J&J Snack Foods Corp. Annual Report 2021

← All annual reports

FY2021 Annual Report · J&J Snack Foods Corp.

Loading PDF…

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL

YEAR ENDED SEPTEMBER 25, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE

TRANSITION PERIOD FROM TO

Registrant's telephone number, including area code: (856) 665-9533

Commission File No. 000-14616

J&J SNACK FOODS CORP.
(Exact name of registrant as specified in its charter)

New Jersey
(State or other jurisdiction of incorporation or organization)

22-1935537
(I.R.S. Employer Identification No.)

6000 Central Highway
Pennsauken, New Jersey
(Address of principal executive offices)

Securities Registered Pursuant to Section 12(b) of the Act:

08109
(Zip Code)

Title of Each Class
Common Stock, no par value

Trading Symbols(s)
JJSF

Name of Each Exchange on Which Registered
The NASDAQ Global Select Market

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐

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

Large accelerated filer ☒
Non-accelerated filer ☐

Accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. Yes ☒ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

March 26, 2021 was the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value of
the registrant’s common stock held by non-affiliates was $2,398,906,547 based on the last sale price on March 26, 2021 of $157.64 per
share. As of November 19, 2021, 19,084,586 shares of the registrant’s common stock were issued and outstanding.

Portions of the registrant’s definitive proxy statement for its Annual Meeting of Shareholders scheduled for February 16, 2022 are

incorporated by reference into Part III of this report.

DOCUMENTS INCORPORATED BY REFERENCE

J & J SNACK FOODS CORP.
2021 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

Note About Forward-Looking Statements
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

PART I

PART II

Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B

Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities
[Reserved]
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
Quantitative And Qualitative Disclosures About Market Risk
Financial Statements And Supplementary Data
Changes In And Disagreements With Accountants On Accounting And Financial Disclosure
Controls and Procedures
Other Information

PART III

Item 10
Item 11
Item 12
Item 13
Item 14

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters
Certain Relationships And Related Transactions, and Director Independence
Principal Accountant Fees and Service

Item 15

Exhibits, Financial Statement Schedules

PART IV

Page

1
1
7
11
11
12
12

13
15
15
26
27
27
27
28

28
30
30
31
31

Note About Forward-Looking Statements

Statements made in this Form 10-K 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 Act of 1934, that involve
substantial risks or uncertainties. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,”
“anticipate,” “estimate,” “projects,” “seek,” “predict,” “approximate,” or “continue,” or other similar references to future periods or the
negative thereof. Statements addressing our future operating performance and statements addressing events and developments that we
expect or anticipate will occur are also considered as forward-looking statements. We intend that such forward-looking statements be
subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking
statements, which speak on as of the date made. Any forward-looking statements represent management’s best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks, uncertainties, and important factors beyond our control that
could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or
projected. We disclaim any obligation subsequently to revise, update, add or to otherwise correct, 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. Furthermore, all
subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements contained in this report. The discussion and analysis of our financial condition and results of operations
included in Item 7- Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction
with our consolidated financial statements and related notes included in Item 8 of this Form 10-K.

Part I

Item 1. Business

General

J & J Snack Foods Corp. (the “Company” or “J & J”) manufactures snack foods and distributes frozen beverages which it markets
nationally to the food service and retail supermarket industries. The Company’s principal snack food products are soft pretzels marketed
primarily under the brand names SUPERPRETZEL, BRAUHAUS, AUNTIE ANNE’S* and BAVARIAN BAKERY, frozen novelties
marketed primarily under the LUIGI’S, WHOLE FRUIT, ICEE, DOGSTERS, PHILLY SWIRL, SOUR PATCH** and MINUTE MAID***
brand names, churros marketed primarily under the TIO PEPE’S and CALIFORNIA CHURROS brand names and bakery products sold
primarily under the READI-BAKE, COUNTRY HOME, MARY B’S, DADDY RAY’S and HILL & VALLEY brand names as well as for
private label and contract packing. J & J believes it is the largest manufacturer of soft pretzels in the United States. Other snack food
products include funnel cake sold under THE FUNNEL CAKE FACTORY brand and handheld products sold under smaller brands. The
Company’s principal frozen beverage products are the ICEE brand frozen carbonated beverage and the SLUSH PUPPIE brand frozen non-
carbonated beverage.

The Company’s Food Service and Frozen Beverages sales are made primarily to food service customers including snack bar and
food stand locations in leading chain, department, discount, warehouse club and convenience stores; malls and shopping centers; fast food
and casual dining restaurants; stadiums and sports arenas; leisure and theme parks; movie theatres; independent retailers; and schools,
colleges and other institutions. The Company’s retail supermarket customers are primarily supermarket chains.

* AUNTIE ANNE’S is a registered trademark of Auntie Anne’s LLC
** SOUR PATCH is a registered trademark of Mondelēz International Group
*** Minute Maid is a registered trademark of the Coca-Cola Company

The Company was incorporated in 1971 under the laws of the State of New Jersey.

The Company has made acquisitions as described in “Management’s Discussion and Analysis of Financial Condition and Results

of Operations” and our consolidated financial statements and related notes thereto.

The Company operates in three business segments: Food Service, Retail Supermarkets and Frozen Beverages. These segments are

described below.

The Chief Operating Decision Maker for Food Service, Retail Supermarkets and Frozen Beverages reviews detailed operating
income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales and operating
income are key variables monitored by the Chief Operating Decision Maker and management when determining each segment’s and the
company’s financial condition and operating performance. In addition, the Chief Operating Decision Maker reviews and evaluates
depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment (see
Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8 – Financial Statements and
Supplementary Data for financial information about segments.

Food Service

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

Retail Supermarkets

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

Frozen Beverages

We sell frozen beverages to the food service industry primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE in the

United States, Mexico and Canada. We also provide repair and maintenance services to customers for customers’ owned equipment.

Products

Soft Pretzels

The Company’s soft pretzels are sold under many brand names; some of which are: SUPERPRETZEL, PRETZEL FILLERS,
PRETZELFILS, GOURMET TWISTS, MR. TWISTER, SOFT PRETZEL BITES, SOFTSTIX, SOFT PRETZEL BUNS, TEXAS TWIST,
BAVARIAN BAKERY, SUPERPRETZEL BAVARIAN, NEW YORK PRETZEL, KIM & SCOTT’S GOURMET PRETZELS,
SERIOUSLY TWISTED!, BRAUHAUS, AUNTIE ANNE’S AND LABRIOLA; and, to a lesser extent, under private labels.

Soft pretzels are sold in the Food Service and Retail Supermarket segments. Soft pretzel sales amounted to 20% of the Company’s

revenue in both fiscal years 2021 and 2020, and 21% in 2019.

Certain of the Company’s soft pretzels qualify under USDA regulations as the nutritional equivalent of bread for purposes of the
USDA school lunch program, thereby enabling a participating school to obtain partial reimbursement of the cost of the Company’s soft
pretzels from the USDA.

The Company’s soft pretzels are manufactured according to a proprietary formula. Soft pretzels, ranging in size from one to twenty-
four ounces in weight, are shaped and formed by the Company’s twister machines. These soft pretzel tying machines are automated, high-
speed machines for twisting dough into the traditional pretzel shape. Additionally, we make soft pretzels which are extruded or shaped by
hand. Soft pretzels, after processing, are primarily quick-frozen in either raw or baked form and packaged for delivery.

The Company’s principal marketing program in the Food Service segment includes supplying ovens, mobile merchandisers, display
cases, warmers and similar merchandising equipment to the retailer to prepare and promote the sale of soft pretzels. Some of this equipment
is proprietary, including combination warmer and display cases that reconstitute frozen soft pretzels while displaying them, thus eliminating
the need for an oven. The Company retains ownership of the equipment placed in customer locations, and as a result, customers are not
required to make an investment in equipment.

Frozen Novelties

The Company’s frozen novelties are marketed primarily under the LUIGI’S, WHOLE FRUIT, PHILLY SWIRL, SOUR PATCH,
ICEE and MINUTE MAID brand names. Frozen novelties are sold in the Food Service and Retail Supermarkets segments. Frozen
novelties sales were 13% of the Company’s revenue in fiscal year 2021, 12% in 2020 and 10% in 2019.

The Company’s school food service LUIGI’S and WHOLE FRUIT frozen juice bars and cups contain three to four ounces of 100%
apple or pineapple juice with no added sugar and 100% of the daily US FDA value of vitamin C. The juice bars are produced in various
flavors and are packaged in a sealed push-up paper container referred to as the Milliken M-pak, which the Company believes has certain
sanitary and safety advantages.

The balance of the Company’s frozen novelties products are manufactured from water, sweeteners and fruit juice concentrates in
various flavors and packaging including cups, tubes, sticks, M-paks and pints. Several of the products contain ice cream and WHOLE
FRUIT contains pieces of fruit.

Churros

The Company’s churros are sold primarily under the TIO PEPE’S and CALIFORNIA CHURROS brand names. Churros are sold
to the Food Service and Retail Supermarkets segments. Churro sales were 6% of the Company’s sales in fiscal year 2021, 5% in 2020 and
6% in 2019. Churros are pastries in stick form which the Company produces in several sizes according to a proprietary formula. The
churros are deep fried, frozen and packaged. At food service point-of-sale they are reheated and topped with a cinnamon sugar
mixture. The Company also sells fruit and crème-filled churros. The Company supplies churro merchandising equipment similar to that
used for its soft pretzels.

Handheld Products

The Company's handheld products are marketed under the SUPREME STUFFERS and SWEET STUFFERS brand names and
under private labels. Handheld products are sold to the Food Service and Retail Supermarket segments. Handheld product sales amounted
to 7% of the Company’s sales in fiscal year 2021, 5% in 2020 and 4% in 2019.

Bakery Products

The Company’s bakery products are marketed under the MRS. GOODCOOKIE, READI-BAKE, COUNTRY HOME, MARY B’S,
DADDY RAY’S and HILL & VALLEY brand names, and under private labels. Bakery products include primarily biscuits, fig and fruit
bars, cookies, breads, rolls, crumb, muffins and donuts. Bakery products are sold to the Food Service segment. Bakery products sales
amounted to 32% of the Company’s sales in fiscal year 2021, 35% in 2020 and 32% in 2019.

Frozen Beverages

The Company markets frozen beverages primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE which are sold

primarily in the United States, Mexico and Canada. Frozen beverages are sold in the Frozen Beverages segment.

Frozen beverage sales amounted to 11% of the Company’s revenue in fiscal year 2021, 10% in 2020 and 15% in 2019.

Under the Company’s principal marketing program for frozen carbonated beverages, it installs frozen beverage dispensers for its
ICEE brand at customer locations and thereafter services the machines, arranges to supply customers with ingredients required for
production of the frozen beverages, and supports customer retail sales efforts with in-store promotions and point-of-sale materials. The
Company sells frozen non-carbonated beverages under the SLUSH PUPPIE and PARROT ICE brands through a distributor network and
through its own distribution network. The Company also provides repair and maintenance service to customers for customer-owned
equipment and sells equipment in its Frozen Beverages segment. Revenue from equipment sales and repair and maintenance services
totaled 9% of the Company’s sales in fiscal year 2021, 11% in 2020 and 11% in 2019.

Each new frozen carbonated customer location requires a frozen beverage dispenser supplied by the Company or by the customer.

Company-supplied frozen carbonated dispensers are purchased from outside vendors or rebuilt by the Company.

The Company provides managed service and/or products to approximately 119,000 Company-owned and customer-owned

dispensers.

The Company has the rights to market and distribute frozen beverages under the name ICEE to the entire continental United States

as well as internationally.

Other Products

Other products sold by the Company include funnel cakes sold under the FUNNEL CAKE FACTORY brand name and smaller

amounts of various other food products. These products are sold in the Food Service and Frozen Beverages segments.

Customers

The Company sells its products to two principal channels: food service and retail supermarkets. The primary products sold to the
food service channel are soft pretzels, frozen beverages, frozen novelties, churros, handheld products and baked goods. The primary
products sold to the retail supermarket channel are soft pretzels, frozen novelties and handheld products.

We have several large customers that account for a significant portion of our sales. Our top ten customers accounted for 43%, 43%
and 43% of our sales during fiscal years 2021, 2020 and 2019, respectively, with our largest customer accounting for 11% of our sales in
2021, 13% of our sales in 2020 and 11% of our sales in 2019. Five of the ten customers in 2021 are food distributors who sell our product
to many end users. The loss of one or more of our large customers could adversely affect our results of operations. These customers typically
do not enter into long-term contracts and make purchase decisions based on a combination of price, product quality, consumer demand and
customer service performance. If our sales to one or more of these customers are reduced, this reduction may adversely affect our business.
If receivables from one or more of these customers become uncollectible, our operating income would be adversely impacted.

The Food Service and the Frozen Beverages segments sell primarily to food service channels. The Retail Supermarkets segment

sells primarily to the retail supermarket channel.

The Company’s customers in the food service segment include snack bars and food stands in chain, department and mass
merchandising stores, malls and shopping centers, fast food and casual dining restaurants, stadiums and sports arenas, leisure and theme
parks, convenience stores, movie theatres, warehouse club stores, schools, colleges and other institutions, and independent retailers.
Machines and machine parts are sold to other food and beverage companies. Within the food service industry, the Company’s products are
purchased by the consumer primarily for consumption at the point-of-sale.

The Company sells its products to an estimated 85-90% of supermarkets in the United States. Products sold to retail supermarket
customers are primarily soft pretzel products, including SUPERPRETZEL and AUNTIE ANNE’S, frozen novelties including LUIGI’S
Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars, WHOLE FRUIT Sorbet,
PHILLY SWIRL cups and sticks, MARY B’S biscuits and dumplings, DADDY RAY’S fig and fruit bars, HILL & VALLEY baked goods,
and ICEE Squeeze-Up Tubes. Within the retail supermarket industry, the Company’s frozen and prepackaged products are purchased by
the consumer for consumption at home.

Marketing and Distribution

The Company has developed a national marketing program for its products. For the Food Service and Frozen Beverages segments’
customers, this marketing program includes providing ovens, mobile merchandisers, display cases, warmers, frozen beverage dispensers
and other merchandising equipment for the individual customer’s requirements and point-of-sale materials as well as participating in trade
shows and in-store demonstrations. The Company’s ongoing advertising and promotional campaigns for its Retail Supermarket segment’s
products include newspaper advertisements with coupons and consumer advertising campaigns across traditional and digital channels.

The Company develops and introduces new products on a routine basis. The Company evaluates the success of new product
introductions on the basis of sales and profit levels, which are reviewed no less frequently than monthly by the Company’s Chief Operating
Decision Maker.

The Company’s products are sold through a network of food brokers, independent sales distributors and the Company’s own direct
sales force. For its snack food products, the Company maintains warehouse and distribution facilities in Pennsauken, Bellmawr and
Bridgeport, New Jersey; Vernon (Los Angeles) and Colton, California; Brooklyn, New York; Scranton, Pittsburgh, Hatfield and Lancaster,
Pennsylvania; Carrollton (Dallas), Texas; Atlanta, Georgia; Moscow Mills (St. Louis), Missouri; Pensacola and Tampa, Florida; Solon,
Ohio; Weston, Oregon; Holly Ridge, North Carolina and Rock Island, Illinois. Frozen beverages and machine parts are distributed from
177 Company managed warehouse and distribution facilities located in 44 states, Mexico and Canada, which allow the Company to directly
service its customers in the surrounding areas. The Company’s products are shipped in frozen and other vehicles from the Company’s
manufacturing and warehouse facilities on a fleet of Company operated tractor-trailers, trucks and vans, as well as by independent carriers.

Seasonality

The Company’s sales are seasonal because frozen beverage sales and frozen novelties sales are generally higher during the warmer

months.

Trademarks and Patents

The Company has numerous trademarks, the most important of which are SUPERPRETZEL, TEXAS TWIST, NEW YORK
PRETZEL, BAVARIAN BAKERY, MR. TWISTER, SOFT PRETZEL BITES, SOFTSTIX, PRETZEL FILLERS, PRETZELFILS,
BRAUHAUS and LABRIOLA for its pretzel products; SHAPE-UPS, WHOLE FRUIT, PHILLY SWIRL and LUIGI’S for its frozen
novelties; TIO PEPE’S and CALIFORNIA CHURROS for its churros; ARCTIC BLAST, SLUSH PUPPIE and PARROT ICE for its frozen
beverages; FUNNEL CAKE FACTORY for its funnel cake products, and MRS. GOODCOOKIE, READI-BAKE, COUNTRY HOME,
CAMDEN CREEK, MARY B’S, DADDY RAY’S and HILL & VALLEY for its bakery products.

