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UNITED
STATESSECURITIES
AND EXCHANGE COMMISSIONWASHINGTON,
D.C. 20549

---

FORM
      10-Q

| | QUARTERLY
        REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
    OF 1934
| | ---------------------------------------------------------------------------------------------------

For the quarterly period ended August 29, 2004


OR

| | TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
| | ----------------------------------------------------------------------------------------------------

For the transition period from
___________ to
____________


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 of                        |  | (I.R.S. Employer   
|incorporation
    or organization)                         |  | Identification No.)
|                                                           |  |                    
|1486 York Street, P.O. Box 334, Hanover, PA                |  | 17331              
|                                                           |  |                    
|(Address
    of principal executive offices)               |  | (Zip Code)         
|                                                           |  |                    
|717-632-6000                                              
|                                                          
|(Registrants
      telephone
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 (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes      No


Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.   YesNo


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


|Class                |  | Outstanding at September 30, 2004
|-------------------- |  | ---------------------------------
|                     |  |                                  
|Class A Common Stock |  | 287,996 shares                   
|Class B Common Stock |  | 781,648 shares                   
|                     |  |                                  
|                     |  |                                  

|
|
|
|




HANOVER FOODS CORPORATION AND SUBSIDIARIESFORM
10-QFor the Thirteen
Weeks Ended August 29, 2004

|Index                                                                     | Page
|------------------------------------------------------------------------- | ----
|                                                                          |     
|Part
         I  Financial
    Information                               |     
|                                                                          |     
|Item
    1  Financial Statements:                                        |     
|                                                                          |     
|Condensed Consolidated Balance Sheets                                     |     
|August 29, 2004 (Unaudited) and May 30, 2004                              | 1   
|                                                                          |     
|Condensed Consolidated Statements of Operations (Unaudited)               |     
|Thirteen Weeks Ended August 29, 2004 and
    August 31, 2003              | 3   
|                                                                          |     
|                                                                          |     
|Condensed
    Consolidated Statements of Stockholders                    |     
|Equity (Unaudited)                                                        | 4   
|                                                                          |     
|Condensed Consolidated Statements of Cash Flows                           |     
|(Unaudited), Thirteen Weeks Ended August 29, 2004 and
    August 31, 2003 | 5   
|                                                                          |     
|                                                                          |     
|Notes to Condensed Consolidated Financial Statements                      |     
|(Unaudited)                                                               | 6   
|                                                                          |     
|Item
    2  Managements Discussion and Analysis of Financial            |     
|Condition and Results of Operations                                       | 17  
|                                                                          |     
|Item
      3  Quantitative and Qualitative Disclosures About Market Risk | 22  
|                                                                          |     
|Item
      4  Controls and Procedures                                    | 22  
|                                                                          |     
|Part
    II  Other Information                                           | 23  
|                                                                          |     
|Item
    1  Legal Proceedings                                            | 23  
|Item
    2  Unregistered Sales of Equity Securities and Use of Proceeds  | 23  
|Item
    3  Defaults Upon Senior Securities                              | 23  
|Item
    4  Submission of Matters to a Vote of Security Holders          | 23  
|Item
    5  Other Information                                            | 23  
|Item
    6  Exhibits                                                     | 23  

i

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PART I – FINANCIAL
INFORMATIONITEM 1. FINANCIAL STATEMENTSHANOVER
FOODS CORPORATION AND SUBSIDIARIESCondensed
Consolidated Balance Sheets

|                                              |   | August
      29, 2004 |  |   | May
      30, 2004 | 
|--------------------------------------------- | - | --------------------- |  | - | ------------------ | 
|ASSETS                                        |   | (Unaudited)           |  |   |                    | 
|                                              |   |                       |  |   |                    | 
|Current Assets:                               |   |                       |  |   |                    | 
|Cash and Cash Equivalents                     | $ | 2,619,000             |  | $ | 3,015,000          | 
|Accounts and Notes Receivable, Net            |   | 32,786,000            |  |   | 30,323,000         | 
|Accounts Receivable from Related Parties, Net |   | 455,000               |  |   | 275,000            | 
|Inventories                                   |   |                       |  |   |                    | 
|Finished Goods                                |   | 67,625,000            |  |   | 46,779,000         | 
|Raw Materials and Supplies                    |   | 16,394,000            |  |   | 17,027,000         | 
|Prepaid Income Taxes                          |   | 1,114,000             |  |   | 611,000            | 
|Prepaid Expenses                              |   | 6,627,000             |  |   | 6,347,000          | 
|Deferred Income Taxes                         |   | 917,000               |  |   | 917,000            | 
|                                              |   |                       |  |   |                    | 
|Total Current Assets                          |   | 128,537,000           |  |   | 105,294,000        | 
|                                              |   |                       |  |   |                    | 
|Property, Plant and Equipment, at Cost:       |   |                       |  |   |                    | 
|Land and Buildings                            |   | 61,075,000            |  |   | 63,585,000         | 
|Machinery and Equipment                       |   | 136,421,000           |  |   | 135,029,000        | 
|Leasehold Improvements                        |   | 544,000               |  |   | 544,000            | 
|                                              |   |                       |  |   |                    | 
|                                              |   | 198,040,000           |  |   | 199,158,000        | 
|Less Accumulated Depreciation and             |   |                       |  |   |                    | 
|Amortization                                  |   | 115,713,000           |  |   | 121,028,000        | 
|                                              |   |                       |  |   |                    | 
|                                              |   | 82,327,000            |  |   | 78,130,000         | 
|Construction in Progress                      |   | 1,080,000             |  |   | 5,975,000          | 
|                                              |   |                       |  |   |                    | 
|Total Property, Plant and Equipment           |   | 83,407,000            |  |   | 84,105,000         | 
|                                              |   |                       |  |   |                    | 
|Other Assets:                                 |   |                       |  |   |                    | 
|Goodwill                                      |   | 2,070,000             |  |   | 2,070,000          | 
|Intangible Assets                             |   | 2,274,000             |  |   | 2,274,000          | 
|Other Assets                                  |   | 5,710,000             |  |   | 5,645,000          | 
|                                              |   |                       |  |   |                    | 
|Total Assets                                  | $ | 221,998,000           |  | $ | 199,388,000        | 
|                                              |   |                       |  |   |                    | 

See
accompanying notes to condensed consolidated financial statements.

1

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Back to Index

PART
  I – FINANCIAL INFORMATION
  ITEM 1. FINANCIAL STATEMENTS
  HANOVER FOODS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets


LIABILITIES
AND STOCKHOLDERS EQUITY

|                                                         |   | August
    29, 2004 |   |   | May
    30, 2004 |  
|-------------------------------------------------------- | - | ------------------- | - | - | ---------------- | -
|                                                         |   |                     |   |   |                  |  
|Current
    Liabilities:                                 |   |                     |   |   |                  |  
|Notes
    Payable – Banks                                | $ | 36,777,000          |   | $ | 21,609,000       |  
|Accounts
    Payable                                     |   | 25,267,000          |   |   | 23,393,000       |  
|Accounts
    Payable to Related Parties, Net             |   | 9,000               |   |   | 32,000           |  
|Accrued
    Expenses                                     |   | 17,745,000          |   |   | 14,011,000       |  
|Current
    Maturities of Long-Term Debt                 |   | 4,286,000           |   |   | 4,286,000        |  
|Income
    Taxes Payable                                 |   | 0                   |   |   | 302,000          |  
|                                                         |   |                     |   |   |                  |  
|Total Current Liabilities                                |   | 84,084,000          |   |   | 63,633,000       |  
|                                                         |   |                     |   |   |                  |  
|Long-Term Debt, Less Current Maturities                  |   | 21,071,000          |   |   | 21,071,000       |  
|Other Liabilities                                        |   | 8,027,000           |   |   | 7,636,000        |  
|Deferred Income Taxes                                    |   | 2,828,000           |   |   | 2,948,000        |  
|                                                         |   |                     |   |   |                  |  
|Total Liabilities                                        |   | 116,010,000         |   |   | 95,288,000       |  
|                                                         |   |                     |   |   |                  |  
|Stockholders Equity:                                    |   |                     |   |   |                  |  
|Series
    A & B 8 1/4% cumulative convertible preferred |   | 776,000             |   |   | 776,000          |  
|Series
    C cumulative convertible preferred            |   | 250,000             |   |   | 250,000          |  
|Common
    stock, Class A, non-voting                    |   | 8,733,000           |   |   | 8,733,000        |  
|Common
    stock, Class B, voting                        |   | 21,213,250          |   |   | 21,213,250       |  
|Capital
    Paid in Excess of Par Value                  |   | 34,913,850          |   |   | 34,913,850       |  
|Retained
    Earnings                                    |   | 89,185,000          |   |   | 87,424,000       |  
|Treasury
    Stock, at Cost                              |   | (8,379,000          | ) |   | (8,379,000       | )
|Employee
    Stock Trust                                 |   | (40,403,100         | ) |   | (40,419,100      | )
|Accumulated
    Other Comprehensive Income               |   | (301,000            | ) |   | (412,000         | )
|                                                         |   |                     |   |   |                  |  
|Total
    Stockholders Equity                           |   | 105,988,000         |   |   | 104,100,000      |  
|                                                         |   |                     |   |   |                  |  
|Total
    Liabilities and Stockholders Equity           | $ | 221,998,000         |   | $ | 199,388,000      |  
|                                                         |   |                     |   |   |                  |  

See accompanying notes to condensed consolidated financial statements.

2

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Back to Index

PART I–FINANCIAL INFORMATION
  ITEM 1. FINANCIAL STATEMENTS,
  HANOVER FOODS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)

|                                                   |   | Thirteen
      Weeks Ended |  
|-------------------------------------------------- | - | -------------------------- | -
|                                                   |   |                            |  
|                                                   |   | August
    29, 2004        |  
|                                                   |   |                            |  
|Net Sales                                          | $ | 79,681,000                 |  
|Cost of Goods Sold                                 |   | 69,330,000                 |  
|                                                   |   |                            |  
|Gross Profit                                       |   | 10,351,000                 |  
|                                                   |   |                            |  
|Selling Expenses                                   |   | 2,983,000                  |  
|Administrative Expenses                            |   | 3,997,000                  |  
|                                                   |   |                            |  
|Operating Profit                                   |   | 3,371,000                  |  
|                                                   |   |                            |  
|Interest Expense                                   |   | 610,000                    |  
|                                                   |   |                            |  
|Other (Income) Loss, Net                           |   | (136,000                   | )
|                                                   |   |                            |  
|Earnings Before Income Taxes                       |   | 2,897,000                  |  
|Income Taxes                                       |   | 914,000                    |  
|                                                   |   |                            |  
|Net Earnings                                       |   | 1,983,000                  |  
|Dividends on Preferred Stock                       |   | 10,000                     |  
|                                                   |   |                            |  
|Net Earnings
       Applicable to Common
    Stock | $ | 1,973,000                  |  
|                                                   |   |                            |  
|Earnings Per Share:                                |   |                            |  
|Net
    Earnings Per Common Share  Basic          | $ | 2.72                       |  
|Net
    Earnings Per Common Share  Diluted        | $ | 2.68                       |  
|Dividends per Share, Common                        | $ | 0.275                      |  
|Basic Weighted Average Shares                      |   | 725,171                    |  
|Diluted Weighted Average Shares                    |   | 738,868                    |  
|                                                   |   |                            |  

See accompanying notes to condensed consolidated
    financial statements.

3

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Back to Index

PART
  I–FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HANOVER FOODS CORPORATION
  AND SUBSIDIARIESCondensed
  Consolidated Statements of Stockholders Equity
(Unaudited)



|                                   |               |   | Cumulative       |  |          |  | Cumulative     |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   |               |   | 
|---------------------------------- | ------------- | - | ---------------- |  | -------- |  | -------------- |  | -------- |  | ------------- |  | ---------- |  | ------------- |  | ----------- |  | ------------- |  | ----------- | - | -------- |  | ----------- | - | -------- | - | ------------ | - | ------------- | - | 
|                                   |               |   | Convertible      |  |          |  | Convertible    |  |          |  |               |  |            |  |               |  |             |  | Capital       |  |             |   |          |  |             |   |          |   |              |   |               |   | 
|                                   |               |   | Preferred        |  |          |  | Preferred      |  |          |  | Common        |  |            |  | Common        |  |             |  | Paid
      In |  |             |   |          |  |             |   | Employee |   |              |   | Accumulated   |   | 
|                                   | Total         |   | Stock            |  |          |  | Stock          |  |          |  | Stock         |  |            |  | Stock         |  |             |  | Excess        |  |             |   | Treasury |  |             |   | Stock    |   |              |   | Other         |   | 
|                                   | Stockholders |   | Series
      A   |  |          |  | Series
      C |  |          |  | Class
      A |  |            |  | Class
      B |  |             |  | Of
      Par  |  | Retained    |   | Stock    |  |             |   | Trust    |   |              |   | Comprehensive |   | 
|                                   | Equity        |   | &
      B Shares |  | Amount   |  | Shares         |  | Amount   |  | Shares        |  | Amount     |  | Shares        |  | Amount      |  | Value         |  | Earnings    |   | Shares   |  | Amount      |   | Shares   |   | Amount       |   | Income        |   | 
|                                   |               |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   |               |   | 
|Balance,
      
      May 30, 2004 | $104,100,000  |   | 31,056           |  | $776,000 |  | 10,000         |  | $250,000 |  | 349,353       |  | $8,733,000 |  | 848,522       |  | $21,213,250 |  | $34,913,850   |  | $87,424,000 |   | 144,723  |  | ($8,379,000 | ) | 344,672  |   | ($40,419,100 | ) | ($412,000     | ) | 
|Purchase
      of Stock by         |               |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   |               |   | 
|Employee
      Stock               |               |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   |               |   | 
|Ownership
      Plan               | $16,000       |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   | (133     | ) | ($16,000     | ) |               |   | 
|Net Earnings
      for the Period  | $1,983,000    |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  | $1,983,000  |   |          |  |             |   |          |   |              |   |               |   | 
|Cash Dividends
      Per Share:    |               |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   |               |   | 
|Preferred – $2.0625
      annually | ($10,000      | ) |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  | ($10,000    | ) |          |  |             |   |          |   |              |   |               |   | 
|Common – $1.10
      annually      | ($212,000     | ) |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  | ($212,000   | ) |          |  |             |   |          |   |              |   |               |   | 
|Other Comprehensive
      Income   | $111,000      |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   | $111,000      |   | 
|                                   |               |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   |               |   | 
|Balance
      August 29, 2004      | $105,988,000  |   | 31,056           |  | $776,000 |  | 10,000         |  | $250,000 |  | 349,353       |  | $8,733,000 |  | 848,522       |  | $21,213,250 |  | $34,913,850   |  | $89,185,000 |   | 144,723  |  | ($8,379,000 | ) | 344,539  |   | ($40,403,100 | ) | ($301,000     | ) | 
|                                   |               |   |                  |  |          |  |                |  |          |  |               |  |            |  |               |  |             |  |               |  |             |   |          |  |             |   |          |   |              |   |               |   | 

See
  accompanying notes to condensed consolidated financial statements.

