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<SEC-DOCUMENT>0001193125-08-033214.txt : 20080912
<SEC-HEADER>0001193125-08-033214.hdr.sgml : 20080912
<ACCEPTANCE-DATETIME>20080219095512
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-08-033214
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20080219

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INGLES MARKETS INC
		CENTRAL INDEX KEY:			0000050493
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-GROCERY STORES [5411]
		IRS NUMBER:				560846267
		STATE OF INCORPORATION:			NC
		FISCAL YEAR END:			0929

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		PO BOX 6676
		CITY:			ASHEVILLE
		STATE:			NC
		ZIP:			28816
		BUSINESS PHONE:		7046692941

	MAIL ADDRESS:	
		STREET 1:		P O BOX 6676
		CITY:			ASHEVILLE
		STATE:			NC
		ZIP:			28816
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML><HEAD>
<TITLE>Correspondence</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">February&nbsp;19, 2008 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">Michael Moran </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Accounting Branch Chief </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Brian McAllister </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Staff Accountant </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Donna Di Silvio
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Review Accountant </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">United States Securities and Exchange
Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">100 F Street N.E. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Washington, DC 20549-7010
</FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Dear Messrs. Moran and McAllister and Ms.&nbsp;Di Silvio: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">We are in receipt of your letter dated January&nbsp;17, 2008 regarding our Form 10-K for the fiscal year ended September&nbsp;29, 2007. Our responses to your comments are provided below. We have repeated each of your
comments in full and the response to each such comment is noted directly below the quoted comment. As noted in response to comment No.&nbsp;1, we will make the changes discussed in future filings, commencing with our Form 10-Q for the fiscal quarter
ending March&nbsp;29, 2008. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Form 10-K for the Fiscal Year Ended September&nbsp;29, 2007 </U></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Item&nbsp;7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations, page 17 </U></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Results of Operations, page 19 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">We refer you to paragraph four on page 20. Please expand your sales discussion and analysis to include known financial and operational information in an effort to clarify and
quantify the material sales elements that create variability within the grocery segment. For example, we note you disclose approximately 74% of grocery segment sales are Advantage Card holders and these cards assist you in optimizing product
offerings and promotions according to shopping patterns You also disclose the existence of ten product categories in this paragraph and disclose elsewhere there are meat and seafood departments, bakery, delicatessen, fuel station and pharmacies; yet
you provide no quantitative nor qualitative analysis of grocery segment sales by either product offerings or departments. In circumstances where you disclose more than one business reason for a segment&#146;s change in operations please quantify the
incremental impact of each individual business reason within the overall change in the line item. See paragraph 26.b of SFAS No.&nbsp;131 and Section III.A.3 of SEC Release No.&nbsp;33-8350. </FONT></TD></TR></TABLE>