The Company markets frozen beverages under the trademark ICEE in all of the United States and in Mexico and Canada.

Additionally, the Company has the international rights to the trademark ICEE.

The trademarks, when renewed and continuously used, have an indefinite term and are considered important to the Company as a

means of identifying its products. The Company considers its trademarks important to the success of its business.

The Company has numerous patents related to the manufacturing and marketing of its product.

Supplies

The Company’s manufactured products are produced from raw materials which are readily available from numerous sources. With
the exception of the Company’s churro production equipment, funnel cake production equipment and soft pretzel twisting equipment, all
of which are made for J & J by independent third parties, and certain specialized packaging equipment, the Company’s manufacturing
equipment is readily available from various sources. Syrup for frozen beverages is purchased primarily from The Coca-Cola Company, Dr
Pepper Snapple Group, Inc., the Pepsi Cola Company, and Jogue, Inc. Cups, straws and lids are readily available from various suppliers.
Parts for frozen beverage dispensing machines are purchased from several sources. Frozen beverage dispensers are purchased primarily
from IMI Cornelius, Inc. and FBD Partnership.

Competition

Snack food and bakery products markets are highly competitive. The Company’s principal products compete against similar and
different food products manufactured and sold by numerous other companies, some of which are substantially larger and have greater
resources than the Company. As the soft pretzel, frozen novelties, bakery products and related markets evolve, additional competitors and
new competing products may enter the markets. Competitive factors in these markets include product quality, customer service, taste,
price, identity and brand name awareness, method of distribution and sales promotions.

The Company believes it is the only national distributor of soft pretzels. However, there are numerous regional and local

manufacturers of food service and retail supermarket soft pretzels as well as several chains of retail pretzel stores.

In Frozen Beverages the Company competes directly with other frozen beverage companies. There are many other regional frozen

beverage competitors throughout the country and one large retail chain which uses its own frozen beverage brand.

The Company competes with large soft drink manufacturers for counter and floor space for its frozen beverage dispensing machines
at retail locations and with products which are more widely known than the ICEE, SLUSH PUPPIE and PARROT ICE frozen beverages.

The Company competes with several other companies in the frozen novelties and bakery products markets.

Risks Associated with Foreign Operations

Foreign operations generally involve greater risk than doing business in the United States. Foreign economies differ favorably or
unfavorably from the United States’ economy in such respects as the level of inflation and debt, which may result in fluctuations in the
value of the country’s currency and real property. Sales of our foreign operations were $20,754,000, $15,421,000 and $33,906,000 in
fiscal years 2021, 2020 and 2019, respectively. At September 25, 2021, the total assets of our foreign operations were approximately $25
million or 2.2% of total assets. At September 26, 2020, the total assets of our foreign operations were approximately $20 million or 1.9%
of total assets.

Employees

The Company has about 4,300 full and part time employees and approximately 800 workers employed by staffing agencies as of
September 25, 2021. About 1,200 production and distribution employees throughout the Company are covered by collective bargaining
agreements.

The Company considers its employee relations to be good.

Available Information

The Company’s internet address is www.jjsnack.com. On the investor relations section of its website, the Company provides free
access to its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these
reports, as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the Securities and Exchange
Commission (“SEC”). The information on the website listed above is not and should not be considered part of this annual report on Form
10-K and is not incorporated by reference in this document.

Item 1A. Risk Factors

You should carefully consider the risks described below, together with all the other information included in this report, in
considering our business and prospects. The risks and uncertainties described below are not the only ones facing us. Additional risks and
uncertainties not presently known to us or that we currently deem insignificant may also impair our business operations. The following is
a discussion of known potentially significant risks which could result in harm to our business, financial condition or results of operations.

Risks Related to COVID-19

The global COVID-19 pandemic of 2020 and 2021 continues to affect our operations. Approximately 2/3 of the Company’s sales
are to venues and locations that previously shut down or sharply curtailed their food service operations as a result of COVID-19. While the
majority of these venues have re-opened, the extent of the future impact of COVID-19 on our operations depends on future developments
of the virus and its effects which is uncertain at this point in time. Furthermore any economic downturn caused by any pandemic, epidemic
or other disease outbreak, comparable or similar to COVID-19, may also cause substantial changes in consumer behavior, adversely
affecting results of operations and our financial position, some of which we may not be able to predict with certainty.

Risks of Shortages or Increased Cost of Raw Materials

We are exposed to the market risks arising from adverse changes in commodity prices, affecting the cost of our raw materials
and energy. The raw materials and energy which we use for the production and distribution of our products are largely commodities that
are subject to price volatility and fluctuations in availability caused by changes in global supply and demand, weather conditions,
agricultural uncertainty or governmental controls. We purchase these materials and energy mainly in the open market. Our 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. If commodity price changes result in increases in raw materials and energy costs, we may not be able to increase our prices to
offset these increased costs without suffering reduced volume, revenue and operating income.

General Risks of the Food Industry

Food processors are subject to the risks of adverse changes in general economic conditions; evolving consumer preferences and
nutritional and health-related concerns; changes in food distribution channels; federal, state and local food processing controls or other
mandates; changes in federal, state, local and international laws and regulations, or in the application of such laws and regulations; consumer
product liability claims; risks of product tampering and contamination; and negative publicity surrounding actual or perceived product
safety deficiencies. The increased buying power of large supermarket chains, other retail outlets and wholesale food vendors could result
in greater resistance to price increases and could alter the pattern of customer inventory levels and access to shelf space.

Risks of Shortages or Increased Costs of Labor

Our businesses operate in highly competitive markets. The labor market in the United States is very competitive. We depend on
the skills, working relationships, and continued services of employees, including our experienced management team. We must hire, train
and develop effective employees. We compete with other companies both within and outside of our industry for talented employees, and
we may lose key personnel or fail to attract, train, and retain other talented personnel. In addition, our ability to achieve our operating
goals depends on our ability to identify, hire, train, and retain qualified individuals. Any such loss or failure could adversely affect our
product sales, financial condition, and operating results. Additionally, a shortage in the labor pool and other general inflationary pressures
or changes, and applicable laws and regulations could increase labor costs, which could have a material adverse effect on our consolidated
operating results or financial condition.

Environmental Risks

The disposal of solid and liquid waste material and the discharge of airborne pollutants resulting from the preparation and
processing of foods is subject to various federal, state and local laws and regulations relating to the protection of the environment. Such
laws and regulations have an important effect on the food processing industry as a whole, requiring substantially all firms in the industry
to incur material expenditures for modification of existing processing facilities and for construction of upgraded or new waste treatment
facilities.

We cannot predict what environmental legislation or regulations will be enacted in the future, how existing or future laws or
regulations will be administered or interpreted or what environmental conditions may be found to exist. Enactment of more stringent laws
or regulations or more strict interpretation of existing laws and regulations may require additional expenditure by us, some of which could
be material. Additionally, the failure by any one or more of our suppliers to comply with applicable federal, state and local laws and
regulations relating to the protection of the environment, or allegations of non-compliance, may disrupt their operations and could result in
accompanying disruptions to our operations.

Risks Resulting from Customer Concentration

Five of the ten customers are food distributors who sell our product to many end users. The loss of one or more of our large
customers could adversely affect our results of operations. These customers typically do not enter into long-term contracts and make
purchase decisions based on a combination of price, product quality, consumer demand and customer service performance. If our sales to
one or more of these customers are reduced, this reduction may adversely affect our business. If receivables from one or more of these
customers become uncollectible, our operating income would be adversely impacted.

Competition

Our businesses operate in highly competitive markets. We compete against national and regional manufacturers and distributors
on the basis of price, quality, product variety, brand recognition and loyalty, and effective distribution. Many of our major competitors in
the market are larger and have greater financial and marketing resources than we do. Increased competition and anticipated actions by our
competitors could lead to downward pressure on prices and/or a decline in our market share, either of which could adversely affect our
results. See “Competition” in Item 1 for more information about our competitors.

Risks Relating to Manufacturing and Distribution

Our ability to purchase, manufacture and distribute products is critical to our success. Because we source certain products from
single manufacturing sites, it is possible that we could experience a production disruption that results in a reduction or elimination of the
availability of some of our products. If we are not able to obtain alternate production capability in a timely manner, or on favorable terms,
it could have a negative impact on our business, results of operations, financial condition and cash flows, including the potential for long-
term loss of product placement with various customers. We are also subject to risks of other business disruptions associated with our
dependence on production facilities and distribution systems. Natural disasters, terrorist activity, cyberattacks or other unforeseen events
could interrupt production or distribution and have a material adverse effect on our business, results of operations, financial condition and
cash flows, including the potential for long-term loss of product placement with our customers.

Risks Relating to the Availability and Costs of Transportation

Our ability to obtain adequate and reasonably priced methods of transportation to distribute our products, including refrigerated
trailers for many of our products, is a key factor to our success. Delays in transportation, including weather-related delays, and carrier
capacity limitations, could have a material adverse effect on our business and results of operations. Further, higher fuel costs and increased
line haul costs due to industry capacity constraints, customer delivery requirements and a more restrictive regulatory environment could
also negatively impact our financial results. We pay fuel surcharges that fluctuate with the price of diesel fuel to third-party transporters of
our products, and such surcharges can be substantial. Any sudden or dramatic increases in the price of diesel fuel would serve to increase
our fuel surcharges and our cost of goods sold. These higher costs could have a material adverse effect on our business, results of operations,
financial condition and cash flows.

Risks Relating to Manufacturing Capacity Constraints

Our current manufacturing resources may be inadequate to meet significantly increased demand for some of our food products.
Our ability to increase our manufacturing capacity depends on many factors, including the equipment delivery, construction lead-times,
installation, qualification, regulatory permitting and regulatory requirements. A lack of sufficient manufacturing capacity to meet demand
could cause our customer service levels to decrease, which may negatively affect customer demand for our products and customer relations
generally, which in turn could have a material adverse effect on our business, results of operations, financial condition and cash flows. In
addition, operating facilities at or near capacity may also increase production and distribution costs and negatively affect relations with our
employees or contractors, which could result in disruptions in our operations.

New Jersey Law and Provisions of Our Amended and Restated Certificate of Incorporation and Bylaws May Inhibit a Change In Control

The New Jersey Shareholders' Protection Act, N.J.S.A. 14A:10A-1, et seq., may delay, deter or prevent a change in control by
prohibiting the Company from engaging in a business combination transaction with an interested shareholder for a period of five years
after the person becomes an interested stockholder, even if a majority of our shareholders believe a change in control would be in the best
interests of the Company and its shareholders. In addition, our Amended and Restated Certificate of Incorporation and Bylaws contain
provisions that may delay, deter or prevent a future acquisition of J & J Snack Foods Corp. not approved by our Board of Directors. This
could occur even if our shareholders are offered an attractive value for their shares or if a substantial number or even a majority of our
shareholders believe the takeover is in their best interest. These provisions are intended to encourage any person interested in acquiring us
to negotiate with and obtain the approval of our Board of Directors in connection with the transaction. Provisions of our Amended and
Restated Certificate of Incorporation and Bylaws that could delay, deter or prevent a future acquisition include the following:

--
--
--
--
--

--
--

a classified Board of Directors;
the requirement that our shareholders may only remove Directors for cause;
limitations on share holdings and voting of certain persons;
special Director voting rights;
the ability of the Board of Directors to consider the interests of various constituencies, including our employees, customers,
suppliers, creditors and the local communities in which we operate;
shareholders do not generally have the right to call special meetings or to act by written consent;
our Bylaws contain advance notice procedures for nominations of Directors or submission of shareholder proposals at an annual
meeting; and
our Bylaws contain a forum selection clause providing that certain litigation against the Company can only be brought in New
Jersey state or federal courts.

Risks Relating to Gerald B. Shreiber

Gerald B. Shreiber is the founder and Chairman of the Board of Directors of the Company. He is currently beneficial owner of 18%
of its outstanding common stock, held in a trust for his benefit. Our Amended and Restated Certificate of Incorporation provides that Mr.
Shreiber has three votes on any matter to be acted upon by the Board of Directors (subject to certain adjustments). Therefore, he and one
other director would have the ability to approve any matter before the Board.

Risk Related to Increases in our Health Insurance Costs

The costs of employee health care insurance have been increasing in recent years due to rising health care costs, legislative changes,
and general economic conditions. Because of the breadth and complexity of health care regulations as well as other health care reform
legislation considered by Congress and state legislatures, we cannot predict with certainty the future effect of these laws on us. A continued
increase in health care costs or additional costs incurred as a result of new or existing health care reform laws or changes in enforcement
policies could have a negative impact on our financial position and results of operations.

Risk Related to Product Changes

There are risks in the marketplace related to trade and consumer acceptance of product improvements, packing initiatives and new

product introductions.

Risks Related to Changes in the Business

Our ability to successfully manage changes to our business processes, including selling, distribution, product capacity, information

management systems and the integration of acquisitions, will directly affect our results of operations.

Risks Associated with Foreign Operations

Foreign operations generally involve greater risk than doing business in the United States. Foreign economies may differ favorably
or unfavorably from the United States’ economy in such respects as the level of inflation and debt, which may result in fluctuations in the
value of the country’s currency and real property. Further, there may be less government regulation in various countries, and we may face
difficulty in enforcing our legal rights outside the United States. Additionally, in some foreign countries, there is the possibility of
expropriation or confiscatory taxation limitations on the removal of property or other assets, political or social instability or diplomatic
developments which could affect the operations and assets of U.S. companies doing business in that country. Any such difficulties noted
above could effect our business. Sales of our foreign operations were $20,754,000, $15,421,000 and $33,906,000 in fiscal years 2021, 2020
and 2019, respectively. At September 25, 2021, the total assets of our foreign operations were approximately $25 million or 2.2% of total
assets. At September 26, 2020, the total assets of our foreign operations were approximately $20 million or 1.9% of total assets.

Risks Associated with our Information Technology Systems

The efficient operation of our business depends on our information technology systems. We rely on our information technology
systems to effectively manage our business data, communications, supply chain, manufacturing, order entry and fulfillment, and other
business processes. The failure of our information technology systems (including those provided to us by third parties) to perform as we
anticipate could disrupt our business and could result in billing, collecting, and ordering errors, processing inefficiencies, and the loss of
sales and customers, causing our business and results of operations to suffer.

Our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including
fire, natural disasters, systems failures, security breaches or intrusions (including those against our third-party providers and theft of
customer, consumer or other confidential data), and viruses. Although we continue to monitor our information technology networks, if we
are unable to prevent physical and electronic break-ins, cyber-attacks and other information security breaches, we may suffer financial and
reputational damage, be subject to litigation or incur remediation costs or penalties because of the unauthorized disclosure of confidential
information belonging to us or to our partners, customers, suppliers or employees.

We may experience difficulties in implementing the final phases of our new enterprise resource planning system. We are in the late
stages of a multi-year implementation of a new enterprise resource planning system (“ERP”), which is replacing our existing financial and
operating systems. The design and implementation of this new ERP has required an investment of significant personnel and financial
resources, including substantial expenditures for outside consultants and software. We may not be able to implement the ERP successfully
without experiencing delays, increased costs and other difficulties, including potential design defects, miscalculations, testing requirements,
and the diversion of management’s attention from day-to-day business operations. If we are unable to implement the new ERP as planned,
the effectiveness of our internal control over financial reporting could be adversely affected, our ability to assess those controls adequately
could be delayed, and our business, results of operations, financial condition and cash flows could be negatively impacted.

Risks Associated with Real or Perceived Safety Issues Regarding our Food Products

We sell food products for human consumption, which involves risks such as product contamination or spoilage, product
tampering, other adulteration of food products, mislabeling, and misbranding. We can be impacted by both real and unfounded claims
regarding the safety of our operations, or concerns regarding mislabeled, adulterated, contaminated or spoiled food products. Any of these
circumstances could necessitate a voluntary or mandatory recall due to a substantial product hazard, a need to change a product’s labeling
or other consumer safety concerns. A pervasive product recall may result in significant loss due to the costs of a recall, related legal claims,
including claims arising from bodily injury or illness caused by our products, the destruction of product inventory, or lost sales due to
product unavailability. A highly publicized product recall, whether involving us or any related products made by third parties, also could
result in a loss of customers or an unfavorable change in consumer sentiment regarding our products or any category in which we operate.
In addition, an allegation of noncompliance with federal or state food laws and regulations could force us to cease production, stop selling
our products or create significant adverse publicity that could harm our credibility and decrease market acceptance of our products. Any of
these events could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Seasonality and Quarterly Fluctuations

Our sales are affected by the seasonal demand for our products. Demand is greater during the summer months primarily as a result
of the warm weather demand for our ICEE and frozen novelties products. Because of seasonal fluctuations, there can be no assurance that
the results of any particular quarter will be indicative of results for the full year or for future years.

