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 June 30, 1997 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 including 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. X Yes 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 -
9,732,084 shares outstanding as of July 30, 1997.
<PAGE>
-1-
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of June 30, 1997 (unaudited)
and December 31, 1996.................................................3
Condensed Consolidated Statements of Income for the Three Month
Periods Ended June 30, 1997 and 1996(unaudited).......................4
Condensed Consolidated Statements of Income for the Six Month
Periods Ended June 30, 1997 and 1996 (unaudited)......................5
Condensed Consolidated Statements of Cash Flows for the Six Month
Periods Ended June 30, 1997 and 1996 (unaudited)......................6
Notes to Condensed Consolidated Financial Statements (unaudited)......8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS........................................9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................17
SIGNATURES...............................................................18
EXHIBITS
</TABLE>
<PAGE>
-2-
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JAMESON INNS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Property and equipment, at cost $94,993,895 $80,816,228
Less accumulated depreciation (10,635,240) (9,205,591)
----------- -----------
84,358,655 71,610,637
Cash 226,054 208,912
Lease revenue receivable 1,544,803 684,625
Prepaid expenses 102,675 98,794
Deferred finance costs, net 763,112 1,197,205
Other assets 46,598 184,784
----------- -----------
$87,041,897 $73,984,957
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $ 9,875,358 $22,317,206
Accounts payable 14,767 20,121
Accounts payable to affiliates 1,082,315 633,460
Accrued interest 41,455 120,543
Accrued property taxes 295,531 97,515
Other accrued liabilities 3,203 33,154
----------- -----------
11,312,629 23,221,999
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, 9,727,960 (7,357,471 in 1996) shares
issued and outstanding 972,796 735,747
Contributed capital 75,783,463 51,054,202
Retained deficit (1,026,991) (1,026,991)
---------- -----------
Total stockholders' equity 75,729,268 50,762,958
---------- -----------
$87,041,897 $73,984,957
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
-3-
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
For the Three Month Period Ended
June 30
-------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Lease revenue $3,242,524 $2,427,100
Expenses:
Property tax expense 167,099 100,289
Insurance expense 102,251 63,947
Depreciation 928,522 640,284
General and administrative 86,048 180,193
Loss on disposal of furniture and equipment 48,238 --
---------- ----------
Total expenses: 1,332,158 984,713
---------- ----------
Income from operations 1,910,366 1,442,387
Interest expense, net of capitalized amounts 21,305 275,736
---------- ----------
Income before extraordinary loss 1,889,061 1,166,651
Extraordinary loss -- 989,376
---------- ----------
Net income $1,889,061 $ 177,275
========== ==========
Per common and common equivalent share:
Income before extraordinary loss $.19 $.18
========== ==========
Net income $.19 $.03
========== ==========
Dividends paid $.22 $.21
========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
-4-
<TABLE>
<CAPTION>
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Six Month Period Ended
June 30
-----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Lease revenue $5,978,067 $4,342,690
Expenses:
Property tax expense 294,169 191,812
Insurance expense 195,655 114,130
Depreciation 1,784,388 1,250,673
General and administrative 158,080 314,941
Loss on disposal of furniture and equipment 78,124 --
---------- ----------
Total expenses: 2,510,416 1,871,556
---------- ----------
Income from operations 3,467,651 2,471,134
Interest expense, net of capitalized amounts 367,721 965,979
---------- ----------
Income before extraordinary loss 3,099,930 1,505,155
Extraordinary loss 689,542 989,376
---------- ----------
Net income $2,410,388 $ 515,779
========== ==========
Per common and common equivalent share:
Income before extraordinary loss $.35 $.29
========== ==========
Net income $.27 $.10
========== ==========
Dividends paid $.44 $.42
========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
-5-
<TABLE>
<CAPTION>
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Month Period Ended
June 30
-----------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net income $ 2,410,388 $ 515,779
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary item 689,542 989,376
Depreciation and amortization 1,820,732 1,307,245
Loss on disposal of furniture and equipment 78,123 --
Stock option and other expenses 37,424 36,623
Changes in assets and liabilities increasing
(decreasing) cash:
Lease revenue receivable (860,179) (287,749)
Prepaid expenses and other assets 134,305 (151,489)
Accounts payable (5,354) 205,472
Accounts payable to affiliates 448,855 (35,553)
Accrued interest (79,088) (135,409)
Accrued property taxes and other
