GLACIER WATER SERVICES, INC.
                             1385 Park Center Drive
                             Vista, California 92081

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

                            NOTICE OF ANNUAL MEETING
                          To be held at the offices of
                   Kayne Anderson Investment Management, Inc.
                     1800 Avenue of the Stars, Second Floor
                          Los Angeles, California 90067

                                  June 15, 2005


To Our Stockholders:

     NOTICE is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Glacier Water Services,  Inc. (the "Company") will be held at 10:00
a.m. Pacific Time on June 15, 2005, at the offices of Kayne Anderson  Investment
Management,  Inc.,  1800  Avenue  of  the  Stars,  Second  Floor,  Los  Angeles,
California, 90067 for the following purposes:

     1.   To elect seven directors to serve for terms of one year until the next
          Annual Meeting of Stockholders and until their  respective  successors
          have been duly elected and qualified;

     2.   To ratify the appointment of KPMG LLP as independent registered public
          accounting firm of the Company for the 2005 fiscal year; and

     3.   To consider  and vote upon such other  business as may  properly  come
          before the Annual Meeting or any adjournment thereof.

     Holders of the Company's  Common Stock, par value $.01 per share, as of the
close of  business  on April 18,  2005,  the  record  date fixed by the Board of
Directors,  are  entitled  to notice of and to vote at the Annual  Meeting.  The
Company's  Board of Directors and officers urge that all  stockholders of record
exercise  their  right to vote at the  Annual  Meeting  personally  or by proxy.
Accordingly,  we are sending you the enclosed Proxy Statement and proxy card, as
well as the fiscal year 2004 Annual Report.

     Whether or not you plan to attend the Annual Meeting,  please indicate your
vote on the accompanying  proxy card and sign, date and return it as promptly as
possible in the enclosed self-addressed, postage-paid envelope.

     Your prompt response is appreciated.

                                          By Order of the Board of Directors
                                          /s/ W. David Walters
                                          --------------------------------------
                                          W. David Walters
                                          Senior Vice President,
Vista, California                         Chief Financial Officer and Secretary
May 23, 2005







                          GLACIER WATER SERVICES, INC.
                             1385 Park Center Drive
                                 Vista, CA 92081

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

                         ANNUAL MEETING OF STOCKHOLDERS
                            To Be Held June 15, 2005

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

                                 PROXY STATEMENT


     The  accompanying  proxy is  solicited by the Board of Directors of Glacier
Water  Services,  Inc.  (the  "Company")  to be used at the  Annual  Meeting  of
Stockholders on June 15, 2005 (the "Annual Meeting").  This Proxy Statement, the
enclosed  form of proxy and the fiscal year 2004 Annual Report are being sent to
stockholders on or about May 23, 2005.

     At the Annual Meeting, stockholders will be asked to consider and vote upon
the following items:

     1.   To elect seven directors to serve for terms of one year until the next
          Annual Meeting of Stockholders and until their  respective  successors
          have been duly elected and qualified;

     2.   To ratify the appointment of KPMG LLP as independent registered public
          accounting firm of the Company for the 2005 fiscal year; and

     3.   To consider  and vote upon such other  business as may  properly  come
          before the Annual Meeting or any adjournment thereof.



     The fiscal year 2004 Annual Report that accompanies this Proxy Statement is
not to be regarded as proxy soliciting material.

     The  Board of  Directors  of the  Company  believes  that  election  of its
director  nominees are in the best interests of the Company and its stockholders
and recommends to the stockholders of the Company the election of the nominees.




                                       1




                                     VOTING

     Shares  represented by duly executed and unrevoked  proxies in the enclosed
form  received by the Board of  Directors  prior to the Annual  Meeting  will be
voted at the Annual Meeting in accordance with the  specifications  made therein
by the stockholders,  unless authority to do so is withheld. If no specification
is made, shares represented by duly executed and unrevoked proxies will be voted
FOR  the  election  as  directors  of  the  nominees  listed  herein,   FOR  the
ratification  of  KPMG  LLP  as  the  Company's  independent  registered  public
accounting  firm,  and with respect to any other  matter that may properly  come
before  the  Annual  Meeting,  at the  discretion  of  the  persons  voting  the
respective proxies.

     No provisions  for rights of appraisal or similar  rights of dissenters are
applicable with respect to the matters to be voted upon at the Annual Meeting.

     Execution  of a proxy will not in any way affect a  stockholder's  right to
attend the Annual Meeting and vote in person, and any stockholder giving a proxy
may revoke it at any time prior to its exercise at the Annual  Meeting by giving
notice of such  revocation  either  personally or in writing to the Secretary of
the Company at the Company's executive offices, located at the address set forth
above,  by subsequently  executing and delivering  another proxy or by voting in
person at the Annual Meeting.

     The  Company  has  retained  Mellon  Investor  Services  LLC to  assist  in
soliciting  proxies  from  brokers  and  nominees  for the Annual  Meeting.  The
estimated  cost for these services is estimated to be less than $20,000 and will
be borne by the  Company.  It is  contemplated  that this  solicitation  will be
primarily by mail. In addition, some of the officers, directors and employees of
the Company may solicit  proxies by telephone,  facsimile,  and  internet.  Such
persons will not be compensated for such solicitation.

     Only holders of record of the Company's  Common Stock,  $.01 par value (the
"Common  Stock"),  as of the close of business  on April 18,  2005 (the  "Record
Date"),  will be entitled to notice of and to vote at the Annual Meeting. On the
Record Date,  there were  outstanding  2,195,408 of Common Stock.  Each share of
Common  Stock is  entitled to one vote on all  matters  presented  at the Annual
Meeting.

Vote Required

     The  election of the  director  nominees  requires a plurality of the votes
cast in  person or by proxy at the  Annual  Meeting.  Under  Delaware  law,  the
Company's  Certificate of Incorporation and the Company's  Bylaws,  shares as to
which a  stockholder  abstains  or  withholds  from  voting on the  election  of
directors  and  shares  as to  which a  broker  indicates  that it does not have
discretionary  authority  to  vote  ("broker  non-votes")  on  the  election  of
directors  will not be counted as voting  thereon and therefore  will not affect
the election of the nominees receiving a plurality of the votes cast.

