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 March 31, 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 9,306,745 shares of the registrant's common stock outstanding
as of May 3, 1996.<PAGE>
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1996 and June 30, 1995
Condensed Consolidated Statements of Income -
Three and Nine Months Ended March 31, 1996 and 1995
Condensed Consolidated Statement of Stockholders'
Equity - Nine Months Ended March 31, 1996
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended March 31, 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>
March 31, June 30,
ASSETS 1996 1995
______ ________ ________
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 37,991 $ 32,916
Prepaid expenses 1,087 1,703
Other current assets 1,774 2,637
________ ________
Total current assets 40,852 37,256
________ ________
Property and equipment, at cost:
Land and buildings 2,656 2,656
Gaming equipment 29,036 26,676
Other equipment 4,506 4,328
Leasehold improvements 724 713
________ ________
36,922 34,373
Less accumulated depreciation (21,817) (19,322)
________ ________
15,105 15,051
Lease acquisition costs and other
intangible assets, net of
accumulated amortization of
$6,978 and $6,061 5,994 7,292
Goodwill, net of accumulated
amortization of $2,485 and $2,341 5,145 5,289
Lease and other security deposits 3,453 3,490
Other non-current assets 2,501 3,581
________ ________
Total assets $ 73,050 $ 71,959
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
(Concluded)
<TABLE>
March 31, June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
____________________________________ ________ _______
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 678
Accounts payable $ 333 566
Other current liabilities 3,813 4,372
_______ _______
Total current liabilities 4,146 5,616
Long-term debt, less current portion 271
Deferred rent 3,290 3,506
Accrued pension and other liabilities 2,076 2,350
_______ _______
Total liabilities 9,512 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;
9,599,540 and 9,595,388 shares issued 96 96
Additional paid-in capital 63,767 63,935
Retained earnings (accumulated deficit) 3,310 (180)
Less 293,748 and 293,741 shares of common
stock in treasury, at cost (3,635) (3,635)
_______ _______
Total stockholders' equity 63,538 60,216
_______ _______
Total liabilities and
stockholders' equity $73,050 $71,959
======== =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
March 31, March 31,
__________________ _________________
1996 1995 1996 1995
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Revenues:
Route operations $21,000 $22,141 $62,055 $65,063
Casino operations 1,846 2,096 5,976 6,576
_______ _______ _______ _______
Totals 22,846 24,237 68,031 71,639
_______ _______ _______ _______
Costs and expenses:
Route operations 16,344 16,685 47,689 48,965
Casino operations 1,745 1,881 5,237 5,946
Amortization 546 750 1,657 2,074
Depreciation 1,008 1,342 3,303 4,007
General and administrative 958 1,375 3,190 4,128
_______ _______ _______ _______
Totals 20,601 22,033 61,076 65,120
_______ _______ _______ _______
Operating income 2,245 2,204 6,955 6,519
_______ _______ _______ _______
Other income (expense):
Interest and other income 463 315 1,177 720
Interest expense (22) (22) (125)
_______ _______ _______ _______
Totals 463 293 1,155 595
_______ _______ _______ _______
Income before income tax 2,708 2,497 8,110 7,114
_______ _______ _______ _______
Provision for Federal income tax:
Current 2,393 2,393
Deferred (1,527) 825 202 2,349
_______ _______ _______ _______
Totals 866 825 2,595 2,349
_______ _______ _______ _______
Net income $ 1,842 $ 1,672 $ 5,515 $ 4,765
======= ======= ======= =======
Earnings per common and
common equivalent share $ .20 $ .18 $ .59 $ .52
======= ======= ======= =======
Cash dividends per share of
common stock $ .08 $ .08 $ .24 $ .24
======= ======= ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED MARCH 31, 1996
(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) $60,216
Cash
dividends
($.24 per
share) (201) (2,025) (2,226)
Issuance
of shares
on exercise
of stock
options 5 33 33
Net
income 5,515 5,515
_____ ___ _______ _______ ____ _______ _______
Balance
March 31,
1996 9,600 $96 $63,767 $ 3,310 (294) $(3,635) $63,538
===== === ======= ======= ==== ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(Dollars in thousands)
(Unaudited)
<TABLE>
1996 1995
_______ _______
<S> <C> <C>
Operating activities:
Net income $ 5,515 $ 4,765
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,960 6,081
Deferred Federal income tax 202 2,349
Net gain on sales and retirements of property
and equipment (344) (133)
Other (200)
Increase (decrease) from changes in:
Prepaid expenses and other current assets 519 427
Other non-current assets (107) 204
Accounts payable (233) (891)
Other current liabilities 686 134
Deferred rent (216) 913
Other liabilities (274) 138
_______ _______
Net cash provided by operating activities 10,708 13,787
_______ _______
Investing activities:
Proceeds from sales of short-term investments 509
Net proceeds from location operators 181 180
