<PAGE>
 
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--------------------------------------------------------------------------------


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



    (Mark One)

    [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999


                                      OR


    [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934
      For the transition period from _______________ to ________________


                       Commission file number 333-50681
                               AURORA FOODS INC.
            (Exact Name of Registrant as Specified in Its Charter)

<TABLE> 
                      DELAWARE                                                  94-3303521
                      ---------                                                 ----------
   <S>                                                                <C>   
  (State or Other Jurisdiction of Incorporation or Organization)      (IRS Employer Identification No.)
</TABLE> 

                       456 Montgomery Street, Suite 2200
                           San Francisco, CA 94104
          (Address of Principal Executive Office, Including Zip Code)

                                (415) 982-3019
              (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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes   X   No _____
                                         ---

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


                                                              Shares Outstanding
                                                                     May 7, 1999
Common stock, $0.01 par value                                         67,016,173


--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
 
                                    PART I
                                    ------

                             FINANCIAL INFORMATION
                             ---------------------

ITEM 1.  FINANCIAL STATEMENTS
-----------------------------

See pages 2 through 14.

                                       1
<PAGE>
 
                               AURORA FOODS INC.
                                BALANCE SHEETS
                (dollars in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                               March 31,                December 31,
                                                                                 1999                       1998
                                                                         ------------------         ------------------
ASSETS                                                                        (unaudited)
<S>                                                                      <C>                        <C>
Current assets:
     Cash and cash equivalents                                               $          253             $          354
     Accounts receivable (net of $717 and $670 allowance, respectively)             107,753                     86,539
     Inventories (Note 3)                                                            75,078                     76,674
     Prepaid expenses and other assets                                               11,781                      6,517
     Asset held for sale                                                              3,000                      3,000
     Current deferred tax assets                                                     10,840                      8,251
                                                                         ------------------         ------------------ 
          Total current assets                                                      208,705                    181,335
 
Property, plant and equipment, net                                                  160,370                    153,167
Goodwill and other intangible assets, net                                         1,077,121                  1,072,760
Other assets                                                                         27,535                     26,620
                                                                         ------------------         ------------------
          Total assets                                                       $    1,473,731             $    1,433,882
                                                                         ==================         ==================
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Current portion of senior secured term debt                             $       20,000             $       20,000
     Senior secured revolving debt facility                                         115,000                     85,850
     Accounts payable                                                                60,329                     59,078
     Accrued liabilities                                                             48,782                     49,836
                                                                         ------------------         ------------------
          Total current liabilities                                                 244,111                    214,764
 
Non-current deferred tax liabilities                                                  8,350                        649
Other liabilities                                                                    12,372                     12,372
Senior secured term debt                                                            195,000                    200,000
Senior subordinated notes                                                           402,196                    402,242
                                                                         ------------------         ------------------
          Total liabilities                                                         862,029                    830,027
                                                                         ------------------         ------------------
 
Stockholders' equity:
     Preferred stock, $0.01 par value; 25,000,000 shares
        authorized; no shares issued or outstanding                                       -                          -
     Common stock, $0.01 par value; 250,000,000
        shares authorized; 67,016,173 shares
        issued and outstanding                                                          670                        670
     Paid-in capital                                                                647,889                    647,889
     Promissory notes                                                                  (545)                      (562)
     Accumulated deficit (Note 4)                                                   (36,312)                   (44,142)
                                                                         ------------------         ------------------  
        Total stockholders' equity                                                  611,702                    603,855
                                                                         ------------------         ------------------
        Total liabilities and stockholders' equity                           $    1,473,731             $    1,433,882
                                                                         ==================         ==================
</TABLE>

                See accompanying notes to financial statements.

                                       2
<PAGE>
 
                               AURORA FOODS INC.
                           STATEMENTS OF OPERATIONS
                    (in thousands except per share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                    Three Months Ended
                                                                        -----------------------------------------
                                                                            March 31,                March 28,
                                                                              1999                      1998
                                                                        ----------------          ---------------
<S>                                                                     <C>                       <C>
Net sales                                                                 $      261,050            $      89,385
Cost of goods sold                                                               104,128                   37,734
                                                                        ----------------          --------------- 

     Gross profit                                                                156,922                   51,651
                                                                        ----------------          --------------- 
Brokerage, distribution and marketing expenses:
     Brokerage and distribution                                                   24,634                    9,355
     Trade promotions                                                             61,373                   15,568
     Consumer marketing                                                           22,558                    7,997
                                                                        ----------------          ---------------  
Total brokerage, distribution and marketing expenses                             108,565                   32,920
                         
Amortization of goodwill and other intangibles                                     8,772                    4,597
Selling, general and administrative expenses                                       7,342                    2,346
Incentive plan expense (Note 4)                                                        -                   60,000
Transition expenses (Note 5)                                                       4,272                    1,926
                                                                        ----------------          --------------- 
Total operating expenses                                                         128,951                  101,789
                                                                        ----------------          --------------- 

     Operating income (loss)                                                      27,971                  (50,138)
 
Interest expense, net                                                             14,579                   12,614
Amortization of deferred financing expense                                           397                      513
Other bank and financing expenses                                                     53                       51
                                                                        ----------------          ---------------  

     Income (loss) before income taxes and extraordinary item                     12,942                  (63,316)
 
Income tax expense (benefit)                                                       5,112                     (360)
                                                                        ----------------          --------------- 

     Net income (loss) before extraordinary item                                   7,830                  (62,956)
 
Extraordinary loss on early extinguishment of debt,
  net of tax of $1,184                                                                 -                    1,876
                                                                        ----------------          --------------- 

     Net income (loss)                                                    $        7,830            $     (64,832)
                                                                        ================          =============== 
Basic and diluted earnings (loss) per share before
  extraordinary item                                                      $         0.12            $       (2.17)
Extraordinary item per share                                                           -                     0.06
                                                                        ----------------          --------------- 

Basic and diluted earnings (loss) per share                               $         0.12            $       (2.23)
                                                                        ================          =============== 

Weighted average number of shares outstanding                                     67,016                   29,053
                                                                        ================          =============== 
</TABLE>

                See accompanying notes to financial statements.

                                       3
<PAGE>
 
                               AURORA FOODS INC.
                 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                            Additional
                                         Common Stock         Paid-in     Promissory   Accumulated   
                                     --------------------                                            
                                       Shares     Amount      Capital       Notes        Deficit         Total
                                     ---------    -------   ----------    ----------   -----------   ------------- 
<S>                                  <C>          <C>       <C>           <C>          <C>           <C>
Balance at December 31, 1998            67,016    $  670    $  647,889    $   (562)    $  (44,142)   $    603,855 
Payments on officer promissory                                                                                     
  notes                                      -         -             -          17              -              17 
Net income                                   -         -             -           -          7,830           7,830 
                                     ---------    -------   ----------    ----------   -----------   ------------- 
Balance at March 31, 1999               67,016    $  670    $  647,889    $   (545)    $  (36,312)   $    611,702  
                                     =========    =======   ==========    ==========   ===========   =============
</TABLE>

                See accompanying notes to financial statements.