Item 1B. Unresolved Staff Comments

We have no unresolved SEC staff comments to report.

Item 2. Properties

The Company’s primary east coast manufacturing facility is located in Pennsauken, New Jersey in a 70,000 square foot building on
a two-acre lot. Soft pretzels, churros, and funnel cake are manufactured at this Company-owned facility which also serves as the Company’s
corporate headquarters. The Company owns a 128,000 square foot building adjacent to this manufacturing facility which contains a large
freezer for warehousing and distribution purposes. The Company leases, through January 2022, 16,000 square feet of office and warehouse
space located next to the Pennsauken, New Jersey plant and owns a 43,000 square foot office and warehouse building in the same complex.

The Company owns a 150,000 square foot building on eight acres in Bellmawr, New Jersey. The facility is used by the Company

to manufacture soft pretzels and various lines of baked goods.

The Company’s primary west coast manufacturing facility is located in Vernon (Los Angeles), California. It consists of a 137,000
square foot facility in which soft pretzels, churros and various lines of baked goods are produced and warehoused. Included in the 137,000
square foot facility is a 30,000 square foot freezer used for warehousing and distribution purposes. The facility is leased through November
2030. The Company leases an additional 80,000 square feet of office and warehouse space, adjacent to its manufacturing facility, through
November 2030.

The Company leases a 22,000 square foot soft pretzel manufacturing facility located in Brooklyn, New York. The lease runs through

August 2023.

The Company leases through June 2030 a 45,000 square foot churros and funnel cake manufacturing facility located in Colton,

California.

The Company leases an 85,000 square foot bakery manufacturing facility located in Atlanta, Georgia. The lease runs through

December 2022.

The Company leases a 129,000 square foot bakery manufacturing facility located in Rock Island, Illinois. The lease runs through

December 2034.

The Company owns a 46,000 square foot frozen novelties manufacturing facility and a 42,000 square foot dry storage warehouse

located on six acres in Scranton, Pennsylvania.

The Company leases a 29,600 square foot soft pretzel manufacturing facility located in Hatfield, Pennsylvania. The lease runs

through June 2032.

The Company leases a 48,000 square foot soft pretzel manufacturing facility located in Carrollton, Texas. The lease runs through
April 2026. The Company leases an additional property containing a 6,500 square foot storage freezer across the street from the
manufacturing facility, which expires March 2030.

The Company’s fresh bakery products manufacturing facility and offices are located in Bridgeport, New Jersey in three buildings

totaling 133,000 square feet. The buildings are leased through December 2025.

The Company owns a 165,000 square foot fig and fruit bar manufacturing facility located on 9-1/2 acres in Moscow Mills (St.

Louis), Missouri.

The Company owns an 84,000 square foot handheld products manufacturing facility in Holly Ridge, North Carolina.

The Company leases a 70,000 square foot handheld products manufacturing facility in Weston, Oregon which is leased through
June 30, 2031. The Company leases an additional 11,300 square foot freezer storage facility in Weston, Oregon which expires May 2023.

The Company leases 84,000 square feet of office space in LaVergne (Nashville), Tennessee through February 2035 for its ICEE

headquarters.

The Company leases a 39,000 square foot frozen novelties manufacturing facility in Tampa, Florida which is leased through

September 2023.

The Company also leases approximately 160 warehouse and distribution facilities in 44 states, Mexico and Canada.

Item 3. Legal Proceedings

The Company has no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which

the Company or any of its subsidiaries is a party or of which any of their property is subject.

Item 4. Mine Safety Disclosures

Not Applicable

PART II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities

The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol “JJSF.” The following table sets
forth the high and low sale price quotations as reported by NASDAQ and dividend information for the common stock for each quarter of
the years ended September 26, 2020 and September 25, 2021.

Fiscal 2021
First quarter
Second quarter
Third quarter
Fourth quarter

Fiscal 2020
First quarter
Second quarter
Third quarter
Fourth quarter

Common Stock Market Price

High

Low

Dividend
Declared

166.27 $
169.58
181.71
180.00

195.72 $
189.16
143.69
142.64

128.10 $
147.61
154.29
150.50

178.87 $
105.67
117.90
115.00

0.575
0.575
0.633
0.633

0.575
0.575
0.575
0.575

As of September 25, 2021, we had approximately 26,000 beneficial shareholders.

We did not purchase any shares of our common stock in our fiscal year ended September 28, 2019.

In our fiscal year ended September 26, 2020, we purchased and retired 65,648 shares of our common stock at a cost of $8,972,292,

all of which was purchased in our second quarter.

We did not purchase any shares of our common stock in our fiscal year ended September 25, 2021.

A plan to purchase 500,000 shares was announced on November 8, 2012. 500,000 shares were purchased under this plan with the
last purchase in August 2017. A plan to purchase 500,000 shares was announced on August 4, 2017 with no expiration date. 318,858 shares
remain to be purchased under this plan.

For information on the Company’s Equity Compensation Plans, please see Item 12 herein.

Item 6. [ RESERVED ]

Item 7. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide
a reader of our financial statements with a narrative from the perspective of our management regarding our financial condition and results
of operations, liquidity and certain other factors that may affect our future results. The following discussion should be read in conjunction
with the consolidated financial statements and accompanying notes included in Item 8 of this Form 10-K.

Critical Accounting Policies, Judgments and Estimates

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America.
The preparation of such financial statements requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the date of those financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company discloses its significant accounting policies in the accompanying notes to its audited consolidated financial

statements.

Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in certain areas. Following
are some of the areas requiring significant judgments and estimates: revenue recognition, accounts receivable, cash flow and valuation
assumptions in performing asset impairment tests of long-lived and intangible assets, estimates of the value and useful lives of intangible
assets, insurance reserves, inventories, and income taxes.

There are numerous critical assumptions that may influence accounting estimates in these and other areas. We base our critical
assumptions on historical experience, third-party data, and various other estimates we believe to be reasonable. A description of the
aforementioned policies follows:

Revenue Recognition - We adopted the new revenue recognition guidance on the first day of our fiscal 2019 year using a modified
retrospective approach; however, we did not record a cumulative-effect adjustment from initially applying the standard as the adoption did
not have a material impact on our financial position or results of operations. We completed a review of customer contracts and evaluated
the impact of the new standard on certain common practices currently employed by us. We also finalized our assessment of the impact on
our accounting policies, processes, system requirements, internal controls and disclosures.

When Performance Obligations Are Satisfied
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account
for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as
revenue when, or as, the performance obligation is satisfied.

The singular performance obligation of our customer contracts for product and machine sales is determined by each individual
purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under
the terms of the agreement is satisfied and product control is transferred to our customer. Specifically, control transfers to our
customers when the product is delivered to, installed, or picked up by our customers based upon applicable shipping terms, as
our customers can direct the use and obtain substantially all of the remaining benefits from the product at this point in time. The
performance obligations in our customer contracts for product are generally satisfied within 30 days.

The singular performance obligation of our customer contracts for time and material repair and maintenance equipment service
is the performance of the repair and maintenance with revenue being recognized at a point-in-time when the repair and
maintenance is completed.

The singular performance obligation of our customer repair and maintenance equipment service contracts is the performance of
the repair and maintenance with revenue being recognized over the time the service is expected to be performed. Our customers
are billed for service contracts in advance of performance and therefore we have contract liability on our balance sheet.

Significant Payment Terms
In general, within our customer contracts, the purchase order identifies the product, quantity, price, pick-up allowances, payment
terms and final delivery terms. Although some payment terms may be more extended, presently the majority of our payment
terms are 30 days. As a result, we have used the available practical expedient and, consequently, do not adjust our revenues for
the effects of a significant financing component.

Shipping
All amounts billed to customers related to shipping and handling are classified as revenues; therefore, we recognize revenue for
shipping and handling fees at the time the products are shipped or when services are performed. The cost of shipping products to
the customer is recognized at the time the products are shipped to the customer and our policy is to classify them as Distribution
expenses.

Variable Consideration
In addition to fixed contract consideration, our contracts include some form of variable consideration, including sales discounts,
trade promotions and certain other sales and consumer incentives, including rebates and coupon redemptions. In general, variable
consideration is treated as a reduction in revenue when the related revenue is recognized. Depending on the specific type of
variable consideration, we use the most likely amount method to determine the variable consideration. We believe there will be
no significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers.
We review and update our estimates and related accruals of variable consideration each period based on historical experience.

Warranties & Returns
We provide all customers with a standard or assurance type warranty. Either stated or implied, we provide assurance the related
products will comply with all agreed-upon specifications and other warranties provided under the law. No services beyond an
assurance warranty are provided to our customers.

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

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

Beginning Balance
Additions to contract liability
Amounts recognized as revenue
Ending Balance

Fiscal Year Ended
September 25, September 26,

2021

2020

(in thousands)

1,327 $
5,544
(5,774)
1,097 $

1,334
5,526
(5,533)
1,327

Disaggregation of Revenue
See Note N of the Notes to our Consolidated Financial Statements for disaggregation of our net sales by class of similar product
and type of customer.

Allowance for Doubtful Receivables
We provide an allowance for doubtful receivables after taking into consideration historical experience and other factors. On
September 27, 2020, the Company adopted guidance issued by the FASB in ASU 2016-13 Measurement of Credit Losses on
Financial Instruments, which requires companies to recognize an allowance that reflects a current estimate of credit losses
expected to be incurred over the life of the asset. Adoption of this new guidance did not have a material impact on the consolidated
financial statements. The Company continuously monitors collections and payments from its customers and maintains a provision
for estimated credit losses. The allowance for doubtful accounts considers a number of factors including the age of receivable
balances, the history of losses, expectations of future credit losses and the customers’ ability to pay off obligations. The allowance
for doubtful receivables was $1,405,000 and $1,388,000 on September 25, 2021 and September 26, 2020, respectively.

Accounts Receivable - We record accounts receivable at the time revenue is recognized. Bad debt expense is recorded in marketing
and administrative expenses. We continually monitor our estimate of the allowance for doubtful accounts and adjust it monthly. We have
approximately 28 customers with accounts receivable balances of between $1 million to $10 million with one customer having a balance
of approximately $14 million. Failure of these customers, and others with lesser balances, to pay us the amounts owed, could have a material
impact on our consolidated financial statements.

Accounts receivable due from any of our customers is subject to risk. Our total bad debt expense was $338,000, $1,105,000 and
$389,000 for the fiscal years 2021, 2020 and 2019, respectively. At September 25, 2021 and September 26, 2020, our accounts receivables
were $162,939,000 and $126,587,000 net of an allowance for doubtful accounts of $1,405,000 and $1,388,000.

Asset Impairment – We have three reporting units with goodwill totaling $121,833,000 as of September 25, 2021. Goodwill is
evaluated annually by the Company for impairment. We perform impairment tests at year end for our reporting units, which is also the
operating segment level, with recorded goodwill utilizing primarily the discounted cash flow method. This methodology used to estimate
the fair value of the total Company and its reporting units requires inputs and assumptions (i.e. revenue growth, operating profit margins,
capital spending requirements and discount rates) that reflect current market conditions. The estimated fair value of each reporting unit is
compared to the carrying value of the reporting unit. If the carrying value of the reporting unit exceeds its fair value, the goodwill of the
reporting unit is potentially impaired, and the Company then determines the implied fair value of goodwill, which is compared to the
carrying value of goodwill to determine if impairment exists. Our tests at September 25, 2021 show that the fair value of each of our
reporting units with goodwill exceeded its carrying value. Therefore, no further analysis was required. The inputs and assumptions used
involve considerable management judgment and are based upon assumptions about expected future operating performance. Assumptions
used in these forecasts are consistent with internal planning. The actual performance of the reporting units could differ from management’s
estimates due to changes in business conditions, operating performance, economic conditions, competition, and consumer preferences.

Licenses and rights, customer relationships and non-compete agreements are being amortized by the straight-line method over
periods ranging from 2 to 20 years and amortization expense is reflected throughout operating expenses. Long-lived assets, including fixed
assets and amortizing intangibles, are reviewed for impairment as events or changes in circumstances occur indicating that the carrying
amount of the asset may not be recoverable. Indefinite lived intangibles are reviewed annually for impairment. Cash flow and sales analyses
are used to assess impairment. The estimates of future cash flows and sales involve considerable management judgment and are based upon
assumptions about expected future operating performance. Assumptions used in these forecasts are consistent with internal planning. The
actual cash flows and sales could differ from management’s estimates due to changes in business conditions, operating performance,
economic conditions, competition, and consumer preferences.

Useful Lives of Intangible Assets - Most of our trade names and distribution rights which have carrying value have been assigned
an indefinite life and are not amortized because we plan to receive the benefit from them indefinitely. If we decide to curtail or eliminate
the use of any of the trade names or if sales that are generated from any particular trade name or distribution right do not support the
carrying value of the trade name or distribution right, then we would record impairment or assign an estimated useful life and amortize
over the remaining useful life. Rights such as prepaid licenses and non-compete agreements are amortized over contractual periods. The
useful lives of customer relationships are based on the discounted cash flows expected to be received from sales to the customers adjusted
for an attrition rate. The loss of a major customer or declining sales in general could create an impairment charge.

Insurance Reserves - We have a self-insured medical plan which covers approximately 1,600 of our employees. We record a liability
for incurred but not yet reported or paid claims based on our historical experience of claims payments and a calculated lag time period. We
maintain a spreadsheet that includes claims payments made each month according to the date the claim was incurred. This enables us to
have an historical record of claims incurred but not yet paid at any point in the past. We then compare our accrued liability to the more
recent claims incurred but not yet paid amounts and adjust our recorded liability up or down accordingly. Our recorded liability at September
25, 2021 and September 26, 2020 was $1,791,000 and $1,737,000 respectively. Considering that we have stop loss coverage of $200,000
for each individual plan subscriber, the general consistency of claims payments and the short time lag, we believe that there is not a material
exposure for this liability.

We self-insure, up to loss limits, workers’ compensation, automobile and general 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 2021 and 2020 was $5,300,000 and $3,700,000, respectively. Our total recorded liability for all years’ claims incurred but
not yet paid was $14,500,000 and $12,800,000 at September 25, 2021 and September 26, 2020, respectively. We estimate the liability
based on total incurred claims and paid claims adjusting for loss development factors which account for the development of open claims
over time. We estimate the amounts we expect to pay for some insurance years by multiplying incurred losses by a loss development factor
which is based on insurance industry averages and the age of the incurred claims; our estimated liability is then the difference between the
amounts we expect to pay and the amounts we have already paid for those years. Loss development factors that we use range from 1.0 to
2.0. However, for some years, the estimated liability is the difference between the amounts we have already paid for that year and the
maximum we could pay under the program in effect for that particular year because the calculated amount we expect to pay is higher than
the maximum. For other years, where there are few claims open, the estimated liability we record is the amount the insurance company has
reserved for those claims. We evaluate our estimated liability on a continuing basis and adjust it accordingly. Due to the multi-year length
of these insurance programs, there is exposure to claims coming in lower or higher than anticipated; however, due to constant monitoring
and stop loss coverage of $350,000 on individual claims, we believe our exposure is not material. Because of the foregoing, we do not
engage a third party actuary to assist in this analysis. In connection with these self-insurance agreements, we customarily enter into letters
of credit arrangements with our insurers. At both September 25, 2021 and September 26, 2020, we had outstanding letters of credit totaling
$9,275,000.

Inventories - Inventories are valued at the lower of cost (determined by the first-in, first-out method) or market. We
recognize abnormal amounts of idle facilities, freight, handling costs, and spoilage as charges of the current period. Additionally,
we allocate fixed production overhead to inventories based on the normal capacity of our production facilities. We calculate normal
capacity as the production expected to be achieved over a number of periods or seasons under normal circumstances, taking into account
the loss of capacity resulting from planned maintenance. This requires us to use judgment to determine when production is outside the
range of expected variation in production (either abnormally low or abnormally high). In periods of abnormally low production (for
example, periods in which there is significantly lower demand, labor and material shortages exist, or there is unplanned equipment
downtime) the amount of fixed overhead allocated to each unit of production is not increased. However, in periods of abnormally high
production the amount of fixed overhead allocated to each unit of production is decreased to assure inventories are not measured above
cost.

Income Taxes - We account for our income taxes under the liability method. Under the liability method, deferred tax assets and
liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the
enacted tax rates that will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets
and liabilities.

Refer to Note A to the accompanying consolidated financial statements for additional information on our accounting policies.

