Item 6.     Selected Financial Data[ RESERVED ]

The selected financial data for the last five years was derived from our audited consolidated financial statements. The following selected financial data should be read in conjunction with “Management’s

Item 7.Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management regarding our financial condition and results of operations, liquidity and certain other factors that may affect our future results. The following discussion should be read in conjunction with the consolidated financial statements and relatedaccompanying notes thereto, especially as the information pertains to fiscal 2015, 2016 and 2017.included in Item 8 of this Form 10-K.

Item 7.     Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

In addition to historical information, this document and analysis contains forward-looking statements. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Important factors that might cause such a difference include, but are not limited to, those discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Critical Accounting Policies, Judgments and Estimates

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. The preparation of such financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of those financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company discloses its significant accounting policies in the accompanying notes to its audited consolidated financial statements.

Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in certain areas. Following are some of the areas requiring significant judgments and estimates: revenue recognition, accounts receivable, cash flow and valuation assumptions in performing asset impairment tests of long-lived and intangible assets, estimates of the value and useful lives of intangible assets, insurance reserves, inventories, and income taxes.

There are numerous critical assumptions that may influence accounting estimates in these and other areas. We base our critical assumptions on historical experience, third-party data, and various other estimates we believe to be reasonable. A description of the aforementioned policies follows:

Revenue Recognition - We adopted the new revenue recognition guidance on the first day of our fiscal 2019 year using a modified retrospective approach; however, we did not record a cumulative-effect adjustment from initially applying the standard as the adoption did not have a material impact on our financial position or results of operations. We completed a review of customer contracts and evaluated the impact of the new standard on certain common practices currently employed by us. We also finalized our assessment of the impact on our accounting policies, processes, system requirements, internal controls and disclosures.

When Performance Obligations Are Satisfied

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The singular performance obligation of our customer contracts for product and machine sales is determined by each individual purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under the terms of the agreement is satisfied and product control is transferred to our customer. Specifically, control transfers to our customers when the product is delivered to, installed, or picked up by our customers based upon applicable shipping terms, as our customers can direct the use and obtain substantially all of the remaining benefits from the product at this point in time. The performance obligations in our customer contracts for product are generally satisfied within 30 days.

The singular performance obligation of our customer contracts for time and material repair and maintenance equipment service is the performance of the repair and maintenance with revenue being recognized at a point-in-time when the repair and maintenance is completed.

The singular performance obligation of our customer repair and maintenance equipment service contracts is the performance of the repair and maintenance with revenue being recognized over the time the service is expected to be performed. Our customers are billed for service contracts in advance of performance and therefore we have contract liability on our balance sheet.

Significant Payment Terms

In general, within our customer contracts, the purchase order identifies the product, quantity, price, pick-up allowances, payment terms and final delivery terms. Although some payment terms may be more extended, presently the majority of our payment terms are 30 days. As a result, we have used the available practical expedient and, consequently, do not adjust our revenues for the effects of a significant financing component.

Shipping

All amounts billed to customers related to shipping and handling are classified as revenues; therefore, we recognize revenue from ourfor shipping and handling fees at the time the products are shipped or when services are performed. The cost of shipping products to the customer is recognized at the time the products are shipped to the customer and our policy is to classify them as Distribution expenses.

Variable Consideration

In addition to fixed contract consideration, our contracts include some form of variable consideration, including sales discounts, trade promotions and certain other sales and consumer incentives, including rebates and coupon redemptions. In general, variable consideration is treated as a reduction in revenue when the related revenue is recognized. Depending on the specific type of variable consideration, we use the most likely amount method to determine the variable consideration. We believe there will be no significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. RepairWe review and maintenance equipment service revenue is recorded when it is performed ifupdate our estimates and related accruals of variable consideration each period based on historical experience.

Warranties & Returns

We provide all customers with a standard or assurance type warranty. Either stated or implied, we provide assurance the customer termsrelated products will comply with all agreed-upon specifications and other warranties provided under the law. No services beyond an assurance warranty are that the customer isprovided to be charged onour customers.

We do not grant a time and material basisgeneral right of return. However, customers may return defective or recorded onnon-conforming products. Customer remedies may include either a straight-line basis over the termcash refund or an exchange of the contract when the customer has signed a service contract. Revenue is recognized only where persuasive evidence of an arrangement exists, our price is fixed or estimable and collectability is reasonably assured.product. We record offsets to revenue for allowances, end-user pricing adjustments, trade spending, coupon redemption costs and returned product. Customers generally do not have theestimate a right toof return product unless it is damaged or defective. Off-invoice allowances are deducted directly from the amount invoiced to our customer whenand related refund liability as returns of our products are shipped to the customer. Offsets to revenuerare.

Contract Balances

Our customers are billed for allowances, end-user pricing adjustmentsservice contracts in advance of performance and trade spending are recorded primarily as a reduction of accounts receivable basedtherefore we have contract liability on our estimatesbalance sheet as follows:

We provide an allowance for doubtful receivables after taking into consideration historical experience and other factors. On September 27, 2020, the Company adopted guidance issued by the FASB in ASU 2016-13 Measurement of Credit Losses on Financial Instruments, which are based on customer programs and historical experience. These offsetsrequires companies to revenue are estimated primarilyrecognize an allowance that reflects a current estimate of credit losses expected to be incurred over the life of the asset. Adoption of this new guidance did not have a material impact on the quantityconsolidated financial statements. The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The allowance for doubtful accounts considers a number of product purchased over specific time periods. For our Retail Supermarket and Frozen Beverages segments, we accrue forfactors including the liability based on products sold multiplied by per product offsets. Offsets to revenue for our Food Service segment are calculated in a similar manner for offsets owed to our direct customers; however, because shipments to end-users are unknown to us until reported by our direct customers or byage of receivable balances, the end-users, there is a greater degreehistory of uncertainty as to the accuracylosses, expectations of the amounts accrued for end-user offsets. Additional uncertainty may occur as customers take deductions when they make payments to us. This creates complexities because our customers do not always provide reasons for the deductions taken. Additionally, customers may take deductions to which they are not entitledfuture credit losses and the length of time customers take deductionscustomers’ ability to which they are entitled can vary from two weeks to well over a year. Because of the aforementioned uncertainties, the process to determine these estimates requires judgment. We feel that due to constant monitoring of the process, including but not limited to comparing actual results to estimates madepay off obligations. The allowance for doubtful receivables was $1,405,000 and $1,388,000 on a monthly basis, these estimates are reasonable in all material respects. Our recorded liability for allowances, end-user pricing adjustmentsSeptember 25, 2021 and trade spending was approximately $13.0 million at September 30, 2017 and $14.3 million at September 24, 2016.26, 2020, respectively.

Accounts Receivable - We record accounts receivable at the time revenue is recognized. Bad debt expense is recorded in marketing and administrative expenses. The amount of the allowance for doubtful accounts is based on our estimate of the accounts receivable amount that is uncollectable. It is comprised of a general reserve based on historical experience and amounts for specific customers’ accounts receivable balances that we believe are at risk due to our knowledge of facts regarding the customer(s). We continually monitor our estimate of the allowance for doubtful accounts and adjust it monthly. We usually have approximately 1528 customers with accounts receivable balances of between $1 million to $10 million with one customer having a balance of approximately $14 million. Failure of these customers, and others with lesser balances, to pay us the amounts owed, could have a material impact on our consolidated financial statements.

Accounts receivable due from any of our customers is subject to risk. Our total bad debt expense was $122,000, $525,000$338,000, $1,105,000 and $310,000$389,000 for the fiscal years 2017, 20162021, 2020 and 2015,2019, respectively. At September 30, 201725, 2021 and September 24, 2016,26, 2020, our accounts receivables were $124,553,000$162,939,000 and $98,325,000$126,587,000 net of an allowance for doubtful accounts of $359,000$1,405,000 and $571,000.$1,388,000.

Asset Impairment – We have three reporting units with goodwill totaling $102,511,000$121,833,000 as of September 30, 2017.25, 2021. Goodwill is evaluated annually by the Company for impairment. We perform impairment tests at year end for our reporting units, which is also the operating segment level, with recorded goodwill utilizing primarily the discounted cash flow method. This methodology used to estimate the fair value of the total Company and its reporting units requires inputs and assumptions (i.e. revenue growth, operating profit margins, capital spending requirements and discount rates) that reflect current market conditions. The estimated fair value of each reporting unit is compared to the carrying value of the reporting unit. If the carrying value of the reporting unit exceeds its fair value, the goodwill of the reporting unit is potentially impaired, and the Company then determines the implied fair value of goodwill, which is compared to the carrying value of goodwill to determine if impairment exists. Our tests at September 30, 201725, 2021 show that the fair value of each of our reporting units with goodwill exceeded its carrying value. Therefore, no further analysis was required.  The inputs and assumptions used involve considerable management judgment and are based upon assumptions about expected future operating performance. Assumptions used in these forecasts are consistent with internal planning. The actual performance of the reporting units could differ from management’s estimates due to changes in business conditions, operating performance, economic conditions, competition, and consumer preferences. 

Licenses and rights, customer relationships and non-compete agreements are being amortized by the straight-line method over periods ranging from 32 to 20 years and amortization expense is reflected throughout operating expenses. Long-lived assets, including fixed assets and amortizing intangibles, are reviewed for impairment as events or changes in circumstances occur indicating that the carrying amount of the asset may not be recoverable. Indefinite lived intangibles are reviewed annually for impairment. Cash flow and sales analyses are used to assess impairment. The estimates of future cash flows and sales involve considerable management judgment and are based upon assumptions about expected future operating performance. Assumptions used in these forecasts are consistent with internal planning. The actual cash flows and sales could differ from management’s estimates due to changes in business conditions, operating performance, economic conditions, competition, and consumer preferences. 

Useful Lives of Intangible Assets - Most of our trade names and distribution rights which have carrying value have been assigned an indefinite life and are not amortized because we plan to receive the benefit from them indefinitely. If we decide to curtail or eliminate the use of any of the trade names or if sales that are generated from any particular trade name or distribution right do not support the carrying value of the trade name or distribution right, then we would record impairment or assign an estimated useful life and amortize over the remaining useful life.  Rights such as prepaid licenses and non-compete agreements are amortized over contractual periods. The useful lives of customer relationships are based on the discounted cash flows expected to be received from sales to the customers adjusted for an attrition rate. The loss of a major customer or declining sales in general could create an impairment charge.

Insurance Reserves - We have a self-insured medical plan which covers approximately 1,600 of our employees. We record a liability for incurred but not yet reported or paid claims based on our historical experience of claims payments and a calculated lag time period. We maintain a spreadsheet that includes claims payments made each month according to the date the claim was incurred. This enables us to have an historical record of claims incurred but not yet paid at any point in the past. We then compare our accrued liability to the more recent claims incurred but not yet paid amounts and adjust our recorded liability up or down accordingly. Our recorded liability at September 30, 201725, 2021 and September 24, 201626, 2020 was $2,382,000$1,791,000 and $1,719,000,$1,737,000 respectively. Considering that we have stop loss coverage of $200,000 for each individual plan subscriber, the general consistency of claims payments and the short time lag, we believe that there is not a material exposure for this liability. Because of the foregoing, we do not engage a third party actuary to assist in this analysis.

We self-insure, up to loss limits, worker’sworkers’ compensation, automobile and automobilegeneral liability claims. Accruals for claims under our self-insurance program are recorded on a claims-incurred basis. Under this program, the estimated liability for claims incurred but unpaid in fiscal years 20172021 and 20162020 was $2,900,000$5,300,000 and $1,900,000$3,700,000, respectively. Our total recorded liability for all years’ claims incurred but not yet paid was $8,100,000$14,500,000 and $8,200,000$12,800,000 at September 30, 201725, 2021 and September 24, 2016,26, 2020, respectively. We estimate the liability based on total incurred claims and paid claims adjusting for loss development factors which account for the development of open claims over time. We estimate the amounts we expect to pay for some insurance years by multiplying incurred losses by a loss development factor which is based on insurance industry averages and the age of the incurred claims; our estimated liability is then the difference between the amounts we expect to pay and the amounts we have already paid for those years. Loss development factors that we use range from 1.0 to 2.0. However, for some years, the estimated liability is the difference between the amounts we have already paid for that year and the maximum we could pay under the program in effect for that particular year because the calculated amount we expect to pay is higher than the maximum. For other years, where there are few claims open, the estimated liability we record is the amount the insurance company has reserved for those claims. We evaluate our estimated liability on a continuing basis and adjust it accordingly. Due to the multi-year length of these insurance programs, there is exposure to claims coming in lower or higher than anticipated; however, due to constant monitoring and stop loss coverage of $350,000 on individual claims, we believe our exposure is not material. Because of the foregoing, we do not engage a third party actuary to assist in this analysis. In connection with these self-insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At both September 30, 201725, 2021 and September 24, 2016,26, 2020, we had outstanding letters of credit totaling $8,675,000 and $8,675,000, respectively.$9,275,000.

Inventories - Inventories are valued at the lower of cost (determined by the first-in, first-out method) or market. We recognize abnormal amounts of idle facilities, freight, handling costs, and spoilage as charges of the current period. Additionally, we allocate fixed production overhead to inventories based on the normal capacity of our production facilities. We calculate normal capacity as the production expected to be achieved over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. This requires us to use judgment to determine when production is outside the range of expected variation in production (either abnormally low or abnormally high). In periods of abnormally low production (for example, periods in which there is significantly lower demand, labor and material shortages exist, or there is unplanned equipment downtime) the amount of fixed overhead allocated to each unit of production is not increased. However, in periods of abnormally high production the amount of fixed overhead allocated to each unit of production is decreased to assure inventories are not measured above cost.

Income Taxes - We account for our income taxes under the liability method. Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities.

Refer to Note A to the accompanying consolidated financial statements for additional information on our accounting policies.

RESULTS OF OPERATIONS:OPERATIONS:

Fiscal 2017 (53Year 2021 (52 weeks) Compared to Fiscal Year 20162020 (52 weeks)

Net sales increased $91,443,000,$122,541,000, or 9%12%, to $1,084,224,000$1,144,579,000 in fiscal 20172021 from $992,781,000$1,022,038,000 in fiscal 2016. Excluding2020. As parts of the economy that impact our operations continue to open, sales from the extra week in 2017, sales increased approximately 7% from 2016 to 2017.

Excluding sales from Hill & Valley, Inc., acquired in January 2017, an ICEE distributor located in the Southeast acquired in June 2017 and Labriola Bakery which was acquired in August 2017 and the extra week in 2017, sales increased approximately 3% for the year.year improved from a year ago.  Approximately 2/3 of the Company’s sales are to venues and locations that previously shut down or sharply curtailed their foodservice operations as a result of COVID-19. While the majority of these venues have re-opened, the extent of the future impact of COVID-19 on our operations depends on future developments of the virus and its effects which are uncertain at this point in time. As we have $305 million of cash and marketable securities on our balance sheet, we do not expect to have any liquidity issues, nor do we anticipate a material amount of our assets would be impaired.

We have three reportable segments, as disclosed in the accompanying notes to the consolidated financial statements: Food Service, Retail Supermarkets and Frozen Beverages.

The Chief Operating Decision Maker for Food Service, and Retail Supermarkets and the Chief Operating Decision Maker for Frozen Beverages reviews monthly review detailed operating income statements and sales reports in order to assess performance and allocate resourcesresources to each individual segment. Sales and operating income are the key variables monitored by the Chief Operating Decision MakersMaker and management when determining each segment’s and the company’sCompany’s financial condition and operating performance. In addition, the Chief Operating Decision Makers reviewMaker reviews and evaluateevaluates depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment.

FOOD SERVICE

Sales to food service customers increased $80,265,000$106,090,000, or 13%17%, to $701,794,000$724,983,000 in fiscal 2017. Excluding sales from the extra week in 2017, sales increased approximately 10% from 2016 to 2017. Excluding Hill & Valley and Labriola sales and the extra week in 2017, sales increased approximately 5% for the year.2021. Soft pretzel sales to the food service market increased 6%16% to $180,138,000$174,977,000 for the year with strong sales to restaurant chains and with sales increases and decreases throughout our customer base. Our new line of BRAUHAUS pretzels contributed to the increased sales. Excluding Labriola sales, soft pretzelyear. Frozen novelties sales increased 5%. Frozen juice bar and ices sales decreased $2,329,000,$9,429,000, or 4%27%, to $49,469,000$44,605,000 for the year due primarily to lower sales to warehouse club stores.year. Churro sales to food service customers were up 10%38% to $62,809,000$64,916,000 for the year with increased sales to restaurant chains and warehouse club stores.year. Sales of bakery products increased $56,839,000,$10,095,000, or 19%3%, to $342,609,000 for the year. Excluding Hill & Valley sales, bakery sales increased 7% for the year. Although sales increases and decreases were spread across our customer base, increased sales to two customers accounted for the entire sales increase, exclusive of Hill & Valley. Handheld sales to food service customers were up 35%110% to $36,913,000$75,627,000 in 2017 with sales increases to four customers accounting for about 75% of the increase.2021. Sales of funnel cake increased $780,000,$4,868,000, or 4%29% to $19,959,000 due primarily to increased sales to school food service and despite a sharp decline in sales to one restaurant chain. Overall food service sales to restaurant chains and school food service$21,491,000. Sales were strong for the year. Sales of new products in the first twelve months since their introduction were approximately $43 million for the year. Volume increases, including newup across all product sales and sales from acquired companies, accounted for virtually alllines as many of the food service sales increases. Price increases had a marginal impact on sales for the year. Operating income invenues and locations where our Food Service segment increased from $76,539,000 in 2016 to $81,208,000 in 2017 with primarily all of the increase coming in our fourth quarter because of strong sales of all product categories compared to last year’s fourth quarter and about $551,000 of operating income from Hill & Valley. Additionally, last year’s fourth quarter was impacted by roughly $1.5 million of costs related to certain bakery products are sold that were withdrawn from the market due to quality issues. Operating income for the 2017 year benefitted from a $1.8 million gain on insurance recovery recordedpreviously shut down or operating at reduced capacity in our third quarter related to last year’s product quality issues.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $1,658,0002020 have partially or 1% to $119,247,000fully re-opened in fiscal year 2017. Excluding sales from the extra week in 2017, sales decreased approximately 1/2 of 1 % from 2016 to 2017. Soft pretzel sales to retail supermarkets were $35,081,000 compared to $33,279,000 in 2016, an increase of 5%. About 3/4 of the pretzel sales increase was from sales of AUNTIE ANNE’S products, under a license agreement entered into this year. Sales of frozen juices and ices increased $2,401,000 or 3% to $71,325,000 primarily because of a reduction in trade spending which was higher than usual last year to introduce WHOLE FRUIT Organic juice tubes and new PHILLY SWIRL products and increased sales of the WHOLE FRUIT product line in general.  Coupon redemption costs, a reduction of sales, increased 11% to $4,898,000 for the year.  Handheld sales to retail supermarket customers decreased 3% to $14,892,000 for the year as sales of this product line in retail supermarkets continues its long-term decline. Sales of OREO churros, introduced last year, were approximately $2.5 million for the year compared to $4.0 million last year, with all of the decline in the fourth quarter.    2021.

