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 28, 1996

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

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

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

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

30 Community Drive
South Burlington, Vermont                         05403-6828
(Address of principal executive offices)          (Zip Code)
 
Registrant's telephone number, including area code: 802-651-9600

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

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

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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                                            Yes x         No__

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (225.405) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
                                            Yes  x     No    

     The aggregate market value of the Company's Class A and Class B Common
Stock held by non-affiliates was approximately $71,777,992 and $3,009,916
respectively, at March 7, 1997.

     At March 7, 1997, 6,310,410 shares of the Company's Class A Common
Stock and 893,308 shares of the Company's Class B Common Stock were
outstanding.

Page 1 of 94 pages.  Exhibit Index appears on page 40.



                          BEN & JERRY'S HOMEMADE, INC.

                          1996 FORM 10-K ANNUAL REPORT

                                Table of Contents


                                                                            Page
                                                                            ----

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

Item 2.           Properties................................................15
Item 3.           Legal Proceedings.........................................16

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

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

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

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

Item 8.           Financial Statements and Supplementary Data...............27

Item 9.           Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure....................27

Item 10.          Directors and Executive Officers of the Company...........28

Item 11.          Executive Compensation....................................31

Item 12.          Security Ownership of Certain Beneficial Owners
                  and Management............................................33

Item 13.          Certain Relationships and Related Transactions............35

Item 14.          Exhibits, Financial Statements, and Financial
                  Statement Schedules, and Reports on Form 8-K..............40


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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,
including  Peace Pops and Brownie Bars. The Company uses natural  ingredients in
its products and believes that its  gourmet-quality,  "down home", and the "made
in Vermont" image is a key element of its marketing strategy.

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  metropolitan  Chicago and Denver areas.  In 1996,
approximately 77% of the sales of the Company's packaged pints were attributable
to these target markets. The Company's products are also available in the United
Kingdom, France, Israel, Canada and the Netherlands.

The Company  currently  markets 39 flavors in packaged pints, for sale primarily
in  supermarkets,  grocery  stores,  convenience  stores and other  retail  food
outlets and over 60 flavors of its ice cream,  frozen yogurt and sorbet in bulk,
primarily to restaurants and Ben & Jerry's franchised "scoop shops."

History and Philosophy of the Company

The  Company  began  active  operations  in May 1978,  when Ben  Cohen,  now the
Company's Chairperson, and Jerry Greenfield, now the Company's Vice Chairperson,
opened a retail store in a renovated  gas station in  Burlington,  Vermont.  The
store  featured  homemade  ice  cream  made in an  antique  rock  salt ice cream
freezer.  That ice cream parlor  continues to make its own ice cream in a larger
location in Burlington.

The Company  believes that,  despite its growth,  it has maintained a reputation
for producing gourmet-quality,  natural ice cream and for sponsoring or creating
light-hearted  promotions  that  foster  an  image  as an  independent  socially
conscious Vermont company.

The  Board of  Directors  of the  Company  has  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




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"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...[to]  improve the
quality of life of our  employees  and a broad  community:  local,  national and
international."  Since 1988 the  Company's  Annual  Report to  Stockholders  has
contained a "social audit" on the Company's performance during the year.

The Company makes cash  contributions  equal to 7 1/2% of its pretax  profits to
philanthropy through The Ben & Jerry's Foundation (the "Foundation"),  Community
Action Teams, which are employee led groups from each of its five Vermont sites,
and through  corporate  grants.  In 1996,  the 7 1/2% amounted to $513,981.  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."

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

Ben & Jerry's  has also taken  actions  intended  to  strengthen  the  Company's
ability to remain an independent,  Vermont-based company. Ben & Jerry's believes
these actions are in the best interests of the Company,  its  stockholders,  its
employees  and the  Vermont  community.  See  "Anti-Takeover  Effects of Class B
Common Stock and Preferred Stock".

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
rBST, a synthetic growth hormone approved by the FDA. The




<PAGE>



Company's premium policy has some adverse impact on its gross margin.

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

The Super Premium Ice Cream, Frozen Yogurt and Sorbet Market

The packaged ice cream industry  includes  economy,  regular,  premium 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 and super premium  frozen  yogurt and,  more  recently,
super  premium  sorbet  have  become an  important  part of the  frozen  dessert
industry.  In response to the demand for lower fat, lower cholesterol  products,
the Company  introduced its own super premium low fat frozen yogurt in 1992, and
non-fat frozen yogurt in 1995. In February 1996, the Company  introduced  six(6)
lactose-free and cholesterol-free  sorbet flavors, five (5) flavors are fat free
and one(1) flavor is low fat. In 1997 Ben & Jerry's will continue to produce ice
cream, sorbet,  frozen yogurt, and a new line of low fat ice cream which will be
introduced in April 1997.

The Company believes,  based on information  provided by Information  Resources,
Inc., a software and marketing  information services company ("IRI"), that total
annual U.S. sales in  supermarkets  at retail prices  (defined as grocery stores
with  annual  revenues  of at least $2  million)  of super  premium  ice  cream,
frozen yogurt, and sorbet were in excess of $445 million in 1996,  compared with
about $444 million in 1995. All of the information in this paragraph is taken
from IRI data.






<PAGE>



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

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

Ben &  Jerry's  low fat  frozen  yogurt is a high  quality  frozen  yogurt  with
approximately 2% fat (excluding add-ins) and approximately 20% overrun.  The fat
content  of  frozen  yogurt  comes  from the  cream  used in the base  mix.  The
Company's  non-fat frozen yogurt has  approximately 0% fat and approximately 40%
overrun.  All our frozen yogurt  products are  sweetened  with pure cane or beet
sugar and corn syrup.  In 1996,  the  Company  produced  ten(10)frozen  yogurts.
Six(6)are  labeled  non-fat,  two(2) are labeled low fat, and two(2) are not low
fat because of the add-ins.  The Company  purchases  cultured yogurt from yogurt
manufacturers who use Vermont dairy ingredients.  Cultured yogurt is used in the
manufacturing of our frozen yogurt dessert products.

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

All Ben & Jerry's frozen  desserts are made of the finest  quality  ingredients.
Our ingredients  contain no preservatives or artificial  components  (except the
flavoring component in one of the candies that we purchase).  The dairy products
in Ben & Jerry's frozen desserts are readily  available from dairy  cooperatives
in  Vermont.  The  various  flavorings,  add-ins,  and  variegates  are  readily
available from multiple suppliers throughout the country.

All the  Company's  plants  include mix  batching  facilities  which allow Ben &
Jerry's to manufacture  its own dessert  mixes.  Ben & Jerry's also has 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




<PAGE>



processes for swirling variegates (dessert sauces) into our finished products.

The Company also makes ice cream novelty  products,  including stick pops, which
Ben & Jerry's  markets as Peace Pops(TM) and Brownie Bars (an ice cream sandwich
type novelty).

Ben & Jerry's  license  agreements  include a license  from the  estate of Jerry
Garcia  formerly of the Grateful  Dead rock group with respect to the  Company's
Cherry Garcia(R) flavor;  political cartoonist Garry Trudeau and Universal Press
Syndicate with respect to the Company's Doonesberry(TM) flavor of the new sorbet
line of  products;  Wavy  Gravy  for the  flavor  Wavy  Gravy;  and  with  Phish
Merchandising,  Inc. with respect to Phish  Food(TM),  a new flavor  launched in
February of 1997.

Manufacturing

The Company manufactures Ben & Jerry's super premium ice cream and frozen yogurt
pints at its  Waterbury,  Vermont  plant.  The Company  generally  operates  its
Waterbury  plant 2  shifts  a day,  six days a week.  The  Company  manufactured
approximately 4.4 million gallons at this facility in 1996.

The Company's Springfield, Vermont plant is used for the production of ice cream
novelties,  bulk ice cream,  frozen  yogurt and sorbet,  and packaged  pints and
quarts.  In 1996 the plant produced  approximately  1.1 million dozen novelties,
2.6  million  gallons of bulk ice cream and frozen  yogurt,  packaged  pints and
quarts.  In 1996, the Company  generally  operated the Springfield plant five to
six days per week, with one or two production shifts depending on the season.

In March 1995,  the Company's  new  manufacturing  plant in St.  Albans  started
manufacturing ice cream on one line using a temporary  nitrogen tunnel hardening
system.  A second line began  operation  in December  1995.  In 1996,  the plant
produced  7.8 million  gallons of  packaged  pints.  The  Company  added a third
manufacturing  line at the plant during 1996. This third line could be converted
to a higher  production  rate,  if  needed,  and  once  converted,  the  maximum
projected  capacity at the St.  Albans plant would be  approximately  17 million
gallons.  The Company started using the third line in the Fall of 1996, however,
the Company  does not expect to utilize all three lines in the plant at the same
time in  order  to meet  demand  in  1997.  Currently  the St.  Albans  plant is
producing ice cream, frozen yogurt and sorbet in packaged pints.




<PAGE>



In order to meet  demand  for its pints  from 1989 to 1995,  the  Company  had a
manufacturing  and warehouse  agreement with Edy's Grand Ice Cream ("Edy's"),  a
subsidiary of Dreyer's Grand Ice Cream, Inc. ("Dreyer's"). Under this agreement,
Edy's manufactured certain pint ice cream and frozen yogurt flavors at its plant
in Fort Wayne, Indiana with specifications and quality control provided by Ben &
Jerry's and using Vermont dairy  products.  This agreement  expired in September
1995. Approximately 1.9 million gallons, or about 16% of the aggregate number of
packaged pints  manufactured in 1995, were manufactured  under this arrangement,
down from approximately 40% in 1994. Commencing in October of 1995 and to date,
all Ben & Jerry's  products  are  manufactured  by the  Company  in the state of
Vermont.

Markets and Customers

The  Company  markets  packaged  pints,  quarts and novelty  products  primarily
through supermarkets,  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  Company-owned) Ben & Jerry's
"scoop shops" and through restaurants.

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

Ben & Jerry's has a  distribution  agreement  with Dreyer's under which Dreyer's
acts as the master  distributor  (with  exclusivity,  in  general,  for sales to
supermarkets  and  similar  accounts)  of Ben & Jerry's  products in most of the
Company's  markets outside of New England,  upstate New York, and  Pennsylvania.
Dreyer's  markets its own premium  ice cream under both the  Dreyer's  and Edy's
brand  names,  as well as,  premium  plus ice cream  under  the  brand  names of
Starbucks  (a product  produced  under a joint  venture  between  Starbucks  and
Dreyer's Grand Ice Cream) and Portofino,  and certain frozen dessert products of
other companies. Dreyer's does not produce or market any other super premium ice
cream, or frozen  yogurt(other  than novelties),  and in the event that Dreyer's
were to distribute another super premium ice cream, or frozen yogurt in any part
of its territory,  Dreyer's would lose the contractual exclusivity granted to it
as a Ben & Jerry's distributor under the agreement.  The agreement also contains
certain  additional  provisions  specific to the greater  metropolitan  New York
market,  including  special  limitations  on the  ability  of  either  party  to
terminate the agreement with respect to the New York market.  In early 1994, the
agreement was amended to provide for the Company to perform the sub-distribution
of Ben & Jerry's products to convenience stores




<PAGE>



and "mom and  pops"  in the New York  City  area.  In  October  1995,  exclusive
distribution  rights  for  the New  York  City  area  were  transferred  back to
Dreyer's.  Net sales to Dreyer's  (including  sales where the Company acted as a
subdistributor  in the New York City area) accounted for  approximately  55% and
47% of the Company's net sales for 1996 and 1995, respectively.

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

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

While the Company  believes that its  relationships  with Dreyer's and its other
distributors  generally have been satisfactory and that these relationships have
been instrumental in the Company's growth,  the Company has at times experienced
difficulties  in  maintaining  these   relationships.   Available   distribution
alternatives  are  limited.  Accordingly,  there can be no  assurance  that such
difficulties, which may be related to actions by the Company's competitors or by
one or more of the distributors  themselves (or their controlling persons), will
not have a material  adverse  effect on the Company's  business.  Loss of one or
more of the Company's principal distributors or




<PAGE>



termination of one or more of the related  distribution  agreements could have a
material adverse effect on the Company's business.

Marketing

Ben & Jerry's  marketing  strategy is  characterized by its focus on innovative,
non-traditional  methods of promotion.  The Company emphasizes the high quality,
natural  ingredients  in its products,  and the "down home Vermont" image of its
products  in  its  packaging,   sales  materials  and   promotional   campaigns.
Significant  prominence  has been given to Ben Cohen and Jerry  Greenfield,  the
founders  of the  Company,  as "two real guys"  still  actively  involved in the
Company.  Pictures of Ben and Jerry appear on packaging,  and they make personal
appearances on TV, radio and at select marketing events.

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

During 1996,  the Company  created and  produced  Ben & Jerry's "One World,  One
Heart" Festivals in Vermont and Minneapolis. The Company also sponsors the Ben &
Jerry's Newport Folk Festival in Newport,  Rhode Island. These events,  attended
by over 50,000 people in outdoor public areas  generated  lots of goodwill,  ice
cream sampling and social activism,  while building customer loyalty and support
for the Company's products in the future.

Ben & Jerry's  continues to conduct  guided tours of its facility in  Waterbury,
Vermont. In 1996, approximately 300,000 people visited the plant, making it (the
Company believes) the single most popular tourist attraction in the State.

Franchise  shops are an integral  part of the  Company's  marketing  efforts and
their  activity  on the local  level  contributes  to the  Company's  three part
mission.  A  franchise  is  required  to spend at least 4% of its gross sales on
community/self  directed marketing,  sampling,  advertising and participation in
certain Ben & Jerry's selected  promotions.  The Company introduced its new line
of six innovative  sorbet flavors made with all natural  ingredients and Vermont
Pure(TM) Spring Water by offering  consumers 1 million free samples during March
and April 1996.  Samples  were also  offered at all  franchised  scoop shops and
given away during sampling sessions  scheduled in target markets  throughout the
country.




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Franchise Program

As of December 28, 1996,  there were 137 North  American  franchise  scoop shops
compared to 132 scoop shops and satellites for the year ended December 30, 1995.
These numbers do not include 3 Company owned stores in 1996.  The franchise
scoop shops are located in 24 states.  The Company also has 11  franchise  scoop
shops in Israel and 3 in the Netherlands.

During  1996,  the  Company  opened  21  additional  franchise  scoop  shops and
satellites  including one Partnershop,  and closed 16 scoop shops and satellites
including 2  Partnershops.  These scoop shops have been opened under  existing
Development  Agreements,  and Single Store  Agreements.  Development  Agreements
require a franchisee to develop a particular number of units annually  according
to the terms of their  Agreement.  Partnershops  are  arrangements  that  permit
non-profit  organizations  to own  scoop  shops  which  serve  as an  employment
resource and  potentially  a source of revenue for the  non-profit  groups.  The
Company  waives the normal  franchise  fee of $25,000 in addition  to  providing
expertise in the start-up and operation of the Partnershops.

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

International

The Company regularly investigates the possibilities of entering new markets. In
March 1994,  the Company  started  shipping  its  products to smaller  specialty
stores  in the  United  Kingdom.  Ben &  Jerry's  ice  cream  products  are  now
distributed  nationally  in the United  Kingdom,  and are  available in parts of
Ireland, France, Canada and the Netherlands.



In 1990,  the  Company  entered  into a joint  venture  agreement  with  certain
individuals   in  the  former   Soviet  Union  to  establish  a  Ben  &  Jerry's
manufacturing  facility and  franchised  "scoop  shops" in the Russian  state of
Karelia.  The  Company's  goal was to provide a model of a small  scale  private
enterprise in the former Soviet Union and to foster international




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cooperation  and global  understanding.  In February of 1997 Ben & Jerry's began
the process of transferring all of its stock in Ben & Jerry's (Iceverk), the ice
cream business it started, to the city of Petrosovosk. This enabled the business
to be 100% owned by the local  community in the city of  Petrosovosk  within the
state of  Karelia,  the  Sister  State of  Vermont.  All  rights to use of Ben &
Jerry's  trademarks in the former Soviet Union will be terminated as of the date
of the  stock  transfer.  At the  date  of this  filing  this  transfer  was not
complete.

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

Competition

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

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

During  1996,  the Company  noted that the premium  category  again  experienced
increased  promotional  activity  driven  by the  national  competition  between
Dreyer's  Grand Ice  Cream,  Inc.,  the  Company's  principal  distributor,  and
Breyer's Ice Cream (owned by Unilever,  a large international food company).  In
accordance  with Dreyer's  strategic  five year plan to accelerate  the sales of
their branded  premium  products  Dreyer's has increased its consumer  marketing
efforts and continued  expansion of its distribution system into additional U.S.
markets.  In addition,  Dreyer's has  introduced two premium plus brands under
the Starbuck's and Portofino brands.




<PAGE>




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,
competition for adequate  distribution and limited shelf space within the frozen
dessert category in supermarkets and other food retail outlets.

Seasonality

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

Regulation

The Company is subject to regulation by various governmental agencies, including
the United  States Food and Drug  Administration  and the Vermont  Department of
Agriculture.  It must also obtain  licenses  from the states where Ben & Jerry's
products are sold. The criteria for labeling  low-fat/low-cholesterol  and other
health-oriented  foods  was  revised  in 1994,  and in some  respects  made more
stringent,  by the FDA. The Company,  like other companies in the food industry,
made  changes  in its  labeling  in  response  to  these  regulations  and is in
compliance.  The Company cannot predict the impact of possible  further  changes
that it may be required to make in response to  legislation,  rules or inquiries
made from time to time by any  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 Vermont  environmental laws and regulations  relating to air quality,  waste
management, and other related land use matters. The Company maintains wastewater
discharge  permits for all of its manufacturing  locations.  The Waterbury plant
pre-treats production effluent prior to discharge to the municipal treatment
facility.  The Company believes that it is in compliance with




<PAGE>



all of the required operational permits relating to
environmental regulations.

The Company believes that it is in compliance in all material  respects with the
other regulatory  requirements  applicable to its operations and that continuing
expenditures for compliance with environmental or other regulatory  requirements
will not materially affect its results.

Trademarks

The name Ben & Jerry's(R) and the proprietary  flavor names:  Cherry  Garcia(R);
Chunky  Monkey(R);  Chubby  Hubby(R) and  Dastardly  Mash(R) are all  registered
trademarks of the Company.  Cherry  Garcia(R),  Phish  Food(TM),  Wavy Gravy and
Doonesberry(TM)  are  licensed  to the  Company.  Some  of the  Company's  other
trademarks include: New York Super Fudge Chunk(TM);  Peace Pops(TM); Hunka Hunka
Burning Fudge(TM);  Cool Britannia(TM);  World's Best(TM);  Vermont's Finest(TM)
and One World One Heart(TM).

Employees

At December 28, 1996,  Ben & Jerry's  employed 708 people  including  full time,
part time and temporary  employees.  This represents a .4% increase from the 703
people employed by the Company at December 30, 1995.

The Ben & Jerry's Foundation

In 1985,  Ben  Cohen,  Chairperson  of the Board,  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.  Until March 1994,  the Foundation was the
recipient  of the  bulk  of the  Company's  charitable  cash  contributions  and
provided the  principal  means for carrying out the  Company's  charitable  cash
giving policy.  In March 1994, the Board of Directors of the Company revised the
process to make philanthropic  giving more meaningful for, and connected to, the
employees  of the  Company.  Employees  serving in  Community  Action  Teams now
provide the  principal  means for carrying  out the  Company's  charitable  cash
giving policy in the State of Vermont.  The  Foundation,  with its  employee-led
grant  making  committee,  provides  the  principal  means for  carrying out the
Company's  charitable  cash  giving  policy  across the nation.  The  Foundation
continues to target its grants to small grass roots social change organizations.





<PAGE>



In October 1985, pursuant to stockholder authorization,  the Company issued to
the Foundation  all of the 900  authorized  shares  of  Preferred  Stock valued
at $10 per share.  The 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 and Preferred
Stock

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

The Company has been advised that Mr. Ben Cohen  (Chairperson  and a director of
the  Company),  Mr. Jerry  Greenfield  (Vice  Chairperson  and a director of the
Company),  Mr. Fred Lager (a director and formerly a consultant  to 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 four directors
who are Principal  Stockholders.  See "Security  Ownership of Certain Beneficial
Owners and  Management."  As of March 7, 1997,  these four principal  individual
stockholders  held shares  representing  48.5% of the aggregate  voting power in
elections  of  directors  and  various  other  matters  but only  19.94%  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




<PAGE>



they might sell substantial portions of their Class A Common Stock.

The Board of Directors,  without further stockholder approval, may authorize the
issuance of additional authorized but unissued shares of Class B Common Stock in
the  future  and  sell  shares  of Class B Common  Stock  held in the  Company's
treasury;  however,  issuance  or sale of  additional  shares  of Class B Common
Stock, which was not permitted under a rule of the NASDAQ-NMS until 1995, is now
permitted subject to approval under limited circumstances by the NASDAQ-NMS.

In 1985,  Ben  Cohen,  Chairperson  of the  Board,  contributed  900  shares  of
Preferred Stock to The Ben & Jerry's Foundation,  Inc. While the Foundation is a
charitable  entity legally separate from the Company,  it may be deemed to be an
affiliate of the Company because all of the current directors of the Foundation,
Messrs.  Greenfield  and  Furman and Ms.  Bankowski  are also  directors  of the
Company.  The Preferred  Stock gives the Foundation a special class voting right
to act  with  respect  to  certain  Business  Combinations  (as  defined  in the
Company's  charter). The issuance of  the  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.

The  Class  B  Common  Stock  and  the  Preferred  Stock  may  be  deemed  to be
"anti-takeover" devices 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,  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.















<PAGE>




Item 2.         Properties

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  also  owns a 48,000  square-foot  production  facility  in
Springfield,  Vermont.  The Springfield  plant is used for the production of ice
cream  novelties,  bulk ice cream and frozen yogurt and at times  packaged pints
and quarts.

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

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

In 1992,  the Company  entered into a five-year  lease/purchase  agreement for a
42-acre parcel of land in St. Albans,  Vermont, the site of the Company's 92,000
square-foot  production facility.  The Company anticipates that this parcel will
be purchased in 1997.

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 now  located,  following  the  1996  move  from  its  Waterbury
headquarters.

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

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















<PAGE>




Item 3.  Legal Proceedings

On December 14, 1995, the Company was served with a class action complaint filed
in federal court in  Burlington,  Vermont.  The  complaint,  captioned  Henry G.
Jakobe,  Jr. v. Ben & Jerry's Inc., et al.,  United  States  District  Court (D.
Vermont)  Case No.  1-95-CV-373,  was  filed by a Ben & Jerry's  shareholder  on
behalf  of  himself  and  purportedly  on  behalf  of all  other  Ben &  Jerry's
shareholders  who  purchased  the common stock of the Company  during the period
from March 25, 1994  through  December  19,  1994.  Plaintiff  alleges  that the
Company  violated  the  federal  securities  laws by  making,  in  1994,  untrue
statements  of material  facts and omitting to state  material  facts  primarily
concerning  the  Company's  construction  and start-up of its new  manufacturing
facility in St. Albans,  Vermont.  Also named as defendants in the Complaint are
certain present and former  officers and directors of the Company.  Plaintiff is
seeking an unspecified amount of monetary damages.

On October  31,  1996 the Court  dismissed  all but one of  Plaintiff's  claims.
Pretrial discovery has commenced.

While this action is in its preliminary stages, management believes, based on an
initial review,  the  allegations  made in the lawsuit are without merit and the
Company intends to defend the lawsuit vigorously.

The  Company  is  subject to  certain  additional  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 1996.




















<PAGE>




                                                    PART II

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

The  Company's  Class A Common  Stock is traded on the  NASDAQ  National  Market
System under the symbol  BJICA.  The  following  table sets forth for the period
January 1, 1995 through  March 7, 1997 the high and low closing  sales prices of
the Company's Class A Common Stock for the periods indicated.
                                                High             Low

1995
         First Quarter......................     $14              $ 9 5/8
         Second Quarter.....................      15 1/2           11 3/4
         Third Quarter......................      20               13 5/8
         Fourth Quarter.....................      19               14 1/2
1996

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

1997

         First Quarter(through March 7, 1997)   $14 3/8           10 7/8

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

As of March 7, 1997 there were 10,991 holders of record of the Company's Class A
Common Stock and 2,329 holders of record of the Company's Class B Common Stock.











<PAGE>




Item 6.         Selected Financial Data

The following table contains  selected  financial  information for the Company's
fiscal years 1992 through 1996.

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

                                                            Fiscal Year
                                  ------------------------------------------------------------ 
                                      1996         1995         1994         1993        1992
                                      ----         ----         ----         ----        ----

<S>                               <C>          <C>          <C>          <C>         <C>      
Net sales .....................   $ 167,155    $ 155,333    $ 148,802    $ 140,328   $ 131,969

Cost of sales .................     115,212      109,125      109,760      100,210      94,389
Gross profit ..................      51,943       46,208       39,042       40,118      37,580
Selling, general
   and administrative
   expenses ...................      45,531       36,362       36,253       28,270      26,243

Asset write-down ..............       6,779
Other income
 ...(expense)--net .............         (77)        (441)         228          197         (23)
Income(loss) before
   income taxes ...............       6,335        9,405       (3,762)      12,045      11,314
Income taxes
(benefit) .....................       2,409        3,457       (1,893)       4,844       4,639

Net income(loss) ..............       3,926        5,948       (1,869)       7,201       6,675

Net income(loss) per
common share(1)................   $    0.54    $    0.83    $   (0.26)   $    1.01   $    1.07

Weighted average
   common and common
   equivalent shares
   outstanding(1)..............       7,230        7,222        7,148        7,138       6,254

Balance Sheet Data:
                                                             Fiscal Year
                                  ------------------------------------------------------------ 
                                       1996         1995         1994         1993        1992
                                  ---------    ---------    ---------    ---------   ---------
Working capital ...............   $  50,055    $  51,023    $  37,456    $  29,292   $  18,053
Total assets ..................     136,665      131,074      120,296      106,361      88,207
Long-term debt ................      31,087       31,977       32,419       18,002       2,641
Stockholders' equity(2)........      82,685       78,531       72,502       74,262      66,760




--------
<FN>
(1) The per share amounts and average shares  outstanding have been adjusted for
the effects of all stock  splits,  including  stock  splits in the form of stock
dividends.

(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.
</FN>
</TABLE>



<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.



                                      Percentage of Net Sales
                                      -----------------------
                                           Fiscal Year
                                           -----------

                                     1996      1995      1994
                                     ----      ----      ----
                                                             
Net sales ....................      100.0 %   100.0 %   100.0  %
Cost of sales ................       68.9      70.2      73.8
                                     ----      ----      ----
Gross profit .................       31.1      29.8      26.2
Selling, general
     and administrative
     expense .................       27.2      23.4      24.4
Asset write-down .............                           (4.6)
Other income
     (expenses) ..............        0.1      (0.4)      0.2
                                      ---      ----       ---
Income(loss)before
     income taxes ............        3.8       6.0      (2.6)
Income taxes(benefit) ........        1.5       2.2      (1.3)
                                      ---       ---      ---- 
Net income(loss) .............        2.3 %     3.8 %    (1.3) %
                                      ===       ===      ====   
                                                              


Sales

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

Pint sales  represented  approximately  85% of total net sales in 1996, 1995 and
1994. Net sales of 2 1/2 gallon bulk containers  represented  approximately 7.0%
of total net sales in 1996, 1995 and 1994. Net sales of novelties  accounted for
approximately  6.0% of total  net sales in 1996 and  1995,  and 5% in 1994.  Net
sales from the Company's  retail stores  represented  2.0% of total net sales in
1996 and 1995 and 3% in 1994.

