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						Six months ended
	March 30,			March 31,			March 30,			March 31,
	2019			2018			2019			2018


Sales to External Customers:
Food Service
Soft pretzels	$	49,812		$	48,748		$	98,803		$	97,769
Frozen juices and ices		8,947			9,439			16,474			16,623
Churros		15,770			15,272			30,905			29,864
Handhelds		7,987			9,331			16,789			20,693
Bakery		90,764			90,813			192,873			185,746
Other		8,145			5,862			13,471			11,034
Total Food Service	$	181,425		$	179,465		$	369,315		$	361,729

Retail Supermarket
Soft pretzels	$	10,829		$	10,081		$	21,015		$	20,593
Frozen juices and ices		14,668			15,438			25,664			25,165
Handhelds		2,479			2,763			5,047			5,789
Coupon redemption		(507	)		(618	)		(1,201	)		(1,369	)
Other		340			420			699			982
Total Retail Supermarket	$	27,809		$	28,084		$	51,224		$	51,160

Frozen Beverages
Beverages	$	33,603		$	33,127		$	65,039		$	66,270
Repair and maintenance service		20,034			19,308			39,777			38,312
Machines revenue		13,161			5,854			22,065			13,327
Other		270			263			494			513
Total Frozen Beverages	$	67,068		$	58,552		$	127,375		$	118,422

Consolidated Sales	$	276,302		$	266,101		$	547,914		$	531,311

Depreciation and Amortization:
Food Service	$	6,616		$	6,041		$	12,938		$	13,139
Retail Supermarket		320			358			655			648
Frozen Beverages		5,066			4,754			10,044			9,352
Total Depreciation and Amortization	$	12,002		$	11,153		$	23,637		$	23,139

Operating Income :
Food Service	$	19,580		$	18,535		$	38,041		$	34,435
Retail Supermarket		2,641			2,534			4,088			5,092
Frozen Beverages		2,550			2,472			4,724			5,242
Total Operating Income	$	24,771		$	23,541		$	46,853		$	44,769

Capital Expenditures:
Food Service	$	8,403		$	6,259		$	14,681		$	15,700
Retail Supermarket		581			103			1,133			103
Frozen Beverages		5,530			5,296			10,537			10,478
Total Capital Expenditures	$	14,514		$	11,658		$	26,351		$	26,281

Assets:
Food Service	$	705,724		$	652,850		$	705,724		$	652,850
Retail Supermarket		23,338			23,783			23,338			23,783
Frozen Beverages		223,650			210,916			223,650			210,916
Total Assets	$	952,712		$	887,549		$	952,712		$	887,549