# 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
endedMay 31, 2004

OR

|[_] | TRANSITION
REPORT PURSUANT TO SECTION 13 AND 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ------------------------------------------------------------------------------------------

For the transition period
from ________to ________

Commission File Number
0-16130

|NORTHLAND CRANBERRIES, INC.                           
|------------------------------------------------------
|                                                      
|(Exact name of registrant as specified in its charter)

|Wisconsin                                                      | 39-1583759                          
|-------------------------------------------------------------- | ------------------------------------
|                                                              
|(State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.)

|2930 Industrial Street                  
|----------------------------------------
|P.O. Box 8020                           
|Wisconsin Rapids, Wisconsin 54495-8020  
|                                        
|(Address of Principal Executive Offices)

Registrant's telephone
number, including area code   (715) 424-4444

|                                                                                  
|----------------------------------------------------------------------------------
|                                                                                  
|(Former name, former address and former fiscal year, if changed since last report)

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
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2).   Yes
   No X

Indicate
the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date:

|Class A Common Stock | July 15, 2004 | 94,091,633
|-------------------- | ------------- | ----------

1

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# NORTHLAND CRANBERRIES,
INC. FORM 10-Q INDEX

|PART I.  | FINANCIAL INFORMATION                                          | PAGE   
|-------- | -------------------------------------------------------------- | -------
|Item 1.  | Financial Statements                                           | 3      
|         | Condensed Consolidated Balance Sheets                          | 3      
|         | Condensed Consolidated Statements of Net Income                | 4      
|         | Condensed Consolidated Statements of Cash Flows                | 5      
|         | Condensed Consolidated Statement of Shareholders' Equity       | 6      
|         | Notes to Condensed Consolidated Financial Statements           | 7 - 11 
|Item 2.  | Management's Discussion and Analysis of Financial             
|         | Condition and Results of Operations                            | 12 - 18
|Item 3.  | Quantitative and Qualitative Disclosure About                 
|         | Market Risk                                                    | 19     
|Item 4.  | Controls and Procedures                                        | 20     
|PART II. | OTHER INFORMATION                                             
|Item 1.  | Legal Proceedings                                              | 20     
|Item 2.  | Changes in Securities, Use of Proceeds and Issuer Purchases of
|         | Equity Securities                                              | 20     
|Item 3.  | Defaults Upon Senior Securities                                | 20     
|Item 4.  | Submission of Matters to a Vote of Security Holders            | 20     
|Item 6.  | Exhibits and Reports on Form 8-K                               | 20 - 21
|         | SIGNATURE                                                      | 22     
|         | Exhibit Index                                                  | 23     

2

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# PART I 
FINANCIAL INFORMATION

ITEM 1.    FINANCIAL
STATEMENTS

# NORTHLAND CRANBERRIES,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)

|                                                                        
|------------------------------------------------------------------------
|ASSETS                                                                  
|Current assets:                                                         
|Cash and cash equivalents                                               
|Accounts receivable - net                                               
|Inventories                                                             
|Prepaid expenses and other current assets                               
|Assets held for sale                                                    
|                                                                        
|Total current assets                                                    
|Property and equipment - net                                            
|Other assets                                                            
|Note receivable                                                         
|Debt issuance cost - net                                                
|                                                                        
|Total assets                                                            
|                                                                        
|LIABILITIES AND SHAREHOLDERS' EQUITY                                    
|Current liabilities:                                                    
|Revolving line of credit facility                                       
|Accounts payable                                                        
|Accrued liabilities                                                     
|Current maturities of long-term debt:                                   
|Outstanding principal payments                                          
|Future interest payments from debt restructuring                        
|                                                                        
|Current maturities of long-term debt                                    
|                                                                        
|Total current liabilities                                               
|                                                                        
|Long-term debt:                                                         
|Outstanding principal payments                                          
|Future interest payments from debt restructuring                        
|                                                                        
|Long-term debt                                                          
|                                                                        
|Total liabilities                                                       
|                                                                        
|Shareholders' equity:                                                   
|Common stock - Class A, $.01 par value, 94,091,633 and 91,548,580 shares
|issued and outstanding, respectively                                    
|Redeemable preferred stock - Series B, $.01 par value, 100 shares issued
|and outstanding                                                         
|Additional paid-in capital                                              
|Accumulated deficit                                                     
|                                                                        
|Total shareholders' equity                                              
|                                                                        
|Total liabilities and shareholders' equity                              
|                                                                        

See notes to condensed
consolidated financial statements.

3

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# NORTHLAND CRANBERRIES,
INC. CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA) (Unaudited)

|                                               
|-----------------------------------------------
|May 31,
2004                                   
|Net revenues                                   
|                                               
|Cost of sales                                  
|                                               
|Gross profit                                   
|Selling, general and administrative expenses   
|(Loss)/gain on disposal of property & equipment
|Write down of assets held for sale             
|Other income (Note 3)                          
|                                               
|Income from operations                         
|Interest expense                               
|Gain on debt extinguishment                    
|Interest income                                
|                                               
|Income before taxes                            
|Income tax expense                             
|                                               
|Net income                                     
|                                               
|Net income per common share:                   
|Basic:                                         
|Diluted:                                       
|Shares used in computing net income per share: 
|Basic                                          
|Diluted                                        

See notes to condensed
consolidated financial statements.

