<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

                                [GRAPHIC OMITTED]

(Mark One)

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

For the quarterly period ended February 26, 2000

                                       OR

[ ]   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 0-23036

                                  ODWALLA, INC.
             (Exact name of registrant as specified in its charter)

           California                                    77-0096788
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                  120 Stone Pine Road, Half Moon Bay, CA 94019
              (Address and zip code of principal executive offices)
                                 (650) 726-1888
                         (Registrant's telephone number)


              (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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

   Common Stock, no par value                             5,125,761 shares
   --------------------------                     ------------------------------
             (Class)                              (Outstanding at April 3, 2000)



<PAGE>   2


                                  ODWALLA, INC.

                                    FORM 10-Q
                FOR THE QUARTERLY PERIOD ENDED FEBRUARY 26, 2000


                                      INDEX
<TABLE>
<CAPTION>
                                                                           PAGE
<S>         <C>                                                            <C>
PART I. FINANCIAL INFORMATION

   Item 1.  Financial Statements

            Consolidated Balance Sheets as of August 28, 1999 and
            February 26, 2000..............................................   3

            Consolidated Statements of Operations for the thirteen week
            and twenty-six week periods ended February 27, 1999 and
            February 26, 2000..............................................   4

            Consolidated Statements of Cash Flows for the twenty-six week
            periods ended February 27, 1999 and February 26, 2000..........   5

            Notes to Consolidated Financial Statements.....................   6

   Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations......................................  10

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....  21

Part II. Other Information

   Item 1.  Legal Proceedings..............................................  22

   Item 6.  Exhibits and Reports on Form 8-K...............................  23
</TABLE>



                                       2
<PAGE>   3

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                  ODWALLA, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                          AUGUST 28,   FEBRUARY 26,
                                                             1999          2000
                                                          ----------   ------------
<S>                                                        <C>         <C>
Current assets
    Cash and cash equivalents                              $   2,581   $      503
    Short-term investments                                     4,788        1,263
    Trade accounts receivable, less allowance for
       doubtful accounts of $631 and $581                      6,072        6,634
    Inventories                                                3,718        4,157
    Prepaid expenses and other current assets                  1,530        1,519
    Deferred tax asset, current                                1,358        1,622
                                                           ---------   ----------
          Total current assets                                20,047       15,698
                                                           ---------   ----------
Plant, property and equipment, net                            12,877       14,491
                                                           ---------   ----------
Other assets
    Goodwill, net                                              1,117        1,063
    Covenants not to compete, net                                497          443
    Deferred tax asset, non-current                              520          438
    Other noncurrent assets                                      247          513
                                                           ---------   ----------
          Total other assets                                   2,381        2,457
                                                           ---------   ----------
                                                           $  35,305   $   32,646
                                                           =========   ==========
Current liabilities
    Accounts payable                                       $   6,876   $    6,082
    Accrued payroll and related items                          1,142        1,018
    Line of credit                                             2,319        1,950
    Other accruals                                             2,126        1,841
    Current maturities of capital lease obligations               28           25
    Current maturities of long-term debt                         172          181
                                                           ---------   ----------
          Total current liabilities                           12,663       11,097

Capital lease obligations, less current maturities                15            4
Long-term debt, less current maturities                          673          581
                                                           ---------   ----------
Total liabilities                                             13,351       11,682
                                                           ---------   ----------
Mandatorily redeemable and convertible preferred stock
    Series A, no par value, shares authorized,
       5,000,000; shares issued and outstanding,
       1,033,333 and 1,074,666.  Liquidation preference
       minimum, $8,600,000 at August 28, 1999 and
       February 26, 2000                                       7,505        7,931

Shareholders' equity
    Common stock, no par value, shares authorized,
       15,000,000; shares issued and outstanding,
       5,125,000 and 5,126,000                                29,750       29,751
    Additional paid-in capital                                    62           62
    Accumulated deficit                                      (15,363)     (16,780)
                                                          ----------   ----------
Total shareholders' equity                                    14,449       13,033
                                                          ----------   ----------
                                                          $   35,305   $   32,646
                                                          ==========   ==========
</TABLE>

           See accompanying notes to consolidated financial statements



                                       3
<PAGE>   4

                                  ODWALLA, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                        THIRTEEN WEEKS ENDED        TWENTY-SIX WEEKS ENDED
                                    ---------------------------   ---------------------------
                                    FEBRUARY 27,   FEBRUARY 26,   FEBRUARY 27,   FEBRUARY 26,
                                            1999           2000           1999           2000
                                    ------------   ------------   ------------   ------------
<S>                                     <C>            <C>            <C>            <C>
Net sales                               $ 16,342       $ 18,090       $ 31,674       $ 34,859

Cost of sales                              9,009          9,585         16,645         18,541
                                        --------       --------       --------       --------

    Gross profit                           7,333          8,505         15,029         16,318
                                        --------       --------       --------       --------

Operating expenses
    Sales and distribution                 5,671          6,271         11,284         12,498
    Marketing                                773            590          1,569          1,133
    General and administrative             1,772          1,918          3,549          3,802
                                        --------       --------       --------       --------

          Total operating expenses         8,216          8,779         16,402         17,433
                                        --------       --------       --------       --------

Loss from operations                        (883)          (274)        (1,373)        (1,115)

Other income (expense)
    Interest expense, net                    (74)           (35)          (144)           (47)
    Other                                     (3)            (4)            (6)            (4)
                                        --------       --------       --------       --------

Loss before income taxes                    (960)          (313)        (1,523)        (1,166)

Income tax benefit                           143             47            227            175
                                        --------       --------       --------       --------

Net loss                                    (817)          (266)        (1,296)          (991)

Preferred stock dividend                      --           (213)            --           (426)
                                        --------       --------       --------       --------

Net loss applicable to common
    shareholders                        $   (817)      $   (479)      $ (1,296)      $ (1,417)
                                        ========       ========       ========       ========

Basic net loss applicable to
    common shareholders per share       $  (0.16)      $  (0.09)      $  (0.25)      $  (0.28)
                                        ========       ========       ========       ========

Shares used in per share amounts           5,063          5,126          5,063          5,126
                                        ========       ========       ========       ========

Diluted net loss applicable to
    common shareholders per share       $  (0.16)      $  (0.09)      $  (0.25)      $  (0.28)
                                        ========       ========       ========       ========

Shares used in per share amounts           5,063          5,126          5,063          5,126
                                        ========       ========       ========       ========
</TABLE>

           See accompanying notes to consolidated financial statements



                                       4
<PAGE>   5

                                  ODWALLA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                        TWENTY-SIX WEEKS ENDED
                                                      --------------------------
                                                      FEBRUARY 27,  FEBRUARY 26,
                                                              1999          2000
                                                      ------------  ------------
<S>                                                       <C>           <C>
Cash flows from operating activities
   Net loss                                               $(1,296)      $  (991)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
        Depreciation and amortization                       1,151         1,295
        Deferred taxes                                       (229)         (182)
        Gain from disposal of assets                           82            --
        Changes in assets and liabilities:
          Trade accounts receivable                          (593)         (562)
          Inventories                                         178          (439)
          Prepaid expenses and other current assets          (618)           11
          Other noncurrent assets                              33          (268)
          Accounts payable                                  1,525          (794)
          Accrued payroll and related items                  (141)         (124)
          Other accrued liabilities                          (689)         (285)
                                                          -------       -------
Net cash used in operating activities                        (597)       (2,339)
                                                          -------       -------

Cash flows from investing activities
   Capital expenditures                                     (1078)       (2,799)
   Proceeds from sale of assets                                 2            --
   Proceeds from sale (purchase) of short-term
     investments                                           (4,956)        3,525
                                                          -------       -------
Net cash provided by (used in) investing activities        (6,032)          726
                                                          -------       -------

Cash flows from financing activities
   Principal payments under long-term debt                   (201)          (83)
   Net borrowings (payments) under line of credit             489          (369)
   Payments of obligations under capital leases               (98)          (14)
   Sale of preferred stock                                  7,300            --
   Issuance of common stock                                     8             1
                                                          -------       -------
Net cash provided by (used in) financing activities         7,498          (465)
                                                          -------       -------