Sales of new products in the first twelve months since their introduction were approximately $2.8$39 million for the year. Operating income in our Food Service segment increased from $6,458,000 in 2020 to $39,172,000 in 2021. The increase in operating income was primarily due to the increase in sales which improved margin efficiencies and expense leverage.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $7,732,000 or 4% to $184,897,000 in fiscal year 2021. Soft pretzel sales to retail supermarkets were $54,990,000, an increase of $5,833,000, or 12%, from sales in 2020.  Sales of frozen novelties increased $11,316,000 or 13% to $100,059,000.  Sales of biscuits and dumplings decreased 15% to $24,197,000 for the year.  Handheld sales to retail supermarket customers decreased 38% to $7,547,000 for the year.

Sales of new products in the first twelve months since their introduction were approximately $1 million in fiscal year 2017. Price increases were negligible in 2017.2021. Operating income in our Retail Supermarkets segment increased from $9,618,000$23,202,000 to $10,627,000$25,914,000 for the year primarily because of approximately $2.5 million ofdue to higher trade spending in 2016 for the introduction of WHOLE FRUIT Organic juice tubes, OREO churros, PILLSBURY mini dessert pies and several PHILLY SWIRL products.volume.

FROZEN BEVERAGES

FrozenTotal frozen beverage and related productsegment sales increased 4% to $263,183,000$234,699,000 in fiscal 2017. Excluding sales from the extra week in 2017,2021 and beverage sales increased approximately 2% from 2016 to 2017. Excluding the acquired ICEE distributor and the extra week in 2017, sales increased approximately 1%16% or $17,494,000 for the year. BeverageGallon sales alone increased 7% or $10,125,00016% from last year. Service revenue decreased 3% to $81,305,000 for the year primarily due to the loss of a major customer in October 2020. Machines revenue, primarily sales of machines, decreased from $33,986,000 in 2020 to $26,953,000 in 2021 due to lower sales volumes with increasesa major customer. Overall, sales in the frozen beverage segment grew as key amusement, convenience, restaurants, and decreases throughout our customer base. Gallon sales were up 6%retail venues returned to pre-COVID capacity in our base ICEE business, with sales increases spread throughout our customer base. Service revenue increased 5% to $74,594,000 forthe second half of the year, with sales increases and decreases spread throughout our customer base. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, decreased from $31,155,000offset a slower recovery in 2016 to $27,073,000 in 2017. the theater channel.

The estimated number of Company ownedCompany-owned frozen beverage dispensers was 25,00019,000 and 23,00027,000 at September 30, 201725, 2021 and September 24, 2016,26, 2020, respectively.  Operating income in ourOur Frozen Beverage segment decreased from $26,653,000had operating income of $6,132,000 in 20162021 compared to $26,272,000an operating loss of $12,466,000 in 20172020 primarily as a result of higher beverage sales volume due primarily to lower machine sales and higher payroll and payroll related costs.COVID-19 recovery during 2021.

CONSOLIDATED

Other than as commented upon above by segment, there are no material specific reasons for the reported sales increases or decreases. Sales levels can be impacted by the appeal of our products to our customers and consumers and their changing tastes, competitive and pricing pressures, sales execution, marketing programs, seasonal weather, customer stability and general economic conditions.

Gross profit as a percentage of sales decreasedincreased to 30.53%26.1% in 20172021 from 30.67%23.3% in 2016. Without the lower gross profit percentage of the Hill & Valley business, gross profit percentage would have been 30.82% in 2017. Gross profit percentage compared2020. The increase is largely attributable to the previous year benefitted from higher volumes throughout our businessbenefit of increased sales, favorable product mix and lower trade spending in our retail supermarket business but was negatively impacted by higher payroll and payroll related costs throughout our business. Additionally this year’s grosscorresponding margin percentage benefitted from the $1.8 million gain on insurance recovery in contrast to the additional $1.5 million of related costs in last year in our food service segment.efficiencies.

Total operating expenses increased $21,259,000$6,477,000 to $212,916,000$227,710,000 in fiscal 2017 and2021 but as a percentage of sales increaseddecreased to 19.64%19.9% of sales from 19.31%21.6% in 2016.2020. Operating expenses this year included $1,273,000 of intangible asset impairment charges and operating expenses in 2020 included $6,387,000 of plant shutdown impairment costs for the shutdown of one of our manufacturing plants. Marketing and selling expenses were 8.71% and 8.66decreased to 6.8% this year from 8.3% of sales in 2017 and 2016, respectively.2020 driven by effective investment of marketing dollars aligned with sales recovery. Distribution expenses as a percent of sales increased to 7.55%9.5% from 7.36%9.1% in 20172020 due in part to higher shippingrising freight and fuel costs. Administrative expenses were 3.40%3.5% and 3.25%3.6% of sales in 20172021 and 2016, respectively as we incur costs to upgrade our information systems.2020, respectively.

Operating income increased $5,297,000$54,024,000 or 5%314% to $118,107,000$71,218,000 in fiscal year 20172021 as a result of the aforementioned items.

Our investments generated before tax income of $5.3$2,815,000 million this year, updown from $4.1 million$4,356,000 last year. Last year’s income was reduced by realized lossesyear due to decreases in the amount of $661,000 on sales of investments.investments and lower interest rates.

Other expenses thisOur effective tax rate in our fiscal 2021 year include $1,070,000 of expenses incurred to acquire Hill & Valley,was 24.9%. Net earnings for the ICEE distributor and Labriola Bakery.    

The effective2020 year benefited from a reduction in income tax rate increasedexpense related to 35.2% from 35.0% last year. We expect thestate deferred taxes of approximately $2.2 million. Excluding this adjustment, our effective income tax rate for 2018 to be approximately 36%in our fiscal 2020 year was 25.0%.

Net earnings increased $3,199,000$37,302,000 or 4%204%, in the 53 weeks fiscal 20172021 to $79,174,000,$55,607,000, or $4.21$2.91 per diluted share, from $75,975,000,$18,305,000 or $4.05$0.96 per diluted share, in the 52 weeks fiscal 20162020 as a result of the aforementioned items.

There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.

Fiscal 2016 (52 weeks) Compared to Fiscal Year 2015 (52 weeks)

Net sales increased $16,525,000, or 2%, to $992,781,000 in fiscal 2016 from $976,256,000 in fiscal 2015.

We have three reportable segments, as disclosed in the accompanying notes to the consolidated financial statements: Food Service, Retail Supermarkets and Frozen Beverages.

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.

