SECURITIES AND EXCHANGE COMMISSION 	Washington, D.C. 20549 	FORM 10-Q 	QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) 	OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended ___January 31, 1995 Commission File Number 1-4183 			 CHOCK FULL O' NUTS CORPORATION 	(Exact Name of Registrant As Specified In Its Charter) 							 New York 13-0697025 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 370 Lexington Avenue, New York, N.Y. 10017 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (212) 532-0300 			Indicate by check mark whether the registrant (1) 			has filed all reports required to be filed by Section 			13 or 15 (d) of the Securities Exchange Act of 1934 			during the preceding 12 months (or for such shorter 			period that the registrant was required to file such 			reports), and (2) has been subject to such filing 			requirements for the past 90 days. 							 Yes X No No. of Shares of Common Stock ($.25 par value) outstanding as of March 13, 1995 - 10,422,856 	 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 			 INDEX 							Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements 	Unaudited Condensed Consolidated Balance Sheets - 	January 31, 1995 and July 31, 1994 1 & 2 of 12 	Unaudited Condensed Consolidated Statements of Operations- 	Three Months Ended January 31, 1995 and 1994 3 of 12 	Unaudited Condensed Consolidated Statements of Operations - 	 Six Months Ended January 31, 1995 and 199 4 of 12 	Unaudited Condensed Consolidated Statements of Cash Flows - 	 Six Months Ended January 31, 1995 and 1994 5 of 12 	Unaudited Condensed Consolidated Statement of Stockholders' Equity - 	January 31, 1995 6 & 7 of 12 	Notes to Unaudited Condensed Consolidated Financial 	Statements - January 31, 1995 8 & 9 of 12 Item 2. Management's Discussion and Analysis of 	Financial Condition and Results of Operations 10 of 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 of 12 Item 6. Exhibits and Reports on Form 8-K 11 of 12 Signatures 12 of 12 	PART I. FINANCIAL INFORMATION 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	CONDENSED CONSOLIDATED BALANCE SHEETS 		 					 January 31, July 31, 						1995 1994 					 (Unaudited) (Note) ASSETS Current assets: 	 Cash and cash equivalents $ 4,318,139 $ 5,939,456 Receivables, principally trade, less allowances for doubtful accounts and discounts of $1,548,000 and $928,000 40,124,462 31,935,437 Inventories 61,400,660 45,543,048 Investments in marketable securities, at cost (market value of $12,612,000 and $25,649,000) 12,749,520 25,786,080 Prepaid expenses and other 4,203,731 3,466,246 	 	Total current assets 122,796,512 112,670,267 Property, plant and equipment - at cost $98,659,518 $ 96,805,506 Less allowances for depreciation and amortization (44,364,171) 54,295,347 (41,510,772) 55,294,734 Real estate held for sale or development, at cost 5,404,243 5,404,243 Other assets and deferred charges 27,300,948 29,367,430 Excess of cost over net assets acquired 5,969,703 6,070,268 				 $215,766,753 $208,806,942 Note: The balance sheet at July 31, 1994 has been derived from the audited 	financial statements at that date. See notes to unaudited condensed consolidated financial statements. 	 		1 of 12 			 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	CONDENSED CONSOLIDATED BALANCE SHEETS 						January 31, July 31, 						 1995 1994 						(Unaudited) (Note) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 13,662,410 $ 11,851,998 Accrued expenses 14,006,066 17,381,839 Income taxes 2,361,178 1,698,293 Total current liabilities 30,029,654 30,932,130 Long-term debt 115,764,457 110,427,265 Other non-current liabilities 4,761,930 4,743,855 Deferred income taxes 4,442,000 4,442,000 Stockholders' equity: Common stock, par value $.25 per share; Authorized 50,000,000 shares: Issued 10,898,378 and 10,898,130 shares 2,724,595 2,724,533 Additional paid-in-capital 49,324,524 49,322,585 Retained earnings 18,454,659 16,217,803 Cost of 475,522 shares in treasury (6,573,719) (6,573,719) Deferred compensation under stock bonus plan and employees' stock ownership plan (1,395,347) (1,663,510) Unfunded pension losses (1,766,000) (1,766,000) 	 Total stockholders' equity 60,768,712 58,261,692 						$215,766,753 $208,806,942 Note: The balance sheet at July 31, 1994 has been derived from the audited 	financial statements at that date. See notes to unaudited condensed consolidated financial statements. 		