<PAGE>


                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

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

     For the fiscal year ended January 1, 2000 OR [ ] TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the transition period from                  to

Commission File Number 1-7603
                                   HANNAFORD BROS. CO.
                (Exact name of Registrant as specified in its charter)

              Maine                                                 01-0085930
   (State or other jurisdiction of                             (I.R.S. Employer
   incorporation or organization)                            Identification No.)

145 Pleasant Hill Road, Scarborough, Maine                           04074
(Address of principal executive offices)                           (Zip Code)

Registrant's telephone number, including area code:  (207) 883-2911

    Securities registered pursuant to Section 12(b) of the Act:

       Title of each class           Name of each exchange on which registered

  Common Stock, $.75 par value                  New York Stock Exchange
  Preferred Stock Purchase Rights               New York Stock Exchange

  Securities registered pursuant to Section 12(g) of the Act:  None

     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 in 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  the  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. [X]

     The  aggregate  market value of the Common Stock,  $.75 par value,  held by
non-affiliates as of March 1, 2000, was $2,196,335,756. This calculation assumes
that all shares of Common Stock  beneficially  held by directors  and  executive
officers of the Registrant are owned by "affiliates".

     As of March 1, 2000,  there were  42,663,723  outstanding  shares of Common
Stock,  $.75  par  value,  the only  authorized  class  of  common  stock of the
Registrant.

                         DOCUMENTS INCORPORATED BY REFERENCE
                                       NONE
                                                     Exhibit Index on Page: 77


<PAGE>

FORM 10-K                HANNAFORD BROS. CO. 1-7603              JANUARY 1, 2000



                                   PART I

ITEM 1.  BUSINESS

GENERAL DEVELOPMENT OF THE BUSINESS

     Hannaford Bros. Co. (the "Registrant" or the "Company") was incorporated in
Maine in 1902 as the successor to a business established by the Hannaford family
in 1883.

     Its  principal  executive  offices are located at 145  Pleasant  Hill Road,
Scarborough,  Maine 04074. Its telephone  number is 207-883-2911.  Approximately
25.6% of the outstanding shares of the Registrant's common stock, par value $.75
per share, is owned by certain  members of the Sobey family of Stellarton,  Nova
Scotia,  and  certain  companies  and  trusts  controlled  by them  (the  "Sobey
Parties").

     Fiscal  year 1999  consisted  of 52 weeks of  operations  as compared to 52
weeks in 1998 and 53 weeks in 1997.  The  Company  closes its fiscal year on the
Saturday closest to December 31.

     Consolidated  sales and other  revenues  for 1999 were $3.463  billion,  an
increase of 4.2% over 1998 sales and other revenues of $3.324 billion. Identical
store sales were up 1.1% for fiscal year 1999 compared to an increase of 2.2% in
1998.  Comparable  store sales were up 1.7% for fiscal year 1999  compared to an
increase of 2.4% in 1998.

     On August 18, 1999,  the  Registrant  announced  that it had entered into a
definitive Merger Agreement with Delhaize America,  Inc., which will acquire all
of the  outstanding  shares of the  Registrant.  The  merger is a cash and stock
transaction  valued at  approximately  $3.6 billion  including the assumption of
debt of the Registrant.  In February 2000, the shareholders of the Company voted
to approve the terms of the Merger  Agreement.  Upon  completion  of the merger,
which is pending FTC approval and is expected to close in the second  quarter of
2000,  the  Registrant  will operate as a  wholly-owned  subsidiary  of Delhaize
America.

     The Registrant ships food and  food-related  products from its distribution
centers to an  additional  23  independent  retail food  stores.  Sales to these
wholesale  accounts amounted to 2.2% of total sales in 1999. Other revenues from
such  activities as home  shopping,  trucking,  real estate and retail  services
amounted to about 1.4% of total sales.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

     The Registrant,  through its operations and those of its  subsidiaries,  is
principally  involved in the retail food business.  The Registrant considers its
business a single  segment under the  applicable  reporting  rules.  See Item 8,
Financial Statements and Supplementary Data.



NARRATIVE DESCRIPTION OF THE BUSINESS

     The Registrant is a  multi-regional  food retailer,  with 154  supermarkets
located  throughout Maine, New Hampshire and Vermont,  and in parts of New York,
Massachusetts,  Virginia,  North  Carolina  and South  Carolina.  Its stores are
operated primarily under the names Shop 'n Save7 and Hannaford7.  The Registrant
offers  consumers  comprehensive  product variety and outstanding  freshness and
quality in  perishables,  at  competitive  prices,  from  modern and  convenient
facilities.  The Registrant also operates 108 pharmacies within the Registrant's
supermarkets and combination stores.

     Of the  Registrant's  105  supermarkets in the  northeastern  region of the
United  States,  more than 75% are either new or have been expanded or relocated
in the  past 10  years.  During  this  period,  a  number  of  smaller  outdated
facilities have been closed or sold.

     In addition,  the Registrant operates 49 supermarkets  located in Virginia,
North Carolina and South  Carolina.  Eleven of these stores were acquired by the
Registrant in July 1994, six were acquired in September 1995 and thirty-two were
newly constructed since 1995.

     Of the  Registrant's  154  supermarkets,  127 are  combination  stores with
selling  areas  ranging  from 22,300 to 61,700  square feet.  These  combination
stores offer under one roof the traditional all-department supermarket, together
with other services and expanded lines of general merchandise.



<PAGE>




     The following tables set forth certain  statistical  information  regarding
the Registrant's operations at the dates indicated:

                                            FISCAL YEAR
NUMBER OF STORES       1995       1996        1997       1998         1999

      Beginning         118        134         139        148          150
      Opened             13         13          15         11            4
      Closed             (3)        (7)         (6)        (9)           0
      Sold                0         (1)          0          0            0
      Acquired            6          0           0          0            0
      Ending            134        139         148        150          154


AVERAGE SQUARE FEET
  OF SELLING AREA
  PER STORE          31,100     32,300      33,400     34,500       34,800

TOTAL SQUARE FEET
 OF SELLING AREA  4,166,000  4,490,000   4,947,000  5,171,000    5,360,000


<PAGE>


     As  illustrated  by the foregoing  tables,  the Registrant has continued to
expand its food store operations.

     During 1999,  net selling  square  footage  increased  3.7%. The Registrant
opened four new food stores with selling  areas  ranging from 40,600 square feet
to 41,300  square feet,  expanded  four existing  stores,  and  conducted  major
remodelling projects in a number of its other stores.

     During 2000, the Registrant  expects to open eight new food stores,  six of
which will be located in a northeastern markets and two in southeastern markets.
The new stores will have from 25,600 to 40,200 square feet of selling area.  The
Registrant  will also expand two  stores,  and, in January  2000,  acquired  one
additional store from an independent wholesale customer. It is expected that net
retail selling area will increase approximately 4.8% in 2000.

     The Registrant owns four  distribution  facilities which support its retail
operations, as follows:

     1. Distribution facility in South Portland, Maine, which primarily services
certain store locations in Maine, New Hampshire and Massachusetts. This facility
warehouses grocery,  fresh fruits and vegetables,  frozen foods, meat, and dairy
products  in  approximately  521,000  square  feet of floor  area,  and has dock
facilities for 89 highway  trailers.  This  distribution  center, as well as the
others, has a dedicated on-line computerized  warehouse management system, which
efficiently  controls the movement of product through the facility and schedules
labor for greater efficiency and productivity.  Productivity in the distribution
facilities also has been enhanced through the use of employee  incentive payment
programs.

     2.  Distribution  center and office facility in Schodack,  New York,  which
primarily services certain store locations in New York,  Vermont,  New Hampshire
and  Massachusetts.   This  facility  warehouses   grocery,   fresh  fruits  and
vegetables, meat, dairy and frozen food products in approximately 489,000 square
feet of floor area and has dock  facilities for 129 highway  trailers.  Although
approvals have been received to expand this facility to approximately  1,200,000
square feet, the Registrant has no current plans to do so.

<PAGE>


     3. Distribution center in Butner, North Carolina, which services all of the
Registrant's  store  locations in North  Carolina,  South Carolina and Virginia.
This facility  warehouses  grocery,  fresh fruits and vegetables,  frozen foods,
meat and dairy products in  approximately  431,000 square feet of floor area and
has dock  facilities  for 112  highway  trailers.  This  facility  was opened in
November  1996 and  incorporates  increased  staging areas for  crossdocking,  a
mezzanine for slower moving items and other modern distribution techniques.  The
site on which this  distribution  center is located includes land for additional
expansion of the distribution center to approximately 750,000 square feet.

     4. A 200,000 square foot  distribution  facility in Winthrop,  Maine.  This
facility   distributes  health  and  beauty  care  products,   specialty  foods,
pharmaceuticals  and some general  merchandise to all of the Registrant's retail
outlets.

     Hannaford   Trucking  Company,   a  wholly-owned   subsidiary,   transports
merchandise to and from the Registrant's distribution facilities and is licensed
as an irregular route common carrier with 48 state authority. Hannaford Trucking
Company also hauls  products for  third-party  customers,  thereby  reducing the
number of miles that its trucks travel empty.

     During 1999,  the Registrant  continued to operate a home shopping  service
called  HomeRuns.com (sm)  in the Boston,  Massachusetts market area. Consumers
shop from a catalog,  placing their order via the Internet, fax or phone. Orders
are  selected  at a dedicated  fulfillment  center and  delivered  the next day.
Prices are  competitive  with  those in local  supermarkets.  Early in 2000,  an
agreement  was reached with an investment  group to sell a majority  interest in
this subsidiary, and on February 12, 2000, this sale was completed.

     Innovation in operating  systems for competitive  advantage is an important
component  of the  Registrant's  strategy,  and the  Registrant  is committed to
investing in new technology and the  development of new systems.  The Registrant
seeks to be an industry  leader in the application of new technology and systems
to improve customer service, productivity and financial information.

     Raw  materials,  as  such,  are  not  essential  to  the  business  of  the
Registrant.

     Seasonal  business  affects the  Registrant's  operations in that sales are
generally  greater in the second half of the year than in the first. (See Note 9
of Notes to Consolidated Financial Statements.)

<PAGE>

     Inventory  levels are  maintained  at  distribution  centers and all retail
locations in amounts adequate to minimize "out of stock" conditions.

     Backlog is not material to the Registrant's business.

     No  material  portion  of the  business  of the  Registrant  is  subject to
renegotiation  of profits or  termination  of contracts or  subcontracts  at the
election of the Government.

     At  the  retail  level,  the   Registrant's   supermarkets  are  in  direct
competition with regional,  national and local food and drug chains,  as well as
"supercenters",  "club  stores" and  military  commissaries,  some of which have
greater resources than the Registrant,  and with other independent operators. In
addition,  certain  of  the  independent  stores  served  by the  Registrant  as
wholesale  customers are located in the same trade areas as the Registrant's own
stores.

     In its wholesale  operations,  the Registrant  directly competes with other
regional  wholesalers,  some of which supply franchised retail outlets. The loss
of any one or a few of the  wholesale  customers  would  not  have a  materially
adverse effect on the Registrant.

     No material  expenditures  were made during  fiscal  1997,  1998 or 1999 on
research  activities   relating  to  new  or  improved  products,   services  or
techniques.

     The  Registrant  does not foresee  that  material  capital  outlays will be
needed or that material increases in operating expenses will be incurred for the
purpose of compliance with any statutory  requirement  respecting  environmental
quality.

     As of January 1, 2000, the Registrant had approximately 9,200 full-time and
15,400 part-time employees.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES.

     Neither  the  Registrant  nor  any  of  its  subsidiaries  engages  in  any
operations in foreign countries, nor is a material portion of sales and revenues
derived from retail customers in foreign countries.


<PAGE>

ITEM 2.  PROPERTIES

     The  Registrant  owns 64 of its 154 food stores and leases the remaining 90
locations.  It owns all 4 of its distribution  facilities and leases its general
office facility in Scarborough,  Maine. The Registrant's  properties are located
in Maine, New Hampshire,  Vermont,  northern Massachusetts,  eastern upstate New
York,  southern  Virginia,  North  Carolina and South  Carolina.  The Registrant
believes that its properties are well  maintained  and are  appropriate  for its
business needs.

     The number of stores and  facilities  operated and the square feet of space
at January 1, 2000, consisted of:

                                                    (In thousands)
                                                 Square       Square Footage
                                                Footage           Selling
                                 Units         Gross Area           Area

    Stores                        154             7,483            5,360
    Distribution and
      administrative facilities     5             1,860              --
          Total                   159             9,343            5,360


     The  following  table sets  forth  expiration  dates of leased  facilities,
assuming exercise of all renewal options:

                   Lease                                 Administrative
                Expiration          Food stores            Facilities

                 2000-2009                1
                 2010-2019                7
                 2020-thereafter         82                   1
                                         90                   1


     Further  information  concerning the Registrant's  distribution  facilities
appears  under  Item 1 at pages 5-6 above,  which  information  is  incorporated
herein by reference.


<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

     There  are  no  material  legal  proceedings,  including  ordinary  routine
litigation  incidental to the business, to which the Registrant is a party or to
which any of its property is subject.

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

     There were no matters  submitted to a vote of security  holders  during the
fourth quarter of fiscal 1999.




                                    Part II

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

     The Common  Stock of the  Registrant  has been listed on the New York Stock
Exchange since July 18, 1986.  The following  table sets forth the dividends per
share and the high and low  sales  prices  of the  Common  Stock on the New York
Stock Exchange composite tapes during each quarter of 1998 and 1999.



                                                                 QUARTERLY
                                         SALE PRICE              DIVIDENDS
                                    HIGH               LOW       PER SHARE

1st Quarter, 1999                 $53.438           $44.505        .165
2nd Quarter, 1999                  57.500            43.625        .165
3rd Quarter, 1999                  73.375            53.125        .165
4th Quarter, 1999                  73.125            65.938        .165

1st Quarter, 1998                 $46.438           $38.750        .150
2nd Quarter, 1998                  46.938            43.375        .150
3rd Quarter, 1998                  47.000            41.250        .150
4th Quarter, 1998                  53.000            40.063        .150




     There are approximately  14,000 record holders of the Common Stock.  Fiscal
1999 was the fifty-first consecutive year that dividends were paid on the Common
Stock and the  thirty-seventh  consecutive year that the aggregate dividend paid
per share (after  adjusting for stock splits) has  increased.  Future  dividends
will depend on the Registrant's earnings and financial condition.


<PAGE>



Item 6.  Selected Financial Data
<TABLE>


                                                                                    Fiscal Year

                                                                1999         1998        1997         1996         1995
                                                                         (In thousands except per share amounts)
EARNINGS STATEMENT DATA:
<S>                                                          <C>           <C>         <C>          <C>          <C>

Sales and other revenues.................................    $3,462,942    $3,323,588  $3,226,433   $2,957,559   $2,568,061
Cost of sales............................................     2,544,623     2,480,346   2,427,287    2,242,784    1,951,248

Gross margin.............................................       918,319       843,242     799,146      714,775      616,813
Selling, general and administrative expenses.............       725,900       664,357     635,355      568,033      481,017
Merger related costs.....................................         9,453             -           -            -            -
Impairment loss..........................................             -             -      39,950            -            -

Operating profit.........................................       182,966       178,885     123,841      146,742      135,796
Interest expense, net....................................        23,468        26,577      26,425       22,204       19,368

Earnings before income taxes.............................       159,498       152,308      97,416      124,538      116,428
Income taxes.............................................        61,480        57,661      37,769       49,333       46,227
Net earnings.............................................    $   98,018    $   94,647  $   59,647   $   75,205   $   70,201

Per common share:

   Basic earnings per share..............................    $     2.32    $     2.24  $     1.41   $     1.78   $     1.67

   Diluted earnings per share............................    $     2.28    $     2.21  $     1.40   $     1.76   $     1.66

   Cash dividends........................................    $      .66    $      .60  $      .54   $      .48   $      .42

                                                               January      January     January      December     December
                                                               1, 2000       2, 1999     3, 1998      28, 1996     30, 1995
BALANCE SHEET DATA:                                              (Dollar amounts in thousands except per share data)
Working capital..........................................    $   53,578    $   36,279  $   20,873   $   21,796   $   23,512
Total assets.............................................     1,329,990     1,284,538   1,227,190    1,183,727      961,830
Current maturities:
   Long-term debt.......................................         20,391        19,296      18,155       14,213       11,246
   Obligations under capital leases......................         2,462         2,108       1,873        1,775        1,467
Long-term debt, excluding current maturities.............       185,126       220,130     235,850      227,525      150,648
Obligations under capital leases, excluding current
  maturities.............................................        71,464        73,866      75,687       75,198       69,747
Shareholders' equity.....................................       727,188       663,350     601,029      569,156      518,677
Book value per share.....................................    $    17.20    $    15.70  $    14.22   $    13.46   $    12.26

</TABLE>
<PAGE>

FORM 10-K              HANNAFORD BROS. CO. 1-7603              JANUARY 1, 2000



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

     This  analysis  of  the  Company's  results  of  operations  and  financial
condition  should  be read in  conjunction  with the  accompanying  consolidated
financial statements, including the notes thereto, and the information presented
in the summary of selected financial data. All footnote  references are to Notes
to Consolidated Financial Statements.

