SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                 FORM 10-Q


          Quarterly Report Pursuant to Section 13 or 15(d) 
  X       of the Securities Exchange Act of 1934.
          For the quarterly period ended March 31, 1997 or
     
                         
          Transition Report Pursuant to Section 13 
          or 15(d) of the Securities Exchange Act of 1934.
          For the transition period from_______ to _______.

 
                       Commission File Number 01912

                             VACU-DRY COMPANY

          (Exact name of registrant as specified in its charter)




     California                                        94-1069729
(State of incorporation)                            (IRS Employer
                                                  Identification #)

7765 Healdsburg Ave., Sebastopol, California          95472
(Address of principal executive offices)                 (Zip Code)


Registrant's telephone number, including area code:  707/829-4600          
     

                              Not-Applicable
_____________________________________________________________________________
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. 

YES: ____   NO:__X__

As of May 12, 1997, there were 1,640,845 shares of common stock, no par value,
outstanding.



<PAGE>
                                Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements

                                            VACU-DRY COMPANY
                                     CONDENSED STATEMENT OF EARNINGS
                                               (UNAUDITED)
                         

<TABLE>
                         <C>Nine Months    <C>Nine Months   <C>Three Months  <C>Three Months        
                              3/31/97           3/31/96          3/31/97          3/31/96                    
REVENUES:                                                        
     Net sales              $18,233,000       $20,304,000      $5,894,000      $7,053,000

     Other                      531,000           584,000         176,000         241,000
                            ___________       ___________      __________      __________
       Total revenue        $18,764,000       $20,888,000      $6,070,000      $7,294,000

COST & EXPENSES:

     Cost of sales           16,208,000        18,306,000       5,392,000       6,379,000

     Selling, general &
       administrative         1,625,000         1,521,000         545,000         596,000

     Interest                   175,000           248,000          82,000          79,000
                            ___________       ___________      __________      __________
      Total cost & expenses $18,008,000       $20,075,000      $6,019,000      $7,054,000

EARNINGS BEFORE INCOME TAXES    756,000           813,000          51,000         240,000

PROVISION FOR INCOME TAXES      306,000           331,000          24,000          96,000
                               ________          ________        ________        ________
NET EARNINGS                   $450,000          $482,000         $27,000        $144,000
                               ========          ========         =======        ========
EARNINGS PER COMMON SHARE          $.27              $.28            $.02            $.08
                                   ====              ====            ====            ====   
WEIGHTED AVERAGE COMMON SHARES
 AND EQUIVALENTS              1,650,001         1,702,091       1,638,739       1,706,289

                                See notes to interim financial statements
</TABLE>








                                                 VACU-DRY COMPANY
                                                   Balance Sheets
                                                    (Unaudited)
                                              (Dollars in thousands)
<TABLE>
CURRENT ASSETS:        <C>3/31/97 <C>3/31/96<C>6/30/96     CURRENT LIABILITIES:           <C>3/31/97  <C>3/31/96  <C>6/30/96

Cash                        $250      $271     $214     Borrowings under line of credit      $3,428    $1,475      $826

Accounts receivable        2,306     2,744    2,684     Current maturities of long-term debt    576       415       415

Other receivable              27        18      -0-     Accounts payable                      1,461     1,591       678

Inventories                7,692     5,395    3,430     Accrued payroll & related liabilities   742       644       476

Prepaid expenses              16       152      116     Accrued expenses                        123       144       106


Current deferred taxes       225       303      225     Income taxes payable                    -0-       186        32
                         _______   _______   ______                                          ______    ______    ______        
Total current assets     $10,516   $ 8,883   $6,669          Total current liabilities       $6,330    $4,455    $2,533
                                                                              
                                               
Net property, plant &                                   LONG-TERM DEBT - Net of
equipment                  7,337     6,919    6,918           current maturities              1,927     1,732     1,628
                       
                                               
                                                        DEFERRED INCOME TAXES                   843       905       748  

                                               

                                                        SHAREHOLDERS' EQUITY;          

                                                          Capital stock                       3,626     3,985     4,001
                                                          Retained earnings                   5,127     4,725     4,677
                                                                                              _____     _____     _____
                                                          Total shareholders' equity          8,753     8,710     8,678

                         _______   _______  _______     Total liabilities and               _______   _______   ______
Total Asset              $17,853   $15,802  $13,587       shareholders' equity              $17,853   $15,802   $13,587
                         =======   =======  =======                                         =======   =======   ======= 
                                 See notes to interim financial statements
</TABLE>
                                VACU-DRY COMPANY
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996



