message to shareholders
Allow me to begin my first message as chief executive officer with sincere thanks to our outstanding management team, the dedicated employees in our stores and at our corporate headquarters, the growing ranks of Casey’s customers, and you in the investment community for making fiscal 2007 another year of progress for Casey’s General Stores, Inc.

Our goals are one of the factors that support the cover’s assertion: we’re a convenience store and a whole lot more. They are performance goals aligned with our business model and long-term strategic plans. They identify benchmarks for enhancing this company’s value now and in the future.

The first four goals, same-store sales and margin targets in our business categories as well as containment of operating expenses, were in place to measure our performance of the stores we already own. The final goal called for continued execution of Casey’s acquisition strategy.

Gasoline, our leading destination item, drew traffic to our stores again in fiscal 2007. We sold 1.19 billion gallons at our pumps, and every gasoline purchase was an opportunity to sell additional items inside
our stores. Our goal for same-store gallons sold was a 2% increase; the actual increase was 1.4%.

In fiscal 2007, the retail environment across our marketing territory held Casey’s average margin to 10.4 cents per gallon. The margin was below our goal because we adhered to our policy of pricing with the competition to avoid giving our customers a reason to take their business elsewhere.

Gasoline customers who came inside our doors helped raise fiscal 2007’s inside sales to $1.12 billion, a 12.5% increase following the previous year’s 9.7% rise. Gross profit on those sales was up 13.6% to $444.4 million. We continued to seek new synergies between the two contributing business categories: grocery & other merchandise and prepared food & fountain.

The performance of our grocery & other merchandise category has improved significantly over the past three years, and we are confident there are more benefits to derive from point of sale and our analysis of the data it provides. Our annual goal was to build on the previous year’s strong performance by increasing same-store sales 3.9% with an average margin of
32.2%. By fiscal year-end, same-store sales were up 4.6%; our margin was 32.7%, aided by a one-time benefit related to cigarettes. Without the one-time benefit, the margin would have been nearly on goal at 32.1%.

Prepared food & fountain continued its momentum to achieve another year of outstanding sales gains. We thought we had set a challenging goal when we called for a 7.9% increase in fiscal 2007 same-store sales, but we were too conservative. Spurred by the growing popularity of our premier prepared foods, same-store sales grew 11%.
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