What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-11-23 compared with 2021-11-24 · 61 added, 69 removed, 812 unchanged (14% of the section changed)

20 unchanged sentences

Deloitte & Touche LLP has audited and reported on the consolidated financial statements of the Company and the Company’s internal control over financial reporting.

The reports of the independent auditors are contained in this Annual Report.

The reports of the independent auditors are contained in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

2 unchanged sentences

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

2 unchanged sentences

The Company has adopted a Code of Ethics that applies to its senior financial officers, including without limitation, its Chief Executive Officer, Chief Financial Officer and Controller.

The full text of the Code of Ethics is published on the Company’s website at www.ingles-markets.com under the caption “Corporate Information.” In the event that the Company makes any amendments to, or grants any waivers of, a provision of the Code of Ethics applicable to its principal executive officer, principal financial officer or principal accounting officer, the Company intends to disclose such amendment or waiver on its website.

principal accounting officer, the Company intends to disclose such amendment or waiver on its website.

Information on the Company’s website, however, does not form a part of this Annual Report on Form 10-K.

20 unchanged sentences

(b) Exhibits:

Articles of Incorporation of Ingles Markets, Incorporated (included as Exhibit 3.1 to Ingles Markets, Incorporated’s Registration Statement on Form S-1, File No.

33-23919, previously filed with the Commission and incorporated herein by this reference).

(Filed on paper – hyperlink is not required pursuant to Rule 105 of Regulation S-T.)

Articles of Amendment to Articles of Incorporation of Ingles Markets, Incorporated (included as Exhibit 3.3 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 25, 2004, File No.

0-14706, previously filed with the Commission and incorporated herein by this reference).

Articles of Amendment to Articles of Incorporation of Ingles Markets, Incorporated dated February 14, 2012 (included as Exhibit 3.3 to Ingles Markets, Incorporated Quarterly Report on Form 10-Q for the fiscal quarter ended March 24, 2012, File No.

0-14706, previously filed with the Commission and incorporated herein by this reference).

Composite Articles of Incorporation of Ingles Markets, Incorporated (included as Exhibit 3.1 to Ingles Markets, Incorporated’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 26, 2022, File No.

0-14706, filed with the Commission on May 5, 2022 and incorporated herein by this reference).

Amended and Restated By-Laws of Ingles Markets, Incorporated (included as Exhibit 99.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No.

53 unchanged sentences

FORM 10-K SUMMARY

Not applicable.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

5 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 24, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 23, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Accounting Pronouncement Recently Adopted

The Company has changed its method of accounting for leases in the fiscal year ended September 26, 2020 due to the adoption of Financial Accounting Standards Board Accounting Standards Update 2016-02, Leases (Topic 842).

Basis for Opinion

25 unchanged sentences

• We selected a sample of transactions and tested for the appropriateness of recorded reductions to inventory, cost of sales or advertising expense.

• We selected a sample of vendors and confirmed the completeness of programs as well as the amounts earned and terms of the agreement directly with the vendor.

• We selected a sample of vendors and sent confirmations to test the completeness of programs as well as the accuracy of amounts earned and terms of the agreement directly with the vendor.

/s/ DELOITTE & TOUCHE LLP

7 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 24, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended September 25, 2021, of the Company and our report dated November 24, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of Financial Accounting Standards Board Accounting Standards Update 2016-02, Leases (Topic 842).

Basis for Opinion

32 unchanged sentences

2,018,343,955

See Notes to Consolidated Financial Statements.

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 25, 2021 AND SEPTEMBER 26, 2020

LIABILITIES AND STOCKHOLDERS’ EQUITY

28 unchanged sentences

( 3,426,140 )

( 10,251,296 )

Retained earnings

1,246,238,155

Total stockholders’ equity

1,259,594,425

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

17 unchanged sentences

Operating and administrative expenses

1,040,193,885

Gain from sale or disposal of assets

8 unchanged sentences

( 11,887,660 )

( 1,674,636 )

Income tax (expense) benefit

( 5,119,000 )

Other comprehensive income (expense), net of tax

( 2,206,000 )

Other comprehensive income (expense), net of tax

( 8,985,646 )

15 unchanged sentences

Balance, September 28, 2019

( 1,265,650 )

Other comprehensive expense net of tax

9 unchanged sentences

( 10,251,296 )

Other comprehensive expense net of tax

Other comprehensive income net of tax

Cash dividends

( 9,396,169 )

Cash dividends

( 3,234,276 )

Stock repurchases, at cost

( 1,265,400 )

( 12,311,249 )

( 67,624,069 )

( 79,998,588 )

Common stock conversions

7 unchanged sentences

( 2,805,583 )

Stock repurchases, at cost

( 1,265,400 )

( 12,311,249 )

( 67,624,069 )

( 79,998,588 )

Common stock conversions

1 unchanged sentence

1,246,238,155

1,259,594,425

See Notes to Consolidated Financial Statements.

