FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

               [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 27, 1997

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

        For the transition period from ____________ to _________________
                         Commission File Number 0-13544

                          BEN & JERRY'S HOMEMADE, INC.
             (Exact name of registrant as specified in its charter)

Vermont                                   03-0267543
(State of incorporation)                  (I.R.S. Employer Identification No.)

30 Community Drive
South Burlington, Vermont                        05403-6828
-------------------------                        ----------
(Address of principal executive offices)         (Zip Code)

Registrant's telephone number, including area code: 802-651-9600

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

                  Class A Common Stock, $.033 par value per share Class B Common
                  Stock, $.033 par value per share

     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 for 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 if disclosure of delinquent  filers pursuant to Item
405 of  Regulation  S-K  (225.405)  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.
                                            Yes  x     No

     The  aggregate  market  value of the  Company's  Class A and Class B Common
Stock  held by  non-affiliates  was  approximately  $99,666,648  and  $4,436,040
respectively, at March 6, 1998.

     At March 6, 1998,  6,381,217  shares of the Company's  Class A Common Stock
and 862,274 shares of the Company's Class B Common Stock were outstanding.

Page 1 of 130 pages.  Exhibit Index appears on page 37.

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                         BEN & JERRY'S HOMEMADE, INC.

                          1997 FORM 10-K ANNUAL REPORT

                                Table of Contents

                                                                           Page

Item 1.    Business...........................................................1

Item 2.    Properties........................................................15

Item 3.    Legal Proceedings.................................................15

Item 4.    Submission of Matters to Vote of Security Holders.................16

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters...............................................17

Item 6.    Selected Financial Data...........................................18

Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations...............................19

Item 8.    Financial Statements and Supplementary Data.......................26

Item 9.    Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure............................26

Item 10.   Directors and Executive Officers of the Company...................27

Item 11.   Executive Compensation............................................30

Item 12.   Security Ownership of Certain Beneficial Owners
           and Management....................................................32

Item 13.   Certain Relationships and Related Transactions....................34

Item 14.   Exhibits, Financial Statements, and Financial
           Statement Schedules, and Reports on Form 8-K......................37


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Item 1.  Business

Introduction

Ben & Jerry's  Homemade,  Inc.  ("Ben & Jerry's" or the  "Company") is a leading
manufacturer of super premium ice cream,  frozen yogurt and sorbet in unique and
regular flavors.  The Company also manufactures ice cream novelty products.  The
Company  uses  natural  ingredients  in its  products.  The  Company  embraces a
philosophy that manifests  itself in these  attributes:  being real and "down to
earth",  being humorous and having fun, being  non-traditional  and  alternative
and, at times, activists around our progressive values.

The Company's  products are currently  distributed  throughout the United States
primarily through  independent  distributors.  However,  the Company's marketing
resources are  concentrated on certain "target  markets"  including New England,
New York, the Mid-Atlantic region,  Florida,  Texas, the West Coast and selected
other  major  markets,  including  the  Midwest ( defined  for this  purpose  as
Chicago, Illinois, Minnesota, Wisconsin and Michigan) and Denver areas. In 1997,
approximately 80% of the sales of the Company's packaged pints were attributable
to these target  markets.  The Company's  products are also available in certain
"non-target"  markets in the United  States and in the United  Kingdom,  France,
Israel,  Canada,  the Netherlands and Belgium and commencing in 1998, Japan. The
Company currently markets flavors of its ice cream,  frozen yogurt and sorbet in
packaged  pints,  for sale  primarily in  supermarkets,  other  grocery  stores,
convenience  stores and other  retail  food  outlets and in bulk,  primarily  to
restaurants and Ben & Jerry's franchised "scoop shops."

The  Company  began  active  operations  in May 1978,  when Ben  Cohen,  now the
Company's Chairperson, and Jerry Greenfield, now the Company's Vice Chairperson,
opened a retail store in a renovated  gas station in  Burlington,  Vermont.  The
Company   believes   that  it  has   maintained  a  reputation   for   producing
gourmet-quality,  natural ice cream and for sponsoring or creating light-hearted
promotions  that foster an image as an independent  socially  conscious  Vermont
company.

The Board of  Directors  of the  Company  has since  1988  formalized  its basic
business  philosophy  by  adopting a three part  "mission  statement"  for Ben &
Jerry's.  The statement includes a "product  mission," to "make,  distribute and
sell the finest  quality  all-natural  ice cream";  an  "economic  mission,"  to
"operate  the  Company  on a sound  financial  basis...increasing  value for our
shareholders  and creating career  opportunities  and financial  rewards for our
employees";  and a "social  mission,"  to  "operate  the  Company  in a way that
actively  recognizes  the central role that  business  plays in the structure of
society by initiating


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innovative  ways to improve  the  quality of life of a broad  community:  local,
national  and  international.  Underlying  the  mission  of Ben & Jerry's is the
determination to seek new and creative ways of addressing all three parts, while
holding a deep  respect for  individuals  inside and outside the Company and for
the  communities  of which  they are a part."  Since 1988 the  Company's  Annual
Report  to  Stockholders  has  contained  a  "social  report"  on the  Company's
performance  during the year. The Company's social mission has always been about
more than philanthropy, product donations and community relations. Ben & Jerry's
has strived to integrate  into its day to day  business  decisions a concern for
the community and to seek ways to lead with progressive values.

The Company makes cash  contributions  equal to 7 1/2% of its pretax  profits to
philanthropy through The Ben & Jerry's Foundation (the "Foundation"),  Community
Action Teams, which are employee led groups from each of its five Vermont sites,
and through corporate grants.  Excluded from the 7 1/2% are contributions out of
a portion of the proceeds of incidental operations, not directly relating to Ben
& Jerry's core business of the manufacturing and selling of Ben & Jerry's frozen
desserts, such as a portion of the admission fees for plant tours, and excluding
corporate sponsorships that have as one of their purposes the furtherance of Ben
& Jerry's  marketing  goals.  For 1997,  the 7 1/2%  amounted  to  approximately
$510,000.  The amount of the Company's cash contribution is subject to review by
the Board of Directors  from time to time in light of the Company's  cash needs,
its  operating  results,  existing  conditions in the industry and other factors
deemed relevant by the Board. See "The Ben & Jerry's Foundation."

In some  instances  where the Company pays  royalties  for the licensed use of a
flavor  name,  the  licensor  donates  all or a portion  of these  royalties  to
charitable organizations.  For example, in 1997, the Company launched Phish Food
(TM) ice cream and paid the Vermont-based band Phish $159,000 in royalties.  The
band  has   established   a  Foundation  to  donate  all  of  its  royalties  to
environmental causes in the Lake Champlain Region of Vermont.

Ben & Jerry's  maintains a special tie to the Vermont  community in which it had
its  origins.  The  Company  donates  product  to public  events  and  community
celebrations  in the Vermont area.  Each county in Vermont is covered by a Ben &
Jerry's Community Action Team. Also, the Company,  acting as an agent, transfers
funds to charitable  organizations  throughout  Vermont derived from the sale of
product to participating Vermont retail grocers.

Ben & Jerry's has,  through the years,  taken actions intended to strengthen the
Company's  ability to remain an  independent,  Vermont-based  company focused on
carrying out its three part  corporate  mission.  Ben & Jerry's  believes  these
actions are in the best  interests of the Company,  its  stockholders,employees,
suppliers,  customers and the Vermont community.  See "Anti-Takeover  Effects of
Class  B  Common  Stock,  Class  A  Preferred  Stock  and  Classified  Board  of
Directors".

In 1991 the Company decided to pay not less than a certain minimum price for its
dairy  ingredients,  other  than  yogurt  cultures,  to bring the price up to an
amount based upon the average price for dairy products in certain prior periods.
This  commitment  is part of an effort to foster  the  supply of  Vermont  dairy
products  and  thereby  also seek to maintain  the  long-term  viability  of the
Company's  source of supply of its  principal  dairy  ingredients,  against  the
marketplace background of a


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continuing trend of decreasing family dairy farms in Vermont.  In early 1994 the
Company's  agreement  with the St.  Albans  Cooperative  Creamery was amended to
include,  as a condition for payment of the premium,  an assurance  from the St.
Albans  Cooperative  Creamery  that the milk and cream  purchased by the Company
will not come from cows that have been treated with  Recombinant  Bovine  Growth
Hormone ("rBGH"), a synthetic growth hormone approved by the FDA.

In December  1997,  the St. Albans'  Cooperative  Creamery's  board of directors
approved  a motion to allow for  controlled  use of rBGH by a limited  amount of
member  farms  beginning  July 1,  1998.  The Co-op has  assured us that it will
continue to provide Ben & Jerry's with an rBGH-free  dairy  supply.  The Company
will continue to offer a premium to Co-op member farms that do not use rBGH. 

In 1997 the Company settled its litigation against the State of Illinois,  which
cleared  the way for the Company  and other  dairy  processors  who so desire to
label their  product as being from cows not  treated  with rBGH,  an  artificial
growth hormone.

In 1992, the Company became a signatory to the CERES  Principals  adopted by the
Community  for  Environmentally  Responsible  Economies.  The  CERES  Principles
establish an environmental ethic with criteria by which investors and others can
assess  the  environmental  performance  of  companies.  Ben & Jerry's is also a
member of Businesses for Social Responsibility, Inc. ("BSR"), an organization in
San Francisco,  California  which  promotes a concept of business  profitability
that includes  environmental  responsibility and social equity. Ben & Jerry's is
also a member of the Social  Venture  Network and Vermont  Businesses for Social
Responsibility.

The Super Premium Ice Cream, Frozen Yogurt and Sorbet Market

The packaged ice cream industry includes economy, regular, premium, premium plus
and super premium products.  Super premium ice cream is generally  characterized
by a greater richness and density than other kinds of ice cream.

This  higher  quality  ice cream  generally  costs more than other  kinds and is
usually marketed by emphasizing  quality,  flavor  selection,  texture and brand
image. Other types of ice cream are largely marketed on the basis of price.

Super premium ice cream,  super premium frozen yogurt and, more recently,  super
premium sorbet have become an important part of the frozen dessert industry.  In
response to the demand for lower fat, lower  cholesterol  products,  the Company
introduced  its own super  premium  low fat frozen  yogurt in 1992,  and non-fat
frozen yogurt in 1995. In February 1996, the Company introduced


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lactose-free and  cholesterol-free  sorbet. In 1997, Ben & Jerry's  introduced a
new line of low fat ice cream.

The Company believes,  based on information  provided by Information  Resources,
Inc., a software and marketing  information services company ("IRI"), that total
annual U.S. sales in  supermarkets  at retail prices  (defined as grocery stores
with annual revenues of at least $2 million) of super premium ice cream,  frozen
yogurt,  and sorbet were  approximately $428 million in 1997 compared with about
$438 million in 1996. All of the information in this paragraph is taken from IRI
data.

Ben & Jerry's Super Premium Ice Cream, Frozen Yogurt and Sorbet

Ben &  Jerry's  ice  cream has a high  level of  butterfat  and low level of air
incorporation  during the freezing  process.  The approximate fat content is 15%
(excluding  add-ins).  The  approximate  overrun (a measurement of the volume of
air) is 20%.  These  physical  attributes  give the ice cream the rich taste and
dense,  creamy  texture that  characterizes  super  premium ice creams.  The fat
content of the ice cream is derived  primarily  from the butterfat in the cream,
and  secondarily  from egg yolks.  The ice cream mix consists of cream,  cane or
beet sugar, non-fat milk solids, egg yolks, and natural stabilizers.

Ben &  Jerry's  low fat  frozen  yogurt is a high  quality  frozen  yogurt  with
approximately 2% fat (excluding add-ins) and approximately 20% overrun.  The fat
content  of  frozen  yogurt  comes  from the  cream  used in the base  mix.  The
Company's  non-fat frozen yogurt has  approximately 0% fat and approximately 40%
overrun.  All our frozen yogurt  products are  sweetened  with pure cane or beet
sugar  and corn  syrup.  The  Company  purchases  cultured  yogurt  from  yogurt
manufacturers who use Vermont dairy ingredients.  Cultured yogurt is used in the
manufacturing of our frozen yogurt dessert products.

Ben & Jerry's  fruit  sorbets are a fat free frozen  dessert  with an overrun of
approximately  20%. The chocolate sorbet is a low fat product with approximately
2% fat (from the cocoa and chocolate  liquor).  All sorbets are  sweetened  with
pure cane or beet sugar and corn syrup. The water used to manufacture  sorbet is
Vermont Pure(TM) Spring Water.

In 1997, Ben & Jerry's introduced a line of low fat ice cream flavors. These low
fat ice creams  offer high  quality,  all natural  ingredients  with less than 3
grams of fat. The product line offers  exciting flavor  combinations,  chunks of
candy, and swirls of variegates with extraordinary flavor.

All Ben & Jerry's frozen  desserts are made of the finest  quality  ingredients.
Its ingredients  contain no preservatives or artificial  components  (except the
flavoring  component  in one of the  candies  that we  purchase).  To date,  the
Company has not


<PAGE>



experienced  any  difficulty  in obtaining  the dairy  products used to make its
frozen desserts.  The various  flavorings,  add-ins,  and variegates are readily
available from multiple suppliers throughout the country.

All the  Company's  plants  include mix  batching  facilities  which allow Ben &
Jerry's  to  manufacture  its own  dessert  mixes.  Ben & Jerry's  designed  and
modified special machinery to mix large chunks of cookies,  candies,  fruits and
nuts  into our  frozen  desserts.  The  Company  has also  designed  proprietary
processes for swirling variegates (dessert sauces) into its finished products.

The Company also makes ice cream  novelty  products,  including a variety of ice
cream bars such as Cherry Garcia(R),  Cookie Dough,  Phish Stick(TM) , Dilbert's
World(TM)-Totally Nuts(TM) and Peanut Butter & Jelly(TM).

In 1997,  the  Company  entered  into a license  agreement  with Paul Newman and
Newman's Own to manufacture and market a line of Premium Plus ice cream products
under the brand name "Newman's Own".  These products will be manufactured at the
Company's manufacturing facilities in Vermont.

Ben & Jerry's other license agreements include licenses from the estate of Jerry
Garcia  formerly of the Grateful  Dead rock group with respect to the  Company's
Cherry Garcia(R) flavor;  political cartoonist Garry Trudeau and Universal Press
Syndicate  with respect to the  Company's  Doonesberry(TM)  flavor of the sorbet
line  of   products;   Wavy  Gravy  for  the  flavor  Wavy  Gravy;   with  Phish
Merchandising,  Inc.  with  respect  to Phish  Food(TM),  a flavor  launched  in
February  of 1997;  and  from  United  Feature  Syndicate,  Inc.  for use of the
trademark Dilbert for the flavor Dilbert's World(TM)-Totally Nuts(TM) introduced
in 1998.

Manufacturing

The Company manufactures Ben & Jerry's super premium ice cream and frozen yogurt
pints at its  Waterbury,  Vermont  plant.  The Company  generally  operates  its
Waterbury  plant 2 shifts a day,  five or six days per week  depending on demand
requirements.  In the fourth  quarter of 1997, the Company  temporarily  stopped
production  at this  site to begin an  upgrade  of the  production  lines.  This
project  was  completed  in  early  1998.  In  1997,  the  Company  manufactured
approximately 3.9 million gallons at this facility.

The Company's Springfield, Vermont plant is used for the production of ice cream
novelties,  ice cream,  frozen yogurt,  low fat ice cream and sorbet packaged in
bulk, pints, quarts and half gallons.  In 1997 the plant produced  approximately
1.1 million


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dozen  novelties,  2.2  million  gallons  of bulk ice cream,  frozen  yogurt and
sorbet,  packaged pints and quarts. In 1997, the Company generally  operated the
Springfield  plant five to six days per week, with one or two production  shifts
depending on the season.

The Company  manufactures  Ben & Jerry's super premium ice cream,  frozen yogurt
and sorbet in packaged  pints at its St.  Albans,  Vermont  plant which in March
1995,  started  manufacturing  ice cream on one line using a temporary  nitrogen
tunnel  hardening  system.  A second line began  operation in December 1995. The
Company added a third  manufacturing line to the plant and began using this line
for  production  in 1996.  This  line was also  used in 1997 to meet  peak  pint
production requirements and is currently being outfitted to produce ice cream in
single serve packaging starting in 1998. In 1997, the plant produced 7.6 million
gallons of packaged pints. The Company  generally  operated St. Albans plant two
shifts a day for five to six days per week depending on demand requirements.

Markets and Customers

The  Company  markets  packaged  pints,  quarts and novelty  products  primarily
through supermarkets,  other grocery stores, convenience stores and other retail
food  outlets.  The  Company  markets ice cream,  frozen  yogurt and sorbet in 2
1/2-gallon bulk containers  primarily  through  franchised (and 2 Company-owned)
Ben & Jerry's "scoop shops" and through restaurants.

Ben & Jerry's  products are  distributed  primarily  through  Dreyer's Grand Ice
Cream,  Inc.  ("Dreyer's")  and through  other  independent  regional  ice cream
distributors.  With some exceptions,  only one distributor is appointed for each
territory  for  supermarkets.  In  most  areas,  sub-distributors  are  used  to
distribute  to  the  smaller   classes  of  trade.   Company  trucks  and  other
distributors distribute products that are sold in Vermont and upstate New York.

Ben & Jerry's has a  distribution  agreement  with Dreyer's under which Dreyer's
acts as the master  distributor  (with  exclusivity,  in  general,  for sales to
supermarkets  and  similar  accounts)  of Ben & Jerry's  products in most of the
Company's  markets  outside of New England,  upstate New York and  Pennsylvania.
Dreyer's  markets its own premium  ice cream under both the  Dreyer's  and Edy's
brand  names,  as well as,  premium  plus ice cream  under  the  brand  names of
Starbucks  (a product  produced  under a joint  venture  between  Starbucks  and
Dreyer's Grand Ice Cream) and Portofino,  and certain frozen dessert products of
other companies. Dreyer's does not produce or market any other super premium ice
cream or frozen  yogurt (other than  novelties),  and in the event that Dreyer's
were to distribute another super premium ice cream, or frozen yogurt in any part
of its territory,  Dreyer's would lose the contractual exclusivity granted to it
as


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a Ben & Jerry's  distributor  under the  agreement.  The agreement also contains
certain  additional  provisions  specific to the greater  metropolitan  New York
market,  including  special  limitations  on the  ability  of  either  party  to
terminate  the  agreement  with respect to the New York market prior to December
31, 1998. Net sales to Dreyer's  accounted for  approximately 57% and 55% of the
Company's net sales for 1997 and 1996, respectively.

