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, 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 -
9,757,576 shares outstanding as of October 10, 1997.
<PAGE>
<TABLE>
INDEX
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of September 30, 1997
(unaudited) and December 31, 1996....................................3
Condensed Consolidated Statements of Income for the Three Month
Periods Ended September 30, 1997 and 1996 (unaudited)................4
Condensed Consolidated Statements of Income for the Nine Month Periods
Ended September 30, 1997 and 1996 (unaudited)........................5
Condensed Consolidated Statements of Cash Flows for the Nine Month
Periods Ended September 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 6. EXHIBITS AND REPORTS ON FORM 8-K................................17
SIGNATURES...............................................................18
EXHIBITS
</TABLE>
2
<PAGE>
<TABLE>
ITEM 1. FINANCIAL STATEMENTS
<CAPTION>
Jameson Inns, Inc.
Condensed Consolidated Balance Sheets
September 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Property, equipment and construction in
progress, at cost $103,695,621 $80,816,228
Less accumulated depreciation (11,538,127) (9,205,591)
----------- -----------
92,157,494 71,610,637
Cash 81,886 208,912
Lease revenue receivable 1,843,829 684,625
Prepaid expenses 124,245 98,794
Deferred finance costs, net 761,144 1,197,205
Other assets 81,971 184,784
----------- -----------
$95,050,569 $73,984,957
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $16,806,220 $22,317,206
Accounts payable 46,544 20,121
Accounts payable to affiliates 2,067,557 633,460
Accrued interest 77,077 120,543
Accrued property taxes 443,739 97,515
Other accrued liabilities -- 33,154
----------- -----------
19,441,137 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, 9,749,242 (7,357,471 in 1996) shares
issued and outstanding 974,924 735,747
Contributed capital 75,661,499 51,054,202
Retained deficit (1,026,991) (1,026,991)
----------- -----------
Total stockholders' equity 75,609,432 50,762,958
----------- -----------
$95,050,569 $73,984,957
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
Jameson Inns, Inc.
Condensed Consolidated Statements of Income (Unaudited)
<CAPTION>
For the Three Month Period Ended
September 30
--------------------------------
1997 1996
----------- ----------
<S> <C> <C>
Lease revenue $3,554,015 $2,668,378
Expenses:
Property tax expense 187,979 106,151
Insurance expense 109,270 82,213
Depreciation 979,002 687,444
General and administrative 103,893 168,402
Loss on disposal of furniture and equipment 33,839 --
---------- ----------
Total expenses 1,413,983 1,044,210
Income from operations 2,140,032 1,624,168
Interest expense, net of capitalized amounts 127,769 180,838
---------- ----------
Net income $2,012,263 $1,443,330
========== ==========
Per common and common equivalent share:
Net income $.20 $.20
========== ==========
Dividends paid $.23 $.22
========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
Jameson Inns, Inc.
Condensed Consolidated Statements of Income (Unaudited)
<CAPTION>
For the Nine Month Period Ended
September 30
-------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Lease revenue $9,532,082 $7,011,068
Expenses:
Property tax expense 482,148 297,963
Insurance expense 304,925 196,343
Depreciation 2,763,390 1,938,117
General and administrative 261,973 483,343
Loss on disposal of furniture and equipment 111,963 --
---------- ----------
Total expenses 3,924,399 2,915,766
Income from operations 5,607,683 4,095,302
Interest expense, net of capitalized amounts 495,490 1,146,817
---------- ----------
Income before extraordinary loss 5,112,193 2,948,485
Extraordinary loss 689,542 989,376
---------- ----------
Net income $4,422,651 $1,959,109
========== ==========
Per common and common equivalent share:
Income before extraordinary loss $.55 $.50
========== ==========
Net income $.48 $.33
========== ==========
Dividends paid $.67 $.64
========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
<TABLE>
Jameson Inns, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
For the Nine Month Period Ended
September 30
-------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net income $4,422,651 $1,959,109
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary item 689,542 989,376
Depreciation and amortization 2,820,437 2,011,177
Loss on disposal of furniture and equipment 111,963 --
Stock option and other expenses 37,424 55,719
Changes in assets and liabilities increasing
(decreasing) cash:
Lease revenue receivable (1,159,205) (324,406)
Prepaid expenses and other assets 77,362 (177,167)
Accounts payable 26,423 (20,926)
Accounts payable to affiliates 1,434,097 11,396
