Item 1. BUSINESS 		 Item 101 (a) and (c) of Regulation S-K The Company is the fourth largest roaster, packer, and marketer of coffee in the United States based on coffee pounds sold by the Company. Its broad range of regular and decaffeinated, ground roast, instant and specialty coffees for the Foodservice and Retail Grocery Industries are sold regionally throughout the United States and Canada under various well known trademarks, including Chock full o' Nuts, LaTouraine and Cain's. Best known among its products is Chock full o' Nuts brand premium, vacuum packed, all-method grind coffee. The Company is also one of the largest marketers of foodservice and private label coffees. The balance of the Company's business is derived from its developing Quikava outlets and from real estate operations.
Incorporated in 1932, for many years, the Company's primary business was the operation of counter service restaurants, under the Chock full o' Nuts name. In 1953, the Company expanded its business by marketing the coffee made famous in its restaurants to consumers via supermarkets and other Retail Grocery outlets. Impactful advertising, featuring the "Heavenly Coffee" jingle, made Chock full o' Nuts brand premium coffee a market leader. In 1983, Management discontinued the Company's restaurant operations and concentrated its efforts on the sale of coffee and related food products. In 1994, the Company commenced opening a limited number of Chock Cafes in the New York metropolitain area. In October 1996, the Company adopted a plan to discontinue operations of these company-owned cafes. See Note 4 of Notes to Consolidated Financial Statements.
In January 1997, the Company acquired substantially all of the assets and assumed substantially all of the liabilities of Ireland Coffee & Tea Company a leading roaster and distributor of coffees to hotels, restaurants and institutions on the East Coast. See Note 9(a) of Notes to Consolidated Financial Statements.
In March 1994, the Company acquired all the assets and liabilities of a company ("Quikava") whose menu features a full assortment of the most popular specialty coffee beverages, plus a variety of freshly prepared foods and snacks specifically suited for in-car consumption. Quikava's unique "double drive-thru" format targets the suburban commuter and is uniquely suited to take advantage of the growth of Specialty Coffees "away from home", where annual growth rates are significant.
In December 1992, the Company acquired the stock of Cain's Coffee Co. ("Cain's") and certain trademarks related to that business. Cain's primary business is the direct sale and distribution of coffee and related products under the Cain's label to Foodservice Customers in twelve states primarily West of the Mississippi. Cain's also sells coffee and tea to Retail Customers, using a direct store distribution system.
In November 1992, the Company acquired a controlling interest in a partnership, which owned Dana Brown Private Brands, Inc., a company which markets and sells private label coffee and tea products to food retailers and distributors, located primarily in the Midwest.
In December 1986, the Company acquired Greenwich Mills Company ("Greenwich"). Established in 1912, Greenwich is a leading manufacturer and supplier of coffee, tea and allied products to Foodservice and private label customers. The majority of their customers are located in markets East of the Mississippi. Greenwich's best known trademark is LaTouraine.
In November 1993, the Company sold Hillside Coffee of California, Inc., whose business consisted of roasting, packing, distributing and marketing specialty coffee under the Hillside name, primarily to supermarkets.
Corporate Management is currently focused on the following growth initiatives: (1) Maximizing the Company's Foodservice franchise by significantly broadening its customer base for Cain's, Chock full o' Nuts and LaTouraine brand coffee, tea and allied products; (2) Increasing Retail Grocery Market shares for such higher margin products as Chock full o' Nuts brand Cafe Blend, decaffeinated, instant and Rich French Roast coffees; (3) Selectively pursuing new business development opportunities that will deliver significant volume and profit growth; and (4) Expansion of its developing Quikava drive-thru outlets.
The following table sets forth revenues and operating results from continuing operations, before interest and corporate expenses, attributable to the Company's beverage products sales, Quikava sales and real estate operations, for the fiscal years ended July 31, 1997, 1996 and 1995:
						 Fiscal Years Ended July 31, 		 					 1997 1996 1995 						 (In Thousands) Revenues Net Sales - Beverage Products $360,467 $319,213 $325,259 Net Sales - Quikava 3,737 1,922 882 Rentals from Real Estate 2,091 2,156 2,061
Operating Profit/(Loss): Beverage Products 23,498 16,708 19,075 Quikava (1,998) (1,649) (870) Real Estate Operations 140 671 490 			
COFFEE AND RELATED PRODUCTS
Description of Coffee Market According to certain available industry surveys and Company estimates, total United States coffee sales by manufacturers in 1996 were approximately $6 billion. Approximately 31% of total United States coffee sales in 1996 were to Foodservice customers.
Foodservice Sales and Marketing
In January 1985, the Company began using Company sales personnel and independent food brokers to market its coffee and allied products to foodservice customers. These include chain and independent restaurants, hospitals, airlines, schools, governmental institutions, vending and office coffee service operators and other institutional distributors. In December 1986, the Company acquired Greenwich, which is a major direct sales and distribution supplier in the Eastern United States of coffee, tea and allied products to Foodservice Customers and private label customers. Greenwich's best-known label is LaTouraine, which enjoys a reputation for high quality. LaTouraine also distributes spices, international coffee mixes, speciality coffees, whole bean and pod Espresso, hot chocolate, iced and hot tea, powdered soft drinks, soup bases, and portion controlled jams, jellies and condiments.
In December 1992, the Company acquired Cain's, which is a major supplier in the Midwest and Southwest of products similar to those sold by Greenwich and LaTouraine to Foodservice Customers.
In fiscal 1997, approximately 49% of sales were derived from processing and marketing coffee and allied products for sale to Foodservice Customers. Sales of coffee products to Foodservice Customers have traditionally been less price-sensitive and depend more on the level of customer service provided. These sales also tend to generate higher operating margins, due to lower marketing and advertising expenses, than do sales of coffee products to Retail Customers. In addition, the absence of competitors with a dominant market position, makes the Company's pricing to Foodservice Customers less susceptible, as compared to pricing to Retail Customers, to changes in price in response to pricing actions of any single competitor.
Retail Sales and Marketing
The Company currently sells most of its Retail Grocery coffee products to supermarket chains, wholesalers and independent food outlets ("Retail Customers") through independent food brokers. The Company's retail products include coffees sold under the Chock full o' Nuts, Cain's, Ireland and Safari labels. The Company believes that its best known product, Chock full o' Nuts premium, vacuum packed, all-method grind coffee, is superior to most competitors in being able to produce a more consistent, better tasting, finished brew from a single, "all-method grind", regardless of the coffee maker used. The Company also sells an "extended yield" coffee, which produces more cups than equivalent quantities of standard yield coffee. Additionally, the Company sells decaffeinated roast and ground coffee, instant coffees, a premium quality Cafe blend and a Rich French Roast coffee.
The Company and Greenwich roast, pack and market regular, decaffeinated and instant coffees for sale by others under a variety of private labels.
In fiscal 1997, the Company's coffee sales to Retail Customers accounted for approximately 44% of sales and coffee sales under the Chock full o'Nuts label represented approximately 4% of total Branded Retail Grocery coffee sales in the United States.
Chock full o' Nuts all-method grind coffee is sold in most major metropolitan areas of the United States and in the provinces of Ontario and Quebec, Canada. Sales are concentrated in the New York metropolitan area, upstate New York, New England, Philadelphia, Washington, D.C. and Florida. The Company believes that its distinctive packaging design and one grind concept are important factors in the marketing of its coffee products. Marketing a single grind coffee has enabled the Company's all-method grind coffee to be consistently one of the fastest moving items off supermarket shelves in its core markets.
The sales of Cain's, Ireland and Safari brand products are concentrated in the Midwest, East and Southwest, respectively.
Suppliers and Manufacturing
The Company's coffee is primarily a blend of readily available Central and South American coffees. The Company purchases approximately 100 million pounds of green coffee beans annually. All such coffee is purchased from approximately 25 importers located in New York City, New Orleans and Miami, who assume the risk of delivering beans that meet the Company's quality requirements at a guaranteed price. The Company generally buys its coffee pursuant to contracts providing for delivery in 4 to 12 weeks and supplements such contracts with purchases on the spot market. All purchases are subject to inspection and approval by the United States Food and Drug Administration.
Manufacturing activities for coffee and related products are presently conducted at the following facilities:
	Location Principal Use
Brooklyn, New York............Coffee Roasting Plant, Warehouse St. Louis, Missouri...........Coffee Roasting Plant, Warehouse Hialeah, Florida..............Coffee Roasting Plant, Warehouse Rochester, New York...........Coffee Roasting Plant, Warehouse Oklahoma City, Oklahoma.......Coffee Roasting Plant and Processing 				 Plant for Tea and Related Food 				 Products, Warehouse Springfield, Missouri.........Processing Plant for Spices, Warehouse Pleasantville, New Jersey.....Coffee Roasting Plant, Warehouse
All of the above facilities are owned, except the Rochester, New York, Springfield, Missouri and Pleasantville, New Jersey facilities, which are leased. The Company believes that it has sufficient production capacity to meet its current and future needs.
