INGLES MARKETS INC 10-K

Item 9A. CONTROLS AND PROCEDURES Conclusion Regarding Disclosure Controls and Procedures The Company maintains disclosure controls and procedures designed to provide reasonable assurance to achieve the objective that information in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the regulations of the Securities and Exchange Commission. Disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, include controls and procedures designed to ensure the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that the Company’s system of controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. As required by Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation, under the supervision and with participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures as of September 24, 2022, the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable level as of September 24, 2022. 22 Management’s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in a reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company’s assets that could have a material adverse effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company has assessed the effectiveness of its internal control over financial reporting as of September 24, 2022 using the criteria described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment of the design and related testing of the Company’s internal control over financial reporting management has concluded that, as of September 24, 2022, the Company maintained effective internal control over financial reporting based on the criteria set forth in the COSO framework. The Company’s independent auditors, Deloitte & Touche LLP, a registered public accounting firm, are appointed by the Audit Committee of the Company’s Board of Directors. 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 on Form 10-K. Changes in Internal Control Over Financial Reporting There has been no change during the Company’s fiscal year ended September 24, 2022, in the Company’s internal control over financial reporting that was identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) which has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. As noted above, management has concluded that the Company’s disclosure controls and procedures were effective as of September 24, 2022. Item 9B. OTHER INFORMATION None. Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item, including the information concerning the Company’s directors and officers, audit committee, and compliance with Section 16 of the Exchange Act, is incorporated herein by reference to the information to be contained in the Company’s definitive Proxy Statement to be used in connection with the solicitation of proxies for the Company's 2023 annual meeting of stockholders. The definitive Proxy Statement will be filed with the Securities and Exchange Commission (the “Commission”) pursuant to Regulation 14A no later than 120 days after September 24, 2022. 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 23 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. Item 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated herein by reference to the information to be contained in the Company’s definitive Proxy Statement referred to above in “Item 10. Directors, Executive Officers and Corporate Governance.” Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item is incorporated herein by reference to the information to be contained in the definitive Proxy Statement referred to above in “Item 10. Directors, Executive Officers and Corporate Governance.” Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item is incorporated herein by reference to the information to be contained in the definitive Proxy Statement referred to above in “Item 10. Directors, Executive Officers and Corporate Governance.” Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item is incorporated herein by reference to the information to be contained in the definitive Proxy Statement referred to above in “Item 10. Directors, Executive Officers and Corporate Governance.” PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Documents filed as part of this report: 1. The following financial statements of the Registrant are included in response to Item 8 of this Annual Report on Form 10-K: Consolidated Balance Sheets as of September 24, 2022 and September 25, 2021; Consolidated Statements of Income and Other Comprehensive Income for the years ended September 24, 2022, September 25, 2021, and September 26, 2020; Consolidated Statements of Changes in Stockholders’ Equity for the years ended September 24, 2022, September 25, 2021, and September 26, 2020; Consolidated Statements of Cash Flows for the years ended September 24, 2022, September 25, 2021, and September 26, 2020; Notes to Consolidated Financial Statements. 2. Exhibits (b) Exhibits: 3.1 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). 4 3.2 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. 0-14706, previously filed with the Commission on August 30, 2007 and incorporated herein by this reference). 4.1 Articles 4 and 9 of the 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, (filed on paper – hyperlink is not required pursuant to Rule 105 of Regulation S-T) and 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, respectively, each of which were previously filed with the Commission and are incorporated herein by this reference). 4.2 Articles 2, 3, 10, 11 and 14 of the 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. 0-14706, previously filed with the Commission on August 30, 2007 and incorporated herein by this reference). 24 4.3 Indenture, dated as of June 17, 2021, by and between Ingles Markets, Incorporated and Truist Bank, as Trustee, governing the 4.000% Senior Notes Due 2031, including the Form of 4.00% Senior Notes Due 2031 (filed as Exhibit 4.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, filed with the Commission on June 21, 2021 and incorporated herein by this reference). 4.4 * Description of Capital Stock (included as Exhibit 4.5 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 26, 2020, File No. 0-14706, previously filed with the commission and incorporated herein by reference). 10.1 Amended and Restated Ingles Markets, Incorporated Investment/Profit Sharing Plan effective September 29, 2002 (included as Exhibit 10.11 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 28, 2002, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.2 Second Amendment to the Ingles Markets, Incorporated Investment/Profit Sharing Plan dated November 2, 2011 (included as Exhibit 10.5 to the Ingles Markets, Incorporated Annual Report on Form 10-K for the fiscal year ended September 24, 2011, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.3 Ingles Markets, Incorporated Non-qualified Plan dated May 30, 2005 (included as Exhibit 10.5 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 24, 2005, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.4 Ingles Markets, Incorporated Executive Non-qualified Excess Plan amended and restated Effective January 1, 2013, dated November 1, 2012 (included as Exhibit 10.10 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 29, 2012, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.5 Ingles Markets, Incorporated Investment/Profit Sharing Plan (Amended and Restated effective January 1, 2017) (included as Exhibit 10.9 to the Ingles Markets, Incorporated’s Quarterly Report on Form 10-Q for the quarter ended December 30, 2017, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference ). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.6 Ingles Markets, Incorporated Investment/Profit Sharing Plan Description (included as Exhibit 10.10 to the Ingles Markets, Incorporated’s Quarterly Report on Form 10-Q for the quarter ended December 30, 2017, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference ). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.7 Amendment to Investment/Profit Sharing Plan to Permit In-Plan Roth Transfers (included as Exhibit 10.11 to the Ingles Markets, Incorporated’s Quarterly Report on Form 10-Q for the quarter ended December 30, 2017, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.8 Participation Agreement for Milkco, Inc. (Amended and Restated effective January 1, 2017) (included as Exhibit 10.12 to the Ingles Markets, Incorporated’s Quarterly Report on Form 10-Q for the quarter ended December 30, 2017, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference). 25 (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 10.9 Credit Agreement, dated as of June 17, 2021, by and among Ingles Markets, Incorporated, as borrower, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the other agents and lenders party thereto (included as Exhibit 10.1 to the Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on June 21, 2021 and incorporated herein by this reference). (Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of Form 10-K. ) 21.1 Subsidiaries of Ingles Markets, Incorporated (included as Exhibit 21.1 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 29, 2012, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference). 31.1 * Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002. 31.2 * Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002. 32.1 * Certification by Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002. 32.2 * Certification by Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002. 101 * The following financial information from the Annual Report on Form 10-K for the fiscal year ended September 24, 2022 formatted as Inline XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Statements of Income; (ii) the Consolidated Balance Sheets; (iii) the Consolidated Statements of Cash Flows; (iv) the Consolidated Statements of Changes in Stockholders’ Equity; and (v) the Notes to the Consolidated Financial Statements. 104 * Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ___________________________________ * Filed herewith. Item 16. FORM 10-K SUMMARY ‎ None. ‎ 26 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Ingles Markets, Incorporated Black Mountain, North Carolina Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Ingles Markets, Incorporated and subsidiaries (the "Company") as of September 24, 2022 and September 25, 2021, the related consolidated statements of income and other comprehensive income, changes in stockholders’ equity, and cash flows for each of the three fiscal years in the period ended September 24, 2022 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 24, 2022 and September 25, 2021, and the results of its operations and its cash flows for each of the three fiscal years in the period ended September 24, 2022, in conformity with accounting principles generally accepted in the United States of America. 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. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Vendor Allowances – Refer to Note 1 to the consolidated financial statements. Critical Audit Matter Description The Company receives funds for a variety of merchandising activities from certain 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 allowances generally relate to short term arrangements with vendors, often relating to a period of a month or less and are negotiated on a purchase-by-purchase or transaction-by-transaction basis. Vendor discounts and allowances that relate to buying and merchandising activities are recorded as a reduction of inventory cost and recognized in cost of goods sold when the related inventory is sold. Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising the vendor’s specific products are recorded as a reduction to the related expense in the period that the related expense is incurred. We identified vendor allowances as a critical audit matter because of the number and diversity of individual vendors agreements. This required an increased extent of effort when performing procedures to evaluate whether the vendor allowances were recorded in accordance with the terms of the vendor agreements. ‎ 27 How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to whether vendor allowances were recorded in accordance with the terms of the vendor agreements included the following, among others: • We tested the operating effectiveness of controls over vendor allowances, including management’s controls over the accrual and recording of vendor allowances as a reduction to the cost of inventory, cost of sales, or advertising expense in accordance with the terms of the vendor agreements. • 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 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 Charlotte, North Carolina November 23, 2022 We have served as the Company's auditor since 2012. 28 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Ingles Markets, Incorporated Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Ingles Markets, Incorporated and subsidiaries (the “Company”) 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 (COSO). 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 24, 2022, of the Company and our report dated November 23, 2022, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP Charlotte, North Carolina November 23, 2022 ‎ 29 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 24, 2022 AND SEPTEMBER 25, 2021 2022 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 267,198,517 $ 70,313,350 Short term investments — 5,000,000 Receivables (less allowance for doubtful accounts of $ 382,657 – 2022 and ‎ $ 157,343 – 2021) 97,157,614 95,082,014 Inventories 457,945,539 389,953,456 Other 15,830,032 15,091,595 Total current assets 838,131,702 575,440,415 PROPERTY AND EQUIPMENT, NET 1,374,031,169 1,370,769,432 OPERATING LEASE RIGHT OF USE ASSETS 38,594,968 40,145,098 OTHER ASSETS 44,752,886 31,989,010 TOTAL ASSETS $ 2,295,510,725 $ 2,018,343,955 2022 2021 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 17,620,789 $ 17,600,739 Current portion of operating lease liabilities $ 7,797,975 $ 8,635,998 Accounts payable - trade 213,388,385 189,432,027 Accrued expenses and current portion of other long-term liabilities 94,969,902 90,428,567 Total current liabilities 333,777,051 306,097,331 DEFERRED INCOME TAXES 73,578,000 72,768,000 LONG-TERM DEBT 554,287,420 571,913,204 NONCURRENT OPERATING LEASE LIABILITIES 32,794,609 33,887,935 OTHER LONG-TERM LIABILITIES 41,479,220 50,418,947 Total liabilities 1,035,916,300 1,035,085,417 COMMITMENTS AND CONTINGENCIES — — STOCKHOLDERS’ EQUITY: Preferred stock, $ 0.05 par value; 10,000,000 shares authorized; no shares issued — — Common stocks: Class A, $ 0.05 par value; 150,000,000 shares authorized; issued and outstanding, 14,377,575 shares in 2022, 14,271,335 shares in 2021 718,879 713,567 Class B, convertible to Class A, $ 0.05 par value; 100,000,000 shares authorized; issued and outstanding, 4,616,801 shares in 2022, 4,723,041 shares in 2021 230,840 236,152 Paid-in capital in excess of par value — — Accumulated other comprehensive income 12,406,551 ( 3,426,140 ) Retained earnings 1,246,238,155 985,734,959 Total stockholders’ equity 1,259,594,425 983,258,538 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,295,510,725 $ 2,018,343,955 See Notes to Consolidated Financial Statements. 