Back to GetFilings.com




1

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM 10-K
(MARK ONE)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 26, 1998
OR

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

FOR THE TRANSITION PERIOD FROM ____________ TO ____________

COMMISSION FILE NUMBER: 0-14190

DREYER'S GRAND ICE CREAM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



DELAWARE NO. 94-2967523
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)


5929 COLLEGE AVENUE, OAKLAND, CALIFORNIA 94618
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (510) 652-8187

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE



NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------

Not applicable Not applicable


SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, $1.00 PAR VALUE
PREFERRED STOCK PURCHASE RIGHTS

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value (based on the average of the high and low sales
prices on March 18, 1999, as reported by NASDAQ) of the Common Stock held by
non-affiliates was approximately $321,211,655. (Such amount excludes the
aggregate market value of shares beneficially owned by the executive officers
and members of the Board of Directors of the registrant.)

As of March 18, 1999, the latest practicable date, 27,490,677 shares of
Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Dreyer's Grand Ice Cream, Inc. Annual Report to
Stockholders for the fiscal year ended December 26, 1998, filed as Exhibit 13 to
this Annual Report on Form 10-K, are incorporated by reference into Part IV of
the Annual Report on Form 10-K. With the exception of those portions which are
specifically incorporated by reference in this Annual Report on Form 10-K, the
Dreyer's Grand Ice Cream, Inc. Annual Report to Stockholders for the fiscal year
ended December 26, 1998 is not to be deemed filed as part of this Report.

Portions of the Dreyer's Grand Ice Cream, Inc. Proxy Statement for the 1999
Annual Meeting of Stockholders to be filed with the Commission on or before
April 25, 1999 are incorporated by reference into Part III of this Annual Report
on Form 10-K. With the exception of those portions which are specifically
incorporated by reference in this Annual Report on Form 10-K, the Dreyer's Grand
Ice Cream, Inc. Proxy Statement for the 1999 Annual Meeting of Stockholders is
not to be deemed filed as part of this Report.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2

PART I
ITEM 1. BUSINESS

GENERAL

Dreyer's Grand Ice Cream, Inc. and its consolidated subsidiaries are,
unless the context otherwise requires, sometimes referred to herein as
"Dreyer's" or the "Company." The Company, successor to the original Dreyer's
Grand Ice Cream business, was originally incorporated in California on February
23, 1977 and reincorporated in Delaware on December 28, 1985.

Dreyer's, a single segment industry company, manufactures and distributes
premium ice cream and other frozen dessert products. Since 1977, Dreyer's has
developed from a specialty ice cream sold principally in selected San Francisco
Bay Area grocery and ice cream stores to a broad line of frozen dairy and other
frozen desserts sold under the Dreyer's and Edy's brand names in retail outlets
serving more than 87% of the households in the United States. The Dreyer's line
of products are available in the thirteen western states, Texas, certain markets
in the Far East and South America. The Company's products are sold under the
Edy's brand name generally throughout the remaining regions of the United
States. The Dreyer's and Edy's line of products are distributed through a
direct-store-delivery system further described below under the caption
"Marketing, Sales and Distribution." The Company also distributes and, in
certain instances, manufactures branded ice cream and frozen dessert products of
other companies. The Dreyer's and Edy's line of ice cream and related products
is relatively expensive and is sold by the Company and its independent
distributors to grocery stores, convenience stores, club stores, ice cream
parlors, restaurants, hotels and certain other accounts. The Dreyer's and Edy's
brands enjoy strong consumer recognition and loyalty.

MARKETS

Ice cream was traditionally supplied by dairies as an adjunct to their
basic milk business. Accordingly, ice cream was marketed like milk, as a
fungible commodity, and manufacturers competed primarily on the basis of price.
This price competition motivated ice cream producers to seek economies in their
formulations. The resulting trend to lower quality ice cream created an
opportunity for the Company and other producers of premium ice creams, whose
products can be differentiated on the basis of quality, technological
sophistication and brand image, rather than price. Moreover, the market for all
packaged ice creams was influenced by the steady increase in market share of
"private label" ice cream products owned by the major grocery chains and the
purchase or construction by the chains of their own milk and ice cream plants.
The resulting reduction in the demand for milk and the "regular" ice cream
brands produced by the independent dairies has caused many such dairies to
withdraw from the market. Manufacturing and formulation complexities, broader
flavor requirements, consumer preference and brand identity, however, make it
more difficult for the chains' private label brands to compete effectively in
the premium market segment. As a result, independent premium brands such as the
Company's are normally stocked by major grocery chains.

While many foodservice operators, including hotels, schools, hospitals and
other institutions, buy ice cream primarily on the basis of price, there are
also those in the foodservice industry who purchase ice cream based on its
quality. Operators of ice cream shops wanting to feature a quality brand,
restaurants that include an ice cream brand on their menu and clubs or chefs
concerned with the quality of their fare are often willing to pay for Dreyer's
quality, image and brand identity.

PRODUCTS

The Company and its predecessors have always been innovators of flavor,
package development and formulation. William A. Dreyer, the founder of Dreyer's
and the creator of Dreyer's Grand Ice Cream, is credited with inventing many
popular flavors including Rocky Road. Dreyer's was the first to produce an ice
cream lower in calories. The Company's Grand Light(R) formulation was a
precursor to the reduced fat, reduced sugar and low cholesterol products in the
Company's current product line.

The Company uses only the highest quality ingredients in its products. The
Company's philosophy is to make changes in its formulations or production
processes only to the extent that such changes do not

1
3

compromise quality for cost even though the industry in general may adopt such
new formulation or process compromises.

Dreyer's and Edy's Grand Ice Cream is the Company's flagship product which
utilizes traditional formulations with all natural flavorings and is
characterized by premium quality taste and texture, and diverse flavor
selection. The flagship product is complimented by Dreyer's and Edy's Homemade
Ice Cream, a product formulated for regional taste preferences and now
distributed on a nationwide basis, and the Company's reduced fat, low
cholesterol products such as Frozen Yogurt; Grand Light(R); No Sugar Added and
Fat Free ice creams; and the Company's Sherbet and Whole Fruit Sorbet products.
The Company believes these "better for you" products are well positioned in the
market where products are characterized by lower levels of fat, sugar and
cholesterol than those of regular ice cream. The Company also produces
Portofino(R) brand Italian style ice cream which is distributed in selected
western markets, and manufactures and distributes Starbucks(R) Ice Cream
products for its joint venture with Starbucks Coffee Company. The Company also
produces a premium soft serve product, Grand Soft(R), which is available as ice
cream or frozen yogurt. The Company's novelty line features Dreyer's and Edy's
Ice Cream Bars, Fruit Bars, and Sundae Cones. The Company has launched Godiva(R)
Ice Cream, a ultra-premium product produced by the Company under a long-term
license with Godiva Chocolatier. The Company also distributes and, in some
instances, manufactures selected branded frozen dessert products of other
companies.

The Company's product lines now include over 110 flavors that are selected
both on the basis of general popularity and on the intensity of consumer
response. Some flavors are seasonal and are produced only as a featured flavor
during particular months. The Company operates a continuous flavor development
and evaluation program.

