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: October 2, 2005

[   ]    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 of               (I.R.S. Employer
          incorporation or organization)              Identification No.)

         1385 Park Center Drive, Vista, California           92081
         ----------------------------------------------------------------
         (Address of principal executive offices)         (Zip Code)


                                 (760) 560-1111
                                 --------------
              (Registrant's telephone number, including area code)

                                       N/A
                                       ---
              (Former name, former address and former fiscal year,
                          if changed since last report)


     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 whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act).  YES [ ]   NO [X]

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

     Indicate  the number of shares  outstanding  of each of  issuer's  class of
common  stock as of the  latest  practicable  date:  2,322,016  shares of common
stock, $.01 par value, outstanding at October 25, 2005.



<PAGE>

<TABLE>
<CAPTION>

                         PART 1 - FINANCIAL INFORMATION
                          ITEM 1 - FINANCIAL STATEMENTS
                          GLACIER WATER SERVICES, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)


                                                                                 October 2,      January 2,
                                                                                    2005            2005 *
                                                                                    ----            ----
                                     ASSETS                                     (unaudited)
                                     ------
<S>                                                                             <C>             <C>
Current assets:
  Cash and cash equivalents..................................................   $     3,817     $     2,256
  Accounts receivable, net of allowance for doubtful accounts of $211
   and $201 as of October 2, 2005 and January 2, 2005, respectively..........         2,088           2,476
  Repair parts...............................................................         1,837           2,403
  Prepaid expenses and other.................................................         1,394             950
                                                                                ------------    ------------
     Total current assets....................................................         9,136           8,085

Property and equipment, net..................................................        61,506          52,370
Goodwill.....................................................................         6,868           6,868
Intangible assets, net of accumulated amortization of $853 and $681 as
 of October 2, 2005 and January 2, 2005, respectively........................           303             475
Investment in Glacier Water Trust I Common Securities........................         2,629           2,629
Investment in Glacier Water Trust I Preferred Securities.....................         3,357           3,357
Other assets.................................................................         5,491           5,716
                                                                                ------------    ------------
Total assets.................................................................   $    89,290     $    79,500
                                                                                ============    ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      -------------------------------------
Current liabilities:
  Accounts payable...........................................................   $     1,512     $     2,759
  Accrued commissions........................................................         2,647           1,989
  Accrued liabilities........................................................         1,961           2,215
  Current portion of deferred rent...........................................            23              --
  Current portion of obligations under capital lease.........................           276             262
  Current portion of long-term notes payable.................................           370             460
                                                                                ------------    ------------
     Total current liabilities...............................................         6,789           7,685

Long-term debt...............................................................        87,629          87,629
Long-term notes payable......................................................        23,000          10,040
Long-term portion of deferred rent...........................................           152             112
Long-term portion of obligations under capital lease.........................           452             661
                                                                                ------------    ------------
Total liabilities............................................................       118,022         106,127

Stockholders' deficit:
  Common stock, $.01 par value; 10,000,000 shares authorized, 2,322,016
   and 2,160,218 shares issued and outstanding as of October 2, 2005 and
   January 2, 2005, respectively.............................................            39              38
  Additional paid-in capital.................................................        21,520          18,948
  Retained deficit...........................................................       (17,729)        (13,051)
  Treasury stock, at cost, 1,587,606 shares as of October 2, 2005 and
   January 2, 2005...........................................................       (32,562)        (32,562)
                                                                                ------------    ------------
     Total stockholders' deficit.............................................       (28,732)        (26,627)
                                                                                ------------    ------------
Total liabilities and stockholders' deficit..................................   $    89,290     $    79,500
                                                                                ============    ============

*Amounts derived from audited information
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       2
<PAGE>

<TABLE>
<CAPTION>

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



                                                                 Three Months Ended           Nine Months Ended
                                                              -------------------------   -------------------------
                                                               October 2,  September 26,   October 2,  September 26,
                                                                  2005          2004          2005          2004
                                                              -----------   -----------   -----------   -----------
<S>                                                           <C>           <C>           <C>           <C>
Revenues...................................................   $   22,926    $   21,332    $   60,032    $   58,123
Operating costs and expenses:
  Operating expenses.......................................       13,978        13,080        37,968        36,913
  Depreciation and amortization............................        3,937         2,733        10,698         7,834
                                                              -----------   -----------   -----------   -----------
     Cost of goods sold....................................       17,915        15,813        48,666        44,747

  Selling, general and administrative expenses.............        4,203         2,624         9,621         8,028
                                                              -----------   -----------   -----------   -----------
     Total operating costs and expenses....................       21,777        18,437        57,946        52,775
                                                              -----------   -----------   -----------   -----------
Income from operations.....................................          808         2,895         1,745         5,348
Other expenses:
  Interest expense.........................................        2,209         1,909         6,423         5,744
                                                              -----------   -----------   -----------   -----------
Income (loss) before income taxes..........................       (1,401)          986        (4,678)         (396)
Income tax benefit.........................................           --            --            --            --
                                                              -----------   -----------   -----------   -----------
Net income (loss)..........................................       (1,401)          986        (4,678)         (396)
                                                              ===========   ===========   ===========   ===========
Basic income (loss) per common share:
  Net income (loss) applicable to common stockholders......   $    (0.64)   $     0.46    $    (2.10)   $    (0.19)
                                                              ===========   ===========   ===========   ===========
     Weighted average shares used in calculation...........    2,189,339     2,145,848     2,232,873     2,128,374

