# UNITED
STATESSECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549FORM 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
   February 29, 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 | April 14, 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 Operations          | 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 and Use of Proceeds                | 20     
|Item 3.  | Defaults Upon Senior Securities                          | 20     
|Item 4.  | Submission of Matters to a Vote of Security Holders      | 21     
|Item 6.  | Exhibits and Reports on Form 8-K                         | 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:                                                    
|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 OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA) (Unaudited)

|                                              
|----------------------------------------------
|February 29,
2004                             
|Net revenues                                  
|                                              
|Cost of sales                                 
|                                              
|Gross profit                                  
|Selling, general and administrative expenses  
|Loss 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)

|                                                       
|-------------------------------------------------------
|February 29,
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 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 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 six months for:                   
|Interest                                               

See notes to condensed
consolidated financial statements.

5

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# NORTHLAND CRANBERRIES,
INC.CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY SIX MONTHS ENDED
FEBRUARY 29, 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, February 29, 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 February 29, 2004 and
August 31, 2003, its related results of operations for the three and six months ended
February 29, 2004 and February 28, 2003, and its cash flows for the six months ended
February 29, 2004 and February 28, 2003. 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 six months ended February 29, 2004 and February 28, 2003 consisted of the
following:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      
|----------------------
|February 29, 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 six
months ended February 29, 2004 and February 28, 2003 exclude outstanding options to
purchase 613,575 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)
|February 29,
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. Given that
the proceeding remains in its early stages, 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 three
months ended February 29, 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 six
months ended February 28, 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | On
January 6, 2004, the Company sold its facility in Eau Claire, Michigan 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 three months ended February 29, 2004.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Assets
held for sale as of February 29, 2004 include the land and buildings related to former
manufacturing facilities located in Dundee, New York and Jackson, Wisconsin. The facility
in Dundee, New York was written down by $558,000 in the three months ended February 29,
2004 based on additional information received during the period. The Company also
recognized a loss of approximately $1,900,000 in connection with the sale at auction of
certain equipment from its Jackson, Wisconsin facility on February 4, 2004. Proceeds from
the sale of $1,262,000 were used to reduce debt outstanding. In March 2004, the Company
entered into an agreement to sell the facility and land in Jackson, Wisconsin. The
Company anticipates that it will recognize a gain of approximately $2,900,000 when it
completes the closing of this transaction in the fourth quarter of fiscal 2004.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | Inventories
as of February 29, 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 February 29, 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 three months ended February 29,
2004 as a result of the pay off 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 February 29, 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 six months ended February 29, 2004
of $20,000 relates to state income taxes. The Company did not incur any federal tax
liability for either the three or six months ended February 29, 2004 and February 28,
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 evidenced by a single promissory note 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 six months ended February
29, 2004, net income was $8.9 million, which was an improvement of $7.5 million compared
to the six months ended February 28, 2003. Also in the six months ended February 29, 2004
we reduced our long-term and short-term debt by a total of $16.9 million. Shareholders
equity also improved by $8.9 million during the first half of fiscal 2004 to $54.8
million.

Total net revenues decreased by 16.1%
during the six months ended February 29, 2004 compared to the six months ended February
28, 2003. This decrease resulted primarily from a reduction in sales of cranberry
concentrate to industrial ingredient customers which we believe is attributable to (i) 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 intend to continue to focus our marketing efforts on educating consumers about the
health benefits and generally higher cranberry content of our Northlandbrand 100%
juice products. We also intend to continue to focus on profitable growth while striving to
reduce debt.

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 six months ended February 29, 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 receivables 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 $5.2 million, net of doubtful accounts of $0.4 million, and $8.5
million, net of doubtful accounts of $0.4 million as of February 29, 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 quarter ended February 29, 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 net deferred tax assets of
$35.8 million and a valuation allowance against these assets of $35.8 million resulting in
a no deferred income tax assets being recorded on our consolidated balance
sheet or other financial statements. 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 and approximately
$37,000 of investment tax credit carryforwards available to offset future federal income
taxes. The alternative minimum tax credit carryforwards have no expiration date and the
investment tax credit carryforwards expire in 2004.

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 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, interest paid has been less than previously estimated. Interest rates
in effect at February 29, 2004 were 6.5%, therefore, we recognize a gain of approximately
$5.3 million upon final payment of the principal outstanding.

