Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Casey’s General Stores, Inc.:

We have audited the accompanying consolidated balance sheets of Casey’s General Stores, Inc. and subsidiaries (the Company) as of April 30, 2012 and 2011, and the related consolidated statements of earnings, shareholders’ equity and cash flows for each of the years in the three-year period ended April 30, 2012. We also have audited the Company’s internal control over financial reporting as of April 30, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A (Controls and Procedures). Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Casey’s General Stores, Inc. and subsidiaries as of April 30, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended April 30, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/KPMG LLP

Des Moines, Iowa

June 26, 2012

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	XXXXXXX		XXXXXXX	XXXXXXX		XXXXXXX
		April 30,
		2012			2011
Assets
Current assets
Cash and cash equivalents	$		55,919	$		59,572
Receivables			21,700			20,154
Inventories			170,794			159,200
Prepaid expenses			1,298			1,180
Deferred income taxes			13,143			10,405
Income taxes receivable			16,424			43,376

Total current assets			279,278			293,887

Property and equipment, at cost
Land			381,756			348,456
Buildings and leasehold improvements			807,795			724,170
Machinery and equipment			1,035,651			907,483
Leasehold interest in property and equipment			14,545			14,538

			2,239,747			1,994,647
Less accumulated depreciation and amortization			860,998			777,342

Net property and equipment			1,378,749			1,217,305

Other assets, net of amortization			12,403			11,721
Goodwill			104,385			88,042

Total assets	$		1,774,815	$		1,610,955


Liabilities and Shareholders’ Equity
Current liabilities
Notes payable to bank	$		-	$		600
Current maturities of long-term debt			10,737			1,167
Accounts payable			211,165			215,675
Accrued expenses
Wages and related taxes			15,010			13,014
Property taxes			19,111			17,283
Insurance			23,701			22,129
Other			26,917			24,632

Total current liabilities			306,641			294,500

Long-term debt, net of current maturities			667,930			678,680
Deferred income taxes			260,405			203,078
Deferred compensation			14,698			13,858
Other long-term liabilities			19,100			16,943

Total liabilities			1,268,774			1,207,059

Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, none issued			-			-
Common stock, no par value, 38,140,309 and 37,966,709 shares issued and outstanding at April 30, 2012 and 2011, respectively			12,199			3,996
Retained earnings			493,842			399,900

Total shareholders’ equity			506,041			403,896

Total liabilities and shareholders’ equity	$		1,774,815	$		1,610,955

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share amounts)

	x		x	x		x	x		x
		Years ended April 30,
		2012			2011			2010
Total revenue	$		6,987,804	$		5,635,240	$		4,637,087
Cost of goods sold (exclusive of depreciation, shown separately below)			5,984,114			4,754,173			3,844,735

Gross profit			1,003,690			881,067			792,352
Operating expenses			688,431			607,628			526,291
Depreciation and amortization			96,552			82,355			73,546
Interest, net			35,192			28,497			10,933
Loss on early retirement of debt			-			11,350			-


Earnings before income taxes			183,515			151,237			181,582
Federal and state income taxes			66,724			56,614			64,620

Net earnings	$		116,791	$		94,623	$		116,962


Earnings per common share
Basic	$		3.07	$		2.24	$		2.30


Diluted	$		3.04	$		2.22	$		2.29

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share and per share amounts)

	XXXXXX		XXXXXX	XXXXXX		XXXXXX	XXXXXX		XXXXXX
		Common			Retained
		stock			earnings			Total
Balance at April 30, 2009	$		60,804	$		660,226	$		721,030
Net earnings			-			116,962			116,962
Payment of dividends (34 cents per share)			-			(17,308)			(17,308)
Proceeds from exercise of stock options
(83,450 shares)			1,239			-			1,239
Tax benefits related to nonqualified stock options			365			-			365
Stock based compensation			2,031			-			2,031


Balance at April 30, 2010	$		64,439	$		759,880	$		824,319
Net earnings			-			94,623			94,623
Payment of dividends (50.5 cents per share)			-			(20,467)			(20,467)
Repurchase of common stock (13,157,894 shares)			(66,890)			(434,136)			(501,026)
Proceeds from exercise of stock options
(184,441 shares)			3,733			-			3,733
Tax benefits related to nonqualified stock options			648			-			648
Stock based compensation			2,066			-			2,066


Balance at April 30, 2011	$		3,996	$		399,900	$		403,896
Net earnings			-			116,791			116,791
Payment of dividends (60 cents per share)			-			(22,849)			(22,849)
Proceeds from exercise of stock options
(159,600 shares)			3,249			-			3,249
Tax benefits related to nonqualified stock options			1,162			-			1,162
Stock based compensation			3,792			-			3,792