Net sales in 1995  overall  increased  4.4% to $155 million from $149 million in
1994.  Pint volume  decreased  1.5% compared to 1994.  This volume  decrease was
offset by a 3.7% price  increase  of pints sold to  distributors  that went into
effect  in  March  1995.  Net  sales of both  novelties  and  21/2  gallon  bulk
containers had modest increases in 1995.






<PAGE>




Cost of Sales

Cost of sales in 1996 increased approximately $6.1 million or 5.6% over the same
period in 1995 and overall gross profit as a percentage  of net sales  increased
from 29.8% in 1995 to 31.1% in 1996.  The higher gross profit as a percentage of
sales in 1996 is due to the price  increase  effective  in August 1996  combined
with improved inventory management and production efficiencies, as compared with
1995.  The impact of increased  dairy raw material  costs was offset by improved
manufacturing expenses. If the trend of rising dairy prices continues,  there is
the  possibility  that these costs will not be passed on to consumers which will
negatively  impact  future  gross  profit  margins.  See the Risk Factors in the
"Forward-Looking  Statements"  section.  In addition,  the improved gross margin
reflects the impact of the termination of the  manufacturing  agreement  between
the Company and Edy's Grand Ice Cream, a subsidiary of Dreyer's Grand Ice Cream.
This production was
transferred to the Company's  manufacturing  facility in St. Albans,  Vermont in
the third quarter of 1995.  Approximately 16% of the packaged pints manufactured
by the Company in 1995 were produced by Edy's.

Cost of sales in 1995 decreased  approximately $.6 million or 0.6% over the same
period in 1994 and overall gross profit as a percentage  of net sales  increased
from 26.2% in 1994 to 29.8% in 1995.  The higher gross profit as a percentage of
sales in 1995 is due to the price increase effective in March 1995 combined with
improved  inventory  management  and production  efficiencies,  as compared with
1994. In addition,  the improved gross margin reflects less product manufactured
for the Company by Edy's Grand Ice Cream,  a  subsidiary  of Dreyer's  Grand Ice
Cream,   resulting  from  the  transfer  of  production  to  the  Company's  new
manufacturing facility in St. Albans,  Vermont. During 1995 approximately 16% of
the packaged pints manufactured by the Company were produced by Edy's,  compared
to 40% in 1994.

Selling, General and Administrative Expenses

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

Selling,  general and administrative expenses increased 0.3% to $36.4 million in
1995 from $36.3 million in 1994 but decreased




<PAGE>



as a percentage of net sales to 23.4% in 1995 from 24.4% in 1994.  This increase
in  dollar  spending   primarily   reflects   strengthening   of  the  Company's
infrastructure  in order to prepare for  increased  growth,  offset by the lower
level of marketing and sales spending  compared to 1994,  when the launch of the
new "Smooth, No Chunks" line occurred.

Asset Write-Down

1994 results included a pretax charge of $6.8 million, representing a write-down
of  certain  assets  of the  Company's  St.  Albans,  Vermont  plant.  Following
substantial  delays with the  implementation and completion of certain automated
handling  processes and refrigeration  hardening  equipment of the new plant and
after receipt of a report from an outside  engineering  firm  experienced in the
refrigerated  food  industry,  the  Company  decided to  replace  certain of the
software and equipment installed at the new plant. The charge included a portion
of the previously  incurred  capitalized  interest and project management costs.
The impact of this  charge on both the 1994  fourth  quarter  and full year 1994
results was $4.1 million or $0.57 per share.

The Company began manufacturing at the St. Albans plant in March 1995, utilizing
a temporary  set-up on one production line. Two  manufacturing  lines were fully
operational in December 1995.

Other Income(Expense)

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

Interest income  increased $0.6 million during 1995 compared to 1994,  primarily
due to higher interest rates on  investments.  Interest  expense  increased $1.2
million  in 1995  compared  to 1994.  This  increase  was due  primarily  to the
capitalization  of  interest  in the  prior  year as part of the cost of the new
plant in St.  Albans,  Vermont as compared with  capitalization  of only a small
amount of interest in 1995 before the plant became operational.

Income Taxes

The Company's effective income tax rate increased from 36.8% in 1995 to 38.0% in
1996 reflecting higher state income taxes and




<PAGE>



lower income tax credits partially offset by increased tax-exempt interest.  The
Company's  effective  income tax rate increased from (50.3%) in 1994 to 36.8% in
1995  primarily  reflecting the profit in 1995, as compared to the loss in 1994,
combined with lower income tax credits and tax-exempt interest income in 1995 as
compared to 1994.  Management expects 1997's effective income tax rate to remain
at approximately 38.0%.

Net Income

As a result of the foregoing,  net income decreased $2.0 million to $3.9 million
in 1996 compared to $5.9 million in 1995 and a net loss of $1.9 million in 1994.
Net  income(loss) as a percentage of net sales was 2.3% in 1996 compared to 3.8%
in 1995 and (1.3%) in 1994.

The Company  announced on March 20, 1997 that the Company expects a net loss for
the first quarter of 1997. The Company  anticipates this lost to be in the range
of $.12 to $.15 per share.

The Company  expects to report a decrease  in net sales in the first  quarter of
1997 of approximately  5-7% as compared to the first quarter of 1996. This sales
decline,  coupled with planned reduced  production  levels designed to lower the
Company  inventories,  significantly  reduced the Company's gross margins in the
first  quarter of 1997.  In addition,  increased  commodity  costs  continued to
negatively   impact  the   Company's   gross   margin.   Selling,   general  and
administrative  expenses are expected to be higher than in the first  quarter of
1996 due primarily to higher European  marketing and selling expenses.  Although
financial  results  are  disappointing,  the  Company  anticipates  a return  to
profitability for the remainder of 1997.

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  costs.  See the  Risk  Factors  in the
"Forward-Looking  Statements"  section.  Management believes that the effects of
inflation  and  changing  prices were  successfully  managed in 1996,  with both
margins  and  earnings  being   protected   through  a  combination  of  pricing
adjustments, cost control programs and productivity gains.






<PAGE>




Liquidity and Capital Resources

As of  December  28,  1996  the  Company  had  $36.1  million  of cash  and cash
equivalents,  an increase of $700,000 since December 30, 1995. Net cash provided
by operations  in 1996 was  approximately  $14.3  million.  Approximately  $12.3
million was used for net additions to property,  plant and equipment,  primarily
for  equipment  upgrades  in  Waterbury,  and  Springfield,  relocation  to  and
renovation of the new corporate  headquarters in South  Burlington,  Vermont and
capital  expenditures  for the  installation  of a third  production line at the
plant in St.
Albans, Vermont.

Inventories  increased  from $12.6 million at December 1995, to $15.4 million at
December  28,  1996.  The  increase  in  inventory   resulted  from  lower  than
anticipated  sales in the  second  half of  1996.  Management  plans  to  reduce
inventories  in 1997.  Accounts  receivable  has  decreased  $3.0 million  since
December 30, 1995 to $8.7 million from $11.7 million at December 30, 1995.  This
decrease  in  accounts  receivable  is due to the  timing of sales in the fourth
quarter of 1996 compared to 1995. The Company anticipates  capital  expenditures
in 1997 of  approximately  $8.0 million.  Substantially  all of these additional
projected capital  expenditures relate to equipment upgrades and enhancements at
the Company's manufacturing plants in Waterbury,  Springfield and St. Albans, as
well as  additional  research  &  development  equipment  and  computer  related
expenditures.

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

On December 29, 1995, the Company extended two line of credit agreements, for an
aggregate of $20 million, with The First National Bank of Boston and Key Bank of
Vermont.  These unsecured  agreements  provide for borrowings from time to time,
and unless further  extended,  expire  September 29, 1998 and December 29, 1998,
respectively.  The agreements specify interest at either the banks' Base Rate or
the  Eurodollar  rate plus a maximum of 1.25%.  As of March 28,  1997 there have
been no  borrowings  under  these lines of credit.  Management  intends to renew
these line of credit agreements.

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






<PAGE>




Forward-Looking Statements

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

Risk Factors

Dependence on Independent  Ice Cream  Distributors.  The Company is dependent on
maintaining  satisfactory  relationships with independent ice cream distributors
that now generally act as the Company's exclusive or master distributor in their
assigned territories. While the Company believes its relationships with 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.   Available   distribution
alternatives  are  limited.   Accordingly,   there  can  be  no  assurance  that
difficulties  in  maintaining  relationships  with  distributors,  which  may be
related  to  actions  by the  Company's  competitors  or by one or  more  of the
Company's distributors  themselves (or their controlling persons), will not have
a material adverse effect on the Company's business.  The loss of one or more of
the  Company's  principal  distributors  or  termination  of one or  more of the
related  distribution  agreements  could have a material  adverse  effect on the
Company's business. See "Business - Markets and Customers."

Growth in sales and earnings.  In 1996, net sales of the Company  increased 7.6%
to $167 million from $155 million in 1995.  Pint volume  increased 2.6% compared
to 1995.  The super premium ice cream,  frozen yogurt and sorbet  category sales
remained flat in 1996 as compared to 1995.  Given these overall  domestic  super
premium industry trends, the successful  introduction of innovative flavors on a
periodic  basis has become  increasingly  important  to any sales  growth by the
Company.  Accordingly,  the  future  degree of market  acceptance  of any of the
Company's new products,  which will be accompanied by promotional  expenditures,
is likely to have an important impact on the Company's 1997 and future financial
results. See "Management's




<PAGE>



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

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

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

The  Company's  Social  Mission.  The  Company's  basic  business  philosophy is
embodied in a three-part "mission  statement," which includes a "social mission"
to "operate the Company...[to]  improve the quality of life of our employees and
a broad community: local, national and international." The Company believes that
implementation  of its social  mission,  which is integrated  into the Company's
business,  has been beneficial to the Company's overall  financial  performance.
However,  it is possible  that at some  future date the amount of the  Company's
energies  and  resources  devoted  to its social  mission  could have a material
adverse financial effect on the Company's business.  See  "Business-History  and
Philosophy of the Company" and "Business-Marketing."





<PAGE>



International.  The Company's  principal  competitors  have  substantial  market
shares in various  countries outside the United States,  principally  Europe and
Japan. The Company sells product in Canada, the United Kingdom,  Ireland, France
and the  Netherlands,  in addition to Israel under a licensing  agreement but is
investigating the possibility of further international expansion. However, there
can be no  assurance  that the Company  will be  successful  in  entering,  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,
entitled,  except to the  extent  otherwise  provided  by law,  to ten votes per
share. Ben Cohen, Jerry Greenfield, Fred Lager and Jeffrey Furman (collectively,
the "Principal  Stockholders")  hold shares  representing 48.5% of the aggregate
voting power in elections for directors,  permitting them as a practical  matter
to elect all members of the Board of Directors and thereby  effectively  control
the  business,  policies  and  management  of  the  Company.  Because  of  their
significant  holdings of Class B Common Stock,  the Principal  Stockholders  may
continue to exercise this control even if they were to sell substantial portions
of their Class A Common  Stock.  See "Security  Ownership of Certain  Beneficial
Owners and Management."

In  addition,  the  Company has issued all of the  authorized  Class A Preferred
Stock to the Foundation.  All current  directors of the Foundation are directors
and/or  employees of the Company.  The  Preferred  Stock gives the  Foundation a
special class voting right to act with respect to certain Business  Combinations
(as defined in the Company's  charter) and 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
such Business Combinations. See "Business- The Ben & Jerry's Foundation."

While  the Board of  Directors  believes  that the Class B Common  Stock and the
Preferred  Stock are important  elements in keeping Ben & Jerry's an independent
Vermont-based  business, the Class B Common Stock and the Preferred Stock may be
deemed  to be  "anti-takeover"  devices  (and  thus  may be  deemed  to have the
potential  for  adverse  consequences  on the  business)  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.






<PAGE>



Item 8.         Financial Statements and Supplementary Data

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

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

Not applicable.





<PAGE>








                                                   PART III

Item 10.  Directors and Executive Officers of the Company

Directors and Executive Officers

The directors and executive officers of the Company are as
follows:
Name                               Age                     Office
----                               ---                     ------
Ben Cohen............              45      Chairperson and Director
Perry Odak...........              51      Chief Executive Officer and Director
Jerry Greenfield.....              45      Vice Chairperson and Director
Elizabeth Bankowski..              49      Director and Director of Social
                                           Mission
Jeffrey Furman.......              53      Director
Fred Lager...........              42      Director
Frederick A. Miller..              50      Director
Henry Morgan.........              71      Director
Jennifer Henderson...              43      Director
Robert Holland,Jr....              56      Director
Bruce Bowman.........              44      Senior Director of Operations and
                                           Chief Operating Officer
Frances Rathke.......              36      Chief Financial Officer
                                           and Secretary

All directors hold office until the June 28, 1997 annual meeting of stockholders
of the Company and until their  successors are elected and qualified.  The Board
of  Directors  has an  Audit  Committee  on  which  Messrs.  Morgan,  and  Lager
(Chairperson)  serve and a  Workplace/Compensation  Committee  on which  Messrs.
Morgan (Chairperson),  Lager, Miller and Ms. Henderson serve. The Board also has
both a  Nominating  Committee  on which  Messrs.  Cohen  (Chairperson),  Furman,
Holland,  Greenfield and Ms. Bankowski serve, and a Social Mission  Committee on
which Messrs.  Miller  (Chairperson),  Furman, Cohen, Holland, Ms. Henderson and
Ms.  Bankowski  serve.  Officers  serve until their  successors  are elected and
qualified.