FOOD SERVICE

Sales to food service customers increased $4,894,000 or less than 1%, to $621,529,000 in fiscal 2016. Soft pretzel sales to the food service market increased 1% to $170,155,000 for the year with sales increases and decreases throughout our customer base. Soft pretzel sales to restaurant chains were about the same this year and last year. Frozen juice bar and ices sales decreased $2,656,000, or 5%, to $51,798,000 for the year due primarily to lower sales to two customers. Churro sales to food service customers were up 1% to $57,318,000 for the year with sales increases and decreases throughout our customer base. Sales of bakery products decreased $6,617,000, or 2%, for the year with sales to one customer down $7.0 million as the customer added a secondary supplier. Handheld sales to food service customers were up 26% to $27,427,000 in 2016 with sales increases to one customer accounting for about 80% of the increase. Sales of funnel cake increased $7,000,000, or 57% to $19,179,000 due primarily to increased sales to school food service and $4.0 million of sales to a new restaurant chain customer. Sales of new products in the first twelve months since their introduction were approximately $32 million for the year. Price increases accounted for approximately $5 million of sales for the year and net volume, including new product sales as defined above, was essentially unchanged from last year. Operating income in our Food Service segment increased from $75,286,000 in 2015 to $76,539,000 in 2016. Operating income for the year benefitted from lower marketing expenses, lower ingredient costs, significantly increased volume of our handhelds and funnel cake products, pricing and more favorable product mix and was hurt by higher group health insurance costs and lower volume of our frozen juices and ices and bakery products. However, operating income in the fourth quarter decreased from $23,665,000 in 2015 to $17,498,000 in 2016 primarily because of a 2% decline in sales and higher manufacturing expenses.  We anticipate that these issues will continue to affect us into the first quarter of fiscal year 2017. Additionally, approximately 1/4 of the decrease of $6,167,000 in operating income resulted from costs related to certain bakery products that were withdrawn from the market due to quality issues.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets decreased $5,788,000 or 5% to $117,589,000 in fiscal year 2016. Soft pretzel sales to retail supermarkets were $33,279,000 compared to $35,727,000 in 2015, a decrease of 7%. About 1/2 of the pretzel sales decline was due to the discontinuance of SUPERPRETZEL BAVARIAN Soft Pretzel bread which was introduced in 2015. Sales of frozen juices and ices decreased $3,250,000 or 5% to $68,924,000. Increased trade spending to introduce WHOLE FRUIT Organic juice tubes and new PHILLY SWIRL products and general declines in sales of our existing PHILLY SWIRL products accounted for all of the sales decline in frozen juices and ices.  PHILLY SWIRL sales were down primarily because of lower sales to a customer in Canada due to the stronger US dollar, lower sales to one warehouse club store which carried fewer SKUS this year and decreased sales to one retail supermarket customer of a product that is being discontinued.  Although sales were down for the year, PHILLY SWIRL sales were marginally higher in the fourth quarter.  Coupon redemption costs, a reduction of sales, which were higher in the first six months a year ago supporting the introduction of the SUPERPRETZEL BAVARIAN Soft Pretzel Bread, decreased 6% to $4,430,000 for the year.  Handheld sales to retail supermarket customers decreased 19% to $15,347,000 for the year.  Roughly 37% of the handhelds sales decline in the year resulted from increased trade spending to introduce PILLSBURY mini dessert pies.  The balance of the sales decline was spread over our customer base.  Sales of OREO churros, introduced this year, were approximately $4.0 million for the year, with about ½ of the sales coming in the fourth quarter.    

Sales of new products in the first twelve months since their introduction were approximately $8 million in fiscal year 2016. Price increases accounted for approximately $2 million of sales for the year but higher trade spending of $6 million and volume decreases of $2 million resulted in an overall sales decline of $5.7 million. Operating income in our Retail Supermarkets segment decreased from $11,020,000 to $9,618,000 for the year primarily because of approximately $2 million of increased trade spending related to the introduction of WHOLE FRUIT Organic juice tubes, OREO churros, PILLSBURY mini dessert pies and other new  products and lower soft pretzels and frozen juices and ices sales volume. However, operating income in the fourth quarter increased from $1,413,000 in 2015 to $1,793,000 in 2016 primarily because of a 4% increase in overall sales.

FROZEN BEVERAGES

Frozen beverage and related product sales increased 7% to $253,663,000 in fiscal 2016. Beverage sales alone increased 5% to $150,118,000 for the year with increases and decreases throughout our customer base. Gallon sales were up 6% in our base ICEE business, with sales to movie theaters accounting for about 3/4 of the increase. Service revenue increased 8% to $71,123,000 for the year with sales increases and decreases spread throughout our customer base. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, increased from $26,413,000 in 2015 to $31,155,000 in 2016. The estimated number of Company owned frozen beverage dispensers was 23,000 and 22,000 at September 24, 2016 and September 26, 2015, respectively. Operating income in our Frozen Beverage segment increased from $24,582,000 in 2015 to $26,653,000 in 2016 due primarily to higher sales in all areas of the business.

CONSOLIDATED

Other than as commented upon above by segment, there are no material specific reasons for the reported sales increases or decreases. Sales levels can be impacted by the appeal of our products to our customers and consumers and their changing tastes, competitive and pricing pressures, sales execution, marketing programs, seasonal weather, customer stability and general economic conditions.

Gross profit as a percentage of sales decreased to 30.67% in 2016 from 30.82% in 2015. Gross profit percentage benefitted from lower ingredient costs, pricing and increased food service handhelds and funnel cake business which was more than offset by higher costs in our frozen beverages business and increased trade spending related to the introduction of WHOLE FRUIT Organic juice tubes, OREO churros, PILLSBURY mini dessert pies and new PHILLY SWIRL products in our retail supermarket business, as well as by lower volume in most of our food service segment and in our retail supermarket business and the product withdrawal in our food service segment mentioned previously.

Total operating expenses increased $1,655,000 to $191,657,000 in fiscal 2016 and as a percentage of sales decreased to 19.31% of sales from 19.46% in 2015. Marketing expenses were 8.66% and 8.72% of sales in 2016 and 2015, respectively. Distribution expenses as a percent of sales decreased to 7.36% from 7.60% in 2015 due in part to lower fuel costs and shipping efficiencies. Administrative expenses were 3.25% and 3.16% of sales in 2016 and 2015, respectively. Other general expense of $281,000 this year compared to other general income of $207,000 in 2015.

Operating income increased $1,922,000 or 2% to $112,810,000 in fiscal year 2016 as a result of the aforementioned items.

Our investments generated before tax income of $4.1 million this year, up from $1.2 million last year as sales of our mutual fund investments, net of capital gain distributions, generated a realized loss of $598,000 this year compared to a realized loss of $3.9 million last year.   Although we recognized losses as we decreased our investments in mutual funds, our overall return on the mutual funds has been positive since we first made the investments in October 2012. We have reduced our investments in mutual funds over the past year to $13 million at September 2016 from $19 million at September 2015 and $128 million at September 2014. The remaining unrealized losses of $520,000 are spread over 4 funds with total fair market value of $12.5 million. The remaining mutual funds presently generate income of 4.9 % per year. We have invested $17 million in Fixed-to-Floating Perpetual Preferred Stock which generates fixed income to call dates in 2018, 2019 and 2025 and then income is based on a spread above LIBOR if the securities are not called. The annual yield from these investments is presently 5.5%, of which 70% is not subject to income tax. The mutual funds and the Fixed-to-Floating Perpetual Preferred Stock investment securities do not have contractual maturities; however, we classify them as long term assets as it is our intent to hold them for a period of over one year, although we may sell some or all of them depending on presently unanticipated needs for liquidity or market conditions. We have invested $103 million in corporate bonds which generate fixed income to maturity dates in 2017 through 2021, with $67 million maturing prior to the end of our fiscal year 2018. The bonds presently generate income of about 2.2% per year. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

The effective income tax rate decreased to 35.0% from 37.3% last year because the realized losses on sales of our mutual fund investments in 2015 and 2016 are not deductible as we do not have capital gains to offset the losses and our income tax expense for 2016 benefitted by $885,000 related to share base compensation (see Note A13).

Net investment after tax income for the year of $2.7 million, or $.14 per share, compared to last year’s net investment after tax loss of $516,000, or $.03 per share.

Net earnings increased $5,792,000 or 8%, in fiscal 2016 to $75,975,000, or $.32 per diluted share as a result of the aforementioned items.

There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.

RESULTS OF OPERATIONS:

Fiscal Year 2020 (52 weeks) Compared to Fiscal Year 2019 (52 weeks)

Net sales decreased $164,449,000, or 14%, to $1,022,038,000 in fiscal 2020 from $1,186,487,000 in fiscal 2019. Excluding sales from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020, sales decreased 15% for the year. Sales for our fourth quarter improved to being down approximately 19% from a year ago compared to being down 34% from a year ago in our third quarter as parts of the economy that impact our operations continue to open up. Approximately 2/3 of the Company’s sales are to venues and locations that have shut down or sharply curtailed their foodservice operations, and therefore we anticipate COVID-19 will continue to have a negative impact on our business. As we have $278 million of cash and marketable securities on our balance sheet, up from $267 million at March 28, 2020, we do not expect to have any liquidity issues, nor do we anticipate a material amount of our assets would be impaired.

FOOD SERVICE

Sales to food service customers decreased $117,094,000, or 16%, to $618,893,000 in fiscal 2020.  Soft pretzel sales to the food service market decreased 28% to $150,786,000 for the year. Frozen novelties sales decreased $8,496,000, or 19%, to $35,176,000 for the year.  Churro sales to food service customers were down 29% to $46,881,000 for the year.  Sales of bakery products decreased $26,506,000, or 7%, to $332,514,000 for the year.  Handheld sales to food service customers were up 14% to $36,088,000 in 2020 with sales of a new product to a warehouse club store customer accounting for all of the increase.  Sales of funnel cake decreased $8,170,000, or 33% to $16,623,000.  Sales were down across all product lines except handhelds as many of the venues and locations where our products are sold had been shut down or operated at reduced capacity for some or all of the third and fourth quarters due to COVID-19.