4

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# NORTHLAND CRANBERRIES,
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (Unaudited)

|                                                                 
|-----------------------------------------------------------------
|May 31,
2004                                                     
|Operating activities:                                            
|Net income                                                       
|Adjustments to reconcile net income to net cash                  
|provided by operating activities:                                
|Depreciation and amortization of property and equipment          
|Amortization of debt issuance costs and debt discount            
|Gain on debt extinguishment                                      
|Provision for writedown of assets held for sale                  
|Loss/(gain) on disposal of property and equipment                
|Changes in assets and liabilities:                               
|Receivables, prepaid expenses and other current assets           
|Inventories                                                      
|Accounts payable and accrued liabilities                         
|                                                                 
|Net cash provided by operating activities                        
|                                                                 
|                                                                 
|Investing activities:                                            
|Collections on note receivable                                   
|Issuance of note receivable                                      
|Property and equipment purchases                                 
|Proceeds from disposals of assets held for sale and of           
|property and equipment                                           
|                                                                 
|Net cash provided by investing activities                        
|                                                                 
|Financing activities:                                            
|Net borrowings/(payments) under revolving line of credit facility
|Payments on long-term debt                                       
|Proceeds from issuance of common stock                           
|                                                                 
|                                                                 
|Net cash used in financing activities                            
|                                                                 
|Net (decrease) increase in cash and cash equivalents             
|Cash and cash equivalents, beginning of period                   
|                                                                 
|Cash and cash equivalents, end of period                         
|                                                                 
|SUPPLEMENTAL CASH FLOW INFORMATION-                              
|Cash paid during the nine months for:                            
|Interest                                                         

See notes to condensed
consolidated financial statements.

5

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# NORTHLAND CRANBERRIES,
INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY NINE MONTHS ENDED MAY
31, 2004 (DOLLARS IN THOUSANDS) (Unaudited)

|                         | Common Stock -
Class A | Additional
Paid-in Capital | Accumulated
Deficit | Total
Shareholders'
Equity
|------------------------ | ---------------------- | -------------------------- | ------------------- | --------------------------
|Balance, August 31, 2003 |                        |                            | $                   | 915                       
|Stock warrants exercised |                        |                           
|(2,543,053 shares)       |                        |                            |                     | 26                        
|Net income               |                        |                            |                     | 0                         
|                         |                        |                            |                     |                           
|Balance, May 31, 2004    |                        |                            | $                   | 941                       
|                         |                        |                            |                     |                           

See notes to condensed
consolidated financial statements.

6

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# NORTHLAND CRANBERRIES,
INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

|1. | BASIS
OF PRESENTATION
|-- | ---------------------

| | The
accompanying condensed consolidated financial statements have been prepared by Northland
Cranberries, Inc. (collectively with its subsidiaries, the Company) pursuant
to the rules and regulations of the Securities and Exchange Commission and reflect normal
and recurring adjustments, which are, in the opinion of the Company, considered necessary
to present fairly the financial position of the Company as of May 31, 2004 and August 31,
2003, its related results of operations for the three and nine months ended May 31, 2004
and 2003, respectively, and its cash flows for the nine months ended May 31, 2004 and
2003, respectively. As permitted by these regulations, these condensed consolidated
financial statements do not include all information required by accounting principles
generally accepted in the United States of America to be included in an annual set of
financial statements, however, the Company believes that the disclosures are adequate to
make the information presented not misleading. The Companys condensed consolidated
balance sheet as of August 31, 2003 was derived from the Companys latest
audited consolidated financial statements. It is suggested that the accompanying
condensed consolidated financial statements be read in conjunction with the latest
audited consolidated financial statements and the notes thereto included in the Companys
Annual Report on Form 10-K for the fiscal year ended August 31, 2003.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Business
Risks  Prices paid to growers for raw cranberries are effectively determined by
Ocean Spray, the industry leader, which controls the bulk of the cranberry supply in
North America.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Net
Income Per Common Share  Net income per common share is calculated in
accordance with Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share. Basic net income per common share is computed by dividing
net income by the weighted average number of common shares outstanding. Diluted net
income per common share is computed by dividing net income by the weighted average number
of common shares outstanding increased by the number of dilutive potential common shares
using the treasury stock method.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
weighted average shares outstanding used in calculating net income per common share for
the three and nine months ended May 31, 2004 and 2003 consisted of the following:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      
|----------------------
|May 31, 2004          
|Basic:                
|Shares outstanding    
|beginning of period   
|Issuance of new shares
|                      
|Total                 
|Effect of dilution:   
|Warrants              
|Options               
|                      
|Diluted               
|                      