RESULTS OF OPERATIONS

Overview

     Sales and other revenues for 1999 amounted to $3.463  billion,  an increase
of 4.2% over last  year's  sales and other  revenues of $3.324  billion.  Fourth
quarter sales and other revenues in 1999 were $888 million,  as compared to $850
million,  an increase of 4.4%.  Identical store sales were up 1.5% in the fourth
quarter  and up 1.1% for the year.  Comparable  store  sales were up 2.0% in the
fourth quarter and 1.7% for the year.

     Before merger related costs,  net earnings in 1999 were up 10.4% and fourth
quarter net earnings  were up 8.2% over 1998 net earnings for the same  periods.
Before merger related costs, diluted net earnings per common share for 1999 were
$2.43, as compared to $2.21 for 1998.  Before merger related costs,  diluted net
earnings per common share for the fourth  quarter of 1999 were $.70, as compared
to $.65 reported for the fourth quarter of 1998.

     In  February,  2000 the Company sold a majority  interest in  HomeRuns.com,
Inc., its  internet-based  grocery  delivery  service (Note 3). The Company will
retain a minority  interest and,  subsequent  to the sales date,  will no longer
reflect  the  operating  results  of  HomeRuns.com,  Inc.  in  its  consolidated
statement of earnings.  This business generated a net loss of approximately $.25
per share in 1999 and $.16 per share in 1998.

<PAGE>


     The following table sets forth,  for the years  indicated,  the percentages
which selected items in the consolidated statements of earnings are to sales and
other revenues and the  percentage  change in the dollar values of such items as
compared to the indicated prior year:

                                                    YEAR-TO-YEAR PERCENTAGE
   PERCENTAGE OF SALES                              CHANGE IN DOLLAR VALUES
    AND OTHER REVENUES                                 1999        1998
 EXCEPT PER SHARE AMOUNTS                          Compared to  Compared to
 1999     1998      1997                               1998        1997

  100.0%   100.0%   100.0%  Sales and other revenues       4.2%       3.0%

   26.5     25.4     24.8   Gross margin                   8.9        5.5

                            Selling, general and
   20.9     20.0     19.7     administrative expenses      9.3        4.6
    0.3        -        -   Merger related costs             -          -
      -        -      1.3   Impairment loss                  -     (100.0)

    5.3      5.4      3.8   Operating profit               2.3       44.5

    0.7      0.8      0.8   Interest expense, net        (11.7)       0.6

    4.6      4.6      3.0   Earnings before income taxes   4.7       56.3

    1.8      1.7      1.2   Income taxes                   6.6       52.7

    2.8%     2.9%     1.8%  Net earnings                   3.6       58.7

                            Earnings per share:
  $2.32    $2.24    $1.41     Basic                        3.6       58.9

  $2.28    $2.21    $1.40     Diluted                      3.2       57.9

  $ .66    $ .60    $ .54   Cash dividends per share      10.0       11.1


<PAGE>

Sales

     Sales and other revenues rose 4.2% in 1999, to $3.463 billion,  an increase
of $139 million over 1998  results.  Sales from  supermarkets  that were open in
both periods presented ("identical store sales"), increased $36 million or 1.1%.
Additional supermarket sales of $90 million resulted from the net impact of new,
expanded,  relocated and closed stores. Other sales and revenues,  which include
wholesale,  trucking,  home  delivery,  real  estate  and  miscellaneous  retail
operations, increased $13 million. Comparable store sales, which include results
from expanded and relocated stores, increased 1.7% in 1999.

     Identical  store  sales  were up 1.5% in the  fourth  quarter of 1999 while
comparable store sales were up 2.0% in the quarter. The Company attributes these
increases to a strong holiday sales season  coupled with sales  generated by the
Year 2000 event.

     Sales and other revenues rose 3.0% in 1998, to $3.324 billion,  an increase
of $97  million  over  1997  results.  Fiscal  year 1998  contained  52 weeks of
operations as compared to 53 weeks in 1997.  This  additional week accounted for
approximately  $58 million of additional sales in 1997. The Company's real sales
growth in 1998 exceeded 6.7% after adjusting for the 53rd week of sales in 1997.
Identical  store  sales,  adjusted  to  exclude  the 53rd week of sales in 1997,
increased  1.3%.  Comparable  store  sales,  on a  52-week  basis in both  years
presented, increased 1.9% in 1998.

Gross Margin

     Gross  margins  increased  in 1999 to 26.5% of sales and other  revenues in
comparison to 25.4% in 1998.  These increases are the result of improved selling
margins in most of the Company's marketing territories. The Company continues to
focus on maintaining a competitive pricing strategy.

     Gross  margins  increased  in 1998 to 25.4% of sales and other  revenues in
comparison to 24.8% in 1997. The 1998 increase is the result of improved selling
margins in a majority of the Company's marketing territories.  A portion of this
increase was the result of an inventory  shrinkage  reduction  initiative  which
combined store level associates and vendor partners using integrated information
technology.

<PAGE>

Selling, General and Administrative Expenses

     Selling,  general and  administrative  expenses increased to 20.9% of sales
and other  revenues in 1999 as  compared  to 20.0% in 1998.  Payroll and payroll
related  expenses,  which  exceeded 50% of selling,  general and  administrative
expenses in both years, increased as a percentage of sales in 1999. In addition,
the Company  incurred  increased  advertising  costs during 1999 as it undertook
programs  to build sales in several of its  marketing  areas.  The Company  also
incurred increased costs as it developed plans to grow  HomeRuns.com,  Inc., its
internet-based grocery delivery service.

     Selling,  general and  administrative  expenses increased to 20.0% of sales
and other  revenues in 1998 as  compared  to 19.7% in 1997.  Payroll and payroll
related  expenses  increased  as a percentage  of sales in 1998.  In addition to
increased direct labor costs,  the Company  incurred  increased costs related to
its employee benefit plans (Note 8).

Merger Related Costs

     Charges for merger  related  costs of $9 million were incurred in 1999 as a
result of the pending merger with Delhaize America,  Inc. (Note 2). The majority
of these costs  represent  fees for  professional  services  provided by outside
parties.   Additional   merger  related  costs  will  be  recorded  in  2000  as
expenditures are incurred.

Impairment Loss

     The Company recorded a non-cash charge of $40 million in the fourth quarter
of fiscal 1997 (Note 6).  Expressed as a percentage of sales the impairment loss
was  1.3%  of  sales  and  other  revenues.  Approximately  $24  million  of the
impairment  loss  relates  to  supermarket  assets and  related  costs for seven
southeastern  stores in non-core  markets that were closed in January 1998.  The
remaining $16 million relates to supermarket assets which continue to be used in
the operations of the Company.

Interest Expense, Net

     Net interest expense  expressed as a percentage of sales and other revenues
was 0.7% in 1999 as compared to 0.8% in both 1998 and 1997. The 1999 decrease is
primarily the result of a decrease in average debt levels.

     Net interest expense in 1998 was $27 million, an increase of 0.6% from 1997
interest expense of $26 million. This slight increase is primarily the result of
a decrease in capitalized interest from reduced construction  activity offset by
a decrease in average debt levels.

<PAGE>

Income Taxes

     The  provision  for income  taxes  includes  both  federal and state income
taxes.  The  effective  tax rate  increased in 1999 to 38.5% from 37.9% in 1998.
This higher effective tax rate is primarily the result of non-deductible  merger
related costs  incurred by the Company.  Excluding  merger costs,  the Company's
1999 effective tax rate would have approximated 38.1%.

     The  effective  tax rate  increased in the fourth  quarter of 1999 to 39.4%
from 37.5% in the fourth quarter of 1998.  This increase is primarily the result
of  non-deductible  merger related costs  incurred  during the fourth quarter of
1999.

     The effective tax rate decreased in 1998 to 37.9% from 38.8% in 1997.  This
lower  effective tax rate is the result of  reductions in the Company's  overall
state  income  tax rate.  In  addition,  the 1998  reduced  rate was  positively
impacted by a tax benefit related to the Company's donation of food products.

Net Earnings and Earnings Per Common Share

     Net  earnings  increased  3.6% in 1999 to $98  million or 2.8% of sales and
other revenues,  an increase of $3 million over 1998 net earnings of $95 million
or 2.9% of sales and other  revenues.  Before  merger  related  costs,  1999 net
earnings increased by 10.4% to $104 million or 3.0% of sales and other revenues.
This  increase is the result of increased  sales and gross  margin  coupled with
reduced interest expense partially offset by an increase in selling, general and
administrative expenses.

     Net  earnings  for  both the  fourth  quarters  of 1999  and 1998  were $28
million. Basic and diluted earnings per share were $.67 and $.65,  respectively,
in the fourth quarter of 1999 versus $.66 and $.65, respectively,  in the fourth
quarter of 1998.  Before  merger  related  costs,  net  earnings  for the fourth
quarter of 1999 were $30  million or 3.4% of sales and other  revenues,  an 8.2%
increase  over 1998 fourth  quarter net earnings of $28 million or 3.3% of sales
and other revenues.

     Net  earnings  increased  58.7% in 1998 to $95 million or 2.9% of sales and
other revenues, an increase of $35 million from 1997 net earnings of $60 million
or 1.8% of sales  and other  revenues.  Before  the 1997  impairment  loss,  net
earnings for 1998 increased 12.1% over 1997 results. This increase is the result
of increased sales and gross margin coupled with a reduced income tax provision,
partially offset by an increase in selling, general and administrative expenses.

     Basic  earnings per common share in 1999 were $2.32 as compared to $2.24 in
1998,  an increase of 3.6%.  Diluted  earnings  per common  share (Note 1K) were
$2.28 in 1999, an increase of 3.2% from $2.21  reported for 1998.  Before merger
related costs,  diluted earnings per common share were $2.43 in 1999 as compared
to $2.21 in 1998, an increase of 10.0%.

<PAGE>

     Basic  earnings per common share in 1998 were $2.24 as compared to $1.41 in
1997,  an increase of 58.9%.  Diluted  earnings  per common  share were $2.21 in
1998, an increase of 57.9% from $1.40  reported for 1997.  Before the impairment
charge,  diluted  earnings  per common  share were $2.21 in 1998 as  compared to
$1.99 in 1997, an increase of 11.1%. Management estimates that the extra week of
operations in the fourth quarter of 1997 increased net earnings by approximately
$0.04 per share.

     In  February,  2000 the Company sold a majority  interest in  HomeRuns.com,
Inc., its  internet-based  grocery business (Note 3). This business  generated a
net loss of  approximately  $.25 per  share in 1999,  $.16 per share in 1998 and
$.11 per share in 1997.  Following the sale,  the Company will retain a minority
interest and account for its remaining  investment in HomeRuns.com,  Inc. on the
cost basis.

Year 2000 (Y2K)

     The Company  reported that all of its  facilities and major systems were up
and  running on January 1, 2000.  Subsequent  to this date,  the Company has not
experienced  any Y2K  related  events.  The costs  incurred  by the  Company  to
implement  its  readiness  plan were $2  million in 1999 and $3 million in 1998.
These costs were not material to the Company's results of operations,  financial
condition or cash flows for 1999 and 1998.

<PAGE>


Other Items and Impact of Inflation

     Seasonal  business  affects  the  Company's  operations  in that  sales are
generally greater in the second half of the year (Note 11).

     In recent years, the impact of inflation on the Company's operating results
has been minimal,  reflecting generally lower rates of inflation in the economy.
The  Company's  business  is  characterized  by large  purchases  and high sales
volumes  extended  across diverse  product lines,  rapid inventory turns and low
profit margins.  In this environment,  vendor price changes are typically passed
on to the  customer.  The Company does not believe  inflation  or deflation  has
significantly affected its competitive position in the industry.  However, since
price changes do cause sales dollars to fluctuate, the use of the LIFO method of
accounting  for  inventories  reduces the impact of price changes on earnings by
matching current costs with current revenues.

CAPITAL RESOURCES AND LIQUIDITY

Overview

Measures of liquidity at the end of the last three fiscal years were as follows:
                                            (Dollars in millions)
                                   1999           1998           1997

Cash and cash equivalents            $54            $60            $58
Working capital (FIFO inventory)     $75            $56            $39
Unused lines of revolving credit     $72            $58            $54
Unused lines of short-term credit    $ 1            $ 1            $30
Current ratio (FIFO inventory)       1.27           1.22           1.15

<PAGE>


     The Company  continued to maintain a strong capital  position at the end of
fiscal 1999.  Cash and cash  equivalents  decreased $6 million to $54 million at
the end of the year.  This decrease was the result of cash used in financing and
investing activities offset by cash provided by operating  activities.  Lines of
credit  represent a continuing  source of capital and are available for purposes
of  short-term  financing.  At January  1, 2000,  the  Company  had $20  million
outstanding on its revolving lines of credit.  Not-  withstanding  its impending
merger  with  Delhaize  America  (Note 2), the  Company is in a solid  financial
position to carry out its current  internal  expansion  and  potential  external
growth plans in 2000.

     In  February  1999,  the  Company  renewed  a  stock   repurchase   program
authorizing  the repurchase of up to $100 million in shares of Hannaford  common
stock over the next three years.  The program  authorizes  purchases on the open
market and through privately negotiated transactions.  Shares repurchased by the
Company are held as treasury  shares and are available to the Company for use in
funding its stock-based benefit plans and, when authorized,  for other corporate
purposes.  During 1999, the Company  reacquired  405,000 shares at a cost of $20
million,  all of which were used to fund  issuances  under  stock-based  benefit
plans.

Cash Flows from Operating Activities

     Cash provided by operating  activities was $181 million in 1999, a decrease
of $3 million from the $184 million provided in 1998. This decrease is primarily
attributable to an increase in inventories, partially offset by increases in net
earnings,  depreciation  and  amortization  and  accounts  payable  and  accrued
expenses.  With the  exception of  inventories  and their  impact upon  accounts
payable, the fluctuations within these accounts are part of the Company's normal
business  activities.  Inventory levels increased $29 million from year-end 1998
levels.  This is primarily the result of the Company's Y2K contingency  planning
to  increase  its  retail and  warehouse  inventory  levels of certain  grocery,
pharmaceutical and general  merchandise items in anticipation of consumer demand
and in planning for a possible Y2K external  infrastructure  problem.  Since Y2K
infrastructure  problems did not arise,  management expects to sell most of this
excess  inventory  as part of its normal  business  operations  during the first
quarter of 2000.

     Cash  provided by operating  activities  was $184 million in 1998, a slight
decrease  from the $190  million  provided in 1997.  This  decrease is primarily
attributable  to  an  increase  in  inventories,  receivables  and  prepayments,
partially offset by an increase in deferred taxes. The fluctuations within these
accounts are part of the Company's normal business operations.

<PAGE>

Cash Flows from Investing Activities

     Cash used in investing activities decreased $21 million during 1999 to $112
million from $133 million in 1998.  This decrease is primarily the result of the
Company's  reduced  capital  investment  during  the year.  Capital  investments
totaled $133  million in 1999 and were  composed of $115 million in additions to
property,  plant and  equipment,  $10  million in  computer  software  costs and
deferred charges and $8 million in non-cash asset additions.  These 1999 capital
investments  consist  primarily of costs incurred in building and equipping new,
expanded and  remodeled  stores and for  improvements  necessary in  maintaining
current facilities and systems.

     Net  retail  selling  space  for  supermarkets  increased  3.7%  in 1999 to
5,360,000 square feet at year-end,  an increase of 189,000 square feet over 1998
year-end  sales  area.  During  1999,  the  Company  opened  eight  supermarkets
including four new stores and four expansions.

     The number of supermarkets  and square footage of selling area at year-ends
1999, 1998 and 1997 are summarized below:

                                 SUPERMARKETS
                         Number of         Square Footage
                           Units            Selling Area

           1999            154                5,360,000
           1998            150                5,171,000
           1997            148                4,947,000

<PAGE>


     New,  relocated  and expanded  supermarkets  in 1999,  together  with their
square footage of selling area, are listed below:

                                                   Square Footage
                            Location                Selling Area

  Northeast
                      Bucksport, ME (expansion)        16,000
                      Ossipee, NH (expansion)          17,000
                      York, ME                         41,000
                      Jay, ME (expansion)              17,000

  Southeast
                      Richmond, VA (expansion)         38,000
                      Charlotte, NC                    41,000
                      Apex, NC                         41,000
                      Richmond, VA                     41,000

     The 1999 capital program also included eight major remodels and a number of
minor ones,  which do not add square  footage but are important to the Company's
presentation  and  ability  to build  sales.  At the end of 1999,  approximately
two-thirds of the Company's  supermarkets have been newly constructed,  expanded
or remodeled within the last five years.

     Cash used in investing activities decreased $24 million during 1998 to $133
million from $157 million in 1997.  This decrease is the result of the Company's
reduced capital  investment  coupled with the increased net book value of assets
sold during the year.  During 1998,  the Company  completed  the sale of certain
assets  relating to  supermarkets  that were closed in January  1998 and written
down to their estimated fair values in 1997.


<PAGE>


Cash Flows from Financing Activities

     Cash used in financing  activities  was $75 million in 1999, as compared to
$49 million in 1998.  This  reduction  in cash flows of $26 million is primarily
the result of reduced proceeds from the issuance of long-term debt.

