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 Company’s financial position and the results of operations and cash flows.

The results of operations for the three ~~and~~ ~~nine~~ months ended ~~June~~December 24, 2022 and December 25, ~~2022~~ ~~and~~ ~~June 26,~~ 2021 are not necessarily indicative of results for the full year. Sales of our frozen beverages and frozen novelties are generally higher in the fiscal third and fourth quarters due to warmer weather. ~~Also, 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.~~ ~~While the majority of these venues have reopened, the extent of the future impact of COVID-~~19 ~~on our operations depends on future developments of the virus and its effects which are uncertain at this time.~~

While we believe that the disclosures presented are adequate to make the information not misleading, ~~we suggest~~it is suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes included in the Company’s Annual Report on Form 10-K10-K for the fiscal year ended September ~~25, 2021.~~24, 2022.

Dippin’ Dots is a leading producer of flash-frozen beaded ice cream treats, and the acquisition will leverage synergies in entertainment and amusement locations, theaters, and convenience to continue to expand our business. The acquisition also includes the Doc Popcorn business operated by Dippin’ Dots.

The financial results of Dippin’ Dots have been included in our consolidated financial statements since the date of the acquisition. Sales and net earnings (loss) of Dippin’ Dots ~~since the date of acquisition~~ were ~~$2,218,000~~$13.4 million and ~~$621,000~~($0.7) million for the three ~~and~~ ~~nine~~~~-months~~ months ended ~~June 25,~~December 24, 2022. Dippin’ Dots is reported as part of our Food Service segment. ~~Included within Administrative expenses for the quarter were $3,088,000 of acquisition costs.~~

Upon acquisition, the assets and liabilities of Dippin’ Dots were adjusted to their respective fair values as of the closing date of the transaction, including the identifiable intangible assets acquired. In addition, the excess of the purchase price over the fair value of the net assets acquired has been recorded as goodwill. The fair value estimates used in valuing certain acquired assets and liabilities are based, in part, on inputs that are unobservable. For intangible assets, these include, but are not limited to, forecasted future cash flows, revenue growth rates, attrition rates and discount rates.

The purchase price allocation as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available.

In fiscal year 2022, we recorded measurement period adjustments to the estimated fair values initially recorded on June 21, 2022, which resulted in an increase to Property, plant, and equipment, net of $6.5 million, and reductions in Goodwill, Identifiable intangible assets, and Inventories of $4.0 million, $2.2 million, and $0.3 million, respectively. The measurement period adjustments were recorded to better reflect market participant assumptions about facts and circumstances existing as of the acquisition date and did not have a material impact on our consolidated statement of income for the year ended September 24, 2022. No measurement period adjustments were recorded in fiscal year 2023.

The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows:

~~Preliminary Dippin' Dots Purchase Price Allocation (~~1)

Preliminary Dippin' Dots Purchase Price Allocation (1)

~~Dippin' Dots Results Included in the Company's Consolidated Results~~

~~The following unaudited pro forma information presents the consolidated results of operations as if the business combination in~~ ~~2022~~ ~~had occurred as of~~ ~~September 27, 2020,~~ ~~after giving effect to acquisition-related adjustments, including: (~~1~~) depreciation and amortization of assets; (~~2~~) amortization of unfavorable contracts related to the fair value adjustments of the assets acquired; (~~3~~) change in the effective tax rate; (~~4~~) interest expense on any debt incurred to fund the acquisitions which would have been incurred had such acquisitions occurred as of~~ ~~September 27, 2020;~~ ~~and (~~5~~) merger and acquisition costs.~~

~~J & J Snack Foods Corp and Dippin' Dots Unaudited Pro Forma Combined Financial Information~~

~~The pro forma information does~~ ~~not~~ ~~reflect the potential benefits of cost and funding synergies, opportunities to earn additional revenues, or other factors, and therefore does~~ ~~not~~ ~~represent what the actual Net sales and Net earnings would have been had the companies actually been combined as of this date.~~

~~Revenue Recognition~~We recognize revenue in accordance with ASC 606, “Revenue from Contracts with Customers.”

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 a contract liability ~~recorded within Accrued liabilities~~ on our balance sheet.

The Company is entitled to royalties under its agreements with franchisees. Sales-based royalties are related entirely to the Company’s performance obligation under the franchise agreements and are recognized on a monthly basis. Purchase-based royalties are related entirely to the Company’s performance obligation under the franchise agreements and are recognized on a weekly basis.

Under franchise agreements, the Company provides franchisees with a franchise license allowing the use of brand intellectual property and certain ongoing services. As the performance obligations are satisfied, over time, franchise, renewal and transfer fees are recognized on a straight-line basis over the terms of the franchise agreement.

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.

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.

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 ~~$16,907,000~~approximately $12.1 million at ~~June 25,~~December 24, 2022 and ~~$14,646,000~~$14.7 million at September ~~25, 2021.~~24, 2022.

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 liabilities consist of deferred revenue resulting from service contracts in our Frozen Beverages segment where our~~

Our customers are billed for service contracts in advance of ~~performance. Contract liabilities also consist of deferred revenue in our Food Service segment resulting from initial franchise fees paid by franchisees, as well as renewal~~performance and ~~transfer fees paid by franchisees and license fees paid by licensees which are generally recognized on a straight-line basis over the term of the underlying agreement. Therefore,~~therefore we have contract ~~liabilities~~liability on our balance sheet as follows:

See Note 11 for disaggregation of our net sales by class of similar product and type of customer.

~~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 ~~$1,629,000~~$2.2 million on December 24, 2022 and ~~$1,405,000 on~~ ~~June 25,~~September 24, 2022, ~~and~~ ~~September 25, 2021,~~ respectively.

~~382,431 anti-dilutive shares have been excluded in the computation of EPS for the~~ ~~three~~ ~~months ended~~ ~~June 25, 2022.~~

~~302,674 anti-dilutive shares have been excluded in the computation of EPS for the~~ ~~nine~~ ~~months ended~~ ~~June 25, 2022.~~

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

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

The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model.

~~During the fiscal year~~ ~~2022~~~~nine~~~~-month period, the Company granted 115,700 stock options. The weighted-average grant date fair value of these options was $23.36.~~

~~During the fiscal year~~ ~~2021~~~~nine~~~~-month period, the Company granted 138,432 stock options. The weighted-average grant date fair value of these options was $31.20.~~

~~The Company issued 327 service share units (“RSU”)’s in the~~ ~~three~~~~-months ended~~ ~~June 25, 2022,~~ ~~and 9,200 RSU’s in the~~ ~~nine~~~~-months ended~~ ~~June 25, 2022.~~ ~~Each RSU entitles the awardee to~~ ~~one~~ ~~share of common stock upon vesting. The fair value of RSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. NaN such RSU’s were issued in the~~ ~~three~~ or ~~nine~~~~-months ended~~ ~~June 26, 2021.~~

In ~~November 2021,~~ ~~the Company also issued 8,868 performance share units (“PSU”)’s. Each PSU~~ ~~may~~ ~~result in the issuance of up to~~ ~~two~~ shares of common stock upon vesting, dependent upon the level of achievement of the applicable Performance Goal. The fair value of the PSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. Additionally, the Company applies a quarterly probability assessment in computing this non-cash compensation expense, and any change in estimate is reflected as a cumulative adjustment to expense in the quarter of the change. NaN such PSU’s were issued in the ~~three~~~~-months ended~~ ~~June 25, 2022~~ ~~or in the~~ ~~three~~ or ~~nine~~~~-months ended~~ ~~June 26, 2021.~~

Expected volatility is based on the historical volatility of the price of our common shares over the past 51 months for 5~~-year~~5-year options and 10 years for 10~~-year~~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.

