**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-Q**

|        | 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 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

**Commission File Number – 0-17896**

**HANOVER FOODS CORPORATION(Exact name of Registrant as specified in its charter)**

| Commonwealth of Pennsylvania                                  |   |   | 23-0670710                          |   |
|---------------------------------------------------------------|--------|--------|-------------------------------------|--------|
| (State or other jurisdiction ofincorporation or organization) |   |   | (I.R.S. EmployerIdentification No.) |   |
|                                                          |   |   |                                |   |
| 1486 York Road, P.O. Box 334, Hanover, PA                     |   |   | 17331                               |   |
| (Address of principal executive offices)                      |   |   | (Zip Code)                          |   |

717-632-6000(Registrant’stelephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing for the past 90 days.       Yes         No    

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

Indicate the number of shares outstanding of issuer’s classes of common stock as of the latest practicable date.

| Class                                    | Outstanding at February      29, 2004 |
|------------------------------------------|---------------------------------------|
|                                     |                                  |
| Class A Common Stock, $25 par      value | 288,018 shares                        |
|                                     |                                  |
| Class B Common Stock, $25 par      value | 781,648 shares                        |

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**HANOVER FOODS CORPORATION AND SUBSIDIARIESFORM 10-QFor the Thirty-Nine Weeks Ended February 29, 2004**

| Index                                    |   |   | Page                                                                                                                                                |   |
|------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part I – Financial      Information |   |   |                                                                                                                                                |   |
|                                          |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   | Item 1 – Financial      Statements:                                                                                                            |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |   | Condensed        Consolidated Balance Sheets        February 29, 2004 (Unaudited) and June 1, 2003 |  |  | 3 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |   | Condensed        Consolidated Statements of Operations (Unaudited)        Thirty-Nine Weeks Ended and Thirteen Weeks Ended February 29, 2004 and        March 2, 2003 |  |  | 5 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |   | Condensed        Consolidated Statements of Stockholders’        Equity, (Unaudited) Thirty-Nine Weeks Ended February 29, 2004 |  |  | 6 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |   | Condensed        Consolidated Statements of Cash Flows        (Unaudited), Thirty-Nine Weeks Ended February 29, 2004 and March 2, 2003 |  |  | 7 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |   | Notes        to Condensed Consolidated Financial Statements (Unaudited) |  |  | 8 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   | Item        2 – Management’s Discussion and Analysis of Financial        Condition and Results of Operations                             |        |  | 19 |   |
|                                     |   |   |                                                                                                                                                     |   |   |   |   |   |   |   |
|                                     |   |   | Item      3 – Quantitative and Qualitative Disclosure About Market Risk                                                                        |        |  | 26 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   | Item      4 – Controls and Procedures                                                                                                          |        |  | 26 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   | Part      II – Other Information                                                                                                               |        |  | 27 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   | Item 1                                                                                                                                              |        |  | – Legal      Proceedings |  |  | 27 |   |
|                                     |   |   | Item 2                                                                                                                                              |        |  | – Changes      in Securities and Use of Proceeds |  |  | 27 |   |
|                                     |   |   | Item 3                                                                                                                                              |        |  | – Defaults      upon Senior Securities |  |  | 27 |   |
|                                     |   |   | Item 4                                                                                                                                              |        |  | – Submission      of Matters to a Vote of Security Holders |  |  | 27 |   |
|                                     |   |   | Item 5                                                                                                                                              |        |  | – Other      Information |  |  | 27 |   |
|                                     |   |   | Item 6                                                                                                                                              |        |  | – Exhibits      and Reports on Form 8-K |  |  | 27 |   |
|                                     |   |   | Exhibit      Index                                                                                                                                  |        |  | 27 |   |
|                                     |   |   |                                                                                                                                                |   |   |   |   |   |   |   |
|                                     |   |   | Exhibit 31.1 Section      302 Certification – Chief Executive Officer                                                                          |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |
|                                     |   |   | Exhibit 31.2 Section      302 Certification – Chief Financial Officer                                                                          |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |
|                                     |   |   | Exhibit 32.1 Certification      by John A. Warehime, Chief Executive Officer Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 Exhibit |   |   |   |   |
|                                     |   |   |                                                                                                                                                |   |
|                                     |   |   | Exhibit 32.2 Certification      by Gary T. Knisely, Chief Financial Officer Pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002 Exhibit  |   |   |   |   |

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**PART I  –  FINANCIAL INFORMATIONItem 1.  Financial StatementsHANOVER FOODS CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets**

|                                                       |   |
|-------------------------------------------------------|--------|
| ASSETS                                           |   |   | **February 29,      2004      (Unaudited)** |   |   | **June 1, 2003** |   |
|                                                       |   |
|                                                  |   |   |   |   |   |   |   |
| Current Assets:                                       |   |   |   |   |   |   |   |
| Cash        and Cash Equivalents                      |   |      $      | 1,763,000 |   |      $      | 4,128,000 |   |
| Accounts        and Notes Receivable, Net             |   |   | 30,073,000 |   |   | 25,099,000 |   |
| Accounts        Receivable from Related Parties, Net  |   |   | 183,000 |   |   | 163,000 |   |
| Inventories                                           |   |   |   |   |   |   |   |
| Finished Goods                                        |   |   | 46,524,000 |   |   | 40,746,000 |   |
| Raw Materials and Supplies                            |   |   | 18,135,000 |   |   | 17,562,000 |   |
| Prepaid        Expenses                               |   |   | 2,163,000 |   |   | 2,216,000 |   |
| Prepaid        Income Taxes                           |   |   | 140,000 |   |   | 0 |   |
| Deferred        Income Taxes                          |   |   | 917,000 |   |   | 917,000 |   |
|                                                       |   |
|                                                  |   |   |   |   |   |   |   |
| Total Current Assets                                  |   |   | 99,898,000 |   |   | 90,831,000 |   |
|                                                  |   |
|                                                  |   |   |   |   |   |   |   |
| Property, Plant and Equipment,      at Cost:          |   |   |   |   |   |   |   |
| Land        and Buildings                             |   |   | 58,629,000 |   |   | 53,972,000 |   |
| Machinery        and Equipment                        |   |   | 133,442,000 |   |   | 128,422,000 |   |
| Leasehold        Improvements                         |   |   | 544,000 |   |   | 544,000 |   |
|                                                       |   |
|                                                  |   |   | 192,615,000 |   |   | 182,938,000 |   |
| Less        Accumulated Depreciation and Amortization |   |   | 118,598,000 |   |   | 111,255,000 |   |
|                                                       |   |
|                                                  |   |   | 74,017,000 |   |   | 71,683,000 |   |
| Construction        in Progress                       |   |   | 3,795,000 |   |   | 951,000 |   |
|                                                       |   |
| Total Property, Plant and Equipment                   |   |   | 77,812,000 |   |   | 72,634,000 |   |
|                                                       |   |
| Other Assets:                                         |   |   |   |   |   |   |   |
| Goodwill        & Intangible Assets               |   |   | 4,314,000 |   |   | 3,539,000 |   |
| Other        Assets                                   |   |   | 5,929,000 |   |   | 4,429,000 |   |
|                                                       |   |
| Total Assets                                          |   |      $      | 187,953,000 |   |      $      | 171,433,000 |   |
|                                                       |   |

See accompanying notes to condensed consolidated financial statements.

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**PART  I  –  FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets**

|                                                                                                                                                                                                                                                                |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                     |   |   | **February 29, 2004      (Unaudited)** |   |   | **June 1, 2003** |   |
|                                                                                                                                                                                                                                                                |   |
| Current Liabilities:                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |
| Notes    Payable – Banks                                                                                                                                                                                                                                  |   |      $      | 17,797,000 |   |      $      | 7,634,000 |   |
| Accounts    Payable                                                                                                                                                                                                                                            |   |   | 19,932,000 |   |   | 19,745,000 |   |
| Accounts    Payable to Related Parties – Net                                                                                                                                                                                                              |   |   | 0 |   |   | 7,000 |   |
| Accrued    Expenses                                                                                                                                                                                                                                            |   |   | 11,131,000 |   |   | 10,921,000 |   |
| Current    Maturities of Long-Term Debt                                                                                                                                                                                                                        |   |   | 4,286,000 |   |   | 4,286,000 |   |
| Income    Taxes Payable                                                                                                                                                                                                                                        |   |   | 662,000 |   |   | 1,211,000 |   |
|                                                                                                                                                                                                                                                                |   |
| Total Current Liabilities                                                                                                                                                                                                                                      |   |   | 53,808,000 |   |   | 43,804,000 |   |
|                                                                                                                                                                                                                                                                |   |
| Long-Term Debt, Less Current      Maturities                                                                                                                                                                                                                   |   |   | 22,857,000 |   |   | 25,357,000 |   |
| Other Liabilities                                                                                                                                                                                                                                              |   |   | 7,011,000 |   |   | 5,916,000 |   |
| Deferred Income Taxes                                                                                                                                                                                                                                          |   |   | 2,860,000 |   |   | 3,139,000 |   |
|                                                                                                                                                                                                                                                                |   |
| Total Liabilities                                                                                                                                                                                                                                              |   |   | 86,536,000 |   |   | 78,216,000 |   |
|                                                                                                                                                                                                                                                                |   |
| Stockholders’ Equity:                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |
| Series    A & B 8 1/4% cumulative convertible preferred, $25                                                                                                                                                                                               |   |   |   |   |   |   |   |
| Par      Value, 120,000 shares authorized;       31,056 shares issued at June 1, 2003      and February 29, 2004;       14,564 shares outstanding at June 1, 2003 and February    29, 2004                                                                     |   |   | 776,000 |   |   | 776,000 |   |
| Series      C cumulative convertible preferred, $25 Par Value,       10,000 shares authorized,    issued and outstanding                                                                                                                                       |   |   | 250,000 |   |   | 250,000 |   |
| Common      stock, Class A, non-voting, $25 Par Value;       800,000 shares authorized, 349,353      shares issued         at June 1, 2003 and February 29, 2004; 288,062 shares         outstanding at June 1, 2003 and 288,018 at February 29, 2004          |   |   | 8,733,000 |   |   | 8,733,000 |   |
| Common      stock, Class B, voting, $25 Par Value;       880,000 shares authorized, 649,072      shares issued         at June 1, 2003 and 848,522 at February 29, 2004,       582,198 shares outstanding    June 1, 2003 and 781,648 at     February 29, 2004 |   |   | 21,213,250 |   |   | 16,227,000 |   |
| Capital    Paid in Excess of Par Value                                                                                                                                                                                                                         |   |   | 34,920,850 |   |   | 16,372,000 |   |
| Retained    Earnings                                                                                                                                                                                                                                           |   |   | 84,455,000 |   |   | 76,746,000 |   |
| Treasury    Stock, at Cost                                                                                                                                                                                                                                     |   |   | (8,177,000 | ) |   | (8,172,000 | ) |
| Value        of Shares held in Employee Stock Trust – 146,930 shares         at June 1, 2003 and 344,679 at February 29, 2004                                                                                                                             |   |   | (40,427,100 | ) |   | (17,096,000 | ) |
| Accumulated    Other Comprehensive Loss                                                                                                                                                                                                                        |   |   | (327,000 | ) |   | (619,000 | ) |
|                                                                                                                                                                                                                                                                |   |
| Total Stockholders’ Equity                                                                                                                                                                                                                               |   |   | 101,417,000 |   |   | 93,217,000 |   |
|                                                                                                                                                                                                                                                                |   |
| Total Liabilities and Stockholders’      Equity                                                                                                                                                                                                          |   |      $      | 187,954,000 |   |      $      | 171,433,000 |   |
|                                                                                                                                                                                                                                                                |   |

See accompanying notes to condensed consolidated financial statements.

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**PART I  –  FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Operations – Unaudited**

|                                                    |   |
|----------------------------------------------------|--------|
|                                               |   |   | **Thirty-Nine Weeks Ended** |   |   | **Thirteen Weeks Ended** |   |
|                                               |   |   | ** ** |   |   | ** ** |   |   | ** ** |   |   | ** ** |   |
|                                               |   |   | **February 29,  2004** |   |   | **March 2,  2003** |   |   | **February 29,  2004** |   |   | **March 2,  2003** |   |
|                                                    |   |
| Net Sales                                          |   |      $      | 234,132,000 |   |      $      | 216,485,000 |   |      $      | 83,009,000 |   |      $      | 73,161,000 |   |
| Cost of Goods Sold                                 |   |   | 199,482,000 |   |   | 180,871,000 |   |   | 71,566,000 |   |   | 60,657,000 |   |
|                                                    |   |
| Gross Profit                                       |   |   | 34,650,000 |   |   | 35,614,000 |   |   | 11,443,000 |   |   | 12,504,000 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling Expenses                                   |   |   | 8,962,000 |   |   | 9,712,000 |   |   | 3,143,000 |   |   | 3,586,000 |   |
| Administrative Expenses                            |   |   | 11,087,000 |   |   | 11,277,000 |   |   | 4,009,000 |   |   | 4,364,000 |   |
|                                                    |   |
| Operating Profit                                   |   |   | 14,601,000 |   |   | 14,625,000 |   |   | 4,291,000 |   |   | 4,554,000 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense                                   |   |   | 1,794,000 |   |   | 2,218,000 |   |   | 594,000 |   |   | 708,000 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other (Income) Expenses, Net                       |   |   | (231,000 | ) |   | 230,000 |   |   | (19,000 | ) |   | 75,000 |   |
|                                                    |   |
| Earnings Before Income Taxes                       |   |   | 13,038,000 |   |   | 12,177,000 |   |   | 3,716,000 |   |   | 3,771,000 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Taxes                                       |   |   | 4,569,000 |   |   | 4,338,000 |   |   | 1,365,000 |   |   | 1,407,000 |   |
|                                                    |   |
| Net Earnings                                       |   |   | 8,469,000 |   |   | 7,839,000 |   |   | 2,351,000 |   |   | 2,364,000 |   |
| Dividends on Preferred Stock                       |   |   | 31,000 |   |   | 31,000 |   |   | 10,000 |   |   | 10,000 |   |
|                                                    |   |
| Net Earnings Applicable to                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common    Stock                                    |   |      $      | 8,438,000 |   |      $      | 7,808,000 |   |      $      | 2,341,000 |   |      $      | 2,354,000 |   |
|                                                    |   |
| Earnings Per Share:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Earnings Per Common  Share – Basic   |   |      $      | 8.70 |   |      $      | 10.85 |   |      $      | 2.19 |   |      $      | 3.26 |   |
| Net      Earnings Per Common  Share – Diluted |   |      $      | 8.62 |   |      $      | 10.70 |   |      $      | 2.17 |   |      $      | 3.22 |   |
| Dividends per Share, Common                        |   |      $      | 0.825 |   |      $      | 0.825 |   |      $      | 0.275 |   |      $      | 0.275 |   |
| Basic Weighted Average Shares                      |   |   | 969,620 |   |   | 719,822 |   |   | 1,069,710 |   |   | 721,883 |   |
| Diluted Weighted Average Shares                    |   |   | 982,686 |   |   | 732,888 |   |   | 1,082,776 |   |   | 734,949 |   |
|                                                    |   |

See accompanying notes to condensed  consolidated financial statements.

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**PART I  –  FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Stockholders’ Equity(Unaudited)**

|                                                      |   |   | TotalStockholder’sEquity |   |   | CumulativeConvertiblePreferred StockSeries      A & BShares |   |   | Amount  |   |   | CumulativeConvertiblePreferred StockSeries      CShares |   |   | Amount  |   |   | CommonStockClass AShares |   |   | Amount    |   |   | CommonStockClass BShares |   |   | Amount     |   |   | CapitalPaid      InExcessOf      ParValue |   |   | RetainedEarnings |   |   | TreasuryStockShares |   |   | Amount      |   |   | Employee Stock Trust Shares |   |   | Amount       |   |   | AccumulatedOtherComprehensiveIncome |   |
|-----------------------------------------------------------|--------|--------|--------------------------------|--------|--------|-----------------------------------------------------------------|--------|--------|---------|--------|--------|---------------------------------------------------------|--------|--------|---------|--------|--------|--------------------------|--------|--------|-----------|--------|--------|--------------------------|--------|--------|------------|--------|--------|-------------------------------------------|--------|--------|------------------|--------|--------|---------------------|--------|--------|-------------|--------|--------|-----------------------------|--------|--------|--------------|--------|--------|-------------------------------------|--------|
| Balance,      June 1, 2003                                |   | $      | 93,217,000                     |   |   | 31,056                                                          |   | $      | 776,000 |   |   | 10,000                                                  |   | $      | 250,000 |   |   | 349,353                  |   | $      | 8,733,000 |   |   | 649,072                  |   | $      | 16,227,000 |   | $      | 16,372,000                                |   | $      | 76,746,000       |   |   | 144,657             |   |   | ($8,172,000 | )      |   | 146,930                     |   |   | ($17,096,000 | )      |   | ($619,000                           | )      |
|                                                      |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Net      Earnings for the Period                          |   | $      | 8,469,000                      |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   | $      | 8,469,000        |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Cash      Dividends Per Share:                            |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Preferred – $2.0625 annually                         |   |   | ($31,000                       | )      |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   | ($31,000         | )      |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Common – $1.10 annually                              |   |   | ($729,000                      | )      |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   | ($729,000        | )      |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Issuance      of common stock to                          |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Employee Stock Trust                                      |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Class B 199,450 shares                                    |   | $      |                                |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   | 199,450                  |   |   | 4,986,250  |   |   | 18,548,850                                |   |   |             |   |   |                |   |   |        |   |   | (199,450                    | )      |   | (23,535,100  | )      |   |                                |   |
| Issuance of Common Stock toEmployee Stock Ownership Trust |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   | (1,701                      | )      |   | 204,000      |   |   |                                |   |
| Redemption      of Common Stock                           |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Class A                                                   |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |        | 44                  |   |   | ($5,000     | )      |   |                        |   |   |         |   |   |                                |   |
| Class B                                                   |   | $      | 0                              |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Stock      Conversions                                    |   | $      | 0                              |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Other      Comprehensive Income                           |   |   | 292,000                        |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   | $      | 292,000                             |   |
|                                                      |   |   |                           |   |   |                                                            |   |   |    |   |   |                                                    |   |   |    |   |   |                     |   |   |      |   |   |                     |   |   |       |   |   |                                      |   |   |             |   |   |                |   |   |        |   |   |                        |   |   |         |   |   |                                |   |
| Balance      February 29, 2004                            |   | $      | 101,417,000                    |   |   | 31,056                                                          |   | $      | 776,000 |   |   | 10,000                                                  |   | $      | 250,000 |   |   | 349,353                  |   | $      | 8,733,000 |   |   | 848,522                  |   | $      | 21,213,250 |   | $      | 34,920,850                                |   | $      | 84,455,000       |   |   | 144,701             |   |   | ($8,177,000 | )      |   | 344,679                     |   |   | ($40,427,100 | )      |   | ($327,000                           | )      |

See accompanying notes to condensed  consolidated financial statements.

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**PART I  –  FINANCIAL INFORMATION  Item 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows (Unaudited)**

|                                                                |   |
|----------------------------------------------------------------|--------|
|                                                                |   |   | **Thirty-Nine      Weeks Ended** |   |
|                                                           |   |   | **Feb. 29, 2004** |   |   | **Mar. 2, 2003** |   |
|                                                                |   |
| Cash Flows From:                                               |   |   |   |   |   |   |   |
| Operating Activities:                                          |   |   |   |   |   |   |   |
| Net        Earnings                                            |   |      $      | 8,469,000 |   |      $      | 7,839,000 |   |
| Adjustments        to Reconcile Net Earnings:                  |   |   |   |   |   |   |   |
| To        Net Cash Provided by (Used In) Operating Activities: |   |   |   |   |   |   |   |
| Depreciation        and Amortization                           |   |   | 7,343,000 |   |   | 7,361,000 |   |
| Non        Cash Charge (ESOP Contribution)                     |   |   | 204,000 |   |   | 545,000 |   |
| Deferred        Income Taxes                                   |   |   | (279,000 | ) |   | 44,000 |   |
| Changes        in Assets and Liabilities:                      |   |   |   |   |   |   |   |
| Accounts        Receivable                                     |   |   | (4,403,000 | ) |   | 645,000 |   |
| Inventories                                                    |   |   | (5,701,000 | ) |   | (2,212,000 | ) |
| Prepaid        Expenses                                        |   |   | 74,000 |   |   | 329,000 |   |
| Accounts        Payable and Accrued Expenses                   |   |   | 305,000 |   |   | (1,994,000 | ) |
| Income        Taxes Payable                                    |   |   | (689,000 | ) |   | 100,000 |   |
| Other        Liabilities                                       |   |   | 1,095,000 |   |   | 877,000 |   |
|                                                                |   |
| Net Cash Provided by (Used In)      Operating Activities       |   |   | 6,418,000 |   |   | 13,534,000 |   |
|                                                                |   |
| Investing Activities:                                          |   |   |   |   |   |   |   |
| Decrease        (Increase) in Other Assets                     |   |   | (1,208,000 | ) |   | (566,000 | ) |
| Acquisitions        of Property, Plant and Equipment           |   |   | (8,830,000 | ) |   | (4,180,000 | ) |
| Purchases        of Businesses                                 |   |   | (5,643,000 | ) |   |   |   |
|                                                                |   |
| Net Cash Provided by (Used In)      Investing Activities       |   |   | (15,681,000 | ) |   | (4,746,000 | ) |
|                                                                |   |
| Financing Activities:                                          |   |   |   |   |   |   |   |
| Increase        in Notes Payable                               |   |   | 10,163,000 |   |   | (4,246,000 | ) |
| Proceeds        from issuance of Long Term Debt                |   |   | 0 |   |   | 0 |   |
| Payments        on Long-Term Debt                              |   |   | (2,500,000 | ) |   | (2,509,000 | ) |
| Payment        of Dividends                                    |   |   | (760,000 | ) |   | (748,000 | ) |
| Redemption        of Common Stock                              |   |   | (5,000 | ) |   | (22,000 | ) |
|                                                                |   |
| Net Cash Provided by (Used In)      Financing Activities       |   |   | 6,898,000 |   |   | (7,525,000 | ) |
|                                                                |   |
| Net Increase (Decrease) in Cash      and Cash Equivalents      |   |   | (2,365,000 | ) |   | 1,263,000 |   |
| Cash and Cash Equivalents, Beginning      of Period            |   |   | 4,128,000 |   |   | 2,816,000 |   |
|                                                                |   |
| Cash and Cash Equivalents, End      of Period                  |   |      $      | 1,763,000 |   |      $      | 4,079,000 |   |
|                                                                |   |

See accompanying notes to condensed  consolidated financial statements.

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**PART  I – FINANCIAL INFORMATION  Item 1. Financial Statements, Continued  HANOVER FOODS CORPORATION AND SUBSIDIARIES  Notes to Condensed Consolidated Financial Statements  February 29, 2004   (Unaudited)**

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| (1) | BASIS OF PRESENTATIONThe condensed consolidated financial statements of the Registrant included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Although certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been omitted, the Registrant believes that the disclosures are adequate to make the information presented not misleading.The Corporation’s fiscal year ends at the close of operations on the Sunday nearest to May 31st.  Accordingly, these financial statements reflect activity for the thirteen and thirty-nine week periods ended February 29, 2004 and March 2, 2003.Itis suggested that these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Form 10-K/A for the Corporation’s fiscal year ended June 1, 2003.The condensed consolidated financial statements included herein reflect all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary to present a fair statement of the results of the interim period.The results for the interim periods are not necessarily indicative of trends or results to be expected  for a full fiscal year.Certain reclassifications were made to the prior period financial statements to be consistent with the current period reporting presentation. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)    | SHORT-TERM BORROWINGS      The Corporation and its subsidiaries maintain short-term unsecured lines      of credit with various banks providing credit availability amounting to      $50,000,000 of which $17,797,000 was borrowed at February 29, 2004. The      average cost of funds during thirty-nine week period ended February 29,      2004 was 1.89% compared to 2.34% for the thirty-nine week period ended March      2, 2003. |

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**PART I – FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)**

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| (3) | LONG-TERM DEBT |
|-----|----------------|

|   |                                                                   |
|--------|------------------------------------------------------------------------|
|   | The long-term debt of the Corporation and its subsidiaries consist of: |

|   |                                                                              |   |   |                  |   |   |             |   |
|--------|-----------------------------------------------------------------------------------|--------|--------|-----------------------|--------|--------|------------------|--------|
|   |                                                                              |   |   | **February 29, 2004** |   |   | **June 1, 2003** |   |
|        |                                                                              |
|   | 8.74%    unsecured senior notes payable to an insurance company, due through 2007 |   | $      | 7,143,000             |   | $      | 7,143,000        |   |
|   |                                                                              |   |   |                  |   |   |             |   |
|   | 7.01% unsecured senior notes payable to an insurance company, due through 2011    |   |   | 20,000,000            |   |   | 22,500,000       |   |
|        |                                                                              |
|   | Total Long-Term Debt                                                              |   |   | 27,143,000            |   |   | 29,643,000       |   |
|   |                                                                              |   |   |                  |   |   |             |   |
|   | Less current maturities                                                           |   |   | 4,286,000             |   |   | 4,286,000        |   |
|        |                                                                              |
|   | Net Long-Term Debt                                                                |   | $      | 22,857,000            |   | $      | 25,357,000       |   |
|        |                                                                              |

|   | The senior note agreements and the agreements for seasonal borrowing with financial institutions contain various restrictive provisions including those relating to mergers and acquisitions, additional borrowing, guarantees of obligations, lease commitments, limitations on declaration and payment of dividends, repurchase of the Corporation’s stock, and the maintenance of working capital and certain financial ratios. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                        |
|--------|-------------------------------------------------------------------------------------------------------------|
|   | The Corporation is in compliance with the restrictive provisions in the agreements as of February 29, 2004. |

