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 December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to _____________ 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 9,304,580 shares of the registrant's common stock
outstanding as of February 2, 1996.<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1995 and June 30, 1995
Condensed Consolidated Statements of Income -
Three and Six Months Ended December 31, 1995 and 1994
Condensed Consolidated Statement of Stockholders'
Equity - Six Months Ended December 31, 1995
Condensed Consolidated Statements of Cash Flows -
Six Months Ended December 31, 1995 and 1994
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 4. Submission of Matters to a Vote of Stockholders
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
December 31, June 30,
ASSETS 1995 1995
______ ___________ ________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 36,425 $ 32,916
Prepaid expenses 1,416 1,703
Other current assets 1,598 2,637
________ ________
Total current assets 39,439 37,256
________ ________
Property and equipment, at cost:
Land and buildings 2,656 2,656
Gaming equipment 28,265 26,676
Other equipment 4,442 4,328
Leasehold improvements 721 713
________ ________
36,084 34,373
Less accumulated depreciation (20,947) (19,322)
________ ________
15,137 15,051
Lease acquisition costs and other
intangible assets, net of
accumulated amortization of
$6,496 and $6,061 6,395 7,292
Goodwill, net of accumulated
amortization of $2,437 and $2,341 5,193 5,289
Lease and other security deposits 3,450 3,490
Other non-current assets 2,817 3,581
________ ________
Total assets $ 72,431 $ 71,959
======== ========
See Notes to Condensed Consolidated Financial Statements.
/TABLE
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
(Concluded)
<TABLE>
December 31, June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995
____________________________________ ___________ ________
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 319 $ 678
Accounts payable 372 566
Other current liabilities 3,679 4,372
_______ _______
Total current liabilities 4,370 5,616
Long-term debt, less current portion 271
Deferred rent 3,259 3,506
Accrued pension and other liabilities 2,372 2,350
_______ _______
Total liabilities 10,001 11,743
_______ _______
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;
9,598,198 and 9,595,388 shares issued 96 96
Additional paid-in capital 63,757 63,935
Retained earnings (accumulated deficit) 2,212 (180)
Less 293,742 and 293,741 shares of
common stock in treasury, at cost (3,635) (3,635)
_______ _______
Total stockholders' equity 62,430 60,216
_______ _______
Total liabilities and
stockholders' equity $72,431 $71,959
======= =======
See Notes to Condensed Consolidated Financial Statements.
/TABLE
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
December 31, December 31,
________________ ________________
1995 1994 1995 1994
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Revenues:
Route operations $20,448 $21,846 $41,055 $42,922
Casino operations 1,936 1,933 4,130 4,480
_______ _______ _______ _______
Totals 22,384 23,779 45,185 47,402
_______ _______ _______ _______
Costs and expenses:
Route operations 15,569 16,420 31,345 32,280
Casino operations 1,729 1,660 3,492 4,065
Amortization 549 664 1,111 1,324
Depreciation 1,051 1,330 2,295 2,665
General and administrative 1,043 1,420 2,232 2,753
_______ _______ _______ _______
Totals 19,941 21,494 40,475 43,087
_______ _______ _______ _______
Operating income 2,443 2,285 4,710 4,315
_______ _______ _______ _______
Other income (expense):
Interest and other income 319 200 714 405
Interest expense (10) (45) (22) (103)
_______ _______ _______ _______
Totals 309 155 692 302
_______ _______ _______ _______
Income before income tax 2,752 2,440 5,402 4,617
_______ _______ _______ _______
Provision for Federal income tax:
Current
Deferred 881 784 1,729 1,524
_______ _______ _______ _______
Totals 881 784 1,729 1,524
_______ _______ _______ _______
Net income $ 1,871 $ 1,656 $ 3,673 $ 3,093
======= ======= ======= =======
Earnings per common and
common equivalent share $ .20 $ .18 $ .39 $ .34
======= ======= ======= =======
Cash dividends per share of
common stock $ .08 $ .08 $ .16 $ .16
======= ======= ======= =======
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED DECEMBER 31, 1995
(Dollars and shares in thousands, except per share data)
(Unaudited)
<TABLE>
Retained
Additional Earnings Treasury Total
Common Stock Paid-in (Accumulated Stock Stockholders'
Shares Amount Capital Deficit) Shares Amount Equity
______ ______ __________ ___________ ______ _______ _____________
<S> <C> <C> <C> <C> <C> <C> <C>
Balance
July 1,
1995 9,595 $96 $63,935 $ (180) (294) $(3,635) $60,216
