<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
[X]
For the quarterly period ended December 30, 1995
-----------------
[ ]
For the transition period from to
------------------ ------------------
Commission File Number 0-14706
INGLES MARKETS, INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-0846267
- --------------------------------- ----------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
P.O. Box 6676, Asheville, NC 28816
- --------------------------------- ----------------------------------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code: (704) 669-2941
----------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO .
--- ---
As of February 2, 1996, the registrant had 4,579,041 shares of Class A Common
Stock, $.05 par value per share, and 13,325,109 shares of Class B Common Stock,
$.05 par value per share, outstanding.
<PAGE> 2
INGLES MARKETS, INCORPORATED
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -
December 30, 1995 and
September 30, 1995 3
Consolidated Statements of Income -
Three Months Ended
December 30, 1995 and
December 24, 1994 5
Consolidated Statements of Changes in
Stockholders' Equity
Three Months Ended
December 30, 1995 and
December 24, 1994 6
Consolidated Statements of Cash Flows -
Three Months Ended
December 30, 1995 and
December 24, 1994 7
Notes to Unaudited Interim Financial Statements 8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 10
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibits
11 Computation of Earnings Per Common Share 16
27 Financial Data Schedule (for SEC use only)
</TABLE>
2
<PAGE> 3
Part I. Financial Information
Item 1. Financial Statements
INGLES MARKETS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 30, SEPTEMBER 30,
1995 1995
(UNAUDITED) (NOTE)
------------ -------------
<S> <C> <C>
CURRENT ASSETS
--------------
Cash $ 22,409,810 $ 20,120,776
Receivables 18,547,553 15,176,746
Inventories 118,088,426 116,863,588
Other 4,952,079 3,667,010
------------- -------------
TOTAL CURRENT ASSETS 163,997,868 155,828,120
PROPERTY AND EQUIPMENT - Net 470,911,669 450,540,776
----------------------
OTHER ASSETS 5,492,417 5,458,358
------------ ------------- -------------
TOTAL ASSETS $ 640,401,954 $ 611,827,254
============= =============
</TABLE>
NOTE: The balance sheet at September 30, 1995 has been derived from the
audited financial statements at that date.
See notes to unaudited interim financial statements.
3
<PAGE> 4
INGLES MARKETS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONCLUDED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 30, SEPTEMBER 30,
1995 1995
(UNAUDITED) (NOTE)
------------ -------------
<S> <C> <C>
CURRENT LIABILITIES
-------------------
Short-term loans and current
portion of long-term liabilities $ 62,896,509 $ 36,899,696
Accounts payable and accrued
expenses 97,328,167 98,119,632
------------ ------------
TOTAL CURRENT LIABILITIES 160,224,676 135,019,328
DEFERRED INCOME TAXES 20,426,161 20,226,161
---------------------
LONG-TERM LIABILITIES 293,966,802 292,765,280
--------------------- ------------ ------------
TOTAL LIABILITIES 474,617,639 448,010,769
------------ ------------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, $.05 par value;
10,000,000 shares authorized;
no shares issued - -
Common stocks:
Class A, $.05 par value; 150,000,000
shares authorized; 4,578,741
shares issued and outstanding
December 30, 1995; 4,577,541 shares
issued and outstanding
September 30, 1995 228,937 228,877
Class B, $.05 par value; 100,000,000
shares authorized; 13,325,409
shares issued and outstanding
December 30, 1995; 13,326,609 shares
issued and outstanding
September 30, 1995 666,271 666,331
Paid-in capital in excess of
par value 48,599,088 48,599,088
Retained earnings 116,290,019 114,322,189
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 165,784,315 163,816,485
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $640,401,954 $611,827,254
============ ============
</TABLE>
NOTE: The balance sheet at September 30, 1995 has been derived from the
audited financial statements at that date.
See notes to unaudited interim financial statements.
