# 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
             November 30, 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.)

|2321 West Grand Avenue                  
|----------------------------------------
|P.O. Box 8020                           
|Wisconsin Rapids, Wisconsin 54495-8020  
|                                        
|(Address of Principal Executive Offices)

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

|2930 Industrial Street                                                            
|----------------------------------------------------------------------------------
|P.O. Box 8020                                                                     
|Wisconsin Rapids, Wisconsin 54495-8020                                            
|                                                                                  
|(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 | January 14, 2005 | 94,091,633
|-------------------- | ---------------- | ----------

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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 Income                 | 4   
|         | Condensed Consolidated Statements of Cash Flows             | 5   
|         | Condensed Consolidated Statement of Shareholders' Equity    | 6   
|         | Notes to Condensed Consolidated Financial Statements        | 7   
|Item 2.  | Management's Discussion and Analysis of Financial          
|         | Condition and Results of Operations                         | 12  
|Item 3.  | Quantitative and Qualitative Disclosures About             
|         | Market Risk                                                 | 17  
|Item 4.  | Controls and Procedures                                     | 18  
|PART II. | OTHER INFORMATION                                          
|Item 1.  | Legal Proceedings                                           | 18  
|Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds | 18  
|Item 3.  | Defaults Upon Senior Securities                             | 18  
|Item 4.  | Submission of Matters to a Vote of Security Holders         | 18  
|Item 6.  | Exhibits                                                    | 18  
|         | SIGNATURE                                                   | 19  
|         | Exhibit Index                                               | 20  

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                                               
|Escrow receivable                                                       
|Inventories                                                             
|Prepaid expenses and other current assets                               
|Deferred income taxes                                                   
|                                                                        
|Total current assets                                                    
|Property and equipment - net                                            
|Other assets                                                            
|Debt issuance cost - net                                                
|                                                                        
|Total assets                                                            
|                                                                        
|LIABILITIES AND SHAREHOLDERS' EQUITY                                    
|Current liabilities:                                                    
|Revolving line of credit facility                                       
|Accounts payable                                                        
|Accrued liabilities                                                     
|Accrued dividends                                                       
|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 shares               
|issued and outstanding                                                  
|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 INCOME (DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA) (Unaudited)

|                                              
|----------------------------------------------
|November 30,
2004                             
|Net revenues                                  
|Cost of sales                                 
|                                              
|Gross profit                                  
|Selling, general and administrative expenses  
|Gain on transaction with Ocean Spray (Note 3) 
|                                              
|Income from operations                        
|Interest expense                              
|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)

|                                                       
|-------------------------------------------------------
|November 30,
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  
|Provision for deferred income taxes                    
|(Gain) on transaction with Ocean Spray                 
|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:                                  
|Property and equipment purchases                       
|Proceeds from disposals of property and equipment      
|                                                       
|Net cash provided by investing activities              
|                                                       
|Financing activities:                                  
|Net borrowings under revolving line of credit facility 
|Payments on long-term debt                             
|Proceeds from issuance of long-term debt               
|                                                       
|Net cash provided (used in) financing activities       
|                                                       
|Net 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 three months for:                 
|Interest                                               
|Non-cash activity:                                     
|Declaration of dividend                                

See notes to condensed
consolidated financial statements.

5

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# NORTHLAND CRANBERRIES,
INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY THREE MONTHS ENDED
NOVEMBER 30, 2004 (DOLLARS IN THOUSANDS) (Unaudited)