30 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FISCAL YEARS ENDED SEPTEMBER 24, 2022, SEPTEMBER 25, 2021 AND SEPTEMBER 26, 2020 2022 2021 2020 Net sales $ 5,678,835,032 $ 4,987,919,603 $ 4,610,609,025 Cost of goods sold 4,263,066,672 3,684,486,289 3,412,357,115 Gross profit 1,415,768,360 1,303,433,314 1,198,251,910 Operating and administrative expenses 1,040,193,885 963,331,599 921,749,183 Gain from sale or disposal of assets 1,358,109 9,955,890 4,434,359 Income from operations 376,932,584 350,057,605 280,937,086 Other income, net 5,845,479 2,971,629 1,737,596 Interest expense 21,508,135 24,332,143 40,529,096 Loss on early extinguishment of debt — 1,082,633 7,101,153 Income before income taxes 361,269,928 327,614,458 235,044,433 Income tax expense 88,511,000 77,883,000 56,443,000 Net income $ 272,758,928 $ 249,731,458 $ 178,601,433 Other comprehensive income (expense): Change in fair value of interest rate swap $ 20,951,691 $ 9,031,156 $ ( 11,887,660 ) Income tax (expense) benefit ( 5,119,000 ) ( 2,206,000 ) 2,902,014 Other comprehensive income (expense), net of tax 15,832,691 6,825,156 ( 8,985,646 ) Comprehensive income $ 288,591,619 $ 256,556,614 $ 169,615,787 Per-share amounts: Class A Common Stock Basic earnings per common share $ 14.69 $ 13.06 $ 9.06 Diluted earnings per common share $ 14.36 $ 12.73 $ 8.82 Class B Common Stock Basic earnings per common share $ 13.35 $ 11.87 $ 8.24 Diluted earnings per common share $ 13.35 $ 11.87 $ 8.24 Cash dividends per common share: Class A $ 0.66 $ 0.66 $ 0.66 Class B $ 0.60 $ 0.60 $ 0.60 See Notes to Consolidated Financial Statements. 31 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FISCAL YEARS ENDED SEPTEMBER 24, 2022, SEPTEMBER 25, 2021 AND SEPTEMBER 26, 2020 PAID-IN ACCUMULATED CLASS A CLASS B CAPITAL IN OTHER COMMON STOCK COMMON STOCK EXCESS OF COMPREHENSIVE RETAINED SHARES AMOUNT SHARES AMOUNT PAR VALUE LOSS EARNINGS TOTAL Balance, September 28, 2019 14,180,485 $ 709,024 6,079,291 $ 303,965 $ 12,311,249 $ ( 1,265,650 ) $ 650,664,018 $ 662,722,606 Net income — — — — — — 178,601,433 178,601,433 Other comprehensive expense net of tax ( 8,985,646 ) ( 8,985,646 ) Cash dividends Class A — — — — — — ( 9,367,248 ) ( 9,367,248 ) Class B — — — — — — ( 3,640,188 ) ( 3,640,188 ) Common stock conversions 31,875 1,594 ( 31,875 ) ( 1,594 ) — — — — Balance, September 26, 2020 14,212,360 $ 710,618 6,047,416 $ 302,371 $ 12,311,249 $ ( 10,251,296 ) $ 816,258,015 $ 819,330,957 Net income — — — — — — 249,731,458 249,731,458 Other comprehensive income net of tax 6,825,156 6,825,156 Cash dividends Class A — — — — — — ( 9,396,169 ) ( 9,396,169 ) Class B — — — — — — ( 3,234,276 ) ( 3,234,276 ) Stock repurchases, at cost — — ( 1,265,400 ) ( 63,270 ) ( 12,311,249 ) — ( 67,624,069 ) ( 79,998,588 ) Common stock conversions 58,975 2,949 ( 58,975 ) ( 2,949 ) — — — — Balance, September 25, 2021 14,271,335 $ 713,567 4,723,041 $ 236,152 $ — $ ( 3,426,140 ) $ 985,734,959 $ 983,258,538 Net income — — — — — — 272,758,928 272,758,928 Other comprehensive income net of tax 15,832,691 15,832,691 Cash dividends Class A — — — — — — ( 9,450,149 ) ( 9,450,149 ) Class B — — — — — — ( 2,805,583 ) ( 2,805,583 ) Common stock conversions 106,240 5,312 ( 106,240 ) ( 5,312 ) — — — — Balance, September 24, 2022 14,377,575 $ 718,879 4,616,801 $ 230,840 $ — $ 12,406,551 $ 1,246,238,155 $ 1,259,594,425 See Notes to Consolidated Financial Statements. ‎ 32 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FISCAL YEARS ENDED SEPTEMBER 24, 2022, SEPTEMBER 25, 2021 AND SEPTEMBER 26, 2020 2022 2021 2020 Cash Flows From Operating Activities: Net income $ 272,758,928 $ 249,731,458 $ 178,601,433 Adjustments to reconcile net income to net cash provided ‎ by operating activities: Depreciation and amortization expense 117,801,654 117,103,658 116,282,239 Non cash operating lease cost 7,935,225 8,006,820 9,091,019 Gain from sale or disposal of assets ( 1,358,109 ) ( 9,955,890 ) ( 4,434,359 ) Loss on early extinguishment of debt — 1,082,633 7,101,153 Receipt of advance payments on purchases contracts 2,766,995 2,328,167 3,996,454 Recognition of advance payments on purchases contracts ( 3,037,321 ) ( 2,889,553 ) ( 4,026,852 ) Deferred income taxes ( 4,309,000 ) ( 2,772,000 ) 737,000 Changes in operating assets and liabilities Receivables ( 2,075,600 ) ( 13,723,657 ) ( 9,407,042 ) Inventory ( 67,992,082 ) ( 23,129,018 ) 7,304,622 Other assets 2,708,240 ( 3,948,861 ) ( 8,276,159 ) Operating lease liabilities ( 8,316,444 ) ( 8,384,435 ) ( 9,463,632 ) Accounts payable and accrued expenses 22,615,984 ( 7,152,634 ) 62,611,221 Net Cash Provided By Operating Activities 339,498,470 306,296,688 350,117,097 Cash Flows From Investing Activities: Proceeds from sales of property and equipment 2,618,907 17,612,326 5,413,781 Purchase of short term investments ( 110,210,267 ) ( 295,000,000 ) — Proceeds of short term investments 115,210,267 290,000,000 — Capital expenditures ( 119,608,974 ) ( 140,597,162 ) ( 122,767,178 ) Net Cash Used By Investing Activities ( 111,990,067 ) ( 127,984,836 ) ( 117,353,397 ) Cash Flows From Financing Activities: Proceeds from short-term borrowings — 653,623,780 112,835,439 Payments on short-term borrowings — ( 692,507,850 ) ( 73,951,369 ) Debt issuance costs — ( 5,576,832 ) ( 854,789 ) Proceeds from issuance of bonds — 350,000,000 — Proceeds from new long-term borrowings — — 155,000,000 Principal payments on long-term borrowings ( 18,367,504 ) ( 327,812,521 ) ( 442,640,345 ) Prepayment penalties on debt extinguishment — — ( 5,366,350 ) Stock repurchases — ( 79,998,588 ) — Dividends ( 12,255,732 ) ( 12,630,446 ) ( 13,007,436 ) Net Cash Used By Financing Activities ( 30,623,236 ) ( 114,902,457 ) ( 267,984,850 ) Increase (decrease) in Cash and Cash Equivalents 196,885,167 63,409,395 ( 35,221,150 ) Cash and Cash Equivalents at Beginning of Year 70,313,350 6,903,955 42,125,105 Cash and Cash Equivalents at End of Year $ 267,198,517 $ 70,313,350 $ 6,903,955 See Notes to Consolidated Financial Statements. ‎ 33 Ingles Markets, Incorporated and Subsidiaries Notes To Consolidated Financial Statements Fiscal years ended September 24, 2022, September 25, 2021 and September 26, 2020 1. Summary of Significant Accounting Policies Nature of Operations – Ingles Markets, Incorporated (“Ingles” or the “Company”), is a leading supermarket chain in the southeast United States, operates 198 supermarkets in North Carolina ( 75 ), Georgia ( 65 ), South Carolina ( 35 ), Tennessee ( 21 ), Virginia ( 1 ) and Alabama ( 1 ). Principles of Consolidation – The consolidated financial statements include the accounts of Ingles Markets, Incorporated and its wholly-owned subsidiaries, Sky King, Inc., Ingles Markets Investments, Inc., Milkco, Inc., Land O Sky, LLC, Shopping Center Financing, LLC, and Shopping Center Financing II, LLC. All significant inter-company balances and transactions are eliminated in consolidation. Fiscal Year – The Company’s fiscal year ends on the last Saturday in September. Fiscal years 2022, 2021 and 2020 each consisted of 52 weeks. Segment Information – The Company operates one primary business segment, retail grocery sales (representing the aggregation of individual retail stores). 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): Facilitation of the Effects of Reference Rate Reform on Financial Reporting .” The ASU provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting in response to the risk of cessation of the London Interbank Offered Rate (“LIBOR”). This amendment provides for optional expedients and exceptions for applying generally accepted accounting principles to contracts and hedging relationships that are affected by LIBOR and other reference rates. The ASU generally allows for hedge accounting to continue if the hedge was highly effective or met other standards prior to reference rate reform. 