Balance at April 30, 2012	$		12,199	$		493,842	$		506,041

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands )

	116,791		116,791	116,791		116,791	116,791		116,791
		Years ended April 30,
		2012			2011			2010
Cash flows from operating activities
Net earnings	$		116,791	$		94,623	$		116,962
Adjustments to reconcile net earnings to net cash provided by operations
Depreciation and amortization			96,552			82,355			73,546
Other amortization			347			988			203
Stock-based compensation			3,792			2,066			2,031
Loss (gain) on sale of property and equipment			1,428			(80)			456
Deferred income taxes			54,589			60,861			18,171
Excess tax benefits related to stock option exercises			(1,162)			(648)			(365)
Loss on early retirement of debt			-			11,350			-
Changes in assets and liabilities
Receivables			(1,546)			(8,043)			(1,223)
Inventories			(8,647)			(26,527)			(15,886)
Prepaid expenses			(118)			(51)			87
Accounts payable			(4,510)			70,341			29,898
Accrued expenses			7,399			5,516			(6,567)
Income taxes receivable			29,508			(31,266)			(3,649)
Other, net			456			(42)			404

Net cash provided by operating activities			294,879			261,443			214,068
Cash flows from investing activities
Purchase of property and equipment			(240,874)			(214,573)			(129,233)
Payments for acquisition of businesses			(39,444)			(113,567)			(45,688)
Proceeds from sales of property and equipment			2,196			2,627			1,769

Net cash used in investing activities			(278,122)			(325,513)			(173,152)
Cash flows from financing activities
Proceeds from long-term debt			-			569,000			-
Payments of long-term debt			(1,372)			(69,172)			(19,231)
Net borrowing of short-term debt			(600)			600			-
Proceeds from exercise of stock options			3,249			3,733			1,239
Payments of cash dividends			(22,849)			(20,467)			(17,308)
Repurchase of common stock			-			(501,026)			-
Payments of prepayment penalties			-			(11,350)			-
Excess tax benefits related to stock option exercises			1,162			648			365

Net cash used in financing activities			(20,410)			(28,034)			(34,935)

Net (decrease) increase in cash and cash equivalents			(3,653)			(92,104)			5,981
Cash and cash equivalents at beginning of year			59,572			151,676			145,695

Cash and cash equivalents at end of year	$		55,919	$		59,572	$		151,676



SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid (received) during the year for
Interest, net of amount capitalized	$		35,403	$		34,691	$		11,677
Income taxes			(17,973)			26,113			48,825
Noncash investing and financing activities
Property and equipment acquired through notes payable and capitalized lease obligations			191			689			2,234

See accompanying Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

1. SIGNIFICANT ACCOUNTING POLICIES

Operations Casey’s General Stores, Inc. and its subsidiaries (the Company/Casey’s) operate 1,699 convenience stores in 11 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail sales in 2012 were distributed as follows: 73% gasoline, 20% grocery & other merchandise, and 7% prepared food & fountain. The Company’s materials are readily available, and the Company is not dependent on a single supplier or only a few suppliers.

Principles of consolidation The consolidated financial statements include the financial statements of Casey’s General Stores, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect 1) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and 2) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash equivalents Cash equivalents consist of money market funds. We consider all highly liquid investments with a maturity at purchase of three months or less to be cash equivalents.

Inventories Inventories, which consist of merchandise and gasoline, are stated at the lower of cost or market; in-store inventory (excluding cigarettes, beer, beverages, and prepared foods, which are stated at cost) is determined by the retail inventory method (RIM). Cost is determined using the first-in, first-out (FIFO) method for gasoline and the last-in, first-out (LIFO) method for merchandise. The excess of current cost over the stated LIFO value was $41,805 and $36,698 at April 30, 2012 and 2011, respectively. There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at April 30, 2012 and 2011:


	Fiscal 2012		Fiscal 2011
Gasoline		83,063		81,964
Merchandise		87,731		77,236

Total inventory		170,794		159,200

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 sales 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 sales 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 April 30, 2012, there was $104,385 of goodwill, and management’s analysis of recoverability completed as of the fiscal year-end yielded no evidence of impairment.

Store closings and asset impairment The Company writes down property and equipment of stores it is closing to estimated net realizable value at the time management commits to a plan to close such stores and begins active marketing of the stores. The Company bases the estimated net realizable value of property and equipment on its experience in utilizing and/or disposing of similar assets and on estimates provided by its own and/or third-party real estate experts.

