What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-02-08 compared with 2023-08-03 · 82 added, 145 removed, 308 unchanged (42% of the section changed)

18 unchanged sentences

Current portion of operating lease liabilities

Current portion of finance lease liabilities

Accounts payable - trade

4 unchanged sentences

Noncurrent operating lease liabilities

Noncurrent operating finance liabilities

Other Long-Term Liabilities

5 unchanged sentences

no shares issued

Common stock:

Common stocks:

Class A, $ 0.05 par value;

150,000,000 shares authorized;

‎ 14,415,250 shares issued and outstanding June 24, 2023;

‎ 14,536,175 shares issued and outstanding December 30, 2023;

‎ 14,497,075 shares issued and outstanding at September 30, 2023

1 unchanged sentence

‎ 100,000,000 shares authorized;

‎ 4,579,126 shares issued and outstanding June 24, 2023;

‎ 4,458,201 shares issued and outstanding December 30, 2023;

‎ 4,497,301 shares issued and outstanding at September 30, 2023

26 unchanged sentences

Income tax expense

Other comprehensive income:

Other comprehensive loss:

Change in fair value of interest rate swap

Income tax expense

( 5,067,556 )

Other comprehensive income, net of tax

Comprehensive income

Per share amounts:

Class A Common Stock

Basic earnings per common share

Diluted earnings per common share

Class B Common Stock

Basic earnings per common share

Diluted earnings per common share

Cash dividends per common share

Class A Common Stock

Class B Common Stock

See notes to unaudited condensed consolidated financial statements.

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

Nine Months Ended

( 1,522,507 )

4,226,814,981

Cost of goods sold

3,272,591,387

3,175,829,075

1,035,195,465

1,050,985,906

Operating and administrative expenses

Gain from sale or disposal of assets

Income from operations

Other income, net

Interest expense

Income before income taxes

Income tax expense

Other comprehensive (loss) income:

Change in fair value of interest rate swap

( 1,656,936 )

Income tax benefit (expense)

Income tax benefit

Other comprehensive loss, net of tax

( 3,829,556 )

Other comprehensive (loss) income, net of tax

( 1,150,507 )

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

THREE AND NINE MONTHS ENDED JUNE 24, 2023 AND JUNE 25, 2022

THREE MONTHS ENDED DECEMBER 30, 2023 AND DECEMBER 24, 2022

Comprehensive

2 unchanged sentences

1,246,238,155

Other comprehensive income, net of income tax

Cash dividends

1,259,594,425

( 3,063,227 )

Common stock conversions

Balance, December 25, 2021

( 2,015,253 )

1,048,860,750

1,047,795,216

Other comprehensive income, net of income tax

Cash dividends

( 1,150,507 )

Common stock conversions

Balance, March 26, 2022

1,114,438,370

1,120,851,249

Other comprehensive income, net of income tax

Cash dividends

2 unchanged sentences

Common stock conversions

Balance, June 25, 2022

Balance, December 24, 2022

1,312,544,815

3 unchanged sentences

1,458,972,140

Other comprehensive loss, net of income tax

Other comprehensive income, net of income tax

( 3,829,556 )

7 unchanged sentences

1,495,469,572

Other comprehensive loss, net of income tax

( 2,019,226 )

Cash dividends

( 3,064,960 )

Common stock conversions

Balance, March 25, 2023

1,350,019,660

1,360,206,197

Other comprehensive income, net of income tax

Cash dividends

( 3,064,961 )

Common stock conversions

Balance, June 24, 2023

1,395,214,242

1,407,318,576

See notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

Three Months Ended

Cash Flows from Operating Activities:

3 unchanged sentences

Gain from sale or disposal of assets

( 1,493,484 )

( 1,235,886 )

Receipt of advance payments on purchases contracts

Recognition of advance payments on purchases contracts

( 2,194,407 )

( 2,239,005 )

Deferred income taxes

7 unchanged sentences

( 3,759,603 )