     The  ratification of the appointment of KPMG LLP as independent  registered
public  accounting  firm of the Company for the 2005  fiscal year  requires  the
affirmative  vote of the  majority  of votes  cast in  person or by proxy at the
Annual Meeting.

                                   PROPOSAL 1
                              ELECTION OF DIRECTORS

     The Bylaws of the Company fix the number of  directors at not less than one
nor more than nine,  with the exact number to be set by  resolution of the Board
of Directors.  The Board of Directors has set the authorized number of directors
at seven,  and proposes the election of seven directors to hold office until the
next Annual  Meeting and until their  successors are duly elected and qualified.
Unless  authority  to vote for  directors  has been  withheld in the proxy,  the
persons named in the enclosed proxy intend to vote at the Annual Meeting for the
election  of the seven  nominees  presented  below.  Except as set forth  below,
persons  named as  proxies  may not vote for the  election  of any person to the
office  of  director  for which a bona  fide  nominee  is not named in the Proxy
Statement.  All nominees  have  consented to serve as a director for the ensuing
year.  Although  the Board of  Directors  does not  contemplate  that any of the
nominees will be unable to serve, if any nominee  withdraws or otherwise becomes
unavailable to serve,  the persons named in the enclosed proxy will vote for any
substitute nominee designated by the Board of Directors.


                                       2


     Each of these  individuals is currently a member of the Board.  The Company
has not paid any third  parties  to  assist in the  process  of  identifying  or
evaluating  candidates for the Board, and it has not rejected any candidates put
forward by any  stockholder or group of  stockholders  owing more than 5% of the
Company's stock.

     The names and certain information concerning the persons to be nominated as
directors by the Board of Directors at the Annual Meeting are set forth below.


       THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
                       EACH OF THE NOMINEES NAMED BELOW.

                NOMINEES FOR DIRECTORS FOR TERMS EXPIRING IN 2005


Name and Age as of the       Position, Principal Occupation, Business
June 15, 2005 Meeting Date   Experience and Directorships
- --------------------------   ----------------------------

William A. Armstrong, 64     Mr. Armstrong has been a director of the Company
                             since January 2002. Mr. Armstrong is the retired
                             Vice-President, Administration for McKesson
                             Corporation, a health care services and technology
                             company, where he served in various positions
                             commencing in 1972 until his retirement in June
                             2002.

William G. Bell, 58          Mr. Bell has been a director of the Company since
                             January 2002. Mr. Bell serves on the Board of
                             Directors of Aqua Filter Fresh, Inc., Clear
                             Mountain Spring Water LLC, Tyler Mountain Water
                             Company, Wissahickon Spring Water Company, Reid
                             Plastic Holdings and Consolidated Container
                             Company, and was past Chairman of the International
                             Bottled Water Association. Mr. Bell is currently
                             President of Aqua Filter Fresh, Inc. Previously,
                             Mr. Bell held various management positions at Polar
                             Water Company, including General Manager and
                             Northern Region Director before his departure in
                             1980 to found Aqua Filter Fresh, Inc.

Richard A. Kayne, 60         Mr. Kayne has been a director of the Company since
                             March 1995. Mr. Kayne served as Chairman of the
                             Board from September 1999 to June 2001. Mr. Kayne
                             and John E. Anderson founded Kayne Anderson
                             Investment Management, Inc. in 1984. Mr. Kayne
                             currently serves as President, Chief Executive
                             Officer and director of Kayne Anderson Investment
                             Management, Inc., the general partner of Kayne
                             Anderson Capital Advisors, L.P., an investment
                             management firm, and its broker-dealer affiliate,
                             KA Associates, Inc. He is also Co-Chair of the
                             Management Committee of Kayne Anderson Rudnick
                             Investment Management, LLC, an investment
                             management firm.

Brian H. McInerney, 37       Mr. McInerney joined the Company in May 2001 as the
                             President and Chief Executive Officer. Prior to
                             joining the Company, Mr. McInerney was the Vice
                             President, Worldwide Autolite Products for
                             Honeywell International (AlliedSignal), a
                             manufacturing company. Mr. McInerney joined
                             AlliedSignal in 1997 and served in various
                             marketing management positions. Mr. McInerney began
                             his marketing career at Nabisco, a diversified food
                             company. Prior thereto, he served at KPMG, an
                             accounting firm, as a financial auditor.

Peter H. Neuwirth, 66        Mr. Neuwirth has been a director of the Company
                             since January 2000 and has served as Vice-Chairman
                             of the Board since October 2000. Mr. Neuwirth
                             currently serves as Chairman of the Board of
                             Advanced Engine Management, Inc., a manufacturer
                             of high-performance automotive systems, and has
                             held that position since 1997. Mr. Neuwirth served
                             as President of IMPAC Imported Parts and
                             Accessories Company, Inc., a major importer and
                             distributor of replacement parts for imported cars
                             and light trucks to the specialist repair industry,
                             from 1979 to 1995. Mr. Neuwirth currently serves on
                             the Board of A Place Called Home, a charitable
                             organization in Los Angeles.

Charles A. Norris, 59        Mr. Norris has served as Chairman of the Board of
                             the Company since June 2001. Mr. Norris is the
                             retired President of McKesson Water Products
                             Company, a bottled water company, where he served
                             as President from 1990 until he retired in October
                             2000. Glacier acquired Aqua-Vend, a division of
                             McKesson Water Products Company, in 1997. Mr.
                             Norris is a past Chairman of the International
                             Bottled Water Association.

Heidi E. Yodowitz, 52        Ms. Yodowitz has been a director since February
                             2003. Ms. Yodowitz currently serves as the Senior
                             Vice President of Finance for McKesson Corporation.
                             Ms. Yodowitz has served in various financial
                             positions since joining McKesson Corporation in
                             1990.



                                       3



           INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES

     The Board of  Directors  is  responsible  for the  overall  affairs  of the
Company. The Board of Directors met a total of four times during the 2004 fiscal
year, including regularly scheduled and special meetings. The Board of Directors
has a  standing  Audit  Committee,  Compensation  Committee,  and  Nominating  /
Governance Committee.  The current members of each of the Board's committees are
listed below. No member of the Board of Directors attended fewer than 75% of the
meetings of the Board or such  Committees on which he served during fiscal 2004,
except for Mr. Neuwirth, who attended two of the four Audit Committee meetings.

