<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1999
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 30346-1604
(Address of principal executive offices including zip codes)
(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 -
10,995,294 shares outstanding as of August 12, 1999.
<PAGE> 2
INDEX
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of June 30, 1999 (unaudited)
and December 31, 1998...................................................................... 3
Condensed Consolidated Statements of Operations for the Three and Six
Month Periods Ended June 30, 1999 and 1998 (unaudited)..................................... 4
Condensed Consolidated Statements of Stockholders' Equity for the
Six Month Period Ended June 30, 1999 (unaudited) and the Year Ended
December 31, 1998.......................................................................... 5
Condensed Consolidated Statements of Cash Flows for the Six Month
Periods Ended June 30, 1999 and 1998 (unaudited)........................................... 6
Notes to Condensed Consolidated Financial Statements (unaudited)........................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................................... 12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS................................................................ 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ..................................................... 21
SIGNATURES..................................................................................... 22
EXHIBITS
</TABLE>
2
<PAGE> 3
JAMESON INNS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Property and equipment $ 297,105,368 $ 168,880,042
Less: Accumulated depreciation (20,075,929) (16,754,843)
------------- -------------
277,029,439 152,125,199
Cash 706,944 500,377
Restricted cash 892,165 --
Lease revenue receivable 5,448,701 2,289,753
Deferred finance costs, net 1,942,653 1,110,336
Hotel limited partnership 1,068,848 --
Other assets 443,248 303,497
------------- -------------
$ 287,531,998 $ 156,329,162
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $ 141,648,091 $ 53,697,435
Accounts payable and accrued expenses 862,975 199,730
Accounts payable to affiliates 1,468,340 2,087,106
Accrued interest payable 979,529 350,436
Accrued property taxes 2,289,795 432,168
Preferred stock dividends payable 1,304,307 693,750
------------- -------------
148,553,037 57,460,625
Stockholders' equity:
Preferred stock, $1 par value,
1,272,727 shares (1,200,000 in 1998) of
9.25% Series A Cumulative Preferred
Stock issued and outstanding 1,272,727 1,200,000
Preferred stock, $1 par value,
2,256,000 shares (0 in 1998) of $1.70
Series S Cumulative Convertible
Preferred Stock issued and outstanding 2,256,000 --
Common stock, $.10 par value, 40,000,000
shares authorized, 10,992,299 shares
( 9,895,810 shares in 1998) issued and
outstanding 1,099,230 989,581
Additional paid-in capital 135,377,995 97,705,947
Retained deficit (1,026,991) (1,026,991)
------------- -------------
Total stockholders' equity 138,978,961 98,868,537
------------- -------------
$ 287,531,998 $ 156,329,162
============= =============
</TABLE>
See accompanying notes.
3
<PAGE> 4
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
1999 1998 1999 1998
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Lease revenue $9,322,064 $ 4,742,604 $14,197,102 $8,595,282
Expenses:
Property tax expense 658,740 213,044 961,299 430,948
Insurance expense 200,815 115,138 283,403 228,179
Depreciation 2,204,549 1,363,976 3,905,872 2,659,247
General and administrative expenses 318,172 150,443 446,222 288,480
Loss on disposal of furniture and equipment 140,697 160,697 261,405 267,460
Loss on impairment of real estate -- 2,507,000 -- 2,507,000
---------- ----------- ----------- ----------
Total expenses 3,522,973 4,510,298 5,858,201 6,381,314
---------- ----------- ----------- ----------
Income from operations 5,799,091 232,306 8,338,901 2,213,968
Other income (expenses):
Equity in income of hotel limited partnership 25,448 -- 25,448 --
Interest expense, net of capitalized amounts 2,013,023 165,965 2,925,027 682,213
---------- ----------- ----------- ----------
Income before extraordinary loss 3,811,516 66,341 5,439,322 1,531,755
Extraordinary loss - early extinguishment of debt -- 78,014 -- 106,050
---------- ----------- ----------- ----------
Net income (loss) 3,811,516 (11,673) 5,439,322 1,425,705
Less preferred stock dividends 1,304,307 693,750 1,998,057 800,550
---------- ----------- ----------- ----------
Net income (loss) attributable to
common stockholders $2,507,209 $ (705,423) $ 3,441,265 $ 625,155
========== =========== =========== ==========
Per common share:
Income before extraordinary loss:
Basic $ 0.24 $ (0.06) $ 0.34 $ 0.08
Diluted $ 0.24 $ (0.06) $ 0.34 $ 0.07
Net income:
Basic $ 0.24 $ (0.07) $ 0.34 $ 0.06
Diluted $ 0.24 $ (0.07) $ 0.34 $ 0.06
Dividends paid on common stock $ 0.24 $ 0.23 $ 0.48 $ 0.46
</TABLE>
See accompanying notes.