The Company did not grant any stock options during the three months ended December 24, 2022 or during the three months ended December 25, 2021.

During the three months ended December 24, 2022, the Company issued 9,900 service share units (“RSU”)’s. Each RSU entitles the awardee to one share of common stock upon vesting. During the three months ended December 25, 2021, the Company issued 8,873 service share units (“RSU”)’s. The fair value of the RSU’s was determined based upon the closing price of the Company’s common stock on the date of grant.

During the three months ended December 24, 2022, the Company also issued 18,641 performance share units (“PSU”)’s. Each PSU may result in the issuance of up to two shares of common stock upon vesting, dependent upon the level of achievement of the applicable Performance Goal. The fair value of the PSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. Additionally, the Company applies a quarterly probability assessment in computing this non-cash compensation expense, and any change in estimate is reflected as a cumulative adjustment to expense in the quarter of the change. During the three months ended December 25, 2021, the Company issued 8,868 performance share units (“PSU”)’s.

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~~$0.3 million on both ~~June 25,~~December 24, 2022 and September ~~25, 2021,~~ ~~respectively,~~24, 2022, 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 25,~~December 24, 2022 and September ~~25, 2021,~~ 24, 2022, the Company has ~~$267,000~~$0.3 million of accrued interest and ~~penalties.~~penalties, respectively.

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 ~~was 26%~~ for the ~~nine~~three months ended ~~June 25,~~December 24, 2022 ~~and 24% for the~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021.~~ was 26%. Our effective tax rate was 27% ~~for the~~ ~~three~~ ~~months ended~~ ~~June 25, 2022~~ ~~and 25% for the~~ ~~three~~ ~~months ended~~ ~~June 26, 2021.~~in last fiscal year’s quarter.

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~~-132016-13 did not have a material impact on the Company’s ~~consolidated financial statements.~~Consolidated Financial Statements.

In December 2021, the Company entered into an amended and restated loan agreement (the “Credit Agreement”) with our existing banks which provided for up to a $50 million revolving credit facility repayable in December 2026.

Interest accrues, at the Company’s election, at (i) the BSBY Rate (as defined in the Credit Agreement) plus an applicable margin, based upon the Consolidated Net Leverage Ratio, as defined in the Credit Agreement, or (ii) the Alternate Base Rate (a rate based on the higher of (a) the prime rate announced from time-to-time by the Administrative Agent, (b) the Federal Reserve System’s federal funds rate, plus 0.50% or (c) the Daily BSBY Rate, plus an applicable margin. The Alternate Base Rate is defined in the Credit Agreement.

The Credit Agreement requires the Company to comply with various affirmative and negative covenants, including without limitation (i) covenants to maintain a minimum specified interest coverage ratio and maximum specified net leverage ratio, and (ii) subject to certain exceptions, covenants that prevent or restrict the Company’s ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future indebtedness, alter its capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates, or amend its organizational documents. As of ~~June 25,~~December 24, 2022, the Company is in compliance with all financial covenants terms of the Credit Agreement.

On June 21, 2022, the Company entered into an amendment to the Credit Agreement, the “Amended Credit Agreement” which provided for an incremental increase of ~~$175,000,000~~$175 million in available borrowings. The Amended Credit Agreement also includes an option to increase the size of the revolving credit facility by up to an amount not to exceed in the aggregate the greater of ~~$225,000,000~~$225 million or, ~~$50,000,000~~$50 million plus the Consolidated EBITDA of the Borrowers, subject to the satisfaction of certain terms and conditions.

As of ~~June 25,~~December 24, 2022, ~~$125,000,000~~$92.0 million was outstanding under the Amended Credit ~~Agreement.~~Agreement with a weighted average interest rate of 4.84%. These borrowings have been classified as Long-Term Debt on the Company’s Balance Sheet. As of ~~June 25,~~December 24, 2022, the amount available under the Amended Credit Agreement was ~~$91,225,000~~$123.2 million, after giving effect to the outstanding letters of credit. As of September ~~25, 2021,~~ ~~there were 0~~24, 2022, $55.0 million was outstanding ~~balances~~ under the Amended Credit Agreement. As of September 24, 2022, the amount available under the Amended Agreement was $160.2 million, after giving effect to the outstanding letters of credit.

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 below which is available to our Chief Operating Decision Maker.

Our 3 reportable segments are Food Service, Retail Supermarkets and Frozen Beverages. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income. These segments are described below.

The primary products sold by the food service segment are soft pretzels, frozen novelties, churros, handheld products and baked goods. Our customers in the food service segment include snack bars and food stands in chain, department and discount stores; malls and shopping centers; casual dining restaurants, 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.~~point-of-sale or for take-away.

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

The Company markets frozen beverages primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE which are sold primarily in the United States, Mexico and Canada. We also provide repair and maintenance service to customers for customers’ owned equipment.

The Chief Operating Decision Maker for Food Service, Retail Supermarkets and Frozen Beverages reviews monthly 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 Maker and management when determining each segment’s, and the Company’s, financial condition and operating performance. In addition, the Chief Operating Decision Maker reviews and evaluates 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:

Our 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 Beverages segments as of ~~June 25,~~December 24, 2022 and September ~~25, 2021~~ 24, 2022 are as follows:

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~~December 24, 2022 and December 25, ~~2022~~ 2021 was $1.7 million and ~~June 26, 2021~~ ~~was $584,000 and $639,000,~~$0.6 million, respectively. ~~Aggregate amortization expense of intangible assets for the~~ ~~nine~~ ~~months ended~~ ~~June 25, 2022~~ ~~and~~ ~~June 26, 2021~~ ~~was $1,766,000 and $2,096,000, respectively~~

Estimated amortization expense for the next five fiscal years is approximately ~~$3,500,000~~$4.9 million in ~~2022,~~ ~~$6,700,000~~2023 (excluding the three months ended December 24, 2022), $6.2 million in ~~2023,~~ ~~$6,400,000~~2024, $5.6 million in ~~2024,~~ ~~$5,800,000~~2025 and 2026, and $4.6 million in ~~2025,~~ ~~and $5,800,000 in~~ ~~2026.~~2027.

The weighted amortization period of the intangible assets, in total, is 10.4 years. The weighted amortization period by intangible asset class is 10 years for Technology, 10 years for Customer relationships, 20 years for Licenses & rights, and 10 years for Franchise agreements.

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

Level 3 Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

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

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at ~~June 25,~~December 24, 2022 are summarized as follows:

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at ~~June 25,~~December 24, 2022 are summarized as follows:

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 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~~ ~~2022~~ ~~through~~ ~~2023,~~with ~~$4.5~~all remaining $2 million maturing within ~~the next 12 months.~~our fiscal year 2023. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at September ~~25, 2021~~ 24, 2022 are summarized as follows:

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September ~~25, 2021~~ 24, 2022 are summarized as follows:

The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at ~~June 25,~~December 24, 2022 and September ~~25, 2021~~ 24, 2022 are summarized as follows:

Proceeds from the redemption and sale of marketable securities were ~~$0 and $11,526,000~~$3.3 million in the three ~~and~~ ~~nine~~ months ended ~~June 25,~~December 24, 2022, and ~~were $12,854,000 and $54,191,000~~$7.2 million in the three ~~and~~ ~~nine~~ months ended ~~June 26,~~December 25, 2021, respectively. Losses of ~~$343,000~~$37,000 and ~~$412,000~~$44,000 were recorded in the three ~~and~~ ~~nine~~ months ended ~~June~~December 24, 2022 and December 25, ~~2022,~~ 2021, respectively, which included unrealized losses on marketable securities of $39,000 and ~~gains of $21,000 and $139,000 were recorded~~$5,000 in the three ~~and~~ ~~nine~~ months ended ~~June 26, 2021.~~ ~~Included in the gains~~December 24, 2022 and ~~losses were unrealized losses of $401,000 and unrealized gains of $786,000 in the~~ ~~nine~~ ~~months ended~~ ~~June~~December 25, ~~2022~~ ~~and~~ ~~June 26,~~ 2021, ~~respectively. An unrealized loss of $343,000 and an unrealized gain of $137,000 were recorded in the~~ ~~three~~ ~~months ended~~ ~~June 25, 2022,~~ ~~and~~ ~~June 26, 2021,~~ respectively. We use the specific identification method to determine the cost of securities sold.