Proceeds from sales of other non-current assets 500 617
Proceeds from sales of property and equipment 524 204
Purchases of property and equipment (3,422) (2,615)
Advances to equity investee (1,498)
Increase in lease acquisition costs and other
intangible assets (311) (596)
Decrease in lease and other security deposits 37 26
_______ _______
Net cash used in investing activities (2,491) (3,173)
_______ _______
Financing activities:
Repayments of long-term debt (949) (1,058)
Proceeds from issuance of common stock 33 7
Dividends paid (2,226) (2,214)
_______ _______
Net cash used in financing activities (3,142) (3,265)
_______ _______
Net increase in cash and cash equivalents 5,075 7,349
Cash and cash equivalents at beginning of period 32,916 23,543
_______ _______
Cash and cash equivalents at end of period $37,991 $30,892
======= =======
Supplemental disclosures of cash flow data:
Cash paid during the period for:
Interest $ 22 $ 125
Federal income tax $ 1,000 -
Non-cash investing and
financing activities:
Common stock surrendered on exercise
of stock options - $ 600
Tax benefit from exercise of stock options - $ 86
Reduction of debt upon sale of other
non-current asset - $ 479
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
JACKPOT ENTERPRISES, INC.
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 March 31, 1996, the results of its
operations for the three and nine months ended March 31, 1996 and
1995 and its cash flows for the nine months ended March 31, 1996 and
1995. 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 fiscal year ended June 30, 1995 (the "1995 Form 10-K").
The earnings for the three and nine months ended March 31, 1996
and 1995 are not necessarily indicative of results for a full year.
Note 2 - Earnings per share:
Earnings per share for the three and nine months ended March 31,
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 or were antidilutive on earnings per share.
Note 3 - Stockholders' equity:
Cash dividends:
For the nine months ended March 31, 1996, Jackpot paid cash
dividends of approximately $2,226,000 ($.24 per common share). On
April 29, 1996, Jackpot's Board of Directors declared a quarterly
dividend of $.08 per common share for the three months ended March
31, 1996 which is payable on or about May 24, 1996 to stockholders
of record on May 10, 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 June 30, 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. 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.
<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 nine months ended March 31,
1996 (the "1996 nine 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 March 31, 1996 approximated $38.0
million.
Net cash provided by operating activities in the 1996 nine months was
$10.7 million. Net cash used in investing activities in the 1996 nine months
was approximately $2.5 million which included cash used of approximately $3.7
million and cash received of approximately $1.2 million. The $3.7 million of
cash used was primarily for the purchase of property and equipment. The $1.2
million of cash received from investing activities consisted primarily of
aggregate proceeds from sales of property and equipment and other non-current
assets.
Net cash used in financing activities in the 1996 nine months was
approximately $3.1 million which resulted from the repayment of approximately
$.9 million of long-term debt and the payment of approximately $2.2 million
of dividends.
Liquidity:
At March 31, 1996, Jackpot had cash and cash equivalents of approximately
$38.0 million, an increase of approximately $5.1 million from June 30, 1995.
Jackpot's working capital and current ratio increased to approximately $36.7
million and 9.9 to 1, respectively, at March 31, 1996, 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. 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,
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, 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 $1.2 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
non-gaming. 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 March 31, 1996 (the "1996 three
months") decreased approximately $1.4 million (from $24.2 million in the
three months ended March 31, 1995 (the "1995 three months") to $22.8 million
in the 1996 three months), while total revenues in the 1996 nine months
decreased approximately $3.6 million (from $71.6 million in the nine months
ended March 31, 1995 (the "1995 nine months") to $68.0 million in the 1996
nine months). The decreases in total revenues of $1.4 million and $3.6
million were the net result of decreases of $1.1 million (from $22.1 million
in the 1995 three months to $21.0 million in the 1996 three months) and $3.0
million (from $65.1 million in the 1995 nine months to $62.1 million in the
1996 nine months), respectively, in gaming machine route operations revenues
and decreases of $.3 million (from $2.1 million in the 1995 three months to
$1.8 million in the 1996 three months) and $.6 million (from $6.6 million in
the 1995 nine months to $6.0 million in the 1996 nine months), respectively,
in casino operations revenues.
