J&J SNACK FOODS CORP - Annual Report: 2015 (Form 10-K)

jjsf20150926_10k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(X)	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 26, 2015

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

Commission File No. 0-14616

J & J SNACK FOODS CORP.

(Exact name of registrant as specified in its charter)

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

6000 Central Highway	08109
Pennsauken, New Jersey	(Zip Code)
(Address of principal executive offices)

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

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

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, no par value	The NASDAQ Global Select Exchange

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 X 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 X

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 X No ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer (X)	Accelerated filer ( )
Non-accelerated filer ( )	Smaller reporting company ( )
(Do not check if a smaller reporting company)

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

As of November 5, 2015, the latest practicable date, 18,686,025 shares of the Registrant’s common stock were issued and outstanding. The aggregate market value of shares held by non-affiliates of the Registrant on such date was $1,624,968,709 based on the last sale price on March 27, 2015 of $109.04 per share. March 27, 2015 was the last business day of the registrant’s most recently completed second fiscal quarter.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for its Annual Meeting of Shareholders scheduled for February 16, 2016 are incorporated by reference into Part III of this report.

J & J SNACK FOODS CORP.

2015 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

		Page

PART I

Item 1	Business	1
Item 1A	Risk Factors	6
Item 1B	Unresolved Staff Comments	9
Item 2	Properties	9
Item 3	Legal Proceedings	10
Item 4	Mine Safety Disclosures	10

PART II

Item 5	Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities	11
Item 6	Selected Financial Data	12
Item 7	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	13
Item 7A	Quantitative And Qualitative Disclosures About Market Risk	24
Item 8	Financial Statements And Supplementary Data	24
Item 9	Changes In And Disagreements With Accountants On Accounting And Financial Disclosure	24
Item 9A	Controls and Procedures	24
Item 9B	Other Information	25

PART III

Item 10	Directors, Executive Officers and Corporate Governance	26
Item 11	Executive Compensation	26
Item 12	Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters	27
Item 13	Certain Relationships And Related Transactions, and Director Independence	27
Item 14	Principal Accountant Fees and Service	27

PART IV

Item 15	Exhibits, Financial Statement Schedules	28

In addition to historical information, this document and analysis contains forward-looking statements. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Important factors that might cause such a difference include, but are not limited to, those discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Part I

Item 1. Business

General

J & J Snack Foods Corp. (the “Company” or “J & J”) manufactures nutritional 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 and BAVARIAN BAKERY, frozen juice treats and desserts marketed primarily under the LUIGI’S, WHOLE FRUIT, ICEE, PHILLY SWIRL and MINUTE MAID^* brand names, churros marketed primarily under the TIO PEPE’S, CALIFORNIA CHURROS and OREO** brand names and bakery products sold primarily under the READI-BAKE, COUNTRY HOME, MARY B’S AND DADDY RAY’S 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, Mexico and Canada. Other snack food products include funnel cake sold under THE FUNNEL CAKE FACTORY brand and dough enrobed handheld products sold under the PATIO brand and other smaller brands as well. 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 outlets; 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.

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 and Retail Supermarkets and the Chief Operating Decision Maker for Frozen Beverages monthly review detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales is considered to be the one and only key variable monitored by the Chief Operating Decision Makers and management when determining each segment’s and the company’s financial condition and operating performance. In addition, the Chief Operating Decision Makers review and evaluate depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment (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).

*Minute Maid is a registered trademark of the Coca-Cola Company

**OREO is a registered trademark of Mondelez International, Inc.

Food Service

The primary products sold by the food service segment are soft pretzels, frozen juice treats and desserts, churros, dough enrobed 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 juice treats and desserts including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars and sorbet, PHILLY SWIRL cups and sticks, ICEE Squeeze-Up Tubes and dough enrobed handheld products including PATIO burritos. 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 service 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 and SERIOUSLY TWISTED!; 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 21% of the Company’s revenue in fiscal year 2015, 22% in 2014 and 21% in 2013.

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 ten 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 Juice Treats and Desserts

The Company’s frozen juice treats and desserts are marketed primarily under the LUIGI’S, WHOLE FRUIT, PHILLY SWIRL, ICEE and MINUTE MAID brand names. Frozen juice treats and desserts are sold in the Food Service and Retail Supermarkets segments. Frozen juice treats and dessert sales were 13% of the Company’s revenue in fiscal year 2015, 12% in 2014 and 11% in 2013.

The Company’s school food service MINUTE MAID 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 juice treats and desserts 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, CALIFORNIA CHURROS and OREO 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 2015, 6% in 2014 and 7% in 2013. Churros are Hispanic 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 dough enrobed handheld products are marketed under the PATIO, 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 4% of the Company’s sales in fiscal year 2015, 5% in 2014 and 6% in 2013.

Bakery Products

The Company’s bakery products are marketed under the MRS. GOODCOOKIE, READI-BAKE, COUNTRY HOME, MARY B’S and DADDY RAY’S 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 31% of the Company’s sales in fiscal year 2015, 31% in 2014 and 32% in 2013.

Frozen Beverages

The Company markets frozen beverages primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE in the United States, Mexico and Canada. Frozen beverages are sold in the Frozen Beverages segment.

Frozen beverage sales amounted to 15% of revenue in fiscal year 2015, 14% in 2014 and 15% in 2013.

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. In most cases, the Company retains ownership of its dispensers, and as a result, customers are not required to make an investment in equipment or arrange for the ingredients and supplies necessary to produce and market the frozen beverages. 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 customers’ owned equipment and sells equipment in its Frozen Beverages segment, revenue from which amounted to 9% of sales in 2015, 9% in 2014 and 8% in 2013.

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, built new or rebuilt by the Company.

The Company provides managed service and/or products to approximately 111,000 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 (except for portions of nine states) as well as internationally.

Other Products

Other products sold by the Company include soft drinks, 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 juice treats and desserts, churros, dough enrobed handheld products and baked goods. The primary products sold to the retail supermarket channel are soft pretzels, frozen juice treats and desserts and dough enrobed 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 2015, 2014 and 2013, respectively, with our largest customer accounting for 8% of our sales in 2015, 8% of our sales in 2014 and 8% of our sales in 2013. Three 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.

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 outlets, 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, frozen juice treats and desserts 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, ICEE Squeeze-Up Tubes, PATIO burritos and TIO PEPE’S Churros. 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 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 trade shows, newspaper advertisements with coupons, in-store demonstrations and consumer advertising campaigns.

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 levels, which are reviewed no less frequently than monthly by the Company’s Chief Operating Decision Makers.

The Company’s products are sold through a network of about 100 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; and Holly Ridge, North Carolina. Frozen beverages are distributed from 161 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 refrigerated 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 juice treats and desserts 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 and PRETZELFILS for its pretzel products; SHAPE-UPS, WHOLE FRUIT, PHILLY SWIRL and LUIGI’S for its frozen juice treats and desserts; 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, PATIO for its handheld burritos and MRS. GOODCOOKIE, READI-BAKE, COUNTRY HOME, CAMDEN CREEK, MARY B’S and DADDY RAY’S for its bakery products.

The Company markets frozen beverages under the trademark ICEE in all of the continental United States, except for portions of nine 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 soft pretzel twisting equipment, churros and funnel cake production equipment, 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/Seven Up, 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 juice treat and dessert, bakery products and related markets grow, 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. These include several companies which have the right to use the ICEE name in portions of nine states. 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 a number of other companies in the frozen juice treat and dessert and bakery products markets.

Risks Associated with Foreign Operations

Employees

The Company has about 3,400 full and part time employees and approximately 1,500 workers employed by staffing agencies as of September 26, 2015. About 900 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 material is 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 of 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. Following is a discussion of known potentially significant risks which could result in harm to our business, financial condition or results of operations.

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; consumer product liability claims; and risks of product tampering. 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.

Environmental Risks

The disposal of solid and liquid waste material 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 expenditures by us, some of which could be material.

Risks Resulting from Several Large Customers

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 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

Our ability to purchase, manufacture and distribute products is critical to our success. Damage or disruption to our manufacturing or distribution capabilities due to weather, natural disaster, fire or explosion, terrorism, pandemic, political upheaval, strikes or other reasons could impair our ability to manufacture or distribute our products.

Our Certificate of Incorporation may inhibit a change in control that you may favor

Our Certificate of Incorporation contains provisions that may delay, deter or inhibit 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 that could delay, deter or inhibit 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; and

-- 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.

Risks Relating to the Control by Gerald B. Shreiber

Gerald B. Shreiber is the founder of the Company and the current beneficial owner of 20% of its outstanding stock. Our Certificate of Incorporation provides that he has three votes on the Board of Directors (subject to certain adjustments). Therefore, he and one other director have voting control of the Board. The performance of this Company is greatly impacted by his leadership and decisions. His voting control reduces the restrictions on his actions. His retirement, disability or death may have a significant impact on our future operations.

Risk Related to Increases in our Health Insurance Costs and Costs of Compliance with the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010

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. Additionally, we may incur additional costs because of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Care Reform Laws”). Provisions of these laws have become and will become effective over the past several years and at various dates over the next several years. Because of the breadth and complexity of these laws and the phased-in nature of the new 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 the Health Care Reform Laws or the enforcement of the Health Care Reform Laws or other future health care reform laws imposed by Congress or state legislations 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 Change 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 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 difficulty in enforcing 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. Sales of our foreign operations were $25,313,000, $23,633,000 and $23,161,000 in fiscal years 2015, 2014 and 2013, respectively. At September 26, 2015, the total assets of our foreign operations were approximately $28 million or 3.8% of total assets. At September 27, 2014, the total assets of our foreign operations were approximately $28 million or 3.9% of total assets.

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 juice treats and desserts 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 are manufactured at this Company-owned facility which also serves as the Company’s corporate headquarters. This facility operates at approximately 55% of capacity. 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 warehouse has a utilization rate of 80-90% depending on product demand. 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 some of its products including funnel cake, pretzels and churros. The facility operates at about 70% of capacity.

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 manufacturing facility operates at approximately 70% of capacity.

The Company leases a 22,000 square foot soft pretzel manufacturing facility located in Brooklyn, New York. The lease runs through September 2016. The facility operates at about 60% of capacity.

The Company leases through June 2030 a 45,000 square foot churros manufacturing facility located in Colton, California which operates at approximately 55% of capacity.

The Company leases an 85,000 square foot bakery manufacturing facility located in Atlanta, Georgia. The lease runs through December 2020. The facility operates at about 50% of capacity.

The Company owns a 46,000 square foot frozen juice treat and dessert manufacturing facility and a 42,000 square foot dry storage warehouse located on six acres in Scranton, Pennsylvania. The manufacturing facility operates at approximately 65% of capacity.

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

The lease runs through June 2017. The facility operates at approximately 65% of capacity.

The Company leases a 48,000 square foot soft pretzel manufacturing facility located in Carrollton, Texas. The lease runs through April 2019. The facility operates at approximately full capacity. The Company leases an additional property containing a 6,500 square foot storage freezer across the street from the manufacturing facility, which lease expires May 2016.

The Company leases an 18,000 square foot soft pretzel manufacturing facility located in Chambersburg, Pennsylvania. The lease runs through September 2016. The facility operates at approximately 35% of capacity.

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 2015. A lease extension is presently being negotiated. The manufacturing facility operates at approximately 70% of capacity.

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 facility operates at about 65% of capacity.

The Company leases a building in Pensacola, Florida for the manufacturing, packing and warehousing of dumplings. The building is approximately 14,000 square feet and the lease runs through December 2017. The manufacturing facility operates at approximately 75% of capacity.