20 unchanged sentences

( 4,309,000 )

( 2,772,000 )

Changes in operating assets and liabilities

9 unchanged sentences

( 8,384,435 )

Accounts payable and accrued expenses

( 9,463,632 )

Accounts payable and accrued expenses

( 7,152,634 )

4 unchanged sentences

( 110,210,267 )

Proceeds from short term investments

( 295,000,000 )

Proceeds of short term investments

Capital expenditures

11 unchanged sentences

( 73,951,369 )

( 303,810,043 )

Debt issuance costs

33 unchanged sentences

The “Other” segment includes our remaining operations -- fluid dairy and shopping center rentals.

The Company defines its segments as those operations for which the Company’s chief operating decision maker regularly reviews results to analyze performance and allocate resources.

New Accounting Pronouncements – In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848):

3 unchanged sentences

Entities are permitted to apply the amendments to all contracts, cash flow and net investment hedge relationships that exist as of March 12, 2020.

The relief provided in this ASU is only available for a limited time, generally through December 31, 2022.

The relief provided in this ASU is only available for a limited time, currently through December 31, 2022.

The Company’s debt agreements and interest rate swaps that utilize LIBOR have not yet discontinued the use of LIBOR and, therefore, this ASU is not yet effective for us.

To the extent our debt and interest rate swap arrangements change to another accepted rate, we will utilize the relief in this ASU to continue hedge accounting.

To the extent our debt and interest rate swap arrangements change to another accepted rate within the timeline provided by this ASU, we will utilize the relief in this ASU to continue hedge accounting.

Cash and Cash Equivalents – Outstanding checks in excess of bank balances are included in the line item “Accounts payable – trade” on the Consolidated Balance Sheets.

14 unchanged sentences

Store inventories are valued using the retail method under which inventories at cost (and the resulting gross margins) are determined by applying a calculated cost-to-retail ratio to the retail value of inventories.

As an integral part of valuing inventory at cost, management makes certain judgments and estimates for gross margins, allowances for vendor consideration, markdowns and shrinkage.

As an integral part of valuing inventory at cost, management makes certain judgments and estimates for gross margins, allowances for vendor consideration,

markdowns and shrinkage.

Warehousing and distribution costs are not included in the valuation of inventories.

28 unchanged sentences

The Company’s self-insurance reserves totaled $ 31.0 million and $ 32.1 million for employee group insurance, workers’ compensation insurance and general liability insurance at September 24, 2022 and September 25, 2021, respectively.

These amounts are inclusive of expected recoveries from excess cost insurance or other sources that are recorded as receivables of $ 4.2 at September 25, 2021 and $ 4.7 million at September 26, 2020.

These amounts are inclusive of expected recoveries from excess cost insurance or other sources that are recorded as receivables of $ 4.0 million at September 24, 2022 and $ 4.2 million at September 25, 2021.

The Company is required in certain cases to pledge certificates of deposit or obtain surety bonds to support its self-insured status.

34 unchanged sentences

Vendor Allowances – The Company receives funds for a variety of merchandising activities from the many vendors whose products the Company buys for resale in its stores.

These incentives and allowances are primarily comprised of volume or purchase based incentives, advertising allowances, slotting fees, and promotional discounts.

These incentives and allowances are primarily composed of volume or purchase based incentives, advertising allowances, slotting fees, and promotional discounts.

The purpose of these incentives and allowances is generally to help defray the costs incurred by the Company for stocking, advertising, promoting and selling the vendors’ products.

15 unchanged sentences

Property and equipment tax/book differences

Interest rate swaps

Property tax method

19 unchanged sentences

( 3,565,000 )

( 2,482,000 )

Total deferred (benefit) expense

( 4,309,000 )

( 2,772,000 )

Total expense

6 unchanged sentences

1,045,266,039

1,018,790,068

Transportation equipment

50 unchanged sentences

The weighted average remaining lease term for the Company’s operating leases is 13.4 years.

The weighted average discount rate used to determine lease liability balances as of September 25, 2021 is 3.51 %, based on recent Company financings collateralized by store properties.