The Company also rents executive office space in New York City and maintains warehousing facilities in over forty-five locations throughout the United States. None of these facilities are material to the Company's operations.
Competition
The coffee business is highly competitive. The Company competes for Retail Customers with a number of nationally and regionally established brands. Its largest competitors are Kraft Foods (Maxwell House, Yuban and Sanka coffees), Procter & Gamble (Folger's coffees) and The Nestle Company (Hills, MJB and Chase & Sanborn coffees), with combined annual sales accounting for approximately 80% of the United States coffee market. The profitability of the Company's coffee sales to Retail Customers is largely dependent on competitive pricing conditions. See "Management's Discussion and Analysis of Financial Condition and Results of Operations".
There are many competitors in the business of selling coffee to Foodservice Customers. However, the Company believes that no single competitor's sales constitute more than 20% of this market. Sales of coffee, tea and allied products to Foodservice Customers have traditionally been less price-sensitive and more dependent on the level of service provided to such customers than sales of such products to Retail Customers. In addition, the absence of direct competitors with a dominant market position has traditionally made the Company's pricing to Foodservice Customers less susceptible, as compared to pricing to Retail Customers, to changes in price in response to pricing actions of any single competitor.
Quikava
Quikava is the operator and franchisor of double-drive thru outlets, which offer a variety of specialty coffees, espresso-based drinks, fresh baked goods, sandwiches, other "finger foods" and snacks. Quikava units are situated on major commuter thoroughfares in suburban markets and offer quick-service of quality beverages and snacks. The Company intends to develop additional Quikava units, most of which will be franchised. At the fiscal year end, the Company was operating nine company owned units and there were eight operating franchished units.
Cafes
In June 1994, with the opening of a flagship store in Midtown Manhattan, the Company began to develop the business of operating retail cafes which offered moderately priced specialty coffees, sandwiches, salads, bakery products, snacks, and other assorted food and beverage products. The cafes had an upscale motif, which featured a rich wood and granite interior and utilized a quick-service format.
The Company developed a number of formats for expansion of its retail cafe concept, including the full cafe (2500 to 3500 square feet with seating for 45-75), the mini-cafe (400-1000 square feet with limited seating), and Chock Full O'Nuts EXPRESS-Osm (a modular kiosk of 150 square feet).
In October 1996, the Company discontinued the operations of its Cafes due to store operating losses due to high food and labor costs and insufficient volume to cover high fixed and operating costs related to Midtown Manhattan operations as well as a Cafe Corporate structure organized to support a much higher number of locations. See Note 4 of Notes to the Consolidated Financial Statements.
RESEARCH AND DEVELOPMENT
The Company invested a nominal amount in research and development for the three years ended July 31, 1997.
TRADEMARKS
Certain trademarks (i.e. Chock full o'Nuts, LaTouraine, Eppen Smith, Cain's, Safari and Ireland) are important to the business of the Company.
EMPLOYEES
The Company employs approximately 1,400 employees, 10% of whom are represented by labor unions. The Company believes that its relations with both union and non-union employees are good.
REAL ESTATE OPERATIONS
The Company is both lessor and lessee on certain properties and an owner of one property in New York City. Such properties had been part of the Company's original restaurant operations. Additionally, the Company owns a coffee roasting facility in Castroville, California which it leases to the owner of Hillside Coffee of California, Inc.
OTHER MATTERS
Reference is made to Notes 9(a) and 4 of Notes to Consolidated Financial Statements with respect to the acquisition and disposition of certain assets.
			 Item 101 (b) of Regulation S-K
Segment Information is incorporated herein by reference to Note 10 of Notes to Consolidated Financial Statements. 			 Item 101 (d) of Regulation S-K
All of the Company's operations are located in the United States. Export sales are not significant.
Item 2.
Item 2. PROPERTIES
The Company leases certain premises which are under long-term leases expiring on various dates through 2009 and certain of which contain renewal options. Reference should be made to Note 5 of the Notes to Consolidated Financial Statements for additional information about these leases. The following table sets forth the location and certain information with respect to the Company's plants and certain other properties as of October 8, 1997, all of which premises the Company considers adequate for its present and anticipated needs.
PLANTS AND OTHER PROPERTIES 					 		 					 Approximate Whether 					 Square Feet Owned 					 of Or Location Principal Use Floor Space Leased (1) Brooklyn, New York Coffee Roasting 			Plant,Warehouse 55,000 Owned St. Louis, Missouri Coffee Roasting 			Plant,Warehouse 77,000 Owned Secaucus, New Jersey Warehouse and 			Offices 104,000 Owned Hialeah, Florida Coffee Roasting 			Plant,Warehouse 50,000 Owned Rochester, New York Coffee Roasting 			Plant,Warehouse 50,000 Leased Oklahoma City, Oklahoma Coffee Roasting Plant 			and Processing 			Plant for 			Tea and Related 			Food Products, 			Warehouse 150,000 Owned Springfield, Missouri Processing Plant 			for Spices, 			Warehouse 30,000 Leased Pleasantville, New Coffee Roasting 47,000 Leased Jersey Plant, Warehouse 574 Fifth Avenue Real Estate New York, New York Operation 13,000 Leased 422 Madison Avenue Real Estate New York, New York Operation 8,750 Leased 532 Madison Avenue Real Estate New York, New York Operation 12,250 Leased 49 Broadway Real Estate New York, New York Operation 12,000 Leased 1420 Broadway Real Estate New York, New York Operation 6,750 Leased 370 Lexington Avenue Corporate New York, New York Headquarters 11,000 Leased Waverly Place corner Green Street Real Estate New York, New York Operation 2,500 Leased 336 Broadway Real Estate New York, New York Operation 10,500 Owned Castroville, Real Estate California Operation 66,000 Owned 1114 Avenue of the Real Estate 2,800 Leased Americas Operation New York, New York 43 West 42 Street Real Estate 340 Leased New York, New York Operation Queen Ann Plaza Quikava Operation 250 Leased Norwell, Mass 2297 Brown Avenue Quikava Operation 500 Leased Manchester, New Hampshire Natick Crossing Mall Quikava Operation 1,500 Leased Natick, Mass. 917 Lynnfield Street Quikava Operation 600 Leased Lynn, Mass 1184 Main Street Quikava Operation 600 Leased Haverhill, Mass 84 Milfod Road Quikava Operation 600 Leased Amherst, New Hampshire 374 Bridge Street Quikava Operation 600 Leased N. Weymouth, Mass 895 Bald Hill Road Quikava Operation 600 Leased Warwick, Rhode Island 190 Old Derby Street Headquarters, Quikava 1,196 Leased Hingham, Mass. 2344 G.A.R Hwy Quikava Operations 600 Leased Swansea, Mass.
(1) -- No Company-leased premises are owned by any officer or director of the Company. See Note 5 of Notes to Consolidated Financial Statements.
Item 3.
Item 3. LEGAL PROCEEDINGS None
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF 	 SECURITY HOLDERS Not applicable. 	PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND 	 RELATED SECURITY HOLDER MATTERS
"Common Share Prices" and related security holder matters may be found immediately after "Segment Information" and are incorporated herein by reference.
Item 6.
Item 6. SELECTED FINANCIAL DATA
"Selected Financial Data" may be found immediately after Note 10 of Notes to Consolidated Financial Statements and is incorporated herein by reference.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 	 AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of Operations" may be found immediately after "Forward-Looking Statements" and is incorporated herein by reference.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted in a separate section of this report.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 	FINANCIAL DISCLOSURE
Not applicable.
	PART III
Item 10.
Item 10. DIRECTORS AND OFFICERS OF THE REGISTRANT 				 and
Item 11.
Item 11. EXECUTIVE COMPENSATION 				 and
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 				 and
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted, per General Instruction G. The information required by Part III shall be incorporated by reference from the Registrant's definitive proxy statement pursuant to Regulation 14A for the fiscal year ended July 31, 1997 which is to be filed with the Commission.
	 PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2) The response to this portion of Item 14 is submitted as a separate section of this report.
(3) The response to this portion of Item 14 is submitted as a separate section of this report (see below).
(b) Reports on Form 8-K: 		None
(c) The response to this portion of Item 14 is submitted as a separate section of this report (see below).