Total marketable securities held to maturity as of ~~June 25,~~December 24, 2022 with credit ratings of BBB/BB/B had an amortized cost basis totaling ~~$4,520,000.~~$2.0 million. This rating information was obtained ~~June 30,~~on December 31, 2022.

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

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 1312 years.

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

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~~

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.

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.

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.

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 ~~June 25,~~December 24, 2022, the weighted-average discount rate of our operating and finance leases was 3.4% and 3.2%, respectively. As of September 24, 2022, the weighted-average discount rate of our operating and finance leases was 3.3% and 3.2%, respectively. ~~As of~~ ~~June 26, 2021,~~ ~~the weighted-average discount rate of our operating and finance leases was 3.2% and 3.2%, respectively.~~

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.

We have related party expenses for distribution and shipping related costs with NFI Industries, Inc. Our director, Sidney R. Brown, is CEO and an owner of NFI Industries, Inc. In the three months ended December 24, 2022 and December 25, 2021, the Company paid NFI $14.3 million and $1.3 million, respectively. Of the amounts paid to NFI, the amount related to management services performed by NFI was $0.1 million in the three months ended December 24, 2022 and $0.1 million in the three months ended December 25, 2021. The remainder of the costs related to amounts that were passed through to the third-party distribution and shipping vendors that are being managed on the Company’s behalf by NFI. The agreements with NFI include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party. As of ~~June 25,~~December 24, 2022 ~~the maturities~~and September 24, 2022, our consolidated balance sheet included related party trade payables of ~~lease liabilities were as follows:~~approximately $4.0 million and $2.9 million, respectively.

~~Note~~ 16

We have related party expenses for distribution and shipping related costs with NFI Industries, Inc. Our director, Sidney R. Brown, is CEO of NFI Industries, Inc. The Company paid $12,004,000 and $15,984,000 to NFI in the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~June 25, 2022~~ ~~and paid $19,000 and $115,000 through the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021.~~ ~~Of the amounts paid to NFI, the amount related to management services performed by NFI was $149,000 and $403,000 in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~June 25, 2022,~~ ~~and $19,000 and $115,000 through the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021.~~ ~~The remainder of the costs related to amounts that were passed through to the~~ ~~third~~-party distribution and shipping vendors that are being managed on the Company’s behalf by NFI. The agreements with NFI include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party. As of ~~June 25, 2022~~ ~~our consolidated balance sheet included related party trade payables of approximately $3,305,000. We had 0 related party trade payable balance as of~~ ~~September 25, 2021.~~

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

~~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”~~“Securities Act”) and Section 21E of the Securities Exchange Act of 1934 ~~“the Exchange~~(the “Exchange Act”., that involve substantial risks or uncertainties. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “projects,” “seek,” “intend,” “predict,” “approximate,” ~~“intend”~~ or “continue,” or other similar references to future periods or the negative thereof. Statements addressing our future operating performance and statements addressing events and developments that we expect or anticipate will occur are also considered as forward-looking statements. We intend that such forward-looking statements be subject to the safe ~~harbor provisions of the Act and the Exchange Act.~~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, assumptions, 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 working capital, capital spending, debt service requirements and future growth and expansion for at least the next twelve months. See Note 13 to these financial statements for a discussion of our investment securities.RESULTS OF OPERATIONS – Three months ended December 24, 2022

The ~~Company’s Board~~following discussion provides a review of ~~Directors declared a regular quarterly cash dividend of $0.633 per share of its common stock payable on July 11, 2022, to shareholders of record as of~~results for the ~~close of business on June 20, 2022.~~

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. We did not purchase any shares of our common stock in the ninethree months ended ~~June~~December 24, 2022 as compared with the three months ended December 25, ~~2022, nor did we purchase any shares of our common stock in fiscal year~~ 2021.

3127

Summary of Results	Three months ended
	December 24,			December 25,
	2022			2021			% Change
	(Unaudited) (in thousands)

Net Sales	$	351,343		$	318,490			10.3	%

Cost of goods sold		260,488			239,115			8.9	%
Gross Profit		90,855			79,375			14.5	%

Operating expenses
Marketing		23,699			20,907			13.4	%
Distribution		42,049			33,315			26.2	%
Administrative		16,391			10,369			58.1	%
Other general expense (income)		(612	)		(61	)		903.3	%
Total Operating Expenses		81,527			64,530			26.3	%

Operating Income		9,328			14,845			(37.2	)%

Other income (expense)
Investment income		685			271			152.8	%
Interest (expense)		(1,049	)		(18	)	n.m.

Earnings before income taxes		8,964			15,098			(40.6	)%

Income tax expense		2,331			4,007			(41.8	)%

NET EARNINGS	$	6,633		$	11,091			(40.2	)%

Comparisons as a Percentage of Net Sales	Three months ended
	December 24,			December 25,
	2022			2021			Basis Pt Chg
Gross profit		25.9	%		24.9	%		100
Marketing		6.7	%		6.6	%		10
Distribution		12.0	%		10.5	%		150
Administrative		4.7	%		3.3	%		140
Operating income		2.7	%		4.7	%		(200	)
Earnings before income taxes		2.6	%		4.7	%		(210	)
Net earnings		1.9	%		3.5	%		(160	)

Net Sales

Net sales increased $32.9 million or 10.3% to $351.3 million for the three months ended ~~June 25, 2022 and June 26, 2021, fluctuations~~December 24, 2022. Net sales in the ~~valuation~~period included $13.4 million of net sales from Dippin’ Dots. Organic sales growth was driven by growth across all three of the ~~Mexican~~Company’s business segments, led by our core products including pretzels, churros, frozen novelties and ~~Canadian currencies~~frozen beverages.

Gross Profit

Gross Profit increased by $11.5 million, or 14.5%, to $90.9 million for the three months ended December 24, 2022. As a percentage of sales, gross profit increased from 24.9% to 25.9%. Key ingredients including flour, oils, eggs, meats, sugar and dairy continued to experience inflationary pressures compared with the ~~resulting translation~~same quarter last year, with average raw material costs up approximately 20%. Three pricing actions implemented in fiscal 2022, along with an improved mix, helped to offset the impact of the net assets of our Mexican and Canadian subsidiaries caused an increase of $93,000 and a decrease of $657,000 in accumulated other comprehensive loss, respectively. In the nine months ended June 25, 2022 and June 26, 2021, 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 $9,000 and $2,405,000 in accumulated other comprehensive loss, respectively.

In December 2021, the Company entered into an amended and restated loan agreement (the “Credit Agreement”) with our existing banks which provided for up to a $50,000,000 revolving credit facility repayable in December 2026.

On June 21, 2022, the Company entered into an amendment to the Credit Agreement, the “Amended Credit Agreement” which provided for an incremental increase of $175,000,000 in available borrowings. The Amended Credit Agreement also includes an option to increase the size of the revolving credit facility by up to an amount not to exceed in the aggregate the greater of $225,000,000 or $50,000,000 plus the Consolidated EBITDA of the Borrowers, subject to the satisfaction of certain terms and conditions.