# 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 the 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 February 29, 2004 were $16.7 million, a decrease of 32.8% from net revenues
of $24.8 million in the prior years second quarter. The decrease resulted primarily
from (i) a 23.4% decrease in sales of cranberry concentrates and frozen cranberries, (ii)
an 8.5% decrease in sales of Northland brand juice products and (iii) a 6.5%
decrease in sales of Seneca brand juice products. Partly offsetting these sales
declines were lower trade incentives for the quarter of $1.6 million or 6.5%. Net revenues
for the six months ended February 29, 2004 were $39.1 million, a decrease of 16.1% from
net revenues of $46.6 million in the corresponding period for the prior year. The decrease
resulted primarily from (i) a decrease in sales of cranberry concentrates of 7.7%, (ii) a
decrease in co-packing revenues 2.8% due to the closure of our Jackson, Wisconsin bottling
facility, (iii) a decrease in sales of Northland brand juice products of 2.8% and
(iv) a decrease in sales of Seneca brand juice products of 6.7%. Partly offsetting
these decreases in sales from last year were sales of fresh and frozen cranberries, which
increased by 2.1%, and a decrease in trade incentives of $0.9 million or 1.9%.

Trade industry data for the 12-week
period ended February 22, 2004 showed that our Northland brand 100% juice products
achieved a 5.3% market share of the supermarket shelf-stable cranberry beverage category
on a national basis, down from a 5.6% market share for the 12-week period ended February
28, 2003. We believe this decrease is attributable in part to an increase in publicity
related to low carb diets, as well as an increase in trade spending by our
competitors. Nonetheless, we continue to gain distribution with our Northland brand
juice products in the retail grocery channel. As of February 22, 2004, our
Northland 100% juice cranberry products were available in supermarkets nationwide
that account for approximately 74.3% of total grocery sales, up from 66.8% as of February
22, 2003.

Cost of sales for the three months
ended February 29, 2004 was $10.9 million compared to $16.6 million for the second quarter
of fiscal 2003, resulting in gross margins of 34.7% and 33.4% in each respective period.
The increase in gross margin percentage resulted primarily from higher margins on sales of
our branded juice products as a result of a decrease in trade spending for the quarter and
lower manufacturing costs. This improvement in margins was partly offset by an increase in
the cost of cranberry concentrate due to higher prices paid to our contract growers for
cranberries.Cost of sales for the six months ended February 29, 2004 was $26.3
million compared to $31.7 million for the same period of fiscal 2003, resulting in gross
margins of 32.7% and 31.9% in each respective period. The increase in gross margin
percentage in the six months ended February 29, 2004 was primarily the result of higher
selling prices for cranberry concentrate and frozen processed cranberries over the same
period in fiscal 2003.

Selling, general and administrative
expenses were $6.1 million, or 36.5% of net revenues, for the three months ended February
29, 2004 compared to $7.5 million, or 30.0% of net revenues, for the second 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 $1.4 million decrease
in selling, general and administrative expenses in the three months ended February 29,
2004 which was primarily the result of a $2.0 million decrease in media advertising
spending, from $4.0 million in the second quarter of fiscal 2003 to $2.0 million in the
second quarter of fiscal 2004. For the six months ended February 29, 2004, selling,
general and administrative expenses were $10.1 million, or 25.9% of net revenues, compared
to $14.1 million, or 30.2% of net revenues, for the first six months of fiscal 2003. This
decrease was primarily the result of a $4.8 million decrease in advertising media
expenses. Partly offsetting this decrease was a $0.8 million increase in expenses related
to the closure of our Jackson facility.

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There was a net loss on the disposal
of property and equipment of $0.3 million in the three months and six months ended
February 29, 2004 related to the sale of equipment in connection with the closure of our
Jackson facility. Partly offsetting this loss was a gain of $1.5 million attributable to
payments made under our insurance policy in connection with losses experienced as a result
of a fire at our former warehouse facility in Eau Claire, Michigan and upon the subsequent
sale of that facility.

There was a write down of assets held
for sale in the three months and six months ended February 29, 2004 in the amount of $0.6
million related to our closed Dundee, New York facility. As a result of ongoing efforts to
sell this facility, recent purchase offers indicated an additional impairment charge
related to the value of the property was appropriate.

Other income was $3.0 million for the
six months ended February 29, 2004 as a result of 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 six months ended February 28, 2003 was $1.5 million due to the
recognition of a gain from the settlement of claims made by the Company against a third
party storage facility for improper handling of the Companys inventory following
delivery. Interest expense was $0.6 million for the three months ended February 29, 2004
compared to $1.0 million in the prior years second quarter. Interest expense for the
six months ended February 29, 2004 was $1.3 million compared to $2.1 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 three months ended February 29, 2004 as a result of the prepayment in full of the
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
the Companys debt in November 2001.

Interest income was less than $0.1
million for the three and six months periods ended February 29, 2004 compared to $0.5
million and $1.1 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.

In the six months ended February 29,
2004, there were no federal income taxes on operating income due to the utilization of
certain net operating loss carryforwards for which no benefit had been previously
provided. There was $20,000 of state income taxes expensed in the three and six months
ended February 29, 2004.

Net income for the three months ended
February 29, 2004, increased by 1,840% to $6.5 million, or $0.06 per diluted share,
compared to net income of $0.3 million, or $0.00 per diluted share, for the second quarter
of fiscal 2003. Net income for the six months ended February 29, 2004 increased by 558% to
$8.9 million, or $0.09 per diluted share, compared to $1.4 million, or $0.01 per diluted
share, of net income for the first six months of fiscal 2003.

