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 June 30, 1996.
[ ] 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 0-22562
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
<S> <C>
Indiana 35-1880120
- --------------------------------------- ---------------------------
(State of Incorporation) (I.R.S. Identification No.)
9202 North Meridian Street
Indianapolis, IN 46260
- --------------------------------------- ---------------------------
(Addres of principal executive offices) (Zip Code)
(317)843-9514
- ---------------------------------------
(Telephone Number)
</TABLE>
Indicate by check mark whether the registrant (1) has filed all documents and
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
There were 6,105,708 Common shares outstanding as of August 13, 1996.
<PAGE>
11
CROSSMANN COMMUNITIES, INC.
FORM 10-Q
INDEX
Part I. Financial Information.
Item 1. Financial Statements.
Consolidated balance sheets as of June 30, 1996 (unaudited) and
December 31, 1995.
Consolidated unaudited statements of income for the three months
ended June 30, 1996 and 1995, and six months ended
June 30, 1996 and 1995.
Consolidated unaudited statements of cash flows for the six months
ended June 30, 1996 and 1995.
Notes to consolidated unaudited financial statements for the six
months ended June 30, 1996 and 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Part II. Other Information
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
Signatures.
<PAGE>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
June 30, 1996 December 31, 1995
(unaudited)
---------------
ASSETS
Cash and cash equivalents $ $ 5,232,950
Retainages 1,672,820 604,973
Real estate inventories 92,310,657 69,682,696
Furniture and equipment, net 2,920,299 1,310,259
Investments in joint ventures 1,779,988 1,172,289
Goodwill, net 3,020,496 2,898,722
Other assets 4,400,717 3,052,587
--------------- ------------------
Total assets $ 106,104,977 $ 83,954,476
=============== ==================
Liabilities and shareholders' equity
Accounts payable $ 17,485,483 $ 10,304,193
Accrued expenses and other liabilities 5,049,344 3,966,255
Notes payable 35,333,878 25,472,321
--------------- ------------------
Total liabilities 57,868,705 39,742,769
Shareholders' equity:
Common shares 24,059,879 24,028,879
Retained earnings 24,176,393 20,182,828
--------------- ------------------
Total shareholders' equity 48,236,272 44,211,707
--------------- ------------------
Total liabilities and shareholders' equity $ 106,104,977 $ 83,954,476
=============== ==================
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
------------ ------------ ------------ ------------
Sales of residential real estate $45,240,555 $37,747,174 $82,809,121 $62,407,324
Cost of residential real estate sold 35,809,354 30,078,060 65,845,422 49,808,157
------------ ------------ ------------ ------------
Gross profit 9,431,201 7,669,114 16,963,699 12,599,167
Selling, general and administrative 5,235,159 4,007,946 10,347,450 7,486,105
------------ ------------ ------------ ------------
Income from operations 4,196,042 3,661,168 6,616,249 5,113,062
Other income, net 189,499 87,164 424,437 205,320
Interest expense (172,268) (142,773) (380,271) (200,711)
------------ ------------ ------------ ------------
17,231 (55,609) 44,166 4,609
------------ ------------ ------------ ------------
Income before income taxes 4,213,273 3,605,559 6,660,415 5,117,671
Income taxes 1,589,561 1,448,804 2,666,850 2,060,834
------------ ------------ ------------ ------------
Net income $ 2,623,712 $ 2,156,755 $ 3,993,565 $ 3,056,837
============ ============ ============ ============
Weighted average number of common 6,102,122 6,070,000 6,094,110 6,070,000
shares outstanding
Net income per common share .43 .36 .66 .50
============ ============ ============ ============
<FN>
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<S> <C> <C>
SIX MONTHS ENDED JUNE 30,
---------------------------
1996 1995
--------------------------- -------------
Operating activities:
Net Income $ 3,993,565 $ 3,056,837
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 248,919 154,288
Amortization (121,774) 80,848
Gain on sale of equipment (3,880)
Cash provided (used) by changes in:
Retainages (1,067,847) (244,178)
Real estate inventories (22,627,961) (11,747,132)
Amounts due from related parties (213,778)
Other assets (1,134,352) (512,495)
Accounts payable 7,182,855 2,553,972
Amounts due to related parties 1,410
Accrued expenses and other liabilities 1,080,114 1,381,928
--------------------------- -------------
Net cash used by operating activities (12,662,729) (5,275,932)
Investing activities:
Purchases of furniture and equipment (1,862,079) (610,184)
Proceeds from disposition of furniture and equipment 7,000
Investments in joint ventures (607,699) (400,169)
--------------------------- -------------
Net cash used by investing activities (2,462,778) (1,010,353)
Financing activities:
Proceeds from bank borrowings 34,250,000 31,851,810
Principal payments on bank borrowings (24,517,223) (25,565,525)
Payments on notes and long-term debt 128,780
Proceeds from sale of common shares 31,000
---------------------------
Net cash provided by financing activities 9,892,557 6,286,285
--------------------------- -------------
Net increase (decrease) in cash and cash equivalents (5,232,950)
Cash and cash equivalents at beginning of period 5,232,950
---------------------------
Cash and cash equivalents at end of period $ $
=========================== =============
<FN>
See accompanying notes.
</TABLE>
CROSSMANN COMMUNITIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
Crossmann Communities, Inc. ("Crosmann" or the "Company") is engaged
primarily in the development, construction, marketing and sale of new
single-family homes for first time and first move-up buyers. The Company also
acquires and develops land for construction of such homes and originates
mortgage loans for the buyers. The Company operates in Indianapolis, Ft.