Net increase (decrease) in cash and cash equivalents          869        (2,078)

Cash and cash equivalents, beginning of period              3,191         2,581
                                                          -------       -------

Cash and cash equivalents, end of period                  $ 4,060       $   503
                                                          =======       =======
</TABLE>

           See accompanying notes to consolidated financial statements



                                       5
<PAGE>   6

                                  ODWALLA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    SUMMARY OF ACCOUNTING POLICIES AND BASIS OF PRESENTATION

      Basis of Presentation. The accompanying consolidated balance sheet of
Odwalla, Inc. and its subsidiary ("Odwalla" or "Company") at February 26, 2000
and the related consolidated statements of operations and of cash flows for the
thirteen week and twenty-six week periods ended for each of February 27, 1999
and February 26, 2000 have not been audited by independent accountants. However,
in management's opinion, they include all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the financial
position and the results of operations for the periods presented. The statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosure
normally included in financial statements prepared in conformity with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The operating results for the interim periods are not
necessarily indicative of results to be expected for an entire year. The
aforementioned statements should be read in conjunction with the consolidated
financial statements for the year ended August 28, 1999 appearing in Odwalla's
1999 Annual Report on Form 10-K.

2.    CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

      We consider all investments with an initial maturity of three months or
less at the date of purchase to be cash equivalents. Both cash equivalents and
short term investments are considered available-for-sale securities and are
reported at amortized cost, which approximates fair value.

3.    INVENTORIES

      Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                   August 28,  February 26,
                                                        1999           2000
                                                   ---------   ------------
<S>                                                 <C>           <C>
        Raw materials                               $  2,433      $   2,388
        Packaging supplies and other                     629            924
        Finished product                                 656            845
                                                    --------      ---------

                                                    $  3,718      $   4,157
                                                    ========      =========
</TABLE>



                                       6
<PAGE>   7

                                  ODWALLA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


4.    PLANT, PROPERTY AND EQUIPMENT

      Plant, property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                 August 28,  February 26,
                                                      1999           2000
                                                 ---------   ------------
<S>                                              <C>           <C>
      Land                                        $    618      $     618
      Buildings and building improvements            7,220          7,233
      Leasehold improvements                         1,397          1,418
      Machinery and equipment                        7,485          8,230
      Vehicles                                         625            839
      Data processing equipment                      2,294          2,672
      Other                                          1,986          3,414
                                                  --------      ---------
                                                    21,625         24,424
      Less accumulated depreciation and
        amortization                                (8,748)       (9,933)
                                                  --------      ---------
      Plant, property and equipment, net          $ 12,877      $  14,491
                                                  ========      =========
</TABLE>

5.    EARNINGS PER COMMON SHARE AND PREFERRED STOCK DIVIDEND

      Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed using the weighted average number of common and dilutive common
equivalent shares outstanding during the period. Common equivalent shares
consist of the shares issuable upon the exercise of stock options and warrants
under the treasury stock method.

      The following table shows the computation of basic and diluted earnings
per share, in thousands except per share data:

<TABLE>
<CAPTION>
                                                     THIRTEEN WEEKS ENDED      TWENTY-SIX WEEKS ENDED
                                                    ---------------------      ----------------------
                                                    FEB. 27,     FEB. 26,      FEB. 27,      FEB. 26,
                                                      1999          2000          1999          2000
                                                    --------     --------      --------      --------
<S>                                                 <C>           <C>           <C>           <C>
Basic:
  Weighted average common shares outstanding          5,063         5,126         5,063         5,126
  Net loss                                          $  (817)      $  (266)      $(1,296)      $  (991)
  Net loss attributable to common shareholders      $  (817)      $  (479)      $(1,296)      $(1,417)
  Per share amount, attributable to common
    shareholders                                    $ (0.16)      $ (0.09)      $ (0.25)      $ (0.28)

Diluted:
  Weighted average common shares outstanding          5,063         5,126         5,063         5,126
  Shares used in per share amounts                    5,063         5,126         5,063         5,126
  Net loss                                          $  (817)      $  (266)      $(1,296)      $  (991)
  Net loss attributable to common shareholders      $  (817)      $  (479)      $(1,296)      $(1,417)
  Per share amount, attributable to common
    shareholders                                    $ (0.16)      $ (0.09)      $ (0.25)      $ (0.28)
</TABLE>

      We had no dilutive common equivalent shares during either period due to
the reported net loss.



                                       7
<PAGE>   8

                                  ODWALLA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


      Holders of Series A Preferred Stock ("Series A Stock") are entitled to a
receive an 8% annual dividend which is payable in either cash or additional
Series A Stock, at our election. The dividend is payable semi-annually. For the
thirteen and the twenty-six week periods ended February 26, 2000, we increased
our net loss by $213,000 per period as part of the next semi-annual dividend. In
December 1999, Odwalla's Board of Directors chose to pay the semi-annual
dividend to the Series A Stock holders by issuing 41,333 shares of Series A
Stock payable on December 31, 1999. The amount of the dividend represents the
difference between net loss and net loss attributable to common shareholders.
Under the definitive merger agreement with Fresh Samantha, as described in Note
8, the Series A Stock will be converted into common stock as of the effective
date of the proposed merger.

6.    RECLASSIFICATION

      To conform with new classifications in our fiscal 2000 financial statement
presentation, we reclassified certain fiscal 1999 expenses. The reclassification
was an increase ($54,000 and $104,000 for the thirteen and twenty-six week
periods ended February 27, 1999) in fiscal 1999 sales and distribution costs and
a corresponding decrease in general and administrative expenses.

7.    LINE OF CREDIT

      The terms of our Revolving Credit Agreement ("Credit Agreement") contain
certain covenants, including maintenance of certain financial, leverage, and
debt service coverage ratios, and certain tangible net worth. As of February 26,
2000, we were not in compliance with certain covenants. We requested our lender
to waive the specific February 26, 2000 covenant violations and, in April 2000,
the lender granted the requested waiver. See Note 8 regarding an increase in the
line of credit following the proposed merger with Fresh Samantha.

8.    PROPOSED MERGER WITH FRESH SAMANTHA

      On February 2, 2000, Odwalla announced a definitive agreement to merge
with Fresh Samantha, Inc. Under the merger agreement, Odwalla expects to deliver
approximately 3,812,000 shares of Odwalla common stock in exchange for all of
the outstanding stock of Fresh Samantha. The Fresh Samantha shareholders will
own approximately 34.0% of the outstanding common stock following the
consummation of the merger and the issuance of common stock described below. The
merger agreement also contains a working capital "target" amount for each of
Odwalla and Fresh Samantha, and subject to the detailed provisions of the merger
agreement, the number of shares of Odwalla common stock to be issued in the
merger may be increased or decreased if Odwalla and Fresh Samantha exceed or
fall short of their respective working capital target.

      Odwalla shareholders are scheduled to meet on April 25, 2000 to vote on
whether to approve the merger with Fresh Samantha and other matters. If
approved, the merger is expected to close shortly thereafter. However, there can
be no assurance that the proposed merger will be consummated by Odwalla.

      Upon consummation of the merger, the businesses of Fresh Samantha and
Odwalla will be combined and we will bear all the expenses incurred by both
Fresh Samantha and Odwalla in connection with the merger. As of January 22,
2000, Fresh Samantha had negative working capital of $3.9 million, which will
impose additional post-merger financing requirements on us. In order to cover
these expenses, as well as expenses associated with the integration and
operation of Odwalla and Fresh Samantha's combined businesses, we are arranging
additional financing. We have received a commitment letter from Imperial Bank
for an increase in our credit facility from $5.0 million to $10.0 million and
entered into a common stock purchase agreement, dated February 11, 2000, with
Catterton-Simon Partners and U.S. Equity Partners, L.P. to sell $6.0 million of
Odwalla common stock. U.S. Equity Partners will purchase $5.0 million of common
stock and Catterton-Simon Partners will purchase $1.0 million of common stock.