                                          
                                          
CASH FLOWS FROM OPERATING ACTIVITIES:                 1997        1996   

  Net earnings                                     $450,000     $482,000  
                                                   ________     ________  
Adjustments to reconcile net earnings to net
     cash provided by(used for)operating activities  -

   Refund of reserve related to debt owing to the
     State of California                                -0-     (110,000) 
    
    Depreciation expense                            787,000      701,000  
    Deferred income tax provision                    95,000       (7,000)

  Changes in certain assets & liabilities              
   (Increase) decrease in receivables               351,000     (928,000) 
   (Increase) decrease in inventories            (4,262,000)      19,000  
   Decrease in prepaid assets                       100,000       24,000  
   Increase in accounts payable                     783,000    1,198,000  
   (Decrease) increase in accrued expenses           17,000     (247,000) 
   Increase in accrued payroll & related liab       266,000      120,000  
   Increase (decrease) in income taxes payable      (32,000)     186,000  
                                                 __________   __________  
       Total adjustments                         (1,895,000)     956,000  
                                                ___________   __________  
   Net cash provided by operating activities     (1,445,000)   1,438,000  
                                                 __________   __________  
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                            (401,000)    (199,000) 
                                                ___________    _________ 
   Net cash (used for) investing activities        (401,000)    (199,000) 

CASH FLOWS FROM FINANCING ACTIVITIES:
   Additional borrowings under the line of credit 6,483,000    8,736,000  
   Payments on line of credit                    (3,881,000)  (9,612,000) 
   Employee purchase of Company stock                32,000       49,000  
   Repurchase of common stock                      (407,000)         -0-  
   Principal payments of long-term debt            (345,000)    (328,000) 
                                                  _________    _________ 
   Net cash used by financing activities          1,882,000   (1,155,000) 
                                                  _________    _________ 
NET INCREASE (DECREASE) IN CASH                      36,000       84,000  

CASH AT THE BEGINNING OF THE YEAR                   214,000      187,000  
                                                   ________     ________  
TOTAL CASH AT THE END OF THE PERIOD                $250,000     $271,000  
                                                   ========     ========


                    See notes to interim financial statements








                            VACU-DRY COMPANY
                  NOTES TO INTERIM FINANCIAL STATEMENTS                        
                    NINE MONTHS ENDED MARCH 31, 1997
 
 
 Note 1  -  The accompanying 1997 and 1996 unaudited interim financial 
            statements have been prepared pursuant to the rules of the
            Securities and Exchange Commission.  Certain information and 
            disclosures normally included in annual financial statements   
            prepared in accordance with generally accepted accounting 
            principles have been condensed or omitted pursuant to such 
            rules and regulations although the Company believes these
            disclosures are adequate to make the information not 
            misleading.  In the opinion of management, all adjustments
            necessary for a fair presentation for the period presented have
            been reflected and are of a normal recurring nature.  These
            interim financial statements should be read in conjunction with
            the financial statements and notes thereto for each of the
            three years in the period ended June 30, 1996.  The results of
            operations for the nine month period ended March 31, 1997 are
            not indicative of the results that may be achieved for the 
            entire year ending June 30, 1997.

            Reclassifications - Certain 1996 amounts were
            reclassified to conform to the 1997 presentation.
 
 Note 2  -  Inventories  -
 
                    Inventories are stated at the lower of cost, using the
                    last-in, first-out (LIFO) method or market.
 
                    Inventories at March 31, 1997 and June 30, 1996,
                    consisted of the following: 
 
                                          3/31/97        6/30/96 
                                          -------        -------               
                 Finished goods         $5,845,000     $2,757,000 
 
                 Work in progress          473,000        233,000 
 
                 Raw materials, &
                     containers          1,374,000        440,000 
                                        __________     __________
                                        $7,692,000     $3,430,000
                                        ==========     ==========      
 
 Note 3  -  Statement of Cash Flows  -
 
               Interest and income tax payments reflected in the
               Consolidated Statement of Cash Flows were as follows:
                              
                                         1997               1996
 
               Interest paid           $159,000          $252,000  
               Income taxes paid       $376,000          $130,000 
 
               Supplemental disclosure of cash flow information:
 
                                                  1997         1996
               Non-cash investing and financing activities:
                 Liabilities assumed in the 
                   acquisition of equipment      $805,000     $ -0-

 Note 4  -          Income Taxes -
 
               The effective income tax rate for 1997 is 40%, which
              compares to 41% for 1996
 
 
<PAGE>
Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations


THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISK AND
UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN OF
THE FACTORS SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED JUNE 30, 1996.