Wayne, and Lafayette, Indiana; Cincinnati, Columbus, and Dayton, Ohio; and
Louisville, Kentucky.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, the unaudited consolidated financial statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the Company, all adjustments (consisting of normal, recurring
adjustments) considered necessary to present fairly the consolidated financial
statements have been included.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," which is effective for the Company beginning January 1, 1996.
SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25,
which recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to
its stock-based compensation awards to employees and will disclose the
required pro forma effect on net income and earnings per share.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Company's business and the homebuilding industry in general are subject to
changes in economic conditions, including, but not limited to, employment
levels, interest rates, the availability of credit, and consumer confidence.
The Company's success over the past several years has been influenced by a
variety of factors including favorable economic conditions in its principal
markets, the availability of capital for expansion, and low interest rates.
To the extent these conditions do not continue, the Company's operating
results may be adversely affected.
The Company's business is subject to weather-related seasonal factors that can
affect quarter-to-quarter results of operations. The number of sales
contracts signed tends to be higher during the first four months of the year,
creating a backlog that declines during the second half of the year. A home
is included in "backlog" upon execution of a sales contract by the customer,
and sales and cost of sales are recognized when the title is transferred and
the home is delivered to the buyer at "closing." Adverse weather conditions
during the first and second quarters of the year usually restrict site
development work, and construction limitations generally result in fewer
closings during this period. (The Company attempts to mitigate the effect of
winter weather by building an inventory of foundations during the fall.)
Results of operation during the first half of the year may reflect increased
costs associated with adverse weather.
In January 1996, Crossmann began marketing homes in Dayton, Ohio. In January
1996 Crossmann also began marketing new homes in several cities in southern
Indiana from its new office in Columbus, Indiana. In April, Crossmann began
marketing new homes is Louisville, Kentucky.
On April 26, 1996, the Company closed on an asset purchase of substantially
all the assets of Tom Peebles Builders, Inc., ("Peebles") a Dayton
homebuilder. Peebles' assets consist principally of land, model homes, and
houses under construction and were acquired for approximately $4 million.
The Company hired substantially all the employees of Peebles and assumed its
rights and obligations under purchase agreements with 50 Peebles' customers
and in two land development joint ventures. The acquisition added
approximately 450 lots to Crossmann's lot inventory in Dayton. The
transaction was not material in relation to the Company's assets, sales, or
income.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1995
Results of Operations
Sales for the three months ended June 30, 1996 increased approximately $7.5
million, or 19.85%, over the same period in 1995. This increase reflects more
homes closed (411 homes in 1996 as compared to 347 in 1995) and higher selling
prices ($110,000 per home for the period in 1996 as compared to approximately
$108,800 in 1995). Management attributes the increase in unit closings
principally to higher closings in Columbus and Cincinnati, Ohio and to
closings generated in new markets Dayton, Ohio and Southern Indiana.
Increased Ohio production also causes a higher average selling price, since
homes sold by the Company in Ohio more frequently have basements (as a result
a higher selling price) than homes sold in Indiana.
Gross profit increased approximately $1.8 million for the three months ended
June 30, 1996, over the same period the year before. Gross profit as a
percentage of sales increased to 20.85% in 1996 from 20.32% in 1995. This
variation in gross profit is due principally to a greater proportion of homes
built on Crossmann's internally developed lots, and a higher capture rate for
Crossmann Mortgage Corp.
Selling, general and administrative expenses increased $1.2 million during the
three months ended June 30, 1996 compared to the same period in 1995, due in
part to sales commissions on the higher sales and increased overhead related
to the Company's new markets. Selling, general and administrative expenses
increased as a percentage of sales, from 10.62% to 11.57%.
Other income increased $102,335 for the three months ended June 30, 1996
compared to the same period the year before. Although interest expense was
greater during the three month period ended June 30, 1996 as compared to the
same period in 1995, due to higher inventory levels, the increase was offset
by higher earnings from land development joint ventures during the three
month period ended June 30, 1996 compared to the same period ended 1995.
Income before income taxes for the three months ended June 30, 1996 increased
$607,714, to more than $4.2 million in 1996 from $3.6 million in 1996, an
increase of approximately 16.9%. This increase is due principally to
increased sales volume with partly fixed selling, general, and administrative
expenses. Income before income taxes as a percentage of sales decreased to
9.31% of sales in 1996 compared to 9.55% in 1995.
Net income was $466,957 higher for the second quarter of 1996 than for the
second quarter of 1995, an increase of 21.7%. As a percentage of sales, net
income was 5.80% in 1996 compared to 5.71% for the same period in 1995.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995.
Sales for the six months ended June 30, 1996 increased approximately $20.4
million, or 32.7%, over the same period in 1995. This increase reflects more
homes closed (765 homes in 1996, compared to 581 in 1995) and higher
selling prices (approximately $108,250 per home for the period in 1996,
compared to approximately $107,400 in 1995). Management attributes both
increases to the contribution of sales by the new divisions and by stronger
sales in Ohio.
Gross profit increased approximately $4.4 million for the six months ended
June 30, 1996, over the same period the year before. Gross profit as a
percentage of sales increased to 20.5% in 1996 compared to 20.2% in 1995.
This variation in gross profit is due principally to a greater proportion of
homes built on Crossmann's internally developed lots, and a higher capture
rate for Crossmann Mortgage Corp.
