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 28, 2024, the end of the period covered by this Annual Report on Form 10-K. 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 assurance level as of September 28, 2024. 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: 25 (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 28, 2024, 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 28, 2024, 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, have been 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 quarter ended September 28, 2024 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) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. OTHER INFORMATION During the three-month period ended September 28, 2024, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “ non-Rule 10b5-1 trading arrangement”, as defined in Item 408 of Regulation S-K. 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 2025 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 28, 2024. The Company has adopted an insider trading policy which governs the purchase, sale and/or any other dispositions of the Company’s securities by the Company and its directors, officers and employees and is reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable exchange listing standards. A copy of our Securities Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. 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”. In the event that the Company makes any amendments to, or grants any waivers of, a provision of the Code of Ethics applicable to its principal executive officer, principal financial officer or principal accounting officer, the Company intends to disclose such amendment or waiver on its website. Information on the Company’s website, however, does not form a part of this Annual Report on Form 10-K. 26 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 28, 2024 and September 30, 2023; Consolidated Statements of Income and Other Comprehensive Income for the years ended September 28, 2024, September 30, 2023, and September 24, 2022; Consolidated Statements of Changes in Stockholders’ Equity for the years ended September 28, 2024, September 30, 2023, and September 24, 2022; Consolidated Statements of Cash Flows for the years ended September 28, 2024, September 30, 2023, and September 24, 2022; 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 * Composite Amended and Restated By-Laws of Ingles Markets, Incorporated. 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). 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 4.000% 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). 27 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). 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). 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). 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). 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 ). 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 ). 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). 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). 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). 19.1 * Ingles Markets, Incorporated Securities Trading Policy. 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. 97.1 * Ingles Markets, Incorporated Executive Officer Clawback Policy . 101 * The following financial information from the Annual Report on Form 10-K for the fiscal year ended September 28, 2024 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. 28 104 * Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ___________________________________ * Filed herewith. ** Furnished herewith. † Management contract or compensatory plan arrangement. Item 16. FORM 10-K SUMMARY ‎ None. ‎ 29 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 28, 2024 and September 30, 2023, 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 28, 2024 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 28, 2024 and September 30, 2023, and the results of its operations and its cash flows for each of the three fiscal years in the period ended September 30, 2023, 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 30, 2023, 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 December 27, 2024, 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 Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 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. ‎ 30 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 performed detailed testing on vendor allowance transactions and tested for the appropriateness of recorded reductions to inventory, cost of sales or advertising expense. • We performed detailed testing and sent confirmations to vendors to test the completeness of programs as well as the accuracy of amounts earned and terms of the agreement directly