RESULTS OF OPERATIONS:

Fiscal Year 2021 (52 weeks) Compared to Fiscal Year 2020 (52 weeks)

Net sales increased $122,541,000, or 12%, to $1,144,579,000 in fiscal 2021 from $1,022,038,000 in fiscal 2020. As parts of the
economy that impact our operations continue to open, sales for the year improved from a year ago. Approximately 2/3 of the Company’s
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 re-opened, 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 point in time. As we have $305 million of cash and marketable securities
on our balance sheet, we do not expect to have any liquidity issues, nor do we anticipate a material amount of our assets would be impaired.

We have three reportable segments, as disclosed in the accompanying notes to the consolidated financial statements: Food Service,

Retail Supermarkets and Frozen Beverages.

The Chief Operating Decision Maker for Food Service, Retail Supermarkets and Frozen Beverages reviews monthly detailed
operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales and
operating income are the key variables monitored by the Chief Operating Decision Maker and management when determining each
segment’s and the Company’s financial condition and operating performance. In addition, the Chief Operating Decision Maker reviews
and evaluates depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each
segment.

FOOD SERVICE

Sales to food service customers increased $106,090,000, or 17%, to $724,983,000 in fiscal 2021. Soft pretzel sales to the food
service market increased 16% to $174,977,000 for the year. Frozen novelties sales increased $9,429,000, or 27%, to $44,605,000 for the
year. Churro sales to food service customers were up 38% to $64,916,000 for the year. Sales of bakery products increased $10,095,000, or
3%, to $342,609,000 for the year. Handheld sales to food service customers were up 110% to $75,627,000 in 2021. Sales of funnel cake
increased $4,868,000, or 29% to $21,491,000. Sales were up across all product lines as many of the venues and locations where our products
are sold that were previously shut down or operating at reduced capacity in 2020 have partially or fully re-opened in 2021.

Sales of new products in the first twelve months since their introduction were approximately $39 million for the year. Operating
income in our Food Service segment increased from $6,458,000 in 2020 to $39,172,000 in 2021. The increase in operating income was
primarily due to the increase in sales which improved margin efficiencies and expense leverage.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $7,732,000 or 4% to $184,897,000 in fiscal year 2021. Soft pretzel sales to retail
supermarkets were $54,990,000, an increase of $5,833,000, or 12%, from sales in 2020. Sales of frozen novelties increased $11,316,000
or 13% to $100,059,000. Sales of biscuits and dumplings decreased 15% to $24,197,000 for the year. Handheld sales to retail supermarket
customers decreased 38% to $7,547,000 for the year.

Sales of new products in the first twelve months since their introduction were approximately $1 million in fiscal year 2021.
Operating income in our Retail Supermarkets segment increased from $23,202,000 to $25,914,000 for the year primarily due to higher
volume.

FROZEN BEVERAGES

Total frozen beverage segment sales increased 4% to $234,699,000 in fiscal 2021 and beverage sales increased 16% or $17,494,000
for the year. Gallon sales increased 16% from last year. Service revenue decreased 3% to $81,305,000 for the year primarily due to the loss
of a major customer in October 2020. Machines revenue, primarily sales of machines, decreased from $33,986,000 in 2020 to $26,953,000
in 2021 due to lower sales volumes with a major customer. Overall, sales in the frozen beverage segment grew as key amusement,
convenience, restaurants, and retail venues returned to pre-COVID capacity in the second half of the year, which offset a slower recovery
in the theater channel.

The estimated number of Company-owned frozen beverage dispensers was 19,000 and 27,000 at September 25, 2021 and September
26, 2020, respectively. Our Frozen Beverage segment had operating income of $6,132,000 in 2021 compared to an operating loss of
$12,466,000 in 2020 primarily as a result of higher beverage sales volume due to COVID-19 recovery during 2021.

CONSOLIDATED

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 increased to 26.1% in 2021 from 23.3% in 2020. The increase is largely attributable to the

benefit of increased sales, favorable product mix and corresponding margin efficiencies.

Total operating expenses increased $6,477,000 to $227,710,000 in fiscal 2021 but as a percentage of sales decreased to 19.9% of
sales from 21.6% in 2020. Operating expenses this year included $1,273,000 of intangible asset impairment charges and operating expenses
in 2020 included $6,387,000 of plant shutdown impairment costs for the shutdown of one of our manufacturing plants. Marketing and
selling expenses decreased to 6.8% this year from 8.3% of sales in 2020 driven by effective investment of marketing dollars aligned with
sales recovery. Distribution expenses as a percent of sales increased to 9.5% from 9.1% in 2020 due to rising freight and fuel costs.
Administrative expenses were 3.5% and 3.6% of sales in 2021 and 2020, respectively.

Operating income increased $54,024,000 or 314% to $71,218,000 in fiscal year 2021 as a result of the aforementioned items.

Our investments generated before tax income of $2,815,000 million this year, down from $4,356,000 last year due to decreases in

the amount of investments and lower interest rates.

Our effective tax rate in our fiscal 2021 year was 24.9%. Net earnings for the 2020 year benefited from a reduction in income tax
expense related to state deferred taxes of approximately $2.2 million. Excluding this adjustment, our effective tax rate in our fiscal 2020
year was 25.0%.

Net earnings increased $37,302,000 or 204%, in fiscal 2021 to $55,607,000, or $2.91 per diluted share, from $18,305,000 or $0.96

per diluted share, in fiscal 2020 as a result of the aforementioned items.

There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and
cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our
ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in
tax laws and interest rates.

RESULTS OF OPERATIONS:

Fiscal Year 2020 (52 weeks) Compared to Fiscal Year 2019 (52 weeks)

Net sales decreased $164,449,000, or 14%, to $1,022,038,000 in fiscal 2020 from $1,186,487,000 in fiscal 2019. Excluding sales
from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020, sales decreased 15% for the year. Sales for
our fourth quarter improved to being down approximately 19% from a year ago compared to being down 34% from a year ago in our third
quarter as parts of the economy that impact our operations continue to open up. Approximately 2/3 of the Company’s sales are to venues
and locations that have shut down or sharply curtailed their foodservice operations, and therefore we anticipate COVID-19 will continue
to have a negative impact on our business. As we have $278 million of cash and marketable securities on our balance sheet, up from $267
million at March 28, 2020, we do not expect to have any liquidity issues, nor do we anticipate a material amount of our assets would be
impaired.

FOOD SERVICE

Sales to food service customers decreased $117,094,000, or 16%, to $618,893,000 in fiscal 2020. Soft pretzel sales to the food
service market decreased 28% to $150,786,000 for the year. Frozen novelties sales decreased $8,496,000, or 19%, to $35,176,000 for the
year. Churro sales to food service customers were down 29% to $46,881,000 for the year. Sales of bakery products decreased $26,506,000,
or 7%, to $332,514,000 for the year. Handheld sales to food service customers were up 14% to $36,088,000 in 2020 with sales of a new
product to a warehouse club store customer accounting for all of the increase. Sales of funnel cake decreased $8,170,000, or 33% to
$16,623,000. Sales were down across all product lines except handhelds as many of the venues and locations where our products are sold
had been shut down or operated at reduced capacity for some or all of the third and fourth quarters due to COVID-19.

Sales of new products in the first twelve months since their introduction were approximately $5 million for the year. Operating
income in our Food Service segment decreased from $76,546,000 in 2019 to $6,458,000 in 2020 primarily because of lower production
and sales volume due to COVID-19. This year’s operating income was impacted by plant shutdown impairment costs of $6,387,000 for
the shutdown of one of our manufacturing plants. We expect to reduce manufacturing overhead and distribution costs by about $7-8 million
annually as a result of this plant closure. This year also included approximately $6 million of costs for employee safety and increased
COVID-19 compensation as well as increased expense of about $3.5 million for accounts receivable allowances and inventory losses due
to the impact of COVID-19 on some of our customers and on sales of some of our products.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $32,573,000 or 23% to $177,165,000 in fiscal year 2020. Soft pretzel sales to
retail supermarkets were $49,157,000, an increase of $12,893,000, or 36%, from sales in 2019. Sales of frozen novelties increased
$14,992,000 or 20% to $88,743,000. Sales of biscuits and dumplings increased 12% to $28,317,000 for the year. Coupon redemption costs,
a reduction of sales, of $3,569,000 were down less than 1% from 2019. Handheld sales to retail supermarket customers increased 13% to
$12,303,000 for the year. Sales were generally higher for all product lines as sales in the year ago periods were impacted by lost volume
and placements due to the price increases implemented in last year’s first quarter and because of increased sales to supermarkets generally
since mid-March 2020 due to COVID-19.

Sales of new products in the first twelve months since their introduction were approximately $1 million in fiscal year 2020.
Operating income in our Retail Supermarkets segment increased from $10,460,000 to $23,202,000 for the year primarily due to higher
volume.

FROZEN BEVERAGES

Total frozen beverage segment sales decreased 26% to $225,980,000 in fiscal 2020 and beverage sales decreased 38% or
$64,816,000 for the year. Excluding sales from the acquisition of ICEE Distributors in October 2019 and BAMA ICEE in February 2020,
total frozen beverage segment sales decreased 30% for the year and beverage sales decreased 45% for the year. Gallon sales were down
41% from last year exclusive of ICEE Distributors’ gallons. Service revenue decreased 3% to $83,420,000 for the year with sales increases
and decreases spread throughout our customer base with additional sales to existing customers and to new customers to largely offset
declines in sales business to customers due to COVID-19. Machines revenue, primarily sales of machines, decreased from $45,811,000 in
2019 to $33,986,000 in 2020 with the decrease due to two significant install projects during the prior fiscal year, as well as the slowdown
due to COVID-19. Sales are down across all product lines as many of the venues and locations where our products are sold have been shut
down or operating at reduced capacity for some or all of the third and fourth quarters due to COVID-19.

The estimated number of Company-owned frozen beverage dispensers was 27,000 and 26,000 at September 26, 2020 and September
28, 2019, respectively. Our Frozen Beverage segment had an operating loss of $12,466,000 in 2020 compared to operating income of
$29,950,000 in 2019 primarily as a result of lower sales volume due to COVID-19. This year’s operating income was also impacted by
relocation costs of our ICEE’s headquarters of $2.5 million.

CONSOLIDATED

Gross profit as a percentage of sales decreased to 23.3% in 2020 from 29.5% in 2019. Gross profit percentage decreased because
of lower volume in our food service and frozen beverages segments, higher costs related to production disruptions due to volume mix
changes, expenses related to employee safety and increased COVID-19 compensation and increased cost compared to last year of about
$4.5 million for the write-down and disposal of inventory.

Total operating expenses decreased $12,212,000 to $221,233,000 in fiscal 2020 but as a percentage of sales increased to 21.6% of
sales from 19.7% in 2019. Operating expenses this year included $6,387,000 of plant shutdown impairment costs for the shutdown of one
of our manufacturing plants. Marketing and selling expenses increased to 8.3% this year from 8.1% of sales in 2019. Distribution expenses
as a percent of sales increased to 9.1% from 8.0% in 2019. Administrative expenses were 3.6% and 3.4% of sales in 2020 and 2019,
respectively. The percentage increases mentioned above were because of the drop in sales (lower denominators) and our inability to reduce
expenses in line with the decrease in sales because of fixed costs that do not fluctuate with sales.

Operating income decreased $99,762,000 or 85% to $17,194,000 in fiscal year 2020 as a result of the aforementioned items.

Our investments generated before tax income of $4,356,000 million this year, down from $7,741,000 last year due to decreases in

the amount of investments and lower interest rates.

Other income in 2019 includes a $2.0 million payment received from a customer due to cancellation of production under a co-

manufacturing agreement.

Net earnings in 2019 benefited from a reduction of approximately $900,000 in tax as the provision for the one-time repatriation tax
under the Tax Cuts and Jobs Act recorded in 2018 was reduced as the amount recorded in 2018 was an estimate. Excluding the reduction
in the provision for the one-time repatriation tax, our effective tax rate was 25.8% for 2019. Net earnings for the 2020 year benefited from
a reduction in income tax expense related to state taxes of approximately $2.2 million. Excluding this benefit, our effective tax rate in our
fiscal 2020 year was 25.0%.

Net earnings decreased $76,514,000 or 81%, in fiscal 2020 to $18,305,000, or $.96 per diluted share, from $94,819,000 or $5.00

per diluted share, in fiscal 2019 as a result of the aforementioned items.

RESULTS OF OPERATIONS

ACQUISITIONS

On October 1, 2019, we acquired the assets of ICEE Distributors LLC, based in Bossier City, Louisiana for approximately $45
million. ICEE Distributors does business in Arkansas, Louisiana and Texas. Sales and operating income of ICEE Distributors were $9.7
million and $2.4 million for the year ended September 25, 2021. Sales and operating income of ICEE Distributors were $11.4 million and
$3.6 million for the year ended September 26, 2020.

On February 4, 2020, we acquired the assets of BAMA ICEE, based in Birmingham, Alabama for approximately $12 million.
BAMA ICEE does business in Alabama and Georgia. Sales and operating income of BAMA ICEE were $1.8 million and $0.5 million for
the year ended September 25, 2021. Sales and operating income of BAMA ICEE were $1.7 million and $0.6 million for the year ended
September 26, 2020.

These acquisitions were accounted for under the purchase method of accounting, and their operations are included in the

accompanying consolidated financial statements from their respective acquisition dates.

LIQUIDITY AND CAPITAL RESOURCES

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

As of September 25, 2021, we have 283,192,000 of Cash and Cash Equivalents, and $22,111,000 of Marketable Securities.

The Company’s material cash requirements include the following contractual and other obligations:

Purchase Commitments

Leases

We have operating leases with initial noncancelable lease terms in excess of one year covering the rental of various facilities and
equipment. Our operating leases include leases for real estate from some of our office and manufacturing facilities as well as manufacturing
and non-manufacturing equipment used in our business. As of September 25, 2021, we have operating lease payment obligations of
$66,324,000, with $14,994,000 payable within 12 months.

Fluctuations in the value of the Mexican and Canadian currencies and the resulting translation of the net assets of our Mexican and
Canadian subsidiaries caused a decrease of $2,204,000 in accumulated other comprehensive loss in 2021, an increase of $2,599,000 in
accumulated other comprehensive loss in 2020 and an increase of $909,000 in accumulated other comprehensive loss in 2019. In 2021,
sales of the two subsidiaries were $20,754,000 as compared to $15,421,000 in 2020 and $33,906,000 in 2019. The fluctuation of sales over
the periods presented is the result of COVID-19.

In our fiscal year ended September 28, 2019, we did not purchase any shares of our common stock.

In our fiscal year ended September 26, 2020, we purchased and retired 65,648 shares of our common stock at a cost of $8,972,292.

In our fiscal year ended September 25, 2021, we did not purchase any shares of our common stock.

In November 2016, 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 2021. The agreement contains restrictive
covenants and requires commitment fees in accordance with standard banking practice. There were no outstanding balances under the
facility at September 25, 2021 or at September 26, 2020. The significant financial covenants are:

. Tangible net worth must initially be more than $465 million.

. Total funded indebtedness divided by earnings before interest expense, income taxes, depreciation and amortization shall not be
greater than 2.25 to 1.

We were in compliance with the financial covenants described above at September 25, 2021.

On November 16, 2021, we entered into an amendment and modification to the amended and restated loan agreement which

extended the maturity of the revolving credit facility to December 16, 2021.

We self-insure, up to loss limits, certain insurable risks such as workers’ compensation, automobile, and general 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 2021 and 2020 was $5,300,000 and $3,700,000, respectively. In connection with certain self-
insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At both September 25, 2021 and September
26, 2020, we had outstanding letters of credit totaling $9,275,000.

Fiscal 2021 Compared to Fiscal 2020

Cash and cash equivalents and marketable securities held to maturity and available for sale increased $27,440,000 or 10%, to

$305,303,000 from a year ago for reasons described below.

Accounts receivables, net increased $36,352,000, or 29%, to $162,939,000 in 2021 because of higher sales in this year’s September

month and timing of collections.

Inventory increased $14,237,000 or 13% to $123,160,000 largely due to the increase in sales and the need for additional inventory

in connection with the increased sales.

Prepaid expenses and other was $7,498,000 compared to $17,087,000 last year, as prepaid income tax decreased by $13,697,000.

Prepaid taxes in 2020 were higher, as payments in the first six months of the year were based on pre-COVID expectations.

Net property, plant and equipment increased $5,571,000 to $267,187,000 because purchases of property, plant and equipment for
the improvement and expansion of our manufacturing capabilities and frozen carbonated beverage business exceeded depreciation on
existing assets. Purchases of property, plant and equipment decreased slightly to $53,578,000 in 2021 from $57,817,000 in 2020. We are
continually looking for opportunities to invest in projects at our manufacturing facilities that have a financial payback on capital invested
with the goal of improving efficiency and reducing operating costs.