Sales of new products in the first twelve months since their introduction were approximately $5 million for the year. Operating income in our Food Service segment decreased from $76,546,000 in 2019 to $6,458,000 in 2020 primarily because of lower production and sales volume due to COVID-19. This year’s operating income was impacted by plant shutdown impairment costs of $6,387,000 for the shutdown of one of our manufacturing plants. We expect to reduce manufacturing overhead and distribution costs by about $7-8 million annually as a result of this plant closure. This year also included approximately $6 million of costs for employee safety and increased COVID-19 compensation as well as increased expense of about $3.5 million for accounts receivable allowances and inventory losses due to the impact of COVID-19 on some of our customers and on sales of some of our products.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $32,573,000 or 23% to $177,165,000 in fiscal year 2020. Soft pretzel sales to retail supermarkets were $49,157,000, an increase of $12,893,000, or 36%, from sales in 2019. Sales of frozen novelties increased $14,992,000 or 20% to $88,743,000. Sales of biscuits and dumplings increased 12% to $28,317,000 for the year. Coupon redemption costs, a reduction of sales, of $3,569,000 were down less than 1% from 2019. Handheld sales to retail supermarket customers increased 13% to $12,303,000 for the year. Sales were generally higher for all product lines as sales in the year ago periods were impacted by lost volume and placements due to the price increases implemented in last year’s first quarter and because of increased sales to supermarkets generally since mid-March 2020 due to COVID-19.

Sales of new products in the first twelve months since their introduction were approximately $1 million in fiscal year 2020. Operating income in our Retail Supermarkets segment increased from $10,460,000 to $23,202,000 for the year primarily due to higher volume.

FROZEN BEVERAGES

Total frozen beverage segment sales decreased 26% to $225,980,000 in fiscal 2020 and beverage sales decreased 38% or $64,816,000 for the year. Excluding sales from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020, total frozen beverage segment sales decreased 30% for the year and beverage sales decreased 45% for the year. Gallon sales were down 41% from last year exclusive of ICEE Distributors’ gallons. Service revenue decreased 3% to $83,420,000 for the year with sales increases and decreases spread throughout our customer base with additional sales to existing customers and to new customers to largely offset declines in sales business to customers due to COVID-19. Machines revenue, primarily sales of machines, decreased from $45,811,000 in 2019 to $33,986,000 in 2020 with the decrease due to two significant install projects during the prior fiscal year, as well as the slowdown due to COVID-19. Sales are down across all product lines as many of the venues and locations where our products are sold have been shut down or operating at reduced capacity for some or all of the third and fourth quarters due to COVID-19.

The estimated number of Company-owned frozen beverage dispensers was 27,000 and 26,000 at September 26, 2020 and September 28, 2019, respectively. Our Frozen Beverage segment had an operating loss of $12,466,000 in 2020 compared to operating income of $29,950,000 in 2019 primarily as a result of lower sales volume due to COVID-19. This year’s operating income was also impacted by relocation costs of our ICEE’s headquarters of $2.5 million.

CONSOLIDATED

Other than as commented upon above by segment, there are no material specific reasons for the reported sales increases or decreases. Sales levels can be impacted by the appeal of our products to our customers and consumers and their changing tastes, competitive and pricing pressures, sales execution, marketing programs, seasonal weather, customer stability and general economic conditions.

Gross profit as a percentage of sales decreased to 23.3% in 2020 from 29.5% in 2019. Gross profit percentage decreased because of lower volume in our food service and frozen beverages segments, higher costs related to production disruptions due to volume mix changes, expenses related to employee safety and increased COVID-19 compensation and increased cost compared to last year of about $4.5 million for the write-down and disposal of inventory.

Total operating expenses decreased $12,212,000 to $221,233,000 in fiscal 2020 but as a percentage of sales increased to 21.6% of sales from 19.7% in 2019. Operating expenses this year included $6,387,000 of plant shutdown impairment costs for the shutdown of one of our manufacturing plants. Marketing and selling expenses increased to 8.3% this year from 8.1% of sales in 2019. Distribution expenses as a percent of sales increased to 9.1% from 8.0% in 2019. Administrative expenses were 3.6% and 3.4% of sales in 2020 and 2019, respectively. The percentage increases mentioned above were because of the drop in sales (lower denominators) and our inability to reduce expenses in line with the decrease in sales because of fixed costs that do not fluctuate with sales.

Operating income decreased $99,762,000 or 85% to $17,194,000 in fiscal year 2020 as a result of the aforementioned items.

Our investments generated before tax income of $4,356,000 million this year, down from $7,741,000 last year due to decreases in the amount of investments and lower interest rates.

Other income in 2019 includes a $2.0 million payment received from a customer due to cancellation of production under a co-manufacturing agreement.

Net earnings in 2019 benefited from a reduction of approximately $900,000 in tax as the provision for the one-time repatriation tax under the Tax Cuts and Jobs Act recorded in 2018 was reduced as the amount recorded in 2018 was an estimate. Excluding the reduction in the provision for the one-time repatriation tax, our effective tax rate was 25.8% for 2019. Net earnings for the 2020 year benefited from a reduction in income tax expense related to state taxes of approximately $2.2 million. Excluding this benefit, our effective tax rate in our fiscal 2020 year was 25.0%.

Net earnings decreased $76,514,000 or 81%, in fiscal 2020 to $18,305,000, or $.96 per diluted share, from $94,819,000 or $5.00 per diluted share, in fiscal 2019 as a result of the aforementioned items.

There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.

RESULTS OF OPERATIONS

ACQUISITIONS

InOn October 2013,1, 2019, we acquired the assets of New York Pretzel, a manufacturer and distributor of soft pretzels selling primarilyICEE Distributors LLC, based in the northeast to foodservice and retail locations. This business had sales of about $4.3 million in our 2014 fiscal year included in the food service segment.

In May 2014, we acquired the stock of Philly’s Famous Water Ice, Inc. (PHILLY SWIRL). PHILLY SWIRL, located in Tampa, FL, produces frozen novelty products sold primarily to retail supermarket locations throughout the United States and to Canada with annual sales approximating $25 million. Sales of PHILLY SWIRL from the acquisition date to September 26, 2015 were $12.6 million and are included in the retail supermarket segment.

On December 30, 2016, we acquired Hill & Valley Inc., a premium bakery located in Rock Island, Illinois,Bossier City, Louisiana for approximately $31$45 million. Hill & Valley, with sales of over $45 million annually, is a manufacturer of a variety of pre-baked cakes, cookies, pies, muffinsICEE Distributors does business in Arkansas, Louisiana and other desserts selling to retail in-store bakeries.  Hill & Valley is a leading brand of Sugar Free and No Sugar Added pre-baked in-store bakery items. Additionally, Hill & Valley sustains strategic private labeling partnerships with retailers nationwide.Texas. Sales and operating income of Hill & Valley included in our 2017 fiscalICEE Distributors were $9.7 million and $2.4 million for the year operating results were $35,770,000 and $653,000, respectively.

On May 22, 2017, we acquired an ICEE distributor doing business in Georgia and Tennessee for approximately $11 million.ended September 25, 2021. Sales and operating income of ICEE Distributors were $11.4 million and $3.6 million for the acquired business included in our 2017 fiscal year operating results were $1,689,000 and $395,000, respectively. ended September 26, 2020.

On August 16, 2017,February 4, 2020, we acquired Labriola Baking Company, a premium bakerythe assets of breads and artisan soft pretzels locatedBAMA ICEE, based in Alsip, IllinoisBirmingham, Alabama for approximately $6$12 million. Labriola Bakery, with salesBAMA ICEE does business in Alabama and Georgia. Sales and operating income of approximately $17BAMA ICEE were $1.8 million annually, is a manufacturerand $0.5 million for the year ended September 25, 2021. Sales and operating income of pre-baked breads, rollsBAMA ICEE were $1.7 million and soft pretzels$0.6 million for retail in-store bakery and foodservice outlets nationwide. Sales of Labriola included in our 2017 fiscalthe year operating results were $2,061,000 with marginal operating income.ended September 26, 2020.

These acquisitions were accounted for under the purchase method of accounting, and their operations are included in the accompanying consolidated financial statements from their respective acquisition dates.

LIQUIDITY AND CAPITAL RESOURCES

Although there are many factors that could impact our operating cash flow, most notably net earnings, we believe that our future operating cash flow, along with our borrowing capacity, our current cash and cash equivalent balances and our investment securities is sufficient to satisfy our cash requirements over the next twelve months and beyond, as well as fund future growth and expansion. See Note C

As of September 25, 2021, we have 283,192,000 of Cash and Cash Equivalents, and $22,111,000 of Marketable Securities.

The Company’s material cash requirements include the following contractual and other obligations:

Purchase Commitments

Our most significant raw material requirements include flour, packaging, shortening, corn syrup, sugar, juice, cheese, chocolate, and a variety of nuts. We attempt to minimize the effect of future price fluctuations related to the purchase of raw materials primarily through forward purchasing to cover future manufacturing requirements, generally for periods from 1 to 12 months. As of September 25, 2021, we have approximately $78 million of such commitments. The purchase commitments do not exceed our financial statementsprojected requirements over the related terms and are in the normal course of business.