Accrued interest (43,466) (118,005)
Accrued property taxes and other
accrued liabilities 313,070 260,556
----------- ----------
Net cash provided by operating activities 8,730,298 4,646,829
Investing activities
Additions to property and equipment (23,422,211) (15,426,437)
----------- -----------
Net cash used in investing activities (23,422,211) (15,426,437)
See notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
Jameson Inns, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited) Continued
<CAPTION>
For the Nine Month Period Ended
September 30
-------------------------------
1997 1996
----------- ----------
<S> <C> <C>
Financing activities
Common stock dividends paid (5,997,060) (3,944,223)
Proceeds from issuance of common stock 26,051,969 31,064,130
Proceeds from exercise of stock options 331,490 181,389
Proceeds from long-term debt 20,920,546 19,812,732
Payment of deferred finance costs (217,510) (879,565)
Payments on long-term debt (26,431,532) (35,331,228)
Prepayment penalties on early extinguishment
of debt (93,016) --
----------- -----------
Net cash provided by financing activities 14,564,887 10,903,235
----------- -----------
Net increase (decrease) in cash (127,026) 123,627
Cash at beginning of period 208,912 235,254
----------- -----------
Cash at end of period $81,886 $358,881
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
7
<PAGE>
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 September 30, 1997, the Company had a total
of 70 Inns either in operation or under development, including 54 Inns in
operation (2,567 available rooms), 13 Inns under construction and contracts to
acquire 3 parcels of land on which additional Inns are expected to be
constructed during 1998. Upon completion of these projects, the Company will
have 3,247 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 nine month period ended
September 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.
8
<PAGE>
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 September 30, 1997, the Company had a total
of 70 Inns either in operation or under development, including 54 Inns in
operation (2,567 available rooms), 13 Inns under construction and contracts to
acquire 3 parcels of land on which additional Inns are expected to be
constructed during 1998. Upon completion of these projects, the Company expects
to have 3,247 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 September 30, 1997, Base Rent
and Percentage Rent in the aggregate amount of $3.6 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
September 30
-------------------------
1997 1996
-------- --------
<S> <C> <C>
Occupancy rate 68.81% 70.41%
ADR $47.93 $47.81
REVPAR $32.98 $33.66
Room Revenues (000s) $7,562 $5,679
Room nights available 224,083 164,827
Room nights occupied 154,188 116,060
Operating Inns (at period end) 54 37
Rooms available (at period end) 2,567 1,818
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Nine month period ended
September 30
------------------------
1997 1996
-------- --------
<S> <C> <C>
Occupancy rate 67.16% 69.26%
ADR $ 47.02 $ 45.77
REVPAR $ 31.58 $ 31.70
Room Revenues (000s) $20,281 $14,943
Room nights available 626,750 459,398
Room nights occupied 420,894 318,195
Operating Inns (at period end) 54 37
Rooms available (at period end) 2,567 1,818
</TABLE>
Results of Operations
Comparison of the Three Months Ended September 30, 1997 to the Three Months
Ended September 30, 1996.
Lease revenue for the Company for the three month period ended September 30,
1997 increased 34% to $3.6 million as compared to $2.7 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 164,827 in 1996 to 224,083 in
1997, or 36%, due to the opening from January 1, 1996 through September 30, 1997
of 22 new 40-room Inns and seven 20- to 26-room expansions of existing Inns. The
occupancy rate decreased from 70.41% during the third quarter of 1996 to 68.81%
during the third quarter of 1997, as a result of the expansion of certain higher
occupancy Inns and increased competition in certain markets. However, ADR
increased from $47.81 in 1996 to $47.93 in 1997. As a result of these three
factors, third quarter Room Revenues rose 34%, from $5.7 million for 1996 to
$7.6 million in 1997. Same Inn Room Revenues in 1997 versus 1996 decreased from
$5.1 million to $5.0 million, or 2%. The decrease is due to a decrease in ADR
from $47.79 to $47.44 for these Inns, a decrease in the occupancy rate from
70.40% to 67.06% for these Inns, partially offset by an increase in room nights
available (due to expansions of certain of these Inns) from 148,347 to 152,431
for 1997 compared to 1996. The decrease in ADR is due to higher than normal ADRs
during the 1996 Summer Olympic Games.
