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 March 31, 1997.
[ ] 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
- ---------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
(317) 843-9514
- ----------------------------------------
(Telephone number)
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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
ExchangeAct 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 6,125,768 Common shares outstanding as of May 13, 1997.
<PAGE>
CROSSMANN COMMUNITIES, INC.
FORM 10-Q
INDEX
Part I. Financial Information.
Item 1. Financial Statements.
Consolidated balance sheets as of March 31, 1997 (unaudited) and December 31,
1996.
Consolidated unaudited statements of income for the three months ended March
31, 1997 and 1996.
Consolidated unaudited statements of cash flows for the three
months ended March 31, 1997 and 1996.
Notes to consolidated unaudited financial statements for the
three months ended March 31, 1997 and 1996.
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
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CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
March 31, 1997 December 31, 1996
---------------- ------------------
(unaudited)
----------------
ASSETS
Cash and cash equivalents $ 100,000 100,000
Retainages 1,668,659 1,151,700
Real estate inventories 124,677,817 113,202,107
Furniture and equipment, net 2,939,281 2,919,333
Investments in joint ventures 3,846,580 3,404,742
Goodwill, net 2,696,603 2,737,328
Other assets 5,329,819 4,821,259
---------------- ------------------
Total assets $ 141,258,759 $ 128,336,469
================ ==================
Liabilities and shareholders' equity
Accounts payable $ 16,075,051 $ 14,110,634
Accrued expenses and other liabilities 5,540,163 5,250,256
Notes payable 57,941,067 49,326,220
---------------- ------------------
Total liabilities 79,556,281 68,687,110
Commitments and contingencies
Shareholders' equity:
Common shares 24,400,903 24,400,903
Retained earnings 37,301,575 35,248,456
---------------- ------------------
Total shareholders' equity 61,702,478 59,649,359
---------------- ------------------
Total liabilities and shareholders' equity $ 141,258,759 $ 128,336,469
================ ==================
<FN>
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
<S> <C> <C>
1997 1996
------------ ------------
Sales of residential real estate $46,821,263 $37,568,566
Cost of residential real estate sold 37,074,010 30,036,068
------------ ------------
Gross profit 9,747,253 7,532,498
Selling, general and 6,353,310 5,112,291
administrative
Income from operations 3,393,943 2,420,207
Other income, net 313,525 234,938
Interest expense (285,620) (208,003)
------------ ------------
27,905 26,935
------------ ------------
Income before income taxes 3,421,848 2,447,142
Income taxes 1,368,731 1,077,289
------------ ------------
Net income $ 2,053,117 $ 1,369,853
============ ============
Weighted average number of
common shares outstanding 6,125,768 6,087,825
============ ============
Net income per common share $ .34 $ .23
============ ============
<FN>
See accompanying notes.
</TABLE>
<TABLE>
<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<S> <C> <C>
Three Months Three Months
Ended March 31, Ended March 31,
----------------- -----------------
1997 1996
----------------- -----------------
Operating activities:
Net Income $ 2,053,117 $ 1,369,853
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 164,512 166,388
Amortization 40,725 40,423
Gain on sale of equipment -0- (3,880)
Cash provided (used) by changes in:
Retainages (516,959) (586,877)
Real estate inventories (11,475,710) (6,699,239)
Other assets (508,560) (266,311)
Accounts payable 1,964,417 (510,798)
Amounts due to related parties -0- 210
Accrued expenses and other liabilities 289,909 520,256
----------------- -----------------
Net cash flows from operating activities (7,988,549) (5,969,975)
Investing activities:
Purchases of furniture and equipment (184,460) (1,506,934)
Proceeds from disposition of furniture and equipment -0- 7,000
Investments in joint ventures (441,838) (230,661)
----------------- -----------------
Net cash used by investing activities (626,298) (1,730,595)
Financing activities:
Proceeds from bank borrowing 24,965,000 7,360,000
Principal payments on bank borrowing (16,318,000) (4,670,000)
Payments on notes and long-term debt (32,153) (253,380)
Proceeds from sale of common shares -0- 31,000
----------------- -----------------
Net cash provided by financing activities 8,614,847 2,467,620
----------------- -----------------
Net decrease in cash and cash equivalents -0- (5,232,950)
Cash and cash equivalents at beginning of period 100,000 5,232,950
----------------- -----------------
Cash and cash equivalents at end of period $ 100,000 $ -0-
================= =================
<FN>
See accompanying notes.
</TABLE>
CROSSMANN COMMUNITIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
Crossmann Communities, Inc. (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
accruals) considered necessary to present fairly the consolidated financial
statements have been included.
Item 2. Management's Discussion and Analysis of Financial Conditions 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. Results of operation during the first half of
the year also may reflect increased costs associated with adverse weather.
Effective December 1997, SFAS 128, relating to the computation and
presentation of earnings per share, becomes effective. SFAS 128 replaces the
presentation of primary EPS with a presentation of basic EPS, requires dual
presentation of basic and diluted EPS for all entities with complex capital
structure and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS
computation. SFAS is effective for financial statements issued for periods
ending after December 15, 1997; earlier adoption is not permitted. Management
has determined that the adoption of SFAS 128 will not have a material effect
on the accompanying consolidated financial statements.
Three Months Ended March 31, 1997 Compared to the Three Months Ended March 31,
1996.
Results of Operation
Sales for the three months ended March 31, 1997 increased approximately $9.3
million, or 24.6%, over the same period in 1996. This increase reflects more
homes closed (420 homes in 1997 as compared to 354 in 1996) and higher selling
prices ($111,479 per home for the period in 1997 as compared to $106,126 in
1996.) Management attributes this increase in unit closings principally to
the contribution of closings in Dayton, a new market which had no closings in
the first quarter of last year, and to improved closings in Indianapolis.
Gross profit increased approximately $2.2 million for the three months ended
March 31, 1997, over the same period the year before. Gross profit as a
percentage of sales increased from 20.05% in 1996 to 20.82% in 1997. This
improvement is due principally to a more profitable product mix, and a higher
percentage of houses closed on lots developed by the Company in 1997 than in
1996.
Selling, general and administrative expenses increased $1.24 million during
the three months ended March 31, 1997 compared to the same period in 1996, due
in part to sale commissions on the higher sales and increased overhead related
to the Company's new markets. Selling, general and administrative expenses
declined as a percentage of sales from 13.61% to 13.57%.
Other income increased $78,587 for the three months ended March 31, 1997
compared to the same period the year before. Although interest expense was
higher during the first quarter of 1997 due to higher inventory levels,
earnings from land development joint ventures were also higher and more than
offset the increase.
Income before income taxes for the three months ended March 31, 1997
increased $974,685, from more that $2.4 million in 1996 to more than $3.4
million in 1997, an increase of approximately 39.8%. Income before income
taxes as a percentage of sales increased to 7.3% of sales in 1997 compared to
6.5% in 1996. This increase is due principally to increased sales volume with
stable selling, general and administrative expenses.
Net income was $683,264 higher for the first quarter of 1997 than for the
first quarter of 1996, an increase of 49.9%. As a percentage of sales, net
income increased to 4.38% from 3.65% during the same period in 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 March 31, 1997 was 1,614 with an aggregate sales value of
approximately $173 million, compared to 1,313 homes with an aggregate sales
value of approximately $139.3 million at March 31, 1996, an increase of
approximately 23%. This increase reflects a higher year-end backlog (1,006 at
December 31, 1996 compared to 757 at December 31, 1995) and stronger sales in
the first quarter of 1997 (1,028 contracts written in the first quarter of
1997 compared to 910 in 1996, an increase of 12.97%). Indianapolis, Southern
Indiana and all Ohio markets showed strong improvement in first quarter
orders. Louisville, which had no marketing presence in the first quarter of
1996, also posted strong sales for a new market.
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
$11.5 million or 10.1% from their December 31, 1996 level. The expansion in
inventory during the first quarter is a normal seasonal trend. Winter weather
slows closings but does not prevent work on houses under construction from
continuing; therefore, investment in inventory grows.
Retainages increased $516,959 in the first quarter, or 44.9%. 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.
Notes payable increased approximately $8.6 million during the first quarter of
1997 as the line of credit was used to finance 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%. At March 31, 1997, $22.2 million
was the outstanding note balance.
To finance inventory expansion during the first quarter, the Company at March
31, 1997, had drawn funds on its senior bank line of credit in the amount of
$34,489,000. On March 27, 1997, Crossmann amended its credit agreement with
Bank One, Indiana, NA, to increase its line of credit to $60 million,
streamline its covenants, and extend the maturity of the line to March 31,
1999.
Both the note agreements and the bank line of credit require compliance with
certain financial and operating covenants and place certain limitations on the
Company's investments in land and unconsolidated joint ventures. They also
limit payments of cash dividends by the Company.
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
On April 29, 1997, Crossmann announced its intent to acquire Don Galloway
Homes, Inc. and related business operations, based in Charlotte, North
Carolina. Galloway builds homes in Charlotte, North Carolina, and Greenville
and Charleston, South Carolina. The purchase is contingent upon Crossmann's
completion of due diligence and the negotiation of a definitive purchase
agreement by June 9, 1997. Terms of the agreement will be disclosed when the
agreement is finalized. Crossmann hopes to close the transaction early in the
third quarter of 1997.
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.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
<TABLE>
<CAPTION>
a) Exhibit
<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.)
10.2 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
toExhibit 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 First Amendment to Amended and Restated Credit Agreement, dated March 27,
1997, by and between Crossmann Communities, Inc. et al. and Bank One, Indiana
N.A.
10.42 Promissory Note, dated March 27, 1997, by and between Crossmann Communities,
Inc. et al. and Bank One, Indiana, N.A.
11.40 Computation of Per Share Net Income for the quarter ended March 31, 1997.
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. (Incorporated by
reference to Exhibit 21.2 to Form 10-Q dated August 13, 1996.)
27.3 Financial Data Schedule for the quarter ended March 31, 1997.
</TABLE>
(b) Reports on Form 8-K.
No Reports on Form 8-K were filed during the quarter for which this
report is filed.
A report on Form 8-K was filed May 13, 1997 to announce the planned
acquisition of Don Galloway Homes, Inc.
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
and 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: May 13, 1997
Exhibit 10.41 Amended and Restated Credit Agreement
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Crossmann Communities, Inc., and Indiana Corporation (the "Company") and
Bank One, Indiana, NA, (formerly known as Bank One, Indianapolis, NA) a
national banking association (the "Bank") being parties to that certain
Amended and Restated Credit Agreement dated December 21, 1995 (the
"Agreement"), hereby enter into this First Amendment to Amended and Restated
Credit Agreement ("Amendment") in order to amend the Agreement as follows:
Section 1. Definitions. All defined terms used in this Amendment unless
otherwise defined herein shall have their respective meanings set forth in the
Agreement. Further, the following definitions appearing in Section 1 of the
Agreement are hereby amended and restated in their respective entireties as
follows:
"Borrowing Base" means for the Company and the Current Subsidiaries,
determined on a consolidated basis, an amount equal to the sum of: (i) One
Hundred Percent (100%) of cash and cash equivalents; (ii) Eighty Percent (80%)
of the lesser of the net book value or current market value of inventory of
speculative homes and model homes completed or under construction, and winter
foundations, on land which the Company or a Current Subsidiary owns and with
respect to which neither the Company nor a Current Subsidiary owns and with
respect to which neither the Company nor a Current Subsidiary has a contract
with a third party to build a house; (iii) Ninety Percent (90%) of the lesser
of the net book value or current market value of inventory of residential
housing completed or under construction on land which the Company or a Current
Subsidiary owns and has a contract with a third party to build a house; (iv)
Sixty-Five Percent (65%) of the lesser of the net book value or current market
value of Land Held for Future development; (v) Sixty-Five Percent (65%) of the
lesser of the net book value or current market value of Land Under Development
and Developed Lots; (vi) Ninety-Five Percent (95%) of receivables held in
escrow; and (vii) the lesser of $10,000,000 or Fifty Percent (50%) of the net
book value of the company's unencumbered multifamily unit inventory completed
or under construction.
