<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

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

     For the fiscal year ended April 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 0-26602

                             THE GRAND UNION COMPANY
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                                                          <C>

                              Delaware                                                          22-1518276
----------------------------------------------------------------------       --------------------------------------------------
          (State or other jurisdiction of incorporation or                         (I.R.S. Employer Identification No.)
                                                          -
                            organization)


        201 Willowbrook Boulevard, Wayne, New Jersey                                            07470-0966
----------------------------------------------------------------------       --------------------------------------------------
              (Address of principal executive offices)                                          (Zip Code)


Registrant's telephone number, including area code                                            (973) 890-6000
                                                                             --------------------------------------------------

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

                         Title of each class                                     Name of each exchange on which registered
----------------------------------------------------------------------       --------------------------------------------------


                                None

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


Securities registered pursuant to Section 12 (g) of the Act:                          Common Stock, Par Value $0.01
                                                                             --------------------------------------------------
</TABLE>

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 requirements
for the past 90 days.
Yes     X          No
    ----------        ----------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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. [ ]

                              [Cover page 1 of 2]

<PAGE>

The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of June 26, 2000 approximately $16,871,000, based upon the closing
sales price of the Common Stock on the NASDAQ National Market on such date. For
the purpose of this calculation, all members of the Board of Directors are
presumed to be affiliates.

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes     X          No
                          ----------        ----------

As of June 26, 2000 there were issued and outstanding 29,992,098 shares, par
value $0.01 per share, of the registrant's Common Stock.

Documents Incorporated by Reference: The Proxy Statement for the 2000 Annual
Meeting of Shareholders has been incorporated by reference partially in Part III
hereof.

                              [Cover page 2 of 2]

<PAGE>


                             THE GRAND UNION COMPANY

                                    FORM 10-K
                        For the Year Ended April 1, 2000

                                      Index

<TABLE>
<CAPTION>
                                                                                                                    Page

                                Part I

<S>          <C>                                                                                                    <C>
Item 1.      Business...........................................................................................     1
Item 2.      Properties.........................................................................................     5
Item 3.      Legal Proceedings..................................................................................     6
Item 4.      Submission of Matters to a Vote of Security Holders................................................     7

                                Part II

Item 5.      Market for the Registrant's Common Stock and Related Stockholder Matters...........................     7
Item 6.      Selected Consolidated Financial Data...............................................................     8
Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations..............     8
Item 7A.     Quantitative and Qualitative Disclosures About Market Risk.........................................    12
Item 8.      Financial Statements and Supplementary Data........................................................    13
Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............    13

                                Part III

Item 10.     Directors and Executive Officers of the Registrant.................................................    13
Item 11.     Executive Compensation.............................................................................    13
Item 12.     Security Ownership of Certain Beneficial Owners and Management.....................................    13
Item 13.     Certain Relationships and Related Transactions.....................................................    13

                                Part IV

Item 14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K....................................    14
Signatures......................................................................................................    17

</TABLE>

                                       i

<PAGE>

     Other than historical information, statements in this report may be deemed
to be forward-looking statements within the meaning of the federal securities
laws. Actual results and the timing of certain events could differ materially
from those projected in the forward-looking statements due to a number of
factors, including those set forth in this report. See "Special Note Concerning
Forward-Looking Statements" in Part II of this report.

PART I

Item 1.  Business

General

     The Grand Union Company, a Delaware corporation ("Grand Union" or the
"Company"), is engaged in the retail food business. Grand Union operated 216
stores in six northeastern states averaging approximately 20,050 selling square
feet per store as of April 1, 2000. The selling square feet per store ranges
from 1,850 to 47,703. As of June 26, 2000, the Company operates 206 stores in
Connecticut, New Hampshire, New Jersey, New York, Pennsylvania and Vermont. On
March 24, 2000, the NASDAQ Listing Qualifications Panel advised the Company its
Common Stock no longer qualified for trading on the NASDAQ National Market and
would be delisted. The Company has appealed the decision and is seeking to
transfer the Common Stock to the NASDAQ SmallCap Market. In order to qualify for
listing on the NASDAQ SmallCap Market, the Company must satisfy all listing
criteria, including the $1 minimum bid price. The Company's appeal will be
considered by NASDAQ on July 27, 2000. Until a final determination is made, the
Company's Common Stock will remain on the NASDAQ National Market under the
ticker symbol "GUCO" as it has been since October 1, 1998.

     Since 1997, Grand Union has attempted to stabilize and improve its
operations in the critical areas of sales, margins, promotional income and
expense levels. These initiatives included numerous position eliminations and a
complete restaffing of senior management positions in 1997, 1998, and 2000,
organizational restructuring measures and reconfiguration of the Company into
three geographic operating areas. Grand Union is continuing its evaluation of
all strategic initiatives, including the identification of additional areas for
operating and administrative expense reduction, implementation of technological
efficiency and the pursuit of new marketing and merchandising activities, all of
which are designed to enhance the Company's image as a high-quality,
value-driven operator in the northeastern retail food industry.

Strategic Initiatives

     In recent years, results in the supermarket industry have been impacted by
slow population growth, increasing competitive activity and changing consumer
shopping and eating patterns. These factors, and others, are projected to lead
to essentially flat real supermarket sales growth over the next several years.

     Grand Union is in the process of exploring various strategic alternatives
to improve its financial performance, which may include asset sales, store
closings or a sale of the Company. The Company has retained Merrill Lynch & Co.
to provide investment banking advice and Alvarez & Marsal, Inc. to assist in the
development of a strategic business plan. The business plan is anticipated to
address all of the Company's operating locations and will assist in the creation
of strategies to assess both long-term and short-term objectives and goals. The
Company will continue to focus its operational efforts on identifying and
understanding the ongoing changes in consumer trends, thereby allowing consumer
preferences to be the drivers of change in Grand Union's offerings of services
and products. The Company continues to develop and evaluate new retailing
strategies that will respond to its customers' needs.

     On August 17, 1998 (the "Effective Date"), Grand Union consummated the 1998
Reorganization under Chapter 11 of the Bankruptcy Code (the "Reorganization")
pursuant to the August 5, 1998 Confirmation Order of the United States
Bankruptcy Court for the District of New Jersey. As a result of the 1998
Reorganization, the Company substantially improved its liquidity, significantly
reduced its debt and interest expense, and entered into a $300 million credit
agreement (see "The 1998 Reorganization" below). The substantial reduction of
debt and the availability of new funds enabled Grand Union to reorganize and to
commence a capital expenditure program intended to enhance its operations,
profitability and competitiveness of the Company. In order to maximize
liquidity, the Company has reduced its capital expenditure program.

     EACH OF THE FOREGOING STRATEGIC INITIATIVES ARE FORWARD-LOOKING AND INVOLVE
RISKS AND UNCERTAINTIES. THERE CAN BE NO ASSURANCE THAT ANY OF THE STRATEGIC
INITIATIVES WILL IMPROVE THE FINANCIAL PERFORMANCE OF THE COMPANY.

                                       1

<PAGE>

Store Formats and Locations; Competition

     Grand Union's store sizes and formats vary depending upon the demographics,
competitive conditions and real estate availability in each location in which it
operates. The Company's supermarkets offer a wide selection of national brand
and private label grocery and general merchandise products as well as
high-quality perishables and service departments. The majority of Grand Union's
sales are generated from stores which include high-margin specialty and service
departments. Selected locations feature in-store cafes and pharmacies. Liquor,
beer and wine departments are included in many locations, subject to the
limitations of state and local laws. Grand Union's supermarkets range in size
from 7,300 to 69,000 gross square feet.

     Subsequent to April 1, 2000, the Company opened one and closed eleven
stores. As of June 26, 2000, Grand Union operates 206 stores in six states,
including 112 in New York, 33 in Vermont, 42 in New Jersey, 14 in Connecticut, 3
in New Hampshire and 2 in Pennsylvania.

     The food retailing business is highly competitive. Grand Union competes
with numerous national, regional and local supermarket chains. Grand Union also
competes with convenience stores, stores owned and operated or otherwise
affiliated with large food wholesalers, unaffiliated independent food stores,
warehouse/merchandise clubs, discount drugstore chains and discount general
merchandise chains. Some of the Company's competitors have greater financial
resources than Grand Union has and could use those resources to take steps which
would adversely affect the Company's competitive position.

     In upstate New York, Grand Union generally operates in small cities and
rural communities. The Company's main competitors are Price Chopper and
Hannaford. Commercial development in areas north of Albany, New York is limited
and constrained by zoning and environmental restrictions, particularly in areas
regulated by the Adirondack Park Commission. In the more urban Albany area,
Price Chopper and Hannaford have each opened a number of new stores in the last
five years, which are generally larger than the Company's stores.

     In the Mid-Hudson Valley area of New York, the Company's principal
competitors are Big V Supermarkets Inc. (a member of the Wakefern ("ShopRite")
cooperative), Price Chopper, Hannaford and A&P. Continuing weak economic
conditions in the Mid-Hudson Valley have constrained business in recent years.
In addition, the Company's results in this region have been adversely affected
by recent competitive store openings.

     In Vermont, Grand Union's principal competitors are Price Chopper and
Hannaford. Based on its information, Grand Union maintains the largest market
share in Vermont. Zoning and environmental regulations in the state restrict
commercial development, including supermarkets which might be competitors of the
Company.

     A number of the Company's stores in upstate New York and Vermont are in
resort areas. These generally experience significant increases in sales in the
summer months and in some cases during the winter ski season.

     The Company's stores in metropolitan New York, Connecticut and New Jersey
serve densely populated communities with demographics particularly well suited
for store formats emphasizing specialty departments. Accordingly, the sales mix
in these stores includes a larger percentage of higher margin perishable items.
In addition, the high population density as well as the geographic concentration
of stores provide substantial economy of scale opportunities. Some of the
Company's stores in these areas, as in upstate New York and Vermont, experience
increased sales during the summer months.

     In New Jersey, the Company competes primarily against A&P, Pathmark,
Edwards, ShopRite and various other supermarkets. In Westchester, Orange,
Rockland, Dutchess and Putnam Counties in New York, the Company generally
competes with A&P, Edwards and ShopRite. On Long Island, the Company's principal
competitors include A&P, Waldbaums (division of A&P), Pathmark, ShopRite, King
Kullen and Edwards. Grand Union's main competitors in Fairfield County,
Connecticut include Stop & Shop and A&P. It has been publicly announced that the
Edwards stores noted above converted to the Stop & Shop banner.

Distribution and Supply

     The majority of Grand Union's merchandise is distributed to Grand Union
stores by C&S Wholesale Grocers, Inc. ("C&S") pursuant to several supply and
distribution agreements. Under the agreements, C&S supplies grocery products
from its own warehouses, and health and beauty care and general merchandise
products from Grand Union's Montgomery, New York warehouse. On September 24,
1999, the Company signed a term sheet (the "C&S Term Sheet") extending its
primary supply agreement with C&S and modifying certain terms. The C&S Term
Sheet provides for

                                       2

<PAGE>

substantial monetary penalties in the event the Company is sold or closes
stores, and such closed or sold stores are not thereafter supplied by C&S. The
expiration date of the agreement was extended until September 24, 2014, and the
parties are drafting a final agreement. Grand Union also contracts with a third
party for frozen food distribution, however, that agreement terminates by its
terms in April 2001, and C&S will assume such work. Management believes that
Grand Union's existing agreements with C&S enhance the Company's ability to
offer consistently fresh and high-quality products to its customers at
competitive prices. Grand Union operates a 20,000 square foot commissary located
in Newburgh, New York, in which high quality cooked meat products, salads, salad
ingredients and soups are prepared for sale in the delicatessen departments of
the Company's stores.

Selected Data

     The table below sets forth certain statistical information with respect to
Grand Union retail stores for the past three years.

<TABLE>
<CAPTION>

                                                                     Fiscal           Fiscal            Fiscal
                                                                      2000             1999              1998
                                                                ----------------- ----------------- -----------------
<S>                                                             <C>               <C>               <C>
Number of stores (at end of year)                                      216              217                222
Total selling square feet at end of year (in thousands)              4,331            4,293              4,353
Average sales per selling square foot per week                  $     9.79        $   10.05         $    10.07

</TABLE>

Capital Investment

     The Company's capital spending since the 1998 Reorganization has been
focused on renovating and upgrading existing Grand Union stores and opening new
and replacement stores in existing marketing areas. Cash capital expenditures
for the fiscal year ended April 1, 2000 ("Fiscal 2000"), 33 weeks ended April 3,
1999, the 20 weeks ended August 15, 1998, and the fiscal year ended March 28,
1998 ("Fiscal 1998") were approximately $66.3 million, $20.9 million, $3.4
million, and $39.7 million, respectively, excluding capital lease additions of
$1.6 million, $7.6 million, $0, and $21.7 million, respectively. In order to
maximize liquidity, the Company has reduced the capital expenditure program. See
Item 6 for information concerning the methodology utilized to report the
Company's operating results before and after the 1998 Reorganization.

Information Technology

     Financial, purchasing and operating system requirements are supported
through a central computer system located in Wayne, New Jersey. As of April 1,
2000, Grand Union utilized scanning systems in 188 stores (representing
approximately 95% of total sales).

Employees

     As of April 1, 2000, Grand Union had approximately 13,600 employees, of
whom approximately 67% were employed on a part-time basis. Approximately 55% of
Grand Union's employees are covered by 12 collective bargaining agreements with
various local unions.

     In October 1999, the Company entered into a successor labor agreement with
United Food and Commercial Workers Local 342-50 covering approximately 275 meat,
seafood, deli and Taste Place employees in 15 of the Company's stores in Queens,
Nassau and Suffolk counties in New York. That agreement expires in October 2003.
In December 1999, the Company reached an agreement with Teamsters Local 445 for
a successor collective bargaining agreement covering approximately 80 warehouse
employees at the Company's Montgomery distribution warehouse. The Local 445
agreement expires December 7, 2002. The Company's other labor agreements expire
between September 2000 and May 2003.

     As of April 1, 2000, all employees covered by collective bargaining
agreements were employed at store locations and in the Company's Montgomery, New
York warehouse.

     The Company believes that its relationship with employees is generally
satisfactory.

                                       3

<PAGE>

Trade Names, Service Marks and Trademarks

     Grand Union owns and actively uses over 20 trade names, service marks and
trademarks (collectively, "Marks"). Among these Marks are "Grand Union"(R), the
symbol of a red dot, "Grand Classics"(R), "Big Gold Top"(R), "The Best Take Out
Restaurant in Town"(R), "Grand Premium"(R), "Taste Place"(R), "Holland Hall"(R)
and "Red Dot Special"(R), all of which are significant to the Company's
business. The Company also has common law rights in, has filed for, or intends
to file for various other Marks.

Common Stock Trading

     On March 24, 2000, the NASDAQ Listing Qualifications Panel advised the
Company its Common Stock no longer qualified for trading on the NASDAQ National
Market and would be delisted. The Company has appealed the decision and is
seeking to transfer the Common Stock to the NASDAQ SmallCap Market. In order to
qualify for listing on the NASDAQ SmallCap Market, the Company must satisfy all
listing criteria, including the $1 minimum bid price. The Company's appeal will
be considered by NASDAQ on July 27, 2000. Until a final determination is made,
the Company's Common Stock will remain on the NASDAQ National Market under the
ticker symbol "GUCO" as it has been since October 1, 1998.

Financial Information about Foreign and Domestic Operations and Export Sales

     Grand Union has no foreign operations or export sales.

Recent History

     Change in Management and Board of Directors

     On December 17, 1999,  the Board of Directors  voted to expand the number
of directors from eleven to fifteen and elected four new members: Neil A.
Augustine, Michael Embler, Stephen M. Peck and Herbert E. Seif.

     On February 13, 2000, the Board of Directors removed J. Wayne Harris from
his position as Chief Executive Officer, Chairman of the Board, and a Director
of the Company. In addition, Jack W. Partridge, Jr., resigned from his position
as Vice Chairman, Chief Administrative Officer and a Director of Grand Union on
February 13, 2000. Messrs. Harris and Partridge have each executed a Settlement
Agreement and General Release with the Company.

     On February 13, 2000, Gary M. Philbin was elected Chief Executive Officer
to replace Mr. Harris, and Stephen M. Peck, a non-management director, became
the Chairman of the Board, replacing Mr. Harris in that role. Mr. Philbin has
served as a director and the Company's President and Chief Merchandising Officer
since joining the Company in October 1997. The Company has recorded a charge to
operations during the 12 weeks ended April 1, 2000 (the "Fiscal 2000 Fourth
Quarter") related to these matters.

