INGLES MARKETS INC Leases Disclosure
The Company conducts part of its retail operations from leased facilities. The initial term of the leases is generally 20 years. The majority of the leases include one or more renewal options and provide that the Company pay property taxes, utilities, repairs and certain other costs incidental to occupation of the leased premises. Several leases contain clauses calling for percentage rentals based upon gross sales of the supermarket occupying the leased space. Step rent provisions, escalation clauses, capital improvements and other lease concessions are taken into account in computing lease payments. Operating lease expense is recognized on a straight-line basis over the minimum lease term.
Operating Leases - Rent expense for all operating leases of $7.4 million, $9.7 million and $10.6 million for fiscal years 2025, 2024 and 2023, respectively, is included in operating and administrative expenses. These amounts included short-term (less than one year) leases, common area expenses, and variable lease costs, all of which were insignificant. Cash paid for lease liabilities in operating activities approximates operating lease cost. Sub-lease rental income of $0.3 million for each of fiscal years 2025, 2024 and 2023, was included as a reduction of rental expense.
Finance Leases –Finance lease cost of $840.0 thousand included amortization expense of $674.8 thousand, included in operating and administrative expense, and $165.2 thousand of interest expense for fiscal year 2025. Fiscal year 2024 finance lease cost of $318.5 thousand included amortization expense of $275.6 thousand, included in operating and administrative expense, and $82.3 thousand of interest expense. Finance lease cost of $270.7 thousand included amortization expense of $231.3 thousand, included in operating and administrative expense, and $87.2 thousand of interest expense for fiscal year 2023.
Future maturities of lease liabilities as of September 27, 2025 were as follows:
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Fiscal Year |
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| Operating Leases |
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| Finance Leases |
2026 |
| $ | 6,052,190 |
| $ | 840,000 |
2027 |
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| 5,542,431 |
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| 840,000 |
2028 |
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| 3,958,840 |
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| 840,000 |
2029 |
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| 2,955,264 |
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| 101,500 |
2030 |
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| 1,576,004 |
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| — |
Thereafter |
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| 15,053,932 |
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| — |
Total lease payments |
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| 35,138,661 |
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| 2,621,500 |
Less amount representing interest |
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| 8,621,228 |
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| 236,321 |
Present value of lease liabilities |
| $ | 26,517,433 |
| $ | 2,385,179 |
On the Consolidated Balance Sheets, lease extensions exercised during fiscal year 2025 increased the line items “Operating lease right of use assets” and “Noncurrent operating lease liabilities” by $3.8 million each during the year ended September 27, 2025. The weighted average remaining lease term for the Company’s operating leases is 14.4 years. No new financing leases were entered into during fiscal year 2025. The weighted average discount rate used to determine operating lease liability balances as of September 27, 2025 was 4.2%, and was 6.0% for finance lease liability balances.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.