(d) The response to this portion of Item 14 is submitted as a separate section of this report.
Pursuant to Regulation S-K Item 601, following is a list of Exhibits.
Exhibit 3 Articles of incorporation and by laws.
(a) Articles of incorporation filed as an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is incorporated herein by reference.
(b) By-laws filed as an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is incorporated herein by reference.
Exhibit 4 Instruments defining the rights of security holders, including 	indentures.
(a) Indenture dated as of September 15, 1986 between the Company and Manufacturers Hanover Trust Company ("Manufacturers") filed as an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is incorporated herein by reference.
(b) Form of the Company's 8% Convertible Subordinated Debenture included in Exhibit 4(a)filed as an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is incorporated herein by reference.
(c) Instrument of resignation, appointment and acceptance dated August 9, 1993 among the Company, Manufacturers and Liberty Bank and Trust Company of Oklahoma City filed as an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is incorporated herein by reference.
(d) Indenture dated as of April 1, 1987 between the Company and IBJ Schroder Bank and Trust Company filed as an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is incorporated herein by reference.
(e) Form of the Company's 7% Convertible Senior Subordinated Debenture included in Exhibit 4(d) filed as an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is incorporated herein by reference.
Exhibit 9 Voting Trust Agreement, not applicable.
Exhibit 10 Material contracts
(a) Rights Agreement, dated as of December 30, 1987, with IBJ Schroder 	Bank and Trust Company, as Rights Agent, the form of Rights 	Certificate and Summary of Rights to Purchase Common Stock filed as 	an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is 	incorporated herein by reference.
(b) Benefits protection trust with National Westminster Bank USA filed as 	an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is 	incorporated herein by reference.
(c) Resolution of the Board of Directors adopting severance policy filed as 	an Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is 	incorporated herein by reference.
(d) Chock full o' Nuts Corporation Employees' Stock Ownership Plan dated 	December 16, 1988 filed as an Exhibit to From 10-K for the fiscal year 	ended July 31, 1995, is incorporated herein by reference.
(e) Amended and Restated Credit Agreement dated December 4, 1992, amended 	and restated as of January 1, 1996, among Chock full o' Nuts 	Corporation and its Subsidiaries and National Westminster Bank N.A., 	now known as Fleet Bank, N.A., and Chemical Bank, now known as the 	Chase Manhattan Bank, filed as an Exhibit to Form 10-K for the fiscal 	year ended July 31, 1996, is incorporated herein by references.
(f) Form of restricted stock agreement dated January 2, 1988 with key 	employees (including certain officers and directors) filed as an 	Exhibit to Form 10-K for the fiscal year ended July 31, 1994 is 	incorportated herein by reference.
(g) Asset Purchase Agreement dated as of January 16, 1997 by and between 	Chock full o'Nuts Corporation and Ireland Coffee-Tea, Inc. filed as 	on Exhibit to Form 8-K dated February 3, 1997 is incorporated herein 	by reference.
Exhibit 11 Statement re: Computation of Per Share Earnings
Exhibit 12 Statement re: Computation of ratios, not applicable.
Exhibit 13 Not applicable.
Exhibit 18 Letter re: change in accounting principles, not applicable.
Exhibit 21 Subsidiaries of the registrant.
Exhibit 22 Published report regarding matter submitted to vote of security 	 holders, not applicable.
Exhibit 23 Consent of experts and counsel, not applicable.
Exhibit 24 Power of attorney, not applicable.
Exhibit 27 Financial Data Schedule.
Exhibit 99 Additional exhibits, not applicable.
	 	SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
					 CHOCK FULL O' NUTS CORPORATION 						 (Registrant)
October 8, 1997 /s/ Howard M. Leitner 				 Howard M. Leitner, Vice President, 				 Chief Financial and Accounting Officer 				 and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
October 8, 1997 /s/ Norman E. Alexander October 8, 1997 /s/ Mark A. Alexander 		 Norman E. Alexander Mark A. Alexander 		 Chairman of the Board Director
October 8, 1997 /s/ Stuart Z. Krinsly October 8, 1997 /s/ Martin J. Cullen 		 Stuart Z. Krinsly Martin J. Cullen 		 Director Vice President 							 and Director
October 8, 1997 /s/ Howard M. Leitner October 8, 1997 /s/ Marvin I. Haas 		 Howard M. Leitner Marvin I. Haas 		 Vice President and President and 		 Chief Financial Officer Chief Executive 		 and Director Officer 							 and Director
October 8, 1997 /s/ R. Scott Schafler October 8, 1997 /s/ Henry Salzhauer 		 R. Scott Schafler Henry Salzhauer 		 Director Director 	 October 8, 1997 /s/ Jerry Columbus October 8, 1997 		 Jerry Columbus David S. Weil 		 Director Director
		 		
	ANNUAL REPORT ON FORM 10-K 	ITEM 8, ITEM 14(a)(1) AND (2), (c) and (d)
	LIST OF FINANCIAL STATEMENTS 	AND FINANCIAL STATEMENT SCHEDULES
	CERTAIN EXHIBITS
	YEAR ENDED JULY 31, 1997
	CHOCK FULL O' NUTS CORPORATION
	NEW YORK, NEW YORK 	
FORM 10-K--ITEM 14(a)(1) and (2)
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of the Registrant and its subsidiaries are included in Item 8:
									Page Report of Independent Auditors...................................... 15 Consolidated Balance Sheets--July 31, 1997 and 1996................. 16 and 17 Consolidated Statements of Operations--Years Ended July 31, 1997, 1996 and 1995...................................... 18 Consolidated Statements of Cash Flows-- Years Ended July 31, 1997, 1996 and 1995.......................... 19 and 20 Consolidated Statements of Stockholders' Equity-- Years Ended July 31, 1997, 1996 and 1995.......................... 21 and 22 Notes to Consolidated Financial Statements.......................... 23 to 31
The following consolidated financial statement schedule of the registrant and its subsidiaries is included in Item 14(d):
									Page Schedule II -- Valuation and Qualifying Accounts.................... 37
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
Ernst & Young LLP
Report of Independent Auditors
The Board of Directors and Stockholders Chock Full o'Nuts Corporation New York, New York
We have audited the accompanying consolidated balance sheets of Chock Full o'Nuts Corporation and subsidiaries as of July 31, 1997 and 1996, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended July 31, 1997. Our audits also included the financial statement schedule listed in the index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and signifi- cant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Chock Full o'Nuts Corporation and subsidiaries at July 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended July 31, 1997 in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
						ERNST & YOUNG LLP
New York, New York September 30, 1997
CONSOLIDATED BALANCE SHEETS CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES July 31, 1997 and 1996
ASSETS 1997 1996
CURRENT ASSETS: Cash and cash equivalents $ 4,585,633 $16,293,783 Receivables, principally trade, less allowances for doubtful accounts and discounts of $1,422,000 and $1,133,000-- Notes 2 and 9(b) 37,554,412 30,989,008 Inventories--Notes 1 and 2 82,951,688 59,637,802 Prepaid expenses and other -- Note 3 2,457,221 3,667,875 		 TOTAL CURRENT ASSETS 127,548,954 110,588,468
PROPERTY, PLANT AND EQUIPMENT, at cost- Note 2: Land 3,114,889 3,114,889 Buildings and improvements 14,805,429 14,675,708 Leaseholds and leasehold improvements 2,526,691 1,825,464 Machinery and equipment 78,162,457 74,067,267 						 98,609,466 93,683,328 Less allowances for depreciation and amortization 49,933,489 45,172,084 						 48,675,977 48,511,244 REAL ESTATE HELD FOR DEVELOPMENT OR SALE at cost -- Note 2 7,635,427 7,691,267
OTHER ASSETS AND DEFERRED CHARGES, net-- Note 9 (c) 23,799,057 26,976,132
EXCESS OF COST OVER NET ASSETS ACQUIRED, net 9,670,551 5,668,008 						 $217,329,966 $199,435,119 See notes to consolidated financial statements
CONSOLIDATED BALANCE SHEETS - Continued CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES July 31, 1997 and 1996
						 1997 1996 						 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Accounts payable $ 13,590,697 $ 10,469,300 Accrued expenses 12,148,313 11,346,483 Income taxes--Note 3 1,957,788 1,719,575 Current installments of long-term debt -- Note 2 766,000 	 TOTAL CURRENT LIABILITIES 28,462,798 23,535,358
LONG-TERM DEBT, Excluding Current Installments-- Note 2 106,065,753 105,235,468
OTHER NON-CURRENT LIABILITIES 3,265,078 1,586,231
DEFERRED INCOME TAXES -- Note 3 7,655,000 5,591,000