     In 1999, the Company  purchased 405,000 shares of common stock at a cost of
$20  million.  The  majority  of this  repurchased  stock  was  used to fund the
Company's  stock-based  benefit  plans with the balance  being held in treasury.
This amount was offset by proceeds of $14 million  received during 1999 from the
issuance of 423,000 shares of treasury stock.

     The Company paid $28 million in dividends to common  shareholders  in 1999.
Quarterly cash dividends  declared during 1999 totaled $.66 per common share, an
increase of 10.0% over the $.60 per share  declared  during  1998.  This was the
thirty-seventh  consecutive  year that the  aggregate  dividend  paid per common
share,  after  adjustment for stock splits and stock  dividends,  has increased.
Common  stock  dividend  payments  in 1999  represented  28.4%  of net  earnings
available  to common  shareholders.  In February  1999,  the Company  declared a
quarterly  dividend on its common  stock of $.165 per share,  payable  March 23,
2000.

     Cash used in  financing  activities  was $49 million in 1998 as compared to
$17 million in 1997.  This  reduction  in cash flows of $32 million is primarily
the result of increased payments of long-term debt coupled with reduced proceeds
from the issuance of long-term debt.

<PAGE>


2000 Capital Program

     Total capital expenditure commitments are projected to be in excess of $160
million in 2000, primarily for new store constructions, expansions and remodels,
equipment, vehicles and other asset expenditures. During 2000, this program will
be subject to  continuing  change and review as conditions  warrant.  Net square
footage of retail  selling space is expected to increase by  approximately  4.7%
during  2000.  A number  of  projects  scheduled  to  start in 2000  will not be
completed  until 2001.  The 2000  capital  program is expected to be financed by
internally-generated funds, long-term debt and leases.

FORWARD-LOOKING STATEMENTS

     From time to time,  information  provided by the Company or statements made
by its associates  may contain  forward-looking  information,  as defined in the
Private Securities Litigation Reform Act of 1995. Examples of such statements in
this report include those  concerning the pending merger with Delhaize  America,
construction schedules and capital expenditures.  The Company cautions investors
that there can be no assurance that actual results or business  conditions  will
not differ materially from those projected or suggested in such  forward-looking
statements as a result of various factors and risks  including,  but not limited
to, the following:

     (1) Hannaford's  future  operating  results are dependent on its ability to
achieve  increased  sales and to control  expenses.  Factors  such as lower than
expected  inflation,   product  cost  fluctuations  particularly  in  perishable
categories,  changes in product  mix or the use of  promotional  items,  both of
which may affect pricing strategy,  continued or increased competitive pressures
from existing competitors and new entrants,  including price cutting strategies,
and  deterioration  in general or regional  economic  conditions are all factors
which could adversely  affect sales  projections.  Other components of operating
results  could  be  adversely  affected  by  state  or  federal  legislation  or
regulation  that  increases  costs,  interest  rates  or the  Company's  cost of
borrowing, by increases in labor rates due to low unemployment or other factors,
by  unanticipated  costs  related to the opening and closing of stores or by the
inability to control various expense categories.

     (2)  Hannaford's  future  growth is  dependent on its ability to expand its
retail square  footage,  either  de-novo or through  acquisitions.  Increases in
interest rates or the Company's cost of capital, the unavailability of funds for
capital expenditures and the inability to develop new stores or convert existing
stores as rapidly as planned are all risks to projected future expansion.
<PAGE>

     (3) Adverse  determinations with respect to pending or future litigation or
other material claims against Hannaford could affect actual results.

     Furthermore, the market price of Hannaford common stock could be subject to
fluctuations in response to quarter to quarter  variations in operating results,
changes in analysts' earnings estimates, market conditions in the retail sector,
especially in the supermarket  industry,  as well as general economic conditions
and other factors external to Hannaford.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Presented  below  are  the   Registrant's   Consolidated   Balance  Sheets,
Consolidated  Statements  of  Earnings,  Consolidated  Statements  of Changes in
Shareholders'  Equity,  Consolidated  Statements of Cash Flows and  accompanying
Notes to Consolidated Financial Statements.
<PAGE>






                      REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors and Shareholders of
Hannaford Bros. Co.:

     In our  opinion,  the  accompanying  consolidated  balance  sheets  and the
related consolidated statements of earnings, changes in stockholders' equity and
of cash flows present fairly, in all material  respects,  the financial position
of Hannaford Bros. Co. and  Subsidiaries at January 1, 2000 and January 2, 1999,
and the results of their  operations  and their cash flows for each of the three
years in the period  ended  January  1,  2000,  in  conformity  with  accounting
principles  generally accepted in the United States.  These financial statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally accepted in the United States,  which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe  that our audits  provide a reasonable  basis for the opinion  expressed
above.


s/PricewaterhouseCoopers, LLP


Portland, Maine
January 19, 2000
(except for Notes 2 and 3,
as to which the date is
February 12, 2000)
<PAGE>


                     HANNAFORD BROS. CO. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS


                                    ASSETS

                                                      (In thousands)
                                               January 1,        January 2,
                                                  2000              1999

Current assets:
    Cash and cash equivalents                  $   53,641        $   59,722
    Accounts receivable, net                       26,633            22,869
    Inventories (Note 1C)                         230,416           201,219
    Prepaid expenses                                5,817             6,116
    Deferred income taxes (Note 10)                10,325             5,952
       Total current assets                       326,832           295,878

Property, plant and equipment, net
      (Notes 1D, 4 and 6)                         841,335           818,106

Leased property under capital leases, net
      (Note 5)                                     51,536            54,911

Other assets:
    Goodwill, net (Notes 1F and 6)                 58,154            63,517
    Deferred charges, net (Note 1H)                24,055            25,074
    Computer software costs, net (Note 1I)         26,149            24,580
    Miscellaneous assets                            1,929             2,472
       Total other assets                         110,287           115,643

                                               $1,329,990        $1,284,538




See accompanying notes to consolidated financial statements.


<PAGE>

                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS
                    LIABILITIES AND SHAREHOLDERS' EQUITY

                                     (In thousands except per share amounts)
                                                January 1,     January 2,
                                                   2000           1999
Current liabilities:
   Current maturities of long-term debt (Note 4) $   20,391     $   19,296
   Obligations under capital leases (Note 5)          2,462          2,108
   Accounts payable                                 187,344        186,626
   Accrued payroll                                   30,768         27,254
   Other accrued expenses                            31,033         23,873
   Income taxes                                       1,256            442
      Total current liabilities                     273,254        259,599

Deferred income tax liabilities (Note 10)            32,676         28,859

Other liabilities                                    40,282         38,734

Long-term debt (Note 4)                             185,126        220,130

Obligations under capital leases (Note 5)            71,464         73,866

Shareholders' equity (Notes 7 and 9):

   Class A Serial Preferred stock, no par,
     authorized 2,000 shares                              -              -
   Class B Serial Preferred stock, par value
     $.01 per share, authorized 28,000 shares             -              -
   Common stock, par value $.75 per share:
     Authorized 110,000 shares;
     42,338 and 42,338 shares
     issued.                                         31,754         31,754
   Additional paid-in capital                       103,085        109,664
   Preferred stock purchase rights                      423            423
   Retained earnings                                595,478        525,344
                                                    730,740        667,185
   Less common stock in treasury
     68 and 85 shares                                 3,552          3,835
        Total shareholders' equity                  727,188        663,350
                                                 $1,329,990     $1,284,538

See accompanying notes to consolidated financial statements.
<PAGE>


                     HANNAFORD BROS. CO. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF EARNINGS

                                     (In thousands except per share amounts)
                                                     FISCAL YEAR
                                           1999         1998        1997

Sales and other revenues                $3,462,942   $3,323,588  $3,226,433
Cost of sales                            2,544,623    2,480,346   2,427,287

Gross margin                               918,319      843,242     799,146
Selling, general and administrative
  expenses                                 725,900      664,357     635,355
Merger related costs (Note 2)                9,453            -           -
Impairment loss (Note 6)                         -            -      39,950

Operating profit                           182,966      178,885     123,841

Interest expense, net (Notes 1J and 4)      23,468       26,577      26,425

Earnings before income taxes               159,498      152,308      97,416

Income taxes (Note 10)                      61,480       57,661      37,769

   Net earnings                         $   98,018   $   94,647  $   59,647

Earnings per share (Note 1K):

   Basic                                $     2.32   $     2.24  $     1.41
   Diluted                              $     2.28   $     2.21  $     1.40

Cash dividends per share                $      .66   $      .60  $      .54

Weighted average number of common shares
  outstanding                   Basic       42,224       42,277      42,287
                                Diluted     43,061       42,884      42,732


See accompanying notes to consolidated financial statements.

<PAGE>

<TABLE>

                                                      HANNAFORD BROS. CO. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                                             (In thousands)

                                                              Additional
                                              Common Stock     Paid-in   Preferred Stock  Retained  Treasury Stock
                                             Shares   Amount   Capital   Purchase Rights  Earnings  Shares  Amount
<S>                                          <C>       <C>      <C>            <C>         <C>      <C>    <C>

Balance, December 28, 1996                   42,338    31,754   119,399        423         419,459  ( 58)  (1,879)

     Net earnings                                                                           59,647
     Cash dividends on common stock                                                        (23,043)
     Shares issued under employee
       benefit plans, net of tax benefits                        (4,269)                             399   13,917
     Treasury stock purchases                                                                       (400) (14,379)

Balance, January 3, 1998                     42,338    31,754   115,130        423         456,063   (59)  (2,341)

     Net earnings                                                                           94,647
     Cash dividends on common stock                                                        (25,366)
     Shares issued under employee
       benefit plans, net of tax benefits                        (5,466)                             392   16,514
     Treasury stock purchases                                                                       (418) (18,008)

Balance, January 2, 1999                     42,338    31,754   109,664        423         525,344  ( 85)  (3,835)


     Net earnings                                                                           98,018
     Cash dividends on common stock                                                        (27,884)
     Shares issued under employee
       benefit plans, net of tax benefits                        (6,579)                             423   20,689
     Treasury stock purchases                                                                       (406) (20,406)

Balance, January 1, 2000                     42,338   $31,754  $103,085       $423        $595,478  ( 68) $(3,552)


See accompanying notes to consolidated financial statements.

</TABLE>
<PAGE>

FORM 10-K                 HANNAFORD BROS. CO. 1-7603             JANUARY 1, 2000


                     HANNAFORD BROS. CO. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                    (In thousands)
                                               1999      1998      1997
Cash flows from operating activities:
  Net income                                 $ 98,018  $ 94,647  $ 59,647
  Adjustments to reconcile net
   income to net cash provided
   by operating activities:
     Impairment loss                                -         -    39,950
     Depreciation and amortization            103,278    96,739    93,953
     (Increase) decrease in inventories       (29,197)  (12,452)    2,891
     (Increase) decrease in receivables and
      prepayments                              (3,618)   (6,202)      599
     Increase in accounts payable and
      accrued expenses                         14,099     2,986       440
     Increase (decrease) in income
      taxes payable                               814    (2 387)      297
     Increase (decrease) in deferred taxes       (556)   11,554    (7,815)
     Other operating activities                (1,494)   (1,081)     (446)
        Net cash provided by
         operating activities                 181,344   183,804   189,516

Cash flows from investing activities:
  Acquisition of property, plant
   and equipment                             (114,917) (135,904) (152,862)
  Sale of property, plant and equipment, net   12,762     9,156     6,143
  Increase in computer software costs          (8,562)   (7,262)   (6,205)
  (Increase) decrease in deferred charges      (1,627)      911    (4,054)
        Net cash used in investing
         activities                          (112,344) (133,099) (156,978)

Cash flows from financing activities:
  Principal payments under capital
   lease obligations                           (2,099)   (1,740)   (1,788)
  Proceeds from issuance of long-term debt          -    20,000    26,600
  Payments of long-term debt                  (38,803)  (34,580)  (14,418)
  Issuance of common stock                     14,110    11,048     9,648
  Purchase of treasury stock                  (20,406)  (18,008)  (14,379)
  Dividends paid                              (27,883)  (25,366)  (23,043)
        Net cash used in
         financing activities                 (75,081)  (48,646)  (17,380)

Net increase (decrease) in cash and cash
   equivalents                                 (6,081)    2,059    15,158
Cash and cash equivalents at beginning
   of year                                     59,722    57,663    42,505
Cash and cash equivalents at end of year     $ 53,641  $ 59,722  $ 57,663

See accompanying notes to consolidated financial statements.
<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

Supplemental disclosure of cash flow information

                                                      (In thousands)

                                                1999       1998       1997

Cash paid during the year for:
       Interest (net of amount capitalized,
         $1,870 in 1999, $1,935 in 1998 and
         $3,463 in 1997)                      $24,807    $27,397    $26,396

       Income taxes                            59,022     47,658     41,202

Supplemental disclosure of noncash investing and financing activities

    A non-cash debt obligation totalling $4,895,000 was assumed in 1999
    when the Company acquired land and building at a previously leased
    location.

    Capital lease obligations totalling $2,663,000, $1,166,000 and
    $4,550,000 were incurred during 1999, 1998 and 1997, respectively,
    when the Company entered into real estate leases.

<PAGE>


                     HANNAFORD BROS. CO. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.  NATURE OF BUSINESS

     The  Company  and  its  subsidiaries   are  principally   involved  in  the
distribution  and retail sale of food,  prescription  drugs and related products
through supermarkets and combination stores. The Company's stores are located in
Maine, New Hampshire, Vermont, Massachusetts,  upstate New York, Virginia, North
Carolina and South Carolina.

B.  PRINCIPLES OF CONSOLIDATION

     The Company's  fiscal year ends on the Saturday closest to December 31. The
consolidated  financial  statements  include the accounts of the Company and its
wholly-owned  subsidiaries  as of  January 1,  2000,  for  fiscal  year 1999 (52
weeks),  January 2, 1999,  for fiscal  year 1998 (52 weeks) and January 3, 1998,
for fiscal year 1997 (53  weeks).  All  significant  intercompany  accounts  and
transactions have been eliminated in consolidation.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the reporting  periods.  Actual results could differ from those
estimates.

C.  INVENTORIES

     Inventories  consist  primarily  of  groceries,   meat,  produce,   general
merchandise and  pharmaceuticals.  The majority of grocery,  pharmaceutical  and
general merchandise  inventories are valued at the lower of cost,  determined on
the  last-in,   first-out  (LIFO)  method,  or  market.   Approximately  87%  of
inventories  were  valued  using  the  LIFO  method  in  1999  and  1998.  Other
inventories are stated at the lower of cost (first-in, first-out) or market. The
current cost of groceries,  general merchandise and pharmaceuticals exceeded the
LIFO valuation by $21,108,000 at January 1, 2000, $19,583,000 at January 2, 1999
and  $18,037,000 at January 3, 1998.  LIFO expense charged to cost of goods sold
was $1,525,000 in 1999, $1,546,000 in 1998 and $961,000 in 1997

<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

D.  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment is recorded at cost and depreciated using the
straight-line  method over the estimated  useful lives of the assets.  Leasehold
interests and  improvements are amortized on the  straight-line  method over the
shorter  of  estimated  useful  life or lease  term.  The costs of  repairs  and
maintenance are expensed as incurred;  renewals and betterments are capitalized.
Upon sale or  retirement,  the cost and  related  accumulated  depreciation  are
eliminated  from  the  respective  accounts  and any  resulting  gain or loss is
included in the results of operations. Property, plant and equipment consists of
the following:

  AVERAGE
DEPRECIATION                                             (In thousands)
   RATE                                              1999           1998
    3%       Land and improvements               $  164,068     $  141,706
    3%       Buildings                              325,070        300,708
   12%       Furniture, fixtures and equipment      505,769        500,364
    4%       Leasehold interests and improvements   328,250        324,106
             Construction in progress                12,726          8,790
                                                  1,335,883      1,275,674
             Less accumulated depreciation
             and amortization                       494,548        457,568
                                                 $  841,335     $  818,106

E.  STORE OPENING COSTS

     The  noncapital  expenditures  incurred in opening new stores or remodeling
existing stores are expensed as they are incurred.

F.  GOODWILL

     Goodwill,  which represents the excess of costs of assets acquired over the
fair value of their net assets at dates of  acquisition,  is being  amortized on
the straight-line  method over various periods not exceeding 20 years.  Goodwill
amortization expense charged to operations was $4,164,000 in 1999, $4,035,000 in
1998 and $5,534,000 in 1997.

<PAGE>

                    HANNAFORD BROS. CO. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

G.       IMPAIRMENT OF LONG-LIVED ASSETS

     The Company  reviews and evaluates  long-lived  assets for impairment  when
events or circumstances  indicate costs may not be recoverable (Note 6). The net
book value of long-lived assets is compared to expected undiscounted future cash
flows.  The Company performs this evaluation on each  supermarket  location.  An
impairment loss would be recorded for the excess of net book value over the fair
value of the impaired  asset.  Based on management  expectations  of future cash
flows  at  January  1,  2000,  no  impairment  charge  was  recognized  for  the
non-current asset base of the Company's  supermarkets for the year ended January
1, 2000.

H.  DEFERRED CHARGES

     Deferred  charges consist  primarily of costs of obtaining new store sites,
covenants-not-to-compete,  tradenames and initial  direct lease costs.  Costs of
obtaining  new  store  sites,  if  ultimately  developed,  are  capitalized  and
depreciated  over the  estimated  useful  lives  of the  related  assets.  Other
intangible  assets acquired in connection with acquisitions are amortized on the
straight-line  method over periods  ranging from five to ten years.  Lease costs
are amortized on the straight-line method over the base lease term. Amortization
expense related to these deferred charges was $3,515,000 in 1999,  $3,715,000 in
1998 and $3,599,000 in 1997.

I.  CAPITALIZED COMPUTER SOFTWARE COSTS

     Capitalized  computer  software  costs  consist  of costs to  purchase  and
develop software.  The Company capitalizes  internally  developed software costs
based on a  project-by-project  analysis of each project's  significance  to the
Company and its  estimated  useful life.  The majority of  capitalized  software
costs are  amortized  on a  straight-line  method  over a period of five  years.
Amortization expense charged to operations was $6,959,000 in 1999, $4,495,000 in
1998 and $3,312,000 in 1997.

     In  1999,  the  Company  implemented  Statement  of  Position  (SOP)  98-1,
Accounting  For the Costs of Computer  Software  Developed  For or Obtained  For
Internal Use. SOP 98-1 requires the  capitalization of certain costs incurred in
connection with developing or obtaining  software for internal use. In 1999, the
Company  made  certain  changes in its  capitalization  policy to conform to SOP
98-1,  the impact of which was not  material  to its  results of  operations  or
financial position.

<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

J.  CAPITALIZED INTEREST

     The  Company  capitalizes  interest  as part of the cost of  acquiring  and
constructing  certain  assets.  Capitalized  interest  was  $1,870,000  in 1999,
$1,935,000 in 1998 and $3,463,000 in 1997.

K.  EARNINGS PER COMMON SHARE

     Basic  earnings per share of common stock have been  determined by dividing
net  earnings  by  the  weighted  average  number  of  shares  of  common  stock
outstanding  during the year.  Diluted  earnings per share reflect the potential
dilution that would occur if existing stock options were exercised and have been
determined  by dividing net earnings by the weighted  average  number of diluted
shares of common stock outstanding during the year.

L.  FAIR VALUE DISCLOSURES ABOUT FINANCIAL INSTRUMENTS

     The  following  methods  and  assumptions  were  used  by  the  Company  in
estimating its fair value disclosures for financial instruments:

    Cash and cash equivalents, accounts receivable and notes receivable:
      The carrying amounts reported in the balance sheet for these items
      approximate their fair values.

    Long-term debt:  The fair values of the Company's long-term debt are
      estimated using discounted cash flow analyses, based on the Company's
      current incremental borrowing rates for similar types of borrowing
      arrangements.  The carrying amount of the Company's long-term debt,
      including current maturities, was approximately $205,517,000 at
      January 1, 2000.  The fair value of the long-term debt is estimated
      to be $204,455,000 at January 1, 2000.

M.        RECLASSIFICATIONS

     Certain  reclassifications have been made in the prior year's balance sheet
to conform to classifications made in the current year.

<PAGE>

                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

2.        MERGER AGREEMENT

In August 1999, the Company entered into an Agreement and Plan of
Merger among the Company, Food Lion, Inc. ("Food Lion") and FL
Acquisition Sub, Inc. ("Merger Sub"), a wholly-owned subsidiary of
Food Lion, pursuant to which Merger Sub would be merged with and into
the Company and the Company would continue as the surviving
corporation (the "Merger").  In September 1999, the shareholders
of Food Lion approved a number of proposals, including (1) the
conversion of Food Lion into a holding company, (2) an amendment to
its Articles of Incorporation to change the company name to Delhaize
America, Inc. (Delhaize), and (3) a one-for-three reverse stock split
of Food Lion's outstanding shares of common stock (Classes A and B).
Under the terms of the Merger Agreement and subject to certain
conditions, Delhaize will pay up to $79 per share through a
combination of cash and stock for all of the outstanding shares of the
Company.  In addition, approximately $200 million of the Company's
debt will remain outstanding after the merger.  Each share of
common stock of the Company issued and outstanding immediately prior
to the effective time of the Merger (excluding shares owned by
Delhaize which will include the shares received by Delhaize from the
Sobey Parties pursuant to a separate Stock Exchange Agreement
referred to below) will be converted, subject to proration as
described in the Merger Agreement, into a right to receive (A) $79.00
in cash, without interest, or (B) the number of shares of Class A
common stock of Delhaize equal to $79.00 divided by the greater of
(i) the average of the per share last sales prices of Delhaize Class A
common stock for the ten consecutive trading days prior to the closing
date of the merger or (ii) $27.00.  This merger will be
accounted for under the purchase method of accounting and will be a
taxable transaction under the Internal Revenue Code.

     In  connection  with  the  execution  of  the  Merger  Agreement,   certain
shareholders (the "Sobey Parties") entered into a Stock Exchange  Agreement with
Delhaize.  Pursuant to the Stock Exchange Agreement, the Sobey Parties agreed to
exchange their shares in the Company for a combination of Delhaize  common stock
and cash.  The Sobey Parties also entered into a Voting  Agreement with Delhaize
pursuant to which,  among other things,  the Sobey Parties  agreed to vote their
shares  of  Company  common  stock  (representing  approximately  24.7%  of  the
outstanding

<PAGE>

                    HANNAFORD BROS. CO. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

     Company  common  stock)  in favor of the  Merger.  In  February  2000,  the
shareholders  of the Company voted to approve the terms of the merger  agreement
as outlined above. Upon completion of the merger,  which is pending FTC approval
and is expected to close in the second quarter of 2000, the Company will operate
as a  wholly-owned  subsidiary of Delhaize.  Merger  related costs of $9 million
were  incurred  in  1999.  The  majority  of  these  costs  represent  fees  for
professional services provided by outside parties.

3.  SALE OF HOMERUNS.COM, INC.

     In February  2000,  the Company sold a majority  interest in  HomeRuns.com,
Inc.,  its  internet-based  grocery  delivery  service  through  a  $100,000,000
investment and  recapitalization  on the part of the Cypress Group L.L.C., a New
York-based  private equity firm. The Company will retain a minority interest and
will account for the future  results of this  investment  using the cost method.
The  Company  has  also  entered  into  a  wholesale   supply   agreement   with
HomeRuns.com, Inc.

4.  EXTERNAL FINANCING

     At January 1, 2000,  the Company had  revolving  credit  lines with several
banks  totalling   $92,000,000  with  interest  rates  determined  by  different
borrowing options including prime,  quoted money market or LIBOR plus a premium.
At January 1, 2000, there were $19,700,000 of outstanding borrowings under these
credit  lines with a  weighted-average  interest  rate of 6.5%.  The  agreements
provide for  conversion of revolving  credit loans to term loans with  principal
payments due in quarterly  installments  over a period of one to four years. The
loan  agreements  contain  certain  restrictive  covenants,  which  among  other
provisions,  require maintenance of certain levels of working capital,  debt and
tangible net worth.  The lines  require a commitment  fee of 0.21% on the unused
portion of the line.  There are no  compensating  balances  required  during the
commitment period.

     In addition, the Company had an unused, uncommitted short-term bank line of
credit  of  $11,000,000  at  January  1,  2000.  Of this  amount,  approximately
$10,204,000 is reserved to support  outstanding  standby letters of credit which
guarantee payment of certain insurance claims and premiums.

     In  December  1999,  the Company  assumed a mortgage  loan in the amount of
$4,895,000 in connection  with its  acquisition of the Hannaford  Plaza Shopping
Center in  Bennington,  VT. This loan has a 16 year term and an interest rate of
8.25%.

     At January  1, 2000,  real  estate and  equipment  with a net book value of
approximately  $82,043,000  served  as  collateral  for  debt  of  approximately
$57,201,000.

<PAGE>

                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

Net interest expense was as follows:
                                              (In thousands)
                                       1999       1998       1997

Interest on debt                     $16,327    $19,012    $20,108
Capital lease interest                 9,639      9,630      9,902
Capitalized interest                  (1,870)    (1,935)    (3,463)
Interest income                         (628)      (130)      (122)
                                     $23,468    $26,577    $26,425


Long-term debt consists of the following:

                                                         (In thousands)
                                                        1999         1998

   Uncollateralized senior notes due in varying
   annual installments through 2016 with interest
   from 6.2% to 9.0%.                                 $125,350      $139,600

   Collateralized by real estate, due in
   varying installments through 2011 with
   interest from 7.5% to 10.3%                          57,201        59,619

   Uncollateralized revolving credit loans with
   interest from 5.6% to 6.5%                           19,700        34,100

   Other                                                 3,266         6,107

                                                       205,517       239,426

   Less current portion                                 20,391        19,296
                                                      $185,126      $220,130
<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

     The  uncollateralized  senior note agreements  contain certain  restrictive
covenants,  which among other  provisions,  limit total debt and require minimum
levels of tangible net worth.

Maturities of long-term debt at January 1, 2000, are as follows:

                                                    (In thousands)
                              2000                      $ 20,391
                              2001                        40,151
                              2002                        16,874
                              2003                        17,310
                              2004                        16,491
                              2005 and thereafter         94,300
                                                        $205,517

<PAGE>

                    HANNAFORD BROS. CO. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

5.  LEASED ASSETS AND LEASE COMMITMENTS

     The Company's financial structure includes leases of certain stores, office
facilities, and equipment. Initial lease terms range from 3 to 45 years with the
majority  of lease  terms  between  20 and 25 years.  Substantially  all  leases
contain renewal  options.  Certain leases contain a provision for the payment of
contingent  rentals  based on a  percentage  of sales in  excess  of  stipulated
amounts.  Most of the real  estate  leases  provide  that the Company pay taxes,
insurance and maintenance applicable to the leased premises.

The Company's investment in real property under capital leases was as follows:
                                                     (In thousands)
                                                  1999            1998

Real property                                   $82,810         $82,500
Less accumulated amortization                    31,274          27,589
Net real property under capital leases          $51,536         $54,911

     Amortization  of property  under  capital  leases was  $4,282,595  in 1999,
$4,217,342 in 1998 and $4,381,463 in 1997.

     Future  minimum  rental  payments  under  capital  lease   obligations  and
operating leases at January 1, 2000, are as follows:

                                                     (In thousands)
                                                  Capital      Operating
                                                   Leases        Leases

                      2000                       $ 11,756       $ 21,257
                      2001                         11,677         20,123
                      2002                         11,906         19,516
                      2003                         12,074         18,318
                      2004                         12,003         17,767
                      2005 and thereafter          97,698        187,308

               Total minimum lease payments       157,114       $284,289

               Less:
                 Imputed interest (at rates
                   from 8.50% to 21.13%)           83,188
               Present value of net mini-
                 mum lease payments                73,926
               Less current portion                 2,462
               Long-term portion of obligations  $ 71,464

<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)


     Minimum  payments for capital and operating leases have not been reduced by
minimum sublease rentals of $2,370,000 and $8,336,000,  respectively, due in the
future  under  noncancellable  subleases.  They also do not  include  contingent
rentals that may be payable under certain leases.

Total rent expense, net of executory costs, was as follows:

                                               (In thousands)
                                    1999           1998           1997

Capital leases:
   Contingent rentals             $   172        $   123        $   194

Operating leases:
   Minimum rentals                 22,526         21,439         20,584
   Contingent rentals                 198              2            714
   Rentals from subleases          (2,045)        (1,843)        (1,492)
                                   20,679         19,598         19,806
                                  $20,851        $19,721        $20,000



<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

6.  IMPAIRMENT LOSS

     In December 1997, the Company  determined  that certain of its  supermarket
assets and identifiable intangibles, including goodwill, were impaired. Based on
a review of Company locations and considering the expected  operating cash flows
along with the  estimated  market value of the assets as if they were to be sold
or disposed of, an impairment loss of $39,950,000 was recognized.  Approximately
$24,000,000  of the asset  impairment  loss  related to  supermarket  assets and
associated  costs for stores that were closed in January 1998 and being held for
sale or  disposal,  and  $15,950,000  related to  supermarket  assets  which the
Company  continued to use in its  operations.  In 1997 the  operating  losses of
these closed supermarkets were not material.



<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

7.  CAPITAL STOCK

     In May 1996,  the Company  amended and  extended  its  existing  standstill
agreement  with  certain  shareholders  ("the  Sobey  Parties").  The  amendment
extended the term of the standstill  agreement to December 31, 1998,  subject to
automatic  renewal for successive  one-year periods (but not beyond December 31,
2000)  unless by July 31 of a given year  either the Company or any of the Sobey
Parties gave written  notice of an intention  not to further  extend the term of
the  standstill  agreement.  Under the  agreement,  whenever the Company  issued
shares of voting stock to third  parties,  the Sobey  Parties  generally had the
right to purchase  sufficient  shares from the Company to maintain a 25.6% level
of ownership.  Due to the Company's share repurchase program to fund stock-based
benefit plans no new shares were issued by the Company, and so the Sobey Parties
purchased no additional  shares in 1997,  1998 or 1999.  In May 1999,  the Sobey
Parties  informed the Company of their  intention to not extend the terms of the
standstill  agreement  beyond December 31, 1999 and the agreement  terminated in
August 1999, upon the Board of Director's  approval of the Merger Agreement with
Delhaize America, Inc.

     In May 1997, the  shareholders of the Company  approved an amendment to the
Hannaford Bros. Co.  Employee Stock Purchase Plan. This amendment  increased the
total  authorized  shares for this Plan by an additional  750,000 shares thereby
permitting  continued use of the Plan in future years. This plan was terminated,
pursuant to the Merger Agreement, effective January 1, 2000.

<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

8.  EMPLOYEE BENEFIT PLANS

     The Company  maintains a  non-contributory,  defined  benefit  pension plan
covering  approximately  50% of its employees.  The plan provides for payment of
retirement  benefits on the basis of employees'  length of service and earnings.
The Company's  policy is to fund the plan based upon legal  requirements and tax
regulations. Plan assets consist of common stocks, cash and cash equivalents and
fixed income investments.

     The Company also maintains an unfunded  supplemental  executive  retirement
plan that provides  benefits in excess of those limited in the cash balance plan
by maximum compensation and benefit limitations.

     The  Company  also   provides  a  defined   contribution   401(k)  plan  to
substantially  all  employees.  Amounts  charged to  expense  for this plan were
$6,398,000  in 1999,  $6,561,000 in 1998 and  $2,916,000 in 1997.  Effective for
1998, the Company increased the percentage of its matching  contribution to this
401(k) plan.

     In addition,  the Company  provides  certain health care and life insurance
benefits for retired employees  ("postretirement  benefits").  Substantially all
employees may become  eligible for these  benefits if they reach early or normal
retirement age and accrue 10 years of service while working for the Company. The
postretirement  health  care plan is  contributory  for most  participants  with
retiree  contributions  adjusted  annually.  Life  insurance  benefits  are  not
available for employees who retired after January 1, 1996.

<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

     The following tables set forth the change in plans' benefit obligations and
assets as well as the plans' funded status  reconciled with the amounts shown in
the  Company's  financial  statements  at  January  1, 2000 (1999 plan year) and
January 2, 1999 (1998 plan year):

<TABLE>
                                                        (In thousands)
                                           Pension Benefits     Postretirement Benefits

                                              1999    1998           1999      1998
<S>                                         <C>      <C>            <C>       <C>

Change in benefit obligation:
  Benefit obligation at beginning of year   $97,992  $ 84,201       $3,145    $ 3,118
  Service cost                                5,224     4,690           35         36
  Interest expense                            6,187     6,247          190        228
  Amendments                                      -         -            -       (369)
  Actuarial loss (gain)                      (7,832)    8,462          279        571
  Benefits paid                              (9,333)   (5,608)        (421)      (439)
  Benefit obligation at end of year         $92,238  $ 97,992       $3,228    $ 3,145

Change in plan assets:
  Fair value of plan assets at beginning
    of year                                 $90,718  $ 88,385       $    0    $     0
  Actual return on plan assets               15,512     3,123            0          0
  Employer contribution                       3,305     4,818          421        439
  Benefits paid                              (9,333)   (5,608)        (421)      (439)
  Fair value of plan assets at end of year $100,202  $ 90,718       $    0    $     0

  Funded status                             $ 7,964  $ (7,274)     $(3,228)  $(3,145)
  Unrecognized transition obligation (ass      (195)     (227)       6,848     7,381
  Unrecognized prior service cost             2,228     2,549            0         0
  Unrecognized net actuarial loss (gain)    (10,926)    3,192       (4,387)   (5,149)
  Accrued benefit cost                     $   (929) $ (1,760)     $  (767)  $  (913)

</TABLE>
<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

     For measurement  purposes, a 5.5% annual rate of increase in the per capita
cost of covered  health care benefits was assumed for 1999. The rate was assumed
to decrease to 5.0% for 2000 and remain at that level thereafter.
<TABLE>

                                                        (In thousands)
                                          Pension Benefits     Postretirement Benefits

                                        1999    1998    1997       1999    1998     1997
<S>                                   <C>      <C>     <C>         <C>     <C>      <C>

Components of net periodic benefit cost:
  Service cost                        $ 5,224  $4,690  $3,128      $ 35    $ 36     $ 35
  Interest expense                      6,187   6,247   5,793       190     228      248
  Expected return on plan assets       (9,236)(10,162) (7,062)        0       0        0
  Amortization of transition
    obligation (asset)                    (31)    (31)    (31)      533     533      552
  Amortization of prior service cost      322     322     322         0       0        0
  Recognized net actuarial loss (gain)      8    (318)     28      (483)   (553)    (612)
                                     $  2,474  $  748 $ 2,178     $ 275   $ 244    $ 223

Weighted-average assumptions as of
  September 30 (the plans measurement
      date):
    Discount rate                       7.50%   6.50%   7.50%     7.50%   6.50%    7.50%
    Expected return on plan assets     10.50%  10.50%  10.50%        -       -        -
    Rate of compensation increase       4.50%   4.50%   4.50%        -       -        -
</TABLE>


     The projected benefit obligation and accumulated benefit obligation for the
unfunded  supplemental  executive retirement plan were $2,216,000 and $2,207,000
respectively at January 1, 2000 and $2,192,000 and $2,176,000 respectively as of
January 2, 1999. The projected  benefit  obligation for the defined benefit plan
was  $95,800,000  with a fair value of plan assets of  $90,718,000 at January 2,
1999.

     A 1% change in the  assumed  health  care cost trend rates would not have a
material effect on the benefit obligation or expense of postretirement benefits.



<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

9. EMPLOYEE STOCK PLANS

     The 1988 and 1998 Stock  Plans  provide for the  granting  to officers  and
other key employees options to purchase common stock at 100% of the market price
on the date of grant. Under the 1988 Stock Plan 2,800,000 shares were authorized
for grant and under the 1998 Stock Plan  6,000,000  shares were  authorized  for
grant.  The 1988 and 1998 Stock Plans allow the granting of both incentive stock
options and  non-qualified  stock options.  Under the 1988 and 1998 Stock Plans,
both incentive  stock options and  non-qualified  stock options may have various
vesting  schedules,  but generally none are exercisable  until at least one year
following  the grant.  All options may be  exercised  for cash or by  exchanging
currently owned shares, or both. Under the 1988 and 1998 Plans, exchanged shares
may trigger the granting of  non-qualified  "reload"  options for the balance of
the original option term.  Original option grants expire ten years from the date
of grant. Incentive stock option activity for the last three fiscal years was as
follows:
<TABLE>

                                          (Share Amounts in Thousands)
                                1999                  1998                 1997
                                    Weighted              Weighted             Weighted
                                    Average               Average              Average
                                    Exercise              Exercise             Exercise
                         Shares       Price     Shares     Price     Shares     Price

<S>                       <C>        <C>         <C>      <C>         <C>      <C>
Outstanding at
  beginning of year       1,735      $32.64      1,500    $27.53      1,415    $24.89
Granted                     386       48.25        510     44.70        362     34.63
Exercised                  (296)      28.39       (224)    24.76       (261)    22.85
Cancelled                   (53)      43.84        (51)    37.33        (16)    30.89
Outstanding at end
  of year                 1,772       37.04      1,735     32.64      1,500     27.53
Exercisable at end
  of year                   947       29.00        915     25.98        911     24.02

</TABLE>
<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)
<TABLE>

Non-qualified stock option activity was as follows:

                                            (Share Amounts in Thousands)
                                1999                  1998                 1997
                                    Weighted              Weighted             Weighted
                                    Average               Average              Average
                                    Exercise              Exercise             Exercise
                         Shares       Price     Shares     Price     Shares     Price

<S>                        <C>       <C>          <C>     <C>          <C>     <C>
Outstanding at
  beginning of year        534       $32.74       487     $30.07       378     $28.23
Granted                    120        49.86       102      44.81       122      35.52
Exercised                  (25)       33.15       (52)     30.82       (13)     27.89
Cancelled                  (15)       48.82        (3)     41.07         -          -
Outstanding at end
  of year                  614        36.01       534      32.74       487      30.07
Exercisable at end
  of year                  401        32.74       304      28.74       297      27.61


Available for future
  grants (all plans)     5,029            -     5,445          -        86          -
</TABLE>

     Exercise  prices for options  outstanding as of January 1, 2000 ranged from
$18.81 to  $72.81.  The  weighted-average  remaining  contractual  life of these
options is approximately 6.6 years.

     The  Employee  Stock  Purchase  Plan  enables  participating  employees  to
purchase  common  stock  through  payroll  deduction  of up  to  5% of  eligible
compensation.  The Company pays interest on the accumulated withholdings.  These
amounts  may be used to  purchase  shares of company  stock at the option  price
(lesser  of:  (a) 85% of the fair  market  value at the date of grant or (b) the
greater of the market  price at the close of  business on the  exercise  date or
$10.00 per share).  During 1998,  employees  purchased 112,000 shares, for which
$2,941,000  was paid to the Company.  During 1999,  employees  purchased  99,000
shares,  for which  $3,109,000  was paid to the Company.  As of January 1, 2000,
grants had been  exercised by employees  for the purchase of 106,000  shares and
624,000 shares remained available for issuance under the Plan. As of January 28,
2000,  $3,880,000 had been received by the Company upon issuance of these shares
and the balance of shares  available for future issuance was reduced to 519,000.
This plan was terminated, pursuant to the Merger Agreement, effective January 1,
2000.
<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

     The  Company  applies  the  disclosure-only   provisions  of  Statement  of
Accounting Standards (SFAS) No. 123. Accordingly,  no compensation cost has been
recognized for stock plans granting common shares at market value, as defined by
SFAS No. 123, on the date of the grant. Had compensation  cost for the Company's
stock plans been  determined  based on the fair value  requirements  of SFAS No.
123,  the  Company's  net income and basic  earnings  per share  would have been
reduced to the proforma amounts indicated below:

                                (In thousands except earnings per share)
                                             1999        1998      1997

Net earnings              As reported      $98,018     $94,647    $59,647
                          Proforma          93,224      90,585     56,436

Basic earnings per share  As reported       $2.32       $2.24      $1.41
                          Proforma           2.21        2.14       1.33

     The fair value of each stock option grant has been estimated on the date of
grant  using  the   Black-Scholes   option  pricing  model  with  the  following
weighted-average assumptions:
                                     1999            1998           1997

Risk-free interest rate              5.54%           5.65%          6.85%
Dividend yield                       1.30%           1.40%          1.55%
Expected volatility                 20.00%          20.17%         19.42%
Expected life                        4.1 yrs.        4.4 yrs.       4.5 yrs.

     The weighted-average grant date fair values of options granted during 1999,
1998 and 1997 were $11.72, $10.33 and $8.84, respectively.
<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)

10.  INCOME TAXES

The components of the provision for income taxes were as follows:

                                            (In thousands)
                                   1999              1998            1997
Current
  Federal                         $51,904           $39,944         $37,028
  State                             6,934             6,135           4,790
                                   58,838            46,079          41,818
Deferred
  Federal                           2,392            10,514          (2,801)
  State                               250             1,068          (1,248)
                                    2,642            11,582          (4,049)
Total income tax expense          $61,480           $57,661         $37,769


     The  reconciliation  of income tax  computed at the United  States  Federal
statutory tax rate to income tax expense was as follows:

                                         (In thousands)
                           1999               1998               1997


Tax at U.S.
 statutory rate     $55,825   35.00%   $53,307   35.00%   $34,096   35.00%
State income taxes,
 net of federal tax
 benefit              4,673    2.93      4,630    3.04      3,487    3.58
Other - net             982     .62       (276)   (.18)       186     .19

                    $61,480   38.55%   $57,661   37.86%   $37,769   38.77%

<PAGE>


                    HANNAFORD BROS. CO. AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (continued)



     Deferred  income taxes arise  because of  differences  in the  treatment of
income and  expense  items for  financial  reporting  and  income tax  purposes.
Significant  components of the Company's  deferred tax assets and liabilities at
the end of the last two fiscal years were as follows:

                                                       (In thousands)
                                                    1999           1998

Deferred Tax Liabilities:

  Depreciation and amortization                   $48,524        $43,824
  Other                                             3,999          2,880
                                                   52,523         46,704

Deferred Tax Assets:

  Capital leases                                   (8,473)        (8,027)
  Insurance reserves                              (10,855)       (10,314)
  Associate benefit plans                          (5,730)        (4,681)
  Other                                            (5,114)          (775)
                                                  (30,172)       (23,797)

                                                   22,351         22,907

Net current deferred tax assets                    10,325          5,952

Net non-current deferred tax liabilities          $32,676        $28,859


     The Company  expects to realize  the  deferred  tax assets in the  ordinary
course of business  operations in subsequent  years, and,  accordingly,  has not
established a valuation reserve relative to these amounts.


<PAGE>

                      HANNAFORD BROS. CO. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)

11.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following is a presentation of selected  financial data for each of the
four quarters of fiscal years 1999, 1998 and 1997.
<TABLE>

                                                 (In thousands except per share amounts)

                                             First             Second             Third               Fourth
                                            Quarter           Quarter            Quarter             Quarter
1999
<S>                                         <C>               <C>                <C>                 <C>

Sales and other revenues..........          $839,124          $854,325           $881,934            $887,559
Gross margin......................           217,725           226,216            235,644             238,734
Net earnings......................            19,990            25,414             24,325              28,289
Earnings per share:
     Basic........................          $    .47          $    .60           $    .58            $    .67
     Diluted......................          $    .47          $    .59           $    .56            $    .65


1998

Sales and other revenues..........          $788,296          $830,371           $854,675            $850,246
Gross margin......................           198,317           207,614            217,649             219,662
Net earnings......................            17,815            23,019             25,832              27,981
Earnings per share:
     Basic........................          $    .42          $    .54           $    .61            $    .66
     Diluted......................          $    .42          $    .54           $    .60            $    .65


1997

Sales and other revenues..........          $759,923          $775,687           $820,115            $870,708
Gross margin......................           185,650           194,615            203,060             215,821
Net earnings......................            15,590            19,878             22,797               1,382
Earnings per share:
     Basic........................          $    .37          $    .47           $    .54            $    .03
     Diluted......................          $    .37          $    .47           $    .53            $    .03


</TABLE>

<PAGE>


ITEM 9:  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None

                              Part III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) DIRECTORS OF THE REGISTRANT

     The  Articles  of  Incorporation  of the  Company  provide  for a Board  of
Directors of not fewer than seven nor more than eighteen  members,  as from time
to time may be determined by resolution of the  shareholders  or the  Directors.
The Board of Directors is divided into three  classes,  each such class having a
three-year  term of office with the term of office of one such class expiring at
the Annual Meeting of Shareholders each year.

     The  following  table  sets  forth  for  each  Director,  his or her  name,
principal  occupations or employment for at least the past five years,  class of
directorship, age on March 1, 2000, and year first elected a Director.

                          Principal Occupation                       Director
       Name                   or Employment                     Age    Since

CLASS I (Last elected in May 1997)

William T. End(1)         Chairman and Chief Executive Officer,  52     1995
                          Cornerstone Brands, Inc.,
                          Portland, Maine (Catalog Retailer);
                          President and Chief Executive Officer,
                          Lands' End, Inc., 1991 to 1995.

Claudine B. Malone(2)     President, Financial & Management      63     1991
                          Consulting, Inc., McLean, Virginia

Dr. Walter J. Salmon(3)   Stanley Roth, Sr., Professor           69     1964
                          of Retailing, Emeritus, Harvard
                          University Graduate School
                          of Business Administration,
                          Boston, Massachusetts

John Robert Sobey(4       President & Chief Operating Officer,   51     1998
                          Sobeys Inc., Stellarton,
                          Nova Scotia
<PAGE>


CLASS II (Last elected in May 1998)

Hugh G. Farrington(5)     Chief Executive Officer since          55     1981
                          May 1992; President since 1984;
                          Executive Vice President
                          1981 to 1984; Senior Vice
                          President 1980 to 1981; Vice
                          President 1977 to 1980

David F. Sobey(6)         Chairman of the Board,                 68     1981
                          Sobeys Inc., Stellarton,
                          Nova Scotia

Robert L. Strickland(7)   Retired Chairman of the Board,         68     1994
                          Lowe's Companies, Inc., Winston-Salem,
                          North Carolina

Robert J. Tarr, Jr.(8)    Consultant; formerly President, Chief  56     1998
                          Executive Officer and Chief Operating
                          Officer, Harcourt General, Inc. and
                          The Neiman Marcus Group, Inc., Boston,
                          Massachusetts from 1991 to 1997

CLASS III (Last elected in May 1999)

Robert D. Bolinder(9)     President, Robert D. Bolinder          68    1984
                          Associates, Management Consultants,
                          Boise, Idaho; retired Executive
                          Vice President, Smith's Food and
                          Drug Centers, Inc., Salt Lake City,
                          Utah

Richard K. Lochridge(10   President, Lochridge & Company, Inc.,  56     1993
                          Boston, Massachusetts (Management
                          Consulting)

Renee M. Love(11)         Chairman and Chief Executive Officer,  54     1996
                          Omega Group, Inc., Bryn Mawr,
                          Pennsylvania (Strategic Consulting)

Robert J. Murray(12)      Chairman, President and Chief          57     1997
                          Executive Officer, New England
                          Business Service, Inc., Groton,
                          Massachusetts; formerly Executive
                          Vice President of the North Atlantic
                          Group of The Gillette Company,
                          Boston, Massachusetts, from 1991 to 1995
<PAGE>



 (1) Mr. End is Chairperson of the Human Resources Committee of the Board
     and is a member of the Corporate Governance Committee of the Board.
     Prior to rejoining the Board in 1995, Mr. End served as a Hannaford
     Director from 1983 to 1993.
 (2) Ms. Malone is Chairperson of the Audit Committee of the Board and a
     member of the Corporate Governance Committee of the Board.  She is also a
     Director of Hasbro, Inc.; Houghton Mifflin Company; The Limited, Inc.;
     Union Pacific Resources; Dell Computer Corporation; Lowe's Companies,
     Inc.; Lafarge Corporation; Mallinckrodt Group; and SAIC.  She is a
     Trustee of the Massachusetts Institute of Technology and is Chairperson
     of the Federal Reserve Bank of Richmond.
 (3) Dr. Salmon is Chairman of the Board, Chairperson of the Executive
     Committee of the Board and a member of the Finance and Corporate
     Governance Committees of the Board.  He is also a Director of Luby's
     Cafeterias, Inc.; Circuit City Stores, Inc.; The Neiman Marcus Group,
     Inc.; The Quaker Oats Company; Harrah's Entertainment, Inc; Cole
     National Corporation; and PetsMart, Inc.  He is also a Director of the
     Tufts Health Plan and the Harvard Business School Publishing Company.
 (4) Mr. John Robert Sobey is a member of the Audit Committee of the Board.
     He is also a Director of Empire Company Limited and Sobeys Inc.
     He is a cousin of Director David F. Sobey.
 (5) Mr. Farrington is a member of the Executive Committee of the Board.
     He is also a Director of Sobeys , Inc.
 (6) Mr. David Sobey is a member of the Executive Committee of the Board. He
     is also a Director of Empire Company Limited; Sobeys Inc.; and
     CHC Helicopter Corporation.  He is a cousin of Director John Robert
     Sobey.
 (7) Mr. Strickland is Chairperson of the Corporate Governance Committee of
     the Board and is a member of the Human Resources and Executive Committees
     of the Board.  He is also a Director of Lowe's Companies, Inc.; Krispy
     Kreme Corp.; and T. Rowe Price Associates, Inc.
 (8) Mr. Tarr is a member of the Audit and Finance Committees of the Board.
     He is also a Director of Houghton Mifflin Company; and John Hancock
     Mutual Life Insurance Company.
 (9) Mr. Bolinder is Chairperson of the Finance Committee of the Board and a
     member of the Corporate Governance Committee of the Board.  He is also
     a Director of Idaho Power Company.
(10) Mr. Lochridge is a member of the Executive, Finance and Human Resources
     Committees of the Board.  He is also a Director of Lowe's Companies,
     Inc.; and PetsMart, Inc.
(11) Ms. Love is a member of the Audit and Finance Committees of the Board.
(12) Mr. Murray is a member of the Human Resources and Finance Committees
     of the Board.  He is also a Director of Allmerica Financial Corporation;
     Fleet National Bank; LoJack Corporation; and New England Business
     Service, Inc.

<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

     Under Section 16(a) of the Securities Exchange Act of 1934, certain persons
associated  with the Company  (directors,  executive  officers,  and  beneficial
owners of more than 10% of the  outstanding  Common  Stock) are required to file
with the  Securities  and Exchange  Commission  and the New York Stock  Exchange
various reports  disclosing their ownership of Company securities and changes in
such ownership. To the Company's knowledge,  all requisite reports for 1999 were
filed in a timely manner.

<PAGE>

(b) EXECUTIVE OFFICERS OF THE REGISTRANT

     Information with respect to the Executive Officers of the Registrant is set
forth below.

     Under the by-laws of the Registrant, all Executive Officers hold office, at
the  pleasure  of the  Board of  Directors,  until  the  Annual  Meeting  of the
Directors  next  following  their  election  or until  others  are  elected  and
qualified in their stead.