Leases

We have operating leases with initial noncancelable lease terms in excess of one year covering the rental of various facilities and equipment. Our operating leases include leases for a discussionreal estate from some of our investment securities.office and manufacturing facilities as well as manufacturing and non-manufacturing equipment used in our business. As of September 25, 2021, we have operating lease payment obligations of $66,324,000, with $14,994,000 payable within 12 months.

Fluctuations in the value of the Mexican and Canadian currencies and the resulting translation of the net assets of our Mexican and Canadian subsidiaries caused a decrease of $3,745,000$2,204,000 in accumulated other comprehensive loss in 2017,2021, an increase of $3,065,000$2,599,000 in accumulated other comprehensive loss in 20162020 and an increase of $5,389,000$909,000 in accumulated other comprehensive loss in 2015.2019. In 2017,2021, sales of the two subsidiaries were $31,001,000$20,754,000 as compared to $27,075,000$15,421,000 in 20162020 and $25,313,000$33,906,000 in 2015.2019. The fluctuation of sales over the periods presented is the result of COVID-19.

In our fiscal year ended September 30, 2017,28, 2019, we did not purchase any shares of our common stock.

In our fiscal year ended September 26, 2020, we purchased and retired 142,66565,648 shares of our common stock at a cost of $18,228,763. In our second quarter, we purchased and retired 12,926 shares at a cost of $1,682,342. In our third quarter, we purchased and retired 13,004 shares at a cost of $1,691,357. In our fourth quarter, we purchased and retired 116,735 shares at a cost of $14,855,064.   $8,972,292.

In our fiscal year ended September 24, 2016,25, 2021, we purchased and retired 141,700did not purchase any shares of our common stock at a cost of $15,265,019.stock.

In our fiscal year ended September 26, 2015, we purchased and retired 72,698 shares of our common stock at a cost of $8,011,118.

In November 2016, we entered into an amendment and modification to an amended and restated loan agreement with our existing banks which provides for up to a $50,000,000 revolving credit facility repayable in November 2021. The agreement contains restrictive covenants and requires commitment fees in accordance with standard banking practice. There were no outstanding balances under the facility at September 30, 201725, 2021 or at September 24, 2016.26, 2020. The significant financial covenants are:

We were in compliance with the financial covenants described above at September 30, 2017.25, 2021.

On November 16, 2021, we entered into an amendment and modification to the amended and restated loan agreement which extended the maturity of the revolving credit facility to December 16, 2021.

We self-insure, up to loss limits, certain insurable risks such as worker'sworkers’ compensation, automobile, and automobilegeneral liability claims. Accruals for claims under our self-insurance program are recorded on a claims-incurred basis. Under this program, the estimated liability for claims incurred but unpaid in fiscal years 20172021 and 20162020 was $2,900,000$5,300,000 and $1,900,000,$3,700,000, respectively. In connection with certain self-insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At both September 30, 201725, 2021 and September 24, 2016,26, 2020, we had outstanding letters of credit totaling $8,575,000 and $8,575,000, respectively.$9,275,000.

The following table presents our contractual cash flow commitments on long-term debt, operating leases and purchase commitments for raw materials and packaging. See Notes to the consolidated financial statements for additional information on our long-term debt and operating leases.

The purchase commitments do not exceed our projected requirements over the related terms and are in the normal course of business.

Fiscal 20172021 Compared to Fiscal 20162020

Cash and cash equivalents and marketable securities held to maturity and available for sale decreased $33,145,000increased $27,440,000 or 12%10%, to $241,243,000$305,303,000 from a year ago for reasons described below.

Accounts receivables, net increased $26,228,000,$36,352,000, or 27%29%, to $124,553,000$162,939,000 in 20172021 because of significantly higher sales in this year’s September month and timing of collections. Inventories

Inventory increased $14,584,000$14,237,000 or 16%13% to $103,268,000 in 2017$123,160,000 largely due to higherthe increase in sales this year and the need for additional inventory build for specific first quarter 2018in connection with the increased sales.

Prepaid expenses and other decreasedwas $7,498,000 compared to $3,936,000 from $13,904,000$17,087,000 last year, primarily because last year included $10,574,000 ofas prepaid income tax decreased by $13,697,000. Prepaid taxes in 2020 were higher, as a resultpayments in the first six months of adopting bonus tax depreciation.the year were based on pre-COVID expectations.

Net property, plant and equipment increased $43,368,000$5,571,000 to $227,581,000$267,187,000 because purchases of property, plant and equipment for the improvement and expansion of our manufacturing capabilities and frozen carbonated beverage business exceeded depreciation on existing assets and we acquired $10,273,000 of property plant and equipment in acquisitions.assets. Purchases of property, plant and equipment increaseddecreased slightly to $72,180,000$53,578,000 in 20172021 from $48,709,000$57,817,000 in 2016 due to several large projects across our manufacturing base to modernize our facilities to have state-of-the-art systems to produce high quality products, increase capacity and respond to customer requests.2020. We are continually looking for opportunities to invest in projects at our manufacturing facilities that have a financial payback on capital invested with the goal of improving efficiency and reducing operating costs.

Goodwill increased to $102,511,000 because of $16,069,000 acquired in acquisitions.

Other intangible assets, less accumulated amortization increased $19,453,000 to $61,272,000 as $23,293,000 was acquired in acquisitions during the year and $3,840,000 was amortized.

Marketable securities available for sale and held to maturity increaseddecreased by $16,545,000$59,943,000 to $150,281,000$22,111,000 as we continuedecreased our holdings of corporate bonds and available for sale securities primarily due to increase our income generating investments.the decline in interest rates.

Accounts Payables increased 17%32% to $72,729,000$96,789,000 from $62,026,000$73,135,000 in 2016. About 40% of the increase was at our acquired Hill & Valley business and the balance was due to general increase in business.

Accrued insurance liability increased 4% to $10,558,000 as our estimates for incurred but not yet paid claims under our group insurance and insurance liability programs increased from a year ago.

Accrued compensation expense increased 21% to $19,826,000 due to an increase in our employee base, a general increase in the level of pay rates and additional accrual because of the change in timing due to this year having 53 weeks.2020.

Dividends payable increased to $7,838,000$12,080,000 as our quarterly dividend payment increased to $.42/$0.633/share from $.39/$0.575/share.

Deferred income tax liabilities increased $14,519,000 to $62,705,000 from $48,186,000 because of increased liabilities related to depreciation of property and equipment, amortization of goodwill and other intangible assets and the addition of $6,632,000 of deferred tax liabilities as a result of purchase accounting for the Hill & Valley acquisition.

Common stock decreased $7,950,000 to $17,382,000 in 2017 because repurchases of our common stock of $18,229,000 exceeded increases totaling $10,279,000 from the exercise of incentive and nonqualified stock options, stock issued under our stock purchase plan for employees, stock issued under our deferred stock plan and share-based compensation expense.

Net cash provided by operating activities increased $4,124,000$9,356,000 to $125,349,000$101,499,000 in 20172021 primarily because of an increase in net earnings of $3,199,000, an increase of accounts payable and accrued liabilities of $9,521,000 compared to $3,888,000 in 2016, a decrease of $10,265,000 in prepaid expenses and other compared to an increase of prepaid expenses and other in 2016 of $7,386,000, as well as by higher depreciation of fixed assets of $3,675,000 in 2017 , all of which were partially offset by an increase ofin the investment in net working capital balances, predominantly related to accounts receivable of $20,370,000 in 2017 compared to a decrease of $3,571,000 in 2016 and an increase in inventories of $7,410,000 compared to an increase of $6,295,000 in 2016.receivable.

Net cash provided by investing activities increased $54,402,000 to $9,939,000 in 2021 from net cash used in investing activities increased $60,717,000of $44,463,000 in 2020 primarily due to $135,319,000 in 2017 from $74,602,000 in 2016 because$57,212,000 of paymentscash paid for purchases of companies netin 2020. In 2021, proceeds from the redemption and sales of marketable securities outpaced the cash acquired of $47,698,000 in 2017 compared to none in 2016 and increasedused on purchases of property, plant and equipment of $23,471,000 from 2016 to 2017. equipment.

Net cash used in financing activities decreased by $18,791,000 to a use of $37,573,000cash of $24,673,000 in 2016 increased2021 due to $42,213,000an increase in 2017 primarily becauseproceeds from the issuance of increased dividend payments of $2,336,000 and increasedcommon stock combined with having no repurchases of common stock in 2021. The net use of $2,964,000.cash in 2021 was due the payment of cash dividends outpacing the inflow of cash proceeds from the issuance of common stock.

