Gas Sign
The margin on prepared food & fountain’s sales was a very profitable 62%. The major reason we missed our 63.4% target was the higher cost of goods sold that resulted from switching to a dual cola program at the end of fiscal 2006. Though the loss of our exclusivity contract cost us a little in fiscal 2007 margin, having additional products in our fountain line-up means we can satisfy more customers year in and year out. By the close of 2007, fountain sales were up a remarkable 24%.

Our fourth goal was to hold the percentage increase in operating expenses to less than the percentage increase in gross profit. Our drop in gasoline margin slowed the increase in total gross profit to 10.9% versus 15.2% in fiscal 2006. Expenses rose 13.4% primarily because of a 31.1% increase in bank fees for customers’ credit card charges plus higher wages and utilities.

Our fiscal 2007 expansion goal was to acquire 50 stores and build 10 stores. We actually acquired 52 and built 8. The 33 HandiMart stores we purchased in October helped us exceed our acquisition target and served our priority of purchasing good sites that will flourish under our business model. During the past three fiscal years we have added a total of 148 stores through acquisition.
Our fiscal 2008 goals quantify expectations for building on our 2007 performance:

• Increase same-store gasoline gallons sold 2% with an average margin of 10.7 cents per gallon.

• Increase same-store grocery & other merchandise sales 4.3% with an average margin of 32.2%.

• Increase same-store prepared food & fountain sales 8.4% with an average margin of 62%.

• Hold the percentage increase in operating expenses to less than the percentage increase in gross profit.

• Acquire 50 stores and build 10 stores.

This annual report will show how we plan to meet these goals and how we intend to make sure that no matter how many locations we own, every Casey’s store is
a convenience store and a whole lot more.


Robert Myers signature
Robert J. Myers
President and Chief Executive Officer
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