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4

5

6

7

~~J&J SNACK FOODS CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(Unaudited)~~

~~(in thousands)~~

Three months ended

December 30,

December 24,

2017

2016

Net Earnings
$ 36,249 $ 13,540

Foreign currency translation adjustments
(3,887 ) (1,104 )
Unrealized holding loss on marketable securities
(110 ) (103 )

Total Other Comprehensive Loss
(3,997 ) (1,207 )

Comprehensive Income
$ 32,252 $ 12,333

~~The accompanying notes are an integral part of these statements.~~

~~J & J SNACK FOODS CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited) (in thousands)~~

Three months ended

December 30,

December 24,

2017

2016

Operating activities:

Net earnings
$ 36,249 $ 13,540
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation of fixed assets
11,152 8,728
Amortization of intangibles and deferred costs
834 1,183
Share-based compensation
953 748
Deferred income taxes
(18,265 ) (74 )
Loss on sale of marketable securities
(8 ) -
Other
(317 ) 222
Changes in assets and liabilities net of effects from purchase of companies

Decrease in accounts receivable
14,547 5,849
Increase in inventories
(9,933 ) (6,727 )
Decrease in prepaid expenses
111 5,747
Decrease in accounts payable and accrued liabilities
(9,216 ) (2,816 )
Net cash provided by operating activities
26,107 26,400
Investing activities:

Purchases of property, plant and equipment
(14,623 ) (11,399 )
Purchases of marketable securities
(30,865 ) (8,550 )
Proceeds from redemption and sales of marketable securities
19,096 475
Proceeds from disposal of property and equipment
1,046 645
Other
27 (20 )
Net cash used in investing activities
(25,319 ) (18,849 )
Financing activities:

Payments to repurchase common stock
- -
Proceeds from issuance of stock
253 980
Payments on capitalized lease obligations
(90 ) (90 )
Payment of cash dividend
(7,838 ) (7,280 )
Net cash used in financing activities
(7,675 ) (6,390 )
Effect of exchange rate on cash and cash equivalents
(2,986 ) (847 )
Net (decrease)increase in cash and cash equivalents
(9,873 ) 314
Cash and cash equivalents at beginning of period
90,962 140,652
Cash and cash equivalents at end of period
$ 81,089 $ 140,966

~~The accompanying notes are an integral part of these statements.~~

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1

The accompanying unaudited ~~Consolidated Financial Statements~~consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form ~~10-Q~~10-Q and Rule ~~10-01~~10-01 of Regulation ~~S-X.~~S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form ~~10-K~~10-K for the year ended September ~~30, 2017.~~26, 2020.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position and the results of operations and cash flows.

The results of operations for the three and six months ended March 27, 2021 and March 28, 2020 are not necessarily indicative of results for the full year. Sales of our frozen beverages and frozen juice bars and ices are generally higher in the third and fourth quarters due to warmer weather. Also, approximately 2/3 of our sales are to venues and locations that have shut down or sharply curtailed their foodservice operations as a result of COVID-19 resulting in a negative impact on our business. Capacity at the venues started to improve towards the end of the second quarter, but the extent of future impacts on our business from COVID-19 is dependent on developments to control the virus which is still uncertain at this point in time.

While we believe that the disclosures presented are adequate to make the information not misleading, we suggest that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 26, 2020.

8

Note 2

~~The results of operations for the three~~ months ended December 30, 2017 and December 24, 2016 are not necessarily indicative of results for the full year. Sales of our frozen beverages and frozen juice bars and ices are generally higher in the third and fourth quarters due to warmer weather.

While we believe that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes included in the Company~~’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017.~~Revenue Recognition

~~Note 2~~

WeWhen 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 liabilities 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 our~~for 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.

9

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. ~~Repair~~We review and ~~maintenance equipment service revenue is~~update our estimates and related accruals of variable consideration each period based on historical experience. Our recorded when it is performed provided the customer terms are that the customer is to be charged on a time and material basis or on a straight-line basis over the term 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 determinable and collectability is reasonably assured. We record offsets to revenueliability for allowances, end-user pricing adjustments and trade spending ~~coupon redemption costs~~ was $16,035,000 at March 27, 2021 and ~~returned product. Customers generally do not have the right to return product unless it is damaged or defective.~~ $14,345,000 at September 26, 2020.

Warranties & Returns

We provide ~~an allowance for doubtful receivables after taking into consideration historical experience~~all customers with a standard or assurance type warranty. Either stated or implied, we provide assurance the related products will comply with all agreed-upon specifications and other ~~factors. The allowance~~warranties provided under the law. No services beyond an assurance warranty are provided to our customers.

We do not grant a general right of return. However, customers may return defective or non-conforming products. Customer remedies may include either a cash refund or an exchange of the product. We do not estimate a right of return and related refund liability as returns of our products are rare.

Contract Balances

Our customers are billed for ~~doubtful receivables was $458,000~~service contracts in advance of performance and ~~$359,000 at December 30, 2017 and September 30, 2017, respectively.~~therefore we have contract liabilities on our balance sheet as follows:

	(in thousands)
	Three months ended						Six months ended
	March 27,			March 28,			March 27,			March 28,
	2021			2020			2021			2020
Beginning Balance	$	1,716		$	1,094		$	1,327		$	1,334
Additions to contract liability	$	1,201			1,474			2,945			2,749
Amounts recognized as revenue	$	(1,827	)		(1,333	)		(3,182	)		(2,848	)
Ending Balance	$	1,090		$	1,235		$	1,090		$	1,235

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Disaggregation of Revenue

See Note 9 for disaggregation of our net sales by class of similar product and type of customer.

Allowance for Doubtful Receivables

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 requires companies to recognize 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 consolidated 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 factors including the age of receivable balances, the history of losses, expectations of future credit losses and the customers’ ability to pay off obligations. The allowance for doubtful receivables was $1,381,000 and $1,388,000 on March 27, 2021 and September 26, 2020, respectively.

Note 3

Depreciation of equipment and buildings is provided for by the straight-line method over the assets’ estimated useful lives. Amortization of improvements is provided for by the straight-line method over the term of the lease or the assets’ estimated useful lives, whichever is shorter. Licenses and rights, customer relationships and non-compete agreements arising from acquisitions are amortized by the straight-line method over periods ranging from 32 to 20 years. Depreciation expense was ~~$11,152,000~~$11,984,000 and ~~$8,728,000~~$12,923,000 for the three months ended ~~December 30, 2017~~ March 27, 2021 and ~~December 24, 2016,~~ March 28, 2020, respectively and $24,253,000 and $24,810,000 for the six months ended March 27, 2021 and March 28, 2020, respectively.

11

Note 4

Basic earnings per common share (EPS) excludes dilution and is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted EPS takes into consideration the potential dilution that could occur if securities (stock options) or other contracts to issue common stock were exercised and converted into common stock. Our calculation of EPS is as follows:

	Three Months Ended December 30, 2017							Three Months Ended March 27, 2021
	Income		Shares		Per Share			Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount			(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)							(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	36,249		18,666	$	1.94		$	6,061		19,006	$	0.32

Effect of Dilutive Securities
Options		-		112		(0.01	)		0		124		0

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	36,249		18,778	$	1.93		$	6,061		19,130	$	0.32

~~1,000~~163,072 anti-dilutive shares have been excluded in the computation of EPS for the three months ended ~~December 30, 2017.~~March 27, 2021

	Six Months Ended March 27, 2021
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	7,839		18,971	$	0.41

Effect of Dilutive Securities
Options		0		110		0

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	7,839		19,081	$	0.41

184,672 anti-dilutive shares have been excluded in the computation of EPS for the six months ended March 27, 2021

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	Three Months Ended March 28, 2020
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	7,309		18,921	$	0.39

Effect of Dilutive Securities
Options		0		93		(0.01	)

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	7,309		19,014	$	0.38

180,258 anti-dilutive shares have been excluded in the computation of EPS for the three months ended March 28, 2020

	Six Months Ended March 28, 2020
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	24,368		18,910	$	1.29

Effect of Dilutive Securities
Options		0		169		(0.01	)

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	24,368		19,079	$	1.28

180,258 anti-dilutive shares have been excluded in the computation of EPS for the six months ended March 28, 2020

Three Months Ended December 24, 2016

Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(in thousands, except per share amounts)

Basic EPS

Net Earnings available to common stockholders
$ 13,540 18,686 $ 0.72

Effect of Dilutive Securities

Options
- 101 -

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions
$ 13,540 18,787 $ 0.72

Note 5

At ~~December 30, 2017,~~ March 27, 2021, the Company has three stock-based employee compensation plans. Share-based compensation expense ~~(benefit)~~ was recognized as follows:

	Three months ended
	December 30,		December 24,
	2017		2016			Three months ended				Six months ended
	(in thousands, except per share amounts)					March 27,		March 28,		March 27,		March 28,
						2021		2020		2021		2020

Stock Options	$	615	$	(211	)	$	447	$	412	$	993	$	1,377
Stock purchase plan		200		174			64		69		342		271
Stock issued to an outside director							22		33		22		33
Restricted stock issued to an employee		1		1			47		0		47		0
Total share-based compensation	$	816	$	(36	)	$	580	$	514	$	1,404	$	1,681

The above compensation is net of tax benefits	$	137	$	783		$	446	$	620	$	866	$	751

~~The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted average assumptions used for grants in fiscal 2018 first three months: expected volatility of 16.8%; risk-free interest rate of 2.1%; dividend rate of 1.2% and expected lives of 5 years.~~

~~During the~~ ~~fiscal year 2018 three month period, the Company granted 1,500 stock options. The weighted-average grant date fair value of these options was $23.14.~~

~~During the~~ ~~fiscal year 2017 three month period, the Company granted 300 stock options. The weighted-average grant date fair value of these options was $15.15.~~

~~Expected volatility is based on the~~ historical volatility of the price of our common shares over the past 50 months for 5 year options and 10 years for 10 year options. We use historical information to estimate expected life and forfeitures within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation cost is recognized using a straight-line method over the vesting or service period and is net of estimated forfeitures.

