UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 27, 2004
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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 of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| P.O. Box 6676, Asheville NC | 28816 | |
| (Address of principal executive offices) | (Zip Code) | |
(828) 669-2941
Registrant’s telephone number, including area code
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 ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨.
As of April 30, 2004, the Registrant had 11,241,896 shares of Class A Common Stock, $.05 par value per share, outstanding and 12,369,841 shares of Class B Common Stock, $.05 par value per share, outstanding.
INDEX
2
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
| MARCH 27, 2004 (UNAUDITED) |
SEPTEMBER 27, 2003 (NOTE) | |||||
| Current Assets: |
||||||
| Cash |
$ | 44,195,311 | $ | 80,865,318 | ||
| Receivables |
34,311,265 | 31,014,026 | ||||
| Inventories |
187,717,769 | 194,834,781 | ||||
| Other |
6,952,956 | 8,351,169 | ||||
| Total Current Assets |
273,177,301 | 315,065,294 | ||||
| Property and Equipment – Net |
754,706,199 | 740,834,467 | ||||
| Other Assets |
14,319,313 | 15,759,680 | ||||
| Total Assets |
$ | 1,042,202,813 | $ | 1,071,659,441 | ||
NOTE: The condensed consolidated balance sheet at September 27, 2003 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
| MARCH 27, 2004 (UNAUDITED) |
SEPTEMBER 27, 2003 (NOTE) | |||||
| Current Liabilities: |
||||||
| Short-term loans and current portion of long-term debt |
$ | 31,190,903 | $ | 38,032,125 | ||
| Accounts payable, accrued expenses and current portion of other long-term liabilities |
126,884,982 | 144,587,717 | ||||
| Total Current Liabilities |
158,075,885 | 182,619,842 | ||||
| Deferred Income Taxes |
42,554,578 | 40,614,578 | ||||
| Long-Term Debt |
588,858,006 | 602,932,198 | ||||
| Other Long-Term Liabilities |
1,891,947 | 1,929,709 | ||||
| Total Liabilities |
791,380,416 | 828,096,327 | ||||
| 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; 11,204,274 shares issued and outstanding March 27, 2004; 10,635,419 shares issued and outstanding September 27, 2003 |
560,213 | 531,770 | ||||
| Class B, $.05 par value; 100,000,000 shares authorized; 12,369,841 shares issued and outstanding March 27, 2004; 12,391,216 shares issued and outstanding September 27, 2003 |
618,492 | 619,561 | ||||
| Paid-in capital in excess of par value |
107,935,237 | 102,465,443 | ||||
| Retained earnings |
141,708,455 | 139,946,340 | ||||
| Total Stockholders’ Equity |
250,822,397 | 243,563,114 | ||||
| Total Liabilities and Stockholders’ Equity |
$ | 1,042,202,813 | $ | 1,071,659,441 | ||
NOTE: The condensed consolidated balance sheet at September 27, 2003 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 |
|||||||
| MARCH 27, 2004 |
MARCH 29, 2003 |
||||||
| Net sales |
$ | 521,059,146 | $ | 489,382,957 | |||
| Cost of goods sold |
383,566,145 | 361,807,562 | |||||
| Gross profit |
137,493,001 | 127,575,395 | |||||
| Operating and administrative expenses |
118,426,841 | 115,823,020 | |||||
| Rental income, net |
1,769,876 | 2,349,080 | |||||
| Income from operations |
20,836,036 | 14,101,455 | |||||
| Other income, net |
4,183,422 | 1,317,766 | |||||
| Interest expense |
13,712,365 | 12,511,137 | |||||
| Income before income taxes |
11,307,093 | 2,908,084 | |||||
| Income taxes: |
|||||||
| Current |
866,000 | 3,150,000 | |||||
| Deferred |
3,230,000 | (2,062,000 | ) | ||||