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 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">February&nbsp;19, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Page 2 </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Response</U>: We believe that our current disclosure complies with paragraph 26.b. of SFAS
No.&nbsp;131 and Section III.B.3 of SEC Release No.&nbsp;33-8350. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">Paragraph 26.b. of SFAS No.&nbsp;131 states that &#147;An enterprise
shall disclose the following general information: &#133;&#133; b. Types of products and services from which each reportable segment derives its revenues.&#148; It does not require quantification of products and services. The <I>Merchandising
</I>section of Part I, Item&nbsp;1 of the Form 10-K extensively describes the grocery segment products offered by the Company and the Company&#146;s merchandising strategy. As components of this strategy are interrelated, it is not possible for us
to quantify the incremental impact of each. Using the Commission&#146;s example, the fact that 74% of grocery segment sales are to Advantage Card holders does not correlate to a quantifiable increase in sales. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">Section III.B.3 of SEC Release No.&nbsp;33-8350 requires us to discuss known trends and information in an effort to clarify material sales elements. We
currently disclose and quantify the following: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="9%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">Sales, with and without gasoline </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">Comparable store sales, with and without gasoline </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">Effect of new and closed stores </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">We
disclosed that sales increased in substantially all product categories to indicate that our sales increase was broad based. The disclosure that percentage increases were greater in certain categories (such as gasoline or deli) is intended to
indicate trends in customer preferences and relevance to the Company&#146;s merchandising strategy. The dollar amounts are not always material. For example, the fiscal year 2007 increase in deli department sales was $8.2 million, less than 4% of the
total grocery segment sales increase for fiscal year 2007. Deli department sales are approximately 3% of total grocery segment sales. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">We
believe the disclosure of individual product category sales is tantamount to defining product categories as identifiable segments under SFAS No.&nbsp;131. The Company and the Commission agreed in a 2006 comment letter that the current disclosure of
grocery segment operations was appropriate. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">Finally, we reviewed filings with the Commission by peer grocery companies and did not find
product category disclosures, presumably for many of the reasons cited above. In general, our sales disclosures were more extensive than those companies. We believe that further detailed disclosure by the Company would place the Company at a
competitive disadvantage in relation to its industry peers. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">February&nbsp;19, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Page 3 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Consolidated Balance Sheets, page 39 </U></FONT></P> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Please state that Class B is convertible on the face of the balance sheet. See Rule 5-02.30 of Regulations S-X. </FONT></TD></TR></TABLE> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Response</U>: We will revise the line item on the balance sheet as follows: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">Class B, convertible to Class&nbsp;A, $0.05 par value; 100,000,000 shares authorized; issued and outstanding, 12,156,476 shares in 2007, 12,321,774 shares
in 2006. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Note 1. Summary of Significant Accounting Policies, page 43 </U></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><U>Inventories, page 43 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">3.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Please disclose the major categories of inventory. See Rule 5-02.6 of Regulation S-X. </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">4.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Please expand your disclosure to address whether or not your inventory valuation methods require certain management estimates and judgments such as estimates for shrinkage,
warehousing and distribution costs related to inventory, and markdowns of merchandise inventories. To the extent estimates are used, please disclose the basis for your estimates as well as whether or not you have experienced any significant
differences in your estimates of recovery compared to actual results. </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Response</U>: Over 99.5% of our total inventory is
finished goods. We will revise the disclosure as follows: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">Inventories &#150; Substantially all of the Company&#146;s inventory consists of
finished goods. Warehouse inventories are valued at the lower of average cost or market. Store inventories are valued using the retail method under which inventories at cost (and the resulting gross margins) are determined by applying a calculated
cost-to-retail ratio to the retail value of inventories. As an integral part of valuing inventory at cost, management makes certain judgments and estimates for standard gross margins, allowances for vendor consideration, markdowns and shrinkage.
Warehousing and distribution costs are not included in the valuation of inventories. The Company reviews its judgments and estimates regularly and makes adjustments where facts and circumstances dictate. Period to period adjustments for vendor
allowances, markdowns and shrinkage have historically not been significant. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Schedule III, page 60 </U></FONT></P> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">5.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Please tell us why you have not included the Schedule III required by Rule 5-04(a)(1) of Regulation S-X. To the extent you believe that real estate activities do not represent a
substantial portion of your business please provide a basis for you conclusion as well as any calculations to clarify our understanding of the response. </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT
FACE="Times New Roman" SIZE="2"><U>Response</U>: We do not acquire or hold real estate for investment. Our real estate is, has been at one time, or will be used in the business and is therefore exempt from reporting in Schedule III in accordance
with Rule 5-04(a)(1) of Regulation S-X. Furthermore, total assets </FONT>
</P>

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 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">February&nbsp;19, 2008 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Page 4 </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%">
<FONT FACE="Times New Roman" SIZE="2">of the shopping center rentals operating segment comprise less than 10% of total consolidated assets. In, addition rental revenues related to shopping
centers are less than 0.5% of total revenues in fiscal 2007. We do not believe this meets the definition of a &#147;substantial portion&#148; of our business as stated in Rule 5-04(a)(1) of Regulation S-X. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Exhibits 31.1 and 31.2 </U></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">6.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Please revise the wording in each certification to be in the exact format provided by item 601(b)(31) of Regulation S-K. For example, in paragraph two you refer to
&#147;annual&#148; report instead of &#147;report.&#148; </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Response</U>: We will change the wording of these certifications
to the exact format provided by Item&nbsp;601(b)(31) of Regulation S-K beginning with our Form 10-Q for the quarterly period ended March&nbsp;29, 2008. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P
STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Company acknowledges that:
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(1) the Company is responsible for the adequacy and accuracy of the disclosure in its filings with the Commission; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(2) the staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to any
filing; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(3) the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under
the federal securities laws of the United States. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">If you have any questions or comments regarding the foregoing responses, please contact
the undersigned at 828-669-2941, Ext.&nbsp;223. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Very truly yours,</FONT></TD></TR>
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<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Ingles Markets, Incorporated</FONT></TD></TR>
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<TD HEIGHT="16"></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Ronald B. Freeman</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Ronald B. Freeman</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">Chief Financial
Officer</FONT></P></TD></TR>
</TABLE></DIV> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Attachment </FONT></P>
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