The Company owns an 84,000 square foot handheld products manufacturing facility in Holly Ridge, North Carolina which operates at about 40% of capacity.

The Company leases a 70,000 square foot handheld products manufacturing facility in Weston, Oregon which operates at about 30% of capacity. The facility is leased through May 13, 2021.

The Company leases a 39,000 square foot frozen juice treat and dessert manufacturing facility in Tampa, Florida which operates at about 70% of capacity. The facility is leased through August 2016.

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 27, 2014 and September 26, 2015.

	Common Stock Market Price

	High		Low		Dividend Declared

Fiscal 2014
First quarter	$	90.79	$	78.13	$	0.3200
Second quarter		97.80		84.30		0.3200
Third quarter		100.00		90.25		0.3200
Fourth quarter		97.50		88.95		0.3200



Fiscal 2015
First quarter	$	112.74	$	90.71	$	0.3600
Second quarter		115.63		96.53		0.3600
Third quarter		113.94		102.11		0.3600
Fourth quarter		119.99		104.63		0.3600

As of September 26, 2015, we had approximately 14,000 beneficial shareholders.

In our fiscal year ended September 26, 2015, we purchased and retired 72,698 shares of our common stock at a cost of $8,011,118. In our first quarter, we purchased and retired 16,164 shares at a cost of $1,669,741. In our second quarter, we purchased and retired 4,380 shares at a cost of $443,839. In our fourth quarter, we purchased and retired 52,154 shares at a cost of $5,897,538.

In our fiscal year ended September 27, 2014, we purchased and retired 81,685 shares of our common stock at a cost of $7,504,729.

In our fiscal year ended September 28, 2013, we purchased and retired 204,397 shares of our common stock at a cost of $14,500,215.

On November 8, 2012 the Company’s Board of directors authorized the purchase and retirement of an additional 500,000 shares of the Company’s common stock; 189,475 shares remain to be purchased under that authorization.

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

Stock Performance Graph

Item 6. Selected Financial Data

The selected financial data for the last five years was derived from our audited consolidated financial statements. The following selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto, especially as the information pertains to fiscal 2013, 2014 and 2015.

	Fiscal year ended in September
	(In thousands except per share data)

	2015		2014		2013		2012		2011

Net Sales	$	976,256	$	919,451	$	867,683	$	830,796	$	744,071
Net Earnings	$	70,183	$	71,814	$	64,381	$	54,118	$	55,063
Total Assets	$	742,935	$	704,773	$	645,661	$	603,044	$	550,816
Long-Term Debt	$	-	$	-	$	-	$	-	$	-
Capital Lease Obligations	$	1,469	$	520	$	347	$	687	$	801
Stockholders' Equity	$	599,919	$	562,518	$	516,565	$	475,487	$	432,388
Common Share Data
Earnings Per Diluted Share	$	3.73	$	3.82	$	3.41	$	2.86	$	2.93
Earnings Per Basic Share	$	3.76	$	3.85	$	3.43	$	2.87	$	2.95
Book Value Per Share	$	32.12	$	30.14	$	27.66	$	25.32	$	23.09
Common Shares Outstanding At Year End		18,676		18,663		18,677		18,780		18,727
Cash Dividends Declared Per Common Share	$	1.44	$	1.28	$	0.64	$	0.52	$	0.47

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

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 and insurance reserves.

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 recognize revenue from our products when the products are shipped to our customers. Repair and maintenance equipment service revenue is recorded when it is performed provided the customer terms are that the customer is to be charged on a time and material basis or on a straight-line basis over the term of the contract when the customer has signed a service contract. Revenue is recognized only where persuasive evidence of an arrangement exists, our price is fixed or estimable and collectability is reasonably assured. We record offsets to revenue for allowances, end-user pricing adjustments, trade spending, coupon redemption costs and returned product. Customers generally do not have the right to return product unless it is damaged or defective. Off-invoice allowances are deducted directly from the amount invoiced to our customer when our products are shipped to the customer. Offsets to revenue for allowances, end-user pricing adjustments and trade spending are recorded primarily as a reduction of accounts receivable based on our estimates of liability which are based on customer programs and historical experience. These offsets to revenue are based primarily on the quantity of product purchased over specific time periods. For our Retail Supermarket and Frozen Beverages segments, we accrue for the liability based on products sold multiplied by per product offsets. Offsets to revenue for our Food Service segment are calculated in a similar manner for offsets owed to our direct customers; however, because shipments to end-users are unknown to us until reported by our direct customers or by the end-users, there is a greater degree of uncertainty as to the accuracy of the amounts accrued for end-user offsets. Additional uncertainty may occur as customers take deductions when they make payments to us. This creates complexities because our customers do not always provide reasons for the deductions taken. Additionally, customers may take deductions to which they are not entitled and the length of time customers take deductions to which they are entitled can vary from two weeks to well over a year. Because of the aforementioned uncertainties, the process to determine these estimates requires judgment. We feel that due to constant monitoring of the process, including but not limited to comparing actual results to estimates made on a monthly basis, these estimates are reasonable in all material respects. Our recorded liability for allowances, end-user pricing adjustments and trade spending was approximately $11.7 million at September 26, 2015 and $11.5 million at September 27, 2014.

Accounts Receivable - We record accounts receivable at the time revenue is recognized. Bad debt expense is recorded in marketing and administrative expenses. The amount of the allowance for doubtful accounts is based on our estimate of the accounts receivable amount that is uncollectable. It is comprised of a general reserve based on historical experience and amounts for specific customers’ accounts receivable balances that we believe are at risk due to our knowledge of facts regarding the customer(s). We continually monitor our estimate of the allowance for doubtful accounts and adjust it monthly. We usually have approximately 15 customers with accounts receivable balances of between $1 million to $10 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 $310,000 and $161,000 for the fiscal years 2015 and 2014, respectively. We had a credit to expense of $70,000 in fiscal year 2013. At September 26, 2015 and September 27, 2014, our accounts receivables were $102,649,000 and $99,972,000 net of an allowance for doubtful accounts of $304,000 and $450,000.

Asset Impairment – We have three reporting units with goodwill totaling $86,442,000 as of September 26, 2015. Goodwill is evaluated annually by the Company for impairment. We perform impairment tests 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 26, 2015 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 3 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 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 do not support the carrying value of the trade name, 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 1,500 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 26, 2015 and September 27, 2014 was $1,659,000 and $1,853,000, 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. Because of the foregoing, we do not engage a third party actuary to assist in this analysis.

We self-insure, up to loss limits, worker’s compensation and automobile liability claims. Accruals for claims under our self-insurance program are recorded on a claims-incurred basis. Under this program, the estimated liability for claims incurred but unpaid in fiscal years 2015 and 2014 was $2,800,000 and $2,700,000 respectively. Our total recorded liability for all years’ claims incurred but not yet paid was $8,200,000 and $8,100,000 at September 26, 2015 and September 27, 2014, 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 September 26, 2015 and September 27, 2014, we had outstanding letters of credit totaling $9,075,000 and $9,075,000, respectively.

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

RESULTS OF OPERATIONS:

Fiscal 2015 (52 weeks) Compared to Fiscal Year 2014 (52 weeks)

Net sales increased $56,805,000, or 6%, to $976,256,000 in fiscal 2015 from $919,451,000 in fiscal 2014.

Excluding sales of PHILLY SWIRL, which was acquired in the third quarter of fiscal 2014,through April of this year, sales increased approximately 5% for the year.

We have three reportable segments, as disclosed in the accompanying notes to the consolidated financial statements: Food Service, Retail Supermarkets and Frozen Beverages.

FOOD SERVICE

Sales to food service customers increased $24,737,000 or 4%, to $616,635,000 in fiscal 2015. Soft pretzel sales to the food service market increased 3% to $168,970,000 for the year aided primarily by increased sales to school food service and convenience stores. Increased sales to one customer accounted for approximately 3/4 of the pretzel sales increase. Soft pretzel sales to restaurant chains were down about 4% this year to about $40 million. Frozen juice bar and ices sales increased $566,000, or 1%, to $54,454,000 for the year due entirely to increased sales of WHOLEFRUIT Frozen Organic Juice Tubes to one customer; excluding these sales, frozen juices and ices sales were down 3%. Churro sales to food service customers were up 1% to $56,602,000 for the year which include a decline in sales of $6,469,000 to one restaurant chain that discontinued carrying churros in August 2014. Churro sales to other customers were up 15% for the year with sales to four customers accounting for about 1/2 of the increase. Sales of bakery products increased $19,579,000, or 7%, for the year as sales increases were concentrated in eight customers and to school food service. Handheld sales to food service customers were down 10% to $21,817,000 in 2015 as sales declines were spread throughout our customer base. Sales of new products in the first twelve months since their introduction were approximately $18 million for the year. Price increases accounted for approximately $9 million of sales for the year and net volume increases, including new product sales as defined above, accounted for approximately $16 million of sales for the year. Operating income in our Food Service segment increased from $73,731,000 in 2014 to $75,286,000 in 2015. Operating income benefited from lower distribution costs and improved performance at some of our smaller manufacturing facilities and was negatively impacted by continuing declines in sales of our handhelds business, higher manufacturing costs and higher costs of egg raw material. Additionally, operating income was impacted in 2014 by $973,000 of shutdown costs of our Norwalk, California, manufacturing facility.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $10,733,000 or 10% to $123,377,000 in fiscal year 2015. Excluding sales of PHILLY SWIRL through April of this year, sales increased approximately 1% for the year, although sales in our fourth quarter were down 9% due to lower sales of handhelds and higher trade spending. Soft pretzel sales to retail supermarkets were $35,727,000 compared to $34,830,000 in 2014, an increase of 3%. Sales of frozen juices and ices increased $12,770,000 or 21% to $72,174,000. Without PHILLY SWIRL sales, sales of frozen juices and ices were up $3,669,000, or 6%, with sales increases and decreases spread across our customer base. Coupon redemption costs, a reduction of sales, increased 24% or about $918,000 for the year. Handheld sales to retail supermarket customers decreased 11% to $18,957,000 in 2015 as three customers accounted for about 3/4 of the decrease in sales. Sales of products in the first twelve months since their introduction were approximately $1.5 million in fiscal year 2015. Price increases accounted for approximately $2.7 million of sales for the year and net volume increases, including new product sales as defined above and PHILLY SWIRL’s sales and net of increased coupon costs, accounted for approximately $8 million in sales for the year. Operating income in our Retail Supermarkets segment decreased from $11,201,000 in 2014 to $11,020,000 in 2015 due primarily to higher coupon expense and advertising expenses to support our SUPERPRETZEL soft pretzel products. Additionally, in 2015, we were impacted by operating losses of PHILLY SWIRL during its off season while in 2014 we acquired PHILLY SWIRL after its off season.

FROZEN BEVERAGES

Frozen beverage and related product sales increased 10% to $236,244,000 in fiscal 2015. Beverage sales alone increased 7% to $142,705,000 for the year with increases and decreases throughout our customer base. Gallon sales were up 7% in our base ICEE business, with sales to movie theaters accounting for about half of the increase. Service revenue increased 10% to $65,765,000 for the year with sales increases and decreases spread throughout our customer base. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, increased from $20,224,000 in 2014 to $26,413,000 in 2015. The estimated number of Company owned frozen beverage dispensers was 53,000 and 49,000 at September 26, 2015 and September 27, 2014, respectively. Operating income in our Frozen Beverage segment increased from $21,916,000 in 2014 to $24,582,000 in 2015 due primarily to higher sales in all areas of the business and lower fuel costs.

