Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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, 2016 and 2015, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2016. We also have audited the Company’s internal control over financial reporting as of April 30, 2016, based on criteria established in Internal Control—Integrated Framework (2013) 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 Management’s Report on Internal Control Over Financial Reporting included in 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, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year period ended April 30, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, Casey's General Stores, Inc. maintained, in all material respects, effective internal control over financial reporting as of April 30, 2016, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

Des Moines, Iowa

June 27, 2016

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	April 30,
	2016				2015
Assets
Current assets
Cash and cash equivalents	$	75,775			$	48,541
Receivables	27,701				22,609
Inventories	204,988				197,331
Prepaid expenses	3,008				2,025
Deferred income taxes	—				15,531
Income taxes receivable	14,413				19,223
Total current assets	325,885				305,260
Property and equipment, at cost
Land	593,043				549,239
Buildings and leasehold improvements	1,279,258				1,136,248
Machinery and equipment	1,704,379				1,503,079
Leasehold interest in property and equipment	16,044				16,044
	3,592,724				3,204,610
Less accumulated depreciation and amortization	1,340,249				1,185,246
Net property and equipment	2,252,475				2,019,364
Other assets, net of amortization	19,222				18,295
Goodwill	128,566				127,046
Total assets	$	2,726,148			$	2,469,965
Liabilities and Shareholders’ Equity
Current liabilities
Current maturities of long-term debt	15,375				15,398
Accounts payable	241,207				226,577
Accrued expenses
Wages and related taxes	32,026				32,092
Property taxes	24,091				23,523
Insurance	35,535				31,389
Other	39,337				35,910
Total current liabilities	387,571				364,889
Long-term debt, net of current maturities	822,869				838,245
Deferred income taxes	394,934				354,973
Deferred compensation	17,813				17,645
Other long-term liabilities	19,498				18,984
Total liabilities	1,642,685				1,594,736
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, none issued	—				—
Common stock, no par value, 39,055,570 and 38,886,165 shares issued and outstanding at April 30, 2016 and 2015, respectively	72,868				56,274
Retained earnings	1,010,595				818,955
Total shareholders’ equity	1,083,463				875,229
Total liabilities and shareholders’ equity	$	2,726,148			$	2,469,965

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Years ended April 30,
	2016				2015				2014
Total revenue	$	7,122,086			$	7,767,216			$	7,840,255
Cost of goods sold (exclusive of depreciation and amortization, shown separately below)	5,508,465				6,327,431				6,618,239
Gross profit	1,613,621				1,439,785				1,222,016
Operating expenses	1,053,805				960,424				857,297
Depreciation and amortization	170,937				156,111				131,160
Interest, net	40,173				41,225				39,915
Income before income taxes	348,706				282,025				193,644
Federal and state income taxes	122,724				101,397				66,824
Net income	$	225,982			$	180,628			$	126,820
Net income per common share
Basic	$	5.79			$	4.66			$	3.30
Diluted	$	5.73			$	4.62			$	3.26

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share and share amounts)

	Shares Outstanding			Common stock				Retained earnings				Shareholders' Equity
Balance at April 30, 2013	38,352,509			$	23,119			$	570,268			$	593,387
Net income	—			—				126,820				126,820
Dividends declared (72 cents per share)	—			—				(27,702		)		(27,702		)
Exercise of stock options	140,785			3,368				—				3,368
Tax benefits related to nonqualified stock options	—			1,791				—				1,791
Stock-based compensation	14,093			5,600				—				5,600
Balance at April 30, 2014	38,507,387			$	33,878			$	669,386			$	703,264
Net income	—			—				180,628				180,628
Dividends declared (80 cents per share)	—			—				(31,059		)		(31,059		)
Exercise of stock options	310,224			11,465				—				11,465
Tax benefits related to nonqualified stock options	—			3,624				—				3,624
Stock-based compensation	68,554			7,307				—				7,307
Balance at April 30, 2015	38,886,165			$	56,274			$	818,955			$	875,229
Net income	—			—				225,982				225,982
Dividends declared (88 cents per share)	—			—				(34,342		)		(34,342		)
Exercise of stock options	108,100			3,717				—				3,717
Issuance of common stock	32,717			2,762				—				2,762
Tax benefits related to nonqualified stock options	—			2,702				—				2,702
Stock-based compensation	28,588			7,413				—				7,413
Balance at April 30, 2016	39,055,570			$	72,868			$	1,010,595			$	1,083,463

