<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended September 25, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from ______ to _________
Commission file number: 0-14706
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Ingles Markets, Incorporated
Investment/Profit Sharing Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Ingles Markets, Incorporated
P.O. Box 6676
Asheville, North Carolina 28816
<PAGE> 2
Financial Statements and Supplemental Schedules
Ingles Markets, Incorporated
Investment/Profit Sharing Plan
As of September 25, 1999 and September 26, 1998
and for the year ended September 25, 1999
with Report of Independent Auditors
<PAGE> 3
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Financial Statements and Supplemental Schedules
As of September 25, 1999 and September 26, 1998 and
for the year ended September 25, 1999
Contents
<TABLE>
<S> <C>
Report of Independent Auditors................................................................1
Financial Statements
Statements of Net Assets Available for Benefits...............................................2
Statement of Changes in Net Assets Available for Benefits.....................................3
Notes to Financial Statements.................................................................4
Supplemental Schedules
Line 27a - Schedule of Assets Held for Investment Purposes at September 25, 1999.............10
Line 27d - Schedule of Reportable Transactions for the year ended September 25, 1999.........11
</TABLE>
<PAGE> 4
[ERNST & YOUNG LOGO] -Ernst & Young LLP -Phone:(864) 242-5740
Two Liberty Square www.ey.com
Suite 800
P.O. Box 10647
Greenville, south Carolina 29603
Report of Independent Auditors
The Plan Administrative Committee
Ingles Markets, Incorporated Investment/Profit Sharing Plan
We have audited the accompanying statements of net assets available for benefits
of Ingles Markets, Incorporated Investment/Profit Sharing Plan as of September
25, 1999 and September 26, 1998 and the related statement of changes in net
assets available for benefits for the year ended September 25, 1999. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
September 25, 1999 and September 26, 1998, and the changes in its net assets
available for benefits for the year ended September 25, 1999, in conformity with
accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of September 25, 1999, and reportable
transactions for the year then ended, are presented for purpose of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
February 20, 2000
<PAGE> 5
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
SEPTEMBER 25, SEPTEMBER 26,
1999 1998
------------ -------------
<S> <C> <C>
ASSETS
Investments at fair value:
Employer securities $22,885,111 $21,936,851
Collective trust funds 11,323,226 9,054,729
Mutual funds 6,725,610 6,032,004
Loans to participants 741,889 608,822
----------- -----------
41,675,836 37,632,406
Cash 1,689 --
Receivables:
Employer contributions 337,644 --
Participant contributions 173,114 --
----------- -----------
510,758
----------- -----------
42,188,283 37,632,406
LIABILITIES
Due to bank -- 48,572
----------- -----------
Net assets available for benefits $42,188,283 $37,583,834
=========== ===========
</TABLE>
See accompanying notes.
2
<PAGE> 6
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Statement of Changes in Net Assets Available for Benefits
Year ended September 25, 1999
<TABLE>
<S> <C>
ADDITIONS
Net realized and unrealized appreciation in fair value of investments $ 5,312,413
Interest 46,936
-----------
5,359,349
Contributions:
Participant 2,349,769
Employer 632,310
-----------
2,982,079
-----------
Total additions 8,341,428
DEDUCTIONS
Distributions to participants 3,549,956
Administrative expenses 187,023
-----------
Total deductions 3,736,979
-----------
Net increase 4,604,449
Net assets available for benefits at September 26, 1998 37,583,834
-----------
Net assets available for benefits at September 25, 1999 $42,188,283
===========
</TABLE>
See accompanying notes.
3
<PAGE> 7
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Notes to Financial Statements
September 25, 1999
1. DESCRIPTION OF THE PLAN
The following description of the Ingles Markets Incorporated Investment/Profit
Sharing Plan (Plan) provides only general information. Participants should refer
to the Plan document for a more complete description of the Plan's provisions.
Copies of the Plan document are available from the Plan Administrative
Committee.