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, 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 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. There were no such balances at September 24, 2022 and September 25, 2021, respectively. At September 24, 2022 demand deposits of approximately $ 262.3 million in five banks exceed the $ 250,000 FDIC insurance limit per bank. Short Term Investments – From time to time, the Company purchases financial products that can be readily converted into cash and accounts for such financial products as short-term investments. The financial products include money market funds, bonds, and mutual funds. The carrying values of the Company’s short term investments approximate fair value because of their liquidity. Interest Rate Swaps – The Company utilizes interest rate swap contracts to reduce its exposure to fluctuations in variable interest rates for future interest payments on some of its debt instruments. For determining the fair value of the interest rate swap contracts, the Company uses significant observable market data or assumptions about counterparty risk. The fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves. The Company has designated its swaps as cash flow hedges, for which the Company records the effective portions of changes in its fair value, net of tax, in other comprehensive income (expense). To the extent interest rate swaps are determined to be ineffective, the Company recognizes the change in the estimated fair value of the swaps in earnings. Allowance for Doubtful Accounts – Accounts receivable are primarily from vendor allowances, customer charges and pharmacy insurance company reimbursements. Accounts receivable are stated net of an allowance for uncollectible accounts, which is determined through analysis of the aging of accounts receivable at the date of the consolidated financial statements and assessments of the collectability based upon historical collection activity adjusted for current conditions. Inventories – Substantially all of the Company’s inventory consists of finished goods. Warehouse inventories are valued at the lower of average cost or market. 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, 34 markdowns and shrinkage. Warehousing and distribution costs are not included in the valuation of inventories. The Company reviews its judgments and estimates regularly and makes adjustments where facts and circumstances dictate. Property, Equipment and Depreciation – Property and equipment are stated at cost and depreciated over the estimated useful lives by the straight-line method. Buildings are generally depreciated over 30 years . Store, office and warehouse equipment is generally depreciated over three years to 10 years. Transportation equipment is generally depreciated over three years to five years . Leasehold improvements are depreciated over the shorter of the subject lease term or the useful life of the asset, generally from three years to 30 years. Depreciation and amortization expense totaled $ 117.8 million , $ 117.1 million and $ 116.3 million for fiscal years 2022, 2021 and 2020, respectively. Asset Impairments – The Company accounts for the impairment of long-lived assets in accordance with FASB Accounting Standards Codification (“FASB ASC”) Topic 360. Asset groups are primarily comprised of individual store and shopping center properties. For assets to be held and used, the Company tests for impairment using undiscounted cash flows and calculates the amount of impairment using discounted cash flows. For assets held for sale, impairment is recognized based on the excess of remaining book value over expected recovery value. The recovery value is the fair value as determined by independent quotes or expected sales prices developed by internal associates, less costs to sell. Estimates of future cash flows and expected sales prices are judgments based upon the Company’s experience and knowledge of local operations and cash flows that are projected for several years into the future. These estimates can fluctuate significantly due to changes in real estate market conditions, the economic environment, capital spending decisions and inflation. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred. Nonqualified Investment Plan – The purpose of the Executive Nonqualified Excess Plan is to provide retirement benefits similar to the Company’s Investment/Profit Sharing Plan to certain of the Company’s management associates who are otherwise subject to limited participation in the 401(k) feature of the Company’s Investment/Profit Sharing Plan. Participant retirement account balances are liabilities of the Company. Assets of the plan are assets of the Company and are held in trust for associates and distributed upon retirement, death, disability, in-service distributions, or termination of employment. In accordance with the trust, the Company may not use these assets for general corporate purposes. Life insurance policies and marketable securities held in the trust are included in the caption “Other assets” in the Consolidated Balance Sheets. The liability to plan participants totaled $ 18.4 million at September 24, 2022 and $ 21.0 million at September 25, 2021. The settlement of this obligation is dependent upon participant elections to withdraw funds, which cannot be predicted. Self-Insurance – The Company is self-insured for workers’ compensation, general liability and group medical and dental benefits. Risks and uncertainties are associated with self-insurance; however, the Company has limited its exposure by maintaining excess liability coverage of $ 1,000,000 per occurrence for workers’ compensation, and for general liability, and $ 475,000 per covered person for medical care benefits for a policy year. Self-insurance liabilities are established based on claims filed and estimates of claims incurred but not reported. The estimates are based on data provided by the respective claims administrators, which is then applied to appropriate actuarial methods. These estimates can fluctuate if historical trends are not predictive of the future. 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 $ 4.0 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. The Company carries casualty insurance only on those properties where it is required to do so. The Company has elected to self-insure its other properties. Income Taxes – The Company accounts for income taxes under FASB ASC Topic 740. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates. The Company accounts for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. The Company files income tax returns with federal and various state jurisdictions. With few exceptions, the Company is no longer subject to federal or state income tax examinations by tax authorities for the years before tax year 2018. Examinations may challenge certain of the Company’s tax positions. Actual results could materially differ from these estimates and could significantly affect the effective tax rate and cash flows in the future years. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not expected to be realized. Gross unrecognized tax benefits as well as interest and penalties related to uncertain tax positions could affect the Company’s effective tax rate. These amounts are insignificant for fiscal years 2022, 2021, and 2020. Pre-Opening Costs – Costs associated with the opening of new stores are expensed when incurred. 