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 (the Company/Casey’s) operate 2,243 convenience stores in 16 Midwest states. The stores are located primarily in smaller communities, many with populations of less than 5,000. Retail revenue in 2021 by category are as follows: 55% fuel, 31% grocery and other merchandise, 13% prepared food and fountain, and 1% other.
Principles of consolidation: The consolidated financial statements include the financial statements of Casey’s General Stores, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
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 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.
Inventories: Inventories, which consist of merchandise and fuel, are stated at the lower of cost or market. For fuel, 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 $93,158 and $87,546 at April 30, 2021 and 2020, respectively. There were no material LIFO liquidations during the periods presented. Below is a summary of the inventory values at April 30, 2021 and 2020:
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Years ended April 30,
|
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2021
|
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2020
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Fuel
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$
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63,018
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|
|
$
|
33,695
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|
Merchandise
|
223,580
|
|
|
202,312
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Total inventory
|
$
|
286,598
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|
|
$
|
236,007
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|
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. Vendor rebates, including billbacks, are treated as a reduction in cost of goods sold and are recognized primarily based on the purchase of product or shipment of product from the warehouse to the store, or sale of product to our guests. These 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 recorded as a reduction in cost of goods sold in the period when the Company commits to a price and agrees to sell the RIN. The Company does not record an asset on the balance sheet related to RINs that have not been validated and contracted.
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.
Capitalized software implementation costs: The Company capitalizes expenditures related to the implementation of software as incurred. These costs are expensed on a straight-line basis within operating expenses over the contractual life of the contract with the related software provider. The useful lives utilized for capitalized software implementation costs range from 2-13 years. As of April 30, 2021 and April 30, 2020, the Company had recognized $42,881 and $38,593 of capitalized software implementation costs, respectively. The outstanding balance is recognized in other assets on the consolidated balance sheets.
Goodwill: Goodwill and intangible assets with indefinite lives are tested for impairment at least annually. The Company assesses impairment at least annually at year-end using a market based approach to establish fair value. All of the goodwill assigned to the individual stores is aggregated into a single reporting unit due to the similar economic characteristics of the stores. As of both April 30, 2021 and 2020, there was $161,075 of goodwill recognized. Management’s analysis of recoverability completed as of the fiscal year-end indicated no evidence of impairment for the years ended April 30, 2021, 2020, and 2019.
Depreciation and amortization: Depreciation of property and equipment are computed using the straight-line method over the following estimated useful lives:
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Buildings
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25-40 years
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Machinery and equipment
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5-40 years
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Finance lease right-of-use assets
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Lesser of term of lease or life of asset
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Leasehold improvements
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Lesser of term of lease or life of asset
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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 active marketing of 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 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 $3,846 in fiscal 2021, $1,177 in fiscal 2020, and $1,167 in fiscal 2019. Impairment charges are a component of operating expenses.
Excise taxes: Excise taxes approximating $1,053,000, $1,063,000, and $988,000 on retail fuel sales are included in total revenue and cost of goods sold for fiscal 2021, 2020, and 2019, respectively.
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 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 other merchandise, prepared food and fountain 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.
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, 2021 and April 30, 2020, the Company recognized a contract liability of $30,719 and $11,180, 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.
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 Team Member has met certain requirements in the award agreement. For example, if retirement provisions are satisfied which allow a Team Member 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 amortizes 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 $24,411 and $22,658 at April 30, 2021 and 2020, respectively, and is recorded in other long-term liabilities.
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 actuarially 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 $50,526 and $44,959 for the years ended April 30, 2021 and 2020, 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, 2021, 2020, or 2019. 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 purchase 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. 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 a three-year cumulative earnings before interest, income taxes, depreciation, and amortization. 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 applicable peer group, the performance-based shares included will be adjusted downward by 25%, or upward by 25%, respectively (the "TSR Modifier"). The market-based awards are achieved based on our relative performance to a pre-determined peer group. 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.
Segment reporting: As of April 30, 2021, we operated 2,243 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 merchandise categories of fuel, grocery and other merchandise, and prepared food and fountain 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). As a result of this update, we recognized 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 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. In July 2018, the FASB issued ASU 2018-10, Leases (Topic 842) - Codification Improvements which contains several FASB Codification improvements for ASC Topic 842, including several implementation issues and ASU 2018-11, "Leases (Topic 842) - Targeted Improvements" which provides entities with an additional transition method for implementing ASC Topic 842. This update provided the option to apply the new standard at the adoption date, recognizing a cumulative-effect adjustment to the opening balance of retained earnings along with the modified retrospective approach previously identified, both of which include a number of practical expedients that companies may elect to apply. Under the cumulative-effect adjustment approach, comparative periods would not be restated. Under the modified retrospective approach, leases are recognized and measured under the noted guidance at the beginning of the earliest period presented. We adopted this guidance in the first quarter of fiscal 2020, using the modified retrospective approach and elected the cumulative-effect adjustment practical expedient. As a result of the transition method selected, the Company did not restate previously reported comparable periods. Please refer to Note 7 for additional information regarding ASC Topic 842.