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**PART I – FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)**

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| (4)    | RELATED PARTY TRANSACTIONSThe Corporation and its subsidiaries, in the normal course of business, purchase and sell goods and services to related parties.   The Corporation believes that the cost of such purchases and sales are competitive with alternative sources of supply and markets. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                            |

|          |                               |   |                                                          | **Thirty-NineWeeks      Ended** |   |                                                          | **Thirteen Weeks      Ended** |   |
|---------------|------------------------------------|--------|---------------------------------------------------------------|---------------------------------|--------|---------------------------------------------------------------|-------------------------------|--------|
|          |                               |   |                                                          | ** **                      |   |                                                          | ** **                    |   |   | ** ** |   |   | ** ** |   |
|          |                               |   |                                                          | **Feb. 29,      2004**          |   |                                                          | **Mar. 2,      2003**         |   |   | **Feb. 29,      2004** |   |   | **Mar. 2,      2003** |   |
|               |                               |
| Revenues:     |                               |   |                                                          |                            |   |                                                          |                          |   |   |   |   |   |   |
|          |                               |   |                                                          |                            |   |                                                          |                          |   |   |   |   |   |   |   |
|          | Park 100 Foods, Inc.               |   |      $      | 942,000                         |   |      $      | 1,643,000                     |   |      $      | 369,000 |   |      $      | 393,000 |   |
|               |                                    |   |
|          |                               |   |                                                          |                            |   |                                                          |                          |   |   |   |   |   |   |   |
| Expenditures: |                               |   |                                                          |                            |   |                                                          |                          |   |   |   |   |   |   |
|          |                               |   |                                                          |                            |   |                                                          |                          |   |   |   |   |   |   |   |
|          |                                    |   |
|          | Park 100 Foods, Inc.               |   |      $      | 19,000                          |   |      $      | 12,000                        |   |      $      | 8,000 |   |      $      | 2,000 |   |
|          |                                    |   |
|          | Warehime Enterprises, Inc.         |   |                                                          | 3,000                           |   |                                                          | 3,000                         |   |   | 1,000 |   |   | 1,000 |   |
|          |                                    |   |
|          | John A. & Patricia M. Warehime |   |                                                          | 30,000                          |   |                                                          | 48,000                        |   |   | 12,000 |   |   | 15,000 |   |
|          |                                    |   |
|          | Lippy Brothers, Inc.               |   |                                                          | 1,108,000                       |   |                                                          | 1,146,000                     |   |   | 14,000 |   |   | 704,000 |   |
|          |                                    |   |
|          | Schaier Travel                     |   |                                                          | 0                               |   |                                                          | 3,000                         |   |   | 0 |   |   | 0 |   |
|          |                                    |   |

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**PART I – FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)**

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The respective June 1, 2003 and February 29, 2004 account balances with related parties are as follows:

|                     |                         |   |   | **February 29, 2004** |   |   | **June 1, 2003** |   |
|--------------------------|------------------------------|--------|--------|-----------------------|--------|--------|------------------|--------|
|                          |                         |
| **Accounts Receivable:** |                         |   |   |                  |   |   |             |
|                     |                         |   |   |                  |   |   |             |   |
|                     | Park 100 Foods, Inc.         |   | $      | 186,000               |   | $      | 163,000          |   |
|                     |                              |   |
|                     |                         |   |   |                  |   |   |             |   |
| **Accounts Payable:**    |                         |   |   |                  |   |   |             |
|                     |                         |   |   |                  |   |   |             |   |
|                     | Park 100 Foods, Inc.         |   |   | 0                     |   |   | 7,000            |   |
|                     | John & Patricia Warehime |   |   | 3,000                 |   |   | 3,000            |   |

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**PART I – FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)**

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| (5) | COMPREHENSIVE INCOMEComprehensive income is determined as follows: |
|-----|--------------------------------------------------------------------|

|                                                                     |   |   |               |   |   |               |   |
|--------------------------------------------------------------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|                                                                     |   |   | **39 Weeks Ended** |   |   | **13 Weeks Ended** |   |
|                                                                     |   |   |               |   |   |               |   |   |   |   |   |   |   |
|                                                                     |   |   | **Feb. 29, 2004**  |   |   | **Mar. 2, 2003**   |   |   | **Feb. 29, 2004** |   |   | **Mar. 2, 2003** |   |
|                                                                          |   |
| Net Income                                                               |   | $      | 8,469,000          |   | $      | 7,839,000          |   | $ | 2,351,000 |   | $ | 2,364,000 |   |
| Other Comprehensive Income (Loss) -Unrealized Gain (Loss) on Investments |   |   | 292,000            |   |   | (270,000           | )      |   | 208,000 |   |   | (183,000 | ) |
|                                                                     |   |        |                    |   |        |                    |   |  |  |   |  |  |   |
|                                                                     |   |   |               |   |   |               |   |   |   |   |   |   |   |
| Comprehensive Income                                                     |   | $      | 8,761,000          |   | $      | 7,569,000          |   | $ | 2,559,000 |   | $  | 2,181,000 |   |
|                                                                     |   |        |                    |   |        |                    |   |  |  |   |  |  |   |
|                                                                     |   |   |               |   |   |               |   |   |   |   |   |   |   |

| (6) | RECONCILIATION OF NUMERATOR AND DENOMINATOR FOR BASICAND DILUTED EARNINGS PER SHARE |
|-----|-------------------------------------------------------------------------------------|

|       |
|--------------------------------|

    Numerator for basis earnings per share:

|                                         |   |   | **39 Weeks Ended** |   |   | **13 Weeks Ended** |   |
|----------------------------------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|                                         |   |   |               |   |   |               |   |   |   |   |   |   |   |
|                                         |   |   | **Feb. 29, 2004**  |   |   | **Mar. 2, 2003**   |   |   | **Feb. 29, 2004** |   |   | **Mar. 2, 2003** |   |
|                                              |   |
| Net earnings applicable to common      stock |   | $      | 8,438,000     |   | $      | 7,808,000     |   | $ | 2,341,000  |   | $ | 2,354,000  |   |
|                                         |   |   |               |   |   |               |   |   |   |   |   |   |   |
| Preferred stock dividends                    |   |   | 31,000             |   |   | 31,000             |   |   | 10,000 |   |   | 10,000 |   |
|                                         |   |        |                    |   |        |                    |   |  |  |   |  |  |   |
|                                         |   |   |               |   |   |               |   |   |   |   |   |   |   |
| Net earnings assuming dilution               |   | $      | 8,469,000          |   | $      | 7,839,000          |   | $ | 2,351,000 |   | $ | 2,364,000 |   |
|                                         |   |        |                    |   |        |                    |   |  |  |   |  |  |   |
| Denominator:                                 |   |   |               |   |   |               |   |   |   |   |   |   |   |
| Basic weighted average shares                |   |   | 969,620            |   |   | 719,822            |   |   | 1,069,710 |   |   | 721,883 |   |
|                                         |   |   |               |   |   |               |   |   |   |   |   |   |   |
| Effect of dilutive securities                |   |   | 13,066             |   |   | 13,066             |   |   | 13,066 |   |   | 13,066 |   |
|                                         |   |        |                    |   |        |                    |   |  |  |   |  |  |   |
|                                         |   |   |               |   |   |               |   |   |   |   |   |   |   |
| Diluted weighted average shares              |   |   | 982,686            |   |   | 732,888            |   |   | 1,082,776 |   |   | 734,949 |   |
|                                         |   |        |                    |   |        |                    |   |  |  |   |  |  |   |

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**PART I – FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)**

| (7) | STOCK OPTION PLAN   On June 20, 2002, the Corporation’s Board of Directors adopted the Hanover Foods Corporation 2002 Stock Option Plan (the “Stock Option Plan”). All officers and key employees of the Corporation and of any present or future parent or subsidiary of the Corporation are eligible to receive options under the Stock Option Plan, excluding John A. Warehime.  No individual may receive options under the Stock Option Plan for more than 15% of the total number of shares of the Corporation’s Class B common stock authorized for issuance under the Stock Option Plan.  34,600 shares of the Corporation’s Class B common stock, par value $25.00 per share, are authorized for issuance under theStock Option Plan, and options to purchase 13,500 shares were granted on June 20, 2002.  Concurrent with the stock option grant on June 20, 2002, the Corporation contributed an additional 13,500 shares of Hanover Class B common stock to the Employee Stock Trust for the purpose of funding obligations under the Stock Option Plan.      On October 17, 2003, the Corporation’s Board of Directors adopted      the Hanover Foods Corporation 2003 Stock Option Plan (the “2003 Option      Plan”). All full-time employees (excluding employees represented by      a collective bargaining agent) of the Corporation and of any present or      future parent or subsidiary of the Corporation who have been employed for      at least one year, excluding John A. Warehime, are eligible to receive options      under the 2003 Option Plan. No individual may receive options under the      2003 Option Plan for more than 5% of the total number of shares of the Corporation’s      Class B common stock authorized for issuance under the 2003 Option Plan.      200,000 shares of the Corporation’s Class B common stock, par value      $25.00 per share, are authorized for issuance under the 2003 Option Plan.      On October 17, 2003, the Board of Directors of the Corporation voted to      make a grant to all full-time, non-union employees of the Corporation who      have been employed by the Corporation for at least one year, other than      John A. Warehime ****except that if an individual is in the employ of      the Corporation or any of its subsidiaries as of October 17, 2003, but has      not been employed for at least one year as of October 17, 2003, once the      one year employment requirement has been satisfied, the employee will receive      stock options, with an option price equal to the appraised fair market value      at the time of the option grant. The Board of Directors granted options      for****199,450 shares of Class B common stock. Under the Plans, the exercise price of stock options is equal to the fair market value of the common stock on the grant date.  The maximum term of stock options is 10 years.  Stock options are accounted for under Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations.  Accordingly, no compensation expense is recorded for stock option grants. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Had compensation expense for all stock and        employee stock purchase plans been determined based upon the fair value        at the grant date for awards under these plans consistent with the method        prescribed under SFAS No. 123, “Accounting for Stock-Based Compensation” as        amended, net (loss) income and (loss) earnings per share would have been    adjusted to the pro forma amounts as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|                                                                                                                                               |   |   | **39      Weeks Ended** |   |   | **13      Weeks Ended** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                                                                                                                                    |   |
|                                                                                                                                               |   |   | **Feb. 29,      2004**  |   |   | **Mar. 2,      2003**   |   |   | **Feb. 29,      2004** |   |   | **Mar. 2,      2003** |   |
|                                                                                                                                                    |   |
| Net earnings applicable to common      stockholders, as reported                                                                                   |   | $      | 8,438,000               |   | $      | 7,808,000               |   | $ | 2,341,000 |   | $ | 2,384,000 |   |
| Deduct: Total stock based employeecompensation expense determined under the fair      value base method for all awards, net of related tax effects |   |   | (60,000                 | )      |   | (60,000                 | )      |   | (20,000 | ) |   | (20,000 | ) |
|                                                                                                                                               |   |        |                    |
| Pro forma net income applicable      to common stock                                                                                               |   | $      | 8,738,000               |   | $      | 7,748,000               |   | $ | 2,321,000 |   | $ | 2,334,000 |   |
|                                                                                                                                               |   |        |                    |
|                                                                                                                                               |   |   |                    |   |   |                    |   |   |   |   |   |   |   |
| Earnings per share:                                                                                                                                |   |   |                    |   |   |                    |   |   |   |   |   |   |   |
| Basic-as reported                                                                                                                                  |   | $      | 8.70                    |   | $      | 10.85                   |   | $ | 2.19 |   | $ | 3.26 |   |
| Basic – pro-forma                                                                                                                             |   | $      | 8.64                    |   | $      | 10.76                   |   | $ | 2.17 |   | $ | 3.23 |   |
| Diluted-as reported                                                                                                                                |   | $      | 8.62                    |   | $      | 10.70                   |   | $ | 2.17 |   | $ | 3.22 |   |
| Diluted-pro forma                                                                                                                                  |   | $      | 8.53                    |   | $      | 10.57                   |   | $ | 2.14 |   | $ | 3.18 |   |

****

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**PART I – FINANCIAL INFORMATIONItem 1.  Financial Statements, ContinuedHANOVER FOODS CORPORATION AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements(Unaudited)**

| (9) | LEGAL MATTERS**Derivative Action**On September 13, 1996, certain Class A shareholders filed a complaint in equity against six of the Corporation’s directors and the estate of a former director in the Court of Common Pleas of York County, Pennsylvania (the complaint).  The suit also names the Corporation as a nominal defendant.  The suit sought various forms of relief including, but not limited to, rescission of the board’s April 28, 1995 approval of John A. Warehime’s 1995 Employment Agreement and the board’s February 10, 1995 adjustment of director’s fees.  (Since the filing of this lawsuit, John A. Warehime’s 1995 Employment Agreement was amended.)  In addition, the plaintiffs sought costsand fees incident to bringing suit.  On November 4, 1996, the complaint was amended to add additional plaintiffs.  On June 24, 1997, the Court dismissed the amended complaint for failure to make a prior demand.  An appeal was filed on the Court’s June 24, 1997 Order.  On December 2, 1998, the Superior Court of Pennsylvania held that the derivative plaintiffs had made adequate demand.On May 12, 1997, a written demand was received by the Corporation from the attorney for those Class A shareholders containing similar allegations and the allegations raised by the Class A common stockholders were investigated by a special independent committee of the Board of Directors and found to be without merit.  The director defendants filed an Answer and New Matter tothe amended complaint on March 17, 1999.  On September 5, 2001, director defendants filed a Motion to Dismiss the Derivative Action.  On September 20, 2001, plaintiffs filed an answer to director defendants’ Motion to Dismiss.  On May 17, 2002, the court entered an order denying defendants’ Motion to Dismiss.  On May 14, 2002, Albert Blakey, Esquire, counsel for certain of the derivative plaintiffs filed a Petition for Fees seeking an award of $1,585,716 in attorney’s fees.  Defendants filed a response in opposition to the request for fees.On January 29, 2003, Albert Blakey, Esquire, counsel for certain derivative plaintiffs filed a Motion for Reconsideration of the Court’s December 31, 2002 denial of the Petition for Fees.  A Response inOpposition to the Motion for Reconsideration of Plantiffs’ Petition for Fees was filed with the Court on February 12, 2003.**Warehime Family Litigation**On February 13, 1997, the Board of Directors proposed an amendment and restatement of the Corporation’s Articles of Incorporation (the “Amended and Restated Articles”) which provides that if all of the following Class B shareholders (or their estates upon the death of such shareholders), Michael A. Warehime, John A. Warehime, Sally W. Yelland, J. William Warehime, and Elizabeth W. Stick (all members of the Warehime family, do not agree in writing to the composition of the Board of Directors or other important matters specified below on or after the 1998 annual shareholders meeting, the trustees ofthe Corporation’s 401(k) Savings Plan (or a similar employee benefit plan), who qualify as disinterested directors acting as fiduciaries for the employees who participate in the Plan, and the Class A shareholders may become entitled to vote in the manner described in the document. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | The Amended and Restated          Articles created a Series C Convertible Preferred Stock , which, in          case of a dispute among the above mentioned members of the Warehime          family on Board of Directors composition or other important matters,          would be entitled to 35 votes per shares (a total of 350,000 votes          based on 10,000 shares of Series C Convertible Preferred Stock issued          to and held by the trustees of the Corporation’s 401(k) Savings          Plan); if Series C Convertible Preferred Stock were entitled to vote          because of such dispute, each share of Class A Common Stock would be          entitled to 1/10th of a vote per share.

The Amended and Restated Articles          also classified the terms of the Board of Directors commencing with          the election at the 1997 annual shareholders’ meeting and permitted          directors to be elected for four-year term as permitted by Pennsylvania          law. Pursuant to the Corporation’s Bylaws, as then in effect,          nominations for directors must be submitted to the Corporation in the          manner prescribed by the Bylaws no later than June 1 of the year in          which the meeting is to occur.

On February 21, 1997, Michael          A. Warehime, a Class B shareholder, and certain Class A shareholders          filed motions for a preliminary injunction against the Corporation,          John A. Warehime, in his capacity as voting trustee, and certain directors          of the Corporation in the Court of Common Pleas of York County, Pennsylvania          against a Proposal of the Board of Directors to amend and restate the          Corporation’s Articles of Incorporation in the manner described          herein.

The motions for a preliminary          injunction were dismissed by the Court on June 24, 1997. The Class          B shareholders on June 25, 1997 approved the Amended and Restated Articles          (John A. Warehime, being the sole Class B shareholder voting affirmatively          in his capacity as voting trustee) and the Amended and Restated Articles          became effective June 25, 1997. 

