<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION 
                             Washington, D.C. 20549 
                                    FORM 10-Q


(Mark One)
[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          For the quarterly period ended:  July 4, 1997

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          For the transition period from               to          
                                         -------------    -------------

     Commission FILE NUMBER: 1-11012

                           GLACIER WATER SERVICES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                               33-0493559
    -------------------------------------------------------------------
      (State or other jurisdiction                 (I.R.S. Employer 
    of incorporation or organization)              Identification No.)


2261 Cosmos Court, Carlsbad, California                92009
-----------------------------------------------------------------------
(Address of principal executive offices)             (Zip Code)

                                 (760)  930-2420
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

     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 the number of shares outstanding of each of issuer's class of 
common stock as of the latest practicable date: 3,226,075 shares of common 
stock, $.01 par value, outstanding at July 31, 1997.

<PAGE>


                           PART 1 - FINANCIAL INFORMATION
                           ITEM 1 - FINANCIAL STATEMENTS

                            GLACIER WATER SERVICES, INC.
                             CONSOLIDATED BALANCE SHEETS
                           (in thousands, except share data)

                                                          JULY 4,   DECEMBER 31,
                                                           1997        1996*
                                                        ----------- ------------
 ASSETS                                                 (unaudited)
 Current assets:
      Cash . . . . . . . . . . . . . . . . . . .        $     10     $     11 
      Accounts receivable. . . . . . . . . . . .             183          311
      Inventories. . . . . . . . . . . . . . . .           2,153        2,946 
      Prepaid commissions and other. . . . . . .           1,379        1,084 
                                                        --------     --------
           Total current assets. . . . . . . . .           3,725        4,352 
 
 Property and equipment, net of 
  accumulated depreciation . . . . . . . . . . .          48,128       36,754 
 Other assets. . . . . . . . . . . . . . . . . .           6,698        4,961
                                                        --------     -------- 
 Total assets. . . . . . . . . . . . . . . . . .        $ 58,551     $ 46,067 
                                                        --------     --------
                                                        --------     --------

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
      Accounts payable . . . . . . . . . . . . .        $  1,026     $    640 
      Accrued commissions. . . . . . . . . . . .           2,061          988 
      Accrued liabilities. . . . . . . . . . . .           1,822        1,654
                                                        --------     --------
           Total current liabilities . . . . . .           4,909        3,282 

 Long-term debt. . . . . . . . . . . . . . . . .          26,241       15,820
 Deferred income taxes . . . . . . . . . . . . .           2,979        2,979 

 Stockholders' equity:
     Preferred stock, $.01 par value;
          100,000 shares authorized, 
          no shares issued or outstanding                     --           --


     Common stock, $.01 par value;
          10,000,000 shares authorized, 3,223,825 and
          3,208,575 shares issued and outstanding, 
          respectively . . . . . . . . . . . . .              34           34 
 Additional paid-in capital. . . . . . . . . . .          15,433       15,284
 Retained earnings . . . . . . . . . . . . . . .          12,518       12,231
 Treasury stock; 170,500 shares, at cost . . . .          (3,563)      (3,563)
                                                        --------     --------

     Total stockholders' equity. . . . . . . . .          24,422       23,986 
                                                        --------     --------

 Total liabilities and stockholders' equity . . .       $ 58,551     $ 46,067 
                                                        --------     --------
                                                        --------     --------

 * Amounts derived from audited information

                                         See accompanying notes

                                                   2

<PAGE>

                                     GLACIER WATER SERVICES, INC.
                                   CONSOLIDATED STATEMENTS OF INCOME
                            (in thousands, except shares and per share data)
                                              (unaudited)


<TABLE>
<CAPTION>

                                                                          THREE MONTHS ENDED          SIX MONTHS ENDED
                                                                         JULY 4,     JUNE 30,     JULY 4,        JUNE 30,
                                                                          1997        1996         1997           1996
                                                                        ---------  ----------   ----------     ----------
  <S>                                                                   <C>        <C>          <C>            <C>
  Sales  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $ 16,038   $  12,036    $  27,214      $  22,051

