SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended January 31, 1998 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 of Organization) Identification No.)
370 Lexington Avenue, New York, N.Y. 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (212) 532-0300
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
No. of Shares of Common Stock ($.25 par value) outstanding as of
March 13, 1998 - 10,741,050
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets -
January 31, 1998 and July 31, 1997 1 & 2 of 14
Unaudited Condensed Consolidated Statements of Income-
Three Months Ended January 31, 1998 and 1997 3 of 14
Unaudited Condensed Consolidated Statements of Income-
Six Months Ended January 31, 1998 and 1997 4 of 14
Unaudited Condensed Consolidated Statements of Cash Flows -
Six Months Ended January 31, 1998 and 1997 5 of 14
Unaudited Condensed Consolidated Statement of Stockholders' Equity -
January 31, 1998 6 & 7 of 14
Notes to Unaudited Condensed Consolidated Financial
Statements - January 31, 1998 8 & 9 of 14
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10,11 and 12 of 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13 of 14
Item 4. Submission of Matters to a Vote of Shareholders 13 of 14
Item 5. Other Information 13 of 14
Item 6. Exhibits and Reports on Form 8-K 13 of 14
Signatures 14 of 14
PART I. FINANCIAL INFORMATION
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, July 31,
1998 1997
(Unaudited) (Note)
ASSETS
Current assets:
Cash and cash equivalents $11,721,399 $ 4,585,633
Receivables, principally
trade, less allowances
for doubtful accounts and
discounts of $1,584,000
and $1,422,000 40,339,772 37,554,412
Inventories 74,306,042 82,951,688
Prepaid expenses and other 3,166,848 2,457,221
Total current assets 129,534,061 127,548,954
Property, plant and
equipment - at cost $101,000,955 $98,609,466
Less allowances for
depreciation and
amortization (53,230,656) 47,770,299 (49,933,489) 48,675,977
Real estate held for
development or sale, at cost 2,203,264 7,635,427
Other assets and deferred charges 23,572,126 23,799,057
Excess of cost over net
assets acquired 9,625,034 9,670,55
$212,704,784 $217,329,966
Note: The balance sheet at July 31, 1997 has been derived from the audited
financial statements at that date.
See notes to unaudited condensed consolidated financial statements.
1 of 14
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, July 31,
1998 1997
(Unaudited) (Note)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 3,750,000 $ 766,000
Accounts payable 15,264,241 13,590,697
Accrued expenses 8,888,288 12,148,313
Income taxes 1,924,488 1,957,788
Total current liabilities 29,827,017 28,462,798
Long-term debt, excluding current portion 97,036,837 106,065,753
Other non-current liabilities 2,794,268 3,265,078
Deferred income taxes 7,655,000 7,655,000
Stockholders' equity:
Common stock, par value $.25 per share;
Authorized 50,000,000 shares:
Issued 11,216,572 and 11,211,068 shares 2,804,143 2,802,767
Additional paid-in-capital 51,397,859 51,357,008
Retained earnings 29,602,508 25,349,146
Cost of 475,522 shares in treasury (6,573,719) (6,573,719)
Deferred compensation under stock bonus
plan and employees' stock ownership plan (1,839,129) (1,053,865)
Total stockholders' equity 75,391,662 71,881,337
$212,704,784 $217,329,966
Note: The balance sheet at July 31, 1997 has been derived from the audited
financial statements at that date.
See notes to unaudited condensed consolidated financial statements.
2 of 14
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended January 31,
1998 1997
Revenues:
Net sales $102,124,053 $ 84,242,490
Rentals from real estate 551,135 524,969
102,675,188 84,767,459
Cost and expenses:
Cost of sales 75,594,751 58,455,236
Selling, general and
administrative expenses 21,720,183 21,114,737
Expenses of real estate 437,337 444,179
97,752,271 80,014,152
Operating profit 4,922,917 4,753,307
Interest income 179,610 360,156
Gain on sale of real estate 1,281,698
Interest expense (1,942,453) (2,126,938)
Other (deductions)/income - net (2,302) 1,964
Income before income taxes 4,439,470 2,988,489
Income taxes 1,754,000 1,240
Net income $2,685,470 $1,748,489
Income per share:
Basic $.26 $.17
Diluted $.17 $.13
See notes to unaudited condensed consolidated financial statements.