with the vendor. Inventories – Refer to Note 1 to the consolidated financial statements. Critical Audit Matter Description On September 27, 2024, Hurricane Helene (“Helene”) severely impacted western North Carolina, including the area where the Company’s headquarters are located. The Company recognized an impairment loss related to inventory damaged or destroyed by Helene. In calculating the impairment loss, management used the product cost as the cost basis since the inventory is sold by the Company with no additional modifications. This loss includes products destroyed or damaged at stores and at the warehouse. We identified the recorded inventory impairment loss specific to Helene as a critical audit matter because of the number of locations impacted and to varying degrees. This required an increased extent of effort when performing procedures to evaluate the accuracy of the recorded impairment loss. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to whether the inventory impairment loss was recorded accurately included the following, among others: • We tested the operating effectiveness of controls over the Company’s process to identify locations impacted by Helene and the related impairment loss. • We tested the recorded impairment loss using substantive analytical procedures. • We performed detailed testing to evaluate extent of damage to locations, including performing certain physical observations. /s/ DELOITTE & TOUCHE LLP Charlotte, North Carolina December 27, 2024 We have served as the Company's auditor since 2012. 31 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 28, 2024, 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 28, 2024, 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 28, 2024, of the Company and our report dated December 27, 2024, 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 December 27, 2024 ‎ 32 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 28, 2024 AND SEPTEMBER 30, 2023 2024 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 353,687,911 $ 328,539,922 Receivables (less allowance for doubtful accounts of $ 474,684 – 2024 and ‎ $ 143,753 – 2023) 78,266,383 107,570,690 Inventories 462,084,658 493,859,775 Other 31,508,803 22,585,958 Total current assets 925,547,755 952,556,345 PROPERTY AND EQUIPMENT, NET 1,526,708,462 1,431,872,289 OPERATING LEASE RIGHT OF USE ASSETS 27,247,555 39,602,202 OTHER ASSETS 48,378,943 49,814,897 TOTAL ASSETS $ 2,527,882,715 $ 2,473,845,733 2024 2023 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 17,520,876 $ 17,526,289 Current portion of operating lease liabilities 4,995,837 7,594,971 Current portion of finance lease liabilities 674,759 635,559 Accounts payable - trade 198,329,197 204,040,546 Accrued expenses and current portion of other long-term liabilities 99,101,275 100,735,784 Total current liabilities 320,621,944 330,533,149 DEFERRED INCOME TAXES 63,767,000 67,187,000 LONG-TERM DEBT 515,101,562 532,631,960 NONCURRENT OPERATING LEASE LIABILITIES 24,276,818 34,016,670 NONCURRENT FINANCE LEASE LIABILITIES 2,385,179 3,059,938 OTHER LONG-TERM LIABILITIES 55,981,122 47,444,876 Total liabilities $ 982,133,625 $ 1,014,873,593 COMMITMENTS AND CONTINGENCIES — — STOCKHOLDERS’ EQUITY: Preferred stock, $ 0.05 par value; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock: Class A, $ 0.05 par value; 150,000,000 shares authorized; issued and outstanding, 14,544,925 shares for 2024, 14,497,075 shares for 2023 727,247 724,854 Class B, convertible to Class A, $ 0.05 par value; 100,000,000 shares authorized; issued and outstanding, 4,449,451 shares for 2024, 4,497,301 shares for 2023 222,472 224,865 Paid-in capital in excess of par value — — Accumulated other comprehensive income 6,737,631 13,233,631 Retained earnings 1,538,061,740 1,444,788,790 Total stockholders’ equity 1,545,749,090 1,458,972,140 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,527,882,715 $ 2,473,845,733 See Notes to Consolidated Financial Statements. 33 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FISCAL YEARS ENDED SEPTEMBER 28, 2024, SEPTEMBER 30, 2023 AND SEPTEMBER 24, 2022 2024 2023 2022 Net sales $ 5,639,609,434 $ 5,892,781,732 $ 5,678,835,032 Cost of goods sold 4,339,774,157 4,487,866,518 4,263,066,672 Gross profit 1,299,835,277 1,404,915,214 1,415,768,360 Operating and administrative expenses 1,161,797,093 1,115,380,833 1,040,193,885 Gain from sale or disposal of assets 9,106,047 2,769,751 1,358,109 Income from operations 147,144,231 292,304,132 376,932,584 Other income, net 14,216,870 8,269,117 5,845,479 Interest expense 21,859,800 22,068,290 21,508,135 Income before income taxes 139,501,301 278,504,959 361,269,928 Income tax expense 33,960,000 67,693,000 88,511,000 Net income $ 105,541,301 $ 210,811,959 $ 272,758,928 Other comprehensive (loss) income: Change in fair value of interest rate swap $ ( 8,584,000 ) $ 1,094,080 $ 20,951,691 Income tax benefit (expense) 2,088,000 ( 267,000 ) ( 5,119,000 ) Other comprehensive (loss) income, net of tax ( 6,496,000 ) 827,080 15,832,691 Comprehensive (loss) income $ 99,045,301 $ 211,639,039 $ 288,591,619 Per-share amounts: Class A Common Stock Basic earnings per common share $ 5.68 $ 11.35 $ 14.69 Diluted earnings per common share $ 5.56 $ 11.10 $ 14.36 Class B Common Stock Basic earnings per common share $ 5.16 $ 10.32 $ 13.35 Diluted earnings per common share $ 5.16 $ 10.32 $ 13.35 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. 