|                                         | Common Stock -
Class A | Additional
Paid-in Capital | Accumulated
Deficit | Total
Shareholders'
Equity
|---------------------------------------- | ---------------------- | -------------------------- | ------------------- | --------------------------
|Balance, August 31, 2004                 |                        |                            | $                   | 941                       
|Cash dividends declared ($.33 per share) |                        |                            |                     |                           
|Net income                               |                        |                            |                     | 0                         
|                                         |                        |                            |                     |                           
|Balance, November 30, 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 November 30, 2004 and
August 31, 2004, its related results of operations for the three months ended November
30, 2004 and 2003, respectively, and its cash flows for the three months ended November
30, 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, 2004 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, 2004.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Business
Risks  Ocean Spray Cranberries, Inc. (Ocean Spray), the industry
leader, which controls the bulk of the cranberry supply in North America, effectively
determines prices paid to growers for raw cranberries. In addition, the Company is
obligated during the next ten years to sell to Ocean Spray all cranberry concentrate not
otherwise used by the Company in its branded juice business for a purchase price equal to
the average price of concentrate sold by Ocean Spray to third party buyers during the
prior six months.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 months ended November 30, 2004 and 2003 consisted of the following:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          
|--------------------------
|November 30, 2004         
|Basic shares outstanding  
|Effect of dilution:       
|Warrants                  
|Options                   
|                          
|Diluted shares outstanding

7

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| | The
shares outstanding used to compute the diluted earnings per share for the three months
ended November 30, 2004 and 2003 exclude outstanding options to purchase 547,825 and
612,575 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) 
|November 30, 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:                                          
|Historical and pro forma                        
|Diluted:                                        
|Historical and pro forma                        

| | New
Accounting Pronouncements  On December 16, 2004, the Financial Accounting
Standards Board (FASB) issued Statement No. 123R, Share-Based Payment (SFAS
123R), which requires compensation costs related to share-based payment
transactions to be recognized in the financial statements. With limited exceptions, the
amount of the compensation cost will be measured based on the grant-date fair value of
the equity or liability instruments issued. In addition, liability awards will be
remeasured each reporting period. Compensation cost will be recognized over the period
that an employee provides service in exchange for the award. SFAS 123R replaces FASB
Statement No. 123, Accounting for Stock Based Compensation and supercedes APB
Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R is
effective for all interim or annual periods beginning after June 15, 2005. Early adoption
is encouraged and retroactive application of the provisions of SFAS 123R to the beginning
of the fiscal year that includes the effective date is permitted, but not required. The
Company has not yet adopted this pronouncement and is currently evaluating the impact
that the adoption of SFAS 123R will have on its consolidated financial position, results
of operations and cash flows.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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| | On
November 24, 2004, the FASB issued Statement No. 151, Inventory Costs(SFAS
151) an amendment of ARB No. 43, Chapter 4. SFAS 151 clarifies the accounting for
abnormal amounts of the idle facility expense, freight, handling costs and wasted
material (spoilage). SFAS 151 is the result of a broader effort by the FASB and
International Accounting Standards Board (IASB) to improve financial
reporting by eliminating certain narrow differences between their existing accounting
standards. One such difference was the accounting for abnormal inventory costs. Both the
FASB and IASB agree that abnormal expenses should be recognized in the period in which
they are incurred, however the wording of IAS 2, Inventories and ARB 43,
Chapter 4, Inventory Pricing, led to inconsistent application of that
principle. The FASB agreed that the wording in IAS 2 was less ambiguous and decided to
incorporate portions of that language into ARB 43. As such, this statement requires that
those items be recognized as current-period charges regardless of whether they meet the
so abnormalcriterion outlined in ARB 43. SFAS 151 also introduces the concept
of normal capacity and requires the allocation of fixed production overhead
to inventory based on the normal capacity of the production facility. Unallocated
overhead must be recognized as an expense in the period in which it is incurred. SFAS 151
is effective for all interim or annual periods beginning after June 15, 2005. Early
adoption is encouraged and retroactive application of the provisions of SFAS 151 to the
beginning of the fiscal year that includes the effective date is permitted, but not
required. The Company has not yet adopted this pronouncement and is currently evaluating
the impact that the adoption of SFAS 151 will have on its consolidated financial
position, results of operations and cash flows.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | The
Company is subject to certain legal proceedings, claims and environmental matters that
arise in the ordinary course of business. Although the final results of such claims and
matters cannot be predicted with certainty, management believes that the ultimate
resolution of all such claims and matters will not have a material effect on the Companys
financial condition, results of operations or cash flows. Actual results could vary,
among other things, due to the uncertainties involved in litigation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | OCEAN
SPRAY TRANSACTION
|-- | -----------------------

