SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q10-Q/A

(Amendment No. 1)

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Fiscal Quarter Ended JanuaryJuly 31, 20112014

Commission File Number 001-34700

CASEY’S GENERAL STORES, INC.

(Exact name of registrant as specified in its charter)

 

IOWA 42-0935283

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

ONE CONVENIENCE BOULEVARD,

ANKENY, IOWA

 50021
(Address of principal executive offices) (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]x    No  [  ]¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  [X]x    No  [  ]¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of Accelerated filer and large accelerated filer@ in Rule 12b-2 of the Exchange Act.

Large accelerated filer [X]         Accelerated filer [  ]         Non-accelerated filer [  ]

Large accelerated filerxAccelerated filer¨
Non-accelerated filer¨

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  [  ]¨    No  [X]x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

  

Outstanding at March 4, 2011

September 2, 2014

Common stock, no par value per share

  37,950,50938,649,999 shares


Explanatory Note

Casey’s General Stores, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A to its Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2014, originally filed with the Securities and Exchange Commission (“SEC”) on September 9, 2014, (the “Original Filing”) to make the following changes:

1.To amend and revise Item 4. Controls and Procedures related to the effectiveness of our disclosure controls and procedures and internal control over financial reporting; and

2.To make revisions for immaterial errors in the consolidated financial statements previously included in the Original Filing.

In the second quarter of fiscal year 2015, through a routine Internal Revenue Service (IRS) examination, management became aware that an inadvertent accounting and reporting error occurred during the fiscal years 2012, 2013, and 2014 and the first quarter of fiscal year 2015. A control deficiency was identified with regards to the review and approval of quarterly federal excise tax returns by management with the requisite skill and knowledge, and recognition of the corresponding liability and expense. The internal controls in place during this time were not responsive to changes in circumstances. While the control deficiency did not result in a material misstatement to the Company’s consolidated financial statements for any periods through and including the fiscal year ended April 30, 2014, or unaudited condensed consolidated financial statements for the first fiscal quarter of fiscal year 2015, it did represent a material weakness as of April 30, 2014, since there existed a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis. The correction of these immaterial errors is being recognized in revisions to our consolidated financial statements for the fiscal year ended April 30, 2014, filed separately as Amendment No. 1 on Form 10-K/A for the fiscal year ended April 30, 2014, and the unaudited condensed consolidated financial statements for the quarter ended July 31, 2014 in this Amendment No. 1. Pursuant to Rule 12b-15 under the Securities Exchange act of 1934, as a result of this Amendment No. 1, the certifications pursuant to Rules 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended and Section 906 of the Sarbanes-Oxley Act of 2002 have been re-executed and refiled as of the date of this Amendment No. 1. As a result, the Exhibit Index in Item 6. of the Quarterly Report is also being amended to reflect the inclusion of the aforementioned updates.

Accordingly, we hereby amend Items 1, 2, 4, and 6 in the Original Filing. Except as described in this Explanatory Note, the Original Filing is unchanged. In particular, except for the events described above, this Amendment No. 1 speaks only as of the date the Original Filing was filed, and has not been updated, amended, or supplemented to

give effect to any subsequent events. Accordingly, forward-looking statements included in this Amendment No. 1 represent the management’s views as of the Original Filing was filed and should not be assumed to be accurate as of any date thereafter. This Amendment No. 1 should be read in conjunction with the Original Filing, and any of the Company’s other filings with the SEC subsequent to the Original Filing, together with any amendments to those filings.

CASEY’S GENERAL STORES, INC.

INDEX

 

Page

PART I FINANCIAL INFORMATION

Page
PART I

Item 1. Condensed Consolidated Financial Statements

 FINANCIAL INFORMATION
Item 1.Condensed Consolidated Financial Statements

Condensed consolidated balance sheets – JanuaryJuly 31, 20112014 and April 30, 20102014 (unaudited)

3
Condensed consolidated statements of earnings – three and nine months ended January 31, 2011 and 2010 (unaudited)

 5

Condensed consolidated statements of income – three months ended July 31, 2014 and 2013 (unaudited)

7

Condensed consolidated statements of cash flows – ninethree months ended JanuaryJuly 31, 20112014 and 20102013 (unaudited)

 68

Notes to unaudited condensed consolidated financial statements

 810

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations

 1517

Item 3.

Quantitative and Qualitative Disclosure about Market Risk.Risk

 2826

Item 4. Controls and Procedures

26

PART II OTHER INFORMATION

Item 4.

Controls and Procedures.1. Legal Proceedings

 29
PART II    

OTHER INFORMATION

Item 1.Legal Proceedings.29
Item 1A. Risk Factors.Factors

 30

Item 6.

Exhibits. Exhibits

 31

SIGNATURE

 3332

PART I - I—FINANCIAL INFORMATION

 

Item 1.Condensed Consolidated Financial Statements

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(DOLLARS IN THOUSANDS)

 

      January 31,
2011
   April 30,
2010
 
  July 31,
2014
   April 30,
2014
 

ASSETS

          

Current assets:

          

Cash and cash equivalents

  $      64,446     151,676    $116,747     121,641  

Receivables

     16,203     12,111     30,331     25,841  

Inventories

     134,721     124,951     218,403     204,833  

Prepaid expenses

     1,578     1,129     2,748     1,478  

Deferred income taxes

     11,062     9,417     21,192     23,292  

Income tax receivable

     36,501     10,801     —       12,473  
            

 

   

 

 

Total current assets

     264,511     310,085     389,421     389,558  
            

 

   

 

 

Other assets, net of amortization

     11,736     10,232     16,395     15,947  

Goodwill

     86,422     57,547     126,931     120,406  

Property and equipment, net of accumulated depreciation of $760,421 at January 31, 2011 and of $706,994 at April 30, 2010

     1,171,586     1,010,911  
          

Property and equipment, net of accumulated depreciation of $1,093,305 at July 31, 2014 and $1,062,278 at April 30, 2014

   1,852,807     1,778,965  
  

 

   

 

 

Total assets

  $      1,534,255     1,388,775    $2,385,554     2,304,876  
            

 

   

 

 

See notes to unaudited condensed consolidated financial statements.

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Continued)

(DOLLARS IN THOUSANDS)

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

      January 31,
2011
   April 30,
2010
   July 31,
2014
   April 30,
2014
 

Current liabilities:

          

Notes payable

  $      9,000       

Current maturities of long-term debt

     1,319     24,577  

Notes payable to bank

  $—       —    

Current maturities of long- term debt

   427     553  

Accounts payable

     159,252     145,334     255,767     250,807  

Accrued expenses

     87,993     70,975     151,344     139,529  
          

Income taxes payable

   16,123     —    
  

 

   

 

 

Total current liabilities

     257,564     240,886     423,661     390,889  
            

 

   

 

 

Long-term debt, net of current maturities

     678,864     154,754     853,545     853,642  

Deferred income taxes

     182,595     141,229     319,959     318,023  

Deferred compensation

     13,555     12,788     16,938     16,558  

Other long-term liabilities

     16,508     14,799     19,291     22,500  
            

 

   

 

 

Total liabilities

     1,149,086     564,456     1,633,394     1,601,612  
          
  

 

   

 

 

Shareholders’ equity:

          

Preferred stock, no par value

               —       —    

Common stock, no par value

     2,913     64,439     40,402     33,878  

Retained earnings

     382,256     759,880     711,758     669,386  
            

 

   

 

 

Total shareholders’ equity

     385,169     824,319     752,160     703,264  
            

 

   

 

 
  $2,385,554     2,304,876  
  $      1,534,255     1,388,775   ��

 

   

 

 
          

See notes to unaudited condensed consolidated financial statements.

CASEY’S GENERAL STORES,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGSINCOME

(Unaudited)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

     Three months ended January 31,   Nine months ended January 31,   Three months ended July 31, 
     2011   2010   2011   2010   2014   2013 

Total revenue

  $   1,374,199     1,114,377     4,085,745     3,457,281    $2,291,186     2,114,749  

Cost of goods sold
(exclusive of depreciation and amortization, shown separately below)

     1,171,668     937,777     3,421,866     2,854,192     1,920,272     1,772,328  
                    

 

   

 

 

Gross profit

     202,531     176,600     663,879     603,089     370,914     342,421  
                    

 

   

 

 

Operating expenses

     151,506     127,883     457,155     391,254     244,318     215,974  

Depreciation and amortization

     20,769     18,368     60,373     54,846     36,249     30,501  

Interest, net

     8,908     2,748     19,630     8,159     10,506     9,576  

Loss on early retirement of debt

               11,350       
                    

 

   

 

 

Earnings before income taxes

     21,348     27,601     115,371     148,830  

Income before income taxes

   79,841     86,370  

Federal and state income

taxes

     8,473     10,359     43,518     53,803     29,744     32,575  
                    

 

   

 

 

Net earnings

  $   12,875     17,242     71,853     95,027  

Net income

  $50,097     53,795  
                    

 

   

 

 

Earnings per common share

          

Net income per common share

    

Basic

  $   .34     .34     1.64     1.87    $1.30     1.40  
                  
  

 

   

 

 

Diluted

  $   .34     .34     1.63     1.86    $1.28     1.39  
                    

 

   

 

 

Basic weighted average

shares outstanding

     37,938,394     50,914,462     43,727,582     50,892,629     38,616,340     38,393,076  

Plus effect of stock options

     305,056     185,024     272,828     146,903  

Plus effect of stock compensation

   390,121     434,809  
                    

 

   

 

 

Diluted weighted average shares outstanding

     38,243,450     51,099,486     44,000,410     51,039,532     39,006,461     38,827,885  
                    

 

   

 

 

See notes to unaudited condensed consolidated financial statements.