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

	Years ended April 30,
	2016				2015				2014
Cash flows from operating activities
Net income	$	225,982			$	180,628			$	126,820
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	170,937				156,111				131,160
Stock-based compensation	7,413				7,307				5,600
Loss on disposal of assets and impairment charges	837				2,370				2,846
Deferred income taxes	55,492				44,711				17,089
Excess tax benefits related to stock option exercises	(2,702		)		(3,624		)		(1,791		)
Changes in assets and liabilities:
Receivables	(5,092		)		3,232				(4,941		)
Inventories	(7,390		)		10,365				(13,696		)
Prepaid expenses	(983		)		(547		)		(82		)
Accounts payable	3,011				(33,290		)		17,894
Accrued expenses	10,008				(17,544		)		33,818
Income taxes receivable	7,064				(7,801		)		(441		)
Other, net	132				(236		)		(116		)
Net cash provided by operating activities	464,709				341,682				314,160
Cash flows from investing activities
Purchase of property and equipment	(392,839		)		(360,734		)		(308,633		)
Payments for acquisitions of businesses, net of cash acquired	(7,263		)		(41,157		)		(31,584		)
Proceeds from sales of property and equipment	5,134				2,748				3,328
Net cash used in investing activities	(394,968		)		(399,143		)		(336,889		)
Cash flows from financing activities
Proceeds from long-term debt	—				—				200,000
Repayments of long-term debt	(15,399		)		(553		)		(15,865		)
Net (repayments) borrowings of short-term debt	—				—				(59,100		)
Proceeds from exercise of stock options	3,717				11,465				3,368
Payments of cash dividends	(33,527		)		(30,175		)		(27,095		)
Excess tax benefits related to stock option exercises	2,702				3,624				1,791
Net cash (used in) provided by financing activities	(42,507		)		(15,639		)		103,099
Net increase (decrease) in cash and cash equivalents	27,234				(73,100		)		80,370
Cash and cash equivalents at beginning of year	48,541				121,641				41,271
Cash and cash equivalents at end of year	$	75,775			$	48,541			$	121,641
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for interest, net of amount capitalized	$	40,401			$	41,382			$	36,923
Cash paid for income taxes, net	60,049				64,367				50,031
Noncash investing and financing activities
Purchased property and equipment in accounts payable	11,619				9,060				5,056
Property and equipment acquired through notes payable and capitalized lease obligations	—				—				1,169

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 1,931 convenience stores in 14 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail sales in 2016 by category are as follows: 59% fuel, 29% grocery & other merchandise, and 12% prepared food & fountain. The Company’s products 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 We consider all highly liquid investments with a maturity at purchase of three months or less to be cash equivalents. Included in cash equivalents are money market funds and credit card, debit card and electronic benefits transfer transactions that process within three days.

Inventories Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For 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.

The excess of current cost over the stated LIFO value was $58,432 and $53,428 at April 30, 2016 and 2015, respectively. There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at April 30, 2016 and 2015:

	Fiscal 2016				Fiscal 2015
Fuel	$	57,840			$	69,056
Merchandise	147,148				128,275
Total inventory	$	204,988			$	197,331

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 (RDAs) 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. The RDAs are treated as a reduction in cost of goods sold and are recognized ratably over the period covered by the applicable rebate agreement. 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 goods 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.

Renewable Identification Numbers (RINs) are recorded as a reduction in cost of goods sold in the period when the Company commits to a price and agrees to sell all of the RINs earned during a specified period. The Company includes in cost of goods sold the costs incurred to acquire fuel and merchandise, including excise taxes, less vendor allowances and rebates and RINs. In accordance with U.S. GAAP, the Company does not record an asset on the balance sheet related to RINs that have not been validated and contracted.