34 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FISCAL YEARS ENDED SEPTEMBER 28, 2024, SEPTEMBER 30, 2023 AND SEPTEMBER 24, 2022 PAID-IN ACCUMULATED CLASS A CLASS B CAPITAL IN OTHER COMMON STOCK COMMON STOCK EXCESS OF COMPREHENSIVE RETAINED SHARES AMOUNT SHARES AMOUNT PAR VALUE INCOME (LOSS) EARNINGS TOTAL 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 Net income — — — — — — 210,811,959 210,811,959 Other comprehensive income net of tax 827,080 827,080 Cash dividends Class A — — — — — — ( 9,511,647 ) ( 9,511,647 ) Class B — — — — — — ( 2,749,677 ) ( 2,749,677 ) Common stock conversions 119,500 5,975 ( 119,500 ) ( 5,975 ) — — — — Balance, September 30, 2023 14,497,075 $ 724,854 4,497,301 $ 224,865 $ — $ 13,233,631 $ 1,444,788,790 $ 1,458,972,140 Net income — — — — — — 105,541,301 105,541,301 Other comprehensive loss net of tax ( 6,496,000 ) ( 6,496,000 ) Cash dividends Class A — — — — — — ( 9,588,957 ) ( 9,588,957 ) Class B — — — — — — ( 2,679,394 ) ( 2,679,394 ) Common stock conversions 47,850 2,393 ( 47,850 ) ( 2,393 ) — — — — Balance, September 28, 2024 14,544,925 $ 727,247 4,449,451 $ 222,472 $ — $ 6,737,631 $ 1,538,061,740 $ 1,545,749,090 See Notes to Consolidated Financial Statements. ‎ 35 INGLES MARKETS, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FISCAL YEARS ENDED SEPTEMBER 28, 2024, SEPTEMBER 30, 2023 AND SEPTEMBER 24, 2022 2024 2023 2022 Cash Flows From Operating Activities: Net income $ 105,541,301 $ 210,811,959 $ 272,758,928 Adjustments to reconcile net income to net cash provided ‎ by operating activities: Depreciation and amortization expense 121,622,579 115,979,172 117,801,654 Non cash operating lease cost 6,184,012 6,878,571 7,935,225 Gain from sale or disposal of assets ( 9,106,047 ) ( 2,769,751 ) ( 1,358,109 ) Inventory and Property loss due to Helene 34,956,523 — — Receipt of advance payments on purchases contracts 3,250,328 4,154,945 2,766,995 Recognition of advance payments on purchase contracts ( 3,179,373 ) ( 3,156,909 ) ( 3,037,321 ) Deferred income taxes ( 1,332,000 ) ( 6,658,000 ) ( 4,309,000 ) Changes in operating assets and liabilities Receivables 29,340,527 ( 10,413,074 ) ( 2,075,600 ) Inventory 1,331,223 ( 35,914,236 ) ( 67,992,082 ) Other assets ( 16,087,132 ) ( 10,743,707 ) 2,708,240 Operating lease liabilities ( 6,187,984 ) ( 6,866,749 ) ( 8,316,444 ) Accounts payable and accrued expenses ( 3,817,249 ) 5,109,120 22,615,984 Net Cash Provided By Operating Activities 262,516,708 266,411,341 339,498,470 Cash Flows From Investing Activities: Proceeds from sales of property and equipment 4,670,841 3,495,707 2,618,907 Purchase from short term investments — — ( 110,210,267 ) Proceeds of short term investments — — 115,210,267 Capital expenditures ( 210,855,602 ) ( 173,591,468 ) ( 119,608,974 ) Net Cash Used By Investing Activities ( 206,184,761 ) ( 170,095,761 ) ( 111,990,067 ) Cash Flows From Financing Activities: Repayment of Financing Lease ( 635,559 ) ( 231,291 ) — Principal payments on long-term borrowings ( 18,280,048 ) ( 22,481,560 ) ( 18,367,504 ) Dividends ( 12,268,351 ) ( 12,261,324 ) ( 12,255,732 ) Net Cash Used By Financing Activities ( 31,183,958 ) ( 34,974,175 ) ( 30,623,236 ) Increase in Cash and Cash Equivalents 25,147,989 61,341,405 196,885,167 Cash and Cash Equivalents at Beginning of Year 328,539,922 267,198,517 70,313,350 Cash and Cash Equivalents at End of Year $ 353,687,911 $ 328,539,922 $ 267,198,517 See Notes to Consolidated Financial Statements. ‎ 36 Ingles Markets, Incorporated and Subsidiaries Notes To Consolidated Financial Statements Fiscal years ended September 28, 2024, September 30, 2023 and September 24, 2022 1. Summary of Significant Accounting Policies Nature of Operations – Ingles Markets, Incorporated (“Ingles” or the “Company”), 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 – Fiscal years 2024 and 2022 each consisted of 52 weeks. The Company’s fiscal year ends on the last Saturday in September. Fiscal year 2023 consisted of 53 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 existed as of March 12, 2020. The relief provided in this ASU extends through December 31, 2024. The U.S. 