4
<PAGE> 5
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED PREFERRED
STOCK STOCK COMMON CONTRIBUTED RETAINED STOCKHOLDERS'
SERIES A SERIES S STOCK CAPITAL DEFICIT EQUITY
---------- ---------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 -- -- $ 977,408 $ 75,210,464 $(1,026,991) $ 75,160,881
Issuance of preferred and common
stock, net of offering expense $1,200,000 -- 4,253 27,839,002 -- 29,043,255
Exercise of stock options -- -- 5,930 353,089 -- 359,019
Vesting of restricted stock grant -- -- 1,990 60,442 -- 62,432
Common stock dividends -- -- -- (3,784,845) (5,457,255) (9,242,100)
Preferred stock dividends -- -- -- (1,972,205) (215,845) (2,188,050)
Net income -- -- -- -- 5,673,100 5,673,100
---------- ---------- ---------- ------------- ----------- -------------
Balance at December 31, 1998 $1,200,000 -- $ 989,581 $ 97,705,947 $(1,026,991) $ 98,868,537
Issuance of preferred and common
stock, net of offering expense (unaudited) 72,727 $2,256,000 108,052 38,852,282 -- 41,289,061
Exercise of stock options (unaudited) -- -- 1,501 100,302 -- 101,803
Vesting of restricted stock grant (unaudited) -- -- 96 32,301 -- 32,397
Common stock dividends (unaudited) -- -- -- (619,087) (4,135,015) (4,754,102)
Preferred stock dividends (unaudited) -- -- -- (693,750) (1,304,307) (1,998,057)
Net income (unaudited) -- -- -- -- 5,439,322 5,439,322
========== ========== ========== ============= =========== =============
Balance at June 30, 1999 (unaudited) $1,272,727 $2,256,000 $1,099,230 $ 135,377,995 $(1,026,991) $ 138,978,961
========== ========== ========== ============= =========== =============
</TABLE>
See accompanying notes.
5
<PAGE> 6
JAMESON INNS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTH PERIOD ENDED
JUNE 30
---------------------------
1999 1998
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,439,322 $ 1,425,705
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Extraordinary item -- 106,050
Depreciation and amortization 4,005,514 2,712,544
Loss on disposal of furniture and equipment 261,404 267,460
Loss on impairment of property -- 2,507,000
Equity in income of hotel limited partnership (25,448) --
Changes in assets and liabilities, net of acquisitions,
increasing (decreasing) cash:
Lease revenue receivable (2,908,949) (168,385)
Restricted cash 491,909 --
Prepaid expenses and other assets (139,751) (376,447)
Accounts payable and accrued expenses 1,028,619 (13,723)
Accounts payable to affiliates (870,319) (1,013,329)
Accrued interest (908) (36,806)
Accrued property taxes 445,831 166,651
------------ ------------
Net cash provided by operating activities 7,727,224 5,576,720
INVESTING ACTIVITIES
Acquisition of Signature and billboards, net of
cash acquired 3,821 --
Additions to property and equipment (18,196,983) (23,795,572)
------------ ------------
Net cash used in investing activities (18,193,162) (23,795,572)
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock -- 28,527,933
Common stock dividends paid (4,754,102) (4,619,069)
Preferred stock dividends paid (1,998,057) --
Proceeds from issuance of common stock 235,153 304,896
Proceeds from exercise of stock options 101,803 316,064
Proceeds from mortgage notes payable 43,091,060 23,314,066
Payment of deferred finance costs (931,958) (235,424)
Payments on mortgage notes payable (25,071,394) (29,713,056)
------------ ------------
Net cash provided by financing activities 10,672,505 17,895,410
------------ ------------
Net increase (decrease) in cash 206,567 (323,442)
Cash at beginning of period 500,377 338,581
------------ ------------
Cash at end of period $ 706,944 $ 15,139
============ ============
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Non-cash acquisition of property and equipment $ 37,914,215 --
============ ============
Issuance of stock in connection with acquisitions $ 41,053,908 --
============ ============
</TABLE>
See accompanying notes.
6
<PAGE> 7
JAMESON INNS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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)." In addition, as a result of the acquisition of
Signature Inns, Inc. in May, 1999 the Company now owns Inns in the Midwest
operating under the name "Signature Inn (R)". At June 30, 1999, the Company had
a total of 113 Jameson Inns either in operation or under development, including
85 operating Jameson Inns (4,101 available rooms), 14 Inns under construction,
eight tracts of land on which construction is expected to commence during 1999,
and contracts to acquire six parcels of land on which additional Inns are
expected to be constructed. In addition, the Company owns 25 operating Signature
Inns (2,978 available rooms) and owns a 40% interest as a general partner in
another Signature Inn (81 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, 1998,
has been derived from the audited consolidated financial statements at that
date. Operating results for the periods ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999, 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, 1998.
2. MERGER WITH SIGNATURE INNS, INC.
On May 7, 1999, the Company completed its merger with Signature Inns, Inc.
("Signature"). In the merger, the Company acquired 25 Signature Inns located in
six Midwestern states and a 40% interest in a partnership which owns one
Signature Inn. Immediately prior to the merger, the Signature operating assets
were sold to, and the liabilities pertaining to the operations of the Signature
Inns were assumed by, Jameson Hospitality, LLC (see Lessee). In connection with
the merger, the Company entered into a new master lease with Jameson Hospitality
covering the 25 wholly-owned Signature Inns. The new master lease has terms
which are similar to the terms of the master leases covering the Jameson Inns
and extends to 2012.
7
<PAGE> 8
In the merger, holders of Signature common stock received one half of a share of
Jameson common stock and $1.22 in cash for each share of Signature common stock.