The Audit Committee

     The Audit Committee acts pursuant to a written charter. A copy of the Audit
Committee  Charter may be obtained by sending a written request to the Secretary
of the Company at 1385 Park Center Drive,  Vista,  California  92081.  The Audit
Committee  met four times  during the 2004 fiscal year.  The Audit  Committee is
composed  solely of  directors  whom the Board has  determined  are  independent
within the meaning of the  requirements  of the  American  Stock  Exchange.  The
members of the Audit Committee are Ms. Yodowitz and Messrs.  Bell, and Neuwirth.
The Board has also determined that Ms. Yodowitz is an "audit committee financial
expert" as defined by the rules of the Securities and Exchange  Commission.  The
Audit Committee meets  periodically  with the Company's  independent  registered
public  accounting  firm  and  management  to  discuss  accounting   principles,
financial and  accounting  controls,  the scope and results of the annual audit,
internal  controls and other  matters;  advises the Board on matters  related to
accounting  and auditing;  and is  responsible  for selecting and overseeing the
independent   registered   public   accounting   firm  and   determining   their
compensation.  The independent  registered  public accounting firm have complete
access to the Audit Committee, without management present, to discuss results of
their audit and their observations on adequacy of internal controls,  quality of
financial  reporting,  and other accounting and auditing matters.  A copy of the
report of the Audit Committee is contained in this proxy statement.

The Compensation Committee

     The members of the Compensation Committee for the 2004 fiscal year were Ms.
Yodowitz,   Messrs.   Armstrong  and  Neuwirth.  None  of  the  members  of  the
Compensation  Committee has ever been an officer or employee of the Company. The
Compensation  Committee  met once during the 2004 fiscal year to review and make
recommendations  to  the  Board  regarding  terms  of  compensation,  employment
contracts  and pension  matters that concern  officers and key  employees of the
Company.  The Compensation  Committee is also responsible for the administration
of stock options under the Company's stock option plans. A copy of the report of
the Compensation Committee is contained in this proxy statement.

The Nominating / Governance Committee

     The Nominating / Corporate  Governance Committee provides assistance to the
Board  of  Directors  in  fulfilling  its  responsibility  to the  shareholders,
potential  shareholders  and  investment  community by (i)  reviewing and making
recommendations  to the Board  regarding the Board's  composition and structure,
establishing  criteria for Board  membership and evaluating  corporate  policies
relating  to the  recruitment,  selection,  tenure and  qualifications  of Board
members;  and  (ii)  establishing,  implementing  and  monitoring  policies  and
processes  regarding  principles of corporate  governance in order to ensure the
Board's   compliance   with  its  fiduciary   duties  to  the  Company  and  its
shareholders.  The Nominating / Governance  Committee acts pursuant to a written
charter.  The members of the  Nominating / Governance  Committee for fiscal year
2004 were Messrs.  Armstrong and Bell,  each of whom is  independent  within the
meaning of the  requirement of the American Stock  Exchange.  The members of the
Nominating / Governance Committee for fiscal year 2005 are Messrs. Armstrong and
Kayne, each of whom is independent  within the meaning of the requirement of the
American Stock Exchange.  In identifying  candidates for membership on the Board
of  Directors,  the  Nominating  Committee  takes into  account  all  factors it
considers  appropriate,  which may include ensuring that the Board of Directors,
as a whole, consists of individuals with various and relevant career experience,
relevant  technical  skills,   industry  knowledge  and  experience,   financial
expertise,  local and  community  ties and  minimum  individual  qualifications,
including strength of character, mature judgment, familiarity with the Company's
business  and  industry,   independence  of  thought  and  an  ability  to  work
collegially.  The Nominating Committee also may consider the extent to which the
candidate  would fill a particular need of the Board.  The Nominating  Committee
reviews the  qualifications  of, among  others,  those persons  recommended  for
nomination to the Board of Directors by stockholders. A stockholder suggesting a
nominee to the Board  should send the  nominee's  name,  biographical  material,
beneficial  ownership of the Company's  stock and other relevant  information in
writing to


                                       4


the  Secretary of the Company in a timely  manner as set forth in the  Company's
Bylaws,  accompanied  by a consent of such  nominee  to serve as a  director  if
elected. See "Proposals of Stockholders". Nominees must be willing to devote the
time required to serve  effectively as a director and as a member of one or more
Board  committees.  In order to submit a  nomination,  a  stockholder  must be a
holder of  record  on the date of such  submission  and on the  record  date for
determining  stockholders  entitled to vote at the meeting at which the election
will take place.  The Nominating  Committee met in March 2005 for the purpose of
recommending  to the Board the  nomination  of the nominees  named in this Proxy
Statement.



                                            EXECUTIVE OFFICERS OF THE REGISTRANT

     Name                          Position                                                            Age
     --------------------------    -----------------------------------------------------             -------
                                                                                                 
     Brian H. McInerney            President and Chief Executive Officer                               37
     Steven L. Murphy              Senior Vice President and Chief Operating Officer                   56
     W. David Walters              Senior Vice President, Chief Financial Officer and Secretary        56
     Luz E. Gonzales               Vice President, Human Resources                                     52
     Brian T. Nakagawa             Vice President, Technology and Information Systems                  51
     Kenneth W. Sumner, Sr.        Vice President, Sales                                               64


     The  executive  officers are elected by and serve at the  discretion of the
Board of Directors until their successors are duly chosen and qualified.

     Brian H. McInerney

     Mr.  McInerney  joined the Company in May 2001 as the  President  and Chief
Executive  Officer.  Prior to joining the Company,  Mr.  McInerney  was the Vice
President,    Worldwide   Autolite   Products   for   Honeywell    International
(AlliedSignal),  a manufacturing  company.  Mr. McInerney joined AlliedSignal in
1997 and served in various marketing management  positions.  Mr. McInerney began
his marketing career at Nabisco, a diversified food company.  Prior thereto,  he
served at KPMG, an accounting firm, as a financial auditor.

     Steven L. Murphy

     Mr. Murphy joined the Company in October 2000 as Senior Vice  President and
Chief Operating Officer. From 1998 to 2000, Mr. Murphy served as Vice President,
Finance and Chief Financial Officer of World Wide Parts and Accessories  Company
(WORLDPAC),  a major importer and distributor of replacement  parts for imported
cars and light trucks to the specialist repair industry.  From 1977 to 1998, Mr.
Murphy  served in  various  roles for  WORLDPAC,  including  Vice  President  of
Operations and Vice President, General Manager.