Selling, general and administrative expenses increased approximately $2.9
million during the six months ended June 30, 1996 compared to the same period
in 1995, due principally to sales commissions on the higher sales volume and
to higher advertising and administrative expenses associated with the
Company's new divisions. Selling, general and administrative expenses as a
percentage of sales increased from 12.0% in 1995 to 12.5% in 1996.
Other income increased $39,557 for the six months ended June 30, 1996, due
primarily to higher income from land development joint ventures than in the
same period the year before. Interest expense was higher in 1996 than in
1995 because of higher overall borrowing levels necessitated by higher
investments in land and homes under construction.
Income before income taxes for the six months ended June 30, 1996 increased
$1.5 million from approximately $5.1 million in 1995 to approximately $6.7
million in 1996, an increase of 30.1%. This increase is due primarily to
higher gross margins. Income before income taxes as a percentage of sales
decreased to 8.0% of sales in 1996 compared to 8.2% in 1995.
Net income increased 30.6% , from approximately $3.1 million in the first six
months of 1995 to approximately $4 million in the first half of 1996.
Backlog
The Company generally builds only upon the execution of a sales contract by a
customer and after approval of financing, although it also builds a limited
number of homes on speculation. The standard sales contract used by the
Company provides for an earnest money deposit of $1,000. The contract usually
includes a termination provision under which the earnest money is refunded in
the event that mortgage financing is not available on terms specified in the
contract, and may include other contingencies. Cancellations by buyers with
approved financing occur infrequently.
Sales backlog at June 30, 1996 was 1,481 homes with an aggregate sales value
of approximately $158 million, compared to 978 homes with an aggregate sales
value of approximately $102.5 million at June 30, 1995, an increase of over
51%. This increase reflects a higher year-end backlog (757 at December 31,
1995 compared to 345 at December 31, 1994) and strong sales in the first half
of 1996 (1,490 new contracts written in the first half of 1996 compared to
1,214 in 1995, an increase of 22.7%). Management attributes the strong sales
improvement to the fact that it offers homes in more markets in 1996, but also
to an effective marketing campaign undertaken during the first quarter of
1996. Crossmann also added 50 sales through its acquisition of Peebles in
April 1996.
Changes in Financial Position
Income from operations and new borrowings on the line of credit were used
primarily to finance real estate inventories, which increased approximately
$22.6 million or 32.5% from December 31 ,1995 . The expansion in inventory
during the first half of 1996 is a normal seasonal trend. Winter weather
slows closings but does not prevent work on houses under construction from
continuing; therefore, investment in inventory generally grows during the
first half of the year.
Retainages increased $1,067,847 in the first half of the year, or 177%. This
increase is also seasonal. Mortgage companies retain escrows for the
completion of exterior landscape items. As weather permits, yards will be
completed and retainages will be released to the Company during the second and
third quarters of the year.
Furniture and equipment, net increased approximately $1.6 million dollars or
123%. The increase is principally attributable to the purchase of an aircraft
for use in the management of the Company. In March, Crossmann purchased a
1982 King Air B200 for $1.295 million . The Company formed a wholly-owned
subsidiary, Deluxe Aviation, Inc., to hold and manage the aircraft, which will
be available for outside charter when it is not being used for company
business.
Notes payable increased approximately $9.9 million during the first six months
of 1996 as the line of credit was employed to increase inventories.
Capital Resources and Liquidity
On December 22, 1995, the Company issued senior notes pari passu with its
senior bank facility, in the amount of $25 million, to be repaid over nine
years at a fixed interest rate of 7.625%. The note agreement requires
compliance with certain financial and operating covenants and places certain
limitations on the Company's investments in land and in unconsolidated joint
ventures. It also limits payments of cash dividends by the Company.
Concurrent with the issuance of the notes, the Company also renegotiated its
$40 million credit agreement with Bank One, Indianapolis N.A. to permit the
issuance of the notes, streamline the covenants, and to extend the maturity of
the banks' credit agreement to March 31, 1998. To finance inventory expansion
during the second quarter, the Company used its available cash and, at June
30, 1996, had drawn funds on its bank line of credit in the amount of
$9,732,777.
The Company's financing needs depend on land acquisition, inventory turnover
and sales volume. Historically, the Company has financed operations with the
retention of earnings and borrowings from financial institutions. Management
believes future financing needs will be funded by internally generated
capital, funds available under the existing credit arrangement, and additional
financing to be negotiated.
FUTURE TRENDS
Record snow and rain in central Indiana, Ohio and northern Kentucky in 1996
have caused unusual delays in scheduled land development and construction.
The Company's field personnel have met production schedules successfully thus
far; nevertheless, significantly higher level s of production over normal
levels are necessary for the second half of the year. Management believes
most of its backlog can be closed as scheduled, but there can be no certainty
in which quarter closings will occur.
Customers who qualify for mortgage loans are contractually obligated to close,
regardless of weather or production delays. The Company is working closely
with customers to set realistic expectations about closing dates.
<PAGE>
PART II. OTHER INFORMATION
The following items for which provision is made in the applicable regulations
of the Securities and Exchange Commission are not required under the related
explanations or are inapplicable and therefore have been omitted:
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submissions of Matters to a Vote of Security Holders.
