UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended ~~December~~June 26, ~~2020~~2021

☐	☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 0-14616

J&J SNACK FOODS CORP.

(Exact name of registrant as specified in its charter)

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

6000 Central Highway, Pennsauken, New Jersey 08109

(Address of principal executive offices)

Telephone (856) 665-9533

Securities registered pursuant to Section 12(b) of the Exchange Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒

Yes

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐
		Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐

Yes

☒

~~As January 19,~~At July 23, 2021 there were ~~18,979,637~~19,063,903 shares of the Registrant’s Common Stock outstanding.

INDEX

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

Item l.	Consolidated Financial Statements

Consolidated Balance Sheets – ~~December 26, 2020 (unaudited)~~June 26,2021(unaudited) and September 26, 2020	3

Consolidated Statements of Earnings (unaudited) – Three and nine months ~~ended December~~Ended June 26, ~~2020~~2021 and ~~December 28, 2019~~ June 27, 2020	4

Consolidated Statements of Comprehensive Income (unaudited) – Three ~~Months~~and nine months Ended ~~December~~June 26, ~~2020~~2021 and ~~December 28, 2019~~ June 27, 2020	5

Consolidated Statements of Changes In Stockholders’ Equity (unaudited) – Three ~~Months~~and nine months Ended ~~December~~June 26, ~~2020~~2021 and ~~December 28, 2019~~ June 27, 2020	6

Consolidated Statements of Cash Flows (unaudited) – ~~Three~~Nine Months Ended ~~December~~June 26, ~~2020~~2021 and ~~December 28, 2019~~June 27, 2020	7

Notes to the Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25 27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28 31

Item 4.	Controls and Procedures	28 31

Part II. Other Information	32

Item 6. Exhibits	~~Exhibits~~	29 32

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

~~CONSOLIDATED BALANCE SHEETS~~

~~(in~~
J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

	December 26,						June 26,
	2020			September 26,			2021			September 26,
	(unaudited)			2020			(unaudited)			2020
Assets
Current assets
Cash and cash equivalents	$	228,335		$	195,809		$	276,268		$	195,809
Marketable securities held to maturity		34,286			51,151			9,902			51,151
Accounts receivable, net		113,210			126,587			154,845			126,587
Inventories		114,882			108,923			114,822			108,923
Prepaid expenses and other		17,942			17,087			11,547			17,087
Total current assets		508,655			499,557			567,384			499,557

Property, plant and equipment, at cost
Land		2,494			2,494			2,494			2,494
Buildings		26,582			26,582			26,582			26,582
Plant machinery and equipment		331,357			330,168			340,693			330,168
Marketing equipment		249,440			250,914			253,199			250,914
Transportation equipment		10,251			9,966			10,232			9,966
Office equipment		34,095			33,878			34,291			33,878
Improvements		43,994			43,264			45,349			43,264
Construction in progress		23,874			19,995			28,134			19,995
Total Property, plant and equipment, at cost		722,087			717,261			740,974			717,261
Less accumulated depreciation and amortization		462,873			455,645			482,056			455,645
Property, plant and equipment, net		259,214			261,616			258,918			261,616

Other assets
Goodwill		121,833			121,833			121,833			121,833
Other intangible assets, net		80,947			81,622			79,676			81,622
Marketable securities held to maturity		8,595			16,927			7,568			16,927
Marketable securities available for sale		13,734			13,976			11,273			13,976
Operating lease right-of-use assets		55,989			58,110			51,811			58,110
Other		2,876			2,912			3,083			2,912
Total other assets		283,974			295,380			275,244			295,380
Total Assets	$	1,051,843		$	1,056,553		$	1,101,546		$	1,056,553

Liabilities and Stockholders' Equity
Current Liabilities
Current finance lease liabilities	$	332		$	349		$	252		$	349
Accounts payable		76,325			73,135			97,117			73,135
Accrued insurance liability		13,842			13,039			15,764			13,039
Accrued liabilities		6,924			7,420			6,890			7,420
Current operating lease liabilities		12,981			13,173			12,780			13,173
Accrued compensation expense		11,387			16,134			15,000			16,134
Dividends payable		10,900			10,876			12,064			10,876
Total current liabilities		132,691			134,126			159,867			134,126

Noncurrent finance lease liabilities		299			368			417			368
Noncurrent operating lease liabilities		45,641			47,688			41,573			47,688
Deferred income taxes		64,469			64,413			64,284			64,413
Other long-term liabilities		454			460			375			460

Stockholders' Equity
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued		0			0			0			0
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 18,956,000 and 18,915,000 respectively		54,902			49,268
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,061,000 and 18,915,000 respectively								69,572			49,268
Accumulated other comprehensive loss		(13,308	)		(15,587	)		(13,182	)		(15,587	)
Retained Earnings		766,695			775,817			778,640			775,817
Total stockholders' equity		808,289			809,498			835,030			809,498
Total Liabilities and Stockholders' Equity	$	1,051,843		$	1,056,553		$	1,101,546		$	1,056,553

The accompanying notes are an integral part of these statements.

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

~~CONSOLIDATED STATEMENTS OF EARNINGS~~
~~(Unaudited)~~

~~(in thousands, except per share amounts)~~

Three months ended

December 26,

December 28,

2020

2019

Net Sales
$ 240,997 $ 282,897

Cost of goods sold
190,872 205,036
Gross Profit
50,125 77,861

Operating expenses

Marketing
17,301 22,732
Distribution
22,889 23,542
Administrative
9,440 9,618
Other general expense
(83 ) 266
Total Operating Expenses
49,547 56,158

Operating Income
578 21,703

Other income (expense)

Investment income
1,370 1,786
Interest expense & other
(15 ) (26 )

Earnings before income taxes
1,933 23,463

Income tax expense
155 6,404

NET EARNINGS
$ 1,778 $ 17,059

Earnings per diluted share
$ 0.09 $ 0.89

Weighted average number of diluted shares
19,031 19,144

Earnings per basic share
$ 0.09 $ 0.90

Weighted average number of basic shares
18,935 18,898

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(in thousands, except per share amounts)

	Three months ended						Nine months ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020

Net Sales	$	324,344		$	214,563		$	821,519		$	769,502

Cost of goods sold		228,170			177,367			614,324			585,002
Gross Profit		96,174			37,196			207,195			184,500

Operating expenses
Marketing		20,502			21,952			56,995			68,532
Distribution		27,311			21,272			75,643			69,648
Administrative		10,348			8,374			29,004			28,166
Plant shutdown impairment costs		0			5,072			0			5,072
Other general (income) expense		(131	)		(54	)		(399	)		(183	)
Total Operating Expenses		58,030			56,616			161,243			171,235

Operating Income (loss)		38,144			(19,420	)		45,952			13,265

Other (expense)income
Investment income (loss)		470			1,300			2,419			2,673
Interest (expense) & other		(8	)		(7	)		(19	)		(60	)

Earnings (loss) before income taxes		38,606			(18,127	)		48,352			15,878

Income taxes (benefit)		9,713			(5,480	)		11,620			4,157

NET EARNINGS (LOSS)	$	28,893		$	(12,647	)	$	36,732		$	11,721

Earnings (loss) per diluted share	$	1.51		$	(0.67	)	$	1.92		$	0.62

Weighted average number of diluted shares		19,185			18,888			19,116			19,036

Earnings (loss) per basic share	$	1.52		$	(0.67	)	$	1.93		$	0.62

Weighted average number of basic shares		19,045			18,888			18,996			18,902

The accompanying notes are an integral part of these statements.

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

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(Unaudited)~~

~~(in thousands)~~

Three months ended

December 26,

December 28,

2020

2019

Net Earnings
$ 1,778 $ 17,059

Foreign currency translation adjustments
2,279 810
Total Other Comprehensive Loss
2,279 810

Comprehensive Income
$ 4,057 $ 17,869

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

	Three months ended					Nine months ended
	June 26,		June 27,			June 26,		June 27,
	2021		2020			2021		2020

Net Earnings (loss)	$	28,893	$	(12,647	)	$	36,732	$	11,721

Foreign currency translation adjustments		657		41			2,405		(3,070	)
Total Other Comprehensive Income (loss) , net of tax		657		41			2,405		(3,070	)

Comprehensive Income (loss)	$	29,550	$	(12,606	)	$	39,137	$	8,651

The accompanying notes are an integral part of these statements.

