INGLES MARKETS INC

Previous wording

For the six months ended March 30, 2024, there were no material changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 that have had a material impact on our condensed consolidated financial statements and related notes.

Current wording

For the nine months ended June 29, 2024, there were no material changes to our critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 that have had a material impact on our condensed consolidated financial statements and related notes.

Previous wording

The Company is self-insured for workers’ compensation, general liability 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 $1.0 million per occurrence for workers’ compensation and for general liability, and $500,000 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. 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, the Company maintains liability coverage. At March 30, 2024 the Company’s self-insurance reserves totaled $34.6 million. This amount included $4.6 million of expected self-insurance recoveries from excess cost insurance or other sources that are recorded as a receivable.

Current wording

The Company is self-insured for workers’ compensation, general liability 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 $1.0 million per occurrence for workers’ compensation and for general liability, and $500,000 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, the Company maintains liability coverage. At June 29, 2024 the Company’s self-insurance reserves totaled $34.5 million. This amount included $4.1 million of expected self-insurance recoveries from excess cost insurance or other sources that were recorded as a receivable.

Previous wording

The Company accounts for the impairment of long-lived assets in accordance with FASB ASC Topic 360. Asset groups are primarily composed of our individual stores 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, net of 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 six-month period ended March 30, 2024.

Current wording

The Company accounts for the impairment of long-lived assets in accordance with FASB ASC Topic 360. Asset groups are primarily composed of our individual stores 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, net of 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 nine-month period ended June 29, 2024.

Previous wording

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 composed 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 applicable vendor’s products. These allowances generally relate to short term arrangements with vendors, often relating to a period of one month or less, and are negotiated on a purchase-by-purchase or transaction-by-transaction basis. Whenever practical, 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 the use of the retail method of store inventory 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 $35.8 million and $29.8 million for the fiscal quarters ended March 30, 2024 and March 25, 2023, respectively. For the six-month periods ended March 30, 2024 and March 25, 2023, vendor allowances applied as a reduction of merchandise costs totaled $72.6 million and $64.6 million, 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 in the period in which the related expense is incurred. Vendor advertising allowances recorded as a reduction of advertising expense totaled $2.3 million and $1.9 million for the fiscal quarters ended March 30, 2024 and March 25, 2023, respectively. For the six-month periods ended March 30, 2024 and March 25, 2023, vendor advertising allowances recorded as a reduction of advertising expense totaled $4.2 million and $3.9 million, respectively.

Current wording

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 composed 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 applicable vendor’s products. These allowances generally relate to short term arrangements with vendors, often relating to a period of one month or less, and are negotiated on a purchase-by-purchase or transaction-by-transaction basis. Whenever practical, 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 the use of the retail method of store inventory 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 $34.3 million and $31.4 million for the fiscal quarters ended June 29, 2024 and June 24, 2023, respectively. For the nine-month periods ended June 29, 2024 and June 24, 2023, vendor allowances applied as a reduction of merchandise costs totaled $106.9 million and $96.0 million, 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 in the period in which the related expense is incurred. Vendor advertising allowances recorded as a reduction of advertising expense totaled $2.1 million for each of the fiscal quarters ended June 29, 2024 and June 24, 2023. For the nine-month periods ended June 29, 2024 and June 24, 2023, vendor advertising allowances recorded as a reduction of advertising expense totaled $6.3 million and $6.0 million, respectively.

Previous wording

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 and six-month periods ended March 30, 2024 and March 25, 2023 both include 13 and 26 weeks of operations, respectively. Comparable store sales are defined as sales by retail 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 newly-opened store that replaces an existing nearby store that has closed. A major remodel entails substantial remodeling of an existing store and includes additional retail square footage. For both the three- and six-month periods ended March 30, 2024 and March 25, 2023, comparable store sales included 198 stores.

Current wording

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- and nine-month periods ended June 29, 2024 and June 24, 2023 each include 13 and 39 weeks of operations, respectively. Comparable store sales are defined as sales by retail 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 newly-opened store that replaces an existing nearby store that has closed. A major remodel entails substantial remodeling of an existing store and includes additional retail square footage. For both the three- and nine-month periods ended June 29, 2024 and June 24, 2023, comparable store sales included 198 stores.

Previous wording

Net income for the second quarter of fiscal 2024 totaled $31.9 million, compared with net income of $40.5 million for the second quarter of fiscal 2023. The decrease related primarily to increased expenses, as described below.

Current wording

Net income for the third quarter of fiscal 2024 totaled $31.7 million compared with net income of $48.3 million for the third quarter of fiscal 2023. The decrease related primarily to an increase in operating and administrative expenses as a percentage of sales.

Previous wording

Net Sales. Net sales decreased by $13.1 million, or 0.95%, to $1.37 billion for the three months ended March 30, 2024 compared with $1.38 billion for the three months ended March 25, 2023. Excluding fuel sales, total grocery comparable store sales decreased 0.2% over the comparative fiscal quarter. Ingles operated 198 stores at both March 30, 2024 and March 25, 2023.

Current wording

Net Sales. Net sales decreased by $40.3 million, or 2.8%, to $1.39 billion for the three months ended June 29, 2024 compared with $1.43 billion for the three months ended June 24, 2023. Excluding fuel sales, total grocery comparable store sales decreased 4.1% over the comparative fiscal quarter. Ingles operated 198 stores at both June 29, 2024 and June 24, 2023.

Previous wording

Sales by product category (in thousands) were as follows:

Current wording

Sales by product category were as follows (in thousands):

Previous wording

Gross Profit. Gross profit for the six-month period ended March 30, 2024 totaled $670.7 million, a decrease of $26.4 million, or 3.79%, compared with gross profit of $697.1 million for the six-month period ended March 25, 2023. Gross profit as a percentage of sales was 23.5% and 24.3% for the six months ended March 30, 2024 and March 25, 2023, respectively.

Current wording

Gross Profit. Gross profit for the three-month period ended June 29, 2024 totaled $329.8 million, a decrease of $8.3 million, or 2.5%, compared with gross profit of $338.1 million for the three-month period ended June 24, 2023. Gross profit as a percentage of sales was 23.7% and 23.6% for the three months ended June 29, 2024 and June 24, 2023, respectively.

Previous wording

Operating and Administrative Expenses. Operating and administrative expenses increased $15.9 million, or 5.9%, to $284.8 million for the three months ended March 30, 2024, from $268.9 million for the three months ended March 25, 2023. As a percentage of sales, operating and administrative expenses were 20.8% and 19.5% for the March 2024 and March 2023 quarters, respectively.

Current wording

Operating and Administrative Expenses. Operating and administrative expenses increased $15.3 million, or 5.7%, to $286.3 million for the three months ended June 29, 2024, from $270.9 million for the three months ended June 24, 2023. As a percentage of sales, operating and administrative expenses were 20.5% and 18.9% for the June 2024 and June 2023 quarters, respectively.

Previous wording

Salaries and wages increased due to increased labor market competition, which has increased the Company’s cost to attract and retain associates in the Company’s market area.

Current wording

Salaries and wages increased due toincreased labor market competition, which has increased the Company’s cost to attract and retain associates in the Company’s market area.

Previous wording

Insurance expense increased due to higher claim volume for our self-insured employee benefit plans.

Current wording

Insurance expense increased due to higher claim volume for the Company’s self-insured employee benefit plans.

Previous wording

Gain from Sale or Disposal of Assets. Gain from the sale or disposal of assets totaled $7.7 million for the three months ended March 30, 2024, primarily from the exchange of adjacent property. Gain from the sale or disposal of assets totaled $0.6 million for the three months ended March 25, 2023.

Current wording

Gain from Sale or Disposal of Assets. Gain from the sale or disposal of assets totaled $643.0 thousand for the three months ended June 29, 2024. During the quarter ended June 24, 2023, the gain from the sale or disposal of assets was $116.2 thousand.

Previous wording

Income Taxes. Income tax expense totaled $10.7 million for the three months ended March 30, 2024, reflecting an effective tax rate of 25.1% of pretax income. Income tax expense totaled $13.5 million for the three months ended March 25, 2023, reflecting an effective tax rate of 25.0% of pretax income.

Current wording

Income Taxes. Income tax expense totaled $10.6 million for the three months ended June 29, 2024 and $15.7 million for the three months ended June 24, 2023, reflecting effective tax rates of 25.1% and 24.6%, respectively.

Previous wording

Net Income. Net income totaled $31.9 million for the three-month period ended March 30, 2024 compared with $40.5 million for the three-month period ended March 25, 2023. Basic and diluted earnings per share for Class A Common Stock were $1.72 and $1.68, respectively, for the March 2024 quarter, compared to $2.18 and $2.13, respectively, for the March 2023 quarter. Basic and diluted earnings per share for Class B Common Stock were each $1.56 for the March 2024 quarter compared with $1.98 for the March 2023 quarter.

Current wording

Net Income. Net income totaled $31.7 million for the three-month period ended June 29, 2024 compared with $48.3 million for the three-month period ended June 24, 2023. Basic and diluted earnings per share for Class A Common Stock were $1.71 and $1.67, respectively, for the June 2024 quarter, compared to $2.60 and $2.54, respectively, for the June 2023 quarter. Basic and diluted earnings per share for Class B Common Stock were each $1.55 for the June 2024 quarter compared with $2.36 for the June 2023 quarter.

Previous wording

Net Sales. Net sales decreased by $25.4 million, or 0.88%, to $2.85 billion for the six months ended March 30, 2024 compared with $2.87 billion for the six months ended March 25, 2023. Excluding fuel sales, total grocery comparable store sales increased 0.43% over the comparative six-month period.

Current wording

Net Sales. Net sales decreased by $65.7 million, or 1.5%, to $4.24 billion for the nine months ended June 29, 2024 compared with $4.31 billion for the nine months ended June 24, 2023. Excluding fuel sales, total grocery comparable store sales decreased 1.1% over the comparative nine-month period. Ingles operated 198 stores at both June 29, 2024 and June 24, 2023.

Previous wording

Sales by product category (in thousands) were as follows:

Current wording

Sales by product category were as follows (in thousands):

Previous wording

Changes in retail grocery sales for the quarter ended March 30, 2024 are summarized as follows (in thousands):

Current wording

Changes in retail grocery sales for the nine months ended June 29, 2024 are summarized as follows (in thousands):

Previous wording

Gross Profit. Gross profit for the three-month period ended March 30, 2024 totaled $321.9 million, a decrease of $4.1 million, or 1.2%, compared with gross profit of $325.9 million for the three-month period ended March 25, 2023. Gross profit as a percentage of sales was 23.5% and 23.6% for the three months ended March 30, 2024 and March 25, 2023, respectively. The decrease in gross profit as a percentage of sales resulted primarily from inflation and raw material shortages, which have increased the cost of products.

Current wording

Gross Profit. Gross profit for the nine-month period ended June 29, 2024 totaled $1.00 billion, a decrease of $34.8 million, or 3.36%, compared with gross profit of $1.04 billion for the nine-month period ended June 24, 2023. Gross profit as a percentage of sales was 23.6% and 24.0% for the nine months ended June 29, 2024 and June 24, 2023, respectively.

Previous wording

Operating and Administrative Expenses. Operating and administrative expenses increased $29.5 million, or 5.4%, to $574.6 million for the six months ended March 30, 2024, from $545.1 million for the six months ended March 25, 2023. As a percentage of sales, operating and administrative expenses were 20.2% and 19.0% for the March 2024 and March 2023 six-month periods, respectively.

Current wording

Operating and Administrative Expenses. Operating and administrative expenses increased $44.9 million, or 5.5%, to $860.8 million for the nine months ended June 29, 2024, from $816.0 million for the nine months ended June 24, 2023. As a percentage of sales, operating and administrative expenses were 20.3% and 18.8% for the June 2024 and June 2023 nine-month periods, respectively.

Previous wording

Salaries and wages increased due to increased labor market competition, which has increased the Company’s cost to attract and retain associates in the Company’s market area.

Current wording

Salaries and wages increased in dollars due toincreased labor market competition, which has increased the Company’s cost to attract and retain associates in the Company’s market area.

Previous wording

Insurance expense increased due to higher claim volume and costs related to the self-insured employee benefits.

Current wording

Insurance expense increased due to higher claim volume for the Company’s self-insured employee benefit plans.

Previous wording

Gain from Sale or Disposal of Assets. Gain from the sale or disposal of assets totaled $8.3 million for the six months ended March 30, 2024, as compared to $1.4 million for the six months ended March 25, 2023.

Current wording

Gain from Sale or Disposal of Assets. During the nine months ended June 29, 2024, the gain from the sale or disposal of assets totaled $9.0 million, primarily due to the exchange of adjacent properties, compared to $1.5 million during the nine months ended June 24, 2023.

Previous wording

Net Income. Net income totaled $75.3 million for the six-month period ended March 30, 2024 compared with $109.9 million for the six-month period ended March 25, 2023. Basic and diluted earnings per share for Class A Common Stock were $4.05 and $3.96, respectively, for the six months ended March 30, 2024, compared to $5.92 and $5.79, respectively, for the six months ended March 25, 2023. Basic and diluted earnings per share for Class B Common Stock were each $3.68 for the six months ended March 30, 2024 compared with $5.38 for the six months ended March 25, 2023.

Current wording

Net Income. Net income totaled $107.0 million for the nine-month period ended June 29, 2024 compared with $158.2 million for the nine-month period ended June 24, 2023. Basic and diluted earnings per share for Class A Common Stock were $5.76 and $5.63, respectively, for the nine months ended June 29, 2024, compared to $8.51 and $8.33, respectively, for the nine months ended June 24, 2023. Basic and diluted earnings per share for Class B Common Stock were each $5.23 for the nine months ended June 29, 2024 compared with $7.74 for the nine months ended June 24, 2023.

Previous wording

Capital expenditures totaled $98.4 million for the six-month period ended March 30, 2024. The Company’s capital expenditures include the construction of new stores, the expansion and remodeling of existing stores, the acquisition of sites, new technology, and upgrades of the Company’s transportation fleet and facilities.

Current wording

Capital expenditures totaled $143.0 million for the nine-month period ended June 29, 2024. The Company’s capital expenditures include the construction of one new store, the expansion and remodeling of existing stores, the acquisition of sites, new technology, and upgrades of the Company’s transportation fleet and facilities.

Previous wording

The Company’s capital expenditure plans for fiscal 2024 currently include investments of approximately $160 to $200 million. The Company currently plans to dedicate the majority of its fiscal 2024 capital expenditures to continued improvement of its store base, including remodeling and continued investment in one store expected to open in fiscal 2024, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipment and improvements to the Company’s milk processing plant.

Current wording

The Company’s capital expenditure plans for fiscal 2024 currently include investments of approximately $170 to $190 million. The Company currently plans to dedicate the remainder of its fiscal 2024 capital expenditures to continued improvement of its store base, including remodeling and continued investment in one store expected to open by the end of fiscal 2024, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipment, and improvements to the Company’s milk processing plant.

Previous wording

The Company generated $85.9 million net cash from operations for the March 2024 six-month period compared with $94.4 million for the March 2023 six-month period. Cash from operations decreased by $8.5 million due tolower net income for the March 2024 six-month period compared with the March 2023 six-month period.

Current wording

The Company generated $189.3 million net cash from operations for the nine-month period ended June 29, 2024 compared with $177.0 million for the nine-month period ended June 24, 2023. Netcash from operations increased due to a decrease in working capital needs during the June 2024 nine-month period compared with the June 2023 nine-month period.

Previous wording

Cash used by investing activities for the six-month periods ended March 30, 2024 and March 25, 2023 totaled $94.6 million and $89.6 million, respectively, consisting primarily of capital expenditures and purchases of short term investments.

Current wording

Cash used by investing activities for the nine-month periods ended June 29, 2024 and June 24, 2023 totaled $138.5 million and $135.2 million, respectively, consisting primarily of capital expenditures.

Previous wording

Cash used by financing activities totaled $17.9 million for the six-month period ended March 30, 2024, compared with $21.7 million for the six-month period ended March 25, 2023. The increase was primarily related to principal payments on long-term debt.

Current wording

Cash used by financing activities totaled $24.5 million for the nine-month period ended June 29, 2024 compared with $28.2 million for the nine-month period ended June 24, 2023. The decrease was primarily related to principal payments on long-term debt.

Previous wording

The Company has a $150.0 million line of credit (the “Line”) that matures in June 2026. The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or SOFR. The Line allows the Company to issue up to $10.0 million in letters of credit, of which none were issuedat March 30, 2024. The Company is not required to maintain compensating balances in connection with the Line. At March 30, 2024, the Company had no borrowings outstanding under the Line.

Current wording

The Company has a $150.0 million line of credit (the “Line”) that matures in June 2026. The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or SOFR. The Line allows the Company to issue up to $10.0 million in letters of credit, of which none were issued at June 29, 2024. The Company is not required to maintain compensating balances in connection with the Line. At June 29, 2024, the Company had no borrowings outstanding under the Line.

Previous wording

Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, the financial institutions would hold the Bonds until December 17, 2029, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4.5 million began on January 1, 2014. The outstanding balance of the Bonds was $44.9 million as of March 30, 2024. The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029.

Current wording

Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, the financial institutions agreed to hold the Bonds until December 17, 2029, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4.5 million began on January 1, 2014. The outstanding balance of the Bonds was $49.9 million as of June 29, 2024. The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029.

Previous wording

In September 2017, the Company refinanced approximately $60 million secured borrowing obligations with a SOFR-based amortizing floating rate loan secured by real estate maturing in October 2027. The Company has an interest rate swap agreement for a current notional amount of $21.5 million at a fixed rate of 3.962%. Under this agreement, the Company pays monthly the fixed rate of 3.962% and receives the one-month SOFR plus 1.75%. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest rate swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.5 million and mature October 1, 2027.

Current wording

In September 2017, the Company refinanced approximately $60 million secured borrowing obligations with a SOFR-based amortizing floating rate loan secured by real estate maturing in October 2027. The Company has an interest rate swap agreement for a current notional amount of $20.0 million at a fixed rate of 3.962%. Under this agreement, the Company pays monthly the fixed rate of 3.962% and receives the one-month SOFR plus 1.75%. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest rate swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.5 million and mature October 1, 2027.

Previous wording

In December 2019, the Company closed a $155 million SOFR-based amortizing floating rate loan secured by real estate maturing in January 2030. The Company has an interest rate swap agreement for a current notional amount of $120.8 million at a fixed rate of 2.998%. Under this agreement, the Company pays monthly the fixed rate of 2.998% and receives the one-month SOFR plus 1.60%. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.65 million and mature in fiscal year 2030.

Current wording

In December 2019, the Company closed a $155 million SOFR-based amortizing floating rate loan secured by real estate maturing in January 2030. The Company has an interest rate swap agreement for a current notional amount of $118.8 million at a fixed rate of 2.998%. Under this agreement, the Company pays monthly the fixed rate of 2.998% and receives the one-month SOFR plus 1.60%. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.65 million and mature in fiscal year 2030.

Previous wording

The fair market value of the interest rate swaps are measured quarterly with adjustments recorded in other comprehensive income.

Current wording

The fair market value of the interest rate swaps is measured quarterly with adjustments recorded in other comprehensive income.

Previous wording

The Company’s long-term debt agreements generally 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 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 March 30, 2024, the Company was in compliance with these covenants. Under the most restrictive of these covenants, the Company would have been permitted to incur approximately $1.7 billion of additional borrowings (including borrowings under the Line) as of March 30, 2024.

Current wording

The Company’s long-term debt agreements generally 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 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 June 29, 2024, the Company was in compliance with these covenants. Under the most restrictive of these covenants, the Company would have been permitted to incur approximately $1.2 billion of additional borrowings (including borrowings under the Line) as of June 29, 2024.

Previous wording

“believe”, “seek”, “will”, “may”, “would”, “should” 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 or described by such forward-looking statements. 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, financial position, growth strategies, 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 the resurgence of the COVID-19 pandemic or variants of the virus on our 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; reduction in per gallon retail fuel prices; the maturation of new and expanded stores; 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; disruptions in the efficient distribution of food products; changes in accounting policies, standards, guidelines or principles as may be adopted by regulatory agencies as well as the Financial Accounting Standards Board; and those factors contained under the heading “Risk Factors” in Item 1A of Part I of our most recent Annual Report on Form 10-K for the year ended September 30, 2023, filed by the Company under the Exchange Act, on November 29, 2023.

Current wording

This Quarterly Report on Form 10-Q 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”, “will”, “may”, “would”, “should” 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 or described by such forward-looking statements. 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, financial position, growth strategies, 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, a resurgence of the COVID-19 pandemic or variants of the virus on our business and economic conditions generally in the Company’s operating area; the