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, 2016, there was $128,566 of goodwill. Management’s analysis of recoverability completed as of the fiscal year-end yielded no evidence of impairment for the years ended April 30, 2016, 2015, and 2014, respectively.

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

Buildings	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

The Company monitors stores and will accelerate depreciation if the expected life of the asset is reduced due to the operation of the store or the Company’s plans.

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 $1,625 in fiscal 2016, $1,785 in fiscal 2015, and $2,542 in fiscal 2014. Impairment charges are a component of operating expenses.

Excise taxes Excise taxes approximating $818,000, $715,000, and $646,000 on retail fuel sales are included in total revenue and cost of goods sold for fiscal 2016, 2015, and 2014, 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 fuel, 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.

Net income per common share Basic earnings per share have been computed by dividing net income 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. 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 2016. The recorded asset for asset retirement obligations was $9,788 and $9,234 at April 30, 2016 and 2015, respectively, and is recorded in other assets, net of amortization. The discounted liability was $14,975 and $14,014 at April 30, 2016 and 2015, respectively, and is recorded in other long-term liabilities.

Self-insurance The Company is primarily self-insured for employee healthcare, workers’ compensation, general liability, and automobile claims. The self-insurance claim liability for workers’ compensation, general liability, and automobile claims 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 development time frame, settlement patterns, litigation and adjudication direction, and medical treatment and cost trends. The liability is not discounted. The balance of our self-insurance reserves were $35,535 and $31,389 for the years ended April 30, 2016 and 2015, respectively.

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 There were no options or futures contracts as of or during the years ended April 30, 2016, 2015, or 2014. However, we do from time to time, participate in a forward buy of certain commodities, primarily cheese and coffee. These are not accounted for as derivatives under the normal purchase and normal sale exclusions under the applicable guidance.

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 ratably in the statement of income over the vesting period of the award. None of the awards contain performance conditions.

Segment reporting As of April 30, 2016, we operated 1,931 stores in 14 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 & 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

In May 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard, after deferral for one year, is effective for the Company on May 1, 2018. Early application is permitted as of May 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-9 and related guidance will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In April 2015, the FASB issued ASU 2015-03 Interest-Imputation of Interest (Subtopic 835-30) which provides guidance on the presentation of debt issuance costs. The new standard requires that debt issuance costs be recorded as a reduction from the face amount of the related debt, with amortization recorded as interest expense, rather than recording as a deferred asset. The guidance is effective for the Company in the first quarter of fiscal 2017 with early adoption permitted. The guidance is to be retrospectively applied to all prior periods. Adoption of the new guidance is not expected to have a material impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-02.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The goal of this update is to simplify several aspects of the accounting for share-

based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This update becomes effective for the company beginning May 1, 2017 with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-09.

See also the adoption of ASU 2015-17 Balance Sheet Classification of Deferred Taxes, discussed in footnote 6 to the financial statements.

2. ACQUISITIONS

During the year ended April 30, 2016, the Company acquired 5 stores through a variety of single store transactions with several unrelated third parties. Of the 5 stores acquired, 4 were re-opened as a Casey's store during the 2016 fiscal year, and one will be opened during the 2017 fiscal year. The acquisitions meet the criteria to be considered business combinations. 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 transactions in aggregate for the year ended April 30, 2016 is as follows (in thousands):

Assets acquired:
Inventories	$	267
Property and equipment	5,465
Other assets	25
Total assets	5,757
Liabilities assumed:
Accrued expenses	14
Total liabilities	14
Net tangible assets acquired	5,743
Goodwill	1,520
Total consideration paid	$	7,263

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 first fiscal year of the periods presented (amounts in thousands, except per share data):

	Years Ended April 30,
	2016				2015
Total revenue	$	7,132,349			$	7,785,111
Net income	$	226,271			$	181,051
Net income per common share
Basic	$	5.80			$	4.67
Diluted	$	5.74			$	4.63

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 $887,000 and $887,000, respectively, at April 30, 2016 and 2015.

