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 26, 1998

     [  ]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:  802/846-1500

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
                 Class A Common Stock Purchase Right
                 Class B Common Stock Purchase Right

     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   $130,577,185   and  $4,886,336
respectively, at March 5, 1999.

At March 5, 1999,  6,250,209  shares of the  Company's  Class A Common Stock and
818,951 shares of the Company's Class B Common Stock were outstanding.

Page 1 of 146 pages.  Exhibit Index appears on page 30.

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                          BEN & JERRY'S HOMEMADE, INC.

                          1998 FORM 10-K ANNUAL REPORT

                                Table of Contents

                                                                            PAGE

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

Item 2.   Properties.........................................................11

          Legal Proceedings..................................................12

Item 4.   Submission of Matters to Vote of Security Holders..................12

Item 5.   Market for Registrant's Common Equity and Related Stockholder
          Matters ...........................................................12

Item 6.   Selected Financial Data............................................13

Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations..........................................14

Item 7A.   Market Risk........................................................22

Item 8.   Financial Statements and Supplementary Data........................22

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure...............................................22

Item 10.  Directors and Executive Officers of the Company....................22

Item 11.  Executive Compensation.............................................25

Item 12.  Security Ownership of Certain Beneficial Owners and Management.....26
Item 13.  Certain Relationships and Related Transactions.....................28

Item 14.  Exhibits, Financial Statements, Financial Statement Schedules, and
          Reports on Form 8-K................................................31

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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 is committed to using milk and cream that have not been treated with the
synthetic hormone,  rBGH. 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,  being  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  1998,
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, the United Kingdom,  France,  Israel,
Canada,  The  Netherlands,  Belgium,  Japan and,  commencing  in 1999,  Peru and
Lebanon.  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 Jerry Greenfield,  now the
Company's Chairperson, and Ben Cohen, 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  frozen  desserts,   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  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 its progressive values.

The  Company  makes cash  contributions  equal to 7.5% 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,

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and through corporate grants.  Excluded from the 7.5% 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  1998,  the 7.5%  amounted  to  approximately
$792,600.  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 during 1998 paid the Vermont-based band Phish $200,482 in
royalties.  The band  established  the Water  Wheel  Foundation  to support  the
protection and preservation of Lake Champlain.

Ben & Jerry's  maintains a special tie to the Vermont  community in which it has
its  origins.  The  Company  donates  product  to public  events  and  community
celebrations  in the Vermont area. As already noted,  Community  Action Teams at
each site  make  grants  in  Vermont.  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,  Classified Board of Directors,
Vermont Legislation and Shareholders' Rights Plans."

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 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 a rBGH-free  dairy  supply.  The Company
will  continue to offer a premium to the Co-op for member  farms that do not use
rBGH.

In 1992, the Company became a signatory to the CERES  Principles  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

<PAGE>

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.  In February
1996, the Company introduced lactose-free and cholesterol-free  sorbet. In 1997,
Ben & Jerry's  introduced  a new line of low fat ice cream.  In 1998 the Company
introduced nine new flavors and two new novelty products.

Based on  information  provided by Information  Resources,  Inc., a software and
marketing  information services company ("IRI"), the Company believes 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  $446 million in 1998  compared with about
$428 million in 1997. 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  ("overrun")  during the freezing  process.  The  approximate  fat
content is 15%  (excluding  add-ins).  The  approximate  overrun  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, beet sugar, non-fat milk solids, egg
yolks and natural stabilizers.

Ben & Jerry's frozen yogurt is a high quality  frozen yogurt with  approximately
2% fat (excluding  add-ins) and  approximately  30% overrun.  The fat content of
frozen  yogurt  comes  from the cream used in the base mix.  All  frozen  yogurt
products are sweetened with beet sugar and corn syrup. The Company uses cultured
yogurt in the  manufacturing  of our frozen yogurt dessert  products,  purchased
from yogurt manufacturers who use Vermont dairy ingredients.

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

In 1997 and 1998, 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 three grams of fat and 40% overrun. The product line offers exciting flavor
combinations,  chunks of candy,  and  swirls of  variegates  with  extraordinary
flavor.

In  1999,  the  Company  introduced  a new  line  of  frozen  smoothies.  Frozen
Smoothies(TM)  is a four  item  line of  innovative  healthy  treats  that  take
smoothies from the juice bar to the freezer.

<PAGE>

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 the Company purchases).  To date,
the Company has not  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 allows 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 S'mores(TM) Bars.

In 1997,  the  Company  entered  into a license  agreement  with Paul Newman and
Newman's  Own(TM) to  manufacture  and  market a line of premium  plus ice cream
products  under the brand name  "Newman's  Own." These  products  are  currently
manufactured at the Company's 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 Gary Trudeau and Andrews McMeel
Universal with respect to the Company's Doonesberry(R) flavor of the sorbet line
of  products;  Wavy Gravy for the flavor Wavy Gravy;  with Phish  Merchandising,
Inc. with respect to Phish Food(TM),  and Phish Stick(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'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.  The
Company  manufactures  Ben & Jerry's super premium ice cream,  frozen yogurt and
sorbet in packaged pints and single serve containers at its St. Albans,  Vermont
plant. The Company  generally  operates its plants two shifts a day, five or six
days per week, depending upon demand requirements.

Markets and Customers

The Company markets packaged pints, quarts,  single-serve containers 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 6 Company-owned) Ben & Jerry's "scoop shops",  through restaurants and food
service accounts (i.e. stadiums, airports, cafeterias, hotels, etc.).

Ben  &  Jerry's   products  are  distributed   through   independent  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.

In late August 1998 - January 1999, Ben & Jerry's  redesigned  its  distribution
network to create more  Company  control over sales and more  efficiency  in the

<PAGE>

distribution  of its products.  Under the redesign,  Ben & Jerry's will increase
direct  sales calls by its own sales force (as  distinguished  from calls by the
distributors' sales forces) to all grocery and chain convenience stores and will
have a  network  where no  distributor  of Ben &  Jerry's  products  will have a
majority  percentage  of the  Company's  distribution.  Under  the  distribution
network  redesign  which  will  commence  in  April-May  1999  and will be fully
effective September 1, 1999, The Pillsbury Company ("Pillsbury") will distribute
Ben & Jerry's  products  in  specified  territories;  the  balance  of  domestic
deliveries  will be  distributed  primarily  by Dreyer's  Grand Ice Cream,  Inc.
("Dreyer's"),  with  Dreyer's  handling a smaller  volume (than before) of Ben &
Jerry's  distribution  in  other  specified  territories,  and in part by  other
independent  regional   distributors,   most  of  whom  are  already  acting  as
distributors for Ben & Jerry's.  The Company  presently  expects that, under the
redesign,  no  single  distributor  would  handle  over  40%  of  Ben &  Jerry's
distribution,  as compared with Dreyer's distribution  activities accounting for
approximately 57% of the Company's net sales in 1998 and 1997.

Pursuant to the  distribution  network  redesign  Ben & Jerry's  entered into an
agreement  with  Pillsbury  which,  as  amended in January  1999,  provides  for
distribution on a non-exclusive basis by Pillsbury,  the parent of Haagen-Daz, a
major competitor of Ben & Jerry's products in various areas of the United States
on September 1, 1999,  including  certain areas commencing April - May 1999. The
agreement with  Pillsbury may not be terminated  (except for cause) by Pillsbury
or Ben & Jerry's until an effective date in the year 2003. The agreement further
provides  that Ben &  Jerry's  may  earlier  terminate  without  cause by making
certain specified payments and it contains additional provisions relating to any
termination   upon  a  change  in   control   of  either   party.   The  use  of
sub-distributors by Pillsbury is limited under the Agreement.

In January 1999, the Company concluded a new distribution  agreement,  also on a
non-exclusive  basis,  with  Dreyer's,  effective  for  distribution  commencing
September 1, 1999.  This agreement  pertains to a smaller  geographic  area than
that which is covered under the present  distribution  agreement and is on terms
and  conditions  different  in some  respects  from those  applicable  under the
present  distribution  agreement.  The terms as to the  prices  received  by the
Company from Dreyer's  purchases of the Company's ice cream products are in line
with the new Agreement the Company entered into with Pillsbury, and are expected
to be more favorable to the Company.

The new  agreement  with  Dreyer's may be terminated by either party on not less
than six  months'  notice  except  that no such  notice may be given  during the
months of October - March in any year.  The  present  agreement  gives  Dreyer's
certain  territorial  exclusivity,  limits the sale by Dreyer's  of  competitive
products  (Dreyer's  brands and certain brands of other ice cream  competitors),
and contains  provisions for payment by the  terminated  party in the event of a
change in control of the terminated party, the present agreement,  as amended in
January 1999,  will remain in place until  distribution  under the new agreement
with Dreyer's  becomes  effective as to certain  territories in April - May 1999
and as to most of the territories on September 1, 1999.

The  litigation  filed  by  Dreyer's  against  the  Company  in  September  1998
challenging  the  effective  date of the  Company's  August 31,  1998  notice of
termination  of the present  agreement with Dreyer's was resolved by stipulation
of dismissal,  with prejudice, of that litigation,  and without any payments, in
connection  with the January  1999  amendment of the present  agreement  and the
signing of the new agreement with Dreyer's.

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.
The Company believes that the recent distribution  network redesign will give it

<PAGE>

more control over the Company's distribution. However, due to the consolidations
in the  distribution  arena,  available  distribution  alternatives are limited.
Accordingly, there can be no assurance that such difficulties with distributors,
which may be related to actions by the  Company's  distributors,  which  include
competitors of the Company in the  marketplace (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."  The  new  agreement  with  Dreyer's   contains  a
standstill provision whereby Dreyer's has agreed, subject to certain exceptions,
not to acquire or seek to acquire Ben & Jerry's or stock in Ben & Jerry's.

Marketing

Ben  &  Jerry's  marketing  is  characterized  by a  strategic  discipline  that
continues to build brand equity,  a solid  reputation for the Company,  and most
importantly, profitable customer relationships.

Ben  &  Jerry's  marketing  strategies  remain  consistent  with  the  Company's
three-part   mission.   Building  on  Ben  &  Jerry's   significant  brand  name
recognition,  the Company  continues  to  emphasize  the high  quality,  natural
ingredients  in its products while  highlighting  its  non-traditional  image in
innovative packaging, sales materials, promotional and radio campaigns.

Ben & Jerry's  continues to facilitate brand awareness by focusing its marketing
efforts on  communicating  the Company's  unique business  approaches via Public
Relations Campaigns designed to generate unpaid newspaper,  magazine,  radio and
TV news coverage. Company founders, Ben Cohen and Jerry Greenfield,  continue to
make personal appearances on TV, radio and at select marketing events covered by
the print and broadcast media.

The media played a  significant  role in the  introduction  of the Company's new
products in 1998.  Ben & Jerry's April Fool's Day promotion for it's new flavor,
Dilbert's  World(TM) Totally Nuts(TM)  successfully  garnered media exposure and
generated significant consumer interest in the flavor.

Additional  media  opportunities  in 1998  include  placement  of the  Company's
products in popular sitcoms and exclusive national sponsorship of the film, "Man
With A Plan," starring Fred Tuttle - the first independently produced movie from
Vermont ever distributed by the Public Broadcasting Service.

1998  marked  the  implementation  of a new  package  design  for Ben &  Jerry's
flavors.  The package was restyled to  communicate  the quality of Ben & Jerry's
products and make them easier to shop, while retaining a sense of fun and humor.

Ben & Jerry's  conducts  guided tours of its facility in  Waterbury,  Vermont to
approximately  300,000  visitors  annually,  making it the single  most  popular
tourist attraction in the State.

Company-sponsored  annual events include the "One World, One Heart" Festival and
the Ben & Jerry's  Folk  Festival in Newport,  Rhode  Island.  These  events are

<PAGE>

accompanied  by ice cream  sampling  and  social  activism,  promoting  customer
loyalty and support for the Company's future product introductions.

Franchise shops are an integral part of the Company's marketing effort and their
activity on the local level contributes to the Company's three-part mission. The
Company's 1998  reintroduction  of the Ben & Jerry's Scoop Truck program in five
key markets  provided an  opportunity  to distribute  new product  samples while
supporting customer interaction.

