Item 6. SELECTED FINANCIAL DATA

(In thousands, except per share amounts)

Statement of Income Data

	Years ended April 30,
	2017				2016				2015				2014				2013
Total revenue	$	7,506,587			$	7,122,086			$	7,767,216			$	7,840,255			$	7,250,840
Cost of goods sold	5,825,426				5,508,465				6,327,431				6,618,239				6,179,771
Gross profit	1,681,161				1,613,621				1,439,785				1,222,016				1,071,069
Operating expenses	1,172,328				1,053,805				960,424				857,297				760,365
Depreciation and amortization	197,629				170,937				156,111				131,160				111,823
Interest, net	41,536				40,173				41,225				39,915				35,265
Income before income taxes	269,668				348,706				282,025				193,644				163,616
Federal and state income taxes	92,183				122,724				101,397				66,824				59,802
Net income	$	177,485			$	225,982			$	180,628			$	126,820			$	103,814
Basic earnings per common share	$	4.54			$	5.79			$	4.66			$	3.30			$	2.71
Diluted earnings per common share	$	4.48			$	5.73			$	4.62			$	3.26			$	2.69
Weighted average number of common shares outstanding—basic	39,125				39,016				38,743				38,458				38,297
Weighted average number of common shares outstanding—diluted	39,579				39,422				39,104				38,868				38,620
Dividends declared per common share	$	0.96			$	0.88			$	0.80			$	0.72			$	0.66

Balance Sheet Data

	As of April 30,
	2017				2016				2015				2014				2013
Current assets	$	350,685			$	325,885			$	305,260			$	389,558			$	278,967
Total assets	3,020,102				2,726,148				2,469,965				2,304,876				1,990,168
Current liabilities	446,546				387,571				364,889				390,889				412,806
Long-term debt, net of current maturities	907,356				822,869				838,245				853,642				653,081
Shareholders’ equity	1,190,620				1,083,463				875,229				703,264				593,387

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars and gallons in thousands, except per share amounts)

Please read the following discussion of the Company’s financial condition and results of operations in conjunction with the selected historical consolidated financial data and consolidated financial statements and accompanying notes presented elsewhere in this Form 10-K.

Overview

The Company primarily operates convenience stores under the names "Casey's" and “Casey’s General Store” in 15 Midwestern states, primarily in Iowa, Missouri and Illinois. On April 30, 2017, there were a total of 1,978 stores in operation. All but two stores offer fuel for sale on a self-serve basis and carry a broad selection of food (including freshly prepared foods such as pizza, donuts and sandwiches), beverages, tobacco products, health and beauty aids, automotive products and other non-food items. We derive our revenue from the retail sale of fuel and the products offered in our stores.

Approximately 57% of all Casey’s General Stores were opened in areas with populations of fewer than 5,000 people, while approximately 18% of all stores were opened in communities with populations exceeding 20,000 persons. The Marketing Company operates two distribution centers, through which grocery and general merchandise items are supplied to our stores. One is adjacent to our Corporate Headquarters facility in Ankeny, Iowa. The other was opened in February 2016 in Terre Haute, Indiana. At April 30, 2017, the Company owned the land at 1,957 store locations and the buildings at 1,962 locations, and leased the land at 21 locations and the buildings at 16 locations.

During the fourth quarter of fiscal 2017, the Company earned $0.76 in diluted earnings per share compared to $1.19 per share for the same quarter a year ago. Fiscal 2017 diluted earnings per share were $4.48 versus $5.73 for the prior year. The Company’s business is seasonal, and generally the Company experiences higher sales and profitability during the first and second fiscal quarters (May-October), when customers tend to purchase greater quantities of fuel and certain convenience items such as beer, pop and ice.

During the 2017 fiscal year, we acquired 22 convenience stores from other parties and opened 18 of them, and completed 48 new store constructions. In addition to this activity, the Company also completed 103 major remodels, replaced 21 stores and closed 20 stores during the year.

