UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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 no. 1-9728
JACKPOT ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0169922
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1110 Palms Airport Drive, Las Vegas, Nevada 89119
(Address of principal executive offices) (Zip Code)
702-263-5555
(Registrant's telephone number, including area code)
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
___ ___
There were 9,356,995 shares of the registrant's common stock outstanding as
of November 2, 1996.<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1996 and June 30, 1996
Condensed Consolidated Statements of Income -
Three Months Ended September 30, 1996 and 1995
Condensed Consolidated Statement of Stockholders'
Equity - Three Months Ended September 30, 1996
Condensed Consolidated Statements of Cash Flows -
Three Months Ended September 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
September 30, June 30,
ASSETS 1996 1996
______ ____________ ________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 42,229 $ 39,024
Prepaid expenses 1,464 1,740
Other current assets 1,717 3,515
________ ________
Total current assets 45,410 44,279
________ ________
Property and equipment, at cost:
Land and buildings 1,535 1,535
Gaming equipment 27,605 27,839
Other equipment 4,354 4,282
Leasehold improvements 338 336
________ ________
33,832 33,992
Less accumulated depreciation (20,756) (20,697)
________ ________
13,076 13,295
Lease acquisition costs and other
intangible assets, net of
accumulated amortization of
$5,532 and $5,142 4,419 4,749
Goodwill, net of accumulated
amortization of $2,423 and $2,382 4,199 4,240
Lease and other security deposits 3,436 3,436
Other non-current assets 624 743
________ ________
Total assets $ 71,164 $ 70,742
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
(Concluded)
<TABLE>
September 30, June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1996
____________________________________ ____________ ________
<S> <C> <C>
Current liabilities:
Accounts payable $ 487 $ 504
Other current liabilities 3,146 3,439
_______ _______
Total current liabilities 3,633 3,943
Deferred rent 2,886 3,025
Accrued pension and other liabilities 141 279
_______ _______
Total liabilities 6,660 7,247
_______ _______
Commitments and contingencies
Stockholders' equity:
Preferred stock - authorized
1,000,000 shares of $1 par value;
none issued
Common stock - authorized
30,000,000 shares of $.01 par
value; 9,649,743 and 9,631,278
shares issued 96 96
Additional paid-in capital 64,313 64,129
Retained earnings 3,730 2,905
Less 293,748 shares of common stock
in treasury, at cost (3,635) (3,635)
_______ _______
Total stockholders' equity 64,504 63,495
Total liabilities and _______ _______
stockholders' equity $71,164 $70,742
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
1996 1995
_______ _______
<S> <C> <C>
Revenues:
Route operations $21,167 $20,607
Casino operations 788 2,194
_______ _______
Totals 21,955 22,801
_______ _______
Costs and expenses:
Route operations 16,977 15,776
Casino operations 753 1,763
Amortization 431 562
Depreciation 888 1,244
General and administrative 983 1,189
_______ _______
Totals 20,032 20,534
_______ _______
Operating income 1,923 2,267
_______ _______
Other income (expense):
Interest income and other, net 356 395
Interest expense (12)
_______ _______
Totals 356 383
_______ _______
Income before income tax 2,279 2,650
_______ _______
Provision for Federal income tax:
Current 706
Deferred 848
_______ _______
Totals 706 848
_______ _______
Net income $ 1,573 $ 1,802
======= =======
Earnings per common share $ .17 $ .19
======= =======
Cash dividends per share of common stock $ .08 $ .08
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED SEPTEMBER 30, 1996
(Dollars and shares in thousands, except per share data)
(Unaudited)
<TABLE>
Treasury
Common Stock Additional Stock Total
_____________ Paid-in Retained _____________ Stockholders'
Shares Amount Capital Earnings Shares Amount Equity
______ ______ __________ ___________ ______ ______ ____________
<S> <C> <C> <C> <C> <C> <C> <C>
Balance
July 1,
1996 9,631 $96 $64,129 $2,905 (294) $(3,635) $63,495
Cash
dividends
($.08 per
share) (748) (748)
Issuance of
shares on
exercise of
stock
options 19 184 184
Net income 1,573 1,573
_____ ___ _______ ______ _____ _______ _______
Balance
September
30, 1996 9,650 $96 $64,313 $3,730 (294) $(3,635) $64,504
===== === ======= ====== ==== ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Dollars in thousands)