As of June 25, 2022, $125,000,000 was outstanding under the Amended Credit Agreement. These borrowings have been classified as Long-Term Debt on the Company’s Balance Sheet. As of June 25, 2022, the amount available under the Amended Credit Agreement was $91,225,000, after giving effect to the outstanding letters of credit. As of September 25, 2021, there were no outstanding balances under the Credit Agreement. As of June 25, 2022, the Company is in compliance with all financial covenants of the Credit Agreement.

~~Critical Accounting Policies, Judgments and Estimates~~

There have been no material changes to our critical accounting policies, judgments and estimates from the information provided in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies, Judgments and Estimates, in our Annual Report on Form 10-K for the year ended September 25, 2021, as filed with the SEC on November 23, 2021.inflationary pressures noted above.

3228

~~RESULTS OF OPERATIONS~~Operating Expenses

~~Net sales~~Operating Expenses increased ~~by 17%~~$17.0 million, or 26.3%, to ~~$380,227,000 in the third quarter and by 19% to $980,230,000~~$81.5 million for the ~~nine~~three months ended ~~June 25, 2022 compared to the three and nine months ended June 26, 2021, respectively.~~

~~FOOD SERVICE~~

Sales to food service customers increased by 16% in the third quarter to $227,842,000 and by 17% to $615,914,000 for the nine months, compared to respective prior year periods. Sales were up across most product lines as many of the venues and locations where our products are sold that were previously shut down or operating at reduced capacity in the first nine months of 2021 have partially or fully re-opened in the first nine months ofDecember 24, 2022. Theaters and outdoor venues, including stadiums and amusement parks, as well as schools, restaurants and strategic accounts continued to experience an increase in visitation that drove strong sales in our core products.

Soft pretzel sales to the food service market increased by 10% to $55,946,000 in the third quarter and by 24% to $149,628,000 in the nine months compared to respective prior year periods. Frozen novelties sales increased by 23% to $17,155,000 in the third quarter and increased by 7% to $32,917,000 in the nine months compared to respective prior year periods. Churro sales to food service customers increased by 27% to $25,614,000 in the third quarter and increased by 35% to $62,550,000 in the nine months compared to respective prior year periods. Sales of bakery products increased by 11% in the third quarter to $95,495,000 and increased 12% to $287,293,000 for the nine months compared to respective prior year periods. Sales of handhelds increased 36% in the third quarter to $25,740,000 and by 14% to $64,741,000 in the nine months compared to respective prior year periods.

Sales of new products in the first twelve months since their introduction were approximately $700,000 in the third quarter and $4,600,000 in the nine months, driven primarily by new bakery items, including a new empanada product with a major convenience customer. Price increases had a moderate impact on sales in the quarter, and the overall revenue growth included marginal volume increases as well.

Compared to prior year, operating income in our Food Service segment decreased by 85% to $2,640,000 in the third quarter and by 59% to $12,177,000 in the nine months reflecting the significant increase in ingredients, production and distribution costs year over year, as well as our ERP implementation which previously impacted our results in the fiscal second quarter.

~~RETAIL SUPERMARKETS~~

Compared to prior year, sales of products to retail supermarkets increased by 13% to $61,008,000 in the third quarter and increased by 6% to $144,460,000 in the nine months. Our SUPERPRETZEL brand has performed well helping to drive a 4% increase in sales of soft pretzels in the third quarter to $11,696,000 and a 7% increase in sales in the nine months to $43,642,000. Sales of frozen novelties increased by 13% to $41,865,000 in the third quarter and increased by 10% to $78,586,000 in the nine months compared to respective prior year periods, largely driven by the addition of new stock keeping units, and additional product placement with some of our key brands. Sales of biscuits increased by 33% to $6,066,000 in the third quarter and by 7% to $20,024,000 in the nine months compared to respective prior year periods. Handheld sales to retail supermarket customers increased by 33% to $1,589,000 in the third quarter but decreased by 37% to $3,934,000 in the nine months compared to respective prior year periods.

Sales of new products were approximately $400,000 for the third quarter and $900,000 in the nine months, primarily related to frozen novelty items. Price increases and volume increases both had a marginal impact on sales in the quarter.

Compared to prior year periods, operating income in our Retail Supermarkets segment decreased by 74% to $2,341,000 in the third quarter and by 58% to $8,416,000 in the nine months. The decreases in operating income were primarily attributable to higher cost of goods sold as well as higher shipping and distribution related costs, as well as our ERP implementation which previously impacted our results in the fiscal second quarter..

~~FROZEN BEVERAGES~~

Compared to prior year periods, frozen beverage and related product sales increased by 23% to $91,377,000 in the third quarter and by 39% to $219,856,000 in the nine months. Beverage related sales increased by 37% to $57,791,000 in the third quarter and by 66% to $126,919,000 in the nine months compared to respective prior year periods. Gallon sales were up 28% in the quarter and up 56% in the nine months compared to respective prior year periods. The increase in gallon sales reflects the strong demand across theaters, amusement parks, convenience and restaurants. In the amusement parks channel, we continue to see strong growth as both domestic and international visitation numbers continue to recover, and exceed, pre-COVID-19 levels. Theater sales continue on their upward trajectory as movie goers indulge in their favorite snacks and view highly anticipated movie releases. Service revenue remained relatively flat in the third quarter, but increased by 10% to $65,903,000 in the nine months, compared to respective prior year periods, led by an acceleration in maintenance calls and additional growth in one of our larger customers, earlier in the fiscal year. Machines revenue (primarily sales of frozen beverage machines) increased by 17% to $9,868,000 in the third quarter and by 23% to $25,257,000 in the nine months, compared to respective prior year periods, driven mainly by growth from large quick service restaurant (QSR) and convenience customers.

Our Frozen Beverage segment had operating income of $16,279,000 in the third quarter compared with $11,420,000 in the prior year third quarter. In the nine months, our Frozen Beverage segment had operating income of $19,600,000 compared with an operating loss of $4,094,000 in the prior year nine-month period. The comparative performance was primarily a result of higher beverage sales volume which drove leverage across the business.

~~CONSOLIDATED~~

Gross profit as a percentage of sales was 28.7% in the third quarter and 29.7% in the prior year quarter. Gross profit as a percentage of sales was 25.9% in the nine-month period this year and 25.2% last year. Inflation continued to build over the quarter and nine-month period which has significantly pressured margins. The impact was especially pronounced in key raw material purchases such as flour, eggs, dairy, chocolates and meats, as well as packaging and fuel. We have pricing and cost initiatives in place to offset these cost pressures, which included a price increase early in the third quarter.

~~Total operating expenses increased by 51% to $87,816,000 in the third quarter and by 32% to $213,606,000 in the nine months compared to respective prior year periods.~~ As a percentage of ~~net~~ sales, operating expenses increased from ~~17.9%~~20.3% to ~~23.1%~~23.2%, primarily reflecting the ongoing inflationary pressures across distribution and administrative costs. As a percentage of sales, distribution expenses increased from 10.5% to 12.0%, reflecting inflationary pressures noted in fuel and outbound freight. As a percentage of sales, marketing expenses remained relatively flat, increasing slightly from 6.6% to 6.7%. As a percentage of sales, general and administrative expenses increased from 3.3% to 4.7% largely driven by the general and administrative expenses incurred by Dippin’ Dots in the ~~third quarter and from 19.6% to 21.8% in the nine months.~~three months ended December 24, 2022.

