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, 2023 and 2022, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended April 30, 2023, 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, 2023, 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 23, 2023 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 Matter

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 a 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, 2023, 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. Factors affecting the uncertainty of the claim liability include the (1) loss development factors, which include the development time frame and settlement patterns, and (2) expected loss rates, which include litigation and adjudication direction, and medical treatment and cost trends. As discussed in Notes 1 and 10 to the consolidated financial statements, the Company reported a self-insurance claim liability of $61,168 thousand, which included the self-insurance claim liability for workers’ compensation.

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

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rates, required complex auditor judgment due to the significant measurement uncertainty. Specialized skill and knowledge was necessary to evaluate the methods and key assumptions used to determine the liability.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to determine the self-insurance claim liability for workers’ compensation. This included controls related to the selection of the methods used to determine the liability, and the evaluation of 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 by comparing them to generally accepted actuarial methods
evaluating the loss development factors and expected loss rates used by the Company by comparing them to industry trends.

/s/ KPMG LLP

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

Des Moines, Iowa

June 23, 2023

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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, 2023, 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, 2023, 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, 2023 and 2022, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended April 30, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated June 23, 2023 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 23, 2023

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CASEY’S GENERAL STORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In thousands, except share data)


	April 30,
	2023		2022
Assets
Current assets
Cash and cash equivalents	$	378,869	$	158,878
Receivables	120,547		108,028
Inventories	376,085		396,199
Prepaid expenses	22,107		17,859

Income taxes receivable	23,347		44,071
Total current assets	920,955		725,035
Property and equipment, at cost
Land	1,151,812		1,097,985
Buildings and leasehold improvements	2,629,795		2,445,509
Machinery and equipment	2,783,802		2,695,366
Finance lease right-of-use assets	99,764		75,060
Construction in process	169,796		92,331
	6,834,969		6,406,251
Less accumulated depreciation and amortization	2,620,149		2,425,709
Net property and equipment	4,214,820		3,980,542
Other assets, net of amortization	192,153		187,219
Goodwill	615,342		612,934
Total assets	$	5,943,270	$	5,505,730
Liabilities and Shareholders’ Equity
Current liabilities

Current maturities of long-term debt and finance lease obligations	$	52,861	$	24,466
Accounts payable	560,546		588,783

Accrued expenses
Wages and related taxes	78,791		87,022
Property taxes	51,109		47,556
Insurance accruals	28,856		25,795
Other	154,962		131,056
Total current liabilities	927,125		904,678
Long-term debt and finance lease obligations, net of current maturities	1,620,513		1,663,403
Deferred income taxes	543,598		520,472

Insurance accruals, net of current portion	32,312		27,957
Other long-term liabilities	159,056		148,382
Total liabilities	3,282,604		3,264,892
Commitments and contingencies
Shareholders’ equity
Preferred stock, no par value, none issued	—		—
Common stock, no par value, 37,263,248 and 37,111,667 shares issued and outstanding at April 30, 2023 and 2022, respectively	110,037		79,412
Retained earnings	2,550,629		2,161,426
Total shareholders’ equity	2,660,666		2,240,838
Total liabilities and shareholders’ equity	$	5,943,270	$	5,505,730

See accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)


	Years ended April 30,
	2023		2022		2021
Total revenue	$	15,094,475	$	12,952,594	$	8,707,189
Cost of goods sold (exclusive of depreciation and amortization, shown separately below)	12,022,069		10,189,880		6,350,754

Operating expenses	2,119,942		1,961,473		1,637,191
Depreciation and amortization	313,131		303,541		265,195
Interest, net	51,815		56,972		46,679
Income before income taxes	587,518		440,728		407,370
Federal and state income taxes	140,827		100,938		94,470
Net income	$	446,691	$	339,790	$	312,900
Net income per common share
Basic	$	11.99	$	9.14	$	8.44
Diluted	$	11.91	$	9.10	$	8.38

Dividends declared per share	$	1.52	$	1.39	$	1.32

See accompanying Notes to Consolidated Financial Statements.

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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, 2020	36,806,325	$	33,286	$	1,609,919	$	1,643,205
Net income	—	—		312,900		312,900
Dividends declared ($1.32 per share)	—	—		(49,091)		(49,091)
Exercise of stock options	40,189	1,784		—		1,784
Stock-based compensation (net of tax withholding on employee share-based awards)	103,364	23,881		—		23,881
Balance at April 30, 2021	36,949,878	$	58,951	$	1,873,728	$	1,932,679
Net income	—	—		339,790		339,790
Dividends declared ($1.39 per share)	—	—		(52,092)		(52,092)
Exercise of stock options	3,000	133		—		133
Stock-based compensation (net of tax withholding on employee share-based awards)	158,789	20,328		—		20,328
Balance at April 30, 2022	37,111,667	$	79,412	$	2,161,426	$	2,240,838
Net income	—	—		446,691		446,691
Dividends declared ($1.52 per share)	—	—		(57,488)		(57,488)
Stock-based compensation (net of tax withholding on employee share-based awards)	151,581	30,625		—		30,625
Balance at April 30, 2023	37,263,248	$	110,037	$	2,550,629	$	2,660,666

See accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Years ended April 30,
	2023		2022		2021
Cash flows from operating activities
Net income	$	446,691	$	339,790	$	312,900
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	313,131		303,541		265,195
Amortization of debt issuance costs	1,789		2,527		1,603
Stock-based compensation	47,024		37,976		31,986
Loss (gain) on disposal of assets and impairment charges	6,871		(1,201)		9,680
Deferred income taxes	23,126		82,721		4,123
Changes in assets and liabilities:
Receivables	(12,519)		(33,025)		(26,278)
Inventories	24,090		(76,730)		(50,342)
Prepaid expenses	(4,248)		(6,376)		(1,413)
Accounts payable	(9,483)		165,893		166,546
Accrued expenses	20,292		23,574		65,497
Income taxes	20,652		(35,716)		5,714
Other, net	4,535		(14,233)		18,877
Net cash provided by operating activities	881,951		788,741		804,088
Cash flows from investing activities
Purchase of property and equipment	(476,568)		(326,475)		(441,252)
Payments for acquisitions of businesses, net of cash acquired	(85,569)		(901,638)		(9,356)
Proceeds from sales of property and equipment	17,103		70,118		6,268
Net cash used in investing activities	(545,034)		(1,157,995)		(444,340)
Cash flows from financing activities
Proceeds from long-term debt	—		450,000		650,000
Repayments of long-term debt	(40,970)		(188,537)		(571,661)
Repayments of short-term debt	—		—		(120,000)
Payment of debt issuance costs	(3,940)		(1,149)		(5,525)
Proceeds from exercise of stock options	—		133		1,784
Payments of cash dividends	(55,617)		(51,212)		(47,971)
Tax withholdings on employee share-based awards	(16,399)		(17,648)		(8,105)
Net cash (used in) provided by financing activities	(116,926)		191,587		(101,478)
Net increase (decrease) in cash and cash equivalents	219,991		(177,667)		258,270
Cash and cash equivalents at beginning of year	158,878		336,545		78,275
Cash and cash equivalents at end of year	$	378,869	$	158,878	$	336,545

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for interest, net of amount capitalized	$	56,799	$	54,499	$	48,508
Cash paid for income taxes, net	90,398		49,565		80,916
Noncash investing and financing activities

Purchased property and equipment in accounts payable	27,905		46,659		9,204

See accompanying Notes to Consolidated Financial Statements.

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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 (collectively referred to as the "Company") operate 2,521 convenience stores in 16 states, primarily in the Midwest. Many of the stores are located in smaller communities, often with populations of less than 5,000.

Principles of consolidation: The consolidated financial statements include the financial statements of Casey’s General Stores, Inc. and its wholly-owned subsidiaries. All material 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 ("U.S. GAAP") 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, treasury bills, and credit card, debit card and electronic benefits transfer transactions that process within three days.

Receivables: Receivables is primarily comprised of balances outstanding from credit card companies which are not processed within three days and balances outstanding from vendor rebates. The Company records credit card receivables at the time of the related sale to the guest. Vendor rebates are recorded based upon the applicable agreements. Uncollectible accounts were immaterial during the periods presented. Below is a summary of the receivable values at April 30, 2023 and 2022:


	Years ended April 30,
	2023		2022
Credit cards	$	46,851	$	57,724
Vendor rebates	54,979		40,045
Other	18,717		10,259
Total receivables	$	120,547	$	108,028

Inventories and cost of goods sold: Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel inventories, 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 $138,962 and $114,731 at April 30, 2023 and 2022, respectively. There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at April 30, 2023 and 2022:


	Years ended April 30,
	2023		2022
Fuel	$	115,095	$	131,823
Merchandise	260,990		264,376
Total inventories	$	376,085	$	396,199

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. These amounts 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 assigned to gallons of renewable fuels produced and are used to track compliance with the renewable fuel standard. At times, we purchase fuel components (ethanol, gasoline, biodiesel or diesel) and blend those components into a finished product in a fuel truck. This process enables the Company to take title to the RIN assigned to each gallon of ethanol or biodiesel produced. RINs are recorded as a reduction in cost of goods sold at the contracted sales price, in the period when the Company transfers the RIN. The Company does not record inventories on the balance sheet related to RINs, as they are acquired at no cost to the Company.

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. Warehousing costs are recorded within operating expenses on the consolidated statements of income.