In the event that Dreyer's were to terminate the agreement  without  cause,  the
agreement provides for a twelve month notice period (subject to reduction by the
Company) and specified  minimum  purchase  requirements  by Dreyer's  during the
notice  period.  In addition,  the agreement  provides for  termination by Ben &
Jerry's  without cause for a twelve month notice period (subject to reduction by
the Company and Dreyer's under certain conditions) and specified minimum selling
obligations  to Dreyer's  during the notice period.  The agreement  provides for
termination  by Ben &  Jerry's  or  Dreyer's  on short  notice  for  cause.  The
agreement also contains certain  provisions for termination by one party (at its
election) upon a change in control (as defined) of the other, in which event the
terminated  party  experiencing  the change in control has a minimum purchase or
sale obligation,  as the case may be, for a specified additional period and also
must make a $20 million  termination  payment (adjusted by the CPI index) to the
other party. In addition,  the agreement states that in the event that Dreyer's,
directly or indirectly introduces, acquires, or distributes in the United States
another  super  premium  product (as  defined),  the Company may  terminate  the
agreement  and  Dreyer's  must make a $20  million  termination  payment  to the
Company.  The common stock of Dreyer's is publicly traded. In April 1994, Nestle
USA, Inc. (a U.S. subsidiary of a large international  conglomerate)  acquired a
significant minority equity position in Dreyer's. Dreyer's reported net sales of
$970 Million in 1997. (See also "Competition")

The  relationship  between the Company and Dreyer's  commenced in 1987,  and the
distribution  agreement has been amended  several times since then.  The Company
and Dreyer's  regularly  engage in  discussions  regarding ways to improve their
long-term  relationship to their mutual  benefit.  Any changes which are made in
the arrangement may have certain beneficial or adverse consequences, the effects
of which cannot be foreseen by the Company.

While the Company  believes that its  relationships  with Dreyer's and its other
distributors  generally have been satisfactory and that these relationships have
been instrumental in the Company's growth,  the Company has at times experienced
difficulties in maintaining these  relationships to its satisfaction.  Available
distribution  alternatives are limited.  Accordingly,  there can be no assurance
that such  difficulties,  which  may be  related  to  actions  by the  Company's
competitors or by one or more of the


<PAGE>



distributors themselves (or their controlling persons), will not have a material
adverse effect on the Company's  business.  Loss of one or more of the Company's
principal distributors or termination of one or more of the related distribution
agreements could have a material adverse effect on the Company's business.

In early 1998 Dreyer's  made  overtures to Ben Cohen and Jerry  Greenfield,  the
Company's co-founders,  to obtain their support for an offer that Dreyer's would
make to acquire the Company.  These  overtures were rejected by the  co-founders
who stated: "As stockholders, each of us has always been firmly committed to the
view that Ben & Jerry's  Homemade,  Inc.  should remain an  independent  company
headquartered  in Vermont,  in a position to carry out its three-part  corporate
mission.  Accordingly,  neither  of us will  agree  to  support  or vote for the
transaction with Dreyer's."

Marketing

Ben & Jerry's  marketing  strategy is  characterized by its focus on innovative,
non-traditional  methods of promotion.  The Company emphasizes the high quality,
natural ingredients in its products,  and the "down to earth and real", humorous
and non-traditional image of its products in its packaging,  sales materials and
promotional  campaigns.  In 1997,  the  Company  utilized  additional  marketing
tactics such as radio advertising in four large markets.

The founders of the Company,  are "two real guys" still actively involved in the
Company.  The founders continue to make personal appearances on TV, radio and at
select marketing events.

As the  Company  has  become a  significant  force in the super  premium  frozen
dessert category,  its marketing  emphasis has shifted from portraying itself as
the small "underdog" firm to a Company-wide focus on community involvement,  its
status  as  a  socially  responsible  business,   and  continuing  to  introduce
innovative,  high  quality  products.  In the  past,  the  Company  has  created
innovative  products  and  business  approaches  that  tend to  generate  unpaid
newspaper, magazine, radio and TV news coverage.

During 1997,  the Company  created and  produced  Ben & Jerry's "One World,  One
Heart"  Festival in Vermont.  The Company also  sponsored the Ben & Jerry's Folk
Festival in Newport, Rhode Island. These events,  attended by over 50,000 people
in  outdoor  public  areas and  accompanied  by ice cream  sampling  and  social
activism,  built customer loyalty and support for the Company's  products in the
future.

Ben & Jerry's  continues to conduct  guided tours of its facility in  Waterbury,
Vermont. In 1997, approximately 300,000 people visited the plant, making it (the
Company believes) the single most popular tourist attraction in the State.


<PAGE>





In 1997, the Company  introduced a new flavor,  Phish Food(TM),  under a license
arrangement  with the  Vermont-based  band  Phish.  The  Phish  Food(TM)  launch
included a video news release and a benefit concert held in Burlington, Vermont.
The  launch  successfully  garnered  public  relations  exposure  and  generated
significant  consumer interest in the flavor.  The band Phish donates all of its
royalties to a Foundation  whose mission is to promote  environmental  causes in
the Lake Champlain region.

The Company also  introduced low fat ice cream in 1997  responding to consumers'
interest  in high  quality,  low fat  products.  The low fat ice  cream  flavors
continue to incorporate  chunks and swirls in the ice cream consistent with many
of the flavors for which Ben & Jerry's is known.

Franchise Program

As of December 27, 1997,  there were 135 North  American  franchise  scoop shops
compared to 137 scoop shops and satellites for the year ended December 28, 1996.
At December 27,  1997,  there were 3 Company  owned scoop shops in Vermont.  The
franchise scoop shops are located throughout the United States. There are also 9
Ben &  Jerry's  franchise  scoop  shops in  Israel,  2 in  Canada,  and 3 in the
Netherlands.  In 1998,  the Company plans to open 3 Company owned scoop shops in
Paris, France.

New scoop shops are opened under existing Development Agreements,  and under new
Single Store Agreements.  Development Agreements require a franchisee to develop
a particular number of units annually according to the terms of their Agreement.
Partnershops(R)  are arrangements  that permit  non-profit  organizations to own
scoop shops that serve as an  employment  resource and  potentially  a source of
revenue for the non-profit  groups.  The Company waives the normal franchise fee
of $30,000.  In addition  the Company  provides  expertise  in the  start-up and
operation of the Partnershops(R).

The Company has assorted franchise concepts that include  traditional shops in a
variety  of  settings  as well  as five  Partnershops(R)  -  shops  operated  by
non-profit  organizations.  Franchise Agreements generally have initial terms of
five to ten  years.  Ben &  Jerry's  Franchise  scoop  shops  sell Ben & Jerry's
proprietary  and  non-proprietary  approved  items for  resale to the public and
include Ben & Jerry's ice cream, frozen yogurt, sorbet, private label hot fudge,
baked goods and toppings.  The menu items also include coffee  beverages,  fruit
smoothies, ice cream cakes, novelties and gift items.


<PAGE>








International

The Company  regularly  investigates the  possibilities of entering new markets.
Ben & Jerry's ice cream  products are now  distributed  nationally in the United
Kingdom and Israel and are available in parts of Ireland,  France,  Canada,  the
Netherlands and Belgium.

In 1992, the Company  repurchased the Canadian rights to Ben & Jerry's  products
that it had  previously  licensed  in 1987.  In 1987,  the  Company  granted  an
exclusive license to manufacture and sell Ben & Jerry's ice cream in Israel.

In 1997, the Company signed an Importation  and Marketing  Agreement with one of
the largest food retailers in Japan for sale through  Japanese  retail stores of
Ben & Jerry's  products  manufactured  in Vermont in a special size. The Company
plans a test market and product  launch in 1998. In 1997,  the Company  signed a
letter of intent with Royal Sporting House PTE, Ltd., a significant  distributor
and retailer headquartered in Singapore, for a license to distribute and sell in
all channels of distribution,  including  licensed Ben & Jerry's scoop shops and
products  purchased  from Ben &  Jerry's  for  resale  to  retail  outlets.  The
agreement covers  Singapore,  Malaysia,  Indonesia and the United Arab Emirates.
The parties intend that the arrangement will be finalized with respect to one or
more of these countries in 1998.

Competition

The super  premium  ice  cream,  frozen  yogurt and  sorbet  business  is highly
competitive, and with the distinction between the super premium category and the
"adjoining"  premium and premium plus  categories  less marked than in the past.
The  Company's  principal  competitor is The  Haagen-Dazs  Company,  Inc.  Other
significant frozen dessert competitors are Dannon,  Columbo,  Healthy Choice and
Starbucks.  Haagen-Dazs,  an  industry  leader  in the super  premium  ice cream
market,  is owned by The  Pillsbury  Company,  which in turn is owned by  Diageo
(previously  known  as Grand  Metropolitan  PLC),  a  British  food  and  liquor
conglomerate.   Diageo  is  a  large,   diversified   company   with   resources
significantly  greater than the  Company's,  and  Haagen-Dazs  has a significant
share of the markets that the Company has entered in recent  years.  Haagen-Dazs
has also entered  substantially more foreign markets than the Company (including
certain  markets in Europe and the Pacific Rim).  Haagen-Dazs  and certain other
competitors  also  market  flavors  using  pieces  of  cookies  and  candies  as
ingredients.

In the ice cream novelty segment,  the Company competes with several  well-known
brands, including Haagen-Dazs and Dove Bars, manufactured by a division of Mars,
Inc.  Both of these other brands have  achieved far larger shares of the novelty
market than the Company.


<PAGE>





During  1997,  the premium  category  again  experienced  increased  promotional
activity driven by the national  competition  between  Dreyer's Grand Ice Cream,
Inc.,  the  Company's  principal  distributor,  and Breyer's Ice Cream (owned by
Unilever,  a large  international  food  company).  In accordance  with Dreyer's
strategic  five  year plan to  accelerate  the  sales of their  branded  premium
products  Dreyer's has  increased its consumer  marketing  efforts and continued
expansion of its distribution  system into additional U.S. markets. In addition,
Dreyer's has two premium plus products sold under the  Starbuck's  and Portofino
brands.  In April 1998, Ben & Jerry's will be entering the premium plus category
for the first time with the  introduction  of  "Newman's  Own" line of ice cream
products.

As a result of the various  developments noted in this section on "Competition",
Dreyer's and the Company are viewed as competitors.

There are a number of other super premium  brands,  including  some regional ice
cream  companies and some new entries.  Increased  competition and the increased
consumer  demand for new lower fat, lower  cholesterol  products like low fat or
non-fat frozen yogurt, low fat ice cream and sorbet, combined with limited shelf
space within  supermarkets,  may have, in general,  made market entry harder and
has already  forced some brands out of some  markets.  The ability to  introduce
innovative  new  flavors  and low fat  offerings  on a periodic  basis is also a
significant  competitive  factor.  The Company  expects  strong  competition  to
continue,  including price/promotional  competition and competition for adequate
distribution  and limited  shelf  space  within the frozen  dessert  category in
supermarkets and other food retail outlets.

Seasonality

The ice cream,  frozen yogurt and frozen dessert industry generally  experiences
the highest  volume during the spring and summer months and the lowest volume in
the winter months.

Regulation

The Company is subject to regulation by various governmental agencies, including
the United  States Food and Drug  Administration  and the Vermont  Department of
Agriculture.  It must also obtain  licenses  from the states where Ben & Jerry's
products are sold. The criteria for labeling  low-fat/low-cholesterol  and other
health-oriented  foods  was  revised  in 1994,  and in some  respects  made more
stringent,  by the FDA. The Company,  like other companies in the food industry,
made  changes  in its  labeling  in  response  to  these  regulations  and is in
compliance.  The Company cannot predict the impact of possible  further  changes
that it may be required to make in response to  legislation,  rules or inquiries
made from time to time by governmental agencies. FDA


<PAGE>



regulations  may, in certain  instances,  affect the ability of the Company,  as
well as others in the  frozen  desserts  industry,  to  develop  and  market new
products.  Nevertheless,  the Company  does not believe  these  legislative  and
administrative  rules  and  regulations  will have a  significant  impact on its
operations.

In connection with the operation of all its plants, the Company must comply with
the Federal  and  Vermont  environmental  laws and  regulations  relating to air
quality,  waste  management,  and other  related land use  matters.  The Company
maintains wastewater  discharge permits for all of its manufacturing  locations.
The Waterbury  plant  pre-treats  production  effluent prior to discharge to the
municipal treatment facility. The Company believes that it is in compliance with
all of the required operational permits relating to environmental regulations.

Trademarks

The  name  Ben  &  Jerry's(R),  Vermont's  Finest(TM),  Partnershops(R),  Chunky
Monkey(R),  Chubby Hubby(R),  Dastardly Mash(R),  New York Super Fudge Chunk(R),
Peace  Pops(R),  Hunka Hunka  Burning  Fudge(TM),  Cool  Britannia(TM),  Totally
Nuts(TM),   Coffee,  Coffee  BuzzBuzzBuzz!(TM)  and  World's  Best(TM)  are  all
trademarks  of the  Company.  Cherry  Garcia(R),  Phish  Food(TM),  Wavy  Gravy,
Doonesberry(TM)  and Holy Cannoli(R),  which are also Ben & Jerry's  proprietary
flavor names, and are licensed to the Company.

Employees

At December 28, 1997,  Ben & Jerry's  employed 736 people  including  full time,
part time and temporary  employees.  This  represents a 4% increase from the 708
people employed by the Company at December 28, 1996.

The Ben & Jerry's Foundation

In 1985,  Ben Cohen,  Co-founder  of the Company,  contributed  a portion of the
equity of the Company which he then owned to The Ben & Jerry's Foundation, Inc.,
a charitable  organization under Section 501(c)(3) of the Internal Revenue Code,
in order to enable the Foundation to sell such equity in 1985 and invest the net
proceeds  (approximately  $598,000) in  income-producing  securities to generate
funds for future charitable grants. The Foundation,  with its employee-led grant
making committee, under supervision of the Foundation's directors,  provides the
principal  means for carrying out the  Company's  charitable  cash giving policy
across the nation. The Foundation  continues to target its grants to small grass
roots social change organizations.

In October 1985,  pursuant to stockholder  authorization,  the Company issued to
the Foundation all of the 900 authorized shares


<PAGE>



of Class A Preferred  Stock.  The Class A Preferred Stock gives the Foundation a
special  class  voting  right to act with  respect to certain  mergers and other
Business  Combinations  (as defined in the Company's  charter).  The issuance of
Preferred  Stock  was  designed  to  perpetuate  the  relationship  between  the
Foundation  and the Company and to assist the  Company in its  determination  to
remain an independent business headquartered in Vermont.

Anti-Takeover  Effects  of Class B Common  Stock,  Class A  Preferred  Stock and
Classified Board of Directors.

The holders of Class A Common Stock are entitled to one vote for each share held
on all matters  voted on by  stockholders,  including the election of directors.
The  holders of Class B Common  Stock are  entitled  to ten votes for each share
held in the election of directors and on all other  matters.  The Class B Common
Stock is generally nontransferable, and there is no trading market for the Class
B Common  Stock.  The Class B Common  Stock is freely  convertible  into Class A
Common  Stock  on  a  share-for-share  basis  and  transferable   thereafter.  A
stockholder  who does not wish to  complete  the prior  conversion  process  may
effect a sale by simply  delivering the  certificate  for such shares of Class B
Common  Stock to a broker,  properly  endorsed.  The broker may then present the
certificate to the Company's  Transfer Agent which, if the transfer is otherwise
in good  order,  will issue to the  purchaser  a  certificate  for the number of
shares of Class A Common Stock thereby sold.

The Company has been advised that Mr. Ben Cohen  (Chairperson  and a director of
the  Company),  Mr. Jerry  Greenfield  (Vice  Chairperson  and a director of the
Company)  and Mr. Jeff  Furman (a  director  and  formerly a  consultant  to the
Company) (collectively, the "Principal Stockholders") presently intend to retain
substantial  numbers  of  shares  of  Class  B  Common  Stock.  As a  result  of
conversions by "public" stockholders of Class B Common Stock, in order to enable
their  sales  of  such  securities,  the  Class  B  Common  Stock  is  now  held
disproportionately   by  Company  insiders,   including  the  above-named  three
directors who are  Principal  Stockholders.  See "Security  Ownership of Certain
Beneficial  Owners and  Management." As of March 6, 1998,  these three principal
individual  stockholders  held shares  representing  45% of the aggregate voting
power in  elections  of  directors  and  various  other  matters  and 17% of the
aggregate common equity  outstanding,  permitting  them, as a practical  matter,
generally to decide elections of directors and various other questions submitted
to a vote of the Company's  stockholders even though they might sell substantial
portions of their Class A Common Stock.

The Board of Directors,  without further stockholder approval, may authorize the
issuance of additional authorized but unissued shares of Class B Common Stock in
the  future  and  sell  shares  of Class B Common  Stock  held in the  Company's
treasury;


<PAGE>




In 1985, Ben Cohen, one of the Company's  co-founders,  contributed a portion of
the equity in the Company  which he then owned to The Ben & Jerry's  Foundation,
Inc. The current directors of the Foundation,  Messrs. Greenfield and Furman and
Ms.  Bankowski are also  directors of the Company.  The Class A Preferred  Stock
gives  the  Foundation  a class  voting  right to act with  respect  to  certain
Business  Combinations (as defined in the Company's charter).  The 1985 issuance
of the Class A Preferred Stock to the Foundation  effectively  limits the voting
rights that  holders of the Class A Common Stock and Class B Common  Stock,  the
owners of virtually all of the equity in the Company,  would otherwise have with
respect  to  Business  Combinations  (as  defined).  This may have the effect of
limiting such common stockholders' participation in certain transactions such as
mergers,  other Business Combinations (as defined) and tender offers, whether or
not such transactions might be favored by such common stockholders.

At the 1997 Annual Meeting the shareholders approved amendments to the Company's
Articles of Association to (a) classify the Board into three classes,  as nearly
as equal as possible,  so that each director (after a transitional  period) will
serve for three years,  with one class of directors being elected each year; (b)
provide that directors may be removed only for cause and with the approval of at
least  two-thirds  of the votes  cast on the  matter  by all of the  outstanding
shares  of  capital  stock of the  Company  entitled  to vote  generally  in the
election of  directors;  (c)  provide  that any  vacancy  resulting  from such a
removal may be filled by  two-thirds of the  directors  then in office;  and (d)
increase the  stockholder  vote  required to alter,  amend,  repeal or adopt any
provision inconsistent with these amendments approved by stockholders in 1997 to
at least  two-thirds  of the votes cast on the matter by all of the  outstanding
shares  of  capital  stock of the  Company  entitled  to vote  generally  in the
elections of directors, voting together.