                                       8
<PAGE>   9

                                  ODWALLA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Both the credit facility increase and the sale of Odwalla common stock are to be
completed at the time of the closing of the merger. However, there is no
guarantee that these financing transactions will be consummated and if not, we
may be unable to obtain financing through other means and upon favorable terms.
Failure to complete these financing transactions may prevent the merger from
occurring or could jeopardize its success and, as a result, harm our business,
results of operations, and financial condition. In addition, Catterton-Simon
Partners, the holder of all outstanding Series A preferred stock, has agreed to
convert all Series A preferred stock and the warrant it holds to purchase 75,000
shares of Odwalla stock into 1,333,333 shares of common stock at the effective
date of the merger.

      The merger of Odwalla and Fresh Samantha will be accounted for using the
purchase method of accounting under Accounting Principles Board Opinion No. 16.
Under this accounting treatment, as of the effective time of the merger, the
excess of the cost of acquiring Fresh Samantha, including the value of the
shares of Odwalla common stock to be issued to Fresh Samantha shareholders, over
the fair market value of the assets and liabilities of Fresh Samantha assumed
will be recorded as goodwill. Odwalla intends to amortize this goodwill on a
straight-line basis over a 20 year period.



                                       9
<PAGE>   10

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

CAUTION ABOUT FORWARD-LOOKING STATEMENTS

      This Form 10-Q includes forward-looking statements about future financial
results, future business changes and other events that haven't yet occurred. For
example, statements like we expect, we anticipate or we believe are
forward-looking statements. Investors should be aware that actual results may
differ materially from our expressed expectations. We will not necessarily
update the information in this Form 10-Q if any forward-looking statement later
turns out to be inaccurate. Details about risks that could affect various
aspects of our business are discussed throughout this Form 10-Q. Investors
should read all of these risks carefully. Investors should also refer to
Odwalla's Form 10-K for the year ended August 28, 1999, including our financial
statements and related notes included in that Form 10-K, the proxy statement for
the Annual Shareholders meeting scheduled for April 25, 2000, and other
documents that we file from time to time with the Securities and Exchange
Commission in conjunction with the following discussion and analysis.

OVERVIEW

      Odwalla's business is to provide easy access to great tasting nourishment.
We are the leading branded all-natural, super-premium refrigerated juice company
in the country, serving selected markets in the Western, Midwest, Mid-Atlantic
and Southeastern regions of the United States. Odwalla's complete product line
consists of more than 25 all-natural, super-premium juices and smoothies
(including single-flavor and blended fruit- and vegetable-based juice products),
all-natural meal replacement and dairy-free shakes, natural spring water and
all-natural food bars. Our beverage product line appeals to many consumers
because of the superior taste of minimally processed beverages and greater
nutritional value compared to juice from concentrate or with artificial flavors.

      We want to be the leading nourishment company in our existing and future
markets. We seek to achieve this objective by leading the industry in beverage
and other food knowledge, optimizing quality through sourcing and production,
controlling product access and distribution from production through retail,
artful presentation, growing through geographic and product line expansion,
leveraging our information systems, interacting with consumers and living our
vision.

      Odwalla's sourcing procedures and production methods enable us to create
products with high nutritional and flavor quality. The distribution of our
products through both our own and other direct-store-delivery systems allows us
to control product quality and presentation, as well as to develop relationships
with trade partners. We sell and distribute our products to over 3,800 retail
locations, including supermarkets, specialty retailers, natural food stores,
warehouse outlets, convenience stores and food service operators through our
direct-store-delivery system.

      Odwalla is committed to certain values -- nourishing consumers,
shareholders and other stakeholder groups; environmental awareness; and support
for the communities we serve. We believe that our products reflect these values.

      Odwalla products are currently sold in Arizona, California, Colorado,
Georgia, Illinois, Louisiana, Maryland, Michigan, Minnesota, Nevada, New Jersey,
New Mexico, New York, North Carolina, Oregon, Pennsylvania, Texas, Utah,
Virginia, Washington, the Washington, D.C. area, and Wisconsin. Our all-natural
food bars are available in additional states and can also be purchased through
our Web site at odwalla.com.



                                       10
<PAGE>   11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


PROPOSED BUSINESS TRANSACTION

      On February 2, 2000, Odwalla announced a definitive agreement to merge
with Fresh Samantha, Inc. Fresh Samantha manufactures and distributes
all-natural super-premium refrigerated juices. Its product line consists of
approximately 20 blends of juices, depending on the season, which are
distributed to selected markets along the East Coast from Maine to Florida from
a single production facility in Saco, Maine. Certain of the citrus juices sold
by Fresh Samantha are co-packed by vendors and sold under the Fresh Samantha
label. Fresh Samantha has ten regional distribution facilities where finished
product is stored for local distribution. Fresh Samantha's products include
classic juices, including orange juice and grapefruit juice, smoothies and other
nutritionally fortified juice products. Fresh Samantha sales for the year ended
October 1999 were $32.2 million.

      Under the merger agreement, Odwalla expects to deliver approximately
3,812,000 shares of Odwalla common stock in exchange for all of the outstanding
stock of Fresh Samantha. The Fresh Samantha shareholders will own approximately
34.0% of the outstanding common stock following the consummation of the merger
and the issuance of common stock described below. The number of shares to be
delivered by Odwalla will not be adjusted if the price of our common stock
increases or decreases. However, the merger agreement contains a working capital
"target" amount for each of Odwalla and Fresh Samantha, and subject to the
detailed provisions of the merger agreement, the number of shares of Odwalla
common stock to be issued in the merger may be increased or decreased if Odwalla
and Fresh Samantha exceed or fall short of their respective working capital
target.

      Upon consummation of the merger, the businesses of Fresh Samantha and
Odwalla will be combined and we will bear all the expenses incurred by both
Fresh Samantha and Odwalla in connection with the merger. As of January 22,
2000, Fresh Samantha had negative working capital of $3.9 million, which will
impose additional post-merger financing requirements on us. In order to cover
these expenses, as well as expenses associated with the integration and
operation of Odwalla and Fresh Samantha's combined businesses, we are arranging
additional financing. We have received a commitment letter from Imperial Bank
for an increase in our credit facility from $5.0 million to $10.0 million and
entered into a common stock purchase agreement, dated February 11, 2000, with
Catterton-Simon Partners and U.S. Equity Partners, L.P. to sell $6.0 million of
Odwalla common stock. U.S. Equity Partners will purchase $5.0 million of common
stock and Catterton-Simon Partners will purchase $1.0 million of common stock.
Both the credit facility increase and the sale of Odwalla common stock are to be
completed at the time of the closing of the merger. However, there is no
guarantee that these financing transactions will be consummated and if not, we
may be unable to obtain financing through other means and upon favorable terms.
Failure to complete these financing transactions may prevent the merger from
occurring or could jeopardize its success and, as a result, harm our business,
results of operations, and financial condition. In addition, Catterton-Simon
Partners, the holder of all outstanding Series A preferred stock, has agreed to
convert all Series A preferred stock and the warrant it holds to purchase 75,000
shares of Odwalla stock into 1,333,333 shares of common stock at the effective
date of the merger.

      Odwalla shareholders are scheduled to meet on April 25, 2000 to vote on
whether to approve the merger with Fresh Samantha and other matters. If
approved, the merger is expected to close shortly thereafter. However, there can
be no assurance that the proposed merger will be consummated by Odwalla. At the
effective date of the merger, Doug Levin, chief executive officer and a founder
of Fresh Samantha, will become President of Odwalla.



                                       11
<PAGE>   12

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


RESULTS OF OPERATIONS

      The following table presents, as a percentage of net sales, certain
statements of operations data for the thirteen week and twenty-six week periods
ended for each of February 27, 1999 and February 26, 2000. These operating
results are not necessarily indicative of the results for any future period.