The Company monitors closed and underperforming stores for an indication that 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, an impairment loss is recognized to the extent carrying value of the assets exceeds their estimated fair value. Fair value is based on management’s estimate of the price that would be received to sell an asset in an orderly transaction between market participants. The estimate is derived from offers, actual sale or disposition of assets subsequent to year-end, and other indications of fair value, which are considered Level 3 inputs. 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. The Company incurred impairment charges of $226 in fiscal 2012, $348 in fiscal 2011, and $100 in fiscal 2010. Impairment charges are a component of operating expenses.

Depreciation and amortization Depreciation of property and equipment and amortization of capital lease assets are computed principally by the straight-line method over the following estimated useful lives:


Buildings		25-40 years
Machinery and equipment		5-30 years
Leasehold interest in property and equipment		Lesser of term of lease or life of asset
Leasehold improvements		Lesser of term of lease or life of asset

Excise taxes Excise taxes approximating $527,000, $495,000, and $454,000 on retail gasoline sales are included in total revenue and cost of goods sold for fiscal 2012, 2011, and 2010, respectively.

Income taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company calculates its current and deferred tax provision based on estimates and assumptions that could differ from actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are recorded when identified.

Revenue recognition The Company recognizes retail sales of gasoline, grocery & other merchandise, prepared food & fountain, and commissions on lottery, prepaid phone cards, and video rentals at the time of the sale to the customer. Sales taxes collected from customers and remitted to the government are recorded on a net basis in the consolidated financial statements.

Earnings per common share Basic earnings per share have been computed by dividing net earnings by the weighted average shares outstanding during each of the years. The calculation of diluted earnings per share treats stock options and restricted stock units outstanding as potential common shares to the extent they are dilutive.

Asset retirement obligations The Company recognizes the estimated future cost to remove underground storage tanks over the estimated useful life of the storage tank_._ The Company records a discounted liability for the fair value of an asset retirement obligation with a corresponding increase to the carrying value of the related long-lived asset at the time an underground storage tank is installed. The Company amortizes the amount added to other assets and recognizes accretion expense in connection with the discounted liability over the remaining life of the tank. The estimates of the anticipated future costs for removal of an underground storage tank are based on our prior experience with removal. The cost estimates are compared to the actual removal cost experienced on an annual basis, and when the actual costs exceed our original estimates, an additional liability for estimated future costs to remove the underground storage tanks will be recognized. Because these estimates are subjective and are currently based on historical costs with adjustments for estimated future changes in the associated costs, we expect the dollar amount of these obligations to change as more information is obtained.

There were no material changes in our asset retirement obligation estimates during fiscal 2012. The recorded asset for asset retirement obligations was $7,343 and $6,926 at April 30, 2012 and 2011, respectively, and is recorded in other assets, net of amortization. The discounted liability was $11,313 and $10,549 at April 30, 2012 and 2011, respectively, and is recorded in other long-term liabilities.

Environmental remediation liabilities The Company accrues for environmental remediation liabilities when it is probable a liability has been incurred and the amount of loss can be reasonably estimated.

Derivative instruments The Company occasionally has used derivative instruments such as options and futures to hedge against the volatility of gasoline cost, under which the Company was at risk for possible changes in the market value for these derivative instruments. There were no such options or futures contracts as of or during the years ended April 30, 2012, 2011, or 2010.

Stock-based compensation Stock-based compensation is recorded based upon the fair value of the award on the grant date. The cost of the award is recognized in the statement of earnings over the vesting period of the award.

Segment reporting As of April 30, 2012 we operated 1,699 stores in 11 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 gasoline, 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.

Recent accounting pronouncements Effective May 1, 2012, the Company will adopt new accounting guidance which revises the manner in which we present comprehensive income in our financial statements. The new guidance removes the presentation options previously allowed and requires us to report components of comprehensive income as part of the consolidated statement of income or as a separate consolidated statement of comprehensive income. The revised guidance will not change the items that must be reported in other comprehensive income. Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are not included in net income, but rather are recorded directly in stockholders’ equity. This guidance, which is to be applied retrospectively, is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. This guidance only affects presentation and disclosure and will not have a material impact on our consolidated financial statements.