In addition, Signature paid a special $0.28 dividend on each share of Signature
common stock immediately prior to the consummation of the merger. Holders of
Signature Series A Preferred Stock received one share of Jameson Series S
Preferred Stock for each share of Signature Series A Preferred Stock. In the
merger, the Company assumed all of the outstanding indebtedness of Signature,
except for $2.1 million which was repaid at closing with additional borrowings
under the Company's line of credit. As of May 7, 1999, the debt assumed totaled
$67.1 million and was secured by mortgages on twenty-four of the Signature Inns.
The purchase price of Signature approximated $46.3 million, consisting of $2.6
million in cash, the issuance of 1,051,846 shares of Jameson Common Stock (at
$9.125 per share), 2,256,000 shares of Jameson Series S Preferred Stock (at
$13.375 per share), and merger related costs of approximately $4.0 million. The
purchase price has been allocated to the fair value of the net assets acquired
as follows:
<TABLE>
<S> <C>
Cash $ 6,721,951
Restricted cash 1,384,074
Hotel limited partnership 1,079,675
Property and equipment 108,332,245
Amount due from affiliates 398,447
Accounts payable and accrued expenses (277,580)
Accrued interest payable (630,001)
Accrued property taxes (1,411,796)
Mortgage notes payable (69,231,797)
-------------
Total purchase price $ 46,365,218
=============
</TABLE>
8
<PAGE> 9
The merger was accounted for as a purchase of Signature by Jameson. The
historical results of Jameson include the effects of the merger beginning May 7,
1999. The following presents the unaudited pro forma results of operations as if
the purchase and all related transactions were consummated on April 1 of the
respective period for the three-month periods ended June 30, and January 1 of
the respective period for the six month periods ended June 30. Such information
reflects the allocation of the purchase price.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
--------------------------- ----------------------------
1999 1998 1999 1998
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
PRO FORMA:
Lease revenues $11,045,869 $9,486,017 $19,155,376 $16,533,939
Income before extraordinary
items 3,863,609 1,455,648 5,285,493 2,947,464
Extraordinary items -- (78,014) -- (106,050)
----------- ---------- ----------- -----------
Net income 3,863,609 1,377,634 5,285,493 2,841,414
Preferred stock dividends 1,694,596 1,652,550 3,347,146 2,718,150
----------- ---------- ----------- -----------
Net income (loss) attributable to
common stockholders $ 2,169,013 $ (274,916) $ 1,938,347 $ 123,264
=========== ========== =========== ===========
Pro forma earnings per share:
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary
items $ .20 $ (.02) $ .18 $ .02
Extraordinary items -- (.01) -- (.01)
----------- ---------- ----------- -----------
Net income $ .20 $ (.03) $ .18 $ .01
=========== ========== =========== ===========
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary
items $ .20 $ (.02) $ .18 $ .02
Extraordinary items -- (.01) -- (.01)
----------- ---------- ----------- -----------
Net income (loss) $ .20 $ (.03) $ .18 $ .01
=========== ========== =========== ===========
</TABLE>
3. ACQUISITION OF OUTDOOR ADVERTISING ASSETS OF JAMESON HOSPITALITY, LLC
On April 2, 1999, the Company completed the acquisition of the outdoor
advertising assets and certain operations of Jameson Hospitality, LLC ("JH").
These assets consist of approximately 100 roadside billboards on which
advertising for the Company's hotel properties and, in certain instances, other
services or products for third parties, is placed. These billboards were leased
to JH and continue to be used for the same type of advertising. Consideration of
$2,381,000 paid to JH consisted of (i) 72,727 newly issued shares of the
Company's Series A Preferred Stock (at $17.625 per share), (ii) $400,000 in
cash, and (iii) the assumption of indebtedness of approximately $700,000 which
is secured by mortgages on the billboards and the revenues generated therefrom.
9
<PAGE> 10
4. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
NUMERATOR:
Income before extraordinary
Loss $ 3,811,516 $ 66,341 $ 5,439,322 $ 1,531,755
Extraordinary loss -- (78,014) -- (106,050)
------------ ----------- ------------ -----------
Net income (loss) 3,811,516 (11,673) 5,439,322 1,425,705
Less: Cumulative preferred stock
dividends (1,304,308) (693,750) (1,998,058) (800,550)
------------ ----------- ------------ -----------
Numerator for basic and diluted
earnings per share-income available
to common stockholders $ 2,507,208 $ (705,423) $ 3,441,264 $ 625,155
============ =========== ============ ===========
DENOMINATOR:
Weighted average shares
outstanding 10,551,772 9,835,984 10,229,083 9,813,795
Less: Unvested restricted shares of
common stock (85,964) (64,401) (85,135) (64,401)
------------ ----------- ------------ -----------
Denominator for basic earnings per
share 10,465,808 9,771,583 10,143,948 9,749,394
Plus: Effect of dilutive securities
Employee and director stock
options 58,295 -- 49,832 117,233
Unvested restricted shares of
common stock 69,476 -- 72,148 44,589
------------ ----------- ------------ -----------
Total potential dilutive common
shares 127,771 -- 121,980 161,822
------------ ----------- ------------ -----------
Denominator for diluted earnings
per share- adjusted weighted average
shares and assumed conversions 10,593,579 9,771,583 10,265,928 9,911,216
============ =========== ============ ===========
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
-------------------------- ------------------------
1999 1998 1999 1998
---- ----- ---- -----
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE:
Income before extraordinary loss
(net of cumulative preferred stock
dividends) $.24 $(.06) $.34 $ .08
Extraordinary loss -- $(.01) -- $(.02)
---- ----- ---- -----
Net income per common share
(net of cumulative preferred stock
dividends) $.24 $(.07) $.34 $(.06)
==== ===== ==== =====
DILUTED EARNINGS PER COMMON SHARE:
Income before extraordinary loss (net of
cumulative preferred stock dividends) $.24 $(.06) $.34 $ .07
Extraordinary loss -- $(.01) -- $(.01)
---- ----- ---- -----
Net income per common share (net of
cumulative preferred stock dividends) $.24 $(.07) $.34 $ .06
==== ===== ==== =====
</TABLE>
Options to purchase 682,501 and -0- shares of Common Stock for the three months
ended June 30, 1999 and 1998 and options to purchase 944,282 and -0- shares of
Common Stock for the six months ended June 30, 1999 and 1998 were outstanding
but were not included in the computation of diluted earnings per share because
the securities' exercise price was greater than the average market price of the
common shares and, therefore, the effect would be antidilutive.