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The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted average assumptions used for grants in fiscal 2021six months: expected volatility of 25.8%; risk-free interest rate of 0.5%; dividend rate of 1.5% and expected lives of 51 months.

During the fiscal year 2021six-month period, the Company granted 300 stock options. The weighted-average grant date fair value of these options was $29.54.

During the fiscal year 2020six-month period, the Company granted 1,300 stock options. The weighted-average grant date fair value of these options was $24.67.

Expected volatility is based on the historical volatility of the price of our common shares over the past 51 months for 5-year options and 10 years for 10-year options. We use historical information to estimate expected life and forfeitures within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation cost is recognized using a straight-line method over the vesting or service period and is net of estimated forfeitures.

Note 6

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 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.

Additionally, we recognize a liability for income taxes and associated penalties and interest for tax positions taken or expected to be taken in a tax return which are more likely than not to be overturned by taxing authorities (“uncertain tax positions”). We have not recognized a tax benefit in our financial statements for these uncertain tax positions.

The total amount of gross unrecognized tax benefits is $343,000 and $360,000 on March 27, 2021 and September 26, 2020, respectively, all of which would impact our effective tax rate over time, if recognized. We recognize interest and penalties related to uncertain tax positions as a part of the provision for income taxes. As of March 27, 2021, and September 26, 2020, the Company has $267,000 of accrued interest and penalties.

14

In addition to our federal tax return and tax returns for Mexico and Canada, we file tax returns in all states that have a corporate income tax with virtually all open for examination for three to four years.

Additionally, we recognize a liability for income taxes and associated penalties and interest for tax positions taken or expected to be taken in a tax return which are more likely than not to be overturned by taxing authorities (“uncertain tax positions”)
Our effective tax rate for the six months ended March 27, 2021 was 20%, primarily due to a $866,000 tax benefit related to share-based compensation. Our effective tax rate for the six months ended March 28, 2020 was 28%. ~~We have not recognized a tax benefit in our financial statements for these uncertain tax positions.~~
~~The total amount of gross unrecognized tax benefits is~~ $379,000 and $374,000 on December 30, 2017 and September 30, 2017, respectively, all of which would impact our effective tax rate over time, if recognized. We recognize interest and penalties related to uncertain tax positions as a part of the provision for income taxes. As of December 30, 2017 and September 30, 2017, respectively, the Company has $244,000 and $239,000 of accrued interest and penalties.

In addition to our federal tax return and tax returns for Mexico and Canada, we file tax returns in all states that have a corporate income tax with virtually all open for examination for three to four years.
~~Net earnings for the current year quarter benefited from a $20.9 million, or $1.11 per diluted share, gain on the remeasurement of deferred tax liabilities and a $~~2.0 million, or $0.11 per diluted share, reduction in income taxes related primarily to the lower corporate tax rate enacted under the Tax Cuts and Jobs Act in December 2017. Net earnings were impacted by a $1.2 million, or $.06 per diluted share, provision for the one time repatriation tax required under the new tax law. Excluding the deferred tax gain and the one time repatriation tax, our effective tax rate decreased to 28.6% from 34.0% in the prior year quarter reflecting the reduction in the federal statutory rate to 21% from 35% for the remaining three quarters of fiscal 2018. The gain on the remeasurement of deferred tax liabilities and the one time repatriation tax are preliminary estimates.
~~On December 22, 2017, the SEC issued guidance under Staff~~ Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. In accordance with SAB 118, the estimated income tax net benefit of $21.7 million represents our best estimate based on interpretation of the U.S. legislation as we are still accumulating data to finalize the underlying calculations, or in certain cases, the U.S. Treasury is expected to issue further guidance on the application of certain provisions of the U.S. legislation. In accordance with SAB 118, the additional estimated income tax net benefit of $21.7 million is considered provisional and will be finalized before December 22, 2018.

Note 7

In ~~May 2014 and in subsequent updates,~~ June 2016, the FASB issued ~~guidance~~ASU 2016-13,Measurement of Credit Losses on ~~revenue recognition~~Financial Instruments, which ~~requires that we~~changes the impairment model used to measure credit losses for most financial assets. We are required to recognize ~~revenue to depict the transfer of promised goods or services to customers in~~ an ~~amount~~allowance that reflects the ~~consideration which we expect~~Company’s current estimate of credit losses expected to be ~~entitled in exchange for those goods or services. We have performed a review~~incurred over the life of the ~~requirements of the new revenue standard~~financial asset, including trade receivables and ~~are~~held-to-maturity debt securities.

The Company adopted this guidance in the ~~process~~first quarter of reviewing customer contracts and applying the five-step model of this new guidance to each contract category we have identified and will compare the results to our current accounting practices. We plan to adopt this guidance on the first day of our fiscal 2019 year. We will applyFiscal 2021 using the modified retrospective transition ~~method, which would result in an adjustment to retained earnings for~~method. The adoption of ASU 2016-13 did not have a material impact on the ~~cumulative effect, if any, of applying the standard to contracts in process as~~Company’s consolidated financial statements.

Note 8

Inventories consist of the adoption date. Under this method, we would not restate the prior financial statements presented. Therefore, this guidance would require additional disclosures of the amount by which each financial statement line item is affected in the fiscal year 2019 reporting period. ~~Our analysis indicates that the impact of this guidance on our consolidated financial statements will not be material.~~ following:

~~In January 2016,~~ the FASB issued guidance which requires an entity to measure equity investments at fair value with changes in fair value recognized in net income, to use the price that would be received by a seller when measuring the fair value of financial instruments for disclosure purposes, and which eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. Under present guidance, changes in fair value of equity investments are recognized in Stockholders’ Equity. This guidance is effective for our fiscal year ended September 2019. Early adoption is not permitted. We do not anticipate that the adoption of this new guidance will have a material impact on our consolidated financial statements.

~~In February 2016, the FASB issued guidance on lease accounting which requires that an entity recognize most leases on its balance sheet.~~ The guidance retains a dual lease accounting model for purposes of income statement recognition, continuing the distinction between what are currently known as “capital” and “operating” leases for lessees. This guidance is effective for our fiscal year ended September 2020. While we continue to evaluate the effect of adopting this guidance on our consolidated financial statements and related disclosures, we expect our operating leases, will be subject to the new standard. We will recognize right-of-use assets and operating lease liabilities on our consolidated balance sheets upon adoption, which will increase our total assets and liabilities. We anticipate that the impact of this guidance on our financial statements will be material.

	March 27,		September 26,
	2021		2020
	(unaudited)
	(in thousands)

Finished goods	$	41,803	$	40,184
Raw materials		28,066		24,550
Packaging materials		12,069		10,545
Equipment parts and other		33,652		33,644
Total Inventories	$	115,590	$	108,923

Note 8

~~Inventories consist of the following:~~

December 30,

September 30,

2017

2017

(unaudited)

(in thousands)

Finished goods
$ 51,808 $ 45,394
Raw materials
25,291 22,682
Packaging materials
9,765 8,833
Equipment parts and other
26,185 26,359
Total Inventories
$ 113,049 $ 103,268

~~Note~~ 9

We principally sell our products to the food service and retail supermarket industries. Sales and results of our frozen beverages business are monitored separately from the balance of our food service business because of different distribution and capital requirements. We maintain separate and discrete financial information for the three operating segments mentioned above which is available to our Chief Operating Decision Makers.

Our three reportable segments are Food Service, Retail Supermarkets and Frozen Beverages. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income. These segments are described below.

~~Food Service~~

~~The primary products sold by the food service group are soft pretzels, frozen juice treats and desserts,~~ churros, dough enrobed handheld products and baked goods. Our customers in the food service industry include snack bars and food stands in chain, department and discount stores; malls and shopping centers; fast food outlets; stadiums and sports arenas; leisure andtheme parks; convenience stores; movie theatres; warehouse club stores; schools, colleges and other institutions. Within the food service industry, our products are purchased by the consumer primarily for consumption at the point-of-sale.

