Casey's Reports Improving Trends Despite Disappointing Fourth Quarter

ANKENY, Iowa -- Convenience store chain Casey's General Stores Inc. reported quarterly diluted earnings per share were $0.02, down from $0.11 for the same quarter a year ago. For fiscal 2004, diluted earnings per share were $0.73 compared with $0.80 for fiscal 2003.

Ronald M. Lamb, chairman and CEO, listed the significant causes of the earnings shortfall: "In the fourth quarter alone, a gasoline margin a penny under our historical average cost us 3 cents per share, a decrease in the cigarette margin cost us 3 cents, and higher cheese prices accounted for 1 cent. A $3.4 million increase in our insurance reserves, primarily for workers' compensation, came to 4 cents."

An independent actuarial review completed in the fourth quarter determined the 4 cents per share cost of the increase. In response, the company strengthened reserves for adverse development and for losses incurred but not yet reported. Lamb added, "We requested an actuarial opinion for the first time primarily because of the size of the reserves and recent changes in the retentions."

The difficult gasoline market that affected the third quarter continued to be a factor in the fourth. "Our cost per gallon has increased nearly every week since December -- we haven't seen that kind of rising trend line since the 1970s," said Lamb. "We made some headway from the third quarter to the fourth, however, and expect further improvement when wholesale prices begin to normalize."
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