The weighted average discount rate used to determine lease liability balances as of September 24, 2022 is 3.51 %, based on our incremental borrowing rate.

Supplementary Balance Sheet Information

28 unchanged sentences

Senior notes, interest rate of 4.00 %, maturing 2031

Recovery Zone Facility Bonds, maturing 2036

Outstanding line of credit, weighted average interest rate of 3.75 % for 2020

Notes payable due to banks, weighted average interest rate of 2.31 % for 2022

6 unchanged sentences

Long-term debt, net of current portion

In November 2019, the Company closed a $ 155 million amortizing loan secured by real estate (the “Loan”) and issued notice to redeem a like principal amount of the 2023 Notes.

The Loan was funded and the 2023 Notes were redeemed thirty days after the redemption notice in December 2019.

The 2023 Notes were redeemed at 101.917 % of par value, and the Company recognized debt extinguishment costs of approximately $ 3.7 million during the quarter ended December 28, 2019.

In June 2020, the Company issued an irrevocable notice to redeem $ 150 million principal amount of its 5.75 % senior notes due in 2023 (the “2023 Notes”).

The 2023 Notes were redeemed at 100.958 % of par value on July 9, 2020.

The Company recognized debt extinguishment costs of approximately $ 2.0 million during the quarter ended September 26, 2020.

In July 2020, the Company issued an irrevocable notice to redeem $ 100 million principal amount of the 2023 Notes.

The 2023 Notes were redeemed at 100.958 % of par value on August 27, 2020.

The Company recognized debt extinguishment costs of approximately $ 1.4 million during the quarter ended September 26, 2020.

Following this redemption, there was $ 295.0 million aggregate principal amount of the 2023 Notes outstanding.

In June 2021, the Company issued at par $ 350.0 million aggregate principal amount of 4.00 % senior notes due in 2031 (the “2031 Notes”).

Upon issuance of the 2031 Notes, the Company issued an irrevocable notice to redeem the remaining $ 295.0 million aggregate principal amount of its 5.75 % senior notes due in 2023 (the “2023 Notes”) and invested $ 295.0 million of 2031 Notes proceeds in short term investments pending redemption of the 2023 Notes.

Upon issuance of the 2031 Notes, the Company issued an irrevocable notice to redeem the remaining $ 295.0 million aggregate principal amount of its 2023 Notes and invested $ 295.0 million of 2031 Notes proceeds in short term investments pending redemption of the 2023 Notes.

The 2023 Notes were redeemed at par value on July 16, 2021.

5 unchanged sentences

provided, that, after such redemption, at least 60 % of the aggregate principal amount of the 2031 Notes originally issued remains outstanding.

In November 2019, the Company closed a $ 155 million amortizing loan secured by real estate (the “Loan”) and issued notice to redeem a like principal amount of the 2023 Notes.

The Loan was funded and the 2023 Notes were redeemed thirty days after the redemption notice in December 2019.

The 2023 Notes were redeemed at 101.917 % of par value, and the Company recognized debt extinguishment costs of approximately $ 3.7 million during the quarter ended December 28, 2019.

The Loan matures January 31, 2030 and has monthly principal payments of $ 0.65 million plus floating rate interest payments based on LIBOR.

In June 2020, the Company issued an irrevocable notice to redeem $ 150 million principal amount of the 2023 Notes.

The 2023 Notes were redeemed at 100.958 % of par value on July 9, 2020.

The Company recognized debt extinguishment costs of approximately $ 2.0 million during the quarter ending September 26, 2020.

In July 2020, the Company issued an irrevocable notice to redeem $ 100 million principal amount of the 2023 Notes.

The 2023 Notes were redeemed at 100.958 % of par value on August 27, 2020.

The Company recognized debt extinguishment costs of approximately $ 1.4 million during the quarter ending September 26, 2020.

Following this redemption, there were $ 295.0 million aggregate principal amount of the 2023 Notes outstanding.

In June 2021, the Company entered into a $ 150.0 million line of credit (the “Line”) that matures in June 2026.

6 unchanged sentences

Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, such financial institutions hold the Bonds until September 2026, subject to certain events.

Mandatory redemption of the Bonds by the Company in the annual amount of $ 4.5 million began on January 1, 2014.

Mandatory redemption

of the Bonds by the Company in the annual amount of $ 4.5 million began on January 1, 2014.

The Company may redeem the Bonds without penalty or premium at any time prior to September 26, 2026.

6 unchanged sentences

The Company was in compliance with all financial covenants related to the 2031 Notes, the Bonds and Line at September 24, 2022.

