Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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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, 2020 and 2019, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended April 30, 2020, 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, 2020, 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 26, 2020 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.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the self-insurance claim liability for workers’ compensation

As discussed in Notes 1 and 10 to the consolidated financial statements, at April 30, 2020, the Company was primarily self-insured for workers’ compensation claims. The self-insurance claim liability for workers’ compensation is determined actuarially 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 variability in the liability estimates. Factors affecting the uncertainty of the claim liability include the (1) loss development factors, which includes the development time frame, and settlement patterns, and (2) expected loss rates, which includes litigation and adjudication direction, and medical treatment and cost trends.

We identified the assessment of the self-insurance claim liability for workers’ compensation as a critical audit matter. The evaluation of the key assumptions used to estimate the liability, specifically the loss development factors and expected loss

rates involved significant measurement uncertainty requiring complex auditor judgment. Specialized skill and knowledge is necessary to evaluate the methods and key assumptions used to determine the liability.

The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s process to determine the self-insurance claim liability for workers’ compensation including controls over the selection of the methods used to determine the liability, and the loss development factors and expected loss rates. We involved actuarial professionals with specialized skill and knowledge, who assisted in:

–assessing the methods used by the Company’s external actuary by comparing them to generally accepted actuarial methods

–evaluating the loss development factors and expected loss rates used by the Company’s external actuary by comparing them to industry and regulatory trends.

/s/ KPMG LLP

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

Des Moines, Iowa

June 26, 2020

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, 2020, 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, 2020, 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, 2020 and 2019, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated June 26, 2020 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 26, 2020

CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In thousands, except share data)

April 30,
20202019
Assets
Current assets
Cash and cash equivalents$78,275$63,296
Receivables48,50037,856
Inventories236,007273,040
Prepaid expenses9,8017,493
Income taxes receivable14,66728,895
Total current assets387,250410,580
Property and equipment, at cost
Land872,151792,601
Buildings and leasehold improvements1,969,5851,770,695
Machinery and equipment2,369,3612,236,123
Finance lease right-of-use assets24,78025,323
Construction in process125,632124,613
5,361,5094,949,355
Less accumulated depreciation and amortization2,037,7081,826,936
Net property and equipment3,323,8013,122,419
Other assets, net of amortization71,76641,154
Goodwill161,075157,223
Total assets$3,943,892$3,731,376
Liabilities and Shareholders’ Equity
Current liabilities
Lines of credit$120,000$75,000
Current maturities of long-term debt570,28017,205
Accounts payable184,800335,240
Accrued expenses
Wages and related taxes34,03939,950
Property taxes36,34832,931
Insurance accruals22,09721,671
Other95,86468,935
Total current liabilities1,063,428590,932
Long-term debt and finance lease obligations, net of current maturities714,5021,283,275
Deferred income taxes435,598385,788
Deferred compensation13,60415,881
Insurance accruals, net of current portion22,86222,663
Other long-term liabilities50,69324,068
Total liabilities2,300,6872,322,607
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, none issued——
Common stock, no par value, 36,806,325 and 36,664,521 shares issued and outstanding at April 30, 2020 and 2019, respectively33,28615,600
Retained earnings1,609,9191,393,169
Total shareholders’ equity1,643,2051,408,769
Total liabilities and shareholders’ equity$3,943,892$3,731,376

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

Years ended April 30,
202020192018
Total revenue$9,175,296$9,352,910$8,391,124
Cost of goods sold (exclusive of depreciation and amortization, shown separately below) (a)7,030,6127,398,1866,621,731
Operating expenses1,498,0431,391,2791,283,046
Depreciation and amortization251,174244,387220,970
Interest, net53,41955,65650,940
Income before income taxes342,048263,402214,437
Federal and state income taxes78,20259,516(103,466)
Net income$263,846$203,886$317,903
Net income per common share
Basic$7.14$5.55$8.41
Diluted$7.10$5.51$8.34
Dividends declared per share$1.28$1.16$1.04
(a) Includes excise taxes of approximately:$1,063,000$988,000$919,000

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share and share amounts)

