10-Q

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 December 29, 2012

¨ 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨(Do not check if a smaller reporting company.)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

As of February 4, 2013, the Registrant had 12,957,300 shares of Class A Common Stock, $0.05 par value per share, outstanding and 11,302,476 shares of Class B Common Stock, $0.05 par value per share, outstanding.

INGLES MARKETS, INCORPORATED

INDEX

		Page No.
Part I - Financial Information
Item 1.	Interim Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of December 29, 2012 and September 29, 2012		3
	Condensed Consolidated Statements of Income for the Three Months Ended December 29, 2012 and December 24, 2011		4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended December 29, 2012 and December 24, 2011		5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 29, 2012 and December 24, 2011		6
	Notes to Interim Financial Statements (Unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		18
Item 4.	Controls and Procedures		18
Part II - Other Information
Item 6.	Exhibits		19
Signatures			21

2

Part I. Financial Information

Item 1. Interim Financial Statements

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	DECEMBER 29, 2012		SEPTEMBER 29, 2012
ASSETS
Current Assets:
Cash and cash equivalents	$	9,449,067	$	4,683,410
Receivables-net		61,450,092		61,519,081
Inventories		343,248,403		329,614,925
Other current assets		31,315,769		30,386,453
Total Current Assets		445,463,331		426,203,869
Property and Equipment – Net		1,200,710,871		1,197,137,643
Other Assets		15,302,496		18,767,092
Total Assets	$	1,661,476,698	$	1,642,108,604
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	50,412,062	$	49,928,264
Accounts payable - trade		156,938,130		163,541,226
Accrued expenses and current portion of other long-term liabilities		89,060,786		92,682,243
Total Current Liabilities		296,410,978		306,151,733
Deferred Income Taxes		82,789,000		84,120,000
Long-Term Debt		826,587,232		785,240,249
Other Long-Term Liabilities		9,708,262		9,183,153
Total Liabilities		1,215,495,472		1,184,695,135
Stockholders’ Equity
Preferred stock, $0.05 par value; 10,000,000 shares authorized; no shares issued		—		—
Common stocks:
Class A, $0.05 par value; 150,000,000 shares authorized; issued and outstanding 12,957,150 shares at December 29, 2012 and 12,953,635 shares at September 29, 2012		647,858		647,682
Class B, convertible to Class A, $0.05 par value; 100,000,000 shares authorized; issued and outstanding 11,302,626 shares at December 29, 2012 and 11,306,141 shares at September 29, 2012		565,131		565,307
Paid-in capital in excess of par value		114,236,249		114,236,249
Retained earnings		330,531,988		341,964,231
Total Stockholders’ Equity		445,981,226		457,413,469
Total Liabilities and Stockholders’ Equity	$	1,661,476,698	$	1,642,108,604

See notes to unaudited interim financial statements.

3

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	THREE MONTHS ENDED
	DECEMBER 29, 2012		DECEMBER 24, 2011
Net sales	$	932,791,433	$	918,237,929
Cost of goods sold		724,902,265		716,509,749
Gross profit		207,889,168		201,728,180
Operating and administrative expenses		174,845,782		171,808,529
Rental income, net		316,073		428,150
Gain from sale or disposal of assets		121,547		14,704
Income from operations		33,481,006		30,362,505
Other income, net		564,191		1,003,612
Interest expense		15,559,549		15,008,901
Income before income taxes		18,485,648		16,357,216
Income Tax Expense		6,918,000		5,760,000
Net income	$	11,567,648	$	10,597,216
Per share amounts:
Class A Common Stock
Basic earnings per common share	$	0.50	$	0.45
Diluted earnings per common share	$	0.48	$	0.43
Class B Common Stock
Basic earnings per common share	$	0.45	$	0.41
Diluted earnings per common share	$	0.45	$	0.41
Cash dividends declared per common share:
Class A Common Stock	$	0.99	$	0.165
Class B Common Stock	$	0.90	$	0.150

See notes to unaudited interim financial statements.

4

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

THREE MONTHS ENDED DECEMBER 29, 2012 AND DECEMBER 24, 2011

	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 24, 2011		12,939,533		$	646,977			11,489,726		$	574,486		$	116,844,842		$	313,879,289		$	431,945,594
Net income		—			—			—			—			—			10,597,216			10,597,216
Cash dividends declared		—			—			—			—			—			(3,858,483	)		(3,858,483	)
Stock repurchases, at cost		(15,473	)		(774	)		(140,710	)		(7,035	)		(2,373,982	)		—			(2,381,791	)
Common stock conversions		75			4			(75	)		(4	)		—			—			—
Balance, December 24, 2011		12,924,135		$	646,207			11,348,941		$	567,447		$	114,470,860		$	320,618,022		$	436,302,536
Balance, September 29, 2012		12,953,635		$	647,682			11,306,141		$	565,307		$	114,236,249		$	341,964,231		$	457,413,469
Net income		—			—			—			—			—			11,567,648			11,567,648
Cash dividends declared		—			—			—			—			—			(22,999,891	)		(22,999,891	)
Common stock conversions		3,515			176			(3,515	)		(176	)		—			—			—
Balance, December 29, 2012		12,957,150		$	647,858			11,302,626		$	565,131		$	114,236,249		$	330,531,988		$	445,981,226

See notes to unaudited interim financial statements.

5

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	THREE MONTHS ENDED
	DECEMBER 29, 2012			DECEMBER 24, 2011
Cash Flows from Operating Activities:
Net income	$	11,567,648		$	10,597,216
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		23,622,646			22,122,204
Gains on disposals of property and equipment		(121,547	)		(14,704	)
Receipt of advance payments on purchases contracts		1,259,188			750,000
Recognition of advance payments on purchases contracts		(873,388	)		(900,000	)
Deferred income taxes		(1,281,000	)		(2,275,000	)
Changes in operating assets and liabilities:
Receivables		68,990			(13,302,862	)
Inventory		(13,633,479	)		3,990,029
Other assets		(233,913	)		(190,340	)
Accounts payable and accrued expenses		(25,699,214	)		(13,405,644	)
Net Cash (Used) Provided by Operating Activities		(5,324,069	)		7,370,899
Cash Flows from Investing Activities:
Proceeds from sales of restricted investments		—			32,586,246
Proceeds from sales of property and equipment		171,850			11,248
Capital expenditures		(28,079,634	)		(63,688,077	)
Net Cash Used in Investing Activities		(27,907,784	)		(31,090,583	)
Cash Flows from Financing Activities:
Proceeds from short-term borrowings		271,806,734			222,220,876
Payments on short-term borrowings		(227,093,088	)		(178,045,750	)
Proceeds from new long-term borrowings		—			3,250,000
Principal payments on long-term borrowings		(2,882,864	)		(20,048,390	)
Stock repurchases		—			(2,381,791	)
Dividends paid		(3,833,272	)		(3,858,483	)
Net Cash Provided by Financing Activities		37,997,510			21,136,462
Net Increase (Decrease) in Cash and Cash Equivalents		4,765,657			(2,583,222	)
Cash and cash equivalents at beginning of period		4,683,410			12,421,250
Cash and Cash Equivalents at End of Period	$	9,449,067		$	9,838,028

See notes to unaudited interim financial statements.

6

INGLES MARKETS, INCORPORATED AND SUBSIDIARIES

NOTES TO INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Three Months Ended December 29, 2012 and December 24, 2011

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 29, 2012, and the results of operations, changes in stockholders’ equity and cash flows for the three months ended December 29, 2012 and December 24, 2011. 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 accounting principles generally accepted in the United States 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 Annual Report on Form 10-K for the year ended September 29, 2012, filed by the Company under the Securities Exchange Act of 1934 on December 26, 2012.

The results of operations for the three-month period ended December 29, 2012 are not necessarily indicative of the results to be expected for the full fiscal year.

B. NEW ACCOUNTING PRONOUNCEMENTS

There were no accounting standards adopted in the three-month period ended December 29, 2012.

C. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Receivables are presented net of an allowance for doubtful accounts of $742,000 at each of December 29, 2012 and September 29, 2012.

D. INCOME TAXES

The Company’s continuing practice is to recognize interest and penalties related to uncertain tax positions and related matters in income tax expense. As of December 29, 2012, the Company had approximately $50,000 accrued for interest and penalties.

The Company’s effective tax rate differs from the federal statutory rate primarily as a result of state income taxes and tax credits. As of December 29, 2012, the Company had gross unrecognized tax benefits of approximately $121,000, all of which, if recognized, would affect the effective tax rate. The Company does not expect that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

The Company files income tax returns with federal and various state jurisdictions. With few exceptions, the Company is no longer subject to state income tax examinations by tax authorities for the years before 2009. Additionally, the Internal Revenue Service has completed its examination of the Company’s U.S. Federal income tax returns filed through fiscal year 2008.

E. ACCRUED EXPENSES AND CURRENT PORTION OF OTHER LONG-TERM LIABILITIES

Accrued expenses and current portion of other long-term liabilities consist of the following:

	DECEMBER 29, 2012		SEPTEMBER 29, 2012
Property, payroll, and other taxes payable	$	12,418,205	$	18,191,260
Salaries, wages and bonuses payable		19,867,930		25,350,513
Self-insurance liabilities		27,226,216		26,695,291
Interest payable		7,079,868		19,132,734
Dividends declared but not paid and other		22,468,567		3,312,445
Total	$	89,060,786	$	92,682,243

Self-insurance liabilities are established for general liability claims, workers’ compensation claims, and employee group medical and dental benefits based on claims filed and estimates of claims incurred but not reported. The Company is insured for covered costs in excess of $750,000 per occurrence for workers’ compensation, $500,000 for general liability, and $325,000 per covered person for medical care benefits for a policy year. Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $8.5 million and $7.3 million for each of the three-month periods ended December 29, 2012 and December 24, 2011, respectively.

7

F. LONG-TERM DEBT

In May 2009, the Company issued $575.0 million aggregate principal amount of senior notes due in 2017 (the “Notes”) in a private placement. Subsequent to the private placement, the Company filed a registration statement with the Securities and Exchange Commission to exchange private placement notes with registered notes. The Notes bear an interest rate of 8.875% per annum and were issued at a discount to yield 9.5% per annum.

The Company may redeem all or a portion of the Notes at any time on or after May 15, 2013 at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning May 15 of the years indicated below:

Year
2013	104.438	%
2014	102.219	%
2015 and thereafter	100.000	%

In connection with the offering of the Notes, the Company entered into a new three-year $175.0 million line of credit. At December 29, 2012, the Company had $175.0 million of total line of credit commitments, with $84.8 million outstanding.