STOCKHOLDERS' EQUITY--Notes 2 and 6: 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 25,349,146 17,434,755 						 79,508,921 71,594,530 Deduct: Cost of 475,522 shares in treasury (6,573,719) (6,573,719) Deferred compensation under stock 	bonus plan and employees' stock 	ownership plan (1,053,865) (1,533,749) 	 TOTAL STOCKHOLDERS' EQUITY 71,881,337 63,487,062
LEASES--Note 5 						 $217,329,966 $199,435,119
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES Years ended July 31, 1997, 1996 and 1995
				 1997 1996 1995 Revenues: Net sales $364,203,601 $321,134,537 $326,140,872 Rentals from real estate 2,091,307 2,156,070 2,061,015 				 366,294,908 323,290,607 328,201,887 Costs and expenses: Cost of sales 257,078,504 229,477,193 230,962,257 Selling, general and administrative expenses 86,018,181 77,223,407 77,396,552 Expenses of real estate 1,951,137 1,484,681 1,571,090 				 345,047,822 308,185,281 309,929,899 OPERATING PROFIT 21,247,086 15,105,326 18,271,988
Interest and dividend income 1,061,160 865,145 903,887 Interest expense (8,599,963) (8,783,798) (9,191,495) Other(deductions)/income -- Notes 9 (d) and (e) (1,495,891) 520,692 763,597 INCOME BEFORE INCOME TAXES 12,212,392 7,707,365 10,747,977
Income taxes--Note 3: Current: Federal 1,885,000 1,905,000 3,276,000 State and local 753,000 488,000 161,000 Deferred 1,660,000 683,000 573,000 				 4,298,000 3,076,000 4,010,000 INCOME FROM CONTINUING OPERATIONS 7,914,392 4,631,365 6,737,977
Discontinued operations -- Note 4: (Loss) from operations, net of income tax credits of $1,073,000 and $1,009,000 (1,757,044) (1,874,689) (Loss) on disposition, net of deferred income tax credit of $2,590,000 (4,410,000) 						 (6,167,044) (1,874,689) NET INCOME/(LOSS) $ 7,914,392 $(1,535,679) $4,863,288 Income/(loss)per share--Note 1: Primary: Continuing operations $ .74 $ .43 $.63 Discontinued operations (.57) (.18) Net income/(loss) $ .74 $ (.14) $.45 Fully diluted: Continuing operations $ .55 $ .40 $.51 Discontinued operations (.27) (.09) Net income $ .55 $.13 $.42 		
See notes to consolidated financial statements
			 CONSOLIDATED STATEMENTS OF CASH FLOWS CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES Years Ended July 31, 1997, 1996 and 1995
					 1997 1996 1995 Operating Activities - Continuing Operations: Income from continuing operations before income taxes $12,212,392 $ 7,707,365 $10,747,977 Adjustments to reconcile pretax income from continuing operations to net cash provided by continuing operations: Depreciation and amortization of property, plant and equipment 7,386,215 6,380,262 5,799,063 Amortization of deferred compensation and deferred charges 4,437,262 4,561,305 4,606,372 Other, net (312,060) (1,000,099) (330,359) Changes in operating assets and liabilities: (Increase)/decrease in receivables (4,889,186) 6,818,278 (6,076,849) (Increase)/decrease in inventories (21,960,180) 913,733 (15,008,487) Decrease/(increase) in prepaid expenses 1,600,484 (281,086) (1,511,194) Increase/(decrease) in accounts payable, accrued expenses and income taxes 1,259,724 (5,098,044) (801,909) Net cash (used in)/provided by operating activities - continuing operations (265,349) 20,001,714 (2,575,386) Operating Activities - Discontinued Operations: Discontinued operations exclusive of income taxes (9,830,044) (2,883,689) Adjustments to reconcile pretax loss from discontinued operations to net cash used in discontinued operations Provision for close down and write-off of equipment 7,000,000 Depreciation and amortization 431,623 247,841 Other (192,929) (146,047) Net cash (used in) discontinued operations (2,591,350) (2,781,895) Income taxes - current (2,638,000) (1,320,000) (2,428,000) NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES (2,903,349) 16,090,364 (7,785,281)
Investing Activities - Continuing Operations: Purchases of marketable securities (34,026)(152,018,726) (11,473,787) Proceeds from sale and collection of principal of marketable securities 79,993 158,863,555 31,086,939 Purchases of property, plant and equipment (6,123,523) (7,411,199) (6,547,330) Acquisition of business (5,872,858) Proceeds from/(advances to) co-packer 1,549,328 (3,132,245) Proceeds from sale of property, plant and equipment 4,078,764 Other (13,147) Net Cash (used in)/provided by investing activities - continuing operations (10,401,086) (3,711,762) 17,144,586 Net cash (used in)investing activities - discontinued operations - purchases of property and equipment (2,608,543) (2,457,240) NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES (10,401,086) (6,320,305) 14,687,346 Financing activities - Continuing Operations: Loan to employees' stock ownership plan (500,000) (500,000) Net proceeds from (payments of)long-term debt 1,596,285 (1,333,428) (3,856,369) NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES 1,596,285 (1,833,428) (4,356,369) (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS - CONTINUING OPERATIONS (11,708,150) 7,936,631 2,545,696 Cash and cash equivalents at beginning of year - continuing operations 16,293,783 8,357,152 5,811,456 CASH AND CASH EQUIVALENTS AT END OF YEAR-CONTINUING OPERATIONS $4,585,633 $16,293,783 $8,357,152
Supplemental Information Cash paid during the year: 1997 1996 1995 Interest $8,143,201 $8,259,325 $8,532,841 Income taxes 2,168,425 848,539 1,080,706
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES Years Ended July 31, 1997, 1996 and 1995
					 						 Common Stock 						Issued In Treasury 					 Shares Amount Shares Amount 							In Thousands
Balance at July 31, 1994 10,898 $2,724 476 $6,574 Net Income 3% stock dividend 313 79 Conversion of debentures Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization Loan to employees' stock ownership plan Decrease in unfunded pension losses Balance at July 31, 1995 11,211 2,803 476 6,574 Net(loss) Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization Loan to employees' stock ownership plan Balance at July 31, 1996 11,211 2,803 476 6,574 Net income Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization Balance at July 31, 1997 11,211 $2,803 476 $6,574
See notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - Continued CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES Years Ended July 31, 1997, 1996, and 1995 				 Deferred 				 Compensation 				 Under Stock 				 Bonus Plan 				 and Employees' Unfunded Additional 				 Stock Ownership Pension Paid-In Retained 				 Plan Losses Capital Earnings 						 In Thousands
Balance at July 31, 1994 $1,664 $1,766 $49,323 $16,218 Net income 4,863 3% stock dividend 2,032 (2,111) Conversion of debentures 2 Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization (544) Loan to employees' stock ownershipn plan 500 Decrease in unfunded pension losses (1,766) Balance at July 31, 1995 1,620 - 51,357 18,970 Net (loss) (1,535) Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization (586) Loan to employees' stock ownership plan 500 Balance at July 31, 1996 1,534 - 51,357 17,435 Net income 7,914 Deferred compensation under stock bonus plan and employees' stock ownership plan: Amortization (480) Balance at July 31, 1997 $1,054 - $51,357 $25,349
See notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES July 31, 1997, 1996 and 1995
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Fiscal year: The Company's year ends on the last Friday in July. Fiscal years are designated as ending July 31 for convenience of reference.
Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Receivables - Concentration of Credit Risk: The Company's primary business is the roasting, packing and marketing of a broad range of regular and decaffeinated, ground roast, instant and specialty coffees for the Foodservice and Retail Grocery Industries. These products are sold regionally throughout the United States and Canada. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. Credit losses relating to customers have consistently been within Management's expectations.
Cash Equivalents: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Inventories: Inventories are stated at the lower of cost (first-in, first-out) or market and consist of:
July 31, 1997 1996
Finished goods $41,747,129 $35,715,505 Raw materials 36,412,728 18,931,470 Supplies 4,791,831 4,990,827 				$82,951,688 $59,637,802
Property, Plant and Equipment: Depreciation and amortization of property, plant and equipment are computed by the straight-line method for financial reporting purposes and by accelerated methods for income tax purposes.
Long-Lived Assets: In accordance with Financial Accounting Standards Board ("FASB") Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", the Company records impairment losses on long-lived assets used in operations,including intangible assets, when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.
Pre-opening Costs: Quikava pre-opening costs are charged to operations as incurred.