The fourth quarter results reflected a 0.5% decrease in same-store fuel gallons sold, with an average margin of approximately 17.2 cents per gallon (compared to a 4.6% increase in same-store fuel gallons sold and an average margin of 17.8 cents per gallon last year). The Company’s fourth quarter fuel margin was helped by our ability to sell approximately 15.5 million renewable fuel credits for $7.1 million (compared to 12.7 million credits sold last year for $9.1 million) . For the year, we sold 67.6 million renewable fuel credits for $52.2 million. In the prior year we sold 57.1 million credits for $31.0 million. For the fiscal year, same-store gallons increased 2.1% with an average margin of 18.4 cents per gallon. In the prior year, same-store gallons increased 3.0% with an average margin of 19.6 cents per gallon. The Company’s policy is to price to the competition, so the timing of retail price changes is primarily driven by local competitive conditions.

Same store sales of grocery & other merchandise increased 1.5% and prepared foods & fountain increased 3.2% during the fourth quarter of fiscal 2017, as compared to the same period in the prior year.

The Company believes that reducing energy consumption where feasible is a sound long-term business strategy that reduces operating expenses. While individually and in aggregate the financial impact of these initiatives may not be material, implementing them throughout our operations is a part of our overall expense management. Below is a list of some of the energy initiatives the Company is currently undertaking:

•

All newly constructed stores use 100 percent high efficiency LED lighting. The Company is also in the process of retrofitting all of our legacy stores with LED lighting. The project is expected to take roughly four to five years to complete. Also, when we perform a major remodel of an existing store, the fluorescent lighting is replaced with LED lighting. Furthermore, new canopies over the fuel pumps are installed with time systems and photo eyes to help control the canopy lighting.

•	Multiple paperless initiatives are going on throughout the Company.

•	Our fleet of trucks is updated frequently, and uses electric fuel tank heaters to reduce idle time. Furthermore, timers have been installed that automatically turn off the engine if it is idling for more than ten minutes.

For further information concerning the Company’s operating environment and certain conditions that may affect future performance, see the “Forward-looking Statements” at the end of this Item 7.

Fiscal 2017 Compared with Fiscal 2016

Total revenue for fiscal 2017 increased 5.4% ($384,501) to $7,506,587, primarily due to an increase in the number of fuel gallons sold (which generated an additional $235,458), and a $185,993 increase in inside sales (grocery & other merchandise and prepared food & fountain), offset by a 1% decrease in the average retail price of a gallon of fuel (a $36,132 decrease). Retail fuel sales for the fiscal year were $4,414,128, an increase of 4.7%. Fuel gallons sold increased 5.6% to 2.1 billion gallons. Inside sales increased 6.5% to $3,040,779, primarily as a result of a $77,872 increase from stores that were built or acquired after April 30, 2015, and a $50,593 increase from the rollout and expansion of our recent operating programs in our stores (expanded hours at select locations, stores with pizza delivery, and major remodels).

Total gross profit margin was 22.4% for fiscal 2017 compared with 22.7% for the prior year. The fuel margin decreased to 8.6% in fiscal 2017 from 9.1% in fiscal 2016 primarily due to less volatility in wholesale fuel prices, partially offset by gains in renewable fuel credits. The grocery & other merchandise margin was slightly lower at 31.5% in fiscal 2017 compared to

31.9% in fiscal 2016, due mainly to the continued pricing pressures from cigarettes, transitioning to direct store delivery of ice, and a one time adjustment in the fourth quarter. The prepared food & fountain margin decreased to 62.3% from 62.5% during fiscal 2017.

Operating expenses increased 11.2% ($118,523) in fiscal 2017 primarily due to the expansion of our operating programs noted above ($36,393), and an increase from stores built or acquired after April 30, 2015 ($31,854). The majority of all operating expenses are wages and related costs.

Depreciation and amortization expense increased 15.6% to $197,629 in fiscal 2017 from $170,937 in fiscal 2016. The increase was due primarily to capital expenditures made in fiscal 2017.