GENERAL
The Plan is a defined contribution plan covering all employees of Ingles
Markets, Incorporated (Company and Plan Sponsor) and its wholly-owned subsidiary
Milkco, Inc. who have completed one year of service with a minimum of 1,000
hours. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
CONTRIBUTIONS
The Plan provides for three types of contributions: (i) employer profit sharing
plan contributions to the Ingles Stock Fund (Class B) made by the Company -
discretionary in nature; (ii) employee pre-tax 401(k) contributions by
participating employees from 1% to 15% of their pretax annual compensation as
defined in the Plan (in increments of 1%) and (iii) employer 401(k) matching
contributions, discretionary in nature and announced by the Company prior to the
start of each Plan quarter.
The Company made discretionary profit sharing contributions to the Plan in
fiscal 1999 and 1998 of $237,212 and $430,123, respectively. The Company made
401(k) matching contributions, which were allocated to the accounts of
participating employees, in fiscal 1999 and fiscal 1998. The allocation of
Company contributions has certain limits as detailed in the Plan Document.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of the Company's matching contributions and plan earnings.
Allocations are based on participant account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be provided from the
participant's account.
Upon enrollment in the Plan, participants may direct employee and employer
contributions in 1% increments to any of the Plan's fund options. No 401(k)
contributions can be made to the Ingles Stock Fund. Participants may change
their investment options daily.
4
<PAGE> 8
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING
Contributions by employees plus actual earnings thereon are immediately 100%
vested and nonforfeitable. Participants become vested in the Company's matching
and profit sharing contributions on a graduated basis with 100% vesting
occurring after the completion of seven years of service. Forfeited balances are
allocated as follows:
a. First, to restore the nonvested portion of the employer
contribution accounts of certain terminated participants who
reparticipate in the plan as described in the Plan document.
b. Second, the Company has the option to reduce the matching employer
contribution as described in the Plan document.
Unallocated forfeitures at September 25, 1999 and September 26, 1998 were
$723,000 and $599,000, respectively.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $500 up to a
maximum equal to the lesser of $50,000 or 50% of their vested balances with the
term of the loan not exceeding five years. The loans are secured by the balance
in the participant's account. The interest rate used will be comparable to rates
charged by local lending institutions for similar loans. Principal and interest
are paid ratably through employee payroll deductions.
PAYMENT OF BENEFITS
Upon termination of service, a participant may receive a lump-sum amount equal
to the vested value of his or her account, or upon death, disability or
retirement, elect to receive annual installments.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
5
<PAGE> 9
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements are prepared on the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Quoted market prices of the
Ingles Markets, Incorporated Class A Common Stock are used to value the Ingles
Markets, Incorporated Class B Common Stock. The fair value of the participation
units owned by the Plan in common and collective trust funds held by the trustee
are based on quoted redemption values on the last business day of the Plan year.
Securities traded on a national securities exchange are valued at the last
reported sales price on the last business day of the Plan year. The loans to
participants are valued at their outstanding balances, which approximate fair
value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 financial statement presentation.
6
<PAGE> 10
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
The Plan's investments are held by a bank administered trust fund. The bank's
records do not separate dividends from appreciation. The Employer securities had
dividends of approximately $1,109,000 which are included in the appreciation
amount below. During 1999, the Plan's investments (including investments
purchased, sold, as well as held during the year) appreciated in value as
determined by quoted market prices as follows:
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED APPRECIATION
IN FAIR VALUE OF
INVESTMENTS
-----------------------
<S> <C>
Employer securities $3,158,936
Mutual funds 348,999
Collective trust funds 1,804,478
----------
Total $5,312,413
==========
</TABLE>
The fair values of individual investments that represent 5% or more of the
Plan's net assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 25, SEPTEMBER 26,
1999 1998
------------- -------------
<S> <C> <C>
Employer Securities:
Ingles Stock Fund $22,850,819* $21,936,851*
Mutual Funds:
First Union National Bank - Evergreen
Balanced Fund 3,950,659 3,893,450
First Union National Bank - Evergreen
Short-Term Intermediate Bond Fund ** 2,138,554
Collective Trust Funds:
First Union National Bank - Stable Portfolio
Group Fund 3,034,257 2,484,377
First Union National Bank - Enhanced Stock
Portfolio Fund 8,288,969 6,570,352
</TABLE>
- ----------------
* Nonparticipant-directed.
