<PAGE>
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 Period Ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition Period From to
----------- ------------
Commission file number 0-23256
JAMESON INNS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its Articles)
Georgia 58-2079583
- ----------------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
8 Perimeter Center East, Suite 8050,
Atlanta, Georgia 30346-1603
- ----------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(770) 901-9020
---------------------------------------------------
(Registrant's telephone number, including area code)
---------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter periods 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
------- -------
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date - Common
Stock, $.10 Par Value - 7,338,713 shares outstanding as of
October 21, 1996.
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Jameson Inns, Inc.
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of September 30, 1996
(unaudited) and December 31, 1995 . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Income for the Three
Month Periods Ended September 30, 1996 and 1995 (unaudited) . . 4
Condensed Consolidated Statements of Income for the Nine
Month Periods Ended September 30, 1996 and 1995 (unaudited) . . 5
Condensed Consolidated Statements of Cash Flows for the Nine
Month Periods Ended September 30, 1996 and 1995 (unaudited) . . 6
Notes to Condensed Consolidated Financial
Statements (unaudited) . . . . . . . . . . . . . . . . . . . . 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 19
EXHIBITS
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<PAGE>
ITEM 1. FINANCIAL STATEMENTS
Jameson Inns, Inc.
Condensed Consolidated Balance Sheets
September 30, December 31,
1996 1995
----------- ------------
(Unaudited)
ASSETS
Property and equipment, at cost $72,796,094 $57,369,657
Less accumulated depreciation (8,527,870) (6,589,753)
----------- ------------
64,268,224 50,779,904
Cash 358,881 235,254
Lease revenue receivable 820,261 495,855
Prepaid expenses 113,780 37,412
Deferred finance costs, net 1,030,525 1,213,396
Other assets 144,835 44,036
------------ ------------
$66,736,506 $52,805,857
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $14,695,409 $30,213,904
Accounts payable 45,023 65,948
Accounts payable to affiliates 580,057 568,661
Accrued interest 33,177 151,182
Accrued property taxes 279,214 13,533
Other accrued liabilities 33,154 38,279
------------ ------------
15,666,034 31,051,507
Stockholders' equity:
Preferred stock, $1 par value,
100,000 shares authorized, no
shares issued and outstanding - -
Common stock, $.10 par value,
20,000,000 shares authorized,
7,331,848 (3,857,942 in 1995)
shares issued and outstanding 733,185 385,795
Contributed capital 51,364,278 22,395,546
Retained deficit (1,026,991) (1,026,991)
------------ ------------
Total stockholders' equity 51,070,472 21,754,350
------------ ------------
$66,736,506 $52,805,857
============ ============
See notes to condensed consolidated financial statements.
3
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Jameson Inns, Inc.
Condensed Consolidated Statements of Income (unaudited)
For the Three Month Period Ended
September 30
--------------------------------
1996 1995
-------------- --------------
Lease revenue $2,668,378 $1,752,450
Property tax expense 106,151 79,498
Insurance expense 82,213 67,030
Depreciation 687,444 475,890
---------- ----------
1,792,570 1,130,032
Other expenses:
Interest expense, net of
capitalized amounts 180,838 441,282
General and administrative 168,402 173,141
---------- ---------
Net income $1,443,330 $515,609
========== ==========
Funds from operations (Note 2) $2,130,774 $991,499
========== ==========
Per common and common
equivalent share:
Net income $.20 $.13
========== ==========
Dividends paid $.22 $.21
========== ==========
See notes to condensed consolidated financial statements.
4
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Jameson Inns, Inc.