Effective May 1, 2012, we will adopt new guidance that is intended to simplify goodwill impairment testing by adding a qualitative review step to assess whether the required quantitative impairment analysis that exists today is necessary. The fair value calculation for goodwill will not be required unless we conclude, based on the qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less

than its book value. If such a decline in fair value is deemed more likely than not to have occurred, then the quantitative goodwill impairment test that exists under current GAAP must be completed; otherwise, goodwill is deemed to be not impaired and no further testing is required until the next annul test date (or sooner if conditions or events before that date raise concerns of potential impairment in the business). The amended goodwill impairment guidance does not affect the manner in which a company estimates fair value. It is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, but early adoption is permitted. We do not expect it to have a material impact on our consolidated financial statements.

2. ACQUISITIONS

During the year ended April 30, 2012, the Company acquired 35 stores through a variety of single store and multi-store transactions with several unrelated third parties. 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 of the purchase price for the transactions in aggregate is as follows (in thousands):


Assets acquired:
Inventories	$	2,947
Property and equipment		20,415

Total assets		23,362

Liabilities assumed:
Accrued expenses		282

Total liabilities		282

Net tangible assets acquired		23,080
Goodwill		16,364

Total consideration paid	$	39,444

The following unaudited pro forma information presents a summary of our consolidated results of operations as if the transactions referenced above occurred at the beginning of the fiscal year for each of the periods presented (amounts in thousands, except per share data):


		Years Ended April 30,
		2012		2011
Total revenue	$		7,021,256		5,790,215
Net earnings	$		117,727		99,138
Earnings per common share
Basic	$		3.09		2.34
Diluted	$		3.07		2.33

3. FAIR VALUE OF FINANCIAL INSTRUMENTS AND LONG-TERM DEBT

A summary of the fair value of the Company’s financial instruments follows.

Cash and cash equivalents, receivables, and accounts payable The carrying amount approximates fair value due to the short maturity of these instruments or the recent purchase of the instruments at current rates of interest.

Long-term debt The fair value of the Company’s long-term debt and 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 and capital lease obligations was approximately $691,000 and $647,000, respectively, at April 30, 2012 and 2011.

The next table delineates the Company’s long-term debt at carrying amount.


		As of April 30,
		2012		2011
Capitalized lease obligations discounted at 5.22% to 7.09% due in various monthly installments through 2048 (Note 7)	$		9,645		10,344

Mortgage notes payable due in various installments through January 2013 with interest at 6%			22		503

5.72% senior notes due in 14 installments beginning September 30, 2012 and ending March 30, 2020			100,000		100,000

5.22% senior notes due August 9, 2020			569,000		569,000

			678,667		679,847

Less current maturities			10,737		1,167


	$		667,930		678,680

The Company has a current line of credit arrangement with two Promissory Notes, each in the principal amount of $50,000 (together, the “Notes”). The Notes evidence a revolving line of credit in the aggregate principal amount of $100,000 and bear interest at variable rates subject to change from time to time based on changes in an independent index referred to in the Notes as the Federal Funds Offered Rate (the “Index”). The interest rate to be applied to the unpaid principal balance of the first Note will be at a rate of 0.750% over the Index, resulting in an initial rate of 0.850% per annum. The interest rate applicable to the second note is 1.000% over the Index, resulting in an initial rate of 1.100% per annum. There was no balance owed at April 30, 2012 and $600 owed at April 30, 2011 with a weighted average interest rate of 0.85%.

Interest expense is net of interest income of $208, $360, and $300 for the years ended April 30, 2012, 2011, and 2010, respectively. Interest expense in the amount of $674, $406, and $431 was capitalized during the years ended April 30, 2012, 2011, and 2010, respectively.

Various debt agreements contain certain operating and financial covenants. At April 30, 2012, the Company was in compliance with all covenants. Listed below are the aggregate maturities of long-term debt, including capitalized lease obligations, for the 5 years commencing May 1, 2012 and thereafter:


Years ended April 30,
2013	$	10,737
2014		15,759
2015		439
2016		15,278
2017		15,250
Thereafter		621,204

	$	678,667

4.		PREFERRED AND COMMON STOCK

Preferred stock The Company has 1,000,000 authorized shares of preferred stock of which 250,000 shares have been designated as Series A Serial Preferred Stock. No shares have been issued.

Common stock The Company currently has 120,000,000 authorized shares of common stock.

Preferred share purchase rights On April 16, 2010, the Board of Directors adopted a Rights Plan, providing for the distribution of one right for each share of common stock outstanding. Each right entitled the holder to purchase one one-thousandth (1/1000th) of a share of Series A Serial Preferred Stock, no par value per share, of the Company at a price of $95.00. Each right also entitled the holder to purchase common shares in the surviving entity at 50% of the market price. The rights generally became exercisable at the discretion of the Board of Directors following a public announcement that 15% or more of the Company’s common stock has been acquired or an intent to acquire has become apparent. The rights expired on April 15, 2011.