5. SUBSEQUENT EVENT
On July 2, 1999 the Company sold its Jameson Inn hotel property located in
Milledgeville, Georgia. The sale did not result in a gain or a loss.
11
<PAGE> 12
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.
The Company's primary source of revenue is rent payments by "JH" under master
leases (the "Leases") covering all of the operating Jameson Inns and the
twenty-five Signature Inns beginning May 7, 1999. The expenses of the Company
consist of property taxes, insurance, corporate overhead, interest on mortgage
debt and depreciation of the Inns. The Leases provide for the payment of base
rent and percentage rent. For the quarter ended June 30, 1999, base rent and
percentage rent in the aggregate amount of $9.32 million was earned by the
Company. The principal determinant of percentage rent is JH's Room Revenues of
the Inns, as defined by the Leases. 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 revenue from the
Leases.
The following table shows certain historical financial and other information for
the periods indicated.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
----------------------- -----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Occupancy rate 65.63% 68.00% 62.13% 64.84%
ADR $ 55.62 $ 49.89 $ 54.38 $ 48.94
REVPAR $ 36.51 $ 33.93 $ 33.79 $ 31.73
Room revenues (000s) $ 19,494 $ 9,895 $ 29,848 $ 17,902
Room nights available 533,984 291,661 883,416 564,142
Room nights occupied 350,451 198,336 548,879 365,789
Operating Inns (at period end) 110 72 110 72
Rooms available (at period end) 7,079 3,377 7,079 3,377
</TABLE>
12
<PAGE> 13
RESULTS OF OPERATIONS
Comparison of the Three Months Ended June 30, 1999 to the Three Months Ended
June 30, 1998.
Revenue from the Leases for the Company for the three month period ended June
30, 1999, increased 96.6% to $9.3 million as compared to $4.7 million for the
same period in 1998. The increase was due to the increase in JH's Room Revenues.
- - The number of room nights available increased from 291,661 in 1998 to
533,984 in 1999, or 83.1%, due to the opening from January 1, 1998
through June 30, 1999, of 23 new Jameson Inns (totaling 910 rooms), and
15 expansions of existing Jameson Inns (adding 290 rooms) and the
operations of the Signature Inns (2,978 additional rooms) from May 7,
1999.
- - ADR increased 11.5% from $49.89 in the second quarter of 1998 to $55.62
in the same period in 1999.
- - The occupancy rate decreased from 68.00% during the second quarter of
1998 to 65.63% during the second quarter of 1999. The decrease in
overall occupancy of Jameson Inns is attributable primarily to (a) the
expansion of several high occupancy Jameson Inns which then experienced
lower occupancy rates because of the additional rooms available, (b)
the opening of new Jameson Inns which typically require several months
of operations before realizing higher occupancy rates and (c)
additional competition in certain markets.
As a result of these three factors, second quarter Room Revenues rose 97% from
$9.9 million for the second quarter of 1998 to $19.5 million in the second
quarter of 1999. Same Inn Room Revenues in the second quarter of 1999 versus the
second quarter of 1998 grew to $10.3 million from $9.9 million, or 3.6%. The
same Inn growth is due to an increase in ADR from $50.79 to $52.55 for these
Inns, an increase in room nights available (due to expansions of certain of
these Inns) from 286,679 to 292,403, offset by a decrease in the occupancy rate
from 68.19% to 66.94% for these Inns for the second quarter of 1999 compared to
the same period in 1998.
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, 1999, was $318,172,
as compared to $150,443 for the three months ended June 30, 1998. The 1999
expense is greater than 1998 due to more time spent in 1999 by shared employees
on the Company's business matters as compared to other related entities. Much of
this increased time related to the merger with Signature.
Property taxes and insurance expense totaled $859,555 for the three month period
ended June 30, 1999, compared with $328,182 for the same period in 1998. The
increase is attributable to the increase in number of Jameson Inns, the
expansion of existing Jameson Inns and the Signature Inns acquired on May 7,
1999.
Interest expense increased from $165,965 for the three-month period ended June
30, 1998, to $2,013,023 for the same period ended June 30, 1999, due to the
greater amounts of average principal indebtedness outstanding in the second
quarter of 1999 and the $67.1 million of mortgage indebtedness assumed with the
acquisition of Signature. Interest expense amounts exclude interest capitalized
in the cost of new Inn development.