Franchise Program

As of December 26, 1998,  there were 147 North American  Franchise and Satellite
scoop shops  compared to 135 Franchise and Satellite  scoop shops as of December
27, 1997. In addition to our traditional Franchise and Satellite locations,  the
Company  has five  PartnerShop(R)  Franchises  and 19  Featuring  Franchises.  A
PartnerShop(R)  Franchise  is a  franchise  scoop  shop,  which is  awarded to a
not-for-profit  organization.  A Featuring  Franchise  is a business  that has a
scoop shop within its  location,  much like a store within a store.  These scoop
stations are often found in  airports,  stadiums,  college  campuses and similar
venues.  In the beginning of 1999, the Company began offering another  franchise
concept, Scoop Station Franchise.  These locations will be located in businesses
and will be serviced from a pre-fabricated  unit with a small product  offering.
At year-end,  there were six  company-owned  scoop  shops:  three in Vermont and
three new  locations  in Paris,  France.  Internationally,  there are nine Ben &
Jerry's  franchised  scoop  shops  in  Israel;  four  in  Canada;  four  in  the
Netherlands; and one in Lima, Peru.

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.
PartnerShop(R)   franchises   are   arrangements   that  permit   not-for-profit
organizations to own franchised scoop shops that serve as an employment resource
and potentially a source of revenue for the  not-for-profit  groups. The Company
waives the normal  franchisee fee of $30,000.  In addition the Company  provides
expertise in the start-up and operation of the PartnerShop(R).

The Company has assorted franchise concepts that include  traditional shops in a
variety of settings, five PartnerShop(R)  Featuring Franchises and Scoop Station
Franchises.  Franchise  Agreements  generally  have initial terms of five to ten
years and renewal terms. Ben & Jerry's  franchise scoop shops sell 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.  The Scoop Station is a limited  concept
with a smaller menu offering at a reduced term.

International

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

In 1992, the Company  repurchased the Canadian rights to Ben & Jerry's  products
that it had  previously  licensed in 1987.  In May 1998,  the  Company  signed a
non-exclusive  licensing agreement with Delicious Alternative Desserts,  LTD, to
manufacture,  sell and distribute Ben & Jerry's  products  through the wholesale
distribution  channels in Canada for royalty payments based upon a percentage of
the licensee's  sales.  This agreement is for a five-year  period with a renewal
option. In connection with this agreement, the Company received 4,000,000 Common

<PAGE>

Shares of Delicious Alternative Desserts, LTD. which represents approximately 8%
of total issued  outstanding  common  shares on a fully diluted  basis,  and the
right to designate one director.

In 1987, the Company granted an exclusive  license to manufacture and sell Ben &
Jerry's ice cream in Israel,  and in March 1999,  the Company made an investment
in the Israeli licensee, which gave the Company a 60% ownership interest.

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.  Following a
test market, the product was launched in 1998.

Competition

The super  premium  ice  cream,  frozen  yogurt and  sorbet  business  is highly
competitive,  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-Daz  Company,  Inc.  Other
significant frozen dessert competitors are Dannon,  Columbo,  Healthy Choice and
Starbucks (distributed by Dreyer's). Haagen-Daz, 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-Daz has a significant share
of the markets that the Company has entered in recent years. Haagen-Daz has also
entered  substantially  more foreign markets than the Company (including certain
markets in Europe and the Pacific Rim). Haagen-Daz and certain other competitors
also market flavors using pieces of cookies and candies as ingredients.  As part
of  Ben &  Jerry's  distribution  network  redesign,  Pillsbury  will  become  a
principal distributor for the Company's products.

In the ice cream novelty segment,  the Company competes with several  well-known
brands,  including Haagen-Daz 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.

During  1998,  the premium  category  again  experienced  increased  promotional
activity driven by the national  competition  between  Dreyer's Grand Ice Cream,
Inc., a principal  distributor for the Company, and Breyer's Ice Cream (owned by
Unilever,  a large  international  food  company).  In accordance  with Dreyer's
strategic  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 Starbucks and Portofino  brands.  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.

<PAGE>

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  certain  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 was 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 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.
All the plants pre-treat 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 marks Ben & Jerry's, Ben and Jerry's Portrait,  Chubby Hubby, Chunky Monkey,
Cool Britannia,  Dastardly Mash, Hunka Hunka Burnin' Fudge, New York Super Fudge
Chunk,  One World One Heart,  PartnerShop,  Peace Pop and  Vermont's  Finest are
registered trademarks of the Company.

Cherry Garcia(R),  Phish Food(TM),  Wavy Gravy,  Doonesberry(R),  Heath(R),  and
Dilbert's  World(TM) are Ben & Jerry's proprietary flavor names and are licensed
to the Company.

Employees

At December 26, 1998,  Ben & Jerry's  employed 751 people  including  full-time,
part-time and temporary  employees.  This  represents a 2% increase from the 736
people employed by the Company at December 27, 1997.

During 1998, a union  organizing  effort took place at the Company's St. Albans,
Vermont plant within the Maintenance  Department.  Nineteen  hourly  maintenance
employees,  by a majority vote,  agreed to be  represented by the  International
Brotherhood of Electrical  Workers (IBEW).  The Company is currently in contract
negotiations with IBEW.

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 grassroots social change organizations.

<PAGE>

In October 1985,  pursuant to stockholder  authorization,  the Company issued to
the Foundation all of the 900 authorized  shares 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,
Classified Board of Directors, Vermont Legislation and Shareholder Rights Plans.

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  as such, 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.  Jerry  Greenfield  (Chairperson  and a
director of the Company), Mr. Ben Cohen  (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 5, 1999,  these three principal
individual  stockholders  held shares  representing  46% 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  issue
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. 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.

<PAGE>

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.

Also, in April, 1998 the Legislature of the State of Vermont amended a provision
of the Vermont  Business  Corporation  Act to provide  that the  directors  of a
Vermont  corporation  may also consider,  in determining  whether an acquisition
offer or other matter is in the best interests of the corporation, the interests
of the corporation's employees,  suppliers, creditors and customers, the economy
of the state in which the  corporation is located and including the  possibility
that the best  interests  of the  corporation  may be  served  by the  continued
independence of the corporation.  Also, in August,  1998,  following approval by
its Board of Directors,  the Company put in place two Shareholder  Rights Plans,
one  pertaining  to the Class A Common Stock and one  pertaining  to the Class B
Common  Stock.  These Plans are intended to protect  stockholders  by compelling
someone  seeking to acquire the Company to negotiate with the Company's Board of
Directors in order to protect  stockholders  from unfair takeover tactics and to
assist in the maximization of stockholder  value.  These Rights Plans, which are
common  for public  companies  in the  United  States,  may also be deemed to be
"anti-takeover"  provisions  in that the Board of Directors  believes that these
Plans will make it difficult for a third party to acquire control of the Company
on terms which are unfair or unfavorable to the stockholders.

The Class B Common Stock,  the Class A Preferred  Stock, the Classified Board of
Directors and the Shareholder  Rights Plans 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 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.

The Company believes that these  provisions of the Articles of Association,  the
amendment to the Vermont  Business  Corporation Act and the  Shareholder  Rights
Plans,  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 these items  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.

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

<PAGE>

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  are  subject to  various  liens  securing a portion of the  Company's
long-term debt.

The Company  owns a 42-acre site in St.  Albans,  Vermont on which it operates a
92,000 square foot manufacturing facility.

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.

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 and Paris,  France, and its corporate offices in the United
Kingdom,  France and Japan. The Company owns three single-family  houses,  which
are situated on land adjacent to its manufacturing facility in Waterbury.

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

ITEM 3.  LEGAL PROCEEDINGS

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 1998.

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 29, 1996 through  March 5, 1999,  the high and low closing sales prices
of the Company's Class A Common Stock for the periods indicated.

                                                   High               Low
1997
        First Quarter                       $      14 3/8       $     10 7/8
        Second Quarter                             14 1/2             11
        Third Quarter                              14 1/2             12
        Fourth Quarter                             18 3/4             12 1/4
1998
        First Quarter                       $      19           $     14
        Second Quarter                             21 1/8             17
        Third Quarter                              19 7/8             13 1/16
        Fourth Quarter                             23 7/8             14 7/8
1999
        First Quarter through March 5, 1999 $      24 5/16      $     21 3/8

<PAGE>

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 Common Stock thereby sold.

As of March 5, 1999 there were 10,202 holders of record of the Company's Class A
Common Stock and 2,025 holders of record of the Company's Class B Common Stock.

Item 6.   Selected Financial Data

The following table contains  selected  financial  information for the Company's
fiscal years 1994 through 1998.

Summary of Operations (In thousands except per share data)

<TABLE>
<CAPTION>
                                                                                    Fiscal Year
                                                   1998         1997         1996        1995       1994
                                                ---------    ---------    ---------    ---------    ------
<S>                                                              <C>          <C>          <C>          <C>
Net sales                                       $209,203   $ 174,206    $ 167,155    $ 155,333    $ 148,802
Cost of sales                                    136,225     114,284      115,212      109,125      109,760
Gross profit                                      72,978      59,922       51,943       46,208       39,042
Selling, general & administrative expenses        63,895      53,520       45,531       36,362       36,253
Asset write-down(1)                                                                                   6,799
Other income (expense) - net                         693        (118)         (77)        (441)         228
Income before income taxes                         9,776       6,284        6,335        9,405       (3,762)
Income taxes                                       3,534       2,388        2,409        3,457       (1,893)
Net income                                         6,242       3,896        3,926        5,948       (1,869)
Net income (loss) per share -diluted           $    0.84   $    0.53    $    0.54    $    0.82       $(0.26)
Shares outstanding -diluted                        7,463       7,334        7,230        7,222        7,148

Balance Sheet Data:
                                                                         Fiscal Year
                                                  1998         1997         1996         1995      1994
                                                ---------    ---------    ---------    ---------    ------
Working capital                                 $ 48,381   $  51,412    $  50,055    $  51,023    $  37,456
Total assets                                     149,501     146,471      136,665      131,074      120,296
Long-term debt and capital lease obligations      20,491      25,676       31,087       31,977       32,419
Stockholders' equity(2)                           90,908      86,919       82,685       78,531       72,502
</TABLE>

1 Write-down of assets - In 1994, the Company  replaced  certain of the software
and equipment  installed at the plant in St Albans,  Vermont.  The loss from the
write-down  of  the  related  assets   included  a  portion  of  the  previously
capitalized interest and project management costs.

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                   1998           1997            1996
                                                   Fiscal Year                       Compared       Compared        Compared
                                        1998           1997          1996            To 1997         To 1996        To 1995
                                        ----           ----          ----            -------         -------        -------
<S>                                     <C>            <C>           <C>               <C>              <C>            <C> 
Net sales                               100.0%         100.0%        100.0%            20.1%            4.2%           7.6%
Cost of sales                            65.1           65.6          68.9             19.2            (0.8)           5.6
                                        -----         ------        ------           ------            -----           ---
Gross profit                             34.9           34.4          31.1             21.8            15.4           12.4
Selling, general and
administrative expense                   30.5           30.7          27.2             19.4            17.5           25.2
Other income(expense)                     0.3           (0.1)          0.1            687.3            53.2          (82.5)
                                        -----         -------        -----            -----            ----          ------
Income before income       taxes
                                          4.7            3.6           3.8             55.6            (0.8)         (32.6)
Income taxes                              1.7            1.4           1.5             48.0            (0.9)         (30.3)
                                        -----          -----         -----            -----            -----         ------
Net income                                3.0%           2.2%          2.3%            60.2%           (0.8)%        (34.0)%
                                        =====          =====         =====            ======           ======        ======
</TABLE>


Net Sales

Net sales in 1998  increased  20.1% to $209  million  from $174 million in 1997.
Domestic  pint  volume  increased  10%  compared  to 1997,  which was  primarily
attributable  to the Company's  original line of products.  This volume increase
was combined with a price increase of 3% on pints sold to distributors that went
into effect in July 1998.  Unit volume of 2 1/2 gallon bulk  container  products
increased  17%  compared to the same period in 1997.  Also  contributing  to the
increase  in sales for 1998 was the launch of the  Company's  new  single  serve
products in Japan and the  introduction of a new line of premium plus ice cream,
Newman's  Own(TM) All Natural Ice Cream,  manufactured  and sold under a license
agreement with Paul Newman and Newman's Own(TM).

Packaged sales  (primarily  pints)  represented  approximately  81% of total net
sales in 1998,  84% of total  net  sales in 1997 and 85% of total  net  sales in
1996. Net sales of 2 1/2 gallon bulk containers represented  approximately 8% of
total net sales in 1998 and 1997 and 7% of total net sales in 1996. Net sales of
novelties  accounted for  approximately  9% of total net sales in 1998 and 6% of
total net sales in 1997 and 1996.  Net sales from the  Company's  retail  stores
represented 2% of total net sales in 1998, 1997 and 1996.