The Company’s long-term debt at carrying amount by issuance is as follows:

	As of April 30,
	2016				2015
Capitalized lease obligations discounted at 5.22% to 7.09% due in various monthly installments through 2048 (Note 7)	$	9,244			$	9,643
5.72% Senior notes due in 14 installments beginning September 30, 2012 and ending March 30, 2020	60,000				75,000
5.22% Senior notes due August 9, 2020	569,000				569,000
3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028	150,000				150,000
3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028	50,000				50,000
	838,244				853,643
Less current maturities	15,375				15,398
	$	822,869			$	838,245

At April 30, 2016, the Company had a bank line of credit arrangement consisting of two Promissory Notes, in the principal amount of $50,000 each (together, the “Notes”). The Notes evidenced 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 was at a rate of 0.750% over the Index. The interest rate applicable to the second note is 1.000% over the Index. There was a $0 balance owed on the Notes at both April 30, 2016 and April 30, 2015. The line of credit is due upon demand.

Interest expense is net of interest income of $157, $158, and $214 for the years ended April 30, 2016, 2015, and 2014, respectively. Interest expense is also net of interest capitalized of $1,134, $1,209, and $1,177 during the years ended April 30, 2016, 2015, and 2014, respectively.

The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2016, the Company was in compliance with all such financial covenants. Listed below are the aggregate maturities of long-term debt, including capitalized lease obligations, for the 5 years commencing May 1, 2016 and thereafter:

Years ended April 30,	Capital Leases				Senior Notes				Total
2017	$	375			$	15,000			$	15,375
2018	396				15,000				15,396
2019	417				15,000				15,417
2020	441				15,000				15,441
2021	464				569,000				569,464
Thereafter	7,151				200,000				207,151
	$	9,244			$	829,000			$	838,244

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.

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 3,556,936 shares available for grant at April 30, 2016 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 reduce the shares available for grant by one, and each share issued pursuant to an award of restricted stock or restricted stock units will reduce the shares available for grant by two. Restricted stock is transferred to the employee or non-employee immediately upon grant, whereas restricted stock units have a vesting period that must expire before the stock is transferred. We account for stock-based compensation by estimating the fair value of stock options using the Black Scholes model, and value restricted stock unit awards granted under the Plan using market price of a share of our common stock on the date of grant. We recognize this fair value as an operating expense in our consolidated statements of income over the requisite service period using the straight-line method, as adjusted for certain retirement provisions. At April 30, 2016, stock options for 291,200 shares (which expire between 2017 and 2021) were outstanding. All stock option shares issued are previously unissued authorized shares.

The following table summarizes the most recent compensation grants made during the three-year period ended April 30, 2016:

Date of Grant	Type of Grant	Shares Granted		Recipients	Vesting Date	Fair Value at Grant Date
June 7 & 19, 2013	Restricted Stock Units	77,650		Officers & Key employees	June 7, 2016	$4,816
September 13, 2013	Restricted Stock Units	14,000		Non-employee board members	May 1, 2014	$958
June 6, 2014	Restricted Stock Units	91,000		Officers & Key employees	June 6, 2017	$6,584
June 6, 2014	Restricted Stock	30,538		Officers & Key employees	Immediate (Annual performance goal)	$2,209
September 19, 2014	Restricted Stock	13,955		Non-employee board members	Immediate	$990
June 5, 2015	Restricted Stock Units	104,200		Officers & Key employees	June 5, 2018	$9,135
June 5, 2015	Restricted Stock	48,913		Officers & Key employees	Immediate (Annual performance goal)	$4,288
April 12, 2016	Restricted Stock Units	10,000		CEO	20% each May 1, 2017-2021	$1,060

Information concerning the issuance of stock options under the Plan and Prior Plans is presented in the following table:

	Number of option shares			Weighted average option exercise price
Outstanding at April 30, 2013	854,809			$	34.64
Granted	—			—
Exercised	(140,785	)		23.93
Forfeited	(2,000	)		44.39
Outstanding at April 30, 2014	712,024			$	36.73
Granted	—			—
Exercised	(310,224	)		36.96
Forfeited	—			—
Outstanding at April 30, 2015	401,800			$	36.55
Granted	—			—
Exercised	(108,100	)		34.37
Forfeited	(2,500	)		25.26
Outstanding at April 30, 2016	291,200			$	37.46

At April 30, 2016, all outstanding options had an aggregate intrinsic value of $21,707 and a weighted average remaining contractual life of 4.32 years. All options are vested as of April 30, 2016. The aggregate intrinsic value for the total of all options exercised during the year ended April 30, 2016 was $8,071, and no shares vested during the year ended April 30, 2016.

At April 30, 2016, the range of exercise prices for outstanding options was $24.11 – $44.39. The number of shares and weighted average remaining contractual life of the options by range of applicable exercise prices at April 30, 2016 were as follows:

Range of exercise prices	Number of shares			Weighted average exercise price			Weighted average remaining contractual life (years)
24.11-25.26	84,350			25.23			3.1
25.49-26.92	22,500			26.47			1.8
44.39	184,350			44.39			5.2
	291,200

Information concerning the issuance of restricted stock units under the Plan is presented in the following table:

Unvested at April 30, 2013	71,196
Granted	91,650
Vested	(14,150	)
Forfeited	(150	)
Unvested at April 30, 2014	148,546
Granted	91,000
Vested	(38,198	)
Forfeited	(7,418	)
Unvested at April 30, 2015	193,930
Granted	114,200
Vested	(31,480	)
Forfeited	(3,750	)
Unvested at April 30, 2016	272,900

Total compensation costs recorded for the stock options, restricted stock, and restricted stock unit awards for the years ended April 30, 2016, 2015 and 2014 were $7,413, $7,307, and $5,600, respectively. As of April 30, 2016, there was $9,212 of total unrecognized compensation costs related to the Plan and Prior Plans for costs related to restricted stock units which are expected to be recognized ratably through fiscal 2019.

5. NET INCOME PER COMMON SHARE

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

	Years ended April 30,
	2016				2015				2014
Basic
Net income	$	225,982			$	180,628			$	126,820
Weighted average shares outstanding-basic	39,016,299				38,743,227				38,457,680
Basic earnings per common share	$	5.79			$	4.66			$	3.30
Diluted
Net income	$	225,982			$	180,628			$	126,820
Weighted-average shares outstanding-basic	39,016,299				38,743,227				38,457,680
Plus effect of stock options and restricted stock units	405,900				360,606				410,726
Weighted-average shares outstanding-diluted	39,422,199				39,103,833				38,868,406
Diluted earnings per common share	$	5.73			$	4.62			$	3.26

There were no options considered antidilutive; therefore, all options were included in the computation of dilutive earnings per share for fiscal 2016, 2015, and fiscal 2014, respectively.

6. INCOME TAXES

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

	Years ended April 30,
	2016				2015				2014
Current tax expense
Federal	$	58,273			$	49,593			$	44,078
State	8,959				7,093				5,657
	67,232				56,686				49,735
Deferred tax expense	55,492				44,711				17,089
Total income tax expense	$	122,724			$	101,397			$	66,824

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

	As of April 30,
	2016				2015
Deferred tax assets
Accrued liabilities and reserves	$	11,522			$	8,593
Property and equipment depreciation	15,914				12,846
Workers compensation	10,540				9,536
Deferred compensation	6,696				6,653
Equity compensation	5,186				3,767
State net operating losses & tax credits	973				626
Other	1,582				1,787
Total gross deferred tax assets	52,413				43,808
Less valuation allowance	84				228
Total net deferred tax assets	52,329				43,580
Deferred tax liabilities
Property and equipment depreciation	(425,586		)		(363,965		)
Goodwill	(21,677		)		(18,319		)
Other	—				(738		)
Total gross deferred tax liabilities	(447,263		)		(383,022		)
Net deferred tax liability	$	(394,934	)		$	(339,442	)

At April 30, 2016, the Company had net operating loss carryforwards for state income tax purposes of approximately $65,241, which are available to offset future state taxable income. These net operating loss carryforwards expire during the years 2020 through 2035. In addition, the Company had state alternative minimum tax credit carryforwards of approximately $167, which are available to reduce future state regular income taxes over an indefinite period.