~~Retail Supermarkets~~

~~The primary products sold to the retail supermarket channel are soft pretzel products~~ – including SUPERPRETZEL, frozen juice treats and desserts including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars and sorbet, PHILLY SWIRL cups and sticks, ICEE Squeeze-Up Tubes and dough enrobed handheld products including PATIO burritos. Within the retail supermarket channel, our frozen and prepackaged products are purchased by the consumer for consumption at home.

~~Frozen Beverages~~

~~We sell frozen beverages and related products to the food service industry primarily under the names ICEE,~~ ~~SLUSH PUPPIE and PARROT ICE in the United States, Mexico and Canada. We also provide repair and maintenance service to customers for customers’ owned equipment.~~

~~The Chief Operating~~ Decision Maker for Food Service and Retail Supermarkets and the Chief Operating Decision Maker for Frozen Beverages monthly review detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales and operating income are key variables monitored by the Chief Operating Decision Makers and management when determining each segment’s and the company’s financial condition and operating performance. In addition, the Chief Operating Decision Makers review and evaluate depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. Information regarding the operations in these three reportable segments is as follows:

Three months ended

December 30,

December 24,

2017

2016

(unaudited)

(in thousands)
Sales to External Customers:

Food Service

Soft pretzels
$ 50,131 $ 41,494
Frozen juices and ices
7,184 7,479
Churros
14,592 14,438
Handhelds
10,252 7,479
Bakery
94,933 75,279
Other
5,172 4,128
Total Food Service
$ 182,264 $ 150,297

Retail Supermarket

Soft pretzels
$ 10,512 $ 8,944
Frozen juices and ices
9,727 9,851
Handhelds
3,026 3,450
Coupon redemption
(751 ) (1,259 )
Other
562 633
Total Retail Supermarket
$ 23,076 $ 21,619

Frozen Beverages

Beverages
$ 34,303 $ 28,276
Repair and maintenance service
19,004 18,091
Machines sales
6,313 7,039
Other
250 248
Total Frozen Beverages
$ 59,870 $ 53,654

Consolidated Sales
$ 265,210 $ 225,570

Depreciation and Amortization:

Food Service
$ 7,098 $ 5,732
Retail Supermarket
290 278
Frozen Beverages
4,598 3,901
Total Depreciation and Amortization
$ 11,986 $ 9,911

Operating Income :

Food Service
$ 15,900 $ 17,054
Retail Supermarket
2,558 1,046
Frozen Beverages
2,770 1,227
Total Operating Income
$ 21,228 $ 19,327

Capital Expenditures:

Food Service
$ 9,441 $ 6,587
Retail Supermarket
- 82
Frozen Beverages
5,182 4,730
Total Capital Expenditures
$ 14,623 $ 11,399

Assets:

Food Service
$ 635,988 $ 594,963
Retail Supermarket
21,531 22,128
Frozen Beverages
207,498 177,082
Total Assets
$ 865,017 $ 794,173

~~Note 10~~

Our three ~~reporting units, which are also~~ reportable segments are Food Service, Retail Supermarkets and Frozen Beverages. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income. These segments are described below.

~~The carrying amounts of acquired intangible assets for the Food Service, Retail Supermarkets and Frozen~~ ~~Beverage segments as of December 30, 2017 and September 30, 2017 are as follows:~~

December 30, 2017

September 30, 2017

Gross

Gross

Carrying

Accumulated

Carrying

Accumulated

Amount

Amortization

Amount

Amortization

(in thousands)

FOOD SERVICE

Indefinite lived intangible assets

Trade Names
$ 16,628 $ - $ 16,628 $ -

Amortized intangible assets

Non compete agreements
980 302 980 263
Customer relationships
20,510 7,011 20,510 6,476
License and rights
1,690 1,080 1,690 1,058
TOTAL FOOD SERVICE
$ 39,808 $ 8,393 $ 39,808 $ 7,797

RETAIL SUPERMARKETS

Indefinite lived intangible assets

Trade Names
$ 6,557 $ - $ 6,557 $ -

Amortized Intangible Assets

Trade names
649 130 649 130
Customer relationships
7,979 3,022 7,979 2,822
TOTAL RETAIL SUPERMARKETS
$ 15,185 $ 3,152 $ 15,185 $ 2,952

FROZEN BEVERAGES

Indefinite lived intangible assets

Trade Names
$ 9,315 $ - $ 9,315 $ -
Distribution rights
6,900 - 6,900 -

Amortized intangible assets

Customer relationships
257 56 257 50
Licenses and rights
1,400 811 1,400 794
TOTAL FROZEN BEVERAGES
$ 17,872 $ 867 $ 17,872 $ 844

CONSOLIDATED
$ 72,865 $ 12,412 $ 72,865 $ 11,593

15

Food Service

The primary products sold by the food service group are soft pretzels, frozen juice treats and desserts, churros, dough enrobed handheld products and baked goods. Our customers in the food service industry include snack bars and food stands in chain, department and discount stores; malls and shopping centers; fast food outlets; stadiums and sports arenas; leisure andtheme parks; convenience stores; movie theatres; warehouse club stores; schools, colleges and other institutions. Within the food service industry, our products are purchased by the consumer primarily for consumption at the point-of-sale.

Retail Supermarkets

The primary products sold to the retail supermarket channel are soft pretzel products – including SUPERPRETZEL, frozen juice treats and desserts including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars and sorbet, PHILLY SWIRL cups and sticks, ICEE Squeeze-Up Tubes and dough enrobed handheld products including PATIO burritos. Within the retail supermarket channel, our frozen and prepackaged products are purchased by the consumer for consumption at home.

Frozen Beverages

We sell frozen beverages and related products to the food service industry primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE in the United States, Mexico and Canada. We also provide repair and maintenance service to customers for customers’ owned equipment.

16

The Chief Operating Decision Maker for Food Service and Retail Supermarkets and the Chief Operating Decision Maker for Frozen Beverages monthly review detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales and operating income are key variables monitored by the Chief Operating Decision Makers and management when determining each segment’s and the company’s financial condition and operating performance. In addition, the Chief Operating Decision Makers review and evaluate depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. Information regarding the operations in these three reportable segments is as follows:

	Three months ended						Six months ended
	March 27,			March 28,			March 27,			March 28,
	2021			2020			2021			2020


Sales to External Customers:
Food Service
Soft pretzels	$	36,776		$	45,660		$	69,463		$	95,601
Frozen juices and ices		10,590			9,491			16,885			16,534
Churros		14,720			14,754			26,262			31,145
Handhelds		19,992			7,447			37,603			14,636
Bakery		82,910			89,407			171,874			185,779
Other		4,336			4,573			7,662			11,085
Total Food Service	$	169,324		$	171,332		$	329,749		$	354,780

Retail Supermarket
Soft pretzels	$	15,789		$	12,332		$	29,677		$	22,158
Frozen juices and ices		19,386			15,864			34,702			25,957
Biscuits		6,495			6,630			14,155			13,608
Handhelds		2,243			3,117			5,023			5,878
Coupon redemption		(608	)		(866	)		(1,683	)		(1,409	)
Other		601			494			1,126			805
Total Retail Supermarket	$	43,906		$	37,571		$	83,000		$	66,997

Frozen Beverages
Beverages	$	18,529		$	31,895		$	34,384		$	67,150
Repair and maintenance service		18,218			21,779			37,114			44,265
Machines revenue		5,663			8,910			12,152			20,891
Other		538			555			776			856
Total Frozen Beverages	$	42,948		$	63,139		$	84,426		$	133,162

Consolidated Sales	$	256,178		$	272,042		$	497,175		$	554,939

Depreciation and Amortization:
Food Service	$	7,116		$	7,240		$	13,902		$	14,158
Retail Supermarket		384			329			770			688
Frozen Beverages		5,648			6,188			11,424			11,641
Total Depreciation and Amortization	$	13,148		$	13,757		$	26,096		$	26,487

Operating Income :
Food Service	$	6,055		$	7,951		$	12,235		$	25,985
Retail Supermarket		6,364			4,337			11,087			6,554
Frozen Beverages		(5,189	)		(1,306	)		(15,514	)		146
Total Operating Income	$	7,230		$	10,982		$	7,808		$	32,685

Capital Expenditures:
Food Service	$	7,246		$	10,331		$	15,532		$	18,734
Retail Supermarket		80			275			101			1,235
Frozen Beverages		1,827			8,774			3,196			17,016
Total Capital Expenditures	$	9,153		$	19,380		$	18,829		$	36,985

Assets:
Food Service	$	760,557		$	740,318		$	760,557		$	740,318
Retail Supermarket		33,395			31,636			33,395			31,636
Frozen Beverages		270,963			305,983			270,963			305,983
Total Assets	$	1,064,915		$	1,077,937		$	1,064,915		$	1,077,937

17

Note 10

Our three reporting units, which are also reportable segments, are Food Service, Retail Supermarkets and Frozen Beverages.