| | On
September 23, 2004, the Company entered into agreements with Ocean Spray pursuant to
which: (i) it sold its processing plant, storage facility and certain offices located in
Wisconsin Rapids, Wisconsin to Ocean Spray for approximately $28 million, subject to
certain adjustments and including a $2.5 million escrow; (ii) Ocean Spray paid to the
Company a non-refundable (but creditable) $5 million cash fee in exchange for the option
to purchase up to 14 of the Companys 17 cranberry marshes at prices that aggregate
to $47.5 million (before the option fee); (iii) the Company agreed to, for a period of
ten years, deliver all of the cranberries harvested from its currently-owned marshes and
its contract growers marshes to Ocean Spray, which Ocean Spray will receive, clean,
bin, store and process into juice concentrate for a fixed fee; (iv) Ocean Spray agreed
to, for a period of ten years, purchase cranberry concentrate not otherwise used by the
Company in its branded products; and (v) the Company agreed to dismiss with prejudice its
antitrust lawsuit against Ocean Spray. As a result of this transaction, the Company
recognized a gain of $7.7 million.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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|4. | INVENTORIES
|-- | -----------

| | Inventories
as of November 30, 2004 and August 31, 2004 consisted of the following (in thousands):
| | --------------------------------------------------------------------------------------------------

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

|5. | DEBT
|-- | ----

| | Debt
as of November 30, 2004 and August 31, 2004 consisted of the following (in thousands):
| | -------------------------------------------------------------------------------------------

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

| | On
November 16, 2004, the Company entered into an Amended and Restated Loan and Security
Agreement with two of its lenders, Wells Fargo Foothill, Inc. (Wells Fargo)
and Ableco Finance LLC (Ableco) pursuant to which, among other things, the
commitment under the existing revolving credit facility was reduced to an aggregate
principal amount of $11.0 million and an additional term loan facility in the aggregate
principal amount of $15.0 million was provided.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of November 30, 2004 and August 31, 2004, the Company was in compliance with financial
covenants contained in its agreements covering its long-term debt obligations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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|6. | 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
effective income tax rate of 40% is higher than the statutory rate of 34% due to state
income taxes.
| | --------------------------------------------------------------------------------------------------------

|7. | 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, which is recorded
within Other Assets on the accompanying consolidated balance sheet, was made in
connection with the restructuring of certain debt obligations of the grower, $1.0 million
of which were previously 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | COMMITMENTS
|-- | -----------

| | The
Company has multiple-year crop purchase contracts with 44 independent cranberry growers
pursuant to which the Company has contracted to purchase all of the cranberries harvested
from up to 1,738 contracted acres owned by these growers, subject to federal marketing
order limitations. These contracts generally last for five years, and pay the growers at
a market rate, as defined, for all raw cranberries delivered (plus $3 per barrel in
certain circumstances) and certain incentives for premium cranberries.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company and Ocean Spray entered into an agreement for a period of ten years pursuant to
which Ocean Spray will receive, clean, store and process into concentrate all cranberries
harvested from the Companys and its contract growers cranberry properties for
a fixed fee.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. | DIVIDEND
DECLARED
|-- | -----------------

| | On
November 12, 2004, the Company declared a special cash dividend of $0.33 per share of
Class A Common Stock payable on December 1, 2004 to all shareholders of record at the
close of business on November 26, 2004. The $31.9 million dividend was paid from a
combination of proceeds from the September 2004 asset sale to Ocean Spray and new
borrowings discussed in Note 5.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