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(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
Issuance of common stock upon exercise of stock options		27		3,564		0			0			3,564
Foreign currency translation adjustment		-		0		657			0			657
Dividends declared		-		0		0			(12,066	)		(12,066	)
Share-based compensation		-		982		0			0			982
Net earnings		-		0		0			28,893			28,893

Balance at June 26, 2021		19,061		69,572		(13,182	)		778,640			835,030

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

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~

~~(in thousands)~~

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

					Accumulated															Accumulated
					Other															Other
	Common Stock				Comprehensive			Retained						Common Stock						Comprehensive			Retained
	Shares		Amount		Loss			Earnings			Total			Shares			Amount			Loss			Earnings			Total

Balance at September 28, 2019		18,895	$	45,744	$	(12,988	)	$	800,995		$	833,751			18,895		$	45,744		$	(12,988	)	$	800,995		$	833,751
Issuance of common stock upon exercise of stock options		5		468		0			0			468			5			468			0			0			468
Foreign currency translation adjustment		-		0		810			0			810			-			0			810			0			810
Dividends declared		-		0		0			(10,867	)		(10,867	)		-			0			0			(10,867	)		(10,867	)
Share-based compensation		-		1,299		0			0			1,299			-			1,299			0			0			1,299
Net earnings		-		0		0			17,059			17,059			-			0			0			17,059			17,059

Balance at December 28, 2019		18,900	$	47,511	$	(12,178	)	$	807,187		$	842,520			18,900		$	47,511		$	(12,178	)	$	807,187		$	842,520
Issuance of common stock upon exercise of stock options															47			5,049			0			0			5,049
Issuance of common stock for employee stock purchase plan															6			783			0			0			783
Foreign currency translation adjustment															-			0			(3,921	)		0			(3,921	)
Issuance of common stock under deferred stock plan															1			90			0			0			90
Dividends declared															-			0			0			(10,878	)		(10,878	)
Share-based compensation															-			1,088			0			0			1,088
Repurchase of common stock															(66	)		(8,972	)		0			0			(8,972	)
Net earnings															-			0			0			7,309			7,309

Balance at March 28, 2020															18,888			45,549			(16,099	)		803,618			833,068
Foreign currency translation adjustment															-			0			41			0			41
Dividends declared															-			0			0			(10,873	)		(10,873	)
Share-based compensation															-			1,011			0			0			1,011
Net loss															-			0			0			(12,647	)		(12,647	)

Balance at June 27, 2020															18,888			46,560			(16,058	)		780,098			810,600

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 26,

December 28,

2020

2019

Operating activities:

Net earnings
$ 1,778 $ 17,059
Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation of fixed assets
12,269 11,887
Amortization of intangibles and deferred costs
679 843
Share-based compensation
1,244 1,299
Deferred income taxes
(8 ) (231 )
Loss on marketable securities
(681 ) 9
Other
(80 ) 14
Changes in assets and liabilities net of effects from purchase of companies

Decrease in accounts receivable
13,701 10,254
Increase in inventories
(5,641 ) (8,524 )
(Increase) decrease in prepaid expenses
(889 ) 1,922
Decrease in accounts payable and accrued liabilities
(1,068 ) (963 )
Net cash provided by operating activities
21,304 33,569
Investing activities:

Payments for purchases of companies, net of cash acquired
0 (44,970 )
Purchases of property, plant and equipment
(9,676 ) (17,605 )
Purchases of marketable securities
0 (4,000 )
Proceeds from redemption and sales of marketable securities
26,148 18,782
Proceeds from disposal of property and equipment
880 898
Other
15 38
Net cash provided by (used in) investing activities
17,367 (46,857 )
Financing activities:

Proceeds from issuance of stock
4,390 468
Payments on finance lease obligations
(86 ) (86 )
Payment of cash dividend
(10,876 ) (9,447 )
Net cash used in financing activities
(6,572 ) (9,065 )
Effect of exchange rate on cash and cash equivalents
427 285
Net increase (decrease) in cash and cash equivalents
32,526 (22,068 )
Cash and cash equivalents at beginning of period
195,809 192,395
Cash and cash equivalents at end of period
$ 228,335 $ 170,327

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (in thousands)

	Nine Months Ended
	June 26,			June 27,
	2021			2020
Operating activities:
Net earnings	$	36,732		$	11,721
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of fixed assets		36,278			37,353
Amortization of intangibles and deferred costs		2,096			2,516
Share-based compensation		3,252			3,421
Deferred income taxes		(188	)		(426	)
(Gain) loss on marketable securities		(926	)		1,746
Plant shutdown impairment costs		0			5,072
Other		(305	)		(309	)
Changes in assets and liabilities net of effects from purchase of companies
(Increase) decrease in accounts receivable		(27,940	)		24,634
Increase in inventories		(5,964	)		(3,751	)
(Increase) decrease in prepaid expenses		5,710			(7,879	)
Increase (decrease) in accounts payable and accrued liabilities		24,823			(7,478	)
Net cash provided by operating activities		73,568			66,620
Investing activities:
Payments for purchases of companies, net of cash acquired		0			(57,197	)
Purchases of property, plant and equipment		(34,456	)		(47,637	)
Purchases of marketable securities		0			(6,103	)
Proceeds from redemption and sales of marketable securities		54,191			54,125
Proceeds from disposal of property and equipment		2,079			2,852
Other		42			(72	)
Net cash provided by (used in) investing activities		21,856			(54,032	)
Financing activities:
Payments to repurchase common stock		0			(8,972	)
Proceeds from issuance of stock		17,178			6,300
Payments on capitalized lease obligations		(48	)		(272	)
Payment of cash dividend		(32,719	)		(31,193	)
Net cash used in financing activities		(15,589	)		(34,137	)
Effect of exchange rate on cash and cash equivalents		624			(885	)
Net increase (decrease) in cash and cash equivalents		80,459			(22,434	)
Cash and cash equivalents at beginning of period		195,809			192,395
Cash and cash equivalents at end of period	$	276,268		$	169,961

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 and Rule 10-01 of Regulation 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 for the year ended September 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 nine months ended June 26, 2021 and June 27, 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. Approximately 2/3 of our sales are to venues and locations that previously shut down or sharply curtailed their foodservice operations as a result of COVID-19, which has impacted the comparative nature of our results. While the majority of these venues have re-opened, the future impact of COVID-19 is still uncertain and continues to be monitored.

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.

~~The results of operations for the~~ ~~three~~ ~~months ended~~ ~~December 26, 2020~~ ~~and~~ ~~December 28, 2019~~ ~~are~~ ~~not~~ ~~necessarily indicative of results for the full year. Sales of our frozen beverages and frozen juice bars 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. 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, 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 26, 2020.~~

Note 2

Revenue Recognition

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 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.

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.~~

~~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 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.

~~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. We review and update our estimates and related accruals of variable consideration each period based on historical experience. Our recorded liability for allowances, end-user pricing adjustments and trade spending was approximately $14.7 million at ~~December 26, 2020~~ ~~and $14.3 million~~
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. We review and update our estimates and related accruals of variable consideration each period based on historical experience. Our recorded liability for allowances, end-user pricing adjustments and trade spending was $15,481,000 at June 26, 2021 and $14,345,000 at September 26, 2020.
Warranties & Returns
We provide 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 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 service contracts in advance of performance and therefore we have contract liabilities on our balance sheet as follows:

	(in thousands)
	Three months ended						Nine months ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020

Beginning Balance	$	1,090		$	1,235		$	1,327		$	1,334
Additions to contract liability	$	1,237			1,362			4,182			4,111
Amounts recognized as revenue	$	(1,283	)		(1,311	)		(4,465	)		(4,159	)
Ending Balance	$	1,044		$	1,286		$	1,044		$	1,286

~~Warranties & Returns~~

We provide 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 warranties provided under the law. No ~~services beyond an assurance warranty are provided to our customers.~~

~~We do~~ ~~not~~ ~~grant a general right~~Disaggregation 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.~~Revenue

~~Contract Balances~~

~~Our customers are billed for service contracts in advance of performance and therefore we have contract liability on our balance sheet as follows:~~

Three Months Ended

December 26,

December 28,

2020

2019

(in thousands)

Beginning Balance
$ 1,327 $ 1,334
Additions to contract liability
1,744 1,275
Amounts recognized as revenue
(1,355 ) (1,515 )
Ending Balance
$ 1,716 $ 1,094

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

~~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. For the~~ ~~first~~ ~~quarter ended~~ ~~December~~ ~~26,2020,~~ ~~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 for this quarter. 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 customer’s ability to pay off obligations. The allowance for doubtful receivables was $1,388,000 and $1,388,000 on ~~December 26,~~
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 $1,185,000 and $1,388,000 on June 26, 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 2 to 20 years. Depreciation expense was ~~$12,269,000~~$12,025,000 and ~~$11,887,000~~$12,543,000 for the three months ended ~~December~~June 26, ~~2020~~2021 and ~~December 28, 2019,~~June 27, 2020, respectively and $36,278,000 and $37,353,000 for the nine months ended June 26, 2021 and June 27, 2020, respectively.