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Capitalized software implementation costs: The Company capitalizes expenditures related to the implementation of software-as-a-service as incurred. These costs are expensed on a straight-line basis within operating expenses, typically over the contractual life of the related software. The useful lives utilized for capitalized software implementation costs range from 2-13 years. As of April 30, 2023 and April 30, 2022, the Company had recognized $42,495 and $41,337 of capitalized software implementation costs, respectively. The outstanding balance is recognized in other assets, net of amortization on the consolidated balance sheets. The Company has recognized amortization of $12,302 in fiscal 2023, $9,449 in fiscal 2022 and $8,553 in fiscal 2021 within operating expenses on the consolidated statements of income.

Goodwill: As of April 30, 2023 and 2022, there was $615,342 and $612,934 of goodwill recognized, respectively. Goodwill is tested for impairment at least annually. The Company used a qualitative approach to assess the recoverability of goodwill at year-end. Management’s analysis of recoverability completed as of the fiscal year-end indicated no evidence of impairment for the years ended April 30, 2023, 2022, and 2021.

Contractual customer relationships: As the result of the prior year acquisition of Buchanan Energy, the Company recognized approximately $31,100 of contractual customer relationships. These assets were valued using the multi-period excess earnings method. The contractual customer relationships are amortized on a straight-line basis over a useful life of 15 years and are included within other assets, net of amortization in the consolidated balance sheets as of April 30, 2023. As of April 30, 2023 and April 30, 2022, the Company has recognized $26,953 and $29,027 of contractual customer relationships, which was net of accumulated amortization of $4,147 and $2,073 respectively. The Company expects to recognize $2,073 of annual amortization expense related to contractual customer relationships over the next 5 years.

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


Buildings			25-40 years
Machinery and equipment			3-40 years
Finance lease right-of-use assets			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 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 actively marketing 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 typically 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 $3,500 in fiscal 2023, $1,056 in fiscal 2022, and $3,846 in fiscal 2021. Impairment charges are a component of operating expenses.

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 the consolidated statements of 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 general merchandise, prepared food and dispensed beverage 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.

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A portion of revenue from sales that include a redeemable digital 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 digital box top coupon or points. The amounts related to redeemable digital box top coupons and points are deferred until their redemption or expiration. Revenue related to the digital 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, 2023 and April 30, 2022, the Company recognized a contract liability of $55,561 and $41,577, respectively, related to the outstanding digital 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. As of April 30, 2023 and April 30, 2022, the Company recognized a liability of $17,463 and $15,509, respectively, related to outstanding gift cards, which is included in other accrued expenses on the consolidated balance sheets.

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 recipient has met certain requirements in the award agreement. For example, if retirement provisions are satisfied which allow a recipient 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 depreciates 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.

The discounted liability was $36,978 and $28,604 at April 30, 2023 and 2022, respectively, and is recorded in other long-term liabilities on the consolidated balance sheets.

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 using actuarial methods 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 $61,168 and $53,752 for the years ended April 30, 2023 and 2022, respectively. See additional discussion in Note 10.

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, 2023, 2022, or 2021. From time to time, we participate in a forward buy of certain commodities - see further discussion in Note 9. These are not accounted for as derivatives under the normal purchases 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. Forfeitures are recognized as they occur. Additionally, certain awards include performance and market conditions. The majority of performance-based awards are based on either the achievement of a three-year average return on invested capital (ROIC) or three-year cumulative earnings before interest, income taxes, depreciation, and amortization (EBITDA). 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. Additionally, if the Company's relative total shareholder return over the performance period is in the bottom or top quartile of the companies comprising the S&P 500, the performance-based shares included will be adjusted downward by 25%, or upward by 25%, respectively (the "TSR Modifier"). The fair value of these awards is determined using a Monte Carlo simulation as of the date of the grant. For the market-based portion of these awards, the stock-based compensation expense will not be adjusted should the target awards vary from actual awards.

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Segment reporting: As of April 30, 2023, we operated 2,521 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 categories of fuel, grocery and general merchandise, and prepared food and dispensed beverage 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 November 2021, the FASB issued ASU 2022-10, Governmental Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance. The standard is an effort to increase transparency of government assistance by requiring disclosures related to the type of assistance, the accounting treatment for the assistance, and the effect of the assistance on the financial statements. The Company was required to adopt this guidance in the first quarter of this fiscal year. The adoption of this standard did not have a material impact on our consolidated financial statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50). The standard included guidance related to supplier finance programs and requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program. The new standard is effective for the Company on May 1, 2023. While the new standard could result in enhanced disclosures, we do not expect this standard to materially impact the consolidated financial statements.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The standard extends the period of time preparers can utilize the reference rate reform relief guidance in Topic 848, and became effective immediately. During the year, we entered into a new credit agreement which, in part, removed the LIBO Rate from applicable debt agreements. See Note 3 for additional information related to the new credit agreement (see “New Credit Agreement” section). The adoption of this standard did not have a material impact on our consolidated financial statements.