The line of credit provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or the London Interbank Offering Rate (“LIBOR”), plus a credit spread. The line allows the Company to issue up to $30.0 million in unused letters of credit, of which $9.5 million of unused letters of credit were issued at December 29, 2012. The Company is not required to maintain compensating balances in connection with the line of credit.

On December 29, 2010, the Company completed the funding of $99.7 million of Recovery Zone Facility Bonds (the “Bonds”) for the acquisition, construction and equipping of an approximately 830,000 square foot new warehouse and distribution center adjacent to its current distribution center in Buncombe County, North Carolina (the “Project”). The final maturity date of the Bonds is January 1, 2036.

Bond proceeds were invested in a trust account with the Bond trustee. The Company received disbursements from the account as it submitted requisitions to the trustee for incurred Project costs. The account with the Bond trustee consisted of money market deposits and United States Treasury securities. All funds had been disbursed from the trust account as of September 29, 2012.

The Bonds were issued by the Buncombe County Industrial Facilities and Pollution Control Financing Authority and were purchased by certain financial institutions. Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between the financial institutions and the Company, the financial institutions will hold the Bonds until January 2, 2018, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4,530,000 begins on January 1, 2014. The Company may redeem the Bonds without penalty or premium at any time prior to January 2, 2018.

Interest earned by bondholders on the Bonds is exempt from Federal and North Carolina income taxation. Initially, the interest rate on the Bonds is equal to one month LIBOR (adjusted monthly) plus a credit spread, adjusted to reflect the income tax exemption.

The Company’s obligation to repay the Bonds is collateralized by the Project. Additional collateral was provided in order to meet certain loan to value criteria in the Covenant Agreement. The Covenant Agreement incorporates substantially all financial covenants included in the line of credit.

Also on December 29, 2010, the Company executed an amendment to extend the maturity of the line of credit from May 12, 2012 to December 29, 2015. All other terms of the line of credit remain in place.

The Notes, the Bonds and the line of credit contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the line of credit to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. The Company was in compliance with all financial covenants at December 29, 2012.

The Company’s long-term debt agreements generally have cross-default provisions which could result in the acceleration of payments due under the Company’s line of credit, Bonds, and Notes indenture in the event of default under any one instrument.

8

G. DIVIDENDS

The Company paid cash dividends of $0.165 for each share of Class A Common Stock and $0.15 for each share of Class B Common Stock on October 25, 2012 to stockholders of record on October 11, 2012. On December 7, 2012, the Company declared a special dividend of $0.66 per share of Class A Common Stock and $0.60 per share of Class B Common Stock payable on December 31, 2012 to shareholders of record on December 21, 2012. The Company paid cash dividends of $0.165 for each share of Class A Common Stock and $0.15 for each share of Class B Common Stock on December 31, 2012 to stockholders of record on December 21, 2012. This dividend normally would have been declared and paid in January 2013.

For additional information regarding the dividend rights of the Class A Common Stock and Class B Common Stock, please see Note 8, “Stockholders’ Equity” to the Consolidated Financial Statements of the Annual Report on Form 10-K filed by the Company under the Securities Exchange Act of 1934 on December 26, 2012.

H. EARNINGS PER COMMON SHARE

The Company has two classes of common stock: Class A, which is publicly traded, and Class B, which has no public market. The Class B Common Stock has restrictions on transfer; however, each share is convertible into one share of Class A Common Stock at any time. Each share of Class A Common Stock has one vote per share and each share of Class B Common Stock has ten votes per share. Each share of Class A Common Stock is entitled to receive cash dividends equal to 110% of any cash dividend on Class B Common Stock.

The Company calculates earnings per share for its Class A Common Stock and Class B Common Stock using the two-class method in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 260.

The two-class method of computing basic earnings per share for each period reflects the cash dividends declared per share for each class of stock, plus allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Diluted earnings per share is calculated assuming the conversion of all shares of Class B Common Stock to shares of Class A Common Stock on a share-for-share basis. The tables below reconcile the numerators and denominators of basic and diluted earnings per share for current and prior periods.

	THREE MONTHS ENDED DECEMBER 29, 2012				THREE MONTHS ENDED DECEMBER 24, 2011
	CLASS A		CLASS B		CLASS A		CLASS B
Numerator: Allocated net income
Net income allocated, basic	$	6,452,230	$	5,115,418	$	5,864,420	$	4,732,796
Conversion of Class B to Class A shares		5,115,418		—		4,732,796		—
Net income allocated, diluted	$	11,567,648	$	5,115,418	$	10,597,216	$	4,732,796
Denominator: Weighted average shares outstanding
Weighted average shares outstanding, basic		12,954,485		11,305,291		12,939,090		11,485,020
Conversion of Class B to Class A shares		11,305,291		—		11,485,020		—
Weighted average shares outstanding, diluted		24,259,776		11,305,291		24,424,110		11,485,020
Earnings per share
Basic	$	0.50	$	0.45	$	0.45	$	0.41
Diluted	$	0.48	$	0.45	$	0.43	$	0.41

9

I. SEGMENT INFORMATION

The Company operates three lines of business: retail grocery sales (representing the aggregation of individual retail stores), shopping center rentals, and a fluid dairy processing plant. All of the Company’s operations are domestic. Information about the Company’s operations by lines of business (in thousands) is as follows:

	THREE MONTHS ENDED
	DECEMBER 29, 2012			DECEMBER 24, 2011
Revenues from unaffiliated customers:
Grocery sales	$	899,795		$	884,773
Shopping center rentals		2,186			2,293
Fluid dairy		32,996			33,465
Total revenues from unaffiliated customers	$	934,977		$	920,531
Income from operations:
Grocery sales	$	30,841		$	27,089
Shopping center rentals		316			428
Fluid dairy		2,324			2,846
Total income from operations	$	33,481		$	30,363
	DECEMBER 29, 2012			SEPTEMBER 29, 2012
Assets:
Grocery sales	$	1,506,040		$	1,486,109
Shopping center rentals		119,393			119,393
Fluid dairy		38,516			38,874
Elimination of intercompany receivable		(2,472	)		(2,267	)
Total assets	$	1,661,477		$	1,642,109

Sales by product category (amounts in thousands) are as follows:

	THREE MONTHS ENDED
	DECEMBER 29, 2012		DECEMBER 24, 2011
Grocery	$	371,259	$	371,961
Non-foods		177,704		175,649
Perishables		219,949		209,869
Gasoline		130,883		127,294
Total grocery segment	$	899,795	$	884,773

The grocery category includes grocery, dairy and frozen foods.

The non-foods category includes alcoholic beverages, tobacco, pharmacy, health and video.

The perishables category includes meat, produce, deli and bakery.

Revenue from shopping center rentals is included in the caption “Rental income, net” in the Condensed Consolidated Statements of Income. Grocery and fluid dairy revenues comprise net sales reported in the Condensed Consolidated Statements of Income.

For the three months ended December 29, 2012 and December 24, 2011, the fluid dairy segment had $15.9 million and $15.2 million, respectively, in sales to the grocery sales segment. These sales have been eliminated in consolidation and are excluded from the amounts in the table above.

J. FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments.

10

The fair value of the Company’s debt is estimated using valuation techniques under the accounting guidance related to fair value measurements based on observable and unobservable inputs. Observable inputs reflect readily available data from independent sources, while unobservable inputs reflect the Company’s market assumptions. These inputs are classified into the following hierarchy:

Level 1 Inputs	–	Quoted prices for identical assets or liabilities in active markets.
Level 2 Inputs	–	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs	–	Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

The carrying amount and fair value of the Company’s debt at December 29, 2012 is as follows (in thousands):

	Carrying Amount		Fair Value		Fair Value Measurements
Senior Notes, net of unamortized original issue discount	$	564,171	$	612,375		Level 2
Recovery Zone Facility Bonds		99,740		99,740		Level 2
Real estate and equipment notes payable		128,254		128,649		Level 2
Line of credit payable		84,834		84,834		Level 2
Total debt	$	876,999	$	925,598

The fair values for Level 2 measurements were determined primarily using market yields and taking into consideration the underlying terms of the debt.

K. NONQUALIFIED INVESTMENT PLAN

The purpose of the Executive Nonqualified Excess Plan is to provide retirement benefits similar to the Company’s Investment/Profit Sharing Plan to certain of the Company’s management employees who are otherwise subject to limited participation in the 401(k) feature of the Company’s Investment/Profit Sharing Plan. Participant retirement account balances are liabilities of the Company. Assets of the plan are assets of the Company and are held in trust for employees and distributed upon retirement, death, disability, in-service distributions, or other termination of employment. In accordance with the trust, the Company may not use these assets for general corporate purposes. During the quarter ended December 29, 2012 the Company liquidated certain life insurance policy assets and invested the proceeds in marketable securities. These marketable securities will be liquidated and invested in life insurance policies in future periods. Life insurance policies and marketable securities held in the trust are included in the caption “Other assets” in the Condensed Consolidated Balance Sheets.

L. SUBSEQUENT EVENTS

We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the day the financial statements were filed with the SEC.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Ingles, a leading supermarket chain in the Southeastern United States, operates 203 supermarkets in Georgia (74), North Carolina (69), South Carolina (36), Tennessee (21), Virginia (2) and Alabama (1). The Company locates its supermarkets primarily in suburban areas, small towns and rural communities. Ingles supermarkets offer customers a wide variety of nationally advertised food products, including grocery, meat and dairy products, produce, frozen foods and other perishables and non-food products. Non-food products include health and beauty care products and general merchandise. The Company also offers quality private label items. As of December 29, 2012, the Company operated 82 in-store pharmacies and 73 fuel centers.

Ingles also operates two other lines of business, fluid dairy processing and shopping center rentals. The fluid dairy processing segment sells approximately 33% of its products to the retail grocery segment and approximately 67% of its products to third parties. Real estate ownership (including the shopping center rental segment) is an important component of the Company’s operations, providing both operational and economic benefits.

11

Critical Accounting Policies

Self-Insurance

The Company is self-insured for workers’ compensation and group medical and dental benefits. Risks and uncertainties are associated with self-insurance; however, the Company has limited its exposure by maintaining excess liability coverage of $750,000 per occurrence for workers’ compensation, $500,000 for general liability, and $325,000 per covered person for medical care benefits for a policy year. Self-insurance liabilities are established based on claims filed and estimates of claims incurred but not reported. The estimates are based on data provided by the respective claims administrators, which is then applied to appropriate actuarial methods. These estimates can fluctuate if historical trends are not predictive of the future. The majority of the Company’s properties are self-insured for casualty losses and business interruption; however, liability coverage is maintained. At December 29, 2012, the Company’s self insurance reserves totaled $27.2 million for employee group insurance, workers’ compensation insurance and general liability insurance.

Asset Impairments

The Company accounts for the impairment of long-lived assets in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 360. Asset groups are primarily comprised of individual store and shopping center properties. For assets to be held and used, the Company tests for impairment using undiscounted cash flows and calculates the amount of impairment using discounted cash flows. For assets held for sale, impairment is recognized based on the excess of remaining book value over expected recovery value. The recovery value is the fair value as determined by independent quotes or expected sales prices developed by internal associates, less costs to sell. Estimates of future cash flows and expected sales prices are judgments based upon the Company’s experience and knowledge of local operations and cash flows that are projected for several years into the future. These estimates can fluctuate significantly due to changes in real estate market conditions, the economic environment, capital spending decisions and inflation. The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred. There were no asset impairments during the three-month period ended December 29, 2012.

Closed Store Accrual

For closed properties under long-term lease agreements, a liability is recognized and expensed based on the difference between the present value of any remaining liability under the lease and the present value of the estimated market rate at which the Company expects to be able to sublease the properties, in accordance with FASB ASC Topic 420. The Company’s estimates of market rates are based on its experience, knowledge and third-party advice or market data. If the real estate and leasing markets change, sublease recovery could vary significantly from the recoveries originally assumed, resulting in a material change in the Company’s recorded liability. The closed store accrual is included in the line item “Accrued expenses and current portion of other long-term liabilities” on the Condensed Consolidated Balance Sheets.

Vendor Allowances

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 vendor’s 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 $32.9 million and $30.0 million for the fiscal quarters ended December 29, 2012 and December 24, 2011, respectively. Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising the vendor’s specific products are recorded as a reduction to the related expense

12

in the period that the related expense is incurred. Vendor advertising allowances recorded as a reduction of advertising expense totaled $3.9 million and $3.4 million for the fiscal quarters ended December 29, 2012 and December 24, 2011, respectively.

If vendor advertising allowances were substantially reduced or eliminated, the Company would likely consider other methods of advertising as well as the volume and frequency of the Company’s product advertising, which could increase or decrease the Company’s expenditures.

Similarly, the Company is not able to assess the impact of vendor advertising allowances on creating additional revenue, as such allowances do not directly generate revenue for the Company’s stores.

Uncertain Tax Positions

Under ASC 740-10 “Accounting for Uncertainty in Income Taxes”, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more likely than not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. A reserve for uncertain tax positions, including interest and penalties, of $0.2 million is included in the Company’s income taxes payable at both December 29, 2012 and September 29, 2012. The reserve for uncertain tax positions has been recorded based on management’s assumption that certain tax positions would be successfully challenged by taxing authorities.

Results of Operations

Ingles operates on a 52 or 53-week fiscal year ending on the last Saturday in September. The Condensed Consolidated Statements of Income for the three-month periods ended December 29, 2012 and December 24, 2011 both include 13 weeks of operations. Comparable store sales are defined as sales by grocery stores in operation for five full fiscal quarters. Sales from replacement stores, major remodels and the addition of fuel stations to existing stores are included in the comparable store sales calculation from the date thereof. A replacement store is a new store that is opened to replace an existing nearby store that is closed. A major remodel entails substantial remodeling of an existing store and includes additional retail square footage. For the three-month periods ended December 29, 2012 and December 24, 2011, comparable store sales include 203 and 202 stores, respectively.

The following table sets forth, for the periods indicated, selected financial information as a percentage of net sales. For information regarding the various segments of the business, see Note I “Segment Information” to the condensed consolidated financial statements.

	THREE MONTHS ENDED
	DECEMBER 29, 2012			DECEMBER 24, 2011
Net sales		100.0	%		100.0	%
Gross profit		22.3	%		22.0	%
Operating and administrative expenses		18.7	%		18.7	%
Income from operations		3.6	%		3.3	%
Other income, net		0.1	%		0.1	%
Interest expense		1.7	%		1.6	%
Income before income taxes		2.0	%		1.8	%
Income taxes		0.7	%		0.6	%
Net income		1.2	%		1.2	%

Three Months Ended December 29, 2012 Compared to the Three Months Ended December 24, 2011

Net income for the first quarter of fiscal 2013 totaled $11.6 million, 9.2% higher than net income of $10.6 million earned for the first quarter of fiscal 2012. Grocery segment sales increased, while fluid dairy segment performance decreased from the prior fiscal period. Gross profit increased, but the Company recognized higher income tax expense due to the expiration of temporary tax benefits.

Net Sales. Net sales increased 1.6% to $932.8 million for the three months ended December 29, 2012 from $918.2 million for the three months ended December 24, 2011. Ingles operated 203 stores and approximately 11.0 million of retail square feet at both December 29, 2012 and at December 24, 2011. Excluding gasoline sales, net sales increased 1.4% for the three months ended December 29, 2012 compared with the three months ended December 24, 2011.

Grocery segment comparable store sales grew $14.8 million, or 1.7%, in the first quarter of fiscal 2013 compared to the first quarter of fiscal 2012. Excluding gasoline sales, comparable store sales increased 1.5%. Retail gasoline sales prices increased and the number of gallons sold decreased 0.9% during the first quarter of fiscal 2013 compared with the first quarter of fiscal 2012. The number of customer transactions (excluding gasoline) increased 1.4%, and the average transaction size was essentially unchanged.

13

Sales by product category (amounts in thousands) are as follows:

	THREE MONTHS ENDED
	DECEMBER 29, 2012		DECEMBER 24, 2011
Grocery	$	371,259	$	371,961
Non-foods		177,704		175,649
Perishables		219,949		209,869
Gasoline		130,883		127,294
Total grocery segment	$	899,795	$	884,773

The grocery category includes grocery, dairy, and frozen foods.

The non-foods category includes alcoholic beverages, tobacco, pharmacy, health and video.

The perishables category includes meat, produce, deli and bakery.

Changes in grocery segment sales for the quarter ended December 29, 2012 are summarized as follows (in thousands):

Total grocery sales for the three months ended December 24, 2011	$	884,773
Comparable store sales increase (including gasoline)		14,844
Impact of stores opened in fiscal 2012 and 2013		—
Impact of stores closed in fiscal 2012 and 2013		—
Other		178
Total grocery sales for the three months ended December 29, 2012	$	899,795

Net sales to outside parties for the Company’s milk processing subsidiary decreased $0.5 million, or 1.4%, in the December 2012 quarter compared to the December 2011 quarter. Higher raw milk costs in the December 2012 quarter were more than offset by a lower case volume of products sold compared with the December 2011 quarter. Milk sales volumes have decreased nationwide, partly as a result of rising prices.

Gross Profit. Gross profit for the three-month period ended December 29, 2012 increased $6.2 million to $207.9 million, or 22.3% of sales, compared to $201.7 million, or 22.0% of sales, for the three-month period ended December 24, 2011.

Grocery segment gross profit as a percentage of total sales was influenced by gasoline margins (which are typically much lower than margins earned on other grocery segment products), intense competition, and vendor participation in pricing promotions. Excluding gasoline sales, grocery segment gross profit as a percentage of sales was 26.0% for the three months ended December 29, 2012 compared with 25.5% for the three months ended December 24, 2011.

Gross profit for the Company’s milk processing subsidiary for the December 2012 quarter decreased $0.5 million, or 9.1%, to $5.0 million, or 10.1% of sales, compared to $5.5 million, or 11.2% of sales, for the December 2011 quarter. The gross margin percentage was adversely affected by higher milk prices. The cents-per-gallon margin was adversely affected by the competitive environment comparing the three months ended December 2012 with the three months ended December 2011.

In addition to the direct product cost, the cost of goods sold line item for the grocery segment includes inbound freight charges, purchasing costs and costs related to the Company’s distribution network. The milk processing segment is a manufacturing process, therefore, the costs mentioned above as well as receiving costs, production costs, inspection costs, warehousing costs, internal transfer costs, and other costs of distribution incurred by the milk processing segment are included in the cost of goods sold line item, while these items are included in operating and administrative expenses for the grocery segment.

Operating and Administrative Expenses. Operating and administrative expenses increased $3.0 million, or 1.8%, to $174.8 million for the three months ended December 29, 2012, from $171.8 million for the three months ended December 24, 2011. As a percentage of sales, operating and administrative expenses were both 18.7% for both the December 2012 and December 2011 quarters. Excluding gasoline sales and associated gasoline operating expenses (primarily payroll), operating expenses were 21.7% of sales for the first fiscal quarter of 2013 compared with 21.6% for the first fiscal quarter of 2012. The absence of new and remodeled stores opened by the Company during fiscal years 2012 and 2013 have contributed to operating expenses as a percentage of sales being relatively stable.

14

The major increases (decreases) in operating and administrative expenses were as follows:

	INCREASE (DECREASE) IN MILLIONS			INCREASE (DECREASE) AS A % OF SALES
Salaries and wages	$	3.2			0.34	%
Depreciation expense	$	(0.9	)		(0.10	)%
Insurance expense	$	0.8			0.09	%
Supplies	$	0.4			0.04	%
Taxes and licenses	$	0.4			0.04	%
Repairs and maintenance	$	(0.4	)		(0.04	)%

Salaries and wages expenses increased due to the additional labor hours required to support the increased sales volume.

Depreciation and amortization expense decreased as a result of the Company’s lower store-based capital expenditures in fiscal year 2012, as the majority of fiscal year 2012 capital expenditures were for the construction of the new distribution center.

Insurance expense increased due to adverse claims experience under the Company’s self insurance programs.

Supply costs increased due to increased costs of petroleum based packaging and changes in packaging in certain perishable departments.

Taxes and licenses increased due to increased property taxes and other taxes and fees charged by municipalities where the Company operates stores.

Repair and maintenance expenses decreased due to the cyclical nature of certain significant repairs to store equipment.

Rental Income, Net. Rental income, net totaled $0.3 and $0.4 million for the December 2012 and 2011 quarters, respectively. Following a period of increased vacancies attributed to the economic recession, the Company’s tenant base has somewhat stabilized.

Other Income, Net. Other income, net decreased $0.4 million to $0.6 million for the three-month period ended December 29, 2012 from $1.0 million for the three-month period ended December 24, 2011. The principal component of other income is waste paper and packaging sales.

Interest Expense. Interest expense increased $0.6 million for the three-month period ended December 29, 2012 to $15.6 million from $15.0 million for the three-month period ended December 24, 2011. Total debt at December 29, 2012 was $877.0 million compared to $882.5 million at December 24, 2011. Interest expense increased due to the $99.7 million of Recovery Zone Facility Bonds (the “Bonds”). Interest on the Bonds was capitalized as a construction cost of the new distribution facility prior to its opening in mid-2012. For the three months ended December 29, 2012 this interest was expensed.

Income Taxes. Income tax expense as a percentage of pre-tax income was 37.4% in the December 2012 quarter compared to 35.2% in the December 2011 quarter. Certain tax incentives related to hiring and investing during the recent economic downturn were in effect for last year’s first fiscal quarter, but had expired for this year’s first fiscal quarter.

Net Income. Net income increased $1.0 million, or 9.2%, for the three-month period ended December 29, 2012 to $11.6 million compared to $10.6 million for the three-month period ended December 24, 2011. Net income, as a percentage of sales, was 1.2% for both the December 2012 quarter the December 2011 quarter. Basic and diluted earnings per share for Class A Common Stock were $0.50 and $0.48, respectively, for the December 2012 quarter, compared to $0.45 and $0.43, respectively, for the December 2011 quarter. Basic and diluted earnings per share for Class B Common Stock were each $0.45 for the December 2012 quarter compared to $0.41 for the December 2011 quarter.

Liquidity and Capital Resources

Capital Expenditures

The Company believes that a key to its ability to increase sales and develop a loyal customer base is providing conveniently located, clean and modern stores that offer customers good service and a broad selection of competitively priced products. Accordingly, the Company has invested and plans to continue to invest significant amounts of capital toward the modernization of its store base. The Company’s modernization program includes the opening of new stores, the completion of major remodels and expansion of selected existing stores, and the relocation of selected existing stores to larger, more convenient locations.

Capital expenditures totaled $28.1 million for the three-month period ended December 29, 2012. Most of these capital expenditures were related to smaller-scale remodeling projects in a number of the Company’s stores and the construction of a new store expected to open during the second quarter of fiscal 2013. Capital expenditures also included the costs of upgrading and replacing store

15

equipment, technology investments, capital expenditures related to its milk processing plant, and expenditures for stores scheduled to open later in fiscal 2013 and in fiscal 2014.

Ingles’ capital expenditure plans for fiscal 2013 include investments of approximately $100 to $130 million. The majority of the Company’s fiscal 2013 capital expenditures will be dedicated to continued improvement of its store base and will include the completion of two or more new/remodeled stores. Fiscal 2013 capital expenditures will also include investments in stores expected to open in fiscal 2014 as well as technology improvements, upgrading and replacing existing store equipment and warehouse and transportation equipment and improvements to the Company’s milk processing plant.

The Company expects that its net annual capital expenditures will be in the range of approximately $110 to $180 million going forward in order to maintain a modern store base. Planned expenditures for any given future fiscal year will be affected by the availability of financing, which can affect both the number of projects pursued at any given time and the cost of those projects. The number of projects may also fluctuate due to the varying costs of the types of projects pursued including new stores and major remodel/expansions. The Company makes decisions on the allocation of capital expenditure dollars based on many factors including the competitive environment, other Company capital initiatives and its financial condition.

The Company does not generally enter into commitments for capital expenditures other than on a store-by-store basis at the time it begins construction on a new store or begins a major remodeling project. Construction commitments at December 29, 2012 totaled $9.3 million.

Liquidity

The Company used $5.3 million of net cash from operations in the December 2012 quarter compared to $7.4 million of net cash provided by operations in the December 2011 quarter. Most of the change is attributable to a decrease in cash used for working capital.

Cash used in investing activities for the December 2012 quarter totaled $27.9 million, compared to $31.1 million in the December 2011 quarter. The primary investing activities for the quarter ended December 29, 2012 were $28.1 million of capital expenditures. Capital expenditures for the quarter ended December 24, 2011 totaled $63.7 million, of which $32.6 million was funded by liquidation of investments from the Recovery Zone Facility Bond proceeds for new distribution facility construction costs.

Cash provided by financing activities during the December 2012 quarter totaled $38.0 million, compared with $21.1 million of cash used by financing activities during the December 2011 quarter. For the December 2012 quarter, principal payments on long-term debt were $2.9 million and cash dividends paid were $3.8 million. The Company borrowed an additional $44.7 million under its $175.0 million line of credit facility during the quarter.

In May 2009, the Company issued $575.0 million aggregate principal amount of senior notes due in 2017 (the “Notes”) in a private placement. The Notes bear an interest rate of 8.875% per annum and were issued at a discount to yield 9.5% per annum. The Notes become callable at a price of 104.438% of the principal amount outstanding on May 15, 2013. The Company is closely monitoring market conditions, which are currently more favorable than when the Notes were issued in 2009.

In connection with the offering of the Notes, the Company entered into a new three-year $175.0 million line of credit. On December 29, 2010 the maturity date of the $175.0 million line of credit was extended to December 29, 2015. There was $84.8 million outstanding under the line of credit at December 29, 2012.

The line of credit provides the Company with various interest rate options generally at rates less than prime. The line allows the Company to issue up to $30.0 million in unused letters of credit, of which $9.5 million of unused letters of credit were issued at December 29, 2012. The Company is not required to maintain compensating balances in connection with the line of credit.

On December 29, 2010, the Company completed the funding of $99.7 million of Recovery Zone Facility Bonds (the “Bonds”) for the acquisition, construction and equipping of an approximately 830,000 square foot new warehouse and distribution center adjacent to its current distribution center in Buncombe County, North Carolina (the “Project”). The final maturity date of the Bonds is January 1, 2036.

Bond proceeds were invested in a trust account with the Bond trustee. The Company received disbursements from the account as it submitted requisitions to the trustee for incurred Project costs. The account with the Bond trustee consisted of money market deposits and United States Treasury securities. All funds had been disbursed from the trust account as of September 29, 2012.

The Bonds were issued by the Buncombe County Industrial Facilities and Pollution Control Financing Authority and were purchased by certain financial institutions. Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between the financial institutions and the Company, the financial institutions will hold the Bonds until January 2, 2018, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4,530,000 begins on January 1, 2014. The Company may redeem the Bonds without penalty or premium at any time prior to January 2, 2018.

16

The Notes, the Bonds and the line of credit contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the line of credit to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. As of December 29, 2012, the Company was in compliance with these covenants by a significant margin. Under the most restrictive of these covenants, the Company would be able to incur approximately $697 million of additional borrowings (including borrowings under the line of credit) as of December 29, 2012.

The Company’s principal sources of liquidity are expected to be cash flow from operations, borrowings under its line of credit and long-term financing. As of December 29, 2012, the Company had unencumbered real property and equipment with a net book value of approximately $907 million. The Company believes, based on its current results of operations and financial condition, that its financial resources, including the line of credit, short- and long-term financing expected to be available to it and internally generated funds, will be sufficient to meet planned capital expenditures and working capital requirements for the foreseeable future, including any debt service requirements of additional borrowings. However, there is no assurance that any such sources of financing will be available to the Company when needed on acceptable terms, or at all.

It is possible that, in the future, the Company’s results of operations and financial condition will be different from that described in this report based on a number of 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, as well as the additional factors discussed below under “Forward Looking Statements.” It is also possible, for such reasons, that the results of operations from the new distribution center and from new, expanded, remodeled and/or replacement stores will not meet or exceed the results of operations from existing stores that are described in this report.

Contractual Obligations and Commercial Commitments

There have been no material changes in contractual obligations and commercial commitments subsequent to September 29, 2012 other than as disclosed elsewhere in this Form 10-Q.

Off Balance Sheet Arrangements

The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company’s financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

Quarterly Cash Dividends

Since December 27, 1993, the Company has paid regular quarterly cash dividends of $0.165 (sixteen and one-half cents) per share on its Class A Common Stock and $0.15 (fifteen cents) per share on its Class B Common Stock for an annual rate of $0.66 and $0.60 per share, respectively. Because of increased tax rates on dividends that went into effect in January 2013, the Company paid in December 2012 a special dividend equal to $0.66 cents per each Class A share and $0.60 cents per each Class B share. The Company also accelerated the payment of the regular quarterly January 2013 dividend into December 2012. Both dividends were declared on December 7, 2012, payable on December 31, 2012 to shareholders of record on December 21, 2012. The next scheduled regular quarterly cash dividend of $0.165 (sixteen and one-half cents) per share on its Class A Common Stock and $0.15 (fifteen cents) per share on its Class B Common Stock is expected to be declared and paid in April 2013.

The Company expects to continue paying regular cash dividends on a quarterly basis. However, the Board of Directors periodically reconsiders the declaration of dividends. The Company pays these dividends at the discretion of the Board of Directors and the continuation of these payments, the amount of such dividends, and the form in which the dividends are paid (cash or stock) depends upon the results of operations, the financial condition of the Company and other factors which the Board of Directors deems relevant. In addition, the Notes, long-term debt and the lines of credit contain provisions that, based on certain financial parameters, restrict the ability of the Company to pay additional cash dividends in excess of current quarterly per share amounts. Further, the Company is prevented from declaring dividends at any time that it is in default under the indenture governing the Notes.

Seasonality

Sales in the grocery segment of the Company’s business are subject to a slight seasonal variance due to holiday related sales and sales in areas where seasonal homes are located. Sales are traditionally higher in the Company’s first fiscal quarter due to the inclusion of sales related to Thanksgiving and Christmas. The Company’s second fiscal quarter traditionally has the lowest sales of the year. In the third and fourth quarter, sales are affected by the return of customers to seasonal homes in the Company’s market area. The fluid dairy segment of the Company’s business has slight seasonal variation to the extent of its sales into the grocery industry. The Company’s real estate segment is not subject to seasonal variations.

17

Impact of Inflation

The following table from the United States Bureau of Labor Statistics lists annualized changes in the Consumer Price Index that could have an effect on the Company’s operations. One of the Company’s significant costs is labor, which increases with general inflation. Inflation in energy costs affects both the Company’s gasoline sales and distribution expenses.

	THREE MONTHS ENDED
	DECEMBER 29, 2012			DECEMBER 24, 2011
All items		(0.1	)%		—	%
Food and beverages		0.2	%		0.1	%
Energy		(1.9	)%		(1.6	)%

Forward Looking Statements

This Quarterly Report contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “expect,” “anticipate,” “intend,” “plan,” “likely,” “goal,” “believe,” “seek” and similar expressions are intended to identify forward-looking statements. While these forward-looking statements and the related assumptions are made in good faith and reflect the Company’s current judgment regarding the direction of the Company’s business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such statements are based upon a number of assumptions and estimates which are inherently subject to significant risks and uncertainties, many of which are beyond the Company’s control. Some of these assumptions inevitably will not materialize, and unanticipated events will occur which will affect the Company’s results. Some important factors (but not necessarily all factors) that affect the Company’s revenues, growth strategies, future profitability and operating results, or that otherwise could cause actual results to differ materially from those expressed in or implied by any forward-looking statement, include business and economic conditions generally in the Company’s operating area; the Company’s ability to successfully implement its expansion and operating strategies and to manage rapid expansion; pricing pressures and other competitive factors; sudden or significant changes in the availability of gasoline and retail gasoline prices; the maturation of new and expanded stores; general concerns about food safety; the Company’s ability to reduce costs and achieve improvements in operating results; the availability and terms of financing; increases in labor and utility costs; success or failure in the ownership and development of real estate; changes in the laws and government regulations applicable to the Company; and other risks and uncertainties, including those contained in the Company’s Annual Report on Form 10-K for the year ended September 29, 2012, as updated or supplemented by subsequent quarterly reports on Form 10-Q and current reports of Form 8-K filed with the Securities and Exchange Commission.

Consequently, actual events affecting the Company and the impact of such events on the Company’s operations may vary significantly from those described in this report or contemplated or implied by statements in this report. The Company does not undertake and specifically declines any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not typically utilize financial instruments for trading or other speculative purposes, nor does it typically utilize leveraged financial instruments. From time to time, the Company may consider derivative instruments such as interest rate swaps to manage its overall interest rate risk. There have been no material changes in the market risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the year ended September 29, 2012.

Item 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the regulations of the Securities and Exchange Commission. Disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, include controls and procedures designed to ensure the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that the Company’s system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.

As required by Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation, under the supervision and with participation of its management including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures as of December 29, 2012, the end of the period covered by this report. In making this evaluation, it considered matters previously identified and disclosed in connection with the filing of its Form 10-K for

18

fiscal 2012. After consideration of the matters discussed above, management has concluded that the Company’s controls and procedures were effective as of December 29, 2012.

(b) Changes in Internal Control over Financial Reporting

The Company has set the timing and scope of its fiscal 2013 testing of internal controls over financial reporting and has begun performing tests for fiscal 2013.

No other change in internal control over financial reporting occurred during the Company’s last fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. OTHER INFORMATION

Item 6. EXHIBITS

(a)	Exhibits.
3.1	Articles of Incorporation of Ingles Markets, Incorporated (included as Exhibit 3.1 to Ingles Markets, Incorporated’s Registration Statement on Form S-1, File No. 33-23919, previously filed with the Commission and incorporated herein by this reference).
3.2	Articles of Amendment to Articles of Incorporation of Ingles Markets, Incorporated (included as Exhibit 3.3 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 25, 2004, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference).
3.3	Articles of Amendment to Articles of Incorporation of Ingles Markets, Incorporated dated April 23, 2012 (included as Exhibit 3.3 to Ingles Markets, Incorporated Quarterly Report on Form 10-Q for the fiscal quarter ended March 24, 2012, File No. 0-14706, previously filed with the Commission and incorporated herein by this reference).
3.4	Amended and Restated By-Laws of Ingles Markets, Incorporated (included as Exhibit 99.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on August 30, 2007 and incorporated herein by this reference).
4.1	Articles 4 and 9 of the Articles of Incorporation of Ingles Markets, Incorporated (included as Exhibit 3.1 to Ingles Markets, Incorporated’s Registration Statement on Form S-1, File No. 33-23919, and Exhibit 3.3 to Ingles Markets, Incorporated’s Annual Report on Form 10-K for the fiscal year ended September 25, 2004, File No. 0-14706, respectively, each of which were previously filed with the Commission and are incorporated herein by this reference).
4.2	Articles 2, 3, 10, 11 and 14 of the Amended and Restated By-Laws of Ingles Markets, Incorporated (included as Exhibit 99.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on August 30, 2007 and incorporated herein by this reference).
4.3	Indenture, dated as of May 12, 2009, between Ingles Markets, Incorporated and U.S. Bank, National Association, as Trustee, governing the 8 7/8% Senior Notes Due 2017, including the form of unregistered 8 7/8% Senior Note Due 2017 (included as Exhibit 4.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on May 15, 2009 and incorporated herein by this reference).
4.4	Registration Rights Agreement, dated May 12, 2009, among the Company and Banc of America Securities LLC, Wachovia Capital Markets, LLC and BB&T, a division of Scott & Stringfellow, LLC (included as Exhibit 4.3 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on May 15, 2009 and incorporated herein by this reference).
10.1	Credit Agreement, dated May 12, 2009, among the Company and the lenders party thereto, Bank of America, as administrative agent, swing line lender and l/c issuer, Branch Banking and Trust Company, as syndication agent, Wachovia Bank, National Association, as documentation agent, and Banc of America Securities LLC, Branch Banking and Trust Company and Wachovia Capital Markets, LLC, as joint lead arrangers and book managers (included as Exhibit 10.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on May 15, 2009 and incorporated herein by this reference).
10.2	Exhibits and Schedules to Credit Agreement dated May 12, 2009, among the Company and the lenders party thereto, Bank of America, as administrative agent, swing line lender and l/c issuer, Branch Banking and Trust Company, as syndication agent, Wachovia Bank, National Association, as documentation agent, and Banc of America Securities LLC, Branch Banking and Trust Company and Wachovia Capital Markets, LLC, as joint lead arrangers and joint book managers (included as Exhibit 10.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on May 15, 2009 and incorporated herein by this reference).

19

10.3	Waiver and First Amendment to the Credit Agreement dated as of May 12, 2009, among the Company the lenders from time to time party thereto, Bank of America, N.A., as administrative agent, swing line lender and l/c issuer, and the other agents, joint lead arrangers and joint book managers party thereto (included as Exhibit 10.3 to Ingles Markets, Incorporated’s Annual Report on Form 10-K, File No. 0-14706, previously filed with the Commission on December 26, 2012, and incorporated herein by this reference).
10.4	Second Amendment to the Credit Agreement dated as of May 12, 2009, among the Company the lenders from time to time party thereto, Bank of America, N.A., as administrative agent, swing line lender and l/c issuer, and the other agents, joint lead arrangers and joint book managers party thereto (included as Exhibit 10.1 to Ingles Markets, Incorporated’s Current Report on Form 8-K, File No. 0-14706, previously filed with the Commission on January 4, 2011 and incorporated herein by this reference).
31.1*	Rule 13a-14(a) Certification
31.2*	Rule 13a-14(a) Certification
32.1*	Certification Pursuant to 18 U.S.C. Section 1350
32.2*	Certification Pursuant to 18 U.S.C. Section 1350
101*	The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended December 29, 2012, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Consolidated Statements of Earnings; (ii) the Consolidated Balance Sheets; (iii) the Consolidated Statements of Cash Flows; (iv) the Consolidated Statements of Comprehensive Income; and (v) the Notes to the Consolidated Financial Statements.

* Filed herein.

20

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 7, 2013	/s/ Robert P. Ingle, II
	Robert P. Ingle, II Chief Executive Officer

Date: February 7, 2013	/s/ Ronald B. Freeman
	Ronald B. Freeman Vice President-Finance and Chief Financial Officer

21

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert P. Ingle, II, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ingles Markets, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d – 15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s first fiscal quarter) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 7, 2013

/s/ Robert P. Ingle, II

Robert P. Ingle, II

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald B. Freeman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ingles Markets, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d – 15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s first fiscal quarter) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 7, 2013

/s/ Ronald B. Freeman

Ronald B. Freeman

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ingles Markets, Incorporated (the “Company”) on Form 10-Q for the period ended December 29, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert P. Ingle, II, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert P. Ingle, II

Robert P. Ingle, II

Chief Executive Officer

February 7, 2013

The foregoing certification is being furnished as an exhibit of the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing).

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ingles Markets, Incorporated (the “Company”) on Form 10-Q for the period ended December 29, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald B. Freeman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Ronald B. Freeman

Ronald B. Freeman

Vice President of Finance and

Chief Financial Officer

February 7, 2013

The foregoing certification is being furnished as an exhibit of the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing).

XML

Segment Information - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 29, 2012	Dec. 24, 2011
Segment Reporting Information [Line Items]
Number of segment	3
Fluid dairy
Segment Reporting Information [Line Items]
Sales	$ 15.9	$ 15.2

XML

Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended
	Dec. 29, 2012
Income Taxes [Line Items]
Interest and penalties, accrued	$ 50,000
Gross unrecognized tax benefits	$ 121,000
Year from which state income tax examination is applicable	2009

XML

ALLOWANCE FOR DOUBTFUL ACCOUNTS

3 Months Ended

Dec. 29, 2012

ALLOWANCE FOR DOUBTFUL ACCOUNTS

C. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Receivables are presented net of an allowance for doubtful accounts of $742,000 at each of December 29, 2012 and September 29, 2012.

XML

Redemption Prices of Senior Notes (Detail)	3 Months Ended
	Dec. 29, 2012
Long Term Debt Maturities Repayments Of Principal [Line Items]
2013	104.438%
2014	102.219%
2015 and thereafter	100.00%

XML

Long-Term Debt - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	May 31, 2009	Dec. 29, 2012	Dec. 29, 2010 sqft
Debt Instrument [Line Items]
Aggregate principal amount of senior notes	$ 575,000,000
Maturity period of senior note		2017
Interest rate of senior note		8.875%
Discount rate of senior note to yield		9.50%
Redemption period of senior notes		Redeem all or a portion of the Notes at any time on or after May 15, 2013
Redemption of senior notes, date		May 15, 2013
Amount of line of credit agreement		175,000,000
Line of credit agreement term		3 years
Total line of credit commitments		175,000,000
Line of credit outstanding		84,800,000
Maximum amount of unused letters of credit allowed to issue		30,000,000
Unused letters of credit issued		9,500,000
Total amount of bonds funded			99,700,000
Total area of new warehouse and distribution center			830,000
Final maturity date of bonds		Jan. 01, 2036
Redemption period of bonds		Jan. 01, 2014
Annual amount of redemption of bonds		$ 4,530,000
Redemption period of bonds without penalty or premium		Jan. 02, 2018
Description of interest rate on bonds		Interest rate on the Bonds is equal to one month LIBOR (adjusted monthly) plus a credit spread
Amendment to extend the maturity of line of credit			From May 12, 2012 to December 29, 2015
Line of credit, expiration date			Dec. 29, 2015

XML

Dividends - Additional Information (Detail) (USD $)	1 Months Ended			3 Months Ended		1 Months Ended		3 Months Ended		1 Months Ended
	Oct. 25, 2012	Dec. 07, 2012 Special Dividend	Oct. 25, 2012 Class A Common Stock	Dec. 29, 2012 Class A Common Stock	Dec. 24, 2011 Class A Common Stock	Dec. 07, 2012 Class A Common Stock Special Dividend	Oct. 25, 2012 Class B Common Stock	Dec. 29, 2012 Class B Common Stock	Dec. 24, 2011 Class B Common Stock	Dec. 07, 2012 Class B Common Stock Special Dividend	Dec. 31, 2012 Subsequent Event	Dec. 31, 2012 Subsequent Event Class A Common Stock	Dec. 31, 2012 Subsequent Event Class B Common Stock
Dividends [Line Items]
Cash dividends per share of common stock				$ 0.990	$ 0.165	$ 0.66		$ 0.900	$ 0.150	$ 0.60
Cash dividend paid per share			$ 0.165				$ 0.15					$ 0.165	$ 0.15
Dividend payment date	Oct. 25, 2012	Dec. 31, 2012
Dividend record date	Oct. 11, 2012	Dec. 21, 2012									Dec. 21, 2012

XML

Earnings Per Common Share - Additional Information (Detail)	3 Months Ended
	Dec. 29, 2012
Earnings Per Share [Line Items]
Voting rights for shareholders	Class A Common Stock has one vote per share and each share of Class B Common Stock has ten votes per share.
Percentage of cash dividend on Class B Common Stock entitled to receive for each share of Class A Common Stock	110.00%
Conversion feature for Class B Common Stock	Each share is convertible into one share of Class A Common Stock at any time.
Class A Common Stock
Earnings Per Share [Line Items]
Number of votes for common stock	1
Class B Common Stock
Earnings Per Share [Line Items]
Number of votes for common stock	10

XML

NEW ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Dec. 29, 2012

NEW ACCOUNTING PRONOUNCEMENTS

B. NEW ACCOUNTING PRONOUNCEMENTS

There were no accounting standards adopted in the three-month period ended December 29, 2012.

XML

Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share (Detail) (USD $)	3 Months Ended
	Dec. 29, 2012	Dec. 24, 2011
Class A Common Stock
Numerator: Allocated net income
Net income allocated, basic	$ 6,452,230	$ 5,864,420
Conversion of Class B to Class A shares	5,115,418	4,732,796
Net income allocated, diluted	11,567,648	10,597,216
Denominator: Weighted average shares outstanding
Weighted average shares outstanding, basic	12,954,485	12,939,090
Conversion of Class B to Class A shares	11,305,291	11,485,020
Weighted average shares outstanding, diluted	24,259,776	24,424,110
Earnings per share
Basic	$ 0.50	$ 0.45
Diluted	$ 0.48	$ 0.43
Class B Common Stock
Numerator: Allocated net income
Net income allocated, basic	5,115,418	4,732,796
Net income allocated, diluted	$ 5,115,418	$ 4,732,796
Denominator: Weighted average shares outstanding
Weighted average shares outstanding, basic	11,305,291	11,485,020
Weighted average shares outstanding, diluted	11,305,291	11,485,020
Earnings per share
Basic	$ 0.45	$ 0.41
Diluted	$ 0.45	$ 0.41

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 29, 2012	Sep. 29, 2012
Current Assets:
Cash and cash equivalents	$ 9,449,067	$ 4,683,410
Receivables-net	61,450,092	61,519,081
Inventories	343,248,403	329,614,925
Other current assets	31,315,769	30,386,453
Total Current Assets	445,463,331	426,203,869
Property and Equipment - Net	1,200,710,871	1,197,137,643
Other Assets	15,302,496	18,767,092
Total Assets	1,661,476,698	1,642,108,604
Current Liabilities:
Current portion of long-term debt	50,412,062	49,928,264
Accounts payable - trade	156,938,130	163,541,226
Accrued expenses and current portion of other long-term liabilities	89,060,786	92,682,243
Total Current Liabilities	296,410,978	306,151,733
Deferred Income Taxes	82,789,000	84,120,000
Long-Term Debt	826,587,232	785,240,249
Other Long-Term Liabilities	9,708,262	9,183,153
Total Liabilities	1,215,495,472	1,184,695,135
Stockholders' Equity
Preferred stock, $0.05 par value; 10,000,000 shares authorized; no shares issued
Common stocks:
Paid-in capital in excess of par value	114,236,249	114,236,249
Retained earnings	330,531,988	341,964,231
Total Stockholders' Equity	445,981,226	457,413,469
Total Liabilities and Stockholders' Equity	1,661,476,698	1,642,108,604
Class A Common Stock
Common stocks:
Common stock, value	647,858	647,682
Class B Common Stock
Common stocks:
Common stock, value	$ 565,131	$ 565,307

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Dec. 29, 2012	Dec. 24, 2011
Cash Flows from Operating Activities:
Net income	$ 11,567,648	$ 10,597,216
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	23,622,646	22,122,204
Gains on disposals of property and equipment	(121,547)	(14,704)
Receipt of advance payments on purchases contracts	1,259,188	750,000
Recognition of advance payments on purchases contracts	(873,388)	(900,000)
Deferred income taxes	(1,281,000)	(2,275,000)
Changes in operating assets and liabilities:
Receivables	68,990	(13,302,862)
Inventory	(13,633,479)	3,990,029
Other assets	(233,913)	(190,340)
Accounts payable and accrued expenses	(25,699,214)	(13,405,644)
Net Cash (Used) Provided by Operating Activities	(5,324,069)	7,370,899
Cash Flows from Investing Activities:
Proceeds from sales of restricted investments		32,586,246
Proceeds from sales of property and equipment	171,850	11,248
Capital expenditures	(28,079,634)	(63,688,077)
Net Cash Used in Investing Activities	(27,907,784)	(31,090,583)
Cash Flows from Financing Activities:
Proceeds from short-term borrowings	271,806,734	222,220,876
Payments on short-term borrowings	(227,093,088)	(178,045,750)
Proceeds from new long-term borrowings		3,250,000
Principal payments on long-term borrowings	(2,882,864)	(20,048,390)
Stock repurchases		(2,381,791)
Dividends paid	(3,833,272)	(3,858,483)
Net Cash Provided by Financing Activities	37,997,510	21,136,462
Net Increase (Decrease) in Cash and Cash Equivalents	4,765,657	(2,583,222)
Cash and cash equivalents at beginning of period	4,683,410	12,421,250
Cash and Cash Equivalents at End of Period	$ 9,449,067	$ 9,838,028

XML

Sales by Product Category (Detail) (USD $)	3 Months Ended
	Dec. 29, 2012	Dec. 24, 2011
Segment Reporting Information By Segment [Line Items]
Net sales	$ 932,791,433	$ 918,237,929
Grocery
Segment Reporting Information By Segment [Line Items]
Net sales	371,259,000	371,961,000
Non-foods
Segment Reporting Information By Segment [Line Items]
Net sales	177,704,000	175,649,000
Perishables
Segment Reporting Information By Segment [Line Items]
Net sales	219,949,000	209,869,000
Gasoline
Segment Reporting Information By Segment [Line Items]
Net sales	130,883,000	127,294,000
Grocery sales
Segment Reporting Information By Segment [Line Items]
Net sales	$ 899,795,000	$ 884,773,000

XML

SEGMENT INFORMATION (Tables)

3 Months Ended

Dec. 29, 2012

Operations by Lines of Business

Information about the Company’s operations by lines of business (in thousands) is as follows:

	THREE MONTHS ENDED
	DECEMBER 29, 2012			DECEMBER 24, 2011
Revenues from unaffiliated customers:
Grocery sales	$	899,795		$	884,773
Shopping center rentals		2,186			2,293
Fluid dairy		32,996			33,465
Total revenues from unaffiliated customers	$	934,977		$	920,531
Income from operations:
Grocery sales	$	30,841		$	27,089
Shopping center rentals		316			428
Fluid dairy		2,324			2,846
Total income from operations	$	33,481		$	30,363
	DECEMBER 29, 2012			SEPTEMBER 29, 2012
Assets:
Grocery sales	$	1,506,040		$	1,486,109
Shopping center rentals		119,393			119,393
Fluid dairy		38,516			38,874
Elimination of intercompany receivable		(2,472	)		(2,267	)
Total assets	$	1,661,477		$	1,642,109

Sales by Product Category

Sales by product category (amounts in thousands) are as follows:

	THREE MONTHS ENDED
	DECEMBER 29, 2012		DECEMBER 24, 2011
Grocery	$	371,259	$	371,961
Non-foods		177,704		175,649
Perishables		219,949		209,869
Gasoline		130,883		127,294
Total grocery segment	$	899,795	$	884,773

XML

Carrying Amount and Fair Value of Debt (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 29, 2012
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	$ 876,999
Carrying Amount | Level 2 | Senior Notes, net of unamortized original issue discount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	564,171
Carrying Amount | Level 2 | Recovery Zone Facility Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	99,740
Carrying Amount | Level 2 | Real estate and equipment notes payable
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	128,254
Carrying Amount | Level 2 | Line of credit payable
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	84,834
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	925,598
Fair Value | Level 2 | Senior Notes, net of unamortized original issue discount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	612,375
Fair Value | Level 2 | Recovery Zone Facility Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	99,740
Fair Value | Level 2 | Real estate and equipment notes payable
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	128,649
Fair Value | Level 2 | Line of credit payable
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated fair value of debt	$ 84,834

XML

Allowance for Doubtful Accounts - Additional Information (Detail) (USD $)	Dec. 29, 2012	Sep. 29, 2012
Receivables And Related Allowances [Line Items]
Allowance for doubtful accounts receivables	$ 742,000	$ 742,000

XML

BASIS OF PREPARATION

3 Months Ended

Dec. 29, 2012

BASIS OF PREPARATION

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 29, 2012, and the results of operations, changes in stockholders’ equity and cash flows for the three months ended December 29, 2012 and December 24, 2011. 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 accounting principles generally accepted in the United States 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 Annual Report on Form 10-K for the year ended September 29, 2012, filed by the Company under the Securities Exchange Act of 1934 on December 26, 2012.

The results of operations for the three-month period ended December 29, 2012 are not necessarily indicative of the results to be expected for the full fiscal year.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 29, 2012	Sep. 29, 2012
Preferred stock, par value	$ 0.05	$ 0.05
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Class A Common Stock
Common stock, par value	$ 0.05	$ 0.05
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	12,957,150	12,953,635
Common stock, shares outstanding	12,957,150	12,953,635
Class B Common Stock
Common stock, par value	$ 0.05	$ 0.05
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	11,302,626	11,306,141
Common stock, shares outstanding	11,302,626	11,306,141

XML

NONQUALIFIED INVESTMENT PLAN

3 Months Ended

Dec. 29, 2012

NONQUALIFIED INVESTMENT PLAN

K. NONQUALIFIED INVESTMENT PLAN

The purpose of the Executive Nonqualified Excess Plan is to provide retirement benefits similar to the Company’s Investment/Profit Sharing Plan to certain of the Company’s management employees who are otherwise subject to limited participation in the 401(k) feature of the Company’s Investment/Profit Sharing Plan. Participant retirement account balances are liabilities of the Company. Assets of the plan are assets of the Company and are held in trust for employees and distributed upon retirement, death, disability, in-service distributions, or other termination of employment. In accordance with the trust, the Company may not use these assets for general corporate purposes. During the quarter ended December 29, 2012 the Company liquidated certain life insurance policy assets and invested the proceeds in marketable securities. These marketable securities will be liquidated and invested in life insurance policies in future periods. Life insurance policies and marketable securities held in the trust are included in the caption “Other assets” in the Condensed Consolidated Balance Sheets.

XML

Document and Entity Information	3 Months Ended
	Dec. 29, 2012	Feb. 04, 2013 Class A Common Stock	Feb. 04, 2013 Class B Common Stock
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 29, 2012
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Trading Symbol	IMKTA
Entity Registrant Name	INGLES MARKETS INC
Entity Central Index Key	0000050493
Current Fiscal Year End Date	--09-29
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		12,957,300	11,302,476

XML

SUBSEQUENT EVENTS

3 Months Ended

Dec. 29, 2012

SUBSEQUENT EVENTS

L. SUBSEQUENT EVENTS

We have evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the day the financial statements were filed with the SEC.

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)	3 Months Ended
	Dec. 29, 2012	Dec. 24, 2011
Net sales	$ 932,791,433	$ 918,237,929
Cost of goods sold	724,902,265	716,509,749
Gross profit	207,889,168	201,728,180
Operating and administrative expenses	174,845,782	171,808,529
Rental income, net	316,073	428,150
Gain from sale or disposal of assets	121,547	14,704
Income from operations	33,481,006	30,362,505
Other income, net	564,191	1,003,612
Interest expense	15,559,549	15,008,901
Income before income taxes	18,485,648	16,357,216
Income Tax Expense	6,918,000	5,760,000
Net income	$ 11,567,648	$ 10,597,216
Class A Common Stock
Per share amounts:
Basic earnings per common share	$ 0.50	$ 0.45
Diluted earnings per common share	$ 0.48	$ 0.43
Cash dividends declared per common share:
Common Stock	$ 0.990	$ 0.165
Class B Common Stock
Per share amounts:
Basic earnings per common share	$ 0.45	$ 0.41
Diluted earnings per common share	$ 0.45	$ 0.41
Cash dividends declared per common share:
Common Stock	$ 0.900	$ 0.150

XML

LONG-TERM DEBT

3 Months Ended

Dec. 29, 2012

LONG-TERM DEBT

F. LONG-TERM DEBT

In May 2009, the Company issued $575.0 million aggregate principal amount of senior notes due in 2017 (the “Notes”) in a private placement. Subsequent to the private placement, the Company filed a registration statement with the Securities and Exchange Commission to exchange private placement notes with registered notes. The Notes bear an interest rate of 8.875% per annum and were issued at a discount to yield 9.5% per annum.

The Company may redeem all or a portion of the Notes at any time on or after May 15, 2013 at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning May 15 of the years indicated below:

Year
2013	104.438	%
2014	102.219	%
2015 and thereafter	100.000	%

In connection with the offering of the Notes, the Company entered into a new three-year $175.0 million line of credit. At December 29, 2012, the Company had $175.0 million of total line of credit commitments, with $84.8 million outstanding.

The line of credit provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or the London Interbank Offering Rate (“LIBOR”), plus a credit spread. The line allows the Company to issue up to $30.0 million in unused letters of credit, of which $9.5 million of unused letters of credit were issued at December 29, 2012. The Company is not required to maintain compensating balances in connection with the line of credit.

On December 29, 2010, the Company completed the funding of $99.7 million of Recovery Zone Facility Bonds (the “Bonds”) for the acquisition, construction and equipping of an approximately 830,000 square foot new warehouse and distribution center adjacent to its current distribution center in Buncombe County, North Carolina (the “Project”). The final maturity date of the Bonds is January 1, 2036.

Bond proceeds were invested in a trust account with the Bond trustee. The Company received disbursements from the account as it submitted requisitions to the trustee for incurred Project costs. The account with the Bond trustee consisted of money market deposits and United States Treasury securities. All funds had been disbursed from the trust account as of September 29, 2012.

The Bonds were issued by the Buncombe County Industrial Facilities and Pollution Control Financing Authority and were purchased by certain financial institutions. Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between the financial institutions and the Company, the financial institutions will hold the Bonds until January 2, 2018, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4,530,000 begins on January 1, 2014. The Company may redeem the Bonds without penalty or premium at any time prior to January 2, 2018.

Interest earned by bondholders on the Bonds is exempt from Federal and North Carolina income taxation. Initially, the interest rate on the Bonds is equal to one month LIBOR (adjusted monthly) plus a credit spread, adjusted to reflect the income tax exemption.

The Company’s obligation to repay the Bonds is collateralized by the Project. Additional collateral was provided in order to meet certain loan to value criteria in the Covenant Agreement. The Covenant Agreement incorporates substantially all financial covenants included in the line of credit.

Also on December 29, 2010, the Company executed an amendment to extend the maturity of the line of credit from May 12, 2012 to December 29, 2015. All other terms of the line of credit remain in place.

The Notes, the Bonds and the line of credit contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the line of credit to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. The Company was in compliance with all financial covenants at December 29, 2012.

The Company’s long-term debt agreements generally have cross-default provisions which could result in the acceleration of payments due under the Company’s line of credit, Bonds, and Notes indenture in the event of default under any one instrument.

XML

ACCRUED EXPENSES AND CURRENT PORTION OF OTHER LONG-TERM LIABILITIES

3 Months Ended

Dec. 29, 2012

ACCRUED EXPENSES AND CURRENT PORTION OF OTHER LONG-TERM LIABILITIES

E. ACCRUED EXPENSES AND CURRENT PORTION OF OTHER LONG-TERM LIABILITIES

Accrued expenses and current portion of other long-term liabilities consist of the following:

	DECEMBER 29, 2012		SEPTEMBER 29, 2012
Property, payroll, and other taxes payable	$	12,418,205	$	18,191,260
Salaries, wages and bonuses payable		19,867,930		25,350,513
Self-insurance liabilities		27,226,216		26,695,291
Interest payable		7,079,868		19,132,734
Dividends declared but not paid and other		22,468,567		3,312,445
Total	$	89,060,786	$	92,682,243

Self-insurance liabilities are established for general liability claims, workers’ compensation claims, and employee group medical and dental benefits based on claims filed and estimates of claims incurred but not reported. The Company is insured for covered costs in excess of $750,000 per occurrence for workers’ compensation, $500,000 for general liability, and $325,000 per covered person for medical care benefits for a policy year. Employee insurance expense, including workers’ compensation and medical care benefits, net of employee contributions, totaled $8.5 million and $7.3 million for each of the three-month periods ended December 29, 2012 and December 24, 2011, respectively.

XML

FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Dec. 29, 2012

Carrying Amount and Fair Value of Debt

The carrying amount and fair value of the Company’s debt at December 29, 2012 is as follows (in thousands):

	Carrying Amount		Fair Value		Fair Value Measurements
Senior Notes, net of unamortized original issue discount	$	564,171	$	612,375		Level 2
Recovery Zone Facility Bonds		99,740		99,740		Level 2
Real estate and equipment notes payable		128,254		128,649		Level 2
Line of credit payable		84,834		84,834		Level 2
Total debt	$	876,999	$	925,598

XML

ACCRUED EXPENSES AND CURRENT PORTION OF OTHER LONG-TERM LIABILITIES (Tables)

3 Months Ended

Dec. 29, 2012

Accrued Expenses and Current Portion of Other Long-Term Liabilities

Accrued expenses and current portion of other long-term liabilities consist of the following:

	DECEMBER 29, 2012		SEPTEMBER 29, 2012
Property, payroll, and other taxes payable	$	12,418,205	$	18,191,260
Salaries, wages and bonuses payable		19,867,930		25,350,513
Self-insurance liabilities		27,226,216		26,695,291
Interest payable		7,079,868		19,132,734
Dividends declared but not paid and other		22,468,567		3,312,445
Total	$	89,060,786	$	92,682,243

XML

SEGMENT INFORMATION

3 Months Ended

Dec. 29, 2012

SEGMENT INFORMATION

I. SEGMENT INFORMATION

The Company operates three lines of business: retail grocery sales (representing the aggregation of individual retail stores), shopping center rentals, and a fluid dairy processing plant. All of the Company’s operations are domestic. Information about the Company’s operations by lines of business (in thousands) is as follows:

	THREE MONTHS ENDED
	DECEMBER 29, 2012			DECEMBER 24, 2011
Revenues from unaffiliated customers:
Grocery sales	$	899,795		$	884,773
Shopping center rentals		2,186			2,293
Fluid dairy		32,996			33,465
Total revenues from unaffiliated customers	$	934,977		$	920,531
Income from operations:
Grocery sales	$	30,841		$	27,089
Shopping center rentals		316			428
Fluid dairy		2,324			2,846
Total income from operations	$	33,481		$	30,363
	DECEMBER 29, 2012			SEPTEMBER 29, 2012
Assets:
Grocery sales	$	1,506,040		$	1,486,109
Shopping center rentals		119,393			119,393
Fluid dairy		38,516			38,874
Elimination of intercompany receivable		(2,472	)		(2,267	)
Total assets	$	1,661,477		$	1,642,109

Sales by product category (amounts in thousands) are as follows:

	THREE MONTHS ENDED
	DECEMBER 29, 2012		DECEMBER 24, 2011
Grocery	$	371,259	$	371,961
Non-foods		177,704		175,649
Perishables		219,949		209,869
Gasoline		130,883		127,294
Total grocery segment	$	899,795	$	884,773

The grocery category includes grocery, dairy and frozen foods.

The non-foods category includes alcoholic beverages, tobacco, pharmacy, health and video.

The perishables category includes meat, produce, deli and bakery.

Revenue from shopping center rentals is included in the caption “Rental income, net” in the Condensed Consolidated Statements of Income. Grocery and fluid dairy revenues comprise net sales reported in the Condensed Consolidated Statements of Income.