The Company holds registered trademarks on many of its products. Dreyer's
believes that consumers associate the Company's trademarks, distinctive
packaging and trade dress with its high quality products. The Company does not
own any patents that are material to its business. Research and development
expenses are not significant, nor have they been significant in the past.

MARKETING, SALES AND DISTRIBUTION

The Company's marketing strategy is based upon management's belief that a
significant number of people prefer a quality product and quality image in ice
cream just as they do in other product categories. A quality image is
communicated in many ways -- taste, packaging, flavor selection, price and often
through advertising and promotion. If consistency in the product's quality and
image are strictly maintained, a brand can develop a clearly defined and loyal
consumer following. It is the Company's goal to develop such a consumer
following in each major market in which it does business.

In fiscal 1994 the Company adopted a strategic plan to accelerate the sales
of its brand throughout the country (the Strategic Plan). The key elements of
this plan are: 1) to build high margin brands with leading market shares through
effective consumer marketing activities, 2) to expand the Company's
direct-store-delivery distribution network to national scale and enhance this
capability with sophisticated information and logistics systems and 3) to
introduce innovative new products. The potential benefits of the Strategic Plan
are increased market share and future earnings above those levels that would be
attained in the absence of the Strategic Plan.

In accordance with the Strategic Plan, the Company embarked on an
aggressive national expansion. This expansion involved the entry into 34 new
markets, which included the opening of a major manufacturing and distribution
center in Texas, a significant increase in marketing spending and the
introduction of several new products. At the same time, the Company invested in
its soft-serve equipment manufacturing business (Grand Soft). The investments
required to fund the brand building actions and national expansion and to
support the Grand Soft business substantially increased the Company's cost
structure.

Beginning in late fiscal 1997 and continuing into fiscal 1998, the cost of
dairy, the primary ingredient in ice cream, increased significantly. These costs
peaked in fiscal 1998 at a rate more than double that experienced in the prior
year. This increase reduced the Company's fiscal 1998 gross margin by
approximately

2
4

$22,000,000 when compared to fiscal 1997. Aggressive discounting by the
Company's competitors made it difficult to raise prices by an amount sufficient
to compensate for these higher dairy costs. During this same period, sales
volumes of the Company's "better for you" products continued the significant
decline that began in fiscal 1997, consistent with an industry-wide trend. These
"better for you" products enjoy a higher margin than the Company's classic ice
cream and the volume decline had a significant impact on the Company's
profitability in fiscal 1998. Finally, in August of 1998, Ben & Jerry's
Homemade, Inc. (Ben & Jerry's) informed the Company of its intention to
terminate its distribution contract. Subsequent negotiations with Ben & Jerry's
yielded revisions to the original contract terms which will reduce the Company's
distribution gross margin of Ben & Jerry's products by approximately 54%
starting September 1, 1999. The Company estimates that the markets where it will
stop distributing Ben & Jerry's products contributed approximately 6% of its
gross margin, or $13,000,000, in fiscal 1998.

The above factors: the higher dairy costs; the decline in "better for you"
volumes; and the reduction in future Ben & Jerry's sales; had and will have a
negative effect on the Company's gross margin and its ability to successfully
implement the Strategic Plan. The Company, therefore, concluded that a thorough
reassessment of its cost structure and strategy was necessary. This reassessment
yielded a restructuring program designed to improve profitability and accelerate
cost reductions by increasing focus on the core elements of the Strategic Plan.
The reassessment also addressed the need to review the valuation of certain
assets unfavorably impacted by Ben & Jerry's decision to change its distribution
agreement with the Company. On October 16, 1998, the board of directors approved
the restructuring program.

For additional information see the discussion set forth in Note 3 which
appears on pages 22-24 of the Company's 1998 Annual Report to Stockholders which
is incorporated herein by reference. In addition, see the discussions set forth
under the captions "Background," "Revision of Ben & Jerry's Distribution
Agreement" and "Restructuring Program and Other Actions" in "Management's
Discussion and Analysis" which appear on pages 34-37 of the Company's 1998
Annual Report to Stockholders and are incorporated herein by reference.

Unlike most other ice cream manufacturers, the Company uses a
direct-store-delivery system to distribute the Company's products directly to
the retail ice cream cabinet by either the Company's own personnel or
independent distributors who primarily distribute the Company's products. This
store level distribution allows service to be tailored to the needs of each
store. Dreyer's believes this service ensures proper product handling, quality
control, flavor selection and retail display. The implementation of this system
has resulted in an ice cream distribution network capable of providing frequent
direct service to grocery stores in every market where the Company's products
are sold. Under the Strategic Plan, the Company's distribution network has been
significantly expanded to where the Company's products are available to grocery
stores serving approximately 87% of the households in the United States. This
distribution system is considerably larger than any other direct-store-delivery
system for ice cream products currently operating in the United States.

The distribution network in the West now includes twelve distribution
centers operated by the Company in large metropolitan areas such as Los Angeles,
the San Francisco Bay Area, Phoenix, San Diego, Seattle and Denver. The Company
also has independent distributors handling the Company's product in various
areas of the thirteen western states, Texas, the Far East and South America.

Distribution in the remainder of the United States is under the Edy's brand
name with most of the distribution handled through seventeen Company-owned
distribution centers, including centers in the New York/New Jersey metropolitan
area, Chicago, the Washington/Baltimore metropolitan area, Atlanta, Tampa and
Kansas City. The Company also has independent distributors handling the
Company's products in certain market areas east of the Rocky Mountains.

Taken together, independent distributors accounted for approximately 21% of
the Company's consolidated sales in fiscal 1998. The Company's agreements with
its independent distributors are generally terminable upon 30 days notice by
either party.

3
5

Each distributor, whether Company-owned or independent, is primarily
responsible for sales of all products within its respective market area.
However, the Company provides sales and marketing support to its independent
distributors, including training seminars, sales aids of many kinds, point of
purchase materials, assistance with promotions and other sales support.

For fiscal 1998, one customer, Safeway, Inc., accounted for 10% of
consolidated sales of the Company. No other customers accounted for 10% or more
of consolidated sales. The Company's export sales were about 1% of fiscal 1998
consolidated sales.

The Company experiences a seasonal fluctuation in sales, with more demand
for its products during the spring and summer than during the fall and winter.

MANUFACTURING

The Company manufactures its products at its plants in Union City,
California; City of Commerce, California; Fort Wayne, Indiana; Houston, Texas;
and Salt Lake City, Utah. The Company has a manufacturing agreement with one ice
cream manufacturer to produce Dreyer's line of products serving high altitude
markets and to occasionally meet peak periods of demand in accordance with
specifications and quality control provided by Dreyer's. Of the approximately 93
million gallons of the Company's products sold in fiscal 1998, approximately two
million gallons were manufactured under this agreement. The Company also has
manufacturing agreements with six different companies to produce a portion of
its novelty products. During fiscal 1998, approximately two million cases (45%
of total production) of Dreyer's and Edy's Ice Cream Bars and Fruit Bars were
produced under these agreements. In addition, the Company has agreements to
produce products for other manufacturers. In fiscal 1998, the Company
manufactured approximately 14 million gallons of product under these agreements.