Diluted income (loss) per common share:
  Net income (loss) applicable to common stockholders......   $    (0.64)   $     0.38    $    (2.10)   $    (0.19)
                                                              ===========   ===========   ===========   ===========
     Weighted average shares used in calculation...........    2,189,339     2,581,257     2,232,873     2,128,374
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>

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


                                                                                     Nine Months Ended
                                                                                     -----------------
                                                                                 October 2,     September 26,
                                                                                    2005            2004
                                                                                    ----            ----
<S>                                                                             <C>             <C>
Cash flow from operating activities:
  Net loss...................................................................   $    (4,678)    $      (396)
  Adjustments to reconcile net loss to net cash provided by
   operating activities:
     Depreciation and amortization...........................................        10,698           7,834
     Loss on disposal of assets..............................................            45             261
     Stock option compensation expense.......................................         1,142              --
  Change in operating assets and liabilities:
     Accounts receivable.....................................................           388            (471)
     Repair parts............................................................           566            (685)
     Prepaid expenses and other..............................................          (444)            384
     Payment for prepaid contract rights.....................................        (2,104)           (211)
     Other assets............................................................           836              40
     Accounts payable, accrued commissions and accrued liabilities...........          (843)          1,434
                                                                                ------------    ------------
              Net cash provided by operating activities......................         5,606           8,190
                                                                                ------------    ------------

Cash flows from investing activities:
  Investment in property and equipment.......................................       (18,214)        (10,021)
                                                                                ------------    ------------
              Net cash used in investing activities..........................       (18,214)        (10,021)
                                                                                ------------    ------------

Cash flows from financing activities:
  Principal payments on long-term notes payable..............................        (3,630)         (1,998)
  Proceeds from long-term notes payable......................................        16,500           5,218
  Principal payments under capital lease obligations.........................          (195)           (182)
  Proceeds from issuance of stock............................................         1,431             458
  Increase in deferred rent..................................................            63              --
                                                                                ------------    ------------
              Net cash provided by financing activities......................        14,169           3,496
                                                                                ------------    ------------

Net increase in cash and cash equivalent.....................................         1,561           1,665
Cash and cash equivalents, beginning of period...............................         2,256           1,924
                                                                                ------------    ------------
Cash and cash equivalents, end of period.....................................   $     3,817     $     3,589
                                                                                ============    ============




                                                                                     Nine Months Ended
                                                                                     -----------------
                                                                                 October 2,     September 26,
                                                                                    2005            2004
                                                                                    ----            ----
Supplemental disclosure of cash flow information:
  Cash paid for interest.....................................................   $     6,248     $     5,651
                                                                                ============    ============
  Cash paid for income taxes.................................................   $        33     $         3
                                                                                ============    ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       4
<PAGE>


                          GLACIER WATER SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 October 2, 2005
                                   (unaudited)

1.   Basis of Presentation

        Glacier  Water  Services,  Inc., a Delaware  corporation  ("Glacier"  or
"Company"),  is  primarily  engaged in the  operation  of  self-service  vending
machines  that  dispense  drinking  water to  consumers.  In the  opinion of the
Company's management, the accompanying consolidated financial statements reflect
all adjustments necessary for a fair presentation of the consolidated  financial
position of the Company and its  subsidiaries  and the  consolidated  results of
their operations for the three- and nine-month periods ended October 2, 2005 and
September 26, 2004 and their cash flows for the nine-month periods ended October
2,  2005  and  September  26,  2004.  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 United
States 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 three- and  nine-month  periods ended October 2,
2005 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 January 2, 2005.

2.   Stock Option Plans

        In December  2002,  the FASB issued  Statement of  Financial  Accounting
Standards (SFAS) No. 148,  Accounting for Stock-Based  Compensation - Transition
and  Disclosure.  SFAS No. 148 amends SFAS No. 123,  Accounting for  Stock-Based
Compensation,  to provide  alternative  methods of  transition  for a  voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition,  SFAS No. 148 amends the disclosure  requirements of
SFAS No.  123 to  require  prominent  disclosures  in both  annual  and  interim
financial  statements  about the method of accounting for  stock-based  employee
compensation and the effect of the method used on reported results.

        In December 2004, the Financial Accounting Standards Board (FASB) issued
Statement  of  Financial  Accounting  Standards  (SFAS) No.  123R  (SFAS  123R),
"Share-Based Payment",  which replaces SFAS No. 123, "Accounting for Stock-Based
Compensation" and supercedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees." SFAS 123R requires compensation costs related to share-based payment
transactions  to  be  recognized  in  the  financial  statements.  With  limited
exception,  the amount of compensation  cost is measured based on the grant date
fair value of the  equity or  liability  instruments  used.  SFAS 123R  requires
liability for awards to be re-measured  each reporting  period and  compensation
costs to be  recognized  over the period  that an employee  provides  service in
exchange  for the  award.  SFAS123R  is  effective  beginning  the first  annual
reporting period that begins after June 15, 2005. The Company plans to adopt the
provisions of SFAS 123R prospectively  effective fiscal year 2006. The Company's
Stock  Compensation  Program  expired in March 2004 and no options  were granted
during the year ended January 2, 2005 or the three- and nine-month periods ended
October 2, 2005. The Company does not expect that the adoption of SFAS 123R will
have a material impact on the Company's consolidated financial statements.

        The Company has options  outstanding  under the 1994 Stock  Compensation
Program.   The  Company  accounts  for  this  plan  under  the  recognition  and
measurement  principles  of APB Opinion No. 25,  Accounting  for Stock Issued to
Employees,  under  which no  compensation  cost has been  recognized,  since the
exercise  prices of the options  granted were not less than the market prices of
the stock on the date of grant.


                                       5
<PAGE>

        The  following  unaudited  pro  forma  disclosures  represent  what  the
Company's  net loss and loss per common  share  would have been had the  Company
recorded  compensation  cost for this plan in accordance  with the provisions of
SFAS No. 123:
<TABLE>
<CAPTION>

                                                                 Three Months Ended           Nine Months Ended
                                                                 ------------------           -----------------
                                                               October 2,  September 26,   October 2,  September 26,
                                                                  2005          2004          2005          2004
                                                                  ----          ----          ----          ----
                                                                       (in thousands, except per share data)
<S>                                                           <C>           <C>           <C>           <C>
Net income (loss) applicable to common stockholders,
as reported................................................   $   (1,401)   $      986    $   (4,678)   $     (396)
                                                              -----------   -----------   -----------   -----------
Add:  Total stock-based employee compensation
 expense for cashless options included in net income
 (loss)....................................................        1,142            --         1,142            --
Deduct:  Total stock-based employee compensation
  expense determined under the fair value method for
  all awards...............................................       (1,165)          (55)       (1,210)         (284)
                                                              -----------   -----------   -----------   -----------
Pro forma net income (loss) applicable to common
 stockholders..............................................   $   (1,424)   $      931    $   (4,746)   $     (680)
                                                              ===========   ===========   ===========   ===========

Basic income (loss) per common share:
As reported................................................   $    (0.64)   $     0.46    $    (2.10)   $    (0.19)
                                                              ===========   ===========   ===========   ===========
Pro forma..................................................   $    (0.65)   $     0.43    $    (2.13)   $    (0.32)
                                                              ===========   ===========   ===========   ===========

Diluted income (loss) per common share:
As reported................................................   $    (0.64)   $     0.38    $    (2.10)   $    (0.19)
                                                              ===========   ===========   ===========   ===========
Pro forma..................................................   $    (0.65)   $     0.36    $    (2.13)   $    (0.32)
                                                              ===========   ===========   ===========   ===========
</TABLE>

3.   Earnings per share

        Basic  earnings  per  common  share is  computed  based on the  weighted
average number of common shares outstanding during the period.  Diluted earnings
per common  share is computed  based on the  weighted  average  number of common
shares  outstanding  during the period increased by the effect of dilutive stock
options and warrants,  using the treasury  stock method.  The  computations  for
basic and diluted earnings per share are as follows:
<TABLE>
<CAPTION>

                                                                 Three Months Ended           Nine Months Ended
                                                                 ------------------           -----------------
                                                               October 2,  September 26,   October 2,  September 26,
                                                                  2005          2004          2005          2004
                                                                  ----          ----          ----          ----
                                                                  (in thousands,except share and per share data)
<S>                                                           <C>           <C>           <C>           <C>
Numerator for basic earnings per share - net income (loss)
 applicable to common shareholders.........................   $   (1,401)   $      986    $   (4,678)   $     (396)
                                                              -----------   -----------   -----------   -----------
Denominator - shares:
     Weighted average common shares for basic
     earnings per share....................................    2,189,339     2,145,848     2,232,873     2,128,374
     Effect of dilutive securities.........................           --       435,409            --            --
                                                              -----------   -----------   -----------   -----------
Dilutive potential shares for diluted earnings per share...    2,189,339     2,581,257     2,232,873     2,128,374
                                                              ===========   ===========   ===========   ===========
Loss per share:
     Basic income (loss) applicable to
     common shareholders...................................   $    (0.64)   $     0.46    $    (2.10)   $    (0.19)
                                                              ===========   ===========   ===========   ===========
     Dilutive income (loss) applicable to
     common shareholders...................................   $    (0.64)   $     0.38    $    (2.10)   $    (0.19)
                                                              ===========   ===========   ===========   ===========
Potentially dilutive securities not included above since
 they are antidilutive.....................................      314,261            --       369,259       406,832
                                                              ===========   ===========   ===========   ===========
</TABLE>


                                       6
<PAGE>

4.   Long-Term Debt and Line of Credit

        Company Obligated Mandatorily Redeemable Preferred Securities

        On January  27,  1998,  Glacier  Water  Trust I (the  "Trust"),  a newly
created  Delaware  business trust and a wholly-owned  subsidiary of the Company,
issued 105,154 common  securities to the Company and completed a public offering
of 3,400,000 of 9.0625% Cumulative Trust Preferred Securities with a liquidation
amount of $25.00 per security  (the "Trust  Preferred  Securities"  and together
with the common  securities  the "Trust  Securities").  The Trust exists for the
sole purpose of issuing Trust Securities and purchasing Subordinated Debentures.
Concurrent with the issuance of such securities, the Trust invested the proceeds
therefrom in an aggregate  principal  amount of  $85,000,000  of 9.0625%  Junior
Subordinated Debentures (the "Subordinated Debentures") issued by the Company.