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard provides guidance on accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in the update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The Company early adopted this guidance retrospectively, in the first quarter of fiscal 2019. The adoption did not have a material impact on our consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes. The standard includes changes that eliminate certain exceptions related to the approach for intraperiod tax allocation and the methodology for calculating income taxes in an interim period. It also simplifies aspects of the accounting for franchise taxes, certain transactions that result in a step-up in the tax basis of goodwill, and enacted changes in tax laws or rates. The Company is required to adopt this guidance in the first quarter of its fiscal 2022, with early adoption permitted. The Company does not expect the adoption of this standard to have a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard included optional guidance for a limited period of time to help ease the burden in accounting for the effects of reference rate reform. The new standard is effective for all entities through December 31, 2022. The Company does not expect this standard to have a material impact on our consolidated financial statements.
2. ACQUISITIONS
During the year ended April 30, 2021, the Company acquired 5 stores. Of the 5 stores acquired, 2 were re-opened as a Casey's store during the 2021 fiscal year, and the remaining 3 will be opened during the 2022 fiscal year. The majority of these acquisitions meet the criteria to be considered business combinations. The purchase price of the stores were valued 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 third party appraisals or 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. No goodwill was recognized as the result of the current year acquisitions.
Allocation of the purchase price for the transactions in aggregate for the year ended April 30, 2021 is as follows (in thousands):
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Assets acquired:
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Inventories
|
$
|
249
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|
Property and equipment
|
9,117
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Total assets
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9,366
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Liabilities assumed:
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Accrued expenses
|
10
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Total liabilities
|
10
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Net tangible assets acquired
|
9,356
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Goodwill
|
—
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Total consideration paid
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$
|
9,356
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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 and finance lease obligations: The fair value of the Company’s long-term debt and finance lease obligations (including current maturities) is estimated based on the current rates offered to the Company for debt of the same or similar issues. The fair value of the Company’s long-term debt and capital lease obligations was approximately $1,408,000 and $1,341,000, respectively, at April 30, 2021 and 2020.
The carrying amount of the Company’s long-term debt and finance lease obligations by issuance is as follows:
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As of April 30,
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2021
|
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2020
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Finance lease liabilities (Note 7)
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$
|
14,085
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|
|
$
|
16,746
|
|
5.22% Senior notes due August 9, 2020
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$
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—
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|
|
569,000
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3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028
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150,000
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|
|
150,000
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3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028
|
50,000
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|
|
50,000
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|
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031
|
50,000
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|
|
50,000
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3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031
|
50,000
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|
|
50,000
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|
3.51% Senior notes (Series E) due June 13, 2025
|
150,000
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|
|
150,000
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|
3.77% Senior notes (Series F) due August 22, 2028
|
250,000
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|
|
250,000
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2.85% Senior notes (Series G) due August 7, 2030
|
325,000
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|
|
—
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2.96% Senior notes (Series H) due August 6, 2032
|
325,000
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|
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—
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Debt issuance costs
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(336)
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|
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—
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|
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1,363,749
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|
|
1,285,746
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Less current maturities (1)
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2,354
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571,244
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$
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1,361,395
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$
|
714,502
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(1) Current maturities is presented gross in the table above, but net of unamortized debt issuance costs of $964 on the consolidated balance sheets for the year ended April 30, 2020.
Interest expense is net of interest income of $168, $860, and $595 for the years ended April 30, 2021, 2020, and 2019, respectively. Interest expense is also net of interest capitalized of $4,537, $5,258, and $3,057 during the years ended April 30, 2021, 2020, and 2019, respectively.
The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2021, the Company was in compliance with all such operating and financial covenants.