The primary factor in the Company's product costs is the price of basic
dairy ingredients (cream, milk and skim milk) and sugar. The minimum prices paid
for dairy ingredients are established by the market under the Federal Milk Price
Support Program. In fiscal 1997, dairy raw material prices decreased from 1996
resulting in a favorable impact of approximately $3,800,000 in gross margin. In
fiscal 1998, the Company experienced a significant increase of approximately
$22,000,000 in dairy raw materials costs, when compared to fiscal 1997, which
negatively impacted the Company's gross margin.

In order to ensure consistency of flavor, each of the Company's
manufacturing plants purchases, to the extent practicable, all of its required
dairy ingredients from a limited number of suppliers. These dairy products and
most other ingredients or their equivalents are available from multiple sources.
The Company maintains a rigorous process for evaluating qualified alternative
suppliers of its key ingredients.

COMPETITION

The Company's manufactured products compete on the basis of brand image,
quality and breadth of flavor selection. The ice cream industry is highly
competitive and most ice cream manufacturers, including full line dairies, the
major grocery chains and the other independent ice cream processors, are capable
of manufacturing and marketing high quality ice creams. Furthermore, there are
relatively few barriers to new entrants in the ice cream business. However,
reduced fat, reduced sugar and low cholesterol ice cream products generally
require technologically sophisticated formulations and production in comparison
to standard or "regular" ice cream products.

Much of the Company's competition comes from the "private label" brands
produced by or for the major supermarket chains and which generally sell at
prices below those charged by the Company for its products. Because these brands
are owned by the retailer, they often receive preferential treatment when the
retailers allocate available freezer space. The Company's competition also
includes premium ice creams produced by other ice cream manufacturers, some of
whom are owned by parent companies much larger than Dreyer's.

4
6

EMPLOYEES

On December 26, 1998, the Company had approximately 3,450 employees. The
Company's Union City manufacturing and distribution employees are represented by
the Teamsters Local 853, whose contract with the Company expires between
September 1999 and December 2000 for different types of employees, and the
International Union of Operating Engineers, Stationary Local No. 39, whose
contract with the Company expires in August 2001. The Sacramento distribution
employees are represented by the Chauffeurs, Teamsters and Helpers Union, Local
150 whose contract with the Company expires in August 1999. The St. Louis
distribution employees are represented by the United Food & Commercial Workers
Union, Local 655 whose contract with the Company expires in December 2000. The
Company has never experienced a strike by any of its employees.

ITEM 2. PROPERTIES

The Company owns its headquarters located at 5929 College Avenue in
Oakland, California. The headquarters buildings include 54,000 square feet of
office space utilized by the Company and 10,000 square feet of retail space
leased to third parties.

The Company owns a manufacturing and distribution facility in Union City,
California. This facility has approximately 60,000 square feet of manufacturing
and dry storage space, 40,000 square feet of cold storage warehouse space and
15,000 square feet of office space. The plant has the current production
capacity of 28 million gallons per year. During fiscal 1998, the facility
produced approximately 19 million gallons of ice cream and related products.

The Company leases an ice cream manufacturing plant with an adjoining cold
storage warehouse located in the City of Commerce, California. This facility has
approximately 76,000 square feet of manufacturing and dry storage space, 25,000
square feet of cold storage space and 19,000 square feet of office space. The
lease on this property, including renewal options, expires in 2022. The plant
has the current production capacity of 22 million gallons per year. During
fiscal 1998, the facility produced approximately 18 million gallons of ice cream
and related products.

The Company owns a cold storage warehouse facility located in the City of
Industry, California. This facility includes 52,000 square feet of cold and dry
storage warehouse space and 13,000 square feet of office space. This facility
supplements the cold storage warehouse and office space leased in the City of
Commerce.

The Company owns a manufacturing plant with an adjoining cold storage
warehouse in Fort Wayne, Indiana. This facility has approximately 74,000 square
feet of manufacturing and storage space and 16,000 square feet of office space.
In January 1998, the Company completed construction of an additional warehouse
on land adjacent to the Ft. Wayne manufacturing facility. The newly constructed
warehouse has cold storage space of 109,000 square feet. The plant has the
current production capacity of 64 million gallons per year. During fiscal 1998,
the facility produced approximately 49 million gallons of ice cream and related
products. The Company's original purchase and development of the Fort Wayne
facility was financed by industrial development bonds and the property is
pledged as collateral to secure payment of the Company's obligations to the
issuer of the irrevocable letter of credit established for the benefit of the
bondholders.

The Company owns a manufacturing and distribution facility in Houston,
Texas. This facility has approximately 68,000 square feet of manufacturing and
dry storage space, 46,000 square feet of cold storage warehouse space and 20,000
square feet of office space. The plant has the current production capacity of
approximately 30 million gallons per year. During fiscal 1998, this facility
produced approximately 19 million gallons of ice cream and related products. As
a result of the restructuring program, the Company will realize substantially
lower production volumes over the remaining useful life of its Houston, Texas
manufacturing plant than originally contemplated. For additional information see
the discussion set forth under the caption "Restructuring Program and Other
Actions" in "Management's Discussion and Analysis" which appears on pages 35-37
of the Company's 1998 Annual Report to Stockholders which is incorporated herein
by reference.

The Company owns a manufacturing and distribution facility in Salt Lake
City, Utah. This facility has approximately 12,000 square feet of manufacturing
and dry storage space, 13,000 square feet of cold storage space and 1,000 square
feet of office space. Another 4,000 square feet of office space is leased. The
plant has

5
7

the current production capacity of 5 million gallons per year. During fiscal
1998, the facility produced approximately 5 million gallons of ice cream and
related products.

The Company intentionally acquires, designs and constructs its
manufacturing and distribution facilities with a capacity greater than current
needs require. This is done to facilitate growth and expansion and minimize
future capital outlays. The cost of carrying this excess capacity is not
significant.

The Company leases or rents various local distribution and office
facilities with leases expiring through the year 2022, including options to
renew, except for one that has 89 years remaining on the lease.

ITEM 3. LEGAL PROCEEDINGS

During the third quarter of fiscal 1998, Ben & Jerry's notified the Company
of its intention to terminate the distribution agreement between the Company and
Ben & Jerry's. The Company subsequently entered into negotiations with Ben &
Jerry's to resolve issues associated with the pending termination. In the first
quarter of 1999, the companies announced that they reached a resolution
regarding these issues by amending the existing distribution agreement and
entering into a new distribution agreement. As a result, the Company will
continue to distribute Ben & Jerry's products until August 31, 1999 in all
existing markets, except the New York metropolitan area, and on terms and
conditions different in some respects from those in place prior to the
amendment. The Company will stop distributing Ben & Jerry's products in New York
on April 1, 1999. Starting September 1, 1999, the Company's distribution of Ben
& Jerry's products will continue in a smaller geographic region pursuant to the
terms of the new distribution agreement.