        The Subordinated  Debentures are unsecured obligations of the Company to
the  trust  and are  subordinate  and  junior  in  right  of  payment  to  other
indebtedness  of the Company.  The Trust relies on payments on the  Subordinated
Debentures   to  make   distributions   on  the  Trust   Preferred   Securities.
Distributions  on the Trust Preferred  Securities are payable monthly in arrears
by the  Trust.  The  Company  may  cause  the  Trust to  defer  the  payment  of
distributions for a period not to exceed 60 consecutive months.  During any such
deferral  period,  distributions  will accrue and  compound  quarterly,  and the
Company may not declare or pay distributions on its common or preferred stock or
debt securities  that rank equal or junior to the  Subordinated  Debentures.  To
date,  the  Company  is  current  on  all  distributions.  The  Trust  Preferred
Securities  are  subject  to  mandatory  redemption  upon the  repayment  of the
Subordinated   Debentures  at  the  redemption  price  equal  to  the  aggregate
liquidation   amount  of  the  Securities   plus  any   accumulated  and  unpaid
distributions.  The Subordinated  Debentures mature on January 31, 2028, but may
be redeemed at the option of the Company at any time since January 31, 2003. The
Company effectively  provides a full and unconditional  guarantee of the Trust's
obligations under the Trust Securities.

        The  Company's  Board of  Directors  authorized  the  purchase  of up to
1,250,000 of the Trust Preferred Securities.  As of October 2, 2005, the Company
had repurchased 921,400 of the Trust Preferred  Securities at an average cost of
$16.40 per share.  The Company did not repurchase any shares of Trust  Preferred
Securities  during the three- and  nine-month  periods ended October 2, 2005 and
September 26, 2004. As of October 2, 2005,  the Company had used  $15,118,000 in
cash to repurchase $23,035,000 face value of the Trust Preferred Securities less
$1,098,000 of deferred  financing  costs.  The Company may continue to make such
purchases from time to time in open market transactions or block trades.

        Pursuant to an Exchange Offer,  which commenced on February 26, 2003 and
expired on April 11, 2003,  holders of a total of 983,880 shares of Common Stock
exchanged  those shares for a total of 787,105 Trust  Preferred  Securities then
held by the Company at a ratio of one share of Common Stock for  eight-tenths of
a Trust  Preferred  Security.  The Exchange  Offer  increased  long-term debt by
approximately  $19,678,000,  which represents the total liquidation value of the
787,105 Trust Preferred Securities.

        In December 2003, FASB issued  Interpretation No. 46R,  Consolidation of
Variable  Interest  Entities ("FIN 46R"),  which supercedes  FIN46. The Trust is
considered a variable  interest entity under FIN 46R. Prior to FIN 46R, variable
interest  entities  were  generally  consolidated  by  an  enterprise  when  the
enterprise had a controlling  financial interest through ownership of a majority
voting interest in the entity.  Under FIN 46R, a variable interest entity should
be  consolidated  by its  primary  beneficiary.  Because  the Company is not the
primary  beneficiary of the Trust, the financial  statements of the Trust are no
longer included in the consolidated financial statements of the Company.


                                       7
<PAGE>

FIN 46R may be adopted either by recording a cumulative  effect adjustment as of
the date of the adoption,  or restating prior period financial  statements.  The
Company opted to restate prior period financial  statements.  As a result of the
de-consolidation, the Company has recorded its ownership of 105,154 Common Trust
Securities of the Trust and its ownership of 134,295  shares of Trust  Preferred
Securities  as  long-term  assets  and  has  recorded  the  Junior  Subordinated
Debentures as long-term debt at a face value of $87,629,000.  At October 2, 2005
and  September  26,  2004,  there  were  3,265,705  Trust  Preferred  Securities
outstanding (other than the 134,295 held by the Company).

Line of Credit and Notes Payable

        On October 7, 2003, the Company  restructured  its credit  facility with
City National Bank in connection with the  acquisition of Water Island.  The two
existing  revolving  notes,  under which no borrowings  were  outstanding,  were
replaced with a new $12,000,000 revolving credit facility,  which had a maturity
date of February 1, 2009. The credit  availability  on the new revolving  credit
facility was reduced by $400,000 every three months  beginning  February 7, 2004
until its  maturity in  February  2009.  The credit  facility  required  monthly
interest  payments at the City  National  Bank's prime rate plus 1.00%.  The new
credit facility required a quarterly unused facility fee of 0.50% per annum, and
contained certain customary  financial  covenants which restricted  indebtedness
and capital expenditures.  On March 26, 2004, the City National Bank reduced the
interest rate of the  revolving  credit  facility to City National  Bank's prime
rate. All other terms on the credit facility remained the same.