The Company  believes the amendments  reduce the possibility  that a third party
could effect a change,  including a tender offer or a sudden or surprise  change
in the composition of the Company's  Board of Directors,  without the support of
the incumbent Board and accordingly that adoption of the amendments strengthened
Ben & Jerry's ability to remain an independent, Vermont-based company focused on
carrying out its three part corporate  mission,  which Ben & Jerry's believes is
in the best interest of the Company,  its  stockholders,  employees,  suppliers,
customers and the Vermont community.

The Class B Common Stock,  the Class A Preferred Stock and the Classified  Board
of Directors may be deemed to be "anti-takeover" provisions in that the Board of
Directors  believes the existence of these securities and the 1997 amendments to
the Articles of Association  will make it difficult for a third party to acquire
control of the Company on terms opposed by the holders of the


<PAGE>



Class B Common Stock,  including primarily the Principal  Stockholders,  and the
Foundation or for incumbent management and the Board of Directors to be removed.
See also "Risk Factors" in Item 7 of this Report.

Item 2.  Properties

The Company  owns three  production  facilities.  Ben & Jerry's owns a 42.5 acre
site in  Waterbury,  Vermont  on which it  operates a 46,000  square-foot  plant
producing ice cream and frozen yogurt in packaged  pints.  The Company owns a 12
acre site in  Springfield,  Vermont on which it  operates  a 48,000  square-foot
production  facility.  The  Springfield  plant is used for the production of ice
cream  novelties,  bulk ice cream and frozen yogurt and at times  packaged pints
and quarts.

The  Company's  property,  plant and equipment at its  production  facilities in
Waterbury and Springfield are subject to various liens securing a portion of the
Company's long-term debt.

In 1991,  the Company  entered into a  twenty-five  year lease with an option to
purchase  17.1  acres  of land in  Rockingham,  Vermont  on  which  the  Company
constructed and operates a 45,000 square-foot central distribution facility.

The Company owns a 42 acres site in St.  Albans,  Vermont on which it operates a
92,000 square foot manufacturing facility. In February 1996, the Company entered
into a ten year lease agreement for approximately  69,000  square-feet of office
and warehousing space in South Burlington, Vermont where the Company's executive
offices and administrative departments are located.

The Company also leases space for its retail ice cream parlors in Burlington and
Montpelier,  Vermont.  The Company owns three  single-family  houses,  which are
situated on land adjacent to its manufacturing facility it Waterbury, used for a
day-care center, employee training and other purposes.

The Company  believes that all of its facilities are well maintained and in good
repair.




Item 3.  Legal Proceedings

On December 14, 1995, the Company was served with a class action complaint filed
in federal court in  Burlington,  Vermont.  The  complaint,  captioned  Henry G.
Jakobe,  Jr. v. Ben & Jerry's Inc., et al.,  United  States  District  Court (D.
Vermont)  Case No.  1-95-CV-373,  was  filed by a Ben & Jerry's  shareholder  on
behalf of himself and purportedly on behalf of all other Ben & Jerry's


<PAGE>



shareholders  who  purchased  the common stock of the Company  during the period
from March 25, 1994  through  December  19,  1994.  Plaintiff  alleges  that the
Company  violated  the  federal  securities  laws by  making,  in  1994,  untrue
statements  of material  facts and omitting to state  material  facts  primarily
concerning  the  Company's  construction  and start-up of its new  manufacturing
facility in St. Albans,  Vermont. Also named as defendants in the Complaint were
certain present and former officers and directors of the Company. On October 31,
1996 the Court dismissed all but one of Plaintiff's claims.

On July 1, 1997,  the  Company  entered  into a  Stipulation  and  Agreement  of
Settlement with the Plaintiff  Class. On September 4, 1997, the Court entered an
Order   approving  the   Stipulation   and  Agreement  of  Settlement.   Despite
Management's  continued  belief that the remaining claim in Plaintiffs' suit was
without merit, it was determined  that the costs  associated with defending this
lawsuit  through its  conclusion  at trial would be greater than the  negotiated
settlement amount (a portion of which was reimbursed by the Company's  insurance
carrier).  Therefore,  management concluded that settling this matter was in the
best interest of the Company and its shareholders.

The Company is subject to certain  litigation and claims in the ordinary  course
of  business  which  management  believes  are  not  material  to the  Company's
business.

Item 4.  Submission of Matters to Vote of Security Holders

No matters were  submitted to a vote of security  holders of the Company  during
the fourth quarter of 1997.



<PAGE>



                                                      PART II

Item 5.  Market for Registrant's Common Equity and Related
         Stockholder Matters

The  Company's  Class A Common  Stock is traded on the  NASDAQ  National  Market
System under the symbol  BJICA.  The  following  table sets forth for the period
December 31, 1995 through March 6, 1998 the high and low closing sales prices of
the Company's Class A Common Stock for the periods indicated.
                                            
                                                  High           Low
                                                  ----           ---
1996
----

         First Quarter......................    $ 17 1/4       $ 13
         Second Quarter.....................      19 1/2         14
         Third Quarter......................      17 3/4         12 1/4
         Fourth Quarter.....................      14 3/4         10 7/8

1997
----

         First Quarter......................    $ 14 3/8       $ 10 7/8
         Second Quarter.....................      14 1/2         11
         Third Quarter......................      14 1/2         12
         Fourth Quarter.....................      17             12 1/4
1998
----

         First Quarter (through March 6,1998)   $ 18 7/16      $ 14

The Class B Common Stock is generally non-transferable,  and there is no trading
market for the Class B Common Stock. However, the Class B Common Stock is freely
convertible  into  Class  A  Common  Stock  on  a  share-for-share   basis,  and
transferable  thereafter.  A stockholder who does not wish to complete the prior
conversion  process may effect a sale by simply  delivering the  certificate for
such shares of Class B Stock to a broker, properly endorsed. The broker may then
present the  certificate to the Company's  Transfer Agent which, if the transfer
is otherwise in good order,  will issue to the purchaser a  certificate  for the
number of shares of Class A Stock thereby sold.

As of March 6, 1998 there were 10,612 holders of record of the Company's Class A
Common Stock and 2,135 holders of record of the Company's Class B Common Stock.



<PAGE>



Item 6.  Selected Financial Data

The following table contains  selected  financial  information for the Company's
fiscal years 1993 through 1997.

                                       (In thousands except per share data)
Summary of Operations:
<TABLE>
<CAPTION>

                                                       Fiscal Year
                                                       -----------
                                      1997        1996        1995        1994       1993
                                      ----        ----        ----        ----       ----
                         
<S>                              <C>         <C>         <C>         <C>         <C>     
Net sales                        $ 174,206   $ 167,155   $ 155,333   $ 148,802   $140,328
Cost of sales                      114,284     115,212     109,125     109,760    100,210
Gross profit                        59,922      51,943      46,208      39,042     40,118
Selling, general
   and administrative
   expenses                         53,520      45,531      36,362      36,253     28,270
Asset write-down                                                         6,779
Other income
 (expense)--net                       (118)        (77)       (441)        228        197
Income(loss) before
       Income taxes                  6,284       6,335       9,405      (3,762)    12,045
Income taxes
(benefit)                            2,388       2,409       3,457      (1,893)     4,844
Net income(loss)                     3,896       3,926       5,948      (1,869)     7,201
Net income(loss) per
Share - diluted(1)               $    0.53   $    0.54   $    0.82   $   (0.26)  $   1.01
Shares outstanding
 - diluted(1)                        7,334       7,230       7,222       7,148      7,138

Balance Sheet Data:
                                                       Fiscal Year
                                                       -----------
                                      1997        1996        1995        1994       1993
                                      ----        ----        ----        ----       ----
                                 
Working capital                  $  51,412   $  50,055   $  51,023   $  37,456   $ 29,292
Total assets                       146,471     136,665     131,074     120,296    106,361
Long-term debt                      25,676      31,087      31,977      32,419     18,002
Stockholders'equity(2)              86,919      82,685      78,531      72,502     74,262

</TABLE>





(1) All earnings per share amounts have been  restated to comply with  Statement
of Financial Accounting Standards No. 128, Earnings per Share.

(2) No cash  dividends  have been declared or paid by the Company on its capital
stock since the Company's organization. The Company intends to reinvest earnings
for use in its business and to finance future growth. Accordingly,  the Board of
Directors  does not anticipate  declaring any cash dividends in the  foreseeable
future.





<PAGE>



Item 7.          Management's Discussion and Analysis of Financial
                 Condition and Results of Operations

Results of Operations

The  following  table shows certain items as a percentage of net sales which are
included in the Company's Statement of Operations.

<TABLE>
<CAPTION>
                                                                     Annual Increase(Decrease)
                                    Percentage of Net Sales            1997     1996     1995
                                           Fiscal Year             Compared Compared Compared
                                  1997      1996      1995          to 1996  to 1995  to 1994
                                  ----      ----      ----          -------  -------  -------
<S>                              <C>       <C>       <C>               <C>      <C>      <C> 
Net sales............            100.0%    100.0%    100.0%            4.2%     7.6%     4.4%
Cost of sales........             65.6      68.9      70.2            (0.8)     5.6     (0.6)
                                  ----      ----      ----             ---      ---      ---
Gross profit.........             34.4      31.1      29.8            15.4     12.4     18.4
Selling, general                                                                      
     and administrative                                                               
     expense...........           30.7      27.2      23.4            17.5     25.2      0.3
Other income                                                                          
     (expenses)........           (0.1)      0.1      (0.4)           53.2    (82.5)  (293.4)
                                   ---       ---       ---            ----     ----    -----
Income(loss)before                                                                    
     income taxes......            3.6       3.8       6.0            (0.8)   (32.6)   350.0
Income taxes(benefit)              1.4       1.5       2.2            (0.9)   (30.3)   282.6
                                   ---       ---       ---             ---     ----    -----
Net income(loss).....              2.2%      2.3%      3.8%           (0.8)%  (34.0)%  418.2%
                                   ===       ===       ===            =====   ======   =====
</TABLE>


Net Sales                                                                       

Net sales in 1997  increased  4.2% to $174  million  from $167  million  in 1996
primarily due to price  increases of  approximately  3% for pints that went into
effect in August 1996 and April 1997.  Pint volume  increased  0.7%  compared to
1996.Net sales of 2 1/2 gallon bulk containers had a modest increase in 1997.

Pint sales  represented  approximately 84% of total net sales in 1997 and 85% of
total net sales in 1996,  and 1995.  Net sales of 2 1/2 gallon  bulk  containers
represented  approximately  8% of total  net  sales in 1997 and 7% of total  net
sales in 1996 and 1995. Net sales of novelties accounted for approximately 6% of
total net sales in 1997,  1996,  and 1995.  Net sales from the Company's  retail
stores represented 2% of total net sales in 1997 and 1996, and 1995.

Net sales in 1996 increased 7.6% to $167 million from $155 million in 1995. Pint
volume increased 2.6% compared to 1995. This volume increase was combined with a
3.6% price  increase of pints that went into effect in August 1996.  This volume
increase in pints was  primarily due to the  Company's  introduction  of its new
line of sorbets in February  1996.  Net sales of both  novelties and 21/2 gallon
bulk containers had increases of 10.9% and 8.3% respectively in 1996.


<PAGE>










Cost of Sales

Cost of sales in 1997  decreased  approximately  $900,000  or 0.8% over the same
period in 1996 and overall gross profit as a percentage  of net sales  increased
from 31.1% in 1996 to 34.4% in 1997.  The higher gross profit as a percentage of
net sales in 1997 is a result of higher selling prices instituted in August 1996
and April 1997,  improved  operating  efficiencies  and decreases in certain raw
material commodity prices.

The Company  experienced a modest decrease in dairy commodity prices during 1997
compared to 1996. Dairy costs started to increase in the summer and fall of 1996
and continued into the first half of 1997. In response to higher dairy commodity
costs,  the Company  instituted  a price  increase of  approximately  3% for its
packaged pint products  effective in April 1997.  Though dairy commodity  prices
were lower in the third quarter of 1997 as compared to the comparable quarter in
the prior year, they began to escalate in the latter half of the fourth quarter.
If dairy commodity prices remain at higher levels, there is the possibility that
these  costs will not be passed on to  consumers  which will  negatively  impact
future gross profit margins. See the Risk Factors below.

Cost of sales in 1996 increased approximately $6.1 million or 5.6% over the same
period in 1995 and overall gross profit as a percentage  of net sales  increased
from 29.8% in 1995 to 31.1% in 1996.  The higher gross profit as a percentage of
net sales in 1996 is due to the price increase effective in August 1996 combined
with improved inventory management and production efficiencies, as compared with
1995.  The impact of increased  dairy raw material  costs was offset by improved
manufacturing  expenses.  In addition,  the improved  gross margin  reflects the
impact of the termination of the manufacturing agreement between the Company and
Edy's Grand Ice Cream, a subsidiary of Dreyer's Grand Ice Cream. This production
was transferred to the Company's  manufacturing  facility in St. Albans, Vermont
in  the  third  quarter  of  1995.  Approximately  16%  of  the  packaged  pints
manufactured by the Company in 1995 were produced by Edy's.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 17.5% to $53.5 million in
1997 from $45.5  million in 1996 and  increased as a percentage  of net sales to
30.7% in 1997 from 27.2% in 1996.  This increase  primarily  reflects  increased
marketing  and sales  expenses  and  includes  national  radio  advertising  and
increased trade promotions to support the Company's brand both  domestically and
in Europe. This increase also reflects royalty expense of approximately $500,000
which was previously reflected in other income (expense) in the prior year.


<PAGE>





Selling, general and administrative expenses increased 25.2% to $45.5 million in
1996 from $36.4  million in 1995 and  increased as a percentage  of net sales to
27.2% in 1996 from 23.4% in 1995.  This increase  primarily  reflects  increased
marketing  and sales  spending for the launch of the new "Sorbet" line which was
introduced in February 1996, international market penetration costs and expenses
primarily in the production planning and inventory management areas.

Other Income (Expense)

Interest income increased from $1.7 million in 1996 to $1.9 million in 1997. The
increase  in  interest  income  was due to a  higher  average  invested  balance
throughout 1997. Interest expense in 1997 remained level with 1996. Other income
(expense)  decreased  in 1997 from other income of $243,000 in the prior year to
other  expense of  $64,000  in 1997.  This is  primarily  due to the  receipt of
insurance  settlement  proceeds of  approximately  $884,000  in 1996,  offset by
reclassification  of royalty  expense to  selling,  general  and  administrative
expenses in 1997. This reclassification  resulted in a decrease in other expense
of approximately $500,000

Interest  income in 1996 remained level with 1995.  Interest  expense  increased
$0.5 million in 1996  compared to 1995.  This  increase was due primarily to the
capitalization of a portion of interest in the prior year as part of the cost of
the plant in St.  Albans,  Vermont  before the plant  became  operational.  This
increase  in interest  expense was more than offset by net  proceeds of $884,000
from an insurance claim settlement related to inventory damaged in 1995.

Income Taxes

The  Company's  effective  income tax rate in 1997  remained  level with 1996 at
38.0%.  The Company's rate had increased from 36.8% in 1995,  reflecting  higher
state income taxes and lower  income tax credits  partially  offset by increased
tax-exempt  interest.  Management  expects 1998's  effective  income tax rate to
decrease to approximately 36.0% due to higher income tax credits and lower state
taxes.

Net Income

As a result of the  foregoing,  net  income  for the full year of 1997  remained
level with 1996 at $3.9 million, compared to $5.9 million in 1995. However, 1997
quarterly  results for the third and fourth  quarters were above the  comparable
quarters  in 1996.  Net  income  as a  percentage  of net sales was 2.2% in 1997
compared to 2.3% in 1996 and 3.8% in 1995.
<PAGE>


Seasonality

The Company typically experiences more demand for its products during the summer
than during the winter.

Inflation

Inflation has not had a material effect on the Company's  business to date, with
the exception of dairy raw material commodity costs. See the Risk Factors below.
Management  believes  that the effects of  inflation  and  changing  prices were
successfully  managed in 1997,  with both margins and earnings  being  protected
through  a  combination  of  pricing  adjustments,  cost  control  programs  and
productivity gains.

Liquidity and Capital Resources

As of  December  27,  1997  the  Company  had  $47.3  million  of cash  and cash
equivalents,  an increase of $11.2  million  since  December 28, 1996.  Net cash
provided by operations in 1997 was  approximately  $17.6 million.  Approximately
$5.2  million  was used for net  additions  to  property,  plant and  equipment,
primarily for equipment  upgrades at all  manufacturing  facilities and computer
related expenditures.

Inventories  decreased  from $15.4 million at December 1996, to $11.1 million at
December 27, 1997. The decrease in inventories  resulted from planned  inventory
reductions in 1997.  Accounts  receivable  increased $4.0 million since December
28, 1996 to $12.7 million from $8.7 million at December 28, 1996.  This increase
in  accounts  receivable  is due to the  timing  of  sales in  December  of 1996
compared to December 1997.

The Company  anticipates  capital  expenditures  in 1998 of  approximately  $9.0
million.  These projected capital  expenditures relate to equipment upgrades and
enhancements at the Company's manufacturing  facilities,  research & development
equipment,   computer   related   expenditures  and  acquisition  and  leasehold
improvement  costs  related to three scoop shop  locations  in Paris,  France in
1998.

During 1997 the Company  repurchased  77,500  shares of its Class A Common Stock
for approximately  $988,000 pursuant to the repurchase  program announced May 8,
1997  primarily  for use in  connection  with stock option awards under the 1995
Equity Incentive Plan.

The Company's short and long-term debt includes $30 million aggregate  principal
amount  of  Senior  Notes  issued  in 1993  and  1994,  which  are  held in cash
equivalents pending their use in the business. The first principal payment of $5
million is due in September 1998.

The Company has two line of credit agreements,  for an aggregate of $20 million,
with The First National Bank of Boston and Key


<PAGE>



Bank of Vermont. These unsecured agreements provide for borrowings from time to
time, and unless further  extended,  expire  September 29, 1998 and December 29,
1998,  respectively.  The agreements  specify interest at either the banks' Base
Rate or the Eurodollar  rate plus a maximum of 1.25%. As of March 27, 1998 there
have been no borrowings under these lines of credit. Management intends to renew
these line of credit agreements.

Management believes that internally  generated  funds,cash and cash equivalents,
and  equipment  lease  financing  and/or  borrowings  under  the  Company's  two
unsecured  bank lines of credit will be adequate to meet  anticipated  operating
and capital requirements. 