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 26, 2020

Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(in thousands, except per share amounts)

Basic EPS

Net Earnings available to common stockholders
$ 1,778 18,935 $ 0.09

Effect of Dilutive Securities

Options
0 96 0

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions
$ 1,778 19,031 $ 0.09
11

Three Months Ended June 26, 2021

Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(in thousands, except per share amounts)

Basic EPS

Net Earnings available to common stockholders
$ 28,893 19,045 $ 1.52

Effect of Dilutive Securities

Options
0 140 (0.01 )

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions
$ 28,893 19,185 $ 1.51

~~187,722~~20,800 anti-dilutive shares have been excluded in the computation of EPS for the three months ended ~~December~~June 26, ~~2020~~2021

Three Months Ended December 28, 2019

Nine Months Ended June 26, 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
$ 17,059 18,898 $ 0.90 $ 36,732 18,996 $ 1.93

Effect of Dilutive Securities

Options
0 246 (0.01 ) 0 120 (0.01 )

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions
$ 17,059 19,144 $ 0.89 $ 36,732 19,116 $ 1.92

~~20,000~~289,692 anti-dilutive shares have been excluded in the computation of EPS for the nine months ended June 26, 2021
12

Three Months Ended June 27, 2020

Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(in thousands, except per share amounts)

Basic EPS

Net Earnings available to common stockholders
$ (12,647 ) 18,888 $ (0.67 )

Effect of Dilutive Securities

Options
0 0 0

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions
$ (12,647 ) 18,888 $ (0.67 )
845,977 anti-dilutive shares have been excluded in the computation of EPS for the three months ended ~~December 28, 2019~~June 27, 2020

12

Nine Months Ended June 27, 2020

Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(in thousands, except per share amounts)

Basic EPS

Net Earnings available to common stockholders
$ 11,721 18,902 $ 0.62

Effect of Dilutive Securities

Options
0 134 0

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions
$ 11,721 19,036 $ 0.62
169,246 anti-dilutive shares have been excluded in the computation of EPS for the nine months ended June 27, 2020

Note 5
At ~~December~~June 26, ~~2020,~~2021, the Company has three stock-based employee compensation plans. Share-based compensation expense was recognized as follows:

Three months ended

December 26,

December 28,

Three months ended

Nine months ended

2020

2019

June 26,

June 27,

June 26,

June 27,

(in thousands)
2021

2020

2021

2020

(in thousands)
Stock Options
$ 546 $ 965 $ 512 $ 890 $ 1,505 $ 2,267
Stock purchase plan
278 202 171 57 513 328
Stock issued to outside director
11 17 33 50
Restricted stock issued to an employee
23 0 70 0
Total share-based compensation
$ 824 $ 1,167 $ 717 $ 964 $ 2,121 $ 2,645

The above compensation is net of tax benefits
$ 420 $ 132 $ 265 $ 70 $ 1,131 $ 822

~~The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model.~~
~~The Company did~~ ~~not~~ ~~grant any stock options during the fiscal years~~
~~2021~~13 ~~and~~ ~~2020~~~~three~~~~-month periods, respectively.~~
~~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

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 2021nine months: expected volatility of 25.8%; risk-free interest rate of 0.8%; dividend rate of 1.4% and expected lives of 51 months.
During the fiscal year2021nine-month period, the Company granted 138,432 stock options. The weighted-average grant date fair value of these options was $31.20.
During the fiscal year 2020nine-month period, the Company granted 161,682 stock options. The weighted-average grant date fair value of these options was $14.40.
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.
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 June 26, 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 June 26, 2021, and September 26, 2020, the Company has $267,000 of accrued interest and penalties.

~~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 $360,000 on both~~ ~~December 26, 2020~~ ~~and~~ ~~September 26, 2020,~~ ~~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 26, 2020~~ ~~and~~ ~~September 26, 2020,~~ ~~the Company has $267,000 of accrued interest and penalties.~~
1314

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.
~~Our effective tax rate for the~~ ~~three~~ ~~months ended~~ ~~December 26, 2020~~ ~~was 8% primarily due to a $420,000 tax benefit related to share based compensation. Our effective tax rate was 28.0% in last year’s quarter.~~
Our effective tax rate for the nine months ended June 26, 2021 was 24%, primarily due to a $1,131,000 tax benefit related to share-based compensation. Our effective tax rate for the nine months ended June 27, 2020 was 26%.

Note 7
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the impairment model used to measure credit losses for most financial assets. We are required to recognize an allowance that reflects the Company’s current estimate of credit losses expected to be incurred over the life of the financial asset, including trade receivables and held-to-maturity debt securities.
The Company adopted this guidance in the first quarter of Fiscal 2021 using the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements.
~~The Company adopted this guidance in the~~ ~~first~~ ~~quarter of Fiscal~~ ~~2021~~ ~~using the modified retrospective transition method. The adoption of ASU~~ ~~2016~~-13 ~~did~~ ~~not~~ ~~have a material impact on the Company’s Consolidated Financial Statements for the~~ ~~three~~ ~~months ended~~ ~~December 26, 2020.~~

Note 8
Inventories consist of the following:

December 26,

September 26,

June 26,

September 26,

2020

2020

2021

2020

(unaudited)

(unaudited)

(in thousands)

(in thousands)

Finished goods
$ 40,789 $ 40,184 $ 40,850 $ 40,184
Raw materials
28,645 24,550 29,171 24,550
Packaging materials
11,749 10,545 12,080 10,545
Equipment parts and other
33,699 33,644 32,721 33,644
Total Inventories
$ 114,882 $ 108,923 $ 114,822 $ 108,923

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.

1415

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

Food Service

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

Retail Supermarkets

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

15

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 26,

December 28,

2020

2019

(unaudited)
(in thousands)
Sales to External Customers:

Food Service

Soft pretzels
$ 32,687 $ 49,941
Frozen juices and ices
6,295 7,043
Churros
11,542 16,391
Handhelds
17,611 7,189
Bakery
88,964 96,372
Other
3,326 6,512
Total Food Service
$ 160,425 $ 183,448

Retail Supermarket

Soft pretzels
$ 13,888 $ 9,826
Frozen juices and ices
15,316 10,093
Biscuits
7,660 6,978
Handhelds
2,780 2,761
Coupon redemption
(1,075 ) (543 )
Other
525 311
Total Retail Supermarket
$ 39,094 $ 29,426

Frozen Beverages

Beverages
$ 15,855 $ 35,255
Repair and maintenance service
18,896 22,486
Machines revenue
6,489 11,981
Other
238 301
Total Frozen Beverages
$ 41,478 $ 70,023

Consolidated Sales
$ 240,997 $ 282,897

Depreciation and Amortization:

Food Service
$ 6,786 $ 6,918
Retail Supermarket
386 359
Frozen Beverages
5,776 5,453
Total Depreciation and Amortization
$ 12,948 $ 12,730

Operating Income :

Food Service
$ 6,180 $ 18,034
Retail Supermarket
4,723 2,217
Frozen Beverages
(10,325 ) 1,452
Total Operating Income
$ 578 $ 21,703

Capital Expenditures:

Food Service
$ 8,286 $ 8,403
Retail Supermarket
21 960
Frozen Beverages
1,369 8,242
Total Capital Expenditures
$ 9,676 $ 17,605

Assets:

Food Service
$ 744,277 $ 760,852
Retail Supermarket
31,668 30,963
Frozen Beverages
275,898 304,291
Total Assets
$ 1,051,843 $ 1,096,106
16

16

Three months ended

Nine months ended

June 26

June 27

June 26

June 27

2021

2020

2021

2020

Sales to External Customers:

Food Service

Soft pretzels
$ 50,895 $ 21,384 $ 120,359 $ 116,985
Frozen juices and ices
13,927 8,688 30,812 25,222
Churros
20,096 7,321 46,358 38,466
Handhelds
18,971 7,448 56,574 22,084
Bakery
85,706 69,237 257,580 255,016
Other
6,884 2,543 14,546 13,628
Total Food Service
$ 196,478 $ 116,621 $ 526,226 $ 471,401