                                       4
<PAGE>
 
                               AURORA FOODS INC.
                           STATEMENTS OF CASH FLOWS
                                (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                             Three Months Ended
                                                                                     ----------------------------------
                                                                                      March 31,         March 28,
                                                                                        1999               1998
                                                                                     --------------    --------------  
<S>                                                                                  <C>               <C>
Cash flows from operating activities:                                                               
     Net income (loss)                                                               $       7,830     $     (64,832)
     Early extinguishment of debt, net of tax of $1,184                                          -             1,876 
     Adjustments to reconcile net income (loss) to cash provided by operating                                        
      activities:                                                                                                    
         Depreciation and amortization                                                      12,054             6,140 
         Deferred income taxes                                                               5,112              (360)
         Incentive plan expense (Note 4)                                                         -            60,000 
         Change in assets and liabilities, net of effects of businesses                                              
          acquired:                                                                                                  
             (Increase) decrease in accounts receivable                                    (21,214)              989 
             Decrease (increase) in inventories                                              6,367           (17,949)
             Increase in prepaid expenses and other assets                                  (5,264)           (3,018)
             Increase in accounts payable                                                      251            19,824 
             (Decrease) increase in accrued liabilities                                     (3,005)           11,698 
                                                                                     --------------    --------------  
Net cash provided by operating activities                                                    2,131            14,368 
                                                                                     --------------    -------------- 
Cash flows from investing activities:                                                                                
     Additions to property, plant and equipment                                             (6,545)           (1,181)
     Changes to other non-current assets and liabilities                                    (1,785)              (90)
     Payment for acquisition of businesses (Note 2)                                        (18,069)         (448,121)
                                                                                     --------------    --------------  
Net cash used in investing activities                                                      (26,399)         (449,392)
                                                                                     --------------    -------------- 
Cash flows from financing activities:                                                                                
     Proceeds from senior secured revolving and term debt                                   73,150           450,000 
     Repayment of borrowings                                                               (49,000)          (77,500)
     Capital contributions, net of officer promissory notes                                     17            93,638 
     Debt issuance and equity raising costs                                                      -           (12,501)
                                                                                     --------------    --------------  
Net cash provided by financing activities                                                   24,167           453,637 
                                                                                     --------------    --------------  

(Decrease) increase in cash and cash equivalents                                              (101)           18,613 
Cash and cash equivalents, beginning of period                                                 354             4,717 
                                                                                     --------------    -------------- 
Cash and cash equivalents, end of period                                             $         253     $      23,330  
                                                                                     ==============    ==============
</TABLE>

                See accompanying notes to financial statements.

                                       5
<PAGE>
 
                               AURORA FOODS INC.
                       NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION
------------------------------

INTERIM FINANCIAL STATEMENTS

The interim financial statements of Aurora Foods Inc. (the "Company"), included
herein, have not been audited by independent accountants. The statements include
all adjustments, such as normal recurring accruals, which management considers
necessary for a fair presentation of the financial position and operating
results of the Company for the periods presented. The statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in conformity
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The operating results for interim
periods are not necessarily indicative of results to be expected for an entire
year. Certain prior period amounts have been reclassified to conform to the
current period's presentation.

For further information, reference should be made to the financial statements of
the Company and notes thereto included in the annual report on Form 10-K of
Aurora Foods Inc. for the year ended December 31, 1998.

THE COMPANY, ITS BUSINESS AND OWNERSHIP

The Company was incorporated in Delaware on June 19, 1998, as the successor to
Aurora Foods Holdings Inc. ("Holdings") and its subsidiary, AurFoods Operating
Co., Inc. (formerly known as Aurora Foods Inc.) ("AurFoods"), both of which were
incorporated in Delaware in December 1996. AurFoods was wholly-owned by
Holdings, which in turn was wholly-owned by MBW Investors LLC ("MBW LLC").
AurFoods was formed for the purpose of acquiring the Mrs. Butterworth's(R) syrup
business from Conopco, Inc., a subsidiary of Unilever United States, Inc.
AurFoods subsequently acquired the Log Cabin(R) syrup business from Kraft Foods,
Inc. in July 1997 and the Duncan Hines(R) baking mix business ("DH") from The
Procter & Gamble Company ("P&G") in January 1998.

Van de Kamp's, Inc. ("VDK") was a wholly-owned subsidiary of VDK Holdings, Inc.,
a Delaware corporation ("VDK Holdings") and was incorporated in Delaware in July
1995 for the purpose of acquiring the Van de Kamp's(R) frozen seafood and frozen
dessert businesses from The Pillsbury Company in September 1995. VDK then
acquired the Mrs. Paul's(R) frozen seafood business from the Campbell Soup
Company in May 1996 and the Aunt Jemima(R) frozen breakfast and Celeste(R)
frozen pizza businesses from The Quaker Oats Company in July 1996. VDK Holdings
was wholly-owned by VDK Foods LLC ("VDK LLC").

The Company groups its brands into two general divisions: dry grocery division
and frozen food division. The dry grocery division includes Duncan Hines(R)
brand baking mix products and Mrs. Butterworth's(R) and Log Cabin(R) brand syrup
products. The frozen food division includes Van de Kamp's(R) and Mrs. Paul's(R)
frozen seafood products, Aunt Jemima(R) frozen breakfast products and Celeste(R)
frozen pizza products.

                                       6
<PAGE>
 
On April 8, 1998, MBW LLC and VDK LLC formed Aurora/VDK LLC ("New LLC"). MBW LLC
contributed all of the capital stock of Holdings and VDK LLC contributed all of
the capital stock of VDK Holdings to New LLC (the "Contribution"). In return for
these contributions, MBW LLC was issued 55.5% of the interests in New LLC plus a
right to receive a special $8.5 million priority distribution from New LLC, and
VDK LLC was issued 44.5% of the interests in New LLC plus a right to receive a
special $42.4 million priority distribution from New LLC. The amount and source
of consideration used by MBW LLC and VDK LLC for their acquisition of interests
in New LLC was their equity in Holdings and VDK Holdings, respectively. New LLC
accounted for the contribution of the ownership of Holdings at MBW LLC's
historical cost and the contribution of the ownership of VDK Holdings was
accounted for as an acquisition using the purchase method of accounting at New
LLC's cost. After giving effect to the Contribution, New LLC directly held 100%
of Holdings' capital stock and Holdings continued to hold directly 100% of
AurFoods capital stock and New LLC directly held 100% of VDK Holdings' capital
stock and VDK Holdings continued to hold directly 100% of VDK's capital stock.
On June 25, 1998, New LLC contributed to the Company all the issued and
outstanding stock of Holdings and VDK Holdings. Therefore, the Company's
financial statements, as it is the successor to Holdings, includes the
historical financial information of Holdings from its inception. New LLC was
then dissolved in connection with the IPO (defined below).