( 2,227,902 )

Operating lease liabilities

3 unchanged sentences

( 38,672,293 )

( 4,842,782 )

Net Cash Provided by Operating Activities

1 unchanged sentence

Purchase of short term investments

( 110,210,267 )

Proceeds from sales of property and equipment

9 unchanged sentences

( 7,625,680 )

Repayment of finance lease

Dividends paid

4 unchanged sentences

( 10,690,501 )

Net Increase in Cash and Cash Equivalents

Net Decrease in Cash and Cash Equivalents

( 53,505,942 )

( 11,617,859 )

Cash and cash equivalents at beginning of period

2 unchanged sentences

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS

Three Months and Nine Months Ended June 24, 2023 and June 25, 2022

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

Three Months Ended December 30, 2023 and December 24, 2022

BASIS OF PREPARATION

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position as of June 24, 2023, and the results of operations and changes in stockholders’ equity for the three-month and nine-month periods ended June 24, 2023 and June 25, 2022, and cash flows of Ingles Markets, Incorporated, a North Carolina corporation (“Ingles”, the “Company”, “we”, “us”, or “our”), for the nine months ended June 24, 2023 and June 25, 2022.

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position as of December 30, 2023, and the results of operations, changes in stockholders’ equity and cash flows of Ingles Markets, Incorporated, a North Carolina corporation (“Ingles”, the “Company”, “we”, “us”, or “our”), for the three months ended December 30, 2023 and December 24, 2022.

The adjustments made are of a normal recurring nature.

1 unchanged sentence

It is suggested that these unaudited interim financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Annual Report on Form 10-K for the year ended September 30, 2023, filed by the Company under the Securities Exchange Act of 1934, on November 29, 2023.

The results of operations for the three-month and nine-month periods ended June 24, 2023 are not necessarily indicative of the results to be expected for the full fiscal year.

The results of operations for the three months ended December 30, 2023 are not necessarily indicative of the results to be expected for the full fiscal year.

NEW ACCOUNTING PRONOUNCEMENTS

6 unchanged sentences

Dollar LIBOR panel ceased following June 30, 2023, and the Company’s debt agreements and interest rate swaps that utilized LIBOR discontinued the use of LIBOR and adopted the Secured Overnight Financing Rate (“SOFR”), which did not materially impact our condensed consolidated unaudited interim financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Taxes Disclosures , which requires greater disaggregation of income tax disclosures.

The new standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

This ASU should be applied prospectively for fiscal years beginning after December 15, 2024, with retrospective application permitted.

The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires companies to enhance the disclosures about segment expenses.

The new standard requires the disclosure of the Company’s Chief Operating Decision Maker (“CODM”), expanded incremental line-item disclosures of significant segment expenses used by the CODM for decision-making, and the inclusion of previous annual only segment disclosure requirements on a quarterly basis.

This ASU should be applied retrospectively for fiscal years beginning after December 15, 2023, and early adoption is permitted.

The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.

SHORT TERM INVESTMENTS

3 unchanged sentences

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Receivables are presented net of an allowance for doubtful accounts of $ 537,930 at June 24, 2023 and $ 382,657 at September 24, 2022.

Receivables are presented net of an allowance for doubtful accounts of $ 143,739 at December 30, 2023 and $ 143,753 at September 30, 2023.

The Company’s effective tax rate differs from the federal statutory rate primarily as a result of state income taxes and tax credits.

The Company has unrecognized tax benefits and could incur interest and penalties related to uncertain tax positions, all of which are insignificant and are not expected to significantly increase or decrease within the next twelve months.

The Company has unrecognized tax benefits and could incur interest and penalties related to uncertain tax positions.

These amounts are insignificant and are not expected to significantly increase or decrease within the next twelve months.

ACCRUED EXPENSES AND CURRENT PORTION OF OTHER LONG-TERM LIABILITIES

5 unchanged sentences

Interest payable

Income taxes payable

Self-insurance liabilities are established for general liability claims, workers’ compensation, and employee group medical and dental benefits based on claims filed and estimates of claims incurred but not reported.