Listed below are the aggregate maturities of long-term debt, including finance lease obligations, for the 5 years commencing May 1, 2021 and thereafter:
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Years ended April 30,
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Finance Leases
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|
Senior Notes
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Total
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2022
|
$
|
2,354
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|
|
$
|
—
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|
|
$
|
2,354
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2023
|
2,484
|
|
|
20,000
|
|
|
22,484
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2024
|
2,060
|
|
|
32,000
|
|
|
34,060
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2025
|
734
|
|
|
32,000
|
|
|
32,734
|
|
2026
|
471
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|
|
192,000
|
|
|
192,471
|
|
Thereafter
|
5,982
|
|
|
1,074,000
|
|
|
1,079,982
|
|
|
$
|
14,085
|
|
|
$
|
1,350,000
|
|
|
$
|
1,364,085
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Senior Notes
On June 30, 2020, the Company entered into a note purchase agreement with respect to the issuance of $650,000 aggregate principal amount of senior notes, consisting of: (i) $325,000 aggregate principal amount of 2.85% Senior Notes, Series G (the “Series G Notes”); and (ii) $325,000 aggregate principal amount of 2.96% Senior Notes, Series H (the “Series H Notes”) (collectively, the “Notes”). The Notes were issued on August 7, 2020. The Series G Notes bear interest at the rate of 2.85% per annum, payable semi-annually on February 7 and August 7 of each year, and mature on August 7, 2030. The Series H Notes bear interest at the rate of 2.96% per annum, payable semi-annually on February 7 and August 7 of each year, and mature on August 6, 2032. The Company used a portion of the proceeds of the Notes to pay off the $569,000 5.22% senior notes that matured on August 9, 2020.
Bridge Loan
On November 8, 2020, the Company entered into a commitment letter (“Commitment Letter”) with Goldman Sachs Bank USA (“Goldman”), pursuant to which Goldman committed to lend the Company up to $100 million under a new senior unsecured 364-day bridge loan facility (the “Bridge Loan”). As a result of, and concurrent with the effectiveness of the second amendment of the Credit Agreement discussed below, the commitments under the Commitment Letter were reduced, and are now expired, in accordance with the terms thereof.
Credit Agreement
As noted above, on December 23, 2020, the Company entered into a second amendment (“the Amendment”) to its existing credit agreement dated January 11, 2019, as amended June 30, 2020 (together with the Amendment, the “Credit Agreement”) to: (a) increase the revolving commitments thereunder to an aggregate principal amount of $450 million (the “Revolving Facility Increase”, and together with the existing revolving commitments the “Revolving Facility”); and (b) provide for a senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $300 million (the “Term Loan Facility”).
Revolving Facility Increase: The Amendment increased the total borrowing capacity under the Revolving Facility by an aggregate principal amount of $150 million, from $300 million to $450 million. The maturity date of the Revolving Facility remains unchanged, at January 11, 2024. Amounts borrowed under the Revolving Facility bear interest at variable rates based upon, at the Company’s option, either: (a) the LIBO Rate adjusted for statutory reserve requirements (but no less than 0.75%) (the “Adjusted LIBO Rate”), plus a margin ranging from 1.05% to 1.85%; or (b) an alternate base rate, which is the higher of (i) the prime rate announced by the Administrative Agent, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) the one-month LIBO Rate plus 1.00% (as applicable, the “ABR Rate”), plus a margin ranging from 0.05% to 0.85%. The Revolving Facility also carries a facility fee of 0.20% to 0.40% per annum. The applicable margins and facility fee are dependent upon the Company’s Consolidated Leverage Ratio, as calculated quarterly in accordance with the Credit Agreement (the “Consolidated Leverage Ratio”). The Company had $0 and $120,000 outstanding under the line of credit at April 30, 2021 and 2020, respectively.
Term Loan Facility: The Amendment also provides for a new senior unsecured delayed-draw term loan facility in an aggregate principal amount of up to $300 million. The Term Loan Facility has a maturity date of January 6, 2026 (the “Term Loan Maturity Date”) and its proceeds may be used to finance the acquisition of Buchanan Energy (see additional discussion at Note 11), as well as working capital needs, capital expenditures, share repurchases and general corporate purposes.
Amounts borrowed under the Term Loan Facility will bear interest at variable rates based upon, at the Company’s option, either: (i) the Adjusted LIBO Rate, plus a margin ranging from 1.55% to 2.60%; or (ii) the ABR Rate, plus a margin ranging from 0.20% to 1.60%. The Term Loan Facility also carries a facility fee of 0.20% to 0.40% per annum. The applicable margins and facility fee are dependent upon the Consolidated Leverage Ratio.
The outstanding principal balance of the loan drawn 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 following its funding date, with the balance due on the Term Loan Maturity Date. The Company had not yet drawn on the Term Loan Facility as of April 30, 2021. Subsequent to fiscal 2021, the Company drew $300 million on the Term Loan Facility to partially fund the Buchanan Energy acquisition - refer to Note 11 for additional details.