On July 1, 1998, Holdings, AurFoods, VDK Holdings and VDK merged with and into
the Company and the initial public offering (the "IPO" or "Equity Offerings") of
12,909,372 shares of Common Stock of the Company and 1,590,628 shares of the
Company's Common Stock sold by New LLC was consummated at an initial public
offering price of $21.00 per share. Also, concurrently with the IPO, the Company
issued $200.0 million aggregate principal amount of 8.75% senior subordinated
notes due 2008 (the "Notes Offering" or "New Notes") and borrowed $225.0 million
of senior secured term debt and $99.0 million out of the total available of
$175.0 million of senior secured revolving debt under the Third Amended and
Restated Credit Agreement, dated as of July 1, 1998, among the Company, as
borrower, the lenders listed therein, The Chase Manhattan Bank, as
Administrative Agent, The National Westminster Bank PLC, as Syndication Agent
and Swiss Bank Corporation, as Documentation Agent (the "New Senior Bank
Facilities").

The Company used the net proceeds from the IPO, the Notes Offering and the New
Senior Bank Facilities to (i) repay $180.8 million of senior secured bank debt
under the Second Amended and Restated Credit and Guarantee Agreement, dated as
of July 9, 1996, among VDK Holdings, VDK, the banks and other financial
institutions parties thereto and the Chase Manhattan Bank, as agent, as amended
(the "VDK Senior Bank Facilities"), (ii) repay $467.0 million under the Aurora
Senior Bank Facilities (as defined in Note 2), (iii) redeem the 12% Senior
Subordinated Notes due 2005 issued under an Indenture dated as of September 15,
1995, between VDK and Harris Trust and Savings Bank, as Trustee (the "VDK
Notes") (redemption completed on July 31, 1998) in the principal amount of
$100.0 million and (iv) pay the $14.5 million redemption premium associated with
the VDK Notes. As a result of the early extinguishment of the Aurora Senior Bank
Facilities, the Company recorded in the year ended December 31, 1998 an
extraordinary charge of $7.3 million, net of income tax of $4.4 million, for the
write off of deferred financing charges.

As a consequence of the IPO, no additional incentive plan expense will be
recorded under the Aurora Plan (See Note 4 - Incentive Plan Expense). MBW LLC
satisfied its liability under the

                                       7
<PAGE>
 
Aurora Plan by distributing shares of the Company's common stock in connection
with the liquidation of MBW LLC.

NOTE 2 - ACQUISITIONS
---------------------

DUNCAN HINES

On January 16, 1998, the Company acquired all the assets of DH from P&G. The
assets acquired by the Company include (i) the Duncan Hines(R) brand and
associated trademarks, (ii) substantially all of the equipment for the
manufacture of Duncan Hines(R) products previously located in P&G's Jackson,
Tennessee facility, (iii) proprietary formulations for Duncan Hines(R) products,
(iv) other product specifications and customer lists and (v) rights under
certain contracts, licenses, purchase orders and other arrangements and permits.
The Company is using the acquired assets in its operations of DH. The purchase
price of approximately $445.0 million was based on arms length negotiations
between the Company and P&G. The acquisition was accounted for by using the
purchase method of accounting.

To finance the acquisition of DH and related costs, the Company refinanced its
previously existing senior bank facilities with $450.0 million of senior secured
term debt under the Second Amended and Restated Credit Agreement, dated as of
January 16, 1998 by and among Holdings, the Company, the lenders listed therein,
The Chase Manhattan Bank, The National Westminster Bank PLC, and Swiss Bank
Corporation (the "Aurora Senior Bank Facilities"), and received a capital
contribution from Holdings of $93.8 million. As a result of the new bank
borrowings under the Aurora Senior Bank Facilities, the Company incurred an
early extinguishment of its pre-DH senior secured bank debt and the write-off of
the associated deferred financing charges was recorded in the quarter ended
March 28, 1998 as an extraordinary charge of $1.9 million, net of income taxes
of $1.2 million.

The cost to acquire DH has been allocated to tangible and intangible assets
acquired as follows (in thousands):

<TABLE> 
             <S>                                            <C> 
             Cash paid to acquire assets                    $      445,000
             Other acquisition costs                                13,294
                                                            --------------
                                                                   458,294
             Cost assigned to tangible assets                      (40,672)
                                                            -------------- 
                                                            
             Cost attributable to intangible assets         $      417,622
                                                            ==============
</TABLE>

                                       8
<PAGE>
 
VDK HOLDINGS, INC.

On April 8, 1998, New LLC completed a stock purchase of VDK Holdings (See 
Note 1 -Basis of Presentation). The Company acquired all the capital stock of
VDK Holdings in exchange for $183.5 million of the Company's equity. The
acquisition was accounted for using the purchase method of accounting. The
allocation of purchase price has not been finalized; however, any changes are
not expected to be material.

The cost to acquire VDK Holdings has been allocated to tangible and intangible
assets acquired as follows (in thousands):

<TABLE>
          <S>                                                  <C>           
          Value of stock used to acquire VDK Holdings          $      183,469
          Liabilities assumed                                         383,063
          Other acquisition costs                                       8,431
                                                               -------------- 
                                                                      574,963
          Cost assigned to tangible assets                           (201,545)
                                                               --------------
                                                                             
          Cost attributable to intangible assets               $      373,418
                                                               ============== 
</TABLE>  

Had the VDK Holdings and DH acquisitions taken place January 1, 1998, the
unaudited pro forma results of operations for the three month period ended March
28, 1998 would have been as follows (in thousands):

<TABLE>
<CAPTION>
                                                   Three Months Ended
                                             --------------------------------   
                                               March 31,         March 28,
                                                  1999              1998
                                             -------------      ------------- 
                                                (actual)        (pro forma)
          <S>                                <C>                <C>
          Net sales                           $   261,050       $    240,337   
                                             =============      ============= 
                                             
          Gross profit                        $   156,922       $    145,226   
                                             =============      =============  
                                             
          Operating income (loss)             $    27,971       $    (99,218)   
                                             =============      ============= 
</TABLE>

                                       9
<PAGE>
 
NOTE 3 - INVENTORIES
--------------------

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                       March 31,            December 31,
                                                          1999                  1998
                                                   ----------------      ---------------- 
        <S>                                        <C>                   <C>       
        Raw materials                              $         16,496      $         17,982
        Work in process                                         477                   271
        Finished goods                                       53,717                54,640
        Packaging and other supplies                          4,388                 3,781
                                                   ----------------      ---------------- 
                                                   $         75,078      $         76,674
                                                   ================      ================
</TABLE>
                                                                                

NOTE 4 - INCENTIVE PLAN EXPENSE
-------------------------------

AURORA INCENTIVE PLAN

The Amended and Restated Limited Liability Company Agreement of MBW LLC
contained an incentive plan (the "Aurora Plan") as a means by which certain key
employees and other specifically designated persons ("Aurora Covered Employees")
of AurFoods and/or affiliated with AurFoods, were given an opportunity to
benefit from appreciation in the value of AurFoods. Under the Aurora Plan,
Aurora Covered Employees were issued a specific class of limited liability
company member units ("Management Units"), at a nominal value, as a means to
participate in the appreciation of the equity value of AurFoods. The Management
Units were subject to vesting requirements based on terms of employment or other
factors.