Excess of Cost over Net Assets Acquired: The Company evaluates goodwill impairment at the end of each quarter based on recoverability measured by undiscounted estimated operating profits (i.e., pretax earnings before interest expense and goodwill amortization). Under this approach, the carrying value would be reduced to estimated realizable value if it is probable that Management's best estimate of future operating profits during the goodwill amortization period will be less than the carrying amount of the related goodwill. Excess of cost over net assets acquired is being amortized on a straight-line basis over periods of 40 and 15 years. Accumulated amortization amounted to $2,010,000 and $1,755,000 at July 31, 1997 and 1996, respectively.
Other Intangibles: Other intangibles consist principally of trademarks, covenants not to compete and customer lists. Such items are being amortized on a straight-line basis over periods of 40, 5 and 7.5 years, respectively. See Note 9 (c). The Company evaluates any impairment of these assets on a basis similar to goodwill.
Advertising Expenses: The cost of advertising is expensed as incurred. The Company incurred $4,253,000, $3,130,000 and $4,615,000 in advertising costs during 1997, 1996 and 1995, respectively.
Stock Based Compensation: In October 1995, the FASB issued Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, which provides an alternative to APB Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for stock-based compensation issued to employees. The Statement allows for a fair value based method of accounting for employee stock options and similar equity instruments. The Company has determined it will continue to report stock-based compensation for all options that are issued under APB Opinion No. 25.
Per Share Data: Primary per share data is based on the following weighted average number of common shares outstanding during each year retroactively adjusted for stock dividends:10,736,000 in 1997, 1996 and 1995. Fully diluted per share data, assuming conversion of debentures, is based on 22,557,000 common shares outstanding for the years ended July 31, 1997, 1996 and 1995.
In February of 1997, the FASB issued Statement No. 128, "Earnings Per Share", which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. The Company believes adoption of Statement No. 128 will not have a material impact on earnings per share information currently presented.
NOTE 2--LONG TERM DEBT
Long-term debt consists of the following: 							 July 31 							1997 1996
7% Convertible senior subordinated debentures due 2012 $ 51,693,000 $ 51,693,000 8% Convertible subordinated debentures due 2006 43,266,000 43,266,000 Revolving credit and term loan 11,872,753 10,276,468 			 						 106,831,753 105,235,468 Less current installments 766,000 						 $106,065,753 $105,235,468
The 7% and 8% debentures require annual sinking fund payments of $3,000,000 and $3,750,000, respectively, which after giving effect to previous conversions and redemptions, commence April 1, 2000 and September 15, 1998, respectively, and provide for balloon payments of $18,000,000 and $12,500,000 on April 1, 2012 and September 15, 2006, respectively. The debentures are convertible at the option of the debenture holders into shares of the Company's common stock at a price of $8.23 per share and $7.81 per share, respectively (subject to adjustment). As of July 31, 1997, approximately 11,821,000 common shares are reserved for issuance upon conversion of debentures.
Under the Company's amended and restated revolving credit and term loan agreements (collectively the "Loan Agreements") with Fleet Bank, N.A. and The Chase Manhattan 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, 1997 may not exceed $40,000,000 and after such date may not exceed $20,000,000. Interest (8.5% at July 31, 1997) on all such loans is equal to the 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 July 31, 1997) are to be repaid in December 1999. Outstanding loans under the revolving credit agreements 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.
As of July 31, 1997, long-term debt matures as follows: $766,000 (year ending July 31, 1998), $3,750,000 (year ending July 31, 1999), $16,315,753 (year ending July 31, 2000),$6,750,000 (years ending July 31, 2001 and 2002) and $72,500,000 thereafter.
The Company believes that the fair value of its 7% and 8% convertible subordinated debentures approximates $51,176,000 and $44,780,000, respectively, as indicated by the public trading prices of such debt.
NOTE 3--INCOME TAXES The provision for income taxes for continuing operations differs from the expected Federal income tax for the reasons shown in the following table:
					 1997 1996 1995 Federal income tax provision expected at the statutory rate $4,152,213 $2,620,504 $ 3,761,792 Effect on Federal income tax of: State and local income taxes, 	net of Federal income tax 	benefit 496,980 322,080 106,260 Amortization of excess of cost 	over net assets acquired 68,000 68,000 68,000 Other 347,807 65,416 73,948 Realization of prior year capital 	loss not previously recorded (767,000) 					 $4,298,000 $3,076,000 $4,010,000
Deferred tax liabilities and assets are comprised of the following at July 31, 							 1997 1996 Net deferred non-current tax liabilities: Net difference between tax and book basis 	of property, plant and equipment $7,755,000 $5,897,000 Prepaid pension expense 779,000 431,000 Compensation under stock bonus plan and employees' stock ownership plan (178,000) (273,000) Other (701,000) (464,000) 						 $7,655,000 $5,591,000 Net deferred current tax assets: Net difference between tax and book 	basis of inventory $356,000 $344,000 Allowance for doubtful accounts and discounts 463,000 419,000 Accrued expenses - close-down 169,000 650,000 Accrued cash bonus 208,000 Payment of underfunded pension plan (525,000) Other 72,000 45,000 						 $1,268,000 $ 933,000
NOTE 4--DISCONTINUED OPERATIONS
In October 1996, the Company's Board of Directors adopted a plan to discontinue operations of the Chock Cafes. Accordingly, the operating results of the Chock Cafe operations,including provisions for estimated lease termination costs, employee benefits and losses during the phase-out period of approximately $1,800,000 and a write-off of leasehold improvements and equipment and deferred charges of approximately $5,200,000 have been segregated from continuing operations and reported as a separate line item on the statement of operations. During the year end July 31, 1997, approximately $1,250,000 was changed against the previously established reserves.
Operating results (exclusive of any corporate charges or interest expense and the aforementioned provisions)from discontinued operations are as follows:
					1996 1995
Net Sales $3,783,397 $2,236,855 Costs and expenses Costs of sales 5,903,142 4,184,197 Selling, general and administrative expenses 710,299 705,197 				 6,613,441 4,889,394 Operating (loss) (2,830,044) (2,652,539) Other deductions (231,150) (Loss) before income taxes (2,830,044) (2,883,689) Income tax credits (1,073,000) (1,009,000) (Loss) from operations $(1,757,044) $(1,874,689)
NOTE 5 -- LEASES
The Company and subsidiaries lease manufacturing plants, warehouses, office space and Quikava locations and related premises. Leases which provide for payment of property taxes, utilities and certain other expenses, expire on various dates through 2009 and contain renewal options. As of July 31, 1997, the Company's obligation for future minimum rental payments, assuming the exercise of renewal options, aggregated $12,440,000. Payments required in the following five fiscal years amount to $4,024,000 (1998), $3,249,000 (1999), $2,523,000 (2000),$1,476,000(2001) and $760,000 (2002). Rental expense charged to continuing operations under operating leases for the years ended July 31, 1997, 1996 and 1995 was $4,751,000, $4,150,000 and $4,893,000, respectively.
As of July 31, 1997, future minimum rental payments due from tenants under sub-leases of retail facilities and related premises aggregated $12,922,000. Amounts receivable in the following five fiscal years amount to $2,087,000 (1998), $1,809,000 (1999), $1,508,000 (2000), $1,244,000 (2001) and $926,000 (2002).
NOTE 6--STOCKHOLDERS' EQUITY
A non-contributory employee stock ownership plan ("ESOP") has been established to acquire shares of the Company's common stock for the benefit of all eligible employees. The Company has made loans to the ESOP to be repaid in equal annual installments over 8 years with interest primarily at 9% and 10%. Deferred compensation equal to the loans has been recorded as a reduction of stock holders' equity representing the Company's prepayment of future compensation expense. As the Company makes annual contributions to the ESOP, these contributions will be used to repay the loans to the Company, together with accrued interest. As the loans are repaid, common stock is allocated to ESOP participants and deferred compensation is reduced by the amount of the principal payment on the loans.
The Company has a Warrant Dividend Plan which provides for distribution to shareholders of a right to purchase one share of the Company's common stock currently for $24.13 (subject to anti-dilution adjustments) as a dividend on each of the Company's outstanding common shares. These rights are not currently exercisable and will only become exercisable upon the happening of certain events. Under certain circumstances, the rights entitle the holders to receive, upon payment of the then current exercise price of the right, that number of shares of Company common stock having a market value of two times the then current exercise price of the right. The rights will expire on December 30, 1997 and are redeemable at $.05 per right at any time prior to the occurrence of certain events.
