Crossmann Communities, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 20, 1997
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
CROSSMANN COMMUNITIES, INC. ("Crossmann" or the "Company") which will be held
at the Bank One Tower, 111 Monument Circle, 3rd Floor, Room A, Indianapolis,
Indiana, at 9:00 a.m. on May 20, 1997 for the following purposes:
1. To elect one director;
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997;
3. To act upon such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 31, 1997
as the record date for determining those shareholders entitled to vote at the
meeting. The stock transfer books will not be closed between the record date
and the date of the meeting.
Representation of at least a majority of all outstanding Common Shares of
Crossmann Communities, Inc. is required to constitute a quorum. Accordingly,
it is important that your shares be represented at the meeting. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may be
revoked at any time prior to the time it is voted.
Please read the proxy material carefully. Your vote is important and the
Company appreciates your cooperation in considering and acting on the matters
presented.
Very truly yours,
/s/ John B. Scheumann
John B. Scheumann
Chairman of the Board of Directors
and Chief Executive Officer
CROSSMANN COMMUNITIES, INC.
9202 North Meridian Street
Indianapolis, Indiana 46260
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of CROSSMANN COMMUNITIES, INC. ("Crossmann" or the
"Company") of proxies to be voted at the Annual Meeting of Shareholders, which
will be held at 9:00 a.m. on May 20, 1997 at Bank One Tower, 111 Monument
Circle, 3rd Floor, Conference Room A, Indianapolis, Indiana, 46277 or at any
adjournments or postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. This Proxy Statement
and the proxy card were first mailed to shareholders on or about April 15,
1997.
Shareholders Should Read the Entire Proxy Statement Carefully Prior to
Returning Their Proxies
VOTING RIGHTS AND SOLICITATION
The close of business on March 31, 1997 was the record date for
shareholders entitled to notice of and to vote at the Annual Meeting. As of
that date, Crossmann had 6,125,768 common shares without par value, (the
"Common Shares"), issued and outstanding. All of the holders of the Company's
Common Shares outstanding on the record date are entitled to vote at the
Annual Meeting, and shareholders of record entitled to vote at the meeting
will have one (1) vote for each share so held on the matters to be voted
upon.
Common Shares represented by proxies in the accompanying form which are
properly executed and returned to Crossmann will be voted at the Annual
Meeting of Shareholders in accordance with the shareholders' instructions
contained therein. In the absence of contrary instructions, shares
represented by such proxies will be voted FOR the election of the director
as described herein under "Proposal 1--Election of Director" and FOR
ratification of the appointment of auditors as described herein under
"Proposal 2--Ratification of Appointment of Auditors." Management does not
know of any matters to be presented at this Annual Meeting other that those
set forth in this Proxy Statement and in the Notice accompanying this Proxy
Statement. If other matters should properly come before the meeting, the proxy
holders will vote on such matters in accordance with their best judgement.
Any shareholder has the right to revoke his or her proxy at any time before it
is voted. Abstentions and broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
The solicitation of proxies is being made by Crossmann, and the entire
cost of soliciting proxies will be borne by Crossmann Communities, Inc.
Proxies will be solicited principally through the use of the mail, but, if
deemed desirable, may be solicited personally or by telephone, telegraph or
special letter by officers and regular Crossmann employees for no additional
compensation. Arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the Company's Common Shares, and such persons may be
reimbursed for their expenses.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information regarding the beneficial
ownership of the Company's Common Shares as of March 12, 1997 by (i) each
person who is known to the Company to own beneficially more than 5% of the
outstanding shares of Common Shares of the Company, (ii) each director, (iii)
each officer listed in the Summary Compensation Table on page 6 of this Proxy
Statement and (iv) all directors and officers as a group. All shares are
subject to the named person's sole voting and investment power except where
otherwise indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Shares Percent of
NAME (1) Beneficially Owned Common Shares (2)
- ------------------------------------------------ ------------------ -----------------
John B. Scheumann, Chairman and CEO 1,743,000 28.50
Richard H. Crosser, President, COO, Director (3) 1,479,600 24.15
Steven M. Dunn, Vice President 91,000 1.50
James C. Shook, Director 5,000 *
Larry S. Wechter, Director 3,500 *
John M. Moody, Vice President 11,591 *
Ronald W. Rooze, Vice President 4,000 *
All directors and executive officers 3,433,699 56.05
as a group (10 persons)
<FN>
* Denotes less than 1%
(1) The address of each beneficial owner is 9202 North Meridian Street,
Indianapolis, Indiana, 46260.