Prior to the closing of the Equity Offerings, the final value of all classes of
Management Units were determined based on the valuation of the Common Stock held
indirectly by MBW LLC, and upon the closing of the Equity Offerings all unvested
Management Units became fully vested. The aggregate value of all Management
Units was $58.9 million. Through December 27, 1997, the Company had recorded
estimated incentive plan expense of $2.3 million based on the estimated
valuation of the Company at that time. Additional incentive plan expense of
$56.6 million was recorded in the first and second quarters of 1998.

The incentive plan expense was recorded as a liability of MBW LLC as sponsor of
the Aurora Plan. However, because the Aurora Plan was for the benefit of Aurora
Covered Employees, expense recognized under the Aurora Plan was pushed down to
the Company as incentive plan expense and as additional paid-in capital from its
parent. No additional incentive plan expense will be recorded under the Aurora
Plan.

MBW LLC satisfied its liability under the Aurora Plan by distributing 4,152,417
shares of Common Stock of the Company based on the valuation of the Management
Units at the initial public offering price of the Company's Common Stock on the
dissolution of MBW Investors LLC.

                                       10
<PAGE>
 
VDK INCENTIVE PLAN

VDK LLC provided a compensation arrangement (the "VDK Plan") as a means by which
certain key employees, and other specifically designated persons ("VDK Covered
Employees") of VDK and/or affiliated with VDK, were given an opportunity to
benefit from appreciation in the equity value of VDK. Under the VDK Plan, VDK
Covered Employees were issued a specific class of limited liability company
member units and/or performance-based units (collectively, "VDK Management
Units"), at a nominal value, as a means to participate in the appreciation of
the equity value of VDK. The VDK Management Units were subject to vesting
requirements based on terms of employment or other factors.

Prior to the closing of the Equity Offerings, the final value of all classes of
VDK Management Units were determined based on the valuation of the shares of the
Company held indirectly by VDK LLC, and upon the closing of the Equity Offerings
all unvested VDK Management Units became fully vested. The aggregate value of
all VDK Management Units was $66.7 million. Through December 31, 1997, no
incentive plan expense had been recorded by VDK based on the estimated valuation
of VDK at that time. Incentive plan expense of $66.7 million was recorded in the
first and second quarters of 1998. The incentive plan expense was recorded as a
liability of VDK LLC as sponsor of the VDK Plan. However, because the VDK Plan
was for the benefit of VDK Covered Employees, expense recognized under the VDK
Plan was pushed down to VDK as incentive plan expense and as additional paid-in
capital from its parent. No additional incentive plan expense will be recorded
under the VDK Plan.

VDK LLC (or the Company as described below) will distribute a fixed number of
shares of Common Stock of the Company upon the dissolution of VDK LLC, based on
the valuation of the VDK Management Units at the initial public offering price
of the Company's Common Stock.

The VDK Plan provides for tax gross-up payments on certain distributions.
Because the Company will receive the tax benefit of such distributions and
related tax gross-up payments, and because the tax benefit is expected to exceed
the amount of the tax gross-up payments, the Company will bear the $12.4 million
liability for any such tax gross-up payments due. The tax benefit of the tax
gross-up payment and related distributions of $19.6 million, which more than
offsets the gross-up payments, has been recorded to income tax expense and as a
deferred tax asset.

To facilitate payment of the tax gross-up obligation and recognition of related
tax benefits, VDK adopted a new incentive plan (the "New VDK Plan" and together
with the VDK Plan, the "VDK Plans"), which was assumed by the Company in
connection with the Contribution. Under the New VDK Plan, the Company is
obligated to distribute no later than July 1, 1999 1,801,769 shares of the
Company's Common Stock to VDK Covered Employees who were granted certain types
of VDK Management Units under the VDK Plan. The issuance of such shares (the "MC
Shares") will not increase the number of outstanding shares of Common Stock
because the Company's obligations to issue the MC Shares is contingent upon the
Company's receiving from VDK LLC, as a contribution, a number of shares of the
Company's Common Stock owned by VDK LLC equal to the number of MC Shares. The
Company will have no obligation to issue MC Shares unless it receives a
contribution of an equal number of shares from VDK LLC. VDK LLC is obligated to
contribute such shares to the Company after the closing of the Equity Offerings.
The Company's obligation to make the tax gross-up payments referred to above is

                                       11
<PAGE>
 
subject to the Company being allowed a deduction for federal income tax purposes
with respect to the payment of the MC Shares and tax gross-up payment.

NOTE 5 - TRANSITION EXPENSES
----------------------------

Transition expenses consist of one-time costs incurred to integrate the acquired
businesses, including relocation expenses, recruiting fees, sales support,
production transition and other unique transitional expenses.

NOTE 6 - EARNINGS PER SHARE
---------------------------

Basic earnings per share represents the income available to common stockholders
divided by the weighted average number of common shares outstanding during the
measurement period. Diluted earnings per share represents the income available
to common stockholders divided by the weighted average number of common shares
outstanding during the measurement period while also giving effect to all
potentially dilutive common shares that were outstanding during the period.
Potentially dilutive common shares consist of stock options (the dilutive impact
is calculated by applying the "treasury stock method").

The table below summarizes the numerator and denominator for the basic and
diluted loss per share calculations (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                             ------------------------------- 
                                                                              March 31,          March 28,
                                                                                 1999              1998
                                                                             ------------------------------- 
          <S>                                                                <C>               <C>
          Numerator:                                                                       
            Income (loss) before extraordinary item                          $     7,830       $    (62,956) 
            Extraordinary item, net of tax                                             -              1,876  
                                                                             ------------      ------------- 

            Net income (loss)                                                $     7,830       $    (64,832) 
                                                                             ============      =============
          Denominator:                                                                                       
            Weighted average number of basic shares                               67,061             29,053  
            Effect of dilutive securities                                              -                  -  
                                                                             ------------      -------------

            Weighted average number of diluted shares                             67,061             29,053  
                                                                             ============      =============   
          Basic and diluted earnings (loss) per share                                                        
           before extraordinary item                                         $      0.12       $      (2.17) 
          Extraordinary item per share                                                 -               0.06  
                                                                             ------------      -------------

          Basic and diluted earnings (loss) per share                        $      0.12       $      (2.23)  
                                                                             ============      ============= 
</TABLE>

                                       12
<PAGE>
 
NOTE 7 - SEGMENT INFORMATION
----------------------------

The Company groups its businesses in two operating segments: dry grocery
division and frozen food division.  The operating segments are managed as
strategic units due to their distinct manufacturing methodologies, distribution
channels and dedicated segment management teams. The dry grocery division
includes Duncan Hines(R) baking mix products, and Mrs. Butterworth's(R) and Log
Cabin(R) syrup products.  The frozen food division includes Van de Kamp's(R) and
Mrs. Paul's(R) frozen seafood products, Aunt Jemima(R) frozen breakfast products
and Celeste(R) frozen pizza products.