4
<PAGE> 5
INGLES MARKETS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
DECEMBER 30, DECEMBER 24,
1995 1994
------------ ------------
<S> <C> <C>
NET SALES $357,406,265 $330,206,368
COST OF GOODS SOLD 275,038,436 256,622,143
------------ ------------
GROSS PROFIT 82,367,829 73,584,225
OPERATING AND ADMINISTRATIVE
EXPENSES 69,072,617 63,759,908
RENTAL INCOME, NET 995,347 1,294,944
------------ ------------
INCOME FROM OPERATIONS 14,290,559 11,119,261
OTHER INCOME, NET 569,784 31,719
------------ ------------
INCOME BEFORE INTEREST
AND INCOME TAXES 14,860,343 11,150,980
INTEREST EXPENSE 7,238,227 5,113,192
------------ ------------
INCOME BEFORE
INCOME TAXES 7,622,116 6,037,788
------------ ------------
INCOME TAXES:
Current 3,000,000 2,500,000
Deferred (100,000) (300,000)
------------ ------------
2,900,000 2,200,000
------------ ------------
NET INCOME $ 4,722,116 $ 3,837,788
============ ============
PER-SHARE AMOUNTS:
Earnings per common share:
Primary earnings per common share $ .26 $ .21
============ ============
Fully diluted earnings per common share $ .24 $ .20
============ ============
Cash dividends per common share:
Class A $ .165 $ .165
------------ ------------
Class B $ .150 $ .150
------------ ------------
</TABLE>
See notes to unaudited interim financial statements.
5
<PAGE> 6
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B PAID-IN
COMMON STOCK COMMON STOCK CAPITAL IN
------------------- -------------------- EXCESS OF RETAINED
SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS TOTAL
--------- -------- ---------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
SEPTEMBER 24, 1994. 4,412,167 $220,609 13,491,983 $674,599 $48,599,088 $108,478,050 $157,972,346
NET INCOME . . . . . - - - - - 3,837,788 3,837,788
CASH DIVIDENDS . . . - - - - - (2,751,806) (2,751,806)
COMMON STOCK
CONVERSIONS . . . . 12,825 641 (12,825) (641) - - -
--------- -------- ---------- -------- ----------- ------------ ------------
BALANCE,
DECEMBER 24,1994. . 4,424,992 $221,250 13,479,158 $673,958 $48,599,088 $109,564,032 $159,058,328
========= ======== ========== ======== =========== ============ ============
BALANCE,
SEPTEMBER 30, 1995. 4,577,541 $228,877 13,326,609 $666,331 $48,599,088 $114,322,189 $163,816,485
NET INCOME . . . . . - - - - - 4,722,116 4,722,116
CASH DIVIDENDS . . . - - - - - (2,754,286) (2,754,286)
COMMON STOCK
CONVERSIONS . . . . 1,200 60 (1,200) (60) - - -
--------- -------- ---------- -------- ----------- ------------ ------------
BALANCE,
DECEMBER 30,1995. . 4,578,741 $228,937 13,325,409 $666,271 $48,599,088 $116,290,019 $165,784,315
========= ======== ========== ======== =========== ============ ============
</TABLE>
See notes to unaudited interim financial statements.
6
<PAGE> 7
INGLES MARKETS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
DECEMBER 30, DECEMBER 24,
1995 1994
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 4,722,116 $ 3,837,788
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 7,769,984 6,149,306
Receipt of advance payment on purchases
contract 800,000 -
Recognition of advance payment on
purchases contracts (581,250) (302,100)
(Gains) losses on disposals of property and
equipment (572,988) 85,170
Deferred income taxes (100,000) (300,000)
Increase in receivables (3,362,894) (1,306,012)
Increase in inventory (1,224,838) (3,390,262)
(Increase)decrease in other assets (1,089,496) 67,022
(Decrease) increase in accounts payable
and accrued expenses (791,465) 2,880,019
------------ ------------
Net Cash Provided by Operating Activities 5,569,169 7,720,931
------------ ------------
Cash Flows From Investing Activities:
Proceeds from sales of property and
equipment 904,661 24,652
Capital expenditures (28,410,095) (33,663,909)
------------ ------------
Net Cash (Used) by Investing Activities (27,505,434) (33,639,257)
------------ ------------
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt 39,857,403 50,947,760
Payments on short-term borrowings, net (5,000,000) (15,000,000)
Principal payments of long-term debt (7,877,818) (3,566,141)
Dividends paid (2,754,286) (2,751,806)
------------ ------------
Net Cash Provided By Financing Activities 24,225,299 29,629,813
------------ ------------
Net Increase in Cash 2,289,034 3,711,487
Cash at Beginning of Period 20,120,776 18,471,011
------------ ------------
Cash at End of Period $ 22,409,810 $ 22,182,498
============ ============
</TABLE>
See notes to unaudited interim financial statements.