35 Per-Share Amounts – The Company calculates earnings per share using the two-class method in accordance with FASB ASC Topic 260. Advertising – The Company expenses advertising as incurred. Advertising and promotion expenses, net of vendor allowance reimbursements, totaled $ 20.8 million, $ 18.6 million and $ 15.8 million for fiscal years 2022, 2021 and 2020, respectively. Use of Estimates – The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Such estimates include the allowance for doubtful accounts, various inventory reserves, realizability of deferred tax assets, and self-insurance reserves. Cost of Goods Sold – In addition to the direct product cost, cost of goods sold for the grocery segment includes inbound freight charges and costs of the Company’s distribution network. Milk processing is a manufacturing process. Therefore, cost of goods sold include direct product and production costs, inbound freight, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs, and other costs of distribution. Depreciation expense included in costs of goods sold totaled $ 15.0 million, $ 16.4 million and $ 15.6 million for fiscal years 2022, 2021 and 2020, respectively. Operating and Administrative Expenses – Operating and administrative expenses include costs incurred for store and administrative labor, occupancy, depreciation (to the extent not included in Cost of Goods Sold), insurance and general administration. Revenue Recognition – The Company recognizes revenues from grocery segment sales at the point of sale to its customers. Sales taxes collected from customers are not included in reported revenues. Discounts provided to customers by the Company at the point of sale, including discounts provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Product returns are not significant. The Company recognizes fluid dairy revenues at the time the risk of loss shifts to the customer pursuant to our terms of sale. Therefore, approximately 49 % of fluid dairy revenues are recognized when the product is picked up by the customer at our facility. The remaining fluid dairy revenues are recognized when the product is received at the customer’s facility upon delivery via transportation arranged by the Company. Rental income, including contingent rentals, is recognized on the accrual basis. Upfront consideration paid by either the Company as lessor or by the lessee is recognized as an adjustment to net rental income using the straight line method over the term of the lease. 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 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. These allowances generally relate to short term arrangements with vendors, often relating to a period of a month or less, and are negotiated on a purchase-by-purchase or transaction-by-transaction basis. Whenever practical, vendor discounts and allowances that relate to buying and merchandising activities are recorded as a component of item cost in inventory and recognized in merchandise costs when the item is sold. Due to system constraints, the use of the retail method for store inventory, and the nature of certain allowances, it is sometimes not practicable to apply allowances to the item cost of inventory. In those instances, the allowances are applied as a reduction of merchandise costs using a rational and systematic methodology, which results in the recognition of these incentives when the inventory related to the vendor consideration received is sold. Vendor allowances applied as a reduction of merchandise costs totaled $ 110.6 million, $ 116.3 million, and $ 107.5 million for the fiscal years ended September 24, 2022, September 25, 2021 and September 26, 2020, respectively. Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising the vendor’s specific products are recorded as a reduction to the related expense in the period that the related expense is incurred. Vendor advertising allowances recorded as a reduction of advertising expense totaled $ 7.1 million, $ 8.1 million, and $ 8.0 million for the fiscal years ended September 24, 2022, September 25, 2021 and September 26, 2020, respectively. During fiscal years 2022, 2021 and 2020, the COVID-19 pandemic increased the Company’s sales. As a result, vendors offered a lower level of incentives for the Company to sell their products. If vendor advertising allowances were substantially reduced or eliminated, the Company would likely consider other methods of advertising as well as the volume and frequency of its product advertising, which could increase or decrease its expenditures. Similarly, the Company is not able to assess the impact of vendor advertising allowances on the creation of additional revenue; as such allowances do not directly generate revenue for its stores . 36 2. Income Taxes Deferred Income Tax Liabilities and Assets – Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates. Significant components of the Company’s deferred tax liabilities and assets are as follows: 2022 2021 Deferred tax liabilities: Property and equipment tax/book differences $ 82,457,000 $ 88,736,000 Interest rate swaps 4,011,000 — Property tax method 1,450,000 1,051,000 Total deferred tax liabilities 87,918,000 89,787,000 Deferred tax assets: Insurance reserves 4,303,000 5,030,000 Advance payments on purchases contracts 487,000 553,000 Vacation accrual 1,977,000 1,867,000 Inventory 1,571,000 1,368,000 Deferred compensation 4,483,000 5,532,000 Interest rate swaps — 1,107,000 Other 1,519,000 1,562,000 Total deferred tax assets 14,340,000 17,019,000 Net deferred tax liabilities $ 73,578,000 $ 72,768,000 Refundable current income taxes totaling $ 4.2 million and $ 2.7 million at September 24, 2022 and September 25, 2021, respectively are included in the line item “Other current assets” on the Consolidated Balance Sheets. Income Tax Expense - Income tax expense differs from the amounts computed by applying the statutory federal rates to income before income taxes. The reasons for the differences are as follows: 2022 2021 2020 Federal tax at statutory rate $ 75,783,000 $ 68,818,000 $ 49,359,000 State income tax, net of federal tax benefits 12,032,000 10,872,000 7,825,000 Federal tax credits ( 1,500,000 ) ( 1,700,000 ) ( 513,000 ) Other 2,196,000 ( 107,000 ) ( 228,000 ) Total $ 88,511,000 $ 77,883,000 $ 56,443,000 Current and deferred income tax expense (benefit) is as follows: 2022 2021 2020 Current: Federal $ 76,647,000 $ 66,526,000 $ 45,261,000 State 16,173,000 14,129,000 10,445,000 Total current expense 92,820,000 80,655,000 55,706,000 Deferred: Federal ( 3,565,000 ) ( 2,482,000 ) 1,163,000 State ( 744,000 ) ( 290,000 ) ( 426,000 ) Total deferred (benefit) expense ( 4,309,000 ) ( 2,772,000 ) 737,000 Total expense $ 88,511,000 $ 77,883,000 $ 56,443,000 3. Property and Equipment Property and equipment, net, consists of the following: 2022 2021 Land $ 417,414,333 $ 399,747,689 Construction in progress 38,591,661 37,735,207 Buildings 1,350,593,056 1,304,896,586 Store, office and warehouse equipment 1,045,266,039 1,018,790,068 Transportation equipment 75,163,558 71,032,666 Leasehold improvements 60,958,847 60,986,752 Total 2,987,987,494 2,893,188,968 Less accumulated depreciation and amortization 1,613,956,325 1,522,419,536 Property and equipment - net $ 1,374,031,169 $ 1,370,769,432 37 4. Property Held for Lease and Rental Income At September 24, 2022, the Company owned and operated 85 shopping centers in conjunction with its supermarket operations. The Company leases to others a portion of its shopping center properties. The leases are non-cancelable operating lease agreements for periods ranging up to 20 years. Rental income is included in the line item “Net sales” on the Consolidated Statements of Income. Depreciation on owned properties leased to others and other shopping center expenses are included in the line item “Cost of goods sold” on the Consolidated Statements of Income. 