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 ___April 30, 1996 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 June 12, 1996 - 10,735,546 	 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	INDEX 								 Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements 	Unaudited Condensed Consolidated Balance Sheets - 	April 30, 1996 and July 31, 1995 1 & 2 of 11 	 	Unaudited Condensed Consolidated Statements of Operations- 	 Three Months Ended April 30, 1996 and 1995 3 of 11 	 	Unaudited Condensed Consolidated Statements of Operations - 	 Nine Months Ended April 30, 1996 and 1995 4 of 11 	 	Unaudited Condensed Consolidated Statements of Cash Flows - 	Nine Months Ended April 30, 1996 and 1995 5 of 11 	Unaudited Condensed Consolidated Statement of Stockholders' Equity - 	 April 30, 1996 6 & 7 of 11 	 	Notes to Unaudited Condensed Consolidated Financial 	Statements - April 30, 1996 8 of 11 Item 2. Management's Discussion and Analysis of 	Financial Condition and Results of Operations 9 & 10 of 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 of 11 Item 6. Exhibits and Reports on Form 8-K 10 of 11 Signatures 11 of 11 	PART I. FINANCIAL INFORMATION 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	CONDENSED CONSOLIDATED BALANCE SHEETS 		 	 April 30, July 31, 	 1996 1995 	(Unaudited) (Note) ASSETS Current assets: 	 Cash and cash equivalents $ 16,965,580 $ 8,386,620 Receivables, principally trade, less allowances for doubtful accounts and discounts of $1,294,000 and $1,251,000 36,168,628 37,703,214 Inventories 55,746,667 60,576,420 Investments in marketable securities, at cost (market value of $945,000 and $6,975,000) 942,380 6,972,928 Prepaid expenses and other 1,981,813 2,916,690 	 	Total current assets 111,805,068 116,555,872 Property, plant and equipment - at cost $ 97,266,706 $ 91,038,726 Less allowances for depreciation and amortization (43,965,653) 53,301,053 (39,273,602) 51,765,124 Real estate held for sale or development, at cost 7,705,227 7,747,107 Other assets and deferred charges 24,454,430 25,099,333 Excess of cost over net assets acquired 5,718,290 5,869,138 					$202,984,068 $207,036,574 Note: The balance sheet at July 31, 1995 has been derived from the audited 	financial statements at that date. See notes to unaudited condensed consolidated financial statements. 	1 of 11 			 	 CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS 						 April 30, July 31, 						 1996 1995 						(Unaudited) (Note) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 10,496,219 $ 12,937,578 Accrued expenses 8,554,746 12,438,512 Income taxes 1,246,300 1,530,543 Total current liabilities 20,297,265 26,906,633 Long-term debt 106,341,034 106,568,896 Other non-current liabilities 1,555,071 1,468,358 Deferred income taxes 7,156,000 7,156,000 Stockholders' equity: Common stock, par value $.25 per share; Authorized 50,000,000 shares: Issued 11,211,068 shares 2,802,767 2,802,767 Additional paid-in-capital 51,357,008 51,357,008 Retained earnings 21,711,403 18,970,435 Cost of 475,522 shares in treasury (6,573,719) (6,573,719) Deferred compensation under stock bonus plan and employees' stock ownership plan (1,662,761) (1,619,804) 	 Total stockholders' equity 67,634,698 64,936,687 					 $202,984,068 $207,036,574 Note: The balance sheet at July 31, 1995 has been derived from the audited 	financial statements at that date. See notes to unaudited condensed consolidated financial statements. 		2 of 11 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 					Three Months Ended April 30, 					 1996 1995 Revenues: Net sales $ 86,630,744 $ 81,004,923 Rentals from real estate 513,299 492,725 	 					87,144,043 81,497,648 		 Cost and expenses: Cost of sales 62,127,397 57,681,664 Selling, general and administrative expenses 21,166,766 19,319,393 Expenses of real estate 394,565 395,488 					83,688,728 77,396,545 Operating profit 3,455,315 4,101,103 Interest income 226,898 318,768 Interest expense (2,148,818) (2,319,098) Other income - net 25,955 111,148 Income before income taxes 1,559,350 2,211,921 									 Income taxes 591,000 798,000 Net income $968,350 $1,413,921 							 Net income per share Primary $ .09 $ .13 Fully diluted $ .09 $ .11 See notes to unaudited condensed consolidated financial statements. 	