        On December 1, 2004,  City National Bank increased the  availability  on
the credit  facility to  $25,000,000  and on June 30, 2005,  City  National Bank
increased the  availability on the credit  facility to $30,000,000.  The revised
credit facility requires monthly interest payments at City National Bank's prime
rate  (6.75%  per annum at October  2,  2005).  The  revolving  credit  facility
requires a quarterly  unused  facility  fee of 0.50% per annum and  continues to
contain certain customary financial covenants,  which restrict  indebtedness and
capital  expenditures.  The Company  pledged certain assets such as repair parts
and equipment as collateral for its obligations  under the credit facility.  The
credit  availability  on the  revised  revolving  credit  facility is reduced by
$1,500,000  every three months  beginning  January 1, 2007 until its maturity in
December  2010.  The  Company  was in  compliance  at  October  2, 2005 with all
covenants  under  this  credit  facility.  As of  October  2,  2005,  there  was
$23,000,000  outstanding on the credit facility,  which is included in long-term
notes payable.  Availability under the $30,000,000 revolving credit facility was
$7,000,000 as of October 2, 2005.

        As of October 2, 2005, there was $370,000  outstanding under the current
portion  of  notes  payable  associated  with the Pure  Fill  and  Water  Island
acquisitions.  The Pure Fill note was  payable  over 4 years in equal  quarterly
payments and as of October 2, 2005, had an outstanding balance of $80,000. As of
October 2, 2005 the Water  Island note had a balance of $290,000  and is payable
in October 2005.  Both the Pure Fill and the Water Island notes  payable  accrue
interest at the prime rate published in the Wall Street Journal (6.75% and 4.75%
per annum at October 2, 2005 and September 26, 2004, respectively).

5.   Comprehensive Loss

        SFAS No. 130, "Reporting  Comprehensive Income," requires classification
of other  comprehensive  income in a  financial  statement  and display of other
comprehensive  income separately from retained  earnings and additional  paid-in
capital.   Other  comprehensive   income  includes  primarily  foreign  currency
translation   adjustments   and  unrealized   gains  (losses)  on   investments.
Comprehensive  loss did not  differ  from the net loss for the  three- and nine-
months ended October 2, 2005 and September 26, 2004.


                                       8
<PAGE>

6.   Correction of Error

        The Company  determined in the third  quarter that it had  inadvertently
not recorded  amortization  expense of approximately  $72,000 related to certain
prepaid  contract rights in each of the first and second quarters of 2005, which
ended April 3, 2005 and July 3, 2005.  The Company  concluded that these amounts
were not  material to the first and second  quarters of 2005 and as a result the
$144,000  of  amortization  expense is  included  in the  three- and  nine-month
periods ended October 2, 2005 as a correction of error.

7.   Subsequent Events

        On October 3, 2005, the Company acquired 100% of the outstanding  common
stock of Gestion Bi-Eau Pure  Management,  Inc. for a purchase price (subject to
adjustment) of  approximately  CAN$1,350,000  in cash and CAN$75,000  payable on
each of the  first  and  second  anniversaries  of the  acquisition  for a total
purchase  price of  CAN$1,500,000.  Gestion  Bi-Eau Pure  Management,  Inc. is a
privately  held  company  headquartered  in  Montreal,   Canada.  Management  is
currently  in the  process  of  evaluating  the  fair  value of the  assets  and
liabilities  assumed and the  transaction  costs incurred in connection with the
acquisition,  which will be  accounted  for as part of the purchase  price.  The
fair-value  evaluation  report for the assets  purchased  will be provided by an
independent  third party. The transaction will be financed with cash on hand and
borrowings under the Company's credit facility.

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

        This  report  contains  "forward-looking"  information,  as that term is
defined by the federal securities laws, about our financial  condition,  results
of operations and business. You can find many of these statements by looking for
words such as "may", "will", "expect", "anticipate",  "believe", "estimate", and
similar words used in this report. The forward-looking statements in this report
are intended to be subject to the safe harbor protection provided by the federal
securities laws.

        These  forward-looking  statements are subject to numerous  assumptions,
risks and  uncertainties  (including trade relations and  competition)  that may
cause our actual  results to be  materially  different  from any future  results
expressed or implied in those statements.

        Because the  statements are subject to risks and  uncertainties,  actual
results  may  differ   materially   from  those  expressed  or  implied  by  the
forward-looking  statements.  We caution  readers not to place undue reliance on
these statements, which speak only as of the date of this report.

        The  cautionary  statements  set forth  above  should be  considered  in
connection with any subsequent written or oral  forward-looking  statements that
we or persons acting on our behalf may issue. We do not undertake any obligation
to review or confirm analysts'  expectations or estimates or to release publicly
any  revisions  to  any   forward-looking   statements  to  reflect   events  or
circumstances  after the date of this  report or to reflect  the  occurrence  of
unanticipated events.

Results of Operations
---------------------

Overview
--------

        Since its  inception  in 1983,  the  Company  has  created an  extensive
network of water vending  machines  located  throughout the United  States.  The
Company's  water  vending  machines,  which  include  both  outdoor  and  indoor
machines, are placed at supermarkets and other retail locations in order to take
advantage of the regular customer traffic at such locations.