Condensed Consolidated Statements of Income (unaudited)
For the Nine Month Period Ended
September 30
------------------------------
1996 1995
----------- -----------
Lease revenue $7,011,068 $4,650,242
Property tax expense 297,963 222,542
Insurance expense 196,343 159,247
Depreciation 1,938,117 1,267,557
---------- ----------
4,578,645 3,000,896
Other expenses:
Interest expense, net of
capitalized amounts 1,146,817 1,010,008
General and administrative 483,343 534,617
---------- ----------
Income before extraordinary loss 2,948,485 1,456,271
Extraordinary loss 989,376 -
---------- ----------
Net income $1,959,109 $1,456,271
========== ==========
Funds from operations (Note 2) $4,886,602 $2,723,828
========== ==========
Per common and common
equivalent share:
Income before extraordinary loss $.50 $.38
========== ==========
Net income $.33 $.38
========== ==========
Dividends paid $.64 $.59
========== ==========
See notes to condensed consolidated financial statements.
5
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Jameson Inns, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
For the Nine Month
Period Ended
September 30
-----------------------
1996 1995
----------- ----------
Net income $1,959,109 $1,456,271
Adjustments to reconcile net income
to net cash provided by operating
activities:
Extraordinary item 989,376 -
Depreciation and amortization 2,011,177 1,322,770
Stock option and other expenses 55,719 59,212
Changes in assets and liabilities
increasing (decreasing) cash:
Lease revenue receivable (324,406) (86,644)
Prepaid expenses and other assets (177,167) (42,945)
Accounts payable (20,926) (125,571)
Accounts payable to affiliates 11,396 639,235
Accrued interest (118,005) 117,761
Accrued property taxes and
other accrued liabilities 260,556 174,246
----------- ----------
Net cash provided by operating activities 4,646,829 3,514,335
Investing activities
Additions to property and equipment (15,426,437) (12,992,222)
------------ -----------
Net cash used in investing activities (15,426,437) (12,992,222)
Financing activities
Common stock dividends paid (3,944,223) (2,105,345)
Preferred stock dividends paid - (489,949)
Proceeds from issuance of common stock 31,064,130 28,544
Proceeds from exercise of stock options 181,389 -
Proceeds from long-term debt 19,812,732 13,283,190
Payment of deferred finance costs (879,565) (437,279)
Payments on long-term debt (35,331,228) (595,368)
------------ -----------
Net cash provided by financing
activities 10,903,235 9,683,793
Net increase(decrease) in cash 123,627 205,906
Cash at beginning of period 235,254 353,387
----------- ----------
Cash at end of period $ 358,881 $ 559,293
=========== ==========
See notes to condensed consolidated financial statements.
6
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Jameson Inns, Inc.
Notes to Condensed Consolidated Financial Statements
1. Business and Basis of Financial Statements
Jameson Inns, Inc. (the "Company") is a self-administered real estate
investment trust ("REIT") headquartered in Atlanta which develops and
owns limited service hotel properties ("Inns") operating in the
southeastern United States under the trademark "The Jameson Inn." At
September 30, 1996, the Company had a total of 59 Inns either in
operation or under development, including 37 Inns in operation (1,818
available rooms), 12 Inns under construction and contracts to acquire
10 parcels of land on which additional Inns are expected to be
constructed during 1997. In addition, at that date, 2 of the Inns in
operation were undergoing expansions. Upon completion of these
projects, the Company expects to have 2,748 available rooms.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. The condensed consolidated balance sheet at December
31, 1995 has been derived from the audited consolidated financial
statements at that date. Operating results for the three month period
or nine month period ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the year ended
December 31, 1996 or any other interim period. For further
information, refer to the consoli-dated financial statements and
footnotes thereto included in the annual report on Form 10-K for the
year ended December 31, 1995.
2. Funds from Operations
Industry analysts generally consider funds from operations (FFO) an
appropriate measure of an equity REIT's performance. Effective the
second quarter of 1995, the Company adopted the March 1995
interpretation of the NAREIT definition of funds from operations which
is calculated (in the Company's case) as net income plus depreciation
and extraordinary items, if applicable. The following FFO calculations
for both periods follow the new interpretation. Other non-cash
expenses such as amortization and stock option expense have not been
added back in FFO. Funds from operations should not be considered an
alternative to net income as an indicator of the Company's operating
performance or to cash flow as a measure of liquidity.