There was a valuation allowance of $84 and $228 for state net operating loss deferred tax assets as of April 30, 2016 and 2015. The change in the valuation allowance was $(144) and $228 for the years ending April 30, 2016 and 2015, respectively. 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. Out of period adjustments of $2,760 were recorded in fiscal 2014.

	Years ended April 30,
	2016			2015			2014
Income taxes at the statutory rates	35.0	%		35.0	%		35.0	%
Federal tax credits	(1.7	)%		(1.7	)%		(2.1	)%
State income taxes, net of federal tax benefit	2.7	%		3.1	%		3.2	%
Out of period adjustments	—	%		—	%		(1.4	)%
Other	(0.8	)%		(0.4	)%		(0.2	)%
	35.2	%		36.0	%		34.5	%

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 $6,484 and $8,043 in gross unrecognized tax benefits at April 30, 2016 and 2015, respectively, which is recorded in other long-term liabilities in the consolidated balance sheet. Of this amount, $4,251 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits decreased $1,559 during the twelve

months ended April 30, 2016, due primarily to the expiration of certain statute of limitations exceeding the increase associated with income tax filing positions for the current year.

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

	2016				2015
Beginning balance	$	8,043			$	9,244
Additions based on tax positions related to current year	1,084				1,186
Additions for tax positions of prior years	26				13
Reductions for tax positions of prior years	—				—
Reductions due to lapse of applicable statute of limitations	(2,669		)		(2,400		)
Settlements	—				—
Ending balance	$	6,484			$	8,043

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $217 and $152 at April 30, 2016 and 2015, 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, 2016 was an increase in tax expense of $65 and a decrease of $250 for the year ended April 30, 2015.

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 State of Illinois is examining tax years 2011 and 2012. Additionally, the IRS is currently examining tax year 2012. The Company has no other ongoing federal or state income tax examinations. The Company does not have any outstanding litigation related to tax matters.

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 $3,198 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 2012 and forward. Tax years 2011 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 the quarter ended April 30, 2016, the Company adopted the provisions of ASU 2015-17, Balance Sheet Classification of Deferred Taxes, on a prospective basis. The guidance requires that all deferred tax assets and deferred tax liabilities be classified as noncurrent on the balance sheet. Prior periods have not been adjusted upon adoption.

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,
	2016				2015
Real estate	$	13,480			$	13,480
Equipment	2,564				2,564
	16,044				16,044
Less accumulated amortization	6,365				5,666
	$	9,679			$	10,378

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, 2016:

Years ended April 30,	Capital leases				Operating leases
2017	$	868			$	1,105
2018	870				1,088
2019	876				817
2020	882				474
2021	879				217
Thereafter	11,113				88
Total minimum lease payments	15,488				$	3,789
Less amount representing interest	6,244
Present value of net minimum lease payments	$	9,244

The total rent expense under operating leases was $1,862 in 2016, $1,961 in 2015, and $1,424 in 2014.

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 in Company stock and are allocated based on employee contributions. Contributions to the 401(k) plan were $6,560, $5,852, and $5,348 for the years ended April 30, 2016, 2015, and 2014, respectively.

On April 30, 2016 and 2015, 1,419,841 and 1,453,251 shares of common stock, respectively, 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 net income per common share.

Supplemental executive retirement plan The Company has a nonqualified supplemental executive retirement plan (SERP) for two of its executive officers, one of whom retired April 30, 2003 and the other on April 30, 2008. The SERP provides for the Company to pay annual retirement benefits, 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 (at a reduced level) 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, 2016 and 2015, respectively, were $5,230 and $5,626. The discount rates used were 3.8% and 4.0%, respectively, at April 30, 2016 and 2015. The amount expensed in fiscal 2016 was $230 and the Company expects to pay $625 per year for each of the next five years. Expense incurred in fiscal 2015 and fiscal 2014 was $326 and $93, respectively.