For additional information see the discussion set forth under the caption
"Revision of Ben & Jerry's Distribution Agreement" in Note 3 which appears on
page 22 of the Company's 1998 Annual Report to Stockholders which is
incorporated herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The Company's executive officers and their ages are as follows:



NAME POSITION AGE
---- -------- ---

T. Gary Rogers Chairman of the Board and Chief Executive Officer 56
William F. Cronk, III President 56
Edmund R. Manwell Secretary 56
Thomas M. Delaplane Vice President -- Sales 54
J. Tyler Johnston Vice President -- Marketing 45
Timothy F. Kahn Vice President -- Finance and Administration and
Chief Financial Officer 45
William R. Oldenburg Vice President -- Operations 52


All officers hold office at the pleasure of the Board of Directors. There
is no family relationship among the above officers.

Mr. Rogers has served as Dreyer's Chairman of the Board and Chief Executive
Officer since its incorporation in February 1977.

Mr. Cronk has served as a director of the Company since its incorporation
in February 1977 and has been the Company's President since April 1981.

Mr. Manwell has served as Secretary of the Company since its incorporation
and as a director of the Company since April 1981. Since March 1982, Mr. Manwell
has been a partner in the law firm of Manwell & Milton, general counsel to the
Company.

Mr. Delaplane has served as Vice President -- Sales of the Company since
May 1987.

6
8

Mr. Johnston has served as Vice President -- Marketing of the Company since
March 1996. From September 1995 to March 1996, he served as the Company's Vice
President -- New Business. From May 1988 to August 1995, he served as the
Company's Director of Marketing.

Mr. Kahn has served as Vice President -- Finance and Administration and
Chief Financial Officer since March 1998. In 1994 through October 1997, Mr. Kahn
served in the positions of Senior Vice President, Chief Financial Officer and
Vice President for several divisions of PepsiCo, Inc., which included Pizza Hut
Restaurants.

Mr. Oldenburg has served as Vice President -- Operations of the Company
since September 1986.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information set forth in Note 16 under the caption "Price Range Per
Common Share (NASDAQ)" which appears on page 31 of the Company's 1998 Annual
Report to Stockholders is incorporated herein by reference. The bid and asked
quotations for the Company's Common Stock are as reported by NASDAQ.

On March 18, 1999, the number of holders of record of the Company's common
stock was 5,114.

On November 18, 1997, the Company issued shares of common stock to holders
of record on October 30, 1997 to effect a two-for-one common stock split. Unless
otherwise indicated, all share information appearing in this report has been
restated to reflect this stock split on a retroactive basis.

The Company paid a regular quarterly dividend of $.03 per share of common
stock for each quarter of fiscal 1997 and fiscal 1998. On February 23, 1999, the
Board of Directors, subject to compliance with law, contractual restrictions and
future review of the condition of the Company, declared its intention to issue
regular quarterly dividends of $.03 per share of common stock for each quarter
of fiscal 1999. Also on February 23, 1999, the Board of Directors declared a
dividend of $.03 per share of common stock for the first quarter of fiscal 1999
for stockholders of record on March 26, 1999.

ITEM 6. SELECTED FINANCIAL DATA

The information set forth under the caption "Five Year Summary of
Significant Financial Data" which appears on page 33 of the Company's 1998
Annual Report to Stockholders is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Certain statements contained in this report are forward-looking statements
made pursuant to the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks and uncertainties,
which may cause the Company's actual actions or results to differ materially
from those contained in the forward-looking statements. The Company believes
that the benefits under the Strategic Plan will be realized in future years,
although no assurance can be given that the expectations relative to future
market share and earnings benefits of the strategy will be achieved. Specific
factors that might cause such a difference include, but are not limited to, the
Company's ability to achieve the cost reductions anticipated from its
restructuring program and to achieve efficiencies in its manufacturing and
distribution operations without negatively affecting sales, the cost of dairy
and other commodities used in the Company's products, competitors' marketing and
promotion responses, market conditions affecting the price of the Company's
products, the Company's ability to increase sales of its branded products and
responsiveness of the trade and consumers to the Company's new products and
increased marketing and promotional expenses.

The information set forth under the caption "Risks and Uncertainties" in
"Management's Discussion and Analysis" which appears on page 37 of the Company's
1998 Annual Report to Stockholders is incorporated herein by reference.

7
9

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the caption "Market Risk" in "Management's
Discussion and Analysis" which appears on page 39 of the Company's 1998 Annual
Report to Stockholders is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated February 22, 1999 appearing on pages 16-32 of
the Company's 1998 Annual Report to Stockholders are incorporated herein by
reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

8
10

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information set forth under the captions "Board of
Directors -- Nominees for Director" and "Board of Directors -- Continuing
Directors," "Matters Submitted to the Vote of Stockholders -- Election of
Directors," "Executive Compensation -- Compensation Committee Interlocks and
Insider Participation" and "Security Ownership of Certain Beneficial Owners and
Management -- Section 16(a) Beneficial Ownership Reporting Compliance" in the
Company's Proxy Statement for the 1999 Annual Meeting of Stockholders to be
filed with the Commission on or before April 25, 1999, and the information
contained in Part I of this Annual Report on Form 10-K under the caption
"Executive Officers of the Registrant," is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information set forth under the captions "Executive Compensation" and
"Board of Directors -- Remuneration of Directors" in the Company's Proxy
Statement for the 1999 Annual Meeting of Stockholders to be filed with the
Commission on or before April 25, 1999 is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's Proxy Statement for the 1999
Annual Meeting of Stockholders to be filed with the Commission on or before
April 25, 1999 is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the captions "Executive
Compensation -- Compensation Committee Interlocks and Insider Participation" and
"Executive Compensation -- Other Relationships" in the Company's Proxy Statement
for the 1999 Annual Meeting of Stockholders to be filed with the Commission on
or before April 25, 1999 is incorporated herein by reference.

9
11

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE:

The following documents are filed as part of this report:



PAGE(S) IN
ANNUAL REPORT*
--------------

1. Financial Statements:
Consolidated Statement of Operations for each of the three
years in the period ended December 26, 1998............ 16
Consolidated Balance Sheet at December 26, 1998 and December
27, 1997............................................... 17
Consolidated Statement of Changes in Stockholders' Equity
for the three years ended December 26, 1998............ 18
Consolidated Statement of Cash Flows for each of the three
years in the period ended December 26, 1998............ 19
Notes to Consolidated Financial Statements.................. 20-31
Report of Independent Accountants........................... 32




PAGE(S)
-------

2. Financial Statement Schedule:
Report of Independent Accountants on Financial Statement
Schedule for each of the three years in the period
ended December 26, 1998................................ 18
Schedule II. Valuation and Qualifying Accounts.............. 19


- ---------------
* Incorporated by reference to the indicated pages of the Company's 1998
Annual Report to Stockholders.

All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.

Financial statements of any other 50 percent or less owned company have
been omitted because the Registrant's proportionate share of income from
continuing operations before income taxes and cumulative effect of change
in accounting principle is less than 20 percent of the respective
consolidated amounts, and the investment in and advances to any such
company is less than 20 percent of consolidated total assets.

