JAMS Jameson Inns

- Double-Digit System-Wide RevPAR Increase ATLANTA, Aug. 11 /PRNewswire-FirstCall/ -- Jameson Inns, Inc. (NASDAQ:JAMS), owner and operator of Jameson Inn and Signature Inn hotels, today announced financial results for the quarter ended June 30, 2005. Second Quarter Results Net income attributable to common stockholders was approximately $2.5 million, or $0.04 per share in the second quarter 2005, compared to a net loss of approximately $555,000, or $0.04 per share in same period of 2004. The net change was primarily due to the increase in ADR and occupancy, and the elimination of the preferred dividends of approximately $1.7 million accrued in second quarter 2004. Preferred dividends were eliminated as a result of the redemption of the preferred stock in August 2004. - Lodging revenue grew by approximately $1.3 million (or 5.9%) to $23.4 million in second quarter 2005 from $22.1 million in second quarter 2004. - RevPAR improvements by the Jameson Inn brand (11.5%), combined with a substantial slowing in the performance decline by the Signature brand produced an overall double-digit increase (10.2%) in company wide RevPAR. Along with a rising ADR (up $2.80, or 4.6%), occupancy rose by a full three percentage points. "We believe these results are a clear indication that our markets are improving across the company, and that we are well positioned in these markets to take advantage of the increased lodging demand," said Thomas W. Kitchin, Chairman and Chief Executive Officer of Jameson Inns, Inc. "The fact that we were able to grow both rate and occupancy validates our belief that customers continue to be drawn to our price value proposition and our Perfect Stay guarantee." - The Jameson Inn brand occupancy rate increased to 62.2% in second quarter 2005 from 59.2% in second quarter 2004. ADR for the Jameson Inn brand increased 6.1% in second quarter 2005 as compared to second quarter 2004. This combination drove RevPAR to $39.29, more than $4.00 higher than the same period last year. - ADR for the Signature Inn brand increased to $67.98 in second quarter 2005 from $67.36 in second quarter 2004, while the Signature Inn occupancy rate fell slightly to 43.1% from 44.2%. RevPAR at Signature Inns decreased by 1.7%. "We appear to have stemmed the tide of double digit decreases at Signature," said Kitchin. "It's especially impressive since three of our best Signature Inns are now Jameson Inns, and their 2005 results are no longer included with the Signature brand." Six-Months Results Net income attributable to common stockholders was approximately $630,000, or $0.01 per share in the first six months of 2005, compared to a net loss of approximately $8.6 million, or $0.64 per share in the same period of 2004. The net change was primarily due to a one time lease termination expense in 2004 of approximately $9.0 million as a result of the acquisition of Kitchin Hospitality, LLC, partially offset by an income tax benefit of approximately $1.4 million to establish initial deferred tax asset as a result of the change in taxable status in 2004, and by the elimination of the preferred dividends of approximately $3.3 million accrued in the six months ended June 30, 2004 due to the redemption of the preferred stock in August 2004. - Despite having 1.9% fewer rooms available to rent, lodging revenue rose 2.5% to $42.0 million during the first six months of 2005 compared to $40.9 million in the same period in 2004. - During the first six months, the occupancy rate for the Jameson Inn brand increased to 57.8% from 55.9%. ADR for the Jameson Inn brand increased 7.1% for the first six months 2005 as compared to the same period of 2004. This combination resulted in a RevPAR increase of 10.8% for the Jameson Inn brand. - During the first six months, the occupancy rate for the Signature Inn brand decreased to 35.7% from 38.9%. ADR for the Signature Inn brand increased 1.0% for the first six months of 2005 as compared to the first six months of 2004. This combination resulted in a RevPAR decrease of 7.6% for the Signature Inn brand. Discontinued Operations During the second quarter of 2005, three Signature Inns located in Bettendorf, Iowa; Terre Haute, Indiana; and Dayton, Ohio, were sold for the aggregate sales price of approximately $6.1 