Year 2000

The Company  has  instituted  a  Company-wide  program to prepare  its  computer
systems for the year 2000. A comprehensive  evaluation of the impact of the Year
2000 issue on both the Company's infrastructure and its interface with suppliers
and  customers  is  expected to be  completed  in the latter part of fiscal year
1998. The Company expects the remediation  program to be completed by the middle
of 1999.  Based on a  preliminary  assessment,  the Company  expects  that these
costs, which primarily include redeployment of existing internal resources, will
not be  material.  The  Company  will  expense the costs of  modifying  existing
systems and  capitalize  the  replacement  of  software  that is not "Year 2000"
compliant.  There  can be no  guarantee,  however,  that  the  systems  of other
entities with which the Company's  systems interface also will be converted on a
timely basis or that any failure to convert by another  entity would not have an
adverse effect on the Company's systems.

Forward-Looking Statements

This  section,  as well as other  portions of this  document,  includes  certain
forward-looking  statements about the Company's business and new products, sales
and expenses,  effective tax rate and  operating  and capital  requirements.  In
addition,  forward-looking  statements  may be included in various other Company
documents to be issued in the future and in various oral  statements  by Company
representatives  to security  analysts and investors from time to time. Any such
statements  are subject to risks that could cause the actual results or needs to
vary  materially.  These  risks are  discussed  below in "Risk  Factors" in this
document.

Risk Factors

Dependence on Independent  Ice Cream  Distributors.  The Company is dependent on
maintaining  satisfactory  relationships with independent ice cream distributors
that now generally act as the Company's exclusive or master distributor in their
assigned territories. While the Company believes its relationships with


<PAGE>



Dreyer's and its other  distributors  generally have been  satisfactory and have
been instrumental in the Company's growth,  the Company has at times experienced
difficulty in maintaining  such  relationships  to its  satisfaction.  Available
distribution  alternatives are limited.  Accordingly,  there can be no assurance
that difficulties in maintaining  relationships with distributors,  which may be
related  to  actions  by the  Company's  competitors  or by one or  more  of the
Company's distributors  themselves (or their controlling persons), will not have
a material adverse effect on the Company's business.  The loss of one or more of
the  Company's  principal  distributors  or  termination  of one or  more of the
related  distribution  agreements  could have a material  adverse  effect on the
Company's business. In early 1998 Dreyer's made overtures to Ben Cohen and Jerry
Greenfield, the Company's co-founders, to obtain their support for an offer that
Dreyer's would make to acquire the Company. These overtures were rejected by the
co-founders. See "Business - Markets and Customers."

Growth in sales and earnings.  In 1997, net sales of the Company  increased 4.2%
to $174 million from $167 million in 1996.  Pint volume  increased 0.7% compared
to 1996. The super premium ice cream, frozen yogurt and sorbet industry category
sales decreased 2.3% in 1997 as compared to 1996.  Given these overall  domestic
super premium industry trends, the successful introduction of innovative flavors
on a periodic basis has become increasingly important to any sales growth by the
Company.  Accordingly,  the  future  degree of market  acceptance  of any of the
Company's new products,  which will be accompanied by promotional  expenditures,
is likely to have an important impact on the Company's 1998 and future financial
results.  See "Management's  Discussion and Analysis of Financial Conditions and
Results of Operations."

Competitive  Environment.  The super  premium  frozen  dessert  market is highly
competitive with the distinctions  between the super premium  category,  and the
"adjoining"  premium and premium plus  categories  less marked than in the past.
And, as noted above, the ability to successfully introduce innovative flavors on
a  periodic  basis  that  are  accepted  by  the  marketplace  is a  significant
competitive factor. In addition,  the Company's principal competitors are large,
diversified  companies with resources  significantly greater than the Company's.
The Company expects strong  competition to continue,  including  competition for
adequate distribution and competition for the limited shelf space for the frozen
dessert   category  in   supermarkets   and  other  retail  food  outlets.   See
"Business-Competition" and "Business-The Super Premium Frozen Dessert Market."

Increased Cost of Raw Materials: Management believes that the trend of increased
dairy  ingredient  commodity  costs may continue and it is possible that at some
future date both gross  margins and  earnings  may not be  protected  by pricing
adjustments, cost control programs and productivity gains.


<PAGE>





Reliance  on a limited  number of Key  Personnel.  The success of the Company is
significantly  dependent  on the  services  of Perry Odak,  the Chief  Executive
Officer and a limited  number of executive  managers  working under Mr. Odak, as
well as certain  continued  services of Ben Cohen,  the Chairperson of the Board
and  co-founder  of the Company;  and Jerry  Greenfield,  Vice  Chairperson  and
co-founder  of the Company.  Loss of the services of any of these  persons could
have a material  adverse  effect on the Company's  business.  See "Directors and
Executive Officers of the Company."

The  Company's  Social  Mission.  The  Company's  basic  business  philosophy is
embodied in a three-part "mission  statement," which includes a "social mission"
to "operate the Company in a way that actively  recognizes the central role that
business  plays in the  structure of society by  initiating  innovative  ways to
improve  the  quality  of  life  of  a  broad  community:  local,  national  and
international.  Underlying the mission of Ben & Jerry's is the  determination to
seek new and creative ways of addressing  all three parts,  while holding a deep
respect for  individuals  inside and outside the Company and for the communities
of which they are a part."  The  Company  believes  that  implementation  of its
social  mission,  which is  integrated  into the  Company's  business,  has been
beneficial  to the  Company's  overall  financial  performance.  However,  it is
possible  that at some  future  date the amount of the  Company's  energies  and
resources  devoted  to its  social  mission  could  have some  material  adverse
financial effect. See "Introduction" and "Business-Marketing."

International.  The Company's  principal  competitors  have  substantial  market
shares in various  countries outside the United States,  principally  Europe and
Japan. The Company sells product in Canada, the United Kingdom, Ireland, France,
the Netherlands and Belgium and will start selling in Japan in 1998. The Company
also has licensing agreements in Israel,  signed in 1987, and a licensing letter
of intent  relating  to  Singapore,  Malaysia,  Indonesia  and the  United  Arab
Emirates,  signed in 1997.  The  Company is  investigating  the  possibility  of
further  international  expansion.  However,  there can be no assurance that the
Company  will  be  successful  in  entering   (directly  or  indirectly  through
licensing),  on a long-term  profitable basis, such international  markets as it
selects.

Control of the Company.  The Company has two classes of common stock - the Class
A Common  Stock,  entitled to one vote per share,  and the Class B Common  Stock
(authorized in 1987), entitled,  except to the extent otherwise provided by law,
to ten  votes per  share.  Ben  Cohen,  Jerry  Greenfield,  and  Jeffrey  Furman
(collectively, the "Principal Stockholders") hold shares representing 45% of the
aggregate  voting  power  in  elections  for  directors,  permitting  them  as a
practical  matter to elect all  members of the Board of  Directors  and  thereby
effectively  control the  business,  policies  and  management  of the  Company.
Because of their  significant  holdings of Class B Common  Stock,  the Principal
Stockholders  may  continue to exercise  this  control even if they were to sell
substantial portions of their Class A Common Stock.


<PAGE>



 See "Security Ownership of Certain Beneficial Owners and Management."

In addition, the Company issued all of the authorized Class A Preferred Stock to
the Foundation in 1985. All current directors of the Foundation are directors of
the  Company.  The Class A Preferred  Stock gives the  Foundation a class voting
right to act with respect to certain  Business  Combinations  (as defined in the
Company's  charter) and  significantly  limits the voting rights that holders of
the Class A Common Stock and Class B Common  Stock,  the owners of virtually all
of the equity in the Company, would otherwise have with respect to such Business
Combinations. See "Business- The Ben & Jerry's Foundation."

While  the Board of  Directors  believes  that the Class B Common  Stock and the
Class A  Preferred  Stock are  important  elements  in keeping  Ben & Jerry's an
independent, Vermont-based business focused on its three-part corporate mission,
the Class B Common  Stock and the  Class A  Preferred  Stock may be deemed to be
"anti-takeover" provisions in that the Board of Directors believes the existence
of these  securities will make it difficult for a third party to acquire control
of the  Company  on terms  opposed by the  holders of the Class B Common  Stock,
including  primarily  the  Principal  Stockholders,  or The  Foundation,  or for
incumbent management and the Board of Directors to be removed. In addition,  the
1997  amendments to the Company's  Articles of Association to classify the Board
of Directors  and to add certain other related  provisions  (see  "Anti-Takeover
Effects of Class B Common Stock,  Class A Common Stock,  Class A Preferred Stock
and   Classified   Board  of   Directors"  in  Item  1)  may  be  deemed  to  be
"anti-takeover"  provisions  in that the Board of Directors  believes that these
amendments  will make it difficult  for a third party to acquire  control of the
Company on terms opposed by the holders of the Class B Common  Stock,  including
primarily  the  Principal  Stockholders  and the  Foundation,  or for  incumbent
management and the Board of Directors to be removed.

Item 8.  Financial Statements and Supplementary Data

The response to this Item is in Item 14(a)of this Report.

Item 9.          Changes in and Disagreements with Accountants
                         on Accounting and Financial Disclosure

Not applicable.




<PAGE>



                                    PART III

Item 10.  Directors and Executive Officers of the Company

Directors and Executive Officers

The directors and executive officers of the Company are as follows:
Name                             Age                     Office
----                             ---                     ------
Ben Cohen............            46      Chairperson and Director
Perry Odak...........            52      Chief Executive Officer, President
                                         and Director
Jerry Greenfield.....            46      Vice Chairperson and Director 
Elizabeth Bankowski..            50      Director and Director of Social
                                         Mission
Pierre Ferrari.......            47      Director
Jeffrey Furman.......            54      Director
Jennifer Henderson...            44      Director
Frederick A. Miller..            51      Director
Henry Morgan.........            72      Director
Andrew S. Patti......            57      Director
Lawrence Benders.....            41      Chief Marketing Officer
Bruce Bowman..........           45      Senior Director of Operations
Angelo Pezzani.......            56      Senior Director of Business Development
Frances Rathke.......            37      Chief Financial Officer
                                         and Secretary

The Board of Directors has an Audit Committee on which Directors Ferrari, Morgan
and Patti  (Chairperson)  serve;  a  Compensation  Committee on which  Directors
Henderson,  Miller, and Morgan  (Chairperson)  serve; a Social  Mission/Worklife
Committee on which Directors  Bankowski,  Cohen,  Ferrari,  Furman,  Greenfield,
Henderson  and Miller  (Chairperson)  serve;  an  Executive  Committee  on which
Directors Cohen, Greenfield, Miller, Morgan, Odak and Patti (Chairperson) serve;
and a Nominating  Committee on which Directors  Bankowski,  Cohen (Chairperson),
Ferrari, Greenfield and Odak serve.

Elizabeth  Bankowski has served as Director of Social Mission  Development since
December  1991.  Ms.  Bankowski  has been a director of the Company  since 1990.
Additionally,  Ms.  Bankowski  is  Secretary  and  director of The Ben & Jerry's
Foundation, Inc.

Ben Cohen,  a founder of the Company,  has served as Chairperson of the Board of
Directors  since February 1989. From January 1, 1991 through January 29, 1995 he
was the Chief Executive Officer of the Company. Mr. Cohen has been a director of
the Company  since 1977.  Mr. Cohen is a director of Blue Fish  Clothing,  Inc.,
Community Products,  Inc., Social Venture Network and GreenPeace  International.
In 1997,  Community  Products Inc. filed for protection  under Chapter 11 of the
United State Bankruptcy Code.


<PAGE>





Pierre  Ferrari has served as a director of the Company since June 1997. In 1997
Mr. Ferrari became President of Lang International, a marketing consulting firm.
From 1994 to 1997 Mr. Ferrari was the Special Assistant to the President and CEO
of Care, the World's  largest private relief and  development  agency.  Prior to
1994, Mr. Ferrari held various senior level marketing positions at The Coca-Cola
Company.

Jeffrey Furman has served as a director of the Company since 1982. Mr. Furman is
Treasurer  and director of The Ben & Jerry's  Foundation,  Inc.  From March 1991
through December 1996, Mr. Furman was a consultant to the Company.

Jerry  Greenfield,  a founder of the  Company,  has served as director  and Vice
Chairperson  of the  Board of  Directors  since  1990.  Mr.  Greenfield  is also
President and director of The Ben & Jerry's Foundation, Inc.

Jennifer  Henderson has served as a director of the Company since June 1996. Ms.
Henderson  is  director  of  Training  at the  Center  for  Community  Change in
Washington DC and President of Strategic  Interventions,  Inc., a leadership and
management  consulting firm. 

Frederick  A. Miller has served as a director of the Company  since 1992.  Since
1985 Mr. Miller has served as President of The Kaleel Jamison  Consulting Group,
Inc., a strategic culture change and management consulting firm.

Henry Morgan has served as a director of the Company  since 1987.  Mr. Morgan is
retired Dean  Emeritus of Boston  University  School of  Management.  Mr. Morgan
serves  on  the  Board  of  Directors  of  Cambridge  Bancorporation,   Southern
Development Bancorporation and Cleveland Development Bancorporation.

Perry D.  Odak has  served  as Chief  Executive  Officer  of the  Company  since
December 31, 1996, as director of the Company  since January 1997,  and as Chief
Executive Officer and President since June 1997. From 1990 to 1996, Mr. Odak was
a principal in Odak, Pezzani & Company,  a private  management  consulting firm.
From 1994 to 1995, Mr. Odak was Chief Executive Officer of Graham Packaging.

Andrew S. Patti has served as a director  of the  Company  since June 1997.  Mr.
Patti is the Senior  Executive  and  Founder of Rianco,  LLC, a venture  capital
firm. Mr. Patti was Executive  Vice-President of Ameritech, a telecommunications
Company from September 1996 to February 1997. From 1978 until 1995 Mr. Patti was
an  executive  with The Dial  Corporation,  including  holding  the  position of
President.


<PAGE>







Other Key Executives

Lawrence  E.  Benders  joined the  Company in  October  1997 as Chief  Marketing
Officer.  Prior to joining  the  Company,  Mr.  Benders  was Vice  President  of
International  Marketing  at Coors  Brewing  Company.  From 1994  until 1996 Mr.
Benders was a marketing  executive  with Nabisco  Foods  Group.  From 1993 until
1994, Mr. Benders was a Division  Manager for American  Telephone and Telegraph.
Prior to 1993, Mr. Benders was a marketing executive with Johnson & Johnson.

Bruce  Bowman has served as Senior  Director of  Operations  since  August 1995.
Prior to joining the Company, Mr. Bowman was Senior Vice President of Operations
at Tom's Foods, Inc., a food manufacturing  company from April 1991 until August
1995.

Richard Doran joined the Company in 1997 as Senior Director of Human  Resources.
From 1987 until  joining the Company Mr. Doran was a management  consultant  and
Vice President for the Kaleel  Jamison  Consulting  Group,  a strategic  culture
change and management consulting firm.

Charles Green joined the Company in October of 1996 as Senior  Director of Sales
and Distribution. From 1993 to 1996 Mr. Green was General Manager of Dari-Farms,
the distributor of Ben & Jerry's products in the  Massachusetts  and Connecticut
areas. From 1991 to 1993, Mr. Green was Vice President of Sales for HP Hood.

Angelo Pezzani joined the Company in January 1998 as Senior Director of Business
Development. From 1995 to 1996, Mr. Pezzani was Executive Vice President of Sony
Interactive  Entertainment.  From 1989 to 1995,  Mr.  Pezzani was a principal of
Odak, Pezzani & Company, a private management consulting company.

Frances Rathke has served as Chief Financial  Officer,  Chief Accounting Officer
and Secretary of the Company since April 1990.



<PAGE>



Item 11.  Executive Compensation

Summary Compensation Table

The  following  table sets forth the cash  compensation  paid by the  Company in
Fiscal Years 1995 - 1997 as well as certain other  compensation paid, awarded or
accrued  for  those  years to the  Company's  Chief  Executive  Officer  and the
Company's  other  executive  officers  during the 1997  fiscal  year whose total
salary and bonuses  exceeded  $100,000.  Perry Odak  became the Chief  Executive
Officer on January 1, 1997.

<TABLE>
<CAPTION>


                                                                          Long-Term Compensation
                                                                       -------------------------------------------
                           Annual Compensation                            Awards            Payouts
                      --------------------------------------------------------------------------------------------
                                                             Other                      Securities                All
Name and                                                     Annual       Restricted    Underlying   LTIP         Other
Principal                                                    Compen-      Stock         Options/     Payouts      Compen-
Position                  Year     Salary       Bonus(2)     sation       Awards        SARS                      sation(3)
-------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>      <C>          <C>          <C>          <C>            <C>         <C>          <C>     
Ben Cohen(1)              1997     $183,333         --                                                            $  3,000     
Chairperson               1996     $149,664         --                                                            $  3,017
and CEO                   1995     $132,500         --                                                            $  2,195
                                                                                                                          
                                                                                                                          
Jerry Greenfield          1997     $183,333         --                                                            $  3,000
Vice Chairperson          1996     $149,664         --                                                            $  3,017
                          1995     $132,500         --                                                            $  2,195
                                                                                                                  
Perry D. Odak             1997     $300,000     $100,000                                360,000                   $ 25,000
CEO, President and        1996     $   --           --                                                                -- 
Director                  1995     $   --           --                                                                -- 
                                                                                                                     
Bruce Bowman              1997     $200,000     $ 50,000                                 27,000                   $ 4,131 
Senior Director of        1996     $169,231     $ 20,000                                 10,000                   $ 1,099 
Operations                1995     $ 55,385     $ 40,000                                 25,000                   $ 2,195 
                                                                                                                          
Frances Rathke            1997     $162,603     $ 45,000                                 30,000                   $ 3,229 
CFO  and                  1996     $145,385         --                                     --                     $ 2,928 
Secretary                 1995     $125,000     $  1,281                                 30,000                   $ 2,260 
                                                                                                                          
Charles Green             1997     $162,596     $ 40,000                                 45,000                      --   
Senior Director of        1996     $ 24,231         --                                    5,000                      --   
Sales & Distribution      1995     $   --           --                                     --                        --   
                                                                                                                          




(1) Ben Cohen was CEO prior to January 31, 1995                                                                   

(2)  "Bonus"  includes  1997  discretionary  distributions  under the  Company's
Management  Incentive  Program.  Bruce Bowman was awarded a bonus in  accordance
with his employment  contract of $40,000 in 1995 and $20,000 in 1996. Ms. Rathke
received $1,281 in 1995 under the Company's  informal and  discretionary  profit
sharing plan, under which executive officers and senior executives are no longer
eligible.

(3)  "All Other Compensation" includes Company contributions to 401(K) plans and relocation fees.

