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						Nine months ended
	June 30,			June 24,			June 30,			June 24,
	2018			2017			2018			2017
Sales to External Customers:
Food Service
Soft pretzels	$	53,880		$	45,069		$	151,649		$	129,556
Frozen juices and ices		12,825			16,281			29,448			33,453
Churros		16,739			17,536			46,603			46,693
Handhelds		9,974			8,574			30,667			24,155
Bakery		93,082			89,712			278,828			248,795
Other		5,201			5,938			16,235			14,833
Total Food Service	$	191,701		$	183,110		$	553,430		$	497,485

Retail Supermarket
Soft pretzels	$	7,332		$	7,496		$	27,925		$	25,626
Frozen juices and ices		28,785			27,317			53,950			50,359
Handhelds		2,960			3,548			8,749			10,374
Coupon redemption		(1,278	)		(1,092	)		(2,647	)		(3,246	)
Other		733			873			1,715			2,260
Total Retail Supermarket	$	38,532		$	38,142		$	89,692		$	85,373

Frozen Beverages
Beverages	$	50,343		$	48,714		$	118,932		$	108,812
Repair and maintenance service		19,693			18,549			58,005			54,327
Machines sales		5,644			6,496			16,652			20,547
Other		326			404			839			954
Total Frozen Beverages	$	76,006		$	74,163		$	194,428		$	184,640

Consolidated Sales	$	306,239		$	295,415		$	837,550		$	767,498

Depreciation and Amortization:
Food Service	$	6,237		$	6,028		$	19,376		$	18,155
Retail Supermarket		332			221			980			859
Frozen Beverages		4,860			4,437			14,212			12,382
Total Depreciation and Amortization	$	11,429		$	10,686		$	34,568		$	31,396

Operating Income:
Food Service	$	19,663		$	22,005		$	54,098		$	58,695
Retail Supermarket		3,203			4,890			8,295			8,390
Frozen Beverages		12,003			10,905			17,245			14,153
Total Operating Income	$	34,869		$	37,800		$	79,638		$	81,238

Capital Expenditures:
Food Service	$	10,172		$	16,923		$	25,872		$	35,536
Retail Supermarket		273			15			376			228
Frozen Beverages		6,618			7,230			17,096			21,387
Total Capital Expenditures	$	17,063		$	24,168		$	43,344		$	57,151

Assets:
Food Service	$	672,861		$	631,131		$	672,861		$	631,131
Retail Supermarket		24,215			25,212			24,215			25,212
Frozen Beverages		217,156			209,441			217,156			209,441
Total Assets	$	914,232		$	865,784		$	914,232		$	865,784