Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and Board of Directors

Casey’s General Stores, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Casey’s General Stores, Inc. and subsidiaries (the Company) as of April 30, 2019 and 2018, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three‑year period ended April 30, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three‑year period ended April 30, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of April 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 28, 2019 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 1987.

Des Moines, Iowa

June 28, 2019

Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors

Casey’s General Stores, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Casey’s General Stores, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of April 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of April 30, 2019 and 2018, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2019, and the related notes (collectively, the consolidated financial statements), and our report dated June 28, 2019 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible 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. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. 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 audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

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.

/s/ KPMG LLP

Des Moines, Iowa

June 28, 2019

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In thousands, except share data)

	April 30,
	2019				2018
Assets
Current assets
Cash and cash equivalents	$	63,296			$	53,679
Receivables	37,856				45,045
Inventories	273,040				241,668
Prepaid expenses	7,493				5,766
Income taxes receivable	28,895				50,682
Total current assets	410,580				396,840
Property and equipment, at cost
Land	792,601				729,965
Buildings and leasehold improvements	1,770,695				1,620,218
Machinery and equipment	2,224,330				2,093,878
Leasehold interest in property and equipment	25,323				13,690
Construction in process	124,613				56,346
	4,937,562				4,514,097
Less accumulated depreciation and amortization	1,826,936				1,611,177
Net property and equipment	3,110,626				2,902,920
Other assets, net of amortization	52,947				29,909
Goodwill	157,223				140,258
Total assets	$	3,731,376			$	3,469,927
Liabilities and Shareholders’ Equity
Current liabilities
Lines of credit	$	75,000			$	39,600
Current maturities of long-term debt	17,205				15,374
Accounts payable	335,240				321,419
Accrued expenses
Wages and related taxes	39,950				27,704
Property taxes	32,931				29,117
Insurance accruals	21,671				20,029
Other	68,935				54,607
Total current liabilities	590,932				507,850
Long-term debt, net of current maturities	1,283,275				1,291,725
Deferred income taxes	385,788				341,946
Deferred compensation	15,881				15,928
Insurance accruals, net of current portion	22,663				19,748
Other long-term liabilities	24,068				21,589
Total liabilities	2,322,607				2,198,786
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, none issued	—				—
Common stock, no par value, 36,664,521 and 36,874,322 shares issued and outstanding at April 30, 2019 and 2018, respectively	15,600				—
Retained earnings	1,393,169				1,271,141
Total shareholders’ equity	1,408,769				1,271,141
Total liabilities and shareholders’ equity	$	3,731,376			$	3,469,927

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Years ended April 30,
	2019				2018				2017
Total revenue	$	9,352,910			$	8,391,124			$	7,506,587
Cost of goods sold (exclusive of depreciation and amortization, shown separately below) (a)	7,398,186				6,621,731				5,825,426
Operating expenses	1,391,279				1,283,046				1,172,328
Depreciation and amortization	244,387				220,970				197,629
Interest, net	55,656				50,940				41,536
Income before income taxes	263,402				214,437				269,668
Federal and state income taxes	59,516				(103,466		)		92,183
Net income	$	203,886			$	317,903			$	177,485
Net income per common share
Basic	$	5.55			$	8.41			$	4.54
Diluted	$	5.51			$	8.34			$	4.48
Dividends declared per share	$	1.16			$	1.04			$	0.96
(a) Includes excise taxes of approximately:	$	988,000			$	919,000			$	866,000

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, 2016	39,055,570			$	72,868			$	1,010,595			$	1,083,463
Net income	—			—				177,485				177,485
Dividends declared ($0.96 per share)	—			—				(37,534		)		(37,534		)
Exercise of stock options	69,150			2,357				—				2,357
Issuance of common stock	28,138			3,526								3,526
Repurchase of common stock	(443,800	)		(49,374		)		—				(49,374		)
Stock-based compensation	56,763			10,697				—				10,697
Balance at April 30, 2017	38,765,821			$	40,074			$	1,150,546			$	1,190,620
Net income	—			—				317,903				317,903
Dividends declared ($1.04 per share)	—			—				(39,060		)		(39,060		)
Exercise of stock options	40,377			1,377				—				1,377
Repurchase of common stock	(1,997,800	)		(57,186		)		(158,248		)		(215,434		)
Stock-based compensation	65,924			15,735				—				15,735
Balance at April 30, 2018	36,874,322			$	—			$	1,271,141			$	1,271,141
Implementation of ASU 2014-09	—			—				(4,140		)		(4,140		)
Net income	—			—				203,886				203,886
Dividends declared ($1.16 per share)	—			—				(42,471		)		(42,471		)
Exercise of stock options	71,546			2,290				—				2,290
Repurchase of common stock	(352,592	)		—				(35,247		)		(35,247		)
Stock-based compensation	71,245			13,310				—				13,310
Balance at April 30, 2019	36,664,521			$	15,600			$	1,393,169			$	1,408,769