Retail Supermarket

Soft pretzels
$ 11,193 $ 12,716 $ 40,871 $ 34,874
Frozen juices and ices
36,898 33,322 71,600 59,279
Biscuits
4,562 8,151 18,717 21,759
Handhelds
1,191 3,257 6,215 9,135
Coupon redemption
(513 ) (807 ) (2,196 ) (2,216 )
Other
526 863 1,652 1,668
Total Retail Supermarket
$ 53,857 $ 57,502 $ 136,859 $ 124,499

Frozen Beverages

Beverages
$ 42,279 $ 16,456 $ 76,663 $ 83,606
Repair and maintenance service
22,789 17,259 59,903 61,524
Machines revenue
8,404 6,363 20,556 27,254
Other
536 362 1,312 1,218
Total Frozen Beverages
$ 74,009 $ 40,440 $ 158,434 $ 173,602

Consolidated Sales
$ 324,344 $ 214,563 $ 821,519 $ 769,502

Depreciation and Amortization:

Food Service
$ 6,817 $ 7,050 $ 20,334 $ 21,208
Retail Supermarket
378 468 1,147 1,156
Frozen Beverages
5,469 5,864 16,893 17,505
Total Depreciation and Amortization
$ 12,664 $ 13,382 $ 38,374 $ 39,869

Operating Income :

Food Service
$ 17,644 $ (18,242 ) $ 29,879 $ 7,743
Retail Supermarket
9,080 7,910 20,167 14,464
Frozen Beverages
11,420 (9,088 ) (4,094 ) (8,942 )
Total Operating Income (Loss)
$ 38,144 $ (19,420 ) $ 45,952 $ 13,265

Capital Expenditures:

Food Service
$ 10,383 $ 7,865 $ 25,915 $ 26,599
Retail Supermarket
93 390 194 1,625
Frozen Beverages
5,151 2,397 8,347 19,413
Total Capital Expenditures
$ 15,627 $ 10,652 $ 34,456 $ 47,637

Assets:

Food Service
$ 779,730 $ 729,331 $ 779,730 $ 729,331
Retail Supermarket
33,405 33,766 33,405 33,766
Frozen Beverages
288,411 294,189 288,411 294,189
Total Assets
$ 1,101,546 $ 1,057,286 $ 1,101,546 $ 1,057,286
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 ~~December~~June 26, ~~2020~~2021 and September 26, 2020 are as follows:

December 26, 2020

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
670 658 670 645
Customer relationships
13,000 5,213 19,737 11,595
License and rights
1,690 1,333 1,690 1,312
TOTAL FOOD SERVICE
$ 25,768 $ 7,204 $ 32,505 $ 13,552

RETAIL SUPERMARKETS

Indefinite lived intangible assets

Trade names
$ 12,750 $ - $ 12,750 $ -

Amortized Intangible Assets

Trade names
676 554 676 519
Customer relationships
7,907 5,338 7,907 5,140
TOTAL RETAIL SUPERMARKETS
$ 21,333 $ 5,892 $ 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
1,439 293 1,439 257
Licenses and rights
1,400 1,019 1,400 1,002
TOTAL FROZEN BEVERAGES
$ 48,254 $ 1,312 $ 48,254 $ 1,259

CONSOLIDATED
$ 95,355 $ 14,408 $ 102,092 $ 20,470
~~Fully amortized intangible assets have been removed from the~~ ~~December 26, 2020~~ ~~amounts.~~
17

Amortizing intangible assets are being amortized by the straight-line method over periods ranging from 2 to 20 years and amortization expense is reflected throughout operating expenses. Aggregate amortization expense of intangible assets for the ~~three~~ ~~months ended~~ ~~December 26, 2020~~ ~~and~~ ~~December 28, 2019~~ ~~was $679,000 and $843,000, respectively.~~
~~Estimated amortization expense for the next~~ ~~five~~ ~~fiscal years is approximately $2,500,000 in~~ ~~2021,~~ ~~$2,300,000 in~~ ~~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 10.9 years.~~
~~Goodwill~~
~~The carrying amounts of goodwill for the Food Service, Retail Supermarket and Frozen Beverage segments are as follows:~~

Food
Service

Retail
Supermarket

Frozen
Beverages
Total
(in thousands)
Balance at December 26, 2020 $ 61,189 $ 4,146 $ 56,498 $ 121,833

Balance at September 26, 2020 $ 61,189 $ 4,146 $ 56,498 $ 121,833
June 26, 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 5,863 19,737 11,595
License and rights
1,690 1,375 1,690 1,312
TOTAL FOOD SERVICE
$ 25,768 $ 7,908 $ 32,505 $ 13,552

RETAIL SUPERMARKETS

Indefinite lived intangible assets

Trade names
$ 12,750 $ - $ 12,750 $ -

Amortized Intangible Assets

Trade names
676 619 676 519
Customer relationships
7,907 5,733 7,907 5,140
TOTAL RETAIL SUPERMARKETS
$ 21,333 $ 6,352 $ 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
1,439 365 1,439 257
Licenses and rights
1,400 1,054 1,400 1,002
TOTAL FROZEN BEVERAGES
$ 48,254 $ 1,420 $ 48,254 $ 1,259

CONSOLIDATED
$ 95,355 $ 15,680 $ 102,092 $ 20,470
Fully amortized intangible assets have been removed from the June 26, 2021 amounts.
Amortizing intangible assets are being amortized by the straight-line method over periods ranging from 2 to 20 years and amortization expense is reflected throughout operating expenses. Aggregate amortization expense of intangible assets for the three months ended June 26, 2021 and June 27, 2020 was $639,000 and $831,000, respectively. Aggregate amortization expense of intangible assets for the nine months ended June 26, 2021 and June 27, 2020 was $2,096,000 and $2,507,000, respectively.
18
Estimated amortization expense for the next five fiscal years is approximately $2,500,000 in 2021, $2,300,000 in 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 10.9 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 June 26, 2021
$ 61,189 $ 4,146 $ 56,498 $ 121,833

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


Note 11
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.~~
18

~~Marketable~~ securities held to maturity and available for ~~sale consist primarily of investments~~sale. The FASB defines fair value as the price that would be received from selling an asset or paid to transfer a liability in ~~mutual funds, preferred stock and corporate bonds. The~~an orderly transaction between market participants. As such, fair ~~values of mutual funds are~~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 ~~market~~ prices in active markets ~~and are classified within~~for identical assets or liabilities;
Level 2
Observable inputs, other than Level 1 ~~of the fair value hierarchy. The fair values of preferred stock, corporate bonds and certificates of deposit are based on quoted prices for identical or similar instruments~~inputs in active markets, that are ~~not~~ ~~active. As a result, preferred stock, corporate bonds~~observable either directly or indirectly; and ~~certificates of deposit are classified within~~
Level 23
Unobservable inputs for which there is little or no ofmarket data, which require the ~~fair value hierarchy.~~
~~The amortized cost, unrealized gains and losses, and fair market values of our investment securities held~~reporting entity to ~~maturity at~~ ~~December 26, 2020~~ ~~are summarized as follows:~~develop its own assumptions.

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Corporate Bonds
42,881 606 15 43,472
Total marketable securities held to maturity
$ 42,881 $ 606 $ 15 $ 43,472
~~The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at~~ ~~December 26, 2020~~ ~~are summarized as follows:~~

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual Funds
$ 3,588 $ 0 $ 672 $ 2,916
Preferred Stock
10,751 206 139 10,818
Total marketable securities available for sale
$ 14,339 $ 206 $ 811 $ 13,734
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 ~~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 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~~ ~~2021~~ ~~through~~ ~~2023,~~ ~~with $41 million maturing within 2 years. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.~~
19

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

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Corporate Bonds
68,078 1,015 32 69,061
Total marketable securities held to maturity
$ 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 26, 2020~~ ~~are summarized as follows:~~

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual Funds
$ 3,588 $ 0 $ 738 $ 2,850
Preferred Stock
11,596 116 586 11,126
Total marketable securities available for sale
$ 15,184 $ 116 $ 1,324 $ 13,976
~~The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at~~ ~~December 26, 2020~~ ~~and~~ ~~September 26, 2020~~ ~~are summarized as follows:~~