Marketable securities available for sale and held to maturity decreased by $59,943,000 to $22,111,000 as we decreased our holdings

of corporate bonds and available for sale securities primarily due to the decline in interest rates.

Accounts Payables increased 32% to $96,789,000 from $73,135,000 in 2020.

Dividends payable increased to $12,080,000 as our quarterly dividend payment increased to $0.633/share from $0.575/share.

Net cash provided by operating activities increased $9,356,000 to $101,499,000 in 2021 primarily because of an increase in net

earnings offset by an increase in the investment in net working capital balances, predominantly related to accounts receivable.

Net cash provided by investing activities increased $54,402,000 to $9,939,000 in 2021 from net cash used in investing activities of
$44,463,000 in 2020 primarily due to $57,212,000 of cash paid for purchases of companies in 2020. In 2021, proceeds from the redemption
and sales of marketable securities outpaced the cash used on purchases of property, plant and equipment.

Net cash used in financing activities decreased by $18,791,000 to a use of cash of $24,673,000 in 2021 due to an increase in proceeds
from the issuance of common stock combined with having no repurchases of common stock in 2021. The net use of cash in 2021 was due
the payment of cash dividends outpacing the inflow of cash proceeds from the issuance of common stock.

In 2021, the major variables in determining our net increase in cash and cash equivalents and marketable securities were our increase
in net earnings, depreciation and amortization of fixed assets, changes in accounts receivable, accounts payable and accrued liabilities and
changes in deferred tax liabilities, purchases of property, plant and equipment, and payments of cash dividends. Other variables which in
the past have had a significant impact on our change in cash and cash equivalents and marketable securities 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. We are actively seeking acquisitions that could be a significant use of cash. Although we have no long-term debt at
September 25, 2021, we may borrow in the future depending on our needs.

Off –Balance Sheet Arrangements

The Company has off-balance sheet arrangements for operating leases and purchase commitments as of September 25, 2021.

Item 7A. Quantitative And Qualitative Disclosures About Market Risk

The following is the Company’s quantitative and qualitative analysis of its financial market risk:

Interest Rate Sensitivity

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 25,
2021, the Company had no interest rate swap contracts.

Interest Rate Risk

At September 25, 2021, the Company had no long-term debt obligations.

Purchasing Risk

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.

Foreign Exchange Rate Risk

The Company has not entered into any forward exchange contracts to hedge its foreign currency rate risk as of September 25, 2021,

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.

Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

None.

Item 9A. Controls And Procedures

Disclosure Controls and Procedures

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 25, 2021. Based on that evaluation, our chief executive officer and chief financial officer concluded that these
controls and procedures are effective at a reasonable assurance level.

Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods
specified in the rules and forms of the SEC. These disclosure controls and procedures include, among other things, controls and procedures
designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file under the Exchange Act
is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to
allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control
over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the
supervision of, the chief executive officer and chief financial officer and effected by the board of directors and management to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that:

●

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of our management and board of directors;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of September 25, 2021. In making
this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in the 2013 Internal Control-Integrated Framework.

Based on our assessment, our management believes that, as of September 25, 2021, our internal control over financial reporting is
effective. There have been no changes that occurred during our fourth quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

Our independent registered public accounting firm, Grant Thornton LLP, audited our internal control over financial reporting as of
September 25, 2021. Their report, dated November 23, 2021, expressed an unqualified opinion on our internal control over financial
reporting. That report appears in Item 15 of Part IV of this Annual Report on Form 10-K and is incorporated by reference to this Item 9A.

Item 9B. Other Information

There was no information required on Form 8-K during the quarter that was not reported.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following is a list of the executive officers of the Company and their principal past occupations or employment. All such
persons serve at the pleasure of the Board of Directors and have been elected to serve until the Annual Meeting of Shareholders on February
16, 2022 or until their successors are duly elected.

Name

Age

Position

Gerald B. Shreiber
Peter G. Stanley
Sidney R. Brown
Vincent A. Melchiorre
Marjorie S. Roshkoff
Dan Fachner
Ken A. Plunk
Robert J. Pape
Lynwood Mallard
Steve Every

79
79
64
61
53
61
58
64
53
59

Chairman of the Board and Director
Director
Director
Director
Director, General Counsel and Secretary
Chief Executive Officer and President
Senior Vice President and Chief Financial Officer and Treasurer
Senior Vice President Sales
Chief Marketing Officer
Senior Vice President, Chief Operating Officer – The ICEE Company

Gerald B. Shreiber is the founder of the Company and has served as its Chairman of the Board since its inception in 1971 and as
Chief Executive Officer and President until Dan Fachner was named Chief Executive Officer and President of the Company in May 2021,
and May 2020, respectively. His term as a director expires in 2025.

Peter G. Stanley became a director in 1983. Since November 1999 he has been the Chairman of the Board of Emerging Growth

Equities, Ltd., an investment banking firm.

Sidney R. Brown became a director of the Company in 2003. He is the Chief Executive Officer of NFI Industries, Inc., a premier
integrated supply chain solutions provider. Mr. Brown is also on the Board of FS Energy and Power Fund, a specialty finance company
that invests primarily in income-oriented securities of private energy-related companies. In addition, he is a member of the Board of Trustees
of Cooper Health Systems.

Vincent A. Melchiorre became a director in 2013. He is Senior Vice President of Bimbo Bakeries USA since September 2010.
From June 2007 to August 2010, Mr. Melchiorre was employed by J&J Snack Foods Corp. as Senior Vice President-Food Group. From
May 2006 to June 2007 he was Senior Vice President, Bread and Roll Business, George Weston Foods; from January 2003 to April 2006
he was Senior Vice President, Sales and Marketing at Tasty Baking Company and from June 1982 to December 2002 he was employed by
Campbell Soup Company in various capacities, most recently Vice President of Marketing of Pepperidge Farm.

Marjorie S. Roshkoff joined the Company in February 2016 with more than 15 years of legal experience. In February 2017 she was
appointed Vice President, In-House Counsel and Corporate Secretary. In this role, she oversees outside counsel and is responsible for the
Company’s legal issues. Ms. Roshkoff became a director of the Company in 2020. In 2021, she was named General Counsel of the
Company. Ms. Roshkoff is a daughter of Gerald B. Schreiber.

Dan Fachner has been an employee of The ICEE Company, which was acquired by the Company in May 1987, since 1979. He was
named Senior Vice President of The ICEE Company in April 1994 and became President of ICEE in May 1997. On May 4, 2020, he was
appointed President of J & J Snack Foods Corp. and on May 11, 2021, he was appointed Chief Executive Officer of J & J Snack Foods.

Ken A. Plunk joined the Company in September 2020 as Senior Vice President and Chief Financial Officer. Prior to joining the

Company, Mr. Plunk held various senior positions with Walmart, Inc., The Home Depot and The Coca-Cola Company.

Robert J. Pape joined the Company in 1998. He served in various sales and sales management capacities prior to becoming Senior

Vice President Sales in 2010. Mr. Pape will be retiring effective January 3, 2022.

Lynwood Mallard joined the Company in March 2021 as Senior Vice President, Chief Marketing Officer. Prior to joining the
Company, Mr. Mallard worked for Coca-Cola for almost 23 years and held various positions across Coca-Cola’s business segments. Mr.
Mallard was most recently Vice President of Innovation for Coca-Cola’s Foodservice division.

Steve Every joined the Company in 2009 and in July 2021, was promoted to Chief Operating Officer, The ICEE Company. Since
joining the Company, Mr. Every has served in a number of roles including sales, operations, service and international, most recently as
SVP-Sales.

Portions of the information concerning directors and executive officers, appearing under the captions “Information Concerning
Nominees For Election To Board” and “Information Concerning Continuing Directors And Executive Officers” and information concerning
Section 16(a) Compliance appearing under the caption “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the
Company’s Proxy Statement filed with the SEC in connection with the Annual Meeting of Shareholders to be held on February 16, 2022
(“2021 Proxy Statement”) is incorporated herein by reference.

Portions of the information concerning the Audit Committee, the requirement for an Audit Committee Financial Expert and the
Nominating Committee in the Company’s 2021 Proxy Statement filed with the SEC in connection with the Annual Meeting of Shareholders
to be held on February 16, 2022 is incorporated herein by reference.

The Company has adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, which applies to the
Company’s principal executive officer and senior financial officers. The Company has also adopted a Code of Business Conduct and Ethics
which applies to all employees. The Company will furnish any person, without charge, a copy of the Code of Ethics upon written request
to J & J Snack Foods Corp., 6000 Central Highway, Pennsauken, New Jersey 08109, Attn: Marjorie S. Roshkoff, Esq. A copy of the Code
of Ethics can also be found on our website at www.jjsnack.com. Any waiver of any provision of the Code of Ethics granted to the principal
executive officer or senior financial officer may only be granted by a majority of the Company’s disinterested directors. If a waiver is
granted, information concerning the waiver will be posted on our website www.jjsnack.com for a period of 12 months.

Item 11. Executive Compensation

Information concerning executive compensation appearing in the Company’s 2021 Proxy Statement under the caption

“Management Remuneration” is incorporated herein by reference.

Item 12. Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters

Information concerning the security ownership of certain beneficial owners and management appearing in the Company’s 2021

Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” is incorporated herein by
reference.

The following table details information regarding the Company’s existing equity compensation plans as of September 25, 2021.

( a )

( b )

Number of
securities to
be issued upon

exercise of
outstanding
options,

Weighted-
average
exercise
price of
outstandng
options,

warrants and

rights

( c )
Number of
Securities
Remaining
available for
future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column (a))

Plan Category

Equity compensation plans approved by security holders

748,096 $

141.16

598,000

Equity compensation plans not approved by security holders

Total

748,096 $

141.16

598,000

Column A includes 173,000 from stock option plans that were replaced subsequent to September 30, 2017. Those plans have been
replaced by a plan, approved by shareholders in February 2018, that has 174,000 shares available for future issuance as of the date of this
Form 10-K.

Item 13. Certain Relationships And Related Transactions, and Director Independence

Information concerning the Certain Relationships and Related Transactions, and Director Independence in the Company’s 2021

Proxy Statement is incorporated herein by reference.

Item 14. Principal Accountant Fees And Services

Information concerning the Principal Accountant Fees and Services in the Company’s 2021 Proxy Statement is incorporated herein

by reference.

Item 15. Exhibits, Financial Statement Schedules

(a)

The following documents are filed as part of this Report:

PART IV

(1) Financial Statements

The financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements and Financial
Statements Schedule on page F-1.

(2) Financial Statement Schedule – Page S-1

Schedule II – Valuation and Qualifying Accounts

All other schedules are omitted either because they are not applicable or because the information required is contained in the

financial statements or notes thereto.

(b)

Exhibits

3.1
Amended and Restated Certificate of Incorporation filed February 28, 1990 (Incorporated by reference from the Company’s
Form 10-Q dated May 4, 1990).

3.2
Revised Bylaws adopted November 19, 2013 (Incorporated by reference from the Company’s Form 10-K dated November 26,
2013).

4.3
Amended and Restated Loan Agreement dated December 1, 2006 by and among J & J Snack Foods Corp. and Certain of its
Subsidiaries and Citizens Bank of Pennsylvania, as Agent (Incorporated by reference from the Company’s Form 10-K dated
December 6, 2006).

4.4
First Amendment and Modification to Amended and Restated Loan Agreement (Incorporated by reference from the Company’s
Form 10-K dated December 7, 2011).

4.5
Fourth Amendment and Modification to Amended and Restated Loan Agreement (Incorporated by reference from the Company’s
Form 10-K dated November 21, 2016).

4.6**
Fifth Amendment and Modification to Amended and Restated Loan Agreement

10.1*
J & J Snack Foods Corp. Amended and Restated Long-Term Incentive Plan (Incorporated by referenced from the Company’s
Form 8-K filed on February 12, 2021).

10.2*
J & J Snack Foods Corp. Stock Option Plan (Incorporated by reference from the Company’s Definitive Proxy Statement dated
December 22, 2017).

10.3*
J & J Snack Foods Corp. Employee Stock Purchase Plan (Incorporated by reference from the Company’s Form S-8 dated May
16, 1996).

10.4*
Inducement Restricted Stock Award Agreement (Incorporated by reference from the Company’s Form 8-K filed on October 26,
2020.

14.1
Code of Ethics Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 (Incorporated by reference from the Company’s 10-
Q dated July 20, 2004).

21.1**
Subsidiaries of J & J Snack Foods Corp.

23.1**
Consent of Independent Registered Public Accounting Firm.

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 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002.

32.2**
Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002.

101**
The following financial information from J&J Snack Foods Corp.'s Form 10-K for the year ended September 25, 2021, formatted
in iXBRL (Inline extensible Business Reporting Language):

(i)
(ii)
(iii)
(iv)
(v)
(vi)

Consolidated Balance Sheets,
Consolidated Statements of Earnings,
Consolidated Statements of Comprehensive Income,
Consolidated Statements of Cash Flows,
Consolidated Statement of Changes in Stockholders' Equity and
The Notes to the Consolidated Financial Statements

104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_____________

*Compensatory Plan

**Filed Herewith

Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused

report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

November 23, 2021

J & J SNACK FOODS CORP.

By: /s/ Dan Fachner
Dan Fachner,

Chief Executive Officer
and President
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons

on behalf of the Registrant and in the capacities and on the dates indicated.

November 23, 2021

/s/ Dan Fachner

Dan Fachner,

Chief Executive Officer
and President
(Principal Executive Officer)

/s/ Ken A. Plunk

Ken A. Plunk, Senior Vice

President and Chief Financial
Officer
(Principal Financial Officer)
(Principal Accounting Officer)

/s/ Sidney R. Brown
Sidney R. Brown, Director

/s/ Peter G. Stanley
Peter G. Stanley, Director

/s/ Vincent A. Melchiorre
Vincent A. Melchiorre, Director

J & J SNACK FOODS CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

Financial Statements:

Report of Independent Registered Public Accounting Firm

Opinion of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

Consolidated Balance Sheets as of September 25, 2021 and September 26, 2020

Consolidated Statements of Earnings for the fiscal years ended September 25, 2021, September 26, 2020 and September
28, 2019

Consolidated Statements of Comprehensive Income for the fiscal years ended September 25, 2021, September 26, 2020
and September 28, 2019

Consolidated Statement of Changes in Stockholders’ Equity for the fiscal years ended September 25, 2021, September 26,
2020 and September 28, 2019

Consolidated Statements of Cash Flows for the fiscal years ended September 25, 2021, September 26, 2020 and
September 28, 2019

Notes to Consolidated Financial Statements

Financial Statement Schedule:

Schedule II – Valuation and Qualifying Accounts

F-2

F-4

F-5

F-6

F-7

F-8

F-9

F-10

S-1

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

J&J Snack Foods Corp. and Subsidiaries

Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of J&J Snack Foods Corp. (a New Jersey corporation) and subsidiaries
(the “Company”) as of September 25, 2021 and September 26, 2020, the related consolidated statements of earnings, comprehensive
income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended September 25, 2021, and the
related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our
opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 25, 2021
and September 26, 2020, and the results of its operations and its cash flows for each of the three years in the period ended September 25,
2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),
the Company’s internal control over financial reporting as of September 25, 2021, based on criteria established in the 2013 Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and
our report dated November 23, 2021 expressed an unqualified opinion.

Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

F-2

Critical audit matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to
the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Net Revenue Adjustments

As described in Note A to the consolidated financial statements, contracts with customers include some form of variable consideration,
including sales discounts, trade promotions and certain other sales and consumer incentives, including rebates. Variable consideration is
treated as a reduction in revenue when the related revenue is recognized, and is recorded using the most likely amount method, with
updates to estimates and related accruals of variable consideration occurring each period based on historical experience and changes in
circumstances.

We identified the estimation of certain subsidiaries’ reserves for these net revenue adjustments by management as a critical audit matter
because the inputs and assumptions utilized by management in estimating these reserves, including consistency of historical data and
contract pricing, require significant judgment and create a high degree of estimation uncertainty. Consequently, auditing these
assumptions requires subjective auditor judgment.

Our audit procedures related to the estimation of the reserves included the following, among others.

● We obtained an understanding of management’s processes and controls over calculating the reserves for net revenue adjustments,

including understanding relevant inputs and assumptions.

● We evaluated the design and tested the operating effectiveness of key controls relating to the calculation of the reserves for net

revenue adjustments, including key management review controls over the period-end accrual of allowances and end-user pricing
adjustments.

● We re-performed management’s process for calculating the reserves for net revenue adjustments.
● We evaluated key inputs and assumptions relevant to the net revenue adjustments, including contractual pricing and rebate

arrangements with customers and historical allowance data, which were compared to source documents.