7
<PAGE> 8
INGLES MARKETS, INCORPORATED
AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
December 30, 1995
A. BASIS OF PREPARATION
In the opinion of management, the accompanying unaudited interim
financial statements contain all adjustments necessary to present fairly
the Company's financial position as of December 30, 1995 and September 30,
1995, and the results of operations, changes in stockholders' equity and
cash flows for the three months ended December 30, 1995 and December 24,
1994. The adjustments made are of a normal recurring nature. Certain
information and footnote disclosures normally included in the annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission for Form 10-Q.
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 1995 Annual Report on Form 10-K filed by the Company under
the Securities Exchange Act of 1934 on December 15, 1995.
The results of operations for the three month period ended December 30,
1995 are not necessarily indicative of the results to be expected for the
full fiscal year.
Certain amounts for the three month period ended December 24, 1994 have
been reclassified for comparative purposes.
The fiscal year ended September 30, 1995 contained 53 weeks. The
Company's quarters normally end on the last Saturday in the month. For
comparison purposes, the first quarter of fiscal 1995 ended on December
24, 1994 instead of December 31, 1994. The first three quarters of the
fiscal year ended September 30, 1995 contained thirteen weeks each, while
the fourth quarter consisted of fourteen weeks.
B. EARNINGS PER COMMON SHARE
Primary earnings per common share is computed by dividing consolidated
net income by the weighted average number of shares of common stock and
dilutive common stock equivalent shares outstanding during the period
(18,353,052 and 18,354,685 for the three months ended December 30, 1995
and December 24, 1994, respectively).
Fully diluted earnings per common share gives effect to the assumed
conversion, if dilutive, of the Convertible Subordinated Debentures, after
elimination of related interest expense, net of the bonus and income tax
effect. The weighted average number of shares used to compute fully
diluted earnings per common share were 21,783,919 and 21,729,370 for the
three months ended December 30, 1995 and December 24, 1994, respectively.
C. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Receivables are presented net of an allowance for doubtful accounts of
$85,259 and $85,490 at December 30, 1995 and September 30, 1995,
respectively.
8
<PAGE> 9
D. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 30, September 30,
1995 1995
------------ -------------
<S> <C> <C>
Accounts payable-trade $ 68,606,928 $ 66,815,027
Property, payroll, and
other taxes payable 9,410,906 9,363,814
Salaries, wages and
bonuses payable 5,688,884 7,970,396
Other 13,621,449 13,970,395
------------ -------------
$ 97,328,167 $ 98,119,632
============ =============
</TABLE>
E. LONG-TERM LIABILITIES
During the three months ended December 30, 1995, the Company obtained
$39,857,403 in long-term loans. The proceeds were used to reduce
short-term debt, to fund capital expenditures and for general corporate
purposes. Details are as follows:
<TABLE>
<S> <C>
Interest rate at 7.58%, maturing 2002,
secured by real estate and equipment $ 28,357,403
Interest rate at 7.61%, maturing 2000,
secured by equipment 5,000,000
Interest at certain LIBOR rates plus
a specified margin, maturing 1997,
unsecured 6,500,000
------------
$ 39,857,403
============
</TABLE>
F. DIVIDENDS
The Company paid cash dividends of $.165 for each share of Class A Common
Stock and $.15 for each share of Class B Common Stock on October 16, 1995
to stockholders of record on October 6, 1995.
G. SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid for interest and taxes is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
December 30, December 24,
1995 1994
------------ ------------
<S> <C> <C>
Interest (net of
amount capitalized) $ 7,983,527 $ 6,002,607
Income taxes 3,047,300 789,600
</TABLE>
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
THREE MONTHS ENDED DECEMBER 30, 1995 COMPARED
WITH THE THREE MONTHS ENDED DECEMBER 24, 1994
RESULTS OF OPERATIONS
NET SALES
Net sales for the three month period ended December 30, 1995 increased $27.2
million to $357.4 million, up 8.2% over sales of $330.2 million last year.
