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    Casey's Earnings Exceed Expectations

    Concentration on improved gross profits at pumps and inside paid off, said CEO Ron Lamb.

    ANKENY, Iowa -- Casey's General Stores, Inc reported earnings for the second quarter ending October 31, 2003, and for the fiscal year to date, and for the quarter, diluted earnings per share exceeded analysts' expectations at $0.32, up from $0.27 for the second quarter a year ago. Quarterly net income rose 17.3 percent to $15.8 million, and year-to-date diluted earnings per share rose to $0.59 from $0.52. Net income is also up 15.5 percent to $29.6 million.

    "We've now completed two solid quarters and credit for our success goes largely to our focus," said Ronald M. Lamb, Chairman and CEO of Casey's. "All of us at Casey's, including our store managers, concentrated on improving gross profit at the pumps and inside our stores."

    Total gross profit was up 6.9 percent to $117.3 million for the second quarter, and up 6.8 percent to $231.1 million year to date. Operating expenses increased only 5.3 percent year to date.

    Additionally, the company's management continued to fine-tune mechanisms for balancing gasoline gallons sold and average margin per gallon to improve gross profit. At the six-month mark, gallons sold were up 7.6 percent to 511.2 million. The average margin per gallon was 10.8 cents, near the company's historical average and similar to the 10.6 cents year to date October 31, 2002. Gasoline gross profit rose 10.1 percent to $55.2 million from $50.2 million.

    Lamb highlighted a benefit of implementing the real-time satellite communication initiative: "Having pay at the pump at more than 1,100 stores contributes to volume, but it also increases costs related to credit card sales. Beginning in the third quarter, our satellite communication capability will offer the opportunity for significant savings in credit card transaction fees." The capability was operational in 1,000 stores as of November 30, 2003.

    At midyear, total inside sales -- comprised of grocery, other merchandise, and prepared food and fountain. -- were up 3.9 percent to $458.9 million, and the gross margin was up 60 basis points to 38.1. Also, the gross profit was up 5.5 percent to $174.7 million.

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