The Company is currently insured for covered costs in excess of $ 1.0 million per occurrence for workers’ compensation and for general liability and $ 500,000 per covered person for medical care benefits for a policy year.

The Company’s self-insurance reserves totaled $ 30.9 million at June 24, 2023, of which $ 13.1 million was accounted for as a current liability and $ 17.8 million as a long-term liability, which includes $ 4.3 million of expected self-insurance recoveries from excess cost insurance or other sources that are recorded as a receivable.

At September 24, 2022, the Company’s self-insurance reserves totaled $ 31.0 million of which $ 13.2 million was accounted for as a current liability and $ 17.8 million as a long-term liability, which includes $ 4.0 million of expected self-insurance recoveries from excess cost insurance or other sources that are recorded as a receivable.

Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $ 8.6 million and $ 7.9 million for the three-month periods ended June 24, 2023 and June 25, 2022, respectively.

For the nine-month periods ended June 24, 2023 and June 25, 2022, employee insurance expense, net of employee contributions totaled $ 27.5 million and $ 28.2 million, respectively.

The Company’s self-insurance reserves totaled $ 34.2 million at December 30, 2023.

Of this amount, $ 15.2 million was accounted for as a current liability and $ 19.0 million as a long-term liability, which included $ 4.3 million of expected self-insurance recoveries from excess cost insurance or other sources that were recorded as a receivable.

At September 30, 2023, the Company’s self-insurance reserves totaled $ 32.9 million, of which $ 14.0 million was accounted for as a current liability and $ 18.9 million as a long-term liability, which included $ 4.3 million of expected self-insurance recoveries from excess cost insurance or other sources that were recorded as a receivable.

Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $ 13.1 million and $ 10.8 million for the three months ended December 30, 2023 and December 24, 2022, respectively.

The Company’s fuel operations use underground tanks for the storage of gasoline and diesel fuel.

1 unchanged sentence

The Company followed the FASB ASC 410 model for determining the asset retirement cost and asset retirement obligation.

The amounts recorded were immaterial for each fuel center, as well as in the aggregate at June 24, 2023 and September 24, 2022.

The amounts recorded were immaterial for each fuel center as well as in the aggregate, at December 30, 2023 and September 30, 2023.

LONG-TERM DEBT

1 unchanged sentence

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

The Company may redeem all or a portion of the Notes at any time at the following redemption prices (expressed as percentages of the principal amount) if redeemed during the respective 12-month periods beginning June 15 of the years indicated below:

The Company may redeem all or a portion of the 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:

2029 and thereafter

1 unchanged sentence

The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate or SOFR.

The Line allows the Company to issue up to $ 10.0 million of letters of credit, of which none were issued at June 24, 2023.

The Line allows the Company to issue up to $ 10.0 million of letters of credit, of which none were issued at December 30, 2023.

The Company is not required to maintain compensating balances in connection with the Line.

At June 24, 2023, the Company had no borrowings outstanding under the Line.

At December 30, 2023, the Company had no borrowings outstanding under the Line.

In December 2010, the Company completed the funding of $ 99.7 million of bonds (the “ Bonds”) for construction of new warehouse and distribution space adjacent to its existing space in Buncombe County, North Carolina (the “Project”).

2 unchanged sentences

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

The outstanding balance of the Bonds was $ 54.4 million as of June 24, 2023.

The outstanding balance of the Bonds was $ 54.4 million as of December 30, 2023.

The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029 .

15 unchanged sentences

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 three and nine months ended June 24, 2023, the Company recorded $ 1.9 million of other comprehensive income and $ 1.3 million of other comprehensive loss, respectively, net of income taxes, in its Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 14.8 million were included as assets at fair value in the line “Other Assets” on the Consolidated Balance Sheet as of June 24, 2023.