~~Marketing expenses remained flat at 6.3% of net sales~~Other Income and Expense

Investment income increased $0.4 million to $0.7 million for the three months ended December 24, 2022. The increase was primary due to the improving interest rate environment. Interest expense increased by $1.0 million for the three months ended December 24, 2022 due to the Company’s outstanding borrowings on the Amended Credit Agreement.

Income Tax Expense

Income tax expense decreased by $1.7 million, or 41.8%, to $2.3 million for the three months ended December 24, 2022. This decrease was materially consistent with the overall 40.6% decrease in earnings before income taxes. The effective tax rate was 26.0% for the ~~third quarter and decreased to 6.7% in the nine~~three months ended December 24, 2022 as compared with ~~6.9% in prior year’s nine-month period. Distribution expenses increased to 12.7% of net sales in the third quarter from 8.4%~~26.5% in the prior year and to 11.2% in the nine months compared with 9.2% in prior year’s nine-month period, with the increases largely driven by higher truck driver wages and rising carrier, storage and fuel costs. Administrative expenses increased to 4.1% of net sales in the third quarter from 3.2% in prior year and to 3.9% in the nine months compared with 3.5% in prior year’s nine-month period, with the increase largely attributable to $3,088,000 of merger and acquisition costs which were incurred in the third quarter.period.

~~Compared to prior year, operating income~~Net Earnings

Net earnings decreased by ~~44%~~$4.5 million, or 40.2%, to ~~$21,260,000 in~~$6.6 million for the ~~third quarter and by 13%~~three months ended December 24, 2022, due to ~~$40,193,000 in the nine months as a result of~~ the aforementioned items.

Our investments generated before tax income of $106,000 in the third quarter, a $364,000 decrease over prior year. In the nine months, our investments generated before tax income of $537,000, a 78% decrease from the prior year period. The decrease in before tax investment income compared with prior year was due to decreases in the amount of investments as well as the impact of the rising interest rate environment on our investment holdings.

Compared to prior year, net earnings decreased by 46% to $15,563,000 in the third quarter and by 19% to $29,925,000 in the nine months. Our effective tax rate was 26% in the nine months compared with 24% in the prior year’s nine-month period, as prior year’s nine-month period effective tax rate was more favorably impacted by tax benefits related to share-based compensation. Our effective tax rate was 27% in the third quarter and was 25% in the prior year third quarter.

There are many factors which can impact our net earnings from ~~year-to-year~~year to year and in the long run, among ~~including~~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.

Business Segment Discussion

We operate in three segments: Food Service, Retail Supermarket, and Frozen Beverages. The following table is a summary of sales and operating income (loss), which is how we measure segment profit.

	Three months ended
	December 24,		December 25,
	2022		2021		% Change
	(in thousands)
Net Sales
Food Service	$	238,297	$	211,732		12.5	%
Retail Supermarket		43,073		42,695		0.9	%
Frozen Beverages		69,973		64,063		9.2	%
Total Sales	$	351,343	$	318,490		10.3	%

	Three months ended
	December 24,		December 25,
	2022		2021		% Change
	(in thousands)

Operating Income
Food Service	$	6,387	$	9,001		(29.0	)%
Retail Supermarket		1,111		4,984		(77.7	)%
Frozen Beverages		1,830		860		112.8	%
Total Operating Income	$	9,328	$	14,845		(37.2	)%

Food Service Segment Results

	Three months ended
	December 24,		December 25,
	2022		2021		% Change
	(in thousands)

Food Service Sales
Soft pretzels	$	52,223	$	50,421		3.6	%
Frozen novelties		21,765		8,457		157.4	%
Churros		25,757		19,489		32.2	%
Handhelds		23,572		18,495		27.5	%
Bakery		108,948		107,831		1.0	%
Other		6,032		7,039		(14.3	)%
Total Food Service Sales	$	238,297	$	211,732		12.5	%

Food Service Operating Income	$	6,387	$	9,001		(29.0	)%

Sales to food service customers increased $26.6 million, or 12.5%, to $238.3 million for the three months ended December 24, 2022, which included approximately $13.4 million in sales from Dippin’ Dots. Soft pretzels sales to food service increased 4% to $52.2 million. Frozen novelties sales increased 157% to $21.8 million, largely driven by Dippin’ Dots sales. Churro sales increased 32% to $25.8 million led by customer expansion and growing menu penetration, highlighted by the introduction of our Hola! Churros brand, as we achieved some of our slotting objectives with major distributors and gains at large regional quick service and fast casual restaurants. Sales of bakery products increase by 1% to $108.9 million. Sales of handhelds increased 28% to $23.6 million led by the continued success of a product developed for one of our larger wholesale club customers.

Sales of new products in the first twelve months since their introduction were minimal in the quarter. Price increases benefited revenues in the quarter, and more than offset some volume declines seen in certain product categories.

Operating income in our Food Service segment decreased $2.6 million in the quarter to $6.4 million, which reflected the significant increase in input, production and distribution costs.

Retail Supermarket Segment Results

	Three months ended
	December 24,			December 25,
	2022			2021			% Change
	(in thousands)

Retail Supermarket Sales
Soft pretzels	$	14,485		$	16,194			(10.6	)%
Frozen novelties		17,969			17,802			0.9	%
Biscuits		7,913			8,271			(4.3	)%
Handhelds		2,892			1,276			126.6	%
Coupon redemption		(176	)		(896	)		(80.4	)%
Other		(10	)		48			(120.8	)%
Total Retail Supermarket Sales	$	43,073		$	42,695			0.9	%

Retail Supermarket Operating Income	$	1,111		$	4,984			(77.7	)%

Sales of products to retail customers increased $0.4 million, or 1%, to $43.1 million for the three months ended December 24, 2022. Soft pretzel sales declined 11% to $14.5 million, frozen novelties sales increase 1% to $18.0 million, biscuit sales declined 4% to $7.9 million, and handheld sales increased 127% to $2.9 million. Sales of new products in retail supermarkets were minimal in the quarter. Price increases benefited revenues in the quarter and helped to offset volume declines seen in certain product categories.

Operating income in our Retail Supermarkets segment decreased $3.9 million in the quarter to $1.1 million driven by higher cost of goods sold and distribution related expenses.

Frozen Beverages Segment Results

	Three months ended
	December 24,		December 25,
	2022		2021		% Change
	(in thousands)

Frozen Beverages Sales
Beverages	$	38,659	$	33,763		14.5	%
Repair and maintenance service		23,827		22,011		8.3	%
Machines revenue		7,011		7,847		(10.7	)%
Other		476		442		7.7	%
Total Frozen Beverages Sales	$	69,973	$	64,063		9.2	%

Frozen Beverages Operating Income	$	1,830	$	860		112.8	%

Frozen beverage and related product sales increased $5.9 million, or 9%, in the three months ended December 24, 2022. Beverage related sales increased 15% to $38.7 million. Gallon sales were up 2% for the three months led by continued improving trends in travel, sporting events, concerts and amusement parks. Sales remained strong even as volume at theaters declined in the quarter due to lower performing releases and weather-related impacts during the holiday season. Service revenue increased 8% to $23.8 million reflecting healthy maintenance call volumes. Machine revenue (primarily sales of frozen beverage machines) decreased 11% to $7.0 million due to the timing of customer installations between years.

Operating income in our Frozen Beverage segment increased $1.0 million in the quarter to $1.8 million as strong sales drove leverage across the business.