Approximately 62% of the dollar increase in sales resulted from an increase in
grocery sales, while the balance resulted substantially from increased sales in
the perishable departments. Aggressive merchandising, aggressive pricing and
effective advertising helped boost sales. Sales also benefited by increased
volume in stores that were expanded, remodeled and/or replaced. Growth in
identical store sales (grocery stores open for the entire duration of the
previous fiscal year) was 6.0%.
During the period, one new store was opened and three older stores were
remodeled and/or replaced. All of the stores that were remodeled and/or
replaced were enlarged, the results of which have been excellent, as evidenced
by increased sales and market share. At December 30, 1995, the Company
operated 183 supermarkets in six states: North Carolina (57), South Carolina
(28), Georgia (73), Tennessee (21), Virginia (3) and Alabama (1).
GROSS PROFIT
Gross profit for the 1996 three month period was $82.4 million, or 23.0% of
sales, compared to $73.6 million, or 22.3% of sales, the prior year. Grocery
gross profit, as a percentage of sales, increased primarily because of
aggressive merchandising, aggressive pricing and an effective advertising
program. Benefit was also derived from increased variety in the department.
Meat, produce, frozen food and deli gross profit, as a percentage of sales,
improved due to better merchandising and aggressive purchasing and pricing
programs.
OPERATING AND ADMINISTRATIVE EXPENSES
Operating and administrative expenses, as a percentage of sales, were 19.3% in
both fiscal 1996 and fiscal 1995. During fiscal 1996, depreciation and
amortization expense increased due to the Company's aggressive new store
opening, expansion, remodel and/or replacement program. In addition, the cost
of labor at store level, the cost of repairs and maintenance and insurance
expense also increased. These increases were compensated for by decreases, as
a percentage of sales, in advertising and promotional expenditures, the cost of
store supplies and rent expense.
RENTAL INCOME, NET
Rental income, net decreased from $1.3 million last year to $1.0 million this
year primarily due to increased expense associated with the remodeling of
shopping centers.
10
<PAGE> 11
INCOME FROM OPERATIONS
Income from operations in fiscal 1996 was $14.3 million, or 4.0% of sales,
compared to $11.1 million, or 3.4% of sales, a year ago. The increase in
operating income was due to the increase in sales and the related increase in
gross profit.
OTHER INCOME, NET
Other income, net increased $.5 million. Fiscal 1996 includes gains on the
sale of two outparcels of land located adjacent to shopping centers owned by
the Company.
INCOME BEFORE INTEREST AND INCOME TAXES
Income before interest and income taxes increased 33.3% to $14.9 million, or
4.2% of sales, this year compared to $11.2 million, or 3.4% of sales, last
year.
INTEREST EXPENSE
Interest expense was $7.2 million in fiscal 1996 - $5.1 million in fiscal 1995.
The increase in interest expense was principally due to an increase in debt to
fund the Company's aggressive new store opening, expansion, remodel and/or
replacement program.
INCOME BEFORE INCOME TAXES
Income before income taxes was $7.6 million, or 2.1% of sales, this year
compared with $6.0 million, or 1.8% of sales, last year.
INCOME TAXES
Income tax expense, as a percentage of pre-tax income, was 38.0% this year
compared with 36.4% last year due to the elimination of the targeted jobs tax
credit and higher state income taxes.
NET INCOME
Net income for the three month period ended December 30, 1995 increased 23.0%
to $4.7 million, or 1.3% of sales, compared to $3.8 million, or 1.2% of sales,
the prior year. Primary earnings per common share rose from $.21 last year to
$.26 this year.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
Net cash provided by operating activities for the three month period ended
December 30, 1995 totalled $5.6 million. Net income for the period was $4.7
million and depreciation and amortization expense was $7.8 million.
11
<PAGE> 12
Receivables increased $3.4 million, inventory increased $1.2 million and other
assets increased $1.1 million.
The increase in receivables is primarily the result of an increase in rebates
and allowances due from suppliers. The increase in inventory occurred at both
store and warehouse levels and is the result of one new store opening, three
store expansions, remodels and/or replacements, an expanded warehouse facility,
increased variety and the Company's desire to maintain inventory levels to
support increased sales volume. The increase in other assets is principally
due to an increase in short-term prepaid expenses.
