Accounts receivable due from any of our customers is subject to risk. Our total bad debt expense was $423,000, $493,000$276,000 and $492,000$423,000 for the fiscal years 2012 and 2011, 2010 and 2009, respectively. We had a credit to expense of $70,000 in fiscal year 2013. At September 24, 201128, 2013 and September 25, 2010,29, 2012, our accounts receivables were $75,000,000$87,545,000 and $69,875,000$76,414,000 net of an allowance for doubtful accounts of $653,000$854,000 and $591,000.

Sales of products to retail supermarkets increased $14,980,000decreased $7,529,000 or 20%7% to $91,099,000$102,339,000 in fiscal year 2011.2013. Excluding handheld sales from the extra week in 2012, sales increased 7%decreased approximately 5% from 2012 to 2013. Excluding Kim & Scott’s sales in the twelve months post acquisition and the extra week in 2012, sales decreased approximately 5% for the year. Soft pretzel sales to retail supermarkets were $32,044,000$34,597,000 compared to $30,463,000$33,842,000 in 20102012 on a unit volume increase of 2%. Sales of frozen juices and ices increased $3,652,000decreased $5,596,000 or 8%10% to $51,940,000$48,077,000 on a unit volume increasedecrease of about 9%. Frozen juices and ices sales were impacted by cold weather throughout the second half of the year. Coupon redemption costs, a reduction of sales, increased 13%14% or about $458,000$459,000 for the year. Handheld sales to retail supermarket customers were $9,424,000decreased 8% to $22,528,000 in 2011.2013 as two customers accounted for all of the decrease in sales. Sales of products in the first twelve months since their introduction were approximately $4.5$1.4 million in fiscal year 2011.2013. Price increases accounted for approximately $3.1$2.9 million of sales for the year and net volume increases,decreases, including new product sales as defined above and handheldKim & Scott’s sales and net of decreasedincreased coupon costs, accounted forreduced sales by approximately $12.0$10.4 million of sales for the year. Operating income in our Retail Supermarkets segment decreased from $13,316,000 in 2012 to $8,594,000 in 2013 with 84% of the decrease, or $3,982,000, coming in the fourth quarter. The fourth quarter was impacted by sharply lower sales of frozen juices and ices, which were down 26%, and by increased from $11,281,000 in 2010trade spending needed to $11,830,000 in 2011.  Operating income benefited by lower advertising expensegenerate those sales. We believe that the impact of approximately $800,000 and higher volume and pricing, whichcold weather on frozen novelties’ sales was partially offset by higher product costs related to ingredient and packaging cost increases.

Frozen beverage and related product sales increased 4%2% to $189,410,000$204,585,000 in fiscal 2011.2013. Excluding sales from the extra week in 2012, sales increased approximately 4% from 2012 to 2013. Beverage sales alone increased 4%decreased 2% to $133,372,000$132,274,000 for the year with a 31% increase in sales in Mexico accounting for over 50% of the increase.  Domestic gallonincreases and decreases throughout our customer base. Gallon sales were flatdown 4% in our base ICEE business. Service revenue increased 5%8% to $42,608,000$52,813,000 for the year with increases and decreases spread across our customer base. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, decreasedincreased from $11,964,000$13,136,000 in 20102012 to $11,362,000$17,376,000 in 2011.2013. The estimated number of Company owned frozen beverage dispensers was 40,80044,700 and 38,60042,500 at September 24, 201128, 2013 and September 25, 2010,29, 2012, respectively. Operating income in our Frozen Beverage segment increased from $15,661,000$21,881,000 in 20102012 to $18,582,000$22,903,000 in 20112013 as a result of increased volumeservice revenue and machine sales as discussed above and controlled expenses.  Higher gasoline costs of approximately $1.4 million impacted the year’s operating income.