The effective tax rate decreased 100 basis points to 34.2% in fiscal 2017 from 35.2% in fiscal 2016. The decrease in the effective tax rate was primarily due to the adoption of ASU 2016-09 in the first quarter of fiscal year 2017. ASU 2016-09 requires excess tax benefits from the settlement of share-based awards to be recognized in income tax expense in the income statement, whereas they were previously recognized in equity.

Net income decreased to $177,485 in fiscal 2017 from $225,982 in fiscal 2016. The decrease was due to a combination of a weaker agricultural economy, which has slowed the growth in customer traffic to stores, combined with less volatility in the wholesale fuel costs and wage rate increases. These were partially offset by an increase in the number of fuel gallons sold, as well as an increase in inside sales.

Fiscal 2016 Compared with Fiscal 2015

Total revenue for fiscal 2016 decreased 8.3% ($645,130) to $7,122,086, primarily due to a 24% decrease in the average retail price of a gallon of fuel (a $1,221,577 decrease), offset by an increase in the number of fuel gallons sold (which generated an additional $291,994), and a $279,077 increase in inside sales (grocery & other merchandise and prepared food & fountain). Retail fuel sales for the fiscal year were $4,214,802, a decrease of 18.1%. Fuel gallons sold increased 7.4% to 2.0 billion gallons. Inside sales increased 10.8% to $2,854,786, primarily as a result of a $81,018 increase from stores that were built or acquired after April 30, 2014, and a $54,845 increase from the rollout and expansion of our recent operating programs in our stores (expanded hours at select locations, stores with pizza delivery, and major remodels).

Total gross profit margin was 22.7% for fiscal 2016 compared with 18.5% for the prior year. The fuel margin increased to 9.1% in fiscal 2016 from 6.8% in fiscal 2015 primarily due to a steady fall in wholesale costs midyear combined with volatility in wholesale fuel prices, contributing to a stronger margin. The grocery & other merchandise margin was consistent at 31.9% in fiscal 2016 compared to 32.1% in fiscal 2015. The prepared food & fountain margin increased to 62.5% from 59.7% primarily due to the lower commodity costs during fiscal 2016.

Operating expenses increased 9.7% ($93,381) in fiscal 2016 primarily due to an increase from stores built or acquired after April 30, 2014 ($31,137), and the expansion of our operating programs noted above ($21,256). The majority of all operating expenses are wages and related costs.

Depreciation and amortization expense increased 9.5% to $170,937 in fiscal 2016 from $156,111 in fiscal 2015. The increase was due to capital expenditures made in fiscal 2016.

The effective tax rate decreased 80 basis points to 35.2% in fiscal 2016 from 36.0% in fiscal 2015. The decrease in the effective tax rate was primarily due to a decrease in state tax expense (approximately 40 basis points) and an increase in favorable permanent differences (approximately 30 basis points).

Net income increased to $225,982 in fiscal 2016 from $180,628 in fiscal 2015. The increase was due primarily to the increase in the number of fuel gallons sold and a slight increase in the fuel gross profit margin, as well as an increase in inside sales, including a stronger prepared food margin. However, this was partially offset by an increase in operating expenses and depreciation and amortization.

COMPANY TOTAL REVENUE AND GROSS PROFIT BY CATEGORY

	Years ended April 30,
	2017				2016				2015
Total revenue by category
Fuel	$	4,414,128			$	4,214,802			$	5,144,385
Grocery & other merchandise	2,087,349				1,974,073				1,794,822
Prepared food & fountain	953,430				880,713				780,887
Other	51,680				52,498				47,122
	$	7,506,587			$	7,122,086			$	7,767,216
Gross profit by category (1)
Fuel	$	378,347			$	381,659			$	351,155
Grocery & other merchandise	657,190				629,234				575,510
Prepared food & fountain	594,024				550,292				466,056
Other	51,600				52,436				47,064
	$	1,681,161			$	1,613,621			$	1,439,785