● We considered transactions subsequent to year end occurring up to the date of our auditor’s opinion, which involved inspecting

customer contracts and relevant source documents submitted by customers in conjunction with the allowance, including end-user
pricing adjustments.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 1984.

Philadelphia, Pennsylvania
November 23, 2021

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
J&J Snack Foods Corp. and Subsidiaries

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of J&J Snack Foods Corp. (a New Jersey corporation) and subsidiaries (the
“Company”) as of September 25, 2021 based on criteria established in the 2013 Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of September 25, 2021, based on criteria established in the 2013
Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),
the consolidated financial statements of the Company as of and for the year ended September 25, 2021, and our report dated November
23, 2021 expressed an unqualified opinion on those financial statements.

Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on
our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/GRANT THORNTON LLP

Philadelphia, Pennsylvania
November 23, 2021

F-4

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

Assets
Current assets

Cash and cash equivalents
Marketable securities held to maturity
Accounts receivable, net
Inventories
Prepaid expenses and other
Total current assets

Property, plant and equipment, at cost

Less accumulated depreciation and amortization

Property, plant and equipment, net

Other assets
Goodwill
Other intangible assets, net
Marketable securities held to maturity
Marketable securities available for sale
Operating lease right-of-use assets
Other

Total other assets

Total Assets

Liabilities and Stockholders' Equity

Current Liabilities
Current finance lease liabilities
Accounts payable
Accrued insurance liability
Accrued liabilities
Current operating lease liabilities
Accrued compensation expense
Dividends payable

Total current liabilities

Noncurrent finance lease liabilities
Noncurrent operating lease liabilities
Deferred income taxes
Other long-term liabilities

September 25, September 26,

2021

2020

283,192 $
7,980
162,939
123,160
7,498
584,769

757,242
490,055
267,187

121,833
77,776
4,047
10,084
54,555
1,968
270,263
1,122,219 $

182 $
96,789
16,260
10,955
13,395
17,968
12,080
167,629

392
46,557
61,578
409

195,809
51,151
126,587
108,923
17,087
499,557

717,261
455,645
261,616

121,833
81,622
16,927
13,976
58,110
2,912
295,380
1,056,553

349
73,135
13,039
7,420
13,173
16,134
10,876
134,126

368
47,688
64,413
460

Stockholders' Equity
Preferred stock, $1 par value; authorized 10,000,000 shares; none issued
Common stock, no par value; authorized, 50,000,000 shares; issued and outstanding 19,084,000

and 18,915,000 respectively

Accumulated other comprehensive loss
Retained Earnings

Total stockholders' equity

Total Liabilities and Stockholders' Equity

The accompanying notes are an integral part of these statements.

73,597
(13,383 )
785,440
845,654
1,122,219 $

49,268
(15,587)
775,817
809,498
1,056,553

F-5

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

Fiscal Year Ended

September 25, September 26, September 28,
2020
(52 weeks)

2019
(52 weeks)

2021
(52 weeks)

Net Sales
Cost of goods sold
Gross Profit

Operating expenses

Marketing and selling
Distribution
Administrative
Intangible asset impairment charges
Plant shutdown impairment costs
Other general expense (income)
Total operating expenses

Operating Income

Other income (expenses)
Investment income
Interest expense & other

Earnings before income taxes

Income taxes

NET EARNINGS

Earnings per diluted share

1,144,579 $
845,651
298,928

1,022,038 $
783,611
238,427

1,186,487
836,086
350,401

77,922
108,297
40,538
1,273
-
(320)
227,710
71,218

84,977
92,759
36,747
-
6,387
363
221,233
17,194

96,428
94,888
40,721
-
-
1,408
233,445
116,956

2,815
(7)

4,356
(84)

7,741
1,880

74,026

21,466

126,577

18,419

3,161

31,758

55,607 $

18,305 $

94,819

2.91 $

0.96 $

5.00

Weighted average number of diluted shares

19,133

19,032

18,959

Earnings per basic share

2.92 $

0.97 $

5.04

Weighted average number of basic shares

19,013

18,901

18,812

The accompanying notes are an integral part of these statements.

F-6

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

Fiscal Year Ended

September 25, September 26, September 28,
2020
(52 weeks)

2019
(52 weeks)

2021
(52 weeks)

Net Earnings

55,607 $

18,305 $

94,819

Foreign currency translation adjustments
Total Other Comprehensive Income (loss), net of tax

2,204
2,204

(2,599)
(2,599)

(909)
(909)

Comprehensive Income

57,811 $

15,706 $

93,910

F-7

J & J SNACK FOODS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)

Accumulated
Other

Common Stock
Shares

Amount

Comprehensive Retained
Earnings

Loss

Total

Balance at September 29, 2018

18,754 $

27,340 $

(11,994) $

743,745 $

759,091

Issuance of common stock upon exercise of stock

options

Issuance of common stock for employee stock

purchase plan

Foreign currency translation adjustment
Reclass from accumulated other comprehensive

income

Issuance of common stock under deferred stock

plan

Dividends declared
Share-based compensation
Net earnings

128

12,658

12
-

1,516
-

-
(909)

-
-

1,516
(909)

1
-
-
-

(85)

91
-
4,139
-

-
-
-
-

-
(37,654)
-
94,819

91
(37,654)
4,139
94,819

Balance at September 28, 2019

18,895 $

45,744 $

(12,988) $

800,995 $

833,751

Issuance of common stock upon exercise of stock

options

Issuance of common stock for employee stock

purchase plan

Foreign currency translation adjustment
Issuance of common stock under deferred stock

plan

Dividends declared
Share-based compensation
Repurchase of common stock
Net earnings

6,406

12
-

1
-
-
(66)
-

1,495
-

91
-
4,504
(8,972 )
-

-
(2,599)

-
-

-
-
-
-
-

-
(43,483)
-
-
18,305

6,406

1,495
(2,599)

91
(43,483)
4,504
(8,972)
18,305

Balance as September 26, 2020

18,915 $

49,268 $

(15,587) $

775,817

809,498

Issuance of common stock upon exercise of stock

options

Issuance of common stock for employee stock

purchase plan

Foreign currency translation adjustment
Dividends declared
Share-based compensation
Net earnings

158

18,739

11
-
-
-
-

1,391
-
-
4,199
-

-
2,204
-
-
-

-
-
(45,984)
-
55,607

1,391
2,204
(45,984)
4,199
55,607

Balance as September 25, 2021

19,084 $

73,597 $

(13,383) $

785,440 $

845,654

The accompanying notes are an integral part of these statements.

F-8

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

Fiscal Year Ended

September 25, September 26, September 28,
2020
(52 weeks)

2021
(52 weeks)

2019
(52 weeks)

55,607 $

18,305 $

94,819

46,781
2,610
1,273
(231)
-
77
4,199
(2,896)
(1,026)

(35,755)
(14,155)
9,629
35,386
101,499

-
(53,578)
-
60,891
2,435
191
9,939

-
20,256
(144)
(44,785)
(24,673)
618
87,383
195,809
283,192 $

49,830
3,218
-
(303)
6,387
296
4,595
2,622
882

14,580
7,877
(11,366)
(4,780)
92,143

(57,212)
(57,817)
(6,103)
73,226
3,593
(150)
(44,463)

(8,972)
7,901
(340)
(42,053)
(43,464)
(802)
3,414
192,395
195,809 $

45,225
3,385
-
(347)
-
730
4,230
9,637
404

(8,759)
(3,231)
(744)
2,150
147,499

(1,156)
(57,128)
(26,091)
39,158
2,050
(196)
(43,363)

-
14,174
(356)
(36,644)
(22,826)
(394)
80,916
111,479
192,395

Operating activities:

Net earnings

Adjustments to reconcile net earnings to net cash provided by
operating activities:

Depreciation of fixed assets
Amortization of intangibles and deferred costs
Intangible asset impairment charges
Gains from disposals of property & equipment
Plant shutdown impairment costs
Amortization of bond premiums
Share-based compensation
Deferred income taxes
(Gain) Loss on sale of marketable securities
Changes in assets and liabilities, net of effects from purchase of
companies:

Decrease (increase) in accounts receivable, net
Decrease (increase) in inventories
Decrease (increase) in prepaid expenses and other
Increase (decrease) in accounts payable and accrued liabilities

Net cash provided by operating activities

Investing activities:

Payments for purchases of companies, net of cash acquired
Purchases of property, plant and equipment
Purchases of marketable securities
Proceeds from redemption and sales of marketable securities
Proceeds from disposal of property, plant and equipment
Other

Net cash provided by (used in) investing activities

Financing activities:

Payments to repurchase common stock
Proceeds from issuance of common stock
Payments on capitalized lease obligations
Payment of cash dividend

Net cash used in financing activities

Effect of exchange rates on cash and cash equivalents

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

The accompanying notes are an integral part of these statements.

F-9

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

J & J Snack Foods Corp. and Subsidiaries (the Company) manufactures, markets and distributes a variety of nutritional snack foods
and beverages to the food service and retail supermarket industries. A summary of the significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial statements follows. Our fiscal years 2021, 2020 and 2019 comprise 52 weeks.

1. Principles of Consolidation

The consolidated financial statements were prepared in accordance with U.S. GAAP. These financial statements include the
accounts of J & J Snack Foods Corp. and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in
the consolidated financial statements.

2. Revenue Recognition

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

The singular performance obligation of our customer contracts for product and machine sales is determined by each individual
purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under
the terms of the agreement is satisfied and product control is transferred to our customer. Specifically, control transfers to our
customers when the product is delivered to, installed or picked up by our customers based upon applicable shipping terms, as our
customers can direct the use and obtain substantially all of the remaining benefits from the product at this point in time. The
performance obligations in our customer contracts for product are generally satisfied within 30 days.

F-10

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Beginning Balance
Additions to contract liability
Amounts recognized as revenue
Ending Balance

Fiscal Year Ended
September 25, September 26,

2021

2020

(in thousands)

1,327 $
5,544
(5,774)
1,097 $

1,334
5,526
(5,533)
1,327

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

Allowance for Doubtful Receivables
The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit
losses. The allowance for doubtful accounts considers a number of factors including the age of receivable balances, the history
of losses, expectations of future credit losses and the customers’ ability to pay off obligations. The allowance for doubtful
receivables was $1,405,000 and $1,388,000 at September 25, 2021 and September 26, 2020, respectively.

F-11

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Foreign Currency

Assets and liabilities in foreign currencies are translated into U.S. dollars at the rate of exchange prevailing at the balance sheet
date. Revenues and expenses are translated at the average rate of exchange for the period. The cumulative translation adjustment is recorded
as a separate component of stockholders’ equity and changes to such are included in comprehensive income.

4. Use of Estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America,
management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

5. Cash Equivalents

Cash equivalents are short-term, highly liquid investments with original maturities of three months or less.

6. Concentrations and related risks

We maintain cash balances at financial institutions located in various states. We have cash balances at four banks totaling

approximately $123 million that is in excess of federally insured limits.

Financial instruments that could potentially subject us to concentrations of credit risk are trade accounts receivable; however, such
risks are limited due to the large number of customers comprising our customer base and their dispersion across geographic regions. We
have approximately 28 customers with accounts receivable balances of between $1 million and $10 million and one customer with a balance
of approximately $14 million.

About 27% of our employees are covered by collective bargaining agreements.

None of our vendors supplied more than 10% of our ingredients and packaging in 2021, 2020 or 2019.

Virtually all of our accounts receivable are due from trade customers. Credit is extended based on evaluation of our customers’
financial condition and collateral is not required. Accounts receivable payment terms vary and are stated in the financial statements at
amounts due from customers net of an allowance for doubtful accounts. At September 25, 2021 and September 26, 2020, our accounts
receivables were $162,939,000 and $126,587,000, net of an allowance for doubtful accounts of $1,405,000 and $1,388,000. Accounts
receivable outstanding longer than the payment terms are considered past due. We determine our allowance by considering a number of
factors, including the length of time trade accounts receivable are past due, our previous loss history, customers’ current ability to pay their
obligations to us, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become
uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.

F-12

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. Inventories

Inventories are valued at the lower of cost (determined by the first-in, first-out method) or net realizable value. We recognize
abnormal amounts of idle facilities, freight, handling costs, and spoilage as charges of the current period. Additionally, we allocate fixed
production overhead to inventories based on the normal capacity of our production facilities. We calculate normal capacity as the
production expected to be achieved over a number of periods or seasons under normal circumstances, taking into account the loss of
capacity resulting from planned maintenance. This requires us to use judgment to determine when production is outside the range of
expected variation in production (either abnormally low or abnormally high). In periods of abnormally low production (for example, periods
in which there is significantly lower demand, labor and material shortages exist, or there is unplanned equipment downtime) the amount of
fixed overhead allocated to each unit of production is not increased. However, in periods of abnormally high production the amount of
fixed overhead allocated to each unit of production is decreased to assure inventories are not measured above cost.

8. Investment Securities

We classify our investment securities in one of three categories: held to maturity, trading, or available for sale. Our investment
portfolio at September 25, 2021 consists of investments classified as held to maturity and available for sale. The securities that we have the
positive intent and ability to hold to maturity are classified as held to maturity and are stated at amortized cost. Investments classified as
available for sale are reported at fair market value with unrealized gains and losses related to the changes in fair value of the securities
recognized in investment income. The mutual funds and preferred stock in our available for sale portfolio 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. See Note C for further information on our
holdings of investment securities.

9. Depreciation and Amortization

Depreciation of equipment and buildings is provided for by the straight-line method over the assets’ estimated useful lives. We

review our equipment and buildings to ensure that they provide economic benefit and are not impaired.

Amortization of leasehold improvements is provided for by the straight-line method over the term of the lease or the assets’
estimated useful lives, whichever is shorter. Licenses and rights, customer relationships, non-compete agreements and certain tradenames
are being amortized by the straight-line method over periods ranging from 2 to 20 years and amortization expense is reflected throughout
operating expenses.

Long-lived assets, including fixed assets and amortizing intangibles, are reviewed for impairment as events or changes in
circumstances occur indicating that the carrying amount of the asset may not be recoverable. Indefinite lived intangibles are reviewed
annually for impairment. Cash flow and sales analyses are used to assess impairment. The estimates of future cash flows and sales involve
considerable management judgment and are based upon assumptions about expected future operating performance. Assumptions used in
these forecasts are consistent with internal planning. The actual cash flows and sales could differ from management’s estimates due to
changes in business conditions, operating performance, economic conditions, competition, and consumer preferences.

10. Fair Value of Financial Instruments

The carrying value of our short-term financial instruments, such as accounts receivables and accounts payable, approximate their

fair values, based on the short-term maturities of these instruments.

F-13

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Income Taxes

We account for our income taxes under the liability method. Under the liability method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax
rates that will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities.

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

As of September 25, 2021 and September 26, 2020, the total amount of gross unrecognized tax benefits is $343,000 and $360,000,
respectively, all of which would impact our effective tax rate over time, if recognized. We recognize interest and penalties related to
income tax matters as a part of the provision for income taxes. As of September 25, 2021 and September 26, 2020, we had $267,000 of
accrued interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at September 26, 2020
Additions based on tax positions related to the current year
Reductions for tax positions of prior years
Settlements
Balance at September 25, 2021

(in thousands)

360
-
-
(17)
343

In addition to our federal tax return and tax returns for Mexico and Canada, we file tax returns in all states that have a corporate

income tax. Virtually all the returns noted above are open for examination for three to four years.

Net earnings in the year ended September 28, 2019 benefited from a reduction of $885,000 in tax as the provision for the one-time
repatriation tax was reduced as the amount recorded in 2018 was an estimate. Excluding the reduction in the provision for the one-time
repatriation tax, our effective tax rate was 25.8% in 2019. Net earnings for the 2020 year benefited from a reduction in income tax expense
related to state deferred taxes and provision to return adjustments of approximately $2.2 million. Excluding these benefits, our effective
tax rate in our fiscal 2020 year was 25.0%. Our effective tax rate in our fiscal 2021 year was 24.9%.

F-14

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. Earnings Per Common Share

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

Our calculation of EPS is as follows:

Income
(Numerator)

Fiscal Year Ended September 25, 2021
Shares
(Denominator)
(in thousands, except per share amounts)

Per Share
Amount

Earnings Per Basic Share
Net Income available to common stockholders

Effect of Dilutive Securities
Options

55,607

19,013 $

2.92

120

(0.01)

Earnings Per Diluted Share
Net Income available to common stockholders plus assumed conversions

55,607

19,133 $

2.91

284,480 anti-dilutive shares have been excluded in the computation of 2021 diluted EPS.