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

# OCEAN SPRAY TRANSACTION

On September 23, 2004, we entered
into agreements with Ocean Spray pursuant to which: (i) we sold our processing plant,
storage facility and certain offices located in Wisconsin Rapids, Wisconsin to Ocean Spray
for approximately $28 million, subject to certain adjustments and including a $2.5 million
escrow; (ii) Ocean Spray paid us a non-refundable (but creditable) $5 million cash fee in
exchange for the option to purchase up to 14 of our 17 cranberry marshes at prices that
aggregate to $47.5 million (before the option fee); (iii) we agreed to, for a period of
ten years, deliver all of the cranberries harvested from our currently-owned marshes and
our contract growers marshes to Ocean Spray, which Ocean Spray will receive, clean,
bin, store and process into juice concentrate for a fixed fee; (iv) Ocean Spray agreed to,
for a period of ten years, purchase cranberry concentrate not otherwise used by us in our
branded products; and (v) we agreed to dismiss with prejudice our antitrust lawsuit
against Ocean Spray (the Ocean Spray Transaction).

# GENERAL

Total net revenues increased by 3.3%
during the three months ended November 30, 2004 compared to the three months ended
November 30, 2003. This increase resulted primarily from an increase in sales of cranberry
concentrate pursuant to our new agreement to sell cranberry concentrate to Ocean Spray.
This increase was partly offset by a decrease in sales of branded products which we
believe is attributable to an overall increase in trade spending by competitors in the
cranberry beverage category in specific markets, as well as our decreased trade spending
during the first quarter of fiscal 2005.

During the three months ended
November 30, 2004, we realized net income of $4.5 million, which was an increase of $2.2
million compared to the three months ended November 30, 2003. In the month of November, we
entered into an Amended and Restated Loan and Security Agreement with two of our lenders
pursuant to which, among other things, the commitment under the existing revolving credit
facility was reduced to an aggregate principal amount of $11.0 million and an additional
term loan facility in the aggregate principal amount of $15.0 million was provided. We
used the proceeds from our refinancing arrangements to (i) reduce our long-term debt with
another lender by $5.0 million during the first quarter of fiscal 2005 and (ii) also, with proceeds from the Ocean Spray Transaction, to pay
a special dividend during the second quarter of fiscal 2005.

During the first quarter of fiscal
2005, we declared a $0.33 per share special dividend payable on December 1, 2004 to
shareholders of record as of November 26, 2004. As a result, we recorded a dividend
payable on our November 30, 2004 balance sheet in the amount of $31.9 million. This
dividend was paid on December 1, 2004 and reduced shareholders equity from approximately
$63.9 million as of August 31, 2004 to approximately $36.5 million as of November 30,
2004.

# 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 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.

12

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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 three months ended November 30, 2004.

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 $8.2 million, net of doubtful accounts of $0.3 million, and $4.4
million, net of doubtful accounts of $0.3 million as of November 30, 2004 and August 31,
2004, 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.

13

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Realization of Deferred
Tax Assets

We have recorded a valuation allowance
to reduce our deferred tax assets to the amount that we believe is more likely than not to
be realized. We considered our recent history of profitable operations adjusting for
nonrecurring items, the sale of certain assets to Ocean Spray and projected future
operations in reaching our conclusion.

# 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.

# RESULTS OF OPERATIONS

Total net revenues for the three
months ended November 30, 2004 were $23.1 million, an increase of 3.3% from net revenues
of $22.4 million in the prior years first quarter. The increase resulted primarily
from an increase in sales of cranberry concentrate pursuant to our agreement to sell
cranberry concentrate to Ocean Spray. Trade industry data for our Northland brand
100% juice products for the 12-week period ended November 28, 2004 showed that we achieved
a 5.2% market share of the supermarket shelf-stable cranberry beverage category on a
national basis, down from a 5.8% market share for the 12-week period ended November 30,
2003. We believe the reduction in market share is primarily attributable to a reduction in
trade spending programs with customers during the first quarter of fiscal 2005. As of
November 28, 2004, our Northland 100% juice cranberry products were available in
supermarkets nationwide that account for approximately 71.3% of total grocery sales, down
from approximately 73.9% as of November 30, 2003. We believe this loss in distribution is
primarily attributable to trade accounts allocating shelf space to popular new low calorie
products, as well as our reduced level of trade spending during the quarter.