International  sales were $17.4,  $7.6, and $6.9 million in 1998, 1997 and 1996,
respectively,  which  represents  8% of net sales in 1998,  4% in 1997 and 4% in
1996. The increase in 1998 was primarily due to the introduction of single serve
products in Japan and higher sales to Canada.

Net  sales in 1997  increased  4% 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.

<PAGE>

Cost of Sales

Cost of sales in 1998 increased  approximately  $22 million or 19% over the same
period in 1997 and overall gross profit as a percentage  of net sales  increased
from 34.4% in 1997 to 34.9% in 1998.  The slightly  higher  gross profit  margin
primarily  resulted from increases in selling  prices  effective in January 1998
and July 1998, better plant  utilization due to higher production  volumes and a
decrease in reserves for potential  product  obsolescence,  partially  offset by
substantial increases in dairy commodity costs.

The Company experienced  significant  increases in dairy prices in 1998 compared
to 1997 levels.  In response to higher dairy costs, the Company  instituted a 3%
price  increase  effective  in July 1998 for its  packaged  pint  products and a
combined 10% price  increase for its 2 1/2 gallon bulk  containers  effective in
January 1998 and July 1998 to offset these  increased  costs. If dairy commodity
prices begin to rise again to higher levels, there is the possibility that these
costs will not be passed on to customers,  which will  negatively  impact future
gross profit margins. See Risk Factors in Item 7.

In 1997,  cost of sales decreased  approximately  $900,000 or 0.8% over 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
was 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 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.

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses  increased 19% to $64 million in
1998 from $54  million in 1997 and  decreased  slightly as a  percentage  of net
sales to 30.5% in 1998 from 30.7% in 1997. The $10 million  increase in expenses
is attributable to increased sales and marketing  expenses to support the launch
of a new line of premium  plus ice cream under the name of Newman's  Own(TM) All
Natural  Ice  Cream  ,  increased   international  costs,   increases  in  radio
advertising, in-store programs to drive product trial and brand awareness, scoop
truck marketing and the rollout of the new pint package design.

Selling,  general and  administrative  expenses  increased 17% to $54 million in
1997 from $46  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.

Other Income (Expense)

Interest income increased from $1.9 million in 1997 to $2.2 million in 1998. The
increase  in  interest  income  was  due  to  higher  average  invested  balance
throughout 1998. Interest expense in 1998 decreased $104,000 in 1998 as compared
to 1997 due to the $5 million Senior Notes principal installment payment.  Other
income  (expense)  increased  in 1998 from other  expense of $118,000 in 1997 to
other  income of $693,000 in 1998.  This is primarily  due to  increased  losses
associated  with foreign  currency  exchange in comparison to 1997 combined with
income received from the Company's cost basis investment.

<PAGE>

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.

Income Taxes

The  Company's  effective  income tax rate in 1998  decreased to 36% from 38% in
1997 and 1996.  The  decrease  was a result of lower state  income  taxes,  more
tax-exempt  interest  income,  and  the  overall  geographic  mix  of  earnings.
Management expects 1999's effective income tax rate to decrease to approximately
35% based upon the expected geographic mix of earnings.

Net Income

Net income for 1998 increased to $6.2 million  compared to $3.9 million in 1997.
Net income as a percentage  of net sales was 2.9% in 1998 as compared to 2.2% in
1997 and 2.3% in 1996.

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 1998,  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 26, 1998 the Company had $47.2 million of cash, cash  equivalents
and marketable  securities ($25.1 million of cash and cash equivalents and $22.1
million of marketable securities),  a $570,000 decrease since December 27, 1997.
Net cash provided by operations in 1998 was $16.1 million of which approximately
$8.8  million  was used for net  additions  to  property,  plant and  equipment,
primarily for improvements at the Company's manufacturing facilities,  the build
out of three Company owned scoop shops in France and fit-up costs for a chain of
cinemas  in the United  Kingdom.  In  addition,  $3.1  million  cash was used to
repurchase  shares of the  Company's  Class A Common  Stock and $5.3 million was
used to pay down debt and capital leases.

From December 27, 1997 to December 26, 1998  inventories and the sum of accounts
payable  and  accrued  expenses  have  increased  $2  million  and  $5  million,
respectively.  These increases reflect the growth in the Company's  business and
increased sales and marketing expenses.

The Company anticipates capital expenditures in 1999 of approximately $9 million
plus $1 million for its  acquisition  of 60% of its  licensee  in Israel  during
1999. Most of these projected capital  expenditures relate to equipment upgrades
and  enhancements  at  the  Company's  manufacturing  facilities,  research  and
development  equipment,   computer  related  expenditures  and  corporate  space
expansion.

During the year ended  December  26,  1998 the  Company  repurchased  a total of
166,500  shares of the  Company's  Class A Common Stock for  approximately  $3.1
million.  Pursuant to the  repurchase  program  announced  May 8, 1997,  122,500
shares were  purchased for use in connection  with stock option awards under the

<PAGE>

1995  Equity   Incentive  Plan.  These   transactions,   together  with  earlier
repurchases  of 77,500  shares in 1997,  complete the  repurchase of the 200,000
shares authorized under this program. An additional 44,000 shares were purchased
through December 26, 1998 for approximately  $733,000 under a repurchase program
announced in September 1998  authorizing  the Company to purchase  shares of the
Company's Class A Common Stock up to an aggregate cost of $5 million for use for
general corporate purposes. Subsequent to December 26, 1998 and through March 5,
1999 the Company  repurchased an additional 68,000 shares under this program for
approximately $1.5 million.

The Company's short and long-term debt at December 26, 1998 includes $25 million
aggregate  principal  amount of Senior Notes issued in 1993 and 1994.  The first
principal  payment of $5 million was paid in September 1998 and the remainder of
principal is payable in annual installments through 2003.

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 LIBOR plus a margin based on a  pre-determined
formula.  No amounts were  borrowed  under these or any bank  agreements  during
1998. The working capital line of credit agreements expire December 23, 2001.

Management believes that internally  generated funds, cash, cash equivalents and
marketable  securities 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 Readiness Disclosure

Background of Year 2000 Issues.  The "Year 2000" issue is the result of computer
systems  and  software  programs  using two rather  than four digits to define a
year.  As a result,  computer  systems  that have date  sensitive  software  may
recognize a date using "00" as the year 1900  rather than the year 2000.  Unless
remedied, the Year 2000 issue could result in system failures,  miscalculations,
and the inability to process necessary  transactions or engage in similar normal
business  activities.  In addition to computer  systems and software,  equipment
using embedded chips, such as manufacturing and telephone equipment,  could also
be at risk.

State of Readiness.  The Company has developed,  and is implementing a Year 2000
plan to address Year 2000 issues.  The plan focuses on the following three broad
categories:  (a) information  technology systems;  (b) manufacturing  facilities
including  embedded  technology;  and (c) external  noncompliance  by customers,
distributors, suppliers and other business partners.

The Company has substantially completed the inventory and assessment of the core
software  applications and hardware  infrastructure.  The Company has identified
and is in various  stages of  remediating  software  and  hardware  deficiencies
caused by the Year 2000 issue. The financial, human resources, manufacturing and
distribution  systems are currently  being  repaired;  testing and validation of
these systems are  scheduled  during the second  quarter of 1999.  The Company's
networking equipment is not compliant and is scheduled to undergo renovation and
testing during the second quarter of 1999 as well.

While  the  Company  is  continuing  detailed  assessment  of its  manufacturing
facilities and embedded chip technology, it has not identified any problems thus
far that would have a material impact upon operations.  The assessment phase for
the  manufacturing  facilities is expected to be completed in April 1999. At the

<PAGE>

same time, the Company is testing and remediating certain equipment and software
systems known to have possible Year 2000 issues and is expected to complete this
phase during the second quarter of 1999.

A critical step in this project is the  coordination of Year 2000 readiness with
third parties.  The Company is  communicating  with its  significant  suppliers,
distributors  and  customers  to  determine  the extent to which the  Company is
vulnerable  if the third  parties fail to resolve  their Year 2000  issues.  The
Company  will  continue  to assess  and work with all of its major  partners  to
understand the associated risks and plan for contingencies.

Risks Related to Year 2000 Issues.  The Company presently believes that the Year
2000 issue will not pose significant  operational problems and that the internal
Year 2000  issues  will be  resolved  in a timely  manner.  However,  the future
compliance  of Year 2000  processing  within the Company is  dependent  upon key
personnel,  vendor software,  vendor  equipment and components.  In the unlikely
event that no further  progress is made on the Company's year 2000 project,  the
Company may be unable to  manufacture  or ship  product,  invoice  customers  or
collect  payments.  As a result,  Year 2000 issues could have a material adverse
impact on the Company's  operations and its financial results.  In addition,  if
systems operated by third parties  (including  municipalities  or utilities) are
not Year 2000 compliant,  this could also have a material  adverse affect on the
Company.

Costs to Address Year 2000 Issues.  The Company  does not  separately  track the
internal  costs  incurred for the Year 2000  project,  which are  primarily  the
related payroll costs for its information  systems ("IS") group. There have been
no  incremental  payroll  costs  related  to  the  Year  2000  project,  however
non-critical  IS projects have been deferred due to  concentration  on Year 2000
efforts.  The delay of these projects is not expected to have a material  impact
on the operations of the Company.

The external costs for software; hardware, equipment and services related to the
Year 2000 project are expected to be  approximately  $1.2  million.  The Company
will  expense  the  costs of  modifying  existing  systems  and  capitalize  the
replacement cost of software or equipment that is not Year 2000 compliant. There
can be no  guarantee,  however,  that the  systems of other  entities  which the
Company  relies upon 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 and operations.

Contingency  Plans.  Due to the  general  uncertainty  inherent in the Year 2000
problem,  including  uncertainty regarding the Year 2000 readiness of suppliers,
distributors  and other  manufacturers,  the Company is  developing  contingency
plans. This process includes, among others, developing backup procedures in case
of systems  failures,  identifying  alternative  production plans and developing
alternative plans to engage in business activities with customers,  distributors
and suppliers that are not experiencing Year 2000 problems.

The above forward looking  statements with regard to the timing and overall cost
estimates  of the  Company's  efforts to address the Year 2000 problem are based
upon the  Company's  experience  thus far in this  effort.  Should  the  Company
encounter  unforeseen  difficulties  either  in  the  continuing  review  of its
internal  systems,  the ultimate  remediation,  or the responses of its business
partners,  the actual  results  could vary  significantly  from the estimates in
these forward-looking statements.

Forward-Looking Statements

This  section,  as well as other  portions of this  document,  includes  certain
forward-looking  statements about the Company's business,  new products,  sales,
dairy prices,  other  expenditures  and cost savings,  Year 2000 program  costs,

<PAGE>

effective tax rate, operating and capital requirements and refinancing. Any such
statements  are subject to risks that could cause the actual results or needs to
vary materially. These risks are discussed below.

Risk Factors

Dependence on Independent Ice Cream Distributors.  Historically, the Company has
been dependent on maintaining satisfactory relationships with Dreyer's Grand Ice
Cream, Inc.  ("Dreyer's") and the other independent ice cream  distributors that
have acted as the Company's  exclusive or master  distributor  in their assigned
territories. In 1998, Dreyer's distributed significantly more than a majority of
the  sales  of  Ben  &  Jerry's   products.   While  the  Company  believes  its
relationships  with  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.  In addition,  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.  The co-founders rejected
these overtures.

In August 1998 - January 1999, the Company redesigned its distribution  network,
entering into a distribution  agreement with The Pillsbury Company ("Pillsbury")
and a new agreement with Dreyer's.  These  arrangements take effect September 1,
1999, except for certain territories,  which are effective, in April - May 1999.
The Company believes the terms of the new arrangements will, on balance, be more
favorable  to its Company  and  expects  that,  under the  distribution  network
redesign, no one distributor will account for more than 40% of the Company's net
sales.  However,  both Pillsbury,  through its Haagen-Daz unit, and Dreyer's are
competitors of the Company.