F-15

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income
(Numerator)

Fiscal Year Ended September 26, 2020
Shares
(Denominator)
(in thousands, except per share amounts)

Per Share
Amount

Earnings Per Basic Share
Net Income available to common stockholders

Effect of Dilutive Securities
Options

18,305

18,901 $

0.97

131

(0.01)

Earnings Per Diluted Share
Net Income available to common stockholders plus assumed conversions

18,305

19,032 $

0.96

341,849 anti-dilutive shares have been excluded in the computation of 2020 diluted EPS.

Income
(Numerator)

Fiscal Year Ended September 28, 2019
Shares
(Denominator)
(in thousands, except per share amounts)

Per Share
Amount

Earnings Per Basic Share
Net Income available to common stockholders

Effect of Dilutive Securities
Options

94,819

18,812 $

5.04

147

(0.04)

Earnings Per Diluted Share
Net Income available to common stockholders plus assumed conversions

94,819

18,959 $

5.00

162,070 anti-dilutive shares have been excluded in the computation of 2019 diluted EPS.

F-16

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Accounting for Stock-Based Compensation

At September 25, 2021, the Company has three stock-based employee compensation plans. Share-based compensation was

recognized as follows:

Fiscal year ended

September 25, September 26, September 28,
2020
(in thousands)

2019

2021

Stock options
Stock purchase plan
Stock issued to an outside director
Restricted stock issued to employees
Total share-based compensation

The above compensation is net of tax benefits

2,265 $
573
44
93
2,975 $

2,874 $
390
66
-
3,330 $

1,743
390
66
-
2,199

1,224 $

1,265 $

2,030

At September 25, 2021, the Company has unrecognized compensation expense of approximately $6.6 million to be recognized over

the next three fiscal years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model with the
following weighted average assumptions used for grants in fiscal 2021, 2020 and 2019: expected volatility of 25.8% for fiscal year 2021,
17.4% for fiscal year 2020 and 17.2% for fiscal year 2019: weighted average risk-free interest rates of 0.8%, 0.3% and 2.1%; dividend rate
of 1.4%, 1.8% and 1.2% and expected lives ranging between 4 and 10 years for all years.

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.

14. Advertising Costs

Advertising costs are expensed as incurred. Total advertising expense was $4,885,000, $6,461,000, and $5,938,000 for the fiscal

years 2021, 2020 and 2019, respectively.

F-17

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. Commodity Price Risk Management

Our most significant raw material requirements include flour, packaging, shortening, corn syrup, sugar, juice, cheese, chocolate,
and a variety of nuts. We attempt 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. As of September 25,
2021, we have approximately $78 million of such commitments. Futures contracts are not used in combination with forward purchasing of
these raw materials. Our 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. Our policy is to recognize estimated losses on purchase commitments when they occur. At
each of the last three fiscal year ends, we did not have any material losses on our purchase commitments.

16. Research and Development Costs

Research and development costs are expensed as incurred. Total research and development expense was $619,000, $680,000 and

$645,000 for the fiscal years 2021, 2020 and 2019, respectively.

17. Recent Accounting Pronouncements

In February 2016, the FASB issued guidance on lease accounting which requires that an entity recognize most leases on its balance
sheet. The guidance retains a dual lease accounting model for purposes of income statement recognition, continuing the distinction
between what are currently known as “capital” and “operating” leases for lessees. We adopted the guidance on September 29, 2019
using this alternate transition method, but we did not record a cumulative-effect adjustment from initially applying the standard.
We elected the package of practical expedients that permits us not to reassess our prior conclusions about lease identification, lease
classification and initial direct costs and made an accounting policy election to exclude short-term leases with an initial term of 12
months or less from our Consolidated Balance Sheets. We have completed the implementation of a lease accounting system to
enable the preparation of financial information and have implemented relevant accounting policies and internal controls surrounding
the lease accounting process. As a result of adoption, on September 29, 2019, we recognized a right-of-use asset and lease liability
of $71 million and $72 million, respectively. The right-of-use asset balance reflects the reclassification of deferred rent and prepaid
rent against the initial asset. The adoption did not impact our results of operations or cash flows. See additional lease disclosures in
Note P.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the
impairment model used to measure credit losses for most financial assets. We are required to recognize an allowance that reflects
the Company’s current estimate of credit losses expected to be incurred over the life of the financial asset, including trade
receivables and held to maturity debt securities.

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

18. Reclassifications

Certain prior year financial statement amounts have been reclassified to be consistent with the presentation for the current year.

F-18

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B – ACQUISITIONS

The purchase price allocations for these two acquisitions are as follows:

Accounts Receivable, net
Inventories
Property, plant & equipment, net
Customer Relationships
Distribution rights
Goodwill
Accounts Payable

Purchase Price

(in thousands)

ICEE

Distributors

BAMA
ICEE

Total

721 $
866
4,851
569
22,400
15,773
(210)
44,970 $

71 $
77
1,722
133
6,800
3,549
(110)
12,242 $

792
943
6,573
702
29,200
19,322
(320)
57,212

The goodwill and intangible assets acquired in the business combinations are recorded at estimated fair value. To measure
fair value for such assets, we use techniques including discounted expected future cash flows (Level 3 input). The goodwill
recognized is attributable to the assembled workforce of each acquired business and certain other strategic intangible assets that do
not meet the requirements for recognition separate and apart from goodwill. Acquisition costs of $76,000 are included in other
general expense for the year ended September 26, 2020.

Our unaudited proforma results, giving effect to these acquisitions and assuming an acquisition date of September 30, 2018, would

have been:

Net Sales

Net Earnings

Fiscal Year Ended
September 26, September 28,

2020

2019

1,022,838 $

1,201,804

18,303 $

96,945

F-19

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C – INVESTMENT SECURITIES

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 inputs 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.

Our 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.

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities held to maturity at September

25, 2021 are summarized as follows:

Gross

Fair

Amortized Unrealized Unrealized Market
Value

Losses

Gains

Cost

Corporate Bonds

Total marketable securities held to maturity

$
$

12,027 $
12,027 $

(in thousands)
123 $
123 $

18 $
18 $

12,132
12,132

F-20

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities available for sale at September

25, 2021 are summarized as follows:

Gross

Fair

Amortized Unrealized Unrealized Market
Value

Losses

Gains

Cost

(in thousands)

Mutual Funds
Preferred Stock

Total marketable securities available for sale

3,588 $
6,892
10,480 $

- $
175
175 $

536 $
35
571 $

3,052
7,032
10,084

The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration. The mutual
funds presently generate income of about 3.5% per year. We have invested $7 million in Fixed-to-Floating Perpetual Preferred Stock which
generates fixed income to call dates in 2025 and then income is based on a spread above LIBOR if the securities are not called. The annual
yield from these investments is presently 5.9%, of which 50% is not subject to income tax. The mutual funds and the Fixed-to-Floating
Perpetual Preferred Stock investment securities 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. We have invested $12 million in corporate bonds which generate fixed income to maturity dates in 2021
through 2023, with $8 million maturing prior to the end of our fiscal year 2022. The bonds presently generate income of about 3.1% per
year based on purchase price. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our
amortized cost.

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities held to maturity at September

26, 2020 are summarized as follows:

Gross

Fair

Amortized Unrealized Unrealized Market
Value

Losses

Gains

Cost

Corporate Bonds

Total marketable securities held to maturity

$
$

68,078 $
68,078 $

1,015 $
1,015 $

32 $
32 $

69,061
69,061

(in thousands)

F-21

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amortized cost, unrealized gains and losses, and fair market values of our marketable securities available for sale at September

26, 2020 are summarized as follows:

Gross

Fair

Amortized Unrealized Unrealized Market
Value

Losses

Gains

Cost

Mutual Funds
Preferred Stock

Total marketable securities available for sale

3,588 $
11,596
15,184 $

- $
116
116 $

738 $
586
1,324 $

2,850
11,126
13,976

The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at September 25, 2021 and

September 26, 2020 are summarized as follows:

(in thousands)

Due in one year or less
Due after one year through five years
Due after five years through ten years
Total held to maturity securities
Less current portion
Long term held to maturity securities

September 25, 2021

September 26, 2020

Fair

Amortized Market
Value

Cost

Amortized Market
Value

Cost

7,980 $
4,047
-
12,027 $
7,980
4,047 $

(in thousands)
8,080 $
4,052
-
12,132 $
8,080
4,052 $

51,151 $
16,927
-
68,078 $
51,151
16,927 $

51,815
17,246
-
69,061
51,815
17,246

Proceeds from the sale and redemption of marketable securities were $60,891,000, $73,226,000, and $39,158,000 in the years ended
September 25, 2021, September 26, 2020, and September 28, 2019, respectively; with a gain of $213,000 in 2021, a gain of $83,000 in
2020 and a gain of $27,000 in 2019. We use the specific identification method to determine the cost of securities sold. Unrealized losses
of $813,000 and 965,000 were recorded in 2021 and 2020, respectively.

F-22

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total marketable securities held to maturity as of September 25, 2021 with credit ratings of AAA/AA/A had an amortized cost basis
totaling $1,469,000 and those with credit ratings of BBB/BB/B had an amortized cost basis totaling $10,558,000. This rating information
was obtained September 30, 2021.

NOTE D – INVENTORIES

Inventories consist of the following:

Finished goods
Raw materials
Packaging materials
Equipment, parts and other

Total Inventories

NOTE E – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

Land
Buildings
Plant machinery and equipment
Marketing equipment
Transportation equipment
Office equipment
Improvements
Construction in Progress

Less accumulated depreciation and amortization
Property, plant and equipment, net

September 25,

September 26,

2021

2020

(in thousands)

49,756 $
29,529
11,168
32,707
123,160 $

40,184
24,550
10,545
33,644
108,923

September 25,
2021

September 26,
2020
(in thousands)

2,494 $
26,582
343,716
258,624
10,315
34,648
45,578
35,285
757,242
490,055
267,187 $

2,494
26,582
330,168
250,914
9,966
33,878
43,264
19,995
717,261
455,645
261,616

Estimated
Useful Lives
(in years)

15 - 39.5
5 - 20
5 - 7
5
3 - 5
5 - 20
-

Depreciation expense was $46,781,000, $49,830,000, and $45,225,000 for fiscal years 2021, 2020 and 2019, respectively.

F-23

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE F – GOODWILL AND INTANGIBLE ASSETS

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

The carrying amount of acquired intangible assets for the reportable segments are as follows:

September 25, 2021

September 26, 2020

FOOD SERVICE

Indefinite lived intangible assets

Trade Names

Amortized intangible assets

Non compete agreements
Customer relationships
License and rights
TOTAL FOOD SERVICE

RETAIL SUPERMARKETS

Indefinite lived intangible assets

Trade Names

Amortized Intangible Assets

Trade names
Customer relationships

TOTAL RETAIL SUPERMARKETS

FROZEN BEVERAGES

Indefinite lived intangible assets

Trade Names
Distribution rights

Amortized intangible assets
Customer relationships
Licenses and rights

TOTAL FROZEN BEVERAGES

CONSOLIDATED

Gross
Carrying Accumulated Carrying Accumulated
Amortization
Amount

Amortization Amount

Gross

(in thousands)

10,408 $

812 $

10,408 $

670
13,000
1,690
25,768 $

670
6,188
1,396
9,066 $

670
19,737
1,690
32,505 $

645
11,595
1,312
13,552

12,777 $

461 $

12,750 $

649
7,907
21,333 $

649
5,931
7,041 $

676
7,907
21,333 $

519
5,140
5,659

9,315 $
36,100

- $
-

9,315 $
36,100

-
-

257
1,002
1,259

1,439
1,400
48,254 $

400
1,072
1,472 $

1,439
1,400
48,254 $

95,355 $

17,579 $

102,092 $

20,470

F-24

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The gross carrying amount of intangible assets is determined by applying a discounted cash flow model to the future sales and
earnings associated with each intangible asset or is set by contract cost. The amortization period used for definite lived intangible assets is
set by contract period or by the period over which the bulk of the discounted cash flow is expected to be generated. We currently believe
that we will receive the benefit from the use of the trade names and distribution rights classified as indefinite lived intangible assets
indefinitely and they are therefore not amortized.

Licenses and rights, customer relationships and non-compete agreements are being amortized by the straight-line method over

periods ranging from 2 to 20 years and amortization expense is reflected throughout operating expenses.

Amortizing intangibles are reviewed for impairment as events or changes in circumstances occur indicating that the carrying amount
of the asset may not be recoverable. Indefinite lived intangibles are reviewed annually at year end for impairment. Cash flow and sales
analyses are used to assess impairment. The estimates of future cash flows and sales involve considerable management judgment and are
based upon assumptions about expected future operating performance which include Level 3 inputs such as annual growth rates and
discount rates. Assumptions used in these forecasts are consistent with internal planning. The actual cash flows and sales could differ from
management’s estimates due to changes in business conditions, operating performance, economic conditions, competition, and consumer
preferences.

In connection with our annual impairment assessment conducted during the fourth quarter of 2021, we determined that the carrying
amounts of two trade names exceeded their fair value as of September 25, 2021. As a result, the Company recorded an indefinite lived
intangible asset impairment charge of $1,273,000 in the fourth quarter of 2021. The intangible asset impairment charge is reflected in
Intangible asset impairment charges in the Consolidated Statements of Earnings. Of the total impairment charge, $812,000 related to trade
names in the Food Service segment and $461,000 related to trade names in the Retail Supermarket segment.

There were no intangible assets acquired in fiscal year 2021. In fiscal year 2020, intangible assets of $22,969,000 were added in the
frozen beverages segment from the acquisition of ICEE Distributors in the quarter ended December 28, 2019 and $6,933,000 from the
acquisition of BAMA ICEE in the quarter ended March 28, 2020. Intangible assets of $480,000 were acquired in the Frozen Beverage
segment in fiscal year 2019.

Aggregate amortization expense of intangible assets for the fiscal years 2021, 2020 and 2019 was $2,610,000, $3,202,000, and

$3,320,000, respectively.

Estimated amortization expense for the next five fiscal years is approximately $2,300,000 in 2022 and 2023, $2,000,000 in 2024

and $1,400,000 in 2025 and 2026. The weighted average amortization period of the intangible assets is 10.9 years.

F-25

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill

The carrying amounts of goodwill for the reportable segments are as follows:

Balance at

September 25, 2021

September 26, 2020

Food
Service

Retail

Frozen

Supermarkets Beverages

Total

(in thousands)

61,189 $

4,146 $

56,498 $

121,833

61,189 $

4,146 $

56,498 $

121,833

The carrying value of goodwill is determined based on the excess of the purchase price of acquisitions over the estimated fair value of
tangible and intangible net assets. Goodwill is not amortized but is evaluated annually at year end by management for impairment. Our
impairment analysis for 2021, 2020 and 2019 was based on a combination of the income approach, which estimates the fair value of
reporting units based on discounted cash flows, and the market approach, which estimates the fair value of reporting units based on
comparable market prices and multiples. Under the income approach the Company used a discounted cash flow which requires Level 3
inputs such as: annual growth rates, discount rates based upon the weighted average cost of capital and terminal values based upon current
stock market multiples. There were no impairment charges in 2021, 2020 and 2019.

No goodwill was acquired in fiscal years 2021. In fiscal year 2020, goodwill of $15,773,000 was added in the frozen beverages
segment from the acquisition of ICEE Distributors in the quarter ended December 28, 2019 and $3,549,000 from the acquisition of BAMA
ICEE in the quarter ended March 28, 2020.

NOTE G – LONG-TERM DEBT

In November 2016, we entered into 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 2021, with the availability of repayments without penalty. Interest is calculated
based on LIBOR plus an applicable margin. The agreement contains financial covenants and requires commitment fees in accordance with
standard banking practice. As of September 25, 2021 and September 26, 2020, there were no outstanding balances under the facility. We
were in compliance with the financial covenants at September 25, 2021.

F-26

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On November 16, 2021, we entered into an amendment and modification to the amended and restated loan agreement which

extended the maturity of the revolving credit facility to December 16, 2021.