7
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2. Funds from Operations (continued)
Three months ended
September 30
-----------------------
1996 1995
--------- ---------
Net income $1,443,330 $515,609
Depreciation 687,444 475,890
---------- ---------
Funds from operations, per March 1995
NAREIT interpretation $2,130,774 $991,499
========== =========
Nine months ended
September 30
------------------------
1996 1995
---------- ----------
Net income $1,959,109 $1,456,271
Depreciation 1,938,117 1,267,557
Extraordinary loss 989,376 -
---------- ----------
Funds from operations, per March 1995
NAREIT interpretation $4,886,602 $2,723,828
========== ==========
3. Stockholders' Equity
On April 22, 1996 and May 6, 1996, the Company completed the sale of
3,000,000 and 375,000 newly issued shares, respectively, of common
stock at $10 per share. Net proceeds of approximately $30.9 million
were used to repay certain existing mortgage indebtedness at that
date. Simultaneously with the closing of the equity offering, the
Company modified its lines of credit and certain long-term mortgages
into new lines of credit with terms more favorable to the Company.
On April 17, 1996, the Company and Thomas W. Kitchin, its Chairman,
Chief Executive Officer and President, agreed to amend the Employment
Agreement with Mr. Kitchin to cancel his stock appreciation rights
effective March 31, 1996. The Company's Board of Directors
unanimously approved the amendment as being in the best interest of
the Company.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Jameson Inns, Inc. condensed consolidated financial statements and
notes thereto appearing elsewhere in this quarterly report.
Jameson Inns, Inc. (the "Company") is a self-administered real estate
investment trust ("REIT") headquartered in Atlanta which develops and
owns limited service hotel properties ("Inns") operating in the
southeastern United States under the trademark "The Jameson InnR." At
September 30, 1996, the Company had a total of 59 Inns either in
operation or under development, including 37 Inns in operation (1,818
available rooms), 12 Inns under construction and contracts to acquire
10 parcels of land on which additional Inns are expected to be
constructed during 1997. In addition, at that date, 2 of the Inns in
operation were undergoing expansions. Upon completion of these
projects, the Company expects to have 2,748 available rooms.
The Company's primary source of revenue is rent payments by Jameson
Operating Company (the "Operator") from leases under a master lease
(the "Lease") covering all of the Inns in operation. The expenses of
the Company consist of property taxes, insurance, corporate overhead,
compensation expense related to certain stock options, interest on
mortgage debt and depreciation of the Inns. The Lease provides for the
payment of Base Rent and Percentage Rent. For the quarter ended
September 30, 1996, Base Rent and Percentage Rent in the aggregate
amount of $2.7 million was earned by the Company. The principal
determinant of Percentage Rent is the Operator's Room Revenues of the
Inns. Therefore, management believes that a review of the historical
performance of the operations of the operating Inns, particularly with
respect to occupancy, average daily rate ("ADR") and revenue per
available room ("REVPAR") is appropriate for understanding the Lease
revenue.
9
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<PAGE>
The following table shows certain historical financial and other
information for the periods indicated.
Three Month Period
Ended September 30
----------------------
1996 1995
-------- --------
Occupancy rate 70.41% 70.97%
ADR $47.81 $43.56
REVPAR $33.66 $30.91
Room Revenues (000s) $5,679 $3,729
Room nights available 164,827 117,482
Room nights occupied 116,060 83,377
Operating Inns (at period end) 37 27
Rooms available (at period end) 1,818 1,297
Nine Month Period
Ended September 30
----------------------
1996 1995
-------- --------
Occupancy rate 69.26% 69.93%
ADR $45.77 $42.57
REVPAR $31.70 $29.77
Room Revenues (000s) $14,943 $9,633
Room nights available 459,398 315,163
Room nights occupied 318,195 220,387
Operating Inns (at period end) 37 27
Rooms available (at period end) 1,818 1,297
10
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Results of Operations
Comparison of the Three Months Ended September 30, 1996 to the Three
Months Ended September 30, 1995.