2 of 12 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 					 Three Months Ended January 31, 					 1995 1994 Revenues: Net sales $91,704,240 $62,108,202 Rentals from real estate 635,324 574,012 	 					 92,339,564 62,682,214 Cost and expenses: Cost of sales 66,479,636 41,446,261 Selling, general and administrative expenses 21,176,650 18,531,010 Expenses of real estate 511,929 430,173 					 88,168,215 60,407,444 Operating profit 4,171,349 2,274,770 Interest income 223,657 331,100 Gain on sale of product line 13,208,393 Interest expense (2,256,682) (2,158,665) Other income(deductions) - net 55,311 (46,124) Income before income taxes 2,193,635 13,609,474 									 Income taxes 899,000 6,365,000 								 Net income $1,294,635 $7,244,474 			 							 Net income per share: Primary $.12 $.69 Fully diluted $.12 $.39 See notes to unaudited condensed consolidated financial statements. 	3 of 12 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 					 Six Months Ended January 31, 					 1995 1994 Revenues: Net sales $165,275,827 $133,044,007 Rentals from real estate 1,075,563 1,056,936 					 166,351,390 134,100,943 Cost and expense: Cost of sales 117,338,032 86,877,081 Selling, general and administrative expenses 40,401,094 41,118,217 Expenses of real estate 789,782 829,136 					 158,528,908 128,824,434 Operating profit 7,822,482 5,276,509 Interest and dividend income 479,893 356,130 Gain on sale of product line 13,208,393 Interest expense (4,569,605) (4,344,803) Other income(deductions) - net 58,086 (37,790) Income before income taxes 3,790,856 14,458,439 Income taxes 1,554,000 6,708,000 Net income $ 2,236,856 $ 7,750,439 Net income per share: Primary $.21 $.74 Fully diluted $.21 $.44 See notes to unaudited condensed consolidated financial statements. 			 4 of 12 						 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 					 Six Months Ended January 31, 						1995 1994 Operating Activities: Net income $ 2,236,856 $ 7,750,439 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment 2,853,399 3,148,990 Amortization of deferred compensation and deferred charges 2,331,102 2,208,914 Gain on sale of product line (13,208,393) Other, net (57,816) (235,366) Changes in operating assets and liabilities: (Increase) in accounts receivable (8,809,025) (244,250) (Increase) in inventory (15,857,612) (1,424,595) (Increase) decrease in prepaid expenses (737,485) 679,635 (Decrease) in accounts payable, accrued expenses and income taxes (902,476) (437,032) NET CASH (USED IN) OPERATING ACTIVITIES (18,943,057) (1,761,658) Investing Activities: Proceeds from sale and collection of principal of marketable securities 21,313,249 1,238,076 Purchases of marketable securities (7,476,689) (25,670,708) Purchases of property, plant and equipment (3,072,059) (2,163,976) Proceeds from sale of product line 38,144,205 Increase in assets held for sale (1,093,071) Proceeds from sale of property, plant and equipment 1,218,047 NET CASH PROVIDED BY INVESTING ACTIVITIES 11,982,548 10,454,546 Financing Activities: Proceeds from long-term debt 5,339,192 Principal payments on long-term debt (1,546,533) Purchase of treasury stock (1,850,000) Other _________ ( 50,106) NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES 5,339,192 (3,446,639) Increase in Cash and Cash Equivalents (1,621,317) 5,246,249 Cash and cash equivalents at beginning of period 5,939,456 5,469,159 Cash and Cash Equivalents at End of Period $ 4,318,139 $10,715,408 See notes to unaudited condensed consolidated financial statements. 		 							