(Unaudited)
<TABLE>
1996 1995
________ ________
<S> <C> <C>
Operating activities:
Net income $ 1,573 $ 1,802
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,319 1,806
Deferred Federal income tax 848
Net loss (gain) on sales and retirements
of property and equipment 5 (120)
Increase (decrease) from changes in:
Prepaid expenses and other current assets 159 (45)
Other non-current assets 54 (8)
Accounts payable (17) (218)
Other current liabilities 253 (97)
Deferred rent (139) (248)
Other liabilities 17
_______ _______
Net cash provided by operating activities 3,207 3,737
_______ _______
Investing activities:
Net proceeds from location operators 45 76
Proceeds from sales of subsidiary and property 1,270 393
Purchases of property and equipment (693) (1,257)
Increase in lease acquisition costs and other
intangible assets (60) (78)
Decrease in lease and other security deposits 34
Net cash provided by (used in) _______ _______
investing activities 562 (832)
_______ _______
Financing activities:
Repayments of long-term debt (401)
Proceeds from issuance of common stock 184
Dividends paid (748) (739)
_______ _______
Net cash used in financing activities (564) (1,140)
_______ _______
Net increase in cash and cash equivalents 3,205 1,765
Cash and cash equivalents at beginning of period 39,024 32,916
_______ _______
Cash and cash equivalents at end of period $42,229 $34,681
======= =======
Supplemental disclosures of cash flow data:
Cash paid during the period for:
Interest $ - $ 12
Federal income tax $ - $ -
</TABLE>
See Notes to Condensed Consolidated Financial Statements.<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General:
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements reflect all
adjustments, consisting of normal recurring accruals,
necessary to present fairly Jackpot's financial position as
of September 30, 1996 and the results of its operations and
cash flows for the three months ended September 30, 1996 and
1995. Information included in the condensed consolidated
balance sheet as of June 30, 1996 has been derived from Jackpot's
Annual Report to the Securities and Exchange Commission on
Form 10-K for the fiscal year ended June 30, 1996 (the "1996
Form 10-K"). The earnings for the three months ended September
30, 1996 and 1995 are not necessarily indicative of results for
a full year.
In March 1995, the Financial Accounting Standards Board (the
"FASB") issued Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"),
which is effective for fiscal years beginning after December
15, 1995. SFAS 121 requires that long-lived assets and
certain identifiable intangible assets to be held and used by
an entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. The adoption of SFAS 121, which was effective
July 1, 1996, had no effect on the consolidated financial
statements.
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation"
("SFAS 123"), which is effective for fiscal years beginning after
December 15, 1995. Although SFAS 123 encourages an entity to
measure compensation by applying the fair value method of
accounting for employee stock-based compensation arrangements,
it permits an entity to continue to account for employee
stock-based compensation arrangements under the provisions of
Accounting Principles Board Opinion 25 ("ABP 25"). The Company
intends to continue to account for stock-based compensation in
accordance with APB 25. The pro forma effect on net income and
earnings per share, as if the fair value recognition provisions
had been applied, will be provided in a note to the consolidated
financial statements for the fiscal year ending June 30, 1997, as
required by SFAS 123.
Note 2 - Earnings per share:
Earnings per share for the three months ended September 30, 1996
and 1995 are computed by dividing net income by the weighted
average number of common shares outstanding. Stock options and
warrants have been excluded from the computations because they
had no effect on earnings per share.
Note 3 - Stockholders' equity:
Cash dividends:
For the three months ended September 30, 1996, Jackpot paid cash
dividends of approximately $748,000 ($.08 per common share). On
October 29, 1996, Jackpot's Board of Directors declared a
quarterly dividend of $.08 per common share for the three months
ended September 30, 1996 which is payable on or about November
29, 1996 to stockholders of record on November 15, 1996.
In addition, the Board announced that it would suspend future
payment of quarterly cash dividends, subject to periodic review
and reconsideration.