Lease revenue for the Company for the three month period ended
September 30, 1996 increased 50% to $2.7 million as compared to $1.8
million for the same period in 1995. The increase was due to the
increase in the Operator's Room Revenues.
The number of room nights available increased from 117,482 in 1995 to
164,827 in 1996, or 40%, due to the opening from January 1, 1995
through September 30, 1996 of seventeen new 40-room Inns, seven
20-room expansions of existing Inns, one 22-room expansion of an
existing Inn and one 16-room expansion of an existing Inn. The
occupancy rate decreased from 70.97% during the third quarter of 1995
to 70.41% during the third quarter of 1996. However, ADR increased
10% from $43.56 in 1995 to $47.81 in 1996. Part of the increase in
ADR for the quarter is directly related to increased room rates at
certain Inns during the 1996 Summer Olympics. As a result of these
three factors, third quarter Room Revenues rose 54%, from $3.7 million
for 1995 to $5.7 million in 1996. Same Inn Room Revenues in 1996
versus 1995 grew to $3.4 million from $3.0 million, or 13%. The
growth is due to an increase in ADR from $43.61 to $48.81 for these
Inns, an increase in room nights available (due to expansions of
certain of these Inns) from 92,184 to 99,163, partially offset by a
decrease in the occupancy rate from 72.75% to 69.43% for these Inns
for 1996 compared to 1995.
General and administrative expense includes overhead charges for
management, accounting and legal services for the corporate home
office. General and administrative expense for the three months ended
September 30, 1996 was $168,402, as compared to $173,141 for the three
months ended September 30, 1995. The 1996 expense is lower than 1995
due to a decrease in third party accounting, legal and marketing
services.
Property taxes and insurance expenses totaled $188,364 for the three
month period ended September 30, 1996 compared to $146,528 for the
same period in 1995. The increase is attributable to the increase in
number of Inns.
11
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<PAGE>
Interest expense decreased from $441,282 for the three-month period
ended September 30, 1995 to $180,838 for the same period ended
September 30, 1996, due to the greater amount of principal
indebtedness outstanding in the third quarter of 1995. Debt balances
were lower in 1996 due to the $30.9 million payoff in April 1996 with
the equity offering proceeds. Interest expense amounts exclude
interest capitalized in the cost of new Inn development.
Depreciation expense increased from $475,890 to $687,444 for the three
month periods ended September 30, 1995 and 1996, respectively, due to
an increase in the number of operating Inns.
Comparison of the Nine Months Ended September 30, 1996 to the Nine
Months Ended September 30, 1995.
Lease revenue for the Company for the nine month period ended
September 30, 1996 increased 49% to $7.0 million as compared to $4.7
million for the same period in 1995. The increase was due to the
increase in the Operator's Room Revenues, partially offset by the
effect of a change in the Percentage Rent formula under the Lease
Amendment effective July 1, 1995.
The number of room nights available increased from 315,163 in 1995 to
459,398 in 1996, or 46%, due to the opening from January 1, 1995
through September 30, 1996 of seventeen new 40-room Inns, seven 20-
room expansions of existing Inns, one 22-room expansion of an existing
Inn and one 16-room expansion of an existing Inn. The occupancy rate
decreased from 69.93% to 69.26% for 1995 and 1996, respectively.
However, ADR increased 8% from $42.57 in 1995 to $45.77 in 1996. Part
of the increase in ADR for the period is directly related to increased
room rates at certain Inns during the 1996 Summer Olympics. As a
result of these three factors, Room Revenues rose 55% from $9.6
million for 1995 to $14.9 million in 1996. Same Inn Room Revenues for
1996 versus 1995 grew to $9.4 million from $8.3 million, or 13%. The
growth is due to an increase in ADR from $42.48 to $45.90 for these
Inns and an increase in room nights available (due to expansions of
certain of these Inns) from 267,623 to 291,922, partially offset by a
decrease in the occupancy rate from 71.25% to 68.32% for these Inns
for 1995 compared to 1996. The decrease in the overall occupancy rate
of the Inns is attributable primarily to (i) the expansion of several
high occupancy Inns which then experienced lower occupancy rates
because of the additional rooms available in the marketplace and (ii)
more severe weather conditions in the first quarter of 1996 versus
1995.
12
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<PAGE>
General and administrative expense includes overhead charges for
management, accounting and legal services for the corporate home
office. General and administrative expense for the nine months ended
September 30, 1996 was $483,343, as compared to $534,617 for the nine
months ended September 30, 1995. The 1996 expense is lower than 1995
due to a decrease in third party accounting, legal and marketing
services.
Property taxes and insurance expenses totaled $494,306 for the nine
month period ended September 30, 1996 compared with $381,789 for the
same period in 1995. The increase is attributable to the increase in
the number of Inns.
Interest expense increased from $1,010,008 for the nine month period
ended September 30, 1995 to $1,146,817 for the same period ended
September 30, 1996, due to the greater amount of principal
indebtedness outstanding combined with higher average interest rates
in 1996. The additional debt was incurred for the development of new
Inns and expansion of existing Inns, however $30.9 million was repaid
in April 1996 with the equity offering proceeds. As a result of the
early extinguishment of this debt, the Company had a loss of $989,376
due to the write-off of deferred finance costs, which is reflected as
an extraordinary item. Interest expense amounts exclude interest
capitalized in the cost of new Inn development.
Depreciation expense increased from $1,267,557 to $1,938,117 for the
nine month periods ended September 30, 1995 and 1996, respectively,
due to an increase in the number of operating Inns.
13
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Liquidity and Capital Resources
On April 22, 1996 and May 6, 1996, the Company completed the sale of
3,000,000 and 375,000 newly issued shares, respectively, of common
stock at $10 per share. Net proceeds of approximately $30.9 million
were used to repay certain existing mortgage indebtedness at those
dates. Simultaneously with the closing of the equity offering, the
Company converted with certain modifications its existing lines of
credit and certain long-term mortgages into new line of credit
facilities. In the aggregate, the modified loan provisions provide
the Company with new lines of credit of approximately $29 million.
The new lines of credit have an interest rate of 25 basis points over
the prime rate as published in the Wall Street Journal, which is
currently 8.25%. The interest rate adjusts annually. The average
rate on the mortgages repaid with the proceeds of the offering was
9.8%. Two years from the closing date of the loan modification, the
lines of credit convert to 15-year amortizing loans with ten-year call
provisions. There are no prepayment penalties for early
extinguishment of the debt balances. As of September 30, 1996, the
Company had five Inns unencumbered and available to use as collateral
for any additional financing, in addition to approximately $30.9
million in available credit under its lines of credit and construction
loans. For most new Inns developed by the Company, a construction
loan for approximately $1.05 million has been obtained, usually from
community banks in the general locale of where the Inn is being
constructed. The balance of approximately $200,000 to $300,000 to buy
the land and complete the construction project is funded with draws on
other lines of credit. The construction loan converts to a long-term
mortgage financing after completion of the Inn without any further
action by the Company. As of September 30, 1996, the Company had
$14.7 million in outstanding debt.
The Company expects to continue to develop additional Inns as suitable
opportunities arise. The Company currently is constructing new
40-room Inns in Commerce, Conyers and Oakwood, Georgia; Greenville,
Alabama; Forest City and Laurinburg, North Carolina; Georgetown,
Seneca, Simpsonville and Union, South Carolina; and Decherd and
Tullahoma, Tennessee. The total turnkey construction price for the
Inns currently under construction is $15 million, of which
approximately $5.4 million had been expended at September 30, 1996.
