Rule 433 Prospectus

FWP 1 dfwp.htm RULE 433 PROSPECTUS Rule 433 Prospectus

March 2006

Filed Pursuant to Rule 433

Registration Nos. 333-119016

March 7, 2006

Jameson Inn –

Investor Presentation

Forward Looking Statement

Certain statements made during this presentation are forward-looking and

are subject to risks and uncertainties. The forward-looking statements

made are based on our beliefs, assumptions and expectations of future

performance, taking into account all information currently available to us.

Actual results could differ materially from the forward-looking statements

made during this presentation.

When

use

the

words

"believe,"

"expect,"

"anticipate,"

"plan,"

"will,"

"intend" or other similar expressions, we are identifying forward-looking

statements.

The forward-looking statements made during this presentation are subject

to the safe harbor of the Private Securities Litigation Reform Act of 1995.

We refer you to our filings with the Securities and Exchange Commission

for a more detailed discussion of the risks that may have a direct bearing

on our operating results, performance and financial condition.

This presentation is not an offer to sell or solicitation of offers to

buy any of our securities. Any such offers may be made only by

our prospectuses which may be obtained at,

https://enroll.jamesonstockawards.com/.

Ownership of our securities and participation in our Jameson Stock

Awards program involve certain risks which are discussed in our

prospectuses which may be obtained at,

https://enroll.jamesonstockawards.com/

and

our

other

filings

with

the Securities and Exchange Commission which may be seen at

http://SEC.gov

and

http://www.jamesoninns.com/

Founded by Thomas Kitchin, Chairman & CEO, in 1987

Brand owner and operator of economy and mid-scale hotels

–

Jameson Inns

•

Southeastern United States

•

95 owned hotels (5,736 guest rooms)

•

12 franchised hotels (479 guest rooms)

–

Signature Inns (12 being converted to Jameson Inns)

•

Midwestern United States

•

Portfolio acquired in 1999

•

14 owned hotels (1,592 guest rooms)

All hotel and room count numbers are as of December 31, 2005.

Overview of the Company

Geographic Locations –

121 Inns (7,807 rooms)

Diversified across the Southeastern and Midwestern United States

Distribution by Number of Inns

Mississippi, 6

Florida, 6

S. Carolina,

Tennessee,

Indiana, 12

N. Carolina,

Kentucky, 3

Louisana, 3

Ohio, 1

Virginia, 2

Illinois, 3

Georgia, 31

Alabama, 18

Experienced management team with significant ownership stake

Committed to outstanding customer service

Strong and growing proprietary brand name

Significant opportunities for growth

Most unique loyalty program in industry

Keys to our Success

Executive Management

18 years Lodging Industry experience on average

Chief Accounting Officer &

Treasurer

Martin D. Brew

W. David Vining

D. Anthony Maness

Steven A. Curlee

Craig R. Kitchin

Thomas W. Kitchin

Name

VP –

Marketing

VP –

Operations

VP –

Legal & General Counsel

President & Chief Financial

Officer

Chief Executive Officer

Title

Years in

Lodging

Industry

Years with

Company

Senior management beneficially owns approximately 6% of the

common stock.

Commitment to Customer Satisfaction

Jameson Inns ranked #1 in overall customer satisfaction for Economy

Chains (2005, 2004 and 2003)

Source: Market Metrix, 2005. Customer Satisfaction Scores Listed are for Annual 2005

: Market Metrix, 2005. Customer Satisfaction Scores Listed are for Annual 2005

“Perfect Stay Guarantee”

offered to every guest

–

Room charge refunded for unsatisfied guests

88.4

83.6

83.0

81.9

79.1

75.0

80.0

85.0

90.0

Jameson

Inns

Hampton Inn

Fairfield Inn

Holiday Inn

Express

Comfort Inn

Growth Opportunities –

Maximizing the Jameson Inn Brand

Major Capital Investment Program

Jameson Inn Conversions

Jameson Stock Awards

Strong network in smaller markets in Southeast. Infill opportunities in larger

markets.

New development or selective property acquisition to re-brand.

5,604

6,215

6,845

7,544

5,000

6,000

7,000

8,000

2004

2005

2006

2007

Anticipated Rooms Growth due to Conversions

2004

2005

2006

2007

Knoxville, TN (Jameson Inn) –

After Conversion

Louisville East, KY -

Lobby

Louisville East, KY –

Front Desk

Louisville East, KY -

Pool

Elkhart, IN -

Front Desk

South Bend, IN –

Lobby

Indianapolis (Castleton), IN -

Vanity

Indianapolis (Castleton), IN –

King Size Bedroom

Creating the Most Unique Loyalty Program in the Industry

Launched July 1, 2005 –

9,300 members in 49 states since inception.

Members receive common stock as a result of staying at any of our hotels.

Driving business with Jameson Stock Awards Program.

Aligning the brand, shareholders and customers.