The following table presents a summary of operations by segment (in thousands):

<TABLE>
<CAPTION>
                                               March 31,                   March 28,
                                                 1999                        1998
                                        --------------------        --------------------
<S>                                     <C>                         <C>
Net sales
     Dry grocery                                  $  101,010                    $ 89,385
     Frozen food                                     160,040                           -
                                        --------------------        --------------------
     Total                                        $  261,050                    $ 89,385
                                        ====================        ====================
 
Operating income (loss)
     Dry grocery                                  $   16,864                    $ 11,788
     Frozen food                                      15,379                           -
     Other                                            (4,272)                    (61,926)
                                        --------------------        -------------------- 
     Total                                        $   27,971                    $(50,138)
                                        ====================        ====================
 
 
Total assets
     Dry grocery                                  $  974,737                    $869,551
     Frozen food                                     498,994                           -
                                        --------------------        --------------------
     Total                                        $1,473,731                    $869,551
                                        ====================        ====================
 
 
Depreciation and amortization
     Dry grocery                                  $    6,506                    $  6,140
     Frozen food                                       5,548                           -
                                        --------------------        -------------------- 
     Total                                        $   12,054                    $  6,140
                                        ====================        ====================
 
 
Capital expenditures
     Dry grocery                                  $    3,542                    $  1,181
     Frozen food                                       3,003                           -
                                        --------------------        --------------------
     Total                                        $    6,545                    $  1,181
                                        ====================        ====================
</TABLE>

The Other line item in operating income (loss) is comprised of one-time expenses
related to incentive plan expense (See Note 4 - Incentive Plan Expense) and
transition expenses (See Note 5 - Transition Expenses) that were incurred in the
respective periods.

                                       13
<PAGE>
 
NOTE 8 - SUBSEQUENT EVENT
-------------------------

ACQUISITION

On April 1, 1999, subsequent to the Company's quarter end, the Company acquired
100% of the stock in Sea Coast Foods, Inc. ("Seacoast") from Galando Investment
Limited Partnership, Carey-On Limited Partnership, Joseph A. Galando, Barbara J.
Galando, Stanley J. Carey and Mary K. Carey (collectively the "Sellers").  The
assets owned by Seacoast include (1) the Chef's Choice(R) brand and associated
trademarks, (2) assets located at its Seattle, WA administrative office, and (3)
$5.8 million of net working capital.  The purchase price of approximately $50.0
million was based on an arms length negotiation between the Company and the
Sellers.  The acquisition will be accounted for by using the purchase method of
accounting.

To finance the acquisition of Seacoast and related costs, the Company added
$100.0 million of senior secured term debt to its existing senior bank
facilities under the Company's Fourth Amended and Restated Credit Agreement,
dated as of March 31, 1999, among the Company, as borrower, the lenders listed
therein, The Chase Manhattan Bank, as Administrative Agent, The National
Westminster Bank PLC, as Syndication Agent and UBS AF, Stamford Branch, as
Documentation Agent ("Amended New Senior Bank Facilities").  The Company used
the remaining proceeds from the Amended New Senior Bank Facilities to repay
$46.5 million of its senior secured revolving debt facility.

                                       14
<PAGE>
 
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------------------------------------------------------------------------------
OF OPERATIONS
-------------

Reference is made to Notes to Financial Statements and Management's Discussion
and Analysis of Financial Condition and Results of Operations presented in the
annual report on Form 10-K of Aurora Foods Inc. for the year ended December 31,
1998.

The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the historical
financial information included in the Financial Statements and notes to the
financial statements.  Unless otherwise noted, years (1999 and 1998) in this
discussion refer to the Company's March-ending quarters.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of the Company.  The Company and
its representatives may from time to time make written or oral statements that
are "forward-looking" including statements contained in this report and other
filings with the Securities and Exchange Commission and in reports to the
Company's stockholders.  Certain statements, including, without limitation,
statements containing the words "believes," "anticipates," "intends," "expects,"
"estimates" and words of similar import and Year 2000 remediation efforts,
constitute "forward-looking statements" and involve known and unknown risk,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements.  Such factors include, among others, the following: the
actions of the Company's competitors; general economic and business conditions;
industry trends; demographics; raw material costs; the continued success of
management's strategy; integration of acquired businesses into the Company;
terms and development of capital; and changes in, or the failure or inability to
comply with, governmental rules and regulations, including, without limitation,
FDA and environmental rules and regulations.  Given these uncertainties, undue
reliance should not be placed on such forward looking statements.  The Company
disclaims an obligation to update any such factors or to publicly announce the
results of any revisions to any forward-looking statements contained herein to
reflect future events or developments.

The following table sets forth, for the periods indicated, the percentage, which
the items in the Statement of Operations bear to net sales.  A summary of the
components of operations is shown on the page that follows.

                                       15
<PAGE>
 
            COMPARATIVE RESULTS: THREE MONTHS ENDED MARCH 31, 1999
                        AND MARCH 28, 1998 (UNAUDITED)

<TABLE> 
<CAPTION> 
(in thousands except                                          Actual                                             Pro Forma
                                  ------------------------------------------------------------       ------------------------------
per share amounts)                         March 31, 1999                   March 28, 1998                   March 28, 1998
                                  ---------------------------       --------------------------       ------------------------------
<S>                               <C>                    <C>        <C>                   <C>        <C>                     <C> 
Net sales                                 $261,050       100.0 %          $ 89,385       100.0 %             $ 240,337       100.0 %

Cost of goods sold                         104,128       39.9               37,734        42.2                  95,111        39.6
                                  ----------------    -------       --------------     -------       -----------------      ------- 

     Gross profit                          156,922       60.1               51,651        57.8                 145,226        60.4
                                  ----------------    -------       --------------     -------       -----------------      -------
 
 
Brokerage, distribution and
   marketing expenses:
     Brokerage and distribution             24,634        9.4                9,355        10.5                  23,544         9.8
     Trade promotions                       61,373       23.5               15,568        17.4                  57,736        24.0
     Consumer marketing                     22,558        8.7                7,997         8.9                  21,059         8.8
                                  ----------------    -------       --------------     -------       -----------------      -------
 
Total brokerage, distribution
   and marketing expenses                  108,565       41.6               32,920        36.8                 102,339        42.6
Amortization of goodwill
   and other intangibles                     8,772        3.4                4,597         5.2                   8,356         3.5
Selling, general and
   administrative expenses                   7,342        2.8                2,346         2.6                   7,083         2.9
Incentive plan expense                           -        0.0               60,000        67.1                 124,740        51.9
Transition expenses                          4,272        1.6                1,926         2.2                   1,926         0.8
                                  ----------------    -------       --------------     -------       -----------------      -------
     Total operating expenses              128,951       49.4              101,789       113.9                 244,444       101.7
                                  ----------------    -------       --------------     -------       -----------------      -------
 
     Operating income (loss)                27,971       10.7              (50,138)      (56.1)                (99,218)      (41.3)
 
Interest expense, net                       14,579        5.6               12,614        14.1                  14,434         6.0
Amortization of deferred
  financing expense                            397        0.1                  513         0.5                     373         0.2
Other bank and financing
  expenses                                      53        0.0                   51         0.1                      95         0.0
                                  ----------------    -------       --------------     -------       -----------------      -------
 