16

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# LIQUIDITY AND CAPITAL
RESOURCES

Net cash provided by operating
activities was $3.2 million in the first six months of fiscal 2004 compared to $1.4
million in the same period of fiscal 2003. Receivables, prepaid expenses and other current
assets decreased $3.9 million in the first six months of fiscal 2004 compared to a
decrease of $1.4 million for the same period in fiscal 2003. This decrease was due to
lower sales levels during the first six months ended February 29, 2004 than for the first
six months ended February 28, 2003. Inventories increased $10.0 million in the first six
months of fiscal 2004 compared to $4.6 million in the first six months of fiscal 2003.
Inventories increased by $5.4 million more in the first six months of fiscal 2004 than for
the same period in fiscal 2003 due to the combination of lower sales volumes and higher
prices paid to our contract growers for cranberries. Accounts payable and accrued
liabilities increased by $2.6 million in the first six months of fiscal 2004 compared to
$0.6 million in the first six months of fiscal 2003. The increase in accounts payable was
primarily due to higher prices paid to our contract growers for cranberries.

Working capital was $16.2 million at
February 29, 2004 compared to $16.4 million at August 31, 2003. Our current ratio was 1.9
to 1.0 at February 29, 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 six months of fiscal 2004 compared to $2.4
million in the same period of fiscal 2003. In the first six months of fiscal 2004,
proceeds from disposals of property and equipment, primarily as a result of the sale of
the Bridgeton and Eau Claire facilities and Jackson equipment auction, provided $4.0
million. In fiscal 2003, proceeds from disposals of property and equipment provided $0.8
million, primarily as a result of the auction of equipment held at our closed facility in
Dundee, New York. Purchases of property and equipment were $0.7 million in fiscal 2004 and
$0.4 million in fiscal 2003. In the first six 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 $12.1 million in the first six months of fiscal 2004 compared to $3.7
million in the same period of the prior year. In the first six months of fiscal 2004, we
made principal payments on long-term debt and other obligations of $12.2 million as
required under our restructured debt agreements compared to $8.7 million in the same
period of fiscal 2003. The $12.2 million in principal payments was primarily comprised of
$8.8 million in payments to US Bank resulting in the elimination of the bank note to US
Bank and principal payments to Wells Fargo Foothill Inc. totaling $2.3 million. Principal
payments were made on other long-term debt totaling $1.1 million. 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 long-term debt obligations as of February 29, 2004 (dollars in thousands):

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|                         | Payments Due by Period
|------------------------ | ----------------------
|Total                    | Less than 1
year      
|Principal debt           |                       
|obligations              |                       
|Future interest payments |                       
|from debt restructuring  |                       
|                         |                       
|Total debt               |                       
|                         |                       

As of February 29, 2004, we had no
outstanding borrowings under our $30.0 million revolving credit facility with Wells Fargo
Foothill and Ableco. As of February 29, 2004, we had approximately $11.4 million of unused
borrowing availability under the facility. Proceeds of $1.3 million from the sale of
equipment at our Jackson, Wisconsin facility were used to reduce our Wells Fargo Foothill
long-term debt. We intend to pay the remaining balance of our long-term debt to Wells
Fargo Foothill of approximately $2.6 million upon the closing of 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 February 29, 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 February 29, 2004, an
increase of 1.0% in market interest rates would increase annual interest expense by
approximately $6,000.

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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 AND USE OF PROCEEDS.
|------- | ------------------------------------------

On December 9, 2003, Wells Fargo
Foothill Inc. f/k/a Foothill Capital Corporation purchased 2,543,053 shares of Class A
Common Stock for a purchase price $25,430.53 pursuant to the terms and conditions of
Northland Cranberries, Inc. Common Stock Purchase Warrant No. W-1 dated November 6, 2001.
The shares sold are exempt from registration pursuant to Section 4 (2) of the Securities
Act of 1933 because they were sold by the issuer in a transaction not involving any public
offering.

|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None.

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

At our annual meeting of shareholders
held on January 7, 2004, the following nine individuals, who constitute our entire board
of directors, were elected to serve as directors of the Company to hold office until the
next annual meeting of our shareholders and until their successors are duly qualified and
elected:

|                   
|-------------------
|John Swendrowski   
|Marc J. Leder      
|Rodger R. Krouse   
|Clarence E. Terry  
|Kevin J. Calhoun   
|T. Scott King      
|George R. Rea      
|Patrick J. Sullivan
|C. Daryl Hollis    

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

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

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 second 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:  April 14, 2004 | By:  /s/ Nigel J. Cooper   
|                      | Nigel J. Cooper            
|                      | Vice President - Finance   

22

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# EXHIBIT INDEX

|EXHIBIT NO. | 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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