Ben Cohen,  a founder of the Company,  has served as Chairperson of the Board of
Directors  since February 1989. From January 1, 1991 through January 29, 1995 he
was the Chief Executive Officer of the Company. Mr. Cohen has been a director of
the Company since 1977. Mr. Cohen is a director of Community  Products,  Inc., a
manufacturer of Rain Forest Crunch candy,  Blue Fish Clothing,  Inc., and Social
Venture Network.

Perry Odak,  has served as the Chief  Executive  Officer since January 1997. Mr.
Odak started his career on the food side of Armour-Dial, Inc., was later part of
the start-up  team at Jovan,  Inc.  and as  President of the Consumer  Group for
Atari, Inc. At Jovan he was General Manager of this $150 million




<PAGE>



company overseeing sales, marketing,  operations and distribution.  In 1983 Odak
became a partner at Catalyst  Technologies  where he started and launched  ETAK,
Inc., the first vehicle navigation system. In 1990 Mr. Odak began his consulting
career which took him to several companies including Sudbury,  Inc.,  Investcorp
International,  Color Tile, Graham Packaging and U.S.  Repeating Arms Co.. While
at  Investcorp,  Mr. Odak  developed  and  executed a  successful  strategy  for
Dellwood  Foods,  a large dairy that  included a buy out and merger with Tuscan,
the largest dairy in metropolitan New York.

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

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

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

Fred Lager has served as director of the Company since 1982.  From 1989 to 1991,
Mr.  Lager was  President  and Chief  Executive  Officer  of the  Company.  Most
recently,  from 1991 to July,  1996, Mr. Lager was a consultant for the Company.
Mr.  Lager is a director  of Working  Assets  Funding  Service  and Whole  Foods
Market, Inc.

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.  He is also a
director of  Cambridge  Bancorporation,  Shorebank  Development  Bancorporation,
Southern Development Bancorporation and Cleveland Development Bancorporation.

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.





<PAGE>



Robert Holland, Jr. served as President and Chief Executive Officer from January
1995 to October 31,  1996.  Mr.  Holland has served as a director of the Company
since March 1995.  Prior to this, Mr.  Holland  served as Chairperson  and Chief
Executive Officer of ROHKER-J, a consulting firm for Fortune 500 companies since
1991. Mr. Holland is Chairperson of the Board of Trustees at Spelman College,  a
trustee of Atlanta  University  Center and Mutual of New York and is a member of
the Board of Directors of Frontier Corporation,  TrueMark Manufacturing Company,
the Harlem Junior Tennis Program and AC Nielsen Corporation.

Bruce Bowman has served as Senior  Director of Operations  since August 1995 and
Chief  Operating  Officer since October 31, 1996.  Prior to this, Mr. Bowman was
Senior Vice President of Operations at Tom's Foods,  Inc., a food  manufacturing
company from April 1991 until August 1995.

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




<PAGE>








Item 11.  Executive Compensation

Summary Compensation Table

The  following  table sets forth the cash  compensation  paid by the  Company in
Fiscal Years 1994 - 1996 as well as certain other  compensation paid, awarded or
accrued for those years to the Company's Chief Executive  Officer (Ben Cohen was
CEO prior to Robert Holland's  election in January 1995) and the Company's other
executive  officers  during the 1996 fiscal year whose total  salary and bonuses
exceeded  $100,000.  Perry Odak became the Chief Executive Officer on January 1,
1997.

<TABLE>
                                                               Long-Term Compensation
                                                               ----------------------
                        Annual Compensation                    Awards                Payouts
                        ----------------------------------------------------------------------

                                                     Other                Securities                  All
Name and                                             Annual    Restricted Underlying                 Other
Principal                                            Compen-     Stock     Options/   LTIP         Compen-
Position                 Year     Salary   Bonus(2)  sation(4)  Awards(3)   SARS(6)   Payouts     sation(5)
--------                 ----     ------   --------  ---------  ---------   -------   -------     ---------

<S>                      <C>    <C>        <C>        <C>        <C>       <C>                    <C>     
Ben Cohen(1)...........  1996   $149,664       --                                                 $  3,017
Chairperson ...........  1995   $132,500       --                                                 $  2,195
and CEO ...............  1994   $132,500       --                                                 $  2,650       

Jerry Greenfield ......  1996   $149,664       --                                                 $  3,017
Vice Chairperson ......  1995   $132,500       --                                                 $  2,195
                         1994   $132,745       --                                                 $  2,655

Robert Holland, Jr ....  1996   $250,000   $100,000                                               $272,948
CEO, President and ....  1995   $225,962   $100,000                        $80,000                   --
Director

Bruce Bowman ..........  1996   $169,231   $ 20,000                        $10,000                $  1,099
Senior Director of ....  1995   $55,385     $40,000                        $25,000                   --
Operations and COO

Katherine Greenleaf ...  1996   $156,934       --                          $25,000                   --        
Senior Director
of People

Frances Rathke ........  1996   $145,385       --                                                 $  2,928
CFO and ...............  1995   $125,000   $  1,281                        $30,000                $  2,260
Secretary .............  1994   $121,398   $    611                                               $  2,440

Elizabeth Bankowski ...  1996   $125,000       --                          $20,000                $  2,267
Director of Social ....  1995   $125,000   $    745   $ 14,341   $ 21,360  $ 5,000                $  2,267
Mission Development ...  1994   $115,803   $    328                                               $  2,323


<FN>

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

(2)  "Bonus"  includes  discretionary  distributions  under the Company's profit
     sharing  plan  pursuant to which a cash bonus was awarded to all  employees
     (other  than  co-founders,  Ben  Cohen  and Jerry  Greenfield,  CEO  Robert
     Holland,  and Senior Director of Operations  Bruce Bowman,  and starting in
     1996 Frances Rathke,  Elizabeth Bankowski and Katherine Greenleaf).  Robert
     Holland was awarded a bonus in accordance  with his employment  contract of
     $100,000  for the years 1995 and 1996.  Bruce Bowman was awarded a bonus in
     accordance  with his employment  contract of $40,000 in 1995 and $20,000 in
     1996.

(3)  "Restricted Stock Awards" includes  restricted stock awards of 2,000 shares
     made in 1995. No other restricted  stock awards were made in 1994-1996,  or
     are outstanding. Award was vested at date of grant.


--------






(4)  "Other  Annual   Compensation"   consists  of  gross-up  payments  for  tax
     liabilities incurred on the restricted stock award granted in 1995.

(5)  "All Other Compensation" includes Company contributions to 401(K) plans and
     in 1996 includes severance payments payable monthly through January 1998 to
     Robert Holland,  Jr. under the Amended  Employment  Agreement dated October
     31, 1996 in the amount of $270,833. .

(6)  "Securities  Underlying  Options/SAR"  after giving effect to Mr. Holland's
     Amended Employment Agreement dated October 31, 1996.
</FN>
</TABLE>

Option/SAR Grants in 1996
<TABLE>

                                                                                               Potential
                                                                                              Realizable
                                                                                               Value at
                                          Percentage                                        Assumed Annual
                                           of Total                                            Rates of
                                           Options/                                           Stock Price
                                             SARS           Exercise                         Appreciation
                            Options/      Granted to           or                           for Option Term
                            SARS           Employees       Base Price    Expiration
                            Granted         in 1996        (per share)      Date               5%            10%
                            -------         -------        -----------      ----               --            ---
<S>                           <C>            <C>            <C>            <C>            <C>           <C>
Ben Cohen                         0             0                0                0             0              0
Jerry Greenfield                  0             0                0                0             0              0
Robert Holland, Jr.               0             0                0                0             0              0
Bruce Bowman                 10,000          16.0%          $12.38         10/22/06       $77,857       $197,305
Katherine Greenleaf          25,000          40.0%           14.75          4/14/06       231,905        587,693
Frances Rathke                    0             0                0                0             0              0
Elizabeth Bankowski          20,000          32.0%           12.38         10/22/06       156,000        394,611
</TABLE>

Aggregated Option/SAR Exercises in 1996 and 1996 Year-End
Option/SAR Values
<TABLE>

                        Shares
                       Acquired                                                  Value of Unexercised
                          on                    Number of Unexercised            In-The-Money Options/
                       Exercise    Value       Options/SARS at 12/28/96            SARS at 12/28/96
                                               ------------------------            ----------------
                          (#)   Realized     Exercisable    Unexercisable    Exercisable Unexercisable
                          ---   --------     -----------    -------------    -------------------------

<S>                       <C>        <C>      <C>               <C>              <C>            
Ben Cohen                 0          0             0                 0                 0           ---
Jerry Greenfield          0          0             0                 0                 0           ---
Robert Holland, Jr.       0          0        80,000                 0           $45,400           ---
Bruce Bowman              0          0             0            35,000                 0           ---
Katherine Greenleaf       0          0             0            25,000                 0           ---
Frances Rathke            0          0         5,593            25,592            $3,750           ---
Elizabeth Bankowski       0          0         5,485            20,485            $3,750           ---
</TABLE>

Directors who are not employees or full-time  consultants of the Company receive
an annual  retainer  fee of  $9,000,  in  addition  to a $750 per board  meeting
attendance fee, and reimbursement of reasonable out-of-pocket expenses.

The Company has also adopted the 1995  Non-Employee  Directors Plan for Stock in
lieu of  Directors  Cash  Retainer  under which  directors  may elect to be paid
annually,  in lieu of the cash  retainer  for Board  services,  shares of common
stock having a fair market value (as of the date of payment) equal to the amount
of such annual retainer.  This plan was not implemented with respect to the year
1995. On September 19, 1996,  four  non-employee  directors,  Henry Morgan,  Jon
Katzenbach, Frederick A. Miller, and Jennifer Henderson each received 524 shares
of stock in lieu of the cash retainer for the period October 1996




<PAGE>



through June of 1997 under the 1995 Non-Employee Directors'
Plan for Stock in Lieu of Directors' Cash Retainer Plan.

Item 12.         Security Ownership of Certain Beneficial Owners and
Management

The  following  table sets forth  certain  information  as of March 7, 1997 with
respect to the beneficial  ownership of the outstanding shares of Class A Common
Stock,  Class B Common Stock and  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 Class A Common  Stock,  Class B Common  Stock or
Preferred  Stock,  (ii) each  director  and  executive  officer  of the  Company
individually,  (iii) all  directors  and  officers of the Company as a group and
(iv) The Ben & Jerry's  Foundation,  Inc.  The  mailing  address  of each of the
persons  shown and of the  Foundation  is c/o the Company,  30 Community  Drive,
South Burlington, Vermont 05403-6828.
<TABLE>

                                 Amount of              Amount of
                                 Beneficial             Beneficial              Amount of
                                Ownership of           Ownership of             Beneficial
                                   Class A               Class B               Ownership of
                                Common Stock           Common Stock          Preferred Stock
                                ------------           ------------          ---------------
                                      Percentage           Percentage               Percentage
                               Number     of       Number      of          Number       of
                                 of   Outstanding    of    Outstanding       of     outstanding
                               Shares  Shares(a)   Shares    Share(b)      Shares     Shares
                               ------  ---------   ------    --------      ------     ------
<S>                           <C>        <C>      <C>         <C>            <C>     <C> 
Ben Cohen (c)                 604,373    9.60%    487,876     52.24%          --       --
Robert Holland, Jr.             1,596        *         --        --           --       --
Fred Lager (d)                 30,600        *     53,600       5.9%          --       --
Jeffrey Furman                 10,000        *     30,300       3.3%          --       --
Henry Morgan                    3,224        *        *--          *          --       --
Jerry Greenfield (e)          130,000    2.01%     90,000       9.9%          --       --
Frederick A. Miller             1,124        *         --          *          --       --
Elizabeth Bankowski             3,134        *         --          *          --       --
Jon Katzenbach                    524        *         --         --          --       --
Jennifer Henderson                524        *         --         --          --       --
Bruce Bowman                      403        *         --          *          --       --
Frances Rathke                  3,315        *         --          *          --       --
Putnam Investments, Inc.(1)   472,250    6.50%         --          *          --       --
     One Post Office Square
     Boston, MA 02109

The Capital Group(2)          755,500   11.90%         --         **          --       --
Companies, Inc.
     333 South Hope St.
     Los Angeles, CA 90071

All Officers and directors
as a group (13 persons)       788,817   12.53%    661,776       72.6%         --       --
The Ben & Jerry's
Foundation, Inc.(g)                --       --         --          --        900     100%
----------------------
*      Less than 1%

--------
<FN>
(1)  Putnam Investments,  Inc. is a wholly-owned  subsidiary of Marsh & McLennan
     Companies, Inc., and wholly owns two registered investment advisers: Putnam
     Investment Management,  Inc., which is the investment adviser to the Putnam
     family of mutual funds and The Putnam Advisory Company,  Inc., which is the
     investment  adviser to Putnam's  institutional  clients.  Both subsidiaries
     have dispository power over the shares as investment managers,  but each of
     the mutual  fund's  trustees have voting power over the shares held by each
     fund, and The Putnam  Advisory  Company,  Inc. has shared voting power over
     the shares held by the institutional clients.