(2) There are 6,125,768 shares issued and outstanding at March 12, 1997.
(3) All of the 1,479,600 shares owned beneficially by Mr. Crosser are owned by
the Richard H. Crosser Living Trust, a revocable trust established by Mr. Crosser on
February 25, 1992. The beneficiaries of the trust are Mr. Crosser's children. Mr.
Crosser is the trustee of the trust.
(4) Five hundred of the shares owned beneficially by Mr. Wechter are owned by
the Penn Meridian Foundation, a trust established by Mr. Wechter on December 11, 1995.
Mr. Wechter and his wife, Janis Wechter, are co-trustees of the trust.
</TABLE>
PROPOSAL 1
ELECTION OF DIRECTORS
The members of the Board of Directors of Crossmann Communities, Inc. are
classified into three classes, one of which is elected at each Annual Meeting
of Shareholders to hold office for a three-year term and until successors of
such class have been elected and qualified. The nominee for the class of
Directors to be elected at this annual meeting is set forth below. Unless
otherwise instructed, proxy holders will vote the proxies received by them for
the election of the nominee named below. If the nominee becomes unavailable
for any reason, it is intended that the proxies will be voted for a substitute
nominee designated by the Board of Directors. As of the date of this Proxy
Statement, the Board of Directors is not aware that the nominee is unable or
will decline to serve as a director.
<TABLE>
<CAPTION>
NOMINEE TO THE BOARD OF DIRECTORS
<S> <C> <C> <C> <C>
Director Class and Year
Name Principal Occupation Since Term will Expire Age
- ------------------- --------------------------- -------- ---------------- ---
Jennifer A. Holihen Chief Financial Officer, 1993 Class I 1997 39
Treasurer, Secretary,
Crossmann Communities, Inc.
</TABLE>
Jennifer A. Holihen has served as a director of the Company since
September 1993. Ms. Holihen is Chief Financial Officer, Secretary and
Treasurer of Crossmann and has been employed by the Company since 1983 as its
principal financial and accounting officer. Ms. Holihen is a Certified Public
Accountant and holds an MBA in Accounting and Management Information Systems
from Indiana University. She is a member of the Indiana Society of Certified
Public Accountants and the American Institute of Certified Public Accountants.
<TABLE>
<CAPTION>
DIRECTORS NOT STANDING FOR ELECTION
The members of the Board of Directors who are not standing for election
at this year's Annual Meeting are set forth below.
<S> <C> <C> <C> <C>
Director Class and Year
Name Occupation Since Term will Expire Age
- ------------------ ------------------------ -------- ---------------- ---
John B. Scheumann Chairman of the Board of
Directors and Chief
Executive Officer, 1992 Class III 1999 48
Crossmann Communities,
Inc.
Richard H. Crosser President and Chief
Operating Officer, 1992 Class II 1998 58
Crossmann Communities,
Inc.
James C. Shook President, The Shook 1994 Class II 1998 65
Agency
Larry S. Wechter Managing Director, 1994 Class III 1999 41
Monument Advisors
</TABLE>
John B. Scheumann has been the Company's Chairman of the Board of
Directors and Chief Executive Officer since 1992 and has served as a senior
executive officer since joining the predecessor Company in 1977. Before
joining the Company, Mr. Scheumann was employed by National Homes Construction
Corp. for three years in a variety of capacities, last serving as Division
Controller for Multi-Family Construction.
Richard H. Crosser has been the Company's President and Chief Operating
Officer since 1992 and serves on its Board of Directors and has served as a
senior executive officer since joining the predecessor Company in 1974.
Prior to 1974, Mr. Crosser was employed by National Homes Construction Corp.
for 15 years in a variety of capacities, last serving as a regional manager of
the company.
James C. Shook was elected to Crossmann's Board of Directors by the Board
of Directors in March 1994. Mr. Shook is President of The Shook Agency, Inc.,
a real estate brokerage firm in Lafayette, Indiana specializing in commercial
and industrial sales and leasing. Mr. Shook's other corporate affiliations
include directorships of NBD Indiana, Inc., Indiana Energy Inc. (Indiana Gas
Company), and Lafayette Life Insurance Company. Community service includes
past and present directorships of The Indiana Chamber of Commerce, The Greater
Lafayette Chamber of Commerce, Great Lafayette Progress, Inc., United Way,
Lafayette Home Hospital, The Purdue Foundation, Dean's Advisory Committee,
Krannert School of Management at Purdue University, Greater Lafayette Museum
of Art, YWCA Foundation, and the Greater Lafayette Community Foundation.
Larry S. Wechter is one of the founders and the former President and
director of ADESA Corporation. ADESA Corporation was once a publicly held
company; today it is a wholly owned subsidiary of Minnesota Power & Light
(NYSE: MPL), a diversified utility based in Duluth, Minnesota. ADESA owns and
operates auto auctions and performs related services throughout the United
States and Canada. Mr. Wechter now serves as Managing Director of Monument
Advisors, an investment bank based in Indianapolis and is a member of Eagle
Investments I, LLC, a private investment company. Mr. Wechter was elected to
Crossmann's Board of Directors in May 1994.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The firm of Deloitte & Touche LLP served as auditors for the Company for
the fiscal years ended December 31, 1995 and 1996. The Board of Directors
desires the firm to continue in this capacity for the current fiscal year.
Accordingly, a resolution will be presented to the meeting to ratify the
appointment of Deloitte & Touche LLP by the Board of Directors as independent
auditors to audit the accounts and records of the Company for the fiscal year
ending December 31, 1997 and to perform other appropriate services. In the
event that shareholders fail to ratify the appointment of Deloitte & Touche
LLP, the Board of Directors would reconsider such appointment.
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting to respond to appropriate questions and to make a statement if such
representatives desire to do so.
BOARD OF DIRECTORS MEETINGS
The Board of Directors of the Company held a total of four meetings
during 1996. All meetings were attended by all of the Directors.
In March 1994 the Board designated an Audit Committee and a Compensation
Committee of the Board of Directors, the functions of which are described
below.
The Audit Committee is responsible for recommending independent auditors,
reviewing with the independent auditors the scope and results of the audit
engagement, establishing and monitoring the Company's financial policies and
control procedures, reviewing and monitoring the non-audit services performed
by the Company's auditors and reviewing all potential conflicts of interest.
This Committee, currently consisting of John B. Schuemann, Larry S. Wechter
and James C. Shook, held four meetings during 1996.
The Compensation Committee was formed and currently consists of James C.
Shook and Larry S. Wechter, non-employee members of the Board of Directors.
The Compensation Committee is responsible for reviewing, determining and
establishing the salaries, bonuses and other compensation of the executive
officers of the Company and for administering the Employee Option Plan. The
Compensation Committee held two meetings during 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Salaries, bonuses and option grants for all executive officers were
recommended by Messrs. Scheumann and Crosser and Ms. Holihen, and approved by
the Compensation Committee. Messrs. Scheumann and Crosser, and Ms. Holihen do
not participate in setting their personal salaries, bonuses or option grants.
DIRECTOR COMPENSATION
Non-employee members of the Board of Directors are each paid an annual
retainer fee of $10,000 plus a fee of $500 per Board meeting, and are
reimbursed for all out-of-pocket costs incurred in connection with their
attendance at such meetings. During 1996, James C. Shook and Larry S.
Wechter each received fees of $12,000.