5 of 12 							 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 						 Common 					 Issued In Treasury 					 Shares Amount Shares Amount 						 In Thousands Balance at July 31, 1994 10,898 $2,725 476 $6,574 Net income Conversion of subordinated debentures - - Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization _____ ______ ____ ______ 			 			 Balance at January 31, 1995 10,898 $2,725 476 $6,574 			 See notes to unaudited condensed consolidated financial statements. 				6 of 12 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 				 Deferred 				 Compensation 				 Under Stock 				 Bonus Plan and Unfunded Additional 				 Employees' Stock Pension Paid-In Retained 				 Ownership Plan Losses Capital Earnings 						 In Thousands Balance at July 31, 1994 $1,664 $1,766 $49,323 $16,218 Net income 2,237 Conversion of subordinated debentures 2 Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization 269 Balance at January 31, 1995 $1,395 $1,766 $49,325 $18,455 See notes to unaudited condensed consoliated financial statements. 				7 of 12 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 	January 31, 1995 (A) The accompanying unaudited condensed consolidated financial statements 	have been prepared in accordance with generally accepted accounting 	principles for interim financial information and with the instructions 	to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do 	not include all of the information and footnotes required by generally 	accepted accounting principles for complete financial statements. 	In the opinion of management, all adjustments (consisting of normal 	recurring accruals) considered necessary for a fair presentation have 	been included. Operating results for the three and six months ended 	January 31, 1995 and 1994 are not necessarily indicative of the results 	that may be expected for a full fiscal year. For further information, 	refer to the consolidated financial statements and footnotes thereto 	included in the Company's annual report on Form 10-K for the year ended 	July 31, 1994. (B) Primary per share data are based on the weighted average number of 	common shares outstanding of 10,423,000 and 10,462,000, respectively, 	for the three months ended January 31, 1995 and 1994 and 10,423,000 	and 10,545,000, respectively for the six months ended January 31, 	1995 and 1994. The three and six month periods ended January 31, 1994 	have been retroactively adjusted for a 3% stock dividend distributed in 	July 1994. Assumed conversion of debentures would have had an anti- 	dilutive effect on net income per share for the three and six months 	ended January 31, 1995. (C) Inventories are stated at the lower of cost (first-in, first-out) or 	market. The components of inventory consist of the following: 						 January 31, July 31, 						 1995 1994 	Finished goods $30,980,644 $24,684,609 	Raw materials 26,912,976 16,889,428 	Supplies 3,507,040 3,969,011 						$61,400,660 $45,543,048 (D) Under the Company's amended and restated revolving credit and term loan 	agreements (collectively the "Loan Agreements") with National 	Westminster Bank USA and Chemical Bank (the "Banks"), the Company may, 	from time to time, borrow funds from the Banks, provided that the total 	principal amount of all such loans outstanding at any time may not 	exceed $40,000,000. Interest (9% at January 31, 1995) on all such 	loans is equal to prime rate, subject to adjustment based on the level 	of loans outstanding. Outstanding borrowings under the Loan Agreements 	may not exceed certain percentages of and are collateralized by, among 	other things, the trade accounts receivable and inventories, and 	substantially all of the machinery and equipment and real estate of the 	Company and its subsidiaries. All loans made under the term loan 	agreement ($10,000,000 at January 31, 1995) are to be repaid in 	December 1997. Pursuant to the terms of the Loan Agreements, the 	Company and its subsidiaries, among other things, must maintain a 	minimum net worth and meet ratio tests for liabilities to net worth 	and coverage of fixed charges and interest, all as defined. The Loan 	Agreements also provide, among other things, for restrictions on 	dividends (except for stock dividends) and require repayment of 	outstanding loans with excess cash flow, as defined. 					