The Company held its annual meeting of shareholders on May 22, 1996. Present
at the meeting either in person or by proxy were 5,538,076 shares of the
Company's common stock, representing 91% of the total shares outstanding. At
the meeting, the shareholders approved an amendment to the Company's Employee
Stock Option Plan to increase the number of shares authorized for issuance
thereunder from 300,000 shares to 600,000 shares. Of the shares present in
person or by proxy, 5,557,843 voted for approval to this amendment. In
addition, 5,534,605 of the shared present in person or by proxy voted in favor
of the candidates for election to the Company's Board of Directors, and
5,628,130 of the shares present in person or by proxy voted in favor of the
ratification of Deloitte & Touche, LLP as the Company's independent
accountants for the year ended December 31, 1996.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C>
Exhibit Description of Exhibit
Number
3.1 Amended and restated Articles of Incorporation of Crossmann Communities,
Inc. (Incorporated by reference to Exhibit 3.1 to Form S-1 Registration
Statement No. 33-68396.)
3.2 Bylaws of Crossmann Communities, Inc. (Incorporated by reference to Exhibit
3.2 to Form S-1 Registration Statement No. 33-68396.)
4.1 Specimen Share Certificate for Common Shares. (Incorporated by reference to
Exhibit 2.9 to Form S-1 Registration Statement No. 33-68396.)
10.1 Tax Indemnification Agreement dated September 1, 1993, among Crossmann
Communities, Inc., John B. Scheumann and Richard H. Crosser, as sole trustee
of the Richard H. Crosser Living Trust. (Incorporated by reference to Exhibit
10.1 to Form S-1 Registration Statement No. 33-68396.)
10.2 1993 Outside Director Stock Option Plan. (Incorporated by reference to Exhibit
10.2 to Form S-1 Registration Statement No. 33-68396.)
10.3 1993 Employee Stock Option Plan. (As amended as of May 22, 1996.)
10.37 Note Agreement dated as of December 19, 1995, $25,000,000 7.625% Senior
Notes due December 9, 2004, by Crossmann Communities, Inc., et al.
(Incorporated by reference to Exhibit 10.37 to From 10-K dated March 18,
1996.)
10.38 7.625% Senior Note due December 19, 2004, issued to Combined Insurance
Company by Crossmann Communities, Inc., et al. (Incorporated by reference to
Exhibit 10.38 to Form 10-K dated March 18, 1996.)
10.39 7.625% Senior Note due December 19, 2004, issued to Minnesota Mutual Life
Insurance company by Crossmann Communities, Inc., et al. (Incorporated by
reference to Exhibit 10.39 to Form 10-K dated March 18, 1996.)
10.40 Amended and Restated Credit Agreement, dated December 22, 1995, by and
between Crossmann Communities, Inc., et al. and Bank One, Indianapolis N.A.
(Incorporated by reference to Exhibit 10.40 to Form 10-K dated March 18,
1996.)
10.41 Asset Purchase Agreement, dated April 26, 1996, by and among Crossmann
Communities, Inc., Crossmann Communities of Ohio, Inc., Tom Peebles
Builders, Inc., and Thomas H. Peebles. (Incorporated by reference to Exhibit
10.41 to Form 10-Q dated May 13, 1996.)
10.42 Employment contract dated April 26, 1996, by and among Crossmann
Communities Inc., Crossmann Communities of Ohio, Inc., and Thomas H.
Peebles. (Incorporated by reference to Exhibit 10.42 to Form 10-Q dated May
13, 1996.)
11.2 Computation of Per Share Net Income for the quarter ended June 30, 1996.
19.1 Lease by and between Pinnacle Properties LLC ("Landlord") and Crossmann
Communities, Inc. (Tenant"), 9202 North Meridian Street, Suite 300,
Indianapolis, Indiana 46260, executed April 18, 1994. (Incorporated by
reference to Exhibit 19.1 to Form 10-Q dated August 12, 1994.)
21.2 Amended subsidiaries of the registrant, dated March 28, 1996.
27.2 Financial Data Schedule for the quarter ended June 30, 1996.
</TABLE>
(b) Reports on Form 8-K.
No Reports on Form 8-K were filed during the quarter for which this
report is filed.
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.
CROSSMANN COMMUNITIES, INC.
/s/ Jennifer A. Holihen
- ------------------------------
Jennifer A. Holihen
Director; Chief Financial Officer;
Treasurer; Secretary
(Principal Financial and Accounting Officer)
Dated: August 13, 1996
<PAGE>
CROSSMANN COMMUNITIES, INC.
EMPLOYEE STOCK OPTION PLAN
(as amended to reflect increase of shares available thereunder)
Crossmann Communities, Inc. (the "Company") sets forth the following
terms of this Crossmann Communities, Inc. Employee Stock Option Plan
(hereinafter referred to as the "Plan"):
1. PURPOSE. The Plan is intended to advance the interests of the
Company by providing key employees of the Company or of any "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), or the
corresponding provisions of any subsequently enacted tax statutes, with an
opportunity to acquire or increase a proprietary interest in the Company,
which thereby will create a stronger incentive to expend maximum effort for
the growth and success of the Company and its subsidiaries, and will encourage
such individuals to remain in the employ or service of the Company or of one
or more of its subsidiaries. The Company and all such subsidiary corporations
are hereinafter collectively referenced from time to time as the "Employer."
Each stock option granted under the Plan is intended to be an "incentive stock
option," as defined in Code Section 422 or the corresponding provisions of any
subsequently enacted tax statutes, and any provision of the Plan which does
not comply with the requirements of Code Section 422 shall be inoperative;
provided, however, than an option is not intended to be an incentive stock
option to the extent that (i) any such option would exceed the limitations set
forth in Section 5, and (ii) any such option is specifically designated as
not being an incentive stock option.