Depreciation expense increased from $1,363,976 to $2,204,549 for the three month
periods ended June 30, 1998 and 1999, respectively, due to an increase in the
number of operating Jameson Inns, the expansion of existing Inns and the
Signature Inns acquired on May 7, 1999.
13
<PAGE> 14
Comparison of the Six Months Ended June 30, 1999 to the Six Months Ended
June 30, 1998.
Revenue from the Leases for the Company for the six month period ended June 30,
1999, increased 65.2% to $14.2 million as compared to $8.6 million for the same
period in 1998. The increase was due to the increase in JH's Room Revenues.
- - The number of room nights available increased from 564,142 in 1998 to
883,416 in 1999, or 56.6%, due to the opening from January 1, 1998
through June 30, 1999, of 23 new Jameson Inns (totaling 910 rooms), and
15 expansions of existing Jameson Inns (adding 290 rooms) and the
operations of the Signature Inns from May 7, 1999.
- - ADR increased 7.3% from $48.94 in the first half of 1998 to $52.53 in
the same period in 1999.
- - The occupancy rate decreased from 64.84% during the first six months of
1998 to 61.12% during the second six months of 1999. The decrease in
overall occupancy of Jameson Inns is attributable primarily to (a) the
expansion of several high occupancy Jameson Inns which then experienced
lower occupancy rates because of the additional rooms available, (b)
the opening of new Jameson Inns which typically require several months
of operations before realizing higher occupancy rates and (c)
additional competition in certain markets.
As a result of these three factors, Room Revenues rose 66.5% from $17.9 million
for the first six months of 1998 to $29.8 million in the first six months of
1999. Same Inn Room Revenues in the first six months of 1999 versus the same
period in 1998 grew to $19.0 million from $18.1 million, or 5.0%. The same Inn
growth is due to an increase in ADR from $49.94 to $52.29 for these Inns, an
increase in room nights available (due to expansions of certain of these Inns)
from 559,160 to 580,438, offset by a decrease in the occupancy rate from 64.91%
to 62.74% for these Inns for the first half of 1999 compared to the same period
in 1998.
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, 1999, was $446,222, as
compared to $288,480 for the six months ended June 30, 1998. The 1999 expense is
greater than 1998 due to more time spent in 1999 by shared employees on the
Company's business matters as compared to other related entities.
Much of this increased time related to the Signature Inns merger.
Property taxes and insurance expense totaled $1,244,702 for the six month period
ended June 30, 1999, compared with $659,127 for the same period in 1998. The
increase is attributable to the increase in number of Jameson Inns, the
expansion of existing Jameson Inns and the Signature Inns acquired on May 7,
1999.
Interest expense increased from $682,213 for the six-month period ended June 30,
1998, to $2,925,027 for the same period ended June 30, 1999, due to the greater
amounts of average principal indebtedness outstanding in the second quarter of
1999. Interest expense amounts exclude interest capitalized in the cost of new
Inn development and the $67.1 million of mortgage indebtedness assumed with the
acquisition of Signature.
Depreciation expense increased from $2,658,362 to $3,905,872 for the six month
periods ended June 30, 1998 and 1999, respectively, due to an increase in the
number of operating Jameson Inns, the expansion of existing Inns and the
Signature Inns acquired on May 7, 1999.
14
<PAGE> 15
FUNDS FROM OPERATIONS ("FFO")
The Company notes that industry analysts and investors use funds from operations
as another tool to evaluate and compare equity REITs. The Company also believes
it is meaningful as an indicator of net income excluding most non-cash items and
provides information about the Company's cash available for distributions, debt
service and capital expenditures. The Company follows the March 1995
interpretation of the National Association of Real Estate Investment Trusts
("NAREIT") definition of funds from operations ("Funds from Operations") which
is calculated (in the Company's case) as net income plus depreciation, loss on
disposal of furniture and equipment, loss on impairment of real estate and
extraordinary items, if applicable. Other non-cash expenses such as amortization
and stock option expense have not been added back in Funds from Operations.
Funds from Operations does not represent cash flow from operating activities in
accordance with generally accepted accounting principles ("GAAP") and is not
indicative of cash available to fund all of the Company's cash needs. Funds from
Operations should not be considered as an alternative to net income or any other
GAAP measure as an indicator of performance and should not be considered as an
alternative to cash flows as a measure of liquidity. In addition, the Company's
Funds from Operations may not be comparable to other companies' Funds from
Operations due to differing methods of calculating Funds from Operations and
varying interpretations of the NAREIT definition.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
--------------------------- --------------------------
1999 1998 1999 1998
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net income attributable to common
stockholders $2,507,208 $ (705,423) $3,441,264 $ 625,155
Depreciation 2,204,549 1,363,976 3,905,872 2,659,247
FFO adjustment for equity share of
hotel partnership 5,761 -- 5,761 --
Extraordinary loss -- 78,014 -- 106,050
Loss on disposal of furniture and
equipment 140,697 160,697 261,405 267,460
Loss on impairment of property -- 2,507,000 -- 2,507,000
---------- ----------- ---------- ----------
Funds from Operations $4,858,215 $ 3,404,264 $7,614,302 $6,164,912
========== =========== ========== ==========
</TABLE>
15
<PAGE> 16
As described elsewhere in this Form 10-Q, including in note 2 to the condensed
consolidated statements, the Company merged with Signature Inns, Inc. on May 7,
1999. The following presents the unaudited pro forma funds from operations as if
the purchases and all related transactions were consummated on April 1 of the
respective period for the three month periods ended June 30 and January 1 of the
respective period for the six month periods ended June 30:
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
--------------------------- --------------------------
1999 1998 1999 1998
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
PRO FORMA:
Net income attributable to common
stockholders $2,169,013 $ (274,196) $1,938,347 $ 123,264
Depreciation 2,758,432 2,719,531 5,815,310 5,370,357
FFO adjustment for equity share
of hotel partnership 9,822 15,619 19,644 31,238
Extraordinary loss -- 78,014 -- 106,050
Loss on disposal of furniture and
equipment 140,697 160,697 261,405 267,460
Loss on impairment of property -- 2,507,000 -- 2,507,000
---------- ----------- ---------- ----------
Funds from Operations $5,077,964 $ 5,206,665 $8,034,706 $8,405,369
========== =========== ========== ==========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company expects to continue to develop additional Inns and to expand
existing Inns, as suitable opportunities arise. The Company will not undertake
such investments, however, unless adequate sources of financing are available.