Since available distribution alternatives are limited, there can be no assurance
that  difficulties  in maintaining  satisfactory  relationships  with Pillsbury,
Dreyer's and its other  distributors,  some of which are also competitors of the
Company, will not have a material adverse effect on the Company's business. (See
"Business-Markets and Customers")

Growth in Sales and Earnings.  In 1998, net sales of the Company increased 20.1%
to $209 million from $174 million in 1997. Pint volume  increased 10.2% compared
to 1997. The super premium ice cream, frozen yogurt and sorbet industry category
sales  increased 4% in 1998 as compared to 1997.  Given these  overall  domestic
super premium industry trends, the successful introduction of innovative flavors
on a periodic  basis has become  increasingly  important  to 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  significant  promotional
expenditures,  is likely to have an important  impact on the Company's  1999 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. 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,  two of which
are  distributors  for the Company.  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."

<PAGE>

Increased Cost of Raw Materials.  Management  believes that the general 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  adequately
protected by pricing adjustments, cost control programs and productivity gains.

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 Jerry  Greenfield the Chairperson of the
Board and  co-founder  of the  Company;  and Ben  Cohen,  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 being more 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 "Business-Introduction" and "Business-Marketing."

International.  Total  international net sales  represented  approximately 8% of
total consolidated net sales in 1998. 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 Japan,  Canada,  the
United Kingdom, Ireland, France, the Netherlands, Belgium and will start selling
in Peru and Lebanon in 1999. In 1987, the Company  granted an exclusive  license
to manufacture and sell Ben & Jerry's products in Israel.  In February 1999, the
Company made an investment  commitment in the Israeli  licensee,  which gave the
Company a 60% ownership  interest.  In May 1998,  the Company signed a Licensing
Agreement with Delicious  Alternative  Desserts,  LTD. to manufacture,  sell and
distribute Ben & Jerry's products through the wholesale distribution channels in
Canada.  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 46% 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 sell substantial
portions of their  Class A Common  Stock.  See  "Security  Ownership  of Certain
Beneficial Owners and Management."

<PAGE>

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."

Also, in April, 1998 the Legislature of the State of Vermont amended a provision
of the Vermont  Business  Corporation  Act to provide  that the  directors  of a
Vermont  corporation  may also consider,  in determining  whether an acquisition
offer or other matter is in the best interests of the corporation, the interests
of the corporation's employees,  suppliers, creditors and customers, the economy
of the state in which the  corporation is located and including the  possibility
that the best  interests  of the  corporation  may be  served  by the  continued
independence of the corporation. Also in August, 1998, following approval by its
Board of Directors,  the Company put in place two Shareholder  Rights Plans, one
pertaining to the Class A Common Stock and one  pertaining to the Class B Common
Stock.  These Plans are intended to protect  stockholders by compelling  someone
seeking  to  acquire  the  Company  to  negotiate  with the  Company's  Board of
Directors in order to protect  stockholders  from unfair takeover tactics and to
assist in the maximization of stockholder  value.  These Rights Plans, which are
common  for public  companies  in the  United  States,  may also be deemed to be
"anti-takeover"  provisions  in that the Board of Directors  believes that these
Plans will make it difficult for a third party to acquire control of the Company
on terms which are unfair or unfavorable to the stockholders.

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; the April 1998 Vermont
Legislative   Amendment  of  the  Vermont  Business   Corporation  Act  and  the
Shareholder  Rights  Plans  put in place in  August,  1998  (see  "Anti-Takeover
Effects of Class B Common Stock,  Class A Common Stock, Class A Preferred Stock,
Classified Board of Directors, Vermont Legislation and Shareholder Rights Plans"
in Item 1) may be deemed to be  "anti-takeover"  provisions in that the Board of
Directors  believes that these amendments and legislation 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 7A. Market Risk

The  Company  is  exposed to a variety  of market  risks,  including  changes in
interest  rates  affecting the return on its  investments  and foreign  currency
fluctuations.  The  Company's  exposure  to market risk for a change in interest
rates relates primarily to the Company's investment  portfolio.  The Company has
classified  all of its  short-term  and long-term  investments as "available for
sale"  except for  certificates  of  deposits  which are held to  maturity.  The
majority of these  investments  are municipal  bonds and fixed income  preferred

<PAGE>

stock in which the market value  approximates its cost at December 26, 1998. The
Company  does not intend to hold such  investments  to  maturity  if there is an
underlying  change in interest  rates or the Company's  cash flow  requirements.
Certificates of deposits do not expose the consolidated  statement of operations
or balance sheets to fluctuations in interest rates.  The Company's  exposure to
market risk for fluctuations in foreign currency relate primarily to the amounts
due from  subsidiaries.  Exchange  gains and losses  related to amounts due from
subsidiaries have not been material for each of the years presented.

Item 8.   Financial Statements and Supplementary Data

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

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

Not applicable.

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                   
-----------------------  ------  -------------------------
Jerry Greenfield          47     Chairperson and Director
Ben Cohen                 47     Vice Chairperson and Director
Perry Odak                53     Chief Executive Officer, President and Director
Elizabeth Bankowski       51     Director and Director of Social Mission
Pierre Ferrari            48     Director
Jeffrey Furman            55     Director
Jennifer Henderson        45     Director
Frederick A. Miller       52     Director
Henry Morgan              73     Director
Lawrence Benders          42     Chief Marketing Officer
Bruce Bowman              46     Senior Director of Operations
Charles Green             44     Senior Director Sales and Distribution
Angelo Pezzani            57     Senior Director of Business Development
Frances Rathke            38     Chief Financial Officer and Secretary

The Board of Directors has an Audit Committee on which Directors Ferrari, Furman
and Morgan  (Chairperson)  serve;  a Compensation  Committee on which  Directors
Miller, Morgan and Henderson,  (Chairperson) serve; a Social Mission/Workculture
Committee  on  which   Directors   Bankowski,   Furman,   Henderson  and  Miller
(Chairperson)  serve; an Executive  Committee on which Directors Cohen,  Miller,
Morgan,  Odak and Ferrari serve;  and a Nominating  Committee on which Directors
Ferrari, Greenfield, Henderson, Odak and Cohen (Chairperson) 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 a director of The Ben & Jerry's
Foundation, Inc.

Ben  Cohen,  a founder of the  Company,  served as  Chairperson  of the Board of
Directors from February 1989 through  November 1998. Mr. Cohen currently  serves
as Vice  Chairperson  of the Board of  Directors.  From  January 1, 1991 through
January 29, 1995 he was the Chief  Executive  Officer of the Company.  Mr. Cohen

<PAGE>

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 States Bankruptcy Code.

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.  Currently,  Mr.
Furman is a self-employed consultant. From March 1991 through December 1996, Mr.
Furman was a consultant to the Company.

Jerry  Greenfield,  a  founder  of the  Company,  served  as  director  and Vice
Chairperson  of the Board of Directors  from 1990 to November 1998 at which time
he was elected  Chairperson  of the Board of Directors.  Mr.  Greenfield is also
President and a 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.

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 (April 1991 to 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.

<PAGE>

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.

Item 11.  Executive Compensation

Summary Compensation Table

The  following  table sets forth the cash  compensation  paid by the  Company in
Fiscal Years 1996 - 1998 as well as certain other  compensation paid, awarded or
accrued for those years to the Company's Chief  Executive  Officer and the other
four  highest-paid  executive  officers during the 1998 fiscal year.  Perry Odak
became the Chief Executive Officer on January 1, 1997.

<TABLE>
<CAPTION>

                                       Annual Compensation                Awards          Long-Term Compensation Pay-outs
                                       -------------------               ---------        -------------------------------
                                                               Other                 Securities
                                                               Annual    Restricted  Underlying               All Other
  Name and                                           Bonus     Compen-     Stock      Options/      LTIP     Compensation
 Principal Position              Year     Salary      (1)      sation      Awards       SARS        Pay-outs       (2)
------------------------------   ----   --------   ---------   --------   -------   ---------      ---------- ------------
<S>                              <C>         <C>        <C>         <C>       <C>         <C>           <C>         <C>
 Perry D. Odak                   1998   $305,769   $150,000                                                    $ 7,750
 CEO, President and              1997   $300,000   $100,000                           360,000                  $25,000
 Director                        1996   $     --   $     --                                                    $    --

 Bruce Bowman                    1998   $211,692   $ 75,000                                                    $ 6,964
 Senior Director of              1997   $200,000   $ 50,000                            27,000                  $ 4,131
 Operations                      1996   $169,231   $ 20,000                            10,000                  $ 1,099

 Lawrence E. Benders             1998   $229,327   $ 40,000                                                    $    52
 Chief Marketing Officer         1997   $ 38,942   $  5,000                            52,000                  $    --
                                 1996   $     --   $     --                                                    $    --

 Charles Green                   1998   $182,885   $ 75,000                                                    $ 5,755
 Senior Director of              1997   $162,596   $ 40,000                            45,000                  $    --
 Sales & Distribution            1996   $ 24,231   $     --                             5,000                  $    --

 Angelo Pezzani                  1998   $254,808   $ 75,000                            30,000                  $ 4,327
 Senior Director of              1997   $208,332   $     --                            52,000                  $    --
 Business Development            1996   $     --   $     --                                                    $    --


(1)  "Bonus" includes 1998 discretionary distributions under the Company's Management Incentive Program.

(2)  "All Other Compensation" includes Company contributions to 401(k) plans and relocation fees.
</TABLE>

<PAGE>

Option/SAR Grants in Fiscal 1998

<TABLE>
<CAPTION>

                                Percentage
                                 of Total                                    Potential Realizable Value
                               Options/SARS        Exercise or                 at Assumed Annual Rates  
                Options/SARS    Granted to         Base Price    Expiration  of Stock Price Appreciation
  Name            Granted    Employees in 1998    (per share)      Date           for Option Term   
  ----         ------------  -----------------    -----------    ----------  -------------------------- 
<S>              <C>              <C>               <C>           <C>     
                                                                                  5%          10%
                                                                                --------    --------
Angelo Pezzani   30,000           70.6%             $19.25        7/28/08       $363,187    $920,386

</TABLE>

Aggregated Option/SAR Exercises in 1998 and 1998 Year-End Option/SAR Values
<TABLE>
<CAPTION>

                                                                                           Value of Unexercised
                                                            Number of Unexercised       In-the-money Options/SARS
                                                          Options/SARS at 12/26/98              at 12/26/98
                      Shares                             ------------------------      --------------------------
                   Acquired on
     Name          Exercise (#)     Value Realized      Exercisable    Unexercisable     Exercisable     Unexercisable
-------------      -----------      --------------      -----------    -------------     -----------     -------------
<S>                      <C>               <C>           <C>              <C>           <C>             <C>       
Perry D. Odak            0                 0             140,000          220,000       $1,626,800      $2,556,400
Bruce Bowman             0                 0              24,125           37,875       $  162,656      $  258,514
Charles Green            0                 0              19,375           30,625       $  170,594      $  267,456
Lawrence Benders         0                 0              16,250           35,750       $  160,388      $  352,853
Angelo Pezzani           0                 0              19,250           62,750       $  132,243      $  412,978

</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  each made an election  under the Plan and  received 941
shares of stock for the period July 1, 1998 through June of 1999 under the Plan.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The  following  table sets forth  certain  information  as of March 5, 1999 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 Ben &
Jerry's  Homemade,   Inc.,  30  Community  Drive,   South  Burlington,   Vermont
05403-6828.

<PAGE>

<TABLE>
<CAPTION>

                                                          Amount of Beneficial Ownership
                                    Class A Common Stock    Class B Common Stock          Preferred Stock
                                    --------------------    --------------------          ---------------
                                             % Outstanding             % Outstanding              % Outstanding
       Name                       # Shares     shares (1)    # Shares     Shares (2)  # Shares        Shares
       ----                       --------   -------------   --------  ------------   --------     ------------
<S>                                <C>          <C>         <C>             <C>         <C>             <C>     
Ben Cohen (3)                       447,373      7.2%        488,486         59.6%        --             --
Jeffrey Furman (4)(5)                17,000        *          30,300          3.7%        --             --
Jerry Greenfield (4)                130,000      2.1%         90,000         11.0%        --             --
Perry Odak (6)                      213,250      3.4%             --           --         --             --
Elizabeth Bankowski (4)              28,766        *              --           --         --             --
Pierre Ferrari                        6,377        *              --           --         --             --
Jennifer Henderson                      524        *              --           --         --             --
Frederick A. Miller                   3,101        *              --           --         --             --
Henry Morgan                          5,101        *              --           --         --             --
Lawrence E. Benders                  18,417        *              --           --         --             --
Bruce Bowman                         31,931        *              --           --         --             --
Charles Green                        21,250        *              --           --         --             --
Angelo Pezzani                       23,917        *              --           --         --             --
Frances Rathke                       38,091        *              --           --         --             --
The Capital Group                   587,500      9.4%             --           --         --             --
  Companies, Inc. (7)
  333 South Hope St
  Los Angeles, CA 90071
Warburg Pincus Asset                745,800     11.9%             --           --         --              --
Management
   466 Lexington Ave
   New York, NY 10017
All Officers and Directors        1,008,535     16.1%        608,786         74.3%        --              --
as a group of 15 persons
The Ben & Jerry's                       --        --              --           --        900             100%
   Foundation, Inc. (4)
</TABLE>

*    Less than 1%

(1)  Based on the  number of shares of Class A Common  Stock  outstanding  as of
     March 5, 1999.  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 5, 1999.  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  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 and 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 provided at no cost to Mr.
Furman family health  insurance  coverage under the Company's  regular  employee
health insurance plan. This obligation terminated March 2, 1999.