The carrying amounts of acquired intangible assets for the Food Service, Retail Supermarkets and Frozen Beverage segments as of March 27, 2021 and September 26, 2020 are as follows:

	March 27, 2021				September 26, 2020
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
			(in thousands)
FOOD SERVICE

Indefinite lived intangible assets
Trade names	$	10,408	$	-	$	10,408	$	-

Amortized intangible assets
Non compete agreements		670		670		670		645
Customer relationships		13,000		5,538		19,737		11,595
License and rights		1,690		1,354		1,690		1,312
TOTAL FOOD SERVICE	$	25,768	$	7,562	$	32,505	$	13,552

RETAIL SUPERMARKETS

Indefinite lived intangible assets
Trade names	$	12,750	$	-	$	12,750	$	-

Amortized Intangible Assets
Trade names		676		587		676		519
Customer relationships		7,907		5,535		7,907		5,140
TOTAL RETAIL SUPERMARKETS	$	21,333	$	6,122	$	21,333	$	5,659


FROZEN BEVERAGES

Indefinite lived intangible assets
Trade names	$	9,315	$	-	$	9,315	$	-
Distribution rights		36,100		-		36,100		-

Amortized intangible assets
Customer relationships		1,439		329		1,439		257
Licenses and rights		1,400		1,037		1,400		1,002
TOTAL FROZEN BEVERAGES	$	48,254	$	1,366	$	48,254	$	1,259

CONSOLIDATED	$	95,355	$	15,050	$	102,092	$	20,470

~~Amortized~~Fully amortized intangible assets have been removed from the March 27, 2021 amounts.

Amortizing intangible assets are being amortized by the straight-line method over periods ranging from 32 to 20 years and amortization expense is reflected throughout operating expenses. In last year’s fiscal year, intangible assets of $6,957,000 were acquired in an ICEE distributor acquisition in our frozen beverage segment, intangible assets of $15,760,000 were acquired in the Hill & Valley acquisition in our food service segment and intangible assets fo $576,000 were acquired in the Labriola Baking acquisition, also in our food service segment. Aggregate amortization expense of intangible assets for the three months ended ~~December 30, 2017~~ March 27, 2021 and ~~December 24, 2016~~ March 28, 2020 was ~~$819,000~~$777,000 and ~~$1,108,000,~~$833,000, respectively. Aggregate amortization expense of intangible assets for the six months ended March 27, 2021 and March 28, 2020 was $1,457,000 and $1,676,000, respectively.

18

Estimated amortization expense for the next five fiscal years is approximately ~~$3,500,000~~$2,500,000 in ~~2018, $3,400,000 in 2019, $3,000,000 in 2020, $2,400,000 in~~ 2021, ~~and~~ $2,300,000 in ~~2022.~~2022, $2,300,000 in 2023, $2,000,000 in 2024, and $1,400,000 in 2025. The weighted amortization period of the intangible assets is ~~10.8~~10.9 years.

Goodwill

The carrying amounts of goodwill for the Food Service, Retail Supermarket and Frozen Beverage segments are as follows:

Food

Retail

Frozen

Service Supermarket Beverages Total
(in thousands)
Balance at December 30, 2017
$ 61,665 $ 3,670 $ 37,176 $ 102,511

Balance at September 30, 2017
$ 61,665 $ 3,670 $ 37,176 $ 102,511

	Food		Retail		Frozen
	Service		Supermarket		Beverages		Total
	(in thousands)
Balance at March 27, 2021	$	61,189	$	4,146	$	56,498	$	121,833

Balance at September 26, 2020	$	61,189	$	4,146	$	56,498	$	121,833

~~In last year~~’s fiscal year, goodwill of $1,236,000 was acquired in an ICEE distributor acquisition in our frozen beverage segment, goodwill of $14,175,000 was acquired in the Hill & Valley acquisition in our food service segment and goodwill of $658,000 was acquired in our Labriola Baking acquisition, also in our food service segment.

Note 1111

We have classified our investment securities as marketable securities held to maturity and available for sale. The FASB defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the FASB has established three levels of inputs that may be used to measure fair value:

Level 1

Observable input such as quoted prices in active markets for identical assets or liabilities;

Level 2

Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3

Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

19

Marketable securities held to maturity and available for sale consist primarily of investments in mutual funds,, preferred stock, and corporate bonds. The fair values of mutual funds are based on quoted market prices in active markets and are classified within Level 1 of the fair value hierarchy. The fair values of preferred stock and corporate bonds ~~and certificates of deposit~~ are based on quoted prices for identical or similar instruments in markets that are not active. As a result, preferred stock and corporate bonds ~~and certificates of deposit~~ are classified within Level 2 of the fair value hierarchy.

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at ~~December 30, 2017~~ March 27, 2021 are summarized as follows:

			Gross		Gross		Fair				Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market		*Amortized*		*Unrealized*		*Unrealized*		*Market*
	Cost		Gains		Losses		Value		*Cost*		*Gains*		*Losses*		*Value*
	(in thousands)										(in thousands)

Corporate Bonds	$	125,591	$	165	$	551	$	125,205	$	28,959	$	381	$	15	$	29,325
Certificates of Deposit		5,920		8		-		5,928
Total marketable securities held to maturity	$	131,511	$	173	$	551	$	131,133	$	28,959	$	381	$	15	$	29,325

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at ~~December 30, 2017~~ March 27, 2021 are summarized as follows:

			Gross		Gross		Fair				Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market		*Amortized*		*Unrealized*		*Unrealized*		*Market*
	Cost		Gains		Losses		Value		*Cost*		*Gains*		*Losses*		*Value*
	(in thousands)										(in thousands)

Mutual Funds	$	13,003	$	58	$	237	$	12,824	$	3,588	$	0	$	638	$	2,950
Preferred Stock		16,791		608		73		17,326		9,489		160		81		9,568
Total marketable securities available for sale	$	29,794	$	666	$	310	$	30,150	$	13,077	$	160	$	719	$	12,518

The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration. The Fixed-to-Floating Perpetual Preferred Stock generate fixed income to call dates in ~~2018, 2019~~2021 and 2025 and then income is based on a spread above LIBOR if the securities are not called. The mutual funds and Fixed-to-Floating Perpetual Preferred Stock do not have contractual maturities; however, we classify them as ~~long term~~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. The corporate bonds generate fixed income to maturity dates in ~~2017~~2021 through ~~2021,~~2023, with ~~$123~~$29 million maturing within 32 years. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

20

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at September ~~30, 2017~~ 26, 2020 are summarized as follows:

											Gross		Gross		Fair
									*Amortized*		*Unrealized*		*Unrealized*		*Market*
			Gross		Gross		Fair		*Cost*		*Gains*		*Losses*		*Value*
	Amortized		Unrealized		Unrealized		Market				(in thousands)
	Cost		Gains		Losses		Value
	(in thousands)
Corporate Bonds	$	114,101	$	424	$	155	$	114,370		68,078		1,015		32		69,061
Certificates of Deposit		5,920		18		1		5,937
Total marketable securities held to maturity	$	120,021	$	442	$	156	$	120,307	$	68,078	$	1,015	$	32	$	69,061

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September ~~30, 2017~~ 26, 2020 are summarized as follows:

			Gross		Gross		Fair				Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market		*Amortized*		*Unrealized*		*Unrealized*		*Market*
	Cost		Gains		Losses		Value		*Cost*		*Gains*		*Losses*		*Value*
	(in thousands)										(in thousands)

Mutual Funds	$	13,003	$	77	$	240	$	12,840	$	3,588	$	0	$	738	$	2,850
Preferred Stock		16,791		711		82		17,420		11,596		116		586		11,126
Total marketable securities available for sale	$	29,794	$	788	$	322	$	30,260	$	15,184	$	116	$	1,324	$	13,976

The amortized cost and fair value of the ~~Company~~’sCompany’s held to maturity securities by contractual maturity at ~~December 30, 2017~~ March 27, 2021 and September ~~30, 2017~~ 26, 2020 are summarized as follows:

September 24, 2011	December 30, 2017				September 30, 2017
									March 27, 2021				September 26, 2020

											*Fair*				*Fair*
			Fair				Fair		*Amortized*		*Market*		*Amortized*		*Market*
	Amortized		Market		Amortized		Market		*Cost*		*Value*		*Cost*		*Value*
	Cost		Value		Cost		Value				(in thousands)
			(in thousands)
Due in one year or less	$	49,445	$	49,444	$	59,113	$	59,194	$	21,379	$	21,640	$	51,151	$	51,815
Due after one year through five years		82,066		81,689		60,908		61,113		7,580		7,685		16,927		17,246
Due after five years through ten years						-		-		0		0		0		0
Total held to maturity securities	$	131,511	$	131,133	$	120,021	$	120,307	$	28,959	$	29,325	$	68,078	$	69,061
Less current portion		49,445		49,444		59,113		59,194		21,379		21,640		51,151		51,815
Long term held to maturity securities	$	82,066	$	81,689	$	60,908	$	61,113	$	7,580	$	7,685	$	16,927	$	17,246

21

Proceeds from the redemption and sale of marketable securities were ~~$19,096,000~~$15,189,000 and $41,337,000 in the three and six months ended ~~December 30, 2017~~ March 27, 2021 and ~~$475,000~~were $12,156,000 and $30,938,000 in the three and six months ended ~~December 24, 2016,~~ March 28, 2020, respectively. ~~Gains~~A gain of ~~$7,558~~$41,000 and $119,000 were recorded in the three and six months ended ~~December 30, 2017~~ March 27, 2021 and ~~no gains or~~ losses of $2,059,000 and $2,070,000 were recorded in the three and six months ended ~~December 24, 2016.~~March 28, 2020. Included in the gains and losses were unrealized gains of $649,000 and unrealized losses of $1,993,000 in the six months ended March 27, 2021 and March 28, 2020, respectively. Unrealized losses of $46,000 and $2,064,000 were recorded in the three months ended March 27, 2021 and March 28, 2020, respectively. We use the specific identification method to determine the cost of securities sold.