For the three- and nine-month periods ended June 25, 2022, the Company recorded $ 3.3 million and $ 12.2 million of other comprehensive income, respectively, net of income taxes, in its Consolidated Statements of Comprehensive Income.

For the three months ended December 30, 2023, the Company recorded $ 3.8 million of other comprehensive loss, net of income taxes, in its Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 12.4 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of December 30, 2023.

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 June 24, 2023.

The Company was in compliance with all financial covenants at December 30, 2023.

The Company’s long-term debt agreements generally have cross-default provisions which could result in the acceleration of payments due under all long-term debt agreements in the event of default under any one instrument.

At June 24, 2023, property and equipment with an undepreciated cost of approximately $ 256.4 million were pledged as collateral for long-term debt.

At December 30, 2023, property and equipment with an undepreciated cost of approximately $ 254.8 million were 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.

At June 24, 2023, the Company had excess net worth totaling $ 444.3 million calculated under covenants in the Bonds, various floating rate loans (the “Loans”), and the Line.

At December 30, 2023, the Company had excess net worth totaling $ 484.4 million calculated under covenants in the Bonds, various floating rate loans (the “Loans”), and the Line.

This amount is available to pay dividends;

3 unchanged sentences

The Company paid cash dividends of $ 0.165 for each share of Class A Common Stock and $ 0.15 for each share of Class B Common Stock on October 19, 2023 to stockholders of record on October 12, 2023 .

The Company paid cash dividends of $ 0.165 for each share of Class A Common Stock and $ 0.15 for each share of Class B Common Stock on January 12, 2023 to stockholders of record on January 6, 2023 .

The Company paid cash dividends of $ 0.165 for each share of Class A Common Stock and $ 0.15 for each share of Class B Common Stock on April 13, 2023 to stockholders of record on April 6, 2023 .

For additional information regarding the dividend rights of the Class A Common Stock and Class B Common Stock, please see Note 8, “Stockholders’ Equity” to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K filed by

the Company under the Securities Exchange Act of 1934, on November 23, 2022, as well as Note I, “Earnings Per Common Share” below.

EARNINGS PER COMMON SHARE

3 unchanged sentences

however, each share is convertible into one share of Class A Common Stock at any time .

Each share of Class A Common Stock has one vote per share, and each share of Class B Common Stock has ten votes per share .

Each share of Class A Common Stock has one vote per share and each share of Class B

Common Stock has ten votes per share .

Each share of Class A Common Stock is entitled to receive cash dividends equal to 110 % of any cash dividend paid on Class B Common Stock.

4 unchanged sentences

Three Months Ended

Nine Months Ended

June 24, 2023

Allocated net income

Net income allocated, basic

Conversion of Class B to Class A shares

Net income allocated, diluted

Weighted average shares outstanding

Weighted average shares outstanding, basic

Conversion of Class B to Class A shares

Weighted average shares outstanding, diluted

Earnings per share

Three Months Ended

Nine Months Ended

June 25, 2022

December 30, 2023

December 24, 2022

Allocated net income

10 unchanged sentences

The initial terms of the leases are generally 20 years.

The majority of the leases includes one or more renewal options and requires that the Company pay property taxes, utilities, repairs and certain other costs incidental to occupation of the premises.

The majority of the leases include one or more renewal options and require that the Company pay property taxes, utilities, repairs and certain other costs incidental to occupation of the premises.

Several leases contain clauses that require rental payments based on a percentage of gross sales of the supermarket occupying the leased space.

Step rent provisions, escalation clauses and lease incentives are taken into account in computing minimum lease payments.

Operating lease cost for all operating leases totaled $ 2.6 million for the three months ended June 24, 2023 and $ 7.9 million for the nine months ended June 24, 2023.

Operating Leases – Rent expense for all operating leases totaled $ 2.4 million for the three months ended December 30, 2023.

This amount included short-term (less than one year) leases, common area expenses, and variable lease costs, all of which were insignificant.