Mr.  Cohen,  a Co-founder of the Company,  Vice-Chairperson  and Director of the
Company,  has  entered  into an  Employment  Agreement  with the  Company for an
employment  term  expiring  on  December  31,  1999   (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
(adjusted for changes in the Consumer Price Index) 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,  Chairperson,  and Director of the
Company,  has  entered  into an  Employment  Agreement  with the  Company for an
employment  term  expiring  on  December  31,  1999   (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 (adjusted for changes in the Consumer Price Index) for life,  commencing
with  the  end of the  three-year  severance  period,  for  specified  insurance
benefits  and  contains a provision  for  certain  services  contemplated  to be
provided to the Company  after the end of the term of  employment  and severance
period.

Mr. Odak, Chief Executive Officer,  has a three-year  Employment  Agreement with
the  Company  dated  December  31,  1996,  as  amended.  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
($315,000 has been set by the Board as the 1999 base salary).  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  period,  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

<PAGE>

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.

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 exercisability
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.

Mr. Pezzani, Senior Director of Business Development has an Employment Agreement
dated  January  1,  1998,  expiring  December  31,  2000 with an annual  renewal
provision.  The  agreement  provides  for an annual base salary of $250,000  per
annum,  subject to increases  from time to time by the CEO with  approval by the
Board of Directors.  He is eligible for an annual bonus that is guaranteed to be
at  least  $75,000,  as  determined  by the CEO and  approved  by the  Board  of
Directors. Mr. Pezzani received incentive stock options to purchase an aggregate
of 52,000  shares of Class A common stock of the Company  exercisable  at $13.89
per  share,  the fair  market  value  on the  date of grant by the  Compensation
Committee of the Board of Directors under the 1995 Equity  Incentive Plan. These
options  become  exercisable  over a four  year  period  with  one-fourth  being
exercisable on March 1, 1998 and up to an additional  1/48 of the shares covered
by this  Option  on the last day of each  month in the  next  three  years.  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.

The Agreement  may be  terminated  at any time for by the Company for cause,  as
defined.  The Company may also terminate the Agreement  other than for cause, in
which event the Company has a continuing  obligation to pay Mr. Pezzani his base
salary,  bonuses that are earned and unpaid, for the monthly periods,  but for a
period not less than twelve months,  specified in the  Agreement.  Additionally,
the Company will continue to contribute the cost of Mr. Pezzani's  participation
in the Company's  group medical and life insurance  plans during the same period
as his base salary is continued.  Upon such termination,  unvested options shall
become  exercisable to the extent so provided by the Agreement.  Mr. Pezzani may
terminate his  employment  with the Company for good reason,  as defined (in the
absence  of  cause).  In the  event of such  termination,  base  salary,  bonus,
benefits and options  shall be paid or provided in the same manner and extent as
for termination by the Company Other Than For Cause.

Mr. Benders,  Chief Marketing Officer, has an Employment Agreement dated October
20, 1997,  expiring October 20, 2000. The agreement  provides for an annual base
salary of $225,000 per annum,  subject to increases from time to time by the CEO
with approval by the Board of  Directors.  He is eligible for an annual bonus as
determined  by the CEO and  approved  by the  Board of  Directors.  Mr.  Benders

<PAGE>

received  incentive  stock  options to purchase an aggregate of 52,000 shares of
Class A common stock of the Company  exercisable  at $12.63 per share,  the fair
market value on the date of grant by the Compensation  Committee of the Board of
Directors under the 1995 Equity Incentive Plan. These options become exercisable
over a four year period with  one-fourth  being  exercisable on October 20, 1998
and up to an  additional  1/48 of the shares  covered by this Option on the last
day of each month in the next three  years.  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.

The Agreement  may be  terminated  at any time for by the Company for cause,  as
defined.  The Company may also terminate the Agreement  other than for cause, in
which event the Company has a continuing  obligation to pay Mr. Benders his base
salary for six months. Additionally, the Company will continue to contribute the
cost of  Mr.Benders'  participation  in the  Company's  group  medical  and life
insurance plans during the same period as his base salary is continued.

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 RainForest Crunch
cashew-brazilnut  butter crunch candy to be included in Ben & Jerry's RainForest
Crunch(R)  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 U.S.  Bankruptcy  Code in early 1997,  its  business was sold and the matter
(and related  litigation)  is pending in U.S.  Bankruptcy  Court.  Ben & Jerry's
located  an  alternative  supplier  for  cashew-brazilnut  butter  crunch and no
purchases were made in 1998 from Community Products, Inc. The termination of Ben
& Jerry's  relationship with Community Products,  Inc. had no material effect on
the Company's business.

In 1998,  the Company paid $20,000 to Ms.  Jennifer  Henderson for services as a
consultant in connection with service as a member of the Board of Directors.

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,  Mr.  Benders paid the bridge
loan in full.

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

A.        List of financial statements and financial statement schedule:
<TABLE>
<CAPTION>
                                                                                           Form 10-K
                                                                                          Page Number
                                                                                          -----------

    <S>                                                                                      <C>
     1. The following consolidated financial statements are included in Item 8:

         Consolidated Balance Sheets as of December 26, 1998 and December 27, 1997            F-2

         Consolidated Statements of Operations for the years ended
         December 26, 1998, December 27, 1997 and December 28, 1996                           F-3

         Consolidated Statements of Stockholders' Equity for the years ended
         December 26, 1998, December 27, 1997 and December 28, 1996                           F-4

         Consolidated Statements of Cash Flows for the years ended
         December 26, 1998, December 27, 1997 and December 28, 1996                           F-5

         Notes to Consolidated Financial Statements                                         F-6 - F-21

     2. The following financial statement schedule is included in Item 14(d)

         Schedule II - Valuation and Qualifying Accounts                                      F-22
</TABLE>

         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.

<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 as Exhibit  3.1.4 to the  Company's  Annual Report on
                    Form  10-K  for the  period  ended  December  27,  1997  and
                    incorporated herein by reference).

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).

3.2.2               Amendment to By-laws dated March 31, 1998 (filed as Exhibits
                    1 and 2 to the  Company's  Form 8-K dated  April 1, 1998 and
                    incorporated herein by reference).

3.2.3               Amendment to By-laws dated June 26, 1998 (filed as Exhibit A
                    to  the   Company's   Form  8-K  dated  July  30,  1998  and
                    incorporated herein by reference).

4.1                 See Exhibit 3.1.

4.2                 See Exhibit 3.2.

4.3                 Mortgage  and  Security   Agreement  between  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 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).
<PAGE>

4.4.1               Amendment  to item 4.4 dated July 28, 1992 [filed as 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.

4.12                Class A Common Stock  Stockholder  Rights Agreement  between
                    the  Company and  American  Stock  Transfer & Trust  Company
                    dated as of July 30,  1998 (filed as Exhibit 1 to the Report
                    on Form 8-K, dated August 13,1998 and hereby incorporated by
                    reference).

4.13                Class B Common Stock Stockholder Rights Agreement dated July
                    30,  1998  (filed as  Exhibit  4 to the  Report on Form 8-K,
                    dated August 13,1998 and hereby incorporated by reference).

10.1*               Employment  Agreement  dated as of January 29, 1998  between
                    Bennett R. Cohen and the Company  (filed as Exhibit  10.1 to
                    the  Company's  Annual  Report on Form  10-K for the  period
                    ended   December  26,  1997  and  hereby   incorporated   by
                    reference).

*  Indicates management contract or compensatory plan, contract or arrangement.

<PAGE>

10.4*               Employment  Agreement  dated as of January 29, 1998  between
                    Jerry  Greenfield  and the Company (filed as Exhibit 10.1 to
                    the  Company's  Annual  Report on Form  10-K for the  period
                    ended   December  26,  1997  and  hereby   incorporated   by
                    reference).

10.5                Settlement  Agreement  dated  March  29,  1985  between  the
                    Company and  Haagen-Daz,  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 30, 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   herein  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 herein by reference).

10.8.3**            Amendment  to Item 10.8 dated as of January  11, 1999 (filed
                    herewith).

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].

10.10**             New  Distribution  Agreement  with Dreyer's Grand Ice Cream,
                    Inc., dated as of January 11, 1999 (filed herewith).

10.10.1**           Addendum to Item 10.10 (filed herewith).

10.11**             Agreement with the Pillsbury  Company dated as of August 26,
                    1998 (filed herewith).

10.11.1             Amendment to Item 10.11 (filed herewith).

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).

*         Indicates  management  contract  or  compensatory  plan,  contract  or
          arrangement.

**        Confidential  treatment  requested  as to certain  portions.  The term
          "confidential  treatment"  and the  mark  "*" as used  throughout  the
          indicated  Exhibits mean that material has been omitted and separately
          filed with the Commission.

<PAGE>

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 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 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 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).

10.22.4             Amendment  to  Item  10.22  dated  January  1,  1998  (filed
                    herewith).

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).

10.25               1999 Equity Incentive Plan (filed herewith)

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

*         Indicates  management  contract  or  compensatory  plan,  contract  or
          arrangement.

**        Confidential  treatment  requested  as to certain  portions.  The term
          "confidential  treatment"  and the  mark  "*" as used  throughout  the
          indicated  Exhibits mean that material has been omitted and separately
          filed with the Commission.

<PAGE>


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).

10.29.1*            Amendment  to Item  10.29  (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).

10.29.2*            Amendment to Item 10.29 (filed herewith).

10.30               Non-Employee Directors' Plan for Stock in Lieu of Directors'
                    Cash  Retainer  dated August 4, 1995 (filed as Exhibit 10.30
                    to the  Company's  Quarterly  Report  on Form  10-Q  for the
                    period  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).

10.33.1*            Amendment dated as of February 28, 1999 to Item 10.33 (filed
                    herewith.)

10.34*              Employment  Agreement  dated  January  1, 1998  between  the
                    Company and Angelo M. Pezzani (filed as Exhibit 10.34 to the
                    Company's Form 10-K for the year ended December 27, 1997 and
                    incorporated herein by reference).

10.35*              Employment  Agreement  dated  October 20,  1997  between the
                    Company and Lawrence  Benders (filed as Exhibit 10.34 to the
                    Company's Form 10-K for the year ended December 27, 1997 and
                    incorporated herein by reference).

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 as Exhibit
                    10.34 to the Company's Form 10-K for the year ended December
                    27, 1997 and incorporated herein by reference).

11.0                The  computation  of Per Share Earnings is  incorporated  by
                    reference  from  Note  11  of  the  Company's   consolidated
                    financial statements (filed herewith).

21.1                Subsidiaries  of the  registrant  as of  December  26,  1998
                    (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
                    1998.

*         Indicates  management  contract  or  compensatory  plan,  contract  or
          arrangement.