NOTE H – INCOME TAXES

Income tax expense (benefit) is as follows:

Current
U.S. Federal
Foreign
State

Total current expense

Deferred

U.S. Federal
Foreign
State

Total deferred benefit

Total expense

Fiscal year ended
September 25, September 26, September 28,
2020
(in thousands)

2019

2021

13,964 $
860
6,431
21,255

(145) $
(353)
(2,338)
(2,836)
18,419 $

1,992 $
193
(1,517)
668

3,139 $
(536)
(110)
2,493
3,161 $

14,078
2,111
5,971
22,160

6,285
849
2,464
9,598
31,758

The provisions for income taxes differ from the amounts computed by applying the statutory federal income tax rate of 21% for the

fiscal years ended 2021, 2020 and 2019 to earnings before income taxes for the following reasons:

Fiscal year ended

Income taxes at federal statutory rates
Increase (decrease) in taxes resulting from:

State income taxes, net of federal income tax benefit
One-time repatriation tax
Increase in gross unrecognized tax benefits
Share based compensation
Non deductible employee compensation
Other, net

Income tax expense

September 25, September 26, September 28,
2020
(in thousands)

2019

2021

15,545 $

4,508 $

26,581

3,233
-
-
(124)
-
(235)
18,419 $

(1,285)
-
-
(183)
-
121
3,161 $

6,664
(885)
20
(777)
490
(335)
31,758

F-27

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax assets and liabilities consist of the following:

Deferred tax assets:
Vacation accrual
Capital loss carry forwards
Unrealized gains/losses
Insurance accrual
Operating lease liabilities
Deferred income
Allowances
Inventory capitalization
Share-based compensation
Net Operating Loss
Payroll Tax Accrual
Plant shutdown impairment costs
Foreign tax credit

Total deferred tax assets
Valuation allowance
Total deferred tax assets, net

Deferred tax liabilities:

Amortization of goodwill and other intangible assets
Depreciation of property and equipment
Right-of-use assets
Accounting method change 481 (a)
Total deferred tax liabilities
Total deferred tax liabilities, net

September 25, September 26,

2021

2020

(in thousands)

1,359 $
14
598
3,918
16,235
30
2,155
1,108
1,754
617
2,307
-
404
30,499
(612 )
29,887

31,540
44,924
14,773
228
91,465
61,578 $

1,460
161
345
3,060
16,368
105
2,863
1,058
1,637
697
-
1,721
404
29,879
(506)
29,373

29,587
48,303
15,605
291
93,786
64,413

As of September 25, 2021, we have federal and state capital loss carry forwards of approximately $2,209,000 primarily from the
sale of marketable securities in fiscal year 2016 and unrealized losses incurred in fiscal years 2019 and 2020. These carry forwards began
to expire in 2021. Except for current year usage, we have no foreseeable capital gains that would allow us to use this asset. Accordingly,
we have recorded a valuation allowance for the full amount of this deferred tax asset.

As of September 25, 2021, we have a federal net operating loss carry forward of approximately $2.9 million from the PHILLY
SWIRL acquisition. These carry forwards are subject to an annual limitation under Code Section 382 of approximately $378,000 and will
expire in 2033. We have determined there are no limitations to the total use of this tax asset and accordingly, have not recorded a valuation
allowance for this deferred tax asset.

F-28

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have undistributed earnings of our Mexican and Canadian subsidiaries. As a result of the Tax Act, we changed our assertion
with respect to foreign earnings. We are no longer permanently reinvested in earnings of our foreign subsidiaries for any year. However,
due to the impact of the Tax Act and the deemed repatriation of positive accumulated earnings and profits from our foreign subsidiaries in
2017, which resulted in a Sec. 965 liability of $315,000 for our fiscal year ended September 2018, no additional U.S. federal income taxes
are anticipated if our undistributed earnings in our Mexican and Canadian subsidiaries were repatriated to the U.S. However, if such funds
were repatriated, a portion of the funds remitted may be subject to applicable state income taxes and non-U.S. income and withholding
taxes. The amount of unrecognized deferred income tax liabilities related to potential state income tax and foreign withholding taxes is
immaterial.

The Tax Act was enacted on December 22, 2017 and introduced significant changes to U.S. income tax law. Effective in 2018, the
Tax Act reduced the U.S. statutory tax rate from 35% to 21%. We have updated any provisional amounts related to the Tax Act and
accounting for this is now final.

The Coronavirus, Aid, Relief and Economic Security (“CARES”) Act was signed into law on March 27, 2020, which introduced
and revised numerous provisions including a technical correction to qualified improvement property for assets placed in service after 2017
through 2022 to allow for immediate depreciation to be claimed on these assets and the deferral of employer’s share of certain payroll
taxes. As a result of the CARES Act, we deferred $9.0 million of payroll taxes as of September 25, 2021.

NOTE I - COMMITMENTS

We are a party to litigation which has arisen in the normal course of business which management currently believes will not have a

material adverse effect on our financial condition or results of operations.

We self-insure, up to loss limits, certain insurable risks such as workers’ compensation, automobile, and general liability claims.
Accruals for claims under our self-insurance program are recorded on a claims incurred basis. Our total recorded liability for all years’
claims incurred but not yet paid was $14,500,000 and $12,800,000 at September 25, 2021 and September 26, 2020, respectively. In
connection with certain self-insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At both
September 25, 2021 and September 26, 2020, we had outstanding letters of credit totaling $9,275,000.

We have a self-insured medical plan which covers approximately 1,600 of our employees. We record a liability for incurred but not
yet reported or paid claims based on our historical experience of claims payments and a calculated lag time period. Our recorded liability
at September 25, 2021 and September 26, 2020 was $1,791,000 and $1,737,000, respectively.

F-29

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE J - CAPITAL STOCK

We did not purchase any shares of our common stock in our fiscal year ended September 28, 2019.

In our fiscal year ended September 26, 2020, we purchased and retired 65,648 shares of our common stock at a cost of $8,972,292.

We did not purchase any shares of our common stock in our fiscal year ended September 25, 2021.

NOTE K – STOCK OPTIONS

We have a Stock Option Plan (the “Plan”). Pursuant to the Plan, stock options may be granted to officers and our key employees
which qualify as incentive stock options as well as stock options which are nonqualified. The exercise price of incentive stock options is at
least the fair market value of the common stock on the date of grant. The exercise price for nonqualified options is determined by a
committee of the Board of Directors. The options are generally exercisable after three years and expire no later than ten years from date of
grant. There are 174,000 shares reserved under the Plan for which options have not yet been issued. There are options that were issued
under prior option plans that have since been replaced that are still outstanding.

We have an Employee Stock Purchase Plan (“ESPP”) whereby employees purchase stock by making contributions through payroll
deductions for six-month periods. The purchase price of the stock is 85% of the lower of the market price of the stock at the beginning of
the six-month period or the end of the six-month period. In fiscal years 2021, 2020 and 2019 employees purchased 11,988, 12,292 and
12,492 shares at average purchase prices of $116.03, $121.62, and $121.37, respectively. ESPP expense of $573,000, $390,000, and
$390,000 was recognized for fiscal years 2021, 2020 and 2019, respectively.

F-30

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the status of our stock option plans as of fiscal years 2021, 2020 and 2019 and the changes during the years ended

on those dates is represented below:

Incentive Stock Options

Weighted-
Average
Exercise

Price

Nonqualified Stock Options
Weighted-
Average
Exercise

Stock

Options
Outstanding

Stock

Options
Outstanding

Balance, September 29, 2018

Granted
Exercised
Canceled

Balance, September 28, 2019

Granted
Exercised
Canceled

Balance, September 26, 2020

Granted
Exercised
Canceled

433,556 $
118,934
(100,018)
(18,320)

434,152
124,414
(51,350)
(36,796)

470,420
111,862
(102,976)
(31,684)

120.90
163.14
102.01
127.88

136.53
126.33
109.73
138.34

136.62
165.53
120.83
143.74

332,269 $
66,236
(35,763)
-

362,742
37,074
(24,182)
(29,192)

346,442
43,970
(55,453)
(41,222)

Price

105.66
171.78
101.03
-

118.19
125.83
53.43
135.79

122.04
160.14
120.92
95.95

Balance, September 25, 2021

447,622 $

146.98

293,737 $

132.29

Exercisable Options September 25, 2021

123,552 $

136.24

144,327 $

108.19

The weighted-average fair value of incentive stock options granted during fiscal years ended September 25, 2021, September 26,
2020 and September 28, 2019 was $31.20, $14.43 and $26.29, respectively. The weighted-average fair value of non-qualified stock options
granted during the fiscal years ended September 25, 2021, September 26, 2020 and September 28, 2019 was $29.76, $14.32 and $33.11,
respectively. The total intrinsic value of stock options exercised was $6.0 million, $5.7 million and $9.4 million in fiscal years 2021, 2020
and 2019, respectively.

The total cash received from these option exercises was $18.7 million, $6.4 million and $12.7 million in fiscal years 2021, 2020
and 2019, respectively; and the actual tax benefit realized from the tax deductions from these option exercises was $1.2 million, $1.1
million and $1.8 million in fiscal years 2021, 2020 and 2019, respectively.

F-31

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes information about incentive stock options outstanding as of September 25, 2021:

Options Outstanding

Options Exercisable

Number

Outstanding

September 25,

Weighted-
Average

Remaining
Contractual

2021

Life

Weighted-
Average
Exercise
Price

Number

Exercisable

September 25,

2021

Weighted-
Average
Exercise
Price

237,596
210,026
447,622

2.3 $
3.7 $

131.41
164.59

123,052 $
500
123,552

136.13
163.29
136.24

Range of
Exercise Prices

$125.83
$163.29
Total options

- $158.97
- $192.13

The following table summarizes information about nonqualified stock options outstanding as of September 25, 2021:

Options Outstanding

Options Exercisable

Number

Outstanding

Weighted-
Average

Remaining
September 25, Contractual

2021

Life

Weighted-
Average
Exercise
Price

Number

Exercisable

at
September 25,
2021

Weighted-
Average
Exercise
Price

60,000
98,137
135,600
293,737

2.0 $
2.4 $
3.1 $

77.45
126.11
161.03

60,000 $
62,681
21,646
144,327

77.45
126.27
141.01
108.19

Range of
Exercise Prices
- $94.24
- $131.30
- $191.40

$57.33
$117.85
$141.01
Total options

NOTE L – 401(k) PROFIT-SHARING PLAN

We maintain a 401(k) profit-sharing plan for our employees. Under this plan, we may make discretionary profit-sharing and
matching 401(k) contributions. Contributions of $2,270,000, $2,390,000, and $2,433,000 were made in fiscal years 2021, 2020 and 2019,
respectively.

F-32

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE M – CASH FLOW INFORMATION

The following is supplemental cash flow information:

Fiscal Year Ended

September 25, September 26, September 28,
2020
(in thousands)

2019

2021

Cash paid for:
Interest
Income taxes

Non cash items:

23 $
4,275

29 $
11,556

36
23,002

Obtaining a right-of-use asset in exchange for a lease liability

6,513 $

685 $

336

NOTE N – SEGMENT REPORTING

We principally sell our products to the food service and retail supermarket industries. Sales and results of our frozen beverages
business are monitored separately from the balance of our food service business because of different distribution and capital requirements.
We maintain separate and discrete financial information for the three operating segments mentioned above which is available to our Chief
Operating Decision Maker. We have applied no aggregation criteria to any of these operating segments in order to determine reportable
segments. Our three reportable segments are Food Service, Retail Supermarkets and Frozen Beverages. All inter-segment net sales and
expenses have been eliminated in computing net sales and operating income. These segments are described below.

Food Service

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

Retail Supermarkets

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

Frozen Beverages

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

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

F-33

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 25, September 26, September 28,
2020
(52 weeks)
(in thousands)

2019
(52 weeks)

2021
(52 weeks)

Sales to External Customers:

Food Service

Soft pretzels
Frozen novelties
Churros
Handhelds
Bakery
Other

Total Food Service

Retail Supermarket
Soft pretzels
Frozen novelties
Biscuits
Handhelds
Coupon redemption
Other

Total Retail Supermarket

Frozen Beverages

Beverages
Repair and maintenance service
Machines revenue
Other

Total Frozen Beverages

Consolidated Sales

Depreciation and Amortization:

Food Service
Retail Supermarket
Frozen Beverages

Total Depreciation and Amortization

Operating Income:
Food Service
Retail Supermarket
Frozen Beverages
Total Operating Income

Capital Expenditures:

Food Service
Retail Supermarket
Frozen Beverages

Total Capital Expenditures

Assets:

Food Service
Retail Supermarket
Frozen Beverages

Total Assets

174,977 $
44,605
64,916
75,627
342,609
22,249
724,983 $

54,990 $
100,059
24,197
7,574
(3,689)
1,766
184,897 $

124,498 $
81,305
26,953
1,943
234,699 $

150,786 $
35,176
46,881
36,088
332,514
17,448
618,893 $

49,157 $
88,743
28,317
12,303
(3,569 )
2,214
177,165 $

107,004 $
83,420
33,986
1,570
225,980 $

209,227
43,672
65,976
31,685
359,020
26,707
736,287

36,264
73,751
25,316
10,902
(3,596)
1,955
144,592

171,820
85,834
45,811
2,143
305,608

1,144,579 $

1,022,038 $

1,186,487

26,738 $
1,671
20,982
49,391 $

39,172 $
25,914
6,132
71,218 $

38,558 $
288
14,732
53,578 $

28,111 $
1,577
23,360
53,048 $

6,458 $
23,202
(12,466 )
17,194 $

34,798 $
1,763
21,256
57,817 $

26,978
1,418
20,214
48,610

76,546
10,460
29,950
116,956

29,197
1,979
25,952
57,128

799,149 $
31,486
291,584
1,122,219 $

738,033 $
31,704
286,816
1,056,553 $

766,081
29,369
223,889
1,019,339

F-34

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE O - ACCUMULATED OTHER COMPREHENSIVE LOSS:

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

Fiscal Year Ended September 25, 2021
(in thousands)

Foreign Currency
Translation
Adjustments

(15,587 )

2,204

(13,383 )

Fiscal Year Ended September 26, 2020
(in thousands)

Foreign Currency
Translation
Adjustments

(12,988 )

(2,599 )

(15,587 )

Beginning Balance

Other comprehensive income

Ending Balance

Beginning Balance

Other comprehensive loss

Ending Balance

NOTE P – 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 from 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.

F-35

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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
a lessee 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 a 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 internal borrowing rate, treasury security rates, collateral, and credit risk specific to us, and our lease portfolio
characteristics.

F-36

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 25, 2021, the weighted-average discount rate of our operating and finance leases was 3.3% and 3.2%, respectively.

As of September 26, 2020, the weighted-average discount rate of our operating and finance leases was 3.3% and 3.1%, respectively

Amounts Recognized in the Financial Statements

The components of lease expense were as follows:

Operating lease cost in Cost of goods sold and Operating Expenses
Finance lease cost:

Amortization of assets in Cost of goods sold and Operating Expenses
Interest on lease liabilities in Interest expense & other

Total finance lease cost

Short-term lease cost in Cost of goods sold and Operating Expenses

Total net lease cost

Supplemental balance sheet information related to leases is as follows:

Operating Leases
Operating lease right-of-use assets

Current operating lease liabilities
Noncurrent operating lease liabilities

Total operating lease liabilities

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

Current finance lease liabilities
Noncurrent finance lease liabilities

Total finance lease liabilities

Twelve Months
Ended
September 25,
2021

Twelve Months
Ended
September 26,
2020

15,471 $

17,250

346 $
25
371 $
-
15,842 $

337
29
366
-
17,616

September 25,
2021

September 26,
2020

54,555 $

58,110

13,395 $
46,557
59,952 $

13,173
47,688
60,861

561 $

182 $
392
574 $

684

349
368
717

F-37

J & J SNACK FOODS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental cash flow information related to leases is as follows:

Twelve Months
Ended
September 25,
2021

Twelve Months
Ended
September 26,
2020

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

Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases

$
$
$

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

15,651 $
144 $
25 $

6,513 $
- $

17,324
340
29

685
-

As of September 25, 2021, the maturities of lease liabilities were as follows:

2022
2023
2024
2025
2026
Thereafter

Total minimum payments
Less amount representing interest

Present value of lease obligations

Operating
Leases

Finance Leases
207
137
137
65
39
32
617
(43)
574

14,994 $
12,821
10,071
6,769
4,411
17,258
66,324 $
(6,372 )
59,952 $

As of September 25, 2021, the weighted-average remaining term of our operating and finance leases was 6.3 years and 4.2 years,
respectively. As of September 26, 2021, the weighted average remaining term of our operating and finance leases was 7.1 years and 3.5
years, respectively.

F-38

J & J SNACK FOODS CORP. AND SUBSIDIARIES

Year

Description

Opening
Balance

Charged to
Expense

Deductions

Closing
Balance

2021

Allowance for doubtful accounts

$ 1,388,000 $

338,000 $

321,000 (1) $ 1,405,000

2020

Allowance for doubtful accounts

572,000 $ 1,105,000 $

289,000 (1) $ 1,388,000

2019

Allowance for doubtful accounts

400,000 $

389,000 $

217,000 (1) $

572,000

(1) Write-offs of uncollectible accounts receivable.

S-1