(2)  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,  he Capital Group Companies,
     Inc., may be deemed to "beneficially own" such securities by virtue of Rule
     13d-3 under the Securities Exchange Act of 1934.




(a)  Based on the  number of shares of Class A Common  Stock  outstanding  as of
     March 7, 1997.  Each share of Class A Common  Stock  entitles the holder to
     one vote.

(b)  Based on the  number of shares of Class B Common  Stock  outstanding  as of
     March 7, 1997.  Each share of Class B Common  Stock  entitles the holder to
     ten votes.

(c)  Under the  regulations and  interpretations  of the Securities and Exchange
     Commission, Mr. Cohen may be deemed to be a parent of the Company.

(d)  Mr. Lager owns these shares jointly with his wife.

(e)  By virtue of their  positions as two of the three current  directors of the
     Foundation,  which has the power to vote or dispose of the Preferred Stock,
     each of Messrs. Greenfield, a co-founder,  Director and Vice Chairperson of
     the Company,  and Furman,  a Director of and  formerly a consultant  to the
     Company,  may be deemed,  under the regulations and  interpretations of the
     Securities  and Exchange  Commission,  to own  beneficially  the  Preferred
     Stock.

(f)  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.

(g)  While the Ben & Jerry's Foundation, Inc. is an entity legally separate from
     the Company,  it may be deemed to be an affiliate of the Company  under the
     securities laws.
</FN>
</TABLE>



<PAGE>









Item 13.  Certain Relationships and Related Transactions

Under the terms of an Amended  Employment  Agreement between the Company and Mr.
Lager,  the Company is  obligated  to provide Mr.  Lager with  (i)family  health
insurance  coverage under the Company's  regular  employee health insurance plan
until February, 2003(ii) to continue payments of the premiums due on Mr. Lager's
life  insurance  policy  (currently  $12,335  per year)  until the date when the
policy becomes  "self-funding",  which is estimated to be December 31, 2002, and
(iii) to  extend  the  non-compete  provisions  for an  additional  three  years
(without  any   additional   payment)   beyond  the   two-year   post-employment
non-competition period provided for in the original Employment Agreement.

Pursuant  to the terms of a  Consulting  Agreement  dated  January  17, 1991 (as
amended  in 1994 and 1995) Mr.  Lager  agreed to furnish  management  consulting
services to the Company,  upon the  Company's  request.  Commencing in September
1995, Mr. Lager  provided  part-time  consulting  services to the Company at the
rate of $8,333 per month, plus reasonable  out-of-pocket  expenses.  In 1995 and
1996, Mr. Lager was paid $235,902 and $57,917. Mr. Lager's obligation to provide
part-time  consulting  services to the Company  under the terms of the  Original
Consulting Agreement, as extended by the 1994-1995 amendment, terminated on July
31, 1996. In accordance with the Agreement,  Mr. Lager has agreed not to compete
with the  Company  for a period of two years  following  the  expiration  of the
Consulting Agreement on July 31, 1996.

Under the terms of a Severance and Non-Competition Agreement between the Company
and Mr. Furman, dated December 31, 1990, the Company continues to provide, at no
cost to Mr. Furman, family health insurance coverage under the Company's regular
employee  health  insurance  plan.  This obligation will continue until March 2,
1999. In 1995 and 1996,  Mr. Furman was paid $51,938 and $30,000 for  consulting
services in connection with his work on the Company's Russian joint venture.

Mr. Holland was hired January 30, 1995 as President and Chief Executive Officer.
Under Mr.  Holland's  Employment  Agreement which has a term of four years,  Mr.
Holland is entitled to a base salary of $250,000 per year,  subject to increases
from  time to time by the Board of  Directors,  and an  annual  incentive  award
payable in cash or vested  shares of Class A Common Stock as  determined  by the
Compensation  Committee  of the  Board of  Directors  in an amount up to but not
exceeding  $125,000,  with all or such portion thereof to be earned on a sliding
scale based upon the extent to which the Committee  determines  that Mr. Holland
has met in each fiscal year the objectives previously  established for that year
by the Compensation




<PAGE>



Committee.  For 1995, the Incentive Award  Objectives were financial  objectives
and for years 1996 and beyond the Objectives were financial and non-financial in
nature (i.e. Internal Culture and External Social  Responsibility,  etc.). Under
the Company's 1985 Stock Option Plan, Mr. Holland received  non-incentive  stock
options to purchase  180,000 shares of Class A Common Stock of the Company at an
exercise price equal to the fair market value at the date of grant.  The options
have a term of eight years and become exercisable at the rate of 20,000 shares a
year for the first four years,  and  thereafter  at the rate of 25,000 a year so
long as Mr. Holland is an employee of the Company under this Agreement, provided
that,  in lieu of said  "regular"  annual  vesting of  options  during the fifth
through eighth years, options for 25,000 shares which are at the time the latest
options  to  become  "regularly"  exercisable  by the  passage  of  time  become
exercisable,  by acceleration,  upon the Committee's determination by March 15th
of  each  year,  commencing  March  15,  1996,  that  Mr.  Holland  has  met the
Non-Financial Option Objectives  previously  established for that fiscal year by
the  Committee.  As of March  28,  1996 no  options  had been  accelerated.  The
agreement  provides for  termination  of employment by the Company for cause (as
defined) and also provides for  termination  by the Company other than for cause
or by Mr.  Holland for good  reason (as  defined),  in each of which  events Mr.
Holland is entitled to receive  for the  remaining  period of the four year term
his base  salary and an amount  equal to the  average  Incentive  Award that was
earned prior to termination  under the Agreement times the period  remaining and
all options which could have become  exercisable  upon "regular"  annual vesting
prior to the end of the four year term shall be  accelerated  and become  vested
upon such termination.  The Agreement also provides that during the term and for
two years thereafter Mr. Holland will not compete with the Company.

Mr. Holland resigned as President and Chief Executive  Officer of the Company on
October 31, 1996. On October 21, 1996, Mr. Holland and the Company  entered into
an  Agreement  regarding  the  termination  of Mr.  Holland's  employment  which
modified the terms of his original Employment  Agreement dated January 30, 1995.
Under the terms of this  Agreement,  Mr.  Holland  will  continue to receive his
monthly salary, at the annual rate of $250,000 through January 30, 1998; receive
a bonus in 1996 of $100,000;  Options for an aggregate of 80,000  shares,  which
were  granted in January  1995,  and will be vested and  exercisable  up through
April 30, 1997; all other options terminated on October 31, 1996.  Participation
in the Company's life insurance and health insurance plans shall continue on the
current  basis  for  the  shorter  of one  year  from  October  31,  1996 or the
commencement  of  new  employment  for  Mr.  Holland  which  provides  him  with
eligibility  to  participate  in  comparable  plans.  Mr.  Holland will remain a
director of the Company until the 1997




<PAGE>



Annual  Meeting  and will  provide  consulting  services to the Company on an as
needed basis. All other provisions in the Employment Agreement dated January 30,
1995, including the covenant not to compete, remain in effect.

Mr. Cohen,  Chairperson  and a director,  has an Employment  Agreement which has
been  extended for a term ending April 30, 1997.  The  Agreement  provided for a
base salary,  which may be increased by the Board (the Board has currently fixed
such base salary at $150,000),  and he is entitled to an incentive  bonus at the
discretion of the Board (no bonus was paid in 1996). The Agreement also provides
for certain  medical  benefits and a covenant not to compete  during the term of
the Agreement and for a two year period thereafter,  in consideration of payment
by  the  Company  (except  as  otherwise  provided  in  the  Agreement)  of  the
then-current base salary during the two-year period.

Mr. Greenfield, Vice Chairperson, and director and also a director and President
of The Ben & Jerry's  Foundation,  has an  Employment  Agreement  which has been
extended  for a term ending April 30, 1997.  The  Agreement  provides for a base
salary,  which may be increased by the Board (the Board has currently fixed such
base  salary at  $150,000),  and he is  entitled  to an  incentive  bonus at the
discretion of the Board (no bonus was paid in 1996). The Agreement also provides
for certain  medical  benefits and a covenant not to compete  during the term of
the Agreement and for a two-year period thereafter,  in consideration of payment
by  the  Company  (except  as  otherwise  provided  in  the  Agreement)  of  the
then-current base salary during the two-year period.

Mr. Bowman,  Senior Director of Operations and Chief Operating  Officer,  has an
Employment  Agreement  dated August 21,  1995,  which has a term of three years,
expiring  August 20,  1998.  The  Agreement  provides for an annual base salary,
which may be  increased  by the Board (the Board has  currently  fixed such base
salary at $200,000), and he is entitled to an incentive bonus, not exceeding 35%
of his base  salary  (payable  in cash and shares of Class A Common  Stock),  as
determined  by  the  Chief  Executive  Officer,   subject  to  approval  of  the
Compensation  Committee.  The  amount  of the award  for 1996 was  $20,000.  The
Agreement  also  provides for stock  options on 25,000  shares of Class A Common
Stock which were  granted in August,  1995,  vesting over a period of six years,
commencing  January 1, 1997.  The  Agreement  also  provides for  medical,  life
insurance,  401(k)plan  and other employee  benefits,  a covenant not to compete
during the term of the Agreement and for a two-year period  thereafter,  and for
one year's  continuation of then-current  base salary and annual incentive award
at the rates in  effect  on the date of  termination  of his  employment  by the
Company without cause.





<PAGE>



Mr. Odak, Chief Executive  Officer,  has a three year Employment  Agreement with
the Company dated December 31, 1996. Under the terms of the Agreement,  Mr. Odak
is entitled to a base salary of $300,000 per annum,  subject to  increases  from
time to time by the Board of Directors,  in its sole discretion.  Mr. Odak shall
receive  options,  which are  non-statutory,  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 date of grant by
the  Compensation  Committee  of the Board of  Directors  under the 1995  Equity
Incentive Plan. The options have a term of 10 years and will become  exercisable
so long as Mr. Odak is employed.

The Employment Agreement may be terminated at any time by the Company for cause,
as defined,  upon  written  notice to Mr. Odak.  If  terminated  for cause,  the
Company shall have no further  obligation  or liability to Mr. Odak,  other than
for base salary earned and unpaid at the date of  termination,  any options that
are vested which shall continue to be  exercisable  for thirty days (unless such
options are terminated by the vote of the Compensation Committee of the Board of
Directors),  and payments or reimbursement of business expenses accrued prior to
the date of termination. All other options shall terminate.

The Company may also terminate the Employment Agreement other than for cause. In
the event of such  termination  during the first year of the Agreement (or, upon
vote of two-thirds of the members of the Board of Directors, excluding Mr. Odak,
that a  decision  should  not be made in the  first  year,  then in the first 15
months of the Agreement),  the Company shall have a continuing obligation to pay
Mr.  Odak his base amount at the rate in effect on the date of  termination.  In
the event of such  termination  following the first year of the  Agreement  (or,
upon vote of two-thirds of the members of the Board of Directors,  excluding Mr.
Odak,  that a decision  should not be made in the first year, then following the
first  15  months  of the  Agreement),  the  Company  shall  have  a  continuing
obligation  to pay Mr. Odak his base amount at the rate in effect on the date of
termination  for a period of  twelve  months.  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,   provided   that  Mr.  Odak  is  entitled  to  continue  such
participation  under  applicable  law and plan  terms.  Upon  such  termination,
unvested options shall become exercisable to the extent so provided by the terms
of the Employment Agreement.

Mr. Odak may  terminate  his  employment  with the Company for good  reason,  as
defined (in the absence of cause),  upon notice to the Company.  In the event of
such termination, base amount,




<PAGE>



benefits  and options  (including  acceleration,  period of  exercisablilty  and
termination  of options) shall be paid or provided in the same manner and extent
as for a termination Other Than for Cause as stated above.

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

During the year ended  December  28,  1996,  the Company  purchased  Rain Forest
Crunch cashew-brazilnut  buttercrunch candy to be included in Ben & Jerry's Rain
Forest Crunch flavor ice cream for an aggregate  purchase price of approximately
$1,000,000 from Community Products,  Inc., a company of which Messrs.  Cohen and
Furman are the principal  stockholders and of which Mr. Cohen is also president.
Mr.  Lager was a director  until  January  1994.  The candy was  purchased  from
Community  Products,  Inc.  at  competitive  prices  and on  standard  terms and
conditions.  Although the Company expects to purchase  additional  quantities of
candy from Community Products,  Inc.,  termination of Ben & Jerry's relationship
with this supplier would not have a material effect on the Company's business.





<PAGE>








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

(a)      List of financial statements and financial statement
         schedule:
                                                                Form 10-K
                                                                 Page No.
                                                                 --------

     (1)      The following consolidated financial
              statements are included in Item 8:

              Consolidated Balance Sheets as of December
              28, 1996 and December 30, 1995                         F-2

              Consolidated Statements of Operations for
              the years ended December 28, 1996, December
              30, 1995, and December 31,1994                         F-3

              Consolidated Statements of Stockholders'
              Equity for the years ended December 28, 1996,
              December 30, 1995 and December 31, 1994                F-4

              Consolidated Statements of Cash Flows for
              the years ended December 28, 1996, December 30,
              1995 and December 31, 1994                             F-5

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

              SCHEDULE II - Valuation and Qualifying
              Accounts

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

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



<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).

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

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

4.1             See Exhibit 3.1.

4.2             See Exhibit 3.2

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

4.4             Guaranty by the Company accepted by the Howard Bank,
                N.A., Trustee, and Marine Midland Bank, N.A., as
                amended (filed as Exhibits 4.2 and 4.2.1 to the
                Company's Registration Statement on Form S-1 (file no.
                33-284) and incorporated herein by reference), as
                amended November 20, 1987 (filed as Exhibit 4.4 to the
                Company's Registration Statement on Form S-1 (file no.
                33-17516) and incorporated by reference), as amended




<PAGE>



                January  31 and March 10,  1989  (filed  as  Exhibit  4.4 to the
                Company's Annual Report on Form 10-K for the year ended December
                31, 1988 and incorporated herein by reference).

