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 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 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 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-K for the fiscal year ended September 25, 2021.

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 of Dippin’ Dots since the date of acquisition were $2,218,000 and $621,000 for the three and nine-months ended June 25, 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.

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

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.

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~~2021.

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

~~845,977 anti-dilutive shares have been excluded in the computation of EPS for the~~ ~~three~~ ~~months ended~~ ~~June 27, 2020~~

~~169,246 anti-dilutive shares have been excluded in the computation of EPS for the~~ ~~nine~~ ~~months ended~~ ~~June 27, 2020~~

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 2022nine-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 2021nine-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 options and 10 years for 10-year options. We use historical information to estimate expected life and forfeitures within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation cost is recognized using a straight-line method over the vesting or service period and is net of estimated forfeitures.

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 14not

The Company adopted this guidance in the first quarter of Fiscal 2021 using the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements.

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, 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 $175,000,000 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 million, after giving effect to the outstanding letters of credit. As of September 25, 2021, there were 0 outstanding balances under the Credit Agreement.

16

Three Months Ended

Nine Months Ended

June 25,

June 26,

June 25,

June 26,

2022

2021

2022

2021

Sales to external customers:

Food Service

Soft pretzels
$ 55,946 $ 50,895 $ 149,628 $ 120,356
Frozen novelties
17,155 13,927 32,917 30,812
Churros
25,614 20,096 62,550 46,358
Handhelds
25,740 18,971 64,741 56,574
Bakery
95,495 85,706 287,293 257,580
Other
7,892 6,884 18,785 14,546
Total Food Service
$ 227,842 $ 196,479 $ 615,914 $ 526,226

Retail Supermarket

Soft pretzels
$ 11,696 $ 11,193 $ 43,642 $ 40,871
Frozen novelties
41,865 36,898 78,586 71,600
Biscuits
6,066 4,562 20,024 18,717
Handhelds
1,589 1,191 3,934 6,215
Coupon redemption
(605 ) (513 ) (2,227 ) (2,196 )
Other
397 526 501 1,652
Total Retail Supermarket
$ 61,008 $ 53,857 $ 144,460 $ 136,859

Frozen Beverages

Beverages
$ 57,791 $ 42,279 $ 126,919 $ 76,663
Repair and

maintenance service
22,892 22,789 65,903 59,903
Machines revenue
9,868 8,404 25,257 20,556
Other
826 536 1,777 1,312
Total Frozen Beverages
$ 91,377 $ 74,008 $ 219,856 $ 158,434

Consolidated sales
$ 380,227 $ 324,344 $ 980,230 $ 821,519

Depreciation and amortization:

Food Service
$ 7,097 $ 6,817 $ 20,436 $ 20,334
Retail Supermarket
405 378 1,157 1,147
Frozen Beverages
5,514 5,469 16,474 16,893
Total depreciation and amortization
$ 13,016 $ 12,664 $ 38,067 $ 38,374

Operating income:

Food Service
$ 2,640 $ 17,644 $ 12,177 $ 29,879
Retail Supermarket
2,341 9,080 8,416 20,167
Frozen Beverages
16,279 11,420 19,600 (4,094 )
Total operating income
$ 21,260 $ 38,144 $ 40,193 $ 45,952

Capital expenditures:

Food Service
$ 21,673 $ 10,383 $ 45,757 $ 25,915
Retail Supermarket
2,815 93 6,438 194
Frozen Beverages
4,437 5,151 12,036 8,347
Total capital expenditures
$ 28,925 $ 15,627 $ 64,231 $ 34,456

Assets:

Food Service
$ 957,719 $ 779,730 $ 957,719 $ 779,730
Retail Supermarket
29,147 33,405 29,147 33,405
Frozen Beverages
304,376 288,411 304,376 288,411
Total assets
$ 1,291,242 $ 1,101,546 $ 1,291,242 $ 1,101,546
22

Three months ended

Nine months ended

June 26

June 27

June 26

June 27

2021

2020

2021

2020

Sales to External Customers:

Food Service

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

Retail Supermarket

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

Frozen Beverages

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

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

Depreciation and Amortization:

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

Operating Income :

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

Capital Expenditures:

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

Assets:

Food Service
$ 779,730 $ 729,331 $ 779,730 $ 729,331
Retail Supermarket
33,405 33,766 33,405 33,766
Frozen Beverages
288,411 294,189 288,411 294,189
Total Assets
$ 1,101,546 $ 1,057,286 $ 1,101,546 $ 1,057,286
17

~~Note~~ 10
Note 12
Our~~three~~ ~~reporting units, which are also~~ reportable segments are Food Service, Retail Supermarkets and Frozen Beverages.

The carrying amounts of acquired intangible assets for the Food Service, Retail Supermarkets and Frozen ~~Beverage~~Beverages segments as of June ~~26, 2021~~25, 2022 and September ~~26, 2020~~25, 2021 are as follows:
June 26, 2021
September 26, 2020

Gross

Gross

Carrying

Accumulated

Carrying

Accumulated

Amount

Amortization

Amount

Amortization

(in thousands)

FOOD SERVICE

Indefinite lived intangible assets

Trade names
$ 10,408 $ - $ 10,408 $ -

Amortized intangible assets

Non compete agreements
670 670 670 645
Customer relationships
13,000 5,863 19,737 11,595
License and rights
1,690 1,375 1,690 1,312
TOTAL FOOD SERVICE
$ 25,768 $ 7,908 $ 32,505 $ 13,552

RETAIL SUPERMARKETS

Indefinite lived intangible assets

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

Amortized Intangible Assets

Trade names
676 619 676 519
Customer relationships
7,907 5,733 7,907 5,140
TOTAL RETAIL SUPERMARKETS
$ 21,333 $ 6,352 $ 21,333 $ 5,659

FROZEN BEVERAGES

Indefinite lived intangible assets

Trade names
$ 9,315 $ - $ 9,315 $ -
Distribution rights
36,100 - 36,100 -

Amortized intangible assets

Customer relationships
1,439 365 1,439 257
Licenses and rights
1,400 1,054 1,400 1,002
TOTAL FROZEN BEVERAGES
$ 48,254 $ 1,420 $ 48,254 $ 1,259

CONSOLIDATED
$ 95,355 $ 15,680 $ 102,092 $ 20,470
~~Fully amortized intangible assets have been removed from the~~ ~~June 26, 2021~~ ~~amounts.~~
Amortizing intangible assets are being amortized by the straight-line method over periods ranging from 2 to 20 years and amortization expense is reflected throughout operating expenses. Aggregate amortization expense of intangible assets for the ~~three~~ ~~months ended~~ ~~June 26, 2021~~ ~~and~~ ~~June 27, 2020~~ ~~was $639,000 and $831,000, respectively. Aggregate amortization expense of intangible assets for the~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021~~ ~~and~~ ~~June 27, 2020~~ ~~was $2,096,000 and $2,507,000, respectively.~~
18

June 25, 2022

September 25, 2021

Gross

Gross

Carrying

Accumulated

Carrying

Accumulated

Amount

Amortization

Amount

Amortization

(in thousands)

FOOD SERVICE

Indefinite lived intangible assets

Trade names
$ 86,496 $ 0 $ 10,408 $ 812

Amortized intangible assets

Non compete agreements
670 670 670 670
Franchise agreements 8,500 0 0 0
Customer relationships
25,100 7,163 13,000 6,188
Technology 22,900 0 0 0
License and rights
1,690 1,460 1,690 1,396
TOTAL FOOD SERVICE
$ 145,356 $ 9,293 $ 25,768 $ 9,066

RETAIL SUPERMARKETS

Indefinite lived intangible assets

Trade names
$ 12,316 $ 0 $ 12,777 $ 461

Amortized intangible Assets

Trade names
649 649 649 649
Customer relationships
7,907 6,500 7,907 5,931
TOTAL RETAIL SUPERMARKETS
$ 20,872 $ 7,149 $ 21,333 $ 7,041

FROZEN BEVERAGES

Indefinite lived intangible assets

Trade names
$ 9,315 $ - $ 9,315 $ -
Distribution rights
36,100 - 36,100 -

Amortized intangible assets

Customer relationships
1,439 509 1,439 400
Licenses and rights
1,400 1,124 1,400 1,072
TOTAL FROZEN BEVERAGES
$ 48,254 $ 1,633 $ 48,254 $ 1,472

CONSOLIDATED
$ 214,482 $ 18,075 $ 95,355 $ 17,579
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 25, 2022 and June 26, 2021 was $584,000 and $639,000, 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
23
Estimated amortization expense for the next five fiscal years is approximately $3,500,000 in 2022, $6,700,000 in 2023, $6,400,000 in 2024, $5,800,000 in 2025, and $5,800,000 in 2026.
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.
Goodwill
The carrying amounts of goodwill for the Food Service, Retail Supermarket and Frozen Beverages segments are as follows:
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

~~Estimated amortization expense for the next~~ ~~five~~ ~~fiscal years is approximately $2,500,000 in~~ ~~2021,~~ ~~$2,300,000 in~~ ~~2022,~~ ~~$2,300,000 in~~ ~~2023,~~ ~~$2,000,000 in~~ ~~2024,~~ ~~and $1,400,000 in~~ ~~2025.~~ ~~The weighted amortization period of the intangible assets is 10.9 years.~~
~~Goodwill~~
~~The carrying amounts of goodwill for the Food Service, Retail Supermarket and Frozen Beverage segments are as follows:~~
Food Retail Frozen
Service
Supermarket
Beverages Total
(in thousands)
Balance at June 26, 2021
$ 61,189 $ 4,146 $ 56,498 $ 121,833

Balance at September 26, 2020
$ 61,189 $ 4,146 $ 56,498 $ 121,833
~~Note~~ 11
Note 13
We have classified our investment securities as marketable securities held to maturity and available for sale. The FASB defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the FASB has established three levels of inputs that may be used to measure fair value:
Level 1
Observable input such as quoted prices in active markets for identical assets or liabilities;
Level 2
Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and
Level 3
Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
24

Marketable securities held to maturity and available for ~~sale.~~sale consist primarily of investments in mutual funds, preferred stock, and corporate bonds. The ~~FASB defines~~fair values of mutual funds are based on quoted market prices in active markets and are classified within Level 1 of the fair value ashierarchy. The fair values of preferred stock and corporate bonds are based on quoted prices for identical or similar instruments in markets that are not active. As a result, preferred stock and corporate bonds are classified within Level 2 of the ~~price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such,~~ fair value hierarchy.
The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at June 25, 2022 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Corporate bonds
$ 4,520 $ 0 $ 52 $ 4,468
Total marketable securities held to maturity
$ 4,520 $ 0 $ 52 $ 4,468
The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at June 25, 2022 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual funds
$ 3,588 $ 0 $ 742 $ 2,846
Preferred stock
2,816 15 69 2,762
Total marketable securities available for sale
$ 6,404 $ 15 $ 811 $ 5,608
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 ~~a market-based measurement that should be determined~~ based on ~~assumptions~~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 million maturing within the next 12 months. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.
25
The amortized cost, unrealized gains and losses, and fair market ~~participants would use~~values of our investment securities held to maturity at September 25, 2021 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Corporate bonds
12,027 123 18 12,132
Total marketable securities held to maturity
$ 12,027 $ 123 $ 18 $ 12,132
The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September 25, 2021 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual funds
$ 3,588 $ 0 $ 536 $ 3,052
Preferred stock
6,892 175 35 7,032
Total marketable securities available for sale
$ 10,480 $ 175 $ 571 $ 10,084
The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at June 25, 2022 and September 25, 2021 are summarized as follows:

June 25, 2022

September 25, 2021

Fair

Fair

Amortized

Market

Amortized

Market

Cost

Value

Cost

Value

(in thousands)

Due in one year or less
$ 4,520 $ 4,468 $ 7,980 $ 8,080
Due after one year through five years
- - 4,047 4,052
Total held to maturity securities
$ 4,520 $ 4,468 $ 12,027 $ 12,132
Less current portion
4,520 4,468 7,980 8,080
Long term held to maturity securities
$ - $ - $ 4,047 $ 4,052
26
Proceeds from the redemption and sale of marketable securities were $0 and $11,526,000 in ~~pricing an asset or liability. As a basis for considering such assumptions,~~ the ~~FASB has established~~ three ~~levels~~and nine months ended June 25, 2022 and were $12,854,000 and $54,191,000 in the three and nine months ended June 26, 2021, respectively. Losses of ~~inputs that~~$343,000 and $412,000 were recorded in the ~~may~~ three~~be used~~ and nine months ended June 25, 2022, and gains of $21,000 and $139,000 were recorded in the three and nine months ended June 26, 2021. Included in the gains and losses were unrealized losses of $401,000 and unrealized gains of $786,000 in the nine months ended June 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 ~~measure fair value:~~determine the cost of securities sold.
Total marketable securities held to maturity as of June 25, 2022, with credit ratings of BBB/BB/B had an amortized cost basis totaling $4,520,000. This rating information was obtained June 30, 2022.
Note 14
Changes to the components of accumulated other comprehensive loss are as follows:

Three Months Ended

Nine Months Ended

June 25, 2022

June 25, 2022

Foreign Currency

Foreign Currency

Translation

Translation

Adjustments

Adjustments

(unaudited)

(unaudited)

(in thousands)

(in thousands)

Beginning balance
$ (13,281 ) $ (13,383 )

Other comprehensive (loss) income (93 ) 9

Ending balance
$ (13,374 ) $ (13,374 )
~~Level~~
127

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 )
~~Observable input such as quoted prices in active markets for identical assets or liabilities;~~
Note 15 –
Leases

~~Level~~ 2General Lease Description
~~Observable inputs, other than Level~~ 1 ~~inputs in active markets, that are observable either directly or indirectly; and~~

~~Level~~We have operating leases with initial noncancelable lease terms in excess of 3one
~~Unobservable inputs~~ 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 13 years.
We have finance leases with initial noncancelable lease terms in excess of one year covering the rental of various equipment. These leases are generally for manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these finance leases range from 1 year to 5 years.
Significant Assumptions and Judgments
Contract Contains a Lease
In evaluating our contracts to determine whether a contract is or contains a lease, we considered the following:
•          Whether explicitly or implicitly identified assets have been deployed in the contract; and
•          Whether we obtain substantially all of the economic benefits from the use of that underlying asset, and we can direct how and for what purpose the asset is used during the term of the contract.
28
Allocation of Consideration
In determining how to allocate consideration between lease and non-lease components in a contract that was deemed to contain a lease, we used judgment and consistent application of assumptions to reasonably allocate the consideration.
Options to Extend or Terminate Leases
We have leases which ~~there~~contain options to extend or terminate the leases. On a lease-by-lease basis, we have determined if the extension should be considered reasonably certain to be exercised and thus a right-of-use asset and a lease liability should be recorded.
Discount Rate
The discount rate for leases, if not explicitly stated in the lease, is ~~little~~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, 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.
Practical Expedients and Accounting Policy Elections
We elected the package of practical expedients that permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs and made an accounting policy election to exclude short-term leases with an initial term of 12 months or less from our Consolidated Balance Sheets.
no29 ~~market data, which require~~
Amounts Recognized in the ~~reporting entity~~Financial Statements
The components of lease expense were as follows:

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended

June 25, 2022

June 26, 2021

June 25, 2022

June 26, 2021

(in thousands)

(in thousands)

(in thousands)

(in thousands)

Operating lease cost in cost of goods sold and operating expenses
$ 3,630 $ 3,846 $ 11,550 $ 11,747
Finance lease cost:

Amortization of assets in cost of goods sold and operating expenses
19 62 141 216
Interest on lease liabilities in Interest expense & other
1 5 8 30
Total finance lease cost $ 20 $ 67 $ 149 $ 246
Short-term lease cost in cost of goods sold and operating expenses
0 0 0 0
Total net lease cost $ 3,650 $ 3,913 $ 11,699 $ 11,993
Supplemental balance sheet information related to ~~develop its own assumptions.~~leases is as follows:
Marketable securities held to maturity and available for sale consist primarily of investments in mutual funds, preferred stock, and corporate bonds. The fair values of mutual funds are based on quoted market prices in active markets and are classified within Level 1 ~~of the fair value hierarchy. The fair values of preferred stock and corporate bonds are based on quoted prices for identical or similar instruments in markets that are~~ ~~not~~ ~~active. As a result, preferred stock and corporate bonds are classified within Level~~ 2 ~~of the fair value hierarchy.~~

June 25, 2022

September 25, 2021

(in thousands)

(in thousands)

Operating Leases

Operating lease right-of-use assets
$ 54,990 $ 54,555

Current operating lease liabilities
$ 14,062 $ 13,395
Noncurrent operating lease liabilities
46,017 46,557
Total operating lease liabilities $ 60,079 $ 59,952

Finance Leases

Finance lease right-of-use assets in property, plant and equipment, net
$ 441 $ 561

Current finance lease liabilities
$ 189 $ 182
Noncurrent finance lease liabilities
318 392
Total finance lease liabilities $ 507 $ 574
Supplemental cash flow information related to leases is as follows:

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended

June 25, 2022

June 26, 2021

June 25, 2022

June 26, 2021

(in thousands)

(in thousands)

(in thousands)

(in thousands)

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

Operating cash flows from operating leases
$ 4,181 $ 3,860 $ 12,189 $ 11,847
Operating cash flows from finance leases
$ 1 $ 64 $ 8 $ 237
Financing cash flows from finance leases
$ 39 $ 23 $ 150 $ 48

Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets
$ 4,652 $ 1,317 $ 11,717 $ 2,671
Supplemental noncash information on lease liabilities removed due to purchase of leased asset
$ - $ - $ - $ -
As of June 25, 2022, the maturities of lease liabilities were as follows:

(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

19

~~The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at~~ ~~June 26, 2021~~ ~~are summarized as follows:~~

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

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

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual Funds
$ 3,588 $ 0 $ 581 $ 3,007
Preferred Stock
8,107 213 54 8,266
Total marketable securities available for sale
$ 11,695 $ 213 $ 635 $ 11,273
The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration. The Fixed-to-Floating Perpetual Preferred Stock generate fixed income to call dates in ~~2021~~ ~~and~~ ~~2025~~ ~~and then income is based on a spread above LIBOR if the securities are~~ ~~not~~ ~~called. The mutual funds and Fixed-to-Floating Perpetual Preferred Stock do~~ ~~not~~ ~~have contractual maturities; however, we classify them as long-term assets as it is our intent to hold them for a period of over~~ ~~one~~ ~~year, although we~~ ~~may~~ ~~sell some or all of them depending on presently unanticipated needs for liquidity or market conditions. The corporate bonds generate fixed income to maturity dates in~~ ~~2021~~ ~~through~~ ~~2023,~~ ~~with $17.5 million maturing within 2 years. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.~~
20

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

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Corporate Bonds
68,078 1,015 32 69,061
Total marketable securities held to maturity
$ 68,078 $ 1,015 $ 32 $ 69,061
~~The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at~~ ~~September 26, 2020~~ ~~are summarized as follows:~~

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

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

June 26, 2021
September 26, 2020

Fair

Fair

Amortized

Market

Amortized

Market

Cost

Value

Cost

Value

(in thousands)

Due in one year or less
$ 9,902 $ 10,041 $ 51,151 $ 51,815
Due after one year through five years
7,568 7,666 16,927 17,246
Due after five years through ten years
0 0 0 0
Total held to maturity securities
$ 17,470 $ 17,707 $ 68,078 $ 69,061
Less current portion
9,902 10,041 51,151 51,815
Long term held to maturity securities
$ 7,568 $ 7,666 $ 16,927 $ 17,246
21

~~Proceeds from the redemption and sale of marketable securities were $12,854,000 and $54,191,000 in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021~~ ~~and were $23,187,000 and $54,125,000 in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~June 27, 2020,~~ ~~respectively. Gains of $21,000 and $139,000 were recorded in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021,~~ ~~respectively. A gain of $324,000 was recorded in the~~ ~~three~~ ~~months ended~~ ~~June 27, 2020~~ ~~and losses of $1,746,000 were recorded in the~~ ~~nine~~ ~~months ended~~ ~~June 27, 2020.~~ ~~Included in the gains and losses were unrealized gains of $786,000 and unrealized losses of $1,708,000 in the~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021~~ ~~and~~ ~~June 27, 2020,~~ ~~respectively. Unrealized gains of $137,000 and $285,000 were recorded in the~~ ~~three~~ ~~months ended~~ ~~June 26, 2021~~ ~~and~~ ~~June 27, 2020,~~ ~~respectively. We use the specific identification method to determine the cost of securities sold.~~
~~Total marketable securities held to maturity as of~~ ~~June 26, 2021~~ with credit ratings of AAA/AA/A had an amortized cost basis totaling $4,970,000 and those with credit ratings of BBB/BB/B had an amortized cost basis totaling $12,500,000. This rating information was obtained ~~June~~ 30 ~~2021.~~
~~Note~~ 12  ~~Changes to the components of accumulated other comprehensive loss are as follows:~~

Three Months Ended June 26, 2021

Nine Months Ended June 26, 2021

(unaudited)

(unaudited)

(in thousands)

(in thousands)

Foreign Currency

Foreign Currency

Translation

Translation

Adjustments

Total

Adjustments

Total

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

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

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

Three Months Ended June 27, 2020

Nine Months Ended June 27, 2020

(unaudited)

(unaudited)

(in thousands)

(in thousands)

Foreign Currency

Foreign Currency

Translation

Translation

Adjustments

Total

Adjustments

Total

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

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

Ending Balance
$ (16,058 ) $ (16,058 ) $ (16,058 ) $ (16,058 )
22



~~Note~~ 13
Note 16 On ~~October 1, 2019,~~ we acquired the assets of ICEE Distributors LLC, based in Bossier City, Louisiana. ICEE Distributors does business in Arkansas, Louisiana and Texas with annual sales of approximately $13 million. Sales and operating income of ICEE Distributors were $3,163,000 and $1,099,000 for the ~~three~~ ~~months ended~~ ~~June 26, 2021~~ ~~and were $6,952,000 and $1,568,000 for the~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021.~~ ~~Sales and operating income of ICEE Distributors were $3,200,000 and $1,100,000 for the~~ ~~three~~ ~~months ended~~ ~~June 27, 2020~~ ~~and were $8,000,000 and $2,000,000 for the~~ ~~nine~~ ~~months ended~~ ~~June 27, 2020.~~
On ~~February 4, 2020,~~ we acquired the assets of BAMA ICEE, based in Birmingham, Alabama. BAMA ICEE does business in Alabama and Georgia with annual sales of approximately $3.5 million. Sales and operating income of BAMA ICEE were $632,000 and $221,000 for the ~~three~~ ~~months ended~~ ~~June 26, 2021~~ ~~and were $1,437,000 and $365,000 for~~ ~~nine~~ ~~months ended~~ ~~June 26, 2021.~~ ~~Sales and operating income of BAMA ICEE were $636,000 and $205,000 for the~~ ~~three~~ ~~months and were $975,000 and $281,000 for the~~ ~~nine~~ ~~months ended~~ ~~June 27, 2020.~~
~~The purchase price allocations for the acquisitions are as follows:~~
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.

(in thousands)

ICEE

BAMA

Total

Distributors

ICEE

Accounts Receivable, net
$ 721 $ 71 $ 792
Inventories
866 77 943
Property, plant & equipment, net
4,851 1,722 6,573
Customer Relationships
569 133 702
Distribution rights
22,400 6,800 29,200
Goodwill
15,773 3,549 19,322
Accounts Payable
(210 ) (110 ) (320 )
Purchase Price
$ 44,970 $ 12,242 $ 57,212
~~The goodwill recognized is attributable to the assembled workforce of ICEE Distributors and certain other strategic intangible assets that do~~ ~~not~~ ~~meet the requirements for recognition separate and apart from goodwill.~~
~~The Company incurred 0 acquisitions costs during the~~ ~~three~~ or ~~nine~~ ~~months ended~~ ~~June 26, 2021.~~ ~~Acquisition costs of $76,000 are included in other general expense for the~~ ~~nine~~ ~~months ended~~ ~~June 27, 2020.~~
23

~~Note~~ 14 ~~– Leases~~
~~General Lease Description~~
~~We have operating leases with initial noncancelable lease terms in excess of~~ ~~one~~ year covering the rental of various facilities and equipment. Certain of these leases contain renewal options and some provide options to purchase during the lease term. Our operating leases include leases for real estate for some of our office and manufacturing facilities as well as manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these operating leases range from 1 month to 14 years.
~~We have finance leases with initial noncancelable lease terms in excess of~~ ~~one~~ year covering the rental of various equipment. These leases are generally for manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these finance leases range from 1 year to 6 years.
~~Significant Assumptions and Judgments~~
~~Contract Contains a Lease~~
~~In evaluating our contracts to determine whether a contract is or contains a lease, we considered the following:~~
~~•         Whether explicitly or implicitly identified assets have been deployed in the contract; and~~
•         Whether we obtain substantially all of the economic benefits from the use of that underlying asset, and we can direct how and for what purpose the asset is used during the term of the contract.
~~Allocation of Consideration~~
In determining how to allocate consideration between lease and non-lease components in a contract that was deemed to contain a lease, we used judgment and consistent application of assumptions to reasonably allocate the consideration.
~~Options to Extend or Terminate Leases~~
We have leases which contain options to extend or terminate the leases. On a lease-by-lease basis, we have determined if the extension should be considered reasonably certain to be exercised and thus a right-of-use asset and a lease liability should be recorded.
~~Discount Rate~~
~~The discount rate for leases, if~~ ~~not~~ explicitly stated in the lease, is the incremental borrowing rate, which is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
24