<TABLE>
<CAPTION>
                                  THIRTEEN WEEKS ENDED       TWENTY-SIX WEEKS ENDED
                                -------------------------  -------------------------
                                FEBRUARY 27, FEBRUARY 26,  FEBRUARY 27, FEBRUARY 26,
                                       1999         2000          1999         2000
                                ------------ ------------  ------------ ------------
<S>                                  <C>          <C>           <C>          <C>
Net sales                             100.0%       100.0%        100.0%       100.0%
Cost of sales                          55.1         53.0          52.6         53.2
                                      -----        -----         -----        -----
Gross margin                           44.9         47.0          47.4         46.8
Operating expenses
  Sales and distribution               34.7         34.7          35.6         35.9
  Marketing                             4.7          3.2           4.9          3.2
  General and administrative           10.9         10.6          11.2         10.9
                                      -----        -----         -----        -----
Loss from operations                   (5.4)        (1.5)         (4.3)        (3.2)
Interest and other income
  (expense), net                       (0.5)        (0.2)         (0.5)        (0.1)
Income tax benefit                      0.9          0.2           0.7          0.5
                                      -----        -----         -----        -----
Net loss                               (5.0)%       (1.5)%        (4.1)%       (2.8)%
                                      =====        =====         =====        =====
</TABLE>

      NET SALES. Net beverage and bar sales for the second quarter of fiscal
2000 increased 11.7% to $18.0 million compared to $16.2 million in the second
quarter of fiscal 1999. By-product sales were approximately $43,000 in the
second quarter of fiscal 2000 compared to $191,000 for the second quarter of
fiscal 1999. The decrease in by-product sales resulted from the sale of our
small by-product operation in late fiscal 1999. Total net sales for the second
quarter of fiscal 2000 increased 10.7% to $18.1 million compared to $16.3
million for the same period last year. Our sales growth rate this quarter was
about the same for both our direct-store-delivery and our distributor business.
Total sales in our newest markets, which include the Midwest, Mid-Atlantic and
Atlanta markets, were about 7% of total sales and represent a significant
percentage increase from the second quarter of fiscal 1999 as we were in the
early stages of selling in some of the newer markets at that time. Because we
sell product to distributors at a wholesale price lower than the price to retail
trade partners, our increased use of distributors will not produce the same net
sales growth that would occur if the same number of products were sold to retail
trade partners. Food bar sales rose almost 30% from the same quarter of last
year, although food bar sales represented less than 5% of our net sales.

      Net beverage and bar sales for the first half of fiscal 2000 increased
11.2% to $34.8 million compared to $31.2 million for the same period last year.
By-product sales were approximately $73,000 this year compared to $400,000 for
the first half of fiscal 1999. As noted above, we sold our by-product operation
in late fiscal 1999. Total net sales for the first half of fiscal 2000 were
$34.9 million, an increase of 10.1% over the $31.7 million of net sales in the
same period last year. Sales growth for the first half of the year was about
equal for our direct-store-delivery and our distributor business and was
strongest in our new markets and most established markets. Food bar sales
increased about 28% during the first half of fiscal 2000 compared to the same
period in the prior year due to increased geographic distribution and sales
promotions. Food bar sales represent less than 5% of net sales.

      On September 1, 1999, we introduced new branded, custom-designed 450
milliliter and 325 milliliter bottles made from recyclable, HDPE plastic. Our
new bottle retains fresh fruit flavor notes better than our previous bottle and
better than the bottles commonly used by our competitors. It also has a
tamper-resistant, screw-on cap, which allows consumers to easily reseal their
beverage while drinking Odwalla on-the-go. The characteristics of the new bottle
also extend the shelf life of our products. At the same time, we began using a
new bottling line designed to accommodate our new bottles. During the first
quarter of fiscal 2000, we experienced problems in producing beverage products
to meet sales orders during the initial introduction



                                       12
<PAGE>   13

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


period. We also experienced unexpected issues that caused some products to
ferment and, ultimately, caused some bottles to bloat. These issues disrupted a
consistent flow of product during the first half of the first quarter of fiscal
2000. We believe that these issues negatively impacted sales in the first
quarter.

      COST OF SALES. Cost of sales increased to $9.6 million in the second
quarter of fiscal 2000 compared to $9.0 million for the same period during
fiscal 1999.

      In late December 1998, the San Joaquin Valley in central California
experienced a citrus freeze that seriously damaged the navel orange crop. Other
parts of California were also affected, but to a significantly lesser extent.
The freeze also impacted the California Valencia orange crop and other citrus,
which extended the impact throughout calendar 1999 and part of January 2000,
which included part of the second quarter of fiscal 2000. The immediate affect
of the freeze was to increase the price of the fresh citrus we purchase, which
continued into the second quarter of fiscal 2000. We also experienced poorer
citrus yields and some delay in fruit maturity. The freeze also caused us to be
more reliant on citrus sources farther from our production facility than in
prior years, which caused an increase in freight cost.

      As a result of the citrus freeze, we became more dependent upon
alternative and more expensive sources of fresh supply than in prior years. We
used our extensive network of grower contacts to continually try to maintain our
supply of fresh ingredients. The cost and quality of the new crop now available
is expected to be comparable to those prior to the citrus freeze, although we
continued to experience less favorable citrus yields than normal citrus costs in
the second quarter of fiscal 2000.

      Apples are another significant ingredient in our beverage products.
Currently, the demand for apples on the fresh market has increased our cost
compared to the first half of fiscal 1999.

      Gross margin as a percentage of net sales was 47.0% in the second quarter
of fiscal 2000, an increase from 44.9% in the second quarter of fiscal 1999. The
gross margin increase for the second quarter of fiscal 2000 compared to the
prior year resulted from (a) a normalization of citrus costs in the last half of
the second quarter despite an increase in apple costs, (b) better efficiencies
in labor and packaging yields due to the new bottling line, offset by (c)
additional packaging costs due to the new bottle and the increased costs of the
new bottling line.

      Cost of sales for the first half of fiscal 2000 were $18.5 million
compared to $16.6 million in the same period last year. Gross margin as a
percentage of net sales was 46.8% for the first half of this year compared to
47.4% in the prior year. Gross margin decreased primarily due to (a) the citrus
freeze discussed above which, because it occurred in December 1998, did not
impact the first quarter and the early part of the second quarter of fiscal
1999, (b) the increase in the cost of apples, (c) the additional costs due to
the issues involved with our new bottle introduction in the first quarter of
fiscal 2000, as noted above, as we worked through the production challenges of
the new bottling line, and (d) the better efficiencies in labor and packaging
yields from the new bottling line in the second quarter of fiscal 2000.

      SALES AND DISTRIBUTION. Sales and distribution expenses increased to $6.3
million in the second quarter of fiscal 2000 compared to $5.7 million in the
second quarter of fiscal 1999, and remained constant at 34.7% of net sales in
each quarter. The increase in absolute dollars is due to the increased costs of
utilizing a direct-store-delivery system in some of our newer markets, some of
which were previously serviced with third party distributors, and increased
national and regional labor costs. Future decisions regarding growth and
expansion consistent with long-term strategic objectives may increase sales and
distribution costs as a percentage of net sales. We continue to look for
efficiencies in this part of our business. However, expansion into markets
serviced by our direct-store-delivery system will require an investment for some
initial period.

      Expenses will continue to be affected as we seek to find the proper mix
between third party distributors and our own direct-store-delivery system in a
given market. The perishable nature of most of our



                                       13
<PAGE>   14

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


products and our stringent service standards can make it difficult to find
appropriate distributors in some markets. In March 2000, we entered into an
agreement whereby we distribute Fresh Samantha products in the Washington, D.C.
market. We may experience additional costs during the initial months of this
agreement as we hire and train new personnel, revise direct-store-delivery
routing, and move into a new facility before completion of the proposed merger
anticipated in late April 2000.