     W. David Walters

     Mr. Walters has served as Senior Vice President,  Chief  Financial  Officer
and Secretary since January 2000. Mr. Walters joined the Company in January 1999
as Chief Financial Officer, Vice  President-Finance and Secretary.  From 1997 to
1999,  Mr.  Walters was the Vice  President  Finance and Controller for the Penn
Traffic Company, a grocery supermarket retailer.  From 1996 to 1997, Mr. Walters
was the Vice  President,  Controller  for Bruno's,  Inc., a grocery  supermarket
retailer.  From 1992 to 1996,  Mr. Walters was the Chief  Financial  Officer for
ABCO Markets, Inc., a grocery supermarket retailer.

     Luz E. Gonzales

     Ms. Gonzales joined the Company in February 1995 as Vice President of Human
Resources.  From 1981 to February 1995, Ms.  Gonzales was Corporate  Director of
Human  Resources for Southwest  Water  Company,  a water utility and  wastewater
management company. Prior thereto, Ms. Gonzales served at American Isuzu Motors,
an automotive manufacturer, as a Human Resources Manager.

     Brian T. Nakagawa

     Mr.  Nakagawa  has served as Vice  President,  Technology  and  Information
Systems since February 1996, after joining the Company as Director of Technology
and Information Systems in June 1995. Prior to joining the Company, Mr. Nakagawa
was the owner of New Frontier  Technologies,  an information  systems consulting
company.


                                       5


     Kenneth W. Sumner, Sr.

     Mr.  Sumner joined the Company in February  2002 as Vice  President,  Sales
upon the Company's  acquisition of substantially  all of the assets of Pure Fill
Corporation. Mr. Sumner was the President of Pure Fill Corporation from February
1999 through  February 2002. From December 1997 to February 1999, Mr. Sumner was
General  Manager  of  National  Water  Services,   a  subsidiary  of  Pure  Fill
Corporation.  From 1985 through  1996,  Mr. Sumner held various  positions  with
Coca-Cola Bottling Plants in Kentucky and Virginia.

     The Company has adopted a Standards of Business  Conduct and ethics  policy
for its executive  officers and directors,  a copy of which has been filed as an
exhibit to the Company's  annual report filed with the  Securities  and Exchange
Commission.

                             EXECUTIVE COMPENSATION

Summary of Compensation

     The table below presents information concerning the compensation of (i) the
Chief Executive Officer of the Company during fiscal 2004 and (ii) the four most
highly  compensated  executive  officers who served as executive officers of the
Company at January 2, 2005 (the persons listed in the table below are the "Named
Executive Officers").



                                                Summary Compensation Table

                                                                                               Long-Term
                                                                                             Compensation
                                                    Annual Compensation                         Awards
                                 ---------------------------------------------------------   ------------
            Name                                                                              Securities
            And                                                                Other          Underlying        All
          Principal                                                            Annual          Options         Other
          Position                  Year       Salary       Bonus (1)     Compensation (2)        (#)       Compensation
- -----------------------------    ---------  ------------  ------------    ----------------   ------------   ------------

                                                                                               
Brian H. McInerney                 2004     $   280,410   $    48,125            --                   --         --
President and Chief                2003     $   249,784   $   125,000            --                6,500         --
Executive Officer                  2002     $   241,723   $   175,000            --                1,500         --

Steven L. Murphy                   2004     $   217,816   $    30,520            --                   --         --
Senior Vice President,             2003     $   211,838   $    85,393            --                1,500         --
Chief Operating Officer            2002     $   205,862   $   125,000            --                1,500         --

W. David Walters                   2004     $   211,815   $    25,970            --                   --         --
Senior Vice President,             2003     $   206,000   $    77,604            --                1,500         --
Chief Financial Officer and        2002     $   205,862   $   115,000            --                1,500         --
Secretary

Luz E. Gonzales,                   2004     $   131,561   $    13,335            --                   --         --
Vice President,                    2003     $   121,865   $    36,856            --                1,500         --
Human Resources                    2002     $   116,860   $    47,000            --                5,000         --

Kenneth W. Sumner, Sr.             2004     $   130,246   $    10,938            --                   --         --
Vice President, Sales (3)          2003     $   119,461   $    42,010            --                5,000         --
                                   2002     $    90,769   $    44,700            --                3,000         10,619


(1)  All 2004 bonus amounts were paid in 2005, all 2003 bonus amounts were paid
     in 2004 and all 2002 bonus amounts were paid in 2003.

(2)  Other Annual Compensation did not exceed the lesser of $50,000 or 10% of
     the Named Executive Officer's salary and bonus.

(3)  Mr. Sumner has served as Vice President, Sales since February 2002. All
     Other Compensation in 2002 for Mr. Sumner represents amounts paid by the
     Company to third parties in connection with relocation expenses and
     associated income taxes.


Option Grants in Fiscal 2004

     The Company's  1994 Stock  Compensation  Program  expired in March 2004. No
stock option grants were issued the fiscal year ended January 2, 2005.


                                       6


Aggregated Option Exercises in Fiscal 2004 and Fiscal Year-End Option Values

     The following  table presents  certain  information  regarding stock option
exercises  during fiscal 2004 and fiscal  year-end  option values of unexercised
options for each of the Named Executive Officers.