Under the Company's Outside Director Stock Option Plan, (the "Outside
Director Plan") each non-employee Director is entitled to receive the grant of
an option to purchase 1,000 Common Shares on their initial election and each
re-election to the Board of Directors, or more frequently as determined by the
employee Directors of the Company. The total number of Common Shares with
respect to which option may be granted under the Outside Director Plan may not
exceed 25,000 Common Shares. The Outside Director Plan is administered by the
Board members who are employees of the Company. Options granted under the
Outside Director Plan constitute non-qualified stock options for income tax
purposes. Messrs. Wechter and Shook each were granted options to purchase
1,000 Common Shares on March 13, 1996.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the Company's four other highest-paid executive
officers for services rendered in all capacities to the Company and its
subsidiaries for the fiscal years ended December 31, 1996, 1995, and 1994,
respectively.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
<S> <C> <C> <C> <C> <C> <C>
Other Options/ All Other
------------- --------- ----------------
Salary Bonus Compensation SARs Compensation (1)
-------- -------- ------------- --------- ----------------
Name and Principal Position Year ($) ($) ($) (#) ($)
- ------------------------------- ---- -------- -------- ------------- --------- ----------------
John B. Scheumann, Chairman 1996 166,000 249,000 508 None 18,715
and Chief Executive Officer 1995 157,500 157,500 925 18,232
1994 150,000 150,000 1,240 22,500
Richard H. Crosser, President 1996 166,000 249,000 1,171 None 18,715
and Chief Operating Officer 1995 157,500 157,500 1,037 18,232
1994 150,000 150,000 1,045 22,500
John M. Moody, Vice President 1996 82,500 125,000 2,075 5,000 18,715
and General Manager, 1995 78,750 112,500 2,477 12,500 18,223
Indianapolis Division 1994 75,000 102,500 2,970 10,000 -0-
Steven M. Dunn, Vice President 1996 100,320 60,000 614 -0- 18,715
and General Manger, Columbus 1995 100,320 -0- 597 -0- 11,044
Division 1994 100,320 10,000 635 -0- 3,029
Ronald W. Rooze, Vice President 1996 80,000 80,000 1,464 5,000 18,715
and General Manger, Cincinnati 1995 70,000 70,000 1,457 10,000 15,161
Division 1994 56,973 10,000 898 5,000 -0-
<FN>
(1) Represents contributions by the Company to the named individual's profit sharing pension plan.
</TABLE>
EMPLOYMENT CONTRACTS
On September 1, 1993, Crossmann entered into a five-year employment
agreement with Steven M. Dunn, the sole shareholder of Deluxe Homes of
Columbus, Inc. in connection with the acquisition of that company by
Crossmann. Pursuant to the terms of this employment agreement, Mr. Dunn
manages the Columbus division and serves as an officer of Crossmann and
receives an annual salary of $100,000 and is permitted to participate in the
Company's benefit plans, its bonus program and the Employee Option Plan.
OPTION PLAN BENEFITS
The following table sets forth the benefits allocated under the Outside
Director Plan and the Employee Option Plan (collectively, the "Plans") for the
fiscal year ended December 31, 1996 to each of the named executive officers;
all current executive officers as a group; all current directors who are not
executive officers as group; and all employees, including all current officers
who are not executive officers, as a group. The amount of such benefits are
not necessarily indicative of the amounts that will be granted in the future.
The closing sale price of a Common Share at the close of business on March 12,
1997 was $19.75.
<TABLE>
<CAPTION>
<S> <C> <C>
Employee Outside Director
Option Plan Option Plan
Number of Units Number of Units
Name
John B. Scheumann -0- --
Richard H. Crosser -0- --
John M. Moody 5,000 --
Steve M. Dunn -0- --
Ronald W. Rooze 5,000 --
All Other Executive Officers 15,000 --
as a Group
All Directors who are not Executive Officers 2,000
All non-Executive Officers
and Employees as a Group 33,500*
<FN>
*Options to purchase 58,500 shares were granted under the Company's
Employee Option Plan on March 13, 1996. One employee forfeited his option
grant of 5,000 shares by leaving the Company prior to exercising his option.
Options still outstanding from the 1996 grant total 53,500.