The financial statements herein presented for the quarters ended March 31,
1997 and 1996, reflect all the adjustments that in the opinion of management
are necessary for the fair presentation of the financial position and results
of operations for the period then ended.  All adjustments during the periods
presented, are of a normal recurring nature.

Liquidity and Capital Resources

Because the Company's operations are seasonal in nature, the Company's liquid
resources fluctuate during the year in a way that changes very little from
year to year.  The inventory and accounts payable balances are normally at
their lowest level as of the end of the fiscal year and their highest level as
of the end of the second quarter.  This seasonal increase in the accounts
payable balance results in a temporary increase in the Debt to Equity ratio. 
This year, as a result of certain processing efficiencies and a change in our
sales mix (resulting in larger carryover inventory balances), our inventories
will be at their highest level as of the current quarter.  At this time we are
anticipating that our inventory balances at the end of the current fiscal year
will be higher than last year as result of these changes.  The net working
capital as of March 31, 1997, 1996 and June 30, 1996 are very comparable. The
largest increase in working capital is a result of the higher inventory
balance which has been funded by the increase in the borrowings under the line
of credit.  The Company increased its long-term debt by $805,000 as of the end
of December 1996.    

The Company's liquidity resources are obtained from external and internal
sources.  The Company's largest external source is a revolving line of credit
provided by a bank at the Bank's prime rate. The Company has a revolving line
of credit limit of $3,500,000 secured by inventory and accounts receivable. As
of March 31, 1997, the Company had $72,000 of available funds on the line of
credit.  As of March 31, 1996 the Company had $2,025,000 of available funds
under the line of credit. The increase in the inventory balance between March
31, 1997 and 1996, resulted in the decrease in the available funds under the
line of credit.  We are estimating that this will be the lowest level of
available funds during the current fiscal year.  As of March 31, 1997, the
Company was in compliance with all of the covenants and restrictions related
to its outstanding debt. The most significant source of internal liquidity is
the Company's net working capital. One additional possible source of long term
liquidity could be the sale of the idle production facility, which is presently
being leased to third parties.  Although the Company is not relying on or 
pursuing the sale of this facility as a source of liquidity, the Company's
short and long-term liquidity would materially increase upon such a sale. In 
regard to this facility, there is some indication that in the latter part of 
calendar 1997 certain leases may not be renewed.  Advance planning to locate 
new tenants is already underway. The Company continues to lease a portion of 
its operating facility and is in negotiations with the primary tenant to 
increase its square footage.





<PAGE>

The Company has established a capital expenditure budget of approximately
$1,813,000 for the fifteen month period April 1, 1996 through June 30, 1997.
To date, capital expenditures of $1,477,000 have been made.  These funds are
being primarily used to purchase new and refurbish existing equipment. The
Company anticipates financing these assets through internally generated funds
and through the use of debt financing. During the current fiscal year, the
Company borrowed $805,000 of long-term  debt to finance a portion of the
$1,813,000 capital budget. The note for $805,000 is dated December 31, 1996
with a term of 60 months, at a variable interest rate equal to the average
weekly yield of 30 day Commercial Paper, plus 2.10% and is secured by specific
machinery and equipment. 
                          
During the first quarter ended September 30, 1996, the Company repurchased
80,000 shares of common stock at a cost of $407,000.  This repurchase was to
offset the dilution caused by stock issuances under the Company's stock
purchase plan and under outstanding options.  The Company received approval
from the Bank prior to the repurchase of 80,000 shares of common stock during
the current fiscal year.  The Company has no present intentions to repurchase
more stock in the current fiscal year.



Results of Operations

Quarter

Net sales decreased $1,159,000 or 16% in the third  quarter of fiscal 1997 as
compared to the third quarter of fiscal 1996.  In the third quarter of fiscal
1996 sales increased $2,522,000 or 56%, 22% of this increase was a result of 
increased sales from a single customer.  This increase in sales did not
continue in the fourth quarter of fiscal 1996 nor did this volume to one
customer recur in the third quarter of fiscal 1997.  The loss of the Confoco
business only accounted for $252,000 of lost net sales between quarters.  Most
of the adverse sales impact of the lost Confoco business incurred in the first
two quarters of fiscal 1997. Other revenue decreased $65,000 as a result of a
non-recurring refund in 1996 of $132,000 from the State of California
Superfund for the clean-up of underground storage tanks.