                                                                                                      Value of Unexercised
                                                                          Number of Unexercised     In-the-Money Options at
                                 Shares Acquired                            Options at FY-End           Fiscal Year End
            Name                 On Exercise (#)      Value Realized               #                           $
            ----                 ---------------      ---------------              -                           -
                                                            ($)         Exercisable/Unexercisable  Exercisable/Unexercisable
                                                            ---         -------------------------- -------------------------

                                                                                         
Brian H. McInerney                     --                   --               128,125 / 4,875         $2,337,469 / $ 59,201

Steven L. Murphy                       --                   --                70,625 / 7,375         $1,162,231 / $135,489

W. David Walters                       --                   --                79,125 / 19,875        $1,181,771 / $373,489

Luz E. Gonzales                        500                 3,480              22,000 / 2,000           $212,030 / $ 33,105

Kenneth W. Sumner, Sr.                 --                   --                 3,125 / 4,875           $ 41,519 / $ 61,451



Compensation of Directors

     Effective  January 1, 2002,  the  members  of the Board  were  entitled  to
receive, in lieu of cash fees, supplemental grants of options to purchase Common
Stock of the  Company  at the fair  market  value  on the date the  options  are
granted.  The cash  equivalent  values for these options are $26,750 per quarter
for Mr.  Norris as  Chairman  of the Board and $6,250 per  quarter for the other
outside directors. With the expiration of the 1994 Stock Compensation Program on
March 17, 2004, the members of the Board will no longer receive grants for their
services  as members of the Board,  but  instead  will,  effective  May 6, 2004,
receive  $26,750 per quarter in the case of Mr. Norris as Chairman of the Board,
$7,500  per  quarter  in the  case of Ms.  Yodowitz  as  Chairman  of the  Audit
Committee and $6,250 per quarter in the case of all other outside directors. All
members of the Board are  reimbursed  for expenses  incurred in connection  with
their services on the Board.

1994 Stock Compensation Program

     The Company adopted its 1994 Stock Compensation  Program (the "Program") to
provide a means of encouraging certain officers, employees,  directors, advisors
and  consultants  of the Company and its  subsidiaries  to obtain a  proprietary
interest in the enterprise  and thereby create an additional  incentive for such
persons to further the Company's  growth and  development.  The Program provided
for the granting of options to certain officers, employees,  directors, advisors
and  consultants of the Company and its  subsidiaries  to purchase shares of the
Company's Common Stock. The Program  terminated on March 17, 2004. The following
description  of the Program is qualified in its entirety by the full text of the
Program,  copies of which  have been  filed  with the  Securities  and  Exchange
Commission.

     The Program is divided into two parts.  Part I is the 1994  Employee  Stock
Option Plan and Part II is the 1994  Non-Employee  Director  Stock  Option Plan.
Part  I  provided  for  discretionary  grants  of  stock  options  to  officers,
employees,  advisors  and  consultants  of the Company.  Such stock  options are
either  incentive  stock  options  (each,  an "ISO")  under  Section  422 of the
Internal  Revenue Code of 1986, as amended (the "Code"),  or nonqualified  stock
options  that are not  intended to be, or do not  qualify  as,  ISOs  (each,  an
"NSO"),  provided,  however,  that ISOs were  granted  only to  employees of the
Company. Part II provided for the  non-discretionary  annual grant of options to
purchase  1,500  shares  of the  Company's  Common  Stock  to each  non-employee
director of the Company.  Stock options  granted under Part II may only be NSOs.
The Program is administered by the Compensation Committee.

     Additionally,  under the  Program,  non-employee  directors  of the Company
received  supplemental  grants of Options in lieu of cash fees. The supplemental
options  ("Supplemental  Options")  were  granted  each  year on the date of the
Company's  Annual  Meeting.  The  number of  Supplemental  Options  granted to a
director  was the lesser of (i) the number  whose  value,  as  determined  by an
independent  valuation  expert  retained  by  the  Compensation   Committee,  is
equivalent  on the date of grant to the cash  compensation  which  the  director
would  otherwise have been entitled to receive for such year, or (ii) the number
set by the  Board of  Directors  in its  discretion.  In  general,  Supplemental


                                       7


Options  vest and  become  exercisable  one year from the date of grant (or such
longer period as the Compensation  Committee may set) and will be exercisable at
a price per share equal to the closing  price of the  Company's  Common Stock on
the exchange on which it is traded at the close of business on the first trading
day  preceding  the  date of  grant.  Supplemental  Options  become  immediately
exercisable  upon a director's  death or disability or upon a Change of Control.
If a director's  membership on the Board of Directors  ends for any reason other
than death,  disability or a Change in Control,  then the number of Supplemental
Options  granted for the year in which the  membership  ends shall be reduced to
reflect  the  amount  of cash  equivalent  compensation  actually  earned by the
director  in  that  year  and  shall  be  immediately   exercisable.   Once  any
Supplemental  Options become exercisable,  they shall remain exercisable for the
lesser  of (i) five  years  after  the date of grant or (ii) one year  after the
director's   membership  on  the  Board  of  Directors   ends  for  any  reason.
Supplemental Options to non-employee directors may only be NSOs.

Company's Long-Term Incentive Program

     The Company  adopted a  Long-Term  Incentive  Program  for  officers of the
Company  in 2004.  The  Long-Term  Incentive  Program  is a three  year  program
intended to  compensate  key  executives  based on obtaining  certain  financial
performance by the end of the three year term. Awards are based on the levels of
fiscal 2006 revenues and earnings before interest, taxes and depreciation,  each
of which is weighted at 50% for purposes of the awards. No awards will be earned
if results are below 94% of  targeted  levels,  and the  maximum  awards will be
earned if results exceed  approximately  106% of targeted levels.  The following
table presents certain  information  regarding the targeted long-term  incentive
program for the Named Executives:



                         Number of        Performance       Estimated Payout Under Non-Stock Price-Based Plans
                         Shares or        Period Until      --------------------------------------------------
Name                    Other Rights         Payout          Threshold             Target             Maximum
- ----                    ------------         ------          ---------             -------            -------
                                                                                     
Brian McInerney              n/a              2006           $ 106,250           $ 212,500          $ 318,750
Steve  Murphy                n/a              2006            $ 44,921            $ 89,842          $ 134,763
W. David Walters             n/a              2006            $ 38,224            $ 76,448          $ 114,673
Luz E. Gonzales              n/a              2006            $ 19,627            $ 39,254           $ 58,882
Ken Sumner                   n/a              2006            $ 19,318            $ 38,636           $ 57,954


Employment Agreement

     Mr. McInerney and the Company are parties to an employment  agreement which
provides  for Mr.  McInerney  to receive an annual  salary of $275,000  for 2004
(with such annual increases  thereafter as are given in the Board's  discretion)
and for a severance  benefit equal to one-year's  compensation if his employment
is terminated without cause or generally in connection with a change of control.
The agreement also provides for Mr. McInerney's  eligibility for a target annual
bonus of 50% of his salary and a target long-term incentive payout of 75% of his
average salary for the three-year term of the Company's 2004 Long-Term Incentive
Program.