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(DOLLARS IN THOUSANDS)

 

      Nine months ended January 31,   Three months ended
July 31,
 
      2011 2010   2014 2013 

Cash flows from operations:

     

Net earnings

  $      71,853   95,027 

Adjustments to reconcile net earnings to net cash provided by operations:

     

Cash flows from operating activities:

   

Net income

  $50,097  53,795 

Adjustments to reconcile net income to net cash provided by operating activities:

   

Depreciation and amortization

     60,373   54,846    36,249  30,501 

Other amortization

     348   193     108  93 

Stock based compensation

     1,305   1,536 

Loss on sale and disposal of property and equipment

     239   656 

Stock-based compensation

   1,632  1,044 

Loss on disposal of assets and impairment charges

   242  916 

Deferred income taxes

     39,721   17,307    4,037   1,828  

Excess tax benefits related to stock option exercises

     (594  (274   (579 (440

Loss on early retirement of debt

     11,350     

Changes in assets and liabilities:

        

Receivables

     (4,092  (773   (4,490 (5,018

Inventories

     (3,396  (4,706   (11,362 (15,979

Prepaid expenses

     (449  (292   (1,270 (1,433

Accounts payable

     13,918   16,389    4,960  19,631 

Accrued expenses

     16,404   (12,862   10,969  23,214 

Income taxes

     (24,178  (3,120   25,782  30,207 

Other, net

     (390  171    (18 (126
           

 

  

 

 

Net cash provided by operations

     182,412   164,098 

Net cash provided by operating activities

   116,357   138,233 
           

 

  

 

 

Cash flows from investing:

     

Cash flows from investing activities:

   

Purchase of property and equipment

     (155,353  (101,506   (88,789  (72,456

Payments for acquisition of stores, net of cash acquired

     (101,040  (28,287

Proceeds from sale of property and equipment

     1,245   1,072 

Payments for acquisition of businesses, net of cash acquired

   (30,774  (1,669

Proceeds from sales of property and equipment

   557   449 
           

 

  

 

 

Net cash used in investing activities

     (255,148  (128,721   (119,006  (73,676
           

 

  

 

 

Cash flows from financing:

     

Cash flows from financing activities:

   

Proceeds from long-term debt

     569,000        —      150,000 

Payments of long-term debt

     (68,836  (16,559

Net borrowings of short-term debt

     9,000     

Repayments of long-term debt

   (223  (208

Net repayments of short-term debt

   —      (59,100

Proceeds from exercise of stock options

     3,465   1,084    4,313   900 

Payments of cash dividends

     (15,341  (12,980   (6,914  (6,913

Repurchase of common stock

     (501,026    

Payments of prepayment penalties

     (11,350    

Excess tax benefits related to stock option exercises

     594   274    579   440 
           

 

  

 

 

Net cash used in financing activities

     (14,494  (28,181

Net cash (used in) provided by financing activities

   (2,245  85,119 
           

 

  

 

 

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued)

(DOLLARS IN THOUSANDS)

 

        Nine months ended January 31, 
        2011     2010 

Net (decrease) increase in cash and cash equivalents

       (87,230     7,196  

Cash and cash equivalents at beginning of the period

       151,676      145,695  
                

Cash and cash equivalents at end of the period

    $   64,446      152,891  
                

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

 

  

        Nine months ended January 31, 
        2011     2010 

Cash paid during the period for:

          

Interest, net of amount capitalized

    $   16,934       7,931  

Income taxes

       27,332       38,582  
   Three months ended July 31, 
   2014  2013 

Net (decrease) increase in cash and cash equivalents

   (4,894  149,676 

Cash and cash equivalents at beginning of the period

   121,641   41,271 
  

 

 

  

 

 

 

Cash and cash equivalents at end of the period

  $116,747   190,947 
  

 

 

  

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

   Three months ended July 31, 
   2014  2013 

Cash paid (received) during the period for:

   

Interest, net of amount capitalized

  $3,665    118 

Income taxes, net

   (106  540 

See notes to unaudited condensed consolidated financial statements.

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(Dollars in Thousands, Except Share and Per Share Amounts)

1. Presentation of Financial Statements

The accompanying condensed consolidated 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. Correction of Immaterial Errors

Subsequent to the year ended April 30, 2014, through a routine IRS examination, the Company identified errors in excise taxes owed on ethanol gallon purchases, that resulted in an understatement of accrued expenses at April 30, 2014 and 2013 and cost of goods sold for the fiscal years ended 2014, 2013 and 2012. The excise tax liability is subject to interest charges and is deductible for income tax purposes. In accordance with the SEC’s Staff Accounting Bulletin (SAB) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Consolidated Statements of Income, Balance Sheets, and Cash Flows, management evaluated the materiality of the errors from qualitative and quantitative perspectives and concluded that the errors were immaterial to the Company’s historical financial statements. Consequently, the Company has revised its historical financial statements for the quarter ended July 31, 2014 as noted in the tables below.

Statement of Income Data

 

1.The accompanying condensed consolidated 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.
   Period Ended 
   July 31, 2014   July 31, 2013 
   As
reported
   As
revised
   As
reported
   As
revised
 

Cost of goods sold

  $1,917,010     1,920,272    $1,769,239     1,772,328  

Interest, net

   10,257     10,506     9,456     9,576  

Federal and state income taxes

   31,062     29,744     33,869     32,575  

Net income

   52,290     50,097     55,710     53,795  

Net income per

        

Basic

  $1.35     1.30    $1.45     1.40  

Diluted

  $1.34     1.28    $1.43     1.39  

Balance Sheet Data

 

2.
   Period Ended 
   July 31, 2014   April 30 ,2014 
   As
reported
   As
revised
   As
reported
   As
revised
 

Deferred income Taxes (asset)

  $12,225    $21,192    $11,878    $23,292  

Accrued expenses

   119,887     151,344     111,583     139,529  

Income taxes payable

   19,900     16,123     —       —    

Deferred income Taxes (liability)

   320,136     319,959     317,953     318,023  

Other long term liabilities

   19,033     19,291     22,500     22,500  

Retained earnings

   730,552     711,758     685,988     669,386  

Statement of Cash Flow Data

   Period Ended 
   July 31, 2014   July 31, 2013 
   As
reported
   As
revised
   As
reported
   As
revised
 

Net income

  $52,290    $50,097    $55,710    $53,795  

Deferred income taxes

   1,836     4,037     3,122     1,828  

Accrued expenses

   7,458     10,969     20,005     23,214  

Income taxes

   29,301     25,782     30,207     30,207  

In addition, the following notes to the condensed consolidated financial statements have been affected by the revisions for the correction of these immaterial errors: Footnotes 7 and 9.

3. Basis of Presentation

The accompanying condensed consolidated 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 U.S. 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 condensed consolidated 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 condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of January 31, 2011 and April 30, 2010, and the results of operations for the three and nine months ended January 31, 2011 and 2010, and cash flows for the nine months ended January 31, 2011 and 2010.

3.The Company recognizes retail sales of gasoline, grocery and general merchandise, prepared food and commissions on lottery, prepaid phone cards, and video rentals at the time of the sale to the customer. Vendor rebates in the form of rack display allowances are treated as a reduction in cost of sales and are recognized pro rata over the period covered by the applicable rebate agreement. Vendor rebates in the form of billbacks are treated as a reduction in cost of sales and are recognized at the time the product is sold.

4.On March 9, 2010, the Company received an unsolicited proposal from Alimentation Couche-Tard Inc. (“Couche-Tard”) to acquire all outstanding shares of common stock of the Company (“Common Stock”), at a price of $36.00 per share in cash. After careful consideration of the strategic, financial and legal aspects of the proposal and the nature and timing of the proposal in consultation with its legal and financial advisors and senior management of the Company, the Company’s Board of Directors (the “Board”) unanimously determined that the proposal was not in the best interests of the Company, its shareholders and its other constituencies and unanimously determined to reject the proposal. Couche-Tard made public its unsolicited proposal to acquire the Company on April 9, 2010. Subsequently, on June 2, 2010, Couche-Tard and its indirect wholly owned subsidiary, ACT Acquisition Sub, Inc. (“Couche-Tard Sub”), commenced a tender offer for all outstanding shares of Common Stock, together with the associated rights (the “Rights”) to purchase Series A Serial Preferred Stock, no par value per share, of the Company issued pursuant to the Rights Agreement dated as of April 16, 2010 (the “Rights Agreement”), between the Company and Computershare Trust Company, N.A., as Rights Agent (the “Offer”), for $36.00 per share in cash. On the same date, Couche-Tard also publicly announced, and notified the Company of, its intent to nominate and solicit proxies for the election of a full slate of directors at the 2010 annual meeting of the Company’s shareholders. After careful consideration, including a thorough review of the terms and conditions of the Offer in consultation with its legal and financial advisors and senior management of the Company, the Board determined that the Offer was not in the best interests of the Company, its shareholders and its other constituencies, and the Board recommended that the Company’s shareholders not tender into the Offer. On July 22, 2010, Couche-Tard announced that it had increased the offer price to $36.75 per share in cash. After careful consideration, including a thorough review of the terms and conditions of the revised Offer in consultation with its legal and financial advisors and senior management of the Company, the Board determined that the revised Offer was not in the best interests of the Company, its shareholders and its other constituencies, and the Board recommended that the Company’s shareholders not tender into the Offer. On September 1, 2010, Couche-Tard announced that it had increased the offer price to $38.50 per share in cash. After careful consideration, including a thorough review of the terms and conditions of the revised Offer in consultation with its legal and financial advisors and senior management of the Company, the Board determined that the revised Offer was not in the best interests of the Company, its shareholders and its other constituencies, and the Board recommended that the Company’s shareholders not tender into the Offer.

In response to the Offer, the Company filed with the Securities and Exchange Commission (the “SEC”) a Solicitation/Recommendation StatementCommission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. 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 condensed consolidated 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 unaudited condensed consolidated financial statements contain all adjustments (consisting of all normal recurring accruals) necessary to present fairly the financial position as of July 31, 2014 and April 30, 2014, and the results of operations for the three months ended July 31, 2014 and 2013, and cash flows for the three months ended July 31, 2014 and 2013.

4. Revenue Recognition

The Company recognizes retail sales of fuel, grocery and general merchandise, prepared food and fountain and commissions on Schedule 14D-9 (as amended,lottery, newspapers, prepaid phone cards, and video rentals at the “Schedule 14D-9”). Among other subsequent amendmentstime of the sale to the same, on September 7, 2010customer. Renewable Identification Numbers (RINs) are treated as a reduction in cost of goods sold in the period the Company amendedcommits to a price and agrees to sell the Schedule 14D-9 to disclose that it had received an unsolicited preliminary proposal from a strategic third party regarding a consensual transaction at $40.00 per share of Common Stock in cash. On September 9, 2010, the Company confirmed that it had entered into discussions with 7-Eleven, Inc. (“7-Eleven”) regarding a potential transaction. While the Board believed Casey’s value substantially exceeded $40.00 per share, it authorized such discussions to explore whether a transaction could be reached that reflected the true value of Casey’s and wasRIN. Vendor rebates in the best interestsform of Casey’s, its shareholdersrack display allowances are treated as a reduction in cost of goods sold and other constituencies.

On September 23, 2010,are recognized pro rata over the period covered by the applicable rebate agreement. Vendor rebates in the form of billbacks are treated as a reduction in cost of goods sold and are recognized at the 2010 Annual Meeting of Shareholders,time the Company’s shareholders re-elected all eight of the Company’s incumbent directorsproduct is sold.

5. Long-Term Debt and rejected a bylaw proposal submitted by Couche-Tard. On September 30, 2010, Couche-Tard disclosed that the Offer would be allowed to expire at the close of business on September 30, 2010, and that no shares of Common Stock would be purchased under the Offer.Fair Value Disclosure

On November 3, 2010, the Company disclosed that it had received a revised proposal from 7-Eleven of $43.00 per share of Common Stock in cash. The Board, in consultation with its financial and other advisors, carefully considered the revised proposal from 7-Eleven and determined it did not reflect the value of Casey’s and its significant growth opportunities, and was not in the best interests of Casey’s, its shareholders and other constituencies. The Company also disclosed on November 3, 2010 that it was no longer in discussions with 7-Eleven.