We used the discount rate to calculate the present value of the lease liability at the date of adoption. In the development of the discount rate, we considered our incremental borrowing rate as provided by our lender which was based on cash collateral and credit risk specific to us, and our lease portfolio characteristics.
~~As of~~ ~~June 26, 2021,~~ ~~the weighted-average discount rate of our operating and finance leases was 3.2% and 3.2%, respectively.~~
~~Practical Expedients and Accounting Policy Elections~~
~~We elected the package of practical expedients that permits us~~ ~~not~~ ~~to reassess our prior conclusions about lease identification, lease classification and initial direct costs and made an accounting policy election to exclude short-term leases with an initial term of~~ 12 ~~months or less from our Consolidated Balance Sheets.~~
~~Amounts Recognized in the Financial Statements~~
~~The components of lease expense were as follows:~~

Three Months Ended

Nine Months Ended

June 26, 2021

June 26, 2021

(in thousands)

(in thousands)

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

Amortization of assets in Cost of goods sold and Operating Expenses
62 216
Interest on lease liabilities in Interest expense & other
5 30
Total finance lease cost
67 246
Short-term lease cost in Cost of goods sold and Operating Expenses
0 0
Total net lease cost $ 3,913 $ 11,993
25

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

June 26, 2021

(in thousands)

Operating Leases

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

Current operating lease liabilities
$ 12,780
Noncurrent operating lease liabilities
41,573
Total operating lease liabilities $ 54,353

Finance Leases

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

Current finance lease liabilities
$ 252
Noncurrent finance lease liabilities
417
Total finance lease liabilities $ 669
~~Supplemental cash flow information related to leases is as follows:~~

Three Months Ended

Nine Months Ended

June 26, 2021

June 26, 2021

(in thousands)

(in thousands)

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

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

Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets
$ 1,317 $ 2,671
Supplemental noncash information on lease liabilities removed due to purchase of leased asset
$ - -
~~As of~~ ~~June 26, 2021,~~ ~~the maturities of lease liabilities were as follows:~~

(in thousands)

Operating Leases

Finance Leases

Three months ending September 25, 2021
$ 3,863 $ 117
2022
13,804 203
2023
11,681 133
2024
8,967 133
2025
5,726 61
Thereafter
16,480 70
Total minimum payments
$ 60,521 $ 717
Less amount representing interest
(6,168 ) (48 )
Present value of lease obligations
$ 54,353 $ 669
~~As of~~ ~~June 26, 2021,~~ ~~the weighted-average remaining term of our operating and finance leases was 6.2 years and 4.2 years, respectively.~~
26

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~
Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate,” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934 “the Exchange Act”. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate,” “intend” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbor provisions of the Act and the Exchange Act. 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.~~expansion for at least the next twelve months. See Note 1113 to these financial statements for a discussion of our investment securities.

The Company’s Board of Directors declared a regular quarterly cash dividend of ~~$.633~~$0.633 per share of its common stock payable on July ~~12, 2021,~~11, 2022, to shareholders of record as of the close of business on June ~~21, 2021. The cash dividend of $.633 per share represents an increase of 10% from the previous quarterly dividend rate of $.575 per share.~~20, 2022.

~~We purchased 65,648 shares of our common stock in fiscal year 2020, but did not purchase any shares in the nine months ended June 26, 2021.~~ On August 4, 2017 the Company’s Board of Directors authorized the purchase and retirement of 500,000 shares of the Company’s common stock; 318,858 shares remain to be purchased under this authorization. We did not purchase any shares of our common stock in the nine months ended June 25, 2022, nor did we purchase any shares of our common stock in fiscal year 2021.
31

In the three months ended June ~~26, 2021~~25, 2022 and June ~~27, 2020,~~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 ~~decreases~~an increase of ~~$657,000~~$93,000 and ~~$41,000~~a decrease of $657,000 in accumulated other comprehensive loss, respectively. In the nine months ended June ~~26, 2021~~25, 2022 and June ~~27, 2020,~~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 ~~$2,405,000~~$9,000 and ~~an increase of $3,070,000~~$2,405,000 in accumulated other comprehensive loss, respectively.

27

~~Our general-purpose bank credit line,~~In December 2021, the Company entered into an amended and restated loan agreement (the “Credit Agreement”) with our existing banks which ~~expires in November 2021, provides~~provided for up to a $50,000,000 revolving credit ~~facility.~~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 ~~agreement contains restrictive covenants~~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 ~~requires commitment fees in accordance with standard banking practice. There~~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 ~~this facility at~~the Credit Agreement. As of June ~~26,~~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.
32

RESULTS OF OPERATIONS

Net sales increased by ~~51%~~17% to ~~$324,344,000~~$380,227,000 in the third quarter and by 7%19% to ~~$821,519,000~~$980,230,000 for the nine months ended June ~~26, 2021~~25, 2022 compared to the three and nine months ended June ~~27, 2020,~~26, 2021, respectively.

FOOD SERVICE

Sales to food service customers increased by ~~68%~~16% in the third quarter to ~~$196,478,000~~$227,842,000 and by ~~12%~~17% to ~~$526,226,000~~$615,914,000 for the nine months, compared to respective prior year periods. ~~Food service~~Sales were up across most product lines as many of the venues and locations where our products are ~~approaching pre-COVID~~sold that were previously shut down or operating at reduced capacity ~~levels~~in the first nine months of 2021 have partially or fully re-opened in the first nine months of 2022. Theaters and ~~more confident consumers are leaving their homes~~outdoor venues, including stadiums and ~~spending more~~amusement parks, as ~~the market normalizes. Sales accelerated throughout~~well as schools, restaurants and strategic accounts continued to experience an increase in visitation that drove strong sales in our ~~key channels led by schools, amusement/recreation, restaurants, c-stores and theaters.~~core products.