2. ADMINISTRATION.
a. COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (hereinafter referred to as
the "Committee").
b. POWER AND AUTHORITY. The Committee shall have the full power
and authority to take all actions and make all determinations required or
provided for under the Plan, any option agreement, or any option granted under
the Plan; to interpret and construe the provisions of the Plan, any option
agreement, or any option granted under the Plan, which interpretation or
construction shall be final, conclusive, and binding on the Company, the
Employer, and the optionee; and to take any and all other actions and make any
and all other determinations not inconsistent with the specific terms and
provisions of the Plan which the Committee deems necessary or appropriate in
the administration of the Plan. The Committee may from time to time
prescribe, amend, and rescind rules and regulations applicable to the Plan.
c. ACTIONS AND DETERMINATIONS. The Committee may take action and
make determinations in the manner prescribed by the Board of Directors of the
Company, provided such action is permitted by the Articles of Incorporation
and Bylaws of the Company, the Indiana Business Corporation Law, as amended,
and all other applicable laws. A majority of the Committee shall constitute a
quorum for purposes of any action or determination by the Committee. All
actions and determinations of the Committee shall be made by an affirmative
vote by not less than a majority of its members.
d. NO LIABILITY. No member of the Committee shall be liable for
any action or determination made by the Committee or by such member in good
faith.
3. ELIGIBILITY
a. KEY EMPLOYEES. Only those persons who are key employees of the
Employer shall be eligible to participate in the Plan. The Committee shall
determine from time to time the particular employees of the Employer who are
"key employees" of the Employer and who shall be eligible to participate in
the Plan, and the terms and extent of their participation in the Plan.
b. 10% SHAREHOLDERS. No option shall be granted under the Plan to
any key employee of the Employer who, at the time such option is granted, owns
shares possessing more than 10% of the total combined voting power of all
classes of shares of the Company or of any parent corporation of the Company
(as defined in Code Section 424(e)) or subsidiary corporation of the Company
(such employee being hereinafter referred to as "10% Shareholder"), except as
expressly provided below. In determining whether the percentage limitations
of this Section 3(b) are met, an employee shall be considered as owning any
shares owned, directly or indirectly, by or for his or her brothers or sisters
(whether by the whole or half blood), spouse, ancestors, lineal descendants,
or by reason of any other relationships as contemplated by Code Section
422(b)(6). For purposes of this Section 3(b), shares owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust shall be
considered as being owned proportionately by or for its shareholders,
partners, or beneficiaries. The percentage limitations of this Section 3(b)
shall not apply, however, if at the time such option is granted the option
price is at least 110% of the fair market value of the shares subject to the
option and such option by its terms is not exercisable after the expiration of
five years from the date such option is granted.
4. SHARES. The shares subject to the options and other provisions
of the Plan shall be shares of the Company's authorized but unissued, or
reacquired, Common Shares (the "Common Shares"). The total number of Common
Shares with respect to which options may be granted shall not exceed in the
aggregate 600,000 Common Shares, except as such number of Common Shares shall
be adjusted in accordance with the provisions set forth in Section 6(g). In
the event any outstanding option under the Plan expires or is terminated in
whole or in part for any reason prior to the end of the period during which
options may be granted, the Common Shares allocable to the unexercisable
portion of such option may again be subject to an option granted under the
Plan. During the period that any options granted under the Plan are
outstanding, the Company shall reserve and keep available such number of
Common Shares as will be sufficient to satisfy all outstanding, unexercised
options.
5. MAXIMUM EXERCISE. The aggregate fair market value (determined
at the time the option is granted) of the Common Shares with respect to which
incentive stock options are exercisable for the first time by an employee
during any calendar year (under all such plans of the Company and its parent
and subsidiary corporations within the meaning of Code Section 422(d)) shall
not exceed $100,000. In the event the fair market value of the Common Shares
subject to such options exceeds $100,000, the options in excess of such amount
shall be deemed to be nonstatutory stock options, and the character of all
relevant options shall be determined by taking options into account in the
order in which they were granted.
6. TERMS AND CONDITIONS OF OPTIONS. Subject to the terms and
conditions set forth in the Plan, the Committee may grant options to any
eligible individuals upon such terms and conditions as the Committee shall
determine. The date on which the Committee approves the grant of an option
shall be considered the date on which such option is granted. Options granted
pursuant to the Plan shall be evidenced by option agreements in such form
consistent with the Plan as the Committee shall prescribe from time to time.
Option agreements covering options granted from time to time or at the same
time need not contain similar provisions so long as all such option agreements
are consistent with the Plan. Such option agreements shall state whether the
options issued thereunder are incentive stock options or non-statutory stock
options, and shall comply with and be subject to the following terms and
conditions:
a. MEDIUM AND TIME OF PAYMENT
i. In General. An option may be exercised by delivery of
payment of the purchase price of the Common Shares subject to an option
accompanied by a properly executed written notice of exercise and subscription
agreement in such form as prescribed by the Committee. The notice of exercise
shall specify the number of Common Shares with respect to which the option is
being exercised. The Committee may prescribe in the option agreement a
minimum number of Common Shares with respect to which an option may be
exercised, in whole or in part. Except as provided in Section 6(a)(ii),
payment in full of the purchase price of the Common Shares for which the
option is being exercised shall be made either (i) in cash or in cash
equivalents; (ii) through the tender to the Company of Common Shares or the
withholding of Common Shares subject to the option, which Common Shares shall
be valued, for purposes of determining the extent to which the purchase price
has been paid, at their fair market value on the date of exercise as
determined under Section 6(c); or (iii) by a combination of the methods
prescribed in (i) and (ii); provided, however, that the Committee may in its
discretion impose and set forth in the option agreement pertaining to an
option such limitations or prohibitions on the use of Common Shares to
exercise options as it deems appropriate. Any attempt to exercise an option
granted under the Plan other than as set forth in this Section 6(a) shall be
invalid and of no force and effect.