Shares OutstandingCommon stockRetained earningsShareholders' Equity
Balance at April 30, 201738,765,821$40,074$1,150,546$1,190,620
Net income——317,903317,903
Dividends declared ($1.04 per share)——(39,060)(39,060)
Exercise of stock options40,3771,377—1,377
Repurchase of common stock(1,997,800)(57,186)(158,248)(215,434)
Stock-based compensation65,92415,735—15,735
Balance at April 30, 201836,874,322$—$1,271,141$1,271,141
Implementation of ASU 2014-09——(4,140)(4,140)
Net income——203,886203,886
Dividends declared ($1.16 per share)——(42,471)(42,471)
Exercise of stock options71,5462,290—2,290
Repurchase of common stock(352,592)—(35,247)(35,247)
Stock-based compensation71,24513,310—13,310
Balance at April 30, 201936,664,521$15,600$1,393,169$1,408,769
Net income——263,846263,846
Dividends declared ($1.28 per share)——(47,096)(47,096)
Exercise of stock options66,6382,958—2,958
Stock-based compensation75,16614,728—14,728
Balance at April 30, 202036,806,325$33,286$1,609,919$1,643,205

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Years ended April 30,
202020192018
Cash flows from operating activities
Net income$263,846$203,886$317,903
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization251,174244,387220,970
Stock-based compensation18,12916,41018,800
Loss on disposal of assets and impairment charges3,4951,3842,281
Deferred income taxes49,81045,337(98,178)
Changes in assets and liabilities:
Receivables(10,644)7,189(1,801)
Inventories37,713(29,648)(38,406)
Prepaid expenses(2,308)(1,727)3,413
Accounts payable(140,151)12,45114,751
Accrued expenses26,40030,92715,967
Income taxes15,78322,545(30,053)
Other, net(8,933)(22,527)(5,850)
Net cash provided by operating activities504,314530,614419,797
Cash flows from investing activities
Purchase of property and equipment(438,977)(394,699)(577,421)
Payments for acquisitions of businesses, net of cash acquired(32,706)(68,200)(37,160)
Proceeds from sales of property and equipment5,0415,0695,246
Net cash used in investing activities(466,642)(457,830)(609,335)
Cash flows from financing activities
Proceeds from long-term debt——400,000
Repayments of long-term debt(17,476)(16,000)(15,688)
Net borrowings of short-term debt45,00035,40038,700
Proceeds from exercise of stock options2,9582,2901,377
Payments of cash dividends(45,951)(41,430)(38,780)
Repurchase of common stock—(37,479)(214,683)
Tax withholdings on employee share-based awards(7,224)(5,948)(4,426)
Net cash (used in) provided by financing activities(22,693)(63,167)166,500
Net increase (decrease) in cash and cash equivalents14,9799,617(23,038)
Cash and cash equivalents at beginning of year63,29653,67976,717
Cash and cash equivalents at end of year$78,275$63,296$53,679
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the year for interest, net of amount capitalized$54,277$56,306$48,757
Cash paid (received) for income taxes, net9,364(11,433)24,274
Noncash investing and financing activities
Noncash additions from adoption of ASC 84222,635——
Purchased property and equipment in accounts payable5,32815,61612,014
Shares repurchased in accounts payable——2,232

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 2,207 convenience stores in 16 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail revenue in 2020 by category are as follows: 60% fuel, 28% grocery and other merchandise, and 12% prepared food and 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. Certain amounts in prior year have been reclassified to conform to current year presentation.

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 $87,546 and $80,814 at April 30, 2020 and 2019, respectively. There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at April 30, 2020 and 2019:

Years ended April 30,
20202019
Fuel$33,695$83,204
Merchandise202,312189,836
Total inventory$236,007$273,040

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, including billbacks, are treated as a reduction in cost of goods sold and are recognized primarily based on the purchase of product or shipment of product from the warehouse to the store, or sale of product to our guests. These are recognized in the period earned based on the applicable rebate agreement. Reimbursements of an operating expense (e.g., advertising) are recorded as reductions of the related expense.

Renewable Identification Numbers (RINs) are recorded as a reduction in cost of goods sold in the period when the Company commits to a price and agrees to sell all of the RINs earned during a specified period. The Company includes in cost of goods sold the costs incurred to acquire fuel and merchandise, including excise taxes, less vendor allowances and rebates and RINs. 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 consolidated statements of income.

