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 (loss). 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
	December 24,			December 26,
	2016			2015
	(unaudited)
	(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	41,494		$	38,699
Frozen juices and ices		7,479			8,315
Churros		14,438			13,936
Handhelds		7,479			6,146
Bakery		75,279			76,601
Other		4,128			3,055
Total Food Service	$	150,297		$	146,752

Retail Supermarket
Soft pretzels	$	8,944		$	8,740
Frozen juices and ices		9,851			9,064
Handhelds		3,450			3,875
Coupon redemption		(1,259	)		(574	)
Other		633			155
Total Retail Supermarket	$	21,619		$	21,260

Frozen Beverages
Beverages	$	28,276		$	28,070
Repair and maintenance service		18,091			17,763
Machines sales		7,039			8,732
Other		248			273
Total Frozen Beverages	$	53,654		$	54,838

Consolidated Sales	$	225,570		$	222,850

Depreciation and Amortization:
Food Service	$	5,732		$	5,385
Retail Supermarket		278			286
Frozen Beverages		3,901			3,954
Total Depreciation and Amortization	$	9,911		$	9,625

Operating Income :
Food Service	$	17,054		$	15,902
Retail Supermarket		1,046			1,090
Frozen Beverages		1,227			1,368
Total Operating Income	$	19,327		$	18,360

Capital Expenditures:
Food Service	$	6,587		$	8,084
Retail Supermarket		82			156
Frozen Beverages		4,730			5,064
Total Capital Expenditures	$	11,399		$	13,304

Assets:
Food Service	$	594,963		$	546,264
Retail Supermarket		22,128			23,099
Frozen Beverages		177,082			172,275
Total Assets	$	794,173		$	741,638