December 26, 2020

September 26, 2020

Fair

Fair

Amortized

Market

Amortized

Market

Cost

Value

Cost

Value

(in thousands)
Due in one year or less
$ 34,286 $ 34,745 $ 51,151 $ 51,815
Due after one year through five years
8,595 8,727 16,927 17,246
Due after five years through ten years
0 0 0 0
Total held to maturity securities
$ 42,881 $ 43,472 $ 68,078 $ 69,061
Less current portion
34,286 34,745 51,151 51,815
Long term held to maturity securities
$ 8,595 $ 8,727 $ 16,927 $ 17,246
~~Proceeds from the redemption and sale of marketable securities were $26,148,000 in the~~ ~~three~~ ~~months ended~~ ~~December 26, 2020~~ ~~and $18,782,000 in the~~ ~~three~~ ~~ended~~ ~~December 28, 2019,~~ ~~respectively. Losses of $78,000 and $11,000 were recorded in the~~ ~~three~~ ~~months ended~~ ~~December 26, 2020~~ ~~and~~ ~~December 28, 2019,~~ ~~respectively, which included unrealized gains on marketable securities of $603,000 and $71,000 in the~~ ~~three~~ ~~months ended~~ ~~December 26, 2020~~ ~~and~~ ~~December 28, 2019,~~ ~~respectively. We use the specific identification method to determine the cost of securities sold.~~
20

~~Total marketable securities held to maturity as of~~ ~~December 26, 2020~~ with credit ratings of AAA/AA/A had an amortized cost basis totaling $16,866,000 and those with credit ratings of BBB/BB/B had an amortized cost basis totaling $26,015,000. This rating information was obtained ~~December 31,~~
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 are based on quoted prices for identical or similar instruments in markets that are not active. As a result, preferred stock and corporate bonds are classified within Level 2 of the fair value hierarchy.
19
The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at June 26, 2021 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Corporate Bonds
$ 17,470 $ 243 $ 6 $ 17,707
Total marketable securities held to maturity
$ 17,470 $ 243 $ 6 $ 17,707
The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at June 26, 2021 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual Funds
$ 3,588 $ 0 $ 581 $ 3,007
Preferred Stock
8,107 213 54 8,266
Total marketable securities available for sale
$ 11,695 $ 213 $ 635 $ 11,273
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 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 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 2021 through 2023, with $17.5 million maturing within 2 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 26, 2020 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Corporate Bonds
68,078 1,015 32 69,061
Total marketable securities held to maturity
$ 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 26, 2020 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual Funds
$ 3,588 $ 0 $ 738 $ 2,850
Preferred Stock
11,596 116 586 11,126
Total marketable securities available for sale
$ 15,184 $ 116 $ 1,324 $ 13,976
The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at June 26, 2021 and September 26, 2020 are summarized as follows:

June 26, 2021
September 26, 2020

Fair

Fair

Amortized

Market

Amortized

Market

Cost

Value

Cost

Value

(in thousands)

Due in one year or less
$ 9,902 $ 10,041 $ 51,151 $ 51,815
Due after one year through five years
7,568 7,666 16,927 17,246
Due after five years through ten years
0 0 0 0
Total held to maturity securities
$ 17,470 $ 17,707 $ 68,078 $ 69,061
Less current portion
9,902 10,041 51,151 51,815
Long term held to maturity securities
$ 7,568 $ 7,666 $ 16,927 $ 17,246
21
Proceeds from the redemption and sale of marketable securities were $12,854,000 and $54,191,000 in the three and nine months ended June 26, 2021 and were $23,187,000 and $54,125,000 in the three and nine months ended June 27, 2020, respectively. Gains of $21,000 and $139,000 were recorded in the three and nine months ended June 26, 2021, respectively. A gain of $324,000 was recorded in the three months ended June 27, 2020 and losses of $1,746,000 were recorded in the nine months ended June 27, 2020.Included in the gains and losses were unrealized gains of $786,000 and unrealized losses of $1,708,000 in the nine months ended June 26, 2021 and June 27, 2020, respectively. Unrealized gains of $137,000 and $285,000 were recorded in the three months ended June 26, 2021 and June 27, 2020, respectively. We use the specific identification method to determine the cost of securities sold.
Total marketable securities held to maturity as of June 26, 2021 with credit ratings of AAA/AA/A had an amortized cost basis totaling $4,970,000 and those with credit ratings of BBB/BB/B had an amortized cost basis totaling $12,500,000. This rating information was obtained June 30, 2021.

~~Note~~ 12
~~Changes to the components of accumulated other comprehensive loss are as follows:~~
Three Months ended December 26, 2020
(unaudited)
(in thousands)

Foreign Currency

Translation Adjustments

Total

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

Other comprehensive income
2,279 2,279
Ending Balance
$ (13,308 ) $ (13,308 )
Note 12  Changes to the components of accumulated other comprehensive loss are as follows:

Three Months Ended June 26, 2021

Nine Months Ended June 26, 2021

(unaudited)

(unaudited)

(in thousands)

(in thousands)

Foreign Currency

Foreign Currency

Translation

Translation

Adjustments

Total

Adjustments

Total

Beginning Balance
$ (13,839 ) $ (13,839 ) $ (15,587 ) $ (15,587 )

Other comprehensive income (loss) before reclassifications
657 $ 657 2,405 $ 2,405

Ending Balance
$ (13,182 ) $ (13,182 ) $ (13,182 ) $ (13,182 )

Three Months Ended June 27, 2020

Nine Months Ended June 27, 2020

(unaudited)

(unaudited)

(in thousands)

(in thousands)

Foreign Currency

Foreign Currency

Translation

Translation

Adjustments

Total

Adjustments

Total

Beginning Balance
$ (16,099 ) $ (16,099 ) $ (12,988 ) $ (12,988 )

Other comprehensive income (loss) before reclassifications
41 $ 41 (3,070 ) $ (3,070 )

Ending Balance
$ (16,058 ) $ (16,058 ) $ (16,058 ) $ (16,058 )
22
Note 13 On October 1, 2019, we acquired the assets of ICEE Distributors LLC, based in Bossier City, Louisiana. ICEE Distributors does business in Arkansas, Louisiana and Texas with annual sales of approximately $13 million. Sales and operating income of ICEE Distributors were $3,163,000 and $1,099,000 for the three months ended June 26, 2021 and were $6,952,000 and $1,568,000 for the nine months ended June 26, 2021. Sales and operating income of ICEE Distributors were $3,200,000 and $1,100,000 for the three months ended June 27, 2020 and were $8,000,000 and $2,000,000 for the nine months ended June 27, 2020.
On February 4, 2020, we acquired the assets of BAMA ICEE, based in Birmingham, Alabama. BAMA ICEE does business in Alabama and Georgia with annual sales of approximately $3.5 million. Sales and operating income of BAMA ICEE were $632,000 and $221,000 for the three months ended June 26, 2021 and were $1,437,000 and $365,000 for nine months ended June 26, 2021. Sales and operating income of BAMA ICEE were $636,000 and $205,000 for the three months and were $975,000 and $281,000 for the nine months ended June 27, 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
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 nine months ended June 26, 2021. Acquisition costs of $76,000 are included in other general expense for the nine months ended June 27, 2020.
23
Note 14 – Leases

Three Months ended December 28, 2019
(unaudited)
(in thousands)

Foreign Currency

Translation Adjustments

Total

Beginning Balance
$ (12,988 ) $ (12,988 )

Other comprehensive income
810 810
Ending Balance
$ (12,178 ) $ (12,178 )
~~Note~~ 13
On ~~October 1, 2019,~~ we acquired the assets of ICEE Distributors LLC, based in Bossier City, Louisiana. ICEE Distributors does business in Arkansas, Louisiana and Texas with annual sales of approximately $13 million. Sales and operating income of ICEE Distributors were $2.1 million and $0.3 million for the ~~three~~ ~~months ended~~ ~~December 26, 2020.~~ ~~Sales and operating income of ICEE Distributors were $2.5 million and $0.5 million for the~~ ~~three~~ ~~months ended~~ ~~December 28, 2019.~~
On ~~February 4, 2020,~~ we acquired the assets of BAMA ICEE, based in Birmingham, Alabama. BAMA ICEE does business in Alabama and Georgia with annual sales of approximately $3.5 million. Sales and operating income of BAMA ICEE were $400,000 and $75,000 for the ~~three~~ ~~months ended~~ ~~December 26, 2020.~~
21

~~The purchase price allocations for the acquisitions are as follows:~~

(in thousands)

ICEE

Distributors

BAMA ICEE

Total

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
~~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.~~
~~Acquisition costs of $0 and $36,000 are included in other general expense for the~~ ~~three~~ ~~months ended~~ ~~December 26, 2020~~ ~~and~~ ~~December 28, 2019,~~ ~~respectively.~~
~~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 56 years.

