What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 74 added, 60 removed, 403 unchanged (25% of the section changed)

30 unchanged sentences

Stockholders’ Equity

Preferred stock, $ 0.05 par value;

Preferred stock, $ 0.05 par value per share;

10,000,000 shares authorized;

1 unchanged sentence

Common stocks:

Class A, $ 0.05 par value;

Class A, $ 0.05 par value per share;

150,000,000 shares authorized;

‎ 14,536,700 shares issued and outstanding March 30, 2024;

‎ 14,544,925 shares issued and outstanding June 29, 2024;

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

Class B, convertible to Class A, $ 0.05 par value;

Class B, convertible to Class A, $ 0.05 par value per share;

‎ 100,000,000 shares authorized;

‎ 4,457,676 shares issued and outstanding March 30, 2024;

‎ 4,449,451 shares issued and outstanding June 29, 2024;

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

26 unchanged sentences

Income tax expense

Other comprehensive income (loss):

Other comprehensive (loss) income:

Change in fair value of interest rate swap

( 2,671,226 )

Income tax (expense) benefit

Other comprehensive income (loss), net of tax

( 2,019,226 )

Income tax benefit (expense)

Other comprehensive (loss) income, net of tax

Comprehensive income

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

Six Months Ended

Nine Months Ended

4,242,080,604

3 unchanged sentences

3,272,591,387

1,000,444,341

1,035,195,465

Operating and administrative expenses

27 unchanged sentences

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

THREE AND SIX MONTHS ENDED MARCH 30, 2024 AND MARCH 25, 2023

THREE AND NINE MONTHS ENDED JUNE 29, 2024 AND JUNE 24, 2023

Comprehensive

23 unchanged sentences

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

Balance, September 30, 2023

19 unchanged sentences

1,525,442,469

Other comprehensive loss, net of income tax

Cash dividends

( 3,067,208 )

Common stock conversions

Balance, June 29, 2024

1,542,601,595

1,553,834,250

See notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

Cash Flows from Operating Activities:

25 unchanged sentences

Cash Flows from Investing Activities:

Purchase of short term investments

Proceeds from sales of property and equipment

16 unchanged sentences

( 28,225,422 )

Net Decrease in Cash and Cash Equivalents

( 26,522,074 )

( 16,894,841 )

Net Increase in Cash and Cash Equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS

Three Months and Six Months Ended March 30, 2024 and March 25, 2023

Three Months and Nine Months Ended June 29, 2024 and June 24, 2023

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 March 30, 2024 and the results of operations and changes in stockholders’ equity for the three-month and six-month periods ended March 30, 2024 and March 25, 2023, and cash flows of Ingles Markets, Incorporated, a North Carolina corporation (“Ingles”, the “Company”, “we”, “us”, or “our”), for the six months ended March 30, 2024 and March 25, 2023.

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position as of June 29, 2024 and the results of operations and changes in stockholders’ equity for the three-month and nine-month periods ended June 29, 2024 and June 24, 2023, and cash flows of Ingles Markets, Incorporated, a North Carolina corporation (“Ingles”, the “Company”, “we”, “us”, or “our”), for the nine months ended June 29, 2024 and June 24, 2023.

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 six-month periods ended March 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year.

The results of operations for the three-month and nine-month periods ended June 29, 2024 are not necessarily indicative of the results to be expected for the full fiscal year.

NEW ACCOUNTING PRONOUNCEMENTS

21 unchanged sentences

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Receivables are presented net of an allowance for doubtful accounts of $ 294,085 at March 30, 2024 and $ 143,753 at September 30, 2023.

Receivables are presented net of an allowance for doubtful accounts of $ 395,137 at June 29, 2024 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.

10 unchanged sentences

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 $ 34.6 million at March 30, 2024.

The Company’s self-insurance reserves totaled $ 34.5 million at June 29, 2024.

Of this amount, $ 15.7 million was accounted for as a current liability and $ 18.8 million as a long-term liability, which included $ 4.1 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 $ 9.4 million and $ 8.1 million for the three-month periods ended March 30, 2024 and March 25, 2023, respectively.

For the six-month periods ended March 30, 2024 and March 25, 2023, employee insurance expense, net of employee contributions totaled $ 22.4 million and $ 19.0 million, respectively.

Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $ 9.4 million and $ 8.6 million for the three-month periods ended June 29, 2024 and June 24, 2023, respectively.

For the nine-month periods ended June 29, 2024 and June 24, 2023, employee insurance expense, net of employee contributions totaled $ 31.9 million and $ 27.5 million, 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 March 30, 2024 and September 30, 2023.

The amounts recorded were immaterial for each fuel center, as well as in the aggregate at June 29, 2024 and September 30, 2023.

LONG-TERM DEBT

5 unchanged sentences

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 March 30, 2024.

The Line allows the Company to issue up to $ 10.0 million of letters of credit, of which none were issued at June 29, 2024.

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

At March 30, 2024, the Company had no borrowings outstanding under the Line.

At June 29, 2024, 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”).

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, the financial institutions would hold the Bonds until December 2029, subject to certain events.

Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, the financial institutions agreed to hold the Bonds until December 2029, subject to certain events.

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 $ 49.9 million as of March 30, 2024.

The outstanding balance of the Bonds was $ 49.9 million as of June 29, 2024.

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 months ended March 30, 2024, the Company recorded $ 1.1 million of other comprehensive income and for the six months ended March 30, 2024, the Company recorded $ 2.7 million of other comprehensive loss, net of income taxes, in its Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 14.0 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of March 30, 2024.

For the three and six months ended March 25, 2023, the Company recorded $ 2.0 million and $ 3.2 million of other comprehensive loss, respectively, net of income taxes, in its Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 12.2 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of March 25, 2023.

For the three and nine months ended June 29, 2024, the Company recorded $ 0.3 million and $ 3.0 million of other comprehensive loss, respectively, net of income taxes, in its Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 13.6 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of June 29, 2024.

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 Condensed Consolidated Statements of Comprehensive Income.

Unrealized gains of $ 14.8 million were included as an asset at fair value in the line “Other Assets” on the Condensed Consolidated Balance Sheet as of June 24, 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 March 30, 2024.

The Company was in compliance with all financial covenants at June 29, 2024.

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 March 30, 2024, property and equipment with an undepreciated cost of approximately $ 252.2 million were pledged as collateral for long-term debt.

At June 29, 2024, property and equipment with an undepreciated cost of approximately $ 250.4 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 March 30, 2024, the Company had excess net worth totaling $ 498.5 million calculated under covenants in the Bonds, various floating rate loans, and the Line.

At June 29, 2024, the Company had excess net worth totaling $ 511.0 million calculated under covenants in the Bonds, various floating rate loans, and the Line.

This amount is available to pay dividends;

4 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 January 19, 2024 to stockholders of record on January 12, 2024 .

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 18, 2024 to stockholders of record on April 11, 2024 .

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 July 18, 2024 to stockholders of record on July 11, 2024

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 29, 2023, as well as Note I, “Earnings Per Common Share” below.

11 unchanged sentences

Three Months Ended

Six Months Ended

March 30, 2024

Nine Months Ended

June 29, 2024

Allocated net income

8 unchanged sentences

Three Months Ended

Six Months Ended

March 25, 2023

Nine Months Ended

June 24, 2023

Allocated net income

13 unchanged sentences

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

Operating Leases – Rent expense for all operating leases totaled $ 2.7 million for the three months ended March 30, 2024 and $ 5.1 million for the six months ended March 30, 2024.

Operating Leases – Rent expense for all operating leases totaled $ 2.5 million for the three months ended June 29, 2024 and $ 7.6 million for the nine months ended June 29, 2024.

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.

Finance Leases – Finance lease cost of $ 420.0 thousand included amortization expense of $ 357.0 thousand, which was included in operating and administrative expense, and $ 107.0 thousand of interest expense for the six months ended March 30, 2024.

Future maturities of lease liabilities as of March 30, 2024 were as follows:

Finance Leases – Finance lease cost of $ 630.0 thousand included amortization expense of $ 535.5 thousand, which was included in operating and administrative expense, and $ 156.9 thousand of interest expense for the nine months ended June 29, 2024.

Future maturities of lease liabilities as of June 29, 2024 were as follows:

Operating Leases

4 unchanged sentences

Present value of lease liabilities

On the Condensed Consolidated Balance Sheets, lease extensions exercised during the six months ended March 30, 2024 increased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” by $ 1.5 million each.

At March 30, 2024, the weighted average remaining lease term for the Company’s operating leases was 12.5 years.

The weighted average discount rate used to determine operating lease liability balances as of March 30, 2024 was 5.6 %, and was 6.0 % for finance lease liability balances.

On the Condensed Consolidated Balance Sheets, purchases of leased properties offset by lease extensions exercised during the nine months ended June 29, 2024 decreased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities”.

At June 29, 2024, the weighted average remaining lease term for the Company’s operating leases was 13.0 years.

The weighted average discount rate used to determine operating lease liability balances as of June 29, 2024 was 5.275 %, and was 6.0 % for finance lease liability balances.

Leases as Lessor

At March 30, 2024, the Company owned and operated 96 shopping centers in conjunction with its supermarket operations.

At June 29, 2024, the Company owned and operated 97 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 terms 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.

Rental income is included in the line item “Net sales” on the Condensed 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 Condensed Consolidated Statements of Income.

Three Months Ended

Six Months Ended

March 30, 2024

Nine Months Ended

June 29, 2024

Rents earned on owned and subleased properties:

5 unchanged sentences

( 2,857,149 )

( 1,992,714 )

Future minimum operating lease receipts at March 30, 2024 were as follows:

Future minimum operating lease receipts at June 29, 2024 were as follows:

Remainder of 2024

5 unchanged sentences

Three Months Ended

Six 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 March 30, 2024 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 June 29, 2024 were as follows (in thousands):

Senior Notes due 2031

15 unchanged sentences

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 six months ended March 30, 2024, there were $ 500,000 loans issued and outstanding.

During the nine months ended June 29, 2024, there were $ 500,000 loans issued, all of which were repaid.

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

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements