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   May 31, 2001
                               ---------------

                                       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                (I.R.S. Employer Identification No.)
of Incorporation or organization)

                             800 First Avenue South
                                  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___

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

      Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes____ No____

      APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:

Class A Common Stock            July 10, 2001                   19,702,221
Class B Common Stock            July 10, 2001                      636,202


                                       1
<PAGE>
                           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

               Notes to Condensed Consolidated Financial Statements........ 6-14

     Item 2.   Management's Discussion and Analysis of Financial
                        Condition and Results of Operations................15-21

     Item 3.   Quantitative and Qualitative Disclosure About
                        Market Risk........................................  21

PART II.       OTHER INFORMATION

     Item 1.   Legal Proceedings...........................................  22

     Item 3.   Defaults Upon Senior Securities.............................  22

     Item 6.   Exhibits and Reports on Form 8-K............................  22

               SIGNATURE...................................................  23


                                       2
<PAGE>
<TABLE>
                                      PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
----------------------------------------------------------------------------------------------------------
                                       NORTHLAND CRANBERRIES, INC.
                                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<CAPTION>
                                                                                (Unaudited)
                                                                                  May 31,       August 31,
                                                                                   2001           2000
                                                                                -----------     ---------
                                                  ASSETS
Current assets:
<S>                                                                              <C>            <C>
   Cash and cash equivalents                                                      $  2,421       $    164
   Accounts receivable                                                               9,642         20,650
   Current portion of note receivable and accounts receivable - other                8,162          7,787
   Refundable income taxes                                                               -          1,102
   Inventories                                                                      43,827         48,201
   Prepaid expenses                                                                  1,684            908
   Assets held for sale                                                              6,645          6,645
                                                                                  --------       --------
      Total current assets                                                          72,381         85,457

Note receivable, less current portion                                               24,000         26,000
Property and equipment - net                                                       146,999        153,119
Intangible assets - net                                                             18,559         19,193
Other assets                                                                           431            466
                                                                                  --------       --------

      Total assets                                                                $262,370       $284,235
                                                                                  ========       ========

                                   LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                               $ 11,599       $ 31,357
   Accrued liabilities                                                              19,402         18,489
   Current maturities of long-term debt                                            161,019         12,643
   Long-term debt classified as a current liability                                 17,032        164,459
                                                                                  --------       --------
      Total current liabilities                                                    209,052        226,948

Long-term debt, less current maturities                                              3,530          3,927
                                                                                  --------       --------

      Total liabilities                                                            212,582        230,875
                                                                                  --------       --------
Shareholders' equity:
   Common stock - Class A, $.01 par value,
       19,702,221 shares issued and outstanding                                        197            197
   Common stock - Class B, $.01 par value,
       636,202 shares issued and outstanding                                             6              6
   Additional paid-in capital                                                      148,977        148,977
   Accumulated deficit                                                             (99,392)       (95,820)
                                                                                  --------       --------
      Total shareholders' equity                                                    49,788         53,360
                                                                                  --------       --------

   Total liabilities and shareholders' equity                                     $262,370       $284,235
                                                                                  ========       ========

                        See notes to condensed consolidated financial statements.
</TABLE>

                                       3
<PAGE>
<TABLE>
                                                 NORTHLAND CRANBERRIES, INC.
                                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                          (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                                         (Unaudited)
<CAPTION>
                                                                   For the three                        For the nine
                                                                   months ended                         months ended
                                                            May 31,            May 31,           May 31,            May 31,
                                                             2001               2000               2001              2000
                                                          ----------         ----------        ----------         ----------
<S>                                                       <C>                <C>               <C>                <C>
Revenues                                                    $ 30,281           $ 61,417         $ 107,490          $ 205,005

Cost of sales                                                 19,682             39,322            70,328            163,918
                                                             -------            -------           -------           --------

Gross profit                                                  10,599             22,095            37,162             41,087
Selling, general and administrative
   expenses                                                    9,279             25,425            31,384             71,973
Gain on disposals of business and property
   and equipment                                                   -             (2,144)             (412)            (2,144)
                                                             -------            -------           -------           --------

Income (loss) from operations                                  1,320            ( 1,186)            6,190            (28,742)

Interest expense                                              (4,410)            (3,908)          (13,913)           (10,311)

Interest income                                                  684                684             2,060                684
                                                             -------            -------           -------           --------

Loss before income taxes                                      (2,406)            (4,410)           (5,663)           (38,369)

Income tax benefit                                                 -                  -             2,092             13,244
                                                             -------            -------           -------           --------

Net loss                                                     $(2,406)           $(4,410)          $(3,571)          $(25,125)
                                                             =======            =======           =======           ========

Net loss per share:
          Basic                                               $(0.12)            $(0.22)           $(0.18)            $(1.24)
                                                              ======             ======            ======             ======

          Diluted                                             $(0.12)            $(0.22)           $(0.18)            $(1.24)
                                                              ======             ======            ======             ======
Shares used in computing net loss per
share:
          Basic                                           20,338,423         20,338,423        20,338,423         20,327,183
          Diluted                                         20,338,423         20,338,423        20,338,423         20,327,183
</TABLE>

            See notes to condensed consolidated financial statements.


                                       4
<PAGE>
<TABLE>
                                       NORTHLAND CRANBERRIES, INC.
                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (DOLLARS IN THOUSANDS)
                                               (Unaudited)
<CAPTION>
                                                                                 For the nine months ended
                                                                                   May 31,        May 31,
                                                                                    2001           2000
                                                                                  --------       --------
Operating activities:
<S>                                                                               <C>            <C>
   Net loss                                                                       $ (3,571)      $(25,125)
   Adjustments to reconcile net loss to net cash provided by
         (used in) operating activities:
         Depreciation and amortization of property and equipment                     6,898          6,497
         Amortization of intangible assets                                             634          1,414
         Deferred income taxes                                                           -        (13,636)
         Inventory lower of cost or market adjustment                                    -         27,000
         Gain on disposals of business and property and
            equipment                                                                 (412)        (2,144)
         Changes in assets and liabilities:
            Receivables, prepaid expenses and other current assets                  11,209           (647)
            Inventories                                                              4,374        (35,642)
            Accounts payable and accrued liabilities                               (16,701)        14,149
                                                                                  --------       --------
         Net cash provided by (used in) operating activities                         2,431        (28,134)
                                                                                  --------       --------
Investing activities:
   Collections on note receivable                                                    1,250              -
   Property and equipment purchases                                                   (377)        (5,704)
   Proceeds from disposals of business and  property and
         equipment                                                                     511          7,072
   Net decrease (increase) in other assets                                              35           (822)
                                                                                  --------       --------
         Net cash provided by investing activities                                   1,419            546
                                                                                  --------       --------
Financing activities:
   Net (repayment) borrowings under revolving credit facilities                        (54)        30,750
   Payments on long-term debt - vendor note                                           (614)             -
   Payments on other long-term debt                                                   (925)        (1,508)
   Dividends paid                                                                        -         (2,432)
   Proceeds from exercise of stock options                                               -            175
                                                                                  --------       --------

         Net cash (used in) provided by financing activities                        (1,593)        26,985
                                                                                  --------       --------

Net increase (decrease) in cash and cash equivalents                                 2,257           (603)

Cash and cash equivalents, beginning of period                                         164            769
                                                                                  --------       --------

Cash and cash equivalents, end of period                                          $  2,421       $    166
                                                                                  ========       ========

            See notes to condensed consolidated financial statements.
</TABLE>

                                       5
<PAGE>
                           NORTHLAND CRANBERRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.    BASIS OF PRESENTATION

      The accompanying condensed consolidated financial statements have been
      prepared by Northland Cranberries, Inc. (collectively with its
      subsidiaries, the "Company") pursuant to the rules and regulations of the
      Securities and Exchange Commission and reflect normal and recurring
      adjustments, which are, in the opinion of the Company, considered
      necessary to present fairly the financial position of the Company as of
      May 31, 2001 and August 31, 2000 and its related results of operations for
      the three- and nine-month periods ended May 31, 2001 and 2000,
      respectively, and cash flows for the nine months ended May 31, 2001 and
      2000, 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, 2000 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 latest Annual Report on Form
      10-K.

      Going Concern - The accompanying condensed consolidated financial
      statements have been prepared on a going concern basis, which contemplates
      the realization of assets and the satisfaction of liabilities in the
      normal course of business. Recent production levels of cranberries in the
      United States have been in excess of demand and usage which has resulted
      in an industry-wide excess of supply of frozen cranberries and cranberry
      concentrate. Prices paid to growers for raw cranberries are currently
      below production costs for many growers. The Company currently operates in
      a marketplace that has experienced increased levels of competitive price
      discounting and selling activities as the industry responds to the excess
      cranberry supply levels. In June 2001, the United States Department of
      Agriculture ("USDA") adopted a volume regulation under a federal marketing
      order for the 2001 crop year which is intended to reduce the industry-wide
      cranberry crop. The Company has not yet determined the extent to which the
      marketing order will impact its results of operations or financial
      condition. In addition, Federal legislation signed on October 27, 2000
      provided for an aggregate of approximately $20 million in direct payments
      to certain growers with funds from the Commodity Credit Corporation
      ("CCC") and approximately $30 million in funding for the USDA to purchase
      cranberry products for school lunch and other meal programs. The Company
      received approximately $1.2 million in direct payments from the CCC in the
      three months ended May 31, 2001 which is recorded in the condensed
      consolidated statements of operations as revenues. In addition, the
      Company has been awarded contracts for approximately $1.4 million that
      will use approximately 31,000 barrels of fruit under the USDA cranberry
      product purchase programs and is evaluating its alternatives with respect
      to participating in future bids under this program. During the nine months
      ended May 31, 2001 and year ended August 31, 2000, the Company incurred
      net losses of approximately $3.6 million and $105 million, respectively.
      As shown in the condensed consolidated financial statements and for the
      reasons stated below, as of May 31, 2001, the Company's current
      liabilities exceeded its current assets by approximately $136.7 million
      and the Company was


                                       6
<PAGE>
      not in compliance with several provisions of certain loan agreements.
      These factors, among others, raise substantial doubt that the Company will
      be able to continue as a going concern.

      The condensed consolidated financial statements do not include any
      adjustments relating to the recoverability and classification of recorded
      asset amounts or the amounts and classification of liabilities that might
      be necessary should the Company be unable to continue as a going concern.
      As described in Note 4, the Company has not made scheduled interest and
      principal payments as required on the revolving credit facility and the
      term loans payable to an insurance company. In addition, the Company is
      not in compliance with several provisions of the loan agreements. The
      Company entered into forbearance agreements with the group of banks
      providing the revolving credit facility and with the insurance company
      providing the term loans which provide that the banks and insurance
      company will not seek immediate repayment of certain principal and
      interest payments until July 30, 2001 as long as the Company remains in
      compliance with the terms of the forbearance agreements. Under the terms
      of the Company's forbearance agreements, the lenders have the ability to
      call all outstanding principal and interest under the loan agreements due
      and payable on July 31, 2001, or at any time thereafter, or at any time
      prior thereto if the Company is then in default of the terms thereof. In
      addition, the Company is not in compliance with the terms of its grower
      contracts. The Company's continuation as a going concern is dependent upon
      its ability to generate sufficient cash flow to meet its obligations on a
      timely basis, to comply with the terms and covenants of its financing
      agreements, to obtain additional financing or refinancing as may be
      required, and ultimately to attain successful operations. Management is
      continuing its efforts to obtain additional funds through additional
      equity and debt financing, restructure and/or refinance its current funded
      debt facilities, reduce costs and related near-term working capital
      requirements and to explore various strategic alternatives related to the
      sale of all or a portion of the Company's assets or common stock so the
      Company can meet its obligations and sustain its operations. Those
      strategic alternatives may potentially include significant restructuring
      of the current debt and equity capital structure of the Company, which
      could result in a substantial dilution of the ownership interests of the
      Company's existing shareholders. Despite these efforts, management cannot
      provide assurance that the Company will be able to obtain additional
      financing or that cash flows from operations will be sufficient to allow
      it to meet its obligations.

      Long-Lived Assets - The Company periodically evaluates the carrying value
      of property and equipment and intangible assets in accordance with
      Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
      for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
      Disposed Of." Long-lived assets are reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount may
      not be recoverable. If the sum of the expected future undiscounted cash
      flows is less than the carrying amount of an asset, a loss is recognized
      for the difference between the fair value and carrying value of the asset.

      Income Taxes - The Company accounts for income taxes using an asset and
      liability approach which 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. A tax benefit of $2.1
      million was recognized in the nine months ended May 31, 2001 for certain
      refunds related to farm loss carrybacks which were received in that
      period.

                                       7
<PAGE>
      Use of Estimates - The preparation of financial statements in conformity
      with accounting principles generally accepted in the United States of
      America requires management to make estimates and assumptions that affect
      the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements
      and the reported amounts of revenues and expenses during the reporting
      period. Actual results could differ from those estimates.

      New Accounting Standard - In May 2000, the Emerging Issues Task Force
      ("EITF") issued EITF No. 00-14, "Accounting for Certain Sales Incentives."
      The Company is currently evaluating the impact of this statement on its
      consolidated financial statements. This statement is required to be
      adopted no later than the fourth quarter of fiscal 2001.

      Reclassifications - Certain amounts previously reported have been
      reclassified to conform with the current presentation.

2.    DISPOSITION OF BUSINESS AND RELATED LEGAL PROCEEDINGS

      On March 8, 2000, the Company sold the net assets of its private label
      juice business to Cliffstar Corporation ("Cliffstar"), pursuant to an
      asset purchase agreement ("Asset Purchase Agreement"), dated January 4,
      2000. The private label juice business assets sold consisted primarily of
      finished goods and work-in-process inventories, raw material inventories
      consisting of labels and ingredients that relate to customers of the
      private label juice business (other than cranberry juice and cranberry
      juice concentrates), certain trademarks and goodwill, contracts relating
      to the purchase of raw materials inventory and the sale of products, and
      135,000 gallons of cranberry juice concentrate. No plants or equipment
      were included in the sale. Cliffstar also assumed certain obligations
      under purchased contracts. In connection with the sale, the Company
      received from Cliffstar an unsecured, subordinated promissory note for $28
      million (non-cash investing activity) which will be amortized over six
      years and which bears interest at a rate of 10% per annum, as well as
      approximately $6.8 million in cash (subject to potential post-closing
      adjustments) related to inventory transferred to Cliffstar on the closing
      date.

      Additionally, Cliffstar is contractually obligated to make certain annual
      earn-out payments to the Company for a period of six years from the
      closing date based generally on operating profit from Cliffstar's sale of
      cranberry juice products. The Company also entered into certain related
      agreements with Cliffstar, including among them a co-packing agreement
      pursuant to which Cliffstar contracted for specified quantities of
      Cliffstar juice products to be packed by the Company during each year of
      the period in which Cliffstar is making earn-out payments to the Company.

      The private label juice business had revenues of approximately $1.2
      million and $20.9 million for the three- and nine-months ended May 31,
      2000, respectively. The Company recognized gross profit of approximately
      $0.2 million and $3.8 million on such revenues during the three- and
      nine-months ended May 31, 2000, respectively. Information with respect to
      selling, general and administrative expenses with respect to the private
      label juice business is not available, as the Company's accounting system
      does not segregate such expenses by type of product.

      On July 7, 2000, Cliffstar filed suit against the Company in the United
      States District Court, Western District of New York, alleging, among other
      things, that the Company breached certain representations and warranties
      in the Asset Purchase Agreement. That lawsuit was subsequently

                                       8
<PAGE>
      dismissed, and on July 31, 2000, the Company filed a lawsuit against
      Cliffstar in the Northern District of Illinois, which was later amended on
      October 10, 2000 and January 16, 2001. The lawsuit arises out of the sale
      of the net assets of the Company's private label juice business to
      Cliffstar in the transaction that closed on March 8, 2000. The Company
      claims that (1) Cliffstar breached the Asset Purchase Agreement by failing
      to make required payments under the Asset Purchase Agreement and by
      failing to negotiate in good faith concerning a cranberry sauce purchase
      agreement between the parties; (2) Cliffstar breached an interim cranberry
      sauce purchase agreement between the two companies by failing to
      adequately perform and to pay the Company the required amounts due under
      it; (3) Cliffstar breached its fiduciary duty to the Company based on the
      same (or similar) conduct; (4) Cliffstar breached the promissory note
      issued by it in the transaction by failing to make its payments in a
      timely manner and failing to pay all of the interest due; (5) Cliffstar
      breached a co-packing agreement entered into in connection with the sale
      by failing to make required payments thereunder and other misconduct; and
      (6) Cliffstar breached the Asset Purchase Agreement's arbitration
      provision, which provides that any disagreements over the valuation of
      finished goods, work-in-process and raw material inventory purchased by
      Cliffstar shall be submitted to arbitration for resolution. On April 10,
      2001, the Court granted the Company's Petition to Compel Arbitration.
      Accordingly, the price dispute over finished goods, work-in-process and
      raw material inventory will be arbitrated. No date has been set for this
      arbitration. The Company seeks compensatory damages in an amount in excess
      of $5 million, plus punitive damages for Cliffstar's breaches of its
      fiduciary duties and attorneys' fees.

      Cliffstar has asserted counterclaims against the Company, alleging that
      (1) the Company fraudulently induced Cliffstar to enter into the Asset
      Purchase Agreement; (2) the Company has breached the Asset Purchase
      Agreement by failing to negotiate in good faith a cranberry sauce purchase
      agreement, by failing to provide Cliffstar with sufficient quantities of
      cranberry concentrate meeting Cliffstar's "specifications," by selling
      inventory that did not have a commercial value at least equal to the
      Company's carrying value, by failing to notify Cliffstar that the Company
      intended to write-down its cranberry inventory, by not providing Cliffstar
      its selling prices, by decreasing its level of service to customers after
      the parties signed the Asset Purchase Agreement, and by refusing to turn
      over certain labels, films and plates relating to the private label juice
      business to Cliffstar; (3) the Company breached the co-packing agreement
      by prematurely terminating that agreement; (4) the Company converted the
      labels, films and plates relating to the private label juice business; (5)
      the Company intentionally interfered with Cliffstar's contractual
      relations, or reasonable expectations of entering into business relations,
      with the printers who hold the labels, films and plates; and (6) the
      Company breached the Transition Agreement by failing to remit to Cliffstar
      the excess of Cliffstar's interim payment for work-in-process and raw
      material inventory, by withholding a portion of the work-in-process and
      raw material inventory from Cliffstar, and by artificially building up its
      work-in-process and raw material inventory before and after the sale of
      the private label juice business to Cliffstar. Cliffstar seeks
      compensatory damages in an amount not stated in the counterclaims,
      punitive damages for the alleged fraudulent inducement and intentional
      interference claims, and attorneys' fees. The complaint does not seek
      rescission of the agreement, although Cliffstar reserves the right to seek
      recovery of rescission-type damages (among other damages) without seeking
      to unwind the transaction. The Company has denied the allegations of
      Cliffstar's original and amended counterclaims in all material respects.


                                       9
<PAGE>
      As of May 31, 2001, the note receivable from Cliffstar had an outstanding
      balance of $26.5 million, and the Company had outstanding accounts
      receivable and accrued interest due from Cliffstar aggregating
      approximately $5.7 million. The action remains in its early stages. The
      Company has only begun to conduct discovery. It is the opinion of the
      Company's management, after consulting with outside legal counsel, that,
      (1) the Company has strong claims for the required payments for cranberry
      concentrate, co-packing services and cranberry sauce sales and other
      alleged breaches of the agreements and these amounts owed the Company are
      valid and collectible; (2) the Company has strong factual and legal
      defenses in all material respects to Cliffstar's counterclaims; and (3)
      the note and accrued interest due from Cliffstar is collectible. However,
      the resolution of the legal proceedings cannot be predicted with certainty
      at this time. In addition, management intends to vigorously defend the
      counterclaims against them and to pursue any claims they may have against
      Cliffstar, including any actions to collect the amounts outstanding.

      Cliffstar made the required $0.25 million principal and related accrued
      interest payment on the note receivable that was due on May 31, 2000 on
      June 13, 2000, and the Company, after consulting with its outside legal
      counsel, concluded that the payment was received late and, thus, the note
      is in default with future interest accruing at the default rate of 12%.
      The Company received Cliffstar's scheduled August 31, 2000 principal
      payment of $0.25 million together with approximately $0.7 million of
      accrued interest at 10% on September 8, 2000. The Company received
      Cliffstar's scheduled November 30, 2000 principal payment of $ 0.25
      million together with approximately $0.7 million of accrued interest at
      10% on December 22, 2000. The Company received Cliffstar's scheduled
      February 28, 2001 principal payment of $0.25 million together with
      approximately $0.7 million of accrued interest at 10% on March 2, 2001.
      The Company received Cliffstar's scheduled May 31, 2001 principal payment
      of $0.50 million together with approximately $0.7 million of accrued
      interest at 10% on May 31, 2001. The Company has recognized interest
      income on the note receivable at a rate of 10% in the condensed
      consolidated financial statements, pending the resolution of this matter.

      Although the note is in default, the Company has classified the balance
      outstanding in the accompanying condensed consolidated balance sheets in
      accordance with the scheduled payment dates provided for in the note, as
      this is how the Company anticipates payments will be received unless the
      court rules otherwise.

3.    INVENTORIES

      Inventories as of May 31, 2001 and August 31, 2000 consisted of the
      following (in thousands):

                                 May 31, 2001      August 31, 2000

      Raw materials                 $  33,517           $   30,529
      Finished goods                    4,519                7,951
      Deferred crop costs               5,791                9,721
                                    ---------           ----------
      Total inventories             $  43,827           $   48,201
                                    =========           ==========


                                       10
<PAGE>
4.    LONG-TERM DEBT

      Long-term debt as of May 31, 2001 and August 31, 2000 consisted of the
      following (in thousands):
                                                      May 31,     August 31,
                                                       2001         2000

      Revolving credit facility with banks           $154,946      $155,000
      Term loan payable to insurance company with
        interest at 8.08%                              11,377        11,377
      Term loan payable to insurance company with
        interest at 7.86%                               7,719         7,719
      Term note with a bank                             1,966         2,508
      Promissory vendor notes                           3,131         1,600
      Other obligations                                 2,442         2,825
                                                     --------      --------

      Total                                           181,581       181,029
      Less: Current maturities of long-term debt      161,019        12,643
            Amounts classified as current liability    17,032       164,459
                                                     --------      --------
      Amounts classified as noncurrent               $  3,530      $  3,927
                                                     ========      ========

      The Company was not in compliance with various covenants under the
      revolving credit facility, the two term loans payable to an insurance
      company, and the term note with a bank as of May 31, 2001 and August 31,
      2000, and the Company has not received waivers for any of these covenant
      defaults. The Company has entered into forbearance agreements with the
      group of banks providing the revolving credit facility and with the
      insurance company providing the term loans. The forbearance agreements
      provide, among other things, that, so long as the Company remains in
      compliance with the terms thereof, the lenders will forbear from seeking
      immediate repayment of certain principal and interest payments through
      July 30, 2001 (although effective March 2001 the Company must pay interest
      at the rate of 7% (banks) and 5% (insurance company) per annum on the
      outstanding principal amounts and interest continues to accrue at the
      higher default rate), and that the Company (i) must pay to the bank group
      principal amounts aggregating $14.3 million in June 2001, (ii) must comply
      with additional financial covenants through July 30, 2001, and (iii) must
      continue the process of exploring strategic alternatives and provide
      evidence satisfactory to the bank group that substantial progress has been
      made in pursuit of such alternatives. The borrowings under the two term
      loans payable to an insurance company and the term note payable to a bank
      have been classified as a current liability in the accompanying condensed
      consolidated balance sheets.

      On March 15, 1999, the Company entered into a credit agreement with a
      group of banks (the "Credit Agreement") that provided for a revolving
      credit facility of $140 million. On December 31, 1999, the Credit
      Agreement was amended, increasing the amount that could be borrowed under
      the revolving credit facility to $155 million. The Credit Agreement was
      subsequently amended effective May 31, 2000 and July 17, 2000 for
      financial covenant defaults. The revolving credit facility terminates on
      May 31, 2002. Under the terms of the Credit Agreement, the outstanding
      principal amount is scheduled to be reduced by $5.0 million on the last
      day of each of the first and third quarters of the Company commencing with
      the fiscal quarters ended November 30, 2000 and May 31, 2001 and
      continuing thereafter until the termination date of the agreement
      (however, the forbearance agreement allows for deferral of the November
      30, 2000

                                       11
<PAGE>

      and May 31, 2001 principal payments). Under the amended revolving credit
      facility, the Company, through July 17, 2000, could borrow at the bank's
      domestic rate (which approximates prime, as defined) or LIBOR plus one and
      one-quarter percent (1.25%). Effective July 18, 2000, the interest rate
      was increased to the bank's domestic rate (which approximates prime, as
      defined), plus 1.25%. Under the terms of the amended revolving credit
      facility, interest accrues at the bank's domestic rate, plus 2.0%, while
      the loan is in default. The borrowing option under LIBOR is no longer
      available. Amounts outstanding under the agreement bear interest at a
      weighted average of 9.0% and 10.09% as of May 31, 2001 and August 31,
      2000, respectively. The Company has not made the full interest payments
      due to the bank since August 31, 2000, and did not make the $5.0 million
      principal payments due November 30, 2000 and May 31, 2001. The credit
      facility is collateralized by substantially all assets of the Company not
      otherwise collateralized. Included in accrued liabilities as of May 31,
      2001 is approximately $10.9 million of outstanding interest on the
      revolving credit facility. Beginning in March 2001, pursuant to the terms
      of the forbearance agreement, current interest payments of 7% per annum
      are required on the revolving credit facility. Interest continues to
      accrue at the contracted rates.

      The 8.08% term loan with an insurance company is payable in semi-annual
      installments, including interest, through July 1, 2004. The 7.86% term
      loan with an insurance company is payable in semi-annual installments,
      including interest, through August 1, 2008. The interest rate is subject
      to adjustment in fiscal year 2003, as determined by the insurance company,
      but the adjusted rate will not exceed 2.25% over the then five-year
      treasury bond yield. The loans are collateralized by specific property and
      equipment. The insurance company term loans provide for an additional 5%
      default interest on unpaid principal and interest, which aggregated $2.1
      million at May 31, 2001. Beginning in March 2001, current interest
      payments of 5% per annum are required on these loans. Interest continues
      to accrue at the contracted rates.

      The term note with a bank is payable in monthly installments, including
      interest, through March 2002, at which time the remaining principal must
      be paid. The interest rate on this term note is 1% per annum less than the
      prime rate, as defined, or LIBOR plus an applicable rate margin (2%) at
      the option of the Company. The interest rate on the outstanding borrowings
      was 7.50% and 7.79% as of May 31, 2001 and August 31, 2000, respectively.
      The note is collateralized by specific property and equipment.

      The bank term note has a higher default interest rate specified while the
      loan is in default, as defined, if the scheduled principal and interest
      payments are not made. The Company has made all scheduled principal and
      interest payments on this loan through May 31, 2001 and has not accrued
      interest at the higher default rate.

      The promissory vendor notes include a $1.6 million unsecured note payable,
      including interest payments at 5% per annum, maturing on October 24, 2002.
      The note provides that each $100 increment of the outstanding principal
      and accrued interest will be convertible into one share of $100 stated
      value Series A Convertible Preferred Stock ("Preferred Stock"), which
      series of Preferred Stock is yet to be established by the Board of
      Directors of the Company, 180 days after the occurrence of a refinancing,
      as defined. Each share of Preferred Stock will be convertible into 40
      shares of Class A Common Stock at the option of the holder or
      automatically upon the occurrence of certain events. Each share of
      Preferred Stock will entitle the holder to receive cumulative annual cash
      dividends at a rate of 5% on the $100 stated value.

                                       12
<PAGE>

      The second promissory vendor note in the amount of $1.5 million is
      unsecured and is payable in various installments through December 31,
      2001, including interest at 7%.

      The other obligations consist of various term loans with financial
      institutions with principal and interest due in various amounts through
      January 2007. These loans are generally collateralized by specific
      property and equipment.

      The debt agreements contain various covenants which include restrictions
      on dividends and other distributions to shareholders, repurchases of
      stock, and require the Company to maintain and meet certain minimum levels
      of shareholders' equity ($125 million as of May 31, 2001) and operating
      ratios, as defined.

      The Company has also guaranteed $1.0 million of outstanding obligations to
      a bank of an independent cranberry grower who subsequently became an
      officer of the Company. The grower is in default with certain terms and
      conditions contained in the related debt agreements. Management of the
      Company is of the opinion that the potential for any loss to the Company
      is minimal.

5.    RESTRUCTURING ACCRUALS AND OTHER CHARGES

      In the fourth quarter of fiscal 2000, the Company recorded an $8.25
      million pre-tax restructuring charge, consisting primarily of a $6.0
      million writedown of a manufacturing facility in Bridgeton, New Jersey
      that discontinued production on November 22, 2000 and $2.25 million of
      plant closing costs (primarily cleanup, security and insurance costs) and
      employee termination benefits. Approximately 130 employees received
      notification of their termination in fiscal 2000 as a result of the
      restructuring plan, primarily at the Bridgeton facility and in the
      Company's sales department. The employees were subsequently terminated and
      the Bridgeton facility is held for sale.

      The following table summarizes the activity within the recorded accruals
      during the nine months ended May 31, 2001 (in thousands):

                                                       Charges and
                                         Accrued at       Cash       Accrued at
                                       August 31, 2000  Payments    May 31, 2001

       Plant closing costs                 $  770        $  770         $  0
       Employee termination benefits        1,480           930          550
                                           ------        ------         ----
       Total                               $2,250        $1,700         $550
                                           ======        ======         ====

      In addition, the Company has continued to incur costs throughout fiscal
      2001 in exploring various strategic alternatives and restructuring
      scenarios. Costs relating to such activities, which consist primarily of
      outside consulting and legal fees, were $0.3 million and $1.9 million for
      the three- and nine-months ended May 31, 2001, respectively and are
      included in selling, general and administrative expenses.


                                       13
<PAGE>

6.    SUPPLY CONTRACTS

      The Company has multiple-year crop purchase contracts with 47 independent
      cranberry growers pursuant to which the Company has contracted to purchase
      the entire cranberry crop produced on 1,755 planted acres owned by these
      growers. These contracts generally last for seven years, starting with the
      1999 calendar year crop, and pay the growers at a market rate, as defined,
      for all raw cranberries delivered plus $3 per barrel and certain
      incentives for premium cranberries. In September 2000, the Company was
      unable to make an aggregate payment of approximately $0.7 million due to
      the growers under the terms of the contracts and the Company notified the
      growers of the Company's intention to also defer payments required in
      fiscal 2001 under the contract for the 2000 calendar year crop.
      Accordingly, the Company is currently in default under the terms of the
      grower contracts. However, the contracted growers harvested and delivered
      their 2000 calendar year crop to the Company subsequent to August 31,
      2000. The Company intends to pursue amendment of the payment terms
      required under the contracts and seek waivers from the growers. The
      ultimate resolution of this matter is currently undeterminable, but the
      Company has made all rescheduled payments to the growers.

7.    LEASE COMMITMENTS

      On April 10, 1990, the Company acquired leasehold interests in two
      cranberry marshes in Nantucket, Massachusetts. On March 31, 1994, the
      Company entered into an agreement which extended the original lease term
      through November 30, 2003. Rental payments are based on 20 percent of
      gross cash receipts from agricultural production, subject to certain
      minimums which are dependent upon the statewide average crop yield and
      price. During fiscal 2000, the Company determined that it was no longer
      economically feasible to operate these marshes and has entered into
      negotiations to either amend or terminate the lease.

8.    SUBSEQUENT EVENT

      In June 2001, the Company sold a manufacturing plant in Mountain Home,
      North Carolina and its private label cranberry sauce business for a
      combined sum of approximately $13.3 million in cash plus an additional
      amount for certain inventory items. The proceeds of the sale were utilized
      primarily to reduce the Company's bank debt. The gain from this sale,
      which is estimated at approximately $1.4 million, will be recognized in
      the financial statements in the fourth quarter of fiscal 2001.

      The Company also entered into a noncompete agreement related to the
      private label cranberry sauce business which will provide noncompete
      payments computed based on total case sales of the buyer over the next
      five years subject to an aggregate minimum payment of $1,000,000.

      Cranberry sauce sales for the three and nine months ended May 31, 2001 and
      2000, respectively, were less than 5% of the Company's total revenues in
      those periods.

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

GENERAL

      As of May 31, 2001, we remained in default of several covenants of our
revolving credit agreement and other long-term debt agreements. We did not make
$10.9 million of interest payments due on our revolving credit facility in the
first nine months of fiscal 2001 and did not make the $5.0 million principal
payments due November 30, 2000 and May 31, 2001. In addition, we did not make
required principal and interest payments aggregating $2.1 million in the first
nine months of fiscal 2001 on our term loans with an insurance company. However,
we continue to work closely with our lenders to restructure the terms of our
debt arrangements. We have entered into forbearance agreements with the bank
group and the insurance company pursuant to which they have agreed not to seek
immediate repayment of certain principal and interest payments due under our
debt arrangements until July 31, 2001 as long as we remain in compliance with
the terms and conditions of the forbearance agreements. We agreed with the
lenders in the forbearance agreements to perform certain actions, among them (i)
paying interest on a periodic basis during the forbearance period (beginning in
March 2001) at a rate of 7% (bank group) and 5% (insurance company) on the
principal amounts outstanding (although interest on outstanding principal
continues to accrue at the higher default rate); (ii) making principal payments
aggregating $14.3 million in June 2001 to the bank group; (iii) continuing the
process of exploring strategic alternatives and providing evidence satisfactory
to the bank group that we have made substantial progress in pursuit of such
alternatives; and (iv) complying with certain financial covenants set forth in
the agreements. We continue to work closely with the bank group and the
insurance company.

      Additionally, we continue to actively explore alternative sources of debt
and equity capital and ways in which we can refinance all or some of our
indebtedness. Alternative debt and equity sources may potentially involve a
significant restructuring of our current debt and equity capital structure,
which could result in a substantial dilution of the ownership interests of our
existing shareholders.

      We have taken several steps that we believe positively contributed to our
results of operations in the first nine months of fiscal 2001:

            o We entered into a strategic marketing alliance with Crossmark,
            Inc. ("Crossmark"), a national food broker, effective in the first
            quarter of fiscal 2001, whereby we combined our sales and marketing
            efforts and further consolidated our food broker network with
            Crossmark.

            o We refocused our trade promotional strategies to emphasize
            profitability as opposed to generating revenue growth and, in the
            first nine months of fiscal 2001, certain higher-cost promotional
            activities we entered into in fiscal 2000 expired or were
            renegotiated. We believe these steps helped to reduce our selling,
            general and administrative expenses in the first nine months of
            fiscal 2001.

            o In the first quarter of fiscal 2001, we increased the cranberry
            juice content in all of our Northland brand 100% juice cranberry
            blends to 27% and began the rollout of these new reformulated
            blends, which we refer to as the "27% Solution." While Northland
            brand 100% juice blends have always contained 100% fruit juice (as

                                       15
<PAGE>

            opposed to many of our competitors' products which generally contain
            a lesser percentage of fruit juice sweetened by fructose or corn
            syrup), they have historically contained only approximately 15%
            cranberry juice. We have reformulated our Northland blends to
            include 27% cranberry juice in response to increasing evidence of
            the potential health benefits associated with drinking cranberry
            juice. This reformulation uses more cranberries per case of juice
            products and as a result has helped reduce our inventory levels in
            the first nine months of fiscal 2001 from levels that would have
            otherwise existed.

            o We completed the previously announced restructuring of our
            manufacturing operations which we believe contributed to our lower
            cost of sales for the first nine months of fiscal 2001.

            o We reduced total personnel in all areas in an effort to reflect
            the current needs of our business, which contributed to reduced
            selling, general and administrative expenses for the first nine
            months of fiscal 2001.

      Additionally, in June 2001, we sold a manufacturing facility in Mountain
Home, North Carolina and our private label cranberry sauce business.
Substantially all the proceeds were used to reduce principal on the revolving
credit facility with banks. The sale of the plant also reduced our bottling
capacity which should result in lower production costs in the future through
improved efficiencies.

      The Cranberry Marketing Committee ("CMC") of the United States Department
of Agriculture ("USDA") has the authority to recommend that the Secretary of the
USDA impose harvest restrictions on cranberry growers if the CMC believes there
will be an oversupply of cranberries for the coming crop year. During fiscal
2000, the Secretary of the USDA, at the request and based on the recommendation
of the CMC, invoked a volume regulation to restrict the industry-wide harvest of
cranberries for the harvest occurring in the fall of 2000. The restriction
generally limited cranberry growers to selling only up to 85% of their historic
production levels. At the recommendation of the CMC, the USDA has again adopted
a volume regulation for the 2001 crop year. The restriction generally limits
cranberry growers to selling only up to 65% of their historic production levels.
This should limit the total 2001 cranberry crop to approximately 4.6 million
barrels, plus a fresh fruit exemption. We have not yet determined to what extent
this marketing order will impact our results of operations or financial
condition.

      In addition to the volume regulation and in response to requests from the
grower community, the United States Congress approved a $50 million federally
funded assistance program in October 2000. Under this plan, the federal
government will make direct cash subsidies totaling $20 million to growers. Of
this, we received approximately $1.2 million during the three months ended May
31, 2001. In addition, $30 million is to be used by the federal government to
purchase cranberry products containing the equivalent of approximately one
million barrels of cranberries from the industry on a "bid" basis. This purchase
will be used in school lunch and other federal programs directed to the needy
and disadvantaged. We participated in the program and received contracts for
approximately $1.4 million in the aggregate to provide cases of juice
concentrate that we expect will use approximately 31,000 barrels of cranberries.
We have not yet determined whether we will participate in future bids under this
program.


                                       16
<PAGE>

      While we currently continue to experience cash flow difficulties, we hope
to improve our cash position and results of operations through focusing on a
return to profitability as opposed to driving increased revenues.

RESULTS OF OPERATIONS

      Total revenues for the three months ended May 31, 2001 were $30.3 million,
a decrease of 50.7% from revenues of $61.4 million in the prior year's third
quarter. Revenues for the nine-month period ended May 31, 2001 were $107.5
million, a decrease of 47.6% from revenues of $205.0 million in the same period
in fiscal 2000. The decreases resulted primarily from (i) reduced sales of
Northland and Seneca branded products; (ii) reduced co-packing revenue from a
major customer that during the first quarter switched from an arrangement where
we purchased substantially all of the ingredients and sold the customer finished
product to a fee for services performed arrangement; and (iii) the sale of the
private label juice business in March of 2000. Included in revenues for the
three months ended May 31, 2001 is approximately $1.2 million received in direct
payments from the federal government (the Commodity Credit Corporation) for a
cranberry subsidy. Our marketing spending during the first nine months of fiscal
2001 was down significantly as compared to the prior year, contributing to a
decrease in market share for our Northland and Seneca branded products. Trade
industry data for the 12-week period ended May 20, 2001 showed that our
Northland brand 100% juice products achieved a 6.8% market share of the
supermarket shelf-stable cranberry beverage category on a national basis, down
from a 10.0% market share for the 12-week period ended May 21, 2000. The total
combined market share of supermarket shelf-stable cranberry beverages for our
Northland and Seneca branded product lines was 7.6% for the 12-week period ended
May 20, 2001 compared to a 12.9% market share for the 12-week period ended May
21, 2000. We anticipate that our total revenues will continue to decrease in
fiscal 2001 as compared to fiscal 2000 primarily as a result of anticipated
lower co-packing revenues as well as our change in promotional and pricing
strategies to focus more on profitability as opposed to revenue growth.
Additionally, unless we secure further financing, we are unlikely to spend
significant amounts on additional marketing activities in the fourth quarter of
fiscal 2001.

      Cost of sales for the three months ended May 31, 2001 was $19.7 million
compared to $39.3 million for the three months ended May 31, 2000, resulting in
gross margins of 35.0% and 36.0% in each respective period. Cost of sales for
the nine month period ended May 31, 2001 was $70.3 million compared to $163.9
million in the same period in fiscal 2000, yielding gross margins of 34.6% and
20.0% respectively. The decrease in cost of sales for the three- and nine-month
periods ended May 31, 2001 was primarily due to reduced sales of Northland and
Seneca branded products resulting from our change in promotional and pricing
strategies, the elimination of private label juice revenues and reduced
co-packing revenues. In the second quarter of fiscal 2000 we took a charge to
cost of sales of $27.0 million. Cost of sales without taking into effect this
write down would have been $136.9 million for the nine-month period ended May
31, 2000, which would have resulted in a gross margin of 33.2%.

      Selling, general and administrative expenses were $9.3 million, or 30.6%
of revenues, for the three months ended May 31, 2001 compared to $25.4 million,
or 41.4% of revenues, in the same period in fiscal 2000. Selling, general and
administrative expenses were $31.4 million, or 29.2% of revenues, for the nine
month period ended May 31, 2001 compared to $72.0 million, or 35.1% of revenues,
during the same period in the prior fiscal year. The $16.1 million decrease in
selling, general and administrative expenses in the third quarter, and $40.6
million decrease in the nine month period, was primarily due to (i) significant
reductions in marketing and promotional expenses


                                       17
<PAGE>

compared to the third quarter of fiscal 2000 (in which we incurred greater
marketing and promotional expense to support the Seneca brand and the launch of
a new Seneca line of cranberry juice products, as well as undertook an
aggressive marketing campaign to support development and growth of our Northland
brand products); (ii) the significant revisions to our trade promotional
practices to reflect our new focus away from growing sales and market share and
toward more profitable operations; (iii) a reduction in personnel costs
resulting from our restructuring efforts; (iv) a reduction in personnel costs
and selling commissions resulting from our strategic alliance with Crossmark
that outsources and consolidates much of our sales and marketing efforts; and
(v) improvements in our collection and control over customer deductions and
discounts (in the second quarter 2000 we took a charge of $3.8 million for
uncollectible accounts receivable related to certain unauthorized customer
deductions and discounts). The decrease in selling, general and administrative
expenses was partially offset by increases in outside professional fees incurred
in connection with developing a "turnaround" plan for our operations,
negotiating with our lenders regarding the terms of our credit facilities,
related covenant defaults and forbearance agreements, and continuing efforts to
seek additional or alternative debt and equity financing. We expect that
selling, general and administrative expenses in the remaining quarter of fiscal
2001 will decrease from the comparable quarter last year primarily as a result
of the foregoing and the additional steps we have taken to focus on increasing
profitability as opposed to revenue growth.

      The gain on disposals of property and equipment in the nine-month period
ended May 31, 2001 of $0.4 million resulted primarily from the sale of certain
real estate and other assets. In the nine-month period ended May 31, 2000, the
gain of $2.1 million resulted from the sale of the private label juice business.

      Interest expense was $4.4 million and $13.9 million for the three- and
nine-month periods ended May 31, 2001 compared to $3.9 million and $10.3 million
during the same period of fiscal 2000. The increase in interest expense of $0.5
million and $3.6 million respectively was due to increased debt levels between
the periods and significantly higher interest rates in fiscal 2001 (due in part
to revised terms of our revolving credit facility as a result of our defaults
thereunder). We remain in default of the terms of our revolving credit facility
and other debt agreements with third parties. See "Financial Condition" below.

      Interest income of $0.7 million and $2.1 million for the three- and
nine-month periods ended May 31, 2001, and $0.7 million in the third quarter of
fiscal 2000, was associated with an unsecured, subordinated promissory note we
received in connection with the sale of our private label juice business in
March of 2000.

      The income tax benefit recognized in the first nine months of fiscal 2001
relates to a refund from a farm loss carryback received in the second quarter.
Future deferred income tax benefits of approximately $28.6 million relating to
the fiscal 2000 loss and any future deferred income tax benefits relating to the
fiscal 2001 losses have not been recognized as an asset because of uncertainties
with respect to realization of those benefits. These benefits may be recognized
in future periods to offset income tax obligations that may need to be
recognized.


FINANCIAL CONDITION

      Net cash provided by operating activities was $2.4 million in the first
nine months of fiscal 2001 compared to a net cash used in operating activities
of $(28.1) million in the same period of


                                       18
<PAGE>

fiscal 2000. The difference of $30.5 million between periods was primarily due
to fiscal 2001 reductions in assets and liabilities compared to significant
increases in the same items in fiscal 2000. Our inventory decreased $4.4 million
in the first nine months of fiscal 2001 compared to an increase of $35.6 million
in the first nine months last year. This was primarily because (i) volume intake
of raw cranberries was reduced due to the impact of the federal marketing order
of the USDA and prevailing growing conditions related to the fall 2000 harvest;
(ii) the price for raw cranberries purchased from our independent growers was
down significantly (due primarily to the renegotiated terms of our grower
contracts which tie the price we pay for cranberries more closely to prevailing
market prices), and our growing and processing costs decreased from the prior
year (generally as a result of scaled-back growing operations, reorganized
manufacturing operations and overall personnel reductions); (iii) our
consolidation of operations, closing of our Bridgeton, New Jersey facility and
increased use of cranberries in our Northland branded products resulting from
the recent reformulation of those products, which enabled us to decrease raw
material and finished goods inventories; and (iv) a reduction in our purchases
of other raw materials. Also, receivables, prepaid expenses and other current
assets decreased $11.2 million from August 31, 2000 as a result of declining
revenue levels, which, along with the deferral payment of certain principal and
interest payments permitted by the terms of our forbearance agreements, provided
us additional cash to pay down accounts payable and accrued liabilities by $16.7
million in the first nine months of fiscal 2001.

      Working capital deficiency decreased $4.8 million to a $(136.7) million
deficiency at May 31, 2001 compared to a working capital deficiency of $(141.5)
million at August 31, 2000. Our current ratio was 0.35 to 1.0 at May 31, 2001
compared to 0.38 to 1.0 at August 31, 2000.

      Net cash provided from investing activities was $1.4 million in the first
nine months of fiscal 2001 compared to $0.5 million in the comparable period of
fiscal 2000. Collections on the note receivable were $1.3 million in 2001 versus
none in 2000. Property and equipment purchases decreased from $5.7 million in
2000 to $0.4 million in 2001. Sale of the private label juice business provided
$7.1 million in the first nine months of fiscal 2000 compared to $0.5 million
from property and equipment disposals in the first nine months of fiscal 2001.