22

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.
~~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 a lease-by-lease basis, we have determined if the extension should be considered reasonably certain to be exercised and thus a right-of-use asset and a lease liability should be recorded.

Discount Rate
The discount rate for leases, if not explicitly stated in the lease, is 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 a similar economic environment.

24
We used the discount rate to calculate the present value of the lease liability at the date of adoption. In the development of the discount rate, we considered our incremental borrowing rate as provided by our lender which was based on cash collateral and credit risk specific to us, and our lease portfolio characteristics.

As of ~~December~~June 26, ~~2020,~~2021, the weighted-average discount rate of our operating and finance leases was ~~3.3%~~3.2% and ~~3.1%~~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.

23

Amounts Recognized in the Financial Statements
The components of lease expense were as follows:

Three Months Ended

Three Months Ended

Nine Months Ended

December 26, 2020

June 26, 2021

June 26, 2021

(in thousands)

(in thousands)

(in thousands)

Operating lease cost in Cost of goods sold and Operating Expenses
$ 1,356 $ 3,846 $ 11,747
Finance lease cost:

Amortization of assets in Cost of goods sold and Operating Expenses
412 62 216
Interest on lease liabilities in Interest expense & other
14 5 30
Total finance lease cost
426 67 246
Short-term lease cost in Cost of goods sold and Operating Expenses
0 0 0
Total net lease cost $ 1,782 $ 3,913 $ 11,993

25
Supplemental balance sheet information related to leases is as follows:

December 26, 2020

June 26, 2021

(in thousands)

(in thousands)

Operating Leases

Operating lease right-of-use assets
$ 55,989 $ 51,811

Current operating lease liabilities
$ 12,981 $ 12,780
Noncurrent operating lease liabilities
45,641 41,573
Total operating lease liabilities
$ 58,622 $ 54,353

Finance Leases

Finance lease right-of-use assets in Property, plant and equipment, net
$ 600 $ 654

Current finance lease liabilities
$ 332 $ 252
Noncurrent finance lease liabilities
299 417
Total finance lease liabilities
$ 631 $ 669

Supplemental cash flow information related to leases is as follows:

Three Months Ended

Three Months Ended

Nine Months Ended

December 26, 2020

June 26, 2021

June 26, 2021

(in thousands)

(in thousands)

(in thousands)

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases
$ 1,427 $ 3,860 $ 11,847
Operating cash flows from finance leases
$ 86 $ 64 $ 237
Financing cash flows from finance leases
$ 14 $ 23 $ 48

Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets
$ 776 $ 1,317 $ 2,671
Supplemental noncash information on lease liabilities removed due to purchase of leased asset
$ 0 $ - -

As of ~~December~~June 26, ~~2020,~~2021, the maturities of lease liabilities were as follows:

(in thousands)
(in thousands)

Operating Leases

Finance Leases

Operating Leases

Finance Leases

Nine months ending June 30, 2020

2021
14,484 280
Three months ending September 25, 2021
$ 3,863 $ 117
2022
12,205 168 13,804 203
2023
10,362 98 11,681 133
2024
8,093 98 8,967 133
2025
5,217 26 5,726 61
Thereafter
16,172 0 16,480 70
Total minimum payments
$ 66,533 $ 670 $ 60,521 $ 717
Less amount representing interest
(7,911 ) (39 ) (6,168 ) (48 )
Present value of lease obligations
$ 58,622 $ 631 $ 54,353 $ 669
As of June 26, 2021, the weighted-average remaining term of our operating and finance leases was 6.2 years and 4.2 years, respectively.

2426

Item 2. Management’s Discussion and Analysis of 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 ~~$.575~~$.633 per share of its common stock payable on ~~January~~July 12, 2021, to shareholders of record as of the close of business on ~~December~~June 21, ~~2020.~~2021. The cash dividend of $.633 per share represents an increase of 10% from the previous quarterly dividend rate of $.575 per share.

We purchased 65,648 shares of our common stock in fiscal year 2020, but did not purchase any shares in the ~~three~~nine months ended ~~December~~June 26, ~~2020.~~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; 318,858 shares remain to be purchased under this authorization.

~~Fluctuations~~In the three months ended June 26, 2021 and June 27, 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 decreases of $657,000 and $41,000 in accumulated other comprehensive loss, respectively. In the nine months ended June 26, 2021 and June 27, 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 a decrease of ~~$2,279,000~~$2,405,000 and an increase of $3,070,000 in accumulated other comprehensive loss, ~~in the 2021 first quarter and a decrease of $810,000 in accumulated other comprehensive loss in the 2020 first quarter.~~respectively.
27

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~~June 26, ~~2020.~~2021.

RESULTS OF OPERATIONS

Net sales ~~decreased $41,900,000 or 15%~~increased by 51% to ~~$240,997,000~~$324,344,000 in the third quarter and by 7% to $821,519,000 for the ~~three~~nine months ended ~~December~~June 26, ~~2020. Operating income decreased $21,125,000 or 97% for~~2021 compared to the ~~quarter to $578,000.~~
three and nine months ended June 27, 2020, respectively.

FOOD SERVICE

Sales to food service customers ~~decreased $23,023,000 or 13%~~increased by 68% in the ~~first~~third quarter to ~~$160,425,000. Key customer~~$196,478,000 and by 12% to $526,226,000 for the nine months, compared to respective prior year periods. Food service venues are approaching pre-COVID capacity levels and more confident consumers are leaving their homes and spending more as the market normalizes. Sales accelerated throughout our key channels ~~like theme parks,~~led by schools, amusement/recreation, restaurants, c-stores and ~~theaters continue to operate at limited capacity impacting food service sales.~~ theaters.
Soft pretzel sales to the food service ~~decreased 35%~~market increased by 138% to ~~$32,687,000.~~$50,895,000 in the third quarter and by 3% to $120,359,000 in the nine months. Frozen juices and ices sales ~~decreased 11%~~increased by 60% to ~~$6,295,000~~$13,927,000 in the third quarter and increased by 22% to $30,812,000 in the nine months. Churro sales ~~were down 30%~~to food service customers increased by 174% to $20,096,000 in the third quarter and increased by 21% to ~~$11,542,000. Sales of funnel cake decreased $3,050,000 or 49%~~$46,358,000 in the ~~quarter.~~
25

nine months. Sales of bakery products ~~decreased $7,408,000 or 8%~~increased by 24% in the ~~first~~third quarter to ~~$88,964,000, as~~$85,706,000 and increased by 1% to $257,580,000 for the ~~virus impacted traffic, purchase choices and frequency in this part of our business.~~nine months.

Sales of handhelds increased ~~$10,422,000 or 145%~~by 155% in the third quarter to $18,971,000 and by 156% in the nine months to $56,574,000 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 ~~$12,200,000~~$11,762,000 in ~~this~~the third quarter and $38,929,000 in the nine months led by the previously noted handheld item. Price increases had a marginal impact on results in the quarter as traffic and volume drove almost all of the sales decline compared to ~~last~~prior year.

Operating income in our Food Service segment ~~decreased $11,854,000~~was $17,644,000 in the third quarter compared with an operating loss of $18,242,000 in the prior year quarter. Operating income in our Food Service segment increased by 286% to ~~$6,180,000~~$29,879,000 in the nine months. The increase in operating income was primarily ~~because of~~due to the increase in sales ~~declines~~ which ~~impacted~~improved margin efficiencies and expense leverage.
28

RETAIL SUPERMARKETS

Sales of products to retail supermarkets ~~increased $9,668,000 or 33%~~decreased by 6% to ~~$39,094,000~~$53,857,000 in the ~~first quarter. Our SUPERPRETZEL brand performed well~~third quarter but increased by 10% to $136,859,000 in the nine months. The decrease in sales in the current quarter ~~driving an increase~~was primarily attributable to the stronger customer demand in the prior year third quarter resulting from the initial responses to the COVID-19 pandemic. During the prior year third quarter, a surge in demand and sales was experienced related to the effects of the rapid changes in consumer purchasing habits.
Sales of soft ~~pretzel sales of 41%~~pretzels decreased by 12% in the third quarter to ~~$13,888,000.~~$11,193,000 but increased by 17% in the nine months to $40,871,000. Sales of frozen juices and ices ~~were up 52%~~increased by 11% to ~~$15,316,000~~$36,898,000 in the ~~first~~third quarter and ~~sales~~by 21% to $71,600,000 in the nine months. Sales of biscuits ~~were up 10% to7,660,000.~~decreased by 44% to $4,562,000 in the third quarter and by 14% to $18,717,000 in the nine months. Handheld sales to retail supermarket customers ~~increased 1%~~decreased by 63% to $1,191,000 in the ~~quarter.~~ third quarter and by 32% to $6,215,000 in the nine months.
Sales ~~from~~of new products ~~increased an estimated $400,000~~ in the ~~quarter driven by~~nine months were approximately $550,000 and were primarily related to frozen novelty items.
Price increases had ~~minimum~~a minimal impact on ~~growth~~sales in the third quarter and in the nine months, as sales were driven primarily by ~~increased~~ consumer traffic and volume trends in retail outlets.