</TABLE>
The following table contains information concerning the grant of stock
options under the Company's Employee Option Plan to the named executive
officers and groups indicated. The table also lists potential realizable
values of such options on the basis of assumed annual compounded appreciation
rates of 5% and 10% over the life of the options, which are set at a maximum
of 10 years.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
<S> <C> <C> <C> <C> <C> <C>
% of Total Options Exercise
Options Granted to Price Expiration
Name Granted (#) Employees in 1996 ($/Share) Date 5% ($) 10% ($)
John B. Scheumann -0- -0- --- --- --- ---
Richard H. Crosser -0- -0- --- --- --- ---
John M. Moody 5,000 9 17.75 3/02/06 144,564 230,195
Steve M. Dunn -0- -0- --- --- --- ---
Ronald W. Rooze 5,000 9 17.75 3/02/06 144,564 230,195
<FN>
* Options to purchase 58,500 shares were granted under the Company's Employee Stock
Option plan on March 13, 1996. One employee forfeited his option grant of 5,000 shares by
leaving the Company prior to exercising his option. Options still outstanding from the 1996
grant total 53,500.
</TABLE>
The following table provides information with respect to the named
executive officers and groups indicated concerning options exercised in 1996
and the unexercised options held as of the end of the fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION VALUES AT DECEMBER 31, 1996
<S> <C> <C> <C> <C>
VALUE OF UNEXERCISED
NUMBER OF OPTIONS AT
SHARES OPTIONS YEAREND: MARKET PRICE OF
ACQUIRED VALUE REALIZED: UNEXERCISED AT 17.00 - EXERCISE PRICE OF
ON MARKET DECEMBER 31, 9.00, $9.50, $7.75 AND $17.75
NAME EXERCISE PRICE OF $17.00 1996
John M. Moody 2,191 $ 37,247 25,000 $ 273,750
Steven M. Dunn -- -- -- --
Ronald W. Rooze 4,000 $ 68,000 16,000 $ 180,250
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Company has undertaken to formulate a competitive
compensation policy for executive officers that will attract, motivate and
retain qualified and productive personnel, reward superior performance, and
provide long-term incentives based on that performance. The Company also has
attempted to develop a compensation policy that will serve to align the
interests of the Company, its executive officers, and its shareholders. The
primary components of executive compensation consist of base salaries, a
performance-based cash bonus plan, and stock options.
Base salaries. Management has traditionally held that it is in the
Company's best interest to keep base salaries of employees at all levels as
low as possible, due to uncertainties inherent in the homebuilding business
that affect the amount and timing of income: weather, interest rates and
other credit issues, the availability of developed lots, labor supply, etc.
This policy ensures a low break-even point and conserves cash. Management
also believes that its compensation system is consistent with hiring young
professionals and developing them as managers in the Company.
Management believes that base salaries for the Company's executive
officers are lower than bases salaries in companies of similar size and
performance, as analyzed from time to time by the Compensation Committee of
the Board of Directors. In 1996, the Compensation Committee utilized salary
surveys provided by Deloitte & Touche LLP and examined recent proxy statements
of other homebuilders to confirm that this policy continues to be observed.
Bonuses. In light of relatively low base salaries, it is the Company's
policy to pay a substantial portion of the compensation an officer has the
opportunity to earn as a year-end bonus, provided that certain predetermined
corporate goals and individual performance objectives are achieved. By
weighing bonus compensation heavily, management believes it has an effective
tool for enhancing Company performance, while protecting the Company from high
fixed costs. Bonuses are computed only when actual earnings performance for
the entire year is known.
Division managers who are directly responsible for operating divisions
work toward goals that focus attention on activities critical to the survival
and success of the organization. In 1996, those factors critical to
Crossmann's success were:
- Unit growth in all divisions;
- Margin preservation in light of anticipated volume growth and
increasing competitive pressures; and
- Concentration of sales on the Company's internally developed lots
to free capital for new projects.
In 1997, Crossmann's critical success factors are perceived to be the same.