Stock option plans The 2009 Stock Incentive Plan (the “Plan”), was approved by the Board of Directors 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 4,428,604 shares available for grant at April 30, 2012 under the Plan. 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. Additional information regarding the Plan is provided in the Company’s 2011 Proxy Statement. Under the Company’s Prior Plans, options could have been granted to non-employee directors, certain officers, and key employees to purchase an aggregate of 5,260,000 shares of common stock. At April 30, 2012, options for 1,053,509 shares (which expire between 2013 and 2021) were outstanding. All stock option shares issued are previously unissued authorized shares.

On May 1, 2009, stock options totaling 16,000 shares were granted to the non-employee members of the Board. These awards vested immediately and compensation expense was recognized at that time.

On June 23, 2009, stock options totaling 361,000 shares were granted to certain officers and key employees. These awards will vest on June 23, 2012, and compensation expense is being recognized ratably over the vesting period.

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. This award was also granted at no cost to the non-employee members of the Board. This award vested immediately and compensation expense was recognized at that time.

On March 22, 2011, restricted stock units with respect to a total of 14,000 shares were granted to the non-employee members of the Board. This award was also granted at no cost to the non-employee members of the Board. This award vested on May 1, 2011, and compensation expense was recognized ratably over the vesting period.

On June 10, 2011, restricted stock units with respect to a total of 9,198 shares were granted to certain employees under the annual incentive compensation program. These awards will vest on June 10, 2014 and compensation expense is being recognized ratably over the vesting period.

On June 23, 2011, stock options totaling 441,000 shares were granted to certain officers and key employees. These awards will vest on June 23, 2014, and compensation expense is being recognized ratably over the vesting period.

On June 23, 2011, restricted stock units totaling 15,000 shares were granted to the CEO. This award was also granted at no cost to the employee. This award will vest on June 23, 2014 and compensation expense is currently being recognized ratably over the vesting period.

On September 16, 2011, restricted stock units with respect to a total of 14,000 shares were granted to the non-employee members of the Board. This award was also granted at no cost to the non-employee members of the Board. This award will vest on May 1, 2012 and compensation expense is currently being recognized ratably over the vesting period.

The 2000 Stock Option Plan allowed the grant of options with an exercise price equal to the fair value of the Company’s stock on the date of grant that expired ten years after the date of grant. Vesting was generally over a three to five-year service period. The Non-employee Directors’ Stock Option Plan allowed the grant of options with an exercise price equal to the average of the last reported sale prices of shares of common stock on the last trading day of each of the twelve months preceding the award of the option. The term of such options was ten years from the date of grant, and each option is exercisable immediately upon grant. The aggregate number of shares of Common Stock that could have been granted pursuant to the Director Stock Plan was 200,000 shares, subject to adjustment to reflect any future stock dividends, stock splits, or other relevant capitalization changes.

The following table shows the stock option and restricted stock unit activity during the periods indicated:


	Number of restricted stock units		Number of option shares			Weighted average exercise
Balance at April 30, 2009		-		678,000		$	20.45
Granted		-		377,000			25.27
Exercised		-		(83,450	)		14.85
Forfeited		-		(12,000	)		24.41
Balance at April 30, 2010		-		959,550		$	22.78
Granted		28,000		-			0.00
Exercised		-		(184,441	)		20.24
Forfeited		-		-			0.00
Balance at April 30, 2011		28,000		775,109		$	23.38
Granted		38,198		441,000			44.39
Exercised		-		(159,600	)		20.36
Forfeited		-		(3,000	)		36.19
Balance at April 30, 2012		66,198		1,053,509		$	32.59

At April 30, 2012, all outstanding options had an aggregate intrinsic value of $25,029 and a weighted average remaining contractual life of 7.2 years. The vested options totaled 276,009 shares with a weighted average exercise price of $22.82 per share and a weighted average remaining contractual life of 5.8 years. The aggregate intrinsic value for the vested options as of April 30, 2012 was $9,255. The aggregate intrinsic value for the total of all options exercised during the year ended April 30, 2012 was $4,565, and the total fair value of shares granted during the year ended April 30, 2012 was $6,461.

Total compensation costs recorded for the years ended April 30, 2012, 2011 and 2010 were $3,792, $2,066, and $2,031, respectively, for the stock option and restricted stock awards. As of April 30, 2012, there was $4,894 of total unrecognized compensation costs related to the Plan and Prior Plans for stock options that are expected to be recognized ratably through 2014.

