UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended June 29, 2002 | ||
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from to | ||
Commission file number 0-14706.
INGLES MARKETS, INCORPORATED
| North Carolina | 56-0846267 | |
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| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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| P.O. Box 6676, Asheville NC | 28816 | |
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| (Address of principal executive offices) | (Zip Code) |
(828) 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 o.
As of August 1, 2002, the Registrant had 10,179,657 shares of Class A Common Stock, $.05 par value per share, outstanding and 12,608,082 shares of Class B Common Stock, $.05 par value per share, outstanding.
1
INGLES MARKETS, INCORPORATED
INDEX
| Page No. | |||||||
Part I — Financial Information |
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Item 1. Financial Statements (Unaudited) |
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Condensed Consolidated Balance Sheets
June 29, 2002 and September 29, 2001 |
3 | ||||||
Condensed Consolidated Statements of Income |
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Three Months Ended June 29, 2002 and June 30, 2001 |
5 | ||||||
Nine Months Ended June 29, 2002 and June 30, 2001 |
6 | ||||||
Condensed Consolidated Statements of Changes in Stockholders’ Equity
Nine Months Ended June 29, 2002 and June 30, 2001 |
7 | ||||||
Condensed Consolidated Statements of Cash Flows
Nine Months Ended June 29, 2002 and June 30, 2001 |
8 | ||||||
Notes to Unaudited Interim Financial Statements |
9 | ||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
15 | ||||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
24 | ||||||
Part II — Other Information |
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Item 6. Exhibits and Reports on Form 8-K |
24 | ||||||
Signatures |
25 | ||||||
2
Part I. Financial Information
Item 1. Financial Statements
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
| JUNE 29, | SEPTEMBER 29, | |||||||||
| 2002 | 2001 | |||||||||
| (UNAUDITED) | (NOTE) | |||||||||
Current Assets: |
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Cash |
$ | 67,449,468 | $ | 12,434,897 | ||||||
Receivables |
29,223,575 | 32,466,072 | ||||||||
Inventories |
184,548,425 | 185,359,164 | ||||||||
Other |
6,185,278 | 3,790,109 | ||||||||
Total Current Assets |
287,406,746 | 234,050,242 | ||||||||
Property and Equipment – Net |
712,803,618 | 724,443,414 | ||||||||
Other Assets |
13,648,832 | 4,307,374 | ||||||||
Total Assets |
$ | 1,013,859,196 | $ | 962,801,030 | ||||||
| NOTE: | The balance sheet at September 29, 2001 has been derived from the audited financial statements at that date. |
See notes to unaudited interim financial statements.
3
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONCLUDED)
LIABILITIES AND STOCKHOLDERS’ EQUITY
| JUNE 29, | SEPTEMBER 29, | ||||||||||
| 2002 | 2001 | ||||||||||
| (UNAUDITED) | (NOTE) | ||||||||||
Current Liabilities: |
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Short-term loans and current portion of
long-term debt |
$ | 48,515,958 | $ | 60,851,887 | |||||||
Accounts payable, accrued expenses and
current portion of other long-term liabilities |
129,188,130 | 135,745,897 | |||||||||
Total Current Liabilities |
177,704,088 | 196,597,784 | |||||||||
Deferred Income Taxes |
36,864,578 | 37,064,578 | |||||||||
Long-Term Debt |
557,046,982 | 488,693,496 | |||||||||
Other Long-Term Liabilities |
3,865,846 | 3,944,960 | |||||||||
Total Liabilities |
775,481,494 | 726,300,818 | |||||||||
Stockholders’ Equity |
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Preferred stock, $.05 par value; 10,000,000
shares authorized; no shares issued |
— | — | |||||||||
Common stocks: |
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Class A, $.05 par value; 150,000,000 shares
authorized; 10,179,507 shares issued
and outstanding June 29, 2002;
10,005,107 shares issued and outstanding
September 29, 2001 |
508,975 | 500,255 | |||||||||
Class B, $.05 par value; 100,000,000 shares
authorized; 12,608,232 shares issued
and outstanding June 29, 2002;
12,634,432 shares issued and outstanding
September 29, 2001 |
630,411 | 631,722 | |||||||||
Paid-in capital in excess of par value |
100,148,857 | 98,595,411 | |||||||||
Retained earnings |
137,089,459 | 136,772,824 | |||||||||
Total Stockholders’ Equity |
238,377,702 | 236,500,212 | |||||||||
Total Liabilities and Stockholders’ Equity |
$ | 1,013,859,196 | $ | 962,801,030 | |||||||
| NOTE: | The balance sheet at September 29, 2001 has been derived from the audited financial statements at that date. |
See notes to unaudited interim financial statements.
4
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| THREE MONTHS ENDED | |||||||||
| JUNE 29, | JUNE 30, | ||||||||
| 2002 | 2001 | ||||||||
Net sales |
$ | 482,952,623 | $ | 484,734,506 | |||||
Cost of goods sold |
353,780,308 | 356,100,404 | |||||||
Gross profit |
129,172,315 | 128,634,102 | |||||||
Operating and administrative expenses |
112,858,578 | 114,101,554 | |||||||
Rental income, net |
2,724,797 | 2,774,045 | |||||||
Income from operations |
19,038,534 | 17,306,593 | |||||||
Other income, net |
386,695 | 2,427,081 | |||||||
Income before interest and income taxes |
19,425,229 | 19,733,674 | |||||||
Interest expense |
13,532,646 | 10,011,839 | |||||||
Income before income taxes |
5,892,583 | 9,721,835 | |||||||
Income taxes: |
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Current |
700,000 | 3,200,000 | |||||||
Deferred |
1,500,000 | 600,000 | |||||||
| 2,200,000 | 3,800,000 | ||||||||
Income before extraordinary item |
3,692,583 | 5,921,835 | |||||||
Extraordinary item — early extinguishment of debt (net of
tax benefit) |
124,247 | — | |||||||
Net income |
$ | 3,568,336 | $ | 5,921,835 | |||||
Per share amounts: |
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Basic earnings per common share before extraordinary item |
$ | 0.16 | $ | 0.26 | |||||
Extraordinary item – early extinguishment of debt |
— | — | |||||||
Basic earnings per common share |
$ | 0.16 | $ | 0.26 | |||||
Diluted earnings per common share before extraordinary item |
$ | 0.16 | $ | 0.26 | |||||
Extraordinary item – early extinguishment of debt |
— | — | |||||||
Diluted earnings per common share |
$ | 0.16 | $ | 0.26 | |||||
Cash dividends per common share: |
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Class A Common Stock |
$ | 0.165 | $ | 0.165 | |||||
Class B Common Stock |
$ | 0.150 | $ | 0.150 | |||||
See notes to unaudited interim financial statements.