      Our net cash used in financing activities was $1.6 million in the first
nine months of fiscal 2001 compared to net cash provided of $27.0 million in the
first nine months of the prior year. Our financing activity in the first nine
months of fiscal 2001 was related primarily to payments on certain long-term
debt and vendor notes. There were no funds available under our revolving credit
facility during the first nine months of fiscal 2001 and dividend payments were
suspended indefinitely during the prior fiscal year. Our total debt (including
current portion) was $181.6 million at May 31, 2001 for a total debt to equity
ratio of approximately 3.6 to 1.0 at May 31, 2001 compared to total debt of
$181.0 million at August 31, 2000 and a total debt to equity ratio of
approximately 3.4 to 1.0 at August 31, 2000. Depending upon our future sales
levels and relative sales mix of our products during the remainder of the fiscal
year, we expect our working capital requirements to fluctuate.

      During the first nine months of fiscal 2001, we continued to experience
cash flow difficulties. We have reached our borrowing capacity under our
revolving credit facility. We were not in compliance with several provisions of
our revolving credit agreement and other long-term debt agreements (including
various covenants of two term loans payable to an insurance company and a term
note with a bank) as of and for the nine months ended May 31, 2001, and
accordingly, because the lenders have not waived these covenant defaults, the
balance of the debt agreement revolving credit facility and long-term debt
agreements have been classified as a current liability. As of May

                                       19
<PAGE>

31, 2001, we have not made interest payments on the revolving credit facility in
the amount of $10.9 million, and did not make the $5.0 million principal
payments due November 30, 2000 and May 31, 2001. We have also not made aggregate
principal and interest payments of $2.1 on term loans payable to an insurance
company at May 31, 2001. We cannot be assured that we will be able to obtain
additional financing or that cash flow from operations will be sufficient to
allow us to manage our payables. We intend to continue to work closely with our
trade creditors in managing the terms of our accounts payable.

      As previously mentioned, we have entered into forbearance agreements with
our bank group and the insurance company pursuant to which the lenders agreed
not to seek immediate repayment of some of these interest and principal payments
through July 30, 2001 as long as we remain in compliance with the terms of the
forbearance agreements. We are not certain that we will be able to renegotiate
the terms of our debt agreements or that we will obtain additional financing
prior to the expiration of the forbearance period. By the terms of our debt
arrangements and forbearance agreements, because we are currently in default of
certain provisions of our debt arrangements, our creditors have the ability to
call all outstanding principal and interest thereunder due and payable on July
31, 2001, or at any time thereafter, or at any time prior thereto if we are then
in default of the terms thereof. In such event, it is highly unlikely that we
would be able to satisfy such an obligation, and we would likely be unable to
continue operation as a going concern. However, we continue to work with our
lenders to renegotiate the terms of those agreements. Renegotiation of those
agreements may potentially involve a significant restructuring of our current
debt and equity capital structure, which could result in a substantial dilution
of the ownership interests of our existing shareholders.

      Additionally, we are currently in default under the terms of our grower
contracts (see Note 6 to Notes to Condensed Consolidated Financial Statements).
We were unable to make payments to the growers under the terms of the contracts
in fiscal 2000, and we notified the growers of our intention to defer payments
required in fiscal 2001. We have made payments to the growers on their
outstanding balances and we intend to pursue amendment of the payment terms
required under the contracts and seek waivers from the growers.

      As a result of these factors and others, there is substantial doubt about
our ability to continue as a going concern. See Notes 1 and 4 to Notes to
Condensed Consolidated Financial Statements included in this Form 10-Q.

      Unless our lenders call our loans due and payable after July 30, 2001, we
believe that we will be able to fund our ongoing operational needs for the
fourth quarter of fiscal 2001 through (i) cash generated from operations; (ii)
our actions to reduce our near-term working capital requirements; and (iii)
additional measures to reduce costs and improve cash flow from operations.


                                       20
<PAGE>

                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.
Whether or not these forward-looking statements will be accurate in the future
will depend on certain risks and factors including, without limitation, risks
associated with (i) the development, market share growth and consumer acceptance
of our branded juice products, including consumer acceptance of our new "27%
Solution"; (ii) the disposition of certain litigation related to the sale of the
net assets of our private label juice business; (iii) the impact of the
marketing order of the United States Department of Agriculture, relative to the
2001 crop year, as well as the cranberry purchase program adopted by the United
States Congress; (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 amended credit
facility and other debt agreements, with respect to which we are currently in
default of certain covenants as well as certain principal and interest payment
provisions, as well as our forbearance agreements; (vi) our ability to secure
additional financing and/or generate sufficient cash from operations as may be
necessary to fund working capital requirements and continue as a going concern;
(vii) the results of our previously announced exploration of strategic
alternatives, including alternatives that could include a significant
restructuring of our current debt and equity capital structure, which could
result in a substantial dilution of the ownership interest of our existing
shareholders; (viii) the results of our internal organizational restructuring,
including, without limitation, the results of the restructuring of certain of
our sales and marketing functions through our agreement with Crossmark, Inc.;
(ix) our ability to manage our trade payables; and (x) our ability to continue
to meet the listing requirements of The Nasdaq National Market, including,
without limitation, the requirement that our Class A Common Stock maintain a
minimum bid price above $1.00 per share. 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 will not necessarily 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 have not experienced any material changes in our market risk since
August 31, 2000.


                                       21
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.
---------------------------

      There has been no material change in our litigation with Cliffstar since
our last Quarterly Report on Form 10-Q for the quarter ended February 28, 2001.


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

      In response to this Item, the information set forth in Note 1 and Note 4
to Notes of Condensed Consolidated Financial Statements contained in Part I of
this Quarterly Report on Form 10-Q is hereby incorporated by reference.


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

      We filed the following Current Reports on Form 8-K during the third
      quarter of fiscal 2001 and in the fourth quarter of fiscal 2001 to the
      date of this Form 10-Q:

         Date Filed     Date of Report            Item
         ----------     --------------            ----

        March 29, 2001  March 23, 2001  Item 5 - Amendment to Forbearance
                                        Agreement

        June 11, 2001    June 8, 2001   Item 5 - Second Amendment to
                                        Forbearance Agreement and Limited
                                        Waiver, Third Amendment to Forbearance
                                        Agreement and sale of Mountain Home,
                                        North Carolina plant and private label
                                        sauce business.


                                       22
<PAGE>

                                    SIGNATURE


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


                                      NORTHLAND CRANBERRIES, INC.



DATE: July 16, 2001                   By: /s/ Richard P. Teske
                                         ---------------------------------------
                                      Richard P. Teske
                                      Vice President and Chief Financial Officer



                                       23
<PAGE>

                                  EXHIBIT INDEX

      Exhibit No.                 Description
      -----------                 -----------

          (4)       Second Amendment to Forbearance Agreement, dated as of
                    May 1, 2001, by and between Northland Cranberries, Inc.
                    and the Equitable Life Assurance Society of the United
                    States.



                                       24