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 consolidated audited 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 impact 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 impact of this guidance on the Company’s consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact that the adoption of this accounting standard will have on its financial disclosures. 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 28, 2024 and September 30, 2023, respectively. At September 28, 2024 demand deposits aggregating approximately $ 346.3 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 the Company accounts for such financial products as short-term investments. 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. 37 Interest Rate Swaps – The Company utilizes interest rate swap contracts to reduce its exposure to fluctuations in variable interest rates applicable to 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, 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. For the year ended September 28, 2024, the Company recognized an impairment loss of $ 30.4 million related to inventory damaged or destroyed by Hurricane Helene. In calculating the impairment loss amount, management used the product cost as the cost basis since the inventory is sold by the Company with no additional modifications. This loss includes products destroyed or damaged at stores and at the warehouse. Warehouse inventory is covered through the Company’s insurance policy. A claim made by the Company under that policy is being processed and the expected proceeds are currently being assessed. 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 $ 121.6 million , $ 116.0 million and $ 117.8 million for fiscal years 2024, 2023 and 2022, 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 composed 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. For the year ended September 28, 2024, the Company recognized a property and equipment impairment loss of $ 4.5 million pertaining to Hurricane Helene. 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 $ 28.9 million at September 28, 2024 and $ 21.8 million at September 30, 2023. 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. There are risks and uncertainties 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 $ 500,000 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 $ 35.9 million and $ 32.9 million for employee group insurance, workers’ compensation insurance and general liability insurance at September 28, 2024 and September 30, 2023, respectively. These amounts include expected recoveries from excess cost insurance or other sources of $ 4.1 million at September 28, 2024 and $ 4.3 million at September 30, 2023, and are 38 recorded as receivables. 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 on only those properties for which 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 2020. 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 2024, 2023, and 2022. Pre-Opening Costs – Costs associated with the opening of new stores are expensed when incurred. 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 $ 14.5 million, $ 14.6 million and $ 20.8 million for fiscal years 2024, 2023 and 2022, 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 $ 16.4 million, $ 15.2 million and $ 15.0 million for fiscal years 2024, 2023 and 2022, respectively. Inventory losses of $ 30.4 million are included in cost of goods sold from Hurricane Helene. 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. Asset impairments of $ 4.5 million are included in operating and administrative expenses for fiscal year 2024. 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 40.5 % 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 39 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 $ 146.9 million, $ 128.9 million and $ 110.6 million for the fiscal years ended September 28, 2024, September 30, 2023 and September 24, 2022, 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 $ 8.9 million, $ 8.5 million and $ 7.1 million for the fiscal years ended September 28, 2024, September 30, 2023 and September 24, 2022, respectively. During fiscal year 2022 the continuing effects of the COVID-19 pandemic contributed to an increase in 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. 