      Sales and distribution expenses for the first half of fiscal 2000 were
$12.5 million or 35.9% of net sales compared to $11.3 million or 35.6% of net
sales during the same period last year. The increase in both absolute dollars
and as a percentage of net sales results from increased national and regional
labor costs and the increased costs of utilizing a direct-store-delivery system
in some of our newer markets, some of which were previously serviced with third
party distributors, particularly in the first quarter of fiscal 2000.

      MARKETING. Marketing expenses decreased to $590,000 in the second quarter
of fiscal 2000 compared to $773,000 in the second quarter of fiscal 1999. For
the first half of fiscal 2000, marketing expenses were $1.1 million compared to
$1.6 million in the same period last year. Most of the decrease in expenses from
last year results from a change in marketing strategy which resulted in fewer
employees, less advertising, and decreased product tastings as we move to more
strategic tastings, both in retail locations and at community events. These
reductions were offset by an increase in market research in the second quarter
of fiscal 2000.

      Despite the reduced marketing expenses during the first half of this year
compared to the prior year, we expect marketing expenses to increase in both
dollars and as a percentage of net sales later in fiscal 2000 as we integrate
the Odwalla and Fresh Samantha brands.

      GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
to $1.9 million in the second quarter of fiscal 2000 from $1.8 million in the
second quarter of fiscal 1999, and decreased as a percentage of net sales to
10.6% from 10.9% last year. The change was due primarily to an increase in
professional fees and collection costs. We expect that general and
administrative costs will increase in absolute dollars throughout the remainder
of fiscal 2000, particularly if the merger with Fresh Samantha is effected and
we begin to integrate Fresh Samantha with Odwalla. We will continue to invest in
infrastructure, particularly in information systems and research and
development, to allow for sustainable growth.

      For the first half of fiscal 2000, general and administrative expenses
were $3.8 million or 10.9% of net sales compared to $3.5 million or 11.2% of net
sales in the first half of fiscal 1999. Most of the increase in absolute dollars
resulted from professional and recruiting fees and collection costs.

      INTEREST AND OTHER EXPENSE. Odwalla had net interest and other expense of
$39,000 in the second quarter of fiscal 2000 compared to $77,000 in the second
quarter last year. The net interest expense resulted primarily from borrowings
under the line of credit and other existing debt for each quarter. Although
we've invested the net proceeds of the Series A Stock offering funded in
February 1999, we continue to incur interest expense primarily from borrowings
under our existing line of credit agreement and the imputed interest impact of
the fiscal 1998 settlement with the U.S. Government.

      For the first half of fiscal 2000, we had net interest and other expense
of $51,000 compared to $150,000 in the prior year. In fiscal 2000, borrowings
under our line of credit were at lower levels than in the prior year and we
recognized interest income from the invested proceeds of the February 1999
Series A Stock offering.

      INCOME TAX BENEFIT. The $47,000 income tax benefit for the second quarter
of 2000 resulted from the tax benefit associated with reported net losses. In
the second quarter of fiscal 1999, we recorded a $143,000 income tax benefit. We
recorded a $175,000 tax benefit for the first half of fiscal 2000 compared to a
$227,000 tax benefit for the same period last year. The 15% effective tax rate
for all periods noted for fiscal



                                       14
<PAGE>   15

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


2000 and 1999 varies from the federal statutory tax rate primarily due to the
effect of establishing a deferred tax asset valuation allowance. We recorded a
valuation allowance for a portion of the net deferred tax asset due to
uncertainty as to the ultimate realization of such assets. We will continue to
assess the valuation allowance as additional information regarding our future
profitability is available.

LIQUIDITY AND CAPITAL RESOURCES

      At February 26, 2000, we had working capital of $4.6 million compared to
working capital of $7.4 million at August 28, 1999. The decrease resulted
primarily from cash used for capital asset purchases and to reduce our line of
credit. At February 26, 2000, we had cash and cash equivalents and short-term
investments of $1.8 million, compared to $7.4 million at August 28, 1999.

      Net cash used in operating activities in the first twenty-six weeks of
fiscal 2000 was $2.3 million. This consisted of the net loss plus depreciation
and amortization and the increase in accounts receivable, inventories and the
increase in noncurrent assets, primarily costs of the Fresh Samantha
transaction, and the decrease in accounts payable, accrued payroll and related
items and other accrued liabilities. Net cash provided by investing activities
in the first twenty-six weeks of fiscal 2000 was $726,000, consisting primarily
of the sale of short-term investments offset by capital expenditures for
production equipment at the Dinuba plant, display coolers and, to a lesser
extent, computer equipment. Net cash used in financing activities in the first
twenty-six weeks of fiscal 2000 was $465,000, consisting primarily of the
reduction on our outstanding line of credit.

      We've used, and expect to continue to use, both operating and capital
lease financing to obtain production equipment, computer and communication
equipment, and coolers used in selling our products. We are currently discussing
additional lease lines with several companies, although we haven't completed a
transaction with a leasing company and there can be no assurance that we will
finalize the proposed transaction. If we don't obtain adequate lease or other
financing, our ability to obtain needed equipment may negatively affect our
operations. For the first half of fiscal 2000, we utilized significant cash to
purchase equipment that we were unsuccessful in leasing at acceptable terms.

      In September 1999, we entered into a revolving credit agreement with a new
lender and paid the balance then outstanding under our prior line of credit
arrangement. The credit agreement provides a revolving credit facility up to
$5.0 million. The first $2.0 million of borrowings do not require separate
borrowing base reporting. Borrowings over $2.0 million and up to $5.0 million
are limited to 80% of eligible accounts receivable. The credit agreement defines
eligible accounts receivable which generally represents all trade accounts
receivable less delinquent balances. Interest is payable monthly at either the
prime interest rate plus 1% or the Eurodollar rate plus 3.5%. The interest rate
to be incurred is selected by Odwalla at the inception of each loan and may be
changed during the period in which the borrowed amount is outstanding in
accordance with provisions included in the credit agreement. The initial term of
the credit agreement is for three years.

      All of our assets are pledged as collateral under the credit agreement. We
are also required to meet certain covenants, including maintenance of certain
financial, leverage, and debt service coverage ratios, and certain tangible net
worth. The credit agreement also contains certain business restrictions,
including the ability to borrow additional funds, limitations on capital
expenditures in excess of certain amounts, restrictions on the payment of cash
dividends, sale or purchase of Company stock, ability to encumber or sell
Company assets, and limitations on other business transactions without prior
approval from the lender. As of February 26, 2000, we were not in compliance
with certain covenants. We requested our lender to waive the specific February
26, 2000 covenant violations and, in April 2000, the lender granted the
requested waiver.

      See the description of the proposed business transaction on page 11
regarding other matters resulting from the proposed merger with Fresh Samantha.



                                       15
<PAGE>   16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


      Based upon information currently available, we believe that our existing
cash and cash equivalents and our current and anticipated borrowing capability
will be adequate to meet our obligations as they become due in the next twelve
months.

OTHER FACTORS AFFECTING ODWALLA'S BUSINESS

      PRODUCTS, DISTRIBUTION AND TRADE PARTNERS. Our current product line
consists of single-flavor and blended fruit- and vegetable-based juice products,
dairy-free shakes, wholesome food bars and natural spring water. All of our
juices are currently flash pasteurized and some are produced on a seasonal
basis. Our decision in November 1999 to minimally process all orange juice, some
of which we previously did not flash pasteurize, may result in the loss of some
trade partners and consumers who choose to purchase fresh citrus products.
However, we believe that heightened food safety concerns expressed by trade
partners and consumers, on-going government regulatory processing and labeling
changes, and our ability to produce super-premium minimally processed products
will offset potential sales declines over a period of time. In the second
quarter of fiscal 2000, we are not aware of any significant impact on sales due
to this decision.