Cash paid for lease liabilities in operating activities approximates operating lease cost.

Maturities of operating lease liabilities as of June 24, 2023 were as follows:

Finance Leases – Finance lease cost of $ 210.0 thousand included amortization expense of $ 178.5 thousand, which was included in operating and administrative expense, and $ 54.7 thousand of interest expense for the three months ended December 30, 2023.

Future maturities of lease liabilities as of December 30, 2023 were as follows:

Operating Leases

Finance Leases

Remainder of 2024

2 unchanged sentences

Present value of lease liabilities

On the Condensed Consolidated Balance Sheets, lease extensions exercised less leased properties purchased during fiscal year 2023 increased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” by $8.1 million each during the nine months ended June 24, 2023.

The weighted average remaining lease term for the Company’s operating leases is 12.4 years.

The weighted average discount rate used to determine lease liability balances as of June 24, 2023 was 3.51 %, based on the most recent Company financings collateralized by store properties.

There were no lease extensions exercised to increase the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” on the Condensed Consolidated Balance Sheets during the three months ended December 30, 2023.

At December 30, 2023, the weighted average remaining lease term for the Company’s operating leases was 13.0 years.

The weighted average discount

rate used to determine the operating lease liability balances as of December 30, 2023 was 5.6 %, and was 6.0 % for finance lease liability balances.

Leases as Lessor

At June 24, 2023, the Company owned and operated 94 shopping centers in conjunction with its supermarket operations.

At December 30, 2023, the Company owned and operated 96 shopping centers in conjunction with its supermarket operations.

The Company leases to others a portion of its shopping center properties.

3 unchanged sentences

Three Months Ended

Nine Months Ended

June 24, 2023

December 30, 2023

Rents earned on owned and subleased properties:

2 unchanged sentences

( 1,996,250 )

( 5,022,314 )

Other shopping center expenses

( 1,153,180 )

( 2,691,145 )

Future minimum operating lease receipts at June 24, 2023 were as follows:

Future minimum operating lease receipts at December 30, 2023 were as follows:

Remainder of 2024

5 unchanged sentences

Three Months Ended

Nine Months Ended

Revenues from unaffiliated customers:

22 unchanged sentences

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 retirement plan assets at June 24, 2023 were as follows (in thousands):

The carrying amount and fair value of the Company’s debt, interest rate swaps, and non-qualified retirement plan assets at December 30, 2023 were as follows (in thousands):

Senior Notes due 2031

1 unchanged sentence

Secured notes payable and other

Interest rate swap derivative contracts asset

Interest rate swaps derivative contract assets

Non-qualified retirement plan assets

The carrying amount and fair value of the Company’s debt, interest rate swaps, and non-qualified retirement plan assets at September 30, 2023 were as follows (in thousands):

Senior Notes due 2031

Facility Bonds due 2036

Secured notes payable and other

Interest rate swaps derivative contract assets

Non-qualified retirement plan assets

The fair values for Level 2 measurements were determined primarily using market yields and taking into consideration the underlying terms of the instrument.

3 unchanged sentences

RELATED PARTY TRANSACTIONS

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 nine months ended June 24, 2023, no such loans were made, repaid or outstanding.

During the nine months ended June 24, 2023, a limited liability corporation having Robert P.

Ingle II, the Company’s Chairman of the Board, as one of its principals, purchased a shopping center from an unrelated party at which the Company has a long-term lease in place.

The Company’s lease was in place prior to such purchase, and the terms of the lease have not changed since it was originally negotiated.

A Common Stock.

During the three months ended December 30, 2023, the outstanding loan of $ 330,000 as of September 30, 2023 was repaid to the Company.

In January 2024, the Company and a limited liability company having Mr.

Ingle II, the Company’s Chairman of the Board, as one of its principals swapped adjoining properties.

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

The Company received $ 2.3 million in addition to the swapped property based on these values.

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-Q

Item 1. Financial Statements