The Company's incentive compensation plan provides, among other things, for incentive or non-qualified stock options, stock appreciation rights, perfor- mance units, restricted stock and incentive bonus awards. During the years ended July 31, 1996 and 1995, respectively, non-qualified stock options for the purchase of 16,000 and 250,000 shares, at prices of $5.25 and $5.75 per share, were granted to key executives under the plan. During each of the years ended July 31, 1997 and 1995 options to purchase 8,500 shares were forefeited. At July 31, 1997, there were outstanding options for 358,000 shares. The 1995 options were granted to the Chief Executive Officer. Options granted are exercisable at the fair market value at date of grant and, subject to termination of employment, expire ten years from the date of grant, are non-transferable other than on death, and are exercisable in three equal annual installments commencing three years from date of grant.
Had compensation cost for the Company's stock option plan been determined based on the fair market value at the grant for awards in 1996 consistent with the provisions of SFAS 123, the Company's net income would have been reduced by approximately $1,000 in 1997 and net loss would have been increased by approximately $2,000 in 1996 with no affect on per share amounts. These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years. The fair value for the options awarded was estimated at the date of grant using the Black-Scholes model with the following assumptions: expected divided yield - - 0, expected stock price volatility - 22%,risk-free interest rate: 1996 - 5.34% and expected life of options - 4 years.
Under the incentive compensation plan, as of July 31, 1997, 31,000 common shares are outstanding which were issued to key executives in 1987 and 1988. These shares are subject to restricted stock agreements which provide that the shares will vest ratably over periods through 2001. Such shares are subject, upon the occurrence of certain events, to either forfeiture or accelerated vesting. The fair value of the shares on the dates of issuance is being charged to operations as compensation during the period the restrictions remain in effect. At July 31, 1997, 121,000 shares were available under the plan.
NOTE 7--PENSION PLANS
The Company has non-contributory defined benefit pension plans covering all employees who have completed six months of service, have attained age twenty and one-half and are not covered by union-sponsored plans. The benefits are based on years of service and the employee's compensation during the last 60 months of employment. The pension plans are funded to accumulate sufficient assets to provide for accrued benefits. In addition, contributions are made to multi-employer plans which provide defined benefits to union employees.
A summary of the components of net periodic pension cost for the defined benefit plans for the three years ended July 31, 1997 and total contributions charged to pension expense for the union-sponsored plans follows (in thousands):
						1997 1996 1995
Service cost-benefits earned 	during the year $1,681 $1,729 $1,813 Interest cost on projected benefit 	obligation 2,246 1,985 1,961 Actual return on plan assets (2,021) (1,866) (1,723) Net amortization and deferral 211 144 253 NET PENSION COST OF DEFINED BENEFIT 	PLANS 2,117 1,992 2,304 UNION-SPONSORED PLANS 335 319 287 TOTAL PENSION EXPENSE $2,452 $2,311 $2,591
The following table sets forth the funded status and amounts recognized in the consolidated balance sheet at July 31, for the defined benefit pension plans (in thousands): 			 1997 1996 			 Plans Whose Plan Whose Plan Whose 			 Assets Exceed Assets Exceed Accumulated 			 Accumlated Accumulated Benefits 			 Benefits Benefits Exceed Assets Actuarial present value of benefit obligations:
Vested benefit obligation $ (27,641) $ (22,241) $(2,160) Accumulated benefit obligation $ (27,967) $ (22,993) $(2,163) Projected benefit obligation $ (31,141) $ (25,520) $(2,163)
Plan assets, consisting primarily of U.S. treasury notes, other U.S. agency issues, guaranteed insurance contracts and corporate investments, at fair value 27,404 23,010 1,864
Projected benefit obligation (in excess of)plan assets (1,737) (2,510) (299) Unrecognized prior service cost 280 223 114 Unrecognized net loss 5,586 5,338 392 Unrecognized net asset at August 1, 1987; net of amortization (484) (514) (57) 									 Net pension asset recognized in the consolidated balance sheet $3,645 $2,537 $150
The weighted-average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 8.0% and 4% and 8.3% and 4%, respectively, at July 31, 1997 and 1996. The expected long-term rate of return on plan assets was 8.0% in 1997, 1996 and 1995, respectively.
NOTE 8--QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of the unaudited quarterly results of continuing operations for the years ended July 31, 1997 and 1996:
						 Fiscal 1997 						 Three Months Ended 				 October 31 January 31 April 30 July 31 				 (Thousands of Dollars Except Per Share Data)
Net sales $82,577 $84,242 $95,306 $102,079
Gross profit $23,421 $25,787 $29,110 $ 28,807
Income from 	 continuing operations $ 1,451 $ 1,748 $ 2,236 $ 2,479(1) Per share: Primary $ .14 $ .16 $ .21 $ .23(1)
Fully diluted $ .11 $ .13 $ .15 $ .16
						 Fiscal 1996 						 Three Months Ended 				 October 31 January 31 April 30 July 31 				 (Thousands of Dollars Except Per Share Data)
Net sales $77,373 $82,243 $85,617 $75,902
Gross profit $21,588 $22,977 $25,058 $22,034
Income from 	 continuing operations $ 1,354 $ 1,389 $ 1,460 $ 428
Per share: Primary $ .13 $ .13 $ .14 $ .04
Fully diluted $ .11 $ .12 $ .10 $ .04
(1) Includes write-off of $1,500,000 relating to litigation, $.09 per share and $767,000 income tax credit relating to realization of prior year capital loss not previously recorded , $.07 per share (see Notes 9(a) and 3).
NOTE 9--OTHER ITEMS
a. On January 17,1997, the Company acquired substantially all of the assets and assumed substantially all of the liabilities of Ireland Coffee & Tea Company, a leading roaster and distributor of coffees to hotels, restaur- ants and institutions on the East Coast for approximately $8,000,000 which includes $1,500,000 for contingent payments. The acquisition is being accounted for as purchase. The excess of cost over net assets acquired (approximately $4,100,000) is being amortized over a period of 40 years using the straight-line method. The pro forma effects on the Company's operations as if this business had been acquired on August 1, 1995 are not material.
b. Receivables other than trade at July 31, 1997 and 1996 amount to $576,000 and $2,418,000, respectively. See Note 9(d).
c. Other assets and deferred charges consist of (in thousands):
July 31, 1997 1996
Deferred financing costs (1) $2,460 $2,896 Non-compete agreements, net 1,424 2,766 Trademarks, net 5,207 4,542 Customer lists, net 3,512 4,666 Due from co-packer 1,711 3,375 Prepaid pension expense 3,705 2,924 Other 5,780 5,807 							 $23,799 $26,976
				
(1) Being amortized over the terms of the related indebtedness (see Note 2).
d. In connection with closing a business and termination of a pension plan the Company paid a liability for an underfunded pension plan of approximately $1,500,000 and recorded a similar amount receivable at July 31, 1994 from the previous owner of such business pursuant to certain provisions of the acquisition agreement. The previous owner of the business is contesting the liability to the Company and the Company has commenced litigation seeking collection of such amount. On August 8, 1997 the United States District Court Southern District of New York granted the previous owner's motion for summary judgment. The Company has appealed the decision to the Second Circuit. However, due to the uncertainty surrounding the outcome of such appeal and in light of the aforementioned decision, the Company has written-off the $1,500,000 due from theprevious owner. Such amount is included in other deductions in fiscal 1997.
e. In fiscal 1996, other income includes $460,000 from the sale of real estate. In fiscal 1995, other income includes $589,000 from the sale of a former manufacturing plant.
NOTE 10 -- INDUSTRY SEGMENT INFORMATION
The Company's financial information by industry segment for 1997, 1996 and 1995 may be found immediately after "Managements Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated herein by reference.
SELECTED FINANCIAL DATA CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
					 YEAR ENDED JULY 31 			 1997 1996 1995 1994 1993 			(Dollar Amounts in Thousands, Except Per Share Amounts)
Net sales $364,204 $321,135 $326,141 $263,511 $251,641 Income from continuing operations 7,914 4,631 6,738 8,243 1,062 Working capital 99,086 87,053 89,612 81,590 72,022 Working capital ratio 4.5 to 1 4.7 to 1 4.3 to 1 3.6 to 1 3.8 to 1 Total assets 217,330 199,435 207,005 208,807 195,304 Long-term debt 106,066 105,235 106,569 110,427 108,092 Stockholders' equity 71,881 63,487 64,937 58,262 52,985 Per common share (1): Income from continuing operations .74 .43 .63 .76 .10 Stock dividends declared 3% 3% 3% 	 Stockholders' equity 6.70 5.91 6.05 5.43 4.84 				
(1) Per share data has been retroactively adjusted for a 3% stock dividend in July 1995, 1994 and 1993.