</TABLE>

<PAGE>




Option/SAR Grants in Fiscal 1997
<TABLE>
<CAPTION>

                                                                                               Potential
                                                                                              Realizable
                                                                                               Value at
                                          Percentage                                        Assumed Annual
                                           of Total                                            Rates of
                                           Options/                                           Stock Price
                                             SARS           Exercise                         Appreciation
                              Options/    Granted to           or                           for Option Term
                              SARS         Employees       Base Price    Expiration
                              Granted       in 1997        (per share)      Date               5%          10%
                             -------       -------        -----------      ----               --          ---
<S>                            <C>           <C>           <C>              <C>        <C>            <C>     
Ben Cohen                           0           0               0                 0             0              0
Jerry Greenfield                    0           0               0                 0             0              0
Perry D. Odak                 200,000       28.8%          $10.88          12/31/06    $1,368,475     $3,467,984
                              160,000       23.1%          $10.88            1/1/07    $1,094,780     $2,774,387
Bruce Bowman                   27,000        3.9%          $13.89           6/28/07      $235,854       $597,701
Charles Green                  45,000        6.5%          $13.89           6/28/07      $393,091       $996,169
Frances Rathke                 30,000        4.3%          $13.89           6/28/07      $262,060       $664,112

</TABLE>

Aggregated Option/SAR Exercises in 1997 and 1997 Year-End
Option/SAR Values

<TABLE>
<CAPTION>

                                  Shares
                                 Acquired                                                     Value of Unexercised
                                    on                    Number of Unexercised               In-The-Money Options/
                                 Exercise    Value        Options/SARS at 12/27/97            SARS at 12/27/97
                                    (#)    Realized    Exercisable    Unexercisable    Exercisable  Unexercisable
                                    ---    --------    -----------    -------------    -----------  -------------
<S>                                 <C>        <C>      <C>             <C>               <C>         <C>     
Ben Cohen                           0          0             0               0                   0           ---
Jerry Greenfield                    0          0             0               0                   0           ---
Perry Odak                          0          0        90,000         270,000            $472,500    $1,417,500
Bruce Bowman                        0          0        15,375          46,625             $15,060       $82,920
Charles Green                       0          0         1,000          49,000              $3,750      $115,800
Frances Rathke                      0          0        14,343          46,842             $46,550      $101,400

</TABLE>


Effective  January  1,  1998  Directors  who  are  not  employees  or  full-time
consultants  of the  Company  receive  an annual  retainer  fee of  $18,000,  in
addition to a $1,000 per board  meeting  attendance  fee, and  reimbursement  of
reasonable out-of-pocket expenses.

The Company  adopted the 1995  Non-Employee  Directors Plan for Stock in lieu of
Directors Cash Retainer  under which  directors may elect to be paid, in lieu of
the annual cash retainer,  shares of common stock having a fair market value (as
of the date of  payment)  equal to the  amount  of such  annual  retainer.  Four
non-employee  directors,  Henry  Morgan,  Frederick A. Miller,  Andrew Patti and
Pierre  Ferrari  each  received  936 shares of stock for the period July 1, 1997
through June of 1998 under the Plan.


<PAGE>



Item 12.         Security Ownership of Certain Beneficial Owners and management

The  following  table sets forth  certain  information  as of March 6, 1998 with
respect to the beneficial  ownership of the outstanding shares of Class A Common
Stock,  Class B Common  Stock and  Class A  Preferred  Stock by (i) all  persons
owning of record,  or  beneficially  to the knowledge of the Company,  more than
five  percent of the  outstanding  shares of any  class(ii)  each  director  and
executive officer of the Company individually,  (iii) all directors and officers
of the  Company  as a group  and (iv) The Ben &  Jerry's  Foundation,  Inc.  The
mailing  address of each of the persons  shown and of the  Foundation is c/o the
Company, 30 Community Drive, South Burlington, Vermont 05403-6828.


<PAGE>


<TABLE>

                                Amount of                   Amount of
                                Beneficial                 Beneficial                   Amount of
                               Ownership of               Ownership of                 Beneficial
                                  Class A                    Class B                  Ownership of
                               Common Stock               Common Stock               Preferred Stock
                                        Percentage                  Percentage                   Percentage
                              Number        of            Number        of            Number         of
                                of     Outstanding         of      Outstanding         of       outstanding
                              Shares    Shares (1)        Shares   Shares(2)          Shares       Shares
                              ------    ----------        ------   ---------          ------       ------
                             
<S>                           <C>              <C>       <C>           <C>               <C>          <C>      
Ben Cohen (3)                 508,173          8.0%      488,486       56.7%              --           --
Jeffrey Furman (4) (5)         17,000             *       30,300        3.5%              --           --
Jerry Greenfield (4)          130,000          2.0%       90,000       10.4%              --           --
Perry Odak (6)                152,000          2.4%           --          --              --           --
Elizabeth Bankowski (4)        16,732             *           --          --              --           --
Pierre Ferrari                  2,936             *           --          --              --           --
Jennifer Henderson                524             *           --          --              --           --
Frederick A. Miller             2,160             *           --          --              --           --
Henry Morgan                    4,160             *           --          --              --           --
Andrew Patti                      936             *           --          --              --           --
Lawrence E. Benders                 0            --           --          --              --           --
Bruce Bowman                   18,764             *           --          --              --           --
Charles Green                   1,000             *           --          --              --           --
Angelo Pezzani                 13,000             *           --          --              --           --
Frances Rathke                 25,750             *           --          --              --           --
The Capital Group             797,500         12.5%           --          --              --           --
Companies, Inc. (7)
     333 South Hope St.
     Los Angeles, CA 90071

All Officers and directors
as a group (15 persons)       893,135         14.0%      608,786       70.6%              --           --
The Ben & Jerry's
Foundation, Inc. (4)               --            --           --          --             900         100%
*      Less than 1%

</TABLE>



(1) Based on the  number of shares  of Class A Common  Stock  outstanding  as of
March 6, 1998.  Each share of Class A Common  Stock  entitles  the holder to one
vote per share.
(2) Based on the  number of shares  of Class B Common  Stock  outstanding  as of
March 6, 1998.  Each share of Class B Common  Stock  entitles  the holder to ten
votes.  
(3) Under the  regulations  and  interpretations  of the Securities and Exchange
Commission, Mr. Cohen may be deemed to be a parent of the Company.
(4)By virtue of their  positions as directors of The  Foundation,  which has the
power  to vote or  dispose  of the  Class A  Preferred  Stock,  each of  Messrs.
Greenfield,  a co-founder,  Director and Vice  Chairperson  of the Company,  and
Furman,  a  Director  of and  formerly  a  consultant  to the  Company,  and Ms.
Bankowski,  an officer and  Director of the  Company,  may be deemed,  under the
regulations and  interpretations of the Securities and Exchange  Commission,  to
own beneficially the Class A Preferred Stock.
(5) Does not include 210 shares of Class A Common  Stock and 105 shares of Class
B Common Stock owned by Mr.  Furman's wife, as to which he disclaims  beneficial
ownership under the securities laws. Includes 7,000 shares held by Mr. Furman as
trustee for others,  which are deemed  beneficially  owned by Mr.  Furman  under
rules and regulations of the Securities and Exchange Commission.
(6) Does not include 15,080 shares of Class A Common Stock beneficially owned by
Mr. Odak's wife under the rules and  regulations  of the Securities and Exchange
Commission, as to which he disclaims beneficial ownership.
(7) The Capital Group Companies,  Inc. is the parent company of Capital Research
and Management  Company,  SMALLCAP World Fund,  Inc. and Capital  Guardian Trust
Company.  As a result of the investment power and in some cases the voting power
held by the subsidiary companies,  The Capital Group Companies,  Inc., is deemed
to  "beneficially  own"  such  securities  by  virtue  of Rule  13d-3  under the
Securities Exchange Act of 1934.



<PAGE>






Item 13.  Certain Relationships and Related Transactions

Under the terms of a Severance and Non-Competition Agreement between the Company
and Mr. Furman, dated December 31, 1990, the Company continues to provide, at no
cost to Mr. Furman, family health insurance coverage under the Company's regular
employee  health  insurance  plan.  This obligation will continue until March 2,
1999.

Mr. Cohen, a Co-founder of the Company, Chairperson and director of the Company,
has entered into an Employment Agreement with the Company for an employment term
expiring on December 31, 1998 (renewable  automatically thereafter in successive
one year  periods  unless  either Mr.  Cohen or the Company  gives notice to the
other of non-renewal).  The Agreement provides for a base salary of $200,000 per
annum,  subject to increases  and bonuses at the  discretion  of the Board.  The
Agreement  provides for a covenant not to compete during the employment  term of
the  Agreement  and for a three year  period  thereafter,  in  consideration  of
payment by the  Company  (except as  otherwise  provided  in the  Agreement)  of
severance equal to the  then-current  base salary during the three-year  period.
The Agreement then provides for annual payments of $75,000 for life,  commencing
with the end of the three year  severance  period,  and for specified  insurance
benefits and contains a provision  for  contemplated  services to be provided to
the Company after the end of the term of employment and severance period.

Mr. Greenfield,  a Co-founder of the Company, Vice Chairperson,  and director of
the Company,,  has entered into an Employment  Agreement  with the Company for a
term  expiring  on December  31, 1998  (renewable  automatically  thereafter  in
successive  one year periods  unless either Mr.  Greenfield or the Company gives
notice to the other of non-renewal). The Agreement provides for a base salary of
$200,000 per annum,  subject to increases  and bonuses at the  discretion of the
Board.  The  Agreement  also  provides for a covenant not to compete  during the
employment  term of the  Agreement  and for a three year period  thereafter,  in
consideration  of payment by the Company  (except as  otherwise  provided in the
Agreement)  of  severance  equal to the  then-current  base  salary  during  the
three-year  period . The Agreement then provides for annual  payments of $75,000
for  life,  commencing  with the end of the three  year  severance  period,  for
specified  insurance  benefits and contains a  provisions  for certain  services
contemplated  to be  provided  to the  Company  after  the  end of the  term  of
employment and severance period.

Mr.  Bowman,  Senior  Director of Operations has an Employment  Agreement  dated
August 21, 1995,  expiring August 20, 1998. The Agreement provides for an annual
base salary,  which may be increased by the Board (the Board has currently fixed
such base


<PAGE>



salary at $200,000), and he is entitled to an incentive bonus, not exceeding 35%
of his base  salary  (payable  in cash and shares of Class A Common  Stock),  as
determined  by  the  Chief  Executive  Officer,   subject  to  approval  of  the
Compensation Committee.  The amount of the bonus award for 1997 was $50,000. The
Agreement  provided for stock  options of 25,000  shares of Class A Common Stock
which were granted in August,  1995.  The  Agreement  also provides for medical,
life  insurance,  401(k)plan  and other  employee  benefits,  a covenant  not to
compete during the term of the Agreement and for a two-year  period  thereafter,
and for one year's continuation of then-current base salary and annual incentive
award at the rates in effect on the date of termination of his employment by the
Company without cause.

Mr. Odak, Chief Executive  Officer,  has a three year Employment  Agreement with
the Company dated December 31, 1996. Under the terms of the Agreement,  Mr. Odak
is entitled to a base salary of $300,000 per annum,  subject to  increases  from
time to time by the  Board  of  Directors,  in its  sole  discretion.  Mr.  Odak
received, non-incentive stock options to purchase an aggregate of 360,000 shares
of Class A Common Stock of the Company exercisable at $10.88 per share, the fair
market value on the dates of grant by the Compensation Committee of the Board of
Directors under the 1995 Equity Incentive Plan. These options become exercisable
at various dates specified in the Employment Agreement,  subject to acceleration
of vesting as to specified amounts in the event that certain financial goals are
achieved and the  Compensation  Committee makes certain findings with respect to
Mr. Odak's  performance in the applicable prior year, all as specified in detail
in the Employment Agreement.

The Employment Agreement may be terminated at any time by the Company for cause,
as  defined.  If  terminated  for  cause,  the  Company  shall  have no  further
obligation  to Mr.  Odak,  other  than  for  base  salary  through  the  date of
termination,  and any options that are vested shall  continue to be  exercisable
for thirty days (unless  terminated by the vote of the Compensation  Committee).
All other options terminate.

The Company may also terminate the Employment Agreement Other Than For Cause, in
which  event the Company has a  continuing  obligation  to pay Mr. Odak his base
amount at the rate in effect on the date of termination  for the monthly periods
specified  in  the  Agreement,  which  are  dependent  upon  the  date  of  such
termination.  Additionally,  the Company will  continue to  contribute,  for the
period  during  which  the base  amount  is  continued,  the cost of Mr.  Odak's
participation  (including  his  family)  in  the  Company's  group  medical  and
hospitalization  insurance  plans  and  group  life  insurance  plan.  Upon such
termination, unvested options shall become exercisable to the extent so provided
by the Agreement.


<PAGE>








Mr. Odak may  terminate  his  employment  with the Company for good  reason,  as
defined  (in the  absence  of  cause).  In the event of such  termination,  base
amount, benefits and options (including  acceleration,  period of exercisablilty
and  termination  of  options)  shall be paid or provided in the same manner and
extent as for a termination by the Company Other Than For Cause.

Mr. Odak agrees not to compete with the Company  during his period of employment
and, after  termination,  for the greater of one year or the period during which
severance payments are made.

Copies of the above  described  Agreements  have been filed as  exhibits to this
Report on Form 10-K and the above  descriptions  are qualified by the definitive
terms of the Agreements so filed as exhibits.

During the year ended  December  27,  1997,  the Company  purchased  Rain Forest
Crunch cashew-brazilnut  buttercrunch candy to be included in Ben & Jerry's Rain
Forest Crunch flavor ice cream for an aggregate  purchase price of approximately
$800,000 from  Community  Products,  Inc., a company of which Messrs.  Cohen and
Furman were the principal  stockholders  and directors.  The candy was purchased
from Community  Products,  Inc. at competitive  prices and on standard terms and
conditions.  Community  Products,  Inc. filed for protection under Chapter 11 of
the US Bankruptcy  Code in early 1997, its business was sold and the matter (and
related  litigation) is pending in US Bankruptcy Court. Ben & Jerry's located an
alternative supplier for cashew-brazilnut buttercrunch. The termination of Ben &
Jerry's relationship with Community Products, Inc. had no material effect on the
Company's business.

In 1997, the Company paid a $60,000 fee to The Kaleel Jamison  Consulting Group,
Inc. for its role in the Company's hiring of Mr. Richard Doran,  Senior Director
of Human  Resources.  Mr.  Frederick  A. Miller,  a director of the Company,  is
President of Kaleel Jamison  Consulting Group, Inc. Prior to joining the Company
Mr. Doran was an employee of Kaleel Jamison Consulting Group, Inc.

In December  1997,  the Company  advanced  $140,000 to Mr.  Lawrence E. Benders,
Chief  Marketing  Officer,  under a  non-interest  bearing  bridge  loan for the
purchase  of his home in Vermont.  In January  1998 this bridge loan was paid in
full by Mr. Benders.

During  1997,  the Company  paid  $20,000 to Mr.  Andrew  Patti for  services as
Chairman of the Executive Committee.


<PAGE>







<TABLE>

Item 14. Exhibits,  Financial Statements,  and Financial Statement Schedule, and
Reports on Form 8-K

(a)  List of financial statements and financial statement
     schedule:                                                                        Form 10-K
                                                                                      Page No.
         <S>                                                                          <C>   
     (1)  The following  consolidated  financial  statements are included in
          Item 8:

          Consolidated Balance Sheets as of December
          27,  1997  and  December  28,  1996                                          F-2 
          
          Consolidated   Statements  of
          Operations  for the years ended  December 27,  1997,  December 28,
          1996, and December 30,1995                                                   F-3

          Consolidated Statements of Stockholders'
          Equity for the years ended December 27, 1997,
          December 28, 1996 and December 30, 1995                                      F-4

          Consolidated Statements of Cash Flows for
          the years ended December 27, 1997, December 28,
          1996 and December 30, 1995                                                   F-5

          Notes to Consolidated Financial Statements                                   F-6 to
                                                                                       F-15
     (2)  The following financial statement schedule
          is included in Item 14 (d)                                                   F-16

          SCHEDULE II - Valuation and Qualifying
          Accounts

          All other  schedules for which provision is made in the applicable
          accounting  regulations of the Securities and Exchange  Commission
          are  not   required   under  the  related   instructions   or  are
          inapplicable, and therefore have been omitted.

     (3)  The following  designated exhibits are, as indicated below, either
          filed herewith or have  heretofore  been filed with the Securities
          and Exchange Commission under the Securities Act of 1933
          or the Securities Exchange Act of 1934 and are referred to
          and incorporated herein by reference to
          such filings.
</TABLE>


<PAGE>



Exhibit No.


3.1             Articles of Association, as amended, of the
                Company (filed with the Securities and Commission
                as Exhibit 3.1 and 3.1.1 to the Company's Registration
                Statement on Form-1 (File No. 33-284) and incorporated
                herein by reference).

3.1.1           Amendment to Articles of  Association on June 27, 1987 (filed as
                Exhibit 1 to the Company's Quarterly Report on Form 10-Q for the
                period   ended  June  30,  1987  and   incorporated   herein  by
                reference).

3.1.2           Amendment to Articles of Association on September 7, 1993 (filed
                as Exhibit 1 to the Company's  Quarterly Report on Form 10-Q for
                the  period  ended  June 26,  1993 and  incorporated  herein  by
                reference).

3.1.3           Amendment to Articles of Association on August 4, 1995 (filed as
                Exhibit 3.1.3 to the Company's Quarterly Report on Form 10-Q for
                the  period  ended  July 1,  1995  and  incorporated  herein  by
                reference).

3.1.4           Amendment  to  Articles  of   Association   approved   June  28,
                1997(filed herewith).

3.2             By-laws as amended  through  November 10, 1995 (filed as Exhibit
                3.2.2 to the Company's  Report on Form 10-Q for the period ended
                September 30, 1995 and incorporated herein by reference).

3.2.1           Section 2 of Article 5 of the  By-laws as amended on January 18,
                1996 (filed as Exhibit 3.2.1 to the Company's  Form 10-K for the
                year  ended  December  30,  1995  and  incorporated   herein  by
                reference).

4.1             See Exhibit 3.1.

4.2             See Exhibit 3.2

4.3             Mortgage and Security Agreement among the State of Vermont,  the
                Company and the Howard Bank,  N.A.  (filed as Exhibit 4.1 to the
                Company's  Registration  Statement on Form S-1 (file no. 33-284)
                and incorporated herein by reference).