The Company is also currently expanding Inns in Florence, Alabama and
Greenwood, South Carolina and may in the future expand additional Inns
if management determines that sufficient market demand exists and
financing is available for any such expansion. The Company currently
has 10 additional land sites under contract, subject to varying
contingencies.
14
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<PAGE>
As with most real estate investments, the Company's investments in the
Inns are relatively illiquid. As a result, the ability of the Company
to sell or otherwise dispose of any Inn to provide liquidity may be
very limited.
Forward-Looking Statements
There are a number of statements in this report which address
activities, events or developments which the Company expects or
anticipates will or may occur in the future, including such things as
the Company's expansion plans, including construction of new Inns and
expansion of existing Inns, availability of debt financing and
capital, payment of quarterly dividends and other matters. These
statements are based on certain assumptions and analyses made by the
Company in the light of its experience and its perception of
historical trends, current conditions and expected future
developments, as well as other factors it believes are appropriate
under the circumstances. However, whether actual results and
developments will conform to the Company's expectations and
predictions is subject to a number of risks and uncertainties,
including (1) the Company's ability to (a) secure construction and
permanent financing to finance such development on terms and
conditions favorable to the Company, (b) assess accurately the market
demand for new Inns and expansions of existing Inns, (c) identify and
purchase new sites which meet its various criteria, including
reasonable land prices, (d) contract for the construction of new Inns
and expansions of existing Inns in a manner which produces Inns
consistent with its present quality and standards at a reasonable cost
and without significant delays, (e) provide ongoing renovation and
refurbishment of the Inns sufficient to maintain consistent quality
among the Inns, and (f) manage its business in a cost-effective manner
given the increase in the number of Inns; (2) the Operator's
willingness and ability to manage the Inns profitably; (3) general
economic, market and business conditions, particularly those in the
lodging industry generally and in the geographic markets where the
Inns are located; (4) the business opportunities (or lack thereof)
that may be presented to and pursued by the Company; (5) the
availability of qualified managers and employees necessary for the
Company's planned growth; (6) changes in laws or regulations and (7)
other factors, most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this
report are qualified by these cautionary statements and there can be
no assurance that the actual results or developments anticipated by
the Company will be realized, or even if substantially realized, that
they will have the expected consequences to or effects on the Company
or its business or operations.
15
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The Operator
The Company seeks to enhance Lease revenue by working in a
collaborative manner with the Operator. Presently, the Operator also
has an exclusive relationship with the Company in that the Operator
does not manage any hotel properties other than the Inns. The Company
believes this exclusive relationship ensures that the Company's and
the Operator's interests are well-aligned. The Operator is owned 9.9%
by Thomas W. Kitchin, Chairman, President and Chief Executive Officer
of the Company, and 90.1% by a grantor trust of which Steven A.
Curlee, General Counsel and Secretary of the Company, is the trustee.
While the Company does not control the operations of the Operator or
the day-to-day operation of the Inns, the two companies work together
to enhance both occupancy and ADR. The Lease formula allows the
Company to benefit from increases in Room Revenues, regardless of the
mix between occupancy and ADR.
The following table summarizes the unaudited financial results of the
Operator. The comparison of revenues of the Operator between the two
periods is the same as that described above for the Company.
Three Month Period
Ended September 30
--------------------------
1996 1995
------------ ------------
Room revenues as defined by Lease $5,679,432 $3,728,618
Operating expenses (2,970,663) (1,946,364)
Lease expense to Jameson Inns, Inc. (2,668,378) (1,752,450)
------------ ------------
Net income before income taxes $ 40,391 $ 29,804
============ ============
Nine Month Period
Ended September 30
--------------------------
1996 1995
------------ -----------
Room revenues as defined by Lease $14,943,079 $9,633,298
Operating expenses (7,801,540) (5,084,189)
Lease expense to Jameson Inns, Inc. (7,011,068) (4,650,242)
------------ -----------
Net income (loss) before income taxes $ 130,471 $ (101,133)
============ ===========
16
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Distributions to Stockholders
The table below sets forth, for the periods indicated, the cash
distributions declared per share for the common stock since January 1,
1995.