Total marketable securities held to maturity as of March 27, 2021 with credit ratings of AAA/AA/A had an amortized cost basis totaling $7,966,000 and those with credit ratings of BBB/BB/B had an amortized cost basis totaling $20,993,000. This rating information was obtained March 31, 2021.

Note12 Changes to the components of accumulated other comprehensive loss are as follows:

	Three Months Ended March 27, 2021						Six Months Ended March 27, 2021
	(unaudited)						(unaudited)
	(in thousands)						(in thousands)

	*Foreign Currency*						*Foreign Currency*
	*Translation*						*Translation*
	*Adjustments*			*Total*			*Adjustments*			*Total*

Beginning Balance	$	(13,308	)	$	(13,308	)	$	(15,587	)	$	(15,587	)

Other comprehensive income (loss) before reclassifications		(531	)		(531	)		1,748		$	1,748


Ending Balance	$	(13,839	)	$	(13,839	)	$	(13,839	)	$	(13,839	)

Three Months ended December 30, 2017

(unaudited)

(in thousands)

Unrealized Holding

Foreign Currency

Gain on

Translation Adjustments

Marketable Securities

Total

Beginning Balance
$ (9,341 ) $ 466 $ (8,875 )

Other comprehensive loss before reclassifications
(3,887 ) (110 ) $ (3,997 )

Amounts reclassified from accumulated other comprehensive income
- - -

Ending Balance
$ (13,228 ) $ 356 $ (12,872 )

	Three Months ended December 24, 2016									Three Months Ended March 28,2020						Six Months Ended March 28,2020
				(unaudited)						(unaudited)						(unaudited)
				(in thousands)						(in thousands)						(in thousands)

				Unrealized Holding						*Foreign Currency*						*Foreign Currency*
	Foreign Currency			Loss on						*Translation*						*Translation*
	Translation Adjustments			Marketable Securities			Total			*Adjustments*			*Total*			*Adjustments*			*Total*

Beginning Balance	$	(13,086	)	$	(329	)	$	(13,415	)	$	(12,178	)	$	(12,178	)	$	(12,988	)	$	(12,988	)

Other comprehensive(loss)income before reclassifications		(1,104	)		(103	)		(1,207	)
Other comprehensive income (loss) before reclassifications											(3,921	)		(3,921	)		(3,111	)	$	(3,111	)

Amounts reclassified from accumulated other comprehensive income		-			-			-

Ending Balance	$	(14,190	)	$	(432	)	$	(14,622	)	$	(16,099	)	$	(16,099	)	$	(16,099	)	$	(16,099	)

22

~~Note 13~~

On December 30, 2016, we acquired Hill & Valley Inc., a premium bakery located in Rock Island, IL, for approximately $31 million. Hill & Valley, with sales of over $45 million annually, is a manufacturer of a variety of pre-baked cakes, cookies, pies, muffins and other desserts 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.

Note 13On ~~May 22, 2017,~~ October 1, 2019, we acquired anthe assets of ICEE ~~distributor doing~~Distributors LLC, based in Bossier City, Louisiana. ICEE Distributors does business in ~~Georgia~~Arkansas, Louisiana and ~~Tennessee~~Texas with annual sales of approximately $13 million. Sales and operating income of ICEE Distributors were $1,768,000 and $203,000 for ~~approximately $11 million.~~ the three months ended March 27, 2021 and were $3,789,000 and $469,000 for the six months ended March 27, 2021. Sales and operating income of ICEE Distributors were $2,500,000 and $400,000 for the three months ended March 28, 2020 and were $5,000,000 and $900,000 for the six months ended March 28, 2020.

On ~~August 16, 2017,~~ February 4, 2020, we acquired ~~Labriola Baking Company, a bakery~~ the assets of ~~breads~~BAMA ICEE, based in Birmingham, Alabama. BAMA ICEE does business in Alabama and ~~artisan soft pretzels located in Alsip, IL for approximately $6 million. Labriola Bakery,~~Georgia with annual sales of approximately ~~$17 million annually, is a manufacturer~~$3.5 million. Sales and operating income of ~~pre-baked breads, rolls~~BAMA ICEE were $399,000 and ~~soft pretzels~~$69,000 for ~~retail in-store bakery~~ the three months ended March 27, 2021 and ~~foodservice outlets nationwide.~~were $805,000 and $144,000 for six months ended March 27, 2021. Sales and operating income of BAMA ICEE were $300,000 and $100,000 for both the three and six months ended March 28, 2020.

The purchase price allocations for the acquisitions are as follows:

	(in thousands)

	ICEE			BAMA			Total
	Distributors			ICEE

Accounts Receivable, net	$	721		$	71		$	792
Inventories		866			77			943
Property, plant & equipment, net		4,851			1,722			6,573
Customer Relationships		569			133			702
Distribution rights		22,400			6,800			29,200
Goodwill		15,773			3,549			19,322
Accounts Payable		(210	)		(110	)		(320	)
Purchase Price	$	44,970		$	12,242		$	57,212

~~Note 14~~

~~Subsequent Event~~The goodwill recognized is attributable to the assembled workforce of ICEE Distributors and certain other strategic intangible assets that do not meet the requirements for recognition separate and apart from goodwill.

The Company incurred 0 acquisitions costs during the three or six months ended March 27, 2021. Acquisition costs of $62,000 and $98,000 are included in other general expense for the three and six months ended March 28, 2020, respectively.

23

Note 14 – Leases

General Lease Description

We have operating leases with initial noncancelable lease terms in excess of one year covering the rental of various facilities and equipment. Certain of these leases contain renewal options and some provide options to purchase during the lease term. Our operating leases include leases for real estate for some of our office and manufacturing facilities as well as manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these operating leases range from 1 month to 14 years.

We have finance leases with initial noncancelable lease terms in excess of one year covering the rental of various equipment. These leases are generally for manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these finance leases range from 1 year to 5 years.

Significant Assumptions and Judgments

Contract Contains a Lease

In evaluating our contracts to determine whether a contract is or contains a lease, we considered the following:

• Whether explicitly or implicitly identified assets have been deployed in the contract; and

• Whether we obtain substantially all of the economic benefits from the use of that underlying asset, and we can direct how and for what purpose the asset is used during the term of the contract.

Allocation of Consideration

In determining how to allocate consideration between lease and non-lease components in a contract that was deemed to contain a lease, we used judgment and consistent application of assumptions to reasonably allocate the consideration.

Options to Extend or Terminate Leases

We have leases which contain options to extend or terminate the leases. On ~~January 8, 2018, Hom/Ade Foods, Inc,~~ a ~~wholly owned subsidiary of J & J Snack Foods Corp. (the “Company”), issued a Product Recall Notification for~~lease-by-lease basis, we have determined if the extension should be considered reasonably certain ~~products marketed under the name “MARY B’s Biscuits,” which have the potential~~ to be ~~contaminated with~~ ~~Listeria monocytogenes.~~ exercised and thus a right-of-use asset and a lease liability should be recorded.

Discount Rate

The ~~affected products were manufactured by Flowers Foods, Inc. (“Flowers”), and~~discount rate for leases, if not explicitly stated in the ~~Company~~lease, is ~~working~~the incremental borrowing rate, which is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in ~~coordination with Flowers and~~a similar economic environment.

We used the ~~U.S. Food and Drug Administration~~discount rate to ~~effectuate~~calculate the ~~recall. We believe that Flowers, the manufacturer~~present value of the ~~recalled product and initiator~~lease liability at the date of adoption. In the development of the ~~recall, is contractually obligated~~discount rate, we considered our incremental borrowing rate as provided by our lender which was based on cash collateral and credit risk specific to ~~indemnify~~ us, ~~against all~~and our lease portfolio characteristics.

As of March 27, 2021, the weighted-average discount rate of our operating and finance leases was 3.3% and 3.2%, respectively.

Practical Expedients and Accounting Policy Elections

We elected the package of practical expedients that permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs and made an accounting policy election to exclude short-term leases with an initial term of 12 months or less from our Consolidated Balance Sheets.