                                       9
<PAGE>

        Operating  in 40 states as of October 2, 2005,  the Company  continually
looks for  opportunities  to expand its presence in existing  markets as well as
new high-potential  markets. The Company also looks for ways to reduce operating
costs in all areas. The Company explores  opportunities to implement  technology
to improve  efficiency of servicing the vending  machines to lower its operating
costs.  The Company  continues to monitor  selling,  general and  administrative
expenses and reduce costs where possible.

        During the three- and nine- month  periods  ended  October 2, 2005,  the
Company  continued with a major  initiative to upgrade its outside water vending
machines.  The upgrade  results in a new generation  machine  ("G-2") with a new
modern  appearance and increased  functionality  such as dollar bill validators,
multi-vend   capability,   a  replaceable   stainless  steel  vend  chamber  and
replaceable  Lexan  panels.  As of October 2, 2005,  the  Company  has  upgraded
approximately 10,700 machines at an approximate cost of $21,000,000. The Company
plans to complete the upgrade of  approximately  11,000 outside  machines by the
end of  fiscal  2005.  The  Company  expects  that it  will  expend  a total  of
approximately $22,000,000 in connection with this major upgrade initiative.  The
initiative  is such that the Company has the ability to time these  expenditures
with the availability of its cash flows from operations and  availability  under
its credit facility.

Revenues
--------

        Revenues for the quarter ended October 2, 2005 increased $1,594,000,  or
7.5%, to $22,926,000  from  $21,332,000 for the same period last year.  Revenues
for the nine-month period ended October 2, 2005 increased  $1,909,000,  or 3.3%,
to $60,032,000  from  $58,123,000 for the same period last year. The Company had
approximately  15,100 and 15,200 machines in operation as of October 2, 2005 and
September 26, 2004,  respectively.  The increase in revenues for the quarter and
the nine-month  periods was the result of the new "G-2"  machines  combined with
the warm summer weather across the country. On a same-store basis, the Company's
new "G-2" machines have experienced revenue increases of approximately 18.0% and
11.5% for the three- and  nine-month  periods  ended October 2, 2005 compared to
the same periods last year.

Costs and Expenses
------------------

        Operating  expenses,  excluding  depreciation and amortization,  for the
quarter  ended  October  2,  2005  increased  6.9% to  $13,978,000,  or 61.0% of
revenues,  compared to  $13,080,000,  or 61.3% of revenues,  for the same period
last year. Operating expenses, excluding depreciation and amortization,  for the
nine-month  period ended October 2, 2005 increased 2.9% to $37,968,000  compared
to $36,913,000  for the same period last year.  For the nine-month  period ended
October 2, 2005,  operating expenses,  excluding  depreciation and amortization,
were 63.2% of revenues  which was slightly  lower than the 63.5% of revenues for
the same period last year.

        Depreciation  and  amortization  expense was  $3,937,000 for the quarter
ended  October 2, 2005,  compared to  $2,733,000  for the same period last year.
Depreciation  and  amortization  expense includes the amortization of intangible
assets and prepaid  contract rights of  approximately  $765,000 and $271,000 for
the  three-month   periods  ended  October  2,  2005  and  September  26,  2004,
respectively.  Depreciation  and  amortization  expense was  $10,698,000 for the
nine-month  period ended October 2, 2005,  compared to  $7,834,000  for the same
period  last  year.   Depreciation   and   amortization   expense  includes  the
amortization of intangible  assets and prepaid  contract rights of approximately
$1,668,000  and $810,000  for the  nine-month  period ended  October 2, 2005 and
September 26, 2004,  respectively.  The Company  determined in the third quarter
that it had  inadvertently  not recorded  amortization  expense of approximately
$72,000  related to  certain  prepaid  contract  rights in each of the first and
second quarters of 2005, which ended April 3, 2005 and July 3, 2005. The Company
concluded that these amounts were not material to the first and second  quarters
of 2005 and as a result the $144,000 of amortization  expense is included in the
three- and  nine-month  periods  ended October 2, 2005 as a correction of error.


                                       10
<PAGE>

The increase in depreciation  and  amortization  expense for both the three- and
nine-month  periods was due  primarily  to new capital  expenditures,  primarily
associated  with the "G-2" upgrade of the  Company's  outside  machines,  offset
partially by some assets  becoming fully  depreciated or amortized.  The Company
currently has sufficient  machines in storage available for deployment in fiscal
2005.  Machines that have been previously  installed and are in storage awaiting
redeployment continue to be depreciated.

        SG&A  expenses  for the  quarter  ended  October  2, 2005  increased  to
$4,203,000, or 18.3% of revenues,  compared to $2,624,000, or 12.3% of revenues,
for the same period last year.  SG&A  expenses for the  nine-month  period ended
October 2, 2005  increased  to  $9,621,000,  or 16.0% of  revenues,  compared to
8,028,000,  or 13.8% of revenues, for the same period last year. The increase in
SG&A for both the three-  and nine-  month  periods  resulted  primarily  from a
one-time  non-cash  stock  compensation  charge of  $1,142,000  associated  with
cashless stock option exercises by two company executives.

        Interest  expense  for the  quarter  ended  October  2,  2005  increased
$300,000 to  $2,209,000,  compared to $1,909,000  for the same period last year.
Interest  expense for the  nine-month  period  ended  October 2, 2005  increased
$679,000 to  $6,423,000,  compared to $5,744,000  for the same period last year.
The  increase  in interest  expense was  primarily  due to  additional  interest
associated with higher outstanding borrowing on the credit facility this year as
compared to last year, primarily due to the "G-2" project.