First Quarter, 1995 $ .19*
Second Quarter, 1995 .21
Third Quarter, 1995 .21
Fourth Quarter, 1995 .21
First Quarter, 1996 .21
Second Quarter, 1996 .22
Third Quarter, 1996 .22**
* Includes $.07 declared for the period January 1 to February 2, 1995
and $.12 declared for the period February 3 to March 31, 1995.
** On October 24, 1996, the Company declared this dividend, which is
payable on November 22, 1996 to shareholders of record on November 6,
1996.
17
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PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits
11.1 Earnings per Share
27.1 Financial Data Worksheet
The Company did not file any reports on Form 8-K during the three
months ended September 30, 1996.
18
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Jameson Inns, Inc.
(Registrant)
Dated: November 4, 1996 By: /s/ Thomas W. Kitchin
-------------------------
Thomas W. Kitchin
President and Chief
Executive Officer
Dated: November 4, 1996 By: /s/ Craig R. Kitchin
-------------------------
Craig R. Kitchin
Chief Financial Officer
(Principal Financial Officer)
19
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INDEX TO EXHIBITS
Exhibit
Number
Page
11.1 - Statement Re: Per Share Earnings ....................
27.1 - Financial Data Worksheet .............................
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000914373
<NAME> JAMESON INNS INC
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 358,881 358,881
<SECURITIES> 0 0
<RECEIVABLES> 820,261 820,261
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,437,757 1,437,757
<PP&E> 72,796,094 72,796,094
<DEPRECIATION> (8,527,870) (8,527,870)
<TOTAL-ASSETS> 66,736,506 66,736,506
<CURRENT-LIABILITIES> 970,625 970,625
<BONDS> 14,695,409 14,695,409
0 0
0 0
<COMMON> 733,185 733,185
<OTHER-SE> 50,337,287 50,337,287
<TOTAL-LIABILITY-AND-EQUITY> 66,736,506 66,736,506
<SALES> 2,668,378 7,011,068
<TOTAL-REVENUES> 2,668,378 7,011,068
<CGS> 188,364 494,306
<TOTAL-COSTS> 188,364 494,306
<OTHER-EXPENSES> 168,402 483,343
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 180,838 1,146,817
<INCOME-PRETAX> 1,443,330 2,948,485
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 1,443,330 2,948,485
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 989,376
<CHANGES> 0 0
<NET-INCOME> 1,443,330 1,959,109
<EPS-PRIMARY> .20 .33
<EPS-DILUTED> .20 .33
</TABLE>
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Exhibit 11.1 - Statement Re: Per-Share Earnings
Three month period ended
September 30
-------------------------
1996 1995
-------------------------
Average shares and common stock
equivalents outstanding 7,322,847 3,853,905
Net effect of dilutive stock options
based on the treasury stock method 28,592 29,335
-------------------------
7,351,439 3,883,240
=========================
Net income $1,443,330 $ 515,609
=========================
Per common and common equivalent share:
Net income $ .20 $ .13
=========================
Nine month period ended
September 30
-------------------------
1996 1995
-------------------------
Average shares and common stock
equivalents outstanding 5,866,885 3,852,823
Net effect of dilutive stock options
based on the treasury stock method 28,901 29,388
-------------------------
5,895,786 3,882,210
=========================
Net income $1,959,109 $1,456,271
=========================
Extraordinary loss $ 989,376 $ -
=========================
Per common and common equivalent share:
Income before extraordinary loss $ .50 $ .38
Extraordinary loss (.17) -
-------------------------
Net income $ .33 $ .38
=========================
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