During the third quarter of fiscal 2011, the Company recorded $1,725 in legal and advisory fees incurred during the second quarter related to the evaluation of the Offer and related actions by Couche-Tard and the evaluation of the proposal from 7-Eleven.

5.During the second quarter, the Company issued $569,000 of aggregate principal amount of 5.22% Senior Notes to finance its “Dutch Auction” tender offer, to prepay the 1995 and 1999 Senior Notes, and to pay the fees and expenses associated with the tender offer and the financing. The Company purchased an aggregate of 13,157,894 shares of Common Stock at a purchase price of $38.00 per share, for a total cost of approximately $500,000, excluding fees and expenses.

The fair value of the Company’s long-term debt excluding capital lease obligations is estimated based on the current rates offered to the Company for debt of the same or similar issues. The fair value of the Company’s long-term debt excluding capital lease obligations was approximately $640,000$894,000 and $161,000,$841,000, respectively, at JanuaryJuly 31, 20112014 and April 30, 2010.2014. The Company has a $50,000an aggregate $100,000 line of credit with a $9,000no balance owed at JanuaryJuly 31, 20112014 and no balance was owed at April 30, 2010.2014, respectively.

6. Disclosure of Compensation Related Costs, Share Based Payments

6.The 2009 Stock Incentive Plan (the “Plan”

The 2009 Stock Incentive Plan (the “Plan), was approved by the Board in June 2009 and approved by the shareholders in September 2009. The Plan replaced the 2000 Option Plan and the Non-employee Director Stock Plan (together, the “Prior Plans”). There are 4,972,000 shares still available for grant at January 31, 2011. Awards made under the Plan may take the form of stock options, restricted stock or restricted stock units. Each share issued pursuant to a stock option will be counted as one share, and each share issued pursuant to an award of restricted stock or restricted stock units will reduce the shares available for grant by two. On June 23, 2010, restricted stock units with respect to a total of 14,000 shares were granted to the non-employee members of the Board. Additional information regarding the Plan is provided in the Company’s 2010 Proxy Statement.

The 2000 Stock Option Plan granted employeesand the Non-employee Director Stock Plan (together, the “Prior Plans”). There are 3,916,668 shares still available for grant at July 31, 2014. Awards made under the Plan may take the form of stock options, withrestricted stock or restricted stock units. Each share issued pursuant to a stock option will reduce the shares available for grant by one, and each share issued pursuant to an exercise price equal toaward of restricted stock or restricted stock units will reduce the shares available for grant by two. We account for stock-based compensation by estimating the fair value of stock options and restricted stock unit awards granted under the Company’sPlan using the market price of a share of our common stock on the date of grant and that expire ten years aftergrant. We recognize this fair value as an operating expense in our consolidated statements of income ratably over the date of grant. Vestingrequisite service period using the straight-line method, as adjusted for certain retirement provisions. Additional information regarding the Plan is generally over a three to five-year service period. provided in the Company’s 2009 Proxy Statement.

On June 23, 2009,7, 2013 and June 19, 2013, restricted stock options totaling 361,000units with respect to a total of 77,650 shares were granted to certain officers and key employees. These awards were granted at no cost to the grantee. These awards will vest on June 23, 2012 and compensation expense is currently being recognized ratably over7, 2016.

On September 13, 2013, restricted stock units totaling 14,000 shares were granted to the vesting period.non-employee members of the Board. This award was granted at no cost to the non-employee members of the Board. This award vested on May 1, 2014.

On June 25, 2007,6, 2014, restricted stock options totaling 246,000units with respect to a total of 91,000 shares were granted to certain officers and key employees. These awards were granted at no cost to the employee.grantee. The fair value of these awards was $6,584. These awards vestedwill vest on June 25, 2010 and compensation expense was recognized ratably over the vesting period.6, 2017.

On July 5, 2005, stock options totaling 234,000 shares were granted to certain officers and key employees. These awards were also granted at no cost to the employee. These awards vested on July 5, 2010 and compensation expense was recognized ratably over the vesting period.

At JanuaryJuly 31, 2011,2014, options for 793,809645,124 shares (which expire between 20112014 and 2019)2021) were outstanding for the Plan and Prior Plans. Information concerning the issuance of stock options under the Plan and Prior Plans is presented in the following table:

 

Number of
Shares
   Number of
option shares
  Weighted
average option
exercise price
 

Outstanding at April 30, 2014

   712,024  $36.73  

Granted

   —     —   

Exercised

   (66,900  40.27 

Forfeited

   —     —   
  

 

 

  

 

 

 

Outstanding at July 31, 2014

   645,124  $36.36  
  

 

 

  

 

 

 

Weighted

Average

Exercise Price

Outstanding April 30, 2010

959,550$        22.78        

Granted

—        

Exercised

165,74120.90        

Forfeited

—        

Outstanding at January 31, 2011

793,809$23.17        

At JanuaryJuly 31, 2011,2014, all outstanding options had an aggregate intrinsic value of $15,346$19,231 and a weighted average remaining contractual life of 6.45.8 years. The vested options totaled 450,809645,124 shares with a weighted average exercise price of $21.58$36.36 per share and a weighted average remaining contractual life of 4.85.8 years. The aggregate intrinsic value for the vested options as of JanuaryJuly 31, 2011,2014, was $9,428.$19,231. The aggregate intrinsic value for the total of all options exercised during the ninethree months ended JanuaryJuly 31, 2011,2014, was $3,211 and the total$2,018. The fair value of sharesoptions vested during the nine monthsquarter ended JanuaryJuly 31, 2011,2014 was $3,290.$6,270.

Total compensation costs recorded forInformation concerning the nine months ended January 31, 2011 and 2010, were $1,305 and $1,536 respectively, for the stock option andissuance of restricted stock awards. As of January 31, 2011, there was $1,497 of total unrecognized compensation costs related tounits under the 2000 Stock Option Plan for stock options which is expected to be recognized ratably through fiscal 2013.

7.During the first nine months of fiscal 2011, the Company acquired 74 stores through a variety of single store and multi-store transactions with several unrelated third parties. The stores were valued using a discounted cash flow model on a location by location basis. The acquisitions were recorded by allocating the cost of the assets acquired, including intangible assets and liabilities assumed, based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the net amounts assigned to the fair value of the assets acquired and the liabilities assumed is recorded as goodwill. All of the goodwill associated with these transactions will be deductible for income tax purposes over 15 years.

Allocation ofpresented in the purchase price for the transactions in aggregate is as follows (in thousands):following table:

 

Assets acquired:Unvested at April 30, 2014

  

Inventories

$6,374148,546 

Property and equipmentGranted

  91,000

Vested

  66,435(38,198

Forfeited

(6,136

Unvested at July 31, 2014

195,212 
  

Total assets

72,809

Liabilities assumed:

Accrued expenses

614

Total liabilities

614

Net tangible assets required, net of cash

72,195

Goodwill and other intangible assets

28,845

Total consideration paid, net of cash acquired

$101,040
 

Total compensation costs recorded for the three months ended July 31, 2014 and 2013, respectively, were $1,632 and $1,044 for the stock option and restricted stock unit awards. As of July 31, 2014, there were no unrecognized compensation costs related to the Plan for stock options and $9,312 of unrecognized compensation costs related to restricted stock units which are expected to be recognized ratably through fiscal 2018.

7. Acquisitions

Due to the immaterial error discussed in this Amendment No. 1, amounts in this footnote have been revised. For further discussion of the revision, see footnote 2, Correction of Immaterial Errors

During the first three months of fiscal 2015, the Company acquired 25 stores through one transaction with a third party. The stores were valued using a discounted cash flow model on a location by location basis. The acquisitions were recorded in the financial statements by allocating the purchase price to the assets acquired, including intangible assets and liabilities assumed, based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the net amounts assigned to the fair value of the assets acquired and the liabilities assumed is recorded as goodwill. All of the goodwill associated with these transactions will be deductible for income tax purposes over 15 years.

Allocation of the purchase price for the transaction in aggregate is as follows (in thousands):

Assets acquired:

  

Inventories

  $2,208  

Property and equipment

   22,075  
  

 

 

 

Total assets

   24,283  
  

 

 

 

Liabilities assumed:

  

Accrued expenses

   34  
  

 

 

 

Total liabilities

   34  
  

 

 

 

Net tangible assets acquired, net of cash

   24,249  

Goodwill and other intangible assets

   6,525  
  

 

 

 

Total consideration paid, net of cash acquired

  $30,774  
  

 

 

 

The allocation of the purchase price to assets acquired and liabilities assumed is preliminary pending finalization of management’s analysis.

The following unaudited pro forma information presents a summary of our consolidated results of operations as if the transactionstransaction referenced above occurred at the beginning of the first fiscal year for each of the periods presented (amounts in thousands, except per share data)(all acquisitions from the three month period ended July 31, 2014 were completed in May):

 

Nine months ended

January 31,

2011

2010

Total revenues

$4,243,6663,671,360

Net earnings

75,422100,397

Earnings per share:

Basic

$1.711.97

Diluted

$1.711.97
   Three months ended
July 31,
 
   2014   2013 

Total revenues

  $2,291,186     2,210,709  

Net earnings

   50,097     55,793  

Earnings per common share:

    

Basic

  $1.30     1.45  

Diluted

  $1.28     1.44  

8. Commitments and Contingencies

8.The Company is

As previously reported, the Company was named as a defendant in four lawsuits (“hot fuel” cases) brought in the federal courts in Kansas and Missouri against a variety of gasoline retailers. The complaints generally allege that the Company, along with numerous other retailers, has misrepresented gasoline volumes dispensed at its pumps by failing to compensate for expansion that occurs when fuel is sold at temperatures above 60°F. Fuel is measured at 60°F in wholesale purchase transactions and computation of motor fuel taxes in Kansas and Missouri. The complaints all seek certification as class actions on behalf of gasoline consumers within those two states, and one of the complaints also seeks certification for a class consisting of gasoline consumers in all states. The actions generally seek recovery for alleged violations of state consumer protection or unfair merchandising practices statutes, negligent and fraudulent misrepresentation, unjust enrichment, civil conspiracy, and violation of the duty of good faith and fair dealing; several seek injunctive relief and punitive damages.