7

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| | The
shares outstanding used to compute the diluted earnings per share for the three and nine
months ended May 31, 2004 and 2003 exclude outstanding options to purchase 598,825 and
613,575 shares of Class A Common Stock, respectively. Those options were excluded because
their weighted average exercise prices were greater than the average market price of the
common shares and their inclusion would have been antidilutive.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Accounting
for Stock Options  The Company accounts for stock-based compensation in
accordance with Accounting Principle Board Opinion No. 25, Accounting for Stock
Issued to Employees, as allowed by SFAS No. 123, Accounting for Stock-Based
Compensation. Stock options are granted at prices equal to the fair market value of
the Companys common stock on the grant dates; therefore no compensation expense is
recognized in connection with stock options granted to employees. The following table
illustrates the effect on net income and net income per share as if the fair value-based
method provided by SFAS No. 123 had been applied for all outstanding and unvested awards
in each period:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               
|-----------------------------------------------
|(Dollars in thousands except per share amounts)
|
|May 31,
2004                                   
|Net income                                     
|Deduct: Total stock-based employee             
|compensation expense determined under          
|fair value based method for all                
|awards, net of related tax effect              
|                                               
|Pro forma net income                           
|                                               
|Historical and pro forma net income            
|per common share:                              
|Basic:                                         
|Pro forma                                      
|Historical                                     
|Diluted:                                       
|Pro forma                                      
|Historical                                     

|2. | LEGAL
PROCEEDINGS
|-- | -----------------

| | On
November 11, 2002, the Company together with Clermont, Inc, filed an antitrust lawsuit
against Ocean Spray Cranberries, Inc. (Ocean Spray). The lawsuit, which is
pending in the United Stated District Court for the District of Massachusetts, alleges
that Ocean Spray has engaged in anticompetitive tactics and unlawfully monopolized the
cranberry products industry to the detriment of its competitors and customers. Management
is unable to predict the outcome of this matter with certainty. However, management does
not believe that the resolution of this matter will have an adverse effect on the Companys
financial statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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|3. | OTHER
INCOME
|-- | ------------

| | On
December 1, 2003, the Company and Cliffstar Corporation (Cliffstar) settled
all disputes between them relating to the earn-out payments the Company was entitled to
under an Asset Purchase Agreement previously entered into by the parties in connection
with the sale of the net assets of the Companys private label juice business to
Cliffstar. As a result, the Company recognized income of $3,000,000 during the nine
months ended May 31, 2004.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
fiscal 2003, the Company received cash proceeds in the amount of $1,500,000, as well as
$200,000 in credits toward storage fees over the next four years, in connection with the
settlement of claims made by the Company against a third party storage facility for
improper handling of the Companys inventory following delivery. Based on the terms
of the settlement agreement, the Company recognized income of $1,500,000 for the nine
months ended May 31, 2003. The Company also recognized income of $89,000 for the three
months ended May 31, 2003 as a result of the settlement of a dispute related to the sale
of the net assets of its private label juice business.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | ASSETS
HELD FOR SALE
|-- | --------------------

| | During
the nine months ended May 31, 2004, the Companys former bottling facility in
Dundee, New York was written down by $558,000 to its estimated fair market value. On
April 23, 2004, the Company sold this facility and the net proceeds from the sale of
approximately $244,000 were used to reduce debt. The Company also sold its facility in
Eau Claire, Michigan on January 6, 2004, and on January 9, 2004, the Company received a
payment of approximately $1,700,000 from its insurance carrier under the terms and
conditions of its policy in connection with losses experienced by the Company as a result
of a fire at the facility on May 10, 2003. As a result of these transactions, the Company
recognized a gain of approximately $1,500,000 during the nine months ended May 31, 2004.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Assets
held for sale as of May 31, 2004 include the land and buildings related to former
manufacturing facilities located in Jackson, Wisconsin. During the nine months ended May
31, 2004, the Company recognized a loss of approximately $1,900,000 in connection with
the sale of certain equipment from this facility. Proceeds from the sale of $1,262,000
were used to reduce debt. On June 17, 2004, the Company sold the facility and anticipates
that it will recognize a gain of approximately $2,900,000 related to the sale in the
fourth quarter of fiscal 2004.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | INVENTORIES
|-- | -----------

| | Inventories
as of May 31, 2004 and August 31, 2003 consisted of the following (in thousands):
| | ---------------------------------------------------------------------------------------------

|                   
|-------------------
|Raw materials      
|Finished goods     
|Deferred crop costs
|                   
|Total inventories  
|                   

