<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

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

            For the Quarterly Period Ended February 28, 1999

                                       OR

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

                        Commission File Number -- 0-17896

                            HANOVER FOODS CORPORATION
             (Exact name of Registrant as specified in its charter)

Commonwealth of Pennsylvania                          23-0670710
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                        Identification No.)

1486 York Road, P.O. Box 334, Hanover, PA             17331
(Address of principal executive offices)              (Zip Code)

717-632-6000
(Registrant's telephone number, including area code)

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, and (2) has been subject to such filing for the past 90
days.                                                        Yes [X]     No [ ]

Indicate the number of shares outstanding of issuer's classes of common stock as
of the latest practicable date.

<TABLE>
<CAPTION>
               Class                      Outstanding at February 28, 1999
               -----                      --------------------------------
<S>                                       <C>
   Class A Common Stock, $25 par value              289,792 shares

   Class B Common Stock, $25 par value              426,547 shares
</TABLE>


                                        1
<PAGE>   2
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                For the Thirty-Nine Weeks Ended February 28, 1999

<TABLE>
<CAPTION>
Index                                                                Page
<S>                                                                  <C>
Part I -- Financial Information

   Item 1 -- Financial Statements:

      Condensed Consolidated Balance Sheets
        February 28, 1999 (Unaudited) and May 31, 1998..............   3

      Condensed Consolidated Statements of Operations (Unaudited)
        Thirty-Nine Weeks and Thirteen Weeks Ended
        February 28, 1999 and March 1, 1998.........................   5

      Condensed Consolidated Statements of Stockholders'
        Equity, Periods Ended February 28, 1999 (Unaudited)
        and May 31, 1998............................................   6

      Condensed Consolidated Statements of Cash Flows
        (Unaudited), Thirty-Nine Weeks Ended February 28, 1999
        and March 1, 1998...........................................   7

      Notes to Condensed Consolidated Financial Statements
        (Unaudited)................................................    8

   Item 2 -- Management's Discussion and Analysis of Financial
      Condition and Results of Operations..........................   19

Part II -- Other Information.......................................   24

  Item  1   -- Legal Proceedings...................................   24
  Items 2-3 -- None................................................   26
  Item  4   -- None................................................   27
  Item  5   -- None................................................   27
  Item  6   -- Exhibits and Reports on Form 8-K....................   27
</TABLE>


                                        2
<PAGE>   3
                         PART I -- FINANCIAL INFORMATION
                          Item 1. Financial Statements
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------

                                                    February 28, 1999     May 31, 1998
ASSETS                                                 (Unaudited)
--------------------------------------------------------------------------------------
<S>                                                    <C>                <C>
Current Assets:
   Cash and Cash Equivalents                           $  2,091,000       $  2,337,000
   Accounts and Notes Receivable, Net                    23,223,000         23,429,000
   Accounts Receivable from Related Parties, Net            193,000            389,000
   Inventories                                           55,754,000         42,962,000
   Prepaid Expenses                                       2,272,000          2,244,000
   Deferred Income Taxes                                    365,000            365,000
--------------------------------------------------------------------------------------

Total Current Assets                                     83,898,000         71,726,000
--------------------------------------------------------------------------------------

Property, Plant and Equipment, at Cost:
   Land and Buildings                                    44,415,000         35,171,000
   Machinery and Equipment                               93,556,000         86,965,000
   Leasehold Improvements                                   383,000            374,000
--------------------------------------------------------------------------------------

                                                        138,354,000        122,510,000
   Less Accumulated Depreciation and
     Amortization                                        77,103,000         72,641,000
--------------------------------------------------------------------------------------

                                                         61,251,000         49,869,000

   Construction in Progress                                  65,000          4,411,000
--------------------------------------------------------------------------------------

Total Property, Plant and Equipment                      61,316,000         54,280,000
--------------------------------------------------------------------------------------

Other Assets:
   Intangible Assets, Net                                 2,283,000          2,323,000
   Other Assets                                           3,383,000          2,678,000
--------------------------------------------------------------------------------------

Total Assets                                           $150,880,000       $131,007,000
--------------------------------------------------------------------------------------
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                        3
<PAGE>   4
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY                               February 28, 1999            May 31, 1998
                                                                      (Unaudited)
-------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                         <C>
Current Liabilities:
   Notes Payable - Banks                                              $  31,103,000             $  19,874,000
   Accounts Payable                                                      24,671,000                23,979,000
   Accrued Expenses                                                       8,206,000                 7,717,000
   Current Maturities of Long-Term Debt                                   1,859,000                 1,859,000
   Income Taxes Payable                                                   2,503,000                 1,498,000
-------------------------------------------------------------------------------------------------------------

Total Current Liabilities                                                68,342,000                54,927,000
-------------------------------------------------------------------------------------------------------------

Long-Term Debt, Less Current Maturities                                  14,286,000                14,359,000
Other Liabilities                                                         1,980,000                 1,565,000
Deferred Income Taxes                                                     4,618,000                 4,686,000
-------------------------------------------------------------------------------------------------------------

Total Liabilities                                                        89,226,000                75,537,000
-------------------------------------------------------------------------------------------------------------

Stockholders' Equity:
   8.25% cumulative convertible preferred, $25 par value;
      issuable in series, 120,000 shares authorized;
      31,536 shares issued, 15,044 shares outstanding                       788,000                   788,000
   4.40% cumulative convertible preferred, $25 par value;
      issuable in series, 10,000 shares authorized; 10,000
      shares issued and outstanding                                         250,000                   250,000
   Common stock, Class A, non-voting, $25 par value;
      800,000 shares authorized, 349,210 shares issued,
      289,792 shares at February 28, 1999 and 290,860
      shares at May 31, 1998 outstanding                                  8,729,000                 8,729,000
   Common stock, Class B, voting, $25 par value;
      880,000 shares authorized, 493,123 shares issued,
      426,547 shares at February 28, 1999 and 426,766
      shares at May 31, 1998 outstanding                                 12,328,000                12,328,000
   Capital Paid in Excess of Par Value                                    2,143,000                 2,143,000
   Retained Earnings                                                     45,199,000                39,179,000
   Treasury Stock, at Cost                                               (8,053,000)               (7,993,000)
   Accumulated Other Comprehensive Income                                   270,000                    46,000
-------------------------------------------------------------------------------------------------------------