Cash
dividends
($.16 per
share) (201) (1,281) (1,482)
Issuance
of shares
on
exercise
of stock
options 3 23 23
Net
income 3,673 3,673
_____ ___ _______ ______ ____ _______ _______
Balance
December
31, 1995 9,598 $96 $63,757 $2,212 (294) $(3,635) $62,430
===== === ======= ====== ==== ======= =======
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Dollars in thousands)
(Unaudited)
<TABLE> 1995 1994
________ _______
<S> <C> <C>
Operating activities:
Net income $ 3,673 $ 3,093
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,406 3,989
Deferred Federal income tax 1,729 1,524
Net gain on sales and retirements of property
and equipment (166) (161)
Other (75)
Increase (decrease) from changes in:
Prepaid expenses and other current assets 81 248
Other non-current assets (106) (81)
Accounts payable (194) (40)
Other current liabilities (693) 211
Deferred rent (247) 680
Other liabilities 22 92
_______ _______
Net cash provided by operating activities 7,505 9,480
_______ _______
Investing activities:
Proceeds from sales of short-term investments 509
Net proceeds (advances) to location operators 122 (124)
Proceeds from sale of other non-current asset 217
Proceeds from sales of property and equipment 500 82
Purchases of property and equipment (2,405) (1,439)
Advances to equity investee (1,402)
Increase in lease acquisition costs and other
intangible assets (164) (209)
Decrease in lease and other security deposits 40 31
_______ _______
Net cash used in investing activities (1,907) (2,335)
_______ _______
Financing activities:
Repayments of long-term debt (630) (704)
Proceeds from issuance of common stock 23
Dividends paid (1,482) (1,474)
_______ _______
Net cash used in financing activities (2,089) (2,178)
_______ _______
Net increase in cash and cash equivalents 3,509 4,967
Cash and cash equivalents at beginning of period 32,916 23,543
_______ _______
Cash and cash equivalents at end of period $36,425 $28,510
======= =======
Supplemental disclosures of cash flow data:
Cash paid during the period for:
Interest $ 22 $ 103
Federal income tax $ - $ -
Non-cash financing activity: reduction of
debt upon sale of other non-current asset $ - $ 479
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
<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 December 31, 1995, and the results of its operations
for the three and six months ended December 31, 1995 and
1994 and its cash flows for the six months ended December 31,
1995 and 1994. Information included in the condensed
consolidated balance sheet as of June 30, 1995 has been derived
from Jackpot's Annual Report to the Securities and Exchange
Commission on Form 10-K for the year ended June 30, 1995
(the "1995 Form 10-K").
The earnings for the three and six months ended December 31,
1995 and 1994 are not necessarily indicative of results for a
full year.
Note 2 - Earnings per share:
Earnings per share for the three and six months ended December
31, 1995 and 1994 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 or were antidilutive on earnings per
share.
Note 3 - Stockholders' equity:
Cash dividends:
For the six months ended December 31, 1995, Jackpot paid cash
dividends of approximately $1,482,000 ($.16 per common share).
On January 27, 1996 Jackpot's Board of Directors declared a
quarterly dividend of $.08 per common share for the three months
ended December 31, 1995 which is payable on or about February 23,
1996 to stockholders of record on February 9, 1996.
The 1992 Incentive and Non-qualified Stock Option Plan:
On September 30, 1995, the exercise price of the June 30, 1995
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 $10.75 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
1995 Form 10-K for further information regarding the 1992 Plan
and option grants.
Common stock warrants:
As of December 31, 1995, there were 1,588,195 warrants
outstanding and 1,747,015 shares of common stock reserved for
issuance upon exercise of such warrants. In January 1996, 129
common shares were issued on exercise of 119 warrants leaving
1,588,076 warrants outstanding which expired pursuant to their
terms on January 31, 1996. See Note 7 of Notes to Consolidated
Financial Statements in the 1995 Form 10-K.
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 as described
below.
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. 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.
<PAGE>
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 six months ended December 31,
1995 (the "1995 six months"), consisted of the cash flows from operating
activities and its available cash and cash equivalents which, at June 30,
1995, approximated $32.9 million and at December 31, 1995 approximated
$36.4 million.