These actions are among a total of 45 similar lawsuits that have been filed since November 2006 in 27 jurisdictions, including 25 states, the District of Columbia, and Guam against a wide rangevariety of defendants that produce, refine, distribute and/or market gasoline productsfuel retailers, which were consolidated in the United States. On June 18, 2007, the Federal Judicial Panel on Multidistrict Litigation ordered that all of the pending hot fuel cases (officially, the “Motor Fuel Temperature Sales Practices Litigation”) be transferred to the U.S. District Court for the District of Kansas in Kansas City, Kansas for coordinated or consolidated pretrial proceedings, including rulings on discovery matters, various pretrial motions, and class certification. Discovery efforts by both sides were substantially completed during the ensuing months, and the plaintiffs filed motions for class certification in eachas part of the pending lawsuits.

In a Memorandum and Order entered on May 28, 2010,multidistrict “Motor Fuel Temperature Sales Practices Litigation”. On November 20, 2012, the Court ruledpreliminarily approved the previously-reported settlement involving the Company, which when approved in final form by the Court following notice to the Class would result in the settlement and dismissal of all claims against Casey’s in the multidistrict litigation. The preliminarily approved settlement includes, but is not limited to, a commitment on the Plaintiffs’ Motion for Class Certification in two cases originally filed in the U.S. District Court for the Districtpart of Kansas,American Fiber & Cabling, LLC v. BP West Coast Products, LLC, et. al., Case No. 07-2053, andWilson v. Ampride, Inc., et. al., Case No. 06-2582, in which the Company to “sticker” certain information on its fuel pumps and make a monetary payment (which is a named Defendant. The Court determined that it could not certify a class asconsidered to claims against the Companybe material in theAmerican Fiber & Cabling case, having decided that the named Plaintiff had no standing to assert such claims. However, in theWilson case the Court certified a class asamount) to the liability and injunctive aspects of the Plaintiff’s claims for unjust enrichment and violation of the Kansas Consumer Protection Act (KCPA) against the Company and several other Defendants. With respect to claims for unjust enrichment, the class certified consists of all individuals and entities (except employees or affiliates of the Defendants) that, at any time between January 1, 2001 and the present, purchased motor fuel at retail at a temperature greater than 60°F, in the state of Kansas, from a gas station owned, operated, or controlled by one or more of the Defendants. As to claims for violation of the KCPA, the class certified is limited to all individuals, sole proprietors and family partnerships (excluding employees or affiliates of Defendants) that made such purchases.plaintiff class.

The Court also ordered the parties to show cause in writing why theWilson case and theAmerican Fiber & Cabling case should not be consolidated for all purposes. The matter is now under consideration by the Court. The court has scheduled the trial to commence on May 17, 2012. Management does not believe the Company is liable to the Plaintiffs for the conduct complained of, and intends to contest the matter vigorously.

From time to time we aremay be involved in other legal and administrative proceedings or investigations arising from the conduct of our business operations, including contractual disputes; environmental contamination or remediation issues; employment or personnel matters; personal injury and property damage claims; and claims by federal, state, and local regulatory authorities relating to the sale of products pursuant to licenses and permits issued by those authorities. Claims for compensatory or exemplary damages in those actions may be substantial. While the outcome of such litigation, proceedings, investigations, or claims is never certain, it is our opinion, after taking into consideration legal counsel’s assessment and the availability of insurance proceeds and other collateral sources to cover potential losses, that the ultimate disposition of such matters currently pending or threatened, individually or cumulatively, will not have a material adverse effect on our consolidated financial position and results of operation.

9. Unrecognized Tax Benefits

Due to the immaterial error discussed in this Amendment No. 1, amounts in this footnote have been revised. For further discussion of the revision, see footnote 2, Correction of Immaterial Errors

The total amount of gross unrecognized tax benefits was $9,244 at April 30, 2014. At July 31, 2014, gross unrecognized tax benefits were $9,736. If this unrecognized tax benefit were ultimately recognized, $6,451 is the amount that would impact our effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits was $189 at July 31, 2014, and $402 at April 30, 2014. Net interest and penalties included in income tax expense for the three months ended July 31, 2014, was a net benefit of $213 and an expense of $94 for the same period of 2013.

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. The Company currently has no ongoing federal or state income tax examinations. The Company does not have any outstanding litigation related to tax matters. At this time, management expects the aggregate amount of unrecognized tax benefits to decrease by approximately $2,549 within the next 12 months. The expected decrease is due to the expiration of the statute of limitations related to certain federal and state income tax filing positions.

The federal statute of limitation remains open for the tax years 2010 and forward. Tax years 2009 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11,Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists to provide guidance on the presentation of unrecognized tax benefits. The pronouncement requires unrecognized tax benefits to be offset on the balance sheet by any same-jurisdiction net operating loss or tax credit carryforward that would be used to settle the position with a tax authority. The pronouncement was adopted by the Company effective May 1, 2014. The adoption did not have a material impact on our financial statements.

10. Segment Reporting

As of July 31, 2014 we operated 1,837 stores in fourteen states. Our stores offer a broad selection of merchandise, fuel and other products and services designed to appeal to the convenience needs of our customers. We manage the business on the basis of one operating segment and therefore, have only one reportable segment. Our stores sell similar products and services, use similar processes to sell those products and services, and sell their products and services to similar classes of customers. We make specific disclosures concerning the three broad merchandise categories of fuel, grocery & other merchandise, and prepared food and fountain because it makes it easier for us to discuss

trends and operational initiatives within our business and industry. Although we can separate gross margins within these categories (and further sub-categories), the operating expenses associated with operating a store that sells these products are not separable by these three categories.

11. Subsequent Events

Events that have occurred subsequent to July 31, 2014 have been evaluated for disclosure through the filing date of this Quarterly Report on Form 10-Q/A (Amendment No. 1) with the SEC.

9.Effective May 1, 2007, we adopted guidance on the recognition and measurement of an enterprise’s tax positions taken in a tax return, and how we account for a tax position depending on whether the position is ‘more likely than not’ to pass a tax examination. We adopted guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The total amount of gross unrecognized tax benefits was $5,482 at April 30, 2010. At January 31, 2011, we had a total of $6,282 in gross unrecognized tax benefits. Of this amount, $4,092 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits was $379 at January 31, 2011 and $250 at April 30, 2010. Net interest and penalties included in income tax expense for the nine months ended January 31, 2011 was an expense of $128 and a benefit of $263 for the same period of 2010. These unrecognized tax benefits relate to certain federal and state income tax filing positions claimed for our corporate subsidiaries.
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. As of January 31, 2011, the Company did not have any ongoing federal income tax examinations. Two states have an examination in progress. The Company did not have any outstanding litigation related to tax matters. At this time, management expects the aggregate amount of unrecognized tax benefits to decrease by approximately $1,200 within the next 12 months. This expected decrease is due to the expiration of statute of limitations related to certain federal and state income tax filing positions.
The statute of limitations for federal income tax filings remains open for the years 2007 and forward. Tax years 2003 and forward are subject to audit by state tax authorities depending on the tax code of each state.
10.Certain amounts in the prior years’ financial statements have been reclassified to conform to the current-year presentation, primarily related to cash flows related to acquisitions. These changes were not considered material.
11.Events that have occurred subsequent to January 31, 2011 have been evaluated through the filing date of this Quarterly Report on Form 10-Q with the SEC.
12.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 Statements included in Item 2 of this Form 10-Q and in the “Risk Factors” described in Item 1A of the Annual Report on Form 10-K for the fiscal year ended April 30, 2010. These interim condensed consolidated financial statements should be read in conjunction with those disclosures.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations(Dollars in Thousands).

Overview

Casey’s General Stores, Inc. (“Casey’s”Casey’s) and its wholly-owned subsidiaries (Casey’s, together with its subsidiaries, are referred to herein as the “Company”Company) operate convenience stores primarily under the name “Casey’s General Store”, “HandiMart” and “Just Diesel” (hereinafter collectively referred to as “Casey’s Store”Casey’s Store or “Stores”Stores) in tenfourteen Midwestern states, primarily Iowa, Missouri and Illinois. The Company also operates one stand-alone pizza delivery and carry-out store and one store selling primarily tobacco products. On JanuaryJuly 31, 2011,2014, there were a total of 1,6181,837 Casey’s Stores in operation. All convenience stores offer gasolinefuel for sale on a self-serve basis and most 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. The Company derives its revenue primarily from the retail sale of gasolinefuel and the products offered in its stores.

Approximately 60%57% of all Casey’s Stores are located in areas with populations of fewer than 5,000 persons, while approximately 15%17% of all stores are located in communities with populations exceeding 20,000 persons. 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 stores. At JanuaryJuly 31, 2011,2014, the Company owned the land at 1,5991,832 locations and the buildings at 1,6081,820 locations, and leased the land at 19five locations and the buildings at 1017 locations.

The Company reported basicdiluted earnings per common share of $0.34$1.28 for the thirdfirst quarter of fiscal 2011. The results include $1,725 in legal and advisory fees pertaining to the evaluation of the unsolicited offer and related actions by Alimentation Couche-Tard Inc. (“Couche-Tard”) and the evaluation of a proposal from 7-Eleven, Inc. (“7-Eleven”). Without those expenses, basic earnings per common share would have been approximately $0.37 for the quarter.2015. For the same quarter a year ago, basicyear-ago, diluted earnings per common share were $0.34.$1.39.

During the thirdfirst fiscal quarter, the Company acquired 64 stores,completed seven new-store constructions, opened 9four replacement stores, acquired 25 stores, and completed 6 new-store constructions.closed three stores. The annual goal is to increase the number ofbuild or acquire 72 to 108 stores by 4% to 6%.and replace 25 existing locations.

The thirdfirst quarter results reflected a 3.5%3.0% increase in same-store gasolinefuel gallons sold, with an average margin of approximately 13.918.9 cents per gallon.gallon, primarily driven by the continuing benefit of our fuel saver program and $5,738 of renewable fuel credits. The Company policy is to price to the competition, so the timing of retail price changes is driven by local competitive conditions. During the quarter, the Company continued to benefit from a responsive pricing environment.

Same storeSame-store sales of grocery and other merchandise increased 7.7% and prepared foods and fountain showed gainsincreased 11.1% during the thirdfirst quarter. Operating expenses increased 18.5%13.1% in the quarter primarily due to a $1,725 pre-tax charge related to the evaluation of the unsolicited offer and related actions by Couche-Tard and the evaluation of the proposal from 7-Eleven, a $3,684 increase in credit card fees, higher transportation costs associated with higher fuel prices, an increase in insurance expense, and a greater number of88 more stores in operation compared to the same period a year ago.

The weak U.S. economy and high levels of unemployment have generally had an adverse impact on consumer disposable income in the Midwest. These conditions have not significantly lowered the overall demand for gasolineago, and the merchandise soldexpansion of our operating initiatives in our stores but management believes customers often are “trading down” to less expensive items inside the store. Also, inflationary pressures in commodity costs have had an adverse effect on the gross profit margin in the prepared food(expanded hours at select locations, stores with pizza delivery, and fountain category. For further information concerning the Company’s operating environment and certain of the conditions that may affect future performance, see the “Cautionary Statements” at the end of this Item 2.

major remodels).