3 of 14
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended January 31,
1998 1997
Revenues:
Net sales $210,399,348 $166,819,000
Rentals from real estate 1,065,714 1,047,853
211,465,062 167,866,853
Cost and expenses:
Cost of sales 157,129,834 117,610,436
Selling, general and
administrative expenses 43,698,026 40,355,556
Expenses of real estate 830,889 868,477
201,658,749 158,834,469
Operating profit 9,806,313 9,032,384
Interest income 241,686 678,590
Gain on sale of real estate 1,281,698
Interest expense (4,132,047) (4,266,407)
Other (deductions)/income - net (36,289) 18,482
Income before income taxes 7,161,361 5,463,049
Income taxes 2,908,000 2,264,000
Net income $4,253,361 $3,199,049
Income per share:
Basic $.41 $.31
Diluted $.29 $.24
See notes to unaudited condensed consolidated financial statements.
4 of 14
CHOCK FULL O'NUTS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended January 31,
1998 1997
Operating Activities:
Net income $ 4,253,361 $ 3,199,049
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization of
property,plant and equipment 3,297,167 3,536,706
Amortization of deferred compensation and
deferred charges 2,181,653 2,172,602
Gain on sale of real estate (1,281,698)
Other, net (887,074) (237,266)
Changes in operating assets and liabilities:
(Increase) in accounts receivable (2,947,557) (3,702,554)
Decrease in inventory 8,645,646 2,345,396
(Increase)/decrease in prepaid expenses (700,768) 459,566
(Decrease) in accounts payable, accrued
expenses and income taxes (1,619,781) (2,416,856)
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,940,949 5,356,643
Investing Activities:
Proceeds from sale of real estate 6,685,941
Acquisition of business (5,746,230)
Purchases of marketable securities (8,859) (34,026)
Purchases of property, plant and equipment (2,391,489) (2,826,088)
NET CASH PROVIDED BY/(USED IN)INVESTING
ACTIVITIES 4,285,593 (8,606,344)
Financing Activities:
(Payments of)/proceeds from long-term debt,
net (6,001,916) 2,491,601
(Advances to)/proceeds from co-packer, net (1,088,860) 1,269,346
Loan to employees' stock ownership plan (1,000,000)
NET CASH (USED IN)/PROVIDED BY FINANCING
ACTIVITIES (8,090,776) 3,760,947
Increase in Cash and Cash Equivalents 7,135,766 511,246
Cash and Cash Equivalents at Beginning
of Period 4,585,633 16,293,783
Cash and Cash Equivalents at End of Period $11,721,399 $16,805,029
See notes to unaudited condensed financial statements.
5 of 14
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, 1997 11,211 $2,803 476 $6,574
Net income
Conversion of debentures 6 1
Deferred compensation under stock
bonus plan and employees' stock
ownership plan:
Amortization
Loan to employees' stock
ownership plan
Balance at January 31, 1998 11,217 $2,804 476 $6,574
See notes to unaudited condensed consolidated financial statements.
6 of 14
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, 1997 $1,054 $51,357 $25,349
Net income 4,254
Conversion of debentures 41
Deferred compensation under stock
bonus plan and employees' stock
ownership plan:
Amortizatization (215)
Loan to employees' stock
ownership plan 1,000
Balance at January 31, 1998 $1,839 $51,398 $29,603
See notes to unaudited condensed consoliated financial statements.
7 of 14
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998
(A) The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended
January 31, 1998 and 1997 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, 1997.
(B) In 1997, the Financial Accounting Standards Board issued Statement of
Finacial Accounting Standards No. 128, Earnings per Share. Statement
128 repaced the previously reported primary and fully diluted earnings
per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants, and convertible securities. Diluted
earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all
periods have been presented, and where necessary, restated to conform
to the Statement 128 requirements.
Basic per share data is based on the weighted average number of common
shares outstanding of 10,350,000 and 10,373,000 for the three and six
months ended January 31, 1998, respectively, and 10,370,000 and
10,357,000 for the three and six months ended January 31, 1997,
respectively. Diluted per share data, assuming conversion of
debentures, is based on 22,082,000 and 22,121,000 shares outstanding
for the three and six months ended January 31, 1998, respectively,
and 22,190,000 and 22,177,000 shares outstanding for the three and
six months ended January 31, 1997, respectively.