3. List of Management Compensation Agreements

(i) Dreyer's Grand Ice Cream, Inc. Incentive Stock Option Plan (1982)
referenced in Exhibit 10.3 herein.

(ii) Indemnification Agreements by and between Dreyer's Grand Ice Cream,
Inc. and each of its directors, executive officers and certain other
officers referenced in Exhibit 10.10 herein.

(iii) Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1992) referenced in
Exhibit 10.16 herein.

(iv) Dreyer's Grand Ice Cream, Inc. Incentive Bonus Plan referenced in
Exhibit 10.19 herein.

(v) Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993) referenced in
Exhibit 10.20 herein.

(vi) Dreyer's Grand Ice Cream, Inc. Income Swap Plan referenced in Exhibit
10.21 herein.

(b) REPORTS ON FORM 8-K

Not applicable.

10
12

(c) EXHIBITS



EXHIBIT
NUMBER DESCRIPTION
------- -----------

2.1 Securities Purchase Agreement dated June 24, 1993 by and
among Dreyer's Grand Ice Cream, Inc., Trustees of General
Electric Pension Trust, GE Investment Private Placement
Partners, I and General Electric Capital Corporation
(Exhibit 2.1(11)).
2.2 Amendment to Securities Purchase Agreement dated May 6, 1994
by and among Dreyer's Grand Ice Cream, Inc., Trustees of
General Electric Pension Trust, GE Investment Private
Placement Partners, I and General Electric Capital
Corporation, amending Exhibit 2.1 (Exhibit 2.1(14)).
2.3 Stock and Warrant Purchase Agreement dated as of May 6, 1994
by and between Dreyer's Grand Ice Cream, Inc. and Nestle
Holdings, Inc. (Exhibit 2.1(15)).
2.4 First Amendment to Stock and Warrant Purchase Agreement
dated as of June 14, 1994 by and between Dreyer's Grand Ice
Cream, Inc. and Nestle Holdings, Inc., amending Exhibit 2.3
(Exhibit 2.1(16)).
2.5 Second Amendment to Securities Purchase Agreement dated July
28, 1995 and effective as of June 1, 1995 by and among
Dreyer's Grand Ice Cream, Inc., Trustees of General Electric
Pension Trust, GE Investment Private Placement Partners, I
and General Electric Capital Corporation, amending Exhibit
2.1 (Exhibit 10.2(18)).
2.6 Third Amendment to Securities Purchase Agreement dated
October 30, 1995 and effective as of September 30, 1995 by
and among Dreyer's Grand Ice Cream, Inc., Trustees of
General Electric Pension Trust, GE Investment Private
Placement Partners, I and General Electric Capital
Corporation, amending Exhibit 2.1 (Exhibit 10.1(19)).
2.7 Amended and Restated Fourth Amendment to Securities Purchase
Agreement dated March 12, 1996 and effective as of October
1, 1995 by and among Dreyer's Grand Ice Cream, Inc.,
Trustees of General Electric Pension Trust, GE Investment
Private Placement Partners, I and General Electric Capital
Corporation, amending Exhibit 2.1 (Exhibit 2.8(20)).
3.1 Certificate of Incorporation of Dreyer's Grand Ice Cream,
Inc., as amended, including the Certificate of Designation
of Series A Convertible Preferred Stock, as amended, setting
forth the Powers, Preferences, Rights, Qualifications,
Limitations and Restrictions of such series of Preferred
Stock and the Certificate of Designation of Series B
Convertible Preferred Stock, as amended, setting forth the
Powers, Preferences, Rights, Qualifications, Limitations and
Restrictions of such series of Preferred Stock (Exhibit
3.1(16)).
3.2 Certificate of Designation, Preferences and Rights of Series
A Participating Preference Stock (Exhibit 3.2(17)).
3.3 By-laws of Dreyer's Grand Ice Cream, Inc., as last amended
May 2, 1994 (Exhibit 3.2(16)).
4.1 Amended and Restated Rights Agreement dated March 4, 1991
between Dreyer's Grand Ice Cream, Inc. and Bank of America,
NT & SA (Exhibit 10.1(6)).
4.2 Registration Rights Agreement dated as of June 30, 1993
among Dreyer's Grand Ice Cream, Inc., Trustees of General
Electric Pension Trust, and GE Investment Private Placement
Partners, I and General Electric Capital Corporation
(Exhibit 4.1(12)).
4.3 Amendment to Registration Rights Agreement dated May 6, 1994
by and among Dreyer's Grand Ice Cream, Inc., Trustees of
General Electric Pension Trust, GE Investment Private
Placement Partners, I and General Electric Capital
Corporation, amending Exhibit 4.2 (Exhibit 4.1(14)).
4.4 First Amendment to Amended and Restated Rights Agreement
dated as of June 14, 1994 between Dreyer's Grand Ice Cream,
Inc. and First Interstate Bank of California (as successor
Rights Agent to Bank of America NT & SA), amending Exhibit
4.1 (Exhibit 4.1(16)).
4.5 Registration Rights Agreement dated as of June 14, 1994
between Dreyer's Grand Ice Cream, Inc. and Nestle Holdings,
Inc. (Exhibit 4.2(16)).