Bank Line
The Company has an unsecured bank line of credit (the "Bank Line") with availability up to $25,000. 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 Line as the Federal Funds Offered Rate (the “Index”). The interest rate to be applied to the unpaid principal balance of the Bank Line was at a rate of 1.0% over the Index. There was $0 outstanding at April 30, 2021 and 2020. The Bank Line is due upon demand.
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 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 ("the "2018 Plan Effective Date"). The 2018 Plan replaced the 2009 Stock Incentive Plan (the "2009 Plan") under which no new awards are allowed to be granted as of the 2018 Plan Effective Date.
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 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 2,211,232 shares available for grant at April 30, 2021, under the 2018 Plan.
We account for stock-based compensation by estimating the grant date fair value of stock options using the Black Scholes model, and the 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. For market-based awards, we use a "Monte Carlo" approach to estimate the value of the awards, which simulates the prices of the Company’s and each member of the performance peer groups' common stock price at the end of the relevant performance period, taking into account volatility and the specifics surrounding each total shareholder return metric under the relevant plan. 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 and/or non-employee member of the Board.
The following table summarizes the equity-related grants made during the three-year period ended April 30, 2021:
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Date of Grant
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Type of Grant
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Shares Granted
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Recipients
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Vesting Date
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Fair Value at Grant Date
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 24, 2018
|
Restricted Stock Units
|
88,846
|
|
Key Employees
|
May 24, 2021
|
$8,593
|
June 8, 2018
|
Restricted Stock Units (1)
|
75,402
|
|
Officers
|
June 8, 2021
|
$7,571
|
September 5, 2018
|
Restricted Stock Units
|
7,984
|
|
Non-Employee Board Members
|
2019 Annual Shareholders' Meeting Date
|
$920
|
June 4, 2019
|
Restricted Stock Units
|
75,959
|
|
Key Employees
|
June 4, 2022
|
$9,886
|
June 4, 2019
|
Restricted Stock Units (1)
|
59,579
|
|
Officers
|
June 4, 2022
|
$9,097
|
June 24, 2019
|
Restricted Stock Units (2)
|
32,786
|
|
CEO
|
Various (2)
|
$5,700
|
September 4, 2019
|
Restricted Stock Units
|
5,504
|
|
Non-Employee Board Members
|
2020 Annual Shareholders' Meeting Date
|
$919
|
December 23, 2019
|
Restricted Stock Units (3)
|
5,000
|
|
CEO
|
Various (3)
|
$788
|
Fiscal 2020 -Various
|
Restricted Stock Units (4)
|
8,444
|
|
Officers
|
Various (4)
|
$1,368
|
Fiscal 2020 -Various
|
Restricted Stock Units (5)
|
1,763
|
|
Officers
|
Various (5)
|
$354
|
Fiscal 2021 -Various
|
Restricted Stock Units
|
80,050
|
|
Key Employees
|
Vests ratably on anniversary date over three-year period
|
$13,417
|
Fiscal 2021 -Various
|
Restricted Stock Units (6)
|
94,756
|
|
Officers
|
Various (6)
|
$17,856
|
September 2, 2020
|
Restricted Stock Units
|
5,240
|
|
Non-Employee Board Members
|
2021 Annual Shareholders' Meeting Date
|
$951
|
Fiscal 2021 -Various
|
Restricted Stock Units (7)
|
29,890
|
|
Key Employees and Officers
|
Various (7)
|
$5,153
|
(1) This grant of restricted stock units ("RSUs") includes time-based, performance-based and market-based awards. 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". Total performance-based expense of approximately $4.2 million for the 2018 grant and $6.9 million for the 2019 grant (compared to a grant date fair value of $2.8 million and $3.4 million, respectively), will be recognized on a straight-line basis over the vesting period, subject to acceleration for retirement provisions. The market-based awards incorporate market conditions in determining fair value as of the grant date, and will also range from 0% to 200% of "target". Total market-based expense of approximately $2.6 million for the 2018 grant and $3.1 million for the 2019 grant, will be recognized on a straight-line basis over the vesting period, subject to acceleration for retirement provisions.
(2) This grant of RSUs includes time-based awards that vest ratably on each June 24, 2020 through 2022, along with a market-based award vesting June 24, 2022. The market-based award incorporates market conditions in determining fair value on the grant date and will range from 0% to 200% of target. Total market-based expense of approximately $1.8 million will be recognized on a straight-line basis over the vesting period.
(3) This grant of RSUs includes performance-based awards which are calculated based upon targets achieved over a performance period of January 1, 2020 to December 31, 2020. If the performance targets are met, the units vest ratably on each January 15, 2021 through 2023.