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 were as follows: 2024 2023 Deferred tax liabilities: Property and equipment tax/book differences $ 81,318,000 $ 78,008,000 Interest rate swaps 2,173,000 4,278,000 Property tax method 1,324,000 1,462,000 Right of use asset 7,350,000 — Total deferred tax liabilities 92,165,000 83,748,000 Deferred tax assets: Insurance reserves 4,929,000 5,115,000 Advance payments on purchases contracts 746,000 731,000 Vacation accrual 1,959,000 1,724,000 Inventory 1,566,000 1,777,000 Deferred compensation 6,986,000 5,282,000 Lease liability 7,868,000 — Other 4,344,000 1,932,000 Total deferred tax assets 28,398,000 16,561,000 Net deferred tax liabilities $ 63,767,000 $ 67,187,000 Refundable current income taxes totaling $ 16.9 million and $ 8.0 million at September 28, 2024 and September 30, 2023, 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 were as follows: 2024 2023 2022 Federal tax at statutory rate $ 29,295,000 $ 58,396,000 $ 75,783,000 State income tax, net of federal tax benefits 3,892,000 9,247,000 12,032,000 Federal tax credits ( 1,239,000 ) ( 1,449,000 ) ( 1,500,000 ) Other 2,012,000 1,499,000 2,196,000 Total $ 33,960,000 $ 67,693,000 $ 88,511,000 40 Current and deferred income tax expense (benefit) was as follows: 2024 2023 2022 Current: Federal $ 29,394,000 $ 61,562,000 $ 76,647,000 State 5,898,000 12,789,000 16,173,000 Total current expense 35,292,000 74,351,000 92,820,000 Deferred: Federal ( 565,000 ) ( 5,802,000 ) ( 3,565,000 ) State ( 767,000 ) ( 856,000 ) ( 744,000 ) Total deferred (benefit) expense ( 1,332,000 ) ( 6,658,000 ) ( 4,309,000 ) Total expense $ 33,960,000 $ 67,693,000 $ 88,511,000 3. Property and Equipment Property and equipment, net, consisted of the following: 2024 2023 Land $ 503,677,113 $ 457,048,257 Construction in progress 37,545,222 43,281,401 Buildings 1,470,754,512 1,414,696,772 Store, office and warehouse equipment 1,118,250,135 1,053,056,285 Transportation equipment 88,465,993 78,531,980 Leasehold improvements 59,748,005 60,950,486 Finance lease right-of-use assets 3,946,422 3,656,078 Total 3,282,387,402 3,111,221,259 Less accumulated depreciation and amortization 1,755,678,940 1,679,348,970 Property and equipment - net $ 1,526,708,462 $ 1,431,872,289 4. Property Held for Lease and Rental Income At September 28, 2024, the Company owned and operated 101 shopping centers in conjunction with its supermarket operations. The Company leases a portion of its shopping center properties to third parties. 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. 2024 2023 2022 Rents earned on owned and subleased properties: Base rentals $ 26,658,958 $ 24,964,305 $ 20,091,776 Variable rentals 314,009 203,823 166,890 Total 26,972,967 25,168,128 20,258,666 Depreciation on owned properties leased to others ( 8,620,836 ) ( 7,788,344 ) ( 6,318,888 ) Other shopping center expenses ( 3,819,139 ) ( 3,752,407 ) ( 2,968,660 ) Total $ 14,532,992 $ 13,627,377 $ 10,971,118 Owned properties leased or held for lease to others under operating leases by major classes are summarized as follows: September 28, September 30, 2024 2023 Land $ 112,871,892 $ 111,407,692 Buildings 305,862,582 286,022,850 Total 418,734,474 397,430,542 Less accumulated depreciation ( 127,936,997 ) ( 120,412,929 ) Total $ 290,797,477 $ 277,017,613 The above amounts are included on the Consolidated Balance Sheets in the caption “Property and equipment, net.” 41 The following is a schedule of minimum future rental income on non-cancelable operating leases as of September 28, 2024: Fiscal Year 2025 $ 19,707,170 2026 16,017,822 2027 12,574,738 2028 10,052,200 2029 6,919,482 Thereafter 33,084,759 Total minimum future rental income $ 98,356,171 5. Leases and Rental Expense The Company conducts part of its retail operations from leased facilities. The initial term of the leases is 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 leased 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 $ 9.7 million, $ 10.6 million and $ 10.9 million for fiscal years 2024, 2023 and 2022, respectively, is included in operating and administrative expenses. These amounts 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. Sub-lease rental income of $ 0.3 million for each of fiscal years 2024, 2023 and 2022, was included as a reduction of rental expense. Finance Leases – Fiscal year 2024 finance lease cost of $ 318.5 thousand included amortization expense of $ 275.6 thousand, included in operating and administrative expense, and $ 82.3 thousand of interest expense. Finance lease cost of $ 270.7 thousand included amortization expense of $ 231.3 thousand, included in operating and administrative expense, and $ 87.2 thousand of interest expense for fiscal year 2023. No finance lease cost was incurred during fiscal year 2022. Future maturities of lease liabilities as of September 28, 2024 were as follows: Fiscal Year Operating Leases Finance Leases 2025 $ 6,065,926 $ 840,000 2026 5,171,179 840,000 2027 4,602,012 840,000 2028 3,060,046 840,000 2029 2,082,223 101,500 Thereafter 17,897,558 — Total lease payments 38,878,944 3,461,500 Less amount representing interest 9,606,289 401,562 Present value of lease liabilities $ 29,272,655 $ 3,059,938 On the Consolidated Balance Sheets, lease extensions exercised during fiscal year 2024 increased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” by $ 6.2 million each during the year ended September 28, 2024. The weighted average remaining lease term for the Company’s operating leases is 14.9 years. No new financing leases were entered into during fiscal year 2024. The weighted average discount rate used to determine operating lease liability balances as of September 28, 2024 was 3.9 %, and was 6.0 % for finance lease liability balances. 