Asheville, North Carolina (April 26, 1999) - Ingles Markets, Incorporated (Nasdaq-IMKTA) today announced financial results for the second quarter and six months ended March 27, 1999.

SECOND QUARTER RESULTS

Ingles achieved substantial sales and earnings growth in the second quarter of fiscal 1999 compared with the same quarter last year. Total sales increased 12.4%, while comparable store sales increased 9.1%, a five-year record. Net income increased 23.5% to $4.1 million, or $0.18 per diluted share, for the March 1999 quarter compared to $3.3 million, or $0.15 per diluted share, in the prior year quarter.

"Both marketing and operational plans that we have put in place are now showing results," stated Robert P. Ingle, chairman and chief executive officer. "We have increased our marketing efforts in all media and have renewed our focus on customers’ needs. We are making every effort to reach out to our customers through advertising and community involvement, as well as improving the conditions of our stores to enhance the shopping experience. We are particularly pleased with our comparable store sales results, which reflect the success of our efforts."

Gross profit increased 12.6% over the prior year’s quarter and remained constant as a percentage of sales at 24.7%. "We were able to maintain gross profit as a percentage of sales, while aggressively increasing our marketing efforts. We accomplished this through careful planning of our purchasing and promotional strategies," Ingle commented.

Operating and administrative expenses decreased slightly as a percentage of sales to 21.6% this quarter compared with 21.7% for the same quarter last year. Economies achieved through increased sales resulted in reductions in payroll, utilities and depreciation expense, as a percentage of sales. These reductions were partially offset by rent expense associated with the sale/leaseback of store equipment in September 1998 and March 1999.

Net rental income rose to $2.4 million in the March 1999 quarter from $1.5 million in the same quarter last year, due primarily to the purchase of seven shopping centers in fiscal 1998 and receipts of $.2 million for the early termination of two tenant leases.

Other income, net for the March 1999 period declined $1.1 million from the same quarter last year, primarily due to $1.3 million in gains on the sales of assets in the March 1998 quarter.

Interest expense increased $.5 million this year due to the net result of debt incurred to fund capital expenditures offset by the previously mentioned sale/leaseback transactions.

During the March 1999 quarter, Ingles opened two new stores, completed one major remodel/expansion and closed three older stores.

SIX-MONTH RESULTS

Net sales increased 12.4% for the March 1999 six-month period over the same period last year, while comparable store sales increased 8.3%. During the 1999 six-month period, Ingles opened two new stores and two replacement stores, completed one major remodel/expansion and six minor remodels and closed four older stores.

Gross profit increased 13.0% and improved slightly as a percentage of sales to 24.6% this year compared with 24.4% last year.

Operating and administrative expenses, as a percentage of sales, remained constant at 21.4%. The factors involved in the comparison between periods are comparable to the factors discussed in the three-month period.

Rental income, net increased $1.7 million for the six months ended March 27, 1999, compared with the prior year comparable period, primarily due to the purchase of seven shopping centers in fiscal 1998.

Interest expense increased $1.9 million for the 1999 period over the same period last year due primarily to debt incurred to fund capital expenditures. Capital expenditures totaled $155.9 million in fiscal 1998. Capital expenditures for the March 1999 six-month period were $23.9 million and are currently projected to be approximately $75 million for fiscal 1999.

Net income grew 32.6% in the March 1999 six-month period to $8.2 million, or $0.36 per diluted share, compared with $6.2 million in the March 1998 period, or $0.28 per diluted share.

ADDITIONAL COMMENTS BY ROBERT P. INGLE

"Our performance in the first six months of fiscal 1999 represents our team’s commitment to continue to build a top-notch supermarket company. We are pleased and encouraged by our financial results and believe we are laying the foundation for a continued trend in sales and earnings growth," Ingle concluded.

The comments in this press release contain certain forward-looking statements. Ingles undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Ingles actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, Ingles. Factors that could cause actual results to differ are discussed in reports filed by the Company with the Securities and Exchange Commission, particularly its Form 10-K for fiscal year 1998 and its Form 10-Q for the first quarter of fiscal 1999.

Ingles Markets, Incorporated is a leading supermarket chain with operations in six southeastern states. Headquartered in Asheville, North Carolina, the Company operates 205 supermarkets. In conjunction with its supermarket operations, the Company also operates 80 neighborhood shopping centers, all but seven of which contain an Ingles supermarket. The Company’s Class A Common Stock is traded on The Nasdaq Stock Market’s National Market under the symbol IMKTA.


INGLES MARKETS, INCORPORATED
Unaudited Financial Highlights
(Amounts in thousands, except per share data)

Three Months Ended Six Months Ended
March 27, 1999 March 28, 1998 March 27, 1999 March 28, 1998
Net sales $442,177 $393,513 $895,518 $796,561
Gross profit 109,248 97,054 219,836 194,575
Operating and administrative expenses 95,339 85,277 191,593 170,763
Rental income, net 2,447 1,518 4,618 2,947
Income from operations 16,356 13,295 32,861 26,759
Other income, net 509 1,616 912 1,817
Income before interest and income taxes 16,865 14,911 33,773 28,576
Interest expense 10,250 9,705 20,688 18,755
Income taxes 2,500 1,875 4,900 3,650
Net income $4,115 $3,331 $8,185 $6,171
Earnings per common share:
Basic earnings per common share $0.18 $0.15 $0.36 $0.28
Diluted earnings per common share $0.18 $0.15 $0.36 $0.28
EBITDA(1) $27,361 $25,912 $54,871 $50,153

(1) EBITDA represents earnings before interest, income taxes, depreciation and amortization, non-recurring charges and extraordinary items. Management believes that EBITDA is a useful measure of operating performance because it allows for a means of comparing Ingles with other companies that operate supermarkets, many of which do not own the real property on which the supermarkets are operated. EBITDA is unaffected by the debt and equity structure of Ingles. EBITDA does not represent cash flow from operations as defined by generally accepted accounting principles (GAAP), is not necessarily indicative of cash available to fund all cash flow needs and should not be considered as an alternative to net income under GAAP for evaluating Ingles’ results of operations.


INGLES MARKETS, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Amounts in thousands)

March 27, 1999 September 26, 1998
ASSETS
Current assets $215,505 $196,039
Property and equipment - net 648,281 661,772
Other assets 4,618 4,976
TOTAL ASSETS $865,404 $862,787
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term loans and current maturities of long-term debt $114,897 $55,759
Accounts payable, accrued expenses and current portion of other long-term liabilities 124,020 121,209
Deferred income taxes 24,735 24,935
Long-term debt 361,408 427,414
Other long-term liabilities 20,821 15,234


    Total liabilities 645,881 644,551
Stockholders' equity 219,523 218,236


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $865,404 $862,787

Ingles Markets, Incorporated is a leading supermarket chain with operations in six southeastern states. Headquartered in Asheville, North Carolina, the Company operates 197 supermarkets. In conjunction with its supermarket operations, the Company also operates 76 neighborhood shopping centers, all but 16 of which contain an Ingles supermarket. The Company's Class A Common Stock is traded on The Nasdaq Stock Market's National Market under the symbol IMKTA. For more information about the Company, visit Ingles' website at www.ingles-markets.com.


Ingles Markets, Incorporated - Post Office Box 6676, Asheville, NC 28816 - http://www.ingles-markets.com

 

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Contact:
Ron Freeman
Chief Financial Officer
(828) 669-2941 (Ext. 223)