INDIVIDUAL STORE COMPARISONS (2)

	Years ended April 30,
	2017				2016				2015
Average retail sales	$	3,817			$	3,704			$	4,133
Average retail inside sales	1,561				1,505				1,384
Average gross profit on inside items	633				618				554
Average retail sales of fuel	2,256				2,199				2,748
Average gross profit on fuel (3)	194				202				194
Average operating income (4)	233				280				256
Average number of gallons sold	1,053				1,015				968

(1)	Gross profits represent total revenue less cost of goods sold. Gross profit is given before charges for depreciation, amortization, and credit card fees. Cost of goods sold includes the costs we incur to acquire fuel and merchandise, including excise taxes, less renewable fuel credits (RINs).

(2)	Individual store comparisons include only those stores that had been in operation for at least one full year and remained open on April 30 of the fiscal year indicated.

(3)

Retail fuel profit margins have a substantial impact on our net income. Profit margins on fuel sales can be adversely affected by factors beyond our control, including oversupply in the retail fuel market, uncertainty or volatility in the wholesale fuel market, and price competition from other fuel marketers. Any substantial decrease in profit margins on retail fuel sales or the number of gallons sold could have a material adverse effect on our earnings.

(4)	Average operating income represents retail sales less cost of goods sold and operating expenses attributable to a particular store; it excludes federal and state income taxes, and Company operating expenses not attributable to a particular store.

SAME STORE SALES GROWTH BY CATEGORY

	Years ended April 30,
	2017			2016			2015
Fuel gallons (1)	2.1	%		3.0	%		2.6	%
Grocery & other merchandise (1)	2.9	%		7.1	%		7.8	%
Prepared food & fountain (1) (2)	4.8	%		8.4	%		12.4	%

(1)	The decline in all categories of same store sales for 2017 as compared to 2016 was due to a generally weaker agricultural economy, which has slowed the growth in customer traffic to stores.

(2)	The decline in same store sales growth for 2016 as compared to 2015 was impacted by the timing of implementation on the continued rollout of pizza delivery and major remodels in 2016, as well as cycling against strong results from the prior year.

The same store sales comparison includes aggregated individual store results for all stores open throughout both periods presented. When comparing quarterly data the store must be open for each entire quarter. When comparing annual data, the store must be open for each entire fiscal year being compared.

Remodeled stores that remained open or were closed for just a very brief period of time (less than a week) during the period being compared remain in the same store sales comparison. If a store is replaced, either at the same location (razed and rebuilt) or relocated to a new location, it is removed from the comparison until the new store has been open for each entire period being compared. Newly constructed and acquired stores do not enter the calculation until they are open for each entire period being compared as well.

Use of Non-GAAP Measures

We define EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA by excluding the gain or loss on disposal of assets as well as impairment charges. Neither EBITDA nor Adjusted EBITDA are presented in accordance with GAAP.

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

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

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

The following table contains a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months and years ended April 30, 2017 and 2016, respectively:

	Three months ended								Years ended
	April 30, 2017				April 30, 2016				April 30, 2017				April 30, 2016
Net income	$	30,078			$	47,044			$	177,485			$	225,982
Interest, net	10,362				9,948				41,536				40,173
Depreciation and amortization	51,947				45,909				197,629				170,937
Federal and state income taxes	13,242				22,699				92,183				122,724
EBITDA	$	105,629			$	125,600			$	508,833			$	559,816
Loss on disposal of assets and impairment charges	1,488				523				2,298				837
Adjusted EBITDA	$	107,117			$	126,123			$	511,131			$	560,653

For the three months ended April 30, 2017, EBITDA and Adjusted EBITDA were down 15.9% and 15.1% respectively, when compared to the same period a year ago. The decrease was due to slowing customer traffic due to challenges in the broader agricultural economy, lower fuel margins, and increases in operating expenses, primarily wages. These reductions were partially offset by operating 47 more stores than the same period a year ago, increased fuel gallons sold, and increases in inside sales. For the year ended April 30, 2017, EBITDA and Adjusted EBITDA were down 9.1% and 8.8% respectively. The decrease was due to slowing customer traffic due to challenges in the broader agricultural economy, lower fuel margins, and increases in operating expenses, primarily wages. These reductions were partially offset by operating 47 more stores than the same period a year ago, increased fuel gallons sold, and increases in inside sales.