FORWARD-LOOKING STATEMENTS
Certain statements under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-K and in the letter of the President and Chief Executive Officer and Chairman of the Board and elsewhere in the Company's Annual Report to Shareholders, constitute "forward looking statements" within the meaning of the Reform Act. Such forward looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, among others, the following: general economic and business conditions; the availability of green coffee; green coffee prices; competition; success of operating initiatives; development and operating costs; advertising and promotional efforts; brand awareness; the existence of or adherence to development schedules; the existence or absence of adverse publicity; availability, locations and terms of sites for Quikava outlets; changes in business strategy or development plans; quality of management; availability, terms and deployment of capital; business abilities and judgement of personnel; availability of qualified personnel; labor and employee benefit costs; changes in or the failure to comply with government regulations; construction costs and other factors.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS
The discussion and analysis that follows relates solely to continuing operations of the Company.
In January 1997, the Company acquired substantially all of the assets and assumed substantially all of the liabilities of Ireland Coffee and Tea Company ("Ireland"). The business of Ireland consists of roasting and distributing coffees to hotels, restaurants and institutions on the East Coast.
Net sales from beverage products increased $41,254,000 or 13% for the year ended July 31, 1997, compared to the prior year. The increase was primarily due to a 15% increase in coffee pounds sold. Operating profits from beverage products were $23,498,000, an increase of 41% for the year ended July 31, 1997 compared to the prior year. The increase resulted primarily from increased gross margins and the operations of Ireland from date of acquisition, partially offset by increased selling, general and administrative expenses. Increased gross margins were primarily due to increased coffee pounds sold and a decrease in the average cost of green coffee. During the year ended July 31, 1997 prices for green coffee ranged from a high of $3.15 to a low of $1.03 per pound. Selling, general and administrative expenses increased primarily due to increased advertising, brokerage and data processing costs and salaries. Certain of the Company's selling expenses vary with the number of pounds sold, therefore selling expense has increased in 1997 compared to 1996.
Net sales of Quikava company operated shops increased to $3,737,000 for the year ended July 31, 1997 from $1,922,000 in the prior year. Quikava's future lies in its ability to franchise the concept, thereby generating royalty income on franchise sales ($2,437,000 in 1997 versus $1,747,000 in 1996) plus initial franchise fees to cover expenses for headquarters. Company operated shops have opened in new markets to generate potential franchisee interest and gain exposure to the concept. Operating losses increased to $1,998,000 for the year ended July 31, 1997 compared to $1,649,000 in the prior year. The increase in operating losses consists primarily of increased headquarters' expenses (primarily payroll and related expenses for franchising infrastructure and pre-opening costs) and increased shop level losses (primarily due to the number of shops open less than 12 months), partially offset by increased royalty income on increased franchisee sales. The first year shops opening in new markets with lack of brand recognition resulted in slower sales growth and greater shop level losses than established comparable shops.
Income from continuing operations was $7,914,000 or $.74 per share for the year ended July 31, 1997, compared to $4,631,000 or $.43 per share for the prior year. The difference was primarily due to increased operating profits from beverage products and to a lesser extent increased interest income (resulting from increased invested funds in the early part of fiscal 1997) and reduced interest expense (resulting from lower amounts of debt outstanding), partially offset by increased income taxes and increased operating losses from Quikava. Increased income taxes are primarily attributable to increased income before income taxes, partially offset by realization of prior year capital loss not previously recorded. Net income for 1997 is the same as the results from continuing operations. Net income for 1996 is net of a loss from discontinued operations of $6,167,000 or $.57 per share (see Note 4 of Notes to Consoli- dated Financial Statements).
Net sales from beverage products decreased $6,046,000 or 1.9% for the year ended July 31, 1996, compared to the prior year. The decrease in net sales was due to a decrease in the average selling price of coffee, partially offset by a 16% increase in coffee pounds sold. Operating profits from beverage products were $16,708,000, a decrease of 12% for the year ended July 31, 1996, compared to $19,075,000 for the prior year. The decrease resulted primarily from decreased gross margins. 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 inceased coffee pounds sold. During the year ended July 31, 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 were slightly lower than the prior year, with decreases in advertising, coupon, payroll and payroll related expenses partially offset by increased brokerage and delivery costs.
Net sales of Quikava increased to $1,922,000 for the year ended July 31, 1996 from $882,000 in the prior year. Operating losses increased to $1,649,000 for the year ended July 31, 1996 compared to $870,000 in the prior year. The increase in operating losses was substantially attributable to increased headquarters' expense (primarily payroll and related expenses) and store level losses (primarily attributable to first year stores), partially offset by increased royalty income on increased franchisee sales ($1,747,000 in 1996 versus $1,232,000 in 1995).
Income from continuing operations was $4,631,000 or $.43 per share for the year ended July 31, 1996, compared to $6,738,000 or $.63 per share for the prior year. The difference was primarily due to decreased operating profits from beverage products and increased operating losses from Quikava, partially offset by decreased income taxes (primarily due to decreased income before income taxes).
General inflation has been relatively low for the last several years; however, green coffee prices have changed significantly during fiscal 1997, 1996 and 1995. While the Company manages its inventory to have rapid turnover, the changes in green coffee prices have required the Company to carry higher inventories (dollars) than it might otherwise have done in a more stable green coffee market and impacted the Company's gross profit percentage.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 1997, working capital was approximately $99,000,000 and the ratio of current assets to current liabilities was 4.5 to 1.
As of July 31, 1997, the Company had unused borrowing capacity of approximately $28 million under its credit facilities of $40 million with Fleet Bank N.A. and The Chase Manhattan Bank (see Note 2 of Notes to Consoli- dated Financial Statements).
The Company plans on expanding its Quikava franchised operations, which are currently operating in 9 locations. The sales of Company operated and franchised units are not material to the Company's consolidated sales. Total Quikava store level operations are not currently profitable but are being offset by franchise income and, in addition, Quikava headquarters' expenses of approximately $1,400,000 on an annual basis are not being absorbed.
The Company believes that its cash flow from operations, its cash equivalents and its revolving credit and term loan agreements with its Banks provide sufficient liquidity to meet its working capital, expansion and capital requirements.
GREEN COFFEE MARKET
Coffee is one of the leading commodities traded on futures exchanges. Supplies fluctuate with the weather and prices have been volatile. The supply and price is affected by multiple factors, such as weather, politics and economics in the coffee producing countries, many of which are lesser developed nations. While coffee trades primarily on the futures market, coffee of the quality level sought by the Company can trade on a negotiated basis at a substantial premium above commodity coffee pricing, depending upon the supply and demand at the time of purchase. 				 The International Coffee Organization, through the imposition of export quotas agreed upon by consumer and producer member nations, has in the past attempted to maintain the commodity prices of green coffees. In July 1989 the refusal of certain countries to participate in the quota system resulted in the dissolution of the agreement and a drop in the prices of coffees. In August 1993, 21 coffee-producing countries formed a new cartel, the Association of Coffee Producing Countries ("ACPC") and announced plans to cut the supply of coffee by 20% beginning October 1, 1993 in an attempt to raise world coffee prices. The effect of the ACPC on coffee prices is difficult to determine in light of the dramatic price increases resulting from the 1994 frosts in Brazil discussed below. Nonetheless, the ACPC met in November 1994 and resolved to sustain green coffee bean prices. In Janaury 1996, the ACPC agreed to extend its current limitations on the supply of green coffee upon their expiration in June 1996 through the 1996/1997 green coffee year. The Company is unable to predict whether the ACPC will be successful in achieving its goals. Based on published statistics the supplies of green coffees held by consumers (roasters and buyers) are currently, near historically low levels.
Brazil, the world's largest coffee producer, experienced frosts in June and July of 1994 which reportedly damaged approximately 40% of the green coffee bean crop. The announcement of the Brazilian frost damage caused a substantial increase in green coffee bean prices and other coffee-product prices worldwide. The Company purchases a modest amount of its green coffee beans from Brazil. In the third and fourth quarter of 1994 the Company experienced a significant increase in the price of green coffee beans which carried over into the first three quarters of 1995. The Company was not able to immediately pass through to customers all of the price increases in the third and fourth quarters of 1994 and the first quarter of 1995 following the significant increase in green coffee bean prices that resulted from the Brazilian frosts. Subsequent to such period through January 1997, the Company's green coffee purchases and commitments returned to pricing levels closer to those that existed prior to the June and July 1994 Brazilian frosts. In February 1997, green coffee bean prices began to rise significantly reaching a high of $3.18 per pound in May 1997. This bull market was somewhat unique in that the fundamental cause was very tight stocks of arabica coffee in consuming countries. Historically, bull markets have been the direct result of weather developments in Brazil, specifically cold weather and drought that damages the following crop. Subsequent to May 1997, the green coffee market has been in the $1.60 to $2.10 range.
