Error Leads Casey’s to Revise Financial Results
ANKENY, Iowa — Casey's General Stores Inc. paid $31.5 million to the Internal Revenue Service (IRS) due to an inadvertent accounting and reporting error related to the treatment of the excise tax on ethanol. This payout comprises $30.4 million in taxes and $1.1 million in interest.
The convenience store retailer will also revise its financial statements for fiscal years 2012, 2013, 2014 and the first quarter of 2015.
Casey's stressed that it voluntarily reported the error to the IRS and is cooperating fully with the government agency.
"We deeply regret the errors that led to this revision, and we are taking swift and decisive action to enhance our excise tax reporting process and systems to resolve this issue. While we are disappointed to revise our financial results, it's important to note this inadvertent error was in a single area of our reporting," stated Casey's Chairman and CEO Robert J. Myers.
According to the company, prior to Jan. 1, 2012, it received a credit from the federal government for the blending of ethanol and gasoline commonly known as "splash" blending. Up to this time, ethanol gallons were being correctly accounted for on the excise tax return and the applicable tax owed was offset or netted against the credit.
After the credit expired on Dec. 31, 2011, Casey's continued the practice of blending ethanol and gasoline, thus obligating the company to pay the excise tax of $0.184 per gallon, without the offsetting benefit of the corresponding credit.
Casey's continued to file the quarterly IRS Form 720 after Jan. 1, 2012. However, the ethanol gallons blended and related tax for the ethanol activity were inadvertently omitted from the form. As a result, Casey's failed to record the proper federal excise taxes for blended ethanol gallons for the period of Jan. 1, 2012 through July 31, 2014.
Despite this setback, Casey's remains committed to achieving its financial goals for fiscal 2015. These goals include:
- Increase same-store fuel gallons sold by 1 percent with an average margin of 15.3 cents per gallon;
- Increase same-store grocery and other merchandise sales by 5.3 percent with an average margin of 32.1 percent;
- Increase same-store prepared food and fountain sales by 9.5 percent with an average margin of 60 percent; and
- Build or acquire 72 to 108 stores and replace 25 existing locations.
Bonnie Herzog, managing director of beverage, tobacco and convenience store research at Wells Fargo Securities LLC, noted in a recent report that the Wall Street firm questions if Casey's will need to scale back some of its capital expenditure investments or growth plans. Casey's NASDAQ-listed stock traded down more than 7 percent during Tuesday morning trading.
Ankeny-based Casey's General Stores Inc. operated 1,837 convenience stores as of July 31.