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years ended April 30,
	2019				2018				2017
Cash flows from operating activities
Net income	$	203,886			$	317,903			$	177,485
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	244,387				220,970				197,629
Stock-based compensation	16,410				18,800				10,697
Loss on disposal of assets and impairment charges	1,384				2,281				2,298
Deferred income taxes	45,337				(98,178		)		45,190
Changes in assets and liabilities:
Receivables	7,189				(1,801		)		(15,543		)
Inventories	(29,648		)		(38,406		)		4,400
Prepaid expenses	(1,727		)		3,413				(6,171		)
Accounts payable	12,451				14,751				40,332
Accrued expenses	30,927				15,967				14,780
Income taxes	22,545				(30,053		)		(6,226		)
Other, net	(22,527		)		(5,850		)		(5,598		)
Net cash provided by operating activities	530,614				419,797				459,273
Cash flows from investing activities
Purchase of property and equipment	(394,699		)		(577,421		)		(433,392		)
Payments for acquisitions of businesses, net of cash acquired	(68,200		)		(37,160		)		(25,473		)
Proceeds from sales of property and equipment	5,069				5,246				4,140
Net cash used in investing activities	(457,830		)		(609,335		)		(454,725		)
Cash flows from financing activities
Proceeds from long-term debt	—				400,000				100,000
Repayments of long-term debt	(16,000		)		(15,688		)		(15,399		)
Net borrowings of short-term debt	35,400				38,700				900
Proceeds from exercise of stock options	2,290				1,377				2,357
Payments of cash dividends	(41,430		)		(38,780		)		(36,758		)
Repurchase of common stock	(37,479		)		(214,683		)		(47,893		)
Tax withholdings on employee share-based awards	(5,948		)		(4,426		)		(6,813		)
Net cash (used in) provided by financing activities	(63,167		)		166,500				(3,606		)
Net increase (decrease) in cash and cash equivalents	9,617				(23,038		)		942
Cash and cash equivalents at beginning of year	53,679				76,717				75,775
Cash and cash equivalents at end of year	$	63,296			$	53,679			$	76,717
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for interest, net of amount capitalized	$	56,306			$	48,757			$	41,268
Cash (received) paid for income taxes, net	(11,433		)		24,274				52,961
Noncash investing and financing activities
Purchased property and equipment in accounts payable	15,616				12,014				10,883
Shares repurchased in accounts payable	—				2,232				1,481

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 2,146 convenience stores in 16 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail sales in 2019 by category are as follows: 63% fuel, 26% grocery & other merchandise, and 11% prepared food & fountain. The Company’s products are readily available, and the Company is generally 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and 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 replacement cost over the stated LIFO value was $80,814 and $73,494 at April 30, 2019 and 2018, respectively. There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at April 30, 2019 and 2018:

	Years ended April 30,
	2019				2018
Fuel	$	83,204			$	75,817
Merchandise	189,836				165,851
Total inventory	$	273,040			$	241,668

The Company often receives vendor allowances on the basis of quantitative contract terms that vary by product and vendor or directly on the basis of purchases made. Vendor allowances include rebates and other funds received from vendors to promote their products. 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, or 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 adopted ASU 2014-09 in the quarter ended July 31, 2018. As a result, revenue from sales of pizza that include a redeemable box top coupon are deferred until redemption for the portion of the sale that represents the estimated future redemption of the box top coupon. Gift card revenue is now recognized based on the estimated gift card breakage rate over the pro-rata usage of the card.

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. The Company does not record an asset on the balance sheet related to RINs that have not been validated and contracted. Warehousing costs are recorded within operating expenses on the income statement.