9

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|6. | LONG-TERM
DEBT
|-- | --------------

| | Long-term
debt as of May 31, 2004 and August 31, 2003 consisted of the following (in thousands):
| | ------------------------------------------------------------------------------------------------

|                                                
|------------------------------------------------
|Term loans payable                              
|Fee note payable                                
|Restructured bank notes                         
|Restructured insurance company note             
|Other obligations                               
|                                                
|Subtotal principal obligations                  
|Future interest payments from debt restructuring
|                                                
|Total debt                                      
|Less current maturities of long-term debt       
|                                                
|Long-term debt                                  
|                                                

| | A
gain of approximately $5,300,000 was recognized in the nine months ended May 31, 2004 as
a result of the payment in full of the restructured bank notes. This gain is the
recognition of the future interest payments from the restructuring of the Companys
bank note debt in November 2001.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of May 31, 2004 and August 31, 2003, the Company was in compliance with financial
covenants contained in its agreements covering its long-term debt obligations.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | INCOME
TAXES
|-- | ------------

| | The
Company accounts for income taxes using an asset and liability approach that generally
requires the recognition of deferred income tax assets and liabilities based on the
expected future income tax consequences of events that have previously been recognized in
the Companys financial statements or tax returns. In addition, a valuation
allowance is recognized if it is more likely than not that some or all of the deferred
income tax assets will not be realized.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
income tax expense recognized in the three months and nine months ended May 31, 2004 of
$33,000 relates to federal and state income taxes. The Company did not incur any tax
liability for either the three or nine months ended May 31, 2003 due to the utilization
of certain net operating loss carryforwards for which no benefit had been previously
provided.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | NOTE
RECEIVABLE
|-- | ---------------

| | On
January 28, 2004 the Company made a loan of $800,000 to an independent cranberry grower
who is a former officer of the Company, which is secured by a subordinated mortgage of
the growers cranberry marsh (the Loan). The Loan was made in connection
with the restructuring of certain debt obligations of the grower, $1,000,000 of which
were guaranteed by the Company. The proceeds of the Loan were used to pay off the
indebtedness of the grower to its bank, enabling the Company to obtain from the bank a
release of its obligations under the guarantee.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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|9. | COMMON
STOCK
|-- | ------------

| | On
December 9, 2003, Wells Fargo Foothill Inc. f/k/a Foothill Capital Corporation (Foothill)
purchased 2,543,053 shares of Class A Common Stock for an aggregate purchase price of
$25,430.53 pursuant to the terms and conditions of Northland Cranberries, Inc. Common
Stock Purchase Warrant No. W-1 dated November 6, 2001 and issued to Foothill as part of
the consideration to provide credit facilities to the Company in connection with the
restructuring of the Companys debt and equity on November 6, 2001.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

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ITEM 2.    MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# GENERAL

During the nine months ended May 31,
2004, net income was $9.6 million, which was an improvement of $7.0 million compared to
the nine months ended May 31, 2003. Also in the nine months ended May 31, 2004 we reduced
our total debt by $16.5 million. Shareholders equity also improved by $9.6 million during
the first nine months of fiscal 2004 to $55.5 million.

However, total net revenues decreased
by 17.0% during the nine months ended May 31, 2004 compared to the nine months ended May
31, 2003. This decrease resulted primarily from (i) a reduction in sales of cranberry
concentrate to industrial ingredient customers which we believe is attributable to an
increase in competition during the period which resulted in lower sales volume and prices
and (ii) a decrease in sales of branded products which we believe is attributable to an
overall increase in trade spending by competitors and an overall decrease in sales
throughout the shelf stable juice category due to recent publicity concerning diets low in
carbohydrates.

During the remainder of fiscal 2004,
we will continue to focus our marketing efforts on educating consumers about the health
benefits and generally higher cranberry content of our Northlandbrand 100% juice
products.

On November 19, 2003, we announced
that we retained Stephens Inc. of Little Rock, Arkansas, to serve as our financial advisor
and assist us in evaluating various strategic alternatives, including, without limitation,
potential acquisitions, mergers, joint ventures, licensing arrangements or investments in
or potential sale of the company, as well as remaining an independent public company. We
are working with Stephens Inc. to evaluate the means through which we can build on our
financial performance, continue to grow the Northland brand and maximize
shareholder value.

# CRITICAL ACCOUNTING
POLICIES

The preparation of consolidated
financial statements in conformity with generally accepted accounting principles (GAAP) in
the United States of America requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and related
disclosures. On an on-going basis, we evaluate our estimates, including those related to
product shipments and returns, bad debts, inventories, assets held for sale and income
taxes. We base these estimates on historical experience and various other assumptions that
we believe to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

Specifically, we believe that the
following accounting policies and estimates are most important to the portrayal of our
financial condition and operating results and require managements most difficult
judgments:

Revenue Recognition

We recognize revenue when persuasive
evidence of an arrangement exists, product is delivered, collectibility is reasonably
assured and title passes to the customer. Estimated reserves for discounts, coupons,
product returns and trade allowances are established based on an analysis of historical
trends and experience, as well as the trade allowances offered by us at the time products
are delivered. The estimated reserves are charged against revenues in the same period that
corresponding sales are recorded. We periodically evaluate such reserves and make
necessary adjustments when actual participation in these programs differs from historical
experience. There have been no significant changes in estimates for such reserves during
the nine months ended May 31, 2004.

12

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Inventory

We have stated our inventory carrying
value at the lower of cost (using the first-in, first-out costing method) or estimated
market values, based upon managements best estimates of future product selling costs
for the periods during which the cranberries are grown and the cranberries and
cranberry-related products are expected to be sold. The market estimates are dependent
upon several factors including, but not limited to, price, product mix, demand, costs and
the period of time it takes to sell the inventory.