million resulting in a net gain of approximately $289,000. Hotels under Renovation and Conversion The Company continues to execute a strategy of selling certain Signature Inn hotels and converting the remaining Signature Inns to its primary Jameson Inn brand. The conversions are accompanied by a significant renovation and upgrade to the physical property. "Early results from our newly converted Jameson Inns in Louisville, Kentucky and Knoxville, Tennessee are very encouraging," said Kitchin. "At each hotel, we have been able to win back business which had been lost over the years as newly built competition came to the markets. These are now properties that compete well and add to the strength of the Jameson brand." Work has already begun to convert two additional Signature Inns to Jameson Inns in South Bend and Elkhart, Indiana. These projects should be completed in the early fall of 2005. The Company invested approximately $3.1 million in the second quarter of 2005 and approximately $4.8 million in the first six months of 2005 for its capital refurbishment, renovation and conversion projects. Guest Satisfaction Survey Results For the third consecutive quarter, Jameson Inn dominated in the economy sector for guest satisfaction by Market Metrix, LLC, the leading provider of market research services for the hospitality industry. Jameson was also ranked number one in this survey for both calendar years 2003 and 2004. A link to the Market Metrix website results has been added to the Company's website, http://www.jamesoninns.com/. Inns At June 30, 2005, the Company owned and operated 110 Inns, of which 93 are Jameson Inns, located predominantly in the southeastern United States and 17 are Signature Inns, located predominantly in the mid-western United States. The Company licenses the use of the Jameson Inn brand to the owners of 12 other Jameson Inns. The Company's 110 owned and 12 franchised Inns are located in the following thirteen states: Combined Percentage Jameson Inns Signature Inns of Total State Hotels Rooms Hotels Rooms Hotels Rooms Rooms Georgia 31 1,598 -- -- 31 1,598 20.2% Indiana -- -- 13 1,445 13 1,445 18.2% Alabama 18 960 -- -- 18 960 12.1% Tennessee 12 781 -- -- 12 781 9.9% N. Carolina 14 677 -- -- 14 677 8.6% S. Carolina 10 577 -- -- 10 577 7.3% Florida 6 390 -- -- 6 390 4.9% Illinois -- -- 3 371 3 371 4.7% Mississippi 6 349 -- -- 6 349 4.4% Kentucky 3 305 -- -- 3 305 3.9% Louisiana 3 213 -- -- 3 213 2.7% Ohio -- -- 1 125 1 125 1.6% Virginia 2 122 -- -- 2 122 1.5% Total 105 5,972 17 1,941 122 7,913 100.0% Earnings Conference Call As previously announced, the Company's second quarter earnings conference call is scheduled for 11:00 am EDT, August 12, 2005. A simultaneous webcast of the conference call is available by accessing the Investor Relations section of the Company's website at http://www.jamesoninns.com/. To listen to the call, dial 877-462-0700 (domestic) or 706-679-3971 (international) and ask for the Jameson Inns, Inc. second quarter earnings conference call hosted by Mr. Tom Kitchin. A replay of the conference call will be available for thirty days following the call on http://www.jamesoninns.com/ and by telephone for thirty days by calling 800-642-1687 (domestic) or 706-645-9291 (international) and requesting conference ID 8454801. For more information about Jameson Inns, Inc., visit the Company's website at http://www.jamesoninns.com/. Forward-Looking Statements Certain matters discussed in this press release may constitute "forward- looking statements" within the meaning of federal securities regulations. All forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual transactions, results, performance or achievements to be materially different from any future transactions, results, performance or achievements expressed or implied by such forward-looking statements. General economic conditions, competition, and governmental actions will affect future transactions, results, performance, and achievements. These risks are presented in detail in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the Company's expectations will be attained or that any deviations will not be material. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. Operating Statistics Three Months Ended June 30, Room Nights Available Occupancy Rate Brand 2005 2004 2005 2004 Jameson Inns (1) 499,833 473,564 62.2 % 59.2 % Signature Inns (1) 120,848 153,699 43.1 % 44.2 % Combined Brands (1) 620,681 627,263 58.5 % 55.5 % Discontinued Operations 76,919 88,361 45.8 % 39.6 % Three Months Ended June 30, Average Daily Rate RevPAR RevPAR Brand 2005 2004 2005 2004 Change Jameson Inns (1) $63.17 $59.53 $39.29 $35.24 11.5 % Signature Inns (1) $67.98 $67.36 $29.27 $29.76 (1.7)% Combined Brands (1) $63.86 $61.06 $37.34 $33.90 10.2 % Discontinued Operations $56.82 $57.35 $26.01 $22.70 14.6 % Six Months Ended June 30, Room Nights Available Occupancy Rate Brand 2005 2004 2005 2004 Jameson Inns (1) 961,533 951,342 57.8 % 55.9 % Signature Inns (1) 272,948 307,398 35.7 % 38.9 % Combined Brands (1) 1,234,481 1,258,740 52.9 % 51.7 % Discontinued Operations 160,799 182,182 37.8 % 34.7 % Six Months Ended June 30, Average Daily Rate RevPAR RevPAR Brand 2005 2004 2005 2004 Change Jameson Inns (1) $63.01 $58.81 $36.40 $32.85 10.8 % Signature Inns (1) $66.39 $66.01 $23.71 $25.66 (7.6)% Combined Brands (1) $63.51 $60.13 $33.59 $31.09 8.0 % Discontinued Operations $55.61 $55.90 $21.02 $19.39 8.4 % Three Months Ended June 30, Room Nights Available Occupancy Rate Brand 2005 2004 2005 2004 Converted Inns (2) 32,881 32,942 50.7 % 46.3 % Inns under renovation and conversion (3) 22,568 22,568 38.4 % 39.6 % Three Months Ended June 30, Average Daily Rate RevPAR RevPAR Brand 2005 2004 2005 2004 Change Converted Inns (2) $68.12 $70.31 $34.52 $32.57 6.0 % Inns under renovation and conversion (3) $68.19 $67.71 $26.16 $26.80 (2.4)% (1) Brand statistics reflect only owned hotels included in continuing operations. At June 30, 2005 there are five Signature Inns being held for sale and classified as discontinued operations. (2) The Signature Inn in Knoxville, Tennessee and the two Signature Inns in Louisville, Kentucky were converted and began operating as Jameson Inns on April 1, 2005. (3) Signature Inn in South Bend and Elkhart, Indiana were under renovation and conversion during the second quarter of 2005. Condensed Consolidated Balance Sheets June 30, 2005 December 31, (unaudited) 2004 Assets Current Assets: Cash and cash equivalents $10,384,040 $1,626,322 Restricted cash 668,737 1,745,171 Trade accounts receivable, net of allowance of $99,139 and $124,504 at June 30, 2005 and December 31, 2004, respectively 2,229,264 1,442,912 Other receivables 200,051 206,706 Prepaid expenses 1,099,488 554,105 Inventory 1,276,311 1,345,261 Total current assets 15,857,891 6,920,477 Operating property and equipment 348,553,330 350,763,365 Property and equipment held for sale 11,270,674 16,754,836 Less accumulated depreciation (90,547,551) (91,160,887) 269,276,453 276,357,314 Deferred finance costs, net 2,238,664 1,881,995 Other assets 664,756 976,554 Investment in Jameson Inns Financing Trust I 812,000 - Total assets $288,849,764 $286,136,340 Liabilities and Stockholders' Equity Current Liabilities: Current maturities of mortgage notes payable $54,154,292 $49,991,739 Line of credit borrowings 2,000 110,216 Accounts payable and accrued expenses 4,359,962 4,582,803 Accrued interest payable 889,596 830,368 Accrued property and other taxes 2,676,493 2,165,734 Accrued payroll 1,166,428 1,150,571 Total current liabilities 63,248,771 58,831,431 Mortgage notes payable, less current portion 118,258,865 147,737,940 Notes due Jameson Inns Financing Trust I 27,062,000 - Total liabilities 208,569,636 206,569,371 Stockholders' Equity Common stock, $0.10 par value, 100,000,000 shares authorized, 57,412,310 shares and 57,052,630 shares issued and outstanding at June 30, 2005 and December 31, 2004, respectively 5,741,231 5,705,263 Contributed capital 110,502,276 110,375,931 Unamortized deferred compensation (1,898,071) (1,819,158) Accumulated deficit (34,065,308) (34,695,067) Total stockholders' equity 80,280,128 79,566,969 Total liabilities and equity $288,849,764 $286,136,340 Condensed Consolidated Statements of Operations (unaudited) Three Months Ended Six Months Ended June 30, June 30, (unaudited) (unaudited) 2005 2004 2005 2004 Lodging revenues $23,431,926 $22,136,246 $41,953,857 $40,934,595 Other revenues 172,373 108,142 292,439 202,704 Total revenues 23,604,299 22,244,388 42,246,296 41,137,299 Direct lodging expenses 11,677,879 