<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 26, 1999              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, 1999                 /s/ Elizabeth Bankowski
                               -------------------------------------------------
                               Elizabeth Bankowski
                               Director, Director of Social Mission Development

March 25, 1999                 /s/ Bennett R. Cohen
                               -------------------------------------------------
                               Bennett R. Cohen
                               Director and Vice-Chairperson

March 25, 1999                 /s/ Pierre Ferrari
                               -------------------------------------------------
                               Pierre Ferrari
                               Director

March 25, 1999                 /s/ Jeffrey Furman
                               -------------------------------------------------
                               Jeffrey Furman
                               Director

March 25, 1999                 /s/ Jerry Greenfield
                               -------------------------------------------------
                               Jerry Greenfield
                               Director and Chairperson

March 25, 1999                 /s/ Jennifer Henderson
                               -------------------------------------------------
                               Jennifer Henderson
                               Director

March 25, 1999                 /s/ Frederick A. Miller
                               -------------------------------------------------
                               Frederick A. Miller
                               Director

March 25, 1999                 /s/ Henry Morgan
                               -------------------------------------------------
                               Henry Morgan
                               Director

March 25, 1999                 /s/ Perry Odak
                               -------------------------------------------------
                               Perry Odak
                               Director, Principal Executive Officer
                               and President

March 25, 1999                 /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

                          YEAR ENDED DECEMBER 26, 1998

                          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 26, 1998 and December 27, 1997.......................................F-2

Consolidated Statements of Operations for the years ended December 26, 1998,
December 27, 1997 and December 28, 1996.........................................................................F-3

Consolidated Statements of Stockholders' Equity for the years ended December 26, 1998,
December 27, 1997 and December 28, 1996.........................................................................F-4

Consolidated Statements of Cash Flows for the years ended December 26, 1998,
December 27, 1997 and December 28, 1996.........................................................................F-5

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

Financial Statement Schedule:

SCHEDULE II - Valuation and Qualifying Accounts................................................................F-22

</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 26, 1998 and  December 27, 1997,  and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period ended  December 26, 1998.  Our audits also
included the financial  statement schedule listed in the Index at Item 14(a)(2).
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  26,  1998 and  December  27, 1997 and the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended  December  26,  1998,  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 22 1999, except for Note 17,
as to which the date is February 26, 1999



                                      F-1

<PAGE>

                         BEN & JERRY'S HOMEMADE, INC.

                           CONSOLIDATED BALANCE SHEETS
                       (In thousands except share amounts)
 
<TABLE>
<CAPTION>

                                                         December 26,        December 27,
                                                              1998                1997                                              
                                                       -------------------  ------------------
<S>                                                             <C>                 <C>   
ASSETS
Current assets:
  Cash and cash equivalents                                      $ 25,111            $ 47,318
  Short term investments                                           22,118                 481
  Trade accounts receivable:
      (less allowance of $979 in 1998
       and $1,066 in 1997 for doubtful accounts)                   11,338              12,710
  Inventories                                                      13,090              11,122
  Deferred income taxes                                             7,547               6,071
  Prepaid expenses and other current assets                         3,105               2,378                                       
                                                       -------------------  ------------------
      Total current assets                                         82,309              80,080

Property, plant and equipment, net                                 63,451              62,724
Investments                                                           303               1,061
Other assets                                                        3,438               2,606
                                                       -------------------  ------------------                                      
                                                                $ 149,501           $ 146,471
                                                       ===================  ==================                                      
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses                          $ 28,662            $ 23,266
  Current portion of long-term debt and
      obligations under capital leases                              5,266               5,402
                                                       -------------------  ------------------                                      
      Total current liabilities                                    33,928              28,668

Long-term debt and obligations under capital leases                20,491              25,676

Deferred income taxes                                               4,174               5,208

Stockholders' equity:
  $1.20  noncumulative  Class A preferred stock -
      par value $1.00 per share, redeemable  at 
      $12.00 per share;  900  shares  authorized,
      issued and outstanding; aggregated preference
      on liquidation - $9,000                                           1                   1
  Class A common stock - $.033 par value; authorized
      20,000,000 shares; issued: 6,592,392 at 
      December 26, 1998 and 6,494,835 at 
      December 27, 1997                                               218                 214
  Class B common stock - $.033 par value; authorized
      3,000,000 shares; issued:  824,480 at 
      December 26, 1998 and 866,235 at
      December 27, 1997                                                27                  29
  Additional paid-in-capital                                       50,556              49,681
  Retained earnings                                                45,328              39,086
  Accumulated other comprehensive income                             (151)               (129)
  Treasury stock, at cost: 291,032 Class A and 1,092 Class B
      shares at December 26, 1998 and  124,532 Class A
      and 1,092 Class B shares at December 27, 1997                (5,071)             (1,963)
                                                       -------------------  ------------------                                      
      Total stockholders' equity                                   90,908              86,919
                                                       -------------------  ------------------                                      
                                                                $ 149,501           $ 146,471
                                                       ===================  ==================                                      

                 See notes to consolidated financial statements.



                                      F-2
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

             BEN & JERRY'S HOMEMADE, INC.

            CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands except share amounts)
                                                                                Fiscal Year Ended
                                                       -------------------------------------------------------------                
                                                       December 26, 1998    December 27, 1997    December 28, 1996
                                                       -------------------  -------------------  -------------------                

<S>                                                             <C>                  <C>                  <C>      
Net sales                                                       $ 209,203            $ 174,206            $ 167,155

Cost of sales                                                     136,225              114,284              115,212
                                                       -------------------  -------------------  -------------------                

Gross profit                                                       72,978               59,922               51,943

Selling, general and
     administrative expenses                                       63,895               53,520               45,531


Other income (expense):
Interest income                                                     2,248                1,938                1,676
Interest expense                                                   (1,888)              (1,992)              (1,996)
Other income (expense), net                                           333                  (64)                 243
                                                       -------------------  -------------------  -------------------                
                                                                      693                 (118)                 (77)
                                                       -------------------  -------------------  -------------------                


Income before income taxes                                          9,776                6,284                6,335

Income taxes                                                        3,534                2,388                2,409
                                                       -------------------  -------------------  -------------------                

Net income                                                        $ 6,242              $ 3,896              $ 3,926
                                                       ===================  ===================  ===================                

Shares used to compute net income per common share

     Basic                                                          7,197                7,247                7,189
     Diluted                                                        7,463                7,334                7,230

Net income per common share

     Basic                                                         $ 0.87               $ 0.54               $ 0.55
     Diluted                                                       $ 0.84               $ 0.53               $ 0.54




                 See notes to consolidated financial statements.

                                     


                                       F-3
</TABLE>
<PAGE>


<TABLE>
<CAPTION>



                                            Consolidated Statements of Stockholders' Equity
                                                   (In thousands except share data)
                                                                                                               
                                                                                                               Accumulated
                                                                Common Stock        Additional                    Other             
                                                           ---------------------
                                              Preferred     Class A    Class B      Paid-in      Retained     Comprehensive   
                                                Stock      Par Value  Par Value     Capital      Earnings       Income       
                                                ------     ---------  ---------     -------      --------       -------      
                                              Par Value
                                              ---------
<S>                                               <C>        <C>         <C>        <C>          <C>             <C>         
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)      
                                                                                                                             
Net comprehensive income                                                                                                     
                                                                                                                             
                                              ------------------------------------------------------------------------------ 
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)      
                                                                                                                             
Net comprehensive income                                                                                                     
                                                                                                                             
                                              ----------------------------------------------------------------------------- 
Balance at December 27, 1997                       1          214         29         49,681       39,086          (129)      
Net income                                                                                         6,242                     
Common stock issued under stock
 purchase plan (14,277 Class A shares)                          -                       179                                  
Conversion of Class B shares to Class A
 shares (41,755 shares)                                         2         (2)
Common stock issued under stock and 
 option plans(41,525 Class A shares)                            2                       696                                  
Repurchase of Common Stock (166,500
   Class A shares)                                                                                                           
Foreign currency translation adjustment                                                                            (22)      
                                                                                                                             
Net comprehensive income                                                                                                     
                                                                                                                             
                                              ------------------------------------------------------------------------------ 
Balance at December 26, 1998                                                                                                 
                                                  $1         $218        $27        $50,556      $45,328         $(151)      
                                              ============ ========== ========== ============== =========== ================







                                                                      
                                                  Treasury Stock                                
                                                  --------------         Total                                    
                                               Class A   Class B    Stockholders'   Comprehensive
                                                Cost       Cost         Equity          Income   
                                                ----       ----         ------          ------   
                                                                                                 
<S>                                           <C>           <C>         <C>              <C>                                        
Balance at December 30, 1995                  $(1,375)      $(5)        $78,531                  
Net income                                                                3,926          $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)                 
                                                                                             (4) 
Net comprehensive income                                                            -------------             
                                                                                         $3,922  
                                              ------------------------------------- =============             
Balance at December 28, 1996                   (1,375)       (5)         82,685                  
Net income                                                                3,896          $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)                 
                                                                                            (11) 
Net comprehensive income                                                            -------------             
                                                                                         $3,885  
                                              ------------------------------------- =============              
Balance at December 27, 1997                   (1,958)       (5)         86,919                  
Net income                                                                6,242          $6,242  
Common stock issued under stock                                                                  
 purchase plan (14,277 Class A shares)                                      179                  
Conversion of Class B shares to Class A                                                          
 shares (41,755 shares)                                                                          
Common stock issued under stock and                                                              
 option plans(41,525 Class A shares)                                        698                  
Repurchase of Common Stock (166,500                                                              
   Class A shares)                             (3,108)                   (3,108)                 
Foreign currency translation adjustment                                     (22)                 
                                                                                            (22) 
Net comprehensive income                                                            -------------             
                                                                                         $6,220  
                                              ------------------------------------- =============             
Balance at December 26, 1998                  $(5,066)      $(5)        $90,908                  
                                              ========== ========== ===============                  
                                                                                                 
                                                                                                
</TABLE>

 
                 See notes to consolidated financial statements.
                                    
                                    


                                       F-4




<PAGE>

<TABLE>
<CAPTION>

                                                  
                 BEN & JERRY'S HOMEMADE, INC.

             CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (In thousands)

                                                                        Fiscal Year Ended
                                                       ---------------------------------------------------                          
                                                       December 26,          December 27,        December 28,
                                                           1998                  1997                1996
                                                       --------------       ---------------      --------------                     
<S>                                                         <C>                   <C>                 <C>    
Cash flows from operating activities:   
Net income                                                   $ 6,242               $ 3,896             $ 3,926
Adjustments to reconcile net income to net
cash provided by operating activities:  
     Depreciation and amortization                             8,181                 7,711               7,091
     Provision for bad debts                                      50                   630                 408
     Deferred income taxes                                    (2,510)               (1,599)                809
     Stock compensation                                                                405                  10
     Loss on disposition of assets                               112                   124
      Changes in operating assets and liabilities:
     Accounts receivable                                       1,460                (5,318)              3,146
     Inventories                                              (1,968)                4,243                 (89)
     Prepaid expenses                                           (501)                  (64)             (2,749)
     Accounts payable and accrued expenses                     5,385                 5,868                 897
     Income taxes payable/receivable                            (364)                1,743                 806
                                                       --------------       ---------------      --------------                    
Net cash provided by operating activities                     16,087                17,639              14,255

Cash flows from investing activities:
Additions to property, plant and equipment                    (8,770)               (5,236)            (12,333)
Proceeds from sale of assets                                       0                    48                 168
Changes in other assets                                       (1,082)                 (425)               (466)
Increase in investments                                      (20,879)                  (76)               (320)
                                                       --------------       ---------------      --------------                     
Net cash used for investing activities                       (30,731)               (5,689)            (12,951)

Cash flows from financing activities:
Repayments of long-term debt and capital leases               (5,321)                 (669)               (678)
Repurchase of common stock                                    (3,108)                 (988)
Proceeds from issuance of common stock                           877                   932                 232
                                                       --------------       ---------------      --------------                     
Net cash used for financing activities                        (7,552)                 (725)               (446)

Effect of exchange rate changes on cash                          (11)                  (11)               (160)
                                                       --------------       ---------------      --------------                     
(Decrease) increase in cash and cash equivalents             (22,207)               11,214                 698

Cash and cash equivalents at beginning of year                47,318                36,104              35,406
                                                       --------------       ---------------      --------------                     

Cash and cash equivalents at end of year                    $ 25,111              $ 47,318            $ 36,104
                                                       ==============       ===============      ==============                     

                 See notes to consolidated financial statements.

                 

                                       F-5


</TABLE>
<PAGE>


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.  Inter-company accounts and transactions have
been eliminated.

Fiscal Year

The  Company's  fiscal year is the 52 or 53 weeks ending on the last Saturday in
December.  Fiscal  years  1998,  1997 and 1996  consisted  of the 52 weeks ended
December 26, 1998, December 27, 1997 and December 28, 1996, respectively.

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 investments at the time
of purchase and reevaluates  such  designation as of each balance sheet date. At
December  26,  1998,  the  Company  considers  all its  investments,  except for
certificates of deposit,  as available for sale.  Available-for-sale  securities
are carried at cost, which  approximates  fair value for the year ended December
26, 1998 and December 27, 1997.  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  and  available-for-sale  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.

                                      

                                      F-6

<PAGE>



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

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 in certain
countries  outside  the United  States.  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.