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

Gross profit as a percentage of sales decreasedincreased to 30.88%30.35% in 20112013 from 32.69%30.11% in 2010.  Higher2012 primarily due to higher volume in our food service segment, and the margin also benefitted by lower ingredient and packaging costs of about $2.3 million. Gross profit was impacted by about $2.1 million of increased liability insurance expense compared to last year and a product write down of approximately $18 million and the mid single digit gross profit margin of handheld sales were primarily responsible for the decreased gross profit percentage.$500,000 related to a new product that was not successful. Ingredient and packaging costs can be extremely volatile and may be significantly different from what we are presently expecting and therefore we cannot project the impact of ingredient and packaging costs on our business going forward; however, there has been a very significant increase in the market cost of ingredient and packaging costs over the past eighteen months which we anticipate will result in higher costs over some portions of our fiscal year 2012.  The impact of these higher costs and increased costs in operational areas may result in lower net earnings in 2012 than in 2011.

Total operating expenses increased $2,543,000$680,000 to $153,191,000$165,898,000 in fiscal 20112013 but as a percentage of sales decreased a full.77 percentage pointpoints to 21%19% of sales. Marketing expenses decreased .86.65 percentage points toand remained at 9% of sales becauseas a result of reduced advertisinghigher sales and lower expenses of which about $800,000 resulted from a management and sales meeting held in our retail supermarket segment and controlled spending elsewhere.2012 which did not reoccur in 2013. Distribution expenses increased .24 percentage points to 8%as a percent of sales due to higher fuel costs and freight rates.were 7.49% in both years. Administrative expenses decreased .18 percentage pointswere 3.16% and were 3%3.15% of sales in both years.2013 and 2012, respectively. Other general expenseincome of $524,000$651,000 this year compared to other general expense of $2,087,000$458,000 in 2010.2012. Included in other general income in 2013 is $805,000 of settlement income related to prior acquisitions. Included in other general expense in 20102012 is $1.6 million for an unclaimed property assessment and $577,000$404,000 of acquisition costs. Included in other general expense in 2011 is $546,000costs and costs of acquisition costs.

Operating income decreased $579,000increased $12,437,000 or 1%15% to $76,583,000$97,404,000 in fiscal year 20112013 as a result of the aforementioned items.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $10,961,000$18,769,000 or 17%21% to $76,119,000$109,868,000 in fiscal year 2010.2012. Excluding sales from the extra week in 2012, sales increased approximately 18% from 2011 to 2012. Excluding handheld sales and Kim & Scott’s sales in the twelve months post acquisitions and the extra week in 2012, sales increased approximately 2% for the year. Soft pretzel sales to retail supermarkets were $30,463,000$33,842,000 compared to $30,506,000$32,044,000 in 20092011 on a unit volume decreaseincrease of less than 1%2%.  This makes the third consecutive year of flat or modestly up or down unit sales. Sales of frozen juices and ices increased $10,469,000$1,733,000 or 28%3% to $48,288,000$53,673,000 on a unit volume increase of 24%.  Reduced trade spending of $1.5 million for the introduction of new frozen novelty items and a shift in product mix increased sales dollars in relation to the overall unit volume increases.flat volume. Coupon redemption costs, a reduction of sales, decreased 9%16% or about $354,000$635,000 for the year. Handheld sales to retail supermarket customers were $24,358,000 in 2012. Sales of products in the first twelve months since their introduction were approximately $4.2$7.0 million in fiscal year 2010.  Net2012. Price increases accounted for approximately $3.7 million of sales for the year and net volume increases, including new product sales as defined above and handheld sales and Kim & Scott’s sales and net of decreased coupon costs, and reduced trade spending for new product introductions, accounted for virtually allapproximately $15.0 million of sales for the sales increases in 2010.year. Operating income in our Retail Supermarkets segment increased from $7,442,000$11,830,000 in 20092011 to $11,281,000$13,316,000 in 20102012 primarily as a result of volume increasesdue to operating income generated by handheld sales and reduced trade spending for the introduction of new frozen novelty items.

