Thanks to our technology initiatives, everyone at Casey’s has better, more timely data on which to base operational decisions. The human capacity we’ve gained by empowering our store managers with more information and greater responsibility makes every store more efficient and more customer-focused. Our infrastructure improvements let us absorb additional Casey’s stores without putting stress on our systems.

“Adding stores increases our purchasing power—the capacity to buy more for less,” said Terry Handley, Chief Operating Officer. “Because of our size, we can negotiate with vendors for better prices, products, and service and can contract for millions of gallons of gasoline at negotiated discounts. As we grow, we are able to create new efficiencies in store delivery and gasoline transport.”

Be assured these advantages are being put to work because there are strong incentives to do so. The financial rewards for everyone at Casey’s from store managers to executive officers remain aligned with gross profit improvement. The alignment is one reason we followed an 8.8% gross profit increase in fiscal 2005 with a 15.2% increase in fiscal 2006.

Our reward system also takes into account controlling operating expenses. Holding our fiscal 2006 operating expense increase to only 10.6% was particularly noteworthy considering that just one component—credit card fees—rose nearly 39% and cost us $27.4 million. We can’t expect credit card charges to diminish as long as the retail price of gasoline remains high, so containing transaction fees will be a challenge for us and for the entire industry in fiscal 2007.

“There will be other challenges as well, but we are in an excellent position to address them,” said Myers. “In the rest of this section of the report, we’ll show you how we used our considerable resources to exceed our fiscal 2006 goals for each of Casey’s three business categories: gasoline, groceries & other merchandise, and prepared food & fountain. More important, we’ll tell you how we plan to improve on our 2006 performance in the new fiscal year.”

GASOLINE

Casey’s customers purchased a total of 1.1 billion gallons of gasoline in fiscal 2006. Our 4.4% increase in same-store gallons sold was one sure indicator that gasoline remains a powerful destination item.