Soft pretzel sales to the food service market increased by ~~138%~~10% to ~~$50,895,000~~$55,946,000 in the third quarter and by 3%24% to ~~$120,359,000~~$149,628,000 in the nine ~~months.~~months compared to respective prior year periods. Frozen ~~juices and ices~~novelties sales increased by ~~60%~~23% to ~~$13,927,000~~$17,155,000 in the third quarter and increased by ~~22%~~7% to ~~$30,812,000~~$32,917,000 in the nine ~~months.~~months compared to respective prior year periods. Churro sales to food service customers increased by ~~174%~~27% to ~~$20,096,000~~$25,614,000 in the third quarter and increased by ~~21%~~35% to ~~$46,358,000~~$62,550,000 in the nine ~~months.~~months compared to respective prior year periods. Sales of bakery products increased by ~~24%~~11% in the third quarter to ~~$85,706,000~~$95,495,000 and increased ~~by 1%~~12% to ~~$257,580,000~~$287,293,000 for the nine ~~months.~~
months compared to respective prior year periods. Sales of handhelds increased ~~by 155%~~36% in the third quarter to ~~$18,971,000~~$25,740,000 and by ~~156%~~14% to $64,741,000 in the nine months compared to ~~$56,574,000 led by the continued success of a new product developed for one of our larger wholesale club customers.~~respective prior year periods.

Sales of new products in the first twelve months since their introduction were approximately ~~$11,762,000~~$700,000 in the third quarter and ~~$38,929,000~~$4,600,000 in the nine months, ~~led~~driven primarily by ~~the previously noted handheld item.~~new bakery items, including a new empanada product with a major convenience customer. Price increases had a ~~marginal~~moderate impact on ~~results~~sales in the quarter, and the overall revenue growth included marginal volume increases as ~~traffic and volume drove almost all of the sales decline compared~~well.
Compared to prior ~~year.~~
~~Operating~~year, operating income in our Food Service segment ~~was $17,644,000~~decreased by 85% to $2,640,000 in the third quarter ~~compared with an operating loss of $18,242,000 in the prior year quarter. Operating income in our Food Service segment increased~~and by ~~286%~~59% to ~~$29,879,000~~$12,177,000 in the nine ~~months. The~~months reflecting the significant increase in ~~operating income was primarily due to~~ingredients, production and distribution costs year over year, as well as our ERP implementation which previously impacted our results in the ~~increase in sales which improved margin efficiencies and expense leverage.~~fiscal second quarter.

2833

RETAIL SUPERMARKETS

~~Sales~~Compared to prior year, sales of products to retail supermarkets ~~decreased~~increased by 13% to $61,008,000 in the third quarter and increased by 6% to ~~$53,857,000~~$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 $136,859,000 in the nine months. The decrease in sales in the current quarter was primarily attributable to the stronger customer demand in the prior year third quarter resulting from the initial responses to the COVID-19 pandemic. During the prior year third quarter, a surge in demand and sales was experienced related to the effects of the rapid changes in consumer purchasing habits.
~~Sales of soft pretzels decreased by 12% in the third quarter to $11,193,000 but increased by 17%~~$65,903,000 in the nine months, compared to ~~$40,871,000. Sales~~respective prior year periods, led by an acceleration in maintenance calls and additional growth in one of ~~frozen juices and ices increased by 11% to $36,898,000~~our larger customers, earlier in the third quarter and by 21% to $71,600,000 in the nine months. Sales of biscuits decreased by 44% to $4,562,000 in the third quarter and by 14% to $18,717,000 in the nine months. Handheld sales to retail supermarket customers decreased by 63% to $1,191,000 in the third quarter and by 32% to $6,215,000 in the nine months.
Sales of new products in the nine months were approximately $550,000 and were primarily related to frozen novelty items. Price increases had a minimal impact on sales in the third quarter and in the nine months, as sales were driven primarily by consumer traffic and volume trends in retail outlets.
Operating income in our Retail Supermarkets segment increased by 15% to $9,080,000 in the third quarter and by 39% to $20,167,000 in the nine months. The increases in operating income was primarily attributable to the improvement in operating margins.
~~FROZEN BEVERAGES~~
~~Frozen beverage and related product sales increased by 83% to $74,009,000 in the third quarter but decreased by 9% to $158,434,000 in the nine months.~~
Beverages sales increased by 157% to $42,279,000 in the third quarter but decreased by 8% to $76,663,000 in the nine months, with the majority of the fluctuations attributable to gallon sales. The increase in sales in the current quarter was led by the amusement channel that experienced sales above pre-COVID 19 levels, and continued traffic increases in the mass merchandise, QSR and theater channels.
Service revenue increased by 32% to $22,789,000 in the third quarter but decreased by 3% to $59,903,000 in the nine months. The increase in the quarter was largely due to customers accelerating equipment maintenance to support the post COVID-19 recovery.
29

fiscal year. Machines revenue (primarily sales of frozen beverage machines) increased by ~~32%~~17% to ~~$8,404,000~~$9,868,000 in the third quarter ~~but decreased~~and by ~~25%~~23% to ~~$20,556,000~~$25,257,000 in the nine ~~months. Retailers are beginning~~months, compared to ~~re-invest again which helped to accelerate machine revenues in the quarter.~~respective prior year periods, driven mainly by growth from large quick service restaurant (QSR) and convenience customers.

Our Frozen Beverage segment ~~generated~~had operating income of ~~$11,420,000~~$16,279,000 in the third quarter compared with ~~an operating loss of $9,088,000~~$11,420,000 in the prior year third quarter. In the nine months, our Frozen Beverage segment ~~incurred an~~had operating ~~loss~~income of ~~$4,094,000~~$19,600,000 compared with an operating loss of ~~$8,942,000~~$4,094,000 in the prior year nine-month period. The comparative performance was ~~impacted by~~primarily a result of higher beverage sales volume which drove leverage across the ~~challenging sales environment in the prior year quarter due to the COVID-19 pandemic.~~business.
34

CONSOLIDATED

Gross profit as a percentage of sales was ~~29.7%~~28.7% in the third quarter and ~~17.3%~~29.7% in the prior year quarter. Gross profit as a percentage of sales was ~~25.2%~~25.9% in the nine-month period this year and ~~24.0%~~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 ~~is largely attributable to~~early in the ~~benefit of increased sales, favorable product mix and corresponding margin efficiencies.~~third quarter.

Total operating expenses increased by ~~2.5%~~51% to ~~$58,030,000~~$87,816,000 in the third quarter ~~but decreased~~and by ~~5.8%~~32% to ~~$161,243,000~~$213,606,000 in the nine ~~months.~~months compared to respective prior year periods. As a percentage of net sales, operating expenses ~~decreased~~increased from ~~26.4%~~17.9% to ~~17.9%~~23.1% in the third quarter and ~~increased~~from 19.6% to 21.8% in the nine ~~months from 22.2% to 19.6%.~~months.