Allowance for Doubtful
Accounts

We maintain allowances for doubtful
accounts for estimated losses resulting from the inability of our customers to make
required payments. We determine the level of our allowance based on historical experience,
the aging of our accounts receivable and the creditworthiness of individual customers. If
the financial condition of our customers were to deteriorate, resulting in impairment of
their ability to make payments, additional allowances may be required. Our accounts
receivable balance was $5.7 million, net of doubtful accounts of $0.4 million, and $6.0
million, net of doubtful accounts of $0.3 million as of May 31, 2004 and August 31, 2003,
respectively.

Recoverability of
Long-Lived Assets

We state the value of our long-lived
assets (property and equipment) at cost less depreciation and amortization. We
periodically evaluate this carrying value. Our estimates of the expected future
undiscounted cash flows related to the recoverability of these assets may change from
actual cash flows due to, among other things, changes in technology and economic
conditions.

Assets Held for Sale

From time to time, in connection with
our managements ongoing efforts to maximize operating effectiveness, decisions are
made to exit certain production or distribution facilities. At the time that our
management commits to a decision to exit existing facilities and initiates an active plan
to dispose of the facility, an assessment of the recoverability of the carrying value of
the long-lived assets of the facility to be closed is made by our management. This
assessment requires our management to estimate the fair value of the assets to be disposed
of and the estimated cost to sell such assets. To the extent that the carrying value of
the assets to be disposed of exceeds the estimated fair value of those assets less their
estimated cost to sell, impairment in the value of the assets is recognized.

Estimates of the fair value of the
assets to be disposed of are generally based on a discounted cash flow analysis or
substantive purchase offers from viable potential buyers. Estimates of the value are
impacted by a variety of relevant factors, including, but not limited to, alternative
future uses of such assets, the availability of potential buyers, general economic
conditions, current legal restrictions, if any, on the use of the assets, and any relevant
legal issues. Our management continues to evaluate all available evidence of the fair
value of the assets to be disposed of and makes any necessary adjustments at the time that
additional information becomes available. During the nine months ended May 31, 2004 we
recorded an additional impairment writedown of $0.6 million related to a closed facility
that is held for sale.

13

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Realization of Deferred
Tax Assets

We have deferred tax assets of $35.8
million and a valuation allowance against these assets of $35.8 million resulting in no
net deferred income tax asset being recorded on our consolidated balance sheet. Of this
amount, $31.2 million of the deferred tax assets relate to tax loss carryforwards.

As of August 31, 2003, we had, for
federal and state income tax purposes, net operating loss carryforwards of approximately
$79.5 million, which expire in 2021 and 2022, available to offset future federal taxable
income. In addition, as of August 31, 2003, we had approximately $2.0 million of federal
alternative minimum tax credit carryforwards available to offset future federal income
taxes. The alternative minimum tax credit carryforwards have no expiration date.

Deferred Gain on
Forgiveness of Indebtedness

On November 6, 2001 we completed the
restructuring of our then-outstanding debt obligations. The modified debt included
provisions for a variable interest rate based on a premium above the lenders prime
borrowing rate.  The critical assumption we made at the time of the restructuring was the
interest rate to be incurred over the life of the debt. For purposes of the determination
of the gain from the restructuring, the interest rate used for the debt was the rate in
effect at the date of the restructuring. Since the debt restructuring in November 2001,
general economic conditions and other factors have resulted in a reduction of interest
rates. Accordingly, since interest paid has been less than previously estimated, we
recognized a gain of approximately $5.3 million upon payment in full of the principal
outstanding during the second quarter of fiscal 2004.

# OFF-BALANCE SHEET
ARRANGEMENTS

We do not typically engage in
off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships with unconsolidated entities or other persons that
may have a material current or future effect on our financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures, capital
resources, or significant components of revenues or expenses. We do not materially rely on
off-balance sheet arrangements for liquidity, capital resources, market risk support,
credit risk support or other benefits.

We have outstanding 100 shares of our
Series B Preferred Stock. The Series B Preferred Stock is subject to mandatory redemption
upon (i) the consummation of a transaction following which neither Sun Northland, LLC nor
its affiliates owns or controls securities possessing at least 10% of the voting power of
the Company, or (ii) the distribution of assets to holders of our capital stock upon the
sale of substantially all our assets. The redemption price in such a circumstance varies
depending upon the number of shares of Series B Preferred Stock then outstanding and the
internal rate of return (as defined in our Articles of Incorporation) recognized by Sun
Northland, LLC in connection with the event triggering such redemption. We cannot be
certain if or when the Series B Preferred Stock may be redeemed, nor can we be certain of
the redemption price in the event of such a redemption.