Certain Relationships and Related-Party Transactions

     Kayne  Anderson  Capital  Advisors,  L.P.  currently  manages the Company's
investment portfolio. Kayne Anderson Investment Management,  Inc. is the general
partner of Kayne Anderson  Capital  Advisors,  L.P. Mr. Kayne, a director of the
Company,  is  employed  as a  senior  executive  of  Kayne  Anderson  Investment
Management,  Inc.  Mr.  Kayne and  accounts  managed by Kayne  Anderson  Capital
Advisors,  L.P. are  shareholders of the Company.  The Company incurred costs of
$0, $3,000, and $7,000 in 2004, 2003 and 2002,  respectively,  to Kayne Anderson
Capital Advisors, L.P. in connection with investment management fees.

Litigation

     No director,  officer, affiliate or beneficial owner of the Company, or any
associate thereof,  is a party adverse to the Company or any of its subsidiaries
in any lawsuit nor has a material adverse interest thereto.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's executive officers, directors and persons who own more than 10% of


                                       8


the Company's Common Stock to file reports of ownership on Forms 3, 4 and 5 with
the Securities and Exchange  Commission.  Executive officers,  directors and 10%
stockholders  are required by the  Commission to furnish the Company with copies
of all Forms 3, 4 and 5 they file.

     Based  solely on the  Company's  review of the  copies of such forms it has
received, the Company believes that all of its executive officers, directors and
greater  than  10%   beneficial   owners  have  complied  with  all  the  filing
requirements applicable to them with respect to transactions during fiscal 2004.


                     REPORT OF THE COMPENSATION COMMITTEE(1)
                            ON EXECUTIVE COMPENSATION

Compensation Philosophy

     The  Compensation  Committee's  executive  compensation  philosophy  is  to
provide competitive levels of compensation while establishing a strong, explicit
link between executive  compensation and the achievement of the Company's annual
and long-term performance goals, rewarding  above-average corporate performance,
recognizing individual initiative and achievement,  and assisting the Company in
attracting and retaining  highly-skilled  management.  This  philosophy has been
adhered to by  developing  incentive pay  programs,  which  provide  competitive
compensation  and mirror  Company  performance.  Both  short-term  and long-term
incentive   compensation  are  based  on  direct,   explicit  links  to  Company
performance and the value received by stockholders.


     Fiscal 2004 Executive Compensation

     Cash  compensation  includes base salary and annual bonuses.  Base salaries
are set at competitive levels, with reference to the responsibilities undertaken
by personnel and their experience.  Annual salary  adjustments are determined by
reference to the  Company's  and the  individual's  performance,  as well as the
competitive marketplace generally. Annual bonuses are awarded based primarily on
management's ability to achieve specified earnings levels.

     Stock-Based Incentives

     The  Compensation  Committee  believes  that it is  essential  to align the
interests of the executives and other management  personnel  responsible for the
growth of the Company with the  interests  of the  Company's  stockholders.  The
Compensation  Committee  believed  that  this  alignment  was best  accomplished
through the  provision of  stock-based  incentives.  Therefore,  the Company has
periodically  granted stock options to officers,  salaried employees,  advisors,
consultants and  non-employee  directors under the Company's stock option plans.
The Company's Stock  Compensation  Program  terminated on March 17, 2004 and was
replaced  with a  Long-Term  Incentive  Program,  which  will  be  aligned  with
long-term performance goals set by the Board.

     Fiscal 2004 President and Chief Executive Officer Compensation

     Mr.  McInerney's  compensation as President and Chief Executive  Officer of
the  Company for Fiscal 2004 was  recommended  to the Board by the  Compensation
Committee.  For Fiscal 2004,  the  Compensation  Committee  determined  that Mr.
McInerney  would be entitled to receive an annual base salary of $275,000  and a
bonus objective of $137,500,  subject to the Company's  achievement of specified
earnings  levels.  In March 2005,  Mr.  McInerney was awarded a bonus of $48,125
associated with fiscal year 2004.

     Summary

     After its  review of the  Company's  existing  programs,  the  Compensation
Committee  believes that the total  compensation  program for  executives of the
Company over the last fiscal year was competitive with the compensation programs
provided by other  companies  with which the  Company  competes  for  management
talent.  The  Compensation  Committee  also believes that the annual bonuses and
stock-based   incentives   provided   opportunities  to  participants  that  are
consistent  with the  returns  that are  generated  on behalf  of the  Company's
stockholders.

     Limitation of Tax Deduction for Executive Compensation


                                       9


     The Omnibus Budget Reconciliation Act of 1993 (the "Act") prevents publicly
traded  companies  from  receiving  a tax  deduction  on  compensation  paid  to
proxy-named  executive officers in excess of $1 million annually,  effective for
compensation  paid after  1993.  Although  the  Compensation  Committee  has not
adopted a policy relating to the Act, the Compensation  Committee  believes that
there will be little, if any, impact from this limitation to the Company.


COMPENSATION COMMITTEE:

     William A. Armstrong
     Heidi Yodowitz
     Peter Neuwirth

- --------------------
(1)  Notwithstanding  anything to the contrary set forth in any of the Company's
     previous  or  future  filings  under  the  Securities  Act of  1933  or the
     Securities  Exchange Act of 1934, the Report of the Compensation  Committee
     on Executive  Compensation  shall not be  incorporated  by reference in any
     such filings.






                                       10





                              PERFORMANCE GRAPH (2)

     The following  graph compares the Company's  cumulative  total  stockholder
return on Common Stock for the period from December 31, 1998, to January 2, 2005
with returns on, respectively, the American Stock Exchange Index and an industry
index consisting of the Dow Jones Industry Group - Beverages,  Soft Drinks.  The
return lines assume a $100  investment in the Company's  Common Stock (or in the
basket of stocks  represented by the given index) at the beginning of the period
presented.

              GLACIER WATER SERVICES, INC. STOCK PERFORMANCE GRAPH
                 FROM DECEMBER 31, 1998 THROUGH JANUARY 2, 2005


            [See supplemental PDF for graphic of performance graph]



- --------------------
(2)  Notwithstanding  anything to the contrary set forth in any of the Company's
     previous  or  future  filings  under  the  Securities  Act of  1933  or the
     Securities  Exchange  Act of 1934,  this  performance  graph  shall  not be
     incorporated by reference in any such filings.