"Revolving Loan Maturity Date" means March 31,1999,and thereafter any
subsequent date to which the Commitment may be extended by the Bank pursuant
to the terms of Section 2(d).
"Total Debt" shall mean as of the date of determination thereof, all (i)
indebtedness of the Company and the Current Subsidiaries for borrowed money,
including current maturities of such obligations, (ii) obligations secured
by any lien upon property or assets owned by the Company or a Current
Subsidiary, (iii) obligations arising under any conditional sale agreement,
(iv) capitalized lease obligations, (v) all Letters of Credit issued by the
Bank for the account of the Company or any Current Subsidiary, except those
Letters of Credit issued by the Bank for the account of the Company or the
Company and Crossmann Partnership in support of the obligations of
the Company to develop improvements with respect to the Company's Land Under
Development, and (vi) all guaranties by the company or any Current Subsidiary
of indebtedness of other entities, all determined on a consolidated basis in
accordance with GAAP.
Section 2. New Definition. The following definition is added to Section 1
of the Agreement as follows:
"First Amendment" means that certain agreement entitled First Amendment to
Amended and Restated Credit Agreement entered into by and between the Company
and the Bank dated as of March 27, 1997.
Section 3. Revolving Loan. Section 2(a) of the Agreement is hereby
amended and restated in its entirety and a new Section 2(i) is added to the
agreement as follows:
(a) The Commitment --Use of Proceeds. Until the Revolving Loan Maturity
Date, the Bank agrees to make Advances (collectively the "Revolving Loan")
under a revolving line of credit from time to time to the Company of amounts
not exceeding Sixty Million and No/100 Dollars ($60,000,000) (the
"Commitment") in the aggregate at any time outstanding, provided that all of
the conditions of lending stated in Sections 7(a), 7(c), and 7(d) of this
Agreement as being applicable to the Revolving Loan have been fulfilled at the
time of each Advance. Proceeds of the Revolving Loan may be used by the
Company only to: (i) fund the working capital requirements of the Company and
the Current Subsidiaries, and (ii) to the extent provided herein, for the
issuance of Letters of Credit as provided in Section 2(e).
(i) Special Repayments of Principal. At any time the principal balance
of the Revolving Loan exceeds the Borrowing Base, as determined on the basis
of the most recent Borrowing Base Certificate furnished by the Company or
as determined by the Bank upon an inspection of the books and records of the
Company, the Company shall immediately repay that portion of the principal
balance of the Revolving Loan which is in excess of the Borrowing Base. Such
repayment shall be due without demand and in any event not later than thirty
(30) days from either the effective date of the Borrowing Base Certificate or
the date of an audit completed by the Bank, on which such determination is
based. For purposes of this Subsection, the principal balance of the
Revolving Loan shall be deemed to include an amount equal to the total amount
of all Letters of Credit which are outstanding from time to time, but shall
not be deemed to include those Letters of Credit issued by the Bank for the
account of the Company or theCompany and Crossmann Partnership issued in
support of the obligations of the company to develop improvements with respect
to the Company's Land Under Development.