(4) These grants of RSUs were issued to various officers throughout the fiscal year. The grants were comprised of time-based awards and vest in accordance with the vesting schedules in the award agreements, ranging from January 2021 to January 2023.
(5) These grants of RSUs were issued to various officers throughout the fiscal year. The grants include time-based, performance-based and market-based awards. 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". Total performance-based expense of approximately $310 (compared to a grant date fair value of $177) will be recognized on a straight-line basis over the vesting period. The market-based awards incorporate market conditions in determining fair value as of the grant date, and will also range from 0% to 200% of "target". Total market-based expense of approximately $177 will be recognized on a straight-line basis over the vesting period.
(6) These grants of RSUs were issued to officers throughout the year. The grants include time-based awards and performance-based awards. The time-based awards 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". In addition, the performance-based award is subject to the TSR Modifier. Total performance-based expense of approximately $24.1 million (compared to a grant date fair value of $13.9 million) will be recognized on a straight-line basis over the vesting period, subject to acceleration for retirement provisions.
(7) These grants of RSUs were issued to officers and key employees throughout the year. The grants includes primarily time-based awards, as well as a performance-based award. The time-based awards vest in accordance with the vesting schedules in the award agreements, ranging from June 2021 to June 2023. The grant also includes one performance-based award that represents 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 the “target". In addition, the performance-based award is subject to the TSR Modifier. Total performance-based expense of approximately $2.2 million (compared to a grant date fair value of $1.3 million) will be recognized on a straight-line basis over the vesting period, subject to acceleration for retirement provisions.
At April 30, 2021, stock options for 3,000 shares (which expire on June 23, 2021) were outstanding. All stock option shares issued are previously unissued authorized shares. Information concerning the issuance of stock options under the 2009 Plan is presented in the following table (no stock option awards have been granted under the 2018 Plan):
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of option shares
|
|
Weighted
average option
exercise price
|
Outstanding at April 30, 2018
|
181,673
|
|
|
$
|
39.48
|
|
|
|
|
|
Exercised
|
(71,546)
|
|
|
32.02
|
|
Forfeited
|
(300)
|
|
|
25.26
|
|
Outstanding at April 30, 2019
|
109,827
|
|
|
$
|
44.39
|
|
|
|
|
|
Exercised
|
(66,638)
|
|
|
44.39
|
|
|
|
|
|
Outstanding at April 30, 2020
|
43,189
|
|
|
$
|
44.39
|
|
|
|
|
|
Exercised
|
(40,189)
|
|
|
44.39
|
|
|
|
|
|
Outstanding at April 30, 2021
|
3,000
|
|
|
$
|
44.39
|
|
At April 30, 2021, all outstanding options had an aggregate intrinsic value of $533 and a remaining contractual life of 0.17 years. The weighted average exercise price for all remaining outstanding options is $44.39. All options are vested as of April 30, 2021. The aggregate intrinsic value for the total of all options exercised during the year ended April 30, 2021 was $5,297.
Information concerning the issuance of restricted stock units under the 2018 Plan and the 2009 Plan is presented in the following table:
|
|
|
|
|
|
|
|
Unvested at April 30, 2018
|
338,981
|
|
Granted
|
172,232
|
|
Vested
|
(104,166)
|
|
Forfeited
|
(10,530)
|
|
Performance Award Adjustments
|
(7,717)
|
|
Unvested at April 30, 2019
|
388,800
|
|
Granted
|
189,035
|
|
Vested
|
(108,484)
|
|
Forfeited
|
(25,146)
|
|
Performance Award Adjustments
|
29,594
|
|
Unvested at April 30, 2020
|
473,799
|
|
Granted
|
209,936
|
|
Vested
|
(154,842)
|
|
Forfeited
|
(12,275)
|
|
Performance Award Adjustments
|
130,302
|
|
Unvested at April 30, 2021
|
646,920
|
|
Total compensation costs recorded for employees and non-employee board members for the stock options, restricted stock, and restricted stock unit awards for the years ended April 30, 2021, 2020 and 2019 were $31,986, $18,129, and $16,410, respectively. As of April 30, 2021, there was $36,717 of total unrecognized compensation costs related to the 2018 Plan and 2009 Plan for costs related to restricted stock units which are expected to be recognized ratably through fiscal 2023.
During the fourth quarter of the fiscal year ended April 30, 2017, the Company began a share repurchase program, wherein the Company was authorized to repurchase up to an aggregate of $300 million of the Company's outstanding common stock. The share repurchase authorization was valid for a period of two years. From its inception on March 9, 2017, through May 2018, the company completed the $300 million authorization by repurchasing 2,794,192 shares of its common stock.