In 2017,2021, the major variables in determining our net increase in cash and cash equivalents and marketable securities were our increase in net earnings, depreciation and amortization of fixed assets, changes in accounts receivable, and accounts payable purchases of companies,and accrued liabilities and changes in deferred tax liabilities, purchases of property, plant and equipment, and payments of cash dividend and the repurchase of common stock.dividends. Other variables which in the past have had a significant impact on our change in cash and cash equivalents and marketable securities are proceeds from borrowings and payments of long-term debt.  As discussed in results of operations, our net earnings may be influenced by many factors. Depreciation and amortization of fixed assets is primarily determined by past purchases of property, plant and equipment although it could be impacted by a significant acquisition. Purchases of property, plant and equipment are primarily determined by our ongoing normal manufacturing and marketing requirements but could be increased significantly for manufacturing expansion requirements or large frozen beverage customer needs. From time to time, we have repurchased common stock and we anticipate that we will do so again in the future. We are actively seeking acquisitions that could be a significant use of cash.  Although we have no long-term debt at September 30, 2017,25, 2021, we may borrow in the future depending on our needs.

Fiscal 2016 Compared to Fiscal 2015

Cash and cash equivalents and marketable securities held to maturity and available for sale increased $34,401,000, or 14%, to $274,388,000 from a year ago for reasons described below.

Accounts receivables, net decreased $4,324,000, or 4%, to $98,325,000 in 2016 because of lower sales in this year’s September month and timing of collections. Inventories increased $6,027,000 or 7% to $88,684,000 in 2016 due to sluggish September sales this year and changes in product mix.

Prepaid expenses and other increased to $13,904,000 from $6,557,000 last year due primarily to an increase in prepaid income taxes as a result of adopting bonus depreciation.

Net property, plant and equipment increased $12,159,000 to $184,213,000 because purchases of property, plant and equipment for the improvement and expansion of our manufacturing capabilities and frozen carbonated beverage business exceeded depreciation on existing assets. Purchases of property, plant and equipment were $48,709,000 in 2016 and $48,641,000 in 2015.

Goodwill remained at $86,442,000 because there was no goodwill acquired in acquisitions and no impairment charges.

Other intangible assets, less accumulated amortization decreased $4,000,000 to $41,819,000 due to amortization of $5,078,000 during the year, offset by $1,078,000 paid for the acquisition of the HEARTBAR brand in the food service segment.

Marketable securities available for sale and held to maturity increased by $27,438,000 to $133,736,000 as we reinvested proceeds from the 2015 sales of our mutual funds investments.

Accounts Payables increased 5% to $62,026,000 from $59,206,000.

Accrued insurance liability was essentially unchanged at $10,119,000 as our estimates for incurred but not yet paid claims under our group insurance and insurance liability programs remained about the same as at September 2015.

Accrued compensation expense increased 7% to $16,340,000 due to an increase in our employee base and a general increase in the level of pay rates.

Dividends payable increased to $7,280,000 as our quarterly dividend payment increased to $.39/share from $.36/share.

Deferred income tax liabilities increased $7,663,000 to $48,186,000 from $40,523,000 because of increased liabilities related to depreciation of property and equipment.

Other long-term liabilities include $354,000 of gross unrecognized tax benefits at September 24, 2016 and $334,000 at September 26, 2015.

Common stock decreased $6,321,000 to $25,332,000 in 2016 because repurchases of our common stock of $15,265,000 exceeded increases totaling $8,945,000 from the exercise of incentive and nonqualified stock options, stock issued under our stock purchase plan for employees, stock issued under our deferred stock plan and share-based compensation expense.

Net cash provided by operating activities increased $17,304,000 to $121,225,000 in 2016 primarily because of an increase in net earnings of $5,792,000, a reduction of accounts receivable of $3,571,000 in 2016 compared to an increase of $3,123,000 in 2015, an increase of accounts payable and accrued liabilities of $3,888,000 compared to $287,000 in 2015 and an increase in deferred income taxes of $7,700,000, as well as by higher depreciation of fixed assets of $2,180,000 in 2016.

Net cash used in investing activities increased $46,111,000 to $74,602,000 in 2016 from $28,491,000 in 2015 primarily because purchases of marketable securities, net of proceeds, was $28,562,000 in 2016 compared to proceeds from marketable securities, net of purchases, of $19,877,000, in 2015. We reduced our holdings of mutual funds in 2015 by $109 million.

Net cash used in financing activities of $29,745,000 in 2015 increased to $37,573,000 in 2016 primarily because of increased dividend payments of $2,369,000 and increased repurchases of common stock of $7,254,000.

In 2016, the major variables in determining our net increase in cash and cash equivalents and marketable securities were our net earnings, depreciation and amortization of fixed assets, changes in accounts receivable and accounts payable, purchases of property, plant and equipment, payments of cash dividend and the repurchase of common stock. Other variables which in the past have had a significant impact on our change in cash and cash equivalents and marketable securities are purchases of companies and proceeds from borrowings and payments of long-term debt. As discussed in results of operations, our net earnings may be influenced by many factors. Depreciation and amortization of fixed assets is primarily determined by past purchases of property, plant and equipment although it could be impacted by a significant acquisition. Purchases of property, plant and equipment are primarily determined by our ongoing normal manufacturing and marketing requirements but could be increased significantly for manufacturing expansion requirements or large frozen beverage customer needs.

Off –Balance Sheet Arrangements

The Company does not have anyhas off-balance sheet arrangements for operating leases and purchase commitments as of September 30, 2017.25, 2021.

Item 7A.Quantitative And Qualitative Disclosures About Market Risk

The following is the Company’sCompany’s quantitative and qualitative analysis of its financial market risk:

Interest Rate Sensitivity

The Company has in the past entered into interest rate swaps to limit its exposure to interest rate risk and may do so in the future if the Board of Directors feels that such non-trading purpose is in the best interest of the Company and its shareholders. As of September 30, 2017,25, 2021, the Company had no interest rate swap contracts.

Interest Rate Risk

At September 30, 2017,25, 2021, the Company had no long-term debt obligations.

Purchasing Risk

The Company’s most significant raw material requirements include flour, shortening, corn syrup, sugar, juice, cheese, chocolate, and a variety of nuts. The Company attempts to minimize the effect of future price fluctuations related to the purchase of raw materials primarily through forward purchasing to cover future manufacturing requirements, generally for periods from 1 to 12 months. Future contracts are not used in combination with forward purchasing of these raw materials. The Company’s procurement practices are intended to reduce the risk of future price increases, but also may potentially limit the ability to benefit from possible price decreases.

Foreign Exchange Rate Risk

The Company has not entered into any forward exchange contracts to hedge its foreign currency rate risk as of September 30, 2017,25, 2021, because it does not believe its foreign exchange exposure is significant.

Item 8.Financial Statements And Supplementary Data

The financial statements of the Company are filed under this Item 8, beginning on page F-1 of this report.         

Item 9.Changes In And Disagreements With Accountants OnAccounting And Financial Disclosure

None.

Item 9A. Controls And Procedures

Disclosure Controls and Procedures

We carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), as amended for financial reporting, as of September 30, 2017.25, 2021. Based on that evaluation, our chief executive officer and chief financial officer concluded that these controls and procedures are effective at a reasonable assurance level.

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the rules and forms of the SEC. These disclosure controls and procedures include, among other things, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the chief executive officer and chief financial officer and effected by the board of directors and management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2017.25, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control-Integrated Framework.

Based on our assessment, our management believes that, as of September 30, 2017,25, 2021, our internal control over financial reporting is effective. There have been no changes that occurred during our fourth quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our independent registered public accounting firm, Grant Thornton LLP, audited our internal control over financial reporting as of September 30, 2017.25, 2021. Their report, dated November 28, 2017,23, 2021, expressed an unqualified opinion on our internal control over financial reporting. That report appears in Item 15 of Part IV of this Annual Report on Form 10-K and is incorporated by reference to this Item 9A.

Item 9B.Other Information

There was no information required on Form 8-K during the quarter that was not reported.

PART III

Item 10.Directors, Executive Officers and Corporate Governance

The following is a list of the executive officers of the Company and their principal past occupations or employment. All such persons serve at the pleasure of the Board of Directors and have been elected to serve until the Annual Meeting of Shareholders on February 9, 201816, 2022 or until their successors are duly elected.

Gerald B. Shreiber is the founder of the Company and has served as its Chairman of the Board President, and Chief Executive Officer since its inception in 1971.1971 and as Chief Executive Officer and President until Dan Fachner was named Chief Executive Officer and President of the Company in May 2021, and May 2020, respectively. His term as a director expires in 2020.2025.

DennisPeter G. Moore joinedStanley became a director in 1983. Since November 1999 he has been the Chairman of the Board of Emerging Growth Equities, Ltd., an investment banking firm.

Sidney R. Brown became a director of the Company in 1984.2003. He served in various controllership functions prior to becomingis the Chief FinancialExecutive Officer of NFI Industries, Inc., a premier integrated supply chain solutions provider. Mr. Brown is also on the Board of FS Energy and Power Fund, a specialty finance company that invests primarily in June 1992. His term asincome-oriented securities of private energy-related companies. In addition, he is a member of the Board of Trustees of Cooper Health Systems.

Vincent A. Melchiorre became a director expires in 2022.