In August 1997, the Board of          Directors proposed a further amendment (the “Amendment”)          to the Amended and Restated Articles to expand the definition of “disinterested          directors” in the manner described below, and to approve certain          performance based compensation for John A. Warehime solely for the          purpose of making the Corporation eligible for a federal income tax          deduction pursuant to Section 162(m) of the Internal Revenue Code of          1986, as amended. A special meeting was scheduled for August 14, 1997          (the “Special Meeting”) to vote on these proposals. On          August 8, 1997, Michael A. Warehime filed a motion in the Court of          Common Pleas of York County, Pennsylvania to prevent John A. Warehime,          in his capacity as voting trustee from voting on these proposals and          to enjoin the Amendment. This motion was denied by the Court on August          11, 1997. The Amendment and the proposal under Section 162(m) were          approved by Class B shareholders (John A. Warehime was the sole Class          B shareholder to vote affirmatively, in his capacity as voting trustee)          on August 14, 1997 and the Amendment became effective on August 14,          1997.

Under the Amendment, the definition          of “disinterested directors” means a person who, in the          opinion of counsel for the Corporation, meets any of the following          criteria: (i) disinterested directors as defined in Section 1715(e)          of the Pennsylvania Business Corporations Law of 1988, as amended;          (ii) persons who are not “interested” directors as defined          in Section 1.23 of The American Law Institute “Principles of          Corporate Governance: Analysis and Recommendations” (1994); or          (iii) persons who qualify as members of the Audit Committee pursuant          to Section 303.00 of the New York Stock Exchange’s Listed Company    Manual. |
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|   | Michael A. Warehime filed          an appeal from the denial of his motion to enjoin the previously described          Amendment to the Corporation’s Amended and Restated Articles.          On December 2, 1998, a majority panel of the Superior Court of Pennsylvania          issued a decision holding that although John A. Warehime had acted          in good faith in voting for the Amendment to the Amended and Restated          Articles as trustee of the Warehime voting trust, he had breached his          fiduciary duty to the beneficiaries of the Warehime voting trust in          voting for the Amendment. On November 29, 1999, the Supreme Court of          Pennsylvania granted a petition for allowance of appeal, filed by John          A. Warehime, and granted a cross-petition for appeal filed by Michael          A. Warehime.

On August 13, 1999, Michael          A. Warehime filed a complaint in equity in the Court of Common Pleas          of York County, Pennsylvania, naming as defendants Arthur S. Schaier,          Cyril T. Noel, Clayton J. Rohrbach, Jr., John A. Warehime, and the          Corporation. The complaint sought a court order declaring that the          September 1999 election for the Board of Directors of the Corporation          be conducted in accordance with the Articles of Incorporation of the          Corporation as they existed prior to June 25, 1997, an order declaring          that the Series C Convertible Preferred Stock cannot be voted, and          an order that the following candidates for the Board of Directors of          the Corporation proposed by Michael A. Warehime, Sally Yelland, Elizabeth          Stick and J. William Warehime be accepted by the Corporation and listed          on the ballot to be distributed at the annual meeting of shareholders          of the Corporation to be held on September 16, 1999: Michael A. Warehime,          Daniel Meckley, Elizabeth Stick, Sonny Bowman, and John Denton. The          basis for the complaint was the December 2, 1998 decision of the Superior          Court of Pennsylvania which held that John A. Warehime breached his          fiduciary duties in voting for the Amended and Restated Articles as          trustee of the Warehime voting trust. The requested relief was denied          by the Court of Common Pleas of York County and Michael Warehime appealed          to the Superior Court of Pennsylvania.

On September 12, 2000, the          Superior Court of Pennsylvania stated, in a Memorandum decision, that          the June 25, 1997 shareholder vote, which adopted the Amended and Restated          Articles of the Corporation should be set aside, and remanded the case          to the Court of Common Pleas of York County to determine what further          relief would be appropriate. On remand, the Court of Common Pleas of          York County entered an Order on October 10, 2000 declaring that the          Amended and Restated Articles of Incorporation were set aside and that          an election should be held without the Amended or Restated Articles.          On October 11, 2000, the Supreme Court of Pennsylvania entered an Order          staying the Order of the Court of Common Pleas of York County.

On November 27, 2000, the Supreme          Court of Pennsylvania reversed and remanded the Order of the Superior          Court issued on December 2, 1998 and, in effect, the Order of the Superior          Court issued September 12, 2000. In reversing the Superior Court’s          Order, the Supreme Court of Pennsylvania held that John A. Warehime,          the trustee of the voting trust, did not breach his fiduciary duties          in voting the trust shares in favor of the Amended and Restated Articles          of Incorporation. The Supreme Court remanded the case to the Superior          Court of Pennsylvania to consider other issues raised by Michael A.          Warehime

On May 4, 2001, the Superior          Court of Pennsylvania, on remand from the Supreme Court of Pennsylvania          to decide several remaining issues, held that the 1997 amendments to          the Corporation’s Amended and Restated Articles of Incorporation “violated          principles of corporate democracy” and should be invalidated          even though the Superior Court found the directors acted in good faith          and their actions in approving the amendments did not result in a breach          of their fiduciary duties. A petition for allocatur was filed with          the Supreme Court of Pennsylvania requesting that the Supreme Court          of Pennsylvania review the Superior Court’s May 4, 2001 ruling.          On September 17, 2002, the Supreme Court of Pennsylvania granted the          petition for allocatur and oral argument was heard in the matter on    May 13, 2003. |
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|   | On December 12, 2002, Michael          Warehime filed an Emergency Application for Expedited Relief with the          Pennsylvania Supreme Court in the Warehime v. Warehime  appeal          concerning the election of directors noticed for December 23, 2002.          The Pennsylvania Supreme Court denied Michael Warehime’s emergency          application on December 20, 2002.

On December 12, 2002, Michael          Warehime filed a Motion for Relief under the Warehime v. Schaier caption          in the York County Court of Common Pleas. Michael Warehime’s          motion requested, interalia, that Hanover Foods Corporation’s          December 23, 2002 election be conducted according to the Articles of          Incorporation as they existed prior to June 25, 1997. Following a hearing          on December 20, 2002, the York County Court of Common Pleas denied          Michael Warehime’s Motion for Relief. On January 17, 2003 Michael          Warehime appealed the Court’s denial of his Motion for Relief          to the Superior Court of Pennsylvania. Oral argument was heard in this          matter before the Superior County on January 13, 2004.

The Corporation is involved          in various other claims and legal actions arising in the ordinary course          of business. In the opinion of management, the ultimate disposition          of these matters will not have a material adverse effect on the Corporation’s    consolidated financial position, results of operations or liquidity. |
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|             |                                                                                                                                                                                                                                                                                                                                                                                                             |
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| (10)   | SUBSEQUENT EVENTIn March 2004, Aunt Kitty’s Foods, Inc. a wholly owned subsidiary of the Corporation purchased substantially all of the assets of a canned food processing company located in New Jersey in a foreclosure sale for $6,400,000.  The operation of the acquired company will be included in the consolidated financial statements of Hanover Foods Corporation from the date of acquisition. |

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**PART I – FINANCIAL INFORMATIONItem 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of OperationsHANOVER FOODS CORPORATION AND SUBSIDIARIES**

**FORWARD LOOKING STATEMENTS**

When used in this Annual Report, the words or phrases “will likely result”, “are expected to”, “will continue”, “is anticipated”, “estimate”, “projected”, or similar expressions are intended to identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are subject to certain risks and uncertainties, including but not limited to quarterly fluctuations in operating results, competition, state and federal regulation, environmental considerations, and foreign operations. Such factors, which are discussed in the Form 10-Q, could affect the Company’s financial performance and could cause theCompany’s actual result for future periods to differ materially from any opinion or statements expressed herein with respect to future periods.  As a result, the Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made.

The following comments should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in the Corporation’s Annual Report on Form 10-K/A for the fiscal year ended June 1, 2003.

**GENERAL**

Prices for processed food tend to rise with overall inflation and not in line with prices of raw farm products.  Generally, price surges in farm products due to material supply reductions and crop problems are not passed on to consumers dollar for dollar.  Management believes consumers often switch from one food product that has risen to another which has not changed in price.  As a result, food processors tend to absorb raw farm product price increases to remain competitive.  However, when raw farm product prices drop, food processors try to retain some of the savings.  The Corporation does not expect the overall number of pounds of product consumed to significantly increase over the next several years.  Generally, the Corporation expects salesgrowth by processors beyond expected inflation rates and population growth will come at the expense of and loss of market share by another processor.  Sales growth can increase internationally  and through promotions to increase consumption through the introduction of new or improved food products.