Three Months Ended JanuaryJuly 31, 20112014 Compared to

Three Months Ended JanuaryJuly 31, 20102013 (1)

(Dollars and Amounts in Thousands)

 

Three months

ended 1/31/11

  Gasoline   

Grocery &

Other

Merchandise

   

Prepared Food

& Fountain

   Other   Total 
Three months ended 7/31/14  Fuel Grocery &
Other
Merchandise
 Prepared Food
& Fountain
 Other Total 

Revenue

   $    991,143         276,075         100,189           6,792        1,374,199         $1,607,126   478,586   194,610   10,864   2,291,186  

Gross profit

   48,101         85,385         62,266           6,779        202,531          87,872   155,683   116,511   10,848   370,914  

Margin

   4.9%         30.9%         62.1%           99.8%        14.7%          5.5 32.5 59.9 99.9 16.2

Gasoline gallons

   347,029              

Three months

ended 1/31/10

  Gasoline   

Grocery &

Other

Merchandise

   

Prepared Food

& Fountain

   Other   Total 

Fuel gallons

   464,214      
Three months ended 7/31/13  Fuel Grocery &
Other
Merchandise
 Prepared Food
& Fountain
 Other Total 

Revenue

   $    780,792         242,544         86,005           5,036        1,114,377         $1,514,874   423,585   166,248   10,042   2,114,749  

Gross profit

   38,303         79,255         54,019           5,023        176,600          91,227   138,412   102,754   10,028   342,421  

Margin

   4.9%         32.7%         62.8%           99.7%        15.8%          6.0 32.7 61.8 99.9 16.2

Gasoline gallons

   309,747              

Fuel gallons

   426,549      

(1)Due to the immaterial error discussed in this Amendment No. 1, these numbers have been revised from the Original Filing.

Total revenue for the thirdfirst quarter of fiscal 20112015 increased by $259,822 (23.3%$176,437 (8.3%) over the comparable period in fiscal 2010.2014. Retail gasolinefuel sales increased by $210,351 (26.9%$92,252 (6.1%) as the number of gallons sold increased by 37,282 (12%)37,665 (8.8% or $130,398) while the average retail price per gallon increased 13.3%decreased 2.5% (amounting to a $38,146 decrease). During this same period, retail sales of grocery and general merchandise increased by $33,531 (13.8%$55,001

(13.0%), primarily due to increases in sales of tobacco products, sports and energy drinks, and juices,a $22,807 increase from stores that were built or acquired after April 30, 2013, and a greater number$10,665 increase from the expansion of storesour operating initiatives in operation.our stores. Prepared food and fountain sales also increased by $14,184 (16.5%$28,362 (17.1%), due primarily to the continued popularity of menu offeringsan $8,719 increase from stores that were built or acquired after April 30, 2013, and a greater number$6,462 increase from the expansion of storesour operating initiatives in operation.our stores.

The other revenue category primarily consists of lottery, prepaid phone cards, newspaper, money orders, car wash, video rental revenues and automated teller machine (ATM) commissions received and car wash revenues.received. These revenues increased $1,756 (34.9%$822 (8.2%) for the thirdfirst quarter of fiscal 20112015 primarily due to the increases in prepaid phone card sales, car wash revenues, lottery commissions, and ATM commissions from the comparable period in the prior year.

Total gross profit margin was 14.7%16.2% for the thirdfirst quarter of fiscal 2011,2015, compared to 15.8%16.2% for the comparable period in the prior year. The gross profit margin on retail gasolinefuel sales remained constantdecreased (to 5.5%) during the thirdfirst quarter of fiscal 20112015 from the thirdfirst quarter of the prior year (4.9%(6.0%). However, theThe gross profit margin per gallon increasedalso decreased (to $.1386)$.1893) in the thirdfirst quarter of fiscal 20112015 from the comparable period in the prior year ($.1237),.2139) primarily due to the competitive responsedecrease of many gasoline retailersthe renewable fuel credits sold this quarter ($5,738) compared to the movement of wholesale costs.comparable quarter in the prior year ($12,942). The gross profit margin on retail sales of grocery and other merchandise decreased (to 30.9%32.5%) from the comparable period in the prior year (32.7%), primarily due to a more competitive cigarette pricing environment, a $1,059 increase in LIFO charges primarily related to cigarette cost increases, and continued promotional activity in the beverage category.margin pressure on cigarettes. The prepared food margin also decreased (to 62.1%59.9%) from the comparable period in the prior year (62.8%(61.8%), primarily due to higher commodityinput costs of cheese, meat, and increased pizza promotional activity.supplies.

Operating expenses increased 18.5%13.1% ($28,344) in the thirdfirst quarter of fiscal 20112015 from the comparable period in the prior year primarily due to a $1,725 pre-tax charge associated with the unsolicited offer by Couche-Tard and the proposalan $11,716 increase from 7-Eleven, a $3,684 increase in credit card fees, higher transportation costs associated with higher fuel prices, an increase in insurance expense,stores that were built or acquired after April 30, 2013 and a greater number$5,399 increase from the expansion of storesour operating initiatives in operation compared to the same period a year ago.our stores. Operating expenses as a percentage of total revenue were 11%10.7% for the thirdfirst quarter of fiscal 20112015 compared to 11.5%10.2% for the comparable period in the prior year. The decrease instore level operating expenses as a percentage of total revenue was caused primarilyfor open stores not impacted by higher gasoline revenues resulting from the increaseinitiatives were up approximately 5.0% for the quarter.

Depreciation and amortization expense increased 18.8% to $36,249 in the average retail price per gallon of gasoline sold.

Interest expense increased $6,160 (224.2%) in the thirdfirst quarter of fiscal 20112015 from the comparable period in the prior year, primarily due to the additional $569,000 principal amount outstanding on the 5.22% Senior Notes.

The effective tax rate increased 220 basis points to 39.7% in the third quarter of fiscal year 2011 from 37.5% in the third quarter of fiscal year 2010. The increase in the effective tax rate was primarily due to an upward adjustment to net deferred tax liabilities resulting from a significant income tax rate increase enacted for one state that normally contributes a substantial proportion of state income tax expense.

Net earnings decreased by $4,367 (25.3%). The decrease in net earnings was attributable primarily to the increases in operating expenses and interest expense. However, this was partially offset by the increase in gross profit dollars.

Nine Months Ended January 31, 2011 Compared to

Nine Months Ended January 31, 2010

(Dollars and Amounts in Thousands)

Nine months

ended 1/31/11

  Gasoline   Grocery &
Other
Merchandise
   Prepared Food
& Fountain
   Other   Total 

Revenue

  $2,855,413         902,181         309,754         18,397     4,085,745      

Gross profit

   159,762         291,065         194,697         18,355     663,879      

Margin

   5.6%         32.3%         62.9%         99.8%     16.2%      

Gasoline gallons

   1,059,146              

Nine months

ended 1/31/10

  Gasoline   Grocery &
Other
Merchandise
   Prepared Food
& Fountain
   Other   Total 

Revenue

  $2,350,541         816,074         276,042         14,624       3,457,281      

Gross profit

   137,176         275,356         175,976         14,581       603,089      

Margin

   5.8%         33.7%         63.7%         99.7%       17.4%      

Gasoline gallons

   969,268              

Total revenue for the first nine months of fiscal 2011 increased by $628,464 (18.2%) over the comparable period in fiscal 2010. Retail gasoline sales increased by $504,872 (21.5%) as the number of gallons sold increased by 89,878 (9.3%) while the average retail price per gallon increased 11.2%. During this same period, retail sales of grocery and general merchandise increased by $86,107 (10.6%), primarily due to increases in sales of tobacco products, sports and energy drinks, juices and ice and a greater number of stores in operation. Prepared food and fountain sales also increased by $33,712 (12.2%), due to the continued popularity of menu offerings and a greater number of stores in operation.

The other revenue category primarily consists of lottery, prepaid phone cards, video rental and ATM commissions received and car wash revenues. These revenues increased $3,773 (25.8%) for the first nine months of fiscal 2011 primarily due to the increases in car wash revenues, lottery commissions, and ATM commissions from the comparable period in the prior year.

Total gross profit margin was 16.2% for the first nine months of fiscal 2011, compared to 17.4% for the comparable period in the prior year, primarily due to decreases in the gross profit margin of all three of our major categories. The gross profit margin on retail gasoline sales decreased (to 5.6%) during the first nine months of fiscal 2011 from the comparable period of the prior year (5.8%). However, the gross profit margin per gallon increased (to $.1508) in the first nine months of fiscal 2011 from the comparable period in the prior year ($.1415), primarily due to the competitive response of many gasoline retailers to the movement of wholesale costs. The gross profit margin on retail sales of grocery and other merchandise decreased (to 32.3%) from the comparable period in the prior year (33.7%), primarily due to a more competitive cigarette pricing environment, a $1,998 increase in LIFO charges primarily related to cigarette cost increases, and increased promotional activity in the beverage category. The prepared food margin also decreased (to 62.9%) from the comparable period in the prior year (63.7%), primarily due to higher commodity costs and increased pizza promotional activity.

Operating expenses increased 16.8% in the first nine months of fiscal 2011 from the comparable period in the prior year, primarily due to a $16,038 pre-tax charge related to the evaluation of the unsolicited offer and related actions by Couche-Tard and the proposal from 7-Eleven. Without these charges, operating expenses would have increased 12.7%. Operating expenses as a percentage of total revenue were 11.2% for the first nine months of fiscal 2011 compared to 11.3%$30,501 for the comparable period in the prior year. The decrease in operating expenses as a percentage of total revenueincrease was caused primarily by higher gasoline revenues resulting from the increase in the average retail price per gallon of gasoline sold. This impact was mostly offset by the expenses associated with the unsolicited offer by Couche-Tard and the proposal from 7-Eleven, a $8,668 increase in credit card fees, and higher transportation costs associated with higher fuel prices.

Interest expense increased $11,471 (140.6%) in the first nine months of fiscal 2011 from the comparable period in the prior year, primarily due to capital expenditures made during the additional $569,000 principal amount outstanding on the 5.22% Senior Notes.previous twelve months.

The effective tax rate increased 150decreased 40 basis points to 37.7% for the first nine months of fiscal year 2011 from 36.2% for the comparable period of the prior year. The increase in the effective tax rate was primarily due to the expiration of certain statutes of limitations for unrecognized tax benefits related to federal tax credits claimed in the prior year. This non-recurring tax benefit was realized37.3% in the first quarter of fiscal year 2010. This impact was partially offset by higher expected federal tax credits for2015 from 37.7% in the current year.first quarter of fiscal year 2014. The higher rate additionally resulted from an upward adjustment to net deferred tax liabilities resulting from a significant incomedecrease in the effective tax rate increase enacted for one state that normally contributeswas due to a substantial proportion of state incomedecline in unrecognized tax expense.benefits from prior period.