At April 30, 2012, the range of exercise prices for options was $11.86 – $44.39 and the weighted average remaining contractual life of outstanding options was 7.2 years. The number of shares and weighted average remaining contractual life of the options by range of applicable exercise prices at April 30, 2012 were as follows:


Range of exercise prices	Number of shares	Weighted average exercise price	Weighted average remaining contractual life (years)

$ 11.86 –17.64	45,500	$ 14.68	1.5
20.68 – 26.92	569,009	24.92	6.1
44.39	439,000	44.39	9.2

	1,053,509

5. EARNINGS PER COMMON SHARE

Computations for basic and diluted earnings per common share are presented below:


		Years ended April 30,
		2012			2011			2010
Basic
Net earnings	$		116,791	$		94,623	$		116,962


Weighted average shares outstanding-basic			38,068,001			42,284,664			50,899,370


Basic earnings per common share	$		3.07	$		2.24	$		2.30


Diluted
Net earnings	$		116,791	$		94,623	$		116,962


Weighted-average shares outstanding-basic			38,068,001			42,284,664			50,899,370
Plus effect of stock options and restricted stock units			323,703			281,913			153,803

Weighted-average shares outstanding-diluted			38,391,704			42,566,577			51,053,173


Diluted earnings per common share	$		3.04	$		2.22	$		2.29

Options to purchase shares of common stock that were not included in the computation of diluted earnings per share, because their inclusion would have been antidilutive, were 439,000 for fiscal 2012 and 356,000 for fiscal 2010. All options were included for fiscal 2011.

6. INCOME TAXES

Income tax expense attributable to earnings consisted of the following components:

	(247,262)		(247,262)	(247,262)		(247,262)	(247,262)		(247,262)
		Years ended April 30,
		2012			2011			2010
Current tax expense
Federal	$		9,937	$		(6,171)	$		41,632
State			2,345			1,871			4,794

			12,282			(4,300)			46,426
Deferred tax expense			54,442			60,914			18,194

Total income tax provision	$		66,724	$		56,614	$		64,620

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

	(247,262)		(247,262)	(247,262)		(247,262)	(247,262)		(247,262)
		As of April 30,
		2012			2011			2010
Deferred tax assets
Accrued liabilities	$		13,143	$		10,405	$		9,417
Deferred compensation			5,663			5,325			4,941
Other			7,644			5,562			3,759

Total gross deferred tax assets			26,450			21,292			18,117

Deferred tax liabilities
Excess of tax over book depreciation			(264,757)			(211,415)			(145,433)
Other			(8,955)			(2,550)			(4,496)

Total gross deferred tax liabilities			(273,712)			(213,965)			(149,929)

Net deferred tax liability	$		(247,262)	$		(192,673)	$		(131,812)

At April 30, 2012, the Company has net operating loss carryforwards for state income tax purposes of approximately $80,756, which are available to offset future taxable income. These net operating losses expire during the years 2017 through 2032.

There was no valuation allowance for deferred tax assets as of April 30, 2012 and 2011. There was no net change in the valuation allowance for the years ended April 30, 2012 and 2011. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.

Total reported tax expense applicable to the Company’s continuing operations varies from the tax that would have resulted from applying the statutory U.S. federal income tax rates to income before income taxes.


	Years ended April 30,
	2012	2011	2010
Income taxes at the statutory rates	35.0%	35.0%	35.0%
Federal tax credits	-2.1	-1.2	-0.8

State income taxes, net of federal tax benefit	2.9	2.9	2.1
Other	0.6	0.7	-0.7

	36.4%	37.4%	35.6%

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had a total of $7,538 and $6,148 in gross unrecognized tax benefits at April 30, 2012 and 2011, respectively. Of this amount, $4,900 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits were a net increase of $1,390 during the twelve months ended April 30, 2012 due primarily to the expiration of certain statute of limitations offset by a greater increase associated with state income tax filing positions. This had the effect of increasing the effective state tax rate during the fiscal year ending April 30, 2012. These unrecognized tax benefits predominately relate to risks associated with state income tax filing positions and federal tax credits claimed for the Company’s subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


		2012			2011
Beginning balance	$		6,148	$		5,482
Additions based on tax positions related to current year			2,706			1,982
Additions for tax positions of prior years			142			48
Reductions for tax positions of prior years			(47)			(192)
Reductions due to lapse of applicable statute of limitations			(1,411)			(1,172)
Settlements			-			-

Ending balance	$		7,538	$		6,148

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $249 and $245 at April 30, 2012 and 2011, respectively, and is included in other long-term liabilities. Net interest and penalties included in income tax expense for the twelve month period ended April 30, 2012 was an increase in tax expense of $4 and a decrease of $5 for the year ended April 30, 2011. At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax benefits is a decrease of $1,370 during the next twelve months mainly due to the expiration of certain statute of limitations. The federal statute of limitations remains open for the years 2009 and forward. Tax years 2008 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.