ii. Use of Brokers. The Committee may provide, by inclusion
of appropriate language in an option agreement, that payment in full of the
purchase price need not accompany the written notice of exercise and
subscription agreement provided the notice of exercise and subscription
agreement directs that the certificate or certificates for such Common Shares
for which the option is exercised be delivered to a licensed broker acceptable
to the Company as the agent for the individual exercising the option and, at
the time such certificate or certificates are delivered, the broker tenders to
the Company cash or cash equivalents acceptable to the Company equal to the
purchase price for such Common Shares purchased pursuant to the exercise of
the option plus the amount (if any) of federal and other taxes which the
Company may, in its sole judgment, be required to withhold with respect to the
exercise of the option.
iii. Issuance of Certificates. Promptly after the exercise of
an option and the payment in full of the purchase price of the Common Shares
subject to the option, the individual exercising the option shall be entitled
to the issuance of a certificate or certificates evidencing ownership of such
Common Shares. The Company may issue separate certificates for any Common
Shares purchased pursuant to the exercise of an option which is an incentive
stock option and for Common Shares purchased pursuant to the exercise of an
option which is not an incentive stock option.
b. NUMBER OF SHARES. The option agreement shall state the total
number of Common Shares which may be purchased pursuant to the option
agreement.
c. OPTION PRICE. The purchase price of each Common Share subject
to an option shall be fixed by the Committee at an amount per Common Share not
less than the fair market value per Common Share on the date of grant of the
option. In the case of options granted to an employee of the Employer who is
a 10% Shareholder, the purchase price of each Common Share subject to an
option shall be an amount per Common Share not less than 110% of the fair
market value per Common Share on the date of grant of the option. The fair
market value of the Common Shares subject to an option shall be determined by
the Committee in good faith in accordance with such procedures as the
Committee shall prescribe from time to time. The Committee shall consider
those factors which the Committee reasonably believes to be relevant in
determining the fair market value of the Common Shares. The option agreement
shall state the purchase price of the Common Shares subject to the option.
d. TERM OF OPTIONS. Each option granted under the Plan shall
expire within the period prescribed in the option agreement relating to the
option, which shall not be more than five years from the date the option is
granted if the optionee is a 10% Shareholder and not more than ten years from
the date the option is granted if the optionee is not a 10% Shareholder. The
option agreement shall state the date of the grant of the option.
e. TIME OF EXERCISE. The Committee may, in its discretion, provide
in an option agreement that an option granted under the Plan may not be
exercised in whole or in part until the expiration of such period or periods
of time as may be specified by the Committee; provided, however, that any such
limitation on the exercise of an option contained in an option agreement may
be rescinded, modified, or waived by the Committee, in its sole discretion, at
any time and from time to time after the date of grant of such option so as to
accelerate the time in which the option may be exercised. Except as
specifically restricted by the provisions of this Section 6(e) or by the
Committee in administering the Plan, any option may be exercised in whole or
in part at any time and from time to time during the period commencing with
the date of grant and ending upon the expiration or termination of the option.
Notwithstanding the preceding sentence, any person subject to Section 16 of
the Securities Act of 1934, as amended, who is granted an option shall not
exercise the option in whole or in part within the six month period
immediately following the date of grant unless the person agrees to hold the
securities acquired upon exercise until at least six months have elapsed from
the date of grant.
f. TERMINATION OF EMPLOYMENT
i. In General. Without limiting the applicability of Section
6(h), in the event an optionee shall cease to be employed by the Employer, a
parent corporation of the Employer, or a corporation or a parent corporation
or a subsidiary corporation of such corporation issuing or assuming an option
in a transaction to which Code Section 424(a) applies, all options outstanding
in the hands of the optionee shall terminate immediately as to any unexercised
portion thereof; provided, however, that the Committee, in its discretion,
subject to the provisions of Section 6(d) and Section 6(e), may permit a
terminated optionee to exercise any unexercised options, at any time within
three months after the effective date of the cessation of the optionee's
employment with respect to the Common Shares for which such options could have
been exercised (i) on the effective date of the cessation of employment, or
(ii) during the three month period following such effective date; provided
further, that if any cessation of employment is due to retirement with the
consent of the Employer or permanent and total disability (as defined in Code
Section 22(e)(3)), the optionee shall have the right, subject to the
provisions of Section 6(d) and Section 6(e), to exercise the option with
respect to the Common Shares for which it could have been exercised on the
effective date of cessation of employment, at any time within three months
after such cessation of employment due to retirement with the consent of the
Employer or at any time within twelve months after such cessation of
employment due to permanent and total disability.
ii. Death. In the event of the death of an employee while in
the employ of the Employer or within the period following termination of
employment during which the option remains exercisable under this Section
6(f), the employee's personal representative shall have the right, subject to
the provisions of Section 6(d) and Section 6(e), to exercise the option
with respect to the Common Shares for which it could have been exercised on
the date of death, at any time within twelve months from the date of death.
