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 29,			December 30,
	2018			2017
	(unaudited)
	(in thousands)

Sales to External Customers:
Food Service
Soft pretzels	$	48,991		$	49,021
Frozen juices and ices		7,527			7,184
Churros		15,135			14,592
Handhelds		8,802			11,362
Bakery		102,109			94,933
Other		5,326			5,172
Total Food Service	$	187,890		$	182,264

Retail Supermarket
Soft pretzels	$	10,186		$	10,512
Frozen juices and ices		10,996			9,727
Handhelds		2,568			3,026
Coupon redemption		(694	)		(751	)
Other		359			562
Total Retail Supermarket	$	23,415		$	23,076

Frozen Beverages
Beverages	$	31,436		$	33,143
Repair and maintenance service		19,743			19,004
Machines revenue		8,904			7,473
Other		224			250
Total Frozen Beverages	$	60,307		$	59,870

Consolidated Sales	$	271,612		$	265,210

Depreciation and Amortization:
Food Service	$	6,322		$	7,098
Retail Supermarket		335			290
Frozen Beverages		4,978			4,598
Total Depreciation and Amortization	$	11,635		$	11,986

Operating Income :
Food Service	$	18,461		$	15,900
Retail Supermarket		1,447			2,558
Frozen Beverages		2,174			2,770
Total Operating Income	$	22,082		$	21,228

Capital Expenditures:
Food Service	$	6,278		$	9,441
Retail Supermarket		552			-
Frozen Beverages		5,007			5,182
Total Capital Expenditures	$	11,837		$	14,623

Assets:
Food Service	$	692,912		$	635,988
Retail Supermarket		21,380			21,531
Frozen Beverages		219,692			207,498
Total Assets	$	933,984		$	865,017