     There are no family relationships  between any of the Executive Officers of
the  Registrant  nor were  there  any  special  arrangements  or  understandings
regarding the selection of any officer.
                                                         SERVED AS AN EXECU-
NAME                        AGE        POSITION          TIVE OFFICER SINCE:

HUGH G. FARRINGTON           55      President                    09/30/77
                                     Chief Executive Officer

     Mr. Farrington was elected President in 1984 and designated Chief Executive
Officer in 1992. He had held the position of Chief  Operating  Officer from 1984
to 1992. He had been  Executive  Vice  President from 1981 until his election as
President.  He  has  been  employed  by the  Registrant  in  various  operating,
supervisory and executive capacities since 1968.

RICHARD A. ANICETTI          42      Executive Vice President -   08/10/94
                                     Southeast Operations

     Mr. Anicetti was elected Executive Vice President - Southeast Operations in
May 1998.  He had been Senior Vice  President  and  General  Manager,  Southeast
Operations since December 1995, Senior Vice President, Retail Operations for the
southeast  from 1994 to 1995,  and Vice  President  - Retail  Operations/General
Manager, New Hampshire and Massachusetts from 1989 to 1994. He has been employed
by the Registrant since 1980 in various retail management capacities.

PAUL A. FRITZSON           46     Executive Vice President,      01/02/92
                                  Chief Financial Officer

     Mr. Fritzson was elected Executive Vice President & Chief Financial Officer
in June 1999.  Since May 1998, he had been  Executive Vice President - Strategic
Development,  Senior Vice President,  Marketing,  Merchandising and Distribution
since December 1995,  Senior Vice  President,  Marketing from 1994 to 1995, Vice
President - Marketing from 1992 to 1994 and Vice President,  General Merchandise
from 1990 to 1992. He had served  previously in various staff and  merchandising
and retail operations capacities since 1978.

<PAGE>

                                                         SERVED AS AN EXECU-
NAME                      AGE        POSITION            TIVE OFFICER SINCE:

ANDREW P. GEOGHEGAN, ESQ.  49     Senior Vice President,         09/14/87
                                  Secretary & General Counsel

     Mr.  Geoghegan  was elected  Senior Vice  President,  Secretary and General
Counsel in May 1996. He joined the Registrant as Vice President, General Counsel
in September 1987. He was elected Secretary in 1992. From 1979 to 1987 he was in
private law practice with the firm of Kassoy, Lopez & Geoghegan Law Corporation,
Beverly Hills, California, specializing in corporate, tax and real estate law.

RONALD C. HODGE            52     Executive Vice President -     08/10/94
                                  Chief Operating Officer

     Mr. Hodge was elected Executive Vice President & Chief Operating Officer in
June 1999. He had been Executive  Vice President - Sales & Northeast  Operations
since May 1998, Senior Vice President, Northeast Operations since December 1995,
Senior Vice President,  Retail Operations from 1994 to 1995 and Vice President -
Retail  Operations/General  Manager,  New York and Vermont from 1989 to 1994. He
has been employed by the  Registrant  in various  retail  management  capacities
since 1980.

MICHAEL J. STROUT          45      Executive Vice President,    12/19/94
                                   Human Resources and
                                   Information Technology

     Mr.  Strout was  elected  Executive  Vice  President - Human  Resources  &
Information Technology in June 1999. He had served as Executive Vice President -
Human  Resources  since May 1998,  Senior Vice President - Human Resources since
rejoining the  Registrant in December  1994.  From 1990 through 1994 he was Vice
President - Human Resources and later Senior Vice President - Human Resources at
Tops Markets,  Inc.,  Buffalo,  New York.  From 1985 to 1990 Mr. Strout had been
employed by the Registrant in various Human Resource management positions.

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Directors

     Each  non-management  Director  is paid an annual  retainer  of $26,000 for
services  as a Director.  Non-management  Directors  (other  than Dr.  Walter J.
Salmon)  receive fees of $1,000 for each Board  meeting  attended and $1,000 for
each committee meeting attended.  Committee  Chairpersons  receive an additional
annual  retainer  of $2,500  for such  services.  Hugh G.  Farrington  (the only
management  member of the Board)  receives no  additional  compensation  for his
services as a Director.  All  Directors  are  reimbursed  for any  out-of-pocket
expenses incurred in attending Board and committee meetings.

     Dr.  Salmon also  receives  $84,000 per year,  which covers his services as
Chairman of the Board and Chairperson of the Executive Committee,  his Board and
committee  meeting  attendance  fees and the additional  consulting  services he
provides.

     The Company  maintains a Stock  Ownership Plan for Outside  Directors which
offers non-management Directors a potential source of performance-based deferred
compensation tied to the long-term performance of the Company as measured by the
price of its Common Stock.

    Performance Shares.  Under the Plan, each non-management Director is
    credited annually with a specified number of "performance shares", whose
    value will be determined over a five-year "performance period".  (In the
    event that a Director leaves the Board before age 70, except in the case
    of death or disability, the performance period for each outstanding award
    will terminate at the end of the fiscal year in which the Director ceases
    to be a member of the Board.)  At the end of the performance period for a
    given award, the number of performance shares is multiplied by the
    increase (if any) in the trading price of the Common Stock over such
    period.  The resulting figure (in dollars) is then credited to a
    deferral account for the Director, where it is treated as if it were
    invested in Common Stock of the Company (with adjustments to reflect
    reinvestment of dividends paid on such stock and changes in the trading
    price of the stock).  The following Directors hold the number of common
    share equivalents indicated: Mr. Bolinder, 4,935; Mr. End, 1,121;
    Mr. Lochridge, 2,037; Ms. Malone, 3,410; Dr. Salmon, 5,487;
    Mr. D. Sobey, 5,119; and Mr. Strickland, 1,015.

    Generally, amounts credited to a Director's deferral account will be
    paid to her or him in a lump sum or in monthly installments over a period
    not to exceed 10 years.  Payments may not begin until the Director leaves
    the Board or reaches age 70, whichever is later.  All payments from
    the Plan are made in cash.

    For 1999 each non-management Director received an award under the Plan
    of 1,000 performance shares.  The number of performance shares
    presently held by the non-management Directors are:  Mr. Bolinder, 5,300;
    Mr. End, 5,300; Mr. Lochridge, 5,300; Ms. Love, 3,600; Ms. Malone, 5,300;
    Mr. Murray, 2,200; Dr. Salmon, 5,300; Mr. D. Sobey, 5,300; Mr. J. Sobey,
    1,000; Mr. Strickland, 5,300; and Mr. Tarr, 1,000.  As described above,
    the ultimate value of the performance shares will vary depending upon
    the future market price of the Company's Common Stock.
<PAGE>

     The Plan also allows  non-management  Directors to receive stock options in
lieu of their  annual  retainers  or to defer their  compensation,  as described
below.

    Stock Options.  Each non-management Director may elect to receive his
    or her annual retainer in the form of a stock option rather than cash.
    This election must be made by the Director before January 1 of the
    relevant year, and cannot be made for less than the entire annual
    retainer for that year.  If so elected, the stock option is granted as
    of the first trading day of the new year.  The option entitles the
    Director to purchase Common Stock at an exercise price equal to 100%
    of the closing price of Hannaford Common Stock on the New York Stock
    Exchange as of the grant date.  The number of shares covered by the
    option is set by formula and equals (i) three times the annual
    retainer, divided by (ii) the closing price per share of the Common
    Stock on the grant date.  The exercise price is payable in cash or
    previously acquired stock (or any combination thereof) at the time of
    exercise.  The option becomes exercisable one year after the date of
    grant, but will be forfeited if for any reason (other than a "change in
    control event" as defined) the Director's service on the Board
    terminates before December 31 of that year. (If the option is forfeited,
    the Director will receive a cash payment for the portion of the annual
    retainer earned through the termination date.)  Each option will expire
    ten years from the date of grant if not exercised.

    Deferral of Compensation.  Each non-management Director may at any time
    (but not more frequently than once a year) elect to defer receipt of
    any Director compensation (i.e., annual retainer, meeting fees,
    committee chairperson retainer, and consulting fees) that would otherwise
    be paid to him or her in cash.  The deferral period expires upon
    termination of the Director's service on the Board.  The Director must
    designate at the time of the deferral election whether the compensation
    deferred is ultimately to be paid in stock or in cash.

         Stock Deferral.  Whenever the Director would otherwise receive
         payment of compensation, the Company will credit to his or her
         account that number of stock units which equals (i) the amount
         deferred, divided by (ii) the closing price per share of the
         Common Stock on the deferral date.  Payout of the deferred amounts
         will be made in the form of Common Stock.

         Cash Deferral.  Whenever the Director would otherwise receive
         payment of compensation, the Company will credit the payment
         amount to the Director's account and will thereafter credit the
         account with interest at the rate paid on five-year Treasury
         notes.

     The Company has established stock ownership  guidelines for Directors.  The
guidelines  encourage  each  Director  to acquire  and  maintain  an interest in
Hannaford stock having a value of at least five times the annual  retainer.  The
stock  equivalents,  stock options and stock deferral  units,  described  above,
under the Stock  Ownership Plan are counted  toward this target.  The guidelines
and the Stock  Ownership Plan are intended to further align the interests of the
Directors  and  shareholders.  (See  Item  12.  Security  Ownership  of  Certain
Beneficial Owners and Management on Page 73).
<PAGE>

                        COMPENSATION OF EXECUTIVE OFFICERS
                            Summary Compensation Table

     The following table provides  information  concerning  compensation paid to
the named executive officers for the past three years.
<TABLE>
                                                                      Long Term Compensation
                                             Annual Compensation        Awards     Payouts
Name and                                                              Securities    LTIP       All Other
Principal                                   Salary         Bonus      Underlying  Payouts(1) Compensation
Position                        Year         ($)            ($)       Options (#)    ($)          ($)
<S>                             <C>         <C>           <C>           <C>         <C>         <C>

Hugh G. Farrington              1999        460,000       263,097       27,026      372,896     26,248(2)
 President and                  1998        437,000       233,402       24,448       89,030     19,010
 Chief Executive Officer        1997        428,077       213,847       30,981      111,462      2,625

Ronald C. Hodge                 1999        291,046       166,184       10,811       99,702     17,952(3)
 Executive Vice President and   1998        242,277       128,881        9,310       21,192     11,333
 Chief Operating Officer        1997        203,846       101,779        8,717       24,060      2,625

Paul A. Fritzson                1999        249,600       142,740        9,369       90,851     15,888(4)
 Executive Vice President and   1998        218,723       116,651        9,985       20,353      9,812
 Chief Financial Officer        1997        203,846       101,779        6,256       23,931      2,625

Richard A. Anicetti             1999        239,200       136,841        9,369       89,839     15,465(4)
 Executive Vice President -     1998        221,877       118,285        8,235       20,460      9,945
 Southeast Operations           1997        203,846       101,779        6,256       23,926      6,000

Michael J. Strout               1999        221,000       126,415        8,304       81,219     13,438(6)
 Executive Vice President -     1998        196,661       104,888        7,240       18,508      8,798
 Human Resources & Information  1997        183,462        91,365        5,631       20,180      2,625
 Technology
</TABLE>

     (1) Reflects  payouts under the Long Term Incentive Plan for the three-year
award period ending in the stated year.
     (2)  Reflects  contributions  of $4,800  under the  qualified  Savings  and
Investment  Plan,  contributions  of $13,582 and  interest  of $7,866  under the
Nonqualified Savings and Investment Plan.
     (3)  Reflects  contributions  of $4,800  under the  qualified  Savings  and
Investment  Plan,  contributions  of $6,811  and  interest  of $6,341  under the
Nonqualified Savings and Investment Plan.
     (4)  Reflects  contributions  of $4,800  under the  qualified  Savings  and
Investment  Plan,  contributions  of $5,704  and  interest  of $5,384  under the
Nonqualified Savings and Investment Plan.
     (5)  Reflects  contributions  of $4,800  under the  qualified  Savings  and
Investment  Plan,  contributions  of $5,246  and  interest  of $5,419  under the
Nonqualified Savings and Investment Plan.
     (6)  Reflects  contributions  of $4,800  under the  qualified  Savings  and
Investment  Plan,  contributions  of $4,032  and  interest  of $4,606  under the
Nonqualified Savings and Investment Plan.
<PAGE>

                       Option Grants in Last Fiscal Year


     The  following  table  provides  information  on option grants to the named
executive officers during the past year. No stock  appreciation  rights ("SARs")
were granted during this period.
<TABLE>

                                        Individual Grants(1)

                        Number of
                        Securities     % of Total
                        Underlying      Options
                         Options       Granted to     Exercise or                     Grant Date
                         Granted      Employees in    Base Price     Expiration        Present
       Name                (#)        Fiscal year      ($/Share)        Date           Value(2)
<S>                       <C>             <C>           <C>           <C>              <C>

Hugh G. Farrington        27,026          5.4%          $51.0625      05/19/09         $352,689
                             143(3)        .03%          71.875       05/13/01         $  1,747
                           1,340(3)        .27%          71.875       05/14/02         $ 16,442

Ronald C. Hodge           10,811          2.2%           51.0625      05/19/09          141,084

Paul A. Fritzson           9,369          1.9%           51.0625      05/19/09          122,265

Richard A. Anicetti        9,369          1.9%           51.0625      05/19/09          122,265

Michael J. Strout          8,304          1.7%           51.0625      05/19/09          108,367
                           2,010(3)        .40%          45.625       05/24/05           17,125
</TABLE>


     (1) All options  were  granted  under the 1998 Stock Plan at 100% of market
price at the date of grant.  All options  (other than reload  options) are fully
exercisable  three years after grant (with one- third becoming  exercisable each
year after  grant).  The  exercise  price may be paid in cash or by surrender of
currently owned Common Stock (valued at 100% of market price). Payment in shares
entitles the holder to a "reload" option for that number of shares.  Each reload
option generally  becomes  exercisable one year after grant and carries the same
expiration date as the original option.
     (2) Computed under the  Black-Scholes  method based on one-half of the full
stated option term. For options  expiring  5/19/09,  assumes an interest rate of
5.68%,  annual  dividend  yield of 1.42% and  volatility  of 20.67%.  For reload
options  expiring  5/13/01,  assumes an interest rate of 5.76%,  annual dividend
yield of 1.31% and volatility of 24.02%;  reloads expiring  5/14/02,  assumes an
interest rate of 5.84%,  annual dividend yield of 1.31% and volatility of 24.02%
and reloads expiring 5/24/05, assumes an interest rate of 5.39%, annual dividend
yield of 1.43% and volatility of 20.62%.
     (3) Reload option granted upon exercise of the underlying  option through a
surrender of Common Stock. See note (1) above.
<PAGE>

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



     The following table provides  information on option  exercises by the named
executive  officers  during  the  past  year  and the  value  of such  officers'
unexercised  options at January 1, 2000,  the last day of the  Company's  fiscal
year. No SARs were outstanding during this period.

<TABLE>

                                                        Number of                  Value of
                                                   Securities Underlying         Unexercised
                                        Value      Unexercised Options          In-the-Money
                  Shares Acquired on  Realized        At FY-End (#)         Options at FY-End (2)($)
      Name           Exercise (#)      (1)($)  Exercisable  Unexercisable  Exercisable Unexercisable
<S>                      <C>           <C>       <C>            <C>         <C>         <C>

Hugh G. Farrington       4,738         233,885   158,641        53,904      6,414,065   1,210,115
Ronald C. Hodge              0               0    38,226        49,873      1,380,190   1,555,202
Paul A. Fritzson             0               0    40,459        47,595      1,537,585   1,508,299
Richard A. Anicetti      1,199          32,673    39,817        47,715      1,590,514   1,511,254
Michael J. Strout            0               0    20,561        17,017        669,003     383,109

</TABLE>

     (1) Amounts in this column  reflect the market price of the Common Stock at
the date of exercise, minus the exercise price of the option.
     (2) Amounts in this column  reflect the market price of the Common Stock on
December 31, 1999 ($69.3125 per share),  minus the exercise price of the option.
All options were granted at 100% of market price on the date of grant.  The term
"in-the-money" refers to options having an exercise price less than the year-end
market price.

<PAGE>


               Long Term Incentive Plan - Awards in Last Fiscal Year

     The following  table provides  information  on long term  incentive  awards
granted to the named executive officers.  All awards were granted under the 1993
Long Term Incentive Plan and cover the three-year  performance  period beginning
in 1999.