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 decreased to 30.82% in 2015 from 31.28% in 2014. Gross profit margins benefited from the improved performance of our frozen beverages business and from higher gross profit margins in our retail supermarket business. Gross profit margins in our food service segment were impacted by increased lower margin school food service sales, continuing decline in sales of our handhelds business, higher manufacturing costs, modest volume increases and higher egg raw material costs. We will continue to be impacted by higher egg raw material costs in our 2016 fiscal year resulting from the Avian Flu epidemic; however, we have increased our selling prices intending to recover a significant portion of the increased costs.

Total operating expenses increased $9,273,000 to $190,002,000 in fiscal 2015 and as a percentage of sales decreased to 19.46% of sales from 19.66% in 2014. Marketing expenses were 8.72% and 8.55% of sales in 2015 and 2014, respectively. Marketing expenses this year included additional spending to support our retail SUPERPRETZEL soft pretzel products. Distribution expenses as a percent of sales decreased to 7.60% from 7.74% in 2014 due in part to lower fuel costs. Administrative expenses were 3.16% and 3.24% of sales in 2015 and 2014, respectively. Other general income of $207,000 this year compared to other general expense of $1,154,000 in 2014. Included in other general expense in 2014 is $973,000 of shutdown costs of our Norwalk, CA manufacturing facility.

Operating income increased $4,040,000 or 4% to $110,888,000 in fiscal year 2015 as a result of the aforementioned items.

Our investments generated before tax income of $1.2 million this year, down from $4.5 million last year as sales of our mutual fund investments, net of capital gain distributions, generated a realized loss of $3.9 million this year. Although we recognized losses as we decreased our investments in mutual funds, our overall return on the mutual funds has been positive since we first made the investments in October 2012. We have reduced our investments in mutual funds over the past year to $19 million at September 2015 from $128 million at September 2014. The remaining unrealized losses of $827,000 are spread over 4 funds with total fair market value of $19.2 million. The remaining mutual funds presently generate income of 4.8 % per year. We invested $20 million this year in Fixed-to-Floating Perpetual Preferred Stock which generates fixed income to call dates in 2018, 2019 and 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 5.5%, of which 70% 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. In the fourth quarter we invested $67 million in corporate bonds which generate fixed income to maturity dates in 2017 through 2021, with $40 million maturing prior to the end of our fiscal year 2018. The bonds presently generate income of about 2.5% per year. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

The effective income tax rate increased to 37.3% from 35.4% last year primarily because the realized losses on sales of our mutual fund investments in 2015 are not deductible as we do not have capital gains to offset the losses. We expect the effective income tax rate for 2016 to be between 36% and 36.5%.

Net investment after tax loss for the year of $516,000, or $.03 per share, compared to last year’s net investment after tax income of $2.8 million, or $.15 per share.

Net earnings decreased $1,631,000 or 2%, in fiscal 2015 to $70,183,000, or $.09 per diluted share 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 2014 (52 weeks) Compared to Fiscal 2013 (52 weeks)

Net sales increased $51,768,000, or 6%, to $919,451,000 in fiscal 2014 from $867,683,000 in fiscal 2013.

Excluding sales from the acquisition of New York Pretzel in October 2013 and PHILLY SWIRL in May 2014, sales increased approximately 4% for the year.

We have three reportable segments, as disclosed in the accompanying notes to the consolidated financial statements: Food Service, Retail Supermarkets and Frozen Beverages.

FOOD SERVICE

Sales to food service customers increased $31,139,000 or 6%, to $591,898,000 in fiscal 2014. Excluding New York Pretzel sales, sales increased approximately 5% for the year. Soft pretzel sales to the food service market increased 14% to $164,680,000 for the year aided by increased sales to restaurant chains, warehouse club stores, school food service and throughout our customer base. Increased sales to one customer accounted for approximately 1/4 of the pretzel sales increase. Excluding New York Pretzel sales, food service soft pretzel sales increased 11% for the year. Frozen juice bar and ices sales increased $5,057,000 or 10%, to $53,888,000 for the year primarily as the result of higher sales to warehouse club stores, school food service accounts and throughout our customer base. Increased sales to one customer accounted for approximately 50% of the frozen juice bar and ices sales increase. Churro sales to food service customers were essentially unchanged at $55,929,000 for the year with sales to one restaurant chain down $4,063,000 for the year. Excluding the decrease in sales to that restaurant chain, which were $6.8 million for the year and to which we expect no sales in 2015, sales were up $3.9 million, or 9%. Sales of bakery products increased $6,773,000, or 2%, for the year as sales increases and decreases were spread throughout our customer base. Handheld sales to food service customers were down 8% to $24,248,000 in 2014 as two customers accounted for all of the decrease in sales. Sales of new products in the first twelve months since their introduction were approximately $10 million for the year. Price increases accounted for approximately $7 million of sales for the year and net volume increases, including new product sales as defined above and sales resulting from the acquisition of New York Pretzel, accounted for approximately $24 million of sales for the year. Operating income in our Food Service segment increased from $65,907,000 in 2013 to $73,731,000 in 2014. Operating income benefited from increased sales volume, price increases and lower ingredient and packaging costs. Additionally, liability insurance costs were about $1.5 million lower this year; last year’s costs were higher than usual because of increases in insurance company estimates for actual claims incurred but not paid. Operating income was impacted in 2014 by $913,000 of shutdown costs of our Norwalk, CA manufacturing facility.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets increased $10,305,000 or 10% to $112,644,000 in fiscal year 2014. Excluding PHILLY SWIRL sales, sales decreased approximately 2% for the year. Soft pretzel sales to retail supermarkets were $34,830,000 compared to $34,597,000 in 2013 on a unit volume increase of 1%. Sales of frozen juices and ices increased $11,327,000 or 24% to $59,404,000. Without PHILLY SWIRL sales, sales of frozen juices and ices were down $1,967,000, or 4%, on flat volume with sales increases and decreases spread across our customer base. Coupon redemption costs, a reduction of sales, increased 3% or about $126,000 for the year. Handheld sales to retail supermarket customers decreased 5% to $21,354,000 in 2014 as two customers accounted for all of the decrease in sales. Sales of products in the first twelve months since their introduction were approximately $700,000 in fiscal year 2014. Price increases accounted for approximately $1.2 million of sales for the year and net volume increases, including new product sales as defined above and PHILLY SWIRL’s sales and net of increased coupon costs, accounted for approximately $9 million in sales for the year. Operating income in our Retail Supermarkets segment increased from $8,594,000 in 2013 to $11,201,000 in 2014 due primarily to lower trade spending, manufacturing cost savings and lower coupon expense excluding PHILLY SWIRL.

FROZEN BEVERAGES

Frozen beverage and related product sales increased 5% to $214,909,000 in fiscal 2014. Beverage sales alone increased 1% to $133,283,000 for the year with increases and decreases throughout our customer base. Gallon sales were down 1% in our base ICEE business, but excluding significant decreases at three customers, gallon sales were up 3%. Service revenue increased 13% to $59,805,000 for the year with two customers accounting for the entire increase. Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, increased from $17,376,000 in 2013 to $20,224,000 in 2014. The estimated number of Company owned frozen beverage dispensers was 48,000 and 44,700 at September 27, 2014 and September 28, 2013, respectively. Operating income in our Frozen Beverage segment decreased from $22,903,000 in 2013 to $21,916,000 in 2014 as a result of decreased gallon sales and higher than usual group medical and insurance liability costs of about $670,000.

CONSOLIDATED

Gross profit as a percentage of sales increased to 31.28% in 2014 from 30.35% in 2013 primarily due to higher volume in our food service segment, lower trade spending and manufacturing cost savings in our retail supermarkets segment and lower ingredients costs. Additionally, this year benefited from lower liability insurance costs of about $1.5 million compared to last year.

Total operating expenses increased $14,831,000 to $180,729,000 in fiscal 2014 and as a percentage of sales increased .54 percentage points to 19.66% of sales. Marketing expenses were 8.55% and 8.54% of sales in 2014 and 2013, respectively. Distribution expenses as a percent of sales increased to 7.74% from 7.49% in 2013. Administrative expenses were 3.24% and 3.16% of sales in 2014 and 2013, respectively. Other general expense of $1,154,000 this year compared to other general income of $651,000 in 2013. Included in other general income in 2013 is $805,000 of settlement income related to prior acquisitions. Included in other general expense in 2014 is $973,000 of shutdown costs of our Norwalk, CA manufacturing facility.

Operating income increased $9,444,000 or 10% to $106,848,000 in fiscal year 2014 as a result of the aforementioned items.

Investment income increased by $981,000 to $4,473,000 due to increased investments in marketable securities. We invested an additional $20 million in the second quarter in mutual funds that seek current income with an emphasis on maintaining low volatility and overall moderate duration. At September 27, 2014, we had $128 million invested in these funds. We estimate the annual yield from these funds to approximate 3.5 – 3.75%.

The effective income tax rate decreased to 35.4% from 36.1% last year because actual liability for last year’s taxes was less than estimated due to lower effective state tax rates and higher domestic production activities deduction and the estimate for this year’s taxes was lowered accordingly. We expect the effective income tax rate for 2015 to be between 36% and 36.5%.

Net earnings increased $7,433,000 or 12%, in fiscal 2014 to $71,814,000, or $3.82 per diluted share as a result of the aforementioned items.

RESULTS OF OPERATIONS

ACQUISITIONS

In May 2011, we acquired the frozen handheld business of ConAgra Foods. This business had sales of approximately $50 million over the prior twelve months to food service and retail supermarket customers and sales of $18.3 million in our 2011 fiscal year from the acquisition date.

In June 2012, we acquired the assets of Kim & Scott’s Gourmet Pretzels, Inc., a manufacturer and seller of a premium brand soft pretzel. This business had sales of approximately $8 million over the prior twelve months to food service and retail supermarket customers, and had sales of approximately $1.8 million in our 2012 fiscal year from the acquisition date.

In October 2013, we acquired the assets of New York Pretzel, a manufacturer and distributor of soft pretzels selling primarily in the northeast to foodservice and retail locations. Of the purchase price of $11.8 million, $849,000 was allocated to intangible assets, $7,716,000 was allocated to goodwill and $3,049,000 was allocated to property, plant and equipment. This business had sales of about $4.3 million in our 2014 fiscal year included in the food service segment.

In May 2014, we acquired the stock of Philly’s Famous Water Ice, Inc. (PHILLY SWIRL). PHILLY SWIRL, located in Tampa, FL, produces frozen novelty products sold primarily to retail supermarket locations throughout the United States and to Canada with annual sales approximating $25 million. The allocation of the purchase price of $17.4 million is $4.0 million to working capital, $1.2 million to property, plant and equipment, $11.1 million to intangible assets, $1.8 million to goodwill, $4.0 million to deferred tax assets and $95,000 to other assets and $4.8 million to deferred tax liabilities. Sales of PHILLY SWIRL from the acquisition date to September 27, 2014 were $12.6 million and are included in the retail supermarket segment.

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 fund future growth and expansion. See Note C to these financial statements for a discussion of our investment securities.

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 an increase of $5,389,000 in accumulated other comprehensive loss in 2015, an increase of $929,000 in accumulated other comprehensive loss in 2014 and an increase of $571,000 in accumulated other comprehensive loss in 2013. In 2015, sales of the two subsidiaries were $25,313,000 as compared to $23,633,000 in 2014 and $23,161,000 in 2013.

In our fiscal year ended September 27, 2014, we purchased and retired 81,685 shares of our common stock at a cost of $7,504,729.

In our fiscal year ended September 28, 2013, we purchased and retired 204,397 shares of our common stock at a cost of $14,500,215.