Frozen beverage and related product sales increased 8%5% to $182,778,000$199,666,000 in fiscal 2010.2012. Excluding sales from the acquisition of Parrot Ice,extra week in 2012, sales would have increased 7% for the year.approximately 4% from 2011 to 2012. Beverage sales alone increased 13%2% to $128,125,000$135,436,000 for the year with increased sales to two new customersincreases and one existingdecreases throughout our customer sales from Parrot Ice and a 26% increase in sales in Mexico accounting for over 80% of the increase.  Gallonbase. Domestic gallon sales were up 10%flat in our base ICEE business with sales to three customers accounting for almost all of the increase.business. Service revenue decreased 4%increased 15% to $40,410,000$49,115,000 for the year with declinesincreases and decreases spread across our customer base. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, increased from $11,729,000$11,362,000 in 20092011 to $11,964,000$13,136,000 in 2010.2012. The estimated number of Company owned frozen beverage dispensers was 38,60042,500 and 35,70040,800 at September 25, 201029, 2012 and September 26, 2009,24, 2011, respectively. Operating income in our Frozen Beverage segment increased from $14,536,000$18,582,000 in 20092011 to $15,661,000$21,881,000 in 20102012 as a result of increased volumesales as discussed above.above and controlled expenses. Higher gasoline costs of approximately $867,000$900,000 impacted the year’s operating income.

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

Gross profit as a percentage of sales increaseddecreased to 32.69%30.11% in 20102012 from 31.98%30.88% in 2009.  Lower2011. Higher ingredient and packaging costs compared to last year of approximately $2.2$10 million and the benefitlower gross profit margin of higher volumes leveraging our fixed manufacturing costs and reduced trade spending for new product introductions in our Retail Supermarket segmenthandheld sales were primarily responsible for the increaseddecreased gross profit percentage. Without this handhelds impact, gross profit as a percentage of sales would have been roughly the same for 2011 and 2012. Ingredient and packaging costs can be extremely volatile and may be significantly different from what we are presently expecting and therefore we cannot project the impact of ingredient and packaging costs on our business going forward; however, there has been a very significant increase in the market cost of flour and packaging as well as other commoditieslesser used ingredients over the past six months which we anticipate will result in higher costs over some portions of our fiscal year 2011.  The impact of these higher costs and increased costs in operational areas may result in lower net earnings in 2011 than in 2010.

Total operating expenses increased $8,712,000$12,027,000 to $150,618,000$165,218,000 in fiscal 2010 and2012 but as a percentage of sales decreased .11 of a.70 percentage point and remained at 22%points to 20% of sales. Marketing expenses decreased .29.30 percentage points to 10%and remained at 9% of sales. Distribution expenses decreased .13.23 percentage points to 7% of sales. Administrative expenses decreased .15 percentage points and were about 3-1/2%3% of sales in both years. The drops in percentages were generally because of increased sales. Other general expense of $2,087,000$458,000 this year compared to other general incomeexpense of $5,000$524,000 in 2009.2011. Included in other general expense this yearin 2012 is $1.6 million for an unclaimed property assessment and $577,000$404,000 of acquisition costs and costs of relocating Kim & Scott’s operations. Included in other general expense in 2011 is $546,000 of acquisition costs.

Operating income for the year was impacted by approximately $800,000 of costs of a management and sales meeting held in October 2011, which has historically been held every five years.

Operating income increased $10,224,000$8,384,000 or 15%11% to $77,162,000$84,967,000 in fiscal year 20102012 as a result of the aforementioned items.

In November 2011, we entered into an amendment and modification to an amended and restated loan agreement with our existing banks which provides for up to a $50,000,000 revolving credit facility repayable in November 2016. The agreement contains restrictive covenants and requires commitment fees in accordance with standard banking practice. There were no outstanding balances under the prior facility at September 24, 2011 and28, 2013 or at September 25, 2010.29, 2012. The significant financial covenants are:

We were in compliance with the financial covenants described above at September 24, 2011.

We self-insure, up to loss limits, certain insurable risks such as worker's compensation and automobile liability claims. Accruals for claims under our self-insurance program are recorded on a claims-incurred basis. Under this program, the estimated liability for claims incurred but unpaid in fiscal years 20112013 and 20102012 was $1,100,000$3,200,000 and $2,200,000,$1,800,000, respectively. In connection with certain self-insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At each of September 24, 201128, 2013 and September 25, 2010,29, 2012, we had outstanding letters of credit totaling $8,175,000.