Liquidity and Capital Resources

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

	Three months ended
	December 24,			December 25,
	2022			2021
	(in thousands)
Cash flows from operating activities
Net earnings	$	6,633		$	11,091
Non-cash items in net income:
Depreciation of fixed assets		13,476			11,923
Amortization of intangibles and deferred costs		1,705			588
Gains from disposals of property & equipment		(711	)		(27	)
Share-based compensation		1,239			1,083
Deferred income taxes		(526	)		(529	)
Loss on marketable securities		37			44
Other		(18	)		(4	)
Changes in assets and liabilities, net of effects from purchase of companies		(425	)		(18,715	)
Net cash provided by operating activities	$	21,410		$	5,454

~~Item 3.~~●

~~Quantitative~~The increase in depreciation of fixed assets over prior year period was largely due to prior year purchases of property plant and ~~Qualitative Disclosures About Market Risk~~equipment, as well as depreciation expense related to assets acquired in the fiscal 2022 Dippin’ Dots acquisition.


	●	The increase in amortization of intangibles and deferred costs over prior year period was related to intangible assets acquired in the fiscal 2022 Dippin’ Dots acquisition.

●

The $0.7 million gain from disposals of property & equipment in the three months ended December 24, 2022 primarily related to the sale of a building.


	●	Cash flows associated with changes in assets and liabilities, net of effects from purchase of companies were a net slight outflow in the three months ended December 24, 2022, with a decrease in accounts receivable largely offset by a decrease in accounts payable and accrued liabilities. In the prior year period, the net $18.7 million cash outflow was largely attributable to increases in inventory and decreases in accounts payable and accrued liabilities.

	Three months ended
	December 24,			December 25,
	2022			2021
	(in thousands)
Cash flows from investing activities
Purchases of property, plant and equipment		(30,910	)		(16,100	)
Proceeds from redemption and sales of marketable securities		3,300			7,200
Proceeds from disposal of property and equipment		729			231
Net cash used in investing activities	$	(26,881	)	$	(8,669	)

●

Purchases of property, plant and equipment include spending for production growth, in addition to acquiring new equipment, infrastructure replacements, and upgrades to maintain competitive standing and position us for future opportunities. The increase over prior year period was primarily due to increased spend for new lines at various plants aimed at increasing capacity.

●

The decrease in proceeds from redemption and sales of marketable securities from prior year period was due to a strategic decision in prior years to no longer re-invest redeemed proceeds into marketable securities given the low interest rate environment that existed in those years.

	Three months ended
	December 24,			December 25,
	2022			2021
	(in thousands)
Cash flows from financing activities
Proceeds from issuance of stock		1,285			706
Borrowings under credit facility		72,000			-
Repayment of borrowings under credit facility		(35,000	)		-
Payments on finance lease obligations		(39	)		(74	)
Payment of cash dividends		(13,453	)		(12,080	)
Net cash provided by (used in) financing activities	$	24,793		$	(11,448	)

●

Borrowings under credit facility and repayment of borrowings under credit facility relate to the Company’s cash draws and repayments made in the three months ended December 24, 2022 to primarily fund working capital needs and investments in additional production capacity in our plants.

●

The increase in payment of cash dividends from prior year period was due to the raising of our quarterly dividend during fiscal 2022.

Liquidity

As of December 24, 2022, we had $54.9 million of Cash and Cash Equivalents, and $6.4 million of Marketable Securities.

The Credit Agreement requires the Company to comply with various affirmative and negative covenants, including without limitation (i) covenants to maintain a minimum specified interest coverage ratio and maximum specified net leverage ratio, and (ii) subject to certain exceptions, covenants that prevent or restrict the Company’s ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future indebtedness, alter its capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates, or amend its organizational documents. As of December 24, 2022, the Company is in compliance with all financial covenants of the Credit Agreement.

On June 21, 2022, the Company entered into an amendment to the Credit Agreement, the “Amended Credit Agreement” which provided for an incremental increase of $175 million in available borrowings. The Amended Credit Agreement also includes an option to increase the size of the revolving credit facility by up to an amount not to exceed in the aggregate the greater of $225 million or, $50 million plus the Consolidated EBITDA of the Borrowers, subject to the satisfaction of certain terms and conditions.

As of December 24, 2022, we had $92.0 million of outstanding borrowings drawn on the Amended Credit Agreement. As of September 24, 2022, we had $123.2 million of additional borrowing capacity, after giving effect to the $9.8 million of letters of credit outstanding.

Critical Accounting Estimates

We consider revenue recognition, allowance for doubtful receivables, valuation of goodwill, valuation of long-lived assets and other intangible assets, insurance reserves, income taxes, and business combinations to be critical accounting estimates. These policies are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended September 24, 2022. These critical accounting policies require us to make estimates and assumptions that affect the amounts reported in the consolidated condensed financial statements and accompanying notes.

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 2021 annual report~~our Annual Report on Form 10-K ~~filed with~~for the ~~SEC.~~fiscal year ended September 24, 2022.

Item 4.Controls and Procedures

~~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 ~~June 25,~~December 24, 2022, 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 ~~June 25,~~December 24, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. During the fiscal third quarter of 2022, the Company completed the acquisition of Dippin’ Dots. As permitted by SEC staff interpretive guidance that an assessment of a recently acquired business may be omitted from the scope of evaluation for a period of up to one year following the acquisition, management excluded Dippin’ Dots from its interim evaluation of internal controls over financial reporting.

PART II. OTHER INFORMATION

~~Item 6.~~

~~Exhibits~~

~~Exhibit No.~~Item 1.Legal Proceedings

~~31.1 Certification Pursuant~~The Company is subject, from time to ~~Section 302~~time, to certain legal proceedings and claims that arise from our business. As of the ~~Sarbanes-Oxley Act~~date 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.~~

~~101.1 The following financial information from J&J Snack Foods Corp.'s~~this Quarterly Report on Form 10-Q, ~~for~~ the ~~quarter ended June 25, 2022, formatted in inline XBRL (extensible Business Reporting Language):~~

~~(i) Consolidated Balance Sheets,~~

~~(ii) Consolidated Statements~~Company does not expect that any such proceedings will have a material adverse effect on the Company’s financial position or results of ~~Earnings,~~

~~(iii)Consolidated Statements of Comprehensive Income,~~

~~(iv) Consolidated Statements of Cash Flows and~~

~~(v) the Notes to the Consolidated Financial Statements~~operations.

~~104 Cover Page Interactive Data File (embedded within~~Item 1A.Risk Factors

For information on risk factors, please refer to “Risk Factors” in Part I, Item 1A of the ~~Inline XBRL~~Company’s Form 10-K for the fiscal year ended

September 24, 2022. The risks identified in that report have not changed in any material respect.

Item 2.Unregistered Sales of Equity Securities and ~~contained~~the Use of Proceeds

In October 2022, we withheld 129 shares to cover taxes associated with the vesting of certain restricted stock units held by officers and employees. In November 2022, we withheld 760 shares to cover taxes associated with the vesting of certain restricted stock units held by officers and employees.

Item 6.Exhibits

Exhibit No.


10.1	Form of Performance Share Unit
10.2	Form of Service Share Unit
31.1 &	Certification Pursuant to Section 302 of
31.2	the Sarbanes-Oxley Act of 2002

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


101.1	The following financial information from J&J Snack Foods Corp.'s Quarterly Report on Form 10-Q for the quarter ended December 24, 2022, 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 containing in Exhibit 101)

3735

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: August 4, 2022~~	~~/s/~~ ~~Dan Fachner~~J & J SNACK FOODS CORP.