     The Company promoted its Executive Vice President and Chief Financial
Officer ("CFO"), Jeffrey Freimark, to succeed Mr. Partridge as Chief
Administrative Officer. Mr. Freimark, who will continue as CFO, was also elected
to the Company's Board of Directors. Effective February 13, 2000, and in
connection with the changes referenced above, the Board voted to reduce the
number of directors from fifteen to fourteen.

     The 1998 Reorganization

     In February 1998, due to a lack of sufficient liquidity, increasing
competition, consolidation, and falling margins, Grand Union determined that its
financial resources would be insufficient to satisfy the interest payment due
and payable on its then outstanding senior notes (the "Old Senior Notes"). As a
result, Grand Union did not make its March 2, 1998 interest payment to holders
of the Old Senior Notes. The failure to make such interest payment constituted a
default under the indenture governing the Old Senior Notes and a cross-default
under its then outstanding credit agreement (the "Old Credit Agreement").

     Accordingly, the Company commenced negotiations with the secured banks
under the Old Credit Agreement regarding obtaining necessary waivers to avoid
the consequences of an event of default and to facilitate the negotiation of a
consensual plan of reorganization with an unofficial committee of holders of the
Old Senior Notes (the "Unofficial Noteholder Committee"). Negotiations between
Grand Union and the Unofficial Noteholder Committee continued, and on March 30,
1998, the parties reached an agreement in principle on the terms of a
restructuring to be effectuated pursuant

                                       4

<PAGE>

to a plan of reorganization (the "Plan of Reorganization") under chapter 11,
Title 11 of the United States Code, as amended ("Chapter 11"). On May 14, 1998,
Grand Union, the Unofficial Noteholder Committee and the holders of Grand
Union's then outstanding preferred stock (the "Old Preferred Stock") reached an
agreement in principle regarding the proposed treatment of the Old Preferred
Stock.

     Pursuant to a Disclosure Statement, dated May 22, 1998 (the "Disclosure
Statement"), Grand Union commenced a prepetition solicitation of votes by the
holders of Old Senior Notes and Old Preferred Stock to accept or reject the Plan
of Reorganization. That solicitation resulted in the acceptance of the Plan of
Reorganization. On June 24, 1998, the Company filed a voluntary petition for
relief (the "Filing") under Chapter 11 with the United States Bankruptcy Court
for the District of New Jersey (the "Bankruptcy Court").

     On the August 17, 1998 Effective Date, Grand Union consummated its Plan of
Reorganization pursuant to the August 5, 1998 Confirmation Order of the
Bankruptcy Court. Consummation of the Plan of Reorganization resulted in a
capital restructuring of the Company, whereby approximately $600 million in debt
under the Old Senior Notes was eliminated from the Company's balance sheet,
reducing annual interest expense by approximately $72 million.

     Consummation of the Plan of Reorganization resulted in (i) the issuance of
30,000,000 shares of New Common Stock to the holders of the Company's Old Senior
Notes; (ii) the issuance of New Series 1, Series 2 and Series 3 Warrants to the
holders of the Company's Old Preferred Stock; (iii) the issuance of New Series 1
Warrants to holders of the Company's Old Common Stock; and (iv) cancellation of
the Company's Old Senior Notes, Old Preferred Stock, Old Common Stock, Old
Series 1 and Series 2 Warrants and Old Stock Options. As of October 1, 1998, the
Company's new common stock began trading on the NASDAQ National Market under the
ticker symbol GUCO.

     On the Effective Date and in connection with the consummation of the Plan
of Reorganization, the Company entered into a $300 million credit agreement (the
"Credit Agreement") with UBS AG, Stamford Branch and Lehman Commercial Paper
Inc. ("LCPI") as agents for a syndicate of lenders. The Credit Agreement is
secured by substantially all of the assets of the Company and its subsidiaries
and is guaranteed by the Company's subsidiaries. Some of the proceeds of the
Credit Agreement were used to pay off the Company's obligations under its
debtor-in-possession credit agreement (the "DIP Facility"), which had provided
the Company operating liquidity during the Chapter 11 case. During the Chapter
11 case, all trade claims were paid in the ordinary course.

Item 2.  Properties

     Grand Union conducts its operations primarily in leased stores and offices.
The following table indicates the location and number of stores in operation as
of April 1, 2000.

                                             Number of
                         Locations            Stores

                    ---------------------  -------------
                    New York                      119
                    New Jersey                     41
                    Vermont                        37
                    Connecticut                    14
                    New Hampshire                   3
                    Pennsylvania                    2
                                           -------------
                      Total                       216
                                           -------------

     Grand Union operates its stores under the name Grand Union, Grand Union
Mega Store, Grand Union Fresh Market and Grand Union Hot Dot. As of April 1,
2000, Grand Union owned 13 and leased 203 of its operating store sites pursuant
to commercial leases. Management believes no store lease is individually
material to Grand Union. Most store leases contain several renewal options.
Seventeen store leases do not contain renewal options and twelve will expire
over the next five years and five thereafter. Management anticipates that it
will be able to renegotiate favorable lease terms for most of these locations,
if so desired. The Company does not intend to renew its leases on seven (7)
stores operated pursuant to the FTC order discussed below in Item 3. Legal
Proceedings.

     Grand Union currently operates one distribution center in Montgomery, New
York, which is leased, and a commissary, which is housed in a building owned by
the Company on a ground-leased site in Newburgh, New York. Grand Union's lease
on its distribution center has 29 years remaining, including options. On May 20,
1998, the Company sold a 101,000 square foot warehouse in Waverly, New York,
which had been vacant. In January 1999, the Company sold its assets and

                                       5
<PAGE>

discontinued operations at a printing shop it operated in Atlanta, Georgia. On
March 31, 2000, the Company surrendered and terminated its lease agreement at a
warehouse facility in Mt. Kisco, New York, which had been vacant.

     In March 2000, the Company has chosen not to renew an agreement with Penn
Traffic Company for leasing nine New England stores that have operated under the
Grand Union name for the past 10 years. As of June 26, 2000, the Company
operated 206 stores in the same six (6) northeastern states.

Item 3.  Legal Proceedings

     Chapter 11 Proceedings. Reference is made to "Item 1 - Business - Recent
History" for information regarding the Company's Chapter 11 proceedings.

     Environmental - Connecticut. Soil and ground water contamination has been
detected at a shopping center owned by Grand Union, which is located in
Connecticut. The Company believes such contamination was caused primarily by the
use, storage, and/or improper disposal of solvents, in particular,
perchloroethylene by dry cleaning operations previously conducted at this
location and from off-site sources. The Company notified the Connecticut
Department of Environmental Protection ("CTDEP") upon its initial discovery of
contamination in 1992. At that time, the Company conducted a remedial
investigation designed to identify the sources of such soil and ground-water
contamination and delineate the extent of the contamination on-site and to
assess potential off-site impacts. This investigation has confirmed that the
source of the on-site contamination is, in part, an off-site shopping center and
a gasoline station located nearby. The Company is proceeding with the
investigation of the contamination and formulation of a remedial plan. The
Company has entered into CTDEP's voluntary cleanup program.

     The Company's potential responsibility does not arise from any aspect of
its operation of a supermarket at the shopping center, but from the actions of a
former tenant. Any contamination migrating on-site from an off-site source is
the responsibility of another party. The Company is assessing the feasibility of
seeking reimbursement of past costs and clean-up costs from some or all of these
other parties. The Company is unable to determine the amount of its potential
liability arising from the on-site contamination, but does not believe, based
upon the results of investigations made to date, that the amount of potential
liability is likely to be materially adverse to the Company's financial
condition. Management presently estimates, based upon investigations made by the
Company's environmental consultant to date, that such liability should not
exceed $750,000. Investigations are continuing, and there can be no assurance
that the amount of such liability will not exceed $750,000.

     FTC Order. At the time of an acquisition of Grand Union in July 1989, Grand
Union and P&C Foods, then a subsidiary and currently a division of Penn Traffic,
operated stores in some of the same geographic areas in Vermont and upstate New
York. In order to satisfy the concerns of federal antitrust authorities arising
therefrom in connection with the acquisition, prior to consummation thereof, MTH
Holdings, Inc. ("MTH Holdings"), which indirectly controlled Grand Union and
Penn Traffic, an affiliate of Miller Tabak Hirsch & Co., a New York Limited
Partnership, and Grand Union entered into an Agreement to Hold Separate with
Salomon Inc. and the Federal Trade Commission ("FTC") and an Agreement
Containing Consent Order (the "Order") with the FTC, which Order was
subsequently modified on February 16, 1996 (collectively, the "FTC Agreements").

     The FTC Agreements required the divestiture by MTH Holdings and/or Grand
Union (including in each case their respective subsidiaries and affiliates) of
sixteen stores located in Vermont and upstate New York. Such divestitures were
completed on July 30, 1990. Thirteen of the sixteen stores divested were P&C
Foods stores and three of the sixteen stores divested were Grand Union stores.
In a related transaction, Grand Union and P&C Foods entered into an operating
agreement (the "Operating Agreement"), pursuant to which Grand Union acquired
the right to operate P&C Foods' thirteen remaining stores in New England under
the Grand Union name until July 2000, for an average annual rent of
approximately $10,700,000 with an option to extend the term of such operation
for an additional five years. Grand Union paid P&C Foods $7,500,000 for an
option, exercisable in July 1999, to purchase the stores at an amount defined in
the Operating Agreement. As of April 1, 2000, Grand Union still operated nine
(9) of these stores. However, the Company does not intend to renew the leases on
those stores and has notified P&C that it will return the properties to P&C on
or before July 30, 2000.


                                       6
<PAGE>

     Other Proceedings. The Company is also subject to certain other legal
proceedings and claims arising in connection with its business. It is
management's opinion that the ultimate resolution of such legal proceedings and
claims will not have a material adverse effect on the Company's consolidated
results of operations or its financial position.

Item 4.  Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of the Company's stockholders during
the fourth quarter of Fiscal 2000.

PART II

Item 5.  Market for the Registrant's Common Equity and Related Stockholder
         Matters

     The Common Stock of the Company is traded on the NASDAQ National Market
under the symbol "GUCO." At the close of business on June 26, 2000, there were
29,992,098 shares of Common Stock, $0.01 par value outstanding and entitled to
vote. See "Common Stock Trading" in Item 1 of this report for information
concerning the Company's Common Stock. As of June 26, 2000, there were
approximately 3,300 stockholders of record of the Common Stock.

     The quarterly market value of the Company's stock is discussed in Note 18
to the Consolidated Financial Statements.

     No cash dividends were declared or paid during each of the three fiscal
years ended April 1, 2000. Payment of dividends to holders of Common Stock is
restricted by the Credit Facility.

                                       7
<PAGE>

Item 6.  Selected Financial Data

     As discussed in Item 1, the Company, in connection with the 1998
Reorganization, emerged from its Chapter 11 proceedings on the Effective Date,
August 17, 1998. For financial reporting purposes, the Company accounted for the
consummation of the Plan of Reorganization effective August 15, 1998. In
accordance with the American Institute of Certified Public Accountants Statement
of Position 90-7, "Financial Reporting By Entities In Reorganization Under The
Bankruptcy Code," the Company adopted Fresh-Start Reporting as of the Effective
Date which has resulted in significant changes to the valuation of certain of
the Company's assets and liabilities, and to its stockholders' equity. In
connection with the adoption of Fresh-Start Reporting, a new entity has been
deemed created for financial reporting purposes. The period prior to the
Effective Date has been designated "Predecessor Company" and the period
subsequent to the Effective Date has been designated "Successor Company." All
information is derived from the consolidated financial statements of the
Company. This information should be read in conjunction with the historical
financial statements of the Company, including the notes thereto, included
elsewhere herein. All dollars are in millions, except per share data.

<TABLE>
<CAPTION>

                                                                                                                             Old
                                                    Successor Company                  Predecessor Company                 Company
                                                  ----------------------  ---------------------------------------------- -----------
                                                  52 Weeks    33 Weeks    20 Weeks    52 Weeks    52 Weeks    41 Weeks    11 Weeks
                                                    Ended       Ended       Ended       Ended       Ended      Ended       Ended
                                                   April 1,    April 3,    August 15,  March 28,   March 29,  March 30,   June 17,
                                                    2000        1999       1998(**)     1998        1997        1996      1995(**)
                                                  ----------  ----------  ----------  ----------  ---------- ----------- -----------
Statement of Operations Data:

<S>                                               <C>         <C>         <C>         <C>         <C>        <C>         <C>
  Sales                                           $ 2,204.5   $ 1,417.3   $   869.0   $ 2,266.8   $ 2,312.7  $ 1,819.9   $   487.9
  Gross profit                                        627.1       421.6       258.0       639.5       705.7      569.9       143.8
  Operating and administrative expenses               553.3       349.8       221.7       574.8       586.2      454.6       117.8
  Depreciation and amortization                        68.9        39.5        22.1        93.0        82.2       58.9        16.9
  Amortization of excess reorganization value         131.9        81.1        40.1       104.3       102.6       84.0         -
  Unusual items (***)                                  19.6         1.0         4.8         6.3         9.8       22.0        18.6
  Interest expense, net                                43.1        27.2        36.5       113.8       105.8       79.2        19.8
  Loss before income taxes, extraordinary items
   and cumulative effect of accounting change        (189.7)      (76.9)      (67.2)     (252.6)     (180.8)    (128.8)      (29.3)
  Income tax provision (benefit)                      117.2         0.6         -          51.4         2.5      (18.9)        -
  Extraordinary items                                   -           -         259.1         -           -          -         854.8
  Cumulative effect of accounting change (***)          3.5         -           -           -           -          -           -
  Net income (loss)                                  (310.4)      (77.5)      191.9      (304.0)     (183.4)    (109.9)      825.5
  Net income (loss) applicable to common stock       (310.4)      (77.5)      189.6      (312.4)     (185.4)       -           -
  Basic and diluted net (loss) per common share(*)    (10.4)       (2.6)        -           -           -          -           -

  Deficiency in earnings available to cover
   fixed charges                                     (189.7)      (76.9)      (67.2)     (252.6)     (180.8)    (128.8)      (29.3)
Balance Sheet Data:
  Total assets                                        793.4     1,089.3         -         904.6     1,071.8    1,178.2         -
  Total debt and capital lease obligations            381.8       391.1         -         959.5       888.4      875.1         -
  Redeemable stock                                      -           -           -         113.4        65.0        -           -
  Nonredeemable stock and stockholders' equity
   (deficit)                                           (2.8)      307.6         -        (466.6)     (153.2)      44.1         -
Operating and Other Data:

  Capital expenditures                            $    66.3   $    20.9   $     3.4   $    39.7   $    55.1  $    43.0   $     3.0
  Number of stores at year end                          216         217         N/A         222         226        229         N/A
</TABLE>

(*)   Basic and diluted net (loss) per share information is not meaningful for
      the period prior to the Effective Date due to the significant changes in
      the capital structure of the Company and cancellation of the Old Common
      Stock and Old Preferred Stock.

(**)  Balance sheet data is not applicable at this date.

(***) See accompanying notes to consolidated financial statements.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

General

     As discussed in Note 3 to the accompanying Consolidated Financial
Statements of Grand Union, the Company emerged from its Chapter 11 proceedings
effective August 17, 1998. For financial reporting purposes, the Company
accounted for the consummation of the Plan of Reorganization effective August
15, 1998. In accordance with the American Institute of Certified Public
Accountants Statement of Position 90-7, "Financial Reporting By Entities in
Reorganization Under The Bankruptcy Code", the Company adopted Fresh-Start
Reporting as of the Effective Date which has resulted in significant changes to
the valuation of certain of the Company's assets and liabilities and to its

                                       8
<PAGE>

stockholders' equity. In connection with the adoption of Fresh-Start Reporting,
a new entity has been deemed created for financial reporting purposes. The
period prior to the Effective Date has been designated "Predecessor Company" and
the period subsequent to the Effective Date has been designated "Successor
Company." For purposes of the discussion of Results of Operations and Liquidity
and Capital Resources for the 53 weeks ended April 3, 1999, the results of the
Predecessor Company and Successor Company have been combined.

Results of Operations

     The following table sets forth certain statements of operations and other
data (all dollars in millions).