The Company is unable to predict weather events in particular countries that may adversely affect coffee supplies and price. Except for late 1994 and early 1995, the Company generally has been able to pass green coffee price increases through to its customers, thereby maintaining its gross margins. The Company cannot predict whether it will be able to pass inventory price increases through to its customers in full in the future.
A significant portion of the Company's green coffee supply is contracted for future delivery, generally between three and twelve months forward (with declining precentages of the supply being subject to future contracts in the latter portions of each year), to ensure both an adequate supply and reduced risk of short-term price fluctuations. Green coffee is a large market with well-established brokers, importers and warehousemen though which the Company manages its requirements. In addition to forward purchases, the Company keeps physical inventory in each of its production facilities and third-party warehouses representing anywhere from four to ten weeks of supply requirements. All coffee purchase transactions are in U.S. dollars, the industry's standard currency. The Company believes that it is not dependent upon any one importer or broker for its supply of green coffee beans from any particular country.
Retail Customers are very price-sensitive about the purchase of coffee in supermakets. When retail prices increase dramatically, takeaway declines and consumers switch to less expensive brands and high yield roasts. Likewise, Food Service Customers in times of price increase tend to stretch the use of inventory.
SEGMENT INFORMATION CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
						 Year Ended July 31 				 1997 1996 1995 						 (Amounts in Thousands) 								 Net sales - beverage products $360,467 $ 319,213 $325,259 Net sales - Quikava 3,737 1,922 882 				 $364,204 $ 321,135 $326,141 Rental revenues $ 2,091 $ 2,156 $ 2,061 	 Operating profit\(loss): Beverage products $ 23,498 $ 16,708 $19,075 Quikava (1,998) (1,649) (870) Real estate 140 671 490 Eliminations (393) (625) (423) 				 $ 21,247 $ 15,105 $18,272
Identifiable assets: Beverage products $186,304 $152,168 $163,595 Quikava 4,835 4,720 1,971 Real estate 9,356 9,493 9,564 Corporate 16,835 33,054 31,875 				 $217,330 $199,435 $207,005 Depreciation and amortization: Beverage products $ 6,843 $ 6,006 $ 5,515 Quikava 366 197 81 Corporate 177 177 203 				 $ 7,386 $ 6,380 $ 5,799 Capital expenditures: Beverage products $ 5,154 $ 4,831 $ 6,224 Quikava 953 2,566 309 Corporate 17 14 14 				 $ 6,124 $ 7,411 $ 6,547
				
The beverage products segment is engaged in the (a) roasting, packing and marketing of regular, instant, decaffeinated and specialty coffees and (b) packing and marketing of regular and decaffeinated tea for sale to Retail, Foodservice and Private Label customers. Additionally, other related food products are marketed and sold to Foodservice customers. Quikava operations feature a full assortment of specialty coffee beverages and a varitey of freshly prepared foods and baked goods specifically suited for in-car consumption. See Note 4 of Notes to Consolidated Financial Statements for discontinued cafe operations. Operations of real estate represent rental and other income principally from the Company's original restaurant facilities.
All of the Company's operations are located in the United States. Export sales are not significant.
Identifiable assets under the caption "Corporate" include (1) cash and cash equivalents, investments in marketable securities and short-term investments of $3,781,000 (1997), $15,180,000 (1996) and $14,425,000 (1995) and (2) net assets of discontinued operations of $895,000 (1997), $941,000 (1996) and $3,814,000 (1995).
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES COMMON SHARE PRICES
The Company's Common Stock is traded on the New York Stock Exchange under the symbol CHF. The Company has approximately 14,000 shareholders of record as of October 8, 1997.
					1997 1996
				 High Low High Low
1st Quarter 5 3/8 4 5/8 6 3/4 5 7/8 2nd Quarter 5 3/8 4 5/8 6 1/8 5 1/8 3rd Quarter 6 1/8 5 1/8 5 1/2 4 3/4 4th Quarter 7 7/16 5 5/8 5 1/4 4 5/8
Pursuant to certain provisions of a revolving credit and term loan agreement, the Company may not declare or pay any dividend (except for stock dividends).
Item 14(d) CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E 				 Additions 			 Balance at Charged to Balance 			 Beginning Costs and Deductions at End Description of Period Expenses Other (1) of Period
Year ended July 31, 1997: Allowance for doubtful accounts and discounts $1,133,000 $2,440,846 $2,151,846 $1,422,000
Year ended July 31, 1996: Allowance for doubtful accounts and discounts $1,251,000 $2,315,902 $2,433,902 $1,133,000
Year ended July 31, 1995: Allowance for doubtful accounts and discounts $ 928,000 $2,597,705 $2,274,705 $1,251,000
(1) Discounts taken by customers and uncollectible accounts written-off, 	net of recoveries.
EXHIBIT 11 - STATMENT RE: COMPUTATION OF PER SHARE EARNINGS
					 YEAR ENDED JULY 31, 				1997 1996 1995 					(AMOUNTS IN THOUSANDS, 					EXCEPT PER SHARE DATA) PRIMARY AVERAGE SHARES OUTSTANDING 10,736 10,736 10,736 INCOME FROM CONTINUING OPERATIONS $7,914 $4,631 $6,738 NET INCOME/(LOSS) $7,914 $(1,536) $4,863 PER SHARE AMOUNTS: INCOME FROM CONTINUING OPERATIONS $.74 $.43 $.63 NET INCOME/(LOSS) $.74 $(.14) $.45 FULLY DILUTED AVERAGE SHARES OUTSTANDING 10,736 10,736 10,736 ASSUMED CONVERSION OF CONVERTIBLE DEBENTURES 11,821 11,821 11,821 TOTAL 22,557 22,557 22,557 INCOME FROM CONTINUING OPERATIONS $7,914 $4,631 $6,738 ADD CONVERTIBLE DEBENTURES INTEREST AND AMORTIZATION OF DEFERRED CHARGES, NET OF INCOME TAXES 4,392 4,386 4,670 TOTAL $12,306 $9,017 $11,408 NET INCOME/(LOSS) $7,914 $(1,536) $4,863 ADD CONVERTIBLE DEBENTURES INTEREST AND AMORTIZATION OF DEFERRED CHARGES, NET OF INCOME TAXES 4,392 4,452 4,670 TOTAL $12,306 $2,916 $9,533 PER SHARE AMOUNTS: INCOME FROM CONTINUING OPERATIONS $.55 $.40 $.51 NET INCOME $.55 $.13 $.42
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
As of October 13, 1997, the Company had directly and indirectly the following active subsidiaries, all of which are included in the Company's consolidated financial statements furnished herewith:
Subsidiaries of Chock full o'Nuts Corporation
Chock Realty Corporation California 100% Cain's Coffee Co. Delaware 100% Cain's Holding Company Delaware 100% Quikava, Inc. Massachusetts 100%
Exhibit 27 - FINANCIAL DATA SCHEDULE
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 $ 4,585,633 5-02 (2) Marketable securities -0- 5-02 (3)(a)(1) Notes and accounts receivable - trade 38,976,412 5-02 (4) Allowances for doubtful accounts 1,422,000 5-02 (6) Inventory 82,951,688 5-02 (9) Total current assets 127,728,954 5-02 (13) Property, plant and equipment 98,609,466 5-02 (14) Accumulated depreciation 49,933,489 5-02 (18) Total assets 217,509,966 5-02 (21) Total current liabilities 28,642,798 5-02 (22) Bonds, mortgages and similar debt 106,065,753 5-02 (28) Preferred stock - mandatory redemption -0- 5-02 (29) Preferred stock - no mandatory redemption -0- 5-02 (30) Common stock 2,802,767 5-02 (31) Other stockholders' equity 69,078,570 5-02 (32) Total liabilities and stockholders' equity 217,509,966 5-03 (b) 1 (a) Net sales of tangible products 364,203,601 5-03 (b) 1 Total revenues 366,294,908 5-03 (b) 2 (a) Cost of tangible goods sold 257,078,504 5-03 (b) 2 Total costs and expenses applicable to 		sales and revenues 259,029,641 5-03 (b) 3 Other costs and expenses -0- 5-03 (b) 5 Provision for doubtful accounts and notes 2,440,846 5-03 (b) (8) Interest and amortization of debt 8,599,963 5-03 (b) (10) Income before taxes and other items 12,212,392 5-03 (b) (11) Income tax expense 4,298,000 5-03 (b) (14) Income/loss continuing operations 7,914,392 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 7,914,392 5-03 (b) (20) Earnings per share - primary .74 5-03 (b) (20) Earnings per share - fully diluted .55