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Ingles Markets Inc. Reports Operating Results (10-Q)

July 30, 2010 | About:
10qk

10qk

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Ingles Markets Inc. (IMKTA) filed Quarterly Report for the period ended 2010-06-26.

Ingles Markets Inc. has a market cap of $401.5 million; its shares were traded at around $16.38 with a P/E ratio of 14 and P/S ratio of 0.1. The dividend yield of Ingles Markets Inc. stocks is 4%. Ingles Markets Inc. had an annual average earning growth of 9.5% over the past 10 years. GuruFocus rated Ingles Markets Inc. the business predictability rank of 3-star.IMKTA is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

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 comprised 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 possible, vendor discounts and allowances that 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 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 $26.4 million and $26.0 million for the fiscal quarters ended June 26, 2010 and June 27, 2009, respectively. For the nine-month periods ended June 26, 2010 and June 27, 2009, vendor allowances applied as a reduction of merchandise costs totaled $79.3 million and $75.1 million, respectively. Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising the vendors specific products are recorded as a reduction to the related expense in the period in which the related expense is incurred. Vendor advertising allowances recorded as a reduction of advertising expense totaled $3.2 million for the fiscal quarter ended June 26, 2010 and $3.7 million for the fiscal quarter ended June 27, 2009. For the nine-month periods ended June 26, 2010 and June 27, 2009, vendor advertising allowances recorded as a reduction of advertising expense totaled $10.0 million and $10.2 million, respectively.

Net income for the third quarter of fiscal 2010 totaled $11.7 million, compared with net income of $4.7 million earned for the third quarter of fiscal 2009. During the third quarter of fiscal 2009, the Company issued $575 million aggregate principal amount of senior notes in a private placement and used a portion of the proceeds to repay existing debt that carried call premiums or prepayment penalties. As a result, the Company incurred debt extinguishment expenses totaling $10.2 million during the third quarter of 2009. Excluding this amount, income before income taxes increased to $18.3 million for the three months ended June 26, 2010 from $17.8 million for the three months ended June 27, 2009.

Interest Expense. Interest expense decreased $0.2 million for the three-month period ended June 26, 2010 to $16.2 million from $16.4 million for the three-month period ended June 27, 2009. Total debt at June 2010 was $825.6 million compared to $855.7 million at June 2009.

Loss on early extinguishment of debt. In May 2009, the Company issued $575.0 million aggregate principal amount of senior notes due in 2017 (the Notes). Note proceeds were used to pay off $349.8 million aggregate principal amount of senior subordinated debt maturing in 2011, pay off $45.3 million of indebtedness outstanding under the Companys committed lines of credit, and pay off $77.7 million of secured indebtedness. In conjunction with these transactions, the Company incurred call premiums and prepayment penalties totaling $6.8 million and wrote off $3.4 million of unamortized capitalized loan issuance costs associated with the paid off debt.

Net Income. Net income totaled $11.7 million, 1.4% of sales, for the three-month period ended June 26, 2010. Basic and diluted earnings per share for Class A Common Stock were $0.50 and $0.48, respectively, for the June 2010 quarter. Basic and diluted earnings per share for Class B Common Stock were each $0.45 for the June 2010 quarter. Net income totaled $4.7 million, 0.6% of sales, for the three-month period ended June 27, 2009. Basic and diluted earnings per share for Class A Common Stock were $0.20 and $0.19, respectively, for the June 2009 quarter. Basic and diluted earnings per share for Class B Common Stock were each $0.18 for the June 2009 quarter.

Net Income. Net income totaled $23.3 million, 0.9% of sales, for the nine-month period ended June 26, 2010. Basic and diluted earnings per share for Class A Common Stock were $0.99 and $0.96, respectively, for the June 2010 nine-month period. Basic and diluted earnings per share for Class B Common Stock were each $0.90 for the June 2010 nine-month period. Net income totaled $23.6 million, 1.0% of sales, for the nine-month period ended June 27, 2009. Basic and diluted earnings per share for Class A Common Stock were $1.01 and $0.95, respectively, for the June 2009 nine-month period. Basic and diluted earnings per share for Class B Common Stock were each $0.92 for the June 2009 nine-month period.

Read the The complete Report

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