In November 2011, we entered into an amendment and modification to an amended and restated loan agreement with our existing banks which provides for up to a $50,000,000 revolving credit facility repayable in November 2016. The agreement contains restrictive covenants and requires commitment fees in accordance with standard banking practice. There were no outstanding balances under the facility at September 26, 2015 or at September 27, 2014. The significant financial covenants are:

● Tangible net worth must initially be more than $294 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 26, 2015.

We self-insure, up to loss limits, certain insurable risks such as worker's compensation and automobile liability claims. Accruals for claims under our self-insurance program are recorded on a claims-incurred basis. Under this program, the estimated liability for claims incurred but unpaid in fiscal years 2015 and 2014 was $2,800,000 and $2,700,000, respectively. In connection with certain self-insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At September 26, 2015 and September 27, 2014, we had outstanding letters of credit totaling $9,075,000 and $9,075,000, respectively.

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

	Payments Due by Period
	(in thousands)

	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years

Long-term debt,including current maturities	$	-	$	-	$	-	$	-	$	-
Capital lease obligations		1,469		273		541		400		255
Purchase commitments		68,000		65,000		3,000		-		-
Operating leases		51,673		10,928		16,828		8,714		15,203
Total	$	121,142	$	76,201	$	20,369	$	9,114	$	15,458

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

Fiscal 2015 Compared to Fiscal 2014

Cash and cash equivalents and marketable securities held to maturity and available for sale increased $18,110,000, or 8%, to $239,987,000 from a year ago for reasons described below.

Accounts receivables, net increased $2,677,000, or 3%, to $102,649,000 in 2015, generally in line with sales increases in our fourth quarter. Inventories increased $4,539,000 or 6% to $80,622,000 in 2015 due primarily to an increase in parts inventory to support our growing repair and maintenance service in our frozen beverages segment.

Prepaid expenses and other increased to $6,557,000 from $3,695,000 last year primarily because of an increase in prepaid income taxes of $2,314,000 this year compared to last year.

Net property, plant and equipment increased $16,560,000 to $174,089,000 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. Purchasing of property, plant and equipment were $11,265,000 higher in 2015 than in 2014 because of significant manufacturing improvements in pretzel production and growth of our frozen beverage customer base.

Goodwill remained at $86,442,000 because there was no goodwill acquired in acquisitions.

Other intangible assets, less accumulated amortization decreased $5,170,000 to $45,819,000 due almost entirely to amortization of $5,370,000 during the year.

Marketable securities available for sale and held to maturity decreased by $23,819,000 to $106,298,000 as we reduced our holdings of mutual funds from $128.1 million to $19.2 million during the year and invested $86.4 million in corporate bonds and preferred stocks.

Accounts Payables decreased less than 1% to $59,206,000 from $59,968,000.

Accrued insurance liability decreased $347,000, or 3% to $10,231,000 due to decreases in estimates for incurred but not yet paid claims under our group insurance and insurance liability programs.

Accrued compensation expense increased 7% to $15,318,000 due to an increase in our employee base and a general increase in the level of pay rates.

Dividends payable increased to $6,723,000 as our quarterly dividend payment increased to $.36/share from $.32/share.

Deferred income tax liabilities decreased $1,031,000 to $43,789,000 from $44,785,000.

Other long-term liabilities include $334,000 of gross unrecognized tax benefits at September 26, 2015 and $315,000 at September 27, 2014.

Common stock decreased $968,000 to $31,653,000 in 2015 because repurchases of our common stock of $8,011,000 exceeded increases totaling $6,625,000 from the exercise of incentive and nonqualified stock options, stock issued under our stock purchase plan for employees, stock issued under our deferred stock plan and share-based compensation expense.

Net cash provided by operating activities decreased $1,269,000 to $105,273,000 in 2015 primarily because of a decrease in net earnings of $1,631,000, an increase of prepaid expenses of $2,871,000 in 2015 compared to $182,000 in 2014 and an increase of accounts payable and accrued liabilities of $287,000 compared to $6,831,000 in 2014 which were mainly offset by increased loss on sale of marketable securities of $3,958,000 and a decrease in accounts receivable of $3,123,000 in 2015 compared to $8,913,000 in 2014.

Net cash used in investing activities decreased $56,269,000 to $29,843,000 in 2015 from $86,112,000 in 2014 primarily because net proceeds from marketable securities of $19,980,000 in 2015 compared to net purchases of marketable securities of $19,687,000 in 2014 and a decline in payments for purchases of companies of $27,745,000 which were offset by increased purchases of property, plant and equipment of $11,265,000.

Net cash used in financing activities of $25,435,000 in 2014 increased to $29,745,000 in 2015 primarily because of increased dividend payments $5,230,000.

In 2015, the major variables in determining our net increase in cash and cash equivalents and marketable securities were our net earnings, depreciation and amortization of fixed assets, increase in accounts receivable and accounts payable, purchases of property, plant and equipment, payments of cash dividend and the repurchase of common stock. Other variables which in the past have had a significant impact on our change in cash and cash equivalents and marketable securities are purchases of companies and proceeds from borrowings and payments of long-term debt. As discussed in results of operations, our net earnings may be influenced by many factors. Depreciation and amortization of fixed assets is primarily determined by past purchases of property, plant and equipment although it could be impacted by a significant acquisition. Purchases of property, plant and equipment are primarily determined by our ongoing normal manufacturing and marketing requirements but could be increased significantly for manufacturing expansion requirements or large frozen beverage customer needs. From time to time, we have repurchased common stock and we anticipate that we will do so again in the future. We are actively seeking acquisitions that could be a significant use of cash. Although we have no long-term debt at September 26, 2015, we may borrow in the future depending on our needs.

Fiscal 2014 Compared to Fiscal 2013

Cash and cash equivalents and marketable securities held to maturity and available for sale increased $14,612,000, or 7%, to $221,877,000 from a year ago for reasons described below.

Accounts receivables, net increased $12,427,000, or 14%, to $99,972,000 in 2014. The increase this year is primarily due to higher sales in the last month of our year. Inventories increased $4,298,000 or 6% to $76,083,000 in 2014 due to higher unit costs of inventory and an increase in parts inventory to support our growing repair and maintenance service in our frozen beverages segment.

Prepaid expenses and other increased to $3,695,000 from $3,284,000 last year because of prepaid income taxes of $451,000 this year compared to none last year.

Net property, plant and equipment increased $10,365,000 to $157,529,000 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 and we acquired $4.3 million of property, plant and equipment in the New York Pretzel and PHILLY SWIRL acquisitions.

Goodwill increased to $86,442,000 from $76,899,000 because of goodwill acquired in the New York Pretzel and PHILLY SWIRL acquisitions.

Other intangible assets, less accumulated amortization increased $6,977,000 to $50,989,000 due to intangible assets of $11,909,000 acquired in the New York Pretzel and PHILLY SWIRL acquisitions offset by amortization of $4,932,000 during the year.

Marketable securities available for sale and held to maturity increased by $20,453,000 to $130,117,000 as we invested an additional $20 million into mutual funds designed to generate current income while maintaining a low volatility and overall moderate duration.

Accounts Payables increased $9,062,000 to $59,968,000 due to increased levels of business in September and October 2014 and timing of payments.

Accrued insurance liability increased $624,000 to $10,578,000 due to increases in estimates for incurred but not yet paid claims under our group insurance and insurance liability programs.

Accrued compensation expense increased 4% to $14,286,000 due to an increase in our employee base and a general increase in the level of pay rates.

Dividends payable doubled to $5,972,000 as our quarterly dividend payment increased to $.32/share from $.16/share.

Deferred income tax liabilities was essentially unchanged at $44,785,000.

Other long-term liabilities at September 27, 2014 include $315,000 of gross unrecognized tax benefits which decreased from $438,000 a year ago due to reductions for tax positions of prior years. Other long-term liabilities in total increased $601,000 from a year ago primarily because of deferred income due to a customer.

Common stock decreased $1,895,000 to $32,621,000 in 2014 because repurchases of our common stock of $7,505,000 exceeded increases totaling $5,610,000 from the exercise of incentive and nonqualified stock options, stock issued under our stock purchase plan for employees, stock issued under our deferred stock plan and share-based compensation expense.

Net cash provided by operating activities increased $19,994,000 to $106,542,000 in 2014 primarily because of an increase of accounts receivables in 2014 of $8,913,000 compared to an increase of $11,148,000 in 2013, an increase in accounts payable and accrued liabilities of $6,831,000 in 2014 compared to an increase of $579,000 in 2013 and an increase in prepaid expenses and other of $182,000 in 2014 compared to an increase of $1,067,000 in 2013, higher net earnings of $7,433,000 and higher depreciation and amortization of $3,541,000.

Net cash used in investing activities decreased $34,725,000 to $86,112,000 in 2014 from $120,837,000 in 2013 primarily because net purchases of marketable securities decreased by $66,247,000 which was offset by payments for purchases of companies of $28,360,000.

Net cash used in financing activities of $22,360,000 in 2013 increased to $25,435,000 in 2014 primarily because of increased dividend payments $9,456,000 offset by lower payments to purchase common stock of $7,000,000.

In 2014, the major variables in determining our net increase in cash and cash equivalents and marketable securities were our net earnings, depreciation and amortization of fixed assets, increase in accounts receivable and accounts payable, purchases of companies, purchases of property, plant and equipment, payments of cash dividend and the repurchase of common stock. Other variables which in the past have had a significant impact on our change in cash and cash equivalents are proceeds from borrowings and payments of long-term debt. As discussed in results of operations, our net earnings may be influenced by many factors. Depreciation and amortization of fixed assets is primarily determined by past purchases of property, plant and equipment although it could be impacted by a significant acquisition. Purchases of property, plant and equipment are primarily determined by our ongoing normal manufacturing and marketing requirements but could be increased significantly for manufacturing expansion requirements or large frozen beverage customer needs. From time to time, we have repurchased common stock and we anticipate that we will do so again in the future. We are actively seeking acquisitions that could be a significant use of cash. Although we have no long-term debt at September 26, 2015, we may borrow in the future depending on our needs.

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 26, 2015, the Company had no interest rate swap contracts.

Interest Rate Risk

At September 26, 2015, 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 26, 2015, 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 26, 2015. Based on that evaluation, our chief executive officer and chief financial officer concluded that these controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported as specified in Securities and Exchange Commission rules and forms. There were no changes in these controls or procedures identified in connection with the evaluation of such controls or procedures that occurred during our last fiscal quarter, or in other factors that have materially affected, or are reasonably likely to materially affect these controls or procedures. There were no changes in the Company’s internal controls over financial reporting that occurred during our last fiscal quarter.

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 Securities and Exchange Commission. 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 26, 2015. 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 26, 2015, 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 26, 2015. Their report, dated November 23, 2015, 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.

Item9B.

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

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 Securities and Exchange Commission in connection with the Annual Meeting of Shareholders to be held on February 16, 2016 (“2015 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 2015 Proxy Statement filed with the Securities and Exchange Commission in connection with the Annual Meeting of Shareholders to be held on February 16, 2016 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: Dennis Moore. 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 2015 Proxy Statement under the caption “Management Remuneration” is incorporated herein by reference.

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, 2016 or until their successors are duly elected.

Name	Age	Position

Gerald B. Shreiber	73	Chairman of the Board, President, Chief Executive Officer and Director
Dennis G. Moore	59	Senior Vice President, Chief Financial Officer, Secretary, Treasurer and Director
Robert M. Radano	66	Senior Vice President, Sales and Chief Operating Officer
Dan Fachner	55	President of The ICEE Company Subsidiary
Gerard G. Law	41	Senior Vice President and Assistant to the President
Robert J. Pape	58	Senior Vice President Sales

Gerald B. Shreiber is the founder of the Company and has served as its Chairman of the Board, President, and Chief Executive Officer since its inception in 1971. His term as a director expires in 2020.