Cost of sales for the three months
ended November 30, 2004 was $16.8 million compared to $15.4 million for the first quarter
of fiscal 2004, resulting in gross margins of 27.2% and 31.2% in each respective period. The increase in cost of sales was primarily due to an increase in cranberry concentrate sales.
The decrease in gross margin percentage was primarily the result of lower selling prices
for cranberry concentrate and frozen processed cranberries over the same periods in fiscal
2004.

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Selling, general and administrative
expenses were $5.7 million, or 24.6% of net revenues, for the three months ended November
30, 2004 compared to $4.0 million, or 17.9% of net revenues, for the first quarter of
fiscal 2004. The increase was primarily the result of recording a $1.2 million charge for
management bonuses paid following the Ocean Spray Transaction and a $0.7 million increase
in media advertising spending, from $0.8 million in the first quarter of fiscal 2004 to
$1.5 million in the first quarter of fiscal 2005. Other administrative expenses decreased
by $0.1 million.

The effective income tax rate of 40%
is higher than the statutory rate of 34% due to state income taxes.

We recognized a net gain of $7.7
million in the three months ended November 30, 2004 as a result of the Ocean Spray
Transaction (see Note 3.).

Interest expense was $0.9 million for
the three months ended November 30, 2004 compared to $0.6 million in the prior years
first quarter. Interest expense has increased as result of increased debt levels.

Net income for the three months ended
November 30, 2004, was $4.5 million, or $0.04 per diluted share, compared to net income of
$2.3 million, or $0.02 per diluted share, for the three months ended November 30, 2003.

# LIQUIDITY AND CAPITAL
RESOURCES

Net cash provided by operating
activities was $7.5 million in the first three months of fiscal 2005 compared to $4.1
million in the same period of fiscal 2004. Receivables, prepaid expenses and other current
assets increased $4.9 million in the first three months of fiscal 2005 compared to a
decrease of $0.8 million for the same period in fiscal 2004. This increase was primarily
due to increased cranberry concentrate sales to Ocean Spray pursuant to our agreement to
sell to Ocean Spray cranberry concentrate not otherwise used by us in our branded
products. Inventories increased $5.3 million in the first three months of fiscal 2005
compared to $9.9 million in the first three months of fiscal 2004. The increase in
inventories was due primarily as a result of the fall 2004 cranberry harvest and the
purchase of cranberries from our contract growers. Accounts payable and accrued
liabilities increased by $16.5 million in the first three months of fiscal 2005 compared
to an increase of $9.5 million in the first three months of fiscal 2004. The increase in
accounts payable was attributable primarily to installment payments due our contract
growers for fruit received during the quarter. The increase in accruals was primarily due
to the recording of a $5.0 million deposit related to the fee Ocean Spray paid us for the
option to purchase certain of our cranberry marshes, which is creditable against the
purchase price to be paid by Ocean Spray in the event it exercises its option.

Working capital was $6.0 million at
November 30, 2004 compared to $26.6 million at August 31, 2004. Our current ratio
decreased to 1.1 to 1.0 at November 30, 2004, compared to 3.6 to 1.0 at August 31, 2004.

Net cash provided by investing
activities in the first three months of fiscal 2005 was $12.1 million from the sale of our
receiving, freezing and concentrate-processing plant and an adjacent office in Wisconsin
Rapids to Ocean Spray. Net cash provided by investing activities in first quarter of
fiscal 2004 was $0.6 million, which primarily resulted from the sale of our former
bottling facility in Bridgeton, New Jersey.

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Our net cash provided by financing
activities was $12.0 million in the first three months of fiscal 2005 compared to net cash
used of $2.1 million in the same period of the prior year. In the first three months of
fiscal 2005, we made principal payments on long-term debt and other obligations of $8.0
million as required under our restructured debt agreements compared to $2.1 million in the
same period of fiscal 2004. Net borrowing under the revolving line of credit facility
amounted to $5.0 million in the first three months of fiscal 2005. Also, in the first
three months of fiscal 2005, we had additional borrowings of $15.0 million under our term
loan facility. We used the proceeds from these borrowings to reduce other long-term debt
by $5.0 million during the first quarter of fiscal 2005 and, with proceeds from the Ocean Spray Transaction, to pay a special
dividend during the second quarter of fiscal 2005. In both fiscal 2005 and fiscal 2004,
monthly principal payments were made on other obligations and additional payments were
made as required under our restructured and restated debt agreements.