7. LEASES

The Company leases certain property and equipment used in its operations. Generally, the leases are for primary terms of from five to twenty years with options either to renew for additional periods or to purchase the premises and call for payment of property taxes, insurance, and maintenance by the lessee.

The following is an analysis of the leased property under capital leases by major classes:


		Asset balances at April 30,
		2012			2011
Real estate	$		11,933	$		11,933
Equipment			2,612			2,605

			14,545			14,538
Less accumulated amortization			4,378			3,918

	$		10,167	$		10,620

Future minimum payments under the capital leases and noncancelable operating leases with initial or remaining terms of one year or more consisted of the following at April 30, 2012:


		Capital			Operating
Years ended April 30,		leases			leases
2013	$		1,266	$		928
2014			1,262			739
2015			898			385
2016			721			199
2017			678			131
Thereafter			12,462			481

Total minimum lease payments			17,287	$		2,863

Less amount representing interest			7,642

Present value of net minimum lease payments	$		9,645

The total rent expense under operating leases was $1,269 in 2012, $674 in 2011, and $438 in 2010.

8. BENEFIT PLANS

401(k) plan The Company provides employees with a defined contribution 401(k) plan. The 401(k) plan covers all employees who meet minimum age and service requirements. The Company contributions consist of matching amounts and are allocated based on employee contributions. Contributions to the 401(k) plan were $3,681, $3,049, and $2,964 for the years ended April 30, 2012, 2011, and 2010, respectively.

On April 30, 2012, 1,520,985 shares of common stock were held by the trustee of the 401(k) plan in trust for distribution to eligible participants upon death, disability, retirement, or termination of employment. Shares held by the 401(k) plan are treated as outstanding in the computation of earnings per common share.

Supplemental executive retirement plan The Company has a nonqualified supplemental executive retirement plan (SERP) for 2 of its executive officers, 1 of whom retired April 30, 2003 and the other on April 30, 2008. The SERP provides for the Company to pay annual retirement benefits, depending on retirement dates, up to 50% of base compensation until death of the officer. If death occurs within twenty years of retirement, the benefits become payable to the officer’s spouse until the spouse’s death or twenty years from the date of the officer’s retirement, whichever comes first. The Company has accrued the deferred compensation over the term of employment. The amounts accrued at April 30, 2012 and 2011, respectively, were $6,611 and $6,574. The discount rates used were 4.6% and 5.5%, respectively, at April 30, 2012 and 2011. The amount expensed in fiscal 2012 was $662. The Company expects to pay $625 per year for each of the next five years. There was no expense incurred in fiscal 2011 or 2010.

9. COMMITMENTS

The Company has entered into an employment agreement with its chief executive officer. The agreement provides that the officer will receive aggregate base compensation of not less than $660 per year exclusive of bonuses. The agreement also provides for certain payments in the case of death or disability of the officer. The Company also has entered into employment agreements with eleven other key employees, providing for certain payments in the event of termination following a change of control of the Company.

10. CONTINGENCIES

Environmental compliance The United States Environmental Protection Agency and several states have adopted laws and regulations relating to underground storage tanks used for petroleum products. Several states in which the Company does business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation costs.

Management currently believes that substantially all capital expenditures for electronic monitoring, cathodic protection, and overfill/spill protection to comply with existing regulations have been completed. The Company has an accrued liability at April 30, 2012 and 2011 of approximately $380 and $231, respectively, 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. Additional regulations or amendments to the existing regulations could result in future revisions to such estimated expenditures.

Legal matters 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 alleged 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 sought certification as class actions on behalf of gasoline consumers within those two states, and one of the complaints also sought certification for a class consisting of gasoline consumers in all states. The actions generally sought 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 were 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 range of defendants that produce, refine, distribute and/or market gasoline products 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 each of the pending lawsuits.