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. Management believes that it can continue to finance new hotels and
expansions with these construction and long-term mortgage loans. At June 30,
1999, the Company had approximately $142 million in outstanding debt and had two
operating Jameson Inns and one operating Signature Inn which were debt free and
could be used as collateral should it require additional borrowing capacity.
The Company has a $46.2 million line of credit (the "Line"). The Company uses
the Line to finance part or all of the development costs of new Inns if there is
no construction loan in place. Borrowings under the Line are secured by
mortgages on 41 of the Jameson Inns. Interest-only payments are due monthly
until the balance under the Line converts to a term loan. After the
interest-only period, which extends for up to three years, borrowings under the
Line convert to term loans and payments of interest and principal are due
monthly. Principal under each of the term loans is generally amortized over a
15-year period, but is payable in full at various dates beginning in 2003
through 2007 for term loans outstanding at June 30, 1999. Loans made under the
Line bear interest at rates initially ranging from 8.25% to 9.0%, which are
adjustable annually to equal a major lender's prime rate plus 0.25% or 0.50%.
The minimum annual interest rate payable under the Line is 7% and the maximum is
13%. At June 30, 1999, the Company had borrowed $16.6 million under the Line and
had remaining availability of $29.6 million. The annual interest rates at June
30, 1999, ranged from 8.25% to 9.0%.
Historically, the Company has employed construction and long term mortgage
financing to fund the balance of construction costs not funded under the Line.
For each new Jameson Inn to be built, Jameson generally obtains a construction
loan of $1.1 to $2.8 million depending on the size of the Jameson Inn to be
built. After an 18-month interest-only period, each construction loan converts
to a long-term mortgage
16
<PAGE> 17
financing upon completion of the Jameson Inn without any further action by
Jameson, amortized over 10 to 15 years and payable in full seven years from
inception. The interest rate on each of such loans is adjusted annually to rates
ranging from the prime rate then prevailing to prime plus 0.50%. As of June 30,
1999, the construction loans were secured by mortgages on 12 of the Jameson Inns
under construction.
As of June 30, 1999, Jameson had a total of 14 Jameson Inns under construction
with total construction costs, excluding land and closing costs, expected to
total $42.3 million when the projects are complete. For 12 of these properties,
the Company had obtained commitments for construction loans totaling $23.8
million.
Since the Company presently intends to rely primarily on borrowings for
construction and permanent financing of new Jameson Inns and Signature Inns and
the expansion of existing properties, the lack of sufficient financing on
favorable terms and conditions could prevent or significantly deter Jameson from
constructing new hotels or expanding existing hotels. The availability of such
financing depends on a number of factors over which we have no control,
including general economic conditions, the economic and competitive environments
of the communities in which our Inns are located and the level and stability of
long term interest rates. The Company is also considering possible additional
long-term debt or equity financing that would be available to fund our ongoing
development activities.
As with most real estate environments, investments in Inns are relatively
illiquid and this illiquidity is further increased by the location of many of
our Inns in small communities. As a result, our ability to sell or otherwise
dispose of any Inn to provide liquidity will be very limited.
YEAR 2000
As the year 2000 approaches, a critical business issue has emerged regarding how
existing application software programs and operating systems can accommodate
this date value. Many existing application software products in the marketplace
were designed to accommodate only two-digit date entries. Beginning in the year
2000, these systems and products will need to be able to accept four-digit
entries to distinguish years beginning with 2000 from prior years. As a result,
computer systems and software used by many companies may need to be upgraded to
comply with such "Year 2000" requirements.
Jameson and Jameson Hospitality have completed an assessment of their computer
and other operating systems to identify those which could be affected by the
"Year 2000" issue. The assessment included the review of corporate and hotel
applications, hardware, and software (information technology or "IT"), and
non-IT areas such as microprocessors and embedded chips. Jameson and Jameson
Hospitality established a time line for assuring compliance and are monitoring
progress toward that end. On-going testing of existing systems, to determine
compliance, will be completed by the end of September 1999. We anticipate that
systems that are determined to be non-compliant will be repaired or replaced by
October 1999. The remediation phase includes modification to, or replacement of,
software, and hardware or microprocessors.