The 1992 Incentive and Non-qualified Stock Option Plan:
On September 30, 1996, the exercise price of the June 30, 1996
grant of nonqualified stock options to purchase an aggregate of
110,000 shares of common stock (27,500 each to four directors)
was vested at $10.00 per share, the fair market value of the
stock on that date, pursuant to the terms of the 1992 Incentive
and Non-qualified Stock Option Plan (the "1992 Plan"). See
Note 7 of Notes to Consolidated Financial Statements in the
1996 Form 10-K for further information regarding the 1992 Plan
and option grants.
Note 4 - Commitments and contingencies:
Legal matter:
On August 17, 1992, Phar-Mor, Inc. ("Phar-Mor"), a large chain
store, announced that it had filed for protection under Chapter
11 of the U.S. Bankruptcy Code. Jackpot operated 51 gaming
machines at three Phar-Mor store locations in Nevada under a
license agreement dated February 10, 1990 (the "Original
Agreement"). Under the Original Agreement, Jackpot made
certain advances to Phar-Mor. Thereafter, Jackpot and Phar-Mor,
subject to bankruptcy court approval, entered into an amended
license agreement, dated January 1, 1993 (the "Amended
Agreement"). If the Amended Agreement were to become final,
Jackpot would receive credits for certain prepaid sums but would
be required to pay certain additional obligations.
On May 12, 1995, Phar-Mor announced the closing of 41 stores,
including its three stores in Nevada. On May 24, 1995 Jackpot
notified Phar-Mor that it was in default under (i) the Original
Agreement, and (ii) the Amended Agreement to the extent
applicable. Jackpot has taken the position that the Amended
Agreement has not become operative and has not replaced the
Original Agreement. Jackpot has claimed monetary damages in
excess of several millions of dollars resulting from Phar-Mor's
alleged default, consisting of, but not limited to certain
refundable monies, prepaid license fees, lost profits and
other consequential and incidental damages.
On July 25, 1995, Phar-Mor notified Jackpot that it disagreed
with Jackpot's position that Phar-Mor has defaulted under the
terms of either the Original Agreement or the Amended Agreement.
Phar-Mor maintains that the Amended Agreement is the operative
agreement and is seeking to enforce its rights thereunder.
On or about March 7, 1996, Phar-Mor filed a lawsuit against
Jackpot in the United States Bankruptcy Court for the Northern
District of Ohio, claiming it is owed approximately $1 million
under the Amended Agreement. Jackpot has filed an answer and
counterclaim reflecting its position that under the Original
Agreement Jackpot is owed in excess of $3 million. Jackpot,
based upon discussions with counsel, does not believe it is
probable that Phar-Mor will prevail in this matter. If Phar-Mor
were to prevail and the Amended Agreement is determined to be
the operative agreement, Jackpot could be liable for certain
obligations under the Amended Agreement up to approximately
$1 million. If Jackpot were to prevail, it would become an
unsecured creditor with respect to its claims against Phar-Mor
which exceed $3 million.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
_________________________________________________
Capital Resources and Liquidity
_______________________________
Cash Flows:
Jackpot's principal sources of cash for the three months ended September
30, 1996 (the "1996 three months"), consisted primarily of the cash flows
from operating activities and its available cash and cash equivalents which,
at June 30, 1996, approximated $39.0 million and at September 30, 1996
approximated $42.2 million.
Net cash provided by operating activities in the 1996 three months was
$3.2 million. Net cash provided by investing activities in the 1996 three
months was approximately $.6 million which included cash received of
approximately $1.3 million and cash used of approximately $.7 million.
The $1.3 million of cash received from investing activities consisted
primarily of the proceeds from the sale of Jackpot's interest in Jackpot
City, Inc. (the "Nugget"), a casino operation located in Reno, Nevada.
The $.7 million of cash used was primarily for the purchase of property
and equipment.
Net cash used in financing activities in the 1996 three months was
approximately $.6 million which resulted from the payment of approximately
$.8 million of dividends, net of approximately $.2 million of proceeds
from the issuance of common stock upon the exercise of stock options.