Robert M. Radano joined the Company in 19722013. He is Senior Vice President of Bimbo Bakeries USA since September 2010. From June 2007 to August 2010, Mr. Melchiorre was employed by J&J Snack Foods Corp. as Senior Vice President-Food Group. From May 2006 to June 2007 he was Senior Vice President, Bread and in May 1996 was named Chief Operating Officer of the Company. PriorRoll Business, George Weston Foods; from January 2003 to becoming Chief Operating Officer,April 2006 he was Senior Vice President, Sales responsible for national food service salesand Marketing at Tasty Baking Company and from June 1982 to December 2002 he was employed by Campbell Soup Company in various capacities, most recently Vice President of J & J.Marketing of Pepperidge Farm.

Marjorie S. Roshkoff joined the Company in February 2016 with more than 15 years of legal experience. In February 2017 she was appointed Vice President, In-House Counsel and Corporate Secretary. In this role, she oversees outside counsel and is responsible for the Company’s legal issues. Ms. Roshkoff became a director of the Company in 2020. In 2021, she was named General Counsel of the Company. Ms. Roshkoff is a daughter of Gerald B. Schreiber.

Dan Fachner has been an employee of ICEE-USA Corp.,The ICEE Company, which was acquired by the Company in May 1987, since 1979. He was named Senior Vice President of The ICEE Company in April 1994 and became President of ICEE in May 1997. On May 4, 2020, he was appointed President of J & J Snack Foods Corp. and on May 11, 2021, he was appointed Chief Executive Officer of J & J Snack Foods.

Gerard G. LawKen A. Plunk joined the Company in 1992.  He served in various manufacturing and sales management capacities prior to becomingSeptember 2020 as Senior Vice President Western Operations in 2009.  He was namedand Chief Financial Officer. Prior to his present position in 2011 in which he has responsibility for marketing, researchjoining the Company, Mr. Plunk held various senior positions with Walmart, Inc., The Home Depot and development and overseeing a number of the manufacturing facilities of J & J. The Coca-Cola Company.

Robert J. Pape joined the Company in 1998. He served in various sales and sales management capacities prior to becoming Senior Vice President Sales in 2010. Mr. Pape will be retiring effective January 3, 2022.

Lynwood Mallard joined the Company in March 2021 as Senior Vice President, Chief Marketing Officer. Prior to joining the Company, Mr. Mallard worked for Coca-Cola for almost 23 years and held various positions across Coca-Cola’s business segments. Mr. Mallard was most recently Vice President of Innovation for Coca-Cola’s Foodservice division.

Steve Every joined the Company in 2009 and in July 2021, was promoted to Chief Operating Officer, The ICEE Company. Since joining the Company, Mr. Every has served in a number of roles including sales, operations, service and international, most recently as SVP-Sales.

Portions of the information concerning directors and executive officers, appearing under the captions “Information Concerning Nominees For Election To Board” and “Information Concerning Continuing Directors And Executive Officers” and information concerning Section 16(a) Compliance appearing under the caption “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Company’sCompany’s Proxy Statement filed with the SEC in connection with the Annual Meeting of Shareholders to be held on February 9, 201816, 2022 (“20172021 Proxy Statement”) is incorporated herein by reference.

Portions of the information concerning the Audit Committee, the requirement for an Audit Committee Financial Expert and the Nominating Committee in the Company’s 20172021 Proxy Statement filed with the SEC in connection with the Annual Meeting of Shareholders to be held on February 9, 201816, 2022 is incorporated herein by reference.

The Company has adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, which applies to the Company’s principal executive officer and senior financial officers. The Company has also adopted a Code of Business Conduct and Ethics which applies to all employees. The Company will furnish any person, without charge, a copy of the Code of Ethics upon written request to J & J Snack Foods Corp., 6000 Central Highway, Pennsauken, New Jersey 08109, Attn: Marjorie S. Roshkoff, Esq. A copy of the Code of Ethics can also be found on our website at www.jjsnack.com.www.jjsnack.com. Any waiver of any provision of the Code of Ethics granted to the principal executive officer or senior financial officer may only be granted by a majority of the Company’s disinterested directors. If a waiver is granted, information concerning the waiver will be posted on our website www.jjsnack.com for a period of 12 months.

Item 11.Executive Compensation

Information concerning executive compensation appearing in the Company’s 20172021 Proxy Statement under the caption “Management Remuneration” is incorporated herein by reference.

Item 12.Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters

Information concerning the security ownership of certain beneficial owners and management appearing in the Company’s 20172021 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” is incorporated herein by reference.

The following table details information regarding the Company’s existing equity compensation plans as of September 30, 2017.25, 2021.

Column A includes 704,000173,000 from stock option plans that have beenwere replaced subsequent to September 30, 2017. Those plans have been replaced by a plan, subject to shareholder approvalapproved by shareholders in February 2018, that has 800,000174,000 shares available for future issuance as of the date of this Form 10-K.

Item 13.Certain Relationships And Related Transactions, and Director Independence

Information concerning the Certain Relationships and Related Transactions, and Director Independence in the Company’s 20172021 Proxy Statement is incorporated herein by reference.

Item 14.         Principal AccountingAccountant Fees And Services

Information concerning the Principal Accountant Fees and Services in the Company’s 20172021 Proxy Statement is incorporated herein by reference.

PART IV

Item 15.Exhibits, Financial Statement Schedules

(1)     Financial Statements

The financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements and Financial Statements Schedule on page F-1.

(2)     Financial Statement Schedule – Page S-1

Schedule II – Valuation and Qualifying Accounts

All other schedules are omitted either because they are not applicable or because the information required is contained in the financial statements or notes thereto.

(b)  

3.1

Amended and Restated Certificate of Incorporation filed February 28, 1990 (Incorporated by reference from the Company’sCompany’s Form 10-Q dated May 4, 1990).

3.2

Revised Bylaws adopted November 19, 2013 (Incorporated by reference from the Company’sCompany’s Form 10-K dated November 26, 2013).

4.3

Amended and Restated Loan Agreement dated December 1, 2006 by and among J & J Snack Foods Corp. and Certain of its Subsidiaries and Citizens Bank of Pennsylvania, as Agent (Incorporated by reference from the Company’sCompany’s Form 10-K dated December 6, 2006).

4.4

First Amendment and Modification to AmendmentAmended and Restated Loan Agreement (Incorporated by reference from the Company’s Form 10-K dated December 7, 2011).

4.5

Fourth Amendment and Modification to AmendmentAmended and Restated Loan Agreement.Agreement (Incorporated by reference from the Company'sCompany’s Form 10-K dated November 21, 2016).

4.6**

Fifth Amendment and Modification to Amended and Restated Loan Agreement

10.1*
J & J Snack Foods Corp. Amended and Restated Long-Term Incentive Plan (Incorporated by referenced from the Company’s Form 8-K filed on February 12, 2021).

10.2*

J & J Snack Foods Corp. Stock Option Plan (Incorporated by reference from the Company’s Definitive Proxy Statement dated December 21, 2011)22, 2017).

10.8*10.3*

J & J Snack Foods Corp. Employee Stock Purchase Plan (Incorporated by reference from the Company’s Form S-8 dated May 16, 1996).

10.4*
Inducement Restricted Stock Award Agreement (Incorporated by reference from the Company’s Form 8-K filed on October 26, 2020.

14.1

Code of Ethics Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 (Incorporated by reference from the Company’s 10-Q dated July 20, 2004).

21.1^**

Subsidiaries of J & J Snack Foods Corp.

23.1^**

Consent of Independent Registered Public Accounting Firm.

31.1^***

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2^**

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1^**

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002.

32.2^**

Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002.

101101****

The following financial information from J&J Snack Foods Corp.'s's Form 10-K for the year ended September 30, 2017,25, 2021, formatted in XBRL (eXtensibleiXBRL (Inline extensible Business Reporting Language):

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_____________

*Compensatory Plan

**Filed Herewith

SIGNATURES

Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

J & J SNACK FOODS CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND FINANCIAL STATEMENT SCHEDULE

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

J&J Snack Foods Corp. and Subsidiaries

Opinion on internal control over financial reporting

We have audited the accompanying consolidated balance sheetsinternal control over financial reporting of J&J Snack Foods Corp. (a New Jersey corporation) and subsidiaries (the “Company”) as of September 30, 2017 and September 24, 2016, and the related consolidated statements of earnings, comprehensive income, changes in shareholders’ equity, and cash flows for each of the three fiscal years in the period ended September 30, 2017 (53 weeks, 52 weeks and 52 weeks, respectively). Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a) (2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We have also audited the internal control over financial reporting of the Company as of September 30, 2017,25, 2021 based on criteria established in the 2013 Internal Control—Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 25, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended September 25, 2021, and our report dated November 23, 2021 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our auditsaudit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. AnOur audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. An audit of internal control over financial reporting includesincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerconsidered necessary in the circumstances. We believe that our audits provideaudit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’scompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2017 and September 24, 2016, and the results of its operations and its cash flows for each of the three fiscal years in the period ended September 30, 2017 (53 weeks, 52 weeks and 52 weeks, respectively) in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

/s/GRANT THORNTON LLP

Philadelphia, Pennsylvania

November 28, 201723, 2021

J & J SNACK FOODS CORP. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF EARNINGS 
(in thousands, except per share information)