**RESULTS OF OPERATIONS****NET SALES**

Consolidated net sales were $234.1 million for the thirty-nine week period ended February 29, 2004.  This represents an increase of 8.2% over the thirty-nine week period ended March 2, 2003 consolidated net sales of $216.5 million.  Consolidated net sales were $83.0 million for the thirteen week period ended February 29, 2004, a 13.5% increase from the consolidated net sales of $73.2 million for the corresponding period in the prior year.  The increase in consolidated net 

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**PART I – FINANCIAL INFORMATIONItem 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of OperationsHANOVER FOODS CORPORATION AND SUBSIDIARIES**

sales for the thirty-nine week period was due to increased refrigerated and fresh food sales as well as increases in our snacks, branded sales, private label, and food service sales.  These increases were partially offset by decreases in industrial and canned mushroom sales.  The increase in consolidated net sales for the thirteen week period was due to increases in refrigerated and fresh food sales as well as increases in our snacks, branded, private label, industrial and food service sales.

**COST OF GOODS SOLD**

Cost of goods sold were $199.5 million, or 85.2% of consolidated net sales in the thirty-nine week period ended February 29, 2004 and $180.9 million, or 83.5% of consolidated net sales for the corresponding period in 2003.  Cost of goods sold were $71.6 million, or 86.2% of consolidated net sales for the thirteen week period ended February 29, 2004 as compared to $60.7 million, or 82.9% of consolidated net sales for the corresponding period in 2003.  The increase in cost of goods sold as a percentage or net sales resulted primarily from the increases in refrigerated food sales and private label snacks at a higher cost of sales percentage as compared to other sales of the Company as well as higher energy, health care costs and raw commodity priceincreases without a corresponding increase in prices due to competition pressures.  The increase cost of goods sold as a percentage of net sales for the thirteen week period resulted primarily from higher energy costs, health care costs and raw commodity prices as well as higher cost of goods percentage in our refrigerated foods sales and private label snack sales as well as frozen industrial sales which have increased for the quarter ended February 29, 2004

**GROSS MARGIN**

Gross margins were $34.7 million,  or 14.8% of consolidated net sales in the thirty-nine week period ended February  29, 2004 and $35.6 million, or 16.5% of consolidated net sales for the corresponding  period in 2003. Gross margins were $11.4 million, or 13.8% of consolidated net  sales for the thirteen week period ended February 29, 2004 as compared to $12.5  million, or 17.1% of consolidated net sales for the corresponding period in  2003. The decrease in gross margins as a percentage of net sales for both the  thirty-nine week and thirteen-week periods resulted primarily from higher energy  costs, increases in health care costs and higher raw commodity costs as well  as lower gross margins in our refrigerated food sales and private label snack  sales which increased for the period. During the thirteen week period ended  February 29, 2004 our industrial frozen sales increased 19%, which have lower  margins than other sales areas of the corporation.

**SELLING EXPENSES**

Selling expenses were $9.0 million, or 3.8% of consolidated net sales for the thirty-nine week period ended February 29, 2004 as compared to $9.7 million or 4.5% of consolidated net sales for the corresponding period in 2003.  Selling expense were $3.1 million or 3.8% of consolidated net 

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**PART I – FINANCIAL INFORMATIONItem 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of OperationsHANOVER FOODS CORPORATION AND SUBSIDIARIES**

sales for the thirteen week period ended February 29, 2004 as compared to $3.6 million, or 4.9% of consolidated net sales during the corresponding period in 2003.  The decrease in selling expense for both periods reflects lower customer advertising dollars, lower customer fees on promotion charges due to faster processing of the data as well as lower package design expenses.

**ADMINISTRATIVE EXPENSES**

Administrative expenses were $11.1    million, or 4.7% of consolidated net sales for the thirty-nine week period    ended February    29, 2004 as compared to $11.3 million, or 5.2% of consolidated net sales    for the corresponding period in 2003. Administrative expenses were $4.0 million,    or 4.8% of consolidated net sales for the thirteen week period ended February    29, 2004 as compared to $4.4 million, or 6.0% or consolidated net sales for    the corresponding period in 2003. The decrease in administration expense    for both the thirty-nine and thirteen week period reflects lower workmen’s    compensation insurance reserves at Hanover Insurance Company Limited, a wholly-owned    subsidiary of Hanover Foods Corporation, and lower 401K and ESOP contribution    reserves, off-set by increases in the provision for the supplemental pensionbenefits.

**INTEREST EXPENSE**

Interest expense was $1.8 million for the thirty-nine week period ended February 29, 2004 as compared to $2.2 million for the same period in 2003.   Interest expense was $.6 million for the thirteen week period ended February 29, 2004 as compared to $.7 million for the same period in 2003.  The decreases in both periods reflects lower average borrowings as well as lower average borrowing rate for the periods compared to 2003.

The average seasonal borrowings were $11.5 million for the thirty-nine week period ended February 29, 2004 a decrease of $7.3 million compared to the corresponding period in 2003.  The average seasonal borrowing rate was 1.92% for the thirty-nine week period ended February 29, 2004 a decrease of .48% compared to the corresponding period in 2003.  The average seasonal borrowings was $16.9 million for the thirteen week period ended February 29, 2004 an increase of $.2 million compared to the corresponding period in 2003.  The average seasonal borrowing rate was 1.84% for the thirteen week period ended February 29, 2004 a decrease of .57% compared to the corresponding period in 2003.

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**PART I – FINANCIAL INFORMATIONItem 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of OperationsHANOVER FOODS CORPORATION AND SUBSIDIARIES**

**OTHER (INCOME) EXPENSES**

Other income was $.2 million for the thirty-nine week period ended February 29, 2004 as compared to other expense of $.2 million for the same period in 2003.  Other income, net was $19,000 for the thirteen week period ended February 29, 2004 as compared to other expenses, net of $75,000 for the same period in 2003.  The increase in other income for the thirty-nine week period is due from income generated from the sales of investments.  The decrease in other expenses for the thirteen week period is due to an decrease in the foreign translation loss for the current period compared to the prior year, and income generated from the sales of investments.

**INCOME TAXES**

The provision for corporate federal  and state income taxes for the thirty-nine week period ended February 29, 2004  was $4.6 million, or 35.0% of pretax earnings, as compared to $4.3 million,  or 35.6% of pre-tax earnings for the same period in 2003. The provisions for  corporate federal and state income taxes for the thirteen week period ended  February 29, 2004 was $1.4 million, or 37.3% of pre-tax earnings as compared  to $1.4 million, or 37.7% of pre-tax earnings for the same period in 2003. The  decrease in the effective tax rate for the thirty-nine week period is primarily  due to increased earnings in jurisdiction with lower effective tax for the current  period as compared to the prior period. The decrease in the effective tax rate  for the thirteen week period is primarily due to increased earnings in jurisdiction  with lower effective tax rates in the current period as compared to the prior  period.

**LIQUIDITY AND CAPITAL RESOURCES**

The discussion and analysis of the Corporation’s liquidity and capital resources should be read in conjunction with the Consolidated Statements of Cash Flows, contained elsewhere herein.

**OPERATING ACTIVITIES**

Net working capital was $46.1 million at February 29, 2004 and $47.0 million at June 1, 2003.  The current ratios were 1.86 on February 29, 2004 and 2.07 on June 1, 2003.

Cash provided in operating activities for the thirty-nine week period ended February 29, 2004 was $6.4 million as compared to cash provided from operating activities of $13.5 million during the same period of 2003. The uses of cash during the thirty-nine week period consisted primarily of an increase in finished goods inventory and an increase in accounts and notes receivable partially offset by sources of cash attributed to earnings and increases in accounts payable and accrued expenses and other liabilities.

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**PART I – FINANCIAL INFORMATIONItem 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of OperationsHANOVER FOODS CORPORATION AND SUBSIDIARIES**

**ACQUISITIONS**

On December 12, 2003, Bickel’s Snack Foods, Inc. purchased Wege Pretzel Company real estate, equipment, motor vehicles, accounts receivable and inventory owned by LDI, Inc., Hanover, PA for $4,200,000.

On February 29, 2004, Spring Glen Fresh Foods, Inc. purchased certain assets of Sunsprout of Lancaster County, Inc. for $1,443,000.

**INVESTING ACTIVITIES**

During the thirty-nine week period  ended February 29, 2004, the Corporation spent approximately $8.8 million for  the purchase of plant upgrades, expansions and acquisitions. This compares to  $3.3 million spent during the same period last year for capital projects. During  the thirty-nine week period the market value of investments increased $1.4 million  compared to the same period last fiscal year and the Corporation recorded $.8  million of goodwill due to the acquisition of Sunsprout Corp. of Lancaster,  PA on February 29, 2004.