5
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| NINE MONTHS ENDED | |||||||||
| JUNE 29, | JUNE 30, | ||||||||
| 2002 | 2001 | ||||||||
Net sales |
$ | 1,475,552,233 | $ | 1,464,596,170 | |||||
Cost of goods sold |
1,085,869,119 | 1,082,038,813 | |||||||
Gross profit |
389,683,114 | 382,557,357 | |||||||
Operating and administrative expenses |
344,278,949 | 339,214,882 | |||||||
Rental income, net |
8,038,620 | 8,072,404 | |||||||
Income from operations |
53,442,785 | 51,414,879 | |||||||
Other income, net |
3,544,124 | 3,231,528 | |||||||
Income before interest and income taxes |
56,986,909 | 54,646,407 | |||||||
Interest expense |
38,533,538 | 32,716,274 | |||||||
Income before income taxes |
18,453,371 | 21,930,133 | |||||||
Income taxes: |
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Current |
8,100,000 | 6,600,000 | |||||||
Deferred |
(1,200,000 | ) | 1,800,000 | ||||||
| 6,900,000 | 8,400,000 | ||||||||
Income before extraordinary item |
11,553,371 | 13,530,133 | |||||||
Extraordinary item — early extinguishment of debt (net of
tax benefit) |
572,471 | — | |||||||
Net income |
$ | 10,980,900 | $ | 13,530,133 | |||||
Per share amounts: |
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Basic earnings per common share before extraordinary item |
$ | 0.51 | $ | 0.60 | |||||
Extraordinary item – early extinguishment of debt |
(0.02 | ) | — | ||||||
Basic earnings per common share |
$ | 0.49 | $ | 0.60 | |||||
Diluted earnings per common share before extraordinary item |
$ | 0.50 | $ | 0.60 | |||||
Extraordinary item – early extinguishment of debt |
(0.02 | ) | — | ||||||
Diluted earnings per common share |
$ | 0.48 | $ | 0.60 | |||||
Cash dividends per common share: |
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Class A Common Stock |
$ | 0.495 | $ | 0.495 | |||||
Class B Common Stock |
$ | 0.450 | $ | 0.450 | |||||
See notes to unaudited interim financial statements.
6
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
NINE MONTHS ENDED JUNE 29, 2002 AND JUNE 30, 2001
| CLASS A | CLASS B | PAID-IN | ||||||||||||||||||||||||||
| COMMON STOCK | COMMON STOCK | CAPITAL IN | ||||||||||||||||||||||||||
| EXCESS OF | RETAINED | |||||||||||||||||||||||||||
| SHARES | AMOUNT | SHARES | AMOUNT | PAR VALUE | EARNINGS | TOTAL | ||||||||||||||||||||||
Balance, September 30, 2000 |
9,932,614 | $ | 496,631 | 12,645,125 | $ | 632,256 | $ | 97,943,633 | $ | 133,065,730 | $ | 232,138,250 | ||||||||||||||||
Net income |
— | — | — | — | — | 13,530,133 | 13,530,133 | |||||||||||||||||||||
Cash dividends |
— | — | — | — | — | (10,607,130 | ) | (10,607,130 | ) | |||||||||||||||||||
Exercise of stock options |
59,000 | 2,950 | — | — | 622,187 | — | 625,137 | |||||||||||||||||||||
Common stock conversions |
9,787 | 489 | (9,787 | ) | (489 | ) | — | — | — | |||||||||||||||||||
Balance, June 30, 2001 |
10,001,401 | $ | 500,070 | 12,635,338 | $ | 631,767 | $ | 98,565,820 | $ | 135,988,733 | $ | 235,686,390 | ||||||||||||||||
Balance, September 29, 2001 |
10,005,107 | $ | 500,255 | 12,634,432 | $ | 631,722 | $ | 98,595,411 | $ | 136,772,824 | $ | 236,500,212 | ||||||||||||||||
Net income |
— | — | — | — | — | 10,980,900 | 10,980,900 | |||||||||||||||||||||
Cash dividends |
— | — | — | — | — | (10,664,265 | ) | (10,664,265 | ) | |||||||||||||||||||
Exercise of stock options |
148,200 | 7,409 | — | — | 1,553,446 | — | 1,560,855 | |||||||||||||||||||||
Common stock conversions |
26,200 | 1,311 | (26,200 | ) | (1,311 | ) | — | — | — | |||||||||||||||||||
Balance, June 29, 2002 |
10,179,507 | $ | 508,975 | 12,608,232 | $ | 630,411 | $ | 100,148,857 | $ | 137,089,459 | $ | 238,377,702 | ||||||||||||||||
See notes to unaudited interim financial statements.
7
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| NINE MONTHS ENDED | |||||||||
| JUNE 29, | |||||||||