Marketing expenses ~~decreased to~~remained flat at 6.3% of net sales in the third quarter ~~from 10.2% in prior year~~ and decreased to ~~6.9%~~6.7% in the nine months compared with ~~8.9%~~6.9% in prior year’s nine-month period. Distribution expenses ~~decreased~~increased to ~~8.4%~~12.7% of net sales in the third quarter from ~~9.9%~~8.4% in the prior year ~~but increased slightly~~and to ~~9.2%~~11.2% in the nine months compared with ~~9.1%~~9.2% in prior year’s nine-month ~~period.~~period, with the increases largely driven by higher truck driver wages and rising carrier, storage and fuel costs. Administrative expenses ~~decreased~~increased to ~~3.2%~~4.1% of net sales in the third quarter from ~~3.9%~~3.2% in prior year and to ~~3.5%~~3.9% in the nine months compared with ~~3.7%~~3.5% in prior year’s nine-month ~~period. Operating expenses~~period, with the increase largely attributable to $3,088,000 of merger and acquisition costs which were incurred in the ~~prior year were impacted by $5.1 million of plant shutdown impairment costs in both the three month, and nine-month periods.~~third quarter.

~~Operating~~Compared to prior year, operating income ~~was $38,144,000~~decreased by 44% to $21,260,000 in the third quarter ~~compared with an operating loss of $19,420,000 in the prior year. Operating income increased~~and by ~~246%~~13% to ~~$45,952,000~~$40,193,000 in the nine months as a result of the aforementioned items.

Our investments generated before tax income of ~~$470,000~~$106,000 in the third quarter, a ~~$830,000~~$364,000 decrease ~~from~~over prior year. In the nine months, our investments generated before tax income of ~~$2,419,000,~~$537,000, a ~~10%~~78% decrease from the prior year period. The decrease in before tax investment income compared with prior year was ~~primarily attributable~~due to decreases in the ~~decrease~~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 ~~investments held between periods.~~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.

3035

Net earnings in the third quarter were $28,893,000 compared with a loss of $12,647,000 in prior year. Net earnings increased by 213% in the nine months to $36,732,000. Our effective tax rate was 24% in the nine months compared with 26% in the prior year’s nine-month period.

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

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth, in item 7a. “Quantitative and Qualitative Disclosures About Market Risk,” in its 2020
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 on Form 10-K filed with the SEC.

Item 4.
Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of June 26, 2021,
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, 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 ~~26,2021,~~25, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. During the 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.

3136

PART II. OTHER INFORMATION

Item 6.
~~Item 6.~~  Exhibits

Exhibit No.

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

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

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

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

~~101.1~~
~~The following financial information from J&J Snack Foods Corp.'s Quarterly Report on Form 10-Q for the quarter ended June 26, 2021, formatted in iXBRL (Inline extensible~~
101.1 The following financial information from J&J Snack Foods Corp.'s 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 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~~(embedded within the Inline XBRL and contained in Exhibit 101)

3237

SIGNATURES

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

~~J & J SNACK FOODS CORP.~~
~~Dated: July 29, 2021~~J & J SNACK FOODS CORP.
Dated: August 4, 2022
/s/ Dan Fachner

Dan Fachner

President and Chief Executive Officer

(Principal Executive Officer)
Dated: ~~July 29, 2021~~
August 4, 2022
/s/ Ken A. Plunk
Ken A. Plunk, Senior Vice
President and Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)

3338

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 ~~26,2021(unaudited)~~25, 2022 (unaudited) and September ~~26, 2020~~25, 2021	3 4

Consolidated Statements of Earnings (unaudited) –- Three and ~~nine months~~Nine Months Ended June ~~26, 2021~~25, 2022 and June ~~27, 2020~~26, 2021	45

Consolidated Statements of Comprehensive Income (unaudited) – Three and ~~nine months~~Nine Months Ended June ~~26, 2021~~25, 2022 and June ~~27, 2020~~26, 2021	56

Consolidated Statements of Changes In Stockholders’ Equity (unaudited) – Three and ~~nine months~~Nine Months Ended June ~~26, 2021~~25, 2022 and June ~~27, 2020~~26, 2021	67

Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended June ~~26, 2021~~25, 2022 and June ~~27, 2020~~26, 2021	78

Notes to the Consolidated Financial Statements (unaudited)	8 9

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk	31 36

Item 4. Controls and Procedures	31 36

Part II. Other Information	32 37

Item 6. Exhibits	3237

	June 26,						June 25,
	2021			September 26,			2022			September 25,
	(unaudited)			2020			(unaudited)			2021
Assets
Current assets
Cash and cash equivalents	$	276,268		$	195,809		$	81,283		$	283,192
Marketable securities held to maturity		9,902			51,151			4,520			7,980
Accounts receivable, net		154,845			126,587			253,469			162,939
Inventories		114,822			108,923			173,948			123,160
Prepaid expenses and other		11,547			17,087			10,519			7,498
Total current assets		567,384			499,557			523,739			584,769

Property, plant and equipment, at cost
Land		2,494			2,494			3,714			2,494
Buildings		26,582			26,582			34,742			26,582
Plant machinery and equipment		340,693			330,168			367,297			343,716
Marketing equipment		253,199			250,914			266,915			258,624
Transportation equipment		10,232			9,966			11,780			10,315
Office equipment		34,291			33,878			45,518			34,648
Improvements		45,349			43,264			47,922			45,578
Construction in progress		28,134			19,995			54,537			35,285
Total Property, plant and equipment, at cost		740,974			717,261			832,425			757,242
Less accumulated depreciation and amortization		482,056			455,645			513,851			490,055
Property, plant and equipment, net		258,918			261,616			318,574			267,187

Other assets
Goodwill		121,833			121,833			188,467			121,833
Other intangible assets, net		79,676			81,622			196,407			77,776
Marketable securities held to maturity		7,568			16,927			0			4,047
Marketable securities available for sale		11,273			13,976			5,608			10,084
Operating lease right-of-use assets		51,811			58,110			54,990			54,555
Other		3,083			2,912			3,457			1,968
Total other assets		275,244			295,380			448,929			270,263
Total Assets	$	1,101,546		$	1,056,553		$	1,291,242		$	1,122,219

Liabilities and Stockholders' Equity
Current Liabilities
Current finance lease liabilities	$	252		$	349		$	189		$	182
Accounts payable		97,117			73,135			128,551			96,789
Accrued insurance liability		15,764			13,039			14,892			16,260
Accrued liabilities		6,890			7,420			10,121			10,955
Current operating lease liabilities		12,780			13,173			14,062			13,395
Accrued compensation expense		15,000			16,134			19,038			17,968
Dividends payable		12,064			10,876			12,138			12,080
Total current liabilities		159,867			134,126			198,991			167,629