The decreases in gaming machine route operations revenues of $1.1 million
and $3.0 million were due primarily to the closing or loss, based on
management's commitment to maintain pricing discipline, of certain non-chain
locations and 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. 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 1996 three months and 1996 nine months, new locations
generated revenues of approximately $1.1 million and $3.3 million,
respectively. Terminated locations had generated revenues of $1.8 million
and $4.9 million in the 1995 three months and 1995 nine months, respectively,
while revenues at existing locations decreased $.4 million and $1.4 million
in the 1996 three months and 1996 nine months, respectively.
The amount of gaming machine route operations revenues attributable to
fixed payment leases and revenue sharing contracts for the three and nine
months ended March 31, 1996 and 1995 are summarized below (dollars in
thousands):
<TABLE>
Three Months Ended March 31,
1996 1995
_______________________ _____________________
Percent Percent
of route of route
operations operations
Amount revenues Amount revenues
_______ __________ _______ __________
<S> <C> <C> <C> <C>
Route operations:
Fixed payment leases $13,521 64.4% $13,505 61.0%
Revenue sharing contracts 7,479 35.6 8,636 39.0
_______ _____ _______ _____
Totals $21,000 100.0% $22,141 100.0%
======= ===== ======= =====
</TABLE>
<TABLE>
Nine Months Ended March 31,
1996 1995
_______________________ _____________________
Percent Percent
of route of route
operations operations
Amount revenues Amount revenues
_______ __________ _______ __________
<S> <C> <C> <C> <C>
Route operations:
Fixed payment leases $39,433 63.5% $40,336 62.0%
Revenue sharing contracts 22,622 36.5 24,727 38.0
_______ _____ _______ _____
Totals $62,055 100.0% $65,063 100.0%
======= ===== ======= =====
</TABLE>
The decreases in casino operations revenues of $.3 million and $.6 million
were due primarily to the decline in revenues generated at the Debbie Reynolds'
Hotel and Casino. Effective March 31, 1996, the Company ceased operations at
the Debbie Reynolds' Hotel and Casino. The Company, through its operating
subsidiary Debbie's Casino, Inc. ("Debbie's"), had operated approximately 175
gaming machines at this location.
Costs and expenses:
Route operations expenses in the 1996 three months and 1996 nine months
decreased approximately $.4 million (from $16.7 million in the 1995 three
months to $16.3 million in the 1996 three months) and $1.3 million (from $49.0
million in the 1995 nine months to $47.7 million in the 1996 nine months) and,
as a percentage of route operations revenues, increased to 77.8% and 76.8%
in the 1996 three months and 1996 nine months from 75.4% and 75.3% in the
respective 1995 periods. The decrease of $.4 million in the 1996 three
months over the 1995 three months was due primarily to a decrease in location
rent expense attributable to revenue sharing contracts. The decrease of
$1.3 million in the 1996 nine months over the 1995 nine months was attributable
to decreases of $.4 million in location rent, $.3 million in payroll costs,
$.3 million in workers' compensation costs and $.3 million in other route
operations expenses. Route operations expenses in the 1996 three months and
1996 nine months 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 and from the
decrease in revenues at existing fixed payment lease locations in the 1996
three months and 1996 nine months.
With respect to location rent, which is the single largest route operation
expense, no contract with a material effect on operating results expires in the
remainder of the fiscal year ending June 30, 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 1996 three months, as a percentage of
casino operations revenues, increased to 94.5% from 89.7% in the 1995 three
months due primarily to the operating results of Debbie's. The decline in
operating results at Debbie's was due principally to the decrease in revenues
in the 1996 three months. Casino operations expenses in the 1996 nine months
decreased approximately $.7 million (from $5.9 million in the 1995 nine
months to $5.2 million in the 1996 nine months) and, as a percentage of
casino operations revenues, casino operations expenses decreased to 87.6%
in the 1996 nine months from 90.4% in the 1995 nine months due primarily to
the closing in February 1995 of operations of Water Street Casino, Inc. dba
the Post Office Casino (the "Post Office Casino"). With respect to casino
operations expenses, the 1995 nine months included approximately $.9 million
of costs and expenses incurred by the Post Office Casino.
Amortization expense in the 1996 three months and 1996 nine months
decreased approximately $.2 million (from $.7 million in the 1995 three months
to $.5 million in the 1996 three months) and $.4 million (from $2.1 million
in the 1995 nine months to $1.7 million in the 1996 nine months). The decrease
in amortization expense in the respective 1996 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 1996 three months and 1996 nine months
decreased approximately $.3 million (from $1.3 million in the 1995 three
months to $1.0 million in the 1996 three months) and $.7 million (from $4.0
million in the 1995 nine months to $3.3 million in the 1996 nine months).