  Operating costs and expenses:
         Operating expenses. . . . . . . . . . . . . . . . . . . . .       9,834       7,406       16,909         13,695
         Selling, general and administrative expenses. . . . . . . .       1,856       1,461        3,469          2,759
         Depreciation and amortization . . . . . . . . . . . . . . .       2,318       1,653        4,198          3,287
         Non-recurring acquisition charges . . . . . . . . . . . . .         870          --        1,341             --
                                                                        --------   ---------    ---------      ---------
             Total operating costs and expenses. . . . . . . . . . .      14,878      10,520       25,917         19,741
                                                                        --------   ---------    ---------      ---------
  Income from operations . . . . . . . . . . . . . . . . . . . . . .       1,160       1,516        1,297          2,310
         
  Interest expense (net) and other . . . . . . . . . . . . . . . . .         524         184          838            379
                                                                        --------   ---------    ---------      ---------

  Income before provision for income taxes . . . . . . . . . . . . .         636       1,332          459          1,931
  Provision for income taxes . . . . . . . . . . . . . . . . . . . .         238         533          172            772
                                                                        --------   ---------    ---------      ---------

  Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $    398   $     799    $     287      $   1,159
                                                                        --------   ---------    ---------      ---------
                                                                        --------   ---------    ---------      ---------

  Net income per common and  
         common equivalent share . . . . . . . . . . . . . . . . . .    $    .12   $     .24    $     .09      $     .34
                                                                        --------   ---------    ---------      ---------
                                                                        --------   ---------    ---------      ---------

  Weighted average common and
         common equivalent shares outstanding. . . . . . . . . . . .   3,310,010   3,389,589    3,313,719      3,396,029
                                                                       ---------   ---------    ---------      ---------
                                                                       ---------   ---------    ---------      ---------

</TABLE>


                                              See accompanying notes

                                                         3

<PAGE>


                                    GLACIER WATER SERVICES, INC.
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (in thousands)
                                             (unaudited)


                                                           SIX MONTHS ENDED 
                                                          JULY 4,    JUNE 30,
                                                           1997       1996  
                                                         -------    ---------
Cash flows from operating activities:
     Net income (loss). . . . . . . . . . . . . . . . .  $  287     $ 1,159  
     Adjustments to reconcile net income (loss) to 
     net cash provided by operating activities:
          Depreciation and amortization . . . . . . . .   4,198       3,287  
          Loss on disposal of assets. . . . . . . . . .     231          --   
     Change in operating assets and liabilities:
          Accounts receivable . . . . . . . . . . . . .      (1)        337  
          Inventories . . . . . . . . . . . . . . . . .    (285)       (337)
          Prepaid commissions and other . . . . . . . .     (39)       (471)
          Payments for prepaid marketing incentives . .  (1,198)       (276)
          Other assets. . . . . . . . . . . . . . . . .     (36)       (214)
          Accounts payable, accrued commissions and 
          other accrued liabilities . . . . . . . . . .   1,220         937  
                                                         ------     -------
            Net cash provided by operating activities .   4,377       4,422
                                                         ------     -------  
Cash flows from investing activities:
     Purchase of property and equipment . . . . . . . .    (119)       (353)
     Net investment in vending equipment. . . . . . . .  (5,728)     (2,815)
     Purchase of Aqua-Vend. . . . . . . . . . . . . . .  (9,355)         --
                                                         ------     -------
            Net cash used in investing activities . . . (15,202)     (3,168)
                                                         ------     -------
Cash flows from financing activities:
     Proceeds from long-term borrowings . . . . . . . .  19,980       7,605  
     Principal payments on long-term borrowings . . . .  (9,304)     (8,515)
     Proceeds from issuance of stock. . . . . . . . . .     148          10  
     Purchase of treasury stock . . . . . . . . . . . .      --        (371)
                                                         ------     -------
            Net cash used in financing activities . . .  10,824      (1,271)
                                                         ------     ------- 
Net decrease in cash. . . . . . . . . . . . . . . . . .      (1)        (17) 
Cash, beginning of period . . . . . . . . . . . . . . .      11          29
                                                         ------     -------  
Cash, end of period . . . . . . . . . . . . . . . . . .  $   10     $    12  
                                                         ------     -------
                                                         ------     -------

Supplemental disclosure of cash flow information:
     Interest paid. . . . . . . . . . . . . . . . . . .  $  937     $   400
                                                         ------     -------
                                                         ------     -------  
     Income taxes paid. . . . . . . . . . . . . . . . .  $  353     $   246  
                                                         ------     -------
                                                         ------     -------


                                 See accompanying notes

                                          4

<PAGE>



                          GLACIER WATER SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  July 4, 1997
                                   (unaudited)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    CHANGE IN FISCAL YEAR
   
      Beginning in fiscal year 1997, the company prospectively changed its 
financial reporting year from a fiscal year of twelve calendar months ending 
December 31 to a fiscal year of 52 or 53 weeks ending on the Friday closest 
to December 31.  The period from December 31, 1996 to January 3, 1997 is not 
significant to the Company's six-month operations, and has not been reported 
separately.