Net cash provided by operating activities in the 1995 six months was
$7.5 million. Net cash used in investing activities in the 1995 six months
was approximately $1.9 million which included cash used of approximately
$2.6 million and cash received of approximately $.7 million. The $2.6
million of cash used was primarily for the purchase of property and
equipment. The $.7 million of cash received from investing activities
consisted primarily of aggregate proceeds from sales of property and
equipment.
Net cash used in financing activities in the 1995 six months was
approximately $2.1 million which resulted from the repayment of
approximately $.6 million of long-term debt and the payment of approximately
$1.5 million of dividends.
Liquidity:
At December 31, 1995, Jackpot had cash and cash equivalents of
approximately $36.4 million, an increase of approximately $3.5 million
from June 30, 1995. Jackpot's working capital and current ratio also
increased to approximately $35.1 million and 9.0 to 1, respectively, at
December 31, 1995, from $31.6 million and 6.6 to 1, respectively, at
June 30, 1995 primarily as a result of the activities described above.
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 the same agreements. 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.
Management believes Jackpot's working capital and cash provided by
operations will be sufficient to enable Jackpot to meet its planned capital
expenditures, meet its debt service requirements, pay quarterly cash dividends
pursuant to Jackpot's current dividend policy and meet its other ongoing
cash requirements as they become due in the fiscal year ending June 30, 1996.
With respect to planned capital expenditures, management anticipates Jackpot
will purchase approximately $3.2 million of property and equipment, exclusive
of business acquisitions, if any, in the remainder of fiscal 1996 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.
Results of Operations
_____________________
Revenues:
Total revenues in the three months ended December 31, 1995 (the "1995
three months") decreased approximately $1.4 million (from $23.8 million in
the three months ended December 31, 1994 (the "1994 three months") to $22.4
million in the 1995 three months), while total revenues in the 1995 six months
decreased approximately $2.2 million (from $47.4 million in the six
months ended December 31, 1994 (the "1994 six months") to $45.2 million in
the 1995 six months). The decrease in total revenues of $1.4 million in the
1995 three months was attributable to the decline in gaming machine route
operations revenues (from $21.8 million in the 1994 three months to $20.4
million in the 1995 three months). The decrease in total revenues of $2.2
million in the 1995 six months was the net result of decreases of $1.8 million
(from $42.9 million in the 1994 six months to $41.1 million in the 1995 six
months) in gaming machine route operations revenues and a decrease of $.4
million (from $4.5 million in the 1994 six months to $4.1 million in the
1995 six months) in casino operations revenues.
The decreases in gaming machine route operations revenues of $1.4 million
and $1.8 million were due primarily to the loss of the Company's right to
operate at all three Phar-Mor locations in Nevada due to the permanent
closing by Phar-Mor of such locations in connection with Phar-Mor's bankruptcy
reorganization plan and to the closing or loss, based on the Company's
commitment to maintain pricing discipline, of certain non-chain locations.
The decreases in gaming machine route operations revenues resulted from a
combination of additional revenues generated from new locations, net of lost
revenues from terminated locations and decreases in revenues at existing
locations. In the 1995 three months and 1995 six months, new locations
generated revenues of approximately $1.0 million and $2.2 million,
respectively. Terminated locations had generated revenues of $1.6 million
and $3.1 million in the 1994 three months and 1994 six months, respectively,
while revenues at existing locations decreased $.8 million and $.9 million
in the 1995 three months and 1995 six months, respectively.
The amount of gaming machine route operations revenues attributable to
fixed payment leases and revenue sharing contracts for the three and six
months ended December 31, 1995 and 1994 are summarized below (dollars in
thousands):
<TABLE>
Three Months Ended December 31,
1995 1994
___________________ ____________________
Percent Percent
of route of route
operations operations
Amount revenues Amount revenues
_______ __________ _______ __________
<S> <C> <C> <C> <C>
Route operations:
Fixed payment leases $13,072 63.9% $13,519 61.9%
Revenue sharing contracts 7,376 36.1 8,327 38.1
_______ _____ _______ _____
Totals $20,448 100.0% $21,846 100.0%
======= ===== ======= =====
</TABLE>
<TABLE>
Six Months Ended December 31,
1995 1994
___________________ ____________________
Percent Percent
of route of route
operations operations
Amount revenues Amount revenues
_______ __________ _______ __________
<S> <C> <C> <C> <C>
Route operations:
Fixed payment leases $25,912 63.1% $26,831 62.5%
Revenue sharing contracts 15,143 36.9 16,091 37.5
_______ _____ _______ _____
Totals $41,055 100.0% $42,922 100.0%
======= ===== ======= =====
</TABLE>
Casino operations revenues in the 1995 three months remained constant at
approximately $1.9 million compared to the 1994 three months, and in the 1995
six months decreased approximately $.4 million (from $4.5 million in the 1994
six months to $4.1 million in the 1995 six months). The decrease in casino
operations revenues in the 1995 six months was due primarily to the closing
in February 1995 of operations of Water Street Casino, Inc. dba the Post
Office Casino (the "Post Office Casino"). The Post Office Casino had
generated approximately $.5 million of revenues in the 1994 six months.