42 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: 2024 2023 Property, payroll, and other taxes payable $ 22,592,669 $ 25,203,091 Salaries, wages, and bonuses payable 48,869,003 50,836,143 Self-insurance liabilities: Employee group insurance 5,849,118 4,536,309 Workers’ compensation insurance 4,937,591 4,711,748 General liability insurance 5,690,735 4,726,301 Interest 4,984,248 5,111,666 Other 6,177,911 5,610,526 Total accrued expenses and current portion of other long-term liabilities $ 99,101,275 $ 100,735,784 Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $ 44.3 million, $ 35.2 million and $ 37.0 million for fiscal years 2024, 2023 and 2022, respectively. Other Long-Term Liabilities - Other long-term liabilities are summarized as follows: 2024 2023 Advance payments on purchases contracts $ 3,063,450 $ 2,992,494 Nonqualified investment plan liability 28,916,206 21,768,079 Self-insurance liabilities: Workers’ compensation insurance 12,137,235 13,297,179 General liability insurance 7,331,787 5,628,963 Other 5,927,404 4,804,238 Other long-term liabilities 57,376,082 48,490,953 Less current portion 1,394,960 1,046,077 Total other long-term liabilities $ 55,981,122 $ 47,444,876 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 28, 2024 and September 30, 2023. 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. 7. Long-Term Debt Long-term debt and short-term loans were as follows: September 28, September 30, 2024 2023 Bonds payable: Senior notes, interest rate of 4.00 %, maturing 2031 $ 350,000,000 $ 350,000,000 Recovery Zone Facility Bonds, maturing 2036 49,910,000 54,440,000 Notes payable due to banks, weighted average interest rate of 7.49 % for 2024 ‎ and 6.29 % for 2023 137,319,905 151,069,954 Less unamortized prepaid loan costs ( 4,607,467 ) ( 5,351,705 ) Total long-term debt 532,622,438 550,158,249 Less current portion 17,520,876 17,526,289 Long-term debt, net of current portion $ 515,101,562 $ 532,631,960 The U.S. 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 SOFR, which did not materially impact our consolidated audited financial statements. 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 12-month periods beginning June 15 of the years indicated below: 43 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 Notes at any time prior to June 15, 2026 at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed plus the Applicable Premium (as defined in the indenture governing the Notes), as of, and accrued and unpaid interest to, the redemption date. The Company may also redeem up to 40 % of the aggregate principal amount of the 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 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 Notes originally issued remains outstanding. The Company has 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 SOFR. The Line allows the Company to issue up to $ 10.0 million in letters of credit, of which none were issued at September 28, 2024. The Company is not required to maintain compensating balances in connection with the Line. At September 28, 2024, 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 space adjacent to its existing space in Buncombe County, North Carolina (the “Project”). The Project was completed in 2012 and 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 December 2029, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $ 4.5 million began on January 1, 2014 . The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029 . 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 SOFR 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 Notes, the Bonds and the Line contain provisions that under certain circumstances would permit the acceleration of the indebtedness under such instruments or would otherwise 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 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 loan documents. The Company was in compliance with all financial covenants related to the Notes, the Bonds and Line at September 28, 2024. In September 2017, the Company refinanced approximately $ 60 million of secured borrowing obligations with a SOFR-based amortizing floating rate loan secured by real estate, which matures in October 2027 . The Company has an interest rate swap agreement for a current notional amount of $ 18.5 million at a fixed rate of 3.962 %. Under this agreement, the Company pays monthly the fixed rate of 3.962 % and receives the one-month SOFR plus 1.75 %. 