Capitalized software implementation costs: The Company capitalizes expenditures related 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 useful lives utilized for capitalized software implementation costs range from 3-13 years. As of April 30, 2020 and April 30, 2019, the Company had recognized $38,593 and $27,873 of capitalized software implementation costs, respectively. The outstanding balance is recognized in other assets on the consolidated balance sheets.

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, 2020 and 2019, there was $161,075 and $157,223 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, 2020, 2019, and 2018.

Depreciation and amortization: Depreciation of property and equipment are computed using the straight-line method over the following estimated useful lives:

Buildings25-40 years
Machinery and equipment5-40 years
Finance lease right-of-use assetsLesser of term of lease or life of asset
Leasehold improvementsLesser 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 the related asset is 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, as well as 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 $1,177 in fiscal 2020, $1,167 in fiscal 2019, and $507 in fiscal 2018. Impairment charges are a component of operating expenses.

Excise taxes: Excise taxes approximating $1,063,000, $988,000, and $919,000 on retail fuel sales are included in total revenue and cost of goods sold for fiscal 2020, 2019, and 2018, 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 and other merchandise, prepared food and fountain and other revenue at the time of the sale to the guest. Sales taxes collected from guests and remitted to the government are recorded on a net basis in the consolidated financial statements.

A portion of revenue from sales that include a redeemable box top coupon or points under our Casey’s Rewards program is deferred. The deferred portion of the sale represents the value of the estimated future redemption of the box top coupon or points. The amounts related to redeemable box top coupons and points are deferred until their redemption or expiration. Revenue related to the box top coupons and points issued is expected to be recognized less than one year from the original sale to the guest. As of April 30, 2020 and April 30, 2019, the Company recognized a contract liability of $11,180 and $6,931,

respectively, related to the outstanding box top coupons and Casey's Rewards points, which is included in other accrued expenses on the consolidated balance sheets.

Gift card related revenue is recognized as the gift cards are used by the guest. Gift card breakage revenue is recognized based on the estimated gift card breakage rate over the pro rata usage of the card.

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 a team member has met certain requirements in the award agreement. For example, if retirement provisions are satisfied which allow a team member 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 and unvested restricted stock units with time-based restrictions 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 a long-lived asset at the time an underground storage tank is installed. The Company amortizes the amount added to property and equipment on a straight-line basis 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 2020. The net amount recorded as an increase to the related underground storage tank asset related to asset retirement obligations was $13,416 and $11,793 at April 30, 2020 and 2019, respectively, and is recorded in property and equipment, net of depreciation. The discounted liability was $22,658 and $18,058 at April 30, 2020 and 2019, respectively, and is recorded in other long-term liabilities.

Self-insurance: The Company is primarily self-insured for team member 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 the claim liability include the loss development factors, which includes the development time frame and settlement patterns, and expected loss rates, which includes litigation and adjudication direction, and medical treatment and cost trends. The liability is not discounted. The balance of our self-insurance reserves was $44,959 and $44,334 for the years ended April 30, 2020 and 2019, 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, 2020, 2019, or 2018. However, we do from time to time, participate in a forward buy of certain commodities. These are not accounted for as derivatives under the normal purchase and sale exclusions within the applicable accounting 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 consolidated statements of income over the vesting period of the award, adjusted for certain retirement provisions. Additionally, certain awards include performance and market conditions. The majority of 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, 2020, we operated 2,207 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 guests. 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 guests. We make specific disclosures concerning the three broad merchandise categories of fuel, grocery and other merchandise, and prepared food and fountain because it makes it easier for us to discuss trends and operational initiatives within our business and industry. Although we can separate 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 adopted this guidance as of May 1, 2019 using the modified retrospective approach and elected the cumulative-effect adjustment practical expedient. As a result of the transition method selected, the Company did not restate previously reported comparable periods. Please refer to note 7 for additional information regarding the Company’s adoption of ASC 842.