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

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

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

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

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

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

4.10            Omitted.

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).









<PAGE>



                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.

10.1            Employment Agreement between Bennett R. Cohen and
                the Company (filed as Exhibit 10.1 to the Company's
                Registration Statement on Form S-1 (file no. 33-284)
                and incorporated herein by reference).

10.1.1          Amendment to Employment Agreement dated as of March
                27,1991 (filed as Exhibit 10.1 to the Company's
                Registration Statement on Form S-1 (file no. 33-284)
                and incorporated herein by reference).

10.1.2          Amendment to Employment Agreement dated as of May 1, 1995 (filed
                as Exhibit  10.1.2 of the Company's Form 10-K for the year ended
                December 30, 1995 and incorporated herein by reference).

10.2            Employment Agreement between Fred Lager and the
                Company(filed as Exhibit 10.2 to the Company's
                Registration Statement on Form S-1 (file no. 33-284) and
                incorporated herein by reference).

10.2.1          Amendment to Employment  Agreement dated as of December 31, 1990
                (filed as Exhibit 10.2.1 to the Company's  Annual Report on Form
                10-K for the  year  ended  December  29,  1990 and  incorporated
                herein by reference).

10.2.2          Consulting Agreement between Fred Lager and the Company dated as
                of January 17, 1991  (filed as Exhibit  10.2.2 to the  Company's
                Annual Report on Form 10-K for the year ended  December 18, 1991
                and incorporated herein by reference).

10.2.3          Amendment  to  Consulting  Agreement  between Fred Lager and the
                Company dated as of July 1, 1994 (filed as Exhibit 10.2.3 to the
                Company's Annual Report on Form 10-K for the year ended December
                31, 1994 and incorporated herein by reference).

10.2.4          Amendment  to  Consulting  Agreement  between Fred Lager and the
                Company dated as of January 1, 1995 (filed as Exhibit  10.2.4 to
                the  Company's  Annual  Report on Form  10-K for the year  ended
                December 31, 1994 and incorporated herein by reference).








<PAGE>



10.3            Employment Agreement between Charles Lacy and the
                Company dated August 18, 1994  (filed as
                Exhibit 10.3 to the Company's Annual Report on Form
                10-K for the year ended December 31, 1994 and
                incorporated herein by reference).

10.4            Employment Agreement dated May 1, 1995 between
                Jerry Greenfield and the Company (filed as
                Exhibit 10.4 of the Company's Form 10-K for
                the period ending December 30, 1995 and
                incorporated herein by reference).

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

10.6            Omitted.

10.7            License Agreement between the Company and L.S. Heath &
                Sons, Inc. (filed as Exhibit 10.12 to the Company's
                Annual Report on Form 10-K for the year ended December
                31, 1986 and incorporated herein by reference).

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

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

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

10.8.3          Subdistribution Agreement between the Company and
                Dreyer's Grand Ice Cream, Inc. dated February 7, 1994
                (filed as Exhibit 1 to the Company's Quarterly Report
                on Form 10-Q dated March 26, 1994 and incorporated
                here-in by reference.)






<PAGE>



10.8.4          Amendment  to Item  10.8.3  dated  October  27,  1995  (filed as
                Exhibit  10.8.4 to the Company's Form 10-K for the period ending
                December 30, 1995 and incorporated herein by reference).

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

10.10           Omitted.

10.11           Area Franchise Agreement between the Company and Ben &
                Jerry's of Indiana Inc. dated November 18, 1987 (filed
                as Exhibit 10.20 to the Company's Registration
                Statement on Form S-1 (file no. 33-17516) and
                incorporated herein by reference).

10.12           Omitted.

10.13           Franchise Agreement between the Company and Ben &
                Jerry's of California, Inc. dated June 13, 1988 (filed
                as Exhibit 10.21 to the Company's Annual Report on
                Form 10-K for the year ended December 31, 1988 and
                incorporated herein by reference).

10.13.1         Amendment to 10.13 effective December 17, 1990 (filed as Exhibit
                10.13.1 to the Company's Annual Report on Form 10-K for the year
                ended December 25, 1993 and incorporated herein by reference).

10.13.2         Amendment  to 10.13 dated as of March 20, 1992 (filed as Exhibit
                10.13.2 to the Company's Annual Report on Form 10-K for the year
                ended December 25, 1993 and incorporated herein by reference).

10.14           Area Franchise Amended and Restated Agreement between
                the Company and Ben & Jerry's West Coast, Inc. dated
                March 27, 1992 (filed as Exhibit 10.13.2 on Form 10-K
                for the year ended December 25, 1993 and incorporated
                herein by reference).

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

10.16           Omitted.





<PAGE>



10.18           Manufacturing and Warehouse Agreement between the
                Company and Edy's Grand Ice Cream, a subsidiary of
                Dreyer's Grand Ice Cream, Inc. dated April 5, 1989
                (filed as Exhibit 10.18 to the Company's Annual Report
                on Form 10-K for the year ended December 30, 1989 and
                incorporated herein by reference).

10.18.1         Amendment  to Item 10.18  dated  September  18,  1992  (filed as
                Exhibit 10.18.1 to the Company's  Annual Report on Form 10-K for
                the year ended  December  25,  1993 and  incorporated  herein by
                reference).

10.18.2         Amendment to Item 10.18 dated November 12, 1992(filed as Exhibit
                10.18.2 to the Company's Annual Report on Form 10-K for the year
                ended December 25, 1993 and incorporated herein by reference).

10.18.3         Amendment  to Item  10.18  dated  September  2,  1994  (filed as
                Exhibit 1 to the Company's Quarterly Report on Form 10-Q for the
                quarter  ended  September  24, 1994 and  incorporated  herein by
                reference).

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

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

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

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

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

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




<PAGE>



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

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

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

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

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

10.25           Omitted.

10.26           Directors and Officers Liability Insurance Policy,  Binder dated
                February 24, 1996 (filed herewith).

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

10.28           Employment Agreement between Robert Holland Jr. and
                the Company dated January 30, 1995, (filed as Exhibit
                10.28 to the Company's Report on Form 10-K for the
                year ended December 31, 1994 and incorporated herein
                by reference).

10.28.1         Amendment to Employment Agreement between Robert
                Holland, Jr. and the Company (filed as Exhibit 10.28.1
                to the  Company's  Form 10-Q for the period ended  September 28,
                1996 and incorporated herein by reference).

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





<PAGE>



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

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

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

10.33           Employment Agreement dated December 31, 1996 between
                the Company and Perry D. Odak (filed herewith).

11.0            Statement Re: Computation of Per Share Earnings (filed
                herewith).

21.1            Subsidiaries of the registrant as of December 28,1996
                (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 1996




<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 27, 1997                        
                                            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 27, 1997                              /s/ Elizabeth Bankowski
                                            Elizabeth Bankowski
                                            Director, Director of Social Mission
                                            Development

March 27, 1997                              /s/ Bennett R. Cohen
                                            Bennett R. Cohen
                                            Director and Chairperson

March 27, 1997                              /s/ Jeffrey Furman
                                            Jeffrey Furman
                                            Director

March 27, 1997                              /s/ Jerry Greenfield
                                            Jerry Greenfield
                                            Director and Vice Chairperson

March 27, 1997                              /s/ Jennifer Henderson
                                            Jennifer Henderson
                                            Director

March 27, 1997                              
                                            Robert Holland Jr.
                                            Director

March 27, 1997                              /s/ Fred E. Lager
                                            Fred E. Lager
                                            Director

March 27, 1997                              /s/ Frederick A. Miller
                                            Frederick A. Miller
                                            Director

March 27, 1997                              /s/ Henry Morgan
                                            Henry Morgan
                                            Director

March 27, 1997                              /s/Perry D. Odak
                                            Perry D. Odak
                                            Principal Executive Officer

March 27, 1997                              /s/ Frances Rathke
                                            Frances Rathke
                                            Principal Financial Officer and
                                            Principal Accounting Officer





<PAGE>









                           ANNUAL REPORT ON FORM 10-K

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

          LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

                                CERTAIN EXHIBITS

                          FINANCIAL STATEMENT SCHEDULE

                          YEAR ENDED DECEMBER 28, 1996

                           BEN & JERRY'S HOMEMADE INC.

                            SOUTH BURLINGTON, VERMONT




<PAGE>




                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULE






Report of Independent Auditors...............................................F-1

Consolidated Balance Sheets as of December 28, 1996 and December
     30, 1995................................................................F-2

Consolidated Statements of Operations for the years ended December 28, 1996,
     December 30, 1995, and December 31, 1994................................F-3

Consolidated Statements of Stockholders' Equity for the years ended December
     28, 1996, December 30, 1995, and December 31, 1994......................F-4

Consolidated Statements of Cash Flows for the years ended December 28, 1996,
     December 30, 1995, and December 31, 1994................................F-5

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

Financial Schedule:

SCHEDULE II - Valuation and Qualifying Accounts.............................F-16

<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 28, 1996 and  December 30, 1995,  and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
each of the three years in the period ended  December 28, 1996.  Our audits also
included the  financial  statement  schedule  listed in the Index at Item 14(a).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Ben &
Jerry's  Homemade,  Inc. at  December  28,  1996 and  December  30, 1995 and the
consolidated  results of its operations and its cash flows for each of the three
years in the  period  ended  December  28, 1996, 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 27, 1997


                                       F-1


<PAGE>



Consolidated Balance Sheets
(In thousands except share data)
<TABLE>

                                                                                      December 28,                      December 30,
Assets                                                                                    1996                              1995   
------                                                                                    ----                              ----   

<S>                                                                                   <C>                             <C>        
Current assets:
     Cash and cash equivalents                                                        $    36,104                     $    35,406
     Investments                                                                              466
     Accounts receivable
         Trade (less allowance of $695 in 1996 and $802 in 1995
          for doubtful accounts)                                                            8,684                          11,660
         Other                                                                                275                             854
     Inventories                                                                           15,365                          12,616
     Deferred income taxes                                                                  4,099                           3,599
     Income taxes receivable                                                                2,920                           2,831
     Prepaid expenses                                                                         200                           1,097
                                                                                              ---                           -----
         Total current assets                                                              68,113                          68,063
                                                                                           ------                          ------
Property, plant and equipment, net                                                         65,104                          59,600
Investments                                                                                 1,000                           1,000
Other assets                                                                                2,448                           2,411 
                                                                                            -----                           ----- 
                                                                                      $   136,665                     $   131,074
                                                                                      ===========                     ===========

Liabilities & Stockholders' Equity
Current liabilities:
     Accounts payable and accrued expenses                                            $    17,398                     $    16,592
     Current portion of long-term debt and
         capital lease obligations                                                            660                             448
                                                                                              ---                             ---
              Total current liabilities                                                    18,058                          17,040

Long-term debt and capital lease obligations                                               31,087                          31,977

Deferred income taxes                                                                       4,835                           3,526
Commitments and contingencies
Stockholders' equity:
     $1.20 noncumulative Class A preferred stock -
         $1.00 par value, redeemable at the Company's option
         at $12.00 per share; 900 shares authorized,
         issued and outstanding, aggregate preference
         on voluntary or involuntary liquidation - $9,000                                       1                                1
     Class A common stock - $.033 par value; authorized
         20,000,000 shares; issued: 6,364,733 shares at
         December 28, 1996 and 6,330,302 shares at
         December 30, 1995                                                                    210                              209
     Class B common stock - $.033 par value; authorized
         3,000,000 shares; issued: 897,664 shares at
         December 28, 1996 and 914,325 shares at
         December 30, 1995                                                                     29                               30
     Additional paid-in capital                                                            48,753                           48,521
     Retained earnings                                                                     35,190                           31,264
     Cumulative translation adjustment                                                       (118)                            (114)
     Treasury stock, at cost:  67,032 Class A and  1,092
         Class B shares at December 28, 1996 and
         December 30, 1995                                                                  (1380)                           (1380)
                                                                                            -----                            ----- 
              Total stockholders' equity                                                   82,685                           78,531
                                                                                           ------                           ------
                                                                                      $   136,665                     $    131,074
                                                                                      ===========                     ============
</TABLE>

                             See accompanying notes.
<PAGE>

Ben & Jerry's Homemade, Inc.

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

<TABLE>

                                                                   Years Ended
                                                                   -----------
                                                                                         
                                                    Dec. 28, 1996  Dec. 30, 1995 Dec. 31, 1994
                                                      (52 weeks)    (52 weeks)     (53 weeks)
                                                      ----------    ----------     ----------
                                                                   


<S>                                                    <C>          <C>          <C>      
Net sales ..........................................   $ 167,155    $ 155,333    $ 148,802

Cost of sales ......................................     115,212      109,125      109,760
                                                       ---------    ---------    ---------

Gross profit .......................................      51,943       46,208       39,042

Selling, general and administrative expenses .......      45,531       36,362       36,253

Asset write-down ...................................       6,779

Other income (expense):
     Interest income ...............................       1,676        1,681        1,034
     Interest expense ..............................      (1,996)      (1,525)        (295)
     Other .........................................         243         (597)        (511)
                                                       ---------    ---------    ---------

                                                             (77)        (441)         228
                                                       ---------    ---------    ---------

Income (loss) before income taxes ..................       6,335        9,405       (3,762

Income taxes (benefit) .............................       2,409        3,457       (1,893)
                                                       ---------    ---------    ---------


Net income (loss) ..................................   $   3,926    $   5,948    $  (1,869)
                                                       =========    =========    =========

Net income (loss) per common share .................   $    0.54    $    0.83    $   (0.26)

Weighted average common and common
     equivalent shares outstanding .................       7,230        7,222        7,148

</TABLE>

                             See accompanying notes 

                                       F-3


<PAGE>
Ben & Jerry's Homemade, Inc.

