-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Coq4xiULcHGTnRRto3tVSnVFpd6tdPWkt2r4j6MED4DvsO+5q7QfxAL0DfJKPou9 4V+Hd+qcEbCy+bqmw8z75w== 0000351903-96-000003.txt : 19960213 0000351903-96-000003.hdr.sgml : 19960213 ACCESSION NUMBER: 0000351903-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACKPOT ENTERPRISES INC CENTRAL INDEX KEY: 0000351903 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880169922 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09728 FILM NUMBER: 96515257 BUSINESS ADDRESS: STREET 1: 1110 PALMS AIRPORT DR CITY: LAS VEGAS STATE: NV ZIP: 89119 BUSINESS PHONE: 7023693424 MAIL ADDRESS: STREET 2: 1110 PALMS AIRPORT DRIVE CITY: LAS VEGAS STATE: NV ZIP: 89119 10-Q 1 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. 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 JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited) December 31, June 30, ASSETS 1995 1995 ______ ___________ ________ 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 JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (Unaudited) (Concluded)
December 31, June 30, LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995 ____________________________________ ___________ ________ 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 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)
Three Months Ended Six Months Ended December 31, December 31, ________________ ________________ 1995 1994 1995 1994 _______ _______ _______ _______ 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.
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) Retained Additional Earnings Treasury Total Common Stock Paid-in (Accumulated Stock Stockholders' Shares Amount Capital Deficit) Shares Amount Equity ______ ______ __________ ___________ ______ _______ _____________ 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.
JACKPOT ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994 (Dollars in thousands) (Unaudited) 1995 1994 ________ _______ 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.
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. 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): Three Months Ended December 31, 1995 1994 ___________________ ____________________ Percent Percent of route of route operations operations Amount revenues Amount revenues _______ __________ _______ __________ 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% ======= ===== ======= =====
Six Months Ended December 31, 1995 1994 ___________________ ____________________ Percent Percent of route of route operations operations Amount revenues Amount revenues _______ __________ _______ __________ 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% ======= ===== ======= =====
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. 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 EX-11 2 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) Three Months Ended Six Months Ended December 31, December 31, __________________ ________________ 1995 1994 1995 1994 _______ _______ _______ _______ 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 ======= ======= ======= =======
(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). EX-27 3
5 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. 6-MOS JUN-30-1996 JUL-01-1995 DEC-31-1995 36,425 0 0 0 0 39,439 36,084 20,947 72,431 4,370 0 0 0 96 62,334 72,431 0 45,185 0 34,837 2,938 0 22 5,402 1,729 0 0 0 0 3,673 .39 .39
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