Liquidity:
At September 30, 1996, Jackpot had cash and cash equivalents of
approximately $42.2 million, an increase of approximately $3.2 million
from June 30, 1996. Jackpot's working capital and current ratio increased
to approximately $41.8 million and 12.5 to 1, respectively, at September
30, 1996, from $40.3 million and 11.2 to 1, respectively, at June
30, 1996 primarily as a result of the activities described above.
On October 29, 1996, Jackpot's Board of Directors declared a quarterly
dividend of $.08 per common share which is payable on or about November 29,
1996 and announced that it would suspend future payment of quarterly cash
dividends, subject to periodic review and reconsideration. Further, the
Board authorized Jackpot's management to repurchase up to 500,000 shares
of its common stock, from time to time, at prevailing market prices.
On May 24, 1995, Jackpot notified Phar-Mor, Inc. ("Phar-Mor"), a large
chain store, that it was in default under the terms of certain agreements.
On July 25, 1995, Phar-Mor notified Jackpot that it disagreed with Jackpot's
position and asserted that Jackpot was in default under the terms of an
amended agreement. On or about March 7, 1996, Phar-Mor filed a lawsuit
against Jackpot in the United States Bankruptcy Court for the Northern
District of Ohio, claiming it is owed approximately $1 million under the
amended agreement. Jackpot has filed an answer and counterclaim reflecting
its position that under an original agreement Jackpot is owed in excess of
$3 million. Jackpot, based upon discussions with counsel, does not believe
it is probable that Phar-Mor will prevail in this matter. If Phar-Mor were
to prevail, Jackpot could be liable for certain obligations up to $1 million.
If Jackpot were to prevail, it would become an unsecured creditor of
Phar-Mor in an amount in excess of $3 million. See Note 9 of Notes to
Consolidated Financial Statements in the 1996 Form 10-K for further
information regarding this matter.
Management believes Jackpot's working capital and cash provided by
operations will be sufficient to enable Jackpot to meet its planned capital
expenditures and other cash requirements for the remainder of the fiscal
year ending June 30, 1997. With respect to planned capital expenditures,
management anticipates Jackpot will purchase approximately $4.4 million of
property and equipment, exclusive of business acquisitions, if any, in the
remainder of fiscal 1997 to be used in existing and currently planned new
locations.
Jackpot continues to selectively explore expansion opportunities, both
in and outside Nevada, and various potential acquisitions, both gaming and
nongaming. Management believes working capital and cash provided by
operations will be sufficient to enable Jackpot to pursue expansion
opportunities; however, Jackpot may seek additional debt or equity financing
to facilitate expansion opportunities and potential acquisitions.
Other:
In March 1995, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of" ("SFAS 121"), which is effective for fiscal years beginning after
December 15, 1995. SFAS 121 requires that long-lived assets and certain
identifiable intangible assets to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The adoption of SFAS 121,
which was effective July 1, 1996, had no effect on the consolidated
financial statements.
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"),
which is effective for fiscal years beginning after December 15, 1995.
Although SFAS 123 encourages an entity to measure compensation by applying
the fair value method of accounting for employee stock-based compensation
arrangements, it permits an entity to continue to account for employee
stock-based compensation arrangements under the provisions of Accounting
Principles Board Opinion 25 ("ABP 25"). The Company intends to continue
to account for stock-based compensation in accordance with APB 25.
The pro forma effect on net income and earnings per share, as if the
fair value recognition provisions had been applied, will be provided
in a note to the consolidated financial statements for the fiscal year
ending June 30, 1997, as required by SFAS 123.
Results of Operations
_____________________
Revenues:
Total revenues in the 1996 three months decreased approximately $.8
million (from $22.8 million in the three months ended September 30,1995
(the "1995 three months") to $22.0 million in the 1996 three months).
The decrease in total revenues of $.8 million was the net result of
an increase of $.6 million (from $20.6 million in the 1995 three months to
$21.2 million in the 1996 three months) in gaming machine route operations
("route operations") revenues and a decrease of $1.4 million (from $2.2
million in the 1995 three months to $.8 million in the 1996 three months)
in casino operations revenues.