Total Stockholders' Equity                                               61,654,000                55,470,000
-------------------------------------------------------------------------------------------------------------

Total Liabilities and Stockholders' Equity                            $ 150,880,000             $ 131,007,000
-------------------------------------------------------------------------------------------------------------
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                        4
<PAGE>   5
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
           Condensed Consolidated Statements of Operations - Unaudited

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                  Thirty-Nine Weeks Ended                         Thirteen Weeks Ended
                                            February 28,             March 1,               February 28,             March 1,
                                               1999                    1998                    1999                    1998
-------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                     <C>                     <C>                     <C>
Net Sales                                  $212,189,000            $191,925,000            $ 72,946,000            $ 67,923,000
Cost of Goods Sold                          159,134,000             144,413,000              54,727,000              50,535,000
-------------------------------------------------------------------------------------------------------------------------------

Gross Profit                                 53,055,000              47,512,000              18,219,000              17,388,000

Selling Expenses                             30,472,000              27,470,000              10,905,000              10,143,000
Administrative Expenses                       8,398,000               7,452,000               3,056,000               2,952,000
-------------------------------------------------------------------------------------------------------------------------------

Operating Profit                             14,185,000              12,590,000               4,258,000               4,293,000

Interest Expense                              2,369,000               2,410,000                 867,000                 708,000
Other Expenses, Net                             424,000                 245,000                 182,000                 170,000
-------------------------------------------------------------------------------------------------------------------------------

Earnings Before Income Taxes                 11,392,000               9,935,000               3,209,000               3,415,000

Income Taxes                                  4,629,000               3,740,000               1,324,000               1,259,000
-------------------------------------------------------------------------------------------------------------------------------

Net Earnings                                  6,763,000               6,195,000               1,885,000               2,156,000
Dividends on Preferred Stock                     33,000                  26,000                  10,000                  10,000
-------------------------------------------------------------------------------------------------------------------------------

Net Earnings Applicable to
     Common Stock                          $  6,730,000            $  6,169,000            $  1,875,000            $  2,146,000
-------------------------------------------------------------------------------------------------------------------------------

Earnings Per Share:
     Net Earnings Per Common
         Share - Basic                     $       9.39            $       8.58            $       2.61            $       2.98
     Net Earnings Per Common
         Share - Diluted                   $       9.20            $       8.55            $       2.56            $       2.97
Dividends Per Share, Common                $      0.825            $      0.825            $      0.275            $      0.275
Basic Weighted Average Shares                   716,974                 718,609                 717,086                 719,037
Diluted Weighted Average Shares                 731,895                 724,347                 732,007                 724,775
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                        5
<PAGE>   6
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
            Condensed Consolidated Statements of Stockholders' Equity
                                   (Unaudited)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                     Cumulative            Cumulative
                                               Convertible Preferred   Convertible Preferred
                                                       Stock                  Stock                  Common Stock
                                                   Series A and B            Series C                  Class A
                                    Total
                                Stockholders'
                                   Equity         Shares     Amount       Shares     Amount       Shares       Amount
------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                <C>        <C>          <C>        <C>          <C>         <C>
Balance, May 31, 1998            $55,470,000      31,536     $788,000     10,000     $250,000     349,210     $8,729,000

Net Earnings for the Period        6,763,000

Cash Dividends Per Share:

     Preferred Stock                 (33,000)
     Common Stock                   (710,000)

Redemption of Common Stock

     (Class A 1,068 Shares and
      Class B 219 Shares)            (60,000)

Unrealized Gain on Investments       224,000
------------------------------------------------------------------------------------------------------------------------

Balance, February 28, 1999       $61,654,000      31,536     $788,000     10,000     $250,000     349,210     $8,729,000
------------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                   Common Stock
                                      Class B                                                 Treasury Stock          Accumulated
                                                           Capital Paid                                                 Other
                                                           in Excess of      Retained                                Comprehensive
                                  Shares      Amount         Par Value       Earnings        Shares       Amount         Income
---------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>             <C>            <C>              <C>         <C>             <C>
Balance, May 31, 1998            493,123     $12,328,000     $2,143,000     $39,179,000      141,199     $(7,993,000)     $46,000

Net Earnings for the Period                                                   6,763,000

Cash Dividends Per Share:

     Preferred Stock                                                            (33,000)
     Common Stock                                                              (710,000)

Redemption of Common Stock

     (Class A 1,068 Shares and
      Class B 219 Shares)                                                                      1,287         (60,000)

Unrealized Gain on Investments                                                                                            224,000
---------------------------------------------------------------------------------------------------------------------------------

Balance, February 28, 1999       493,123     $12,328,000     $2,143,000     $45,199,000      142,486     $(8,053,000)    $270,000
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                        6
<PAGE>   7
                       PART I -- FINANCIAL INFORMATION
                   Item 1. Financial Statements, Continued
                  HANOVER FOODS CORPORATION AND SUBSIDIARIES
         Condensed Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                                                                             Period Ended
                                                             February 28, 1999          March 1, 1998
------------------------------------------------------------------------------------------------------
<S>                                                             <C>                      <C>
Increase (Decrease) in Cash and Cash Equivalents

Operating Activities:
   Net Earnings                                                 $  6,763,000             $  6,195,000
   Adjustments to Reconcile Net Earnings to Net
      Cash Provided by Operating Activities:
         Depreciation and Amortization                             4,629,000                4,313,000
         Deferred Income Taxes                                       (68,000)                  99,000
   Changes in Assets and Liabilities:
         Accounts Receivable                                         402,000               (2,721,000)
         Inventories                                             (12,792,000)              (9,111,000)
         Prepaid Expenses                                            (28,000)                (487,000)
         Accounts Payable and Accrued Expenses                     1,181,000                8,849,000
         Income Taxes Payable                                      1,005,000                  681,000
         Other Liabilities                                           415,000                  123,000
------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                          1,507,000                7,941,000
------------------------------------------------------------------------------------------------------

Investing Activities:
   Decrease (Increase) in Other Assets                              (608,000)                 355,000
   Acquisitions of Property, Plant and Equipment                 (11,498,000)              (5,330,000)
------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                            (12,106,000)              (4,975,000)
------------------------------------------------------------------------------------------------------

Financing Activities:
   Increase (Decrease) in Notes Payable                           11,229,000               (1,932,000)
   Payments on Long-Term Debt                                        (73,000)                (449,000)
   Payment of Dividends                                             (743,000)                (619,000)
   Redemption of Common Stock                                        (60,000)                 (86,000)
   Issuance of 4.4% Preferred Stock                                        0                  770,000
------------------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities               10,353,000               (2,316,000)
------------------------------------------------------------------------------------------------------

Net Increase (Decrease) in Cash and Cash Equivalents                (246,000)                 650,000
Cash and Cash Equivalents, Beginning of Period                     2,337,000                3,312,000
------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period                           2,091,000                3,962,000
------------------------------------------------------------------------------------------------------
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                        7
<PAGE>   8
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                       February 28, 1999 and March 1, 1998
                                   (Unaudited)

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

(1)   BASIS OF PRESENTATION

      The condensed consolidated financial statements of the Registrant included
      herein have been prepared, without audit, pursuant to the rules and
      regulations of the Securities and Exchange Commission. Although certain
      information normally included in financial statements prepared in
      accordance with generally accepted accounting principles has been omitted,
      the Registrant believes that the disclosures are adequate to make the
      information presented not misleading.

      The Corporation's fiscal year ends at the close of operations on the
      Sunday nearest to May 31. Accordingly, these financial statements reflect
      activity for the thirty-nine week periods ended February 28, 1999 and
      March 1, 1998.

      It is suggested that these condensed consolidated financial statements be
      read in conjunction with the consolidated financial statements and notes
      thereto included in Form 10-K for the Corporation's fiscal year ended May
      31, 1998.

      The condensed consolidated financial statements included herein reflect
      all adjustments (consisting only of normal recurring accruals) which, in
      the opinion of management, are necessary to present a fair statement of
      the results of the interim period.

      The results for the interim periods are not necessarily indicative of
      trends or results to be expected for a full fiscal year.

(2)   SHORT-TERM BORROWINGS

      The Corporation and its subsidiaries maintain short-term unsecured lines
      of credit with various banks providing credit availability amounting to
      $65.0 million, of which $31,103,000 was borrowed at February 28, 1999. The
      average cost of funds during the thirty-nine week period ended February
      28, 1999 was 5.32%.


                                        8
<PAGE>   9
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


(3)   LONG-TERM DEBT

      The long-term debt of the Corporation and its subsidiaries consist of:

<TABLE>
<CAPTION>
                                                      February 28,      May 31,
                                                         1999            1998
      ----------------------------------------------------------------------------
<S>                                                   <C>             <C>
      8.74% unsecured senior notes payable
         to an insurance company, due
         fiscal years ending 1995-2007                 $16,071,000    $16,071,000

      Installment obligation payable to a related
         party, due in equal annual installments
         in fiscal years ending 1996-2000,
         interest at prime rate (8.0% at
         February 28, 1999)                                 74,000        147,000

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

                                                        16,145,000     16,218,000

      Less current maturities                            1,859,000      1,859,000

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

      Net Long-Term Debt                               $14,286,000    $14,359,000

      ----------------------------------------------------------------------------
</TABLE>


      The term loan agreements with the insurance company and the agreements for
      seasonal borrowing with financial institutions contain various restrictive
      provisions including those relating to mergers and acquisitions,
      additional borrowing, guarantees of obligations, lease commitments,
      limitations on declaration and payment of dividends, repurchase of the
      Corporation's stock, and the maintenance of working capital and certain
      financial ratios.

      The Corporation is in compliance with the restrictive provisions in the
      agreements.


                                        9
<PAGE>   10
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


(4)   RELATED PARTY TRANSACTIONS

      The Corporation and its subsidiaries, in the normal course of business,
      purchase and sell goods and services to related parties. The Corporation
      believes that the cost of such purchases and sales are competitive with
      alternative sources of supply and markets.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                Thirty-Nine Weeks Ended                       Thirteen Weeks Ended
                                             February 28,           March 1,            February 28,            March 1,
                                                1999                  1998                  1999                  1998
--------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                   <C>                   <C>                   <C>
Revenues:

   Park 100 Foods, Inc.                      $2,132,000            $3,559,000            $  385,000            $1,094,000

Corporate Charges:

   Snyder's of Hanover, Inc.                 $  140,000            $  135,000            $   47,000            $   47,000

Expenditures:

   Park 100 Foods, Inc.                      $   85,000            $  165,000            $   51,000            $   23,000
   ARWCO Corporation                         $   12,000            $   15,000            $    4,000            $    5,000
   Warehime Enterprises, Inc.                $   77,000            $   97,000            $   64,000            $   95,000
   John A. & Patricia M. Warehime            $   44,000            $   45,000            $   14,000            $   15,000
   James G. Sturgill                         $   48,000            $   59,000            $   12,000            $   19,000
   Lippy Brothers, Inc.                      $  956,000            $  304,000            $  702,000            $  235,000

--------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       10
<PAGE>   11
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


The respective February 28, 1999 and May 31, 1998 account balances with related
companies are as follows:

<TABLE>
<CAPTION>
                                    February 28, 1999     May 31, 1998
------------------------------------------------------------------------------
<S>                                 <C>                   <C>
Accounts Receivable:

   Snyder's of Hanover, Inc.            $ 32,000            $ 48,000
   Park 100 Foods, Inc.                 $162,000            $346,000
   Warehime Enterprises                 $      0            $  3,000

Accounts Payable:

   ARWCO Corporation                    $  1,000            $  1,000
   James G. Sturgill                    $      0            $  7,000

Notes Payable:

   Cyril T. Noel                        $ 74,000            $147,000
------------------------------------------------------------------------------
</TABLE>


                                       11
<PAGE>   12
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


(5)   ACQUISITIONS

      During the year ended May 31, 1998, the Corporation purchased assets and
      assumed certain liabilities of L.K. Bowman, Inc. and L.K. Bowman Pacific,
      Inc. These acquisitions accounted for under the purchase method were not
      material to the Corporation's results of operations for the year ended May
      31, 1998. The allocation of the purchase price is as follows:

            Accounts receivable                      $ 1,830,000
            Inventory                                  4,002,000
            Prepaid expenses                              41,000
            Property, plant and equipment                911,000
            Intangible assets                            300,000
            Goodwill                                   1,435,000
            Accounts payable                          (1,838,000)
                                                     -----------
               Total purchase price                  $ 6,681,000

      During the year ended October 1998, the Corporation purchased certain
      assets of Bickel's Potato Chip Co., Inc. This purchase was not material to
      the Corporation's results of operations for the thirteen or thirty-nine
      week periods ended February 28, 1999. The allocation of the purchase price
      is as follows:

            Inventory                                $  234,000
            Prepaid expenses                             13,000
            Property, plant and equipment             1,429,000
                                                     ----------
               Total purchase price                  $1,676,000

(6)   EARNINGS PER SHARE

      The Corporation adopted Statement of Financial Accounting Standards No.
      128, "Earnings Per Share," effective with the period ended March 1, 1998,
      and restated all prior earnings per share amounts to conform to the
      provisions thereof.


                                       12
<PAGE>   13
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


(7)   COMPREHENSIVE INCOME

      The Corporation adopted Statement of Financial Accounting Standards No.
      130, "Reporting Comprehensive Income," in the first quarter of the current
      fiscal year. Comprehensive income is determined as follows:

<TABLE>
<CAPTION>
      ----------------------------------------------------------------------------------------------------------------------
                                                Thirty-Nine Weeks Ended                         Thirteen Weeks Ended
                                          February 28,              March 1,               February 28,           March 1,
                                              1999                    1998                    1999                   1998
      ----------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                    <C>                     <C>                    <C>
      Net Income                           $ 6,763,000            $ 6,195,000             $ 1,885,000            $ 2,156,000

      Other Comprehensive
         Income (Loss):

         Unrealized Gain (Loss)
         on Investments                        224,000               (165,000)                 58,000                 81,000

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

      Comprehensive Income                 $ 6,987,000            $ 6,030,000             $ 1,943,000            $ 2,237,000
      ----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       13
<PAGE>   14
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


(8)   RECONCILIATION OF NUMERATOR AND DENOMINATOR FOR BASIC
      AND DILUTED EARNINGS PER SHARE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                     Thirty-Nine Weeks Ended               Thirteen Weeks Ended
                                                    February 28,       March 1,         February 28,       March 1,
                                                       1999              1998              1999             1998
---------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                <C>              <C>                <C>
      Numerator for basic earnings per share:

      Net earnings applicable to
         common stock                                $6,730,000        $6,169,000        $1,875,000        $2,146,000


      Preferred stock dividends                          33,000            26,000            10,000            10,000

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

      Net earnings assuming dilution                 $6,763,000        $6,195,000        $1,885,000        $2,156,000
---------------------------------------------------------------------------------------------------------------------


      Denominator:

      Basic weighted average shares                     716,974           718,609           717,086           719,037

      Effect of dilutive securities                      14,921             5,738            14,921             5,738

      Diluted weighted average shares                   731,895           724,347           732,007           724,775

---------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       14
<PAGE>   15
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


(9)   CONTINGENCIES

      LEGAL PROCEEDINGS

      1995 Warehime Family Litigation

      On February 1, 1995, Michael A. Warehime, J. William Warehime and
      Elizabeth W. Stick, three Class B shareholders of the Corporation, filed a
      compliant in the Court of Common Pleas of York County, Pennsylvania
      against the Corporation and John A. Warehime (Chairman of the
      Corporation), in his capacity as voting trustee of two voting trusts
      entitling him to vote approximately 52% of the Class B common stock. The
      Court has dismissed various claims and parties in the lawsuit and the only
      remaining parties are Michael A. Warehime as plaintiff and John A.
      Warehime as defendant. The only remaining claims are: (i) a claim for
      breach of fiduciary duty based on exercise of powers beyond those granted
      by certain voting trust agreements, (ii) a claim for breach of fiduciary
      duty for use of the voting trusts in a manner harmful to their
      beneficiaries, (iii) a count requesting removal of John A. Warehime as the
      voting trustee of the voting trusts.

      Derivative Action

      On September 13, 1996, certain Class A common stockholders filed a
      complaint in equity against six of the Corporation's directors and the
      estate of a former director in the Court of Common Pleas of York County,
      Pennsylvania (the complaint). The suit also names the Corporation as a
      nominal defendant. The suit sought various forms of relief including, but
      not limited to, rescission of the board's April 28, 1995 approval of John
      A. Warehime's 1995 Employment Agreement and the board's February 10, 1995
      adjustment of director's fees. (Since the filing of this lawsuit, John A.
      Warehime's 1995 Employment Agreement was amended.) In addition, the
      plaintiffs sought costs and fees incident to bringing suit. On November 4,
      1996, the complaint was amended to add additional plaintiffs. On June 24,
      1997, the Court dismissed the amended complaint for failure to make a
      prior demand. An appeal was filed from the court's June 24, 1997 Order. On
      December 2, 1998, the Superior Court of Pennsylvania held that the
      derivative plaintiffs had made adequate demand.

      On May 12, 1997, a written demand was received by the Corporation from the
      attorney for those Class A common stockholders containing similar
      allegations and the allegations


                                       15
<PAGE>   16
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


      raised by the Class A common stockholders were investigated by a special
      independent committee of the Board of Directors and found to be without
      merit.

      The director defendants filed an Answer and New Matter to the Amended
      Complaint on March 17, 1999.

      1997 Warehime Family Litigation

      On February 21, 1997, Michael A. Warehime, a Class B shareholder, and
      certain Class A shareholders filed motions for a preliminary injunction
      against the Corporation, John A. Warehime, in his capacity as voting
      trustee, and all certain directors of the Corporation in the Court of
      Common Pleas of York County, Pennsylvania against a Proposal of the Board
      of Directors to amend and restate the Corporation's Articles of
      Incorporation in the manner hereafter described.

      On February 13, 1997, the Board of Directors proposed an amendment and
      restatement of the Corporation's Articles of Incorporation (the "Amended
      and Restated Articles") which provides that if all of the following Class
      B Shareholders (or their estates upon the death of such stockholders),
      Michael A. Warehime, John A. Warehime, Sally W. Yelland, J. William
      Warehime, and Elizabeth W. Stick (all members of the Warehime family), do
      not agree in writing to the composition of the Board of Directors or other
      important matters specified below on or after the 1998 annual shareholders
      meeting, the trustees of the Corporation's 401(k) Savings Plan (or a
      similar employee benefit plan), acting as fiduciaries for the employees
      who participate in the Plan, and the Class A shareholders may become
      entitled to vote in the manner described in the document. Pursuant to the
      Company's Bylaws, nominations for director must be submitted to the
      Company in the manner prescribed by the Bylaws no later than June 1 of the
      year in which the meeting is to occur.

      The Amended and Restated Articles create a Series C Convertible Preferred
      Stock and also classified the terms of the Board of Directors commencing
      with the election at the 1997 annual shareholders meeting and permit
      directors to be elected for four year terms as permitted by Pennsylvania
      law.

      The motions for a preliminary injunction were dismissed by the Court on
      June 24, 1997. The Class B shareholders on June 25, 1997 approved the
      Amended and Restated Articles (John A. Warehime being the sole Class B
      shareholder voting affirmatively in his


                                       16
<PAGE>   17
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


      capacity as voting trustee) and the Amended and Restated Articles became
      effective June 25, 1997.

      In August 1997, the Board of Directors proposed a further amendment (the
      "Amendment") to the Amended and Restated Articles to expand the definition
      of "disinterested directors" in the manner described below, and to approve
      certain performance based compensation for John A. Warehime solely for the
      purpose of making the Corporation eligible for a federal income tax
      deduction pursuant to Section 162(m) of the Internal Revenue Code of 1986,
      as amended. A special meeting was scheduled for August 14, 1997 (the
      "Special Meeting") to vote on these proposals. On August 8, 1997, Michael
      A. Warehime filed a motion in the Court of Common Pleas of York County,
      Pennsylvania to prevent John A. Warehime, in his capacity as voting
      trustee from voting on these proposals and to enjoin the Amendment. This
      Motion was denied on August 11, 1997. The Amendment and the proposal under
      Section 162(m) were approved by Class B Shareholders (John A. Warehime was
      the sole Class B shareholder to vote affirmatively, in his capacity as
      voting trustee) on August 14, 1997 and the Amendment became effective on
      August 14, 1997.

      Under the Amendment, the definition of "disinterested directors" means the
      person who, in the opinion of counsel for the Corporation, meet any of the
      following criteria: (i) disinterested directors as defined in Section
      17159(e) of the Pennsylvania Business Corporations Law of 1988, as
      amended; (ii) persons who are not "interested" directors as defined in
      Section 1.23 of The American Law Institute "Principles of Corporate
      Governance: Analysis and Recommendations" (1994); or (iii) persons who
      qualify as members of the Audit Committee pursuant to Section 303.00 of
      the New York Stock Exchange's Listed Company Manual.

      Michael Warehime filed an appeal from the denial of his motion to enjoin
      the previously described Amendment to the Company's Amended and Restated
      Articles. On December 2, 1998, a majority panel of the Superior Court of
      Pennsylvania issued a decision holding that although John Warehime had
      acted in good faith in voting for the Amendment to the Amended and
      Restated Articles as trustee of the Warehime voting trust, Mr. Warehime
      breached his fiduciary duty to the beneficiaries of the Warehime voting
      trust in voting for the Amendment. On December 16, 1998, John Warehime
      filed a motion for reargument en banc with the Superior Court. On December
      16, 1998, Michael Warehime filed a motion for clarification requesting
      that the Superior Court issue an order invalidating the Amendment to the
      Amended and Restated Articles. On December 23, 1998, the Superior


                                       17
<PAGE>   18
                         PART I -- FINANCIAL INFORMATION
                     Item 1. Financial Statements, Continued
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

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


      Court denied Michael Warehime's motion for clarification. On February 8,
      1999, the Superior Court denied the motion for reargument en banc. On
      March 10, 1999, John Warehime and the other directors filed a petition for
      allowance of appeal with the Supreme Court of Pennsylvania. On March 29,
      1999, Michael Warehime filed a response to the petition for allowance of
      appeal and a cross-petition for allowance of appeal with the Supreme Court
      of Pennsylvania. On April 13, 1999, John Warehime and the independent
      directors of the Company filed a brief in opposition to the conditional
      cross-petition for allowance of appeal filed with Michael Warehime.

      The Corporation is involved in various other claims and legal actions
      arising in the ordinary course of business. In the opinion of management,
      the ultimate disposition of these matters will not have a material adverse
      effect on the Corporation's consolidated financial position, results of
      operations or liquidity.


                                       18
<PAGE>   19
                         PART I -- FINANCIAL INFORMATION
                 Item 2. Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


FORWARD LOOKING STATEMENTS

When used in this Form 10-Q, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "projected," or
similar expressions are intended to identify "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties, including, but not
limited to, quarterly fluctuations in operating results, competition, state and
federal regulation, environmental considerations, foreign operations and risks
associated with the Year 2000 Issue. Such factors, which are discussed in the
Form 10-Q, could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinion or statements expressed herein with respect to future periods. As a
result, the Company wishes to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.

The following comments should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing in the Corporation's Annual Report on Form 10-K for the fiscal year
ended May 31, 1998.

GENERAL

Prices for processed food tend to rise with overall inflation and not in line
with prices of raw farm products. Generally, price surges in farm products due
to supply shocks and crop problems are not passed on to consumers dollar for
dollar. Management believes consumers often switch from one food product that
has risen to another which has not changed in price. As a result, food
processors tend to absorb raw farm product price increases to remain
competitive. However, when raw farm product prices drop, food processors try to
retain some of the savings. The Company does not expect the overall number of
pounds of frozen and canned vegetables consumed to significantly increase over
the next several years. Generally, the Company expects sales growth by
processors beyond expected inflation rates and population growth will come at
the expense of and loss of market share by another processor. Sales growth can
increase internationally and through promotions to increase consumption through
the introduction of new or improved food products.


                                       19
<PAGE>   20
                         PART I -- FINANCIAL INFORMATION
                 Item 2. Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


RESULTS OF OPERATIONS

NET SALES

Consolidated net sales were $212.2 million for the thirty-nine week period ended
February 28, 1999. This represents an increase of 10.6% over the thirty-nine
week period ended March 1, 1998 consolidated net sales of $191.9 million.
Consolidated net sales were $72.9 million for the thirteen week period ended
February 28, 1999, a 7.4% increase from consolidated net sales of $67.9 million
for the corresponding period in the prior year. The increase was due primarily
to increases in the sales of L.K. Bowman, Sunnyside Fresh Foods, and Bickel's
Potato Chip Co., new acquisitions during the later part of fiscal 97/98 and the
second quarter of fiscal 98/99. In addition, increases in foodservice sales were
offset by decreases in frozen industrial sales.

COST OF GOODS SOLD

Cost of goods sold were $159.1 million, or 75.0% of consolidated net sales, in
the thirty-nine week period ended February 28, 1999 and $144.4 million, or 75.2%
of consolidated net sales, for the corresponding period in 1998. Cost of goods
sold was $54.7 million, or 75.0% of consolidated net sales, for the thirteen
week period ended February 28, 1999 as compared to $50.5 million, or 74.4% of
consolidated net sales, for the corresponding period in 1998. The decrease in
cost of goods sold as a percentage of net sales for the thirty-nine week period
resulted primarily from a reduction in cost of operations. The increase in the
cost of goods as a percentage of net sales for the thirteen week period was a
result of decreased frozen volume in industrial sales.

SELLING EXPENSES

Selling expenses were $30.5 million, or 14.4% of consolidated net sales, for the
thirty-nine week period ended February 28, 1999 as compared to $27.5 million, or
14.3% of consolidated net sales, during the corresponding period in 1998.
Selling expenses were $10.9 million, or 14.9% of consolidated net sales, for the
thirteen week period ended February 28, 1999 compared to $10.1 million, or 14.9%
of consolidated net sales, during the corresponding period in 1998. The increase
in selling expenses reflects higher expenses related to coupon programs.

ADMINISTRATIVE EXPENSES

Administrative expenses as a percentage of consolidated net sales were 4.0% for
the thirty-nine week period ended February 28, 1999 compared to 3.9% for the
corresponding period of 1998.


                                       20
<PAGE>   21
                         PART I -- FINANCIAL INFORMATION
                 Item 2. Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


Administrative expenses as a percentage of consolidated net sales were 4.2% for
the thirteen week period ended February 28, 1999 compared to 4.3% of
consolidated net sales during the corresponding period in 1998. The increase in
dollars was attributed to increases in outside consulting services dealing with
the Year 2000 conversion and administrative expenses of our acquisitions, L.K.
Bowman, Sunnyside Fresh Foods, and Bickel's Potato Chip Co.

INTEREST EXPENSE

Interest expense was $2,369,000 for the thirty-nine week period ended February
28, 1999 as compared to $2,410,000 for the same period in 1998. Interest expense
was $0.9 million for the thirteen week period ended February 28, 1999 compared
to $0.7 million for the same period in 1998. The decrease in interest expense
for the thirty-nine week period was previously due to lower borrowing rates. The
increase in interest expense for the thirteen week period is due to increased
seasonal borrowing levels which was partially offset by lower borrowing rates.

OTHER EXPENSES, NET

Other expenses, net were $424,000 for the thirty-nine week period ended February
28, 1999 as compared to $245,000 for the same period in 1998. Other expenses,
net were $182,000 for the thirteen week period ended February 28, 1999 as
compared to $170,000 for the same period in 1998. Increased goodwill
amortization due to the acquisitions of L.K. Bowman, Sunnyside Fresh Foods and
Bickel's Potato Chip Co. and increased foreign exchange loss contributed to the
increased expenses during both the thirty-nine and thirteen week periods as
compared to the prior year periods.

INCOME TAXES

The provision for federal and state income taxes for the thirty-nine week period
ended February 28, 1999 was $4.6 million, or 40.6% of pretax earnings, as
compared to $3.7 million, or 37.6% for the same period in 1998. The increase in
the effective tax rate for both the thirty-nine week and thirteen week periods
was due to decreased earnings in foreign jurisdictions with lower tax rates in
the current year periods as compared to prior year periods.

LIQUIDITY AND CAPITAL RESOURCES

Management's discussion of the Corporation's financial condition should be read
in conjunction with the condensed consolidated statements of cash flows
appearing on page 7 of this report.


                                       21
<PAGE>   22
                         PART I -- FINANCIAL INFORMATION
                 Item 2. Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


OPERATING ACTIVITIES

Cash provided by operating activities for the thirty-nine week period ended
February 28, 1999 was $1.5 million as compared to $7.9 million during the same
period of 1998. Increased inventory levels utilized more cash flow in the
current period compared to the same period in the prior year. In addition, the
same period in 1998 consumed less in cash for accounts receivable and provided
more cash from increases in accounts payable and accrued expense levels.

INVESTING ACTIVITIES

During the thirty-nine week period ended February 28, 1999, the Corporation
spent approximately $11.5 million for the purchase of land and plant upgrades
and expansions. This compares to $5.3 million spent during the same period last
year for capital projects.

FINANCING ACTIVITIES

The increase in notes payable of approximately $11.2 million during the
thirty-nine week period ended February 28, 1999 represents borrowings made
against available seasonal lines of credit from financial institutions for use
in operations and plant upgrades and expansions.

The Corporation has available seasonal lines of credit from financial
institutions in the amount of $65.0 million, of which $31.1 million was utilized
as of February 28, 1999. Additional borrowings are permitted within parameters
in existing debt agreements. Management believes these credit facilities provide
adequate availability for seasonal operating requirements.

YEAR 2000

Many existing computer programs, including those utilized by the Corporation,
use only two digits to identify a year in the date field. These programs were
designed and developed without considering the impact of the upcoming change in
the century. If not corrected, any computer applications could fail or create
erroneous results by or at the Year 2000 (the "Year 2000 Issue"). The
Corporation has retained an outside consultant to manage the Corporation's
efforts to bring its computer system into Year 2000 compliance. The Corporation
has contacted its customers, key suppliers and its equipment manufacturers in an
attempt to ensure third party compliance.

In 1997, the Corporation established a management team to assess the
Corporation's Year 2000 issues and to implement the Corporation's Year 2000
compliance program. The management team includes members of the Corporation's
Management Information, Accounting and Finance


                                       22
<PAGE>   23
                         PART I -- FINANCIAL INFORMATION
                 Item 2. Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


Departments and certain officers of the Corporation. The Corporation has
completed the majority of its implementation and testing program and currently
anticipates having all of its information technology systems as well as
non-information technology systems (which include the Corporation's
telecommunications systems and food processing equipment) Year 2000 compliant by
the end of the first quarter of fiscal year 2000. The Corporation is also in the
process of developing a contingency plan in the event its systems are not Year
2000 compliant on a timely basis. The Corporation currently estimates the total
costs associated with addressing the Year 2000 Issue to be approximately
$450,000 and anticipates that such costs will not materially affect the
Corporation's future financial results.

As part of its Year 2000 compliance program, the Corporation is contacting and
surveying vendors and customers with whom the Corporation does a material amount
of business to determine whether these parties' systems (to the extent they
relate to the Corporation's business) are subject to Year 2000 issues. The
failure of the Corporation's material vendors or customers to convert their
systems on a timely basis may have a material adverse effect on the
Corporation's operations. The Corporation is in the process of developing a
contingency plan in the event these vendors or customers with which the
Corporation does a material amount of business are not Year 2000 compliant on a
timely basis.


                                       23
<PAGE>   24
                          PART II -- OTHER INFORMATION
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


ITEM 1.  LEGAL PROCEEDINGS

1995 Warehime Family Litigation

On February 1, 1995, Michael A. Warehime, J. William Warehime and Elizabeth W.
Stick, three Class B shareholders of the Corporation, filed a complaint in the
Court of Common Pleas of York County, Pennsylvania against the Corporation and
John A. Warehime (Chairman of the Corporation), in his capacity as voting
trustee of two voting trusts entitling him to vote approximately 52% of the
Class B common stock. The Court has dismissed various claims and parties in the
lawsuit and the only remaining parties are Michael A. Warehime as plaintiff and
John A. Warehime as defendant. The only remaining claims are: (i) a claim for
breach of fiduciary duty based on exercise of powers beyond those granted by
certain voting trust agreements, (ii) a claim for breach of fiduciary duty for
use of the voting trusts in a manner harmful to their beneficiaries, (iii) a
count requesting removal of John A. Warehime as the voting trustee of the voting
trusts.

Derivation Action

On September 13, 1996, certain Class A common stockholders filed a complaint in
equity against six of the Corporation's directors and the estate of a former
director in the Court of Common Pleas of York County, Pennsylvania (the
complaint). The suit also names the Corporation as a nominal defendant. The suit
sought various forms of relief including, but not limited to, rescission of the
board's April 28, 1995 approval of John A. Warehime's 1995 Employment Agreement
and the board's February 10, 1995 adjustment of director's fees. (Since the
filing of this lawsuit, John A. Warehime's 1995 Employment Agreement was
amended.) In addition, the plaintiffs sought costs and fees incident to bringing
suit. On November 4, 1996, the complaint was amended to add additional
plaintiffs. On June 24, 1997, the Court dismissed the amended complaint for
failure to make a prior demand. An appeal was filed from the court's June 24,
1997 Order. On December 2, 1998, the Superior Court of Pennsylvania held that
the derivative plaintiffs had made adequate demand.

On May 12, 1997, a written demand was received by the Corporation from the
attorney for those Class A common stockholders containing similar allegations
and the allegations raised by the Class A common stockholders were investigated
by a special independent committee of the Board of Directors and found to be
without merit.

The director defendants filed an Answer and New Matter to the Amended Complaint
on March 17, 1999.


                                       24
<PAGE>   25
                          PART II -- OTHER INFORMATION
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


1997 Warehime Family Litigation

On February 21, 1997, Michael A. Warehime, a Class B shareholder, and certain
Class A shareholders filed motions for a preliminary injunction against the
Corporation, John A. Warehime, in his capacity as voting trustee, and all
certain directors of the Corporation in the Court of Common Pleas of York
County, Pennsylvania against a Proposal of the Board of Directors to amend and
restate the Corporation's Articles of Incorporation the manner hereafter
described.

On February 13, 1997, the Board of Directors proposed an amendment and
restatement of the Corporation's Articles of Incorporation (the "Amended and
Restated Articles") which provides that if all of the following Class B
Shareholders (or their estates upon the death of such stockholders), Michael A.
Warehime, John A. Warehime, Sally W. Yelland, J. William Warehime, and Elizabeth
W. Stick (all members of the Warehime family), do not agree in writing to the
composition of the Board of Directors or other important matters specified below
on or after the 1998 annual shareholders meeting, the trustees of the
Corporation's 401(k) Savings Plan (or a similar employee benefit plan), acting
as fiduciaries for the employees who participate in the Plan, and the Class A
shareholders may become entitled to vote in the manner described in the
document. Pursuant to the Company's Bylaws, nominations for director must be
submitted to the Company in the manner prescribed by the Bylaws no later than
June 1 of the year in which the meeting is to occur.

The Amended and Restated Articles create a Series C Convertible Preferred Stock
and also classified the terms of the Board of Directors commencing with the
election at the 1997 annual shareholders meeting and permit directors to be
elected for four year terms as permitted by Pennsylvania law.

The motions for a preliminary injunction were dismissed by the Court on June 24,
1997. The Class B shareholders on June 25, 1997 approved the Amended and
Restated Articles (John A. Warehime being the sole Class B shareholder voting
affirmatively in his capacity as voting trustee) and the Amended and Restated
Articles became effective June 25, 1997.

In August 1997, the Board of Directors proposed a further amendment (the
"Amendment") to the Amended and Restated Articles to expand the definition of
"disinterested directors" in the manner described below, and to approve certain
performance based compensation for John A. Warehime solely for the purpose of
making the Corporation eligible for a federal income tax deduction pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended. A special
meeting was scheduled for August 14, 1997 (the "Special Meeting") to vote on
these proposals. On August 8, 1997, Michael A. Warehime filed a motion in the
Court of Common Pleas of York County, Pennsylvania to prevent John A. Warehime,
in his capacity as voting


                                       25
<PAGE>   26
                          PART II -- OTHER INFORMATION
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


trustee from voting on these proposals and to enjoin the Amendment. This Motion
was denied on August 11, 1997. The Amendment and the proposal under Section
162(m) were approved by Class B Shareholders (John A. Warehime was the sole
Class B shareholder to vote affirmatively, in his capacity as voting trustee) on
August 14, 1997 and the Amendment became effective on August 14, 1997.

Under the Amendment, the definition of "disinterested directors" means the
person who, in the opinion of counsel for the Corporation, meet any the
following criteria: (i) disinterested directors as defined in Section 17159(e)
of the Pennsylvania Business Corporations Law of 1988, as amended; (ii) persons
who are not "interested" directors as defined in Section 1.23 of The American
Law Institute "Principles of Corporate Governance: Analysis and Recommendations"
(1994); or (iii) persons who qualify as members of the Audit Committee pursuant
to Section 303.00 of the New York Stock Exchange's Listed Company Manual.

Michael Warehime filed an appeal from the denial of his motion to enjoin the
previously described Amendment to the Company's Amended and Restated Articles.
On December 2, 1998, a majority panel of the Superior Court of Pennsylvania
issued a decision holding that although John Warehime had acted in good faith in
voting for the Amendment to the Amended and Restated Articles as trustee of the
Warehime voting trust, Mr. Warehime breached his fiduciary duty to the
beneficiaries of the Warehime voting trust in voting for the Amendment. On
December 16, 1998, John Warehime filed a motion for reargument en banc with the
Superior Court. On December 16, 1998, Michael Warehime filed a motion for
clarification requesting that the Superior Court issue an order invalidating the
Amendment to the Amended and Restated Articles. On December 23, 1998, the
Superior Court denied Michael Warehime's motion for clarification. On February
8, 1999, the Superior Court denied the motion for reargument en banc. On March
10, 1999, John Warehime and the other directors filed a petition for allowance
of appeal with the Supreme Court of Pennsylvania. On March 29, 1999, Michael
Warehime filed a response to the petition for allowance of appeal and a
cross-petition for allowance of appeal with the Supreme Court of Pennsylvania.
On April 13, 1999, John Warehime and the independent directors of the Company
filed a brief in opposition to the conditional cross-petition for allowance of
appeal filed with Michael Warehime.

The Corporation is involved in various other claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Corporation's consolidated financial position, results of operations or
liquidity.

ITEM 2.  CHANGES IN SECURITIES -- None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES -- None


                                       26
<PAGE>   27
                          PART II -- OTHER INFORMATION
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -- None

ITEM 5.  OTHER INFORMATION -- None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K -- None

(a)   Exhibits

<TABLE>
<CAPTION>
      S-K Exhibit
      Number           Description of Exhibit
      ------           ----------------------
<S>                    <C>
      27               Financial Data Schedule
</TABLE>

(b)   Reports on Form 8-K.

      No reports on Form 8-K were filed during the quarter ended February 28,
      1999.


                                       27
<PAGE>   28
                                    SIGNATURE


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


                                    HANOVER FOODS CORPORATION


Date:   April 14, 1999              By: /s/ Gary T. Knisely
                                        ---------------------------------------
                                            Gary T. Knisely
                                            Executive Vice President


                                    By: /s/ Pietro Giraffa
                                        ---------------------------------------
                                            Pietro Giraffa
                                            Controller


                                       28