INGLES MARKETS INC Fair Value Disclosure
The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents approximate their fair values.
Short term investments: The carrying amounts reported in the Consolidated Balance Sheets for short term investments approximate their fair values.
Receivables: The carrying amounts reported in the Consolidated Balance Sheets for receivables approximate their fair values.
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:
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Level 1 Inputs - | Quoted prices for identical assets or liabilities in active markets. |
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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. |
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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, interest rate swaps, and non-qualified plan assets at September 27, 2025 were as follows (in thousands):
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| Carrying |
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| Amount |
| Fair Value |
| Fair Value Measurements | ||
Senior Notes due 2031 |
| $ | 350,000 |
| $ | 327,250 |
| Level 2 |
Facility Bonds due 2036 |
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| 45,380 |
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| 45,380 |
| Level 2 |
Secured notes payable and other |
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| 119,387 |
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| 119,387 |
| Level 2 |
Interest rate swaps derivative contract asset |
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| 7,416 |
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| 7,416 |
| Level 2 |
Non-qualified retirement plan assets |
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| 29,881 |
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| 29,881 |
| Level 2 |
The carrying amount and fair value of the Company’s debt, interest rate swaps, and non-qualified plan assets at September 28, 2024 were as follows (in thousands):
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| Carrying |
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| Amount |
| Fair Value |
| Fair Value Measurements | ||
Senior Notes due 2031 |
| $ | 350,000 |
| $ | 317,625 |
| Level 2 |
Facility Bonds due 2036 |
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| 49,910 |
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| 49,910 |
| Level 2 |
Secured notes payable and other |
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| 132,712 |
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| 132,712 |
| Level 2 |
Interest rate swaps derivative contract assets |
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| 8,931 |
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| 8,931 |
| Level 2 |
Non-qualified retirement plan assets |
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| 27,126 |
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| 27,126 |
| Level 2 |
The fair values for Level 2 measurements were determined primarily using market yields and taking into consideration the underlying terms of the debt.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.