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 SOFR-based amortizing floating rate loan secured by real estate, which matures in January 2030 . The Company has an interest rate swap agreement for a current notional amount of $ 116.9 million at a fixed rate of 2.998 %. Under this agreement, the Company pays monthly the fixed rate of 2.998 % and receives the one-month SOFR plus 1.60 %. 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 28, 2024, the Company recorded $ 6.5 million of other comprehensive loss, net of income tax benefits, in its Consolidated Statements of Comprehensive Income. Unrealized gains of $ 8.9 million are recorded as an asset at fair value in the line “Other Assets” on the Consolidated Balance Sheet as of September 28, 2024. For the fiscal year ended September 30, 2023, the Company recorded $ 0.8 million of other comprehensive income, net of income taxes, in its Consolidated Statements of Comprehensive Income. Unrealized gains of $ 17.5 million are recorded as an asset at fair value in the line “Other Assets” on the Consolidated Balance Sheet as of September 30, 2023. 44 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. At September 28, 2024, property and equipment with an undepreciated cost of approximately $ 249.5 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. Components of interest costs were as follows: 2024 2023 2022 Total interest costs $ 22,572,596 $ 23,056,378 $ 21,848,860 Interest capitalized ( 712,796 ) ( 988,088 ) ( 340,725 ) Interest expense $ 21,859,800 $ 22,068,290 $ 21,508,135 Maturities of long-term debt at September 28, 2024 were as follows: Fiscal Year 2025 $ 18,280,000 2026 18,280,000 2027 18,280,000 2028 12,766,571 2029 12,280,000 Thereafter 457,343,334 Less unamortized prepaid loan costs ( 4,607,467 ) Total $ 532,622,438 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. 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. 45 Year Ended September 28, 2024 Class A Class B Numerator: Allocated net income Net income allocated, basic $ 82,518,040 $ 23,023,261 Conversion of Class B to Class A shares 23,023,261 — Net income allocated, diluted $ 105,541,301 $ 23,023,261 Denominator: Weighted average shares outstanding Weighted average shares outstanding, basic 14,534,479 4,459,897 Conversion of Class B to Class A shares 4,459,897 — Weighted average shares outstanding, diluted 18,994,376 4,459,897 Earnings per share Basic $ 5.68 $ 5.16 Diluted $ 5.56 $ 5.16 Year Ended Year Ended September 30, 2023 September 24, 2022 Class A Class B Class A Class B Numerator: Allocated net income Net income allocated, basic $ 163,599,005 $ 47,212,954 $ 210,480,738 $ 62,278,190 Conversion of Class B to Class A shares 47,212,954 — 62,278,190 — Net income allocated, diluted $ 210,811,959 $ 47,212,954 $ 272,758,928 $ 62,278,190 Denominator: Weighted average ‎ shares outstanding Weighted average shares outstanding, basic 14,417,916 4,576,460 14,330,809 4,663,567 Conversion of Class B to Class A shares 4,576,460 — 4,663,567 — Weighted average shares outstanding, diluted 18,994,376 4,576,460 18,994,376 4,663,567 Earnings per share Basic $ 11.35 $ 10.32 $ 14.69 $ 13.35 Diluted $ 11.10 $ 10.32 $ 14.36 $ 13.35 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 $ 5.7 million, $ 5.7 million and $ 5.0 million for fiscal years 2024, 2023 and 2022, 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 $ 564,000 , $ 509,000 and $ 440,000 for fiscal years 2024, 2023 and 2022, respectively. Cash Bonuses – The Company pays monthly bonuses to various managerial personnel based on the 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 $ 29.2 million, $ 34.4 million and $ 32.3 million for fiscal years 2024, 2023 and 2022, respectively. The accrued liability for cash bonuses totaled $ 21.5 million at September 28, 2024 and $ 23.6 million at September 30, 2023. 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. 46 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. Income from operations for the primary business segment, retail grocery sales, includes the charges for impairment losses from Hurricane Helene of $ 34.9 million. Information about the Company’s operations by lines of business (amounts in thousands) is as follows: 2024 2023 2022 Revenues from unaffiliated customers: Grocery $ 1,983,198 $ 2,062,416 $ 1,940,414 Non-foods 1,273,324 1,326,907 1,204,443 Perishables 1,441,039 1,482,089 1,445,042 Gasoline 724,230 792,524 885,801 Total retail 5,421,791 5,663,936 5,475,700 Other 217,818 228,846 203,135 Total revenues from unaffiliated customers $ 5,639,609 $ 5,892,782 $ 5,678,835 Income before income taxes: Retail $ 122,986 $ 263,220 $ 353,006 Other 24,158 29,084 23,927 Total income from operations 147,144 292,304 376,933 Other income, net 14,217 8,269 5,845 Interest expense 21,860 22,068 21,508 Income before income taxes $ 139,501 $ 278,505 $ 361,270 Assets: Retail $ 2,198,732 $ 2,159,883 $ 2,042,730 Other 331,150 317,479 255,880 Elimination of intercompany receivable ( 1,999 ) ( 3,516 ) ( 3,099 ) Total assets $ 2,527,883 $ 2,473,846 $ 2,295,511 Capital expenditures: Retail $ 202,360 $ 168,154 $ 106,508 Other 8,496 5,437 13,101 Total capital expenditures $ 210,856 $ 173,591 $ 119,609 Depreciation and amortization: Retail $ 110,675 $ 106,225 $ 109,642 Other 10,948 9,754 8,160 Total depreciation and amortization $ 121,623 $ 115,979 $ 117,802 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. 