Estimated total costs, excluding internal costs, to complete compliance for both
companies are $100,000. No material amounts have been expended as of June 30,
1999, for Year 2000 remediation. Neither Jameson nor Jameson Hospitality tracks
the internal costs incurred for the Year 2000 project (principally the payroll
and related costs for our information systems group). The costs of the project
have been and will continue to be funded through operating cash flows of the
companies.
Jameson and Jameson Hospitality rely on third party consultants and suppliers
for a variety of their corporate and hotel operations. The ability of third
parties to adequately address their Year 2000 issues is outside of our control.
There can be no assurance that the failure of Jameson and Jameson Hospitality,
or
17
<PAGE> 18
such third parties, to adequately address their respective Year 2000 issues
will not have a material adverse effect on our future financial condition or
results of operations.
Jameson and Jameson Hospitality believe they have an effective program in place
which will resolve the Year 2000 issue in a timely manner. Year 2000 risks
include failure to obtain successful testing of hardware/software, failed
attempts to obtain vendor compliance, and failure on the part of suppliers and
service providers. Jameson and Jameson Hospitality believe that under most
reasonably likely worst case scenarios hotel operations could be disrupted, a
reduction in hotel occupancy could occur due to lost reservations, or corporate
financial functions could be impaired. Such an event would cause certain
processes to revert to manual systems and could have a material adverse impact
on Jameson and Jameson Hospitality's operating results and financial position.
Jameson and Jameson Hospitality maintain contingency plans in its normal course
of business designed to be deployed in the event of various potential business
interruptions. Contingency plans to address Year 2000 risks have not been fully
developed, however Jameson and Jameson Hospitality intend to finalize their
contingency plans for those risks by October 1999. Contingency plans will be
implemented between October 1 and December 31, 1999, for systems that cannot be
feasibly repaired or replaced.
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, expected Year 2000
compliance 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) assimilate the Signature Inns operations,
properties, and staff, (c) assess accurately the market demand for new Inns and
expansions of existing Inns, (d) identify and purchase new sites which meet its
various criteria, including reasonable land prices, (e) 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, (f) provide ongoing renovation and
refurbishment of the Inns sufficient to maintain consistent quality among the
Inns, and (g) manage its business in a cost-effective manner given the increase
in the number of Inns; (2) JH'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 of 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.
THE LESSEE - JAMESON HOSPITALITY, LLC
The Company seeks to enhance Lease revenue by working in a collaborative manner
with JH, lessee of the Inns. JH is wholly-owned by Thomas W. Kitchin, chairman
and chief executive officer of the Company, and his wife. Presently, JH also has
an exclusive relationship with the Company in that JH
18
<PAGE> 19
does not manage any hotel properties other than the Inns. The Company believes
this exclusive relationship ensures that the Company's and JH's interests are
well-aligned. While the Company does not control the operations of JH or the
day-to-day operation of the Inns, the two companies work together to enhance
both occupancy and ADR. The Leases' 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 JH including
the operating results of the Signature Inns beginning May 7, 1999.
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
---------------------------- -----------------------------
1999 1998 1999 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Room Revenues as defined by the
Leases $20,046,146 $10,090,919 $30,650,974 $ 18,288,107
Construction and other revenues 7,943,924 9,441,648 13,635,953 16,384,895
----------- ----------- ----------- ------------
Total revenues 27,990,070 19,532,567 44,286,927 34,673,002
Inn operating expenses 9,516,273 5,247,989 14,720,239 9,468,479
Cost of construction and other
revenues 7,994,364 8,769,975 13,748,557 15,585,424
Advertising 811,986 560,467 1,240,983 1,165,810
Lease expense to Jameson
Inns, Inc. 9,166,144 4,742,604 14,041,182 8,595,282
----------- ----------- ----------- ------------
Total expenses 27,488,767 19,321,035 43,750,961 34,814,995
----------- ----------- ----------- ------------
Net income (loss) $ 501,303 $ 211,532 $ 535,966 $ (141,993)
=========== =========== =========== ============
</TABLE>
The following presents the unaudited pro forma results of operations of JH as if
the purchases and all related transactions were consummated on April 1 of the
respective period for the three month periods ended June 30 and January 1 of the
respective period for the six month periods ended June 30:
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
PRO FORMA:
Room Revenues as defined by the
Leases $ 24,397,170 $21,606,402 $ 43,752,439 $38,885,225
Construction and other revenues 7,953,793 9,441,648 13,684,920 16,384,895
------------ ----------- ------------ -----------
Total revenues 32,350,963 31,048,050 57,437,359 55,270,120
Inn operating expenses 12,601,687 10,945,875 23,002,606 20,436,745
Cost of construction and other
revenues 7,994,364 8,769,975 13,748,557 15,585,424
Advertising 977,008 1,048,197 1,884,582 2,146,114
Lease expense to Jameson,
Inns, Inc. 10,889,949 9,486,017 18,999,456 16,533,939
------------ ----------- ------------ -----------
Total expenses 32,463,008 30,250,064 57,635,201 54,702,222
------------ ----------- ------------ -----------
Net income (loss) $ (112,045) $ 797,989 $ (197,842) $ 567,898
============ =========== ============ ===========
</TABLE>
19
<PAGE> 20
DISTRIBUTIONS TO STOCKHOLDERS
The table below sets forth, for the periods indicated, the cash distributions
declared per share since January 1, 1998.