In a Memorandum and Order entered on May 28, 2010, the Court ruled on the Plaintiffs’ Motion for Class Certification in two cases originally filed in the U.S. District Court for the District of Kansas, American Fiber & Cabling, LLC v. BP West Coast Products, LLC, et. al., Case No. 07-2053, and Wilson v. Ampride, Inc., et. al., Case No. 06-2582, in which the Company is a named Defendant. The Court determined that it could not certify a class as to claims against the Company in the American Fiber & Cabling case, having decided that the named Plaintiff had no standing to assert such claims. However, in the Wilson case the Court certified a class as 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.

The Court also ordered the parties to show cause in writing why the Wilson case and the American Fiber & Cabling case should not be consolidated for all purposes. The matter is now under consideration by the Court. On April 6, 2012, counsel for plaintiffs and counsel for Casey’s General Stores, Inc. informed the Court that they reached an enforceable settlement agreement which, if approved by the Court, will result in the settlement and dismissal of all claims against Casey’s in the multidistrict litigation, including the Kansas cases. Based on this representation, the Court severed plaintiffs’ claims against Casey’s General Stores, Inc. from the claims against the remaining defendants, which are set for an anticipated trial date in August of 2012. The settlement amount for the Company was determined not to be material.

From time to time we may be involved in other legal and administrative proceedings or investigations arising from the conduct of our business operations, including contractual disputes; 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.

Other At April 30, 2012, the Company was partially self-insured for workers’ compensation claims in all eleven states of its marketing territory and was also partially self-insured for general liability and auto liability under an agreement that provides for annual stop-loss limits equal to or exceeding approximately $1,000. To facilitate this agreement, letters of credit approximating $15,000 and $12,000, respectively, were issued and outstanding at April 30, 2012 and 2011, on the insurance company’s behalf. The Company also has investments of approximately $223 in escrow as required by one state for partial self-insurance of workers’ compensation claims. Additionally, the Company is self-insured for its portion of employee medical expenses. At April 30, 2012 and 2011, the Company had $23,701 and $22,129, respectively, in accrued expenses for estimated claims relating to self-insurance, the majority of which has been actuarially determined.

11. SUBSEQUENT EVENTS

Events that have occurred subsequent to April 30, 2012 have been evaluated through the filing date of this Annual Report on Form 10-K with the Securities and Exchange Commission.

12. QUARTERLY FINANCIAL DATA (Dollars in thousands, except per share amounts) (Unaudited)


		Year ended April 30, 2012
Total revenue		Q1		Q2		Q3		Q4		Year Total
Gasoline	$		1,377,914		1,288,498		1,141,230		1,284,669		5,092,311
Grocery & other merchandise			365,171		357,816		311,199		330,809		1,364,995
Prepared food & fountain			123,843		128,838		118,750		128,281		499,712
Other			6,904		7,366		7,771		8,745		30,786

	$		1,873,832		1,782,518		1,578,950		1,752,504		6,987,804
Gross profit*
Gasoline	$		65,320		62,688		49,180		49,371		226,559
Grocery & other merchandise			118,729		116,221		99,099		109,196		443,245
Prepared food & fountain			75,843		76,658		72,714		77,944		303,159
Other			6,890		7,351		7,757		8,729		30,727

	$		266,782		262,918		228,750		245,240		1,003,690

Net earnings	$		39,391		37,632		16,699		23,069		116,791

Earnings per common share
Basic	$		1.04		0.99		0.44		0.61		3.07

Diluted	$		1.03		0.98		0.43		0.60		3.04


		Year ended April 30, 2011
Total revenue		Q1		Q2		Q3		Q4		Year Total
Gasoline	$		936,654		927,617		991,143		1,143,288		3,998,702
Grocery & other merchandise			317,206		308,900		276,075		293,432		1,195,613
Prepared food & fountain			102,382		107,183		100,189		105,486		415,240
Other			5,785		5,819		6,792		7,289		25,685

	$		1,362,027		1,349,519		1,374,199		1,549,495		5,635,240
Gross profit*
Gasoline	$		58,906		52,755		48,101		52,276		212,038
Grocery & other merchandise			104,025		101,655		85,385		94,185		385,250
Prepared food & fountain			65,270		67,161		62,266		63,454		258,151
Other			5,770		5,806		6,779		7,273		25,628

	$		233,971		227,377		202,531		217,188		881,067

Net earnings	$		37,286		21,692		12,875		22,770		94,623

Earnings per common share
Basic	$		0.73		0.51		0.34		0.60		2.24

Diluted	$		0.73		0.51		0.34		0.60		2.22

*Gross profit is given before charge for depreciation and amortization and credit card fees.

Previous: Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK · Next: Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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