Other post-employment benefits The Company also has severance and/or deferred compensation agreements with three other former employees. The amounts accrued at April 30, 2016 and 2015 were $4,043 and $3,960, respectively. The Company expects to pay $507, $507, $457, $432 and $432 the next five years under the agreements. The expense incurred in fiscal 2016, 2015 and 2014 was $238, $219, and $156 respectively.

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 $900 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 fifteen 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, 2016 and 2015 of approximately $341 and $388, 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 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 fuel retailers, which were consolidated in the U.S. District Court for the District of Kansas in Kansas City, Kansas as part of the multidistrict “Motor Fuel Temperature Sales Practices Litigation”. On November 20, 2012, the Court preliminarily 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 approved settlement includes, but is not limited to, a commitment on the part of the Company to “sticker” certain information on its fuel pumps and make a monetary payment (which is not considered to be material in amount) to the plaintiff class. An order awarding fees was filed by the Court on February 17, 2016, but is subject to resolution of any appeal to the Tenth Circuit Court of Appeals.

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, 2016, the Company was partially self-insured for workers’ compensation claims in all but one state of its marketing territory. In North Dakota, the Company is required to participate in an exclusive, state managed fund for all workers compensation claims. The Company 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 $20,115 and $19,155, respectively, were issued and outstanding at April 30, 2016 and 2015, 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, 2016 and 2015, the Company had $35,535 and $31,389, 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, 2016 have been evaluated for disclosure through the filing date of this Annual Report on Form 10-K with the Securities and Exchange Commission. On May 2, 2016 the Company issued $50,000 principal amount Series C 3.65% Senior Notes due in 2031. On October 28, 2016, the Company will issue an additional $50,000 principal amount of Series D 3.72% Senior Notes due in 2031. Further information is set forth in the Current Report on Form 8-K filed by the Company on May 3, 2016.

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

	Year ended April 30, 2016
	Q1				Q2			Q3			Q4			Year Total
Total revenue
Fuel	$	1,286,241			1,166,736			888,744			873,081			4,214,802
Grocery & other merchandise	526,620				516,578			453,388			477,487			1,974,073
Prepared food & fountain	223,381				229,388			209,595			218,349			880,713
Other	12,350				11,898			14,213			14,037			52,498
	$	2,048,592			1,924,600			1,565,940			1,582,954			7,122,086
Gross profit*
Fuel	$	87,681			122,690			85,460			85,828			381,659
Grocery & other merchandise	171,549				162,904			141,482			153,299			629,234
Prepared food & fountain	139,679				145,513			130,027			135,073			550,292
Other	12,333				11,883			14,200			14,020			52,436
	$	411,242			442,990			371,169			388,220			1,613,621
Net income	$	61,806			79,033			38,099			47,044			225,982
Income per common share
Basic	1.59				2.03			0.98			1.20			5.79
Diluted	1.57				2.00			0.97			1.19			5.73
	Year ended April 30, 2015
	Q1				Q2			Q3			Q4			Year Total
Total revenue
Fuel	$	1,607,126			1,470,768			1,056,458			1,010,033			5,144,385
Grocery & other merchandise	478,586				466,934			412,711			436,591			1,794,822
Prepared food & fountain	194,610				201,196			190,393			194,688			780,887
Other	10,864				11,313			12,399			12,546			47,122
	$	2,291,186			2,150,211			1,671,961			1,653,858			7,767,216
Gross profit*
Fuel	$	87,872			89,637			98,418			75,228			351,155
Grocery & other merchandise	155,683				151,025			128,572			140,230			575,510
Prepared food & fountain	116,511				119,322			111,672			118,551			466,056
Other	10,848				11,298			12,384			12,534			47,064
	$	370,914			371,282			351,046			346,543			1,439,785
Net income	$	50,097			49,869			39,319			41,343			180,628
Income per common share
Basic	1.30				1.29			1.01			1.06			4.66
Diluted	1.28				1.28			1.01			1.05			4.62

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