11,336,513 22,177,478 21,898,623 Property and other taxes and insurance 1,445,547 1,316,306 2,857,659 2,609,745 Depreciation 3,204,771 3,385,683 6,313,541 6,864,063 Corporate general and administrative 2,018,640 1,774,296 4,360,409 3,439,893 Total expenses 18,346,837 17,812,798 35,709,087 34,812,324 Income from operations 5,257,462 4,431,590 6,537,209 6,324,975 Interest expense 3,157,955 2,595,915 5,949,527 5,260,340 Early extinguishment of mortgage notes 219,644 - 219,644 9,419 Lease termination costs - - - 8,954,361 Gain on sale of property and equipment (4,374) (11,708) (4,374) (69,240) Income (loss) before income taxes and discontinued operations 1,884,237 1,847,383 372,412 (7,829,905) Deferred tax benefit due to change in taxable status - - - (1,397,672) Income tax expense (benefit) - 874,438 - (1,287,833) Net income (loss) from continuing operations 1,884,237 972,945 372,412 (5,144,400) Income (loss) from discontinued operations 280,654 12,966 (32,058) (579,526) Gain on sale of discontinued operations 289,405 - 289,405 252,547 Income tax benefit - (126,654) - (171,972) Net income (loss) from discontinued operations 570,059 139,620 257,347 (155,007) Net income (loss) 2,454,296 1,112,565 629,759 (5,299,407) Preferred stock dividends 1,667,169 3,334,359 Net income (loss) attributable to common stockholders $2,454,296 $(554,604) $629,759 $(8,633,766) Per common share (basic and diluted): Income (loss) from continuing operations attributable to common stockholders 0.03 (0.05) 0.01 (0.63) Income (loss) from discontinued operations 0.01 0.01 0.00 (0.01) Net income (loss) attributable to common stockholders $0.04 $(0.04) $0.01 $(0.64) Weighted average shares - basic and diluted 56,571,716 13,493,337 56,566,394 13,500,997 Consolidated Statements of Cash Flows Six Months Ended June 30, (unaudited) 2005 2004 Operating activities Net income (loss) from continuing operations $372,412 $(5,144,400) Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities: Depreciation 6,313,541 6,864,063 Amortization of deferred finance costs 276,125 423,689 Stock-based compensation expense 122,363 177,678 Early extinguishment of mortgage notes 219,644 9,419 Lease termination costs- non cash - 9,215,220 Gain on sale of property and equipment (4,374) (69,240) Deferred income tax benefit - (2,872,186) Changes in assets and liabilities increasing (decreasing) cash: Trade accounts receivable, net (786,352) (576,331) Other receivables 6,655 10,898 Prepaid expenses and other assets (343,018) (987,123) Inventory 68,950 36,834 Accounts payable and accrued expenses (262,320) (518,513) Accrued interest payable 102,928 (62,599) Accrued property and other taxes 510,759 565,362 Accrued payroll 15,857 165,738 Net cash provided by operating activities 6,613,170 7,238,509 Investing activities Reductions from restricted cash FF&E reserves 1,076,434 240,356 Proceeds from sale of land, property and equipment 5,586,752 4,621,471 Additions to property and equipment (4,796,034) (1,516,359) Net cash provided by investing activities 1,867,152 3,345,468 Financing activities Preferred stock dividends paid - (3,334,229) Proceeds from issuance of common stock 516 4,542 Proceeds from trust preferred securities offering, net of deferred finance costs 25,465,500 - Advances for mortgage note refinancing (200,000) - (Payments of) proceeds from lines of credit, net (108,216) 2,020,000 Payments of deferred finance costs (131,107) (196,959) Payoffs of mortgage notes payable (19,155,680) (4,499,592) Payments on mortgage notes payable (6,204,542) (5,101,102) Net cash used in financing activities (333,529) (11,107,340) Net cash provided by (used in) continuing operations 8,146,793 (523,363) Net cash provided by discontinued operations 610,925 178,657 Net change in cash 8,757,718 (344,706) Cash at beginning of period 1,626,322 3,549,083 Cash at end of period $10,384,040 $3,204,377 Reconciliation of Net Income (Loss) to EBITDA Three Months Ended Three Months Ended June 30, 2005 June 30, 2004 Dis- Dis- As Continuing continued As Continuing continued Reported Operations Operations Reported Operations Operations (dollars in thousands) (dollars in thousands) Net income (loss) attributable to common stockholders $2,454 $1,884 $570 $(555) $(694) $139 Depreciation 3,205 3,205 - 3,663 3,386 277 