The increase in route operations revenues of $.6 million resulted from
a combination of additional revenues generated from new and existing
locations, net of lost revenues from terminated locations. New locations
generated revenues of approximately $1.3 million, existing locations
generated additional revenues of approximately $.3 million and terminated
locations had generated revenues of approximately $1.0 million in the 1995
three months.
The amount of route operations revenues attributable to fixed payment
leases and revenue sharing contracts in the 1996 and 1995 three months are
summarized below (dollars in thousands):
<TABLE>
1996 1995
___________________ ___________________
Percent Percent
of route of route
operations operations
Amount revenues Amount revenues
_______ __________ _______ __________
<S> <C> <C> <C> <C>
Route operations:
Fixed payment leases $13,804 65.2% $12,840 62.3%
Revenue sharing contracts 7,363 34.8 7,767 37.7
_______ _____ _______ _____
Totals $21,167 100.0% $20,607 100.0%
======= ===== ======= =====
</TABLE>
The decrease in casino operations revenues of $1.4 million was due
primarily to the ceasing of operations at the Debbie Reynolds' Hotel and
Casino effective March 31, 1996 and the sale of Jackpot's interest in the
Nugget on June 30, 1996. The 1995 three months included approximately
$1.3 million of revenues generated at these two locations.
Costs and expenses:
Route operations expenses in the 1996 three months increased
approximately $1.2 million (from $15.8 million in the 1995 three months
to $17.0 million in the 1996 three months) and, as a percentage of route
operations revenues, increased to 80.2% in the 1996 three months from
76.6% in the 1995 three months. The increase of $1.2 million in the
1996 three months was attributable to increases of $.8 million in
location rent, $.1 million in payroll costs and $.3 million in other
route operations expenses. The increase in location rent was principally
attributable to new fixed payment lease locations. Route operations
expenses in the 1996 three months increased as a percentage of route
operations revenues primarily because of an increase in location rent,
as a percentage of revenues, attributable to revenue sharing contracts
and to increases in payroll costs and certain other route operations
expenses.
With respect to location rent, which is the single largest route
operations expense, agreements with three of Jackpot's largest six retail
chain store customers expire on June 30, 1997. While the Company is
actively seeking to renew these agreements, there is no assurance that
the Company will be able to renew or extend such agreements or that these
agreements will be renewed upon terms that Jackpot will find acceptable.
The loss or nonrenewal of any one of these agreements could have a material
adverse effect on the Company's future results of operations. See
Item 1 - Business - Gaming Machine Route Operations in the 1996 Form
10-K for a further description of the Company's lease and license agreements.
Casino operations expenses in the 1996 three months decreased
approximately $1.0 million (from $1.8 million in the 1995 three months to
$.8 million in the 1996 three months). With respect to casino operations
expenses, the 1995 three months included approximately $1.0 million of
costs and expenses incurred by the Nugget and the casino operations at the
Debbie Reynolds' Hotel and Casino.
Amortization expense in the 1996 three months decreased approximately
$.1 million (from $.5 million in the 1995 three months to $.4 million in
the 1996 three months). The decrease in amortization expense in the 1996
three months was primarily attributable to reductions in amortization
expense related to lease acquisition costs and prior service costs associated
with the Jackpot Retirement Plan for Directors. The 1996 three months did not
include any amortization expense of prior service costs as all such costs had
been fully amortized at June 30, 1996.
Depreciation expense in the 1996 three months decreased approximately
$.3 million (from $1.2 million in the 1995 three months to $.9 million in
the 1996 three months). The decrease in depreciation expense in the 1996
three months was primarily attributable to gaming machines acquired in
connection with the purchase of a gaming machine route business in 1992,
which had become fully depreciated in the 1995 three months.
General and administrative expenses in the 1996 three months decreased
approximately $.2 million (from $1.2 million in the 1995 three months to
$1.0 million in the 1996 three months) primarily as a result of decreases
in payroll and other compensation related costs.
Other:
The effective tax rate in the 1996 three months was 31%, which was
slightly lower than the 32% rate in the 1995 three months primarily because
of the increase in tax benefits from tax-exempt interest income in the
1996 three months.