Section 4. Financial Covenants. Sections 5(g)(ii) and 5(g)(iii) of the
Agreement are hereby amended and restated in their respective entireties and a
new Section 5(g)(vii) is added to the Agreement as follows:
(ii) Consolidated Tangible Net Worth. The Company shall maintain at
all times its Consolidated Tangible Net Worth at a level not less than the
amount equal to the sum of Fifty-Six Million and No/100 Dollars ($56,000,000)
plus Fifty Percent (50%) of Consolidated Net Earnings determined on a
cumulative basis for each fiscal quarter ending after December 31, 1996;
provided, that for the purposes of the foregoing calculation, in the event
that Consolidated Net Earnings for such fiscal quarter shall be deemed to be
zero and, accordingly, shall not reduce the amount of Consolidated Tangible
Net Worth required to be maintained pursuant to this Section.
(iii) Ratio of Total Debt to Total Capitalization. The Company shall
maintain at all times the ratio of its Total Debt to its Total Capitalization
at a level not greater than 0.60 to 1.00.
(vii) Ratio of Multifamily Inventory to Tangible Net Worth. The Company
shall maintain the book value of its multifamily inventory less depreciation
at a level not exceeding at any time Twenty-Five Percent (25%) of its
Consolidated Tangible Net Worth.
Section 5. Investments. Section 6(d) of the Agreement is hereby amended by
the amendment and restatement of clause (vii) appearing therein as follows:
(vii) other investments (in addition to those permitted by the foregoing
paragraphs (iv), (v), and (vi)) provided that such other investments (A) are
not outside the Company's general line of business, (B) in the aggregate do
not at any time exceed Fifteen Percent (15%) of the Company's Total
Capitalization, and (C) after giving effect to such other investments, no
Event of Default or Unmatured Event of Default shall have occurred and be
continuing; and ...
Section 6. Debt. Section 6(j) of the Agreement is hereby amended by the
addition of a new paragraph (vii) therein as follows:
(vii) Indebtedness related to permanent mortgage financing on multi-family
projects constructed and owned by the Company or any of its Current
Subsidiaries.
Section 7. Multifamily Construction. Section 6 of the Agreement is hereby
amended by the addition of a new Section 6(k) as follows;
(k) Multifamily Construction. Neither the Company nor any Current
Subsidiary shall engage in multifamily construction outside of the States of
Indiana, Ohio, and Kentucky.
Section 8. Waiver. The Bank hereby waives the violations by the Company in
connection with indebtedness in the amount of $1,262,000 assumed by the
Company in connection with the acquisition of certain assets of Tom Peebles
Builders, Inc. of Dayton, Ohio having a maturity date of 1998. This is a one
time waiver only and shall not be construed as the waiver of the same or
similar covenant in the future.
Section 9. Representations and Warranties. In consideration for the terms
and provisions hereof, the Company represents and warrants that each of its
representations and warranties appearing in Section 3 of the Agreement are
complete and correct as of the date hereof except that:
(a) Section 3(a) shall be deemed to also include as a Current Subsidiary
Deluxe Aviation, Inc., a corporation organized, existing and in good standing
under the laws of the State of Indiana;
(b) The representation appearing in Section 3(d) shall be deemed to also
refer to the most recent financial statements delivered by the Company to the
Bank; and
(c) The representation appearing in Section 3(l) shall be deemed to refer
to Subsidiaries of the Company created after the date of the Agreement with
the prior consent of the Bank.
Section 10. Conditions Present. As conditions precedent to the
effectiveness of this Amendment, the Bank shall have received the following,
in form and substance acceptable to the Bank:
(a) This Amendment duly executed by the Company;
(b) The Revolving Note in the form of Exhibit "A" attached hereto (the
"Revolving Note") which hereafter shall be deemed to be the Revolving Note for
all purposes of the Agreement;
(c) A certified copy of the Resolutions of the Board of Directors of the
company authorizing the execution and delivery of this Amendment, the
Revolving Note, and any other document required hereunder.
(d) A certificate signed by the Secretary of the Board of Directors of the
Company certifying the name of the Officer or Officers authorized to sign this
Amendment, the Revolving Note, and any other document required to be executed
and delivered pursuant to this Amendment, together with a sample of the true
signature of each such officer.