4.4             Guaranty  by the  Company  accepted  by the Howard  Bank,  N.A.,
                Trustee,  and Marine  Midland Bank,  N.A., as amended  (filed as
                Exhibits 4.2 and 4.2.1 to the Company's  Registration  Statement
                on Form  S-1  (file  no.  33-284)  and  incorporated  herein  by
                reference),  as amended  November 20, 1987 (filed as Exhibit 4.4
                to the


<PAGE>




                Company's Registration Statement on Form S-1 (file no. 33-17516)
                and incorporated by reference),  as amended January 31 and March
                10, 1989 (filed as Exhibit 4.4 to the Company's Annual Report on
                Form 10-K for the year ended December 31, 1988 and  incorporated
                herein by reference).

4.4.1           Amendment  to item 4.4 dated July 28,  1992 (filed an Exhibit to
                the  Company's  Registration  Statement  on Form S-3  (file  no.
                33-51550) and incorporated herein
                by reference).

4.5             Loan Agreement and Amendment between the Village of
                Waterbury, Vermont and the Company (filed as Exhibit
                4.4 to the Company's Registration Statement on Form
                S-1(file no. 33-284) and incorporated herein by
                reference).

4.6             Second Mortgage and Security Agreement dated December
                11, 1984 between the Company and the Village of
                Waterbury, Vermont (filed as Exhibit 4.5 to the
                Company's Registration Statement on Form S-1 (file no.
                33-284)and incorporated herein by reference).

4.7             Grant Agreement between the Secretary of Housing and
                Urban Development and the Village of Waterbury,
                Vermont  dated  September  15, 1984 (filed as Exhibit 4.6 to the
                Company's  Registration  Statement on Form S-1 (file  no.33-284)
                and incorporated herein by reference).

4.8             Form of Class A Common Stock Certificate (filed as
                Exhibit 4.8 to the Company's Registration Statement on
                Form S-1 (file no. 33-17516) and incorporated herein
                by reference).

4.9             Form of Class B Common Stock Certificate (filed as
                Exhibit 4.9 to the Company's Registration Statement on
                Form S-1 (file no. 33-17516) and incorporated herein
                by reference).

4.11            Senior Note Agreement dated as of October 13, 1993
                between Ben & Jerry's Homemade, Inc. and The Travelers
                Insurance Company and Principal Mutual Life Insurance
                Company (filed as Exhibit 1 to the Company's Quarterly
                Report on Form 10-Q for the period ended September 25,
                1993 and incorporated herein by reference).

                The registrant agrees to furnish a copy to the Commission upon
                request of any other instrument with respect to long-term debt
                (not filed as an exhibit), none of which relates to securities
                exceeding 10% of the total assets of the registrants.


<PAGE>

10.1            Employment  Agreement  dated  as of  January  29,  1998  between
                Bennett R. Cohen and the Company (filed herewith).

10.4            Employment Agreement dated as of January 29, 1998 between Jerry
                Greenfield and the Company (filed herewith).

10.5            Settlement Agreement dated March 20, 1985 between the
                Company and Haagen-Dazs, Inc. (filed as Exhibit 10.8
                to the Company's Registration Statement on Form S-1
                (file no. 33-284) and incorporated herein by
                reference).

10.8            Distribution Agreement between the Company and
                Dreyer's Grand Ice Cream, Inc. dated January 6, 1987
                (filed as Exhibit 10.13 to the Company's Annual
                Report on Form 10-K For the year ended December 31,
                1986 and  incorporated  herein by  reference),  as amended as of
                January 20, 1989 (filed as Exhibit 10.14 to the Company's Annual
                Report on Form 10-K for the year  ended  December  31,  1988 and
                incorporated herein by reference).

10.8.1          Amendment to Item 10.8 dated August 31, 1992 (filed as Exhibit
                28.1 to the Company's Registration Statement on Form S-3 (file
                no. 33-51550) and incorporated here-in by reference).

10.8.2          Amendment  to Item 10.8 dated  April 18, 1994 filed as Exhibit 2
                to the Company's  Quarterly  Report on Form 10-Q dated March 26,
                1994 and incorporated here-in by reference).

10.9            License Agreement between the Company and Jerry Garcia and
                Grateful Dead Productions, Inc. dated July 26, 1987(filed as
                Exhibit 10.15 to the Company's Registration Statement on Form
                S-1 (file no. 33-17516) and incorporated herein by reference).

10.15           Franchise Agreement between the Company and BJ O/R, a
                California limited partnership, dated June 9, 1993
                (filed as Exhibit 2 to the Company's Quarterly Report
                on Form 10-Q for the period ended June 26, 1993 and
                incorporated herein by reference).

10.19           1986 Restricted Stock Plan (filed as Exhibit 10.19 to
                the Company's Annual Report on Form 10-K for the year
                ended December 30, 1989 and incorporated herein by
                reference).

10.20           1986 Employee Stock Purchase Plan (filed as Exhibit 4
                to the Company's Registration Statements on Form S-8
                (file nos. 33-9420 and 33-17594) and incorporated


<PAGE>




                herein by reference).

10.20.1         Amendment  to Employee  Stock  Purchase  Plan dated on August 4,
                1995 (filed as Exhibit 10.20.1 on Form 10-Q for the period ended
                July 1, 1995 and incorporated herein by reference).

10.21           1985 Stock Option Plan (filed as Exhibit 10.21 to the
                Company's Annual Report on Form 10-K for the year
                ended December 30, 1989 and incorporated herein by
                reference).

10.21.1         1994  Amendment  to 1985  Stock  Option  Plan  (filed as Exhibit
                10.21.1 to the Company's Annual Report on Form 10-K for the year
                ended December 30, 1994 and incorporated herein by reference).


10.22           Ben & Jerry's Homemade, Inc. Employees' Retirement
                Plan as amended (filed as Exhibit 10.22 to the
                Company's Annual Report on Form 10-K for the year
                ended December 30, 1989 and incorporated herein by
                reference).

10.22.1         Amendment to Item 10.22 dated  January 1, 1990 (filed as Exhibit
                10.22.1 to the Company's  Report on Form 10-K for the year ended
                December 29, 1991 and incorporated herein by reference).

10.22.2         Amendment  to Item 10.22  dated June 28,  1990 (filed as Exhibit
                10.22.2 to the Company's  Report on Form 10-K for the year ended
                December 25, 1993 and incorporated herein by reference).

10.22.3         Amendment to Item 10.22 dated  January 1, 1991 (filed as Exhibit
                10.22.3 to the Company's  Report on Form 10-K for the year ended
                December 25, 1993 and incorporated herein by reference).

10.23           1991 Restricted Stock Plan (filed as Exhibit 10.23 to
                the Company's Report on Form 10-K for the year ended
                December 25, 1993 and incorporated herein by
                reference).

10.24           Severance/Non-Competition Agreement dated as of
                December 31,1990 between Jeffrey Furman and the
                Company (filed as Exhibit 10.24 to the Company's
                Report on Form 10-K for the year ended December 25,
                1993 and incorporated herein by reference).

10.27           1992 Non-employee Directors' Restricted Stock Plan
                (filed as Exhibit 10.27 to the Company's Annual Report
                on Form 10-K for the year ended December 25, 1993 and


<PAGE>




                incorporated herein by reference).

10.29           1995 Equity Incentive Plan (filed as Exhibit 10.29 to the
                Company's Quarterly Report on Form 10-Q for the period ended
                July 1, 1995 and incorporated herein by reference).

10.30           Non-Employee Director's Plan For Stock In Lieu of
                Directors' Cash Retainer Dated August 4, 1995 (filed
                as Exhibit 10.30 to Form 10-Q quarter ended July 1,
                1995 and incorporated herein by reference).

10.31           Employment Agreement dated August 21, 1995 between the
                Company and Bruce Bowman (filed as Exhibit 10.31 to
                the Company's Form 10-K for the year ended December
                30, 1995 and incorporated herein by reference).


10.32           Lease dated February 1, 1996 between the Company and
                Technology Park Associates, Inc. (filed as Exhibit
                10.31 to the Company's Form 10-K for the year ended
                December 30, 1995 and incorporated herein by
                reference).

10.33           Employment Agreement dated December 31, 1996 between
                the Company and Perry D. Odak (filed as
                Exhibit 10.33 to the Company's Form 10-K for the year
                ended December 28, 1996 and incorporated herein by
                Reference).

10.34           Employment Agreement dated January 1, 1998 between the Company
                and Angelo M. Pezzani (filed herewith).

10.35           Employment  Agreement dated October 20, 1997 between the Company
                and Lawrence Benders (filed herewith).

10.36           Importation  and  Marketing   Agreement   between  the  Company,
                Seven-Eleven Japan Co.,  Ltd.,Tower  Enterprise  Corporation and
                ATF Co., Ltd. dated December 19, 1997 (filed herewith)




11.0            The Computation of Per Share Earnings is incorporated by
                reference from Note 10 of the Company's consolidated financial
                statements(filed herewith).

21.1            Subsidiaries of the registrant as of December 27,1997
                (filed herewith).

23.0            Consent of Ernst & Young LLP (filed herewith).

27.0            Financial Data Schedule (filed herewith).

                 (b) No Current Reports on Form 8-K were filed during the fourth
                     quarter of 1997



<PAGE>



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                          BEN & JERRY'S HOMEMADE, INC.

Dated: March 25, 1998                              By:  /s/ Frances Rathke
                                                        ------------------
                                                        Frances Rathke
                                                        Chief Financial Officer





<PAGE>



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 Company and in
the capacities and on the date indicated.

March 25, 1998                             /s/ Elizabeth Bankowski
                                           Elizabeth Bankowski
                                           Director, Director of Social Mission
                                           Development

March 25, 1998                             /s/ Bennett R. Cohen
                                           Bennett R. Cohen
                                           Director and Chairperson

March 25, 1998                             /s/Pierre Ferrari
                                           Pierre Ferrari
                                           Director

March 25, 1998                             /s/ Jeffrey Furman
                                           Jeffrey Furman
                                           Director

March 25, 1998                             /s/ Jerry Greenfield
                                           Jerry Greenfield
                                           Director and Vice Chairperson

March 25, 1998                             /s/ Jennifer Henderson
                                           Jennifer Henderson
                                           Director

March 25, 1998                             /s/ Frederick A. Miller
                                           Frederick A. Miller
                                           Director

March 25, 1998                             /s/ Henry Morgan
                                           Henry Morgan
                                           Director

March 25, 1998                             /s/Perry D. Odak
                                           Director, Principal Executive Officer
                                           And President

March 25, 1998                             /s/Andrew S. Patti
                                           Andrew S. Patti
                                           Director

March 25, 1998                             /s/ Frances Rathke
                                           Frances Rathke
                                           Principal Financial Officer and
                                           Principal Accounting Officer




<PAGE>





                           ANNUAL REPORT ON FORM 10-K

                    ITEM 8, ITEM 14(a)(1) and (2), (c) and(d)

          LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

                                CERTAIN EXHIBITS

                          FINANCIAL STATEMENT SCHEDULE

                          YEAR ENDED DECEMBER 27, 1997

                           BEN & JERRY'S HOMEMADE INC.

                            SOUTH BURLINGTON, VERMONT


<PAGE>


                                      INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                           AND FINANCIAL STATEMENT SCHEDULE




<TABLE>


<S>                                                                                                       <C>
Report of Independent Auditors............................................................................F-1

Consolidated Balance Sheets as of December 27, 1997 and December 28, 1996.................................F-2

Consolidated Statements of Operations for the years ended December 27, 1997,
  December 28, 1996, and December 30, 1995................................................................F-3

Consolidated Statements of Stockholders' Equity for the years ended December 27, 1997,
  December 28, 1996, and December 30, 1995................................................................F-4

Consolidated Statements of Cash Flows for the years ended December 27, 1997,
  December 28, 1996, and December 30, 1995................................................................F-5

Notes to Consolidated Financial Statements................................................................F-6 to
                                                                                                          F-15

Financial Schedule:

SCHEDULE II - Valuation and Qualifying Accounts...........................................................F-16
</TABLE>


<PAGE>




                             Report of Ernst & Young LLP, Independent Auditors


The Board of Directors and Stockholders
Ben & Jerry's Homemade, Inc.

We have audited the  accompanying  consolidated  balance sheets of Ben & Jerry's
Homemade,  Inc. as of December 27, 1997 and  December 28, 1996,  and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period ended  December 27, 1997.  Our audits also
included the  financial  statement  schedule  listed in the Index at Item 14(a).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Ben &
Jerry's  Homemade,  Inc. at  December  27,  1997 and  December  28, 1996 and the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended  December  27,  1997,  in  conformity  with  generally
accepted  accounting  principles.  Also, in our opinion,  the related  financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

                                                              ERNST & YOUNG LLP

Boston, Massachusetts
January 23, 1998


                                                  F-1


<PAGE>



Ben & Jerry's Homemade, Inc.


Consolidated Balance Sheets
(In thousands except share data)


<TABLE>
<CAPTION>

                                                                    December 27,      December 28,
                                                                     1997              1996
                                                                    -----------       -----------
<S>                                                                 <C>               <C>        
Assets
Current assets:
 Cash and cash equivalents                                          $    47,318       $    36,104
 Marketable securities                                                      481               466
 Trade accounts receivable
     (less allowance of $1,066 in 1997
     and $695 in 1996 for doubtful accounts)                             12,710             8,684
 Inventories, net                                                        11,122            15,365
 Deferred income taxes                                                    6,071             4,099
 Prepaid expenses and other current assets                                2,378             3,395
                                                                    -----------       -----------
          Total current assets                                           80,080            68,113
                                                                    -----------       -----------
Property, plant and equipment, net                                       62,724            65,104
Investments                                                               1,061             1,000
Other assets                                                              2,606             2,448
                                                                    -----------       -----------
                                                                    $   146,471       $   136,665
                                                                    ===========       ===========

Liabilities & Stockholders' Equity
Current liabilities:
 Accounts payable and accrued expenses                              $    23,266       $    17,398
 Current portion of long-term debt and
     capital lease obligations                                            5,402               660
                                                                    -----------       -----------
          Total current liabilities                                      28,668            18,058

Long-term debt and capital lease obligations                             25,676            31,087

Deferred income taxes                                                     5,208             4,835
Commitments and contingencies
Stockholders' equity:
 $1.20 noncumulative  Class A preferred stock -
     $1.00 par value,  redeemable at the  Company's option
     at $12.00 per share;  900 shares  authorized,
     issued and outstanding, aggregate preference
     on voluntary or involuntary liquidation - $9,000                         1                 1
 Class A common stock - $.033 par value; authorized
     20,000,000 shares; issued: 6,494,835 shares at
     December 27, 1997 and 6,364,733 shares at
     December 28, 1996                                                      214               210
 Class B common stock - $.033 par value; authorized
     3,000,000 shares; issued: 866,235 shares at
     December 27, 1997, and 897,664 shares at
     December 28, 1996                                                       29                29
 Additional paid-in capital                                              49,681            48,753
 Retained earnings                                                       39,086            35,190
 Cumulative translation adjustment                                         (129)            ( 118)
 Treasury stock, at cost: 124,532 Class A and 1,092 Class B
     shares at December 27, 1997 and 67,032 Class A and 1,092
     Class B shares at December 28, 1996                                 (1,963)          ( 1,380)
                                                                     ----------        ----------
          Total stockholders' equity                                     86,919            82,685
                                                                    -----------       -----------
                                                                    $   146,471       $   136,665
                                                                    ===========       ===========
                                                   See accompanying notes.
</TABLE>



                                                             F-2


<PAGE>




Ben & Jerry's Homemade, Inc.

Consolidated Statements of Operations
(In thousands except per share data)


<TABLE>
<CAPTION>

                                                                                Years Ended    
                                                             Dec. 27, 1997      Dec. 28, 1996      Dec.30, 1995
                                                             -------------      -------------      ------------
                                                                             
<S>                                                          <C>                <C>                <C>        
Net sales                                                    $   174,206        $   167,155        $   155,333
                                                                             
Cost of sales                                                    114,284            115,212            109,125
                                                             -------------      -------------      -------------
                                                                             
Gross profit                                                      59,922             51,943             46,208

Selling, general and administrative expenses                      53,520             45,531             36,362
                                                                             
                                                                             
Other income (expense):                                                      
     Interest income                                               1,938              1,676              1,681
     Interest expense                                             (1,992)            (1,996)            (1,525)
     Other                                                           (64)               243               (597)
                                                             --------------     --------------     -------------
                                                                    (118)               (77)              (441)
                                                             --------------     --------------     -------------
                                                                             
Income before income taxes                                         6,284              6,335              9,405

Income taxes                                                       2,388              2,409              3,457
                                                             -------------      --------------     -------------
                                                                             
                                                                             
Net income                                                   $     3,896        $     3,926        $     5,948
                                                             =============      =============      =============
                                                                             
Basic earnings per share                                     $      0.54        $      0.55        $      0.83
                                                                             
Diluted earnings per share                                   $      0.53        $      0.54        $      0.82
                                                                            

</TABLE>


                                                      See accompanying notes.




                                                            F-3



<PAGE>


Ben & Jerry's Homemade, Inc.