Dennis G. Moore joined the Company in 1984. He served in various controllership functions prior to becoming the Chief Financial Officer in June 1992. His term as a director expires in 2017.

Robert M. Radano joined the Company in 1972 and in May 1996 was named Chief Operating Officer of the Company. Prior to becoming Chief Operating Officer, he was Senior Vice President, Sales responsible for national food service sales of J & J.

Dan Fachner has been an employee of ICEE-USA Corp., 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 in May 1997.

Gerard G. Law joined the Company in 1992. He served in various manufacturing and sales management capacities prior to becoming Senior Vice President, Western Operations in 2009. He was named to his present position in 2011 in which he has responsibility for marketing, research and development and overseeing a number of the manufacturing facilities of J & J.

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.

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 2015 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 26, 2015.

( a )

( b )

( c )

Number of

Securities

Remaining

available for

future

Number of

Weighted-

issuance under

securities to

average

equity

be issued upon

exercise

compensation

exercise of

price of

plans

outstanding

outstandng

(excluding

options,

securities

warrants and

reflected in

Plan Category

rights

column (a) )

Equity compensation plans approved by security holders

637,000

70.82

854,000

Equity compensation plans not approved by security holders

Total

637,000

70.82

854,000

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 2015 Proxy Statement is incorporated herein by reference.

Item 14.

Principal Accounting Fees And Services

Information concerning the Principal Accountant Fees and Services in the Company’s 2015 Proxy Statement is incorporated herein by reference.

PART IV

Item 15.

Exhibits, Financial Statement Schedules

	(a)		The following documents are filed as part of this Report:

			(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 Amendment and Restated Loan Agreement (Incorporated by referencefrom the Company’s Form 10-K dated December 7, 2011).

10.2^*		J & J Snack Foods Corp. Stock Option Plan (Incorporated by reference from the Company’s Definitive Proxy Statement dated December 21, 2011).

10.7		Lease dated August 29, 1995 between J & J Snack Foods Corp. and 5353 Downey Associated Ltd. for the lease of the Vernon, CA facility (Incorporated by reference from the Company’s Form 10-K dated December 21, 1995).

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

10.11		Amendment No. 1 to Lease dated August 29, 1995 between J & J Snack Foods Corp. and 5353 Downey Associated Ltd. for the lease of the Vernon, CA facility (Incorporated by reference from the Company’s Form 10-K dated December 18, 2002).

10.14		Leases and amendments to leases between Liberty Venture I, LP and J & J Snack Foods Corp. for the three buildings located in Bridgeport, New Jersey (Incorporated by reference from the Company’s Form 10-K dated December 8, 2009).

10.15		Amendment No. 2 to Lease dated August 29, 1995 between J & J Snack Foods Corp. and 5353 Downey Associated Ltd. for the lease of the Vernon, CA facility (Incorporated by reference from the Company's Form 10-K dated December 6, 2010).

10.16		Amendment to Lease dated January 1, 1996 between Country Home Bakers, LLC and Borck Associates Limited Partnership for the lease of the Atlanta, GA facility (Incorporated by reference from the Company's Form 10-k dated December 6, 2011).

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 26, 2015, formatted in XBRL (eXtensible Business Reporting Language):

		(i)	Consolidated Balance Sheets,
		(ii)	Consolidated Statements of Earnings,
		(iii)	Consolidated Statements of Comprehensive Income,
		(iv)	Consolidated Statements of Cash Flows,
		(v)	Consolidated Statement of Changes in Stockholders' Equity and
		(vi)	The Notes to the Consolidated Financial Statements



*Compensatory Plan

**Filed Herewith

SIGNATURES

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.

	J & J SNACK FOODS CORP.

November 23, 2015	By:	/s/ Gerald B. Shreiber
		Gerald B. Shreiber,
		Chairman of the Board, President, Chief Executive Officer and Director
		(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, 2015			/s/ Gerald B. Shreiber
			Gerald B. Shreiber,
			Chairman of the Board, President, Chief Executive Officer and Director
			(Principal Executive Officer)

November 23, 2015			/s/ Dennis G. Moore
			Dennis G. Moore,
			Senior Vice President, Chief Financial Officer and Director
			(Principal Financial Officer)
			(Principal Accounting Officer)

November 23, 2015		/s/ Sidney R. Brown
		Sidney R. Brown, Director

November 23, 2015		/s/ Peter G. Stanley
		Peter G. Stanley, Director

November 23, 2015		/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	F-2

Consolidated Balance Sheets as of September 26, 2015 and September 27, 2014	F-3

Consolidated Statements of Earnings for the fiscal years ended September 26, 2015, September 27, 2014 and September 28, 2013	F-4

Consolidated Statements of Comprehensive Income for the fiscal years ended September 26, 2015, September 27, 2014 and September 28, 2013	F-5

Consolidated Statement of Changes in Stockholders’ Equity for the fiscal years ended September 26, 2015, September 27, 2014 and September 28, 2013	F-6

Consolidated Statements of Cash Flows for the fiscal years ended September 26, 2015, September 27, 2014 and September 28, 2013	F-7

Notes to Consolidated Financial Statements	F-8

Financial Statement Schedule:

Schedule II – Valuation and Qualifying Accounts	S-1

F-1

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

J&J Snack Foods Corp. and Subsidiaries

We have audited the accompanying consolidated balance sheets of J&J Snack Foods Corp. and Subsidiaries as of September 26, 2015 and September 27, 2014, and the related consolidated statements of earnings, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three fiscal years in the period ended September 26, 2015. Our audits of the basic consolidated financial statements included the consolidated financial statement schedule listed in the index appearing under Item 15. We have also audited J&J Snack Foods Corp. and Subsidiaries’ internal control over financial reporting as of September 26, 2015, based on criteria established in the 2013 Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). J&J Snack Foods Corp. and Subsidiaries’ management is responsible for these consolidated financial statements and financial statement schedule, 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 these consolidated financial statements and financial statement schedule and an opinion on J&J Snack Foods Corp. and Subsidiaries’ internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of J&J Snack Foods Corp. and Subsidiaries as of September 26, 2015 and September 27, 2014, and the consolidated results of their operations and their consolidated cash flows for each of the three fiscal years in the period ended September 26, 2015 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, J&J Snack Foods Corp. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of September 26, 2015, based on criteria established in the 2013 Internal Control Integrated Framework issued by COSO.

/s/ Grant Thornton LLP

Philadelphia, Pennsylvania

November 23, 2015

F-2

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	September 26,			September 27,
	2015			2014
Assets
Current assets
Cash and cash equivalents	$	133,689		$	91,760
Accounts receivable, net		102,649			99,972
Inventories, net		80,622			76,083
Prepaid expenses and other		6,557			3,695
Deferred income taxes		3,266			4,096
Total current assets		326,783			275,606

Property, plant and equipment, at cost		573,710			538,081
Less accumulated depreciation and amortization		399,621			380,552
Property, plant and equipment, net		174,089			157,529

Other assets
Goodwill		86,442			86,442
Other intangible assets, net		45,819			50,989
Marketable securities held to maturity		66,660			2,000
Marketable securities available for sale		39,638			128,117
Other		3,504			4,090
Total other assets		242,063			271,638
Total Assets	$	742,935		$	704,773

Liabilities and Stockholder's Equity
Current Liabilities
Current obligations under capital leases	$	273		$	146
Accounts payable		59,206			59,968
Accrued insurance liability		10,231			10,578
Accrued income taxes		-			-
Accrued liabilities		5,365			5,007
Accrued compensation expense		15,318			14,286
Dividends payable		6,723			5,972
Total current liabilities		97,116			95,957

Long-term obligations under capital leases		1,196			374
Deferred income taxes		43,789			44,785
Other long-term liabilities		915			1,139

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 18,676,000 and 18,663,000 respectively		31,653			32,621
Accumulated other comprehensive loss		(10,897	)		(5,988	)
Retained Earnings		579,163			535,885
Total stockholders' equity		599,919			562,518
Total Liabilities and Stockholder's Equity	$	742,935		$	704,773

The accompanying notes are an integral part of these statements.

F-3

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(in thousands, except per share information)

	Fiscal Year Ended

	September 26,			September 27,			September 28,
	2015			2014			2013
	(52 weeks)			(52 weeks)			(52 weeks)

Net Sales	$	976,256		$	919,451		$	867,683
Cost of goods sold ⁽¹⁾		675,366			631,874			604,381
Gross Profit		300,890			287,577			263,302

Operating expenses
Marketing⁽²⁾		85,160			78,632			74,076
Distribution ⁽³⁾		74,158			71,159			65,025
Administrative ⁽⁴⁾		30,891			29,784			27,448
Other general (income) expense		(207	)		1,154			(651	)
Total operating expenses		190,002			180,729			165,898
Operating Income		110,888			106,848			97,404

Other income (expense)
Investment income		1,157			4,473			3,492
Interest expense & other		(126	)		(115	)		(106	)

Earnings before income taxes		111,919			111,206			100,790

Income taxes		41,736			39,392			36,409

NET EARNINGS	$	70,183		$	71,814		$	64,381

Earnings per diluted share	$	3.73		$	3.82		$	3.41

Weighted average number of diluted shares		18,819			18,807			18,878

Earnings per basic share	$	3.76		$	3.85		$	3.43

Weighted average number of basic shares		18,685			18,677			18,785

(1)	Includes share-based compensation expense of $471 for the year ended September 26, 2015, $466 for the year ended September 27, 2014 and $463 for the year ended September 28, 2013.
(2)	Includes share-based compensation expense of $709 for the year ended September 26, 2015, $673 for the year ended September 27, 2014 and $635 for the year ended September 28, 2013.
(3)	Includes share-based compensation expense of $44 for the year ended September 26, 2015, $42 for the year ended September 27, 2014 and $30 for the year ended September 28, 2013.
(4)	Includes share-based compensation expense of $942 for the year ended September 26, 2015, $895 for the year ended September 27, 2014 and $742 for the year ended September 28, 2013.

The accompanying notes are an integral part of these statements.

F-4

J&J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Fiscal Year Ended
	September 26,			September 27,			September 28,
	2015			2014			2013
	(52 weeks)			(52 weeks)			(52 weeks)

Net Earnings	$	70,183		$	71,814		$	64,381

Foreign currency translation adjustments		(5,389	)		(929	)		(571	)
Unrealized holding (loss) gain on marketable securities		(2,607	)		505			(2,227	)
Amount reclassified from accumulated other comprehensive income		3,087			366			-
Total Other Comprehensive (Loss) Income, net of tax		(4,909	)		(58	)		(2,798	)

Comprehensive Income	$	65,274		$	71,756		$	61,583

The accompanying notes are an integral part of these statements.