INVESTING ACTIVITIES
Net cash used by investing activities - primarily expenditures for capital
assets - during the period was $27.5 million. The Company's capital
expenditure program was devoted primarily to obtaining land for new store
locations, the construction of new facilities, including the expansion of the
existing warehouse facility, the renovation, modernization and/or expansion of
existing stores and the installation of electronic scanning systems in four
stores. A portion of these expenditures were for new stores, store expansions,
remodels and/or replacements expected to become operational in fiscal 1997.
FINANCING ACTIVITIES
Net cash provided by financing activities totalled $24.2 million. Proceeds
from the issuance of long-term debt aggregated $39.9 million. The proceeds of
this debt were used to reduce short-term borrowings outstanding under existing
bank lines of credit. Additional short-term debt was subsequently incurred to
pay for capital expenditures and for general corporate purposes. Payments on
short-term borrowings, net were $5.0 million. Principal payments of long-term
debt were $7.9 million. The Company paid cash dividends of $2.7 million.
FINANCIAL STRENGTH
At December 30, 1995, the Company remained in sound financial condition. Total
assets were $640.4 million and stockholders' equity was $165.8 million,
compared with $611.8 million and $163.8 million, respectively, at year-end,
September 30, 1995. Favorable inventory turnover rates (cost of
sales/inventory on an annualized basis) in 1996 of 9.3 helped generate cash
flow from operations. Return on assets (net income/total assets annualized)
increased from 2.5% in 1995 to 2.9% in 1996. Return on investment (net
income/average stockholders' equity annualized) improved from 9.7% in fiscal
1995 to 11.5% in fiscal 1996.
CAPITAL REQUIREMENTS
The Company's store expansion, remodeling and/or replacement plans are
continually reviewed and are subject to change. The Company's ability to open
new stores is subject to many factors, including the acquisition of
satisfactory sites and the successful negotiation of new leases, and may be
limited by zoning and other governmental regulation.
12
<PAGE> 13
During the period ended December 30, 1995, one new store was opened and three
older stores were remodeled and/or replaced. During the balance of fiscal
1996, the Company expects to open eight new stores and expand, remodel and/or
replace six existing stores. Additional capital expenditures will be made to:
(1) upgrade and replace existing store equipment, (2) install electronic
scanning systems in new and existing stores and (3) secure sites for future
store expansion. Fiscal 1996 capital expenditures, in the aggregate, are
expected to be approximately $70 to $75 million. Some of the expenditures that
will be incurred toward fiscal year-end will relate to assets that will be
placed in service in fiscal 1997.
FINANCIAL RESOURCES
At December 30, 1995, the Company had lines of credit with six banks totalling
$95 million; of this amount $53.5 million was unused. The Company monitors its
cash position daily and makes draws or repayments on its lines of credit. The
lines provide the Company with various interest rate options generally at rates
less than prime. The Company is not required to maintain compensating balances
in connection with these lines of credit. The Company had unencumbered
property with a net book value of approximately $210 million which is available
to collateralize additional debt.
The Company believes, based on its current results of operations and financial
condition, that the financial resources available, including amounts available
under long-term financing arrangements, existing bank lines of credit and
internally generated funds, will be sufficient to meet planned capital
expenditures and working capital requirements for the foreseeable future,
including any debt servicing required by additional borrowings. The Company
believes that its current expansion, remodel and/or replacement program will
not have a material adverse effect on the availability of such financial
resources or on the sufficiency of these resources for the purpose described
above. However, there can be no assurance that the Company's results of
operations and financial condition will not change in the future based on a
number of intangible factors. These factors may include, among others,
increased competition, changing regional and national economic conditions,
adverse climatic conditions affecting food production and delivery and changing
demographics. In addition, for such reasons, there can be no assurance that
the results of operations from the expanded, remodeled and/or replacement
stores will meet or exceed the results of operations from existing stores.