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 28, 2024 totaled $ 8.9 million. The Company expects these commitments to be fulfilled during fiscal year 2025. The Company has entered into supply contracts to provide approximately 87 % 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 28, 2024 other than as described elsewhere in this Annual Report on 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: Cash and cash equivalents: The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents approximate their fair values. 47 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 28, 2024 were as follows (in thousands): Carrying Amount Fair Value Fair Value Measurements Senior Notes due 2031 $ 350,000 $ 317,625 Level 2 Facility Bonds due 2036 49,910 49,910 Level 2 Secured notes payable and other 132,712 132,712 Level 2 Interest rate swaps derivative contract asset 8,931 8,931 Level 2 Non-qualified retirement plan assets 27,126 27,126 Level 2 The carrying amount and fair value of the Company’s debt, interest rate swaps, and non-qualified plan assets at September 30, 2023 were as follows (in thousands): Carrying Amount Fair Value Fair Value Measurements Senior Notes due 2031 $ 350,000 $ 287,875 Level 2 Facility Bonds due 2036 54,440 54,440 Level 2 Secured notes payable and other 145,718 145,718 Level 2 Interest rate swaps derivative contract assets 17,515 17,515 Level 2 Non-qualified retirement plan assets 20,074 20,074 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: 2024 2023 2022 Cash paid during the year for: Interest (net of amounts capitalized) $ 21,987,218 $ 21,546,878 $ 21,398,985 Income taxes 45,765,414 78,406,107 87,187,808 Non cash items: Property and equipment additions included in accounts payable 10,082,470 5,067,861 8,724,576 15. 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. At September 30, 2023 there was an aggregate of $ 330,000 of outstanding loans, and there were no such loans outstanding at September 28, 2024. In January 2024, the Company and a limited liability company having Mr. Robert P. 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. 48 16. Subsequent Events As major flooding and power outages devastated the Southeast region of the United States in late September 2024, many Ingles locations were forced to cease operations, some for an extended period, and some of the inventory at the Company’s warehouse and some of its stores was damaged or destroyed. The Company notified the insurance carrier of the loss immediately and submitted an insurance claim for damages and interruption of business at the Company’s distribution center in November 2024. The final amount of the claim is currently being assessed and the timing and exact amount of insurance proceeds remain uncertain. The Company did not recognize an asset for the insurance recovery receivable in the Consolidated Balance Sheet as of September 28, 2024, because recovery was not yet deemed probable. The Company will continue to monitor the claims process and will adjust its impact on financials statements accordingly in future periods. ‎ 49 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 President, Chief Executive Officer and Chief Operating Officer (principal executive officer) Date: December 27, 2024 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 December 27, 2024 Robert P. Ingle, II, Chairman and Director /s/ James W. Lanning December 27, 2024 James W. Lanning, President, Chief Executive Officer, Chief Operating Officer and Director (principal executive officer) /s/ Patricia E. Jackson December 27, 2024 Patricia E. Jackson, CPA, Vice President-Finance, Chief Financial Officer, and Director (principal financial and accounting officer) /s/ Catherine L. Phillips December 27, 2024 Catherine L. Phillips, CPA, Secretary and Controller /s/ John R. Lowden December 27, 2024 John R. Lowden, Director /s/ Fred D. Ayers December 27, 2024 Fred D. Ayers, Director /s/ Laura Sharp December 27, 2024 Laura Sharp, Director /s/ Brenda S. Tudor December 27, 2024 Brenda S. Tudor, Director /s/ Ernest E. Ferguson December 27, 2024 Ernest E. Ferguson, Director 50