Consolidated Statements of Stockholders' Equity
(In thousands except share data)

<TABLE>
<CAPTION>




                                               Preferred
                                               Stock         Common Stock                                          
                                               -----         ------------                                          
                                                           Class A     Class B Additional            Cumulative    
                                               Par         Par         Par     Paid-in    Retained   Translation   
                                               Value       Value       Value   Capital    Earnings   Adjustment    
                                               -----       -----       -----   -------    --------   ----------    
<S>                                            <C>         <C>         <C>     <C>        <C>        <C>  
Balance at December 31, 1994                   $     1     $   208     $ 31    $48,366    $25,316    $   0
Net income (loss)                                                                           5,948
Common stock issued under stock
 purchase plan (21,599 Class A shares)                                             174
Conversion of Class B shares to Class A
 shares (18,123 shares)                                          1       (1)
Common stock issued under restricted
 stock plan (2,000 Class A shares)                                                 (19)        
Foreign currency translation adjustment                                                               (114)
                                                   ---         ---       --     ------     ------     ----
Balance at December 30, 1995                         1         209       30     48,521     31,264     (114)                         
Net income                                                                                  3,926
Common stock issued under stock
 purchase plan (15,674 Class A shares)                                             205
Conversion of Class B shares to Class A
 shares (16,661 shares)                                          1       (1)
Common stock issued under restricted
 stock plan (2,096 Class A shares)                                                  27          
Foreign currency translation adjustment                                                                 (4)         
                                                     -         ---       --     ------     ------     ----
Balance at December 28, 1996                         1         210       29     48,753     35,190     (118)                         
Net income                                                                                  3,896    
Common stock issued under stock
 purchase plan (15,406 Class A shares)                           1                 148     
Conversion of Class B shares to Class A
 shares (31,451 shares)                                          1
Common stock issued under stock and
 option plans (83,267 Class A shares)                            2                 907      
Repurchase of common stock
 (77,500 Class A shares)                          
Issuance of treasury stock for compensation
 (20,000 Class A shares)                                                          (127)       
Foreign currency translation adjustment                                                                (11)
                                               -------     -------     ----    -------    -------    ----- 
Balance at December 27, 1997                   $     1     $   214     $ 29    $49,681    $39,086    $(129)
                                               =======     =======     ====    =======    =======    ===== 
                                      

<PAGE>





                                                 Treasury Stock            
                                                 --------------        Total        
                                               Class A     Class B     Stock-    
                                                                       holders'  
                                                  Cost        Cost     Equity    
                                                  ----        ----     ------    
                                                                              
                                              

Balance at December 31, 1994                   $(1,415)    $    (5)    $ 72,502
Net income (loss)                                                         5,948
Common stock issued under stock
 purchase plan (21,599 Class A shares)                                      174
Conversion of Class B shares to Class A
 shares (18,123 shares)                    
Common stock issued under restricted
 stock plan (2,000 Class A shares)                  40                       21
Foreign currency translation adjustment                                    (114) 
                                                    --          --          ---                                                     
Balance at December 30, 1995                    (1,375)         (5)      78,531                                        
Net income                                                                3,926
Common stock issued under stock
 purchase plan (15,674 Class A shares)                                      205
Conversion of Class B shares to Class A
 shares (16,661 shares)                    
Common stock issued under restricted
 stock plan (2,096 Class A shares)                                           27
Foreign currency translation adjustment                                      (4)
                                                ------          --       ------                                  
Balance at December 28, 1996                    (1,375)         (5)      82,685                                        
Net income                                                                3,896
Common stock issued under stock
 purchase plan (15,406 Class A shares)                                      149   
Conversion of Class B shares to Class A
 shares (31,451 shares)                                                       1
Common stock issued under stock and
 option plans (83,267 Class A shares)                                       909     
Repurchase of common stock
 (77,500 Class A shares)                          (988)                    (988)           
Issuance of treasury stock for compensation
 (20,000 Class A shares)                           405                      278
Foreign currency translation adjustment                                     (11)
                                               -------     -------     --------                                    
Balance at December 27, 1997                   $(1,958)    $    (5)    $ 86,919
                                               =======     =======     ========
                                       
</TABLE>

                                                                      

                                                 See accompanying notes.

                                       F-4


<PAGE>



Ben & Jerry's Homemade, Inc.

Consolidated Statements of Cash Flows
         (In thousands)
<TABLE>
<CAPTION>

                                                                                Years Ended      
                                                             December 27,       December 28,       December 30,                     
                                                                     1997               1996               1995
                                                             ------------       ------------       ------------
<S>                                                          <C>                <C>                <C>      
Cash flows from operating activities:
     Net income                                              $     3,896        $      3,926       $    5,948
     Adjustments to reconcile net income
         to net cash provided
         by operating activities:
         Depreciation and amortization                             7,711               7,091             5,928
         Deferred income taxes                                    (1,599)                809             2,166
         Provision for doubtful accounts                             630                 408               400
         Loss on disposition of assets                               124                  10               171
         Stock compensation                                          405                                    21
         Changes in assets and liabilities:
              Accounts receivable                                 (5,318)              3,146           ( 1,009)
              Income taxes receivable/payable                      1,743                ( 89)            ( 733)
              Inventories                                          4,243             ( 2,749)              847
              Prepaid expenses                                       (64)                897             ( 563)
              Accounts payable and accrued expenses                5,868                 806             2,677
                                                             -----------        ------------       -----------
Net cash provided by operating activities                         17,639              14,255            15,853

Cash flows from investing activities:
     Additions to property, plant and equipment                   (5,236)           ( 12,333)          ( 7,532)
     Proceeds from sale of property, plant
         and equipment                                                48                 168                96
     (Increase) decrease in investments                              (76)              ( 466)            7,000
     Changes in other assets                                        (425)              ( 320)             (303)
                                                             -----------        ------------       ------------
Net cash used for investing activities                            (5,689)           ( 12,951)             (739)

Cash flows from financing activities:
     Repayments of long-term debt and
         capital leases                                             (669)               (678)             (547)
     Repurchase of common stock                                     (988)
     Net proceeds from issuance of common stock                      932                 232               174
                                                             -----------        ------------       -----------
Net cash used for financing activities                              (725)              ( 446)            ( 373)

Effect of exchange rate changes on cash                              (11)               (160)            ( 113)
                                                             -----------        ------------      ------------

Increase in cash and cash equivalents                             11,214                 698            14,628
Cash and cash equivalents at beginning of year                    36,104              35,406           20,778
                                                             -----------        ------------       ----------
Cash and cash equivalents at end of year                     $    47,318        $     36,104       $    35,406
                                                             ===========        ============       ===========

                                                          See accompanying notes.
</TABLE>


                                                        F-5


<PAGE>

Ben & Jerry's Homemade, Inc.

Notes to Consolidated Financial Statements         
Dollars in tables in thousands except share data

1. SIGNIFICANT ACCOUNTING POLICIES

Business
Ben & Jerry's  Homemade,  Inc. (the  Company)  makes and sells super premium ice
cream and other frozen dessert  products  through  distributors  and directly to
retail  outlets  primarily  located in the United  States and  selected  foreign
countries, including Company-owned and franchised ice cream parlors.

Principles of Consolidation
The consolidated  financial  statements  include the accounts of the Company and
all its wholly-owned  subsidiaries.  Intercompany accounts and transactions have
been eliminated.

Use of Estimates
The  preparation  of the  financial  statements  in  accordance  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the
first-in, first-out method.

Cash Equivalents
Cash equivalents  represent  highly liquid  investments with maturities of three
months or less at date of purchase.

Investments
Management  determines the appropriate  classification of debt securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Marketable   equity   securities   and  debt   securities   not   classified  as
held-to-maturity  are  classified  as   available-for-sale.   Available-for-sale
securities are carried at fair value, with the unrealized gains and losses,  net
of tax, reported in a separate component of shareholders'  equity. The amortized
cost of debt  securities  in this  category  is  adjusted  for  amortization  of
premiums and accretion of discounts to maturity.  Such  amortization is included
in interest  income.  Held-to-maturity  securities are stated at amortized cost,
adjusted  for  amortization  of premium and  accretion of discounts to maturity.
Such amortization is included in interest income.  Realized gains and losses and
declines  in  value  judged  to be  other-than-temporary  on  available-for-sale
securities are included in income.  The cost of securities  sold is based on the
specific  identification method. Interest and dividends on securities classified
as available-for-sale are included in interest income.

Concentration of Credit Risk
Financial  instruments,  which  potentially  subject the Company to  significant
concentration of credit risk, consist of cash and cash equivalents,  investments
and trade  accounts  receivable.  The Company  places its  investments in highly
rated financial  institutions,  obligations of the United States  Government and
investment  grade  short-term  instruments.  No  more  than  20%  of  the  total
investment  portfolio  is  invested  in any one issuer or  guarantor  other than
United States Government instruments which limits the amount of credit exposure.

The Company  sells its products  primarily to well  established  frozen  dessert
distribution or retailing companies throughout the United States and Europe. The
Company's most significant  customer,  Dreyer's Grand Ice Cream, Inc., accounted
for 57%,  55%,  and 47% of net sales in 1997,  1996 and 1995  respectively.  The
Company  performs  ongoing  credit  evaluations  of its  customers and maintains
reserves  for  potential  credit  losses.  Historically,  the  Company  has  not
experienced significant losses related to investments or trade receivables.

Property, Plant and Equipment
Property,  plant and  equipment  are  carried at cost.  Depreciation,  including
amortization  of leasehold  improvements,  is computed  using the  straight-line
method over the estimated  useful lives of the related  assets.  Amortization of
assets under  capital  leases is computed on the  straight-line  method over the
lease term and is included in depreciation expense.

Other Assets
Other assets include intangible and other noncurrent  assets.  Intangible assets
are reviewed for  impairment  based on an  assessment  of future  operations  to
ensure that they are appropriately valued.  Intangible assets are amortized on a
straight-line basis over their estimated economic lives.
                                       F-6

<PAGE>


Ben & Jerry's Homemade, Inc.

Notes to Consolidated Financial Statements         
Dollars in tables in thousands except share data

Translation of Foreign Currencies
Assets and liabilities of the Company's  foreign  operations are translated into
United  States  dollars at exchange  rates in effect on the balance  sheet date.
Income and expense items are  translated at average  exchange  rates  prevailing
during the year. Translation adjustments are accumulated as a separate component
of  stockholders'  equity.  Transaction  gains or losses are recognized as other
income or expense in the period incurred.  Translation and transaction  gains or
losses have been immaterial for all periods presented.

Foreign Currency Hedging
The Company hedges foreign currency risks by entering into forward  contracts at
the beginning of each month to hedge foreign currency denominated sales for that
month.  Realized  and  unrealized  gains  or  losses  on  contracts  that  hedge
anticipated  cash flows are  determined by  comparison  of contract  values upon
execution (realized) and at each balance sheet for open contracts  (unrealized).
Resulting  gains and losses are  recognized  at the balance  sheet date as other
income  or  expense  for the  period.  Transaction  gain  or  losses  have  been
immaterial for all periods presented.

Revenue Recognition
The Company  recognizes  revenue and the related  costs when product is shipped.
The  Company  recognizes  franchise  fees as income for  individual  stores when
services required by the franchise  agreement have been substantially  performed
and the store opens for  business.  Franchise  fees  relating to area  franchise
agreements  are  recognized  in proportion to the number of stores for which the
required services have been substantially  performed.  Franchise fees recognized
as income and included in net sales were approximately  $553,000,  $301,000, and
$166,000 in 1997, 1996 and 1995, respectively.

Advertising
Advertising  costs are  expensed as  incurred.  Advertising  expense  (excluding
cooperative  advertising with distribution  companies) amounted to approximately
$6.7 million,  $3.4 million,  and $1.1 million for the years ended  December 27,
1997, December 28, 1996, and December 30, 1995, respectively.

Income Taxes
The Company  accounts for income taxes under the liability  method in accordance
with Statement of Financial  Accounting Standards No. 109, Accounting for Income
Taxes.  Under the  liability  method,  deferred tax  liabilities  and assets are
recognized  for  the tax  consequences  of  temporary  differences  between  the
financial reporting and tax bases of assets and liabilities.

Stock Based Compensation
The Company  grants stock  options for a fixed number of shares with an exercise
price  equal  to the fair  value of the  shares  at the date of the  grant.  The
Company accounts for employee stock option grants in accordance with APB Opinion
No. 25, "Accounting for Stock Issued to Employees". Accordingly, no compensation
expense for stock option grants to employees is recognized.

Earnings Per Share
In 1997,  the Financial  Accounting  Standards  Board issued  Statement No. 128,
Earnings per Share (FAS 128).  FAS 128 replaced the  calculation  of primary and
fully  diluted  earnings  per share with basic and diluted  earnings  per share.
Unlike  primary  earnings  per share,  basic  earnings  per share  excludes  any
dilutive  effects  of  options,  warrants  or  convertible  securities.  Diluted
earnings  per share is very similar to the  previously  reported  fully  diluted
earnings per share.  All  earnings  per share  amounts for all periods have been
presented,   and  where  appropriate,   restated  to  conform  to  the  FAS  128
requirements.

Impact of Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
Reporting Comprehensive Income (FAS 130) and Statement No. 131, Disclosure About
Segments of an Enterprise and Related Information (FAS 131). FAS 130 establishes
standards for reporting and displaying  comprehensive income and its components.
FAS 131 establishes  standards for public companies to report  information about
operating  segments in financial  statements,  and supercedes FAS 14,  Financial
Reporting for Segments of a Business Enterprise, but retains the requirements to
report information about major customers.  FAS 130 and FAS 131 are effective for
the Company in fiscal  1998.  The Company does not believe the adoption of these
Statements will have a material effect on the Company's financial statements.
                
                                       F-7

<PAGE>





2. CASH, MARKETABLE SECURITIES AND INVESTMENTS

The Company's cash and  investments in debt securities are carried at fair value
which approximates cost, or amortized cost, as summarized below:
                                                          1997           1996
                                                          ----           ----
  Municipal bonds                                      $  45,568     $  14,900
  U.S. corporate securities                                             12,980
                                                         -------        ------
       Total debt securities available-for-sale           45,568        27,880
  Cash, cash equivalents and other investments             3,292         9,690
                                                       ---------     ---------
       Total cash, cash equivalents and investments    $  48,860     $  37,570
                                                       =========     =========

All debt  securities at December 27, 1997 and December 28, 1996 have  maturities
of less than twelve months. At December 27, 1997 investments totaling $1,542,000
were classified as held-to-maturity and classified as investments.

Investments  in debt  securities  mature  at par in  thirty  to  forty-five  day
intervals,  at which time the stated interest rates are reset at the then market
rate. Gross purchases and maturities  aggregated  $43,088,000 and $25,400,000 in
1997,  $61,100,000  and  $63,922,000 in 1996, and $94,500,000 and $83,525,000 in
1995, respectively.

3. INVENTORIES
                                              1997                  1996
                                              ----                  ----

Ice cream and ingredients             $       10,294         $      14,221
Paper goods                                      536                   492
Food, beverages, and gift items                  292                   652
                                       --------------         -------------
                                      $       11,122         $      15,365
                                       ==============         =============

The Company purchased certain  ingredients from a company owned by the Company's
Chairperson   and  a  member  of  the  Board  of  Directors  which  amounted  to
approximately $800,000 for 1997, $1,000,000 for 1996 and $1,500,000 for 1995.

4. PROPERTY, PLANT AND EQUIPMENT 
<TABLE>
<CAPTION>
                                                                                       Estimated
                                                                                     Useful Lives/
                                              1997                  1996              Lease Term
                                              ----                  ----              ----------

<S>                                   <C>                    <C>                     <C>        
Land and improvements                 $        4,520         $       4,481           15-25 years
Buildings                                     37,650                37,533           25 years
Equipment and furniture                       44,609                47,978           3-20 years
Leasehold improvements                         3,221                 3,153           3-10 years
Construction in progress                       2,676                   758
                                       --------------         --------------
                                              92,676                93,903
Less accumulated depreciation                 29,952                28,799
                                       --------------         --------------
                                      $       62,724         $      65,104
                                       ==============         ==============
</TABLE>

Depreciation  expense for the years ended  December 27, 1997,  December 28, 1996
and December 30, 1995 was $7,444,000, $6,650,000, and $5,578,000, respectively.

                                                                F-8

<PAGE>




5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

<TABLE>
<CAPTION>
                
                                                                                       1997              1996
                                                                                       ----              ----
<S>                                                                                 <C>              <C>      
Trade accounts payable                                                              $   3,832        $   4,337
Accrued expenses                                                                       10,313            7,350
Accrued payroll and related costs                                                       2,076            2,152
Accrued promotional costs                                                               3,581            2,076
Accrued marketing costs                                                                 2,230              732
Accrued insurance expense                                                               1,234              751
                                                                                    ---------        ---------
                                                                                    $  23,266        $  17,398
                                                                                    =========        =========
</TABLE>

6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
                                                                                       1997              1996
                                                                                       ----              ----
<S>                                                                                <C>              <C>    
Senior Notes - Series A payable in annual installments beginning
     in 1998 through 2003 with interest payable semiannually at 5.9%                $  20,000        $  20,000
Senior Notes - Series B payable in annual installments beginning
     in 1998 through 2003 with interest payable semiannually at 5.73%                  10,000           10,000
Other long-term obligations                                                             1,078            1,747
                                                                                    ---------        ---------
                                                                                       31,078           31,747
Less current portion                                                                    5,402              660
                                                                                    ---------        ---------
                                                                                    $  25,676        $  31,087
                                                                                    =========        =========
</TABLE>

Property,  plant  and  equipment  having  a  net  book  value  of  approximately
$17,275,000  at  December  27,  1997 are  pledged as  collateral  under  certain
long-term debt arrangements.

Long-term  debt and capital lease  obligations  at December 27, 1997 maturing in
each of the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
                                                                                   Capital lease       Long-term
                                                                                    obligations          debt


                           <S>                                                      <C>              <C>                   
                           1998                                                     $      15        $   5,398
                           1999                                                            15            5,281
                           2000                                                            15            5,064
                           2001                                                           248            5,040
                           2002                                                                          5,033
                           Thereafter                                                                    5,098
                                                                                    ---------        ---------
                           Total minimum payments                                         293           30,914
                           Less amounts representing interest                             129         
                                                                                    ---------        --------- 
                           Present value of minimum payments                        $     164        $  30,914
                                                                                    =========        =========
</TABLE>

The Company  capitalized no interest in 1997 or 1996.  Interest of approximately
$497,000 was  capitalized in 1995 as part of the  acquisition  cost of property,
plant and equipment. Interest paid, including interest capitalized,  amounted to
$1,975,000, $1,973,000, and $2,023,000 for 1997, 1996, and 1995, respectively.

The Company has  available two  $10,000,000  unsecured  working  capital line of
credit agreements with two banks. Interest on borrowings under the agreements is
set at the banks'  Base Rate or at the  Eurodollar  Rate plus a maximum of up to
1.25%.  The  agreements  expire  September  29,  1998  and  December  29,  1998,
respectively,  and any  outstanding  borrowings are due at that time. No amounts
were borrowed under these or any bank agreements during 1997, 1996, and 1995.
                                     
                                       F-9

<PAGE>







Certain of the debt agreements contain certain  restrictive  covenants requiring
maintenance  of  minimum  levels  of  working  capital,  net  worth  and debt to
capitalization  ratios.  As of December  27, 1997 the Company was in  compliance
with the  provisions of these  agreements.  Under the most  restrictive of these
covenants,  distributions  are  limited to an amount of  $5,000,000  plus 75% of
earnings and 100% of net losses since June 30, 1993;  approximately  $15,964,000
of  retained  earnings  at  December  27,  1997 was  available  for  payment  of
dividends.