2022 2021 2020 Rents earned on owned and subleased properties: Base rentals $ 20,091,776 $ 19,146,124 $ 13,881,963 Variable rentals 166,890 271,569 289,831 Total 20,258,666 19,417,693 14,171,794 Depreciation on owned properties leased to others ( 6,318,888 ) ( 5,855,749 ) ( 5,278,540 ) Other shopping center expenses ( 2,968,660 ) ( 3,299,391 ) ( 3,327,278 ) Total $ 10,971,118 $ 10,262,553 $ 5,565,976 Owned properties leased or held for lease to others under operating leases by major classes are summarized as follows: September 24, September 25, 2022 2021 Land $ 91,607,085 $ 82,896,124 Buildings 241,280,289 217,732,283 Total 332,887,374 300,628,407 Less accumulated depreciation ( 112,986,048 ) ( 103,975,838 ) Total $ 219,901,326 $ 196,652,569 The above amounts are included on the Consolidated Balance Sheets in the caption “Property and equipment, net.” The following is a schedule of minimum future rental income on non-cancelable operating leases as of September 24, 2022: Fiscal Year 2023 $ 15,913,457 2024 14,554,813 2025 13,088,508 2026 10,090,779 2027 7,691,671 Thereafter 29,954,629 Total minimum future rental income $ 91,293,857 5. Leases and Rental Expense The Company conducts part of its retail operations from leased facilities. The initial terms of the leases are generally 20 years. The majority of the leases include one or more renewal options and provide that the Company pay property taxes, utilities, repairs and certain other costs incidental to occupation of the premises. Several leases contain clauses calling for percentage rentals based upon gross sales of the supermarket occupying the leased space. Step rent provisions, escalation clauses, capital improvements and other lease concessions are taken into account in computing lease payments. Operating lease expense is recognized on a straight-line basis over the minimum lease term. Operating Leases - Rent expense for all operating leases of $ 10.9 million, $ 11.1 million and $ 11.1 million for fiscal years 2022, 2021 and 2020, respectively, is included in operating and administrative expenses. This amount included short-term (less than one year) leases, common area expenses, and variable lease costs, all of which are insignificant. Cash paid for lease liabilities in operating activities approximates operating lease cost. Sub-lease rental income of $ 0.3 million for each of fiscal years 2022, 2021 and 2020, is included as a reduction of rental expense. 38 Maturities of operating lease liabilities as of September 24, 2022 are as follows: Fiscal Year 2023 $ 9,097,692 2024 6,827,392 2025 6,026,685 2026 4,744,737 2027 3,894,487 Thereafter 21,286,379 Total lease payments 51,877,372 Less amount representing interest 11,284,788 Present value of lease liabilities $ 40,592,584 On the Consolidated Balance Sheets, lease extensions exercised during fiscal year 2022 increased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” by $ 7.9 million each during the year ended September 24, 2022. 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 24, 2022 is 3.51 %, based on our incremental borrowing rate. 6. Supplementary Balance Sheet Information Accrued Expenses and Current Portion of Other Long-Term Liabilities - Accrued expenses and current portion of other long-term liabilities are summarized as follows: 2022 2021 Property, payroll, and other taxes payable $ 23,306,546 $ 22,621,486 Salaries, wages, and bonuses payable 49,619,593 45,890,517 Self-insurance liabilities: Employee group insurance 4,969,709 5,183,395 Workers’ compensation insurance 4,607,267 4,711,432 General liability insurance 3,543,885 3,424,729 Interest 4,590,254 4,481,104 Other 4,332,648 4,115,904 Total accrued expenses and current portion of other long-term liabilities $ 94,969,902 $ 90,428,567 Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $ 37.0 million, $ 35.5 million and $ 38.5 million for fiscal years 2022, 2021 and 2020, respectively. Other Long-Term Liabilities - Other long-term liabilities are summarized as follows: 2022 2021 Advance payments on purchases contracts $ 1,994,459 $ 2,264,784 Nonqualified investment plan liability 18,445,157 22,736,980 Self-insurance liabilities: Workers’ compensation insurance 13,287,189 14,501,624 General liability insurance 4,552,162 4,286,347 Interest rate swap liability — 4,531,140 Other 3,942,604 3,211,513 Other long-term liabilities 42,221,571 51,532,388 Less current portion 742,351 1,113,441 Total other long-term liabilities $ 41,479,220 $ 50,418,947 The Company’s fuel operations contain underground tanks for the storage of gasoline and diesel fuel. The Company reviewed FASB Topic ASC 410 and determined that we have a legal obligation to remove tanks at a point in the future and accordingly determined we have met the requirements for an asset retirement obligation. The Company followed the FASB ASC 410 model for determining the asset retirement cost and asset retirement obligation. The amounts recorded are immaterial for each fuel center as well as in the aggregate at September 24, 2022 and September 25, 2021. Advance Payments on Purchases Contracts - The Company has entered into agreements with suppliers whereby payment is received in advance and earned based on purchases of product from these suppliers in the future. The unearned portion, included in other long-term liabilities, will be recognized in the results of operations in accordance with the terms of the contract. 39 7. Long-Term Debt Long-term debt and short-term loans are summarized as follows: 2022 2021 Bonds payable: Senior notes, interest rate of 4.00 %, maturing 2031 $ 350,000,000 $ 350,000,000 Recovery Zone Facility Bonds, maturing 2036 58,970,000 63,500,000 Notes payable due to banks, weighted average interest rate of 2.31 % for 2022 ‎ and 1.74 % for 2021 169,021,513 182,859,017 Less unamortized prepaid loan costs ( 6,083,304 ) ( 6,845,074 ) Total long-term debt 571,908,209 589,513,943 Less current portion 17,620,789 17,600,739 Long-term debt, net of current portion $ 554,287,420 $ 571,913,204 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 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. The Company recognized debt extinguishment costs of approximately $ 1.1 million during fiscal year 2021. The Company may redeem all or a portion of the 2031 Notes at any time at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning June 15 of the years indicated below: Year 2026 102.000 % 2027 101.333 % 2028 100.667 % 2029 and thereafter 100.000 % Additionally, The Company may also redeem all or part of the 2031 Notes at any time prior to June 15, 2026 at a redemption price equal to 100 % of the principal amount of the 2031 Notes to be redeemed plus the Applicable Premium (as defined in the indenture governing the 2031 Notes), as of, and accrued and unpaid interest to, the redemption date. Additionally, the Company may redeem up to 40 % of the aggregate principal amount of the 2031 Notes prior to June 15, 2024 with the net cash proceeds of certain sales of its capital stock at a redemption price equal to 104.0 % of the principal amount of the 2031 Notes, plus accrued and unpaid interest, if any, to the date of redemption; provided, that, after such redemption, at least 60 % of the aggregate principal amount of the 2031 Notes originally issued remains outstanding. In June 2021, the Company entered into a $ 150.0 million line of credit (the “Line”) that matures in June 2026. The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or LIBOR. The Line allows the Company to issue up to $ 10.0 million in letters of credit, of which none were issued at September 24, 2022. The Company is not required to maintain compensating balances in connection with the Line. At September 24, 2022, the Company had no borrowings outstanding under the Line. In December 2010, the Company completed the funding of $ 99.7 million of Recovery Zone Facility Bonds (the “Bonds”) for construction of new warehouse and distribution center to be located in Buncombe County, North Carolina (the “Project”). The final maturity date of the Bonds is January 1, 2036 . 