2. ACQUISITIONS

Current Period Acquisitions

During the year ended April 30, 2023, the Company acquired 47 stores, of which 26 stores were acquired from Minit Mart LLC pursuant to the terms and conditions of an asset purchase agreement. The majority of these acquisitions meet the criteria to be considered business combinations. The purchase price of the stores was determined 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 internal estimates. Fair values were determined using Level 3 inputs (see Note 3). 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. Goodwill of $2,408 was recognized as the result of the current year acquisitions and is primarily attributable to the location of the stores in relation to our footprint and expected synergies. All of the goodwill associated with these transactions will be deductible for income tax purposes over 15 years. Acquisition-related transaction costs are recognized as period costs as incurred.

The aggregate purchase price for the acquisitions totaled $85,569, which was paid in cash upon closing using available cash on hand.

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Allocation of the purchase price for the transactions in aggregate for the year ended April 30, 2023, is as follows (in thousands):


Assets acquired:
Inventories	$	3,976
Property and equipment	79,556
Goodwill	2,408
Total assets	85,940
Total liabilities	371
Net assets acquired and total purchase price	$	85,569

The Company recognized approximately $17,325 of revenue related to the acquired locations in the consolidated statements of income for the year ended April 30, 2023. The amount of net income related to the acquired locations was not material for the year ended April 30, 2023.

Pro Forma Information

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):


	For the year ended April 30,
	2023		2022
Total revenue	$	15,438,809	$	13,302,097
Net income	$	447,320	$	341,235
Net income per common share
Basic	$	12.00	$	9.18
Diluted	$	11.92	$	9.13

Prior Period Acquisitions

Buchanan Energy

On May 13, 2021, the Company closed on the acquisition of 100% of the equity interest in Buchanan Energy (and certain of its related subsidiaries and affiliated entities), owner of Bucky’s Convenience Stores. The transaction included 92 retail locations (consisting of 24 stores in Nebraska, 56 in Illinois, five in Iowa, three in Missouri, and four in Texas), a dealer network of 81 stores where Casey’s manages fuel wholesale supply agreements to these stores, as well as several parcels of land which may be used for new store construction. Three of the retail locations were divested shortly after closing as part of a consent order with the Federal Trade Commission. During the fourth quarter of the 2022 fiscal year, the Company sold four stores and one parcel of land in Texas for an aggregate sale price of $41,000, subject to customary post-closing adjustments. We did not record a material gain or loss related to the sale.

The Company expects to achieve certain synergies over time, in part, through the reduction of duplicate processes, improvements in purchasing power, installing our kitchens, and expanding merchandise offerings.

The aggregate purchase price for the acquisition totaled $571,842, which is net of a working capital adjustment of $5,400. Upon closing, $577,242 was paid in cash using available cash on hand, proceeds from a $300 million term loan and a draw on a revolving credit facility. The draw on the revolving credit facility was repaid during the first quarter of the 2022 fiscal year. The working capital adjustment was received during the fourth quarter of the 2022 fiscal year.

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The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. We utilized a third-party valuation specialist to assist in valuing the contractual customer relationships, leases, and property and equipment acquired.


Assets acquired:
Cash and cash equivalents	$	5,092
Receivables	225
Inventories	18,516
Prepaid expenses	150
Property and equipment	306,818
Contractual customer relationships	31,100
Deferred income taxes	1,343
Finance lease right-of-use assets	9,421
Operating lease right-of-use assets	11,236
Other assets	1,774
Goodwill	254,679
Total assets	640,354
Liabilities assumed:
Accounts payable	30,212
Accrued expenses	8,395
Finance lease liabilities	11,101
Operating lease liabilities	15,087
Other long-term liabilities	3,717
Total liabilities	68,512
Net assets acquired and total purchase price	$	571,842

The goodwill acquired was assigned to the retail reporting unit in the amount of $245,516 and the fuel wholesale reporting unit in the amount of $9,163. The goodwill recognized is primarily attributable to the location of the seller’s stores in relation to our footprint and expected synergies due to expanded inside store offerings and improved purchasing power. Almost all of the goodwill acquired as the result of this transaction will be deductible for income tax purposes over 15 years.

The Company incurred total acquisition-related transaction costs of approximately $8.6 million. This includes approximately $6.7 million incurred during the year ended April 30, 2022, which are included in the consolidated statements of income within operating expenses.

Circle K

Throughout June 2021, the Company closed on the acquisition of 48 stores located in Oklahoma from Circle K pursuant to the terms and conditions of an asset purchase agreement. The aggregate purchase price for the acquisition totaled $41,416, which was paid in cash upon closing using available cash on hand.

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Assets acquired:
Inventories	$	5,299
Property and equipment	6,150
Finance lease right-of-use assets	37,086
Operating lease right-of-use assets	24,113
Deferred income taxes	316
Goodwill	31,346
Total assets	104,310
Liabilities assumed:
Accrued expenses and other long-term liabilities	545
Finance lease liabilities	46,576
Operating lease liabilities	15,773
Total liabilities	62,894
Net assets acquired and total consideration paid	$	41,416

The goodwill recognized from this transaction is primarily attributable to the location of the seller's stores in relation to our footprint and expected synergies due, in part, to expanded inside store and fuel offerings. Almost all of the goodwill acquired as a result of this transaction will be deductible for income tax purposes over 15 years.

Pilot

On December 16, 2021, the Company closed on the acquisition of 40 stores from Pilot Corporation pursuant to the terms and conditions of an asset purchase agreement. The transaction included 39 stores located in Tennessee and one store located in Kentucky. The aggregate purchase price for the acquisition totaled $226,624, which was paid in cash using available cash on hand and certain incremental proceeds from a $150 million term loan.


Assets acquired:
Cash and cash equivalents	$	95
Inventories	6,556
Prepaid expenses	87
Property and equipment	67,365
Deferred income taxes	311
Operating lease right-of-use assets	28,002
Goodwill	154,223
Total assets	256,639
Liabilities assumed:
Accrued expenses and other long-term liabilities	883
Operating lease liabilities	29,132
Total liabilities	30,015
Net assets acquired and total consideration paid	$	226,624

The goodwill recognized from this transaction is primarily attributable to the location of the seller's stores in relation to our footprint and expected synergies due, in part, to expanded inside store offerings. Almost all of the goodwill acquired as a result of this transaction will be deductible for income tax purposes over 15 years.

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

U.S. GAAP requires that each financial asset and liability carried at fair value be classified into one of the following of the fair value hierarchy levels, which is based upon the quality of the inputs used in the valuation. Level 1 inputs are quoted market prices in active markets for identical assets and liabilities. Level 2 inputs are observable market-based inputs or unobservable inputs that are corroborated by market data (excluding those included within Level 1). Level 3 inputs are unobservable inputs that are not corroborated by market data. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. 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) is estimated based on the current rates offered to the Company for debt of the same or similar issuances which are considered Level 2 inputs. The fair value of the Company’s long-term debt was approximately $1,437,000 and $1,508,000, respectively, at April 30, 2023 and 2022. The fair value calculated excludes finance lease obligations of $95,072 and $74,234 outstanding at April 30, 2023 and April 30, 2022, respectively, which are grouped with long-term debt on the consolidated balance sheets.

Prior Credit Agreement

During the fourth quarter, the Company made a $15,625 prepayment on the existing term loan facility under its credit agreement dated January 11, 2019, as amended, by and among the Company, the lenders party thereto and Royal Bank of Canada, as administrative agent (the “Prior Credit Agreement”). On April 21, 2023, the Company subsequently terminated the Prior Credit Agreement, and repaid in full, all outstanding indebtedness thereunder (which as of such date was $250,000 under the term loan facility and $0 under the revolving credit facility).

New Credit Agreement

On April 21, 2023, the Company entered into a new credit agreement, by among the lenders thereto and Wells Fargo Bank, National Association, as administrative agent (the “New Credit Agreement”), to provide for (a) a $250 million unsecured term loan (the “Term Loan Facility”) and (b) an $850 million unsecured revolving credit facility (the “Revolving Facility” and together with the Term Loan Facility, the “Credit Facilities”). The Term Loan Facility was used to refinance the existing term loan under the Prior Credit Agreement, as noted above, and to pay fees and expenses in connection therewith. The Revolving Facility is available for working capital and other general corporate purposes of the Company and its subsidiaries. The transaction was primarily treated as a debt modification for accounting purposes.

Amounts borrowed under the Credit Facilities bear interest at variable rates based upon, at the Company’s option: (a) either Term SOFR or Daily Simple SOFR, in each case plus 0.10% (with a floor of 0.00%) for the interest period in effect, plus an applicable margin ranging from 1.10% to 1.70% or (b) an alternate base rate, which generally equals the highest of (i) the prime commercial lending rate announced by the Administrative Agent as its “prime rate”, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) Adjusted Daily Simple SOFR plus 1.00%, each plus an applicable margin ranging from 0.10% to 0.70% and each with a floor of 1.00%. The Revolving Facility carries a facility fee of 0.15% to 0.30% per annum. The applicable margins and facility fee, in each case, are dependent upon the Company’s quarterly Consolidated Leverage Ratio, as defined in the New Credit Agreement.

