By year-end, we had closed 10 of those stores—only because they
were in direct competition with our stores in the same locations—and
had rebranded the remaining 39 as Casey’s General Stores. We expect
the acquired stores to be accretive within a year; their profitability
will be enhanced by the construction of kitchens to support our
proprietary prepared food program.

Our goal for fiscal 2006 was to acquire 30 stores in addition to the
Gas ‘N Shop acquisition and to build 10 new stores. We actually
built 15 stores because there were good opportunities in areas
where there weren’t attractive potential acquisitions. We acquired
an additional 18 stores and at year-end had written agreements
for 6 more stores.

“More important than the number of stores we acquired was
their quality,” said Senior Vice President John Harmon who leads
the acquisition team. “That’s why we were thorough in evaluating
all aspects of the targeted sites. Our due diligence is rigorous,
and we’ve become increasingly proficient at multi-tasking.”

Our goal for fiscal 2007 is to acquire 50 stores and to build 10.
“There are ample acquisition opportunities available as the industry
continues to consolidate,” said Harmon. “We’re currently targeting
several chains in our 9-state territory and also looking at chains
outside our marketing area. Any decisions will be driven by our
business model of focusing on the small-town customer, potential
contribution to earnings, and estimated return on invested capital.”

Whether we build or acquire, our critical mass and vertically
integrated distribution system are advantageous operationally.
Our vertical integration has three main aspects: We operate our
own distribution center; less than 5% of the nation’s convenience
store chains do. We run 141 grocery delivery routes every week;
our trucks arrive at the same store, on the same day, at the same
time each week. We haul nearly 75% of the gasoline distributed
to our stores in our own tankers; our satellite communication
network maximizes efficiency.