      Our products are sold and distributed primarily through our
direct-store-delivery system, which is serviced by route sales people who
deliver and merchandise products to our trade partners. This
direct-store-delivery system is designed to allow us to optimally manage
delivery schedules, efficiently control product mix, keep store shelves or our
own coolers stocked with freshly prepared products and have a greater influence
on determining in-store location and merchandising of our products. At most
direct-store-delivery accounts, we are responsible to stock, order and
merchandise our products at the point of sale, and we issue credits to the trade
partner for unsold product. This full service relationship allows us to avoid
paying slotting fees for shelf space, as well as other handling fees, and to
maintain control over our product merchandising at the point of sale. We provide
a lesser degree of service to certain trade partners who are responsible for
stocking, ordering and merchandising Odwalla products. These trade partners
don't receive credit for unsold products. Consumers can purchase our products at
supermarkets, specialty retail stores, natural food stores, convenience stores,
warehouse outlets and institutional food service trade partners. We also
distribute our products through third party distributors. This distribution
channel, with merchandising support provided by the distributors' employees
and/or our employees, provides opportunities to expand product distribution in
selected markets and still maintain relationships with trade partners. We sell
directly to the third party distributors and they generally don't receive credit
for unsold product.

      RAW MATERIALS. Producing and selling our minimally processed products
entails special requirements in ingredient sourcing, production, distribution
and sales in order to preserve and maximize the freshness and flavor quality of
the products. We source and select fruits and vegetables to meet a variety of
established criteria, including overall quality, flavor profile, variety,
ripeness and other factors. Processing of the fruit and vegetables is performed
in a manner to capture and preserve various qualities of fresh flavors and
consistency. Odwalla has focused on each of these elements in an effort to
achieve our goal of providing the safest, best tasting and most nutritious
beverage and other products for consumers.

      Odwalla buys ingredients according to stringent specifications. Fruits and
vegetables, in particular, are purchased year-round or seasonally depending on
the type of produce. Because various types of fruit and vegetable crops are
harvested at different times of the year, we obtain and produce different juices
on a seasonal basis. Most of our fruits and vegetables are purchased in the open
market on a negotiated basis. Historically, oranges, apples, carrots and
tangerines are the largest volume commodities we purchase. We have developed an
extensive network of ingredient sourcing relationships over the years and rely
on this network and new sources for the ingredients we need. We also farm a
small orange ranch in California to have access to local fresh fruit in the
early winter months. We also purchase organic oats as a significant ingredient
in our food bars. All of these key ingredients are subject to volatility in
supply, price and quality that could



                                       16
<PAGE>   17

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


seriously harm our business and results of operations. We are subject to the
same issues with our other ingredients as well. We also source a number of
fruits, including tropical fruits, from foreign suppliers in the form of frozen
fruit puree. Most purees are purchased under annual price contracts.

      As with most agricultural products, the supply and price of raw materials
we use can be affected by a number of factors beyond our control, including
frost, drought, flood, hurricane and other natural disasters. Weather
conditions, economic factors affecting growing decisions, various plant diseases
and pests will affect the condition and size of the crop. For example, the heavy
rains and flooding that occurred in California in the first and second quarters
of fiscal 1995 resulted in higher costs of fruit and lower yields from the
California orange crop in the last quarter of fiscal 1995 and the first quarter
of fiscal 1996. We understand that the El Nino conditions and other weather
patterns in the winter of 1997-1998 caused temporary shortages of certain
tropical products. Additionally, significant events including the devastation
caused by hurricanes in Honduras, Nicaragua and neighboring countries in 1998
negatively impacted the supply and pricing of certain ingredients. In December
1998, a freeze damaged citrus crops in the San Joaquin Valley and other portions
of California. This had a significant negative impact on the cost and yield of
fresh citrus products we have used since the freeze. See Management's Discussion
and Analysis of Financial Conditions and Results of Operations beginning on page
10 for more information. All of these adverse weather conditions could
negatively affect our business and results of operations.

      RISKS ASSOCIATED WITH PERISHABLE PRODUCTS. Except for natural spring water
and food bars, Odwalla's products are flash pasteurized and heat treated and
don't contain any preservatives. They have a limited shelf life because of this.
In order to maintain our "day-of-production" quality standards, we further
restrict the shelf life of products through early expiration dates. The
restricted shelf life means that we don't have any significant finished goods
inventory and our operating results are highly dependent on our ability to
accurately forecast near term sales in order to adjust fresh fruit and vegetable
sourcing and production. In addition, our products are subject to issues such as
the fermentation and subsequent bottle bloating experienced in the first quarter
of fiscal 2000 due to natural organisms in ingredients. We've historically
experienced difficulties in accurately forecasting product demands and expect
that challenge to continue. When we don't accurately forecast product demand, we
are either unable to meet higher than anticipated demand or we produce excess
inventory that cannot be profitably sold. In addition, most of our trade
partners have the right to return any products that are not sold by their
expiration date. Our inability to meet higher than anticipated demand or excess
production or significant amounts of product returns on any of our products
could harm our business and results of operations.

      COST SENSITIVITY. Our profitability is highly sensitive to increases in
raw materials, labor and other operating costs. Unfavorable trends or
developments concerning factors including inflation, raw material supply, labor
and employee benefit costs, including increases in hourly wage and minimum
unemployment tax rates, rent increases resulting from the rent escalation
provisions in our leases, and the availability of hourly employees may also
adversely affect our results. We've benefited in prior years from relatively
favorable inflation rates and part-time labor supplies in our principal market
areas. However, there is no assurance that these conditions will continue or
that we will have the ability to control costs in the future. In fiscal 1999 and
in the first half of fiscal 2000, for example, the cost for citrus products
increased significantly due to the citrus crop freeze in California as discussed
above.

      DEPENDENCE ON ONE OR A FEW MAJOR TRADE PARTNERS. Safeway, Inc. ("Safeway")
is our largest single account and accounted for 13% of our fiscal 1999 sales. We
spend considerable time to maintain a good relationship with Safeway and other
significant accounts, but we can't offer any assurance that sales to significant
accounts will not decrease or that these trade partners will not choose to
replace our products with those of competitors. The loss of Safeway or other
significant accounts or any significant decrease in the volume of products
purchased by their customers in the future would seriously harm our business and
results of operations. Continuity of trade partner relationships is important,
and events that impact our trade partners, including labor disputes, may have an
adverse impact on our results of operations.



                                       17
<PAGE>   18

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


      COMPETITION. In a broad sense, our beverages compete with all beverages
available to consumers and our food bars compete with all food bars currently
available. The natural foods market is highly competitive. It includes national,
regional and local producers and distributors; many of them have greater
resources than we do, and many of them have shelf-stable products that can be
distributed with significantly less cost. We believe our niche is
easily-accessed nourishing beverages in the refrigerated super premium juice,
emerging dairy-free beverages, all-natural food bar and bottled water
categories. We believe our direct competition in this market niche is currently
from nationally, regionally and locally focused juice producers, certain of
which are owned by major beverage producers, nationally branded meal replacement
beverage producers, food and energy bar companies and premium bottled waters.
Our direct competitors in the juice business are national brands including Just
Squeezed, Tropicana, Minute Maid and Nantucket Nectars. Our juice products
compete with regional brands including Naked Juice (owned by a large
international company, Chiquita Brands International, Inc.) in Southern
California and Colorado, Fresh Samantha's in the Northeast, Mid-Atlantic and
Southeast sections of the United States and Fantasia in the Chicago and other
Midwest market areas. As previously discussed on page 11, on February 2, 2000,
we entered into a definitive agreement to merge with Fresh Samantha, which is
subject to approval by our shareholders. Juice and smoothie bars including Jamba
Juice are also competitors. In addition, a number of major supermarkets and
other retail outlets squeeze and market their own brand of fresh juices that
compete with the Company's products. A decision by Chiquita or any other large
company to focus on Odwalla's existing markets or target markets could have a
material adverse effect on our business and results of operations. Our food bar
products, which have been on the market since August 1998, compete with several
more established companies, including PowerBar (recently acquired by Nestle),
Balance Bar (recently acquired by Kraft Foods, a division of Phillip Morris) and
Clif Bar. While we believe that we compete favorably with our competitors on
factors including quality, nutritional integrity, food safety, merchandising,
service, sales and distribution, multiple flavor categories, brand name
recognition and loyalty, our products are typically sold at prices higher than
most other competing beverage and bar products. Significant competitive pressure
from these or other companies could negatively impact our sales and results of
operations.