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

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.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes. The standard includes changes that eliminate certain exceptions related to the approach for intraperiod tax allocation and the methodology for calculating income taxes in an interim period. It also simplifies aspects of the accounting for franchise taxes, certain transactions that result in a step-up in the tax basis of goodwill, and enacted changes in tax laws or rates. The Company is required to adopt this guidance in the first quarter of its fiscal 2022, with early adoption permitted. The Company is currently evaluating the impact the standard has on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard included optional guidance for a limited period of time to help ease the burden in accounting for the effects of reference rate reform. The new standard is effective for all entities through December 31, 2022. The Company does not expect the adoption of this standard to have a material impact on our consolidated financial statements.

2. ACQUISITIONS

During the year ended April 30, 2020, the Company acquired 18 stores through a variety of multi-store and single store transactions with several unrelated third parties. Of the 18 stores acquired, 11 were re-opened as a Casey's store during the 2020 fiscal year, and seven will be opened during the 2021 fiscal year. The majority of the acquisitions meet the criteria to be considered business combinations. The purchase price of 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 as determined by third party appraisals or internal estimates. 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, 2020 is as follows (in thousands):

Assets acquired:
Inventories$680
Property and equipment28,384
Total assets29,064
Liabilities assumed:
Accrued expenses210
Total liabilities210
Net tangible assets acquired28,854
Goodwill3,852
Total consideration paid$32,706

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,
20202019
Total revenue$9,217,749$9,421,773
Net income$265,233$205,987
Net income per common share
Basic$7.18$5.61
Diluted$7.13$5.57

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 (including current maturities) and finance 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 $1,341,000 and $1,272,000, respectively, at April 30, 2020 and 2019.

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

As of April 30,
20202019
Finance lease liabilities (Note 7)$16,746$16,480
5.72% Senior notes due in 14 installments beginning September 30, 2012 and ending March 30, 2020—15,000
5.22% Senior notes due August 9, 2020 (1)569,000569,000
3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028150,000150,000
3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 202850,00050,000
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 203150,00050,000
3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 203150,00050,000
3.51% Senior notes (Series E) due June 13, 2025150,000150,000
3.77% Senior notes (Series F) due August 22, 2028250,000250,000
1,285,7461,300,480
Less current maturities (2)571,24417,205
$714,502$1,283,275

(1) The Company is in the process of refinancing these Senior notes, and expects to execute the applicable note purchase agreement for the refinancing in the near future shortly after the report date.

(2) Long-term debt is presented gross in the table above, but net of unamortized debt issuance costs of $964 and $1,171 on the consolidated balance sheets for the years ended April 30, 2020 and 2019, respectively.

In January 2019, the Company entered into the Credit Facility that 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 Credit Facility contains an expansion option permitting the Company to request an increase of the Credit Facility from time to time up to an aggregate additional $150 million from the lenders or other financial institutions acceptable to the Company and the Administrative Agent, upon the satisfaction of certain conditions, including the consent of the lenders whose commitments would increase. 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 had $120,000 and 75,000 outstanding under the line of credit at April 30, 2020 and 2019, respectively.

Concurrently with this 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, 2020 and 2019. The line of credit is due upon demand.

Interest expense is net of interest income of $860, $595, and $1,583 for the years ended April 30, 2020, 2019, and 2018, respectively. Interest expense is also net of interest capitalized of $5,258, $3,057, and $2,260 during the years ended April 30, 2020, 2019, and 2018, respectively.

The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2020, the Company was in compliance with all such operating and financial covenants.

Listed below are the aggregate maturities of long-term debt, including finance lease obligations, for the 5 years commencing May 1, 2020 and thereafter:

Years ended April 30,Finance LeasesSenior NotesTotal
2021$2,244$569,000$571,244
20222,354—2,354
20232,48420,00022,484
20242,06032,00034,060
202573432,00032,734
Thereafter6,870616,000622,870
$16,746$1,269,000$1,285,746

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.

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 2,618,194 shares available for grant at April 30, 2020 under the 2018 Plan.

We account for stock-based compensation by estimating the grant date fair value of stock options using the Black Scholes model, and the fair value of time-based and performance-based restricted stock unit awards using the closing price of our common stock. 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 shares to be issued under performance-based awards. All awards have been granted at no cost to the grantee and/or non-employee member of the Board.