24

Amounts Recognized in the Financial Statements

The components of lease expense were as follows:

	Three Months Ended		Six Months Ended
	March 27, 2021		March 27, 2021
	(in thousands)		(in thousands)

Operating lease cost in Cost of goods sold and Operating Expenses	$	3,962	$	7,901
Finance lease cost:
Amortization of assets in Cost of goods sold and Operating Expenses		78		154
Interest on lease liabilities in Interest expense & other		11		25
Total finance lease cost		89		179
Short-term lease cost in Cost of goods sold and Operating Expenses		0		0
Total net lease cost	$	4,051	$	8,080

Supplemental balance sheet information related to a recall triggered by defective product or governmental demand. Although we are not able to estimate the costs related to the recall presently, we do not expect the costs to have a material impact on our financial statements. Additionally, we expect to be reimbursed by Flowers for our costs related to the recall. ~~We anticipate disruption to our product supply and sales going forward.~~ leases is as follows:

	March 27, 2021
	(in thousands)
Operating Leases
Operating lease right-of-use assets	$	53,994

Current operating lease liabilities	$	12,978
Noncurrent operating lease liabilities		43,609
Total operating lease liabilities	$	56,587

Finance Leases
Finance lease right-of-use assets in Property, plant and equipment, net	$	516

Current finance lease liabilities	$	288
Noncurrent finance lease liabilities		256
Total finance lease liabilities	$	544

Supplemental cash flow information related to leases is as follows:

	Three Months Ended		Six Months Ended
	March 27, 2021		March 27, 2021
	(in thousands)		(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,001	$	7,987
Operating cash flows from finance leases	$	87	$	173
Financing cash flows from finance leases	$	11	$	25

Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets	$	578	$	1,354
Supplemental noncash information on lease liabilities removed due to purchase of leased asset	$	-		-

As of March 27, 2021, the maturities of lease liabilities were as follows:

	(in thousands)
	Operating Leases			Finance Leases
Six months ending September 25, 2021	$	7,639		$	184
2022		13,496			168
2023		11,379			98
2024		8,722			98
2025		5,522			26
Thereafter		16,355			0
Total minimum payments	$	63,113		$	574
Less amount representing interest		(6,526	)		(30	)
Present value of lease obligations	$	56,587		$	544

25

Item 2.

Management’s Discussion and Analysis of F~~inancial~~ Financial Condition and Results of Operations

Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate,” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties, and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Liquidity and Capital Resources

Our current cash and cash equivalents balances, investments and cash expected to be provided by future operations are our primary sources of liquidity. We believe that these sources, along with our borrowing capacity, are sufficient to fund future growth and expansion. See Note 11 to these financial statements for a discussion of our investment securities.

The Company’s Board of Directors declared a regular quarterly cash dividend of ~~$.45~~$.575 per share of its common stock payable on ~~January 4, 2018,~~April 13, 2021, to shareholders of record as of the close of business on ~~December 13, 2017.~~March 22, 2021.

~~In our fiscal year ended September 30, 2017, we~~We purchased ~~and retired 142,665~~65,648 shares of our common stock ~~at a cost of $18,228,763. In the three months ended December 30, 2017 we~~in fiscal year 2020, but did not purchase ~~and retire~~ any ~~shares.~~shares in the six months ended March 27, 2021. On August 4, 2017 the Company’s Board of Directors authorized the purchase and retirement of 500,000 shares of the Company’s common stock; ~~405,110~~318,858 shares remain to be purchased under this authorization.

In the three months ended ~~December 30, 2017~~March 27, 2021 and ~~December 24, 2016~~March 28, 2020, fluctuations in the valuation of the Mexican and Canadian currencies and the resulting translation of the net assets of our Mexican and Canadian subsidiaries caused an increase of ~~$3,887,000~~$531,000 and $3,921,000 in accumulated other comprehensive loss, respectively. In the six months ended March 27, 2021 and March 28, 2020, fluctuations in the ~~2018 first quarter~~valuation of the Mexican and Canadian currencies and the resulting translation of the net assets of our Mexican and Canadian subsidiaries caused a decrease of $1,748,000 and an increase of ~~$1,104,000~~$3,111,000 in accumulated other comprehensive loss, ~~in the 2017 first quarter.~~respectively.

26

Our general-purpose bank credit line, which expires in November 2021, provides for up to a $50,000,000 revolving credit facility. The agreement contains restrictive covenants and requires commitment fees in accordance with standard banking practice. There were no outstanding balances under this facility at ~~December 30, 2017.~~March 27, 2021.

~~Results of Operations~~RESULTS OF OPERATIONS

Net sales ~~increased $39,640,000 or 18%~~decreased by 6% to ~~$265,210,000~~$256,178,000 in the second quarter and by 10% to $497,175,000 for the ~~three~~six months ended ~~December 30, 2017~~March 27, 2021 compared to the three and six months ended December 24, 2016. 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, sales increased approximately 7% for the quarter.March 28, 2020, respectively.

FOOD SERVICE

Sales to food service customers ~~increased $ 31,967,000 or 21%~~decreased by 1% in the ~~first~~second quarter to ~~$182,264,000. Excluding sales of Hill & Valley~~$169,324,000 and ~~Labriola, sales increased $9,569,000 or 6%~~by 7% to $329,749,000 for the ~~first quarter.~~ six months, compared to respective prior year periods. Sales to food service customers were negatively impacted by COVID-19 during the current year periods as many venues and locations shut down or sharply curtailed their food service operations. However, traffic across our food service customers continues to improve as theatres re-open, more schools open their doors, entertainment and amusement venues increase capacity, and growth continues to strengthen across quick serve and casual dining restaurants.

Soft pretzel sales to the food service market ~~increased 21%~~decreased by 19% to ~~$50,131,000~~$36,776,000 in the second quarter and ~~about 14% without Labriola sales. In addition~~by 27% to ~~Labriola sales, soft pretzel sales increased significantly due to increased distribution to restaurant chains and movie theatres and we had strong sales of our recently introduced BRAUHAUS pretzels.~~$69,463,000 in the six months.

Frozen juices and ices sales ~~decreased 4%~~increased by 12% to ~~$7,184,000~~$10,590,000 in the ~~three months with sales increases~~second quarter and ~~decreases across our customer base.~~increased by 2% to $16,885,000 in the six months.

Churro sales to food service customers were ~~up 1%~~relatively flat in the second quarter as compared with prior year at $14,720,000 but decreased by 16% to ~~$14,592,000.~~$26,262,000 in the six months.

Sales of bakery products ~~increased $19,654,000 or 26%~~decreased by 7% in the ~~first~~second quarter to ~~$94,933,000. Excluding sales of Hill & Valley, bakery sales were essentially flat~~$82,910,000 and decreased 7% to $171,874,000 for the ~~quarter.~~six months as COVID-19 impacted traffic, purchase choices and frequency in this part of our business.

Sales of handhelds increased ~~$2,773,000 or 37%~~168% in the second quarter ~~with all of the increase coming from sales~~ to ~~three customers. Sales of funnel cake increased $911,000 or 23%~~$19,992,000 and by 157% in the ~~quarter to $4,794,000 as we continue to increase sales to school food service.~~six months led by the continued success of a new product developed for one of our larger wholesale club customers.

Sales of new products in the first twelve months since their introduction were approximately ~~$8 million~~$14,928,000 in ~~this quarter.~~the second quarter and $27,167,000 in the six months led by the previously noted handheld item. Price increases had noa marginal impact on ~~sales~~results in the quarter as traffic and ~~net~~ volume ~~increases, including new product~~drove almost all of the sales ~~as defined above and Hill & Valley and Labriola sales, accounted for approximately $32 million of sales in the quarter.~~decline compared to prior year.

Operating income in our Food Service segment decreased ~~from $17,054,000~~by 24% to ~~$15,900,000~~$6,055,000 in the ~~quarter. Hill & Valley contributed $1,384,000~~second quarter and by 53% to ~~operating income~~$12,235,000 in the ~~quarter; however, operating income in the balance of our food service business was~~six months primarily due to sales declines which impacted ~~by generally~~ ~~higher costs for payroll~~margin efficiencies and insurance, added personnel in the selling function, inefficiencies in our recently acquired Labriola production facility (compounded by the integration of products previously manufactured at other facilities), product mix changes and significantly lower volume concentrated in specific facilities, shutdown costs of our Chambersburg, PA production facility and higher ingredients costs. There was no benefit of pricing to offset these higher costs. expense leverage.

27

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased ~~$1,457,000 or 7%~~by 17% to ~~$23,076,000~~$43,906,000 in the ~~first quarter. Soft pretzel sales for~~second quarter and increased by 24% to $83,000,000 in the ~~first quarter were up 18%~~six months. Our SUPERPRETZEL brand has performed well helping to ~~$10,512,000 primarily due to sales of AUNTIE ANNE’S~~drive a 28% increase in soft pretzels ~~under~~sales in the second quarter to $15,789,000 and a ~~license agreement entered into~~34% increase in ~~2017.~~the six months to $29,677,000. Sales of frozen juices and ices ~~decreased $124,000 or 1%~~increased by 22% to ~~$9,727,000~~$19,386,000 in the ~~first quarter.~~second quarter and by 34% to $34,702,000 in the six months. Sales of biscuits decreased by 2% to $6,495,000 in the second quarter, but increased by 4% to $14,155,000 in the six months. Handheld sales to retail supermarket customers decreased ~~12%~~by 28% to ~~$3,026,000~~$2,243,000 in the second quarter asand by 15% to $5,023,000 in the ~~sales of this product line continues their long term decline.~~six months.