** Less than 5% of Plan assets.
7
<PAGE> 11
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Notes to Financial Statements (continued)
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 25, SEPTEMBER 26,
1999 1998
-------------- -------------
<S> <C> <C>
Net assets:
Employer securities:
Ingles Stock Fund - Class B $ 22,850,819 $ 21,936,851
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 25, 1999
------------------
<S> <C>
Changes in net assets:
Net realized and unrealized appreciation in fair value $ 3,000,430
Distributions to participants (1,576,758)
Transfers to participant-directed investments (509,704)
------------
Total $ 913,968
============
</TABLE>
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated April 25, 1996 stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (Code) and, therefore, the related trust is exempt
from taxation. The Plan has been amended since receiving the determination
letter. Once qualified, the Plan is required to operate in conformity with the
Code to maintain its qualification. The Plan Sponsor has indicated that it will
take the necessary steps, if any, to maintain the Plan's qualified status.
6. PLAN AMENDMENT
Effective September 27, 1998 participants may contribute to the Plan 1% to 15%
of their compensation as defined in the Plan document. Prior to this date, the
maximum elective deferral was 10%.
8
<PAGE> 12
Ingles Markets, Incorporated Investment/Profit Sharing Plan
Notes to Financial Statements (continued)
7. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 at September 25, 1999:
<TABLE>
<S> <C>
Net assets available for benefits per the financial
statements $ 42,188,283
Contributions receivable 510,758
------------
Net assets available for benefits per the Form 5500 $ 41,677,525
============
</TABLE>
The following is a reconciliation of contributions per the financial statements
to the Form 5500 for the year ended September 25, 1999:
<TABLE>
<S> <C>
Contributions per the financial statements $ 2,982,079
Less: contributions receivable (510,758)
-----------
Contributions per the Form 5500 $ 2,471,321
===========
</TABLE>
9
<PAGE> 13
SUPPLEMENTAL SCHEDULES
<PAGE> 14
Ingles Markets, Incorporated Investment/Profit Sharing Plan
EIN: 56-0846267
Plan Number: 001
Line 27a - Schedule of Assets Held for Investment Purposes
September 25, 1999
<TABLE>
<CAPTION>
(C) DESCRIPTION OF INVESTMENT,
(B) IDENTITY OF ISSUE, INCLUDING MATURITY DATE, RATE OF
BORROWER, LESSOR OR INTEREST, COLLATERAL, PAR OR (E) CURRENT
(A) SIMILAR PARTY MATURITY VALUE (D) COST VALUE
- --------------------------------------- ----------------------------------- -------------- ------------
<S> <C> <C> <C>
COLLECTIVE TRUST FUNDS:
* First Union National Bank Stable Portfolio Group Fund $ 2,735,014 $ 3,034,257
* First Union National Bank Enhanced Stock Portfolio
Fund 5,333,352 8,288,969
------------- ------------
8,068,366 11,323,226
MUTUAL FUNDS:
* First Union National Bank Evergreen Short-term Intermediate
Bond Fund 1,625,530 1,840,752
* First Union National Bank Evergreen Balanced Fund 3,107,965 3,950,659
* First Union National Bank Janus Aspen Worldwide Growth Fund
601,221 607,854
* First Union National Bank Invesco Dynamics VI 319,083 326,345
------------- ------------
5,653,799 6,725,610
EMPLOYER SECURITIES:
* Ingles Markets, Incorporated Ingles Stock Fund -
$.05 par value; Class B Common
Stock 16,536,528 22,850,819
* Ingles Markets, Incorporated Ingles Class A Stock Fund - $.05
par value; Class A Common Stock
36,402 34,292
------------- ------------
16,572,930 22,885,111
Loans to participants Interest rates of 8.75% to
10.00%; maturity dates of
1999-2009 741,889
--
------------- ------------
$ 30,295,095 $ 41,675,836
============= ============
</TABLE>
- ----------
* Represents a party-in-interest.