The following schedule sets forth our
contractual obligations as of November 30, 2004 (in thousands):

|Payments Due by Period       
|-----------------------------
|Contractual Obligations      
|                             
|Principal debt obligations   
|Purchase obligations (1)     
|Future interest payments from
|debt restructuring           
|                             
|Total                        
|                             

| | (1)       Purchase obligations include
estimated payments of $8.3 million due to contract           growers for cranberries
purchased by us during the first quarter for fiscal           2005. Under our crop
purchase contracts, which generally last for five years, we           pay the growers at
a market rate, as defined, for all raw cranberries delivered           (plus $3 per
barrel in certain circumstances). Purchase obligations also include           toll
processing fees of $5.5 million due Ocean Spray for processing our           cranberries
into cranberry concentrate. Our obligations under the crop purchase           agreements
and the toll processing agreement with Ocean Spray are subject to           variability
and generally not fixed or subject to reasonable estimation until           the fourth
quarter of each year.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of November 30, 2004, we had
outstanding borrowings of $5.0 million under our $11.0 million revolving credit facility
with Wells Fargo and Ableco. We had $3.5 million of unused borrowing availability under
the facility.

We believe we will be able to fund
our ongoing operational needs for fiscal 2005 through (i) cash generated from operations
and (ii) financing available under our revolving credit facility with Wells Fargo 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 November 30, 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 maintain our Northland and Seneca
brand names, distribution capabilities and branded products market share; (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) agricultural factors affecting our crop and the crop of other North American
growers; (v) our ability to comply with the terms and conditions of, and to satisfy our
responsibilities under, our credit facilities and other debt agreements; and (vi) 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, including our revised debt structure.

ITEM 3.    QUANTITATIVE AND
QUALITATIVE DISCLOSURES 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 November 30, 2004, an
increase of 1.0% in market interest rates would increase annual interest expense by
approximately $155,000.

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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.

On November 11, 2002, we filed an
antitrust lawsuit against Ocean Spray alleging that it engaged in anticompetitive tactics
and unlawfully monopolized the cranberry products industry to the detriment of its
competitors and customers. We dismissed the lawsuit with prejudice upon the consummation
of the Ocean Spray Transaction on September 23, 2004.

ITEM 2.    UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.    DEFAULTS UPON
SENIOR SECURITIES.

None.

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

None.

ITEM 6.    EXHIBITS.

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

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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:  January 14, 2005 | By:  /s/ Nigel J. Cooper   
|                        | Nigel J. Cooper            
|                        | Vice President - Finance   

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# EXHIBIT INDEX

|EXHIBIT NO. | DESCRIPTION
|----------- | -----------

|4.1 | Amended
and Restated Loan and Security Agreement, dated as of November 16, 2004, by and among the
Company, the lenders signatory thereto as lenders, Wells Fargo Foothill, Inc. as
Administrative Agent and Ableco Finance LLC as Collateral Agent. [Incorporated by
reference to Exhibit 4.1 to the Companys Form 8-K dated November 16, 2004.]
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 | Asset
Purchase Agreement dated as of September 23, 2004 by and between the Company and Ocean
Spray Cranberries, Inc. [Incorporated by reference to Exhibit 10.15 to the Companys
Form 8-K dated September 23, 2004.]
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Toll
Processing Agreement dated as of September 23, 2004 by and between the Company and Ocean
Spray Cranberries, Inc. [Incorporated by reference to Exhibit 10.16 to the Companys
Form 8-K dated September 23, 2004.]
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 | Option
Agreement dated as of September 23, 2004 by and between the Company and Ocean Spray
Cranberries, Inc. [Incorporated by reference to Exhibit 10.17 to the Companys Form
8-K dated September 23, 2004.]
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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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