        As a result of the foregoing,  the Company had a net loss  applicable to
common  stockholders of $1,401,000 for the  three-month  period ended October 2,
2005,  compared  to income of $986,000  for the same  period last year.  For the
nine-month  period ended October 2, 2005, the Company had a net loss  applicable
to common  stockholders  of  $4,678,000,  compared to a loss of $396,000 for the
same  period last year.  The change for both the three- and nine- month  periods
was primarily a result of the one-time non-cash stock  compensation  expense and
increased depreciation and amortization expense.

Liquidity and Capital Resources
-------------------------------

        The Company's  primary  sources of liquidity  and capital  resources are
cash and cash equivalents,  cash flows from operations and funds available under
the Company's credit facility.  On October 7, 2003, the Company restructured its
credit  facility with City National Bank. The new $12,000,000  revolving  credit
facility had a maturity  date of February 1, 2009.  The credit  availability  of
this facility was reduced by $400,000 every three months  beginning  February 7,
2004 until its maturity in February 2009. The revolving credit facility required
monthly interest  payments at the City National Bank's prime rate plus 1.00%. On
March  26,  2004,  the City  National  Bank  revised  the  interest  rate of the
revolving credit facility to City National Bank's prime rate. All other terms on
the credit facility remained the same.

        On December 1, 2004,  City National Bank increased the  availability  on
the credit  facility to  $25,000,000  and on June 30, 2005,  City  National Bank
increased the  availability on the credit  facility to $30,000,000.  The revised
credit facility requires monthly interest payments at City National Bank's prime
rate  (6.75%  per annum at October  2,  2005).  The  revolving  credit  facility
requires a quarterly  unused  facility  fee of 0.50% per annum and  continues to
contain certain customary financial covenants,  which restrict  indebtedness and
capital  expenditures.  The Company  pledged certain assets such as repair parts
and equipment as collateral for its obligations  under the credit facility.  The
credit  availability  on the  revised  revolving  credit  facility is reduced by
$1,500,000  every three months  beginning  January 1, 2007 until its maturity in
December  2010.  The  Company  was in  compliance  at  October  2, 2005 with all
covenants  under  this  credit  facility.  As of  October  2,  2005,  there  was
$23,000,000  outstanding on the credit facility,  which is included in long-term
notes payable.  Availability under the $30,000,000 revolving credit facility was
$7,000,000 as of October 2, 2005.


                                       11
<PAGE>

        For the  nine-months  ended  October  2,  2005,  net  cash  provided  by
operations was approximately $5,606,000. The Company made capital investments in
vending  machines and other  equipment  of  approximately  $18,214,000,  up from
$10,021,000  in the  nine-month  period  ended  September  26,  2004,  which was
associated  primarily  with the upgrade of the outside coin  machines.  Net cash
provided by financing activities was approximately  $14,169,000,  primarily as a
result of  additional  borrowings  under the credit  facility.  As of October 2,
2005, the Company had working  capital of  $2,347,000.  Because the Company does
not have significant product inventories, working capital will vary from time to
time  depending  on the  timing of  payables,  other  accrued  liabilities,  and
payments of prepaid contract rights. The Company's  stockholders'  deficit as of
October 2, 2005 was $28,446,000, which amount continues to be below the American
Stock  Exchange's  listing  guidelines.  Although no actions  have been taken to
date, it is possible that the American Stock Exchange could delist the Company's
stock.

        The Company believes that its cash and cash equivalents,  cash flow from
operations and the availability  under its credit facility will be sufficient to
meet its  anticipated  amounts  due under its  credit  facility,  operating  and
capital  requirements,  as well as distributions  related to the Trust Preferred
Securities, for at least the next twelve months.

Recent Accounting Pronouncements
--------------------------------

        In December 2004, the Financial Accounting Standards Board (FASB) issued
Statement  of  Financial  Accounting  Standards  (SFAS) No.  123R  (SFAS  123R),
"Share-Based Payment",  which replaces SFAS No. 123, "Accounting for Stock-Based
Compensation" and supercedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees." SFAS 123R requires compensation costs related to share-based payment
transactions  to  be  recognized  in  the  financial  statements.  With  limited
exception,  the amount of compensation  cost is measured based on the grant date
fair value of the  equity or  liability  instruments  used.  SFAS 123R  requires
liability awards to be re-measured each reporting period and compensation  costs
to be recognized over the period that an employee  provides  service in exchange
for the award.  SFAS 123R is  effective  beginning  the first  annual  reporting
period  that  begins  after  June 15,  2005.  The  Company  plans  to adopt  the
provisions of SFAS 123R prospectively  effective fiscal year 2006. The Company's
Stock  Compensation  Program  expired in March 2004 and no options  were granted
during the year ended January 2, 2005 or the nine-months  ended October 2, 2005.
The Company  does not expect that the adoption of SFAS 123R will have a material
impact on the Company's consolidated financial statements.