The decrease in depreciation expense in the respective 1996 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 in the three months ended September 30, 1995.
General and administrative expenses in the 1996 three months and 1996
nine months decreased approximately $.4 million (from $1.4 million in the 1995
three months to $1.0 million in the 1996 three months) and $.9 million (from
$4.1 million in the 1995 nine months to $3.2 million in the 1996 nine months)
primarily as a result of decreases in payroll and other compensation related
costs.
Interest and other income:
Interest and other income in the 1996 three months and 1996 nine months
increased approximately $.2 million (from $.3 million in the 1995 three months
to $.5 million in the 1996 three months) and $.5 million (from $.7 million in
the 1995 nine months to $1.2 million in the 1996 nine months) primarily from
the increase in the net gain on sales of certain non-operating assets and 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 1996 three months and 1996 nine months was
approximately 32%, which was slightly lower than the 33% rate in the 1995
three months and 1995 nine months primarily because of the increase in tax
benefits from tax-exempt interest income in the respective 1996 periods.
General:
Despite the decrease in revenues in the respective 1996 periods, operating
income in the 1996 three months remained constant at approximately $2.2 million
compared to the 1995 three months, and in the 1996 nine months increased
approximately $.5 million (from $6.5 million in the 1995 nine months to $7.0
million in the 1996 nine months). The increase in operating income of $.5
million in the 1996 nine months was due primarily to the decreases in
amortization, depreciation and general and administrative expenses described
above.
Net income in the 1996 three months and 1996 nine months increased
approximately $.1 million (from $1.7 million in the 1995 three months to $1.8
million in the 1996 three months) and $.7 million (from $4.8 million in the
1995 nine months to $5.5 million in the 1996 nine months) due to the results
of operations described above. Earnings per share in the 1996 three months
and 1996 nine months were $.20 and $.59 per share, respectively, compared to
earnings per share in the 1995 three months and 1995 nine months of $.18 and
$.52 per share, respectively.
<PAGE>
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 and nine months ended March 31, 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 March 31, 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: May 10, 1996
EXHIBIT 11.1
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE AND NINE MONTHS ENDED MARCH 31, 1996 and 1995
(Dollars and shares in thousands, except per share data)
<TABLE>
Three Months Ended Nine Months Ended
March 31, March 31,
__________________ __________________
1996 1995 1996 1995
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Primary:
Earnings:
Net income $ 1,842 $ 1,672 $ 5,515 $ 4,765
======= ======= ======= =======
Shares:
Weighted average number of
common shares
outstanding (A) 9,305 9,247 9,303 9,229
======= ======= ======= =======
Primary earnings per share $ .20 $ .18 $ .59 $ .52
======= ======= ======= =======
Fully diluted (B):
Earnings:
Net income $ 1,842 $ 1,672 $ 5,515 $ 4,765
Add after-tax interest, net (C) 129 461 867 1,375
_______ _______ _______ _______
Net income, as adjusted $ 1,971 $ 2,133 $ 6,382 $ 6,140
======= ======= ======= =======
Shares:
Weighted average number of
common shares and common
share equivalents
outstanding 9,305 9,247 9,303 9,229
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 799 2,571 1,588 2,485
_______ _______ _______ _______
Weighted average number of
common shares and common
share equivalents outstanding,
as adjusted 10,104 11,818 10,891 11,714
======= ======= ======= =======
Fully diluted earnings per share $ .20 $ .18 $ .59 $ .52
======= ======= ======= =======
</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
computations 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 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 - March 31, 1996 and June 30, 1995 and its
Consolidated Statements of Income - three and nine months ended March 31, 1996
and 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 37,991
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 40,852
<PP&E> 36,922
<DEPRECIATION> 21,817
<TOTAL-ASSETS> 73,050
<CURRENT-LIABILITIES> 4,146
<BONDS> 0
0
0
<COMMON> 96
<OTHER-SE> 63,442
<TOTAL-LIABILITY-AND-EQUITY> 73,050
<SALES> 0
<TOTAL-REVENUES> 68,031
<CGS> 0
<TOTAL-COSTS> 52,926
<OTHER-EXPENSES> 4,262
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22
<INCOME-PRETAX> 8,110
<INCOME-TAX> 2,595
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,515
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