11
13



EXHIBIT
NUMBER DESCRIPTION
------- -----------

4.6 Warrant Agreement dated as of June 14, 1994 between Dreyer's
Grand Ice Cream, Inc. and Nestle Holdings, Inc. (Exhibit
4.3(16)).
4.7 Second Amendment to Amended and Restated Rights Agreement
dated March 17, 1997 between Dreyer's Grand Ice Cream, Inc.
and ChaseMellon Shareholder Services, LLC, as Rights Agent,
amending Exhibit 4.1 (Exhibit 10.1 (24)).
4.8 Third Amendment to Amended and Restated Rights Agreement
dated May 15, 1997 between Dreyer's Grand Ice Cream, Inc.
and ChaseMellon Shareholder Services, LLC, as Rights Agent,
amending Exhibit 4.1 (Exhibit 10.1 (25)).
10.1 Agreement dated September 18, 1978 between Dreyer's Grand
Ice Cream, Inc. and Kraft, Inc. (Exhibit 10.8(1)).
10.2 Agreement and Lease dated as of January 1, 1982 and
Amendment to Agreement and Lease dated as of January 27,
1982 between Jack and Tillie Marantz and Dreyer's Grand Ice
Cream, Inc., as amended (Exhibit 10.2(17)).
10.3 Dreyer's Grand Ice Cream, Inc. Incentive Stock Option Plan
(1982), as amended. (Exhibit 10.6(13)).
10.4 Loan Agreement between Edy's and City of Fort Wayne, Indiana
dated September 1, 1985 and related Letter of Credit, Letter
of Credit Agreement, Mortgage, Security Agreement, Pledge
and Security Agreement and General Continuing Guaranty of
Dreyer's Grand Ice Cream, Inc. (Exhibit 10.33(2)).
10.5 Distribution Agreement between Dreyer's Grand Ice Cream,
Inc. and Ben & Jerry's Homemade, Inc. dated January 6, 1987
(Exhibit 10.1(3)).
10.6 Amendment and Waiver dated July 17, 1987 between Dreyer's
Grand Ice Cream, Inc. and Security Pacific National Bank,
amending the General Continuing Guaranty referenced in
Exhibit 10.4 (Exhibit 10.44(7)).
10.7 Amendment and Waiver dated December 24, 1987 between
Dreyer's Grand Ice Cream, Inc. and Security Pacific National
Bank, amending the General Continuing Guaranty referenced in
Exhibit 10.4 (Exhibit 10.45(7)).
10.8 Agreement for Amendments to Distribution Agreement dated as
of January 20, 1989 among Dreyer's Grand Ice Cream, Inc.,
Edy's Grand Ice Cream, Edy's of New York, Inc., and Ben &
Jerry's Homemade, Inc., amending Exhibit 10.5 (Exhibit 10.46
(4)).
10.9 Amendment to the Distribution Agreement dated as of April
11, 1989 by and among Dreyer's Grand Ice Cream, Inc., Edy's
Grand Ice Cream, Edy's of New York, Inc., and Ben & Jerry's
Homemade, Inc., amending Exhibit 10.5 (Exhibit 10.46(5)).
10.10 Form of Indemnification Agreement between Dreyer's Grand Ice
Cream, Inc. and each officer and director of Dreyer's Grand
Ice Cream, Inc. (Exhibit 10.47(4)).
10.11 Assignment of Lease dated as of March 31, 1989 among
Dreyer's Grand Ice Cream, Inc., Smithway Associates, Inc.
and Wilsey Foods, Inc. (Exhibit 10.52(5)).
10.12 Amendment of Lease dated as of March 31, 1989 between
Dreyer's Grand Ice Cream, Inc. and Smithway Associates,
Inc., as amended by letter dated April 17, 1989 between
Dreyer's Grand Ice Cream, Inc. and Wilsey Foods, Inc.,
amending Exhibit 10.11 (Exhibit 10.53(5)).
10.13 Third Amendment to General Continuing Guaranty and Waiver
dated January 29, 1991 between Dreyer's Grand Ice Cream,
Inc. and Security PacificNational Bank, amending the General
Continuing Guaranty referenced in Exhibit 10.4 (Exhibit
10.46(7)).
10.14 $25,000,000 9.3% Senior Notes: Form of Note Agreement dated
as of March 15, 1991, and executed on April 12, 1991 between
Dreyer's Grand Ice Cream, Inc. and each of Massachusetts
Mutual Life Insurance Company, Massachusetts Mutual Life
Pension Insurance Company, Connecticut Mutual Life Insurance
Company, the Equitable Life Assurance Society of the United
States, and Transamerica Occidental Life Insurance Company
(Exhibit 19.1(8)).


12
14



EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.15 Second Amendment to Distribution Agreement dated as of
August 31, 1992 between Dreyer's Grand Ice Cream, Inc. and
Ben & Jerry's Homemade, Inc., amending Exhibit 10.5 (Exhibit
19.6(9)).
10.16 Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1992)
(Exhibit 10.35(13)).
10.17 Agreement of Amendment and Waiver, dated as of September 30,
1992, between Dreyer's Grand Ice Cream, Inc. and each of
Massachusetts Mutual Life Insurance Company, MML Pension
Insurance Company, the Connecticut Mutual Life Insurance
Company, the Equitable Life Assurance Society of the United
States, and Transamerica Occidental Life Insurance Company
(together, the "Lenders") regarding the Note Agreements
dated as of March 15, 1991 between Dreyer's Grand Ice Cream,
Inc. and each of the Lenders, which Note Agreements are
referenced in Exhibit 10.14 (Exhibit 19.5(9)).
10.18 Second Amendment to Note Agreements dated as of September
30, 1992, between Dreyer's Grand Ice Cream, Inc. and each of
Massachusetts Mutual Life Insurance Company, MML Pension
Insurance Company, the Connecticut Mutual Life Insurance
Company, the Equitable Life Assurance Society of the United
States, and Transamerica Occidental Life Insurance Company
(together, the "Lenders") regarding the Note Agreements
dated as of March 15, 1991 between Dreyer's Grand Ice Cream,
Inc. and each of the Lenders, which Note Agreements are
referenced in Exhibit 10.14 (Exhibit 10.58(10)).
10.19 Description of Dreyer's Grand Ice Cream, Inc. Incentive
Bonus Plan (Exhibit 10.57(10)).
10.20 Dreyer's Grand Ice Cream, Inc. Stock Option Plan (1993), as
amended May 1, 1996.
10.21 Dreyer's Grand Ice Cream, Inc. Income Swap Plan (Exhibit
10.38(13)).
10.22 Amendment to Distribution Agreement dated April 18, 1994,
and Letter Agreement modifying such Amendment to
Distribution Agreement dated April 18, 1994 between Dreyer's
Grand Ice Cream, Inc. and Ben & Jerry's Homemade, Inc.,
amending Exhibit 10.5 (Exhibit 10.3(14)).
10.23 Amendment to Distribution Agreement dated December 12, 1994
between Dreyer's Grand Ice Cream, Inc. and Ben & Jerry's
Homemade, Inc., amending Exhibit 10.5 (Exhibit 10.27(17)).
10.24 Third Amendment to Note Agreement dated as of June 5, 1995
between Dreyer's Grand Ice Cream, Inc. and each of
Massachusetts Mutual Life Insurance Company, MML Pension
Insurance Company, the Connecticut Mutual Life Insurance
Company, the Equitable Life Assurance Society of the United
States, and Transamerica Occidental Life Insurance Company
(together, the "Lenders"), regarding the Note Agreements
dated as of March 15, 1991 between Dreyer's Grand Ice Cream,
Inc. and each of the Lenders, which Note Agreements are
referenced in Exhibit 10.14 (Exhibit 10.3(18)).
10.25 Letter Agreement dated August 4, 1995 between Dreyer's Grand
Ice Cream, Inc. and Smithway Associates, Inc., amending
Exhibits 10.2 and 10.11 (Exhibit 10.29(20)).
10.26 Credit Agreement dated as of December 22, 1995 among
Dreyer's Grand Ice Cream, Inc., Bank of America NT & SA (as
a Bank and as Agent), ABN-AMRO Bank N.V. (as a Bank and as
Co-Agent), Credit Suisse and The Bank of California (Exhibit
10.30(20)).
10.27 Participation Agreement dated March 29, 1996 among Dreyer's
Grand Ice Cream, Inc., Edy's Grand Ice Cream, BA Leasing &
Capital Corporation (as Agent and as a Participant), ABN-
AMRO Bank, NV and Credit Suisse (Exhibit 10.2(21)).
10.28 First Amendment to Credit Agreement dated April 15, 1996
among Dreyer's Grand Ice Cream, Inc., Bank of America, NT &
SA (as Agent and as a Bank), ABN-AMRO Bank, NV (as Co-Agent
and as a Bank), Credit Suisse and Union Bank of California,
NA, amending Exhibit 10.26 (Exhibit 10.1(21)).
10.29 April 1996 Amendment to Commerce Lease dated April 23, 1996
between Dreyer's Grand Ice Cream, Inc. and Smithway
Associates, Inc., amending Exhibits 10.2 and 10.11 (Exhibit
10.29(23)).