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The following table summarizes the equity-related grants made during the three-year period ended April 30, 2020:

Date of GrantType of GrantShares GrantedRecipientsVesting DateFair Value at Grant Date
June 1, 2017Restricted Stock Units63,699Key EmployeesJune 1, 2020$7,388
July 14, 2017Restricted Stock Units (1)61,126OfficersJune 15, 2020$6,912
September 28, 2017Restricted Stock8,344Non-Employee Board MembersImmediate$920
March 29, 2018Restricted Stock Units2,150Non-Employee Board MembersSeptember 21, 2018$236
May 24, 2018Restricted Stock Units88,846Key EmployeesMay 24, 2021$8,593
June 8, 2018Restricted Stock Units (1)75,402OfficersJune 8, 2021$7,571
September 5, 2018Restricted Stock Units7,984Non-Employee Board Members2019 Annual Shareholders' Meeting Date$920
June 4, 2019Restricted Stock Units75,959Key EmployeesJune 4, 2022$9,886
June 4, 2019Restricted Stock Units (1)59,579OfficersJune 4, 2022$9,097
June 24, 2019Restricted Stock Units (2)32,786CEOVarious (2)$5,700
September 4, 2019Restricted Stock Units5,504Non-Employee Board Members2020 Annual Shareholders' Meeting Date$919
December 23, 2019Restricted Stock Units (3)5,000CEOVarious (3)$788
Various (4)Restricted Stock Units (4)8,444OfficersVarious (4)$1,368
Various (5)Restricted Stock Units (5)1,763OfficersVarious (5)$354

(1) 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 $*2.3 million *for the 2017 grant, $*2.6 million for the 2018 grant, and $3.1 million for the 2019 grant will be recognized on a straight-line basis over the vesting period, subject to acceleration for retirement provisions.

(2) This grant of restricted stock units is comprised of time-based awards that vest ratably on each June 23, 2020 through 2022, along with a market-based award vesting June 23, 2022. The market-based award incorporates market conditions in determining fair value on the grant date and will range from 0% to 200% of the target. Total market-based expense of approximately $1.8 million will be recognized on a straight-line basis over the vesting period.

(3) This grant of restricted stock units is comprised of performance-based awards which are calculated based upon targets achieved over performance periods from January 1, 2020 to December 31, 2020. If the performance targets are met, the units vest ratably on each January 15, 2021 through 2023.

(4) These grants of restricted stock units were issued to various officers throughout the fiscal year. The grants were comprised of time-based awards and vest in accordance with the agreements, ranging from January 2021 to January 2023.

(5) These grants of restricted stock units were issued to various officers throughout the fiscal year. The grants includes time-based, performance-based and market-based awards. The performance-based awards included in the figure above represent a

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“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 $177 will be recognized on a straight-line basis over the vesting period.

At April 30, 2020, stock options for 43,189 shares (which expire on June 23, 2021) were outstanding. All stock option shares issued are previously unissued authorized shares. Information concerning the issuance of stock options under the 2009 Plan is presented in the following table (no stock option awards have been granted under the 2018 Plan):

Number of option sharesWeighted average option exercise price
Outstanding at April 30, 2017222,050$38.51
Exercised(40,377)34.11
Outstanding at April 30, 2018181,673$39.48
Exercised(71,546)32.02
Forfeited(300)25.26
Outstanding at April 30, 2019109,827$44.39
Exercised(66,638)44.39
Outstanding at April 30, 202043,189$44.39

At April 30, 2020, all outstanding options had an aggregate intrinsic value of $4,622 and a remaining contractual life of 1.17 years. The weighted average exercise price for all remaining outstanding options is $44.39. All options are vested as of April 30, 2020. The aggregate intrinsic value for the total of all options exercised during the year ended April 30, 2020 was $7,412.

Information concerning the issuance of restricted stock units under the 2018 Plan and the 2009 Plan is presented in the following table:

Unvested at April 30, 2017303,400
Granted126,980
Vested(88,700)
Forfeited(2,699)
Unvested at April 30, 2018338,981
Granted172,232
Vested(104,166)
Forfeited(10,530)
Performance Award Adjustments(7,717)
Unvested at April 30, 2019388,800
Granted189,035
Vested(108,484)
Forfeited(25,146)
Performance Award Adjustments29,594
Unvested at April 30, 2020473,799

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, 2020, 2019 and 2018 were $18,129, $16,410, and $18,800, respectively. As of April 30, 2020, there was $17,022 of total unrecognized compensation costs related to the 2018 Plan and 2009 Plan 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.