                                       11






         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets forth as of March 1, 2005  certain  information
regarding the shares of Common Stock  beneficially owned by each stockholder who
is known by the Company to  beneficially  own in excess of 5% of the outstanding
shares of Common Stock, by each director and each executive officer,  and by all
executive officers and directors as a group.

                                                 Amount and
                                                 Nature of
                                                 Beneficial            Percent
Name of Beneficial Owner                         Ownership             of Class
- ------------------------                         ---------             --------
William A. Armstrong (1)                            37,069                1.70%

William G. Bell (2)                                 11,750                   *

Richard A. Kayne (3)                             1,159,902               50.97%

Peter H. Neuwirth (4) (5)                          151,139                6.66%

Charles A. Norris (4) (6)                          476,939               20.68%

Heidi E. Yodowitz (7)                                5,000                   *

Luz E. Gonzales (8) (4)                             16,000                   *

Brian H. McInerney (8) (4)                         129,375                5.62%

Steven L. Murphy (8) (4)                            76,875                3.42%

Brian T. Nakagawa (8) (4)                           20,000                   *

Kenneth W. Sumner, Sr. (8) (4)                       4,750                   *

W. David Walters (8) (4)                            97,875                4.31%

Executive officers and directors
as a group (12 persons) (4)                      2,186,674               76.03%

- ------------------
*        Less than 1%.

(1)  The address for Mr. Armstrong is 4035 Natasha Drive, Lafayette,  California
     94549.

(2)  The address for Mr. Bell is c/o Tyler Mountain Water Company,  One Commerce
     Drive, Pittsburgh, Pennsylvania 15239.

(3)  The  1,159,902  shares  include (i)  757,197  held  directly  by Mr.  Kayne
     (including  102,357  shares  which  may be  acquired  within  60 days  upon
     exercise of options)  and (ii) 402,705  shares held by managed  accounts of
     Kayne Anderson Capital Advisors, L.P., a registered investment adviser. Mr.
     Kayne  disclaims  beneficial  ownership  of such shares held in the managed
     accounts. The address for Richard A. Kayne is c/o Kayne Anderson Investment
     Management,  Inc.,  1800 Avenue of the Stars,  Second  Floor,  Los Angeles,
     California 90067.

(4)  Shares  beneficially  owned include shares issuable upon the exercise stock
     options  exercisable  within  60 days of March 1,  2004 in the  amounts  of
     10,750 held by Mr.  Armstrong,  10,750 held by Mr. Bell, 96,332 held by Mr.
     Neuwirth,  132,380 held by Mr. Norris, 16,000 held by Ms. Gonzales, 129,375
     held by Mr.  McInerney,  76,875  held  by Mr.  Murphy,  20,000  held by Mr.
     Nakagawa,  4,750 held by Mr.  Sumner,  97,875 held by Mr. Walters and 5,000
     held by Ms. Yodowitz.

(5)  The address for Mr. Neuwirth is c/o Advanced Engine  Management,  Inc., 474
     Cuesta Way, Los Angeles, California 90077.

(6)  The address for Mr. Norris is 481 Denslow Avenue,  Los Angeles,  California
     90049.


                                       12


(7)  The address for Ms. Yodowitz is c/o McKesson Corporation,  One Post Street,
     San Francisco, CA 94104.

(8)  The  address  of each of the  stockholders  named  is:  c/o  Glacier  Water
     Services, Inc., 1385 Park Center Drive, Vista, CA 92081-8338.



                             AUDIT COMMITTEE REPORT

     The Audit  Committee  assists the board of  directors  in  discharging  its
responsibilities relating to the accounting,  reporting, and financial practices
of the Company,  and has general  responsibility for oversight and review of the
accounting and financial reporting  practices,  internal controls and accounting
and audit  activities  of the Company.  The Audit  Committee  acts pursuant to a
written charter. The Audit Committee Charter was originally adopted by the Board
of  Directors on June 6, 2000 and was amended and restated on January 2, 2004. A
copy of the Audit Committee Charter may be obtained by sending a written request
to the  Secretary of the Company at 1385 Park Center  Drive,  Vista,  California
92081.

     Management is responsible for the  preparation,  presentation and integrity
of  the  Company's  financial  statements,   the  financial  reporting  process,
accounting  principles and internal  controls and procedures  designed to assure
compliance with accounting  standards and applicable laws and  regulations.  The
Company's  registered  public  accounting  firm is responsible for performing an
independent  audit of the  financial  statements  in  accordance  with  auditing
standards  generally  accepted  in the United  States of America  and  issuing a
report thereon.  The Audit Committee's  responsibility is to monitor and oversee
these processes.

     During the fiscal year the Audit  Committee met and held  discussions  with
management and the independent  registered  public accounting firm. The meetings
were conducted so as to encourage  communication  among the members of the Audit
Committee, management and the independent registered public accounting firm. The
Audit Committee discussed with the independent registered public accounting firm
the matters required to be discussed by Statement on Auditing  Standards No. 61,
as amended, "Communications with Audit Committees."

     The Audit Committee reviewed and discussed the audited financial statements
of the  Company's as of and for the year ended  January 2, 2005 with  management
and  the  independent  registered  public  accounting  firm,  and the  board  of
directors  including the Audit  Committee  received an opinion of KPMG LLP as to
the conformity of such audited  financial  statements  with  generally  accepted
accounting principles.

     The  Audit  Committee  discussed  with the  independent  registered  public
accounting  firm the overall scope and plans for the audit.  The Audit Committee
met regularly with the independent  registered  public accounting firm, with and
without management  present,  to discuss the results of their  examination,  the
evaluation of the  Company's  internal  controls and the overall  quality of the
Company's accounting procedures.

     In  addition,   the  Audit   Committee   obtained  from  KPMG  LLP  written
documentation describing all relationships between KPMG LLP and the Company that
might bear on KPMG LLP's  independence  consistent with  Independence  Standards
Board Standard No. 1,  "Independence  Discussions  with Audit  Committees."  The
Audit  Committee  discussed  with  KPMG LLP any  relationships  that may have an
impact on its objectivity and independence and satisfied itself as to KPMG LLP's
independence.