Interest expense 3,388 3,158 230 2,908 2,596 312 Income tax expense (benefit) - - - 748 874 (126) Preferred dividends - - - 1,667 1,667 - EBITDA $9,047 $8,247 $800 $8,431 $7,829 $602 The items listed below have not been included as adjustments in the above calculation of EBITDA: Gain on sale of property and equipment $(293) $(4) $(289) $(12) $(12) $- Early extinguishment of mortgage notes 220 220 - - - - Stock based compensation expense (income) (92) (92) - 105 105 - $(165) $124 $(289) $93 $93 $- Six Months Ended Six Months Ended June 30, 2005 June 30, 2004 Dis- Dis- As Continuing continued As Continuing continued Reported Operations Operations Reported Operations Operations (dollars in thousands) (dollars in thousands) Net income (loss) attributable $630 $373 $257 $(8,634) $(8,479) $(155) to common stockholders Depreciation 6,314 6,314 - 7,426 6,864 562 Lease termination costs - - - 8,954 8,954 - Interest expense 6,474 5,950 524 5,902 5,261 641 Income tax benefit - - - (2,857) (2,685) (172) Preferred dividends - - - 3,334 3,334 - EBITDA $13,418 $12,637 $781 $14,125 $13,249 $876 The items listed below have not been included as adjustments in the above calculation of EBITDA: Gain on sale of property and equipment $(293) $(4) $(289) $(322) $(69) $(253) Early extinguishment of mortgage notes 220 220 - 9 9 - Stock based compensation expense 122 122 - 178 178 - $49 $338 $(289) $(135) $118 $(253) The Company considers EBITDA to be an indicator of operating performance because it can be used to measure its ability to service debt, fund capital expenditures and expand its business. EBITDA is defined as income before interest expense, income tax expense, preferred stock dividends, depreciation and amortization and certain non-recurring items. The lease termination costs incurred in 2004 are considered "non-recurring" under relevant SEC guidelines. The Company uses EBITDA to measure the financial performance of its operations because it excludes interest, preferred dividends, income taxes, and depreciation, which bear little or no relationship to operating performance. EBITDA from continuing operations also excludes those items which relate to net income (loss) from discontinued operations. By excluding interest expense and preferred dividends, EBITDA measures financial performance irrespective of the Company's capital structure or how it finances its hotel properties and operations. By excluding income taxes, the Company believes EBITDA provides a basis for measuring the financial performance of its operations excluding factors that its hotels cannot control. By excluding depreciation expense, which can vary from hotel to hotel based on historical cost and other factors unrelated to the hotels' financial performance, EBITDA measures the financial performance of its operations without regard to their historical cost. For all of these reasons, the Company believes that EBITDA and EBITDA from continuing operations provide information that is relevant and useful in evaluating its business. However, because EBITDA excludes depreciation, it does not measure the capital required to maintain or preserve its fixed assets. In addition, because EBITDA does not reflect interest expense and preferred dividends, it does not take into account the total amount of interest paid on outstanding debt and preferred dividends nor does it show trends in interest costs due to changes in borrowings or changes in interest rates. EBITDA, as defined by the Company, may not be comparable to EBITDA as reported by other companies that do not define EBITDA exactly as the Company defines the term. Because the Company uses EBITDA to evaluate its financial performance, the Company reconciles it to net income (loss) (and in the case of EBITDA from continuing operations, to net income (loss) from continuing operations), which is the most comparable financial measure calculated and presented in accordance with GAAP. EBITDA does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income (loss) determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity. DATASOURCE: Jameson Inns, Inc. CONTACT: Investor Relations, Todd Atenhan, , or James Kautz, , both of EPOCH Financial, +1-888-654-5318 Web site: http://www.jamesoninns.com/

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