13
15




EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.30 Letter Agreement dated April 23, 1996 between Dreyer's Grand
Ice Cream, Inc. and Smithway Associates, Inc., amending
Exhibits 10.2 and 10.11 (Exhibit 10.30(23)).
10.31 $15,000,000 7.86% Series A Senior Notes Due 2002,
$15,000,000 8.06% Series B Senior Notes Due 2006 and
$20,000,000 8.34% Series C Senior Notes Due 2008: Form of
Note Agreement dated as of June 6, 1996 between Dreyer's
Grand Ice Cream, Inc. and each of The Prudential Insurance
Company of America, Pruco Life Insurance Company, and
Transamerica Life Insurance and Annuity Company (Exhibit
10.1(22)).
10.32 Fourth Amendment to Note Agreement dated as of June 10, 1997
between Dreyer's Grand Ice Cream, Inc. and each of
Massachusetts Mutual Life Insurance Company, MML Pension
Insurance Company, the Connecticut Mutual Life Insurance
Company, the Equitable Life Assurance Society of the United
States, and Transamerica Occidental Life Insurance Company,
(together, the "Lenders"), regarding the Note Agreements
dated as of March 15, 1991 between Dreyer's Grand Ice Cream,
Inc. and each of the Lenders, which Note Agreements are
reference in Exhibit 10.14 (Exhibit 10.1(26)).
10.33 Second Amendment to Credit Agreement dated as of December
26, 1997 among Dreyer's Grand Ice Cream, Inc., Bank of
America, NT&SA (as Agent and as a bank), ABN-AMRO Bank, NV
(as Co-Agent and as a bank), Credit Suisse First Boston and
Union Bank of California, NA, amending Exhibit 10.26.
(Exhibit 10.33(27)).
10.34 Amended and Restated Credit Agreement dated as of March 27,
1998 by and among Dreyer"s Grand Ice Cream, Inc., Bank of
America National Trust and Savings Association, as one of
the Banks and as Agent, ABN AMRO Bank, N.V., as one of the
Banks and as Co-Agent, Credit Suisse First Boston and Union
Bank of California, N.A. (Exhibit 10.1(28)).
10.35 First Amendment to Amended and Restated Credit Agreement
dated as of November 3, 1998 and effective as of September
25, 1998, among Dreyer's Grand Ice Cream, Inc. and Bank of
America National Trust and Savings Association, as a bank as
Agent, ABN-AMRO Bank N.V., San Francisco International
Branch as a bank and as Co-Agent, Credit Suisse First Boston
and Union Bank of California, N.A. (collectively the
"Banks"), amending the Amended and Restated Credit Agreement
dated as of March 27, 1998 among Dreyer's Grand Ice Cream,
Inc. and the Banks. (Exhibit 10.1(29)).
10.36 Fourth Amendment to General Continuing Guaranty and Waiver
dated November 12, 1998, between Dreyer's Grand Ice Cream,
Inc. and Bank of America National Trust and Savings
Association, amending the General Continuing Guaranty
referenced in Exhibit 10.4.
10.37 First Amendment dated as of November 17, 1998 to Note
Purchase Agreements dated as of June 6, 1996 between
Dreyer's Grand Ice Cream, Inc. and each of The Prudential
Insurance Company of America, Pruco Life Insurance Company,
and Transamerica Life Insurance and Annuity Company amending
Exhibit 10.31.
10.38 First Amendment to Participation Agreement dated December
21, 1998 among Dreyer's Grand Ice Cream, Inc., Edy's Grand
Ice Cream, BA Leasing & Capital Corporation (as Agent and as
a Participant), ABN-AMRO Bank, NV and Credit Suisse First
Boston (formerly Credit Suisse) amending Exhibit 10.27.
10.39 Letter Amendment Agreement dated as of January 11, 1999 to
that certain Distribution Agreement between Ben & Jerry's
Homemade, Inc., and Dreyer's Grand Ice Cream, Inc. and
certain of its subsidiaries, amending Exhibit 10.5.(**)
10.40 New Distribution Agreement between Dreyer's Grand Ice Cream,
Inc. and Ben & Jerry's Homemade, Inc. dated as of January
11, 1999 and related Addendum dated as of January 11,
1999.(**)


14
16



EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.41 Secured Promissory Notes dated October 5, 1998 and December
11, 1998 in the principal sum of $95,000 and $186,000,
respectively, with Thomas M. Delaplane as Maker and Dreyer's
Grand Ice Cream, Inc. as Payee, and related Pledge Agreement
dated October 5, 1998 by and between Thomas Miller
Delaplane, as Trustee of the Delaplane Family Trust UAD
6/22/95 and Dreyer's Grand Ice Cream, Inc.
13 Those portions of the Dreyer's Grand Ice Cream, Inc. 1998
Annual Report to Stockholders which are incorporated by
reference into this Annual Report on Form 10-K.
21 Subsidiaries of Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedule.


- ---------------
(1) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Registration Statement on Form S-1 and Amendment No. 1
thereto, filed under Commission File No. 2-71841 on April 16, 1981 and June
11, 1981, respectively.

(2) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K and Amendment No. 1 thereto for
the fiscal year ended December 28, 1985 filed under Commission File No.
0-10259 on March 28, 1986 and April 14, 1986, respectively.

(3) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-10259 on January 23, 1987.

(4) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
31, 1988 filed under Commission File No. 0-10259 on March 31, 1989.

(5) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
30, 1989 filed under Commission File No. 0-10259 on March 30, 1990.

(6) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-10259 on March 20, 1991.

(7) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
29, 1990 filed under Commission File No. 0-10259 on March 29, 1991.

(8) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
on June 29, 1991 filed under Commission File No. 0-10259 on August 13,
1991.

(9) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
on September 26, 1992 filed under Commission File No. 0-10259 on November
10, 1992.

(10) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
26, 1992 filed under Commission File No. 0-10259 on March 26, 1993.

(11) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-10259 on June 25, 1993.

(12) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
on June 26, 1993 filed under Commission File No. 0-10259 on August 10,
1993.

(13) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
25, 1993 filed under Commission File No. 0-14190 on March 25, 1994.

15
17

(14) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
March 26, 1994 filed under Commission File No. 0-14190 on May 10, 1994.

(15) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-14190 on May 9, 1994.

(16) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
June 25, 1994 filed under Commission File No. 0-14190 on August 9, 1994.

(17) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
31, 1994 filed under Commission File No. 0-14190 on March 30, 1995.

(18) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
July 1, 1995 filed under Commission File No. 0-14190 on August 15, 1995.

(19) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1995 filed under Commission File No. 0-14190 on November 14,
1995.

(20) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
30, 1995 filed under Commission File No. 0-14190 on March 29, 1996.

(21) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
March 30, 1996 filed under Commission File No. 0-14190 on May 14, 1996.