iii. Determinations. For purposes of the Plan, whether a
cessation of employment is to be considered a retirement with the consent of
the Employer or due to permanent and total disability, and whether an
authorized leave of absence or absence on military or government service shall
be deemed to constitute termination of employment shall be determined by the
Committee, which determination shall be final, conclusive, and binding. For
purposes of the Plan, a termination of employment with the Company or a
subsidiary corporation shall not be deemed to occur if the optionee is
immediately thereafter employed with the Company or any subsidiary
corporation.
g. RECAPITALIZATION. The aggregate number of Common Shares as to
which options may be granted under the Plan, the number of Common Shares
covered by each outstanding option, and the price per Common Share with
respect to each such option, all shall be proportionately adjusted for any
increase or decrease in the number of issued Common Shares resulting from a
subdivision or consolidation of shares or any other capital adjustment, the
payment of a share dividend, or other increase or decrease in the Common
Shares effected without receipt of consideration by the Company. In the event
that, prior to the delivery by the Company of the Common Shares remaining
under any outstanding option under the Plan, there shall be a capital
reorganization or reclassification of the capital of the Company resulting in
a substitution of other shares for the Common Shares, there shall be
substituted the number of substitute shares which would have been issued in
exchange for the Common Shares then remaining under the option if such Common
Shares had been then issued and outstanding.
h. CHANGE OF CONTROL, DISSOLUTION, AND LIQUIDATION.
i. Change of Control. For purposes of the Plan, "change of
control event" shall be deemed to have occurred if:
(A) The Company shall become a party to an agreement
of merger, consolidation, or other reorganization pursuant to which the
Company will be a constituent corporation and the Company will not be the
surviving or resulting corporation, or which will result in less than 50% of
the outstanding voting securities of the surviving or resulting entity being
owned by the former shareholders of the Company;
(B) The Company shall become a party to an agreement
providing for the sale by the Company of all or substantially all of the
Company's assets to any individual, partnership, joint venture, association,
trust, corporation, or other entity ("Person") which is not a wholly-owned
subsidiary of the Company;
(C) The Company determines in its sole discretion that
any Person has become or is anticipated to become the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's then outstanding securities, the
effect of which (as determined by the Company in its sole discretion) is to
take over control of the Company; or
(D) The Company determines that during any period of
two consecutive years, individuals who, at the beginning of such period,
constituted the Board of Directors of the Company, cease, for any reason, to
constitute at least a majority thereof, unless the election or nomination for
election for each new director was approved by the vote of at least two-thirds
of the directors then still in office who were directors at the beginning of
the period.
ii. Effect of a Change of Control Event. Upon the occurrence
of a change of control event, the Company shall provide written notice thereof
(the "Notice") to the optionees. All unvested options shall vest immediately
upon delivery of the Notice to the optionees. The Company shall have the
right, but not the obligation, to terminate all outstanding options as of the
30th day immediately following the date of the sending of the Notice by
including a statement to such effect in the Notice. Upon delivery of the
Notice and regardless of whether the Company elects to terminate the
outstanding options, and subject to Section 6(d) and Section 6(e), the
optionees shall have the right to immediately exercise all outstanding options
in full during the 30-day period notwithstanding the other terms and
conditions otherwise set forth in the Plan or in any option agreement.
iii. Dissolution and Liquidation. In the event the Company
adopts all necessary resolutions approving a plan to dissolve or liquidate the
Company, the Company shall provide written notice thereof (the "Notice") to
the optionees. All unvested options shall vest immediately upon delivery of
the Notice to the optionees. Upon delivery of the Notice, and subject to
Section 6(d) and Section 6(e), the optionees shall have the right to
immediately exercise all outstanding options in full during the 30-day period
immediately following the date of the sending of the Notice notwithstanding
the other terms and conditions otherwise set forth in the Plan or in any
option agreement. All unexercised options outstanding as of the 30th day
immediately following the date of the sending of the Notice shall terminate.
i. ASSIGNABILITY. No option shall be assignable or transferable,
except to the extent provided in Section 6(f) in the event of the death of
an optionee. During the lifetime of an optionee, the option shall be
exercisable only by the optionee to whom the option was granted (or, in the
event of the legal incapacity or incompetency of the optionee, the optionee's
legal guardian or legal representative on behalf of the optionee).
<PAGE>
j. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES LAWS
i. Conformity With Law. The Company shall not be required to
sell or issue any Common Shares in connection with any option granted under
the Plan and may postpone the issuance and delivery of certificates
representing Common Shares until (a) the admission of such Common Shares to
listing on any stock exchange on which Common Shares of the Company of the
same class are then listed and (b) the completion of such registration or
other qualification of such Common Shares under any state or federal law,
rule, or regulation as the Company shall determine to be necessary or
advisable, which registration or other qualification the Company shall use
reasonable efforts to complete. Any person purchasing Common Shares pursuant
to the Plan may be required to make such representations and furnish such
information as may, in the opinion of counsel for the Company, be appropriate
to permit the Company to determine the necessity of registration of the Common
Shares under the Securities Act of 1933, as amended from time to time, or any
similar state statute.