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In March 2018, the Company announced a second share repurchase program with an aggregate $300 million share repurchase program. The share repurchase authorization was valid for a period of two years. On March 6, 2020, the authorization was extended through the end of the Company’s 2022 fiscal year. The timing and number of repurchase transactions under the program depends on a variety of factors including, but not limited to, market conditions, corporate considerations, business opportunities, debt agreements, and regulatory requirements. The program can be suspended or discontinued at any time. No repurchases were made on that program in fiscal 2020.

5. NET INCOME PER COMMON SHARE

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

Years ended April 30,
202020192018
Basic
Net income$263,846$203,886$317,903
Weighted average shares outstanding-basic36,956,11536,709,94037,778,304
Basic earnings per common share$7.14$5.55$8.41
Diluted
Net income$263,846$203,886$317,903
Weighted-average shares outstanding-basic36,956,11536,709,94037,778,304
Plus effect of stock options and restricted stock units229,713265,447353,795
Weighted-average shares outstanding-diluted37,185,82836,975,38738,132,099
Diluted earnings per common share$7.10$5.51$8.34

There were no options considered antidilutive; therefore, all options were included in the computation of dilutive earnings per share for fiscal 2020, 2019, and fiscal 2018, respectively.

6. INCOME TAXES

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

Years ended April 30,
202020192018
Current tax expense (benefit):
Federal$22,182$10,326(7,057)
State6,2103,8531,769
28,39214,179(5,288)
Deferred tax expense (benefit)49,81045,337(98,178)
Total income tax expense (benefit)$78,202$59,516(103,466)

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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,
20202019
Deferred tax assets:
Accrued liabilities and reserves$15,953$11,705
Property and equipment depreciation27,51224,661
Workers compensation8,3038,277
Deferred compensation3,7813,827
Equity compensation7,0836,727
State net operating losses & tax credits424775
Other1,3351,033
Total gross deferred tax assets64,39157,005
Less valuation allowance4747
Total net deferred tax assets64,34456,958
Deferred tax liabilities:
Property and equipment depreciation(474,829)(420,710)
Goodwill(24,348)(21,560)
Other(765)(476)
Total gross deferred tax liabilities(499,942)(442,746)
Net deferred tax liability$(435,598)(385,788)

At April 30, 2020, the Company had net operating loss carryforwards for state income tax purposes of approximately $97,144, which are available to offset future state taxable income. The state net operating loss carryforwards begin to expire in 2021.

The valuation allowance for state net operating loss deferred tax assets as of April 30, 2020 and 2019 was $47. 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,
202020192018
Income taxes at the statutory rates21.0%21.0%30.4%
Impact of Tax Reform Act—%0.4%(80.5)%
Federal tax credits(1.9)%(2.3)%(2.2)%
State income taxes, net of federal tax benefit4.0%4.3%3.7%
Impact of phased-in state law changes, net of federal benefit(0.2)%(1.8)%0.8%
ASU 2016-09 benefit (share based compensation)(0.5)%(0.6)%(0.8)%
Other0.5%1.6%0.3%
22.9%22.6%(48.3)%

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 $8,907 and $7,287 in gross unrecognized tax benefits at April 30, 2020 and 2019, respectively, which is recorded in other long-term liabilities in the consolidated balance sheets. Of this amount, $7,059 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits increased $1,620 during the twelve months ended April 30, 2020, due primarily to the increase associated with income tax filing positions for the current year exceeding the decrease related to the expiration of certain statute of limitations.