Critical Accounting Policies

Critical accounting policies are those accounting policies that management believes are important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective judgments, often because of the need to estimate the effects of inherently uncertain factors.

Inventory

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.

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 incrementally 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 rebate is earned per the contract. Reimbursements of an operating expense (e.g., advertising) are recorded as reductions of the related expense.

The Company takes title to RINs when we purchase clear unleaded gasoline or diesel fuel, and purchase ethanol or biodiesel separately. The ethanol or biodiesel is blended in the tanker during transit to the store and the blending is the event that enables the RIN to be separated from the ethanol or biodiesel it identifies and allows it to be sold to third parties. The RINs are recorded as a reduction in the cost of goods sold in the period when the Company commits to a price and agrees to sell all of the RINs acquired during a specified period.

Long-lived Assets

The Company periodically 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 the carrying value of the assets exceeds their estimated fair value. 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. Fair value is based on management’s estimate of the future cash flows to be generated and the amount that could be realized from the sale of assets in a current transaction between willing parties, which are considered Level 3 inputs. The estimate is derived from offers, actual sale or disposition of assets subsequent to year-end, and other indications of fair value. In determining whether an asset is impaired, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which for the Company is generally on a store-by-store basis. The Company recorded impairment charges of $705 in fiscal 2017, $1,625 in fiscal 2016, and $1,785 in fiscal 2015, a portion of which was related to replacement store and acquisition activities. Impairment charges are a component of operating expenses.

Self-insurance

We are 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 potential 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 balances of our self-insurance reserves were $37,984 and $35,535 for the years ended April 30, 2017 and 2016, respectively.

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, 2017, there was $132,806 of goodwill and management’s analysis of recoverability completed as of the fiscal year-end yielded no evidence of impairment and no events have occurred since the annual test indicating a potential impairment.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (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 is effective for the Company on May 1, 2018. Early application is not permitted. To address implementation of ASU 2014-09 and evaluate its impact on our consolidated financial statements, we have developed a project plan to evaluate our revenue streams and related internal controls. Since a majority of our revenue is derived from point of sale transactions, we do not believe the implementation of this standard will have a material impact on our consolidated financial statements. However, certain areas of our consolidated financial statements that will be impacted include, but are not limited to, recognition of estimated breakage upon the sale of the Company’s gift cards and deferral of an estimated portion of revenue expected to be redeemed in the future through Casey’s pizza box tops and punch card programs. We expect the impact of such changes to be immaterial to the consolidated financial statements. The Company expects to adopt the new standard using the full retrospective method beginning May 1, 2018 and will further disclose the impact to the financial statements at that point.

In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), which provided guidance on the presentation of debt issuance costs. The new standard required 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 Company adopted this standard in the quarter ended July 31, 2016, retrospectively to all prior periods. The adoption of this standard did not have a material impact on the 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 the update was 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 was effective for the Company beginning May 1, 2017 with early

adoption permitted. The Company elected to early adopt this standard in the quarter ended July 31, 2016. See footnote 4 to the Consolidated Financial Statements included herein for further discussion of the impact of adoption.

Liquidity and Capital Resources

Due to the nature of our business, cash provided by operations is our primary source of liquidity. We finance our inventory purchases primarily from normal trade credit aided by relatively rapid inventory turnover. This turnover allows us to conduct operations without large amounts of cash and working capital. As of April 30, 2017, the Company’s ratio of current assets to current liabilities was 0.79 to 1. The ratio at April 30, 2016 and at April 30, 2015 was 0.84 to 1 and 0.84 to 1, respectively. We believe our current $100,000 bank line of credit, together with the current cash and cash equivalents and the future cash flow from operations will be sufficient to satisfy the working capital needs of our business.