10
<PAGE> 15
Ingles Markets, Incorporated Investment/Profit Sharing Plan
EIN: 56-0846267
Plan Number: 001
Line 27d - Schedule of Reportable Transactions
Year ended September 25, 1999
<TABLE>
<CAPTION>
(H) CURRENT
VALUE
(B) DESCRIPTION OF ASSET OF ASSET ON
INCLUDING INTEREST RATE AND (C) PURCHASE (D) SELLING (G) COST OF TRANSACTION (I)GAIN OR
(A) IDENTITY OF PARTY INVOLVED MATURITY IN CASE OF A LOAN PRICE PRICE ASSET DATE (LOSS)
------------------------------ -------------------------- ------------ ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - A series of
transactions in excess of 5% of
Plan assets:
- -----------------------------------
Ingles Markets, Incorporated Ingles Stock Fund:
Purchases $ 800,525 $ -- $ 800,525 $ 800,525 $ --
Sales -- 2,956,851 2,282,414 2,956,851 674,437
First Union National Bank Enhanced Stock Portfolio:
Purchases 2,088,663 -- 2,088,663 2,088,663 --
Sales -- 1,977,483 1,236,633 1,977,483 740,850
First Union National Bank Stable Portfolio Group:
Purchases 1,532,459 -- 1,532,459 1,532,459 --
Sales -- 1,124,710 1,043,424 1,124,710 81,286
</TABLE>
11
<PAGE> 16
Ingles Markets, Incorporated Investment/Profit Sharing Plan
EIN: 56-0846267
Plan Number: 001
Line 27d - Schedule of Reportable Transactions (continued)
<TABLE>
<CAPTION>
(H) CURRENT
VALUE
(B) DESCRIPTION OF ASSET OF ASSET ON
INCLUDING INTEREST RATE AND (C) PURCHASE (D) SELLING (G) COST OF TRANSACTION (I) GAIN OR
(A) IDENTITY OF PARTY INVOLVED MATURITY IN CASE OF A LOAN PRICE PRICE ASSET DATE (LOSS)
- ---------------------------------- --------------------------- ------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - A series of
transactions in excess of 5% of
Plan assets (continued):
- ----------------------------------
First Union National Bank Evergreen Balanced Fund:
Purchases $ 1,000,989 $ -- $1,000,989 $1,000,989 $ --
Sales -- 1,233,489 950,899 1,233,489 282,590
</TABLE>
- ----------
Columns (e) and (f) have not been presented as this information is not
applicable.
There were no category (i), (ii) or (iv) reportable transactions during the year
ended September 25, 1999.
12
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Ingles Markets Incorporated
Investment/Profit Sharing Plan
Date: March 23, 2000 By: /s/ Brenda S. Tudor
-------------------------------
Brenda S. Tudor
Trustee
By: /s/ Robert P. Ingle
-------------------------------
Robert P. Ingle
Trustee
By: /s/ Vaughn C. Fisher
-------------------------------
Vaughn C. Fisher
Trustee
-13-
<PAGE> 18
EXHIBIT INDEX
Exhibit 23 Consent of Ernst & Young LLP
-14-
<PAGE> 1
[ERNST & YOUNG LETTERHEAD]
ERNST & YOUNG LLP Phone: (864) 242-5740
Two Liberty Square www.ey.com
Suite 800
P.O. Box 10647
Greenville, South Carolina 29603
EXHIBIT 23
Consent of Ernst & Young LLP,
Independent Auditors
The Plan Administrative Committee
Ingles Markets, Incorporated Investment/Profit Sharing Plan
We consent to the incorporation by reference in the Registration Statement
(Form S-8 dated March 16, 1999) pertaining to the Ingles Markets, Incorporated
Investment/Profit Sharing Plan of our report dated February 20, 2000 with
respect to the financial statements and schedules of the Ingles Markets,
Incorporated Investment/Profit Sharing Plan included in this Annual Report
(Form 11-K) for the year ended September 25, 1999.
/s/ Ernst & Young LLP
----------------------------------
ERNST & YOUNG LLP
Greenville, South Carolina
March 20, 2000