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, 1997 was
$103,893, as compared to $168,402 for the three months ended September 30, 1996.
The reduction in the 1997 expense as compared to 1996 is attributable to lower
costs and less time spent on REIT activities resulting in lower allocated
overhead charges.
Property taxes and insurance expenses totaled $297,249 for the three month
period ended September 30, 1997 compared to $188,364 for the same period in
1996. The increase is attributable to the increase in number of Inns.
10
<PAGE>
Interest expense decreased from $180,838 for the three-month period ended
September 30, 1996 to $127,769 for the same period ended September 30, 1997, due
to the greater amount of average principal indebtedness outstanding in the third
quarter of 1996. Interest expense amounts are net of interest capitalized in the
cost of new Inn development.
Depreciation expense increased from $687,444 to $979,002 for the three month
periods ended September 30, 1996 and 1997, respectively, due to an increase in
the number of operating Inns.
Comparison of the Nine Months Ended September 30, 1997 to the Nine Months Ended
September 30, 1996.
Lease revenue for the Company for the nine month period ended September 30, 1997
increased 36% to $9.5 million as compared to $7.0 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 459,398 in 1996 to 626,750 in
1997, or 37%, due to the opening from January 1, 1996 through September 30, 1997
of 22 new 40-room Inns and seven 20- to 26-room expansions of existing Inns. The
occupancy rate decreased from 69.26% to 67.16% 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 3% from $45.77 in 1996 to
$47.02 in 1997. As a result of these three factors, Room Revenues rose 37%, from
$14.9 million for 1996 to $20.3 million in 1997. Same Inn Room Revenues in 1997
versus 1996 grew to $14.1 million from $14 million, or 1%. The growth is due to
an increase in ADR from $45.63 to $46.48 for these Inns, an increase in room
nights available (due to expansions of certain of these Inns) from 432,678 to
448,820, partially offset by a decrease in the occupancy rate from 69.28% to
66.08% 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 nine months ended September 30, 1997 was
$261,973, as compared to $483,343 for the nine months ended September 30, 1996.
The reduction in the 1997 expense as compared to 1996 is attributable to lower
costs and less time spent on REIT activities resulting in lower allocated
overhead charges.
Property taxes and insurance expenses totaled $787,073 for the nine month period
ended September 30, 1997 compared to $494,306 for the same period in 1996. The
increase is attributable to the increase in number of Inns.
Interest expense decreased from $1,146,817 for the nine month period ended
September 30, 1996 to $495,490 for the same period ended September 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.
Depreciation expense increased from $1,938,117 to $2,763,390 for the nine month
periods ended September 30, 1996 and 1997, respectively, due to an increase in
the number of operating Inns.
11
<PAGE>
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 month period ended
September 30
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Net income $2,012,263 $1,443,330
Depreciation 979,002 687,444
Loss on disposal of furniture and equipment 33,839 --
---------- ----------
Funds from operations $3,025,104 $2,130,774
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nine month period ended
September 30
-------------------------
1997 1996
--------- ---------
<S> <C> <C>
Net income $4,422,651 $1,959,109
Depreciation 2,763,390 1,938,117
Extraordinary loss 689,542 989,376
Loss on disposal of furniture and equipment 111,963 --
---------- ----------
Funds from operations $7,987,546 $4,886,602
========== ==========
</TABLE>
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. 12
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 September 30, 1997, the Company had approximately $16.8 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 September 30, 1997, the Company had a $36 million line of credit (the "Line")
convertible in June 1999 to a term note and approximately $31.9 million was
available for borrowing. Loans made under the Line are secured by mortgages on
31 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 September 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 40-room Inns in Jasper and Sylacauga, Alabama; Macon and Perry,
Georgia; Asheboro, Dunn, Smithfield and Wilson, North Carolina; Boiling Springs
and Duncan, South Carolina; and Clinton, Tennessee; and 60-room Inns in Warner
Robins, Georgia and Johnson City, Tennessee. The expected construction price for
the Inns currently under construction is $18.8 million, of which approximately
$8 million had been expended at September 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.