Capitalized Software Implementation Costs The Company capitalizes expenditures relates to the implementation of software as incurred. These costs are expensed on a straight-line basis within operating expenses over the contractual life of the contract with the related software provider. The outstanding balance in the individual software arrangements is carried in Other Assets on the balance sheet.

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, 2019 and 2018, there was $157,223 and $140,258 of goodwill, respectively. Management’s analysis of recoverability completed as of the fiscal year-end indicated no evidence of impairment for the years ended April 30, 2019, 2018, and 2017.

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 expected remaining operation of the store or the Company’s plans. Construction in process is reported at cost and not subject to depreciation until placed in service.

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 (See Note 3). 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 $1,167 in fiscal 2019, $507 in fiscal 2018, and $705 in fiscal 2017. Impairment charges are a component of operating expenses.

Excise taxes Excise taxes approximating $988,000, $919,000, and $866,000 on retail fuel sales are included in total revenue and cost of goods sold for fiscal 2019, 2018, and 2017, 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. Unvested shares under equity awards are treated as common shares within the basic earnings per share calculation when an employee has met certain requirements in the award agreement. For example, if retirement provisions are satisfied which allow an employee to avoid forfeiture of the award upon a normal retirement from the Company, it is included in the basic earnings per share calculation. The calculation of diluted earnings per share treats stock options as potential common shares to the extent they are dilutive. The diluted earnings per share calculation does not take into effect any shares that have not met performance or market conditions as of the reporting period.

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 2019. The recorded asset for asset retirement obligations was $11,793 and $11,280 at April 30, 2019 and 2018, respectively, and is recorded in other assets, net of amortization. The discounted liability was $18,058 and $17,087 at April 30, 2019 and 2018, 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 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 balance of our self-insurance reserves was $44,334 and $39,777 for the years ended April 30, 2019 and 2018, 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, 2019, 2018, or 2017. 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 within 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, adjusted for certain retirement provisions. Additionally, certain awards include performance and market conditions. The performance-based awards are based on the achievement of a three year average return on invested capital (ROIC). For these awards, stock-based compensation expense is estimated based on the probable outcome of shares to be awarded adjusted as necessary at each reporting period. The market-based awards are achieved based on our relative performance to a pre-determined peer group. The fair value of these awards is determined using a Monte Carlo simulation as of the date of the grant. For market-based awards, the stock-based compensation expense will not be adjusted should the target awards vary from actual awards.

Segment reporting As of April 30, 2019, we operated 2,146 stores in 16 states. Our convenience 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 revenues and cost of goods sold 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 Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). We adopted the standard on May 1, 2018 using the modified retrospective approach. The Company adopted two changes that affect the timing of recognition of revenues related to gift card breakage income and the redemption of coupon box tops attached to our pizza boxes. The impact related to gift cards was $879, net of $321 of deferred taxes and was an increase to shareholders' equity with a reduction in deferred income. The impact related to box tops was $5,019, net of$1,816 of deferred taxes and was a reduction in shareholders' equity, with an increase in deferred income.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update seeks to increase the transparency and comparability among entities by requiring public entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. To satisfy the standard’s objective, a lessee will recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments. Both the right-of-use asset and lease liability will initially be measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.

In July 2018, the FASB issued ASU 2018-10, Leases (Topic 842) - Codification Improvements which contains several FASB Codification improvements for ASC Topic 842, including several implementation issues and ASU 2018-11, "Leases (Topic 842) - Targeted Improvements" which provides entities with an additional transition method for implementing ASC Topic 842. Entities have the option to apply the new standard at the adoption date, recognizing a cumulative-effect adjustment to the opening balance of retained earnings along with the modified retrospective approach previously identified, both of which include a number of practical expedients that companies may elect to apply. Under the cumulative-effect adjustment comparative periods would not

be restated. Under the modified retrospective approach leases are recognized and measured under the noted guidance at the beginning of the earliest period presented. The new standard is effective for public companies for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. We will adopt this guidance as of May 1, 2019 using the modified retrospective approach and elect the cumulative-effect adjustment practical expedient. As a result of the transition method selected, the Company will not restate previously reported comparable periods. The effect of the adoption will not be material to our financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other than Inventory. We adopted the standard in the quarter ended July 31, 2018. There was no material impact to the Company for the adoption of this standard.