F-5

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands)

	Common Stock						Accumulated Other Comprehensive			Retained
	Shares			Amount			Loss			Earnings			Total
Balance at September 30, 2012		18,780		$	43,011		$	(3,132	)	$	435,608		$	475,487
Issuance of common stock upon exercise of stock options		80			2,905			-			-			2,905
Issuance of common stock for employee stock purchase plan		20			1,043			-			-			1,043
Foreign currency translation adjustment		-			-			(571	)		-			(571	)
Unrealized holding loss on marketable securities		-			-			(2,227	)		-			(2,227	)
Issuance of common stock under deferred stock plan		1			103			-			-			103
Dividends declared		-			-			-			(12,010	)		(12,010	)
Share-based compensation		-			1,954			-			-			1,954
Repurchase of common stock		(204	)		(14,500	)		-			-			(14,500	)
Net earnings		-			-			-			64,381			64,381

Balance at September 28, 2013		18,677		$	34,516		$	(5,930	)	$	487,979		$	516,565
Issuance of common stock upon exercise of stock options		52			2,227			-			-			2,227
Issuance of common stock for employee stock purchase plan		16			1,102			-			-			1,102
Foreign currency translation adjustment		-			-			(929	)		-			(929	)
Unrealized holding gain on marketable securities		-			-			871			-			871
Issuance of common stock under deferred stock plan		-			34			-			-			34
Dividends declared		-			-			-			(23,908	)		(23,908	)
Share-based compensation		-			2,247			-			-			2,247
Repurchase of common stock		(82	)		(7,505	)		-			-			(7,505	)
Net earnings		-			-			-			71,814			71,814

Balance at September 27, 2014		18,663		$	32,621		$	(5,988	)	$	535,885		$	562,518
Issuance of common stock upon exercise of stock options		72			3,489			-			-			3,489
Issuance of common stock for employee stock purchase plan		14			1,174			-			-			1,174
Foreign currency translation adjustment		-			-			(5,389	)		-			(5,389	)
Unrealized holding gain on marketable securities		-			-			480			-			480
Issuance of common stock under deferred stock plan		-			21			-			-			21
Dividends declared		-			-			-			(26,905	)		(26,905	)
Share-based compensation		-			2,359			-			-			2,359
Repurchase of common stock		(73	)		(8,011	)		-			-			(8,011	)
Net earnings		-			-			-			70,183			70,183

Balance at September 26, 2015		18,676		$	31,653		$	(10,897	)	$	579,163		$	599,919

The accompanying notes are an integral part of these statements.

F-6

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Fiscal Year Ended

	September 26,			September 27,			September 28,
	2015			2014			2013
	(52 weeks)			(52 weeks)			(52 weeks)

Operating activities:
Net earnings	$	70,183		$	71,814		$	64,381
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of fixed assets		32,356			31,660			28,801
Amortization of intangibles and deferred costs		5,915			5,433			4,751
(Gains) losses from disposals and impairment of property & equipment		(334	)		(119	)		126
Share-based compensation		2,166			2,076			1,870
Deferred income taxes		(121	)		(8	)		74
Loss on sale of marketable securities		4,319			361			-
Changes in assets and liabilities, net of effects from purchase of companies:
Increase in accounts receivable, net		(3,123	)		(8,913	)		(11,148	)
Increase in inventories		(3,504	)		(2,411	)		(1,819	)
Increase in prepaid expenses and other		(2,871	)		(182	)		(1,067	)
Increase in accounts payable and accrued liabilities		287			6,831			579
Net cash provided by operating activities		105,273			106,542			86,548
Investing activities:
Payments for purchases of companies, net of cash acquired		(615	)		(28,360	)		-
Purchases of property, plant and equipment		(50,096	)		(38,831	)		(35,821	)
Purchases of marketable securities		(90,137	)		(26,932	)		(111,241	)
Proceeds from redemption and sales of marketable securities		110,117			7,245			25,307
Proceeds from disposal of property and equipment		1,786			1,572			1,199
Other		(898	)		(806	)		(281	)
Net cash used in investing activities		(29,843	)		(86,112	)		(120,837	)
Financing activities:
Payments to repurchase common stock		(8,011	)		(7,505	)		(14,500	)
Proceeds from issuance of common stock		4,663			3,320			3,948
Payments on capitalized lease obligations		(243	)		(326	)		(340	)
Payment of cash dividend		(26,154	)		(20,924	)		(11,468	)
Net cash used in financing activities		(29,745	)		(25,435	)		(22,360	)
Effect of exchange rates on cash and cash equivalents		(3,756	)		(580	)		(204	)
Net increase (decrease) in cash and cash equivalents		41,929			(5,585	)		(56,853	)
Cash and cash equivalents at beginning of year		91,760			97,345			154,198
Cash and cash equivalents at end of year	$	133,689		$	91,760		$	97,345

The accompanying notes are an integral part of these statements.

F-7

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.

1.	Principles of Consolidation

The consolidated 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 from our products when the products are shipped to our customers. Repair and maintenance equipment service revenue is recorded when it is performed provided the customer terms are that the customer is to be charged on a time and material basis or on a straight-line basis over the term of the contract when the customer has signed a service contract. Revenue is recognized only where persuasive evidence of an arrangement exists, our price is fixed or estimable and collectability is reasonably assured. We record offsets to revenue for allowances, end-user pricing adjustments, trade spending, coupon redemption costs and returned product. Customers generally do not have the right to return product unless it is damaged or defective. Our recorded liability for allowances, end-user pricing adjustments and trade spending was approximately $11.7 million at September 26, 2015 and $11.5 million at September 27, 2014.

All amounts billed to customers related to shipping and handling are classified as revenues. Our product costs include amounts for shipping and handling, therefore, we charge our customers 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. The cost of shipping products to the customer classified as Distribution expenses was $74,158,000, $71,159,000 and $65,025,000 for the fiscal years ended 2015, 2014 and 2013, respectively.

During the years ended September 26, 2015, September 27, 2014 and September 28, 2013, we sold $25,536,000, $22,826,000 and $22,836,000, respectively, of repair and maintenance service contracts in our frozen beverage business. At September 26, 2015 and September 27, 2014, deferred income on repair and maintenance service contracts was $1,579,000 and $1,577,000, respectively, of which $70,000 and $67,000 is included in other long-term liabilities as of September 26, 2015 and September 27, 2014, respectively and the balance is reflected as short-term and included in accrued liabilities on the consolidated balance sheet. Repair and maintenance service contract income of $25,534,000, $22,748,000 and $22,780,000 was recognized for the fiscal years ended 2015, 2014 and 2013, respectively.

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.

F-8

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

5.	Cash Equivalents

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

6.	Cash, Accounts Receivable, Customers, Vendors and Employees Covered by Collective Bargaining Agreements Concentration

We maintain cash balances at financial institutions located in various states. We have cash balances at two banks totalling approximately $84 million that is in excess of FDIC insurance of $250,000 per bank.

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 usually have approximately 15 customers with accounts receivable balances of between $1 million and $10 million.

About 25% of our employees are covered by collective bargaining agreements.

None of our vendors supplied more than 10% of our ingredients and packaging in 2015, 2014 or 2013.

The majority 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 26, 2015 and September 27, 2014, our accounts receivables were $102,649,000 and $99,972,000 net of an allowance for doubtful accounts of $304,000 and $450,000. 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.

7.	Inventories

Inventories are valued at the lower of cost (determined by the first-in, first-out or weighted-average 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.

We review for slow moving and obsolete inventory and a reserve is established for the value of inventory that we estimate will not be used. At September 26, 2015 and September 27, 2014, our reserve for inventory was $2,627,000 and $3,982,000, respectively.

F-9

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 26, 2015, 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 accumulated other comprehensive income (loss). 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 improvements is provided for by the straight-line method over the term of the lease or the assets’ estimated useful lives, whichever is shorter. Licenses and rights, customer relationships and non-compete agreements are being amortized by the straight-line method over periods ranging from 3 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.

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.

F-10

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

As of September 26, 2015 and September 27, 2014, the total amount of gross unrecognized tax benefits is $334,000 and $315,000; 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. We had $199,000 of accrued interest and penalties as of September 26, 2015 and $180,000 as of September 27, 2014. We did not recognize any penalties and interest resulting from tax settlements in the years ended September 26, 2015 and September 27, 2014. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	(in thousands)

Balance at September 27, 2014	$	315
Additions based on tax positions related to the current year		19
Reductions for tax positions of prior years		-
Settlements		-
Balance at September 26, 2015	$	334

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.

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:

	Fiscal Year Ended September 26, 2015
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
	(in thousands, except per share amounts)

Earnings Per Basic Share
Net Income available to common stockholders	$	70,183		18,685	$	3.76

Effect of Dilutive Securities
Options		-		134		(0.03	)

Earnings Per Diluted Share
Net Income available to common stockholders plus assumed conversions	$	70,183		18,819	$	3.73

F-11

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

1500 anti-dilutive shares have been excluded in the computation of 2015 diluted EPS.

	Fiscal Year Ended September 27, 2014
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
	(in thousands, except per share amounts)

Earnings Per Basic Share
Net Income available to common stockholders	$	71,814		18,677	$	3.85

Effect of Dilutive Securities
Options		-		130		(0.03	)

Earnings Per Diluted Share
Net Income available to common stockholders plus assumed conversions	$	71,814		18,807	$	3.82

No anti-dilutive shares have been excluded in the computation of 2014 diluted EPS.

	Fiscal Year Ended September 28, 2013
	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
	(in thousands, except per share amounts)

Earnings Per Basic Share
Net Income available to common stockholders	$	64,381		18,785	$	3.43

Effect of Dilutive Securities
Options		-		93		(0.02	)

Earnings Per Diluted Share
Net Income available to common stockholders plus assumed conversions	$	64,381		18,878	$	3.41

No anti-dilutive shares have been excluded in the computation of 2013 diluted EPS

13.

Accounting for Stock-Based Compensation

At September 26, 2015, the Company has three stock-based employee compensation plans. Share-based compensation was recognized as follows:

	Fiscal year ended
	September 26,		September 27,		September 28,
	2015		2014		2013
	(in thousands, except per share amounts)

Stock options	$	1,098	$	1,262	$	795
Stock purchase plan		328		329		363
Stock issued to outside directors		-		-		47
Stock issued to employees		6		17		18
Total share-based compensation	$	1,432	$	1,608	$	1,223

The above compensation is net of tax benefits	$	734	$	468	$	647

F-12

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

At September 26, 2015, the Company has unrecognized compensation expense of approximately $3.3 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 2015, 2014 and 2013: expected volatility of 18.4% for fiscal year 2015, expected volatility of 21.2% for fiscal year 2014 and 25.7% for fiscal year 2013: weighted average risk-free interest rates of 1.7%, 1.6% and 2.5%; dividend rate of 1.4%, .9% and .8% and expected lives ranging between 5 and 10 years for all years. An expected forfeiture rate of 19% was used for 2015, 20% was used for 2014 and 20% was used for 2013.

Expected volatility is based on the historical volatility of the price of our common shares over the past 49 to 55 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 $4,290,000, $3,487,000 and $3,069,000 for the fiscal years 2015, 2014 and 2013, respectively.

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 26, 2015, we have approximately $68 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 $506,000, $499,000 and $478,000 for the fiscal years 2015, 2014 and 2013, respectively.

17.

Recent Accounting Pronouncements

In May 2014, the FASB issued guidance on revenue recognition which says that we should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which we expect to be entitled in exchange for those goods or services. This guidance is effective for our fiscal year ending September 2019. Early application is permitted. We will assess the impact this guidance will have on our consolidated financial statements.

In September 2015, the FASB issued guidance on accounting for business combinations which require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. This guidance eliminates the requirement to retrospectively account for these adjustments. This guidance is effective for our fiscal year ended September 2018. Early adoption is permitted. We have not assessed the impact this guidance will have on our consolidated financial results.

F-13

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In July 2015, the FASB issued guidance which requires an entity to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance will simplify the subsequent measurement of inventory, as current guidance requires an entity to measure inventory at the lower of cost or market. Under current guidance, market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. This guidance is effective for our fiscal year ended September 2018. Early adoption is permitted. We have not assessed the impact this guidance will have on our consolidated financial results.