Net earningsincome decreased by $23,174 (24.4%$3,698 (6.9%). The decrease in net earningsincome was attributable primarily to the increasesdecrease in operating expenses, interest expense,renewable fuel credits sold and the loss on early retirement of debt.higher input costs in prepared foods category. However, this was partially offset by increases in same-store sales and having 88 more stores in operation compared to prior year.

Use of Non-GAAP Measures

We define EBITDA as net income before net interest expense, depreciation and amortization, and income taxes. Adjusted EBITDA further adjusts EBITDA by excluding the increasegain or loss on disposal of assets as well as impairment charges. Both EBITDA and Adjusted EBITDA are not presented in accordance with generally accepted accounting principles in the gross profit dollars.United States of America (“GAAP”).

We believe EBITDA and Adjusted EBITDA are useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of financial performance and debt service capabilities, and they are regularly used by management for internal purposes including our capital budgeting process, evaluating acquisition targets, and assessing store performance.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as a substitute for net income, cash flows from operating activities or other income or cash flow statement data. These measures have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

Because non-GAAP financial measures are not standardized, EBITDA and Adjusted EBITDA, as defined by us, may not be comparable to similarly titled measures reported by other companies. It therefore may not be possible to compare our use of these non-GAAP financial measures with those used by other companies.

The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended July 31, 2014 and 2013:

   Three months ended (1) 
   July 31, 2014   July 31, 2013 

Net income

  $50,097     53,795  

Interest, net

   10,506     9,576  

Depreciation and amortization

   36,249     30,501  

Federal and state income taxes

   29,744     32,575  
  

 

 

   

 

 

 

EBITDA

  $126,596     126,447  

Loss on disposal of assets and impairment charges

   242     916  
  

 

 

   

 

 

 

Adjusted EBITDA

  $126,838     127,363  
  

 

 

   

 

 

 

(1)Due to the immaterial error discussed in this Amendment No. 1, these numbers have been revised from the Original Filing.

For the three months ended July 31, 2014, EBITDA and Adjusted EBITDA were effectively flat with prior year. The primary reasons for this were the decrease in renewable fuel credits sold and higher input costs in prepared foods, offset by a higher store count, same-store sales increases, and higher depreciation.

Unsolicited Takeover Attempt by Couche-Tard

On March 9, 2010, the Company received an unsolicited proposal from Couche-Tard to acquire all outstanding shares of common stock of the Company (“Common Stock”), at a price of $36.00 per share in cash. After careful consideration of the strategic, financial and legal aspects of the proposal and the nature and timing of the proposal in consultation with its legal and financial advisors and senior management of the Company, the Company’s Board of Directors (the “Board”) unanimously determined that the proposal was not in the best interests of the Company, its shareholders and its other constituencies and unanimously determined to reject the proposal. Couche-Tard made public its unsolicited proposal to acquire the Company on April 9, 2010. Subsequently, on June 2, 2010, Couche-Tard and its indirect wholly owned subsidiary, ACT Acquisition Sub, Inc. (“Couche-Tard Sub”), commenced a tender offer for all outstanding shares of Common Stock, together with the associated rights (the “Rights”) to purchase Series A Serial Preferred Stock, no par value per share, of the Company issued pursuant to the Rights Agreement dated as of April 16, 2010 (the “Rights Agreement”), between the Company and Computershare Trust Company, N.A., as Rights Agent (the “Offer”), for $36.00 per share in cash. On the same date, Couche-Tard also publicly announced, and notified the Company of, its intent to nominate and solicit proxies for the election of a full slate of directors at the 2010 annual meeting of the Company’s shareholders. After careful consideration, including a thorough review of the terms and conditions of the Offer in consultation with its legal and financial advisors and senior management of the Company, the Board determined that the Offer was not in the best interests of the Company, its shareholders and its other constituencies, and the Board recommended that the Company’s shareholders not tender into the Offer. On July 22, 2010, Couche-Tard announced that it had increased the offer price to $36.75 per share in cash. After careful consideration, including a thorough review of the terms and conditions of the revised Offer in consultation with its legal and financial advisors and senior management of the Company, the Board determined that the revised Offer was not in the best interests of the Company, its shareholders and its other constituencies, and the Board recommended that the Company’s shareholders not tender into the Offer. On September 1, 2010, Couche-Tard announced that it had increased the offer price to $38.50 per share in cash. After careful consideration, including a thorough review of the terms and conditions of the revised Offer in consultation with its legal and financial advisors and senior management of the Company, the Board determined that the revised Offer was not in the best interests of the Company, its shareholders and its other constituencies, and the Board recommended that the Company’s shareholders not tender into the Offer.

In response to the Offer, the Company filed with the Securities and Exchange Commission (the “SEC”) a Solicitation/Recommendation Statement on Schedule 14D-9 (as amended, the “Schedule 14D-9”). Among other subsequent amendments to the same, on September 7, 2010 the Company amended the Schedule 14D-9 to disclose that it had received an unsolicited preliminary proposal from a strategic third party regarding a consensual transaction at $40.00 per share of Common Stock in cash. On September 9, 2010, the Company confirmed that it had entered into discussions with 7-Eleven, Inc. (“7-Eleven”) regarding a potential transaction. While the Board believed Casey’s value substantially exceeded $40.00 per share, it authorized such discussions to explore whether a transaction could be reached that reflected the true value of Casey’s and was in the best interests of Casey’s, its shareholders and other constituencies.

On September 23, 2010, at the 2010 Annual Meeting of Shareholders, the Company’s shareholders re-elected all eight of the Company’s incumbent directors and rejected a bylaw proposal submitted by Couche-Tard. On September 30, 2010, Couche-Tard disclosed that the Offer would be allowed to expire at the close of business on September 30, 2010, and that no shares of Common Stock would be purchased under the Offer.

On November 3, 2010, the Company disclosed that it had received a revised proposal from 7-Eleven of $43.00 per share of Common Stock in cash. The Board, in consultation with its financial and other advisors, carefully considered the revised proposal from 7-Eleven and determined it did not reflect the value of Casey’s and its significant growth opportunities, and was not in the best interests of Casey’s, its shareholders and other constituencies. The Company also disclosed on November 3, 2010 that it was no longer in discussions with 7-Eleven.

During the third quarter of fiscal 2011, the Company recorded $1,725 in legal and advisory fees incurred during the second quarter related to the evaluation of the Offer and related actions by Couche-Tard and the evaluation of the offer from 7-Eleven.

Note Agreement and Self-Tender Offer

On August 9, 2010, the Company entered into a Note Purchase Agreement, dated as of August 9, 2010 (the “Note Agreement”), relating to the issuance by the Company of $569,000 aggregate principal amount of its 5.22% Senior Notes due 2020 (the “Notes”). The Company used the net proceeds from this offering to finance its previously announced “Dutch auction” tender offer (the “Self-Tender Offer”) for up to $500,000 in value of shares of Common Stock and to pay fees and expenses in connection with the Self-Tender Offer and the financing. In addition, the Company used approximately $59,000 of the proceeds from the sale of the Notes in connection with its prepayment of its outstanding senior notes, with varying interest rates, issued pursuant to a note agreement dated as of April 15, 1999, and its outstanding 7.38% senior notes, issued pursuant to a note agreement dated as of December 28, 1995 (the “1995 and 1999 Notes”). On August 6, 2010, the Company prepaid in full the remaining $47,000 in aggregate principal amount outstanding under the 1995 and 1999 Notes, including “make-whole” prepayment penalties of $11,350. Any net proceeds of the Notes offering not used for the foregoing purposes was used for general corporate purposes.

The Notes were issued on August 9, 2010, and bear interest at the rate of 5.22% per annum from the date thereof, payable semi-annually in arrears on February 9 and August 9 of each year. The Notes mature on August 9, 2020. The Company may at any time or from time to time prepay all or a portion of the Notes, in an amount not less than $2,000. Any such optional prepayment shall be at a price equal to 100% of the principal amount so prepaid plus the Make-Whole Amount (as defined in the Note Agreement), plus accrued and unpaid interest thereon, if any, to, but not including, the date of prepayment. Any optional prepayment of less than all of the Notes outstanding shall be allocated pro rata among all of the Notes then outstanding.

The Note Agreement provides that, in the event of a Change in Control (as defined in the Note Agreement), each holder of the Notes will have the right to require the Company to purchase all or a portion of such holder’s Notes at a purchase price equal to 100% of the principal amount plus the Make-Whole Amount plus accrued and unpaid interest, if any, to, but not including, the repurchase date. Additional information is provided in the Company’s Form 8-K filed with the SEC on August 10, 2010.

The Self-Tender Offer expired on August 25, 2010 at 12:00 midnight New York City time. Based on the final count by the depositary for the Self-Tender Offer, a total of approximately 26.8 million shares were validly tendered and not withdrawn at a purchase price of $38.00 per share, including approximately 12.6 million shares validly tendered through notice of guaranteed delivery. Due to the Self-Tender Offer being oversubscribed, the Company purchased a pro-rated amount of approximately 49% of shares from each tendering shareholder. As such, the Company purchased an aggregate of 13,157,894 shares of Common Stock at a purchase price of $38.00 per share, for a total cost of approximately $500,000, excluding fees and expenses related to the Self-Tender Offer. The 13,157,894 shares purchased in the Self-Tender Offer represent approximately 25.8% of the Company’s shares outstanding as of August 31, 2010.

The Company policy is to charge the entire repurchase amount to common stock. Since the repurchase amount exceeded the entire balance, the first $66,890 was charged to common stock and the excess was charged to retained earnings.

Critical Accounting Policies

Critical accounting policies are those accounting policies that management believes are important to the portrayal of the Company’s financial condition and results of operations.

Inventory. Inventories, which consist of merchandise and gasoline,fuel, are stated at the lower of cost or market. For gasoline,fuel, cost is determined through the use of the first-in, first-out (FIFO) method. For merchandise inventories, cost is determined through the use of the last-in, first-out (LIFO) method for financial and income tax reporting purposes. This is applied to inventory values determined primarily by theour FIFO methodaccounting system for warehouse inventories and the retail inventory method (RIM) for store inventories, except for cigarettes, beer, pop, and prepared foods, which are valued at cost. RIM is an averaging method widely used in the retail industry because of its practicality.

Under RIM, inventory valuations are at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to sales. Inherent in the RIM calculations are certain management judgments and estimates that could affect the ending inventory valuation at cost and the resulting gross margins.inventories.