Long-term debt								125,000			0
Noncurrent finance lease liabilities		417			368			318			392
Noncurrent operating lease liabilities		41,573			47,688			46,017			46,557
Deferred income taxes		64,284			64,413			61,350			61,578
Other long-term liabilities		375			460			3,667			409

Stockholders' Equity
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued		0			0			0			0
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,061,000 and 18,915,000 respectively		69,572			49,268
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
Accumulated other comprehensive loss		(13,182	)		(15,587	)		(13,374	)		(13,383	)
Retained Earnings		778,640			775,817			778,999			785,440
Total stockholders' equity		835,030			809,498			855,899			845,654
Total Liabilities and Stockholders' Equity	$	1,101,546		$	1,056,553		$	1,291,242		$	1,122,219

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Balance as September 26, 2020		18,915	$	49,268	$	(15,587	)	$	775,817		$	809,498
Balance as September 25, 2021															19,084	$	73,597	$	(13,383	)	$	785,440		$	845,654
Issuance of common stock upon exercise of stock options		41		4,390		0			0			4,390			5		706		0			0			706
Foreign currency translation adjustment		-		0		2,279			0			2,279			-		0		(444	)		0			(444	)
Dividends declared		-		0		0			(10,900	)		(10,900	)		-		0		0			(12,092	)		(12,092	)
Share-based compensation		-		1,244		0			0			1,244			-		1,083		0			0			1,083
Net earnings		-		0		0			1,778			1,778			-		0		0			11,091			11,091

Balance at December 26, 2020		18,956	$	54,902	$	(13,308	)	$	766,695		$	808,289
Balance at December 25, 2021															19,089	$	75,386	$	(13,827	)	$	784,439		$	845,998
Issuance of common stock upon exercise of stock options		72		8,384		0			0			8,384			76		10,012		0			0			10,012
Issuance of common stock for employee stock purchase plan		6		714		0			0			714			8		1,023		0			0			1,023
Foreign currency translation adjustment		-		0		(531	)		0			(531	)		-		0		546			0			546
Dividends declared		-		0		0			(10,943	)		(10,943	)		-		0		0			(12,136	)		(12,136	)
Share-based compensation		-		1,026		0			0			1,026			-		1,267		0			0			1,267
Net earnings		-		0		0			6,061			6,061			-		0		0			3,271			3,271

Balance at March 27, 2021		19,034		65,026		(13,839	)		761,813			813,000
Balance at March 26, 2022															19,173	$	87,688	$	(13,281	)	$	775,574		$	849,981
Issuance of common stock upon exercise of stock options		27		3,564		0			0			3,564			11		1,452		0			0			1,452
Issuance of common stock for employee stock purchase plan															-		-		-			-			-
Foreign currency translation adjustment		-		0		657			0			657			-		0		(93	)		0			(93	)
Dividends declared		-		0		0			(12,066	)		(12,066	)		-		0		0			(12,138	)		(12,138	)
Share-based compensation		-		982		0			0			982			-		1,134		0			0			1,134
Net earnings		-		0		0			28,893			28,893			-		0		0			15,563			15,563

Balance at June 26, 2021		19,061		69,572		(13,182	)		778,640			835,030
Balance at June 25, 2022															19,184	$	90,274	$	(13,374	)	$	778,999		$	855,899

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

	(in thousands)
	June 21,
	2022

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

(1)	Due to the limited time since the date of the acquisition, the purchase price allocation remains preliminary.
(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

	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

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

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

Effect of Dilutive Securities
Effect of dilutive securities
Options		0		140		(0.01	)		0		140		0

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

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

	(in thousands, except per share amounts)							(in thousands, except per share amounts)
Basic EPS
Net Earnings available to common stockholders	$	36,732		18,996	$	1.93
Net earnings available to common stockholders								$	36,732		18,996	$	1.93

Effect of Dilutive Securities
Effect of dilutive securities
Options		0		120		(0.01	)		0		120		0

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

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

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

Effect of Dilutive Securities
Options		0			0		0

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

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

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

Effect of Dilutive Securities
Options		0		134		0

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

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


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

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

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

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

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

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

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

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

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

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

Amortized intangible assets
Non compete agreements		670		670		670		645
Customer relationships		13,000		5,863		19,737		11,595
License and rights		1,690		1,375		1,690		1,312
TOTAL FOOD SERVICE	$	25,768	$	7,908	$	32,505	$	13,552

RETAIL SUPERMARKETS

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

Amortized Intangible Assets
Trade names		676		619		676		519
Customer relationships		7,907		5,733		7,907		5,140
TOTAL RETAIL SUPERMARKETS	$	21,333	$	6,352	$	21,333	$	5,659


FROZEN BEVERAGES

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

Amortized intangible assets
Customer relationships		1,439		365		1,439		257
Licenses and rights		1,400		1,054		1,400		1,002
TOTAL FROZEN BEVERAGES	$	48,254	$	1,420	$	48,254	$	1,259

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

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

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

Amortized intangible assets
Non compete agreements		670		670		670		670
Franchise agreements		8,500		0		0		0
Customer relationships		25,100		7,163		13,000		6,188
Technology		22,900		0		0		0
License and rights		1,690		1,460		1,690		1,396
TOTAL FOOD SERVICE	$	145,356	$	9,293	$	25,768	$	9,066

RETAIL SUPERMARKETS

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

Amortized intangible Assets
Trade names		649		649		649		649
Customer relationships		7,907		6,500		7,907		5,931
TOTAL RETAIL SUPERMARKETS	$	20,872	$	7,149	$	21,333	$	7,041


FROZEN BEVERAGES

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

Amortized intangible assets
Customer relationships		1,439		509		1,439		400
Licenses and rights		1,400		1,124		1,400		1,072
TOTAL FROZEN BEVERAGES	$	48,254	$	1,633	$	48,254	$	1,472

CONSOLIDATED	$	214,482	$	18,075	$	95,355	$	17,579

	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

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

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

~~Dated: July 29, 2021~~J & J SNACK FOODS CORP.


Dated: August 4, 2022	/s/ Dan Fachner
		Dan Fachner
		President and Chief Executive Officer
		(Principal Executive Officer)



Dated: ~~July 29, 2021~~ August 4, 2022		/s/ Ken A. Plunk
		Ken A. Plunk, Senior Vice
		President and Chief Financial Officer
		(Principal Financial Officer)
		(Principal Accounting Officer)