     Income (loss) before income
       taxes and 
       extraordinary item                   12,942        5.0              (63,316)      (70.8)               (114,120)      (47.5)
Income tax expense (benefit)                 5,112        2.0                 (360)       (0.4)                  4,195         1.7
                                  ----------------    -------       --------------     -------       -----------------      -------
 
 
     Net income (loss)
       before
       extraordinary item                    7,830        3.0              (62,956)      (70.4)               (118,315)      (49.2)
 
Extraordinary loss on early
     extinguishment of debt,
     net of tax of $1,184                        -        0.0                1,876         2.1                   1,876         0.8
                                  ----------------    -------       --------------     -------       -----------------      -------
 
     Net income (loss)                    $  7,830       3.0 %            $(64,832)      (72.5)  %           $(120,191)      (50.0)%

                                  ================    =======       ==============     =======       =================      =======
 
Earnings per share                           $0.12                          $(2.23)                             $(1.79)
                                  ================                  ==============                    ================ 
Adjusted EBITDA /(1)/                     $ 43,947                        $ 17,760                           $  38,922
                                  ================                  ==============                    ================ 
Adjusted EPS /(2)/                           $0.16                          $(0.03)                              $0.11
                                  ================                  ==============                    ================ 
</TABLE> 

(1)  Adjusted EBITDA is defined as operating income before incentive plan
     expense, transition expense, depreciation and amortization of goodwill and
     other intangibles.
(2)  Adjusted EPS is defined as earnings per share plus the per share after tax
     effect of incentive plan expense, transition expense and extraordinary
     item. 

                                       16
<PAGE>
 
                             RESULTS OF OPERATIONS

                 THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO
                       THREE MONTHS ENDED MARCH 28, 1998

Net Sales.  Net sales for the quarter ended March 31, 1999 were $261.0 million,
which was an increase of $171.6 million as compared to net sales in the prior
year quarter of $89.4 million. The prior year quarter included the results of
the Mrs. Butterworth's(R) and Log Cabin(R) brands, and the Duncan Hines(R) brand
from January 16, 1998.  The Van de Kamp's, Inc. business was purchased on April
9, 1998 and is included in the pro forma results.

  Pro Forma Net Sales.  Net sales for the quarter ended March 31, 1999 increased
  8.6% as compared to pro forma net sales of $240.3 million for the prior year
  quarter (which reflect all the acquisitions noted previously as if they had
  occurred on January 1, 1998).  Sales growth in the quarter was led by unit
  volume growth of 8.1% in the Company's frozen food division and 7.5% in Duncan
  Hines(R) baking mix products and higher prices for the Company's Duncan
  Hines(R) products.

  Unit volumes increased 5.1% to 12.8 million cases from 12.2 million cases in
  the prior year quarter. Frozen food division unit volumes increased 8.1%
  versus the prior year quarter, including a 17.5% increase in Celeste(R) frozen
  pizza, a 9.1% increase in frozen breakfast products, a 7.9% increase in
  foodservice and a 4.0% increase in frozen seafood volumes.  Unit volumes for
  the dry grocery division increased by 1.4% versus the prior year quarter.
  Unit volumes of the Company's Duncan Hines(R) baking mix products increased
  7.5%, while unit volumes of syrup products decreased 9.7% compared to last
  year.  Overall, unit volume growth was driven by strong consumer marketing
  programs, new television advertising campaigns and new product introductions.
  In the first quarter, the Company began airing five new television advertising
  campaigns and successfully launched several new products, both of  which
  contributed to the volume growth.  The new product introductions included Aunt
  Jemima(R) french toast sticks and mini-pancakes, and Van de Kamp's(R) and Mrs.
  Paul's(R) Crisp & Healthy and Tenders frozen seafood products.  The table
  syrup category experienced a decline in the quarter, particularly in the lite
  syrup segment, which caused the volume decline in the Company's syrup
  products.

  The Company's net sales growth included a 3.5% increase related to pricing,
  which was primarily attributable to the competitive price equalization program
  initiated on the Duncan Hines(R) brand in March 1998 whereby the Company
  increased the list price on cake and frosting products to parity with the
  competition.  The price equalization program generated approximately $7.3
  million in net sales for the quarter ended March 31, 1999. In addition,
  product mix shifts in the frozen pizza and frozen seafood product lines have
  caused dollar sales for those segments to increase at a higher rate than unit
  sales. The dollar sales increase for the Celeste(R) business was 18.2% due to
  increased sales of premium Mama Celeste Fresh-Baked Rising Crust frozen pizza
  products, which sell at a higher list price per case than other Celeste(R)
  frozen pizza products.  Frozen seafood product sales increased 9.0% versus the
  prior year quarter and exceeded the unit volume change due to a 3% price
  increase instituted on both the Van de Kamp's(R) and Mrs. Paul's(R) brands
  during October 1998 and a favorable mix shift to larger sizes and more premium
  priced products.

                                       17
<PAGE>
 
Gross Profit.    Gross profit was 60.1% of net sales, which was greater than the
gross profit in the 1998 period of 57.8%. The increase was primarily due to
higher sales dollars generated from the pricing actions on Duncan Hines(R) and
syrup products in March 1998 and July 1998, respectively.

  Pro Forma Gross Profit. Gross profit of 60.1% for the quarter ended March 31,
  1999 was 0.3 percentage points lower than the pro forma gross profit of 60.4%
  for the prior year quarter.  The difference was primarily attributable to the
  strong sales growth generated by the frozen food division, which generally has
  a lower gross margin than the dry grocery division.  In addition, lower
  volumes of syrup products, which have a high gross margin, partially offset
  the improvement in gross margins for Duncan Hines(R) baking mix products.

Brokerage, Distribution and Marketing Expenses.  Brokerage, distribution and
marketing expenses for the quarter ended March 31, 1999 increased $75.6 million
as compared to the prior year quarter due to the inclusion of the acquired
businesses.  As a percentage of net sales, brokerage, distribution and marketing
expenses were 41.6%, which was 4.8 percentage points higher than the prior year
quarter of 36.8%.

  Pro Forma Brokerage, Distribution and Marketing Expenses.  Brokerage,
  distribution and marketing expenses for the quarter of 41.6% of net sales were
  $6.2 million higher than such expenses for the pro forma prior year quarter,
  which were 42.6% of net sales.  Brokerage and distribution expenses increased
  $1.1 million over last year and decreased as a percentage of net sales to 9.4%
  from 9.8% in the prior year quarter. The decrease as a percent of net sales
  was mainly the result of lower average brokerage commissions. Marketing
  expenses increased $5.1 million and were 32.2% of net sales, which was 0.6
  percentage points lower than the prior year quarter of 32.8%.  A decrease in
  trade promotions and slotting expenses as a percentage of net sales was
  partially offset by increased consumer marketing expenses.  Consumer marketing
  programs were executed during the quarter to support frozen seafood sales
  during the Lenten season and promote baking mix product sales in advance of
  Easter.

Amortization of Goodwill and Other Intangibles.  Amortization of goodwill and
other intangibles increased to $8.8 million from $4.6 million in the 1998
period.  The increase of $4.2 million was due to the additional amortization
expense generated by the goodwill recorded in connection with the brands
acquired by the Company in 1998.