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

20202019
Beginning balance$7,287$6,421
Additions based on tax positions related to current year2,7802,169
Reductions due to lapse of applicable statute of limitations(1,160)(1,303)
Ending balance$8,907$7,287

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $354 and $242 at April 30, 2020 and 2019, 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, 2020 and 2019 was an increase in tax expense of $112 and $51, 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 years 2016 and 2017. 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 $1,800 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 is a lessee in situations where we lease property and equipment, most commonly land or building, from a lessor. The Company is a lessor in situations where the Company owns land or building and leases a portion or all of the property or equipment to a tenant. In both situations, leases are reported in accordance with ASC 842 - Leases. As a lessee, the Company recognizes 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 are initially 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, we have elected to not recognize lease assets and lease liabilities and will recognize lease expense on a straight-line basis over the lease term. The Company records the operating lease liability in accrued expenses and other long-term liabilities and records the finance lease liability within current maturities of long-term debt and long term debt and finance lease obligations on the consolidated balance sheets. We have elected to adopt the package of practical expedients, as well as the land easement practical expedient. All lessor related activity is considered immaterial to the consolidated financial statements.

The leases initially recorded under ASC 842 were recognized, at the time of adoption, at an amount equal to the present value of the lease payments using the incremental borrowing rate of debt based upon the remaining term of the lease. New leases are recognized at the present value of the lease payments using the implicit rate in the lease agreement when it is readily determinable. In the case the implicit rate is not readily determinable, the Company uses the incremental borrowing rate of debt based on the term of the lease.

Several leases have variable payment components of the lease such as commission based payments or payments for property taxes and insurance. For these leases, the Company has not included those variable payments in the calculation of the lease liability as the payments are not in-substance fixed and do not depend on an index or rate. These variable payments will be expensed as incurred. The Company also has options to renew or extend the current lease arrangement on many of our leases. In these situations, if it was reasonably certain the lease would be extended, we have included those extensions within the remaining lease payments at the time of measurement.

Lease right-of-use assets outstanding as of April 30, 2020 consisted of the following (in thousands):

ClassificationApril 30, 2020
Operating lease right-of-use assetsOther assets$21,143
Finance lease right-of-use assetsProperty and equipment$14,583

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Weighted average remaining lease terms, weighted average discount rates, and supplementary cash flow information for outstanding leases were as follows:

April 30, 2020
Weighted-average remaining lease-term - finance lease10.9
Weighted-average remaining lease-term - operating lease20.4
Weighted-average discount rate - finance lease5.34%
Weighted-average discount rate - operating lease4.25%
Right-of-use assets obtained in exchange for new finance lease liabilities (in thousands)$1,520
Right-of-use assets obtained in exchange for new operating lease liabilities (in thousands)$2,840

Future minimum payments under the finance leases and operating leases with initial or remaining terms of one year or more consisted of the following at April 30, 2020 and April 30, 2019:

Years ended April 30, 2020Finance leasesOperating leases
2021$3,118$1,829
20223,1101,814
20233,1161,717
20242,5651,683
20251,1671,686
Thereafter10,76425,335
Total minimum lease payments23,84034,064
Less amount representing interest7,09412,468
Present value of net minimum lease payments$16,746$21,596
Years ended April 30, 2019Capital leasesOperating leases
2020$3,103$1,703
20213,1091,547
20223,0961,354
20233,0981,228
20242,5481,066
Thereafter9,21510,438
Total minimum lease payments24,169$17,336
Less amount representing interest7,689
Present value of net minimum lease payments$16,480

Effective during the third quarter of fiscal year 2020, Casey’s Marketing Company, and the City of Joplin, Missouri (“Joplin”) entered into an agreement in which Joplin agreed to issue up to $51.4 million of taxable industrial development revenue bonds for the purpose of acquiring, constructing, improving, purchasing, equipping and installing a warehouse and distribution facility, which is to be developed and used by the Company. As title transfers to Joplin throughout development and the Company subsequently leases the related asset from Joplin, we have accounted for the transaction under the sale-and-leaseback guidance included in ASC 842-40. We have a purchase option included in the lease agreement for below the fair value of the asset, which prevents the transfer of the assets to Joplin from being recognized as a sale. Accordingly, we have not recognized any gain or loss related to the transfer. Furthermore, we have not derecognized the transferred assets and continue to recognize them in property and equipment on the consolidated balance sheets. The Company has the right and intends to set-off any obligations to make payments under the lease, with proceeds due from the industrial revenue bonds. As of April 30, 2020, we have $5,505 recognized as construction in process in property and equipment on the consolidated balance sheets related to this agreement.