In January 2017, the FASB issued ASU 2017-01, Business Combinations, Clarifying the Definition of a Business. The standard clarifies the definition of a business and adds guidance to assist entities in the determination of whether an acquisition (or disposal) represents assets or a business. The guidance requires the Company to utilize various criteria to evaluate whether or not an acquisition is a business. First, if substantially all of the fair value of the assets acquired is concentrated in a single asset or a group of similar identifiable assets, the acquired assets do not represent a business. If that is not the case, the update provides further guidance to evaluate if the acquisition represents a business focused on the nature and substance of the inputs and process acquired. The standard is generally expected to reduce the number of business combinations, which may impact the allocation of purchase consideration in future acquisitions. Where it is determined that an acquisition is not a business combination, there would be no resulting goodwill recorded. The Company prospectively adopted this guidance for all future acquisitions in the first quarter of fiscal 2019.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard provides guidance on accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in the update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The Company early adopted this guidance retrospectively, in the first quarter of fiscal 2019. The adoption did not have a material impact on our consolidated financial statements.

2. ACQUISITIONS

During the year ended April 30, 2019, the Company acquired 24 stores through a variety of multi-store and single store transactions with several unrelated third parties. Of the 24 stores acquired, 22 were re-opened as a Casey's store during the

2019 fiscal year, and two will be opened during the 2020 fiscal year. The majority of 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 if the acquisition is considered to be a business combination. 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, 2019 is as follows (in thousands):

Assets acquired:
Inventories	$	1,724
Property and equipment	49,698
Total assets	51,422
Liabilities assumed:
Accrued expenses	187
Total liabilities	187
Net tangible assets acquired	51,235
Goodwill	16,965
Total consideration paid	$	68,200

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,
	2019				2018
Total revenue	$	9,474,560			$	8,573,783
Net income	$	209,468			$	325,107
Net income per common share
Basic	$	5.71			$	8.61
Diluted	$	5.67			$	8.53

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 $1,272,000 and $1,277,000, respectively, at April 30, 2019 and 2018.

The carrying amount of the Company’s long-term debt and capital lease obligations by issuance is as follows:

	As of April 30,
	2019				2018
Capitalized lease obligations discounted at 3.70% to 6.00% due in various monthly installments through 2048 (Note 7)	$	16,480			$	8,099
5.72% Senior notes due in 14 installments beginning September 30, 2012 and ending March 30, 2020	15,000				30,000
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
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031	50,000				50,000
3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031	50,000				50,000
3.51% Senior notes (Series E) due June 13, 2025	150,000				150,000
3.77% Senior notes (Series F) due August 22, 2028	250,000				250,000
	1,300,480				1,307,099
Less current maturities	17,205				15,374
	$	1,283,275			$	1,291,725

In January 2019, the Company entered into the Credit Facility which provides for a $300 million unsecured revolving line of credit, a $30 million sublimit for letters of credit and a $30 million sublimit for swingline loans. The maturity date is January 11, 2024. Amounts borrowed under the Credit Facility bear interest at variable rates based upon, at the Company's option, either (a) LIBOR plus an applicable margin or (b) an alternate base rate. The Credit Facility also carries a facility fee between 0.2% and 0.4% per annum based on the Company's consolidated leverage ratio as defined in the credit agreement. The Company has $75,000 outstanding under the new line of credit at April 30, 2019.

Concurrently with this new credit agreement, the Company also reduced the Bank Line from $150,000 to $25,000. The Bank Line bears interest at a variable rate subject to change from time to time based on changes in an independent index referred to in the Bank Line as the Federal Funds Offered Rate (the “Index”). The interest rate to be applied to the unpaid principal balance of the Bank Line was at a rate of 1.0% over the Index. There was $0 outstanding at April 30, 2019 and $39,600 outstanding at April 30, 2018. The line of credit is due upon demand.

Interest expense is net of interest income of $595, $1,583, and $588 for the years ended April 30, 2019, 2018, and 2017, respectively. Interest expense is also net of interest capitalized of $3,057, $2,260, and $1,470 during the years ended April 30, 2019, 2018, and 2017, respectively.

