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 30,			September 24,			September 26,
	2017			2016			2015
	(53 weeks)			(52 weeks)			(52 weeks)
				(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	180,138		$	170,155		$	168,970
Frozen juices and ices		49,469			51,798			54,454
Churros		62,809			57,318			56,602
Handhelds		36,913			27,427			21,817
Bakery		351,357			294,518			301,135
Other		21,108			20,313			13,657
Total Food Service	$	701,794		$	621,529		$	616,635

Retail Supermarket
Soft pretzels	$	35,081		$	33,279		$	35,727
Frozen juices and ices		71,325			68,924			72,174
Handhelds		14,892			15,347			18,957
Coupon redemption		(4,898	)		(4,430	)		(4,725	)
Other		2,847			4,469			1,244
Total Retail Supermarket	$	119,247		$	117,589		$	123,377

Frozen Beverages
Beverages	$	160,243		$	150,118		$	142,705
Repair and maintenance service		74,594			71,123			65,765
Machines sales		27,073			31,155			26,413
Other		1,273			1,267			1,361
Total Frozen Beverages	$	263,183		$	253,663		$	236,244

Consolidated Sales	$	1,084,224		$	992,781		$	976,256

Depreciation and Amortization:
Food Service	$	24,629		$	22,912		$	21,289
Retail Supermarket		949			1,031			1,132
Frozen Beverages		16,867			16,180			15,850
Total Depreciation and Amortization	$	42,445		$	40,123		$	38,271

Operating Income:
Food Service	$	81,208		$	76,539		$	75,286
Retail Supermarket		10,627			9,618			11,020
Frozen Beverages		26,272			26,653			24,582
Total Operating Income	$	118,107		$	112,810		$	110,888

Capital Expenditures:
Food Service	$	44,067		$	24,759		$	28,228
Retail Supermarket		239			369			112
Frozen Beverages		27,874			23,581			20,301
Total Capital Expenditures	$	72,180		$	48,709		$	48,641

Assets:
Food Service	$	635,709		$	589,854		$	543,851
Retail Supermarket		21,129			22,090			24,209
Frozen Beverages		210,390			178,543			171,609
Total Assets	$	867,228		$	790,487		$	739,669