4

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Back to Index

PART
  I–FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HANOVER FOODS CORPORATION
  AND SUBSIDIARIES
  Condensed Consolidated Statements of Cash Flows
(Unaudited)

|                                                            | Thirteen
      Weeks Ended |                      
|----------------------------------------------------------- | -------------------------- | ---------------------
|                                                            |                            | August
      29, 2004
|                                                            |                            |                      
|Cash Flows
      From:                                      |                            |                      
|Operating
      Activities:                                 |                            |                      
|Net
      Earnings                                          | $                          | 1,983,000            
|Adjustments
      to Reconcile Net Earnings:                |                            |                      
|To
      Net Cash Used In Operating Activities:             |                            |                      
|Depreciation
      and Amortization                         |                            | 2,395,000            
|Deferred
      Income Taxes                                 |                            | (120,000             
|Gain
      on Disposal of Property, Plant and Equipment     |                            | (301,000             
|Changes
      in Assets and Liabilities:                    |                            |                      
|Accounts
      Receivable                                   |                            | (2,643,000           
|Inventories                                                 |                            | (20,213,000          
|Prepaid
      Expenses and Other Assets                     |                            | (234,000             
|Accounts
      Payable and Accrued Expenses                 |                            | 5,585,000            
|Income
      Taxes Payable                                  |                            | (805,000             
|Other
      Liabilities                                     |                            | 391,000              
|                                                            |                            |                      
|Net Cash
      (Used In) Operating Activities               |                            | (13,962,000          
|                                                            |                            |                      
|Investing
      Activities:                                 |                            |                      
|Decrease
      (Increase) in Other Assets                   |                            |                     
|Acquisitions
      of Property, Plant and Equipment         |                            | (2,590,000           
|Proceeds
      on Disposal of Property, Plant and Equipment |                            | 1,194,000            
|                                                            |                            |                      
|Net Cash
      (Used In) Investing Activities               |                            | (1,396,000           
|                                                            |                            |                      
|Financing
      Activities:                                 |                            |                      
|Increase
      in Notes Payable                             |                            | 15,168,000           
|Payment
      of Dividends                                  |                            | (222,000             
|Issuance
      of Common Stock                              |                            | 16,000               
|                                                            |                            |                      
|Net Cash
      Provided by Financing Activities             |                            | 14,962,000           
|                                                            |                            |                      
|Net Increase
      (Decrease) in Cash and Cash Equivalents  |                            | (396,000             
|Cash and
      Cash Equivalents, Beginning of Period        |                            | 3,015,000            
|                                                            |                            |                      
|Cash and
      Cash Equivalents, End of Period              | $                          | 2,619,000            
|                                                            |                            |                      

See
  accompanying notes to condensed consolidated financial statements.

5

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Back to Index

PART
  I–FINANCIAL INFORMATION
  ITEM 1. FINANCIAL STATEMENTSHANOVER
  FOODS CORPORATION AND SUBSIDIARIESNotes to Condensed
  Consolidated Financial Statements
(Unaudited)

|(1) | BASIS
    OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The condensed
        consolidated financial statements of Hanover Foods Corporation (the Corporation)
        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 annual financial statements
        prepared in accordance with accounting principles generally accepted
        in the United States of America has been omitted, the Corporation 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
    week periods ended August 29, 2004 and August 31, 2003.                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | It is
        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
    May 30, 2004.                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 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
        amounts in prior periods have been reclassified to conform with classifications
    made in the current period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

6

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PART
  I–FINANCIAL INFORMATION 
  ITEM1. FINANCIAL STATEMENTSHANOVER FOODS
  CORPORATION AND SUBSIDIARIESNotes to Condensed
  Consolidated Financial Statements
(Unaudited)

|(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 $36,777,000 and $21,609,000 were outstanding at August 29, 2004
        and May 30, 2004, respectively. The average cost of funds during the
        thirteen week period ended August 29, 2004 was 2.18% compared to 1.91%
    for the thirteen week period ended August 31, 2003.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(3) | LONG-TERM
    DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The long-term
    debt of the Corporation and its subsidiaries consists of:                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                                                                    |            | August
    29, 2004 |            |   | May
    30, 2004 | 
| | -------------------------------------------------------------------------------------------------- | ---------- | ------------------- | ---------- | - | ---------------- | 
| |                                                                                                    |           
| | 8.74%
         unsecured senior notes payableto
         an insurance company, duethrough
    2007 | $          | 5,357,000           |            | $ | 5,357,000        | 
| |                                                                                                    |            |                     |            |   |                  | 
| | 7.01%
         unsecured senior notes payable to
    an insurance company, due through 2011        | 20,000,000 |                     | 20,000,000 |  
| |                                                                                                    |            |                     |            |   |                  | 
| |                                                                                                    |           
| | Total
    Long-Term Debt                                                                           |            | 25,357,000          |            |   | 25,357,000       | 
| |                                                                                                    |            |                     |            |   |                  | 
| | Less current
    maturities                                                                        |            | 4,286,000           |            |   | 4,286,000        | 
| |                                                                                                    |           
| | Net Long-Term
    Debt                                                                             | $          | 21,071,000          |            | $ | 21,071,000       | 
| |                                                                                                    |           

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, guarantee of obligations,
        lease commitments, limitations to declare or pay dividends, repurchase
        stock, and the maintenance of working capital and certain financial ratios
        and change in control. Based on the requirements of the agreements at
        August 29, 2004, $45,289,000 of retained earnings are restricted from
    distribution.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | The Corporation
        was in compliance with the restrictive provisions in the agreements as
    of August 29, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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PART I – FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HANOVER FOODS CORPORATION AND SUBSIDIARIES
Notes to Condensed
Consolidated Financial Statements
(Unaudited)

|(4) | RELATED PARTY
    TRANSACTIONS                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                             
|    | The Corporation
        and its subsidiaries, in the normal course of business, purchase and
        sell goods and services to related parties. Transactions with related
    parties are summarized below:

|                                        |                      |         |                     |  
|--------------------------------------- | -------------------- | ------- | ------------------- | -
|                                        | Thirteen Weeks Ended |        
|                                        |                      |        
|                                        | August
    29, 2004  |         | August
    31, 2003 |  
|                                        |                      |         |                     |  
|Revenues:                               |                      |         |                     |  
|Park
         100 Foods, Inc.           | $                    | 752,000 |                     | $
|                                        |                      |         |                     |  
|Expenditures:                           |                      |         |                     |  
|Park
         100 Foods, Corp.          |                      | 8,000   |                     |  
|Warehime
         Enterprises, Inc.     |                      | 1,000   |                     |  
|John
         A. & Patricia M. Warehime |                      | 16,000  |                     |  
|Lippy
         Brothers, Inc.           |                      | 220,000 |                     |  
|                                        |                      |         |                     |  

8

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PART I – FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HANOVER FOODS CORPORATION AND SUBSIDIARIES
Notes to Condensed
Consolidated Financial Statements
(Unaudited)

The respective August 29, 2004 and May 30, 2004 account balances with related
      parties are as follows:


|                         | August
    29, 2004 |         | May
    30, 2004 |  
|------------------------ | ------------------- | ------- | ---------------- | -
|                         |                     |         |                  |  
|Accounts Receivable:     |                     |         |                  |  
|Park
    100 Foods, Inc. | $                   | 455,000 |                  | $
|                         |                     |         |                  |  
|Accounts Payable:        |                     |         |                  |  
|Lippy
    Brothers, Inc. |                     | 9,000   |                  |  
|                         |                     |         |                  |  

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PART I – FINANCIAL
INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
HANOVER FOODS CORPORATION AND SUBSIDIARIES
Notes to Condensed
Consolidated Financial Statements
(Unaudited)

|(5) | COMPREHENSIVE
    INCOME
|--- | ------------------------

Comprehensive income is determined as follows:

|                                                              | 13
           Weeks Ended |          
|------------------------------------------------------------- | ------------------------- | ---------
|                                                              |                           |          
|                                                              | August 29, 2004           |          
|                                                              |                           |          
|Net Income                                                    | $                         | 1,983,000
|                                                              |                           |          
|Other
    Comprehensive Income Unrealized Gain on Investments |                           | 111,000  
|                                                              |                           |          
|Comprehensive Income                                          | $                         | 2,094,000
|                                                              |                           |          
|                                                              |                           |          

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

|                                                  |                 | 13 Weeks Ended |                
|------------------------------------------------- | --------------- | -------------- | ---------------
|                                                  |                 |                |                
|                                                  | August 29, 2004 |                | August 31, 2003
|                                                  |                 |                |                
|Numerator for basic earnings per share:           |                 |                |                
|Net earnings
       applicable tocommon
    stock | $               | 1,973,000      |                
|Preferred stock dividends                         |                 | 10,000         |                
|                                                  |                 |                |                
|Net earnings assuming dilution                    | $               | 1,983,000      |                
|                                                  |                 |                |                
|Denominator:                                      |                 |                |                
|Basic weighted average shares                     |                 | 725,171        |                
|Effect of dilutive securities                     |                 | 13,697         |                
|                                                  |                 |                |                
|Diluted weighted average shares                   |                 | 738,868        |                

10

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PART I – FINANCIAL INFORMATIONITEM
    1. FINANCIAL STATEMENTS
  HANOVER FOODS CORPORATION AND SUBSIDIARIES
  Notes 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 and on October 17, 2003, adopted
    the Hanover Foods Corporation 2003 Stock Option Plan. 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.


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
methodology prescribed under SFAS No. 123, Accounting for Stock-Based Compensation, as
amended, our net income and earnings per share would have been adjusted to the
pro forma amounts as follows:


In
  thousands, except (per share date)

|                                                                                                                                                       | Thirteen Weeks Ended |          
|------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------- | ---------
|                                                                                                                                                       |                      |          
|                                                                                                                                                       | August 29, 2004      |          
|                                                                                                                                                       |                      |          
|Net Income  as reported                                                                                                                               | $                    | 1,983,000
|Deduct:
       Total stock-based employee compensation expense determined under fair
    value based method for all awards, net of related tax effects |                      | 20,000   
|                                                                                                                                                       |                      |          
|Pro forma net income                                                                                                                                   | 1,963,000            |          
|Earnings per share:                                                                                                                                    |                      |          
|Basic as
         reported                                                                                                                            | $                    | 2.72     
|Basic  pro
    forma                                                                                                                                  | $                    | 2.70     
|Diluted  as reported                                                                                                                                  | $                    | 2.68     
|Diluted  pro forma                                                                                                                                    | $                    | 2.66     

Since the determination of fair value of all stock options granted includes variable factors, including volatility, and additional stock option grants are expected to be made each year, the above pro forma disclosures are not representative of pro forma effect on reported net income and earnings per share for future years.


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PART I – FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HANOVER FOODS CORPORATION AND SUBSIDIARIES
Notes to Condensed
Consolidated Financial Statements
(Unaudited)

|(8) | 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, recission 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 costs and 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 to the 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 in Opposition to the Motion for Reconsideration of Plaintiffs Petition
for Fees was filed with the Court on February 12, 2003.


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PART I – FINANCIAL
INFORMATIONITEM
  1.  FINANCIAL STATEMENTSHANOVER
  FOODS CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)

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 of the 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.


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.


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PART I–FINANCIAL
INFORMATIONITEM
    1.  FINANCIAL STATEMENTSHANOVER FOODS CORPORATION AND SUBSIDIARIES
  Notes to Condensed Consolidated Financial Statements
  (Unaudited)

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.


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 ofPennsylvania
granted a petition for allowance of appeal, filed by John A. Warehime, and granted
a cross-petition for appeal filed by Michael A. Warehime.




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PART I – FINANCIAL
INFORMATIONITEM
      1.  FINANCIAL STATEMENTS
  HANOVER FOODS
  CORPORATION AND SUBSIDIARIES
  Notes to Condensed
  Consolidated Financial Statements
(Unaudited)

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 September 17, 2002, the
Supreme Court of Pennsylvania granted defendants petition for Allowance
of Appeal.


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PART I FINANCIAL
INFORMATION
ITEM 1. FINANCIAL STATEMENTS HANOVER FOODS CORPORATION
AND SUBSIDIARIES Notes to Condensed Consolidated
Financial Statements 
(Unaudited)

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.


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, inter alia, 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 Court
of Pennsylvania on January 13, 2004. On April 22, 2004, the Superior Court of
Pennsylvania issued a memorandum reversing the December 22, 2002 decision by
the York County Court of Common Pleas
and remanding for further proceedings.


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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PART 1  FINANCIAL
INFORMATIONITEM 2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

When used in this Quarterly
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, foreign operations and a change of control as a
result of the pending Warehime family litigation. Such factors, which are discussed
in the Form 10-Q, could affect the financial performance of Hanover Foods Corporation
(as used herein the term Corporation or Company refers
to Hanover Foods Corporation and its consolidated subsidiaries) and could cause
the Companys actual results 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.


GENERAL OVERVIEW

The Corporation is a vertically integrated processor of food products which operates
through seven (7) wholly-owned subsidiaries, Tri-Co. Foods Corp., Consumers Packing
Company, Spring Glen Fresh Foods, Inc., Hanover Insurance Company, Ltd., Nittany
Corporation, Bickels Snack Foods, Inc. and Aunt Kittys Foods, Inc.
Tri-Co. Foods Corp. has two (2) wholly-owned subsidiaries: Sunwise Corporation
and Mayapac, S.A.


The Corporation is involved in the growing, processing, canning, freezing, freeze-drying,
packaging, marketing and distribution of its products under its own trademarks
as well as other branded, customer and private labels. The Corporation has operations
in eleven plants in Pennsylvania, one plant in Maryland, one plant in Delaware,
one plant in New Jersey and two plants in Guatemala. The Corporation and its
subsidiaries, in the normal course of business, purchase and sell goods and services
to related parties.


The Corporation enjoys the strongest retail sales of its products in the mid-Atlantic
states and Florida. Introduction of frozen ethnic blends, specialty vegetables
and fruits, canned pasta, frozen soft pretzels, refrigerated food, canned and
frozen mushrooms and snack food products has enabled the Corporation to increase
and expand its distribution throughout the eastern seaboard. Distribution in
the remainder of the United States is limited to food service, military and industrial
customers.


The Corporations operations are affected by the growing cycle of the vegetables
it processes. The Corporations business can be positively or negatively
affected by weather conditions nationally and the resulting impact on crop yields.
Favorable weather conditions can


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PART 1  FINANCIAL
INFORMATIONITEM 2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

produce high crop yields and an over-supply situation in a given year. This over-supply
typically will result in depressed selling prices and reduced profitability to
the Corporation
on the inventory produced from that years crops. Excessive rain or drought
conditions can produce low crop yields and a shortage situation. This shortage
typically will result in higher selling prices and increased profitability to
the Corporation. While the national supply situation controls the pricing, the
supply can differ regionally because of variations in weather. Because many of
the raw materials processed by the Corporation are agricultural crops, production
of products using these crops is predominantly seasonal. As a result, the Corporation
needs access to working capital financing to meet its production requirements
during these periods.

The Corporation markets its products under the brand names HANOVER, HANOVER FARMS,
MYERS, PHILLIPS, GIBBS,
SUPERFINE, MARYLAND CHIEF, MITCHELLS, DUTCH FARMS, SUNWISE, O&C (jarred
onions only), SPRING GLEN FRESH FOODS, SUNNYSIDE FOODS, NOTTINGHAM, BICKELS,
BON TON, YORK SNACKS, CABANA, DRAPER KING COLE, VENICE MAID, AUNT KITTYS
and HARVEST CHOICE. The products sold by the Corporation under these brand names
include canned vegetables, beans and pasta as well as frozen vegetables, frozen
meat products, food entrees, refrigerated and fresh foods, canned and frozen
mushrooms and potato chips.