The outstanding principal balance on the Term Loan Facility is required to be repaid in equal quarterly installments in an amount equal to 1.25% of the original principal amount, on the last day of each March, June, September, and December, with the balance of the Credit Facilities due on April 21, 2028. The New Credit Agreement contains an expansion option permitting the Company to request an increase of either of the Credit Facilities from time to time not to exceed the greater of (a) $900 million and (b) 100% of Consolidated EBITDA (as defined in the New Credit Agreement) of the Company for the four most recently completed fiscal quarters, 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.

Under the Prior Credit Agreement, the Company had $0 outstanding on the revolving facility, and $265,625 outstanding on the term loan facility at April 30, 2022. Under the New Credit Agreement, the Company had $0 outstanding on the Revolving Facility and $250,000 outstanding on the Term Loan Facility at April 30, 2023.

Bank Line

The Company has an additional unsecured bank line of credit (the "Bank Line") with availability up to $25,000 at April 30, 2023. The $25,000 availability under the Bank Line is encumbered by a $432 letter of credit. 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

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Line as the Federal Funds Offered Rate. There was $0 outstanding at April 30, 2023 and 2022. The Bank Line is due upon demand. Subsequent to year-end, and effective June 1, 2023, the Bank Line was increased from $25,000 to $50,000.

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


	As of April 30,
	2023		2022
Finance lease liabilities (Note 7)	$	95,072	$	74,234
3.67% Senior Notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028	135,000		150,000
3.75% Senior Notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028	45,000		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
2.85% Senior Notes (Series G) due August 7, 2030	325,000		325,000
2.96% Senior Notes (Series H) due August 6, 2032	325,000		325,000
Variable rate term loan facility, requiring quarterly installments ending April 21, 2028	250,000		265,625
Debt issuance costs	(1,698)		(1,990)
	$	1,673,374	$	1,687,869
Less current maturities	52,861		24,466
	$	1,620,513	$	1,663,403

Interest expense is net of interest income of $7,823, $48, and $168 for the years ended April 30, 2023, 2022, and 2021, respectively. Interest expense is also net of interest capitalized of $3,631, $2,031, and $4,537 during the years ended April 30, 2023, 2022, and 2021, respectively.

The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2023, the Company was in compliance with all such operating and financial covenants.

Listed below are the aggregate maturities of long-term debt, excluding finance lease obligations (refer to Note 7 for future minimum payments under finance leases), for the 5 years commencing May 1, 2023 and thereafter:


Years ended April 30,
2024	$	44,500
2025	44,500
2026	204,500
2027	60,500
2028	248,000
Thereafter	978,000
	$	1,580,000

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 of preferred stock 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 Company's shareholders on September 5, 2018. 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

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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 1,661,530 shares available for grant at April 30, 2023, under the 2018 Plan.

We account for stock-based compensation by estimating the grant date fair value of time-based and performance-based restricted stock unit awards using the closing price of our common stock on the applicable grant date, or the date on which performance goals for performance-based units are established, if after the grant date. The time-based awards most commonly vest ratably over a three-year period commencing on the first anniversary of the grant date. The performance-based awards 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 “target." The performance-based awards are also subject to the TSR Modifier (see Note 1 for additional information). 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.

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.

The following table presents a summary of our RSU activity during the three-year period ended April 30, 2023:



		Weighted-Average
		Grant Date Fair
	Shares	Value per Share
Unvested at April 30, 2020	473,799
Granted	209,936	$	178
Vested	(154,842)
Forfeited	(12,275)
Performance Award Adjustments	130,302
Unvested at April 30, 2021	646,920
Granted	154,278	219
Vested	(242,955)
Forfeited	(30,055)
Performance Award Adjustments	(1,794)
Unvested at April 30, 2022	526,394	185
Granted	165,024	218
Vested	(233,533)	166
Forfeited	(40,773)	208
Performance Award Adjustments	133,728	227
Unvested at April 30, 2023	550,840	$	212

Total compensation costs recorded for employees and non-employee board members for the restricted stock unit awards for the years ended April 30, 2023, 2022 and 2021 were $47,024, $37,976, and $31,986, respectively. As of April 30, 2023, there was $41,422 of total unrecognized compensation costs related to the 2018 Plan for costs related to restricted stock units which are expected to be recognized ratably through fiscal 2026, with a weighted average remaining term of 1.0 year. The fair value of restricted stock unit awards vested for the years ended April 30, 2023, 2022 and 2021 were $46,943, $51,046, and, $24,520, respectively, as of the applicable vest date. At April 30, 2023, there were no stock options outstanding.

On, and effective as of, March 3, 2022, the Board authorized a share repurchase program, whereby the Company was authorized to repurchase its outstanding common stock from time-to-time, for an aggregate amount of up to $400 million, exclusive of fees, commissions or other expenses. The Repurchase Program has no set expiration date. The timing and number of repurchase transactions depends on a variety of factors including, but not limited to, market conditions, corporate considerations, business opportunities, debt agreements, and regulatory requirements. The Repurchase Program can be suspended or discontinued at any time.