Costs and expenses:
Route operations expenses in the 1995 three months and 1995 six months
decreased approximately $.8 million (from $16.4 million in the 1994 three
months to $15.6 million in the 1995 three months) and $1.0 million (from $32.3
million in the 1994 six months to $31.3 million in the 1995 six months) and,
as a percentage of route operations revenues, increased to 76.1% and 76.3% in
the 1995 three months and 1995 six months, respectively, from 75.2% in both
the 1994 three months and 1994 six months. The decreases of $.8 million and
$1.0 million over the respective 1994 periods were attributable to decreases
of $.3 million and $.2 million, respectively, in location rent, decreases of
$.1 million and $.3 million, respectively, in payroll costs, decreases of
$.2 million and $.3 million, respectively, in workers' compensation costs and
decreases of $.2 million in other route operations expenses in each of the
respective 1995 periods. Route operations expenses increased as a percentage
of route operations revenues primarily because of the loss of the right to
operate at the Phar-Mor locations, with which route operations expenses were
lower as a percentage of route operations revenues than Jackpot's overall
percentage. With respect to location rent, which is the single largest route
operations expense, no contract with a material effect on operating results
expires in fiscal 1996. See Item 1 - Business - Gaming Machine Route
Operations in the 1995 Form 10-K for a further description of the Company's
lease and license agreements.
Casino operations expenses in the 1995 three months remained constant at
approximately $1.7 million compared to the 1994 three months and, as a
percentage of casino operations revenues increased to 89.3% in the 1995 three
months from 85.9% in the 1994 three months due primarily to slightly higher
costs in the 1995 three months as compared to the 1994 three months. Casino
operations expenses in the 1995 six months decreased approximately $.6 million
(from $4.1 million in the 1994 six months to $3.5 million in the 1995 six
months) and, as a percentage of casino operations revenues, casino operations
expenses decreased to 84.6% in the 1995 six months from 90.7% in the 1994 six
months due primarily to the closing of the Post Office Casino. With respect
to casino operation expenses, the 1994 six months included approximately
$.8 million of costs and expenses incurred by the Post Office Casino.
Amortization expense in the 1995 three months and 1995 six months
decreased approximately $.1 million (from $.7 million in the 1994 three months
to $.6 million in the 1995 three months) and approximately $.2 million
(from $1.3 million in the 1994 six months to $1.1 million in the 1995 six
months). The decrease in amortization expense in the respective 1995 periods
was primarily attributable to the decrease in amortization expense related to
the three Phar-Mor locations. As a result of the permanent closing of
Phar-Mor's three locations in Nevada, Jackpot wrote off all remaining lease
acquisition costs related to Phar-Mor in the three months ended June 30, 1995.
Depreciation expense in the 1995 three months and 1995 six months
decreased approximately $.2 million (from $1.3 million in the 1994 three
months to $1.1 million in the 1995 three months) and $.4 million (from $2.7
million in the 1994 six months to $2.3 million in the 1995 six months). The
decrease in depreciation expense in the respective 1995 periods 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 during the three months ended September 30, 1995.
General and administrative expenses in the 1995 three months and 1995
six months decreased approximately $.4 million (from $1.4 million in the 1994
three months to $1.0 million in the 1995 three months) and $.6 million
(from $2.8 million in the 1994 six months to $2.2 million in the 1995 six
months) primarily as a result of decreases in payroll and other compensation
related costs.
Interest and other income:
Interest and other income in the 1995 three months and 1995 six months
increased approximately $.1 million (from $.2 million in the 1994 three months
to $.3 million in the 1995 three months) and $.3 million (from $.4 million in
the 1994 six months to $.7 million in the 1995 six months) primarily from
the increase in interest income as a result of the increase in available cash
and cash equivalents.