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

		Payments Due by Period
		(in thousands)
		Total				Less Than 1 Year				1-3 Years				4-5 Years				After 5 Years
Long-term debt, includingcurrent maturities		$	-			$	-			$	-			$	-			$	-
Capital lease obligations			347				211				100				36				-
Purchase commitments			40,000				40,000				-				-				-
Operating leases			45,420				8,556				13,365				7,877				15,622
Total		$	85,767			$	48,767			$	13,465			$	7,913			$	15,622

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

Cash and cash equivalents and marketable securities held to maturity and available for sale increased $38,539,000,$26,855,000, or 33%15%, to $154,985,000$207,265,000 from a year ago for reasons described below.

Accounts receivables, net increased $5,125,000,$11,131,000, or 7%15%, to $75,000,000$87,545,000 in 20112013. On a days’ outstanding basis, the balance a year ago was at an unusually low level; the increase this year is partly due to primarily increased sales levels in our fourth quarter which resulted primarily froma bounceback and partly due to the handhelds acquisition.composition of the receivables. Inventories increased $12,831,000$2,024,000 or 25%3% to $63,461,000$71,785,000 in 20112013 primarily due to higher unit costs of inventory and inventory of handhelds which accounted for over 60% of the increase.

Prepaid expenses and other decreasedincreased to $4,196,000$3,284,000 from $6,067,000$2,220,000 last year because of higher estimated federal income tax payments made in 2010 prior to the enactment of the law extending bonus depreciation.

Net property, plant and equipment increased $14,558,000$5,620,000 to $124,650,000$147,164,000 because purchases of fixed assetsproperty, plant and equipment for the improvement and expansion of our manufacturing capabilities and frozen carbonated beverage business exceeded depreciation on existing assets,assets. Included in purchases of property, plant and becauseequipment in 2013 is approximately $5.4 million for equipment additions at our manufacturing facility in Moscow Mills, MO which essentially completes the multi-year expansion of the addition of $11,036,000 in fixed assets acquired in the handhelds acquisition.that facility.

In 2011,2012, the major variables in determining our net increase in cash and cash equivalents and marketable securities were our net earnings, depreciation and amortization of fixed assets, purchases of property, plant and equipment, purchases of companies, payments of cash dividend and the repurchase of common stock. Other variables which in the past have had a significant impact on our change in cash and cash equivalents are proceeds from borrowings and payments of long-term debt. As discussed in results of operations, our net earnings may be influenced by many factors. Depreciation and amortization of fixed assets is primarily determined by past purchases of property, plant and equipment although it could be impacted by a significant acquisition. Purchases of property, plant and equipment are primarily determined by our ongoing normal manufacturing and marketing requirements but could be increased significantly for manufacturing expansion requirements or large frozen beverage customer needs. From time to time, we have repurchased common stock and we anticipate that we will do so again in the future. We are actively seeking acquisitions that could be a significant use of cash. Although the balance of ourwe have no long-term debt is $0 at September 24, 2011,29, 2012, we may borrow in the future depending on our needs.

The Company has in the past entered into interest rate swaps to limit its exposure to interest rate risk and may do so in the future if the Board of Directors feels that such non-trading purpose is in the best interest of the Company and its shareholders. As of September 24, 2011,28, 2013, the Company had no interest rate swap contracts.

At September 24, 2011,28, 2013, the Company had no long-term debt obligations.

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

The Company has not entered into any forward exchange contracts to hedge its foreign currency rate risk as of September 24, 2011,28, 2013, because it does not believe its foreign exchange exposure is significant.

Item 8.     Financial Statements And Supplementary Data

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

We carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), as amended for financial reporting, as of September 24, 2011.28, 2013. Based on that evaluation, our chief executive officer and chief financial officer concluded that these controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported as specified in Securities and Exchange Commission rules and forms. There were no changes in these controls or procedures identified in connection with the evaluation of such controls or procedures that occurred during our last fiscal quarter, or in other factors that have materially affected, or are reasonably likely to materially affect these controls or procedures. There were no changes in the Company’s internal controls over financial reporting that occurred during our last fiscal quarter.