The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2019, the Company was in compliance with all such operating and financial covenants. Listed below are the aggregate maturities of long-term debt, including capitalized lease obligations, for the 5 years commencing May 1, 2019 and thereafter:

Years ended April 30,	Capital Leases				Senior Notes				Total
2020	$	2,205			$	15,000			$	17,205
2021	2,320				569,000				571,320
2022	2,395				—				2,395
2023	2,538				20,000				22,538
2024	2,085				32,000				34,085
Thereafter	4,937				648,000				652,937
	$	16,480			$	1,284,000			$	1,300,480

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 incentive plans The 2018 Stock Incentive Plan (the “2018 Plan”), was approved by the Board in June 2018 and approved by the Company's shareholders on September 5, 2018 ("the "2018 Plan Effective Date"). The 2018 Plan replaced the 2009 Stock Incentive Plan (the "2009 Plan") under which no new awards are allowed to be granted as of the 2018 Plan Effective Date. The 2009 Plan previously replaced and superseded the 2000 Stock Option Plan and the Non-Employees Directors’ Stock Option Plan (collectively with the 2009 Plan, the “Prior Plans”).

Awards under the 2018 Plan may take the form of stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based and equity-related awards. Each share issued pursuant to a stock option and each share with respect to which a stock-settled stock appreciation right is exercised (regardless of the number of shares actually delivered) is counted as one share against the maximum limit under the 2018 Plan, and each share issued pursuant to an award of restricted stock or restricted stock units is counted as two shares against the maximum limit. Restricted stock is transferred immediately upon grant (and may be subject to a holding period), whereas restricted stock units have a vesting period that must expire, and in some cases performance or market conditions that must be satisfied before the stock is transferred. There were 2,984,032 shares available for grant at April 30, 2019 under the 2018 Plan.

We account for stock-based compensation by estimating the fair value of stock options using the Black Scholes model, and value time-based and performance-based restricted stock unit awards granted under the 2018 Plan and the Prior Plans using the closing price of our common stock on the date of grant. For market based awards we use a "Monte Carlo" approach to estimate the value of the awards, which simulates the prices of the Company’s and each member of the performance peer groups' common stock price at the end of the relevant performance period, taking into account volatility and the specifics surrounding each total shareholder return metric under the relevant plan. We recognize these amounts as an operating expense in our consolidated statements of income ratably over the requisite service period using the straight-line method, as adjusted for certain retirement provisions, and updated estimates of performance based awards. All awards have been granted at no cost to the grantee and/or non-employee member of the Board.

The following table summarizes the equity-related grants made during the three-year period ended April 30, 2019:

Date of Grant	Type of Grant	Shares Granted		Recipients	Vesting Date	Fair Value at Grant Date
June 3, 2016	Restricted Stock Units	111,150		Officers & Key employees	June 3, 2019	$13,849
June 3, 2016	Restricted Stock	40,996		Officers & Key Employees	Immediate (Annual Performance Goal)	$5,108
September 16, 2016	Restricted Stock	8,941		Non-Employee Board Members	Immediate	$1,064
June 1, 2017	Restricted Stock Units	63,699		Key Employees	June 1, 2020	$7,388
July 14, 2017	Restricted Stock Units***	61,126		Officers	June 15, 2020	$6,912
September 28, 2017	Restricted Stock	8,344		Non-Employee Board Members	Immediate	$920
March 29, 2018	Restricted Stock	2,150		Non-Employee Board Members	September 21, 2018	$236
May 24, 2018	Restricted Stock Units	88,846		Key Employees	May 24, 2021	$8,593
June 8, 2018	Restricted Stock Units***	75,402		Officers	June 8, 2021	$7,571
September 5, 2018	Restricted Stock Units	7,984		Non-Employee Board Members	2019 Annual Shareholders' Meeting Date	$920

*** This grant of restricted stock units includes time-based, performance-based and market-based awards. The performance-

based awards included in the figure above represent a “target” amount; the final amount earned is based on the satisfaction of certain performance measures over a three-year performance period and will range from 0% to 200% of the “target". The market-based awards incorporate market conditions in determining fair value as of the grant date, and will also range from 0% to 200% of the "target". Total market-based expense of approximately $2.6 million for the 2017 grant and $2.8 million for the 2018 grant will be recognized on a straight-line basis over the vesting period, subject to acceleration for retirement provisions.