In September 2017, the Company refinanced approximately $ 60 million of secured borrowing obligations with a LIBOR-based amortizing floating rate loan secured by real estate maturing in October 2027.

The Company has an interest rate swap agreement for a current notional amount of $ 30.5 million at a fixed rate of 3.92 %.

2 unchanged sentences

Both the floating rate debt and the interest rate swap have monthly principal amortization of $ 0.5 million and mature October 1, 2027 .

In December 2019, the Company closed a $ 155 million LIBOR-based amortizing floating rate loan secured by real estate maturing in January 2030.

The Company has an interest rate swap agreement for a current notional amount of $ 132.4 million at a fixed rate of 2.95 %.

5 unchanged sentences

For the fiscal year ended September 24, 2022, the Company recorded $ 15.8 million of other comprehensive income, net of income taxes, in its Consolidated Statements of Comprehensive Income.

Unrealized losses of $ 4.5 million are recorded as a liability at fair value in the line “Other Long-Term Liabilities” on the Consolidated Balance Sheet as of September 25, 2021.

For the fiscal year ended September 26, 2020, the Company recorded $ 9.0 million of other comprehensive expense, net of income taxes, in its Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 16.4 million are recorded as an asset at fair value in the line “Other Assets” on the Consolidated Balance Sheet as of September 24, 2022.

For the fiscal year ended September 25, 2021, the Company recorded $ 6.8 million of other comprehensive income, net of income taxes, in its Consolidated Statements of Comprehensive Income.

Unrealized losses of $ 4.5 million are recorded as a liability at fair value in the line “Other Long-Term Liabilities” on the Consolidated Balance Sheet as of September 25, 2021.

13 unchanged sentences

( 1,675,556 )

( 1,265,889 )

Interest expense

55 unchanged sentences

Operating and administrative expenses include bonuses of approximately $ 32.3 million, $ 27.2 million and $ 35.9 million for fiscal years 2022, 2021 and 2020, respectively.

During fiscal year 2020, the Company provided $ 15 million in extra associate appreciation bonuses for exceptional service during the COVID-19 pandemic.

The accrued liability for cash bonuses totaled $ 26.0 million at September 24, 2022 and $ 22.0 million at September 25, 2021.

56 unchanged sentences

Secured notes payable and other

Interest rate swaps derivative contract liability

Interest rate swaps derivative contract asset

Non-qualified retirement plan assets

4 unchanged sentences

Interest (net of amounts capitalized)

( 11,697,668 )

Non cash items:

1 unchanged sentence

Related Party Transactions

On March 19, 2021, the Company’s Board of Directors authorized the repurchase of up to an aggregate of 2.0 million shares of its Class A and Class B Common Stock.

The share repurchase program may be carried out through open market purchases, block trades, purchases from the Company’s Investment/Profit Sharing Plan and in negotiated private transactions.

On March 23, 2021, the Company approved the repurchase of 1.3 million shares of the Company’s Class B Common Stock from a trust that is part of the estate of Robert P.

Ingle, former CEO and Director of the Company.

The aggregate purchase price paid for the repurchased shares was approximately $ 80.0 million, which was equal to the fair market value of the Company’s publicly traded Class A Common Stock at the time of the transaction.

The transaction was approved by the Company’s Executive Committee and Audit Committee in accordance with the Company’s related-party transaction policy and regulatory guidelines.

In August 2022, the Company sold a land parcel for $ 725 thousand to a limited liability corporation having Robert P.

Ingle II, the Company’s Chairman of the Board, as one of its principals with a financial interest in the transaction.

In accordance with the Company’s Related Party Transaction policy, independent fair market value appraisals were obtained to determine the selling price, and the Company’s Audit Committee approved the transaction.

The Company will from time to time make short-term non-interest bearing loans to the Company’s Investment/Profit Sharing Plan to allow the plan to meet distribution obligations during a time when the plan was prohibited from selling shares of the Company’s Class A Common Stock.

During the fiscal year ended September 25, 2021, such a loan in the amount of $ 0.4 million was both made and repaid in full.

There were no such loans outstanding at September 24, 2022 or September 25, 2021.

11 unchanged sentences

Chief Operating Officer and Director

/s/ Ronald B.

/s/ Patricia E.

November 23, 2022

Freeman, Vice

Jackson, CPA, Vice

President-Finance, Chief Financial Officer and Director

/s/ Patricia E.

/s/ Catherine L.

November 23, 2022

Jackson, CPA, Secretary and Controller

Phillips, CPA, Secretary and Controller

November 23, 2022

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures