<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 25, 2001

                                       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)

<TABLE>
<S>                                                       <C>
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)
</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, 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 25, 2001
                 -----                           --------------------------------

<S>                                                  <C>
   Class A Common Stock, $25 par value               288,427 shares

   Class B Common Stock, $25 par value               426,250 shares
</TABLE>



                                       1
<PAGE>   2


                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                For the Thirty-Nine Weeks Ended February 25, 2001


<TABLE>
<CAPTION>
Index                                                                           Page

<S>                                                                              <C>
Part I -- Financial Information

    Item 1 -- Financial Statements:

        Condensed Consolidated Balance Sheets
         February 25, 2001 (Unaudited) and May 28, 2000...........................3

        Condensed Consolidated Statements of Operations (Unaudited)
         Thirty-Nine Weeks and Thirteen Weeks Ended
         February 25, 2001 and February 27, 2000..................................5

        Condensed Consolidated Statements of Stockholders'
         Equity, Periods Ended February 25, 2001 (Unaudited)
         and May 28, 2000.........................................................6

        Condensed Consolidated Statements of Cash Flows
         (Unaudited), Thirty-Nine Weeks Ended February 25, 2001
         and February 27, 2000....................................................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.....................................................23

    Item 1     -- Legal Proceedings..............................................23
    Items 2-3  -- None...........................................................23
    Item 4     -- None...........................................................23
    Item 5     -- None...........................................................23
    Item 6     -- Exhibits and Reports on Form 8-K...............................23
</TABLE>



                                       2
<PAGE>   3


                         PART I -- FINANCIAL INFORMATION
                          Item 1. Financial Statements
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                      February 25, 2001       May 28, 2000
ASSETS                                                    (Unaudited)
---------------------------------------------------------------------------------------------
<S>                                                     <C>                   <C>
Current Assets:
    Cash and Cash Equivalents                           $   4,722,000         $   6,978,000
    Accounts and Notes Receivable, Net                     27,794,000            28,382,000
    Accounts Receivable from Related Parties, Net             174,000               129,000
    Inventories:
        Finished Goods                                     54,327,000            44,777,000
        Raw Materials and Supplies                         15,467,000            14,415,000
    Prepaid Expenses                                        1,349,000             1,563,000
    Deferred Income Taxes                                     917,000               812,000
---------------------------------------------------------------------------------------------

Total Current Assets                                      104,750,000            97,056,000
---------------------------------------------------------------------------------------------
Property, Plant and Equipment, at Cost:
    Land and Buildings                                     49,863,000            47,438,000
    Machinery and Equipment                               112,057,000           106,691,000
    Leasehold Improvements                                    535,000               531,000
---------------------------------------------------------------------------------------------
                                                          162,455,000           154,660,000
    Less Accumulated Depreciation and
      Amortization                                         90,371,000            84,697,000
---------------------------------------------------------------------------------------------
                                                           72,084,000            69,963,000


    Construction in Progress                                3,006,000             3,521,000
---------------------------------------------------------------------------------------------
Total Property, Plant and Equipment                        75,090,000            73,484,000
---------------------------------------------------------------------------------------------
Other Assets:
    Intangible Assets, Net                                  3,799,000             4,013,000
    Other Assets                                            4,910,000             4,959,000
---------------------------------------------------------------------------------------------
Total Assets                                             $188,549,000          $179,512,000
---------------------------------------------------------------------------------------------
</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 25, 2001       May 28, 2000
                                                            (Unaudited)
--------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>
Current Liabilities:
    Notes Payable - Banks                                $ 55,641,000         $ 52,380,000
    Accounts Payable                                       27,015,000           26,533,000
    Accrued Expenses                                        8,242,000            7,696,000
    Current Maturities of Long-Term Debt                    1,801,000            1,821,000
    Income Taxes Payable                                      877,000            1,060,000
--------------------------------------------------------------------------------------------
Total Current Liabilities                                  93,576,000           89,490,000
--------------------------------------------------------------------------------------------
Long-Term Debt, Less Current Maturities                    10,729,000           10,741,000
Other Liabilities                                           3,226,000            2,799,000
Deferred Income Taxes                                       4,558,000            4,170,000
--------------------------------------------------------------------------------------------
Total Liabilities                                         112,089,000          107,200,000
--------------------------------------------------------------------------------------------
Stockholders' Equity:
  Series A & B 8.25% cumulative convertible
    preferred, $25 par value, 120,000 shares
    authorized; 31,256 shares at May 28, 2000 and
    31,216 shares at February 25, 2001 issued;
    14,764 shares at May 28, 2000 and 14,724
    shares at February 25, 2001 outstanding                   780,000              781,000
 Series C Cumulative Convertible Preferred, $25
    par value, 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, 349,282 shares at
    May 28, 2000 and 349,292 shares at February
    25, 2001 issued; 288,420 shares at May 28,
    2000 and 288,247 shares at February 25, 2001
    outstanding                                             8,732,000            8,731,000
 Common stock, Class B, voting, $25 par value;
    880,000 shares authorized, 493,123 shares at
    May 28, 2000 and at February 25, 2001 issued;
    426,250 shares at May 28, 2000 and at
    February 25, 2001 outstanding                          12,328,000           12,328,000
Capital Paid in Excess of Par Value                         2,148,000            2,148,000
Retained Earnings                                          60,055,000           55,478,000
Treasury Stock, at Cost                                   (8,148,000)          (8,134,000)
Accumulated Other Comprehensive Income                        315,000              730,000
--------------------------------------------------------------------------------------------
Total Stockholders' Equity                                $76,460,000          $72,312,000
--------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity               $188,549,000         $179,512,000
</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 25,    February 27,  February 25,   February 27,
                                      2001            2000           2001           2000
----------------------------------------------------------------------------------------------

<S>                              <C>              <C>             <C>            <C>
Net Sales                        $233,815,000     $223,086,000    $82,212,000    $78,926,000
Cost of Goods Sold                176,609,000      166,683,000     63,450,000     59,711,000
----------------------------------------------------------------------------------------------
Gross Profit                       57,206,000       56,403,000     18,762,000     19,215,000
Selling Expenses                   36,110,000       32,041,000     13,331,000     11,829,000
Administrative Expenses             8,997,000        8,927,000      3,327,000      3,476,000
----------------------------------------------------------------------------------------------
Operating Profit                   12,099,000       15,435,000      2,104,000      3,910,000

Interest Expense                    3,715,000        2,962,000      1,308,000      1,105,000
Other Expenses (Income), Net          204,000          779,000     ($202,000)       ($8,000)
----------------------------------------------------------------------------------------------
Earnings Before Income Taxes        8,180,000       11,694,000        998,000      2,813,000

Income Taxes                        2,982,000        4,677,000        339,000      1,135,000
----------------------------------------------------------------------------------------------
Net Earnings                        5,198,000        7,017,000        659,000      1,678,000
Dividends on Preferred Stock           31,000           33,000         10,000         11,000
----------------------------------------------------------------------------------------------
Net Earnings Applicable to
    Common Stock                   $5,167,000       $6,984,000       $649,000     $1,667,000
----------------------------------------------------------------------------------------------
Earnings Per Share:
    Net Earnings Per Common
        Share - Basic                   $7.23            $9.76          $0.91          $2.33
    Net Earnings Per Common
        Share - Diluted                 $7.14            $9.62          $0.91          $2.30
Dividends Per Share, Common            $0.825           $0.825         $0.275         $0.275
Basic Weighted Average Shares         714,569          715,236        714,497        714,919
Diluted Weighted Average Shares       728,238          729,454        728,166        729,137
----------------------------------------------------------------------------------------------
</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            Convertible
                                   Total           Preferred Stock        Preferred Stock
                               Stockholders'        Series A and B           Series C
                                  Equity          Shares     Amount      Shares      Amount

<S>                             <C>              <C>        <C>          <C>       <C>
Balance, May 28, 2000           $72,312,000      31,256     $781,000     10,000    $250,000

Net Earnings for the Period      $5,198,000

Cash Dividends Per Share:

    Preferred Stock               ($31,000)
    Common Stock                 ($590,000)

Redemption of Common Stock
    (Class A 183 Shares)          ($14,000)


Stock Conversions                        $0        (40)     ($1,000)
Other Comprehensive Loss         ($415,000)

---------------------------------------------------------------------------------------------
Balance, February 25, 2001      $76,460,000      31,216     $780,000     10,000    $250,000
=============================================================================================

<CAPTION>

                                   Common Stock               Common Stock         Capital Paid
                                      Class A                   Class B            in Excess of
                                Shares      Amount         Shares      Amount       Par Value

<S>                            <C>         <C>            <C>        <C>           <C>
Balance, May 28, 2000          349,282     $8,731,000     493,123    $12,328,000   $2,148,000

Net Earnings for the Period

Cash Dividends Per Share:

    Preferred Stock
    Common Stock

Redemption of Common Stock
    (Class A 183 Shares)


Stock Conversions                   10         $1,000
Other Comprehensive Loss

-----------------------------------------------------------------------------------------------
Balance, February 25, 2001     349,292     $8,732,000     653,572    $12,328,000   $2,148,000
===============================================================================================

<CAPTION>


                                                                        Accumulated
                                                   Treasury Stock          Other
                                 Retained                               Comprehensive
                                 Earnings       Shares        Amount       Income

<S>                            <C>            <C>        <C>            <C>
Balance, May 28, 2000          $55,478,000    144,227    ($8,134,000)     $730,000

Net Earnings for the Period     $5,198,000

Cash Dividends Per Share:

    Preferred Stock              ($31,000)
    Common Stock                ($590,000)

Redemption of Common Stock
    (Class A 183 Shares)                          183       ($14,000)


Stock Conversions                                                               (415,000)
Other Comprehensive Loss

----------------------------------------------------------------------------------------------------
Balance, February 25, 2001     $60,055,000    144,410    ($8,148,000)   142,449 $315,000
==============================================================================================
</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>
------------------------------------------------------------------------------------------------
                                                                 Thirty-Nine Weeks Ended
                                                          February 25, 2001   February 27, 2000
------------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>
Increase (Decrease) in Cash and Cash Equivalents

Operating Activities:
    Net Earnings                                              $5,198,000        $7,017,000
    Adjustments to Reconcile Net Earnings to Net
        Cash Provided by Operating Activities:
           Depreciation and Amortization                       5,888,000         5,439,000
           Deferred Income Taxes                                 283,000           328,000
    Changes in Assets and Liabilities:
           Accounts Receivable                                   543,000           365,000
           Inventories                                      (10,602,000)       (8,260,000)
           Prepaid Expenses                                      214,000           398,000
           Accounts Payable and Accrued Expenses               1,028,000         1,878,000
           Income Taxes Payable                                (183,000)         (304,000)
           Other Liabilities                                     427,000           586,000
------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                      2,796,000         7,447,000
------------------------------------------------------------------------------------------------
Investing Activities:
    Increase in Other Assets                                   (366,000)         (417,000)
    Acquisitions of Property, Plant and Equipment            (7,280,000)       (8,047,000)
    Purchase of Business, Net of Cash Acquired                         0       (4,524,000)
------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                        (7,646,000)      (12,988,000)
------------------------------------------------------------------------------------------------
Financing Activities:
    Increase in Notes Payable                                  3,261,000         9,946,000
    Payments on Long-Term Debt                                  (32,000)          (80,000)
    Payment of Dividends                                       (621,000)         (700,000)
    Redemption of Common Stock                                  (14,000)          (61,000)
------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities                      2,594,000         9,105,000
------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents         (2,256,000)         3,564,000
Cash and Cash Equivalents, Beginning of Period                 6,978,000         2,214,000
------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, End of Period                       4,722,000         5,778,000
------------------------------------------------------------------------------------------------
</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 25, 2001 and February 27, 2000
                                   (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 28. Accordingly, these financial statements reflect
       activity for the thirty-nine week periods ended February 25, 2001 and
       February 27, 2000.

       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
       28, 2000.

       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
       $85 million, of which $55,641,000 was borrowed at February 25, 2001. The
       average cost of funds during the thirty-nine week period ended February
       25, 2001 was 6.65%.



                                       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 25, 2001      May 28, 2000
--------------------------------------------------------------------------------------------

<S>                                                          <C>               <C>
        8.74% unsecured senior notes payable                 $12,500,000       $12,500,000
           to an insurance company, due
           through 2007


        Other                                                     30,000            62,000
--------------------------------------------------------------------------------------------

                                                              12,530,000        12,562,000

        Less current maturities                                1,801,000         1,821,000

--------------------------------------------------------------------------------------------
        Net Long-Term Debt                                   $10,729,000       $10,741,000
--------------------------------------------------------------------------------------------
</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 as amended or waived as of February 25, 2001.



                                       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 25   February 27      February 25   February 27
                                     2001          2000             2001           2000
--------------------------------------------------------------------------------------------
Revenues:

<S>                               <C>           <C>               <C>           <C>
  Park 100 Foods, Inc.            $1,474,000    $2,028,000        $ 522,000     $ 599,000

Corporate Charges:

  Snyder's of Hanover, Inc.              0      $  110,000             0        $  14,000

Expenditures:

  Park 100 Foods, Inc.            $    4,000    $   46,000        $($4,000)     $  16,000
  ARWCO Corporation               $   73,000    $   11,000        $    0        $   6,000
  Warehime Enterprises, Inc.      $    3,000    $    3,000        $   1,000     $   1,000
  John A. & Patricia M. Warehime  $   53,000    $   51,000        $  20,000     $  19,000
  James G. Sturgill               $   14,000    $   26,000        $    0        $   8,000
  Lippy Brothers, Inc.            $1,284,000    $  675,000        $ 772,000     $ 565,000

  Schaier Travel, Inc.            $    6,000    $    5,000        $   2,000     $   2,000

--------------------------------------------------------------------------------------------
</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 25, 2001 and May 28, 2000 account balances with related
companies are as follows:


<TABLE>
<CAPTION>
                                 February 25, 2001       May 28, 2000
-----------------------------------------------------------------------

<S>                                 <C>                  <C>
Accounts Receivable:

    Snyder's of Hanover, Inc.       $     0              $   26,000
    Park 100 Foods, Inc.            $   174,000          $   96,000
    Lippy Brothers                  $     0              $    7,000


-----------------------------------------------------------------------
</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)    COMPREHENSIVE INCOME

       Comprehensive income is determined as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                       Thirty-Nine Weeks Ended             Thirteen Weeks Ended
                                     February 25,   February 27,       February 25,     February 27,
                                         2001          2000                2001            2000

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

<S>                                  <C>            <C>                 <C>             <C>
        Net Income                   $ 5,198,000    $7,017,000          $659,000        $1,678,000

        Other Comprehensive
           Income (Loss):

           Unrealized Gain (Loss)
           on Investments              (415,000)        65,000         (286,000)         (111,000)
----------------------------------------------------------------------------------------------------

        Comprehensive Income          $4,783,000    $7,082,000          $373,000        $1,567,000
----------------------------------------------------------------------------------------------------
</TABLE>



                                       12
<PAGE>   13


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

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

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                Thirty-Nine Weeks Ended           Thirteen Weeks Ended
                                             February 25,     February 27,     February 25,   February 27,
                                                 2001           2000               2001          2000
-----------------------------------------------------------------------------------------------------------

<S>                                          <C>              <C>                <C>           <C>
Numerator for basic earnings per share:

Net earnings applicable to
    common stock                             $5,167,000       $6,984,000         $649,000      $1,667,000

Preferred stock dividends                        31,000           33,000           10,000          11,000
-----------------------------------------------------------------------------------------------------------

Net earnings assuming dilution                5,198,000        7,017,000          659,000       1,678,000
-----------------------------------------------------------------------------------------------------------

Denominator:

Basic weighted average shares                   714,569          715,236          714,497         714,919
Effect of dilutive securities                    13,669           14,218           13,669          14,218
                                                 ------           ------           ------          ------

Diluted weighted average shares                 728,238          729,454          728,166         729,137
-----------------------------------------------------------------------------------------------------------
</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)

--------------------------------------------------------------------------------
(7)    EMPLOYEE STOCK TRUST

During the quarter ended February 25, 2001, the Corporation established an
Employee Stock Trust (the trust) to fund future stock related obligations of the
Corporation's compensation and benefit plans, including a concurrently
established Employee Stock Ownership Plan. For financial reporting purposes, the
Trust will be consolidated with the Corporation. On March 1, 2001, the
Corporation contributed 142,449 shares of Class B Common Stock to the Trust.
Upon contribution, these shares are recorded at a fair value of $117/per share
based upon the most recent appraised value of Class B Common Stock as determined
by an independent valuation.



                                       14
<PAGE>   15

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

--------------------------------------------------------------------------------
(8)    CONTIGENCIES

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 which, before their expiration in 1998, entitled
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 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.


                                       15
<PAGE>   16


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


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



                                       16
<PAGE>   17

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

--------------------------------------------------------------------------------
In August 1997, the Board of Directors proposed a further amendment (the
"Amendment") 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 by the court 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 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



                                       17
<PAGE>   18


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

for allowance of appeal filed with Michael Warehime. On November 29, 1999 the
Supreme Court of Pennsylvania granted the petitions for allowance of appeal of
John Warehime, and granted some of the petitions of Michael Warehime.

On August 13, 1999, Michael Warehime filed a complaint in equity in the Court of
Common Pleas of York County, Pennsylvania, naming as defendants Arthur S.
Schaier, Cyril T. Noel, Clayton J. Rohrbach, Jr., John A. Warehime, and the
Company. The complaint seeks a court order declaring that the September 1999
election for the board of directors of the Company be conducted in accordance
with the Articles of Incorporation of the Company as they existed prior to June
25, 1997, an order declaring that the Series C Convertible Preferred Stock
cannot be voted, and an order that the following candidates for the board of
directors of the Company proposed by Michael Warehime, Sally Yelland, Elizabeth
Stick and J. William Warehime be accepted by the Company and listed on the
ballot to be distributed at the annual meeting of shareholders of the Company to
be held on September 16, 1999: Michael Warehime, Daniel Meckley, Elizabeth
Stick, Sonny Bowman, and John Denton. The basis for the complaint was the
December 2, 1998 decision of the Pennsylvania Superior Court which held that
John A. Warehime breached his fiduciary duties in voting for the Amended and
Restated Articles as trustee of the Warehime voting trust.

On September 12, 2000, the Superior Court of Pennsylvania stated, in a
Memorandum decision, that the June 25, 1997 shareholder vote, which adopted the
Amended and Restated Articles of Incorporation of the Corporation should be set
aside, and remanded the case to the Court of Common Pleas of York County to
determine what further relief would be appropriate. See Form 8-K dated September
12, 2000 which discusses the Superior Court decision.

On November 27, 2000, the Supreme Court of Pennsylvania reversed and remanded
the Order of the Superior Court issued on September 12, 2000. In reversing the
Superior Court's Order, the Supreme Court of Pennsylvania held that John A.
Warehime, the trustee of the voting trust, did not breach his fiduciary duties
in voting the trust shares in favor of the Amended and Restated Articles of
Incorporation. The Supreme Court remanded the case to the Pennsylvania Superior
Court to consider other issues raised by Michael A. 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 1 -- 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, and foreign operations. 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 28, 2000.

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 product 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 $233.8 million for the thirty-nine week period ended
February 25, 2001. This represents an increase of 4.8% over the thirty-nine week
period ended February 27, 2000 consolidated net sales of $223.1 million.
Consolidated net sales were $82.2 million for the thirteen week period ended
February 25, 2001, a 4.2% increase from consolidated net sales of $78.9 million
for the corresponding period in the prior year. The increase was due primarily
to increases in the sales of York Foods, Inc., York Snacks, Inc., and Bon Ton
Foods, Inc. acquired in January 2000, and increases in frozen Industrial sales.
These increases were partially offset by decreases in canned branded retail
sales, decreases in private label sales and decreases in canned mushroom sales.

COST OF GOODS SOLD

Cost of goods sold were $176.6 million, or 75.5% of consolidated net sales, in
the thirty-nine week period ended February 25, 2001 and $166.7 million, or 74.7%
of consolidated net sales, for the corresponding period in 2000. Cost of goods
sold was $63.5 million, or 77.2% of consolidated net sales, for the thirteen
week period ended February 25, 2001 as compared to $59.7 million, or 75.7% of
consolidated net sales, for the corresponding period in 2000. The increase in
cost of goods sold as a percentage of net sales resulted from a reduction in
higher margin premium branded retail sales. Also, decreased canned mushroom and
private label sales as well as increased frozen storage expense and higher
energy costs contributed to lower margins. The sales decreases were offset by
increases in lower margin snack food sales and frozen industrial sales. The
major increase in the thirteen week period ended February 25, 2000 was increased
energy costs and frozen storage expense.

SELLING EXPENSES

Selling expenses were $36.1 million, or 15.4% of consolidated net sales, for the
thirty-nine week period ended February 25, 2001 as compared to $32.0 million, or
14.4% of consolidated net sales for the corresponding period in 2000. Selling
expenses were $13.3 million, or 16.2% of consolidated net sales for the thirteen
week period ended February 25, 2001 compared to $11.8 million, or 15.0% of
consolidated net sales, during the corresponding period in 2000. The increases
in selling expense primarily reflects increases in York Foods, Inc., York
Snacks, Inc., and Bon-Ton Foods, Inc., acquired in January 2000 and increased
promotions needed to gain back market share and launch new frozen products
during the second quarter of the current fiscal year.



                                       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

Administrative expenses as a percentage of consolidated net sales were 3.8% for
the thirty-nine week period ended February 25, 2001 and 4.0% for corresponding
period of 2000. Administrative expenses as a percentage of consolidated net
sales were 4.0% for the thirteen week period ended February 25, 2001 compared to
4.4% of consolidated net sales during the corresponding period in 2000.
Administrative expense as a percentage of sales was higher in the prior year
period due to executive bonuses paid in December 1999 which were not paid in the
current year.

INTEREST EXPENSE

Interest expense was $3,715,000 for the thirty-nine week period ended February
25, 2001 as compared to $2,962,000 for the same period in 2000. Interest expense
was $1,308,000 for the thirteen week period ended February 25, 2001 compared to
$1,105,000 for the same period in 2000. The increases are due to higher average
borrowings to cover canned and frozen inventory increases as well as higher
average cost of funds for the period.

OTHER EXPENSES

Other expenses, net was $204,000 for the thirty-nine week period ended February
25, 2001 as compared to $779,000 for the same period in 2000. Other income, net
was $202,000 for the thirteen week period ended February 25, 2001 as compared to
$8,000 for the same period in 2000. The decrease in other expenses for the
thirty-nine week period is primarily due to decreased foreign translation
adjustment compared to the prior period and an increased gain on the sale of
investments during the third quarter ended February 25, 2001.

INCOME TAXES

The provision for corporate federal and state income taxes for the thirty-nine
week period ended February 25, 2001 was $3.0 million, or 36.5% of pretax
earnings, as compared to $4.7 million, or 40.0% of pretax earnings for the same
period in 2000. The provision for income taxes was 34.0% of pretax earnings for
the thirteen week period ended February 25, 2001 as compared to 40.3% for the
same period in 2000. The decrease in the effective tax rate is primarily due to
a higher percentage of earnings, that were not subject to income taxes, in
foreign jurisdictions in the current periods as compared to the prior periods.



                                       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

--------------------------------------------------------------------------------
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.

OPERATING ACTIVITIES

Net working capital was $11.2 million at February 25, 2001 and $7.6 million at
May 28, 2000. The current ratio was 1.12 and 1.08 at February 25, 2001 and May
28, 2000, respectively.

Cash provided by operating activities for the thirty-nine week period ended
February 25, 2000, $2.8 million as compared to cash provided by operating
activities of $7.4 million during the same period of 2000. The combination of
increased inventory levels as well as lower net earnings offset by increased
accounts payable and accrued expenses generated less cash flow in the
thirty-nine week period ended February 25, 2001 compared to the prior year
period.

INVESTING ACTIVITIES

During the thirty-nine week period ended February 25, 2001, the Corporation
spent approximately $7.3 million for the purchase of land and plant upgrades and
expansions. This compares to $8.0 million spent during the same period last year
for capital projects.

FINANCING ACTIVITIES

The increase in notes payable of approximately $3.3 million during the
thirty-nine week period ended February 25, 2001 represents borrowings made
against available seasonal lines of credit from financial institutions for use
in operations, plant upgrades and expansions.

The Corporation has available seasonal lines of credit from financial
institutions in the amount of $85.0 million, of which $55.6 million was utilized
as of February 25, 2001. Additional borrowing is permitted within prescribed
parameters of existing debt agreements, which contain certain performance
covenants.

The Company believes that it has sufficient working capital and availability
from seasonal lines of credit to meet it cash flow needs.



                                       22
<PAGE>   23



                           PART II - OTHER INFORMATION
                   HANOVER FOODS CORPORATION AND SUBSIDIARIES

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

ITEM 1. LEGAL PROCEEDINGS

See note 8 of the Notes of Condensed Consolidated Financial Statements in this
form 10-Q for information regarding the 1995 Warehime Family Litigation, the
Derivative Action and the 1997 Injunction Proceeding.

ITEM 2. CHANGES IN SECURITIES -- None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES -- None

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

(a)    Exhibits

<TABLE>
<CAPTION>
       Exhibit No.                     Description
       -----------                     -----------

<S>                                    <C>
               [Add any exhibits]
</TABLE>

(b)    Reports on Form 8-K.

No Form 8-K's were filed during the quarter ended February 25, 2001 except for
the Form 8-K filed on January 11, 2001 to report the decision of the Supreme
Court of Pennsylvania in connection with a litigation matter in which the
company was involved.




                                       23
<PAGE>   24

                                    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 10, 2001              By:         /s/ Gary T. Knisely
                                                -------------------------------
                                                Gary T. Knisely
                                                Executive Vice President


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


                                       24