QUARTERLY CASH DIVIDENDS
At their quarterly meeting on December 3, 1993, the Company's Board of
Directors voted to increase the Company's regular quarterly cash dividends
100%. Effective with dividends paid December 27, 1993, the dividends were
increased from $.0825 (eight and one-quarter cents) per share on Class A Common
Stock to $.165 (sixteen and one-half cents) per share and from $.075 (seven and
one-half cents) per share on Class B Common Stock to $.15 (fifteen cents) per
share for an annual rate of $.66 and $.60 per share, respectively.
13
<PAGE> 14
The Company expects to continue the payment of regular dividends on a quarterly
basis at the rates approved December 3, 1993. The Board of Directors, however,
reconsiders the declaration of dividends periodically, and there can be no
assurance as to the declaration of or the amount of dividends to be paid. The
payment of dividends is subject to the discretion of the Board of Directors and
will depend upon the results of operations, the financial condition of the
Company and other factors which the Board of Directors deems relevant.
IMPACT OF INFLATION
Inflation in food prices continues to be lower than the overall increase in the
Consumer Price Index. Ingles primary costs, inventory and labor, increase with
inflation. Recovery of these costs has to come from improved operating
efficiencies and, to the extent possible, through improved gross margins.
IMPACT OF SFAS 121 AND SFAS 123
The Financial Accounting Standards Board issued new standards (SFAS 121),
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" and (SFAS 123), "Accounting for Stock-based Compensation".
The standards must be adopted by the Company no later than the fiscal year
ending September 1997. The effect of adopting the standards has not been
determined.
Part II. Other Information.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as part of this report. The
exhibit number refers to Item 601 of Regulation S-K.
Exhibit 11 - Computation of Earnings Per Common Share.
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
for the quarter ended December 30, 1995.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
INGLES MARKETS, INCORPORATED
Date: February 12, 1996 /s/ Robert P. Ingle
----------------------------
Robert P. Ingle
Chairman of the Board and
Chief Executive Officer
Date: February 12, 1996 /s/ Jack R. Ferguson
----------------------------
Jack R. Ferguson
Vice President-Finance and
Chief Financial Officer
15
<PAGE> 1
EXHIBIT 11
INGLES MARKETS, INCORPORATED
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE *
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
DECEMBER 30, DECEMBER 24,
1995 1994
------------ ------------
<S> <C> <C>
PRIMARY:
Net income $ 4,722,116 $ 3,837,788
=========== ===========
Shares
Weighted average number of common shares
and common stock equivalent shares
outstanding 18,353,052 18,354,685
=========== ===========
Primary earnings per common share $ .26 $ .21
=========== ===========
FULLY DILUTED:
Net income $ 4,722,116 $ 3,837,788
Add after tax and bonus effect of interest
expense applicable to Convertible
Subordinated Debentures 514,739 528,112
----------- -----------
Fully diluted earnings $ 5,236,855 $ 4,365,900
=========== ===========
Shares
Weighted average number of common
shares and common stock equivalent
shares outstanding 18,409,234 18,354,685
Additional shares assuming conversion
of Convertible Subordinated Debentures 3,374,685 3,374,685
----------- -----------
Weighted average number of common
shares outstanding as adjusted 21,783,919 21,729,370
=========== ===========
Fully diluted earnings per common share $ .24 $ .20
=========== ===========
</TABLE>
* See note B of the notes to unaudited interim financial statements.
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER 30, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 22,409,810
<SECURITIES> 0
<RECEIVABLES> 18,632,812
<ALLOWANCES> 85,259
<INVENTORY> 118,088,426
<CURRENT-ASSETS> 163,997,868
<PP&E> 652,100,689
<DEPRECIATION> 181,189,020
<TOTAL-ASSETS> 640,401,954
<CURRENT-LIABILITIES> 160,224,676
<BONDS> 293,966,802
0
0
<COMMON> 895,208
<OTHER-SE> 164,889,107
<TOTAL-LIABILITY-AND-EQUITY> 640,401,954
<SALES> 357,406,265
<TOTAL-REVENUES> 359,514,799
<CGS> 275,038,436
<TOTAL-COSTS> 276,151,623
<OTHER-EXPENSES> (569,784)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,238,227
<INCOME-PRETAX> 7,622,116
<INCOME-TAX> 2,900,000
<INCOME-CONTINUING> 4,722,116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,722,116
<EPS-PRIMARY> .26
<EPS-DILUTED> .24
</TABLE>