3 of 11 CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 						 Nine Months Ended April 30, 						 1996 1995 Revenues: Net sales $247,990,541 $246,280,750 Rentals from real estate 1,641,756 1,568,288 	 						 249,632,297 247,849,038 Cost and expenses: Cost of sales 179,998,688 175,019,696 Selling, general and administrative expenses 58,523,052 59,720,487 Expenses of real estate 1,145,992 1,185,270 						 239,667,732 235,925,453 Operating profit 9,964,565 11,923,585 Interest income 642,042 798,661 Interest expense (6,649,676) (6,888,703) Other income - net 515,038 169,234 Income before income taxes 4,471,969 6,002,777 									 Income taxes 1,731,000 2,352,000 									 Net income $2,740,969 $3,650,777 			 						 Net income per share Primary $ .26 $ .34 Fully Diluted $ .26 $ .31 See notes to unaudited condensed consolidated financial statements. 	4 of 11 						 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 						Nine Months Ended April 30, 							 1996 1995 Operating Activities: Net income $ 2,740,969 $ 3,650,777 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment 4,692,051 4,152,454 Amortization of deferred compensation and deferred charges 3,497,992 3,488,895 Other, net (1,319,045) (473,705) Changes in operating assets and liabilities: Decrease/(increase)in accounts receivable 1,491,586 (6,238,548 Decrease/(increase)in inventory 4,829,753 (15,457,663) Decrease/(increase) in prepaid expenses 934,877 (2,552,093) (Decrease) in accounts payable, accrued expenses and income taxes (6,609,368) (1,822,569) NET CASH PROVIDED BY/(USED IN)OPERATING ACTIVITIES 10,258,815 (15,252,452) Investing Activities: Proceeds from sale and collection of principal of marketable securities 55,288,251 24,878,467 Purchases of marketable securities (49,557,703) (7,476,689) Purchases of property, plant and equipment (6,969,394) (4,922,745) Proceeds from sale of property, plant and equipment 1,218,047 NET CASH (USED IN)/ PROVIDED BY INVESTING ACTIVITIES (938,846) 13,697,080 Financing Activities: Proceeds from long-term debt, net 104,217 Payments of long-term debt (227,862) Other (13,147) Loan to employees' stock ownership plan (500,000) NET CASH (USED IN)/ PROVIDED BY FINANCING ACTIVITIES (741,009) 104,217 Increase/(decrease)in Cash and Cash Equivalents 8,578,960 (1,451,155) Cash and cash equivalents at beginning of period 8,386,620 5,939,456 Cash and Cash Equivalents at End of Period $16,965,580 $ 4,488,301 See notes to unaudited condensed consolidated financial statements. 		 							5 of 11 							 	 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 					 Common Stock 				 Issued In Treasury 				 Shares Amount Shares Amount 					 In Thousands Balance at July 31, 1995 11,211 $2,803 476 $6,574 Net income Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization Loan to employees' stock ownership plan 				 Balance at April 30, 1996 11,211 $2,803 476 $6,574 				 See notes to unaudited condensed consolidated financial statements. 	6 of 11 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 				 Deferred 				 Compensation 				 Under Stock 				 Bonus Plan and Additional 				 Employees' Stock Paid-In Retained 				 Ownership Plan Capital Earnings 						 In Thousands Balance at July 31, 1995 $1,620 $51,357 $18,970 Net income 2,741 Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization (457) Loan to employees' stock ownership plan 500 Balance at April 30, 1996 $1,663 $51,357 $21,711 See notes to unaudited condensed consoliated financial statements. 	7 of 11 	CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES 	NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 	April 30, 1996 (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 nine months ended 	April 30, 1996 and 1995 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, 1995. (B) Primary per share data is based on the weighted average number of 	common shares outstanding of 10,736,000 for the three and nine months 	ended April 30, 1996 and 1995. The three and nine month periods 	ended April 30, 1995 have been retroactively adjusted for a 3% stock 	dividend distributed in July 1995. Fully diluted per share data, 	assuming conversion of debentures, is based on 22,556,000 shares 	outstanding for the three and nine months ended April 30, 1995. 	Assumed conversion of debentures would have had an anti-dilutive 	effective on net income per share for the three and nine months 	ended April 30, 1996. (C) Inventories are stated at the lower of cost (first-in, first-out) or market. The components of inventory consist of the following: 				 April 30, July 31, 				 1996 1995 	Finished goods $36,617,860 $37,194,809 	Raw materials 14,936,084 19,928,214 	Supplies 4,192,723 3,453,397 				$55,746,667 $60,576,420 (D) Under the Company's amended and restated revolving credit and term 	loan agreements (collectively the "Loan Agreements") with Natwest Bank 	N.A. 