(22) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
June 29, 1996 filed under Commission File No. 0-14190 on August 13, 1996.

(23) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
28, 1996 filed under Commission File No. 0-14190 on March 28, 1997.

(24) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
20-14190 on March 21, 1997.

(25) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Current Report on Form 8-K filed under Commission File No.
0-14190 on May 19, 1997.

(26) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
September 27, 1997 filed under Commission File No. 0-14190 on November 11,
1997.

(27) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
27, 1997 filed under Commission File No. 0-14190 on March 26, 1998.

(28) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
March 28, 1998 filed under Commission File No. 0-14190 on May 12, 1999.

(29) Incorporated by reference to the designated exhibit to Dreyer's Grand Ice
Cream, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 1998 filed under Commission File No. 0-14190 on November 10,
1998.

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

16
18

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

DREYER'S GRAND ICE CREAM, INC.

By: /s/ T. GARY ROGERS

------------------------------------
(T. Gary Rogers)
Chairman of the Board and
Chief Executive Officer and Director
(Principal Executive Officer)
Date: March 25, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



SIGNATURE TITLE DATE
--------- ----- ----


/s/ T. GARY ROGERS Chairman of the Board March 25, 1999
- -------------------------------------------------------- and Chief Executive Officer
(T. Gary Rogers) and Director
(Principal Executive Officer)

/s/ WILLIAM F. CRONK, III President and Director March 25, 1999
- --------------------------------------------------------
(William F. Cronk, III)

/s/ EDMUND R. MANWELL Secretary and Director March 25, 1999
- --------------------------------------------------------
(Edmund R. Manwell)

/s/ TIMOTHY F. KAHN Vice President -- Finance and March 25, 1999
- -------------------------------------------------------- Administration and Chief
(Timothy F. Kahn) Financial Officer
(Principal Financial Officer)

/s/ JEFFREY P. PORTER Corporate Controller March 25, 1999
- -------------------------------------------------------- (Principal Accounting
(Jeffrey P. Porter) Officer)

/s/ JAN L. BOOTH Director March 25, 1999
- --------------------------------------------------------
(Jan L. Booth)

/s/ ROBERT A. HELMAN Director March 25, 1999
- --------------------------------------------------------
(Robert A. Helman)

/s/ M. STEVEN LANGMAN Director March 25, 1999
- --------------------------------------------------------
(M. Steven Langman)

/s/ JOHN W. LARSON Director March 25, 1999
- --------------------------------------------------------
(John W. Larson)

/s/ JACK O. PEIFFER Director March 25, 1999
- --------------------------------------------------------
(Jack O. Peiffer)

/s/ TIMOTHY P. SMUCKER Director March 25, 1999
- --------------------------------------------------------
(Timothy P. Smucker)


Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act:

Not applicable.

17
19

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of Dreyer's Grand Ice Cream, Inc.

Our audits of the consolidated financial statements referred to in our
report dated February 22, 1999 appearing in the 1998 Annual Report to
Stockholders of Dreyer's Grand Ice Cream, Inc. (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the Financial Statement Schedule listed in Item
14(a)2 of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP
San Francisco, California
February 22, 1999

18
20

SCHEDULE II

DREYER'S GRAND ICE CREAM, INC.

VALUATION AND QUALIFYING ACCOUNTS
(TABLE AND FOOTNOTES IN THOUSANDS)



ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END
CLASSIFICATION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
-------------- ---------- ---------- ---------- ----------

Fiscal year ended December 28, 1996:
Allowance for doubtful accounts............. $ 698 $ 891 $ 834(1) $ 755
Amortization of goodwill and distribution
rights................................... 13,414 3,202 -- 16,616
Amortization of other assets................ 4,197 992 191(2) 4,998
------- ------- ------ -------
$18,309 $ 5,085 $1,025 $22,369
======= ======= ====== =======
Fiscal year ended December 27, 1997:
Allowance for doubtful accounts............. $ 755 $ 1,463 $1,508(1) $ 710
Amortization of goodwill and distribution
rights................................... 16,616 3,201 -- 19,817
Amortization of other assets................ 4,998 923 -- 5,921
------- ------- ------ -------
$22,369 $ 5,587 $1,508 $26,448
======= ======= ====== =======
Fiscal year ended December 26, 1998:
Allowance for doubtful accounts............. $ 710 $ 6,498(3) $1,498(1) $ 5,710
Amortization of goodwill and distribution
rights................................... 19,817 12,603(4) 2,208(2,4) 30,212
Amortization of other assets................ 5,921 1,001 1,061(2) 5,861
------- ------- ------ -------
$26,448 $20,102 $4,767 $41,783
======= ======= ====== =======


- ---------------
(1) Write-off of receivables considered uncollectible.

(2) Removal of fully-amortized assets.

(3) Includes reserve of $5,000 for trade receivables related to a Texas
distributor.

(4) Includes goodwill and distribution rights impairment related to the
restructuring program and other actions.

19
21

EXHIBIT INDEX



EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.36 Fourth Amendment to General Continuing Guaranty and Waiver
dated November 12, 1998, between Dreyer's Grand Ice Cream,
Inc. and Bank of America National Trust and Savings
Association, amending the General Continuing Guaranty
referenced in Exhibit 10.4.
10.37 First Amendment dated as of November 17, 1998 to Note
Purchase Agreements dated as of June 6, 1996 between
Dreyer's Grand Ice Cream, Inc. and each of The Prudential
Insurance Company of America, Pruco Life Insurance Company,
and Transamerica Life Insurance and Annuity Company amending
Exhibit 10.31.
10.38 First Amendment to Participation Agreement dated December
21, 1998 among Dreyer's Grand Ice Cream, Inc., Edy's Grand
Ice Cream, BA Leasing & Capital Corporation (as Agent and as
a Participant), ABN-AMRO Bank, NV and Credit Suisse First
Boston (formerly Credit Suisse) amending Exhibit 10.27.
10.39 Letter Amendment Agreement dated as of January 11, 1999 to
that certain Distribution Agreement between Ben & Jerry's
Homemade, Inc., and Dreyer's Grand Ice Cream, Inc. and
certain of its subsidiaries, amending Exhibit 10.5.(**)
10.40 New Distribution Agreement between Dreyer's Grand Ice Cream,
Inc. and Ben & Jerry's Homemade, Inc. dated as of January
11, 1999 and related Addendum dated as of January 11,
1999.(**)
10.41 Secured Promissory Notes dated October 5, 1998 and December
11, 1998 in the principal sum of $95,000 and $186,000,
respectively, with Thomas M. Delaplane as Maker and Dreyer's
Grand Ice Cream, Inc. as Payee, and related Pledge Agreement
dated October 5, 1998 by and between Thomas Miller
Delaplane, as Trustee of the Delaplane Family Trust
UAD6/22/95 and Dreyer's Grand Ice Cream, Inc.
13 Those portions of the Dreyer's Grand Ice Cream, Inc. 1998
Annual Report to Stockholders which are incorporated by
reference into this Annual Report on Form 10-K.
21 Subsidiaries of Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedule.


- ---------------

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