18.

Reclassifications

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

NOTE B – ACQUISITIONS

Acquisition costs of $269,000 for the New York Pretzel and PHILLY SWIRL acquisitions are included in other general expense in the consolidated statements of earnings for the year ended September 27, 2014.

The goodwill and intangible assets acquired in the business combinations are recorded at fair value. To measure fair value for such assets, we use techniques including discounted expected future cash flows (Level 3 input).

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 input such as quoted prices in active markets for identical assets or liabilities;

Level 2

Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

F-14

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE C – INVESTMENT SECURITIES (continued)

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 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 investment securities held to maturity at September 26, 2015 are summarized as follows:

			Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
	(in thousands)
Corporate Bonds	$	66,660	$	15	$	663	$	66,012
Total investment securities held to maturity	$	66,660	$	15	$	663	$	66,012

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September 26, 2015 are summarized as follows:

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

Mutual Funds	$	20,041	$	-	$	827	$	19,214
Preferred Stock		20,473		114		163		20,424
Total investment securities available for sale	$	40,514	$	114	$	990	$	39,638

The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration. We have reduced our investments in mutual funds over the past year to $19 million at September 2015 from $128 million at September 2014. The remaining unrealized losses at September 2015 of $827,000 are spread over 4 funds with total fair market value of $19.2 million. In 2015, sales of mutual funds generated a realized loss of $4.3 million. The Fixed-to-Floating Perpetual Preferred Stock generate fixed income to call dates in 2018, 2019 and 2025 and then income is based on a spread above LIBOR if the securities are not called. The mutual funds and Fixed-to-Floating Perpetual Preferred Stock do not have contractual maturities; however, we classify them as long term assets as it is our intent to hold them for a period of over one year, although we may sell some or all of them depending on presently unanticipated needs for liquidity or market conditions. In the fourth quarter we invested $67 million in corporate bonds which generate fixed income to maturity dates in 2017 through 2021, with $40 million maturing prior to the end of our fiscal year 2018. Our expectation is that we will hold the corporate bonds to their maturity dates and redeem them at our amortized cost.

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at September 27, 2014 are summarized as follows:

			Gross		Gross		Fair
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
	(in thousands)
US Government Agency Debt	$	2,000	$	-	$	13	$	1,987


Total investment securities held to maturity	$	2,000	$	-	$	13	$	1,987

F-15

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE C – INVESTMENT SECURITIES (continued)

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at September 27, 2014 are summarized as follows:

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

Mutual Funds	$	129,473	$	760	$	2,116	$	128,117


Total investment securities available for sale	$	129,473	$	760	$	2,116	$	128,117

The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at September 26, 2015 and September 27, 2014 are summarized as follows:

	September 26, 2015				September 27, 2014

	Amortized Cost		Fair Market Value		Amortized Cost		Fair Market Value
	(in thousands)
Due in one year or less	$	-	$	-	$	-	$	-
Due after one year through five years		63,522		63,010		-		-
Due after five years through ten years		3,138		3,002		2,000		1,987
Total held to maturity securities	$	66,660	$	66,012	$	2,000	$	1,987
Less current portion		-		-		-		-
Long term held to maturity securities	$	66,660	$	66,012	$	2,000	$	1,987

Proceeds from the sale and redemption of marketable securities were $110,117,000, $7,245,000 and $25,307,000 in the years ended September 26, 2015, September 27, 2014 and September 28, 2013, respectively; with losses of $4,319,000, $361,000 and $108,000 recorded in 2015, 2014 and 2013, respectively. We use the specific identification method to determine the cost of securities sold.

NOTE D – INVENTORIES

Inventories consist of the following:

	September 26,		September 27,
	2015		2014
	(in thousands)
Finished goods	$	32,223	$	33,189
Raw materials		17,000		15,632
Packaging materials		5,949		6,107
Equipment parts and other		25,450		21,155
Total Inventories	$	80,622	$	76,083

Inventory is presented net of an allowance for obsolescence of $2,627,000 and $3,982,000 as of fiscal year ends 2015 and 2014, respectively.

F-16

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE E – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	September 26,		September 27,		Estimated
	2015		2014		Useful Lives (in years)
	(in thousands)

Land	$	2,496	$	2,496				-
Buildings		26,741		26,741		15	-	39.5
Plant machinery and equipment		210,728		195,566		5	-	20
Marketing equipment		268,082		256,389		5	-	7
Transportation equipment		6,866		6,913				5
Office equipment		20,586		18,556		3	-	5
Improvements		28,725		26,635		5	-	20
Construction in Progress		9,486		4,785				-
Total property, plant and equipment	$	573,710	$	538,081

Depreciation expense was $32,356,000, $31,660,000 and $28,801,000 for fiscal years 2015, 2014 and 2013, respectively.

F-17

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 26, 2015				September 27, 2014
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(in thousands)

FOOD SERVICE
Indefinite lived intangible assets
Trade Names	$	13,072	$	-	$	13,072	$	-

Amortized intangible assets
Non compete agreements		592		538		592		509
Customer relationships		40,797		33,584		40,797		29,914
License and rights		3,606		2,802		3,606		2,708
TOTAL FOOD SERVICE	$	58,067	$	36,924	$	58,067	$	33,131

RETAIL SUPERMARKETS

Indefinite lived intangible assets
Trade Names	$	7,206	$	-	$	7,206	$	-

Amortized Intangible Assets
Non compete agreements		160		114		160		34
Customer relationships		7,979		1,220		7,979		420
TOTAL RETAIL SUPERMARKETS	$	15,345	$	1,334	$	15,345	$	454


FROZEN BEVERAGES

Indefinite lived intangible assets
Trade Names	$	9,315	$	-	$	9,315	$	-

Amortized intangible assets
Non compete agreements		198		198		198		198
Customer relationships		6,678		6,075		6,478		5,448
Licenses and rights		1,601		854		1,601		784
TOTAL FROZEN BEVERAGES	$	17,792	$	7,127	$	17,592	$	6,430

CONSOLIDATED	$	91,204	$	45,385	$	91,004	$	40,015

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 classified as indefinite lived intangible assets indefinitely and they are therefore not amortized.

F-18

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE F – GOODWILL AND INTANGIBLE ASSETS (continued)

Licenses and rights, customer relationships and non compete agreements are being amortized by the straight-line method over periods ranging from 3 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 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. There were no impairments of intangible assets in 2015, 2014 or 2013.

There were no intangible assets acquired in fiscal year 2013.

Intangible assets of $849,000 were acquired in the food service segment in the New York Pretzel acquisition in the three months ended December 28, 2013 and intangible assets of $11,060,000 were acquired in the retail supermarket segment in the PHILLY SWIRL acquisition in the three months ended June 28, 2014. Intangible assets of $200,000 were acquired in the frozen beverages segment in fiscal year 2015.

Aggregate amortization expense of intangible assets for the fiscal years 2015, 2014 and 2013 was $5,370,000, $4,932,000 and $4,452,000, respectively.

Estimated amortization expense for the next five fiscal years is approximately $5,100,000 in 2016, $2,600,000 in 2017, $1,800,000 in 2018, $1,700,000 in 2019 and $1,400,000 in 2020. The weighted average amortization period of the intangible assets is 10.0 years.

Goodwill

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

	Food		Retail		Frozen
	Service		Supermarkets		Beverages		Total

			(in thousands)

Balance at September 26, 2015	$	46,832	$	3,670	$	35,940	$	86,442
Balance at September 27, 2014	$	46,832	$	3,670	$	35,940	$	86,442

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 by management for impairment. Our impairment analysis for 2015, 2014 and 2013 was based on a combination of the income approach, which estimates the fair value of discounted cash flows, and the market approach, which estimates the fair value based on comparable market prices. 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 2015, 2014 or 2013.

No goodwill was acquired in fiscal year 2013.

Goodwill of $7,716,000 was acquired in the New York Pretzel acquisition in the three months ended December 28, 2013, all of which was allocated to the food service segment. Goodwill of $1,826,000 was acquired in the PHILLY SWIRL acquisition in the three months ended June 28,2014, all of which was allocated to the retail supermarket segment.

No goodwill was acquired in fiscal year 2015.

F-19

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE G – LONG-TERM DEBT

In November 2011, 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 2016, with the availability of repayments without penalty. The agreement contains financial covenants and requires commitment fees in accordance with standard banking practice. As of September 26, 2015 and September 27, 2014, there were no outstanding balances under the facility. We were in compliance with the financial covenants at September 26, 2015.

NOTE H – OBLIGATIONS UNDER CAPITAL LEASES

The following is a schedule by years of future minimum lease payments under capital leases:

	(in thousands)
2016	$	273
2017		284
2018		257
2019		219
2020		181
2021 and thereafter		255
Total minimum capital lease payments	$	1,469

NOTE I – INCOME TAXES

Income tax expense (benefit) is as follows:

	Fiscal year ended
	September 26,			September 27,			September 28,
	2015			2014			2013
		(in thousands)
Current
U.S. Federal	$	33,348		$	31,506		$	26,492
Foreign		2,260			2,008			2,289
State		6,294			6,693			7,560
Total current expense	$	41,902		$	40,207		$	36,341

Deferred
U.S. Federal	$	(109	)	$	(217	)	$	64
Foreign		(34	)		(58	)		(10	)
State		(23	)		(540	)		14
Total deferred (benefit) expense		(166	)		(815	)		68
Total expense	$	41,736		$	39,392		$	36,409

The change in deferred taxes for the year ended September 27, 2014 does not equal deferred tax expense in the amount of $823,000 as a result of purchase accounting related to the Philly Swirl acquisition.

F-20

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE I – INCOME TAXES (continued)

The provisions for income taxes differ from the amounts computed by applying the statutory federal income tax rate of approximately 35% to earnings before income taxes for the following reasons:

	Fiscal year ended
	September 26,			September 27,			September 28,
	2015			2014			2013
				(in thousands)

Income taxes at federal statutory rates	$	39,172		$	38,922		$	35,277
Increase (decrease) in taxes resulting from:
State income taxes, net of federal income tax benefit		4,196			4,281			4,346
Domestic production activities deduction		(2,100	)		(2,100	)		(1,540	)
Reduction of gross unrecognized tax benefits		-			(161	)		(346	)
Increase in federal valuation allowance		1,366			-			-
Other, net		(898	)		(1,550	)		(1,328	)
Income tax expense	$	41,736		$	39,392		$	36,409

Deferred tax assets and liabilities consist of the following:

	September 26,			September 27,
	2015			2014
	(in thousands)
Deferred tax assets
Vacation accrual	$	1,600		$	1,456
Increase in valuation allowance		1,434			-
Insurance accrual		3,385			3,383
Deferred income		63			53
Allowances		927			1,895
Inventory capitalization		738			745
Share-based compensation		1,480			1,216
Net Operating Loss		1,823			1,956
Total deferred tax assets		11,450			10,704
Valuation allowance		(1,434	)		-

Deferred tax liabilities
Amortization of goodwill and other intangible assets		25,791			24,528
Depreciation of property and equipment		24,748			26,865
Total deferred tax liabilities		50,539			51,393
Total deferred tax liabilities, net	$	40,523		$	40,689

As of September 26, 2015, we have federal and state capital loss carry forwards of approximately $3.9 million from the sale of marketable securities in fiscal year 2015. These carry forwards will expire in 2020. As we have no foreseeable capital gains that would allow us to use this asset, we have recorded a valuation allowance for the full amount of this deferred asset.