10%

14%

20%

21%

10%

15%

20%

25%

July

Aug

Sept

Oct

Nov

Dec

Results of RevPAR Growth for Continuing Operations

Revenue Growth

Financial Overview

RevPar for All Inns

$27.69

$27.82

$29.30

$33.27

$33.47

$36.96

$33.85

$35.21

$38.38

$27.82

$29.02

$34.16

$27

$29

$31

$33

$35

$37

$39

RevPAR

for All Inns

2003

2004

2005

Recent RevPAR Trending

Jameson Inns have demonstrated improving performance

27.9% RevPAR increase from Q4 ’03 to Q4 ’05 for Jameson Inns

$23.57

$29.38

$27.82

$22.03

$31.66

$29.02

$19.50

$37.55

$34.16

$18.00

$23.00

$28.00

$33.00

$38.00

Q4-2003

Q4-2004

Q4-2005

Signature Brand

Jameson Brand

All Inns

Jameson Brand Occupancy (Last three 4th Quarters)

50.6%

50.7%

57.3%

50.0%

52.0%

54.0%

56.0%

58.0%

Q4'03

Q4'04

Q4'05

Fourth Quarter Occupancy

Jameson Brand Average Daily Rate

The Jameson brand has achieved significant growth in ADR

$58.40

$58.35

$58.56

$58.05

$58.00

$59.48

$61.34

$62.43

$62.80

$63.20

$63.69

$65.50

$55.00

$56.00

$57.00

$58.00

$59.00

$60.00

$61.00

$62.00

$63.00

$64.00

$65.00

Q1'03

Q2'03

Q3'03

Q4'03

Q1'04

Q2'04

Q3'04

Q4'04

Q1'05

Q2'05

Q3'05

Q4'05

ADR Jameson brand

Jameson Brand RevPAR Growth

Significant RevPAR growth driven by improving occupancy & ADR

18.6% year –

over –

year RevPAR growth as of most recent quarter

2.6%

-0.4%

3.4%

1.0%

3.0%

2.4%

8.9%

7.8%

9.2%

11.5%

11.4%

18.6%

-2.0%

1.0%

4.0%

7.0%

10.0%

13.0%

16.0%

19.0%

Q1'03

Q2'03

Q3'03

Q4'03

Q1'04

Q2'04

Q3'04

Q4'04

Q1'05

Q2'05

Q3'05

Q4'05

Year - Over - Year RevPAR Growth

Jameson Brand Gaining Momentum

Jameson Brand RevPar index 2005

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2005

* RevPAR Index provided by Smith Travel Research

Potential Upside With Conversions to Jameson Brand

Signature Brand RevPar Index 2005

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2005

* RevPAR Index provided by Smith Travel Research

Market Penetration After Conversion is Increasing

Average RevPar Index for 3 inns converted April 1, 2005

100

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2005

* RevPAR Index provided by Smith Travel Research

Market Penetration After Conversion is Increasing

* RevPAR Index provided by Smith Travel Research

Average RevPAR Index for 2 inns converted October 1, 2005

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2005

Capital Structure, Leverage & Coverage Statistics

12/31/2005

12/31/2004

($ in millions)

Capital Structure

Equity Market Capitalization

123.6

(1)

112.4

(1)

Net Debt

192.3

196.2

Enterprise Value

315.9

308.6

Leverage

Net Debt / Enterprise Value

60.9%

63.6%

Net Debt / Adjusted EBITDA

6.7

7.4

(1) based on stock price of $2.15 and $1.97 as of close on December 31, 2005 and 2004,respectively

Schedule of Indebtedness

Average

Amount

Range of

Interest

at 12/31/05

Maturity

Rate

($ in millions)

Variable Rate Debt

$94.1

2006 to 2019

6.6%

Fixed Rate Debt

98.4

2010 to 2035

7.4%

Total Long-Term Debt

$192.5

7.0%

EBITDA * Detail at December 31,

2005

2004

2005

2004

Net Income (Loss)

(1,582)

(5,001)

440

(27,350)

Depreciation

4,320

3,269

14,824

13,874

Interest Expense

3,586

2,598

12,970

10,586

Income Tax Expense

3,320

EBITDA

6,324

4,186

28,234

(2,890)

The items listed below have not been

included as adjustments in the above

calculation of EBITDA:

Gain on sale of property and equipment

(15)

(34)

(19)

(767)

Early extinguishment of mortgage notes

385

Lease termination costs

8,954

Impairment losses

769

Preferred dividends

4,372

Loss on redemption of preferred stock

15,955

Adjusted EBITDA

6,310

4,186

28,600

26,459

* See Apendix A for definition of EBITDA

* Continuing Operations Hotels Only

Three Months Ended

For the Year Ended

($ in thousands)

Appendix A -

EBITDA

We use EBITDA to measure the financial performance of our operations because it excludes

interest, income taxes, depreciation and amortization, which bear little or no relationship to our

hotel

operating

performance.

EBITDA

defined

income

before

interest

expense,

income

tax

expense, depreciation and amortization.

This information should not be considered as an alternative to any measure of performance as

promulgated under GAAP, nor should it be considered as an indicator of our overall financial

performance. Our calculations of EBITDA may be different from the calculation used by other

companies and, therefore, comparability may be limited.

Adjusted EBITDA is a non-GAAP measure and should not be used as a substitute for measures

such

net

income

(loss),

cash

flows

from

operating

activities,

other

measures

computed

accordance with GAAP. The Company uses Adjusted EBITDA to measure its performance and

to assist in the assessment of hotel property values. Adjusted EBITDA is also a widely used

industry measure which the Company believes provides pertinent information to investors and is

an additional indicator of the Company’s operating performance. The Company defines

Adjusted EBITDA as EBITDA excluding the effects of certain charges such as gains and losses

related to the sale of Inns, gains and losses related to early extinguishment of debt, losses on

impairment of real estate, costs related to the acquisition of Kitchin Hospitality, preferred

dividends, and the cost of redemption of preferred stock.