<TABLE>
<CAPTION>

                                                                  52 Weeks Ended   53 Weeks Ended    52 Weeks Ended
                                                                   April 1, 2000    April 3, 1999    March 28, 1998
                                                                  ---------------  ---------------  ----------------
<S>                                                                <C>              <C>               <C>
Sales                                                              $     2,204.5    $     2,286.3     $     2,266.8
Gross profit                                                               627.1            679.6             639.5
Operating and administrative expenses                                      553.3            571.4             574.8
Depreciation and amortization                                               68.9             61.5              92.9
Amortization of excess reorganization value                                131.9            121.2             104.3
Unusual items                                                               19.6              5.8               6.3
Interest expense, net                                                       43.1             63.7             113.8
Income tax provision                                                       117.2              0.6              51.4
Net (loss) before extraordinary item and
  cumulative effect of accounting change                                  (306.9)          (144.6)           (304.0)
Extraordinary item                                                           -              259.0               -
Net income (loss) before cumulative effect
  of accounting change                                                    (306.9)           114.4            (304.0)
Cumulative effect of accounting change                                       3.5              -                 -
Net income (loss) applicable to common stock                              (310.4)           112.1            (312.4)

Sales percentage increase (decrease)                                       (3.6%)            0.9%             (2.0%)
Gross profit as a percentage of sales                                      28.5%            29.7%             28.2%
Operating and administrative expenses as a percentage                      25.1%            25.0%             25.4%
  of sales
Number of weeks                                                               52               53                52

</TABLE>

     Sales for Fiscal 2000 decreased $81.8 million or 3.6% compared to Fiscal
1999. Same store sales, (adjusted to exclude the Easter Holiday effect),
decreased 0.14% in Fiscal 2000 compared to Fiscal 1999. Due to the timing of the
Easter holiday in Fiscal 2000, there was no Easter selling period in the current
fiscal year while Fiscal 1999 included one. Same store sales results, as
compared to the prior year, by quarter for Fiscal 2000, beginning with the first
quarter, were 0.83%, (0.36)%, 0.41% and (1.73)%. The reduction in sales is
primarily due to competitive activity and effects related to implementation of
the Company's capital expenditure plan. These include delays in new store
openings and sales disruptions in stores undergoing significant remodeling. In
addition, the results in the fiscal 2000 fourth quarter were negatively impacted
by the initial disruptive effects of the management changes and staff reductions
that were made during that quarter. (See discussion in Item 1, Change in
Management and Board of Directors.) During Fiscal 2000, the Company opened three
new stores and seven replacement stores, and closed eleven stores, three of
which reopened as replacement stores. The Company continues to invest in
marketing and promotional programs to drive sales and compete effectively as
competitors continue to open new locations and remodel stores at a more
aggressive rate than the Company. Sales for Fiscal 1999 decreased $19.5 million
or 0.9% compared to Fiscal 1998. Same store sales decreased 0.35% in Fiscal 1999
compared to Fiscal 1998. Same store sales results, as compared to the prior
year, by quarter for Fiscal 1999, beginning with the first quarter, were (1.4)%,
0.6%, (0.9)% and 0.7% versus the prior year. During Fiscal 1999, the Company
opened two replacement stores and closed eleven stores, four of which reopened
as Hot Dot stores.

     Gross profit as a percentage of sales decreased to 28.5% in Fiscal 2000
compared to 29.7% in Fiscal 1999. This is primarily due to increased stock
losses and continued competitive promotional activity. This mitigated the effect
of the continued new marketing initiatives by the Company. Additionally, the
Company adopted the Securities and Exchange Commission's Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101")
effective April 4, 1999. The Fiscal 2000 results include a $7.6 million charge
against gross profit as a result of the adoption of SAB 101. Gross profit as a
percentage of sales improved to 29.7% in Fiscal 1999 compared to 28.2% in Fiscal
1998 as a result of increased allowance and promotional income.

                                       9
<PAGE>

     Operating and administrative expenses as a percentage of sales were 25.1%
during Fiscal 2000, compared to 25.0% during Fiscal 1999. The Company continues
to emphasize and aggressively pursue cost reduction opportunities. Operating and
administrative expense as a percentage of sales was 25.4% during Fiscal 1998.

     Depreciation and amortization expense of $68.9 million in Fiscal 2000 was
$7.4 million higher than the prior year's $61.5 million. The increase resulted
from the impact of the application of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of" ("SFAS
121"), impairment losses on assets of $16.0 million and $7.8 million recorded in
Fiscal 2000 and Fiscal 1999, respectively, and the increase in capital
expenditures. The decrease in depreciation and amortization expense during
Fiscal 1999 as compared to Fiscal 1998 was mainly caused by the application of
SFAS No. 121, whereby $25.0 million of impairment losses were recorded to reduce
the estimated fair value of certain store assets and the historical deferral of
capital expenditures.

     Unusual items recorded in Fiscal 2000 consisted of a one-time charge of
$19.6 million for senior restructuring, staff reductions and store closure
costs. During Fiscal 1999, the Company recorded $5.8 million in unusual items
which represented $9.6 million in connection with legal, advisory and bank fees
associated with the Plan of Reorganization and $3.8 million as a net gain
resulting from the elimination of debt premiums. Unusual items recorded in
Fiscal 1998 consisted of $2.7 million in connection with professional fees
associated with the Plan of Reorganization, a $3.0 million charge to supplement
a reserve set at the end of Fiscal 1997 for the reorganization of the Company
during Fiscal 1998 and additional charges of $0.7 million for legal costs to
supplement a reserve created as a result of the Company's Chapter 11 filing in
calendar year 1995.

     Interest expense was $43.1 million in Fiscal 2000 compared to $63.7 million
in Fiscal 1999. The decrease primarily reflects the effect of the Company's
reduced debt burden and a reduction in interest rates on the Term Loan and the
Revolving Credit Facility. Interest expense was $113.8 million in Fiscal 1998.

     The income tax provision, representing federal and state income taxes, was
$117.2 million in Fiscal 2000, compared to $0.6 million in Fiscal 1999 and $51.4
million in Fiscal 1998. The income tax provisions in both Fiscal 2000 and Fiscal
1998 are the result of establishing valuation allowances against the Company's
net deferred tax assets. The effective tax rate varies from the statutory rate
due to differences between income for financial reporting and tax reporting
purposes, resulting primarily from the amortization of excess reorganization
value and the increase in the valuation allowance.

     Extraordinary items of $259.1 million recorded in Fiscal 1999 consisted of
a $260.8 million gain resulting from the discharge of debt in connection with
the consummation of the 1998 Plan of Reorganization and a $1.7 million expense
related to the write-off of deferred financing costs associated with a term loan
that was refinanced by the DIP facility. The Company recognized no extraordinary
gains or losses during Fiscal 2000 and Fiscal 1998.

     The Company adopted SAB 101 effective April 4, 1999. The effect on Fiscal
2000 has been included as a $7.6 million charge against gross profit. The effect
on prior periods was to increase the net loss for Fiscal 2000 by $3.5 million,
net of tax, recorded in the accompanying consolidated statement of operations as
the cumulative effect of accounting change.

Liquidity and Capital Resources

     On the August 17, 1998 Effective Date and in connection with the
consummation of the Plan of Reorganization, the Company entered into the Credit
Agreement. The Credit Agreement is comprised of: (i) a $230 million Term Loan
and (ii) a $70 million Revolving Credit Facility. The Term Loan and Revolving
Credit Facility will mature on August 17, 2003. The proceeds of the Credit
Agreement were used to refinance the obligations under the DIP Facility and
supplemental term loan claims under the credit agreement that was in existence
before the Chapter 11 case. The excess was used for working capital and capital
expenditures. Up to $50 million of the Revolving Credit Facility is available
for the issuance of letters of credit. As of April 1, 2000, the Company had net
borrowings of $4 million and an aggregate of $31 million of letters of credit
issued and outstanding under the Revolving Credit Facility.

     Cash interest payments totaled approximately $42.0 million in Fiscal 2000
compared to $46.1 million in Fiscal 1999. Capital expenditures totaled
approximately $66.3 million in Fiscal 2000 compared to $24.4 million in Fiscal
1999.

                                       10
<PAGE>

     Significant expenditures and resources used to finance such expenditures
for the three fiscal years ended April 1, 2000 are reflected in the following
table (in millions):

<TABLE>
<CAPTION>
                                                                   52 Weeks         53 Weeks          52 Weeks
                                                                     Ended            Ended             Ended
                                                                    April 1,         April 3,          March 28,
                                                                      2000             1999              1998
                                                                 ---------------- ----------------  ----------------
<S>                                                                <C>              <C>               <C>
Resources used:
  Debt and capital lease repayments                                $       208.0    $       314.4     $        27.8
  Capital expenditures                                                      66.3             24.4              39.7
  Financing fees                                                             -                7.9               9.8
  Operating activities                                                       -                -                36.1
                                                                 ---------------- ----------------  ----------------
                                                                   $       274.3    $       346.7     $       113.4
                                                                 ================ ================  ================
Financed by:
  Net proceeds from sale of preferred stock                        $         -      $         -       $        40.0
  Net proceeds from long-term debt                                           -              230.0              78.0

  Proceeds from Revolving Credit Facility                                  206.0              -                 -
  Proceeds from DIP Facility                                                 -              108.0               -
  Property disposals and sales                                               1.8              7.2               5.9
  Operating activities                                                      29.0             14.1               -
                                                                 ---------------- ----------------  ----------------
                                                                   $       236.8    $       359.3     $       123.9
                                                                 ================ ================  ================
</TABLE>

     During the week of May 15, 2000, Standard and Poor's downgraded the
Company's Credit Agreement rating from single-'B'-minus to triple-'C'. The
rating action was prompted by lower-than-anticipated earnings before interest,
taxes, depreciation and amortization ("EBITDA") in the 12 weeks ended April 1,
2000 ("Fiscal 2000 Fourth Quarter") and marginal liquidity due to reduced
availability under the Company's bank facility.

Credit Agreement Amendment

     The Company recently experienced a reduction in its anticipated operating
results and, therefore, the Company's ability to achieve certain of its future
financial covenants included in the Credit Agreement became questionable. As a
result, the Company commenced negotiations with the lenders under the Credit
Agreement and, effective June 30, 2000, executed the third amendment to the
Credit Agreement (the "Third Amendment"), which, among other things, adjusted
certain of the financial covenants and permits the Company to retain a greater
portion of the proceeds of asset sales to a specified level. The Third Amendment
also provides that the financial covenants, which have an EBITDA component, will
be computed and measured based upon each of the Company's 13 fiscal reporting
periods, whereas before they were computed and measured quarterly. This new
requirement subjects the Company to increased risk that a short-term decline in
operating performance could potentially trigger an event of default under the
Credit Agreement resulting in the entire loan balance becoming due and payable,
subject to the lenders' discretion and proper notification. The Company believes
that the revised financial covenants are achievable for each period throughout
the remainder of the year, although there can be no assurance that unanticipated
adverse events will not occur. The Third Amendment also requires the Company to
retain an investment banker for purposes of exploring all strategic alternatives
and to retain a consulting company to assist in the preparation of a business
plan.

Future Outlook

     Fiscal 2000 was a transitional year for the Company. The fundamentals of
the business are being addressed - sales, margin, expenses, assets and
employees - in order to allow the Company to better serve its business strategy
and drive costs out of the system. The management changes made in the fourth
quarter signaled this change of direction. The Company closed eleven
underperforming stores in June, eliminating the negative impact these stores had
on results. Additionally, the decision was made not to renew the leases on seven
additional stores based on the unfavorable economies of the lease renewal. The
Company is focusing its merchandising, advertising and operating efforts
primarily on the Grand Union banner. As such, the Hot Dot and Fresh Market store
concepts that previously had separate advertisements will now be supported by a
common Grand Union ad.

     The Company has invested significant capital in new stores and remodels.
These locations have been merchandised to reinforce the strengths of what Grand
Union customers like most about its stores - outstanding perishables, improved
variety and specialty items throughout all departments. New features such as
kid's stations, enhanced meals-to-go for easy meal solutions, and more health
and natural foods are examples of the Company's continued efforts to meet the
needs of today's consumer.

     The Company continues its efforts to convert working capital to cash.
Aggressive, but realistic, programs are in place to reduce inventories and
receivables. Total capital expenditures in Fiscal 2001 are expected to be
approximately $35 million. The Company expects to finance such capital
expenditures through cash generated from operations, selective asset sales and
amounts available


                                       11
<PAGE>

under the Credit Agreement. The goal is to generate capital to reinvest in
renovations and remodels as the Company continues to improve its infrastructure
as well as invest in technology.

     The execution of the Third Amendment to the Credit Agreement is expected to
provide the Company with sufficient liquidity throughout Fiscal 2001. This is
predicated upon the Company's anticipated operating performance throughout the
year and other factors including selected asset sales. Variances to anticipated
operating performance levels could possibly have a negative effect on the
Company's liquidity. The retention of Merrill Lynch & Co. and Alvarez & Marsal,
Inc. will facilitate the development of a strategic business plan. The business
plan may require the rationalization of assets and the Company's desired
marketing areas going forward.

Special Note Concerning Forward-Looking Statements

     Except for historical information, statements by the Company under the
caption "Future Outlook" and elsewhere in this report may be considered
"forward-looking statements" within the meaning of federal securities law. Such
forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. Potential risks and
uncertainties include, but are not limited to, the competitive environment in
which the Company operates, the ability of the Company to maintain and improve
its gross sales and margins, the liquidity of the Company on a cash flow basis
(including the Company's ability to comply with the financial covenants of its
Credit Agreement and to fund the Company's capital expenditure program), the
Company's ability to complete its capital expenditures on a timely basis, the
success of operating initiatives, the viability of the Company's strategic plan,
regional weather conditions, and the general economic conditions in the
geographic areas in which the Company operates.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     Quantitative and Qualitative Disclosures about Market Risk represents the
risk of loss that may impact the consolidated financial position, results of
operations or cash flows of the Company due to adverse changes in financial
rates. The Company is exposed to market risk in the area of interest rates. This
exposure is directly related to its Term Loan and Revolving Credit borrowings
under the Credit Agreement, due to their variable interest rate pricing.
Accordingly, as of Fiscal 2000, a 1% change in interest rates would result in
interest expense fluctuating approximately $3 million.


                                       12
<PAGE>



Item 8.  Financial Statements and Supplementary Data

     The Financial Statements and Supplementary Data listed below are included
in this report on the page indicated.

Index to Financial Statements:
<TABLE>
<CAPTION>

Document                                                                                Page

<S>                                                                                     <C>
Reports of Independent Accountants                                                       F-1

Consolidated Statement of Operations for the 52 weeks ended April 1, 2000 and
   the 33 weeks ended April 3, 1999 (Successor Company) and the 20 weeks ended
   August 15, 1998 and the 52 weeks ended March 28, 1998 (Predecessor Company)           F-3

Consolidated Balance Sheet at April 1, 2000 and April 3, 1999                            F-4

Consolidated Statement of Cash Flows for the 52 weeks ended April 1, 2000 and
   the 33 weeks ended April 3, 1999 (Successor Company) and the 20 weeks ended
   August 15, 1998 and the 52 weeks ended March 28, 1998 (Predecessor Company)           F-5

Consolidated Statement of Stockholders' Equity (Deficit) for the 52 weeks ended
   April 1, 2000 and the 33 weeks ended April 3, 1999 (Successor Company) and
   the 20 weeks ended August 15, 1998 and the 52 weeks ended March 28, 1998
   (Predecessor Company)                                                                 F-6

Notes to Consolidated Financial Statements                                               F-7

</TABLE>

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

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

     None.

PART III

Item 10.  Directors and Executive Officers of the Registrant

     Information required by Part III, Item 10, will be included in the
Company's Proxy Statement relating to the Company's annual meeting of
stockholders to be held on August 17, 2000, and is incorporated herein by
reference.

Item 11.  Executive Compensation

     Information required by Part III, Item 11, will be included in the
Company's Proxy Statement relating to the Company's annual meeting of
stockholders to be held on August 17, 2000, and is incorporated herein by
reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     Information required by Part III, Item 12, will be included in the
Company's Proxy Statement relating to the Company's annual meeting of
stockholders to be held on August 17, 2000, and is incorporated herein by
reference.

Item 13.  Certain Relationships and Related Transactions

     Information required by Part III, Item 13, will be included in the
Company's Proxy Statement relating to the Company's annual meeting of
stockholders to be held on August 17, 2000, and is incorporated herein by
reference.

                                       13
<PAGE>

PART IV

Item 14.  Exhibits, Financial Statement Schedules and Report on Form 8-K

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

(a)  Financial statements

     All financial statements as set forth under Item 8.