At April 30, 2019, stock options for 109,827 shares (which expire in fiscal year 2022) were outstanding. All stock option shares issued are previously unissued authorized shares. Information concerning the issuance of stock options under the Prior Plans is presented in the following table (no stock option awards have been granted under the 2018 Plan):

	Number of option shares			Weighted average option exercise price
Outstanding at April 30, 2016	291,200			$	37.46
Granted	—			—
Exercised	(69,150	)		34.08
Forfeited	—			—
Outstanding at April 30, 2017	222,050			$	38.51
Granted	—			—
Exercised	(40,377	)		34.11
Forfeited	—			—
Outstanding at April 30, 2018	181,673			$	39.48
Granted	—			—
Exercised	(71,546	)		32.02
Forfeited	(300	)		25.26
Outstanding at April 30, 2019	109,827			$	44.39

At April 30, 2019, all outstanding options had an aggregate intrinsic value of $9,660 and a remaining contractual life of 2.17 years. The weighted average exercise price for all remaining outstanding options is $44.39. All options are vested as of April 30, 2019. The aggregate intrinsic value for the total of all options exercised during the year ended April 30, 2019 was $6,868.

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

Unvested at April 30, 2016	272,900
Granted	111,150
Vested	(73,000	)
Forfeited	(7,650	)
Unvested at April 30, 2017	303,400
Granted	126,980
Vested	(88,700	)
Forfeited	(2,699	)
Unvested at April 30, 2018	338,981
Granted	172,232
Vested	(104,166	)
Forfeited	(10,530	)
Unvested at April 30, 2019	388,800

Total compensation costs recorded for employees and non-employee board members for the stock options, restricted stock, and restricted stock unit awards for the years ended April 30, 2019, 2018 and 2017 were $16,410, $18,800, and $10,697, respectively. As of April 30, 2019, there was $7,682 of total unrecognized compensation costs related to the 2018 Plan and Prior Plans for costs related to restricted stock units which are expected to be recognized ratably through fiscal 2022.

During the fourth quarter of the fiscal year ended April 30, 2017, the Company began a share repurchase program, wherein the Company was authorized to repurchase up to an aggregate of $300 million of the Company's outstanding common stock. The share repurchase authorization was valid for a period of two years. From its inception on March 9, 2017, through May 2018, the company completed the $300 million authorization by repurchasing 2,794,192 shares of its common stock.

During the fourth quarter of fiscal year ended April 30, 2018, the Board of Directors authorized an additional $300 million share repurchase program. The share repurchase authorization is valid for a period of two years. No repurchases were made on that program in fiscal 2019.

5. NET INCOME PER COMMON SHARE

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

	Years ended April 30,
	2019				2018				2017
Basic
Net income	$	203,886			$	317,903			$	177,485
Weighted average shares outstanding-basic	36,709,940				37,778,304				39,124,665
Basic earnings per common share	$	5.55			$	8.41			$	4.54
Diluted
Net income	$	203,886			$	317,903			$	177,485
Weighted-average shares outstanding-basic	36,709,940				37,778,304				39,124,665
Plus effect of stock options and restricted stock units	265,447				353,795				454,333
Weighted-average shares outstanding-diluted	36,975,387				38,132,099				39,578,998
Diluted earnings per common share	$	5.51			$	8.34			$	4.48

There were no options considered antidilutive; therefore, all options were included in the computation of dilutive earnings per share for fiscal 2019, 2018, and fiscal 2017, respectively.

6. INCOME TAXES

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

	Years ended April 30,
	2019				2018				2017
Current tax expense (benefit):
Federal	$	10,326			$	(7,057	)		41,300
State	3,853				1,769				5,693
	14,179				(5,288		)		46,993
Deferred tax expense (benefit)	45,337				(98,178		)		45,190
Total income tax expense (benefit)	$	59,516			$	(103,466	)		92,183

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,
	2019				2018
Deferred tax assets:
Accrued liabilities and reserves	$	11,705			$	7,978
Property and equipment depreciation	24,661				24,419
Workers compensation	8,277				7,244
Deferred compensation	3,827				3,846
Equity compensation	6,727				7,158
Federal net operating losses	—				2,769
State net operating losses & tax credits	775				2,336
Other	1,033				889
Total gross deferred tax assets	57,005				56,639
Less valuation allowance	47				47
Total net deferred tax assets	56,958				56,592
Deferred tax liabilities:
Property and equipment depreciation	(420,710		)		(378,756		)
Goodwill	(21,560		)		(19,548		)
Other	(476		)		(234		)
Total gross deferred tax liabilities	(442,746		)		(398,538		)
Net deferred tax liability	$	(385,788	)		(341,946		)

On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted. In accordance with the SEC issued Staff Accounting Bulletin (“SAB”) No. 118, the Company reported the provisional impact of the Tax Reform Act in the fiscal year ended April 30, 2018. The measurement period allowed by SAB No. 118 closed during the quarter ended January 31, 2019. The Company did not record any material adjustments to the provisional amounts that were recorded in fiscal 2018.