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

                                            Preferred
                                            Stock       Common Stock                                                 Treasury Stock
                                                     Class A  Class B  Additional                        Cumulative Class A Class B
                                            Par      Par      Par      Paid-in    Retained   Unearned    Translation
                                            Value    Value    Value    Capital    Earnings  Compensation  Adjustment   Cost    Cost
                                            -----    -----    -----    -------    --------  ------------  ----------   ----    ----



<S>                                          <C>     <C>     <C>      <C>           <C>       <C>       <C>        <C>          <C>
Balance at December 25, 1993 .............   $  1    $207    $ 32     $48,222       $27,185   $  (20)   $    0     $(1,360)     (5)
     Net income (loss) ...................                                           (1,869)
Common stock issued under stock
     purchase plan (8,619 Class A shares)                                 139            
Conversion of Class B shares to Class A
     shares (15,189 shares) ..............              1      (1)
Termination of stock award (Class A
     shares) .............................                                  5                     20                  (55)
                                             ---------------------------------------------------------------------------------------
Balance at December 31, 1994 .............      1     208      31      48,366       25,316         0         0     (1,415)      (5)
Net income (loss) ........................                                           5,948
Common stock issued under stock
     purchase plan (21,599 Class A shares)                                174
Conversion of Class B shares to Class A
     shares (18,123 shares) ..............              1      (1)
Common stock issued under restricted
     stock plan (2,000 Class A shares) ...                                (19)                                         40
Foreign currency translation adjustment ..                                                                (114)
                                              -------------------------------------------------------------------------------------
Balance at December 30, 1995 .............      1     209      30      48,521      31,264          0      (114)    (1,375)      (5)
Net income ...............................                                          3,926
Common stock issued under stock
     purchase plan (15,674 Class A shares)                                205
Conversion of Class B shares to Class A
     shares (16,661 shares) ..............              1      (1)
Common stock issued under restricted
      stock plan (2,096 Class A shares) ..                                 27
Foreign currency translation adjustment ..                                                                  (4)
                                                                                                                               
                                             --------------------------------------------------------------------------------------
Balance at December 28, 1996 .............   $  1    $210    $ 29    $48,753      $35,190     $    0    $ (118)  $ (1,375)  $   (5)
                                             ====    ====    ====    =======      =======     ======    ======   ========   ======
</TABLE>

                             See accompanying notes.

                                       F-4

Ben & Jerry's Homemade, Inc.

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

                                                                          Years Ended
                                                                          -----------
                                                                December 28, December 30, December 31,
                                                                    1996        1995          1994
                                                                    ----        ----          ----
Cash flows from operating activities:

<S>                                                               <C>         <C>         <C>      
     Net income (loss) ........................................   $  3,926    $  5,948    $ (1,869)
     Adjustments to reconcile net income
         (loss) to net cash provided
         by operating activities:
         Depreciation and amortization ........................      7,091       5,928       4,707
         Deferred income taxes ................................        809       2,166      (1,564)
         Provision for doubtful accounts ......................        408         400         311
         Loss on asset write-down .............................      6,779
         Loss on disposition of assets ........................         10         171          69
         Stock compensation ...................................                     21
         Changes in assets and liabilities:
              Accounts receivable .............................      3,146      (1,009)       (536)
              Income taxes receivable/payable .................        (89)       (733)     (2,442)
              Inventories .....................................     (2,749)        847         (10)
              Prepaid expenses ................................        897        (563)        313
              Accounts payable and accrued expenses ...........        806       2,677      (1,159)
                                                                       ---       -----      ------ 
Net cash provided by operating activities .....................     14,255      15,853       4,599

Cash flows from investing activities:
     Additions to property, plant and equipment ...............    (12,333)     (7,532)    (26,213)
     Proceeds from sale of property, plant
         and equipment ........................................        168          96         194
     Increase (decrease) in investments .......................       (466)      7,000      14,000
     Changes in other assets ..................................       (320)       (303)       (882)
                                                                      ----        ----        ---- 
Net cash used for investing activities ........................    (12,951)       (739)    (12,901)

Cash flows from financing activities:
     Net proceeds from long-term debt .........................                             14,936
     Repayments of long-term debt and
         capital leases .......................................       (678)       (547)       (700)
     Net proceeds from issuance of common stock ...............        232         174         139
                                                                       ---         ---         ---
Net cash  (used for) provided by financing activities .........       (446)       (373)     14,375

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

Increase in cash and cash equivalents .........................        698      14,628       6,073
Cash and cash equivalents at beginning of year ................     35,406      20,778      14,705
                                                                    ------      ------      ------
Cash and cash equivalents at end of year ......................   $ 36,104    $ 35,406    $ 20,778
                                                                  ========    ========    ========

                                                                                                                     
</TABLE>


                             See accompanying notes.


                                       F-5






<PAGE>




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,  including  Company-owned
and franchised ice cream parlors.

Principles of Consolidation
---------------------------

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

Use of Estimates
----------------

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

Inventories
-----------

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

Cash Equivalents
----------------

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

Investments
-----------

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

Concentration of Credit Risk
----------------------------

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

The Company  sells its products  primarily to well  established  frozen  dessert
distribution or retailing companies throughout the United States and Europe. The
Company's most significant  customer,  Dreyer's Grand Ice Cream, Inc., accounted
for 55%,  47%,  or 52% of net  sales in 1996,  1995 and 1994  respectively.  The
Company  performs  ongoing  credit  evaluations  of its  customers and maintains
reserves  for  potential  credit  losses.  Historically,  the  Company  has  not
experienced significant losses related to investments or trade receivables.







<PAGE>






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.

Translation of Foreign Currencies
---------------------------------

Assets and liabilities of the Company's  foreign  operations are translated into
United  States  dollars at exchange  rates in effect on the balance  sheet date.
Income and expense items are  translated at average  exchange  rates  prevailing
during the year. Translation adjustments are accumulated as a separate component
of  stockholders'  equity.  Transaction  gains or losses are recognized as other
income or expense in the period incurred.  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 were  approximately  $301,000,  $166,000 and $82,000 in 1996, 1995 and
1994, respectively. These amounts have been included in net sales.

Advertising
-----------

Advertising  costs are  expensed as  incurred.  Advertising  expense  (excluding
cooperative  advertising with distribution  companies) amounted to approximately
$3.2 million , $1.3 million,  and $5.3 million for the years ended  December 28,
1996, December 30, 1995 and December 31, 1994.

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" (SFAS 109).  Under the liability  method,  deferred tax  liabilities  and
assets are recognized for the tax consequences of temporary  differences between
the financial reporting and tax bases of assets and liabilities.

Stock Based Compensation
------------------------

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

Earnings Per Share
------------------

Primary  earnings  per common share is computed  based on the  weighted  average
number  of shares of Class A and Class B Common  Stock  outstanding  during  the
period,  and for  incremental  shares assumed  issued for dilutive  common stock
equivalents.  Fully diluted  earnings per share did not differ  materially  from
primary earnings per share.

Impact of Recently Issued Accounting Standards
----------------------------------------------

Effective  December  31,  1995,  the Company has adopted  Statement of Financial
Accounting  Standards No. 121 ("SFAS  121"),  Accounting  for the  Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of, which requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indicators of impairment are present and the  undiscounted  cash flows estimated
to be generated by those assets are less than the assets' carrying amount.  SFAS
121 also addresses the accounting for long-lived  assets that are expected to be
disposed of. The adoption of SFAS 121 had no impact on the financial position or
results of operations  of the Company as no  indicators of impairment  currently
exist.

The Company has adopted the  disclosure  provisions  of  Statement  of Financial
Accounting  Standards No. 123 ("SFAS 123"),  Accounting  and Disclosure of Stock
-Based  Compensation.  The Company will  continue to account for its stock based
compensation  arrangements  under the provisions of APB 25, Accounting for Stock
Issued to Employees.

                                                                F-7






<PAGE>


2. CASH AND INVESTMENTS

The Company's cash and  investments in debt  securities  available-for-sale  are
carried at fair value,  which approximates cost, or amortized cost as summarized
below:
<TABLE>

                                                                                       1996              1995
                                                                                       ----              ----
<S>                                                                                 <C>              <C>      
         Municipal bonds                                                            $  14,900        $  16,507

         U.S. corporate securities                                                     12,980           14,139
                                                                                       ------           ------
                  Total debt securities available-for-sale                             27,880           30,646

         Cash, cash equivalents and other investments                                   9,690            5,760
                                                                                        -----            -----
                  Total cash, cash equivalents and investments                      $  37,570        $  36,406
                                                                                      =======           ======
</TABLE>

All debt  securities  at December 28, 1996 have  maturities  of less than twelve
months.  In 1995,  certain debt  securities have been classified as long-term to
reflect their  intended use to finance  capital  projects.  At December 28, 1996
investments   totaling  $1,466,000  were  classified  as  held-to-maturity   and
classified as investments.

Investments  in debt  securities  mature  at par in  thirty  to  forty-five  day
intervals,  at which time the stated interest rates are reset at the then market
rate. Gross purchases and maturities  aggregated  $61,100,000 and $63,922,000 in
1996,  $94,500,000  and  $83,525,000 in 1995, and $81,400,000 and $91,960,000 in
1994, respectively.


3. INVENTORIES
<TABLE>
                                                        1996                1995
                                                        ----                ----

<S>                                              <C>                 <C>        
Ice cream and ingredients                        $    14,221         $    11,480
Paper goods                                              492                 674
Food, beverages, and gift items                          652                 462
                                                         ---                ----
                                                 $    15,365         $    12,616
                                                      ======              ======
</TABLE>

The Company purchases certain  ingredients from a company owned by the Company's
Chairperson   and  a  member  of  the  Board  of  Directors  which  amounted  to
approximately $1,000,000 for 1996 and $1,500,000 for 1995 and 1994.

4. PROPERTY, PLANT AND EQUIPMENT
<TABLE>

                                                                                               Estimated
                                                                                             Useful Lives/
                                                             1996               1995           Lease Term
                                                             ----               ----           ----------

<S>                                                      <C>                <C>                <C>        
Land and improvements                                    $  3,615           $  3,575           15-25 years
Land under capital le                                         866                866
Buildings                                                  37,533             35,644           25 years
Equipment and furniture                                    47,841             41,324           3-20 years
Equipment under capital lease                                 137                934           5 years
Leasehold improvements                                      3,153              1,277           3-10 years
Construction in progress                                      758                740
                                                              ---                ---
                                                           93,903             84,360
Less accumulated depreciation                              28,799             24,760
                                                          -------             ------
                                                         $ 65,104           $ 59,600
                                                           ======             ======
</TABLE>

Accumulated  depreciation  at December 28, 1996 and December 30, 1995,  included
accumulated  amortization  of $133,000  and  $902,000  respectively,  related to
assets under capital lease.

                                                                F-8

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES


                                                    1996             1995
                                                    ----             ----
Trade accounts payable                         $   4,337        $   7,283
Accrued expenses                                   8,825            6,071
Accrued payroll and related costs                  2,152            1,749
Accrued promotional costs                          2,076            1,313
Other                                                  8              176
                                                   -----            -----
                                               $  17,398        $  16,592
                                                  ======           ======


6. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
<TABLE>
                                                                                       1996               1995
                                                                                       ----               ----

<S>                                                                               <C>                 <C>     
Senior Notes - Series A payable in annual installments beginning
     in 1998 through 2003 with interest payable semiannually at 5.9%              $  20,000           $ 20,000
Senior Notes - Series B payable in annual installments beginning
     in 1998 through 2003 with interest payable semiannually at 5.73%                10,000             10,000
Industrial Revenue Bonds (IRB), payable in monthly installments
     of $12,500  plus  interest at 75% of the prime rate (6.188% at December 28,
     1996 and 6.375% at December 30, 1995) through
     June 2000                                                                          468                613
Urban Development Action Grant, payable in quarterly installments
     of $22,130 including interest at 9% through April 2000                             247                310
Capital lease obligations                                                               470                771
Other long-term obligations                                                             562                731
                                                                                     ------             ------
                                                                                     31,747             32,425
Less current portion                                                                    660                448
                                                                                        ---                ---
                                                                                  $  31,087           $ 31,977
                                                                                     ======             ======
</TABLE>

Property,  plant  and  equipment  having  a  net  book  value  of  approximately
$18,864,000 at December 28, 1996 is pledged as collateral for certain  long-term
debt.

Long-term  debt and capital lease  obligations  at December 28, 1996 maturing in
each of the next five years and thereafter are as follows:

                                            Capital lease       Long-term
                                              obligations          debt
                                              -----------          ----

       1997                                    $     334        $     343
       1998                                           15            5,398
       1999                                           15            5,281
       2000                                           15            5,084
       2001                                          248            5,040
       Thereafter                                                  10,131
                                                                   ------
       Total minimum payments                        627           31,277
       Less amounts representing interest            157    
                                                     ---           ------
       Present value of minimum payments       $     470        $  31,277
                                                     ===           ======

                                      F-9

No interest was  capitalized by the Company in 1996.  Interest of  approximately
$497,000 and $1,288,000 was capitalized in 1995 and 1994, respectively,  as part
of the  acquisition  cost of  property,  plant  and  equipment.  Interest  paid,
including  interest   capitalized,   amounted  to  $1,973,000,   $2,023,000  and
$1,755,000 for 1996, 1995 and 1994, respectively.