        In November  2004,  the FASB issued FASB  Statement  No. 151,  Inventory
Costs:  an  amendment  of ARB  No.  43,  which  establishes  standards  for  the
accounting  for  unexpected  production  defects  and  waste  and the  impact on
capitalized  inventory costs. FASB No. 151 is effective for financial statements
for fiscal years beginning after June 15, 2005. The Company does not expect that
the  adoption  of FASB 151  will  have a  material  impact  on the  consolidated
financial statements.

        In May 2005 the FASB issued FASB Statement No. 154,  Accounting  Changes
and Error  Corrections.  Statement 154 replaces APB No. 20, Accounting  Changes,
and FASB Statement No. 3,  Reporting  Changes in Interim  Financial  Statements.
FASB No.  154  changes  the  accounting  for,  and  reporting  of,  a change  in
accounting principle.  FASB No. 154 requires retrospective  application to prior
period's financial  statements of voluntary changes in accounting  principle and
changes required by new accounting  standards when the standard does not include
specific  transition  provisions,  unless it is impracticable to do so. FASB No.
154 is effective  for  accounting  changes and  corrections  of errors in fiscal
years  beginning  after  December 15, 2005.  Early  application is permitted for
accounting changes and corrections of errors during fiscal years beginning after
June 1, 2005.  The Company  does not expect  that the  adoption of FASB 154 will
have a material impact on the consolidated financial statements.


                                       12
<PAGE>

ITEM 3 - QUANTITATIVE AND QUALITIVE DISCLOSURE ABOUT MARKET RISK

        The Company's  primary  market risk exposure is interest rate risk.  The
principal  objectives  of  our  asset/liability  management  activities  are  to
minimize debt and maximize net investment income,  while maintaining  acceptable
levels of  interest  rate  risk and  facilitating  our  funding  needs.  Our net
investment  income and interest expense are subject to the risk of interest rate
fluctuations.  The Company's  outstanding  bank debt is tied to the bank's prime
lending  rate and as such,  the  Company is at risk due to  increases  in market
rates.  A 10% change in the bank's  lending  rate  would have the  potential  of
increasing the annual  interest on the  outstanding  borrowings of the bank debt
and  impacting  the future  earnings  of the Company by  approximately  $155,000
annually.  The  Company's  exposure  to interest  rate risk also  relates to the
opportunity cost of fixed-rate  obligations  associated with the Trust Preferred
Securities.  The  Company  believes  that the fixed rate of the Trust  Preferred
Securities  approximates  the Company's  long-term market rate. As of October 2,
2005, the Company held no marketable securities available-for-sale.

ITEM 4 - CONTROLS AND PROCEDURES

        Since October 2, 2005, the Company carried out an evaluation,  under the
supervision and with the  participation of our Chief Executive Officer and Chief
Financial  Officer,   of  the  effectiveness  of  our  disclosure  controls  and
procedures,  as such term is defined  in Rule  13a-15(e)  promulgated  under the
Securities and Exchange Act of 1934, as amended.  Based on that evaluation,  the
Chief  Executive  Officer and the Chief  Financial  Officer  concluded  that the
disclosure  controls  and  procedures  were  effective  as of October 2, 2005 to
ensure that  information  required to be  disclosed in reports that are filed or
submitted under the Securities and Exchange Act of 1934 is recorded,  processed,
summarized  and reported  within the time periods  specified in  Securities  and
Exchange  Commission  rules and forms.  There has been no change in our internal
controls over  financial  reporting  during the latest  fiscal  quarter that has
materially affected,  or is reasonably likely to materially affect, our internal
controls over financial reporting.



                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

        From time to time,  claims are made  against the Company in the ordinary
course of business.  With the assistance from legal counsel,  estimated  amounts
for such claims that are probable and can  reasonably  be estimated are recorded
as liabilities in the consolidated  balance sheets. The likelihood of a material
change in these  estimated  accruals  would be  dependent  on new claims as they
arise and the favorable or unfavorable outcome of the particular litigation.  As
of October 2, 2005, the Company was not a party to any legal  proceeding that is
likely to  reasonably  have a  material  impact on the  results  of  operations,
financial condition or liquidity of the Company.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECUITY HOLDERS

        There were no matters submitted to a vote of the security holders during
the quarter ended October 2, 2005.


                                       13
<PAGE>

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

        Exhibits
        --------

          10.0 Share Purchase  Agreement between Bi-Eau Pure Management Inc. and
               Glacier Water Services, Inc. dated October 7, 2005

          31.1 Certification  of Brian H. McInerney,  Chief  Executive  Officer,
               under SEC Rule 13a-14(a).

          31.2 Certification of W. David Walters, Chief Financial Officer, under
               SEC Rule 13a-14(a).

          32.1 Certification  of Brian H. McInerney,  Chief  Executive  Officer,
               under SEC Rule 13a-14(b).

          32.2 Certification of W. David Walters, Chief Financial Officer, under
               SEC Rule 13a-14(b).




                                   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: October 28, 2005                 By: /s/ Brian H. McInerney
                                           ----------------------
                                           Brian H. McInerney
                                           President and Chief Executive Officer


Date: October 28, 2005                 By: /s/ W. David Walters
                                           --------------------
                                           W. David Walters
                                           Senior Vice President and
                                           Chief Financial Officer




                                       14