ii. Compliance with Rule 16b-3. The Plan is intended to
qualify for the exemption from the short-swing profits liability imposed by
Section 16(b) under the Securities Exchange Act of 1934, as amended from time
to time, provided by Rule 16b-3. To the extent any provision of the Plan or
action by the Committee does not comply with the requirements of Rule 16b-3,
it shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Committee. In the event Rule 16b-3 is revised or replaced,
the Committee may exercise its discretion to modify the Plan in any respect
necessary to satisfy the requirements of the revised exemption or its
replacement provided such modification is made in accordance with Section 8.
k. RIGHTS AS A SHAREHOLDER. An optionee shall have no rights as a
shareholder with respect to Common Shares covered by an option until the date
of issuance of a certificate or certificates to the optionee and only after
the purchase price of such Common Shares is fully paid. No adjustment will be
made for dividends or other rights for which the record date is prior to the
date such certificate or certificates are issued.
l. OTHER PROVISIONS. The option agreements entered into under the
Plan shall contain such other provisions as the Committee shall deem
advisable, provided that such provisions are not inconsistent with the terms
of the Plan and Code Section 422.
7. TERM OF PLAN. The Plan is effective on September 1, 1993, which
is the date of the approval of the Plan by the unanimous written consent of
the holders of the issued and outstanding Common Shares of the Company. The
Plan shall terminate on August 31, 2002, or on such earlier date as the Board
of Directors may determine. No option may be granted under the Plan
thereafter.
8. AMENDMENT OF THE PLAN. The Board of Directors of the Company,
except any members participating in the Plan, may from time to time, alter,
amend, suspend, or discontinue the Plan with respect to any Common Shares as
to which options have not been granted; provided, however, that the Board of
Directors may not, without further approval by the holders of a majority of
the issued and outstanding Common Shares of the Company voting in person or by
proxy at a duly held shareholders' meeting:
(a) increase the maximum number of shares as to which options may be
granted under the Plan (other than as provided in Section 6(g));
(b) change the class of shares for which options may be granted under
the Plan;
(c) change the designation of the employees or class of employees
eligible to receive options under the Plan;
(d) change the provisions of Section 6(c) concerning the option
price;
(e) increase the maximum period during which options may be
exercised;
(f) extend the term of the Plan; or
(g) permit the granting of options to members of the Committee.
9. APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Shares pursuant to options granted under the Plan will be
used for general corporate purposes.
10. NO OBLIGATION TO EXERCISE OPTION. The granting of an option
under the Plan shall impose no obligation upon the optionee to exercise any
such option.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the adoption of
the Plan nor the granting of an option under the Plan shall impose any
obligation on the Employer to provide any specified amount of compensation to,
or to continue the employment of, any optionee.
12. APPLICABILITY OF AMENDMENTS. Without the express written
consent of the Company and the optionee, no amendment, suspension, or
termination of the Plan shall alter, impair, or otherwise affect any rights or
obligations of the Company or an optionee with respect to any option
previously granted to such optionee.
13. WITHHOLDINGS. The Company shall have the right to require
optionees or their agents to remit to the Company amounts sufficient to
satisfy any federal, state or local income, employment, or other tax
withholding requirements (or make other arrangements satisfactory to the
Company with regard to such taxes) at such times as the Company deems
necessary or appropriate for compliance with such laws.
<PAGE>
<TABLE>
<CAPTION>
Crossmann Communities, Inc.
Exhibit 11.2 - Computation of Per Share Net Income
For the Quarter Ended June 30, 1996
<S> <C> <C> <C> <C>
Quarter Ended June 30, 1996: Fully
Primary Diluted
--------- ---------
Weighted Average Number of Shares:
Average Common Shares Outstanding 6,094,110 6,094,110
at June 30, 1996
Dilutive Effect of Common Stock Equivalents
at June 30, 1996 23,280 23,280
--------- ---------
Weighted Average Shares at June 30, 1996 6,117,390 6,117,390
========= =========
Net Income 3,993,565 3,993,565
========= =========
Net Income per Common Share .65 (1) .65 (1)
========= =========
<FN>
This calculation is submitted in accordance with Regulation S-K item 601(b) (11)
although not required by footnote 2 to paragraph 14 of APB Opinion No. 15
because it results in dilution of less than 3%.
</TABLE>
<PAGE>
EXHIBIT 21.2
AMENDED SUBSIDIARIES OF THE REGISTRANT
1. Merit Realty, Inc.
2. Deluxe Homes of Columbus, Inc.
3. Deluxe Homes of Lafayette, Inc.
4. Deluxe Homes, Inc.
5. Trimark Homes, Inc.
6. Trimark Development, Inc.
7. Crossmann Communities Partnership
8. Deluxe Aviation, Inc.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Crossmann Communities, Inc.
Exhibit 27.2
Article 5 Financial Data Schedule for 1996 2nd Quarter 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 92310657
<CURRENT-ASSETS> 0
<PP&E> 4277612
<DEPRECIATION> 1357313
<TOTAL-ASSETS> 106104977
<CURRENT-LIABILITIES> 0
<BONDS> 35333878
<COMMON> 24059879
0
0
<OTHER-SE> 24176393
<TOTAL-LIABILITY-AND-EQUITY> 106104977
<SALES> 82809121
<TOTAL-REVENUES> 82809121
<CGS> 65845422
<TOTAL-COSTS> 65845422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 320271
<INCOME-PRETAX> 6660415
<INCOME-TAX> 2666850
<INCOME-CONTINUING> 3993565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3993565
<EPS-PRIMARY> .65
<EPS-DILUTED> .65
</TABLE>