14

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# RESULTS OF OPERATIONS

Total net revenues for the three
months ended May 31, 2004 were $18.4 million, a decrease of 18.8% from net revenues of
$22.6 million in the prior years third quarter. The decrease resulted primarily from
(i) a 35.5% decrease in sales of cranberry concentrates and frozen cranberries which we
believe is attributable to an increase in competition during the period resulting in lower
sales volume and prices, (ii) a 6.5% decrease in sales of Northland brand juice
products and (iii) a 2.6% decrease in sales of Seneca brand juice products. Net
revenues for the nine months ended May 31, 2004 were $57.5 million, a decrease of 17.0%
from net revenues of $69.2 million in the corresponding period for the prior year. The
decrease resulted primarily from (i) a reduction in sales of cranberry concentrates and
frozen cranberries of 26.5%, (ii) the discontinuance of co-packing services due to the
closure of our Jackson, Wisconsin bottling facility, which resulted in a significant
decline in co-packing revenue, (iii) a decrease in sales of Northlandbrand juice
products of 5.7% and (iv) a decline in sales of Seneca brand juice products of
18.2%. Partly offsetting these decreases in sales was an increase of 13.4% in sales of
fresh cranberries, and our reduction in trade incentives of $1.2 million or 8.4%.

Trade industry data for the 12-week
period ended May 16, 2004 showed that our Northland brand 100% juice products
achieved a 5.2% market share of the supermarket shelf-stable cranberry beverage category
on a national basis, up from a 5.1% market share for the 12-week period ended May 18,
2003. As of May 16, 2004, our Northland 100% juice cranberry products were
available in supermarkets nationwide that account for approximately 74.1% of total grocery
sales, up from 66.5% as of May 18, 2003.

Cost of sales for the three months
ended May 31, 2004 was $12.5 million compared to $16.0 million for the third quarter of
fiscal 2003, resulting in gross margins of 31.8% and 29.5% in each respective period. Cost
of sales for the nine months ended May 31, 2004 was $38.8 million compared to $47.7
million for the same period of fiscal 2003, resulting in gross margins of 32.4% and 31.1%
in each respective period. The increase in gross margin percentage in the three and nine
months ended May 31, 2004 was primarily the result of higher selling prices for cranberry
concentrate and frozen processed cranberries over the same periods in fiscal 2003.

Selling, general and administrative
expenses were $4.5 million, or 24.4% of net revenues, for the three months ended May 31,
2004 compared to $5.1 million, or 22.5% of net revenues, for the third quarter of fiscal
2003. The increase in expenses as a percentage of net revenues was primarily due to lower
sales volume for the quarter and certain nonrecurring expenses primarily related to the
closure of our Jackson, Wisconsin facility. Overall, there was a $0.6 million decrease in
selling, general and administrative expenses in the three months ended May 31, 2004 which
was primarily the result of a $0.7 million decrease in media advertising spending, from
$1.7 million in the third quarter of fiscal 2003 to $1.0 million in the third quarter of
fiscal 2004. There was also a $0.3 million decrease in environmental expenses during the
quarter from the prior year. Partly offsetting these decreases were legal fees which
increased by $0.3 million due to expenses related to the Ocean Spray lawsuit. Other
administrative expenses increased by $0.1 million. For the nine months ended May 31, 2004,
selling, general and administrative expenses were $14.6 million, or 25.4% of net revenues,
compared to $19.1 million, or 27.6% of net revenues, for the first nine months of fiscal
2003. This decrease was primarily the result of a $5.5 million decrease in media
advertising expenses. Environmental expenses also decreased by $0.3 million. Partly
offsetting these decreases was a $0.9 million increase in expenses related to the closure
of our Jackson facility. Legal fees also increased by $0.6 million due to the Ocean Spray
lawsuit. Other administrative expenses decreased by $0.2 million.

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We recognized a net loss on the
disposal of property and equipment of $0.1 million in the three months ended May 31, 2004
related to the sale of land and building associated with our closed facility in Dundee,
New York. We recognized a net loss on the disposal of property and equipment of $0.4
million in the nine months ended May 31, 2004, including a $1.8 million loss on the sale
of equipment in connection with the closure of our Jackson facility. Partly offsetting
this loss was a gain of $1.5 million from insurance proceeds received as a result of a
fire at our former warehouse facility in Eau Claire, Michigan and proceeds received from
the subsequent sale of that facility.

In addition, we incurred a write down
of assets held for sale in the nine months ended May 31, 2004 in the amount of $0.6
million related to our closed Dundee, New York facility.

Other income of $3.0 million for the
nine months ended May 31, 2004 resulted from the settlement of the dispute with Cliffstar
Corporation related to earn-out payments due under an Asset Purchase Agreement entered
into in connection with the sale of our private label juice business to Cliffstar. Other
income for the nine months ended May 31, 2003 was $1.5 million due to the recognition of a
gain from the settlement of claims made by us against a third party storage facility for
improper handling of our inventory following delivery.

Interest expense was $0.5 million for
the three months ended May 31, 2004 compared to $0.9 million in the prior years
third quarter. Interest expense for the nine months ended May 31, 2004 was $1.8 million
compared to $3.0 million during the same period in fiscal 2003. Interest expense in the
respective periods was lower as result of reduced debt levels.

A gain of $5.3 million was recognized
in the nine months ended May 31, 2004 as a result of the prepayment in full of a term note
held by one of our lenders. This gain is the recognition of the future interest payments,
as previously established in accordance with SFAS No.15, Accounting for Debtors and
Creditors for Troubled Debt Restructurings, from the restructuring of our debt in
November 2001.