accrued liabilities 168,065 178,559
----------- -----------
Net cash provided by operating activities 4,842,813 2,622,854
Investing activities
Additions to property and equipment (14,610,530) (9,472,778)
----------- -----------
Net cash used in investing activities (14,610,530) (9,472,778)
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
-6-
<TABLE>
<CAPTION>
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CONTINUED
For the Six Month Period Ended
June 30
-----------------------------
1997 1996
----------- ----------
<S> <C> <C>
Financing activities
Common stock dividends paid (3,755,491) (2,333,567)
Proceeds from issuance of common stock 25,997,681 30,899,103
Proceeds from exercise of stock options 276,308 110,224
Proceeds from long-term debt 13,979,682 14,222,365
Payment of deferred finance costs (198,775) (755,755)
Payments on long-term debt (26,421,530) (35,296,899)
Prepayment penalties on early extinguishment
of debt (93,016) --
------------ -----------
Net cash provided by financing activities 9,784,859 6,845,471
------------ -----------
Net increase (decrease) in cash 17,142 (4,453)
Cash at beginning of period 208,912 235,254
------------ -----------
Cash at end of period $ 226,054 $ 230,801
============ ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
-7-
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 (R)". At June 30, 1997, the Company had a total of 71
Inns either in operation or under development, including 50 Inns in operation
(2,407 available rooms), 15 Inns under construction and contracts to acquire 6
parcels of land on which additional Inns are expected to be constructed during
1997 or 1998. Upon completion of these projects, the Company will have 3,287
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, 1996 has
been derived from the audited consolidated financial statements at that date.
Operating results for the three month period or six month period ended June 30,
1997 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997 or any other interim period. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the annual report on Form 10-K for the year ended December
31, 1996.
2. STOCKHOLDERS' EQUITY
On March 10, 1997, the Company completed the sale of 2,300,000 newly issued
shares of common stock at $12 per share before underwriting discounts and
expenses. Net proceeds of approximately $26 million were used to repay certain
existing mortgage indebtedness at that date. The Company recorded an
extraordinary loss of $689,542 due to prepayment penalties and the writeoff of
unamortized deferred finance costs.
3. EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board released Statement No. 128,
Earnings Per Share, which generally simplifies the calculation of earnings per
share. The Company will adopt the new standard in fourth quarter 1997, as
required; however, the effect is not expected to be material.
<PAGE>
-8-
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 Inn (R)." At June 30, 1997, the Company had a total of 71
Inns either in operation or under development, including 50 Inns in operation
(2,407 available rooms), 15 Inns under construction and contracts to acquire 6
parcels of land on which additional Inns are expected to be constructed during
1997 or 1998. Upon completion of these projects, the Company expects to have
3,287 available rooms.
The Company's primary source of revenue is rent payments by Jameson Operating
Company (the "Operator") 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, 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 June 30, 1997, Base Rent and Percentage Rent in the aggregate
amount of $3.2 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.
The following table shows certain historical financial and other information for
the periods indicated.
<TABLE>
<CAPTION>
Three month period ended
June 30
--------------------------------
1997 1996
----------- ----------
<S> <C> <C>
Occupancy rate 68.79% 72.52%
ADR $ 47.32 $ 45.14
REVPAR $ 32.55 $ 32.74
Room Revenues (000s) $ 6,899 $ 5,164
Room nights available 207,188 154,017
Room nights occupied 142,516 111,698
Operating Inns (at period end) 50 35
Rooms available (at period end) 2,407 1,717
</TABLE>
<PAGE>
-9-
<TABLE>
<CAPTION>
Six month period ended
June 30
------------------------
1997 1996
---------- ---------
<S> <C> <C>
Occupancy rate 66.23% 68.62%
ADR $ 46.50 $ 44.59
REVPAR $ 30.80 $ 30.60
Room Revenues (000s) $ 12,719 $ 9,264
Room nights available 402,667 294,571
Room nights occupied 266,706 202,135
Operating Inns (at period end) 50 35
Rooms available (at period end) 2,407 1,717
</TABLE>
RESULTS OF OPERATIONS
Comparison of the Three Months Ended June 30, 1997 to the Three Months Ended
June 30, 1996.
Lease revenue for the Company for the three month period ended June 30, 1997
increased 33% to $3.2 million as compared to $2.4 million for the same period in
1996. The increase was due to the increase in the Operator's Room Revenues.
The number of room nights available increased from 154,017 in 1996 to 207,188 in
1997, or 35%, due to the opening from January 1, 1996 through June 30, 1997 of
18 new 40-room Inns and seven 20- to 26-room expansions of existing Inns.