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  included in  accumulated  other
comprehensive income. 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 risk by entering into future options based
on projected forecasts of a portion of the Company's  International Business. In
addition,  from time to time, the Company enters into forward contracts to hedge
foreign currency  denominated sales.  Realized and unrealized gains or losses on
contracts  or  options  that hedge  anticipated  cash  flows are  determined  by
comparison  of contract or option value upon  execution  (realized)  and at each
balance sheet for open  contracts or options  (unrealized).  Realized  gains and
losses are  recognized  at the balance sheet date as other income or expense for
the period.  In the case of options  entered into based on projected  forecasts,
unrealized  gains  and  losses  are  recognized  upon  the  determination   that
circumstances  have changed which cause the hedged  instrument to be speculative
in nature.



                                      F-7


<PAGE>



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

Transaction gains 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  $708,000,  $553,000 and
$301,000 in 1998, 1997 and 1996, respectively.

Advertising

Advertising  costs are  expensed as  incurred.  Advertising  expense  (excluding
cooperative  advertising with distribution  companies) amounted to approximately
$10.6  million,  $6.7  million,  and  $3.4  million  in  1998,  1997  and  1996,
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 has adopted  Statement of Financial  Accounting  Standards  No. 123,
Accounting for Stock-Based  Compensation (FAS 123). As permitted by FAS 123, the
Company  continues  to  account  for  its  stock-based  plans  under  Accounting
Principles Board Opinion No. 25,  Accounting for Stock Issued to Employees,  and
provides pro forma disclosures of the compensation  expense determined under the
fair value provisions of FAS 123.

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.

Comprehensive Income

As of December  28,  1997 the  Company  adopted  Statement  No.  130,  Reporting
Comprehensive  Income (FAS 130). FAS 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the adoption of
this  statement  had no  impact on the  Company's  net  income or  shareholders'
equity.  Statement  130  requires  unrealized  gains or losses on the  Company's
available-for-sale securities and foreign currency translation adjustments to be
included in other comprehensive income.



                                      F-8



<PAGE>



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

Total comprehensive  income amounted to $6.2 million for the year ended December
26, 1998 and $3.9 million for the years ended December 27, 1997 and December 28,
1996, respectively.  Other comprehensive income consisted of adjustments for net
foreign  currency  translation  losses in the  amounts of  $22,000,  $11,000 and
$4,000 for 1998, 1997 and 1996, respectively.

Segment Information

As of December 28, 1997, the Company adopted the Financial  Accounting Standards
Board's Statement of Financial  Accounting  Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information (Statement 131). Statement 131
superseded FASB Statement No. 14, Financial Reporting for Segments of a Business
Enterprise. Statement 131 establishes standards for the way that public business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  Statement 131 also establishes
standards for related disclosures about products and services, geographic areas,
and major  customers.  The adoption of Statement  131 did not affect  results of
operations  or  financial  position,  but did affect the  disclosure  of segment
information. See Note 15.

Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative  Instruments and Hedging Activities (FAS 133). FAS 133
establishes  standards  for  public  companies  regarding  the  recognition  and
measurement of derivatives  and hedging  activities.  The statement is effective
for the Company in fiscal year 2000.  The Company  does not believe the adoption
of this  statement  will  have a  material  impact  on the  Company's  financial
statements  based on the nature and extent of the  Company's  use of  derivative
instruments at the present time.

2.   CASH AND INVESTMENTS

The  following is a summary of cash,  cash  equivalents  and  investments  as of
December 26, 1998 and December 27, 1997:

                                                December 26, 1998
                                Cash and Cash       Short-Term 
                                 Equivalents       Investments       Investments
                                 -----------       -----------       -----------
Cash                                $  7,834
Commercial paper                       3,277
Tax exempt floating
 rate notes                              800
Municipal bonds                       13,200           $14,926
Convertible bonds                                          955
Preferred stock                                          5,649       
                                      ------           -------          ----
                                      25,111            21,530
Certificates of deposit                                    588          $303
                                     -------           -------          ----
                                     $25,111           $22,118          $303
                                     =======           =======          ====


                                      F-9
<PAGE>


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

                                                December 27, 1997
                                Cash and Cash       Short-Term
                                 Equivalents        Investments      Investments
                                 -----------        -----------      -----------
                                                                  
Cash                                 $ 1,750
Municipal bonds                       45,568                                    
                                      ------              ----        ------    
                                      47,318
Certificates of deposit                                   $481        $1,061
                                     -------              ----        ------
                                     $47,318              $481        $1,061
                                     =======              ====        ======

The  Company  considers  all of its  investments,  except  for  certificates  of
deposit,  as available for sale.  Certificates  of deposit are held to maturity.
Municipal bonds included in cash and cash equivalents mature at par in thirty to
forty-five  days,  at which time the  interest  rate is reset to the then market
rate,  and the Company may convert the investment to cash.  Municipal  bonds and
convertible bonds recorded as short-term  investments have varying maturities in
1999 and beyond,  however,  the Company does not intend to hold such investments
to maturity.  During 1998,  the Company also invested in fixed income  preferred
stock of primarily financial institutions.

The costs of all short-term investments approximated the estimated fair value of
such investments. Gross unrealized gains and losses were not significant for all
short-term investments held at December 26, 1998 or December 27, 1997.

Gross purchases and maturities  aggregated  $221.6 million and $228.4 million in
1998,  $43.1  million  and $25.4  million in 1997,  and $61.1  million and $63.9
million in 1996.  Realized  gains and losses were not  material  for all periods
presented.

3. INVENTORIES

                                                   December 26,     December 27,
                                                       1998             1997
                                                   -----------      ------------
   Ice cream and ingredients                           $12,025           $10,294
   Paper goods                                             524               536
   Food, beverages, and gift items                         541               292
                                                       -------           -------
                                                       $13,090           $11,122
                                                       =======           =======


The Company purchased certain  ingredients from a company owned by the Company's
Vice  Chairperson  and a member of the Board of  Directors,  which  amounted  to
approximately $800,000 in 1997. No such purchases were made in 1998 or 1996.


                                      F-10

<PAGE>


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

4.   PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>

                                           December 26,           December 27,      Estimated Useful
                                               1998                  1997           Lives/Lease Term
                                           ---------             ---------           ----------------                               
                                               
<S>                                        <C>                   <C>                 <C>        
Land and improvements                      $   4,520             $   4,520           15-25 years
Buildings                                     37,940                37,650           25 years
Equipment and furniture                       52,047                44,609           3-20 years
Leasehold improvements                         3,727                 3,221           3-10 years
Construction in progress                       2,058                 2,676
                                           ---------             ---------
                                             100,292                92,676
Less accumulated depreciation                 36,841                29,952
                                           ---------             ---------
                                           $  63,451             $  62,724
                                           =========             =========
</TABLE>

Depreciation  expense for the years ended  December 26, 1998,  December 27, 1997
and  December  28,  1996 was  $7.9  million,  $7.4  million  and  $6.7  million,
respectively.

5.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

                                            December 26,          December 27,
                                              1998                    1997
                                           ---------             ---------
                                             
      Trade accounts payable                 $ 4,623              $  3,832
      Accrued expenses                        12,552                10,313
      Accrued payroll and related costs        3,272                 2,076
      Accrued promotional costs                4,297                 3,581
      Accrued marketing costs                  2,837                 2,230
      Accrued insurance expense                1,081                 1,234
                                           ---------             ---------
                                           $  28,662             $  23,266
                                           =========             =========

6.   LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

                                            December 26,          December 27,
                                              1998                    1997
                                           ---------             ---------
      Senior Notes - Series A payable
       in annual  installments  beginning
       in 1998 through 2003 with interest
       payable semiannually at 5.9%          $16,680               $20,000
      Senior Notes - Series B payable
       in annual installments beginning
       in 1998 through 2003 with interest
       payable semiannually at 5.73%           8,333                10,000
      Other long-term obligations                744                 1,078
                                           ---------             ---------
                                              25,757                31,078
      Less current portion                     5,266                 5,402
                                           ---------             ---------
                                             $20,491               $25,676
                                           =========             =========


                                      F-11


<PAGE>



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

Property,  plant and equipment  having a net book value of  approximately  $19.5
million at December 26, 1998 are pledged as collateral
under certain long-term debt arrangements.

Long-term  debt and capital lease  obligations  at December 26, 1998 maturing in
each of the next five years and thereafter are as follows:

                                          Capital Lease          Long-term
                                           Obligations              Debt
                                           -----------           ---------
      1999                                 $      78             $   5,219
      2000                                        78                 5,076
      2001                                        57                 5,039
      2002                                        15                 5,033
      2003                                        15                 5,098
      Thereafter                                 199                     -
                                           ---------             ---------
      Total minimum payments                     442                25,465
      Less amounts representing interest         150                     -
                                           ---------             ---------
                                           $     292              $ 25,465
                                           =========             =========

The  Company  capitalized  no  interest  in 1998,  1997 or 1996.  Interest  paid
amounted to  $1,832,000,  $1,975,000  and  $1,973,000  for 1998,  1997 and 1996,
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 LIBOR plus a margin based on a  pre-determined
formula.  No amounts were  borrowed  under these or any bank  agreements  during
1998. The working capital line of credit agreements expire December 23, 2001.

Certain  of  the  debt  agreements  contain   restrictive   covenants  requiring
maintenance  of  minimum  levels  of  working  capital,  net  worth  and debt to
capitalization  ratios.  As of December 26, 1998,  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  million  plus 75% of
earnings and 100% of net losses since June 30, 1993; approximately $20.6 million
of  retained  earnings  at  December  26,  1998 was  available  for  payment  of
dividends.

As of December 26, 1998,  the  carrying  amount and fair value of the  Company's
long-term  debt were $25.8 million and $24.4  million,  respectively,  and as of
December 27, 1997, they were $31.1 million and $29.7 million, respectively.

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


                                      F-12
<PAGE>

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

Company's  Articles of  Association  that  authorized 3 million  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  as such 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 Common Stock thereby sold.

8.   SHAREHOLDER RIGHTS PLAN

In early August, 1998, following approval by its Board of Directors, the Company
put in place two Shareholder  Rights Plans, one pertaining to the Class A Common
Stock and one  pertaining to the Class B Common Stock.  These Plans are intended
to protect  stockholders by compelling someone seeking to acquire the Company to
negotiate with the Company's Board of Directors in order to protect stockholders
from unfair  takeover  tactics and to assist in the  maximization of stockholder
value.  These Rights Plans,  which are common for public companies in the United
States, may also be deemed to be "anti-takeover" provisions in that the Board of
Directors  believes that these Plans will make it difficult for a third party to
acquire  control of the Company on terms which are unfair or  unfavorable to the
stockholders.  Also,  in April,  1998 the  Legislature  of the State of  Vermont
amended a provision of the Vermont Business  Corporation Act to provide that the
directors of a Vermont corporation may also consider,  in determining whether an
acquisition  offer or other matter is in the best interests of the  corporation,
the  interests  of  the  corporation's  employees,   suppliers,   creditors  and
customers,  the  economy of the state in which the  corporation  is located  and
including the  possibility  that the best  interests of the  corporation  may be
served by the continued independence of the corporation.

9.   STOCK BASED COMPENSATION PLANS

The Company has 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
are granted with an exercise  price equal to the market  price of the  Company's
common stock on the date of grant.  The 1985 Option Plan expired in August 1995,
however, some options granted under this plan are outstanding as of December 26,
1998. 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 with provisions for acceleration of vesting upon the occurrence of certain
events. The exercise period cannot exceed ten years from the date of grant.