<TABLE>
                                                                 Estimated Future Payouts
                    Number of Shares,    Performance or      Under Non-Stock Price-Based Plans
                     Units or Other       Other Period
                      Rights(1)(#)           Until       Threshold(2)    Target(2)     Maximum(2)
                                         Maturation or       ($)            ($)           ($)
                                            Payout
<S>                   <C>                  <C>             <C>             <C>           <C>

Hugh G. Farrington    16.67% of Cash         Fiscal        118,488         359,056       538,584
                       Compensation        1999-2001

Ronald C. Hodge         8% of Cash           Fiscal         36,730         111,303       166,955
                       Compensation        1999-2001

Paul A. Fritzson        8% of Cash           Fiscal         31,728          96,146       144,219
                       Compensation        1999-2001

Richard A. Anicetti     8% of Cash           Fiscal         29,569          89,602       134,404
                       Compensation        1999-2001

Michael J. Strout       8% of Cash           Fiscal         28,075          85,076       127,614
                       Compensation        1999-2001

</TABLE>



     (1) The Plan provides for a "basic  award" equal to a specified  percentage
of the executive  officer's  salary and annual incentive  compensation  over the
three-year award period (Fiscal 1999-2001). The "actual award" subject to payout
is based on  after-tax  cumulative  earnings  per share  (EPS)  growth  over the
three-year period.
     (2) "Threshold",  "target" and "maximum" refer, respectively,  to 33%, 100%
and 150% of the basic award.  The target amount will be paid if the targeted EPS
growth is achieved. The threshold amount will be paid upon achievement of 67% of
the targeted EPS growth.  The maximum  amount will be paid upon  achievement  of
125% of the targeted EPS growth.  Since the actual award is a function of future
compensation  paid over three  years,  the amount of a  potential  award  cannot
presently be  determined.  The amounts set forth are for  illustrative  purposes
only and are computed on the  assumptions  that (i) cash  compensation  for each
officer  during the award  period  increases by 4% per year and (ii) the Company
meets the relevant  performance goal. The Human Resources Committee may decrease
an executive  officer's  payout if it determines  his or her  performance  to be
inconsistent with the amount of the award.

<PAGE>



                                 Pension Plan

     Under the Retirement Plan, renamed the Cash Balance Plan, effective January
1, 1998,  benefits are expressed as cash balance  accounts.  The conversion to a
cash balance design included an adjustment for participants who have fewer years
to accrue future benefits under the cash balance formula.  The Cash Balance Plan
provides each month for (i) a contribution credit equal to 3% of a participant's
base  compensation  for the month,  and (ii) an interest  credit at the one year
U.S.  Treasury bill rate as of October of the preceding year, plus 1/2 of 1%, on
the beginning account balance for the month. For the 1999 plan year the interest
rate was 4.68%.  Plan benefits are payable in a lump sum or as a monthly pension
of equivalent actuarial value.

     The following table sets forth aggregate  estimated annual benefits payable
to the named executive officers under the Cash Balance Plan and the Supplemental
Executive  Retirement Plan. The table reflects benefits accrued through 1999 and
payable at the normal retirement age of 65 in the form of a single life annuity.
The Supplemental Executive Retirement Plan provides a contribution credit and an
interest  credit,  like those provided in the  tax-qualified  Cash Balance Plan,
that are based on  compensation  not taken into  account  under the Cash Balance
Plan because of Internal Revenue Code requirements for tax-qualified plans.

       NAME                             ESTIMATED ANNUAL BENEFIT

   Hugh G. Farrington                           $175,860
   Ronald C. Hodge                                39,870
   Richard A. Anicetti                            20,941
   Paul A. Fritzson                               42,167
   Michael J. Strout                              12,243




<PAGE>


                    Other Contracts with Executive Officers

    Set forth below is a summary of other employment-related contracts with
the executive officers named in the Summary Compensation Table.

Employment Continuity Agreements

     The Company has  Employment  Continuity  Agreements  with each of the named
executive   officers.   The  agreements  provide  for  severance  benefits  upon
termination of employment  within two years after a "change in control",  unless
the termination is "for cause," or is voluntary  without "good reason," as those
terms are defined in the agreements.

     The severance benefit for Mr.  Farrington  includes a cash payment equal to
three times his base salary and annual incentive award, continuation of employee
benefits for 36 months,  and an additional  36 months of employer  contributions
under  the  Nonqualified  Savings  and  Investment  Plan  and  the  Supplemental
Executive  Retirement Plan. The severance  benefit for the other named executive
officers  includes a cash payment equal to two times the  officer's  base salary
and annual incentive award, continuation of employee benefits for 24 months, and
an additional 24 months of employer contributions under the Nonqualified Savings
and  Investment  Plan  and  the  Supplemental  Executive  Retirement  Plan.  The
severance  benefit also  includes  acceleration  of payments  under the Deferred
Compensation  Plan,  payment of awards  earned under the Annual  Incentive  Plan
prior to  termination,  and such  benefits and rights as are provided  under the
Company's Long Term Incentive Plan and stock plans.

     Upon the  occurrence  of a change in  control,  the  Company is required to
place  sufficient  assets in a separate  trust to secure the payment of benefits
under  the  Employment  Continuity  Agreements,  the  Nonqualified  Savings  and
Investment Plan and the  Supplemental  Executive  Retirement  Plan.  These trust
assets will,  however,  remain  subject to the claims of other  creditors of the
Company.  If and to the extent that trust  assets are  insufficient  to meet the
Company's  obligations  under the  agreements  and plans,  the  Company  will be
required to pay such  benefits  from its general  assets.  In February  2000 the
shareholders of Hannaford approved the proposed merger transaction with Delhaize
America, Inc. Such approval constitutes a "change in control" event for purposes
of these arrangements, and obligates Hannaford to fund the trust.



<PAGE>


            HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Compensation Philosophy

Compensation should be:

- Aligned with the Company's business strategies and shareholder interests.

- Based on performance by the Company, the business unit (where
  applicable), and the individual.

- Competitive in the marketplace in which the Company competes for
  executives.

- Based on the same principles that apply to other salaried associates,
  except that executives should have a greater portion of their
  compensation at risk.

Therefore:

- A significant portion of compensation for executives is tied to measures
  of performance of the business as a whole.

- Executive compensation is tied to both short and long-term business
  results.  In addition to rewards for annual results, executives are
  rewarded for achieving sustained long-term results.

- The interests of executives are linked to those of shareholders through
  Company stock ownership and options.  The Company has established stock
  ownership guidelines for executives as a multiple of salary depending on
  position (CEO: 5; Executive Vice President and Senior Vice President: 3;
  Vice President: 2).

In addition:

- Special benefits and perquisites for executives are minimized and based
  on business necessity.

- The income tax deductibility of executive compensation is preserved to
  the extent consistent with the Company's compensation philosophy.

<PAGE>

Compensation Structure

     Executive pay consists of base salary, annual incentives, stock options and
other long-term incentives,  and benefits. If the Company achieves its short and
long-term goals,  long-term  incentive plan awards and stock options account for
fifty  percent of total  compensation  for the CEO,  and forty  percent of total
compensation for other senior officers.

     Salary. Salary ranges for each position reflect the skills required and the
scope  of  responsibility  for the  position.  Salary  increases  are  based  on
individual  performance  and  competitive  data.  Overall,  1999  salary  levels
corresponded to approximately the median level of surveyed companies. The salary
of the CEO is below median because a greater portion of his compensation is paid
through performance-based awards.

     Annual Incentive Plan. If the Company  achieves an annual  performance goal
based on profit  objectives  set by the Board of Directors,  executives  receive
target awards equal to 50% of their salary.  Actual award payments range from 0%
to 125% of the targeted amount, depending on Company performance.  No awards are
earned  unless  the  Company  attains  at  least  85%  of the  performance  goal
(representing 94% of its annual profit objective for 1999). The Board may adjust
the amount awarded to any executive to reflect  individual  performance,  but no
such adjustment has been made for the last three fiscal years.

     Stock Options. Executives receive stock options each year entitling them to
purchase  shares of Hannaford  stock at an option price equal to the fair market
value of the  stock  on the date of  grant.  The  number  of  shares  that  each
executive may purchase  pursuant to the option is determined by multiplying  the
executive's salary by a percentage (CEO: 300%;  Executive Vice President:  200%;
Senior Vice President:  150%; and Vice President:  100% - 150%) and dividing the
result by the market price of the stock on the date of grant.

     Long Term  Incentive  Plan.  The Long Term  Incentive  Plan rewards  senior
executives  for  sustained  growth in earnings per share (EPS) over a designated
three-year  period.  Actual  award  payments  vary from 0% to 150% of the "basic
award" depending on the Company's  growth in EPS relative to performance  goals.
The basic award is expressed as a percentage of salary and incentive pay for the
three-year  period  (CEO:  16.67%;  Executive  Vice  President  and Senior  Vice
President:  8%; Vice President:  4.5 - 8%). Executives  generally receive 50% of
their award in Company stock which must be held for at least two years,  and the
remainder  in cash to meet  tax  withholding  requirements.  Due to the  pending
merger with Delhaize America, payouts in 2000 will be made entirely in cash. The
Committee may adjust any executive's payout if their performance is inconsistent
with the amount of the award,  but no such adjustment has been made for the last
three fiscal years.

     Retirement  Plans.  Because  current  law  limits the  retirement  benefits
payable  to  executives  from  tax-qualified  plans,  the  Company  maintains  a
nonqualified  Supplemental  Executive Retirement Plan and a Nonqualified Savings
and Investment Plan in addition to the  tax-qualified  pension and 401(k) plans.
The combined benefits from these plans equal the amount that would be payable to
executives under the tax-qualified plans if no tax law limits were in place.

     Other  Benefit  Plans.  Executives  may  participate  in a number  of other
broad-based  benefit  plans,  including  the Employee  Stock  Purchase  Plan and
various health and welfare benefit plans.

Compensation of CEO in 1999

     Salary.  Hugh G.  Farrington,  CEO,  received a 5.26% increase in salary to
$460,000 per year, effective January 1, 1999. The increase was based on:


      - his performance

      - the desired mix of salary, short-term and long-term compensation

      - a review of competitive data.


     Annual  Incentive Plan.  Because the Company  achieved 105.5% of its annual
profit objective in 1999, Mr. Farrington, like other senior executives, received
114.5% of the target award ($263,097), equal to 57.1% of his 1999 salary.



     Long Term Incentive  Plan.  The Company's  growth in earnings per share for
the period 1997-1999  entitled Mr. Farrington to a payout of 109.9% of the basic
award  ($372,896)  paid in cash.  Pursuant to its authority  under the Plan, the
Committee  determined  earnings  per share  without  regard  to a 1997  non-cash
impairment charge during the period arising under SFAS No. 121.

<PAGE>


     Mr.   Farrington's  basic  award  level  for  the  next  three-year  period
(2000-2002) is set at 16.67% of his salary and annual  incentive pay during that
period.

     Stock Option Plan. In 1999,  Mr.  Farrington  received a stock option grant
equal  to 300%  of his  salary,  entitling  him to  purchase  27,026  shares  of
Hannaford  stock at a price  equal to  market  price of the stock on the date of
grant.

Governance

     The  Human  Resources  Committee  of the  Board of  Directors  reviews  and
approves all  compensation  arrangements  for executives.  The Committee,  which
consists entirely of non-management  Directors,  retains independent consultants
for advice on  compensation  matters.  It also  considers  recommendations  from
management and the Board.


     Each year, the Committee reviews the Company's  compensation  practices and
the level of compensation of the Chief Executive Officer in light of the Board's
annual performance evaluation.



     The Committee sets compensation at levels appropriate to attract and retain
high-quality individuals.  For competitive reference, the Committee uses surveys
of  executive  compensation  at a variety  of food  industry  and  other  retail
companies,  as well as  comparisons  of pay levels and financial  performance at
companies included in the stock performance graph shown on page 72.



     As the Committee,  we believe the Company's  compensation  programs  during
1999 have met our objectives.

                                                 Respectfully submitted,


                                                 WILLIAM T. END, Chairman
                                                 ROBERT J. MURRAY
                                                 ROBERT L. STRICKLAND
<PAGE>


                           MARKET PRICE PERFORMANCE
                         OF THE COMPANY'S COMMON STOCK

     The following graph provides  information on the five-year cumulative total
return on Hannaford Bros. Co. Common Stock as compared to the S&P 500 Index, and
an index consisting of retail food and grocery companies having shares listed on
a national securities exchange.



                                 DATA POINTS

                          1994     1995     1996     1997     1998    1999

Hannaford Bros. Co.        100       99      138      179      221     293
S&P 500                    100      138      169      226      290     351
Retail Food/Grocery        100      132      166      224      337     209



     Assumes $100  invested on December 31, 1993 in Hannaford  Bros.  Co. Common
Stock, the S&P 500 Index, and a retail food and grocery index, with reinvestment
of all dividends.

    The retail food and grocery index includes the following companies:

     Albertson's, Inc.                 Marsh Supermarkets, Inc.
     Eagle Food Centers, Inc.          Penn Traffic Company
     Delhaize America, Inc.            Ruddick Corporation
     Great Atlantic & Pacific Tea Co.  Safeway, Inc.
     Hannaford Bros. Co.               Weis Markets, Inc.
     Ingles Markets, Inc.              Winn Dixie Stores, Inc.
     Kroger Company

     The list of  companies  included in the retail  food and grocery  index was
revised this year.  American  Stores,  Inc.,  and Fred Meyer,  Inc.,  which were
previously included in the index, are no longer publicly traded companies.

     For purposes of computing  this index,  the returns of the  companies  have
been weighted according to their respective stock market capitalizations.
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Each of the  following  were  beneficial  holders  of  more  than 5% of the
outstanding  Common  Stock of the  Company at the close of  business on March 1,
2000.  Unless  indicated  to the  contrary,  the  persons  or  parties  shown as
beneficial  holders  have the sole power to vote and dispose of the shares shown
as owned by them.
                                            Amount and
                                            Nature of
      Name and Address                      Beneficial            Percent
    of Beneficial Holder                    Ownership             of Class

Sobey Parties(1)                             10,835,921              25.4
115 King Street
Stellarton, Nova Scotia, Canada B0K 1S0


(1) The Sobey Parties include Donald R. Sobey, David F. Sobey, the Estate
    of William M. Sobey, Empire Company Limited, E.C.L. Investments Limited,
    the Pension Plan for Employees of Sobeys Inc., the Deferred Profit
    Sharing Plan for Eligible Employees of Sobeys Inc. and Pauljan Limited.
    Information regarding ownership by the Sobey Parties is given in
    reliance on their latest Schedule 13D filing, made on or about August
    20, 1999, with the Securities and Exchange Commission.

<PAGE>

     The following table sets forth the beneficial  ownership of Common Stock by
each Director,  the other executive  officers named in the Summary  Compensation
Table on page , and all  Directors  and  executive  officers of the Company as a
group,  at the close of business  on  February  11,  2000.  Except as  otherwise
indicated, each person owns less than 1% of the outstanding Common Stock.

                                         SHARES OF
                                        COMMON STOCK             PERCENT OF
         NAME                        BENEFICIALLY OWNED            CLASS
Directors

    Robert D. Bolinder                     15,312(1)

    William T. End                          7,230(2)

    Hugh G. Farrington                    430,102(3)

    Richard K. Lochridge                    9,267(4)

    Renee M. Love                           5,312(5)

    Claudine B. Malone                      1,917

    Robert J. Murray                        5,162(6)

    Dr. Walter J. Salmon                  135,560(7)

    John Robert Sobey                           0(8)

    David F. Sobey                     10,835,921(9)                 25.4

    Robert L. Strickland                    3,000

    Robert J. Tarr, Jr.                     9,000(10)

Other Named Executive Officers

    Richard A. Anicetti                    94,072(11)

    Paul A. Fritzson                       98,474(12)

    Ronald C. Hodge                        97,351(13)

    Michael J. Strout                      41,848(14)

All Executive Officers and Directors
   as a Group                           11,837,958(15)              27.7
<PAGE>


 (1) Includes 5,312 shares that Mr. Bolinder has the right to acquire
     within 60 days by exercise of stock options.

 (2) Includes 3,830 shares that Mr. End has the right to acquire
     within 60 days by exercise of stock options.

 (3) Includes 23,366 shares owned by Mr. Farrington's wife.  Also includes
     212,545 shares that Mr. Farrington has the right to acquire within 60
     days by exercise of stock options.

 (4) Includes 6,267 shares that Mr. Lochridge has the right to acquire
     within 60 days by exercise of stock options.

 (5) Includes 5,312 shares that Ms. Love has the right to acquire within
     60 days by exercise of stock options.

 (6) Includes 3,162 shares that Mr. Murray has the right to acquire within
     60 days by exercise of stock options.

 (7) Includes 1,500 shares owned by Dr. Salmon's wife.

 (8) John Robert Sobey, because of business and family relationships, may be
     deemed to be the beneficial owner of some or all of 10,835,921 shares
     of Hannaford Common Stock held by the Sobey Parties.  John Robert Sobey
     expressly disclaims any beneficial ownership.

 (9) David F. Sobey, because of business and family relationships, may be
     deemed to be the beneficial owner of some or all of 10,835,921 shares
     of Hannaford Common Stock held by the Sobey Parties.  David F. Sobey
     expressly disclaims beneficial ownership of all except 36,110 of said
     shares.

(10) Includes 1,500 shares held in a family charitable trust.

(11) Includes 87,532 shares that Mr. Anicetti has the right to acquire
     within 60 days by exercise of stock options.

(12) Includes 88,054 shares that Mr. Fritzson has the right to acquire
     within 60 days by exercise of stock options.

(13) Includes 75,359 shares that Mr. Hodge has the right to acquire within
     60 days by exercise of stock options.

(14) Includes 37,578 shares that Mr. Strout has the right to acquire
     within 60 days by exercise of stock options.

(15) Includes 26,066 shares held by immediate family members.  Also includes
     591,690 shares which may be acquired within 60 days by exercise of
     stock options.