Vendor allowances include rebates and other funds received from vendors to promote their products. The Company often receives such allowances on the basis of quantitative contract terms that vary by product and vendor or directly on the basis of purchases made. Vendor rebates in the form of rack display allowances are treated as a reduction in cost of salesgoods sold and are recognized incrementally over the period covered by the applicable rebate agreement. The rack display allowances are funds that we receive from various vendors for allocating certain shelf space to carry their specific products or to introduce new products in our stores for a particular period of time. These funds do not represent reimbursements of specific, incremental, identifiable costs incurred by us in selling the vendor’s products. Vendor rebates in the form of billbacks are treated as a reduction in cost of salesgoods sold and are recognized at the time the product is sold. Reimbursements of an operating expense (e.g., advertising) are recorded as reductions of the related expense.

Goodwill.Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. The Company assesses impairment annually at year-end using a market based approach to establish fair value. All of the goodwill assigned to the individual stores is aggregated into a single reporting unit due to the similar economic characteristics of the stores. As of July 31, 2014, there was $126,931 of goodwill. Management’s analysis of recoverability completed as of the fiscal year end yielded no evidence of impairment and no events have occurred since the annual test indicating a potential impairment.

Long-lived Assets. The Company periodically monitors under-performing stores to assess whether the carrying amount of assets may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the assets, a further analysis of the amount of potential impairment is performed. Thean impairment loss is based onrecognized to the estimated amount by whichextent the carrying value exceeds fair value of the asset group.assets exceeds their estimated fair value. Fair value is based on management’s estimate of the future cash flows to be generated and the amount that could be realized from the sale of assets in a current transaction between willing parties.parties, which are considered Level 3 inputs. The estimate is derived from offers, actual sale or disposition of assets subsequent to the

reporting period, and other indications of fair value. In determining whether an asset is impaired, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which for the Company is generally on a store-by-store basis. Management expects to continue its on-going evaluation of under-performing stores, and may periodically sell specific stores where further operational and marketing efforts are not likely to improve their performance. The Company incurred impairment charges of $159$132 and $100$686 during the ninethree months ended JanuaryJuly 31, 20112014 and 2010,2013, respectively. Impairment charges are a component of operating expenses.

Self-insurance. The Company is primarily self-insured for employee health care, workers’ compensation, general liability, and automobile claims. The self-insurance claim liability is determined actuarially at each year end based on claims filed and an estimate of claims incurred but not yet reported. Actuarial projections of the losses are employed due to the high degree of variability in the liability estimates. Some factors affecting the uncertainty of claims include the time frame of development, settlement patterns, litigation and adjudication direction, and medical treatment and cost trends. The liability is not discounted.

Liquidity and Capital Resources(Dollars in Thousands)

Due to the nature of the Company’s business, 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, 2011,2014, the Company’s ratio of current assets to current liabilities was 1.03.92 to 1. The ratio at JanuaryJuly 31, 20102013 and April 30, 20102014 was 1.341.07 to 1 and 1.291 to 1 respectively. Management believes that the Company’s current $50,000aggregate $100,000 bank line of credit, together with the current cash and cash equivalents and the future cash flow from operations will be sufficient to satisfy the working capital needs of our business.

Net cash provided by operations increased $18,314 (11.2%decreased $21,876 (15.8%) in the ninethree months ended JanuaryJuly 31, 20112014 from the comparable period in the prior year, primarily as a result of a reduced net income, and smaller increases in accounts payable and accrued expenses, deferred income taxes, and the loss on early retirement of debt.expenses. This result was partially offset by lower net earnings and ana larger increase in the income tax receivable.depreciation and amortization. Cash used in investing in the ninethree months ended JanuaryJuly 31, 20112014 increased due to the increase in the purchase of additional property and equipment and additional store acquisition activity. Cash usedflows from financing showed a net usage for the period ended July 31, 2014 as compared to a larger net inflow in financing decreased,the prior period, primarily due to the proceeds from long-term debt. This impact was partially offset by the repurchase of 13,157,894 shares of Common Stock and an increasedebt in the repayments of long-term debt.prior period.

Capital expenditures represent the single largest use of Company funds. Management believes that by acquiring and reinvesting in stores, the Company will be better able to respond to competitive challenges and increase operating efficiencies. During the first ninethree months of fiscal 2011,2015, the Company expended $256,393$119,563 primarily for property and equipment, resulting from the construction acquisition and remodeling of stores,

compared to $129,793$74,125 for the comparable period in the prior year. The Company had anticipatedanticipates expending between $189,000$360,000 and $243,000$410,000 in fiscal 20112015 for construction, acquisition and remodeling of stores, primarily from existing cash and funds generated by operations. The Company anticipates expending approximately $50,000 during the final quarter of fiscal 2011. The Company exceeded its original budget due to more acquisitions than anticipated and an acceleration of the remodeling program.

As of JanuaryJuly 31, 2011,2014, the Company had long-term debt, net of current maturities, of $678,864$853,545 consisting of $569,000 in principal amount of 5.22% Senior Notes, $100,000$150,000 in principal amount of 3.67% Senior Notes, Series A, $50,000 in principal amount of 3.75% Senior Notes Series B, $75,000 in principal amount of 5.72% Senior Notes, Series A and B, $9,834and $9,545 of capital lease obligations, and $30 of mortgage notes payable.obligations.

To date, the Company has funded capital expenditures primarily from the proceeds of the sale of Common Stock, issuance of 6-1/4% Convertible Subordinated Debentures (which were converted into shares of Common Stock in 1994), the Senior Notes, a mortgage note, existing cash, and through funds generated from operations. Future capital needs required to finance operations, improvements and the anticipated growth in the number of stores are expected to be met from cash generated by operations, the bank line of credit, and additional long-term debt or other securities as circumstances may dictate, and are not expected to adversely affect liquidity.

Cautionary Statements(Dollars in Thousands)

This Form 10-Q,10-Q/A, including 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 words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project” and similar expressions are used to identify forward-looking statements. 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 following factors described more completely in the Form 10-K for the fiscal year ended April 30, 2010:2014:

Competition. The Company’s business is highly competitive, and marked by ease of entry and constant change in terms of the numbers and type of retailers offering the products and services found in stores. Many of the food (including prepared foods) and non-food items similar or identical to those sold by the Company are generally available from a variety of competitors in the communities served by stores, and the Company competes with other convenience store chains, gasoline stations, supermarkets, drug stores, discount stores, club stores, mass merchants and “fast-food” outlets (with respect

to the sale of prepared foods). Sales of such non-gasolinenon-fuel items (particularly prepared food items) have contributed substantially to the Company’s gross profits from retail sales in recent years. GasolineFuel sales are also intensely competitive. The Company competes with both independent and national brand gasoline stations in the sale of gasoline,fuel, other convenience store chains and several non-traditional gasolinefuel retailers such as supermarkets in specific markets. Some of these other gasolinefuel retailers may have access to more favorable arrangements for gasolinefuel supply then do the Company or the firms that supply its stores. Some of the Company’s competitors have greater financial, marketing and other resources than the Company, and, as a result, may be able to respond better to changes in the economy and new opportunities within the industry.

GasolineFuel operations. GasolineFuel sales are an important part of the Company’s sales and earnings, and retail gasolinefuel profit margins have a substantial impact on the Company’s net earnings. Profit margins on gasolinefuel sales can be adversely affected by factors beyond the control of the Company, including the supply of gasolinefuel available in the retail gasolinefuel market, uncertainty or volatility in the wholesale gasolinefuel market, increases in wholesale gasolinefuel costs generally during a period and price competition from other gasolinefuel marketers. The market for crude oil and domestic wholesale petroleum products is marked by significant volatility, and is affected by general political conditions and instability in oil producing regions such as the Middle East and South America. The volatility of the wholesale gasolinefuel market makes it extremely difficult to predict the impact of future wholesale cost fluctuation on the Company’s operating results and financial conditions. These factors could materially impact the Company’s gasolinefuel gallon volume, gasolinefuel gross profit and overall customer traffic levels at stores. Any substantial decrease in profit margins on gasolinefuel sales or in the number of gallons sold by stores could have a material adverse effect on the Company’s earnings.

The Company purchases its gasolinefuel from a variety of independent national and regional petroleum distributors. Although in recent years the Company’s suppliers have not experienced any difficulties in obtaining sufficient amounts of gasolinefuel to meet the Company’s needs, unanticipated national and international events could result in a reduction of gasolinefuel supplies available for distribution to the Company. Any substantial curtailment in gasolinefuel supplied to the Company could adversely affect the Company by reducing its gasolinefuel sales. Further, management believes that a significant amount of the Company’s business results from the patronage of customers primarily desiring to purchase gasolinefuel and, accordingly, reduced gasolinefuel supplies could adversely affect the sale of non-gasolinenon-fuel items. Such factors could have a material adverse impact upon the Company’s earnings and operations.

Tobacco Products. Sales of tobacco products represent a significant portion of the Company’s revenues. Significant increases in wholesale cigarette costs changes in tobacco company pricing programs and incentives, and tax increases on tobacco products (such as the past tax increase in Illinois), as well as national and local campaigns to further regulate and discourage smoking in the United States, could have had, and are expected to continue having, an adverse effect on the demand for cigarettes sold byin our stores. The Company attempts to pass price increases onto its customers, but

competitive pressures in specific markets may prevent it from doing so. These factors could materially impact the retail price of cigarettes, the volume of cigarettes sold by stores and overall customer traffic.traffic, and have a material adverse impact on the Company’s earnings and profits.

Environmental Compliance Costs. The United States Environmental Protection Agency and several states, including Iowa, have established requirements for owners and operators of underground gasolinefuel 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 gasolinefuel 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. The Company currently has 3,7034,159 USTs, of which 2,9843,259 are fiberglass and 719900 are steel. Management believes that its existing gasolinefuel 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, 20102014 and 2009,2013, the Company spent approximately $1,083$1,224 and $1,128,$899, respectively, for assessments and remediation. During the ninethree months ended JanuaryJuly 31, 2011,2014, the Company expended approximately $516$430 for such purposes. Substantially all of these expenditures have been submitted for reimbursement from state-sponsored trust fund programs and as of JanuaryJuly 31, 2011,2014, approximately $13,747$17,118 has been received from such programs since their inception. Such amounts are typically subject to statutory provisions requiring repayment of the reimbursed funds for non-compliance with upgrade provisions or other applicable laws. No amounts are currently expected to be repaid. The Company has an accrued liability at JanuaryJuly 31, 20112014 of approximately $210$330 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.

Although the Company regularly accrues expenses for the estimated costs related to its future corrective action or remediation efforts, there can be no assurance that such accrued amounts will be sufficient to pay such costs, or that the Company has identified all environmental liabilities at all of its current store locations. In addition, there can be no assurance that the Company will not incur substantial expenditures in the future for remediation of contamination or related claims that have not been discovered or asserted with respect to existing store locations or locations that the Company may acquire in the future, or that the Company will not be subject to any claims for reimbursement of funds disbursed to the Company under the various state programs or that additional regulations, or amendments to existing regulations, will not require additional expenditures beyond those presently anticipated.