Cost of sales for the quarter ended March 31, 1997 increased from 90.4% to
91.5% of net sales. The overall margins for the third quarter of fiscal 1997
were slightly lower than the third quarter of fiscal 1996 as a result of
decreases in overall prices due to the change in the sales mix.  Overall
prices were lower in fiscal 1997, but the margins between years remained
comparable as a result of the higher overhead absorption due to the increased
production in the third quarter of fiscal 1997.     

Selling, general and administrative expenses decreased $51,000 or 9% in the
third quarter of fiscal 1997. This change is a composite of a decrease in
expenses as a result of not incurring the costs related to the Storm Damage in
fiscal 1996 and increases in travel expenses and consulting fees related to
the strategic planning process which was incurred in fiscal 1997.

Interest expense was very comparable between quarters.  Interest expense for
the fourth quarter should be higher than fiscal 1996 as a result of the long-
term debt borrowing of $805,000 and increased borrowings on the line of credit
as a result of the higher inventory levels.

Year-to Date

Net sales decreased $2,071,000 or 10% in the nine months ended March 31, 1997. 
The loss of the sales of Confoco products accounted for $1,974,000 of this net
sales decline.  Other income decreased $53,000 during the comparative nine
month period as a result of the net change between periods of non-recurring
income.   

Cost of sales as a percent of net sales decreased from 90% as of March 31,
1996 to 88.9% as of March 31, 1997.  The increase in the comparative margins
is a result of the increased production volume and the related overhead
absorption during the nine months ended March 31, 1997.

Selling, general and administrative expenses increased $104,000 or 7% in the
nine months ended March 31, 1997.  This increase is a result of higher
expenses in the following areas: consultants for our strategic plan, travel
expenses and increased salaries(new regional sales manager).

Interest expense decreased $73,000 as a result of our lower average borrowings
on the line of credit during the nine months ended March 31, 1997. Interest
expense for the fourth quarter should increase as a result of the long-term
debt borrowing of $805,000 and increased borrowings on the line of credit as a
result of the higher inventory levels.
<PAGE>

                              

PART II
                                OTHER INFORMATION

Item 1.   Legal Proceedings
               
          There are no material legal proceedings pending.  

Item 2.   Changes in Securities

          The Company's revolving line of credit agreement with its Bank
          dated( November 1, 1996), includes a covenant which prohibits the
          declaring or paying of any dividend or distribution in either
          cash, stock or any other property on the Company's stock now or
          hereafter outstanding, nor redeem, retire, repurchase or otherwise
          acquire shares of any class of the Company's stock now or
          hereafter outstanding, without the prior approval by the Bank. The
          Company received approval from the Bank prior to the repurchase of
          80,000 shares of common stock during the current fiscal year.



Item 4.   Submission of Matters to a Vote of Security Holders.
               
          No matters were submitted to a vote of security holders during the
          period covered by this report.
               

Item 5.   Other Information

          Confoco Representation Agreement
          
          Effective July 1, 1996, the representation agreement with Confoco,
          Inc., for the sale of low moisture banana and pumpkin flakes 
          terminated.  Confoco, Inc., has consolidated the sales and
          marketing of its products internally.  From July 1, 1995 through
          March 31, 1996 the Company recorded sales of $1,974,000 of Confoco
          products with a gross profit of $294,000. Under the Company's
          agreement with Confoco, for the two years from the date of
          termination the Company is prohibited from distributing in the
          United States, Canada  and Mexico,  banana products similar to
          those currently being sold.


     
Item 6.   Exhibits & Reports on Form 8-K

          a.   Exhibits  -  none

               (27) Financial Data Schedule (by electronic filing only)    

          b.   Reports on Form 8-K  -  none

<PAGE>
SIGNATURES
                         

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.




                                        
                               VACU-DRY COMPANY


Date: May 13, 1997                 (Gary L. Hess)
                                   _______________________
                                   Gary L. Hess, President  

Date: May 13, 1997                 (Tom Eakin)
                                   _______________________
                                   Tom Eakin, VP, Finance


<PAGE>