Selling, General and Administrative Expenses.  Selling, general and
administrative expenses of $7.3 million were $5.0 million higher than the prior
year quarter expense of $2.3 million.  The increase was due to the inclusion of
Van de Kamp's, Inc. and the additional infrastructure and staffing required by
the dry grocery division to operate the Duncan Hines(R) business, which was
newly integrated during 1998.  Selling, general and administrative expenses were
2.8% of net sales, which was 0.2 percentage points higher than the 2.6%
experienced in the prior year.

Incentive Plan Expense.  In the prior year quarter, the Company recorded non-
cash incentive plan expense of $60.0 million in accordance with the Aurora Plan
contained in the MBW LLC Agreement (See Notes to the Financial Statements Note 4
- Incentive Plan Expense).

Transition Expenses.  Transition expenses were $4.3 million as compared to $1.9
million recorded in the prior year quarter and represent one-time costs incurred
to integrate the acquired businesses.  The increase was due to the acquisition
of the Duncan Hines(R) brand.

                                       18
<PAGE>
 
Operating Income (Loss).  Operating income was $28.0 million as compared to an
operating loss in the prior year period of $50.1 million.  Excluding the effects
of the incentive plan expense and transition expenses, the Company would have
achieved operating income of $32.3 million in the quarter versus operating
income of $11.8 million in the prior year quarter.  The significant increase was
due to the inclusion of operating income generated by the acquired businesses.

  Pro Forma Operating Income (Loss).  On a pro forma basis, the operating loss
  for the prior year quarter was $99.2 million.  Excluding the effects of the
  incentive plan expense and transition expenses, the Company's operating income
  in the 1998 quarter would have been $27.4 million. The increase in operating
  income during the current quarter was 17.9% and was the result of higher sales
  and lower marketing expenses.

Interest Expense and Amortization of Deferred Financing Expense.  The aggregate
of net interest expense and amortization of deferred financing expense of $15.0
million in the quarter ended March 31, 1999 was higher than the prior year
quarter amount of $13.1 million.  The increase was due to the additional debt
associated with the acquisition of the Van de Kamp's, Inc. business in 1998.

Income Tax Expense (Benefit).  The income tax expense recorded for the quarter
was $5.1 million, which was an effective tax rate of 39.5%.  An income tax
benefit of $0.4 million was recorded in the prior year quarter.

Net Income (Loss).  The Company recorded net income of $7.8 million as compared
to a net loss for the prior year quarter of $64.8 million.  Excluding the
effects of transition expense in 1999 and 1998, and excluding the extraordinary
loss from early extinguishment of debt and incentive plan expense in 1998, net
income improved $11.2 million to $10.4 million in the current quarter versus the
prior year period net loss of $0.8 million.

                        LIQUIDITY AND CAPITAL RESOURCES

For the quarter ended March 31, 1999, net income plus non-cash charges provided
$25.0 million of operating cash flow and an increase in net working capital used
$22.9 million of cash during the quarter.  As compared to December 31, 1998,
current assets, excluding cash and current deferred tax assets, increased $24.9
million and current liabilities, excluding current maturities of senior secured
debt, increased $0.2 million.  The increase in current assets was the result of
increased inventory levels of certain Duncan Hines(R) products produced by P&G
in advance of relocating certain production equipment to the Company's contract
manufacturers' production facilities and a higher receivables balance caused by
the timing of the frozen seafood and baking mix sales relative to Easter being
at the end of March.

Net cash used in investing activities was $26.4 million for the quarter ended
March 31, 1999. During the quarter, the Company spent $6.5 million on capital
expenditures.  The Company spent $3.5 million primarily for the relocation of
manufacturing equipment to the Company's baking product contract manufacturers'
production facilities and $3.0 million primarily to expand capacity for its
frozen breakfast products.  In addition, the Company invested in additional
manufacturing capacity of frozen seafood products with the purchase of a
production facility and the associated working capital.  Capital expenditures
were funded from internal cash flow and borrowings on the senior secured
revolving debt facility under the New Senior Bank Facilities.

                                       19
<PAGE>
 
During the quarter, financing activities provided cash of $24.2 million.  The
Company repaid $5.0 million in principal on its New Senior Bank Facilities and
borrowed on the revolving facility to fund capital expenditures, software and
packaging design expenditures and its investment in frozen seafood manufacturing
capacity.

At March 31, 1999, the Company had $0.3 million of cash and cash equivalents and
an unused commitment of $60.0 million on its senior secured revolving debt
facility under the Amended New Senior Bank Facilities.  The Company's primary
sources of liquidity are cash flows from operations and available borrowings
under the $175.0 million revolving debt facility.  Management believes the
available borrowing capacity under the revolving debt facility combined with
cash provided by operations will provide the Company with sufficient cash to
fund operations as well as to meet existing obligations.

YEAR 2000

The dates on which the Company believes Year 2000 compliance will be completed
are based on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, third-party modification plans and other factors. However, there can
be no guarantee that these estimates will be achieved, or that there will not be
a delay in, or increased costs associated with, the implementation of Year 2000
compliance.  Specific factors that might cause differences between the estimates
and actual results include, but are not limited to, the availability and cost of
personnel trained in these areas, the ability to locate and correct all relevant
computer code, timely responses to and corrections by third-parties and
suppliers, the ability to implement interfaces between the new systems and the
systems not being replaced, and similar uncertainties.  Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-parties, the Company cannot
ensure its ability to resolve problems associated with the Year 2000 issue that
may affect its operations and business, or expose it to third-party liability in
a timely and cost-effective manner.

The Year 2000 issue, which is common to most corporations, concerns the
inability of information systems, including computer software programs as well
as non-information technology systems, to properly recognize and process date-
sensitive information related to the Year 2000 and beyond.  The Company believes
that it will be able to achieve Year 2000 compliance by the end of 1999 and does
not currently anticipate any material disruption of its operations as a result
of any failure by the Company to be Year 2000 compliant.  However, to the extent
the Company is unable to achieve Year 2000 compliance, the Company's business
and results of operations could be materially affected.  This could be caused by
computer-related failures in a number of areas including, but not limited to,
the failure of the Company's financial systems or manufacturing and inventory
management systems.

Efforts to identify the risks associated with Year 2000 compliance began in 1997
by identifying the potential areas of exposure.  The Company's information
technology was split into three areas of concern:  internal mission-critical
systems and applications, internal non-mission-critical systems and applications
and external data sources and trading partners.

Compliance with internal mission-critical systems and applications is nearly
complete.  Given the relatively recent incorporation of the Company, most
systems and applications have been 

                                       20
<PAGE>
 
purchased within the last year or two. All purchases made were for systems that
were Year 2000 compliant or for those that had documented plans and dates for
future compliance. Currently, the Warehouse Management System in the frozen food
division, which accesses a compliant information database, is the only remaining
mission-critical application not compliant. The Company has elected to upgrade
the functionality of its current Warehouse Management System and, therefore,
will be replacing the entire system. The new system has been selected and is
scheduled to have installation and testing completed by August 1999. Internal
non-mission-critical systems and applications are currently being analyzed and
are presently expected to be compliant by the middle of 1999.