The Company has  available two  $10,000,000  unsecured  working  capital line of
credit agreements with two banks. Interest on borrowings under the agreements is
set at the banks'  Base Rate or at the  Eurodollar  Rate plus a maximum of up to
1.25%.  The  agreements  expire  December  29,  1998  and  September  29,  1998,
respectively,  and any  outstanding  borrowings are due at that time. No amounts
were borrowed under these or any prior bank  agreements  during 1996,  1995, and
1994.

Certain of the debt agreements contain certain  restrictive  covenants requiring
maintenance  of  minimum  levels  of  working  capital,  net  worth  and debt to
capitalization  ratios.  As of December  28, 1996 the Company was in  compliance
with the  provisions of these  agreements.  Under the most  restrictive of these
covenants limiting distributions to an amount of $5,000,000 plus 75% of earnings
and 100% of net losses since June 30, 1993 approximately $13 million of retained
earnings at December 28, 1996 was available for payment of dividends.

The fair values of the Company's  long-term debt are estimated using  discounted
cash flow analyses,  based on the Company's current incremental  borrowing rates
for similar types of borrowing arrangements.

The carrying amounts and fair values of the Company's financial  instruments are
as follows:

                             1996                               1995
                             ----                               ----

                 Carrying              Fair          Carrying              Fair
                  Amount              Value           Amount              Value
                  ------              -----           ------              -----

Long-term debt   $31,747             $29,862         $32,425             $29,815


7. STOCKHOLDER'S EQUITY

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


8. STOCK BASED COMPENSATION PLANS

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

                                      F-10

Pro forma information regarding net income and earnings per share is required by
Statement 123, which also requires that the  information 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  for 1995
and 1996,  respectively;  risk-free  interest rates ranging from 6.01% to 6.15%;
dividend  yield of 0%;  volatility  factors of the expected  market price of the
Company's common stock of .35 and .39; and a  weighted-average  expected life of
the option of 3.3 years.

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

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma   information   follows  (in  thousands  except  for  earnings  per  share
information) and the following  schedules summarize the changes in stock options
during the three years ended December 28, 1996:

                                                         1996              1995
                                                         ----              ----
Pro forma net income                                   $3,796            $5,849
Pro forma earnings per share                            $0.53             $0.81
Weighted average exercise price
       of options granted                              $13.47            $12.83
Weighted average fair value of
       options outstanding at the end of the period.    $4.26             $4.33

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

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

The 1985 Option Plan provides for the grant of incentive and non-incentive stock
options to employees or consultants.  The 1985 Option Plan provides that options
granted  are  exercisable  at the  market  value on the date of grant.  The 1985
option plan expired in August 1995.  While the Company  grants options which may
become excercisable at different times or within different periods,  the Company
has  generally  granted  options to employees  which vest over a period of five,
eight or ten years,  and in some cases subject to acceleration  of vesting.  The
exercise  period cannot exceed ten years from the date of grant. At December 28,
1996,  no shares of Class A Common  Stock were  available  under the 1985 Option
Plan for additional grants.

<TABLE>

                                                                                Number of               Option Price
A summary of the 1985 Option Plan activity is as follows:                        Options                  Per Share
                                                                                 -------                  ---------
<S>                                                                              <C>           <C>              <C>      
     Outstanding at December 31, 1994                                            162,308       $   16.75   -    $   16.75
         Granted                                                                 215,000           10.63   -        14.00
         Exercised                                                                     -            0.00   -         0.00
         Forfeited                                                               (19,871)          16.75   -        16.75
                                                                                  ------           -----   -        -----
     Outstanding at December 30, 1995                                            357,437       $   10.63   -        16.75
         Granted                                                                       -            0.00   -         0.00
         Exercised                                                                     -            0.00   -         0.00
         Forfeited                                                              (109,819)          10.63   -        16.75
                                                                                 -------           -----   -        -----
     Outstanding at December 28, 1996                                            247,618       $   10.63   -    $   16.75
                                                                                 =======

     Options vested at December 28, 1996                                         160,444       $   10.63   -    $   16.75
                                                                                 =======
</TABLE>

                                      F-11

The  1995  Equity  Incentive  Plan  provides  for the  grant  to  employees  and
consultants 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  excercisable  at
different times or within different  periods,  the Company has generally granted
options to employees which vest over a period of five,  eight or ten years,  and
in some cases subject to  acceleration  of vesting.  The exercise  period cannot
exceed ten years from the date of grant. At December 28, 1996, 412,500 shares of
Class A Common Stock were  available  under the 1995 Equity  Incentive  Plan for
additional  grants.  However at March 7, 1997 55,000  shares were  available for
additional grants.

<TABLE>
                                                                                Number of              Option Price
A summary of the 1995 Equity Incentive Plan activity is as follows:              Options                 Per Share
                                                                                 -------                 ---------
      
<S>                                                                               <C>          <C>              <C>      
     Outstanding at December 31, 1994                                                  0       $    0.00   -    $    0.00
         Granted                                                                  25,000           19.00   -        19.00
         Exercised                                                                     0            0.00   -         0.00
         Forfeited                                                                     0            0.00   -         0.00
                                                                                       -            ----   -         ----
     Outstanding at December 30, 1995                                             25,000       $   19.00   -    $   19.00
         Granted                                                                  62,500           12.38   -        16.00
         Exercised                                                                     0            0.00   -         0.00
         Forfeited                                                                     0            0.00   -         0.00
                                                                                       -            ----   -         ----
     Outstanding at December 28, 1996                                             87,500       $   12.38   -    $   19.00
                                                                                  ======

     Options vested at December 28, 1996                                             625       $   16.00   -    $   16.00
                                                                                     ===
</TABLE>

The Company  maintains an Employee  Stock  Purchase  Plan which  authorizes  the
issuance of up to 300,000 shares of common stock.  All employees with six months
of continuous service are eligible to participate in this plan.  Participants in
the  plan  are  entitled  to  purchase  Class A Common  Stock  during  specified
semi-annual  periods through the accumulation of payroll, at the lower of 85% of
market value of the stock at the  beginning or end of the  offering  period.  At
December  28,  1996,  112,338  shares had been issued under the plan and 187,662
shares were available for future issuance.

The Company has a  restricted  stock plan (the 1992 Plan)  which  provides  that
non-employee  directors,  on becoming eligible, may be awarded shares of Class A
Common Stock by the  Compensation  Committee of the Board of  Directors.  Shares
issued  under the plan  become  vested  over  periods of up to five  years.  The
Company  has also  adopted  the 1995  Plan,  which  provides  that  non-employee
directors can elect to receive stock in lieu of a Director's  cash retainer.  In
1996 2,096 shares were issued to  non-employee  directors.  These shares  vested
immediately.  At December  28,  1996,  a total of 2,096  shares had been awarded
under these  plans,  of which 2,096 were fully  vested,  and 30,904  shares were
available  for  future  awards.  Unearned  compensation  on  unvested  shares is
recorded as of the award date and is amortized over the vesting period.

As of December 28, 1996 a total of 443,404  shares are reserved for future grant
under all of the Company's  stock plans.  However at March 7, 1997 82,749 shares
were available for additional grants.


9. INCOME TAXES



The provision (benefit) for income taxes consists of the following:

         Federal:                    1996             1995            1994
                                     ----             ----            ----
                  Current         $ 1,348         $    873          $  (314)
                  Deferred            681            1,695           (1,263)
                                      ---            -----          ------- 
                                    2,029            2,568           (1,577)
         State:
                  Current             252              418              (15)
                  Deferred            128              471             (301)
                                      ---              ---            -----
                                      380              889             (316)
                                      ---              ---            -----
                                  $ 2,409          $ 3,457          $(1,893)
                                  =======          =======          ========

                                      F-12

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

                                           1996        1995             1994
                                           ----        ----             ----
   Tax at statutory rate                   34.0 %      34.0 %          (34.0)%
   State tax, less federal tax effect       6.0         4.5             (5.6)
   Income tax credits                      (1.0)       (2.9)            (6.7)
   Tax exempt interest                     (2.4)       (1.1)            (5.0)
   Other, et                                1.4         2.3              1.0
                                          ------      ------           ------
   Provision (benefit) for income taxes    38.0 %      36.8 %          (50.3)%
                                          ======       =====           ======

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:

                                                          1996             1995
                                                          ----             ----
          Deferred tax assets:
                  Accrued liabilities                  $ 2,297          $ 1,514
                  Inventories                              944            1,106
                  Accounts receivable                      526              386
                  Other                                    429              695
                                                           ---              ---
                  Total deferred tax assets              4,196            3,701
                                                         -----            -----

          Deferred tax liabilities:
                  Depreciation                           4,923            3,628
                  Other                                      9
                                                             -
                  Total deferred tax liabilities         4,932            3,628
                                                         -----            -----

                  Net deferred tax asset (liabilities) $  (736)         $    73
                                                       =======          =======


Income taxes paid amounted to $1,716,000, $1,918,000 and $2,111,000 during 1996,
1995 and 1994, respectively.


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

In October 1985,  the Company  issued 900 shares Class A Preferred  Stock to The
Ben & Jerry's  Foundation,  Inc.  (the  Foundation),  a  non-profit  corporation
qualified  under section  501(c)(3) of the Internal  Revenue  Code.  The primary
purpose of the Foundation is to be the principal recipient of cash contributions
from the Company which are then donated to various  community  organizations and
other charitable  institutions.  Contributions to the Foundation and directly to
other  charitable  organizations,  at the rate of  approximately  7.5% of income
before income taxes,  amounted to  approximately  $514,000 and $768,000 for 1996
and 1995 respectively. In 1994 there were no contributions to the foundation.

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


11. EMPLOYEE BENEFIT PLANS

The  Company  maintains  profit  sharing  and  savings  plans  for all  eligible
employees.  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

                                      F-13

Officers that are Senior  Directors of functions)  allocated fifty percent based
upon length of service and fifty percent split evenly among all  employees.  The
profit  sharing  plan  is  informal  and  discretionary.  The  savings  plan  is
maintained in accordance  with the  provisions of Section 401(k) of the Internal
Revenue Code and allows all employees  with at least twelve months of service to
make annual tax-deferred voluntary  contributions up to fifteen percent of their
salary.  The  Company  may  match  the  contribution  up to two  percent  of the
employee's gross annual salary. Total contributions by the Company to the profit
sharing and savings plans were approximately $670,000, $769,000 and $508,000 for
1996, 1995 and 1994, respectively.


12. WRITE-DOWN OF ASSETS

In 1994, following  substantial delays with the implementation and completion of
certain automated  handling processes and refrigeration  hardening  equipment of
the  Company's St.  Albans,  Vermont plant and after receipt of a report from an
outside  engineering  firm experienced in the  refrigerated  food industry,  the
Company  decided to replace  certain of the software and equipment  installed at
the new plant.  The loss from the write-down of the related assets  (including a
portion of the previously incurred  capitalized  interest and project management
costs),  amounted to $6,779,000  (approximately  $4.1 million after tax or $0.57
per  share).  Of this  amount,  $3,804,000  was offset  against  the  balance in
construction in progress while $2,975,000 was accrued for additional anticipated
costs, which were paid during 1995.


13.  LEGAL MATTERS

On December 14, 1995, the Company was served with a class action complaint filed
in federal court in  Burlington,  Vermont.  The  complaint,  captioned  Henry G.
Jakobe,  Jr.  v. Ben &  Jerry's  Inc.,  et al.,  , was  filed by a Ben & Jerry's
shareholder  on behalf of himself and  purportedly  on behalf of all other Ben &
Jerry's  shareholders  who purchased the common stock of the Company  during the
period from March 25, 1994 through December 19, 1994. Plaintiff alleges that the
Company  violated the federal  securities  laws by making  untrue  statements of
material  facts  and  omitting  to  state  material  facts  in  1994,  primarily
concerning  the  Company's  construction  and start-up of its new  manufacturing
facility in St. Albans,  Vermont.  Also named as defendants in the Complaint are
certain present and former  officers and directors of the Company.  Plaintiff is
seeking an unspecified amount of monetary damages. On October 31, 1996 the Court
dismissed all but one of Plaintiff's claims. Pretrial discovery has commenced.


Management  believes the  allegations  made in the lawsuit are without merit and
the Company is defending the lawsuit vigorously.


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:

                                             1997                  $  559
                                             1998                     534
                                             1999                     375
                                             2000                     292
                                             2001                     297
                                             Thereafter             1,171

Rent expense for operating leases amounted to approximately  $643,000,  $662,000
and $516,000 in 1996, 1995 and 1994, respectively.

                                      F-14

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

                                           First                   Second                   Third                  Fourth
                                          Quarter                  Quarter                 Quarter                 Quarter
1996
----
<S>                                       <C>                     <C>                     <C>                      <C>        
Net sales                                 $    37,889             $    48,043             $    46,143              $    35,080
Gross profit                              $    11,965             $    16,540             $    14,354              $     9,084
Net income                                $     1,364             $     1,943             $     1,820              $    (1,201)'
Net income per
     common share                         $       .19             $       .27             $       .25              $      (.17)

1995
----

Net sales                                 $    34,205             $    42,936             $    45,405              $    32,787
Gross profit                              $     9,702             $    13,496             $    14,076              $     8,934
Net income                                $       911             $     1,653             $     2,525              $       859
Net income per
     common share                         $       .13             $       .23             $       .35              $       .12
<FN>
' Losses in the fourth  quarter  are the  result of  significantly  higher  than
normal levels of promotional spending during that time to maintain the Company's
domestic market position. In addition,  market entry costs in Europe contributed
to the loss.
</FN>

</TABLE>

                                      F-15






<PAGE>