For the three months ended December 29, 2012 and December 24, 2011, the fluid dairy segment had $15.9 million and $15.2 million, respectively, in sales to the grocery sales segment. These sales have been eliminated in consolidation and are excluded from the amounts in the table above.

XML

DIVIDENDS

3 Months Ended

Dec. 29, 2012

DIVIDENDS

G. DIVIDENDS

The Company paid cash dividends of $0.165 for each share of Class A Common Stock and $0.15 for each share of Class B Common Stock on October 25, 2012 to stockholders of record on October 11, 2012. On December 7, 2012, the Company declared a special dividend of $0.66 per share of Class A Common Stock and $0.60 per share of Class B Common Stock payable on December 31, 2012 to shareholders of record on December 21, 2012. The Company paid cash dividends of $0.165 for each share of Class A Common Stock and $0.15 for each share of Class B Common Stock on December 31, 2012 to stockholders of record on December 21, 2012. This dividend normally would have been declared and paid in January, 2013.

For additional information regarding the dividend rights of the Class A Common Stock and Class B Common Stock, please see Note 8, “Stockholders’ Equity” to the Consolidated Financial Statements of the Annual Report on Form 10-K filed by the Company under the Securities Exchange Act of 1934 on December 26, 2012.

XML

EARNINGS PER COMMON SHARE

3 Months Ended

Dec. 29, 2012

EARNINGS PER COMMON SHARE

H. EARNINGS PER COMMON SHARE

The Company has two classes of common stock: Class A, which is publicly traded, and Class B, which has no public market. The Class B Common Stock has restrictions on transfer; however, each share is convertible into one share of Class A Common Stock at any time. Each share of Class A Common Stock has one vote per share and each share of Class B Common Stock has ten votes per share. Each share of Class A Common Stock is entitled to receive cash dividends equal to 110% of any cash dividend on Class B Common Stock.

The Company calculates earnings per share for its Class A Common Stock and Class B Common Stock using the two-class method in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 260.

The two-class method of computing basic earnings per share for each period reflects the cash dividends declared per share for each class of stock, plus allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Diluted earnings per share is calculated assuming the conversion of all shares of Class B Common Stock to shares of Class A Common Stock on a share-for-share basis. The tables below reconcile the numerators and denominators of basic and diluted earnings per share for current and prior periods.

	THREE MONTHS ENDED DECEMBER 29, 2012				THREE MONTHS ENDED DECEMBER 24, 2011
	CLASS A		CLASS B		CLASS A		CLASS B
Numerator: Allocated net income
Net income allocated, basic	$	6,452,230	$	5,115,418	$	5,864,420	$	4,732,796
Conversion of Class B to Class A shares		5,115,418		—		4,732,796		—
Net income allocated, diluted	$	11,567,648	$	5,115,418	$	10,597,216	$	4,732,796
Denominator: Weighted average shares outstanding
Weighted average shares outstanding, basic		12,954,485		11,305,291		12,939,090		11,485,020
Conversion of Class B to Class A shares		11,305,291		—		11,485,020		—
Weighted average shares outstanding, diluted		24,259,776		11,305,291		24,424,110		11,485,020
Earnings per share
Basic	$	0.50	$	0.45	$	0.45	$	0.41
Diluted	$	0.48	$	0.45	$	0.43	$	0.41

XML

FAIR VALUES OF FINANCIAL INSTRUMENTS

3 Months Ended

Dec. 29, 2012

FAIR VALUES OF FINANCIAL INSTRUMENTS

J. FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments.

The fair value of the Company’s debt is estimated using valuation techniques under the accounting guidance related to fair value measurements based on observable and unobservable inputs. Observable inputs reflect readily available data from independent sources, while unobservable inputs reflect the Company’s market assumptions. These inputs are classified into the following hierarchy:

Level 1 Inputs	–	Quoted prices for identical assets or liabilities in active markets.
Level 2 Inputs	–	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs	–	Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

The carrying amount and fair value of the Company’s debt at December 29, 2012 is as follows (in thousands):

	Carrying Amount		Fair Value		Fair Value Measurements
Senior Notes, net of unamortized original issue discount	$	564,171	$	612,375		Level 2
Recovery Zone Facility Bonds		99,740		99,740		Level 2
Real estate and equipment notes payable		128,254		128,649		Level 2
Line of credit payable		84,834		84,834		Level 2
Total debt	$	876,999	$	925,598

The fair values for Level 2 measurements were determined primarily using market yields and taking into consideration the underlying terms of the debt.

XML

Operations by Lines of Business (Detail) (USD $)	3 Months Ended
	Dec. 29, 2012	Dec. 24, 2011	Sep. 29, 2012
Revenues from unaffiliated customers:
Net sales	$ 932,791,433	$ 918,237,929
Total revenues from unaffiliated customers	934,977,000	920,531,000
Income from operations:
Total income from operations	33,481,006	30,362,505
Assets:
Total assets	1,661,476,698		1,642,108,604
Grocery sales
Revenues from unaffiliated customers:
Net sales	899,795,000	884,773,000
Income from operations:
Total income from operations	30,841,000	27,089,000
Shopping center rentals
Revenues from unaffiliated customers:
Net sales	2,186,000	2,293,000
Income from operations:
Total income from operations	316,000	428,000
Assets:
Total assets	119,393,000		119,393,000
Fluid dairy
Revenues from unaffiliated customers:
Net sales	32,996,000	33,465,000
Income from operations:
Total income from operations	2,324,000	2,846,000
Assets:
Total assets	38,516,000		38,874,000
Grocery
Revenues from unaffiliated customers:
Net sales	371,259,000	371,961,000
Assets:
Total assets	1,506,040,000		1,486,109,000
Elimination of intercompany receivable
Assets:
Total assets	$ (2,472,000)		$ (2,267,000)

XML

EARNINGS PER COMMON SHARE (Tables)

3 Months Ended

Dec. 29, 2012

Reconciliation of Numerators and Denominators of Basic and Diluted Earnings Per Share

The tables below reconcile the numerators and denominators of basic and diluted earnings per share for current and prior periods.

	THREE MONTHS ENDED DECEMBER 29, 2012				THREE MONTHS ENDED DECEMBER 24, 2011
	CLASS A		CLASS B		CLASS A		CLASS B
Numerator: Allocated net income
Net income allocated, basic	$	6,452,230	$	5,115,418	$	5,864,420	$	4,732,796
Conversion of Class B to Class A shares		5,115,418		—		4,732,796		—
Net income allocated, diluted	$	11,567,648	$	5,115,418	$	10,597,216	$	4,732,796
Denominator: Weighted average shares outstanding
Weighted average shares outstanding, basic		12,954,485		11,305,291		12,939,090		11,485,020
Conversion of Class B to Class A shares		11,305,291		—		11,485,020		—
Weighted average shares outstanding, diluted		24,259,776		11,305,291		24,424,110		11,485,020
Earnings per share
Basic	$	0.50	$	0.45	$	0.45	$	0.41
Diluted	$	0.48	$	0.45	$	0.43	$	0.41

XML

Accrued Expenses and Current Portion of Other Long-Term Liabilities (Detail) (USD $)	Dec. 29, 2012	Sep. 29, 2012
Accrued Expenses And Other Liabilities [Line Items]
Property, payroll, and other taxes payable	$ 12,418,205	$ 18,191,260
Salaries, wages and bonuses payable	19,867,930	25,350,513
Self-insurance liabilities	27,226,216	26,695,291
Interest payable	7,079,868	19,132,734
Dividends declared but not paid and other	22,468,567	3,312,445
Total	$ 89,060,786	$ 92,682,243

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)	Total	Class A Common Stock	Class B Common Stock	Paid-in Capital in Excess of Par Value	Retained Earnings
Beginning Balance at Sep. 24, 2011	$ 431,945,594	$ 646,977	$ 574,486	$ 116,844,842	$ 313,879,289
Beginning Balance (in shares) at Sep. 24, 2011		12,939,533	11,489,726
Net income	10,597,216				10,597,216
Cash dividends declared	(3,858,483)				(3,858,483)
Stock repurchases, at cost, shares		(15,473)	(140,710)
Stock repurchases, at cost	(2,381,791)	(774)	(7,035)	(2,373,982)
Common stock conversions (in shares)		75	(75)
Common stock conversions		4	(4)
Ending Balance at Dec. 24, 2011	436,302,536	646,207	567,447	114,470,860	320,618,022
Ending Balance (in shares) at Dec. 24, 2011		12,924,135	11,348,941
Beginning Balance at Sep. 29, 2012	457,413,469	647,682	565,307	114,236,249	341,964,231
Beginning Balance (in shares) at Sep. 29, 2012		12,953,635	11,306,141
Net income	11,567,648				11,567,648
Cash dividends declared	(22,999,891)				(22,999,891)
Common stock conversions (in shares)		3,515	(3,515)
Common stock conversions		176	(176)
Ending Balance at Dec. 29, 2012	$ 445,981,226	$ 647,858	$ 565,131	$ 114,236,249	$ 330,531,988
Ending Balance (in shares) at Dec. 29, 2012		12,957,150	11,302,626

XML

INCOME TAXES

3 Months Ended

Dec. 29, 2012

INCOME TAXES

D. INCOME TAXES

The Company’s continuing practice is to recognize interest and penalties related to uncertain tax positions and related matters in income tax expense. As of December 29, 2012, the Company had approximately $50,000 accrued for interest and penalties.

The Company’s effective tax rate differs from the federal statutory rate primarily as a result of state income taxes and tax credits. As of December 29, 2012, the Company had gross unrecognized tax benefits of approximately $121,000, all of which, if recognized, would affect the effective tax rate. The Company does not expect that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

The Company files income tax returns with federal and various state jurisdictions. With few exceptions, the Company is no longer subject to state income tax examinations by tax authorities for the years before 2009. Additionally, the Internal Revenue Service has completed its examination of the Company’s U.S. Federal income tax returns filed through fiscal year 2008.

XML

Accrued Expenses and Current Portion of Other Long-Term Liabilities - Additional Information (Detail) (USD $)	3 Months Ended
	Dec. 29, 2012	Dec. 24, 2011
Accrued Expenses And Other Liabilities [Line Items]
Workers' compensation per occurrence covered under insurance cost	$ 750,000
General liability	500,000
Medical care benefits per person covered under insurance cost	325,000
Employee insurance expense	$ 8,500,000	$ 7,300,000

XML

LONG-TERM DEBT (Tables)

3 Months Ended

Dec. 29, 2012

Redemption Prices of Notes

The Company may redeem all or a portion of the Notes at any time on or after May 15, 2013 at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning May 15 of the years indicated below:

Year
2013	104.438	%
2014	102.219	%
2015 and thereafter	100.000	%