     Based on the  above-mentioned  review and  discussions  with management and
KPMG  LLP,  and  subject  to the  limitations  on our  role  and  responsibility
described  above  and  in the  Audit  Committee  Charter,  the  Audit  Committee
recommended to the board of directors that the audited  financial  statements be
included in the  Company's  Annual Report on Form 10-K for the fiscal year ended
January 2, 2005, for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE:
Heidi E. Yodowitz
Peter H. Neuwirth
William G. Bell



                                       13




           FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     Fees for all  services  provided  by KPMG LLP for fiscal  year 2004 were as
follows:

     The aggregate fees billed by KPMG LLP for  professional  services  rendered
for the audit of the Company's annual  financial  statements for the fiscal year
ended January 2, 2005, and for the reviews of the financial  statements included
in the  Company's  Quarterly  Reports  on Form  10-Q for that  fiscal  year were
$150,000.  All other fees were  non-audit  services,  primarily  tax  compliance
services,  of $119,000.  The aggregate fees billed by KPMG LLP for  professional
services rendered for the audit of the Company's annual financial statements for
the fiscal year ended  December 28, 2003,  and for the reviews of the  financial
statements  included in the  Company's  Quarterly  Reports on Form 10-Q for that
fiscal year were $75,000. All other fees were non-audit services,  primarily tax
compliance  services,  of $60,000. No amounts were billed by KPMG LLP in 2004 or
2003 for financial information systems design and implementation  services.  The
Audit  Committee has considered  whether the provision of non-audit  services is
compatible with maintaining the principal accountant's independence.


                                   PROPOSAL 2
          RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

     The Audit  Committee  has  appointed  KPMG LLP, as  independent  registered
public  accounting  firm of the Company  for the fiscal  year ending  January 1,
2006, subject to ratification by the stockholders of the Company. It is intended
that,  in the  absence of contrary  specifications,  the shares  represented  by
proxies will be voted FOR the ratification of the appointment of KPMG LLP.

     The affirmative vote of the holders of at least a majority of the shares of
Common  Stock  voted in person or by proxy at the  meeting is required to ratify
the  appointment  of KPMG LLP. A  representative  of KPMG LLP is  expected to be
present at the Annual Meeting,  will be given an opportunity to make a statement
on behalf of his firm if such  representative so desires,  and will be available
to respond to any  appropriate  questions of any  stockholder.  KPMG LLP was the
Company's  independent  auditor  for the  fiscal  years  ended  January 2, 2005,
December 28, 2003 and December 29, 2002.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF  THE COMPANY FOR
THE FISCAL YEAR ENDING JANUARY 01, 2006.


                       STOCKHOLDER-DIRECTOR COMMUNICATIONS

     Stockholders  who  desire to  communicate  with the Board or with  specific
members of the Board should send any such  communications  in writing in care of
the Secretary of the Company at 1385 Park Center Drive, Vista,  California 92081
or by email to Dave.Walters@Glacierwater.com. The Secretary will review all such
communications and will pass on to the appropriate  directors all communications
other than those which are merely solicitations for products or services,  items
of a personal nature not relevant to the stockholders and other matters that are
of a type which render them  improper or irrelevant  to the  functioning  of the
Board and the Company.

     The Company strongly  encourages each director to attend,  and expects that
each director will attend, the Annual Meeting of the Stockholders. All directors
attended the Company's 2004 Annual Meeting of Stockholders.

                                  ANNUAL REPORT

     The Annual Report of the Company,  including  financial  statements for the
fiscal year ended January 2, 2005, is being forwarded to each  stockholder  with
this  Proxy  Statement.  Stockholders  may  obtain a copy of the  Annual  Report
without charge by writing to the Secretary of the Company.

                                  OTHER MATTERS


                                       14


     The Board of Directors has no knowledge of any other matters which may come
before the Annual  Meeting.  If any other matters shall properly come before the
meeting,  the persons named in the proxies will have discretionary  authority to
vote the shares thereby represented in accordance with their best judgment.

                            PROPOSALS OF STOCKHOLDERS

     Stockholder proposals, if any, which may be considered for inclusion in the
Company's  proxy  materials for the 2006 Annual  Meeting must be received by the
Company at its offices at 1385 Park Center Drive,  Vista,  California 92081, not
later than January 23, 2006. Any material  received after January 23, 2006 shall
be considered as untimely presented.

                    OTHER MATTERS TO COME BEFORE THE MEETING

     The federal proxy rules specify what  constitutes  timely  submission for a
stockholder  proposal to be included in the Proxy Statement,  as discussed above
under "Proposals of  Stockholders".  If a stockholder  desires to bring business
before an annual meeting which is not the subject of a proposal timely submitted
for inclusion in the Proxy Statement, the stockholder must provide notice to the
Company,  attention  to the Company  Secretary,  in writing of the  business the
stockholder proposes to bring before the annual meeting.

     If a stockholder wants to nominate a person for election to the Board other
than a director  nominated by the Nominating  Committee,  notice of the proposed
nomination  must be provided to the  Secretary of the Company in the time period
set forth in the previous section in the case of the 2006 annual meeting and, in
the case of a special meeting called for the purpose of electing  directors,  by
the  close of  business  on the  tenth  day  following  the day on which  public
disclosure of the date of the special meeting is made.

                           FORWARD LOOKING STATEMENTS

     This Proxy Statements  contains  "forward-looking"  information  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange Act of 1934,  as amended.  The  forward-looking
statements  in this  report or  incorporated  by  reference  are  intended to be
subject to the safe harbor protection provided by the federal securities laws.

     Forward-looking  statements  often,  although  not always,  may be found by
looking for words or phrases such as "may", "will", "intend(s)", "expect(s/ed)",
"anticipate(s/d)",  "will likely", "will continue",  "estimate(s/d)",  "outlook"
and similar words used in this report.

     Forward-looking statements are subject to numerous estimates,  assumptions,
risk and  uncertainties  (including  trade relations and  competition)  that may
cause our actual  results to be  materially  different  from any future  results
expressed or implied in these statements.  We caution readers not to place undue
reliance   on  these   statements   because   they  are  subject  to  risks  and
uncertainties.

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


                                           By Order of the Board of Directors
                                           /s/ W. David Walters
                                           -------------------------------------
                                           W. David Walters
                                           Senior Vice President,
                                           Chief Financial Officer and Secretary

Dated: May 23, 2005

                                       15