At April 30, 2019, the Company had net operating loss carryforwards for state income tax purposes of approximately $84,330, which are available to offset future state taxable income. The state net operating loss carryforwards begin to expire in 2021. In addition, the Company had state tax credit carryforwards of approximately $504, which begin to expire in 2022.

There was a valuation allowance of $47 and $47 for state net operating loss deferred tax assets as of April 30, 2019 and 2018, respectively. The change in the valuation allowance was $0 and $(13) for the years ending April 30, 2019 and 2018, 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:

	Years ended April 30,
	2019			2018			2017
Income taxes at the statutory rates	21.0	%		30.4	%		35.0	%
Impact of Tax Reform Act	0.4	%		(80.5	)%		—	%
Federal tax credits	(2.3	)%		(2.2	)%		(1.8	)%
State income taxes, net of federal tax benefit	4.3	%		3.7	%		2.8	%
Impact of phased-in state law changes, net of federal benefit	(1.8	)%		0.8	%		—	%
ASU 2016-09 Benefit (share based compensation)	(0.6	)%		(0.8	)%		(1.3	)%
Other	1.6	%		0.3	%		(0.5	)%
	22.6	%		(48.3	)%		34.2	%

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had a total of $7,287 and $6,421 in gross unrecognized tax benefits at April 30, 2019 and 2018, respectively, which is recorded in other long-term liabilities in the consolidated balance sheet. Of this amount, $5,780 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits increased $866 during the twelve months ended April 30, 2019, due primarily to the increase associated with income tax filing positions for the current year exceeding the decrease related to the expiration of certain statutes of limitation.

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

	2019				2018
Beginning balance	$	6,421			$	5,362
Additions based on tax positions related to current year	2,169				2,010
Additions for tax positions of prior years	—				322
Reductions for tax positions of prior years	—				—
Reductions due to lapse of applicable statute of limitations	(1,303		)		(1,273		)
Settlements	—				—
Ending balance	$	7,287			$	6,421

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $242 and $191 at April 30, 2019 and 2018, respectively, and is included in other long-term liabilities. Net interest and penalties included in income tax expense for the twelve month periods ended April 30, 2019 and April 30, 2018 was an increase in tax expense of $51 and $50, respectively.

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 IRS is currently examining tax year 2012. The Company has no other ongoing federal or state income tax examinations.

At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax benefits is a decrease of $1,100 during the next twelve months mainly due to the expiration of certain statutes of limitation. 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.

7. LEASES

The Company leases certain property and equipment used in its operations. Generally, the leases are for primary terms of 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,
	2019				2018
Real estate	$	12,516			$	10,997
Equipment	12,807				2,693
	25,323				13,690
Less accumulated amortization	9,536				7,315
	$	15,787			$	6,375

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, 2019:

Years ended April 30,	Capital leases				Operating leases
2020	$	3,103			$	1,703
2021	3,109				1,547
2022	3,096				1,354
2023	3,098				1,228
2024	2,548				1,066
Thereafter	9,215				10,438
Total minimum lease payments	24,169				$	17,336
Less amount representing interest	7,689
Present value of net minimum lease payments	$	16,480

The total rent expense under operating leases was $2,078 in 2019, $2,224 in 2018, and $1,936 in 2017.

8. BENEFIT PLANS

401(k) plan The Company provides employees with a defined contribution 401(k) plan. The 401(k) plan is available to 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 $9,918, $9,614, and $8,181 for the years ended April 30, 2019, 2018, and 2017, respectively.