Operating income in our Retail Supermarkets segment increased ~~$2,506,000 or 113%~~by 15% to ~~$4,723,000~~$9,080,000 in ~~this year’s first~~the third quarter ~~driven~~and by ~~sales~~39% to $20,167,000 in the nine months. The increases ~~and~~in operating income ~~margins of 12%, over 400 basis points better than last year.~~was primarily attributable to the improvement in operating margins.

FROZEN BEVERAGES

Frozen beverage and related product sales ~~decreased $28,545,000 or 41%~~increased by 83% to ~~$41,478,000~~$74,009,000 in the ~~first quarter. Beverage related~~third quarter but decreased by 9% to $158,434,000 in the nine months.
Beverages sales ~~declined 55%~~increased by 157% to ~~$15,855,000. Gallon sales were down 56% for~~$42,279,000 in the ~~three~~third quarter but decreased by 8% to $76,663,000 in the nine months, ~~as we continue~~with the majority of the fluctuations attributable to ~~see traffic impacted from Covid-19 related concerns~~gallon sales. The increase in ~~theaters, amusement venues and key retailers. These venues also rely on incremental seasonal~~ sales in ~~December~~the current quarter was led by the amusement channel that ~~was impacted from reduced operating capacity~~experienced sales above pre-COVID 19 levels, and ~~consumers staying home.~~ continued traffic increases in the mass merchandise, QSR and theater channels.
Service revenue ~~decreased 16%~~increased by 32% to ~~$18,896,000~~$22,789,000 in the ~~first~~third quarter ~~driven almost entirely from cancellation of a key customer’s planned~~but decreased by 3% to $59,903,000 in the nine months. The increase in the quarter was largely due to customers accelerating equipment maintenance ~~program. Machine~~to support the post COVID-19 recovery.
29
Machines revenue (primarily sales of frozen beverage machines) ~~was $6,489,000, a decrease of 46% due mainly from lapping $5,000,000~~increased by 32% to $8,404,000 in ~~non-recurring sales~~the third quarter but decreased by 25% to $20,556,000 in ~~last year's~~the nine months. Retailers are beginning to re-invest again which helped to accelerate machine revenues in the quarter.

26

Our Frozen Beverage segment generated operating income of $11,420,000 in the third quarter compared with an operating loss of $9,088,000 in the prior year third quarter. In the nine months, our Frozen Beverage segment incurred an operating loss ~~for~~of $4,094,000 compared with an operating loss of $8,942,000 in the prior year nine-month period. The comparative performance was impacted by the challenging sales environment in the prior year quarter ~~of $10,325,000 compared to operating income of $1,452,000 last year~~ due to the ~~challenging~~ COVID-19 ~~sales environment which also impacts our gross margin efficiency and ability to leverage fixed expenses.~~pandemic.

CONSOLIDATED

Gross profit as a percentage of sales was ~~20.8%~~29.7% in the ~~three-month~~third quarter and 17.3% in the prior year quarter. Gross profit as a percentage of sales was 25.2% in the nine-month period this year and ~~27.5%~~24.0% last year. ~~Gross profit percentage decreased because~~The increase is largely attributable to the benefit of ~~continued Covid-19~~increased sales, ~~pressure from our food service~~favorable product mix and ~~frozen beverages segments. This creates~~corresponding margin ~~leverage challenges as we manage lower production volumes on businesses with large-fixed expense bases.~~efficiencies.

Total operating expenses ~~decreased $6,611,000~~increased by 2.5% to $58,030,000 in the ~~first~~third quarter but asdecreased by 5.8% to $161,243,000 in the nine months. As a percentage of net sales, operating expenses decreased from 26.4% to 17.9% in the third quarter and increased in the nine months from 22.2% to ~~20.6% from 19.9% last year.~~ 19.6%.
Marketing expenses decreased to ~~7.2%~~6.3% of net sales in ~~this year’s~~the third quarter from ~~8% last year.~~10.2% in prior year and to 6.9% in the nine months compared with 8.9% in prior year’s nine-month period. Distribution expenses ~~were 9.5%~~decreased to 8.4% of net sales in ~~this~~the third quarter from 9.9% in the prior year but increased slightly to 9.2% in the nine months compared with 9.1% in prior year’s ~~quarter compared to 8.3% of sales last year.~~nine-month period. Administrative expenses decreased to 3.2% of net sales in the third quarter from 3.9% in prior year, and to 3.5% in the nine months compared with 3.7% in prior year’s nine-month period. Operating expenses in the prior year were ~~3.9%~~impacted by $5.1 million of ~~sales this quarter compared to 3.4% last year.~~plant shutdown impairment costs in both the three month, and nine-month periods.

Operating income ~~decreased $21,125,000 or 97% to $578,000~~was $38,144,000 in the ~~first~~third quarter compared with an operating loss of $19,420,000 in the prior year. Operating income increased by 246% to $45,952,000 in the nine months as a result of the aforementioned items.

Our investments generated before tax income of ~~$1,370,000 this quarter, down from $1,760,000 last year due to decreases~~$470,000 in the ~~amount~~third quarter, a $830,000 decrease from prior year. In the nine months, our investments generated before tax income of $2,419,000, a 10% decrease from the prior year period. The decrease in before tax investment income compared with prior year was primarily attributable to the decrease in investments ~~and lower interest rates.~~held between periods.
30

Net earnings ~~decreased $15,281,000, or 90%,~~ in the ~~current three-month period~~third quarter were $28,893,000 compared with a loss of $12,647,000 in prior year. Net earnings increased by 213% in the nine months to ~~$1,778,000.~~$36,732,000. Our effective tax rate was 8%24% in ~~this~~the nine months compared with 26% in the prior year’s ~~quarter.~~    nine-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.

27

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.

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 26, 2020,
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 June 26, 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’s internal control over financial reporting during the quarter ended ~~December 26, 2020,~~June 26,2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2831

PART II. OTHER INFORMATION

~~Item 6.~~
Item 6.  Exhibits

Exhibit No.
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 the 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 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.

~~31.1~~ &101.1
~~Certification Pursuant to Section 302 of~~
~~31.2~~
~~the Sarbanes-Oxley Act of 2002~~
~~31.3~~
~~99.5~~ &
~~Certification Pursuant to the 18 U.S.C.~~
~~99.6~~
~~Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~99.7~~
~~101.1~~
The following financial information from J&J Snack Foods Corp.'s Quarterly Report on Form 10-Q for the quarter ended ~~December~~June 26, ~~2020,~~2021, formatted in 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 101.1)~~
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

2932

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: July 29, 2021
/s/ Dan Fachner
Dan Fachner
President and Chief Executive Officer

~~Dated: January 28, 2021~~ ~~/s/ Gerald B. Shreiber~~
~~Gerald B. Shreiber~~
~~Chairman of the Board,~~
~~Chief Executive~~
~~Officer and Director~~
(Principal Executive Officer)


Dated: ~~January 28,~~July 29, 2021
/s/ Ken A. Plunk
Ken A. Plunk, Senior Vice
President and Chief Financial Officer
~~(Principal Financial Officer)~~
~~(Principal Accounting Officer)~~
~~Dated: January 28, 2021~~
~~/s/ Dan Fachner~~

~~Dan Fachner~~
~~President~~
(Principal ~~Executive~~Financial Officer)
(Principal Accounting Officer)

3033

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

	Three months ended
	December 26,			December 28,
	2020			2019

Net Sales	$	240,997		$	282,897

Cost of goods sold		190,872			205,036
Gross Profit		50,125			77,861

Operating expenses
Marketing		17,301			22,732
Distribution		22,889			23,542
Administrative		9,440			9,618
Other general expense		(83	)		266
Total Operating Expenses		49,547			56,158

Operating Income		578			21,703

Other income (expense)
Investment income		1,370			1,786
Interest expense & other		(15	)		(26	)