(e) The Reaffirmation of Guaranty (each a "Reaffirmation of Guaranty") of
each of the Current Subsidiaries in the forms of Exhibits "B", "C", "D",
"E", "F", "G", "H", "I", and "J" attached hereto.
(f) A certified copy of the Resolutions of each of the corporate Current
Subsidiaries authorizing the execution and delivery of its respective
Reaffirmation of Guaranty and any other document required to be executed by
the respective Current Subsidiary hereunder.
(g) A certificated signed by the Secretary of the Board of Directors of
each of the corporate Current Subsidiaries certifying the name of the Officer
or Officers authorized to sign its respective Reaffirmation of Guaranty and
any other document required to be executed by the respective Current
Subsidiary under this Amendment, together with a sample of the true signature
of each such officer.
(h) A Certificate of Existence for the Company issued by the Indiana
Secretary of State as of a recent date.
(i) A Certificate of Existence or Good Standing, as appropriate, for each
of the Current Subsidiaries issued by the Secretary of State of the respective
State of its incorporation or establishment.
(j) An opinion of counsel for the Company as to the due execution and
delivery and enforceability of this Amendment, the Revolving Note, and all
other documents to be executed by the Company pursuant hereto.
(k) A authenticated copy of an appropriate document executed by all the of
partners of Crossmann Partnership, confirming that they are all of the
partners of Crossmann Partnership, authorizing the execution, delivery, and
performance respectively, of its Reaffirmation of Guaranty, and certifying the
name or names of the officers of the corporate partners authorized to execute
and deliver its Reaffirmation of Guaranty to the Bank on behalf of Crossmann
Partnership, together with a sample of the true signature of each such
officer.
(l) Such other documents as the Bank may reasonably require.
Section 11. Reaffirmation of Agreement. Except as specifically modified
herein, the Agreement is hereby reaffirmed and shall remain in full force and
effect as originally written and as may have been previously amended.
IN WITNESS WHEREOF, the Company and the Bank have entered into this First
Amendment to Amended and Restated Credit Agreement by their respective duly
authorized officers as of this 27th day of March, 1997.
CROSSMANN COMMUNITIES, INC.
BY: /s/ Jennifer A. Holihen
Jennifer A. Holihen, CFO and Secretary
BANK ONE, INDIANA, NA
By: /s/ Daniel H. Hatfiled
Daniel H. Hatfield, Vice President
Exhibit 10.42 Promissory Note
PROMISSORY NOTE
(Revolving Loan)
Indianapolis, Indiana
$60,000,000
Dated: March 27, 1997
Final Maturity: March 31, 1999
On or before March 31, 1999 ("Final Maturity"), Crossmann Communities,
Inc. an Indiana corporation (the "Maker") promises to pay to the order of BANK
ONE, INDIANA, NA (the "Bank") at the principal office of the Bank at
Indianapolis, Indiana, the principal sum of Sixty Million Dollars
($60,000,000) or so much of the principal amount of the Loan represented by
this Note as may be disbursed by the Bank under the terms of the Credit
Agreement described below, and to pay interest on the unpaid principal balance
outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Loan") incurred or to be incurred
by the Maker under a revolving line of credit extended to the Maker by the
Bank under an Amended and Restated Credit Agreement dated December 21, 1995
(as amended, the "Credit Agreement"). All references in this Note to the
Credit Agreement shall be construed as references to that Agreement as it may
be amended from time to time. The Loan is referred to in the Credit Agreement
as the "Revolving Loan." Subject to the terms and conditions of the Credit
Agreement , the proceeds of the Loan may be advanced and repaid and
re-advanced until Final Maturity. The principal amount of the Loan
outstanding from time to time shall be determined by reference to the books
and records of the Bank on which all Advances under the Loan and all payments
by the Maker on account of the Loan shall be recorded. Such books and records
shall be deemed prima facie to be correct as to such matters.
