cash
flows from investing in the ninethree months ended JanuaryJuly 31, 2001 increased primarily
due to the decrease in the purchase of investments. Cash flows from financing
decreased, primarily as a result of an increased purchase of investments.
However, this result was partially offset by a decrease in capital expenditures.
Cash flows from financing increased primarily due to the proceeds from long-term debt in the
long-
term debt exceedingcomparable period in the net paydown of the short-term debt and because there was
no repurchase of the Company's Common Stock during the nine months ended January
31, 2001.prior year.
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 -8-
first ninethree months of fiscal 2001,2002, the Company expended
$65,729$29,721 for property and equipment, primarily for the construction acquisition and
remodeling of Company stores, compared to $83,486$28,453 for the comparable period in
the prior year. The Company anticipates
- 9 -
expending approximately $90,000 in fiscal 20012002 for construction acquisition and remodeling
of Company stores, primarily from funds generated by operations, existing cash
and short-term investments and bank lines of credit.
As of JanuaryJuly 31, 2001, the Company had long-term debt of $184,846,$182,015, consisting
of $9,000$7,500 in principal amount of 7.70% Senior Notes, , $30,000 in principal amount
of 7.38% Senior Notes, $7,200 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, $6,000$5,405 of mortgage notes payable, and $2,646$1,910 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-eighthtwenty-
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 of 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 -9-
purchasers of the 6.55% Senior
Notes.
- 10 -
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 -10-
Company currently has 2,4242,474 USTs, of which 2,0842,126 are fiberglass
and 340348 are steel.
- 11 -
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. 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, 20002001 and 1999,2000, the Company spent approximately $447$944 and
$516,$447, respectively, for assessments and remediation. During the ninethree months
ended JanuaryJuly 31, 2001, the Company expended approximately $689$200 for such purposes.
Substantially all of these expenditures have been submitted for reimbursement
from state-sponsored trust fund programs and as of JanuaryJuly 31, 2001, a total of
approximately $5,000$5,300 has been received from such programs.programs since their inception.
Such amounts are typically subject to statutory provisions requiring repayment
of the reimbursed funds for non-compliancenoncompliance with upgrade provisions or other
applicable laws. The Company has accrued a liability at JanuaryJuly 31, 2001, 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 JanuaryJuly 31, 2001 Compared to Three Months Ended January
--------------------------------------------------------------------------July 31,
------------------------------------------------------------------------
2000 (Dollars and Amounts in Thousands)
- -----------------------------------------------
Net sales for the thirdfirst quarter of fiscal 20012002 increased by $34,975 (8.7%$50,032 (9.5%)
over the comparable period in fiscal 2000.2001. Retail gasoline sales increased by
$33,759 (14.6%$27,806 (8.6%) as the number of gallons sold decreasedincreased by 6,710 (3.4%27,148 (12.8%) while
the average retail price per gallon increased 18.7%decreased 3.7%. During this same period,
retail sales of grocery and general merchandise increased by $5,853 (4.0%$26,357 (14.6%) due
to the addition of 8163 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 80.8%81.9% for the thirdfirst
quarter of fiscal 2001,2002, compared to 81.3%80.9% for the comparable period in the prior
year. The gross profit margins on retail gasoline sales increaseddecreased (to 8.2%6.3%)
during the thirdfirst quarter of fiscal 20012002 from the thirdfirst quarter of the prior year
(7.2%(8.6%) due to the. The gross profit margin per gallon increasingalso decreased (to $.1152)$.093) in the
first quarter of fiscal 2002 from the comparable period in the prior year
($.0861).1308). TheHowever, the gross profits on retail sales of grocery -11-
and general
merchandise also increased (to 39.1%38.5%) from the comparable period in the prior year
(37.2%(38.4%), primarily due to the increase in the retail prices of
selective products..
- 12 -
Operating expenses as a percentage of net sales were 14.9%12.4% for the thirdfirst
quarter of fiscal 20012002 compared to 13.9%12.1% for the comparable period in the prior
year. The increase in operating expenses as a percentage of net sales was caused
primarily by increasesa decrease in wages, utilities, bank charges, and snow removal
costs.the average retail price per gallon of gasoline sold.
Net income decreased by $1,226 (23.5%$3,017 (19.2%). The decrease in net income was
attributable primarily to the increase in the operating expenses and a decrease in the number of gallons of gasoline sold.
