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. Sales and operating income are key variables monitored by the Chief Operating Decision Makers and management when determining each segment’s and the company’s financial condition and operating performance. 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
	December 30,			December 24,
	2017			2016
	(unaudited)
	(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	50,131		$	41,494
Frozen juices and ices		7,184			7,479
Churros		14,592			14,438
Handhelds		10,252			7,479
Bakery		94,933			75,279
Other		5,172			4,128
Total Food Service	$	182,264		$	150,297

Retail Supermarket
Soft pretzels	$	10,512		$	8,944
Frozen juices and ices		9,727			9,851
Handhelds		3,026			3,450
Coupon redemption		(751	)		(1,259	)
Other		562			633
Total Retail Supermarket	$	23,076		$	21,619

Frozen Beverages
Beverages	$	34,303		$	28,276
Repair and maintenance service		19,004			18,091
Machines sales		6,313			7,039
Other		250			248
Total Frozen Beverages	$	59,870		$	53,654

Consolidated Sales	$	265,210		$	225,570

Depreciation and Amortization:
Food Service	$	7,098		$	5,732
Retail Supermarket		290			278
Frozen Beverages		4,598			3,901
Total Depreciation and Amortization	$	11,986		$	9,911

Operating Income :
Food Service	$	15,900		$	17,054
Retail Supermarket		2,558			1,046
Frozen Beverages		2,770			1,227
Total Operating Income	$	21,228		$	19,327

Capital Expenditures:
Food Service	$	9,441		$	6,587
Retail Supermarket		-			82
Frozen Beverages		5,182			4,730
Total Capital Expenditures	$	14,623		$	11,399

Assets:
Food Service	$	635,988		$	594,963
Retail Supermarket		21,531			22,128
Frozen Beverages		207,498			177,082
Total Assets	$	865,017		$	794,173