Net cash provided by operating activities decreased $13,113 (2.8%) in the year ended April 30, 2017, primarily because of a decrease in net income, partially offset by increases in depreciation and accounts payable. Cash used in investing activities in the year ended April 30, 2017 increased $59,757 (15.1%) primarily due to the increased level of acquisitions and new store construction. Cash flows used in financing activities decreased $46,578 (92.8%), primarily due to proceeds from issuance of long-term debt in fiscal 2017.

Capital expenditures represent the single largest use of Company funds. We believe that by reinvesting in stores, we will be better able to respond to competitive challenges and increase operating efficiencies. During fiscal 2017, we expended $458,865 for property and equipment, primarily for construction, acquisition, and remodeling of stores compared with $400,102 in the prior year. In fiscal 2018, we anticipate expending between $500,000 and $600,000, primarily from existing cash, funds generated by operations, and long-term debt proceeds for our construction, acquisition, and remodeling of stores.

At April 30, 2017, 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 $900 balance owed on the Notes at April 30, 2017 and $0 at April 30, 2016. The line of credit is due upon demand.

As of April 30, 2017, we had long-term debt, net of current maturities, of $907,356 consisting of $569,000 in principal amount of 5.22% Senior notes, $30,000 in principal amount of 5.72% Senior notes, Series A and B; $150,000 in principal amount of 3.67% Senior Notes, Series A, $50,000 in principal amount of 3.75% Senior Notes, Series B, $50,000 in principal amount of 3.65% Senior Notes, Series C, $50,000 in principal amount of 3.72% Senior Notes, Series D, and $8,356 of capital lease obligations.

Interest on the 5.22% Senior notes is payable on the 9th day of each February and August. Principal on the 5.22% Senior notes is payable in full on August 9, 2020. We may prepay the 5.22% notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated August 9, 2010 between the Company and the purchasers of the 5.22% Senior notes.

Interest on the 5.72% Senior notes Series A and Series B is payable on the 30th day of each March and September. Principal on the Senior notes Series A and Series B is payable in various installments beginning September 30, 2012 and continuing through March 2020. We may prepay the 5.72% Senior notes Series A and Series B in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated September 29, 2006 between the Company and the purchasers of the 5.72% Senior notes Series A and Series B.

Interest on the 3.67% Senior notes Series A and 3.75% Series B is payable on the 17th day of each June and December. Principal on the Senior notes Series A and Series B is payable in various installments beginning June 17, 2022 (Series A) and December 17, 2022 (Series B) through December 2028. We may prepay the 3.67% and 3.75% Senior notes in whole or in part at any time in an amount of not less than $2,000 at a redemption price calculated in accordance with the Note Agreement dated June 17, 2013, between the Company and the purchasers of the Senior notes Series A and Series B.

Interest on the 3.65% Senior notes Series C is payable on the 2nd day of each May and November, while the interest on the 3.72% Senior notes Series D is payable on the 28th day of each April and October. Principal on the Senior notes Series C and Series D is payable in various installments beginning May 2, 2025 (Series C) and October 28, 2025 (Series D) through October 2031. We may prepay the 3.65% and 3.72% Senior notes in whole or in part at any time in an amount of not less than

$2,000 at a redemption price calculated in accordance with the Note Agreement dated May 2, 2016, between the Company and the purchasers of the Senior notes Series C and Series D.

To date, we have funded capital expenditures primarily through funds generated from operations, the proceeds of the sale of common stock, issuance of debt, and existing cash. Future capital required to finance operations, improvements, and the anticipated growth in the number of stores is expected to come from cash generated by operations, the bank line of credit, and additional long-term debt or other securities as circumstances may dictate. We do not expect such capital needs to adversely affect liquidity.