(C) Inventories are stated at the lower of cost (first-in, first-out) or
market. The components of inventory consist of the following:
January 31, July 31,
1998 1997
Finished goods $47,759,421 $41,747,129
Raw materials 20,260,156 36,412,728
Supplies 6,286,465 4,791,831
$74,306,042 $82,951,688
(D) Under the Company's amended and restated revolving credit and term
loan agreements (collectively the "Loan Agreements") with Fleet Capital
Corporation 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
November 30, 1998 may not exceed $40,000,000 and after such date may
not exceed $20,000,000. Interest (8.5% at January 31, 1998) on all
such loans is equal to the prime rate or at the Company's option the
London Interbank Offering Rate plus 1.75%, 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 ($3,000,000 at January 31, 1998) 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
8 of 14
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 $1,268,000.
(F) On November 19, 1997, the Company sold one of its downtown Manhattan
properties for approximately $6,900,000. The sale resulted in a
pre-tax gain of $1,282,000 or on an after tax basis approximately
$750,000, $.07 per basic share and $.03 per diluted share. The proceeds
from the sale were used to reduce outstanding bank indebtedness.
9 of 14
CHOCK FULL O' NUTS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Form 10-Q constitute
"forward-looking statements" within the meaning of the Reform Act. See Other
Information Item 5.
Operations
The following is Management's discussion and analysis of certain significant
factors that have affected the Company's operations during the periods included
in the accompanying unaudited condensed consolidated statements of operations.
In January 1997, the Company acquired substantially all of the assets and
assumed substantially 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 to $101,275,000 or 21% for the
three months ended January 31, 1998 compared to $83,393,000 for the comparable
period of the prior year. The increase was primarily due to increases in the
average selling price of coffee and to a lesser extent a 12.3% increase in
coffee pounds sold. Operating profit from beverage products was $5,292,000
an increase of 2% for the three months ended January 31, 1998 compared to the
prior year's comparable period. The increase for the three months resulted
primarily from small increases in gross margins, partially offset by small
increases in selling, general and administrative expenses. Increased gross
margins were primarily due to increased pounds sold, partially offset by an
increase in the average cost of green coffee greater than the increase in
the average selling price of coffee. During the three months ended January
31, 1998 prices of green coffee ranged from a high of $1.88 to a low of
$1.44 per pound. Selling, general and administrative expenses increased
slightly, primarily due to increased salaries and advertising, partially
offset by decreased coupon costs.
Net sales from beverage products increased to $208,543,000 or 26% for the
six months ended January 31, 1998 compared to $165,150,000 for the comparable
period of the prior year. The increase was primarily due to increases in
the average selling price of coffee and to a lesser extent a 9.6% increase
in coffee pounds sold. Operating profit from beverage products was
$10,490,000 an increase of 7% for the six months ended January 31, 1998
compared to the prior year's comparable period. The increase for the six
months ended January 31, 1998 resulted primarily from increased gross
margins and to a lesser extent the operations of Ireland, partially offset
by increased selling, general and administrative expenses. Increased gross
margins were primarily due to increased coffee pounds sold and increased
sales of allied products. The increase in the average selling price of
coffee during the six months approximated the increase in the average
cost of green coffee. During the six months ended January 31, 1998 prices
for green coffee ranged from a high of $2.11 to a low of $1.44 per pound.
Selling, general and administrative expenses increased primarily due to
increased salaries, advertising and delivery costs, partially offset by
reduced coupon costs. Certain of the Company's selling expenses vary with
the number of pounds sold, therefore selling expense has increased in 1998
compared to the 1997 periods.
Quikava's growth plans involve franchising the concept, thereby generating
initial franchise fees and continuing royalty income to cover headquarters'
expenses. Franchise operated shop sales were $1,379,000 for six months ended
January 31, 1998 versus $1,157,000, an increase of 19%, in the comparable
1997 period. Quikava company-operated shop sales were $1,590,000 for the
six months ended January 31, 1998 compared to $1,501,000 in the comparable
period of the prior year. Company operated shops generate potential
franchise interest and gain exposure to the concept. Operating losses
amounted to $919,000 for the six months ended January 31, 1998 compared
to $958,000 in the comparable period of the prior year. The operating
losses consist primarily of headquarters' expenses (primarily
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payroll and related expenses for franchising infrastructure) and shop
level losses, partially offset by initial franchise fee income in 1998
and royalty income on franchisee sales. The operating losses for the
three months ended January 31, 1998 and 1997, respectively, were $484,000
and $520,000.