                                      F-13

<PAGE>

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

A summary of the 1985 Option Plan activity is as follows:
<TABLE>
<CAPTION>

                                                         Weighted Average
                                         Number of        Exercise Price             Option Price
                                         Options            Per Share                 Per Share
                                         -------          ---------------    ----------------------------
<S>                                     <C>             <C>                  <C>                <C>   
Outstanding at December 30, 1995         357,437             $13.40          $10.63        -     $16.75
     Granted                                   -                  -               -        -          -
     Exercised                                 -                  -               -        -          -
     Forfeited                          (109,819)             11.34           10.81        -      16.75
                                        ---------            ------
Outstanding at December 28, 1996         247,618              14.31           10.63        -      16.75
     Granted                                   -                  -               -        -          -
     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
     Granted                                   -                  -               -        -          -
     Exercised                           (34,859)             16.75           16.75        -      16.75
     Forfeited                            (6,381)             16.75           16.75        -      16.75
                                       ----------            ------                                  
Outstanding at December 26, 1998         115,571             $15.63           10.63        -      16.75
                                       ==========            ======                                   
Options vested at December 26, 1998      100,571             $15.87           10.63        -      16.75
                                       ==========            ======
</TABLE>

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 events including a change in control (as defined). The exercise period
cannot  exceed ten years from the date of grant.  At December 26, 1998,  103,500
shares of Class A Common Stock were  available  under the 1995 Equity  Incentive
Plan.
                                      F-14
<PAGE>

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

A summary of the 1995 Equity Incentive Plan activity is as follows:

<TABLE>
<CAPTION> 
                                                   Weighted Average
                                     Number of      Exercise Price         Option Price
                                      Options         Per Share              Per share
                                      -------      ---------------        ----------------
<S>                                   <C>              <C>                <C>       <C>

Outstanding at December 30, 1995       25,000          $19.00             $19.00  - $19.00
  Granted                              62,500           13.97              12.38  -  16.00
  Exercised                                --              --                 --        --
  Forfeited                                --              --                 --        --
                                      -------           -----              
Outstanding at December 28, 1996       87,500           15.41              12.38  -  19.00
  Granted                             694,000           12.04              10.88  -  13.89
  Exercised                                --              --                 --        --
  Forfeited                           (27,500)          16.00              16.00  -  16.00
                                      --------          -----              
Outstanding at December 27, 1997      754,000           12.28              10.88  -  19.00
  Granted                              42,500           18.19              14.75  -  19.25
  Exercised                            (1,770)          12.63              12.63  -  12.63
  Forfeited                                --              --                 --        --
                                      -------          ------              
Outstanding at December 26, 1998      794,730          $12.60              10.88  -  19.25
                                      =======          ======              
Options vested at December 26, 1998   281,450          $12.37              10.88  -  19.25
                                      =======          ======    
</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 26, 1998 142,021 shares had been issued under the plan and 157,979 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 1998,  4,896 shares were issued to non-employee  directors.  These
shares vest immediately.  At December 26, 1998 a total of 12,259 shares had been
awarded  under these plans,  all of which were fully  vested,  and 22,741 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.

Exercise  prices for options  outstanding  at December 26, 1998 under all of the
Company's  stock  plans  ranged  from  $10.63 -  $19.25.  The  weighted  average
remaining contractual life of those options is 8.0 years.

As of December 26, 1998, a total of 284,220 shares are reserved for future grant
or issue under all of the Company's stock plans.

                                      F-15

<PAGE>

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

The  Company's  stock option plans  provide for the grant of options to purchase
shares of the  Company's  common stock to both  employees and  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 under APB 25, when 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 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  to be 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:
<TABLE>
<CAPTION>

                                               1998      1997      1996
                                               -----     -----     -----
<S>                                            <C>       <C>       <C>  
Risk-free interest rates                       5.10%     5.53%     6.15%
Dividend yield                                 0.00%     0.00%     0.00%
Volatility factor                              0.32      0.34      0.39
Weighted average expected lives (in years)     2.4       3.6       3.3
</TABLE>

For purposes of pro forma  disclosures,  the estimated fair value of the options
is  amortized to expense over the  options'  vesting  period.  The impact on pro
forma net income may not be  representative  of  compensation  expense in future
years when the effect of the  amortization of multiple awards would be reflected
in the pro forma  disclosures.  The Company's pro forma information  follows (in
thousands except for earnings per share information):
<TABLE>
<CAPTION>

                                              1998           1997          1996
                                              -----          -----        -----
<S>                                           <C>            <C>          <C>   
Pro forma net income                          $5,935         $3,600       $3,796
Pro forma earnings per share - diluted         $0.80         $0.49         $0.53
Weighted average fair value of options 
at the date of grant                           $4.22         $4.16         $4.26
</TABLE>

10.  INCOME TAXES

The provision for income taxes consists of the following:
<TABLE>
<CAPTION>

<S>               <C>             <C>          <C> 
Federal           1998            1997         1996
-------          -----           -----        ------
Current         $5,041          $3,300        $1,348
Deferred        (2,093)         (1,388)          681
               -------        --------     ---------
                 2,948           1,912         2,029
               -------         -------      --------
State
-----
Current          1,003             686           252
Deferred          (417)           (210)          128
               -------        --------     ---------
                   586             476           380
               -------         -------      ---------
                $3,534          $2,388        $2,409
               =======         =======      ========

</TABLE>
                                      F-16

<PAGE>

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


Income taxes computed at the federal statutory rate differ from amounts provided
as follows:
<TABLE>
<CAPTION>

                                         1998             1997              1996
                                        -----            -----             -----
<S>                                     <C>              <C>               <C>   
Tax at statutory rate                   34.0 %           34.0 %            34.0 %
State tax, less federal tax effect       4.0              5.0               6.0
Income tax credits                      (1.0)            (1.0)             (1.0)
Tax exempt interest                     (3.0)            (2.9)             (2.4)
Other, net                               2.1              2.9               1.4
                                       -----            -----             -----
Provision for income taxes              36.1 %           38.0 %            38.0 %
                                       =====            =====             =====
</TABLE>

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying amount of assets and  liabilities  for financial  reporting
purposes and the amounts used for income tax  purposes and are  attributable  to
the following:

<TABLE>
<CAPTION>
                                                1998              1997
                                                -----             -----
<S>                                             <C>             <C>     
Deferred tax assets:
     Accrued liabilities                        $6,425            $3,872
     Inventories                                 1,413             1,503
     Accounts receivable                           430               475
     Other                                         475               221
                                                ------            ------
     Total deferred tax assets                   8,743             6,071

Deferred tax liabilities:
     Depreciation                                5,231             5,193
     Other                                         139                15
                                                ------            -------
     Total deferred tax liabilities              5,370             5,208
                                                ------            ------

         Net deferred tax assets                $3,373            $  863
                                                ======            ======
</TABLE>

Income taxes paid amounted to $6.2 million, $2.2 million and $1.7 million during
1998, 1997 and 1996, respectively.

                                      F-17

<PAGE>

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

11.  EARNINGS PER SHARE

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

                                                      1998           1997         1996
                                                      -----          -----        -----
<S>                                                  <C>             <C>          <C>   
Numerator:
     Net income                                      $6,242          $3,896       $3,926
                                                     ------          ------       ------
Denominator:
     Denominator for basic earnings per share-
         weighted-average shares                      7,197           7,247        7,189

     Dilutive employee stock options                    266              87           41
                                                     ------          ------       -------
     Denominator for diluted earnings per share-
         adjusted weighted-average shares and
         assumed conversions                          7,463           7,334         7,230
                                                    =======          ======        ======
     Net income per common share
         Basic                                        $0.87           $0.54         $0.55
                                                    =======          ======        ======
         Diluted                                      $0.84           $0.53         $0.54
                                                    =======          ======        ======
</TABLE>

Options to purchase  32,500  shares of common  stock at $19.25 were  outstanding
during 1998 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.
Options to purchase 146,811 shares of common stock at prices ranging from $16.75
- $19.00 and  194,033  shares of common  stock at prices  ranging  from $12.38 -
$16.75 were outstanding in 1997 and 1996, respectively, 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 did not exceed $22.00 during 1998.

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

In October 1985, the Company issued 900 shares of Class A Preferred Stock to the
Ben & Jerry's Foundation,  Inc. (the Foundation),  a not-for-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  $793,000,  $510,000 and $514,000
for 1998, 1997 and 1996 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 combination. The three directors of the Foundation,  including
one of the founders of the Company, are members of the Board of Directors of the
Company.

                                      F-18

<PAGE>

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

13.  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  contributes one percent of eligible employees' gross annual
salary and may match the  contribution up to an additional  three percent of the
employee's  gross annual salary.  Effective  January 1, 1998 the Company amended
its employees' retirement plan to permit contributions of shares of its stock to
the plan  from  time to time.  In 1998,  the  Board of  Directors  approved  the
contribution of $250,000 worth of Class A Common Stock to be allocated among all
eligible employees'  accounts.  Total contributions by the Company to the profit
sharing,  management incentive program and savings plans were approximately $2.7
million, $1.2 million and $670,000 for 1998, 1997 and 1996, respectively.

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:

          1999                       $1,093
          2000                          889
          2001                          767
          2002                          598
          2003                          553
          Thereafter                  1,442

Rent expense for operating leases amounted to approximately  $1.5 million,  $1.2
million and $1.1 million in 1998, 1997 and 1996, respectively.

15.  SEGMENT INFORMATION

Ben & Jerry's Homemade Inc. has one reportable segment:  ice cream manufacturing
and  distribution.  The Company  manufactures  super  premium ice cream,  frozen
yogurt,  sorbet and various  ice cream  novelty  products.  These  products  are
distributed   throughout  the  United  States  primarily   through   independent
distributors and in certain countries outside the United States.

During 1998,  1997 and 1996 the Company's most  significant  customer,  Dreyer's
Grand Ice Cream, Inc., accounted for 57%, 57% and 55% of net sales respectively.
Sales and cash  receipts are recorded  and received  primarily in U.S.  dollars.
Foreign  exchange  variations  have  little or no effect on the  Company at this
time.
                                      F-19
<PAGE>

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

Information concerning operations by geographic area are as follows:

<TABLE>
<CAPTION>
                                   December 26,             December 27,            December 28,
                                      1998                     1997                    1996
<S>                                 <C>                      <C>                      <C>     
Sales to Unaffiliated Customers
United States                      $191,777                 $166,592                 $160,263
Foreign                              17,426                    7,614                    6,892
                                   --------                 --------                 --------
                                   $209,203                 $174,206                 $167,155
                                   ========                 ========                 ========
Profit or Loss
United States                      $  6,444                 $  4,136                 $  3,662
Foreign                                (202)                    (240)                     264
                                   ---------                ---------                --------
                                   $  6,242                 $  3,896                 $  3,926
                                   ========                 ========                 ========
Assets
United States                      $143,308                 $142,051                 $132,481
Foreign                               6,193                    4,420                    4,184
                                   --------                 --------                 --------
                                   $149,501                 $146,471                 $136,665
                                   ========                 ========                 ========
</TABLE>

All intersegment  sales are made from the United States to the Company's foreign
locations  and amounted to $14.6  million,  $13.2  million and $12.3 million for
1998, 1997 and 1996, respectively.

Note:     Foreign  operations  include the United Kingdom,  France,  Canada, The
          Netherlands, Belgium and Japan.


16.  SELECTED QUARTERLY FINANCIAL INFORMATION (Unaudited)

<TABLE>
<CAPTION>

                                           First Quarter    Second Quarter   Third Quarter    Fourth Quarter
1998                                           (1)                (1)              (1)              (1)  
----                                       ------------     -------------     ------------    --------------  
<S>                                           <C>              <C>               <C>              <C>    
Net sales                                     $41,556          $58,749           $64,566          $44,332
Gross profit                                   13,964           21,153            24,227           13,634
Net income                                        380            2,130             2,892              840
Net income per common share
     Basic                                       .05              .29               .40              .12
     Diluted
                                                 .05              .28               .39              .11

1997
Net sales                                     $36,148          $50,701           $49,956          $37,401
Gross profit                                   10,003           19,150            19,118           11,651
Net (loss) income                              (1,059)           1,741             2,528              686
Net (loss) income per common share
     Basic                                      (.15)             .24               .35              .09
     Diluted
                                                (.15)             .24               .34              .09
</TABLE>

(1)  Each quarter represents a thirteen week period for all periods presented

                                      F-20
<PAGE>

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

17.  SUBSEQUENT EVENT

Effective  February 26, 1999,  the Company made an  investment  commitment of $1
million  in its  Israeli  Licensee,  which  gave  the  Company  a 60%  ownership
interest.  The Company will consolidate this majority owned subsidiary beginning
March 1999.

                                      F-21
<PAGE>

                          BEN & JERRY'S HOMEMADE, INC.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

     Years ended December 26, 1998, December 27, 1997 and December 28, 1996
                                   (In 000's)
<TABLE>
<CAPTION>

                                                 Balance at      Charged to       Charged to
                                                 beginning        costs and          other       Deductions     Balance at 
                                                  of year         expenses         accounts         (1)         end of year
                                                 ---------       ----------       ----------     ----------     -----------
                                                                                                                           
<S>                                                <C>             <C>               <C>          <C>            <C>    
Year ended  December 26, 1998                      $1,066          $  50             $----        $137           $ 979
    Allowance for doubtful accounts
   (deducted from accounts receivable)
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)

</TABLE>

(1)  Accounts deemed to be uncollectible.

                                      F-22
<PAGE>