In March 2018, the Company announced a second share repurchase program with an aggregate $300 million share repurchase program. The share repurchase authorization was valid for a period of two years. On March 6, 2020, the authorization was extended through the end of the Company’s 2022 fiscal year. The timing and number of repurchase transactions under the program depends on a variety of factors including, but not limited to, market conditions, corporate considerations, business opportunities, debt agreements, and regulatory requirements. The program can be suspended or discontinued at any time. No repurchases were made on that program in fiscal 2021.
5. NET INCOME PER COMMON SHARE
Computations for basic and diluted earnings per common share are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended April 30,
|
|
2021
|
|
2020
|
|
2019
|
Basic
|
|
|
|
|
|
Net income
|
$
|
312,900
|
|
|
$
|
263,846
|
|
|
$
|
203,886
|
|
Weighted average shares outstanding-basic
|
37,092,273
|
|
|
36,956,115
|
|
|
36,709,940
|
|
Basic earnings per common share
|
$
|
8.44
|
|
|
$
|
7.14
|
|
|
$
|
5.55
|
|
Diluted
|
|
|
|
|
|
Net income
|
$
|
312,900
|
|
|
$
|
263,846
|
|
|
$
|
203,886
|
|
Weighted-average shares outstanding-basic
|
37,092,273
|
|
|
36,956,115
|
|
|
36,709,940
|
|
Plus effect of stock options and restricted stock units
|
263,865
|
|
|
229,713
|
|
|
265,447
|
|
Weighted-average shares outstanding-diluted
|
37,356,138
|
|
|
37,185,828
|
|
|
36,975,387
|
|
Diluted earnings per common share
|
$
|
8.38
|
|
|
$
|
7.10
|
|
|
$
|
5.51
|
|
There were no options considered antidilutive; therefore, all options were included in the computation of dilutive earnings per share for fiscal 2021, 2020, and fiscal 2019, respectively.
6. INCOME TAXES
Income tax expense attributable to earnings consisted of the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended April 30,
|
|
2021
|
|
2020
|
|
2019
|
Current tax expense:
|
|
|
|
|
|
Federal
|
$
|
73,950
|
|
|
$
|
22,182
|
|
|
10,326
|
|
State
|
16,397
|
|
|
6,210
|
|
|
3,853
|
|
|
90,347
|
|
|
28,392
|
|
|
14,179
|
|
Deferred tax expense
|
4,123
|
|
|
49,810
|
|
|
45,337
|
|
Total income tax expense
|
$
|
94,470
|
|
|
$
|
78,202
|
|
|
59,516
|
|
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,
|
|
2021
|
|
2020
|
Deferred tax assets:
|
|
|
|
Accrued liabilities and reserves
|
$
|
29,583
|
|
|
$
|
12,423
|
|
|
|
|
|
Workers compensation
|
9,000
|
|
|
8,303
|
|
Operating and finance lease obligations
|
9,186
|
|
|
10,006
|
|
Asset retirement obligations
|
6,294
|
|
|
5,881
|
|
Deferred compensation
|
4,221
|
|
|
3,781
|
|
Equity compensation
|
9,131
|
|
|
7,083
|
|
|
|
|
|
State net operating losses & tax credits
|
928
|
|
|
424
|
|
Other
|
3,068
|
|
|
1,745
|
|
Total gross deferred tax assets
|
71,411
|
|
|
49,646
|
|
Less valuation allowance
|
—
|
|
|
47
|
|
Total net deferred tax assets
|
71,411
|
|
|
49,599
|
|
Deferred tax liabilities:
|
|
|
|
Property and equipment depreciation
|
(484,065)
|
|
|
(460,805)
|
|
Goodwill
|
(27,047)
|
|
|
(24,348)
|
|
Other
|
(20)
|
|
|
(44)
|
|
Total gross deferred tax liabilities
|
(511,132)
|
|
|
(485,197)
|
|
Net deferred tax liability
|
$
|
(439,721)
|
|
|
(435,598)
|
|
At April 30, 2021, the Company had net operating loss carryforwards for state income tax purposes of approximately $67,399, which are available to offset future state taxable income. The state net operating loss carryforwards begin to expire in 2029. In addition, the Company had state tax credit carryforwards of approximately $984, which begin to expire in 2026.