The occupancy rate decreased from 72.52% during the second quarter of 1996 to
68.79% during the second quarter of 1997, as a result of the expansion of
certain higher occupancy inns and increased competition in certain markets.
However, ADR increased 5% from $45.14 in 1996 to $47.32 in 1997. As a result of
these three factors, second quarter Room Revenues rose 33%, from $5.2 million
for 1996 to $6.9 million in 1997. Same Inn Room Revenues in 1997 versus 1996
grew to $5.1 million from $5.0 million, or 2%. The growth is due to an increase
in ADR from $45.08 to $46.79 for these Inns, an increase in room nights
available (due to expansions of certain of these Inns) from 151,137 to 157,069,
partially offset by a decrease in the occupancy rate from 72.33% to 67.95% for
these Inns for 1997 compared to 1996.
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 June 30, 1997 was $86,048, as
compared to $180,193 for the three months ended June 30, 1996. The reduction in
the 1997 expense as compared to 1996 is attributable in part to less time spent
on REIT activities resulting in lower allocated overhead charges.
Property taxes and insurance expenses totaled $269,350 for the three month
period ended June 30, 1997 compared to $164,236 for the same period in 1996. The
increase is attributable to the increase in number of Inns.
<PAGE>
-10-
Interest expense decreased from $275,736 for the three-month period ended June
30, 1996 to $21,305 for the same period ended June 30, 1997, due to the greater
amount of average principal indebtedness outstanding in the second quarter of
1996. Interest expense amounts are net of interest capitalized in the cost of
new Inn development.
Depreciation expense increased from $640,284 to $928,522 for the three month
periods ended June 30, 1996 and 1997, respectively, due to an increase in the
number of operating Inns.
Comparison of the Six Months Ended June 30, 1997 to the Six Months Ended June
30, 1996.
Lease revenue for the Company for the six month period ended June 30, 1997
increased 40% to $6.0 million as compared to $4.3 million for the same period in
1996. The increase was due to the increase in the Operator's Room Revenues.
The number of room nights available increased from 294,571 in 1996 to 402,667 in
1997, or 37%, due to the opening from January 1, 1996 through June 30, 1997 of
eighteen new 40-room Inns and seven 20- to 26-room expansions of existing Inns.
The occupancy rate decreased from 68.62% to 66.23% for 1996 and 1997,
respectively as a result of the expansion of certain higher occupancy inns and
increased competition in certain markets. However, ADR increased 4% from $44.59
in 1996 to $46.50 in 1997. As a result of these three factors, Room Revenues
rose 37%, from $9.3 million for 1996 to $12.7 million in 1997. Same Inn Room
Revenues in 1997 versus 1996 grew to $9.2 million from $8.9 million, or 3%. The
growth is due to an increase in ADR from $44.48 to $45.97 for these Inns, an
increase in room nights available (due to expansions of certain of these Inns)
from 284,331 to 296,389, partially offset by a decrease in the occupancy rate
from 68.69% to 65.58% for these Inns for 1997 compared to 1996.
General and administrative expense includes overhead charges for management,
accounting and legal services for the corporate home office. General and
administrative expense for the six months ended June 30, 1997 was $158,080, as
compared to $314,941 for the six months ended June 30, 1996. The reduction in
the 1997 expense as compared to 1996 is attributable in part to less time spent
on REIT activities resulting in lower allocated overhead charges.
Property taxes and insurance expenses totaled $489,824 for the six month period
ended June 30, 1997 compared to $305,942 for the same period in 1996. The
increase is attributable to the increase in number of Inns.
Interest expense decreased from $965,979 for the six-month period ended June 30,
1996 to $367,72l for the same period ended June 30, 1997, due to the greater
amount of average principal indebtedness outstanding during 1996. Interest
expense amounts are net of interest capitalized in the cost of new Inn
development.
<PAGE>
-11-
Depreciation expense increased from $1,250,673 to $1,784,388 for the six month
periods ended June 30, 1996 and 1997, respectively, due to an increase in the
number of operating Inns.
FUNDS FROM OPERATIONS
Industry analysts generally consider funds from operations (FFO) an appropriate
measure of an equity REIT's performance. The Company uses 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, loss on
disposal of furniture and equipment and extraordinary items, if applicable.
Other non-cash expenses such as amortization and stock option expense have not
been added back in FFO. The Company's method of calculating FFO may be different
from methods used by other REITs and accordingly, may not be comparable to such
other REITs. 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.