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8. BENEFIT PLANS

401(k) Plan: The Company provides team members with a defined contribution 401(k) Plan. The 401(k) Plan is available to all team members who meet minimum age and service requirements. The Company contributions consist of matching amounts in Company stock and are allocated based on team member contributions. Contributions to the 401(k) Plan were $10,571, $9,918, and $9,614 for the years ended April 30, 2020, 2019, and 2018, respectively.

On April 30, 2020 and 2019, 1,113,882 and 1,261,258 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 former 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 recorded the deferred compensation over the term of employment. The amounts accrued at April 30, 2020 and 2019, respectively, were $3,434 and $3,800. The discount rates were based off of the Company's incremental borrowing rate, and ranged from 2.04% to 2.44% for the year ended April 30, 2020. The discount rates used for the year ended April 30, 2019 ranged from 3.78% to 4.01%. The amount expensed in fiscal 2020 was $269 and the Company expects to pay $635 per year for each of the next three years, and $354 in the fourth and fifth year. Expense incurred in fiscal 2019 and fiscal 2018 was $221 and $112, respectively.

Other post-employment benefits: The Company also has severance and/or deferred compensation agreements with former team members. The amounts accrued at April 30, 2020 and 2019 were $3,793 and $2,870, respectively. The Company expects to pay $1,511 in fiscal 2021 and $401 for each of the four years thereafter under the agreements. The expense (benefit received) incurred in fiscal 2020, 2019, and 2018 related to these agreements was $2,727, $(97), and $131, 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 21 other officers, providing for certain payments in the event of termination in connection with a change of control of the Company.

We have entered into various purchase agreements related to our fuel supply, which include varying volume

commitments. Prices included in the purchase agreements are indexed to market prices. While volume commitments are

included in the contracts, we do not have a history of incurring material penalties related to these provisions. These

contracts are not accounted for as derivatives as they meet the normal purchases exclusion under derivative accounting.

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, 2020 and 2019 of approximately $328 and $381, 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

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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 impact on our consolidated financial position and results of operations.

Other: At April 30, 2020, the Company was primarily 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 $500 for general liability and auto liability and $350 for workers' compensation. To facilitate this agreement, letters of credit approximating $21,526 were issued and outstanding at April 30, 2020 and 2019, on the insurance company’s behalf. Additionally, the Company is self-insured for its portion of team member medical expenses. At April 30, 2020 and 2019, the Company had $44,959 and $44,334, respectively, outstanding for estimated claims relating to self-insurance, the majority of which has been actuarially determined.

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

Year ended April 30, 2020
Q1Q2Q3Q4Year Total
Total revenue
Fuel$1,627,5681,514,4741,376,018999,3525,517,412
Grocery and other merchandise687,918660,562582,407568,0802,498,966
Prepared food and fountain295,877297,846273,630229,8531,097,207
Other15,26614,70416,14315,59861,711
$2,626,6292,487,5862,248,1981,812,8839,175,296
Revenue less cost of goods sold excluding depreciation and amortization and credit card fees
Fuel$150,989140,798124,257198,803614,847
Grocery and other merchandise215,453220,134191,692172,862800,140
Prepared food and fountain184,012181,452164,795137,833668,092
Other15,23214,68116,11915,57261,605
$565,686557,065496,863525,0702,144,684
Net income$85,81581,98133,95962,091263,846
Income per common share
Basic2.332.220.921.687.14
Diluted2.312.210.911.677.10
Year ended April 30, 2019
Q1Q2Q3Q4Year Total
Total revenue
Fuel$1,647,4171,621,8681,233,6201,345,8665,848,770
Grocery and other merchandise644,800618,250543,773562,6992,369,521
Prepared food and fountain281,003283,062256,144254,0861,074,294
Other15,21214,82514,53915,74660,325
$2,588,4322,538,0052,048,0762,178,3979,352,910
Revenue less cost of goods sold excluding depreciation and amortization and credit card fees
Fuel$123,476118,656122,559101,417466,107
Grocery and other merchandise208,925200,193173,512177,188759,817
Prepared food and fountain174,184176,675159,682158,057668,598
Other15,18314,79714,51215,70860,202
$521,768510,321470,265452,3701,954,724
Net income$70,22466,61541,83525,212203,886
Income per common share
Basic1.921.821.140.695.55
Diluted1.901.801.130.685.51

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