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 through December 31, 1996 may 	not exceed $40,000,000 and after such date may not exceed $20,000,000. 	Interest (8.75% at April 30, 1996) 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 substant- 	ially 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 April 30, 1996) are to be repaid in December 1999. 	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. (E) Prepaid expenses and other on the unaudited condensed consolidated 	balance sheets includes deferred income taxes of $591,000. (F) Other income - net for nine months ended April 30, 1996 includes a 	gain on sale of real estate of $460,000. 					 8 of 11 	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. 	Net sales increased $5,626,000 or 7% and $1,710,000 or 1% for the three 	and nine months ended April 30, 1996, respectively, compared to the 	comparable periods of the prior year. The increase in net sales was 	due to an increase in coffee pounds sold partially offset by a decrease 	in the average selling price of coffee. 	Operating profits from food products were $3,337,000 and $9,469,000, 	decreases of 17% and 18% for the three and nine months ended April 30, 	1996, respectively, compared to $4,004,000 and $11,541,000 for the 	comparable periods of the prior year. The decrease in the three months 	resulted primarily from increased selling, general and administrative 	expenses partially offset by increase gross profit margins. Increased 	gross margins were due to increased coffee pounds sold and a decrease 	in the average selling price of coffee less than the decrease in the 	average cost of green coffee. During the three months ended April 30, 	1996 prices for green coffee ranged from a high of $1.30 to a low of 	$1.14 per pound. Selling, general and adminstrative expenses increased 	primarily due to increased delivery costs and salaries partially offset 	by decreased advertising. The decrease in the nine months resulted 	primarily from decreased gross profit margins partially offset by 	decreased selling, general and administrative expenses. Decreased gross 	margins were due to a decrease in the average selling price of coffee 	greater than the decrease in the average cost of green coffee, 	partially offset by increased coffee pounds sold. During the nine 	months ended April 30, 1996 prices for green coffee ranged from a high 	of $1.54 per pound to a low of $ .91 per pound. Selling, general and 	administrative expenses decreased primarily due to reduced advertising 	partially offset by increased delivery costs. 	Net income was $968,000 or $.09 and $2,741,000 or $.26 per share for 	the three and nine months ended April 30, 1996, respectively, compared 	to $ 1,414,000 or $.13 per share and $3,651,000 or $.34 per share for 	the comparable periods of the prior year. The difference was primarily 	due to decreased operating profits, partially offset by decreased 	income taxes and a gain on sale of real estate of $460,000 in the 	second quarter of fiscal 1996. Liquidity and Capital Resources 	As of April 30, 1996, working capital was approximately $92,000,000 and 	the ratio of current assets to current liabilities was approximately 	5.5 to 1. 	As of April 30, 1996, the Company had unused borrowing capacity of 	approximately $29 million under its credit facilities of $40 million 	with Natwest Bank N.A. and Chemical Bank. 	 							 							9 of 11 	 	Sales of the Company's Quikava and Cafe retail operations are not 	material to the Company's consolidated sales. The Company is expanding 	the Quikava company operated and franchised operations, which in total 	are operating in 12 locations. Total Quikava store level operations are 	not currently profitable, primarily due to pre-opening expenses. In 	addition, Quikava headquarters' expenses in excess of $1,000,000 on an 	annual basis are not being absorbed. The Company is rethinking its 	strategy as it relates to the Cafe division, as revenues along with 	negative store level contributions have not lived up to expectations 	(due to high level rents and other costs associated with the New York 	City area). In addition, Cafe headqaurters' expenses in excess or 	$1,000,000 on an annual basis are not being absorbed. 	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 II. 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 							 10 of 11 							 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) June 12, 1996 				 Marvin I. Haas 				 President and Chief Executive Officer June 12, 1996 				 Howard M. Leitner 				 Senior Vice President and 				 Chief Financial and Accounting Officer 			 11 of 11