Other:
The effective tax rate in the 1995 three months remained constant at 32%
compared to the 1994 three months and in the 1995 six months such rate was 32%,
which was slightly lower than the 33% rate in the 1994 six months primarily
because of the increase in tax benefits from tax-exempt interest income.
General:
Despite the decrease in revenues in the respective 1995 periods, operating
income in the 1995 three months and 1995 six months increased approximately $.1
million (from $2.3 million in the 1994 three months to $2.4 million in the
1995 three months) and $.4 million (from $4.3 million in the 1994 six months
to $4.7 million in the 1995 six months). The increases in operating income
of $.1 million and $.4 million were due primarily to the decreases in
amortization, depreciation and general and administrative expenses described
above.
Net income in the 1995 three months and 1995 six months increased
approximately $.2 million (from $1.7 million in the 1994 three months to
$1.9 million in the 1995 three months) and $.6 million (from $3.1 million
in the 1994 six months to $3.7 million in the 1995 six months) due to the
results of operations described above. Earnings per share in the 1995
three months and 1995 six months were $.20 and $.39 per share, respectively,
compared to earnings per share in the 1994 three months and 1994 six months
of $.18 and $.34 per share, respectively.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Stockholders
(a) Jackpot's 1995 Annual Meeting of Stockholders was held on
December 13, 1995.
(b) Proxies were solicited by Jackpot's management without
opposition and all nominees were elected to hold office until
the next annual meeting as described in the Proxy Statement
dated October 13, 1995.
(c) No other matters were voted upon except for the proposal to
ratify the appointment of Jackpot's independent auditors. The
stockholders voted 8,606,350 shares "FOR", 23,467 shares
"AGAINST" and 37,136 shares "ABSTAINING" to approve the
appointment of Deloitte & Touche LLP as Jackpot's independent
auditors for the fiscal year ending June 30, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11.1 - Computation of Earnings Per Common Share for
the three and six months ended December 31, 1995 and 1994.
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 December 31, 1995.
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: February 12, 1996
EXHIBIT 11.1
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE AND SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(Dollars and shares in thousands, except per share data)
<TABLE>
Three Months Ended Six Months Ended
December 31, December 31,
__________________ ________________
1995 1994 1995 1994
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Primary:
Earnings:
Net income $ 1,871 $ 1,656 $ 3,673 $ 3,093
======= ======= ======= =======
Shares:
Weighted average number of common
shares outstanding (A) 9,303 9,220 9,302 9,220
======= ======= ======= =======
Primary earnings per share $ .20 $ .18 $ .39 $ .34
======= ======= ======= =======
Fully diluted (B):
Earnings:
Net income $ 1,871 $ 1,656 $ 3,673 $ 3,093
Add after-tax interest, net (C) 350 486 713 937
_______ _______ _______ _______
Net income, as adjusted $ 2,221 $ 2,142 $ 4,386 $ 4,030
======= ======= ======= =======
Shares:
Weighted average number of
common shares and common
share equivalents outstanding 9,303 9,220 9,302 9,220
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 1,974 2,663 1,978 2,449
_______ _______ _______ _______
Weighted average number of
common shares and common share
equivalents outstanding,
as adjusted 11,277 11,883 11,280 11,669
======= ======= ======= =======
Fully diluted earnings per share $ .20 $ .18 $ .39 $ .35
======= ======= ======= =======
</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 or were antidilutive 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 or were
antidilutive 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 - December 31, 1995 and June 30, 1995 and its
Consolidated Statements of Income - three and six months ended December 31,
1995 and 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 36,425
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,439
<PP&E> 36,084
<DEPRECIATION> 20,947
<TOTAL-ASSETS> 72,431
<CURRENT-LIABILITIES> 4,370
<BONDS> 0
0
0
<COMMON> 96
<OTHER-SE> 62,334
<TOTAL-LIABILITY-AND-EQUITY> 72,431
<SALES> 0
<TOTAL-REVENUES> 45,185
<CGS> 0
<TOTAL-COSTS> 34,837
<OTHER-EXPENSES> 2,938
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> 5,402
<INCOME-TAX> 1,729
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,673
<EPS-PRIMARY> .39
<EPS-DILUTED> .39
</TABLE>