The carrying amounts and fair values of the Company's financial  instruments are
as follows:
                               1997                              1996
                  ----------------------------      ----------------------------
                      Carrying         Fair             Carrying         Fair
                       Amount         Value              Amount          Value
Long-term debt         31,078         29,734             31,747          29,862

7. STOCKHOLDERS' EQUITY

The Class A Preferred Stock has one vote per share on all matters on which it is
entitled to vote and is entitled to vote as a separate class in certain business
combinations, such that approval of two-thirds of the class is required for such
business combinations. The Class A Preferred Stock is redeemable by the Company,
by vote of the Continuing Directors (as defined in the Articles of Association).
The Class A Common  Stock has one vote per share on all  matters  on which it is
entitled to vote. In June 1987, the Company's  shareholders adopted an amendment
to the Company's  Articles of Association that authorized  3,000,000 shares of a
new Class B Common Stock and redesignated the Company's existing Common Stock as
Class A Common  Stock.  The Class B Common  Stock has ten votes per share on all
matters on which it is entitled to vote, except as may be otherwise  provided by
law, is generally  non-transferable and is convertible into Class A Common Stock
on a one-for-one  basis.  A stockholder  who does not wish to complete the prior
conversion  process may effect a sale by simply  delivering the  certificate for
such shares of Class B Stock to a broker, properly endorsed. The broker may then
present the  certificate to the Company's  Transfer Agent which, if the transfer
is otherwise in good order,  will issue to the purchaser a  certificate  for the
number of shares of Class A Stock thereby sold.

8. STOCK BASED COMPENSATION PLANS The Company maintains two Stock Option Plans:

The 1985 Option Plan provides for the grant of incentive and non-incentive stock
options to employees or consultants.  The 1985 Option Plan provides that options
granted  are  exercisable  at the  market  value on the date of grant.  The 1985
option plan expired in August 1995.  While the Company  grants options which may
become exercisable at different times or within different  periods,  the Company
has  generally  granted  options to employees  which vest over a period of four,
five, or eight years, and in some cases subject to acceleration of vesting.  The
exercise  period cannot exceed ten years from the date of grant. At December 27,
1997, no shares of Class A Common Stock were  available for grant under the 1985
Option Plan for additional grants.
<TABLE>
<CAPTION>

                                                                          Weighted Average
                                                            Number of      Exercise Price           Option Price
A summary of the 1985 Option Plan activity is as follows  :  Options          Per Share               Per Share
                                                             -------          ---------               ---------
     <S>                                                      <C>            <C>                  <C>          <C>     
     Outstanding at December 31, 1994                         162,308        $   16.75            $  16.75   - $  16.75
         Granted                                              215,000            11.17               10.63   -    14.00
         Exercised                                                  -             0.00                0.00   -     0.00
         Forfeited                                            (19,871)           16.75               16.75   -    16.75
                                                            ---------        ---------           ----------------------
     Outstanding at December 30, 1995                         357,437        $   13.40           $   10.63   - $  16.75
         Granted                                                    -             0.00                0.00   -     0.00
         Exercised                                                  -             0.00                0.00   -     0.00
         Forfeited                                           (109,819)           11.34               10.81   -    16.75
                                                            ---------        ---------           ----------------------
     Outstanding at December 28, 1996                         247,618        $   14.31               10.63   -    16.75
         Granted                                                    -             0.00                0.00   -     0.00
         Exercised                                            (80,000)           10.81               10.81   -    10.81
         Forfeited                                            (10,807)           16.75               16.75   -    16.75
                                                            ---------        ---------           ----------------------
     Outstanding at December 27, 1997                         156,811        $   15.92           $   10.63   - $  16.75
                                                            =========        =========           =========     ========
     Options vested at December 27, 1997                       76,510        $   15.05           $   10.63   - $  16.75
                                                            =========        =========           =========     ========
</TABLE>

                                      F-10

<PAGE>





The 1995 Equity  Incentive  Plan provides for the grant to employees,  and other
key  persons  or  entities,  including  non-employee  directors  who  are in the
position,  in the opinion of the Compensation  Committee,  to make a significant
contribution to the success of the Company, of incentive and non-incentive stock
options, stock appreciation rights, restricted stock, unrestricted stock awards,
deferred stock awards, cash or stock performance  awards,  loans or supplemental
grants,  or  combinations  thereof.  While the Company  grants options which may
become exercisable at different times or within different  periods,  the Company
has  generally  granted  options to employees  which vest over a period of four,
five, or six years,  and in some cases subject to  acceleration  of vesting upon
specified  terms.  The exercise  period cannot exceed ten years from the date of
grant.  At  December  27,  1997,  146,000  shares of Class A Common  Stock  were
available for grant under the 1995 Equity Incentive Plan for additional grants.

<TABLE>
<CAPTION>

A summary of the 1995 Equity Incentive Plan activity is as follows:       Weighted Average
                                                            Number of      Exercise Price               Option Price
                                                             Options          Per Share                   Per Share
     <S>                                                      <C>            <C>                 <C>           <C>     
     Outstanding at December 31, 1994                               0        $    0.00           $    0.00   -     0.00
         Granted                                               25,000            19.00               19.00   -    19.00
         Exercised                                                  0             0.00                0.00   -     0.00
         Forfeited                                                  0             0.00                0.00   -     0.00
                                                             --------        ---------           ----------------------
     Outstanding at December 30, 1995                          25,000        $   19.00               19.00   -    19.00
         Granted                                               62,500            13.97               12.38   -    16.00
         Exercised                                                  0             0.00                0.00   -     0.00
         Forfeited                                                  0             0.00                0.00   -     0.00
                                                             --------        ---------           ----------------------
     Outstanding at December 28, 1996                          87,500        $   15.41               12.38   -    19.00
         Granted                                              694,000            12.04               10.88   -    13.89
         Exercised                                                  0             0.00                0.00   -     0.00
         Forfeited                                            (27,500)           16.00               16.00   -    16.00
                                                             --------        ---------           ----------------------
     Outstanding at December 27, 1997                         754,000        $   12.28           $   10.88   - $  19.00
                                                              =======        =========           =========     ========
     Options vested at December 27, 1997                      127,042        $   11.78           $   10.88   - $  19.00
                                                              =======        =========           =========     ========
</TABLE>

The Company  maintains an Employee  Stock  Purchase  Plan which  authorizes  the
issuance of up to 300,000 shares of common stock.  All employees with six months
of continuous service are eligible to participate in this plan.  Participants in
the  plan  are  entitled  to  purchase  Class A Common  Stock  during  specified
semi-annual  periods through the accumulation of payroll, at the lower of 85% of
market value of the stock at the  beginning or end of the  offering  period.  At
December  27,  1997,  127,744  shares had been issued under the plan and 172,256
shares were available for future issuance.

The Company has a  Restricted  Stock Plan (the 1992 Plan)  which  provides  that
non-employee  directors,  on becoming eligible, may be awarded shares of Class A
Common Stock by the  Compensation  Committee of the Board of  Directors.  Shares
issued  under the plan  become  vested  over  periods of up to five  years.  The
Company  has also  adopted  the 1995  Plan,  which  provides  that  non-employee
directors  can  elect to  receive  stock  in lieu of a  Director's  annual  cash
retainer.  In 1997,  2,612 shares were issued to non-employee  directors.  These
shares vest immediately.  At December 27, 1997, a total of 7,363 shares had been
awarded  under these plans,  all of which were fully  vested,  and 27,637 shares
were available for future awards.  Unearned  compensation  on unvested shares is
recorded as of the award date and is amortized over the vesting period.

As of December 27, 1997 a total of 345,893  shares are reserved for future grant
or issue under all of the Company's stock plans.

The  Company  has stock  option  plans that  provide for the grant of options to
purchase shares of the Company's  common stock to employees or consultants.  The
Company  has  elected to follow  Accounting  Principles  Board  Opinion  No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related  Interpretations
in accounting for its employee stock options  because,  as discussed  below, the
alternative  fair value  accounting  provided for under FASB  Statement No. 123,
"Accounting for  Stock-Based  Compensation,"  (FAS 123),  requires use of option
valuation  models  that were not  developed  for use in valuing  employee  stock
options.  Under APB 25,  because the exercise  price of the  Company's  employee
stock  options  equals the market price of the  underlying  stock on the date of
grant, no compensation expense is recognized.

The Company has followed FAS 123 for its stock options granted to  non-employees
as required.

Pro forma information regarding net income and earnings per share is required by
FAS 123, which also requires that the information be
                                    
                                      F-11

<PAGE>



determined  as if the Company  has  accounted  for its  employee  stock  options
granted  subsequent  to December  31,  1994 under the fair value  method of that
Statement.  The fair value for these  options was estimated at the date of grant
using a Black-Scholes  option pricing model with the following  weighted-average
assumptions:
                                                1997         1996        1995
                                                ----         ----        ----
Risk-free interest rates                        5.53%        6.15%       6.01%
Dividend yield                                  0.00%        0.00%       0.00%
Expected volatility factor                      0.34         0.39        0.35
Weighted average expected lives (in years)       3.6          3.3         3.3

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options  that have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have   characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma   information   follows  (in  thousands  except  for  earnings  per  share
information):
                                                1997         1996        1995
                                                ----         ----        ----
Pro forma net income                         $ 3,600      $ 3,796     $ 5,849
Pro forma earnings per share - diluted       $  0.49      $  0.53     $  0.81
Weighted average fair value of
   options at the date of grant              $  4.16      $  4.26     $  4.33

Exercise  prices  for  options  outstanding  ranged  from  $10.63 - $19.00.  The
weighted-average remaining contractual life of those options is 8.75 years.

Because FAS 123 is applicable only to options granted subsequent to December 31,
1994, its pro forma effect will not be fully reflected until 1998.

9. INCOME TAXES

The provision for income taxes consists of the following:

  Federal:                                    1997           1996         1995
                                              ----           ----         ----
      Current                             $  3,300       $  1,348       $  873
      Deferred                              (1,388)           681        1,695
                                          --------       --------      -------
                                             1,912          2,029        2,568
  State:
      Current                                  686            252          418
      Deferred                                (210)           128          471
                                          --------       --------      -------
                                               476            380          889
                                          --------       --------      -------
                                          $  2,388       $  2,409      $ 3,457
                                          ========       ========      =======

Income taxes computed at the federal statutory rate differ from amounts provided
as follows:

                                              1997           1996         1995
                                              ----           ----         ----
      Tax at statutory rate                   34.0 %         34.0 %       34.0 %
      State tax, less federal tax effect       5.0            6.0          4.5
      Income tax credits                      (1.0 )        ( 1.0 )      ( 2.9 )
      Tax exempt interest                     (2.9 )        ( 2.4 )      ( 1.1 )
      Other, net                               2.9            1.4          2.3
                                           -------         ------        -----
      Provision for income taxes              38.0 %         38.0 %       36.8 %
                                           =======         ======         ====

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying amount of assets and liabilities for
                                      
                                      F-12

<PAGE>



financial  reporting  purposes  and the amounts used for income tax purposes and
are attributable to the following:

                                                 1997                1996
                                                 ----                ----
Deferred tax assets:
    Accrued liabilities                      $  3,872            $  2,297
    Inventories                                 1,503                 944
    Accounts receivable                           475                 526
    Other                                         221                 429
                                                  ---                 ---
    Total deferred tax assets                   6,071               4,196
                                             --------            --------
Deferred tax liabilities:
    Depreciation                                5,193               4,923
    Other                                          15                   9
                                             --------            --------
       Total deferred tax liabilities           5,208               4,932
                                             --------            --------

       Net deferred tax asset (liabilities)  $    863            $  (736)
                                             =========           ========

Income taxes paid amounted to $2,244,000, $1,716,000 and $1,918,000 during 1997,
1996 and 1995, respectively.



10. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>

                                                                                    1997            1996           1995
                                                                                    ----            ----           ----
<S>                                                                               <C>            <C>            <C>    
Numerator:
    Numerator for basic and diluted earnings

      per share - income available to common stockholders                         $3,896         $ 3,926        $ 5,948
                                                                                  ------         -------        -------

Denominator:
    Denominator for basic earnings per share -
      weighted-average shares                                                      7,247           7,189          7,171

    Effect of dilutive securities:
      Dilutive potential common shares - Employee stock options                       87              41             51
                                                                                  ------         -------        -------

    Denominator for diluted earnings per share-adjusted weighted-average
      shares and assumed conversions                                               7,334           7,230          7,222
                                                                                  ======         =======        =======

Basic earnings per share                                                           $0.54           $0.55          $0.83
                                                                                  ======         =======        =======

Diluted earnings per share                                                         $0.53           $0.54          $0.82
                                                                                  ======         =======        =======
</TABLE>

Options to purchase 146,811 shares of common stock at prices ranging from $16.75
to $19.00 were outstanding  during 1997 but were not included in the computation
of diluted  earnings per share because the options'  exercise  price was greater
than the average  market price of the common shares and,  therefore,  the effect
would be antidilutive.

Under an  agreement  with an outside  consultant,  if the average of the closing
market  value of the stock is in excess of $22.00  per share  over a ninety  day
period,  the consultant  would be entitled to purchase  125,000 shares of common
stock at $14.00 per share.  These 125,000 additional  warrants,  which expire on
July 1, 2004, are not included in the computation of diluted  earnings per share
because the stock has not exceeded $22.00.
                                          
                                      F-13


<PAGE>


11. THE BEN & JERRY'S FOUNDATION, INC.

In October 1985,  the Company  issued 900 shares Class A Preferred  Stock to The
Ben & Jerry's  Foundation,  Inc.  (the  Foundation),  a  non-profit  corporation
qualified  under section  501(c)(3) of the Internal  Revenue  Code.  The primary
purpose of the Foundation is to be the principal recipient of cash contributions
from the Company which are then donated to various  community  organizations and
other charitable  institutions.  Contributions to the Foundation and directly to
other  charitable  organizations,  at the rate of  approximately  7.5% of income
before income taxes, amounted to approximately  $510,000,  $514,000 and $768,000
for 1997, 1996 and 1995,  respectively. 

The Class A Preferred  Stock is entitled to vote as a separate  class in certain
business combinations, such that approval of two-thirds of the class is required
for such business combinations. The three directors of the Foundation, including
one of the founders of the Company, are members of the Board of Directors of the
Company.


12. EMPLOYEE BENEFIT PLANS

The  Company  maintains  profit  sharing  and  savings  plans  for all  eligible
employees. The Company has also implemented a management incentive program which
provides for discretionary  bonuses for management.  Contributions to the profit
sharing plan are allocated  among all current  full-time  and regular  part-time
employees (other than the co-founders, Chief Executive Officer and Officers that
are Senior  Directors of functions)  and are allocated  fifty percent based upon
length of service and fifty percent split evenly among all employees. The profit
sharing plan and the management  incentive plan are informal and  discretionary.
Recipients who participate in the management  incentive program are not eligible
to  participate  in the profit  sharing plan.  The savings plan is maintained in
accordance  with the provisions of Section  401(k) of the Internal  Revenue Code
and allows all  employees  with at least twelve months of service to make annual
tax-deferred voluntary  contributions up to fifteen percent of their salary. The
Company may match the  contribution  up to two percent of the  employee's  gross
annual  salary.  Total  contributions  by the  Company  to the  profit  sharing,
management  incentive program and savings plans were  approximately  $1,150,000,
$670,000 and $769,000 for 1997, 1996 and 1995, respectively.

13.  LEGAL MATTERS

On December 14, 1995, the Company was served with a class action complaint filed
in federal court in  Burlington,  Vermont.  The  complaint,  captioned  Henry G.
Jakobe,  Jr.  v. Ben &  Jerry's  Inc.,  et al.,  was  filed  by a Ben &  Jerry's
shareholder  on behalf of himself and  purportedly  on behalf of all other Ben &
Jerry's  shareholders  who purchased the common stock of the Company  during the
period from March 25, 1994 through December 19, 1994. Plaintiff alleges that the
Company  violated the federal  securities  laws by making  untrue  statements of
material  facts  and  omitting  to  state  material  facts  in  1994,  primarily
concerning  the  Company's  construction  and start-up of its new  manufacturing
facility in St. Albans, Vermont.

On July 1, 1997,  the  Company  entered  into a  Stipulation  and  Agreement  of
Settlement with the Plaintiff Class. Despite Management's  continued belief that
the remaining claim in Plaintiffs' suit is without merit, it was determined that
the costs associated with defending this lawsuit through its conclusion at trial
would be greater than the negotiated  settlement  amount paid by the Company (of
which a portion was reimbursed by the Company's insurance  carrier).  Therefore,
it was  concluded  that  settling  this matter,  was in the best interest of the
Company and its shareholders. The net settlement was immaterial to the financial
statements.

14. COMMITMENTS

The Company  leases  certain  property and  equipment  under  operating  leases.
Minimum payments for operating leases having initial or remaining noncancellable
terms in excess of one year are as follows:

                                             1998               $   1,210
                                             1999                     900
                                             2000                     654
                                             2001                     550
                                             2002                     396
                                             Thereafter             1,124

                                      F-14
<PAGE>

Rent  expense  for  operating  leases  amounted  to  approximately   $1,234,000,
$1,051,000 and $1,059,000 in 1997, 1996 and 1995,
respectively.                                


15. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>


                                           First                Second                Third               Fourth
                                          Quarter               Quarter              Quarter              Quarter
<S>                                       <C>                  <C>                  <C>                   <C>   
1997     
Net sales                                 $    36,148          $    50,701          $    49,956           $    37,401
Gross profit                              $    10,003          $    19,150          $    19,118           $    11,651
Net income (loss)                         $    (1,059)         $     1,741          $     2,528           $       686
Net income (loss) per
     common share - basic1                $      (.15)         $       .24          $       .35           $       .09
Net income (loss) per
     common share - diluted1              $      (.15)         $       .24          $       .34           $       .09

1996

Net sales                                 $    37,889          $    48,043          $    46,143           $    35,080
Gross profit                              $    11,965          $    16,540          $    14,354           $     9,084
Net income (loss)                         $     1,364          $     1,943          $     1,820           $   ( 1,201)
Net income (loss) per
     common share - basic1                $       .19          $       .27          $       .25           $      (.17)
Net income (loss) per
     common share - diluted1              $       .19          $       .27          $       .25           $      (.17)


</TABLE>










1 Earnings  per share  amounts  have been  restated to comply with  Statement of
Financial Accounting Standards No. 128, Earnings per Share.

                                      F-15

<PAGE>


                          BEN & JERRY'S HOMEMADE, INC.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)


     Years ended December 27, 1997, December 28, 1996, and December 30, 1995

<TABLE>


                                             Balance at         Charged      Charged to                           Balance
                                              beginning        to costs           other                            at end
                                                of year    and expenses        accounts   Deductions (1)          of year
                                                -------    ------------        --------  --------------           -------

<S>                                                <C>             <C>             <C>             <C>             <C>   
Year ended  December  27, 1997                     $695            $630            $---            $259            $1,066
Allowance for doubtful accounts
(deducted from accounts receivable)

Year ended  December  28, 1996                     $802            $408            $---            $515            $  695
Allowance for doubtful accounts
(deducted from accounts receivable)

Year ended  December  30, 1995                     $504            $400            $---            $102            $  802
Allowance for doubtful accounts
(deducted from accounts receivable)








      (1) Accounts deemed to be uncollectible.

                                                                                  F-16
</TABLE>