General:
Operating income in the 1996 three months decreased approximately $.3
million (from $2.2 million in the 1995 three months to $1.9 million in the
1996 three months). The decrease in operating income in the 1996 three
months resulted primarily from decreases in the operating margin of the
route operations and casino operations of $.6 million and $.4 million,
respectively, net of an overall decrease in amortization, depreciation
and general and administrative expenses of approximately $.7 million.
The decrease of $.6 million (from $4.8 million in the 1995 three months
to $4.2 million in the 1996 three months) in the route operations operating
margin was due principally to the increase in location rent expense as
previously described. The decrease of $.4 million (from $.4 million in
the 1995 three months to a slight contribution in the 1996 three months)
in the casino operations operating margin was due primarily to the ceasing
of operations at the Debbie Reynolds' Hotel and Casino and the sale of
Jackpot's interest in the Nugget, described above.
Net income in the 1996 three months decreased approximately $.2 million
(from $1.8 million in the 1995 three months to $1.6 million in the 1996 three
months) due to the results of operations described above. Earnings per share
in the 1996 three months was $.17 compared to earnings per share in the 1995
three months of $.19.
PART II. OTHER INFORMATION
___________________________
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11.1 - Computation of Earnings Per Common Share for
the three months ended September 30, 1996 and 1995.
Exhibit 27.1 - Financial Data Schedule (EDGAR version only).
(b) Reports on Form 8-K - No Form 8-K was filed for the three
months ended September 30, 1996.
Signature
_________
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.
JACKPOT ENTERPRISES, INC.
_________________________
(Registrant)
By: /s/ Bob Torkar
_________________________
BOB TORKAR
Senior Vice President - Finance,
Treasurer and Chief Accounting Officer
Date: November 13, 1996
EXHIBIT 11.1
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Dollars and shares in thousands, except per share data)
<TABLE>
1996 1995
______ _______
<S> <C> <C>
Primary:
Earnings:
Net income $1,573 $ 1,802
====== =======
Shares:
Weighted average number of common shares
outstanding (A) 9,355 9,302
====== =======
Primary earnings per share $ .17 $ .19
====== =======
Fully diluted (B):
Earnings:
Net income $1,573 $ 1,802
Add after-tax interest, net (C) 39 338
______ _______
Net income, as adjusted $1,612 $ 2,140
====== =======
Shares:
Weighted average number of common shares
outstanding 9,355 9,302
Common shares issuable upon exercise of stock
options and warrants, net of common shares
assumed to be repurchased from the proceeds
using the greater of the average market price
for the period or the period-end price 226 1,983
______ _______
Weighted average number of common shares and common
share equivalents outstanding, as adjusted 9,581 11,285
====== =======
Fully diluted earnings per share $ .17 $ .19
====== =======
</TABLE>
(A) Common shares issuable upon exercise of stock options and warrants, net
of common shares assumed to be repurchased from the proceeds at the
average market price for the period have been excluded from the
computation because they had no effect on primary earnings per share.
(B) These calculations are submitted in accordance with Regulation S-K
Item 601 (b) (ii) although not required by Footnote 2 to paragraph
14 of APB Opinion No. 15 because they had no effect on earnings per
share.
(C) Amounts represent a decrease in interest expense and an increase in
interest income as a result of the assumed reduction in borrowings
and increase in investments in U. S. government securities from the
application of the portion of the proceeds from the assumed exercise
of stock options and warrants which were not applied towards the
repurchase of outstanding common shares (equivalent to 20% of the
common shares outstanding at the end of the applicable period).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Jackpot's
Consolidated Balance Sheets - September 30, 1996 and June 30, 1996 and its
Consolidated Statements of Income - three months ended September 30, 1996 and
1995 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 42,229
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,410
<PP&E> 33,832
<DEPRECIATION> 20,756
<TOTAL-ASSETS> 71,164
<CURRENT-LIABILITIES> 3,633
<BONDS> 0
0
0
<COMMON> 96
<OTHER-SE> 64,408
<TOTAL-LIABILITY-AND-EQUITY> 71,164
<SALES> 0
<TOTAL-REVENUES> 21,955
<CGS> 0
<TOTAL-COSTS> 17,730
<OTHER-EXPENSES> 1,175
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,279
<INCOME-TAX> 706
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,573
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