Sales of new products, which in the ~~first~~second quarter were approximately ~~$1.9 million.~~$150,000, and were approximately $550,000 for the six months, were primarily related to frozen novelty items. Price increases had noa minimal impact on ~~sales~~growth in the second quarter and ~~net volume increases, including new product sales as defined above accounted for $1.5 million of sales~~ in the ~~quarter.~~six months, as sales were driven by increased consumer traffic and volume in retail outlets.

Operating income in our Retail Supermarkets segment increased by 47% to $6,364,000 in the second quarter and by 69% to $11,087,000 in the six months. The increases in operating income was ~~$2,558,000 in this year’s first quarter compared~~primarily attributable to ~~$1,046,000 in last year’s quarter, a 145% increase. Lower coupon expense of $508,000 and lower media spending of $543,000 along with the 18% increase in soft pretzel sales were the major reasons for~~ the increase in sales and the improvement in operating ~~income.~~margins.

FROZEN BEVERAGES

Frozen beverage and related product sales ~~increased 12%~~decreased by 32% to ~~$59,870,000~~$42,948,000 in the ~~first~~second quarter and ~~excluding~~by 37% to $84,426,000 in the six months. Beverages sales ofdecreased by 42% to $18,529,000 in the ~~acquired ICEE distributor~~second quarter and by 49% to $34,384,000 in the six months. Gallon sales were ~~up about 10%. Beverage related sales alone were up 21% to $34,303,000~~down 40% in the quarter and ~~were up about 19% without~~down 46% in the six months. Service revenue decreased by 16% to $18,218,000 in the second quarter and by 16% to $37,114,000 in the six months, with the decreases primarily attributable to the cancellation of a key customer’s planned maintenance program.

Machines revenue (primarily sales of ~~the acquired ICEE distributor. Gallon sales were up 15% for the three months with higher sales~~frozen beverage machines) decreased by 36% to ~~movie theatres and across our customer base. Service revenue increased 5% to $19,004,000~~$5,663,000 in the ~~first~~second quarter ~~with sales increases~~ and by 42% to $12,152,000 in the six months. The decreases ~~spread throughout our~~were primarily attributable to slower customer ~~base.~~expansion and replacement during the periods.

~~Sales~~Our Frozen Beverage segment incurred an operating loss of ~~beverage machines, which tend to fluctuate from~~$5,189,000 in the second quarter compared with an operating loss of $1,306,000 in the prior year ~~to year while following no specific trend, were $6,313,000, a decrease of 10%. Operating income in~~second quarter. In the six months, our Frozen Beverage segment ~~increased~~incurred an operating loss of $15,514,000 compared with operating income of $146,000 in the prior year six-month period. The comparative performance was impacted due to ~~$2,770,000 in this quarter compared to $1,227,000 last year~~the challenging sales environment as a result of ~~significantly higher beverage sales.~~the COVID-19 pandemic which also impacts our gross margin efficiency and ability to leverage fixed expenses.

28

CONSOLIDATED

Gross profit as a percentage of sales was ~~27.63%~~23.8% in the ~~three month~~second quarter and 25.5% last year. Gross profit as a percentage of sales was 22.3% in the six-month period this year and ~~29.21%~~26.5% last year. ~~About 20% of the gross~~Gross profit percentage ~~decrease in the quarter resulted~~decreased because of continued COVID-19 sales pressure from ~~the~~our food service and frozen beverages segments. This creates margin leverage challenges as we manage lower ~~gross profit percentage of the Hill & Valley business. The balance of the decrease was caused by higher costs for payroll and insurance, inefficiencies in our recently acquired Labriola~~ production facility (compounded by the integration of products previously manufactured at other facilities), product mix changes, significantly lower volume concentrated in specific facilities, shutdown costs of our Chambersburg, PA production facility and higher ingredients costs. There was no benefit of pricing to offset these higher costs. volumes on businesses with large fixed-expense bases.

Total operating expenses ~~increased $5,483,000~~decreased by 8% to $53,666,000 in the ~~first~~second quarter ~~but as~~and by 10% to $103,213,000 in the six months. As a percentage of net sales, operating expenses decreased from 21.5% to ~~19.6%~~20.9% in the second quarter but increased slightly in the six months from ~~20.6% last year.~~ 20.7% to 20.8%.

Marketing expenses decreased to ~~8.14%~~7.5% of net sales in ~~this year’s~~the second quarter from ~~9.01% last~~8.8% in prior year ~~primarily because of lower media spending~~and to 7.3% in ~~our retail supermarket business and lower marketing expenses of~~ the ~~acquired Hill & Valley and Labriola businesses.~~six months compared with 8.4% in prior year’s six-month period. Distribution expenses ~~were 7.98%~~increased to 9.9% of net sales in ~~this~~the second quarter from 9.1% in the prior year and to 9.7% in the six months compared with 8.7% in prior year’s ~~quarter and 8.05%~~six-month period. Administrative expenses decreased to 3.6% of net sales in ~~last year’s quarter. Administrative expenses were 3.53% of sales this~~the second quarter ~~compared~~from 3.7% in prior year, but increased to ~~3.59% of sales last year~~3.8% in the ~~first quarter~~six months compared with 3.6% in prior year’s six-month period.

Operating income ~~increased $1,901,000 or 10%~~decreased by 34% to ~~$21,228,000~~$7,230,000 in the ~~first~~second quarter and by 76% to $7,808,000 in the six months as a result of the aforementioned items.

~~Investment~~Our investments generated before tax income ~~increased by $262,000~~of $579,000 in the ~~first~~second quarter, ~~resulting from higher amounts invested and slightly higher interest rates.~~

~~Other~~a $992,000 increase over prior year. In the six months, our investments generated before tax income ~~this quarter includes~~of $1,949,000, a ~~$520,000 gain on a sale of property.~~42% increase over the prior year period. The increase in before tax investment income compared with prior year was primarily attributable to improved market conditions.

Net earnings ~~increased $22,709,000, or 168%,~~decreased by 17% to $6,061,000 in the ~~current three month period~~second quarter and by 68% to ~~$36,249,000. Net earnings for~~$7,839,000 in the current year quarter benefited from a $20.9 million, or $1.11 per diluted share, gain on the remeasurement of deferred tax liabilities and a $2.0 million, or $0.11 per diluted share, reduction in income taxes related primarily to the lower corporate tax rate enacted under the Tax Cuts and Jobs Act in December 2017. Net earnings were impacted by a $1.2 million, or $.06 per diluted share, provision for the one time repatriation tax required under the new tax law. Excluding the deferred tax gain and the one time repatriation tax, oursix months. Our effective tax rate ~~decreased to 28.6% from 34.0%~~was 20% in the six months compared with 28% in the prior ~~year quarter reflecting the reduction in the federal statutory rate to 21% from 35% for the remaining three quarters of fiscal 2018. Last~~ year’s quarter’s effective tax rate benefitted from an unusually high tax benefit on share based compensation of $783,000 which compares to this year’s quarter’s tax benefit of $137,000. We are presently estimating an effective tax rate of 28-29% for the last three quarters of our fiscal year 2018 and 26-27% for our fiscal year 2019.six- month period.

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.

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth, in item 7a. “Quantitative and Qualitative Disclosures About Market Risk,” in its 2020 annual report on Form 10-K filed with the SEC.

~~There has been no material change in the Company~~’s assessment of its sensitivity to market risk since its presentation set forth, in item 7a. “Quantitative and Qualitative Disclosures About Market Risk,” in its 2017 annual report on Form 10-K filed with the SEC.

Item 4.

Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of December 30, 2017,
The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of March 27, 2021, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in the ~~Company~~’sCompany’s internal control over financial reporting during the quarter ended ~~December 30, 2017,~~March 27,2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

30

PART II. OTHER INFORMATION

Item 6.

Exhibits


	Exhibit No.

	10.1 Amended and Restated Long Term Incentive Plan (Incorporated by reference from the Company’s Form 8-K filed on February 12, 2021).

	31.1	&	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~ 2002.
~~31.2~~
	31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.3 Certification Pursuant to Section of 302 of the Sarbanes-Oxley Act of 2020.

~~99.5~~	&	32.1 Certification Pursuant to the 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~
~~99.6~~2002.

	32.2 Certification Pursuant to the 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.3 Certification Pursuant to the 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.1

The following financial information from J&J Snack Foods Corp.'s Quarterly Report on Form 10-Q for the quarter ended ~~December 30, 2017,~~March 27, 2021, formatted in ~~XBRL (extensible~~iXBRL (Inline extensible Business Reporting Language):


		(i)	Consolidated Balance Sheets,

(ii)

Consolidated Statements of Earnings,

(iii)

Consolidated Statements of Comprehensive Income,

(iv)

Consolidated Statements of Cash Flows and

(v)

the Notes to the Consolidated Financial Statements

104

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

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

J & J SNACK FOODS CORP.