Interest income was less than $0.1
million for the three and nine months ended May 31, 2004 compared to $0.5 million and $1.6
in the comparable periods of fiscal 2003. The interest income in fiscal 2003 was
associated with an unsecured, subordinated promissory note receivable from Cliffstar
Corporation, which was paid in full during fiscal 2003.

Net income for the three months ended
May 31, 2004, was $0.8 million, or $0.01 per diluted share, compared to net income of $1.2
million, or $0.01 per diluted share, for the third quarter of fiscal 2003. Net income for
the nine months ended May 31, 2004 was $9.6 million, or $0.10 per diluted share, compared
to $2.6 million, or $0.03 per diluted share, of net income for the first nine months of
fiscal 2003.

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# LIQUIDITY AND CAPITAL
RESOURCES

Net cash provided by operating
activities was $2.5 million in the first nine months of fiscal 2004 compared to $9.4
million in the same period of fiscal 2003. Receivables, prepaid expenses and other current
assets decreased $3.4 million in the first nine months of fiscal 2004 compared to a
decrease of $7.0 million for the same period in fiscal 2003. This decrease was due to
lower sales levels during the first nine months ended May 31, 2004 compared to the same
period during fiscal 2003. Inventories increased $9.3 million in the first nine months of
fiscal 2004 compared to $1.8 million in the first nine months of fiscal 2003. The increase
in inventories was due to the combination of lower sales volumes and higher prices paid to
our contract growers for cranberries. Accounts payable and accrued liabilities decreased
by $0.2 million in the first nine months of fiscal 2004 compared to a decrease of $2.3
million in the first nine months of fiscal 2003. The decrease in accounts payable was
primarily due to lower raw material purchases and plant closure costs.

Working capital was $17.0 million at
May 31, 2004 compared to $16.4 million at August 31, 2003. Our current ratio improved to
2.0 to 1.0 at May 31, 2004, compared to 1.8 to 1.0 at August 31, 2003.

Net cash provided by investing
activities was $2.5 million in the first nine months of fiscal 2004 compared to $23.2
million in the same period of fiscal 2003. In the first nine months of fiscal 2004, we
received proceeds of $4.2 million from the sale of property and equipment associated with
our Bridgeton, Dundee, Eau Claire and Jackson facilities. In fiscal 2003, cash provided
from investing activities included payments received in connection with the settlement of
certain claims related to the prior sale of our private label juice business and proceeds
from disposals of property and equipment of $0.8 million, primarily related to the sale of
equipment from Dundee facility. Purchases of property and equipment totaled $0.9 million
in the first nine months of fiscal 2004 and $0.6 million for the same period in fiscal
2003. In the first nine months of fiscal 2004, we also loaned $0.8 million to one of our
independent contract growers (see Note 8).

Our net cash used in financing
activities was $11.8 million in the first nine months of fiscal 2004 compared to $25.7
million in the same period of the prior year. In the first nine months of fiscal 2004, we
made principal payments on long-term debt and other obligations of $13.3 million as
required under our restructured debt agreements compared to $25.1 million in the same
period of fiscal 2003. Net borrowing under the revolving line of credit facility amounted
to $1.4 million in the first nine months of fiscal 2004 compared to net payments under the
facility of $0.6 million in the first nine months of fiscal 2003. In both fiscal 2004 and
fiscal 2003, monthly principal payments were made on other obligations and additional
payments were made as required under our restructured debt agreements.

The following schedule sets forth our
contractual debt obligations as of May 31, 2004 (in thousands):

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Payments Due by
Period

|                  
|------------------
|Principal debt    
|obligations       
|Future interest   
|payments from     
|debt restructuring
|                  
|Total debt        
|                  

As of May 31, 2004, we had
outstanding borrowings of $1.4 million under our $30.0 million revolving credit facility
with Wells Fargo Foothill and Ableco. As of May 31, 2004, we had approximately $8.4
million of unused borrowing availability under the facility based on collateral levels set
forth in the loan agreement. Proceeds of $1.5 million from the sale of equipment at our
Jackson, Wisconsin facility and the sale of our Dundee, New York facility were used to
reduce our Wells Fargo Foothill long-term debt. During the fourth quarter of fiscal 2004,
we paid the remaining balance of our long-term debt to Wells Fargo Foothill, approximately
$1.8 million, following the sale of our Jackson facility (see Note 4).

We believe we will be able to fund
our ongoing operational needs for fiscal 2004 through (i) cash generated from operations
and (ii) financing available under our revolving credit facility with Wells Fargo Foothill
and Ableco. We do not have any significant capital expenditure commitments and continue to
review our capital requirements in an effort to match expenditures with revenues.

As of May 31, 2004, we were in
compliance with all of our debt arrangements.