      PRODUCT LIABILITY. Because our products are not irradiated or chemically
treated and are flash pasteurized, they are highly perishable and contain
certain naturally occurring microorganisms. In addition to the recall (see "Part
2. Item 1. Legal Proceedings" on page 22) associated with the E. coli O157:H7
bacteria in 1996, from time to time we receive complaints from consumers
regarding ill effects allegedly caused by our products. These past claims
haven't resulted in any material liability to date, but there can be no
assurance that we won't have future claims or that any claims associated with
the recall in 1996 will not result in adverse publicity or monetary damages,
either of which could seriously harm our business and results of operations.
Although we maintain product liability insurance, our coverage may not be
sufficient to cover the cost of defense or related damages in the event of a
significant product liability claim.

      ORCHARD PRODUCTION. Historically, we've depended upon the fruit produced
from the trees of large orchards. These trees may become damaged, diseased or
destroyed as a result of windstorms, pests or fungal disease. Additionally,
there are types of controllable fungal diseases that can affect fruit production
although not fatal to the trees themselves. These types of fungal diseases are
generally controllable with fungicides. However, we can't be sure that such
control measures will continue to be effective. Any decrease in the supply of
fresh fruit as a result of windstorms, pests or fungal disease could have a
material adverse effect on our business and results of operations.

      GEOGRAPHIC CONCENTRATION. Our wholesale accounts and retail trade partners
have their largest concentration in Northern California, with most located in
the metropolitan areas surrounding the San Francisco Bay. Due to this
concentration, natural disasters, including earthquakes, economic downturns and
other conditions affecting Northern California may adversely affect our business
and results of operations.



                                       18
<PAGE>   19

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


      CONCENTRATION OF PRODUCTION CAPACITY. Virtually all of our juice
production capacity is located at our Dinuba, California facility. Because we
maintain minimal finished goods inventory as part of our "day-of-production"
production system, we could be unable to continue to produce beverages in the
event that production at or transportation from Dinuba were interrupted by fire,
earthquakes, floods or other natural disasters, work stoppages, regulatory
actions or other causes. Such an interruption would seriously harm our business
and results of operations. Separate companies produce and package our dairy-free
shakes, meal replacement beverages, spring water and food bars.

      LACK OF DIVERSIFICATION. Odwalla's business is vertically integrated and
centered around essentially one product, all-natural super-premium beverages,
sold primarily through our direct-store-delivery system. Although we've added
dairy-free shakes, meal replacement beverages, spring water and food bars, and
are using more third party distributors, the risks associated with focus on
essentially one product are exemplified by the material adverse effect on our
business and results of operations that resulted from the recall in October 1996
and from the impact of the California citrus freeze in December 1998. Any
significant decrease in the consumption of beverages generally or specifically
with respect to our products would have an adverse effect on our business and
results of operations.

      RISKS RELATED TO EXPANSION. Continued growth depends in part upon our
ability to expand into new geographic areas, either through internal growth or
by acquisition. Following the 1996 recall, management plans for expansion, for
the most part, were postponed until fiscal 1998 as management focused on
restoring production and sales in our then-existing markets and dealing with
legal and other company issues. Due to the extent of our operating losses in
recent years, we currently anticipate limited expansion in fiscal 2000 beyond
existing markets other than through the proposed merger with Fresh Samantha.
There can be no assurance that we will expand into new geographic areas or
continue to invest in newer markets or if such expansion or investment is
undertaken that it will be successful or that such expansion can be accomplished
on a profitable basis. Demands on management and working capital costs
associated with the recall as well as the perishability of our products and
current reliance on the personnel-intensive direct-store-delivery system may
limit the ability, or increase the cost of, expansion into new regions.
Furthermore, consumer tastes vary by region and there can be no assurance that
consumers located in other regions will be receptive to our products.

      We've expanded into certain markets, including the Pacific Northwest and
Colorado several years ago, through acquisitions of local juice manufacturers.
Acquisitions involve a number of special risks, including the diversion of
management's resources, issues related to the assimilation of the operations and
personnel of the acquired businesses, potential adverse effects on operating
results and amortization of acquired intangible assets. In addition, gross
margins may be negatively impacted to the extent that gross margins on acquired
product lines are lower than Odwalla's average gross margins. If we seek and
find attractive acquisition candidates, we may not be able to complete the
transaction on acceptable terms, to successfully integrate the acquisition into
our operations, or to assure that the acquisition won't have an adverse impact
on our operations.

      In addition to the proposed Fresh Samantha acquisition, any plans to
invest in new markets or to consider additional acquisitions may cause us to
seek additional financing that may be dilutive to current investors or result in
a higher debt-to-equity ratio than would otherwise be the case. Any financing we
obtain may not be on terms favorable to us, even if it is available.

      GOVERNMENT REGULATIONS. The production and sales of beverages are subject
to the rules and regulations of various federal, state and local food and health
agencies, including the U.S. Food and Drug Administration ("FDA") and California
State Food and Drug. On September 8, 1998, the FDA regulations for fresh apple
juice went into effect. The regulations for fresh-squeezed citrus juices were
enacted in July 1999. The FDA's ruling for citrus was to require all fresh juice
processors to show a 5-log reduction in potential pathogens, 99.999% barrier,
supported by a Hazard Analysis Critical Control Point plan, or HACCP. All fresh
juice processors which could not demonstrate a 5-log reduction were expected to
label



                                       19
<PAGE>   20

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


their product with a warning label on the bottle to alert consumers of the
presence of unprocessed product. Because all products produced in our Dinuba,
California production facility are manufactured under a HACCP plan with
validated critical control points, we are already in compliance with the FDA
regulations for fresh apple juice and the proposed FDA regulations for citrus
juices, and will not need to use warning labels on unpasteurized juice products.

      However, due to an outbreak of Salmonellosis in another company's orange
juice in 1999, the FDA reconsidered the effectiveness of the proposed ruling.
Regulators, industry representatives and scientists held a meeting during the
summer of 1999 to discuss what regulation should become final. FDA officials
emphasized their preference for a 5-log reduction in fresh juice from the time
it is extracted until bottled. A validated HACCP plan currently does not have to
include this requirement. The most effective way presented to meet the newly
discussed 5-log reduction in commercial production is flash pasteurization. In
November 1999, this same processor of fresh-squeezed, non-pasteurized orange
juice enacted a recall due to Salmonellosis concerns. Based upon discussions
with members of the scientific community and informal discussions with FDA
officials, we anticipate that flash pasteurization will be required.

      Odwalla has been performing flash pasteurization for nearly three years.
All fresh-squeezed citrus used in our products blended with other ingredients
(e.g., in our smoothie and nutritional product lines) has been flash
pasteurized. During fiscal 1999, we began flash pasteurizing fresh-squeezed
citrus products that are not further blended (e.g., grapefruit juice and our
quencher products) and currently all our juice products are flash pasteurized.
Odwalla is ready for the anticipated FDA regulations and we don't anticipate
significant additional costs to comply with current FDA regulations.

      RISKS RELATED TO THE PROPOSED MERGER WITH FRESH SAMANTHA. The merger will
present challenges to management, including the integration of the operations,
product lines, technologies and personnel of Odwalla and Fresh Samantha, and
special risks, including possible unanticipated liabilities, unanticipated costs
and diversion of management attention. We cannot assure you that we will
successfully integrate or profitably manage Fresh Samantha's businesses. In
addition, we cannot assure you that, following the transaction, the combined
businesses will achieve increased sales levels, profitability, efficiencies or
synergies or that the merger will result in increased earnings for the combined
companies in any future period. The difficulties of combining the operations of
Odwalla and Fresh Samantha are exacerbated by the necessity of coordinating
geographically separated organizations. The process of integrating operations
could cause an interruption of, or loss of momentum in, the activities of
Odwalla's businesses, including the business acquired in the merger.
Additionally, the combined company may experience slower rates of growth as
compared to historical rates of growth of Odwalla and Fresh Samantha
independently. Although we believe that the merger is in the best interests of
Odwalla and its shareholders, we cannot assure you that the companies will
realize the anticipated benefits of the merger.