(b)  Reports on Form 8-K

     1.  Relating to changes in Management and Board of Directors - dated
         February 14, 2000.

(c)  Exhibits

Exhibit
Number                       Description of Document

     2.1       Chapter 11 Plan of Reorganization filed with the United States
               Bankruptcy Court, District of New Jersey, on June 24, 1998,
               incorporated by reference to Exhibit 1 to Exhibit 2.1. to Grand
               Union's Current Report on Form 8-K filed May 28, 1998.

     3.1       Certificate of Incorporation of Grand Union, as restated through
               September 10, 1998, incorporated by reference to Exhibit 3.1 to
               Grand Union's Quarterly Report on Form 10-Q for the period ended
               October 10, 1998 .

     3.2       Amended and Restated By-Laws of The Grand Union Company, as
               amended and effective August 17, 1998, incorporated by reference
               to Exhibit 3.1 to Grand Union's Quarterly Report on Form 10-Q for
               the period ended July 18, 1998.

     4.1       Form of Common Stock Certificate of Grand Union, incorporated by
               reference to Exhibit 4.1 to Grand Union's Quarterly Report on
               Form 10-Q for the period ended October 10, 1998.

     4.2       Form of Warrant Agreement, dated August 17, 1998, between Grand
               Union and American Stock Transfer & Trust Company, as Warrant
               Agent, incorporated by reference to Exhibit A to Exhibit 1 to
               Exhibit 2.1 to Grand Union's Current Report on Form 8-K filed
               May 28, 1998.

     4.3       Rights Agreement dated as of April 29, 1999 between Grand Union
               and American Stock Transfer & Trust Co., as Rights Agent,
               including the Form of Rights Certificate and Form of Certificate
               of Designations for Series A Junior Preferred Stock.

    10.1       Agreement to Hold Separate dated July 17, 1989, by and among MTH
               Holdings Inc. ("MTH Holdings"), GU Acquisition Corporation
               ("GUAC"), Salomon Inc. and the Federal Trade Commission (the
               "FTC") entered into in the matter of MTH Holdings and GUAC before
               the FTC, incorporated by reference to Exhibit No. 10.5 to Grand
               Union's Registration Statement on Form S-1 (Registration No.
               33-29707) (the "1989 Grand Union Registration Statement").

    10.2       Agreement containing Consent Order among MTH Holdings, GUAC and
               the FTC entered into in the matter of MTH Holdings and GUAC
               before the FTC, incorporated by reference to Exhibit No. 10.6 to
               the 1989 Grand Union Registration Statement.


                                       14
<PAGE>

Exhibit
Number                       Description of Document

    10.3       Credit Agreement, dated as of August 17, 1998, by and among the
               Company, the several lenders from time to time party, thereto
               Warburg Dillon Read, LLC, as Co-Advisor and Co-Arranger, UBS AG,
               Stamford Branch, as Syndication Agent, Lehman Brothers Inc., as
               Co-Advisor and Co-Arranger, and Lehman Commercial Paper Inc., as
               Administrative Agent and Collateral Agent, incorporated by
               reference to Exhibit 10.1 to Grand Union's Current Report on Form
               8-K filed August 17, 1998.

    10.4       Guarantee and Collateral Agreement dated as of August 17, 1998,
               by the Company and its subsidiaries for the benefit of Lehman
               Commercial Paper, Inc., as Collateral Agent, incorporated by
               reference to Exhibit 10.2 to Grand Union's Current Report on Form
               8-K filed August 17, 1998.

    10.5       Waiver and First Amendment to the Credit Agreement dated as of
               November 6, 1998, incorporated by reference to Exhibit 10.5 to
               Grand Union's Annual Report on Form 10-K for the fiscal year
               ended April 3, 1999.

    10.6       Second Amendment to the Credit Agreement dated as of February 24,
               1999, incorporated by reference to Exhibit 10.6 to Grand Union's
               Annual Report on Form 10-K for the fiscal year ended April 3,
               1999.

    10.7       Third Amendment to the Credit Agreement dated as of June 30,
               2000.

    10.8       Supply and Distribution Agreement between Grand Union and C&S
               Wholesale Grocers Inc., dated June 15, 1995, incorporated by
               reference to Exhibit 10.3 to Grand Union's Quarterly Report on
               Form 10-Q/A for the period ended January 6, 1996.

    10.9       First Amendment to the Supply and Distribution Agreement between
               Grand Union and C&S Wholesale Grocers Inc., dated June 15, 1995,
               incorporated by reference to Exhibit 10.4 to Grand Union's
               Quarterly Report on Form 10-Q/A for the period ended January 6,
               1996.

    10.10      Supply and Distribution Agreement between Grand Union and C&S
               Wholesale Grocers Inc., dated January 2, 1996, incorporated by
               reference to Exhibit 10.5 to Grand Union's Quarterly Report on
               Form 10-Q/A for the period ended January 6, 1996.

    10.11      Agreement with C&S Wholesaler Grocers Inc. dated January 21,
               1996, incorporated by reference to Exhibit 10.28 to Grand Union's
               Annual Report on Form 10-K/A for the fiscal year ended March 29,
               1997.

    10.12      Term Sheet to Supply Agreement effective as of September 24, 1999
               by and between Grand Union and C&S Wholesale Grocers, Inc.

    10.13      Fourth Amendment and Restatement of The Grand Union Company
               Supplemental Retirement Program for Key Executives effective as
               of November 20, 1997, incorporated by reference to Exhibit 10.16
               to Grand Union's Annual Report on Form 10-K for the fiscal year
               ended March 28, 1998.

    10.14      The Grand Union Company Discretionary Severance Plan for
               Non-Union Associates effective April 14, 1998, incorporated by
               reference to Exhibit 10.17 to Grand Union's Annual Report on Form
               10-K for the fiscal year ended March 28, 1998.

    10.15      The Grand Union Company Severance Plan for Exempt Personnel
               effective April 14, 1998, incorporated by reference to Exhibit
               10.18 to Grand Union's Annual Report on Form 10-K for the fiscal
               year ended March 28, 1998.

    10.16      The Grand Union Company 1995 Equity Incentive Plan, as amended,
               incorporated by reference to Exhibit 6 to Grand Union's
               Disclosure Statement filed as Exhibit 2.1 to Grand Union's Form
               8-K filed May 28, 1998.

    10.17      The Grand Union Company 1995 Non-Employee Directors Stock Option
               Plan, as amended, December 9, 1999.

                                       15
<PAGE>

Exhibit
Number                       Description of Document

    10.18      Form of Indemnification Agreement between the Company and Jeffrey
               P. Freimark (dated March 3, 1997), Glenn J. Smith (dated August
               7, 1997), Gary M. Philbin (dated October 3, 1997), Javier
               Ramirez, Vice President Tax and Assistant Secretary (dated
               October 30, 1997), Manny Moslemi (dated August 6, 1998), Martin
               Bernstein (dated August 17, 1998), Thomas Cochill (dated August
               17, 1998), Joseph Colonnetta (dated August 17, 1998), Jacob Doft
               (dated August 17, 1998), David Green (dated August 17, 1998),
               Joseph Lash (dated August 17, 1998), Anthony Petrillo (dated
               August 17, 1998), Scott Tepper (dated August 17, 1998), Gary
               Duncan (dated January 11, 1999), Christopher McGarry, Assistant
               General Counsel and Assistant Secretary (dated November 16,
               1999), Neil Augustine (dated December 21, 1999), Michael Embler
               (dated December 21, 1999), Stephen Peck (dated December 21, 1999)
               and Herbert Seif (dated December 21, 1999), incorporated by
               reference to exhibit 10.26 to Grand Union's Annual Report on Form
               10-K for the fiscal year ended March 28, 1998.

    10.19      Employment Agreement (effective February 13, 2000 and dated as of
               April 13, 2000) between Grand Union and Gary M. Philbin.

    10.20      Employment Agreement (effective February 13, 2000 and dated as of
               April 13, 2000) between Grand Union and Jeffrey P. Freimark.

    10.21      Employment Agreement (effective February 13, 2000 and dated as of
               April 13, 2000) between Grand Union and Manouchehr Moslemi.

    10.22      Employment Agreement (effective February 13, 2000 and dated as of
               April 13, 2000) between Grand Union and Glenn J. Smith.

    21.1       Subsidiaries of Grand Union, incorporated by reference to
               Exhibit 21.1 to Grand Union's Annual Report on Form 10-K for the
               fiscal year ended April 3, 1999.

    27.1       Financial Data Schedule.

                                       16
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                             THE GRAND UNION COMPANY
                                  (Registrant)

         Date: June 30, 2000               /s/ Jeffrey P. Freimark
                                ---------------------------------------------
                                             Jeffrey P. Freimark

                                  Executive Vice President, Chief Financial
                                   and Administrative Officer and Treasurer

     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.

<TABLE>
<CAPTION>

Signature                                       Title                                          Date
<S>                              <C>                                                      <C>
     /s/ Gary M. Philbin         Director, President and Chief Executive                  June 30, 2000
------------------------------   Officer (Principal Executive Officer)
       Gary M. Philbin

   /s/ Jeffrey P. Freimark       Director, Executive Vice President,                      June 30, 2000
------------------------------   Chief Financial and Administrative Officer
     Jeffrey P. Freimark         and Treasurer (Principal Financial and
                                 Accounting Officer)


     /s/ Stephen M. Peck         Chairman, Board of Directors                             June 30, 2000
------------------------------
       Stephen M. Peck

    /s/ Neil A. Augustine        Director                                                 June 30, 2000
------------------------------
      Neil A. Augustine

    /s/ Martin Bernstein         Director                                                 June 30, 2000
------------------------------
      Martin Bernstein

    /s/ Thomas R. Cochill        Director                                                 June 30, 2000
------------------------------
      Thomas R. Cochill

    /s/ Joseph Colonnetta        Director                                                 June 30, 2000
------------------------------
      Joseph Colonnetta

      /s/ Jacob W. Doft          Director                                                 June 30, 2000
------------------------------
        Jacob W. Doft

     /s/ Michael Embler          Director                                                 June 30, 2000
------------------------------
       Michael Embler

     /s/ David M. Green          Director                                                 June 30, 2000
------------------------------
       David M. Green

     /s/ Joseph V. Lash          Director                                                 June 30, 2000
------------------------------
       Joseph V. Lash

    /s/ Anthony Petrillo         Director                                                 June 30, 2000
------------------------------
      Anthony Petrillo

     /s/ Herbert E. Seif         Director                                                 June 30, 2000
------------------------------
       Herbert E. Seif

      /s/ Scott Tepper           Director                                                 June 30, 2000
------------------------------
        Scott Tepper
</TABLE>

                                       17
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS
                                (Post-Emergence)

UPDATE

To the Stockholders and the Board of Directors of
The Grand Union Company

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, cash flows and stockholders' equity
(deficit) present fairly, in all material respects, the financial position of
The Grand Union Company and its subsidiaries (the "Company") at April 1, 2000
and April 3, 1999, and the results of their operations and their cash flows for
the 52 weeks ended April 1, 2000 and the 33 weeks ended April 3, 1999, 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.

As discussed in Note 6 to the consolidated financial statements, the Company
changed its method of accounting for nonrefundable up-front fees to conform to
the guidance in Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements."

As discussed in Notes 3 and 4 to the consolidated financial statements, on June
24, 1998, the Company filed a voluntary petition for relief, under Chapter 11 of
Title 11 of the United States Code ("Chapter 11"), with the United States
Bankruptcy Court for the District of New Jersey. The Company's 1998 Plan of
Reorganization, as amended, became effective on August 17, 1998 and the Company
emerged from Chapter 11. In connection with its emergence from Chapter 11, the
Company adopted Fresh-Start Reporting as of August 15, 1998.


PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 30, 2000

                                      F-1
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS
                                 (Pre-Emergence)

To the Stockholders and the Board of Directors of
The Grand Union Company

In our opinion, the accompanying consolidated statements of operations, cash
flows and stockholders' equity (deficit) present fairly, in all material
respects, the results of operations and cash flows of The Grand Union Company
and its subsidiaries (the "Company") for the 20 weeks ended August 15, 1998 and
52 weeks ended March 28, 1998, 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.

As discussed in Notes 3 and 4 to the consolidated financial statements, on June
24, 1998, the Company filed a voluntary petition for relief, under Chapter 11 of
Title 11 of the United States Code ("Chapter 11"), with the United States
Bankruptcy Court for the District of New Jersey. The Company's 1998 Plan of
Reorganization, as amended, became effective on August 17, 1998 and the Company
emerged from Chapter 11. In connection with its emergence from Chapter 11, the
Company adopted Fresh-Start Reporting as of August 15, 1998.


PricewaterhouseCoopers LLP
Florham Park, New Jersey
May 17, 1999


                                      F-2
<PAGE>


                             THE GRAND UNION COMPANY

                      CONSOLIDATED STATEMENT OF OPERATIONS

                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                     Successor Company                 Predecessor Company
                                                             ---------------------------------- ----------------------------------
                                                                 52 Weeks         33 Weeks          20 Weeks         52 Weeks
                                                                  Ended            Ended             Ended            Ended
                                                                 April 1,         April 3,         August 15,       March 28,
                                                                   2000             1999              1998             1998
                                                             ---------------------------------- ----------------------------------
<S>                                                            <C>              <C>               <C>              <C>

Sales                                                          $   2,204,512    $   1,417,293     $     868,962    $   2,266,770

Cost of sales                                                      1,577,405          995,724           610,930        1,627,233
                                                             ---------------------------------- ----------------------------------

Gross profit                                                         627,107          421,569           258,032          639,537

Operating and administrative expenses                                553,305          349,758           221,647          574,770

Depreciation and amortization                                         68,907           39,445            22,117           92,922

Amortization of excess reorganization value                          131,851           81,146            40,128          104,332

Unusual items                                                         19,604              988             4,789            6,333

Interest expense, net                                                 43,125           27,148            36,509          113,770
                                                             ---------------------------------- ----------------------------------

(Loss) before income taxes, extraordinary item and
    cumulative effect of accounting change                          (189,685)         (76,916)          (67,158)        (252,590)

Income tax provision                                                 117,180              567                 -           51,393
                                                             ---------------------------------- ----------------------------------

Net (loss) before extraordinary item and cumulative effect
    of accounting change                                            (306,865)         (77,483)          (67,158)        (303,983)

Extraordinary item                                                         -                -           259,045                -
                                                             ---------------------------------- ----------------------------------

Net income (loss) before cumulative effect of accounting
    change                                                          (306,865)         (77,483)          191,887         (303,983)

Cumulative effect of accounting change, net (Note 6)                   3,525                -                 -                -
                                                             ---------------------------------- ----------------------------------

Net income (loss)                                                   (310,390)         (77,483)          191,887         (303,983)

Accrued dividends on preferred stock                                       -                -             2,305            8,431
                                                             ---------------------------------- ----------------------------------

Net income (loss) applicable to common stock                   $    (310,390)   $     (77,483)    $     189,582    $    (312,414)
                                                             ================================== ==================================

Net (loss) before cumulative effect of accounting change per
    common share                                               $      (10.23)   $       (2.58)

Cumulative effect of accounting change per common share                (0.12)               -
                                                             ----------------------------------

Basic and diluted net (loss) per common share                  $      (10.35)   $       (2.58)
                                                             ==================================

Weighted average number of shares outstanding                     29,995,233       30,000,000
                                                             ==================================

</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>


                             THE GRAND UNION COMPANY
                           CONSOLIDATED BALANCE SHEET
             (dollars in thousands, except par value and share data)
<TABLE>
<CAPTION>

                                                                                                  April 1,           April 3,
                                                                                                    2000               1999
                                                                                              ------------------ ------------------
<S>                                                                                             <C>                <C>
ASSETS
Current assets:

  Cash and temporary investments                                                                $      19,895      $      57,414
  Receivables, net                                                                                     43,865             34,645
  Inventories                                                                                         145,293            152,217
  Other current assets                                                                                 12,907              7,644
                                                                                              ------------------ ------------------
    Total current assets                                                                              221,960            251,920
Property, plant and equipment, net                                                                    324,719            327,881
Excess reorganization value, net                                                                      182,569            314,420
Beneficial leases, net                                                                                 52,779             66,547
Deferred tax asset                                                                                          -            114,429
Other assets                                                                                           11,407             14,053
                                                                                              ------------------ ------------------
      Total assets                                                                              $     793,434      $   1,089,250
                                                                                              ================== ==================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:

  Current portion of obligations under capital leases                                           $       4,544      $       6,303
  Accounts payable and accrued liabilities                                                            195,261            171,999
                                                                                              ------------------ ------------------
    Total current liabilities                                                                         199,805            178,302
Long-term debt                                                                                        234,000            230,000
Obligations under capital leases                                                                      143,229            154,837
Adverse leases, net                                                                                    69,155             74,322
Other noncurrent liabilities                                                                          150,018            144,172
                                                                                              ------------------ ------------------
    Total liabilities                                                                                 796,207            781,633
                                                                                              ------------------ ------------------

Commitments and contingencies (Notes 10, 11, & 12)

Stockholders' equity (deficit):
  Common stock $.01 par value; 60,000,000 shares authorized, 29,992,098 and 30,000,000
    shares issued and outstanding at April 1, 2000 and April 3, 1999, respectively                        300                300
  Preferred stock $1.00 par value; 10,000,000 shares authorized, no shares issued and
    outstanding at April 1, 2000 and April 3, 1999                                                          -                  -
  Capital in excess of par value                                                                      384,800            384,800
  Accumulated deficit                                                                                (387,873)           (77,483)
                                                                                              ------------------ ------------------
    Total stockholders' equity (deficit)                                                               (2,773)           307,617
                                                                                              ------------------ ------------------
      Total liabilities and stockholders' equity (deficit)                                      $     793,434      $   1,089,250
                                                                                              ================== ==================


</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>


                             THE GRAND UNION COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (dollars in thousands)
<TABLE>
<CAPTION>

                                                                          Successor Company                Predecessor Company
                                                                   --------------------------------- -------------------------------
                                                                      52 Weeks         33 Weeks         20 Weeks        52 Weeks
                                                                        Ended            Ended            Ended           Ended
                                                                      April 1,         April 3,        August 15,       March 28,
                                                                        2000             1999             1998            1998
                                                                   ---------------- ---------------- -------------------------------
OPERATING ACTIVITIES:

<S>                                                                 <C>              <C>              <C>             <C>
  Net income (loss)                                                 $    (310,390)   $     (77,483)   $     191,887   $    (303,983)
  Adjustments to reconcile net income (loss) to net cash provided
   by (used for) operating activities before reorganization items
   paid:
    Depreciation and amortization                                         200,758          120,591           62,245         197,254
    Unusual items                                                          19,604              988            4,789               -
    Deferred taxes                                                        114,429              567                -          51,393
    Extraordinary item                                                          -                -         (259,045)              -
    Cumulative effect of accounting change, net                             3,525                -                -               -
    Pension and other non-cash items                                       10,496            6,466            3,957           5,850
    Non-cash interest                                                       1,073              972              626             907
    Gain on sale of property                                               (3,126)          (1,889)               -               -
  Net changes in assets and liabilities:

    Receivables                                                            (9,220)         (12,077)          (1,506)          7,588
    Inventories                                                             3,649          (24,484)          (5,579)          3,056
    Other current assets                                                   (5,267)          (2,023)             (99)           (461)
    Other assets                                                              303              (86)              29          (1,878)
    Accounts payable and accrued liabilities                                9,162             (751)          22,347          15,582
    Other noncurrent liabilities                                           (4,673)          (5,708)            (517)         (7,749)
                                                                   ---------------- ---------------- -------------------------------
  Net cash provided by (used for) operating activities before              30,323            5,083           19,134         (32,441)
   reorganization items paid
    Reorganization items paid                                              (1,373)            (988)          (9,102)         (3,681)
                                                                   ---------------- ---------------- -------------------------------
  Net cash provided by (used for) operating activities                     28,950            4,095           10,032         (36,122)
                                                                   ---------------- ---------------- -------------------------------
INVESTMENT ACTIVITIES:

   Capital expenditures                                                   (66,301)         (20,943)          (3,413)        (39,727)
   Proceeds from sale of property                                           1,755            4,639                -               -
   Disposals of property                                                       84            2,519               49           5,897
                                                                   ---------------- ---------------- -------------------------------
  Net cash (used for) investment activities                               (64,462)         (13,785)          (3,364)        (33,830)
                                                                   ---------------- ---------------- -------------------------------
FINANCING ACTIVITIES:

   Net proceeds from sale of preferred stock                                    -                -                -          40,000
   Net proceeds from sale of common stock                                       -                -                -             258
   Proceeds from new term loan                                                  -                -          230,000          77,978
   Proceeds from Revolving Credit Facility                                206,000                -                -               -
   Proceeds from DIP facility                                                   -                -          108,000               -
   Repayment of Revolving Credit Facility                                (202,000)               -                -               -
   Repayment of DIP facility                                                    -                -         (108,000)              -
   Financing fees                                                               -                -           (7,895)         (9,842)
   Repayment of old bank debt                                                   -                -         (182,122)              -
   Obligations under capital leases discharged                             (6,007)          (4,198)          (3,094)         (8,770)
   Net repayment of long-term debt                                              -                -          (17,000)        (19,046)
                                                                   ---------------- ---------------- -------------------------------
  Net cash provided by (used for) financing activities                     (2,007)          (4,198)          19,889          80,578
                                                                   ---------------- ---------------- -------------------------------

Net increase (decrease) in cash and temporary investments                 (37,519)         (13,888)          26,557          10,626
Cash and temporary investments at beginning of period                      57,414           71,302           44,745          34,119
                                                                   ---------------- ---------------- -------------------------------
Cash and temporary investments at end of period                     $      19,895    $      57,414    $      71,302   $      44,745
                                                                   ================ ================ ===============================

Supplemental disclosure of cash flow information:

  Interest payments                                                 $      41,987    $      24,738    $      21,358   $      77,658
  Capital lease obligations incurred                                        1,561            7,550                -          21,654
  Accrued dividends                                                             -                -            2,305           8,431
  Taxes paid                                                                4,880                6               13             193

</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>



                             THE GRAND UNION COMPANY
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                             (amounts in thousands)

<TABLE>
<CAPTION>

                                                                             Stockholders' Equity (Deficit)
                                                       ----------------------------------------------------------------------------
                              Redeem-able  Redeem-able                                                    Accumu-lated    Total
                                                                                                             Other
                                                                                                            Compre-      Stock-
                                                                                  Capital                   hensive
                                Class A      Class B                              in Excess    Accumu-      Income      holders'
                               Preferred    Preferred     Common     Preferred       of         lated                    Equity
                                 Stock        Stock       Stock        Stock      Par Value   (Deficit)     (Loss)      (Deficit)
                              ------------ ------------------------------------- ------------------------------------- ------------
<S>                            <C>          <C>         <C>          <C>          <C>         <C>          <C>          <C>
Predecessor Company

Balance at March 29, 1997      $   65,000   $      -    $      100   $        -   $  139,900  $ (293,210)  $        -   $ (153,210)
Issuance of Common Stock                -            -           2            -          256           -            -          258
Issuance of Class B
  Preferred Stock                       -       40,000           -            -            -           -            -            -
Accrued Class A Preferred
  Stock Dividends                   5,685            -           -            -       (5,685)          -            -       (5,685)
Accrued Class B Preferred
  Stock Dividends                       -        2,746           -            -       (2,746)          -            -       (2,746)
Additional minimum pension
  liability                             -            -           -            -            -                   (1,550)      (1,550)
Other                                   -            -           -            -          281           -            -          281
Net loss for the 52 weeks
  ended March 28, 1998                  -            -           -            -            -    (303,983)           -     (303,983)
                              ------------ ------------------------------------- ------------------------------------- ------------

Balance at March 28, 1998      $   70,685   $   42,746  $      102   $        -   $  132,006  $ (597,193)  $   (1,550)  $ (466,635)
Net income for the 20 weeks
  ended August 15, 1998                 -            -           -            -            -     191,887            -      191,887
Extinguishment of
  Stockholders' Equity in
  connection with
  Reorganization                  (70,685)     (42,746)       (102)           -     (132,006)    405,306        1,550      274,748
                              ------------ ------------------------------------- ------------------------------------- ------------

Balance at August 15, 1998     $        -   $        -  $        -   $        -    $       -   $       -   $        -   $        -
                              ============ ===================================== ===================================== ============

</TABLE>

<TABLE>
<CAPTION>

                                                                             Stockholders' Equity (Deficit)
                                                       ----------------------------------------------------------------------------
                                                                                                            Accumu-       Total
                                                                                                          lated Other    Stock-
                                                 Common Stock                    Capital in    Accumu-      Compre-     holders'
                                           -------------------------
                                             Number                  Preferred    Excess of     lated       hensive      Equity
                                            Of Shares     Amount       Stock      Par Value   (Deficit)     Income      (Deficit)
                                           ------------------------------------- ------------------------------------- ------------
Successor Company

<S>                                             <C>     <C>          <C>          <C>         <C>          <C>          <C>
Balance at August 15, 1998                         -    $      -     $      -     $      -    $      -     $      -     $      -
Issuance of Common Stock                        30,000         300            -      384,800           -            -      385,100
Net loss for the 33 weeks
  ended April 3, 1999                                -           -            -            -     (77,483)           -      (77,483)
                                           ------------------------------------- ------------------------------------- ------------

Balance at April 3, 1999                        30,000  $      300   $      -     $  384,800  $  (77,483)  $      -     $  307,617
Net loss for the 52 weeks
  ended April 1, 2000                                -           -            -            -    (310,390)           -     (310,390)
Unreturned Old Senior Notes                         (8)          -            -            -           -            -            -
                                           ------------------------------------- ------------------------------------- ------------

Balance at April 1, 2000                        29,992  $      300   $      -     $  384,800  $ (387,873)  $      -     $   (2,773)
                                           ===================================== ===================================== ============

</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>


                             THE GRAND UNION COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Basis of Presentation and Summary of Significant Accounting Policies

     The Company is a regional food retailer, currently operating stores in six
northeastern states. The Company has been publicly owned since June 15, 1995.

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. Intercompany transactions
and balances have been eliminated in consolidation.

Fiscal Year

     The Company's fiscal year ends on the Saturday nearest the last day of
March. The years ended April 1, 2000 ("Fiscal 2000") and March 28, 1998 ("Fiscal
1998") were each comprised of 52 weeks. The year ended April 3, 1999 ("Fiscal
1999") was comprised of 53 weeks. Fiscal 1999 includes the 20 weeks prior to
August 17, 1998 ("the Effective Date") which have been designated "Predecessor
Company" and the 33 weeks subsequent to the Effective Date which have been
designated "Successor Company."

Temporary Cash Investments

     The Company considers all liquid investments with original maturities of
three months or less to be cash equivalents.

Inventories

     Grocery and general merchandise inventories are all valued at the lower of
LIFO cost or market. Approximately $145,293,000 of grocery, general merchandise
and perishable inventories at April 1, 2000 and $137,217,000 of grocery and
general merchandise inventories at April 3, 1999 were valued using the LIFO
method. Replacement cost exceeded LIFO cost of these inventories by
approximately $3,901,000 and $626,000 at April 1, 2000 and April 3, 1999,
respectively. At April 3, 1999, perishable inventories were valued at the lower
of average cost or market, which provided for the matching of costs and related
revenues due to the rapid turnover of such inventories.

Capitalization, Depreciation and Amortization

     Land, buildings, fixtures and equipment and leasehold improvements are
recorded at cost. Estimated useful lives are generally as follows: buildings and
improvements - 10 to 40 years; leasehold improvements - 10 to 20 years;
equipment - 3 to 10 years and capitalized leases - 3 to 40 years. Properties
held under capital leases are capitalized net of gains on sale-leaseback
transactions and are amortized using the straight-line method over the life of
the asset or the life of the lease, as appropriate.

Excess Reorganization Value

     Excess Reorganization Value, established in connection with Fresh-Start
Reporting, is being amortized on a straight-line basis over three years.
Accumulated amortization was $212,997,000 and $81,146,000 at April 1, 2000 and
April 3, 1999, respectively.

Beneficial Leases

     Amortization of beneficial leases is computed using the straight-line basis
over the lease life. At April 1, 2000 and April 3, 1999, accumulated
amortization was $24,818,000 and $11,050,000, respectively.

Deferred Financing Fees

     Financing fees are deferred and amortized over the term of the related
loan. At April 1, 2000 and April 3, 1999, accumulated amortization was
$2,551,000 and $972,000, respectively.


                                      F-7
<PAGE>


Income Taxes

     Deferred income taxes are recognized for tax consequences of "temporary
differences" by applying enacted statutory tax rates applicable to future years
to the differences between the financial reporting and tax basis of existing
assets and liabilities. Valuation allowances are recorded to the extent that it
is more likely than not that future tax benefits will not be realized.

Retirement Plans

     The Company maintains a noncontributory, trusteed pension plan covering
eligible employees and a supplemental nonqualified, nontrusteed plan for certain
executives. The Company's policy is to fund pension amounts, which satisfy the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Company also maintains a savings plan for all non-union employees
in which those eligible may contribute up to a total of 14% of their salary; the
allowable percentage of pre- and post-tax contributions vary depending upon the
earnings of a particular employee. The Company provides a match of 25% on the
dollar up to the first 4% of employee contributions.

Postretirement Benefits Other than Pensions

     The Company accrues the estimated cost of retiree benefit payments, other
than pension, during the years each employee provides services.

Stock-Based Compensation

     The Company accounts for stock-based compensation using the intrinsic value
method of accounting prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") under which compensation
cost is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of grant over the exercise price of the option
granted. Compensation cost for stock options, if any, is recognized ratably over
the vesting period. The Company provides additional pro forma disclosures as
required under Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123").

Self Insurance

     The Company self-insures workers' compensation, automobile liability,
general liability and non-union employee medical costs to varying deductible
limits, and with the exception of medical costs, carries third party insurance
in excess of such limits. Reserves are provided for the estimated settlement
value up to the deductible limit of all claims incurred during each policy year.
At April 1, 2000 and April 3, 1999, the total self insurance reserve was
$54,133,000 and $52,412,000, respectively, of which $41,047,000 and $44,005,000
is reflected in other noncurrent liabilities in the accompanying consolidated
balance sheet.

Adverse Leases

     Amortization of adverse leases is computed using the straight-line basis
over the lease life. At April 1, 2000 and April 3, 1999, accumulated
amortization was $8,355,000 and $3,188,000, respectively.

Revenue Recognition

     Revenues from the sale of products are recognized at the point of sale to
the Company's customers.

Advertising Costs

     Advertising costs are expensed as incurred. Advertising expense for Fiscal
2000, the 33 weeks ended April 3, 1999, the 20 weeks ended August 15, 1998 and
Fiscal 1998 were $24,555,000, $15,647,000, $10,834,000 and $33,216,000,
respectively.

Store Opening and Closing Costs

     Noncapital expenditures incurred in opening new stores or remodeling
existing stores are expensed in the year in which they are incurred. When a
store is closed, the remaining investment in land, buildings and equipment, net
of expected recovery value, is expensed. For properties under operating lease
agreements, the present value cost of any remaining liability under the lease,
net of expected sublease recovery, is also expensed.

                                      F-8
<PAGE>

Fair Value of Financial Instruments

     The carrying amount of the Company's cash and temporary investments,
receivables, accounts payable and accrued liabilities approximates fair value.
The fair value of the long-term debt is based on the quoted market prices, since
such instruments are publicly traded. At April 1, 2000 and April 3, 1999, the
approximate fair value of the long-term debt was $198,900,000 and $228,275,000,
respectively.

Use of Estimates

     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 and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues, costs and expenses during the
reporting period. Actual results could differ from those estimates. Areas of
significant estimates include self-insurance reserves, realization of deferred
tax assets, retirement benefit reserves, recoverability of long-lived assets,
restructuring and other reserves.

Net Loss Per Share

Net loss per share is computed in accordance with SFAS No. 128, "Earnings Per
Share" ("SFAS No. 128"). This statement requires that entities present, on the
face of the income statement for all periods presented, basic and diluted per
share amounts. Basic earnings per share is computed using the weighted average
number of common shares outstanding for the period. Diluted earnings per share
considers the impact of any dilutive stock options or warrants outstanding
(potential common shares). For the 52 weeks ended April 1, 2000 and the 33 weeks
ended April 3, 1999, potentially dilutive shares totaling 5,810,241 and
8,021,120, respectively, have been excluded from the computation of the
Company's diluted earnings per share because the effect would have been
anti-dilutive. Net loss per share data is not meaningful for periods prior to
August 15, 1998 due to the 1998 Reorganization. The Company adopted SFAS No. 128
in the third quarter of Fiscal 1998.