As of September 26, 2015, we have a federal net operating loss carry forward of approximately $5 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 asset and accordingly, have not recorded a valuation allowance for this deferred tax asset.

We have undistributed earnings of our Mexican and Canadian subsidiaries that are considered to be indefinitely reinvested and accordingly no provision for US federal and state income taxes has been provided thereon.

F-21

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE J - COMMITMENTS

1. Lease Commitments

The following is a summary of approximate future minimum rental commitments for non-cancelable operating leases with terms of more than one year as of September 26, 2015:

	Plants and
	Offices		Equipment		Total
	(in thousands)
2016	$	5,313	$	5,615	$	10,928
2017		4,358		4,980		9,338
2018		3,833		3,657		7,490
2019		3,278		2,362		5,640
2020		2,581		493		3,074
2021 and thereafter		15,189		14		15,203
Total minimal rental commitments	$	34,552	$	17,121	$	51,673

Total rent expense was $16,448,000, $15,163,000 and $13,575,000 for fiscal years 2015, 2014 and 2013, respectively.

2. Other 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 worker’s compensation and automobile 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 $8,200,000 and $8,100,000 at September 26, 2015 and September 27, 2014, respectively. In connection with certain self-insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At September 26, 2015 and September 27, 2014, we had outstanding letters of credit totaling $9,075,000 and $9,075,000, respectively.

We have a self-insured medical plan which covers approximately 1,500 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 26, 2015 and September 27, 2014 was $1,659,000 and $1,853,000, respectively.

NOTE K - CAPITAL STOCK

In our fiscal year ended September 27, 2014, we purchased and retired 81,685 shares of our common stock at a cost of $7,504,729.

In our fiscal year ended September 28, 2013, we purchased and retired 204,397 shares of our common stock at a cost of $14,500,215.

F-22

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE L – 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 were 800,000 shares reserved under the Plan; options for 340,546 shares remain unissued as of September 26, 2015. There are options that were issued under an option plan that has since expired 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 2015, 2014 and 2013 employees purchased 13,648, 15,650 and 19,804 shares at average purchase prices of $86.01, $70.40 and $52.61, respectively. ESPP expense of $328,000, $329,000 and $363,000 was recognized for fiscal years 2015, 2014 and 2013, respectively.

A summary of the status of our stock option plans as of fiscal years 2015, 2014 and 2013 and the changes during the years ended on those dates is represented below:

	Incentive Stock Options					Nonqualified Stock Options
	Stock Options Outstanding			Weighted- Average Exercise Price		Stock Options Outstanding			Weighted- Average Exercise Price

Balance, September 30, 2012		355,680		$	47.16		211,247		$	41.36
Granted		1,600			63.13		20,000			80.79
Exercised		(84,628	)		34.58		-			-
Canceled		(12,800	)		51.01		-			-

Balance, September 28, 2013		259,852			51.17		231,247			44.77
Granted		83,440			82.07		38,132			88.26
Exercised		(39,097	)		42.42		(20,000	)		20.43
Canceled		(8,550	)		58.68		-			-


Balance, September 27, 2014		295,645			60.83		249,379			53.38
Granted		114,488			100.94		55,152			106.96
Exercised		(70,792	)		47.30		(6,590	)		51.14
Canceled		(6,989	)		84.13		-			-


Balance, September 26, 2015		332,352		$	77.04		297,941		$	63.34
Exercisable Options
September 26, 2015		140,263		$	55.34		164,657		$	41.57

The weighted-average fair value of incentive options granted during fiscal years ended September 26, 2015, September 27, 2014 and September 28, 2013 was $15.27, $15.24 and $13.76, respectively. The weighted-average fair value of non-qualified stock options granted during the fiscal years ended September 26, 2015, September 27, 2014 and September 28, 2013 was $21.90, $17.34 and $28.30, respectively. The total intrinsic value of stock options exercised was $4.8 million, $3.4 million and $2.7 million in fiscal years 2015, 2014 and 2013, respectively.

F-23

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE L – STOCK OPTIONS (continued)

The total cash received from these option exercises was $3.1 million, $1.5 million and $2.6 million in fiscal years 2015, 2014 and 2013, respectively; and the actual tax benefit realized from the tax deductions from these option exercises was $874,000, $1.0 million and $666,000 in fiscal years 2015, 2014 and 2013, respectively.

The following table summarizes information about incentive stock options outstanding as of September 26, 2015:

			Options Outstanding						Options Exercisable
			Number		Weighted-				Number
			Outstanding		Average		Weighted-		Exercisable		Weighted-
			at		Remaining		Average		at		Average
Range of			September 26,		Contractual		Exercise		September 26,		Exercise
Exercise Prices			2015		Life		Price		2015		Price
$44.16	-	$57.99		141,363		1.5	$	55.35		140,263	$	55.34
$79.45	-	$117.65		190,989		3.9	$	93.10		-		-

Total options				332,352						140,263

The following table summarizes information about nonqualified stock options outstanding as of September 26, 2015:

			Options Outstanding						Options Exercisable
			Number		Weighted-				Number
			Outstanding		Average		Weighted-		Exercisable		Weighted-
			at		Remaining		Average		at		Average
Range of			September 26,		Contractual		Exercise		September 26,		Exercise
Exercise Prices			2015		Life		Price		2015		Price
$29.78	-	$41.75		100,000		2.2	$	34.32		100,000	$	34.32
$47.59	-	$57.99		84,657		3.8	$	53.86		64,657		52.79
$80.79	-	$117.85		113,284		6.6	$	96.04		-		-
Total options				297,941						164,657

NOTE M – 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 $1,836,000, $1,686,000 and $1,624,000 were made in fiscal years 2015, 2014 and 2013, respectively.

NOTE N – CASH FLOW INFORMATION

The following is supplemental cash flow information:

	Fiscal Year Ended
	September 26,		September 27,		September 28,
	2015		2014		2013
			(in thousands)
Cash paid for:
Interest	$	53	$	41	$	50
Income taxes		43,867		41,318		35,496

Non cash items:
Capital leases	$	1,191	$	499	$	-

F-24

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE O – 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 Makers. We have applied no aggregate 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

Retail Supermarkets

Frozen Beverages

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

F-25

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE O – SEGMENT REPORTING (continued)

	Fiscal year ended

	September 26,			September 27,			September 28,
	2015			2014			2013
	(52 weeks)			(52 weeks)			(52 weeks)
				(in thousands)
Sales to External Customers:
Food Service
Soft pretzels	$	168,970		$	164,680		$	145,026
Frozen juices and ices		54,454			53,888			48,831
Churros		56,602			55,929			56,099
Handhelds		21,817			24,248			26,488
Bakery		301,135			281,556			274,783
Other		13,657			11,597			9,532
Total Food Service	$	616,635		$	591,898		$	560,759

Retail Supermarket
Soft pretzels	$	35,727		$	34,830		$	34,597
Frozen juices and ices		72,174			59,404			48,077
Handhelds		18,957			21,354			22,528
Coupon redemption		(4,725	)		(3,807	)		(3,681	)
Other		1,244			863			818
Total Retail Supermarket	$	123,377		$	112,644		$	102,339

Frozen Beverages
Beverages	$	142,705		$	133,283		$	132,274
Repair and maintenance service		65,765			59,805			52,813
Machines sales		26,413			20,224			17,376
Other		1,361			1,597			2,122
Total Frozen Beverages	$	236,244		$	214,909		$	204,585

Consolidated Sales	$	976,256		$	919,451		$	867,683

Depreciation and Amortization:
Food Service	$	21,289		$	20,882		$	18,999
Retail Supermarket		1,132			492			31
Frozen Beverages		15,850			15,719			14,522
Total Depreciation and Amortization	$	38,271		$	37,093		$	33,552

Operating Income:
Food Service	$	75,286		$	73,731		$	65,907
Retail Supermarket		11,020			11,201			8,594
Frozen Beverages		24,582			21,916			22,903
Total Operating Income	$	110,888		$	106,848		$	97,404

Capital Expenditures:
Food Service	$	28,228		$	21,594		$	19,097
Retail Supermarket		112			26			-
Frozen Beverages		21,756			17,211			16,724
Total Capital Expenditures	$	50,096		$	38,831		$	35,821

Assets:
Food Service	$	547,117		$	516,916		$	486,015
Retail Supermarket		24,209			25,917			6,067
Frozen Beverages		171,609			161,940			153,579
Total Assets	$	742,935		$	704,773		$	645,661

F-26

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE P - ACCUMULATED OTHER COMPREHENSIVE LOSS:

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

	Fiscal Year Ended September 26, 2015
	(in thousands)


	Foreign Currency Translation Adjustments			Unrealized Holding Loss on Marketable Securities			Total

Beginning Balance	$	(4,632	)	$	(1,356	)	$	(5,988	)

Other comprehensive loss before reclassifications		(5,389	)		(2,607	)		(7,996	)

Amounts reclassified from accumulated other comprehensive income		-			3,087			3,087

Ending Balance	$	(10,021	)	$	(876	)	$	(10,897	)

All amounts are net of tax.

	Fiscal Year Ended September 27, 2014
	(in thousands)


	Foreign Currency Translation Adjustments			Unrealized Holding Loss on Marketable Securities			Total

Beginning Balance	$	(3,703	)	$	(2,227	)	$	(5,930	)


Other comprehensive (loss) income before reclassifications		(929	)		505			(424	)

Amounts reclassified from accumulated other comprehensive income		-			366			366

Ending Balance	$	(4,632	)	$	(1,356	)	$	(5,988	)

All amounts are net of tax.

F-27

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE Q - QUARTERLY FINANCIAL DATA (UNAUDITED)

	Fiscal Year Ended September 26, 2015
	Net Sales		Gross Profit		Net Earnings		Net Earnings Per Diluted Share(1)
	(in thousands, except per share information)

1st Quarter	$	212,752	$	61,101	$	11,256	$	0.60
2nd Quarter		225,008		66,950		14,637		0.78
3rd Quarter		278,724		90,396		24,462		1.30
4th Quarter		259,772		82,443		19,828		1.05
Total	$	976,256	$	300,890	$	70,183	$	3.73

	Fiscal Year Ended September 27, 2014
	Net Sales		Gross Profit		Net Earnings		Net Earnings Per Diluted Share(1)
	(in thousands, except per share information)

1st Quarter	$	203,523	$	59,906	$	12,426	$	0.66
2nd Quarter		205,321		61,113		13,521		0.72
3rd Quarter		257,113		84,368		23,678		1.26
4th Quarter		253,494		82,190		22,189		1.18
Total	$	919,451	$	287,577	$	71,814	$	3.82

(1) Total of quarterly amounts do not necessarily agree to the annual report amounts due to separate quarterly calculations of weighted average shares outstanding.

F-28

J & J SNACK FOODS CORP. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Year	Description	Opening Balance		Charge to Expense			Deductions			Closing Balance

2015	Allowance for doubtful accounts	$	450,000	$	310,000		$	456,000	(1)	$	304,000

2014	Allowance for doubtful accounts	$	854,000	$	161,000		$	565,000	(1)	$	450,000

2013	Allowance for doubtful accounts	$	987,000	$	(70,000	)	$	63,000	(1)	$	854,000



2015	Inventory Reserve	$	3,982,000	$	3,771,000		$	5,126,000	(2)	$	2,627,000

2014	Inventory Reserve	$	4,449,000	$	2,626,000		$	3,093,000	(2)	$	3,982,000

2013	Inventory Reserve	$	3,883,000	$	2,768,000		$	2,202,000	(2)	$	4,449,000

(1) Write-offs of uncollectible accounts receivable.

(2) Disposals and write-offs of obsolete inventory.

S-1