8 of 12 (E) Prepaid expenses and other on the unaudited condensed consolidated 	balance sheets includes deferred income taxes of $1,766,000. (F) In October 1993, the Company and Gourmet Coffees of America, Inc. 	("GCA") entered into an agreement to sell Hillside Coffee of 	California, Inc. ("Hillside") to GCA. Pursuant to the agreement, 	which was consummated on November 19, 1993 (the second quarter of 	fiscal 1994), the Company received (a) $38,500,000 in cash and (b) 	shares of stock representing approximately one-half of one percent 	of the equity of GCA. The operating profits of Hillside, before 	intercompany charges, for the period from August 1, 1993 to November 	19, 1993, included in the results of operations, in thousands, are as 	follows: 										 	Net sales $ 9,557 	Costs and expenses: 	 Cost of sales 4,169 	 Selling, general and 	 administrative expenses 3,566 						 7,735 	Operating profit $ 1,822 		 				9 of 12 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 	AND RESULTS OF OPERATIONS Operations 	The following is Management's discussion and analysis of certain 	significant factors that have affected the Company's operations 	during the periods included in the accompanying unaudited condensed 	consolidated statements of operations. 	In October 1993, the Company and Gourmet Coffees of America, Inc. 	("GCA") entered into an agreement to sell Hillside Coffee of 	California, Inc. ("Hillside") to GCA. Pursuant to the agreement, 	which was consummated on November 19, 1993 (the second quarter of 	fiscal 1994), the Company received (a) $38,500,000 in cash and (b) 	shares of stock representing approximately one-half of one percent 	of the equity of GCA. 	Net sales increased $29,596,000 or 48% and $32,232,000 or 24% for the 	three and six months ended January 31, 1995, respectively, compared 	to the comparable periods of the prior year. The increase in net sales 	was due to an increase in the average selling price of coffee, 	partially offset by a decrease in coffee pounds sold and the loss 	(primarily for the six month period) of $9,557,000 of sales from 	Hillside (due to its disposition). 	Operating profits from food products were $4,048,000 and $7,537,000 	increases of 90% and 49% for the three and six months ended January 31, 	1995, respectively compared to $2,131,000 and $5,049,000, for the 	comparable periods of the prior year. The increases resulted primarily 	from increased gross profit margins partially offset by increased 	selling, general and administrative expenses and the loss of operating 	profits of $636,000(second quarter) and $1,822,000 (six months) from 	Hillside (due to its disposition). Increased gross margins were due 	to an increase in the average selling price of coffee greater than the 	increase in the average cost of green coffee, partially offset by 	decreased coffee pounds sold. The price of green coffee has been 	volatile over the last ten months. During the six months ended 	January 31, 1995 prices ranged from a low of $1.44 per pound to a 	high of $2.31 per pound. Currently coffee is trading at around $1.80 	per pound, more than double the price since the beginning of May 1994. 	The Company consistently values its inventory and commitments at the 	lower of cost or market. Selling, general and administrative expenses 	increased primarily due to increased advertising, promotion and payroll 	costs, partially offset by reduced coupon and brokerage costs in the 	six month period. 	