13
<PAGE>
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. Effective September 12,
1997, the Operator is wholly owned by Thomas W. Kitchin, Chairman, President and
Chief Executive Officer of the Company. 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
September 30
--------------------------
1997 1996*
--------- ---------
<S> <C> <C>
Room revenues as defined by Lease $ 7,561,733 $ 5,679,432
Operating expenses (3,992,987) (2,992,641)
Lease expense to Jameson Inns, Inc. (3,554,015) (2,668,378)
---------- ----------
Income before income taxes $ 14,731 $ 18,413
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Nine month period ended
September 30
--------------------------
1997 1996*
--------- ---------
<S> <C> <C>
Room revenues as defined by Lease $20,281,025 $14,943,079
Operating expenses (10,612,754) (7,853,682)
Lease expense to Jameson Inns, Inc. (9,532,082) (7,011,068)
----------- -----------
Income before income taxes $ 136,189 $ 78,329
=========== ===========
<FN>
* 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.
</FN>
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
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.
<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 .23
Third Quarter, 1997 .23**
<FN>
* Includes $.07 declared for the period January 1 to February 2, 1995 and $.12
declared for the period February 3 to March 31, 1995.
</FN>
<FN>
** On October 22, 1997, the Company declared this dividend, which is payable on
November 20, 1997 to shareholders of record on November 3, 1997.
</FN>
</TABLE>
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
15
<PAGE>
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. 16
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
11.1 Earnings per Share
27.1 Financial Data Schedule
The Company did not file any reports on Form 8-K during the three months ended
September 30, 1997.
17
<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 6, 1997 By: /s/ Thomas W. Kitchin
-----------------------------------------
Thomas W. Kitchin
President and Chief Executive Officer
Dated: November 6, 1997 By: /s/ Craig R. Kitchin
-----------------------------------------
Craig R. Kitchin
Chief Financial Officer
(Principal Financial Officer)
18
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit
Number Page
- ------ ----
<S> <C> <C>
11.1 - Earnings per Share....................................................
27.1 - Financial Data Schedule...............................................
</TABLE>
<PAGE>
<TABLE>
Exhibit 11.1 Statement Re: Per-Share Earnings
<CAPTION>
Three month period ended
September 30
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
Average shares and common stock
equivalents outstanding 9,731,683 7,322,847
Net effect of dilutive stock options
based on the treasury stock method 144,667 28,592
---------- ----------
9,876,350 7,351,439
========== ==========
Net income $2,012,263 $1,443,330
========== ==========
Per common and common equivalent share:
Net income $.20 $.20
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Nine month period ended
September 30
---------------------------
1997 1996
--------- ---------
<S> <C> <C>
Average shares and common stock
equivalents outstanding 9,124,211 5,866,885
Net effect of dilutive stock options
based on the treasury stock method 151,758 28,901
---------- ----------
9,275,969 5,895,786
========== ==========
Net income $4,422,651 $1,959,109
========== ==========
Extraordinary loss $ 689,542 $ 989,376
========== ==========
Per common and common equivalent share:
Income before extraordinary loss $.55 $.50
Extraordinary loss (.07) (.17)
---------- ----------
Net income $.48 $.33
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000914373
<NAME> JAMESON INNS INC
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JUL-01-1997 JAN-01-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 81,886 81,886
<SECURITIES> 0 0
<RECEIVABLES> 1,843,829 1,843,829
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,131,931 2,131,931
<PP&E> 103,695,621 103,695,621
<DEPRECIATION> (11,538,127) (11,538,127)
<TOTAL-ASSETS> 95,050,569 95,050,569
<CURRENT-LIABILITIES> 2,634,917 2,634,917
<BONDS> 16,806,220 16,806,220
0 0
0 0
<COMMON> 974,924 974,924
<OTHER-SE> 74,634,508 74,634,508
<TOTAL-LIABILITY-AND-EQUITY> 95,050,569 95,050,569
<SALES> 3,554,015 9,532,082
<TOTAL-REVENUES> 3,554,015 9,532,082
<CGS> 297,249 787,073
<TOTAL-COSTS> 297,249 787,073
<OTHER-EXPENSES> 137,732 373,936
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 127,769 495,490
<INCOME-PRETAX> 2,012,263 5,112,193
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 2,012,263 5,112,193
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 689,542
<CHANGES> 0 0
<NET-INCOME> 2,012,263 4,422,651
<EPS-PRIMARY> .20 .48
<EPS-DILUTED> .20 .48
</TABLE>