<TABLE>
<CAPTION>
Series A Series S
Common Stock Preferred Stock Preferred Stock
------------ --------------- ---------------
<S> <C> <C> <C>
First Quarter, 1998 $0.23 $0.089**
Second Quarter, 1998 0.24 0.5781
Third Quarter, 1998 0.24 0.5781
Fourth Quarter, 1998 0.24 0.5781
First Quarter, 1999 0.24 0.5781
Second Quarter, 1999 0.245* 0.5781*** $0.252****
</TABLE>
* On July 22, 1999 the Company declared this dividend, which is payable
on August 20, 1999 to shareholders of record on August 4, 1999.
** On April 20, 1998, the Company declared a dividend of $.089 per share
for the 9.25% Series A Cumulative Preferred Stock for the period March
18 to March 31, 1998. The dividend was paid on May 1, 1998 to
shareholders of record on March 31, 1998.
*** On June 22, 1999, the Company declared this dividend, which was paid on
July 20, 1999, to shareholders of record on July 2, 1999.
**** The $1.70 Series S Cumulative Convertible Preferred Stock was issued on
May 7, 1999 by the Company as a part of the merger with Signature Inns,
Inc. On June 22, 1999, the Company declared this dividend, which was
paid on July 20, 1999 to shareholders of record on July 2, 1999.
20
<PAGE> 21
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the annual stockholder's meeting held May 7, 1999, the following
matters were submitted to a vote of the Company's stockholders and the
stockholders voted as follows:
1. The approval of the Agreement and Plan of Merger for the
merger of Jameson Inns, Inc. and Signature Inns, Inc. was
approved and adopted. There were 5,039,287 votes cast in favor
of the proposal, 118,087 votes cast against the proposal and
43,654 votes abstained.
2. Thomas W. Kitchin was elected as a director for a three-year
term. The terms of office as directors for Robert D. Hisrich,
Thomas J. O'Haren and Michael E. Lawrence continued after the
meeting. There were 9,148,756 votes cast in favor of the
election of Mr. Kitchin and 46,356 votes to withhold authority
to vote for Mr. Kitchin. There were no broker non-votes.
3. The selection of the firm of Ernst & Young LLP, was ratified
as the independent auditor of the Company's consolidated
financial statements for the fiscal year ending December 31,
1999. There were 9,045,830 votes cast in favor of the
proposal, 125,061 votes cast against the proposal and 24,220
votes abstained. There were no broker non-votes.
Item 6. Exhibits and Reports on Form 8-K
The Company filed one Form 8-K during the three months ended June 30,
1999. This report dated May 26, 1999 related to the consummation of the
merger of Signature Inns, Inc. on May 7, 1999.
EXHIBITS
12.1 Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
27.1 Financial Data Schedule (for SEC use only)
21
<PAGE> 22
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 12, 1999 By: /s/ Craig R. Kitchin
-------------------------------------
Craig R. Kitchin
President and Chief Financial Officer
(Principal Financial Officer)
Dated: August 12, 1999 By: /s/ Martin D. Brew
-------------------------------------
Martin D. Brew
Corporate Controller
(Chief Accounting Officer)
22
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Page
- ------ ----
<S> <C> <C>
12.1 Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends...........................................................................................24
27.1 Financial Data Schedule.............................................................................
</TABLE>
23
<PAGE> 1
EXHIBIT 12.1
JAMESON INNS, INC.
CALCULATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED JUNE 30 ENDED JUNE 30
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Consolidated income before
extraordinary items $3,811,516 $ 66,341 $5,439,322 $1,531,755
Interest 1,959,268 138,436 2,825,385 628,916
Amortization 53,755 27,529 99,642 53,297
---------- ---------- ---------- ----------
Earnings $5,824,539 $ 232,306 $8,364,349 $2,213,968
========== ========== ========== ==========
Interest $1,959,268 $ 138,436 $2,825,385 $ 628,916
Amortization 53,755 27,529 99,642 53,297
Cumulative preferred stock dividends 1,304,308 693,750 1,998,058 800,550
Interest capitalized during the period 352,250 238,772 721,006 407,311
---------- ---------- ---------- ----------
Fixed Charges $3,669,581 $1,098,487 $5,644,091 $1,890,074
========== ========== ========== ==========
Ratio of earnings to fixed charges
and preferred stock dividends 1.59 0.21 1.48 1.17
========== ========== ========== ==========
</TABLE>
24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JAMESON INNS INC FOR THE SIX MONTHS ENDED JUNE 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 706,944
<SECURITIES> 0
<RECEIVABLES> 5,448,701
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,502,559
<PP&E> 297,105,368
<DEPRECIATION> (20,075,929)
<TOTAL-ASSETS> 287,531,998
<CURRENT-LIABILITIES> 6,904,946
<BONDS> 141,648,091
2,256,000
1,727,727
<COMMON> 1,099,230
<OTHER-SE> 134,351,004
<TOTAL-LIABILITY-AND-EQUITY> 287,531,998
<SALES> 14,197,102
<TOTAL-REVENUES> 14,197,102
<CGS> 1,244,702
<TOTAL-COSTS> 1,244,702
<OTHER-EXPENSES> 707,627
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 925,027
<INCOME-PRETAX> 5,439,322
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,439,322
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,439,322
<EPS-BASIC> .34
<EPS-DILUTED> .34
</TABLE>