Net income was $1,295,000 or $.12 per share and $2,237,000 or $.21 	per share for the three and six months ended January 31, 1995, 	respectively, compared to $7,244,000 or $.69 per share and $7,750,000 	or $.74 per share for the comparable periods of the prior year. The 	difference was primarily due to the reported gain on sale of Hillside 	Coffee of California, Inc. (the Company's specialty coffee product 	line) of $7,068,000 after income taxes or $.67 per share in the prior 	year comparable periods and increased income taxes (due to increased 	income before taxes other than on the aforemented gain in the three 	and six months ended January 31, 1994), partially offset by increased 	operating profits in the current fiscal year. Liquidity and Capital Resources 	As of January 31, 1995, working capital was approximately $92,750,000 	and the ratio of current assets to current liabilities was 	approximately 4 to 1. 	As of January 31, 1995, the Company had unused borrowing capacity of 	approximately $18 million under its credit facilities of $40 million 	with National Westminster Bank USA and Chemical Bank. 	The Company plans on expanding its cafe and Quikava owned and 	franchised operations, which in total are currently operating in 	10 locations. The sales of these operations, which are in the 	development stage, are not material to the Company's consolidated 	sales. 							10 of 12 	As a result of the rise in price of green coffee, the Company has 	financed increased inventories and receivables through the sale of 	marketable securities and increased borrowings under its credit 	facilities. The Company believes that its cash flow from operations 	and its amended and restated revolving credit and term loan agreements 	with its Banks provide sufficient liquidity to meet its working 	capital, expansion and capital requirements. 	 							 Part 2. Other Information Item 1. Legal Proceedings - None Item 6. Exhibits and Reports on Form 8-K 	 a) Exhibits - Financial Data Schedule - Exhibit 27 - see below 	 b) Reports on Form 8-K - none 				 11 of 12 	Appendix A to item 601 (c) of Regulation S-K 	(Article 5 of Regulation S-X 	Chock full o'Nuts Corporation and Subsidiaries) Item Number Item Description Amount 5-02 (1) Cash and cash items $4,318,139 5-02 (2) Marketable securities $12,749,520 5-02 (3) (a) (1)Notes and accounts receivable - trade $41,672,462 5-02 (4) Allowances for doubtful accounts $1,548,000 5-02 (6) Inventory $61,400,660 5-02 (9) Total current assets $122,796,512 5-02 (13) Property, plant and equipment $98,659,518 5-02 (14) Accumulated depreciation $44,364,171 5-02 (18) Total assets $215,766,753 5-02 (21) Total current liabilities $30,029,654 5-02 (22) Bonds, mortgages and similar debt $115,764,457 5-02 (28) Preferred stock - mandatory redemption - 0 - 5-02 (29) Preferred stock - no mandatory redemption - 0 - 5-02 (30) Common stock $2,724,595 5-02 (31) Other stockholders' equity $58,044,117 5-02 (32) Total liabilities and stockholders' 		equity $215,766,753 5-03 (b) 1 (a) Net sales of tangible products $165,275,827 5-03 (b) 1 Total revenues $166,351,390 5-03 (b) 2 (a) Cost of tangible goods sold $117,338,032 5-03 (b) 2 Total costs and expenses applicable to 		sales and revenues $118,127,814 5-03 (b) 3 Other costs and expenses - 0 - 5-03 (b) 5 Provision for doubtful accounts and 		notes $1,391,478 5-03 (b) (8) Interest and amortization of debt $4,569,605 5-03 (b) (10) Income before taxes and other items $3,790,856 5-03 (b) (11) Income tax expense $1,554,000 5-03 (b) (14) Income/loss continuing operations $2,236,856 5-03 (b) (15) Discontinued operations - 0 - 5-03 (b) (17) Extraordinary items - 0 - 5-03 (b) (18) Cumulative effect - changes in 		accounting principles - 0 - 5-03 (b) (19) Net income or loss $2,236,856 5-03 (b) (20) Earnings per share - primary $.21 5-03 (b) (20) Earnings per share - 		fully diluted $.21 		 							 						 SIGNATURES 	Pursuant to the requirements of the Securities Exchange Act of 1934, 	the Registrant duly caused this Report of Form 10-Q to be signed on 	its behalf by the undersigned, thereunto duly authorized. 					CHOCK FULL O' NUTS CORPORATION 					(Registrant) March 13, 1995 					 Marvin I. Haas 					 President and Chief Executive Officer March 13, 1995 					 Howard M. Leitner 					 Senior Vice President and 					 Chief Financial and Accounting Officer 							12 of 12 ??