Other Factors. Other factors and risks that may cause actual results to differ materially from those in the forward-looking statements include the risk that our cash balances and cash generated from operations and financing activities will not be sufficient for our future liquidity and capital resource needs, tax increases, potential liabilities and expenditures related to compliance with environmental and other laws and regulations, the seasonality of demand patterns, and weather conditions; the increased indebtedness that the Company has incurred to purchase shares of our common stock in our self tender offer; and the other risks and uncertainties included from time to time in our filings with the SEC. We further caution you that other factors we have not identified may in the future prove to be important in affecting our business and results of operations. We ask you not to place undue reliance on any forward-looking statements because they speak only of our views as of the statement dates. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

The Company’s exposure to market risk for changes in interest rates relates primarily to our investment portfolio and long-term debt obligations. We place our investments with high-quality credit issuers and, by policy, limit the amount of credit exposure to any one issuer. Our first priority is to reduce the risk of principal loss. Consequently, we seek to preserve our invested funds by limiting default risk, market risk, and reinvestment risk. We mitigate default risk by investing in only high-quality credit securities that we believe to be low risk and by positioning our 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. We believe an immediate 100-basis-point move in interest rates affecting our floating and fixed rate financial instruments as of JanuaryJuly 31, 20112014 would have no material effect on pretax earnings.

In the past, we have used derivative instruments such as options and futures to hedge against the volatility of gasoline cost and were at risk for possible changes in the market value of these derivative instruments. No such derivative instruments were used during the nine months ended January 31, 2011 and 2010. However, weWe do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee. These contracts are not accounted for as derivatives as they meet the normal purchases exclusion under derivative accounting.

 

Item 4.Controls and Procedures.

As(a) Evaluation of disclosure controls and procedures.

In the second quarter of fiscal year 2015, through a routine Internal Revenue Service (IRS) examination, management became aware that an inadvertent accounting and reporting error occurred during the fiscal years 2012, 2013, and 2014 and the first quarter of fiscal year 2015. A control deficiency was identified with regards to the review and approval of quarterly federal excise tax returns by management with the requisite skill and knowledge, and recognition of the endcorresponding liability and expense. The internal

controls in place during this time were not responsive to changes in circumstances. While the control deficiency did not result in a material misstatement to the Company’s consolidated financial statements for any periods through and including the fiscal year ended April 30, 2014, or unaudited condensed consolidated financial statements for the first fiscal quarter of the period covered by this report, an evaluation was performed under the supervision and with the participationfiscal year 2015, it did represent a material weakness as of April 30, 2014, since there existed a reasonable possibility that a material misstatement of the Company’s Chief Executive Officerannual or interim financial statements would not be prevented or detected on a timely basis. The correction of these immaterial errors is being recognized in revisions to our consolidated financial statements for the fiscal year ended April 30, 2014, filed separately as Amendment No. 1 on Form 10-K/A for the fiscal year ended April 30, 2014, and Chief Financial Officer ofthe unaudited condensed consolidated financial statements for the quarter ended July 31, 2014 in this Amendment No. 1.

The Company’s chief executive officer and its chief financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) of the Securities Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the Chief Executive Officerof 1934, as amended) as of April 30, 2014. Our chief executive officer and the Chief Financial Officer havechief financial officer concluded that, as a result of the Company’s currentmaterial weakness in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of April 30, 2014. The Company is amending Item 9A of its Annual Report in a separate filing on Form 10-K/A for the Fiscal Year ended April 30, 2014 as well as Item 4 of its Quarterly Reports in this Amendment No. 1 to reflect the conclusion by management that there was a material weakness in internal control over financial reporting as of the end of the periods covered by these reports.

For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are effectivedesigned to ensure that information required to be disclosed by the Companyissuer in the reports that it files or submits under the Securities Exchange Act of 1934(15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and formsforms. Disclosure controls and suchprocedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to ourthe issuer’s management, including our Chief Executive Officerits chief executive and Chief Financial Officer,chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.disclosure.

There were(b) Change in Internal Control over Financial Reporting.

Management has identified no changes in internal control during the Company’sthree months ended July 31, 2014. In connection with our assessment of the effectiveness of internal control over financial reporting that occurred duringat our last assessment date, April 30, 2014, we identified the period coveredfollowing deficiency which constituted a material weakness in our internal control related to financial reporting:

Ineffective design and operation of controls regarding the review and approval of quarterly federal excise tax returns by this report that have materially affected,management with the requisite skill and knowledge, and recognition of the corresponding liability and expense.

The internal controls in place at the time and subsequently were not responsive to changes in circumstances. The control deficiency resulted in errors in cost of goods sold, interest expense, net, federal and state income taxes, deferred income taxes, accrued expenses and retained earnings. These errors did not, individually or are reasonably likelyin the aggregate, result in a material misstatement to materially affect, the Company’s consolidated financial statements for any periods through and including the fiscal year ended April 30, 2014. However such control deficiencies could have resulted in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that the lack of an independent control in place to review the federal excise tax returns constituted a material weakness on April 30, 2014.

(c) Remediation.

In the second quarter of fiscal year 2015, management became actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness in our internal control over financial reporting.reporting identified above, and included preliminary details of its remediation plans in the Current Report on Form 8-K filed on November 24, 2014. After further discussion, management has determined to clarify and refine those preliminary remediation plans and now has implemented or intends to implement the following steps:

preparation of the federal excise tax returns managed under the authority of the Company’s Tax Department;

review and approval of the completed federal excise tax returns by management with the requisite skill and knowledge;

enhance our information technology solutions to facilitate the preparation of the excise tax return and enhance monitoring of the payment of excise taxes;

formalize the process by which the Tax Department will notify return preparers of any changes in the forms used for filings and or any necessary procedural changes to the process;

Management believes the measures described above and others that will be implemented will remediate the material weakness that we have identified. As management continues to evaluate and improve internal control over financial reporting, we may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures contemplated.

Nonetheless, the chief executive officer and chief financial officer believe that the subsequent procedures we performed in connection with our preparation of this Amendment No. 1 provide reasonable assurance that the identified material weakness did not lead to material misstatements in our condensed consolidated financial statements presented in this Amendment No. 1 or in prior periods and that the condensed consolidated financial statements included in this Amendment No. 1 fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in accordance with U.S. GAAP.

(d) Other.

The Company does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, our internal control system can provide only reasonable assurance of achieving its objectives and no evaluation of controls can provide absolute assurance that all control issues and occurrences of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and can provide only reasonable, not absolute, assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.

PART II - II—OTHER INFORMATION

 

Item 1.Legal Proceedings

The information required by this Item is set forth in Note 87 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q10-Q/A and is incorporated herein by this reference.

Item 1A.Risk Factors

Item 1A.Risk Factors

There have been no material changes in our “risk factors” from those disclosed in our 2010 Annual Report on Form 10-K.10-K/A (Amendment No. 1) for the Fiscal Year ended April 30, 2014, filed on December 9, 2014.

Item 6.Exhibits.

The following exhibits are filed with this Report or, if so indicated, incorporated by reference.

 

Exhibit


No.

 

Description

3.1 Restatement of the Restated and Amended Articles of Incorporation(incorporated by reference from the Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 1996)and Articles of Amendment thereto (incorporated(incorporated by reference from the Current Report on Form 8-K filed April 16, 2010, as amended by the Current Report on
Form 8-K/A filed April 19, 2010)2010, and the Current Report on Form 8-K filed May 20, 2011).
3.2(a) Second Amended and Restated By-laws(incorporated by reference from the Current Report on Form 8-K filed June 16, 2009) and Amendments thereto (incorporated by reference from the Current Reports on Form 8-K filed May 20, 2011, and August 2, 2011, and the Current Report on 8-K filed on June 22, 2012).
4.2Rights Agreement between Casey’s General Stores, Inc. and Computershare Trust Company, N.A., relating to Series A Serial Preferred Stock Purchase Rights(incorporated by reference from the Current Report on Form 8-K filed April 16, 2010)
4.8 Note Purchase Agreement dated as of September 29, 2006 among the Company and the purchasers of the 5.72% Senior Notes, Series A and Series B(incorporated by reference from the Current Report on Form 8-K filed September 29, 2006).
4.9 Note Purchase Agreement dated as of August 9, 2010 among the Company and the purchasers of the 5.22% Senior Notes(incorporated by reference from the Current Report on Form 8-K filed August 10, 2010).
    4.10Note Purchase Agreement dated as of June 17, 2013 among the Company and the purchasers of the 3.67% Series A Notes and 3.75% Series B Notes(incorporated by reference from the Current Reports on Form 8-K filed June 18, 2013, and December 18, 2013)
  21(a)Subsidiaries of Casey’s General Stores, Inc.(incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended April 30, 2014).
31.1 Certification of Robert J. Myers under Section 302 of the Sarbanes Oxley Act of 2002
31.2 Certification of William J. Walljasper under Section 302 of the Sarbanes Oxley Act of 2002
32.1 Certificate of Robert J. Myers under Section 906 of Sarbanes-Oxley Act of 2002
32.2 Certificate of William J. Walljasper under Section 906 of Sarbanes-Oxley Act of 2002
101.INS*101.INS XBRL Instance Document
101.SCH*101.SCH XBRL Taxonomy Extension Schema Document
101.CAL*101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE*101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101. DEFXBRL Taxonomy Extension Definition Linkbase Document

 

*Pursuant to Rule 406T of Regulations S-T, the Interactive Data Files in these exhibits are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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: MarchDecember 9, 20112014  By:  

/s/ William J. Walljasper

    William J. Walljasper
  Its:  Senior Vice President &and Chief Financial Officer
    (Authorized Officer and Principal
Financial and Accounting Officer)

EXHIBIT INDEX

The following exhibits are filed herewith:

 

Exhibit No.

  

Description

31.1  Certification of Robert J. Myers under Section 302 of the Sarbanes Oxley Act of 2002
31.2  Certification of William J. Walljasper under Section 302 of the Sarbanes Oxley Act of 2002
32.1  Certificate of Robert J. Myers under Section 906 of Sarbanes-Oxley Act of 2002
32.2  Certificate of William J. Walljasper under Section 906 of Sarbanes-Oxley Act of 2002
101.INS*101.INS  XBRL Instance Document
101.SCH*101.SCH  XBRL Taxonomy Extension Schema Document
101.CAL*101.CAL  XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*101.LAB  XBRL Taxonomy Extension Label Linkbase Document
101.PRE*101.PRE  XBRL Taxonomy Extension Presentation Linkbase Document
101. DEFXBRL Taxonomy Extension Definition Linkbase Document

 

*Pursuant to Rule 406T of Regulations S-T, the Interactive Data Files in these exhibits are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

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