| 4,096,000 | 1,088,000 | ||||||
| Net income |
$ | 7,211,093 | $ | 1,820,084 | |||
| Per share amounts: |
|||||||
| Basic earnings per common share |
$ | 0.31 | $ | 0.08 | |||
| Diluted earnings per common share |
$ | 0.31 | $ | 0.08 | |||
| Cash dividends per common share: |
|||||||
| 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)
| SIX MONTHS ENDED |
|||||||
| March 27, 2004 |
March 29, 2003 |
||||||
| Net sales |
$ | 1,055,393,583 | $ | 984,499,148 | |||
| Cost of goods sold |
785,990,714 | 726,578,668 | |||||
| Gross profit |
269,402,869 | 257,920,480 | |||||
| Operating and administrative expenses |
236,552,694 | 231,159,848 | |||||
| Rental income, net |
3,283,591 | 4,500,261 | |||||
| Income from operations |
36,133,766 | 31,260,893 | |||||
| Other income, net |
5,520,866 | 1,815,685 | |||||
| Interest expense |
27,569,958 | 25,243,265 | |||||
| Income before income taxes |
14,084,674 | 7,833,313 | |||||
| Income taxes: |
|||||||
| Current |
2,956,000 | 5,300,000 | |||||
| Deferred |
2,120,000 | (2,462,000 | ) | ||||
| 5,076,000 | 2,838,000 | ||||||
| Net income |
$ | 9,008,674 | $ | 4,995,313 | |||
| Per share amounts |
|||||||
| Basic earnings per common share |
$ | 0.39 | $ | 0.22 | |||
| Diluted earnings per common share |
$ | 0.39 | $ | 0.22 | |||
| Cash dividends per common share: |
|||||||
| Class A Common Stock |
$ | 0.33 | $ | 0.33 | |||
| Class B Common Stock |
$ | 0.30 | $ | 0.30 | |||
See notes to unaudited interim financial statements.
6
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
SIX MONTHS ENDED MARCH 27, 2004 AND MARCH 29, 2003
| CLASS A COMMON STOCK |
CLASS B COMMON STOCK |
PAID-IN CAPITAL IN EXCESS OF PAR VALUE |
RETAINED EARNINGS |
TOTAL |
|||||||||||||||||||
| SHARES |
AMOUNT |
SHARES |
AMOUNT |
||||||||||||||||||||
| Balance, September 28, 2002 |
10,189,807 | $ | 509,490 | 12,597,932 | $ | 629,897 | $ | 100,148,857 | $ | 137,270,604 | $ | 238,558,848 | |||||||||||
| Net income |
— | — | — | — | — | 4,995,313 | 4,995,313 | ||||||||||||||||
| Cash dividends |
— | — | — | — | — | (7,142,482 | ) | (7,142,482 | ) | ||||||||||||||
| Exercise of stock options |
55,675 | 2,784 | — | — | 549,965 | — | 552,749 | ||||||||||||||||
| Common stock conversions |
205,966 | 10,298 | (205,966 | ) | (10,298 | ) | — | — | — | ||||||||||||||
| Balance, March 29, 2003 |
10,451,448 | $ | 522,572 | 12,391,966 | $ | 619,599 | $ | 100,698,822 | $ | 135,123,435 | $ | 236,964,428 | |||||||||||
| Balance, September 27, 2003 |
10,635,419 | $ | 531,770 | 12,391,216 | $ | 619,561 | $ | 102,465,443 | $ | 139,946,340 | $ | 243,563,114 | |||||||||||
| Net income |
— | — | — | — | — | 9,008,674 | 9,008,674 | ||||||||||||||||
| Cash dividends |
— | — | — | — | — | (7,246,559 | ) | (7,246,559 | ) | ||||||||||||||
| Exercise of stock options |
547,480 | 27,374 | — | — | 5,469,794 | — | 5,497,168 | ||||||||||||||||
| Common stock conversions |
21,375 | 1,069 | (21,375 | ) | (1,069 | ) | — | — | — | ||||||||||||||
| Balance, March 27, 2004 |
11,204,274 | $ | 560,213 | 12,369,841 | $ | 618,492 | $ | 107,935,237 | $ | 141,708,455 | $ | 250,822,397 | |||||||||||
See notes to unaudited interim financial statements.
7
INGLES MARKETS, INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| SIX MONTHS ENDED |
||||||||
| MARCH 27, 2004 |
MARCH 29, 2003 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Net income |
$ | 9,008,674 | $ | 4,995,313 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization expense |
28,159,771 | |||||||