Dated: February 2, 2023		/s/ Dan Fachner
		Dan Fachner
		President and Chief Executive Officer (Principal Executive Officer)
	~~(Principal Executive Officer)~~


~~Dated: August 4, 2022~~	~~/s/ Ken A. Plunk~~
		/s/ Ken A. Plunk
Dated: February 2, 2023		Ken A. Plunk, Senior Vice
	President and Chief Financial Officer
	(Principal Financial Officer)
	(Principal Accounting Officer)

3836

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

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

Large Accelerated filer ☒		Accelerated filer ☐

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

		Page Number
Part I.	Financial Information

Item l.	Consolidated Financial Statements

Consolidated Balance Sheets – ~~June 25,~~December 24, 2022 (unaudited) and September 24, 2022		3

Consolidated Statements of Earnings (unaudited) – Three Months Ended December 24, 2022 and December 25, 2021		4

~~Consolidated Statements of Earnings (unaudited) - Three and Nine Months Ended June 25, 2022 and June 26, 2021~~	5

Consolidated Statements of Comprehensive Income (unaudited) – Three ~~and Nine~~ Months Ended ~~June 25,~~December 24, 2022 and ~~June 26,~~December 25, 2021		6 5

Consolidated Statements of Changes In Stockholders’ Equity (unaudited) – Three ~~and Nine~~ Months Ended ~~June 25,~~December 24, 2022 and ~~June 26,~~December 25, 2021		7 6

Consolidated Statements of Cash Flows (unaudited) – ~~Nine~~Three Months Ended ~~June 25,~~December 24, 2022 and ~~June 26,~~December 25, 2021		8 7

Notes to the Consolidated Financial Statements (unaudited)		98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31 27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36 34

Item 4.	Controls and Procedures	3635

Part II.	Other Information	37

Item 6. ~~Exhibits~~	37Exhibits	35

	June 25,						December 24,
	2022			September 25,			2022			September 24,
	(unaudited)			2021			(unaudited)			2022
Assets
Current assets
Cash and cash equivalents	$	81,283		$	283,192		$	54,866		$	35,181
Marketable securities held to maturity		4,520			7,980			2,008			4,011
Accounts receivable, net		253,469			162,939			187,321			208,178
Inventories		173,948			123,160			182,642			180,473
Prepaid expenses and other		10,519			7,498			14,473			16,794
Total current assets		523,739			584,769			441,310			444,637

Property, plant and equipment, at cost
Land		3,714			2,494			3,714			3,714
Buildings		34,742			26,582			34,232			34,232
Plant machinery and equipment		367,297			343,716			384,749			374,566
Marketing equipment		266,915			258,624			280,172			274,904
Transportation equipment		11,780			10,315			12,306			11,685
Office equipment		45,518			34,648			46,073			45,865
Improvements		47,922			45,578			49,544			49,331
Construction in progress		54,537			35,285			80,453			65,753
Total Property, plant and equipment, at cost		832,425			757,242			891,243			860,050
Less accumulated depreciation and amortization		513,851			490,055			537,873			524,683
Property, plant and equipment, net		318,574			267,187			353,370			335,367

Other assets
Goodwill		188,467			121,833			184,420			184,420
Other intangible assets, net		196,407			77,776			190,027			191,732
Marketable securities held to maturity		0			4,047
Marketable securities available for sale		5,608			10,084			4,371			5,708
Operating lease right-of-use assets		54,990			54,555			50,063			51,137
Other		3,457			1,968			3,987			3,965
Total other assets		448,929			270,263			432,868			436,962
Total Assets	$	1,291,242		$	1,122,219		$	1,227,548		$	1,216,966

Liabilities and Stockholders' Equity
Current Liabilities
Current finance lease liabilities	$	189		$	182		$	128		$	124
Accounts payable		128,551			96,789			91,610			108,146
Accrued insurance liability		14,892			16,260			16,014			15,678
Accrued liabilities		10,121			10,955			9,642			9,214
Current operating lease liabilities		14,062			13,395			13,219			13,524
Accrued compensation expense		19,038			17,968			16,104			21,700
Dividends payable		12,138			12,080			13,461			13,453
Total current liabilities		198,991			167,629			160,178			181,839

Long-term debt		125,000			0			92,000			55,000
Noncurrent finance lease liabilities		318			392			303			254
Noncurrent operating lease liabilities		46,017			46,557			41,883			42,660
Deferred income taxes		61,350			61,578			69,873			70,407
Other long-term liabilities		3,667			409			3,575			3,637

Stockholders' Equity
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued		0			0
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,184,000 and 19,084,000 respectively		90,274			73,597
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued								-			-
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,229,000 and 19,219,000 respectively								96,550			94,026
Accumulated other comprehensive loss		(13,374	)		(13,383	)		(12,842	)		(13,713	)
Retained Earnings		778,999			785,440			776,028			782,856
Total stockholders' equity		855,899			845,654			859,736			863,169
Total Liabilities and Stockholders' Equity	$	1,291,242		$	1,122,219		$	1,227,548		$	1,216,966

	Three Months Ended						Nine Months Ended						Three months ended
	June 25,			June 26,			June 25,			June 26,			December 24,			December 25,
	2022			2021			2022			2021			2022			2021

Net sales	$	380,227		$	324,344		$	980,230		$	821,519
Net Sales													$	351,343		$	318,490

Cost of goods sold		271,151			228,170			726,431			614,324			260,488			239,115
Gross profit		109,076			96,174			253,799			207,195
Gross Profit														90,855			79,375

Operating expenses
Marketing		24,002			20,502			65,945			56,995			23,699			20,907
Distribution		48,157			27,311			109,821			75,643			42,049			33,315
Administrative		15,724			10,348			37,812			29,004			16,391			10,369
Other general expense		(67	)		(131	)		28			(399	)
Total operating expenses		87,816			58,030			213,606			161,243
Other general (income)														(612	)		(61	)
Total Operating Expenses														81,527			64,530

Operating income		21,260			38,144			40,193			45,952
Operating Income														9,328			14,845

Other income (expense)
Investment income		106			470			537			2,419			685			271
Interest expense & other		(156	)		(8	)		(231	)		(19	)
Interest expense														(1,049	)		(18	)

Earnings before income taxes		21,210			38,606			40,499			48,352			8,964			15,098

Income taxes		5,647			9,713			10,574			11,620
Income tax expense														2,331			4,007

NET EARNINGS	$	15,563		$	28,893		$	29,925		$	36,732		$	6,633		$	11,091

Earnings per diluted share	$	0.81		$	1.51		$	1.56		$	1.92		$	0.34		$	0.58

Weighted average number of diluted shares		19,234			19,185			19,198			19,116			19,274			19,153

Earnings per basic share	$	0.81		$	1.52		$	1.56		$	1.93		$	0.35		$	0.58

Weighted average number of basic shares		19,174			19,045			19,131			18,996			19,222			19,085

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

					Accumulated
					Other
	Common Stock				Comprehensive			Retained
	Shares		Amount		Loss			Earnings			Total

Balance as September 24, 2022		19,219	$	94,026	$	(13,713	)	$	782,856		$	863,169
Issuance of common stock upon exercise of stock options		10		1,285		-			-			1,285
Foreign currency translation adjustment		-		-		871			-			871
Dividends declared		-		-		-			(13,461	)		(13,461	)
Share-based compensation		-		1,239		-			-			1,239
Net earnings		-		-		-			6,633			6,633

Balance at December 24, 2022		19,229	$	96,550	$	(12,842	)	$	776,028		$	859,736

~~J & J Snack Foods Corp. and Subsidiaries~~
~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~
~~(in thousands)~~

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
~~(in~~ (in thousands)

			Preliminary Value
			as of acquisition
			date (as previously		Measurement
	(in thousands)		reported as of		Period
	June 21,		June 25,2022)		Adjustment			As Adjusted
	2022		(in thousands)

