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Jameson Inns, Inc. (NASDAQ:JAMS), a leading hotel company, and owner and operator of Jameson Inn and Signature Inn hotels, today announced financial results for the quarter ended March 31, 2004.
Strategic Restructuring and Acquisition Completed during Quarter
On January 2, 2004, the Company acquired Kitchin Hospitality, LLC, the operating company that leased and operated all of the hotel properties ("Inns") owned by Jameson Inns, Inc. The Company is now able to operate its Inns and directly receive the financial benefits from those operations, as well as engage in other related activities such as franchising. Effective January 1, 2004, the Company relinquished its status as a real estate investment trust for federal income tax purposes and became a taxable C- corporation.
As a result of the acquisition of Kitchin Hospitality, lease buy-out costs of approximately $9.0 million were expensed in the first quarter 2004. As a REIT, the Company did not record income taxes or related deferred taxes for financial reporting purposes. The Company recorded a deferred tax benefit of approximately $1.4 million to establish its initial deferred tax asset resulting from the difference in basis of its assets and liabilities for financial reporting and income tax purposes as a result of the change in taxable status.
Effective January 1, 2004, Jameson Inns, Inc. reports the revenue and expenses of the hotel operations rather than the lease revenues it historically received from Kitchin Hospitality. For comparison purposes, the first quarter 2003 unaudited pro forma statement of operations is presented in this release.
First Quarter 2004 Results
The Company reported a net loss from continuing operations attributable to the common stockholders of ($8,079,162) or ($0.60) per share for first quarter 2004 versus a net loss of ($2,282,420) or ($0.20) per share of common stock for pro forma first quarter 2003.
Lodging revenues for the first quarter 2004 were $20,318,445 versus pro forma lodging revenues of $20,119,380 for the first quarter 2003 as a result of the following:
- Combined revenue per available room (RevPAR) for all of the Company's
owned Inns, including Inns reported as discontinued operations, was up
$0.27 or 1.0%, to $26.74 for first quarter 2004 from $26.47 for first
quarter 2003, due to an increase in occupancy to 45.6% in first quarter
2004 from 45.1% in first quarter 2003, offset slightly by a $0.07
decrease in average daily rate to $58.64 from $58.71.
- RevPAR for the Jameson Inn brand increased 3.0%, to $30.37 for first
quarter 2004 from $29.47 for first quarter 2003, resulting from an
increase in occupancy to 52.4% from 50.5%, offset partially by a $0.43
decrease in average daily rate to $57.93 from $58.36.
- RevPAR for the Signature Inn brand decreased 6.0% to $19.58 for first
quarter 2004 compared to $20.89 for first quarter 2003, due to a
decrease in occupancy to 32.1% from 35.0%, offset by a $1.28 increase
in average daily rate to $60.93 from $59.65.
Thomas W. Kitchin, Jameson Inns' Chairman and Chief Executive Officer, said, "We are pleased to have completed the restructuring transaction and have the related costs behind us. The Company is properly positioned to take advantage of an improving economy and favorable industry dynamics. Management's interests are now completely aligned with the common shareholders. We are now a fully integrated hotel company and management owns over 21% of the outstanding common shares."
EBITDA
The Company considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures and expand its business. EBITDA is defined as income before interest expense, income tax expense, depreciation and amortization and certain non-recurring items. The lease termination costs incurred in the three months ended March 31, 2004 meet the definition of "non-recurring" in relevant SEC guidelines.
This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States, nor should it be considered as an indicator of our overall financial performance. The Company's calculation of EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.
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