<TABLE>
<CAPTION>
Three months ended
June 30
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net income $1,889,061 $ 177,275
Depreciation 928,522 640,284
Extraordinary loss -- 989,376
Loss on disposal of furniture and equipment 48,238 --
---------- ----------
Funds from operations $2,865,821 $1,806,935
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Six months ended
June 30
-----------------------
1997 1996
--------- ---------
<S> <C> <C>
Net income $2,410,388 $ 515,779
Depreciation 1,784,388 1,250,673
Extraordinary loss 689,542 989,376
Loss on disposal of furniture and equipment 78,124 --
---------- ----------
Funds from operations $4,962,442 $2,755,828
========== ==========
</TABLE>
<PAGE>
-12-
LIQUIDITY AND CAPITAL RESOURCES
In January 1997, the Company filed a shelf registration statement with the
Securities and Exchange Commission that provides for the issuance of an
aggregate of up to $100 million in Common Stock, Preferred Stock and Common
Stock warrants to be offered and sold from time to time. On March 10, 1997, the
Company completed the sale of 2,300,000 newly issued shares of common stock at
$12 per share before underwriting discounts and expenses. Net proceeds of
approximately $26 million were used to repay certain existing mortgage
indebtedness at that date. The Company intends to use future net proceeds, if
any, from any sale of securities under such registration statement for the
repayment of existing indebtedness, working capital and general corporate
purposes.
Since its election to be taxed as a REIT, the Company has financed and currently
intends to continue financing the construction of new Inns entirely with bank
borrowings. At June 30, 1997, the Company had approximately $9.9 million in
outstanding debt. It is management's intention to continue to borrow from some
or all of its previous lenders to finance future projects.
At June 30, 1997, the Company had a $36 million line of credit (the "Line")
convertible in June 1999 to a term note and approximately $34 million was
available for borrowing. Loans made under the Line are secured by mortgages on
30 of the Inns. Construction and long-term mortgages are expected to be
available to fund the balance of construction costs not funded under the Line.
For each new Inn developed by the Company, generally a construction loan for
approximately $1.1 million has been obtained. Each construction loan converts to
a long-term mortgage upon completion of the Inn without any further action by
the Company. As of June 30, 1997, the Company had 15 Inns unencumbered and
available to use as collateral for any additional financing.
The Company expects to continue to develop additional Inns as suitable
opportunities arise, and the Company will not undertake investments unless
adequate sources of financing are available. The Company currently is
constructing a new 40-room Inn in Auburn, Jasper, Sylacauga, and Tuscaloosa,
Alabama; Dublin, Macon, and Perry, Georgia; Asheboro, Dunn, Sanford, and Wilson,
North Carolina; Duncan, South Carolina; and Clinton, Tennessee; and a 60-room
Inn in Warner Robbins, Georgia and Johnson City, Tennessee. The expected
construction price for the Inns currently under construction is $20.9 million,
of which approximately $5.4 million had been expended at June 30, 1997. The
Company may in the future expand Inns if management determines that sufficient
market demand exists and financing is available for any such expansion.
As with most real estate investments, the Company's investments in the Inns are
relatively illiquid and such illiquidity is further increased by the Inns'
location in small communities. As a result, the ability of the Company to sell
or otherwise dispose of any Inn to provide liquidity may be very limited.
<PAGE>
-13-
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.
<TABLE>
<CAPTION>
Three month period ended
June 30
-------------------------
1997 1996*
--------- --------
<S> <C> <C>
Room revenues as defined by Lease $ 6,898,964 $ 5,163,930
Operating expenses (3,541,667) (2,678,970)
Lease expense to Jameson Inns, Inc. (3,242,524) (2,427,100)
----------- -----------
Income before income taxes $ 114,773 $ 57,860
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Six month period ended
June 30
-------------------------
1997 1996*
-------- --------
<S> <C> <C>
Room revenues as defined by Lease $12,719,292 $ 9,263,534
Operating expenses (6,619,767) (4,860,928)
Lease expense to Jameson Inns, Inc. (5,978,067) (4,342,690)
----------- -----------
Income before income taxes $ 121,458 $ 59,916
=========== ===========
</TABLE>
* Restated to reflect changes in accounting for linen inventory provided by
Jameson Development Company. See Note 6 to audited financial statements of
the Operator filed in the Company's 1996 Form 10-K/A1.
<PAGE>
-14-
DISTRIBUTIONS TO STOCKHOLDERS
The table below sets forth, for the periods indicated, the cash distributions
declared per share of common stock since January 1, 1995.
