Note

We principally sell our products to the food service and retail supermarket industries. Sales and results of our frozen beverages business are monitored separately from the balance of our food service business because of different distribution and capital requirements. We maintain separate and discrete financial information for the

three

operating segments mentioned above which is available to our Chief Operating Decision Makers.

Our

three

reportable segments are Food Service, Retail Supermarkets and Frozen Beverages. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income. These segments are described below

Food Service

The primary products sold by the food service group are soft pretzels, frozen juice treats and desserts, churros, dough enrobed handheld products and baked goods. Our customers in the food service industry include snack bars and food stands in chain, department and discount stores; malls and shopping centers; fast food outlets; stadiums and sports arenas; leisure and

theme parks; convenience stores; movie theatres; warehouse club stores; schools, colleges and other institutions. Within the food service industry, our products are purchased by the consumer primarily for consumption at the point-of-sale.

Retail Supermarkets

The primary products sold to the retail supermarket channel are soft pretzel products – including SUPERPRETZEL, frozen juice treats and desserts including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars and sorbet, PHILLY SWIRL cups and sticks, ICEE Squeeze-Up Tubes and dough enrobed handheld products including PATIO burritos. Within the retail supermarket channel, our frozen and prepackaged products are purchased by the consumer for consumption at home.

Frozen Beverages

We sell frozen beverages and related products to the food service industry primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE in the United States, Mexico and Canada. We also provide repair and maintenance service to customers for customers’ owned equipment.

The Chief Operating Decision Maker for Food Service and Retail Supermarkets and the Chief Operating Decision Maker for Frozen Beverages monthly review detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. In addition, the Chief Operating Decision Makers review and evaluate depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. Information regarding the operations in these

three

reportable segments is as follows:

	Three months ended						Nine months ended
	June 24,			June 25,			June 24,			June 25,
	2017			2016			2017			2016
	(unaudited)
	(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	45,069		$	44,410		$	129,556		$	125,943
Frozen juices and ices		16,281			18,564			33,453			37,850
Churros		17,536			15,819			46,693			43,452
Handhelds		8,574			7,047			24,155			20,371
Bakery		89,712			74,475			248,795			221,500
Other		5,938			8,833			14,833			15,507
Total Food Service	$	183,110		$	169,148		$	497,485		$	464,623

Retail Supermarket
Soft pretzels	$	7,496		$	7,136		$	25,626		$	25,611
Frozen juices and ices		27,317			26,038			50,359			48,009
Handhelds		3,548			3,813			10,374			11,121
Coupon redemption		(1,092	)		(826	)		(3,246	)		(1,911	)
Other		873			852			2,260			2,143
Total Retail Supermarket	$	38,142		$	37,013		$	85,373		$	84,973

Frozen Beverages
Beverages	$	48,714		$	44,352		$	108,812		$	102,966
Repair and maintenance service		18,549			18,398			54,327			53,105
Machines sales		6,496			8,942			20,547			23,911
Other		404			128			954			963
Total Frozen Beverages	$	74,163		$	71,820		$	184,640		$	180,945

Consolidated Sales	$	295,415		$	277,981		$	767,498		$	730,541

Depreciation and Amortization:
Food Service	$	6,028		$	5,777		$	18,155		$	16,846
Retail Supermarket		221			288			859			862
Frozen Beverages		4,437			4,095			12,382			12,122
Total Depreciation and Amortization	$	10,686		$	10,160		$	31,396		$	29,830

Operating Income:
Food Service	$	22,005		$	24,619		$	58,695		$	59,041
Retail Supermarket		4,890			4,266			8,390			7,825
Frozen Beverages		10,905			11,552			14,153			15,210
Total Operating Income	$	37,800		$	40,437		$	81,238		$	82,076

Capital Expenditures:
Food Service	$	16,923		$	5,961		$	35,536		$	19,470
Retail Supermarket		15			140			228			339
Frozen Beverages		7,230			7,385			21,387			17,412
Total Capital Expenditures	$	24,168		$	13,486		$	57,151		$	37,221

Assets:
Food Service	$	631,131		$	563,571		$	631,131		$	563,571
Retail Supermarket		25,212			26,110			25,212			26,110
Frozen Beverages		209,441			181,552			209,441			181,552
Total Assets	$	865,784		$	771,233		$	865,784		$	771,233