The terms "Advance" and "Banking Day" are used in this Note as defined in
the Credit Agreement.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall
be due and payable on the last Banking Day of each month commencing on the
last Banking Day of the month in which this Note is executed. After maturity,
interest shall be due and payable as accrued and without demand. Interest
will be calculated on the basis that an entire year's interest is earned in
360 days.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, at Final Maturity. Reference is made
to the Credit Agreement for provisions requiring prepayment of principal under
certain circumstances. Principal may be prepaid, but only as provided in the
Credit Agreement.
If any installment of interest due under the terms of this Note is not
paid when due, then the Bank or any subsequent holder of this Note may,
subject to the terms of the Credit Agreement, at its option and without
notice, declare the entire principal amount of the Note and all accrued
interest immediately due and payable. Reference is made to the Credit
Agreement which provides for acceleration of the maturity of this Note upon
the happening of other "Events of Default" as defined therein.
If any installment of interest due under the terms of this Note prior to
maturity is not paid in full when due, then the Bank at its option and without
prior notice to the Maker, may asses a late payment fee in an amount equal to
the greater of $50.00 or five percent (5%) of the amount past due. Each late
payment fee assessed shall be due and payable on the earlier of the next
regularly schedule interest payment date or the maturity of this Note. Waiver
by the Bank of any late payment fee assessed, or the failure of the Bank in
any instance to assess a late payment fee shall not be construed as a waiver
by the Bank of its right to assess late payment fees thereafter.
Exhibit "A"
Page 1 of 2 pages
All payments on account of this Note shall be applied first to expenses
of collection, next to any late payment fees which are due and payable, next
to interest which is due and payable, and only after satisfaction of all such
expenses, fees and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to
any renewals or extensions of the time of payment of this Note without notice.
This Note is given in renewal, replacement and modification of that
certain Promissory Note (Revolving Loan) from the Maker to the Bank dated
December 21, 1995, in the original principal amount of $40,000,000.00 and with
a final maturity date of March 31, 1998.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that
Indiana conflicts of law rules might otherwise require the substantive rules
of law of another jurisdiction to apply.
CROSSMANN COMMUNITIES, INC.
By: /s/ Jennifer A. Holihen
Jennifer A. Holihen, CFO and Secretary
(printed name and title)
Exhibit "A"
Page 2 of 2 pages
<TABLE>
<CAPTION>
Crossmann Communities, Inc.
Exhibit 11.3 - Computation of Per Share Net Income
For the Period Ended March 31, 1997
<S> <C> <C> <C> <C>
Quarter Ended March 31, 1997:
- ----------------------------------------------------
Fully
Primary Diluted
--------- ---------
Weighted Average Number of Shares:
Average Common Shares Outstanding 6,125,768 6,125,768
at March 31, 1997
Dilutive Effect of Common Stock Equivalents
at March 31, 1997 67,749 74,303
--------- ---------
Weighted Average Shares at March 31, 1997 6,193,517 6,200,071
========= =========
Net Income 2,053,117 2,053,117
========= =========
Net Income per Common Share .33 (1) .33 (1) ((!_
========= =========
<FN>
(1) 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>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Crossmann Communities, Inc.
Exhibit 27.3
Article 5 Financial Data Schedule for 1997 10-Q
</LEGEND>
<CAPTION>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1997
<CASH> 100000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 124677817
<CURRENT-ASSETS> 0
<PP&E> 4748486
<DEPRECIATION> 1809205
<TOTAL-ASSETS> 141258759
<CURRENT-LIABILITIES> 0
<BONDS> 57941067
<COMMON> 24400903
0
0
<OTHER-SE> 37301575
<TOTAL-LIABILITY-AND-EQUITY> 141258759
<SALES> 46821263
<TOTAL-REVENUES> 46821263
<CGS> 37074010
<TOTAL-COSTS> 37074010
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 285620
<INCOME-PRETAX> 3421848
<INCOME-TAX> 1368781
<INCOME-CONTINUING> 2053117
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2053117
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
</TABLE>