The table below presents our significant contractual obligations, including interest, at April 30, 2017:

Contractual obligations	Payments due by period
	Total				Less than 1 year				1-3 years				3-5 years				More than 5 years
Senior notes	$	1,110,707			$	58,127			$	113,679			$	599,274			$	339,627
Capital lease obligations	14,770				900				1,819				1,791				10,260
Operating lease obligations	4,427				1,172				1,659				781				815
Unrecognized tax benefits	5,362				—				—				—				—
Deferred compensation	15,784				—				—				—				—
Total	$	1,151,050			$	60,199			$	117,157			$	601,846			$	350,702

Unrecognized tax benefits relate to uncertain tax positions and since we are not able to reasonably estimate the timing of the payments or the amount by which the liability will increase or decrease over time, the related balances have not been reflected in the above “Payments due by period” table.

At April 30, 2017, the Company had a total of $5,362 in gross unrecognized tax benefits. Of this amount, $3,522 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. The total amount of accrued interest and penalties for such unrecognized tax benefits was $141 as of April 30, 2017. Interest and penalties related to income taxes are classified as income tax expense in our consolidated financial statements. The federal statute of limitations remains open for the tax years 2012 and forward. Tax years 2012 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.

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 Nebraska is examining tax years 2012 through 2014. The state of Kansas is examining tax years 2013 through 2015. Additionally, the IRS is currently examining tax year 2012. The Company has no other ongoing federal or state income tax examinations. The Company currently does not have any outstanding litigation related to tax matters. At this time, management believes it is reasonably possible the aggregate amount of unrecognized tax benefits will decrease by $1,242 within the next 12 months. This expected decrease is due to the expiration of statute of limitations related to certain federal and state income tax filing positions.

Included in long-term liabilities on our consolidated balance sheet at April 30, 2017, was a $15,784 obligation for deferred compensation. As the specific payment dates for the deferred compensation are unknown due to the unknown retirement dates of many of the participants, the related balances have not been reflected in the above “Payments due by period” table. However, known payments of $5,323 will be due during the next 5 years.

At April 30, 2017, we were partially self-insured for workers’ compensation claims in all 15 states of our marketing territory; we also were 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 $21,126 and $20,115, respectively, were issued and outstanding at April 30, 2017 and 2016, on the insurance company’s behalf. We renew the letters of credit on an annual basis.

Forward-looking Statements

This Form 10-K contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements represent our expectations or beliefs concerning future events, including (i) any statements regarding future sales and gross

profit percentages, (ii) any statements regarding the continuation of historical trends, and (iii) any statements regarding the sufficiency of the Company’s cash balances and cash generated from operations and financing activities for the Company’s future liquidity and capital resource needs. The words believe, expect, anticipate, intend, estimate, project and similar expressions are intended to identify forward-looking statements. We caution you that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including without limitations the factors described in this Form 10-K.

We ask you not to place undue reliance on such forward-looking statements because they speak only of our views as of the statement dates. Although we have attempted to list the important factors that presently affect the Company’s business and operating results, we further caution you that other factors may in the future prove to be important in affecting the Company’s results of operations. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause the Company’s actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following:

Competition

Our business is highly competitive and marked by ease of entry and constant change in terms of the numbers and type of retailers offering the products and services found in stores. Many of the food (including prepared foods) and nonfood items similar or identical to those we sell are generally available from a variety of competitors in the communities served by our stores, and we compete with other convenience store chains, gasoline stations, supermarkets, drug stores, discount stores, club stores, mass merchants, and fast-food outlets (with respect to the sale of prepared foods). Sales of nonfuel items (particularly prepared food items) have contributed substantially to our gross profit on retail sales in recent years. Fuel sales are also intensely competitive. We compete for fuel sales with both independent and national brand gasoline stations, other convenience store chains, and several nontraditional fuel retailers such as supermarkets in specific markets. Some of these other fuel retailers may have access to more favorable arrangements for fuel supply than we do or the firms that supply our stores. Some of our competitors have greater financial, marketing, and other resources than we have and therefore may be able to respond better to changes in the economy and new opportunities within the industry.