Other Comprehensive Income

     Effective March 1, 1998 the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," ("SFAS No. 130"). SFAS No. 130 sets forth standards for
the reporting of comprehensive income in the financial statements. Comprehensive
income includes net earnings and other comprehensive income. Other comprehensive
income includes revenues, expenses, gains and losses that have been excluded
from net earnings and recorded directly in the stockholders' equity section of
the balance sheet.

Reclassifications

     Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the Fiscal 2000 presentation.

NOTE 2 - Restructuring Reserves

     During the 12 weeks ended April 1, 2000 (the "Fiscal 2000 Fourth Quarter"),
the Company incurred one-time charges of $19.6 million for senior management
restructuring, staff reductions and store closure costs.

<TABLE>
<CAPTION>

                                                      Recognition of
                                                      Severance and    Store Closure         Total
                                                     Pension Benefits      Costs
                                                     ---------------------------------- -----------------
<S>                                                    <C>              <C>               <C>
Severance costs                                        $       6,902    $         -       $       6,902
Pension gains                                                 (7,042)               -            (7,042)
Writedown of assets                                                -            4,814             4,814
Occupancy costs                                                    -           14,930            14,930
                                                     ---------------------------------- -----------------
   Total                                               $        (140)   $      19,744     $      19,604
Cash expenditures                                             (1,373)               -            (1,373)
Writedown of assets                                                -           (4,314)           (4,314)
Reduction of pension liability                                 7,042                -             7,042
                                                     ---------------------------------- -----------------
Restructuring reserves at April 1, 2000                $       5,529    $      15,430     $      20,959
                                                     ================================== =================
</TABLE>

     Severance costs consist of obligations to employees who were terminated or
were notified of termination under a plan authorized by senior management.


                                      F-9
<PAGE>

     The restructuring charges also include the amounts to be paid under
separation agreements for two former senior management members and the
associated reduction in the qualified and supplemental retirement plans.

       Store closure costs relate to the cost of closing 19 stores. During the
Fiscal 2000 Fourth Quarter the Company decided to close twelve poor performing
stores and it chose not to renew an agreement with Penn Traffic Company for
leasing seven other stores that have operated under the Grand Union name for the
past ten years. These costs include non-cash asset writedowns, estimated
occupancy expenses that will be paid on closed stores through 2019 and the
estimated cost of refurbishing the Penn Traffic leased stores.

NOTE 3 - 1998 Reorganization

     On August 17, 1998 (the "Effective Date"), the Company consummated the Plan
of Reorganization pursuant to the August 5, 1998 Confirmation Order of the
United States Bankruptcy Court for the District of New Jersey. Consummation of
the Plan of Reorganization resulted in a capital restructuring of the Company,
whereby approximately $600 million in then outstanding senior notes (the "Old
Senior Notes") were eliminated from the Company's balance sheet, reducing annual
interest expense by approximately $72 million.

     Consummation of the Plan of Reorganization resulted in (i) the issuance of
30,000,000 shares of common stock (the "New Common Stock") to the holders of the
Company's Old Senior Notes; (ii) the issuance of Series 1, 2 and 3 warrants (the
"New Series 1, Series 2 and Series 3 Warrants") to the holders of the Company's
then outstanding preferred stock (the "Old Preferred Stock"); (iii) the issuance
of New Series 1 Warrants to holders of the Company's then outstanding common
stock (the "Old Common Stock"); and (iv) cancellation of the Company's Old
Senior Notes, Old Preferred Stock, Old Common Stock, the then outstanding
warrants (the "Old Series 1 and Series 2 Warrants") and the then outstanding
stock options ("Old Stock Options"). On March 24, 2000, the NASDAQ Listing
Qualifications Panel advised the Company its Common Stock no longer qualified
for trading on the NASDAQ National Market and would be delisted. The Company has
appealed the decision and is seeking to transfer the Common Stock to the NASDAQ
SmallCap Market. Until a final determination is made, the Company's Common Stock
will remain on the NASDAQ National Market under the ticker symbol "GUCO" as it
has been since October 1, 1998. Pursuant to the Plan of Reorganization, the
number of outstanding shares of New Common Stock was reduced to 29,992,389 as of
August 17, 1999, because of unreturned Old Senior Notes.

     On the Effective Date and in connection with the consummation of the Plan
of Reorganization, the Company entered into a $300 million credit agreement (the
"Credit Agreement") with UBS AG, Stamford Branch and Lehman Commercial Paper
Inc. ("LCPI") as agents for a syndicate of lenders, which is secured by
substantially all of the assets of the Company and its subsidiaries and is
guaranteed by the Company's subsidiaries. Some of the proceeds of the Credit
Agreement were used to pay off the Company's obligations under its
debtor-in-possession credit agreement (the "DIP Facility"), which had provided
the Company operating liquidity during the Chapter 11 case.

NOTE 4 - Fresh-Start Reporting

     Upon emergence from its Chapter 11 proceedings in connection with the 1998
Reorganization, the Company adopted fresh-start reporting in accordance with
American Institute of Certified Public Accountants Statement of Position 90-7,
"Financial Reporting By Entities in Reorganization Under The Bankruptcy Code"
("Fresh-Start Reporting"). In connection with the adoption of Fresh-Start
Reporting, a new entity has been deemed created for financial reporting
purposes. The period presented prior to the Effective Date has been designated
"Predecessor Company" and the period subsequent to the Effective Date has been
designated "Successor Company". For financial reporting purposes, the Company
accounted for the consummation of the Plan of Reorganization effective August
15, 1998. In accordance with Fresh-Start Reporting, the Company valued its
assets and liabilities at fair values and eliminated its accumulated deficit at
the Effective Date.

     As of the Effective Date the reorganization value of the Company's common
equity of approximately $385,100,000 was determined by the Company with the
assistance of financial advisors in reliance upon various valuation methods,
including discounted projected cash flows analyses, price/earnings ratios, and
other applicable ratios and economic industry information relevant to the
operations of the Company, and through negotiations with the various parties in
interest. The total reorganization value as of the Effective Date was
approximately $730,000,000, which was $395,566,000 in excess of the aggregate
fair value of the Company's tangible and identified intangible assets. Such
excess is classified as "Excess reorganization value, net" in the accompanying
consolidated balance sheet and is being amortized on a straight-line basis over
a three-year period.

                                      F-10
<PAGE>

     As a result of the consummation of the Plan of Reorganization, the Company
recognized an extraordinary gain on debt discharge as follows (in thousands):
<TABLE>
<CAPTION>

<S>                                                                               <C>
Elimination of Old Debt, deferred financing fees and accrued interest             $     645,884
Issuance of New Common Stock                                                           (385,100)
                                                                                ----------------
    Extraordinary gain on debt discharge                                          $     260,784
                                                                                ================
</TABLE>

NOTE 5 - Unusual Items

     Unusual items included in the consolidated statement of operations consist
of the following (in thousands):

<TABLE>
<CAPTION>

                                                                        Successor Company                 Predecessor Company
                                                                ---------------------------------- ---------------------------------
                                                                    52 Weeks         33 Weeks          20 Weeks         52 Weeks
                                                                     Ended            Ended             Ended            Ended
                                                                    April 1,         April 3,         August 15,       March 28,
                                                                      2000             1999              1998             1998
                                                                ---------------------------------- ---------------------------------
                                                                ---------------------------------- ---------------------------------
<S>                                                               <C>              <C>               <C>              <C>
Reserve for senior management restructuring, staff reductions     $      19,604    $         -       $         -      $         -
   and store closure costs
1998 reorganization items                                                     -              988             4,789            2,668
Charges relating to severance                                                 -                -                 -            3,000
1995 reorganization items                                                     -                -                 -              665
                                                                ---------------------------------- ---------------------------------
                                                                ---------------------------------- ---------------------------------
   Total unusual items                                            $      19,604    $         988     $       4,789    $       6,333
                                                                ================================== =================================
</TABLE>

     During the Fiscal 2000 Fourth Quarter, the Company incurred one-time
charges of $19.6 million for senior management restructuring, staff reductions
and store closure costs. This amount includes $4.8 million in store asset
writedowns, $14.9 million of store occupancy costs, $6.9 million in severance
charges and a $7.0 million credit for gains in pension benefit plans. The
Company paid $1,373,000 in severance during the Fiscal 2000 Fourth Quarter.

     During the 33 weeks ended April 3, 1999 and the 20 weeks ended August 15,
1998, the Company recorded $988,000 and $8,602,000, respectively in connection
with legal, advisory and bank fees associated with the Plan of Reorganization
and $3,813,000 as a net gain during the 20 weeks ended August 15, 1998 resulting
from the elimination of debt premiums.

     The Company recorded $2,668,000 of unusual charges during the fourth
quarter of Fiscal 1998 in connection with professional fees associated with the
planned prepackaged restructuring. Additionally, the Company recorded $3,665,000
of unusual charges during the third quarter of Fiscal 1998. This charge included
a $3,000,000 supplement for a reserve set at fiscal year end 1997 for the
reorganization of the Company during Fiscal 1998 and additional charges of
$665,000 for legal costs to supplement a reserve created as a result of the
Company's Chapter 11 filing in calendar year 1995.

NOTE 6 - Accounting Change

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 provides guidance on the recognition, presentation and disclosure
of revenue in financial statements. The Company adopted SAB 101 effective April
4, 1999. The Fiscal 2000 results include a $7.6 million charge against cost of
sales as a result of the adoption of SAB 101. The cumulative effect of the
change, which relates to the Successor Company for the 33 weeks ended April 3,
1999, was to increase the net (loss) for Fiscal 2000 by $3,525,000, or $0.12 per
share, net of a tax benefit of $2,449,000. The effect prior to this date has not
been computed due to the Company's emergence from bankruptcy effective August
15, 1998.


                                      F-11
<PAGE>



     Pro forma amounts (unaudited), assuming the new accounting principle was
applied during all periods presented, follow with comparisons to actual results.
<TABLE>
<CAPTION>

                                                                        Successor Company
                                                                ----------------------------------
                                                                    52 Weeks         33 Weeks
                                                                     Ended            Ended
                                                                    April 1,         April 3,
                                                                      2000             1999
                                                                ----------------------------------
<S>                                                               <C>              <C>
Net Income (Loss) Before Cumulative Effect of Accounting Change:
    As reported                                                   $    (306,865)   $     (77,483)
    Pro forma                                                          (306,865)         (81,008)

Net Income (Loss):
    As reported                                                   $    (310,390)   $     (77,483)
    Pro forma                                                          (306,865)         (81,008)

Loss Per Share Before Cumulative Effect of Accounting Change:
    As reported                                                   $     (10.23)    $      (2.58)
    Pro forma                                                           (10.23)           (2.70)

Basic & Diluted Net (Loss) Per Share:
    As reported                                                   $     (10.35)    $      (2.58)
    Pro forma                                                           (10.23)           (2.70)
</TABLE>

NOTE 7 - Property, Plant and Equipment, Net

     Property, plant and equipment, at cost, consists of the following (in
thousands):
<TABLE>
<CAPTION>

                                                                    April 1,         April 3,
                                                                      2000             1999
                                                                ---------------- ----------------
<S>                                                               <C>              <C>
Property owned:
  Land                                                            $      16,794    $      16,841
  Buildings                                                              74,024           66,782
  Fixtures and equipment                                                429,096          394,667
  Leasehold improvements                                                179,413          166,444
                                                                ---------------- ----------------
                                                                        699,327          644,734
Less: accumulated depreciation and amortization                         475,351          432,818
                                                                ---------------- ----------------
Property owned, net                                                     223,976          211,916
                                                                ---------------- ----------------

Property held under capital leases:

  Land and buildings                                                    147,782          163,968
  Equipment                                                               4,465           11,858
                                                                ---------------- ----------------
                                                                        152,247          175,826
Less: accumulated amortization                                           51,504           59,861
                                                                ---------------- ----------------
Property held under capital leases, net                                 100,743          115,965
                                                                ---------------- ----------------

Property, plant and equipment, net                                $     324,719    $     327,881
                                                                ================ ================
</TABLE>

     Depreciation and amortization of owned and leased property for Fiscal 2000,
the 33 weeks ended April 3, 1999, the 20 weeks ended August 15, 1998 and Fiscal
1998 were $59,577,000, $32,685,000, $17,612,000 and $78,554,000, respectively.

     In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company
records impairments of long-lived assets and certain identifiable intangibles
when there is evidence that events or changes in circumstances have made
recovery of an asset's carrying value unlikely. In accordance with this
statement, the Company performed an evaluation of its assets for impairment
considering the present value of estimated net future operating cash flows. This
review resulted in the Company recording an impairment loss of $15,996,000,
$7,752,000, $0 and $25,020,000 for Fiscal 2000, the 33 weeks ended April 3,
1999, the 20 weeks ended August 15, 1998 and Fiscal 1998, respectively, which
was recorded through depreciation in order to write down certain impaired store
assets.

                                      F-12
<PAGE>

NOTE 8 - Receivables and Accounts Payable and Accrued Liabilities

     Receivables at April 1, 2000 and April 3, 1999 are net of allowances for
doubtful accounts of $7,102,000 and $4,991,000, respectively.

     Accounts payable and accrued liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>

                                                                    April 1,         April 3,
                                                                      2000             1999
                                                                ---------------- ----------------
<S>                                                               <C>              <C>
Accounts payable                                                  $      97,061    $      77,542
Accrued liabilities:
  Payroll                                                                22,123           27,246
  Deferred income                                                        16,529            6,954
  Insurance                                                              15,973           14,014
  Restructuring                                                          10,621
  Other                                                                  32,954           46,243
                                                                ---------------- ----------------
    Total accounts payable and accrued liabilities                $     195,261    $     171,999
                                                                ================ ================
</TABLE>

NOTE 9 - Income Taxes

     The components of the deferred income tax provision are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                       Successor Company                 Predecessor Company
                                                               ---------------------------------- ---------------------------------
                                                                   52 Weeks         33 Weeks          20 Weeks         52 Weeks
                                                                    Ended            Ended             Ended            Ended
                                                                   April 1,         April 3,         August 15,       March 28,
                                                                     2000             1999              1998             1998
                                                               ---------------- ----------------- ---------------- -----------------
<S>                                                              <C>              <C>               <C>              <C>
Federal                                                          $      99,773    $         440     $         -      $      43,872
State                                                                   17,407              127               -              7,521
                                                               ---------------- ----------------- ---------------- -----------------
Income tax provision                                             $     117,180    $         567     $         -      $      51,393
                                                               ================= ================ ================ ================
</TABLE>

     The reconciliation of the income tax (benefit) computed at the federal
statutory rate to the reported income tax provision is as follows (in
thousands):
<TABLE>
<CAPTION>

                                                                        Successor Company                 Predecessor Company
                                                                ---------------------------------- ---------------------------------
                                                                    52 Weeks         33 Weeks          20 Weeks         52 Weeks
                                                                     Ended            Ended             Ended            Ended
                                                                    April 1,         April 3,         August 15,       March 28,
                                                                      2000             1999              1998             1998
                                                                ---------------- ----------------- ---------------- ----------------

<S>                                                               <C>              <C>               <C>              <C>
(Benefit) computed at federal statutory tax rate                  $     (66,390)   $     (26,920)    $     (24,114)   $     (88,407)
(Increase) decrease in the benefit resulting from:
   Amortization of excess reorganization value                           46,148           28,401            14,045           36,257
   State and local taxes, net of federal income tax benefit and
    valuation allowance                                                  17,407               83            (1,434)          (9,039)
   Other                                                                    411             (997)            1,703           (2,005)
   Deferred tax asset valuation allowance (federal)                     119,604                -             9,800          114,587
                                                                ---------------- ----------------- ---------------- ----------------
Income tax provision                                              $     117,180    $         567     $         -      $      51,393
                                                                ================ ================= ================ ================

</TABLE>


                                      F-13
<PAGE>


     The components of the net deferred tax asset are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                    April 1,         April 3,
                                                                      2000             1999
                                                                ---------------- ----------------
<S>                                                               <C>             <C>

Deferred tax assets:
   Insurance reserve                                              $      23,516   $       24,414
   Pension                                                               20,657           19,180
   Postretirement benefit liability                                      19,114           18,063
   Depreciable assets                                                    37,282           33,375
   Other miscellaneous reserves                                          41,039           27,289
   Net operating loss carryforward                                        5,912                -
                                                                ---------------- ----------------
Total deferred tax assets                                               147,520          122,321
                                                                ---------------- ----------------

Deferred tax liabilities:
   LIFO reserve                                                           6,212            7,892
                                                                ---------------- ----------------
Total deferred tax liabilities                                            6,212            7,892
                                                                ---------------- ----------------

Net deferred tax asset before valuation allowance                       141,308          114,429
Valuation allowance                                                    (141,308)               -
                                                                ---------------- ----------------
Net deferred tax asset                                           $            -   $      114,429
                                                                ================ ================
</TABLE>

     The Company recorded a provision for income tax of $117,180,000 for Fiscal
2000 and $567,000 for the 33 weeks ended April 3, 1999, representing federal and
state income taxes. The Company recorded no income tax benefit relating to net
operating losses generated during Fiscal 2000, the 20 weeks ended August 15,
1998 and Fiscal 1998, as they were offset by valuation allowances.

