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Non-Tech : ingles markets (imkta) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Felix who wrote (5)	2/3/1998 8:55:00 AM
From: Steven Dopp	Respond to of 10

My notes on Ingles are at home, so I'm posting from my memory. As I see it, IMKTA has, over the past 5 years, increased its retail sq. footage by 6.7 percent per year. Same store sales have been up slightly during this time period, although same-store sales have decreased during the last 1-2 years. The company has a lot of debt, with a dbt/equity ratio of 1.1 (as best I can recall off-hand). They were so laden with debt that they converted all of their debentures into common stock, which resulted in a 20% dilution. I suspect that this did not cause a hit to eps, since interest paid on the debentures is now paid out as a dividend. I suspect the conversion was to free up borrowing capacity. As I see it, they've maxed out their leverage and can only grow their sq. footage by 7 percent per year. Its unlikely that we will see increased sales/profitability at its existing stores. With the recently-announced eps reduction for this quarter, IMKTA will barely have enough money to cover their dividend. I think its time to bail on this one.