Fuel Operations

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

Fuel is purchased from a variety of independent national and regional petroleum distributors at current daily prices at the rack in which the fuel is loaded onto tanker trucks. While annual purchase agreements exist with a few distributors, those agreements primarily specify purchasing volumes that must be maintained to be eligible for certain discounts. We typically sell the fuel before the vendor is paid as a result of our short fuel inventory turnover rate. Any substantial change in the payment terms required by fuel vendors could impact the amount of cash and working capital we would need to conduct operations.

Although in recent years suppliers have not experienced any difficulties in obtaining sufficient amounts of fuel to meet our needs, unanticipated national and international events could result in a reduction of fuel supplies available for distribution. Any substantial curtailment in our fuel supply could reduce fuel sales. Further, we believe a significant amount of our business results from the patronage of customers primarily desiring to purchase fuel; accordingly, reduced fuel supplies could adversely affect the sale of nonfuel items. Such factors could have a material adverse effect on our earnings and operations.

Tobacco Products

Sales of tobacco products represent a significant portion of our revenues. Significant increases in wholesale cigarette costs and tax increases on tobacco products as well as national and local campaigns to further regulate and discourage smoking in the United States have had and are expected to continue having an adverse effect on the demand for tobacco products sold in our stores. We attempt to pass price increases on to our customers, but competitive pressures in specific markets may prevent us from doing so. These factors could materially impact the retail price of tobacco products, the gross profit obtained from the tobacco category, the volume of cigarettes and other tobacco products sold by stores, and overall customer traffic, and have a material adverse effect on the Company’s earnings and profits.

Environmental Compliance Costs

The United States Environmental Protection Agency and several of the states in which we do business have adopted laws and regulations relating to underground storage tanks used for petroleum products. In the past, we have incurred substantial costs to comply with such regulations, and additional substantial costs may be necessary in the future. Several states in which we do business have trust fund programs with provisions for sharing or reimbursing corrective action or remediation costs. Any reimbursements received in respect to such costs typically are subject to statutory provisions requiring repayment of the reimbursed funds for any future noncompliance with upgrade provisions or other applicable laws. Although we regularly accrue expenses for the estimated costs related to future corrective action or remediation efforts, there can be no assurance that the accrued amounts will be sufficient to pay such costs or that we have identified all environmental liabilities at all of our current store locations. In addition, there can be no assurance that we will not incur substantial expenditures in the future for remediation of contamination or related claims that have not been discovered or asserted with respect to existing store locations or locations that we may acquire in the future, that we will not be subject to any claims for reimbursement of funds disbursed to us under the various state programs, and/or that additional regulations or amendments to existing regulations will not require additional expenditures beyond those presently anticipated.

Seasonality of Sales

Company sales generally are strongest during its first two fiscal quarters (May–October) relative to the third and fourth fiscal quarters (November–April). In the warmer months, customers tend to purchase greater quantities of fuel and certain convenience items such as beer, pop, and ice. Difficult weather conditions (such as flooding, prolonged rain, or snowstorms) in any quarter, however, may adversely reduce sales at affected stores and may have an adverse impact on our earnings for that period.

Other Factors

Other factors and risks that may cause actual results to differ materially from those in the forward-looking statements include the risk that our cash balances and cash generated from operations and financing activities will not be sufficient for our future liquidity and capital resource needs, tax increases, potential liabilities and expenditures related to compliance with environmental and other laws and regulations, the seasonality of demand patterns, and weather conditions; the increased indebtedness that the Company has incurred to purchase shares of our common stock in our self-tender offer; and the other risks and uncertainties included from time to time in our filings with the SEC. We further caution you that other factors we have not identified may in the future prove to be important in affecting our business and results of operations.

Please see Item 1A of this Form 10-K, entitled “Risk Factors,” for further information on these and other factors that may affect our business and financial results.