    BASIS OF PRESENTATION
   
      In the opinion of the Company's management, the accompanying 
consolidated financial statements reflect all adjustments (consisting only of 
normal recurring accruals) necessary for a fair presentation of the 
consolidated financial position of the Company and the consolidated results 
of its operations and its cash flows for the three- and six-month periods 
ending July 4, 1997 and June 30, 1996.  Although the Company believes that 
the disclosures in these financial statements are adequate to make the 
information presented not misleading, certain information, including footnote 
information, normally included in financial statements prepared in accordance 
with generally accepted accounting principles has been condensed or omitted 
pursuant to the rules and regulations of the Securities and Exchange 
Commission.  Results of operations for the period ended July 4, 1997 are not 
necessarily indicative of results to be expected for the full year.  For 
further information, refer to the consolidated financial statements and 
footnotes thereto included in the Company's Annual Report on Form 10-K for 
the year ended December 31, 1996.

    RECLASSIFICATION

      Certain prior year amounts have been reclassified to conform to the 
current presentation.

2.  ACQUISITION

      On March 28, 1997, the Company purchased substantially all of the 
assets of the Aqua-Vend division of McKesson Water Products Company, a 
wholly-owned subsidiary  of McKesson Corporation, for $9.0 million in cash 
plus certain direct costs, including sales tax on assets purchased. The 
transaction was accounted for under the purchase method, and the purchase 
price and related direct costs were allocated based on the estimated fair 
values of assets acquired and liabilities assumed, as follows (in thousands):

               Inventories                              $  208
               Prepaid expenses                            255
               Vending equipment                         7,565
               Other fixed assets                          145
               Prepaid marketing incentives              1,225
               Other non-current assets                    110
               Sales tax liability                        (153)
                                                        ------
                                                        $9,355
                                                        ------
                                                        ------
   

                                        5

<PAGE>

                          GLACIER WATER SERVICES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                 July 4, 1997
                                 (unaudited)


      The unaudited consolidated pro forma results of operations for the six 
months ended July 4, 1997 and June 30, 1996 presented below assume that the 
transaction occurred as of the beginning of the respective periods (in 
thousands, except per share amounts):

                                                        July 4,       June 30, 
                                                         1997          1996 
                                                      ----------    ----------
               Net revenues                            $30,371       $30,290 
               Income from operations                      317         1,532 
               Net income (loss)                          (529)          543 
               Net income (loss) per common share        ($.16)         $.16 
                                                                             


3.  INVENTORIES

      Inventories consist of raw materials, repair and spare parts and 
vending machines in process of assembly, and are stated at the lower of cost 
(moving weighted average) or market.  Costs associated with the assembly of 
vending machines are accumulated until machines are completed, at which time 
the costs are transferred to property and equipment.

      At July 4, 1997 and December 31, 1996, inventories consist primarily of 
raw materials and repair and spare parts.

4.  SUPPLEMENTARY BALANCE SHEET INFORMATION

      Included in Prepaid commissions and other are commission payments made 
to certain retailers based on a percentage of estimated quarterly vending 
machine revenues, as well as other prepaid expenses incurred in the normal 
course of business.  Prepaid commissions were $726,000 and $490,000 at July 
4, 1997 and December 31, 1996, respectively.

      Included in Other assets are prepaid marketing incentives which 
represent payments made to the Company's customers for the placement of the 
Company's machines at retail locations.  Prepaid marketing incentives, net of 
accumulated amortization were $6,100,000 and $4,606,000 at July 4, 1997 and 
December 31, 1996, respectively.

5.  NET INCOME PER SHARE

      Net income per share of common stock is computed on the basis of the 
weighted average shares of common stock outstanding plus common equivalent 
shares arising from the effect of dilutive stock options, using the treasury 
stock method.