Nine Months Ended January 31, 2001 Compared to Nine Months Ended January
------------------------------------------------------------------------
31, 2000 (Dollars and Amounts in Thousands)
- -------------------------------------------
Net sales for the first nine months of fiscal 2001 increased by $259,628
(21.6%) over the comparable period in fiscal 2000. Retail gasoline sales
increased by $217,132 (32.6%) as the number of gallons sold increased by 15,527
(2.6%) and the average retail price per gallon increased 29.2%. During this same
period, retail sales of grocery and general merchandise increased by $48,235
(10.4%) due to the addition of 81 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 80.6% for the first
nine months of fiscal 2001 compared to 79.6% for the comparable period in the
prior year due to total sales consisting of a larger percentage of retail
gasoline sales (60.5%) than the comparable period in the prior year (55.4%).
This result occurred while the gross profit margins on retail gasoline sales
remained constant (8.3%) during the first nine months of fiscal 2001 with the
comparable period in the prior year (8.3%) and while the gross profit margin per gallon increased (to $.1214) from the comparable period in the prior year
($.0946). The gross profits on retail sales of grocery and general merchandise
also increased (to 39.2%) from the comparable period in the prior year (38.3%),
primarily due to the increase in the retail prices of selective products.
Operating expenses as a percentage of net sales were 13.3% for the first
nine months of fiscal 2001 compared to 13.5% 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.
-12-
Net income increased by $1,014 (3.1%). The increase in net income was
attributable primarily to the increase in the gross profit margins on retail
gasoline sales and the increase in the gross profit margins on retail sales of
grocery and general merchandise.
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.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
----------------------------------------------------------
The Company's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio and long-term debt obligations. The
Company places its investments with high quality credit issuers and, by policy,
limits the amount of credit exposure to any one issuer. As stated in its policy,
the Company's first priority is to reduce the risk of principal loss.
Consequently, the Company seeks to preserve its invested funds by limiting
default risk, market risk and reinvestment risk. The Company mitigates default
risk by investing in only high quality credit securities that it believes to be
low risk and by positioning its portfolio to respond appropriately to a
significant reduction in a credit rating of any investment issuer or guarantor.
The portfolio includes only marketable securities with active secondary or
resale markets to ensure portfolio liquidity.
- 13 -
At JanuaryJuly 31, 2001, the Company had no derivative instruments, but management
is aware of the provisions of SFAS No. 133 (as amended by SFAS Nos. 137 and 138)
establishing accounting and reporting standards for derivative instruments.
-13-
The Company believes that an immediate 100 basis point move in interest
rates affecting the Company's floating and fixed rate financial instruments as
of JanuaryJuly 1, 2001 would have an immaterial effect on the Company's pretax earnings
and on the fair value of those instruments.
On July 20, 2001, the Financial Accounting Standards Board issued
Statements No. 141, "Business Combinations" and No. 142, "Goodwill and Other
Intangible Assets." Statement 141 requires all business combinations initiated
after June 30, 2001 to be accounted for using the purchase method. Statement 142
replaces the requirement to amortize intangible assets with indefinite lives and
goodwill with a requirement for an impairment test. Statement 142 also requires
an evaluation of intangible assets and their useful lives and a transitional
impairment test for goodwill and certain intangible assets. After transition,
the impairment tests will be performed annually. Statement 142 is required to be
applied starting with fiscal years beginning after December 15, 2001 and is
required to be applied at the beginning of the fiscal year. The Company does not
expect either of these Statements to have a material effect on their
consolidated financial statements.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.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 activities or
contamination-related claims,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.
- 14 -
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:reference.
Exhibit
No. Description
------- -----------
4.2 Rights Agreement dated as of June 14, 1989 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)
-14-
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 Casey's General
Stores, Inc.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
27 Financial Data Schedule
99 Cautionary Statement Relating to Forward-Looking Statements (h)
____________________
- --------------------15 -
(a) Incorporated by reference from the Registration Statement on Form 8-A
(0-
12788)(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.
-15-
(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 22,23,
2000.
(b) There were no Current Reports on Form 8-K filed by the Company during
the fiscal quarter ended January 31, 2001.
-16-- 16 -
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: March 5,September 10, 2001 By: /s/ John G. Harmon
---------------------------------------------------
John G. Harmon
Secretary/Treasurer
(Authorized Officer and Principal
Financial Officer)
-17-- 17 -
EXHIBIT INDEX
-------------
Exhibit No. Description Page
- ----------- ----------- ----
11 Statement regarding 18
computation of
per share earnings
- 18 -