Intense competition and continued consolidation in the food processing industry
also impact the Corporations results of operations. Large nationally recognized
competitors with greater resources than the Corporation can reduce profit margins
for the Corporations products. Consolidation resulting from acquisitions
by these large competitors has made it more difficult for the Corporation to
increase its market share.


See Managements Discussion and Analysis of Financial Condition and Results of Operations contained in Form 10-K (Amendment No. 1) for the fiscal year ended May 30, 2004 for a description of the Companys
  critical accounting policies and related party transactions.


RESULTS OF OPERATIONS

Three Months Ended August 29, 2004 Compared to Three Months Ended August 31, 2004

Net Sales

Consolidated net sales were $79.7 million for the thirteen week period ended
August 29, 2004. This represents an increase of 19.1% over the thirteen week
period ended August 31, 2003. The increase of $12.8 million was primarily due
to increased sales of food service, industrial frozen, and core snacks partially
offset by decreases in branded retail, core refrigerated foods and core private
label sales. The acquisitions of Venice Maid Foods, Sunsprout of Lancaster and
Wege Pretzel Company during the third and fourth quarters of fiscal 2004 accounted
for 67% of the net sales increase for the period.


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**PART
  1  FINANCIAL INFORMATION
  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

Cost of Goods Sold

Costs
  of goods sold were $69.3 million, or 86.9% of consolidated net sales in the
  thirteen week period ended August 29, 2004 and $57.3 million or 85.6% of consolidated
  net sales for the corresponding period in 2003. The increase in cost of goods
  sold as a percentage of net sales reflects higher energy, health care, labor,
  outside frozen storage and commodity costs.


Selling
  Expenses

Selling
  expenses were $3.0 million, or 3.8% of consolidated net sales for the thirteen
  week period ended August 29, 2004 as compared to $2.9 million, or 4.3% of consolidated
  net sales for the corresponding period in 2003. The increase represents selling
  expenses associated with our new acquisitions during the latter part of the
  last fiscal year.


Administrative
  Expenses

Administrative
    expenses were $4.0 million, or 5.0% of consolidated net sales for the thirteen
    week period ended August 29, 2004 as compared to $3.7 million, or 5.6% of
    consolidated net sales for the corresponding period in 2003. The increase
    in administrative expenses represents expenses associated with our new acquisitions
  during the latter part of the last fiscal year.


Interest
  Expense

Interest
  expense was $.6 million for the thirteen week period ended August 29, 2004 as
  compared to $.6 million for the same period in 2003.


Income
  Taxes

The
  provision for corporate federal and state income taxes for the thirteen week
  period ended August 29, 2004 was $914,000, or 31.5% of pre-tax earnings as compared
  to $818,000 or, 31.1% of pre-tax earnings for the same period in 2003. The small
  increase in the effective tax rate is primarily due to increased earnings in
  jurisdictions with higher effective tax rates in the current period as compared
  to the prior period.


Net Earnings

Net
  earnings was $1.973 million for the thirteen week period ended August 29, 2004,
  as compared to $1.8 million for the same period in 2003, as a result of the
  factors discussed above.


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**PART
  1  FINANCIAL INFORMATION
  ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
  FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

LIQUIDITY
  AND CAPITAL RESOURCES

The
  discussion and analysis of the Corporations liquidity and capital resources
  should be read in conjunction with the consolidated statement of cash flows,
  contained elsewhere herein and the Managements Discussion and Analysis
  of Financial Condition and Results of Operations contained in Form 10-K (Amendment
  No. 1) for the fiscal year ended May 30, 2004.


Operating
  Activities

Net
  working capital was $44.5 million at August 29, 2004 and $41.7 million at August
  31, 2003. The current ratios were 1.53 on August 29, 2004 and 1.66 on August
  31, 2003.


Cash used
    in operating activities for the thirteen week period ended August 29, 2004
    was $14.0 million as compared to cash used in operating activities of $6.0
    million during the same period of 2003. The uses of cash during the thirteen
    week period consisted primarily of an increase in finished goods inventory
    to cover increased sales and an increase in accounts receivable partially
    offset by sources of cash attributed to earnings and an increase in accounts
    payable and accrued expenses.


Investing
Activities

During
  the thirteen week period ended August 29, 2004, the Corporation spent approximately
  $2.6 million for the purchase of plant upgrades and expansions. This compares
  to $2.3 million spent during the same period last fiscal year for capital projects.
  Proceeds from the sale of property, plant and equipment generated $1.2 million
  in cash for the period.


Financing
  Activities

The
  increase in notes payable of approximately $15.2 million during the thirteen
  week period ended August 29, 2004 represents borrowings made against available
  seasonal lines of credit from financial institutions for use in operations and
  plant upgrades and expansion.


The Corporation
    has available seasonal lines of credit from financial institutions in the
    amount of $50.0 million, of which $36.8 million was utilized as of August
    29, 2004. Additional borrowing is permitted within prescribed parameters in
    existing debt agreements, which contain certain performance covenants. For
    a discussion of the terms of the lines of credit, including covenants, see
    Managements Discussion and Analysis of Financial Condition and
    Results of Operations  Liquidity and Capital Resources contained
    in the Form 10-K (Amendment No. 1) for the fiscal year ended May 30, 2004.