      In March, 1997, the Financial Accounting Standards Board adopted 
Statement No. 128 "Earnings Per Share" ("Statement No. 128"), which is 
effective for periods ending after December 15, 1997.  Pro forma net income 
per share computed pursuant to Statement No. 128 would be $.12 and $.09, for 
the three- and six-month periods ended July 4, 1997, respectively, and  $.24 
and $.34 for the three- and six-month periods ended June 30, 1996. 

                                  6

<PAGE>

           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                      CONDITIONS AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

OVERVIEW

Effective January 1, 1997, the Company prospectively changed its fiscal year 
from twelve calendar months ending December 31 to a 52- or 53-week fiscal 
year ending on the Friday closest to December 31.  As a result of this 
change, the Company's 1997 fiscal quarters will each contain 13 calendar 
weeks.

On March 28, 1997, the Company purchased substantially all of the assets of 
the Aqua-Vend division of McKesson Water Products Company, a wholly-owned 
subsidiary of McKesson Corporation.  The assets purchased include 
approximately 3,000 water vending machines.  In connection with the 
acquisition, the Company has developed a detailed integration plan which 
includes the removal of approximately 800 Aqua-Vend machines from service, 
the upgrading and modification of the majority of the remaining Aqua-Vend 
machines and the rationalization and relocation of Aqua-Vend machines within 
Glacier's network of machines.  The revenues and operating costs associated 
with these machines from March 29, 1997 are included in the Company's results 
of operations.

During the second quarter, the Company focused its efforts on the integration 
of the Aqua-Vend machines, removing approximately 300 machines.  In addition, 
the Company installed 26 new outside machines and 138 in-store machines, to 
finish the quarter with 12,305 machines in operation, compared with 8,809 at 
June 30, 1996.  Included in the total at July 4, 1997 are 378 of the 
Company's in-store machines, compared with 32 at June 30, 1996.
 
REVENUES

Revenues  for the quarter ended July 4, 1997 increased 33.3% to $16,038,000, 
from $12,036,000 in the second quarter of 1996.  Revenues for the first six 
months of 1997 increased 23.4% to $27,214,000, from $22,051,000 in the same 
period last year.  The increase is primarily the result of the increased 
number of machines in operation throughout the quarter and six-month periods. 

COSTS AND EXPENSES

Operating expenses for the quarter increased to $9,834,000, or 61.3% of 
revenues, compared to $7,406,000, or 61.5% of revenues in the second quarter 
of 1996.  Operating expenses for the six months increased to $16,909,000, or 
62.1% of revenues, compared to $13,695,000, or 62.1% of revenues in 1996.  
The total dollar increase is due to the additional commissions and service 
costs associated with the additional machines in 1997.  These costs have 
remained relatively consistent as a percentage of sales as the Company 
continues to leverage its efficiencies in servicing outside machines while 
expanding its in-store operations. 

Selling, general and administrative ("SG&A") expenses for the quarter 
increased to $1,856,000, or 11.6% of revenues, compared to $1,461,000, or 
12.1% of revenues in the second quarter of 1996.  SG&A expenses for the six 
months increased to $3,469,000, or 12.7% of revenues, compared to $2,759,000, 
or 12.5% of revenues in 1996.  The increase in total dollars is due to an 
increase in the Company's activities supporting and promoting the in-store 
machine program, as well as additional administrative expenses incurred as a 
result of the Aqua-Vend acquisition.  SG&A expenses have remained relatively 
consistent as a percentage of sales due to continued cost control efforts by 
the Company. 

                                       7

<PAGE>

             ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                CONDITIONS AND RESULTS OF OPERATIONS  - (Continued)

The non-recurring acquisition charges of $870,000 and $1,341,000 for the 
quarter and six-months ended July 4, 1997 represent costs incurred pursuant 
to the Company's plan to integrate Aqua-Vend's operations with its own.  The 
Company expects to incur a total of approximately $3.5 million in 
non-recurring expenses related to the integration. These costs include 
approximately $500,000 to close certain Glacier locations and write-off 
obsolete assets, approximately $1.7 million to upgrade the Aqua-Vend machines 
to Glacier's servicing and operability standards, approximately $1.0 million 
to rationalize and relocate equipment between Aqua-Vend and Glacier locations 
and approximately $300,000 to change the signage on Aqua-Vend machines to 
that used by Glacier.  The Company anticipates that the integration will be 
completed and the remainder of the costs will be incurred by the end of the 
third quarter.  The expenses incurred to date have been grouped together and 
separately classified in the Statements of Income for financial reporting 
purposes.