Dated: April 29, 2021	/s/ Gerald B. Shreiber	~~J & J SNACK FOODS CORP.~~

	Gerald B. Shreiber
	Chairman of the Board,
	Chief Executive
	Officer and Director
	(Principal Executive Officer)


~~Dated: February 1, 2018~~		~~/s/~~ ~~Gerald B. Shreiber~~
		~~Gerald B. Shreiber~~ ~~Chairman of the Board,~~ ~~President, Chief Executive~~ ~~Officer and Director~~ ~~(Principal Executive Officer)~~



Dated: April 29, 2021	/s/ Dan Fachner
~~Dated:~~ ~~February 1, 2018~~	Dan Fachner
~~/s/ Dennis G. Moore~~	President
	(Principal Executive Officer)
		~~Dennis G. Moore,~~



Dated: April 29, 2021	/s/ Ken A. Plunk
	Ken A. Plunk, Senior Vice
	President and Chief Financial Officer ~~and Director~~
	(Principal Financial Officer)
	(Principal Accounting Officer)

24

32

New Jersey	22-1935537
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, no par value	JJSF	The NASDAQ Global Select Market

Large ~~accelerated~~Accelerated filer	~~(X)~~	☒	Accelerated filer	~~( )~~ ☐

Non-accelerated filer	~~( )~~ ☐	~~(Do not check if a smaller reporting company)~~
			Smaller reporting company	~~( )~~ ☐
			Emerging growth company	~~( )~~ ☐

	Page
	Number
Part I. Financial Information
		~~Page~~ ~~Number~~
~~Part I.~~	~~Financial Information~~

Item l.	Consolidated Financial Statements

Consolidated Balance Sheets – ~~December 30, 2017~~March 27,2021 (unaudited) and September ~~30, 2017~~ 26, 2020	3

Consolidated Statements of Earnings (unaudited) – Three and six months ~~ended December 30, 2017~~Ended March 27, 2021 and ~~December 24, 2016~~ March 28, 2020	4

Consolidated Statements of Comprehensive Income (unaudited) – Three ~~Months~~and six months Ended ~~December 30, 2017~~March 27, 2021 and ~~December 24, 2016~~ March 28, 2020	5

Consolidated Statements of Changes In Stockholders’ Equity (unaudited) – Three and six months Ended March 27, 2021 and March 28, 2020	6

Consolidated Statements of Cash Flows (unaudited) – ~~Three~~ Six Months Ended ~~December 30, 2017~~March 27, 2021 and ~~December 24, 2016~~ March 28, 2020	6 7

Notes to the Consolidated Financial Statements (unaudited)	7 8

Item 2.	~~Management~~’s Management’s Discussion and Analysis of Financial Condition and Results of Operations	19 26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23 30

Item 4.	Controls and Procedures	23 30

Part II.	Other Information

Item 6. Exhibits	~~Exhibits~~	24 31

	December 30,			September 30,			March 27,
	2017			2017			2021			September 26,
	(unaudited)						(unaudited)			2020
Assets
Current assets
Cash and cash equivalents	$	81,089		$	90,962		$	238,386		$	195,809
Marketable securities held to maturity		49,445			59,113			21,379			51,151
Accounts receivable, net		109,709			124,553			137,683			126,587
Inventories		113,049			103,268			115,590			108,923
Prepaid expenses and other		3,800			3,936			17,231			17,087
Total current assets		357,092			381,832			530,269			499,557

Property, plant and equipment, at cost
Land		2,494			2,482			2,494			2,494
Buildings		26,582			26,741			26,582			26,582
Plant machinery and equipment		258,738			257,172			337,763			330,168
Marketing equipment		277,236			278,860			248,461			250,914
Transportation equipment		8,438			8,449			9,942			9,966
Office equipment		25,574			25,302			34,186			33,878
Improvements		37,999			38,003			44,797			43,264
Construction in progress		21,997			16,880			23,484			19,995
Total Property, plant and equipment, at cost		659,058			653,889			727,709			717,261
Less accumulated depreciation and amortization		429,217			426,308			472,012			455,645
Property, plant and equipment, net		229,841			227,581			255,697			261,616

Other assets
Goodwill		102,511			102,511			121,833			121,833
Other intangible assets, net		60,453			61,272			80,305			81,622
Marketable securities held to maturity		82,066			60,908			7,580			16,927
Marketable securities available for sale		30,150			30,260			12,518			13,976
Operating lease right-of-use assets								53,994			58,110
Other		2,904			2,864			2,719			2,912
Total other assets		278,084			257,815			278,949			295,380
Total Assets	$	865,017		$	867,228		$	1,064,915		$	1,056,553

Liabilities and Stockholders' Equity
Current Liabilities
Current obligations under capital leases	$	339		$	340
Current finance lease liabilities							$	288		$	349
Accounts payable		68,033			72,729			83,460			73,135
Accrued insurance liability		11,215			10,558			14,136			13,039
Accrued liabilities		10,491			7,753			7,272			7,420
Current operating lease liabilities								12,978			13,173
Accrued compensation expense		11,764			19,826			14,120			16,134
Dividends payable		8,400			7,838			10,943			10,876
Total current liabilities		110,242			119,044			143,197			134,126

Long-term obligations under capital leases		815			904
Noncurrent finance lease liabilities								256			368
Noncurrent operating lease liabilities								43,609			47,688
Deferred income taxes		44,462			62,705			64,449			64,413
Other long-term liabilities		2,117			2,253			404			460

Stockholders' Equity
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued		-			-
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 18,668,000 and 18,663,000 respectively		18,589			17,382
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued								0			0
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,034,000 and 18,915,000 respectively								65,026			49,268
Accumulated other comprehensive loss		(12,872	)		(8,875	)		(13,839	)		(15,587	)
Retained Earnings		701,664			673,815			761,813			775,817
Total stockholders' equity		707,381			682,322			813,000			809,498
Total Liabilities and Stockholders' Equity	$	865,017		$	867,228		$	1,064,915		$	1,056,553

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

J&J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)

					Accumulated
					Other
	Common Stock				Comprehensive			Retained
	Shares		Amount		Loss			Earnings			Total

Balance as September 26, 2020		18,915	$	49,268	$	(15,587	)	$	775,817		$	809,498
Issuance of common stock upon exercise of stock options		41		4,390		0			0			4,390
Foreign currency translation adjustment		-		0		2,279			0			2,279
Dividends declared		-		0		0			(10,900	)		(10,900	)
Share-based compensation		-		1,244		0			0			1,244
Net earnings		-		0		0			1,778			1,778

Balance at December 26, 2020		18,956	$	54,902	$	(13,308	)	$	766,695		$	808,289
Issuance of common stock upon exercise of stock options		72		8,384		0			0			8,384
Issuance of common stock for employee stock purchase plan		6		714		0			0			714
Foreign currency translation adjustment		-		0		(531	)		0			(531	)
Dividends declared		-		0		0			(10,943	)		(10,943	)
Share-based compensation		-		1,026		0			0			1,026
Net earnings		-		0		0			6,061			6,061

Balance at March 27, 2021		19,034	$	65,026	$	(13,839	)	$	761,813		$	813,000

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ~~EARNINGS~~CASH FLOWS
(Unaudited) (in thousands)
~~(in thousands, except per share amounts)~~

	Three months ended
	December 30,			December 24,
	2017			2016

Net Sales	$	265,210		$	225,570

Cost of goods sold⁽¹⁾		191,931			159,675
Gross Profit		73,279			65,895

Operating expenses
Marketing⁽²⁾		21,576			20,335
Distribution ⁽³⁾		21,159			18,164
Administrative ⁽⁴⁾		9,356			8,098
Other general income		(40	)		(29	)
Total Operating Expenses		52,051			46,568

Operating Income		21,228			19,327

Other income (expense)
Investment income		1,489			1,227
Interest expense & other		509			(26	)

Earnings before income taxes		23,226			20,528

Income tax (benefit) expense		(13,023	)		6,988

NET EARNINGS	$	36,249		$	13,540

Earnings per diluted share	$	1.93		$	0.72

Weighted average number of diluted shares		18,778			18,787

Earnings per basic share	$	1.94		$	0.72

Weighted average number of basic shares		18,666			18,686

~~(1) Includes share-based compensation expense of $218 and $182 for the three months ended December 30, 2017 and December 24, 2016, respectively.~~
~~(2) Includes share-based compensation expense of $339 and $261 for the three months ended December 30, 2017 and December 24, 2016, respectively.~~
~~(3) Includes share-based compensation expense of $19 and $18 for the three months ended December 30, 2017 and December 24, 2016, respectively.~~
~~(4) Includes share-based compensation expense of $377 and $286 for the three months ended December 30, 2017 and December 24, 2016, respectively.~~

	Three Months Ended December 24, 2016
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	13,540		18,686	$	0.72

Effect of Dilutive Securities
Options		-		101		-

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	13,540		18,787	$	0.72

	December 30,		September 30,
	2017		2017
	(unaudited)
	(in thousands)

Finished goods	$	51,808	$	45,394
Raw materials		25,291		22,682
Packaging materials		9,765		8,833
Equipment parts and other		26,185		26,359
Total Inventories	$	113,049	$	103,268