      In the event that the merger is not consummated, we will be subject to a
number of material risks, including (1) the incurrence of large legal,
accounting, financial advisory and other fees and costs in connection with the
merger, all of which must be paid even if the merger is not completed, (2)
potential reputational harm, and (3) the failure to meet the expectations of
public market analysts and investors that the merger would be consummated. As a
result, the market price of our common stock may decline and our business,
results of operations, and financial condition may be harmed.

      Upon consummation of the merger, we will assume all the liabilities of
Fresh Samantha. We believe based upon our due diligence and representations made
in the merger agreement that we have accurately assessed and can absorb these
liabilities. However, it is possible that liabilities may arise in the future
which we did not discover or anticipate. To the extent these liabilities are
inconsistent with representations and warranties made in the merger agreement,
we may have a claim for indemnification against the former shareholders of Fresh
Samantha. The merger agreement provides that 15% of Odwalla



                                       20
<PAGE>   21

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS, continued:


common stock to be issued in the merger will be placed in an escrow account and
held for a period of one year to cover any indemnification claim. The escrow
amount will be our sole recourse for indemnification claims other than in the
case of fraud. However, Fresh Samantha's liabilities, both at the time of and
arising after the consummation of the merger, may exceed our expectations and
the escrow amount may be insufficient to cover these liabilities. If total
liabilities for which indemnification is available exceed the escrow amount or
if liabilities arise after the one year escrow period, we may suffer financial
losses, which will harm our business, results of operation and financial
condition.

      QUARTERLY FLUCTUATIONS. Because the fruits and vegetables we use are
purchased in the open market on a negotiated basis, the price and availability
of key ingredients may fluctuate on a quarterly basis. Consumers tend to
establish certain buying patterns, and a disruption of those buying patterns may
result in a decline in sales. Other factors, including expansion into new
markets, consummating an acquisition, costs of integrating acquired operations,
price promotions of certain products, changes by our competitors, and
introduction of new products, can result in fluctuations to sales and costs on a
quarterly basis.

      VOLATILITY OF STOCK PRICE. Odwalla's common stock price has, at certain
times, experienced significant price volatility. Announcements of developments
related to our business, fluctuations in operating results, failure to meet
securities analysts' expectations, general conditions in the fruit and vegetable
industries and the worldwide economy, announcements of innovations, new products
or product enhancements by us or our competitors, fluctuations in the level of
cooperative development funding, acquisitions, changes in governmental
regulations, developments in patents or other intellectual property rights and
changes in our relationships with trade partners and suppliers could cause the
price of our common stock to fluctuate substantially. In addition, in recent
years the stock market in general, and the market for small capitalization
stocks in particular, has experienced extreme price fluctuations which have
often been unrelated to the operating performance of affected companies. Such
fluctuations could adversely affect the market price of our common stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      INTEREST RATE RISK. It is our policy not to enter into derivative
financial instruments. We do not currently have any significant foreign currency
exposure since we do not transact business in foreign currencies. Due to this,
we did not have significant overall currency exposure at February 26, 2000.

      FOREIGN CURRENCY RATE RISK. As almost all of our sales and expenses are
denominated in U.S. dollars, we have experienced only insignificant foreign
exchange gains and losses to date, and we do not expect to incur significant
gains and losses. We do not engage in foreign currency hedging activities.



                                       21
<PAGE>   22

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

      The following personal injury claims and legal proceedings seek monetary
damages and other relief relating to the recall in 1996, as discussed in Item 2
"Management's Discussion and Analysis of Financial Condition and Results of
Operations":

      1.    The McGregor Case: A personal injury lawsuit filed in Santa Clara
            County Superior Court, San Jose, California on June 2, 1997 and
            served on June 16, 1997. There is no trial date set.

      2.    The Nixon Case: A personal injury lawsuit filed in Sacramento County
            Municipal Court, Sacramento, California on August 15, 1997. There is
            no trial date set.

      3.    The Scott Case: A personal injury action lawsuit filed in King
            County Superior Court, Seattle, Washington, on October 14, 1999. The
            case is set for trial on March 5, 2001.

      The Company has two additional proceedings allegedly arising out of
product consumption prior to the recall in 1996:

      1.    The Shields Case: A personal injury lawsuit filed in King County
            Superior Court, Seattle, Washington, and served on or about July 1,
            1999. The case is set for trial on January 16, 2001.

      The following personal injury claim and legal proceeding has been settled:

      1.    The Lane Case: A personal injury lawsuit filed in King County
            Superior Court, Seattle, Washington, and served on or about April
            26, 1999. The case was removed to the United States District Court
            in Seattle on May 25, 1999. The case was settled in February 2000.

      We maintained commercial general liability insurance totaling $27,000,000
during the period for which the above claims are filed, including the recall. We
notified our insurance carrier of these events. At this time, we are unable to
determine the potential liability from the remaining legal proceedings and
claims. The recall related legal proceedings settled to date were covered under
our commercial general liability insurance policy and did not result in any
additional costs to us.

      On May 21, 1999, Odwalla filed a lawsuit in United States District Court
for the Eastern District of California in Fresno, California, against New
Hampshire Insurance Company to seek recovery on our business interruption
insurance claim filed as a result of the recall. The case does not have a trial
date set.

      We are subject to other legal proceedings and claims that arise in the
course of our business. We currently believe that the ultimate amount of
liability, if any, for any pending actions (either alone or combined) will not
materially affect our financial position, results of operations or liquidity.
However, the ultimate outcome of any litigation is uncertain, and unfavorable
outcomes could have a material negative impact on our results of operations and
financial condition.



                                       22
<PAGE>   23

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      a.    EXHIBITS

<TABLE>
<CAPTION>

      EXHIBIT
      NUMBER     DESCRIPTION
      ------     -----------
<S>              <C>
       2.1       Agreement and Plan of Merger dated February 2, 2000 by and
                 among Odwalla, Inc., Fresh Samantha, Inc., and Orange
                 Acquisition Sub, Inc.

       10.1      Employment Agreement dated December 21, 1999 between the
                 Registrant and D. Stephen C. Williamson

       10.2      Employment Agreement dated December 21, 1999 between the
                 Registrant and James R. Steichen

       27.1      Financial Data Schedule
</TABLE>

      b.    REPORTS ON FORM 8-K

      The Company filed a current report on Form 8-K (File No. 0-23036) with the
Securities and Exchange Commission on February 7, 2000. The Form 8-K report
contained information regarding the merger agreement signed between Odwalla and
Fresh Samantha on February 2, 2000.



                                       23
<PAGE>   24

                                    SIGNATURE


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


                                          ODWALLA, INC.
                                          -------------
                                          (Registrant)




Date:  April 10, 2000                     By:  /s/  D. STEPHEN C. WILLIAMSON
                                             ----------------------------------
                                               D. Stephen C. Williamson
                                               Chief Executive Officer
                                               (Principal Executive Officer)



Date:  April 10, 2000                     By:  /s/  JAMES R. STEICHEN
                                             ----------------------------------
                                               James R. Steichen
                                               Chief Financial Officer
                                               (Principal Financial and
                                               Accounting Officer)



                                       24
<PAGE>   25

                                EXHIBIT INDEX

<TABLE>
<CAPTION>

      EXHIBIT
      NUMBER     DESCRIPTION
      ------     -----------
<S>              <C>
       2.1       Agreement and Plan of Merger dated February 2, 2000 by and
                 among Odwalla, Inc., Fresh Samantha, Inc., and Orange
                 Acquisition Sub, Inc.

       10.1      Employment Agreement dated December 21, 1999 between the
                 Registrant and D. Stephen C. Williamson

       10.2      Employment Agreement dated December 21, 1999 between the
                 Registrant and James R. Steichen

       27.1      Financial Data Schedule
</TABLE>











                                       25