     During the fourth quarter of Fiscal 2000, the Company determined that the
likelihood of realizing its net deferred tax asset had significantly diminished
as a result of long-term financial prospects. As a result, a valuation allowance
was established to fully reserve for its entire net deferred tax asset.
Similarly, during the fourth quarter of Fiscal 1998, the company established a
valuation allowance for the portion of its deferred tax asset relating to
temporary differences.

     As of April 1, 2000, the Company had a net operating loss carryforward of
approximately $14,419,000, expiring in the year 2020. At the end of Fiscal 1999,
all credit and operating loss carryforward balances were completely offset by
the discharge of indebtedness income recorded in connection with the Plan of
Reorganization. In addition, the tax basis of the Company's assets was reduced
by $26,864,000, representing the Company's discharge of indebtedness income in
excess of its operating loss and credit carryforwards as of April 3, 1999.

NOTE 10 - Debt

     The components of the Company's debt are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                    April 1,         April 3,
                                                                      2000             1999
                                                                ---------------- ----------------
<S>                                                               <C>              <C>
Bank Credit Agreements:
  Term Loans                                                      $     230,000    $     230,000
  Revolving Credit Facility                                               4,000                -
                                                                ---------------- ----------------
                                                                        234,000          230,000
Less: current maturities of long-term debt                                    -                -
                                                                ---------------- ----------------
Long-term debt                                                    $     234,000    $     230,000
                                                                ================ ================
</TABLE>

     In connection with the Chapter 11 filing in the 1998 Reorganization, the
Company entered into the DIP Facility, a $172,022,020 revolving credit agreement
with Swiss Bank Corporation ("SBC") and LCPI, as agents for a syndicate of
lenders. The DIP Facility included a $50 million letter of credit sub-facility.
The DIP facility matured on August 17, 1998, the consummation date of the Plan
of Reorganization.

     On August 17, 1998, as a result of the consummation of the Plan of
Reorganization, the Company entered into the Credit Agreement. The Credit
Agreement is comprised of: (i) a $230 million term loan facility (the "Term
Loan") and (ii) a $70 million revolving credit facility (the "Revolving
Credit"). The Credit Agreement is secured by substantially all of the

                                      F-14
<PAGE>

assets of Grand Union and its subsidiaries, and is guaranteed by its
subsidiaries. The interest rate applicable to the Term Loan and Revolving Credit
is equal to, at the Company's election, either (i) 2% above the highest of (A)
Citibank's prime or base rate, (B) 0.50% over the Federal Funds Rate per annum
and (C) 1% above the certificate of deposit rate, or (ii) LIBOR plus 3%, in each
case, subject to reduction, based on certain performance criteria. At April 1,
2000, borrowings under the Credit Agreement were at a weighted average interest
rate of 8.70%. The Term Loan and Revolving Credit will mature on August 17,
2003. The proceeds of the Credit Agreement have been used to refinance the
obligations under the DIP Facility and supplemental term loan claims under the
Old Credit Agreement, and the excess portion will be used for the working
capital needs of Grand Union and its subsidiaries, including capital
expenditures. Up to $50 million of Revolving Credit will be available for the
issuance of letters of credit. As of April 1, 2000, an aggregate of $31 million
of letters of credit were issued and outstanding under the Credit Agreement.
Such letters of credit have been issued primarily in connection with the
Company's self insurance for workers compensation, auto and general liability.

     The Company recently experienced a reduction in its anticipated operating
results and, therefore, the Company's ability to achieve certain of its future
financial covenants included in the Credit Agreement became questionable. As a
result, the Company commenced negotiations with the lenders under the Credit
Agreement and, effective June 30, 2000, executed the third amendment to the
Credit Agreement (the "Third Amendment"), which, among other things, adjusted
certain of the financial covenants and permits the Company to retain a greater
portion of the proceeds of asset sales to a specified level. The Third Amendment
also provides that the financial covenants, which have an EBITDA component, will
be computed and measured based upon each of the Company's 13 fiscal reporting
periods, whereas before they were computed and measured quarterly. This new
requirement subjects the Company to increased risk that a short-term decline in
operating performance could potentially trigger an event of default under the
Credit Agreement resulting in the entire loan balance becoming due and payable,
subject to the lenders' discretion and proper notification. The Company believes
that the revised financial covenants are achievable for each period throughout
the remainder of the year, although there can be no assurance that unanticipated
adverse events will not occur. The Third Amendment also requires the Company to
retain an investment banker for purposes of exploring all strategic alternatives
and to retain a consulting company to assist in the preparation of a business
plan.

NOTE 11 - Property Leases

     The Company principally operates in leased stores and offices, in most
cases holding renewal options with varying terms. Many of the leases contain
clauses, which provide for increased rentals based upon increases in real estate
taxes, lessors' operating expenses and increased sales levels.

     Future minimum payments under capital and non-cancelable operating leases,
net of minimum sublease income, as of April 1, 2000 are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                    Capital         Operating
                                                                ---------------- ----------------
<S>                                                               <C>              <C>
Fiscal

2001                                                              $      23,561    $      31,295
2002                                                                     22,623           26,291
2003                                                                     21,792           24,562
2004                                                                     21,796           21,720
2005                                                                     22,175           19,542
Later years                                                             263,640          153,983
                                                                ---------------- ----------------
Total minimum lease payments                                            375,587          277,393
Less: sublease rental income                                             (1,739)         (15,086)
                                                                ---------------- ----------------
Net minimum lease payments                                              373,848    $     262,307
                                                                                 =================
Less: portion representing interest                                    (227,814)
                                                                ----------------
Present value of net minimum lease payments                             146,034
Less: current portion of obligations under capital leases                (4,544)
                                                                ----------------
Noncurrent portion of obligations under capital leases (net of    $     141,490
  sublease rental income)                                       ================
</TABLE>

     Contingent rentals (received)/incurred on capital leases for Fiscal 2000,
the 33 weeks ended April 3, 1999, the 20 weeks ended August 15, 1998, and Fiscal
1998 were $(1,000), $37,000, $24,000 and $81,000, respectively.

     The rental expense for all operating leases was $51,266,000, $30,397,000,
$18,887,000 and $48,262,000 during Fiscal 2000, the 33 weeks ended April 3,
1999, the 20 weeks ended August 15, 1998 and Fiscal 1998, respectively.
Contingent rental expense included in total rental expense was $2,196,000,
$1,494,000, $981,000 and $2,538,000, during Fiscal 2000, the 33 weeks ended
April 3, 1999, the 20 weeks ended August 15, 1998 and Fiscal 1998, respectively.


                                      F-15
<PAGE>


NOTE 12 - Interest Expense, Net

       The components of interest expense, net are summarized as follows (in
thousands):
<TABLE>
<CAPTION>

                                                                        Successor Company                 Predecessor Company
                                                                ---------------------------------  ---------------------------------
                                                                 52 Weeks Ended   33 Weeks Ended    20 Weeks Ended   52 Weeks Ended
                                                                    April 1,         April 3,         August 15,        March 28,
                                                                      2000             1999              1998             1998
                                                                ---------------- ----------------  ---------------- ----------------
<S>                                                               <C>              <C>               <C>              <C>
Term Loans                                                        $      19,409    $      12,315     $       9,653    $      16,813
Revolving Credit                                                            696              111               579            2,203
12% Senior Notes, net of amortization of debt premium                         -                -            16,882           70,817
Capital lease obligations                                                20,230           12,513             7,793           20,166
Banking and letter of credit fees                                         1,092            1,000               625            1,630
Deferred loan placement fees                                              1,579              972               821            1,540
Other                                                                     1,075              821               333              822
Interest income                                                            (956)            (584)             (177)            (221)
                                                                ---------------- ----------------  ---------------- ----------------
     Total interest expense, net                                  $      43,125    $      27,148     $      36,509    $     113,770
                                                                ================ ================= ================ ================
</TABLE>

NOTE 13 - Pension Plans

     The components of the net periodic pension expense for the Company's
defined benefit pension plans are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                     Fiscal           Fiscal            Fiscal
                                                                      2000             1999              1998
                                                                ----------------- ----------------- ----------------
<S>                                                               <C>              <C>               <C>
Service cost - benefits earned during the period                  $       6,971    $       6,211     $       4,492
Interest costs on projected benefit obligations                          13,544           13,150            12,700
Expected return on plan assets                                          (11,609)         (12,610)          (12,589)
Net amortization and deferral                                              (218)             340               171
                                                                ----------------- ----------------- ----------------
Net periodic pension expense                                      $       8,688    $       7,091     $       4,774
                                                                ================= ================= ================
</TABLE>

     The Company has not segregated the respective Successor and Predecessor
Company pension expense for Fiscal 1999 because it is impractical to do so.

     The actuarial present value of benefit obligations and the funded status of
the Company's pension plans are as follows (in thousands):

<TABLE>
<CAPTION>
                                                         Fiscal Year 2000                            Fiscal Year 1999
                                            ---------------------------------------------------------------------------------------
                                              Qualified    Supplemental       Total       Qualified    Supplemental      Total
                                              Retirement                                 Retirement
                                                 Plan          Plan                         Plan           Plan
                                            -------------- -------------- ------------- -------------- ------------- --------------
<S>                                         <C>            <C>            <C>           <C>            <C>           <C>
Change in benefits obligation
  Benefit obligation at beginning of year     $  213,626     $    6,707     $  220,333    $  194,482     $    7,789    $  202,271
  Service cost                                     5,805          1,166          6,971         5,794            417         6,211
  Interest cost                                   13,175            369         13,544        12,634            516        13,150
  Amendments                                           -            222            222             -              -             -
  Settlement (gain)                              (17,103)        (4,507)       (21,610)            -              -             -
  Curtailment loss                                     -          2,384          2,384             -              -             -
  Actuarial (gain) loss                          (15,417)        (1,395)       (16,812)       16,222         (1,557)       14,665
  Benefits paid                                   (8,766)          (467)        (9,233)      (15,506)          (458)      (15,964)
                                            -------------- -------------- ------------- -------------- ------------- --------------
  Benefit obligations at end of year          $  191,320     $    4,479     $  195,799    $  213,626     $    6,707    $  220,333
                                            ============== ============== ============= ============== ============= ==============

Change in plan assets
  Fair value of plan assets at beginning of
  year                                        $  186,697     $        -     $  186,697    $  192,386     $        -    $  192,386
  Actual return on plan assets                    28,565              -         28,565         9,817              -         9,817
  Employer contributions                               -          4,974          4,974             -            458           458
  Settlement (gain)                              (17,103)        (4,507)       (21,610)            -              -             -
  Benefits paid                                   (8,766)          (467)        (9,233)      (15,506)          (458)      (15,964)
                                            -------------- -------------- ------------- -------------- ------------- --------------
  Fair value of plan assets at end of year    $  189,393     $        -     $  189,393    $  186,697     $        -    $  186,697
                                            ============== ============== ============= ============== ============= ==============
  Funded status                               $   (1,927)    $   (4,479)    $   (6,406)   $  (26,929)    $   (6,707)   $  (33,636)
  Unrecognized net actuarial (gain) loss         (37,003)          (304)       (37,307)       (7,934)        (1,834)       (9,768)
  Unrecognized prior service cost                      -            222            222             -              -             -
                                            -------------- -------------- ------------- -------------- ------------- --------------
   (Accrued) pension cost                     $  (38,930)    $   (4,561)    $  (43,491)   $  (34,863)    $   (8,541)   $  (43,404)
                                            ============== ============== ============= ============== ============= ==============
</TABLE>

                                      F-16
<PAGE>


     The settlement and curtailment referred to above arose as a result of the
senior management restructuring and staff reductions discussed in Note 2.

     Weighted average assumptions used in all Company sponsored plans were as
follows:
<TABLE>
<CAPTION>

                                                    Fiscal 2000                   Fiscal 1999
                                            ----------------------------- ----------------------------
                                              Qualified                     Qualified
                                              Retirement   Supplemental    Retirement   Supplemental
                                                 Plan          Plan           Plan          Plan
                                            -------------- -------------- ------------- --------------
<S>                                             <C>            <C>            <C>           <C>
Discount rate                                   7.00%          7.00%          6.25%         6.25%
Rates of increase in future compensation        4.75%          4.75%          4.50%         4.50%
Expected return on plan assets                  7.25%           N/A           8.25%          N/A
</TABLE>

NOTE 14 - Postretirement Health Care and Life Insurance Benefits

     The Company provides certain health care and life insurance benefits for
substantially all of its full-time non-union employees and union employee
groups. The Company's postretirement plans currently are not funded. The
Company's union employee groups are participants in multi-employer plans, which
require monthly contributions and which are not subject to the provisions of
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions."

     Net postretirement benefit cost consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                                     Fiscal           Fiscal            Fiscal
                                                                      2000             1999              1998
                                                                ----------------- ----------------- -----------------
<S>                                                               <C>              <C>               <C>
Service cost - benefits earned during the period                  $         812    $         854     $         720

Interest cost on accumulated postretirement benefit obligation            2,998            2,883             2,690
Net amortization and deferral                                                 -              162                 -
                                                                ----------------- ---------------- -----------------
Net postretirement benefit expense                                $       3,810    $       3,899     $       3,410
                                                                ================= ================ =================
</TABLE>

     The Company has not segregated the respective Successor and Predecessor
Company postretirement benefit expense for Fiscal 1999 because it is impractical
to do so.

                                      F-17
<PAGE>



     The unfunded accrued postretirement benefit cost consists of the following
(in thousands):
<TABLE>
<CAPTION>

                                                                    April 1,         April 3,
                                                                      2000             1999
                                                                ---------------------------------
<S>                                                               <C>              <C>
Change in benefit obligation
  Benefit obligation at beginning of year                         $      47,670    $      44,642
  Service cost                                                              812              854
  Interest cost                                                           2,998            2,883
  Plan participants' contributions                                          732              500
  Actuarial (gain) loss                                                  (1,933)           1,499
  Benefits paid                                                          (3,135)          (2,708)
                                                                ---------------- ----------------
  Benefit obligations at end of year                              $      47,144    $      47,670
                                                                ================ ================

Change in plan assets
  Fair value of plan assets at beginning of year                  $           -    $           -
  Actual return on plan assets                                                -                -
  Employer contributions                                                  2,403            2,208
  Plan participants' contributions                                          732              500
  Benefits paid                                                          (3,135)          (2,708)
                                                                ---------------- ----------------
  Fair value of plan assets at end of year                        $           -    $           -
                                                                ================ ================

  Funded status                                                   $     (47,144)   $     (47,670)
  Unrecognized actuarial loss                                                38            1,971
  Unrecognized prior year service cost                                        -                -
                                                                ---------------- ----------------
  Accrued postretirement benefit cost                             $     (47,106)   $     (45,699)
                                                                ================ ================

Effect of a one-percentage-point increase in the assumed
health care cost trend rates:
  1.Change in service cost plus interest cost components          $          12    $          13
  2.Change in accumulated postretirement benefit obligation                 165              202

Effect of a one-percentage-point decrease in the assumed
health care cost trend rates:
  1.Change in service cost plus interest cost components          $         (11)   $         (12)
  2.Change in accumulated postretirement benefit obligation                (158)            (197)

Weighted average assumptions at year end
Discount rate                                                              7.00%            6.25%
Expected return on plan assets                                              N/A              N/A
Gross health care cost trend rates*
    (a) Pre 65 initial/ultimate                                      8.00%/4.75%      9.00%/4.50%
    (b) Post 65 initial/ultimate                                     5.00%/4.75%      6.00%/4.50%
</TABLE>

*  Initial trend rate assumed for applicable year grading down 1.0% per year to
   ultimate rate. Trend rates do not affect liabilities for retirements
   occurring on or after January 1, 1994.