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5. NET INCOME PER COMMON SHARE

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


	Years ended April 30,
	2023		2022		2021
Basic
Net income	$	446,691	$	339,790	$	312,900
Weighted average shares outstanding-basic	37,266,851		37,158,898		37,092,273
Basic earnings per common share	$	11.99	$	9.14	$	8.44
Diluted
Net income	$	446,691	$	339,790	$	312,900
Weighted-average shares outstanding-basic	37,266,851		37,158,898		37,092,273
Plus effect of stock options and restricted stock units	252,844		197,800		263,865
Weighted-average shares outstanding-diluted	37,519,695		37,356,698		37,356,138
Diluted earnings per common share	$	11.91	$	9.10	$	8.38

There were no stock options outstanding at April 30, 2023 and 2022. In previous years, there were no stock options considered antidilutive; therefore, all stock options were included in the computation of dilutive earnings per share for fiscal 2021.

6. INCOME TAXES

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


	Years ended April 30,
	2023		2022		2021
Current tax expense:
Federal	$	95,336	$	4,382	$	73,950
State	22,365		13,835		16,397
	117,701		18,217		90,347
Deferred tax expense	23,126		82,721		4,123
Total income tax expense	$	140,827	$	100,938	$	94,470

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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,
	2023		2022
Deferred tax assets:
Accrued liabilities and reserves	$	7,031	$	11,699
Deferred revenue	15,565		11,893
Accrued bonus compensation	9,361		7,340
Workers compensation	11,500		9,922
Operating and finance lease obligations	52,464		46,693
Asset retirement obligations	9,404		7,361
Deferred compensation	3,242		3,540
Equity compensation	8,305		9,567

State net operating losses and tax credits	1,807		4,021
Other	3,551		3,548
Total gross deferred tax assets	122,230		115,584
Less valuation allowance	250		250
Total net deferred tax assets	121,980		115,334
Deferred tax liabilities:
Property and equipment depreciation	(617,154)		(597,740)
Goodwill	(43,900)		(34,869)
Other	(4,524)		(3,197)
Total gross deferred tax liabilities	(665,578)		(635,806)
Net deferred tax liability	$	(543,598)	$	(520,472)

At April 30, 2023, the Company had net operating loss carryforwards for state income tax purposes of approximately $94,897, which are available to offset future state taxable income. The state net operating loss carryforwards begin to expire in 2031. In addition, the Company had state tax credit carryforwards of approximately $1,868, which begin to expire in 2026.

The valuation allowance for state net operating loss and state tax credit deferred tax assets as of April 30, 2023 and 2022 was $250. 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,
	2023		2022		2021
Income taxes at the statutory rates	21.0	%	21.0	%	21.0	%

Federal tax credits	(1.3)	%	(1.8)	%	(1.5)	%
State income taxes, net of federal tax benefit	4.0	%	3.8	%	3.5	%
Impact of phased-in state law changes, net of federal benefit	(0.4)	%	(0.8)	%	—	%
ASU 2016-09 benefit (stock-based compensation)	(0.3)	%	(1.0)	%	(0.6)	%
Nondeductible executive compensation	1.1	%	1.2	%	0.9	%
Other	(0.1)	%	0.5	%	(0.1)	%
	24.0	%	22.9	%	23.2	%

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

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total of $10,957 and $10,259 in gross unrecognized tax benefits at April 30, 2023 and 2022, respectively, which is recorded in other long-term liabilities in the consolidated balance sheet. Of this amount, $8,656 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits increased $698 during the twelve months ended April 30, 2023, 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. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	2023		2022
Beginning balance	$	10,259	$	9,316
Additions based on tax positions related to current year	2,867		2,953


Reductions due to lapse of applicable statute of limitations	(2,169)		(2,010)

Ending balance	$	10,957	$	10,259

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $386 and $371 at April 30, 2023 and 2022, 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, 2023 and 2022 was an increase in tax expense of $15 and $1, 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 Company has no 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 $2,500 during the next twelve months mainly due to the expiration of certain statute of limitations. The federal statute of limitations remains open for the tax years 2019 and forward. Tax years 2013 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, building or store equipment, 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 operating lease liabilities in other accrued expenses and other long-term liabilities and records finance lease liabilities within current maturities of long-term debt and long-term debt and finance lease obligations on the consolidated balance sheets. All lessor related activity is considered immaterial to the consolidated financial statements.

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 our incremental borrowing rate of debt based on the term of the lease. The Company commonly has options to renew or extend the current lease arrangement on many of our leases. In these situations, if it is reasonably certain the lease would be extended, we have included those extensions within the remaining lease payments at the time of measurement.