The Company's executive officers earn substantial bonuses if overall
corporate earnings objectives are achieved by division managers and when they
accomplish predetermined strategic objectives. In 1996, Crossmann achieved or
exceeded its earnings objectives in every quarter and achieved its strategic
objective of expanding into new markets. In recognition of management's
substantial personal investment in the Company's stock, the Committee believes
that interest of senior management is consistent with that of the Company's
stockholders. The Committee believes that long-term share value will be
enhanced by continued strong financial performance. For these managers to
receive maximum bonuses in 1997, Crossmann must:
- Achieve its higher earnings targets;
- Support operating managers in producing acceptable volume levels
and margins, particularly monitoring new markets where performance is
unproven; and
- Establish a market presence in one or more new markets that will
provide an adequate base for increased earnings in 1998.
The maximum bonus amounts are set based on a survey of comparable
positions in other publicly traded firms, within the constraints set by
Company earning objectives.
In 1996, goals were set by the Board of Directors and year-end bonuses
for 1996 were paid in accordance with these guidelines. The Compensation
Committee participated in setting new unit and margin goals for each operating
division for 1997 and in formulating overall strategic objectives for 1997.
Stock Options. The Compensation Committee authorized incentive options
to key employees on March 13, 1996 at a grant price of $17.75 per share.
Submitted by the Compensation
Committee
James C. Shook
Larry S. Wechter
PERFORMANCE GRAPH
The following performance graph shows the percentage change in cumulative
total return to a holder of the Company's Common Stock, assuming dividend
reinvestment, compared with the cumulative total return, assuming dividend
reinvestment, of Standard & Poor's 500 Stock Index and the peer group
indicated below at the base period of October 19, 1993 (the effective date of
the Company's initial public offering) and at each of the years ended December
31, 1993 through 1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Measurement Period Crossmann Communties, Inc. Homebuilding 500 S & P 500 Index
(Fiscal Year Covered)
10/19/93 100.00 100.00 100.00
1993 111.91 100.94 100.71
1994 50.00 58.39 102.04
1995 178.58 83.38 140.39
1996 161.91 76.04 172.62
- --------------------- -------------------------- ---------------- ---------------
</TABLE>
CERTAIN TRANSACTIONS
The Company had business dealings with certain affiliates, including its
Chairman of the Board and CEO, John B. Scheumann and its President and COO,
Richard H. Crosser and entities with which they were affiliated prior to its
initial public offering in October 1993. Since its initial public offering ,
the policy of the Company has been to require that such transactions be on
terms not less favorable to the Company than reasonably available from
unrelated third parties and that they be approved by a majority of the
disinterested members of the Board of Directors of the Company.
A summary of Certain Relationships and Related Transactions between the
Company and affiliates that occurred after January 1, 1995 is set forth below.
Previously taxed income. Prior to its initial public offering, Crossmann
Communities, Inc. and the Deluxe Entities were treated as S Corporations. As
a result, the net taxable incomes of the Deluxe Entities through October 25,
1993 were taxed, for federal and some state income tax purposes, directly to
the individual shareholders. On October 26, 1993, Crossmann and all of the
Deluxe Entities terminated their status as S Corporations and became C
Corporations, thereafter subject to federal and state income taxes. Prior to
the termination of S Corporation status, the Deluxe Entities distributed to
their existing shareholders an amount equal to their previously taxed but
undistributed S Corporation earnings and $886,000 in additional paid in
capital originally invested by those shareholders. The aggregate amount
distributed at closing was $12,634,826, $4,993,734 in cash and $7,641,092 in
Subordinated Notes.
The Subordinated Notes bore interest at 1.5% above the prime rate of Bank
One, Indianapolis, N.A. which was 8.75% as of December 22, 1995, and were
payable in four equal annual installments commencing on the first anniversary
date of the closing of Crossmann's initial public offering. On December 22,
1995, the Company used a portion of proceeds of its senior note issue to repay
the outstanding balance of the notes, then $2,684,726, with the approval of
the non-employee members of the Company's Board of Directors.
The Company and Messrs. Scheumann and Crosser are parties to a Tax
Indemnification Agreement dated September 1, 1993, relating to their
respective income tax liabilities. Subject to certain limitations, the
agreement generally provides that Messrs. Scheumann and Crosser will be
indemnified by the Company and the Company will be indemnified by Messrs.
