NOTE O – SEGMENT REPORTING

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. We have applied

aggregation criteria to any of these operating segments in order to determine reportable segments. 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 segment are soft pretzels, frozen juice treats and desserts, churros, dough enrobed handheld products and baked goods. Our customers in the food service segment include snack bars and food stands in chain, department and discount stores; malls and shopping centers; casual dining restaurants; 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 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:

	Fiscal year ended
	September 29,			September 30,			September 24,
	2018			2017			2016
	(52 weeks)			(53 weeks)			(52 weeks)
	(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	208,544		$	180,138		$	170,155
Frozen juices and ices		42,364			49,469			51,798
Churros		61,726			62,809			57,318
Handhelds		38,928			36,913			27,427
Bakery		371,391			351,357			294,518
Other		22,991			21,108			20,313
Total Food Service	$	745,944		$	701,794		$	621,529

Retail Supermarket
Soft pretzels	$	36,438		$	35,081		$	33,279
Frozen juices and ices		74,435			71,325			68,924
Handhelds		12,419			14,892			15,347
Coupon redemption		(4,439	)		(4,898	)		(4,430	)
Other		2,086			2,847			4,469
Total Retail Supermarket	$	120,939		$	119,247		$	117,589

Frozen Beverages
Beverages	$	167,713		$	160,243		$	150,118
Repair and maintenance service		78,805			74,594			71,123
Machines sales		23,781			27,073			31,155
Other		1,083			1,273			1,267
Total Frozen Beverages	$	271,382		$	263,183		$	253,663

Consolidated Sales	$	1,138,265		$	1,084,224		$	992,781

Depreciation and Amortization:
Food Service	$	25,983		$	24,629		$	22,912
Retail Supermarket		1,313			949			1,031
Frozen Beverages		19,181			16,867			16,180
Total Depreciation and Amortization	$	46,477		$	42,445		$	40,123

Operating Income:
Food Service	$	74,056		$	81,208		$	76,539
Retail Supermarket		8,304			10,627			9,618
Frozen Beverages		28,415			26,272			26,653
Total Operating Income	$	110,775		$	118,107		$	112,810

Capital Expenditures:
Food Service	$	36,325		$	44,067		$	24,759
Retail Supermarket		928			239			369
Frozen Beverages		22,769			27,874			23,581
Total Capital Expenditures	$	60,022		$	72,180		$	48,709

Assets:
Food Service	$	693,098		$	635,709		$	589,854
Retail Supermarket		21,366			21,129			22,090
Frozen Beverages		217,549			210,390			178,543
Total Assets	$	932,013		$	867,228		$	790,487