The valuation allowance for state net operating loss deferred tax assets as of April 30, 2021 and 2020 was $0 and $47, respectively. 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,
|
|
2021
|
|
2020
|
|
2019
|
Income taxes at the statutory rates
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
Impact of Tax Reform Act
|
—
|
%
|
|
—
|
%
|
|
0.4
|
%
|
Federal tax credits
|
(1.5)
|
%
|
|
(1.9)
|
%
|
|
(2.3)
|
%
|
State income taxes, net of federal tax benefit
|
3.5
|
%
|
|
4.0
|
%
|
|
4.3
|
%
|
Impact of phased-in state law changes, net of federal benefit
|
—
|
%
|
|
(0.2)
|
%
|
|
(1.8)
|
%
|
ASU 2016-09 benefit (stock-based compensation)
|
(0.6)
|
%
|
|
(0.5)
|
%
|
|
(0.6)
|
%
|
Other
|
0.8
|
%
|
|
0.5
|
%
|
|
1.6
|
%
|
|
23.2
|
%
|
|
22.9
|
%
|
|
22.6
|
%
|
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 total of $9,316 and $8,907 in gross unrecognized tax benefits at April 30, 2021 and 2020, respectively, which is recorded in other long-term liabilities in the consolidated balance sheet. Of this amount, $7,360 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits increased $409 during the twelve months ended April 30, 2021, 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
Beginning balance
|
$
|
8,907
|
|
|
$
|
7,287
|
|
Additions based on tax positions related to current year
|
2,356
|
|
|
2,780
|
|
|
|
|
|
|
|
|
|
Reductions due to lapse of applicable statute of limitations
|
(1,947)
|
|
|
(1,160)
|
|
|
|
|
|
Ending balance
|
$
|
9,316
|
|
|
$
|
8,907
|
|
The total net amount of accrued interest and penalties for such unrecognized tax benefits was $370 and $354 at April 30, 2021 and 2020, 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, 2021 and 2020 was an increase in tax expense of $16 and $112, 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 $2,000 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 2015 and forward. Tax years 2012 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 or building, 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 the operating lease liability in accrued expenses and other long-term liabilities and records the finance lease liability within current maturities of long-term debt and long-term debt and finance lease obligations on the consolidated balance sheets. We have elected to adopt
the package of practical expedients, as well as the land easement practical expedient. All lessor related activity is considered immaterial to the consolidated financial statements.
The leases initially recorded under ASC 842 were recognized, at the time of adoption, at an amount equal to the present value of the lease payments using the incremental borrowing rate of debt based upon the remaining term of the lease. 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 the incremental borrowing rate of debt based on the term of the lease.
The Company also has options to renew or extend the current lease arrangement on many of our leases. In these situations, if it was reasonably certain the lease would be extended, we have included those extensions within the remaining lease payments at the time of measurement.
Lease right-of-use assets outstanding as of April 30, 2021 and 2020 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classification
|
|
April 30, 2021
|
|
April 30, 2020
|
Finance lease right-of-use assets
|
Property and equipment
|
|
$
|
11,711
|
|
|
$
|
14,583
|
|
Operating lease right-of-use assets
|
Other assets
|
|
$
|
20,145
|
|
|
$
|
21,143
|
|
|
|
|
|
|
|
Weighted average remaining lease terms, weighted average discount rates, and supplementary cash flow information for outstanding leases were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2021
|
|
April 30, 2020
|
Weighted-average remaining lease-term - finance lease
|
10.9
|
|
10.9
|
Weighted-average remaining lease-term - operating lease
|
20.4
|
|
20.4
|
|
|
|
|
Weighted-average discount rate - finance lease
|
5.38
|
%
|
|
5.34
|
%
|
Weighted-average discount rate - operating lease
|
4.42
|
%
|
|
4.25
|
%
|
|
|
|
|
Right-of-use assets obtained in exchange for new finance lease liabilities
|
$
|
—
|
|
|
$
|
1,520
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
$
|
1,109
|
|
|
$
|
2,840
|
|
Future minimum payments under the finance leases and operating leases with initial or remaining terms of one year or more consisted of the following at April 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
Years ended April 30,
|
Finance leases
|
|
Operating leases
|
2022
|
$
|
3,110
|
|
|
$
|
1,794
|
|
2023
|
3,116
|
|
|
1,693
|
|
2024
|
2,565
|
|
|
1,658
|
|
2025
|
1,167
|
|
|
1,663
|
|
2026
|
872
|
|
|
1,679
|
|
Thereafter
|
9,893
|
|
|
25,575
|
|
Total minimum lease payments
|
20,723
|
|
|
34,062
|
|
Less amount representing interest
|
6,638
|
|
|
12,997
|
|
Present value of net minimum lease payments
|
$
|
14,085
|
|
|
$
|
21,065
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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 $51.4 million of taxable industrial development revenue bonds for the purpose of acquiring, constructing, improving, purchasing, equipping and installing a warehouse and distribution facility, which is to be developed and used by the Company. As title transfers to Joplin throughout development and the Company subsequently leases 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, 2021, we have recognized the full amount of bonds available as property and equipment on the consolidated balance sheets related to this agreement.