When acquiring leases in a business combination, we retain the lease classification utilized by the seller if it was determined using acceptable methods under ASC 842. As part of the allocation of the purchase price in a business combination, lease terms are compared to market terms utilizing an income approach to determine if leases are favorable or unfavorable. Any favorable or unfavorable leasehold interests identified increase (favorable) or reduce (unfavorable) the right-of-use lease asset and are recognized over the life of the related right-of-use asset.

Lease right-of-use assets outstanding as of April 30, 2023 and 2022 consisted of the following:


	Classification	April 30, 2023		April 30, 2022
Finance lease right-of-use assets	Property and equipment	$	79,344	$	59,677
Operating lease right-of-use assets	Other assets	107,994		104,579

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The summary of lease-related costs included on the consolidated statements of income is included below:


	Years ended April 30,
	2023		2022		2021
Operating lease cost	$	9,346	$	6,721	$	2,290
Finance lease cost:
Amortization of right-of-use assets	$	5,882	$	4,489	$	2,870
Interest on lease liabilities	2,966		2,337		612

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


	April 30, 2023			April 30, 2022
Weighted-average remaining lease-term - finance lease	15.1			19.3
Weighted-average remaining lease-term - operating lease	19.8			20.3

Weighted-average discount rate - finance lease	4.40		%	3.97		%
Weighted-average discount rate - operating lease	4.33		%	3.98		%

Right-of-use assets obtained in exchange for new finance lease liabilities	$	25,166		$	52,525
Right-of-use assets obtained in exchange for new operating lease liabilities	14,642			87,723

Future minimum payments under the finance leases and operating leases consisted of the following at April 30, 2023:


Years ended April 30,	Finance leases		Operating leases
2024	$	12,398	$	8,140
2025	10,913		8,204
2026	10,589		8,118
2027	10,596		8,059
2028	9,644		8,027
Thereafter	76,757		123,773
Total minimum lease payments	$	130,897	$	164,321
Less amount representing interest	35,825		58,392
Present value of net minimum lease payments	$	95,072	$	105,929

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 $51,400 of taxable industrial development revenue bonds for the purpose of acquiring, constructing, improving, purchasing, equipping and installing a warehouse and distribution facility, which has been completed and is currently being used by the Company. As the title of the development was transferred to Joplin and the Company is subsequently leasing 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, 2023, we have recognized the full amount of bonds available as property and equipment on the consolidated balance sheets related to this agreement.

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8. BENEFIT 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 $11,765, $10,983, and $10,382 for the years ended April 30, 2023, 2022, and 2021, respectively.

On April 30, 2023 and 2022, 751,339 and 807,396 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.

9. COMMITMENTS

The Company has entered into employment agreements with its Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer, each of which require minimum annual compensation. The Company also has entered into change of control agreements with its Chief Executive Officer and 31 other officers, providing for certain payments in the event of termination in connection with a change of control of the Company, as defined therein.

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 and sales exclusion under derivative accounting.

We have entered into forward contracts for cheese in order to fix the price per pound for a portion of our expected supply. As of April 30, 2023, the forward contracts run through July 2023. The commitment under these contracts is approximately $14,574. These contracts are not accounted for as derivatives as they meet the normal purchases and sales 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. The majority of the 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, 2023 and 2022 of approximately $268 and $274, 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 impact on our consolidated financial position and results of operations.

The Company is named as a defendant in a lawsuit filed in the United States District Court for the Northern District of Indiana, titled McColley v. Casey’s General Stores, Inc., in which the plaintiff alleges that the Company misclassified its Store Managers as exempt employees under the Fair Labor Standards Act (FLSA). The complaint seeks unpaid wages, liquidated damages and attorneys’ fees for the plaintiff and all similarly situated Store Managers who worked at the Company from February 16, 2015 to the present. On March 31, 2021, the Court granted conditional certification, and to-date, approximately 1,400 current and/or former Store Managers (representing less than 1/4 of those eligible) remain opted-in to participate in the lawsuit. The Company believes that adequate provisions have been made for probable losses related to this matter, and that those, and the reasonably possible losses in excess of amounts accrued, where such range of loss can be estimated, are not material to the Company’s financial position, results of operations or cash flows. The Company believes that its Store Managers are properly classified as exempt employees under the FLSA and it intends to continue to vigorously defend the matter.

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In 2023, the Company received a $15,297 one-time payment from the resolution of a legal matter. These proceeds were recognized as a reduction to operating expenses in the consolidated statements of income.

At April 30, 2023, the Company was primarily self-insured for workers’ compensation claims in all but two states of its operating 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 $2,000 for auto liability and $1,000 for general liability and workers' compensation. Additionally, the Company is self-insured for its portion of Team Member medical expenses. At April 30, 2023 and 2022, the Company had $61,168 and $53,752, respectively, outstanding for estimated claims relating to self-insurance, the majority of which has been actuarially determined.

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