In addition to reviewing its internal systems, the Company has polled or is in
the process of polling its third-party vendors, customers and freight carriers
to determine whether they are Year 2000 compliant and to attempt to identify any
potential issues.  If the Company's customers and vendors do not achieve Year
2000 compliance before the end of 1999, the Company may experience a variety of
problems, which may have a material adverse effect on the Company.  Among other
things, to the extent the Company's customers are not Year 2000 compliant by the
end of 1999, such customers may lose electronic data interchange ("EDI")
capabilities at the beginning of the Year 2000.  Where EDI communication would
no longer be available, the Company expects to utilize voice, facsimile and/or
mail communications in order to receive customer orders and process customer
billings. To the extent the Company's vendors or co-packers are not Year 2000
compliant by the end of 1999, such vendors or co-packers may fail to deliver
ordered materials and products to the Company and may fail to bill the Company
properly and promptly. Consequently, the Company may not have the correct
inventory to send to its customers and may experience a shortage or surplus of
inventory which could materially adversely affect the Company's business and
results of operations.  The Company is in the process of developing a plan to
address potential problems with respect to its vendors; however, the Company
believes it has access to sufficient alternative sources of supply.

To date, the Company has incurred and expensed approximately $0.1 million
related to the assessment and development of the remediation plan and the
purchase of new compliant hardware and software.  Management anticipates
spending and expensing an additional $0.5 million through the end of 1999 to
implement its entire Year 2000 plan.  The costs of the project and the date on
which the Company plans to complete the Year 2000 modifications are based on
management's best estimates, which were derived using numerous assumptions of
future events including the continued availability of certain resources, third-
parties' Year 2000 readiness and other factors.

The Company is in the process of developing contingency plans, which should be
completed in May, 1999 so that the Company's critical business processes can be
expected to continue to function on January 1, 2000 and beyond.  The Company's
contingency plans will be structured to address both remediation of systems and
their components and overall business operating risk.  These plans are intended
to mitigate both internal risks as well as potential risks in the supply chain
of the Company's suppliers and customers.

Interest Rate Collar Agreements.  At March 31, 1999, the Company was party to
two interest rate collar agreements.  On August 22, 1996 the Company entered
into a three year interest rate collar agreement with a notional principal
amount of $70.0 million, a cap rate of 6.5% and a floor rate of 5.75%.  On
November 26, 1997, the Company entered into a three year interest rate collar

                                       21
<PAGE>
 
agreement with a notional principal amount of $50.0 million, a cap rate of 7.5%
and a floor rate of 5.50%.

Interest Rate Swap Agreements. The Company is party to two interest rate swap
agreements.  On March 17, 1998, the Company entered into an interest rate swap
agreement with a notional principal amount of $150.0 million and a term of three
years.  The effective swap rate on March 17, 1998 was 5.81%.  On November 30,
1998, the Company amended the existing interest agreement whereby the
counterparty received the option to extend the termination date to March 17,
2003.  The new effective swap rate through the termination date of the interest
rate swap agreement is 5.37%.

On April 13, 1999, the Company entered into a three-year interest rate swap
agreement (the "Swap") with a notional principal amount of $200.0 million. The
Company entered into the Swap to achieve its objective of hedging approximately
60% of its debt against movements in interest rates. The applicable rate is set
quarterly with the first reset date on July 1, 1999.  The counterparty to the
Company's Swap is a major financial institution.

Under the Swap, the Company would receive payments from the counterparty if the
three-month LIBOR plus a spread of 3.25% falls below a cap rate of 8.63%, but
not below 7.8%.  There would be no payments made to either counterparty if the
three-month LIBOR plus a spread of 3.25% exceeds 8.63% and is less than 10.25%.
The Company would make payments to the counterparty if the three-month LIBOR
plus a spread of 3.25% exceeds 10.25%.

Risks associated with the interest rate swap and collar agreements include those
associated with changes in the market value and interest rates.  Management
considers the potential loss in future earnings and cash flows attributable to
the interest rate swap and collar agreements to not be material.

ITEM 3: QUANTITATIVE AND QUALTITATIVE DISCLOSURE ABOUT MARKET RISK
------------------------------------------------------------------

The Company entered into interest rate swap and collar agreements for non-
trading purposes.  Risks associated with the interest rate swap and collar
agreements include those associated with changes in the market value and
interest rates.  Management considers the potential loss in future  earnings and
cash flows attributable to the interest rate swap and collar agreements not to
be material.

                                       22
<PAGE>
 
                                    PART II
                                    -------

                               OTHER INFORMATION
                               -----------------

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

(a)  Exhibits

Exhibit
Number    Exhibit
------    -------

2.1       Asset Purchase Agreement, dated as of March 10, 1999, by and among the
          Company and Sea Coast Foods, Inc., Galando Investments Limited
          Partnership, Carry-on Limited Partnership, Joseph A. Galando, Barbara
          J. Galando, Stanley J. Carey and Mary K. Carey.

3.1       Certificate of Incorporation of A Foods Inc., filed with the Secretary
          of State of the State of Delaware on June 19, 1998. (Incorporated by
          reference to Exhibit 3.1 to Aurora Foods Inc.'s Form S-1 filed on
          April 22, 1998, as amended (the "S-1")).

3.2       Amended and Restated By-laws of Aurora Foods Inc. (Incorporated by
          reference to Exhibit 3.2 to the S-1).

4.1       Indenture dated as of July 1, 1998 by and between Aurora Foods Inc.
          and Wilmington Trust Company (Incorporated by reference to Exhibit
          4.13 to the S-1).

4.2       Specimen Certificate of 8 3/4% Senior Subordinated Notes due 2008.
          (Included in Exhibit 4.1 hereto).

4.3       Specimen Certificate of the Common Stock. (Incorporated by reference
          to Exhibit 4.1 to the S-1).

4.4       Registration Rights Agreement, dated July 1, 1998, between Aurora
          Foods Inc. and Chase Securities Inc., Goldman, Sachs & Co. and Natwest
          Capital Markets Limited (Incorporated by reference to Exhibit 4.15 to
          the S-1).

10.1      Fourth Amended and Restated Credit Agreement, dated as of March 31,
          1999 among Aurora Foods Inc., as borrower, the Lenders listed therein,
          The Chase Manhattan Bank, as Administrative Agent, National
          Westminster Bank PLC, as Syndication Agent and UBS AG, Stamford
          Branch, as Documentation Agent.

27.1      Financial Data Schedule for the period ended March 31, 1999 submitted
          to the Securities and Exchange Commission in electronic format.

(b) Report on Form 8-K
    None.

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<PAGE>
 
SIGNATURES
----------

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

                               AURORA FOODS INC.


Dated:  May 13, 1999          By: /s/  M. Laurie Cummings
                                  -----------------------
 
                              M. Laurie Cummings
                              Chief Financial Officer
                              (Duly Authorized Officer,
                              Principal Financial Officer and
                              Principal Accounting Officer)

                                       24