Scheumann and Crosser with respect to certain federal and state income taxes
(plus interest and penalties) shifted between Messrs. Scheumann and Crosser
and the Company for taxable years ending either before or after the closing of
the initial public offering as a result of adjustments to tax returns of
Messrs. Scheumann and Crosser and the Company, plus any taxes on such
payments, based on a blended tax rate. The income and expenses, and the
related distributions, of the Company for fiscal 1993 were determined by an
allocation based on a closing of the books of the Company as of the closing of
the initial public offering on October 25, 1993.
Lease of Office Space. The Company leases approximately 20,000 square
feet of office space for its headquarters, and an additional 4,000 square feet
for its mortgage brokerage subsidiary, and 5,000 square feet of warehouse
space at 9202 North Meridian Street in Indianapolis, Indiana from Pinnacle
Properties LLC, an entity owned by principal shareholders John B. Scheumann
and Richard H. Crosser. The monthly rent on these leases is $23,703. The
Company relocated its headquarters to this building in May 1994.
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16(A) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 required the
Company's directors and executive officers, and persons who own more that ten
percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) reports they file. To the knowledge of the Company, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten-percent beneficial owners have been made in a
timely manner.
OTHER MATTERS
Management does not know of any matters to be presented at this Annual
Meeting other than those set forth herein and in the Notice accompanying this
Proxy Statement.
It is important that your shares be represented at the meeting,
regardless of the number of shares which you hold. YOU ARE, THEREFORE, URGED
TO EXECUTE PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE WHICH
HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. Shareholders who are present at the
meeting may revoke their proxies and vote in person or, if they prefer, may
abstain from voting in person and allow their proxies to be voted.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Shareholder proposals intended to be considered at the 1998 Annual
Meeting of Shareholders must be received by Crossmann Communities, Inc. no
later than December 31, 1997. The proposal must be mailed to the Company's
principal executive officer, 9202 North Meridian Street, Indianapolis,
Indiana, 46260, Attention: Jennifer A. Holihen. Such proposals may be
included in next year's proxy statement if they comply with certain rules and
regulations promulgated by the Securities and Exchange Commission.
By the Order of the Board of Directors
/s/ Jennifer A. Holihen
Jennifer A. Holihen
Secretary
April 4, 1997
Indianapolis, Indiana
REVOCABLE PROXY
CROSSMANN COMMUNITIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders
May 20, 1997
The undersigned hereby appoints the Board of Directors of Crossmann
Communities, Inc., or the majority of such directors, with powers of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of capital stock of Crossmann Communities, Inc., which the undersigned
is entitled to vote at the Annual Meeting of Shareholders to be held at Bank
One Tower 3rd Floor, Conference Room A, 111 Monument Circle, Indianapolis,
Indiana, on Tuesday May 20, 1997 at 9:00 a.m. and at any and all adjournments
thereof, as follows:
(Continued on Reverse Side)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
CROSSMANN COMMUNITIES, INC.
May 20, 1997
[X] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
The Board of Directors recommends a vote "FOR" each of the listed propositions
<S> <C>
1. The election as FOR WITHHOLD AUTHORITY Nominee: Jennifer A. Holihen
director of the [ ] [ ]
nominee listed
at right.
2. Approval and ratification of the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as auditors for the year [ ] [ ] [ ]
ending December 31, 1997.
3. In their discretion, the proxies are authorized to
vote on any other business that may properly
come before the Meeting or adjournment thereof.
This proxy may be revoked at any time prior to the voting thereof.
The undersigned acknowledges receipt from Crossmann Communities, Inc., prior
to the executor of this proxy, of notice of the Meeting, a proxy statement and an
Annual Report to shareholders.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS
ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT
SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN THEIR BEST JUDGEMENT. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE MEETING.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
Signature(s)________________________________DATE___________
Note: Please sign as your name appears on the envelope in which this card
was mailed. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, each holder
should sign.
</TABLE>