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 40 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. Interest earned by bondholders on the Bonds is exempt from Federal and North Carolina income taxation. The interest rate on the Bonds is equal to one-month LIBOR (adjusted monthly) plus a credit spread, adjusted to reflect the income tax exemption. The Company’s obligation to repay the Bonds is collateralized by the Project. The Covenant Agreement incorporates substantially all financial covenants included in the Line. The 2031 Notes, the Bonds and the Line contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the Line to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. 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 %. Under this agreement, the Company pays monthly the fixed rate of 3.92 % and receives the one-month LIBOR plus 1.65 %. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest swap. 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 %. Under this agreement, the Company pays monthly the fixed rate of 2.95 % and receives the one-month LIBOR plus 1.50 %. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $ 0.65 million and mature in fiscal year 2030. The Company recognizes differences between the variable rate interest payments and the fixed interest rate settlements with the swap counterparties as an adjustment to interest expense each period over the life of the swaps. The Company has designated the swaps as cash flow hedges and records the changes in the estimated fair value of the swaps to other comprehensive income each period. 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 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. Failure of the swap counterparty to make payments would result in the loss of any potential benefit to the Company under the swap agreement. In this case, the Company would still be obligated to pay the variable interest payments underlying the debt agreements. Additionally, failure of the swap counterparty would not eliminate the Company’s obligation to continue to make payments under the existing swap agreement if it continues to be in a net pay position. The Company’s long-term debt agreements generally contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the Line to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. The Company was in compliance with all financial covenants at September 24, 2022. At September 24, 2022, property and equipment with an undepreciated cost of approximately $ 269.0 million was pledged as collateral for long-term debt. Long-term debt and Line agreements contain various restrictive covenants requiring, among other things, minimum levels of net worth and maintenance of certain financial ratios. While there are no current restrictions on net income or retained earnings available for the payment of dividends, certain loan agreements contain provisions outlining minimum tangible net worth requirements that restrict the ability of the Company to pay cash dividends in excess of the current annual per share dividends paid on the Company’s Class A and Class B Common Stock. 41 Components of interest costs are as follows: 2022 2021 2020 Total interest costs $ 21,848,860 $ 25,463,076 $ 42,204,652 Interest capitalized ( 340,725 ) ( 1,130,933 ) ( 1,675,556 ) Interest expense $ 21,508,135 $ 24,332,143 $ 40,529,096 Maturities of long-term debt at September 24, 2022 are as follows: Fiscal Year 2023 $ 18,371,485 2024 18,375,140 2025 22,281,554 2026 18,280,000 2027 18,280,000 Thereafter 482,403,334 Less unamortized prepaid loan costs ( 6,083,304 ) Total $ 571,908,209 8. Stockholders’ Equity The Company has two classes of Common Stock: Class A and Class B. Class A Common Stock is traded on The NASDAQ Global Select Market under the symbol IMKTA. There is no public market for the Company’s Class B Common Stock. However, each share of Class B Common Stock is convertible at any time, at the option of the holder, into one share of Class A Common Stock. Upon any transfers of Class B Common Stock (other than to immediate family members, other eligible holders, and participants in the Investment/Profit Sharing Plan), such stock is automatically converted into Class A Common Stock. The holders of the Class A Common Stock and Class B Common Stock are entitled to dividends and other distributions when declared out of assets legally available therefore, subject to the dividend rights of any preferred stock that may be issued in the future. Each share of Class A Common Stock is entitled to receive a cash dividend and liquidation payment in an amount equal to 110 % of any cash dividend or liquidation payment on Class B Common Stock. Any stock dividend must be paid in shares of Class A Common Stock with respect to Class A Common Stock and in shares of Class B Common Stock with respect to Class B Common Stock. The voting powers, preferences and relative rights of Class A Common Stock and Class B Common Stock are identical in all respects, except that the holders of Class A Common Stock have one vote per share and the holders of Class B Common Stock have ten votes per share. In addition, holders of Class A Common Stock, as a separate class, are entitled to elect 25 % of all directors constituting the Board of Directors (rounded to the nearest whole number). As long as the Class B Common Stock represents at least 12.5 % of the total outstanding Common Stock of both classes, holders of Class B Common Stock, as a separate class, are entitled to elect the remaining directors. The Company’s Articles of Incorporation and Bylaws provide that the Board of Directors can set the number of directors between five and eleven . 9. Earnings Per Common Share The Company calculates earnings per share using the two-class method in accordance with FASB ASC Topic 260. The two-class method of computing basic earnings per share for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Diluted earnings per share is calculated assuming the conversion of all shares of Class B Common Stock to shares of Class A Common Stock on a share-for-share basis. The tables below reconcile the numerators and denominators of basic and diluted earnings per share for current and prior periods. 42 Year Ended September 24, 2022 Class A Class B Numerator: Allocated net income Net income allocated, basic $ 210,480,738 $ 62,278,190 Conversion of Class B to Class A shares 62,278,190 — Net income allocated, diluted $ 272,758,928 $ 62,278,190 Denominator: Weighted average shares outstanding Weighted average shares outstanding, basic 14,330,809 4,663,567 Conversion of Class B to Class A shares 4,663,567 — Weighted average shares outstanding, diluted 18,994,376 4,663,567 Earnings per share Basic $ 14.69 $ 13.35 Diluted $ 14.36 $ 13.35 Year Ended Year Ended September 25, 2021 September 26, 2020 Class A Class B Class A Class B Numerator: Allocated net income Net income allocated, basic $ 185,964,771 $ 63,766,687 $ 128,634,913 $ 49,966,520 Conversion of Class B to Class A shares 63,766,687 — 49,966,520 — Net income allocated, diluted $ 249,731,458 $ 63,766,687 $ 178,601,433 $ 49,966,520 Denominator: Weighted average ‎ shares outstanding Weighted average shares outstanding, basic 14,242,276 5,370,894 14,194,819 6,064,957 Conversion of Class B to Class A shares 5,370,894 — 6,064,957 — Weighted average shares outstanding, diluted 19,613,170 5,370,894 20,259,776 6,064,957 Earnings per share Basic $ 13.06 $ 11.87 $ 9.06 $ 8.24 Diluted $ 12.73 $ 11.87 $ 8.82 $ 8.24 10. Employee Benefit Plans Investment/Profit Sharing Plan - The purpose of the qualified investment/profit sharing plan is to provide retirement benefits to eligible associates. Assets of the plan, including the Company’s Class B Common Stock, are held in trust for associates and distributed upon retirement, death, disability or termination of employment. Company contributions are discretionary and are determined quarterly by the Board of Directors. The plan includes a 401(k) feature. Company contributions to the plan, included in operating and administrative expenses, were approximately $ 5.0 million, $ 5.1 million and $ 4.2 million for fiscal years 2022, 2021 and 2020, respectively. Nonqualified Investment Plan - The purpose of the Executive Nonqualified Excess Plan is to provide benefits similar to the Company’s Investment/Profit Sharing Plan to certain of the Company’s management associates who are otherwise subject to limited participation in the 401(k) feature of the Company’s Investment/Profit Sharing Plan. Company contributions to the plan, included in operating and administrative expenses, were approximately $ 440,000 , $ 375,000 and $ 294,000 for fiscal years 2022, 2021 and 2020, respectively. Cash Bonuses - The Company pays monthly bonuses to various managerial personnel based on performance of the operating units managed by these personnel. The Company pays discretionary annual bonuses to certain associates who do not receive monthly performance bonuses. The Company pays discretionary bonuses to certain executive officers based on Company performance. 