<TABLE>
<CAPTION>
<S> <C>
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
Fourth Quarter, 1996 .22
First Quarter, 1997 .22
Second Quarter, 1997 .22**
</TABLE>
* 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 July 21, 1997, the Company declared this dividend, which is payable on
August 20, 1997 to shareholders of record on August 4, 1997.
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
<PAGE>
-15-
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.
<PAGE>
16
PART II
OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual stockholder's meeting held June 21, 1997, the following matters
were submitted to a vote of the Company's stockholders and the stockholders
voted as follows:
1. Robert D. Hisrich and Thomas J. O'Haren were elected as directors for a
three year term. The terms of office as directors for Michael E. Lawrence
and Thomas W. Kitchin continued after the meeting. There were 9,014,674
votes cast in favor of the election of Mr. Hisrich and 50,126 votes to
withhold authority to vote for Mr. Hisrich. There were 9,021,624 votes cast
in favor of the election of Mr. O'Haren and 43,176 votes to withhold
authority to vote for Mr. O'Haren. There were no broker non-votes.
2. The selection of the accounting firm of Ernst & Young, LLP was ratified
as the independent auditor of the Company's financial statements for the
fiscal year ending December 31, 1997. There were 9,007,543 votes cast in
favor of the proposal, 10,140 votes cast against the proposal and 47,116
votes abstained. There were no broker non-votes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the three months ended
June 30, 1997.
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
11.1 Earnings per Share
27.1 Financial Data Schedule
</TABLE>
<PAGE>
-17-
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: August 13, 1997 By: /s/ Thomas W. Kitchin
-------------------------------------
Thomas W. Kitchin
President and Chief Executive Officer
Dated: August 13, 1997 By: /s/ Craig R. Kitchin
-------------------------------------
Craig R. Kitchin
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
-18-
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Page
- - ------ ------
<S> <C> <C>
11.1 - Earnings per Share .................................................
27.1 - Financial Data Schedule ............................................
</TABLE>
<PAGE>
Exhibit 11.1 Statement Re: Per-Share Earnings
<TABLE>
<CAPTION>
Three month period ended
June 30
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Average shares and common stock
equivalents outstanding 9,706,959 6,397,012
Net effect of dilutive stock options
based on the treasury stock method 136,827 29,083
---------- ----------
9,843,785 6,426,096
========== ==========
Net income $1,889,061 $ 177,275
========== ==========
Extraordinary loss $ -- $ 989,376
========== ==========
Per common and common equivalent share:
Income before extraordinary loss $.19 $.18
Extraordinary loss -- (.15)
---------- ----------
Net income $.19 $.03
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Six month period ended
June 30
--------------------------
1997 1996
--------- ---------
<S> <C> <C>
Average shares and common stock
equivalents outstanding 8,811,702 5,130,905
Net effect of dilutive stock options
based on the treasury stock method 155,598 29,389
---------- ----------
8,967,300 5,160,294
========== ==========
Net income $2,410,388 $ 515,779
========== ==========
Extraordinary loss $ 689,542 $ 989,376
========== ==========
Per common and common equivalent share:
Income before extraordinary loss $.35 $.29
Extraordinary loss (.08) (.19)
---------- ----------
Net income $.27 $.10
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> APR-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 226,054 226,054
<SECURITIES> 0 0
<RECEIVABLES> 1,544,803 1,544,803
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,920,130 1,920,130
<PP&E> 94,993,895 94,993,895
<DEPRECIATION> (10,635,240) (10,635,240)
<TOTAL-ASSETS> 87,041,897 87,041,897
<CURRENT-LIABILITIES> 1,437,271 1,437,271
<BONDS> 9,875,378 9,875,378
0 0
0 0
<COMMON> 972,796 972,796
<OTHER-SE> 74,756,472 74,756,472
<TOTAL-LIABILITY-AND-EQUITY> 87,041,897 87,041,897
<SALES> 3,242,524 5,978,067
<TOTAL-REVENUES> 3,242,524 5,978,067
<CGS> 269,350 489,824
<TOTAL-COSTS> 269,350 489,824
<OTHER-EXPENSES> 134,286 236,204
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 21,305 367,721
<INCOME-PRETAX> 1,889,061 3,099,930
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 1,889,061 3,099,930
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 689,542
<CHANGES> 0 0
<NET-INCOME> 1,889,061 2,410,388
<EPS-PRIMARY> .19 .27
<EPS-DILUTED> .19 .27
</TABLE>