Net income was $2,685,000 ($.26 per basic share and $.17 per diluted share)
for the three months ended January 31, 1998, compared to $1,748,000
($.17 per basic share and $.13 per diluted share) for the comparable period
of the prior year. The difference was primarily due to the gain on sale of
real estate and to a lesser extent increased operating profits from beverage
products and decreased interest expense (resulting from reduced amounts of
debt outstanding), partially offset by decreased interest income (resulting
from decreased invested funds) and increased income taxes. Increased income
taxes are primarily attributable to increased income before income taxes.
Net income was $4,253,000 ($.41 per basic share and $.29 per diluted share)
for the six months ended January 31, 1998, compared to $3,199,000
($.31 per basic share and $.24 per diluted share) for the comparable
period of the prior year. The difference was primarily due to the gain on
sale of real estate ($.07 per basic share and $.03 per diluted share) and
increased operating profits from beverage products and to a lesser extent
reduced interest expense (resulting from reduced amounts of debt outstanding
in the second quarter), partially offset by decreased interest income
(resulting from decreased invested funds) and increased income taxes
(attributable to increased income before income taxes).
Liquidity and Capital Resources
As of January 31, 1998, working capital was approximately $100,000,000
and the ratio of current assets to current liabilities was 4.3 to 1.
As of January 31, 1998, the Company had unused borrowing capicity of
approximately $34 million under its credit facilities of $40 million
with Fleet Capital Corporation and The Chase Manhattan Bank
(see Notes D and F of Notes to Unaudited Condensed Consolidated
Financial Statements).
The Company plans on expanding its Quikava franchised operations, which
are curently operating in 27 locations. The sales of Company operated and
franchised units are not material to the Company's consolidated sales.
Total Quikava store level opertions are not currently profitable but are
being partially offset by franchise fee and royalty income and, in addition,
Quikava headquarters' expenses of approximately $1,200,000 on an annual
basis are not being absorbed.
The Company believes that its cash flow from operations, its cash equivalents
and funds available under 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.
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
11 of 14
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 January 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.
No further actions have been taken by the ACPC subsequent to that date.
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 $3.15 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 $2.11 to $1.44 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 green
coffee 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 percentages 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 and club stores. When retail prices increase dramatically,
takeaway declines and consumers switch to less expensive brands and high
yield roasts. Likewise, FoodService Customers in times of price increase
tend to stretch the use of inventory.
12 of 14
Part II. Other Information
Item 1. Legal Proceedings - None
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders' held on December 12, 1997,
the Company's shareholders' elected Mark A. Alexander
(8,127,893 for 1,398,654 against), Jerry Columbus
(8,131,830 for 1,394,717 against), Howard M. Leitner
(8,129,473 for 1,397,074 against) and Henry Salzhauer
(8,500,000 for 1,000,000 against) as directors for a term of three years
and ratified the appointment of independent auditors for 1998 with a vote
of 9,264,381 for, 213,286 against and 48,873 abstained.
Item 5. Other Information
Certain statements under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and elsewhere in this
Form 10-Q constitute "forward looking statements" within the meaning of the
Reform Act. Such forward looking statements involve known 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, including green coffee prices;
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
judgment 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.
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
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant duly caused this Report of Form 10-Q to be signed on its
behalf by the undersigned, thereunto duly authorized.
CHOCK FULL O' NUTS CORPORATION
(Registrant)
March 12, 1998
Marvin I. Haas
President and Chief Executive Officer
March 12, 1998
Howard M. Leitner
Senior Vice President and
Chief Financial and Accounting Officer
14 of 14
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 11,721,399
<SECURITIES> 0
<RECEIVABLES> 41,923,772
<ALLOWANCES> 1,584,000
<INVENTORY> 74,306,042
<CURRENT-ASSETS> 129,534,061
<PP&E> 101,000,955
<DEPRECIATION> 53,230,656
<TOTAL-ASSETS> 212,704,784
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<COMMON> 2,804,143
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<TOTAL-LIABILITY-AND-EQUITY> 212,704,784
<SALES> 210,399,348
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