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. The accrued liability for cash bonuses totaled $ 26.0 million at September 24, 2022 and $ 22.0 million at September 25, 2021. These amounts are included in the caption “Accrued expenses and current portion of other long-term liabilities” in the Consolidated Balance Sheets. Medical Care Plan - Medical and dental benefits are provided to qualified associates under a self-insured plan. Expenses under the plan include claims paid, administrative expenses and an estimated liability for claims incurred but not yet paid. 43 11. Segment Information The Company operates one primary business segment, retail grocery sales (representing the aggregation of individual retail stores). “Other” includes the Company’s remaining operations -- fluid dairy and shopping center rentals. Information about the Company’s operations by lines of business (amounts in thousands) is as follows: 2022 2021 2020 Revenues from unaffiliated customers: Grocery $ 1,940,414 $ 1,762,872 $ 1,693,961 Non-foods 1,204,443 1,136,250 1,066,939 Perishables 1,445,042 1,349,081 1,261,537 Gasoline 885,801 583,749 459,639 Total retail 5,475,700 4,831,952 4,482,076 Other 203,135 155,968 128,533 Total revenues from unaffiliated customers $ 5,678,835 $ 4,987,920 $ 4,610,609 Income before income taxes: Retail $ 353,006 $ 327,563 $ 264,388 Other 23,927 22,495 16,549 Total income from operations 376,933 350,058 280,937 Other income, net 5,845 2,971 1,737 Interest expense 21,508 24,332 40,529 Loss on early extinguishment of debt — 1,083 7,101 Income before income taxes $ 361,270 $ 327,614 $ 235,044 Assets: Retail $ 2,042,730 $ 1,794,160 $ 1,712,203 Other 255,880 226,762 189,607 Elimination of intercompany receivable ( 3,099 ) ( 2,578 ) ( 2,511 ) Total assets $ 2,295,511 $ 2,018,344 $ 1,899,299 Capital expenditures: Retail $ 106,508 $ 138,005 $ 120,605 Other 13,101 2,592 2,162 Total capital expenditures $ 119,609 $ 140,597 $ 122,767 Depreciation and amortization: Retail $ 109,642 $ 108,745 $ 108,588 Other 8,160 8,359 7,694 Total depreciation and amortization $ 117,802 $ 117,104 $ 116,282 The grocery category includes grocery, dairy, and frozen foods. The non-foods category includes alcoholic beverages, tobacco, pharmacy, and health/beauty/cosmetic products. The perishable category includes meat, produce, deli and bakery. The fluid dairy operation, included in “Other”, had $ 51.4 million, $ 46.5 million and $ 47.0 million in sales to the grocery sales segment in fiscal 2022, 2021 and 2020, respectively. These sales were eliminated in consolidation. 12. Commitments and Contingencies Various legal proceedings and claims arising in the ordinary course of business are pending against the Company. In the opinion of management, the ultimate liability, if any, from all pending legal proceedings and claims is not expected to materially affect the Company’s financial position, the results of its operations or its cash flows. Construction commitments at September 24, 2022 totaled $ 6.5 million. The Company expects these commitments to be fulfilled during fiscal year 2023. The Company has entered into supply contracts to provide approximately 84 % of the fuel sold in its fuel centers. Pricing is based on certain market indices at the time of purchase. The suppliers can modify or terminate the contracts if the Company does not meet certain minimum monthly purchase requirements. There have been no other material changes in contractual obligations and commercial commitments subsequent to September 24, 2022 other than as described elsewhere in this Form 10-K. 13. Fair Values of Financial Instruments The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: 44 Cash and cash equivalents: The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents approximate their fair values. Short term investments: The carrying amounts reported in the Consolidated Balance Sheets for short term investments approximate their fair values. Receivables: The carrying amounts reported in the Consolidated Balance Sheets for receivables approximate their fair values. The fair value of the Company’s debt is estimated using valuation techniques under the accounting guidance related to fair value measurements based on observable and unobservable inputs. Observable inputs reflect readily available data from independent sources, while unobservable inputs reflect the Company’s market assumptions. These inputs are classified into the following hierarchy: Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets. Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation. The carrying amount and fair value of the Company’s debt, interest rate swaps, and non-qualified plan assets at September 24, 2022 is as follows (in thousands): Carrying Amount Fair Value Fair Value Measurements Senior Notes $ 350,000 $ 292,250 Level 2 Facility Bonds 58,970 58,970 Level 2 Secured notes payable and other 162,938 162,935 Level 2 Interest rate swaps derivative contract asset 16,421 16,421 Level 2 Non-qualified retirement plan assets 16,600 16,600 Level 2 The fair values for Level 2 measurements were determined primarily using market yields and taking into consideration the underlying terms of the debt. 14. Cash Flow Information Supplemental disclosure of cash flow information is as follows: 2022 2021 2020 Cash paid during the year for: Interest (net of amounts capitalized) $ 21,398,985 $ 26,537,234 $ 47,185,161 Income taxes 87,187,808 77,515,577 63,195,908 Non cash items: Property and equipment additions included in accounts payable 8,724,576 6,920,759 11,626,310 15. Related Party Transactions 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. There were no such loans outstanding at September 24, 2022 or September 25, 2021. ‎ 45 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INGLES MARKETS, INCORPORATED By: /s/ James W. Lanning James W. Lanning Chief Executive Officer, President and Chief Operating Officer Date: November 23, 2022 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: /s/ Robert P. Ingle, II November 23, 2022 Robert P. Ingle, II, Chairman and Director /s/ James W. Lanning November 23, 2022 James W. Lanning, CEO, President, Chief Operating Officer and Director /s/ Patricia E. Jackson November 23, 2022 Patricia E. Jackson, CPA, Vice President-Finance, Chief Financial Officer and Director /s/ Catherine L. Phillips November 23, 2022 Catherine L. Phillips, CPA, Secretary and Controller /s/ John R. Lowden November 23, 2022 John R. Lowden, Director /s/ Fred D. Ayers November 23, 2022 Fred D. Ayers, Director /s/ Laura Sharp November 23, 2022 Laura Sharp, Director /s/ Brenda S. Tudor November 23, 2022 Brenda S. Tudor, Director /s/ Ernest E. Ferguson November 23, 2022 Ernest E. Ferguson, Director 46