     The Company provides benefits for all future retirees based on a service
related flat dollar premium allowance. Accordingly, the health care trend rate
will not be a significant factor in determining Grand Union's liability for
future retirees under its postretirement health care arrangements.

NOTE 15 - Equity Compensation Plans

     The Company grants options for common stock under two plans - The Grand
Union Company 1995 Equity Incentive Plan, as amended ("EIP") and The Grand Union
Company 1995 Non-Employee Directors' Stock Option Plan, as amended ("NEDSOP").
In connection with the 1998 Reorganization, the EIP was amended to adjust: 1)
the aggregate number of shares issuable from 6,000,000 shares to 3,250,000
shares of the Company's Common Stock; and 2) the aggregate number of shares that
may be issued to any individual participant to 3,000,000 from 2,000,000. The
NEDSOP was amended on December 9, 1999, to adjust: 1) the aggregate number of
shares issuable from 100,000 shares to 250,000

                                      F-18
<PAGE>

shares, and 2) the initial and annual grants to directors. Both plans are
administered by a committee of the Board of Directors. Options under the EIP and
the NEDSOP generally vest over four and three years respectively, subject to the
terms of individual grants. All grants outstanding become immediately
exercisable upon certain changes of control of the Company. Options under both
plans expire ten years from the grant date, unless otherwise provided in a
particular grant. As a result of the 1998 Reorganization, all then existing
options under both plans were cancelled effective August 17, 1998.

     The following tables summarize information about options outstanding for
both stock option plans:
<TABLE>
<CAPTION>

                                                    Successor Company
                                    --------------------------------------------------
                                        52 Weeks Ended            33 Weeks Ended
                                         April 1, 2000            April 3, 1999
                                    ------------------------ -------------------------
                                                 Weighted                  Weighted
                                                  Average                  Average
                                                 Exercise                  Exercise
EIP                                   Shares       Price       Shares       Price
---                                 ------------ ---------- ------------- ----------- -
<S>                                   <C>        <C>                      <C>
Outstanding at beginning of year      2,408,192  $  11.583             -  $        -
Granted                                 612,500     11.377     2,408,192     11.583
Exercised                                     -      -                 -       -
Cancelled or expired                 (1,622,084)    11.542             -       -
                                    ------------------------ -------------------------
Outstanding at end of year            1,398,608  $  11.532     2,408,192  $  11.583
                                    ======================== =========================

Options exercisable at year-end         104,110  $  12.279        61,225  $  12.320
                                    ======================== =========================

Available for issuance under the      1,851,392                  841,808
plan

Weighted average contractual life
 (years)                                  6.152                    4.081

Range of exercise prices                 $4.690                   $8.500
                                     to $13.438               to $13.438

<CAPTION>


                                                   Predecessor Company
                                    --------------------------------------------------
                                        20 Weeks Ended            52 Weeks Ended
                                        August 15, 1998           March 28, 1998
                                    ------------------------ -------------------------
                                                 Weighted                  Weighted
                                                  Average                  Average
                                                 Exercise                  Exercise
EIP                                   Shares       Price       Shares       Price
---                                 ------------ ---------- ------------- -----------
<S>                                   <C>        <C>             <C>      <C>
Outstanding at beginning of year      4,232,781  $   2.271       226,280  $   6.365
Granted                                       -      -         4,133,800      2.146
Exercised                                     -      -            (5,325)     1.844
Cancelled or expired                 (4,232,781)     2.271      (121,974)     5.658
                                    ------------------------ -------------------------
Outstanding at end of year                    -  $      -      4,232,781  $   2.271
                                    ======================== =========================

Options exercisable at year-end               -  $       -     2,983,981  $   1.972
                                    ======================== =========================

Available for issuance under the              -                1,767,219
plan

Weighted average contractual life
 (years)                                      -                    9.386

Range of exercise prices                      -                   $1.375
                                                               to $6.625
</TABLE>

<TABLE>
<CAPTION>

                                                    Successor Company
                                    --------------------------------------------------
                                        52 Weeks Ended            33 Weeks Ended
                                         April 1, 2000            April 3, 1999
                                    ------------------------ -------------------------
                                                 Weighted                  Weighted
                                                  Average                  Average
                                                 Exercise                  Exercise
NEDSOP                                Shares       Price       Shares       Price
------                              ------------ ----------- ------------ ------------
<S>                                      <C>     <C>                      <C>
Outstanding at beginning of year         40,000  $   8.759             -  $        -
Granted (*)                              50,500     10.322        40,000      8.759
Exercised                                     -      -                 -       -
Cancelled or expired                          -      -                 -       -
                                    ------------ ----------- ------------ ------------
Outstanding at end of year               90,500  $   9.631        40,000  $   8.759
                                    ============ =========== =========================

Options exercisable at year-end          30,172  $   9.193        13,328  $   8.759
                                    ============ =========== =========================

Available for issuance under the        159,500                   60,000
plan

Weighted average contractual life
 (years)                                  9.119                    9.447

Range of exercise prices                 $8.759                   $8.759
                                     to $12.500
<CAPTION>

                                                    Predecessor Company
                                    --------------------------------------------------
                                        20 Weeks Ended            52 Weeks Ended
                                        August 15, 1998           March 28, 1998
                                    ------------------------ -------------------------
                                                 Weighted                  Weighted
                                                  Average                  Average

                                                 Exercise                  Exercise

NEDSOP                                Shares       Price       Shares       Price
------                              ------------ ----------- ------------ ------------
<S>                                      <C>     <C>              <C>     <C>
Outstanding at beginning of year         68,500  $   4.472        51,000  $   5.941
Granted (*)                                   -      -            27,000      2.208
Exercised                                     -      -                 -       -
Cancelled or expired                    (68,500)     4.472        (9,500)     5.928
                                    ------------ ----------- ------------ ------------
Outstanding at end of year                    -  $       -        68,500  $   4.472
                                    ============ =========== ============ ============

Options exercisable at year-end               -  $       -        34,336  $   5.907
                                    ============ =========== ============ ============

Available for issuance under the              -                   31,500
plan

Weighted average contractual life
 (years)                                      -                    7.577

Range of exercise prices                      -                   $2.156
                                                               to $6.125


</TABLE>



(*) Subject to approval by the Stockholders of the December 9, 1999 amendments
to the NEDSOP.

     The following table summarizes information about options outstanding for
the EIP as of April 1, 2000:
<TABLE>
<CAPTION>

                                                            Options Outstanding                         Options Exercisable
                                            ---------------------------------------------------- ----------------------------------
                                                                  Weighted
                                                                  Average          Weighted                           Weighted
                                                Options          Remaining          Average          Options          Average
 Range of Exercise Prices                      Outstanding     Contractual Life  Exercise Price     Exercisable     Exercise Price
 ------------------------                   ----------------- ----------------- ---------------- ---------------- -----------------
<S>                                             <C>              <C>           <C>                   <C>            <C>
    $4.6875                                        50,000           9.953         $    4.6875                -      $      N/A
     8.5000  to 10.6500                           336,742           2.768             10.5426            3,750           8.5000
    11.0000  to 12.3200                           803,866           6.674             12.1247           36,735          12.3200
    12.4375  to 13.4375                           208,000           8.699             12.4880           63,625          12.4788
                                            ----------------- ----------------- ---------------- ---------------- -----------------

   $4.6875   to 13.4375                         1,398,608           6.152         $   11.5320          104,110      $   12.2794
                                            =================                                    ================
</TABLE>

                                      F-19
<PAGE>

     The options issued under these plans will expire if not exercised at
specific dates ranging from August, 2002 to March, 2010 for the EIP and
September , 2008 to December, 2009 for the NEDSOP.

     The Company follows Accounting Principles Board Opinion 25, "Accounting for
Stock Issued to Employees," to account for its EIP and NEDSOP. No compensation
cost is recognized because the option exercise price is equal to or greater than
the market price of the underlying stock on the date of grant.

     An alternative method of accounting for stock options is SFAS No. 123.
Under SFAS No. 123, employee stock options are valued at grant date using the
Black-Scholes valuation model and compensation cost is recognized ratably over
the vesting period. Had compensation cost for the Company's stock option and
employee plans been determined based on the Black-Scholes value at the grant
dates for awards as prescribed by SFAS No. 123, net income (loss) and basic and
diluted net (loss) per common share would have been changed to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>

                                                                        Successor Company                 Predecessor Company
                                                                ---------------------------------- ---------------------------------
                                                                 52 Weeks Ended   33 Weeks Ended    20 Weeks Ended   52 Weeks Ended
                                                                    April 1,         April 3,         August 15,        March 28,
                                                                      2000             1999              1998             1998
                                                                ---------------- ----------------- ---------------- ----------------
<S>                                                              <C>              <C>               <C>              <C>
Net income (loss)
 As reported                                                     $     (310,390)  $      (77,483)   $    189,582     $     (312,414)
  Pro forma                                                            (310,896)         (77,847)        N/A                 N/A

Basic and diluted net (loss) per common share (*)
  As reported (*)                                                $       (10.35)  $        (2.58)         N/A                N/A
  Pro forma (*)                                                          (10.36)           (2.59)         N/A                N/A
</TABLE>

     (*) Basic and diluted net (loss) per common share is not meaningful for the
period prior to the Effective Date due to the significant change in the capital
structure of the Company. The Common Stock began trading on the NASDAQ National
Market on October 1, 1998.

     The weighted average fair values at date of grant for the Company's options
granted during Fiscal 2000 and Fiscal 1999 were $5.40 and $4.32, respectively.
The fair values of options were estimated using the Black-Scholes model with the
following weighted average assumptions:
<TABLE>
<CAPTION>

                                                                        Successor Company                 Predecessor Company
                                                                ---------------------------------- ---------------------------------
                                                                    52 Weeks         33 Weeks       20 Weeks Ended   52 Weeks Ended
                                                                     Ended            Ended
                                                                    April 1,         April 3,         August 15,        March 28,
                                                                      2000             1999              1998             1998
                                                                ---------------- ----------------- ---------------- ----------------
<S>                                                                   <C>              <C>              <C>              <C>
Expected life (years)                                                   4.6              4.4            N/A              N/A
Risk-free interest rate                                                5.12%            4.98%           N/A              N/A
Volatility                                                            51.72%           33.80%           N/A              N/A
Dividend yield                                                         0.00%            0.00%           N/A              N/A
</TABLE>

NOTE 16 - Related Party Transactions

     In connection with a Stock Purchase Agreement, the Company entered into a
management services agreement (the "Services Agreement") with Shamrock Capital
Advisors, Inc. ("SCA"). The Company paid $39,000 and $552,000 for Fiscal 1999
and Fiscal 1998, respectively, under the Services Agreement. The Service
Agreement expired by its terms in September 1999. No further payments will be
made to SCA due to the Plan of Reorganization. An agreement was also made in
connection with the sale of the Class A Convertible Preferred Stock with Roger
E. Stangeland, Chairman of the Board, wherewith he personally purchased an
additional 60,000 shares of the same preferred stock for an aggregate price of
$3,000,000.

NOTE 17 - Contingency Matters and Commitments

     The Company is subject to certain legal proceedings and claims arising in
connection with its business. It is management's opinion that the ultimate
resolution of such legal proceedings and claims will not have a material adverse
effect on the Company's consolidated results of operations or its financial
position.

                                      F-20
<PAGE>

     On September 24, 1999, the Company signed a term sheet (the "C&S Term
Sheet") extending its primary supply agreement with C&S and modifying certain
terms. The C&S Term Sheet provides for substantial monetary penalties in the
event the Company is sold or closes stores, and such closed or sold stores are
not thereafter supplied by C&S. The expiration date of the agreement was
extended until September 24, 2014, and the parties are drafting a final
agreement.

     Donald C. Vaillancourt, formerly corporate vice president, public affairs
counsel and corporate secretary was arrested April 17, 2000 by the Federal
Bureau of Investigation in connection with charges that Mr. Vaillancourt
embezzled substantial sums of money while employed by the Company. Unrelated to
and preceding the filing of charges against him, Mr. Vaillancourt was terminated
by the Company in connection with a reduction-in-force on February 17, 2000.
After conducting an internal investigation, Grand Union brought the matter to
the attention of the FBI and the United States Attorney's Office in Newark, New
Jersey. The Company has undertaken substantial efforts in uncovering the alleged
unlawful acts and has fully cooperated with the authorities in the formal
investigation, which has identified potential misdoings over at least the past
10 years. The Company will continue to examine materials and to fully cooperate
with the federal authorities to determine the full scope of the alleged
embezzlement. The Company has notified its insurance carrier and will seek to
recover any embezzled funds expeditiously.


                                      F-21
<PAGE>



NOTE 18 - Quarterly Financial Information (unaudited) (in thousands, except loss
per share and market price)
<TABLE>
<CAPTION>

                                                    1st               2nd              3rd               4th
                                              ----------------- ----------------- ----------------- -----------------
                                                  16 Weeks          12 Weeks         12 Weeks          12 Weeks
                                                   Ended             Ended            Ended             Ended
                                                  July 24,        October 16,       January 8,         April 1,
Fiscal 2000 (*):                                    1999              1999             2000              2000
------------                                  ----------------- ----------------- ----------------- -----------------
<S>                                            <C>               <C>              <C>               <C>
Sales                                          $      687,268    $      512,348   $      520,304    $      484,592
Gross profit                                          203,272           155,783          146,496           121,556
Unusual items                                               -                 -                -                 -
(Loss) before income taxes                            (39,621)          (24,670)         (41,426)          (83,968)
Net (loss) before cumulative effect of
   accounting change                                  (41,292)          (27,257)         (38,426)         (199,890)
Net (loss) applicable to common stock                 (44,817)          (27,257)         (38,426)         (199,890)
Basic and diluted net (loss) per common share          (1.49)            (0.91)           (1.28)            (6.66)
Market Price - high                                  11 1/2            14               13 1/16           10
Market Price - low                                    8 7/8            10 9/16           9 5/16            2 3/4

</TABLE>

(*)  Results have been restated to reflect the Company's adoption of SAB 101,
     effective April 4, 1999 (see Note 6).

<TABLE>
<CAPTION>

                                                     Predecessor Company                          Successor Company
                                              --------------------------------------------------------------------------------------
                                                    1st                        2nd                       3rd              4th
                                              ----------------- ---------------------------------- ----------------- ---------------
                                                  16 Weeks          4 Weeks          8 Weeks           12 Weeks         13 Weeks
                                                   Ended             Ended            Ended             Ended            Ended
                                                  July 18,         August 15,      October 10,        January 2,        April 3,
Fiscal 1999:                                        1998              1998             1998              1999             1999
------------                                  ----------------- ---------------------------------- ----------------- ---------------

<S>                                            <C>               <C>              <C>               <C>              <C>
Sales                                          $      691,908    $      177,054   $      342,471    $      527,666   $      547,156
Gross profit                                          205,185            52,847          102,814           153,966          164,789
Unusual items                                           4,509               280              647               341                -
(Loss) before income taxes and extraordinary
   item                                               (58,865)           (8,293)         (19,600)          (25,461)         (31,855)
Net income (loss)                                     (60,604)          252,491          (19,424)          (26,689)         (31,370)
Net income (loss) applicable to common stock          (62,909)          252,491          (19,424)          (26,689)         (31,370)
Basic and diluted net (loss) per common
   share (**)                                                                              (0.65)            (0.89)           (1.05)
Market Price - high (**)                                                                 9 1/2            13               14
Market Price - low (**)                                                                  7 1/2             7 1/2           11

</TABLE>

(**) Basic and diluted net (loss) per common share and market price information
     is not meaningful for the period prior to the Effective Date due to the
     significant change in the Capital Structure of the Company. Common Stock of
     the Successor Company began trading on the NASDAQ National Market on
     October 1, 1998. On March 24, 2000, the NASDAQ Listing Qualifications Panel
     advised the Company its Common Stock no longer qualified for trading on the
     NASDAQ National Market and would be delisted. The Company has appealed the
     decision and is seeking to transfer the Common Stock to the NASDAQ SmallCap
     Market. In order to qualify for listing on the NASDAQ SmallCap Market, the
     Company must satisfy all listing criteria, including the $1 minimum bid
     price. The Company's appeal will be considered by NASDAQ on July 27, 2000.
     Until a final determination is made, the Company's Common Stock will remain
     on the NASDAQ National Market under the ticker symbol "GUCO" as it has been
     since October 1, 1998.

                                      F-22