Earnings before income taxes		1,933			23,463

Income tax expense		155			6,404

NET EARNINGS	$	1,778		$	17,059

Earnings per diluted share	$	0.09		$	0.89

Weighted average number of diluted shares		19,031			19,144

Earnings per basic share	$	0.09		$	0.90

Weighted average number of basic shares		18,935			18,898

	Three Months Ended December 26, 2020
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	1,778		18,935	$	0.09

Effect of Dilutive Securities
Options		0		96		0

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	1,778		19,031	$	0.09

	Three Months Ended June 26, 2021
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	28,893		19,045	$	1.52

Effect of Dilutive Securities
Options		0		140		(0.01	)

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	28,893		19,185	$	1.51

	Three Months Ended December 28, 2019							Nine Months Ended June 26, 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	$	17,059		18,898	$	0.90		$	36,732		18,996	$	1.93

Effect of Dilutive Securities
Options		0		246		(0.01	)		0		120		(0.01	)

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	17,059		19,144	$	0.89		$	36,732		19,116	$	1.92

	Three Months Ended June 27, 2020
	Income			Shares		Per Share
	(Numerator)			(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	(12,647	)		18,888	$	(0.67	)

Effect of Dilutive Securities
Options		0			0		0

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	(12,647	)		18,888	$	(0.67	)

	Nine Months Ended June 27, 2020
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	11,721		18,902	$	0.62

Effect of Dilutive Securities
Options		0		134		0

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	11,721		19,036	$	0.62

	December 26,		September 26,		June 26,		September 26,
	2020		2020		2021		2020
	(unaudited)				(unaudited)
	(in thousands)				(in thousands)

Finished goods	$	40,789	$	40,184	$	40,850	$	40,184
Raw materials		28,645		24,550		29,171		24,550
Packaging materials		11,749		10,545		12,080		10,545
Equipment parts and other		33,699		33,644		32,721		33,644
Total Inventories	$	114,882	$	108,923	$	114,822	$	108,923

	Three months ended						Nine months ended
	June 26			June 27			June 26			June 27
	2021			2020			2021			2020


Sales to External Customers:
Food Service
Soft pretzels	$	50,895		$	21,384		$	120,359		$	116,985
Frozen juices and ices		13,927			8,688			30,812			25,222
Churros		20,096			7,321			46,358			38,466
Handhelds		18,971			7,448			56,574			22,084
Bakery		85,706			69,237			257,580			255,016
Other		6,884			2,543			14,546			13,628
Total Food Service	$	196,478		$	116,621		$	526,226		$	471,401

Retail Supermarket
Soft pretzels	$	11,193		$	12,716		$	40,871		$	34,874
Frozen juices and ices		36,898			33,322			71,600			59,279
Biscuits		4,562			8,151			18,717			21,759
Handhelds		1,191			3,257			6,215			9,135
Coupon redemption		(513	)		(807	)		(2,196	)		(2,216	)
Other		526			863			1,652			1,668
Total Retail Supermarket	$	53,857		$	57,502		$	136,859		$	124,499

Frozen Beverages
Beverages	$	42,279		$	16,456		$	76,663		$	83,606
Repair and maintenance service		22,789			17,259			59,903			61,524
Machines revenue		8,404			6,363			20,556			27,254
Other		536			362			1,312			1,218
Total Frozen Beverages	$	74,009		$	40,440		$	158,434		$	173,602

Consolidated Sales	$	324,344		$	214,563		$	821,519		$	769,502

Depreciation and Amortization:
Food Service	$	6,817		$	7,050		$	20,334		$	21,208
Retail Supermarket		378			468			1,147			1,156
Frozen Beverages		5,469			5,864			16,893			17,505
Total Depreciation and Amortization	$	12,664		$	13,382		$	38,374		$	39,869

Operating Income :
Food Service	$	17,644		$	(18,242	)	$	29,879		$	7,743
Retail Supermarket		9,080			7,910			20,167			14,464
Frozen Beverages		11,420			(9,088	)		(4,094	)		(8,942	)
Total Operating Income (Loss)	$	38,144		$	(19,420	)	$	45,952		$	13,265

Capital Expenditures:
Food Service	$	10,383		$	7,865		$	25,915		$	26,599
Retail Supermarket		93			390			194			1,625
Frozen Beverages		5,151			2,397			8,347			19,413
Total Capital Expenditures	$	15,627		$	10,652		$	34,456		$	47,637

Assets:
Food Service	$	779,730		$	729,331		$	779,730		$	729,331
Retail Supermarket		33,405			33,766			33,405			33,766
Frozen Beverages		288,411			294,189			288,411			294,189
Total Assets	$	1,101,546		$	1,057,286		$	1,101,546		$	1,057,286

	December 26, 2020				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		658		670		645
Customer relationships		13,000		5,213		19,737		11,595
License and rights		1,690		1,333		1,690		1,312
TOTAL FOOD SERVICE	$	25,768	$	7,204	$	32,505	$	13,552

RETAIL SUPERMARKETS

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

Amortized Intangible Assets
Trade names		676		554		676		519
Customer relationships		7,907		5,338		7,907		5,140
TOTAL RETAIL SUPERMARKETS	$	21,333	$	5,892	$	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		293		1,439		257
Licenses and rights		1,400		1,019		1,400		1,002
TOTAL FROZEN BEVERAGES	$	48,254	$	1,312	$	48,254	$	1,259

CONSOLIDATED	$	95,355	$	14,408	$	102,092	$	20,470

	Food Service		Retail Supermarket		Frozen Beverages		Total
	(in thousands)
Balance at December 26, 2020	$	61,189	$	4,146	$	56,498	$	121,833

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

	June 26, 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		5,863		19,737		11,595
License and rights		1,690		1,375		1,690		1,312
TOTAL FOOD SERVICE	$	25,768	$	7,908	$	32,505	$	13,552

RETAIL SUPERMARKETS

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

Amortized Intangible Assets
Trade names		676		619		676		519
Customer relationships		7,907		5,733		7,907		5,140
TOTAL RETAIL SUPERMARKETS	$	21,333	$	6,352	$	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		365		1,439		257
Licenses and rights		1,400		1,054		1,400		1,002
TOTAL FROZEN BEVERAGES	$	48,254	$	1,420	$	48,254	$	1,259

CONSOLIDATED	$	95,355	$	15,680	$	102,092	$	20,470

	Food		Retail		Frozen
	Service		Supermarket		Beverages		Total
	(in thousands)
Balance at June 26, 2021	$	61,189	$	4,146	$	56,498	$	121,833

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

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

Corporate Bonds	$	17,470	$	243	$	6	$	17,707
Total marketable securities held to maturity	$	17,470	$	243	$	6	$	17,707

	June 26, 2021				September 26, 2020

			*Fair*				*Fair*
	*Amortized*		*Market*		*Amortized*		*Market*
	*Cost*		*Value*		*Cost*		*Value*
	(in thousands)
Due in one year or less	$	9,902	$	10,041	$	51,151	$	51,815
Due after one year through five years		7,568		7,666		16,927		17,246
Due after five years through ten years		0		0		0		0
Total held to maturity securities	$	17,470	$	17,707	$	68,078	$	69,061
Less current portion		9,902		10,041		51,151		51,815
Long term held to maturity securities	$	7,568	$	7,666	$	16,927	$	17,246

	(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

	(in thousands)

	ICEE
	Distributors			BAMA ICEE			Total

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

	Three Months Ended		Three Months Ended		Nine Months Ended
	December 26, 2020		June 26, 2021		June 26, 2021
	(in thousands)		(in thousands)		(in thousands)

Operating lease cost in Cost of goods sold and Operating Expenses	$	1,356	$	3,846	$	11,747
Finance lease cost:
Amortization of assets in Cost of goods sold and Operating Expenses		412		62		216
Interest on lease liabilities in Interest expense & other		14		5		30
Total finance lease cost		426		67		246
Short-term lease cost in Cost of goods sold and Operating Expenses		0		0		0
Total net lease cost	$	1,782	$	3,913	$	11,993

	(in thousands)						(in thousands)
	Operating Leases			Finance Leases			Operating Leases			Finance Leases
Nine months ending June 30, 2020
2021		14,484			280
Three months ending September 25, 2021							$	3,863		$	117
2022		12,205			168			13,804			203
2023		10,362			98			11,681			133
2024		8,093			98			8,967			133
2025		5,217			26			5,726			61
Thereafter		16,172			0			16,480			70
Total minimum payments	$	66,533		$	670		$	60,521		$	717
Less amount representing interest		(7,911	)		(39	)		(6,168	)		(48	)
Present value of lease obligations	$	58,622		$	631		$	54,353		$	669

	~~99.6~~	~~Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
	~~99.7~~