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**PART
  1  FINANCIAL INFORMATION****ITEM
  2. MANAGEMENTS DISCUSSION AND ANALYSIS OF****FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS**

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 August 29, 2004:


|                                    |           |            |                  | **Payment
      Due by Period** |                    
|----------------------------------- | --------- | ---------- | ---------------- | ------------------------------- | -------------------
|                                    |           |            |                  |                                 |                    
|                                    |           |            |                  | **Less
      than**             |                    
|**Contractual
      Obligation**    | **Total** |            | **1
      Year** |                                 | **1-3
      Years**
|                                    |           |            |                  |                                 |                    
|                                    |           |            |                  |                                 |                    
|Short-Term
      Notes Payable      | $         | 36,777,000 |                  | $                               | 36,777,000         
|Long-Term
      Debt                |           | 25,357,000 |                  |                                 | 4,286,000          
|Operating
      Leases              |           | 1,716,000  |                  |                                 | 808,000            
|                                    |           |            |                  |                                 |                    
|Total contractual
      obligations | $         | 63,850,000 |                  | $                               | 41,871,000         
|                                    |           |            |                  |                                 |                    

Currently,
    the Company is obligated to purchase 6,000,000 pounds of tomato paste from
    California Tomato Products, Colusa, California in each of the fiscal years
    from 2003 through 2006, at a price based on annual cost of production. The
    current market price of tomato paste is 28¢/lb. FOB California.


The
  Companys sources of liquidity are primarily funds from operation and available
  amounts under three (3) seasonal lines of credit. The two lines expire 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. The Company further expects to
  draw down upon the entire amount of these lines as necessary for the operation
  of its business.


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PART
      I  FINANCIAL INFORMATIONITEM
  3. QUANTITATIVE AND QUALITATIVEDISCLOSURES
ABOUT MARKET RISK

There are no material changes to the disclosures on this matter provided in the
Companys Form 10-K (Amendment No. 1) for the fiscal year ended May 30,
2004.


ITEM
  4. CONTROLS AND PROCEDURES

The Corporation, under the supervision and with the participation of its management,
including its principal executive officer and principal financial officer, evaluated
the effectiveness of the design and operation of its disclosure controls and
procedures as of the end of the period covered by this report. Based on this
evaluation, the principal executive officer and principal financial officer concluded
that the Corporations disclosure controls and procedures are effective
in reaching a reasonable level of assurance that information required to be disclosed
by the Corporation in the reports that it files or submits under the Securities
Exchange Act of 1934, as amended (the Exchange Act), is recorded,
processed, summarized and reported within the time period specified in the Securities
and Exchange Commissions
rules and forms.


There were no changes
to internal control over financial reporting (Internal Control) which
occurred during the quarter ended August 29, 2004 that materially affected or
which are reasonably likely to materially affect Internal Control.


A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Corporation have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Corporation conducts periodic evaluations to enhance, where necessary its procedures and controls.


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PART
  II  OTHER INFORMATION

ITEM
  1. LEGAL PROCEEDINGS

See Note 8 of the Notes to Condensed Consolidated Financial Statements in this
Form 10-Q for information regarding the 1995 Warehime Family Litigation and the
Derivative Action, which is incorporated into this Item 1 by reference.


ITEM
  2. UNREGISTERED SALES OF EQUITY SECURITIES AND THE 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

On
      August 25, 2004, the Corporation adopted procedures by which its shareholders
      may recommend	nominees to the Corporations board of directors as
      required by Item 7(d)(2)(ii)(G) of Schedule 14A under the Exchange Act.
      Information regarding these procedures was previously disclosed in the
      Corporations Form 10-K (Amendment No. 1) for the fiscal year ended
      May 30, 2004.


ITEM
  6. EXHIBITS

The following exhibits are filed herewith:


|Exhibit      |  | Description                                                                                                                        
|------------ |  | -----------------------------------------------------------------------------------------------------------------------------------
|             | 
|Exhibit 11   |  | Computation
       of Earnings per Share, incorporated by reference to Note 6 of the Notes
    to Consolidated Financial Statements
|             |  |                                                                                                                                    
|Exhibit 31.1 |  | Section
    302 Certification  Chief Executive Officer                                                                            
|             |  |                                                                                                                                    
|Exhibit 31.2 |  | Section
    302 Certification  Chief Financial Officer                                                                            
|             |  |                                                                                                                                    
|Exhibit 32.1 |  | Section 906 Certification                                                                                                          
|             |  |                                                                                                                                    

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SIGNATURES

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: October
    13, 2004 | By:                          
|                           |                              
|                           |                              
|                           |                              
|                           |                              
|                           |                              
|                           |                              
|                           | By:                          
|                           |                              
|                           |                              
|                           |                              
|                           |                              
|                           |                              
|                           |                              

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|EXHIBIT
      INDEX
|-------------------
|                   
|Exhibit            
|                   
|Exhibit
      11   
|                   
|Exhibit
      31.1 
|                   
|Exhibit
      31.2 
|                   
|Exhibit
      32.1 
|                   

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