On April 30, 2019 and 2018, 1,261,258 and 1,389,694 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, 2019 and 2018, respectively, were $3,800 and $4,214. The discount rates were based off of the Company's incremental borrowing rate, and ranged from 3.78% to 4.01% for the year ended April 30, 2019. The discount rate used was 4.5% at April 30, 2018. The amount expensed in fiscal 2019 was $221 and the Company expects to pay $635 per year for each of the next four years, and $354 in the fifth year. Expense incurred in fiscal 2018 and fiscal 2017 was $112 and $131, respectively.

Other post-employment benefits The Company also has severance and/or deferred compensation agreements with two other former employees. The amounts accrued at April 30, 2019 and 2018 were $2,870 and $3,431, respectively. The Company expects to pay $401 for each of the next five years under the agreements. The (benefit received) expense incurred in fiscal 2019, 2018, and 2017 was $(97), $131, and $370, respectively.

9. COMMITMENTS

During the 2019 fiscal year, the Company was a party to an employment agreement with Terry W. Handley with respect to his service as President and Chief Executive Officer. Mr. Handley retired from the Company on June 23, 2019. In connection with the appointment of Darren M. Rebelez as President and Chief Executive Officer effective June 24, 2019, the Company is a party to an employment agreement with Mr. Rebelez that provides he will receive aggregate base compensation of not less than $950 per year, exclusive of incentive payments. The Company also has entered into change of control agreements with its president and CEO and eighteen other officers, providing for certain payments in the event of termination in connection with 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, 2019 and 2018 of approximately $381 and $260, 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 From time to time we may be involved in legal or administrative proceedings or investigations arising from the conduct of our business operations, including, but not limited to, contractual disputes; employment, personnel, or accessibility 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 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 operations.

Other At April 30, 2019, the Company was partially self-insured for workers’ compensation claims in all but two states of its marketing territory. In North Dakota and Ohio, 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 $21,526 and $21,118, respectively, were issued and outstanding at April 30, 2019 and 2018, on the insurance company’s behalf. Additionally, the Company is self-insured for its portion of employee medical expenses. At April 30, 2019 and 2018, the Company had $44,334 and $39,777, respectively, in accrued expenses for estimated claims relating to self-insurance, the majority of which has been actuarially determined.

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

	Year ended April 30, 2019
	Q1				Q2			Q3			Q4			Year Total
Total revenue
Fuel	$	1,647,417			1,621,868			1,233,620			1,345,866			5,848,770
Grocery & other merchandise	644,800				618,250			543,773			562,699			2,369,521
Prepared food & fountain	281,003				283,062			256,144			254,086			1,074,294
Other	15,212				14,825			14,539			15,746			60,325
	$	2,588,432			2,538,005			2,048,076			2,178,397			9,352,910
Revenue less cost of goods sold excluding depreciation and amortization and credit card fees
Fuel	$	123,476			118,656			122,559			101,417			466,107
Grocery & other merchandise	208,925				200,193			173,512			177,188			759,817
Prepared food & fountain	174,184				176,675			159,682			158,057			668,598
Other	15,183				14,797			14,512			15,708			60,202
	$	521,768			510,321			470,265			452,370			1,954,724
Net income	$	70,224			66,615			41,835			25,212			203,886
Income per common share
Basic	1.92				1.82			1.14			0.69			5.55
Diluted	1.90				1.80			1.13			0.68			5.51
	Year ended April 30, 2018
	Q1				Q2			Q3			Q4			Year Total
Total revenue
Fuel	$	1,220,985			1,306,246			1,297,340			1,321,417			5,145,988
Grocery & other merchandise	597,413				572,151			502,750			511,834			2,184,147
Prepared food & fountain	261,840				261,998			240,618			241,163			1,005,621
Other	13,501				13,350			13,895			14,623			55,368
	$	2,093,739			2,153,745			2,054,603			2,089,037			8,391,124
Revenue less cost of goods sold excluding depreciation and amortization and credit card fees
Fuel	$	109,212			110,686			100,272			86,640			406,811
Grocery & other merchandise	190,364				183,133			160,150			159,929			693,576
Prepared food & fountain	163,645				160,510			145,632			143,949			613,736
Other	13,476				13,328			13,870			14,597			55,270
	$	476,697			467,657			419,924			405,115			1,769,393
Net income	$	56,758			48,918			192,965			19,262			317,903
Income per common share
Basic	1.48				1.29			5.13			0.52			8.41
Diluted	1.46				1.28			5.08			0.51			8.34