<PAGE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Agreement with Sobey Parties

     Between  September 16, 1981 and August 20, 1999,  the Company and the Sobey
Parties were parties to an agreement  (the  "Standstill  Agreement"),  which was
amended and extended from time to time.

     Under the Standstill  Agreement as amended and extended,  the Sobey Parties
agreed not to increase their percentage  ownership of the Company's voting stock
above a level  of  approximately  25.6% of the  outstanding  shares,  except  in
certain circumstances  specified by the Standstill Agreement.  The Sobey Parties
also  agreed that they would not  purchase  any shares of the  Company's  voting
stock except as  contemplated  by the  Standstill  Agreement,  engage in a proxy
contest relating to election of the Company's directors or certain other matters
or enter into a voting trust  agreement for the purpose of acquiring  control of
the Company.  In addition,  the Sobey Parties were  restricted in their right to
sell shares of the Company's voting stock owned by them.

     Under the  Standstill  Agreement,  the Sobey Parties had certain  rights to
purchase  securities from the Company to maintain their percentage  ownership of
the  Company's  voting  stock and to  maintain  specified  percentage  ownership
margins  between  their  percentage  ownership  and  that  of the  next  largest
shareholder.  The  Company  also  agreed  to use its best  efforts  to cause two
nominees of the Sobey  Parties to be elected as  Directors of the Company and to
place one nominee of the Sobey Parties on the Executive  Committee of the Board.
Presently,  David F. Sobey and John  Robert  Sobey  serve as the Sobey  Parties'
designees  on the Board  and David F.  Sobey as the  designee  on the  Executive
Committee.

     On August 20, 1999,  the  Standstill  Agreement was terminated by the Sobey
Parties in accordance with its terms following Board approval of the merger with
Delhaize America, Inc. The Agreement is no longer in effect.

<PAGE>


                                   Part IV

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

The following documents are filed as a part of this report:

(a) 1., 2.  Consolidated Financial Statements and Related
            Schedules                                                  PAGES

    Report of Independent Accountants.............................       25

    Consolidated Balance Sheets - January 1, 2000 and
       January 2, 1999............................................     26-27

    Consolidated Statements of Earnings - Fiscal Years Ended,
       Janaury 1, 2000, January 2, 1999 and January 3, 1998.......       28

    Consolidated Statements of Changes in Shareholders'
       Equity - Fiscal Years Ended, January 1, 2000,
       January 2, 1999 and January 3, 1998........................       29

    Consolidated Statements of Cash Flows
       - Fiscal Years Ended, January 1, 2000,
       January 2, 1999 and January 3, 1998........................     30-31

    Notes to Consolidated Financial Statements....................     32-52


Schedules I, II, III and IV are not included as they are not applicable.

3. Exhibits Required by Item 601 of Regulation S-K
                                                               SEQUENTIAL
                                                              PAGE NUMBER
                                                            IN ORIGINAL 10-K

   3.1 - Articles of Incorporation
         Incorporated by reference to Exhibit 3.1 to the
         Registrant's Annual Report on Form 10-K for the
         fiscal year ended January 2, 1999 (SEC File
         No. 1-7603).

   3.2 - By-Laws of the Registrant
         Incorporated by reference to Exhibit 3.2 to the
         Registrant's Current Report on Form 8-K, filed
         June 17, 1999 (SEC File No. 1-7603).
<PAGE>


                                                                       PAGES

  4.1 -  Instruments Defining the Rights of                     Included in
         Security Holders                                        Exhibit 3

  4.2 -  There are incorporated herein by reference a (i) Rights
         Agreement dated as of February 4, 1998 between the
         Registrant and Continental Stock Transfer & Trust Company,
         as Rights Agent, a copy of which was filed as Exhibit 4.1
         to the Registrant's Registration Statement on Form 8-A,
         dated January 23, 1998 (SEC File No. 1-7603).

 10.1  - There is incorporated herein by reference an Agreement and
         Plan of Merger, dated as of August 17, 1999, among Food Lion,
         Inc., Hannaford Bros. Co. and FL Acquisition Sub, Inc., a copy
         of which was filed as Exhibit 2.1 to the Registrant's Current
         Report on Form 8-K, filed August 19, 1999 (SEC File No. 1-7603).

 10.2  - There are incorporated herein by reference (i) an Amended
         and Restated Agreement, dated as of February 4, 1988, among
         the Registrant and various Sobey Parties, a copy of which
         was filed as Exhibit 1 to the Registrant's Current Report on
         Form 8-K, dated February 16, 1988 (SEC File No. 1-7603);
         (ii) an Amendment Agreement dated as of January 1, 1992 to
         said Agreement with the Sobey Parties, substituting certain
         Sobeys Inc. employee benefit plans as parties thereto, a
         copy of which was filed as Exhibit 10.2 to the Registrant's
         Annual Report on Form 10-K for the fiscal year ended January
         2, 1993 (SEC File No. 1-7603) and (iii) a Second Amendment
         Agreement dated as of May 14, 1996, which extends the term of
         the agreement and makes other technical changes, a copy of
         which was filed as Exhibit 1 to the Registrant's current report
         on Form 8-K, dated May 14, 1996 (SEC File No. 1-7603).

10.3  - There are incorporated herein by reference (i) the Hannaford Cash
        Balance Plan, a copy of which was filed as Exhibit 10.3 to the
        Registrant's Annual Report on Form 10-K for the fiscal year
        ended January 2, 1999 (SEC File No. 1-7603) and (ii) the
        First Amendment to the Hannaford Cash Balance Plan, a copy of
        which was filed as Exhibit 10.1 to the Registrant's Quarterly
        Report on Form 10-Q for the fiscal quarter ended July 4, 1998
        (SEC File NO. 1-7603).

  NOTE:  Compensatory plans and arrangements and management contracts are
  filed as Exhibits 10.3 through 10.34 below.
<PAGE>

                                                                       PAGES

 10.4 - Proposed Amendment to the Hannaford Cash Balance Plan,
        submitted to the Internal Revenue Service for approval.         85

 10.5 - The Second Amendment to The Hannaford Cash Balance Plan.       86-87

 10.6 - Third Amendment to the Hannaford Cash Balance Plan.             88

 10.7 - There are incorporated herein by reference (i) the amended and
        restated Supplemental Executive Retirement Plan, a copy of
        which was filed as Exhibit 10.5 to the Registrant's Annual
        Report on Form 10-K for the fiscal year ended January 2,
        1993 (SEC File No. 1-7603); (ii) the First Amendment to said
        Plan, a copy of which was filed as Exhibit 10.5 to the
        Registrant's Annual Report on Form 10-K for the fiscal
        year ended December 31, 1994 (SEC File No. 1-7603) and (iii)
        the Second Amendment to said Plan, a copy of which was filed
        as Exhibit 10.4 to the Registrant's Quarterly Report on Form
        10-Q for the fiscal quarter ended September 30, 1995 (SEC
        File No. 1-7603).

 10.8 - There is incorporated herein by reference the Hannaford Bros. Co.
        Supplemental Executive Retirement Plan, effective January 1, 1998,
        a copy of which was filed as Exhibit 10.6 to the Registrant's Annual
        Report on Form 10-K for the fiscal year ended January 2, 1999
        (SEC File No. 1-7603).

10.9 - There are incorporated herein by reference (i) the Amended
        and Restated Hannaford Bros. Co. Employee Stock Purchase
        Plan, a copy of which was filed as Exhibit 10.6 to the
        Registrant's Annual Report on Form 10-K for the fiscal
        year ended December 31, 1994 (SEC File No. 1-7603); (ii)
        the First Amendment to said Plan, a copy of which was
        filed as Exhibit 10.1 to the Registrant's Quarterly Report
        on Form 10-Q for the fiscal quarter ended July 1, 1995
        (SEC File No. 1-7603); (iii) the Second Amendment to
        said Plan, a copy of which was filed as Exhibit 10.1
        to the Registrant's Quarterly Report on Form 10-Q for
        the fiscal quarter ended September 30, 1995 (SEC File
        No. 1-7603); (iv) the Third Amendment to said Plan,
        a copy of which was filed as Exhibit 10.1 to the
        Registrant's Quarterly Report on Form 10-Q for the fiscal
        quarter ended September 28, 1996 (SEC File No. 1-7603)
        and (v) the Fourth Amendment to said Plan, a copy of
        which was filed as Exhibit 10.6 to the Registrant's
        Annual Report on Form 10-K for the fiscal year ended
        December 28, 1996 (SEC File No. 1-7603).
<PAGE>


                                                                      PAGES

10.10 - There are incorporated herein by reference (i) the
        Registrant's 1993 Long Term Incentive Plan, a copy of
        which was filed as Exhibit 10.8 to the Registrant's
        Annual Report on Form 10-K for the fiscal year ended
        January 1, 1994 (SEC File No. 1-7603); (ii) the
        First Amendment to said Plan, a copy of which was
        filed as Exhibit 10.9 to the Registrant's Annual
        Report on Form 10-K for the fiscal year ended January
        1, 1994 (SEC File No. 1-7603); (iii) the Second
        Amendment to said Plan, a copy of which was filed as
        Exhibit 10.8 to the Registrant's Annual Report on
        Form 10-K for the fiscal year ended December 28, 1996
        (SEC File No. 1-7603) and (iv) the Third Amendment to
        said Plan, a copy of which was filed as Exhibit 10.8
        to the Registrant's Annual Report on Form 10-K for the
        fiscal year ended January 3, 1998 (SEC File No. 1-7603).

10.11 - There is incorporated herein by reference the Amended
        and Restated Hannaford Bros. Co. 1993 Long Term Incentive
        Plan, a copy of which was filed as Exhibit 10.9 to the
        Registrant's Annual Report on Form 10-K for the fiscal
        year ended January 3, 1998 (SEC File NO. 1-7603).

10.12 - There is incorporated herein by reference the Amended and
        Restated Hannaford Bros. Co. Annual Incentive Plan,
        effective December 7, 1995, a copy of which was filed as
        Exhibit 10.8 to the Registrant's Annual Report on Form 10-K
        for the fiscal year ended December 30, 1995 (SEC File
        No. 1-7603).

10.13 - There is incorporated herein by reference an Amended and
        Restated Employment Continuity Agreement between the
        Registrant and Hugh G. Farrington, a copy of which was
        filed as Exhibit 10.13 to the Registrant's Annual Report
        on Form 10-K for the fiscal year ended January 3, 1998
        (SEC File No. 1-7603).

10.14 - First Amendment to Amended and Restated Employment
        Continuity Agreement with Hugh G. Farrington.               89-90

10.15 - There is incorporated herein by reference an amended and
        restated standard form of Employment Continuity Agreement
        between the Registrant and various of its executive officers,
        a copy of which was filed as Exhibit 10.15 to the Registrant's
        Annual Report on Form 10-K for the fiscal year ended January
        3, 1998 (SEC File No. 1-7603).

<PAGE>


                                                                       PAGES

 10.16 - First Amendment to amended and restated standard form of
         Employment Continuity Agreement with various executive
         Officers.                                                     91-92

 10.17 - There is incorporated herein by reference a standard form
         Deferred Compensation Agreement available to outside
         directors of the Registrant, a copy of which was filed as
         Exhibit 10.2 to the Registrant's Annual Report on Form
         10-K for the fiscal year ended December 29, 1984 (SEC File
         No. 1-7603).

 10.18 - There is incorporated herein by reference the Hannaford Savings
         and Investment Plan, a copy of which was filed as Exhibit 10.16
         to the Registrant's Annual Report on Form 10-K, for the fiscal
         year ended January 2, 1999 (SEC File No. 1-7603).

 10.19 - Proposed First Amendment to the Hannaford Savings and
         Investment Plan, submitted to the Internal Revenue Service
         for approval.                                                 93-94

 10.20 - Second Amendment to the Hannaford Savings and Investment Plan.  95

 10.21 - Third Amendment to the Hannaford Savings and Investment Plan.   96

 10.22 - There is incorporated herein by reference the Hannaford
         Nonqualified Savings and Investment Plan, a copy of which
         was filed as Exhibit 10.5 to the Registrant's Quarterly
         Report on Form 10-Q for the fiscal quarter ended June 28,
         1997 (SEC File No. 1-7603).

 10.23 - First Amendment to the Hannaford Nonqualified Savings and
         Investment Plan.                                              97-98

 10.24 - There is incorporated herein by reference the Amended and
         Restated Hannaford Bros. Co. Deferred Compensation Plan for
         Officers, a copy of which was filed as Exhibit 10.1 to the
         Registrant's Quarterly Report on Form 10-Q for the fiscal
         quarter ended September 27, 1997 (SEC File No. 1-7603).

 10.25 - There is incorporated herein by reference a standard form
         of Deferred Compensation Agreement available to certain
         management employees, a copy of which was filed as Exhibit
         10.19 to the Registrant's Annual Report on Form 10-K for
         the fiscal year ended January 2, 1993 (SEC File No. 1-7603).

<PAGE>


                                                                      PAGES

 10.26 - There is incorporated herein by reference the Amended and
         Restated Hannaford Bros. Co. 1988 Stock Plan, a copy of
         which was filed as Exhibit 4.5 to the Registrant's
         Registration Statement on Form S-8, dated June 27, 1995 (SEC
         Registration No. 33-60655).

 10.27 - There is incorporated herein by reference the Hannaford Bros.
         Co. 1998 Stock Option Plan, a copy of which was filed as
         Exhibit 10.25 to the Registrant's Annual Report on Form 10-K
         for the fiscal year ended January 3, 1998 (SEC File No. 1-7603).

 10.28 - There is incorporated herein by reference the Hannaford Bros.
         Co. 1998 Restricted Stock Plan, a copy of which was filed as
         Exhibit 10.26 to the Registrant's Annual Report on Form 10-K
         for the fiscal year ended January 3, 1998 (SEC File No. 1-7603).

 10.29 - There is incorporated herein by reference (i) the Hannaford
         Bros. Co. Stock Ownership Plan for Outside Directors,
         approved by shareholders May 24, 1995 and effective
         January 1, 1996, a copy of which was filed as Exhibit 4.5
         to the Registrant's Registration Statement on Form S-8,
         dated June 27, 1995 (SEC Registration No. 33-60691) and
         (ii) the First Amendment to said Plan, a copy of which was
         filed as Exhibit 10.21 to the Registrant's Annual Report
         on Form 10-K for the fiscal year ended December 28, 1996
         (SEC File No. 1-7603).

 10.30 - Second Amendment to the Hannaford Bros. Co. Stock Ownership
         Plan for Outside Directors.                                  99-100

 10.31 - There is incorporated herein by reference a Letter
         Agreement between the Registrant and James J. Jermann, dated
         July 8, 1996, a copy of which was filed as Exhibit 10.1
         to the Registrant's Quarterly Report on Form 10-Q for the
         fiscal quarter ended June 29, 1996 (SEC File No. 1-7603).

 10.32 - There is incorporated herein by reference a Consulting and
         Non-Competition Agreement between the Registrant and Larry A.
         Plotkin, dated June 11, 1998, a copy of which was filed as
         Exhibit 10.2 to the Registrant's Quarterly Report on Form
         10-Q for the fiscal quarter ended July 4, 1998 (SEC File
         No. 1-7603).

<PAGE>


                                                                      PAGES

 10.33 - Trust under the Hannaford Nonqualified Deferred Compensation
         Plan and Employment Continuity Agreements, dated January 30,
         2000.                                                       101-115

 10.34 - First Amendment to the Trust under the Hannaford Nonqualified
         Deferred Compensation Plan and Employment Continuity
         Agreements, Dated January 31, 2000.                         116-118

 21    - Subsidiaries of the Registrant............................    119

 23    - Consent of Accountants....................................    120

 27    - Financial Data Schedule...................................    121

(b)      No reports on Form 8-K were filed during the last quarter of
         the period covered by this report.


<PAGE>

                                  SIGNATURES

     Pursuant to the  requirements of Section 13 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.

HANNAFORD BROS. CO.


 s/Paul A. Fritzson
Paul A. Fritzson
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
March 8, 2000

     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.


 s/Walter J. Salmon                                   s/William T. End
Walter J. Salmon         Robert D. Bolinder          William T. End
Chairman of the Board    Director                    Director
Director                 March  , 2000               March 8, 2000
March 8, 2000

                                                      s/Renee M. Love
 s/Paul A. Fritzson      Richard K. Lochridge        Renee M. Love
Paul A. Fritzson         Director                    Director
Exec. Vice President,    March   , 2000              March 8, 2000
Chief Financial Officer
(Principal Accounting Officer)
March 8, 2000

                          s/Claudine B. Malone        s/Robert J. Murray
                         Claudine B. Malone          Robert J. Murray
 s/Hugh G. Farrington    Director                    Director
Hugh G. Farrington       March 8, 2000               March 8, 2000
President
Chief Executive Officer
Director                  s/David F. Sobey            s/John R. Sobey
March 8, 2000            David F. Sobey              John R. Sobey
                         Director                    Director
                         March 8, 2000               March 8, 2000


 s/Robert L. Strickland   s/Robert J. Tarr, Jr.
Robert L. Strickland     Robert J. Tarr, Jr.
Director                 Director
March 8, 2000            March 8, 2000