8. BENEFIT PLANS
401(k) 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 $10,382, $10,571, and $9,918 for the years ended April 30, 2021, 2020, and 2019, respectively.
On April 30, 2021 and 2020, 909,161 and 1,113,882 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.
Supplemental executive retirement plan: The Company has a nonqualified supplemental executive retirement plan (SERP) for two of its former executive officers, one of whom retired April 30, 2003 and the other on April 30, 2008. The SERP provides for the Company to pay annual retirement benefits, up to 50% of base compensation until death of the officer. If death occurs within twenty years of retirement, the benefits become payable to the officer’s spouse (at a reduced level) until the spouse’s death or twenty years from the date of the officer’s retirement, whichever comes first. The Company recorded the deferred compensation over the term of employment. The amounts accrued at April 30, 2021 and 2020, respectively, were $2,866 and $3,434. The discount rates were based off of the Company's incremental borrowing rate, and ranged from 1.36% to 2.52% for the year ended April 30, 2021. The discount rates used for the year ended April 30, 2020 ranged from 2.04% to 2.44%. The Company expects to pay $637 per year for each of the next two years, and $354 in the third through fifth years. The expense incurred in fiscal 2021, 2020, and 2019 related to those agreements was $67, $269, and $221, respectively.
Other post-employment benefits: The Company also has severance and/or deferred compensation agreements with former Team Members. The amounts accrued at April 30, 2021 and 2020 were $2,326 and $3,793, respectively. The Company expects to pay $401 in fiscal 2022 and each of the four years thereafter under the agreements. The expense (benefit received) incurred in fiscal 2021, 2020, and 2019 related to these agreements was $44, $2,727, and $(97), respectively.
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, exclusive of incentive payments. The Company also has entered into change of control agreements with its Chief Executive Officer and 25 other officers, providing for certain payments in the event of termination in connection with a change of control of the Company.
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 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, 2021, the forward contracts run through May 2021. The monthly commitment under these contracts is approximately $3,900. These contracts are not accounted for as derivatives as they meet the normal purchases 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. Several 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, 2021 and 2020 of approximately $368 and $328, 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.
Other: At April 30, 2021, the Company was primarily self-insured for workers’ compensation claims in all but two states of its marketing 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 $1,000 for auto liability and $500 for general liability and workers' compensation. To facilitate this agreement, letters of credit approximating $24,000 and $21,526 were issued and outstanding at April 30, 2021 and 2020, respectively, on the insurance company’s behalf. Additionally, the Company is self-insured for its portion of Team Member medical expenses. At April 30, 2021 and 2020, the Company had $50,526 and $44,959, respectively, outstanding for estimated claims relating to self-insurance, the majority of which has been actuarially determined.
11. SUBSEQUENT EVENTS
On May 13, 2021, the Company closed on the acquisition of Buchanan Energy, owner of Bucky’s Convenience Stores, an equity purchase with an aggregate purchase price of approximately $580 million, subject to customary post-closing adjustments. The transaction includes 92 retail locations, a dealer network of 81 stores where Casey’s will manage fuel supply agreements to these stores, as well as several parcels of real estate which may be used for new store construction. The acquisition, which includes 24 stores in Nebraska, 56 stores in Illinois, 5 stores in Iowa, 3 stores in Missouri and 4 stores in Texas, brings the Company’s total owned and operated stores to over 2,300.
The Buchanan Energy acquisition was financed with a $300 million unsecured term loan under the Credit Facility and cash on hand. The outstanding principal balance of the term loan 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 following its funding date, with the remaining unpaid principal balance due on January 26, 2026. For further information on the term loan, see Note 3 to the consolidated financial statements, above.
During June 2021, the Company closed on the acquisition of 48 stores located in Oklahoma from Circle K for an aggregate purchase price of $36.1 million, subject to customary post-closing adjustments. The transaction was financed with a draw on the revolving credit line under the Credit Facility.
Due to the proximity of the aforementioned acquisitions to the filing of our Form 10-K , we have not yet completed the accounting for the business combinations, including the opening balance sheet. Accordingly, the Company is unable to provide amounts recognized as of the acquisition dates for major classes of assets and liabilities. Moreover, we are unable to provide pro-forma financial information related to the combined entity. This information, at least on a provisional basis, will be available in the Form 10-Q to be filed for the quarter ended July 31, 2021.