Cash and cash equivalents	$	2,259	$	2,259				$	2,259
Accounts receivable, net		12,257		12,257					12,257
Inventories		8,812		8,812		(301	)		8,511
Prepaid expenses and other		1,215		1,215					1,215
Property, plant and equipment, net		24,622		24,622		6,548			31,170
Intangible assets		120,400		120,400		(2,200	)		118,200
Goodwill⁽²⁾		66,634		66,634		(4,047	)		62,587
Operating lease right-of-use assets		3,514		3,514					3,514
Other noncurrent assets		243		243					243
Total assets acquired		239,956		239,956		-			239,956
Liabilities assumed:
Current lease liabilities		619		619					619
Accounts payable		6,005		6,005					6,005
Other current liabilities		3,532		3,532					3,532
Noncurrent lease liabilities		2,954		2,954					2,954
Other noncurrent liabilities		3,285		3,285					3,285
Total liabilities acquired		16,395		16,395		-			16,395
Purchase price	$	223,561	$	223,561	$	-		$	223,561

(1)								(1) Due to the limited time since the date of the acquisition, the purchase price allocation remains preliminary.
(2)								(2) Goodwill was assigned to our Food Services segment and was primarily attributed to the assembled workforce of the acquired business and to our expectations of favorable growth opportunities in entertainment and amusement locations, theaters, and convenience based on increased synergies that are expected to be achieved from the integration of Dippin’ Dots.

Acquired Intangible Assets

			(in thousands)
	*Weighted average*		*June 21,*
	*life (years)*		*2022*
Amortizable
Trade name	indefinite			76,900
Customer relationships		10		12,100
Technology		10		22,900
Franchise agreements		10		8,500
Total acquired intangible assets				120,400

			(in thousands)
	Weighted average		June 21,
	life (years)		2022
Amortizable
Trade name	indefinite		$	76,900
Developed technology		10		22,900
Customer relationships		10		9,900
Franchise agreements		10		8,500
Total acquired intangible assets			$	118,200

	Three Months Ended June 25, 2022
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net earnings available to common stockholders	$	15,563		19,174	$	0.81

Effect of dilutive securities
Options		0		60		0

Diluted EPS
Net earnings available to common stockholders plus assumed conversions	$	15,563		19,234	$	0.81

	Three months ended December 24, 2022
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	6,633		19,222	$	0.35

Effect of Dilutive Securities
RSU’s and Options		-		52		(0.01	)

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	6,633		19,274	$	0.34

	Three months ended December 25, 2021
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
	(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	11,091		19,085	$	0.58

Effect of Dilutive Securities
RSU’s and Options		-		68		-

Diluted EPS
Net Earnings available to common stockholders plus assumed conversions	$	11,091		19,153	$	0.58

	Nine Months ended June 25, 2022
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount

	(in thousands, except per share amounts)
Basic EPS
Net earnings available to common stockholders	$	29,925		19,131	$	1.56

Effect of dilutive securities
Options		0		67		0

Diluted EPS
Net earnings available to common stockholders plus assumed conversions	$	29,925		19,198	$	1.56

	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

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

	Nine 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	$	36,732		18,996	$	1.93

Effect of dilutive securities
Options		0		120		0

Diluted EPS
Net earnings available to common stockholders plus assumed conversions	$	36,732		19,116	$	1.92

	December 24,		September 24
	2022		2022
	(unaudited)
	(in thousands)

Finished goods	$	86,459	$	86,464
Raw materials		43,883		41,505
Packaging materials		17,033		16,637
Equipment parts and other		35,267		35,867
Total Inventories	$	182,642	$	180,473

	June 25, 2022				September 25, 2021				December 24, 2022				September 24, 2022
	Gross				Gross				Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated		Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization		Amount		Amortization		Amount		Amortization
			(in thousands)						(in thousands)
FOOD SERVICE

Indefinite lived intangible assets
Trade names	$	86,496	$	0	$	10,408	$	812	$	85,872	$	-	$	85,872	$	-

Amortized intangible assets
Non compete agreements		670		670		670		670
Non-compete agreements										-		-		670		670
Franchise agreements		8,500		0		0		0		8,500		425		8,500		212
Customer relationships		25,100		7,163		13,000		6,188		22,900		8,418		22,900		7,790
Technology		22,900		0		0		0		23,110		1,162		23,110		576
License and rights		1,690		1,460		1,690		1,396		1,690		1,502		1,690		1,481
TOTAL FOOD SERVICE	$	145,356	$	9,293	$	25,768	$	9,066	$	142,072	$	11,507	$	142,742	$	10,729

RETAIL SUPERMARKETS

Indefinite lived intangible assets
Trade names	$	12,316	$	0	$	12,777	$	461	$	11,938	$	-	$	11,938	$	-

Amortized intangible Assets
Amortized Intangible Assets
Trade names		649		649		649		649		-		-		649		649
Customer relationships		7,907		6,500		7,907		5,931		7,688		6,678		7,907		6,693
TOTAL RETAIL SUPERMARKETS	$	20,872	$	7,149	$	21,333	$	7,041	$	19,626	$	6,678	$	20,494	$	7,342


FROZEN BEVERAGES

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

Amortized intangible assets
Customer relationships		1,439		509		1,439		400		1,439		581		1,439		545
Licenses and rights		1,400		1,124		1,400		1,072		1,400		1,159		1,400		1,142
TOTAL FROZEN BEVERAGES	$	48,254	$	1,633	$	48,254	$	1,472	$	48,254	$	1,740	$	48,254	$	1,687

CONSOLIDATED	$	214,482	$	18,075	$	95,355	$	17,579	$	209,952	$	19,925	$	211,490	$	19,758

	Food		Retail		Frozen
	Service		Supermarket		Beverages		Total
	(in thousands)
Balance at June 25, 2022	$	127,823	$	4,146	$	56,498	$	188,467

Balance at September 25, 2021	$	61,189	$	4,146	$	56,498	$	121,833

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

Corporate bonds	$	4,520	$	0	$	52	$	4,468
Corporate Bonds										2,008		-		10		1,998
Total marketable securities held to maturity	$	4,520	$	0	$	52	$	4,468	$	2,008	$	-	$	10	$	1,998

	Three Months Ended			Nine Months Ended
	June 26, 2021			June 26, 2021

	*Foreign Currency*			*Foreign Currency*
	*Translation*			*Translation*
	*Adjustments*			*Adjustments*
	(unaudited)			(unaudited)
	(in thousands)			(in thousands)

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

Other comprehensive income		657			2,405

Ending balance	$	(13,182	)	$	(13,182	)

	Three months ended
	December 24, 2022

	Foreign Currency
	Translation Adjustments
	(unaudited)
	(in thousands)

Beginning Balance	$	(13,713	)

Other comprehensive income (loss)		871
Ending Balance	$	(12,842	)

	Three months ended
	December 25, 2021

	Foreign Currency
	Translation Adjustments
	(unaudited)
	(in thousands)

Beginning Balance	$	(13,383	)

Other comprehensive income (loss)		(444	)
Ending Balance	$	(13,827	)

	Operating Leases			Finance Leases
Nine months ending September 30, 2023	$	13,095		$	142
2024		12,964			133
2025		9,488			73
2026		6,238			59
2027		5,256			52
Thereafter		15,546			-
Total minimum payments		62,587			397
Less amount representing interest		(7,485	)		(28	)
Present value of lease obligations	$	55,102		$	431

				(in thousands)
	Operating Leases			Finance Leases
Three months ending September 24, 2022	$	4,187		$	64
2023		14,973			181
2024		12,251			140
2025		8,753			65
2026		5,666			39
Thereafter		20,515			33
Total minimum payments	$	66,345		$	522
Less amount representing interest		(6,266	)		(15	)
Present value of lease obligations	$	60,079		$	507