Depreciation and amortization expense for the quarter increased to 
$2,318,000, compared to $1,653,000 in the second quarter of 1996.  
Depreciation and amortization expense for the six months increased to 
$4,198,000, compared to $3,287,000 in the prior year.  The increases are the 
result of the net installation of approximately 780 new Glacier machines and 
the addition of approximately 2,700 Aqua-Vend machines since June 30, 1996. 

Interest expense for the quarter increased to $524,000, compared to $184,000 
in the quarter of 1996.   Interest expense for the six months increased to 
$838,000 compared to $379,000 in the prior year.  The increases are due to 
the higher outstanding balances on the bank line of credit throughout 1997.  
Borrowings throughout the year were used to finance the Company's investment 
in new machines, and to finance the acquisition of Aqua-Vend.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity and capital resources are cash 
flows from operations and funds available under the Company's bank credit 
agreement. The credit agreement provides for borrowings of up to $35 million, 
and requires monthly interest payments at the bank's prime rate (8.5% per 
annum at July 4, 1997) or LIBOR plus 1.75%.  The credit agreement provides 
for a two-year interest-only revolving period which converts to a five-year 
term note due and payable July 1, 2003.  The agreement is collateralized by 
substantially all assets of the Company and requires, among other things, 
that the Company maintain certain debt coverage and other financial ratios.

For the six months ended July 4, 1997, net cash provided by operations was 
approximately $4.4 million, the Company made capital investments in vending 
machines and other equipment of approximately $5.8 million, and invested 
approximately $9.4 million in the purchase of Aqua-Vend.  As of July 4, 1997, 
the Company had a deficit in working capital of $1.2 million.  Because the 
Company does not have significant trade accounts receivable and product 
inventories, working capital will vary from time to time depending on the 
timing of payables.  

Approximately $26.2 million of borrowings were outstanding and $8.8 million 
was available under the credit agreement. The purchase price of the Aqua-Vend 
assets was funded by additional borrowings under the Company's credit 
agreement.  The Company believes its cash flow generated from operations and 
borrowings available under its credit agreement will be sufficient to meet 
its anticipated operating and capital requirements, including its investment 
in vending equipment and costs incurred pursuant to its integration plan, for 
at least the next twelve months.

STATEMENTS IN THIS REPORT THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING 
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT 
OF 1995.  THESE FORWARD-LOOKING STATEMENTS 

                                    8

<PAGE>

           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
              CONDITIONS AND RESULTS OF OPERATIONS  - (Continued)

WITH RESPECT TO THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE 
COMPANY INVOLVE RISKS AND UNCERTAINTIES INCLUDING, BUT NOT LIMITED TO, TRADE 
RELATIONS, DEPENDENCE ON CERTAIN LOCATIONS AND COMPETITION.  FURTHER 
INFORMATION ON POTENTIAL FACTORS WHICH COULD AFFECT THE FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS OF THE COMPANY ARE INCLUDED IN THE FILINGS OF THE 
COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING, BUT NOT 
LIMITED TO, THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED 
DECEMBER 31, 1996. 

                                   9

<PAGE>

                      PART II - OTHER INFORMATION


ITEM 6.                    EXHIBITS AND REPORTS ON FORM 8-K

           a.  EXHIBITS

               None.

           b.  REPORTS ON FORM 8-K

               The Company filed the following Reports on Form 8-K during the 
           quarterly period ending July 4, 1997:

               1.1  Report on Form 8-K filed on May 19, 1997, in connection 
                    with the Company's determination to change its fiscal 
                    year to the fifty-two or fifty-three week period ending
                    on the Friday closest to December 31.

               1.2  Report on Form 8-K/A filed on June 1, 1997, in conjunction
                    with the Company's purchase of the Aqua-Vend division from
                    McKesson Water Products Company.


                                       10

<PAGE>

                             SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.




                                    GLACIER WATER SERVICES, INC.


Date:  August 15, 1997              By: /s/ Jerry A. Gordon  
                                       --------------------------------------
                                        Jerry A. Gordon 
                                        President and Chief Operating Officer


Date:  August 15, 1997              By: /s/ Brenda K. Foster 
                                       --------------------------------------
                                        Brenda K. Foster
                                        Vice President, Controller

                                       11