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SPECIAL NOTE
REGARDING FORWARD-LOOKING STATEMENTS

We make certain forward-looking
statements in this Form 10-Q, such as statements about our future plans, goals and
other events which have not yet occurred. We intend that these statements will qualify for
the safe harbors from liability provided by the Private Securities Litigation Reform Act
of 1995. You can generally identify these forward-looking statements because we use words
such as we believe, anticipate, expect or similar
words when we make them. Forward-looking statements include, among others, statements
about actions by our competitors, sufficiency of our working capital, potential
operational improvements and our efforts to improve profitability, sales and marketing
strategies, expected levels of trade and marketing spending, anticipated market share and
sales of our branded products, cranberry concentrates and other products, and disposition
of significant litigation. These forward-looking statements involve risks and
uncertainties and the actual results could differ materially from those discussed in the
forward-looking statements. These risks and uncertainties include, without limitation,
risks associated with (i) our ability to reinvigorate our Northland and
Seneca brand names, distribution capabilities and branded products market share and
generate increased levels of branded product sales; (ii) the level of cranberry
inventory held by industry participants; (iii) the development, market share growth
and consumer acceptance of our branded juice products; (iv) the resolution of certain
litigation related to claims asserted by us against our principal competitor regarding
what we believe to be anticompetitve tactics and unlawful monopolization within the
cranberry products industry; (v) agricultural factors affecting our crop and the crop of
other North American growers; (vi) our ability to comply with the terms and conditions of,
and to satisfy our responsibilities under, our credit facilities and other debt
agreements; and (vii) our ability to identify, evaluate and successfully execute any
strategic alternatives. You should consider these risks and factors and the impact they
may have when you evaluate our forward-looking statements. We make these statements based
only on our knowledge and expectations on the date of this Form 10-Q. We disclaim any duty
to update these statements or other information in this Form 10-Q based on future events
or circumstances. Please read this entire Form 10-Q to better understand our business and
the risks associated with our operations. Specifically, please see Managements
Discussion and Analysis of Financial Condition and Results of Operations for a
discussion of our current financial condition.

ITEM 3.    QUANTITATIVE AND
QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

We do not enter into any material
futures, forwards, swaps, options or other derivative financial instruments for trading or
other purposes. Our primary exposure to market risk is related to changes in interest
rates and the effects those changes may have on our earnings as a result of our long-term
financing arrangements. We manage our exposure to this market risk by monitoring interest
rates and possible alternative means of financing. Our earnings may be affected by changes
in short-term interest rates under our revolving line of credit facility and certain term
loans, pursuant to which our borrowings bear interest at a variable rate, subject to
minimum interest rates payable on certain loans. Based upon the debt outstanding under our
revolving line of credit facility and certain term loans as of May 31, 2004, an increase
of 1.0% in market interest rates would increase annual interest expense by approximately
$5,000.

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ITEM 4.    CONTROLS AND
PROCEDURES.

Our Chief Executive Officer and our
Vice President  Finance, as of the end of the period covered by this Quarterly
Report on Form 10-Q, evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e). Based on
that evaluation, the Chief Executive Officer and Vice President  Finance concluded
that our disclosure controls and procedures are effective to ensure that information
required to be disclosed in our Exchange Act reports is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commissions rules and forms, and that such information is accumulated and
communicated to the Chief Executive Officer and Vice President  Finance to allow
timely decisions regarding required disclosure.

There have been no changes in our
internal controls over financial reporting that occurred during the last fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

# PART II  OTHER
INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

There have been no material
developments in the legal proceedings described in our Quarterly Report on Form 10-Q for
the three months ended November 30, 2003.

ITEM 2.    CHANGES IN
SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES.

None.

ITEM 3.    DEFAULTS UPON
SENIOR SECURITIES.

None.

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

None.

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

|A. | Exhibits
|-- | --------

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Exhibits filed with this Form 10-Q
report are incorporated herein by reference to the Exhibit Index accompanying this report.

|B. | Form
8-K
|-- | --------

No Current Reports on Form 8-K were
filed during the third quarter of fiscal 2004.

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SIGNATURE

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

|                     | NORTHLAND CRANBERRIES, INC.
|-------------------- | ---------------------------
|DATE:  July 15, 2004 | By:  /s/ Nigel J. Cooper   
|                     | Nigel J. Cooper            
|                     | Vice President - Finance   

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# EXHIBIT INDEX

|EXHIBITNO. | DESCRIPTION
|---------- | -----------

|31.1 | Certification
of John Swendrowski, Chairman and Chief Executive Officer of
                      Northland Cranberries, Inc., pursuant to Title 17 of the Code of
Federal                       Regulations, Section 240.13a-14(a), as adopted pursuant to
Section 302 of the                       Sarbanes-Oxley Act of 2002.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 | Certification
of Nigel Cooper, Vice President - Finance of Northland                       Cranberries,
Inc., pursuant to Title 17 of the Code of Federal Regulations,
                      Section 240.13a-14(a), as adopted pursuant to Section 302 of the
                      Sarbanes-Oxley Act of 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32 | Certification
of John Swendrowski, Chairman and Chief Executive Officer, and
                      Nigel J. Cooper, Vice President - Finance, of Northland
Cranberries, Inc.,                       pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the                       Sarbanes-Oxley Act of 2002.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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