**FINANCING ACTIVITIES**

The increase in notes payable of approximately $10.1 million during the thirty-nine week period ended February 29, 2004 represents borrowings made against available seasonal lines of credit from financial institutions for use in operations and plant upgrades, expansions and acquisitions.

The Corporation has available seasonal lines of credit from financial institutions in the amount of $50.0 million, of which $17.8 million was utilized as of February 29, 2004.  Additional borrowing is permitted within prescribed parameters in existing debt agreements, which contain certain performance covenants.  

The Company believes that it has sufficient working capital and availability from seasonal lines of credit to meet its cash flow needs.

The following table summarizes the Corporation’s contractual obligations and other commitments as of  February 29, 2004:

|                          |   |   |       |   |   | **Payment Due    by Period** |   |   |          |   |
|-------------------------------|--------|--------|------------|--------|--------|------------------------------|--------|--------|---------------|--------|
|                          |   |   |       |   |   |                              |   |
| **Contractual Obligations**   |   |   | **Total**  |   |   | **1 Year**                   |   |   | **2-3 Years** |   |   | **4-5 Years** |   |   | **After5 Years** |   |
|                          |   |        |            |   |        |                              |   |        |               |   |  |  |   |  |  |   |
| Short-Term Notes Payable      |   | $      | 17,797,000 |   | $      | 17,797,000                   |   | $      | -0-           |   | $ | -0- |   | $ | -0- |   |
| Long-Term Debt                |   |   | 27,143,000 |   |   | 4,286,000                    |   |   | 8,572,000     |   |   | 6,785,000 |   |   | 7,500,000 |   |
| Operating Leases              |   |   | 1,121,000  |   |   | 433,000                      |   |   | 470,000       |   |   | 218,000 |   |   | -0- |   |
|                          |   |        |            |   |        |                              |   |        |               |   |  |  |   |  |  |   |
| Total contractual obligations |   | $      | 46,061,000 |   | $      | 22,516,000                   |   | $      | 9,042,000     |   | $ | 7,003,000 |   | $ | 7,500,000 |   |
|                          |   |        |            |   |        |                              |   |        |               |   |  |  |   |  |  |   |

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**PART I – FINANCIAL INFORMATIONItem 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of OperationsHANOVER FOODS CORPORATION AND SUBSIDIARIES**

In the current fiscal year, the Company is obligated to purchase 6,000,000 lbs. of tomato paste from California Tomato Products, Colusa, California.  Effective March 15, 2004, the Company contracted to purchase a minimum of 5,000,000 lbs. of tomato paste per year from The Morningstar Packing Company L.P., Los Banos, California until June 30, 2007.  The current market price of tomato paste is 28¢/lb. FOB California.

The Company’s sources of liquidity are primarily funds from operations and available amounts under three (3) seasonal lines of credit. One line expires on October 29, 2004, the second line expires on October 31, 2004 and the third line expires on January 28, 2005.  They are expected to be renewed in the ordinary course of business.

**NEW ACCOUNTING STANDARDS**

In May 2003, the FASB issued SFAS No. 150 *Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.*  The statement establishes standards for how an issuer classifies and measure certain financial instruments with characteristics of both liabilities and equity.  It requires that an issuer to classify a financial instrument within its scope as a liability (or an asset in some circumstances).  The statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  Adoption of the Statement did not have any impact on our consolidated financial statements.

**APPLICATION OF CRITICAL ACCOUNTING POLICIES**

Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires the Corporation to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.  Many of the estimates and assumptions require significant judgment.  Future actual results could differ from those estimates and assumptions and could have a significant impact on our consolidated results of operations, financial position and cash flows.  

The following accounting policies, estimates and assumptions are particularly sensitive because of their significance on the preparation of the Corporation’s consolidated financial statements:  

|   | • | The allowance for potentially uncollectible receivables and pending deductions requires management to make significant judgments in estimating future amounts to be received.  Our judgments are based upon historical experience and current market conditions.  Changes in estimates could be impacted as a result of events, such as a deterioration of the credit status of customers or material reductions in product and sales volumes. |
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|   | • | Determination of liabilities for pension and post-retirement benefits includes significant assumptions and estimates relating to compensation and health care cost trends, discount rates and rate of return on plan assets.  The assumptions are based upon current market and health care trends. |
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|   | • | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows estimated to be generated by such assets.  If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets.  However, determining fair value is subject to estimates of both cash flows and interest rates and different estimates could yield different results.  There are no events or changes in circumstances of which management is aware indicating that thecarrying value of the Corporation’s long-lived assets may not be recoverable. |

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|   | • | Effective June 1, 2002, the Corporation adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142).  In accordance with SFAS 142, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed at least annually for impairment.  As required by SFAS 142, management performed transitional impairment testing during the third quarter and annual impairment testing of goodwill and indefinite-lived intangible assets during the fourth quarter of fiscal year 2003.  These tests confirmed that the fair value of the Corporation’s reporting units exceeds their carrying values, and that no impairment loss needed to be recognized for goodwill upon the adoption of SFAS 142.The annual evaluation of goodwill and other indefinite-lived intangible assets requires the use of estimates about future operating results for each reporting unit to determine their estimated fair value.  Changes in forecasted operations can materially affect these estimates.  Additionally, other changes in the estimates and assumptions, including the discount rate and expected long-term growth rate, which drive the valuation techniques employed to estimate the fair value of goodwill and other indefinite-lived intangible assets could change and, therefore, impact the assessments of impairment in the future. |

The footnotes to the consolidated financial statements provide additional information on accounting policies and assumptions used by the Corporation.

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**PART I – FINANCIAL INFORMATIONItem 3.  Quantitative and Qualitative Disclosures About Market RiskHANOVER FOODS CORPORATION AND SUBSIDIARIES**

There are no material changes to the disclosures on this matter provided in the Company’s Annual Report on Form 10-K for the fiscal year ended June 1, 2003, and the Company’s Report on Form 10-Q for the Quarterly Period ended February 29, 2004.

**PART I – FINANCIAL INFORMATIONItem 4. Controls and ProceduresHANOVER FOODS CORPORATION AND SUBSIDIARIES**

As of February 29, 2004, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective in timely alerting them to material information required to be disclosed by the Company in the reports that it files with the SEC under the Securities Exchange Act of 1934, as amended, during the period that the report is being prepared.  There were no significant changes in the Company’s internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation.  As a result, no corrective actions were taken.

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**PART II – OTHER INFORMATIONHANOVER FOODS CORPORATION AND SUBSID IARIES**

ITEM 1.  LEGAL PROCEEDINGS

See note 9 of the Notes of Condensed Consolidated Financial Statements in this form 10-Q for information regarding the 1995 Warehime Family Litigation and the Derivative Action.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS – None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES – None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS – None

ITEM 5.  OTHER INFORMATION – None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K – None

(a) EXHIBITS

Exhibit 31.1 Section 302 Certification – Chief Executive Officer

Exhibit 31.2 Section 302 Certification – Chief Financial Officer

Exhibit 32.1  906 Certification –  Chief Executive Officer 

Exhibit 32.2  906 Certification – Chief Financial Officer

(b) REPORTS ON FORM 8-K – None

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**SIGNATURE**

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

|                   |   |   | HANOVER FOODS CORPORATION |                                                                                                |
|------------------------|--------|--------|---------------------------|-----------------------------------------------------------------------------------------------------|
|                   |   |   |                      |                                                                                                |   |
|                   |   |   |                      |                                                                                                |   |
| Date:   April 14, 2004 |   |   | By:                       | */s/ Pietro Giraffa*                                                                                |   |
|                   |   |   |                      | —————————————                      |   |
|                   |   |   |                      | Pietro GiraffaVice President & ControllerChief Accounting Officer(Principal Accounting Officer) |   |
|                   |   |   |                      |                                                                                                |   |
|                   |   |   | By:                       | */s/ Gary T. Knisely*                                                                               |   |
|                   |   |   |                      | —————————————                      |   |
|                   |   |   |                      | Gary T. KniselyExecutive Vice PresidentChief Financial Officer                                      |   |

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| **Item S-K   Exhibit Number** | **Description**                                                                                                              |
|-------------------------------|------------------------------------------------------------------------------------------------------------------------------|
|                          |                                                                                                                         |
|                          |                                                                                                                         |
| Exhibit 31.1                  | Section 302 Certification – Chief Executive Officer                                                                     |
|                          |                                                                                                                         |
| Exhibit 31.2                  | Section 302 Certification – Chief Financial Officer                                                                     |
|                          |                                                                                                                         |
| Exhibit 32.1                  | Certification by John A. Warehime, Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit |
|                          |                                                                                                                         |
| Exhibit 32.2                  | Certification by Gary T. Knisely, Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit  |
|                          |                                                                                                                         |

29

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